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Price
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| þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| Michigan | 38-1465835 | |
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification Number) | |
| 2801 East Beltline NE, Grand Rapids, Michigan | 49525 | |
| (Address of principal executive offices) | (Zip Code) |
| Large Accelerated Filer þ | Accelerated Filer o | Non-Accelerated Filer o | Smaller reporting company o |
| Class | Outstanding as of June 26, 2010 | |
| Common stock, no par value | 19,329,922 |
| Page No. | ||||||||
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PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements
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Item 1. Legal Proceedings — NONE
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Item 1A. Risk Factors — NONE
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| 29 | ||||||||
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Item 3. Defaults Upon Senior Securities — NONE
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Item 4. (Removed and Reserved)
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| Exhibit 31A | ||||||||
| Exhibit 31B | ||||||||
| Exhibit 32A | ||||||||
| Exhibit 32B | ||||||||
2
| June 26, | December 26, | June 27, | ||||||||||
| (in thousands, except share data) | 2010 | 2009 | 2009 | |||||||||
|
ASSETS
|
||||||||||||
|
CURRENT ASSETS:
|
||||||||||||
|
Cash and cash equivalents
|
$ | 21,246 | $ | 82,219 | $ | 32,633 | ||||||
|
Accounts receivable, net
|
229,199 | 107,383 | 197,901 | |||||||||
|
Inventories:
|
||||||||||||
|
Raw materials
|
111,670 | 89,956 | 95,288 | |||||||||
|
Finished goods
|
79,899 | 72,192 | 70,202 | |||||||||
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|
191,569 | 162,148 | 165,490 | |||||||||
|
Assets held for sale
|
— | — | 3,057 | |||||||||
|
Refundable income taxes
|
— | 10,391 | — | |||||||||
|
Other current assets
|
18,110 | 21,208 | 19,728 | |||||||||
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|
||||||||||||
|
TOTAL CURRENT ASSETS
|
460,124 | 383,349 | 418,809 | |||||||||
|
|
||||||||||||
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OTHER ASSETS
|
5,300 | 4,478 | 3,456 | |||||||||
|
GOODWILL AND INDEFINITE-LIVED INTANGIBLE ASSETS
|
158,636 | 157,058 | 156,936 | |||||||||
|
OTHER INTANGIBLE ASSETS, net
|
13,429 | 16,693 | 20,767 | |||||||||
|
PROPERTY, PLANT AND EQUIPMENT:
|
||||||||||||
|
Property, plant and equipment
|
518,816 | 510,774 | 506,519 | |||||||||
|
Accumulated depreciation and amortization
|
(292,390 | ) | (280,675 | ) | (271,010 | ) | ||||||
|
|
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|
PROPERTY, PLANT AND EQUIPMENT, NET
|
226,426 | 230,099 | 235,509 | |||||||||
|
|
||||||||||||
|
TOTAL ASSETS
|
$ | 863,915 | $ | 791,677 | $ | 835,477 | ||||||
|
|
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|
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LIABILITIES AND EQUITY
|
||||||||||||
|
CURRENT LIABILITIES:
|
||||||||||||
|
Accounts payable
|
$ | 103,992 | $ | 64,473 | $ | 98,805 | ||||||
|
Accrued liabilities:
|
||||||||||||
|
Compensation and benefits
|
48,252 | 48,340 | 50,580 | |||||||||
|
Income taxes
|
6,736 | — | 7,699 | |||||||||
|
Other
|
22,995 | 21,698 | 27,180 | |||||||||
|
Current portion of long-term debt and capital lease obligations
|
692 | 673 | 396 | |||||||||
|
|
||||||||||||
|
TOTAL CURRENT LIABILITIES
|
182,667 | 135,184 | 184,660 | |||||||||
|
|
||||||||||||
|
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion
|
67,932 | 53,181 | 55,108 | |||||||||
|
DEFERRED INCOME TAXES
|
21,539 | 21,707 | 17,746 | |||||||||
|
OTHER LIABILITIES
|
11,929 | 12,659 | 14,766 | |||||||||
|
|
||||||||||||
|
TOTAL LIABILITIES
|
284,067 | 222,731 | 272,280 | |||||||||
|
|
||||||||||||
|
EQUITY:
|
||||||||||||
|
Controlling interest shareholders’ equity:
|
||||||||||||
|
Preferred stock, no par value; shares authorized 1,000,000;
issued and outstanding, none
|
||||||||||||
|
Common stock, no par value; shares authorized 40,000,000;
issued and outstanding 19,329,922, 19,284,587 and 19,308,699
|
$ | 19,330 | $ | 19,285 | $ | 19,309 | ||||||
|
Additional paid-in capital
|
135,710 | 132,765 | 130,405 | |||||||||
|
Retained earnings
|
416,562 | 409,278 | 407,035 | |||||||||
|
Accumulated other comprehensive earnings
|
4,018 | 3,633 | 2,615 | |||||||||
|
|
||||||||||||
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|
575,620 | 564,961 | 559,364 | |||||||||
|
Employee stock notes receivable
|
(1,721 | ) | (1,743 | ) | (1,797 | ) | ||||||
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|
||||||||||||
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573,899 | 563,218 | 557,567 | |||||||||
|
Noncontrolling interest
|
5,949 | 5,728 | 5,630 | |||||||||
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TOTAL EQUITY
|
579,848 | 568,946 | 563,197 | |||||||||
|
|
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|
TOTAL LIABILITIES AND EQUITY
|
$ | 863,915 | $ | 791,677 | $ | 835,477 | ||||||
|
|
||||||||||||
3
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 26, | June 27, | June 26, | June 27, | |||||||||||||
| (in thousands, except per share data) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
|
|
||||||||||||||||
|
NET SALES
|
$ | 638,635 | $ | 514,945 | $ | 1,031,593 | $ | 876,667 | ||||||||
|
|
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COST OF GOODS SOLD
|
560,749 | 432,460 | 902,073 | 747,361 | ||||||||||||
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|
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|
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GROSS PROFIT
|
77,886 | 82,485 | 129,520 | 129,306 | ||||||||||||
|
|
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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
|
54,041 | 56,020 | 102,530 | 105,112 | ||||||||||||
|
NET LOSS (GAIN) ON DISPOSITION OF ASSETS AND
OTHER IMPAIRMENT AND EXIT CHARGES
|
212 | (716 | ) | 384 | (1,852 | ) | ||||||||||
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EARNINGS FROM OPERATIONS
|
23,633 | 27,181 | 26,606 | 26,046 | ||||||||||||
|
|
||||||||||||||||
|
INTEREST EXPENSE
|
903 | 1,429 | 1,789 | 2,503 | ||||||||||||
|
INTEREST INCOME
|
(70 | ) | (96 | ) | (190 | ) | (179 | ) | ||||||||
|
|
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833 | 1,333 | 1,599 | 2,324 | ||||||||||||
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EARNINGS BEFORE INCOME TAXES
|
22,800 | 25,848 | 25,007 | 23,722 | ||||||||||||
|
|
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|
INCOME TAXES
|
8,332 | 9,393 | 8,819 | 8,430 | ||||||||||||
|
|
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|
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|
NET EARNINGS
|
14,468 | 16,455 | 16,188 | 15,292 | ||||||||||||
|
|
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|
LESS NET EARNINGS ATTRIBUTABLE TO
NONCONTROLLING INTEREST
|
(752 | ) | (367 | ) | (1,485 | ) | (411 | ) | ||||||||
|
|
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|
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|
NET EARNINGS ATTRIBUTABLE TO
CONTROLLING INTEREST
|
$ | 13,716 | $ | 16,088 | $ | 14,703 | $ | 14,881 | ||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
EARNINGS PER SHARE — BASIC
|
$ | 0.71 | $ | 0.84 | $ | 0.76 | $ | 0.77 | ||||||||
|
|
||||||||||||||||
|
EARNINGS PER SHARE — DILUTED
|
$ | 0.70 | $ | 0.83 | $ | 0.75 | $ | 0.77 | ||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
WEIGHTED AVERAGE SHARES OUTSTANDING
|
19,259 | 19,241 | 19,258 | 19,213 | ||||||||||||
|
|
||||||||||||||||
|
WEIGHTED AVERAGE SHARES OUTSTANDING
WITH COMMON STOCK EQUIVALENTS
|
19,531 | 19,459 | 19,524 | 19,370 | ||||||||||||
4
| Controlling Interest Shareholders’ Equity | ||||||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||
| Other | Employees | |||||||||||||||||||||||||||
| Additional | Retained | Comprehensive | Stock Notes | Noncontrolling | ||||||||||||||||||||||||
| (in thousands, except share and per share data) | Common Stock | Paid-In Capital | Earnings | Earnings | Receivable | Interest | Total | |||||||||||||||||||||
|
Balance at December 27, 2008
|
$ | 19,089 | $ | 128,830 | $ | 393,312 | $ | 2,353 | $ | (1,701 | ) | $ | 6,343 | $ | 548,226 | |||||||||||||
|
Comprehensive income:
|
||||||||||||||||||||||||||||
|
Net earnings
|
14,881 | 411 | ||||||||||||||||||||||||||
|
Foreign currency
translation adjustment
|
262 | (37 | ) | |||||||||||||||||||||||||
|
Total comprehensive earnings
|
15,517 | |||||||||||||||||||||||||||
|
Purchase of additional
noncontrolling interest
|
(853 | ) | (917 | ) | (1,770 | ) | ||||||||||||||||||||||
|
Distributions to
noncontrolling interest
|
(170 | ) | (170 | ) | ||||||||||||||||||||||||
|
Cash dividends — $0.060 per share
|
(1,158 | ) | (1,158 | ) | ||||||||||||||||||||||||
|
Issuance of 65,933 shares under
employee stock plans
|
66 | 1,111 | 1,177 | |||||||||||||||||||||||||
|
Issuance of 78,706 shares under
stock grant programs
|
79 | 10 | 89 | |||||||||||||||||||||||||
|
Issuance of 72,989 shares under
deferred compensation plans
|
73 | (73 | ) | — | ||||||||||||||||||||||||
|
Received 1,530 shares for the
exercise of stock options
|
(2 | ) | (30 | ) | (32 | ) | ||||||||||||||||||||||
|
Tax benefits from non-qualified
stock options exercised
|
276 | 276 | ||||||||||||||||||||||||||
|
Deferred income tax asset reversal
for deferred compensation plans
|
(518 | ) | (518 | ) | ||||||||||||||||||||||||
|
Expense associated with
share-based compensation
arrangements
|
1,089 | 1,089 | ||||||||||||||||||||||||||
|
Accrued expense under
deferred compensation plans
|
442 | 442 | ||||||||||||||||||||||||||
|
Issuance of 3,721 shares in
exchange for employee stock
notes receivable
|
4 | 121 | (125 | ) | — | |||||||||||||||||||||||
|
Payments received on employee
stock notes receivable
|
29 | 29 | ||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Balance at June 27, 2009
|
$ | 19,309 | $ | 130,405 | $ | 407,035 | $ | 2,615 | $ | (1,797 | ) | $ | 5,630 | $ | 563,197 | |||||||||||||
|
|
||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Balance at December 26, 2009
|
$ | 19,285 | $ | 132,765 | $ | 409,278 | $ | 3,633 | $ | (1,743 | ) | $ | 5,728 | $ | 568,946 | |||||||||||||
|
Comprehensive income:
|
||||||||||||||||||||||||||||
|
Net earnings
|
14,703 | 1,485 | ||||||||||||||||||||||||||
|
Foreign currency
translation adjustment
|
385 | 140 | ||||||||||||||||||||||||||
|
Total comprehensive earnings
|
16,713 | |||||||||||||||||||||||||||
|
Purchase of additional
noncontrolling interest
|
(295 | ) | (932 | ) | (1,227 | ) | ||||||||||||||||||||||
|
Distributions to
noncontrolling interest
|
(472 | ) | (472 | ) | ||||||||||||||||||||||||
|
Cash dividends — $0.200 per share
|
(3,871 | ) | (3,871 | ) | ||||||||||||||||||||||||
|
Issuance of 62,029 shares under
employee stock plans
|
62 | 1,269 | 1,331 | |||||||||||||||||||||||||
|
Issuance of 76,143 shares under
stock grant programs
|
76 | 41 | 117 | |||||||||||||||||||||||||
|
Issuance of 6,669 shares under
deferred compensation plans
|
7 | (7 | ) | — | ||||||||||||||||||||||||
|
Repurchase of 100,300 shares
|
(100 | ) | (3,548 | ) | (3,648 | ) | ||||||||||||||||||||||
|
Tax benefits from non-qualified
stock options exercised
|
379 | 379 | ||||||||||||||||||||||||||
|
Expense associated with
share-based compensation
arrangements
|
1,078 | 1,078 | ||||||||||||||||||||||||||
|
Accrued expense under
deferred compensation plans
|
473 | 473 | ||||||||||||||||||||||||||
|
Issuance of 1,298 shares in
exchange for employees’ stock
notes receivable
|
1 | 49 | (50 | ) | — | |||||||||||||||||||||||
|
Notes receivable adjustment
|
(1 | ) | (42 | ) | (9 | ) | (52 | ) | ||||||||||||||||||||
|
Payments received on employee
stock notes receivable
|
81 | 81 | ||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Balance at June 26, 2010
|
$ | 19,330 | $ | 135,710 | $ | 416,562 | $ | 4,018 | $ | (1,721 | ) | $ | 5,949 | $ | 579,848 | |||||||||||||
|
|
||||||||||||||||||||||||||||
|
See notes to unaudited consolidated condensed financial statements.
|
5
| Six Months Ended | ||||||||
| June 26, | June 27, | |||||||
| (in thousands) | 2010 | 2009 | ||||||
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
|
Net earnings attributable to controlling interest
|
$ | 14,703 | $ | 14,881 | ||||
|
Adjustments to reconcile net earnings attributable to controlling interest
to net cash from operating activities:
|
||||||||
|
Depreciation
|
15,199 | 16,510 | ||||||
|
Amortization of intangibles
|
3,590 | 4,520 | ||||||
|
Expense associated with share-based compensation arrangements
|
1,078 | 1,089 | ||||||
|
Excess tax benefits from share-based compensation arrangements
|
(265 | ) | (211 | ) | ||||
|
Expense associated with stock grant plans
|
117 | 89 | ||||||
|
Deferred income taxes (credit)
|
(195 | ) | 195 | |||||
|
Net earnings attributable to noncontrolling interest
|
1,485 | 411 | ||||||
|
Net loss (gain) on sale or impairment of property, plant and equipment
|
118 | (2,457 | ) | |||||
|
Changes in:
|
||||||||
|
Accounts receivable
|
(120,961 | ) | (59,701 | ) | ||||
|
Inventories
|
(26,175 | ) | 27,980 | |||||
|
Accounts payable
|
39,466 | 35,576 | ||||||
|
Accrued liabilities and other
|
21,609 | 23,798 | ||||||
|
|
||||||||
|
NET CASH FROM OPERATING ACTIVITIES
|
(50,231 | ) | 62,680 | |||||
|
|
||||||||
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
|
Purchase of property, plant and equipment
|
(11,551 | ) | (7,279 | ) | ||||
|
Acquisitions, net of cash received
|
(5,834 | ) | — | |||||
|
Proceeds from sale of property, plant and equipment
|
382 | 10,241 | ||||||
|
Advances on notes receivable
|
(1,000 | ) | (14 | ) | ||||
|
Collections of notes receivable
|
103 | 68 | ||||||
|
Insurance proceeds
|
— | 1,023 | ||||||
|
Other, net
|
21 | 11 | ||||||
|
|
||||||||
|
NET CASH FROM INVESTING ACTIVITIES
|
(17,879 | ) | 4,050 | |||||
|
|
||||||||
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
|
Net borrowings (repayments) under revolving credit facilities
|
15,000 | (30,257 | ) | |||||
|
Repayment of long-term debt
|
(255 | ) | (16,213 | ) | ||||
|
Borrowings of long-term debt
|
— | 800 | ||||||
|
Proceeds from issuance of common stock
|
1,331 | 1,177 | ||||||
|
Purchase of additional noncontrolling interest
|
(1,227 | ) | (1,770 | ) | ||||
|
Distributions to noncontrolling interest
|
(472 | ) | (170 | ) | ||||
|
Dividends paid to shareholders
|
(3,871 | ) | (1,158 | ) | ||||
|
Repurchase of common stock
|
(3,648 | ) | — | |||||
|
Excess tax benefits from share-based compensation arrangements
|
265 | 211 | ||||||
|
Other, net
|
14 | (54 | ) | |||||
|
|
||||||||
|
NET CASH FROM FINANCING ACTIVITIES
|
7,137 | (47,434 | ) | |||||
|
|
||||||||
|
|
||||||||
|
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
(60,973 | ) | 19,296 | |||||
|
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
82,219 | 13,337 | ||||||
|
|
||||||||
|
|
||||||||
|
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
$ | 21,246 | $ | 32,633 | ||||
|
|
||||||||
|
|
||||||||
|
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
|
||||||||
|
Cash paid (refunded) during the period for:
|
||||||||
|
Interest
|
$ | 1,777 | $ | 2,790 | ||||
|
Income taxes
|
(8,470 | ) | (6,050 | ) | ||||
|
|
||||||||
|
NON-CASH INVESTING ACTIVITIES:
|
||||||||
|
Stock acquired through employees’ stock notes receivable
|
$ | 50 | $ | 125 | ||||
|
|
||||||||
|
NON-CASH FINANCING ACTIVITIES:
|
||||||||
|
Common stock issued under deferred compensation plans
|
$ | 178 | $ | 2,392 | ||||
|
Stock received for the exercise of stock options, net
|
32 | |||||||
6
| A. |
BASIS OF PRESENTATION
|
| B. |
FAIR VALUE
|
| June 26, 2010 | June 27, 2009 | |||||||||||||||||||||||
| Quoted | Prices with | Quoted | Prices with | |||||||||||||||||||||
| Prices in | Other | Prices in | Other | |||||||||||||||||||||
| Active | Observable | Active | Observable | |||||||||||||||||||||
| Markets | Inputs | Markets | Inputs | |||||||||||||||||||||
| (in thousands) | (Level 1) | (Level 2) | Total | (Level 1) | (Level 2) | Total | ||||||||||||||||||
|
Assets:
|
||||||||||||||||||||||||
|
Money market funds
|
$ | 64 | $ | 64 | ||||||||||||||||||||
|
Mutual funds:
|
$ | 749 | $ | 749 | ||||||||||||||||||||
|
Domestic stock funds
|
436 | 436 | ||||||||||||||||||||||
|
International stock funds
|
395 | 395 | ||||||||||||||||||||||
|
Target funds
|
114 | 114 | ||||||||||||||||||||||
|
Bond funds
|
49 | 49 | ||||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Total mutual funds
|
994 | 994 | 749 | 749 | ||||||||||||||||||||
|
Property, plant and equipment
|
$ | 165 | 165 | $ | 1,204 | 1,204 | ||||||||||||||||||
|
|
||||||||||||||||||||||||
|
|
$ | 1,058 | $ | 165 | $ | 1,223 | $ | 749 | $ | 1,204 | $ | 1,953 | ||||||||||||
|
|
||||||||||||||||||||||||
7
| C. |
REVENUE RECOGNITION
|
| June 26, 2010 | December 26, 2009 | June 27, 2009 | ||||||||||
|
|
||||||||||||
|
Cost and Earnings in Excess of Billings
|
$ | 5,333 | $ | 9,998 | $ | 7,086 | ||||||
|
Billings in Excess of Cost and Earnings
|
4,426 | 8,954 | 10,304 | |||||||||
8
| D. |
EARNINGS PER SHARE
|
| Three Months Ended June 26, 2010 | Three Months Ended June 27, 2009 | |||||||||||||||||||||||
| Income | Shares | Per Share | Income | Shares | Per Share | |||||||||||||||||||
| (Numerator) | (Denominator) | Amount | (Numerator) | (Denominator) | Amount | |||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Net Earnings Attributable to Controlling Interest
|
$ | 13,716 | $ | 16,088 | ||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
EPS — Basic
|
||||||||||||||||||||||||
|
Income available to common stockholders
|
13,716 | 19,259 | $ | 0.71 | 16,088 | 19,241 | $ | 0.84 | ||||||||||||||||
|
|
||||||||||||||||||||||||
|
Effect of dilutive securities
|
||||||||||||||||||||||||
|
Options
|
272 | 218 | ||||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
EPS — Diluted
|
||||||||||||||||||||||||
|
Income available to common stockholders and
assumed options exercised
|
$ | 13,716 | 19,531 | $ | 0.70 | $ | 16,088 | 19,459 | $ | 0.83 | ||||||||||||||
|
|
||||||||||||||||||||||||
| Six Months Ended June 26, 2010 | Six Months Ended June 27, 2009 | |||||||||||||||||||||||
| Income | Shares | Per Share | Income | Shares | Per Share | |||||||||||||||||||
| (Numerator) | (Denominator) | Amount | (Numerator) | (Denominator) | Amount | |||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Net Earnings Attributable to Controlling Interest
|
$ | 14,703 | $ | 14,881 | ||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
EPS — Basic
|
||||||||||||||||||||||||
|
Income available to common stockholders
|
14,703 | 19,258 | $ | 0.76 | 14,881 | 19,213 | $ | 0.77 | ||||||||||||||||
|
|
||||||||||||||||||||||||
|
Effect of dilutive securities
|
||||||||||||||||||||||||
|
Options
|
266 | 157 | ||||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
EPS — Diluted
|
||||||||||||||||||||||||
|
Income available to common stockholders and
assumed options exercised
|
$ | 14,703 | 19,524 | $ | 0.75 | $ | 14,881 | 19,370 | $ | 0.77 | ||||||||||||||
|
|
||||||||||||||||||||||||
9
| E. |
ASSETS HELD FOR SALE AND NET LOSS (GAIN) ON DISPOSITION OF ASSETS AND OTHER IMPAIRMENTS AND
EXIT CHARGES
|
| Three Months Ended June 26, 2010 | Three Months Ended June 27, 2009 | |||||||||||||||
| Northern, | Northern, | |||||||||||||||
| Southern and | Southern and | |||||||||||||||
| Western | All | Western | All | |||||||||||||
| Divisions | Other | Divisions | Other | |||||||||||||
|
Severances
|
$ | 0.1 | ||||||||||||||
|
Property, plant and equipment
|
$ | 0.2 | 0.3 | |||||||||||||
|
Gain on sale of real estate
|
(1.1 | ) | ||||||||||||||
| Six Months Ended June 26, 2010 | Six Months Ended June 27, 2009 | |||||||||||||||
| Northern, | Northern, | |||||||||||||||
| Southern and | Southern and | |||||||||||||||
| Western | All | Western | All | |||||||||||||
| Divisions | Other | Divisions | Other | |||||||||||||
|
Severances
|
$ | 0.3 | $ | 0.6 | ||||||||||||
|
Property, plant and equipment
|
0.1 | 1.0 | ||||||||||||||
|
Gain on sale of real estate
|
(3.5 | ) | ||||||||||||||
10
| F. |
COMMITMENTS, CONTINGENCIES, AND GUARANTEES
|
11
12
| G. |
BUSINESS COMBINATIONS
|
| Net | ||||||||||||||||
| Company | Acquisition | Purchase | Intangible | Tangible | Reportable | |||||||||||
| Name | Date | Price | Assets | Assets | Segment | Business Description | ||||||||||
|
Shepherd Distribution Co. (“Shepherd”)
|
April 29, 2010 |
$5.2 (asset purchase)
|
$ | 1.9 | $ | 3.3 | Northern Division | Distributes shingle underlayment, bottom board, house wrap, siding, poly film and other products to manufactured housing and RV customers. Headquartered in Elkhart, Indiana, it has distribution capabilities throughout the United States. | ||||||||
|
Service Supply Distribution, Inc. (“Service Supply”)
|
March 8, 2010 | $0.6 (asset purchase) | $ | 0.0 | $ | 0.6 | Southern Division | Distributes certain plumbing, electrical, adhesives, flooring, paint and other products to manufactured housing and RV customers. Headquartered in Cordele, Georgia, it has distribution capabilities throughout the United States. | ||||||||
13
| Non-compete | Customer | Goodwill - | Goodwill - Tax | |||||||||||||
| agreements | Relationships | Total | Deductible | |||||||||||||
|
D-Stake initial purchase price
allocation
|
$ | 2.6 | $ | 2.5 | $ | 2.5 | ||||||||||
|
Adjustments
|
(1.6 | ) | 1.9 | (0.3 | ) | (0.3 | ) | |||||||||
|
D-Stake final purchase price allocation
|
1.0 | 1.9 | 2.2 | 2.2 | ||||||||||||
| H. |
SEGMENT REPORTING
|
| Six Months Ended June 26, 2010 | Six Months Ended June 27, 2009 | |||||||||||||||||||||||
| Northern, | Northern, | |||||||||||||||||||||||
| Southern and | Southern and | |||||||||||||||||||||||
| Western | Western | |||||||||||||||||||||||
| Divisions | All Other | Total | Divisions | All Other | Total | |||||||||||||||||||
|
Net sales to outside
customers
|
$ | 947,977 | $ | 83,616 | $ | 1,031,593 | $ | 812,108 | $ | 64,559 | $ | 876,667 | ||||||||||||
|
Intersegment net sales
|
0 | 34,644 | 34,644 | 0 | 20,950 | 20,950 | ||||||||||||||||||
|
Segment operating
profit (loss)
|
23,487 | 3,119 | 26,606 | 21,432 | 4,614 | 26,046 | ||||||||||||||||||
| I. |
SUBSEQUENT EVENT
|
On July 14, 2010, the compensation committee of the board of directors approved a retirement plan for officers whereby we will pay, upon retirement, benefits totaling 150% of the officer’s highest base salary in the three years immediately preceding separation from service plus health care benefits for a specified period of time if certain eligibility requirements are met. We currently anticipate recording approximately $1.8 million of expense in the last six months of 2010 for this plan.
14
| • |
Our overall unit sales increased 9% primarily due to our manufactured housing , industrial,
and site-built markets. We believe we have gained additional share of the industrial and
manufactured housing markets we serve. Share gains in our industrial market have been
achieved by adding many new customers while share gains in manufactured housing have been
achieved by acquiring distribution operations. We believe we have maintained our share of the
DIY/retail market. Finally, we recently closed several plants that supply the site-built
housing market in order to achieve profitability and cash flow goals; consequently, we believe
that these actions may temporarily cause us to lose some market share.
|
| • |
The Lumber Market was approximately 52% higher, on average, in the second quarter of 2010
compared to the same period of 2009, and was unusually volatile during the quarter. The
unusual volatility had a significant adverse impact on our gross profits, particularly in the
month of June. Specifically, lumber prices increased quickly to a peak at the end of
April—so quickly that it was not possible to pass along the increased costs to customers.
This negatively affected profits on products sold at a fixed price during the quarter. Then,
from late April through late June, lumber prices fell quickly, negatively affecting profits on
products we sell at a price that is indexed to the Lumber Market at the time it is shipped to
the customer (such as high-volume treated lumber). Consequently, our gross margin decreased to
12.2% in the second quarter of 2010 from 16.0% in the same period of 2009. Since the end of
June, lumber prices have stabilized.
|
15
| • |
The Leading Indicator for Remodeling Activity, released by Harvard’s Joint Center for
Housing Studies, released its’ report for the second quarter of 2010 and indicated that
spending on homeowner remodeling improvements declined 9.7% for the period, which impacts our
DIY/retail market. Consumer spending for large repair/remodel projects has decreased due to
general economic conditions, among other factors, including weak home prices and high
unemployment levels. Consequently, the same store sales of our “big box” home improvement
retailers have declined. The Consumer Confidence Index, which had been increasing since
February, decreased in June causing concern about the level of consumer spending in future
months.
|
| • |
National housing starts
increased approximately 25% in the period from March through May of
2010 (our sales trail housing starts by about a month), compared to
the same period of 2009. However, within these results, multi-family starts declined
approximately 6% in April and May of 2010 compared to the same period of 2009.
|
| • |
Shipments of HUD code manufactured homes were up 14% in April and May of 2010, compared to
the same period of 2009. Industry sales of modular homes were up 5% in the first quarter
compared to 2009.
|
| • |
Housing starts and shipments of manufactured homes were positively impacted by certain tax
credits that have now expired.
|
| • |
The industrial market has improved as the U.S. economy slowly recovers. More
significantly, we gained additional share of this market due, in part, to adding many new
customers and continuing to penetrate the concrete forming business.
|
| • |
Our cash flow used in operating activities was $50 million due to the seasonal working
capital requirements of our business, which were higher than 2009. We currently anticipate
achieving strong cash flows from operations for the year.
|
16
| Random Lengths Composite | ||||||||
| Average $/MBF | ||||||||
| 2010 | 2009 | |||||||
|
January
|
$ | 264 | $ | 198 | ||||
|
February
|
312 | 199 | ||||||
|
March
|
310 | 195 | ||||||
|
April
|
351 | 208 | ||||||
|
May
|
333 | 198 | ||||||
|
June
|
267 | 222 | ||||||
|
Second quarter average
|
$ | 317 | $ | 209 | ||||
|
Year-to-date average
|
$ | 306 | $ | 203 | ||||
|
|
||||||||
|
Second quarter percentage
change from 2009
|
51.7 | % | ||||||
|
Year-to-date percentage
change from 2009
|
50.7 | % | ||||||
| Random Lengths SYP | ||||||||
| Average $/MBF | ||||||||
| 2010 | 2009 | |||||||
|
January
|
$ | 269 | $ | 241 | ||||
|
February
|
331 | 233 | ||||||
|
March
|
337 | 232 | ||||||
|
April
|
382 | 241 | ||||||
|
May
|
374 | 231 | ||||||
|
June
|
293 | 236 | ||||||
|
Second quarter average
|
$ | 350 | $ | 236 | ||||
|
Year-to-date average
|
$ | 331 | $ | 236 | ||||
|
|
||||||||
|
Second quarter percentage
change from 2009
|
48.3 | % | ||||||
|
Year-to-date percentage
change from 2009
|
40.3 | % | ||||||
17
| • |
Products with fixed selling prices.
These products include value-added products
such as decking and fencing sold to DIY/retail customers, as well as trusses,
wall panels and other components sold to the site-built construction market, and
most industrial packaging products. Prices for these products are generally
fixed at the time of the sales quotation for a specified period of time or are
based upon a specific quantity. In order to maintain margins and reduce any
exposure to adverse
trends
in the price of component lumber products, we attempt
to lock in costs for these sales commitments with our suppliers. Also, the time
period and quantity limitations generally allow us to re-price our products for
changes in lumber costs from our suppliers.
|
|
| • |
Products with selling prices indexed to the reported Lumber Market with a fixed
dollar “adder” to cover conversion costs and profits.
These products primarily
include treated lumber, remanufactured lumber, and trusses sold to the
manufactured housing industry. For these products, we estimate the customers’
needs and carry anticipated levels of inventory. Because lumber costs are
incurred in advance of final sale prices, subsequent increases or decreases in
the market price of lumber impact our gross margins. For these products, our
margins are exposed to changes in the
trend
of lumber prices.
|
| • |
Products with significant inventory levels with low turnover rates, whose
selling prices are indexed to the Lumber Market.
In other words, the longer the
period of time these products remain in inventory, the greater the exposure to
changes in the price of lumber. This would include treated lumber, which
comprises approximately 17% of our total sales. This exposure is less
significant with remanufactured lumber, trusses sold to the manufactured housing
market, and other similar products, due to the higher rate of inventory
turnover. We attempt to mitigate the risk associated with treated lumber
through vendor consignment inventory programs. (
Please refer to the “Risk
Factors” section of our annual report on form 10-K, filed with the United States
Securities and Exchange Commission.
)
|
18
| • |
Products with fixed selling prices sold under long-term
supply arrangements,
particularly those involving multi-family construction projects.
We attempt to
mitigate this risk through our purchasing practices by locking in costs.
|
| Period 1 | Period 2 | |||||||
|
|
||||||||
|
Lumber cost
|
$ | 300 | $ | 400 | ||||
|
Conversion cost
|
50 | 50 | ||||||
|
|
||||||||
|
= Product cost
|
350 | 450 | ||||||
|
Adder
|
50 | 50 | ||||||
|
|
||||||||
|
= Sell price
|
$ | 400 | $ | 500 | ||||
|
Gross margin
|
12.5 | % | 10.0 | % | ||||
19
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 26, 2010 | June 27, 2009 | June 26, 2010 | June 27, 2009 | |||||||||||||
|
Net sales
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
|
Cost of goods sold
|
87.8 | 84.0 | 87.4 | 85.2 | ||||||||||||
|
|
||||||||||||||||
|
Gross profit
|
12.2 | 16.0 | 12.6 | 14.8 | ||||||||||||
|
Selling, general, and
administrative expenses
|
8.5 | 10.9 | 10.0 | 12.0 | ||||||||||||
|
Net loss (gain) on
disposition of assets and
other impairment and exit
charges
|
0.0 | (0.1 | ) | 0.0 | (0.2 | ) | ||||||||||
|
|
||||||||||||||||
|
Earnings from operations
|
3.7 | 5.2 | 2.6 | 3.0 | ||||||||||||
|
Interest, net
|
0.1 | 0.2 | 0.2 | 0.3 | ||||||||||||
|
|
||||||||||||||||
|
Earnings before income taxes
|
3.6 | 5.0 | 2.4 | 2.7 | ||||||||||||
|
Income taxes
|
1.3 | 1.9 | 0.9 | 1.0 | ||||||||||||
|
|
||||||||||||||||
|
Net earnings
|
2.3 | 3.1 | 1.5 | 1.7 | ||||||||||||
|
Less net earnings
attributable to
non-controlling interest
|
(0.1 | ) | (0.0 | ) | (0.1 | ) | (0.0 | ) | ||||||||
|
|
||||||||||||||||
|
Net earnings attributable
to controlling interest
|
2.2 | % | 3.1 | % | 1.4 | % | 1.7 | % | ||||||||
|
|
||||||||||||||||
| • |
Diversifying our end market sales mix by increasing sales of specialty wood packaging to industrial users, increasing
our penetration of the concrete forms market, increasing our sales of engineered wood components for custom home,
multi-family and light commercial construction, and expanding our product lines in each of the markets we serve.
|
|
| • |
Expanding geographically in our core businesses.
|
|
| • |
Increasing sales of “value-added” products and framing services. Value-added product sales primarily consist of
fencing, decking, lattice, and other specialty products sold to the DIY/retail market, specialty wood packaging,
engineered wood components, and “wood alternative” products. Engineered wood components include roof trusses, wall
panels, and floor systems. Wood alternative products consist primarily of composite wood and plastics. Although we
consider the treatment of dimensional lumber with certain chemical preservatives a value-added process, treated lumber
is not presently included in the value-added sales totals.
|
|
| • |
Maximizing unit sales growth while achieving return on investment goals.
|
20
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||||||||||
| June 26, | June 27, | % | June 26, | June 27, | % | |||||||||||||||||||
| Market Classification | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
|
DIY/Retail
|
$ | 315,833 | $ | 291,184 | 8.4 | $ | 480,240 | $ | 458,764 | 4.7 | ||||||||||||||
|
Site-Built Construction
|
72,223 | 60,642 | 19.1 | 133,112 | 120,963 | 10.0 | ||||||||||||||||||
|
Industrial
|
179,240 | 131,783 | 36.0 | 305,228 | 236,419 | 29.1 | ||||||||||||||||||
|
Manufactured Housing
|
81,616 | 44,710 | 82.5 | 129,978 | 81,281 | 59.9 | ||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Total Gross Sales
|
648,912 | 528,319 | 22.8 | 1,048,558 | 897,427 | 16.8 | ||||||||||||||||||
|
Sales Allowances
|
(10,277 | ) | (13,374 | ) | (16,965 | ) | (20,760 | ) | ||||||||||||||||
|
|
||||||||||||||||||||||||
|
Total Net Sales
|
$ | 638,635 | $ | 514,945 | 24.0 | $ | 1,031,593 | $ | 876,667 | 17.7 | ||||||||||||||
|
|
||||||||||||||||||||||||
| Note: |
In the first quarter of 2010, we reviewed the classification of our customers and made
certain reclassifications. Prior year information has been restated to reflect these
reclassifications.
|
21
22
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 26, | June 27, | June 26, | June 27, | |||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
|
||||||||||||||||
|
Value-Added
|
58.8 | % | 61.2 | % | 58.5 | % | 61.0 | % | ||||||||
|
Commodity-Based
|
41.2 | % | 38.8 | % | 41.5 | % | 39.0 | % | ||||||||
23
| • |
Current and projected earnings, cash flow and return on investment
|
| • |
Current and projected market demand
|
| • |
Market share
|
| • |
Competitive factors
|
| • |
Future growth opportunities
|
| • |
Personnel and management
|
24
| Six Months Ended | ||||||||
| June 26, 2010 | June 27, 2009 | |||||||
|
Cash from operating activities
|
$ | (50,231 | ) | $ | 62,680 | |||
|
Cash from investing activities
|
(17,879 | ) | 4,050 | |||||
|
Cash from financing activities
|
7,137 | (47,434 | ) | |||||
|
|
||||||||
|
Net change in cash and cash equivalents
|
(60,973 | ) | 19,296 | |||||
|
Cash and cash equivalents, beginning of
period
|
82,219 | 13,337 | ||||||
|
|
||||||||
|
Cash and cash equivalents, end of period
|
$ | 21,246 | $ | 32,633 | ||||
|
|
||||||||
25
26
27
| (a) |
Evaluation of Disclosure Controls and Procedures
. With the participation of
management, our chief executive officer and chief financial officer, after evaluating the
effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a
— 15e and 15d — 15e) as of the quarter ended June 26, 2010 (the “Evaluation Date”), have
concluded that, as of such date, our disclosure controls and procedures were effective.
|
| (b) |
Changes in Internal Controls
. During the quarter ended June 26, 2010, there were no
changes in our internal control over financial reporting that materially affected, or is
reasonably likely to materially affect, our internal control over financial reporting.
|
28
| (a) |
None.
|
|
| (b) |
None.
|
|
| (c) |
Issuer purchases of equity securities.
|
| Fiscal Month | (a) | (b) | (c) | (d) | ||||||||||||
|
March 28, 2010 – May 1, 2010
(1)
|
1,113,129 | |||||||||||||||
|
May 2 – May 29, 2010
|
60,300 | $ | 37.46 | 1,052,829 | ||||||||||||
|
May 30
– June 26, 2010
|
20,000 | $ | 35.46 | 1,032,829 | ||||||||||||
| (a) |
Total number of shares purchased.
|
|
| (b) |
Average price paid per share.
|
|
| (c) |
Total number of shares purchased as part of publicly announced plans or
programs.
|
|
| (d) |
Maximum number of shares that may yet be purchased under the plans or programs.
|
|
| (1) |
On November 14, 2001, the Board of Directors approved a share repurchase
program (which succeeded a previous program) allowing us to repurchase up to 2.5
million shares of our common stock. As of June 26, 2010, cumulative total authorized
shares available for repurchase is 1.0 million shares.
|
29
| 31 | Certifications. | |||
|
|
||||
|
|
(a) | Certificate of the Chief Executive Officer of Universal Forest Products, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350). | ||
|
|
||||
|
|
(b) | Certificate of the Chief Financial Officer of Universal Forest Products, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350). | ||
|
|
||||
| 32 | Certifications. | |||
|
|
||||
|
|
(a) | Certificate of the Chief Executive Officer of Universal Forest Products, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350). | ||
|
|
||||
|
|
(b) | Certificate of the Chief Financial Officer of Universal Forest Products, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350). | ||
| * |
Indicates a compensatory arrangement.
|
30
|
UNIVERSAL FOREST PRODUCTS, INC.
|
||||
| Date: July 19, 2010 | By: | /s/ Michael B. Glenn | ||
| Michael B. Glenn, | ||||
| Chief Executive Officer and Principal Executive Officer | ||||
| Date: July 19, 2010 | By: | /s/ Michael R. Cole | ||
| Michael R. Cole, | ||||
|
Chief Financial Officer, Principal Financial Officer and
Principal Accounting Officer |
||||
31
| Exhibit No. | Description | |||
| 31 | Certifications. | |||
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(a) | Certificate of the Chief Executive Officer of Universal Forest Products, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350). | ||
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(b) | Certificate of the Chief Financial Officer of Universal Forest Products, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350). | ||
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| 32 | Certifications. | |||
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(a) | Certificate of the Chief Executive Officer of Universal Forest Products, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350). | ||
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(b) | Certificate of the Chief Financial Officer of Universal Forest Products, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350). | ||
| * |
Indicates a compensatory arrangement.
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No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
|---|
| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
|---|
No information found
No Customers Found
Suppliers
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
|---|