1288248--3/31/2006--Norcraft

related topics

{debt, indebtedness, cash}

{customer, product, revenue}

{cost, operation, labor}

{condition, economic, financial}

{cost, regulation, environmental}

{product, market, service}

{acquisition, growth, future}

{competitive, industry, competition}

{property, intellectual, protect}

{personnel, key, retain}

{product, liability, claim}

{stock, price, operating}

Our substantial level of indebtedness could adversely affect our financial condition. The indentures for the Senior Subordinated Notes and the Senior Discount Notes, respectively, and our senior credit facility impose significant operating and financial restrictions, which may prevent us from capitalizing on business opportunities. We will be able to incur more indebtedness and the risks associated with our substantial leverage, including our ability to service our indebtedness, will increase. Holdings and Norcraft Capital Corp. are the sole obligors under the Senior Discount Notes. Holdings subsidiaries, including Norcraft, do not guarantee Holdings obligations under the Senior Discount Notes and do not have any obligation with respect to the Senior Discount Notes; the Senior Discount Notes are effectively subordinated to the debt and liabilities of Holdings subsidiaries, including Norcraft, and are effectively subordinated to any of our future secured debt to the extent of the value of the assets secured by such debt. Increases in interest rates and the reduced availability of financing for home improvements may cause our sales and profitability to decrease. Downturns in the home building industry or the economy could negatively affect the demand for and pricing of our products and our operating results. Increased prices for raw materials or finished goods used in our products could increase our cost of sales and decrease demand for our products, which could adversely affect our profitability or revenues. Interruptions in deliveries of raw materials or finished goods could adversely affect our profitability or revenues. The loss of, or deterioration of relationships with, our sales representatives could adversely affect our sales and profits. Environmental requirements applicable to our manufacturing and distribution facilities may impose significant environmental compliance costs and liabilities, which would adversely affect our results of operation. We may not effectively compete in the highly fragmented and very competitive cabinet industry market, which may adversely affect our revenues. Manufacturing or assembly realignments as a result of our continued review of operations may result in a decrease in our near-term earnings or not result in cost reductions as expected, which would harm our profitability. Increases in the cost of labor, union organizing activity, and work stoppages at our facilities or the facilities of our suppliers could materially affect our financial performance. We could face potential product liability claims relating to products we manufacture or distribute which could result in significant costs and liabilities, which would reduce our profitability. We are dependent on certain key personnel, the loss of whom could materially affect our financial performance and prospects. If we cannot adequately protect our intellectual property rights we may lose exclusivity in our brand, which could reduce our sales and revenue. We may in the future acquire related businesses, which we may not be able to successfully integrate, in which case we may be unable to recoup our investment in those acquisitions. Changes in consumer preferences for cabinet designs and configurations, and our failure to respond to such changes, could adversely affect demand for our product and our results or operations. In the event of consolidation of our dealers, through whom we primarily sell our products, pressure may be put on our operating margins, which could harm our profitability. We are controlled by our principal equity holders, which have the power to take unilateral action that could be adverse to the interests of holders of the notes.

Full 10-K form ▸

1288248--3/31/2006--Norcraft_Holdings