Universal Forest Products

Universal Forest Products Announces Record Third Quarter 2003 Results
-Third quarter sales rose 18.4 percent; EPS increased 13.8 percent to $0.66 per diluted share
- Company increases annual sales target and reaffirms year-end EPS target

GRAND RAPIDS, MI., October13, 2003 – Citing the strengths of the markets it serves, Universal Forest Products, Inc. (NASDAQ: UFPI) today announced record results for the third quarter and the first nine months of the year. The company also reaffirmed its EPS target and increased its sales target for the year.

Net sales for the quarter were $536.3 million, an increase of 18.4% over net sales of $453.0 million in the third quarter of 2002. Net sales for the first nine months of 2003 were $1.44 billion, an 11.1% increase over net sales of $1.30 billion for the same period of 2002.

Diluted earnings per share for the quarter totaled $0.66; representing a 13.8% increase over reported results for the third quarter of 2002. Year-to-date diluted earnings per share were $1.85, an 8.2% increase over reported results for the same period of 2002.

“It was a strong quarter with solid performance from our whole team,” said Universal CEO and Vice Chairman William G. Currie. “We are growing our share in all of our four markets, strengthening our balance sheet, meeting customer expectations, and adding shareholder value.”

Following are Universal's third-quarter 2003 sales by market:
· $262.0 million in D-I-Y/retail, up 21.9% from the same period last year;
· $111.5 million in site-built construction, an increase of 25.7% over last year;
· $79.3 million in manufactured housing, a 0.4% decrease compared to last year – despite a 21% drop in industry shipments for the quarter; and
· $83.4 million in industrial/other, a 19.7% increase over the same period last year.

The company reaffirmed its diluted earnings per share growth target of 7% to 10% for the year. However, due primarily to upward momentum in the lumber market in the third quarter, the company increased its target for annual sales growth to 10% to 12% (up from the previous target of 7% to 10%).

Universal Forest Products will conduct a conference call to discuss information included in this news release and additional matters at 11:00 a.m. EDT on Tuesday, October 14, 2002. The conference call will be hosted by William G. Currie and will be available for analysts and institutional investors domestically at (877) 679-9049 internationally at (952) 556-2803. Use conference call ID #286962. The conference call will be available simultaneously, and in its entirety, to all interested investors and news media through a web cast at www.ufpi.com. Click on Investor Relations.

Universal Forest Products markets, manufactures, and engineers wood and wood-alternative products for D-I-Y retail home centers, structural lumber products for the manufactured housing industry, engineered wood components for the site-built construction market and specialty wood packaging for various industries. Among the company's newest and fastest-growing ventures are framing and installation services for the site-built and retail sectors. In conjunction with its customers, Universal uses its engineering and manufacturing expertise, coupled with highly skilled employees, to design and construct buildings and decks. For information about Universal Forest Products on the Internet, please visit the Company's web site at www.ufpi.com , or call 888-BUY-UFPI.

Included in this report are certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements are based on the beliefs of the Company's management as well as on assumptions made by and information currently available to the Company at the time such statements were made. Actual results could differ materially from those included in such forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainty. Among the factors that could cause actual results to differ materially are the following: Adverse lumber market trends, competitive activity, negative economic trends, government regulations, and weather. These risk factors and additional information are included in the Company's reports on Form 10K and 10Q on file with the Securities and Exchange Commission.

Financial highlights to follow:

Consolidated Statements of Earnings (unaudited)
For the Nine Months Ended
September 2003/2002

(In thousands,
except per share data)		 Quarter Period
2003 2002
Net Sales
$536,728
 100%
$452,959
 100%
Cost of Goods Sold
463,715
 86.47
391,294
 86.39
Gross Profit
72,563
 13.53
61,665
 13.61
Selling, General and Administrative Expenses
48,424
 9.03
41,148
 9.08
Earnings From Operations
24,139
 4.50
20,517
 4.53
Interest Expense
3,526
 0.66
2,542
 0.56
Interest Revenue
(2)
 0.00
(31)
 -0.01
Gain on Sale of Assets
-
 0.00
-
 0.00
 
3,524
 0.66
2,511
 0.55
Earnings Before Income Taxes, and Minority Interest
20,615
 3.84
18,006
 3.98
Income Taxes
7,715
 1.44
6,678
 1.47
Earnings Before Minority Interest
12,900
 2.41
11,328
 2.50
Minority Interest
(695)
 -0.13
(684)
 -0.15
Net Earnings
$12,205
 2.28
$10,644
 2.35
Earnings per Share-Basic
$0.69
  
$0.60
  
Earnings per Share-Diluted
$0.66
  
$0.58
  
Weighted Average Shares Outstanding
17,765
  
17,845
  
Weighted Average Shares Outstanding with Common Stock Equivalents
18,425
  
18,427
  

Consolidated Statements of Earnings (unaudited)
For the Nine Months Ended
September 2003/2002

(In thousands,
except per share data)		 Year to Date
2003 2002
Net Sales
$1,444,360
 100%
$1,299,559
 100%
Cost of Goods Sold
1,242,251
 85.94
1,117,994
 86.03
Gross Profit
203,109
 14.06
181,565
 13.97
Selling, General and Administrative Expenses
135,309
 9.37
120,291
 9.26
Earnings From Operations
67,800
 4.69
61,274
 4.71
Interest Expense
11,271
 0.78
8,497
 0.65
Interest Revenue
(133)
 -0.01
(196)
 -0.02
Gain on Sale of Assets
-
 0.00
(1,082)
 -0.08
 
11,138
 0.77
7,219
 0.56
Earnings Before Income Taxes, and Minority Interest
56,662
 3.92
54,055
 4.16
Income Taxes
20,964
 1.45
20,051
 1.54
Earnings Before Minority Interest
35,698
 2.47
34,004
 2.62
Minority Interest
(1,831)
 -0.13
(1,924)
 -0.15
Net Earnings
$33,867
 2.34
$32,080
 2.47
Earnings per Share-Basic
$1.91
  
$1.78
  
Earnings per Share-Diluted
$1.85
  
$1.71
  
Weighted Average Shares Outstanding
17,745
  
17,980
  
Weighted Average Shares Outstanding with Common Stock Equivalents
18,290
  
18,719
  

Supplemental Sales Data

  Quarter Period
Market Classification 2003 2002
Do-It-Yourself/Retail
$262,025
 48%
$214,975
 47%
Site-Built Construction
111,541
 21%
88,731
 20%
Manufactured Housing
79,306
 15%
79,588
 18%
Industrial and Other
83,406
 16%
69,665
 15%
Total
$536,278
 100%
$452,959
 100%
  Year to Date
Market Classification 2003 2002
Do-It-Yourself/Retail
$721,659
 50%
$626,394
 48%
Site-Built Construction
289,686
 20%
245,717
 19%
Manufactured Housing
206,880
 14%
227,990
 18%
Industrial and Other
226,135
 16%
199,458
 15%
Total
$1444,360
 100%
$1,299,559
 100%

Consolidated Balance Sheets (unaudited)
September 2003/2002

(in thousands)
Assets Liabilities and Shareholders' Equity
  2003 2002   2003 2002
Current Assets     Current Liabilities    
Cash and cash equivalents
$10,747
 $12,800 Notes payable
$645
 $1,494
Accounts receivable
157,768
 149,962 Accounts payable and accrued liabilities
154,140
 126,902
Inventories
160,955
 128,841 Current portion of long-term debt and capital leases
6,263
 18,645
Other current assets
5,847
 3,279  
 
Total Current Assets
335,317
 294,882 Total Current Liabilities
161,048
 147,041
Other Assets
5,679
 6,311 Long-Term Debt and Capital Leases, less current portion
195,833
 185,091
Intangible Assets
131,545
 125,097 Other Liabilities
31,123
 24,092
Property, Plant and Equipment, Net
214,337
 191,349 Shareholders' Equity
298,874
 261,415
Total Assets
$686,878
 $617,639 Total Liabilities and Shareholders' Equity
$686,878
 $617,639

Consolidated Statements of Cash Flows (unaudited)
For the Nine Months Ended
September 2003/2002

(In thousands) 2003 2002
Cash Flows From Operating Activities:    
Net earnings $33,867 $32,080
Adjustments to reconcile net earnings to net cash from operating activities:    
Depreciation 18,702 17,235
Amortization of intangibles 1,519 851
Deferred income taxes (1,301) (246)
(Gain) Loss on sale or impairment of property, plant and equipment 918 (152)
Changes in:    
Accounts receivable (78,688) (61,235)
Inventories 5,051 (6,020)
Accounts payable 37,717 28,076
Accrued liabilities and other 24,463 11,353
Net Cash From Operating Activities 42,248 21,942
     
Cash Flows From Investing Activities:    
Purchases of property, plant and equipment (33,349) (21,136)
Purchases of licensing agreements (150) (2,000)
Aquisitions, net of cash received (787) (2,519)
Proceeds from sale of property, plant and equipment 6,104 3,310
Other 3,059 430
Net Cash From Investing Activities (25,123) (21,915)
     
Cash Flows From Financing Activities:    
Net (repayments) borrowings under revolving credit facilities and notes payable (36,884) 37,004
Repayment of long-term debt (6,150) (8,205)
Proceeds from issuance of common stock 1,719 796
Proceeds from sale and servicing of accounts receivable 25,143 -
Distributions to minority shareholder (833) (660)
Dividends paid to shareholders (798) (806)
Repurchase of common stock (2,029) (38,216)
Net Cash From Financing Activities (19,832) (10,114)
Net Change in Cash and Cash Equivalents (2,707) (10,087)
Cash and Cash Equivalents, Beginning of Period 13,454 22,887
Cash and Cash Equivalents, End of Period $10,747 $12,800

Contact

At the Company: Michael R. Cole, Chief Financial Officer of Universal Forest Products, +1-616-364-6161
At Fleishman Hillard: Jim Ankner, Vice President of Fleishman Hillard, +1-212-453-2198