UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2005

OR

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from .................. to ..................

Commission file number 0-3922

PATRICK INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

107 West Franklin Street, Elkhart, IN   46516

(Address of principal executive offices)

(ZIP Code)

(574) 294-7511

(Registrant's telephone number, including area code)

NONE

(Former name, former address and former fiscal year, if changed since last report)

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.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes No X  

Shares of Common Stock Outstanding as of July 29, 2005: 4,772,198

1

PATRICK INDUSTRIES, INC.

INDEX

Page No.

PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Unaudited Condensed Balance Sheets

Unaudited Condensed Statements of Operations

Unaudited Condensed Statements of Cash Flows

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

2

PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PATRICK INDUSTRIES, INC.

UNAUDITED CONDENSED BALANCE SHEETS

CURRENT ASSETS

CURRENT LIABILITIES

SHAREHOLDERS' EQUITY

See accompanying Notes to Unaudited Condensed Financial Statements.

3

PATRICK INDUSTRIES, INC.

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS

Operating expenses:

Basic and diluted earnings

WEIGHTED AVERAGE COMMON

See accompanying Notes to Unaudited Condensed Financial Statements.

4

PATRICK INDUSTRIES, INC.

UNAUDITED CONDENSED STATEMENTS OF

CASH FLOWS

CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments to reconcile net income to net cash

provided by operating activities:

Change in assets and liabilities:

CASH FLOWS FROM INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES

Cash Payments for:

See accompanying notes to Unaudited Condensed Financial Statements.

5

PATRICK INDUSTRIES, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Inventories are stated at the lower of cost, First-In First-Out (FIFO) method, or market.

Net income (loss):

Deduct total stock-based employee

compensation expense determined

under fair value based method for

Basic and diluted earnings per share:

6

Other Comprehensive Income

The difference between net income and total comprehensive income for the three and six month periods ended June 30, 2005 is as follows:

Primary Manufactured Products - Utilizes various materials including gypsum, particleboard, plywood, and fiberboard which are bonded by adhesives or a heating process to a number of products including vinyl, paper, foil, and high pressure laminate. These products are utilized to produce furniture, shelving, wall, counter, and cabinet products with a wide variety of finishes and textures.

Distribution - Distributes pre-finished wall and ceiling panels, particleboard, hardboard and vinyl siding, roofing products, high pressure laminates, passage doors, building hardware, insulation, and other products.

Other Component Manufactured Products - Includes an aluminum extrusion and fabricating division, an adhesive division, a cabinet door division, and a machine manufacturing division.

7

Reconciliation of segment Operating income to consolidated Operating income:

8

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

GENERAL

The first quarter of 2005 started out on a positive note with increased unit shipments in both the Manufactured Housing and Recreational Vehicle Industries, which represent approximately 71% of the Company’s revenue base. Second quarter 2005 shipment levels in these two industries declined from the first quarter trend, however, they were still ahead of the 2004 levels on a year to date basis. The Industrial and other market sectors, which represent 29% of the Company’s revenue base, remained strong for both the quarter and year to date periods. The Company’s net sales increased approximately 21% in the first quarter from the same period in 2004. Second quarter net sales were comparable with 2004, resulting in year to date sales that were approximately 9.7% ahead of 2004. Second quarter net income decreased approximately $0.3 million from the same period in 2004 and year to date net income was approximately $0.1 million ahead of the June 30, 2004 results. Overall, the Company is operating at approximate break-even sales levels.

The Company increased its market penetration into the Manufactured Housing industry, which represents approximately 42% of 2005 year to date net sales. Sales to this industry for the six month period ended June 30, 2005 were up more than 17% from the previous year, while shipment levels in this industry were up only slightly more than 3% for the same period. The combination of raw material price increases which were passed on to customers and additional market penetration contributed to the Company’s positive results related to this particular market sector. Shipment levels in the Manufactured Housing industry are expected to be between 3% and 5% better than the 2004 figures. The primary product that the Company supplies to this industry continues to migrate from a custom manufactured product to a more general distributed product and as a result is accompanied by lower margins. The Company is continually conducting market research and introducing new products to this industry to supplement its existing manufacturing and distribution capabilities.

Recreational Vehicle market share remained relatively constant from period to period as the Company’s sales to this industry, which represent approximately 29% of 2005 year to date net sales, decreased approximately 1%. Shipment levels in this industry were approximately 1% ahead of the 2004 year to date figures, however, several of the Company’s customers reduced production levels as a result of excess finished goods inventory on hand, thus contributing to the Company’s market sales decline. Additionally, the Company’s raw material inventory levels were susceptible to this production lag and at June 30, 2005, inventories were larger than normal. Shipments in this industry are projected to decrease slightly from the 2004 level which were the second highest in the last 25 years.

Industrial and other market penetration continued as the Company’s sales increased more than 10% for the six months ended June 30, 2005. This penetration is the result of the Company’s dedicated marketing and sales efforts to improve visibility of the Company’s products and capabilities, and establish Patrick Industries as a quality oriented and valued supplier to these particular sectors. While market share is difficult to measure on a micro and macro level within these particular sectors due to the large number of manufacturers and the lack of public reporting, the Company continues to increase its customer base and sales levels in these markets, which represent approximately 29% of net sales, at June 30, 2005.

The Company recorded additional income related to corporate incentive agreements in the second quarter of 2005 of approximately $0.4 million due to an increase in the estimated annual sales volume of products sold in the industries where these incentives are applicable.

The Company’s manufacturing capabilities and available capacity provide significant opportunity for increased sales to all of the industries which the Company serves. The current capital plan, which is in its third and final year, includes expenditures up to $11.0 million in 2005 for buildings, machinery, and equipment to support the Company’s strategic initiatives. In March 2005, the Company obtained $15.0 million in fixed term debt to finance this capital plan which has resulted in increased interest expense of approximately $0.2 million for the quarter and $0.3 million year to date. While recent sales trends have experienced some slight declines, the Company remains committed to its strategic plan to significantly grow its revenue base. The infrastructure is in place to support these and other initiatives and thus increase contribution with increased revenues.

9

The following table sets forth the percentage relationship to net sales of certain items in the Company's Statements of Operations:

RESULTS OF OPERATIONS

Quarter Ended June 30, 2005 Compared to Quarter Ended June 30, 2004

Net Sales. Net sales remained constant at $78.6 million for both quarters ended June 30, 2005 and 2004. The Company increased its penetration into the Manufactured Housing industry and Industrial and other markets, however, these increases were offset by lower production at certain of the Company’s recreational vehicle customers due to excess finished goods inventory levels.

Gross Profit. Gross profit also remained consistent at $9.5 million, or 12.1% of net sales for the second quarter of 2004 and 12.2% for the second quarter of 2005. Exclusive of a $0.4 million increase in corporate incentive agreements in the second quarter of 2005, gross profits decreased $0.4 million from $9.5 million in the second quarter of 2004 to $9.1 million in the same period in 2005. The decrease in gross profits is attributable to a 12% increase in direct shipments from quarter to quarter which result in reduced gross margins.

Warehouse and Delivery Expenses. Warehouse and delivery expenses decreased $0.1 million, or 2.0%, from $3.5 million in the quarter ended June 30, 2004 to $3.4 million in the same period in 2005. As a percentage of net sales, warehouse and delivery expenses decreased from 4.5% in 2004 to 4.4% in 2005. Increased gasoline prices were offset by decreases in certain fixed delivery costs to keep overall costs aligned with revenues.

Selling, General, and Administrative Expenses. Selling, general, and administrative expenses increased $0.4 million, or 7.4%, from $4.9 million in the second quarter of 2004 to $5.3 million in the same period in 2005. As a percentage of net sales, selling, general, and administrative expenses increased 0.5%, from 6.3% in the second quarter of 2004 to 6.8% in the same period in 2005. The 2004 second quarter includes a $0.4 million gain on life insurance proceeds. Exclusive of the gain on life insurance proceeds, selling, general, and administrative expenses remained comparable at $5.3 million and 6.8% for both quarters ended June 30, 2004 and 2005. Increases in sales expense have been offset by reductions in certain fixed administrative costs including depreciation, building rent, and insurance.

Operating Income. Operating income decreased $0.2 million, or 25.6%, from $1.0 million in the second quarter of 2004 to $0.8 million in the second quarter of 2005. As a percentage of net sales, operating income decreased 0.3%, from 1.3% in 2004 to 1.0% in 2005. The decrease in operating income is attributable to the factors described above.

Interest Expense, Net. Interest expense, net increased by $0.3 million, from $0.1 million in the second quarter of 2004 to $0.4 million in the second quarter of 2005. The increase is attributable to the Company borrowing $15.0 million of fixed term debt in March, 2005 and increased interest expense on the variable rate industrial revenue bonds from period to period. The term debt borrowing was done in conjunction with the Company’s capital expenditure plan for 2004 and 2005.

Net Income. Net income decreased $0.3 million, from $0.5 million in the second quarter of 2004 to $0.2 million in the second quarter of 2005 due to the factors described above.

10

Six Months Ended June 30, 2005 Compared to Six Months Ended June 30, 2004

Net Sales. Net sales increased $14.0 million, or 9.7%, from $144.3 million in the six months ended June 30, 2004 to $158.3 million in the same period in 2005. The increase is due to increased raw material prices which were passed on to customers, increased shipments in the Manufactured Housing industry, and increased shipments in the Recreational Vehicle industry, primarily in the first quarter of 2005. The Company’s sales are 42% Manufactured Housing, 29% Recreational Vehicle, and 29% Industrial and other markets. In 2004, the Company’s sales were 39% Manufactured Housing, 32% Recreational Vehicle, and 29% Industrial and other markets.

Gross Profit. Gross profit increased $1.3 million, or 7.2%, from $17.1 million in 2004 to $18.4 million in 2005. As a percentage of net sales, gross profit decreased 0.3%, from 11.9% in 2004 to 11.6% in 2005. The decrease in gross profits in dollars and as a percentage of net sales is attributable to a 23% increase in direct shipments to customers from year to year which traditionally carry lower margins. Gross profit in 2005 includes approximately $0.4 million of additional corporate incentive agreements from year to year.

Warehouse and Delivery Expenses. Warehouse and delivery expenses increased $0.3 million, or 4.6%, from $6.7 million in the six months ended June 30, 2004 to $7.0 million in the same period in 2005. As a percentage of net sales, warehouse and delivery expenses decreased 0.2%, from 4.6% in 2004 to 4.4% in 2005. The increase in dollars is due to increased sales and gasoline prices, and the decrease in percentage of net sales is due to comparable fixed costs from period to period on increased sales.

Selling, General, and Administrative Expenses. Selling, general, and administrative expenses increased $0.4 million, or 4.2%, from $10.1 million in the six months ended June 30, 2004 to $10.5 million in the same period in 2005. As a percentage of net sales, selling, general, and administrative expenses decreased 0.3%, from 7.0% in 2004 to 6.7% in 2005. The six month period ended June 30, 2004 includes a gain on life insurance proceeds of approximately $0.4 million. Exclusive of this gain, selling, general, and administrative expenses increased $0.1 million and decreased as a percentage of net sales by 0.6%, from 7.3% in 2004 to 6.7% in 2005. Increased costs related to investment in personnel in conjunction with the Company’s strategic plan were offset by decreases in other fixed costs including depreciation, rent, and insurance from period to period.

Operating Income. Operating income increased $0.5 million, from $0.3 million in the six months ended June 30, 2004 to $0.8 million in the same period in 2005. The increase in operating income is attributable to the factors described above.

Interest Expense, Net. Interest expense, net increased by $0.3 million, from $0.3 million in the six months ended June 30, 2004 to $0.6 million in the same period in 2005. The increase in interest expense is due to increased variable rates on the industrial revenue bonds, increased borrowings on the Company’s line of credit in the first quarter of 2005, and the Company obtaining an additional $15.0 million in fixed term debt in March, 2005.

Net Income. Net income increased from $33,000 in the six month period ended June 30, 2004 to $0.1 million in the six month period ended June 30, 2005 due to the factors described above.

11

BUSINESS SEGMENTS

Quarter Ended June 30, 2005 Compared to Quarter Ended June 30, 2004

PRIMARY MANUFACTURED PRODUCTS SEGMENT DISCUSSION

Net sales decreased $3.4 million, or 7.9%, from $43.4 million in the second quarter of 2004 to $40.0 million in the second quarter of 2005. The decreased net sales are primarily attributable to certain recreational vehicle customers reducing production as a result of excess finished goods inventories in the second quarter.

Gross profit decreased $0.7 million, or 16.0%, from $4.7 million in the second quarter of 2004 to $4.0 million in the second quarter of 2005. As a percentage of net sales, gross profit decreased 0.9%, from 10.9% in 2004 to 10.0% in 2005. The decrease in gross profit dollars and percentage of net sales is due to decreased sales and excess capacity at certain operating units resulting in increased overhead as a percentage of net sales.

Operating income decreased $0.7 million, from $2.1 million in the second quarter of 2004 to $1.4 million in the same period in 2005. The decline is due to decreased gross profits as operating expenses have remained aligned with revenues on a percentage of net sales basis.

DISTRIBUTION SEGMENT DISCUSSION

Net sales increased $1.0 million, or 3.9%, from $26.2 million in the second quarter of 2004 to $27.2 million in the second quarter of 2005. The increased sales are attributable to increased raw material price increases which were passed on to customers and increased market penetration into the Manufactured Housing sector, which is the primary market this segment serves.

Gross profit decreased $0.3 million, or 8.3%, from $3.3 million in the second quarter of 2004 to $3.0 million in the same period in 2005. As a percentage of net sales, gross profit decreased 1.5%, from 12.6% in 2004 to 11.1% in 2005. The decrease in gross profit in dollars and percentage of net sales is due to an approximate 12% increase in direct shipments to customers which traditionally result in lower margins.

Operating income decreased $0.3 million, from $1.1 million in the second quarter of 2004 to $0.8 million in the second quarter of 2005 due to the factors described above.

OTHER COMPONENT MANUFACTURED PRODUCTS DISCUSSION

Net sales increased $1.3 million, or 9.8%, from $13.4 million in the second quarter of 2004 to $14.7 million in the same period in 2005. The increase is primarily attributable to increased sales in the Company’s aluminum extrusion division as a result of increased raw aluminum prices and increased market penetration.

Gross profit increased $0.2 million, or 17%, from $1.1 million in the second quarter of 2004 to $1.3 million in the second quarter of 2005. As a percent of net sales, gross profit increased 0.6%, from 8.6% in 2004 to 9.2% in 2005. The increased in gross profit is due to increased sales.

Operating income increased $0.2 million, from $0.2 million in the second quarter of 2004 to $0.4 million in the second quarter of 2005 due to the factors described above.

Six Months Ended June 30, 2005 Compared to Six Months Ended June 30, 2004

PRIMARY MANUFACTURED PRODUCTS SEGMENT DISCUSSION

Net sales increased $1.2 million, or 1.4%, from $80.6 million in the six months ended June 30, 2004 to $81.8 million in the same period in 2005. The increase is due to a strong first quarter both in shipments and unit sales in the Recreational Vehicle industry, which is the primary market sector this segment serves, as well as increased penetration into the Industrial and other markets.

Gross profit remained constant at $7.8 million for both six month periods ending June 30, 2004 and 2005. As a percentage of net sales, gross profit decreased 0.2%, from 9.7% in 2004 to 9.5% in 2005. The decrease in gross profit as a percent of net sales is due to excess capacity at certain operating units in the second quarter as a result of decreased production levels at certain of the Company’s Recreational Vehicle customers.

12

Operating income decreased $0.3 million, or 10.4%, from $2.8 million in the six months ended June 30, 2004 to $2.5 million in the same period in 2005 due to increased operating expenses in the general and administrative areas. The excess capacity in the second quarter contributed to higher fixed costs as a percentage of net sales.

DISTRIBUTION SEGMENT DISCUSSION

Net sales increased $5.8 million, or 12.3%, from $47.3 million in the six month period ended June 30, 2004 to $53.1 million in the same period in 2005. This increase is due to increased market penetration and raw material price increases which were passed on to the customer in the Manufactured Housing industry, which is the primary market sector this segment serves. Shipments in this industry were up more than 3% from the 2004 levels.

Gross profit decreased $0.2 million, or 3.6%, from $6.1 million in the six months ended June 30, 2004 to $5.9 million in the same period in 2005. As a percent of net sales, gross profit decreased 1.8%, from 12.9% in 2004 to 11.1% in 2005. The decreased gross profits in both dollars and percent of net sales are attributable to a 23% increase in direct shipments to customers which traditionally result in lower margins when compared to warehouse shipments.

Operating income decreased $0.4 million, from $1.9 million in the six months ended June 3, 2004 to $1.5 million in the same period in 2005 primarily due to the factors described above.

OTHER COMPONENT MANUFACTURED PRODUCTS DISCUSSION

Net sales increased $5.0 million, or 20.0%, from $25.1 million in the six months ended June 30, 2004 to $30.1 million in the same period in 2005. The increase is due to increased market penetration and increased aluminum prices in the Company’s aluminum extrusion division from period to period.

Gross profit increased $0.5 million, or 24.4%, from $2.2 million in the six month period ended June 30, 2004 to $2.7 million in the same period in 2005. As a percent of net sales, gross profit increased 0.3%, from 8.7% in 2004 to 9.0% in 2005. Increased gross profit in this segment is attributable to consistent fixed expenses, coupled with increased sales, resulting in better contribution rates in this segment.

Operating income increased $0.4 million, from $0.3 million in 2004 to $0.7 million in 2005 primarily due to the factors described above.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary capital requirements are to meet working capital needs, support its capital expenditure plans, and meet debt service requirements.

The Company, in September, 1995, issued to an insurance company in a private placement $18,000,000 of senior unsecured notes. The ten year notes bear interest at 6.82%, with semi-annual interest payments that began in 1996 and seven annual principal repayments of $2,571,429 which began in September, 1999. The final payment is due in September 2005. These funds were used to reduce existing bank debt and for working capital needs.

The Company has a secured bank Revolving Credit Agreement that provides loan availability of $10,000,000 with maturity in the year 2006. In March 2005, the Company secured a term debt financing package for $15,000,000. This package provides for a five year maturity in January, 2010, and a ten year amortization schedule with interest only payments due in 2005 and principal payments to begin in the first quarter of 2006. In order to reduce its vulnerability to variable interest rates, this financing includes an interest rate swap agreement with interest fixed at 4.78%. In conjunction with this agreement and the Company’s projected cash flow needs, the Company reduced its available line of credit from $15,000,000 to $10,000,000 through August 31, 2005. At that date, availability will increase to $15,000,000 and subsequently decrease back to $10,000,000 on February 1, 2006.

Pursuant to the private placement and the Credit Agreement, the Company is required to maintain certain financial ratios, all of which are currently complied with. In addition, the term debt which was obtained in March, 2005 includes certain financial covenants which are incorporated into the overall credit facility.

In conjunction with the strategic and capital plan, the Company increased its capital expenditures for property and equipment in 2004 to approximately $10.6 million. Capital expenditures over the last three years have been approximately $5.3 million, $4.2 million, and $1.8 million for 2003, 2002, and 2001, respectively. The Company expects to spend up to $11.0 million in 2005 on capital expenditures, including buildings and equipment. The Company expects 2006 capital expenditures to decline to a level that is more consistent with prior years. The Company believes that cash generated from operating and borrowings under its credit agreements will be sufficient to fund its working capital requirements, remaining capital expenditures, and the common stock repurchase program as currently contemplated. The changes in inventory and accounts receivable balances, which affect the Company’s cash flows, are part of the normal business cycles that cause them to change periodically.

13

A summary of the Company’s contractual cash obligations remaining at June 30, 2005 and for the twelve month periods ending 2006 through 2009 is as follows:

**Interest payments have been calculated using the fixed rate of 6.82% for the Senior notes and the average 2004 annual interest rate of 2.50% for the Industrial Revenue Bonds.

We believe that our cash balance, availability under our line of credit, if needed, and anticipated cash flows from operations will be adequate to fund our cash requirements for 2005.

CRITICAL ACCOUNTING POLICIES

The Company’s significant accounting policies are summarized in the footnotes to our financial statements. Some of the most critical policies are also discussed below.

Our major operating assets are accounts receivable, inventory, and property and equipment. Exclusive of the write-off of certain assets related to the Oakwood Homes Corporation bankruptcy filing in November, 2002, and the write-off of certain receivables in the fourth quarter of 2004 related to one customer, we have not experienced significant bad debts losses and our reserve for doubtful accounts of $200,000 should be adequate for any exposure to loss in our June 30, 2005 accounts receivable. We have also established reserves for slow moving and obsolete inventories and believe them to be adequate. We depreciate our property and equipment over their estimated useful lives and we have not identified any items that are impaired for the quarter ended June 30, 2005. The Company ships product based on specific orders from customers and revenue is recognized upon delivery.

Purchasing costs are included in selling, general, and administrative expenses and receiving costs are included in cost of goods sold. Cost of goods sold includes material costs, direct and indirect labor, and overhead expenses. Cost of goods sold further includes inbound freight charges, inspection costs, internal transfer costs, and other costs of the distribution network. Warehouse and delivery costs include costs such as salaries and wages, building rent and insurance, and other overhead costs related to our distribution operations and delivery costs related to the shipment of finished and distributed products to our customers. Due to the Company including certain costs in cost of goods sold that may be different from that of other companies, our gross margins may not be comparable to those other companies.

14

SEASONALITY

Manufacturing operations in the Manufactured Housing and Recreational Vehicle industries historically have been seasonal and are generally at the highest levels when the climate is moderate. Accordingly, the Company’s sales and profits are generally highest in the second and third quarters.

INFLATION

The Company does not believe that inflation had a material effect on results of operations for the periods presented.

SAFE HARBOR STATEMENT

The Company makes forward-looking statements from time to time and desires to take advantage of the “safe harbor” which is afforded such statements under the Private Securities Litigation Reform Act of 1995 when they are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the forward-looking statements.

The statements contained in the foregoing “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as other statements contained in the quarterly report and statements contained in future filings with the Securities and Exchange Commission and publicly disseminated press releases, and statements which may be made from time to time in the future by management of the Company in presentations to shareholders, prospective investors, and others interested in the business and financial affairs of the Company, which are not historical facts, are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements. Any projections of financial performance or statements concerning expectations as to future developments should not be construed in any manner as a guarantee that such results or developments will, in fact, occur. There can be no assurance that any forward-looking statement will be realized or that actual results will not be significantly different from that set forth in such forward-looking statement. In addition to the risks and uncertainties of ordinary business operations, the forward-looking statements of the Company referred to above are also subject to the following risks and uncertainties:

15

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk related to interest rate changes on portions of its debt. Long term debt includes $2,571,430 of indebtedness bearing interest at a fixed rate of 6.82%. The related maturities and interest are reported in the contractual obligations table in the Liquidity and Capital Resources section of this report.

In March 2005, the Company entered into an interest rate swap agreement. This swap agreement effectively converts a portion of the Company’s variable-rate borrowings to a fixed-rate basis, thus reducing the impact of changes in interest rates on future interest expense.

Under the supervision and with the participation of our senior management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this quarterly report (the “Evaluation Date”). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information relating to the Company, including consolidated subsidiaries, required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to the Company’s management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

June 30, 2005 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

16

PART II: OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

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

Item 3. DEFAULTS UPON SENIOR SECURITIES

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Item 5. OTHER INFORMATION

Item 6. EXHIBITS

32.1     Certification pursuant to 18 U.S.C. Section 350

17

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.

18