Summary of UNIVERSAL FOREST PRODUCTS INC

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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. The forward-looking statements are based on the beliefs and assumptions of management, together with information available to us when the statements were made. Future results could differ materially from those included in such forward-looking statements as a result of, among other things, the factors set forth below and certain economic and business factors which may be beyond our control. Investors are cautioned that all forward-looking statements involve risks and uncertainty.
OVERVIEW Our results for the third quarter of 2008 were impacted by the following:
• Our overall unit sales decreased 8%, as sales out of existing facilities and operations we closed decreased by 11% this quarter and we experienced a 3% increase in unit sales as a result of acquisitions.

• We experienced sales decreases in our site-built, manufactured housing, and DIY/retail markets, while we continued to grow sales to the industrial market. We believe we have gained additional share in each of the markets we serve except manufactured housing. We have been able to maintain our significant market share of manufactured housing business.

• Single-family housing starts decreased approximately 39% in the third quarter of 2008 compared to 2007 as a result of an excess supply of homes, tighter credit conditions, and an increase in foreclosures. In addition, tight credit conditions have recently resulted in a decline in multi-family and light commercial construction activity.

• Consumer spending for large repair/remodel projects has decreased as many homeowners have lost equity in devalued homes and have less disposable income as a result of higher costs for necessities such as food, fuel and utilities. The Consumer Confidence Index has fallen from 87.3 at the beginning of the year to 38.0 at the end of October.

• Shipments of HUD code manufactured homes were down 17% in July and August and industry sales of modular homes have also continued to decline due, in part, to an excess supply of site-built homes and tight credit conditions.

• The industrial market is declining due to the general weakening of the U.S. economy. We gained additional share and increased sales to this market due, in part, to acquisitions and adding new concrete forming business.

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UNIVERSAL FOREST PRODUCTS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
• Our gross profits decreased more than 20% compared to the same period of 2007 due to a combination of lower unit sales out of existing facilities and fixed manufacturing costs; intense pricing pressure, particularly in the site-built market; and higher transportation costs primarily due to an increase in diesel fuel prices and a decline in the number of available carriers.

• We recorded a $6.2 million expense for asset impairments and other exit costs associated with facilities and equipment we made a decision to idle in the third quarter of 2008. The plants we closed had annual sales of approximately $45 million and annual incremental operating losses of over $6 million.

• Since the beginning of this difficult economic cycle, we have focused on cash flow and working capital management. We are pleased to have reduced our debt by approximately $39 million and our sale of receivables program by almost $27 million for the first nine months of 2008.

Outlook
Due to unprecedented and prevailing uncertainties throughout the capital markets, which have a direct and material impact on the markets Universal serves, we do not believe our previous sales and net earnings targets for 2008, disclosed in our second quarter 10-Q, are achievable. In addition, we believe that current economic conditions limit our ability to provide meaningful guidance for the ranges of likely financial performance; therefore, we will not provide guidance for the foreseeable future. Growth & Opportunity 2010 Goals
Since we announced our Growth & Opportunity 2010 Goals in our annual report on form 10-K for the period ended December 30, 2006, industry and general economic conditions have significantly deteriorated. We experience significant fluctuations in the cost of commodity lumber products from primary producers ("Lumber Market"). The Lumber Market has declined from an average of $388/mbf in 2005 to an average of $262/mbf in 2008; a 32% decline from when we first announced our goals, which has adversely impacted our sales. We are currently reviewing these long-term goals and expect to modify them when market conditions stabilize so new targets can be set using more current data and assumptions.

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                        UNIVERSAL FOREST PRODUCTS, INC.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                            HISTORICAL LUMBER PRICES
The following table presents the Random Lengths framing lumber composite price
for the nine months ended September 27, 2008 and September 29, 2007:

                                                    Random Lengths Composite
                                                          Average $/MBF
                                                     2008               2007

      January                                     $       249         $     292
      February                                            244               289
      March                                               240               280
      April                                               255               286
      May                                                 281               288
      June                                                268               306
      July                                                267               299
      August                                              282               290
      September                                           272               276

      Third quarter average                       $       274         $     288
      Year-to-date average                        $       262         $     290

      Third quarter percentage change from 2007          (4.9 %)
      Year-to-date percentage change from 2007           (9.7 %)

In addition, a Southern Yellow Pine ("SYP") composite price, which we prepare and use, is presented below. Sales of products produced using this species, which primarily consists of our preservative-treated products, may comprise up to 50% of our sales volume.

                                                       Random Lengths SYP
                                                          Average $/MBF
                                                       2008            2007

         January                                     $     337        $  414
         February                                          330           405
         March                                             331           396
         April                                             345           397
         May                                               421           390
         June                                              427           410
         July                                              406           412
         August                                            401           374
         September                                         388           347

         Third quarter average                       $     398        $  378
         Year-to-date average                        $     376        $  394

         Third quarter percentage change from 2007         5.3 %
         Year-to-date percentage change from 2007         (4.6 %)

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UNIVERSAL FOREST PRODUCTS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
IMPACT OF THE LUMBER MARKET ON OUR OPERATING RESULTS
We experience significant fluctuations in the cost of commodity lumber products from primary producers ("Lumber Market"). We generally price our products to pass lumber costs through to our customers so that our profitability is based on the value-added manufacturing, distribution, engineering, and other services we provide. As a result, our sales levels (and working capital requirements) are impacted by the lumber costs of our products. Lumber costs are a significant percentage of our cost of goods sold.
Our gross margins are impacted by both (1) the relative level of the Lumber Market (i.e. whether prices are higher or lower from comparative periods), and
(2) the trend in the market price of lumber (i.e. whether the price of lumber is increasing or decreasing within a period or from period to period). Moreover, as explained below, our products are priced differently. Some of our products have fixed selling prices, while the selling prices of other products are indexed to the reported Lumber Market with a fixed dollar adder to cover conversion costs and profits. Consequently, the level and trend of the Lumber Market impact our products differently. Below is a general description of the primary ways in which our products are priced.
• Products with fixed selling prices. These products include value-added products such as decking and fencing sold to DIY/retail customers, as well as trusses, wall panels and other components sold to the site-built construction market, and most industrial packaging products. Prices for these products are generally fixed at the time of the sales quotation for a specified period of time or are based upon a specific quantity. In order to maintain margins and reduce any exposure to adverse trends in the price of component lumber products, we attempt to lock in costs for these sales commitments with our suppliers. Also, the time period and quantity limitations generally allow us to re-price our products for changes in lumber costs from our suppliers.

• Products with selling prices indexed to the reported Lumber Market with a fixed dollar "adder" to cover conversion costs and profits.These products primarily include treated lumber, remanufactured lumber, and trusses sold to the manufactured housing industry. For these products, we estimate the customers' needs and carry anticipated levels of inventory. Because lumber costs are incurred in advance of final sale prices, subsequent increases or decreases in the market price of lumber impact our gross margins. For these products, our margins are exposed to changes in the trend of lumber prices.

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UNIVERSAL FOREST PRODUCTS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Changes in the trend of lumber prices have their greatest impact on the following products:
• Products with significant inventory levels with low turnover rates, whose selling prices are indexed to the Lumber Market. In other words, the longer the period of time these products remain in inventory, the greater the exposure to changes in the price of lumber. This would include treated lumber, which comprises approximately 12% of our total sales. This exposure is less significant with remanufactured lumber, trusses sold to the manufactured housing market, and other similar products, due to the higher rate of inventory turnover. We attempt to mitigate the risk associated with treated lumber through vendor consignment inventory programs. (Please refer to the "Risk Factors" section of our annual report on form 10-K, filed with the United States Securities and Exchange Commission.)

• Products with fixed selling prices sold under long-term supply arrangements, particularly those involving multi-family construction projects. We attempt to mitigate this risk through our purchasing practices by locking in costs.

In addition to the impact of the Lumber Market trends on gross margins, changes in the level of the market cause fluctuations in gross margins when comparing operating results from period to period. This is explained in the following example, which assumes the price of lumber has increased from period one to period two, with no changes in the trend within each period.

                                        Period 1       Period 2

                     Lumber cost       $      300     $      400
                     Conversion cost           50             50

                     = Product cost           350            450
                     Adder                     50             50

                     = Sell price      $      400     $      500
                     Gross margin            12.5 %         10.0 %

As is apparent from the preceding example, the level of lumber prices does not impact our overall profits, but does impact our margins. Gross margins are negatively impacted during periods of high lumber prices; conversely, we experience margin improvement when lumber prices are relatively low.
BUSINESS COMBINATIONS
See Notes to Consolidated Condensed Financial Statements, Note I, "Business Combinations."

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                        UNIVERSAL FOREST PRODUCTS, INC.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                             RESULTS OF OPERATIONS
The following table presents, for the periods indicated, the components of our
Consolidated Condensed Statements of Earnings as a percentage of net sales.

                                              For the Three Months Ended                   For the Nine Months Ended
                                         September 27,           September 29,        September 27,         September 29,
                                             2008                    2007                 2008                  2007
Net sales                                         100.0 %                 100.0 %              100.0 %               100.0 %
Cost of goods sold                                 89.3                    87.9                 88.7                  87.1

Gross profit                                       10.7                    12.1                 11.3                  12.9
Selling, general, and administrative
expenses                                            9.5                     8.7                  9.9                   9.6
Net loss on disposition of assets
and other impairment and exit
charges                                             1.0                                          0.4

Earnings from operations                            0.2                     3.4                  1.0                   3.3
Interest, net                                       0.4                     0.5                  0.4                   0.6

Earnings (loss) before income taxes
and minority interest                              (0.2 )                   2.9                  0.6                   2.7
Income taxes                                        0.1                     1.1                  0.3                   1.0

Earnings before minority interest                  (0.3 )                   1.8                  0.3                   1.7
Minority interest                                  (0.0 )                  (0.1 )               (0.0 )                (0.1 )

Net earnings (loss)                                (0.3 )%                  1.7 %                0.3 %                 1.6 %

GROSS SALES
We engineer, manufacture, treat, distribute and install lumber, composite wood, plastic, and other building products for the DIY/retail, site-built construction, industrial, and manufactured housing markets. Our strategic long-term sales objectives include:
• Diversifying our end market sales mix by increasing sales of specialty wood packaging to industrial users, penetrating the concrete forms market, and increasing our sales of engineered wood components for custom homes, multi- family and light commercial construction.

• Expanding geographically in our core businesses.

• Increasing sales of "value-added" products and framing services. Value-added product sales primarily consist of fencing, decking, lattice, and other specialty products sold to the DIY/retail market, specialty wood packaging, engineered wood components, and "wood alternative" products. Engineered wood components include roof trusses, wall panels, and floor systems. Wood alternative products consist primarily of composite wood and plastics. Although we consider the treatment of dimensional lumber with certain chemical preservatives a value-added process, treated lumber is not presently included in the value-added sales totals.

• Maximizing unit sales growth while achieving return on investment goals.

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                        UNIVERSAL FOREST PRODUCTS, INC.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table presents, for the periods indicated, our gross sales (in
thousands) and percentage change in gross sales by market classification.

                                 For the Three Months Ended                     For the Nine Months Ended
                           Sept. 27,          %         Sept. 29,        Sept. 27,          %          Sept. 29,
Market Classification         2008         Change          2007            2008          Change          2007
DIY/Retail                 $  251,559         (5.9 )    $  267,291      $   758,898         (7.8 )    $   823,173
Site-Built Construction       119,772        (24.2 )       158,035          361,430        (21.0 )        457,663
Industrial                    166,327         5. 4         157,836          480,947          5.7          455,129
Manufactured Housing           85,215        (22.5 )       110,006          245,713        (19.3 )        304,426

Total Gross Sales             622,873        (10.1 )       693,168        1,846,988         (9.5 )      2,040,391
Sales Allowances              (12,129 )                    (14,770 )        (38,247 )                     (39,850 )

Total Net Sales            $  610,744        (10.0 )    $  678,398      $ 1,808,741         (9.6 )    $ 2,000,541

Note: In the first quarter of 2008, we reviewed the classification of our customers and made certain reclassifications. Prior year information has been restated to reflect these reclassifications.

Gross sales in the third quarter of 2008 decreased 10% compared to the third quarter of 2007. We estimate that our unit sales decreased by 8% and overall selling prices decreased by 2% comparing the two periods. We estimate that our unit sales increased 3% as a result of business acquisitions, while unit sales from existing and closed facilities decreased 11%. Our overall selling prices fluctuate as a result of the Lumber Market (see "Historical Lumber Prices") and were negatively impacted by pricing pressure primarily in the site-built market. Gross sales in the first nine months of 2008 decreased 9% compared to the first nine months of 2007 resulting from an estimated decrease in units shipped of approximately 7%, while overall selling prices decreased by 2%. We estimate that our unit sales increased 3% as a result of business acquisitions and new plants, while our unit sales from existing and closed facilities decreased by 10%. Changes in our sales by market are discussed below. DIY/Retail:
Gross sales to the DIY/retail market decreased 6% in the third quarter of 2008 compared to 2007 primarily due to an estimated 4% decrease in overall unit sales and an estimated 2% decrease in overall selling prices. We estimate that our unit sales increased 2% as a result of acquisitions, while unit sales from existing and closed facilities decreased 6%. Unit sales declined due to the impact of the housing market on our retail customers whose business is closely correlated with single-family housing starts and a decline in consumer spending as evidenced by a decline in same store sales of our "big box" customers. Gross sales to the DIY/retail market decreased 8% in the first nine months of 2008 compared to 2007 primarily due to an estimated 7% decrease in overall units shipped and an estimated 1% decrease in overall selling prices. We estimate that our unit sales increased 2% as a result of acquisitions, while unit sales from existing and closed facilities decreased 9%. The decrease in unit sales is primarily due to the same factors mentioned in the paragraph above.

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UNIVERSAL FOREST PRODUCTS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Site-Built Construction:
Gross sales to the site-built construction market decreased 24% in the third quarter of 2008 compared to 2007 due to an estimated 18% decrease in unit sales out of existing plants and an estimated 6% decrease in our average selling prices primarily due to intense pricing pressure and a soft Lumber Market. National single-family housing starts were off a reported 39% from July through September of 2008 compared to the same period of 2007. We were able to mitigate some of the decrease in the single-family market by pursuing multi-family and light commercial business and increasing our turn-key framing activities. However, these markets are currently being impacted by tight credit conditions. Gross sales to the site-built construction market decreased 21% in the first nine months of 2008 compared to 2007, due to an estimated 13% decrease in unit sales and an estimated 8% decrease in selling prices. Single-family housing starts have fallen approximately 40% in 2008 compared to 2007. Industrial:
Gross sales to the industrial market increased 5% in the third quarter of 2008 compared to the same period of 2007, due to an estimated 3% increase in unit sales and an estimated 2% increase in selling prices. Acquisitions and our continued focus on adding new customers, including concrete forming, helped us mitigate the effect of a decline in sales to certain of our customers that supply the housing market or have been impacted by the weakening U.S. economy. Gross sales to the industrial market increased 6% in the first nine months of 2008 compared to the same period of 2007, due to an estimated 8% increase in units shipped offset by an estimated 2% decrease in selling prices. Unit sales increased for the reasons mentioned in the paragraph above. Manufactured Housing:
Gross sales to the manufactured housing market decreased 23% in the third quarter of 2008 compared to the same period of 2007, primarily due to an estimated 21% decrease in unit sales combined with an estimated 2% decrease in selling prices due to the Lumber Market. Our decline in unit sales from existing facilities was the result of an overall decline in industry production. The industry most recently reported a 17% decrease in HUD code production in July and August, and industry production of modular homes was down 34% in the second quarter of 2008. We believe these trends continued through the third quarter of 2008.
Gross sales to the manufactured housing market decreased 19% in the first nine months of 2008 compared to the same period of 2007. This decrease resulted from an estimated 17% decrease in unit sales combined with an estimated 2% decrease in selling prices. The industry most recently reported a 10% decrease in HUD code production in the first eight months of 2008 compared to the same period in 2007.

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                        UNIVERSAL FOREST PRODUCTS, INC.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Value-Added and Commodity-Based Sales:
The following table presents, for the periods indicated, our percentage of
value-added and commodity-based sales to total sales.

                              Three Months Ended               Nine Months Ended
                          Sept. 27,        Sept. 29,      Sept. 27,         Sept. 29,
                             2008             2007           2008             2007

        Value-Added             59.6 %           59.4 %         60.7 %            60.8 %
        Commodity-Based         40.4 %           40.6 %         39.3 %            39.2 %

Note: In the third quarter of 2007, we reviewed the classification of our product codes and made certain reclassifications. Prior year information has been restated to reflect these reclassifications.

Value-added sales decreased 10% in the third quarter of 2008 compared to 2007, primarily due to decreased sales of trusses, engineered wood products, and wall panels, offset partially by increases in industrial packaging and related components. Commodity-based sales decreased 11% comparing the third quarter of 2008 with the same period of 2007, primarily due to decreased sales of non-manufactured brite and other lumber and non-manufactured treated lumber. Value-added sales decreased 10% in the first nine months of 2008 compared to 2007, primarily due to decreased sales of trusses, wall panels, engineered wood products and fencing, offset partially by increases in industrial packaging and related components and turn-key framing and installed sales to site-built customers. Commodity-based sales decreased 9% comparing the first nine months of 2008 with the same period of 2007, primarily due to decreased sales of non-manufactured brite and other lumber and non-manufactured treated lumber.
COST OF GOODS SOLD AND GROSS PROFIT
Our gross profit percentage decreased to 10.7% from 12.1% and gross profit dollars decreased more than 20% comparing the third quarter of 2008 with the same period of 2007. The decline in our profitability was primarily due to a combination of:
• Price pressure in all of our markets but particularly in our site-built market, which reported a significant decline in gross margin.

• A significant increase in fuel and other transportation costs.

• Missed buying opportunities as a result of stocking lower levels of lumber inventory.

• Lower volumes combined with fixed manufacturing costs.

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UNIVERSAL FOREST PRODUCTS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . .