**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington, D.C.  20549**

 

**FORM 10-Q**

 

**(MarkOne)**

**x****                          QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934**

 

**For the quarterly period ended March 29, 2008**

 

**or**

 

**o****                             TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934**

 

                                            **For thetransition period from           to                                      **

 

**Commission File Number: 1-8183**

 

**SUPREMEINDUSTRIES, INC.**

(Exact name of registrant as specified in its charter)

** **

| **Delaware**                                                    | ** ** | **75-1670945**                       |
|-----------------------------------------------------------------|------------|--------------------------------------|
| (State or other jurisdiction of  incorporation or organization) |       | (I.R.S. Employer Identification No.) |
| ** **                                                      | ** ** | ** **                           |
| **2581 E. Kercher Rd., P.O. Box 237, Goshen,  Indiana**    | ** ** | **46528**                            |
| (Address of principal executive offices)                        | ** ** | (Zip Code)                           |

 

Registrant’s telephone number, including area code:  **(574) 642-3070**

 

Indicateby check mark whether the registrant (1) has filed all reports required tobe filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90days.                                     Yes  x   No  o

 

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, a non-accelerated filer, or a smaller reporting company. Seedefinitions of “large accelerated filer,” “accelerated filer,” and “smallerreporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

| Large accelerated filer  o                     |   | Accelerated filer o          |
|------------------------------------------------|--------|-----------------------------------|
|                                           |   |                              |
| Non-accelerated filer o                        |   | Smaller reporting  company x |
| (Do not check if a  smaller reporting company) |   |                              |

 

Indicateby check mark whether the registrant is a shell company (as defined in Rule 12b-2of the Exchange Act).                                                                                                                                                         Yeso   No x

 

Indicate the number of shares outstanding of each of the issuer’sclasses of common stock, as of the latest practicable date.

 
| **Common Stock ($.10 Par Value)** | ** ** | **Outstanding at May 8 , 2008** |
|-----------------------------------|------------|--------------------------------------|
| **Class A**                  | ** ** | **11,012,944**                       |
| **Class B**                  | ** ** | **2,024,133**                        |

 

 

----

 

SUPREME INDUSTRIES, INC.

 

CONTENTS

 
| ** **                                                    | ** ** | ** **                                                                                   | **Page No.** |
|---------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------|-------------------|
|                                                          |       |                                                                                         |              |
| PART I.    FINANCIAL INFORMATION     |       |
|                                                          |       |                                                                                         |              |
| ITEM 1.                                                       |       | Financial Statements.                                                                        |              |
|                                                          |       |                                                                                         |              |
|                                                          |       | Consolidated  Balance Sheets                                                                 | 1                 |
|                                                          |       |                                                                                         |              |
|                                                          |       | Consolidated Statements of Income                                                            | 3                 |
|                                                          |       |                                                                                         |              |
|                                                          |       | Consolidated Statements of Cash Flows                                                        | 4                 |
|                                                          |       |                                                                                         |              |
|                                                          |       | Notes to Consolidated Financial Statements                                                   | 5                 |
|                                                          |       |                                                                                         |              |
| ITEM 2.                                                       |       | Management’s Discussion and Analysis of  Financial Condition and Results of Operations. | 9                 |
|                                                          |       |                                                                                         |              |
| ITEM 3.                                                       |       | Quantitative  and Qualitative Disclosures About Market Risk.                                 | 16                |
|                                                          |       |                                                                                         |              |
| ITEM 4.                                                       |       | Controls and Procedures.                                                                     | 16                |
|                                                          |       |                                                                                         |              |
| PART II.      OTHER INFORMATION |       |
|                                                          |       |                                                                                         |              |
| ITEM 1.                                                       |       | Legal Proceedings.                                                                           | 17                |
|                                                          |       |                                                                                         |              |
| ITEM 2.                                                       |       | Unregistered  Sales of Equity Securities and Use of Proceeds.                                | 17                |
|                                                          |       |                                                                                         |              |
| ITEM 3.                                                       |       | Defaults Upon  Senior Securities.                                                            | 17                |
|                                                          |       |                                                                                         |              |
| ITEM 4.                                                       |       | Submission of  Matters to a Vote of Security Holders.                                        | 17                |
|                                                          |       |                                                                                         |              |
| ITEM 5.                                                       |       | Other Information.                                                                           | 17                |
|                                                          |       |                                                                                         |              |
| ITEM 6.                                                       |       | Exhibits.                                                                                    | 17                |
|                                                          |       |                                                                                         |              |
| SIGNATURES                                                    |       |
|                                                          |       |                                                                                         |              |
| INDEX TO  EXHIBITS                                            |       |
|                                                          |       |                                                                                         |              |
| EXHIBITS                                                      |       |

 

----

 

**PART I. FINANCIALINFORMATION**

 

**ITEM 1.****    FINANCIAL STATEMENTS.**

 

**Supreme Industries, Inc. and Subsidiaries**

ConsolidatedBalance Sheets

 
| ** **                                      | ** ** | **March 29,** | ** **  | **December 29,** | ** ** |
|-------------------------------------------------|------------|--------------------|-------------|-----------------------|------------|
| ** **                                      | ** ** | **2008**           | ** **  | **2007**              | ** ** |
| ** **                                      | ** ** | **(Unaudited)**    | ** **  | ** **            | ** ** |
| **ASSETS**                                      |       |               |        |                  |       |
|                                            |       |               |        |                  |       |
| **Current assets:**                             |       |               |        |                  |       |
| Cash and cash equivalents                       |       | $                  | 67,830      |                  | $          | 1,266,133 |   |
| Investments                                     |       | 3,389,666          |        | 2,215,267             |       |
| Accounts receivable, net                        |       | 28,768,411         |        | 28,628,324            |       |
| Inventories                                     |       | 51,774,184         |        | 46,643,480            |       |
| Other current assets                            |       | 6,117,122          |        | 5,171,503             |       |
|                                            |       |               |        |                  |       |
| **Total current assets**                        |       | 90,117,213         |        | 83,924,707            |       |
|                                            |       |               |        |                  |       |
| **Property, plant and equipment, at cost**      |       | 93,382,489         |        | 92,530,190            |       |
| Less, Accumulated depreciation and amortization |       | 46,084,624         |        | 45,100,465            |       |
|                                            |       |               |        |                  |       |
| **Property, plant and equipment, net**          |       | 47,297,865         |        | 47,429,725            |       |
|                                            |       |               |        |                  |       |
| **Goodwill and intangible assets, net**         |       | 1,359,798          |        | 1,371,891             |       |
| **Other assets**                                |       | 62,673             |        | 64,860                |       |
|                                            |       |               |        |                  |       |
| **Total assets**                                |       | $                  | 138,837,549 |                  | $          | 132,791,183 |   |

 

Seeaccompanying notes to consolidated financial statements.

 

1

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**Supreme Industries, Inc. and Subsidiaries**

ConsolidatedBalance Sheets, Concluded

 
| ** **                                          | ** ** | **March 29,** | ** **  | **December 29,** | ** ** |
|-----------------------------------------------------|------------|--------------------|-------------|-----------------------|------------|
| ** **                                          | ** ** | **2008**           | ** **  | **2007**              | ** ** |
| ** **                                          | ** ** | **(Unaudited)**    | ** **  | ** **            | ** ** |
| **LIABILITIES AND STOCKHOLDER’S EQUITY**       |       |               |        |                  |       |
|                                                |       |               |        |                  |       |
| **Current liabilities:**                            |       |               |        |                  |       |
| Current maturities of long-term debt                |       | $                  | 725,488     |                  | $          | 748,406 |   |
| Trade accounts payable                              |       | 15,360,839         |        | 14,642,616            |       |
| Accrued income taxes                                |       | 540,792            |        | 498,162               |       |
| Other accrued liabilities                           |       | 9,046,206          |        | 9,510,095             |       |
|                                                |       |               |        |                  |       |
| **Total current liabilities**                       |       | 25,673,325         |        | 25,399,279            |       |
|                                                |       |               |        |                  |       |
| **Long-term debt**                                  |       | 35,524,333         |        | 29,002,718            |       |
|                                                |       |               |        |                  |       |
| **Deferred income taxes**                           |       | 2,589,055          |        | 2,589,055             |       |
|                                                |       |               |        |                  |       |
| **Other long-term liabilities**                     |       | 773,300            |        | 333,046               |       |
|                                                |       |               |        |                  |       |
| **Total liabilities**                               |       | 64,560,013         |        | 57,324,098            |       |
|                                                |       |               |        |                  |       |
| **Stockholders’ equity**                       |       | 74,277,536         |        | 75,467,085            |       |
|                                                |       |               |        |                  |       |
| **Total liabilities and stockholders’ equity** |       | $                  | 138,837,549 |                  | $          | 132,791,183 |   |

 

Seeaccompanying notes to consolidated financial statements.

 

2

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**Supreme Industries, Inc. and Subsidiaries**

ConsolidatedStatements of Income (Unaudited)

 
| ** **                                                 | ** ** | **Three Months Ended** | ** ** |
|------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                 | ** ** | **March 29,**               | ** ** | **March 31,** | ** ** |
| ** **                                                 | ** ** | **2008**                         | ** ** | **2007** | ** ** |
|                                                       |       |                             |       |   |   |
| Net sales                                                  |       | $                                | 75,924,356 |   | $ | 83,891,983 |   |
| Cost of sales                                              |       | 68,333,218                       |       | 74,920,597 |   |
| **Gross profit**                                           |       | 7,591,138                        |       | 8,971,386 |   |
|                                                       |       |                             |       |   |   |
| Selling, general and administrative expenses               |       | 6,948,612                        |       | 6,929,747 |   |
| Other income                                               |       | (244,948                         | )          | (89,977 | ) |
| **Operating income**                                       |       | 887,474                          |       | 2,131,616 |   |
|                                                       |       |                             |       |   |   |
| Interest expense                                           |       | 585,960                          |       | 743,171 |   |
| **Income before income taxes**                             |       | 301,514                          |       | 1,388,445 |   |
|                                                       |       |                             |       |   |   |
| Income taxes                                               |       | 75,000                           |       | 424,000 |   |
| **Net income**                                             |       | $                                | 226,514    |   | $ | 964,445 |   |
|                                                       |       |                             |       |   |   |
| **Earnings Per Share:**                                    |       |                             |       |   |   |
| Basic                                                      |       | $                                | .02        |   | $ | .08 |   |
| Diluted                                                    |       | .02                              |       | .08 |   |
|                                                       |       |                             |       |   |   |
| **Shares used in the computation of earnings per  share:** |       |                             |       |   |   |
| Basic                                                      |       | 12,929,776                       |       | 12,726,845 |   |
| Diluted                                                    |       | 13,077,629                       |       | 12,835,053 |   |
|                                                       |       |                             |       |   |   |
| **Cash dividends per common share**                        |       | $                                | .095       |   | $ | .095 |   |

 

Seeaccompanying notes to consolidated financial statements.

 

3

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**Supreme Industries, Inc. and Subsidiaries**

ConsolidatedStatements of Cash Flows (Unaudited)

 
| ** **                                                                                   | ** ** | **Three Months Ended** | ** ** |
|----------------------------------------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                                                   | ** ** | **March 29,**               | ** ** | **March 31,** | ** ** |
| ** **                                                                                   | ** ** | **2008**                         | ** ** | **2007** | ** ** |
| **Cash flows from operating activities:**                                                    |       |                             |       |   |   |
| Net income                                                                                   |       | $                                | 226,514    |   | $ | 964,445 |   |
| Adjustments to reconcile net income to net cash provided by (used in)  operating activities: |       |                             |       |   |   |
| Depreciation and amortization                                                                |       | 1,068,221                        |       | 1,075,893 |   |
| Amortization of intangibles                                                                  |       | 12,093                           |       | 12,093 |   |
| Provision for losses on doubtful receivables                                                 |       | 38,180                           |       | 42,293 |   |
| Stock-based compensation expense                                                             |       | 131,632                          |       | 48,668 |   |
| Losses (gains) on disposal of property, plant and equipment                                  |       | 532                              |       | (70 | ) |
| Changes in operating assets and liabilities                                                  |       | (5,800,025                       | )          | 2,156,468 |   |
|                                                                                         |       |                             |       |   |   |
| **Net cash provided by (used in) operating  activities**                                     |       | (4,322,853                       | )          | 4,299,790 |   |
|                                                                                         |       |                             |       |   |   |
| **Cash flows from investing activities:**                                                    |       |                             |       |   |   |
| Additions to property, plant and equipment                                                   |       | (954,444                         | )          | (999,968 | ) |
| Proceeds from sale of property, plant and equipment                                          |       | 17,551                           |       | 70 |   |
| Purchases of investments                                                                     |       | (1,226,173                       | )          | (1,200,000 | ) |
| Decrease in other assets                                                                     |       | 2,186                            |       | 13,978 |   |
|                                                                                         |       |                             |       |   |   |
| **Net cash used in investing activities**                                                    |       | (2,160,880                       | )          | (2,185,920 | ) |
|                                                                                         |       |                             |       |   |   |
| **Cash flows from financing activities:**                                                    |       |                             |       |   |   |
| Proceeds from revolving line of credit and other long-term debt                              |       | 34,408,551                       |       | 31,577,297 |   |
| Repayments of revolving line of credit and other long-term debt                              |       | (27,909,854                      | )          | (34,042,658 | ) |
| Payment of cash dividends                                                                    |       | (1,238,017                       | )          | (1,204,866 | ) |
| Proceeds from exercise of stock options                                                      |       | 24,750                           |       | 359,813 |   |
|                                                                                         |       |                             |       |   |   |
| **Net cash provided by (used in) financing activities**                                      |       | 5,285,430                        |       | (3,310,414 | ) |
|                                                                                         |       |                             |       |   |   |
| **Change in cash and cash equivalents**                                                      |       | (1,198,303                       | )          | (1,196,544 | ) |
|                                                                                         |       |                             |       |   |   |
| **Cash and cash equivalents, beginning of period**                                           |       | 1,266,133                        |       | 1,307,463 |   |
|                                                                                         |       |                             |       |   |   |
| **Cash and cash equivalents, end of period**                                                 |       | $                                | 67,830     |   | $ | 110,919 |   |

 

Seeaccompanying notes to consolidated financial statements.

 

4

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**SupremeIndustries, Inc. and Subsidiaries**

NotesTo Consolidated Financial Statements

 

NOTE1 - BASIS OF PRESENTATION AND OPINION OF MANAGEMENT

 

Theaccompanying unaudited consolidated financial statements have been prepared inaccordance with the instructions to Form 10-Q and therefore do not includeall of the information and financial statement disclosures necessary for a fairpresentation of consolidated financial position, results of operations, andcash flows in conformity with accounting principles generally accepted in theUnited States of America.  In the opinionof management, the information furnished herein includes all adjustmentsnecessary to reflect a fair statement of the interim periods reported.  All adjustments are of a normal and recurringnature.  The December 29, 2007consolidated balance sheet data was derived from audited financial statements,but does not include all disclosures required by accounting principlesgenerally accepted in the United States of America.

 

TheCompany has adopted a 52- or 53-week fiscal year ending the last Saturday inDecember.  The results of operations forthe three months ended March 29, 2008 and March 31, 2007 are for13-week periods.

 

NOTE2 - OTHER COMPREHENSIVE INCOME (LOSS)

 

Othercomprehensive income (loss) includes unrealized losses on hedge-activity, netof tax, and unrealized gains on available-for-sale securities, net of tax.  Other comprehensive loss for the three-monthperiods ended March 29, 2008 and March 31, 2007 was $334,427 and$46,899, respectively.  Totalcomprehensive income (loss) combines net income and other comprehensive income(loss).  Total comprehensive income(loss) for the three month periods ended March 29, 2008 and March 31,2007 was $(107,913) and $917,546, respectively.

 

NOTE3 - INVENTORIES

 

Inventories,which are stated at the lower of cost or market with cost determined using thefirst-in, first-out method, consist of the following:

 
| ** **       | ** ** | **March 29,** | ** ** | **December 29,** | ** ** |
|------------------|------------|--------------------|------------|-----------------------|------------|
| ** **       | ** ** | **2008**           | ** ** | **2007**              | ** ** |
| Raw materials    |       | $                  | 28,780,501 |                  | $          | 25,042,022 |   |
| Work-in-progress |       | 10,868,970         |       | 9,676,041             |       |
| Finished goods   |       | 12,124,713         |       | 11,925,417            |       |
|             |       | $                  | 51,774,184 |                  | $          | 46,643,480 |   |

 

5

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**SUPREME INDUSTRIES, INC. AND SUBSIDIARIES**

NotesTo Consolidated Financial Statements, Continued

 

Thevaluation of raw materials, work-in-progress, and finished goods inventories atinterim dates is based upon bills of materials, scrap, and other estimatedfactors that affect inventory relief. The Company has historically experienced both favorable and unfavorableadjustments resulting from physical inventories. Pre-tax physical inventoryadjustments recorded during the three-month periods ended March 29, 2008and March 31, 2007 were a favorable $48,000 and an unfavorable $161,000,respectively.  The Company continues torefine its inventory relief in an effort to minimize book to physical inventoryadjustments.

 

NOTE4 – FAIR VALUE MEASUREMENT

 

Statementof Financial Accounting Standards (“SFAS”) No. 157, “Fair ValueMeasurements,” defines fair value as the exchange price that would be receivedfor an asset or paid to transfer a liability (an exit price) in the principalor most advantageous market for the asset or liability in an orderlytransaction between market participants on the measurement date.  SFAS No. 157 also establishes a fairvalue hierarchy which requires an entity to maximize the use of observableinputs and minimize the use of unobservable inputs when measuring fairvalue.  The standard describes threelevels of inputs that may be used to measure fair value:

 

Level1: Quoted prices (unadjusted) or identical assets or liabilities in activemarkets that the entity has the ability to access as of the measurement date.

 

Level2: Significant other observable inputs other than Level 1 prices such as quotedprices for similar assets or liabilities; quoted prices in markets that are notactive; or other inputs that are observable or can be corroborated byobservable market data.

 

Level3: Significant unobservable inputs that reflect a company’s own assumptionsabout the assumptions that market participants would use in pricing and assetor liability.

 

TheCompany used the following methods and significant assumptions used to estimatethe fair value of items:

 

Investments:The fair values of investments available for sale are determined by obtainingquoted prices on nationally recognized securities exchanges (Level 1 inputs).

 

Derivatives:Our derivative instruments consist of interest rate swaps.  As such, significant fair value inputs cangenerally be verified and do not typically involve significant managementjudgments (Level 2 inputs).

 

6

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**SUPREME INDUSTRIES, INC. AND SUBSIDIARIES**

NotesTo Consolidated Financial Statements, Continued

 

NOTE5 - EARNINGS PER SHARE

 

Thenumber of shares used in the computation of basic and diluted earnings pershare are as follows:

 
| ** **                                                                                       | ** ** | **Three Months Ended** | ** ** |
|--------------------------------------------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                                                       | ** ** | **March 29,**               | ** ** | **March 31,** | ** ** |
| ** **                                                                                       | ** ** | **2008**                         | ** ** | **2007** | ** ** |
| Weighted average number of shares outstanding (used in computation of  basic earnings per share) |       | 12,929,776                       |       | 12,726,845 |   |
|                                                                                             |       |                             |       |   |   |
| Assumed exercise or issuance of shares relating to stock plans                                   |       | 147,853                          |       | 108,208 |   |
|                                                                                             |       |                             |       |   |   |
| Diluted shares outstanding (used in computation of diluted earnings per  share)                  |       | 13,077,629                       |       | 12,835,053 |   |

 

NOTE6 - STOCK-BASED COMPENSATION

 

Asummary of the status of the Company’s outstanding stock options as of March 29,2008, and changes during the three months ended March 29, 2008 are asfollows:

 
| ** **                          | ** ** | ** **         | ** ** | **Weighted -** | ** ** |
|-------------------------------------|------------|--------------------|------------|---------------------|------------|
| ** **                          | ** ** | ** **         | ** ** | **Average**         | ** ** |
| ** **                          | ** ** | **Number of** | ** ** | **Exercise**        | ** ** |
| ** **                          | ** ** | **Shares**         | ** ** | **Price**           | ** ** |
| Outstanding, December 30, 2007 |       | 989,181            |       | $                   | 6.44       |   |
| Granted                             |       | 6,000              |       | 6.20                |       |
| Exercised                           |       | (5,500             | )          | 4.50                |       |
| Forfeited                           |       | —             |       | —              |       |
| Outstanding, March 29, 2008    |       | 989,681            |       | 6.45                |       |
|                                     |            |                    |            |                     |            |  |

 

Theintrinsic value of the options exercised during the three-month period ended March 29,2008 was $7,700.  The intrinsic value ofall options outstanding at March 29, 2008 was $209,550 and outstandingoptions had a weighted-average remaining contractual life of 2.45 years.

 

NOTE7 - COMMON STOCK

 

TheCompany paid cash dividends, to all Class A and Class B commonstockholders, of nine and one-half cents ($0.095) for each of the three-monthperiods ended March 29, 2008 and March 31, 2007.

 

7

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**SUPREME INDUSTRIES, INC. AND SUBSIDIARIES**

NotesTo Consolidated Financial Statements, Concluded.

 

NOTE8 - SUBSEQUENT EVENT

 

OnMay 6, 2008, the Company’s Board of Directors declared a nine and one-halfcents ($0.095) per share cash dividend payable on May 27, 2008 to allclass A and B common stockholders of record on May 20, 2008.

 

NOTE9 – ADOPTION OF NEW ACCOUNTING STANDARD

 

In September 2006,the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”), which defines fair value,establishes a framework for measuring fair value in generally acceptedaccounting principles, and expands disclosures about fair valuemeasurements.  SFAS 157 does not requireany new fair value measurements, but provides guidance on how to measure fairvalue by providing a fair value hierarchy used to classify the source of theinformation.  SFAS 157 is effectivefor fiscal years beginning after November 15, 2007; however, on February 12,2008, the FASB issued FSP FAS 157-2 which delayed the effective date ofSFAS 157 for all nonfinancial assets and nonfinancial liabilities, exceptthose that are recognized or disclosed at fair value in the financialstatements on a recurring basis (at least annually).  This FSP partially deferred the effectivedate of Statement 157 to fiscal years beginning after November 15,2008, and interim periods within those fiscal years for items within the scopeof this FSP.  Effective for 2008, weadopted SFAS 157 except as it applies to those nonfinancial assets andnonfinancial liabilities as noted in FSP FAS 157-2. The partial adoptionof SFAS 157 did not have a material impact on our consolidated financialposition, results of operations or cash flows.

 

In February 2007, theFASB issued SFAS No. 159, “TheFair Value Option for Financial Assets and Financial Liabilities- including anAmendment of FASB Statement No. 115”**(“SFAS159”), which allows an entity to choose to measure certain financialinstruments and liabilities at fair value. Subsequent measurements for the financial instruments and liabilities anentity elects of fair value will be recognized in earnings.  SFAS 159 also establishes additionaldisclosure requirements.  SFAS 159is effective for the Company beginning in fiscal 2008.  The Company didnot elect the fair value option for any financial assets or financialliabilities.

 

In March 2008, theFASB issued SFAS No. 161, “Disclosures about Derivative Instruments andHedging Activities,” which changes the disclosure requirements for derivativeinstruments and hedging activities.  SFASNo. 161 requires enhanced disclosures about (a) how and why andentity uses derivative instruments, (b) how derivative instruments andrelated hedged items are accounted for under SFAS No. 133, “Accounting forDerivative Instruments and Hedging Activities” and its related interpretations,and (c) how derivative instruments and related hedged items affect anentity’s financial position, financial performance, and cash flows.  This statement’s disclosure requirements areeffective for fiscal years and interim periods beginning after November 15,2008.  We are currently evaluating theeffects that SFAS No. 161 may have on our consolidated financial statementdisclosures.

 

8

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| **ITEM 2.** |   | **MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION AND RESULTS OF OPERATIONS.** |
|-------------|--------|--------------------------------------------------------------------------------------------------|

 

**Overview**

 

Established in 1974 as a truck bodymanufacturer, Supreme Industries, Inc., through its wholly-ownedsubsidiary Supreme Corporation, is one of the nation’s leading manufacturers ofspecialized vehicles. Utilizing a nationwide direct sales and distributionnetwork, as well as manufacturing and service facilities in 13 states acrossthe continental United States, Supreme is able to meet the needs of customersacross all of North America.

 

The Company engages principally in theproduction and sale of customized truck bodies, shuttle buses, and otherspecialty vehicles. Building on our expertise in providing both cargo andpassenger transportation solutions, the Company’s specialty vehicle offeringsinclude products such as customized armored vehicles, homeland responsevehicles, and luxury motor coaches. Through vertical integration andproprietary processes, the Company also supplies both internal and externalcustomers with high quality fiberglass and fiberglass-reinforced components.

 

The Company and its product offerings aresensitive to various factors which include, but are not limited to, interestrate fluctuations, changes in governmental regulations, and the volatility inthe supply chain of vehicle chassis. The Company’s business is also affected bythe availability and costs of certain raw materials that serve as significantcomponents to our product offerings.

 

Company growth in recent years has beenachieved through internal product development, business acquisitions, and jointventures. The Company operates only in businesses related to its corecompetencies and currently has no plans to deviate from this strategy.

 

The following discussion should be read inconjunction with the unaudited consolidated financial statements and relatednotes thereto elsewhere in this document.

 

**Results of Operations**

 

***Net Sales***

 

Netsales for the three months ended March 29, 2008 decreased $8.0 million, or9.5%, to $75.9 million compared to $83.9 million for the three months ended March 31,2007.  The decrease was primarily relatedto our core dry freight truck body sales, our largest product group, whichdeclined by $10.0 million, or 23.8%.****We attributethe decrease in our core product sales to an industry-wide decline indemand  in the retail truck market. Thisdecline began in early 2007 and the prevailing industry expectations are thatthe lower demand levels will continue throughout 2008 and possibly into 2009.However, this could potentially create future pent-up demand.  We are positioned to capitalize on aneconomic recovery as we execute our strategic plan, including the redesign ofour core van body product line. This new van body is expected to be lessexpensive to produce,  enable increasedinventory turns, and reduce the lead-time required to produce and deliverfinished product. Our progress on the redesign remains on schedule withproduction currently set to begin late in 2008. Additionally, the decrease in firstquarter 2008 net sales resulted from the timing of shipments to our major fleetcustomers. 2007 fleet shipments began early in January while 2008shipments started in late February due to changing customer buyingpatterns. Overall, we anticipate our 2008 fleet sales volume to remainrelatively unchanged compared to 2007. Partially offsetting the decrease in dryfreight truck body sales were sales improvements in our StarTrans bus divisionwhich experienced a 12.5% increase to $18.4 million, coupled with our SilverCrown division, where sales were $4.4 million, a 123% increase, resulting fromthe increased market penetration of this

 

9

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2006 acquisition. Our total sales backlog was$85.8 million at March 29, 2008 compared to $81.3 million at March 31,2007.

 

As we move into the second quarter, theavailability of General Motors (GM) chassis is a concern due to a labor disputebetween the United Auto Workers and GM’s axle supplier. The potentialdisruption in the supply of GM chassis could adversely affect our profitabilityand result in higher inventory carrying costs. The Company has establishedrelationships with all major chassis manufacturers and, to mitigate thepotential adverse impact of the labor dispute, will attempt to divert itssource of supply to other chassis manufacturers.  Additionally, because of the Company’sproduct diversification, management believes the Company is in a favorableposition to withstand the potential adverse effect of a possible chassis supplyinterruption.

 

***Cost of sales and gross profit***

 

Gross profit decreased by $1.4 million, or15.6%, to $7.6 million (10.0% of net sales) for the three months ended March 29,2008 compared to $9.0 million (10.7% of net sales) for the three months ended March 31,2007.  The following table presents thecomponents of cost of sales as a percentage of net sales for the first quarterof 2008 and 2007 and the changes as a percentage of sales:

 
| ** **    | ** ** | **March 29,** | ** ** | **March 31,** | ** ** | **Percent** | ** ** |
|---------------|------------|--------------------|------------|--------------------|------------|-------------|------------|
| ** **    | ** ** | **2008**           | ** ** | **2007**           | ** ** | **Change**  | ** ** |
| Material      |       | 57.3               | %          | 58.7               | %          | -1.4        | %          |
| Direct labor  |       | 14.0               |       | 13.5               |       | 0.5         |       |
| Overhead      |       | 16.1               |       | 14.8               |       | 1.3         |       |
| Delivery      |       | 2.6                |       | 2.3                |       | 0.3         |       |
| Cost of sales |       | 90.0               |       | 89.3               |       | 0.7         |       |
| Gross profit  |       | 10.0               | %          | 10.7               | %          | -0.7        | %          |

 

**Material** – Material cost as a percentage of net sales for the three months ended March 29,2008 was 57.3% compared to 58.7% for the corresponding period in 2007. ** **The decrease of 1.4%was attributable to an improvement of 0.7% in our core truck division due to afavorable product mix and higher selling prices in certain markets.  Additionally, our StarTrans bus divisionmaterial percentage decreased due to the use of more customer-supplied chassisversus purchased chassis.

 

Rawmaterial costs are increasing for aluminum, steel, and petroleum-basedmaterials. Accordingly, we announced a 3% price increase, effective March 14,2008, on all core truck product lines. This price increase, along with cost savings measures such as a redesignof our core truck product and “lean manufacturing” initiatives, as well asongoing efforts in product diversification should help enable us to mitigatethe effect of rising raw material costs. We are closely monitoring and managing all material costs throughfrequent communication and negotiation with our suppliers and we will continueto address unavoidable raw material cost increases by increasing the price ofour products, as necessary and as our markets will bear them.  The Company also continues to strive toreduce the manufacturing costs of our products through research and developmentof innovative materials and the use of robotics.

 

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**Direct Labor** – Direct labor as a percentage of net sales for the three months ended March 29,2008 was 14.0% compared to 13.5% for the three months ended March 31,2007.  The direct labor percentageincrease was the result of the timing of fleet customer buying patterns and thenormal startup costs of additional production lines to fulfill fleet orders.Historically, we have experienced an improvement in our direct labor percentageonce line startup costs decline. However, the historical labor improvement maynot be realized this year should there be an interruption in chassis supply (asdiscussed previously) due to labor disputes in our chassis supply chain.Additionally, our StarTrans bus division experienced an increase in its laborpercentage due to employee training costs associated with a plant expansionwhich was required to satisfy a strong backlog at that operation.

 

**Overhead** – Overhead as a percentage of net sales for the three months ended March 29,2008 was 16.1% compared to 14.8% for the three months ended March 31,2007.  The overhead percentage increaseof 1.3% was due to the fixed nature of certain expenses that do not fluctuate whensales and production volume changes. Additionally, the Company was unfavorably impacted by higher utilitycosts as a result of an unusually cold winter in the Northeast and Midwest.   We will continue to focus on reducingexpenses and managing our overhead cost structure based on our level of salesand production volume.

 

**Delivery** –Delivery as a percentage of net salesfor the three months ended March 29, 2008 was 2.6% compared to 2.3% forthe three months ended March 31, 2007, reflecting the impact of higherfuel costs. We continue to try to pass on the higher fuel related costs tocustomers despite competitive pressures in the marketplace.

 

***Selling, general and administrativeexpenses***

 

Selling, general and administrative (“SG&A”)expenses were $6.9 million for each of the periods presented.  However, SG&A expenses comprised 9.2% ofnet sales for the three months ended March 29, 2008 and 8.3% of net salesfor the three months ended March 31, 2007. The increased percentage reflects the generally fixed nature of most ofour SG&A expenses.  The followingtable presents selling and G&A expenses as a percentage of net sales andthe respective changes:

 
| ** **       | ** ** | **March 29,** | ** ** | **March 31,** | ** ** | **Percent** | ** ** |
|------------------|------------|--------------------|------------|--------------------|------------|-------------|------------|
| ** **       | ** ** | **2008**           | ** ** | **2007**           | ** ** | **Change**  | ** ** |
| Selling expenses |       | 3.2                | %          | 3.1                | %          | 0.1         | %          |
| G&A expenses |       | 6.0                |       | 5.2                |       | 0.8         |       |
| Total            |       | 9.2                | %          | 8.3                | %          | 0.9         | %          |

 

**Selling expenses** – Selling expensesdecreased by $0.2 million, or 7.7%, to $2.4 million for the three months ended March 29,2008 from $2.6 million for the three months ended March 31, 2007.  Selling expenses declined due to increasedcooperative marketing credits the Company received from chassismanufactures.  These credits, determinedsolely by programs established by the chassis manufacturers, are used to offsetmarketing and promotional expenses.

 

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**G&A expenses** – General and administrative expenses increased by $0.2 million, or 4.7%,to $4.5 million for the three months ended March 29, 2008, from $4.3million for the three months ended March 31, 2007. The increase in generaland administrative expenses was primarily due to additional stock-basedcompensation, software maintenance agreement costs, and business insurancepremiums.

 

***Other income***

 

Other income increased by $0.1 million to$0.2 million for the three months ended March 29, 2008 compared to $0.1million for the three months ended March 31, 2007. Other income consistedof rental income, gain on sale of assets, and other miscellaneous incomereceived by the Company through its various business activities.

 

***Interest expense***

 

Interest expense decreased by $0.1 million,or 14.3%, to $.6 million (0.8% of net sales) for the three months ended March 29,2008, compared to $.7 million (0.8% of net sales) for the three months ended March 31,2007.  The decrease in bank interestexpense reflects lower prevailing interest rates coupled with lower workingcapital requirements related to the lower sales volume experienced in the 2008quarter.

 

***Income taxes***

 

The Company’s effective income tax rate was24.9% for the three months ended March 29, 2008, compared to 30.5% for thethree months ended March 31, 2007.  The estimated effective income tax rate for both periods was favorablyimpacted by tax benefits associated with the Company’s wholly-owned captiveinsurance subsidiary, additional manufacturing tax deductions allowed under the2004 American Jobs Creation Act, federal alternative fuel tax credits, andresearch and development tax credits. The effective income tax rate for the previous year ended December 29,2007 was 22.9%.

 

***Net income and earnings per share***

 

Netincome decreased by $0.8 million, or 80.0%, to $0.2 million (0.3% of net sales)for the three months ended March 29, 2008, from to $1.0 million (1.2% ofnet sales) for the three months ended March 31, 2007. The following tablepresents basic and diluted earnings per share and the changes fromquarter-to-quarter:

 
| ** **          | ** ** | **March 29,** | ** ** | **March 31,** | ** ** | ** ** | ** ** |
|---------------------|------------|--------------------|------------|--------------------|------------|------------|------------|
| ** **          | ** ** | **2008**           | ** ** | **2007**           | ** ** | **Change** | ** ** |
| Earnings per share: |       |               |       |               |       |       |       |
| Basic               |       | $                  | 0.02       |               | $          | 0.08       |       | $ | (0.06 | ) |
| Diluted             |       | $                  | 0.02       |               | $          | 0.08       |       | $ | (0.06 | ) |

 

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** **

**Liquidity and Capital Resources**

 

Proceeds from the Company’s revolving line ofcredit were the major source of cash flows during the first quarter of2008.  The Company’s cash managementsystem and revolving line of credit have been designed to maintain zero cashbalances and, accordingly, excess cash generated from operations is utilized toreduce borrowings.  All borrowings underthe revolving line of credit remain unsecured.

 

***Operating activities***

 

Operating activities used $4.3 million ofcash for the three months ended March 29, 2008 compared to cash providedof $4.3 million for the three months ended March 31, 2007.  For the first quarter of 2008, operating cashwas unfavorably impacted by a $5.1 million increase in inventory, offset by a$0.7 million increase in accounts payable. Net income, adjusted fordepreciation and amortization, provided cash flows from operating activitiestotaling $1.3 million and $2.0 million in first quarter of 2008 and 2007,respectively.  Working capital increased$5.9 million during the first quarter of 2008 principally due to the higherinventory levels as a result of  largefleet contracts.

 

***Investing activities***

 

Cash used in investing activities remainedrelatively unchanged at $2.2 million for the three months ended March 29,2008 and March 31, 2007. Investments in our wholly-owned captive subsidiary increased $1.2million during the first quarter of 2008. Capital expenditures were $1.0million during the first quarter of 2008 and consisted principally ofinvestments in replacement equipment. Additionally, our Silver Crown operation began construction of a newfacility to expand capacity to meet the increased demand for its products.  The Company expects to invest approximately$4.0 million in additions to property, plant, and equipment in 2008.

 

***Financing******activities***

 

Financing activities provided $5.3 millionfor the three months ended March 29, 2008 compared to cash used of $3.3million for the three months ended March 31, 2007. The higher levels offinancing activities for the first quarter of 2008 occurred as a result of theincreased inventory levels. The Company also received $25,000 and $360,000 fromthe exercise of stock options for the first quarter of 2008 and 2007,respectively.  The Company paid cashdividends of nine and one-half cents per share, or $1.2 million, for the firstquarter of 2008 and 2007.

 

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** **

**Critical Accounting Policies andEstimates**

 

Management’sdiscussion and analysis of its financial position and results of operations arebased upon the Company’s consolidated financial statements which have beenprepared in accordance with accounting principles generally accepted in theUnited States of America.  Thepreparation of these financial statements requires management to make estimatesand judgments that affect the reported amounts of assets, liabilities, revenuesand expenses and related disclosure of contingent assets and liabilities.  The Company’s significant accounting policiesare discussed in Note 1 of the Notes to Consolidated Financial Statementsincluded in the Annual Report on Form 10-K for the year ended December 29,2007.  In management’s opinion, theCompany’s critical accounting policies include revenue recognition, allowancefor doubtful accounts, excess and obsolete inventories, inventory relief,accrued insurance, and accrued warranty.

 

***Revenue Recognition*** – The Company generallyrecognizes revenue when the unit is shipped to the customer.  Revenue on certain customer requested billand hold transactions is recognized after the customer is notified that theproducts have been completed according to customer specifications, have passedall of the Company’s quality control inspections, and are ready for deliverybased on established delivery terms.

 

***Allowance for Doubtful Accounts*** – The Companymaintains an allowance for doubtful accounts for estimated losses resultingfrom the inability of our customers to make required payments.  If the financial conditions of our customerswere to deteriorate, resulting in an impairment of their ability to makepayments, additional allowances may be required which would adversely affectour future operating results.

 

***Excess and Obsolete Inventories*** – The Companymust make estimates regarding the future use of raw materials and finishedproducts and provide for obsolete or slow-moving inventories.  If actual product life cycles, productdemand, and/or market conditions are less favorable than those projected by management,additional inventory write-downs may be required which would adversely affectfuture operating results.

 

***Inventory Relief*** – For monthly and quarterly financial reporting, cost of sales isrecorded and inventories are relieved by the use of standard bills of materialadjusted for scrap and other estimated factors affecting inventory relief.  Because of our large and diverse product lineand the customized nature of each order, it is difficult to place full relianceon the bills of material for accurate relief of inventories.  Although the Company continues to refine theprocess of creating accurate bills of materials, manual adjustments (which arebased on estimates) are necessary in an effort to assure correct relief ofinventories for products sold.  Thecalculations to estimate costs not captured in the bill of materials take intoaccount the customized nature of products, historical inventory reliefpercentages, scrap variances, and other factors which could impact inventoryrelief.

 

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**Critical Accounting Policies andEstimates, Concluded**

 

***Accrued Insurance*** - The Companyhas a self-insured retention against product liability claims with insurancecoverage over and above the retention. The Company is also self-insured for a portion of its employee medicalbenefits and workers’ compensation. Product liability claims are routinely reviewed by the Company’sinsurance carrier, and management routinely reviews other self-insurance risksfor purposes of establishing ultimate loss estimates.  In addition, management must determineestimated liability for claims incurred but not reported.  Such estimates, and any subsequent changes inestimates, may result in adjustments to our operating results in the future.

 

TheCompany utilizes a wholly-owned small captive insurance company to insurecertain of its business risks.  Certainrisks, traditionally self-insured by the Company and its subsidiaries, areinsured by the captive insurance subsidiary. In addition, certain business risks not traditionally insured areinsured by the captive insurance subsidiary. Since the captive insurance company has not reinsured any of itscoverages, the Company’s overall self-insurance risk has not changed.  The captive insurance subsidiary helps theCompany manage its risk exposures and, under the Internal Revenue Code, the netunderwriting income of such a small captive is not taxable.

 

***Accrued Warranty****–* The Company provides limited warranties for periods of up to fiveyears from the date of retail sale. Estimated warranty costs are provided at the time of sale and are basedupon historical experience.

 

**Forward-LookingStatements**

 

Thisreport contains forward-looking statements, other than historical facts, whichreflect the view of management with respect to future events.  When used in this report, words such as “believe,”“expect,” “anticipate,” “estimate,” “intend,” and similar expressions, as theyrelate to the Company or its plans or operations, identify forward-lookingstatements.  Such forward-looking statementsare based on assumptions made by, and information currently available to,management.  Although management believesthat the expectations reflected in such forward-looking statements arereasonable, it can give no assurance that the expectations reflected in suchforward-looking statements are reasonable, and it can give no assurance thatsuch expectations will prove to be correct. Important factors that could cause actual results to differ materiallyfrom such expectations include, without limitation, limitations on theavailability of chassis on which the Company’s product is dependent,availability of raw materials, raw material cost increases and severe interestrate increases.  Furthermore, the Companycan provide no assurance that such raw material cost increases can be passed onto its customers through implementation of price increases for the Company’sproducts.  The forward-looking statementscontained herein reflect the current view of management with respect to futureevents and are subject to those factors and other risks, uncertainties, andassumptions relating to the operations, results of operations, cash flows andfinancial position of the Company.  TheCompany assumes no obligation to update the forward-looking statements or toupdate the reasons actual results could differ from those contemplated by suchforward-looking statements.

 

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| **ITEM 3.** |   | **QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT  MARKET RISK.** |
|-------------|--------|------------------------------------------------------------------|

 

Therehas been no material change from the information provided in the Company’sAnnual Report on Form 10-K, “Item 7A: Quantitative and QualitativeDisclosures About Market Risk,” for the year ended December 29, 2007.

 
| **ITEM 4.** |   | **CONTROLS AND PROCEDURES.** |
|-------------|--------|------------------------------|

 

a.                                       Evaluation ofDisclosure Controls and Procedures.

 

In connection with the preparation of this Form 10-Q,an evaluation was performed under the supervision and with the participation ofthe Company’s management, including the Company’s Chief Executive Officer andChief Financial Officer, of the effectiveness of the design and operation ofthe Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and15d-15(e) under the Securities Exchange Act of 1934, as amended).  Based upon that evaluation, the ChiefExecutive Officer and Chief Financial Officer concluded that the Company’sdisclosure controls and procedures are effective as of March 29, 2008.

 

b.             Changes in Internal Control overFinancial Reporting.

 

Therehas been no change in the Company’s internal control over financial reportingduring our last fiscal quarter that has materially affected, or is reasonablylikely to materially affect, the Company’s internal control over financialreporting.

 

TheCompany continues to take action to assure compliance with the internalcontrols, disclosure controls, and other requirements of the Sarbanes-Oxley Actof 2002.  Management, including the Company’s Chief Executive Officer andChief Financial Officer, cannot guarantee that the internal controls anddisclosure controls will prevent all possible errors or fraud.  A controlsystem, no matter how well conceived and operated, can provide only reasonable,not absolute, assurance that the objectives of a control system have been met.In addition, the design of a control system must reflect the fact that thereare resource constraints, and the benefit of controls must be relative to theircosts.  Because of the inherent limitations in all control systems, nosystem of controls can provide absolute assurance that all control issues andinstances of fraud, if any, within the Company will be detected.  Theseinherent limitations include the realities that judgments in decision-makingcan be faulty and that breakdowns can occur because of simple error or mistake. Further, controls can be circumvented by individual acts of some persons,by collusion of two or more persons, or by management override of the controls.

 

Thedesign of any system of controls is also based in part upon certain assumptionsabout the likelihood of future events, and there can be no assurance that anydesign will succeed in achieving its stated goals under all potential futureconditions.  Over time, a control may be inadequate because of changes inconditions, or the degree of compliance with the policies or procedures maydeteriorate.  Because of inherent limitations in any cost-effectivecontrol system, misstatements due to error or fraud may occur and not bedetected.

 

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**PART II.     OTHER INFORMATION**

 

**ITEM 1.****                                        ****LEGAL PROCEEDINGS.**

 

The Company is subject to variousinvestigations, claims, and legal proceedings covering a wide range of mattersthat arise in the ordinary course of its business activities.  Each of these matters is subject to variousuncertainties, and it is possible that some ofthese matters may be resolved unfavorably to the Company.  The Company has established accruals formatters that are probable and reasonably estimable.  Management believes that any liability thatmay ultimately result from the resolution of these matters in excess ofaccruals and or amounts provided by insurance coverage will not have a materialadverse effect on the consolidated financial position or results of operationsof the Company.

 

**ITEM 2.****                                        ****UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.**

 

Notapplicable.

 

**ITEM 3.****                                        ****DEFAULTS UPON SENIOR SECURITIES.**

 

Notapplicable.

 

**ITEM 4.****                                        ****SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.**

 

Notapplicable.

 

**ITEM 5.****                                        ****OTHER INFORMATION.**

 

Notapplicable.

 

**ITEM 6.****                                        ****EXHIBITS.**

 

Exhibits:

 
| Exhibit 3.1 |   | Certificate  of Incorporation of the Company, filed as Exhibit 3(a) to the  Company’s Registration Statement on Form 8-A, filed with the Commission  on September 18, 1989, and incorporated herein by reference.                                                                              |
|------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Exhibit 3.2 |   | Certificate  of Amendment of Certificate of Incorporation of the Company filed with the  Secretary of State of Delaware on June 10, 1993 filed as Exhibit 3.2  to the Company’s annual report on Form 10-K for the fiscal year ended December 31,  1993, and incorporated herein by reference. |
| Exhibit 3.3 |   | Certificate  of Amendment of Certificate of Incorporation of the Company filed with the  Secretary of State of Delaware on May 29, 1996 filed as Exhibit 3.3  to the Company’s annual report on Form 10-K for the fiscal year ended December 31,  1996, and incorporated herein by reference.  |

 

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| Exhibit 3.4   |   | Bylaws  of the Company, filed as Exhibit 3(b) to the Company’s Registration  Statement on Form 8-A, filed with the Commission on September 18, 1989,  and incorporated herein by reference.                |
|--------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Exhibit 3.5   |   | Amendment  to Bylaws (as amended November 20, 2007), filed as Exhibit 3.5 to  the Company’s annual report on Form 10-K for the fiscal year ended December 29,  2007, and incorporated herein by reference. |
| Exhibit 31.1* |   | Certification  of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley  Act of 2002.                                                                                                                          |
| Exhibit 31.2* |   | Certification  of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley  Act of 2002.                                                                                                                          |
| Exhibit 32.1* |   | Certification  of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley  Act of 2002.                                                                                                                          |
| Exhibit 32.2* |   | Certification  of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley  Act of 2002.                                                                                                                          |

 

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*Filedherewith.

 

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SIGNATURES

 

Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.

 

 
|                     |   | SUPREME  INDUSTRIES, INC.                            |
|--------------------------|--------|------------------------------------------------------|
|                     |   |                                                 |
|                     |   |                                                 |
|                     |   | BY:  /s/ Herbert M. Gardner                          |
| DATE:  May 13, 2008 |   | Herbert  M. Gardner                                  |
|                     |   | Chairman  of the Board and Chief   Executive Officer |

 

 
|                     |   | BY:  /s/ Jeffery D. Mowery                              |
|--------------------------|--------|---------------------------------------------------------|
| DATE:  May 13, 2008 |   | Jeffery  D. Mowery                                      |
|                     |   | Vice  President of Finance and Chief  Financial Officer |

 

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INDEX TO EXHIBITS

 
| **Exhibit**        | ** ** | ** **                                                                                                                                                                                                                                                                                                              |
|--------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Number**         | ** ** | **Description of Document**                                                                                                                                                                                                                                                                                   |
| Exhibit 3.1   |       | Certificate  of Incorporation of the Company, filed as Exhibit 3(a) to the  Company’s Registration Statement on Form 8-A, filed with the Commission  on September 18, 1989, and incorporated herein by reference.                                                                              |
| Exhibit 3.2   |       | Certificate  of Amendment of Certificate of Incorporation of the Company filed with the  Secretary of State of Delaware on June 10, 1993 filed as  Exhibit 3.2 to the Company’s annual report on Form 10-K for the fiscal  year ended December 31, 1993, and incorporated herein by reference. |
| Exhibit 3.3   |       | Certificate  of Amendment of Certificate of Incorporation of the Company filed with the  Secretary of State of Delaware on May 29, 1996 filed as Exhibit 3.3  to the Company’s annual report on Form 10-K for the fiscal year ended  December 31, 1996, and incorporated herein by reference.  |
| Exhibit 3.4   |       | Bylaws  of the Company, filed as Exhibit 3(b) to the Company’s Registration  Statement on Form 8-A, filed with the Commission on September 18,  1989, and incorporated herein by reference.                                                                                                    |
| Exhibit 3.5   |       | Amendment  to Bylaws (as amended November 20, 2007), filed as Exhibit 3.5 to  the Company’s annual report on Form 10-K for the fiscal year ended  December 29, 2007, and incorporated herein by reference.                                                                                     |
| Exhibit 31.1* |       | Certification  of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley  Act of 2002.                                                                                                                                                                                                              |
| Exhibit 31.2* |       | Certification  of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley  Act of 2002.                                                                                                                                                                                                              |
| Exhibit 32.1* |       | Certification  of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley  Act of 2002.                                                                                                                                                                                                              |
| Exhibit 32.2* |       | Certification  of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley  Act of 2002.                                                                                                                                                                                                              |

 

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*Filedherewith.

 

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