10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 25, 2010

or

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

For the transition period from            to           

Commission File Number: 1-8183

SUPREME INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Delaware	75-1670945
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2581 E. Kercher Rd., P.O. Box 237, Goshen, Indiana  46528

(Address of principal executive offices)       (Zip Code)

Registrant’s telephone number, including area code:  (574) 642-3070

Indicate by check mark 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 x  No o

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 o  No o

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

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No x

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

Common Stock ($.10 Par Value)	Outstanding at October 25, 2010
Class A	12,455,991
Class B	1,917,882

SUPREME INDUSTRIES, INC.

CONTENTS

			Page No.
PART I.	FINANCIAL INFORMATION
ITEM 1.		Financial Statements.	1
		Consolidated Balance Sheets	1
		Consolidated Statements of Operations	3
		Consolidated Statements of Cash Flows	4
		Notes to Consolidated Financial Statements	5
ITEM 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations.	9
ITEM 3.		Quantitative and Qualitative Disclosures About Market Risk.	16
ITEM 4.		Controls and Procedures.	16
PART II.	OTHER INFORMATION
ITEM 1.		Legal Proceedings.	17
ITEM 1A.		Risk Factors.	17
ITEM 2.		Unregistered Sales of Equity Securities and Use of Proceeds.	18
ITEM 3.		Defaults Upon Senior Securities.	18
ITEM 4.		Reserved.	18
ITEM 5.		Other Information.	18
ITEM 6.		Exhibits.	19
SIGNATURES
INDEX TO EXHIBITS
EXHIBITS

PART I. FINANCIAL INFORMATION

ITEM 1.              FINANCIAL STATEMENTS.

Supreme Industries, Inc. and Subsidiaries

Consolidated Balance Sheets

	September 25,		December 26,
	2010		2009
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	57,226	$	1,222,411
Investments	1,235,994		1,645,407
Accounts receivable, net	21,894,479		22,710,669
Inventories	37,606,874		31,553,351
Other current assets	5,374,659		8,870,300
Total current assets	66,169,232		66,002,138
Property, plant and equipment, at cost	88,591,996		89,501,666
Less, Accumulated depreciation and amortization	48,755,232		47,264,582
Property, plant and equipment, net	39,836,764		42,237,084
Other assets	1,380,773		1,181,357
Total assets	$	107,386,769	$	109,420,579

See accompanying notes to consolidated financial statements.

1

Supreme Industries, Inc. and Subsidiaries

Consolidated Balance Sheets, Concluded

	September 25,		December 26,
	2010		2009
	(Unaudited)
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt	$	22,532,330	$	26,226,289
Trade accounts payable	11,779,484		9,906,429
Accrued income taxes	1,002,085		989,300
Other accrued liabilities	9,092,421		7,386,251
Total current liabilities	44,406,320		44,508,269
Long-term debt	979,128		1,115,410
Deferred income taxes	1,438,463		1,211,262
Total liabilities	46,823,911		46,834,941
Stockholders’ equity	60,562,858		62,585,638
Total liabilities and stockholders’ equity	$	107,386,769	$	109,420,579

See accompanying notes to consolidated financial statements.

2

Supreme Industries, Inc. and Subsidiaries

Consolidated Statements of Operations (Unaudited)

	Three Months Ended						Nine Months Ended
	September 25,			September 26,			September 25,			September 26,
	2010			2009			2010			2009
Net sales	$	62,838,770		$	49,805,255		$	171,879,771		$	146,009,984
Cost of sales	57,150,319			45,722,285			156,804,407			135,181,021
Gross profit	5,688,451			4,082,970			15,075,364			10,828,963
Selling, general and administrative expenses	5,706,733			5,223,451			17,043,608			16,066,318
Other income	(192,593		)	(102,669		)	(589,598		)	(776,956		)
Operating income (loss)	174,311			(1,037,812		)	(1,378,646		)	(4,460,399		)
Interest expense	296,438			549,423			1,175,188			1,526,301
Loss from continuing operations before income taxes	(122,127		)	(1,587,235		)	(2,553,834		)	(5,986,700		)
Income tax benefit	—			(337,008		)	—			(2,625,630		)
Loss from continuing operations	(122,127		)	(1,250,227		)	(2,553,834		)	(3,361,070		)
Discontinued operations
Operating loss of discontinued motorhome operations	(51,743		)	(278,347		)	(190,509		)	(672,527		)
Net loss	$	(173,870	)	$	(1,528,574	)	$	(2,744,343	)	$	(4,033,597	)
Loss Per Share:
Loss from continuing operations	$	(0.01	)	$	(0.09	)	$	(0.18	)	$	(0.23	)
Loss from discontinued operations	(0.00		)	(0.02		)	(0.01		)	(0.05		)
Net loss	$	(0.01	)	$	(0.11	)	$	(0.19	)	$	(0.28	)
Shares used in the computation of loss per share:
Basic	14,325,693			14,198,782			14,291,729			14,180,168
Diluted	14,325,693			14,198,782			14,291,729			14,180,168

See accompanying notes to consolidated financial statements.

3

Supreme Industries, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

	Nine Months Ended
	September 25,			September 26,
	2010			2009
Cash flows from operating activities:
Net loss	$	(2,744,343	)	$	(4,033,597	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	2,865,033			3,117,219
Provision for losses on doubtful receivables	51,462			78,736
Stock-based compensation expense	434,515			469,810
Losses (gains) on sale of property, plant and equipment, net	402			(239,708		)
Changes in operating assets and liabilities	2,015,444			11,281,311
Net cash provided by operating activities	2,622,513			10,673,771
Cash flows from investing activities:
Additions to property, plant and equipment	(1,046,839		)	(1,655,555		)
Proceeds from sale of property, plant and equipment	623,749			507,071
Purchases of investments	(1,018,499		)	(85,625		)
Proceeds from sales of investments	1,475,073			1,053,054
Decrease in other assets	6,559			6,559
Net cash provided by (used in) investing activities	40,043			(174,496		)
Cash flows from financing activities:
Proceeds from revolving line of credit and long-term debt	50,794,006			55,813,354
Repayments of revolving line of credit and long-term debt	(54,624,247		)	(67,178,347		)
Proceeds from exercise of stock options	2,500			—
Net cash used in financing activities	(3,827,741		)	(11,364,993		)
Change in cash and cash equivalents	(1,165,185		)	(865,718		)
Cash and cash equivalents, beginning of period	1,222,411			932,608
Cash and cash equivalents, end of period	$	57,226		$	66,890

See accompanying notes to consolidated financial statements.

4

SUPREME INDUSTRIES, INC. AND SUBSIDIARIES

Notes To Consolidated Financial Statements

NOTE 1 - BASIS OF PRESENTATION AND OPINION OF MANAGEMENT

The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all of the information and financial statement disclosures necessary for a fair presentation of consolidated financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America.  In the opinion of management, the information furnished herein includes all adjustments necessary to reflect a fair statement of the interim periods reported.  All adjustments are of a normal and recurring nature.  The December 26, 2009 consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.  References to “we,” “us,” “our,” “its,” “Supreme,” or the “Company” refer to Supreme Industries, Inc. and its subsidiaries.

The Company has adopted a 52- or 53-week fiscal year ending the last Saturday in December.  The results of operations for the three and nine months ended September 25, 2010 and September 26, 2009 are for 13- and 39-week periods, respectively.

NOTE 2 — DISCONTINUED OPERATIONS

In the fourth quarter of 2009, the Company closed its Silver Crown luxury motorhome operations. This decision was triggered by a significant reduction of new motorhome sales orders and the cancellation of sales orders due to the extremely tight credit markets caused by the economic recession. The Company decided to exit the motorhome product line as part of a plan to focus on core truck and bus products and to reduce overall fixed costs.

The Company is in the process of selling or leasing the real estate of the Silver Crown division; therefore, the real estate totaling $1.3 million is accordingly classified as held for sale at September 25, 2010. The Company plans to sell the finished units on hand as of September 25, 2010, relating to this product line in the near term.

The 2010 operating results for the Silver Crown division are classified as discontinued operations, and prior years’ operating results have been reclassified to discontinued operations as follows:

	Three Months Ended						Nine Months Ended
	Sep 25, 2010			Sep 26, 2009			Sep 25, 2010			Sep 26, 2009
Net sales	$	260,174		$	295,922		$	1,828,151		$	2,968,365
Pretax loss from operations	$	(51,743	)	$	(376,339	)	$	(190,509	)	$	(1,197,897	)
Net loss	$	(51,743	)	$	(278,347	)	$	(190,509	)	$	(672,527	)

5

SUPREME INDUSTRIES, INC. AND SUBSIDIARIES

Notes To Consolidated Financial Statements-Continued

NOTE 3 — OTHER COMPREHENSIVE INCOME

Other comprehensive income includes unrealized gains (losses) on hedge-activity, net of tax, and unrealized gains (losses) on available-for-sale securities, net of tax.  Total comprehensive loss combines net loss and other comprehensive income.

For the three- and nine-month periods ended September 25, 2010 and September 26, 2009, total comprehensive loss and other comprehensive income are as follows:

	Three Months Ended						Nine Months Ended
	Sep 25,			Sep 26,			Sep 25,			Sep 26,
	2010			2009			2010			2009
Net loss	$	(173,870	)	$	(1,528,574	)	$	(2,744,343	)	$	(4,033,597	)
Other comprehensive income	42,962			97,530			284,548			228,088
Total comprehensive loss	$	(130,908	)	$	(1,431,044	)	$	(2,459,795	)	$	(3,805,509	)

NOTE 4 — INVENTORIES

Inventories, which are stated at the lower of cost or market with cost determined using the first-in, first-out method, consist of the following:

	September 25,		December 26,
	2010		2009
Raw materials	$	19,717,295	$	17,512,758
Work-in-progress	7,478,945		6,528,059
Finished goods	10,410,634		7,512,534
	$	37,606,874	$	31,553,351

NOTE 5 — FAIR VALUE MEASUREMENT

Generally accepted accounting principles (“GAAP”) define fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  GAAP also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  The standard describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

6

SUPREME INDUSTRIES, INC. AND SUBSIDIARIES

Notes To Consolidated Financial Statements-Continued

NOTE 5 — FAIR VALUE MEASUREMENT- continued

The Company used the following methods and significant assumptions to estimate the fair value of items:

Investments: The fair values of investments available-for-sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs).

The carrying amounts of cash and cash equivalents, accounts receivable, and trade accounts payable approximated fair value as of September 25, 2010, and December 26, 2009, because of the relatively short maturities of these financial instruments.  The carrying amount of long-term debt, including current maturities, approximated fair value as of September 25, 2010, and December 26, 2009, based upon terms and conditions available to the Company at those dates in comparison to the terms and conditions of its outstanding long-term debt.

NOTE 6 — REVOLVING LINE OF CREDIT

On October 18, 2010, Supreme Industries, Inc. entered into an Amended and Restated Credit Agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A. (the “Lender”) which agreement was effective on September 30, 2010.  Under the terms of the Credit Agreement, the Lender agreed to provide the Company with a revolving line of credit of up to $30,000,000 (previously $25,000,000) through December 31, 2011.  The line of credit is limited to $25,000,000 until the Company meets certain post-closing conditions, outlined in the Credit Agreement, at which time the full revolving credit amount of $30,000,000 will become available.  In order to qualify for the full revolving credit amount, the Company must meet certain borrowing base requirements related to accounts receivable and inventories.  As additional collateral for the revolving credit facility, Supreme and certain of its affiliates have signed and delivered to the Lender Pledge and Security Agreements granting to the Lender security interests in their personal property.  During the term of this revolving credit, the Company is required to comply with two financial covenants, consisting of a minimum required EBITDA (Earnings Before Interest Taxes Depreciation and Amortization) and a minimum tangible net worth.

As of September 25, 2010, the Company had unused credit capacity of approximately $5.5 million under its then existing $25,000,000 credit agreement.  Interest on outstanding borrowings under the revolving line of credit is based on the bank’s prime rate, or certain basis points above LIBOR, depending on the pricing option selected and the Company’s leverage ratio.  The Company’s cash management system and revolving line of credit are designed to maintain zero cash balances and, accordingly, checks outstanding in excess of bank balances are classified as additional borrowings under the revolving line of credit.

NOTE 7 - LOSS PER SHARE

As of September 25, 2010, the assumed exercise or issuance of 160,129 shares and 212,753 shares for the three- and nine-month periods, respectively, relating to stock plans were not included in the computation of diluted loss per share. As of September 26, 2009, the assumed exercise or issuance of 253,013 shares and 186,797 shares for the three-and nine month period, respectively, relating to stock plans were not included in the computation of diluted loss per share.  Inclusion of these shares in the respective periods would have been antidilutive.

7

SUPREME INDUSTRIES, INC. AND SUBSIDIARIES

Notes To Consolidated Financial Statements — Concluded

NOTE 8 - STOCK-BASED COMPENSATION

The following table summarizes the activity for the unvested restricted stock units and restricted stock for the nine months ended September 25, 2010:

	Number of Shares		Weighted - Average Grant Date Fair Value
Unvested, December 26, 2009	111,736		$	4.62
Granted	—		n/a
Vested	(67,749	)	5.04
Unvested, September 25, 2010	43,987		$	3.99

The total fair value of the shares vested during the nine months ended September 25, 2010 was $341,247.

A summary of the status of the Company’s outstanding stock options as of September 25, 2010, and changes during the nine months ended September 25, 2010, are as follows:

	Number of Shares		Weighted - Average Exercise Price
Outstanding, December 26, 2009	1,246,082		$	5.00
Granted	—		n/a
Exercised	(1,766	)	1.42
Expired	(363,720	)	6.16
Forfeited	—		n/a
Outstanding, September 25, 2010	880,596		$	4.53

As of September 25, 2010, outstanding options had an intrinsic value of $87,081 and a weighted-average remaining contractual life of 3.92 years.

Total unrecognized compensation expense related to all share-based awards outstanding at September 25, 2010, was approximately $303,000 and is to be recorded over a weighted average contractual life of 0.80 years.

8

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Established in 1974 as a truck body manufacturer, Supreme Industries, Inc., through its wholly-owned subsidiary, Supreme Indiana Operations, Inc., is one of the nation’s leading manufacturers of specialized commercial vehicles. Utilizing a nationwide direct sales and distribution network, as well as manufacturing and service facilities in nine states across the continental United States, Supreme is able to meet the needs of customers across all of North America.

The Company engages principally in the production and sale of customized truck bodies, buses, and other specialty vehicles. Building on its expertise in providing both cargo and passenger transportation solutions, the Company’s specialty vehicle offerings include products such as customized armored vehicles, homeland response vehicles, and portable storage units.

The Company and its product offerings are sensitive to various factors which include, but are not limited to, economic conditions, interest rate fluctuations, volatility in the supply chain of vehicle chassis, and the availability of credit and financing to the Company, our vendors, dealers, and end users.  The Company’s business is also affected by the availability and costs of certain raw materials that serve as significant components of its product offerings.  The Company’s risk factors are disclosed in Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 26, 2009, and herein in Item 1A.

The following discussion should be read in conjunction with the consolidated financial statements and related notes thereto elsewhere in this document and pertain to continuing operations unless otherwise noted.

Results of Operations

Overview

During the third quarter of 2010, we continued to experience increasing revenues, and accordingly, we were able to improve our results from a pre-tax operating loss of $1.6 million in the third quarter of 2009 to a pre-tax operating loss of $0.1 million in the third quarter of 2010.  We also improved our gross profit in 2010 by 39% for both the third quarter and for the nine months as compared with the corresponding periods in 2009.  Based upon industry analysts, our own increasing backlog, and a large fleet order received for spring 2011, we are beginning to see improved market demand. However, we continue to maintain a conservative and cautious view of our markets as we move forward.

We have been experiencing improved demand for all product lines including truck, bus, and armored vehicles.  Our sales backlog was $89.3 million at September 25, 2010, as compared with $61.9 million at September 26, 2009.  With product enhancements to our Signature body to improve customer satisfaction, pent-up truck demand (due to historic lows in purchases over the past two years), and our improved backlog, we are well-positioned to improve our performance going forward, subject to a continued recovery of the truck market.

We also continue to look for opportunities to make our operations leaner and more profitable.  The substantial cost reductions to date, which began in mid-2008, have been derived from, among other factors, personnel and salary reductions, suspension of the Company’s 401(k) contributions, process improvements, plant closures and consolidations, outsourcing, and improved inventory management. In addition, during the fourth quarter of 2009, the Company closed its Silver Crown luxury motorhome business. The unprecedented tight credit markets caused by the severe economic recession led to a significant reduction of new motorhome orders and the cancellation of orders.

In our efforts to rebound from the severe recession and maintain our position as one of the strongest companies in our industry, we continue to implement our strategies of cost containment, production efficiencies, revenue enhancement, market expansion, and product diversification.

9

Net Sales

Net sales for the three months ended September 25, 2010, increased $13.0 million to $62.8 million as compared with $49.8 million for the three months ended September 26, 2009.  Net sales for the nine months ended September 25, 2010, increased $25.9 million to $171.9 million compared with $146.0 million for the nine months ended September 26, 2009.  The following table presents the components of net sales and the changes from period to period:

	Three Months Ended								Nine Months Ended
($000’s omitted)	Sep 25,2010		Sep 26,2009		Change				Sep 25,2010		Sep 26,2009		Change
Specialized vehicles:
Trucks	$	35,968	$	27,153	$	8,815	32.5	%	$	92,956	$	78,806	$	14,150		18.0	%
Buses	20,368		19,515		853		4.4	%	58,443		50,190		8,253			16.4	%
Armored vehicles	5,718		2,735		2,983		109.1	%	17,341		13,226		4,115			31.1	%
	62,054		49,403		12,651		25.6	%	168,740		142,222		26,518			18.6	%
Composites	785		402		383		95.3	%	3,140		3,788		(648		)	-17.1	%
	$	62,839	$	49,805	$	13,034	26.2	%	$	171,880	$	146,010	$	25,870		17.7	%

The truck division sales increase of $8.8 million, or 33% for the quarter, and $14.2 million, or 18% for the first nine months, was primarily attributable to an improved retail truck market and increased fleet shipments.  We have experienced improved backlog for trucks and believe that we are well-positioned to benefit from favorable industry indicators and the expectation that customers will begin replacing aging equipment.  Additionally, we are encouraged by a specific large fleet order received with shipments to commence during the first half of 2011.

Our StarTrans bus division continued to experience strong demand, increasing its sales by $0.9 million for the quarter and $8.3 million for the first nine months of 2010.  These increases were due in part to the availability of funds from the 2009 federal economic stimulus plan enabling state and local transit authorities to purchase new units.  With our strong bus backlog, we anticipate continued favorable contributions from our bus division for the remainder of 2010 and into 2011.

The armored division continued to experience increased demand with revenue increases of $3.0 million for the quarter and $4.1 million for the nine months of 2010.  These increases were primarily the result of our contract with the U.S. Department of State to produce armored Suburbans for embassies abroad and improved demand for cash-in-transit vehicles.  We believe that the armored division is well-positioned for the remainder of 2010 and into 2011 due to the increased backlog and the positive response we are receiving from other governmental agencies regarding our armored product offerings and quality.

The composite divisions represent sales of fiberglass reinforced plywood and other fiberglass products.  The increase for the quarter of $0.4 million was due to improved sales of our fiberglass reinforced plywood product.  The decrease of $0.7 million for the first nine months of 2010 was due to lower fiberglass sales resulting from the overall economic downturn.

Cost of sales and gross profit

Gross profit increased by $1.6 million, or 39.0%, to $5.7 million for the three months ended September 25, 2010, as compared with $4.1 million for the three months ended September 25, 2009.  For the nine months ended September 25, 2010, gross profit increased by $4.3 million, or 39.8%, to $15.1 million compared with $10.8 million for the nine months ended September 26, 2009.  The following table presents the components of cost of sales as a percentage of net sales and the changes from period to period:

10

	Three Months Ended						Nine Months Ended
	Sep 25,2010		Sep 26,2009		PercentChange		Sep 25,2010		Sep 26,2009		PercentChange
Material	57.3	%	59.4	%	(2.1	)%	57.8	%	58.8	%	(1.0	)%
Direct Labor	15.4		13.7		1.7		14.7		13.8		0.9
Overhead	15.6		16.3		(0.7	)	16.2		17.7		(1.5	)
Delivery	2.6		2.4		0.2		2.5		2.3		0.2
Cost of sales	90.9		91.8		(0.9	)	91.2		92.6		(1.4	)
Gross profit	9.1	%	8.2	%	0.9	%	8.8	%	7.4	%	1.4	%

Material — Material cost as a percentage of net sales decreased by 2.1% and 1.0% for the three and nine months ended September 25, 2010, respectively, as compared with the corresponding periods in 2009. The decrease in the material percentage was attributable to a higher proportion of specialty products sold through our bus and armored divisions.  This was partially offset by an increase in the material percentage in the truck division due to a change in the product mix and a competitive pricing environment.

As the general economic environment begins to show signs of stability and some improvement, the potential for future raw material cost increases remains a concern for certain commodities (aluminum, steel, and wood).  We closely monitor all major commodities and continually review the financial stability of our primary vendors.  We also strive to reduce manufacturing costs through the use of improved technologies, processes, and supply-chain management tactics and strategies.

Direct Labor — Direct labor as a percentage of net sales increased by 1.7% and 0.9% for the three and nine months ended September 25, 2010, respectively, as compared with the corresponding periods in 2009.  The increase in the direct labor percentage was due to new employee training costs in order to support the higher production and sales levels in 2010. Historically, our labor percentage has increased during ramp-up periods due to the new employee training costs.

Overhead — Manufacturing overhead as a percentage of net sales decreased by 0.7% and 1.5% for the three and nine months ended September 25, 2010, respectively, as compared with the corresponding periods in 2009.  The overall overhead percentage declined due to the fixed nature of certain overhead expenses that do not fluctuate with sales volume changes.  Additionally, the decrease in the overhead percentage was the result of our cost reduction efforts which have included personnel reductions, process improvements, and plant consolidations.  Partially offsetting the decrease in the percentage was group health insurance costs which were higher than anticipated as a result of several large claims.  In an effort to control future claim costs, the Company continues to implement design changes to its group health insurance plan.

Delivery — Delivery as a percentage of net sales increased by 0.2% for the three and nine months ended September 25, 2010, as compared with the corresponding periods in 2009.  The Company continues to explore more cost-effective delivery methods to mitigate the adverse impact of ongoing high fuel costs.

Selling, general and administrative expenses

Selling, general and administrative (“G&A”) expenses increased by $0.5 million, or 9.6%, to $5.7 million for the three months ended September 25, 2010, as compared with $5.2 million for the three months ended September 26, 2009.  For the nine months ended September 25, 2010, selling and G&A expenses increased by $0.9 million, or 5.6%, to $17.0 million compared with $16.1 million for the nine months ended September 26, 2009.  The following table presents selling and G&A expenses as a percentage of net sales and the changes from period to period:

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	Three Months Ended												Nine Months Ended
($000’s omitted)	Sep 25, 2010				Sep 26, 2009				Change				Sep 25, 2010				Sep 26, 2009				Change
Selling expenses	$	1,910	3.1	%	$	1,677	3.4	%	$	233	-0.3	%	$	5,852	3.4	%	$	5,385	3.7	%	$	467	-0.3	%
G&A expenses	3,797		6.0		3,546		7.1		251		-1.1		11,192		6.5		10,681		7.3		511		-0.8
Total	$	5,707	9.1	%	$	5,223	10.5	%	$	484	-1.4	%	$	17,044	9.9	%	$	16,066	11.0	%	$	978	-1.1	%

Selling expenses — Selling expenses increased for the three and nine months ended September 25, 2010, as compared with the corresponding periods in 2009.  The increase for both periods was primarily attributable to higher commission expense resulting from the improvement in the sales volume. However, selling expenses as a percentage of sales decreased 0.3% for the three and nine months, respectively, as compared with the corresponding periods in 2009.

G&A expenses — G&A expenses increased for the three and nine months ended September 25, 2010, as compared with the corresponding period in 2009.  The increase was primarily attributable to costs incurred to engage a consulting firm to assist the Company with its profit improvement plan and higher legal fees resulting from a lawsuit the Company is vigorously contesting.  These costs were offset by reduced employee headcount and the related payroll and benefit cost savings.  Reductions in our administrative workforce have been a significant part of the cost savings initiatives that we began implementing in mid-2008. G&A expenses as a percentage of sales decreased 1.1% and 0.8% for the three and nine months, respectively, as compared with the corresponding periods in 2009.

Other income

For the three months ended September 25, 2010, other income was $0.2 million as compared with $0.1 million for the three months ended September 26, 2009.  For the nine months ended September 25, 2010, other income was $0.6 million as compared with $0.8 million for the nine months ended September 26, 2009.  Other income consisted of rental income, gain or loss on sale of assets, and other miscellaneous income received by the Company.

Interest expense

Interest expense was $0.3 million for the three months ended September 25, 2010, compared with $0.5 million for the three months ended September 26, 2009.  For the nine months ended September 25, 2010, interest expense was $1.2 million compared with $1.5 million for the nine months ended September 26, 2009.  A reduction in chassis interest expense was partially attributable to measures implemented to improve bailment chassis inventory management.  The bank interest expense reflected lower prevailing interest rates coupled with reduced debt levels due to lower working capital levels.  This was somewhat offset by higher (performance-based) pricing provisions under our bank credit facility as recent operating losses triggered an increase in interest rates.

Loss from continuing operations before income taxes

The loss from continuing operations before income taxes was $0.1 million (-0.2% of net sales) for the three months ended September 25, 2010, compared to a net loss of $1.6 million (-3.2% of net sales) for the three months ended September 26, 2009.  For the nine months ended September 25, 2010, the loss from continuing operations before income taxes was $2.6 million (-1.5% of net sales) compared with $6.0 million (-4.1% of net sales) for the nine months ended September 26, 2009.

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Income taxes

The Company fully utilized its net operating loss carryback benefits during its 2009 tax year, for which refunds have been subsequently received. Accordingly, we recorded a deferred tax asset for the net operating losses generated during the three-and nine-month periods ended September 25, 2010. The ultimate realization of these deferred tax assets is dependent upon future taxable income. Because the Company has incurred tax losses in the prior two years, there is no certainty that the Company will utilize the full benefit of these deferred tax assets; therefore, it has recorded a valuation allowance for the net operating losses generated during the three quarters of 2010, thus no tax benefit has been recorded for the 2010 periods. The estimated effective income tax rate for the nine months ended September 26, 2009, was 44%. The estimated effective income tax rate for the three quarters of 2009 was favorably impacted by tax benefits associated with the Company’s wholly-owned captive insurance subsidiary, federal alternative fuel tax credits, and research and development tax credits. The combination of these tax benefits, in addition to the incurred pretax losses, resulted in an overall tax benefit position for the Company in 2009.

Discontinued Operations

As noted earlier, the Company closed its Silver Crown luxury motorhome business and has, accordingly, reflected prior-period results as discontinued operations. The unprecedented tight credit markets caused by the severe economic recession led to a significant reduction in new motorhome orders and the cancellation of orders.  For the three months ended September 25, 2010, the after tax operating loss from this discontinued operation was $52,000 compared with an after tax operating loss of $0.3 million for the three months ended September 26, 2009.  For the nine months ended September 25, 2010, the after tax operating loss from the Silver Crown discontinued operation was $0.2 million compared with an after tax operating loss of $0.7 million for the nine months ended September 26, 2009.

Basic and diluted loss per share

The following table presents basic and diluted loss per share and the changes from period to period:

	Three Months Ended								Nine Months Ended
	Sep 25, 2010			Sep 26, 2009			Change		Sep 25, 2010			Sep 26, 2009			Change
Basic and diluted net loss per share:
Loss from continuing operations	$	(0.01	)	$	(0.09	)	$	0.08	$	(0.18	)	$	(0.23	)	$	0.05
Loss from discontinued operations	—			(0.02		)	0.02		(0.01		)	(0.05		)	0.04
Net Loss	$	(0.01	)	$	(0.11	)	$	0.10	$	(0.19	)	$	(0.28	)	$	0.09

Liquidity and Capital Resources

Cash Flows

The Company’s primary sources of liquidity have been cash flows from operating activities and borrowings under a credit facility entered into by Supreme Indiana Operations, Inc., the Company’s wholly-owned subsidiary, and certain of its affiliates. Principal uses of cash have been to fund recent operating losses, support working capital needs, meet debt service requirements, and fund capital expenditure needs.

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Operating activities

Cash flows from operations represent the net loss sustained in the reported periods adjusted for non-cash charges and changes in operating assets and liabilities.  Operating activities provided $2.6 million of cash for the nine months ended September 25, 2010, as compared with cash provided of $10.7 million for the nine months ended September 26, 2009.  Our net loss, adjusted for depreciation and amortization, favorably impacted cash flows by $0.1 million for the nine months ended September 25, 2010. For the first nine months of 2010, cash provided by operating activities was favorably impacted by an increase in accounts payable of $1.9 million, a $1.7 million increase in accrued other liabilities, and a decrease in accounts receivables totaling $0.8 million.  The Company also received a federal income tax refund generated by our 2009 net operating loss carryback totaling $4.2 million.  This was offset by a $6.1 million increase in inventories due to higher production levels to support the increased backlog and the increased sales volume.  The Company continues to improve its inventory management resulting in higher inventory turns, which improved by over 13% compared to the third quarter of 2009.

Investing activities

Cash provided by investing activities was $40,000 for the nine months ended September 25, 2010, as compared with cash used of $175,000 for the nine months ended September 26, 2009. During the first nine months of 2010, the Company made short-term investments totaling $1.0 million through its wholly-owned captive insurance subsidiary and had capital expenditures totaling $1.0 million, which consisted primarily of replacement equipment. These amounts were reduced by the proceeds from the sale of assets of $0.6 million and proceeds from the sales of investments totaling $1.5 million.

Financing activities

Financing activities used $3.8 million of cash for the nine months ended September 25, 2010, principally due a reduction of debt under our revolving bank credit facility as compared with cash used of $11.4 million for the nine months ended September 26, 2009.  Because of the prevailing industry conditions and our focus on restoring profitability and reducing debt, the Company’s Board of Directors suspended paying cash dividends effective as of February 16, 2009. Future dividends will be subject to business conditions, the Company’s financial position, and requirements for working capital, property, plant, and equipment expenditures, and other corporate purposes.

Capital Resources

On October 18, 2010, Supreme Industries, Inc. entered into an Amended and Restated Credit Agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A. (the “Lender”) which agreement was effective on September 30, 2010.  Under the terms of the Credit Agreement, the Lender agreed to provide the Company with a revolving line of credit of up $30,000,000 (previously $25,000,000) through December 31, 2011.  The line of credit is limited to $25,000,000 until the Company meets certain post-closing conditions, outlined in the Credit Agreement, at which time the full revolving credit amount of $30,000,000 will become available.  In order to qualify for the full revolving credit amount, the Company must meet certain borrowing base requirements related to accounts receivable and inventories.  As additional collateral for the revolving credit facility, Supreme and certain of its affiliates have signed and delivered to the Lender Pledge and Security Agreements granting to the Lender security interests in their personal property.  During the term of this revolving credit, the Company is required to comply with two financial covenants, being a minimum required EBITDA (Earnings Before Interest Taxes Depreciation and Amortization) and a minimum tangible net worth.

As of September 25, 2010, the Company had unused credit capacity of approximately $5.5 million under its then existing $25,000,000 credit agreement.  Interest on outstanding borrowings under the revolving line of credit is based on the bank’s prime rate, or certain basis points above LIBOR, depending on the pricing option selected and the Company’s leverage ratio.  The Company’s cash management system and revolving line of credit are designed to maintain zero cash balances and, accordingly, checks outstanding in excess of bank balances are classified as additional borrowings under the revolving line of credit.

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Summary of Liquidity and Capital Resources

The Company’s primary capital requirements are to support working capital demands, meet its debt service obligations, and finance capital expenditure requirements. The Company has a substantial asset collateral base that it believes is more than sufficient to support its current outstanding revolving line of credit obligation. Further, additional liquidity is obtained through selling products and collecting the resulting trade accounts receivable. The funds collected are used to pay creditors and employees and to fund working capital needs.

The Company believes that it has adequate availability under its new bank credit facility and sufficient additional liquidity resources to finance its expected working capital needs.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of its financial position and results of operations are based upon the Company’s consolidated condensed financial statements which have been prepared in accordance with accounting principles generally accepted in the United States of America.  The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.  The Company’s significant accounting policies are discussed in Note 1 of the Notes to Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 26, 2009.  In management’s opinion, the Company’s critical accounting policies include revenue recognition, allowance for doubtful accounts, excess and obsolete inventories, inventory relief, accrued insurance, and accrued warranty.

Revenue Recognition — The Company generally recognizes revenue when products are shipped to the customer.  Revenue on certain customer requested bill and hold transactions is recognized after the customer is notified that the products have been completed according to customer specifications, have passed all of the Company’s quality control inspections, and are ready for delivery based on established delivery terms.

Allowance for Doubtful Accounts — The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments.  If the financial conditions of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required which would adversely affect our future operating results.

Excess and Obsolete Inventories — The Company must make estimates regarding the future use of raw materials, chassis, and finished products, and provide for obsolete or slow-moving inventories.  If actual product life cycles, product demand, and/or market conditions are less favorable than those projected by management, additional inventory write-downs may be required which would adversely affect future operating results.

Inventory Relief — For monthly and quarterly financial reporting, cost of sales is recorded and inventories are relieved by the use of standard bills of material adjusted for scrap and other estimated factors affecting inventory relief.  Because of our large and diverse product line and the customized nature of each order, it is difficult to place full reliance on the bills of material for accurate relief of inventories.  Although the Company continues to refine the process of creating accurate bills of materials, manual adjustments (which are based on estimates) are necessary to assure correct relief of inventories for products sold.  The calculations to estimate costs not captured in the bill of materials take into account the customized nature of products, historical inventory relief percentages, scrap variances, and other factors which could impact inventory relief.

The accuracy of the inventory relief is not fully known until physical inventories are conducted at each of the Company’s locations. We conduct semi-annual physical inventories at a majority of our locations and schedule them in a manner that provides coverage in each of our calendar quarters. We have invested significant resources in our continuing effort to improve the physical inventory process and accuracy of our inventory accounting system.

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Accrued Insurance - The Company has a self-insured retention against product liability claims with insurance coverage over and above the retention.  The Company is also self-insured for a portion of its employee medical benefits and workers’ compensation.  Product liability claims are routinely reviewed by the Company’s insurance carrier, and management routinely reviews other self-insurance risks for purposes of establishing ultimate loss estimates.  In addition, management must determine estimated liability for claims incurred but not reported.  Such estimates, and any subsequent changes in estimates, may result in adjustments to our operating results in the future.

The Company utilizes a wholly-owned small captive insurance company to insure certain of its business risks.  Certain risks, traditionally self-insured by the Company and its subsidiaries, are insured by the captive insurance subsidiary.  The captive insurance subsidiary helps the Company manage its risk exposures and, under the Internal Revenue Code, the net underwriting income of such small captive insurance subsidiary is not taxable.

Accrued Warranty— The Company provides limited warranties for periods of up to five years from the date of retail sale.  Estimated warranty costs are accrued at the time of sale and are based upon historical experience.

Forward-Looking Statements

This report contains forward-looking statements, other than historical facts, which reflect the view of management with respect to future events.  When used in this report, words such as “believe,” “expect,” “anticipate,” “estimate,” “intend,” and similar expressions, as they relate to the Company or its plans or operations, identify forward-looking statements.  Such forward-looking statements are based on assumptions made by, and information currently available to, management.  Although management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that the expectations reflected in such forward-looking statements are reasonable, and it can give no assurance that such expectations will prove to be correct.  Important factors that could cause actual results to differ materially from such expectations include, without limitation, an economic slowdown in the specialized vehicle industry, limitations on the availability of chassis on which the Company’s products are dependent, availability of raw materials, raw material cost increases, and severe interest rate increases.  Furthermore, the Company can provide no assurance that such raw material cost increases can be passed on to its customers through implementation of price increases for the Company’s products.  The forward-looking statements contained herein reflect the current view of management with respect to future events and are subject to those factors and other risks, uncertainties, and assumptions relating to the operations, results of operations, cash flows, and financial position of the Company.  The Company assumes no obligation to update the forward-looking statements or to update the reasons actual results could differ from those contemplated by such forward-looking statements.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

There has been no material change from the information provided in the Company’s Annual Report on Form 10-K, “Item 7A: Quantitative and Qualitative Disclosures About Market Risk,” for the year ended December 26, 2009.

ITEM 4.            CONTROLS AND PROCEDURES.

a.Evaluation of Disclosure Controls and Procedures.

In connection with the preparation of this Form 10-Q, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended).  Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective as of September 25, 2010.

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b.             Changes in Internal Control over Financial Reporting.

There has been no change in the Company’s internal control over financial reporting during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

The Company continues to take action to assure compliance with the internal controls, disclosure controls, and other requirements of the Sarbanes-Oxley Act of 2002.  Management, including the Company’s Chief Executive Officer and Chief Financial Officer, cannot guarantee that the internal controls and disclosure controls will prevent all possible errors or fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of a control system have been met. In addition, the design of a control system must reflect the fact that there are resource constraints, and the benefit of controls must be relative to their costs.  Because of the inherent limitations in all control systems, no system of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company will be detected.  These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Further, controls can be circumvented by individual acts of some persons, by collusion of two or more persons, or by management override of the controls.

The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.  Over time, a control may be inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate.  Because of inherent limitations in any cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II.OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS.

The Company is subject to various investigations, claims, and legal proceedings covering a wide range of matters that arise in the ordinary course of its business activities.  Each of these matters is subject to various uncertainties, and it is possible that some of these matters may be resolved unfavorably to the Company.  The Company has established accruals for matters that are probable and reasonably estimable.  Management believes that any liability that may ultimately result from the resolution of these matters in excess of accruals and amounts provided by insurance coverage will not have a material adverse effect on the consolidated financial position or results of operations of the Company.

On January 21, 2009, The Armored Group (“TAG”) filed a complaint against the Company in the Superior Court of the State of Arizona in and for the County of Maricopa alleging breach of oral contract and other claims.  TAG alleges that, under an oral agreement between it and the Company, the Company has an obligation to pay to TAG a 10% commission on all sales of armored vehicles to the United States Department of State under a contract with the United States Department of State providing for up to $100,000,000 in sales.  As of September 25, 2010, sales of armored vehicles to the United States Department of State under this contract were approximately $24,000,000.  Since the Company believed that this lawsuit is totally without merit (there was never any such oral agreement or factual basis for TAG’s other claims), the Company filed a Motion for Summary Judgment which was denied by the trial court on October 6, 2010.  No date for a jury trial has been set.  The Company has instructed its attorneys to vigorously contest TAG’s claim.  However, due to the inherent nature of litigation, the ultimate outcome of this case (whether by jury trial or otherwise) is uncertain and unpredictable.

ITEM 1A.RISK FACTORS.

For a discussion of those “Risk Factors” affecting the Company, you should carefully consider the “Risk Factors” discussed in Part I, under “Item 1A: Risk Factors” contained in our Annual Report on Form 10-K for the year ended December 26, 2009, which is herein incorporated by reference.  We have added an additional risk factor to reflect current litigation.

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We are currently subject to litigation, the unfavorable outcome of which might have a material adverse effect on our financial condition, results of operation and cash flows.

The Armored Group has filed a complaint against the Company alleging breach of an oral contract and other claims.  Since the Company believed that this lawsuit is totally without merit (there was never any such oral agreement or factual basis for TAG’s other claims), the Company filed a Motion for Summary Judgment which was denied by the trial court on October 6, 2010.  No date for a jury trial has been set.  We have instructed our attorneys to vigorously contest TAG’s claim.  However, due to the inherent nature of litigation, the ultimate outcome of this case (whether by jury trial or otherwise) is uncertain and unpredictable.  If the final resolution of this litigation is unfavorable to us, our financial condition, results of operation and cash flows might be materially adversely affected.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Not applicable.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

ITEM 4.            RESERVED.

ITEM 5.            OTHER INFORMATION.

On November 1, 2010, the Company’s wholly-owned subsidiary, Supreme Indiana Operations, Inc. (“SIO”), and Ford Motor Company (“Ford”) entered into the Ford Authorized Converter Pool Agreement (the “Bailment Agreement”), pursuant to which we obtain vehicle chassis for our specialized vehicle products.  The Bailment Agreement supersedes the agreement between Supreme Corporation and Ford, effective May 1, 2008, solely to reflect the merger of SIO with and into our wholly-owned subsidiary, Supreme Corporation, with SIO being the surviving entity.

We build specialized vehicles and install other equipment on such chassis and the completed vehicles (the “Vehicles”) are sold to authorized Ford dealers.  Under the Bailment Agreement, chassis are obtained by bailment and held by us for a period of 90 days without charge.  If any of the chassis have not been utilized in a purchased Vehicle after 90 days, storage charges will begin to accrue on such chassis beginning on the 91st day until such time that such chassis are re-billed to an authorized Ford dealer.  The storage charges will be based on the published interest rate for bank prime loans plus points, which number of points will increase on a sliding scale the longer such chassis is not utilized in a purchased vehicle.

For each chassis, bailment shall end upon the earlier of:  (1) the time that the chassis is sold by Ford to an authorized Ford dealer; and (2) upon authorized return of the chassis to Ford by us.

The foregoing description of the Bailment Agreement is incomplete and is qualified in its entirety by reference to the Bailment Agreement, a copy of which is included as Exhibit 10.1 to this Quarterly Report on Form 10-Q.

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ITEM 6.                EXHIBITS.

Exhibits:

Exhibit 3.1	Certificate of Incorporation of the Company, filed as Exhibit 3(a) to the Company’s Registration Statement on Form 8-A, filed with the Commission on September 18, 1989, and incorporated herein by reference.
Exhibit 3.2	Certificate of Amendment of Certificate of Incorporation of the Company filed with the Secretary of State of Delaware on June 10, 1993 filed as Exhibit 3.2 to the Company’s annual report on Form 10-K for the fiscal year ended December 31, 1993, and incorporated herein by reference.
Exhibit 3.3	Certificate of Amendment of Certificate of Incorporation of the Company filed with the Secretary of State of Delaware on May 29, 1996 filed as Exhibit 3.3 to the Company’s annual report on Form 10-K for the fiscal year ended December 31, 1996, and incorporated herein by reference.
Exhibit 3.4	Amended and Restated Bylaws of the Company dated May 7, 2008, filed as Exhibit 3.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on May 7, 2008, and incorporated herein by reference.
Exhibit 10.1*	Ford Authorized Converter Pool Agreement, dated November 1, 2010, between Supreme Indiana Operations, Inc. and Ford Motor Company.
Exhibit 31.1*	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.2*	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.1*	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.2*	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SUPREME INDUSTRIES, INC.
	By:	/s/ Herbert M. Gardner
DATE: November 5, 2010	Herbert M. Gardner
	Chairman of the Board and Chief Executive Officer
	By:	/s/ Jeffery D. Mowery
DATE: November 5, 2010	Jeffery D. Mowery
	Vice President of Finance and Chief Financial Officer

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INDEX TO EXHIBITS

Exhibit Number	Description of Document
Exhibit 3.1	Certificate of Incorporation of the Company, filed as Exhibit 3(a) to the Company’s Registration Statement on Form 8-A, filed with the Commission on September 18, 1989, and incorporated herein by reference.
Exhibit 3.2	Certificate of Amendment of Certificate of Incorporation of the Company filed with the Secretary of State of Delaware on June 10, 1993 filed as Exhibit 3.2 to the Company’s annual report on Form 10-K for the fiscal year ended December 31, 1993, and incorporated herein by reference.
Exhibit 3.3	Certificate of Amendment of Certificate of Incorporation of the Company filed with the Secretary of State of Delaware on May 29, 1996 filed as Exhibit 3.3 to the Company’s annual report on Form 10-K for the fiscal year ended December 31, 1996, and incorporated herein by reference.
Exhibit 3.4	Amended and Restated Bylaws of the Company dated May 7, 2008, filed as Exhibit 3.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on May 7, 2008, and incorporated herein by reference.
Exhibit 10.1*	Ford Authorized Converter Pool Agreement, dated November 1, 2010, between Supreme Indiana Operations, Inc. and Ford Motor Company.
Exhibit 31.1*	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.2*	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.1*	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.2*	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*Filed herewith.

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EX-10.1

Exhibit 10.1

Ford Motor Company

FORD AUTHORIZED

CONVERTER POOL AGREEMENT

THIS AGREEMENT is made this first day of Nov 1, 2010 (the “Effective Date”) between Supreme Indiana Operations, Inc with its principal place of business at 2581 E. Kercher Road, Goshen, Indiana 46528 (“Manufacturer”) and Ford Motor Company, a Delaware corporation with its principal place of business at The American Road, Dearborn, Michigan 48126 (“Ford”) (the “Agreement”).

WHEREAS, Ford is engaged in the business of manufacturing and marketing completed and incomplete motor vehicles, including Ford trucks and Ford truck chassis (“Vehicles”) and Ford sells such Vehicles to its authorized Ford Lincoln and Mercury dealers (“Authorized Ford Dealers”); and

WHEREAS, Manufacturer, as a final stage manufacturer, is engaged in the business of manufacturing and marketing modified completed vehicles and in the installation of special bodies and equipment on or in incomplete Vehicles, which installations include improvements, modifications, additions and changes (collectively, the “Modifications”) (all of which vehicles, as modified by Manufacturer, are referred to herein as “End Products”); and

WHEREAS, certain Authorized Ford Dealers desire to purchase the End Products and as such, purchase the Vehicles from Ford and the Modifications from the Manufacturer; and

WHEREAS, the price and terms and conditions of purchase of the Modifications from the Manufacturer are governed by agreement between the Manufacturer and the Authorized Ford Dealer, and Ford has no liability, obligation or responsibility with respect to the Modifications; and

WHEREAS, the parties to this Agreement (the “Parties”) desire to provide for Manufacturer to maintain Vehicles at Manufacturer’s location, at no charge to Manufacturer, for no more than 90 days, so as to facilitate the business operations of Ford, its Authorized Ford Dealers and Manufacturer, and so as to accommodate the production schedules of Ford and Manufacturer to the extent feasible, and Ford is willing to deliver such Vehicles on bailment to Manufacturer and Manufacturer is willing to accept delivery of these Vehicles from Ford, subject to the terms of this Agreement; and

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WHEREAS, if there is no purchaser for the End Product after 90 days from Commencement of Bailment (as defined herein), Manufacturer shall pay Storage Charges (as defined herein) to Ford as set forth herein; and

NOW, THEREFORE, in consideration of the foregoing and the mutual promises hereinafter contained, the Parties agree as follows:

1.     BAILMENT

Ford and Manufacturer agree that this Agreement shall constitute a bailment of the Vehicles ordered by Manufacturer from Ford (“Bailment”). Such Vehicles shall be held by Manufacturer as bailee of the Vehicles in accordance with the terms and conditions of this Agreement.

2.     FINAL STAGE MANUFACTURER

Manufacturer, as a final stage manufacturer, shall enter into a separate agreement with Authorized Ford Dealer for the price and terms and conditions of the purchase by Authorized Ford Dealer for the Modifications and Ford shall have no liability, obligation or responsibility for such Modifications or the terms and conditions thereof.

3.     FORD AUTHORIZED CONVERTER PROCEDURES MANUAL

Ford shall provide Manufacturer with a copy of its Ford Authorized Converter Procedures Manual (the “Manual”), setting forth the policies and procedures to be followed in the handling of Vehicles, including Vehicle orders, inventory accounting for Vehicles, repair of transportation damage and defective parts, special use chassis, and similar matters. Manufacturer shall abide by the policies and procedures as are set forth in the Manual. Ford reserves the right to change the Manual at any time.

4.     ORDERS

Manufacturer shall submit orders for Vehicles electronically or by other method specified by Ford in the Manual. Ford shall have no obligation to accept any such order or to deliver to Manufacturer on Bailment, any specific model or number of Vehicles, but may deliver to Manufacturer such number and type of Vehicles ordered by Manufacturer as Ford deems appropriate. Manufacturer shall provide to Ford, at Ford’s request, forecasts of Manufacturer’s requirements for Vehicles.

5.     RECEIPT AND INSPECTION PROCEDURES

Manufacturer shall examine Vehicles upon delivery and, upon satisfaction that the number of Vehicles received as shown on the documents is accurate, accept delivery and sign the invoices, delivery receipts, damage reports and other documents specified by Ford (“Acceptance of Delivery”). Ford shall deliver the Vehicles to Manufacturer at the locations listed in Exhibit A or at such other locations as may be approved by Ford, in writing from time to time. Ford shall not be responsible for any delay in delivering the Vehicles to Manufacturer.

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6.     COMMENCEMENT QF BAILMENT

The Bailment begins upon Manufacturer’s Acceptance of Delivery (“Commencement of the Bailment”). Such acceptance constitutes acknowledgement that the Vehicle was received in the condition, quantity and state described.

7.     STORAGE

(a) Upon Commencement of the Bailment, Manufacturer shall maintain Vehicles at Manufacturer’s location, at no charge to Manufacturer, for no more than 90 days. If there is no purchaser for the End Product after 90 days from Commencement of the Bailment, storage charges will begin to accrue on the Vehicle (“Storage Charge”). Beginning on the ninety-first (91st) day until such time that the Vehicle is re-billed to an Authorized Ford Dealer, Manufacturer shall pay daily Storage Charges to Ford as set forth below:

0 to 90 days:	No Charge
91-180 days:	Prime Rate plus 2 points
181-270 days:	Prime Rate plus 3 points
271-360 days:	Prime Rate plus 5 points
361 + days:	Prime Rate plus 8 points

Manufacturer’s Storage Charges shall appear in Ford Motor Credit Company’s Dealer Finance system on the first day of the month and shall be payable the same day (the 1st).  On a monthly basis, Ford will provide Manufacturer with information regarding the Storage Charges for each Vehicle.

i.Manufacturer shall pay a daily storage charge based on the Invoice Amount of each vehicle beginning on the Storage Charge Start Date for such Vehicle, in an amount equal to the Prime Rate plus (2 point, 3 points, 5 points or 8 points as set forth above) as the “Storage Charge”. The term “Invoice Amount” shall mean that amount reflected on the applicable Vehicle invoice that can be accessed by Ford and Manufacturer via the Lason Vision system online at www.fleet.ford.com. The term “Prime Rate” means the interest rate for “Bank prime loans” under the column entitled “Week Ending” for the Friday preceding the last Monday of a calendar month as reported in the Federal Reserve Statistical Release No. H.15 (519) issued by the Federal Reserve Board.  In the event such Release is discontinued or modified to eliminate the reporting of a 30-day bank prime loans rate, then Ford will substitute, in its sole discretion, a comparable report or release of the bank prime loans rate published by a comparable source.

ii.The Storage Charge will be calculated on the basis of 360-day year. For purposes of computing the Storage Charge on a Vehicle, the Storage Charge shall change on the first day of each month following the Storage Charge Start Date following any month in which there is a change in the Prime Rate. The Storage Charge in effect on the first day of a month shall be deemed to be in effect throughout such month.

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(b) Vehicles shall be stored only at the locations approved by Ford in Exhibit A hereto or at such other locations as may be approved by Ford, in writing, from time to time. Unless otherwise agreed, all Vehicles shall be kept at the approved location, within a fenced and locked storage area, and shall be placed in an area within the storage area separate from that used by Manufacturer to store any other property. Manufacturer shall not move any Vehicles from the approved location to one not approved by Ford without first obtaining the written authorization of Ford. Ford shall have the right to enter onto Manufacturer’s premises, at reasonable times and upon prior reasonable notice, to inspect the Vehicles and Manufacturer’s records with respect thereto.

(c) Manufacturer, at its sole cost and expense, shall ensure that Vehicles do not deteriorate from a “like new” condition in appearance or quality during the period of storage. Vehicles in inventory over 30 days are to be inspected and maintained by Manufacturer in accordance with the vehicle inspection procedure outlined in the Manual.

(d) Upon request by Ford, any or all of the Vehicles shall be immediately returned to Ford as set forth in paragraph 9 herein.

8.     LOSS

Ford shall not be responsible for any delay in delivering the Vehicles to Manufacturer. Manufacturer shall assume all risks of loss with respect to the Vehicles, including all loss or damage that occurs despite Manufacturer’s exercise of reasonable care from the time that Manufacturer accepted the Vehicle and until the Bailment ends. Manufacturer is liable for any and all loss or shortage resulting from its failure to examine any shipment and for any damage and other loss resulting from its failure to comply with any shipping, loading, packaging, storage or other instructions issued by Ford.

9.     END OF BAILMENT

For each Vehicle, the Bailment shall end in one of the following ways (1) at the time that the Vehicle is sold by Ford to an Authorized Ford Dealer according to the procedures set forth in the Manual; or (2) upon authorized return of the Vehicle(s) to Ford by Manufacturer. Upon the occurrence of any of the following events set forth in (a) — (e) herein, the Vehicle(s) must be returned to Ford by Manufacturer at Manufacturer’s expense, to the place and in the manner requested by Ford; otherwise, if Ford requests such return of the Vehicle(s), Ford shall bear the expense: (a) Manufacturer becomes the subject of a bankruptcy petition filed in a court in any jurisdiction, whether voluntary or involuntary; (b) a receiver or trustee is appointed for all or a substantial portion of Manufacturer’s assets; (c) Manufacturer makes an assignment for the benefit of its creditors; (d) Manufacturer fails to perform any material covenant or obligation in this agreement; or (e) any representation or warranty in this agreement by Manufacturer ceases to be true and correct in all material respects.

10.  TITLE

Title to the Vehicles, is, and will at all times remain, the sole and exclusive property

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of Ford until sold by Ford to an Authorized Ford Dealer. Manufacturer has no property rights or interest in any of the Vehicles and cannot grant any rights or interest to a third party. Manufacturer has no right to transfer any Vehicle or to use it except as directed by Ford in this Agreement. Manufacturer has no right to retain possession of any Vehicle after receipt of a written demand, at any time, by Ford for return of the Vehicle. Neither this Agreement nor the Manufacturer’s obligations may be assigned either by Manufacturer’s own act or by operation of law.

11.  UCC FILINGS

Manufacturer authorizes Ford, at its option, to file UCC financing statement(s) evidencing this Bailment and Ford’s ownership of the Vehicles. Manufacturer represents that it is organized under the laws of the state of Delaware.

12.  NOTICE TO MANUFACTURER’S CREDITORS

Within 10 business days after the Effective Date of this Agreement, Manufacturer will (i) send each of its secured creditors and lienholders written notification that it is holding the Vehicles for Ford at Manufacturer’s facility, and (ii) provide to Ford a list of the creditors and lienholders notified, together with a copy of the written notification sent to secured creditors and lienholders. Manufacturer will certify to Ford that it has notified all known secured creditors and lienholders.

13.  USE OF VEHICLES

Subject to section 14 herein, Manufacturer shall not use the Vehicles in any manner other than to make modifications to the Vehicles after such the Vehicle is sold by Ford to an Authorized Ford Dealer. Manufacturer agrees that in no case shall it make any addition or modification to any Vehicle until it has been purchased by an Authorized Ford Dealer.

14.  SALE OF VEHICLE TO AUTHORIZED FORD DEALER; MODIFICATIONS

(a) Manufacturer shall notify Ford electronically or by other methods specified by Ford in the Manual when an Authorized Ford Dealer desires to purchase a Vehicle. Following such notification, Ford may sell such Vehicle to one of its Authorized Ford Dealers at such price and on such terms as Ford shall determine in its sole and exclusive discretion.

(b) Subject to section 14(e) below, Manufacturer agrees that in no case, prior to the Vehicle being purchased by an Authorized Ford Dealer from Ford, shall Manufacturer (i) make any Modification to any Vehicle; (ii) install any body or equipment thereon; or (iii) remove any Vehicle from the location approved by Ford.

(c) Manufacturer may transfer Vehicle(s) to other Manufacturers approved by Ford if Ford has given consent.

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(d) The price and terms and conditions of the Modifications provided by Manufacturer to an Authorized Ford Dealer, and any improvements, modifications or changes thereto, shall be governed by a separate agreement between the Manufacturer and the Authorized Ford Dealer and Ford shall have no liability, obligation, or responsibility with respect thereto to any person, including without limitation, Manufacturer, Authorized Ford Dealer or other third Party.

(e) Ford may, from time to time, allow Manufacturer to make a Modification and/or install a body or equipment on certain Demonstrators or other such Vehicles authorized by Ford prior to such Vehicle being purchased by an Authorized Ford Dealer from Ford, provided that (i) Manufacturer obtains the prior written consent of Ford in each case; (ii) such Modifications and installations do not decrease the value of the Vehicle; (iii) such Vehicles are not driven unless authorized by Ford; and (iv) Manufacturer is entirely responsible for such Modification and installation made to the modified Vehicles. A Demonstrator Vehicle is a vehicle (i) authorized by Ford to be modified or upfit prior to being purchased by a Ford Dealer, and (ii) used for demonstration purposes only. Demonstrator vehicles must be enrolled in and meet the requirements of the Show Them The Value (“STTV”) Demonstrator Program for eligible Ford Authorized Converter Pool Accounts. STTV Demonstration Program details are available at www.sttvdemoprogram.com. The STTV Demonstrator Program is limited to eligible Pool Accounts and may be terminated by Ford at any time for any reason.

15.  DEMONSTRATOR VEHICLES

In addition to the terms and conditions for all bailed Vehicles set forth in this Agreement, Manufacturer shall strictly adhere to the terms and conditions set forth in this section 15 when using Demonstrator (Demo) Vehicles:

(a) Authorized Manufacturers shall utilize Demonstrator Vehicles only according to the terms and conditions set forth in the annual Show Them The Value Demonstrator Program announcement and website at www.sttvdemoprogram.com or according to other terms and conditions set forth by Ford from time to time. Use of Demo Vehicles according to Ford’s terms and conditions shall be considered the Allowable Use. Ford and Manufacturer agree that Demo Vehicles are on bailment from Ford to the Manufacturer. Ford lends the Demos to Manufacturer to be held and used by Manufacturer, only as a bailee of the Vehicle, in accordance with this Agreement and the terms and conditions of the respective STTV program. Demos shall not be removed from Manufacturer’s control without Ford’s prior written approval, other than for the Allowable Use purposes. Demos shall remain the property of Ford and Manufacturer shall bear the risk of loss or damage that occurs to Demos except for loss or damage arising from the sole negligence of Ford. The Demos shall at all times be properly used and maintained by Manufacturer. Ford shall have the right to enter onto Manufacturer’s premises at reasonable times to inspect or remove Demos. Manufacturer shall ensure that Demos are operated at all times in a safe, careful and lawful manner by legally qualified drivers who are employees of Manufacturer and stand in relations to the Manufacturer as employee to employer or are otherwise authorized by Manufacturer.

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(b) With respect to taxes, fees, registration and other legally required permits and obligations for Demos Manufacturer shall:

i.obtain all necessary authorizations, permits, waivers or exemptions that may be required from a government agency to operate the Demos on public highways and assume responsibility for ensuring that if necessary, the Demo has been properly registered and titled, including any required inspections or testing, in accordance with the laws of the jurisdiction where the Demo will be primarily used.

ii.pay all occupational taxes and governmental charges imposed (and all increases therein), including any permits, special permits, licenses or taxes required by the business of Manufacturer

iii.pay any tolls or similar usage fees resulting from operation.

iv.be responsible for any fines levied as a result of moving, parking, toll, or similar vehicle violations.

v.pay any taxes or fees currently in force (and all increases therein) or which hereafter may be enacted and become due and payable with respect to the Manufacturer’s possession and use of the Demo.

vi.pay emissions tests.

(c) With respect to maintenance, repairs, and use of Demos, Manufacturer shall:

i.make all major repairs necessary to maintain the Vehicle in good working order and condition. Title to all such repairs shall vest in Ford.

ii.repair or cause to be repaired said vehicle(s) while in use by Manufacturer. All repairs and servicing shall be done by qualified service personnel at authorized Ford, Lincoln, or Mercury dealerships.

inspect the Vehicle upon delivery and by acceptance thereof is deemed to find the Vehicle in good working order and condition.

iv.maintain the Vehicle in good working order and condition, properly serviced and greased, and comply in every respect with the provisions of this agreement, and of the manufac-turer’s owner manual.

v.reimburse Ford for any repairs caused by abuse, misuse, negligence or intentional wrongful acts of manufacturer.

vi.provide or cause to be provided at its own expense, any repairs or service not completed at authorized Ford, Lincoln, or Mercury dealerships.

vii.pay for all gasoline and for all washing, parking, garage, highway road service, tolls and fines required or incurred in connection with the operation of the Vehicle.

viii.not use or operate or allow the Vehicle to be operated in violation of any federal, state, local or provincial law, rule regulation or ordinance including those pertaining to the age and licensing of drivers, the disclosure of Ford’s interest in the Vehicle, or other requirements or limitations.

ix.under no circumstances, disconnect any odometer or other mileage recording device nor use or operated the Vehicle in a manner subjecting it to depreciation above the normal depreciation associated with general commercial use.

x.not use or operate the Vehicle for any illegal purpose or by a person under the influence of alcohol or narcotics.

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xi.not use or operate the vehicle in any manner or for any purpose that would cause any insurance specified in this Agreement to be suspended, cancelled, held inapplicable or increased in cost.

xii.not use or operate the demo outside of the continental United States, without Ford’s express written consent.

xiii.use, operate, and test the Vehicle only in accordance with the terms and provisions of any such authorization, permit, waiver or exemption, and expressly agrees, in addition to the indemnify obligations of Manufacturer set forth in Section 19 of this Agreement, to indemnify and hold harmless Ford from and against any and all damages, suits, actions, claims, costs or expenses arising from, or connected with, any violation or noncompliance with any of the terms and provisions of any such authorization, permit, waiver or exemption by, or resulting from the action or inaction of, Manufacturer or any of its agents or employees.

16.PREDELIVERY

Manufacturer agrees to perform Pre-delivery Inspection on the Vehicle portion of each End Product prior to delivery to the Authorized Ford Dealer in strict accordance with the Body and Conversion Companies Pre-delivery Inspection Application.

17.COMPLIANCE WITH LAWS AND REGULATIONS

In the interest of protecting the reputation of the products of Manufacturer and Ford, and maintaining customer goodwill, Manufacturer agrees to:

(a) employ components and workmanship of high commercial quality in the manufacture of End Products and to assure that End Products conform in all respects to applicable Federal and State laws, rules and regulations; and,

(b) provide assistance to Ford in communicating promptly, when necessary, with the first retail purchasers of End Products. To that end, Manufacturer agrees to secure and maintain records of the names and addresses of the first retail purchasers of End Products.

18.LABELING

Manufacturer shall affix to all Vehicles such labels as Ford supplies (if not already affixed) and maintain the labels in place.

19.INDEMNIFICATION

Ford and Manufacturer recognize that the burden of defending against product liability allegations, whether or not meritless or frivolous, should be borne by the party whose alleged negligence, wrongdoing or defective product is at issue, regardless of whether it is a party to the particular litigation. The parties also recognize that, under existing law, there are circumstances where a claimant may sue only one party even though the defect, wrongdoing or negligence alleged is the principal responsibility of the other party. The parties also recognize that this results in the

8

named defendant bearing more than its fair share of the cost of the litigation. In order to avoid possible controversy between the parties as to which shall defend such litigation, or bear the cost of defending such litigation, including the cost of settlements or verdicts, the parties agree as follows:

(a) Indemnification by Ford. With respect to any Vehicle supplied by Ford to Manufacturer, Ford shall indemnify, hold harmless and protect Manufacturer from any loss, damage or expense, including, without limitation, settlements, judgments, expert fees and reasonable attorney’s fees, resulting from or related to lawsuits, complaints or claims against Manufacturer for property damage or personal injury where Manufacturer’s liability, if any, arises solely because of a defect in manufacture, assembly, materials or design for which Ford alone is responsible.

(b) Manufacturer, and/or its product liability insurance carrier, shall cooperate fully in the defense of the action as Ford, and/or its Product liability insurance carrier, may reasonably require. Ford shall have the right to assume Manufacturer’s defense at any time, provided that Ford acknowledges Manufacturer’s right to indemnity under this provision.

(c) Indemnification by Manufacturer. With respect to any Vehicle supplied by Ford to Manufacturer, Manufacturer or its contractors, subcontractors, vendors, agents and/or employees, shall indemnify, hold harmless and protect Ford from any loss, damage or expense, including, without limitation, settlements, judgments, expert fees, and attorney’s fees, resulting from or related to lawsuits, complaints or claims against Ford for property damage or personal injury, where Ford’s liability, if any, arises solely from modifications or additions made by Manufacturer or from processing of Vehicles by Manufacturer. Liability on the part of Ford which arises, if at all, because Ford knew or should have known that the processing, modification or additions made by Manufacturer were negligent, improper or defective, or that Ford expressly or impliedly approved the modifications or additions made by Manufacturer, shall be deemed to be liability which arises “solely from processing, modifications or additions made by Manufacturer” within the meaning of this paragraph. However, Manufacturer shall not be obligated to indemnify Ford if the modifications or additions were made or the processing was conducted pursuant to express written instructions provided by Ford.

(d) Manufacturer’s Duty to Defend. Ford shall notify Manufacturer of any lawsuit, complaint or claim that Ford has reason to believe may be covered by this indemnity provision. If Ford’s alleged liability arises solely from modifications or additions made by Manufacturer or processing conducted by Manufacturer not pursuant to express written instructions from Ford, and if Manufacturer’s investigation discloses no basis for Ford’s liability other than the allegations in the lawsuit, complaint, or claim, Manufacturer shall assume Ford’s defense upon Ford’s request. Ford and/or its product liability carrier shall cooperate fully in the defense of the action as Manufacturer, or its product liability carrier, may reasonably require. Manufacturer shall have the right to assume Ford’s defense at any time, provided that Manufacturer acknowledges Ford’s right to indemnity under this provision.

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(e) Cross-Claims or Third Party Complaints. Neither party shall file cross-claims or third-party complaints against the other without notifying the other in advance. Where practicable, the notice should be given sufficiently in advance to allow thorough discussion of alternatives to such filing.

(f) Contributions to Settlement. In the appropriate case, the parties shall, where settlement is or may be warranted, make a reasonable effort to agree upon the amount each party shall contribute to settlement, based upon the nature of the plaintiffs allegations. For example, if the case involves an allegation that a Manufacturer’s component is defective, a reasonable allocation would require the Manufacturer to contribute all or most of any settlement amount. If, however, the allegation concerns a component supplied by Ford, a reasonable allocation would require Ford to contribute all or most of any settlement amount. It is recognized that there shall be cases of multiple allegations with respect to each party and that allocation of responsibility shall be dependent on the circumstances of the case.

(g) Contributions to Adverse Judgment. If the case, for any reason, does not settle, the parties shall, in advance of trial, make a reasonable attempt to agree upon the extent to which each company shall contribute to satisfy any adverse judgment or verdict that may be returned, based upon the principles set forth in the preceding paragraph. Based on these principles, the parties shall likewise attempt to agree upon the extent to which each shall contribute to the cost of defending the litigation, including attorney’s fees.

(h) Unilateral Settlement; Notifying Other Party. In cases where both parties are named defendants, neither party shall unilaterally enter into a settlement agreement without giving reasonable notice to, and consulting in advance with, the other party.

20.INSURANCE

At its sole cost and expense, Manufacturer shall procure and maintain insurance continuously throughout the term of this Agreement from such companies as are acceptable to Ford and listed in the current “Best’s Insurance Guide” as possessing a minimum policy holders rating of “A-” (Excellent) and a financial category no lower than “VI” ($25,000,000 to $50,000,000 of adjusted policyholders surplus). The following insurance shall cover Manufacturer activities under this Agreement whether such activities are by itself or by any Subcontractor or by anyone directly or indirectly employed by any of them, or by anyone for whose acts any of them may be liable:

(a) Liability Insurance

·Workers’ Compensation insurance for statutory limits or a State certificate of self insurance, and employer’s liability insurance for not less than one million ($1,000,000) per occurrence.

·Occurrence type commercial general liability insurance, including products and completed operations, but not limited to blanket contractual coverage, for bodily injury

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including death, personal injury, and property damage with limits of not less than ten million ($10,000,000) combined single limit per occurrence.

·Comprehensive Automobile liability insurance covering all owned, non-owned and hired vehicles, with limits of not less than five million ($5,000,000) combined single limit per occurrence.

(b) With the exception of Workers’ Compensation, each insurance policy listed above, and any excess or umbrella policy carried by Manufacturer with additional limits than those specified above, must name Ford Motor Company (or the appropriate Company subsidiary or affiliate) as an additional insured under the policy(s). All insurance policies of the Manufacturer shall be endorsed to state that the policy will be primary, and will not be excess to or contributory with, any self-insurance or insurance policies carried by Ford. The insurance policy shall provide that the policy may not be cancelled or materially altered without 30 days prior written notice to Ford. Manufacturer shall furnish to Ford an acceptable certificate of insurance evidencing the coverage required herein. The furnishing of acceptable evidence of required coverage should not relieve Manufacturer from any liability or obligation for which it is otherwise responsible to Ford.

(c) Manufacturer shall require that its subcontractors procure and/or maintain insurance coverage at the limits described above. Manufacturer shall indemnify and be fully responsible for any cost to Ford resulting from said subcontractor’s failure to procure and/or maintain said insurance.

21.TAXES

Unless otherwise agreed by the parties, Ford shall report, bear, and pay all applicable personal property taxes on Vehicles and Manufacturer shall report, bear, and pay all applicable personal property taxes on Modifications. In the event a tax jurisdiction issues a forced assessment against one party for the full value of End Products, each party agrees to indemnify the other for the assessment amount attributable to their respective property.

22.WARRANTIES

(a) No warranty obligation of Ford for any Vehicle shall be more extensive than Ford’s warranty obligation for such Vehicle under Ford’s warranty to retail purchasers and shall be expressly IN LIEU OF ANY AND ALL OTHER EXPRESS OR IMPLIED WARRANTIES, GUARANTEES, CONDITIONS OR REPRESENTATIONS, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH THE REMEDY SET FORTH THEREIN AS THE SOLE AND EXCLUSIVE REMEDY THEREUNDER.

(b) With each Vehicle delivered by Manufacturer to Authorized Ford Dealers, or retail customers on an Authorized Ford Dealers’ behalf, Manufacturer shall deliver copies of any applicable Ford warranty and an Owner’s Guide, owner registration card and such other consumer and operating material as Ford generally provides with that model of Vehicle.

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(c) The warranty obligations of Ford (and any governmental certification made by Ford) shall cover only the Vehicles as manufactured by Ford and provided to Manufacturer, and shall not extend to any addition, modification or change of or to the Vehicle by Manufacturer as a Final Stage Manufacturer. Ford’s warranty does not cover any failures of a Ford component usually covered by the Ford warranty if such failure is caused by any addition, modification, or change to the Vehicle once the Vehicle has left Ford’s possession. In such event, the cost of repair and any related charges shall be paid for by Manufacturer and shall in no event be covered by Ford’s warranty.

23.TERMINATION

(a) This Agreement may be terminated by either party, at any time, for any reason, with or without cause, by written notice to the other party.

(b) Either party may terminate this Agreement for cause, upon the occurrence of any of the following events: (i) the other Party becomes the subject of a bankruptcy petition filed in a court in any jurisdiction, whether voluntary or involuntary; (ii) a receiver or trustee is appointed for all or a substantial portion of the other Party’s assets; (iii) the other Party makes an assignment for the benefit of its creditors; (iv) the other Party fails to perform any material covenant or obligation in the Agreement; or (v) any representation or warranty in the Agreement made by the other party ceases to be true and correct in all material respects.

(c) Written Notice of termination shall be delivered personally or by certified mail, return receipt requested to the person and at the address provided herein for Notice. Termination shall be effective at the end of the thirtieth (30) calendar day after the day of receipt of such written Notice or at such later time as may be agreed to in writing by the Parties.

(d) Upon termination of the Agreement by either party, Manufacturer shall fully cooperate with Ford in returning to Ford all Vehicles in its possession. Upon termination of this Agreement by Ford for the reasons set forth in subsection (b) of this paragraph, all Vehicles in the possession of Manufacturer must be returned to Ford by Manufacturer at Manufacturer’s expense, to the place and in the manner requested by Ford, and Ford shall have the right to cancel any and all shipments scheduled for Manufacturer after Ford gives such Notice.

(e) Ford shall have no other obligations to Manufacturer upon termination of this Agreement except those set forth in this Section 23.

24.FINANCIAL INFORMATION

On a quarterly basis, or as otherwise requested by Ford, Manufacturer will provide the most current Financial Reports: (a) for the Manufacturer; and, (b) for any Related Company of Manufacturer involved in the converter business or in financing the Manufacturer.  Financial Reports include income statements, balance sheets, cash flow statements and supporting data. Ford may use Financial Reports provided only to assess Manufacturer’s ongoing ability to perform its obligations under this Agreement and for no other purpose, unless Manufacturer

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agrees otherwise in writing. Ford agrees that it shall protect the disclosed Financial Reports by using the same degree of care, but no less than a reasonable degree of care, to prevent the dissemination to third parties or publication of the Financial Reports as Ford uses to protect its own confidential information of a like nature. Ford is permitted to disseminate the Financial Reports to its employees and those employees of any of its subsidiaries, its parent company and any of its parent company’s subsidiaries, provided such employees are made fully aware of the obligation of confidentiality contained within this Agreement. Manufacturer certifies that any information contained in the Financial Reports shall be true, correct and complete and that the financial information therein fairly presents the financial condition of Manufacturer in accordance with generally accepted accounting principles. Manufacturer acknowledges and intends that Ford shall rely, and shall have the right to rely, on such information. For the purpose of this Agreement, a Related Company is any parent company of Manufacturer and any subsidiary or affiliate in which any of them owns or controls at least 25% of the voting stock, partnership interest or other ownership interest. If requested by Ford, Manufacturer will provide to Ford Letters of Credit and/or Personal Guarantees and/or Corporate Guarantees. Such letters of Credit, Personal Guarantees, Corporate Guarantees and Financial Statements will be collected from Manufacturer by Ford Motor Credit Company on behalf of Ford.

25.GENERAL TERMS

(a) This agreement shall bind Ford when signed by a duly authorized representative of Manufacturer and when it bears the signature of Ford’s Commercial Truck Director. No waiver or modification of any term of this Agreement, or creation of additional terms, shall be valid or binding upon Ford unless made in writing as set forth above. The failure by either party to enforce any term of this Agreement at any future time shall not be considered a waiver of any right or remedy available hereunder or by law.

(b) This Agreement does not constitute either party the agent or legal representative of the other party for any purpose whatsoever.

(c) This Agreement shall be effective as of the Effective Date set forth herein and shall terminate and supersede any other agreements concerning Vehicles between the parties and constitutes the entire and complete agreement between the parties with respect to the subject matter hereof and there are no other agreements between them, either oral or written, respecting the subject matter hereof.

(d) This Agreement and all transactions hereunder, including shall be governed by and construed in accordance with the laws of the State of Michigan as if entirely performed therein.

(e) All notices and other communications hereunder shall be in writing and shall be deemed given when delivered personally or when telecopied (with confirmation of the transmission received by the sender), one business day after being delivered to a nationally recognized overnight courier with next day delivery specified or three business days after mailing by certified or registered U.S. Mail, return receipt requested, with first class postage prepaid, unless otherwise set forth in this Agreement, to the Parties at the following addresses (or at such other address for a Party as shall be specified by like notice) (“Notice”):

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(i)if to Ford, to:

Ford Motor Company

One American Road

Dearborn, Michigan 48126

Attention: Secretary’s Office

Facsimile No.: (313) 248-7613

with a copy to:

Ford Motor Company

Director Commercial Truck

6N233

16800 Executive Plaza Drive

Dearborn, Michigan 48126

(ii) if to Manufacturer, to:

Supreme Indiana Operations

2581 E. Kercher Road

Goshen, IN 46528

(f) Manufacturer may not assign this Agreement or delegate performance of its obligations hereunder without the prior written consent of Ford.

(g) Notwithstanding anything in this Agreement to the contrary, Ford shall have the right to amend, modify or change this Agreement in case of legislation, government regulation or changes in circumstances beyond the control of Ford that might affect materially the relationship between Ford and Manufacturer. Further, Ford may, by notice to Manufacturer, amend this Agreement as to matters that in Ford’s reasonable judgment, do not adversely affect Manufacturer.

IN WITNESS WHEREOF, the parties have caused their duly authorized representatives to execute this Agreement on the execution date set forth below. The Effective Date of this Agreement shall be as defined herein above.

The parties have reviewed this document with legal counsel of their choice.

Manufacturer:			Ford:
By:	/s/ Jeffery D. Mowery		By:	/s/
Title: Vice President-Finance			Title: Director Commercial Truck
Execution Date:		November 1, 2010	Execution Date:		November 1, 2010

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Exhibit A

Ford Converter Pool Authorized Delivery Locations

22135 Alessandro Blvd.
Moreno Valley, CA 92553

2450 Progress Way
Woodburn, OR 97071

2581 East Kercher Road
Goshen, IN 46526

531 Hwy. 41 Bypass
Griffin, GA 30224

500 West Commerce Street
Cleburne, TX 76031

3050 Dee Street
Apopka, FL 32703

411 Jonestown Road
Jonestown, PA 17038

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EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Herbert M. Gardner, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Supreme Industries, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)        All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b)        Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 5, 2010	/s/ Herbert M. Gardner
	Herbert M. Gardner
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Jeffery D. Mowery, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Supreme Industries, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)        All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b)        Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 5, 2010	/s/ Jeffery D. Mowery
	Jeffery D. Mowery
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of Supreme Industries, Inc. (the “Company”) does hereby certify, to such officer’s knowledge, that:

The Quarterly Report on Form 10-Q for the quarter ended September 25, 2010 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in the Form 10-Q.

DATE: November 5, 2010	/s/ Herbert M. Gardner
	Herbert M. Gardner
	Chief Executive Officer

The foregoing certification is being furnished as an exhibit to the Form 10-Q pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and, accordingly, is not being filed as part of the Form 10-Q for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of Supreme Industries, Inc. (the “Company”) does hereby certify, to such officer’s knowledge, that:

The Quarterly Report on Form 10-Q for the quarter ended September 25, 2010 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in the Form 10-Q.

DATE: November 5, 2010	/s/ Jeffery D. Mowery
	Jeffery D. Mowery
	Chief Financial Officer

The foregoing certification is being furnished as an exhibit to the Form 10-Q pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and, accordingly, is not being filed as part of the Form 10-Q for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.