Table ofContents

 

 

 

**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington, D.C.  20549**

 

**FORM 10-Q**

** **

**(MarkOne)**
| **x**      | **QUARTERLY REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**                                               |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** | ** **                                                                                                                                           |
| ** ** | **For  the quarterly period ended June 28, 2008**                                                                                               |
| ** ** | ** **                                                                                                                                           |
| **or**     |
| ** ** | ** **                                                                                                                                           |
| **o**      | **TRANSITION REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**                                              |
| ** ** | ** **                                                                                                                                           |
| ** ** | **For  the transition 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 ofincorporation 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 90 days.  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.  See the definitions of “large acceleratedfiler,” “accelerated filer” and “smaller reporting company” in Rule 12b-2of the Exchange Act.

 
| 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).  Yes o   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 August 1, 2008** |
|-------------------------------------------------------|------------|-------------------------------------------------------|
| **Class A**                                      | ** ** | **11,197,556**                                        |
| **Class B**                                      | ** ** | **2,024,133**                                         |

 

 

 

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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.                                        | 18 |
|                                           |                                                                                         |   |
| ITEM 5.                                        | Other Information.                                                                           | 18 |
|                                           |                                                                                         |   |
| ITEM 6.                                        | Exhibits.                                                                                    | 19 |
|                                           |                                                                                         |   |
| SIGNATURES                                     |                                                                                         |
|                                           |                                                                                         |
| INDEX  TO EXHIBITS                             |                                                                                         |
|                                           |                                                                                         |
| EXHIBITS                                       |                                                                                         |

 

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**PART I. FINANCIAL INFORMATION**

 

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

 

**Supreme Industries, Inc. and Subsidiaries**

Consolidated Balance Sheets

 
| ** **                                      | ** ** | **June 28,** | ** **  | **December 29,** | ** ** |
|-------------------------------------------------|------------|-------------------|-------------|-----------------------|------------|
| ** **                                      | ** ** | **2008**          | ** **  | **2007**              | ** ** |
| ** **                                      | ** ** | **(Unaudited)**   | ** **  | ** **            | ** ** |
| **ASSETS**                                      |       |              |        |                  |       |
|                                            |       |              |        |                  |       |
| **Current assets:**                             |       |              |        |                  |       |
| Cash and cash equivalents                       |       | $                 | 10,642      |                  | $          | 1,266,133 |   |
| Investments                                     |       | 2,557,455         |        | 2,215,267             |       |
| Accounts receivable, net                        |       | 20,718,646        |        | 28,628,324            |       |
| Inventories                                     |       | 48,721,706        |        | 46,643,480            |       |
| Other current assets                            |       | 4,210,554         |        | 5,171,503             |       |
|                                            |       |              |        |                  |       |
| **Total current assets**                        |       | 76,219,003        |        | 83,924,707            |       |
|                                            |       |              |        |                  |       |
| **Property, plant and equipment, at cost**      |       | 94,348,081        |        | 92,530,190            |       |
| Less, Accumulated depreciation and amortization |       | 47,094,259        |        | 45,100,465            |       |
|                                            |       |              |        |                  |       |
| **Property, plant and equipment, net**          |       | 47,253,822        |        | 47,429,725            |       |
|                                            |       |              |        |                  |       |
| **Goodwill and intangible assets, net**         |       | 1,347,706         |        | 1,371,891             |       |
| **Other assets**                                |       | 60,487            |        | 64,860                |       |
|                                            |       |              |        |                  |       |
| **Total assets**                                |       | $                 | 124,881,018 |                  | $          | 132,791,183 |   |

 

See accompanying notes to consolidated financial statements.

 

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**Supreme Industries, Inc. and Subsidiaries**

Consolidated Balance Sheets,Concluded

 
| ** **                                          | ** ** | **June 28,** | ** **  | **December 29,** | ** ** |
|-----------------------------------------------------|------------|-------------------|-------------|-----------------------|------------|
| ** **                                          | ** ** | **2008**          | ** **  | **2007**              | ** ** |
| ** **                                          | ** ** | **(Unaudited)**   | ** **  | ** **            | ** ** |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY**       |       |              |        |                  |       |
|                                                |       |              |        |                  |       |
| **Current liabilities:**                            |       |              |        |                  |       |
| Current maturities of long-term debt                |       | $                 | 702,578     |                  | $          | 748,406 |   |
| Trade accounts payable                              |       | 10,120,329        |        | 14,642,616            |       |
| Accrued income taxes                                |       | 342,636           |        | 498,162               |       |
| Other accrued liabilities                           |       | 8,026,216         |        | 9,510,095             |       |
|                                                |       |              |        |                  |       |
| **Total current liabilities**                       |       | 19,191,759        |        | 25,399,279            |       |
|                                                |       |              |        |                  |       |
| **Long-term debt**                                  |       | 28,865,890        |        | 29,002,718            |       |
|                                                |       |              |        |                  |       |
| **Deferred income taxes**                           |       | 2,589,055         |        | 2,589,055             |       |
|                                                |       |              |        |                  |       |
| **Other long-term liabilities**                     |       | 393,227           |        | 333,046               |       |
|                                                |       |              |        |                  |       |
| **Total liabilities**                               |       | 51,039,931        |        | 57,324,098            |       |
|                                                |       |              |        |                  |       |
| **Stockholders’ equity**                       |       | 73,841,087        |        | 75,467,085            |       |
|                                                |       |              |        |                  |       |
| **Total liabilities and stockholders’ equity** |       | $                 | 124,881,018 |                  | $          | 132,791,183 |   |

 

See accompanying notes to consolidated financial statements.

 

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**Supreme Industries, Inc. and Subsidiaries**

Consolidated Statements ofIncome (Unaudited)

 
| ** **                                                 | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|------------------------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                                                 | ** ** | **June 28,**                | ** ** | **June 30,**              | ** ** | **June 28,** | ** ** | **June 30,** | ** ** |
| ** **                                                 | ** ** | **2008**                         | ** ** | **2007**                       | ** ** | **2008** | ** ** | **2007** | ** ** |
|                                                       |       |                             |       |                           |       |   |   |   |   |
| Net sales                                                  |       | $                                | 75,307,068 |                           | $          | 88,161,027 |   | $ | 151,231,424 |   | $ | 172,053,010 |   |
| Cost of sales                                              |       | 67,907,997                       |       | 77,071,811                     |       | 136,241,215 |   | 151,992,408 |   |
| **Gross profit**                                           |       | 7,399,071                        |       | 11,089,216                     |       | 14,990,209 |   | 20,060,602 |   |
|                                                       |       |                             |       |                           |       |   |   |   |   |
| Selling, general and administrative expenses               |       | 7,041,110                        |       | 7,599,884                      |       | 13,989,722 |   | 14,529,631 |   |
| Other income                                               |       | (264,563                         | )          | (139,164                       | )          | (509,511 | ) | (229,141 | ) |
| **Operating income**                                       |       | 622,524                          |       | 3,628,496                      |       | 1,509,998 |   | 5,760,112 |   |
|                                                       |       |                             |       |                           |       |   |   |   |   |
| Interest expense                                           |       | 530,945                          |       | 667,819                        |       | 1,116,905 |   | 1,410,990 |   |
| **Income before income taxes**                             |       | 91,579                           |       | 2,960,677                      |       | 393,093 |   | 4,349,122 |   |
|                                                       |       |                             |       |                           |       |   |   |   |   |
| Income taxes                                               |       | (125,000                         | )          | 917,000                        |       | (50,000 | ) | 1,341,000 |   |
| **Net income**                                             |       | $                                | 216,579    |                           | $          | 2,043,677 |   | $ | 443,093 |   | $ | 3,008,122 |   |
|                                                       |       |                             |       |                           |       |   |   |   |   |
| **Earnings Per Share:**                                    |       |                             |       |                           |       |   |   |   |   |
| Basic                                                      |       | $                                | .02        |                           | $          | .16 |   | $ | .03 |   | $ | .23 |   |
| Diluted                                                    |       | $                                | .02        |                           | $          | .16 |   | $ | .03 |   | $ | .23 |   |
|                                                       |       |                             |       |                           |       |   |   |   |   |
| **Shares used in the computation of earnings per  share:** |       |                             |       |                           |       |   |   |   |   |
| Basic                                                      |       | 13,283,418                       |       | 13,079,940                     |       | 13,234,366 |   | 13,027,906 |   |
| Diluted                                                    |       | 13,453,276                       |       | 13,160,582                     |       | 13,370,880 |   | 13,127,704 |   |
|                                                       |       |                             |       |                           |       |   |   |   |   |
| **Cash dividends per common share**                        |       | $                                | .095       |                           | $          | .095 |   | $ | .19 |   | $ | .19 |   |

 

See accompanying notes to consolidated financial statements.

 

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**Supreme Industries, Inc. and Subsidiaries**

Consolidated Statements ofCash Flows (Unaudited)

 
| ** **                                                                         | ** ** | **Six Months Ended** | ** ** |
|------------------------------------------------------------------------------------|------------|--------------------------------|------------|
| ** **                                                                         | ** ** | **June 28,**              | ** ** | **June 30,** | ** ** |
| ** **                                                                         | ** ** | **2008**                       | ** ** | **2007** | ** ** |
| **Cash flows from operating activities:**                                          |       |                           |       |   |   |
| Net income                                                                         |       | $                              | 443,093    |   | $ | 3,008,122 |   |
| Adjustments to reconcile net income to net cash provided by operating  activities: |       |                           |       |   |   |
| Depreciation and amortization                                                      |       | 2,131,425                      |       | 2,139,922 |   |
| Amortization of intangibles                                                        |       | 24,185                         |       | 24,185 |   |
| Provision for losses on doubtful receivables                                       |       | 63,288                         |       | 96,341 |   |
| Stock-based compensation expense                                                   |       | 291,552                        |       | 154,610 |   |
| Losses on disposal of property, plant and equipment                                |       | 2,233                          |       | 15,641 |   |
| Changes in operating assets and liabilities                                        |       | 510,402                        |       | 9,880,246 |   |
|                                                                               |       |                           |       |   |   |
| **Net cash provided by operating activities**                                      |       | 3,466,178                      |       | 15,319,067 |   |
|                                                                               |       |                           |       |   |   |
| **Cash flows from investing activities:**                                          |       |                           |       |   |   |
| Additions to property, plant and equipment                                         |       | (2,016,157                     | )          | (1,574,217 | ) |
| Proceeds from sale of property, plant and equipment                                |       | 58,402                         |       | 6,494 |   |
| Proceeds from sale of investments                                                  |       | 832,670                        |       | — |   |
| Purchases of investments                                                           |       | (1,174,858                     | )          | (1,131,492 | ) |
| Decrease in other assets                                                           |       | 4,373                          |       | 24,497 |   |
|                                                                               |       |                           |       |   |   |
| **Net cash used in investing activities**                                          |       | (2,295,570                     | )          | (2,674,718 | ) |
|                                                                               |       |                           |       |   |   |
| **Cash flows from financing activities:**                                          |       |                           |       |   |   |
| Proceeds from revolving line of credit and other long-term debt                    |       | 61,423,636                     |       | 60,102,739 |   |
| Repayments of revolving line of credit and other long-term debt                    |       | (61,606,292                    | )          | (72,114,068 | ) |
| Payment of cash dividends                                                          |       | (2,490,943                     | )          | (2,423,710 | ) |
| Proceeds from exercise of stock options                                            |       | 247,500                        |       | 595,543 |   |
|                                                                               |       |                           |       |   |   |
| **Net cash used in financing activities**                                          |       | (2,426,099                     | )          | (13,839,496 | ) |
|                                                                               |       |                           |       |   |   |
| **Change in cash and cash equivalents**                                            |       | (1,255,491                     | )          | (1,195,147 | ) |
|                                                                               |       |                           |       |   |   |
| **Cash and cash equivalents, beginning of period**                                 |       | 1,266,133                      |       | 1,307,463 |   |
|                                                                               |       |                           |       |   |   |
| **Cash and cash equivalents, end of period**                                       |       | $                              | 10,642     |   | $ | 112,316 |   |

 

See accompanying notes to consolidated financial statements.

 

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**SUPREME INDUSTRIES, 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 opinion of management, the informationfurnished herein includes all adjustments necessary to reflect a fair statementof the interim periods reported. All adjustments are of a normal and recurringnature. The December 29, 2007 consolidated balance sheet data was derivedfrom audited financial statements, but does not include all disclosures requiredby accounting principles generally 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 for the three and six months ended June 28,2008 and June 30, 2007 are for 13- and 26-week periods, respectively.

 

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. Othercomprehensive income (loss) for the three- and six-month periods ended June 28,2008 was $217,227 and $(117,200), respectively. Other comprehensive income forthe three- and six-month periods ended June 30, 2007 was $119,655 and$72,756, respectively. Total comprehensive income (loss) combines net incomeand other comprehensive income (loss). Total comprehensive income for thethree- and six-month periods ended June 28, 2008 was $433,806 and$325,893, respectively. Total comprehensive income for the three- and six-monthperiods ended June 30, 2007 was $2,163,332 and $3,080,878, 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:

 
| ** **       | ** ** | **June 28,** | ** ** | **December 29,** | ** ** |
|------------------|------------|-------------------|------------|-----------------------|------------|
| ** **       | ** ** | **2008**          | ** ** | **2007**              | ** ** |
| Raw materials    |       | $                 | 27,190,406 |                  | $          | 25,042,022 |   |
| Work-in-progress |       | 9,438,705         |       | 9,676,041             |       |
| Finished goods   |       | 12,092,595        |       | 11,925,417            |       |
|             |       | $                 | 48,721,706 |                  | $          | 46,643,480 |   |

 

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**SUPREME INDUSTRIES, INC. AND SUBSIDIARIES**

NotesTo Consolidated Financial Statements, Continued

 

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. 157also establishes a fair value hierarchy which requires an entity to maximizethe use of observable inputs and minimize the use of unobservable inputs whenmeasuring fair value. The standard describes three levels of inputs that may beused 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 by observablemarket 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 to estimate thefair 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, significantfair value inputs can generally be verified and do not typically involvesignificant management judgments (Level 2 inputs).

 

NOTE5 – LONG-TERM DEBT

 

TheCompany amended its existing credit facility effective June 30, 2008. Theterms of the credit facility are substantially the same as the previous creditfacility disclosed in the Annual Report on Form 10-K for the year ended December 29,2007. Certain debt covenants have been modified to provide temporary relief tothe Company during the current economic downturn. Effective August 11,2008, the credit facility maturity date was extended to October 31, 2009, andas a result all borrowings under the credit facility at June 28, 2008 areclassified as long-term debt.

 

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**SUPREME INDUSTRIES, INC. AND SUBSIDIARIES**

NotesTo Consolidated Financial Statements, Continued

 

NOTE6 - EARNINGS PER SHARE

 

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

 
| ** **                                                                                       | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|--------------------------------------------------------------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                                                                                       | ** ** | **June 28,**                | ** ** | **June 30,**              | ** ** | **June 28,** | ** ** | **June 30,** | ** ** |
| ** **                                                                                       | ** ** | **2008**                         | ** ** | **2007**                       | ** ** | **2008** | ** ** | **2007** | ** ** |
| Weighted average number of shares outstanding (used in computation of  basic earnings per share) |       | 13,283,418                       |       | 13,079,940                     |       | 13,234,366 |   | 13,027,906 |   |
|                                                                                             |       |                             |       |                           |       |   |   |   |   |
| Assumed exercise or issuance of shares relating to stock plans                                   |       | 169,858                          |       | 80,642                         |       | 136,514 |   | 99,798 |   |
|                                                                                             |       |                             |       |                           |       |   |   |   |   |
| Diluted shares outstanding (used in computation of diluted earnings per  share)                  |       | 13,453,276                       |       | 13,160,582                     |       | 13,370,880 |   | 13,127,704 |   |

 

NOTE7 - STOCK-BASED COMPENSATION

 

Thefollowing table summarizes the activity for the unvested restricted stock unitsand restricted stock for the six months ended June 28, 2008:

 
| ** **                       | ** ** | ** ** | ** ** | **Weighted -** | ** ** |
|----------------------------------|------------|------------|------------|---------------------|------------|
| ** **                       | ** ** | ** ** | ** ** | **Average**         | ** ** |
| ** **                       | ** ** | ** ** | ** ** | **Grant Date** | ** ** |
| ** **                       | ** ** | **Shares** | ** ** | **Fair Value** | ** ** |
| Unvested, December 30, 2007 |       | 113,546    |       | $                   | 6.11       |   |
| Granted                          |       | 121,890    |       | 4.96                |       |
| Vested                           |       | (26,236    | )          | 5.81                |       |
| Unvested, June 28, 2008     |       | 209,200    |       | 5.48                |       |
|                                  |            |            |            |                     |            |  |

 

Thetotal fair value of the shares vested during the six months ended June 28,2008 was $152,480.

 

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**SUPREME INDUSTRIES, INC. AND SUBSIDIARIES**

NotesTo Consolidated Financial Statements, Continued.

 

Asummary of the status of the Company’s outstanding stock options as of June 28,2008, and changes during the six months ended June 28, 2008 are asfollows:

 
| ** **                          | ** ** | ** **         | ** ** | **Weighted -** | ** ** |
|-------------------------------------|------------|--------------------|------------|---------------------|------------|
| ** **                          | ** ** | ** **         | ** ** | **Average**         | ** ** |
| ** **                          | ** ** | **Number of** | ** ** | **Exercise**        | ** ** |
| ** **                          | ** ** | **Shares**         | ** ** | **Price**           | ** ** |
| Outstanding, December 30, 2007 |       | 1,008,965          |       | $                   | 6.31       |   |
| Granted                             |       | 97,439             |       | 5.18                |       |
| Exercised                           |       | (151,470           | )          | 4.51                |       |
| Forfeited                           |       | (76,862            | )          | 5.13                |       |
| Outstanding, June 28, 2008     |       | 878,072            |       | 6.61                |       |
|                                     |            |                    |            |                     |            |  |

 

Theintrinsic value of the options exercised during the three- and six-month periodended June 28, 2008 was $59,840 and $67,540, respectively. There was nointrinsic value of the options outstanding at June 28, 2008 andoutstanding options had a weighted-average remaining contractual life of 3.87years.

 

NOTE8 - COMMON STOCK

 

TheCompany paid quarterly cash dividends, to all Class A and Class Bcommon stockholders, of nine and one-half cents ($0.095) and nineteen cents($0.19) per share for each of the three and six-month periods ended June 28,2008 and June 30, 2007.

 

NOTE9 – SUBSEQUENT EVENT

 

OnAugust 11, 2008, the Company’s Board of Directors declared a two percent(2%) stock dividend on its outstanding Class A and Class B CommonStock. Stockholders of record on August 22, 2008, will receive a stockdividend for each share owned on that date, payable on August 29, 2008. Allshare and per share data have been adjusted to reflect the stock dividend on aretroactive basis.

 

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**ITEM 2****.****       ****MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF 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 12 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 its 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 operates only in businesses related to its core competencies andcurrently has no plans to deviate from this strategy.

 

The Company and its product offerings aresensitive to various factors which include, but are not limited to, economicconditions, interest rate fluctuations, changes in governmental regulations,and the volatility in the supply chain of vehicle chassis. The Company’sbusiness is also affected by the availability and costs of certain rawmaterials that are significant components of its product offerings.

 

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 June 28, 2008 decreased $12.9 million, or14.6%, to $75.3 million compared to $88.2 million for the three months ended June 30,2007. Net sales for the six months ended June 28, 2008 decreased $20.9million, or 12.1%, to $151.2 million from $172.1 million for the six monthsended June 30, 2007. The decrease was primarily related to our core dryfreight truck body sales, our largest product group, which declined by $9.6million, or 21.5%, and $19.6 million, or 22.6% for the three and six monthsended June 30, 2008, respectively. Additionally, our armored truckdivision experienced a decline in net sales of $1.6 million, or 66.0%, and $2.1million, or 44.1% for the three and six months, respectively. Partiallyoffsetting these decreases was an increase in our StarTrans bus division whichexperienced a 20.6% increase to $18.9 million for the three months ended June 28,2008 and a 16.5% increase to $37.3 million for the six months ended June 30,2008. Our Silver Crown division experienced a decrease in net sales of $1.0million, or 21.8%, for the three months and an increase of $1.5 million, or25.8% for the six months ended June 28, 2008.

 

We attribute the decrease in our core productsales to an industry-wide decline in the retail truck market which began inearly 2007 and the prevailing expectation is that it may continue throughout2008 and possibly into 2009. Additionally, the quarter was negatively impactedby 

 

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the cancellation of approximately $2.6million of orders from a major fleet customer due to the disruption in thesupply of General Motors (“GM”) chassis due to a labor dispute between theUnited Auto Workers and GM’s axle supplier. This labor dispute was settled inthe second quarter although returning to normal conditions was further delayedby a second labor strike against a chassis delivery provider which has sincebeen resolved. While chassis availability has improved, chassis supply remainsa concern as OEM chassis production schedules are subject to change. Thedisruption adversely affected our profitability and resulted in excessinventory carrying costs for both our fleet and retail business during thefirst and second quarters of 2008.

 

Thedecrease in business activity could create pent-up demand and we are poised tocapitalize on the eventual expected recovery in demand as we execute ourstrategic plans including the redesign of our core product. Our new van body isexpected to enable easier and less expensive construction, improve inventoryturns, and reduce the lead-time required to deliver the finished product. Ourprogress on the redesign remains on schedule with production set to beginduring the fourth quarter of 2008. Additionally, our StarTrans bus divisioncontinues to experience strong demand resulting from increased use of masstransit due to higher fuel prices.

 

Our total sales backlog was $73.6 million at June 28,2008 compared to $72.2 million at June 30, 2007.

 

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

 

Gross profit decreased by $3.7 million, or33.3%, to $7.4 million (9.8% of net sales) for the three months ended June 28,2008 compared to $11.1 million (12.6% of net sales) for the three months ended June 30,2007. For the six months ended June 28, 2008, gross profit decreased by$5.1 million or 25.3%, to $15.0 million (9.9% of net sales) compared to $20.1million (11.7% of net sales) for the six months ended June 30, 2007. Thefollowing table presents the components of cost of sales as a percentage of netsales and the changes from period to period:

 
| ** **    | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|---------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **    | ** ** | **June 28,**                | ** ** | **June 30,**              | ** ** | **Percent** | ** ** | **June 28,** | ** ** | **June 28,** | ** ** | **Percent** | ** ** |
| ** **    | ** ** | **2008**                         | ** ** | **2007**                       | ** ** | **Change** | ** ** | **2008** | ** ** | **2007** | ** ** | **Change** | ** ** |
| Material      |       | 57.7                             | %          | 57.0                           | %          | 0.7 | % | 57.5 | % | 57.8 | % | -0.3 | % |
| Direct labor  |       | 14.0                             |       | 13.4                           |       | 0.6 |   | 14.0 |   | 13.5 |   | 0.5 |   |
| Overhead      |       | 15.5                             |       | 14.5                           |       | 1.0 |   | 15.8 |   | 14.6 |   | 1.2 |   |
| Delivery      |       | 3.0                              |       | 2.5                            |       | 0.5 |   | 2.8 |   | 2.4 |   | 0.4 |   |
| Cost of sales |       | 90.2                             |       | 87.4                           |       | 2.8 |   | 90.1 |   | 88.3 |   | 1.8 |   |
| Gross profit  |       | 9.8                              | %          | 12.6                           | %          | -2.8 | % | 9.9 | % | 11.7 | % | -1.8 | % |

 

**Material**– Material cost as a percentage of netsales increased 0.7% for the three months and decreased 0.3% for the six monthsended June 28, 2008 when compared to corresponding periods in 2007. Thechange in the material percentage for the three and six months is primarilyrelated to product mix and higher freight cost resulting from escalating fuelprices. Our change in product mix relates to our bus division, which has ahigher material percentage, and accounted for a greater percentage of our netsales in the quarter and year-to-date in comparison to the same periods in2007.

 

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Rawmaterial costs continue to increase for aluminum, steel, and petroleum-basedproducts. Accordingly, we announced price increases of 3.0% and 5.0% in March andJune, respectively, on all core truck product lines.  Additionally, our StarTrans bus divisionimplemented price increases of 2.5% and 3.0% effective in January andJune, respectively.  These priceincreases, along with cost savings measures such as a redesign of our coretruck product and “lean manufacturing” initiatives, as well as ongoing effortsin product diversification should help enable us to mitigate the effect ofrising raw material costs.  We are closely monitoring and managing allmaterial costs through frequent communication and negotiation with oursuppliers and we will continue to address unavoidable raw material costincreases by increasing the price of our products, as necessary and as ourmarkets will bear them.  The Company also continues to strive to reducethe manufacturing costs of its products through research and development ofinnovative materials and the use of robotics.

 

**Direct Labor** – Direct labor as a percentage of net sales increased 0.6% and 0.5% forthe three and six months ended June 28, 2008, respectively, compared tocorresponding periods in 2007.  Thedirect labor percentage increase was the result of inefficiencies resultingfrom the labor strikes (as discussed previously), timing of fleet customerbuying patterns and the normal startup costs of additional production lines tofulfill fleet orders. Historically, we have experienced an improvement in ourdirect labor percentage after the occurrence of the fleet startup costs.  However, the historical labor improvement wasnot realized this year due to the interruption in the chassis supply chainresulting from the labor disputes. Additionally, our StarTrans bus divisionexperienced an increase in its labor percentage due to employee training costsassociated with one of our regional plant’s bus production line start-up costs.The reallocated capacity will improve plant utilization while acceleratingdelivery to satisfy our strong bus backlog.

 

**Overhead** – Overhead as a percentage of net sales increased 1.0% and 1.2% for thethree and six months ended June 28, 2008, respectively, compared tocorresponding periods in 2007.  Theoverhead percentage increase was due to the fixed nature of certain expensesthat do not fluctuate when sales volume changes.  Additionally, the Company was unfavorablyimpacted by higher utility costs as a result of an unusually cold winter in theNortheast and Midwest.   We continue tofocus on reducing expenses and managing our overhead cost structure based onour level of sales volume.

 

**Delivery** –Delivery as a percentage of net salesincreased 0.5% and 0.4% for the three and six months ended June 28, 2008,respectively, compared to corresponding periods in 2007.  The Company continues to research and utilizemore cost-effective delivery methods to mitigate the impact of higher fuelcosts. We will continue to attempt to pass on the higher costs despitecompetitive pricing pressures in the marketplace.

 

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***Selling, general and administrativeexpenses***

 

Selling, general and administrative (“G&A”)expenses decreased by $0.6 million, or 7.4%, to $7.0 million (9.3% of netsales) for the three months ended June 28, 2008 compared to $7.6 million(8.6% of net sales) for the three months ended June 30, 2007.  For the six months ended June 28, 2008,selling and G&A expenses decreased by $0.5 million, 3.7%, to $14.0 million(9.3% of net sales) compared to $14.5 million (8.4% of net sales) for the sixmonths ended June 30, 2007.   Thefollowing table presents selling and G&A expenses as a percentage of netsales and the changes from period to period:

 
| ** **       | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **       | ** ** | **June 28,**                | ** ** | **June 30,**              | ** ** | **Percent** | ** ** | **June 28,** | ** ** | **June 30,** | ** ** | **Percent** | ** ** |
| ** **       | ** ** | **2008**                         | ** ** | **2007**                       | ** ** | **Change** | ** ** | **2008** | ** ** | **2007** | ** ** | **Change** | ** ** |
| Selling expenses |       | 3.7                              | %          | 3.3                            | %          | 0.4 | % | 3.4 | % | 3.2 | % | 0.2 | % |
| G&A expenses |       | 5.6                              |       | 5.3                            |       | 0.3 |   | 5.9 |   | 5.2 |   | 0.7 |   |
| Total            |       | 9.3                              | %          | 8.6                            | %          | 0.7 | % | 9.3 | % | 8.4 | % | 0.9 | % |

 

**Sellingexpenses** – Selling expenses decreased by $0.2 million, or4.6%, to $2.7 million for the three months ended June 28, 2008 from $2.9million for the three months ended June 30, 2007.  For the six monthsended June 28, 2008, selling expenses decreased by $0.3 million, or 5.9%,to $5.2 million from $5.5 million for the six months ended June 30,2007.  Selling expenses declined due toincreased cooperative marketing credits the Company received from chassismanufacturers.  These credits, determined solely by programs establishedby the chassis manufacturers, are used to offset marketing and promotionalexpenses.

 

**G&Aexpenses** – General and administrative expenses decreased by$0.4 million, or 9.0%, to $4.3 million for the three months ended June 28,2008 from $4.7 million for the three months ended June 30, 2007.  Forthe six months ended June 28, 2008, general and administrative expensesdecreased by $0.2 million, or 2.4%, to $8.8 million from $9.0 million for thesix months ended June 30, 2007. The decrease in general and administrativeexpenses was primarily due to much lower incentive compensation accruals as aresult of the decrease in pretax income. Additionally, we incurred one-time professional fees during 2007 relatedto complying with the requirements of the Sarbanes-Oxley Act of 2002.

 

***Other income***

 

Otherincome increased by $0.2 million to $0.3 million for the three months ended June 28,2008 compared to the corresponding period in 2007.  For the six monthsended June 28, 2008, other income increased by $0.3 million to $0.5million compared to the corresponding period in 2007.  Other income consisted of rental income, gainon sale of assets, and other miscellaneous income received by the Companythrough its various business activities.

 

***Interest expense***

 

Interestexpense was $0.5 million (0.7% of net sales) for the three months ended June 28,2008 compared to $0.7 million (0.8% of net sales) for the three months ended June 30,2007.  For the

 

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sixmonths ended June 28, 2008, interest expense was $1.1 million (0.7% of netsales) compared to $1.4 million (0.8% of net sales) for the six months ended June 30,2007.   The decrease in bank interest expensereflects lower prevailing interest rates coupled with lower working capitalrequirements related to the lower sales volume.

 

***Income taxes***

 

TheCompany’s effective income tax rate was (136.5)% for the three months ended June 28,2008, compared to 31.0% for the three months ended June 30,2007.   For the six months ended June 28, 2008, the effectiveincome tax rate was (12.7)% compared to 30.8% for the six months ended June 30,2007.  The estimated effective income taxrate for both periods was favorably impacted by tax benefits associated withthe Company’s wholly-owned captive insurance subsidiary, additionalmanufacturing tax deductions allowed under the 2004 American Jobs Creation Act,federal alternative fuel tax credits, and research and development taxcredits.  The substantially lowerestimated pretax income for fiscal 2008 is resulting in a benefit position forthe Company.  The effective income taxrate for the previous year ended December 29, 2007 was 22.9%.

 

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

 

Netincome decreased by $1.8 million, or 89.4%, to $0.2 million (0.3% of net sales)for the three months ended June 28, 2008, from $2.0 million (2.3% of netsales) for the three months ended June 30, 2007. For the six months ended June 28,2008, net income decreased by $2.6 million, or 85.3%, to $0.4 million (0.3% ofnet sales) compared to $3.0 million (1.7% of net sales) for the six monthsended June 30, 2007.  The followingtable presents basic and diluted earnings per share and the changes from periodto period:

 
| ** **          | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|---------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **          | ** ** | **June 28,**                | ** ** | **June 30,**              | ** ** | ** ** | ** ** | **June 28,** | ** ** | **June 30,** | ** ** | ** ** | ** ** |
| ** **          | ** ** | **2008**                         | ** ** | **2007**                       | ** ** | **Change** | ** ** | **2008** | ** ** | **2007** | ** ** | **Change** | ** ** |
| Earnings per share: |       |                             |       |                           |       |   |   |   |   |   |   |   |   |
| Basic               |       | $                                | 0.02       |                           | $          | 0.16 |   | $ | (0.14 | ) | $ | 0.03 |   | $ | 0.23 |   | $ | (0.20 | ) |
| Diluted             |       | $                                | 0.02       |                           | $          | 0.16 |   | $ | (0.14 | ) | $ | 0.03 |   | $ | 0.23 |   | $ | (0.20 | ) |

 

**Liquidity and Capital Resources**

 

TheCompany’s cash management system and revolving line of credit have beendesigned to maintain zero cash balances and, accordingly, excess cash generatedfrom operations is utilized to reduce borrowings.  All borrowings underthe revolving line of credit remain unsecured.

 

***Operating activities***

 

Operatingactivities provided $3.5 million of cash for the six months ended June 28,2008 compared to cash provided of $15.3 million for the six months ended June 30,2007.  For the first half of 2008, operating cash was favorably impactedby a $7.9 million reduction in accounts receivable offset by a $4.5 milliondecrease in accounts payable and a $2.1 million increase in inventory.  Net income, adjusted for depreciation andamortization, provided cash flows from

 

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operatingactivities totaling $2.6 million and $5.2 million in first half of 2008 and2007, respectively.

 

***Investing activities***

 

Cashused in investing activities was $2.3 million for the six months ended June 28,2008 compared to $2.7 million for the six months ended June 30,2007. Capital expenditures were $2.0 million during the first half of 2008and consisted principally of investments in replacement equipment.  TheCompany expects to invest another approximately $2.0 million in additions toproperty, plant, and equipment during the remainder of 2008.

 

***Financing activities***

 

Financingactivities used $2.4 million for the six months ended June 28, 2008compared to cash used of $13.8 million for the six months ended June 30,2007.  The lower levels of financingactivities for the first half of 2008 occurred as a result of the decrease inaccounts receivable levels. The Company also received $248,000 and $595,000from the exercise of stock options for the first half of 2008 and 2007,respectively.  The Company paid cash dividends of nine and one-half centsper share, or $1.2 million, for each of the first and second quarters of 2008and 2007.

 

**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.

 

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***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 bymanagement, additional inventory write-downs may be required which wouldadversely affect future 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.

 

***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 such

 

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forward-lookingstatements are reasonable, and it can give no assurance that such expectations willprove to be correct.  Important factorsthat could cause actual results to differ materially from such expectationsinclude, without limitation, limitations on the availability of chassis onwhich the Company’s product is dependent, availability of raw materials, rawmaterial cost increases and severe interest rate increases.  Furthermore, the Company can provide noassurance that such raw material cost increases can be passed on to itscustomers 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.

 

**ITEM 3.****       ****QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUTMARKET 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 of DisclosureControls 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 June 28, 2008.

 

b.             Changes in Internal Control over FinancialReporting.

 

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

 

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benefitof controls must be relative to their costs.  Because of the inherentlimitations in all control systems, no system of controls can provide absoluteassurance that all control issues and instances of fraud, if any, within theCompany will be detected.  These inherent limitations include therealities that judgments in decision-making can be faulty and that breakdownscan occur because of simple error or mistake.  Further, controls can becircumvented by individual acts of some persons, by collusion of two or morepersons, 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.

 

**PART II.****     ****OTHERINFORMATION**

 

**ITEM 1.****       ****LEGALPROCEEDINGS.**

 

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 amounts provided by insurance coverage will not have a materialadverse effect on the consolidated financial position or results of operationsof the Company.

 

**ITEM 2.****       ****UNREGISTEREDSALES OF EQUITY SECURITIES AND USE OF PROCEEDS.**

 

Notapplicable.

 

**ITEM 3.****       ****DEFAULTSUPON SENIOR SECURITIES.**

 

Notapplicable.

 

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

 

SupremeIndustries, Inc.’s annual meeting of stockholders was held on May 8,2008.  Below is a summary of mattersvoted upon at that meeting.

 

a.     The following individualswere elected directors by the holders of the Company’s Class A CommonStock for a one-year term.

 
| ** **                 | ** ** | **Votes For (%)** | ** ** | **Votes Withheld** | ** ** |
|----------------------------|------------|-----------------------------|------------|-------------------------|------------|
| Arthur M. Borden |       | 8,723,787 (90.34       | )%         | 932,480                 |       |
| Edward L. Flynn  |       | 8,725,085  (90.36           | )%         | 902,147                 |       |
| Mark C. Neilson            |       | 8,754,120  (90.66           | )%         | 931,182                 |       |

 

Each of the followingindividuals was elected director by the holders of the Company’s Class BCommon Stock for a one-year term by a vote of 1,913,170 in favor with 110,963votes withheld.

 

William J. Barrett

Robert J. Campbell

Thomas Cantwell

Herbert M. Gardner

Wayne A. Whitener

Robert W. Wilson

 

b.     An amendment to the Company’sAmended and Restated 2004 Stock Option Plan was approved by a combined vote ofthe holders of the Company’s Class A and Class B Common Stock of6,968,499 shares (60%) in favor, 1,360,973 shares against, 505,382 sharesabstaining, and 2,734,583 shares withheld (broker non-vote).

 

c.     Crowe Chizek and Company LLCwas ratified as the Company’s independent registered public accounting firm bya combined vote of the holders of the Company’s Class A and Class BCommon Stock of 10,664,265 shares (92%) in favor, 745,588 shares against, and159,584 shares abstaining.

 

**ITEM 5.****       ****OTHERINFORMATION.**

 

Notapplicable.

 

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**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.   |
| Exhibit 3.4   |   | Amended  and Restated Bylaws of the Company dated May 7, 2008, filed as  Exhibit 3.1 to the Company’s Form 8-K filed with the Securities and  Exchange Commission on May 7, 2008, 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:  August 12, 2008 |   | Herbert  M. Gardner                                     |
|                                    |   | Chairman  of the Board and Chief  Executive Officer     |
|                                    |   |                                                    |
|                                    |   |                                                    |
|                                    |   | BY:    /s/ Jeffery D. Mowery                  |
|   DATE:  August 12, 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    |       | Amended  and Restated Bylaws of the Company dated May 7, 2008, filed as  Exhibit 3.1 to the Company’s Form 8-K filed with the Securities and  Exchange Commission on May 7, 2008, 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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