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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934. FOR FISCAL YEAR ENDED DECEMBER 27, 2003.
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934. For the transition period from ______ to _______.
Commission File No.: 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 No.)
2801 E. BELTLINE, N.E., GRAND RAPIDS, MICHIGAN 49525
(Address of principal executive offices) (Zip Code)
(616) 364-6161
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each Class Name of each exchange on which registered
NONE _________________________________________
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, NO PAR VALUE
(Title of Class)
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: ( )
Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (X)
Indicate by checkmark whether the registrant is an accelerated filer (as defined
in Rule 12b-2 of the Act).
Yes: (X) No: ( )
As of June 28, 2003, 17,738,188 shares of the registrant's common stock, no par
value, were outstanding. The aggregate market value of the common stock held by
non-affiliates of the registrant (i.e. excluding shares held by executive
officers, directors, and control persons as defined in Rule 405, 17 CFR 230.405)
on that date was $265,224,186 computed at the closing price of $20.64 on that
date.
As of February 1, 2004, 17,818,836 shares of the registrant's common stock, no
par value, were outstanding.
Documents incorporated by reference:
(1) Certain portions of the Company's Annual Report to Shareholders for the
fiscal year ended December 27, 2003 are incorporated by reference into
Part I and II of this Report.
(2) Certain portions of the Company's Proxy Statement for its 2004 Annual
Meeting of Shareholders are incorporated by reference into Part III of
this Report.
Exhibit Index located on page E-1.
Page 1 of 16
ANNUAL REPORT ON FORM 10-K
DECEMBER 27, 2003
TABLE OF CONTENTS
PAGE
----
PART I
Item 1. Business. 3
Item 2. Properties. 8
Item 3. Legal Proceedings. 8
Item 4. Submission of Matters to a Vote of Security Holders. 8
Additional Item: Executive Officers of the Registrant. 8
PART II
Item 5. Market for the Registrant's Common Equity, Related Shareholder
Matters and Issuer Purchases of Equity Securities. 10
Item 6. Selected Financial Data. 10
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 10
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 11
Item 8. Financial Statements and Supplemental Data. 11
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. 12
Item 9A. Controls and Procedures. 12
PART III
Item 10. Directors and Executive Officers of the Registrant. 13
Item 11. Executive Compensation. 13
Item 12. Security Ownership of Certain Beneficial Owners
and Management. 13
Item 13. Certain Relationships and Related Transactions. 14
Item 14. Principal Accountant Fees and Services. 14
PART IV
Item 15. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K. 14
2
PART I
ITEM 1. BUSINESS.
(a) GENERAL DEVELOPMENT OF THE BUSINESS.
Universal Forest Products, Inc. was organized as a Michigan corporation in 1955.
We engineer, manufacture, treat, distribute and install lumber, composite,
plastic and other building products to the DIY/retail, site-built construction,
manufactured housing, industrial and other markets. We currently operate more
than 95 facilities throughout the United States, Canada, and Mexico.
Information relating to current developments in our business is incorporated by
reference from our Annual Report to Shareholders for the fiscal year ended
December 27, 2003 ("2003 Annual Report") under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
Selected portions of the 2003 Annual Report are filed as Exhibit 13 with this
Form 10-K Report.
Our Internet address is www.ufpi.com. Through our Internet web site, we make
available free of charge, as soon as reasonably practical after such information
has been filed or furnished to the SEC, our annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to
those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.
SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information ("SFAS 131") 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. Under the definition of a
segment, our Eastern and Western Divisions may be considered an operating
segment of our business. Under SFAS 131, segments may be aggregated if the
segments have similar economic characteristics and if the nature of the
products, distribution methods, customers and regulatory environments are
similar. We have aggregated our divisions into one reporting segment, consistent
with SFAS 131. Accordingly, separate industry segment information is not
presented.
(c) NARRATIVE DESCRIPTION OF BUSINESS.
We presently engineer, manufacture, treat, distribute and install lumber,
composite, plastic and other building products to the DIY/retail, site-built
construction, manufactured housing, industrial and other markets. Each of these
markets is discussed in the paragraphs which follow.
3
DIY/RETAIL MARKET. The customers comprising this market are primarily national
home center retailers, retail-oriented regional lumberyards and
contractor-oriented lumberyards. Customers in this market are serviced by our
regional sales staff and are assisted by personnel from our headquarters.
Generally, terms of sale are established for annual periods, and orders are
placed with our regional facilities in accordance with established terms. One
customer, The Home Depot, accounted for approximately 30% of our total net sales
for fiscal 2003 and 2002, and 33% for 2001.
From time to time we enter into certain sales contracts with The Home Depot. The
contracts are limited to the establishment of general sales terms and
conditions, such as delivery, invoicing, warranties and other standard,
commercial matters. Sales are made by the release of purchase orders to us for
particular quantities of certain products. We also enter into marketing
agreements and rebate agreements with The Home Depot. The marketing agreements
provide a certain percentage of our sales revenue or a minimum dollar amount
will be committed to generate sales for us and The Home Depot.
We currently supply customers in this market from over 50 of our locations.
These regional facilities are able to supply mixed truckloads of products which
can be delivered to customers with rapid turnaround from receipt of an order.
Freight costs are a factor in the ability to competitively service this market,
especially with treated wood products because of their heavier weight. The close
proximity of our regional facilities to the various outlets of these customers
is a significant advantage when negotiating annual sales programs.
The products offered to customers in this market include dimensional lumber
(both preserved and unpreserved) and various "value-added products," some of
which are sold under our trademarks. Value-added products may be preserved or
unpreserved, and include the following:
- - The Deck Necessities(R) group of products consists of decking, balusters,
spindles, decorative posts, handrails, stair risers, stringers and treads.
- - The Fence Fundamentals(TM) group of products includes various styles of
fences, as well as gates, posts and other components.
- - The Outdoor Essentials(R) group of products consists of various home and
garden and landscaping items.
- - Lattice is sold under the Lattice Basics(TM) trademark for use as skirting on
decks, trellises and various outdoor home improvement projects.
- - The Storage Solutions(TM) product line consists primarily of storage building
frames and trusses.
In addition to our conventional lumber products, we offer composite and plastic
alternative products sold under the following trade names:
- - The Perennia(TM) group of fencing products provides customers with a low
maintenance alternative for their fencing needs.
- - The TechTrim(TM) product line consists of exterior trim boards made from a
polymer which is impervious to moisture.
4
- - The Everx(R) composite decking group of products includes decking, balusters,
railings, caps and sleeves manufactured from a proprietary formula of wood
dust and high-density polyethylene plastic. We are a licensee of this
technology.
We also sell engineered wood products to this market, which include roof
trusses, wall panels and engineered floor systems (see "Site-Built Construction
Market" below).
We are not aware of any competitor that currently manufactures, treats and
distributes a full line of both value-added and commodity products on a national
basis. We face competition on individual products from several different
producers, but the majority of these competitors tend to be regional in their
efforts and/or do not offer a full line of outdoor lumber products. We believe
the breadth of our product offering, geographic dispersion, close proximity of
our plants to core customers, purchasing expertise and service capabilities
provide significant competitive advantages in this market. As the customer base
in this market continue to consolidate, we believe we are well-positioned to
capture additional market share.
SITE-BUILT CONSTRUCTION MARKET. We entered the site-built construction market
through strategic business acquisitions beginning in 1997. The customers
comprising this market are primarily large-volume, multi-tract builders and
smaller volume custom builders. Customers are serviced by our sales, engineering
and design personnel in each region. Generally, terms of sale and pricing are
determined based on quotes for each order.
We currently supply customers in this market from more than 70 facilities
located in more than 20 different states and Canada. These facilities
manufacture various engineered wood products used to frame residential or
commercial projects, including roof and floor trusses, wall panels, Open Joist
2000(R) and I-joists. Freight costs are a factor in the ability to competitively
service this market due to the space requirements of these products on each
truckload.
We also install engineered wood products for customers in certain regional
markets. We believe that providing a comprehensive framing package, including
installation, provides a competitive advantage.
Competitors in this market include lumberyards who also manufacture components,
as well as regional manufacturers of components. Our objective is to continue to
increase our manufacturing capacity and framing capabilities for this market
while developing a national presence. We believe our primary competitive
advantages relate to the engineering and design capabilities of our regional
staff, customer relationships, product quality and timeliness of delivery.
MANUFACTURED HOUSING MARKET. The customers comprising the manufactured housing
market are producers of mobile, modular and prefabricated homes and recreational
vehicles. Products sold to customers in this market consist primarily of roof
trusses, lumber cut and shaped to the customer's specification, plywood,
particle board and dimensional lumber, all intended for use in the construction
of manufactured housing. Sales are made by personnel located at each regional
facility
5
based on customer orders. Our engineering and support staff act as a sales
resource to assist customers with truss designs, obtaining various building code
approvals for the designs and aiding in the development of new products and
manufacturing processes.
While no competitor operates in as widely-dispersed geographic areas as we do,
we face competition from suppliers in many geographic regions. Our principal
competitive advantages include our product knowledge, the capacity to supply all
of the customer's lumber requirements, the ability to deliver engineering
support services, the close proximity of our regional facilities to our
customers and our ability to provide national sales programs to certain
customers.
INDUSTRIAL AND OTHER MARKET. We define our industrial market as industrial
manufacturers and agricultural customers who use pallets, specialty crates and
wooden boxes for packaging, shipping and material handling purposes. Many of the
products sold to this market may be produced from the by-product of other
manufactured products, thereby allowing us to increase our raw material yields
while expanding our business. Competition is fragmented and includes virtually
every supplier of lumber convenient to the customer. We service this market with
our regional sales personnel supported by a centralized national sales and
marketing department.
SUPPLIERS. We are one of the largest domestic buyers of solid sawn lumber from
primary producers (lumber mills). We use primarily southern yellow pine in our
pressure-treating operations and site-built component plants in the Southeastern
United States, which we obtain from mills located throughout the states
comprising the Sunbelt. Other species we use include "spruce-pine-fir" from
various provinces in Canada; hemlock, Douglas fir and cedar from the Pacific
Northwest; inland species of Ponderosa pine; and Radiata pine. There are
numerous primary producers for all varieties we use, and we are not dependent on
any particular source of supply. Our financial resources, in combination with
our strong sales network and ability to remanufacture lumber, enable us to
purchase a large percentage of a primary producer's output (as opposed to only
those dimensions or grades in immediate need), thereby lowering our average cost
of raw materials. We believe this represents a competitive advantage.
INTELLECTUAL PROPERTY. We own a patent relating to a tie-down strap patent
related to truss components, and a patent on machinery used in the recycling of
drywall. We also have several patents pending on technologies related to our
business. In addition, we own five registered trade names or trademarks:
PRO-WOOD(R) relating to preservative-treated wood products; Deck Necessities(R)
relating to deck component products; Outdoor Essentials(R) related to lawn and
garden items such as planter boxes, fencing products and lattice products; the
Everx(R) trademark for our recently acquired composite material; and the pine
tree logo. As we develop proprietary brands, we may pursue registration or other
formal protection. In addition, we claim common law trademark rights to several
other trade names or trademarks. While we believe our patent and trademark
rights are valuable, the loss of a patent or any trademark would not be likely
to have a material adverse impact on our competitive position.
6
SEASONAL INFLUENCES. Our manufactured housing and site-built construction
markets are affected by seasonal influences in the northern states during the
winter months when installation and construction is more difficult.
The activities in the DIY/retail market have substantial seasonal impacts. The
demand for many of our DIY/retail products is highest during the period of April
to August. Accordingly, our sales to the DIY/retail market tend to be greater
during the second and third quarters. We build our inventory of finished goods
throughout the winter and spring to support this sales peak. Restraints on
production capacity make this a necessary practice which potentially exposes us
to adverse effects of changes in economic and industry trends. Since 1995,
inventory management initiatives, supply programs with vendors and programs with
customers have been used to reduce our exposure to adverse changes in the
commodity lumber market and decrease demands on cash resources.
BACKLOG. Due to the nature of our DIY/retail, manufactured housing and
industrial businesses, backlog information is not meaningful. The maximum time
between receipt of a firm order and shipment does not usually exceed a few days.
Therefore, we would not normally have a backlog of unfilled orders in a material
amount. The relationships with our major customers are such that we are either
the exclusive supplier of certain products and/or certain geographic areas, or
the designated source for a specified portion of the customer's requirements. In
such cases, either we are able to forecast the customer's requirements or the
customer may provide an estimate of its future needs. In neither case, however,
will we receive firm orders until just prior to the anticipated delivery dates
for the products in question.
On January 1, 2004 and 2003, backlog orders associated with the site-built
construction business approximated $35.8 million and $36.3 million,
respectively, representing approximately seven and ten weeks of production,
respectively. We believe the relatively short time period associated with our
backlog, in certain regions, provides a competitive advantage.
RESEARCH AND DEVELOPMENT. Our research and development efforts generally fall
into four categories: engineering and testing of new truss designs; design and
development of wood treatment systems and manufacturing processes; design and
development of machinery and tooling of various wood shaping devices; and
development of new products. Although important to our competitive strengths and
growth, the dollar amount of research and development expenditures has not
typically been material to us.
WOOD PRESERVATION TREATMENT. Information required for environmental disclosures
is incorporated by reference from Footnote N of the Consolidated Financial
Statements presented under Item 8 herein.
EMPLOYEES. At February 1, 2004, we had approximately 8,000 employees. One of our
subsidiaries has certain production employees who are represented by a labor
union. We believe relations with our employees are good.
7
(d) FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS.
The dominant portion of our operations and sales occur in the United States.
Separate financial information about foreign and domestic operations and export
sales is incorporated by reference from Footnote O of the Consolidated Financial
Statements presented under Item 8 herein.
ITEM 2. PROPERTIES.
Our headquarters building is located on a ten acre site adjacent to a main
thoroughfare in suburban Grand Rapids, Michigan. The headquarters building
consists of several one and two story structures of wood construction.
We currently have more than 95 facilities located throughout the United States,
Canada, and Mexico. These facilities are generally of steel frame and aluminum
construction and situated on fenced sites ranging in size from 7 acres to 48
acres. Depending upon function and location, these facilities typically utilize
office space, manufacturing space, treating space and covered storage.
We own all of our properties, free from any significant mortgage or other
encumbrance, except for 12 regional facilities which are leased. We believe all
of these operating facilities are adequate in capacity and condition to service
existing customer locations.
ITEM 3. LEGAL PROCEEDINGS.
Information regarding our legal proceedings is set forth in Note N of our
Consolidated Financial Statements which are presented under Item 8 of this Form
10-K and are incorporated herein by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
8
ADDITIONAL ITEM: EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table lists the names, ages and positions of all of our executive
officers as of February 1, 2004. Executive officers are elected annually by the
Board of Directors at the first meeting of the Board following the annual
meeting of shareholders.
Name Age Position
---- --- --------
William G. Currie 56 Vice Chair. of the Board and Chief Exec. Officer, Universal Forest Products, Inc.
Michael B. Glenn 52 President and Chief Operating Officer, Universal Forest Products, Inc.
C. Scott Greene 48 President, Universal Forest Products Eastern Division, Inc.
Robert K. Hill 56 President, Universal Forest Products Western Division, Inc.
Donald L. James 44 Exec. Vice President Site-Built, Universal Forest Products Eastern Division, Inc.
Robert D. Coleman 49 Exec. Vice President Manufacturing, Universal Forest Products, Inc.
Matthew J. Missad 43 Executive Vice President and Secretary, Universal Forest Products, Inc.
Michael R. Cole 37 Chief Financial Officer and Treasurer, Universal Forest Products, Inc.
William G. Currie joined us in 1971. From 1983 to 1990, Mr. Currie was President
of Universal Forest Products, Inc., and he was the President and Chief Executive
Officer of The Universal Companies, Inc. from 1989 until the merger to form
Universal Forest Products, Inc. in 1993. On January 1, 2000, Mr. Currie also
became Vice Chairman of the Board.
Michael B. Glenn has been employed by us since 1974. In June of 1989, Mr. Glenn
was elected Senior Vice President of our Southwest Operations, and on December
1, 1997, became President of Universal Forest Products Western Division, Inc.
Effective January 1, 2000, Mr. Glenn was promoted to President and Chief
Operating Officer.
C. Scott Greene joined us in February of 1991. In November of 1996 he became
General Manager of Operations for our Florida Region, and in January of 1999
became Vice President of Marketing for Universal Forest Products, Inc. During
early 2000, Mr. Greene became President of Universal Forest Products Eastern
Division, Inc.
Robert K. Hill has been with us since 1986. In March of 1993, Mr. Hill was
elected Senior Vice President of our Far West Operations. On December 1, 1997,
Mr. Hill became the Executive Vice President of Operations of Universal Forest
Products Western Division, Inc., and on January 1, 2000, became President of
that Division.
Donald L. James joined us in March of 1998, and in June of that year became
Director of National Sales, Site-Built Construction. Mr. James became the
General Manager of Site-Built Operations for Universal Forest Products Shoffner
LLC on January 1, 2001, became Vice President Site-Built,
9
Universal Forest Products Eastern Division, Inc. on January 1, 2002, and became
Executive Vice President Site-Built Universal Forest Products Eastern Division,
Inc. on January 1, 2003.
Robert D. Coleman, has been an employee since 1979. Mr. Coleman was promoted to
Senior Vice President of our Midwest Operations in September 1993. On December
1, 1997, Mr. Coleman became the Executive Vice President of Manufacturing of the
Universal Forest Products Eastern Division, Inc. On January 1, 1999, Mr. Coleman
was named the Executive Vice President of Manufacturing.
Matthew J. Missad has been employed since 1985. Mr. Missad has served as General
Counsel and Secretary since December 1, 1987, and Vice President Corporate
Compliance since August 1989. In February 1996, Mr. Missad was promoted to
Executive Vice President.
Michael R. Cole, CPA, CMA, joined us in November of 1993. In January of 1997,
Mr. Cole was promoted to Director of Finance, and on January 1, 2000 was made
Vice President of Finance. On July 19, 2000, Mr. Cole became Chief Financial
Officer.
PART II
The following information items in this Part II, which are contained in the 2003
Annual Report, are specifically incorporated by reference into this Form 10-K
Report. These portions of the 2003 Annual Report, that are specifically
incorporated by reference, are filed as Exhibit 13 with this Form 10-K Report.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES.
The information required by this Item is incorporated by reference from the 2003
Annual Report under the caption "Price Range of Common Stock and Dividends."
Sales of equity securities in the fourth quarter not registered under the
Securities Act:
Date of Class of Number Consideration
Sale Stock of Shares Purchasers Exchanged
----------- ---------- --------- ---------- -------------
Stock Gift Program Various Common 368 Eligible persons None
ITEM 6. SELECTED FINANCIAL DATA.
The information required by this Item is incorporated by reference from the 2003
Annual Report under the caption "Selected Financial Data."
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
10
The information required by this Item is incorporated by reference from the 2003
Annual Report under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
ITEM 7A. 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.
On December 27, 2003, the estimated fair value of our long-term debt, including
the current portion, was $215.2 million, which was $3.7 million greater than the
carrying value. The estimated fair value is based on rates anticipated to be
available to us for debt with similar terms and maturities. The estimated fair
value of notes payable included in current liabilities and the revolving credit
facility approximated the carrying values.
Expected cash flows over the next five years related to debt instruments are as
follows:
2004 2005 2006 2007 2008 Thereafter Total
---- ---- ---- ---- ---- ---------- -----
($US equivalents, in thousands)
Long-term Debt:
Fixed Rate ($US)............... $5,714 $21,500 $78,500 $55,000 $160,714
Average interest rate........ 7.15% 6.69% 6.98% 6.02%
Variable Rate ($US)............ $2,423 $27,600 $542 $499 $ 2,479 $18,929 $52,472
Average interest rate(1)..... 2.20%
(1)Average of rates at December 27, 2003.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by this Item is incorporated by reference from the 2003
Annual Report under the following captions:
"Report of Independent Auditors"
"Report of Independent Public Accountants"
"Consolidated Balance Sheets"
"Consolidated Statements of Earnings"
"Consolidated Statements of Shareholders' Equity"
11
"Consolidated Statements of Cash Flows"
"Notes to Consolidated Financial Statements"
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Universal Forest Products, Inc. determined, for itself and on behalf of our
subsidiaries, to dismiss our independent auditors, Arthur Andersen LLP ("Arthur
Andersen"), and to engage the services of Ernst & Young LLP ("Ernst & Young") as
our new independent auditors. The change in auditors was approved by our Audit
Committee and Board of Directors and was effective as of May 20, 2002. As a
result, Ernst & Young audited our consolidated financial statements and our
subsidiaries for the fiscal year ended December 28, 2002.
Arthur Andersen's reports on our consolidated financial statements for the
fiscal year ended December 29, 2001 did not contain an adverse opinion or
disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope or accounting principles. During the fiscal year ended December 29,
2001 and through May 20, 2002 (the Relevant Period), (1) there were no
disagreements with Arthur Andersen on any matter of accounting principles or
practices, financial statement disclosures, or auditing scope or procedure
which, if not resolved to Arthur Andersen's satisfaction, would have caused
Arthur Andersen to make reference to the subject matter of the disagreement(s)
in connection with its reports on our consolidated financial statements for such
year; and (2) there were no reportable events as described in Item 304(a)(1)(v)
(Reportable Events) of the Commission's Regulation S-K.
During the Relevant Period, neither we nor anyone acting on our behalf consulted
with Ernst & Young regarding (i) the application of accounting principles to a
specified transaction, either completed or proposed, or the type of audit
opinion that might be rendered on our consolidated financial statements, or (ii)
any matters or reportable events as set forth in Items 304(a)(1)(iv) and (v),
respectively, of Regulation S-K.
We have not been able to obtain, after reasonable efforts, the re-issued reports
or consent of Arthur Andersen related to the 2001 consolidated financial
statements and financial statement schedule. Therefore, we have included a copy
of their previously issued report.
ITEM 9A. 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 - 14c and
15d - 14c) as of the year ended December 27, 2003 (the "Evaluation
Date"), have concluded that, as of such date, our disclosure controls
and procedures were adequate and effective to ensure that material
information relating to us and our consolidated subsidiaries would be
made known to them in connection with our filing of this Form 10-K.
12
(b) Changes in Internal Controls. There were no significant changes in our
internal controls or in other factors that could significantly affect
these controls subsequent to the Evaluation Date through the date of
this filing of Form 10-K, nor were there any significant deficiencies
or material weaknesses in our internal controls that would require
corrective actions.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information relating to executive officers is included in this report in the
last Section of Part I under the caption "Additional Item: Executive Officers of
the Registrant." Information relating to directors and compliance with Section
16(a) of the Securities and Exchange Act of 1934 is incorporated by reference
from our definitive Proxy Statement for the year ended December 27, 2003 for the
2004 Annual Meeting of Shareholders, as filed with the Commission ("2004 Proxy
Statement"), under the captions "Election of Directors," "Corporate Governance
and Board Matters," and "Section 16(a) Beneficial Ownership Reporting
Compliance."
ITEM 11. EXECUTIVE COMPENSATION.
Information relating to executive compensation is incorporated by reference from
the 2004 Proxy Statement under the caption "Executive Compensation."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information relating to security ownership of certain beneficial owners and
management is incorporated by reference from our 2004 Proxy Statement under the
captions "Ownership of Common Stock" and "Securities Ownership of Management."
Information relating to securities authorized for issuance under equity
compensation plans as of December 27, 2003, is as follows:
Number of Weighted Number of shares
shares to be average remaining available for
issued upon exercise future issuance under
exercise of price of equity compensation
outstanding outstanding plans [excluding shares
options options reflected in column (a)](1)
-------------- ----------- --------------------------
(a) (b) (c)
-------------- ----------- --------------------------
Equity compensation plans
approved by security holders................ 1,995,516 $16.83 874,200
Equity compensation plans not
approved by security holders................ none
(1) Annual increases will be added on the date of the annual meeting of
shareholders, equal to the lesser of (i) 200,000 shares; (ii) 1% of the sum of
(1) the outstanding shares, plus (2) the number of shares subject to outstanding
options issued under our option plans; or (iii) an amount determined by the
Board of Directors.
13
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information relating to certain relationships and related transactions is
incorporated by reference from the 2004 Proxy Statement under the captions
"Election of Directors" and "Related Party Transactions."
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Information relating to the types of services rendered by our Independent
Auditors and the fees paid for these services is incorporated by reference from
our 2004 Proxy Statement under the caption "Independent Public Accountants."
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) 1. Financial Statements. The following Report of Independent Auditors,
Report of Independent Public Accountants, and Consolidated Financial Statements
are incorporated by reference, under Item 8 of this report, from the 2003 Annual
Report:
Report of Independent Auditors - Ernst & Young LLP
Report of Independent Public Accountants - Arthur Andersen LLP
Consolidated Balance Sheets as of December 27, 2003 and December 28, 2002
Consolidated Statements of Earnings for the Years Ended December 27, 2003,
December 28, 2002 and December 29, 2001
Consolidated Statements of Shareholders' Equity for the Years Ended
December 27, 2003, December 28, 2002 and December 29, 2001
Consolidated Statements of Cash Flows for the Years Ended December 27,
2003, December 28, 2002 and December 29, 2001
Notes to Consolidated Financial Statements
2. Financial Statement Schedules. All schedules required by this Form
10-K Report have been omitted because they were inapplicable, included in the
Consolidated Financial Statements or Notes to Consolidated Financial Statements,
or otherwise not required under instructions contained in Regulation S-X.
3. Exhibits. Reference is made to the Exhibit Index which is included
in this Form 10-K Report.
(b) None.
14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: March 11, 2004 UNIVERSAL FOREST PRODUCTS, INC.
By: /s/ William G. Currie
-----------------------------------------------
WILLIAM G. CURRIE, VICE CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
and
/s/ Michael R. Cole
-----------------------------------------------
MICHAEL R. COLE, CHIEF FINANCIAL OFFICER AND
TREASURER
15
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below on this 11th day of March, 2004, by the
following persons on behalf of us and in the capacities indicated.
Each Director whose signature appears below hereby appoints Matthew J.
Missad and Michael R. Cole, and each of them individually, as his
attorney-in-fact to sign in his name and on his behalf as a Director, and to
file with the Commission any and all amendments to this report on Form 10-K to
the same extent and with the same effect as if done personally.
/s/ Peter F. Secchia /s/ William G. Currie
- ------------------------------------ --------------------------------
PETER F. SECCHIA, DIRECTOR WILLIAM G. CURRIE, DIRECTOR
/s/ Dan M. Dutton /s/ John M. Engler
- ------------------------------------ --------------------------------
DAN M. DUTTON, DIRECTOR JOHN M. ENGLER, DIRECTOR
/s/ John W. Garside /s/ Gary F. Goode
- ------------------------------------ --------------------------------
JOHN W. GARSIDE, DIRECTOR GARY F. GOODE, DIRECTOR
/s/ Philip M. Novell /s/ Louis A. Smith
- ------------------------------------ --------------------------------
PHILIP M. NOVELL, DIRECTOR LOUIS A. SMITH, DIRECTOR
16
EXHIBIT INDEX
Exhibit # Description
3 Articles of Incorporation and Bylaws.
(a) Registrant's Articles of Incorporation were filed as Exhibit
3(a) to a Registration Statement on Form S-1 (No. 33-69474)
and the same is incorporated herein by reference.
(b) Registrant's Bylaws were filed as Exhibit 3(b) to a
Registration Statement on Form S-1 (No. 33-69474) and the same
is incorporated herein by reference.
4 Instruments Defining the Rights of Security Holders.
(a) Specimen form of Stock Certificate for Common Stock was filed
as Exhibit 4(a) to a Registration Statement on Form S-1 (No.
33-69474) and the same is incorporated herein by reference.
(b)(3) Series A, Senior Unsecured Note Agreement dated May 5, 1994,
was filed as Exhibit 4(b)(3) to a Form 10-Q Quarterly Report
for the quarter period ended March 26, 1994, and the same is
incorporated herein by reference.
(b)(4) First Amendment to Note Agreement dated November 13, 1998,
relating to Series A, Senior Unsecured Note Agreement dated
May 5, 1994, was filed as Exhibit 4(b)(4) to a Form 10-K
Annual Report for the fiscal year ended December 26, 1998.
10 Material Contracts.
(a)(2) Redemption Agreement with Peter F. Secchia, dated January 2,
2002, was filed as Exhibit 10(a)(2) to a Form 10-K, Annual
Report for the year ended December 29, 2001 and the same is
incorporated herein by reference.
*(a)(3) Consulting Agreement with Peter F. Secchia, dated December 31,
2002, and Assignment dated January 1, 2003 was filed as
Exhibit 10(a)(3) to a Form 10-K, Annual Report for the year
ended December 28, 2002 and the same is incorporated herein by
reference.
*(a)(4) Nondisclosure and Non-Compete Agreement with Peter F. Secchia,
dated December 31, 2002 was filed as Exhibit 10(a)(4) to a
Form 10-K, Annual Report for the year ended December 28, 2002
and the same is incorporated herein by reference.
E-1
*(a)(5) Conditional Share Grant Agreement with William G. Currie dated
April 17, 2002 was filed as Exhibit 10(a)(5) to a Form 10-K,
Annual Report for the year ended December 28, 2002 and the
same is incorporated herein by reference.
(b) Form of Indemnity Agreement entered into between the
Registrant and each of its directors was filed as Exhibit
10(b) to a Registration Statement on Form S-1 (No. 33-69474)
and the same is incorporated herein by reference.
(c)(2) Lease guarantee, dated March 10, 1978, given by Registrant on
behalf of Universal Restaurants, Inc. to Jackson Properties
was filed as Exhibit 10(c)(2) to a Registration Statement on
Form S-1 (No. 33-69474) and the same is incorporated herein by
reference.
*(e)(1) Form of Executive Stock Option Agreement was filed as Exhibit
10(e)(1) to a Registration Statement on Form S-1 (No.
33-69474) and the same is incorporated herein by reference.
*(e)(2) Form of Officers' Stock Option Agreement was filed as Exhibit
10(e)(2) to a Registration Statement on Form S-1 (No.
33-69474) and the same is incorporated herein by reference.
*(f) Salaried Employee Bonus Plan was filed as Exhibit 10(f) to a
Registration Statement on Form S-1 (No. 33-69474) and the same
is incorporated herein by reference.
(i)(1) Revolving Credit Agreement dated November 13, 1998 was filed
as Exhibit 10(i)(1) to a Form 10-K Annual Report for the year
ended December 26, 1998, and the same is incorporated herein
by reference.
(i)(2) Series 2002-A, Revolving Credit Agreement dated November 25,
2002 was filed as Exhibit 10(i)(2) to a Form 10-K Annual
Report for the year ended December 28, 2002.
(i)(3) First Amendment dated September 18, 2003 relating to Series
2002-A, Revolving Credit Agreement dated November 25, 2002 was
filed as Exhibit 10(i)(3) to a Form 10-Q Quarterly Report for
the quarter ended September 27, 2003.
(j)(1) Series 1998-A, Senior Note Agreement dated December 21, 1998
was filed as Exhibit 10(j)(1) to a Form 10-K Annual Report for
the year ended December 26, 1998, and the same is incorporated
herein by reference.
(j)(2) Series 2002-A, Senior Note Agreement dated December 18, 2002
was filed as Exhibit 10(j)(2) to a Form 10-K Annual Report for
the year ended December 28, 2002.
E-2
(k)(1) Program for Accounts Receivable Transfer ("PARTS") Agreement
dated September 22, 2003 was filed as Exhibit 10(k)(1) to a
Form 10-Q Quarterly Report for the quarter ended September 27,
2003.
(k)(2) Deposit Account Control Agreement dated September 22, 2003,
completed pursuant to the PARTS Agreement, was filed as
Exhibit 10(k)(2) to a Form 10-Q, Quarterly Report for the
quarter ended September 27, 2003.
13 Selected portions of the Company's Annual Report to Shareholders for
the fiscal year ended December 27, 2003.
16 Letter from Arthur Andersen LLP regarding change in certifying
accountant is incorporated by reference from Exhibit 16 of Registrant's
current report on Form 8-K dated May 21, 2002.
21 Subsidiaries of the Registrant.
23 Consents of Experts and Counsel.
(a) Consent of Ernst & Young LLP.
(b) Information Concerning Consent of Arthur Andersen LLP.
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).
E-3