UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 29, 2013
 
OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Commission File Number 0-22684

UNIVERSAL FOREST PRODUCTS, INC.
(Exact name of registrant as specified in its charter)

Michigan
38-1465835
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification Number)

2801 East Beltline NE, Grand Rapids, Michigan
49525
(Address of principal executive offices)
(Zip Code)

Registrant's telephone number, including area code (616) 364-6161
 
NONE
(Former name or former address, if changed since last report.)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x  No o

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of "large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer x
Accelerated Filer o
Non-Accelerated Filer o
Smaller reporting company o

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
 
Class
Outstanding as of June 29, 2013
Common stock, no par value
19,893,513
 
UNIVERSAL FOREST PRODUCTS, INC.
 
TABLE OF CONTENTS

PART I.
FINANCIAL INFORMATION.
Page No.
 
 
 
Item 1.
Financial Statements.
 
 
 
 
 
3
 
 
 
 
4
 
 
 
 
5
 
 
 
 
6
 
 
 
 
7
 
 
 
Item 2.
16
 
 
 
Item 3.
30
 
 
 
Item 4.
31
 
 
 
PART II.
OTHER INFORMATION.
 
 
 
 
Item 1.
Legal Proceedings – NONE.
 
 
 
 
Item 1A.  
32
 
 
 
Item 2.
32
 
 
 
Item 3.
Defaults upon Senior Securities – NONE.
32
 
 
 
Item 4.
Mine Safety Disclosures – NONE.
32
 
 
 
Item 5.
32
 
 
 
Item 6.
33
UNIVERSAL FOREST PRODUCTS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
(in thousands, except share data)

 
  
June 29,
    
December 29,
    
June 30,
  
 
  
2013
    
2012
    
2012
  
ASSETS
  
   
   
 
CURRENT ASSETS:
  
   
   
 
Cash and cash equivalents
  
$
-
    
$
7,647
    
$
4,764
  
Restricted cash
    
753
      
6,831
      
553
  
Accounts receivable, net
    
270,949
      
163,225
      
212,038
  
Inventories:
                        
Raw materials
    
140,731
      
136,201
      
116,895
  
Finished goods
    
112,823
      
106,979
      
90,661
  
Total inventories
    
253,554
      
243,180
      
207,556
  
Refundable  income taxes
            
7,521
      
-
  
Deferred income taxes
    
9,188
      
9,212
      
9,694
  
Other current assets
    
20,302
      
15,557
      
14,411
  
TOTAL CURRENT ASSETS
    
554,746
      
453,173
      
449,016
  
 
                        
DEFERRED INCOME TAXES
    
1,670
      
1,759
      
-
  
OTHER ASSETS
    
16,353
      
14,583
      
16,176
  
GOODWILL
    
161,516
      
159,316
      
157,836
  
INDEFINITE-LIVED INTANGIBLE ASSETS
    
2,340
      
2,340
      
2,340
  
OTHER INTANGIBLE ASSETS, NET
    
6,914
      
8,101
      
9,491
  
PROPERTY, PLANT AND EQUIPMENT:
                        
Property, plant and equipment
    
568,011
      
543,595
      
537,273
  
Less accumulated depreciation and amortization
    
(334,238
)
    
(322,327
)
    
(319,495
)
PROPERTY, PLANT AND EQUIPMENT, NET
    
233,773
      
221,268
      
217,778
  
TOTAL ASSETS
  
$
977,312
    
$
860,540
    
$
852,637
  
 
                        
LIABILITIES AND SHAREHOLDERS' EQUITY
                        
CURRENT LIABILITIES:
                        
Cash overdraft
  
$
3,407
    
$
-
    
$
-
  
Accounts payable
    
95,594
      
66,054
      
81,117
  
Accrued liabilities:
                        
Compensation and benefits
    
37,216
      
34,728
      
35,592
  
Income taxes
    
5,419
      
-
      
5,401
  
Other
    
23,111
      
14,002
      
16,911
  
Current portion of long-term debt
    
-
      
-
      
40,000
  
TOTAL CURRENT LIABILITIES
    
164,747
      
114,784
      
179,021
  
 
                        
LONG-TERM DEBT, less current portion
    
142,473
      
95,790
      
32,854
  
DEFERRED INCOME TAXES
    
24,842
      
24,930
      
20,034
  
OTHER LIABILITIES
    
17,358
      
17,511
      
16,654
  
TOTAL LIABILITIES
    
349,420
      
253,015
      
248,563
  
 
                        
SHAREHOLDERS' 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, 19,893,513, 19,799,606, and 19,735,289
  
$
19,894
    
$
19,800
    
$
19,735
  
Additional paid-in capital
    
153,254
      
149,805
      
147,260
  
Retained earnings
    
443,913
      
426,887
      
428,573
  
Accumulated other comprehensive earnings
    
3,331
      
4,258
      
3,439
  
Employee stock notes receivable
    
(759
)
    
(982
)
    
(1,016
)
Total controlling interest shareholders' equity
    
619,633
      
599,768
      
597,991
  
Noncontrolling interest
    
8,259
      
7,757
      
6,083
  
TOTAL SHAREHOLDERS' EQUITY
    
627,892
      
607,525
      
604,074
  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
  
$
977,312
    
$
860,540
    
$
852,637
  

See notes to consolidated condensed financial statements.
3
UNIVERSAL FOREST PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
AND COMPREHENSIVE INCOME
(Unaudited)

(in thousands, except per share data)
 
 
  
Three Months Ended
    
Six Months Ended
  
 
  
June 29,
    
June 30,
    
June 29,
    
June 30,
  
 
  
2013
    
2012
    
2013
    
2012
  
 
  
   
   
   
 
NET SALES
  
$
738,436
    
$
593,693
    
$
1,292,930
    
$
1,050,804
  
 
                                
COST OF GOODS SOLD
    
658,220
      
521,618
      
1,155,535
      
925,063
  
 
                                
GROSS PROFIT
    
80,216
      
72,075
      
137,395
      
125,741
  
 
                                
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
    
53,102
      
49,434
      
101,329
      
95,212
  
NET (GAIN) LOSS ON DISPOSITION OF ASSETS, EARLY RETIREMENT AND OTHER IMPAIRMENT AND EXIT CHARGES
    
(3
)
    
(6,878
)
    
(109
)
    
(6,783
)
 
                                
EARNINGS FROM OPERATIONS
    
27,117
      
29,519
      
36,175
      
37,312
  
 
                                
INTEREST EXPENSE
    
1,180
      
1,240
      
2,425
      
2,251
  
INTEREST INCOME
    
(157
)
    
(321
)
    
(304
)
    
(562
)
EQUITY IN EARNINGS OF INVESTEE
    
(92
)
    
52
      
(134
)
    
(10
)
 
    
931
      
971
      
1,987
      
1,679
  
 
                                
EARNINGS BEFORE INCOME TAXES
    
26,186
      
28,548
      
34,188
      
35,633
  
 
                                
INCOME TAXES
    
9,813
      
10,538
      
12,058
      
13,237
  
 
                                
NET EARNINGS
    
16,373
      
18,010
      
22,130
      
22,396
  
 
                                
LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST
    
(601
)
    
(501
)
    
(1,133
)
    
(732
)
 
                                
NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST
  
$
15,772
    
$
17,509
    
$
20,997
    
$
21,664
  
 
                                
EARNINGS PER SHARE - BASIC
  
$
0.79
    
$
0.88
    
$
1.05
    
$
1.10
  
 
                                
EARNINGS PER SHARE - DILUTED
  
$
0.79
    
$
0.88
    
$
1.05
    
$
1.10
  
 
                                
COMPREHENSIVE INCOME
    
14,889
      
16,777
      
21,062
      
22,221
  
 
                                
LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST
    
(164
)
    
(63
)
    
(992
)
    
(718
)
 
                                
COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTERST
  
$
14,725
    
$
16,714
    
$
20,070
    
$
21,503
  

See notes to consolidated condensed financial statements.
4
UNIVERSAL FOREST PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)

(in thousands, except share and per share data)
 
 
  
Controlling Interest Shareholders' Equity
    
   
 
 
  
Common
Stock
    
Additional
Paid-In
Capital
    
Retained
Earnings
    
Accumulat-
ed Other
Comprehen-
sive Earnings
    
Employees
Stock Notes
Receivable
    
Noncontrolling
Interest
    
Total
  
Balance at December 31, 2011
  
$
19,624
    
$
143,988
    
$
410,848
    
$
3,600
    
$
(1,255
)
  
$
5,794
    
$
582,599
  
Net earnings
                    
21,664
                      
732
      
22,396
  
Foreign currency translation adjustment
                            
(161
)
            
(14
)
    
(175
)
Distributions to noncontrolling interest
                                            
(429
)
    
(429
)
Cash dividends - $0.200 per share
                    
(3,946
)
                            
(3,946
)
Issuance of 49,811 shares under employee stock plans
    
50
      
1,184
                                      
1,234
  
Issuance of 33,063 shares under stock grant programs
    
33
      
35
      
7
                              
75
  
Issuance of 29,356 shares under deferred compensation plans
    
29
      
(29
)
                                    
-
  
Tax benefits from non-qualified stock options exercised
            
129
                                      
129
  
Expense associated with share-based compensation arrangements
            
666
                                      
666
  
Accrued expense under deferred compensation plans
            
1,311
                                      
1,311
  
Notes receivable written-off
    
(1
)
    
(24
)
                    
25
              
-
  
Payments received on employee stock notes receivable
                                    
214
              
214
  
Balance at June 30, 2012
  
$
19,735
    
$
147,260
    
$
428,573
    
$
3,439
    
$
(1,016
)
  
$
6,083
    
$
604,074
  
 
                                                        
Balance at December 29, 2012
  
$
19,800
    
$
149,805
    
$
426,887
    
$
4,258
    
$
(982
)
  
$
7,757
    
$
607,525
  
Net earnings
                    
20,997
                      
1,133
      
22,130
  
Foreign currency translation adjustment
                            
(927
)
            
(141
)
    
(1,068
)
Distributions to noncontrolling interest
                                            
(490
)
    
(490
)
Cash dividends - $0.200 per share
                    
(3,977
)
                            
(3,977
)
Issuance of 27,006 shares under employee stock plans
    
27
      
667
                                      
694
  
Issuance of 31,951 shares under stock grant programs
    
32
      
(28
)
    
6
                              
10
  
Issuance of 37,107 shares under deferred compensation plans
    
37
      
(37
)
                                    
-
  
Tax benefits from non-qualified stock options exercised
            
107
                                      
107
  
Expense associated with share-based compensation arrangements
            
1,073
                                      
1,073
  
Accrued expense under deferred compensation plans
            
1,740
                                      
1,740
  
Notes receivable written off
    
(2
)
    
(73
)
                    
77
              
2
  
Payments received on employee stock notes receivable
                                    
146
              
146
  
Balance at June 29, 2013
  
$
19,894
    
$
153,254
    
$
443,913
    
$
3,331
    
$
(759
)
  
$
8,259
    
$
627,892
  

See notes to consolidated condensed financial statements
5
UNIVERSAL FOREST PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

(in thousands)
 
 
  
Six Months Ended
  
 
  
June 29,
    
June 30,
  
 
  
2013
    
2012
  
CASH FLOWS FROM OPERATING ACTIVITIES:
  
   
 
Net earnings
  
$
22,130
    
$
22,396
  
Adjustments to reconcile net earnings to net cash from operating activities:
                
Depreciation
    
14,459
      
14,430
  
Amortization of intangibles
    
1,324
      
1,506
  
Expense associated with share-based compensation arrangements
    
1,073
      
666
  
Excess tax benefits from share-based compensation arrangements
    
(6
)
    
(26
)
Expense associated with stock grant plans
    
36
      
75
  
Deferred income taxes
    
(79
)
    
(1,133
)
Equity in earnings of investee
    
(134
)
    
(10
)
Net gain on sale or impairment of property, plant and equipment
    
(141
)
    
(6,932
)
Changes in:
                
Accounts receivable
    
(108,893
)
    
(84,576
)
Inventories
    
(10,223
)
    
(12,166
)
Accounts payable
    
29,473
      
31,447
  
Accrued liabilities and other
    
22,064
      
14,684
  
NET CASH USED IN OPERATING ACTIVITIES
    
(28,917
)
    
(19,639
)
 
                
CASH FLOWS FROM INVESTING ACTIVITIES:
                
Purchases of property, plant and equipment
    
(21,532
)
    
(15,760
)
Proceeds from sale of property, plant and equipment
    
453
      
14,635
  
Acquisitions, net of cash received
    
(9,296
)
    
(2,149
)
Purchase of patents
    
-
      
(48
)
Advances on notes receivable
    
(1,358
)
    
(706
)
Collections on notes receivable
    
749
      
755
  
Cash restricted as to use
    
6,078
      
(553
)
Other, net
    
(37
)
    
(187
)
NET CASH USED IN INVESTING ACTIVITIES
    
(24,943
)
    
(4,013
)
 
                
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Net borrowings under revolving credit facilities
    
46,683
      
23,154
  
Repayment of long-term debt
    
-
      
(2,774
)
Debt issuance costs
    
(11
)
    
(85
)
Proceeds from issuance of common stock
    
694
      
1,234
  
Distributions to noncontrolling interest
    
(490
)
    
(429
)
Dividends paid to sharesholders
    
(3,977
)
    
(3,946
)
Excess tax benefits from share-based compensation arrangements
    
6
      
26
  
Other, net
    
-
      
4
  
NET CASH FROM FINANCING ACTIVITIES
    
42,905
      
17,184
  
 
                
Effect of exchange rate changes on cash
    
(99
)
    
(73
)
NET CHANGE IN CASH AND CASH EQUIVALENTS
    
(11,054
)
    
(6,541
)
 
                
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
    
7,647
      
11,305
  
 
                
CASH (OVERDRAFT), END OF PERIOD
  
$
(3,407
)
  
$
4,764
  
 
                
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
                
Interest paid
  
$
2,434
    
$
2,079
  
Income taxes (refunded) paid
    
(910
)
    
6,289
  
 
                
NON-CASH FINANCING ACTIVITIES:
                
Common stock issued under deferred compensation plans
  
$
1,490
    
$
1,008
  

See notes to consolidated condensed financial statements
6
UNIVERSAL FOREST PRODUCTS, INC.
 
NOTES TO UNAUDITED
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

A. BASIS OF PRESENTATION AND ACCOUNTING POLICIES

The accompanying unaudited interim consolidated condensed financial statements (the "Financial Statements") include our accounts and those of our wholly-owned and majority-owned subsidiaries and partnerships, and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission.  Accordingly, the Financial Statements do not include all of the information and footnotes normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States.  All intercompany transactions and balances have been eliminated.

In our opinion, the Financial Statements contain all material adjustments necessary to present fairly our consolidated financial position, results of operations and cash flows for the interim periods presented.  All such adjustments are of a normal recurring nature.  These Financial Statements should be read in conjunction with the annual consolidated financial statements, and footnotes thereto, included in our Annual Report to Shareholders on Form 10-K for the fiscal year ended December 29, 2012.

In the second quarter of fiscal 2013, we changed our annual testing date for evaluating goodwill and indefinite-lived intangible asset impairment from the last day of the fiscal year to the first day of the Company’s fourth fiscal quarter for all reporting units and indefinite-lived intangible assets. This voluntary change in accounting method is preferable under the circumstances because it will allow us more time to complete the annual goodwill and indefinite-lived intangible asset impairment testing in advance of our year-end reporting.  This change does not delay, accelerate or avoid an impairment charge. The change is not applied retrospectively as it is impracticable to do so because retrospective application would require application of significant estimates and assumptions with the use of hindsight. Accordingly, the change will be applied prospectively.  There have been no other material changes in our policies or estimates since December 29, 2012.

In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (ASC Topic 220) (“ASU 2013-02”).  ASU 2013-02 amends prior presentation of comprehensive income guidance. ASU 2013-02 requires that we report, in one place, the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required to be reclassified in its entirety to net income. Our adoption of the provisions of ASU 2013-02 in the first quarter of 2013 did not affect our consolidated financial position, results of operations or cash flows.
7
UNIVERSAL FOREST PRODUCTS, INC.
 
B. FAIR VALUE

We apply the provisions of ASC 820, Fair Value Measurements and Disclosures, to assets and liabilities measured at fair value.  Assets measured at fair value are as follows:

 
  
June 29, 2013
      June 30, 2012  
(in thousands)
  
Quoted Prices in Active Markets
(Level 1)
    
Quoted Prices in Active Markets
(Level 1)
  
Quoted Prices in Active Markets
(Level 2)
  
Total
  
Recurring:
  
   
 
 
  
 
Money market funds
  
$
62
    
$
99
  
 
  
$
99
  
Mutual funds:
                
 
        
Domestic stock funds
    
706
      
568
  
 
    
568
  
International stock funds
    
541
      
442
  
 
    
442
  
Target funds
    
158
      
132
  
 
    
132
  
Bond funds
    
140
      
113
  
 
    
113
  
Total mutual funds
    
1,607
      
1,255
  
 
    
1,255
  
Non-recurring:
                
 
        
Property, plant and equipment
                
$600
    
600
  
 
  
$
1,607
    
$
1,354
  
$600
  
$
1,954
  

We maintain money market and mutual funds in our non-qualified deferred compensation plan.  These funds are valued at prices quoted in an active exchange market and are included in “Other Assets”.  Property, plant and equipment are valued based on active market prices and other relevant information for sales of similar assets.  We have elected not to apply the fair value option under ASC 825, Financial Instruments, to any of our financial instruments except for those expressly required by U.S. GAAP.

We do not maintain any Level 3 assets or liabilities that would be based on significant observable or unobservable inputs.

C. REVENUE RECOGNITION

Earnings on construction contracts are reflected in operations using percentage-of-completion accounting, under either cost to cost or units of delivery methods, depending on the nature of the business at individual operations.  Under percentage-of-completion using the cost to cost method, revenues and related earnings on construction contracts are measured by the relationships of actual costs incurred related to the total estimated costs.  Under percentage-of-completion using the units of delivery method, revenues and related earnings on construction contracts are measured by the relationships of actual units produced related to the total number of units.  Revisions in earnings estimates on the construction contracts are recorded in the accounting period in which the basis for such revisions becomes known.  Projected losses on individual contracts are charged to operations in their entirety when such losses become apparent.
8
UNIVERSAL FOREST PRODUCTS, INC.
 
Our construction contracts are generally entered into with a fixed price and completion of the projects can range from 6 to 18 months in duration.  Therefore, our operating results are impacted by, among many other things, labor rates and commodity costs.  During the quarter, we updated our estimated costs to complete our projects using current labor and commodity costs and as a result of significant increases in these costs, our profits were adversely impacted.

The following table presents the balances of percentage-of-completion accounts which are included in “Other current assets” and “Accrued liabilities: Other”, respectively (in thousands):

 
  
June 29,
2013
    
December 29,
2012
    
June 30,
2012
  
 
  
   
   
 
Cost and Earnings in Excess of Billings
  
$
11,014
    
$
4,981
    
$
4,799
  
Billings in Excess of Cost and Earnings
    
3,757
      
2,020
      
3,227
  

D. EARNINGS PER SHARE

The computation of earnings per share (“EPS”) is as follows (in thousands):

 
  
Three Months Ended
    
Six Months Ended
  
 
  
June 29,
2013
    
June 30,
2012
    
June 29,
2013
    
June 30,
2012
  
Numerator:
  
   
   
   
 
Net earnings attributable to controlling interest
  
$
15,772
    
$
17,509
    
$
20,997
    
$
21,664
  
Adjustment for earnings allocated to non-vested restricted common stock
    
(157
)
    
(148
)
    
(202
)
    
(184
)
Net earnings for calculating EPS
  
$
15,615
    
$
17,361
    
$
20,795
    
$
21,480
  
Denominator:
                                
Weighted average shares outstanding
    
19,951
      
19,787
      
19,919
      
19,761
  
Adjustment for non-vested restricted common stock
    
(199
)
    
(173
)
    
(192
)
    
(169
)
Shares for calculating basic EPS
    
19,752
      
19,614
      
19,727
      
19,592
  
Effect of dilutive stock options
    
34
      
29
      
36
      
24
  
Shares for calculating diluted EPS
    
19,786
      
19,643
      
19,763
      
19,616
  
Net earnings per share:
                                
Basic
  
$
0.79
    
$
0.88
    
$
1.05
    
$
1.10
  
Diluted
  
$
0.79
    
$
0.88
    
$
1.05
    
$
1.10
  

No options were excluded from the computation of diluted EPS for the quarter ended June 29, 2013 or June 30, 2012.

Options to purchase 10,000 shares were not included in the computation of diluted EPS for the six months ended June 30, 2012 because the options’ exercise price was greater than the average market price of the common stock during the period and, therefore would be antidilutive.
9
UNIVERSAL FOREST PRODUCTS, INC.

E. NET (GAIN) LOSS ON DISPOSITION OF ASSETS, EARLY RETIREMENT AND OTHER IMPAIRMENT AND EXIT CHARGES

We have long-lived assets that consist of certain vacant land and facilities we closed to better align manufacturing capacity with the current business environment.  The fair values were determined based on broker assessments of value, appraisals or recent offers to acquire assets.  These and other idle assets were evaluated based on the requirements of ASC 360, which resulted in impairment and other exit charges included in “Net loss (gain) on disposition of assets, early retirement and other impairment and exit charges” for the periods presented below. These amounts include the following, separated by reporting segment (in thousands):

 
  
Three Months Ended June 29, 2013
    
Three Months Ended June 30, 2012
  
 
  
Eastern and
Western
    
Site-Built
    
All
Other
    
Total
    
Eastern and
Western
    
Site-Built
    
All
Other
    
Total
  
Severances and early retirement
  
$
8
    
$
1
    
$
3
    
$
12
    
$
26
    
$
-
    
$
2
    
$
28
  
Property, plant and equipment
    
(64
)
    
(16
)
    
65
    
$
(15
)
    
(59
)
    
(68
)
    
129
      
2
  
Net gain on impairment or sale of real estate
    
-
      
-
      
-
      
-
      
(6,908
)
    
-
      
-
      
(6,908
)
Total
  
$
(56
)
  
$
(15
)
  
$
68
    
$
(3
)
  
$
(6,941
)
  
$
(68
)
  
$
131
    
$
(6,878
)


 
  
Six Months Ended June 29, 2013
    
Six Months Ended June 30, 2012
  
 
  
Eastern and
Western
    
Site-Built
    
All
Other
    
Total
    
Eastern and
Western
    
Site-Built
    
All
Other
    
Total
  
Severances and early retirement
  
$
13
    
$
1
    
$
19
    
$
33
    
$
111
    
$
1
    
$
36
    
$
148
  
Property, plant and equipment
    
(156
)
    
29
      
(15
)
    
(142
)
    
(95
)
    
(96
)
    
170
      
(21
)
Net gain on impairment or sale of real estate
    
-
      
-
      
-
      
-
      
(6,910
)
    
-
      
-
      
(6,910
)
Total
  
$ 
(143
)
  
$
30
    
$
5
    
$ 
(109
)
  
$ 
(6,894
)
  
$ 
(95
)
  
$
206
    
$ 
(6,783
)
 
In the second quarter of 2012, we sold certain real estate in Fontana, CA for approximately $12.5 million and recognized a pre-tax gain of $7.2 million.
10
UNIVERSAL FOREST PRODUCTS, INC.

F. COMMITMENTS, CONTINGENCIES, AND GUARANTEES

We are self-insured for environmental impairment liability, including certain liabilities which are insured through a wholly owned subsidiary, Ardellis Insurance Ltd., a licensed captive insurance company.

We own and operate a number of facilities throughout the United States that chemically treat lumber products.  In connection with the ownership and operation of these and other real properties, and the disposal or treatment of hazardous or toxic substances, we may, under various federal, state, and local environmental laws, ordinances, and regulations, be potentially liable for removal and remediation costs, as well as other potential costs, damages, and expenses.  Environmental reserves, calculated with no discount rate, have been established to cover remediation activities at our affiliates’ wood preservation facilities in Stockertown, PA; Elizabeth City, NC; Auburndale, FL; Janesville, WI; and Medley, FL. In addition, a reserve was established for our affiliate’s facility in Thornton, CA to remove certain lead containing materials which existed on the property at the time of purchase.  During 2009, a subsidiary entered into a consent order with the State of Florida to conduct additional testing at the Auburndale, FL facility. We admitted no liability and the costs are not expected to be material.

On a consolidated basis, we have reserved approximately $3.5 million on June 29, 2013 and $3.4 million on June 30, 2012, representing the estimated costs to complete future remediation efforts. These amounts have not been reduced by an insurance receivable.

In addition, on June 29, 2013, we were parties either as plaintiff or defendant to a number of lawsuits and claims arising through the normal course of our business.  In the opinion of management, our consolidated financial statements will not be materially affected by the outcome of these contingencies and claims.

On June 29, 2013, we had outstanding purchase commitments on capital projects of approximately $14.4 million.

We provide a variety of warranties for products we manufacture. Historically, warranty claims have not been material.  We distribute products manufactured by other companies, some of which are no longer in business.  While we do not warrant these products, we have received claims as a distributor of these products when the manufacturer no longer exists or has the ability to pay.  Historically, these costs have not had a material affect on our consolidated financial statements.

In certain cases we supply building materials and labor to site-built construction projects or we jointly bid on contracts with framing companies for such projects. In some instances we are required to post payment and performance bonds to insure the owner that the products and installation services are completed in accordance with our contractual obligations.  We have agreed to indemnify the surety for claims made against the bonds.  As of June 29, 2013, we had approximately $30.9 million in outstanding payment and performance bonds, which expire during the next two years.  In addition, approximately $21.0 million in payment and performance bonds are outstanding for completed projects which are still under warranty.
11
UNIVERSAL FOREST PRODUCTS, INC.
 
On June 29, 2013, we had outstanding letters of credit totaling $28.7 million, primarily related to certain insurance contracts and industrial development revenue bonds described further below.

In lieu of cash deposits, we provide irrevocable letters of credit in favor of our insurers to guarantee our performance under certain insurance contracts.  We currently have irrevocable letters of credit outstanding totaling approximately $18.9 million for these types of insurance arrangements.  We have reserves recorded on our balance sheet, in accrued liabilities, that reflect our expected future liabilities under these insurance arrangements.

We are required to provide irrevocable letters of credit in favor of the bond trustees for all of the industrial development revenue bonds that we have issued.  These letters of credit guarantee principal and interest payments to the bondholders.  We currently have irrevocable letters of credit outstanding totaling approximately $9.8 million related to our outstanding industrial development revenue bonds.  These letters of credit have varying terms but may be renewed at the option of the issuing banks.

Certain wholly owned domestic subsidiaries have guaranteed the indebtedness of Universal Forest Products, Inc. in certain debt agreements, including the Series 2012 Senior Notes and our revolving credit facility.  The maximum exposure of these guarantees is limited to the indebtedness outstanding under these debt arrangements and this exposure will expire concurrent with the expiration of the debt agreements.

Many of our wood treating operations utilize "Subpart W" drip pads, defined as hazardous waste management units by the EPA.  The rules regulating drip pads require that the pad be “closed” at the point that it is no longer intended to be used for wood treating operations or to manage hazardous waste.  Closure involves identification and disposal of contaminants which are required to be removed from the facility.  The cost of closure is dependent upon a number of factors including, but not limited to, identification and removal of contaminants, cleanup standards that vary from state to state, and the time period over which the cleanup would be completed.  Based on our present knowledge of existing circumstances, it is considered probable that these costs will approximate $0.6 million.  As a result, this amount is recorded in other long-term liabilities on June 29, 2013.

We did not enter into any new guarantee arrangements during the second quarter of 2013 which would require us to recognize a liability on our balance sheet.
12
UNIVERSAL FOREST PRODUCTS, INC.

G. BUSINESS COMBINATIONS

We completed the following acquisitions in fiscal 2013 and 2012 which were accounted for using the purchase method (in millions):

Company Name
Acquisition Date
Purchase Price
Intangible Assets
Net Tangible Assets
Operating
Segment
Business Description
Premier Laminating Services, Inc.
(“Premier Laminating”)
May 31, 2013
$0.7 (asset purchase)
$0.2
$0.5
Western Division
A business specialized in environmentally sustainable laminated wooden products. Facility is located in Perris, CA.
Millry Mill Company, Inc. (“Millry”)
February 28, 2013
$2.3 (asset purchase)
$0.1
$2.2
Eastern Division
A highly specialized export mill that produces rough dimension boards and lumber.  Facility is located in Millry, AL.
Custom Caseworks, Inc. (“Custom Caseworks”)
December 31, 2012
$6.3 (asset purchase)
$2.0
$4.3
Western Division
A high-precision business-to-business manufacturer of engineered wood products in many commercial markets. Facility is located in Sauk Rapids, MN. Custom Caseworks had annual sales of $7 million.
Nepa Pallet and Container Co., Inc. (“Nepa”)
November 5, 2012
$16.2 (asset purchase)
$1.4
$14.8
Western Division
Manufactures pallets, containers and bins for agricultural and industrial customers.  Facilities are located in Snohomish, Yakima and Wenatchee, WA. NEPA had trailing twelve month sales of $25 million.
MSR Forest Products, LLC
(“MSR”)
May 16, 2012
$3.2 (asset purchase)
 
$1.1
$2.1
Distribution Division
Supplies roof trusses and cut-to-size lumber to manufactured housing customers.  Facilities are located in Haleyville, AL and Waycross, GA.  MSR had annual sales of $10 million.

The purchase price allocations for Premier Laminating, Millry, Custom Caseworks and Nepa are preliminary for the valuation of intangible assets and will be revised, as necessary, as final determinations of intangible fair value are completed.  The intangible assets for MSR were finalized and allocated to goodwill during the second quarter of 2013.
13
UNIVERSAL FOREST PRODUCTS, INC.

H. SEGMENT REPORTING

ASC 280, Segment Reporting (“ASC 280”), defines operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

Our operating segments consist of the Eastern, Western, Site-Built, Consumer Products and Distribution divisions.  In accordance with ASC 280, due to the similar economic characteristics, nature of products, distribution methods, and customers, we have aggregated our Eastern and Western operating segments into one reportable segment.  The Site-Built division is considered a separate reportable segment.  Our other divisions do not collectively form a reportable segment because their respective operations are dissimilar and they do not meet the applicable quantitative requirements.  These operations have been included in the “All Other” column of the table below.  The “Corporate” column includes unallocated administrative costs.

 
  
Three Months Ended June 29, 2013
  
 
  
Eastern and
Western
    
Site-Built
    
All Other
    
Corporate
    
Total
  
Net sales to outside customers
  
$
601,185
    
$
73,860
    
$
63,391
    
$
-
    
$
738,436
  
Intersegment net sales
    
29,140
      
4,469
      
4,335
      
-
      
37,944
  
Segment operating profit
    
21,710
      
2,225
      
1,258
      
1,924
      
27,117
  

 
  
Three Months Ended June 30, 2012
  
 
  
Eastern and
Western
    
Site-Built
    
All Other
    
Corporate
    
Total
  
Net sales to outside customers
  
$
476,065
    
$
53,388
    
$
64,240
    
$
-
    
$
593,693
  
Intersegment net sales
    
17,792
      
5,053
      
4,256
      
-
      
27,101
  
Segment operating profit
    
26,733
      
1,057
      
199
      
1,530
      
29,519
  

 
  
Six Months Ended June 29, 2013
  
 
  
Eastern and
Western
    
Site-Built
    
All Other
    
Corporate
    
Total
  
Net sales to outside customers
  
$
1,046,709
    
$
132,011
    
$
114,210
    
$
-
    
$
1,292,930
  
Intersegment net sales
    
47,932
      
8,762
      
6,946
      
-
      
63,640
  
Segment operating profit (loss)
    
35,783
      
(1,829
)
    
913
      
1,308
      
36,175
  
14
UNIVERSAL FOREST PRODUCTS, INC.
 
 
  
Six Months Ended June 30, 2012
  
 
  
Eastern and
Western
    
Site-Built
    
All Other
    
Corporate
    
Total
  
Net sales to outside customers
  
$
842,903
    
$
100,931
    
$
106,970
    
$
-
    
$
1,050,804
  
Intersegment net sales
    
35,933
      
8,876
      
8,609
      
-
      
53,418
  
Segment operating profit (loss)
    
39,245
      
464
      
(1,275
)
    
(1,122
)
    
37,312
  
 
I. INCOME TAXES

Effective tax rates differ from statutory federal income tax rates, primarily due to provisions for state and local income taxes and permanent tax differences.  Our effective tax rate was 37.5% in the second quarter of 2013 compared to 36.9% for same period of 2012. Our effective tax rate was 35.3% in the first six months of 2013 compared to 37.1% for the same period of 2012.  The decrease in our effective tax rate is primarily due to research and development and certain other tax credits totaling approximately $700,000 relating to 2012.  These tax credits were enacted in the first quarter of 2013, retroactive to the beginning of 2012.
15
UNIVERSAL FOREST PRODUCTS, INC.
 
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Universal Forest Products, Inc. is a holding company that provides capital, management and administrative resources to subsidiaries that design, manufacture and market wood and wood-alternative products for building materials retailers and wholesalers, structural lumber and other products for the manufactured housing and residential construction markets, and specialty wood packaging and components and packing materials for various industries. It has subsidiaries that provide framing services for the residential construction market in some parts of the country; that manufacture and market products used for concrete construction; and that offer lawn and garden products, such as trellises and arches, to retailers nationwide. Its consumer products operations offer a large portfolio of outdoor living products, including wood composite decking, decorative balusters, post caps and plastic lattice. Founded in 1955, Universal Forest Products is headquartered in Grand Rapids, Mich. Its subsidiaries operate facilities throughout North America. For more about Universal, go to www.ufpi.com.

This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act, as amended, that are based on management’s beliefs, assumptions, current expectations, estimates and projections about the markets we serve, the economy and the Company itself. Words like “anticipates,” “believes,” “confident,” “estimates,” “expects,” “forecasts,” “likely,” “plans,” “projects,” “should,” variations of such words, and similar expressions identify such forward-looking statements. These statements do not guarantee future performance and involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. The Company does not undertake to update forward-looking statements to reflect facts, circumstances, events, or assumptions that occur after the date the forward-looking statements are made. Actual results could differ materially from those included in such forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainty. Among the factors that could cause actual results to differ materially from forward-looking statements are the following: fluctuations in the price of lumber; adverse or unusual weather conditions; adverse economic conditions in the markets we serve; government regulations, particularly involving environmental and safety regulations; and our ability to make successful business acquisitions. Certain of these risk factors as well as other risk factors and additional information are included in the Company's reports on Form 10-K and 10-Q on file with the Securities and Exchange Commission. We are pleased to present this overview of 2013.

OVERVIEW

Our results for the second quarter of 2013 were impacted by the following:

Our sales increased 24% due to a 15% increase in prices due to the lumber market and a 9% increase in unit sales.  See “Historical Lumber Prices”.  Our unit sales increased in all five of our markets, with our strongest growth occurring in our construction and home building markets - commercial construction and concrete forming, residential construction, and manufactured housing. Our unit sales to the retail building materials market reported a slight increase of approximately 2% as we gained market share with retail customers during 2013 and our industrial market increased by 5% due to acquisitions we’ve recently completed.
16
UNIVERSAL FOREST PRODUCTS, INC.
 
· National housing starts increased approximately 28% in the period of March 2013 through May 2013 (our sales trail housing starts by about a month), compared to the same period of 2012, while our unit sales increased 27% in the residential construction market.  Since the downturn in housing began, suppliers servicing this market have been challenged with significant excess capacity.  Consequently, pricing pressure has been intense resulting in several years of operating losses for many industry participants.  We have maintained our focus on profitability and cash flow by being selective in the business we take.  Consequently, our sales may trail the market from time to time.

· Production of HUD code manufactured homes was up 11% during the second quarter of 2013, compared to the same period of 2012, which helped drive our 14% increase in unit sales to this market. We also believe modular market activity has improved.  Our sales increased slightly more than the market as a result of share gains in our distribution business.  We have maintained our share of the manufactured housing market in the core manufactured product lines we offer.

· In June 2012, we sold a plant we had previously closed in Fontana CA and recorded a gain of approximately $7.2 million.  Our net gain on the sale of Fontana and certain other properties was $6.9 million.

· Higher lumber prices have resulted in a substantial year over year increase in our working capital and debt levels.

HISTORICAL LUMBER PRICES

We experience significant fluctuations in the cost of commodity lumber products from primary producers ("Lumber Market"). The following table presents the Random Lengths framing lumber composite price:

 
Random Lengths Composite
   
Average $/MBF
  
    2013     2012  
January
  
$
393
    
$
281
  
February
    
409
      
286
  
March
    
436
      
300
  
April
    
429
      
308
  
May
    
367
      
342
  
June
    
329
      
330
  
 
                
Second quarter average
  
$
375
    
$
327
  
Year-to-date average
    
394
      
308
  
 
Second quarter percentage change
 14.7 %
Year-to-date percentage change
 27.9 %

17
UNIVERSAL FOREST PRODUCTS, INC.
 
In addition, a Southern Yellow Pine ("SYP") composite price, which we prepare and use, is presented below.  Sales of products produced using this species, which primarily consists of our preservative-treated products, may comprise up to 50% of our sales volume.

Random Lengths SYP  
 
  
Average $/MBF
  
 
  
2013
    
2012
  
 
  
   
 
January
  
$
397
    
$
269
  
February
    
426
      
278
  
March
    
445
      
300
  
April
    
436
      
314
  
May
    
383
      
341
  
June
    
355
      
314
  
 
Second quarter average
  
$
391
    
$
323
  
Year-to-date average
  
$
407
    
$
303
  
 
                
Second quarter percentage change
    
21.0
%
        
Year-to-date percentage change
    
34.3
%
        

IMPACT OF THE LUMBER MARKET ON OUR OPERATING RESULTS

We experience significant fluctuations in the cost of commodity lumber products from primary producers ("Lumber Market").  We generally price our products to pass lumber costs through to our customers so that our profitability is based on the value-added manufacturing, distribution, engineering, and other services we provide.  As a result, our sales levels (and working capital requirements) are impacted by the lumber costs of our products.  Lumber costs are a significant percentage of our cost of goods sold.
18
UNIVERSAL FOREST PRODUCTS, INC.

Our gross margins are impacted by (1) the relative level of the Lumber Market (i.e. whether prices are higher or lower from comparative periods), and (2) the trend in the market price of lumber (i.e. whether the price of lumber is increasing or decreasing within a period or from period to period). Moreover, as explained below, our products are priced differently.  Some of our products have fixed selling prices, while the selling prices of other products are indexed to the reported Lumber Market with a fixed dollar adder to cover conversion costs and profits.  Consequently, the level and trend of the Lumber Market impact our products differently.

Below is a general description of the primary ways in which our products are priced.

Ÿ Products with fixed selling prices.  These products include value-added products such as decking and fencing sold to retail building materials customers, as well as trusses, wall panels and other components sold to the residential 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 with our suppliers for these sales commitments.  Also, the time period and quantity limitations generally allow us to re-price our products for changes in lumber costs from our suppliers.

Ÿ 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 we 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.  As a result of the decline in the housing market and our sales to residential and commercial builders, a greater percentage of our sales fall into this general pricing category.  Consequently, we believe our profitability may be impacted to a much greater extent to changes in the trend of lumber prices.

Changes in the trend of lumber prices have their greatest impact on the following products:

Ÿ 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 15% 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.)
19
UNIVERSAL FOREST PRODUCTS, INC.

Ÿ 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.

In addition to the impact of the Lumber Market trends on gross margins, changes in the level of the market cause fluctuations in gross margins when comparing operating results from period to period. This is explained in the following example, which assumes the price of lumber has increased from period one to period two, with no changes in the trend within each period.
 
 
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
%

As is apparent from the preceding example, the level of lumber prices does not impact our overall profits, but does impact our margins.  Gross margins are negatively impacted during periods of high lumber prices; conversely, we experience margin improvement when lumber prices are relatively low.
 
BUSINESS COMBINATIONS

See Notes to Unaudited Consolidated Condensed Financial Statements, Note G, “Business Combinations.”
20
UNIVERSAL FOREST PRODUCTS, INC.
 
RESULTS OF OPERATIONS

The following table presents, for the periods indicated, the components of our Consolidated Condensed Statements of Earnings as a percentage of net sales.

 
  
Three Months Ended
    
Six months Ended
  
 
  
June 29, 2013
    
June 30, 2012
    
June 29, 2013
    
June 30, 2012
  
 
  
   
   
   
 
Net sales
    
100.0
%
    
100.0
%
    
100.0
%
    
100.0
%
Cost of goods sold
    
89.1
      
87.9
      
89.4
      
88.0
  
Gross profit
    
10.9
      
12.1
      
10.6
      
12.0
  
Selling, general, and administrative expenses
    
7.2
      
8.3
      
7.8
      
9.0
  
Net (gain) loss on disposition of assets, early retirement, and other impairment and exit charges
    
-
      
(1.2
)
    
-
      
(0.6
)
Earnings from operations
    
3.7
      
5.0
      
2.8
      
3.6
  
Other expense (income), net
    
0.1
      
0.2
      
0.2
      
0.2
  
Earnings before income taxes
    
3.5
      
4.8
      
2.6
      
3.4
  
Income taxes
    
1.3
      
1.8
      
0.9
      
1.3
  
Net earnings
    
2.2
      
3.0
      
1.7
      
2.1
  
Less net earnings attributable to noncontrolling interest
    
(0.1
)
    
(0.1
)
    
(0.1
)
    
(0.1
)
Net earnings attributable to controlling interest
    
2.1
%
    
2.9
%
    
1.6
%
    
2.1
%

Note: Actual percentages are calculated and may not sum to total due to rounding.

GROSS SALES

We design, manufacture and market wood and wood-alternative products for national home centers and other retailers, structural lumber and other products for the manufactured housing industry, engineered wood components for residential and commercial construction, and specialty wood packaging, components and packing materials for various industries.  Our strategic long-term sales objectives include:

Ÿ Diversifying our end market sales mix by increasing sales of specialty wood packaging to industrial users, increasing our penetration of the concrete forming market, increasing our sales of engineered wood components for custom home, multi-family, military and light commercial construction, and increasing our market share with independent retailers.

Ÿ Expanding geographically in our core businesses, domestically and internationally.

Ÿ Increasing sales of “value-added” products, which primarily consist of fencing, decking, lattice, and other specialty products sold to the retail building materials 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.
 
Ÿ Developing new products and expanding our product offering for existing customers.

Ÿ Maximizing unit sales growth while achieving return on investment goals.
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UNIVERSAL FOREST PRODUCTS, INC.

The following table presents, for the periods indicated, our gross sales and percentage change in gross sales by market classification.

(in thousands)
  
Three Months Ended
    
Six Months Ended
  
Market Classification
  
June 29, 2013
    
June 30, 2012
    
% Change
    
June 29, 2013
    
June 30, 2012
    
% Change
  
Retail Building Materials
  
$
315,093
    
$
279,187
      
12.9
    
$
520,810
    
$
475,304
      
9.6
  
Residential Construction
    
94,328
      
59,948
      
57.3
      
168,635
      
111,755
      
50.9
  
Commercial Construction and Concrete Forming
    
37,534
      
24,036
      
56.2
      
67,889
      
43,751
      
55.2
  
Industrial
    
193,369
      
160,277
      
20.6
      
353,826
      
293,947
      
20.4
  
Manufactured Housing
    
109,495
      
80,663
      
35.7
      
199,362
      
143,703
      
38.7
  
Total Gross Sales
    
749,819
      
604,111
      
24.1
      
1,310,522
      
1,068,460
      
22.7
  
Sales Allowances
    
(11,383
)
    
(10,418
)
            
(17,592
)
    
(17,656
)
        
Total Net Sales
  
$
738,436
    
$
593,693
      
24.4
    
$
1,292,930
    
$
1,050,804
      
23.0
  

Gross sales in the second quarter of 2013 increased 24% compared to the same period of 2012, due to a 15% increase in overall prices due to the higher level of the Lumber Market, which impacts our selling prices to customers in each of our markets, and a 9% increase in overall unit sales.

Gross sales in the first six months of 2013 increased 23% compared to the same period of 2012, due to higher lumber prices and a 6% increase in unit sales primarily resulting from improved demand related to new home construction.

Changes in our gross sales by market are discussed below.

Retail Building Materials:

Gross sales to the retail building materials market increased 13% in the second quarter of 2013 compared to the same period of 2012, primarily due to an 11% increase in selling prices and a 2% increase in our overall unit sales.  Within this market, sales to our big box customers increased 14% while our sales to other retailers increased 12%.  In addition, our unit sales improved sequentially within the quarter as the weather improved.

Gross sales to the retail building materials market increased 10% in the first six months of 2013 compared to the same period of 2012, primarily due to the same factors discussed above.  Within this market, sales to our big box customers increased 7% while our sales to other retailers increased 14%.  Our unit sales decreased 3% for the first six months of 2013.

Residential Construction:

Gross sales to the residential construction market increased 57% in the second quarter of 2013 compared to the same period of 2012 due to an increase in lumber prices and a 27% increase in our unit sales.   By comparison, national housing starts increased approximately 28% in the period of March 2013 through May 2013 (our sales typically trail housing starts by about a month), compared to the same period of 2012.  Our sales growth may trail the market from time to time due to our focus on profitability and cash flow as this market is still challenged with excess capacity resulting in pricing pressure from customers.
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UNIVERSAL FOREST PRODUCTS, INC.

Gross sales to the residential construction market increased 51% in the first six months of 2013 compared to the same period of 2012, primarily due to the same factors discussed above.  Our unit sales increased 24% for the first six months of 2013.

Commercial Construction and Concrete Forming:

Gross sales to the commercial construction and concrete forming market increased 56% in the second quarter of 2013 compared to the same period of 2012.  Within this market, sales to commercial builders increased 103%, primarily due to new product sales in our Gulf region and sales of products used to make concrete forms increased 29%.

Gross sales to the commercial construction and concrete forming market increased 55% in the first six months of 2013 compared to the same period of 2012.  Within this market, sales to commercial builders increased 100%, and sales of products used to make concrete forms increased 30% due to our continued focus on growing our share of this market.

Industrial:

Gross sales to the industrial market increased 21% in the second quarter of 2013 compared to the same period of 2012, resulting from a 16% increase in selling prices and a 5% increase in unit sales.  We acquired two new operations which contributed all of our growth in unit sales.

Gross sales to the industrial market increased 20% in the first six months of 2013 compared to the same period of 2012, primarily due to the same factors discussed above.  Our unit sales increased 5% in the first six months of 2013.

Manufactured Housing:

Gross sales to the manufactured housing market increased 36% in the second quarter of 2013 compared to 2012, primarily due to a 22% increase in selling prices and a 14% increase in unit sales.  Production of HUD-code homes in the second quarter of 2013 increased 11% compared to 2012, and we believe modular market activity also increased.  Our unit sales increase exceeded the market due to share gains of our distribution business.

Gross sales to the manufactured housing market increased 39% in the first six months of 2013 compared to 2012, primarily due to the same factors discussed above.  Our unit sales increased 12% for the first six months of 2013.

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UNIVERSAL FOREST PRODUCTS, INC.
 
Value-Added and Commodity-Based Sales:
 
The following table presents, for the periods indicated, our percentage of value-added and commodity-based sales to total sales.  Value-added products generally carry higher gross margins than our commodity-based products.

 
  
Three Months Ended
    
Six Months Ended
  
 
  
June 29, 2013
    
June 30, 2012
    
June 29, 2013
    
June 30, 2012
  
 
  
   
   
   
 
Value-Added
    
57.8
%
    
59.3
%
    
57.5
%
    
59.2
%
Commodity-Based
    
42.2
%
    
40.7
%
    
42.5
%
    
40.8
%

The processes used to produce preservative treated lumber and its applications in the marketplace would suggest that it is a “value-added” product, but we have classified this product category as “commodity-based” as a result of its lower margin.

COST OF GOODS SOLD AND GROSS PROFIT

Our gross profit percentage decreased to 10.9% from 12.1% comparing the second quarter of 2013 to the same period of 2012.  However, our gross profit dollars increased by 11.3%, exceeding our 9% increase in unit sales.

Our lower gross profit percentage in 2013 is a result of the higher level of year over year lumber prices this year compared to 2012.  See Historical Lumber Prices.  If lumber prices had remained at the same level in 2013 as they were in 2012, we estimate that our gross profit percentage would have been approximately 12.5% in 2013, which compares favorably with our 12.1% gross profit percentage in 2012.

The improvement in our gross profit per unit and profitability this quarter resulted from our increase in unit sales combined with the operating leverage we have on our labor, overhead and outbound freight costs.  This favorable impact was offset to some extent by the significant sequential decline in lumber prices throughout the second quarter of 2013.  See Historical Lumber Prices.  Currently, the selling prices of most of our products reflect the Lumber Market at the time that they are shipped, while we have previously purchased and prepared the products for sale based on the anticipated needs of our customers.   Accordingly, in periods when the trend of lumber prices is declining, our gross profit per unit will decline.

Our gross profit percentage decreased to 10.6% from 12.0% comparing the first six months of 2013 to the same period of 2012.  However, our gross profit dollars increased by 9.3%, which compares favorably to our 6% increase in unit sales. This improvement is primarily due to the same factors discussed above.
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UNIVERSAL FOREST PRODUCTS, INC.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative ("SG&A") expenses increased by approximately $3.7 million, or 7.4%, in the second quarter of 2013 compared to the same period of 2012, while we reported a 9% increase in unit sales.  The increase in SG&A was primarily due to increases in wages  and certain incentive compensation tied to profitability and returns.  These increases were partially offset by a decrease in bad debt expense.

Selling, general and administrative ("SG&A") expenses increased by approximately $6.1 million, or 6.4%, in the first six months of 2013 compared to the same period of 2012, while we reported a 5% increase in unit sales.  SG&A expenses were impacted in the first six months of 2013 by the same factors discussed above.

NET (GAIN) LOSS ON DISPOSITION OF ASSETS, EARLY RETIREMENT AND OTHER IMPAIRMENT AND EXIT CHARGES

In the first six months of 2013, we had net gains on the sale of real estate and other property, plant and equipment totaling approximately $0.1 million.  In the first six months of 2012, we had net gains on the sale of real estate and other property, plant and equipment totaling approximately $6.9 million, which was offset by approximately $0.1 million of severance costs.

We regularly review the performance of each our operations and make decisions to permanently or temporarily close operations based on a variety of factors including:

· 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

We currently have 8 operations which are experiencing operating losses and negative cash flow for the first six months of 2013.  The net book value of the long-lived assets of these operations, which could be subject to an impairment charge in the future, was $18.4 million as of June 29, 2013.  In addition, these operations had future fixed operating lease payments totaling $0.5 million as of June 29, 2013.

INTEREST, NET
Net interest costs were higher in the second quarter and first six months of 2013 compared to the same period of 2012, due to higher debt levels in 2013 resulting from the impact of higher lumber prices on working capital.
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UNIVERSAL FOREST PRODUCTS, INC.

INCOME TAXES

Effective tax rates differ from statutory federal income tax rates, primarily due to provisions for state and local income taxes and permanent tax differences.  Our effective tax rate was 37.5% in the second quarter of 2013 compared to 36.9% for same period of 2012. Our effective tax rate was 35.3% in the first six months of 2013 compared to 37.1% for the same period of 2012.  The decrease in our year to date effective tax rate is primarily due to research and development and certain other tax credits related to 2012, which Congress approved in 2013.

SEGMENT REPORTING

The following table presents, for the periods indicated, our net sales and operating profit by reportable segment.
 
 
  
   
Net Sales
    
   
Segment Operating Profit
  
(in thousands)
  
   
Three Months Ended
    
   
Three Months Ended
  
 
  
June 29, 2013
    
June 30, 2012
    
$ Change
    
% Change
    
June 29, 2013
    
June 30, 2012
    
$ Change
    
% Change
  
Eastern and Western
  
$
601,185
    
$
476,065
    
$
125,120
      
26.3
%
  
$
21,710
    
$
26,733
    
$ 
(5,023
)
    
(18.8
%)
Site-Built
    
73,860
      
53,388
      
20,472
      
38.3
      
2,225
      
1,057
      
1,168
      
110.5
  
All Other
    
63,391
      
64,240
      
(849
)
    
(1.3
)
    
1,258
      
199
      
1,059
      
532.2
  
Corporate1
    
-
      
-
      
-
      
-
      
1,924
      
1,530
      
394
      
25.8
  
Total
  
$
738,436
    
$
593,693
    
$
144,743
      
24.4
%
  
$
27,117
    
$
29,519
    
$ 
(2,402
)
    
(8.1
%)

 
  
   
Net Sales
    
   
Segment Operating Profit
  
(in thousands)
  
   
Six Months Ended
    
   
Six Months Ended
  
 
  
June 29, 2013
    
June 30, 2012
    
$ Change
    
% Change
    
June 29, 2013
    
June 30, 2012
    
$ Change
    
% Change
  
Eastern and Western
  
$
1,046,709
    
$
842,903
    
$
203,806
      
24.2
%
  
$
35,783
    
$
39,245
    
$
(3,462
)
    
(8.8
%)
Site-Built
    
132,011
      
100,931
      
31,080
      
30.8
      
(1,829
)
    
464
      
(2,293
)
    
(494.2
)
All Other
    
114,210
      
106,970
      
7,240
      
6.8
      
913
      
(1,275
)
    
2,188
      
171.6
  
Corporate1
    
-
      
-
      
-
      
-
      
1,308
      
(1,122
)
    
2,430
      
216.6
  
Total
  
$
1,292,930
    
$
1,050,804
    
$
242,126
      
23.0
%
  
$
36,175
    
$
37,312
    
$ 
(1,137
)
    
(3.0
%)

1Corporate primarily represents over (under) allocated administrative costs.

Eastern and Western

Net sales to the Eastern and Western reportable segment increased 26% in the second quarter of 2013 compared to 2012 and 24% in the first six months of 2013 compared to 2012, due to increased lumber prices and:
· An increase in commercial construction and concrete forming sales primarily due to new products introduced in our Gulf region and other market share gains.
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UNIVERSAL FOREST PRODUCTS, INC.
 
· An increase in manufactured housing sales due to an increase in industry production of HUD code homes.
· Recently acquired businesses that serve the industrial market.
 
Operating profit for the Eastern and Western reportable segment decreased in the second quarter and in the first six months of 2013, due to a $6.9 million net gain on the sale of real estate recorded in the prior year. Net of this gain, operating profits increased due to greater unit sales and operating leverage on labor and overhead costs, offset by the impact of the falling lumber market on gross profits from March through June of 2013.

Site-Built

Net sales to the Site-Built reportable segment increased 38% in the second quarter of 2013 compared to 2012 and 31% in the first six months of 2013 primarily due to increased lumber prices and an increase in housing starts.

Operating profit for the Site-Built reportable segment increased in the second quarter of 2013 compared to 2012, primarily due to an increase in unit sales and operating leverage on labor and overhead costs.  This was offset somewhat by a decline in profits of our turn-key framing operations primarily due to an unexpected rise in labor costs on certain projects.

 Operating profit for the Site-Built reportable segment decreased in the first six months of 2013 compared to 2012 primarily due to the impact of rising commodity and labor costs on construction contracts sold with a fixed price.

All Other

Net sales to all other segments decreased 1% in the second quarter of 2013 compared to 2012 primarily due to a decrease in our Universal Consumer Products operations, partially offset by improvements in our Pinelli Universal partnership and UFP Distribution operations.

Net sales increased 7% in the first six months of 2013, primarily due to:
 
· An increase in sales by our UFP Distribution operations, primarily due to an increase in industry production of HUD code homes and market share gains from adding new product lines.
· An increase in sales to the industrial market by our Pinelli Universal partnership, which manufactures moulding and millwork products out of its plant in Durango, Durango Mexico.
· The increases above were offset somewhat by a decrease in sales by our Universal Consumer Products operations.
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UNIVERSAL FOREST PRODUCTS, INC.

Operating profit for all other segments increased in the second quarter of 2013 compared to 2012, primarily due to improved profitability of our Universal Consumer Products operations resulting from operational improvements and our Pinelli Universal partnership due to higher lumber prices.  These factors were offset by additional development costs associated with our new Eovations product line.

Operating profit for all other segments increased in the first six months of 2013 compared to 2012 due to the same factors noted above.

OFF-BALANCE SHEET TRANSACTIONS

We have no significant off-balance sheet transactions other than operating leases.

LIQUIDITY AND CAPITAL RESOURCES

The table below presents, for the periods indicated, a summary of our cash flow statement (in thousands):

 
  
Six Months Ended
  
 
  
June 29, 2013
    
June 30, 2012
  
Cash used in operating activities
  
$ 
(28,917
)
  
$ 
(19,639
)
Cash used in investing activities
    
(24,943
)
    
(4,013
)
Cash from financing activities
    
42,905
      
17,184
  
Effect of exchange rate changes on cash
    
(99
)
    
(73
)
Net change in cash and cash equivalents
    
(11,054
)
    
(6,541
)
Cash and cash equivalents, beginning of period
    
7,647
    
 
11,305
  
Cash (cash overdraft), end of period
  
$ 
( 3,407
)
  
$
4,764
  

In general, we financed our growth in the past through a combination of operating cash flows, our revolving credit facility, industrial development bonds (when circumstances permit), and issuance of long-term notes payable at times when interest rates are favorable.  We have not issued equity to finance growth except in the case of a large acquisition.  We manage our capital structure by attempting to maintain a targeted ratio of debt to equity and debt to earnings before interest, taxes, depreciation and amortization.  We believe this is one of many important factors to maintaining a strong credit profile, which in turn helps ensure timely access to capital when needed.  We are currently below our internal targets and plan to manage our capital structure conservatively in light of current economic conditions.

Seasonality has a significant impact on our working capital from March to August which historically results in negative or modest cash flows from operations in our first and second quarters. Conversely, we experience a substantial decrease in working capital from September to February which typically results in significant cash flow from operations in our third and fourth quarters.  For comparative purposes, we have included the June 30, 2012 balances in the accompanying unaudited consolidated condensed balance sheets.
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UNIVERSAL FOREST PRODUCTS, INC.
 
Due to the seasonality of our business and the effects of the Lumber Market, we believe our cash cycle (days of sales outstanding plus days supply of inventory less days payables outstanding) is a good indicator of our working capital management.  Our cash cycle increased to 49 days in the first six months of 2013 from 47 days in the first six months of 2012, due to a 1 day increase in our days supply of inventory, combined with a 1 day decrease in our days payable outstanding. In 2013, retail demand and weather were poor, resulting in weaker than expected unit sales and lower inventory turnover, particularly in our first quarter.  Conversely, in 2012, consumer demand and weather were unexpectedly good resulting in sales increases over anticipated levels and higher inventory turnover.

Cash used in operating activities was $28.9 million in the first six months of 2013, which was comprised of net earnings of $22.1 million and $16.6 million of non-cash expenses, offset by a $67.6 million increase in working capital since the end of 2012.  Working capital at the end of June 2013 is higher than the end of June 2012 primarily due to the impact of higher lumber prices and sales levels.  In June 2012, we sold real estate including a plant we previously closed in Fontana, CA and recorded a pre-tax gain of approximately $7.2 million with proceeds on the sale totaling approximately $12.5 million.

Capital expenditures were $21.5 million in the first six months of 2013.  We currently plan to spend up to $40 million in 2013, which includes outstanding purchase commitments on existing capital projects totaling approximately $14.4 million on June 29, 2013, primarily for expansion to support new product offerings and sales growth into new geographic markets.  We intend to fund capital expenditures and purchase commitments through our operating cash flows for the balance of the year.

Cash flows used in investing activities also included $9.3 million spent to acquire assets of Custom Caseworks, Inc., Millry Mill Company, Inc., and Premier Laminating Services, Inc.  See Notes to Unaudited Consolidated Condensed Financial Statements, Note G “Business Combinations”.  Cash held in escrow and classified as restricted cash at December 29, 2012 of $6.3 million was used to fund the Custom Caseworks, Inc. asset acquisition.

Operating and investing activities were supported through borrowings on our revolving credit facility.  On June 29, 2013, we had $57.8 million outstanding on our $265 million revolving credit facility compared to $23.3 million outstanding at June 30, 2012.  The increase was due to the impact of the higher Lumber Market on working capital.  The revolving credit facility also supports letters of credit totaling approximately $28.7 million on June 29, 2013.  Financial covenants on the unsecured revolving credit facility and unsecured notes include minimum interest tests and a maximum leverage ratio. The agreements also restrict the amount of additional indebtedness we may incur and the amount of assets which may be sold.  We were in compliance with all our covenant requirements on June 29, 2013.
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UNIVERSAL FOREST PRODUCTS, INC.
 
ENVIRONMENTAL CONSIDERATIONS AND REGULATIONS

See Notes to Unaudited Consolidated Condensed Financial Statements, Note F, "Commitments, Contingencies, and Guarantees."
 
CRITICAL ACCOUNTING POLICIES

In preparing our consolidated financial statements, we follow accounting principles generally accepted in the United States.  These principles require us to make certain estimates and apply judgments that affect our financial position and results of operations. We continually review our accounting policies and financial information disclosures.

In the second quarter of fiscal 2013, we changed our annual testing date for evaluating goodwill and indefinite-lived intangible asset impairment from the last day of the fiscal year to the first day of the Company’s fourth fiscal quarter for all reporting units and indefinite-lived intangible assets. This voluntary change in accounting method is preferable under the circumstances because it will allow us more time to complete the annual goodwill and indefinite-lived intangible asset impairment testing in advance of our year-end reporting.  This change does not delay, accelerate or avoid an impairment charge. The change is not applied retrospectively as it is impracticable to do so because retrospective application would require application of significant estimates and assumptions with the use of hindsight. Accordingly, the change will be applied prospectively.
 
Item 3.  Quantitative and Qualitative Disclosures about Market Risk.

We are exposed to market risks related to fluctuations in interest rates on our variable rate debt, which consists of a revolving credit facility and industrial development revenue bonds.  We do not currently use interest rate swaps, futures contracts or options on futures, or other types of derivative financial instruments to mitigate this risk.

For fixed rate debt, changes in interest rates generally affect the fair market value, but not earnings or cash flows.  Conversely, for variable rate debt, changes in interest rates generally do not influence fair market value, but do affect future earnings and cash flows.  We do not have an obligation to prepay fixed rate debt prior to maturity, and as a result, interest rate risk and changes in fair market value should not have a significant impact on such debt until we would be required to refinance it.

We are subject to fluctuations in the price of lumber.  We experience significant fluctuations in the cost of commodity lumber products from primary producers (the "Lumber Market").  A variety of factors over which we have no control, including government regulations, transportation, environmental regulations, weather conditions, economic conditions, and natural disasters, impact the cost of lumber products and our selling prices.  While we attempt to minimize our risk from severe price fluctuations, substantial, prolonged trends in lumber prices can affect our sales volume, our gross margins, and our profitability.  We anticipate that these fluctuations will continue in the future.  (See “Impact of the Lumber Market on Our Operating Results.”)
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UNIVERSAL FOREST PRODUCTS, INC.

Item 4.  Controls and Procedures.

(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 29, 2013 (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 29, 2013, 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.
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UNIVERSAL FOREST PRODUCTS, INC.
 
PART II.  OTHER INFORMATION

Item 1A.  Risk Factors.

CCA Treated Lumber Products.  In connection with the chemical treatment of lumber products, certain of our affiliates market a modest amount of CCA (Chromated Copper Arsenate) treated products for permitted, non-residential applications.  From time to time, various special interests and environmental groups have petitioned certain states requesting restrictions on the use or disposal of CCA treated products.   The wood preservation industry trade groups have been and are working with individual states and the regulatory agencies to provide an accurate, factual background that demonstrates that the present method of uses and disposal is scientifically supported.  While the level of activity in this area has diminished over time, our inability to market CCA treated products could impact our operations adversely.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

(a) None.

(b) None.

(c) Issuer purchases of equity securities.
 
Fiscal Month
  
(a)
    
(b)
    
(c)
    
(d)
  
 
                    
 
March 31 – May 4, 2013(1)
                            
2,988,229
  
 May 5 – June 1, 2013
                            
2,988,229
  
June 2 – June 29, 2013
                            
2,988,229
  
 
(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.  On October 14, 2011, our Board authorized an additional 2 million shares to be repurchased under our share repurchase program.  The total number of shares that may be repurchased under the program is approximately 3 million shares.

Item 5.  Other Information.

None.
32
UNIVERSAL FOREST PRODUCTS, INC.
 
PART II.  OTHER INFORMATION

Item 6.  Exhibits.

The following exhibits (listed by number corresponding to the Exhibit Table as Item 601 in Regulation S-K) are filed with this report:

18.1         Preferability Letter of Ernst & Young LLP on change in date of annual goodwill and indefinite-lived intangible assets impairment testing performed by the Company.

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).

101 Interactive Data File.

(INS) XBRL Instance Document.

(SCH) XBRL Schema Document.

(CAL) XBRL Taxonomy Extension Calculation Linkbase Document.

(LAB) XBRL Taxonomy Extension Label Linkbase Document.

(PRE) XBRL Taxonomy Extension Presentation Linkbase Document.

(DEF) XBRL Taxonomy Extension Definition Linkbase Document.

33
UNIVERSAL FOREST PRODUCTS, INC.

SIGNATURES

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

 
UNIVERSAL FOREST PRODUCTS, INC.
 
 
 
Date: August 1, 2013
By:
/s/ Matthew J. Missad
 
Matthew J. Missad,
 
Chief Executive Officer and Principal Executive Officer
 
 
 
Date: August 1, 2013
By:
/s/ Michael R. Cole
 
Michael R. Cole,
 
Chief Financial Officer,
 
Principal Financial Officer and Principal Accounting Officer

34
EXHIBIT INDEX

Exhibit No. Description

18.1         Preferability Letter of Ernst & Young LLP on change in date of annual goodwill and indefinite-lived intangible assets impairment testing performed by the Company.

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).

101 Interactive Data File.

(INS) XBRL Instance Document.

(SCH) XBRL Schema Document.

(CAL) XBRL Taxonomy Extension Calculation Linkbase Document.

(LAB) XBRL Taxonomy Extension Label Linkbase Document.

(PRE) XBRL Taxonomy Extension Presentation Linkbase Document.

(DEF) XBRL Taxonomy Extension Definition Linkbase Document.
 
35