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UNITED STATES
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

Commission file number: 333-115490

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

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

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

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

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

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

DOCUMENTS INCORPORATED BY REFERENCE: None.

WII COMPONENTS, INC.

FORM 10-K
Year Ended December 31, 2004

INDEX

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

PART 1

Item 1. Business

Our Company

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

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

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

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

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Our History

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

Customers

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

Sales and Marketing

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

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

Supply of Raw Materials

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

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

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

Competition

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

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

Environmental Matters

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

Employees

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

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Risk Factors and Factors Affecting Forward-Looking Statements

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

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

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

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

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

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

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

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

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

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

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

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

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

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

We face intense competition in our markets.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Item 2. Properties

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

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

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

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

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

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

Item 3. Legal Proceedings

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

Item 4. Submission of Matters to Vote of Security Holders

        None.

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PART II

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

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

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

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

Item 6. Selected Financial Data

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

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(1)

In April 2004, the Company acquired Grand Valley, Inc. through an asset purchase. The results of operations for this acquired business have been included in our financial statements since the date of acquisition. Our results of operations for periods since the acquisition may not be comparable to our results of operations for the periods prior to the acquisition.

(2)

In July 2002, the Predecessor acquired Brentwood, Inc. through an asset purchase. The results of operations for this acquired business have been included in our financial statements since the date of acquisition. Our results of operations for periods since the acquisition may not be comparable to our results of operations for the periods prior to the acquisition.

(3)

Total operating expenses include $1.0 million of stock compensation expense in 2002 related to stock option variable accounting and the issuance of common stock, $1.8 million of payments to holders of our capital stock in the three months ended March 31, 2003 for certain tax liabilities incurred upon the sale of our predecessor's capital stock in connection with our acquisition by Behrman Capital III L.P, and $0.8 million of stock compensation expense in 2004 related stock option variable accounting.

(4)

Total operating expenses include a gain of approximately $1.0 million in 2000 on the sale of a company-owned airplane.

(5)

The Company incurred a $0.8 million expense in 2002 related to the modification of credit facility debt in connection with the acquisition of our Brentwood subsidiary. For the fiscal year of 2004, the Company wrote off $3.5 million of financing fees related to the old credit facility.

(6)

EBITDA as set forth in the table below represents net income before interest, taxes, depreciation and amortization. We have presented EBITDA because we believe it is useful in evaluating our operating performance compared to that of other companies in our industry, as the calculation eliminates the effects of long-term financing, income taxes and the accounting effects of capital expenditures, which items may vary for companies for reasons unrelated to overall operating performance. EBITDA is not a measurement of financial performance or liquidity under GAAP and should not be considered as an alternative to net income or net cash flows provided by operating activities as determined in accordance

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with GAAP. Our calculation of EBITDA may not be comparable to the calculation of similarly titled measures reported by other companies.

(7)

Represents EBITDA divided by net sales.

(8)

Depreciation and amortization does not include amortization of deferred financing fees (which are included in interest expense) for the fiscal years ended December 31, 2000, 2001, 2002 and 2004 of $0.2 million, $0.3 million, $0.4 million and $1.0 million, respectively; for the three months ended March 31, 2003 of $0.1 million; for the nine months ended December 31, 2003 of $0.7 million.

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

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

Overview

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

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

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

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

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

Results of Operations

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Liquidity and Capital Resources

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

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

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

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

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

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

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

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

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

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Schedule of Certain Contractual Obligations

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

Inflation

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

Seasonality

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

Critical Accounting Policies

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

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

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

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

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

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

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

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

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

New Accounting Standards

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

Item 7A. Qualitative and Quantitative Information about Market Risk

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

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

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

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Item 8. Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

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

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

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

/s/ DELOITTE & TOUCHE LLP

Minneapolis, Minnesota
March 25, 2005

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

See notes to consolidated financial statements.

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

See notes to consolidated financial statements.

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

See notes to consolidated financial statements.

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