<PAGE> 1
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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 September 25, 1999
------------------
OR
- --- 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 (I.R.S. Employer
incorporation or organization) 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 check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate the number of shares of each of the issuer's classes of common stock,
as of the latest practicable date:
Class Outstanding as of November 1, 1999
-------------------------- ----------------------------------
Common stock, no par value 20,286,776
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Page 1 of 25
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C>
PART I. FINANCIAL INFORMATION.
Item 1. Financial Statements.
Consolidated Condensed Balance Sheets at September 25, 1999
and December 26, 1998. 3
Consolidated Condensed Statements of Earnings for the Three and
Nine Months Ended September 25, 1999 and September 26, 1998. 4
Consolidated Condensed Statements of Cash Flows for the Nine
Months Ended September 25, 1999 and September 26, 1998. 5
Consolidated Condensed Statements of Shareholders' Equity for the
Periods Ended September 25, 1999 and September 26, 1998. 6-7
Notes to Consolidated Condensed Financial Statements. 8-11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 12-22
PART II. OTHER INFORMATION.
Item 1. Legal Proceedings - NONE.
Item 2. Changes in Securities. 23
Item 3. Defaults Upon Senior Securities - NONE.
Item 4. Submission of Matters to a Vote of Security Holders - NONE.
Item 5. Other Information - NONE.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit Index. 25
(b) No reports were filed on Form 8-K during the three
months ended September 25, 1999.
</TABLE>
2
<PAGE> 3
UNIVERSAL FOREST PRODUCTS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
(in thousands, except share data)
September 25, December 26,
1999 1998
------------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.................................................. $ 9,727 $ 920
Accounts receivable (net of allowance for doubtful accounts of
$4,136 and $3,540)....................................................... 95,338 62,846
Inventories:
Raw materials......................................................... 39,518 36,856
Finished goods........................................................ 76,710 71,543
------------ -----------
116,228 108,399
Other current assets....................................................... 6,647 9,712
------------ -----------
TOTAL CURRENT ASSETS.............................................. 227,940 181,877
OTHER ASSETS .................................................................. 10,715 10,978
GOODWILL AND NON-COMPETE AGREEMENTS, NET........................................ 93,569 95,229
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost..................................... 217,403 193,375
Accumulated depreciation and amortization.................................. (71,189) (61,389)
------------ -----------
PROPERTY, PLANT AND EQUIPMENT, NET................................ 146,214 131,986
------------ -----------
TOTAL ASSETS .................................................................. $ 478,438 $ 420,070
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt............................................................ $ 1,392 $ 1,997
Accounts payable........................................................... 55,389 38,751
Accrued liabilities:
Compensation and benefits............................................. 26,656 28,025
Other ................................................................ 7,556 3,485
Current portion of long-term debt and capital lease obligations............ 7,928 9,760
------------ -----------
TOTAL CURRENT LIABILITIES......................................... 98,921 82,018
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS, less current portion.............................................. 147,580 132,120
DEFERRED INCOME TAXES........................................................... 8,100 8,100
OTHER LIABILITIES............................................................... 6,975 6,249
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, 20,677,289 and 20,710,263........................ 20,677 20,710
Additional paid-in capital................................................. 78,253 77,526
Retained earnings.......................................................... 118,592 95,221
Accumulated other comprehensive earnings................................... (24) (1,072)
------------ -----------
217,498 192,385
Officers' stock notes receivable........................................... (636) (802)
------------ -----------
TOTAL SHAREHOLDERS' EQUITY........................................ 216,862 191,583
------------ -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY...................................... $ 478,438 $ 420,070
============ ===========
</TABLE>
See notes to consolidated condensed financial statements.
3
<PAGE> 4
UNIVERSAL FOREST PRODUCTS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
---------------------------- ---------------------------
September 25, September 26, September 25, September 26,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
NET SALES........................................ $ 388,402 $ 341,071 $ 1,135,333 $ 967,945
COST OF GOODS SOLD............................... 341,260 298,192 991,236 854,258
---------- ---------- ----------- ----------
GROSS PROFIT..................................... 47,142 42,879 144,097 113,687
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES........................ 29,056 26,406 90,489 68,847
---------- ---------- ----------- ----------
EARNINGS FROM OPERATIONS......................... 18,086 16,473 53,608 44,840
OTHER EXPENSE (INCOME):
Interest expense............................ 2,993 2,569 9,230 7,301
Interest income............................. (171) (125) (451) (204)
Other, net.................................. (456) 166 (834) 25
---------- ---------- ----------- ----------
TOTAL OTHER EXPENSE.................... 2,366 2,610 7,945 7,122
---------- ---------- ----------- ----------
EARNINGS BEFORE INCOME TAXES..................... 15,720 13,863 45,663 37,718
INCOME TAXES ................................... 6,163 5,365 17,997 14,520
---------- ---------- ----------- ----------
NET EARNINGS ................................... $ 9,557 $ 8,498 $ 27,666 $ 23,198
========== ========== =========== ==========
EARNINGS PER SHARE - BASIC....................... $ 0.46 $ 0.41 $ 1.33 $ 1.18
EARNINGS PER SHARE - DILUTED..................... $ 0.45 $ 0.40 $ 1.30 $ 1.14
WEIGHTED AVERAGE SHARES
OUTSTANDING ................................... 20,746 20,705 20,734 19,652
WEIGHTED AVERAGE SHARES
OUTSTANDING WITH COMMON
STOCK EQUIVALENTS.............................. 21,265 21,371 21,324 20,344
</TABLE>
See notes to consolidated condensed financial statements.
4
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UNIVERSAL FOREST PRODUCTS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
(in thousands)
Nine Months Ended
---------------------------
September 25, September 26,
1999 1998
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings .................................................................... $ 27,666 $ 23,198
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation and amortization................................................ 11,301 8,875
Amortization of non-compete agreements and goodwill.......................... 2,423 1,648
(Gain) loss on disposal of property, plant and equipment..................... (513) 114
Stock Gift and Stock Grant Program expense................................... 37 25
Changes in:
Accounts receivable........................................................ (32,491) (28,193)
Inventories................................................................ (7,829) 22,930
Other .................................................................... 150 (888)
Accounts payable........................................................... 16,638 6,934
Accrued liabilities........................................................ 5,327 9,103
------------ ------------
NET CASH FROM OPERATING ACTIVITIES........................................... 22,709 43,746
CASH FLOWS FROM INVESTING ACTIVITIES:
Collection of notes receivable.................................................... 2,104 105
Purchase of notes receivable...................................................... (139)
Purchases of property, plant and equipment........................................ (27,508) (18,002)
Proceeds from sale of property, plant and equipment............................... 2,491 431
Business acquisitions, net of cash received....................................... (92,931)
Purchases of other assets......................................................... (50) (159)
------------ ------------
NET CASH FROM INVESTING ACTIVITIES........................................... (23,102) (110,556)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) of notes payable and revolving credit facilities...... (4,984) 91,100
Proceeds from issuance of common stock............................................ 864 446
Proceeds from issuance of long-term debt.......................................... 27,742
Dividends paid.................................................................... (728) (725)
Repayment of long-term debt....................................................... (9,919) (24,883)
Repurchase of common stock........................................................ (3,775)
------------ ------------
NET CASH FROM FINANCING ACTIVITIES........................................... 9,200 65,938
------------ ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS........................................... 8,807 (872)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.................................... 920 3,157
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD.......................................... $ 9,727 $ 2,285
============ ============
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest..................................................................... $ 6,929 $ 6,385
Income taxes................................................................. 14,824 10,560
NON-CASH INVESTING ACTIVITIES:
Note payable issued in exchange for non-compete agreements........................ $ 2,373
Note payable issued in business combination....................................... 820
Property, plant and equipment acquired through capital leases..................... 179
Fair market value of common stock issued in business combinations................. 50,511
Final stock settlement of CBC merger.............................................. 235
</TABLE>
See notes to consolidated condensed financial statements.
5
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UNIVERSAL FOREST PRODUCTS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
(in thousands, except share data) Accumulated Officers'
Additional Other Stock
Common Paid-In Retained Comprehensive Notes
Stock Capital Earnings Earnings Receivable Total
--------- ---------- --------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AS OF 12/26/98................ $ 20,710 $ 77,526 $ 95,221 ($ 1,072) ($ 802) $ 191,583
Comprehensive earnings:
Net earnings...................... 5,361
Foreign currency translation
adjustment...................... 303
Total comprehensive earnings........ 5,664
Issuance of 5,237 shares............ 6 92 98
Repurchase of 50,000 shares......... (50) (887) (937)
Payments received on officers'
stock notes receivable............ 153 153
--------- ---------- --------- ------------- ---------- ----------
BALANCE AS OF 3/27/99................... $ 20,666 $ 77,618 $ 99,695 ($ 769) ($ 649) $ 196,561
Comprehensive earnings:
Net earnings...................... 12,748
Foreign currency translation
adjustment...................... 512
Total comprehensive earnings........ 13,260
Dividends paid...................... (728) (728)
Issuance of 164,743 shares.......... 164 560 724
Repurchase of 57,201 shares......... (57) (1,071) (1,128)
Payments received on officers'
stock notes receivable............ 12 12
--------- --------- --------- ------------- ---------- ---------
BALANCE AS OF 6/26/99................... $ 20,773 $ 78,178 $ 110,644 ($ 257) ($ 637) $ 208,701
Comprehensive earnings:
Net earnings...................... 9,557
Foreign currency translation
adjustment...................... 233
Total comprehensive earnings:....... 9,790
Issuance of 4,247 shares............ 4 75 79
Repurchase of 100,000 shares........ (100) (1,609) (1,709)
Payments received on officers'
stock notes receivable............ 1 1
--------- --------- --------- ------------- ---------- -----------
BALANCE AS OF 9/25/99................... $ 20,677 $ 78,253 $ 118,592 ($ 24) ($ 636) $ 216,862
========= ========= ========= ============= ========== ===========
</TABLE>
6
<PAGE> 7
UNIVERSAL FOREST PRODUCTS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
(in thousands, except share data) Accumulated Officers'
Additional Other Stock
Common Paid-In Retained Comprehensive Notes
Stock Capital Earnings Earnings Receivable Total
---------- ---------- ---------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AS OF 12/27/97................ $ 17,572 $ 29,855 $ 70,253 ($ 882) ($ 900) $ 115,898
Comprehensive earnings:
Net earnings..................... 3,577
Foreign currency translation
adjustment...................... 266
Total comprehensive earnings:...... 3,843
Issuance of 4,585 shares........... 5 51 56
Payments received on officers'
stock notes receivable........... 66 66
---------- ------------ --------- ------------- ------------ ----------
BALANCE AS OF 3/28/98.................. $ 17,577 $ 29,906 $ 73,830 ($ 616) ($ 834) $ 119,863
Comprehensive earnings:
Net earnings..................... 11,123
Foreign currency translation
adjustment..................... (131)
Total comprehensive earnings:...... 10,992
Dividend paid...................... (725) (725)
Final settlement of CBC merger..... (17) (218) (235)
Issuance of 3,123,090 shares....... 3,140 47,700 50,840
Payments received on officers'
stock notes receivable........... 16 16
---------- ------------ ---------- ---------- ----------- ----------
BALANCE AS OF 6/27/98.................. $ 20,700 $ 77,388 $ 84,228 ($ 747) ($ 818) $ 180,751
Comprehensive earnings:
Net earnings..................... 8,498
Foreign currency translation
adjustment..................... (176)
Total comprehensive earnings:...... 8,322
Issuance of 5,685 shares........... 6 79 85
Payments received on officers'
stock notes receivable........... 5 5
---------- ------------ ---------- ---------- ----------- ----------
BALANCE AS OF 9/26/98.................. $ 20,706 $ 77,467 $ 92,726 ($ 923) ($ 813) $ 189,163
========== ============ ========== ========== =========== ==========
</TABLE>
See notes to consolidated condensed financial statements.
7
<PAGE> 8
UNIVERSAL FOREST PRODUCTS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
A. BASIS OF PRESENTATION
The accompanying unaudited interim consolidated condensed financial
statements (the "Financial Statements") of Universal Forest Products,
Inc. and its wholly-owned and majority-owned subsidiaries and
partnerships (together, the "Company"), 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 generally accepted
accounting principles. All significant intercompany accounts and
transactions have been eliminated in consolidation. The equity method has
been used for the Company's 50% or less owned affiliates over which the
Company has the ability to exercise a significant influence.
In the opinion of management, the Financial Statements contain all
material adjustments necessary to present fairly the consolidated
financial position, results of operations and cash flows, and changes in
shareholders' equity of the Company for the interim periods presented.
All such adjustments are of a normal recurring nature. These Financial
Statements should be read in conjunction with the financial statements,
and footnotes thereto, included in the Company's Annual Report to
Shareholders on Form 10-K for the fiscal year ended December 26, 1998.
Certain reclassifications have been made to the consolidated condensed
financial statements for 1998 to conform to the classifications used in
1999.
B. EARNINGS PER COMMON SHARE
A reconciliation of the changes in the numerator and the denominator from
the calculation of basic EPS to the calculation of diluted EPS follows
(in thousands, except per share amounts).
<TABLE>
<CAPTION>
Three Months Ended 9/25/99 Three Months Ended 9/26/98
-------------------------- --------------------------
Net Per Net Per
Earnings Shares Share Earnings Shares Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
--------- ----------- ------ --------- ----------- ------
<S> <C> <C> <C> <C> <C> <C>
EPS - BASIC
Net earnings available to
common shareholders............ $ 9,557 20,746 $0.46 $ 8,498 20,705 $0.41
===== =====
EFFECT OF DILUTIVE SECURITIES
Options........................ 519 666
--------- --------
EPS - DILUTED
Net earnings available to
common shareholders and
options exercised.............. $ 9,557 21,265 $0.45 $ 8,498 21,371 $0.40
========= ========= ===== ========= ======== =====
</TABLE>
8
<PAGE> 9
UNIVERSAL FOREST PRODUCTS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
Nine Months Ended 9/25/99 Nine Months Ended 9/26/98
--------------------------------- ----------------------------------
Net Per Net Per
Earnings Shares Share Earnings Shares Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
--------- ----------- ------ --------- ----------- ------
<S> <C> <C> <C> <C> <C> <C>
EPS - BASIC
Net earnings available to
common shareholders............ $ 27,666 20,734 $1.33 $ 23,198 19,652 $1.18
===== =====
EFFECT OF DILUTIVE SECURITIES
Options........................ 590 692
--------- --------
EPS - DILUTED
Net earnings available to
common shareholders and
options exercised.............. $ 27,666 21,324 $1.30 $ 23,198 20,344 $1.14
========= ========= ===== ========= ======== =====
</TABLE>
Options to purchase 436,107 shares of common stock at exercise prices
ranging from $19.75 to $36.01 were outstanding at September 25, 1999, but
were not included in the computation of diluted EPS because the options'
exercise prices were greater than the average market price of the common
stock and, therefore, would be antidilutive.
C. STOCK OPTIONS AND STOCK-BASED COMPENSATION
In May 1999, the Company granted incentive stock options for 25,000
shares of common stock under its Long Term Stock Incentive Plan. Options
were granted to an officer of the Company at exercise prices ranging from
$19.9100 to $35.7500, which equaled or exceeded the market value of the
stock on the date of each grant. The options are exercisable on various
dates from 2002 through 2014, and the option recipient must be employed
by the Company at the time of exercise.
In January 1999, the Company granted incentive stock options for 231,161
shares of common stock under its Long Term Stock Incentive Plan. Options
were granted to certain employees and officers of the Company at exercise
prices ranging from $19.7500 to $36.0100, which equaled or exceeded the
market value of the stock on the date of each grant. The options are
exercisable on various dates from 2002 through 2014, and the option
recipients must be employed by the Company at the time of exercise.
Options for 133,093 shares related to all plans were canceled during the
period.
In January 1998, the Company granted incentive stock options for 346,506
shares of common stock under its Long Term Stock Incentive Plan. Options
were granted to certain employees and officers of the Company at exercise
prices ranging from $13.1875 to $24.4600, which equaled or exceeded the
market value of the stock on the date of each grant. The options are
exercisable on various dates from 2001 through 2013, and the option
recipients must be employed by the Company at the time of exercise.
9
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UNIVERSAL FOREST PRODUCTS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-CONTINUED
On April 22, 1998, the Company granted incentive stock options for
125,000 shares of common stock under its Long Term Stock Incentive Plan.
Options were granted to certain employees and officers of the Company at
exercise prices ranging from $17.4375 to $31.3000, which equaled or
exceeded the market value of the stock on the date of each grant. The
options are exercisable on various dates from 2001 through 2013, and the
option recipients must be employed by the Company at the time of
exercise.
The Company continues to apply the provisions of APB Opinion No. 25 which
recognizes compensation expense under the intrinsic value method. Had
compensation cost for the stock options granted in 1999 and 1998 been
determined under the fair value based method defined in SFAS 123, the
Company's net earnings and earnings per share would have been reduced to
the following pro forma amounts (in thousands, except per share amounts).
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------ ------------------------------
September 25, September 26, September 25, September 26,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Earnings:
As Reported......... $9,557 $8,498 $27,666 $23,198
Pro Forma........... 9,418 8,417 27,252 22,955
EPS - Basic:
As Reported......... $0.46 $0.41 $1.33 $1.18
Pro Forma........... $0.45 $0.41 $1.31 $1.17
EPS - Diluted:
As Reported......... $0.45 $0.40 $1.30 $1.14
Pro Forma........... $0.44 $0.39 $1.28 $1.13
</TABLE>
Because the fair value based method of accounting has not been applied to
options granted prior to fiscal year 1996, the resulting pro forma
compensation cost may not be representative of that to be expected in
future years.
The fair value of each option granted in 1999 and 1998 is estimated on
the date of the grant using the Black-Scholes option pricing model with
the following weighted average assumptions.
10
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UNIVERSAL FOREST PRODUCTS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-CONTINUED
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Risk Free Interest Rate............. 6.20% 6.20%
Expected Life....................... 9.0 years 8.0 years
Expected Volatility................. 27.75% 28.35%
Expected Dividend Yield............. 0.40% 0.41%
</TABLE>
D. BUSINESS COMBINATIONS
In 1998, the Company completed several business combinations which have
been accounted for using the purchase method of accounting. Accordingly,
in each instance, the purchase price was allocated to the assets acquired
and liabilities assumed based on their fair market values at the date of
acquisition. Any excess of the purchase price over the fair value of the
acquired assets and assumed liabilities was recorded as goodwill in each
transaction. The Company has amortized goodwill on a straight-line basis
over 40 years. The results of operations of each acquisition is included
in the Company's consolidated financial statements since the date it was
acquired.
The following unaudited pro forma consolidated results of operations for
the three and nine month periods ended September 26, 1998 assumes the
acquisitions of Shoffner Industries, Inc. and Advanced Component Systems,
Inc. and its affiliates, occurred on December 27, 1997 (in thousands,
except per share data). The pro forma effects of other acquisitions are
not included because they are not material individually, or in the
aggregate.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 26, 1998 September 26, 1998
-------------------- ------------------
<S> <C> <C>
Net sales........................ $341,071 $998,165
Net earnings..................... 8,498 23,765
Earnings per share:
Basic..................... $0.41 $1.16
Diluted................... $0.40 $1.13
Weighted average shares outstanding:
Basic..................... 20,705 20,402
Diluted................... 21,371 21,094
</TABLE>
The pro forma results above include certain adjustments to give effect to
amortization of goodwill, interest expense, compensation of management,
certain other adjustments, and related income tax effects. The pro forma
results are not necessarily indicative of the operating results that
would have occurred had the acquisitions been completed as of the
beginning of the period presented, nor are they necessarily indicative of
future operating results.
11
<PAGE> 12
UNIVERSAL FOREST PRODUCTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RISK FACTORS
Included in this report are certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such forward-looking
statements are based on the beliefs of the Company's management as well as on
assumptions made by and information currently available to the Company at the
time such statements were made. Actual results could differ materially from
those included in such forward-looking statements as a result of, among other
things, the factors set forth below, the matters included in this report
generally and certain economic and business factors, some of which may be beyond
the control of the Company. Investors are cautioned that all forward-looking
statements involve risks and uncertainty.
Lumber Market Volatility:
The Company experiences significant fluctuations in the cost of lumber
products from primary producers. A variety of factors over which the Company has
no control, including government regulations, environmental regulations, weather
conditions, economic conditions and natural disasters, impact the cost of lumber
products and the Company's selling prices. While the Company attempts to
minimize its risk from severe price fluctuations, substantial, prolonged trends
in lumber prices can affect the Company's financial results.
Competition:
The Company is subject to competitive selling and pricing pressures in
its major markets. While the Company is generally aware of its existing
competitors' capabilities, it is subject to entry in its markets by new
competitors, which could negatively impact financial results.
Market Growth:
The Company's sales growth is dependent, in part, upon growth of the
markets it serves. If the Company's markets do not achieve anticipated growth,
or if the Company fails to maintain its market share, financial results could be
impaired. The manufactured housing industry served by the Company presently has
an oversupply of product for the market and has forecasted a reduction of
production for the next few quarters. The Company has positioned itself to
handle a modest reduction, but should the manufactured housing industry enter
into a prolonged downturn, it could adversely affect the Company's operating
results.
12
<PAGE> 13
UNIVERSAL FOREST PRODUCTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
Economic Trends:
As a result of its recent business combinations in the site-built
construction market, management believes the Company's ability to achieve growth
in sales and margins has become more dependent on general economic conditions,
such as interest rates, housing starts and unemployment levels. To the extent
these conditions change significantly in the future, the Company's financial
results could be impacted.
Business Combinations:
The Company completed several business combinations in 1998 and plans to
continue its acquisition activity in the immediate future in order to achieve
certain strategic objectives. There are many inherent risks associated with
business combinations, including assimilation and successfully managing growth.
While the Company conducts extensive due diligence and has taken steps to ensure
successful assimilation, factors beyond the Company's control could influence
the results of these acquisitions.
Consolidation:
The Company is witnessing consolidation and a reduction in the number of
customers in various markets it serves. These consolidations will result in a
larger portion of Company sales being made to some customers. The long term
effects of this consolidation are unknown, but could impact the Company's
margins on some product lines.
Government Regulations:
The Company is subject to a substantial amount of existing government
regulations which create a burden on the Company. Should the Company become
subject to additional laws and regulations enacted in the future, or changes in
interpretation of existing laws, it could have an adverse affect on the
Company's financial results.
Weather Conditions:
The majority of the Company's products are used in outdoor construction
activities, therefore its sales volume and profits can be negatively affected by
adverse weather conditions in certain geographic markets. In addition, adverse
weather conditions in certain regions can negatively impact the Company's
operations and consequently its productivity and costs per unit.
13
<PAGE> 14
UNIVERSAL FOREST PRODUCTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
Seasonality:
The Company's business is seasonal in nature and results of operations
vary from quarter to quarter. The demand for many of the Company's treated
lumber and outdoor specialty products, such as fencing, decking and lattice,
experience the greatest seasonal effects. Sales of treated lumber, primarily
consisting of Southern Yellow Pine ("SYP"), also experience the greatest Lumber
Market risk. Sales of treated lumber are generally at their highest levels
between the months of April through August. This sales peak, combined with
capacity constraints in the wood treatment process, requires the Company to
build its inventory of treated lumber throughout the winter and spring. Since
sales prices of treated lumber products are generally indexed to the Lumber
Market at the time they are shipped, the Company's profits can be negatively
affected by prolonged declines in the Lumber Market during its primary selling
season. To mitigate this risk, supply programs are maintained with vendors that
are intended to decrease the Company's exposure. These programs include those
materials which are most susceptible to adverse changes in the Lumber Market,
and also allow the Company to carry a lower investment in inventories.
Please recognize the above risk factors when reviewing the Company's business
prospects.
FLUCTUATIONS IN LUMBER PRICES
The following table presents the Random Lengths framing lumber composite
price for the nine months ended September 25, 1999 and September 26, 1998:
<TABLE>
<CAPTION>
Random Lengths
Average $/MBF
--------------
1999 1998
---- ----
<S> <C> <C>
January............................ $370 $360
February........................... 386 375
March.............................. 394 369
April.............................. 393 369
May................................ 421 331
June............................... 454 332
July............................... 480 345
August............................. 404 355
September.......................... 392 328
Third quarter average.............. $425 $343
Year-to-date average............... $410 $352
</TABLE>
14
<PAGE> 15
UNIVERSAL FOREST PRODUCTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS-CONTINUED
<TABLE>
<S> <C>
Third quarter percentage
increase over 1998............... 23.9%
Year-to-date percentage
increase over 1998............... 16.5%
</TABLE>
The Random Lengths composite price is a weighted average of nine key
framing lumber prices chosen from major producing areas and species. The
composite price is designed as a broad measure of price movement in the
commodity lumber market ("Lumber Market"). In the third quarter of 1999, the
Lumber Market was 23.9% higher than it was during the same period of 1998, and
16.5% higher comparing year-to-date 1999 with 1998. However, the price declined
18.3% within the third quarter of 1999. SYP, a species which comprises up to 50%
of the Company's volume, increased 17.7% in the third quarter of 1999 compared
to the same period of 1998, and only 5.8% comparing year-to-date 1999 with 1998.
A SYP composite price, prepared and used by the Company in managing the
business, is as follows:
<TABLE>
<CAPTION>
Random Lengths SYP
Average $/MBF
------------------
1999 1998
---- ----
<S> <C> <C>
January............................ $471 $499
February........................... 497 525
March.............................. 513 550
April.............................. 498 541
May................................ 517 482
June............................... 563 450
July............................... 590 471
August............................. 492 439
September.......................... 473 409
Third quarter average.............. $518 $440
Year-to-date average............... $513 $485
Third quarter percentage
increase over 1998............. 17.7%
Year-to-date percentage
increase over 1998............. 5.8%
</TABLE>
The effects of the Lumber Market on the Company's results of operations
are discussed below under the captions "Net Sales" and "Cost of Goods Sold and
Gross Profit."
15
<PAGE> 16
UNIVERSAL FOREST PRODUCTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS-CONTINUED
RESULTS OF OPERATIONS
The following table presents, for the periods indicated, the components
of the Company's Consolidated Statement of Earnings as a percentage of net
sales.
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
-------------------------- -------------------------
September 25, September 26, September 25, September 26,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales............................... 100.0% 100.0% 100.0% 100.0%
Cost of goods sold...................... 87.9 87.4 87.3 88.3
----- ----- ----- -----
Gross profit............................ 12.1 12.6 12.7 11.7
Selling, general, and
administrative expenses............... 7.5 7.8 8.0 7.1
----- ----- ----- -----
Earnings from operations................ 4.6 4.8 4.7 4.6
Other expense, net...................... 0.5 0.7 0.7 0.7
----- ----- ----- -----
Earnings before income taxes............ 4.1 4.1 4.0 3.9
Income taxes............................ 1.6 1.6 1.6 1.5
----- ----- ----- -----
Net earnings............................ 2.5% 2.5% 2.4% 2.4%
===== ===== ===== =====
</TABLE>
NET SALES
The Company manufactures, treats and distributes lumber and other
building-related products to the do-it-yourself (DIY), manufactured housing,
wholesale lumber, industrial and conventional site-built construction markets.
The Company's strategic objectives relative to sales include:
- - Continuing to diversify the Company's end market sales mix by increasing its
sales of specialty wood packaging to industrial users and "engineered wood
products" to the site-built construction market. The Company defines
engineered wood products as trusses, wall panels and engineered floor
systems.
- - Maximizing its sales of "value-added" products. Value-added product sales
consist of fencing, decking, lattice and other outdoor specialty products
sold to the DIY market; roof trusses sold to producers of manufactured homes;
specialty wood packaging; and engineered wood products. A long-term goal of
the Company is to achieve a ratio of value-added sales to total sales of at
least 50%.
16
<PAGE> 17
UNIVERSAL FOREST PRODUCTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS-CONTINUED
- - Increasing DIY market share, and maintaining manufactured housing market
share.
In order to measure its progress toward attaining these objectives,
management analyzes the following financial data relative to sales:
- - Sales by market classification.
- - The percentage change in sales attributable to changes in overall selling
prices versus changes in the quantity of units shipped.
- - The ratio of value-added product sales to total sales.
The following table presents, for the periods indicated, the Company's
net sales (in thousands) and percentage of total net sales by market
classification.
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
------------------------------------------- ------------------------------------------
Sept. 25, Sept. 26, Sept. 25, Sept. 26,
Market Classification 1999 % 1998 % 1999 % 1998 %
- --------------------- ----------- -------- ----------- --------- ------------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DIY............................ $177,892 45.8% $154,948 45.4% $ 534,850 47.1% $463,466 47.9%
Manufactured Housing........... 103,990 26.8 103,220 30.3 309,222 27.2 303,137 31.3
Site-Built Construction........ 58,062 14.9 42,405 12.4 159,412 14.0 85,882 8.9
Wholesale Lumber............... 22,270 5.7 18,625 5.5 60,667 5.3 57,585 5.9
Industrial..................... 26,188 6.8 21,873 6.4 71,182 6.4 57,875 6.0
-------- ------ -------- ------ ---------- ------ -------- ------
Total.......................... $388,402 100.0% $341,071 100.0% $1,135,333 100.0% $967,945 100.0%
======== ====== ======== ====== ========== ====== ======== ======
</TABLE>
The following table presents, for the periods indicated, the Company's
percentage of value added and commodity-based sales to total sales.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
-------------------------------------- ----------------------------------------
September 25, September 26, September 25, September 26,
1999 1998 1999 1998
------------------ ------------------- -------------------- -------------------
<S> <C> <C> <C> <C>
Value-Added........................... 37.3% 39.4% 37.8% 38.4%
Commodity Based....................... 62.7% 60.6% 62.2% 61.6%
</TABLE>
DIY:
Net sales to the DIY market increased approximately $22.9 million, or
14.8%, in the third quarter of 1999 compared to 1998, and $71.4 million, or
15.4%, in the first nine months of 1999 compared to 1998. These increases are
primarily due to adding treated lumber business with the Company's largest
17
<PAGE> 18
UNIVERSAL FOREST PRODUCTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS-CONTINUED
customer, combined with higher overall selling prices due to the level of the
Lumber Market. The increase in treated lumber sales occurred as a result of
recently acquiring treating plants in targeted markets, and in spite of
significantly decreased business with three national retailers. The decrease in
sales to two of these customers was due to a decline in their financial
position, and the decrease in business to the third customer was due to
competitive factors. Management believes that its concentration of business with
its largest customer in this market will continue to increase.
Manufactured Housing:
Net sales to the manufactured housing market increased approximately
$0.8 million, or 0.7%, in the third quarter of 1999 compared to 1998. Sales were
relatively flat despite an $8.5 million decrease in sales to two of the
Company's largest accounts. These decreases were primarily due to excess
customer inventory at a retail level, therefore these customers have curtailed
production. This industry situation is expected to continue for at least six
months. The decreased sales to two accounts mentioned above was primarily offset
by increased sales to several accounts and the effect of the higher Lumber
Market on selling prices. Net sales to this market for the first nine months of
1999 increased approximately $6.1 million, or 2%, compared to 1998. This overall
increase was primarily due to an increase in overall selling prices as a result
of a higher Lumber Market, which offset a decrease in unit sales.
Spruce-pine-fir is the species predominantly used for products sold to this
market, the costs of which were up considerably during the first nine months of
1999.
Site-Built Construction:
Net sales to the site-built construction market increased approximately
$15.6 million and $73.5 million in the third quarter and first nine months of
1999, respectively, compared to the same periods of 1998. These increases were
due to several new businesses acquired in 1998, combined with growth in their
sales volume in 1999. Sales increases are generally due to a combination of
strong housing markets, increased market share in their respective regions, and
the effect of the higher Lumber Market on selling prices.
Industrial:
Net sales to the industrial market increased approximately $4.3 million,
or 19.6%, and $13.3 million, or 23.0%, in the third quarter and first nine
months of 1999, respectively, compared to the same periods of 1998. These
increases were primarily due to the acquisition of Industrial Lumber Company in
June of 1998, the addition of new customer accounts, and increased market share
by several plants.
18
<PAGE> 19
UNIVERSAL FOREST PRODUCTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS-CONTINUED
COST OF GOODS SOLD AND GROSS PROFIT
Gross profit as a percentage of net sales decreased to 12.1% in the third
quarter of 1999 compared to 12.6% in the third quarter of 1998. Factors
contributing to this decrease include:
- - A change in the mix of products sold to the DIY market whereby the ratio of
value-added product sales to total sales to this market decreased in the
third quarter of 1999 compared to 1998. This was caused by a 29.4% increase
in treated lumber sales while fencing and lattice sales declined 20.7%. The
Company lost certain value-added sales due to competitive factors with
respect to one customer, and credit concerns with respect to two others. The
increase in treated lumber sales is due to new treating facilities in
targeted markets, and replacing lost value-added business mentioned above
with treated lumber sales to the Company's largest customer.
- - A decrease in gross margins on sales of engineered wood products as a result
of the high level of the Lumber Market and new facilities which have not yet
reached targeted production levels. In situations when the Lumber market
increases to unusually high levels, the Company's selling prices generally
increase at a slower rate, sufficient to cover its increase in lumber costs.
- - A decrease in gross margins on certain commodity-based products due to a
severe decrease in the Lumber Market in the third quarter of 1999. The
Company actively seeks to minimize its profit exposure in a falling Lumber
Market through vendor supply programs, inventory management procedures, and
other management techniques.
Gross profit as a percentage of net sales increased to 12.7% in the first
nine months of 1999 compared to 11.7% in 1998, primarily due to increased sales
of engineered wood products combined with increased sales of specialty wood
packaging products and related components to the industrial market in the
Company's Western region. These favorable effects were partially offset by a
decline in sales of fencing, lattice, and other outdoor specialty products due
to factors discussed above.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased approximately $2.7
million, or 10%, comparing the third quarter of 1999 to the same period of 1998.
In the first nine months of 1999, these expenses increased approximately $21.6
million, or 31.4%, compared to 1998. These increases were primarily due to:
- - Expenses added through business acquisitions and other new operations. These
expenses totaled $1.0 million in the third quarter of 1999 and $10.5 million
in the first nine months of 1999.
19
<PAGE> 20
UNIVERSAL FOREST PRODUCTS, INC.
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS-CONTINUED
- - General increases in personnel and travel costs due to additional sales,
marketing, engineering and management personnel to support the recent and
anticipated growth of the business. In addition, sales of engineered wood
products require higher engineering and selling costs than the Company's
other manufactured products. Sales of these products increased 23.0% percent
in the third quarter of 1999 compared to 1998.
- - Increases in accrued incentive compensation expenses tied to profitability
and return on investment objectives.
OTHER EXPENSE, NET
Other expense, net is primarily comprised of interest expense and
interest income. Net interest costs (interest expense less interest income)
increased approximately $0.4 million and $1.7 million, comparing the third
quarter and first nine months of 1999 and 1998, respectively. These increases
are primarily due to a higher average debt balance in 1999 compared to 1998 due
to the growth of the business and a higher borrowing rate on acquisition-related
debt as a result of extending its maturity. The Company extended the maturity of
this debt by replacing borrowings on one-year uncommitted credit lines with
senior notes having bullet maturities ranging from seven to ten years.
INCOME TAXES
The Company's effective tax rate was 39.2% in the third quarter of 1999
compared to 38.7% in the third quarter of 1998. This increase is primarily due
to estimated state and local income taxes which can vary from year to year based
on changes in income generated by the Company in each of the states in which it
operates. The Company's effective tax rate for the first nine months of 1999 was
39.4% compared to 38.5% for the same period of 1998, due to the same factor
discussed above plus a permanent tax difference resulting from a business
acquisition.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows provided by operating activities for the first nine months of
1999 decreased to approximately $22.7 million from $43.7 million in 1998.
Working capital requirements increased from December 1998 to September 1999 as a
result of business growth combined with the effect of a higher Lumber Market in
the third quarter of 1999 compared to the fourth quarter of 1998. Conversely,
working capital decreased from December 1997 to September 1998 as a result of
better inventory management and a lower Lumber Market in the third quarter of
1998 compared to the fourth quarter of 1997.
Due to the seasonality of its business and the effects of the Lumber
Market, management believes the Company's cash cycle (days sales outstanding
plus days supply of inventory less days payables
20
<PAGE> 21
UNIVERSAL FOREST PRODUCTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION-CONTINUED
outstanding) is a better indicator of its working capital management than
operating cash flow. The Company's cash cycle decreased to 41 days in the first
nine months of 1999 from 45 days in the first nine months of 1998, primarily due
to improved inventory management in 1999. At the end of 1997, and during the
first half of 1998, the Company carried higher levels of inventory relative to
sales than was necessary. Since that time, plant management improved its control
over this area.
Capital expenditures totaled $27.5 million in the first nine months of
1999 compared to $18.0 million in the same period of 1998. The increase was
primarily due to an increase in new facilities purchased in 1999, and a
fractional ownership investment in an airplane. Investments associated with new
facilities totaled $16.6 million through September 1999. In 1998, amounts spent
on new facilities totaled approximately $5.0 million. The Company expects to
spend between $10 million and $15 million on capital expenditures for the
balance of 1999, which includes outstanding purchase commitments on capital
projects totaling approximately $7.2 million on September 25, 1999. The Company
intends to satisfy these commitments utilizing its revolving credit facility.
The Company has not completed any business acquisitions during the first
nine months of 1999. Management continues to focus on assimilating the
acquisitions it completed in 1998, while also investigating other potential
targets.
Cash flows provided by financing activities totaled approximately $9.2
million in the first nine months of 1999 compared to $65.9 million in 1998. The
decrease was due to not completing any business acquisitions in 1999, offset by
greater working capital requirements and higher capital expenditures in the
first nine months of 1999. On September 25, 1999, the Company had $12.0 million
outstanding on its $175 million revolving credit facility. The Company
experiences its lowest working capital requirements between the months from
August to January. Seasonal borrowings related to working capital are currently
expected to peak between $60 million and $70 million during the months from
February to July of the year 2000.
ENVIRONMENTAL CONSIDERATIONS AND REGULATIONS
The Company is self-insured for environmental impairment liability, and
accrues for the estimated cost of monitoring or remedial activities. As of
November 1, 1999, the Company owns and/or operates twenty wood preserving
facilities throughout the United States that treat lumber products with a
chemical preservative. In accordance with applicable federal, state and local
environmental laws, ordinances and regulations, the Company may be potentially
liable for costs and expenses related to the environmental condition of the
Company's real property. The Company has established reserves for remedial
activities at its North East, MD; Union City, GA; Stockertown, PA; Elizabeth
City, NC; and Schertz, TX facilities. Remedial activities at the Granger, IN
facility were completed in the second quarter of 1999, other than minimal costs
to dismantle the remediation network, no other costs are expected in the
future.
21
<PAGE> 22
UNIVERSAL FOREST PRODUCTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS-CONTINUED
The Company has accrued, in other current and long-term liabilities,
amounts totaling $2.3 million and $2.0 million at September 25, 1999 and
September 26, 1998 for the activities described above. The increase is due to
the addition of two facilities requiring remediation since 1998. Management
believes that the potential future costs of known remediation efforts will not
have a material adverse effect on its future financial position, results of
operations or liquidity.
"THE YEAR 2000"
The Company has reviewed its primary business and financial systems,
and has concluded it will not have any material "Year 2000" issues with the
computer programs which drive these systems. Accordingly, management does not
expect to incur any programming costs in this area. The Company believes its
risks associated with the "Year 2000" relate primarily to its customers,
suppliers, service providers and possible disruptions in the overall economy.
Management has reviewed the systems of its significant customers and vendors, as
well as its other ancillary systems, and has detected no material issues to
date. This review was originally planned for an April completion, but due to
priorities in other areas, it was completed in September of 1999. Issues that
were identified were insignificant and are now being resolved. Incremental costs
associated with this review are still expected to total $50,000, while no costs,
other than internal management time, have been incurred in the first nine months
of 1999. Although there can be no absolute assurances that there will not be a
material adverse effect on the Company if third parties do not resolve their
"Year 2000" issues in a timely manner, the Company believes its activities will
minimize these risks. The Company will continue to evaluate and develop
contingency plans as a result of its "Year 2000" assessment.
22
<PAGE> 23
UNIVERSAL FOREST PRODUCTS, INC.
PART II. OTHER INFORMATION
Item 2. Changes in Securities.
(a) None.
(b) None.
(c) Sales of equity securities in the third quarter not registered under the
Securities Act.
<TABLE>
<CAPTION>
Date of Class of Number Consideration
Sale Stock of Shares Purchasers Exchanged
------- -------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Employee Stock Gift Program Various Common 50 Eligible employees None
</TABLE>
23
<PAGE> 24
UNIVERSAL FOREST PRODUCTS, INC.
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNIVERSAL FOREST PRODUCTS, INC.
Date: November 8, 1999 By: /s/ William G. Currie
-------------------- --------------------------------------
William G. Currie
Its:President and Chief Executive Officer
Date: November 8, 1999 By: /s/ Elizabeth A. Nickels
-------------------- --------------------------------------------
Elizabeth A. Nickels
Its:Executive Vice President of Finance
and Administration and Treasurer
(Principal Financial Officer)
24
<PAGE> 25
UNIVERSAL FOREST PRODUCTS, INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
- ----------- ----------- --------
<S> <C> <C>
27.1 Financial Data Schedule - Third Quarter 1999 26
</TABLE>
25
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<NAME> UNIVERSAL FOREST PRODUCTS
<CIK> 0000912767
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-25-1999
<PERIOD-START> DEC-27-1998
<PERIOD-END> SEP-25-1999
<CASH> 9,727
<SECURITIES> 0
<RECEIVABLES> 99,474
<ALLOWANCES> 4,136
<INVENTORY> 116,228
<CURRENT-ASSETS> 227,940
<PP&E> 217,403
<DEPRECIATION> 71,189
<TOTAL-ASSETS> 478,438
<CURRENT-LIABILITIES> 98,921
<BONDS> 0
0
0
<COMMON> 20,677
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 478,438
<SALES> 1,135,333
<TOTAL-REVENUES> 1,135,333
<CGS> 991,236
<TOTAL-COSTS> 991,236
<OTHER-EXPENSES> 90,489
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,230
<INCOME-PRETAX> 45,663
<INCOME-TAX> 17,997
<INCOME-CONTINUING> 27,666
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,666
<EPS-BASIC> 1.33
<EPS-DILUTED> 1.30
</TABLE>
