ufpi_Current_Folio_10Q

Table of Contents

 

 

 

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10‑Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2018

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 0‑22684

UNIVERSAL FOREST PRODUCTS, INC.

(Exact name of registrant as specified in its charter)

 

 

 

 

 

 

Michigan

    

38‑1465835

 

 

(State or other jurisdiction of incorporation or

 

(I.R.S. Employer Identification Number)

 

 

organization)

 

 

 

 

 

 

 

 

 

2801 East Beltline NE, Grand Rapids, Michigan

 

49525

 

 

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code (616) 364‑6161

 

 

 

 

NONE

 

 

(Former name or former address, if changed since last report.)

 

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  No

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b‑2 of the Exchange Act.

 

 

 

 

Large Accelerated Filer

Accelerated Filer

Non-Accelerated Filer

Smaller reporting company  

 

 

 

Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with an new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by checkmark whether the registrant is a shell company (as defined by Rule 12b‑2 of the Exchange Act). Yes    No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

 

 

 

 

 

 

Class

    

Outstanding as of March 31, 2018

 

 

Common stock, $1 par value

 

61,543,902

 

 

 

 

 

 

 


 

Table of Contents

UNIVERSAL FOREST PRODUCTS, INC.

 

TABLE OF CONTENTS

PART I.

 

FINANCIAL INFORMATION.

Page No.

 

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

 

 

Consolidated Condensed Balance Sheets at March 31, 2018, December 30, 2017 and April 1, 2017

3

 

 

 

 

 

 

Consolidated Condensed Statements of Earnings and Comprehensive Income for the Three Months Ended March 31, 2018 and April 1, 2017

4

 

 

 

 

 

 

Consolidated Condensed Statements of Shareholders’ Equity for the Three Months Ended March 31, 2018 and April 1, 2017

5

 

 

 

 

 

 

Consolidated Condensed Statements of Cash Flows for the Three Months Ended March 31, 2018 and April 1, 2017

6

 

 

 

 

 

 

Notes to Unaudited Consolidated Condensed Financial Statements

7

 

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

25

 

 

 

 

 

Item 4.

Controls and Procedures

26

 

 

 

 

PART II.

 

OTHER INFORMATION

 

 

 

 

 

 

Item 1.

Legal Proceedings – NONE

 

 

 

 

 

 

Item 1A.

Risk Factors – NONE

27

 

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

27

 

 

 

 

 

Item 3.

Defaults upon Senior Securities – NONE

 

 

 

 

 

 

Item 4.

Mine Safety Disclosures – NONE

 

 

 

 

 

 

Item 5.

Other Information – NONE

27

 

 

 

 

 

Item 6.

Exhibits

28

 

 

 

2


 

Table of Contents

UNIVERSAL FOREST PRODUCTS, INC.

 

CONSOLIDATED CONDENSED BALANCE SHEETS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except share data)

 

 

 

 

 

 

 

 

 

March 31,

 

December 30,

 

April 1,

 

 

    

2018

    

2017

    

2017

 

ASSETS

 

 

 

  

 

 

  

 

 

 

CURRENT ASSETS:

 

 

 

  

 

 

  

 

 

 

Cash and cash equivalents

 

$

25,326

    

$

28,339

  

$

31,020

 

Restricted cash

 

 

32,425

 

 

477

  

 

909

 

Investments

 

 

10,701

 

 

11,269

  

 

5,928

 

Accounts receivable, net

 

 

430,251

 

 

327,751

  

 

365,620

 

Inventories:

 

 

 

  

 

 

  

 

 

 

Raw materials

 

 

261,808

 

 

234,354

  

 

232,647

 

Finished goods

 

 

259,898

 

 

225,954

  

 

239,369

 

Total inventories

 

 

521,706

 

 

460,308

  

 

472,016

 

Refundable income taxes

 

 

 —

 

 

7,228

  

 

3,170

 

Other current assets

 

 

23,304

 

 

28,115

  

 

20,650

 

TOTAL CURRENT ASSETS

 

 

1,043,713

 

 

863,487

 

 

899,313

 

DEFERRED INCOME TAXES

 

 

2,273

 

 

1,865

  

 

1,960

 

RESTRICTED INVESTMENTS

 

 

10,238

 

 

8,359

  

 

3,800

 

OTHER ASSETS

 

 

7,123

 

 

7,368

  

 

12,573

 

GOODWILL

 

 

212,596

 

 

212,644

  

 

211,061

 

INDEFINITE-LIVED INTANGIBLE ASSETS

 

 

7,407

 

 

7,415

  

 

2,340

 

OTHER INTANGIBLE ASSETS, NET

 

 

34,543

 

 

34,910

  

 

36,759

 

PROPERTY, PLANT AND EQUIPMENT:

 

 

 

  

 

 

  

 

 

 

  Property, plant and equipment

 

 

754,603

 

 

763,101

 

 

720,912

 

Less accumulated depreciation and amortization

 

 

(441,032)

 

 

(434,472)

  

 

(411,059)

 

       PROPERTY, PLANT AND EQUIPMENT, NET

 

 

313,571

 

 

328,629

 

 

309,853

 

TOTAL ASSETS

 

 

1,631,464

 

 

1,464,677

 

 

1,477,659

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

  

 

 

  

 

 

 

CURRENT LIABILITIES:

 

 

 

  

 

 

  

 

 

 

Cash overdraft

 

$

30,026

 

$

25,851

  

$

21,566

 

Accounts payable

 

 

176,469

 

 

140,106

  

 

156,030

 

Accrued liabilities:

 

 

 

  

 

 

  

 

 

 

Compensation and benefits

 

 

61,976

 

 

97,556

  

 

58,491

 

Income taxes

 

 

1,600

 

 

 —

 

 

 —

 

Other

 

 

42,633

 

 

38,404

  

 

39,473

 

Current portion of long-term debt

 

 

425

 

 

1,329

  

 

2,280

 

TOTAL CURRENT LIABILITIES

 

 

313,129

 

 

303,246

  

 

277,840

 

LONG-TERM DEBT

 

 

261,327

 

 

144,674

  

 

252,904

 

DEFERRED INCOME TAXES

 

 

13,894

 

 

14,079

  

 

21,364

 

OTHER LIABILITIES

 

 

26,192

 

 

28,655

  

 

28,198

 

TOTAL LIABILITIES

 

 

614,542

 

 

490,654

  

 

580,306

 

SHAREHOLDERS’ EQUITY:

 

 

 

  

 

 

  

 

 

 

Controlling interest shareholders’ equity:

 

 

 

  

 

 

  

 

 

 

Preferred stock, no par value; shares authorized 1,000,000; issued and outstanding, none

 

$

 —

 

$

 —

  

$

 —

 

Common stock, $1 par value; shares authorized 80,000,000; issued and outstanding,  61,543,902,  61,191,888 and 61,554,147

 

 

61,544

 

 

61,192

  

 

61,554

 

Additional paid-in capital

 

 

172,929

 

 

161,928

  

 

156,320

 

Retained earnings

 

 

768,223

 

 

736,212

  

 

670,115

 

Accumulated other comprehensive income

 

 

(1,140)

 

 

144

  

 

(3,450)

 

Total controlling interest shareholders’ equity

 

 

1,001,556

 

 

959,476

  

 

884,539

 

Noncontrolling interest

 

 

15,366

 

 

14,547

  

 

12,814

 

TOTAL SHAREHOLDERS’ EQUITY

 

 

1,016,922

 

 

974,023

  

 

897,353

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

$

1,631,464

 

$

1,464,677

  

$

1,477,659

 

 

See notes to consolidated condensed financial statements.

3


 

Table of Contents

UNIVERSAL FOREST PRODUCTS, INC.

 

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS

AND COMPREHENSIVE INCOME

(Unaudited)

 

 

 

 

 

 

 

(in thousands, except per share data)

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

April 1,

 

 

2018

    

2017

    

NET SALES

$

993,857

    

$

846,130

    

COST OF GOODS SOLD

 

862,968

 

 

725,390

 

GROSS PROFIT

 

130,889

 

 

120,740

 

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

 

93,206

 

 

86,983

 

NET GAIN ON DISPOSITION OF ASSETS

 

(6,534)

 

 

(64)

 

EARNINGS FROM OPERATIONS

 

44,217

 

 

33,821

 

INTEREST EXPENSE

 

1,778

 

 

1,504

 

INTEREST AND INVESTMENT INCOME

 

(717)

 

 

(82)

 

EQUITY IN EARNINGS OF INVESTEE

 

 —

 

 

(5)

 

 

 

1,061

 

 

1,417

 

EARNINGS BEFORE INCOME TAXES

 

43,156

 

 

32,404

 

INCOME TAXES

 

9,574

 

 

10,770

 

NET EARNINGS

 

33,582

 

 

21,634

 

LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST

 

(749)

 

 

(572)

 

NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST

$

32,833

 

$

21,062

 

 

 

 

 

 

 

 

EARNINGS PER SHARE - BASIC

$

0.53

 

$

0.34

 

EARNINGS PER SHARE - DILUTED

$

0.53

 

$

0.34

 

 

 

 

 

 

 

 

OTHER COMPREHENSIVE INCOME:

 

 

 

 

 

 

NET EARNINGS

 

33,582

 

 

21,634

 

OTHER COMPREHENSIVE GAIN (LOSS)

 

(439)

 

 

3,035

 

COMPREHENSIVE INCOME

 

33,143

 

 

24,669

 

LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST

 

(1,594)

 

 

(1,427)

 

COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST

$

31,549

 

$

23,242

 

 

See notes to consolidated condensed financial statements.

4


 

Table of Contents

UNIVERSAL FOREST PRODUCTS, INC.

 

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Controlling Interest Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

Other

 

 

 

 

 

 

 

 

Common

 

Paid-In

 

Retained

 

Comprehensive

 

Noncontrolling

 

 

 

 

    

Stock

    

Capital

    

Earnings

    

Earnings

    

Interest

    

Total

Balance at December 31, 2016

 

$

61,026

 

$

144,649

  

$

649,135

 

$

(5,630)

  

$

11,286

  

$

860,466

Net earnings

 

 

 

  

 

 

  

 

21,062

 

 

  

 

 

572

  

 

21,634

Foreign currency translation adjustment

 

 

 

  

 

 

  

 

 

  

 

1,971

 

 

855

  

 

2,826

Unrealized gain (loss) on investment & foreign currency

 

 

 

  

 

 

  

 

 

  

 

209

 

 

  

 

 

209

Distributions to noncontrolling interest

 

 

 

  

 

 

  

 

 

  

 

 

  

 

(1,673)

 

 

(1,673)

Additional purchases of noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,774

 

 

1,774

Issuance of 5,214 shares under employee stock plans

 

 

 5

 

 

142

  

 

 

  

 

 

  

 

 

  

 

147

Issuance of 407,328 shares under stock grant programs

 

 

408

 

 

6,836

  

 

 

  

 

 

  

 

 

  

 

7,244

Issuance of 118,038 shares under deferred compensation plans

 

 

118

 

 

(118)

  

 

 

  

 

 

  

 

 

  

 

 —

Repurchase of 2,640 shares

 

 

(3)

 

 

  

 

 

(82)

  

 

 

  

 

  

 

 

(85)

Expense associated with share-based compensation arrangements

 

 

 

  

 

571

 

 

  

 

 

  

 

 

  

 

 

571

Accrued expense under deferred compensation plans

 

 

 

  

 

4,240

 

  

  

 

  

  

 

  

  

 

  

4,240

Balance at April 1, 2017

 

$

61,554

 

$

156,320

  

$

670,115

 

$

(3,450)

  

$

12,814

  

$

897,353

Balance at December 30, 2017

 

 

61,192

 

 

161,928

 

 

736,212

 

 

144

 

 

14,547

 

 

974,023

Net earnings

 

 

 

  

 

 

  

 

32,833

 

 

  

 

 

749

  

 

33,582

Foreign currency translation adjustment

 

 

 

  

 

 

  

 

 

  

 

(785)

 

 

845

  

 

60

Unrealized gain (loss) on investment & foreign currency

 

 

 

  

 

 

  

 

 

  

 

(499)

 

 

  

 

 

(499)

Distributions to noncontrolling interest

 

 

 

  

 

 

  

 

 

  

 

 

  

 

(775)

 

 

(775)

Additional purchases of noncontrolling interest

 

 

 

  

 

 

 

 

  

 

 

  

 

 

 —

  

 

 —

Net purchase and dissolution of noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 —

 

 

 —

Issuance of 7,469 shares under employee stock plans

 

 

 8

 

 

199

  

 

 

  

 

 

  

 

 

  

 

207

Issuance of 253,289 shares under stock grant programs

 

 

253

 

 

5,292

  

 

 

  

 

 

  

 

 

  

 

5,545

Issuance of 117,068 shares under deferred compensation plans

 

 

117

 

 

(117)

  

 

 

  

 

 

  

 

 

  

 

 —

Repurchase of 25,812 shares

 

 

(26)

 

 

 

 

 

(822)

 

 

 

 

 

 

 

 

(848)

Expense associated with share-based compensation arrangements

 

 

 

  

 

1,034

 

 

  

 

 

  

 

 

  

 

 

1,034

Accrued expense under deferred compensation plans

 

 

 

  

 

4,593

 

 

  

 

 

  

 

 

  

 

 

4,593

Balance at March 31, 2018

 

$

61,544

 

$

172,929

  

$

768,223

 

$

(1,140)

  

$

15,366

  

$

1,016,922

 

See notes to consolidated condensed financial statements.

5


 

Table of Contents

UNIVERSAL FOREST PRODUCTS, INC.

 

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

 

 

 

 

 

(in thousands)

 

Three Months Ended

 

 

 

March 31,

 

April 1,

 

 

    

2018

    

2017

    

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

  

 

 

 

Net earnings

 

$

33,582

    

$

21,634

 

Adjustments to reconcile net earnings to net cash from operating activities:

 

 

 

  

 

 

 

Depreciation

 

 

12,712

 

 

11,392

 

Amortization of intangibles

 

 

1,228

 

 

1,119

 

Expense associated with share-based and grant compensation arrangements

 

 

1,094

 

 

617

 

Deferred income taxes (credits)

 

 

(519)

 

 

224

 

Equity in earnings of investee

 

 

 —

 

 

(5)

 

Net gain on disposition of assets

 

 

(6,534)

 

 

(64)

 

Changes in:

 

 

 

  

 

 

 

Accounts receivable

 

 

(99,765)

 

 

(67,766)

 

Inventories

 

 

(57,403)

 

 

(60,984)

 

Accounts payable and cash overdraft

 

 

39,935

 

 

32,769

 

Accrued liabilities and other

 

 

(8,502)

 

 

(9,676)

 

NET CASH USED IN OPERATING ACTIVITIES

 

 

(84,172)

 

 

(70,740)

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

  

 

 

 

Purchases of property, plant and equipment

 

 

(24,362)

 

 

(16,531)

 

Proceeds from sale of property, plant and equipment

 

 

36,250

 

 

353

 

Acquisitions, net of cash received

 

 

(8,787)

 

 

(55,441)

 

Advances of notes receivable

 

 

(12)

 

 

(228)

 

Collections on notes receivable

 

 

482

 

 

721

 

Purchases of investments

 

 

(6,718)

 

 

(819)

 

Proceeds from sale of investments

 

 

5,045

 

 

1,204

 

Other

 

 

(594)

 

 

142

 

NET CASH FROM (USED IN) INVESTING ACTIVITIES

 

 

1,304

 

 

(70,599)

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

  

 

 

 

Borrowings under revolving credit facilities

 

 

296,342

 

 

281,090

 

Repayments under revolving credit facilities

 

 

(179,429)

 

 

(137,767)

 

Borrowings of debt

 

 

1,376

 

 

 —

 

Repayment of debt

 

 

(5,232)

 

 

 —

 

Proceeds from issuance of common stock

 

 

206

 

 

146

 

Distributions to noncontrolling interest

 

 

(775)

 

 

(1,673)

 

Repurchase of common stock

 

 

(848)

 

 

(83)

 

Other

 

 

(70)

 

 

(16)

 

NET CASH FROM FINANCING ACTIVITIES

 

 

111,570

 

 

141,697

 

Effect of exchange rate changes on cash

 

 

233

 

 

882

 

NET CHANGE IN CASH AND CASH EQUIVALENTS

 

 

28,935

 

 

1,240

 

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF YEAR

 

 

28,816

 

 

34,489

 

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD

 

$

57,751

 

$

35,729

 

 

 

 

 

 

 

 

 

RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:

 

 

 

 

 

 

 

Cash and cash equivalents, beginning of period

 

$

28,339

 

$

34,091

 

Restricted cash, beginning of period

 

 

477

 

 

398

 

Cash, cash equivalents, and restricted cash, beginning of period

 

$

28,816

 

$

34,489

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

$

25,326

 

$

31,020

 

Restricted cash, end of period

 

 

32,425

 

 

4,709

 

Cash, cash equivalents, and restricted cash, end of period

 

$

57,751

 

$

35,729

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL INFORMATION:

 

 

 

  

 

 

 

Interest paid

 

$

843

 

$

497

 

Income taxes paid

 

 

1,245

 

 

2,337

 

NON-CASH FINANCING ACTIVITIES:

 

 

 

 

 

 

 

Common stock issued under deferred compensation plans

 

 

4,237

 

 

3,793

 

See notes to consolidated condensed financial statements.

6


 

Table of Contents

UNIVERSAL FOREST PRODUCTS, INC.

 

 

NOTES TO UNAUDITED

CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

A.       BASIS OF PRESENTATION

The accompanying unaudited interim consolidated condensed financial statements (the “Financial Statements”) include our accounts and those of our wholly-owned and majority-owned subsidiaries and partnerships, and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, the Financial Statements do not include all of the information and footnotes normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States. All intercompany transactions and balances have been eliminated.

In our opinion, the Financial Statements contain all material adjustments necessary to present fairly our consolidated financial position, results of operations and cash flows for the interim periods presented. All such adjustments are of a normal recurring nature. These Financial Statements should be read in conjunction with the annual consolidated financial statements, and footnotes thereto, included in our Annual Report to Shareholders on Form 10‑K for the fiscal year ended December 30, 2017.

Seasonality has a significant impact on our working capital from March to August which historically results in negative or modest cash flows from operations in our first and second quarters. Conversely, we experience a substantial decrease in working capital from September to February which typically results in significant cash flow from operations in our third and fourth quarters. For comparative purposes, we have included the April 1, 2017 balances in the accompanying unaudited consolidated condensed balance sheets.

 

B.       FAIR VALUE

We apply the provisions of ASC 820, Fair Value Measurements and Disclosures, to assets and liabilities measured at fair value. Assets measured at fair value are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2018

 

April 1, 2017

 

 

Quoted

 

Prices with

 

 

 

 

Quoted

 

Prices with

 

 

 

 

 

Prices in

 

Other

 

 

 

 

Prices in

 

Other

 

 

 

 

 

Active

 

Observable

 

 

 

 

Active

 

Observable

 

 

 

 

 

Markets

 

Inputs

 

 

 

 

Markets

 

Inputs

 

 

 

(in thousands)

    

(Level 1)

    

(Level 2)

    

Total

    

(Level 1)

    

(Level 2)

    

Total

Money market funds

 

$

65

    

$

4,744

    

$

4,809

    

$

64

    

$

4,564

    

$

4,628

Fixed income funds

 

 

2,159

 

 

7,111

 

 

9,270

 

 

4,055

 

 

 —

 

 

4,055

Equity securities

 

 

7,202

 

 

 —

 

 

7,202

 

 

5,928

 

 

 —

 

 

5,928

Mutual funds:

 

 

 

  

 

 

 

 

 

  

 

 

 

 

 

  

 

 

Domestic stock funds

 

 

1,158

 

 

 —

 

 

1,158

 

 

316

 

 

 —

 

 

316

International stock funds

 

 

1,159

 

 

 —

 

 

1,159

 

 

81

 

 

 —

 

 

81

Target funds

 

 

281

 

 

743

 

 

1,024

 

 

246

 

 

 —

 

 

246

Bond funds

 

 

207

 

 

347

 

 

554

 

 

203

 

 

 —

 

 

203

Total mutual funds

 

 

2,805

 

 

1,090

 

 

3,895

 

 

846

 

 

 —

 

 

846

Total

 

$

12,231

 

$

12,945

 

$

25,176

 

$

10,893

 

$

4,564

 

$

15,457

Assets at fair value

 

$

12,231

 

$

12,945

 

$

25,176

 

$

10,893

 

$

4,564

 

$

15,457

 

We maintain money market, mutual funds, bonds, and/or stocks in our non-qualified deferred compensation plan and our wholly owned licensed captive insurance company. These funds are valued at prices quoted in an active

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Table of Contents

UNIVERSAL FOREST PRODUCTS, INC.

 

exchange market and are included in “Cash and Cash Equivalents”, “Investments”, “Restricted Cash”, and “Restricted Investments”. We have elected not to apply the fair value option under ASC 825, Financial Instruments, to any of our financial instruments except for those expressly required by U.S. GAAP.

We did not maintain any Level 3 assets or liabilities at March 31, 2018, or April 1, 2017. 

In 2017, our wholly-owned captive, Ardellis Insurance Ltd. (“Ardellis”) transferred $4.1 million in fixed income securities from its Investment Account and purchased an additional $3.8 million in fixed income securities which are held in a newly formed collateral trust account in line with regulatory requirements in the State of Michigan to allow Ardellis to act as an admitted carrier in the State.  These funds are intended to safeguard the insureds of the Michigan Branch of Ardellis.  The funds are classified as “Restricted Investments”.

In accordance with our investment policy, our wholly-owned captive, Ardellis Insurance Ltd. (“Ardellis”), maintains an investment portfolio, totaling $19.4 million as of March 31, 2018, consisting of domestic and international stocks, and fixed income bonds. 

Ardellis’ available for sale investment portfolio, including funds held with the State of Michigan, consists of the following:

 

 

 

 

 

 

 

 

 

 

 

 

March 31,2018

 

 

 

 

 

Unrealized

 

 

 

 

    

Cost

    

Gain/(Loss)

    

Fair Value