BASIS OF PRESENTATION AND OPINION OF MANAGEMENT

9 Months Ended

Sep. 29, 2012

BASIS OF PRESENTATION AND OPINION OF MANAGEMENT

BASIS OF PRESENTATION AND OPINION OF MANAGEMENT

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.  The December 31, 2011 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 months ended September 29, 2012 and October 1, 2011 are for 13-week periods, respectively. The results of operations for the nine months ended September 29, 2012 and October 1, 2011 are for 39- and 40-week periods, respectively.

Revised Financial Statements

As disclosed in the Company’s quarterly report on Form 10-Q for the period ended June 30, 2012, as a result of its recent implementation of a perpetual inventory system, the Company determined that certain of its previously filed financial statements contained errors related to revenue recognition whereby beginning in the third quarter of 2009 and continuing through the first quarter of 2012 revenue at the Texas armored division plant was inappropriately recognized prior to the product being delivered to a customer due to an irregularity.  The Company concluded that the errors were isolated to this one location and were not material.  In order to assess materiality with respect to the errors, the Company considered Staff Accounting Bulletin (“SAB”) 99, Materiality and SAB 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, and determined that the impact of the errors on prior period consolidated financial statements was immaterial.  Accordingly, the Company’s consolidated balance sheet as of December 31, 2011, and the consolidated statements of operations for the three and nine months ended October 1, 2011, were revised and reflect the correction of these immaterial errors. Correction of the errors in the Company’s consolidated balance sheet as of December 31, 2011 resulted in an increase in inventories of approximately $2.1 million, a decrease in accounts receivable of approximately $2.1 million, an increase in customer deposits of approximately $0.4 million, and a decrease to retained earnings of approximately $0.4 million. The following table summarizes the impact on the Company’s consolidated statements of operations:

	Three Months Ended				Nine Months Ended
	October 1, 2011				October 1, 2011
($000’s omitted)	As Reported		As Revised		As Reported			As Revised
Net sales	$	72,811	$	72,800	$	235,275		$	234,903
Net income (loss)	$	1,522	$	1,493	$	(1,038	)	$	(1,095	)