Universal Forest Products, Inc. ("the Company") is a holding company that provides capital, management and administrative resources to subsidiaries that design, manufacture and market wood and wood-alternative products for retail building materials home centers and other retailers, structural lumber and other products for the manufactured housing industry, engineered wood components for the residential construction market, and specialty wood packaging and components and packing materials for various industries. The Company's subsidiaries also provide framing services for the residential market and forming products for concrete construction. The Company's consumer products operations offer a large portfolio of outdoor living products, including wood composite decking, decorative balusters, post caps and plastic lattice. Its lawn and garden group offers an array of products, such as trellises and arches, to retailers nationwide. The Company is headquartered in Grand Rapids, Michigan, and its subsidiaries operate facilities throughout North America. For more about Universal Forest Products, Inc., go to www.ufpi.com.

Please be aware that: Any statements included in this report that are not historical facts are forward-looking statements within the meaning of 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. The Company does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are 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 from forward-looking statements are the following: adverse Lumber Market trends, competitive activity, negative economic trends, government regulations and weather. Certain of these risk factors and additional information are included in the Company's reports on Form 10-K and 10-Q on file with the Securities and Exchange Commission. We are pleased to present this overview of 2012.

Our results for the third quarter of 2012 were impacted by the following:

· Our sales increased 14% primarily due to an increase in lumber prices. See "Historical Lumber Prices". Our unit sales increased to three of our five markets. We experienced our strongest unit sales increase to the residential construction market.

· National housing starts increased approximately 24% in the period of June through August of 2012 (our sales trail housing starts by about a month), compared to the same period of 2011. Our unit sales increased 20% to this market. Since the downturn in housing began, we have lost some share of the residential construction market due to our focus on profitability and cash flow and the significant excess capacity of suppliers servicing the market.

· We experienced a 9% increase in sales to our industrial customers due to share gains with existing customers and by adding new customers.

· Shipments of HUD code manufactured homes were up 11% in July and August 2012, compared to the same period of 2011, which helped drive our 14% increase in unit sales to this market. We have maintained our share of the manufactured housing market in the product lines we offer and our sales increase reflects greater market activity.

· The retail building materials market, which has been adversely impacted by a decline in consumer demand in prior years, experienced a trend up early in the year due in part to favorable weather. More recently, consumer spending and confidence appears to have softened. Our unit sales decreased due to the fact we lost some market share with a major retail customer this year, primarily in product lines with lower gross margins. This decrease was offset to some extent by gaining share with other customers in a variety of other product lines.

· Our gross profit percentage decreased to 10.4% from 11.6% comparing 2012 to 2011 primarily due to the higher level of lumber prices in the third quarter of 2012. We generally price our products to earn a fixed profit per unit such that lumber costs are passed through to the customer. Therefore, in periods of higher lumber prices our gross profit as a percentage of sales will decrease. See Historical Lumber Prices. Conversely, our selling, general and administrative expenses declined as a percentage of sales.

· In the third quarter, we recorded a $2.0 million loss contingency for a Canadian anti-dumping duty. The Canadian government has imposed retroactive assessments for antidumping and countervailing duties tied to certain extruded aluminum products imported from China. While we continue to work with the government to clarify the applicability of these rules to our products, we recorded a charge in the third quarter for this matter.

                            HISTORICAL LUMBER PRICES

We experience significant fluctuations in the cost of commodity lumber products
from primary producers ("Lumber Market"). The following table presents the
Random Lengths framing lumber composite price:

                                               Random Lengths Composite
                                                     Average $/MBF
                                                 2012               2011

           January                           $         281         $   301
           February                                    286             296
           March                                       300             294
           April                                       308             275
           May                                         342             259
           June                                        330             262
           July                                        323             269
           August                                      340             265
           September                                   332             262

           Third quarter average             $         332         $   265
           Year-to-date average                        316             276

           Third quarter percentage change            25.3 %
           Year-to-date percentage change             14.5 %

                        UNIVERSAL FOREST PRODUCTS, INC.

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
                                                   2012           2011

              January                           $      269       $  282
              February                                 278          289
              March                                    300          290
              April                                    314          266
              May                                      341          254
              June                                     314          246
              July                                     300          253
              August                                   315          263
              September                                319          239

              Third quarter average             $      311       $  252
              Year-to-date average                     306          265

              Third quarter percentage change         23.4 %
              Year-to-date percentage change          15.5 %

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 (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 retail building materials customers, as well as trusses, wall panels and other components sold to the residential 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 with our suppliers for these sales commitments. 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 we 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. As a result of the decline in the housing market and our sales to residential and commercial builders, a greater percentage of our sales fall into this general pricing category. Consequently, we believe our profitability may be impacted to a much greater extent to changes in the trend of lumber prices.

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 15% 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.

See Notes to Unaudited Consolidated Condensed Financial Statements, Note G, "Business Combinations."

                        UNIVERSAL FOREST PRODUCTS, INC.

                             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.

                                                    Three Months Ended                       Nine months Ended
                                            September 29,        September 24,       September 29,       September 24,
                                                2012                 2011                2012                2011

Net sales                                            100.0 %              100.0 %             100.0 %             100.0 %
Cost of goods sold                                    89.6                 88.4                88.6                89.1
Gross profit                                          10.4                 11.6                11.4                10.9
Selling, general, and administrative
expenses                                               8.3                  9.4                 8.8                 9.7
Loss contingency for Canadian
anti-dumping duty                                      0.4                    -                 0.1                   -
Net (gain) loss on disposition of
assets, early retirement, and other
impairment and exit charges                            0.1                  0.0                (0.4 )               0.3
Earnings from operations                               1.6                  2.2                 2.9                 0.9
Other expense (income), net                            0.1                  0.2                 0.2                 0.2
Earnings before income taxes                           1.4                  2.0                 2.7                 0.8
Income taxes                                           0.5                  0.7                 1.0                 0.3
Net earnings                                           0.9                  1.3                 1.7                 0.5
Less net earnings attributable to
noncontrolling interest                               (0.1 )               (0.1 )              (0.1 )              (0.1 )
Net earnings attributable to controlling
interest                                               0.8 %                1.2 %               1.6 %               0.4 %

Note: Actual percentages are calculated and may not sum to total due to rounding.

GROSS SALES

We design, manufacture and market wood and wood-alternative products for national home centers and other retailers, structural lumber and other products for the manufactured housing industry, engineered wood components for residential and commercial construction, and specialty wood packaging, components and packing materials for various industries. Our strategic long-term sales objectives include:

† Diversifying our end market sales mix by increasing sales of specialty wood packaging to industrial users, increasing our penetration of the concrete forming market, increasing our sales of engineered wood components for custom home, multi-family, military and light commercial construction, and increasing our market share with independent retailers.

† Expanding geographically in our core businesses, domestically and internationally.

† Increasing sales of value-added products, which primarily consist of fencing, decking, lattice, and other specialty products sold to the retail building materials market, specialty wood packaging, engineered wood components, and wood alternative products. Wood alternative products consist primarily of composite wood and plastics. Engineered wood components include roof trusses, wall panels, and floor systems. 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.

† Developing new products and expanding our product offering for existing customers.

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

The following table presents, for the periods indicated, our gross sales (in thousands) and percentage change in gross sales by market classification.

                                   Three Months Ended                            Nine Months Ended
                        September      September                      September       September
Market Classification    29, 2012       24, 2011       % Change       29, 2012        24, 2011        % Change
Retail Building
Materials               $  204,368     $  210,874           (3.1 )   $   682,016     $   673,614            1.3
Residential
Construction                69,648         52,066           33.8         181,750         156,508           16.1
Commercial
Construction  and
Concrete Forming            23,850         21,415           11.4          68,236          57,206           19.3
Industrial                 153,906        128,219           20.0         444,499         363,975           22.1
Manufactured Housing        89,023         65,717           35.5         232,755         177,371           31.2
Total Gross Sales          540,795        478,291           13.1       1,609,256       1,428,674           12.6
Sales Allowances            (7,429 )       (9,350 )                      (25,086 )       (28,361 )
Total Net Sales         $  533,366     $  468,941           13.7     $ 1,584,170     $ 1,400,313           13.1

Gross sales in the third quarter of 2012 increased 13% compared to the same period of 2011, primarily due to the impact of the higher level of the Lumber Market on our selling prices.

Gross sales in the first nine months of 2012 increased 13% compared to the same period of 2011, due to higher lumber prices in the second and third quarters and an increase in unit sales in the first quarter primarily resulting from improved demand in each of our markets and more favorable weather compared to inclement weather in 2011.

Changes in our gross sales by market are discussed below.

Retail Building Materials:

Gross sales to the retail building materials market decreased 3% in the third quarter of 2012 compared to the same period of 2011, primarily due to a 10% decrease in our overall unit sales, offset by higher lumber prices. Unit sales decreased primarily due to the loss of sales of low-margin products to a major retail customer. This loss of market share was offset somewhat by increased sales to other retail customers. Within this market, sales to our big box customers decreased 16% while our sales to other retailers increased 16%.

Gross sales to the retail building materials market increased 1% in the first nine months of 2012 compared to the same period of 2011, primarily due to the same factors discussed above and an increase in consumer spending in the first quarter.

Residential Construction:

Gross sales to the residential construction market increased 34% in the third quarter of 2012 compared to the same period of 2011 due to an increase in lumber prices and a 20% increase in our unit sales. By comparison, national housing starts increased approximately 24% in the period of June through August of 2012 (our sales trail housing starts by about a month), compared to the same period of 2011. Gross sales to the residential construction market increased 16% in the first nine months of 2012 compared to the same period of 2011 primarily due to a 10% increase in unit sales (plant closures since July of 2011 had the effect of decreasing unit sales by 3%) combined with an increase in selling prices due to the Lumber Market. By comparison, national housing starts increased approximately 26% in the period of December through August of 2012 (our sales trail housing starts by about a month), compared to the same period of 2011. We continue to be selective in the business that we pursue in order to maximize profitability. As a result, we have lost some share of this market.

Commercial Construction and Concrete Forming:

Gross sales to the commercial construction and concrete forming market increased 11% in the third quarter of 2012 compared to the same period of 2011. Within this market, sales to commercial builders increased 10% and sales of products used to make concrete forms increased 13%. Gross sales to the commercial construction and concrete forming market increased 19% in the first nine months of 2012 compared to the same period of 2011. Within this market, sales to commercial builders increased 13% as a result of our ability to supply "turnkey" (components and framing) services to our customers, and sales of products used to make concrete forms increased 25% due to the sales and capital resources we've dedicated to growing our share of this market.

Industrial:

Gross sales to the industrial market increased 20% in the third quarter of 2012 compared to the same period of 2011, due a 9% increase in unit sales and an 11% increase in selling prices due to the Lumber Market. We added over 40 new customers this quarter and our sales to existing customers increased as we gained share with our top customers and demand improved.

Gross sales to the industrial market increased 22% in the first nine months of 2012 compared to the same period of 2011, primarily due an increase in unit sales as a result of the same factors discussed above.

Manufactured Housing and Recreation Vehicles:

Gross sales to the manufactured housing market increased 36% in the third quarter of 2012 compared to 2011, primarily due to an increase in selling prices due to the Lumber Market and combined with a 14% increase in unit sales. Unit sales to this market increased due to a rise in industry production of HUD-code homes related to orders from FEMA and strong demand for temporary housing in some areas of the country related to shale oil and gas development. In addition, we continued to add product lines and expand share in our distribution business. Shipments of HUD-code homes in July and August 2012 were up 11% compared to 2011.

Gross sales to the manufactured housing market increased 31% in the first nine months of 2012 compared to 2011, primarily due to an increase in selling prices due to the Lumber Market and combined with a 19% increase in unit sales. Unit sales to this market increased due to the factors discussed above. Shipments of HUD-code homes in January through August 2012 were up 17% compared to 2011.

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. Value-added products
generally carry higher gross margins than our commodity-based products.

                              Three Months Ended               Nine Months Ended
                          September        September      September         September
                           29, 2012         24, 2011       29, 2012         24, 2011

        Value-Added             58.5 %           59.0 %         58.9 %            59.0 %
        Commodity-Based         41.5 %           41.0 %         41.1 %            41.0 %

COST OF GOODS SOLD AND GROSS PROFIT

Our gross profit percentage decreased to 10.4% from 11.6% comparing the third quarter of 2012 to the same period of 2011. Our gross profit dollars increased by 2%, which is slightly better than our 1% increase in unit sales. Our lower gross profit percentage in 2012 reflects the impact the higher level of the Lumber Market this year compared to 2011. See Historical Lumber Prices.

Our gross profit percentage increased to 11.4% from 10.9% comparing the first nine months of 2012 to the same period of 2011. In addition, our gross profit dollars increased by 19%, which compares favorably to our 6% increase in unit sales. This improvement is primarily due to the impact of the Lumber Market combined with our increase in unit sales in the first quarter and the operating leverage we have in our cost structure. In addition, more favorable weather in the first quarter of 2012 compared to 2011, when we lost many production days due to inclement weather, impacted our production efficiency and improved our gross profit percentage. These increases were offset to some extent by pricing pressure experienced during the first nine months of the year. In addition, we lost some market share with a major retail customer this year, primarily in product lines with lower gross margins.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative ("SG&A") expenses increased by approximately . . .