##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
 For the quarterly period ended December 31, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
 Commission File Number 000-26667
 CRAFTMADE INTERNATIONAL, INC.
  DELAWARE
(State or other jurisdiction of 
incorporation or organization)
    
    75-2057054
(I.R.S. employer
identification no.)
 650 SOUTH ROYAL LANE, SUITE 100
COPPELL, TEXAS
75019
 (972) 393-3800
 þ o
  o þ o
 o þ




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##### 



CRAFTMADE INTERNATIONAL, INC.
AND SUBSIDIARIES
 TABLE OF CONTENTS
 Part I. Financial Information
    
    
    1Item 1. Financial Statements
    
    
    1Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    24Item 4. Controls and Procedures
    
    
    26Part II. Other Information
    
    
    27Item 1. Legal Proceedings
    
    
    27Item 1A. Risk Factors
    
    
    27Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    27Item 3. Defaults Upon Senior Securities
    
    
    27Item 4. Submission of Matters to a Vote of Security Holders
    
    
    27Item 5. Other Information
    
    
    28Item 6. Exhibits
    
    
    28Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906




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##### Table of Contents



PART I
 
 FINANCIAL INFORMATION
 
  CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Net sales
    
    $
    26,563
    
    
    $
    28,629
    
    
    $
    54,689
    
    
    $
    59,652Cost of goods sold
    
    
    (18,039
    )
    
    
    (20,041
    )
    
    
    (37,383
    )
    
    
    (42,318
    )Gross profit
    
    
    8,524
    
    
    
    8,588
    
    
    
    17,306
    
    
    
    17,334Gross profit as a percentage of net sales
    
    
    32.1
    %
    
    
    30.0
    %
    
    
    31.6
    %
    
    
    29.1
    %Selling, general and administrative expenses
    
    
    (5,135
    )
    
    
    (4,748
    )
    
    
    (10,219
    )
    
    
    (9,646
    )Depreciation and amortization
    
    
    (201
    )
    
    
    (153
    )
    
    
    (401
    )
    
    
    (311
    )Total operating expenses
    
    
    (5,336
    )
    
    
    (4,901
    )
    
    
    (10,620
    )
    
    
    (9,957
    )Income from operations
    
    
    3,188
    
    
    
    3,687
    
    
    
    6,686
    
    
    
    7,377Interest expense, net
    
    
    (393
    )
    
    
    (322
    )
    
    
    (761
    )
    
    
    (626
    )Income before income taxes and minority interests
    
    
    2,795
    
    
    
    3,365
    
    
    
    5,925
    
    
    
    6,751Income taxes
    
    
    (782
    )
    
    
    (929
    )
    
    
    (1,763
    )
    
    
    (1,850
    )Income before minority interests
    
    
    2,013
    
    
    
    2,436
    
    
    
    4,162
    
    
    
    4,901Minority interests
    
    
    (513
    )
    
    
    (739
    )
    
    
    (778
    )
    
    
    (1,472
    )Net income
    
    $
    1,500
    
    
    $
    1,697
    
    
    $
    3,384
    
    
    $
    3,429Weighted average common shares outstanding:Basic
    
    
    5,204
    
    
    
    5,200
    
    
    
    5,204
    
    
    
    5,200Diluted
    
    
    5,206
    
    
    
    5,210
    
    
    
    5,207
    
    
    
    5,210Basic earnings per common share
    
    $
    0.29
    
    
    $
    0.33
    
    
    $
    0.65
    
    
    $
    0.66Diluted earnings per common share
    
    $
    0.29
    
    
    $
    0.33
    
    
    $
    0.65
    
    
    $
    0.66Cash dividends declared per common share
    
    $
    0.12
    
    
    $
    0.12
    
    
    $
    0.24
    
    
    $
    0.24
 
 1




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CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 ASSETS
 December 31,
    
    
    June 30,2006
    
    
    2006(Unaudited)Current assetsCash
    
    $
    464
    
    
    $
    2,164Accounts receivable  net of allowance
of $202 and $293, respectively
    
    
    19,013
    
    
    
    19,802Inventories  net of allowance of $649
and $934, respectively
    
    
    21,944
    
    
    
    21,085Deferred income taxes
    
    
    1,357
    
    
    
    1,252Prepaid expenses and other current assets
    
    
    850
    
    
    
    988Total current assets
    
    
    43,628
    
    
    
    45,291Property and equipmentLand
    
    
    1,535
    
    
    
    1,535Building
    
    
    7,796
    
    
    
    7,796Office furniture and equipment
    
    
    3,970
    
    
    
    3,320Leasehold improvements
    
    
    190
    
    
    
    18713,491
    
    
    
    12,838Less: accumulated depreciation
    
    
    (5,043
    )
    
    
    (4,740
    )Total property and equipment, net
    
    
    8,448
    
    
    
    8,098Other assetsGoodwill
    
    
    12,926
    
    
    
    11,480Other intangibles, net of accumulated amortization
of $138 and $41, respectively
    
    
    1,602
    
    
    
    169Other assets
    
    
    10
    
    
    
    23Total other assets
    
    
    14,538
    
    
    
    11,672Total assets
    
    $
    66,614
    
    
    $
    65,061
 
 2




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CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
 LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS EQUITY
 December 31,
    
    
    June 30,2006
    
    
    2006UnauditedCurrent liabilitiesBook overdrafts
    
    $
    298
    
    
    $
    70Notes payable  current
    
    
    802
    
    
    
    1,135Revolving lines of credit
    
    
    
    
    
    
    2,173Accounts payable
    
    
    5,733
    
    
    
    7,544Commissions payable
    
    
    234
    
    
    
    274Income taxes payable/(receivable)
    
    
    (532
    )
    
    
    114Accrued customer allowances
    
    
    2,026
    
    
    
    2,637Other accrued expenses
    
    
    980
    
    
    
    1,073Total current liabilities
    
    
    9,541
    
    
    
    15,020Other non-current liabilitiesRevolving line of credit
    
    
    21,162
    
    
    
    15,981Other long-term expenses
    
    
    927
    
    
    
    793Deferred income taxes
    
    
    710
    
    
    
    345Notes payable  long term
    
    
    
    
    
    
    223Total other non-current liabilities
    
    
    22,799
    
    
    
    17,342Total liabilities
    
    
    32,340
    
    
    
    32,362Minority interests
    
    
    3,092
    
    
    
    3,662Commitments and contingencies (Note 6)Stockholders equitySeries A cumulative, convertible callable preferred
stock, $1.00 par value, 2,000,000 shares authorized;
nil shares issued
    
    
    
    
    
    
    Common stock, $0.01 par value, 15,000,000
shares authorized; 9,703,420 shares issued
    
    
    97
    
    
    
    97Additional paid-in capital
    
    
    17,767
    
    
    
    17,757Retained earnings
    
    
    51,444
    
    
    
    49,309Less: treasury stock, 4,499,920 common
shares at cost
    
    
    (38,126
    )
    
    
    (38,126
    )Total stockholders equity
    
    
    31,182
    
    
    
    29,037Total liabilities, minority interests and stockholders equity
    
    $
    66,614
    
    
    $
    65,061
 
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CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Six Months EndedDecember 31,
    
    
    December 31,2006
    
    
    2005Net cash provided by operating activities
    
    $
    836
    
    
    $
    4,651Cash flows from investing activitiesAcquisition of Marketing Impressions, Inc.Initial payment, net of cash acquired
    
    
    (1,483
    )
    
    
    Additional contingent consideration
    
    
    (870
    )
    
    
    Additions to property and equipment
    
    
    (440
    )
    
    
    (155
    )Cash used in investing activities
    
    
    (2,793
    )
    
    
    (155
    )Cash flows from financing activitiesNet proceeds from/(payments on) lines of credit
    
    
    3,008
    
    
    
    (9,755
    )Distributions to minority interest members
    
    
    (1,347
    )
    
    
    Cash dividends
    
    
    (1,249
    )
    
    
    (1,155
    )Principal payments on notes payable
    
    
    (555
    )
    
    
    (794
    )Capital lease financing
    
    
    173
    
    
    
    Increase/(decrease) in book overdrafts
    
    
    227
    
    
    
    (214
    )Stock options exercised
    
    
    
    
    
    
    7Net cash provided by/(used in) financing activities
    
    
    257
    
    
    
    (11,911
    )Net decrease in cash
    
    
    (1,700
    )
    
    
    (7,415
    )Cash at beginning of period
    
    
    2,164
    
    
    
    9,145Cash at end of period
    
    $
    464
    
    
    $
    1,730
 
 4




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CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED
DECEMBER 31, 2006(Unaudited)
      5




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CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED
DECEMBER 31, 2006(Unaudited)
  before
  Purchase Price Summary
(In thousands)
 As of December 31, 2006:Amount paid at closing, net of cash acquired
    
    $
    1,287Contingent payments earned
    
    
    945Acquisition-related costs
    
    
    196Total consideration as of December 31, 2006
    
    $
    2,428Percent of Adjusted Gross Profit
July 1, 2006 to August 31, 2011
    
    
    22
    %Additonal Percent of Adjusted Gross Profit
July 1, 2006 to June 30, 2007 (not to exceed $750,000)
    
    
    15
    %
 Business Combinations
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CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED
DECEMBER 31, 2006(Unaudited)
  Preliminary Purchase Price Allocation
(In thousands)
 Assets:Accounts receivable
    
    $
    368Inventory
    
    
    2Property and equipment
    
    
    214Acquired intangibles
    
    
    1,530Goodwill
    
    
    1,4413,555Liabilities:Accounts payable
    
    
    1,120Note payable
    
    
    71,127Total purchase price as of December 31, 2006
    
    $
    2,428
  Summary of Acquired Intangibles
(In thousands)
 Life
    
    
    Grossin Years
    
    
    AmountPatents and trademarks
    
    
    15
    
    
    $
    710Non-compete covenants
    
    
    7
    
    
    
    820$
    1,530
   7




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CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED
DECEMBER 31, 2006(Unaudited)
 Unaudited Pro Forma Results
(In thousands, except per share data)
 Three Months Ended
    
    Six Months EndedDecember 31,
    
    December 31,
    
    December 31,
    
    December 31,2006
    
    2005
    
    2006
    
    2005Net sales(1)As reported
    
    $
    26,563
    
    
    $
    28,629
    
    
    $
    54,689
    
    
    $
    59,652Pro forma
    
    
    26,563
    
    
    
    28,629
    
    
    
    54,689
    
    
    
    59,652Net income(2)As reported
    
    $
    1,527
    
    
    $
    1,697
    
    
    $
    3,411
    
    
    $
    3,429Pro forma
    
    
    1,527
    
    
    
    1,941
    
    
    
    3,411
    
    
    
    3,967Diluted earnings per shareAs reported
    
    $
    0.29
    
    
    $
    0.33
    
    
    $
    0.65
    
    
    $
    0.66Pro forma
    
    
    0.29
    
    
    
    0.37
    
    
    
    0.65
    
    
    
    0.76
 
 (1)
    
    Since net sales of Marketing Impressions, Inc. represent sales to Craftmade,
they eliminate in consolidation. Net sales of PHI have historically been included in
consolidated net sales of the Company in accordance with FIN 46R. Accordingly, pro forma
net sales equal actual net sales.(2)
    
    Pro forma net income includes the remaining 50% net income of PHI (minority
interest portion) plus additional gross margin for certain products, less interest,
depreciation, amortization, and consulting fees. 8




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CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED
DECEMBER 31, 2006(Unaudited)
   Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2006
    
    
    2005
    
    
    2006
    
    
    2005(In thousands, except per share data)Basic and diluted earnings per share:NumeratorNet income
    
    $
    1,500
    
    
    $
    1,697
    
    
    $
    3,384
    
    
    $
    3,429Denominator for basic EPSWeighted average common shares outstanding
    
    
    5,204
    
    
    
    5,200
    
    
    
    5,204
    
    
    
    5,200Denominator for diluted EPSWeighted average common shares outstanding
    
    
    5,204
    
    
    
    5,200
    
    
    
    5,204
    
    
    
    5,200Incremental shares for stock options
    
    
    2
    
    
    
    10
    
    
    
    3
    
    
    
    10Dilutive weighted average common shares
    
    
    5,206
    
    
    
    5,210
    
    
    
    5,207
    
    
    
    5,210Basic earnings per share
    
    $
    0.29
    
    
    $
    0.33
    
    
    $
    0.65
    
    
    $
    0.66Diluted earnings per share
    
    $
    0.29
    
    
    $
    0.33
    
    
    $
    0.65
    
    
    $
    0.66
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CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED
DECEMBER 31, 2006(Unaudited)
     Summary of Segment Information
 Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2006
    
    
    2005
    
    
    2006
    
    
    2005(In thousands)Net salesCraftmade
    
    $
    13,778
    
    
    $
    15,146
    
    
    $
    30,229
    
    
    $
    31,656TSI
    
    
    12,785
    
    
    
    13,483
    
    
    
    24,460
    
    
    
    27,996Total
    
    $
    26,563
    
    
    $
    28,629
    
    
    $
    54,689
    
    
    $
    59,652Income from operationsCraftmade
    
    $
    1,338
    
    
    $
    2,164
    
    
    $
    3,313
    
    
    $
    4,545TSI
    
    
    1,850
    
    
    
    1,523
    
    
    
    3,373
    
    
    
    2,832Total
    
    $
    3,188
    
    
    $
    3,687
    
    
    $
    6,686
    
    
    $
    7,377Net incomeCraftmade
    
    $
    618
    
    
    $
    1,198
    
    
    $
    1,693
    
    
    $
    2,543TSI
    
    
    882
    
    
    
    499
    
    
    
    1,691
    
    
    
    886Total
    
    $
    1,500
    
    
    $
    1,697
    
    
    $
    3,384
    
    
    $
    3,429
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CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED
DECEMBER 31, 2006(Unaudited)
  Share-Based Payment
  Stock-Based Compensation Expense
 Three Months Ended
    
    Six Months EndedDecember 31,
    
    December 31,2006
    
    2005
    
    2006
    
    2005(In thousands)Stock-based compensation expense recognized:Selling, general & administrative
    
    $
    7
    
    
    $
    9
    
    
    $
    11
    
    
    $
    9
  Future Stock-Based Compensation Expense
 ExpectedFutureFiscal Year Ending
    
    CompensationJune 30,
    
    Cost(In thousands)2007 (remaining six months)
    
    $
    412008
    
    
    822009
    
    
    822010
    
    
    822011
    
    
    34
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CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED
DECEMBER 31, 2006(Unaudited)
  Stock Option Information
 WeightedAverageWeighted
    
    
    RemainingAverage
    
    
    ContractualNumber of
    
    
    Exercise
    
    
    LifeShares
    
    
    Price
    
    
    (Years)Outstanding at June 30, 2006
    
    
    19,500
    
    
    $
    15.78
    
    
    
    6.1Options granted
    
    
    60,000
    
    
    
    18.85
    
    
    
    9.9Options exercised
    
    
    
    
    
    
    
    
    
    
    Options forfeited
    
    
    
    
    
    
    
    
    
    
    Options expired
    
    
    
    
    
    
    
    
    
    
    Outstanding at December 31, 2006
    
    
    79,500
    
    
    $
    18.10
    
    
    
    9.0Exercisable at December 31, 2006
    
    
    19,500
    
    
    $
    15.78
    
    
    
    6.1
  Summary of Stock Option Assumptions
 Grant DateNovember 28,
    
    February 16,
    
    February 16,2006
    
    2006
    
    2005Expected volatility
    
    
    36
    %
    
    
    45
    %
    
    
    47
    %Risk-free interest rate
    
    
    4.9
    %
    
    
    4.5
    %
    
    
    3.7
    %Expected lives
    
    4 years
    
    4 years
    
    4 yearsDividend yield
    
    
    2.5
    %
    
    
    2.7
    %
    
    
    1.9
    %Weighted average fair
value of options granted
    
    $
    5.46
    
    
    $
    5.88
    
    
    $
    7.43
   12




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Disclosure Regarding Forward-looking Statements
  Critical Accounting Policies and Estimates
  13




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Results of Operations
  Three Months Ended December 31, 2006 Compared to Three Months Ended December 31, 2005
  Summary Income Statement by Segment (Dollars in thousands)
 Three Months Ended
    
    
    Three Months EndedDecember 31, 2006
    
    
    December 31, 2005Craftmade
    
    
    TSI
    
    
    Total
    
    
    Craftmade
    
    
    TSI
    
    
    TotalNet sales
    
    $
    13,778
    
    
    $
    12,785
    
    
    $
    26,563
    
    
    $
    15,146
    
    
    $
    13,483
    
    
    $
    28,629Cost of goods sold
    
    
    (8,873
    )
    
    
    (9,166
    )
    
    
    (18,039
    )
    
    
    (9,765
    )
    
    
    (10,276
    )
    
    
    (20,041
    )Gross profit
    
    
    4,905
    
    
    
    3,619
    
    
    
    8,524
    
    
    
    5,381
    
    
    
    3,207
    
    
    
    8,588Gross profit as a % of net sales
    
    
    35.6
    %
    
    
    28.3
    %
    
    
    32.1
    %
    
    
    35.5
    %
    
    
    23.8
    %
    
    
    30.0
    %Selling, general and administrative
    
    
    (3,427
    )
    
    
    (1,708
    )
    
    
    (5,135
    )
    
    
    (3,073
    )
    
    
    (1,675
    )
    
    
    (4,748
    )As a % of net sales
    
    
    24.9
    %
    
    
    13.4
    %
    
    
    19.3
    %
    
    
    20.3
    %
    
    
    12.4
    %
    
    
    16.6
    %Depreciation and amortization
    
    
    (140
    )
    
    
    (61
    )
    
    
    (201
    )
    
    
    (144
    )
    
    
    (9
    )
    
    
    (153
    )Total operating expenses
    
    
    (3,567
    )
    
    
    (1,769
    )
    
    
    (5,336
    )
    
    
    (3,217
    )
    
    
    (1,684
    )
    
    
    (4,901
    )Income from operations
    
    
    1,338
    
    
    
    1,850
    
    
    
    3,188
    
    
    
    2,164
    
    
    
    1,523
    
    
    
    3,687Interest expense, net
    
    
    (395
    )
    
    
    2
    
    
    
    (393
    )
    
    
    (302
    )
    
    
    (20
    )
    
    
    (322
    )Income before income taxes
and minority interests
    
    
    943
    
    
    
    1,852
    
    
    
    2,795
    
    
    
    1,862
    
    
    
    1,503
    
    
    
    3,365Provision for income taxes
    
    
    (325
    )
    
    
    (457
    )
    
    
    (782
    )
    
    
    (664
    )
    
    
    (265
    )
    
    
    (929
    )Income before minority interests
    
    
    618
    
    
    
    1,395
    
    
    
    2,013
    
    
    
    1,198
    
    
    
    1,238
    
    
    
    2,436Minority interests
    
    
    
    
    
    
    (513
    )
    
    
    (513
    )
    
    
    
    
    
    
    (739
    )
    
    
    (739
    )Net income
    
    $
    618
    
    
    $
    882
    
    
    $
    1,500
    
    
    $
    1,198
    
    
    $
    499
    
    
    $
    1,697
 Net Sales.
 ®
  14




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##### Table of Contents



Net Sales of TSI Segment
(Dollars in thousands)
 Trade
    
    
    Design
    
    
    SegmentThree Months Ended
    
    Source
    
    
    Trends
    
    
    TotalDecember 31, 2006
    
    $
    7,101
    
    
    $
    5,684
    
    
    $
    12,785December 31, 2005
    
    
    8,106
    
    
    
    5,377
    
    
    
    13,483Dollar increase/(decrease)
    
    $
    (1,005
    )
    
    $
    307
    
    
    $
    (698
    )Percent increase/(decrease)
    
    
    (12.4
    %)
    
    
    5.7
    %
    
    
    (5.2
    %)
    Gross Profit.
 15




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##### Table of Contents



Gross Profit as a Percentage of Net Sales of TSI
 Trade
    
    Design
    
    SegmentThree Months Ended
    
    Source
    
    Trends
    
    TotalDecember 31, 2006
    
    
    28.2
    %
    
    
    28.5
    %
    
    
    28.3
    %December 31, 2005
    
    
    22.0
    %
    
    
    26.5
    %
    
    
    23.8
    %Percent increase/(decrease)
    
    
    6.2
    %
    
    
    2.0
    %
    
    
    4.5
    %
   Selling, General and Administrative Expenses.
 16




---



##### Table of Contents





Selling, General and Administrative Expenses
(Dollars in thousands)


Increase/Three Months Ended
    
    
    (Decrease)December 31,
    
    
    December 31,
    
    
    Over Prior2006
    
    
    2005
    
    
    Year PeriodSalaries and wages
    
    $
    1,809
    
    
    $
    1,682
    
    
    $
    127Accounting, legal and consulting
    
    
    595
    
    
    
    448
    
    
    
    147Other
    
    
    2,731
    
    
    
    2,618
    
    
    
    113$
    5,135
    
    
    $
    4,748
    
    
    $
    387










Depreciation and Amortization.


Interest Expense.


Minority Interests.


17



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##### Table of Contents



Provision for Income Taxes.
 Six Months Ended December 31, 2006 Compared to Six Months Ended December 31, 2005
  Summary Income Statement by Segment
(Dollars in thousands)
 Six Months Ended
    
    
    Six Months EndedDecember 31, 2006
    
    
    December 31, 2005Craftmade
    
    
    TSI
    
    
    Total
    
    
    Craftmade
    
    
    TSI
    
    
    TotalNet sales
    
    $
    30,229
    
    
    $
    24,460
    
    
    $
    54,689
    
    
    $
    31,656
    
    
    $
    27,996
    
    
    $
    59,652Cost of goods sold
    
    
    (19,572
    )
    
    
    (17,811
    )
    
    
    (37,383
    )
    
    
    (20,415
    )
    
    
    (21,903
    )
    
    
    (42,318
    )Gross profit
    
    
    10,657
    
    
    
    6,649
    
    
    
    17,306
    
    
    
    11,241
    
    
    
    6,093
    
    
    
    17,334Gross profit as a % of net sales
    
    
    35.3
    %
    
    
    27.2
    %
    
    
    31.6
    %
    
    
    35.5
    %
    
    
    21.8
    %
    
    
    29.1
    %Selling, general and administrative
    
    
    (7,065
    )
    
    
    (3,154
    )
    
    
    (10,219
    )
    
    
    (6,403
    )
    
    
    (3,243
    )
    
    
    (9,646
    )As a % of net sales
    
    
    23.4
    %
    
    
    12.9
    %
    
    
    18.7
    %
    
    
    20.2
    %
    
    
    11.6
    %
    
    
    16.2
    %Depreciation and amortization
    
    
    (279
    )
    
    
    (122
    )
    
    
    (401
    )
    
    
    (293
    )
    
    
    (18
    )
    
    
    (311
    )Total operating expenses
    
    
    (7,344
    )
    
    
    (3,276
    )
    
    
    (10,620
    )
    
    
    (6,696
    )
    
    
    (3,261
    )
    
    
    (9,957
    )Income from operations
    
    
    3,313
    
    
    
    3,373
    
    
    
    6,686
    
    
    
    4,545
    
    
    
    2,832
    
    
    
    7,377Interest expense, net
    
    
    (732
    )
    
    
    (29
    )
    
    
    (761
    )
    
    
    (580
    )
    
    
    (46
    )
    
    
    (626
    )Income before income taxes
and minority interests
    
    
    2,581
    
    
    
    3,344
    
    
    
    5,925
    
    
    
    3,965
    
    
    
    2,786
    
    
    
    6,751Provision for income taxes
    
    
    (888
    )
    
    
    (875
    )
    
    
    (1,763
    )
    
    
    (1,422
    )
    
    
    (428
    )
    
    
    (1,850
    )Income before minority interests
    
    
    1,693
    
    
    
    2,469
    
    
    
    4,162
    
    
    
    2,543
    
    
    
    2,358
    
    
    
    4,901Minority interests
    
    
    
    
    
    
    (778
    )
    
    
    (778
    )
    
    
    
    
    
    
    (1,472
    )
    
    
    (1,472
    )Net income
    
    $
    1,693
    
    
    $
    1,691
    
    
    $
    3,384
    
    
    $
    2,543
    
    
    $
    886
    
    
    $
    3,429
 Net Sales.
 ®
 18




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##### Table of Contents



Net Sales of TSI Segment
(Dollars in thousands)
 Trade
    
    
    Design
    
    
    SegmentSix Months Ended
    
    Source
    
    
    Trends
    
    
    TotalDecember 31, 2006
    
    $
    14,484
    
    
    $
    9,976
    
    
    $
    24,460December 31, 2005
    
    
    16,940
    
    
    
    11,056
    
    
    
    27,996Dollar increase/(decrease)
    
    $
    (2,456
    )
    
    $
    (1,080
    )
    
    $
    (3,536
    )Percent increase/(decrease)
    
    
    (14.5
    %)
    
    
    (9.8
    %)
    
    
    (12.6
    %)
     19




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##### Table of Contents



Gross Profit.
    Gross Profit as a Percentage of Net Sales of TSI
 Trade
    
    Design
    
    SegmentSix Months Ended
    
    Source
    
    Trends
    
    TotalDecember 31, 2006
    
    
    28.3
    %
    
    
    25.6
    %
    
    
    27.2
    %December 31, 2005
    
    
    16.6
    %
    
    
    23.6
    %
    
    
    21.8
    %Percent increase/(decrease)
    
    
    11.7
    %
    
    
    2.0
    %
    
    
    5.4
    %
   20




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##### Table of Contents



Selling, General and Administrative Expenses.
 Selling, General and Administrative Expenses
(Dollars in thousands)
 Increase/Six Months Ended
    
    
    (Decrease)December 31,
    
    
    December 31,
    
    
    Over Prior2006
    
    
    2005
    
    
    Year PeriodSalaries and wages
    
    $
    3,486
    
    
    $
    3,375
    
    
    $
    111Accounting, legal and consulting
    
    
    1,062
    
    
    
    1,072
    
    
    
    (10
    )Other
    
    
    5,671
    
    
    
    5,199
    
    
    
    472$
    10,219
    
    
    $
    9,646
    
    
    $
    573
    Depreciation and Amortization.
 Interest Expense.
 Minority Interests.
 21




---



##### Table of Contents



Provision for Income Taxes.
 Liquidity and Capital Resources
      Recent Accounting Pronouncements
   22




---



##### Table of Contents



Outstanding Debt
  Summary of Revolving Lines of Credit and Notes Payable
At December 31, 2006
 OutstandingCommitment
    
    
    Balance
    
    
    Interest Rate
    
    MaturityRevolving line of credit
    
    $
    30,000,000
    
    
    $
    21,162,000
    
    
    LIBOR plus 1.50%
    
    September 1, 2009Note payable  facility
    
    
    N/A
    
    
    
    802,000
    
    
    
    8.302%
    
    January 1, 2008$
    21,964,000
    23




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Foreign Currency Risk
 General
   USD:TWD
    
    USD:YUANJune 30, 2005
    
    
    31.665
    
    
    
    8.287September 30, 2005
    
    
    33.270
    
    
    
    8.110December 31, 2005
    
    
    32.951
    
    
    
    8.073March 31, 2006
    
    
    32.568
    
    
    
    8.035June 30, 2006
    
    
    32.619
    
    
    
    8.006September 30, 2006
    
    
    33.119
    
    
    
    7.917December 31, 2006
    
    
    32.590
    
    
    
    7.817
 24




---



##### Table of Contents



Summary of Foreign Purchases
Quarter Ended December 31, 2006
(In thousands)
 China
    
    $
    13,420Taiwan
    
    
    848
  Hypothetical Appreciation
of Foreign Currencies
(Dollars in thousands)
 Annual
    
    AnnualForeign
    
    Increase in
    
    Decrease inCurrency
    
    Cost of
    
    NetAppreciation
    
    Sales
    
    Income1%
    
    $
    537
    
    
    $
    3255%
    
    
    2,683
    
    
    
    1,624
 Managing Market Risk
 Other Market Risks.
 25




---



##### Table of Contents



Item 4. Controls and Procedures
 Disclosure Controls and Procedures
  Changes in Internal Controls
  26




---



##### Table of Contents



PART II
OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  Number of Votesof Common StockNominee
    
    For
    
    WithheldJames R. Ridings
    
    
    4,389,551
    
    
    
    28,353Clifford F. Crimmings
    
    
    4,356,333
    
    
    
    57,021John S. DeBlois
    
    
    4,381,677
    
    
    
    27,127William E. Bucek
    
    
    4,091,294
    
    
    
    321,577L. Dale Griggs
    
    
    4,119,587
    
    
    
    293,767A. Paul Knuckley
    
    
    4,336,888
    
    
    
    76,466R. Don Morris
    
    
    4,091,294
    
    
    
    322,060Lary C. Snodgrass
    
    
    4,338,038
    
    
    
    75,316Richard T. Walsh
    
    
    4,090,471
    
    
    
    322,883
 27




---



##### Table of Contents



Number of VotesNumber of Votes Voted For
    
    Voted Against
    
    Abstentions4,388,409
    
    
    22,465
    
    
    
    2,480
  Number of VotesNumber of Votes Voted For
    
    Voted Against
    
    Abstentions
    
    Non-Votes3,093,462
    
    
    184,662
    
    
    
    31,258
    
    
    
    1,103,972
 
 Item 5. Other Information
  
 Item 6. Exhibits
 2.1
    
    Stock Purchase Agreement between Craftmade International, Inc., Trade
Source International, Inc., and Robert W. Lackey, dated September 15, 2006,
previously filed as Exhibit 10.1 to Form 8-K dated September 15, 2006 (File No.
000-26667), and incorporated by reference herein.Pursuant to Item 601(b)(2) of Regulation S-K, the Company has not filed herewith
the schedules and exhibits to the foregoing exhibit and agrees to furnish
supplementally to the Securities and Exchange Commission, upon request, any
omitted schedules or similar attachments to the foregoing exhibit.2.2
    
    Agreement for the Purchase and Sale of Personal Goodwill between Trade
Source International, Inc. and Robert Lackey, dated September 15, 2006, previously
filed as Exhibit 10.2 to Form 8-K dated September 15, 2006 (File No. 000-26667), and
incorporated by reference herein.2.3
    
    Agreement for the Purchase and Sale of Personal Goodwill between Trade
Source International, Inc. and Robert Lackey, Jr., dated September 15, 2006,
previously filed as Exhibit 10.3 to Form 8-K dated September 15, 2006 (File No.
000-26667), and incorporated by reference herein.2.4
    
    Intellectual Property Assignment by and between Trade Source International,
Inc., Robert W. Lackey, Robert W. Lackey, Jr., RWL Incorporated f/k/a Robert W.
Lackey Corporation and R.L. Products Corporation, dated September 15, 2006,
previously filed as Exhibit 10.4 to Form 8-K dated September 15, 2006 (File No.
000-26667), and incorporated by reference herein.2.5
    
    Non-Competition Agreement between Trade Source International, Inc. and
Robert W. Lackey, dated September 15, 2006, previously filed as Exhibit 10.5 to Form
8-K dated September 15, 2006 (File No. 000-26667), and incorporated by reference
herein.
 28




---



##### Table of Contents



2.6
    
    Non-Competition Agreement between Trade Source International and Robert W.
Lackey, Jr., dated September 15, 2006, previously filed as Exhibit 10.6 to Form 8-K
dated September 15, 2006 (File No. 000-26667), and incorporated by reference
herein.2.7
    
    Consulting Agreement by and between Craftmade International, Inc., Trade
Source International, Inc. and Imagine One Resources, LLC, dated September 15, 2006,
previously filed as Exhibit 10.7 to Form 8-K dated September 15, 2006 (File No.
000-26667), and incorporated by reference herein.2.8
    
    Partially Subordinate Security Agreement among Trade Source International,
Inc., Marketing Impressions, Inc., Prime Home Impressions, LLC, and Robert Lackey,
(Lackey), as collateral agent for Lackey, Robert W. Lackey, Jr., Imagine One
Resources, LLC, RWL Corporation and R.L. Products Corporation, dated September 15,
2006, previously filed as Exhibit 10.8 to Form 8-K dated September 15, 2006 (File No.
000-26667), and incorporated by reference herein.2.9
    
    Subordination Agreement by and among Robert W. Lackey (Lackey), as
collateral agent for Lackey, Robert W. Lackey, Jr., Imagine One Resources, LLC, RWL
Corporation, R.L. Products Corporation, and The Frost National Bank, Trade Source
International, Inc., Marketing Impressions, Inc., Prime/Home Impressions, LLC and
Craftmade International, Inc., dated September 15, 2006, previously filed as Exhibit
10.9 to Form 8-K dated September 15, 2006 (File No. 000-26667), and incorporated by
reference herein.2.10
    
    Agreement and Plan of Merger by and among Craftmade International, Inc.,
Bill Teiber Co., Inc., Teiber Lighting Products, Inc., Todd Teiber and Edward
Oberstein dated March 1, 2005, previously filed as Exhibit 10.1 to Form 8-K dated
March 1, 2005 (File No. 000-26667), and incorporated by reference herein.2.11
    
    Agreement and Plan of Merger, dated as of July 1, 1998, by and among
Craftmade International, Inc., Trade Source International, Inc. a Delaware
corporation, Neall and Leslie Humphrey, John DeBlois, the Wiley Family Trust, James
Bezzerides, the Bezzco Inc. Employee Retirement Trust and Trade Source International,
Inc, a California corporation, filed as Exhibit 2.1 to the Companys Current Report
on Form 8-K filed July 15, 1998 (File No. 33-33594-FW) and incorporated by reference
herein.3.1
    
    Certificate of Incorporation of the Company, filed as Exhibit 3(a)(2) to
the Companys Post Effective Amendment No. 1 to Form S-18 (File No. 33-33594-FW), and
incorporated by reference herein.3.2
    
    Certificate of Amendment of Certificate of Incorporation of the Company,
dated March 24, 1992, and filed as Exhibit 4.2 to the Companys Form S-8 (File No.
333-44337), and incorporated by reference herein.3.3
    
    Amended and Restated Bylaws of the Company, filed as Exhibit 3(b)(2) to the
Companys Post Effective Amendment No. 1 to Form S-8 (File No. 33-33594-FW), and
incorporated by reference herein.4.1
    
    Specimen Common Stock Certificate, filed as Exhibit 4.4 to the Companys
registration statement on Form S-3 (File No. 333-70823), and incorporated by
reference herein.
 29




---



##### Table of Contents



4.2
    
    Rights Agreement, dated as of June 23, 1999, between Craftmade
International, Inc. and Harris Trust and Savings Bank, as Rights Agent, previously
filed as an exhibit to Form 8-K dated July 9, 1999 (File No. 000-26667), and
incorporated by reference herein.10.1
    
    Assignment of Rents and Leases dated December 21, 1995, between Craftmade
International, Inc. and Allianz Life Insurance Company of North America (including
exhibits), previously filed as an exhibit in Form 10Q for the quarter ended
December 31, 1995, and herein incorporated by reference.10.2
    
    Deed of Trust, Mortgage and Security Agreement made by Craftmade
International, Inc., dated December 21, 1995, to Patrick M. Arnold, as trustee for
the benefit of Allianz Life Insurance Company of North America (including exhibits),
previously filed as an exhibit in Form 10-Q for the quarter ended December 31, 1995,
and herein incorporated by reference.10.3
    
    Craftmade International, Inc. 1999 Stock Option Plan, filed as Exhibit A to
the Companys Proxy Statement on Schedule 14A filed October 4, 2000 (File No.
000-26667) and herein incorporated by reference.10.4
    
    Craftmade International, Inc. 2000 Non-Employee Director Stock Plan, filed
as Exhibit B to the Companys Proxy Statement on Schedule 14A filed October 4, 2000
(File No. 000-26667) and herein incorporated by reference.10.5
    
    Second Amended and Restated Loan Agreement with Frost dated September 18,
2006, previously filed as Exhibit 10.1 to Form 8-K dated September 18, 2006 (File No.
000-26667), and incorporated by reference herein.10.6
    
    Revolving Promissory Note (the Note) with dated September 18, 2006,
previously filed as Exhibit 10.2 to Form 8-K dated September 18, 2006 (File No.
000-26667), and incorporated by reference herein.10.7
    
    Craftmade International, Inc. 2006 Long-Term Incentive Plan, previously
filed as Exhibit 10.1 to Form 8-K dated November 28, 2006 (File No. 000-26667), and
incorporated by reference herein.10.8
    
    Incentive Stock Option Agreement, previously filed as Exhibit 10.2 to Form
8-K dated November 28, 2006 (File No. 000-26667), and incorporated by reference
herein.10.9
    
    Non-qualified Stock Option Agreement, previously filed as Exhibit 10.2 to
Form 8-K dated November 28, 2006 (File No. 000-26667), and incorporated by reference
herein.10.10
    
    Stock Appreciation Rights Agreement, previously filed as Exhibit 10.2 to
Form 8-K dated November 28, 2006 (File No. 000-26667), and incorporated by reference
herein.10.11
    
    Restricted Stock Award Agreement, previously filed as Exhibit 10.2 to Form
8-K dated November 28, 2006 (File No. 000-26667), and incorporated by reference
herein.31.1*
    
    Certification of James R. Ridings, Chief Executive Officer of the Company,
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 30




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##### Table of Contents



31.2*
    
    Certification of J. Marcus Scrudder, Chief Financial Officer of the
Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1*
    
    Certification of James R. Ridings, Chairman of the Board, President and
Chief Executive Officer of the Company, pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.32.2*
    
    Certification of J. Marcus Scrudder, Chief Financial Officer of the
Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Each document marked with an asterisk is filed or furnished herewith. 31




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##### Table of Contents



SIGNATURES
  CRAFTMADE INTERNATIONAL, INC.
(Registrant)Date:  February 7, 2007
    /s/ James R. RidingsJAMES R. RIDINGSChairman of the Board and
Chief Executive OfficerDate:  February 7, 2007
    /s/ J. Marcus ScrudderJ. MARCUS SCRUDDER Chief Financial Officer 32




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##### Table of Contents



Index to Exhibits
 ExhibitNumber
    
    Description2.1
    
    Stock Purchase Agreement between Craftmade International, Inc., Trade
Source International, Inc., and Robert W. Lackey, dated September 15, 2006,
previously filed as Exhibit 10.1 to Form 8-K dated September 15, 2006 (File No.
000-26667), and incorporated by reference herein.Pursuant to Item 601(b)(2) of Regulation S-K, the Company has not filed herewith
the schedules and exhibits to the foregoing exhibit and agrees to furnish
supplementally to the Securities and Exchange Commission, upon request, any
omitted schedules or similar attachments to the foregoing exhibit.2.2
    
    Agreement for the Purchase and Sale of Personal Goodwill between Trade
Source International, Inc. and Robert Lackey, dated September 15, 2006, previously
filed as Exhibit 10.2 to Form 8-K dated September 15, 2006 (File No. 000-26667), and
incorporated by reference herein.2.3
    
    Agreement for the Purchase and Sale of Personal Goodwill between Trade
Source International, Inc. and Robert Lackey, Jr., dated September 15, 2006,
previously filed as Exhibit 10.3 to Form 8-K dated September 15, 2006 (File No.
000-26667), and incorporated by reference herein.2.4
    
    Intellectual Property Assignment by and between Trade Source International,
Inc., Robert W. Lackey, Robert W. Lackey, Jr., RWL Incorporated f/k/a Robert W.
Lackey Corporation and R.L. Products Corporation, dated September 15, 2006,
previously filed as Exhibit 10.4 to Form 8-K dated September 15, 2006 (File No.
000-26667), and incorporated by reference herein.2.5
    
    Non-Competition Agreement between Trade Source International, Inc. and
Robert W. Lackey, dated September 15, 2006, previously filed as Exhibit 10.5 to Form
8-K dated September 15, 2006 (File No. 000-26667), and incorporated by reference
herein.2.6
    
    Non-Competition Agreement between Trade Source International and Robert W.
Lackey, Jr., dated September 15, 2006, previously filed as Exhibit 10.6 to Form 8-K
dated September 15, 2006 (File No. 000-26667), and incorporated by reference herein.2.7
    
    Consulting Agreement by and between Craftmade International, Inc., Trade
Source International, Inc. and Imagine One Resources, LLC, dated September 15, 2006,
previously filed as Exhibit 10.7 to Form 8-K dated September 15, 2006 (File No.
000-26667), and incorporated by reference herein.2.8
    
    Partially Subordinate Security Agreement among Trade Source International,
Inc., Marketing Impressions, Inc., Prime Home Impressions, LLC, and Robert Lackey,
(Lackey), as collateral agent for Lackey, Robert W. Lackey, Jr., Imagine One
Resources, LLC, RWL Corporation and R.L. Products Corporation, dated September 15,
2006, previously filed as Exhibit 10.8 to Form 8-K dated September 15, 2006 (File No.
000-26667), and incorporated by reference herein.
 33




---



##### Table of Contents



ExhibitNumber
    
    Description2.9
    
    Subordination Agreement by and among Robert W. Lackey (Lackey), as
collateral agent for Lackey, Robert W. Lackey, Jr., Imagine One Resources, LLC, RWL
Corporation, R.L. Products Corporation, and The Frost National Bank, Trade Source
International, Inc., Marketing Impressions, Inc., Prime/Home Impressions, LLC and Craftmade International, Inc., dated September 15, 2006, previously filed as
Exhibit 10.9 to Form 8-K dated September 15, 2006 (File No. 000-26667), and
incorporated by reference herein.2.10
    
    Agreement and Plan of Merger by and among Craftmade International, Inc.,
Bill Teiber Co., Inc., Teiber Lighting Products, Inc., Todd Teiber and Edward
Oberstein dated March 1, 2005, previously filed as Exhibit 10.1 to Form 8-K dated
March 1, 2005 (File No. 000-26667), and incorporated by reference herein.2.11
    
    Agreement and Plan of Merger, dated as of July 1, 1998, by and among
Craftmade International, Inc., Trade Source International, Inc. a Delaware
corporation, Neall and Leslie Humphrey, John DeBlois, the Wiley Family Trust, James
Bezzerides, the Bezzco Inc. Employee Retirement Trust and Trade Source International,
Inc, a California corporation, filed as Exhibit 2.1 to the Companys Current Report
on Form 8-K filed July 15, 1998 (File No. 33-33594-FW) and incorporated by reference
herein.3.1
    
    Certificate of Incorporation of the Company, filed as Exhibit 3(a)(2) to
the Companys Post Effective Amendment No. 1 to Form S-18 (File No. 33-33594-FW), and
incorporated by reference herein.3.2
    
    Certificate of Amendment of Certificate of Incorporation of the Company,
dated March 24, 1992, and filed as Exhibit 4.2 to the Companys Form S-8 (File No.
333-44337), and incorporated by reference herein.3.3
    
    Amended and Restated Bylaws of the Company, filed as Exhibit 3(b)(2) to the
Companys Post Effective Amendment No. 1 to Form S-8 (File No. 33-33594-FW), and
incorporated by reference herein.4.3
    
    Specimen Common Stock Certificate, filed as Exhibit 4.4 to the Companys
registration statement on Form S-3 (File No. 333-70823), and incorporated by
reference herein.4.4
    
    Rights Agreement, dated as of June 23, 1999, between Craftmade
International, Inc. and Harris Trust and Savings Bank, as Rights Agent, previously
filed as an exhibit to Form 8-K dated July 9, 1999 (File No. 000-26667), and
incorporated by reference herein.10.1
    
    Assignment of Rents and Leases dated December 21, 1995, between Craftmade
International, Inc. and Allianz Life Insurance Company of North America (including
exhibits), previously filed as an exhibit in Form 10Q for the quarter ended December
31, 1995, and herein incorporated by reference.10.2
    
    Deed of Trust, Mortgage and Security Agreement made by Craftmade
International, Inc., dated December 21, 1995, to Patrick M. Arnold, as trustee for
the benefit of Allianz Life Insurance Company of North America (including exhibits),
previously filed as an exhibit in Form 10-Q for the quarter ended December 31, 1995,
and herein incorporated by reference.
 34




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##### Table of Contents



ExhibitNumber
    
    Description10.3
    
    Craftmade International, Inc. 1999 Stock Option Plan, filed as Exhibit A to
the Companys Proxy Statement on Schedule 14A filed October 4, 2000 (File No.
000-26667) and herein incorporated by reference.10.4
    
    Craftmade International, Inc. 2000 Non-Employee Director Stock Plan, filed
as Exhibit B to the Companys Proxy Statement on Schedule 14A filed October 4, 2000
(File No. 000-26667) and herein incorporated by reference.10.5
    
    Second Amended and Restated Loan Agreement with Frost dated September 18,
2006, previously filed as Exhibit 10.1 to Form 8-K dated September 18, 2006 (File No. 000-26667), and incorporated by reference herein.10.6
    
    Revolving Promissory Note (the Note) with dated September 18, 2006,
previously filed as Exhibit 10.2 to Form 8-K dated September 18, 2006 (File No.
000-26667), and incorporated by reference herein.10.7
    
    Craftmade International, Inc. 2006 Long-Term Incentive Plan, previously
filed as Exhibit 10.1 to Form 8-K dated November 28, 2006 (File No. 000-26667), and
incorporated by reference herein.10.8
    
    Incentive Stock Option Agreement, previously filed as Exhibit 10.2 to Form
8-K dated November 28, 2006 (File No. 000-26667), and incorporated by reference
herein.10.9
    
    Non-qualified Stock Option Agreement, previously filed as Exhibit 10.2 to
Form 8-K dated November 28, 2006 (File No. 000-26667), and incorporated by reference
herein.10.10
    
    Stock Appreciation Rights Agreement, previously filed as Exhibit 10.2 to
Form 8-K dated November 28, 2006 (File No. 000-26667), and incorporated by reference
herein.10.11
    
    Restricted Stock Award Agreement, previously filed as Exhibit 10.2 to Form
8-K dated November 28, 2006 (File No. 000-26667), and incorporated by reference
herein.31.1*
    
    Certification of James R. Ridings, Chief Executive Officer of the Company,
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2*
    
    Certification of J. Marcus Scrudder, Chief Financial Officer of the
Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1*
    
    Certification of James R. Ridings, Chairman of the Board, President and
Chief Executive Officer of the Company, pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.32.2*
    
    Certification of J. Marcus Scrudder, Chief Financial Officer of the
Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Each document marked with an asterisk is filed or furnished herewith. 35