e11vk
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
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ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]. |
For the fiscal year ended December 31, 2006
OR
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TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]. |
Commission file number: 0-22684
Universal Forest Products, Inc. Employees’ Profit Sharing and 401(k) Retirement Plan
(Full title of the plan and the address of the plan, if different from that of issuer named below)
Universal Forest Products, Inc.
2801 East Beltline NE
Grand Rapids, Michigan 49525-9736
(Name of issuer of the securities held pursuant to the plan and the address of its principal executive office)
Page 1 of 13
Universal Forest Products, Inc. Employees’ Profit Sharing and
401(k) Retirement Plan
Financial Statements and Supplemental Schedule
Years Ended December 31, 2006 and 2005
Contents
Report of Independent Registered Public Accounting Firm
The Plan Administrator
Universal Forest Products, Inc. Employees’ Profit Sharing and
401(k) Retirement Plan
We have audited the accompanying statements of assets available for benefits of Universal Forest
Products, Inc. Employees’ Profit Sharing and 401(k) Retirement Plan as of December 31, 2006 and
2005, and the related statements of changes in assets available for benefits for the years then
ended. These financial statements are the responsibility of the Plan’s management. Our
responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from material misstatement.
We were not engaged to perform an audit of the Plan’s internal control over financial reporting.
Our audits included consideration of internal control over financial reporting as a basis for
designing our procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the assets available for benefits of the Plan at December 31, 2006 and 2005, and the
changes in its assets available for benefits for the years ended, in conformity with U.S. generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial statements taken
as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December
31, 2006, is presented for purposes of additional analysis and is not a required part of the
financial statements but is supplementary information required by the Department of Labor’s Rules
and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. This supplemental schedule is the responsibility of Plan’s management. The supplemental
schedule has been subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
/s/ Ernst & Young LLP
Grand Rapids, Michigan
June 4, 2007
3
Universal Forest Products, Inc. Employees’ Profit Sharing and
401(k) Retirement Plan
Statements of Assets Available for Benefits
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December 31 |
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2006 |
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2005 |
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Assets |
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Cash |
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$ |
62 |
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$ |
7,960 |
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Investments, at fair value |
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165,431,359 |
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156,999,061 |
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Participant loans receivable |
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9,078,477 |
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7,508,889 |
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174,509,836 |
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164,507,950 |
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Participant contribution receivable |
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444,472 |
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159,457 |
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Employer contribution receivable |
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971,052 |
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901,295 |
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Assets available for benefits at fair value |
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175,925,422 |
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165,576,662 |
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Adjustment from fair value to contract
value for fully benefit
responsive investment contract |
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700,006 |
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694,754 |
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Assets available for benefits |
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$ |
176,625,428 |
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$ |
166,271,416 |
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See accompanying notes.
4
Universal Forest Products, Inc. Employees’ Profit Sharing and
401(k) Retirement Plan
Statements of Changes in Assets Available for Benefits
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Year Ended December 31 |
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2006 |
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2005 |
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Additions |
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Participant contributions |
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$ |
12,233,757 |
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$ |
9,913,171 |
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Employer contributions |
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4,186,921 |
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3,791,022 |
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Interest income |
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640,258 |
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454,040 |
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Dividend income |
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5,343,348 |
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2,301,804 |
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22,404,284 |
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16,460,037 |
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Deductions |
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Distributions to participants |
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7,695,802 |
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8,229,385 |
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Administrative expenses |
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611,091 |
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419,827 |
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8,306,893 |
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8,649,212 |
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Net realized and unrealized appreciation
(depreciation)
in fair value of investments |
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(3,743,379 |
) |
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18,717,644 |
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Net additions |
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10,354,012 |
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26,528,469 |
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Assets available for benefits at beginning
of year |
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166,271,416 |
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139,742,947 |
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Assets available for benefits at end of year |
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$ |
176,625,428 |
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$ |
166,271,416 |
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See accompanying notes.
5
Universal Forest Products, Inc. Employees’ Profit Sharing and
401(k) Retirement Plan
Notes to Financial Statements
1. Significant Accounting Policies
Basis of Accounting
The financial statements of the Universal Forest Products, Inc. Employees’ Profit Sharing and
401(k) Retirement Plan (the Plan) are presented on the accrual method of accounting.
Use of Estimates
The preparation of financial statements in accordance with accounting principles generally accepted
in the United States requires management to make estimates and assumptions that affect reported
amounts. Although actual results could differ from these estimates, management believes estimated
amounts recorded are reasonable and appropriate.
New Accounting Pronouncement
In December 2005, the Financial Accounting Standards Board (FASB) issued FASB Staff Position AAG
INV-1 and SOP 94-4-1, Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain
Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health
and Welfare and Pension Plans (the FSP). The FSP defines the circumstances in which an investment
contract is considered fully benefit responsive and provides certain reporting and disclosure
requirements for fully benefit responsive investment contracts in defined contribution health and
welfare and pension plans. The financial statement presentation and disclosure provisions of the
FSP are effective for financial statements issued for annual periods ending after December 15, 2006
and are required to be applied retroactively to all prior periods presented for comparative
purposes. The Plan has adopted the provisions of the FSP at December 31, 2006.
As required by the FSP, investments in the accompanying Statements of Assets Available for Benefits
include fully benefit responsive investment contracts recognized at fair value. AICPA Statement of
Position 94-4-1, Reporting of Investment Contracts Held by Health and Welfare Benefit Plans and
Defined Contribution Pension Plans, as amended, requires fully benefit responsive investment
contracts to be reported at fair value in the Plan’s Statement of Assets Available for Benefits
with a corresponding adjustment to reflect these investments at contract value. The requirements of
the FSP have been applied retroactively to the Statement of Assets Available for Benefit as of
December 31, 2005, presented for comparative purposes. Adoption of the FSP had no effect on the
Statement of Changes in Assets Available for Benefits for any period presented.
6
Universal Forest Products, Inc. Employees’ Profit Sharing and
401(k) Retirement Plan
Notes to Financial Statements (continued)
1. Significant Accounting Policies (continued)
Investments
The Plan’s investments are stated at fair value. The fair value of mutual funds is based on quoted
market values on the last day of the plan year. The fair value of participation units owned in
common trust funds is based on quoted redemption values on the last day of the plan year, except
the Morley Stable Value Fund, for which the fair value is calculated by discounting the related
cash flows based on current yields of similar instruments with comparable durations. The
participant loans are stated at their outstanding balances, which approximate fair value.
The Universal Forest Products Stock Fund (the Fund) is tracked on a unitized basis. The Fund
consists of Universal Forest Products, Inc. common stock and the funds that are held in the Morley
Stable Value Fund sufficient to meet the Fund’s daily cash needs. Unitizing the Fund allows for
daily trades. The value of a unit reflects the combined market value of the Universal Forest
Products, Inc. common stock and the Morley Stable Value Fund held by the Fund. At December 31,
2006, 1,075,481 units were outstanding with a value of $45.98 per unit (at December 31, 2005,
1,173,186 units were outstanding with a value of $54.32 per unit).
Investment transactions are recorded as of the settlement dates. The change in the difference
between the fair value and the cost of investments held is combined with realized gains and losses
on sales of investments and reported in the statements of changes in assets available for benefits
as net realized and unrealized appreciation or depreciation in the fair value of investments.
Realized gains and losses on sales of investments represent the difference between the proceeds
received and the original cost of investments sold.
The Plan utilizes various investment instruments. Investment securities, in general, are exposed to
various risks, such as interest rate, credit, and overall market volatility. Due to the level of
risk associated with certain investment securities, it is reasonably possible that changes in the
values of investment securities will occur in the near term and that such changes could materially
affect participants’ account balances and the amounts reported in the statements of assets
available for benefits.
Administrative Expenses
Administrative expenses incurred in connection with the operations of the Plan are paid by
Universal Forest Products, Inc. (the Company), except for loan and certain investment fees, which
are paid out of participants’ accounts.
7
Universal Forest Products, Inc. Employees’ Profit Sharing and
401(k) Retirement Plan
Notes to Financial Statements (continued)
1. Significant Accounting Policies (continued)
Reclassification
Certain amounts previously reported in 2005 have been reclassified to conform with the presentation
used in 2006.
2. Description of the Plan
The following description of the Plan provides only general information. Participants should refer
to the Plan agreement, as amended, for a more complete description of the Plan’s provisions.
The Plan is a defined-contribution, profit sharing and 401(k) plan that provides tax-deferred
benefits for substantially all eligible employees of the Company, excluding the employees of
separate subsidiaries that maintain a similar defined-contribution plan and those covered under a
collective bargaining agreement. The Plan is subject to the provisions of the Employee Retirement
Security Act of 1974 (ERISA).
Eligible employees are those who are 18 years or older and have completed 1,000 hours of employment
(year of service) during the 12-month period following date of employment or, where additional
periods are necessary, on succeeding Plan year-end dates. All newly eligible employees on and after
July 1, 2006 are automatically enrolled in the Plan at a deferral level of 3% of eligible
compensation.
Participants may voluntarily contribute up to 75% (25% prior to January 1, 2006) of their eligible
compensation as a 401(k) contribution subject to certain regulatory limitations. Participant
contributions to the Plan vest immediately.
The Company contributes regular discretionary matching contributions, and may contribute additional
discretionary matching contributions. Regular discretionary matching contributions are made
quarterly and were 50% of participant deferrals; limited to 6% of each participant’s compensation
in 2005 and 2006. Additional discretionary matching contributions are made at the end of each Plan
year. These amounts are not guaranteed, and may vary from year to year as the Company is not
obligated to make such contributions.
8
Universal Forest Products, Inc. Employees’ Profit Sharing and
401(k) Retirement Plan
Notes to Financial Statements (continued)
2. Description of the Plan (continued)
The Company may also contribute a discretionary profit sharing amount annually as determined by
management and approved by the Company’s Board of Directors. The Company’s annual profit sharing
contributions are allocated to each participant’s account in the same ratio that each participant’s
total compensation for the Plan year bears to the total compensation of all participants for such
year.
Employer contributions are subject to a six-year vesting schedule as follows:
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| Years of Service |
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Vesting Percentage |
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Less than 2 |
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0% |
2 but less than 3 |
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20 |
3 but less than 4 |
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40 |
4 but less than 5 |
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60 |
5 but less than 6 |
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80 |
6 or more |
|
100 |
The vested portion of terminated and retired participants’ accounts are available for distribution
following a separation from service. Effective January 1, 2006, all forfeitures are used to offset
the Company’s matching contributions. Prior to January 1, 2006 forfeitures were reallocated to
participants on a percentage of income basis.
Participants may select from various investment options made available by the Plan. Each
participant’s account is credited with the participant’s contribution, an allocation of the
Company’s net contribution, if any, Plan earnings and losses, certain administrative expenses and
forfeitures. Earnings allocations are based on account balances, as defined.
Participants may borrow from their account a minimum amount of $1,000 up to a maximum equal to the
lesser of $50,000 or 50% of their vested account balance. Loan terms range from one to five years
or up to 25 years for the purchase of a residence. The loans bear interest at a rate equal to the
prime rate (8.25% at December 31, 2006) plus 2% calculated on a daily basis. A participant may only
have five loans outstanding at any time and one new loan for every 12-month period.
The plan sponsor intends to continue the Plan indefinitely, but reserves the right to terminate or
amend the Plan at any time. In the event of termination of the Plan, all participants are
automatically 100% vested in the value of their accounts and will be paid in full.
9
Universal Forest Products, Inc. Employees’ Profit Sharing and
401(k) Retirement Plan
Notes to Financial Statements (continued)
3. Investments
The Plan’s investments (including investments purchased and held during the year) appreciated
(depreciated) in fair value as follows:
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Year Ended December 31 |
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2006 |
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2005 |
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Common stock |
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$ |
(8,473,124 |
) |
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$ |
14,470,991 |
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Common/collective trust funds |
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2,589,963 |
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1,540,894 |
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Mutual funds |
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2,139,782 |
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2,705,759 |
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$ |
(3,743,379 |
) |
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$ |
18,717,644 |
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Individual investments that represent 5% or more of the fair value of the Plan’s assets are as
follows:
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December 31 |
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2006 |
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2005 |
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Growth & Income Fund |
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$ |
16,420,651 |
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$ |
12,393,201 |
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Growth Fund of America |
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8,928,261 |
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* |
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International Equity Fund |
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8,845,195 |
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* |
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Outlook 2020 Fund |
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9,307,535 |
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* |
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Stable Value Fund |
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36,308,055 |
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33,810,598 |
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Universal Forest Products Stock Fund |
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49,452,782 |
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63,723,363 |
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Investment is less than 5%. |
4. Federal Income Taxes
The Plan has received a determination letter from the Internal Revenue Service dated April 2, 2004,
stating that the Plan is qualified under section 401(a) of the Internal Revenue Code (the Code),
and, therefore, the related trust is exempt from taxation. Subsequent to this determination by the
Internal Revenue Service, the Plan was amended. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The plan sponsor has indicated that it will
take the necessary steps, if any, to bring the Plan’s operations into compliance with the Code.
10
Universal Forest Products, Inc. Employees’ Profit Sharing and
401(k) Retirement Plan
Notes to Financial Statements (continued)
5. Difference Between Financial Statements and Form 5500
The following is a reconciliation of assets available for benefits per the financial statements to
the Form 5500:
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December 31 |
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2006 |
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2005 |
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Assets available for benefits from the
financial statements |
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$ |
176,625,428 |
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$ |
166,271,416 |
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Adjustment to fair value for fully benefit
responsive investment contract |
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(700,006 |
) |
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(694,754 |
) |
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Assets available for benefits from the Form 5500 |
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$ |
175,925,422 |
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$ |
165,576,662 |
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11
Universal Forest Products, Inc. Employees’ Profit Sharing and
401(k) Retirement Plan
Schedule H, Line 4i — Schedule of Assets (Held at End of Year)
EIN #38-1465835 Plan #001
December 31, 2006
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Current |
| Identity of Issue, Borrower, Lessor, or Similar Party |
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Description of Investment |
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Value |
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Common stock: |
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Universal Forest Products, Inc.* |
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Universal Forest Products Stock Fund |
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$ |
49,452,782 |
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Common/Collective trust funds: |
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Evergreen* |
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Sht Int Bond Fund |
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3,167,078 |
Morley |
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Stable Value Fund |
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36,308,055 |
Wachovia Securities* |
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Enhanced Stock Market Fund |
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8,356,196 |
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47,831,329 |
Mutual funds: |
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American Funds |
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Growth Fund of America |
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8,928,261 |
Dreyfus |
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Midcap Index Fund |
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8,429,829 |
Evergreen* |
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International Equity Fund |
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8,845,195 |
Neuberger & Berman |
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Equity Assets Genesis Assets |
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8,518,700 |
Van Kampen |
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Growth & Income Fund |
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16,420,651 |
Wells Fargo Funds |
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Outlook 2040 Fund |
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2,411,099 |
|
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Outlook 2030 Fund |
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2,509,119 |
|
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Outlook 2020 Fund |
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9,307,535 |
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Outlook 2010 Fund |
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1,795,450 |
|
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Outlook Today Fund |
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|
981,409 |
|
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68,147,248 |
|
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Participant loans receivable* |
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Collateralized by vested account balances, payable in monthly installments with interest rates ranging from 5.25% to 11.5% |
|
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9,078,477 |
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|
|
|
|
|
$ |
174,509,836 |
|
|
|
|
|
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| * |
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Represents party in interest. |
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Universal Forest
Products, Inc., as Plan Administrator, has duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.
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Universal Forest Products, Inc. Employee’s
Profit Sharing
and 401(k) Retirement Plan |
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Date:
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June 25, 2007
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/s/ Matthew J. Missad |
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Matthew J. Missad, Executive Vice President
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Universal Forest Products, Inc., Plan Administrator |
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Date:
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June 25, 2007
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/s/ Michael R. Cole |
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Michael R. Cole, Chief Financial Officer
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Universal Forest Products, Inc., Plan Administrator |
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13
EXHIBIT INDEX
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| Exhibit No. |
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Description |
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23
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Consent of Ernst & Young LLP |