**UNITED STATES**

**SECURITIES AND EXCHANGECOMMISSION**

**Washington,D.C.  20549**

 

 

**FORM 10-Q**

** **
| **(Mark One)**                                                                                              | ** ** | ** ** |
|-------------------------------------------------------------------------------------------------------------|------------|------------|
| x**  QUARTERLY REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**        |
| ** **                                                                                                  |
| **For the quarterly period ended September 29,  2007**                                                      |
| ** **                                                                                                  |
| **OR**                                                                                                      |
| ** **                                                                                                  |
| o**   TRANSITION REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

 

Forthe transition period from          to          

 

CommissionFile Number: 1-8183

 

**SUPREME INDUSTRIES, INC.**

(Exactname 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’stelephone number, including area code:  **(574) 642-3070**

** **

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

 

Indicate by check mark whether the registrantis a large accelerated filer, an accelerated filer or a non-acceleratedfiler.  See definition of “acceleratedfiler and large accelerated filer” in Rule 12b-2 of the Exchange Act (checkone):
| Large  accelerated filer   o | Accelerated  filer   o | Non-accelerated  filer   x |
|---------------------------------------------|---------------------------------------|-------------------------------------------|

 

Indicate by check mark whether the registrantis a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes   o  No   x

 

Indicate the number of shares outstanding ofeach of the issuer’s classes of common stock, as of the latest practicabledate.

 
| Common Stock ($.10 Par  Value) |       | Outstanding at November 6,  2007           |
|--------------------------------|------------|--------------------------------------------|
| **Class A**

**Class B**       | ** ** | **10,874,799**

**   2,024,133** |

 

 

----

 

SUPREMEINDUSTRIES, 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.

  | 7            |
| ITEM 3.                                                                    | Quantitative and Qualitative  Disclosures About Market Risk.

                                  | 14           |
| ITEM 4.                                                                    | Controls and Procedures.                                                                             | 14           |
|                                                                       |                                                                                                 |         |
| PART II.       OTHER INFORMATION

      |                                                                                                 |
| ITEM 1.                                                                    | Legal Proceedings.

                                                                            | 15           |
| ITEM 1A.                                                                   | Risk Factors.

                                                                                 | 15           |
| ITEM 2.                                                                    | Unregistered Sales of Equity  Securities and Use of Proceeds.

                                 | 15           |
| ITEM 3.                                                                    | Defaults Upon Senior  Securities.

                                                             | 15           |
| ITEM 4.                                                                    | Submission of Matters to a  Vote of Security Holders.

                                         | 16           |
| ITEM 5.                                                                    | Other Information.

                                                                            | 16           |
| ITEM 6.                                                                    | Exhibits.                                                                                            | 16           |
|                                                                       |                                                                                                 |         |
| SIGNATURES

                                                          | 17                                                                                                   |
| INDEX TO EXHIBITS

                                                   | 18                                                                                                   |
| EXHIBITS                                                                   |                                                                                                 |
|                                                                            |                                                                                                      |              |  |

 

 

 

----

 

**PART I  FINANCIAL INFORMATION**

 

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

 

**SupremeIndustries, Inc. and Subsidiaries**

ConsolidatedBalance Sheets

 
| ** **                                      | ** ** | **September 29,** | ** **  | **December 30,** | ** ** |
|-------------------------------------------------|------------|-------------------|-------------|------------------|------------|
| ** **                                      | ** ** | **2007**          | ** **  | **2006**         | ** ** |
| ** **                                      | ** ** | **(Unaudited)**   | ** **  | ** **       | ** ** |
| **Assets**                                      | ** ** | ** **        | ** **  | ** **       | ** ** |
|                                            |       |              |        |             |       |
| **Current assets:**                             | ** ** | ** **        | ** **  | ** **       | ** ** |
| Cash and cash equivalents                       |       | $                 | 64,373      |             | $          | 1,307,463 |   |
| Investments                                     |       | 2,181,508         |        | 1,542,101        |       |
| Accounts receivable, net                        |       | 24,379,673        |        | 31,116,276       |       |
| Inventories                                     |       | 47,481,456        |        | 53,506,367       |       |
| Other current assets                            |       | 3,973,105         |        | 4,222,705        |       |
|                                            |       |              |        |             |       |
| **Total current assets**                        |       | 78,080,115        |        | 91,694,912       |       |
|                                            |       |              |        |             |       |
| **Property, plant and equipment, at cost**      |       | 92,038,517        |        | 91,471,500       |       |
| Less, Accumulated depreciation and amortization |       | 44,462,551        |        | 43,082,017       |       |
|                                            |       |              |        |             |       |
| **Property, plant and equipment, net**          |       | 47,575,966        |        | 48,389,483       |       |
|                                            |       |              |        |             |       |
| **Goodwill and intangible assets, net**         |       | 1,383,983         |        | 1,420,261        |       |
| **Other assets**                                |       | 438,588           |        | 620,064          |       |
|                                            |       |              |        |             |       |
| **Total assets**                                |       | $                 | 127,478,652 |             | $          | 142,124,720 |   |
|                                                 |            |                   |             |                  |            |  |  |  |

 

The accompanying notes are a part of the consolidated financialstatements.

 

 

1

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**SupremeIndustries, Inc. and Subsidiaries**

Consolidated Balance Sheets, Concluded

 
| ** **                                     | ** ** | **September 29,** | ** **  | **December 30,** | ** ** |        |
|------------------------------------------------|------------|-------------------|-------------|------------------|------------|-------------|
| ** **                                     | ** ** | **2007**          | ** **  | **2006**         | ** ** |        |
| ** **                                     | ** ** | **(Unaudited)**   | ** **  | ** **       | ** ** |        |
| **Liabilities and Stockholders' Equity**       | ** ** | ** **        | ** **  | ** **       | ** ** |        |
|                                           |       |              |        |             |       |        |
| **Current liabilities:**                       | ** ** | ** **        | ** **  | ** **       | ** ** |        |
| Current maturities of long-term debt           |       | $                 | 871,429     |             | $          | 1,807,425   |   |
| Trade accounts payable                         |       | 11,917,638        |        | 13,508,441       |       |        |
| Accrued income taxes                           |       | 495,678           |        | 495,678          |       |        |
| Other accrued liabilities                      |       | 9,818,665         |        | 9,318,050        |       |        |
|                                           |       |              |        |             |       |        |
| **Total current liabilities**                  |       | 23,103,410        |        | 25,129,594       |       |        |
|                                           |       |              |        |             |       |        |
| **Long-term debt**                             |       | 25,766,325        |        | 38,863,229       |       |        |
|                                           |       |              |        |             |       |        |
| **Deferred income taxes**                      |       | 2,870,316         |        | 2,923,216        |       |        |
| ** **                                     | ** ** | ** **        | ** **  | ** **       | ** ** |        |
| **Other long-term liabilities**                |       | 32,879            |        | —           |       |        |
| ** **                                     | ** ** | ** **        | ** **  | ** **       | ** ** |        |
| **Total liabilities**                          |       | 51,772,930        |        | 66,916,039       |       |        |
|                                           |       |              |        |             |       |        |
| **Stockholders' equity**                       |       | 75,705,722        |        | 75,208,681       |       |        |
|                                           |       |              |        |             |       |        |
| **Total liabilities and stockholders' equity** |       | $                 | 127,478,652 |             | $          | 142,124,720 |   |   |
|                                                |            |                   |             |                  |            |             |  |  |  |  |

 

The accompanying notes are a part of the consolidated financialstatements.

 

 

2

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** **

**SupremeIndustries, Inc. and Subsidiaries**

ConsolidatedStatements of Income(Unaudited)

 
| ** **                                                 | ** ** | **Three Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|------------------------------------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** **                                                 | ** ** | **September 29,**      | ** ** | **September 30,**     | ** ** | **September 29,** | ** ** | **September 30,** | ** ** |
| ** **                                                 | ** ** | **2007**               | ** ** | **2006**              | ** ** | **2007** | ** ** | **2006** | ** ** |
| Net sales                                                  |       | $                      | 67,540,998 |                  | $          | 79,678,398 |   | $ | 239,594,008 |   | $ | 264,289,048 |   |   |
| Cost of sales                                              |       | 60,201,848             |       | 70,122,112            |       | 212,194,256 |   | 234,596,119 |   |   |
| Gross profit                                               |       | 7,339,150              |       | 9,556,286             |       | 27,399,752 |   | 29,692,929 |   |   |
| ** **                                                 | ** ** | ** **             | ** ** | ** **            | ** ** | ** ** | ** ** | ** ** | ** ** |   |
| Selling, general and administrative expenses               |       | 6,576,660              |       | 7,171,292             |       | 21,106,291 |   | 21,372,025 |   |   |
| Other expense (income)                                     |       | (161,093               | )          | (202,475              | )          | (390,234 | ) | (406,566 | ) |   |
| Operating income                                           |       | 923,583                |       | 2,587,469             |       | 6,683,695 |   | 8,727,470 |   |   |
|                                                       |       |                   |       |                  |       |   |   |   |   |   |
| Interest expense                                           |       | 520,718                |       | 760,108               |       | 1,931,708 |   | 2,295,693 |   |   |
| Income before income taxes                                 |       | 402,865                |       | 1,827,361             |       | 4,751,987 |   | 6,431,777 |   |   |
|                                                       |       |                   |       |                  |       |   |   |   |   |   |
| Income taxes                                               |       | 129,000                |       | 585,000               |       | 1,470,000 |   | 2,251,000 |   |   |
| Net income                                                 |       | $                      | 273,865    |                  | $          | 1,242,361 |   | $ | 3,281,987 |   | $ | 4,180,777 |   |   |
| ** **                                                 | ** ** | ** **             | ** ** | ** **            | ** ** | ** ** | ** ** | ** ** | ** ** |   |
| **Earnings Per Share:**                                    | ** ** | ** **             | ** ** | ** **            | ** ** | ** ** | ** ** | ** ** | ** ** |   |
| Basic                                                      |       | $                      | .02        |                  | $          | .10 |   | $ | .26 |   | $ | .33 |   |   |
| Diluted                                                    |       | .02                    |       | .10                   |       | .25 |   | .32 |   |   |
|                                                       |       |                   |       |                  |       |   |   |   |   |   |
| **Shares used in the computation of earnings  per share:** | ** ** | ** **             | ** ** | ** **            | ** ** | ** ** | ** ** | ** ** | ** ** |   |
| Basic                                                      |       | 12,870,404             |       | 12,702,632            |       | 12,805,106 |   | 12,701,639 |   |   |
| Diluted                                                    |       | 12,975,543             |       | 12,835,523            |       | 12,903,820 |   | 12,888,703 |   |   |
|                                                       |       |                   |       |                  |       |   |   |   |   |   |
| **Cash dividends per common share**                        |       | $                      | .095       |                  | $          | .095 |   | $ | .285 |   | $ | .285 |   |   |
|                                                            |            |                        |            |                       |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

The accompanying notes are a part of the consolidated financialstatements.

 

 

3

----

 

**SupremeIndustries, Inc. and Subsidiaries**

ConsolidatedStatements of Cash Flows(Unaudited)

 
| ** **                                                                                  | ** ** | **Nine Months Ended** | ** ** |
|---------------------------------------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                                                  | ** ** | **September 29,**     | ** ** | **September 30,** | ** ** |
|                                                                                        | ** ** | **2007**              | ** ** | **2006** | ** ** |
| **Cash flows from operating activities:**                                                   | ** ** | ** **            | ** ** | ** ** | ** ** |
| Net income                                                                                  |       | $                     | 3,281,987  |   | $ | 4,180,777 |   |
| Adjustments to reconcile net income to net cash provided by  operating activities:          |       |                  |       |   |   |
| Depreciation and amortization                                                               |       | 3,220,196             |       | 3,182,038 |   |
| Amortization of intangibles                                                                 |       | 36,278                |       | — |   |
| Provision for losses on doubtful receivables                                                |       | 127,127               |       | 101,879 |   |
| Stock-based compensation expense                                                            |       | 227,638               |       | 74,857 |   |
| Loss (gain) on disposal of property and equipment                                           |       | (11,043               | )          | 13,630 |   |
| Changes in operating assets and liabilities, net of effect of  business acquisition in 2006 |       | 11,806,099            |       | (3,245,962 | ) |
|                                                                                        |       |                  |       |   |   |
| **Net cash provided by operating activities**                                               |       | 18,688,282            |       | 4,307,219 |   |
|                                                                                        |       |                  |       |   |   |
| **Cash flows from investing activities:**                                                   | ** ** | ** **            | ** ** | ** ** | ** ** |
| Business acquisition                                                                        |       | —                |       | (1,050,000 | ) |
| Additions to property, plant and equipment                                                  |       | (2,428,880            | )          | (3,899,691 | ) |
| Proceeds from disposal of property and equipment                                            |       | 33,244                |       | 1,947,749 |   |
| Purchase of short-term investments                                                          |       | (1,180,858            | )          | (1,232,457 | ) |
| Proceeds from sale of investments                                                           |       | 544,804               |       | — |   |
| Decrease in other assets                                                                    |       | 35,017                |       | 31,559 |   |
|                                                                                        |       |                  |       |   |   |
| **Net cash used in investing activities**                                                   |       | (2,996,673            | )          | (4,202,840 | ) |
|                                                                                        |       |                  |       |   |   |
| **Cash flows from financing activities:**                                                   | ** ** | ** **            | ** ** | ** ** | ** ** |
| Proceeds from revolving line of credit and other long-term debt                             |       | 85,466,828            |       | 69,853,150 |   |
| Repayments of revolving line of credit and other long-term debt                             |       | (99,499,728           | )          | (67,528,063 | ) |
| Payment of cash dividends                                                                   |       | (3,646,592            | )          | (3,618,620 | ) |
| Proceeds from exercise of stock options                                                     |       | 744,793               |       | — |   |
|                                                                                        |       |                  |       |   |   |
| **Net cash used in financing activities**                                                   |       | (16,934,699           | )          | (1,293,533 | ) |
|                                                                                        |       |                  |       |   |   |
| **Change in cash and cash equivalents**                                                     |       | (1,243,090            | )          | (1,189,154 | ) |
| ** **                                                                                  | ** ** | ** **            | ** ** | ** ** | ** ** |
| **Cash and cash equivalents, beginning of period**                                          |       | 1,307,463             |       | 1,515,532 |   |
|                                                                                        |       |                  |       |   |   |
| **Cash and cash equivalents, end of period**                                                |       | $                     | 64,373     |   | $ | 326,378 |   |
| ** **                                                                                  | ** ** | ** **            | ** ** | ** ** | ** ** |
| **Supplemental disclosure of noncash investing and  financing activities:**                 | ** ** | ** **            | ** ** | ** ** | ** ** |
| Liabilities assumed in business acquisition                                                 |       | $                     | —     |   | $ | 163,221 |   |
|                                                                                             |            |                       |            |  |  |  |  |  |

 

The accompanying notes are a part of the consolidated financialstatements.

 

 

 

4

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** **

**SUPREMEINDUSTRIES, INC. AND SUBSIDIARIES**

NotesTo Consolidated Financial Statements

NOTE 1 - BASIS OF PRESENTATION AND OPINION OFMANAGEMENT

Theaccompanying unaudited consolidated financial statements have been prepared inaccordance with the instructions to Form 10-Q and therefore do not include allof 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 30, 2006consolidated 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 and nine months ended September 29, 2007 and September 30, 2006 arefor 13 and 39 week periods, respectively.

Certainamounts in the consolidated statements of income for 2006 have beenreclassified to conform to the presentation of the 2007 consolidated statementsof income.  The reclassifications had noimpact on net sales, cost of sales, pretax income or net income as previouslyreported. For further information, refer to the consolidated financialstatements and footnotes thereto included in our Annual Report on Form 10-K forthe year ended December 30, 2006.

NOTE 2 - OTHER COMPREHENSIVE INCOME (LOSS)

Othercomprehensive income (loss) includes unrealized gains on hedge-activity, net oftax, and unrealized depreciation on available-for-sale securities, net oftax.  Other comprehensive (loss) for thethree and nine month periods ended September 29, 2007 was $(183,541) and$(110,785), respectively.  Othercomprehensive income (loss) for the three and nine month periods endedSeptember 30, 2006 was $(196,294) and $65,213, respectively. Totalcomprehensive income combines net income and other comprehensive income.  Total comprehensive income for the three andnine month periods ended September 29, 2007 was $90,324 and $3,171,202,respectively.  Total comprehensive incomefor the three and nine month periods ended September 30, 2006 was $1,046,067and $4,245,990, respectively.

NOTE 3 - 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:

|             |   | **September  29,** | ** ** | **December  30,** |   |
|------------------|--------|--------------------|------------|-------------------|--------|
|             |   | **2007**           | ** ** | **2006**          |   |
| Raw materials    |   | $                  | 26,146,270 |              | $      | 29,569,267 |   |
| Work-in-progress |   | 8,649,121          |       | 11,199,112        |   |
| Finished goods   |   | 12,686,065         |       | 12,737,988        |   |
|             |   | $                  | 47,481,456 |              | $      | 53,506,367 |   |
|                  |        |                    |            |                   |        |  |  |  |  |

 

 

5

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** **

**SUPREMEINDUSTRIES, INC. AND SUBSIDIARIES**

Notes To Consolidated Financial Statements,Continued

 

The valuation of raw materials,work-in-progress, and finished goods inventories at interim dates is based uponbills of materials, scrap, and other estimated factors that affect inventoryrelief.  The Company has historicallyexperienced both favorable and unfavorable adjustments resulting from physicalinventories. Pre-tax favorable physical inventory adjustments recorded duringthe three-month periods ended September 29, 2007 and September 30, 2006 were$0.3 million and $ 1.9 million, respectively. The Company continues to refine its inventory relief in an effort tominimize book to physical inventory adjustments.

 

NOTE 4 - EARNINGS PER SHARE

Thenumber of shares used in the computation of basic and diluted earnings pershare are as follows:
| ** **                                                                                       | ** ** | **Three Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|--------------------------------------------------------------------------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** **                                                                                       | ** ** | **September 29,**      | ** ** | **September 30,**     | ** ** | **September 29,** | ** ** | **September 30,** | ** ** |
|                                                                                             |       | **2007**               | ** ** | **2006**              | ** ** | **2007** | ** ** | **2006** |   |
| Weighted average number of shares outstanding (used in computation of  basic earnings per share) |       | 12,870,404             |       | 12,702,632            |       | 12,805,106 |   | 12,701,639 |   |
|                                                                                             |       |                   |       |                  |       |   |   |   |   |
| Effect of dilutive stock options                                                                 |       | 105,139                |       | 132,891               |       | 98,714 |   | 187,064 |   |
|                                                                                             |       |                   |       |                  |       |   |   |   |   |
| Diluted shares outstanding (used in computation of diluted earnings  per share)                  |       | 12,975,543             |       | 12,835,523            |       | 12,903,820 |   | 12,888,703 |   |

 

NOTE 5 - STOCK-BASED COMPENSATION

Asummary of the status of the Company’s outstanding stock options as ofSeptember 29, 2007, and changes during the nine months ended September 29, 2007are as follows:

| ** **                      | ** ** | **Number of   Shares** | ** ** | **Weighted  Average  Exercise   Price** | ** ** |
|---------------------------------|------------|------------------------|------------|-----------------------------------------|------------|
| ** **                      | ** ** | ** **             | ** ** | ** **                              | ** ** |
| Outstanding, January 1, 2007    |       | 1,228,320              |       | $                                       | 6.12       |   |
| Granted                         |       | 110,195                |       | 6.42                                    |       |
| Exercised                       |       | (280,834               | )          | 5.10                                    |       |
| Forfeited                       |       | (46,500                | )          | 6.73                                    |       |
| Outstanding, September 29, 2007 |       | 1,011,181              |       | 6.54                                    |       |
|                                 |            |                        |            |                                         |            |  |

 

Theintrinsic value of the options exercised during the three and nine monthperiods ended September 29, 2007 was $32,774 and $362,237, respectively.  The intrinsic value of all optionsoutstanding at September 29, 2007 was $708,060 and outstanding options had aweighted-average remaining contractual life of 2.22 years.

 

 

6

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**SUPREME INDUSTRIES,INC. AND SUBSIDIARIES**

Notes To Consolidated Financial Statements,Concluded.

 

NOTE 6 - COMMON STOCK

TheCompany paid cash dividends, to all Class A and Class B common stockholders, ofnine and one-half cents ($0.095) and twenty eight and one-half cents ($0.285)per share for each of the three and nine month periods ended September 29,2007and September 30, 2006.

NOTE 7 - SUBSEQUENT EVENT

OnOctober 30, 2007, the Company’s Board of Directors declared a nine and one-halfcents ($0.095) per share cash dividend payable on November 20, 2007 to allclass A and B common stockholders of record on November 13, 2007.

NOTE 8 - ADOPTION OF NEW ACCOUNTING STANDARD

InJuly 2006, the Financial Accounting Standards Board issued FinancialInterpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”).  This Interpretation revises the recognitiontest for tax positions taken in tax returns such that a tax benefit is recordedonly when it is more likely than not that the tax position will be allowed uponexamination by taxing authorities, which is presumed to occur.  The amount of such a tax benefit to berecorded is the largest amount that is more likely than not to be allowed.  The adoption of FIN 48 did not have amaterial impact on the Company’s financial position or results ofoperations.  The amount of unrecognizedtax benefits at January 1, 2007 totaled approximately $500,000, and the fullamount would decrease the Company’s effective tax rate, if ultimatelyrecognized in income.

TheCompany is subject to U.S. federal income tax as well as various state taxesand is no longer subject to examination by taxing authorities for years before2003.  The Company does not expect thetotal amount of unrecognized tax benefits to significantly increase in the nexttwelve months.  Interest and penaltiesrelated to income tax matters are recognized in income tax expense.  Interest and penalties accrued as ofSeptember 29, 2007 were insignificant.

 

 

**ITEM 2****.          MANAGEMENT’S DISCUSSION ANDANALYSIS OF FINANCIAL**

**                        CONDITIONAND RESULTS OF OPERATIONS.**

**Results of Operations**

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

 

***Net Sales***

Netsales for the three months ended September 29, 2007 decreased $12.2 million, or15.3%, to $67.5 million compared to $79.7 million for the three months endedSeptember 30, 2006.  Net sales for thenine months ended September 29, 2007 decreased $24.7 million, or 9.3%, to$239.6 million from $264.3 million for the nine months ended September 30,2006.** **Thedecrease in net sales for the three and nine months ended September 29, 2007was primarily attributable to a

 

 

7

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**Results ofOperations, Continued**

 

reductionof $17.6 million and $38.2 million, respectively, in our core truck sales.****The decrease was partially offset by higher net sales forthe three and nine months ended September 29, 2007, in our motorcoach divisionof $2.3 million and $6.4 million, respectively, and our armored division of$1.7 million and $2.5 million, respectively, while net sales in our busdivision remained relatively constant from period to period.  We attribute the decrease in our core trucksales to continued softness in the 2007 retail truck market. Assuming thecontinuation of these business conditions, we are anticipating that net salesin the fourth quarter will be lower than the comparable 2006 period.  The increase in sales in our motorcoachdivision resulted from the growth of this 2006 acquisition. Our total salesbacklog was $72.6 million at September 29, 2007 compared to $75.4 million atSeptember 30, 2006.

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

 

Grossprofit decreased by $2.3 million, or 23.9%, to $7.3 million (10.9% of netsales) for the three months ended September 29, 2007 compared to $9.6 million(12.0% of net sales) for the three months ended September 30, 2006.  For the nine months ended September 29, 2007,gross profit decreased by $2.3 million, or 7.7%, to $27.4 million (11.4% of netsales) compared to $29.7 million (11.2% of net sales) for the nine months endedSeptember 30, 2006.  The following tablepresents the components of cost of sales as a percentage of net sales and thechanges from period to period:
| ** **    | ** ** | **Three Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|---------------|------------|------------------------|------------|-----------------------|------------|
| ** **    | ** ** | **September 29,**      | ** ** | **September 30,**     | ** ** | **Percent** | ** ** | **September 29,** | ** ** | **September 30,** | ** ** | **Percent** | ** ** |
| ** **    | ** ** | **2007**               | ** ** | **2006**              | ** ** | **Change** | ** ** | **2007** | ** ** | **2006** | ** ** | **Change** | ** ** |
| Material      |       | 55.8                   | %          | 55.0                  | %          | 0.8 | % | 57.3 | % | 56.9 | % | 0.4 | % |
| Direct labor  |       | 14.1                   |       | 14.3                  |       | -0.2 |   | 13.7 |   | 14.1 |   | -0.4 |   |
| Overhead      |       | 16.2                   |       | 15.7                  |       | 0.5 |   | 15.1 |   | 15.1 |   | 0.0 |   |
| Delivery      |       | 3.0                    |       | 3.0                   |       | 0.0 |   | 2.5 |   | 2.7 |   | -0.2 |   |
| Cost of sales |       | 89.1                   |       | 88.0                  |       | 1.1 |   | 88.6 |   | 88.8 |   | -0.2 |   |
| Gross profit  |       | 10.9                   | %          | 12.0                  | %          | -1.1 | % | 11.4 | % | 11.2 | % | 0.2 | % |

 

**Material** — Material cost as apercentage of net sales increased .8% and .4% for the three and nine monthsended September 29, 2007 when compared to corresponding periods in 2006. ** **The increase for thethree months material percentage is partially attributable to recording a largefavorable inventory adjustment in the third quarter of 2006, which reduced the2006 material percentage by 2.6%. Additionally, the quarter and year-to-date 2007 material percentageswere higher due to product mix, as our bus and motorcoach divisions (which havehigher material content) accounted for a greater percentage of our net sales incomparison to the same periods in 2006.

 

With regard to physicalinventory adjustments, the Company has historically experienced and recordedboth favorable and unfavorable adjustments. For the three months ended September 29, 2007, the Company recorded anet favorable $0.3 million adjustment compared to a net favorable $1.9 millionadjustment for the three months ended September 30, 2006.  Due to our product diversity, complexity,customization, and on-line engineering, inventory relief using standard billsof material does not provide full relief of our inventory.  Therefore, the Company records an estimatedadjustment based on

 

 

8

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**Results ofOperations, Continued**

 

various factors. Throughout2006 and 2007, the Company has intensified its bills of material accuracyinitiatives and cost relief functions in conjunction with selectivelyperforming additional interim physical inventories and recording anyadjustments relating thereto. (See “Inventory Relief” below in our discussionof “Critical Accounting Policies and Estimates”).

 

Raw material prices continueto remain a concern. In particular, prices have increased for petroleum-basedraw materials, including resin and gelcoat, used in the production of ourfiberglass products.  However, we areclosely monitoring and managing all material costs through timely communicationand negotiation with key suppliers.    

 

**Direct Labor** — Direct labor as apercentage of net sales decreased .2% and .4% for the three and nine monthsended September 29, 2007, respectively, when compared to corresponding periodsin 2006.  The direct labor improvementwas the result of the efficiencies realized from contracting fewer, more costlytemporary employees at our core truck divisions due to reduced salesvolume.  Additionally, in the first halfof 2006 we experienced a delay in OEM supplied chassis which caused the Companyto temporarily suspend production, thereby negatively affecting labor andoverhead absorption.  The slight increaseof .4% in the third quarter of 2007 versus the 2007 year-to-date percentage wasattributable to labor efficiencies associated with standardized fleet unitsproduced principally in the first half of the year. This trend was consistentwith our historical experience in years in which we have had fleet contracts.

 

**Overhead** — Overhead as a percentageof net sales increased .5% for the three months ended September 29, 2007compared to the 2006 third quarter and remained flat for the three and ninemonths ended September 29, 2007 when compared to the same period in 2006.** **The increase in theoverhead percentages for the three months was due to lower sales volume for thethree months as certain fixed expenses do not fluctuate when volumechanges.  Additionally, group healthinsurance expense increased 4.4% and 14.2% for the three and nine months endedSeptember 29, 2007, respectively, when compared to 2006. To combat the increasein group health insurance expense, the Company continues to implement changesto its group health insurance plan design in an effort to control future claimcosts.  We will continue to focus onreducing expenses and managing our overhead cost structure for the level ofsales volume we experienced during the first nine months of the year.

 

**Delivery** — Deliveryexpense as a percentage of net sales remained flat and decreased .2% for thethree and nine months ended September 29, 2007 when compared to correspondingperiods in 2006.

 

**Selling, general and administrative expenses**

 

Selling,general and administrative (“G&A”) expenses were $6.6 million (9.7% of netsales) for the three months ended September 29, 2007 compared to $7.2 million(9.0% of net sales) for the three months ended September 30, 2006. For the ninemonths ended September 29, 2007, selling

 

 

9

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**Results ofOperations, Continued**

 

andG&A expenses were $21.1 million (8.8% of net sales) compared to $21.4million (8.1% of net sales) for the nine months ended September 30, 2006.  The following table presents selling andG&A expenses as a percentage of net sales and the changes from period toperiod:
| ** **       | ** ** | **Three Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|------------------|------------|------------------------|------------|-----------------------|------------|
| ** **       | ** ** | **September 29,**      | ** ** | **September 30,**     | ** ** | **Percent** | ** ** | **September 29,** | ** ** | **September 30,** | ** ** | **Percent** | ** ** |
| ** **       | ** ** | **2007**               | ** ** | **2006**              | ** ** | **Change** | ** ** | **2007** | ** ** | **2006** | ** ** | **Change** | ** ** |
| Selling expenses |       | 3.6                    | %          | 3.7                   | %          | -0.1 | % | 3.3 | % | 3.2 | % | 0.1 | % |
| G&A expenses |       | 6.1                    |       | 5.3                   |       | 0.8 |   | 5.5 |   | 4.9 |   | 0.6 |   |
| Total            |       | 9.7                    | %          | 9.0                   | %          | 0.7 | % | 8.8 | % | 8.1 | % | 0.7 | % |

 

**Selling expenses** — Selling expensesdecreased by $.5 million, or 16.7%, to $2.5 million for the three months endedSeptember 29, 2007 from $3.0 million for the three months ended September 30,2006.  For the nine months ended September29, 2007, selling expenses decreased $.5 million, or 5.9%, to $8.0 million from$8.5 million for the nine months ended September 30, 2006.  The decrease in selling expenses was theresult of cooperative marketing credits the Company received from chassismanufactures.  These credits, determinedsolely by programs established by the chassis manufacturers, have historicallybeen used to offset marketing and promotional expenses.  Additionally, sales commission expensedecreased due to the lower sales volume experienced during the first ninemonths of 2007 compared to 2006.

 

**G&A expenses** — General andadministrative expenses increased by $.1 million, or 2.4% to $4.1 million forthe three months ended September 29, 2007 from $4.2 million for the threemonths ended September 30, 2006. For the nine months ended September 29, 2007,general and administrative expenses increased $.2 million, or 1.6%, to $13.1million from $12.9 million for the nine months ended September 30, 2006. Theincrease in general and administrative expenses was primarily due tonon-recurring fees associated with complying with the requirements of theSarbanes-Oxley Act of 2002.

***Other Income***

Otherincome remained relatively constant at $.2 million and $.4 million for thethree and nine months ended September 29, 2007 and September 30, 2006,respectively. Other income consisted of rental income, gain on sale of assets,and other miscellaneous income received by the Company through its variousbusiness activities.

***Interest expense***

Interestexpense was $.5 million (.7% of net sales) for the three months ended September29, 2007 compared to $.8 million (1.0% of net sales) for the three months endedSeptember 30, 2006. For the nine months ended September 29, 2007, interestexpense was $1.9 million (.8% of net sales) compared to $2.3 million (.9% ofnet sales) for the nine months ended September 30, 2006.  The decrease in interest expense was due toless borrowing under the Company’s working capital line of credit and adecrease in chassis interest expense. The decrease in bank interest expense was due to a decrease in thelending interest rates and a more intense focus on working capital managementresulting in improved bank borrowing rates. Additionally, the decrease in chassis interest expense was due to reducedconsigned chassis inventory levels relating to light-duty chassis.  In 2006, we experienced an unanticipatedslowdown in the light-duty truck market causing a build-up of consigned chassisinventory which resulted in increased interest expense.

 

 

10

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**Results ofOperations, Concluded**

***Income taxes***

TheCompany’s effective income tax rate was 32% for the three months endedSeptember 29, 2007 and September 30, 2006. For the nine months ended September 29, 2007, the effective income taxwas 31% compared to 35% for the nine months ended September 30, 2006.  The 2006 effective income tax rate wassubsequently reduced during the fourth quarter of 2006 and was 30% for the yearended December 30, 2006. In addition to being in a lower tax bracket, theeffective income tax rate was favorably impacted by tax-exempt underwritingincome of a wholly-owned small captive insurance subsidiary, by the additionaltax deduction allowed manufacturers under the 2004 American Jobs Creation Act,and federal and state research and development tax credits.

***Net income and earningsper share***

Netincome decreased by $.9 million for the three months ended September 29, 2007to $.3 million (.4% of net sales) from $1.2 million (1.5% of net sales) for thethree months ended September 30, 2006. For the nine months ended September 29,2007, net income decreased by $.9 million to $3.3 million (1.4% of net sales)from $4.2 million (1.6% of net sales) for the nine months ended September 30,2006.

Thefollowing table presents basic and diluted earnings per share and the changesfrom period to period:
| ** **         | ** ** | **Three Months Ended**           | ** ** | **Nine Months Ended**            | ** ** |
|--------------------|------------|----------------------------------|------------|----------------------------------|------------|
| ** **         | ** ** | **September 29,**

**2007** | ** ** | **September 30,**

**2006** | ** ** | **Change** | ** ** | **September 29,****2007** | ** ** | **September 30,****2006** | ** ** | **Change** | ** ** |
|               |       |                             |       |                             |       |   |   |
| Earnings per share |       |                             |       |                             |       |   |   |   |   |   |   |   |   |
| Basic              |       | $                                | 0.02       |                             | $          | 0.10 |   | $ | (0.08) |   | $ | 0.26 |   | $ | 0.33 |   | $ | (0.07) |   |
| Diluted            |       | $                                | 0.02       |                             | $          | 0.10 |   | $ | (0.08) |   | $ | 0.25 |   | $ | 0.32 |   | $ | (0.07) |   |

 

**Liquidity and Capital Resources**

Cashgenerated from operations and reductions in working capital were major sourcesof cash flows during the first nine months of 2007.  The Company’s cash management system andrevolving line of credit are designed to maintain zero cash balances and,accordingly, excess cash generated from operations is utilized to reduceborrowings.

***Operating activities***

Operatingactivities provided $18.7 million for the nine months ended September 29, 2007compared to a $4.3 million for the nine months ended September 30, 2006.  Working capital decreased $11.6 millionduring the nine months ended September 29, 2007, principally due to lowerinventories of $6.0 million and lower accounts receivables of $6.7 million(offset by a decrease in accounts payable of $1.6 million).  Net income, adjusted for depreciation and amortization,also provided $6.5 million and $7.4 million for the first nine months of 2007and 2006, respectively.

11

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**Liquidity and Capital Resources, Concluded**

***Investing activities***

Investingactivities used $3.0 million for the nine months ended September 29, 2007 and$4.2 million for the nine months ended September 30, 2006.  Capital expenditures totaled $2.4 million forfirst nine months of 2007 and consisted principally of investments in replacingmanufacturing equipment.

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

Financingactivities used $16.9 million for the nine months ended September 29, 2007compared to $1.3 for the nine months ended September 30, 2006.  Our positive cash flow, used to significantlyreduce our bank borrowings during 2007, occurred as a result of a reduction of$11.6 million in working capital in the first nine months of 2007. The Companyalso received $0.7 million from the exercise of stock options in the first ninemonths of 2007. The Company’s board of directors approved quarterly cash dividendsof nine and one-half cents per share, or $3.6 million, for the first threequarters of 2007 and 2006.

 

**Critical Accounting Policies and Estimates**

Management’s discussion and analysis of itsfinancial position and results of operations are based upon the Company’sconsolidated financial statements, which have been prepared in accordance withaccounting principles generally accepted in the United States of America.  The preparation of these financial statementsrequires Management to make estimates and judgments that affect the reportedamounts of assets, liabilities, revenues and expenses and related disclosure ofcontingent assets and liabilities.  TheCompany’s significant accounting policies are discussed in Note 1 of the Notesto Consolidated Financial Statements included in the Annual Report on Form 10-Kfor the year ended December 30, 2006.  InManagement’s opinion, the Company’s critical accounting policies includerevenue recognition, allowance for doubtful accounts, excess and obsoleteinventories, inventory relief, accrued insurance and accrued warranty.

***Revenue Recognition*** — The Companygenerally recognizes 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 theproduct(s) have been completed according to customer specifications, havepassed all of the Company’s quality control inspections, and are ready fordelivery based on established delivery terms.

***Allowance for Doubtful Accounts*** — The Company maintains anallowance for doubtful accounts for estimated losses resulting from theinability 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 affect our futureoperating results.

 

***Excess and Obsolete Inventories*** — The Company must makeestimates regarding the future use of raw materials and finished products andprovide for obsolete or slow-moving inventories.  If actual product life cycles, productdemand, and/or market conditions are less favorable than those projected byManagement, additional inventory write-downs may be required which would affectfuture operating results.

 

12

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**Critical Accounting Policies and Estimates, Continued**

***Inventory Relief*** — For monthly and quarterlyfinancial reporting, cost of sales is recorded and inventories are relieved bythe use of standard bills of material adjusted for scrap and other estimatedfactors affecting inventory relief. Because of our large and diverse product line and the customized natureof each order, it is difficult to place full reliance on the bills of materialfor accurate relief of inventories. Although the Company continues to refine the process of creatingaccurate bills of materials, manual adjustments (which are based on estimates)are necessary in an effort to assure correct relief of inventories for productssold.  The estimate calculations considerthe customized nature of products, historical inventory relief percentages,scrap variances, and other factors which could impact inventory relief.

 

The accuracy of the inventory relief is notknown until physical inventories are conducted at each of the Company’s plantlocations. We conduct semi-annual physical inventories at all locations andschedule them in a manner that provides coverage in each of our calendarquarters. We have dedicated significant in-house resources in our continuingeffort to refine our approach to these physical inventories so as to enable usto improve the accuracy of our inventory accounting system.

 

***Accrued Insurance*** - The Company has aself-insured retention against product liability claims with insurance coverageover and above the retention.  TheCompany is also self-insured for a portion of its employee medical benefits andworkers’ compensation.  Product liabilityclaims are routinely reviewed by the Company’s insurance carrier, and managementroutinely reviews other self-insurance risks for purposes of establishingultimate loss estimates.  In addition,management must determine estimated liability for claims incurred but notreported.  Such estimates, and anysubsequent changes in estimates, may result in adjustments to our operatingresults in the future.

 

The Company utilizes a wholly-owned smallcaptive insurance company to insure certain of its business risks.  Certain risks, traditionally self-insured bythe Company and its subsidiaries, are insured by the captive insurancesubsidiary.  In addition, certainbusiness risks not traditionally insured are insured by the captive insurancesubsidiary.  Since the captive insurancecompany has not reinsured any of its coverages, the Company’s overallself-insurance risk has not changed.  Thecaptive insurance subsidiary helps the Company manage its risk exposures and,under the Internal Revenue Code, the net underwriting income of such a smallcaptive is not taxable.

 

***Accrued Warranty*****— The Companyprovides limited warranties for periods of up to five years from the date ofretail sale.  Estimated warranty costsare provided at the time of sale and are based upon historical experience.

 

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**Critical Accounting Policies and Estimates, Concluded**

**Forward-LookingStatements**

This report containsforward-looking statements, other than historical facts, which reflect the viewof management with respect to future events. When used in this report, words such as “believe,” “expect,” “anticipate,”“estimate,” “intend,” and similar expressions, as they relate to the Company orits plans or operations, identify forward-looking statements.  Such forward-looking statements are based onassumptions made by, and information currently available to, management.  Although management believes that theexpectations reflected in such forward-looking statements are reasonable, itcan give no assurance that the expectations reflected in such forward-lookingstatements are reasonable, and it can give no assurance that such expectationswill prove to be correct.  Importantfactors that could cause actual results to differ materially from suchexpectations include, without limitation, limitations on the availability ofchassis on which the Company’s product is dependent, availability of rawmaterials, raw material cost increases and severe interest rate increases.  Furthermore, the Company can provide noassurance that such raw material cost increases can be passed on to its customersthrough implementation of price increases for the Company’s products.  The forward-looking statements containedherein reflect the current view of management with respect to future events andare subject to those factors and other risks, uncertainties, and assumptionsrelating to the operations, results of operations, cash flows and financialposition of the Company.  The Companyassumes no obligation to update the forward-looking statements or to update thereasons actual results could differ from those contemplated by suchforward-looking statements.

 

 

 

**ITEM 3.****    QUANTITATIVE AND QUALITATIVEDISCLOSURES 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 Qualitative DisclosuresAbout Market Risk,” for the year ended December 30, 2006.

**ITEM 4.****  CONTROLS AND PROCEDURES.**

 

a.                                       Evaluation ofDisclosure Controls and Procedures.

 

In connection with the preparation of thisForm 10-Q, an evaluation was performed under the supervision and with theparticipation of the Company’s management, including the Company’s ChiefExecutive Officer and Chief Financial Officer, of the effectiveness of thedesign and operation of the Company’s disclosure controls and procedures (asdefined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of1934, as amended).

b.             Changesin Internal Control over Financial Reporting.

There has been no change in the Company’sinternal control over financial reporting during our last fiscal quarter thathas materially affected, or is reasonably likely to materially affect, theCompany’s internal control over financial reporting.

14

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The Company continues to take action to assurecompliance with the internal controls, disclosure controls, and otherrequirements of the Sarbanes-Oxley Act of 2002.  Management, including theCompany’s Chief Executive Officer and Chief Financial Officer, cannot guaranteethat the internal controls and disclosure controls will prevent all possibleerrors or fraud.  A control system, no matter how well conceived andoperated, can provide only reasonable, not absolute, assurance that theobjectives of a control system have been met. In addition, the design of acontrol system must reflect the fact that there are resource constraints, andthe benefit of controls must be relative to their costs.  Because of theinherent limitations in all control systems, no system of controls can provideabsolute assurance that all control issues and instances of fraud, if any,within the Company will be detected.  These inherent limitations includethe realities that judgments in decision-making can be faulty and thatbreakdowns can occur because of simple error or mistake.  Further,controls can be circumvented by individual acts of some persons, by collusionof two or more persons, or by management override of the controls.

The design of any system of controls is alsobased in part upon certain assumptions about the likelihood of future events,and there can be no assurance that any design will succeed in achieving itsstated goals under all potential future conditions.  Over time, a controlmay be inadequate because of changes in conditions, or the degree of compliancewith the policies or procedures may deteriorate.  Because of inherentlimitations in any cost-effective control system, misstatements due to error orfraud may occur and not be detected.

 

**PART II.    OTHER INFORMATION**

 

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

Notapplicable.

 

**ITEM 1A.****                               ****RISK FACTORS.**

There have been no material changes in ourrisk factors from those previously disclosed in our Annual Report on Form 10-Kfor the year ended December 30, 2006.

 

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

Notapplicable.

 

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

Notapplicable.

 

15

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

Notapplicable.

 

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

Notapplicable.

 

**ITEM 6.****                                        ****EXHIBITS.**
| Exhibits: |         |   |
|-----------|--------------|--------|
|      |         |   |   |
|      | 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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SIGNATURES

 

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

 

 

                                                                                                                  SUPREME INDUSTRIES, INC.

 

 
|                    |   | BY:    | /s/ Jeffery D. Mowery |   |
|-------------------------|--------|--------|-----------------------|--------|
| DATE: November 13, 2007 |   |   | Jeffery D. Mowery     |   |

 

Vice President of Financeand 

Chief Financial Officer

 

(Signing on behalf of theRegistrant 

and as Principal Financialand Accounting Officer)

 

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INDEX TO EXHIBITS

 

 
| **Exhibit**

**Number** | ** ** | **Description  of Document**                                                                           | ** ** |
|-------------------------|------------|--------------------------------------------------------------------------------------------------------|------------|
|                    |       |                                                                                                   |       |
| 31.1                    |       | Certification of Chief  Executive Officer Pursuant to Section 302 of the Sarbanes-

Oxley Act of 2002. |       |
|                    |       |                                                                                                   |
|                    |       |                                                                                                   |       |
| 31.2                    |       | Certification of Chief  Financial Officer Pursuant to Section 302 of the Sarbanes-

Oxley Act of 2002. |       |
|                    |       |                                                                                                   |
|                    |       |                                                                                                   |       |
| 32.1                    |       | Certification of Chief  Executive Officer Pursuant to Section 906 of the Sarbanes-

Oxley Act of 2002. |       |
|                    |       |                                                                                                   |
|                    |       |                                                                                                   |       |
| 32.2                    |       | Certification of Chief  Financial Officer Pursuant to Section 906 of the Sarbanes-

Oxley Act of 2002. |       |
|                    |       |                                                                                                   |

 

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