U.S. SECURITIES AND EXCHANGE COMMISSION

FORM 40-F

[X] ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE
THE SECURITIES EXCHANGE ACT OF 1934

Masonite International Corporation

Premdor Inc.

1600 Britannia Road East
Mississauga, Ontario, Canada L4W 1J2
(905) 670-6500
(Address and telephone number of Registrant’s principal executive offices)

Mr. Steve MacIsaac
Masonite Holdings, Inc.
One North Dale Mabry
Tampa, Florida 33609
(813) 877-2726
(Name, address (including zip code) and telephone number
(including area code) of agent for service in the United States)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

For annual reports, indicate by check mark the information filed with this Form:
[X] Annual information form            [X] Audited annual financial statements

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
The Registrant had 54,433,799 Common Shares
Outstanding as at December 31, 2003

Indicate by check mark whether the Registrant by filing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934 (the “Exchange Act”). If “Yes” is marked, indicate the filing number assigned to the Registrant in connection with such Rule.

Yes [  ].                                        No  [X] .

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes [X].                                          No [  ].

DOCUMENTS FILED WITH THIS FORM 40-F

CONTROLS AND PROCEDURES

As of the end of the period covered by this report, the Registrant carried out an evaluation, under the supervision and with the participation of the Registrant’s management, including the Registrant’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Registrant’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Registrant (including its consolidated subsidiaries) required to be included in the Registrant’s periodic Securities and Exchange Commission filings. No significant changes were made in the Registrant’s internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.

Disclosure controls and procedures are those controls and other procedures that are designed to ensure that information required to be disclosed by the Registrant in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Registrant in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Registrant’s management, including the Registrant’s principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Change in Internal Controls Over Financial Reporting

Masonite maintains a system of internal controls over financial reporting. There were no changes in Masonite internal controls that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, Masonite’s internal control over financial reporting

AUDIT MATTERS

Audit Committee

The members of Masonite’s audit committee are Howard L. Beck, John J. Berton, John M. Cassaday and Joseph L. Rotman. Each of the members of Masonite’s audit committee is independent and financially literate for the purposes of applicable Canadian and U.S. securities legislation. Reference is made to Masonite’s Management Information Circular dated March 26, 2004 relating to the Company’s annual meeting of shareholders held on May 3, 2004 for information about the mandate of the audit committee and the experience of each member of the audit committee that is relevant to the performance of his responsibilities as an audit committee member.

The Board of Directors of the Company has determined that it has at least one audit committee financial expert serving on its audit committee. Mr. John Cassaday has been determined by the board of Masonite to meet the “audit committee financial expert” criteria prescribed by the Securities and Exchange Commission (“SEC”) and applicable Canadian regulatory requirements and is independent, as that term is defined by the New York Stock Exchange’s listing standards applicable to Masonite and applicable Canadian regulatory requirements. The SEC has indicated

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that the designation of Mr. Cassaday as an audit committee financial expert does not make Mr. Cassaday an “expert” for any purposes, impose any duties, obligations or liability on Mr. Cassaday, that are greater than those imposed on members of the audit committee and Board of Directors who do not carry this designation, or affect the duties, obligations or liability of any other member of the audit committee.

Audit and Related Fees

     For the year ended December 31, 2003, fees for audit and related services provided by KPMG LLP, Masonite’s independent external auditors to Masonite were $1,130,000 (2002 - $985,000). Non-audit fees paid to KPMG LLP relating to tax planning and compliance in 2003 were $1,076,000 (2002 - $925,000). Details are shown in the following table:

Audit Fees

Audit fees were for professional services rendered by KPMG LLP for the audit of Masonite’s annual financial statements and services provided in connection with statutory and regulatory filings or engagements. Audit-Related Fees

Audit-related fees were for assurance and related services reasonably related to the performance of the audit of the annual statements and are not reported under “Audit Fees” above. These services primarily consisted of reviewing documents related to due diligence services for business acquisitions and business divestitures.

Tax Fees

Tax fees were for tax compliance, tax advice and tax planning professional services. These services consisted of tax compliance including the review of tax returns, and tax planning and advisory services relating to common forms of domestic and international taxation (i.e. income tax, capital tax, goods and services tax, value added tax and payroll tax).

All Other Fees

In 2003 and 2002, no fees for services were incurred other than those described above under “Audit Fees”, “Audit-Related Fees” and “Tax Fees”.

Pre-Approval Policies and Procedures

It is within the mandate of Masonite’s audit committee to approve all audit and non-audit related fees. The audit committee has pre-approved specifically identified non-audit tax-related services, including tax compliance; the review of tax returns; and tax planning and advisory services relating to common forms of domestic and international taxation (i.e. income tax, capital tax, goods and services tax, value added tax and payroll tax). The audit committee will be informed routinely as to the non-audit services actually provided by the auditors pursuant to this pre-approval process. The auditors also present the estimate for the annual audit related services to the Committee for approval prior to undertaking the annual audit of the financial statements.

CODE OF ETHICS

Masonite has adopted a Code of Ethics for its Chief Executive Officer, Chief Financial Officer and directors and officers. The Code of Ethics is available on the Company’s website at www.masonite.com and in print to any shareholder who requests them. All amendments to the code, and all waivers of a code with respect to any of the persons covered by it, will be posted on the Company’s website and provided in print to any shareholder who requests them.

CORPORATE GOVERNANCE GUIDELINES

The Company has adopted corporate governance guidelines and established committees regarding such matters as, but not limited to: director qualification standards and responsibilities; access by directors to management and independent advisors; director compensation; and management succession. The guidelines and board committee charters are available on the Company’s website at www.masonite.com. Although the Company files as a foreign private issuer in the United States, Masonite is in compliance with the listing requirements of the New York Stock Exchange as they apply to U.S. domestic issuers.

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not have any material off-balance sheet arrangements other than those disclosed in notes 5, 7, 11 and 12 to the consolidated financial statements.

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

     See the disclosure “Contractual Obligation Payments Due by Period” in the Management’s Discussion and Analysis of Financial Condition and Results of Operations filed herewith.

FORWARD-LOOKING STATEMENTS

This Form 40-F and other written reports and oral statements made by the Company may include forward-looking statements, all of which are subject to risks and uncertainties. One can identify these forward-looking statements by their use of words such as “expects”, “plans”, “will”, “estimates”, “intends”, “forecasts”, “projects” and other words of similar meaning, or by the fact that they do not relate strictly to historical or current facts. These statements are likely to address, but may not be limited to, the Company’s growth strategy and financial results. Readers must carefully consider any such statements and should understand that many factors could cause actual results and developments to differ materially from the Company’s forward-looking statements. These factors may include inaccurate assumptions and a broad variety of other known and unknown risks and uncertainties, including: general economic, market and business conditions; levels of construction and renovation activity; competition; financing risks; ability to manage expanding operations; commitments; new services; retention of key management personnel; environmental and other government regulation; and other factors. No forward-looking statement can be guaranteed and actual future results may vary materially. The Company disclaims any responsibility to update these forward-looking statements.

DOCUMENT 1

MASONITE INTERNATIONAL CORPORATION

ANNUAL INFORMATION FORM

May 3, 2004

TABLE OF CONTENTS

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MASONITE INTERNATIONAL CORPORATION

ANNUAL INFORMATION FORM

May 3, 2004

     Except where the context otherwise requires, all references in this annual information form (“AIF”) to the “Company” are to Masonite International Corporation and its subsidiaries. In this AIF, references to “$” and “Cdn.$” are to United States and Canadian dollars, respectively, and unless otherwise indicated, the statistical and financial data contained in this AIF are presented as at December 31, 2003.

CORPORATE STRUCTURE

     The Company was formed by articles of amalgamation under the Business Corporations Act (Ontario) on January 1, 2002 upon the amalgamation of Premdor Inc. and its wholly owned subsidiaries, Masonite International Corporation and Les Portes Centenaires Ltée. (the “Amalgamation”). The registered and principal office of the Company is located at 1600 Britannia Road East, Mississauga, Ontario, L4W 1J2. The Company’s common shares trade on the Toronto Stock Exchange and the New York Stock Exchange under the symbol “MHM”.

Subsidiaries and Investments

     (Florida) The following corporate structure chart illustrates the Company’s material subsidiaries and investments as of May 3, 2004 and identifies their respective jurisdiction of incorporation and the percentage of voting securities beneficially owned, or over which control or direction is exercised by, the Company:

GENERAL DEVELOPMENT OF THE BUSINESS

General

     Masonite International Corporation is one of the world’s largest manufacturers of doors and door components. On January 1, 2002, as a result of the Amalgamation, Premdor Inc. (“Premdor”) changed its name to Masonite International Corporation (“Masonite International”). Masonite International is a unique, integrated, global building products company with its corporate headquarters in Mississauga, Ontario and its international administrative offices in Tampa, Florida. It operates over 75 facilities in 12 countries in North America, South America, Europe, Asia and Africa and has over 12,000 employees. The Company sells its products to customers in over 50 countries.

Nature of the Business

     The principal business of the Company is the manufacture of doors, door components and door entry systems for new residential construction, home repair, renovation and remodelling and commercial use. The Company manufactures a broad line of interior doors, including standard residential flush, molded-facing, stile and rail, louvre and specially-ordered commercial and architectural doors. The Company also manufactures door components for internal use and sale to other door manufacturers. It also manufactures exterior residential steel and fiberglass doors and entry systems. These door products are manufactured, merchandised and sold to large distributors, jobbers, home centre chains and wholesale and retail building supply dealers across North America, South America, France, the United Kingdom, Europe and other countries in the Middle East and Asia. Doors, door components and door entry systems accounted for over 95% of the Company’s total dollar sales in 2003, with other building products accounting for the balance.

Corporate History of the Company

     The Company commenced business in 1955 in Toronto, Ontario as the purchasing division of a retail lumberyard. It began manufacturing doors in 1961. The Company’s original product was a full line of flush doors. Over time, the Company introduced other wood doors, including louvre, stile and rail, plastic laminate, fire doors and pre-hung units.

     From 1975 to 2000, the Company expanded worldwide, initially establishing and acquiring door manufacturers in Canada and then in the United States, the United Kingdom and France. During this period, the Company completed and integrated multiple acquisitions, including acquisitions of door component manufacturers, door manufacturers as well as logistical and fabrication centres. Through this period of growth, the Company increased its sales of interior residential doors and expanded its product line with architectural doors and steel and fiberglass exterior doors and entry systems.

Masonite Corporation

     On August 31, 2001, the Company completed the acquisition of Masonite Corporation from International Paper Company for a purchase price including transaction costs of approximately $427 million, of which approximately $314 million was paid in cash and the remainder in the form of unsecured subordinated long-term debt.

     Masonite Corporation is a global leader in engineered wood composite products, with manufacturing facilities in North America, Europe, Asia and Africa. Masonite Corporation’s products include molded door facings, as well as hardboard and softboard for residential and commercial use. Masonite Corporation is the largest manufacturer of molded door facings in the world. Prior to its acquisition, Premdor was Masonite Corporation’s single largest customer.

     Masonite Corporation was founded in 1925 in Laurel, Mississippi by William H. Mason, whose objective was to utilize the vast available quantities of sawmill waste to manufacture a useable end product. Masonite Corporation’s first major invention and successful product was hardboard, a conversion of wood fiber mat under intense heat and pressure into thin, dense, tough sheets used in the manufacture of a variety of products for

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residential and commercial construction, retail and other applications. In the early 1970’s, Masonite Corporation began production of door facings, also known as door skins. In 1975, Masonite Corporation began the first commercial production of molded door facings. In 1996, Masonite Corporation’s exploration of scaled production methodologies led to the acquisition of the FormTEC™ process, a unique method of manufacturing molded door facings on a “micro-scale” by molding already pressed thin MDF (medium density fiberboard) purchased from third-party suppliers.

Masonite International

     In 2002, the Company purchased the remaining interest in four less than wholly-owned companies and acquired the shares of one door fabrication company. Consideration of $25.9 million for these acquisitions was paid in a combination of cash, common shares of the Company and a note payable. The Company also made an equity investment in a door component manufacturing entity.

     In 2003, the Company purchased 100% of the shares of a door pre-hanger for consideration of approximately $3.5 million and increased its ownership percentage in a less than wholly owned subsidiary for cash consideration of approximately $1.5 million. The net assets of the Lisbon Falls, Maine manufacturing facility that were acquired as part of the Masonite Corporation acquisition were disposed of in 2003. The Company also divested itself of another less than wholly owned entity.

     In December 2003, the Company signed a definitive agreement to acquire the residential entry door business (the “Stanley Purchase”) of The Stanley Works. The purchase price was $161 million and the transaction was completed on March 2, 2004. The residential entry door business acquired in the Stanley Purchase manufactures and pre-hangs steel and fiberglass residential entry doors and entry systems for sale primarily to the home improvement market in the United States. The Stanley Purchase will increase the Company’s presence in the exterior products market and expand its position in the retail home improvement channel.

Financing History

     In July 2001, the Company entered into an agreement to issue and sell 7,150,000 common shares for net proceeds of approximately $63 million. In August 2001, the Company entered into a credit agreement with a banking syndicate providing for a $685 million secured credit facility. Proceeds from these financings were used to pay the cash portion of the purchase price of Masonite Corporation, retire then existing senior debt and to provide working capital.

     In July 2002, the Company completed a refinancing of its existing bank facilities and entered into an amended and restated credit agreement. At the closing of the refinancing, $650 million was available to be drawn through a combination of term facilities having varying maturity dates and interest rates. The new bank facilities are secured by fixed and floating charges over substantially all of the Company’s assets. The Company used the proceeds from the refinancing to repay existing indebtedness including the Company’s subordinated long-term debt.

     In order to finance the Stanley Purchase, the Company negotiated additional term borrowings of $200 million under its existing bank facilities. These additional borrowings are on terms consistent with the July 2002 refinancing of the bank facilities.

THE BUSINESS

Corporate Strategy

     Masonite International’s primary objective is to increase shareholder value by pursuing strategic growth through focusing on one product line – doors – and expanding in all significant markets throughout the world. With manufacturing facilities in twelve countries and sales worldwide, Masonite International has continuously expanded through start-ups and acquisitions. It has increased sales in both domestic and export markets through innovative merchandising and marketing initiatives that emphasize quality, value and service. As demand for building products increases outside North America, Masonite International’s manufacturing, merchandising and sales expertise enable it to become one of the leading door companies in the world. As part of this strategy, the Company’s goal was to

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achieve substantial vertical integration and this has been accomplished to a large extent through the acquisition of Masonite Corporation.

Geographic Region Financial Information

     The following geographic segment financial information summarizes the Company’s sales and operating income for each of the years in the three year period ended December 31, 2003 and is derived from the segmented information disclosure in the Company’s audited consolidated financial statements:

Note:

Products

     Demand for doors is derived from three principal sources: new residential construction; repair, renovation and remodelling activity; and commercial renovation and construction. According to information available to the Company, housing starts (in thousands) in the Company’s major markets were as follows:

     The Company estimates that in 2003 over 50% of its door sales were from repair, renovation and remodelling, with the balance from new construction (both residential and commercial). This estimate is based on the experience of management in the industry and the Company’s knowledge of its customers, however it is not based on any empirical data.

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     The Company sells interior and exterior products, with interior products accounting for approximately 66% of the total sales revenue in 2003 and exterior products accounting for the balance of the Company’s total sales revenue during 2003. While substantially all interior doors are made with wood and related materials such as hardboard (including molded and flat door facings), the use of wood in exterior doors in North America has declined over the last decade as a result of the introduction of steel and fiberglass doors. The Company’s exterior doors are made primarily of steel or fiberglass. The Company offers an extensive range of interior and exterior doors, which are available in a wide variety of sizes, styles and types.

     The Company has become a leader in merchandising and advertising through point of sale displays, in-store merchandising and training programs, magazine and television advertisements, regional flyer programs and do-it-yourself videos for doors distributed through home centres. In addition, the Company advertises its products at numerous events, including trade shows in Canada, the United States, Europe, Asia and the Middle East. The Company has also developed consumer brochures, including a planning guide and do-it-yourself products to assist the consumer in the purchase and installation of doors, as well as training programs designed to assist home centre sales personnel with product knowledge and sales strategies.

     The following is a description of the principal types of doors and door components that the Company sells and manufactures worldwide:

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     The Company’s sales and marketing efforts have increasingly reflected an international focus. In 1990, door sales outside of North America represented 3% of aggregate door sales. In 2003, door sales outside North America represented approximately 23% of the Company’s aggregate door sales. This increase in sales abroad is the result of acquisitions and internal growth. The Company expects that a major portion of the future growth of its door business will be in the United States, Europe, Mexico, the Middle East, South America and Asia.

Intangible Properties

     In North America, doors are marketed primarily under the Masonite® brand. Other North American brands include: Premdor®, Johnson, Rigi-Dor®, Castlegate®, Evergreen®, Timbergrain®, Oakcraft^TM, ArTek^TM, PREMVU®, Royal Mahogany^TM, Span-Rite^TM, Safe ‘N Sound®, Premcor^TM, Crown^TM, Miami, Palazzo^TM, Bellagio^TM, Capri^TM, and Mohawk®.

     In Europe, doors are marketed under the Premdor®, Ekem^TM, Fonmarty^TM, Magri^TM, Monnerie^TM, Batimetal^TM and Crosby® brands.

     The Company uses these trademarks and trade names in the conduct of its business as well as the other trademarks and trade names mentioned throughout this AIF. The Company considers the use of trademarks and trade names to be important in the development of product awareness, and for differentiating products from competitors and between customers.

Distribution

     Generally the major customers of door manufacturers are two-step distributors, one-step distributors, jobbers, home centre chains and wholesale and retail building supply dealers. Retail building supply dealers, lumberyards and home centre chains are the primary merchandisers to the “do-it-yourself” segment of the repair, renovation and remodelling segment. Builders and contractors purchase their door requirements primarily from one-step distributors, lumberyards, home centre chains and wholesale building supply dealers.

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     In Canada, the Company sells primarily to a distributor that resells the Company’s products to wholesale and retail building supply dealers, lumber yards, home centre chains and pre-hangers (suppliers of doors to builders on an installed basis), some of which are members of buying groups. In the United States, the Company’s major customers are two-step distributors, one-step distributors and large home centre chains. In Europe, the Company’s customers are home centre chains and large distributors. Door manufacturers in Canada, the United States, France and the United Kingdom rely primarily on a combination of their own sales forces and independent sales agents.

Manufacturing Process

     The manufacture of wood doors is primarily an assembly operation. Cut-stock is either acquired from suppliers or cut by the door manufacturer. If necessary, the cut-stock is milled into the various dimensions required for different door styles and sizes. The assembly process varies by type of door, from a relatively simple process for flush doors, where the door facings are glued to a wood frame, to more complex procedures for the many pieces of a louvre or stile and rail door. Following assembly, doors are trimmed to their final specifications. Short set-up times, proper production scheduling and co-ordinated material movement are essential to achieve a flexible process capable of producing a wide range of door types, sizes, materials and styles. The Company makes use of flexible manufacturing operations together with scalable logistics primarily through the use of common carriers to fill customers’ orders and to manage its investment in finished goods inventory.

     The manufacture of insulated steel and fiberglass doors consists primarily of the fabrication of steel sheets embossed into panel or flush door facings and fiberglass door facings which are then assembled onto a wood or steel framing system. The doors are then injected with polyurethane insulation.

     The Company’s prehanging operations utilise interior flush doors, stile and rail and louvre doors, and exterior doors from the Company’s manufacturing operations and provide value added fabrication and logistical services to “big box” retail home centres throughout North America. These value added products include interior

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doors which are machined for hinges, passage and lock sets and then incorporated in a frame. Exterior doors are incorporated in a frame and may include decorative glass lites (inserts).

Research and Development

     The acquisition of Masonite Corporation in 2001 added significantly to the Company’s R&D capabilities. R&D activities are concentrated in the Company’s 141,000 sq. ft. research centre in West Chicago, Illinois. During 2003, the centre employed approximately 70 people engaged in various forms of research and product development.

     Management believes the Company is a leader in technological innovation and development in doors, door components and door entry systems and the manufacturing processes involved in making such products. Management is of the view that R&D is a major competitive advantage for the Company intends to capitalize on its leadership in this area through the development of more new and innovative products.

     As an integrated manufacturer, the Company believes that it is well positioned to take advantage of the growing global demand for a variety of molded door facing designs. This capability is particularly important outside North America where newer molded door designs are rapidly replacing traditional wood doors. The Company has an internal capability, unique in the industry, to create new molded door facing designs and manufacture its own molds for use in its own facilities. This provides the Company with the ability to develop proprietary designs that enjoy a strong identity in the marketplace; more flexibility in meeting customer demand; quicker reaction time in the production of new designs or design changes; and greater responsiveness to customer needs. This capability also enables the Company to develop and implement product and process improvements with respect to the production of molded door facings and doors which enhance production efficiency and reduce costs.

     The Company estimates that it spent approximately $8.1 million on R&D during 2003. During 2003 R&D activities resulted in the development of new products that contain patent or patent pending features, including BELLEVILLE^TM fiberglass exterior doors in both smooth and a realistic new textured finish; BARRINGTON^® fiberglass exterior doors with the same textured finish as BELLEVILLE^TM, deep embossed panels and raised moldings; and a post formed molded flat panel interior door launched in the Asian markets that has design flexibility.

Competition

     In 2003, Masonite established its “all-products strategy”, which provides retail and wholesale customers with an innovative and wide range of doors. The Stanley Purchase reinforces this strategy initiative as it presents opportunities for more effective global procurement of raw materials, product development and standardization and more efficient logistics. Moreover, the “all-products strategy” provides customers in the home improvement and wholesale sectors with the opportunity to market Masonite’s complete product line. Management believes that this strategy initiative is a significant competitive advantage.

     With respect to doors, the Company faces significant competition in North America. Competitors based in Canada include other manufacturers that distribute on a national basis as well as smaller regional manufacturers, which focus on particular products. There is a significantly greater number of competitors based in the United States. Doors are shipped from Canada to the United States and vice versa.

     In Europe, the Company faces significant competition from a number of regionally based competitors and imports.

     Competition in both North America and Europe is vigorous because firms manufacture similar products using similar raw materials and manufacturing methods and there has been excess capacity in the industry.

     The Company is the largest manufacturer of molded door facings in the world. The rest of the industry is comprised of one other large, integrated door manufacturer and a number of smaller regional manufacturers. Competition in the molded door facing business is based on quality, price, product design, logistics and customer service. The Company produces molded door facings to meet its own requirements and serves as an important

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supplier to the door industry at large. The Company manufactures molded door facings at its facilities in Mississippi, Ireland, Chile and South Korea.

New Products

     The Company has launched several new interior residential doors in the past several years: the SAFE ‘N SOUND^®, RENOVATOR^®, PREMWOOD^®, the MASONITE^® French Door Series and pre-painted and pre-stained embossed panel doors. The SAFE ‘N SOUND door is a solid core Molded Panel Series door. The inclusion of the solid core greatly enhances the door’s sound deadening and fire resistance properties when compared to standard hollow core doors. In 1998, the Company developed PREMCOR™, a patented new core material for SAFE ‘N SOUND doors. The SAFE ‘N SOUND door has the look and feel of a solid wood door at a much lower price. The RENOVATOR series door is a low priced French door having the look of a higher priced stile and rail wood French door. PREMWOOD is a door with a simulated mahogany, oak or birch wood grain surface which is designed to be stained or painted and is an alternative to mahogany, oak or birch veneer doors. Since their launch, these products have been enhanced and modified to keep pace with changing consumer preferences. The Masonite French Door Series is a series of glazed doors targeted at the mid and upper-priced door market.

     The pre-painted and pre-stained embossed panel doors are used in manufactured housing, new construction, remodelling and emerging market applications. This product utilizes medium density fibreboard door facings with an embossed pattern and is economically priced.

     During 2000, the Company launched several new exterior door products which enhanced the wide range of exterior doors available in the industry. These products include a new line of smooth fiberglass exterior doors marketed as ARTEK^® and PREMVU^® Series Patio Units.

     In 2001, the Company launched the MASONITE^® HD High-Definition Steel and PREMVU^® Flush-Glazed Steel Door lines. For interior doors, the new Two Panel Roman Smooth Molded Panel Series Door was introduced. The Company also released MASONITE^® wainscot, an easy to install high-definition raised panel wainscot system.

     In 2002, Masonite launched the full-line of OAKCRAFT^TM and ARTEK Flush-Glazed Fiberglass Doors. OAKCRAFT and ARTEK twenty minute fire-rated doors were also launched. The PALAZZO^TM SERIES molded panel interior door was released as well. PALAZZO doors feature a high definition panel profile and raised moulding. The PALAZZO door is the first of its kind in molded wood fibre technology.

     In 2003, two new lines of fiberglass doors were released by the Company. The BELLEVILLE^TM line of smooth and textured fiberglass doors have high-definition panels and several unique designs. The patent-pending wood-grain texture of BELLEVILLE doors allows for easy finishing and the ability to replicate the appearance of real wood doors. The BARRINGTON^® line of textured fiberglass doors combines the same patent-pending wood-grain texture with high-definition panel profiles and raised mouldings to replicate the look of authentic hardwood doors. BARRINGTON doors are factory-glazed with SPECIALTY^TM decorative glass and custom, matching glazing frames.

Raw Materials

     The primary raw materials used in the manufacture of wood doors are cut-stock (lumber cut to the various sizes required for components) and door facings. Cut-stock is purchased from suppliers located on the west coast of North America, the southern United States, Europe, eastern Canada, southern Africa and South America. Plywood door facings are imported principally from the Far East, although certain types of hardwood veneer door facings are sourced in North America. Hardboard door facings are purchased from suppliers in Canada, the United States, South America and Africa. Molded hardboard door facings are produced at the Company’s facilities in the United States, Ireland, Chile and South Korea. Subject to seasonal fluctuations, the lead time required for shipments of plywood is approximately three months and ranges from two to eight weeks for cut-stock and hardboard (molded and flat).

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     The primary raw materials used in the manufacture of steel and fiberglass doors are steel, fiberglass, polyurethane and cut-stock, which are primarily purchased from suppliers in North America.

     Periodically, certain commodity components used in the manufacture of doors rise in price significantly or decrease in availability. The risk associated with rising material prices is that these costs may not be passed on to customers. The risk related to the unavailability of certain raw materials is that the Company’s sales will decline if alternative door products manufactured by the Company are not accepted in the marketplace. The Company manages these risks by developing strategic relationships with suppliers and customers, aggressively searching for substitute components, developing new products and seeking alternative sources of supply.

     Door prices are influenced primarily by the cost of raw materials, which usually comprise more than 50% of the total cost of the finished product. Principal raw materials are commodity items that are purchased from suppliers located in North America, the Far East, Europe, South America and Africa. In most cases, purchases from those suppliers are priced in U.S. dollars or euros. Fluctuations in the cost of raw materials and currency exchange rates affect all manufacturers of doors.

Seasonality

     The building products industry in North America is seasonal, particularly in the northeast and midwest regions of the United States and in most regions of Canada. Masonite experiences a decrease in sales in the first quarter of each year and also, to a certain extent, in the fourth quarter of each year. During the winter months in certain regions in which Masonite operates, inclement weather generally reduces building activity, particularly in the new construction market. However, the Company’s expansion into areas of more moderate climate (e.g., the southeast, southern and western part of the United States, France, the United Kingdom and Mexico) and its focus on the repair, renovation and remodelling segment, which is less seasonal than new construction, has helped to smooth this influence on operations in the first and fourth quarters. Additional product and geographic diversification resulting from the 2001 acquisition of Masonite Corporation has also positively affected the seasonality of the Company’s results.

Significant Customers

     Masonite sells its products worldwide to a large number of customers. However, one customer accounted for approximately 21% of Masonite’s sales in North America in 2003. Due to the depth and breadth of the relationship with this customer, which operates in multiple geographic regions and which sells a variety of Masonite’s products, management of the Company believes that this relationship is likely to continue. Management is of the view that, while this customer may be able to purchase and sell some products that compete with Masonite’s products, it would be difficult to replace all of Masonite’s products and services with those of competitors due to the range of products sold to this customer and number of locations serviced.

Environmental Protection

     The geographic breadth of the Company’s facilities subject it to environmental laws, regulations and guidelines in a number of jurisdictions, including Canada, the United States, the United Kingdom, France, Mexico, Chile, Costa Rica, Israel, South Africa, South Korea and the Republic of Ireland. Such laws, regulations and guidelines relate to, among other things, the discharge of contaminants into water and air and onto land, the storage and handling of certain regulated materials used in the manufacturing process and the disposal of wastes.

     The Company’s efforts to ensure environmental compliance include the review of its operations on an ongoing basis utilizing in-house staff and on a selective basis by specialized environmental consultants. Environmental assessments are conducted as part of the Company’s due diligence review prior to the completion of acquisitions.

     Based on recent experience and current projections, environmental protection requirements are not expected to have a material effect on the Company’s business, capital expenditures, operations or financial position.

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Employees

     As at December 31, 2003, the Company employed approximately 12,000 employees of which an estimated 3,167 were covered by collective bargaining agreements. The employees covered by collective bargaining agreements are situated at the Company’s operations as follows:

Note:

RISK FACTORS

     Masonite’s strategic focus is to expand and strengthen its core business of the manufacture and sale of doors, door components and door entry systems. A market strategy that specializes in a relatively narrow product line in the building products industry may amplify the risks inherent in the general effect of economic cycles on

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residential construction and remodeling. The Company has addressed this risk by broadening its customer base within various markets and by expanding market coverage through geographic diversification. During the 1990’s, the Company acquired numerous facilities in France and the United Kingdom. The completion of the Masonite Corporation acquisition in 2001 added operations in Ireland, South Africa and South Korea. The Company’s 2003 annual sales outside North America exceeded $340 million.

     The Masonite group of companies obtains labour and certain raw materials locally, denominated primarily in their respective domestic currencies. Other raw materials are imported and prices are often quoted in U.S. dollars or in the domestic currency in the country where the facility operates. The Company and most of its subsidiaries sell a significant portion of their products within their respective domestic markets at domestic market selling prices. In situations where import or export commitments are undertaken, the Company or its subsidiaries may periodically enter into foreign exchange contracts to manage and reduce the risk associated with foreign currency fluctuations. Gains and losses on such contracts offset losses and gains on transactions being hedged. The amount of foreign exchange contracts matches estimated foreign currency risks over a specified period of time. Masonite’s policy is not to utilize exchange contracts for trading or speculative purposes. The amount of foreign exchange contracts outstanding at December 31, 2003 are described in Note 1(m) of the Company’s consolidated financial statements for the year ended December 31, 2003.

     Certain commodity components used in the manufacture of doors and door components periodically experience significant changes in price or availability. If material cost increases are persistent, there is no assurance that Masonite will be able to sufficiently increase its selling prices. In recent years, the Company has responded to fluctuating prices and decreasing availability of certain materials by seeking sources for similar components from other geographic regions, developing or purchasing substitute alternative materials and raising selling prices on various products in certain markets.

     Almost 100% of the Company’s interest-bearing debt outstanding at December 31, 2003 carried a floating interest rate. Therefore, in the normal course of business Masonite is exposed to changes in short-term interest rates that can create uncertainty and variability in its cash flows. To mitigate this exposure, in September 2001 the Company entered into a five-year interest rate swap agreement converting a notional $250 million of floating-rate debt into fixed-rate debt that currently bears interest at 7.96%. In August 2002, another five-year interest rate swap agreement was executed converting an additional $75 million of amortizing floating-rate debt into a fixed-rate debt at 5.72%. After giving effect to these interest rate swaps, approximately 38% of the Company’s outstanding interest-bearing debt carries a floating interest rate and the other 62% is effectively at fixed rate swaps as at December 31, 2003. Management believes that these interest rate swaps are highly effective in achieving their economic purpose.

     The geographic breadth of the Company’s facilities subjects it to environmental laws, regulations and guidelines in a number of countries. Such laws, regulations and guidelines relate to, among other things, the discharge of contaminants into water and air and onto land, the storage and handling of certain regulated materials used in the manufacturing process, and the disposal of wastes. The Company’s efforts to ensure environmental compliance include the review of its existing operations on an ongoing basis by its own environmental staff and on a selective basis by external environmental consultants. In addition, environmental assessments are conducted as part of Masonite’s due diligence review prior to completion of acquisitions. Masonite has not incurred any significant costs relating to environmental matters in prior years. Future expenditures required to comply with any changes in environmental requirements are anticipated to be undertaken as part of the Company’s ongoing capital investment program that is primarily designed to improve the efficiency of various manufacturing processes.

     Masonite provides credit to its customers in the normal course of business. The Company performs credit evaluations of its customers and maintains reserves for potential credit losses which, when realized, have been within the range of management’s expectations. Masonite does not generally require collateral. The Company’s credit risk is minimized by undertaking transactions with a large number of customers in various countries. Masonite’s credit risk is further minimized by insuring a significant portion of total trade receivables through the use of credit insurance.

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DESCRIPTION OF CAPITAL STRUCTURE

     The Company’s authorized share capital consists of an unlimited number of common shares and unlimited number of first preference shares, issuable in series. Holders of common shares are entitled to one vote per share at meetings of shareholders and to receive dividends, if, as and when declared by the Board of Directors of the Company. In the event of voluntary or involuntary liquidation, dissolution or winding up of the Company, after payment of all outstanding debts, the remaining assets of the Company available for distribution would be distributed rateably to the holders of common shares. Holders of common shares have no pre-emptive redemption, exchange or conversion rights. The preferred shares are non-voting, except as required by law, and will have such rights, privileges and restrictions as will be fixed by the Board of Directors of the Company at the time of issue. The preferred shares are entitled to preference over the common shares with respect to the payment of dividends and distribution of the assets of the Company in the event of liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, or other distribution of assets of the Company for purposes of winding up its affairs. At December 31, 2003, there were 54,433,799 common shares issued and outstanding and no preferred shares outstanding.

     The Company’s senior secured debt has been rated as follows:

A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the rating organization.

MARKET FOR SECURITIES

     The Company’s common shares are listed on the Toronto Stock Exchange and on the New York Stock Exchange under the symbol “MHM”. The price ranges and trading volume of Masonite’s common shares in 2003 on the Toronto Stock Exchange were as follows:

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DIVIDENDS

     The Company has not declared any dividends on its common shares in each of the three most recently completed financial years. The payment of dividends is at the discretion of the Board of Directors of the Company, which considers earnings, capital requirements, the financial condition of the Company and other relevant factors including restrictions contained in the Company’s banking facilities.

DIRECTORS AND OFFICERS

     The following table and associated notes set forth as at the date hereof the name of each director and executive officer of the Company and certain senior managers of the Company, their municipalities of residence, their respective principal occupations and, where applicable, their membership on an executive committee of the Board of Directors. In addition, it indicates the period during which each director has served as a director of the Company or its predecessor. As a group, based on information provided to the Company by each director, executive officer, and senior manager listed below, all directors, executive officers and the senior managers of the Company listed below beneficially owned, directly or indirectly, or exercised control or direction over a total of 1,981,996 common shares of the Company as at May 3, 2004, representing approximately 3.6% of the outstanding common shares. The terms of office of all of the directors of the Company expire at the termination of the next annual meeting of shareholders or until their successor is elected or appointed.

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Notes:

     One director of the Company, Mr. J.L. Rotman, has been a director of other companies, which during the past ten years have been the subject of a cease trade or similar order while Mr. Rotman was acting as a director of such companies. Livent Inc. was the subject of a cease trade order issued by the Ontario Securities Commission on August 7, 1998 following the discovery of accounting irregularities. In November 1998 Livent Inc. filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code and filed for protection under the Companies Creditors Arrangement Act in Canada. The cease trade order was revoked effective November 20, 1998 and Mr. Rotman resigned as a director of Livent Inc. on September 29, 1999. Paragon Entertainment Corporation made a filing under the Companies Creditors Arrangement Act in April 1998; Mr. Rotman resigned as a director of Paragon in June 1998.

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LEGAL PROCEEDINGS

     The Company is involved in various claims and legal actions. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position or liquidity.

TRANSFER AGENT AND REGISTRARS

     The Company’s transfer agent in Canada is Computershare Trust Company of Canada at its principal office in Toronto, Ontario.

     The Company’s transfer agent in the U.S. is Computershare Trust Company, Inc.

AUDIT MATTERS

Audit Committee

     The members of Masonite’s audit committee are Howard L. Beck, John J. Berton, John M. Cassaday and Joseph L. Rotman. Each of the members of Masonite’s audit committee is independent and financially literate for the purposes of applicable Canadian and U.S. securities legislation. Reference is made to Masonite’s Management Information Circular dated March 26, 2004 relating to the Company’s annual meeting of shareholders held on May 3, 2004 for information about the mandate of the audit committee and the experience of each member of the audit committee that is relevant to the performance of his responsibilities as an audit committee member.

     The Board of Directors of the Company has determined that it has at least one audit committee financial expert serving on its audit committee. Mr. John Cassaday has been determined by the board of Masonite to meet the “audit committee financial expert” criteria prescribed by the Securities and Exchange Commission (“SEC”) and applicable Canadian regulatory requirements and is independent, as that term is defined by the New York Stock Exchange’s listing standards applicable to Masonite and applicable Canadian regulatory requirements. The SEC has indicated that the designation of Mr. Cassaday as an audit committee financial expert does not make Mr. Cassaday an “expert” for any purposes, impose any duties, obligations or liability on Mr. Cassaday, that are greater than those imposed on members of the audit committee and Board of Directors who do not carry this designation, or affect the duties, obligations or liability of any other member of the audit committee.

Audit and Related Fees

     For the year ended December 31, 2003, fees for audit and related services provided by KPMG LLP, Masonite’s independent external auditors to Masonite were $1,130,000 (2002 — $985,000). Non-audit fees paid to KPMG LLP relating to tax planning and compliance in 2003 were $1,076,000 (2002 — $925,000). Details are shown in the following table:

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     Audit Fees

     Audit fees were for professional services rendered by KPMG LLP for the audit of Masonite’s annual financial statements and services provided in connection with statutory and regulatory filings or engagements.

     Audit-Related Fees

     Audit-related fees were for assurance and related services reasonably related to the performance of the audit of the annual statements and are not reported under “Audit Fees” above. These services primarily consisted of reviewing documents related to due diligence services for business acquisitions and business divestitures.

     Tax Fees

     Tax fees were for tax compliance, tax advice and tax planning professional services. These services consisted of tax compliance including the review of tax returns, and tax planning and advisory services relating to common forms of domestic and international taxation (i.e. income tax, capital tax, goods and services tax, value added tax and payroll tax).

     All Other Fees

     In 2003 and 2002, no fees for services were incurred other than those described above under “Audit Fees”, “Audit-Related Fees” and “Tax Fees”.

Pre-Approval Policies and Procedures

     It is within the mandate of Masonite’s audit committee to approve all audit and non-audit related fees. The audit committee has pre-approved specifically identified non-audit tax-related services, including tax compliance; the review of tax returns; and tax planning and advisory services relating to common forms of domestic and international taxation (i.e. income tax, capital tax, goods and services tax, value added tax and payroll tax). The audit committee will be informed routinely as to the non-audit services actually provided by the auditors pursuant to this pre-approval process. The auditors also present the estimate for the annual audit related services to the Committee for approval prior to undertaking the annual audit of the financial statements.

DISCLOSURE CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

     Masonite maintains a system of disclosure controls and procedures that is designed to ensure that information required to be disclosed by Masonite is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, in a timely manner. Under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, Masonite has evaluated the effectiveness of the design and operation of these disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, Masonite’s Chief Executive Officer and Chief Financial Officer concluded that Masonite’s system of disclosure controls and procedures is effective.

Change in Internal Controls Over Financial Reporting

     Masonite maintains a system of internal controls over financial reporting. There were no changes in Masonite internal controls that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, Masonite’s internal control over financial reporting.

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CODE OF ETHICS

     Masonite has adopted a Code of Ethics for its Chief Executive Officer, Chief Financial Officer and directors and officers. The Code of Ethics is available on the Company’s website at www.masonite.com and in print to any shareholder who requests them. All amendments to the code, and all waivers of a code with respect to any of the persons covered by it, will be posted on the Company’s website and provided in print to any shareholder who requests them.

CORPORATE GOVERNANCE GUIDELINES

     The Company has adopted corporate governance guidelines and established committees regarding such matters as, but not limited to: director qualification standards and responsibilities; access by directors to management and independent advisors; director compensation; and management succession. The guidelines and board committee charters are available on the Company’s website at www.masonite.com. Although the Company files as a foreign private issuer in the United States, Masonite is in compliance with the listing requirements of the New York Stock Exchange as they apply to U.S. domestic issuers.

OFF-BALANCE SHEET ARRANGEMENTS

     The Company does not have any material off-balance sheet arrangements other than those disclosed in notes 5, 7, 11 and 12 to the consolidated financial statements.

ADDITIONAL INFORMATION

     Additional information, including directors’ and officers’ remuneration and indebtedness, principal holders of the Company’s securities and shares authorized for issuance under equity compensation plans, where applicable, is contained in the Company’s Management Information Circular dated March 26, 2004 with respect to the annual and special meeting of shareholders held on May 3, 2004. Additional financial information is provided in the Company’s consolidated financial statements for the year ended December 31, 2003, together with the accompanying report of the auditors, as well as the Company’s Management Discussion and Analysis of Financial Condition and Results of Operations for the period.

     Additional information about the Company may be found on SEDAR at www.sedar.com.

FORWARD-LOOKING STATEMENTS

     This Annual Information Form and other written reports and oral statements made by the Company may include forward-looking statements, all of which are subject to risks and uncertainties. One can identify these forward-looking statements by their use of words such as “expects”, “plans”, “will”, “estimates”, “intends”, “forecasts”, “projects” and other words of similar meaning, or by the fact that they do not relate strictly to historical or current facts. These statements are likely to address, but may not be limited to, the Company’s growth strategy and financial results. Readers must carefully consider any such statements and should understand that many factors could cause actual results and developments to differ materially from the Company’s forward-looking statements. These factors may include inaccurate assumptions and a broad variety of other known and unknown risks and uncertainties, including: general economic, market and business conditions; levels of construction and renovation activity; competition; financing risks; ability to manage expanding operations; commitments; new services; retention of key management personnel; environmental and other government regulation; and other factors. No forward-looking statement can be guaranteed and actual future results may vary materially. The Company disclaims any responsibility to update these forward-looking statements.

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DOCUMENT 2

MASONITE INTERNATIONAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

Years ended December 31, 2003 and 2002 (In thousands of United States dollars, except earnings per share)

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF RETAINED EARNINGS

Years ended December 31, 2003 and 2002 (In thousands of United States dollars)

See accompanying notes to consolidated financial statements.

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MASONITE INTERNATIONAL CORPORATION

CONSOLIDATED BALANCE SHEETS

December 31, 2003 and 2002 (In thousands of United States dollars)

34

MASONITE INTERNATIONAL CORPORATION

See accompanying notes to consolidated financial statements.

On behalf of the Board:

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MASONITE INTERNATIONAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 2003 and 2002. (In thousands of United States dollars)

Cash provided by (used in):

Supplemental cash flow information (note 14)

See accompanying notes to consolidated financial statements.

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MASONITE INTERNATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2003 and 2002. (In thousands of United States dollars, except per share amounts)

The primary business activity of Masonite International Corporation (“the Company”) is the manufacture and sale of doors, door components and door entry systems.

These consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles, which differ in some respects from United States generally accepted accounting principles, as disclosed in note 17. A summary of the significant accounting principles adopted by the Company is as follows:

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MASONITE INTERNATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2003 and 2002. (In thousands of United States dollars, except per share amounts)

38

MASONITE INTERNATIONAL CORPORATION

39

MASONITE INTERNATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2003 and 2002. (In thousands of United States dollars, except per share amounts)

40

MASONITE INTERNATIONAL CORPORATION

41

MASONITE INTERNATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2003 and 2002. (In thousands of United States dollars, except per share amounts)

42

MASONITE INTERNATIONAL CORPORATION

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MASONITE INTERNATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2003 and 2002. (In thousands of United States dollars, except per share amounts)

accounting and is effective for the Company’s 2004 fiscal year. The Company has reassessed all hedging relationships to determine whether the criteria are met and will apply the new guidance on a prospective basis. To qualify for hedge accounting, the hedging relationship must be appropriately documented at inception of the hedge and there must be reasonable assurance, both at the inception and throughout the term of the hedge, that the hedging relationship will be effective. Effectiveness requires a high degree of correlation of changes in fair values or cash flows between the hedged item and the hedging instrument. All significant current hedging relationships have been adequately documented and effectiveness has been assessed in order to comply with the requirements to continue to apply hedge accounting when AcG 13 becomes effective.

In 2003, the CICA issued Handbook Section 3110, “Asset Retirement Obligations” which is effective for fiscal years beginning on or after January 1, 2004. The standard establishes recognition, measurement and disclosure standards applicable to legal obligations associated with the retirement of property, plant and equipment that results from its acquisition, construction, development or normal operations. The Company has assessed the effect of this new standard and has determined that it will have no significant impact on the financial statements of the Company.

The following is a summary of acquisitions in 2003 and 2002:

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MASONITE INTERNATIONAL CORPORATION

During 2003, the Company purchased 100% of the shares of a door pre-hanger for consideration of $3,546 and increased its ownership percentage in a less than wholly owned subsidiary for cash consideration of $1,542. The note payable issued as consideration in 2003 is non-interest bearing and is payable over 3 years.

In 2003, the Company disposed of the net assets of its Lisbon Falls manufacturing facility located in the U.S. for cash consideration of $9,739. The Company also disposed of its interest in another less than wholly owned subsidiary for cash consideration of $192.

During 2002, the Company purchased the remaining interest in four less than wholly owned companies and acquired the shares of one company. Consideration for these acquisitions was paid in a combination of cash, common shares of the Company and a note payable. The note payable issued as consideration in 2002 was paid in 2003.

Of the total goodwill of $2,801 (2002 - $2,683), $Nil (2002 - $2,683) is related to the North American segment. It is expected that $612 (2002 -$2,683) will be deductible for income tax purposes. None of this goodwill was amortized.

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MASONITE INTERNATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2003 and 2002. (In thousands of United States dollars, except per share amounts)

Included in long-term receivables is $6,997 (2002 - $7,442) receivable over the next nine years pursuant to a royalty agreement and a $2,500 non-interest bearing receivable due in 2005.

In 2003, the Company increased its equity interest in the shares of a door manufacturing and distribution facility headquartered in Israel for consideration of $1,072. During 2002, the Company made an equity investment in the shares of a door component manufacturing entity for consideration of $9,600.

The Company has a $100,000 revolving term loan available as part of its banking arrangements. The loan bears interest at LIBOR plus 2.25% and is secured by fixed and floating charges over substantially all the Company’s assets. There were no amounts outstanding on this loan at December 31, 2003 or 2002. Certain of the Company’s subsidiaries also have credit facilities with local lenders. These facilities are secured by a fixed and floating charge over the assets of the respective subsidiaries and are non-recourse to the parent company.

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MASONITE INTERNATIONAL CORPORATION

The aggregate amount of principal repayments required in each of the next five years is as follows:

Interest on long-term debt for the year ended December 31, 2003 was $31,953 (2002 - $34,553).

The Company has entered into interest rate swap agreements to convert floating rate debt into fixed rate debt. At December 31, 2003, a total of $293,750 (2002 - $318,750) of floating rate debt has been converted into fixed rate debt at a weighted average interest rate of 7.6% (2002 - 7.5%). These agreements mature at various dates through 2006. At December 31, 2003, these agreements had a fair value of $274,585 (2002 - $293,959).

Additional repayment of bank term loans may be required depending on the generation of excess cash flow as defined in the credit agreement. The bank facilities are secured by fixed and floating charges over substantially all of the Company’s assets.

In July of 2002, the Company entered into an amended and restated credit agreement that constituted a settlement of the previous bank facilities resulting in the write off of financing costs of $17,566. The Company used the proceeds from the refinancing to retire existing indebtedness that had a carrying amount of $125,556 for $105,000 resulting in a gain on settlement of $20,556.

In May 2003, the Company’s shareholder rights plan expired and was not renewed.

(a) Stock option plans

The Company provides a stock option plan to allow management and key employees to purchase shares of the Company. At December 31, 2003, options to purchase 2,743,750 common shares (2002 - 3,657,200) at an average option price of $12.20 (2002 - $9.30) per share were outstanding. The term of each option is 10 years and the vesting period is three years. The exercise price for options is the closing share price of the Company on The Toronto Stock

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MASONITE INTERNATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2003 and 2002. (In thousands of United States dollars, except per share amounts)

Exchange on the day prior to the grant date. The options have expiry dates through 2013. The number of options exercisable at December 31, 2003 was 2,461,840 (2002 - 3,233,425) at an average price of $11.52 (2002 - $8.67). During the year, 113,000 options (2002 - 632,500) were granted at an average exercise price of $20.08 (2002 - $14.11) per share and 2,000 (2002 - 77,000) options were forfeited at an average exercise price of $15.90 (2002 - $9.09). A total of 1,024,450 common shares (2002 - 1,208,800) were exercised under the option plan at an average price of $9.32 (2002 - $6.96) per share for proceeds of $9,545 (2002 - $8,412).

In 2003, the Company adopted on a prospective basis requirements for fair value accounting for stock based compensation. The weighted average assumptions used in the determination of the fair value of stock based compensation are as follows:

For options granted in 2003, the Company recognized $191 relating to the fair value of the compensation. For options granted in 2002, the pro forma disclosure relating to the fair value of the compensation is as follows:

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MASONITE INTERNATIONAL CORPORATION

Information with respect to outstanding options is as follows:

During 2002, the Company issued 623,571 common shares with an ascribed value of $9,060 in connection with the acquisitions described in note 2. Also in 2002 an additional 125,000 shares with an ascribed value of $1,921 were issued in connection with a previous acquisition, which has been included in goodwill.

In 2002, 200,000 warrants for common shares at $8.35 per share were exercised for proceeds of $1,670. There were no warrants outstanding at December 31, 2003 or 2002.

(b) Other stock-based compensation plan

In 2003, the Company adopted a Restricted Share Unit (“RSU”) and Deferred Share Unit (“DSU”) plan for certain key senior executives. Under this plan, the RSU’s vest over three years and the DSU’s vest immediately, but are payable only on retirement. Both instruments are settled in cash. The Company records compensation expense for RSU’s evenly over the three year vesting period and for DSU’s immediately. Total compensation expense recorded was $3,588 in 2003, (2002 - $Nil).

(a) Defined contribution plans:

For certain subsidiaries the Company matches a portion of employee contributions to defined contribution retirement. Total contributions by the Company in 2003 were approximately $5,322 (2002 - $2,845).

(b) Defined benefit plans:

Certain of the Company’s subsidiaries maintain defined benefit pension plans for specific employees. Information about the Company’s defined benefit plans is as follows:

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MASONITE INTERNATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2003 and 2002. (In thousands of United States dollars, except per share amounts)

The Company also maintains certain other defined benefit plans, principally in the U.K. which have been curtailed in prior years and for which the net pension liability is not significant.

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MASONITE INTERNATIONAL CORPORATION

(c) Post-retirement benefits

Certain of the Company’s subsidiaries maintain defined post-retirement benefit plans for specific employees. Information about the Company’s post retirement benefit plans is as follows:

Accrued benefit liabilities are included in accounts payable and accrued liabilities.

The discount rate used in measuring the Company’s accrued benefit obligation is 6.00% (2002 - 6.75%). A 5.00% annual rate of increase in the per capita cost of covered health care was assumed.

On December 8, 2003 the Medicare Prescription Drug, Improvement and Modernization Act of 2003 became law. This Legislation expanded Medicare to include, for the first time, coverage for prescription drugs. The Company sponsors retiree medical programs for certain of its locations and the Company expects that this legislation will eventually reduce the Company’s cost for some of these programs. At present, no analysis of the potential reduction in the Company’s costs or obligations has been performed. Under the Company’s accounting policy, the financial effect of this legislation is to be reflected during fiscal 2004.

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MASONITE INTERNATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2003 and 2002. (In thousands of United States dollars, except per share amounts)

This account represents the cumulative unrealized foreign currency translation gain on the Company’s net investment in self-sustaining foreign operations. Changes during the year are as follows:

Future minimum payments, by year, under non-cancellable operating leases with initial or remaining terms of one year or more consisted of the following at December 31, 2003:

The Company is involved in various claims and legal actions. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position or liquidity.

The company is a guarantor under certain performance letters of credit arising from a previous transaction in the amount of $8.9 million. The counterparty to the transaction is required to replace the Company’s letters of credit by March 2004. In the event that the counterparty does not replace the Company’s letters of credit by that date, the Company’s liability as a guarantor could be invoked. No liability has been recorded with respect to this guarantee as the likelihood of non-performance is remote. In addition, the Company would have full legal recourse and holds certain collateral in the form of outstanding accounts payable that could be used to offset amounts paid.

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MASONITE INTERNATIONAL CORPORATION

The effective rates of income taxes provided in the consolidated statements of income vary from the combined Canadian federal and provincial statutory income tax rates as follows: