10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2012

OR

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

For the transition period from                     to                    

Commission file number: 333-114924

Norcraft Companies, L.P.

(Exact name of registrant as specified in its certificate of limited partnership)

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

3020 Denmark Avenue, Suite 100

Eagan, MN 55121

(Address of Principal Executive Offices)

(800) 297-0661

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the 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  ¨    No  x.

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

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

Large Accelerated Filer	¨	Accelerated Filer	¨
Non-Accelerated Filer	x	Smaller Reporting Company	¨

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

Norcraft Companies, L.P.

Table of Contents

	Page
PART I FINANCIAL INFORMATION
Item 1. Unaudited Condensed Consolidated Financial Statements
Consolidated Balance Sheets at September 30, 2012 and December 31, 2011		3
Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2012 and 2011		4
Consolidated Statement of Changes in Member’s Equity for the three and nine months ended September 30, 2012		5
Consolidated Statement of Cash Flows for the nine months ended September 30, 2012 and 2011		6
Notes to Consolidated Financial Statements		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
Item 3. Quantitative and Qualitative Disclosures of Market Risk		21
Item 4. Controls and Procedures		21
PART II OTHER INFORMATION
Item 1. Legal Proceedings		22
Item 1A. Risk Factors		22
Item 6. Exhibits		22
SIGNATURES		23

2

PART I. FINANCIAL INFORMATION

Item 1.

Norcraft Companies, L.P.

Consolidated Balance Sheets

(dollar amounts in thousands)

	September 30, 2012 (unaudited)			December 31, 2011
ASSETS
Current assets:
Cash and cash equivalents	$	28,747		$	24,185
Trade accounts receivable, net		23,825			20,092
Inventories		20,345			17,503
Prepaid and other current assets		1,474			1,835
Total current assets		74,391			63,615
Non-current assets:
Property, plant and equipment, net		26,502			27,434
Goodwill		88,490			88,479
Intangible assets, net		72,045			77,732
Display cabinets, net		6,188			5,842
Other assets		301			568
Total non-current assets		193,526			200,055
Total assets	$	267,917		$	263,670
LIABILITIES AND MEMBER’S EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	9,025		$	6,566
Accrued expenses		20,592			13,775
Total current liabilities		29,617			20,341
Non-current liabilities:
Long-term debt		240,000			240,000
Unamortized premium on bonds payable		137			166
Other liabilities		118			108
Total non-current liabilities		240,255			240,274
Total liabilities		269,872			260,615
Commitments and contingencies		—			—
Member’s equity (deficit):
Member’s equity (deficit)		(3,804	)		1,646
Accumulated other comprehensive income		1,849			1,409
Total member’s equity (deficit)		(1,955	)		3,055
Total liabilities and member’s equity (deficit)	$	267,917		$	263,670

See notes to consolidated financial statements.

3

Norcraft Companies, L.P.

Consolidated Statements of Comprehensive Loss

(dollar amounts in thousands)

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30
	2012			2011			2012			2011
Net sales	$	73,863		$	67,718		$	217,550		$	206,943
Cost of sales		55,360			48,815			160,679			150,223
Gross profit		18,503			18,903			56,871			56,720
Selling, general and administrative expenses		13,849			12,313			40,729			38,143
Income from operations		4,654			6,590			16,142			18,577
Interest expense, net		6,461			6,451			19,372			17,106
Amortization of deferred financing costs		780			795			2,340			1,666
Other expense, net		10			51			61			103
Total other expense		7,251			7,297			21,773			18,875
Net loss		(2,597	)		(707	)		(5,631	)		(298	)
Other comprehensive income (loss):
Foreign currency translation adjustment		500			(566	)		440			(382	)
Total other comprehensive income (loss)		500			(566	)		440			(382	)
Comprehensive loss	$	(2,097	)	$	(1,273	)	$	(5,191	)	$	(680	)

See notes to consolidated financial statements.

4

Norcraft Companies, L.P.

Consolidated Statement of Changes in Member’s Equity (Deficit)

(dollar amounts in thousands)

(unaudited)

	Member’s Equity (Deficit)			Accumulated Other Comprehensive Income		Total Member’s Equity (Deficit)
Member’s equity at January 1, 2012	$	1,646		$	1,409	$	3,055
Issuance of member’s interest		50					50
Stock compensation expense		141					141
Distributions to member		(10	)				(10	)
Foreign currency translation adjustment					440		440
Net loss		(5,631	)				(5,631	)
Member’s equity (deficit) at September 30, 2012	$	(3,804	)	$	1,849	$	(1,955	)

See notes to consolidated financial statements.

5

Norcraft Companies, L.P.

Consolidated Statement of Cash Flows

(dollar amounts in thousands)

(unaudited)

	Nine Months Ended
	September 30,
	2012			2011
Cash flows from operating activities:
Net loss	$	(5,631	)	$	(298	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization of property and equipment		3,562			3,774
Amortization:
Customer relationships		3,350			3,350
Deferred financing costs		2,340			1,666
Display cabinets		3,053			2,888
Discount amortization/accreted interest		(29	)		190
Provision for uncollectible accounts receivable		186			69
Provision for obsolete and excess inventories		(47	)		32
Provision for warranty claims		2,419			2,284
Stock compensation expense		141			136
Gain on disposal of assets		(3	)		—
Change in operating assets and liabilities:
Trade accounts receivable		(3,766	)		(6,113	)
Inventories		(2,722	)		(1,444	)
Prepaid expenses		363			369
Other assets		268			162
Accounts payable and accrued expenses		6,796			3,471
Net cash provided by operating activities		10,280			10,536
Cash flows from investing activities:
Proceeds from sale of property and equipment		5			6
Purchase of property, plant and equipment		(2,387	)		(1,720	)
Additions to display cabinets		(3,399	)		(3,707	)
Net cash used in investing activities		(5,781	)		(5,421	)
Cash flows from financing activities:
Borrowings on senior secured second lien notes payable		—			62,400
Payment of financing costs		(3	)		(8,159	)
Proceeds from issuance of member interests		50			89
Distributions to member		(10	)		(58,015	)
Net cash provided by (used in) financing activities		37			(3,685	)
Effect of exchange rates on cash and cash equivalents		26			(112	)
Net increase in cash and cash equivalents		4,562			1,318
Cash and cash equivalents, beginning of the period		24,185			28,657
Cash and cash equivalents, end of period	$	28,747		$	29,975

See notes to consolidated financial statements.

6

Norcraft Companies, L.P.

Notes to Consolidated Financial Statements

(in thousands)

(unaudited)

1. Basis of Presentation

The accompanying financial statements are those of Norcraft Companies, L.P. (“Norcraft”). Norcraft and its subsidiaries are collectively referred to as the “Company.” Norcraft Holdings, L.P (“Holdings”) is the parent company of Norcraft.

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the interim consolidated financial statements and accompanying notes included herein should be read in conjunction with the more detailed information contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, as filed with the Securities and Exchange Commission. The unaudited interim consolidated financial statements as of September 30, 2012 and 2011 and for the three and nine months ended September 30, 2012 and 2011 include all normal recurring adjustments which management considers necessary for the fair presentation of financial position, results of operations and cash flows for the interim periods.

2. Trade Accounts Receivable

Trade accounts receivable consists of the following:

	September 30,			December 31,
	2012			2011
Trade accounts receivable	$	24,538		$	20,949
Less: allowance for uncollectible accounts		(713	)		(857	)
Trade accounts receivable, net	$	23,825		$	20,092

3. Inventories

Inventories consist of the following:

	September 30,			December 31,
	2012			2011
Raw materials and supplies	$	15,436		$	14,920
Work in process		2,384			2,110
Finished goods		5,380			3,394
Excess and obsolete reserve		(2,855	)		(2,921	)
	$	20,345		$	17,503

4. Intangible Assets

Intangible assets consist of the following:

	September 30, 2012
			Subject to Amortization
	Not Subject to Amortization		Gross Carrying Amount		Accumulated Amortization			Total
Goodwill	$	88,490						$	88,490
Brand names	$	35,100						$	35,100
Customer relationships			$	67,000	$	(39,952	)		27,048
Deferred financing costs				16,123		(6,226	)		9,897
	$	35,100	$	83,123	$	(46,178	)	$	72,045

7

	December 31, 2011
			Subject to Amortization
	Not Subject  to Amortization		Gross  Carrying Amount		Accumulated Amortization			Total
Goodwill	$	88,479						$	88,479
Brand names	$	35,100						$	35,100
Customer relationships			$	67,000	$	(36,602	)		30,398
Deferred financing costs				16,120		(3,886	)		12,234
	$	35,100	$	83,120	$	(40,488	)	$	77,732

There were no events or circumstances during the three or nine months ended September 30, 2012 to indicate that the assets not subject to amortization should be evaluated for potential impairment.

5. Accrued Expenses

Accrued expenses consist of the following:

	September 30,		December 31,
	2012		2011
Interest	$	7,476	$	1,179
Salaries, wages and employee benefits		5,668		5,750
Commissions, rebates and marketing programs		3,031		2,496
Other, including product warranty accruals		2,978		2,783
Workers’ compensation		1,439		1,567
	$	20,592	$	13,775

Product warranty accrual activity is as follows:

	September 30,			September 30,
	2012			2011
Beginning balance – December 31	$	732		$	781
Accruals for warranties		2,419			2,284
Claims paid		(2,339	)		(2,309	)
Ending balance – September 30	$	812		$	756

6. Stock-Based Compensation

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

Under the terms of the Plan, the Class D units vest with time-based vesting over a three year period. Upon vesting, each Class D unit entitles the unit holder the option to purchase a Class A unit in Holdings. All Class D units are issued with an exercise price equal to the then fair value of Holdings’ Class A units as determined by the Company.

The fair value of the Class D units granted is based on the Black-Scholes option-pricing model. In accordance with Accounting Standards Codification (“ASC”) Topic 718, the Company is required to incorporate a volatility factor in the fair value calculation. The volatility factor is developed through the use of a sample of peer group companies consisting of publicly-traded companies that operate in the Company’s same industry. The Company granted 100,000 incentive Class D units during the three and nine months ended September 30, 2012.

Compensation expense related to Class D units was $0.05 million and $0.14 million for the three and nine months ended September 30, 2011 and 2012, respectively. Because individuals receiving these Class D unit awards are employees of Norcraft, the compensation expense is recorded at the Norcraft level.

8

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

	Nine Months Ended September 30, 2012
	Units			Weighted- Average Exercise Price
Beginning balance		6,886,577		$	0.26
Granted		100,000		$	0.34
Forfeited/expired		(50,000	)	$	0.39
Ending balance		6,936,577		$	0.26
Exercisable		5,517,032		$	0.24

The intrinsic values of the issued Class D units and exercisable Class D units at September 30, 2012 were each $0.6 million.

The Plan will terminate in December 2015.

7. Long-term Debt

Long-term debt consists of the following:

	September 30,		December 31,
	2012		2011
Senior secured second lien notes payable (due in 2015 with semi-annual interest payments at 10.5%)	$	240,000	$	240,000
Long term debt	$	240,000	$	240,000

ABL Facility

In December 2009, in connection with the issuance of the senior secured second lien notes, Norcraft entered into a senior secured first-lien asset-based revolving credit facility (the “ABL Facility”) pursuant to a credit agreement dated as of December 9, 2009 (the “ABL Credit Agreement”) by and among Norcraft, as borrower, Norcraft Intermediate Holdings, L.P. and other guarantors party thereto, as guarantors, the lenders party thereto and UBS Securities LLC, as arranger, bookmanager, documentation agent and syndication agent, and UBS AG, Stamford Branch, as issuing bank, administrative agent and collateral agent and UBS Loan Finance LLC, as swingline lender. The ABL Facility provides for aggregate commitments of up to $25.0 million, including a letter of credit sub-facility and a swingline loan sub-facility, subject to a borrowing base, and has a maturity date of December 9, 2013. As of September 30, 2012, the borrowing base was approximately $20.1 million.

In May 2011, the ABL Credit Agreement was modified and now has a maturity of September 2015.

The ABL Credit Agreement contains negative covenants that restrict or limit the ability of Norcraft Intermediate Holdings, L.P., which is the immediate parent of Norcraft, and its subsidiaries from, among other things, (a) selling assets, (b) altering the business that Norcraft currently conducts, (c) engaging in mergers, acquisitions and other business combinations, (d) declaring dividends or redeeming or repurchasing the Company’s equity interests, (e) incurring additional debt or guarantees, (f) making loans and investments, (g) incurring liens, (h) entering into transactions with affiliates, (i) engaging in sale and leaseback transactions and (j) prepaying the senior secured second lien notes, the senior discount notes and any subordinated debt. As of September 30, 2012, the Company was in compliance with these provisions.

9

Indebtedness under the ABL Facility is guaranteed, on a joint and several basis, by Norcraft Intermediate Holdings, L.P.(the immediate parent of Norcraft), Norcraft Finance Corp. (a subsidiary of Norcraft), Norcraft Canada Corporation (a subsidiary of Norcraft) and all of Norcraft’s current and future subsidiaries, subject to exceptions for foreign subsidiaries to the extent of adverse tax consequences, and is secured by a first priority security interest in substantially all of Norcraft’s and the guarantor’s existing and future property and assets, including accounts receivable, inventory, equipment, general intangibles, intellectual property, investment property, other personal property, owned real property, cash and proceeds of the foregoing.

As of September 30, 2012, there were no borrowings outstanding, approximately $4.5 million of a letter of credit outstanding and unused commitments of $15.6 million under the ABL Facility.

The Company has no unused letters of credit.

Senior Secured Second Lien Notes

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

In May 2011, Norcraft and Norcraft Finance Corp. issued, on a joint and several basis, an additional $60.0 million aggregate principal amount of these senior secured second lien notes at a 1.04 premium, for total gross proceeds of $62.4 million. Proceeds from this issuance of the senior secured second lien notes were used to make a distribution to Holdings to allow Holdings to retire the remainder of its 9 ³/₄% senior discount notes due 2012 and to pay related transaction and financing costs.

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

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

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

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

Additionally, the terms of the indenture governing the senior secured second lien notes limit Norcraft’s ability to, among other things, incur additional indebtedness, dispose of assets, make acquisitions, make other investments, pay dividends and make various other payments. The terms also include cross-default provisions. As of September 30, 2012, Norcraft was in compliance with these provisions.

10

The following represents certain condensed consolidating financial information as of September 30, 2012 and December 31, 2011 and for the periods ended September 30, 2012 and 2011 for Norcraft as co-issuer and for Norcraft Finance Corp. as co-issuer and Norcraft Canada Corporation, both wholly-owned subsidiaries of Norcraft, which fully and unconditionally guarantees the senior secured second lien notes.

CONDENSED CONSOLIDATED BALANCE SHEETS

As of September 30, 2012 (unaudited)

	Norcraft Companies, L.P. (1)			Norcraft Finance Corp. (1)		Norcraft Canada			Eliminations			Consolidated Norcraft Companies, L.P.
Current assets	$	68,177		$	—	$	6,214		$	—		$	74,391
Property, plant & equipment, net		20,385			—		6,117			—			26,502
Investments in subsidiary		(1,283	)		—		—			1,283			—
Other assets		178,790			—		305			(12,071	)		167,024
Total assets	$	266,069		$	—	$	12,636		$	(10,788	)	$	267,917
Current liabilities	$	27,769		$	—	$	1,848		$	—		$	29,617
Long-term debt		240,000			—		12,071			(12,071	)		240,000
Unamortized premium on bonds payable		137			—		—			—			137
Other liabilities		118			—		—			—			118
Member’s equity (deficit)		(1,955	)		—		(1,283	)		1,283			(1,955	)
Total liabilities & member’s equity (deficit)	$	266,069		$	—	$	12,636		$	(10,788	)	$	267,917
As of December 31, 2011
	Norcraft Companies, L.P. (1)			Norcraft Finance Corp. (1)		Norcraft Canada			Eliminations			Consolidated Norcraft Companies, L.P.
Current assets	$	57,816		$	—	$	5,799		$	—		$	63,615
Property, plant & equipment, net		21,312			—		6,122			—			27,434
Investments in subsidiary		(928	)		—		—			928			—
Other assets		183,768			—		293			(11,440	)		172,621
Total assets	$	261,968		$	—	$	12,214		$	(10,512	)	$	263,670
Current liabilities	$	18,639		$	—	$	1,702		$	—		$	20,341
Long-term debt		240,000			—		11,440			(11,440	)		240,000
Unamortized premium on bonds payable		166			—		—			—			166
Other liabilities		108			—		—			—			108
Member’s equity (deficit)		3,055			—		(928	)		928			3,055
Total liabilities & member’s equity (deficit)	$	261,968		$	—	$	12,214		$	(10,512	)	$	263,670

(1) Co-issuers

11

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

For the Three Months Ended September 30, 2012 (unaudited)

	Norcraft Companies, L.P. (1)			Norcraft Finance Corp. (1)		Norcraft Canada			Eliminations			Consolidated Norcraft Companies, L.P.
Net sales	$	68,763		$	—	$	6,485		$	(1,385	)	$	73,863
Cost of sales		51,193			—		5,552			(1,385	)		55,360
Gross profit		17,570			—		933			—			18,503
Equity in earnings (losses) of subsidiary		(177	)		—		—			177			—
Selling, general and administrative expenses		12,773			—		1,076			—			13,849
Income (loss) from operations		4,620			—		(143	)		177			4,654
Interest expense, net		6,432			—		29			—			6,461
Amortization of deferred financing costs		780			—		—			—			780
Other expense, net		5			—		5			—			10
Total other expense		7,217			—		34			—			7,251
Net income (loss)		(2,597	)		—		(177	)		177			(2,597	)
Other comprehensive income (loss):
Foreign currency translation adjustment		—			—		500			—			500
Total other comprehensive income (loss)		—			—		500			—			500
Comprehensive income (loss)	$	(2,597	)	$	—	$	323		$	177		$	(2,097	)
For the Three Months Ended September 30, 2011 (unaudited)
	Norcraft Companies, L.P. (1)			Norcraft Finance Corp. (1)		Norcraft Canada			Eliminations			Consolidated Norcraft Companies, L.P.
Net sales	$	62,735		$	—	$	6,102		$	(1,119	)	$	67,718
Cost of sales		44,808			—		5,126			(1,119	)		48,815
Gross profit		17,927			—		976			—			18,903
Equity in earnings (losses) of subsidiary		116			—		—			(116	)		—
Selling, general and administrative expenses		11,470			—		843			—			12,313
Income (loss) from operations		6,573			—		133			(116	)		6,590
Interest expense, net		6,429			—		22			—			6,451
Amortization of deferred financing costs		795			—		—			—			795
Other expense, net		56			—		(5	)		—			51
Total other expense		7,280			—		17			—			7,297
Net income (loss)		(707	)		—		116			(116	)		(707	)
Other comprehensive income (loss):
Foreign currency translation adjustment		—			—		(566	)		—			(566	)
Total other comprehensive income (loss)		—			—		(566	)		—			(566	)
Comprehensive income (loss)	$	(707	)	$	—	$	(450	)	$	(116	)	$	(1,273	)

(1) Co-issuers

12

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

For the Nine Months Ended September 30, 2012 (unaudited)

	Norcraft Companies, L.P. (1)			Norcraft Finance Corp. (1)		Norcraft Canada			Eliminations			Consolidated Norcraft Companies, L.P.
Net sales	$	203,009		$	—	$	18,242		$	(3,701	)	$	217,550
Cost of sales		148,607			—		15,773			(3,701	)		160,679
Gross profit		54,402			—		2,469			—			56,871
Equity in earnings (losses) of subsidiary		(795	)		—		—			795			—
Selling, general and administrative expenses		37,544			—		3,185			—			40,729
Income (loss) from operations		16,063			—		(716	)		795			16,142
Interest expense, net		19,301			—		71			—			19,372
Amortization of deferred financing costs		2,340			—		—			—			2,340
Other expense, net		53			—		8			—			61
Total other expense		21,694			—		79			—			21,773
Net income (loss)		(5,631	)		—		(795	)		795			(5,631	)
Other comprehensive income (loss):
Foreign currency translation adjustment		—			—		440			—			440
Total other comprehensive income (loss)		—			—		440			—			440
Comprehensive income (loss)	$	(5,631	)	$	—	$	(355	)	$	795		$	(5,191	)
For the Nine Months Ended September 30, 2011 (unaudited)
	Norcraft Companies, L.P. (1)			Norcraft Finance Corp. (1)		Norcraft Canada			Eliminations			Consolidated Norcraft Companies, L.P.
Net sales	$	194,224		$	—	$	15,713		$	(2,994	)	$	206,943
Cost of sales		139,636			—		13,581			(2,994	)		150,223
Gross profit		54,588			—		2,132			—			56,720
Equity in earnings (losses) of subsidiary		(559	)		—		—			559			—
Selling, general and administrative expenses		35,501			—		2,642			—			38,143
Income (loss) from operations		18,528			—		(510	)		559			18,577
Interest expense, net		17,056			—		50			—			17,106
Amortization of deferred financing costs		1,666			—		—			—			1,666
Other expense, net		104			—		(1	)		—			103
Total other expense		18,826			—		49			—			18,875
Net income (loss)		(298	)		—		(559	)		559			(298	)
Other comprehensive income (loss):
Foreign currency translation adjustment		—			—		(382	)		—			(382	)
Total other comprehensive income (loss)		—			—		(382	)		—			(382	)
Comprehensive income (loss)	$	(298	)	$	—	$	(941	)	$	559		$	(680	)

(1) Co-issuers

13

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the Nine Months Ended September 30, 2012 (unaudited)

	Norcraft Companies, L.P. (1)			Norcraft Finance Corp. (1)		Norcraft Canada			Eliminations			Consolidated Norcraft Companies, L.P.
Cash flows provided by (used in) operating activities	$	9,585		$	—	$	695		$	—		$	10,280
Cash flows provided by (used in) investing activities		(5,869	)		—		(543	)		631			(5,781	)
Cash flows provided by (used in) financing activities		37			—		631			(631	)		37
Effect of exchange rates on cash and cash equivalents		—			—		26			—			26
Net increase (decrease) in cash and cash equivalents		3,753			—		809			—			4,562
Cash and cash equivalents, beginning of period		24,305			—		(120	)		—			24,185
Cash and cash equivalents, end of period	$	28,058		$	—	$	689		$	—		$	28,747
For the Nine Months Ended September 30, 2011 (unaudited)
	Norcraft Companies, L.P. (1)			Norcraft Finance Corp. (1)		Norcraft Canada			Eliminations			Consolidated Norcraft Companies, L.P.
Cash flows provided by (used in) operating activities	$	10,370		$	—	$	166		$	—		$	10,536
Cash flows provided by (used in) investing activities		(5,933	)		—		(356	)		868			(5,421	)
Cash flows provided by (used in) financing activities		(3,685	)		—		868			(868	)		(3,685	)
Effect of exchange rates on cash and cash equivalents		—			—		(112	)		—			(112	)
Net increase (decrease) in cash and cash equivalents		752			—		566			—			1,318
Cash and cash equivalents, beginning of period		28,705			—		(48	)		—			28,657
Cash and cash equivalents, end of period	$	29,457		$	—	$	518		$	—		$	29,975

(1) Co-issuers

We anticipate that the funds generated by operations and current available cash balances will be sufficient to meet working capital requirements, make required member tax distributions and to finance capital expenditures over the near term. There can be no assurance, however, that our business will generate sufficient cash flow from operations, that anticipated net sales growth and operating improvements will be realized or that future equity or debt financing will be sufficient to enable us to service our indebtedness or to fund our other liquidity needs.

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8. Recently Issued Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-05, Presentation of Comprehensive Income. This standard eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. Under this new ASU, an entity can elect to present items of net income and other comprehensive income in a single continuous statement or in separate, but consecutive, statements. This guidance is effective for publicly traded companies as of the beginning of a fiscal year that begins after December 15, 2011 and interim and annual periods thereafter. Early adoption is permitted, but full retrospective application is required. The Company adopted ASU 2011-05 and it did not have a material impact on the Company’s consolidated financial statements.

In September 2011, the FASB issued ASU No. 2011-08, Testing Goodwill for Impairment. ASU 2011-08 permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. Under ASU 2011-08, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount. ASU 2011-08 is effective for annual periods beginning after December 15, 2011. The Company adopted ASU 2011-08 and it did not have a material impact on the Company’s consolidated financial statements.

In December 2011, the FASB issued ASU No. 2011-12, Comprehensive Income (Topic 220)—Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. ASU 2011-12 defers changes in Update 2011-05 that relate to the presentation of reclassification adjustments. ASU 2011-12 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The Company adopted ASU 2011-12 and it did not have a material impact on the Company’s consolidated financial statements.

In July of 2012, the FASB issued ASU No. 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment. This revised standard is intended to reduce the cost and complexity of testing indefinite-lived intangible assets other than goodwill for impairment. It allows companies to perform a qualitative assessment to determine whether further impairment testing of indefinite-lived intangible assets is necessary, similar in approach to the goodwill impairment test. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The adoption of this standard is not expected to have a significant impact on the Company’s consolidated financial statements.

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

Uncertainty of Forward Looking Statements and Information

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

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

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

Overview

The following discussion of our financial condition and results of operations should be read together with the consolidated financial statements and the accompanying notes included elsewhere in this quarterly report. Additionally, the following discussion should be read together with the Selected Financial Data and our consolidated financial statements and the accompanying notes included in our 2011 Annual Report on Form 10-K. All of our operations are conducted through Norcraft Companies, L.P. (“Norcraft”) and its subsidiaries. Norcraft is an indirect wholly-owned subsidiary of Norcraft Holdings, L.P. (“Holdings”). The words “Company”, “we”, “us” and “our” refer to Norcraft and its subsidiaries.

We are a leader in manufacturing, assembling and finishing kitchen and bathroom cabinetry in the U.S. and parts of Canada. We provide our customers with a single source for a broad range of high-quality cabinetry, including stock, semi-custom and custom cabinets manufactured in both framed and frameless, or full access construction. We market our products through six main brands: Mid Continent Cabinetry^®, Norcraft Cabinetry^®, UltraCraft^®, StarMark Cabinetry^®, Fieldstone Cabinetry^® and Brookwood^®. With the exception of Norcraft Cabinetry, each of these brands represents a distinct line of cabinetry and has been in operation for over 25 years, with Mid Continent, our original brand, having been established in 1966. In 2008, our Winnipeg, Canada facility completed the transition to the production of cabinets for sale into the Canadian market under the Norcraft Canada brand. We believe each brand is well recognized and highly respected throughout the industry for its attractive style, flexibility, quality and value.

During the three and nine months ended September 30, 2012, we experienced sales growth. This sales growth varied significantly from division to division within the Company, depending on exposure to certain customers, channels and geographies. However, conditions within our industry continue to be extremely competitive, and margins were negatively impacted. We expect these challenging market conditions to persist through 2012 and into 2013.

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Results of Operations

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

	Three Months  Ended September 30,						Nine Months  Ended September 30,
	2012			2011			2012			2011
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		75.0	%		72.1	%		73.9	%		72.6	%
Gross profit		25.0	%		27.9	%		26.1	%		27.4	%
Selling, general and administrative expenses		18.7	%		18.2	%		18.7	%		18.4	%
Income from operations		6.3	%		9.7	%		7.4	%		9.0	%
Interest expense, net		8.7	%		9.5	%		8.9	%		8.3	%
Amortization of deferred financing costs		1.1	%		1.2	%		1.1	%		0.8	%
Other, net		—	%		0.1	%		—	%		—	%
Net loss		(3.5	%)		(1.1	%)		(2.6	%)		(0.1	%)

Three Months Ended September 30, 2012 Compared with Three Months Ended September 30, 2011

Net Sales. Net sales increased by $6.2 million, or 9.1%, from $67.7 million for the three months ended September 30, 2011 to $73.9 million for the same period of 2012. The increase in sales was attributable to increases in sales in all of our divisions, with Mid Continent making up over half, UltraCraft making up over a quarter and StarMark and the Winnipeg, Canada facility making up the remainder. The overall increase in sales was generally driven by industry growth. Additionally, we believe we continue to increase the Company’s market share. Net sales to our largest customer were lower during the quarter ended September 30, 2012 as compared to the quarter ended September 30, 2011.

Cost of Sales. Cost of sales increased by $6.6 million, or 13.4%, from $48.8 million for the three months ended September 30, 2011 to $55.4 million for same period of 2012. The increase was primarily attributable to the increased sales volume along with aggressive sales incentives for the three months ended September 30, 2012. Cost of sales as a percentage of net sales increased from 72.1% for the three months ended September 30, 2011 to 75.0% for the same period of 2012.

Gross Profit. Gross profit decreased by $0.4 million, or 2.1%, from $18.9 million for the three months ended September 30, 2011 to $18.5 million for the same period of 2012. The decrease in gross profit was due to the increased cost of sales described above. Gross profit as a percentage of net sales decreased from 27.9% for the three months ended September 30, 2011 to 25.0% for the same period of 2012. The decrease in gross profit as a percentage of net sales was primarily a result of discounting and other sales promotions done in response to the extremely competitive conditions in our industry.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $1.5 million, or 12.5%, from $12.3 million for the three months ended September 30, 2011 to $13.8 million for the same period of 2012. Selling, general and administrative expenses were greater than the prior-year period because of increased sales and marketing expense to generate new customers, market our new products and support our increased sales volume. Selling, general and administrative expenses as a percentage of net sales increased from 18.2% for the three months ended September 30, 2011 to 18.7% for the same period of 2012.

Income from Operations. Income from operations decreased by $1.9 million, or 29.4%, from $6.6 million for the three months ended September 30, 2011 compared to $4.7 million for the same period of 2012. The decrease in income from operations was a result of the factors described above. Income from operations as a percentage of net sales decreased from 9.7% for the three months ended September 30, 2011 to 6.3% for the same period of 2012.

Interest, Amortization of Deferred Financing Fees and Other Expenses. Interest, amortization of deferred financing fees and other expenses were flat at $7.3 million for the three months ended September 30, 2011 and 2012. Interest, amortization of deferred financing fees and other expenses as a percentage of net sales decreased from 10.8% for the three months ended September 30, 2011 to 9.8% for the same period of 2012.

Net Loss. Net loss increased by $1.9 million from $0.7 million for the three months ended September 30, 2011 compared to $2.6 million for the same period of 2012, for the reasons described above. Net loss as a percentage of net sales increased from (1.1%) for the three months ended September 30, 2011 to (3.5%) for the same period of 2012.

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Nine Months Ended September 30, 2012 Compared with Nine Months Ended September 30, 2011

Net Sales. Net sales increased by $10.7 million, or 5.1%, from $206.9 million for the nine months ended September 30, 2011 to $217.6 million for the same period of 2012. The increase in sales was attributable to increases in sales in Mid Continent making up just over half, UltraCraft making up nearly half and the Winnipeg, Canada facility making a small increase which was offset by a decrease in StarMark. The overall increase in sales was generally driven by industry growth. Additionally, we believe we continue to increase the Company’s market share. Net sales to our largest customer were lower during the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011.

Cost of Sales. Cost of sales increased by $10.5 million, or 7.0%, from $150.2 million for the nine months ended September 30, 2011 to $160.7 million for same period of 2012. The increase was primarily attributable to the increased sales volume along with aggressive sales incentives for the nine months ended September 30, 2012. Cost of sales as a percentage of net sales increased from 72.6% for the nine months ended September 30, 2011 to 73.9% for the same period of 2012.

Gross Profit. Gross profit increased by $0.2 million, or 0.3%, from $56.7 million for the nine months ended September 30, 2011 to $56.9 million for the same period of 2012. The increase in gross profit was due to the increase in net sales described above. Gross profit as a percentage of net sales decreased from 27.4% for the nine months ended September 30, 2011 to 26.1% for the same period of 2012. The decrease in gross profit as a percentage of net sales was primarily a result of discounting and other sales promotions done in response to the extremely competitive conditions in our industry.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $2.6 million, or 6.8%, from $38.1 million for the nine months ended September 30, 2011 to $40.7 million for the same period of 2012. Selling, general and administrative expenses were greater than the prior-year period because of increased sales and marketing expense to generate new customers, market our new products and support our increased sales volume. Selling, general and administrative expenses as a percentage of net sales increased from 18.4% for the nine months ended September 30, 2011 to 18.7% for the same period of 2012.

Income from Operations. Income from operations decreased by $2.4 million, or 13.1%, from $18.6 million for the nine months ended September 30, 2011 compared to $16.2 million for the same period of 2012. The decrease in income from operations was a result of the factors described above. Income from operations as a percentage of net sales decreased from 9.0% for the nine months ended September 30, 2011 to 7.4% for the same period of 2012.

Interest, Amortization of Deferred Financing Fees and Other Expenses. Interest, amortization of deferred financing fees and other expenses increased by $2.9 million, or 15.4%, from $18.9 million for the nine months ended September 30, 2011 to $21.8 million for the same period of 2012. Interest expense increased $2.3 million and amortization of deferred financing costs increased $0.6 million mainly due to new debt financing. Interest, amortization of deferred financing fees and other expenses as a percentage of net sales increased from 9.1% for the nine months ended September 30, 2011 to 10.0% for the same period of 2012.

Net Loss. Net loss increased by $5.3 million from $0.3 million for the nine months ended September 30, 2011 compared to $5.6 million for the same period of 2012, for the reasons described above. Net loss as a percentage of net sales increased from (0.1%) for the nine months ended September 30, 2011 to (2.6%) for the same period of 2012.

Liquidity and Capital Resources

Cash Flows

Our primary cash needs are working capital, capital expenditures, display cabinets, member’s tax distributions and debt service. We finance these cash requirements through internally-generated cash flow and, if necessary, funds borrowed under credit facilities.

Cash provided by operating activities was $10.3 million for the nine months ended September 30, 2012, compared with $10.5 million for the same period of 2011, a decrease in cash provided of $0.2 million. The decrease was primarily due to an increase in net loss of $5.3 million as discussed above offset by a change in operating liabilities of $3.3 million, a change in operating assets of $1.2 million and a change in amortization of $0.8 million.

Cash used in investing activities was $5.8 million for the nine months ended September 30, 2012, compared with $5.4 million for the same period of 2011, an increase in cash used of $0.4 million. Capital expenditures were $2.4 million for the nine months ended September 30, 2012, compared with $1.7 million for the same period of 2011, an increase of $0.7 million. Additions to display cabinets were $3.4 million for the nine months ended September 30, 2012, compared with $3.7 million for the same period of 2011, a decrease of $0.3 million.

18

Cash used in financing activities was minimal for the nine months ended September 30, 2012, compared with $3.7 million in the same period of 2011, a decrease in cash used of $3.7 million. This decrease was mainly due to $58.0 million of distributions to members and payment in financing costs of $8.2 million during the nine months ended September 30, 2011. This was all offset by $62.4 million ($60.0 million aggregate principal amount at 1.04 premium) in additional borrowings of senior secured second lien notes during the nine months ended September 30, 2011.

We anticipate that the funds generated by operations and current available cash balances will be sufficient to meet working capital requirements, make required member tax distributions and to finance capital expenditures over the near term. There can be no assurance, however, that our business will generate sufficient cash flow from operations, that anticipated net sales growth and operating improvements will be realized or that future equity or debt financing will be sufficient to enable us to service our indebtedness or to fund our other liquidity needs.

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

Debt Structure

ABL Facility. In December 2009, in connection with issuance of the senior secured second lien notes, Norcraft entered into a senior secured first-lien asset-based revolving credit facility, or the ABL facility, pursuant to a credit agreement dated as of December 9, 2009, or the ABL credit agreement, by and among Norcraft, as borrower, Norcraft Intermediate Holdings, L.P. and other guarantors party thereto, as guarantors, the lenders party thereto and UBS Securities LLC, as arranger, bookmanager, documentation agent and syndication agent, and UBS AG, Stamford Branch, as issuing bank, administrative agent and collateral agent and UBS Loan Finance LLC, as swingline lender. The ABL facility provides for aggregate commitments of up to $25.0 million, including a letter of credit sub-facility and a swingline loan sub-facility, subject to a borrowing base, and has a maturity date of December 9, 2013. As of September 30, 2012, the borrowing base was approximately $20.1 million.

In May, 2011, the ABL credit agreement was modified and now has a maturity of September 2015.

The ABL credit agreement contains negative covenants that restrict or limit the ability of Norcraft Intermediate Holdings, L.P. and its subsidiaries from, among other things, (a) selling assets, (b) altering the business that Norcraft currently conducts, (c) engaging in mergers, acquisitions and other business combinations, (d) declaring dividends or redeeming or repurchasing our equity interests, (e) incurring additional debt or guarantees, (f) making loans and investments, (g) incurring liens, (h) entering into transactions with affiliates, (i) engaging in sale and leaseback transactions and (j) prepaying the senior secured second lien notes, the senior discount notes and any subordinated debt. As of September 30, 2012, the Company was in compliance with these provisions.

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

As of September 30, 2012, there were no borrowings outstanding, approximately $4.5 million in a letter of credit outstanding and unused commitments of $15.6 million under the ABL facility.

The Company has no unused letters of credit.

19

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

In May 2011, Norcraft and Norcraft Finance Corp. issued, on a joint and several basis, an additional $60.0 million aggregate principal amount of these senior secured second lien notes at a 1.04 premium, for total gross proceeds of $62.4 million. Proceeds from this issuance of the senior secured second lien notes were used to make a distribution to Holdings to allow Holdings to retire the remainder of its 9 ³/₄% senior discount notes due 2012 and to pay related transaction and financing costs.

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

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

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

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

Additionally, the terms of the indenture governing the senior secured second lien notes limit Norcraft’s ability to, among other things, incur additional indebtedness, dispose of assets, make acquisitions, make other investments, pay dividends and make various other payments. The terms also include cross-default provisions. As of September 30, 2012, Norcraft was in compliance with these provisions.

Off balance sheet arrangements

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

Taxes; Distributions to our Limited Partners

Norcraft Holdings, L.P, our parent company, and Norcraft Companies, L.P. (“Norcraft”) are limited partnerships. As such, income is allocated to limited partners for inclusion in their respective tax returns. Accordingly, no liability or provision for federal income taxes and deferred income taxes attributable to our operations are included in our financial statements. We are subject to various state and local taxes.

The indenture governing our senior secured second lien notes significantly restricts Norcraft and its subsidiaries from paying dividends and otherwise transferring assets to Holdings. Norcraft expects to make regular distributions to Holdings, subject to certain limitations, to permit Holdings to make further distributions to its equity holders to pay taxes on our net income allocated to them. There was a $10,000 tax distribution during the nine months ended September 30, 2012.

Inflation; Seasonality

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

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

20

Critical Accounting Polices

In our Annual Report on Form 10-K for the year ended December 31, 2011, we identified the critical accounting policies which affect our more significant estimates and assumptions used in preparing our consolidated financial statements. The basis for developing the estimates and assumptions within our critical accounting policies is based on historical information and known current trends and factors. The estimates and assumptions are evaluated on an ongoing basis and actual results have been within the Company’s expectations. We have not changed these policies from those previously disclosed in our annual report.

Item 3. Quantitative and Qualitative Disclosures of Market Risk

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

Variable Interest Rates

Our earnings could be affected by changes in interest rates due to the impact those changes would have on interest expense from variable rate debt instruments and on interest income generated from our cash and investment balances. At September 30, 2012, the Company had no borrowings on our variable rate ABL facility; however future earnings could be affected by changes in interest rates.

Foreign Currency

We have minimal exposure to market risk from changes in foreign currency exchange rates and interest rates that could affect our results of operations and financial condition. Our largest exposure comes from the Canadian dollar, where approximately 8% of our sales during the nine months ended September 30, 2012 were derived from Norcraft Canada and our revenues from such sales were denominated in Canadian dollars.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of September 30, 2012.

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

Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that as of September 30, 2012 the Company’s disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by the Company in the reports it files or submits with the Securities and Exchange Commission is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and is accumulated and communicated to our management, including the principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

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

21

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. The materialization of any risks and uncertainties identified in Part I, Item 2, “Uncertainty of Forward Looking Statements and Information” contained in this report together with those previously disclosed in the Form 10-K or those that are presently unforeseen could result in material adverse effects on our financial condition, results of operations and cash flows.

Item 6. Exhibits

31.1	Certification by Mark Buller pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification by Leigh Ginter pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification by Mark Buller pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification by Leigh Ginter pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

22

SIGNATURES

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

NORCRAFT COMPANIES, L.P.

(Registrant)

/s/ Mark Buller	/s/ Leigh Ginter
Mark Buller	Leigh Ginter
President and Chief Executive Officer	Chief Financial Officer
Date: November 14, 2012	Date: November 14, 2012
Signing on behalf of the	Signing on behalf of the
Registrant and as Principal	Registrant and as Principal
Executive Officer	Accounting Officer

23

EX-31.1

Exhibit 31.1

Section 302 Certification

I, Mark Buller, certify that:

1. I have reviewed this Form 10-Q of Norcraft Companies, L.P.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrants as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrants and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant’s, including their consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 14, 2012	/s/ Mark Buller
	Mark Buller – Chief Executive Officer

EX-31.2

Exhibit 31.2

Section 302 Certification

I, Leigh Ginter, certify that:

1. I have reviewed this Form 10-Q of Norcraft Companies, L.P.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrants as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrants and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant’s, including their consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 14, 2012	/s/ Leigh Ginter
	Leigh Ginter – Chief Financial Officer
	(Chief Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as Chief Executive Officer of Norcraft Companies, L.P. (the “Company”), does hereby certify that to the undersigned’s knowledge:

1) the Company’s Quarterly Report on Form 10-Q for the period ending September 30, 2012 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2) the information contained in the Company’s Quarterly Report on Form 10-Q for the period ending September 30, 2012 fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 14, 2012	/s/ Mark Buller
	Mark Buller – Chief Executive Officer

A signed original of this written statement, required by Section 906, has been provided to Norcraft Companies, L.P. and will be retained by Norcraft Companies, L.P. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as Chief Financial Officer of Norcraft Companies, L.P. (the “Company”), does hereby certify that to the undersigned’s knowledge:

1) the Company’s Quarterly Report on Form 10-Q for the period ending September 30, 2012 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2) the information contained in the Company’s Quarterly Report on Form 10-Q for the period ending September 30, 2012 fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 14, 2012	/s/ Leigh Ginter
	Leigh Ginter – Chief Financial Officer
	(Chief Accounting Officer)

A signed original of this written statement, required by Section 906, has been provided to Norcraft Companies, L.P. and will be retained by Norcraft Companies, L.P. and furnished to the Securities and Exchange Commission or its staff upon request.