UNITED STATES ~~SECURITIES AND EXCHANGE COMMISSION~~

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS

PURSUANT TO SECTIONS 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

(Mark One)

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

For the fiscal year ended December 31, ~~2009~~2010

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

WII COMPONENTS, INC.

(Exact name of registrant as specified in its charter)

Delaware		No. 73-1662631
(State of Incorporation)		(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

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

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

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 x No o

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

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

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

Large Accelerated Filer o		Accelerated Filer o

Non-accelerated Filer x		Smaller Reporting Company o.

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

The aggregate market value of the voting stock held by nonaffiliates of the registrant as of June 30, ~~2009~~2010: not applicable.

As of March 1728, ~~2010~~2011, 100 shares of common stock of the registrant, $.01 par value per share, were issued and outstanding (all of which are owned by WII Holding, Inc.).

DOCUMENTS INCORPORATED BY REFERENCE: None.

Table of Contents

WII COMPONENTS, INC.

FORM 10-K

Year Ended December 31, ~~2009~~2010

INDEX

PART I
Item 1. Business	1	1
Item 1A. Risk Factors	3	3
Item 1B. Unresolved Staff Comments	8	8
Item 2. Properties	8	8
Item 3. Legal Proceedings	9	9
Item 4. Reserved	9	9
PART II
Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	9	9
Item 6. Selected Financial Data	10	10
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	10	11
Item 7A. Quantitative and Qualitative Disclosures about Market Risk	22	21
Item 8. Financial Statements and Supplementary Data	23	22
Item 9. Changes in and Disagreements With Accountants on Accounting Financial Disclosure		40
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	41
Item 9A(T). Controls and Procedures		40
Item 9A (T). Controls and Procedures	41
Item 9B. Other Information	41	40
PART III
Item 10. Directors, Executive Officers and Corporate Governance	41	40
Item 11. Executive Compensation	43	42
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	48	49
Item 13. Certain Relationships and Related Party Transactions, and Director Independence	49	50
Item 14. Principal Accountant Fees and Services		51
Item 14. Principal Accounting Fees and Services	51
PART IV
Item 15. Exhibits, Financial Statement Schedules	52	52
Item 16. Signatures	57	57

ACCESS TO REPORTS

Investors may obtain access free of charge to the WII Components, Inc. annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other reports by visiting the WII Components web site at www.wiicomponents.com. These reports will be available as soon as reasonably practicable following electronic filing with, or furnishing to, the Securities and Exchange Commission.

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In this report, the terms “WII Components,” “we,” “our,” “Company,” or “us” refer to WII Components, Inc. and its subsidiaries on a consolidated basis and their respective predecessors, unless otherwise indicated or the context otherwise requires. In April 2003, WII Components, Inc. was formed by a group of investors to acquire Woodcraft Industries, Inc., or Woodcraft, and its subsidiaries, PrimeWood, Inc., or PrimeWood, and Brentwood Acquisition Corp., or Brentwood. On January 9, 2007, WII Components, Inc. became a wholly owned subsidiary of WII Holding, Inc., a newly formed investment entity controlled by Olympus Growth Fund IV, L.P. and Olympus Executive Fund L.P., ~~each~~ of which isare anaffiliated investment ~~fund~~funds ~~managed~~headquartered byin ~~Olympus~~Stamford, ~~Partners~~Connecticut (together with other affiliated entities, “Olympus”). WII Components conducts all of its operations through its direct subsidiary, Woodcraft, and its indirect subsidiaries, ~~PrimeWood,~~ ~~Brentwood~~PrimeWoodand ~~and Grand Valley Acquisition, Inc~~Brentwood.~~, or Grand Valley. Grand Valley was merged with and into Woodcraft Industries, Inc. on December 31, 2006.~~

PART I

Item 1. Business

Our Company

We believe we are one of the leading manufacturers of hardwood cabinet doors, hardwood components and engineered wood products in the United States. In ~~2009~~2010, we generated approximately 93% of our sales from the kitchen and bath cabinet manufacturing industry. We believe 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 $3233.27 million for the three months ended December 31, ~~2009~~ 2010 and approximately $~~130~~145.54 million for the year ended December 31, ~~2009~~ 2010.

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~~200,000 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 manufacturing, or KAT, a small batch production process that enables us to deliver semi-custom doors and components on a quick-turnaround basis.

We operate twelve manufacturing facilities located in Minnesota, North Dakota, Ohio, Oregon, Pennsylvania, Kansas, North Carolina, West Virginia, and Kentucky that allow us to distribute our products nationwide. In 2005, we acquired substantially all of the assets of Dimension Moldings, Inc., and as a result of the acquisition we commenced operations at a second Ohio facility located in Middlefield, Ohio. In 2005, we also acquired a rough mill facility in Greenville, Pennsylvania and commenced operations at a manufacturing facility in Lansing, Kansas. In 2007, we commenced operations at manufacturing facilities in West Jordan, Utah and Monroe, Washington. Each of these facilities in Utah and Washington contributed minimal capacity to the Company and were closed in the second half of 2008 due to the slowdown in the industry. In 2008, we commenced operations at a manufacturing facility in Conover, North Carolina. In the fourth quarter of 2009, we commenced operations at a manufacturing facility in Moorefield, West Virginia that adds minimal production capacity to the Company. Overall, 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 ~~criteria~~criterion in our customers’ procurement decisions.

Our senior management team has an average of 19 20 years of industry experience and 1819 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.

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, our Grand Valley subsidiary in 2004, and substantially all of the assets of Dimension Moldings, Inc. in 2005. On December 31, 2006, Grand Valley was

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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, our Grand Valley subsidiary in 2004, and substantially all of the assets of Dimension Moldings, Inc. in 2005. On December 31, 2006, Grand Valley was merged with and into Woodcraft. WII Components, Inc. was incorporated in Delaware in April 2003, in connection with the acquisition of Woodcraft and its subsidiaries.

On January 9, 2007, WII Holding, Inc. (“Parent”) acquired all of the outstanding capital stock of WII Components, Inc. through the merger of a newly formed wholly owned subsidiary of Parent with and into WII Components, Inc. (the “Transaction”). At that time, Parent iswas a newly formed investment entity controlled by Olympus ~~Growth Fund IV, L~~.~~P. and Olympus Executive Fund, L.P., each of which is an investment fund managed by Olympus Partners, a private equity firm headquartered in Stamford, Connecticut.~~

~~Customers~~Products

We ~~have~~believe ~~been servicing~~that ~~our~~we ~~top~~have ~~ten~~one ~~customers~~of ~~for~~the anbroadest ~~average~~product offerings of ~~approximately~~doors 17and ~~years,~~related ~~with a~~components ~~minimum~~for ofthe ~~two~~kitchen ~~years~~and bath cabinet manufacturing industry. InOur ~~2009,~~products ~~sales to~~include: (1) hardwood ~~Masco~~cabinet ~~Corporation~~door components, face frames and ~~Elkay~~drawer ~~accounted~~fronts, ~~for~~(2) fully ~~43%~~assembled hardwood cabinet doors, (3) rigid thermofoil, or RTF, cabinet doors and ~~17%~~components, ~~respectively~~(4) veneer raised panels, or VRPs, and (5) a variety of ~~our net~~laminated ~~sales~~and profile-wrapped components. NoWe ~~other~~produce ~~customer~~over ~~accounted~~ 200,000 SKUs for ~~more~~our ~~than~~customers, ~~10%~~representing a wide array of ~~our~~styles, ~~sales~~designs inand ~~2009~~wood species. We In ~~have~~addition, ~~experienced~~we ~~lower~~offer ~~sales~~a ~~volume~~variety ~~over~~of ~~the~~value-added ~~past~~services ~~three~~for ~~years~~our ~~with most~~customers, ofsuch ~~our~~as ~~top~~new ~~ten~~product ~~customers~~design ~~due~~and development and kitchen-at-a-time manufacturing, or KAT, a small batch production process that enables us to ~~the~~deliver ~~overall~~semi-custom ~~market~~doors ~~decline~~and ~~related~~components on a quick-turnaround basis. See Note 3 to ~~lower~~ ~~demand~~our ~~for~~consolidated ~~new~~financial ~~homes~~statements included in this report under “Financial Statements and ~~remodeling~~Supplementary ofData” ~~existing~~for ~~homes~~additional information on our products.

~~Sales and Marketing~~Customers

~~Substantially~~We ~~all~~have ofbeen servicing our ~~sales~~top ~~are~~ten ~~made~~customers ~~directly~~for ~~to cabinet~~an ~~manufacturers~~average ~~without the use~~ of ~~third~~approximately ~~party~~18 ~~sales~~years, ~~representatives~~with ~~or distributors. Our~~a ~~sales~~minimum ~~and~~of ~~marketing group~~six ~~is organized primarily by product and geography~~years. ~~The~~In ~~group~~2010, ~~includes a~~ sales ~~director~~to ~~for~~Masco ~~all product~~Corporation ~~lines,~~and aElkay ~~marketing~~accounted ~~director~~ for ~~hardwood~~38% ~~products,~~ and ~~four~~18%, ~~account managers. Over~~respectively, ~~the~~of ~~past~~our ~~few~~net ~~years, our~~ sales. No ~~and~~other ~~marketing~~customer ~~efforts~~accounted ~~have~~for ~~been~~more ~~focused~~than on10% ~~strengthening~~of ~~relationships with~~ our ~~most~~sales ~~important~~in ~~customers and introducing new products to targeted markets~~2010. ~~Due~~We tohave ~~our~~experienced ~~long-standing relationships~~lower ~~with our key customers,~~ sales ~~and~~volume ~~marketing~~over ~~involves relationships~~the atpast ~~multiple~~four ~~levels~~years with ~~our~~most ~~customers. Accordingly,~~of our ~~internal~~top ~~sales~~ten ~~force~~customers ~~works closely~~due ~~with~~to ~~our~~the ~~manufacturing~~overall ~~and~~market ~~marketing~~decline ~~personnel~~related to ~~develop~~lower ~~new opportunities~~demand infor ~~our~~new ~~core~~homes ~~kitchen~~ and ~~bath~~remodeling ~~market, which accounted for approximately 93%~~ of ~~our~~existing ~~sales in 2009, as well as our other markets, including store fixtures~~homes. ~~In 2009, approximately 99.7% of our net revenues resulted from sales in the United States, while the balance resulted from sales in Canada and Mexico.~~

WeSales ~~do not rely on imported product components for any significant portion of our business. However, we do purchase imported components for use in our domestic manufacturing process~~ and ~~for direct sale to our customers. In 2009, our sales of imported products accounted for less than 1% of our total sales.~~Marketing

~~Seasonality~~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. The group includes a sales director for all product lines, a marketing director for hardwood products, and four 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 2010, as well as our other markets, including store fixtures. In 2010, approximately 98% of our net revenues resulted from sales in the United States, while the balance resulted from sales in Canada and Mexico.

~~Our~~We ~~sales~~do ~~historically~~not ~~have~~rely ~~been~~on ~~moderately~~imported ~~seasonal~~product components for any significant portion of our business. However, ~~reflecting~~ ~~the~~we ~~temporary~~do ~~slow~~purchase ~~down~~imported incomponents ~~consumer~~for ~~purchasing~~use ~~activity~~in ~~during~~our ~~the winter~~domestic ~~holiday~~manufacturing ~~season~~process and ~~the~~for ~~summer~~direct ~~months~~sale to our customers. In 2010, our sales of imported products accounted for 2% of our total sales.

~~Supply of Raw Materials~~Seasonality

~~The~~Our ~~primary~~sales ~~raw~~historically ~~materials~~have webeen ~~purchase~~moderately ~~are green~~seasonal, ~~kiln-dried,~~ ~~and~~reflecting ~~semi-processed hardwood lumber, MDF, hardwood veneer and PVC foil. Hardwood lumber accounts for~~ the ~~largest~~ ~~portion~~temporary ofslowdown ~~our~~in ~~material~~consumer ~~costs. We~~purchasing ~~purchase~~activity ~~our~~during ~~lumber directly from hardwood mills, which allows us to both leverage our scale and avoid~~ the ~~costs~~winter ~~associated~~holiday ~~with~~season ~~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 8% of our material purchases in 2009, and we are not dependent on any single supplier for any raw material product. Our top ten suppliers accounted for approximately 32% of the ~~key~~summer ~~raw materials we purchased in 2009~~months.

WeSupply ~~purchase a variety~~ of ~~species~~Raw of hardwood lumber, with hard maple, cherry, and red oak 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, we have been able to pass lumber price changes through to our customers in a three to nine month time period by working in a partnership with them. Our ability to pass through these price changes to our customers is dependent on prevailing economic and competitive conditions.Materials

2The primary raw materials we purchase are green, kiln-dried, and semi-processed 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 2010, and we are not dependent on any single supplier for any raw material product. Our top ten suppliers accounted for approximately 32% of the key raw materials we purchased in 2010.

~~Table of Contents~~2

~~Competition~~Table of Contents

We ~~operate~~purchase ina ~~the~~variety ~~highly~~of ~~competitive~~species ~~kitchen~~of ~~and~~hardwood ~~bath cabinet~~lumber, ~~door~~with hard maple, cherry, soft maple and ~~component~~red ~~industry~~oak accounting for our largest volumes. ~~Our competitors~~The ~~include~~prices ~~other~~of ~~independent~~the ~~kitchen~~various ~~and~~species ~~bath~~have ~~cabinet~~fluctuated ~~door~~historically ~~and component~~on ~~manufacturers~~independent supply and ~~vertically~~demand ~~integrated~~curves ~~cabinet~~and ~~manufacturers~~are ~~who produce~~not ~~their~~highly ~~own~~correlated ~~doors~~to ~~and~~one ~~components~~another. We Generally, ~~estimate~~we ~~that~~have ~~the~~been ~~cabinet~~able ~~door~~to ~~and~~pass ~~component~~lumber ~~market~~price ~~segment~~changes inthrough ~~which we~~to ~~compete~~our ~~represented~~customers ~~approximately~~in ~~$1.2 billion~~a ofthree ~~the~~to ~~overall~~twelve ~~U.S. cabinet~~month ~~market~~time inperiod ~~2009. We~~by ~~believe~~working ~~that independent~~in ~~cabinet~~a ~~door~~partnership ~~and~~with ~~component~~them. Our ~~manufacturers,~~ability ~~like~~to ~~us,~~pass ~~accounted~~through ~~for approximately~~these ~~$0.6 billion~~price ofchanges ~~this~~to ~~segment~~our incustomers ~~2009,~~is ~~while~~dependent ~~vertically integrated~~on ~~cabinet~~prevailing ~~manufacturers~~economic ~~accounted~~and ~~for~~competitive ~~the remainder~~conditions.

We are one of the three largest manufacturers in the independent cabinet component industry. We believe that in 2009 we accounted for approximately 23% of total outsourced cabinet door and component market sales, and together with our principal competitors Conestoga Wood Products and Appalachian Wood Products, based on publicly available information and management estimates, accounted for approximately 47% of this market in 2009.Competition

~~Environmental~~We ~~Matters~~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 $1.1 billion of the overall U.S. cabinet market in 2010. We believe that independent cabinet door and component manufacturers, like us, accounted for approximately $0.55 billion of this segment in 2010, while vertically integrated cabinet manufacturers accounted for the remainder.

~~Our~~We ~~operations and properties~~ are ~~subject~~one toof ~~extensive federal,~~the ~~state,~~three ~~local~~largest ~~and~~manufacturers ~~foreign~~in ~~environmental laws relating to protection of~~ the ~~environment~~independent ~~and~~cabinet ~~human~~component ~~health and safety~~industry. ~~Environmental laws and regulations are subject to frequent amendment and have become more stringent over time.~~ We ~~could~~ ~~incur~~believe that in ~~the~~2010 ~~future~~we ~~significant~~accounted ~~costs~~for ~~associated~~approximately ~~with~~26% ~~compliance~~of ~~with,~~total ~~or liabilities~~outsourced ~~under,~~cabinet ~~environmental~~door ~~laws~~ and ~~regulations,~~component ~~including~~market ~~equipment costs~~sales, ~~disposal~~and ~~costs,~~together ~~cleanup~~with ~~costs,~~our ~~civil~~principal ~~and~~competitors ~~criminal~~Conestoga ~~penalties,~~Wood ~~injunctive relief~~Products and ~~denial~~Appalachian orWood ~~loss of~~Products, orbased ~~imposition~~on ofpublicly ~~significant~~available ~~restrictions~~information ~~on, environmental~~and ~~permits. In~~management ~~addition~~estimates, ~~we could~~accounted infor ~~the~~approximately ~~future~~49% beof ~~subject~~this tomarket ~~suit by private parties~~ in ~~connection with alleged violations of or liabilities under environmental laws and regulations~~2010.

~~Employees~~Environmental Matters

AsOur operations and properties are subject to extensive federal, state, local and foreign environmental laws relating to protection of ~~December 31~~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, ~~2009~~ or liabilities under, weenvironmental ~~had~~laws ~~approximately~~and 1regulations,~~005~~ ~~full-time~~including ~~employees~~equipment costs, 7disposal ~~part-time~~costs, ~~employees~~cleanup costs, civil and 50criminal ~~leased~~penalties, ~~employees~~injunctive relief and denial or loss of, or imposition of significant restrictions on, environmental permits. ~~Currently~~In addition, ~~none of~~we ~~our~~could ~~employees~~in ~~are~~the ~~covered~~future be subject to suit by aprivate ~~collective~~parties ~~bargaining~~in ~~agreement~~connection with alleged violations of or liabilities under environmental laws and regulations.

~~Item 1A. Risk Factors~~Employees

~~Our~~As ~~ability to predict results or the effect~~ of ~~certain~~December 31, ~~events on our operating results is inherently uncertain. Therefore~~2010, we ~~wish~~had toapproximately ~~caution each~~1,026 ~~reader~~full-time ofemployees, ~~this~~12 ~~annual~~part-time ~~report~~employees, ~~to carefully consider the following factors~~ and ~~certain~~73 ~~other~~leased ~~factors~~employees. Currently, ~~discussed~~none ~~herein~~of ~~and~~our inemployees ~~other~~are ~~past~~covered ~~filings~~by ~~with~~a ~~the Securities~~collective ~~and~~bargaining ~~Exchange Commission~~agreement.

~~Downturns~~Item in1A. ~~the new~~Risk ~~home construction industry, repair and remodeling activity or the economy could negatively affect our business.~~Factors

~~Sales to~~Our ~~the~~ability ~~kitchen~~to ~~and~~predict ~~bath~~results ~~cabinet~~or ~~market~~the ~~accounted~~effect ~~for~~of ~~approximately~~certain ~~93%~~events ofon our ~~total~~ ~~sales~~operating ~~for~~results ~~the~~is ~~year~~inherently ~~ended December 31, 2009~~uncertain. ~~Sales~~Therefore, inwe ~~this~~wish ~~market~~to ~~are~~caution ~~driven~~each byreader ~~new~~of ~~home construction~~this ~~and~~annual ~~home~~report ~~repair~~to ~~and~~carefully ~~remodeling~~consider ~~activity. New~~the ~~home~~following ~~construction~~factors and ~~repair~~certain ~~and remodeling~~other ~~activity~~factors ~~continues~~discussed toherein beand ~~affected by changes~~ in ~~economic and~~ other ~~conditions,~~ ~~such~~past asfilings ~~gross~~with ~~domestic product levels, employment levels, demographic trends, availability of financing, interest rates and consumer confidence. These factors can negatively affect~~ the ~~demand~~Securities ~~for our products. Any deterioration in these factors could have a material adverse effect on our business, financial condition~~ and ~~results~~Exchange ~~of operations~~Commission.

~~The Company~~Downturns ~~derives~~in ~~a significant portion of its revenue as a result of~~ the ~~demand for its products created by the building of~~ new ~~homes,~~home ~~and~~construction ~~repair and remodeling of existing homes. During the second half of 2006~~industry, ~~the home building,~~ repair and remodeling ~~industry experienced~~activity aor ~~slowdown as a result of general economic conditions. The slowdown has continued into 2009, and based on~~ the ~~Kitchen~~economy ~~Cabinet~~could ~~Manufacturers Association~~negatively ~~data~~affect ~~for 2009, the kitchen cabinet market is estimated to be down approximately 28%. This slowdown has had, and continues to have, a negative effect on~~ our ~~sales and income from operations. If this slowdown were to continue or worsen over an extended period of time, it could have a material adverse effect on the Company’s~~ business~~, financial condition or results of operations~~.

~~Current~~Sales to the kitchen and bath cabinet market accounted for approximately 93% of our total sales for the year ended December 31, 2010. Sales in this market are driven by new home construction and home repair and remodeling activity. New home construction and repair and remodeling activity continues to be affected by changes in economic and other conditions, such as gross domestic product levels, employment levels, demographic trends, availability of financing, interest rates and ~~disruptions~~consumer inconfidence. These factors can negatively affect the ~~credit~~demand ~~and~~for ~~financial markets~~our products. Any deterioration in these factors could have ana material adverse effect on our business, financial condition and results of operations.

3The Company derives a significant portion of its revenue as a result of the demand for its products created by the building of new homes, and repair and remodeling of existing homes. During the second half of 2006, the home building, repair and remodeling industry experienced a slowdown as a result of general economic conditions. The slowdown continued throughout 2010, and based on the Kitchen Cabinet Manufacturers Association data for 2010, the kitchen cabinet market is estimated to be down approximately 4% as compared to 2009. This slowdown has had, and continues to have, a negative effect on our sales and income from operations. If this slowdown were to continue or worsen over an extended period of time, it could have a material adverse effect on the Company’s business, financial condition or results of operations.

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~~Recently, the~~Table ~~financial markets experienced a period~~ of unprecedented turmoil, including the bankruptcy, restructuring or sale of certain financial institutions and the intervention of the U.S. federal government. While the ultimate outcome of these events cannot be predicted, they may have a material adverse effect on our liquidity and financial condition if our ability to borrow money from our existing lenders under our Senior Credit Facility to finance our operations were to be impaired. The crisis in the financial markets may also have a material adverse impact on the availability and cost of credit in the future. Our ability to pay our debt or refinance our obligations under our Senior Credit Facility or Senior Notes will depend on our future performance, which will be affected by, among other things, prevailing economic conditions. The recent financial crisis may also have an adverse effect on the U.S., which would have a negative impact on demand for our products. In addition, tightening of credit markets may have an adverse impact on our customers’ ability to finance the purchase of our products or our suppliers’ ability to provide us with raw materials, either of which could adversely affect our business and results of operations.Contents

~~Our~~Economic ~~debt~~conditions ~~agreements~~and ~~contain~~disruptions ~~certain~~in ~~restrictions~~the ~~that~~credit ~~limit our~~and ~~flexibility~~financial inmarkets ~~operating~~could ~~our~~have ~~business,~~an ~~and~~adverse ~~our~~effect ~~failure~~on toour ~~comply~~business, ~~with~~financial ~~these covenants~~condition ~~could~~and ~~result~~results ~~in an acceleration~~ of ~~our indebtedness~~operations.

WeOver ~~are~~the ~~subject~~last ~~to a~~couple ~~number of debt agreements~~years, ~~including~~the ~~our~~financial ~~Senior~~markets ~~Credit~~experienced ~~Facility,~~a ~~the indenture~~period ~~governing~~of ~~the~~unprecedented ~~Senior~~turmoil, ~~Notes~~including ~~and~~ the ~~purchase~~bankruptcy, ~~agreements~~restructuring ~~governing~~or ~~the pay-in-kind~~sale ~~notes~~of ~~issued~~certain byfinancial ~~our~~institutions ~~Parent~~and (the ~~“Parent~~intervention ~~Notes”),~~of ~~which~~the ~~contain covenants~~U.S. ~~that~~federal ~~restrict~~government. ~~our~~While ~~ability~~the toultimate ~~incur~~outcome ~~indebtedness,~~of ~~pay~~these ~~dividends,~~events ~~make investments,~~cannot ~~grant~~be ~~liens~~predicted, ~~sell~~they ~~our~~may ~~assets~~have ~~and~~a ~~engage~~material inadverse ~~certain~~effect ~~other activities. In~~on ~~addition,~~ our ~~Senior~~liquidity ~~Credit Facility~~ and ~~Parent Notes require us to comply with certain consolidated~~ financial ~~ratios~~condition ~~and~~if ~~financial tests.~~our ~~Our~~ ability to ~~meet~~borrow ~~these~~money ~~financial~~from ~~ratios and financial tests may be affected by events beyond~~ our ~~control,~~lenders ~~including~~under ~~a prolonged downturn in the housing market. On March 30, 2009, we amended and obtained waivers to~~ our ~~Senior~~new ~~Credit~~credit ~~Facility~~agreement to, ~~among~~finance ~~other things,~~our ~~adjust~~operations ~~the interest coverage ratio and total leverage ratio that we~~ were ~~required~~ to ~~maintain~~be asimpaired. ofThe ~~December 31,~~crisis ~~2008,~~in ~~and as of~~ the ~~end~~financial ~~of each~~markets ~~quarterly~~may ~~period~~also ~~through~~have ~~December 31,~~a ~~2009~~material toadverse ~~reflect~~impact ~~current economic~~on ~~conditions. On~~the ~~March 30,~~availability ~~2009, Parent also amended~~ and ~~obtained~~ ~~waivers~~cost toof ~~the~~credit ~~Parent~~in ~~Notes to, among other things, waive~~ the ~~total leverage~~future. ~~ratio~~Our ~~that~~ability ~~we were required~~ to ~~maintain~~pay asour ofdebt ~~December 31,~~or ~~2008, and~~refinance toour ~~adjust~~obligations ~~the~~under ~~total~~our ~~leverage~~new ~~ratio~~credit weagreement ~~are~~or ~~required~~10% toSenior ~~maintain~~Notes asdue of2012 (the ~~end~~ of“Senior ~~each~~Notes”) ~~quarterly~~will ~~period~~depend ~~through~~on ~~December 31,~~our ~~2009~~future ~~to reflect current economic conditions. On March 26~~performance, ~~2010,~~ wewhich ~~amended~~will ~~our~~be ~~Senior~~affected ~~Credit Facility again to~~by, among other things, ~~adjust~~ ~~the~~prevailing ~~interest~~economic ~~coverage~~conditions. ~~ratio~~The ~~and~~financial ~~total~~crisis ~~leverage~~may ~~ratio~~also ~~that~~have wean ~~are required~~adverse toeffect ~~maintain~~on asthe ~~of March 31~~U.S., ~~2010~~which ~~and~~would athave ~~the~~a ~~end~~negative ofimpact ~~each~~on ~~quarterly period~~demand ~~through~~for ~~December 31,~~our ~~2010~~products. On ~~March 26,~~In ~~2010~~addition, ~~Parent~~tightening ~~also~~of ~~amended~~credit ~~the~~markets ~~Parent~~may ~~Notes~~have ~~to,~~an ~~among other~~adverse ~~things,~~impact ~~adjust~~on ~~the~~our ~~total~~customers’ ~~leverage~~ability ~~ratio we are required~~ to ~~maintain~~finance ~~as of~~ the ~~end~~purchase of ~~each quarterly period through December 31, 2010. Any breach of the covenants in~~ our ~~debt agreements~~products ~~could result in a default of the obligations under such debt agreement and cause a cross-default under one~~ or ~~more of~~ our ~~other~~suppliers’ ~~debt agreements. If~~ability ~~there~~to ~~were~~provide anus ~~event~~with ofraw ~~default~~materials, ~~under~~either ~~one~~ of ~~the~~which ~~debt agreements that was not cured or waived, the lenders under such debt agreement~~ could ~~cause~~adversely ~~all~~affect ~~amounts~~our ~~outstanding~~business ~~thereunder to be due~~ and ~~payable immediately. Our~~results ~~assets and cash flow may not be sufficient to fully repay borrowings under our debt agreements if accelerated upon an event~~ of ~~default~~ operations.

~~To service~~Our ~~our~~debt ~~indebtedness,~~agreements wecontain ~~will~~certain ~~require~~restrictions athat ~~significant~~limit ~~amount~~our offlexibility ~~cash. Our~~in ~~ability~~operating ~~to generate cash depends on many factors beyond~~ our ~~control~~business, and ~~any~~our failure to ~~meet~~comply ~~our~~with ~~debt~~these ~~service obligations~~covenants could ~~harm~~result ~~our~~in ~~business,~~an ~~financial~~acceleration ~~condition~~of ~~and~~our ~~results of operations~~indebtedness.

~~Our~~We ~~cash~~are ~~interest~~subject ~~expense~~to ~~for~~a ~~the~~number ~~year~~of ~~ended~~debt ~~December~~agreements, including our new credit agreement that we executed on March 3124, ~~2009~~2011 ~~was approximately~~(the “New Credit Agreement”), the indenture governing the Senior Notes and the $1123.0 million~~. Our~~ non-interest bearing note issued on December 30, 2010 by our Parent (the “New Parent Note”), which contain covenants that restrict our ability to incur indebtedness, pay dividends, make ~~payments~~investments, ongrant liens, sell our assets and engage in certain other activities. In addition, our New Credit Agreement and New Parent Note require us to ~~refinance~~comply with certain consolidated financial ratios and financial tests. Our ability to meet these financial ratios and financial tests may be affected by events beyond our ~~indebtedness~~control, including a prolonged downturn in the ~~Senior Notes~~housing market. On March 30, 2009, we amended and obtained waivers to ~~fund~~our ~~working~~prior ~~capital~~senior ~~needs~~credit facility to, among other things, adjust the interest coverage ratio and ~~planned~~total ~~capital~~leverage ~~expenditures~~ratio ~~will depend~~that onwe ~~our~~were ~~ability~~required to ~~generate~~maintain ~~cash~~as inof December 31, 2008, and as of the ~~future~~end of each quarterly period through December 31, 2009 to reflect current economic conditions. ~~This~~ On March 26, 2010, we amended our prior senior credit facility again to, aamong ~~certain~~other ~~extent~~things, isadjust ~~subject~~the interest coverage ratio and total leverage ratio that we were required to ~~general~~ ~~economic~~maintain as of March 31, ~~financial~~2010 and at the end of each quarterly period through December 31, ~~competitive~~2010. On those same dates, ~~business~~Parent undertook similar transactions with respect to its previously outstanding Parent notes, ~~legislative~~which were extinguished on December 30, ~~regulatory~~2010 in connection with the Recapitalization (as defined herein). Any breach of the covenants in our debt agreements could result in a default of the obligations under such debt agreement and cause a cross-default under one or more of our other ~~factors~~debt agreements. If there were an event of default under one of the debt agreements that ~~are~~was ~~beyond~~not cured or waived, the lenders under such debt agreement could cause all amounts outstanding thereunder to be due and payable immediately. Our assets and cash flow may not be sufficient to fully repay borrowings under our ~~control~~debt agreements if accelerated upon an event of default.

IfTo ~~our~~service ~~business does not generate sufficient cash flow from operations or if future borrowings are not available to us in an amount sufficient to enable us to pay~~ our indebtedness, ~~including the Senior Notes, or to fund our other liquidity needs,~~ we ~~may~~will ~~need~~require ~~to refinance all or~~ a ~~portion~~significant ofamount ~~our indebtedness, including the Senior Notes, on or before the maturity thereof, sell assets, reduce or delay capital investments or seek to raise additional capital, any~~ of ~~which could have a material adverse effect on our operations~~cash. ~~In addition, we may not be able to effect any of these actions, if necessary, on commercially reasonable terms or at all.~~ Our ability to ~~restructure~~ orgenerate ~~refinance~~cash ~~our~~depends ~~indebtedness, including the Senior Notes, will depend~~ on ~~the~~many ~~condition~~factors ofbeyond ~~the capital markets and~~ our ~~financial~~control, ~~condition at such time. Any refinancing of our debt could be at higher interest rates~~ and may require us to comply with more onerous covenants, which could further restrict our business operations. The terms of existing or future debt instruments, including the indenture governing the Senior Notes, may limit or prevent us from taking any offailure ~~these actions. Our inability~~ to ~~generate~~meet ~~sufficient cash flow to satisfy~~ our debt service obligations, orcould toharm ~~refinance or restructure~~ our ~~obligations on commercially reasonable terms or at all~~business, ~~would~~financial ~~have~~condition anand ~~adverse~~results ~~effect,~~of ~~which could~~ operations.

Our cash interest expense for the year ended December 31, 2010 was approximately $11.0 million. In addition, our outstanding Senior Notes in an aggregate principal amount of $108.4 million are scheduled to mature on February 15, 2012. Our ability to make payments on and to refinance our indebtedness, including the Senior Notes, and to fund working capital needs and planned capital expenditures will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, business, legislative, regulatory and other factors that are beyond our control. Based on our current level of operations, we do not expect that we will have sufficient cash flows from operations to repay the Senior Notes at their current scheduled maturity in 2012. As a result, we will need to refinance such Senior Notes prior to that time.

~~Table~~ If our business does not generate sufficient cash flow from operations or if future borrowings are not available to us in an amount sufficient to enable us to pay our indebtedness, including the Senior Notes, or to fund our other liquidity needs, we may need to refinance all or a portion of ~~Contents~~our indebtedness, including the Senior Notes, on or before the maturity thereof, sell assets, reduce or delay capital investments or seek to raise additional capital, any of which could have a material adverse effect on our operations. In addition, we may not be able to affect any of these actions, if necessary, on commercially reasonable terms or at all. Our ability to restructure or refinance our indebtedness, including the Senior Notes, will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. The terms of existing or future debt instruments, including the indenture governing the Senior Notes, may limit

~~be material, on our business, financial condition and results of operations, as well as on our ability to satisfy our obligations in respect of the Senior Notes.~~4

InTable ~~addition, if we are unable to meet their debt service obligations under the Senior Notes, the holders~~ of the Senior Notes would have the right to cause the entire principal amount of the Senior Notes to become immediately due and payable. If the amounts outstanding under these instruments are accelerated, we cannot assure you that our assets will be sufficient to repay in full the money owed to our debt holders, including holders of the Senior Notes.Contents

Weor ~~are~~prevent ~~dependent~~us from taking any of these actions. Our inability to generate sufficient cash flow to satisfy our debt service obligations, or to refinance or restructure our obligations on ~~major~~ ~~customers~~commercially ~~for~~reasonable aterms ~~significant~~or ~~portion~~at all, would have an adverse effect, which could be material, on our business, financial condition and results of operations, as well as on our ~~net~~ability ~~sales~~to satisfy our obligations in respect of the Senior Notes.

~~For~~In ~~the~~addition, ~~year~~if ~~ended~~we ~~December 31,~~are ~~2009,~~unable ~~our~~to ~~top~~meet ~~ten customers~~our ~~accounted~~debt ~~for~~service ~~approximately~~obligations ~~89%~~under ofthe ~~our~~Senior ~~net~~Notes, ~~sales. During~~the ~~this~~holders ~~period,~~of ~~our~~the ~~two~~Senior ~~largest~~Notes ~~customers accounted~~would ~~for~~have ~~approximately~~the ~~60%~~right ofto ~~our~~cause ~~net~~the ~~sales. The~~entire ~~permanent~~principal ~~loss~~amount of, orthe aSenior ~~significant decrease~~Notes into ~~the~~become ~~level~~immediately ofdue ~~purchases~~and ~~by,~~payable. If ~~one~~the oramounts ~~more~~outstanding ofunder ~~our~~these ~~major~~instruments ~~customers~~are ~~could have~~accelerated, awe ~~material~~cannot ~~adverse~~assure ~~effect~~you onthat our ~~results~~assets ofwill ~~operations. Future~~be ~~consolidation~~sufficient to repay in full the ~~cabinet manufacturing~~money ~~market~~owed into ~~which~~ our ~~customers~~debt ~~operate~~holders, ~~could~~including ~~increase~~holders ~~the concentration~~ of ~~our~~the ~~sales~~Senior ~~and therefore increase these risks~~Notes.

InWe ~~addition,~~are ~~some~~dependent ofon ~~our~~major ~~key cabinet manufacturer~~ customers ~~have~~for 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, these customers may not 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~~portion ~~in the level~~ of ~~cabinet~~ ~~door and component production outsourcing from~~ our ~~cabinet manufacturing~~net ~~customers could significantly impact our~~ sales ~~and, accordingly, have a material adverse effect on our business, results of operations and financial condition~~.

~~Increased~~For ~~prices~~ the year ended December 31, 2010, our top ten customers accounted for ~~raw~~approximately ~~materials~~88% ~~used~~of our net sales. During this period, our two largest customers accounted for approximately 56% of our net sales. The permanent loss of, or a significant decrease in the level of purchases by, one or more of our ~~products~~major customers could ~~adversely~~have ~~affect~~a material adverse effect on our ~~business~~results of operations. Future consolidation in the cabinet manufacturing market in which our customers operate could increase the concentration of our sales and therefore increase these risks. For more information regarding our significant customers, see “Business — Customers.”

~~Our~~In ~~profitability~~addition, issome ~~affected by the prices~~ of our ~~raw materials,~~key ~~which~~cabinet ~~may~~manufacturer ~~fluctuate~~customers ~~based~~have onthe aresources ~~number~~to ofmanufacture ~~factors~~internally ~~beyond~~the ~~our~~cabinet ~~control, including,~~doors ~~among others, changes in supply~~ and ~~demand,~~components ~~general~~that ~~economic conditions,~~we ~~labor~~sell ~~costs,~~to ~~competition and, in some cases, government regulation~~them. ~~The~~Despite ~~prices~~these ~~for~~manufacturing ~~the~~capabilities, ~~hardwood species~~these wecustomers ~~use~~have inchosen ~~production~~to ofoutsource ~~our~~door ~~hardwood doors~~ and ~~components~~component ~~are~~production ~~subject~~ to ~~some~~ ~~volatility. In~~us ~~the~~in ~~past~~part ~~calendar year~~due ~~the~~to ~~price of hard maple,~~ the ~~primary~~quality ~~hardwood specie we use, (accounting for approximately 41%~~ of our ~~lumber~~products ~~purchases) decreased by approximately 14%,~~ and ~~the~~in ~~price~~order ofto ~~cherry~~reduce costs, ~~(accounting~~eliminate ~~for~~production ~~approximately~~risks ~~31%~~and ofmaintain ~~our~~company ~~lumber purchases) decreased by 29%~~focus. WeHowever, ~~have~~these ~~no long-term~~customers ~~supply~~may ~~contracts~~not ~~for~~continue ~~the~~to ~~raw~~outsource ~~materials~~door ~~used~~and component production in the ~~manufacture of our products~~future. ~~This~~Increased ~~means~~levels ~~that~~of weproduction ~~are~~insourcing ~~subject to~~could ~~changes~~result infrom ~~the~~a ~~prices~~number ~~charged~~of ~~by our suppliers. Recently~~factors, wesuch ~~have~~as ~~experienced~~shifts ~~moderate increases~~ in ~~the~~our ~~price~~customers’ webusiness ~~pay~~strategies, ~~for~~which ~~our~~could ~~hardwood~~result ~~materials. Significant~~from ~~increases in~~ the ~~prices~~acquisition of ~~raw materials~~another ~~could~~door ~~materially~~and ~~adversely~~component ~~affect our business~~manufacturer, ~~financial~~the ~~condition and~~inability ~~results~~ of ~~operations,~~third ~~especially~~party ifsuppliers ~~we are not able~~ to ~~recover~~meet ~~these~~product ~~costs by~~specifications ~~increasing~~and the ~~prices~~emergence weof ~~charge~~low-cost ~~our~~production ~~customers~~opportunities ~~for~~in ~~our~~foreign ~~products~~countries. InAny ~~2009,~~significant ~~the~~reduction ~~U.S.~~in ~~kitchen~~the ~~and~~level ~~bath industry relied heavily on domestic maple, which is~~ of acabinet ~~higher~~door ~~quality~~and ~~than~~component ~~imported maple. A~~production ~~shortage~~outsourcing infrom ~~the~~our ~~supply~~cabinet ~~of domestic~~manufacturing ~~maple~~customers ~~or certain other species of lumber~~ could ~~increase~~significantly ~~prices~~impact ~~for these~~our ~~raw~~sales ~~materials~~and, ~~which~~accordingly, ~~could also~~ have a material adverse effect on our business, ~~financial condition and~~ results of operations~~. Generally,~~ weand ~~have~~financial ~~been able to pass through cost increases to our customers in a three to nine month time period, but the price increases may not fully offset the effects of increasing raw material costs~~condition. ~~Our ability to pass through these price changes to our customers is dependent on prevailing economic and competitive conditions.~~

~~Interruptions~~Increased ~~in deliveries~~prices offor raw materials used in our products could adversely affect our business.

Our ~~dependency~~profitability ~~upon~~is ~~regular~~affected ~~deliveries~~by ~~from~~the ~~suppliers means~~prices ~~that~~of ~~interruptions~~our orraw ~~stoppages in~~materials, ~~such~~which ~~deliveries~~may ~~could~~fluctuate ~~adversely affect~~based on a number of factors beyond our ~~operations~~control, ~~until~~including, ~~arrangements~~among ~~with~~others, ~~alternate~~changes ~~suppliers~~in ~~could~~supply ~~be made~~and demand, general economic conditions, labor costs, competition and, in some cases, government regulation. IfThe aprices ~~substantial~~for ~~number~~the hardwood species we use in production of our ~~suppliers~~ ~~were~~hardwood ~~unable~~doors toand ~~deliver~~components ~~materials~~are subject to ussome ~~for~~volatility. In anthe ~~extended~~past ~~period~~calendar year the price of ~~time,~~ ashard maple, the ~~result~~primary hardwood specie we use, (accounting for approximately 40% of ~~financial~~our ~~difficulties~~lumber purchases) increased by approximately 6%, ~~catastrophic~~and ~~events~~the ~~affecting their~~price ~~facilities~~of orcherry, ~~other~~(accounting ~~factors~~for ~~beyond~~approximately 29% of our ~~control,~~lumber orpurchases) ifincreased by 8%. We have no long-term supply contracts for the raw materials used in the manufacture of our products. This means that we ~~were~~are ~~unable~~subject to ~~negotiate~~ ~~acceptable~~changes ~~terms~~in the prices charged by our suppliers. Recently, we have experienced moderate increases in the price we pay for our hardwood materials. Significant increases in the ~~supply~~prices of raw materials ~~with~~could ~~these~~materially ~~or alternative~~adversely ~~suppliers,~~affect our business, financial condition and results of operations, ~~could~~especially ~~suffer. We~~if ~~may~~we are not be able to ~~find~~recover ~~acceptable~~these ~~alternatives,~~costs ~~and~~by ~~any~~increasing ~~such~~the ~~alternatives~~prices ~~could~~we ~~result~~charge ~~in increased~~our ~~costs~~customers tofor usour products. ~~Even~~In ~~if acceptable~~2010, ~~alternatives~~the ~~are~~U.S. ~~found~~kitchen and bath industry relied heavily on domestic maple, which is of a higher quality than imported maple. A shortage in the ~~process~~supply of ~~locating~~domestic maple or certain other species of lumber could increase prices for these raw materials, which could also have a material adverse effect on our business, financial condition and ~~securing~~results ~~such alternatives~~of ~~might~~operations. Generally, bewe ~~disruptive~~have been able to pass through cost increases to our ~~business~~customers in a three to twelve month time period, but the price increases may not fully offset the effects of increasing raw material costs. ~~Extended~~Our ability to pass through these price changes to our customers is dependent on prevailing economic and competitive conditions.

5Interruptions in deliveries of raw materials could adversely affect our business.

~~Table~~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 ~~Contents~~our suppliers were 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.

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.5

~~Environmental requirements~~Table ~~may~~of ~~impose significant compliance costs and liabilities on us.~~Contents

~~Our~~Extended ~~facilities~~unavailability ~~are subject to numerous federal, state and local laws relating to the protection~~ of ~~the~~a ~~environment. We~~necessary ~~believe~~raw wematerial ~~are~~could incause ~~substantial~~us ~~compliance with all applicable requirements. Our efforts~~ to ~~comply~~cease ~~with~~manufacturing ~~environmental requirements does not remove the risk that we may be held liable, or incur fines or penalties, and that the amount~~ of ~~liability,~~ ~~fines~~one or ~~penalties~~more ~~may~~products ~~be material,~~ for, ~~among~~a ~~other~~period ~~things, releases~~ of ~~hazardous~~time, ~~substances~~which ~~from~~could ~~current~~have ~~properties~~a ormaterial ~~any~~adverse ~~associated offsite~~effect ~~disposal~~on ~~location, or for contamination at~~ our ~~properties~~business, ~~from activities~~financial ~~conducted~~condition ~~by previous occupants. Changes in environmental laws~~ and ~~regulations~~results ~~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.

WeEnvironmental ~~face~~requirements ~~intense competition~~may inimpose ~~our~~significant ~~markets~~compliance costs and liabilities on us.

WeOur ~~operate~~facilities inare ~~the~~subject ~~highly~~to ~~fragmented~~numerous federal, state and ~~very competitive~~local ~~cabinet~~laws ~~door~~relating ~~and~~to ~~component~~the ~~industry~~protection of the environment. ~~Our~~We ~~competitors~~believe ~~include~~we ~~international, national~~are ~~and~~in ~~local~~substantial ~~cabinet~~compliance ~~and~~with ~~cabinet~~all ~~component~~applicable ~~manufacturers~~requirements. ~~These~~Our ~~can~~efforts beto ~~large~~comply ~~consolidated operations~~ with ~~manufacturing~~environmental ~~facilities~~requirements indoes ~~large~~not ~~and~~remove ~~efficient~~the ~~plants,~~risk asthat ~~well~~we ~~as relatively~~may ~~small,~~be ~~local~~held ~~cabinetmakers. Some~~liable, ofor ~~our~~incur ~~competitors~~fines ~~may~~or ~~achieve~~penalties, ~~greater~~and ~~market~~that ~~penetration~~the ~~in certain~~amount of ~~the~~liability, ~~markets~~fines inor ~~which~~penalties wemay ~~operate~~be material, ~~have~~for, ~~greater~~among ~~financial~~other ~~and~~things, ~~other resources~~releases ~~available~~of ~~and~~hazardous besubstances ~~less~~from ~~leveraged,~~current ~~which~~properties ~~may~~or ~~provide~~any ~~them~~associated ~~with~~offsite ~~greater financial~~disposal ~~flexibility. Moreover~~location, ~~companies~~ inor ~~other~~for ~~building~~contamination ~~products~~at ~~industries~~our ~~may~~properties ~~choose~~from toactivities ~~compete~~conducted ~~with~~by usprevious occupants. ToChanges ~~remain~~in ~~competitive,~~environmental welaws ~~will~~and ~~need~~regulations toor ~~invest continuously~~the indiscovery ~~manufacturing,~~of ~~customer~~previously ~~service~~unknown ~~and~~contamination ~~product~~or ~~development. We~~other ~~may~~liabilities ~~have~~relating to ~~adjust~~our ~~the~~properties ~~prices~~and ofoperations ~~some~~could ~~of our~~result ~~products~~in tosignificant ~~stay~~environmental ~~competitive~~liabilities. In ~~this~~ ~~regard~~addition, we ~~have~~might ~~faced~~incur ~~increased~~significant ~~pricing~~capital ~~pressure~~and inother ~~light~~costs ofto ~~the~~comply ~~current economic~~with ~~slowdown. We~~increasingly ~~may~~stringent ~~not~~environmental ~~have sufficient~~laws ~~resources~~and toenforcement ~~continue~~policies, towhich ~~make~~would ~~such~~decrease ~~investments to maintain~~ our ~~competitive~~ ~~position~~cash ~~within~~flow ~~each~~available ofto ~~the~~service ~~markets~~our ~~we serve~~indebtedness.

~~Cabinet manufacturers~~We ~~may~~face ~~increasingly~~intense ~~rely~~competition onin ~~imported components, which could negatively affect~~ our ~~business~~markets.

~~The~~We ~~number~~operate ~~of foreign-made kitchen cabinets sold~~ in the ~~United~~highly ~~States~~fragmented ~~has~~and ~~increased~~very ~~slightly~~competitive incabinet ~~the~~door ~~last~~and ~~ten~~component ~~years~~industry. WeOur ~~believe~~competitors ~~that~~include ~~the~~international, ~~number~~national ofand ~~foreign-made~~ local cabinet ~~components~~and ~~sold~~cabinet incomponent ~~the~~manufacturers. These ~~United~~can ~~States~~be ~~has~~large ~~also~~consolidated ~~increased,~~operations ~~though~~with wemanufacturing ~~do not~~facilities ~~believe~~in ~~any~~large ~~detailed~~and ~~study~~efficient ofplants, ~~such~~as awell ~~trend~~as isrelatively ~~currently~~small, ~~available~~local cabinetmakers. ~~This~~Some ~~increase~~of inour ~~sales~~competitors ofmay ~~imported~~achieve ~~components is~~greater ~~the~~market ~~result~~penetration in certain of ~~foreign~~the ~~wood~~markets ~~component~~in ~~manufacturers~~which ~~improving~~we ~~the~~operate, ~~quality~~have ~~of their~~greater ~~products~~financial and ~~services~~other resources available and, inbe ~~some~~less ~~cases~~leveraged, ~~offering~~which ~~lower~~may ~~prices. While~~provide wethem ~~currently~~with ~~believe~~greater ~~that~~financial ~~the~~flexibility. Moreover, ~~impact~~companies ~~of imported~~in ~~products~~other inbuilding ~~our~~products ~~target~~industries ~~markets~~may ischoose ~~limited~~to ~~by,~~compete ~~among~~with ~~other~~us. To ~~factors~~remain competitive, ~~the~~ we will need ~~for~~to ~~greater~~invest ~~variety~~continuously in ~~terms of profiles~~manufacturing, ~~sizes~~customer service and ~~finishes,~~product ~~demand~~development. We ~~for higher~~may ~~quality~~have ~~products~~to ~~and~~adjust ~~short~~the ~~lead~~prices ~~times,~~of ~~there~~some isof noour ~~assurance~~products ~~that~~to ~~demand for~~stay ~~foreign-made~~competitive. In ~~products~~this ~~will~~regard, ~~not~~we ~~increase~~have faced increased pricing pressure in ~~such~~light ~~markets~~of the current economic slowdown. IfWe ~~domestic~~may ~~cabinet~~not ~~manufacturers~~have ~~continue~~sufficient resources to ~~increasingly~~ ~~rely~~continue onto ~~foreign~~make ~~imports~~such ~~for~~investments ~~their~~to ~~components,~~maintain our ~~business, financial~~competitive ~~condition~~position ~~and~~within ~~results~~each of ~~operations~~the ~~could~~markets bewe ~~materially and negatively affected~~serve.

IfCabinet wemanufacturers ~~are~~may ~~unable~~increasingly ~~to meet~~rely ~~future~~on ~~capital~~imported ~~requirements~~components, ~~our~~which ~~business~~could ~~may~~negatively beaffect ~~adversely~~our ~~affected~~business.

WeThe ~~periodically~~number ~~make~~of ~~capital~~foreign-made ~~investments~~kitchen ~~to,~~cabinets ~~among other~~sold ~~things,~~in ~~maintain~~the ~~and~~United ~~upgrade~~States ~~our~~has ~~facilities~~increased ~~and~~slightly ~~enhance~~in ~~our~~the ~~production~~last ~~processes~~ten years. AsWe webelieve ~~grow~~that ~~our~~the ~~businesses,~~number weof ~~may~~foreign-made ~~have~~cabinet ~~to incur~~components ~~significant~~sold ~~capital~~in ~~expenditures. We~~the ~~may~~United ~~not~~States ~~have~~has also increased, orthough bewe ~~able~~do tonot ~~obtain,~~believe ~~adequate~~any ~~funds~~detailed tostudy ~~make~~of ~~all necessary~~such ~~capital~~a ~~expenditures~~trend ~~when~~is ~~required,~~currently oravailable. This increase in sales of imported components is the ~~amount~~result of ~~future~~foreign ~~capital expenditures~~wood ~~may~~component bemanufacturers ~~materially~~improving inthe ~~excess~~quality of ~~our~~their ~~anticipated~~products orand ~~current expenditures~~services and, in some cases, offering lower prices. IfWhile we ~~are~~currently ~~unable~~believe tothat ~~make necessary~~the ~~capital~~impact ~~expenditures,~~of imported products in our ~~product~~target ~~offering~~markets ~~may~~is ~~become~~limited ~~dated~~by, ~~our productivity~~among ~~may~~other befactors, ~~decreased~~the ~~and~~need ~~the~~for ~~quality~~greater variety in terms of ~~our~~profiles, sizes and finishes, demand for higher quality products ~~may~~and beshort ~~adversely affected,~~lead ~~which~~times, there is no assurance that demand for foreign-made products will not increase in ~~turn,~~such ~~could~~markets. If ~~negatively~~domestic ~~impact~~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.

~~Increases~~If inwe ~~the cost~~are ofunable ~~labor,~~to ~~union~~meet ~~organizing~~future ~~activity~~capital ~~and~~requirements, ~~work stoppages at~~ our ~~facilities~~ ~~could~~business ~~materially~~may ~~affect~~be ~~our~~adversely ~~business~~affected.

~~Our~~We ~~business~~periodically ismake ~~labor~~capital ~~intensive. As~~investments ~~a result~~to, ~~our~~among ~~financial~~other ~~performance~~things, ~~is affected~~maintain byand ~~the~~upgrade ~~availability~~our offacilities ~~qualified personnel~~ and ~~the~~enhance ~~cost~~our ofproduction ~~labor~~processes. ~~Currently,~~As ~~none~~we ofgrow our ~~employees~~businesses, ~~are represented~~we bymay ~~labor~~have ~~unions~~to incur significant capital expenditures. ~~However~~We may not have, ~~there~~ ~~could~~or be ~~strikes~~able to obtain, adequate funds to make all necessary capital expenditures when required, or ~~other~~the ~~types~~amount of ~~conflicts~~future ~~with~~capital ~~personnel~~expenditures ~~that~~ may ~~arise~~ orbe wematerially ~~could~~in ~~become~~excess aof ~~target~~our ~~for~~anticipated ~~union~~or ~~organizing~~current ~~activity~~expenditures. ~~Strikes~~If we are unable to make necessary capital expenditures, ~~work~~our ~~stoppages or~~product ~~slowdowns could~~offering ~~result~~may inbecome ~~slowdowns~~dated, orour ~~closures~~productivity may be decreased and the quality of our orproducts ~~our~~may ~~suppliers’~~be ~~facilities. In~~adversely ~~addition~~affected, ~~organizations~~which, in turn, could negatively impact our business, financial condition and results of operations.

6Increases in the cost of labor, union organizing activity and work stoppages at our facilities could materially affect our business.

~~Table~~Our business is labor intensive. As a result, our financial performance is affected by the availability of ~~Contents~~qualified personnel and the cost of labor. Currently, none of our employees are represented by labor unions. However, there could be strikes or other types of conflicts with personnel that may arise or we could 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.

~~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.~~6

~~The~~Table ~~application~~ of ASC 350 resulted in the recognition of a significant non-cash impairment charge for 2009. Going forward, we may incur impairment charges on our goodwill and other intangible assets with indefinite lives, which could negatively impact our business, financial condition and results of operations.Contents

InThe ~~accordance~~application ~~with~~of ASC 350, weresulted ~~test~~in ~~goodwill~~the ~~and~~recognition ~~other~~of ~~intangible assets~~a ~~for~~significant non-cash impairment ~~during~~charge ~~the~~for ~~fourth~~2009 ~~quarter of each year~~ and onno animpairment ~~interim date~~charge ~~should~~for ~~factors~~2010. orGoing ~~indicators~~forward, ~~become~~we ~~apparent~~may ~~that~~incur ~~would~~impairment ~~require~~charges anon ~~interim test. In~~our ~~recent~~goodwill ~~periods~~and weother ~~have~~intangible ~~taken significant~~assets ~~charges~~with ~~relating~~indefinite tolives, ~~the~~which ~~impairment~~could ofnegatively ~~goodwill. See~~impact ~~Note 4 to~~ our ~~consolidated~~business, financial ~~statements~~ ~~and~~condition ~~“Management’s Discussion~~ and ~~Analysis~~results of ~~Financial Condition and Results of Operations—Critical Accounting Policies~~operations.”

AsIn ~~discussed~~accordance inwith ~~Note~~ASC 4350, towe ~~the~~test ~~consolidated~~goodwill ~~financial~~and ~~statements included~~other inintangible ~~this~~assets ~~Annual~~for ~~Report~~impairment during the fourth quarter of ~~Form 10-K,~~each weyear ~~performed~~and ~~our~~on ~~annual impairment~~an ~~test~~interim asdate ofshould ~~December 31,~~factors ~~2009,~~or ~~and~~indicators ~~conclude~~become apparent that ~~our~~would ~~goodwill was~~require ~~impaired~~an interim test. ~~Therefore,~~In werecent ~~recognized $13.6~~periods ~~million~~we inhave ~~goodwill~~taken ~~impairment~~significant charges ~~during~~relating to the ~~fourth~~impairment ~~quarter~~of goodwill. See Note 4 to our consolidated financial statements and “Management’s Discussion and Analysis of ~~fiscal~~ ~~2009~~Financial Condition and Results of Operations—Critical Accounting Policies.”

As ofdiscussed ~~December 31, 2009,~~in ~~goodwill~~Note ~~and~~4 ~~other~~to ~~intangible~~the ~~assets~~consolidated ~~with~~financial ~~indefinite~~statements ~~lives~~included ~~represented approximately~~in ~~55%~~this ofAnnual ~~our~~Report ~~total~~on ~~assets.~~Form ~~If in the future~~10-K, we ~~determine~~performed ~~that~~our ~~there~~annual ~~has~~impairment ~~been~~test anas ~~impairment~~of December 31, ~~our financial~~2010, ~~results~~and ~~for~~concluded ~~the~~there ~~relevant~~was ~~period~~no ~~would~~goodwill beimpairment. We ~~reduced~~performed byour ~~the~~annual ~~amount~~impairment test as of ~~the impairment~~December 31, ~~net~~2009, ofand ~~any~~concluded ~~income~~that ~~tax~~our ~~effects~~goodwill was impaired. Therefore, ~~which~~we ~~could~~recognized ~~have~~$13.6 anmillion ~~adverse~~in ~~effect on~~goodwill ~~our~~impairment ~~financial~~charges ~~condition~~during ~~and~~the ~~results~~fourth quarter of ~~operations~~fiscal 2009.

WeAs ~~are~~of ~~dependent~~December 31, ~~on certain~~2010, ~~key~~goodwill ~~personnel~~and other intangible assets with indefinite lives represented approximately 54% of our total assets. If in the future, we determine that there has been an impairment, our financial results for the ~~loss~~relevant period would be reduced by the amount of ~~whom~~the impairment, net of any income tax effects, which could ~~materially~~have ~~affect~~an adverse effect on our financial ~~performance~~ condition and ~~prospects~~results of operations.

~~Our~~We ~~continued~~are ~~success~~dependent ~~depends~~on ~~to a large extent upon the continued services of our senior management and~~ certain key ~~employees. The~~personnel, ~~loss of~~ the ~~services~~loss of ~~any~~whom ~~of these individuals~~ could ~~have~~materially aaffect ~~material adverse effect on~~ our ~~business,~~ financial ~~condition~~ performance and ~~results of operations~~prospects. ~~We have no keyman life insurance on any of our employees.~~

WeOur ~~may~~continued ~~not~~success bedepends ~~able~~ to ~~successfully~~a ~~integrate,~~large extent upon the continued services of our senior management and ~~may~~certain ~~inherit~~key ~~significant~~employees. The ~~liabilities~~loss ~~in connection~~of ~~with~~the services of any of these individuals could have a material adverse effect on our business, ~~future~~financial ~~acquisitions~~condition and results of operations. We have no key-man life insurance on any of our employees.

We ~~explore~~may ~~opportunities~~not ~~to acquire related businesses from time to time, some of which could~~ be ~~material~~able to ~~us. If~~successfully ~~we make acquisitions~~integrate, ~~our~~and ~~ability~~may ~~to continue~~inherit tosignificant ~~grow~~liabilities ~~will~~in ~~depend~~connection ~~upon effectively integrating these acquired companies~~with, ~~achieving~~future ~~cost efficiencies and managing these businesses as part of our company~~acquisitions.

We ~~may~~explore ~~not~~opportunities ~~be able~~ to ~~effectively~~acquire ~~integrate~~related ~~the acquired~~businesses ~~companies~~from ortime ~~successfully~~to ~~implement appropriate operational~~time, ~~financial and~~some ~~management~~of ~~systems~~which ~~and~~could ~~controls~~be tomaterial ~~achieve the benefits expected~~ to ~~result from these acquisitions~~us. ~~Our~~If ~~efforts~~we ~~to integrate~~make ~~these~~acquisitions, ~~businesses could be affected by a number of factors beyond~~ our ~~control,~~ ~~including~~ability ~~general~~to ~~economic~~continue ~~conditions~~to ~~and~~grow ~~increased~~will ~~competition. In~~depend ~~addition,~~upon ~~the~~effectively ~~process of~~ integrating these ~~businesses~~ ~~could~~acquired ~~cause the interruption of~~companies, orachieving ~~loss~~cost ofefficiencies ~~momentum in, the activities of our existing business. The diversion of management’s attention~~ and ~~any~~managing ~~delays or difficulties encountered in connection with the integration of~~ these businesses ~~could~~as ~~negatively~~part ~~impact our business and results~~ of ~~operations.~~our ~~Further, the benefits that we anticipate from these acquisitions may not materialize~~company.

~~Additionally,~~We we may not be ~~subject~~able to ~~unexpected~~effectively ~~claims~~ integrate the acquired companies or successfully implement appropriate operational, financial and ~~liabilities~~management ~~arising~~systems and controls to achieve the benefits expected to result from these acquisitions. ~~Such~~Our ~~claims~~efforts ~~and~~to ~~liabilities~~integrate these businesses could be ~~costly to~~affected ~~defend,~~by ~~could~~a benumber ~~material~~of infactors ~~amount~~beyond our control, including general economic conditions and ~~may~~increased ~~exceed~~competition. In ~~either~~addition, the ~~limitations~~process of ~~any~~ ~~applicable~~integrating ~~indemnification~~these ~~provisions~~businesses orcould cause the ~~financial~~interruption ~~resources~~of, or loss of ~~the indemnifying~~momentum ~~parties~~in, inthe ~~which~~activities ~~event~~of ~~such~~our ~~unexpected~~existing ~~claims~~business. The ~~and~~diversion ~~liabilities could~~of ~~materially~~management’s attention and any delays or difficulties encountered in connection with the integration of these businesses could negatively ~~affect~~impact our business and ~~financial~~results ~~performance~~of operations. Further, the benefits that we anticipate from these acquisitions may not materialize.

~~Our~~Additionally, ~~principal stockholder~~we ismay inbe asubject ~~position~~to unexpected claims and liabilities arising from these acquisitions. Such claims and liabilities could be costly to ~~affect~~defend, ~~our~~could ~~ongoing~~be ~~operations~~material in amount and may exceed either the limitations of any applicable indemnification provisions or the financial resources of the indemnifying parties, ~~corporate transactions~~in which event such unexpected claims and ~~other~~liabilities ~~matters~~could materially and negatively affect our business and financial performance.

AsOur ofprincipal ~~March 17,~~stockholder ~~2010, Parent owned 100% of our outstanding voting capital stock and Olympus Growth Fund IV, L.P. and Olympus Executive Fund, L.P. (each of which~~ is anin ~~investment~~a ~~fund~~position ~~managed by Olympus Partners) collectively owned 86.66% of the outstanding voting capital stock of Parent. For ease of reference, we sometimes collectively refer~~ to ~~Olympus~~affect ~~Growth Fund IV, L.P. and Olympus Executive Fund, L.P. herein as the “Olympus Funds”. Olympus Growth Fund IV, L.P. has the ability to control the election of~~ our ~~Board~~ongoing ~~of Directors and the election of the board of directors of Parent and~~operations, bycorporate ~~virtue~~transactions ~~of its ownership in Parent~~ and ~~certain contractual voting rights set forth in the Parent Stockholders Agreement among the current stockholders of Parent, the outcome of~~ other ~~issues submitted to the stockholders for approval~~matters. ~~See “Security Ownership of~~

7As of March 28, 2011, Parent owned 100% of our outstanding voting capital stock and Olympus Growth Fund IV, L.P. and Olympus Executive Fund, L.P. collectively owned 81.55% of the outstanding voting capital stock of Parent. For ease of reference, we sometimes collectively refer to Olympus Growth Fund IV, L.P. and Olympus Executive Fund, L.P. herein as the “Olympus Funds”. Olympus Growth Fund IV, L.P. has the ability to control the election of our Board of Directors and the election of the board of directors of Parent and, by virtue of its ownership in Parent and certain contractual voting rights set forth in the Parent Stockholders Agreement among the current stockholders of Parent, 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 Olympus Growth Fund IV, L.P. will not conflict with the interests of the holders of our Senior Notes. In particular, Olympus Growth Fund IV, L.P. may cause a change of control at a time when we do not have sufficient funds to repurchase our Senior Notes or to repay any outstanding borrowings under our New Credit Agreement.

~~Table of Contents~~7

~~Certain~~Table ~~Beneficial Owners and Management and Related Stockholder Matters.” We cannot assure you that the interests~~ of Olympus Growth Fund IV, L.P. will not conflict with the interests of the holders of our Senior Notes. In particular, Olympus Growth Fund IV, L.P. may cause a change of control at a time when we do not have sufficient funds to repurchase our Senior Notes, or to repay our Senior Credit Facility.Contents

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Our headquarters are located in St. Cloud, Minnesota. We own eight and lease four manufacturing facilities. We believe that our facilities are currently operating at approximately ~~40-~~45-50% of overall plant capacity. We intend to increase current levels of capacity utilization while handling an increased volume of sales. In addition, we have increased capacity over time through increases in operating efficiencies and 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. In 2006, we completed the expansions of our (i) Cabinet Door plant in St. Cloud, Minnesota to create additional door manufacturing capacity, and (ii) Greenville, Pennsylvania facility to add incremental capacity for lumber drying and ~~roughmilling~~rough milling. In 2007, we completed the expansion of leased facilities in West Jordan, Utah and Monroe, Washington to add incremental door manufacturing capacity. Each of these facilities in Utah and Washington contributed minimal capacity to the Company and were closed in the second half of 2008 due to the slowdown in the industry. In 2008, we completed the expansion of a leased facility in Conover, North Carolina to add incremental door manufacturing capacity. In the fourth quarter 2009, we commenced operations at a manufacturing facility in Moorefield, West Virginia that adds minimal RTF production capacity.

Our Woodcraft subsidiary operates three facilities in Minnesota, two of which are located in St. Cloud and one of which is located in Foreston. Our Minnesota facilities manufacture hardwood components, and one of our St. Cloud facilities also produces approximately 5051% of our hardwood doors. The hardwood door plant in St. Cloud includes 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 and Ohio facilities. Our Woodcraft subsidiary in 2005 acquired a facility located in Middlefield, Ohio, which manufactures hardwood component moldings, and also purchased a facility located in Greenville, Pennsylvania, which manufactures hardwood components for shipment to our Minnesota and Ohio facilities. In ~~the first quarter~~ 2008, our Woodcraft subsidiary completed an expansion in Conover, North Carolina to produce hardwood doors.

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. The PrimeWood subsidiary in 2005 also began operations at a manufacturing facility in Lansing, Kansas that manufactures RTF doors and components. The Lansing facility is located in the Lansing Correctional Institute and employs inmates in the production of RTF components. In the fourth quarter 2009, our PrimeWood subsidiary commenced operations at a manufacturing facility in Moorefield, West Virginia that added minimal RTF production capacity.

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. In 2007, our Brentwood subsidiary completed an expansion in Monroe, Washington to produce hardwood doors, which ultimately was closed in the second half of 2008 due to the slowdown in the industry.

Our former Grand Valley subsidiary (which is now part of Woodcraft) 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 the former Grand Valley subsidiary.

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

Location	Primary Product Line	Square Footage	Description of Property Interest
St. Cloud, Minnesota	Headquarters	10,000	Owned
St. Cloud, Minnesota	Hardwood Doors	153,000	Owned
St. Cloud, Minnesota	Hardwood Components	157,450	Owned
Foreston, Minnesota	Hardwood Components	137,770	Owned
Bowling Green, Kentucky	Hardwood Components	116,880	Owned
Middlefield, Ohio	Hardwood Components	40,000	Leased
Greenville, Pennsylvania	Hardwood Components	80,000	Owned
Wahpeton, North Dakota	RTF Doors and Components, VRP	200,000	Owned
Lansing, Kansas	RTF Doors and Components	19,000	Leased
Molalla, Oregon	Hardwood and RTF Doors	100,000	Owned
Orwell, Ohio	Hardwood Doors	40,000	Owned
Moorefield, West Virginia	RTF Doors and Components	10,000	Leased
Conover, North Carolina	Hardwood Doors	55,000	Leased

Table of Contents

We also lease a number of non-manufacturing facilities utilized for warehousing. These facilities are deemed to not be material.

Greenville, Pennsylvania	Hardwood Components	80,000	Owned
Wahpeton, North Dakota	RTF Doors and Components, VRP	200,000	Owned
Lansing, Kansas	RTF Doors and Components	19,000	Leased
Molalla, Oregon	Hardwood and RTF Doors	100,000	Owned
Orwell, Ohio	Hardwood Doors	40,000	Owned
Moorefield, West Virginia	RTF Doors and Components	10,000	Leased
Conover, North Carolina	Hardwood Doors	55,000	Leased

~~Item~~We 3also lease a number of non-manufacturing facilities utilized for warehousing. These ~~Legal~~facilities ~~Proceedings~~are deemed to not be material.

WeAll ~~are involved in various proceedings incidental to the ordinary conduct~~ of our ~~business. We do~~facilities ~~not~~are ~~presently~~pledged ~~believe~~as ~~that~~collateral ~~any~~under ~~of the proceedings currently pending will have a material adverse effect on~~ our ~~business,~~New ~~financial~~Credit ~~condition, cash flows or results of operations~~Agreement.

Item 43. Legal Proceedings

~~Reserved~~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.

~~PART II~~Item 4.

~~Item 5~~Reserved. ~~Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities~~

~~There is no established public trading market for the common stock of WII Components,~~PART ~~Inc. As a result of the Transaction, WII Components, Inc. is a wholly owned subsidiary of Parent.~~II

AsThere ais ~~result~~no ofestablished ~~the Transaction,~~public ~~all~~trading ~~outstanding~~market ~~stock~~for ~~options~~the ~~were~~common ~~terminated~~stock ~~and~~of ~~canceled~~WII ~~on January 9~~Components, ~~2007,~~ Inc. As ~~and~~a ~~there~~result ~~are~~of ~~currently~~the noTransaction, ~~stock~~WII ~~options~~Components, Inc. ofis ~~the~~a ~~Company~~wholly ~~issued~~owned ~~and~~subsidiary ~~outstanding~~of Parent.

~~Parent~~We ~~issued~~became ~~restricted stock~~a wholly owned subsidiary of Parent on ~~August~~January 319, 2007. Since ~~and~~that ~~September 14~~time, ~~2007~~we have made cash dividends to, ~~certain~~and ~~members~~made ~~of our~~other ~~management~~distributions ~~totaling~~on 55account of the,~~219~~ ~~shares~~Parent offrom time to time to enable Parent ~~common~~to ~~stock. The~~(i) make ~~fair~~cash ~~value~~interest ofpayments on the Former Parent ~~common~~Notes ~~stock~~(as ~~was considered~~defined ~~contributed~~herein), ~~capital~~(ii) pay toits ~~the~~customary ~~Company~~and reasonable out-of-pocket expenses, legal and ~~had~~accounting afees ~~fair~~and ~~value~~expenses and overhead incurred on account of ~~approximately~~ ~~$397~~its ownership of us,~~000~~ onand (iii) pay the ~~date~~fees under a management services agreement between Parent and an affiliate of ~~the~~Olympus ~~grant~~Funds. ~~The~~ These ~~restricted~~payments ~~stock~~totaled ~~becomes~~approximately ~~fully~~$0.3 ~~vested after~~million ~~seven~~in ~~years~~2010, or$0.1 ~~earlier~~million in 2009, ifand ~~certain~~$5.0 ~~milestones~~million ~~described~~in 2008. The payments in ~~the underlying~~2009 ~~grant~~and ~~agreements~~2010 are ~~met~~recorded as an intercompany note receivable, included with other current assets, between Parent and Company. ~~In 2009,~~We 1expect to make similar payments to or on account of Parent in the foreseeable future. Any payment of future dividends and the amounts thereof will be dependent upon the Company’s earnings,~~121~~ ~~shares~~fiscal requirements and other factors deemed relevant by the Company’s Board of ~~restricted~~Directors. Certain ~~stock~~restrictive ~~were~~covenants ~~repurchased~~contained ~~due~~in tothe Company’s New Credit Agreement and the ~~termination~~ indenture governing the Senior Notes currently restrict our ability to make dividends or other payments to Parent. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” for a ~~member~~detailed discussion of ~~management~~such restrictions.

As a result of the Transaction, all outstanding stock options were terminated and canceled on January 9, 2007, and there are currently no stock options of the Company issued and outstanding.

~~Table~~Parent issued restricted stock on August 31, 2007 and September 14, 2007 to certain members of ~~Contents~~our management totaling 55,219 shares of Parent common stock. The fair value of the Parent common stock was considered contributed capital to the Company and had a fair value of approximately $397,000 on the date of the grant. The restricted stock becomes fully vested after seven years, or earlier, if certain milestones described in the underlying grant agreements are met. In 2009, 1,121 shares of restricted stock were repurchased due to the termination of a member of management. In 2010, 841 shares of restricted stock were repurchased due to the termination of a member of management. All of the remaining shares of restricted stock of Parent were converted into a nominal number of shares and became fully vested in connection with the Recapitalization (as defined herein) on December 30, 2010.

~~Item 6. Selected Financial Data~~9

~~The~~Table ~~following table sets forth certain~~ of our historical consolidated financial data. The Transaction was completed on January 9, 2007, and the Transaction has been accounted for as a recapitalization in the Company’s financial statements, with no adjustments to the historical basis of the Company’s assets and liabilities. The selected historical consolidated financial data as of and for the years ended December 31, 2009, 2008, 2007, 2006 and 2005 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.Contents

	Year Ended December 31,
	2009			2008			2007			2006			2005 (1)
	(Dollars in thousands)
Statement of Operations Data:
Net sales	$	130,455		$	193,373		$	249,303		$	285,633		$	259,603
Cost of sales	110,093			166,635			205,063			237,289			217,625
Gross profit	20,362			26,738			44,240			48,344			41,978
Total operating expenses (2)	25,753			13,934			24,096			18,024			14,805
Operating (loss) income	(5,391		)	12,804			20,144			30,320			27,173
Interest expense	12,449			13,024			15,460			14,038			13,561
Other (income) loss, net (3)	(23		)	(1,860		)	(453		)	(88		)	(50		)
Income tax (benefit) expense	(2,634		)	324			2,096			6,627			5,487
Net (loss) earnings	$	(15,183	)	$	1,316		$	3,041		$	9,743		$	8,175
Other Financial Data:
Depreciation and amortization (4)	$	8,388		$	8,762		$	8,712		$	7,926		$	6,760
Capital expenditures (5)	1,700			3,722			7,629			15,999			11,787
Net cash provided by operating activities	3,873			13,714			16,500			23,426			12,990
Balance Sheet Data (at end of period):
Total assets	$	203,077		$	221,006		$	247,957		$	230,314		$	221,594
Long-term debt, plus current maturities	108,350			111,947			124,202			127,500			127,500
Capital lease obligations	—			—			530			1,111			2,466

Item 6. Selected Financial Data

~~(1) In~~The ~~July~~following table sets forth certain of our historical consolidated financial data. The Transaction was completed on January ~~2005~~9, 2007, and the ~~Company~~Transaction ~~acquired substantially~~has ~~all~~been ofaccounted for as a recapitalization in the ~~assets~~Company’s offinancial astatements, ~~moldings~~with ~~manufacturing~~no ~~company~~adjustments ~~operating under~~to the ~~name~~historical ~~Dimension~~basis ~~Moldings, Inc.~~of ~~through~~the anCompany’s ~~asset~~assets ~~purchase~~and liabilities. The ~~results~~selected historical consolidated financial data as of ~~operations~~and for ~~this~~the ~~acquired business~~years ended December 31, 2010, 2009, 2008, 2007 and 2006 have been ~~included~~derived infrom our audited consolidated financial statements. ~~since~~Historical results are not necessarily indicative of the ~~date~~results to be expected in the future. You should read the following data in conjunction with “Management’s Discussion and Analysis of ~~acquisition~~ Financial Condition and Results of Operations” and our historical consolidated financial statements and accompanying notes included elsewhere in this annual report.

(2) Total operating expenses include $1.3 million of stock compensation expense in 2005 related to stock option variable accounting, $3.1 million of stock compensation expense in 2006 related to stock option accounting, and $1.8 million of compensation expense in 2007 related to stock option accounting and transaction incentives. In addition, 2007 includes transaction costs for the Transaction, tender offer costs, and management advisory fees of approximately $7.2 million, $0.8 million, and $0.6 million, respectively. Total operating expenses in 2008 include $0.6 million for management advisory fees. Total operating expenses in 2009 include $0.5 million of accrued expenses related to management advisory fees and $13.6 million for a goodwill impairment charge.

	Year Ended December 31,
	2010			2009			2008			2007			2006
	(Dollars in thousands)
Statement of Operations Data:
Net sales	$	145,382		$	130,455		$	193,373		$	249,303		$	285,633
Cost of sales	124,053			110,093			166,635			205,063			237,289
Gross profit	21,329			20,362			26,738			44,240			48,344
Total operating expenses (1)	11,923			25,753			13,934			24,096			18,024
Operating income (loss)	9,406			(5,391		)	12,804			20,144			30,320
Interest expense	12,450			12,449			13,024			15,460			14,038
Other income net (2)	(19		)	(23		)	(1,860		)	(453		)	(88		)
Income tax expense (benefit)	348			(2,634		)	324			2,096			6,627
Net (loss) earnings	$	(3,373	)	$	(15,183	)	$	1,316		$	3,041		$	9,743
Other Financial Data:
Depreciation and amortization (3)	$	7,934		$	8,388		$	8,762		$	8,712		$	7,926
Capital expenditures	1,870			1,700			3,722			7,629			15,999
Net cash (used) provided by operating activities	(3,805		)	3,937			13,714			16,500			23,426
Balance Sheet Data (at end of period):
Total assets	$	197,482		$	203,077		$	221,006		$	247,957		$	230,314
Long-term debt, plus current maturities	108,350			108,350			111,947			124,202			127,500
Capital lease obligations	—			—			—			530			1,111

(31) ~~For~~Total ~~the~~operating ~~fiscal~~expenses ~~year~~include ~~ended~~$3.1 ~~December 31~~million of stock compensation expense in 2006 related to stock option accounting, ~~2008~~ and $1.8 million of compensation expense in 2007 related to stock option accounting and transaction incentives. In addition, 2007 includes transaction costs for the ~~Company~~Transaction, ~~recognized~~tender offer costs, and management advisory fees of approximately $1.7.2 million, $0.8 million, and $0.6 million, respectively. Total operating expenses in 2008 include $0.6 million for management advisory fees. Total operating expenses in 2009 include $0.5 million of ~~gains~~accrued onexpenses ~~the~~related ~~extinguishment~~to management advisory fees and $13.6 million for a goodwill impairment charge. Total operating expenses in 2010 include $0.5 million of ~~debt~~ accrued expenses related to management advisory fees.

(42) ~~Depreciation~~For ~~and amortization does not include amortization of deferred financing fees (which are included in interest expense) for~~ the fiscal ~~years~~year ended December 31, ~~2005~~2008, ~~2006,~~the ~~2007,~~Company ~~2008 and~~recognized ~~2009 of~~ $1.07 million, ~~$1.1~~of ~~million,~~gains ~~$2.5 million,~~on ~~$1.5~~the ~~million~~extinguishment ~~and $1.5~~of ~~million, respectively~~debt.

(53) ~~Includes~~Depreciation ~~capital~~and ~~expenditures~~amortization indoes ~~Accounts~~not ~~Payable~~include atamortization ~~the end~~ of ~~the~~deferred ~~period,~~financing fees (which ~~have~~are ~~not~~included ~~been~~in ~~paid~~interest inexpense) ~~cash. See~~for ~~“Consolidated~~the ~~Statements~~fiscal ofyears ~~Cash~~ended ~~Flows” included~~December 31, in2006, ~~the~~2007, ~~consolidated~~2008, ~~financial~~2009 ~~statements~~and ~~elsewhere~~2010 inof ~~this~~$1.1 ~~report~~million, ~~for more~~$2.5 million, ~~information~~$1.5 million, $1.5 million and $1.5 million, respectively.

10Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~Table~~You ofshould ~~Contents~~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.

~~Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~10

~~You~~Table ~~should~~of 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.Contents

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. In ~~2009~~2010, we generated 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 and Brentwood subsidiaries and we operate twelve manufacturing facilities located in Minnesota, North Dakota, Ohio, Oregon, Pennsylvania, Kansas, North Carolina, West Virginia, and Kentucky that allow us to distribute our products nationwide.

In the past ~~twelve~~thirteen years, we have consummated four strategic acquisitions that have 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. In July 2005, we acquired substantially all of the assets of Dimension Moldings, Inc. ~~(DMI)~~, an Ohio corporation, which was in the business of manufacturing hardwood component moldings at a facility located in Middlefield, Ohio. Following the acquisition, our Woodcraft subsidiary manufactures hardwood component moldings at the Middlefield facility.

~~On January 9,~~ 2007, WII Components, Inc. (the “Company”) was acquired by WII Holding, Inc. (“Parent”), a newly formed investment entity controlled by two investment funds managed by Olympus Partners. For ease of reference, these funds are sometimes collectively referred to herein as the “Olympus Funds.” The acquisition was consummated through a merger of WII Merger Corporation (“MergerCo”), a wholly owned subsidiary of Parent, with and into the Company with the Company being the surviving corporation in the transaction (the “Transaction”). The aggregate purchase price paid by Parent for all of the shares of capital stock of the Company and options to purchase shares of capital stock of the Company in the Transaction was approximately $293.1 million, less indebtedness and certain expenses. The Transaction has been accounted for as a recapitalization in the Company’s financial statements, with no adjustments to the historical basis of the Company’s assets and liabilities. The Company did not push down the new accounting basis because of the significance of the publicly traded debt outstanding, which hinders the Parent’s ability to control the form of ownership of the Company.Acquisition

~~Results~~On January 9, 2007, WII Components, Inc. (the “Company”) was acquired by WII Holding, Inc. (“Parent”), a newly formed investment entity controlled by two investment funds managed by Olympus Partners. For ease of ~~Operations~~reference, these funds are sometimes collectively referred to herein as the “Olympus Funds.” The acquisition was consummated through a merger of WII Merger Corporation (“AcquisitionCo”), a wholly owned subsidiary of Parent, with and into the Company with the Company being the surviving corporation in the transaction (the “Transaction”). The aggregate purchase price paid by Parent for all of the shares of capital stock of the Company and options to purchase shares of capital stock of the Company in the Transaction was approximately $293.1 million, less indebtedness and certain expenses. The Transaction has been accounted for as a recapitalization in the Company’s financial statements, with no adjustments to the historical basis of the Company’s assets and liabilities. The Company did not push down the new accounting basis because of the significance of the publicly traded debt outstanding, which hinders the Parent’s ability to control the form of ownership of the Company.

~~As discussed~~2010 below, we continued to experience a slowdown in net sales for the twelve months ended December 31, 2009 that began in the second half of 2006. This kitchen and bath industry-wide slowdown had a negative impact on our gross profit and operating income margin percentages due to fixed costs becoming a higher percentage of sales. In addition, we have continued to experience decreases in hardwood material prices, which generally are passed on to our customers through lower selling prices in accordance with indexing agreements that reset approximately every three to nine months. While the prices we pay for hardwood materials continued to decline through April 2009, they stabilized by mid year and began to increase in December 2009. These declines in our material costs through April 2009 resulted in lower selling prices in the second half of 2009 due to our indexing agreements with our customers. Our ability to pass through these price changes to our customers is dependent on prevailing economic and competitive conditions.Recapitalization

~~Year~~On ~~Ended~~ December 3130, ~~2009~~ ~~Compared~~2010, Parent completed a comprehensive recapitalization (the “Recapitalization”) pursuant to the ~~Year~~terms ~~Ended~~of a Recapitalization Agreement, dated December 3130, ~~2008~~2010 (the “Recapitalization Agreement”), by and among Parent, WII Parent Merger Corp., a newly formed entity (“MergerCo”), OCM Mezzanine Fund II, L.P. (“OCM”) and Olympus Growth Fund IV, L.P. (“Olympus Fund IV”) and a Note Exchange Agreement, dated December 30, 2010, between OCM and MergerCo (the “Exchange Agreement” and together with the Recapitalization Agreement, the “Recap Agreements”).

~~The~~Pursuant ~~years~~to ~~ended~~the ~~December~~Recap Agreements: (i) 31OCM transferred to MergerCo all of its shares of Series A Preferred Stock and Common Stock of Parent and its Parent notes in an aggregate principal amount of approximately $33.6 million (including accrued and unpaid interest thereon) and, ~~2009~~in exchange therefore, MergerCo issued to OCM an aggregate of 29,713.91 shares of its Common Stock and ~~2008~~new ~~are shown~~unsecured non-interest bearing senior note in a principal amount of $23.0 million (the ~~table~~“New ~~below~~Parent Note”); and (ii) Olympus Fund IV transferred to MergerCo all of the shares of Series A Preferred Stock of Parent held by Olympus Fund IV and its Parent notes in an aggregate principal amount of approximately $114.9 ~~The~~million ~~following~~(including ~~table~~accrued ~~sets~~and ~~forth~~unpaid ~~selected~~interest ~~operating data~~thereon) ~~derived~~and, ~~from~~in ~~our~~exchange ~~consolidated~~therefor, ~~statements~~MergerCo issued to Olympus Fund IV an aggregate of ~~operations~~139,071.406 shares of its Common Stock. Immediately thereafter, MergerCo was merged with and ~~presents~~into ~~this information~~Parent (the “Recap Merger”), with Parent continuing as the surviving corporation in the Recap Merger (as such, the “Surviving Corporation”). Pursuant to the Recap Merger, subject to the terms and conditions of the Recapitalization Agreement, (i) each share of Common Stock of MergerCo outstanding immediately prior to the Recap Merger was converted into the right to receive one share of Common Stock of the Surviving Corporation, (ii) each share of Series A Preferred Stock of Parent outstanding immediately prior to the Recap Merger (other than shares held by Parent or MergerCo) was converted into the right to receive one share of Common Stock of the Surviving Corporation, (iii) each share of Common Stock of the Parent outstanding immediately prior to the Recap Merger (other than shares held by Parent or MergerCo) was converted into the right to receive one thousandth of a ~~percentage~~share of ~~net~~Common ~~sales.~~Stock of the Surviving Corporation and (iv) each share of capital stock

Table of Contents

	Year Ended December 31, 2009			Year Ended December 31, 2008
	(Dollars in thousands)
Net sales	$	130,455		$	193,373
% of net sales	100.0		%	100.0		%
Cost of sales	110,093			166,635
% of net sales	84.4		%	86.2		%
Gross profit	20,362			26,738
% of net sales	15.6		%	13.8		%
Operating expenses	25,753			13,934
% of net sales	19.7		%	7.2		%
Operating (loss) income	(5,391		)	12,804
% of net sales	(4.1		)%	6.6		%
Other expenses:
Interest expense	12,449			13,024
% of net sales	9.5		%	6.7		%
Other (income) loss, net	(23		)	(1,860		)
% of net sales	(0.0		)%	(1.0		)%
Income tax (benefit) expense	(2,634		)	324
% of net sales	(2.0		)%	0.2		%
Net (loss) earnings	(15,183		)	1,316
% of net sales	(11.6		)%	0.7		%

of Parent or MergerCo held by Parent or MergerCo was cancelled without consideration. The Parent notes transferred to MergerCo in connection with the Recapitalization were extinguished in connection with the Recap Merger and the New Parent Note issued by MergerCo was assumed by Parent, as the Surviving Corporation, by operation of law in the Recap Merger.

~~Net Sales. Net~~As ~~sales~~a ~~decreased~~result ~~$62.9 million,~~of ~~or 32.5%, from $193.4 million for~~ the ~~year ended December 31~~Recapitalization, ~~2008 to $130.5 million for~~ the ~~year~~Olympus ~~ended~~Funds ~~December 31, 2009. Sales in our hardwood~~ and ~~engineered~~OCM ~~wood product~~own ~~line~~approximately ~~decreased~~82% ~~$55.4 million~~ and ~~$7.5 million~~17%, respectively~~. These~~, ~~decreases~~of ~~are mainly attributable to an overall slowdown in~~ the ~~market~~outstanding ~~that~~Common ~~began~~Stock ~~in the second half~~ of ~~2006~~Parent, and to a lesser extent, an approximately 5% decline in our overall selling prices, mainly due to lower hardwood material costs. We have indexing agreements with a majority of our customers, whereby selling prices to customers are generally increased or decreased, but with a three to nine month lag time, as ~~our~~the ~~material~~Surviving ~~costs increase or decrease~~Corporation.

~~Cost~~Results of ~~Sales. Cost~~ of sales decreased $56.5 million, or 33.9%, from $166.6 million for the year ended December 31, 2008 to $110.1 million for the year ended December 31, 2009. This decrease in cost of sales is primarily attributable to (i) lower material, labor and overhead costs as a result of lower volume of sales, and, to a lesser extent, (ii) lower hardwood material costs.Operations

~~Gross Profit. Gross~~As ~~profit~~discussed ~~decreased~~below, ~~$6.3~~we continued to experience the industry-wide slowdown in net sales for the twelve months ended December ~~million~~31, ~~or 23.6%,~~2010 ~~from~~that ~~$26~~began in the second half of 2006.~~7 million~~ While sales for the ~~year~~twelve months ended December 31, ~~2008~~2010 toare ~~$20.4 million~~ much lower than sales for the same period inof ~~2009~~2006, as2007 aand ~~result~~2008, ofthey are higher than sales for the ~~factors~~twelve ~~described~~months ~~above~~ended December 31, 2009. AsWe believe this is due to: (i) the short-term impact of personal income tax incentives related to acquiring a ~~percentage~~new or existing home in the first half of ~~net~~2010, ~~sales~~(ii) market share gain by our Company, and (iii) certain successful promotions by a few of our customers. The kitchen and bath industry-wide slowdown had a negative impact on our gross profit ~~increased~~and ~~180~~operating ~~basis~~income ~~points~~margin ~~from~~percentages 13due to fixed costs becoming a higher percentage of sales.8% In ~~for~~addition, we continued to experience decreases in hardwood material prices from the ~~year~~fourth ~~ended~~quarter ~~December 31~~of 2006 through the second quarter of 2009, ~~2008~~ which generally were passed on to 15our customers.6% We ~~for~~have informal agreements with most customers that reset prices in the ~~same~~future period based on the movement of hardwood lumber costs in ~~2009. As~~the aprior ~~percentage~~period. The length of ~~sales~~the period varies by customer from three to twelve months. While the prices we paid for hardwood materials continued to decline through April 2009, ~~gross~~they ~~profit~~stabilized ~~improved~~by ~~due~~mid-year 2009 and began to ~~lower~~increase in December 2009 through June 2010. Since June 2010, hardwood lumber costs ~~and~~have ~~improved~~been ~~operating~~stable ~~efficiencies~~to slightly down. The declines in our material costs through April ~~This~~2009 ~~increase~~resulted ~~was~~in ~~partially~~lower ~~offset~~selling prices in the second half of 2009 and into the first half of 2010 due to our indexing agreements with ~~spreading~~our ~~fixed~~customers. Our ~~costs~~ability ~~over~~to ~~lower sales~~pass ~~volume~~through these price changes to our customers is dependent on prevailing economic and competitive conditions.

~~Operating~~Year ~~Expenses. Operating~~Ended ~~expenses increased $11.9 million, or 85.6%, from $13.9 million for the year ended~~ December 31, ~~2008~~2010 ~~to $25.8 million~~Compared ~~for the year ended December 31, 2009. The increase primarily consists of (i) $13.6 million goodwill impairment and (ii) $0.2 million due~~ to increased allowance for doubtful accounts expense in 2009. The increase was partially offset by (i) approximately $0.8 million lower salaries, including benefits, due to eliminated positions throughout 2008 and 2009, and (ii) $0.8 million due to a long-lived asset write-off in conjunction with the ~~closing~~Year ~~of our~~Ended West Jordan, Utah facility in 2008, and, to a lesser extent, (iii) $0.2 million lower professional fees, and (iv) $0.1 million lower travel costs. We concluded there were no triggering events or changes in circumstances requiring an interim goodwill impairment analysis to be completed during the first three quarters of 2009. As a percentage of sales, operating expenses increased from 7.2% for the year ended December 31, ~~2008 to 19.7% for the same period in~~ 2009~~, as a result of the factors described above.~~

~~Operating Income. Operating~~The ~~income~~years ~~decreased~~ended ~~by $18.2~~December ~~million~~31, or2010 ~~142.2%,~~and ~~from~~2009 ~~$12.8 million~~are ~~for~~shown in the ~~year~~table ~~ended~~below. ~~December 31, 2008~~The tofollowing atable ~~loss~~sets offorth ~~$5.4 million~~selected ~~for~~operating ~~the~~data ~~year~~derived ~~ended~~from ~~December 31,~~our ~~2009 as~~consolidated astatements ~~result~~ of ~~the~~operations ~~net~~and ~~effect~~presents ofthis ~~the~~information ~~factors~~as ~~described~~a ~~above~~percentage of net sales.

	Year Ended December 31, 2010			Year Ended December 31, 2009
	(Dollars in thousands)
Net sales	$	145,382		$	130,455
% of net sales	100.0		%	100.0		%
Cost of sales	124,053			110,093
% of net sales	85.3		%	84.4		%
Gross profit	21,329			20,362
% of net sales	14.7		%	15.6		%
Operating expenses	11,923			25,753
% of net sales	8.2		%	19.7		%
Operating income (loss)	9,406			(5,391		)
% of net sales	6.5		%	(4.1		)%
Other expenses:
Interest expense	12,450			12,449
% of net sales	8.6		%	9.5		%
Other income net	(19		)	(23		)
% of net sales	(0.0		)%	(0.0		)%
Income tax expense (benefit)	348			(2,634		)
% of net sales	0.2		%	(2.0		)%
Net loss	(3,373		)	(15,183		)
% of net sales	(2.3		)%	(11.6		)%

~~Table~~Net ofSales. Net ~~Contents~~sales increased $14.9 million, or 11.4%, from $130.5 million for the year ended December 31, 2009 to $145.4 million for the year ended December 31, 2010. Sales in our hardwood and engineered wood product line increased $14.8 million and $0.1 million, respectively. These increases are mainly attributable to (i) an overall modest increase in the market primarily due to personal income tax incentives that existed in that period related to acquiring a new or existing home

~~Interest Expense. Interest expense decreased $0.6 million, or 4.6%, from $13.0 million for the year ended December 31, 2008 to $~~12.4 million for the year ended December 31, 2009. This decrease relates to lower interest expense in 2009 due to the $3.5 million principal reduction during the three months ended March 31, 2009 on the First Lien Term Facility.

~~Other (Income)~~Table Loss. Other income decreased $1.8 million from $1.9 million for the year ended December 31, 2008 to $23,000 for the year ended December 31, 2009. This income represents interest received from our interest bearing accounts and 2008 also includes a $1.7 million gain on the extinguishment of ~~debt.~~Contents

~~Income~~in ~~Tax~~the ~~Expense. Income~~first ~~tax~~half ~~expense~~of ~~decreased~~2010, ~~$2.9~~(ii) market ~~million~~share ~~from~~gain ~~$0.3 million~~by ~~for~~our ~~the year~~Company, ~~ended~~and ~~December~~(iii) ~~31,~~certain ~~2008~~successful topromotions by a ~~benefit~~few of $2our customers.6 These ~~million~~increases ~~for~~were ~~the~~partially ~~year ended~~offset ~~December 31,~~with ~~2009~~an asapproximately a2% ~~result~~decline ofin ~~lower~~our ~~earnings~~overall selling prices, ~~and~~mainly adue ~~lower effective~~to ~~tax~~the ~~rate~~decline of hardwood lumber costs during 2009. ~~The~~We ~~effective~~have ~~tax rate~~informal ~~decreased~~indexing ~~500~~agreements ~~basis~~with ~~points~~a ~~from~~majority ~~19.8%~~of inour ~~2008~~customers, whereby selling prices to ~~14.8%~~customers in ~~2009~~the ~~due~~future ~~to state~~periods ~~taxes~~are ~~and~~increased ~~permanent~~or ~~differences~~decreased based on hardwood lumber cost changes in the prior periods.

~~Net~~Cost ~~Earnings~~of Sales. ~~Net~~ Cost ~~earnings~~of ~~decreased~~sales increased $1614.5 0 million, or 12.7%, from $1110.31 million for the year ended December 31, ~~2008~~2009 to $15124.21 million ~~net loss~~ for the year ended December 31, ~~2009~~ 2010. This increase in cost of sales is primarily attributable to higher material, labor and overhead costs as a result of ~~the~~higher ~~factors~~sales ~~described above~~volume.

~~Year~~Gross ~~Ended~~Profit. Gross profit increased $0.9 million, or 4.4%, from $20.4 million for the year ended December 31, ~~2008~~ ~~Compared~~2009 to $21.3 million for the ~~Year~~same ~~Ended~~period in 2010 as a result of the factors described above. As a percentage of net sales, our gross profit decreased 90 basis points from 15.6% for the year ended December 31, ~~2007~~2009 to 14.7% for the same period in 2010. This decrease is related to (i) lower selling prices in 2010 due to lower hardwood lumber costs during 2009, (ii) higher lumber costs during the first half of 2010 and (iii) higher premiums for purchases of kiln dried lumber in 2010. This decrease was partially offset by (i) improved operating efficiencies in 2010 and (ii) the absorption of fixed costs over higher sales volume.

~~The~~Operating ~~years~~Expenses. Operating expenses decreased $13.9 million, or 53.9%, from $25.8 million for the year ended December 31, ~~2008~~2009 ~~and~~to ~~2007~~$11.9 million ~~are shown~~for the year ended December 31, 2010. The decrease primarily consists of (i) $13.6 million goodwill impairment in ~~the~~2009, ~~table~~(ii) $0.3 ~~below~~million due to decreased allowance for doubtful accounts expense in 2010, and (iii) $0.1 ~~The~~million ~~following~~due ~~table~~to ~~sets~~lower ~~forth~~customer ~~selected~~relationship amortization expense in 2010. As a percentage of sales, operating ~~data~~ ~~derived~~expenses decreased from ~~our~~19.7% ~~consolidated~~for ~~statements~~the ofyear ~~earnings~~ended ~~and~~December 31, ~~presents~~2009 ~~this information~~to 8.2% for the same period in 2010, as a ~~percentage~~result of ~~net~~the ~~sales~~factors described above.

	Year Ended December 31, 2008			Year Ended December 31, 2007
	(Dollars in thousands)
Net sales	$	193,373		$	249,303
% of net sales	100.0		%	100.0		%
Cost of sales	166,635			205,063
% of net sales	86.2		%	82.3		%
Gross profit	26,738			44,240
% of net sales	13.8		%	17.7		%
Operating expenses	13,934			24,096
% of net sales	7.2		%	9.7		%
Operating income	12,804			20,144
% of net sales	6.6		%	8.0		%
Other expenses:
Interest expense	13,024			15,460
% of net sales	6.7		%	6.2		%
Other (income) loss, net	(1,860		)	(453		)
% of net sales	(1.0		)%	(0.2		)%
Income taxes	324			2,096
% of net sales	0.2		%	0.8		%
Net earnings	1,316			3,041
% of net sales	0.7		%	1.2		%

Operating Income. Operating income increased by $14.8 million, or 274.1%, from a loss of $5.4 million for the year ended December 31, 2009 to an income of $9.4 million for the year ended December 31, 2010 as a result of the net effect of the factors described above.

~~Net Sales~~Interest Expense. ~~Net~~Interest ~~sales~~expense ~~decreased~~was $5512.~~9 million, or 22.~~4~~%, from $249.3~~ million for the year ended December 31, ~~2007~~2009 ~~to $193.4 million~~and for the year ended December 31, ~~2008~~2010. Sales in our hardwood and engineered wood product line decreased $51.0 million and $5.0 million, respectively. These decreases are mainly attributable to an overall slowdown in the market that began in the second half of 2006, and, to a lesser extent, an approximately 4% decline in our overall selling prices, mainly due to lower hardwood material costs. We have indexing agreements with a majority of our customers, whereby selling prices to customers are generally increased or decreased, but with a three to nine month lag time, as our material costs increase or decrease.

~~Cost~~Other ~~of Sales~~Income. ~~Cost~~Other ofincome ~~sales~~ decreased $~~38.5 million~~4, or000 ~~18.8%,~~ from $~~205.1 million~~23,000 for the year ended December 31, ~~2007~~2009 to $~~166.6 million~~19,000 for the year ended December 31, ~~2008~~2010. ~~This decrease in cost of sales is primarily attributable to lower material, labor and overhead costs as a result of lower volume of sales.~~

~~Gross Profit~~Income Tax Expense (Benefit). ~~Gross~~Income ~~profit~~tax benefit decreased $172.5 9 million, ~~or 39~~from a benefit of $2.6% million for the year ended December 31, ~~from~~2009 to an expense of $440.2 3 million for the year ended December 31, ~~2007~~2010 as a result of higher earnings and a higher effective tax rate prior to accounting for a valuation allowance against deferred tax assets in 2010. The effective tax rate decreased from 14.8% in 2009 to (11.5%) in 2010 mainly due to a valuation allowance against deferred tax assets.

13Net Loss. Net loss decreased $11.8 million from $15.2 million for the year ended December 31, 2009 to $3.4 million for the year ended December 31, 2010 as a result of the factors described above.

~~Table~~Year ofEnded ~~Contents~~December 31, 2009 Compared to the Year Ended December 31, 2008

toThe ~~$26.7 million~~years ~~for the~~ended ~~same~~December 31, ~~period~~2009 inand 2008 asare ashown ~~result~~in of the ~~factors~~table ~~described above~~below. As aThe ~~percentage~~following oftable ~~net~~sets ~~sales,~~forth ~~our~~selected ~~gross profit~~operating ~~decreased~~data ~~390~~derived ~~basis points~~ from ~~17.7%~~our ~~for~~consolidated ~~the~~statements ~~year~~of ~~ended~~operations ~~December 31, 2007~~and topresents ~~13.8%~~this ~~for~~information ~~the~~as ~~same~~a ~~period~~percentage inof ~~2008. This decrease is related to (i) spreading fixed costs over lower sales volume and (ii) the~~ net ~~effect of lower selling prices versus material cost reductions~~sales.

Operating Expenses. Operating expenses decreased $10.2 million, or 42.3%, from $24.1 million for the year ended December 31, 2007 to $13.9 million for the year ended December 31, 2008. The decrease mainly consists of approximately; (i) $7.2 million of transaction expenses in 2007 related to the Transaction, (ii) $0.8 million in 2007 related to efforts to refinance a portion of the outstanding debt, (iii) $1.0 million of transaction incentives incurred in 2007 in connection with the Transaction, (iv) $1.2 million related to lower stock compensation expense and lower salaries due to reduced overall workforce in 2008, (v) $0.2 million of lower professional fees, and (vi) $0.2 million of lower incentive compensation expense. These decreases were partially offset by $0.8 million due to long-lived asset write-offs in conjunction with the closing of our West Jordan, Utah facility. As a percentage of sales, operating expenses decreased from 9.7% for the year ended December 31, 2007 to 7.2% for the same period in 2008, as a result of the factors described above.

	Year Ended December 31, 2009			Year Ended December 31, 2008
	(Dollars in thousands)
Net sales	$	130,455		$	193,373
% of net sales	100.0		%	100.0		%
Cost of sales	110,093			166,635
% of net sales	84.4		%	86.2		%
Gross profit	20,362			26,738
% of net sales	15.6		%	13.8		%
Operating expenses	25,753			13,934
% of net sales	19.7		%	7.2		%
Operating (loss) income	(5,391		)	12,804
% of net sales	(4.1		)%	6.6		%
Other expenses:
Interest expense	12,449			13,024
% of net sales	9.5		%	6.7		%
Other income net	(23		)	(1,860		)
% of net sales	(0.0		)%	(1.0		)%
Income tax (benefit) expense	(2,634		)	324
% of net sales	(2.0		)%	0.2		%
Net (loss) earnings	(15,183		)	1,316
% of net sales	(11.6		)%	0.7		%

Operating Income. Operating income decreased by $7.3 million, or 36.3%, from $20.1 million for the year ended December 31, 2007 to $12.8 million for the year ended December 31, 2008 as a result of the net effect of the factors described above.13

~~Interest Expense. Interest~~Table ~~expense~~of decreased $2.4 million, or 15.6%, from $15.4 million for the year ended December 31, 2007 to $13.0 million for the year ended December 31, 2008. This decrease relates to (i) $0.9 million in lower amortized deferred financing fees in 2008, and (ii) lower interest expense in 2008 due to lower debt balances for the Senior Notes, mainly due to the $11.5 million principal reduction during the three months ended March 31, 2008, and for the First Lien Term Facility.Contents

~~Other (Income)~~Net ~~Loss~~Sales. ~~Other~~Net ~~income~~sales ~~increased~~decreased $162.4 9 million, or ~~280~~ 32.05%, from $0193.5 4 million for the year ended December 31, ~~2007~~2008 to $1130.9 5 million for the year ended December 31, ~~2008~~2009. ~~This~~Sales ~~income~~in ~~represents~~our ~~interest~~hardwood ~~received~~and ~~from our~~engineered ~~interest~~wood ~~bearing~~product ~~accounts~~line ~~and~~decreased ~~2008~~$55.4 ~~also~~million ~~includes~~and a $1.7.5 million, ~~gain~~respectively. These ondecreases are mainly attributable to an overall slowdown in the ~~extinguishment~~ market that began in the second half of ~~debt~~2006, and to a lesser extent, an approximately 5% decline in our overall selling prices, mainly due to lower hardwood material costs. We have indexing agreements with a majority of our customers, whereby selling prices to customers are generally increased or decreased, but with a three to twelve month lag time, as our material costs increase or decrease.

~~Income~~Cost ~~Tax~~of ~~Expense~~Sales. ~~Income~~ Cost ~~tax~~of ~~expense~~sales decreased $156.85 million, or 8533.79%, from $2166.16 million for the year ended December 31, ~~2007~~2008 to $0110.3 1 million for the year ended December 31, ~~2008~~2009. This asdecrease ain ~~result~~cost of ~~lower~~sales ~~earnings,~~is ~~and~~primarily ~~a lower~~attributable ~~effective~~to ~~tax~~(i) lower ~~rate. The~~material, ~~effective tax~~labor ~~rate~~and ~~decreased~~overhead ~~2100~~costs ~~basis~~as ~~points~~a ~~from~~result ~~40.8%~~of inlower ~~2007~~volume toof ~~19.8%~~sales, inand, ~~2008~~to ~~due~~a ~~to state~~lesser ~~taxes~~extent, ~~and~~(ii) lower ~~permanent~~hardwood ~~differences~~material costs.

~~Net~~Gross ~~Earnings~~Profit. ~~Net~~ Gross ~~earnings~~profit decreased $16.7 3 million, or 5623.76%, from $326.07 million for the year ended December 31, ~~2007~~2008 to $120.34 million for the same period in 2009 as a result of the factors described above. As a percentage of net sales, our gross profit increased 180 basis points from 13.8% for the year ended December 31, 2008 asto 15.6% for the same period in 2009. As a ~~result~~percentage of ~~the~~sales, ~~factors~~gross ~~described~~profit ~~above~~improved due to lower lumber costs and improved operating efficiencies. This increase was partially offset with spreading fixed costs over lower sales volume.

~~Liquidity~~Operating Expenses. Operating expenses increased $11.9 million, or 85.6%, from $13.9 million for the year ended December 31, 2008 to $25.8 million for the year ended December 31, 2009. The increase primarily consists of (i) $13.6 million goodwill impairment and ~~Capital~~(ii) $0.2 ~~Resources~~million due to increased allowance for doubtful accounts expense in 2009. The increase was partially offset by (i) approximately $0.8 million lower salaries, including benefits, due to eliminated positions throughout 2008 and 2009, (ii) $0.8 million due to a long-lived asset write-off in conjunction with the closing of our West Jordan, Utah facility in 2008, and, to a lesser extent, (iii) $0.2 million lower professional fees, and (iv) $0.1 million lower travel costs. We concluded there were no triggering events or changes in circumstances requiring an interim goodwill impairment analysis to be completed during the first three quarters of 2009. As a percentage of sales, operating expenses increased from 7.2% for the year ended December 31, 2008 to 19.7% for the same period in 2009, as a result of the factors described above.

~~Our~~Operating ~~primary~~Income. Operating ~~cash~~income ~~needs~~decreased ~~are~~by ~~working capital~~$18.2 million, ~~capital expenditures~~or ~~and~~142.2%, ~~debt~~from ~~service~~$12. We8 million ~~have historically~~for ~~financed~~the ~~these~~year ~~cash~~ended ~~requirements~~December 31, ~~through~~2008 ~~internally~~to ~~generated~~a ~~cash flow~~loss ~~and~~of ~~funds~~$5.4 million ~~borrowed~~for ~~under~~the ~~our~~year ~~prior~~ended ~~and~~December 31, ~~existing~~2009 ~~senior~~as ~~secured~~a ~~credit facilities~~result of the net effect of the factors described above.

InInterest conjunction with the Transaction, we entered into a senior credit facility, the “Senior Credit Facility”), with Credit Suisse, Cayman Islands Branch, which provided for (i) a senior secured first lien term loan facility in an aggregate principal amount of $150Expense.0 Interest ~~million~~expense ~~(the~~decreased ~~“First Lien Term Facility”) and (ii) a senior secured first lien revolving credit facility in an aggregate principal amount up to~~ $~~25.~~0.6 million, ~~subject~~or ~~to certain conditions~~4.6%, ~~(the~~from ~~“Revolving Facility” and, together with the First Lien Term Facility, the “First Lien Facilities”) of which~~ $1013.0 million isfor ~~available through a subfacility in~~ the ~~form~~year ofended ~~letters of credit. On March 30, 2009, we repaid all amounts outstanding under the First Lien Term Facility and no additional borrowings are available thereunder. As of~~ December 31, ~~2009,~~2008 ~~the maximum amount of borrowings available~~ to ~~the Company under the Revolving Facility was~~ $12.5 4 million~~. As~~ offor the year ended December 31, 2009~~, we had no outstanding borrowings under the Revolving Facility~~. ~~Borrowings~~This ~~under~~decrease ~~the~~relates ~~Revolving~~to ~~Facility~~lower ~~bear~~ interest atexpense ain ~~fluctuating~~2009 ~~rate~~due ~~equal~~ to ~~either~~ the ~~base rate plus 2.75% per annum or LIBOR plus~~ $3.~~75%~~5 ~~per~~million ~~annum~~principal ~~(effective~~reduction ~~rate~~during ofthe ~~5.25%~~three atmonths ~~December~~ended March 31, 2009~~). We~~ ~~must~~on ~~comply~~the ~~with~~First ~~certain financial~~Lien ~~covenants~~Term ~~under our Senior Credit~~ Facility~~, including maintenance of an interest coverage ratio and a total leverage ratio~~. ~~We were in compliance with all of our covenants as of December 31, 2009.~~

14Other Income. Other income decreased $1.8 million from $1.9 million for the year ended December 31, 2008 to $23,000 for the year ended December 31, 2009. This income represents interest received from our interest bearing accounts and 2008 also includes a $1.7 million gain on the extinguishment of debt.

~~Table~~Income Tax (Benefit) Expense. Income tax expense decreased $2.9 million from $0.3 million for the year ended December 31, 2008 to a benefit of ~~Contents~~$2.6 million for the year ended December 31, 2009 as a result of lower earnings, and a lower effective tax rate. The effective tax rate decreased 500 basis points from 19.8% in 2008 to 14.8% in 2009 due to state taxes and permanent differences.

On March 30, 2009, we entered into an amendment to our Senior Credit Facility, which among other things: (i) increased the applicable interest rate margin for borrowings thereunder; (ii) eliminated the requirement that we maintain corporate debt ratings; (iii) extended the date by which we must amend the indenture governing the Senior Notes to eliminate certain of the restrictive covenants contained therein (including covenants related to the incurrence of indebtedness and liens) or redeem the Senior Notes to March 31, 2010; (iv) extended our ability to continue to pay cash dividends to enable Parent to make cash interest payments on the Parent Notes to March 31, 2010; (v) increased the maximum total leverage ratio we may have at the end of each quarterly period from December 31, 2008 through December 31, 2009, (vi) required payment of remaining balance due under the First Term Lien Facility of approximately $3.6 million and (vii) decreased the minimum interest coverage ratio we are required to maintain at the end of each quarterly period from December 31, 2008 through December 31, 2009. The amendment also waived for the four fiscal quarters ended December 31, 2008, any default or event of default that may have arisen from our failure to maintain the maximum consolidated leverage ratio and the minimum consolidated interest coverage ratio set forth in the Senior Credit Facility prior to the effective date of the amendment.14

OnTable March 26, 2010, we entered into an amendment to our Senior Credit Facility, which among other things: (i) extended the date by which we must amend the indenture governing the Senior Notes to eliminate certain of the restrictive covenants contained therein (including covenants related to the incurrence of indebtedness and liens) or redeem the Senior Notes to March 31, 2011; (ii) increased the maximum total leverage ratio we may have at the end of each quarterly period from March 31, 2010 through December 31, 2010; (iii) added an asset-based borrowing base as a condition to borrowing under the Senior Credit Facility; (iv) extended our ability to continue to pay cash dividends to enable Parent to make cash interest payments on the Parent Notes to March 31, 2011; and (v) decreased the minimum interest coverage ratio we are required to maintain at the end of each quarterly period from March 31, 2010 through December 31, 2010.Contents

~~Indebtedness~~Net ~~for~~(Loss) ~~borrowed~~Earnings. Net ~~money~~earnings ~~incurred under~~decreased ~~our~~$16.5 ~~Senior~~million ~~Credit~~from ~~Facility~~$1.3 million isfor ~~secured~~the byyear ~~substantially~~ended ~~all of our assets~~December 31, ~~including~~ ~~our~~2008 ~~real~~to ~~and~~$15.2 million ~~personal~~net ~~property,~~loss ~~inventory,~~for ~~accounts~~the ~~receivable, intellectual~~year ~~property~~ended ~~and other intangibles.~~December ~~The~~31, ~~Senior~~2009 ~~Credit~~as ~~Facility~~a isresult ~~scheduled~~of tothe ~~mature~~factors indescribed ~~January 2013~~above.

AsLiquidity ofand ~~December 31, 2009,~~Capital ~~the weighted average interest rate for the Company’s outstanding debt was 10.1%.~~Resources

Our ~~Senior~~primary ~~Credit Facility~~cash ~~and~~needs ~~the~~are ~~indenture~~working ~~for the Senior Notes impose certain restrictions on our ability to incur indebtedness~~capital, ~~pay~~capital ~~dividends,~~expenditures ~~make investments, grant liens, sell our assets~~ and ~~engage~~debt ~~in certain other activities~~service. ~~The~~We ~~subsidiary~~have ~~guarantors~~historically ~~are~~financed ~~generally~~these ~~not restricted~~cash inrequirements ~~their~~through ~~ability~~internally togenerated ~~dividend~~cash orflow ~~otherwise~~and ~~distribute~~ funds toborrowed ~~the Company except for restrictions imposed~~ under ~~applicable~~our state corporate law. The Company is limited in its ability to pay dividends or otherwise make other distributions to Parent under the Senior Credit Facility and the indenture governing the Senior Notes. Specifically, as amended, the Senior Credit Facility prohibits the Company from making any distributions to Parent except for limited purposes, including, but not limited to: (i) prior to ~~March 31, 2011, the Company may pay cash dividends~~ and ~~distributions~~existing ~~to Parent~~senior tosecured ~~enable~~credit Parent to make cash interest payments on the Parent Notes, provided that (x) after giving pro forma effect to such dividend or distribution, the consolidated first lien leverage ratio does not exceed 1facilities.0 to 1.0, and (y) the amount of such dividends and distributions shall not exceed $3,225,000 in any calendar quarter, (ii) customary and reasonable out-of-pocket expenses, legal and accounting fees and expenses and overhead of Parent incurred in the ordinary course of business to the extent attributable to the business of the Company and its subsidiaries and in the aggregate not to exceed $500,000 in any fiscal year, and (iii) the Company may pay management fees of Parent not to exceed $750,000 in any fiscal year, as well as any previously accrued but unpaid management fees for any previous fiscal years without regard to this $750,000 limitation, so long as the amount accrued in any such previous fiscal year did not exceed $750,000, in each case, so long as no default has occurred. The indenture provides that the Company can generally pay dividends and make other distributions to Parent in an amount not to exceed (i) 50% of the Company’s consolidated net income for the period beginning April 1, 2004 and ending as of the end of the last fiscal quarter before the proposed payment, plus (ii) 100% of the net cash proceeds received by the Company from the issuance and sale of capital stock, plus (iii) the net return of certain investments, provided that certain conditions are satisfied, including that the Company has a consolidated interest coverage ratio of greater than 2.0 to 1.0. For the twelve month period ended December 31, 2009, the Company’s consolidated interest coverage ratio was less than 2.0 to 1.0.

OnAs ~~March~~of December 3031, ~~2009~~2010, ~~Parent~~ ~~amended and obtained a waiver to the Note Purchase Agreements related to the Parent Notes to waive the total leverage ratio that~~ we ~~were~~had ~~required~~$7.1 ~~to maintain~~million as of ~~December 31,~~cash ~~2008~~ and tocash ~~adjust~~equivalents ~~the~~available ~~total~~for ~~leverage~~any ~~ratio that~~corporate wepurposes, ~~are~~compared ~~required~~ to ~~maintain~~$13.1 million as of ~~the end of each quarterly period through~~ December 31, 2009 ~~to reflect current economic conditions~~. In addition, in connection with this amendment and waiver, the $150,000 quarterly advisory fee payable by Parent to an affiliate of the Olympus Funds under the advisory services agreement discussed below, has been deferred for each quarter of 2009 and will be payable in 2010 or thereafter. See “Certain Relationships and Related Party

15As of December 31, 2010, the weighted average interest rate for the Company’s outstanding debt was 10.1%. As of December 31, 2010 and 2009, we had no capital lease obligations.

~~Table~~Financing ~~of Contents~~Arrangements

~~Transactions,~~Prior ~~and Director~~Senior ~~Independence~~Credit ~~- Advisory Services Agreement” for additional information regarding the advisory services agreement.~~Facility

In conjunction with the Transaction, we entered into a senior credit facility (the “Senior Credit Facility”), with Credit Suisse, Cayman Islands Branch, which provided for (i) a senior secured first lien term loan facility in an aggregate principal amount of $150.0 million (the “First Lien Term Facility”) and (ii) a senior secured first lien revolving credit facility in an aggregate principal amount up to $25.0 million, subject to certain conditions, (the “Revolving Facility” and, together with the First Lien Term Facility, the “First Lien Facilities”) of which $10.0 million was available through a subfacility in the form of letters of credit. On March 2630, ~~2010~~2009, ~~Parent~~ ~~also~~we ~~amended~~repaid all amounts outstanding under the ~~Parent~~First ~~Notes~~Lien Term Facility and no additional borrowings were available thereunder. As of December 31, 2010, the maximum amount of borrowings available to the Company under the Revolving Facility was $12.5 million. As of December 31, ~~among~~2010, ~~other~~we ~~things~~had no outstanding borrowings under the Revolving Facility. Borrowings under the Revolving Facility accrued interest at a fluctuating rate equal to either the base rate plus 4.75% per annum or LIBOR plus 5.75% per annum (effective rate of 8.00% at December 31, ~~adjust~~2010 using the ~~total leverage~~base ~~ratio~~rate weplus ~~are~~4.75%). We were required to ~~maintain~~comply aswith certain financial covenants under our Senior Credit Facility, including maintenance of ~~the~~an ~~end~~interest coverage ratio and a total leverage ratio. We were in compliance with all of ~~each~~our ~~quarterly period~~covenants ~~through~~as of December 31, 2010.

AsOn March 30, 2009, we entered into an amendment to our Senior Credit Facility, which among other things: (i) increased the applicable interest rate margin for borrowings thereunder; (ii) eliminated the requirement that we maintain corporate debt ratings; (iii) extended the date by which we had to amend the indenture governing the Senior Notes to eliminate certain of the restrictive covenants contained therein (including covenants related to the incurrence of indebtedness and liens) or redeem the Senior Notes to March 31, 2010; (iv) extended our ability to continue to pay cash dividends to enable Parent to make cash interest payments on the Parent Notes to March 31, 2010; (v) increased the maximum total leverage ratio we could have at the end of each quarterly period from December 31, 2008 through December 31, 2009; (vi) required payment of remaining balance due under the First Term Lien Facility of approximately $3.6 million; and (vii) decreased the minimum interest coverage ratio we were required to maintain at the end of each quarterly period from December 31, 2008 through December 31, we2009. The ~~had~~amendment noalso ~~capital~~waived ~~lease~~for ~~obligations~~the four fiscal quarters ended December 31, 2008, any default or event of default that may have arisen from our failure to maintain the maximum consolidated leverage ratio and the minimum consolidated interest coverage ratio set forth in the Senior Credit Facility prior to the effective date of the amendment.

~~The~~On ~~Company~~March 26, ~~has outstanding~~2010, we entered into an amendment to our Senior Credit Facility, which among other things: (i) extended the date by which we had to amend the indenture governing the Senior Notes into aneliminate ~~aggregate~~certain ~~principal~~of ~~amount~~the restrictive covenants contained therein (including covenants related to the incurrence of ~~$108.4 million. The~~indebtedness and liens) or redeem the Senior Notes ~~mature~~to ~~on February~~March 1531, ~~2012. During~~ 2011; (ii) increased the ~~three~~maximum ~~months~~total ~~ended~~leverage ratio we could have at the end of each quarterly period from March 31, ~~2008~~ 2010 through December 31, ~~the~~2010; ~~Company~~(iii) added ~~purchased~~an ~~and~~asset-based ~~canceled~~borrowing ~~approximately~~base ~~$11.5~~as ~~million~~a ~~in principal~~condition ~~amount~~to ofborrowing under the Senior ~~Notes~~Credit ~~for~~Facility; ~~payment~~(iv) extended ofour ~~$9.8~~ability ~~million~~to ~~resulting~~continue into ~~a gain~~pay oncash ~~extinguishment~~dividends ofto ~~debt~~enable ofParent ~~approximately~~to ~~$1.7~~make ~~million. The~~cash ~~Company~~interest ~~used~~payments ~~available~~on ~~cash~~the Parent Notes to March 31, 2011; and ~~borrowings~~ ~~under~~(v) decreased ~~its~~the ~~Revolving~~minimum ~~Facility~~interest ~~for~~coverage ~~payment~~ratio ~~thereof~~we were required to maintain at the end of each quarterly period from March 31, 2010 through December 31, 2010.

~~Each~~Parent ~~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 assets or operations independent of its subsidiaries. As a result, the Company has not presented separate financial statements of the subsidiary guarantors.

AsIn ofconjunction ~~December 31, 2009,~~with wethe ~~had~~Transaction, ~~$13.1~~the ~~million~~Parent ofentered ~~cash~~into ~~and~~Note ~~cash~~Purchase ~~equivalents~~Agreements ~~available~~in ~~for~~2007 ~~any corporate~~with ~~purposes,~~OCM ~~compared~~and ~~to $14.7 million as of December 31, 2008.~~

Cash flow from operating activities. As of December 31, 2009, we had $13.1 million of cash and cash equivalents available for working capital purposes. As of December 31, 2008, we had $14.7 million of cash and cash equivalents available for working capital purposes. Cash provided by operating activities for the years ended December 31, 2009 and 2008 was $3.9 million and $13.7 million, respectively. The decreased source of cash provided by operating activities is mainly attributable to (i) lower net income in 2009, (ii) higher inventories in 2009 of $1.0 million, whereas, inventories had declined $7.4 million in 2008, and (iii) an increase in accounts receivable in 2009 of $4.2 million, whereas accounts receivable had declined $7.1 million in 2008. Days of receivables outstanding increased by six days as of December 31, 2009 versus December 31, 2008 mainly due to a majority of customers that were closed the last two weeks of December 2008 and certain customer payment terms have been modified over the past year. These were offset partially by (i) an increase in accounts payable in 2009 of approximately $2.8 million, whereas, accounts payable had decreased $2.1 million in 2008, and (ii) a payment of $6.2 million in 2008 for income tax refunds that were due to previous stockholders of the Company in accordance with the Transaction agreement.15

~~Cash flow~~Table ~~from~~of investing activities. Net cash used in investing activities was $1.6 million for the year ended December 31, 2009 and $3.7 million for the year ended December 31, 2008. Capital expenditures in 2009 were $1.7 million compared to $3.7 million for the year ended December 31, 2008. The decrease in capital expenditures in 2009 is primarily due to lower capital expenditures needed for capacity requirements.Contents

~~Cash flow~~Olympus ~~from~~Fund ~~financing~~IV, ~~activities~~L. ~~Net~~P. ~~cash~~pursuant ~~used in~~to ~~financing~~which ~~activities~~it ~~for~~issued ~~the~~to ~~year~~OCM ~~ended~~$43.0 ~~December 31,~~million ~~2009~~senior ~~totaled~~payment-in-kind ~~$3.9 million~~notes ~~primarily~~with ~~due~~no torequired ~~(i)~~ principal ~~payments~~amortization onand ~~the~~to ~~Senior~~Olympus ~~Credit Facility~~Fund ofIV, L.P. $343.60 million, junior payment-in-kind notes with no required principal amortization (iicollectively, the “Former Parent Notes”) ~~debt~~. The ~~issuance~~Former ~~costs~~Parent ofNotes $0were scheduled to mature in April 2012.1 On ~~million~~March 30, 2009, Parent amended and ~~(iii)~~ obtained a ~~$0.2~~ ~~million~~waiver ~~decrease~~to in the ~~amount~~Note ~~Due~~Purchase Agreements related to the Former Parent ~~related~~Notes to ~~income~~waive ~~tax obligations. Net~~the ~~cash~~total ~~provided~~leverage ~~by financing~~ratio ~~activities~~that ~~for~~we ~~the~~were ~~year~~required ~~ended~~to maintain as of December 31, 2008 ~~totaled~~and ~~$14.9 million~~to ~~primarily~~adjust ~~due~~the total leverage ratio that we were required to ~~(i) capital~~maintain ~~lease~~as ~~payments~~of the end of ~~$0.5~~each ~~million,~~quarterly ~~(ii) principal payments~~period onthrough ~~the~~December 31, ~~Senior~~2009 ~~Credit~~to ~~Facility~~reflect ofcurrent $0economic conditions.8 In ~~million~~addition, ~~(iii) purchase~~in ~~of $9.8~~connection ~~million~~with ofthis ~~Senior~~amendment ~~Notes~~and waiver, ~~and~~the ~~(iv) a~~$150,000 ~~distribution~~quarterly onadvisory ~~behalf~~fee ofpayable ~~the~~ by Parent to an affiliate of ~~$4.5~~the ~~million~~Olympus toFunds under the ~~Parent~~advisory services agreement discussed below, was deferred for ~~payment~~each onquarter ~~the~~of ~~Parent~~2010 ~~Notes. The~~and ~~cash~~2009, ~~used~~and inwill ~~financing~~be ~~activities~~payable ~~was partially~~in ~~offset~~2012 ~~with~~or ~~cash~~thereafter. See ~~provided~~“Certain byRelationships ~~financing~~and ~~activities~~Related ~~due~~Party toTransactions, aand ~~$0.7 million~~Director ~~increase~~Independence ~~for~~— ~~the~~Advisory ~~amount~~Services ~~Due~~Agreement” tofor ~~Parent~~additional ~~related~~information toregarding ~~income~~the ~~tax obligations~~advisory services agreement.

~~For~~On ~~years ended December~~March 3126, ~~2009~~ ~~and December 31~~2010, ~~2008,~~Parent ~~our~~also ~~two~~amended ~~largest~~the ~~customers~~Former ~~accounted~~Parent ~~for approximately~~Notes ~~60% and 55%~~to, ~~respectively,~~among ofother ~~our net sales. As of December 31~~things, ~~2009~~adjust ~~and~~the ~~December 31, 2008,~~total ~~our~~leverage ~~two~~ratio ~~largest~~we ~~customers~~were ~~accounted~~required ~~for~~to ~~approximately~~maintain ~~72%~~as ~~and 47%, respectively,~~ of ~~our~~the ~~consolidated~~end ~~accounts receivables balance. The permanent loss~~ of, oreach aquarterly ~~significant decrease~~period inthrough ~~the level of purchases by~~December 31, ~~one or more of our major customers could have a material adverse effect on our results of operations and future cash flows~~2010.

WeIn ~~cannot~~connection ~~provide assurances~~with ~~that~~the ~~our~~Recapitalization, ~~business~~all ~~will~~of ~~generate~~the ~~sufficient~~Former ~~cash~~Parent ~~flow~~Notes ~~from operations~~were extinguished and the New Parent Note in a principal amount of $23.0 million was issued to OCM. The New Parent Note is non-interest bearing and has an initial maturity date of April 9, 2012. The note purchase agreement governing the New Parent Note provides that ~~anticipated~~if ~~net~~we ~~sales~~refinance ~~growth~~or amend and ~~operating~~extend ~~improvements~~the ~~will be~~Senior ~~realized~~Notes, orand ~~that~~Olympus ~~future~~requests ~~borrowings~~OCM ~~will~~to amend the New Parent Note, so long as we do not raise more than $120.0 million of indebtedness in connection therewith, each of OCM and Parent have agreed to, among other things, to extend the maturity date of the New Parent Note to be ~~available~~one ~~under~~year ~~our~~after the maturity date of the Senior Notes as refinanced or amended and extended, but in no event later than 2017. The Company is not liable for, and has not otherwise guaranteed, any of the obligations of Parent with respect to the New Parent Note. The Company is, however, subject to a number of restrictive covenants in the note exchange agreement with respect to the New Parent Note.

16New Credit Agreement

~~Table~~On March 24, 2011, the Company entered into a new credit agreement (the “New Credit Agreement”) with General Electric Capital Corporation, as a lender, swingline lender and agent for all lenders and the other financial institutions party thereto (“GECC”), to replace the Senior Credit Facility. The New Credit Agreement provides for a $20.0 million revolving credit facility, including a letter of ~~Contents~~credit subfacility of $5.0 million. Availability of borrowings under the New Credit Agreement is subject to a customary borrowing base calculation. Assuming the New Credit Agreement was in place as of December 31, 2010, the Company would have been able to borrow approximately $20.0 million under the New Credit Agreement under the borrowing base calculation. Borrowings under the New Credit Agreement may be made to refinance the Senior Notes (so long as after giving effect to such consummation, the availability under the New Credit Agreement is not less than $5.0 million), to provide for working capital, and for general corporate purposes. The New Credit Agreement matures on December 31, 2011 if the Company has not refinanced or extended the Senior Notes or four months prior to the maturity of any new notes issued to refinance the Senior Notes, in no event later than March 24, 2015. Indebtedness for borrowed money incurred under our New Credit Agreement is secured by substantially all of our assets, including our real and personal property, inventory, accounts receivable, intellectual property and other intangibles. Borrowings under the New Credit Agreement bear interest at a fluctuating rate equal to either the base rate plus 1.25% per annum or LIBOR rate plus 2.50% per annum. We must comply with certain financial covenants under our New Credit Agreement.

~~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 Credit Facility and the Senior Notes, on commercially reasonable terms, if at all. The Company can not provide assurance it will be able to obtain waivers for non-compliance in the future, if necessary.

WeThe ~~derive~~Company ahas ~~significant portion~~outstanding ofSenior ~~our~~Notes ~~revenue~~in asan aaggregate ~~result~~principal amount of ~~demand~~$108.4 ~~for~~million. The ~~our~~Senior ~~products~~Notes ~~created~~mature byon ~~the building of new homes~~February 15, ~~and repair and remodeling of existing homes~~2012. During the ~~second~~three ~~half~~months ofended ~~2006~~March 31, ~~the home building~~2008, ~~and~~the ~~repair~~Company purchased and ~~remodeling~~canceled ~~industry~~approximately ~~experienced~~$11.5 amillion ~~slowdown~~in asprincipal aamount ~~result~~ of ~~general~~the ~~economic~~Senior ~~conditions. This slowdown~~Notes ~~has~~for ~~worsened~~payment ~~into~~of ~~2009,~~$9.8 ~~and~~million ~~has~~resulting ~~had~~in a ~~negative~~gain ~~impact~~ on ~~our~~extinguishment ~~results~~ of ~~operations~~debt ~~for~~of ~~the~~approximately ~~year~~$1.7 ~~ended December 31, 2009~~million. IfThe ~~this~~Company ~~slowdown~~used ~~were~~available tocash ~~continue~~and orborrowings ~~worsen over~~under anits ~~extended~~Revolving ~~period~~Facility offor ~~time,~~payment ~~it could have a material adverse effect on our business, financial condition or results of operations which may include impairment charges of goodwill and other long-term assets~~thereof.

~~Recently,~~Each ~~the financial markets experienced a period~~ of ~~unprecedented~~the ~~turmoil,~~Company’s ~~including the bankruptcy~~subsidiaries, ~~restructuring~~which orare ~~sale~~all of100% ~~certain~~owned ~~financial~~subsidiaries ~~institutions and the intervention~~ of the ~~U.S. federal government. While the ultimate outcome of these events cannot be predicted~~Company, ~~they may~~ have afully ~~material adverse effect on our liquidity~~ and ~~financial~~unconditionally ~~condition~~guaranteed ifthe ~~our ability to borrow money from our existing lenders under our~~ Senior ~~Credit Facility~~Notes toon ~~finance~~a ~~our~~joint ~~operations~~and ~~were~~several ~~to be impaired~~basis. The ~~crisis~~Company inhas ~~the~~no ~~financial~~assets ~~markets~~or ~~may~~operations ~~also have~~independent ~~a material adverse impact on the availability and cost~~ of ~~credit~~its ~~in the future~~subsidiaries. ~~Our~~As ~~ability~~a toresult, ~~pay our debt or refinance our obligations under our Senior Credit Facility or~~ the ~~Senior~~Company ~~Notes will~~has ~~depend~~not onpresented ~~our~~separate ~~future performance, which will be affected by, among other things, prevailing economic conditions. The recent~~ financial ~~crisis~~statements ~~may also have an adverse effect on the U.S., which would have a negative impact on demand for our products. In addition, tightening~~ of ~~credit markets may have an adverse impact on our customers’ ability to finance~~ the ~~purchase~~subsidiary ~~of our products or our suppliers’ ability to provide us with raw materials, either of which could adversely affect our business and results of operations~~guarantors.

WeCertain ~~intend~~Dividend to continue to manage the business in this slower economy and its effect on our industry by diligently reviewing our costs of doing business on a routine basis, controlling working capital in a slower business climate, and minimizing our capital expenditure needs. We note, however, that we expect our working capital requirements to increase by approximately $6.0 to $7.0 million, beyond normal seasonality in our business, due to longer collection times on certain receivables and inventory increases on certain product programs with our customers. We expect that the majority of this increase will occur in the first half of 2010.Restrictions

WeOur ~~anticipate,~~New ~~but~~Credit ~~cannot provide~~Agreement ~~assurance,~~and ~~that~~ the ~~funds~~indenture ~~generated~~for ~~by operations and funds available under~~ the Senior ~~Credit~~Notes ~~Facility~~impose ~~will~~certain berestrictions ~~sufficient~~on toour ~~meet~~ability ~~working capital requirements and~~ to ~~finance capital expenditures for the foreseeable future, including the next twelve months. We intend to~~ incur ~~additional capital expenditures in the ordinary course of doing business.~~

~~Schedule of Contractual Obligations~~16

~~The~~Table ~~following table details our projected payments for our contractual obligations as~~ of ~~December 31, 2009. The table is based upon available information and certain assumptions that we believe are reasonable.~~Contents

	Payments Due by Period
Contractual Obligations	Less than 1 year		1-3 years		3-5 years		More than 5 years		Total
	(Dollars in thousands)
Long-term debt obligations	$	—	$	108,350	$	—	$	—	$	108,350
Interest expense on fixed rate debt	10,835		12,318		—		—		23,153
Operating lease obligations	393		272		190		—		855
Total contractual cash obligations	$	11,228	$	120,940	$	190	$	—	$	132,358

indebtedness, pay dividends, make investments, grant liens, sell our assets and engage in certain other activities. The subsidiary guarantors under our New Credit Agreement and Senior Notes are generally not restricted in their ability to dividend or otherwise distribute funds to the Company except for restrictions imposed under applicable state corporate law. The Company is limited in its ability to pay dividends or otherwise make other distributions to Parent under the New Credit Agreement and the indenture governing the Senior Notes. Specifically, the New Credit Agreement prohibits the Company from making any distributions to Parent except for limited purposes, including, but not limited to: (i) overhead expenses, professional fees, directors fees, and expenses of Parent incurred in the ordinary course of business in the aggregate not to exceed $1.0 million in any fiscal year, and (ii) the Company may pay management fees of Parent not to exceed $750,000 in any fiscal year, plus a 1% transaction fee pursuant to the terms of the Management Agreement, as well as any previously accrued but unpaid management fees and transaction fees for any previous fiscal years without regards to this $750,000 limitation, so long as no default has occurred. The indenture provides that the Company can generally pay dividends and make other distributions to Parent in an amount not to exceed (i) 50% of the Company’s consolidated net income for the period beginning April 1, 2004 and ending as of the end of the last fiscal quarter before the proposed payment, plus (ii) 100% of the net cash proceeds received by the Company from the issuance and sale of capital stock, plus (iii) the net return of certain investments, provided that certain conditions are satisfied, including that the Company has a consolidated interest coverage ratio of greater than 2.0 to 1.0. For the twelve month period ended December 31, 2010, the Company’s consolidated interest coverage ratio was less than 2.0 to 1.0.

AsCash ofFlow ~~December 31, 2009, we had no outstanding indebtedness with a variable interest rate.~~Information

~~From~~Cash ~~time~~flow toprovided ~~time, we~~by ~~acquire~~(used ~~the~~in) ~~use~~operating activities. As of ~~certain assets~~December 31, ~~such~~2010 asand ~~warehouses~~2009, ~~forklifts~~we had $7.1 million and $13.1 million, ~~trailers~~respectively, of cash and ~~office~~cash ~~equipment~~equivalents ~~through~~available ~~operating~~for ~~leases~~working capital purposes. Cash used by operating activities for the year ended December ~~Many~~31, of2010 ~~these~~was $3.8 million and cash provided by operating ~~leases~~activities ~~have~~for ~~termination~~the ~~penalties~~year ended December 31, 2009 was $3.9 million. ~~However,~~The ~~because~~increased ~~the~~source ~~assets~~of ~~are~~cash used by operating activities is mainly attributable to (i) higher inventories in ~~the conduct~~2010 of ~~our~~$4.7 ~~business~~million, ~~operations~~whereas, itinventories ishad ~~unlikely~~increased ~~that~~$1.0 ~~any~~million ~~significant~~in ~~portion~~ 2009, (ii) an increase in net accounts receivable in 2010 of ~~these~~$4.9 ~~operating~~million, ~~leases~~whereas ~~would~~net beaccounts ~~terminated~~receivable ~~prior~~had toincreased ~~the~~$4.2 ~~normal~~million ~~expiration~~in 2009, and (iii) a decrease in accounts payable in 2010 of ~~their~~ ~~lease~~$0.7 ~~terms~~million whereas accounts payable had increased $2.8 million in 2009. ~~Therefore,~~Days ~~we consider~~of ~~the~~receivables ~~risk~~outstanding ~~related~~increased by approximately 21 days as of December 31, 2010 compared to ~~termination~~December 31, ~~penalties~~2009 due to becertain ~~minimal~~customer payment terms being modified over the past year.

17Cash flow used in investing activities. Net cash used in investing activities was $1.9 million for the year ended December 31, 2010 and $1.6 million for the year ended December 31, 2009. Capital expenditures in 2010 were $1.9 million compared to $1.7 million for the year ended December 31, 2009.

~~Table~~Cash flow used in financing activities. Net cash used in financing activities for the year ended December 31, 2010 totaled $0.4 million primarily due to (i) debt issuance costs of ~~Contents~~$50,000, and (ii) $0.3 million of payments made on behalf of Parent. Net cash used in financing activities for the year ended December 31, 2009 totaled $3.9 million primarily due to (i) principal payments on the Senior Credit Facility of $3.6 million, (ii) debt issuance costs of $0.1 million, and (iii) a $0.2 million decrease in the amount due to Parent related to income tax obligations.

~~Off-Balance~~Liquidity ~~Sheet Arrangements~~Considerations

~~With~~For ~~the~~years ~~exception~~ended ~~of routine~~December 31, ~~operating~~2010 ~~leases~~and December 31, we2009, ~~had~~our notwo ~~off-balance~~largest ~~sheet~~customers ~~financing~~accounted ~~arrangements~~for at approximately 56% and 60%, respectively, of our net sales. As of December 31, 2010 and December 31, 2009, ~~2008~~our two largest customers accounted for approximately 62% and ~~2007~~72%, respectively, of our consolidated accounts receivables balance. 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 and future cash flows.

~~Inflation~~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 New Credit Agreement 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 any borrowings under our New Credit Agreement and the Senior Notes, on commercially reasonable terms, if at all. The Company cannot provide assurance it will be able to obtain waivers for non-compliance in the future, if necessary.

~~Our~~The ~~cost~~Company ofderives ~~sales~~a ~~is subject~~significant toportion ~~inflationary~~of ~~pressures~~its onrevenue ~~labor~~as ~~costs,~~a ~~prices~~result of the ~~raw~~demand ~~materials we~~for ~~use~~its ~~and~~products ~~various~~created ~~overhead~~by ~~costs. We generally have been able over time to offset~~ the ~~effects~~building of ~~inflation~~new homes, and ~~price fluctuations~~repair ~~through~~and aremodeling ~~combination~~ of ~~sales~~existing ~~price increases and operational efficiencies~~homes. WeDuring ~~currently~~the ~~believe~~second ~~that raw~~half ~~material~~of ~~cost~~2006, ~~pressure has increased in~~ the ~~fourth~~home ~~quarter~~building, ~~2009. We~~repair ~~continue~~and toremodeling ~~attempt~~industry toexperienced ~~pass~~a ~~along~~slowdown ~~these costs~~as toa ~~our~~result ~~customers,~~of ~~but~~general ~~such~~economic ~~efforts~~conditions. The ~~typically~~slowdown ~~lag~~continued ~~three~~throughout to2010, ~~nine months behind material cost changes~~ and webased ~~can~~on ~~not~~the ~~guarantee~~Kitchen aCabinet ~~full~~Manufacturers ~~offset. Our~~Association ~~ability~~data tofor ~~pass~~2010, ~~through~~the ~~these~~kitchen ~~price changes~~cabinet ~~to our customers is dependent on prevailing economic and competitive conditions.~~

~~Seasonality~~17

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

~~Critical~~market ~~Accounting~~is ~~Policies~~estimated to be down approximately 4% as compared to 2009. This slowdown has had, and continues to have, a negative effect on our sales and income from operations. If this slowdown were to continue or worsen over an extended period of time, it could have a material adverse effect on the Company’s business, financial condition or results of operations.

~~The~~Over ~~preparation~~the oflast couple years, the financial ~~statements~~markets inexperienced ~~conformity with~~a ~~accounting~~period ~~principles~~of ~~generally~~unprecedented ~~accepted~~turmoil, inincluding the ~~United~~bankruptcy, ~~States~~restructuring or sale of ~~America (GAAP)~~certain ~~requires~~financial ~~management~~institutions toand ~~make~~the ~~estimates,~~intervention ~~assumptions~~of ~~and~~the ~~judgments~~U.S. ~~that affect~~federal government. While the ~~reported~~ultimate ~~amounts~~outcome of ~~assets~~these ~~and~~events ~~liabilities~~cannot ~~and~~be ~~disclosure~~predicted, ~~of contingent~~they ~~assets~~may have a material adverse effect on our liquidity and ~~liabilities~~financial atcondition ~~the~~if ~~date~~our ofability to borrow money from our existing lenders under our New Credit Agreement to finance our operations were to be impaired. The crisis in the financial ~~statements~~markets ~~and the~~may ~~reported~~also ~~amounts~~have ofa ~~revenues~~material ~~and~~adverse ~~expenses~~impact ~~during~~on the ~~reporting~~availability ~~period~~and cost of credit in the future. ~~Because~~Our ofability to pay our debt or refinance our obligations under our New Credit Agreement or the ~~uncertainty~~Senior ~~inherent~~Notes inwill ~~these matters~~depend on our future performance, ~~actual~~which ~~results~~will ~~could~~be ~~differ~~affected ~~from~~by, ~~those~~among ~~estimates~~other things, prevailing economic conditions. WeThe ~~believe~~recent ~~that~~financial crisis may also have an adverse effect on the ~~estimates~~U.S., ~~assumptions and~~which ~~judgments~~would ~~involved~~have ina ~~the~~negative ~~accounting~~impact ~~policies~~on ~~below~~demand for our products. In addition, tightening of credit markets may have ~~the~~an ~~greatest potential~~adverse impact on our ~~financial~~customers’ ~~statements~~ability to finance the purchase of our products or our suppliers’ ability to provide us with raw materials, either of which could adversely affect our business and results of operations.

~~The~~We ~~basis~~intend ~~for~~to ~~developing the~~continue ~~estimates~~to ~~and~~manage ~~assumptions~~the ~~within~~business ~~our~~in ~~critical~~this ~~accounting~~slower ~~policies~~economy isand ~~based on~~its ~~historical~~effect ~~information~~on ~~and~~our ~~known~~industry ~~current~~by ~~trends~~diligently ~~and~~reviewing ~~factors. The~~our ~~estimates~~costs ~~and~~of ~~assumptions~~doing ~~are~~business ~~evaluated~~ on ana ~~ongoing~~routine basis, ~~and~~controlling ~~actual~~working ~~results~~capital ~~have~~in ~~been~~a ~~within~~slower ~~the~~business ~~Company’s expectations~~climate, ~~unless~~and ~~noted~~minimizing ~~differently below. We~~our ~~have~~capital ~~not~~expenditure ~~changed these policies from those previously disclosed~~needs.

~~Revenue Recognition.~~ We ~~recognize~~anticipate, ~~revenues~~but ~~and~~cannot ~~related~~provide ~~cost~~assurance, ofthat ~~sales~~the ~~when~~funds ~~title~~generated ~~passes,~~by ~~which is~~operations ~~usually~~and ~~upon~~funds ~~shipment~~available ofunder ~~product~~the ~~under~~New ~~FOB~~Credit ~~shipping~~Agreement ~~point~~will ~~terms. Returns~~be ~~are~~sufficient ~~estimated~~to meet working capital requirements and ~~provided~~to finance capital expenditures for atthe foreseeable future, including the ~~time~~ ofnext ~~sale~~twelve ~~based~~months. We onintend ~~historical~~to ~~experience~~incur ~~and~~additional ~~current~~capital ~~trends~~expenditures in the ordinary course of doing business.

~~Allowance~~Schedule ~~for Doubtful Accounts. We make estimates~~ of ~~potentially~~Contractual 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.Obligations

~~Goodwill. We~~The ~~evaluate~~following ~~goodwill~~table ~~for~~details ~~impairment~~our ~~annually or~~projected ~~whenever~~payments anfor ~~indicator~~our ofcontractual ~~impairment~~obligations ~~occurs. If~~as ~~events~~of ~~or circumstances change~~December 31, ~~including reductions in anticipated cash flows generated by operations, goodwill could become further impaired and result in a charge to earnings~~2010. IfThe atable ~~goodwill~~is ~~impairment~~based ~~charge~~upon ~~was~~available ~~recorded, the~~information ~~Company’s~~and ~~compliance~~certain ~~with~~assumptions ~~financing~~that ~~arrangement~~we ~~covenant~~believe ~~ratios~~are ~~would not be impacted as these ratios exclude non-cash charges~~reasonable.

The Company performed its ASC 350 analysis as of December 31, 2009. To establish fair market value, items considered were: (1) comparable public company trading multiples, (2) other comparable transaction multiples and (3) the Woodcraft transaction multiple resulting from a competitive auction process.

	Payments Due by Period
Contractual Obligations	Less than 1 year		1-3 years		3-5 years		More than 5 years		Total
	(Dollars in thousands)
Long-term debt obligations	$	—	$	108,350	$	—	$	—	$	108,350
Interest expense on fixed rate debt	10,835		1,483		—		—		12,318
Operating lease obligations	552		523		206		—		1,281
Total contractual cash obligations	$	11,387	$	110,356	$	206	$	—	$	121,949

~~We placed~~As ~~limited~~of ~~weight on the comparable public company trading multiples because the public companies are not considered sufficiently similar to Woodcraft to draw meaningful fair value comparisons. For example~~December 31, the OEM cabinet manufacturers are burdened by consumer brand and style risk and other building products companies are competing in markets which have greater commoditization and/or greater exposure to new home construction than Woodcraft. Additionally2010, ~~the~~we ~~large~~had ~~conglomerate businesses~~no ~~are~~outstanding ~~typically~~indebtedness ~~more~~with ~~diversified~~a tovariable ~~draw~~interest ~~meaningful fair value comparisons to~~ rate.

18From time to time, we acquire the use of certain assets, such as warehouses, forklifts, trailers, and office equipment through operating leases. Many of these operating leases have termination penalties. However, because the assets are used in the conduct of our business operations, it is unlikely that any significant portion of these operating leases would be terminated prior to the normal expiration of their lease terms. Therefore, we consider the risk related to termination penalties to be minimal.

~~Table~~Off-Balance ofSheet ~~Contents~~Arrangements

~~Woodcraft~~With the exception of routine operating leases, we had no off-balance sheet financing arrangements at December 31, 2010, 2009 and 2008.

We placed limited weight on the comparable transactions because there have been no comparable transactions since 2007. Given the significant changes in the overall economic conditions and their impact on our industry since 2007, comparable transaction multiples from 2007, in our opinion, are not relevant for purposes of establishing fair value as of December 31, 2009. The comparable transaction valuation multiple analysis from 2007 aggregated mean and median valuation multiples that were slightly higher than the transaction multiple associated with our January 2007 transaction. Although a net discount could be applied to these multiples in valuing our business because of our smaller size (partially offset by a premium, in our opinion, for our more attractive business model), we believe any such discount is unnecessary because of the occurrence of cyclical multiple expansion, as discussed below.Inflation

InOur ~~January 2007,~~cost ~~Woodcraft was acquired through a competitive bidding process which established a fair market value based on a multiple~~ of ~~EBITDA~~sales ~~for~~is ~~the~~subject ~~prior twelve month period. This multiple was then adjusted~~ to ~~account for~~inflationary ~~the~~pressures ~~cyclical~~on ~~multiple~~labor ~~expansion~~costs, ~~occurring~~prices ~~as a result~~ of the ~~slowdown~~raw ~~in housing~~materials ~~that~~we ~~had~~use ~~been~~and ~~occurring~~various ~~since~~overhead ~~2006~~costs. We ~~believe~~generally ~~valuation~~have ~~multiples~~been inable ~~cyclical~~over ~~industries~~time ~~tend~~ to ~~compress at~~offset ~~higher~~the ~~points~~effects inof ainflation ~~cycle~~ and ~~expand~~price atfluctuations ~~lower~~through ~~points in~~ a ~~cycle. We~~combination ~~refer~~of tosales ~~this~~price ~~trend~~increases asand ~~“cyclical~~operational ~~multiple expansion~~efficiencies.” AsRaw ofmaterial ~~December 31,~~cost ~~2009,~~pressure weincreased ~~have~~beginning ~~advanced~~in ~~three years into~~ the ~~current~~fourth ~~housing~~quarter ~~downturn~~2009 and, incontinued ~~our~~through ~~opinion, are closer to~~ the ~~lower~~ ~~point~~first inhalf ~~this~~of ~~cycle~~2010. ~~Accordingly, we~~Subsequent ~~believe~~to ~~this has resulted in expanded multiples. Moreover, given~~ the ~~severity~~first ofhalf ~~the current downturn~~2010, weraw ~~would~~material ~~expect~~costs ~~the magnitude of such multiple expansion to be significant. To account for these expanded multiples, we~~ have ~~applied~~modestly ~~premiums~~declined ofthrough ~~40-50% to the January~~December ~~2007 Woodcraft~~31, ~~transaction multiple to compute a low and high range of fair value~~2010. ~~The~~We ~~low~~continue ~~and high premium was based on similar multiple expansions experienced by companies within similar industries from 2006 through 2009. The companies used~~ to ~~calculate~~attempt ~~the cyclical multiple expansion for our annual goodwill analysis have been consistent from year~~ to ~~year. If~~pass ~~the~~along ~~number of comparable companies increases or decreases or the cyclical multiple expansion calculations change within~~ these ~~comparable~~costs ~~companies,~~to our ~~goodwill~~customers, ~~impairment~~but ~~analysis~~such ~~could be affected.~~

Based on the fair market value methodology and assumptions as of December 31, 2009, the annual test for goodwill impairment resulted in a fair value amount below the Company’s carrying value which required further analysis to determine the goodwill impairment amount. The determination of the goodwill impairment was based on the fair value of assets and liabilities as if the Company had been acquired using a hypothetical business combination with a purchase price equal to the market multiple valuation balance as of December 31, 2009. This impairment analysis concluded the purchase price, as determined, was in excess of the net assets however this excess was below the recorded goodwill balance at December 31, 2009. The difference between the recorded goodwill and excess fair value at December 31, 2009 was the computed goodwill impairment of $13.6 million. As of December 31, 2008, the Company determined its fair value exceeded its carrying value resulting in no goodwill impairment.18

~~Impairment~~Table 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 is 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.Contents

~~Due~~efforts totypically ~~lower~~lag ~~sales~~three ~~and~~to ~~earnings for the~~ twelve months ~~ended~~ ~~December 31,~~behind ~~2009,~~material ~~the~~cost ~~Company~~changes ~~performed~~and awe ~~ASC~~cannot ~~360 impairment~~guarantee ~~test. Based~~a onfull ~~an undiscounted cash flows model, the Company’s carrying value of long-lived assets was adequate and no write-down was necessary~~offset. ~~Separate~~Our ~~from the~~ability ~~undiscounted~~to ~~cash~~pass ~~flow~~through ~~model,~~these itprice ~~was~~changes ~~determined a triggering event occurred in 2008, in conjunction with the decision~~ to ~~discontinue manufacturing operations at~~ our ~~West~~customers ~~Jordan,~~is ~~Utah~~dependent ~~facility. This~~on ~~long-lived~~prevailing ~~asset~~economic ~~impairment~~and ~~totaled~~competitive $0conditions.~~7 million in 2008 due to certain long-lived assets that will not be utilized in the future.~~

Insurance Benefit Accruals. Each accounting period, we estimate an amount to accrue for 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.Seasonality

~~Purchase~~Our ~~Accounting. We~~sales ~~accounted~~historically ~~for~~have ~~our~~been ~~acquisitions~~moderately ~~under the purchase method of accounting and~~seasonal, ~~accordingly,~~reflecting the ~~acquired~~temporary ~~assets~~slowdown ~~and~~in ~~liabilities~~consumer ~~assumed~~purchasing ~~are recorded~~activity atduring ~~their~~the ~~respective~~winter ~~fair~~holiday ~~values. The~~season ~~recorded~~and ~~values~~the ofsummer ~~assets and liabilities~~months.

19Critical Accounting Policies

~~Table~~The preparation of ~~Contents~~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.

~~are~~The ~~based~~basis onfor ~~third-party~~developing the estimates and ~~valuations~~assumptions ~~when~~within ~~available. The~~our ~~remaining~~critical ~~values~~accounting ~~are~~policies is based on ~~management’s~~historical ~~judgments~~information and ~~estimates. Our~~known ~~financial~~current ~~position~~trends and ~~results~~factors. The ~~from operations~~estimates ~~may~~and beassumptions ~~affected~~are byevaluated ~~changes~~on inan ~~estimates~~ongoing basis and ~~judgments. The Transaction~~actual ~~has~~results have been ~~accounted~~within ~~for as a recapitalization in~~ the Company’s ~~financial statements~~expectations, ~~with~~unless nonoted ~~adjustments~~differently ~~to the historical basis of the Company’s assets and liabilities~~below. ~~The~~We ~~Company~~have ~~did~~ not ~~push down~~changed ~~the~~these ~~basis~~policies ~~because~~from ofthose ~~the~~previously ~~significance of the publicly traded debt outstanding, which hinders the Parent’s ability to control the form of ownership of the Company~~disclosed.

~~Income~~Revenue ~~Taxes~~Recognition. ~~The~~We ~~Company~~recognize ~~and~~revenues ~~its Parent file a consolidated federal income tax return,~~ and ~~federal~~related ~~income~~cost ~~taxes~~of ~~are~~sales ~~allocated~~when totitle ~~the Company based upon the respective taxable earnings or loss. The Company accounts for income taxes in accordance with the liability method of accounting~~passes, which ~~requires~~is ~~recognition~~usually ofupon ~~deferred~~shipment ~~tax assets and liabilities for the expected future tax consequences~~ of ~~events~~product ~~that~~under ~~were included~~FOB inshipping ~~the~~point ~~consolidated financial statements and tax returns~~terms. ~~Under~~Returns ~~this method, deferred tax assets and liabilities~~ are ~~determined~~estimated ~~based on the difference between the financial statement~~ and ~~tax~~provided ~~bases of assets and liabilities using enacted tax rates expected to be in effect~~ for ~~the~~at ~~year in which~~ the ~~differences~~time ~~are~~of ~~expected~~sale ~~to reverse. The~~based ~~Company~~on ~~records~~historical aexperience ~~valuation allowance~~and ~~when~~current ~~it is more likely than not that the net deferred tax assets will not be realized~~trends.

~~The~~Allowance ~~Company~~for isDoubtful ~~subject to audits in the tax jurisdictions in which it operates~~Accounts. ~~Upon~~We ~~audit,~~make ~~these~~estimates ~~taxing jurisdictions could retroactively disagree with our tax treatment~~ of ~~certain~~potentially ~~items. Consequently,~~uncollectible ~~the~~accounts ~~actual liabilities with respect to any year may be determined long after financial statements have been issued~~receivable. ~~The~~Our ~~Company establishes tax~~ reserves ~~for~~are ~~estimated~~based ~~tax~~on ~~exposures. These~~an ~~potential~~analysis ~~exposures result from varying applications~~ of ~~statutes, rules,~~customers’ ~~regulations,~~accounts ~~case~~and ~~law~~historical ~~and~~write-off ~~interpretations~~experience. ~~The~~Our ~~settlement~~analysis ofincludes ~~these exposures primarily occurs upon finalization of tax audits. However,~~ the ~~amount~~age of the ~~exposures~~receivable, ~~can~~customer ~~also~~creditworthiness ~~be impacted by changes in tax laws~~ and ~~other~~general ~~factors~~economic conditions. ~~The~~We ~~Company believes~~believe ~~that it has established~~ the ~~appropriate reserves for these estimated exposures. However, actual~~ results ~~may differ~~could ~~from~~be ~~these~~materially ~~estimates. The resolution~~different ofif ~~these~~historical ~~tax~~trends ~~matters~~do ~~will~~ not ~~have~~reflect aactual ~~material~~results ~~effect~~or onif ~~the consolidated~~economic ~~financial~~conditions 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 rateworsened.

~~New~~Goodwill. We ~~Accounting~~evaluate ~~Standards~~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 further impaired and result in a charge to earnings. If a goodwill impairment charge was recorded, the Company’s compliance with financing arrangement covenant ratios would not be impacted as these ratios exclude non-cash charges.

InThe ~~September 2006, the~~Company ~~Financial~~performed ~~Accounting~~its ~~Standards~~ASC ~~Board~~350 ~~(“FASB”) issued~~analysis aas ~~new~~of ~~accounting standard~~December 31, ~~now included~~2010. To inestablish ~~Accounting~~fair ~~Standards~~market ~~Codification~~value, ~~(“ASC”)~~items ~~820~~considered were: (~~formerly SFAS 157~~1), comparable ~~“Fair Value~~public ~~Measurements~~company ~~and~~trading ~~Disclosures” to define fair value~~multiples, ~~establish~~(2) other acomparable ~~framework for~~transaction ~~measuring~~multiples ~~fair value,~~ and ~~expand disclosures about fair value measurements. We adopted this standard effective January~~(3) 1,the ~~2008. The adoption~~Woodcraft oftransaction ~~this~~multiple ~~standard~~resulting ~~did~~from ~~not have~~ a ~~material~~competitive ~~effect~~auction ~~on our financial position or results of operations~~process.

InWe ~~December 2007, the~~placed ~~FASB~~limited ~~issued~~weight ~~ASC~~on ~~805~~the ~~(formerly~~comparable ~~SFAS~~public ~~141R),~~company ~~“Business~~trading ~~Combinations”. ASC~~multiples ~~805~~because ~~establishes~~the ~~principles~~public ~~and requirements~~companies ~~for~~are ~~how~~not ~~identifiable~~considered ~~assets,~~sufficiently ~~liabilities~~similar ~~assumed,~~to ~~non-controlling interests~~Woodcraft into andraw ~~acquirer,~~meaningful ~~and~~fair ~~goodwill~~value ~~are~~comparisons. For ~~recognized~~example, ~~and~~the ~~measured~~OEM incabinet ~~an acquirer’s~~manufacturers ~~financial~~are ~~statements. ASC~~burdened ~~805 also~~by ~~establishes~~consumer ~~disclosure~~brand ~~requirements~~and tostyle ~~assist~~risk ~~users~~and inother ~~evaluating~~building ~~the nature~~products ~~and~~companies ~~financial~~are ~~effects~~competing ofin ~~business~~markets ~~combinations. This~~which ~~standard~~have isgreater ~~effective~~commoditization ~~for~~and/or ~~fiscal~~greater ~~years beginning~~exposure ~~after~~to ~~December 15,~~new ~~2008. The~~home ~~adoption~~construction ofthan ~~this~~Woodcraft. Additionally, ~~statement~~the ~~did~~large ~~not~~conglomerate ~~have~~businesses aare ~~material~~typically ~~effect~~more ondiversified ~~the Company’s~~to ~~financial~~draw ~~position~~meaningful orfair ~~results~~value ofcomparisons ~~operations~~to Woodcraft.

InWe ~~March 2008,~~placed limited weight on the ~~FASB~~ ~~issued~~comparable ~~ASC~~transactions ~~815~~because ~~(formerly~~there ~~SFAS~~have ~~161)~~been ~~“Derivatives~~no ~~and~~comparable ~~Hedging”~~transactions since 2007. ~~ASC~~Given ~~815~~the ~~establishes~~significant changes in the overall economic conditions and their impact on our industry since 2007, ~~among~~comparable ~~other~~transaction ~~things~~multiples from 2007, ~~additional~~ ~~disclosure~~in ~~requirements~~our ~~for~~opinion, ~~derivative~~are ~~instruments~~not ~~and~~relevant for ~~hedging activities~~purposes of establishing fair value as of December 31, 2010. ~~ASC~~The ~~815~~comparable istransaction ~~effective~~valuation ~~for~~multiple analysis from 2007 aggregated mean and median valuation multiples that were slightly higher than the ~~Company~~ ~~beginning~~transaction ~~January 1,~~multiple ~~2009~~associated onwith aour ~~prospective~~January 2007 ~~basis~~transaction. ~~The~~Although ~~adoption~~a net discount could be applied to these multiples in valuing our business because of ~~this~~our ~~statement~~smaller ~~did~~size ~~not~~(partially ~~have~~offset by a ~~material~~ ~~effect~~premium, onin ~~the~~our ~~Company’s~~opinion, ~~financial~~for ~~position~~our ormore ~~results~~attractive business model), we believe any such discount is unnecessary because of ~~operations~~the occurrence of cyclical multiple expansion, as discussed below.

In ~~April~~January ~~2009~~2007, ~~the FASB~~Woodcraft ~~issued~~was ~~guidance~~acquired ~~that~~through ~~requires~~a ~~interim~~competitive ~~reporting~~bidding ~~period~~process ~~disclosure~~which ~~about the~~established a fair market value ofbased ~~certain~~on ~~financial~~a ~~instruments,~~multiple ~~effective~~of EBITDA for ~~interim reporting~~the ~~periods~~prior ~~ending~~twelve ~~after~~month ~~June 15, 2009~~period. ~~The~~This ~~Company~~multiple ~~has adopted~~was ~~these~~then ~~disclosure~~adjusted ~~requirements. Due~~ to ~~their~~account ~~nature,~~for the ~~carrying value~~cyclical multiple expansion occurring as a result of ~~cash,~~the ~~receivables,~~slowdown ~~payables~~in ~~and~~housing ~~debt~~that ~~obligations~~had ~~approximates~~been ~~fair value~~occurring since 2006. We believe

In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” which was primarily codified into Topic 855 “Subsequent Events” in the ASC. This guidance was issued in order to establish principles and requirements for reviewing and reporting subsequent events. On February 24th 2010, the FASB issued Accounting Standards Update (ASU) 2010-09 to amend ASC 855, “Subsequent Events”. As a result, SEC registrants will not disclose the date through which management evaluated subsequent events in the financial statements—either in originally issued financial statements or reissued financial statements. The adoption of this guidance did not have an impact on our consolidated financial statements.19

20Table of Contents

~~Table~~valuation multiples in cyclical industries tend to compress at higher points in a cycle and expand at lower points in a cycle. We refer to this trend as “cyclical multiple expansion.” As of ~~Contents~~December 31, 2010, we have advanced four years into the current housing downturn and, in our opinion, are closer to the lower point in this cycle. Accordingly, we believe this has resulted in expanded multiples. Moreover, given the severity of the current downturn, we would expect the magnitude of such multiple expansion to be significant. To account for these expanded multiples, we have applied premiums of 40-50% to the January 2007 Woodcraft transaction multiple to compute a low and high range of fair value. The low and high premium was based on similar multiple expansions experienced by companies within similar industries from 2006 through 2010. The companies used to calculate the cyclical multiple expansion for our annual goodwill analysis have been consistent from year to year. If the number of comparable companies increases or decreases or the cyclical multiple expansion calculations change within these comparable companies, our goodwill impairment analysis could be affected.

InAs ~~June~~of December ~~2009~~31, ~~the~~ ~~FASB~~2010, ~~issued~~based ~~guidance~~on ~~that establishes~~ the ~~FASB~~fair ~~Accounting~~market ~~Standards Codification~~value ~~(the~~methodology ~~Codification)~~and asassumptions ~~the~~discussed ~~source~~above, ofas ~~authoritative~~compared ~~accounting principles~~to ~~recognized by~~ the ~~FASB~~Company’s tonet beworth ~~applied~~and byinterest-bearing ~~nongovernmental~~indebtedness, ~~entities~~we ~~in the~~have ~~preparation~~concluded ofthat ~~financial~~no ~~statements~~goodwill inimpairment ~~conformity~~existed ~~with~~and ~~generally~~that ~~accepted accounting~~the ~~principles~~fair ~~(GAAP). Use~~value of ~~the~~our ~~new~~assets ~~Codification~~exceeded isthe ~~effective for~~carrying ~~interim~~value ~~and~~by ~~annual~~approximately ~~periods~~5 ~~ending~~to ~~after~~10%. As ~~September~~of December 1531, 2009~~. The Company~~, ~~has used~~ the ~~new~~Company ~~Codification~~determined inits ~~reference~~carrying tovalue ~~GAAP~~exceeded inits ~~this~~fair ~~annual report~~value onresulting ~~Form 10-K and~~in ~~such~~a ~~use~~goodwill ~~has~~impairment ~~not~~charge ~~impacted the consolidated results~~ of ~~the~~$13.6 ~~Company~~million.

InImpairment ~~January 2010,~~ of Long-Lived Assets. We evaluate the ~~FASB~~carrying ~~issued~~value ~~ASU~~of ~~No. 2010~~long-06lived assets, ~~“Fair Value~~such ~~Measurements~~as property, plant and ~~Disclosures~~equipment, ~~(Topic~~for ~~820)—Improving~~impairment ~~Disclosures~~when ~~about~~events ~~Fair Value~~or ~~Measurements”. This guidance~~changes ~~will~~in ~~require~~circumstances ~~reporting~~indicate ~~entities~~that tothe ~~provide~~carrying ~~information~~amount ~~about~~of ~~movements~~ an asset or group of assets ~~among~~may ~~Levels~~not 1be ~~and~~recoverable. Assets 2are ofgrouped ~~the~~and ~~three-tier~~evaluated ~~fair~~for ~~value~~impairment ~~hierarchy established~~at bythe ~~ASC~~lowest ~~820~~level ~~and~~for ~~provide~~which athere ~~reconciliation~~is ofidentifiable ~~purchases,~~cash ~~sales, issuance,~~flows. If ~~and~~impairment ~~settlements~~indicators ofare ~~financial~~present ~~instruments~~and ~~valued~~the ~~with~~estimated afuture ~~Level~~undiscounted ~~3 method,~~cash ~~which~~flows isare ~~used~~less tothan ~~price~~ the ~~hardest~~carrying to value ~~instruments. Entities~~of ~~will~~the ~~have~~asset toor ~~provide~~group ~~fair~~of ~~value measurement~~assets, ~~disclosures~~the ~~for~~carrying ~~each~~value ~~class~~is ofreduced ~~financial~~to ~~assets~~its ~~and liabilities~~estimated fair value. ~~The~~Fair ~~guidance~~value ~~will~~is ~~be effective~~estimated ~~for~~based ~~any~~on ~~fiscal~~the ~~year~~best ~~that~~information ~~begins after December 15~~available, ~~2010. We~~including doprices ~~not~~for ~~anticipate~~similar ~~the~~assets ~~adoption~~or results of ~~ASU~~valuation ~~No. 2010-06 to~~techniques ~~have~~such aas ~~material~~discounting ~~impact~~estimated onfuture ~~our~~cash ~~financial statements~~flows.

~~Item~~Due 7Ato lower sales and earnings for the twelve months ended December 31, 2010 and 2009, the Company performed an ASC 360 impairment test. Based ~~Quantitative~~on an undiscounted cash flows model, the Company’s carrying value of long-lived assets was adequate and ~~Qualitative~~no ~~Disclosures~~write-down ~~about~~was ~~Market~~necessary. Separate ~~Risk~~from the undiscounted cash flow model, it was determined a triggering event occurred in 2008, in conjunction with the decision to discontinue manufacturing operations at our West Jordan, Utah facility. This long-lived asset impairment totaled $0.7 million in 2008 due to certain long-lived assets that will not be utilized in the future.

WeInsurance ~~are~~Benefit ~~subject~~Accruals. Each accounting period, we estimate an amount to ~~various~~accrue ~~market~~for ~~risks~~costs ~~such~~incurred ~~as fluctuating~~but ~~lumber~~not ~~prices~~yet reported under our self-funded employee medical and ~~interest~~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.

~~Commodity~~Purchase ~~Price Risk~~Accounting. ~~Hardwood~~ We ~~lumber~~accounted ~~accounts~~ for ~~the~~our ~~largest~~acquisitions ~~portion~~under ofthe ~~our~~purchase ~~material~~method ~~costs. Our~~of ~~profitability~~accounting isand, ~~therefore~~accordingly, ~~affected by~~ the ~~prices~~acquired ofassets ~~lumber~~and ~~which~~liabilities ~~may fluctuate~~assumed ~~based~~were onrecorded aat ~~number~~their ofrespective ~~factors~~fair ~~beyond~~values. The ~~our~~recorded ~~control,~~values ~~including,~~of ~~among others,~~assets ~~changes in supply~~ and ~~demand,~~liabilities ~~general~~are ~~economic~~based ~~conditions,~~on ~~labor~~third-party ~~costs, competition~~estimates and, invaluations ~~some~~when ~~cases, government regulation~~available. ~~Though~~The weremaining values are ~~not~~based ~~dependent~~ on ~~any~~management’s ~~single supplier~~judgments ~~for~~and ~~our~~estimates. The ~~raw~~Transaction ~~materials,~~has webeen ~~have~~accounted nofor ~~long-term~~as ~~supply~~a ~~contracts~~recapitalization ~~and thus, are subject to changes~~ in the ~~prices~~Company’s ~~charged~~financial bystatements, ~~our~~with ~~suppliers. The~~no ~~prices~~adjustments ~~for~~to the ~~primary~~historical ~~hardwood~~basis ~~species we~~of ~~use in~~ the ~~production~~Company’s ofassets ~~our hardwood doors~~ and ~~components are subject to some volatility~~liabilities. WeThe ~~generally~~Company ~~pass through~~did ~~cost~~not ~~increases~~push todown ~~our~~the ~~customers,~~basis ~~but~~because ~~such~~of ~~efforts~~the ~~typically~~significance ~~lag~~of ~~three to~~the ~~nine~~publicly ~~months~~traded ~~behind~~debt ~~material~~outstanding, ~~cost~~which ~~changes~~hinders ~~and~~the weParent’s ~~can not guarantee a full offset. Our~~ ability to ~~pass~~control ~~through these~~the ~~price~~form ~~changes~~of toownership ~~our~~of ~~customers~~the ~~is dependent on prevailing economic and competitive conditions~~Company.

~~Interest~~Income ~~Rate Risk~~Taxes. We The Company and its Parent file a consolidated federal income tax return, and federal income taxes are ~~exposed~~allocated to ~~market~~the ~~risk~~Company ~~relating~~based toupon ~~changes~~the inrespective ~~interest~~taxable ~~rates~~earnings or loss. The Company accounts for income taxes in ~~respect~~ ofaccordance awith ~~portion~~the liability method of ~~our~~accounting, ~~long-term~~which ~~debt. As~~requires recognition of ~~December 31,~~deferred ~~2009,~~tax weassets ~~had~~and noliabilities ~~outstanding~~for ~~indebtedness~~the ~~which bears~~expected ~~interest~~future attax aconsequences ~~variable~~of ~~rate~~events that were included in the consolidated financial statements and tax returns. ~~We believe~~Under ~~that~~this amethod, ~~one~~deferred ~~percent~~tax ~~(1%)~~assets ~~increase~~and inliabilities are determined based on the ~~interest~~difference between the financial statement and tax basis of assets and liabilities using enacted tax rates ~~currently~~expected to be in effect ~~would~~for ~~not~~the ~~have~~year in which the differences are expected to reverse. The Company records a ~~material~~valuation ~~adverse~~allowance ~~effect~~when onit ~~our~~is ~~financial~~more ~~condition~~likely ~~or results~~than ofnot ~~operations~~that the net deferred tax assets will not be realized.

21The 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

~~Table of Contents~~20

~~Item~~Table 8.of ~~Financial Statements and Supplementary Data~~Contents

~~REPORT~~and OFinterpretations. The ~~INDEPENDENT~~settlement ~~REGISTERED PUBLIC~~of ~~ACCOUNTING~~these ~~FIRM~~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.

~~Board~~New ofAccounting ~~Directors and Stockholders~~Standards

~~WII~~In ~~Components~~January 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-06, “Fair Value Measurements and Disclosures (Topic 820)—Improving Disclosures about Fair Value Measurements”. This guidance requires reporting entities to provide information about movements of assets among Levels 1 and 2 of the three-tier fair value hierarchy established by ASC 820 and provide a reconciliation of purchases, sales, issuance, and settlements of financial instruments valued with a Level 3 method, which is used to price the hardest to value instruments. Entities must provide fair value measurement disclosures for each class of financial assets and liabilities. The guidance was effective for interim and annual periods that begin after December ~~Inc~~15, 2009 except for certain Level 3 activity disclosure requirements that are effective for fiscal years beginning after December 15, 2010 and interim periods within those fiscal years. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

StIn July 2010, the FASB issued ASU 2010-20, “Receivables (Topic 310), Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses,” which includes loans, trade accounts receivable, notes receivable, credit cards, leveraged leases, direct financing leases, and sales-type leases. The ~~Cloud~~term does not include receivables measured at fair value or the lower of cost of fair value and debt securities among others. It also defines two levels of disaggregation for disclosure: portfolio segment and class of financing receivables. A portfolio segment is defined as the level at which an entity determines its allowance for credit losses. A class of financing receivable is defined as a group of finance receivables determined on the basis of their initial measurement attribute (i.e., ~~Minnesota~~amortized cost of purchased credit impaired), risk characteristics, and an entity’s method for monitoring and assessing credit risk. The ASU requires an entity to provide additional disclosures including, but not limited to, a rollforward schedule of the allowance for credit losses (with the ending allowance balance further disaggregated based on impairment methodology) and the related ending balance of the finance receivable presented by portfolio segment, and the aging of past due financing receivables at the end of the period, the nature and extent of troubled debt restructurings that occurred during the period and their impact on the allowance for credit losses, the nature and extent of troubled debt restructurings that occurred within the last year, that have defaulted in the current reporting period, and their impact on the allowance for credit losses, the nonaccrual status of financing receivables, and impaired financing receivables, presented by class. The extensive new disclosures of information as of the end of a reporting period are effective for both interim and annual reporting periods ending after December 15, 2010. Specific items regarding activity that occurred before the issuance of the ASU, such as the allowance rollforward and modification disclosures are required for periods beginning after December 15, 2010. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

WeIn ~~have~~December 2010, ~~audited~~ the ~~accompanying~~FASB ~~consolidated~~issued ~~balance~~ASU ~~sheets~~2010-28, of“Intangibles ~~WII~~— ~~Components, Inc.~~Goodwill and Other (aTopic ~~Delaware Corporation~~350), ~~and~~When ~~wholly-owned~~to ~~subsidiary~~Perform Step 2 of ~~WII~~the ~~Holding~~Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts, ~~Inc.)~~ ~~and subsidiaries~~a (consensus of the ~~“Company”)~~FASB asEmerging ofIssues ~~December 31~~Task Force”, ~~2009~~which ~~and~~affects ~~2008~~all entities that have recognized goodwill and ~~the related~~have ~~consolidated~~one ~~statements~~or ofmore ~~operations,~~reporting ~~stockholders’~~units ~~equity,~~whose ~~and~~carrying ~~cash flows~~amount for ~~each~~purposes of ~~the~~performing ~~three~~Step ~~years~~1 inof the ~~period~~goodwill ~~ended~~impairment ~~December 31, 2009~~test is zero or negative. ~~Our~~The ~~audits~~ASU modifies Step 1 so that for those reporting units, an entity is required to perform Step 2 of the ~~basic consolidated~~goodwill ~~financial~~impairment ~~statements~~test ~~included~~if ~~the~~it ~~financial~~is ~~statement~~more ~~schedule~~likely ~~listed in~~than ~~the~~not ~~Index~~that ~~appearing~~a ~~under~~goodwill ~~Item~~impairment 15exists. ~~These~~ In ~~financial~~determining ~~statements~~whether ~~and~~it ~~financial~~is ~~statement~~more ~~schedule~~likely than not that goodwill impairment exists, an entity should consider whether there are ~~the responsibility~~any adverse qualitative factors indicating that an impairment may exist. The qualitative factors are consistent with existing guidance, which requires that goodwill of a reporting unit be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the ~~Company’s~~fair ~~management~~value of a reporting unit below its carrying amount. ~~Our~~ For ~~responsibility~~public isentities, tothis ~~express~~guidance anis ~~opinion~~effective onfor ~~these~~fiscal ~~financial statements~~years, and ~~financial~~interim ~~statement~~periods ~~schedule~~within ~~based~~those years, beginning after December 15, 2010. Adoption of ASU 2010-28 is not expected to have a significant impact on ~~our~~the ~~audits~~Company’s consolidated financial statements.

WeIn ~~conducted~~December 2010, ~~our audits in accordance with~~ the ~~standards~~FASB ofissued ~~the~~ASU ~~Public Company~~2010-29, ~~Accounting~~“Business ~~Oversight~~Combinations ~~Board~~ (~~United~~Topic ~~States~~805)~~. Those~~, ~~standards~~Disclosure ~~require~~of ~~that~~Supplementary weProForma ~~plan~~Information ~~and perform~~for ~~the~~Business ~~audit~~Combinations, toa ~~obtain~~consensus ~~reasonable~~of ~~assurance about whether~~ the ~~financial statements~~FASB ~~are~~Emerging ~~free~~Issues ofTask ~~material misstatement. The Company is not required to have~~Force”, ~~nor~~which ~~were~~requires wethat ~~engaged~~the topro ~~perform,~~forma ~~an audit~~information ofbe ~~its~~presented ~~internal~~as ~~control~~if ~~over~~the ~~financial~~business ~~reporting. Our~~combination ~~audits~~occurred ~~included~~at ~~consideration~~the beginning of ~~internal control~~the ~~over~~prior ~~financial~~annual reporting asperiod ~~a basis~~ for ~~designing~~purposes ~~audit~~of ~~procedures~~calculating ~~that are~~both ~~appropriate in~~ the ~~circumstances,~~current ~~but~~reporting ~~not~~period ~~for~~and the ~~purpose~~prior ofreporting ~~expressing~~period ~~an opinion~~pro onforma ~~the effectiveness of the Company’s internal control over~~ financial ~~reporting~~ information. ~~Accordingly,~~ The weASU ~~express~~also norequires ~~such~~that ~~opinion. An~~this ~~audit~~disclosure ~~also includes~~be ~~examining,~~accompanied onby a ~~test~~narrative ~~basis,~~description ~~evidence~~of ~~supporting~~ the ~~amounts~~amount and ~~disclosures~~ innature ~~the~~of ~~financial~~material ~~statements,~~nonrecurring ~~assessing~~pro ~~the~~forma ~~accounting~~adjustments. The ~~principles used~~amendments ~~and~~in ~~significant~~this ~~estimates~~ASU ~~made~~are byeffective ~~management,~~for asbusiness ~~well~~combinations aswith ~~evaluating~~effective ~~the overall~~dates ~~financial~~on ~~statement~~or ~~presentation. We~~after ~~believe~~the ~~that~~beginning ~~our~~of ~~audits~~the ~~provide~~first aannual ~~reasonable~~reporting ~~basis~~period ~~for~~beginning ~~our~~on ~~opinion.~~or after

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of WII Components, Inc. and subsidiaries as of December 31, 2009 and 2008, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2009, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the related 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.21

~~/s/~~Table ~~Grant~~of ~~Thornton LLP~~Contents

~~Minneapolis~~December 15, ~~Minnesota~~ 2010. Prospective application is required with early adoption permitted. The Company is currently assessing the impact of the adoption of this ASU on the consolidated financial statements.

~~March~~In January 312011, the FASB issued ASU 2011-01, “Receivables (Topic 310) — Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20”, which deferred the effective date of the disclosure requirements for public entities about troubled debt restructurings in ASU 2010-20, to be concurrent with the effective date of the guidance for troubled debt restructuring which is currently anticipated to be effective for interim and annual periods after June 15, 2011. The Company does not anticipate the new guidance will have a material impact on the consolidated financial statements.

22Item 7A. Quantitative and Qualitative Disclosures about Market Risk

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

~~WII~~Commodity ~~COMPONENTS~~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, ~~INC~~including, among others, changes in supply and demand, general economic conditions, labor costs, competition and, in some cases, government regulation. Though ~~AND~~we ~~SUBSIDIARIES~~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. We generally pass through cost increases to our customers, but such efforts typically lag three to twelve months behind material cost changes and we cannot guarantee a full offset. Our ability to pass through these price changes to our customers is dependent on prevailing economic and competitive conditions.

~~CONSOLIDATED~~Interest ~~BALANCE~~Rate ~~SHEETS~~Risk. We are exposed to market risk relating to changes in interest rates in respect of a portion of our long-term debt. As of December 31, 2010, we had no outstanding indebtedness which bears interest at a variable rate. 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.

~~DECEMBER 31, 2009 AND 2008~~22

~~(In~~Table ~~thousands,~~of ~~except share and per share amounts)~~Contents

	2009			2008
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	13,102		$	14,721
Accounts receivable—net of allowance for doubtful accounts of $325 and $239, respectively	10,754			6,603
Inventories	14,407			13,442
Deferred income taxes	1,927			1,318
Other current assets	735			850
Total current assets	40,925			36,934
PROPERTY, PLANT, AND EQUIPMENT - AT COST:
Land	3,439			3,439
Buildings and yards	26,150			26,122
Equipment	61,112			59,845
Less accumulated depreciation	(39,422		)	(32,869		)
Property, plant, and equipment—net	51,279			56,537
GOODWILL AND OTHER ASSETS:
Goodwill	99,152			112,748
Customer relationship—net	8,266			9,924
Noncompete agreements—net	31			65
Other assets	3,424			4,798
Total goodwill and other assets	110,873			127,535
TOTAL	$	203,077		$	221,006
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	—		$	3,597
Accounts payable	3,990			1,187
Accrued payroll	2,713			2,935
Other current liabilities	13,226			13,711
Total current liabilities	19,929			21,430
LONG-TERM DEBT—Net of current maturities	108,350			108,350
DEFERRED INCOME TAXES	3,174			5,217
OTHER LONG-TERM LIABILITIES	2,324			1,947
COMMITMENTS AND CONTINGENCIES (Note 8)
STOCKHOLDERS’ EQUITY:
Common stock:
Voting	—			—
Nonvoting,	—			—
Additional paid-in capital	71,341			71,291
(Accumulated deficit) retained earnings	(2,041		)	12,771
Total stockholders’ equity	69,300			84,062
TOTAL	$	203,077		$	221,006

Item 8. Financial Statements and Supplementary Data

~~See~~REPORT ~~notes~~OF toINDEPENDENT ~~consolidated~~REGISTERED ~~financial~~PUBLIC ~~statements.~~ACCOUNTING FIRM

23Board of Directors and Stockholders WII Components, Inc. St. Cloud, Minnesota

~~Table~~ We have audited the accompanying consolidated balance sheets of ~~Contents~~WII Components, Inc. (a Delaware Corporation and wholly-owned subsidiary of WII Holding, Inc.) and subsidiaries (the “Company”) as of December 31, 2010 and 2009 and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2010. Our audits of the basic consolidated financial statements included the financial statement schedule listed in the Index appearing under 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 these financial statements and financial statement schedule based on our audits.

~~WII~~We ~~COMPONENTS~~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, ~~INC~~ nor were we engaged to perform, an audit of its internal control over financial reporting. Our ~~AND SUBSIDIARIES~~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.

~~CONSOLIDATED~~In ~~STATEMENTS OF~~our ~~OPERATIONS~~opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of WII Components, Inc. and subsidiaries as of December 31, 2010 and 2009, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2010, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the related 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.

~~(In~~/s/ ~~thousands)~~Grant Thornton LLP Minneapolis, Minnesota March 30, 2011

	Year Ended December 31,
	2009			2008			2007
NET SALES	$	130,455		$	193,373		$	249,303
COST OF SALES	110,093			166,635			205,063
Gross profit	20,362			26,738			44,240
OPERATING EXPENSES:
General and administrative	9,048			10,695			20,792
Selling and marketing	2,977			3,185			3,253
Goodwill impairment	13,596			—			—
Loss (gain) on sale of assets	132			54			51
Total operating expenses	25,753			13,934			24,096
OPERATING (LOSS) INCOME	(5,391		)	12,804			20,144
OTHER INCOME (EXPENSE):
Interest income	16			135			472
Interest expense	(12,449		)	(13,024		)	(15,460		)
Other income (expense)	7			1,725			(19		)
Total other expense	(12,426		)	(11,164		)	(15,007		)
INCOME BEFORE (BENEFIT) PROVISION FOR INCOME TAXES	(17,817		)	1,640			5,137
INCOME TAX (BENEFIT) EXPENSE	(2,634		)	324			2,096
NET (LOSS) EARNINGS	$	(15,183	)	$	1,316		$	3,041

~~See~~Table ~~notes~~of ~~to consolidated financial statements.~~Contents

24WII COMPONENTS, INC. AND SUBSIDIARIES

~~Table of~~CONSOLIDATED ~~Contents~~BALANCE SHEETS

~~WII COMPONENTS,~~DECEMBER ~~INC.~~31, 2010 AND ~~SUBSIDIARIES~~ 2009

~~CONSOLIDATED~~(In ~~STATEMENTS OF STOCKHOLDERS’ EQUITY~~thousands)

(In thousands, except share amounts)

	2010			2009
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	7,058		$	13,102
Accounts receivable—net of allowance for doubtful accounts of $68 and $325, respectively	15,558			10,690
Inventories	19,128			14,407
Deferred income taxes	145			1,927
Other current assets	947			799
Total current assets	42,836			40,925
PROPERTY, PLANT, AND EQUIPMENT - AT COST:
Land	3,439			3,439
Buildings and yards	26,269			26,150
Equipment	62,808			61,112
Less accumulated depreciation	(45,621		)	(39,422		)
Property, plant, and equipment—net	46,895			51,279
GOODWILL AND OTHER ASSETS:
Goodwill	99,152			99,152
Customer relationship—net	6,608			8,266
Noncompete agreements—net	5			31
Other assets	1,986			3,424
Total goodwill and other assets	107,751			110,873
TOTAL	$	197,482		$	203,077
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	3,260		$	3,990
Accrued payroll	2,819			2,713
Other current liabilities	12,660			13,226
Total current liabilities	18,739			19,929
LONG-TERM DEBT	108,350			108,350
DEFERRED INCOME TAXES	1,553			3,174
OTHER LONG-TERM LIABILITIES	2,530			2,324
COMMITMENTS AND CONTINGENCIES (Note 8)
STOCKHOLDERS’ EQUITY:
Common stock:
Voting	—			—
Nonvoting,	—			—
Additional paid-in capital	71,391			71,341
Accumulated deficit	(5,081		)	(2,041		)
Total stockholders’ equity	66,310			69,300
TOTAL	$	197,482		$	203,077

	Common Stock										Additional			(Accumulated Deficit)
	Voting					Nonvoting					Paid-in			Retained
	Shares		Amount			Shares		Amount			Capital			Earnings			Total
BALANCE—January 1, 2007	21,762,081		$	217		854,261		$	9		$	56,244		$	21,509		$	77,979
Net earnings														3,041			3,041
Stock-based compensation	100										100						100
Recapitalization of stock	(21,762,081	)	(217		)	(854,261	)	(9		)				226			—
Effect of adoption of ASC 740														1,449			1,449
Amount due to Sellers														(6,043		)	(6,043		)
Variable stock option pricing											1,029						1,029
Recapitalization-equity contribution											21,747			(256		)	21,491
Recapitalization and repurchase stock options											(7,879		)	(2,689		)	(10,568		)
Expenses paid on behalf of Parent														(2,609		)	(2,609		)
BALANCE—December 31, 2007	100		—			—		—			71,241			14,628			85,869
Net earnings														1,316			1,316
Stock-based compensation											50						50
Amount due to Sellers														666			666
Income tax benefit on stock option payments to Seller														639			639
Payments made on behalf of Parent														(4,478		)	(4,478		)
BALANCE—December 31, 2008	100		—			—		—			71,291			12,771			84,062
Net loss														(15,183		)	(15,183		)
Stock-based compensation											50						50
Amount due to Sellers														371			371
BALANCE—December 31, 2009	100		$	—		—		$	—		$	71,341		(2,041		)	$	69,300

See notes to consolidated financial statements.

~~See notes to consolidated financial statements.~~24

25Table of Contents

~~Table~~WII ~~of Contents~~COMPONENTS, INC. AND SUBSIDIARIES

~~WII~~CONSOLIDATED ~~COMPONENTS, INC.~~STATEMENTS ~~AND SUBSIDIARIES~~OF OPERATIONS

~~CONSOLIDATED~~(In ~~STATEMENTS OF CASH FLOWS~~thousands)

(In thousands)

	Year Ended December 31,
	2010			2009			2008
NET SALES	$	145,382		$	130,455		$	193,373
COST OF SALES	124,053			110,093			166,635
Gross profit	21,329			20,362			26,738
OPERATING EXPENSES:
General and administrative	8,912			9,048			10,695
Selling and marketing	3,023			2,977			3,185
Goodwill impairment	—			13,596			—
(Gain) loss on sale of assets	(12		)	132			54
Total operating expenses	11,923			25,753			13,934
OPERATING INCOME (LOSS)	9,406			(5,391		)	12,804
OTHER INCOME (EXPENSE):
Interest income	12			16			135
Interest expense	(12,450		)	(12,449		)	(13,024		)
Other income	7			7			1,725
Total other expense	(12,431		)	(12,426		)	(11,164		)
INCOME BEFORE INCOME TAX (BENEFIT) EXPENSE	(3,025		)	(17,817		)	1,640
INCOME TAX EXPENSE (BENEFIT)	348			(2,634		)	324
NET (LOSS) EARNINGS	$	(3,373	)	$	(15,183	)	$	1,316

	Year Ended December 31,
	2009			2008			2007
OPERATING ACTIVITIES:
Net (loss) earnings	$	(15,183	)	$	1,316		$	3,041
Adjustments to reconcile net (loss) earnings to net cash provided by operating activities:
Depreciation and amortization	8,388			8,762			8,712
Amortization of debt issue costs	1,510			1,510			2,453
Gain on extinguishments of debt	—			(1,725		)	—
Deferred income taxes	(2,652		)	(631		)	3,392
Loss on sale of property, plant, and equipment	132			54			51
Stock compensation expense	50			50			1,130
Goodwill impairment	13,596			—			—
Long-lived asset impairment	—			696			—
Change in operating assets and liabilities:
Accounts receivable	(4,151		)	7,065			(2,347		)
Inventories	(965		)	7,383			675
Other current assets	115			(181		)	(73		)
Accounts payable	2,803			(2,116		)	(1,368		)
Accrued payroll and other current liabilities	(301		)	(976		)	(6,001		)
Current tax benefit due to Sellers	(9		)	(6,710		)	6,719
Other long-term liabilities	540			(783		)	116
Total adjustments	24,828			12,398			13,459
Net cash provided by operating activities	3,873			13,714			16,500
INVESTING ACTIVITIES:
Purchases of property, plant, and equipment	(1,700		)	(3,722		)	(7,896		)
DMI earn-out payment	—			—			(5,000		)
Proceeds from sale of property, plant, and equipment	131			12			38
Net cash used in investing activities	(1,569		)	(3,710		)	(12,858		)
FINANCING ACTIVITIES:
Principal payments of long-term debt	(3,597		)	(17,659		)	(14,031		)
Borrowings of long-term debt	—			6,600			10,152
Recapitalization - equity contribution	—			—			21,747
Debt issuance costs	(136		)	(29		)	(3,554		)
Recapitalization - repurchase of stock options	—			—			(7,879		)
Due to Parent	(190		)	709			4,058
Payments made on behalf of Parent	—			(4,478		)	(2,609		)
Net cash (used in) provided by provided by financing activities	(3,923		)	(14,857		)	7,884
NET (DECREASE) INCREASE IN CASH	(1,619		)	(4,853		)	11,526
Cash and cash equivalents—Beginning of period	14,721			19,574			8,048
Cash and cash equivalents—End of period	$	13,102		$	14,721		$	19,574
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	10,999		$	11,992		$	12,983
Cash paid for income taxes	$	216		$	450		$	714
NONCASH ACTIVITY:
Recapitalization - repurchase of common stock funded by the Parent	$	—		$	—		$	226
Future tax benefit due to Sellers in:
Other current liabilities	$	—		$	9		$	6,719
Other long-term liabilities	$	1,784		$	1,947		$	2,313
Deferred income taxes	$	—		$	—		$	2,945
Capital expenditures in accounts payable	$	—		$	—		$	152
Note receivable in connection with the sale of property, plant and equipment	$	—		$	55		$	111
Effect of adoption of ASC 740	$	—		$	—		$	1,449

See notes to consolidated financial statements.

~~See notes to consolidated financial statements.~~25

26Table of Contents

~~Table of~~WII ~~Contents~~COMPONENTS, INC. AND SUBSIDIARIES

~~WII~~CONSOLIDATED ~~COMPONENTS, INC.~~STATEMENTS ~~AND SUBSIDIARIES~~OF STOCKHOLDERS’ EQUITY

~~NOTES~~(In TOthousands, ~~CONSOLIDATED~~except ~~FINANCIAL STATEMENTS~~share amounts)

DECEMBER 31, 2009 AND 2008

									(Accumulated
	Common Stock						Additional		Deficit)
	Voting			Nonvoting			Paid-in		Retained
	Shares	Amount		Shares	Amount		Capital		Earnings			Total
BALANCE—January 1, 2008	100	$	—	—	$	—	$	71,241	$	14,628		$	85,869
Net earnings									1,316			1,316
Stock-based compensation							50					50
Amount due to Sellers									666			666
Income tax benefit on stock option payments to Seller									639			639
Expenses paid on behalf of Parent									(4,478		)	(4,478		)
BALANCE—December 31, 2008	100	—		—	—		71,291		12,771			84,062
Net loss									(15,183		)	(15,183		)
Stock-based compensation							50					50
Amount due to Sellers									371			371
BALANCE—December 31, 2009	100	—		—	—		71,341		(2,041		)	69,300
Net loss									(3,373		)	(3,373		)
Stock-based compensation							50					50
Amount due to Sellers									333			333
BALANCE—December 31, 2010	100	$	—	—	$	—	$	71,391	$	(5,081	)	$	66,310

1.See ~~NATURE~~notes OFto ~~BUSINESS~~consolidated financial statements.

Company Background On January 9, 2007, WII Components, Inc. (the “Company”) was acquired by WII Holding, Inc. (“Parent”), a newly formed investment entity controlled by two investment funds managed by Olympus Partners. For ease of reference, these funds are sometimes collectively referred to herein as the “Olympus Funds.” The acquisition was consummated through a merger of WII Merger Corporation (“MergerCo”), a wholly owned subsidiary of Parent, with and into the Company with the Company being the surviving corporation in the transaction (the “Transaction”). The aggregate purchase price paid by Parent for all of the shares of capital stock of the Company and options to purchase shares of capital stock of the Company in the Transaction was approximately $293.1 million, less indebtedness and certain fees and expenses. The aggregate purchase price and related fees and expenses were funded by borrowings under new credit facilities by the Company and private offerings of debt and equity securities by Parent. The Transaction has been accounted for as a recapitalization in the Company’s financial statements, with no adjustments to the historical basis of the Company’s assets and liabilities. The Company did not push down the new accounting basis because of the significance of the publicly traded debt outstanding, which hinders the Parent’s ability to control the form of ownership of the Company.26

~~Description~~Table of ~~Business The~~ 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 throughout the United States and North America. 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.Contents

~~Principles~~WII ~~of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries; Woodcraft Industries~~COMPONENTS, ~~Inc~~INC. ~~and its~~AND wholly owned subsidiaries, PrimeWood, Inc. (“PrimeWood”) and Brentwood Acquisition, Corp. (“Brentwood”) and Dimension Moldings, Inc. (“DMI”) (Note 6). Grand Valley was merged with and into Woodcraft Industries, Inc. on December 31, 2006. All intercompany accounts and transactions have been eliminated in the preparation of the consolidated financial statements.SUBSIDIARIES

2.CONSOLIDATED ~~SIGNIFICANT~~STATEMENTS ~~ACCOUNTING~~OF ~~POLICIES~~CASH FLOWS

~~Cash~~(In Equivalents All highly liquid investments with an original maturity when purchased of three months or less are considered to be cash equivalents. At times, certain bank deposits may be in excess of federally insured limits.thousands)

Revenue Recognition Sales are recognized when revenue is realized or realizable and has been earned. The Company’s policy is to recognize revenue and the related cost of sales when risk and title passes to the customer. This is generally on the date of shipment, however, certain sales are shipped FOB destination and revenue is recognized when received by the customer. Freight billed to customers is included in sales and shipping costs are included in cost of sales. The Company records an estimate for anticipated sales returns and customer discounts at the time revenue is recognized based on historical experience and current trends. Provisions for estimated sales returns and customer discounts are recorded as a reduction of net sales.

	Year Ended December 31,
	2010			2009			2008
OPERATING ACTIVITIES:
Net (loss) earnings	$	(3,373	)	$	(15,183	)	$	1,316
Adjustments to reconcile net (loss) earnings to net cash (used in) provided by operating activities:
Depreciation and amortization	7,934			8,388			8,762
Amortization of debt issue costs	1,488			1,510			1,510
Gain on extinguishments of debt	—			—			(1,725		)
Bad Debt Expense	(257		)	86			108
Deferred income taxes	161			(2,652		)	(631		)
(Gain) Loss on sale of assets	(12		)	132			54
Stock compensation expense	50			50			50
Goodwill impairment	—			13,596			—
Long-lived asset impairment	—			—			696
Change in operating assets and liabilities:
Accounts receivable	(4,611		)	(4,173		)	6,957
Inventories	(4,721		)	(965		)	7,383
Other current assets	186			115			(181		)
Accounts payable	(730		)	2,803			(2,116		)
Accrued payroll and other current liabilities	(460		)	(301		)	(976		)
Current tax benefit due to Sellers	—			(9		)	(6,710		)
Other long-term liabilities	540			540			(783		)
Total adjustments	(766		)	19,120			12,398
Net cash (used in) provided by operating activities	(3,805		)	3,937			13,714
INVESTING ACTIVITIES:
Purchases of property, plant, and equipment	(1,870		)	(1,700		)	(3,722		)
Proceeds from sale of property, plant, and equipment	16			131			12
Net cash used in investing activities	(1,854		)	(1,569		)	(3,710		)
FINANCING ACTIVITIES:
Principal payments of long-term debt	—			(3,597		)	(17,659		)
Borrowings of long-term debt	—			—			6,600
Debt issuance costs	(50		)	(136		)	(29		)
Due to Parent	(1		)	(190		)	709
Payments made on behalf of Parent	(334		)	(64		)	(4,478		)
Net cash used in financing activities	(385		)	(3,987		)	(14,857		)
NET DECREASE IN CASH	(6,044		)	(1,619		)	(4,853		)
Cash and cash equivalents—Beginning of period	13,102			14,721			19,574
Cash and cash equivalents—End of period	$	7,058		$	13,102		$	14,721
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	10,962		$	10,999		$	11,992
Cash paid for income taxes	$	187		$	216		$	450
NONCASH ACTIVITY:
Future tax benefit due to Sellers in:
Other current liabilities	$	—		$	—		$	9
Other long-term liabilities	$	1,450		$	1,784		$	1,947
Note receivable in connection with the sale of property, plant and equipment	$	—		$	—		$	55

~~Concentration~~See ~~of Credit~~notes ~~Risk The~~to Company receives a significant portion of its revenue from two customers. Loss of one or more of these customers could adversely affect the Company’s operating results in the near term. There are no concentrations of business transacted within a market or geographic area that would severely impact business in the near term. The Company’s customers representing 10% or more of consolidated ~~sales~~financial ~~are as follows:~~statements.

	Year Ended December 31,
	2009		2008		2007
A	43	%	37	%	36	%
B	17		18		18

~~These~~Table ~~two customers represented the following percentages~~ of ~~consolidated accounts receivable as of December 31:~~Contents

27WII COMPONENTS, INC. AND SUBSIDIARIES

~~Table~~NOTES ofTO ~~Contents~~CONSOLIDATED FINANCIAL STATEMENTS

	2009		2008
A	57	%	41	%
B	16		6

DECEMBER 31, 2010 AND 2009

~~Accounts Receivable Accounts receivable comprises primarily trade receivables related to the sale of the Company’s products to its customers~~1. ~~Credit~~ isNATURE ~~granted~~OF in the normal course of business, without collateral or any other security, to support amounts due. The Company performs ongoing evaluations of its customers and continuously monitors collections and payments. The Company records an allowance for doubtful accounts based on the aging of the underlying receivables, historical experience, and any specific collection issues it has identified. Accounts outstanding longer than the contractual payments terms are considered past due. The Company writes off accounts receivable when they become uncollectible, and payments subsequently recorded on such receivables are credited to the allowance for doubtful accounts. Accounts receivable balances written off have been within management’s expectations and have not exceeded allowances provided.BUSINESS

~~Inventories~~Company Background ~~Inventories~~On asJanuary 9, of2007, ~~December~~WII Components, 31Inc. ~~consisted~~(the “Company”) was acquired by WII Holding, Inc. (“Parent”), a newly formed investment entity controlled by two investment funds managed by Olympus Partners. For ease of reference, these funds are sometimes collectively referred to herein as the ~~following~~ “Olympus Funds.” The acquisition was consummated through a merger of WII Merger Corporation (“AcquisitionCo”), a wholly owned subsidiary of Parent, with and into the Company with the Company being the surviving corporation in ~~thousands~~the transaction (the “Transaction”):. The aggregate purchase price paid by Parent for all of the shares of capital stock of the Company and options to purchase shares of capital stock of the Company in the Transaction was approximately $293.1 million, less indebtedness and certain fees and expenses. The aggregate purchase price and related fees and expenses were funded by borrowings under new credit facilities by the Company and private offerings of debt and equity securities by Parent. The Transaction has been accounted for as a recapitalization in the Company’s financial statements, with no adjustments to the historical basis of the Company’s assets and liabilities. The Company did not push down the new accounting basis because of the significance of the publicly traded debt outstanding, which hinders the Parent’s ability to control the form of ownership of the Company.

	2009		2008
Raw materials	$	7,338	$	6,977
Work in process	3,213		2,761
Finished goods	2,322		2,496
LIFO adjustment	1,534		1,208
	$	14,407	$	13,442

Description of Business The 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 throughout the United States and North America. 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.

~~The~~Principles ~~majority~~ of ~~inventory~~Consolidation The isconsolidated ~~valued~~financial atstatements include the ~~lower~~accounts of ~~last-in,~~ ~~first-out~~the ~~(“LIFO”)~~Company ~~cost~~and orits ~~market.~~wholly ~~The~~owned ~~remainder~~subsidiaries: ofWoodcraft ~~the~~Industries, Inc. ~~inventory~~and ~~is valued~~its atwholly ~~the~~owned ~~lower~~subsidiaries, ~~of first-in~~PrimeWood, Inc. ~~first-out method~~ (“~~FIFO~~PrimeWood”) ~~cost~~and orBrentwood ~~market~~Acquisition, Corp. (“Brentwood”). AsAll ofintercompany ~~December 31,~~accounts ~~2009~~ and ~~2008, inventory~~transactions onhave ~~the~~been ~~LIFO~~eliminated ~~method~~in ~~represented~~the ~~62%~~preparation ~~and 61%~~ of the ~~inventory~~consolidated ~~balance, respectively~~financial statements.

~~If LIFO inventories had been valued at current costs determined on a FIFO basis the effect on costs of sales would be an increase of $0~~2.3 ~~million,~~SIGNIFICANT ~~$0.8~~ACCOUNTING ~~million, and $1.0 million for the years ended December 31, 2009, 2008, and 2007, respectively.~~POLICIES

~~Property,~~Cash ~~Plant, and Equipment~~Equivalents ~~Property,~~All ~~plant,~~highly ~~and~~liquid ~~equipment~~investments ~~are~~with ~~recorded at~~an ~~cost. Improvements~~original ~~are~~maturity ~~capitalized and~~when ~~expenditures~~purchased ~~for~~of ~~maintenance~~three ~~and~~months ~~repairs~~or less are ~~charged~~considered to ~~operations~~be ~~as incurred~~cash equivalents. ~~Depreciation~~At istimes, ~~computed~~certain ~~using the~~bank ~~straight-line~~deposits ~~method~~may ~~(for~~be ~~financial~~in ~~reporting~~excess ~~purposes)~~of ~~and~~federally ~~the~~insured ~~accelerated method (for income tax reporting purposes)~~limits. ~~Estimated useful lives for financial reporting purposes are as follows:~~

Buildings and yards		20 - 40 years
Equipment (machinery)		7 - 10 years
Equipment (computer related)		3 - 5 years

Revenue Recognition Sales are recognized when revenue is realized or realizable and has been earned. The Company’s policy is to recognize revenue and the related cost of sales when risk and title passes to the customer. This is generally on the date of shipment, however, certain sales are shipped FOB destination and revenue is recognized when received by the customer. Freight billed to customers is included in sales and shipping costs are included in cost of sales. The Company records an estimate for anticipated sales returns and customer discounts at the time revenue is recognized based on historical experience and current trends. Provisions for estimated sales returns and customer discounts are recorded as a reduction of net sales.

Concentration of Credit Risk The Company ~~did not~~receives ~~have~~a ~~any~~significant ~~capital~~portion ~~leases~~of ~~outstanding~~its atrevenue ~~December 31,~~from ~~2009~~two ~~and~~customers. ~~December 31, 2008~~Loss of one or more of these customers could adversely affect the Company’s operating results in the near term. There are no concentrations of business transacted within a market or geographic area that would severely impact business in the near term. The Company’s customers representing 10% or more of consolidated sales are as follows:

Depreciation for the years ended December 31, 2009, 2008, and 2007 was $6.7 million, $7.1 million, and $6.8 million, respectively.

	Year Ended December 31,
	2010		2009		2008
A	38	%	43	%	37	%
B	18		17		18

~~Goodwill The~~These ~~Company~~two ~~evaluates~~customers ~~goodwill~~represented ~~for~~the ~~impairment~~following atpercentages ~~least~~of ~~annually~~consolidated oraccounts ~~when events~~receivable ~~or changes in circumstances indicate impairment. The Company has elected to perform its annual tests for goodwill impairment~~ as of December 31 of each year. Fair value is measured using a market multiple valuation method. As of December 31, 2009 the Company determined its carrying value exceeded its fair value resulting in goodwill impairment (see Note 4). As of December 31, 2008 and 2007, the Company determined its fair value exceeded its carrying value resulting in no goodwill impairment.:

Customer Relationship Customer relationship relates to intangible assets recorded through previous acquisitions for relationships with significant customers. The original cost of these customer relationships is $16.6 million, and the related accumulated amortization as of December 31, 2009 and 2008 is $8.4 million and $6.7 million, respectively. The intangible assets are being amortized over the estimated life of 10 years. Amortization for the year ended December 31, 2009, 2008, and 2007 was $1.7 million, $1.7 million, and $1.6 million, respectively. Expected amortization is as follows for the years ended December 31 (in thousands):

	2010		2009
A	51	%	57	%
B	11		16

Table of Contents

2010	$	1,657
2011	1,658
2012	1,657
2013	1,658
2014	1,636
Thereafter	—

Accounts Receivable Accounts receivable comprises primarily trade receivables related to the sale of the Company’s products to its customers. Credit is granted in the normal course of business, without collateral or any other security, to support amounts due. The Company performs ongoing evaluations of its customers and continuously monitors collections and payments. The Company records an allowance for doubtful accounts based on the aging of the underlying receivables, historical experience, and any specific collection issues it has identified. Accounts outstanding longer than the contractual payments terms are considered past due. The Company writes off accounts receivable when they become uncollectible, and payments subsequently recorded on such receivables are credited to the allowance for doubtful accounts. Accounts receivable balances written off have been within management’s expectations and have not exceeded allowances provided.

~~Noncompete Agreement~~Inventories ~~Noncompete agreements~~Inventories primarily relate to agreements with the former owners of Brentwood, Grand Valley, and Dimension Moldings, Inc. The original cost of these noncompete agreements is $2.4 million, and the related accumulated amortization as of December 31, ~~2009~~consisted ~~and 2008 is $2.3 million and $2.3 million, respectively. Noncompete agreement rights are being amortized over the applicable terms~~ of the ~~agreements (5 years,~~following 7 years, and 5 years, respectively). The noncompete agreement with the former owner of Brentwood was fully amortized in July 2007. The noncompete agreements with the former owners of Grand Valley and Dimension Moldings, Inc. are expected to be fully amortized by April 2011 and July 2010, respectively. Amortization for the years ended December 31, 2009, 2008, and 2007 was $34,000, $34,000, and $285,000, respectively. As of December 31, 2009 the noncompete intangible asset was $31,000. Expected amortization is as follows for the years ended December 31 (in thousands):

~~2010~~	$2010	26	2009
2011	5
Raw materials	$	9,867	$	7,338
Work in process	3,726		3,213
Finished goods	4,003		2,322
LIFO adjustment	1,532		1,534
Total	$	19,128	$	14,407

~~Other~~The ~~Assets Other~~majority ~~assets~~of ~~primarily~~inventory ~~represent~~is ~~financing~~valued ~~fees~~at ~~and~~the ~~are~~lower ~~amortized~~of ~~on a straight~~last-~~line basis~~in, ~~which~~first-out ~~approximates~~(“LIFO”) ~~the~~cost ~~effective~~or ~~interest~~market. ~~method,~~The ~~over~~remainder ~~the term~~ of the ~~related~~inventory ~~financing~~is ~~agreement. In~~valued ~~conjunction~~at ~~with~~ the ~~Transaction,~~lower ~~the~~of ~~Company~~first-in, ~~terminated~~first-out ~~its~~method ~~credit agreement~~(“FIFO”) ~~and~~cost ~~wrote~~or ~~off $0~~market.3 As ~~million~~ of ~~financing~~December 31, ~~fees~~2010 and ~~entered~~2009, ~~into~~inventory aon ~~new credit~~the ~~facility~~LIFO ~~incurring~~method ~~additional~~represented ~~financing~~74% ~~fees~~and 62% of ~~$3.6~~the ~~million~~inventory balance, respectively.

~~Impairment~~If ofLIFO ~~Long-Lived Assets The~~inventories ~~Company~~had ~~evaluates~~been ~~the~~valued ~~carrying~~at ~~value of~~current ~~long-lived~~costs ~~assets~~determined ~~for~~on ~~impairment~~a ~~when~~FIFO ~~events~~basis, ~~or changes in circumstances indicate that~~ the ~~carrying~~effect ~~amount~~on costs of ansales ~~asset~~would ~~may not~~ be ~~recoverable. If~~a ~~impairment~~decrease ~~indicators are present and the estimated future undiscounted cash flows are less than the carrying value~~ of ~~the~~ ~~assets~~$2,000 ~~the carrying value is reduced to the estimated fair value as measured by the associated undiscounted cash flows. Due to the lower sales and earnings~~ for the ~~twelve~~ ~~months~~year ended December 31, ~~2009~~2010 and ~~the current economic environment, the Company performed~~ an ~~ASC~~increase ~~360~~of ~~impairment test~~$0. ~~Based~~3 onmillion ~~the~~and ~~undiscounted~~$0.8 ~~cash~~million ~~flows analysis,~~for the ~~Company~~years ~~determined~~ended ~~the carrying value of long-lived assets was not impaired. In~~ December ~~2008~~31, ~~the Company~~2009 ~~ceased~~and ~~operations in its West Jordan~~2008, ~~Utah location and concluded certain long-lived assets in this facility did not have any future use and recorded an impairment of $0~~respectively.~~7 million.~~

~~Fair~~Property, ~~Value~~Plant, ~~of Financial Instruments The carrying amounts of cash~~ and ~~cash equivalents~~Equipment Property, ~~accounts receivable~~plant, ~~accounts payable~~ and ~~accrued~~equipment ~~liabilities approximate~~are ~~fair~~recorded ~~value,~~at ~~because of the short maturity of these instruments~~cost. ~~The~~Improvements ~~fair~~are ~~value~~capitalized ofand ~~long-term debt~~expenditures ~~is based on quoted market prices~~ for ~~the~~maintenance ~~same~~and orrepairs ~~similar~~are ~~issues~~charged ~~or on the current rates offered~~ to ~~the~~operations ~~Company~~as ~~for a term equal to the same remaining maturities~~incurred. ~~The~~Depreciation ~~fair~~is ~~value~~computed ofusing the ~~First Lien~~straight-line ~~Term~~method ~~Facility~~ (~~Note~~for 7)financial ~~approximates~~reporting ~~the~~purposes) ~~carrying~~and ~~amount due to~~ the ~~variable~~ ~~interest~~accelerated ~~rate~~method on(for ~~this~~income ~~obligation. Based~~tax onreporting ~~quoted market values, the fair value of the Senior Notes was determined to be $65~~purposes).0 Estimated ~~million~~useful ~~and~~lives ~~$37.9~~for ~~million~~financial atreporting ~~December 31,~~purposes ~~2009~~are ~~and~~as ~~December 31, 2008, respectively.~~follows:

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

Buildings and yards		20 - 40 years
Equipment (machinery)		7 - 10 years
Equipment (computer related)		3 - 5 years

	December 31,
	2009		2008
Self-insurance reserve	$	2,236	$	2,548
Accrued interest expense	4,124		4,184
Due to Parent	4,578		4,768
Accrued bonuses	262		38
Payment due to former shareholders	—		8
Other	2,026		2,165
	$	13,226	$	13,711

The Company did not have any capital leases outstanding at December 31, 2010 and December 31, 2009.

~~The~~Depreciation ~~Company~~for isthe ~~partially~~years ~~self-insured~~ended ~~for~~December 31, ~~medical~~2010, ~~and workers’ compensation costs~~2009, ~~subject~~and to2008 ~~maximum~~was ~~individual~~$6.3 ~~stop-loss~~million, ~~amounts~~$6. ~~The~~7 ~~Company~~million, ~~has~~and ~~established~~$7.1 ~~reserves~~million, ~~related to insurance that are included in other current liabilities as noted above~~respectively.

29Goodwill The Company evaluates goodwill for impairment at least annually or when events or changes in circumstances indicate impairment. The Company has elected to perform its annual tests for goodwill impairment as of December 31 of each year. Fair value is measured using a market multiple valuation method. As of December 31, 2010, the Company determined its fair value exceeded its carrying value resulting in no goodwill impairment. As of December 31, 2009 the Company determined its carrying value exceeded its fair value resulting in goodwill impairment (see Note 4). As of December 31, 2008, the Company determined its fair value exceeded its carrying value resulting in no goodwill impairment.

~~Table~~ Customer Relationship Customer relationship relates to intangible assets recorded through previous acquisitions for relationships with significant customers. The original cost of ~~Contents~~these customer relationships is $16.6 million, and the related accumulated amortization as of December 31, 2010 and 2009 is $10.0 million and $8.4 million, respectively. The intangible assets are being amortized over the estimated life of 10 years. Amortization for the year ended December 31, 2010, 2009, and 2008 was $1.6 million, $1.7 million, and $1.7 million, respectively. Expected amortization is as follows for the years ended December 31 (in thousands):

The Company records income tax liabilities as an amount due to Parent.

2011	$	1,658
2012	1,657
2013	1,658
2014	1,635

Income Taxes The Company and its Parent file a consolidated federal income tax return, and federal income taxes are allocated to the Company based upon the respective taxable earnings. 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 basis 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.29

~~Uncertain Tax~~Table ~~Positions On January 1, 2007, the Company adopted the provisions~~ of ASC 740, “Income Taxes”, which clarifies the accounting for uncertain tax positions recognized in an enterprise’s financial statements. ASC 740 prescribes a recognition threshold and measurement criteria for the financial statement recognition and measurement of an income tax provision taken or expected to be taken in a tax return. It also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transitionContents

AsNoncompete aAgreement Noncompete ~~result~~agreements ofprimarily ~~the implementation~~relate ofto ~~ASC~~agreements ~~740,~~with the ~~Company~~former ~~recognized~~owners aof ~~$1.4~~Grand ~~million~~Valley ~~decrease~~and ~~in the~~Dimension ~~liability for uncertain tax positions which~~Moldings, ~~as required, was accounted for as an increase to the January~~ 1,Inc. ~~2007~~The ~~balance~~original cost of ~~retained~~these ~~earnings. The~~noncompete ~~decrease~~agreements is ~~the~~$0.2 ~~result~~million, ofand the ~~derecognition~~ ofrelated ~~certain~~accumulated ~~tax~~amortization ~~positions~~as ~~taken in prior years that management feels are sustainable based on audit results. As~~ of ~~and for the years ended~~ December 31, ~~2009~~2010 and ~~2008,~~2009 ~~the activity~~is ~~and~~$0.2 ~~balance~~million ofand ~~unrecognized~~$0.2 ~~tax~~million, ~~benefits were not significant~~respectively. ~~The~~Noncompete ~~Company~~agreement isrights noare ~~longer~~being ~~subject~~amortized toover ~~U.S. federal,~~the ~~state~~applicable ~~and~~terms ~~local,~~of orthe ~~non-U.S.~~agreements ~~income~~(7 years ~~tax~~and ~~examinations~~5 ~~by tax authorities for the~~ years ~~before December 31~~, ~~2004~~respectively). The ~~Company~~noncompete ~~recognizes~~agreement ~~interest~~with ~~and~~the ~~penalties~~former ~~related~~owner toof ~~unrecognized tax~~Grand ~~benefits~~Valley ~~within~~is ~~income~~expected ~~tax~~to ~~expense. The~~be ~~Company~~fully ~~recognizes~~amortized ~~interest~~by ~~accrued~~April 2011. The ~~related~~noncompete toagreement ~~unrecognized~~with ~~tax benefits~~the informer ~~interest~~owner ~~expense~~of ~~and~~Dimension ~~penalties~~Moldings, Inc. inwas ~~operating~~fully ~~expenses~~amortized ~~for~~by ~~all periods~~July ~~presented~~2010. ~~During~~Amortization for the years ended December 31, 2010, 2009, and 2008, ~~the~~was ~~amount~~$26,000, of$34,000, ~~interest~~ and ~~penalties~~$34,000, ~~was not significant~~respectively. ~~The~~As ~~Company~~of ~~files~~December 31, ~~in numerous~~2010 ~~state~~the ~~jurisdictions~~noncompete ~~with~~intangible ~~varying~~asset ~~statutes~~was of$5,000. Expected ~~limitations~~amortization ~~which~~for ~~have been considered in conjunction with~~ the ~~unrecognized~~year ~~tax~~ended ~~benefits analysis as of~~ December 31, ~~2009~~2011 ~~and~~is ~~2008~~$5,000.

~~Stock~~Other ~~Options~~Assets ~~The~~Other ~~Company maintained~~assets ~~the~~primarily ~~amended~~represent ~~2003~~financing ~~Stock~~fees ~~Option~~ and ~~Grant~~are ~~Plan~~amortized ~~(“2003~~on ~~Plan”)~~a ~~through~~straight-line ~~January 9~~basis, ~~2007, at~~ which ~~time~~approximates the ~~2003~~effective ~~Plan~~interest ~~was terminated. In addition~~method, ~~all~~over of the ~~options,~~ ~~which~~term ~~were outstanding at the time~~ of the ~~Transaction,~~related ~~were~~financing ~~deemed to be fully vested and then terminated on January 9, 2007~~agreement. ~~The~~In ~~2003~~conjunction ~~Plan~~with ~~allowed~~ the ~~granting of both incentive stock options and nonqualified stock options. Under the terms for the amended 2003 Plan~~Transaction, ~~a maximum of 3,000,000 shares of stock, subject to adjustment, were made available for awards to officers, employees, directors, consultants, and other key persons of~~ the Company~~. Awards included,~~ ~~but~~terminated ~~were~~its ~~not~~credit ~~limited~~agreement ~~to, stock options, restricted stock, unrestricted stock awards,~~ and ~~substitute~~wrote ~~performance~~off ~~awards~~$0. ~~Option~~3 ~~awards~~million ~~were~~of ~~generally~~financing ~~granted~~fees ~~with~~and ~~an exercise~~entered ~~price~~into ~~equal~~a tonew ~~the~~credit ~~calculated~~facility ~~fair~~incurring ~~market~~additional ~~value~~financing fees of ~~the Company’s stock~~$3. ~~Options~~6 ~~generally vested over four years and had 10-year contractual terms~~million.

~~Information~~Impairment ~~regarding~~of ~~stock~~Long-Lived ~~options~~Assets The ~~under~~Company ~~all~~evaluates ~~plans~~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 ~~summarized~~reduced to the estimated fair value as ~~follows:~~ measured by the associated undiscounted cash flows. Due to the lower sales, earnings, and the current economic environment for the twelve months ended December 31, 2010 and 2009, the Company performed an ASC 360 impairment test. Based on the undiscounted cash flows analysis, the Company determined the carrying value of long-lived assets was not impaired. In December 2008, the Company ceased operations in its West Jordan, Utah location and concluded certain long-lived assets in this facility did not have any future use and recorded an impairment of $0.7 million.

	Year Ended December 31, 2007
	Options	Weighted Average Exercise Price
Outstanding, beginning of period	2,518,500	$	2.86
Granted	—	$	—
Exercised	—	$	—
Canceled	2,518,500	$	2.86
Outstanding, end of period	—	$	—

Fair Value of Financial Instruments The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value, because of the short maturity of these instruments. The fair value of long-term debt is based on quoted market prices for the same or similar issues or on the current rates offered to the Company for a term equal to the same remaining maturities. Based on quoted market values, the fair value of the Senior Notes was determined to be $104.0 million and $65.0 million at December 31, 2010 and December 31, 2009, respectively.

~~Effective~~Other ~~January 1, 2006~~Current the Company adopted ASC 718 Compensation-Stock Compensation (ASC 718), which requires all share-based payments, including grants of stock options, to be recognized in the statement of operations as an operating expense, based on their fair values over the requisite service period.Liabilities InOther ~~conjunction with~~current ~~the~~liabilities ~~adoption~~consisted of ~~ASC 718,~~ the ~~Company~~following ~~utilized~~(in ~~the prospective transition method as permitted by ASC 718. Under this transition method, ASC 718 is~~ thousands):

	December 31,
	2010		2009
Self-insurance reserve	$	2,063	$	2,236
Accrued interest expense	4,124		4,124
Due to Parent	4,577		4,578
Accrued bonuses	507		262
Other	1,389		2,026
Total	$	12,660	$	13,226

~~Table~~The ofCompany ~~Contents~~is partially self-insured for medical and workers’ compensation costs, subject to maximum individual stop-loss amounts.

~~applied prospectively to all new awards issued as well as awards modified, repurchased, or canceled after the effective date.~~ The Company ~~continued~~ torecords account for the 2,351,000 options outstanding at the effective date of ASC 718 using the accounting principles originally applied to those options. The Company recorded $1,029,000 for the year ended December 31, 2007, of related stock-based compensation expense. The total income tax ~~benefit for~~liabilities ~~share-based~~as ~~compensation~~an ~~arrangements~~amount ~~was~~due ~~$400,000~~to ~~for the year ended December 31, 2007~~Parent.

~~Restricted~~Income ~~Stock~~Taxes The Company and its Parent ~~issued~~file ~~Restricted~~a ~~Stock~~consolidated ~~Agreements on~~federal ~~August 31,~~income ~~2007~~tax return, and ~~September 14,~~federal ~~2007~~income totaxes ~~certain~~are ~~Company management~~allocated ~~personnel~~to ~~totaling~~the ~~55,219~~Company ~~shares~~based ofupon ~~Parent~~the ~~common~~respective ~~stock~~taxable earnings. The ~~fair~~Company ~~value~~accounts offor income taxes in accordance with the ~~restricted~~liability ~~stock~~method ~~was approximately~~of ~~$397~~accounting,~~000~~ onwhich ~~the~~requires ~~date~~recognition of ~~the~~deferred ~~grant. Based~~tax onassets and liabilities for the ~~fair~~expected ~~value~~future tax consequences of ~~the~~events ~~restricted stock~~that atwere included in the ~~date~~consolidated offinancial ~~grant~~statements and ~~related~~tax ~~vesting,~~returns. Under ~~there~~this ~~was $50~~method,~~000~~ ofdeferred ~~related compensation~~tax ~~expense~~assets ~~recorded~~and ~~for~~liabilities ~~each~~are ofdetermined based on the ~~years~~difference ~~ending~~between ~~December 31, 2009~~the financial statement and ~~December 31,~~tax ~~2008. The amount~~basis of ~~compensation~~assets ~~expense~~and inliabilities ~~2007~~using ~~was~~enacted ~~not~~tax ~~significant. The~~rates ~~restricted~~expected ~~stock~~to ~~becomes~~be ~~fully~~in ~~vested after~~effect ~~seven~~for ~~years,~~the oryear ~~earlier,~~in ifwhich ~~certain~~the ~~milestones,~~differences asare ~~defined,~~expected ~~are~~to ~~met~~reverse. The ~~restricted~~Company ~~stock~~records ~~was~~a ~~considered contributed~~valuation ~~capital~~allowance towhen it is more likely than not that the ~~Company~~net ~~from~~deferred ~~its~~tax ~~Parent~~assets will not be realized.

~~Use~~Uncertain ofTax ~~Estimates~~ Positions The ~~preparation~~Company ofadopted ~~financial statements in conformity with accounting principles generally accepted in~~ the ~~United~~provisions ~~States~~ of ~~America~~ASC ~~requires management~~740, to“Income ~~make~~Taxes”, ~~estimates~~which ~~and~~clarifies ~~assumptions that affect~~ the ~~reported~~accounting ~~amounts of~~for ~~assets~~uncertain ~~and~~tax ~~liabilities~~positions ~~and~~recognized ~~disclosure~~in ofan ~~contingent~~enterprise’s ~~assets and liabilities at the date of the~~ financial statements ~~and the reported amounts of revenues and expenses during the reporting period~~. ~~Actual~~ ASC ~~results~~740 ~~could~~prescribes ~~differ~~a ~~from those estimates.~~recognition

New Accounting Pronouncements In September 2006, the Financial Accounting Standards Board (“FASB”) issued a new accounting standard, now included in Accounting Standards Codification (“ASC”) 820 (formerly SFAS 157), “Fair Value Measurements and Disclosures” to define fair value, establish a framework for measuring fair value, and expand disclosures about fair value measurements. The Company adopted this standard effective January 1, 2008. The adoption of this standard did not have a material effect on its financial position or results of operations.30

InTable March 2008, the FASB issued ASC 815 (formerly SFAS 161) “Derivatives and Hedging”. ASC 815 establishes, among other things, additional disclosure requirements for derivative instruments and for hedging activities. ASC 815 is effective for the Company beginning January 1, 2009 on a prospective basis. The adoption of ~~this statement did not have a material effect on the Company’s financial position or results of operations.~~Contents

Inthreshold ~~April 2009,~~and ~~the FASB~~measurement ~~issued~~criteria ~~guidance~~for ~~that~~the ~~requires~~financial ~~interim~~statement ~~reporting~~recognition ~~period~~and ~~disclosure~~measurement ~~about the~~of ~~fair~~an ~~value~~income oftax ~~certain~~provision ~~financial~~taken ~~instruments,~~or ~~effective~~expected ~~for~~to ~~interim reporting~~be ~~periods~~taken ~~ending~~in ~~after~~a ~~June 15,~~tax ~~2009~~return. ~~The~~It ~~Company~~also ~~has adopted~~provides ~~these~~guidance ~~disclosure~~on ~~requirements. Due~~de-recognition, toclassification, ~~their~~interest ~~nature~~and penalties, ~~the~~accounting ~~carrying value~~in ofinterim ~~cash~~periods, ~~receivables,~~disclosure ~~payables~~ and ~~debt obligations approximates fair value.~~transition

InAs ~~May 2009,~~of and for the ~~FASB~~ ~~issued~~years ~~SFAS~~ended ~~No.~~December ~~165~~31, ~~“Subsequent Events”~~2010 ~~which~~and ~~was~~2009, ~~primarily~~the ~~codified~~activity ~~into~~and ~~Topic~~balance ~~855~~of ~~“Subsequent~~unrecognized ~~Events”~~tax inbenefits ~~the~~were ~~ASC~~not significant. ~~This~~The ~~guidance~~Company ~~was~~is ~~issued~~no inlonger ~~order~~subject to ~~establish~~ ~~principles~~U.S. federal, state and ~~requirements~~local, ~~for~~or ~~reviewing~~non-U.S. ~~and~~income ~~reporting~~tax ~~subsequent events. On~~examinations ~~February~~by tax authorities for the years before December ~~24th 2010~~31, ~~the~~2005. The ~~FASB issued~~Company ~~Accounting~~recognizes ~~Standards~~interest ~~Update~~and ~~(ASU)~~penalties ~~2010-09~~related to ~~amend~~unrecognized ~~ASC~~tax ~~855,~~benefits ~~Subsequent Events~~within income tax expense. AsThe aCompany ~~result,~~recognizes ~~SEC~~interest ~~registrants will~~accrued ~~not~~related ~~disclose~~to ~~the~~unrecognized ~~date~~tax ~~through~~benefits ~~which~~in ~~management~~interest ~~evaluated~~expense ~~subsequent~~and ~~events~~ penalties in ~~the~~operating ~~financial~~expenses ~~statements—either~~for inall ~~originally~~periods ~~issued~~presented. During ~~financial~~the ~~statements~~years ~~or reissued~~ended ~~financial~~December 31, ~~statements.~~2010 ~~The~~and ~~adoption~~2009, the amount of ~~this~~interest ~~guidance~~and ~~did~~penalties was not significant. The Company files in numerous state jurisdictions with varying statutes of limitations which have ~~an impact~~been onconsidered in conjunction with the ~~Company’s~~unrecognized ~~consolidated~~tax ~~financial~~benefits ~~statements~~analysis as of December 31, 2010 and 2009.

InRestricted ~~June~~Stock Parent issued Restricted Stock Agreements on August ~~2009~~31, ~~the~~ ~~FASB~~2007 ~~issued~~and ~~guidance~~September 14, ~~that~~2007 ~~establishes~~to ~~the~~certain ~~FASB~~Company ~~Accounting~~management ~~Standards Codification~~personnel (totaling 55,219 shares of Parent common stock. The fair value of the ~~Codification)~~restricted asstock was approximately $397,000 on the ~~source~~date of ~~authoritative~~the ~~accounting principles~~grant. Based ~~recognized~~on by the ~~FASB~~fair tovalue beof ~~applied~~the byrestricted ~~nongovernmental~~stock ~~entities~~at in the ~~preparation~~date of ~~financial~~grant ~~statements~~and inrelated ~~conformity~~vesting, ~~with~~there ~~generally~~was ~~accepted accounting~~$50,000 ~~principles~~of ~~(GAAP). Use~~related compensation expense recorded for each of the ~~new~~years ~~Codification~~ending isDecember 31, ~~effective for~~2010, ~~interim~~2009, and ~~annual~~2008. The ~~periods~~restricted ~~ending~~stock becomes fully vested after ~~September 15~~seven years, ~~2009~~or earlier, if certain milestones, as defined, are met. The restricted stock was considered contributed capital to the Company ~~has~~ ~~used~~from its Parent. All of the ~~new~~shares ~~Codification~~of inrestricted ~~reference~~stock toof ~~GAAP~~Parent inwere ~~this~~converted ~~annual~~into ~~report~~a onnominal ~~Form 10-K~~ number of shares and ~~such~~ ~~use~~became ~~has~~fully ~~not~~vested ~~impacted~~in connection with the ~~consolidated~~Recapitalization ~~results~~(as ofdefined ~~the~~herein) ~~Company~~on December 30, 2010.

InUse ~~January 2010, the~~of ~~FASB~~Estimates The ~~issued~~preparation ~~ASU~~of ~~No. 2010-06,~~financial ~~“Fair Value~~statements ~~Measurements~~in ~~and~~conformity ~~Disclosures~~with ~~(Topic~~accounting ~~820)—Improving~~principles ~~Disclosures~~generally ~~about~~accepted ~~Fair Value~~in ~~Measurements”. This guidance~~the ~~will~~United ~~require~~States ~~reporting~~of ~~entities~~America torequires ~~provide~~management ~~information~~to ~~about~~make ~~movements of~~estimates ~~assets among Levels 1~~ and 2assumptions ofthat affect the ~~three-tier~~reported ~~fair~~amounts ~~value~~of ~~hierarchy established~~assets byand ~~ASC~~liabilities ~~820~~ and ~~provide~~disclosure ~~a reconciliation~~ of ~~purchases,~~contingent ~~sales, issuance,~~assets and ~~settlements~~liabilities ofat ~~financial~~the ~~instruments~~date ~~valued~~of ~~with~~the afinancial ~~Level~~statements ~~3 method,~~and ~~which is used to price~~ the ~~hardest~~reported toamounts ~~value instruments. Entities will have to provide fair value measurement disclosures for each class~~ of ~~financial assets~~revenues and ~~liabilities. The~~expenses ~~guidance will~~during bethe ~~effective~~reporting ~~for any fiscal year that begins after December 15, 2010~~period. ~~The~~Actual ~~Company~~results ~~does~~could ~~not~~differ ~~anticipate the~~from ~~adoption~~those ~~of ASU No~~estimates. ~~2010-06 to have a material impact on its financial statements.~~

31New Accounting Pronouncements In January 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-06, “Fair Value Measurements and Disclosures (Topic 820)—Improving Disclosures about Fair Value Measurements”. This guidance requires reporting entities to provide information about movements of assets among Levels 1 and 2 of the three-tier fair value hierarchy established by ASC 820 and provide a reconciliation of purchases, sales, issuance, and settlements of financial instruments valued with a Level 3 method, which is used to price the hardest to value instruments. Entities must provide fair value measurement disclosures for each class of financial assets and liabilities. The guidance was effective for interim and annual periods that begin after December 15, 2009 except for certain Level 3 activity disclosure requirements that are effective for fiscal years beginning after December 15, 2010 and interim periods within those fiscal years. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

~~Table~~ In July 2010, the FASB issued ASU 2010-20, “Receivables (Topic 310), Disclosures about the Credit Quality of ~~Contents~~Financing Receivables and the Allowance for Credit Losses,” which includes loans, trade accounts receivable, notes receivable, credit cards, leveraged leases, direct financing leases, and sales-type leases. The term does not include receivables measured at fair value or the lower of cost of fair value and debt securities among others. It also defines two levels of disaggregation for disclosure: portfolio segment and class of financing receivables. A portfolio segment is defined as the level at which an entity determines its allowance for credit losses. A class of financing receivable is defined as a group of finance receivables determined on the basis of their initial measurement attribute (i.e., amortized cost of purchased credit impaired), risk characteristics, and an entity’s method for monitoring and assessing credit risk. The ASU requires an entity to provide additional disclosures including, but not limited to, a rollforward schedule of the allowance for credit losses (with the ending allowance balance further disaggregated based on impairment methodology) and the related ending balance of the finance receivable presented by portfolio segment, and the aging of past due financing receivables at the end of the period, the nature and extent of troubled debt restructurings that occurred during the period and their impact on the allowance for credit losses, the nature and extent of troubled debt restructurings that occurred within the last year, that have defaulted in the current reporting period, and their impact on the allowance for credit losses, the nonaccrual status of financing receivables, and impaired financing receivables, presented by class. The extensive new disclosures of information as of the end of a reporting period are effective for both interim and annual reporting periods ending after December 15, 2010. Specific items regarding activity that occurred before the issuance of the ASU, such as the allowance rollforward and modification disclosures are required for periods beginning after December 15, 2010. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

3.In ~~BUSINESS~~December 2010, ~~SEGMENTS~~the FASB issued ASU 2010-28, “Intangibles — Goodwill and Other (Topic 350), When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts, a consensus of the

The Company conducts 93% of its business within one reportable market segment: the wood kitchen and bath products segment. The Company has two primary product categories: hardwood products and engineered wood products. Hardwood products produce a comprehensive line of hardwood doors and components. Engineered wood products includes rigid thermofoil doors and components, veneer raised panels, and wrapped profiles.31

~~The~~Table ~~Company’s~~of ~~sales by product category are as follows (in thousands):~~Contents

	Year Ended December 31,
	2009		2008		2007
Hardwood products	$	102,482	$	157,877	$	208,913
Engineered wood products	27,973		35,496		40,390
Total	$	130,455	$	193,373	$	249,303

FASB Emerging Issues Task Force”, which affects all entities that have recognized goodwill and have one or more reporting units whose carrying amount for purposes of performing Step 1 of the goodwill impairment test is zero or negative. The ASU modifies Step 1 so that for those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist. The qualitative factors are consistent with existing guidance, which requires that goodwill of a reporting unit be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. For public entities, this guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. Adoption of ASU 2010-28 is not expected to have a significant impact on the Company’s consolidated financial statements.

~~Substantially~~In ~~all~~December 2010, ~~assets~~the ~~are~~FASB ~~located~~issued ASU 2010-29, “Business Combinations (Topic 805), Disclosure of Supplementary ProForma Information for Business Combinations, a consensus of the FASB Emerging Issues Task Force”, which requires that the pro forma information be presented as if the business combination occurred at the beginning of the prior annual reporting period for purposes of calculating both the current reporting period and ~~sales~~the prior reporting period pro forma financial information. The ASU also requires that this disclosure be accompanied by a narrative description of the amount and nature of material nonrecurring pro forma adjustments. The amendments in this ASU are ~~made~~ ~~within~~effective ~~North~~for ~~America~~business combinations with effective dates on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Prospective application is required with early adoption permitted. The Company is currently assessing the impact of the adoption of this ASU on the consolidated financial statements.

4In January 2011, the FASB issued ASU 2011-01, “Receivables (Topic 310) — Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20”, ~~GOODWILL~~which deferred the effective date of the disclosure requirements for public entities about troubled debt restructurings in ASU 2010-20, to be concurrent with the effective date of the guidance for troubled debt restructuring which is currently anticipated to be effective for interim and annual periods after June 15, 2011. The Company does not anticipate the new guidance will have a material impact on the consolidated financial statements.

~~The~~3. ~~changes~~BUSINESS ~~in the carrying amount of goodwill were as follows (in thousands):~~SEGMENTS

	Year Ended December 31,
	2009			2008		2007
Balance—Beginning of period	$	112,748		$	112,748	$	108,748
Goodwill impairment	(13,596		)	—		—
DMI contingent consideration	—			—		4,000
Balance—End of period	$	99,152		$	112,748	$	112,748

The ~~December 31, 2009 annual test for goodwill impairment resulted in a fair value amount below the~~ Company’s ~~carrying~~sales ~~value which~~by ~~required~~product ~~further~~category ~~analysis~~are ~~to determine the goodwill impairment amount. The determination of the goodwill impairment was based on the fair value of assets and liabilities~~ as iffollows the Company had been acquired using a hypothetical business combination with a purchase price equal to the market multiple valuation balance as of December 31, 2009. This impairment analysis concluded the purchase price, as determined, was (in excess of the net assets however this excess was below the recorded goodwill balance at December 31, 2009. The difference between the recorded goodwill and excess fair value at December 31, 2009 was the computed goodwill impairment of $13.6 million. As of December 31, 2008 and as of December 31, 2007, the Company determined its fair value exceeded its carrying value resulting in no goodwill impairment.thousands):

5. FAIR VALUE MEASUREMENTS

	Year Ended December 31,
	2010		2009		2008
Hardwood products	$	117,250	$	102,482	$	157,877
Engineered wood products	28,132		27,973		35,496
Total	$	145,382	$	130,455	$	193,373

~~The~~Substantially ~~Company~~all ~~accounts~~assets ~~for~~are ~~fair~~located ~~value~~and ~~measurements~~sales ~~in accordance~~are ~~with~~made ~~ASC~~within ~~820,~~North which defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement dateAmerica. ~~ASC 820 establishes three levels of inputs that may be used to measure fair value:~~

~~· Level 1 — inputs utilizing quoted prices (unadjusted) in active markets for identical assets and liabilities~~4. GOODWILL

~~· Level~~The 2changes —in ~~observable inputs other than quoted prices that are observable for~~ the ~~asset~~carrying oramount ~~liability,~~of ~~either~~goodwill ~~directly~~were oras ~~indirectly,~~follows ~~including quoted prices for similar assets or liabilities~~ (in ~~active markets, or quoted prices for identical or similar assets in markets that are not active.~~thousands):

· Level 3 — unobservable inputs in which there is little or no market data available, which require the reporting entity to develop its own assumptions.

	Year Ended December 31,
	2010		2009			2008
Balance—Beginning of period	$	99,152	$	112,748		$	112,748
Goodwill impairment	—		(13,596		)	—
Balance—End of period	$	99,152	$	99,152		$	112,748

~~In instances~~As ~~where~~of December 31, 2010, the ~~determination~~Company ofdetermined ~~the~~its fair value ~~measurement~~exceeded isits ~~based~~carrying ~~on inputs~~value ~~from~~resulting ~~different~~in ~~levels~~no ofgoodwill ~~the~~impairment. The ~~fair~~December 31, ~~value~~2009 ~~hierarchy,~~annual ~~the~~test ~~level~~for goodwill impairment resulted in ~~the~~a fair value ~~hierarchy~~amount ~~within~~below the Company’s carrying value which required further analysis to determine the ~~entire~~goodwill ~~fair~~impairment ~~value~~amount. The ~~measurement~~determination ~~falls~~of isthe goodwill impairment was based on the ~~lowest~~fair ~~level~~value ~~input~~of ~~that~~assets isand ~~significant~~liabilities toas if the ~~fair~~Company ~~value~~had ~~measurement~~been ~~in its~~acquired ~~entirety.~~using a

Table of Contents

~~Effective January~~hypothetical business combination with a purchase price equal to the market multiple valuation balance as of December 131, 2009,. This impairment analysis concluded the ~~provisions~~purchase ofprice, ~~ASC~~as ~~820~~determined, ~~became~~was ~~applicable~~in ~~for non-financial~~excess ~~assets~~of ~~and~~the ~~liabilities~~net ~~recognized~~assets athowever ~~fair~~this ~~value~~excess inwas below the ~~financial statements~~recorded ongoodwill abalance ~~nonrecurring~~at ~~basis.~~December ~~Repossessed~~31, ~~equipment~~2009. The ~~are~~difference ~~assets~~between ~~measured~~the atrecorded ~~fair~~goodwill ~~value~~and onexcess ~~a nonrecurring~~fair ~~basis;~~value ~~that~~at isDecember 31, ~~the~~2009 ~~assets~~was ~~are~~the ~~not~~computed ~~measured~~goodwill atimpairment ~~fair~~of ~~value~~$13.6 onmillion. As ~~an ongoing~~of ~~basis~~December 31, ~~but~~2008, ~~are~~the ~~subject~~Company todetermined its fair value ~~adjustments~~exceeded its carrying value resulting in ~~certain circumstances~~no goodwill impairment.

~~The~~5. ~~following~~FAIR ~~table presents~~VALUE ~~the assets measured at fair value on a nonrecurring basis as of December 31, 2009:~~MEASUREMENTS

	Assets at Fair Value as of December 31, 2009
	Level 1		Level 2		Level 3		Total
Goodwill	$	—	$	—	$	99,152	$	99,152
Total assets at fair value	$	—	$	—	$	99,152	$	99,152

The Company accounts for fair value measurements in accordance with ASC 820, which defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 establishes three levels of inputs that may be used to measure fair value:

6.· Level ~~RECAPITALIZATION~~1 ~~AND~~— ~~OTHER~~inputs ~~ACQUISITION~~utilizing quoted prices (unadjusted) in active markets for identical assets and liabilities.

~~On January 9,~~· Level ~~2007,~~2 ~~the~~— ~~Company~~observable ~~was~~inputs ~~acquired~~other bythan ~~Parent,~~quoted aprices ~~newly~~that ~~formed investment~~are ~~entity~~observable ~~controlled by the Olympus Funds. The aggregate purchase price paid by Parent~~ for ~~all of~~ the ~~shares~~asset ofor ~~capital~~liability, ~~stock~~either ofdirectly ~~the~~or ~~Company~~indirectly, ~~and~~including ~~options~~quoted toprices ~~purchase shares~~for ofsimilar ~~capital~~assets ~~stock~~or ofliabilities ~~the Company~~ in ~~the~~active ~~Transaction was approximately $293.1 million~~markets, ~~less~~or ~~indebtedness~~quoted ~~and~~prices ~~certain~~for ~~expenses. The~~identical ~~aggregate~~or ~~purchase~~similar ~~price~~assets and related fees and expenses were funded by borrowings under new credit facilities by the Company and private offerings of debt and equity securities by Parent. The Transaction has been accounted for as a recapitalization in ~~the~~markets ~~Company’s~~that ~~consolidated financial~~are ~~statements,~~not ~~with no adjustments to the historical basis of the Company’s assets and liabilities~~active.

~~In conjunction~~· Level ~~with~~3 ~~the~~— ~~Transaction,~~unobservable ~~the~~inputs ~~Company~~in ~~entered~~which ~~into~~there ais ~~senior~~little ~~credit facility~~or ~~(the~~no ~~“Senior~~market ~~Credit~~data ~~Facility”)~~available, ~~with Credit Suisse, Cayman Islands Branch,~~ which ~~provided~~require ~~for (i) a senior secured first lien term loan facility in an aggregate principal amount of $150.0 million (~~the ~~“First~~reporting ~~Lien Term~~entity ~~Facility”) and (ii) a senior secured first lien revolving credit facility in an aggregate principal amount up~~ to ~~$25.0~~develop ~~million,~~its ~~subject~~own ~~to certain conditions (the “Revolving Facility” and, together with the First Lien Term Facility, the “First Lien Facilities”), of which $10~~assumptions.~~0 million is available through a sub facility in the form of letters of credit (See Note 7).~~

In ~~conjunction~~instances ~~with~~where the ~~Transaction,~~ ~~the~~determination ~~Parent entered into Note Purchase Agreements with OCM Mezzanine Fund II, L.P. and Olympus Growth Fund IV, L.P. The Note Purchase Agreement with OCM Mezzanine Fund II, L.P. consisted~~ of $43.0 million senior payment-in-kind notes with no required principal amortization. The Note Purchase Agreement with Olympus Growth Fund IV, L.P. consisted of $43.0 million junior payment-in-kind notes with no required principal amortization. These notes (the ~~“Parent~~fair ~~Notes”)~~value ~~are~~measurement ~~scheduled to mature in April 2012. During the term of the Parent Notes, Parent~~ is ~~able~~based ~~at its option to pay interest~~ on ~~the~~inputs ~~Parent~~from ~~Notes~~different ~~through~~levels ~~the issuance~~ of ~~additional notes. The Company is not liable for, and has not otherwise guaranteed, any of~~ the ~~obligations~~fair ofvalue ~~Parent with respect to the Parent Notes. The Company is~~hierarchy, ~~however, subject to a number of restrictive covenants under~~ the ~~Note~~level ~~Purchase~~in ~~Agreements. On March 30, 2009,~~ the ~~Parent~~fair ~~obtained waivers~~value ~~for~~hierarchy ~~the~~within ~~restrictive~~which ~~covenants in~~ the ~~Note~~entire ~~Purchase~~fair ~~Agreements~~value ~~relating to~~measurement ~~the~~falls ~~maximum~~is ~~total~~based ~~leverage~~on ~~ratio permitted for~~ the ~~period~~lowest ~~ending~~level ~~December 31, 2008. The~~input ~~Company~~that ~~was in compliance with all covenants as of December 31, 2009. In addition, the Company~~ is ~~limited~~significant ~~in its ability~~ to ~~pay dividends or otherwise make distributions to Parent under~~ the ~~Senior~~fair ~~Credit~~value ~~Facility~~measurement ~~and the indenture governing the 10% Senior Notes due 2012 (the “Senior Notes”). The Parent Notes are not reflected~~ in ~~the Company’s consolidated~~its ~~balance sheet as the Company did not push down the new accounting basis because of the significance of the public debt holders’ influence on the Company’s ability to control the form of ownership~~entirety.

Effective ~~as of June~~January 131, ~~2007~~ 2009, the ~~Parent~~provisions ~~issued an additional $20.0 million~~ of ~~Parent~~ASC ~~Notes~~820 tobecame ~~Olympus Growth~~applicable ~~Fund~~for ~~IV,~~non-financial ~~L.P.,~~assets and ~~purchased~~liabilities ~~$20.0~~recognized ~~million~~at offair ~~Parent~~value ~~Notes~~in ~~from~~the ~~OCM Mezzanine~~financial ~~Fund~~statements ~~II,~~on La nonrecurring basis.P. ~~During~~Repossessed ~~the twelve~~equipment ~~month~~are ~~periods~~assets ~~ended~~measured ~~December 31,~~at ~~2009~~fair ~~and~~value ~~December 31,~~on ~~2008, the~~a ~~Company~~nonrecurring ~~had~~basis; nothat ~~distributions~~is, ~~and~~the ~~distributions~~assets ~~totaling~~are ~~$4.5~~not ~~million, respectively,~~measured toat ~~the~~fair ~~Parent~~value ~~for~~on ~~payment~~an onongoing ~~Parent~~basis ~~Notes. The~~but ~~2008~~are ~~distribution~~subject to ~~the~~fair ~~Parent~~value ~~was recorded~~adjustments ~~as a reduction~~ in ~~retained~~certain ~~earnings~~circumstances.

InThe ~~conjunction~~following ~~with~~table ~~the~~presents ~~Transaction, Parent issued equity securities of approximately $86.2 million (including rollover equity from management) to fund~~ the ~~equity~~assets ~~necessary~~measured ~~for~~at ~~the~~fair ~~acquisition,~~value ~~consisting of $81.0 million of preferred equity securities and $5.2 million of common equity securities. Preferred dividends accrue and accumulate~~ on ~~the~~ ~~outstanding~~a ~~preferred~~nonrecurring ~~equity~~basis ~~securities~~as ~~at the rate~~ of ~~10% per annum~~December 31, ~~compounding~~ ~~quarterly, on the sum of its liquidation value per share~~ 2009:

	Assets at Fair Value as of December 31, 2009
	Level 1		Level 2		Level 3		Total

Goodwill	$	—	$	—	$	99,152	$	99,152

Total assets at fair value	$	—	$	—	$	99,152	$	99,152

~~Table~~6. of2007 ~~Contents~~ACQUISITION AND 2010 RECAPITALIZATION

~~($1,000)~~2007 ~~plus~~Acquisition On ~~all accumulated and unpaid dividends thereon.~~January ~~Dividends~~9, ~~are~~2007, ~~payable~~the asCompany ~~and~~was ~~when~~acquired ~~declared~~ by Parent~~’s board of directors out of funds legally available for the payment of dividends. Such dividends accrue~~, ~~whether~~a ornewly ~~not~~formed ~~they~~investment ~~have~~entity ~~been~~controlled ~~declared~~by ~~and whether or not there are profits, surplus or other funds of Parent legally available for~~ the ~~payment~~Olympus ~~of dividends, until such time as such dividends are actually paid by Parent~~Funds. The ~~holders~~aggregate ~~of a~~purchase ~~majority~~price ofpaid ~~the~~by ~~outstanding preferred equity securities at any time and from time to time may demand that~~ Parent ~~redeem~~for all ~~or any portion~~ of the ~~outstanding~~ ~~preferred~~shares ~~equity~~of ~~securities~~capital bystock ~~delivering to the holder(s) thereof (i) an amount~~ of ~~cash per share equal to~~ the ~~sum~~Company ~~of its liquidation value per share ($1,000) plus all accumulated~~ and ~~unpaid~~options ~~dividends~~to ~~thereon~~purchase ~~and (ii) a number of~~ shares of ~~Parent’s~~capital ~~common~~stock ~~equity~~of ~~securities as determined in accordance with~~ the ~~redemption~~Company ~~procedures contained~~ in ~~Parent’s certificate of incorporation. If Parent does not have funds legally available for any particular redemption, Parent is obligated to use those funds that are legally available for~~ the ~~redemption~~Transaction ofwas ~~such~~approximately ~~securities to redeem the maximum possible number of preferred equity securities which would otherwise be redeemed in connection with such redemption~~$293. ~~Thereafter,~~1 ~~when additional funds of Parent are legally available for redemption of such securities~~million, ~~Parent~~less isindebtedness ~~obligated~~and tocertain ~~redeem the balance of such securities~~expenses. ~~Parent~~The isaggregate ~~prohibited~~purchase ~~from redeeming~~price ~~any~~and ~~preferred~~related ~~equity~~fees ~~securities~~and ifexpenses ~~any~~were ~~such~~funded ~~redemption~~by isborrowings ~~prohibited~~ under ~~any~~new credit ~~facility~~facilities orby ~~indenture~~the ~~to which Parent or any of its subsidiaries is a party or is otherwise bound. The~~ Company ~~is not liable for,~~ and ~~has~~private ~~not~~offerings ~~otherwise guaranteed, any~~ of ~~these~~ ~~obligations~~debt ofand ~~Parent with respect to the~~ equity securities ~~issued~~ by Parent. ~~These~~The ~~equity~~Transaction ~~securities~~has ~~are~~been ~~not reflected~~accounted for as a recapitalization in the Company’s consolidated ~~balance~~financial ~~sheet~~statements, aswith ~~the~~no ~~Company~~adjustments ~~did~~to ~~not push down~~ the ~~new~~historical ~~accounting~~ basis ~~because~~ of the ~~significance of the public debt holders’ influence on the~~ Company’s ~~ability~~assets toand ~~control the form of ownership~~liabilities.

OnIn ~~December 11, 2006,~~conjunction ~~Parent~~with ~~and~~the ~~MergerCo~~Transaction, ~~in anticipation of~~ the ~~consummation~~Company ~~of the Transaction,~~ entered into ana ~~employment~~senior ~~agreement~~credit ~~with~~facility ~~Mr. John Fitzpatrick, as Chief Executive Officer of MergerCo~~ (the “~~New~~Senior ~~Fitzpatrick Employment~~Credit ~~Agreement~~Facility”)~~. Pursuant to the New Fitzpatrick Employment Agreement~~, ~~upon consummation of the Transaction, the New Fitzpatrick Employment Agreement superseded and preempted Mr. Fitzpatrick’s prior employment agreement~~ with ~~the Company.~~Credit ~~On January 9~~Suisse, ~~2007,~~Cayman byIslands ~~operation of law upon consummation of the Transaction~~Branch, ~~the~~which ~~New~~provided ~~Fitzpatrick~~for ~~Employment Agreement was assigned by MergerCo to the Company. Under the New Fitzpatrick Employment Agreement, in the event~~ (i) ~~Mr. Fitzpatrick~~a ~~resigns~~senior ~~for retirement~~secured ~~purposes~~first ~~from~~lien ~~the~~term ~~employment~~loan offacility ~~the~~in ~~Company~~an ~~and~~aggregate ~~its~~principal ~~subsidiaries after~~amount ~~December 31,~~of ~~2009~~$150.0 ~~(or~~million ~~such earlier date as~~ (the ~~Company’s~~“First ~~board~~Lien ofTerm ~~directors and Mr. Fitzpatrick mutually agree upon~~Facility”) and (ii) ~~Mr. Fitzpatrick~~a ~~provided~~senior atsecured ~~least twelve~~first ~~months’~~lien ~~prior~~revolving ~~written~~credit ~~notice~~facility toin ~~the~~an ~~Company~~aggregate ~~and~~principal ~~Parent~~amount ~~of such~~up ~~resignation,~~to ~~then Mr~~$25. ~~Fitzpatrick~~0 ~~may~~million, ~~elect~~subject to ~~have~~certain ~~Parent~~conditions ~~repurchase up to 50% of~~ (the ~~common~~“Revolving ~~equity~~Facility” ~~securities~~ and, ~~50%~~together ofwith the ~~preferred~~First ~~equity securities~~Lien ~~acquired~~Term ~~by Mr. Fitzpatrick on January 9~~Facility, ~~2007 in connection with~~ the ~~Transaction~~“First atLien ~~their~~Facilities”), ~~respective~~of ~~fair~~which ~~market values~~$10. ~~Any~~0 ~~such~~million ~~repurchase~~was byavailable ~~Parent~~through ~~shall~~a ~~be subject~~sub tofacility ~~applicable restrictions contained~~ in the ~~Delaware~~form ~~General~~of ~~Corporation Law~~letters ~~and~~of incredit ~~Parent’s~~(See ~~and~~Note ~~its subsidiaries’ debt financing agreements with unaffiliated third parties~~7). If any such restrictions prohibit any such repurchase which Parent is otherwise required to make, the repurchase obligation is suspended until such time as Parent may make such repurchase under such restrictions.

In conjunction with the Transaction, the ~~previous~~Parent ~~stockholders~~entered ofinto ~~the~~Note ~~Company~~Purchase ~~will~~Agreements ~~receive~~with ~~the benefit~~OCM ofMezzanine ~~certain~~Fund ~~negotiated~~II, ~~transaction~~L.P. ~~related~~and ~~tax~~Olympus ~~deductions~~Growth ~~whenever~~Fund ~~such deductions~~IV, ~~are realized~~L.P. ~~Due~~The toNote ~~this agreement,~~Purchase ~~there~~Agreement ~~was~~with ~~$6.2~~OCM ~~million~~Mezzanine ~~paid~~Fund ~~during~~II, ~~the~~L.P. ~~twelve~~consisted ~~month~~of ~~period ended December 31, 2008~~$43. As0 ofmillion ~~December 31,~~senior ~~2009,~~payment-in-kind ~~the entire~~notes ~~liability~~with ~~for~~no ~~the~~required ~~agreement~~principal ~~is $1~~amortization.7 The ~~million~~Note ~~and~~Purchase isAgreement ~~included~~with ~~in Other Long-Term Liabilities.~~

The Company recorded expenses of $9.9 million in the twelve months ended December 31, 2007 related to the Transaction. These expenses comprised of $1.0 million of compensation expense related to accelerated vesting of stock options, $0.2 million of employer related payroll taxes for the accelerated vesting of stock options, $1.3 million of transaction incentive expenses, $7.0 million of transaction costs and $0.4 million of deferred financing costs related to refinanced indebtedness. In addition to these amounts, the Company capitalized $4.0 million of transaction costs into goodwill related to the accelerated earn-out, and $3.6 million of deferred financing costs relating to the Senior Credit Facility. Parent made a capital contribution of $21.7 million to the Company in connection with these transaction costs.33

7.Table ~~FINANCING~~of ~~ARRANGEMENTS~~Contents

~~Long~~Olympus Growth Fund IV, L.P. consisted of $43.0 million junior payment-in-kind notes with no required principal amortization. These notes (the “Parent Notes”) were scheduled to mature in April 2012. During the term ~~debt~~of ~~consisted~~the Parent Notes, Parent was able at its option to pay interest on the Parent Notes through the issuance of additional notes. The Company was not liable for, and had not otherwise guaranteed, any of the ~~following~~obligations (of Parent with respect to the Parent Notes. The Company was, however, subject to a number of restrictive covenants under the Note Purchase Agreements. On March 30, 2009, the Parent obtained waivers for the restrictive covenants in ~~thousands~~ the Note Purchase Agreements relating to the maximum total leverage ratio permitted for the period ending December 31, 2008. In addition, the Company was limited in its ability to pay dividends or otherwise make distributions to Parent under the Senior Credit Facility and the indenture governing the 10% Senior Notes due 2012 (the “Senior Notes”):. The Parent Notes were not reflected in the Company’s consolidated balance sheet as the Company did not push down the new accounting basis because of the significance of the public debt holders’ influence on the Company’s ability to control the form of ownership.

	December 31, 2009		December 31, 2008
Senior Notes (10%) due 2012	$	108,350	$	108,350
First Lien Term Facility	—		3,597
Total debt	108,350		111,947
Less current maturities	—		3,597
	$	108,350	$	108,350

Effective as of June 13, 2007, the Parent issued an additional $20.0 million of Parent Notes to Olympus Growth Fund IV, L.P., and purchased $20.0 million of Parent Notes from OCM Mezzanine Fund II, L.P. During the twelve month periods ended December 31, 2010 and December 31, 2009, the Company had no distributions to the Parent for payment on Parent Notes.

34In conjunction with the Transaction, Parent issued equity securities of approximately $86.2 million (including rollover equity from management) to fund the equity necessary for the acquisition, consisting of $81.0 million of preferred equity securities and $5.2 million of common equity securities. Preferred dividends accrued and accumulated on the outstanding preferred equity securities at the rate of 10% per annum, compounding quarterly, on the sum of its liquidation value per share ($1,000) plus all accumulated and unpaid dividends thereon. Dividends were payable as and when declared by Parent’s board of directors out of funds legally available for the payment of dividends. Such dividends accrued, whether or not they had been declared and whether or not there were profits, surplus or other funds of Parent legally available for the payment of dividends, until such time as such dividends were actually paid by Parent. The holders of a majority of the outstanding preferred equity securities at any time and from time to time could demand that Parent redeem all or any portion of the outstanding preferred equity securities by delivering to the holder(s) thereof (i) an amount of cash per share equal to the sum of its liquidation value per share ($1,000) plus all accumulated and unpaid dividends thereon and (ii) a number of shares of Parent’s common equity securities as determined in accordance with the redemption procedures contained in Parent’s certificate of incorporation. If Parent did not have funds legally available for any particular redemption, Parent was obligated to use those funds that were legally available for the redemption of such securities to redeem the maximum possible number of preferred equity securities which would otherwise had been redeemed in connection with such redemption. Thereafter, when additional funds of Parent were legally available for redemption of such securities, Parent was obligated to redeem the balance of such securities. Parent was prohibited from redeeming any preferred equity securities if any such redemption was prohibited under any credit facility or indenture to which Parent or any of its subsidiaries was a party or was otherwise bound. The Company was not liable for, and had not otherwise guaranteed, any of these obligations of Parent with respect to the equity securities issued by Parent. These equity securities were not reflected in the Company’s consolidated balance sheet as the Company did not push down the new accounting basis because of the significance of the public debt holders’ influence on the Company’s ability to control the form of ownership.

~~Table~~ On December 11, 2006, Parent and AcquisitionCo, in anticipation of ~~Contents~~the consummation of the Transaction, entered into an employment agreement with Mr. John Fitzpatrick, as Chief Executive Officer of AcquisitionCo (the “New Fitzpatrick Employment Agreement”). Pursuant to the New Fitzpatrick Employment Agreement, upon consummation of the Transaction, the New Fitzpatrick Employment Agreement superseded and preempted Mr. Fitzpatrick’s prior employment agreement with the Company. On January 9, 2007, by operation of law upon consummation of the Transaction, the Company became obligated for all of AcquistionCo’s obligations under the New Fitzpatrick Employment Agreement. Under the New Fitzpatrick Employment Agreement, in the event Mr. Fitzpatrick provides at least twelve months’ prior written notice to the Company and Parent of his resignation for retirement purposes, then Mr. Fitzpatrick may elect to have Parent repurchase up to 50% of the common equity securities issued to Mr. Fitzpatrick in the Recapitalization in exchange for the equity securities acquired by Mr. Fitzpatrick on January 9, 2007 in connection with the Transaction at the fair market value of such securities as of the date of such election. Any such repurchase by Parent shall be subject to applicable restrictions contained in the Delaware General Corporation Law and in Parent’s and its subsidiaries’ debt financing agreements with unaffiliated third parties. If any such restrictions prohibit any such repurchase which Parent is otherwise required to make, the repurchase obligation is suspended until such time as Parent may make such repurchase under such restrictions.

~~Senior~~In ~~Notes The~~conjunction ~~Company~~with ~~has~~the ~~outstanding~~Transaction, ~~10%~~the ~~Senior Notes~~previous ~~due~~stockholders inof ~~2012. During~~ the ~~three months~~Company ~~ended~~will ~~March 31,~~receive ~~2008,~~ the ~~Company~~benefit ~~purchased~~of ~~and~~certain ~~canceled approximately~~negotiated ~~$11.5~~transaction ~~million~~related intax ~~principal~~deductions ~~amount~~whenever ofsuch ~~the~~deductions ~~Senior~~are ~~Notes~~realized. Due ~~for~~to ~~payment of~~this agreement, there was $96.82 million ~~resulting~~paid induring athe ~~gain~~twelve onmonth ~~extinguishment~~period ofended ~~debt~~December 31, ~~of approximately $1~~2008.~~7 million.~~ ~~The~~As ~~Company~~of ~~used~~December 31, ~~available cash~~2009 and ~~borrowings~~December 31, ~~under~~2010, ~~its Revolving Facility for payment thereof.~~

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 assets or operations independent of its subsidiaries. As a result, the Company has not presented separate financial statements of the subsidiary guarantors.34

~~Credit Facility In conjunction~~Table with the Transaction, the Company entered into the Senior Credit Facility, with Credit Suisse, Cayman Islands Branch, which provided for (i) the First Lien Term Facility in an aggregate principal amount of $150.0 million and (ii) the Revolving Facility in an aggregate principal amount up to $25.0 million, subject to certain conditions, of which $10.0 million is available through a sub facility in the form of letters of credit. On March 30, 2009, we repaid all amounts outstanding under the First Lien Term Facility, and no additional borrowings are available thereunder. As of December 31, 2009, the maximum amount of borrowings available to the Company under the Revolving Facility was $12.5 million. As of December 31, 2009 the Company had no outstanding borrowings under the Revolving Facility. Borrowings under the Revolving Facility bear interest at a fluctuating rate equal to either the base rate plus 2.75% per annum or LIBOR plus 3.75% per annum (effective rate of 5.25% and 4.21% at December 31, 2009 and December 31, 2008, respectively). The Company must comply with certain financial covenants under its Senior Credit Facility, including maintenance of an interest coverage ratio and a total leverage ratio. We were in compliance with such covenants as of December 31, 2009.Contents

~~On March 30, 2009,~~ the ~~Company~~entire ~~entered~~liability ~~into an amendment to its Senior Credit Facility, which among other things: (i) increased the applicable interest rate margin~~ for ~~borrowings thereunder; (ii) eliminated~~ the ~~requirement~~agreement ~~that~~is the Company maintain corporate debt ratings; (iii) extended the date by which the Company must amend the indenture governing the Senior Notes to eliminate certain of the restrictive covenants contained therein (including covenants related to the incurrence of indebtedness and liens) or redeem the Senior Notes to March 31, 2010; (iv) extended the Company’s ability to continue to pay cash dividends to enable Parent to make cash interest payments on the Parent Notes to March 31, 2010; (v) increased the maximum total leverage ratio the Company may have at the end of each quarterly period from December 31, 2008 through December 31, 2009, (vi) required payment of the remaining balance due under the First Lien Term Facility of approximately $31.67 million and ~~(vii) decreased the minimum interest coverage ratio the Company is required to maintain at the end of each quarterly period from December 31, 2008 through December 31, 2009~~$1. ~~The~~5 ~~amendment also waived for the four fiscal quarters ended December 31~~million, ~~2008~~respectively, ~~any default or event of default that may have arisen from the Company’s failure to maintain the maximum consolidated leverage ratio~~ and ~~the~~is ~~minimum~~included ~~consolidated interest coverage ratio set forth~~ in ~~the~~Other ~~Senior~~Long-Term ~~Credit Facility prior to the effective date of the amendment~~Liabilities.

OnThe ~~March 26, 2010, the~~ Company ~~entered~~recorded ~~into~~expenses ~~an amendment~~of to$9.9 ~~its~~million ~~Senior~~in ~~Credit~~the ~~Facility,~~twelve ~~which~~months ~~among~~ended ~~other things: (i)~~December ~~extended the~~31, ~~date~~2007 byrelated ~~which~~to the ~~Company~~Transaction. These ~~must~~expenses ~~amend~~comprised ~~the~~of ~~indenture~~$1.0 ~~governing~~million ~~the Senior Notes to eliminate certain~~ of ~~the~~compensation ~~restrictive~~expense ~~covenants contained therein (including covenants~~ related to ~~the~~accelerated ~~incurrence~~vesting of ~~indebtedness~~stock ~~and~~options, ~~liens)~~$0.2 ~~or redeem~~million ~~the~~of ~~Senior~~employer ~~Notes~~related topayroll ~~March 31,~~taxes ~~2011;~~for ~~(ii) increased~~ the ~~maximum total~~accelerated ~~leverage~~vesting ~~ratio~~of ~~the~~stock ~~Company~~options, ~~may~~$1.3 ~~have~~million ~~at the end~~ of ~~each~~transaction ~~quarterly~~incentive ~~period from March 31~~expenses, ~~2010~~$7.0 ~~through~~million ~~December 31,~~of ~~2010;~~transaction ~~(iii) added~~costs ~~an asset-based~~and ~~borrowing~~$0.4 ~~base~~million asof adeferred ~~condition~~financing costs related to ~~borrowing~~refinanced ~~under~~indebtedness. In ~~the~~addition ~~Senior~~to ~~Credit Facility;~~these ~~(iv) extended~~amounts, the Company’s ~~ability~~capitalized to$4.0 ~~continue~~million toof ~~pay~~transaction ~~cash dividends~~costs tointo ~~enable~~goodwill ~~Parent~~related to ~~make~~the ~~cash~~accelerated ~~interest~~earn-out, ~~payments~~and on$3.6 ~~the~~million ~~Parent~~of ~~Notes to~~deferred ~~March 31,~~financing ~~2011;~~costs ~~and~~relating ~~(v) decreased~~to the ~~minimum~~Senior ~~interest~~Credit ~~coverage ratio~~Facility. Parent ~~the~~made ~~Company~~a iscapital ~~required~~contribution toof ~~maintain~~$21.7 atmillion to the ~~end~~Company ofin ~~each~~connection ~~quarterly~~with ~~period from~~these ~~March 31,~~transaction ~~2010 through December 31, 2010~~costs.

~~The Senior~~2010 ~~Credit~~Recapitalization On ~~Facility~~December 30, is2010, ~~collateralized~~Parent bycompleted ~~substantially~~a ~~all~~comprehensive ~~assets~~recapitalization (the “Recapitalization”) pursuant to the terms of a Recapitalization Agreement, dated December 30, 2010 (the ~~Company~~ ~~including~~“Recapitalization ~~real~~Agreement”), by and ~~personal~~among ~~property~~Parent, ~~inventory~~WII Parent Merger Corp., ~~accounts~~a ~~receivable~~newly formed entity (“MergerCo”), ~~intellectual~~ ~~property~~OCM Mezzanine Fund II, L.P. (“OCM”) and ~~other~~Olympus ~~intangibles~~Growth Fund IV, L. ~~The~~P. ~~Senior~~(“Olympus ~~Credit~~Fund ~~Facility~~IV”) isand ~~scheduled~~a toNote ~~mature~~Exchange ~~January~~Agreement, dated December ~~2013~~30, 2010, between OCM and MergerCo (the “Exchange Agreement” and together with the Recapitalization Agreement, the “Recap Agreements”).

~~Restrictions~~Pursuant onto ~~Indebtedness~~the Recap Agreements: (i) ~~Our Senior~~OCM ~~Credit~~transferred ~~Facility~~to MergerCo all of its shares of Series A Preferred Stock and ~~the~~Common ~~indenture~~Stock ~~for~~of ~~the~~Parent ~~Senior~~and its Parent Notes ~~impose~~in ~~certain restrictions~~an onaggregate ~~the~~principal ~~Company’s~~amount ~~ability~~of toapproximately ~~incur~~$33.6 ~~indebtedness,~~million ~~pay~~(including ~~dividends~~accrued and unpaid interest thereon) and, ~~make investments~~in exchange therefor, ~~grant~~MergerCo ~~liens~~issued to OCM an aggregate of 29,713.91 ~~sell~~shares ~~assets~~of its Common Stock and ~~engage~~a new unsecured non-interest bearing senior note in ~~certain~~a ~~other~~principal ~~activities~~amount of $23. 0 million (the “New Parent Note”) due April ~~The~~9, ~~subsidiary~~2012; ~~guarantors~~and ~~are~~(ii) Olympus ~~generally~~Fund ~~not~~IV ~~restricted~~transferred to MergerCo all of the shares of Series A Preferred Stock of Parent held by Olympus Fund IV and its Parent Notes in ~~their~~an ~~ability to~~aggregate ~~dividend~~principal oramount ~~otherwise~~of ~~distribute~~approximately ~~funds~~$114.9 million (including accrued and unpaid interest thereon) and, in exchange therefor, MergerCo issued to Olympus Fund IV an aggregate of 139,071.406 shares of its Common Stock. Immediately thereafter, MergerCo was merged with and into Parent (the ~~Company~~“Recap ~~except~~Merger”), ~~for restrictions~~with ~~imposed~~Parent ~~under~~continuing ~~applicable~~as ~~state~~the ~~corporate~~surviving ~~law~~corporation in the Recap Merger (as such, the “Surviving Corporation”). ~~The~~Pursuant ~~Company~~to ~~is limited~~the inRecap ~~its~~Merger, ~~ability~~subject to ~~pay~~the ~~dividends~~terms orand ~~otherwise~~conditions ~~make~~of the Recapitalization Agreement, (i) each share of Common Stock of MergerCo outstanding immediately prior to the Recap Merger was converted into the right to receive one share of Common Stock of the Surviving Corporation, (ii) each share of Series A Preferred Stock of Parent outstanding immediately prior to the Recap Merger (other ~~distributions~~ than shares held by Parent or MergerCo) was converted into the right to receive one share of Common Stock of the Surviving Corporation, (iii) each share of Common Stock of the Parent ~~under~~outstanding immediately prior to the ~~Senior~~Recap ~~Credit~~Merger ~~Facility~~(other ~~and~~than shares held by Parent or MergerCo) was converted into the right to receive one thousandth of a share of Common Stock of the Surviving Corporation and (iv) each share of capital stock of Parent or MergerCo held by Parent or MergerCo was cancelled without consideration.

35The Parent Notes transferred to MergerCo in connection with the Recapitalization were extinguished in connection with the Recap Merger and the New Parent Note issued by MergerCo was assumed by Parent, as the Surviving Corporation, by operation of law in the Recap Merger. The New Parent Note is non-interest bearing and has an initial maturity date of April 9, 2012. The note purchase agreement governing the New Parent Note provides that if we refinance or amend and extend the Senior Notes, and Olympus requests OCM to amend the New Parent Note, so long as we do not raise more than $120.0 million of indebtedness in connection therewith, each of OCM and Parent have agreed to, among other things, to extend the maturity date of the New Parent Note to be one year after the maturity date of the Senior Notes as refinanced or amended and extended, but in no event later than 2017. The Company is not liable for, and has not otherwise guaranteed, any of the obligations of Parent with respect to the New Parent Note. The Company is, however, subject to a number of restrictive covenants in the note exchange agreement with respect to the New Parent Note.

~~Table~~As a result of ~~Contents~~Recapitalization, the Olympus Funds and OCM own approximately 82% and 17%, respectively, of the outstanding Common Stock of Parent, as the Surviving Corporation.

~~indenture governing the Senior Notes~~7. ~~Specifically,~~ ~~the~~FINANCING Senior Credit Facility, as amended, prohibits the Company from making any distributions to Parent except for limited purposes, including, but not limited to: (i) prior to March 31, 2011, the Company may pay cash dividends and distributions to Parent to enable Parent to make cash interest payments on the acquisition loan, provided that (x) after giving pro forma effect to such dividend or distribution, the consolidated first lien leverage ratio does not exceed 1.0 to 1.0, and (y) the amount of such dividends and distributions shall not exceed $3,225,000 in any calendar quarter, (ii) customary and reasonable out-of-pocket expenses, legal and accounting fees and expenses and overhead of Parent incurred in the ordinary course of business to the extent attributable to the business of the Company and its subsidiaries and in the aggregate not to exceed $500,000 in any fiscal year, and (iii) the Company may pay management fees of Parent not to exceed $750,000 in any fiscal year, as well as any previously accrued but unpaid management fees for any previous fiscal years without regard to this $750,000 limitation, so long as the amount accrued in any such previous fiscal year did not exceed $750,000, in each case, so long as no default has occurred. The indenture provides that the Company can generally pay dividends and make other distributions to Parent in an amount not to exceed (i) 50% of the Company’s consolidated net income for the period beginning April 1, 2004 and ending as of the end of the last fiscal quarter before the proposed payment, plus (ii) 100% of the net cash proceeds received by the Company from the issuance and sale of capital stock, plus (iii) the net return of certain investments, provided that certain conditions are satisfied, including that the Company has a consolidated interest coverage ratio of greater than 2.0 to 1.0. For the twelve month period ended December 31, 2009, the Company’s consolidated interest coverage ratio was less than 2.0 to 1.0.ARRANGEMENTS

8.Long-term ~~COMMITMENTS~~debt ~~AND~~consisted ~~CONTINGENCIES~~of the following (in thousands):

Operating Leases The Company is obligated under various operating leases for warehouse space and plant equipment. Rental expense under these agreements was approximately $924,000, $1,085,000, and $913,000 for the years ended December 31, 2009, 2008, and 2007, respectively. Future minimum lease payments are as follows (in thousands) as of December 31, 2009:

	December 31, 2010		December 31, 2009
Senior Notes (10%) due 2012	$	108,350	$	108,350
Senior Credit Facility	—		—
Total debt	108,350		108,350
Less current maturities	—		—
Total	$	108,350	$	108,350

Year Ending December 31
2010	$	393
2011	144
2012	128
2013	105
2014	85

~~Woodcraft Industries, Inc.~~Table ~~Retirement Assurance Plan The 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 $77,000, $554,000, and $620,000 during the years ended December 31, 2009, 2008 and 2007, respectively.Contents

~~Litigation In~~Senior ~~the~~Notes The ~~normal~~Company ~~course~~has ofoutstanding ~~business,~~10% ~~the~~Senior ~~Company~~Notes isdue ~~subject~~on toFebruary 15, ~~various instances of litigation~~2012. InDuring the ~~opinion of~~three months ended March 31, 2008, the Company’s ~~management~~purchased and ~~legal~~canceled ~~counsel,~~approximately ~~the~~$11.5 ~~ultimate settlement~~million in principal amount of ~~such~~the ~~matters~~Senior ~~will~~Notes ~~not~~for ~~have~~payment aof ~~material~~$9.8 ~~adverse~~million ~~effect~~resulting in a gain on ~~the Company’s financial~~extinguishment ~~position,~~of ~~results~~debt of ~~operations,~~approximately or$1.7 million. The Company used available cash ~~flows~~and borrowings under its Revolving Facility for payment thereof.

9Each 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 ~~INCOME~~Company ~~TAXES~~has no assets or operations independent of its subsidiaries. As a result, the Company has not presented separate financial statements of the subsidiary guarantors.

~~The~~Senior ~~provision~~Credit Facility In conjunction with the Transaction, the Company entered into the Senior Credit Facility, with Credit Suisse, Cayman Islands Branch, which provided for ~~income~~(i) the ~~taxes~~First ~~consisted~~Lien Term Facility in an aggregate principal amount of ~~the following~~$150.0 million and (ii) the Revolving Facility in ~~thousands~~an aggregate principal amount up to $25.0 million, subject to certain conditions, of which $10.0 million was available through a sub facility in the form of letters of credit. On March 30,

Filing Compare · WII Components, Inc.