x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
|
Delaware
|
13-3250533
|
(State
or other jurisdiction of incorporation
or organization)
|
(I.R.S.
Employer Identification
Number)
|
|
|
Page
|
PART
I -
|
FINANCIAL
INFORMATION
|
|
|
|
|
|
Item
1 - FINANCIAL STATEMENTS
|
|
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
3
|
|
|
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
4
|
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
5
|
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
|
6
|
|
|
|
|
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
7-16
|
|
|
|
|
Item
2 - MANAGEMENT’S DISCUSSION AND ANALYSIS
|
|
|
OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
17-30
|
|
|
|
|
Item
3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES
|
|
|
ABOUT
MARKET RISK
|
31
|
|
|
|
|
Item
4 - CONTROLS AND PROCEDURES
|
32
|
|
|
|
PART
II - OTHER INFORMATION
|
|
|
|
|
|
|
Item
1 - LEGAL PROCEEDINGS
|
35
|
|
|
|
|
Item
1A - RISK FACTORS
|
36
|
|
|
|
|
Item
6 - EXHIBITS
|
36
|
|
|
|
SIGNATURES
|
37
|
|
|
|
|
EXHIBIT
31.1 - SECTION 302 CEO CERTIFICATION
|
|
|
|
|
|
EXHIBIT
31.2 - SECTION 302 CFO CERTIFICATION
|
|
|
|
|
|
EXHIBIT
32.1 - SECTION 906 CEO CERTIFICATION
|
|
|
|
|
|
EXHIBIT
32.2 - SECTION 906 CFO CERTIFICATION
|
|
|
Six
Months Ended
June
30,
|
Three
Months Ended
June
30,
|
|||||||||||
|
2007
|
2006
|
2007
|
2006
|
|||||||||
(In
thousands, except per share amounts)
|
|
|
|
|
|||||||||
|
|
|
|
|
|||||||||
Net
sales
|
$
|
357,400
|
$
|
410,437
|
$
|
184,456
|
$
|
201,976
|
|||||
Cost
of sales
|
272,455
|
322,131
|
138,683
|
157,371
|
|||||||||
Gross
profit
|
84,945
|
88,306
|
45,773
|
44,605
|
|||||||||
Selling,
general and administrative expenses
|
48,063
|
53,471
|
24,789
|
26,898
|
|||||||||
Other
income
|
656
|
574
|
-
|
-
|
|||||||||
Operating
profit
|
37,538
|
35,409
|
20,984
|
17,707
|
|||||||||
Interest
expense, net
|
1,552
|
2,134
|
640
|
1,015
|
|||||||||
Income
before income taxes
|
35,986
|
33,275
|
20,344
|
16,692
|
|||||||||
Provision
for income taxes
|
13,835
|
12,839
|
7,782
|
6,461
|
|||||||||
Net
income
|
$
|
22,151
|
$
|
20,436
|
$
|
12,562
|
$
|
10,231
|
|||||
|
|||||||||||||
Net
income per common share:
|
|||||||||||||
Basic
|
$
|
1.02
|
$
|
0.95
|
$
|
0.57
|
$
|
0.47
|
|||||
Diluted
|
$
|
1.01
|
$
|
0.93
|
$
|
0.57
|
$
|
0.47
|
|||||
|
|||||||||||||
Weighted
average common shares outstanding:
|
|||||||||||||
Basic
|
21,817
|
21,579
|
21,852
|
21,591
|
|||||||||
Diluted
|
22,025
|
21,896
|
22,091
|
21,894
|
|
June
30,
|
|
December
31,
|
|||||||
|
2007
|
2006
|
2006
|
|||||||
(In
thousands, except shares and per share amount)
|
|
|
|
|||||||
|
|
|
|
|||||||
ASSETS
|
|
|
|
|||||||
Current
assets
|
|
|
|
|||||||
Cash
and cash equivalents
|
$
|
38,561
|
$
|
5,345
|
$
|
6,785
|
||||
Accounts
receivable, trade, less allowances
|
36,521
|
40,485
|
17,828
|
|||||||
Inventories
|
75,053
|
109,528
|
83,076
|
|||||||
Prepaid
expenses and other current assets
|
9,830
|
9,666
|
13,351
|
|||||||
|
||||||||||
Total
current assets
|
159,965
|
165,024
|
121,040
|
|||||||
|
||||||||||
Fixed
assets, net
|
115,080
|
128,412
|
124,558
|
|||||||
Goodwill
|
35,868
|
34,804
|
34,344
|
|||||||
Other
intangible assets
|
28,858
|
26,412
|
24,801
|
|||||||
Other
assets
|
7,218
|
5,716
|
6,533
|
|||||||
|
||||||||||
Total
assets
|
$
|
346,989
|
$
|
360,368
|
$
|
311,276
|
||||
|
||||||||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||||
Current
liabilities
|
||||||||||
Notes
payable, including current maturities of
|
||||||||||
long-term
indebtedness
|
$
|
10,478
|
$
|
9,852
|
$
|
9,714
|
||||
Accounts
payable, trade
|
20,235
|
29,356
|
12,027
|
|||||||
Accrued
expenses and other current liabilities
|
44,733
|
38,895
|
37,320
|
|||||||
|
||||||||||
Total
current liabilities
|
75,446
|
78,103
|
59,061
|
|||||||
|
||||||||||
Long-term
indebtedness
|
37,295
|
89,121
|
45,966
|
|||||||
Other
long-term liabilities
|
3,816
|
2,481
|
1,361
|
|||||||
|
||||||||||
Total
liabilities
|
116,557
|
169,705
|
106,388
|
|||||||
|
||||||||||
Stockholders’
equity
|
||||||||||
Common
stock, par value $.01 per share: authorized
|
||||||||||
30,000,000
shares; issued 23,960,754 shares at June 2007;
|
||||||||||
23,679,561
shares at June 2006 and 23,833,045 at
|
||||||||||
December
2006
|
240
|
237
|
238
|
|||||||
Paid-in
capital
|
57,323
|
50,080
|
53,973
|
|||||||
Retained
earnings
|
192,189
|
159,451
|
170,038
|
|||||||
Accumulated
other comprehensive income
|
147
|
362
|
106
|
|||||||
|
249,899
|
210,130
|
224,355
|
|||||||
Treasury
stock, at cost - 2,149,325 shares
|
(19,467
|
)
|
(19,467
|
)
|
(19,467
|
)
|
||||
Total
stockholders’ equity
|
230,432
|
190,663
|
204,888
|
|||||||
|
||||||||||
Total
liabilities and stockholders’ equity
|
$
|
346,989
|
$
|
360,368
|
$
|
311,276
|
Six
Months Ended
June
30,
|
|||||||
2007
|
2006
|
||||||
(In
thousands)
|
|||||||
Cash
flows from operating activities:
|
|||||||
Net
income
|
$
|
22,151
|
$
|
20,436
|
|||
Adjustments
to reconcile net income to cash flows provided by
|
|||||||
operating
activities:
|
|||||||
Depreciation
and amortization
|
8,941
|
7,310
|
|||||
Deferred
taxes
|
(310
|
)
|
1,050
|
||||
Loss
/ (gain) on disposal of fixed assets
|
1,631
|
(289
|
)
|
||||
Stock-based
compensation expense
|
1,214
|
1,701
|
|||||
Changes
in assets and liabilities, net of business acquisitions:
|
|||||||
Accounts
receivable, net
|
(18,069
|
)
|
(5,385
|
)
|
|||
Inventories
|
8,849
|
(6,233
|
)
|
||||
Prepaid
expenses and other assets
|
741
|
1,636
|
|||||
Accounts
payable, accrued expenses and other liabilities
|
18,360
|
2,366
|
|||||
Net
cash flows provided by operating activities
|
43,508
|
22,592
|
|||||
Cash
flows from investing activities:
|
|||||||
Capital
expenditures
|
(5,425
|
)
|
(16,391
|
)
|
|||
Acquisition
of businesses
|
(6,594
|
)
|
(32,977
|
)
|
|||
Proceeds
from sales of fixed assets
|
6,072
|
1,349
|
|||||
Other
investments
|
(16
|
)
|
(2
|
)
|
|||
Net
cash flows used for investing activities
|
(5,963
|
)
|
(48,021
|
)
|
|||
Cash
flows from financing activities:
|
|||||||
Proceeds
from line of credit and other borrowings
|
23,792
|
128,620
|
|||||
Repayments
under line of credit and other borrowings
|
(31,699
|
)
|
(103,612
|
)
|
|||
Exercise
of stock options
|
2,138
|
725
|
|||||
Other
|
-
|
(44
|
)
|
||||
Net
cash flows (used for) provided by financing
activities
|
(5,769
|
)
|
25,689
|
||||
Net
increase in cash
|
31,776
|
260
|
|||||
Cash
and cash equivalents at beginning of period
|
6,785
|
5,085
|
|||||
Cash
and cash equivalents at end of period
|
$
|
38,561
|
$
|
5,345
|
|||
Supplemental
disclosure of cash flows information:
|
|||||||
Cash
paid during the period for:
|
|||||||
Interest
on debt
|
$
|
1,658
|
$
|
1,965
|
|||
Income
taxes, net of refunds
|
$
|
7,225
|
$
|
10,426
|
Common
Stock
|
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income
|
Treasury
Stock
|
Total
Stockholders’
Equity
|
|
|||||||||||||
(In
thousands, except shares)
|
|||||||||||||||||||
Balance
- December 31, 2006
|
$
|
238
|
$
|
53,973
|
$
|
170,038
|
$
|
106
|
$
|
(19,467
|
)
|
$
|
204,888
|
||||||
Net
income for the six months
|
|||||||||||||||||||
ended
June 30, 2007
|
22,151
|
22,151
|
|||||||||||||||||
Unrealized
gain on interest rate
|
|||||||||||||||||||
swap,
net of taxes
|
41
|
41
|
|||||||||||||||||
Comprehensive
income
|
22,192
|
||||||||||||||||||
Issuance
of 126,620 shares of
|
|||||||||||||||||||
common
stock pursuant to stock
|
|||||||||||||||||||
options
exercised
|
2
|
1,150
|
1,152
|
||||||||||||||||
Income
tax benefit relating to
|
|||||||||||||||||||
issuance
of common stock
|
|||||||||||||||||||
pursuant
to stock options exercised
|
986
|
986
|
|||||||||||||||||
Stock-based
compensation expense
|
1,214
|
1,214
|
|||||||||||||||||
Balance
- June 30, 2007
|
$
|
240
|
$
|
57,323
|
$
|
192,189
|
$
|
147
|
$
|
(19,467
|
)
|
$
|
230,432
|
Six
Months Ended
June
30,
|
Three
Months Ended
June
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Net
sales:
|
|||||||||||||
RV
segment
|
$
|
263,037
|
$
|
289,317
|
$
|
133,905
|
$
|
139,901
|
|||||
MH
segment
|
94,363
|
121,120
|
50,551
|
62,075
|
|||||||||
Total
net sales
|
$
|
357,400
|
$
|
410,437
|
$
|
184,456
|
$
|
201,976
|
|||||
Operating
profit:
|
|||||||||||||
RV
segment
|
$
|
35,631
|
$
|
27,359
|
$
|
19,765
|
$
|
13,815
|
|||||
MH
segment
|
7,071
|
12,306
|
4,271
|
6,385
|
|||||||||
Total
segment operating profit
|
42,702
|
39,665
|
24,036
|
20,200
|
|||||||||
Amortization
of intangibles
|
(1,903
|
)
|
(937
|
)
|
(1,022
|
)
|
(507
|
)
|
|||||
Corporate
and other
|
(3,917
|
)
|
(3,893
|
)
|
(2,030
|
)
|
(1,986
|
)
|
|||||
Other
income
|
656
|
574
|
-
|
-
|
|||||||||
Total
operating profit
|
$
|
37,538
|
$
|
35,409
|
$
|
20,984
|
$
|
17,707
|
Net
tangible assets acquired
|
$
|
718
|
||
Identifiable
intangible assets
|
1,800
|
|||
Goodwill
|
599
|
|||
Total
cash consideration
|
$
|
3,117
|
Net
tangible assets acquired
|
$
|
544
|
||
Identifiable
intangible assets
|
4,000
|
|||
Goodwill
|
894
|
|||
Total
consideration
|
5,438
|
|||
Less:
Present value of future minimum payments
|
(1,961
|
)
|
||
Total
cash consideration
|
$
|
3,477
|
June
30,
|
|
December
31,
|
|
|||||||
|
|
2007
|
|
2006
|
|
2006
|
||||
Finished
goods
|
$
|
11,477
|
$
|
16,075
|
$
|
13,513
|
||||
Work
in process
|
3,375
|
5,831
|
3,868
|
|||||||
Raw
material
|
60,201
|
87,622
|
65,695
|
|||||||
Total
|
$
|
75,053
|
$
|
109,528
|
$
|
83,076
|
|
June
30,
|
|
December
31,
|
|
||||||
|
|
2007
|
|
2006
|
|
2006
|
||||
Senior
Promissory Notes payable at the rate of $1,000 per
|
||||||||||
quarter
on January 29, April 29, July 29 and October 29,
|
||||||||||
with
interest payable quarterly at the rate of 5.01 percent per
|
||||||||||
annum,
final payment to be made on April 29, 2010
|
$
|
12,000
|
$
|
16,000
|
$
|
14,000
|
||||
Senior
Promissory Notes payable at the rate of $536 per
|
||||||||||
quarter
on the last business day of March, June, September,
|
||||||||||
and
December, with interest payable at the rate of LIBOR
|
||||||||||
plus
1.65 percent per annum, final payment to be
|
||||||||||
made
on June 28, 2013
|
12,857
|
15,000
|
13,929
|
|||||||
Notes
payable pursuant to a Credit Agreement expiring
|
||||||||||
June
30, 2009 consisting of a Line of Credit, not to exceed
|
||||||||||
$70,000,
with interest at prime rate or LIBOR plus a rate
|
||||||||||
margin
based upon the Company’s performance
|
10,000
|
49,000
|
12,000
|
|||||||
Industrial
Revenue Bonds, interest rates at June 30, 2007
|
||||||||||
of
4.68% to 6.28%, due 2008 through 2017; secured by
|
||||||||||
certain
real estate and equipment
|
6,097
|
8,756
|
8,077
|
|||||||
Other
loans primarily secured by certain real estate and
|
||||||||||
equipment,
due 2008 to 2011, with fixed interest rates
|
||||||||||
at
June 30, 2007 of 5.18% to 6.63%
|
5,019
|
6,741
|
5,780
|
|||||||
Other
loans primarily secured by certain real estate and
|
||||||||||
equipment,
due 2011 to 2016, with variable interest rates
|
||||||||||
at
June 30, 2007 of 7.00% to 8.50%
|
1,800
|
3,476
|
1,894
|
|||||||
47,773
|
98,973
|
55,680
|
||||||||
Less
current portion
|
10,478
|
9,852
|
9,714
|
|||||||
Total
long-term indebtedness
|
$
|
37,295
|
$
|
89,121
|
$
|
45,966
|
Six
Months Ended
|
|
Three
Months Ended
|
|
||||||||||
|
|
June
30,
|
|
June
30,
|
|
||||||||
|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|||||
Weighted
average shares outstanding
|
|||||||||||||
for
basic earnings per share
|
21,817
|
21,579
|
21,852
|
21,591
|
|||||||||
Common
stock equivalents pertaining
|
|||||||||||||
to
stock options
|
208
|
317
|
239
|
303
|
|||||||||
Total
for diluted shares
|
22,025
|
21,896
|
22,091
|
21,894
|
Six
Months Ended
June
30,
|
Three
Months Ended
June
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Net
sales:
|
|||||||||||||
RV
segment
|
$
|
263,037
|
$
|
289,317
|
$
|
133,905
|
$
|
139,901
|
|||||
MH
segment
|
94,363
|
121,120
|
50,551
|
62,075
|
|||||||||
Total
net sales
|
$
|
357,400
|
$
|
410,437
|
$
|
184,456
|
$
|
201,976
|
|||||
Operating
profit:
|
|||||||||||||
RV
segment
|
$
|
35,631
|
$
|
27,359
|
$
|
19,765
|
$
|
13,815
|
|||||
MH
segment
|
7,071
|
12,306
|
4,271
|
6,385
|
|||||||||
Total
segment operating profit
|
42,702
|
39,665
|
24,036
|
20,200
|
|||||||||
Amortization
of intangibles
|
(1,903
|
)
|
(937
|
)
|
(1,022
|
)
|
(507
|
)
|
|||||
Corporate
and other
|
(3,917
|
)
|
(3,893
|
)
|
(2,030
|
)
|
(1,986
|
)
|
|||||
Other
income
|
656
|
574
|
-
|
-
|
|||||||||
Total
operating profit
|
$
|
37,538
|
$
|
35,409
|
$
|
20,984
|
$
|
17,707
|
·
|
Net
sales for the second quarter of 2007 decreased $18 million (9 percent)
from the second quarter of 2006. The decrease in net sales this quarter
was due to an organic sales decline of about $32 million (approximately
16
percent) resulting from the weakness in both the RV and manufactured
housing industries, partially offset by sales price increases of
approximately $11 million,
primarily due to material cost increases,
and sales growth of $4 million due to acquisitions.
|
·
|
Net
income for the second quarter of 2007 increased 23 percent from the
second
quarter of 2006 for the following reasons:
|
· |
In
response to the slowdowns in both the RV and manufactured housing
industries, over the past 12 months the Company closed 10 facilities
and
consolidated those operations into other existing facilities, and
reduced
fixed overhead where prudent, including reducing staff levels by
more than
90 salaried employees. These facility consolidations and fixed
overhead
reductions increased operating profit in the second quarter of
2007 by
approximately $1.4 million ($0.9 million after taxes). These cost
cutting
measures are expected to improve operating profit by more than
$5 million
in 2007.
|
· |
Improved
production and procurement
efficiencies.
|
· |
Increased
profit margins on certain of the Company’s newer product lines,
particularly in the axle product line, which had been
underperforming.
|
· |
2006
operating profit was reduced by $1.0 million ($0.6 million after
taxes)
due to losses at the Indiana specialty trailer operation which was
closed
in September 2006.
|
· |
Charges
to operating profit aggregating $0.8 million ($0.5 million after
taxes) to
reflect the net loss on sold facilities, and the write-down to estimated
current market value of facilities to be
sold.
|
·
|
On
May 21, 2007, Lippert acquired certain assets and the business of
Coach
Step, a manufacturer of patented electric steps for motorhomes. Coach
Step
had annual sales of $2 million prior to the acquisition. The purchase
price was $3.0 million, which was financed from available cash. The
results of the acquired Coach Step business have been included in
the
Company’s Consolidated Statement of Income beginning May 21, 2007. The
Company is in the process of integrating Coach Step’s business into
existing Lippert facilities.
|
·
|
On
July 6, 2007, Lippert acquired certain assets, liabilities and the
business of Extreme Engineering, Inc. (“Extreme Engineering”), a
manufacturer of specialty trailers for high-end boats, along with
its
affiliate, Pivit Hitch, Inc. Extreme Engineering and Pivit Hitch
had
combined annual sales of $12 million prior to the acquisition. The
purchase price for the two companies was $10.7 million, which was
financed
from available cash. Extreme Engineering's Extreme Custom
Trailers®
are built according to customer specifications, and are sold through
dealers and manufacturers of ski boats and high performance boats
across
the United States. Lippert will continue production at Extreme
Engineering's existing leased facility in Riverside, California.
Lippert
also intends to transfer certain of its existing specialty trailer
manufacturing operations to Extreme's facility in connection with
the
anticipated consolidation of certain existing West Coast factories.
|
·
|
During
the last few years, the Company introduced several new products for
the RV
and specialty trailer markets, including products for the motorhome
market, a relatively new RV category for the Company. New products
include
slide-out mechanisms and leveling devices for motorhomes, axles for
towable RVs and specialty trailers, ramp doors and suspension systems
for
towable RVs, and bed lifts, entry steps, thermoformed bath and kitchen
products, and exterior panels for both towable RVs and motorhomes.
The
Company estimates that the market potential of these products is
over $700
million. In the second quarter of 2007, the Company’s sales of these
products were running at an annualized rate of approximately $110
million,
as compared to an annualized rate of approximately $100 million in
the
second quarter of 2006, an increase of approximately 10 percent,
despite
the decline in industry-wide shipments of
RVs.
|
·
|
A
2007 organic sales decline of approximately $14 million, or 10
percent, of
RV related products, as compared to a decline of 13 percent in
wholesale
shipments of travel trailers and fifth wheel RVs for the same
period.
|
·
|
A
decline of approximately $2 million in sales of specialty trailers
primarily due to the September 2006 closure of the Indiana specialty
trailer operation.
|
· |
Sales
price increases of approximately $7 million, primarily due to material
cost increases.
|
· |
The
impact of sales from acquisitions of approximately $4 million.
|
2007
|
2006
|
Percent
Change
|
||||||||
Content
per Travel Trailer and
|
||||||||||
Fifth
Wheel RVs
|
$
|
1,663
|
$
|
1,447
|
15
|
%
|
||||
Content
per Motorhomes
|
$
|
321
|
$
|
279
|
15
|
%
|
||||
Content
per all RVs
|
$
|
1,273
|
$
|
1,135
|
12
|
%
|
2007
|
2006
|
Percent
Change
|
||||||||
Travel
Trailer and Fifth
|
||||||||||
Wheel
RVs
|
265,800
|
312,600
|
(15
|
)%
|
||||||
Motorhomes
|
56,600
|
57,500
|
(2
|
)%
|
||||||
All
RVs
|
361,500
|
412,600
|
(12
|
)%
|
· |
Implementation
of cost-cutting measures.
|
· |
Improved
production and procurement efficiencies.
|
· | Increased profit margins on certain of the Company’s newer product lines, particularly in the axle product line, which had been underperforming. |
· |
The
elimination of $1.0 million in losses incurred in the Company’s Indiana
specialty trailer operation in the second quarter of 2006. This
operation
was closed in September 2006.
|
· |
A
decrease in selling, general and administrative expenses to 11.1
percent
of net sales in the second quarter of 2007 from 11.6 percent of
net sales
in the second quarter of 2006 due to cost cutting measures implemented,
partially offset by the spreading of fixed costs over a smaller
sales
base, and higher incentive compensation as a percent of net sales
due to
increased operating profits.
|
· |
The
negative impact on the second quarter of 2007 of spreading fixed
manufacturing costs over a smaller sales
base.
|
· |
Higher
warranty costs based on experience and an industry-wide increase
in the
number of months between production and the retail sale of
RVs.
|
· |
A
2007 organic sales decline of approximately $27 million, or 9 percent,
of
RV related products.
|
· |
A
decline of approximately $17 million in hurricane-related sales as
compared to the first six months of 2006. Subsequent to March 2006,
there
was no significant hurricane-related
activity.
|
· |
A
decline of approximately $5 million in sales of specialty trailers
primarily due to the September 2006 closure of the Indiana specialty
trailer operation.
|
· |
Sales
price increases of approximately $13 million, primarily due to material
cost increases.
|
· |
The
impact of sales from acquisitions of approximately $10 million.
|
· |
Implementation
of cost-cutting measures.
|
· |
Improved
production and procurement
efficiencies.
|
· |
A
temporary decline in certain raw materials costs purchased during
the
fourth quarter of 2006 which favorably impacted cost of sales during
the
early part of 2007.
|
· |
Increased
profit margins on certain of the Company’s newer product lines,
particularly in the axle product line, which had been
underperforming.
|
· |
The
elimination of $1.9 million in losses incurred in the Company’s Indiana
specialty trailer operation in the first six months of 2006. This
operation was closed in September
2006.
|
· |
Lower
workers compensation costs.
|
· |
Selling,
general and administrative expenses were consistent at 11.2 percent
of net
sales in both the first six months of 2007 and 2006 as the cost cutting
measures implemented were offset by the spreading of fixed costs
over a
smaller sales base and higher incentive compensation as a percent
of net
sales due to increased operating
profits.
|
· |
The
negative impact on the second quarter of 2007 of spreading fixed
manufacturing costs over a smaller sales
base.
|
· |
Higher
warranty costs, based on experience and an industry-wide increase
in the
number of months between production and the retail sale of
RVs.
|
2007
|
2006
|
Percent
Change
|
||||||||
Content
per Homes Produced
|
$
|
1,853
|
$
|
1,631
|
14
|
%
|
||||
Content
per Floors Produced
|
$
|
1,063
|
$
|
981
|
8
|
%
|
2007
|
|
2006
|
|
Percent
Change
|
||||||
Total
Homes Produced
|
99,300
|
147,900
|
(33
|
)%
|
||||||
Total
Floors Produced
|
173,000
|
245,800
|
(30
|
)%
|
· |
The
spreading of fixed manufacturing costs over a smaller sales
base.
|
· |
An
increase in selling, general and administrative expenses to 14.3
percent
of net sales in the second quarter of 2007 from 13.4 percent of net
sales
in the second quarter of 2006 due to higher delivery costs as a percent
of
net sales and the spreading of fixed costs over a smaller sales
base.
|
· |
Implementation
of cost-cutting measures.
|
· |
Improved
production and procurement
efficiencies.
|
· |
The
spreading of fixed manufacturing costs over a smaller sales
base.
|
· |
An
increase in selling, general and administrative expenses to 14.4
percent
of net sales in the first six months of 2007 from 13.6 percent of
net
sales in the first six months of 2006 due to higher delivery costs
as a
percent of net sales and the spreading of fixed costs over a smaller
sales
base, partially offset by lower incentive compensation as a percent
of net
sales due to reduced operating
profits.
|
· |
Implementation
of cost-cutting measures.
|
· |
Improved
production and procurement
efficiencies.
|
2007
|
|
2006
|
|||||
Net
cash flows provided by operating activities
|
$
|
43,508
|
$
|
22,592
|
|||
Net
cash flows used for investment activities
|
$
|
(5,963
|
)
|
$
|
(48,021
|
)
|
|
Net
cash flows (used for) provided by financing activities
|
$
|
(5,769
|
)
|
$
|
25,689
|
Item
3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
a)
|
Evaluation
of Disclosure Controls and Procedures
|
b)
|
Changes
in Internal Controls
|
1)
|
31.1
Certification of Chief Executive Officer pursuant to 13a-14(a) under
the
Securities Exchange Act of 1934. Exhibit 31.1 is filed herewith.
|
2)
|
31.2
Certification of Chief Financial Officer pursuant to 13a-14(a) under
the
Securities Exchange Act of 1934. Exhibit 31.2 is filed herewith.
|
3)
|
32.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section
1350. Exhibit 32.1is filed
herewith.
|
4)
|
32.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section
1350. Exhibit 32.2 is filed
herewith.
|
DREW
INDUSTRIES INCORPORATED
Registrant
|
||
|
|
|
/s/ Fredric M. Zinn | ||
Fredric
M. Zinn
Executive
Vice President and
Chief
Financial Officer
|
||