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)
|
Yes x
|
No o |
Large
Accelerated Filer o
|
Accelerated
Filer x
|
Non-accelerated
filer o
|
Yes o
|
No x |
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
|
33-34
|
|
Item
1A - RISK FACTORS
|
34
|
|
Item
6 - EXHIBITS
|
34
|
|
SIGNATURES
|
35
|
|
EXHIBIT
31.1 - SECTION 302 CEO CERTIFICATION
|
36
|
|
EXHIBIT
31.2 - SECTION 302 CFO CERTIFICATION
|
37
|
|
EXHIBIT
32.1 - SECTION 906 CEO CERTIFICATION
|
38
|
|
EXHIBIT
32.2 - SECTION 906 CFO CERTIFICATION
|
39
|
Nine
Months Ended
|
Three
Months Ended
|
||||||||||||
September
30,
|
September
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
(In
thousands, except per share amounts)
|
|||||||||||||
Net
sales
|
$
|
530,810
|
$
|
591,180
|
$
|
173,410
|
$
|
180,743
|
|||||
Cost
of sales
|
403,934
|
464,956
|
131,479
|
142,825
|
|||||||||
Gross
profit
|
126,876
|
126,224
|
41,931
|
37,918
|
|||||||||
Selling,
general and administrative expenses
|
71,791
|
78,579
|
23,728
|
25,108
|
|||||||||
Other
income
|
707
|
638
|
51
|
64
|
|||||||||
Operating
profit
|
55,792
|
48,283
|
18,254
|
12,874
|
|||||||||
Interest
expense, net
|
1,996
|
3,542
|
444
|
1,408
|
|||||||||
Income
before income taxes
|
53,796
|
44,741
|
17,810
|
11,466
|
|||||||||
Provision
for income taxes
|
20,512
|
17,368
|
6,677
|
4,529
|
|||||||||
Net
income
|
$
|
33,284
|
$
|
27,373
|
$
|
11,133
|
$
|
6,937
|
|||||
Net
income per common share:
|
|||||||||||||
Basic
|
$
|
1.52
|
$
|
1.27
|
$
|
0.51
|
$
|
0.32
|
|||||
Diluted
|
$
|
1.51
|
$
|
1.25
|
$
|
0.50
|
$
|
0.32
|
|||||
Weighted
average common shares outstanding:
|
|||||||||||||
Basic
|
21,856
|
21,591
|
21,936
|
21,615
|
|||||||||
Diluted
|
22,089
|
21,860
|
22,219
|
21,786
|
September
30,
|
December
31,
|
|||||||||
2007
|
2006
|
2006
|
||||||||
(In
thousands, except shares and per share amount)
|
||||||||||
ASSETS
|
||||||||||
Current
assets
|
||||||||||
Cash
and cash equivalents
|
$
|
43,644
|
$
|
2,003
|
$
|
6,785
|
||||
Accounts
receivable, trade, less allowances
|
38,313
|
35,444
|
17,828
|
|||||||
Inventories
|
79,225
|
98,892
|
83,076
|
|||||||
Prepaid
expenses and other current assets
|
13,703
|
14,310
|
13,351
|
|||||||
Total
current assets
|
174,885
|
150,649
|
121,040
|
|||||||
Fixed
assets, net
|
105,582
|
127,932
|
124,558
|
|||||||
Goodwill
|
39,305
|
34,406
|
34,344
|
|||||||
Other
intangible assets
|
33,959
|
25,679
|
24,801
|
|||||||
Other
assets
|
11,380
|
6,154
|
6,533
|
|||||||
Total
assets
|
$
|
365,111
|
$
|
344,820
|
$
|
311,276
|
||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||||
Current
liabilities
|
||||||||||
Notes
payable, including current maturities of
long-term
indebtedness
|
$
|
11,309
|
$
|
9,738
|
$
|
9,714
|
||||
Accounts
payable, trade
|
25,012
|
21,045
|
12,027
|
|||||||
Accrued
expenses and other current liabilities
|
48,400
|
43,152
|
37,320
|
|||||||
Total
current liabilities
|
84,721
|
73,935
|
59,061
|
|||||||
Long-term
indebtedness
|
31,328
|
69,534
|
45,966
|
|||||||
Other
long-term liabilities
|
4,876
|
2,328
|
1,361
|
|||||||
Total
liabilities
|
120,925
|
145,797
|
106,388
|
|||||||
Stockholders’
equity
|
||||||||||
Common
stock, par value $.01 per share: authorized
30,000,000
shares; issued 24,070,314 shares at September 2007; 23,749,861
shares at September 2006 and 23,833,045 at |
241
|
238
|
238
|
|||||||
Paid-in
capital
|
60,138
|
51,746
|
53,973
|
|||||||
Retained
earnings
|
203,322
|
166,388
|
170,038
|
|||||||
Accumulated
other comprehensive (loss) income
|
(48
|
)
|
118
|
106
|
||||||
263,653
|
218,490
|
224,355
|
||||||||
Treasury
stock, at cost - 2,149,325 shares
|
(19,467
|
)
|
(19,467
|
)
|
(19,467
|
)
|
||||
Total
stockholders’ equity
|
244,186
|
199,023
|
204,888
|
|||||||
Total
liabilities and stockholders’ equity
|
$
|
365,111
|
$
|
344,820
|
$
|
311,276
|
Nine
Months Ended
|
|||||||
September
30,
|
|
|
|
||||
|
|
2007
|
|
2006
|
|||
(In
thousands)
|
|||||||
Cash
flows from operating activities:
|
|||||||
Net
income
|
$
|
33,284
|
$
|
27,373
|
|||
Adjustments
to reconcile net income to cash flows provided by
operating
activities:
|
|||||||
Depreciation
and amortization
|
13,276
|
11,443
|
|||||
Deferred
taxes
|
102
|
284
|
|||||
Loss
/ (gain) on disposal of fixed assets
|
541
|
(1,008
|
)
|
||||
Stock-based
compensation expense
|
1,809
|
2,345
|
|||||
Changes
in assets and liabilities, net of business acquisitions:
|
|||||||
Accounts
receivable, net
|
(19,512
|
)
|
(344
|
)
|
|||
Inventories
|
6,165
|
4,403
|
|||||
Prepaid
expenses and other assets
|
1,317
|
(2,757
|
)
|
||||
Accounts
payable, accrued expenses and other liabilities
|
24,156
|
(2,682
|
)
|
||||
Net
cash flows provided by operating activities
|
61,138
|
39,057
|
|||||
Cash
flows from investing activities:
|
|||||||
Capital
expenditures
|
(7,452
|
)
|
(20,028
|
)
|
|||
Acquisition
of businesses
|
(17,293
|
)
|
(33,695
|
)
|
|||
Proceeds
from sales of fixed assets
|
9,184
|
2,988
|
|||||
Other
investments
|
(34
|
)
|
(9
|
)
|
|||
Net
cash flows used for investing activities
|
(15,595
|
)
|
(50,744
|
)
|
|||
Cash
flows from financing activities:
|
|||||||
Proceeds
from line of credit and other borrowings
|
23,797
|
163,870
|
|||||
Repayments
under line of credit and other borrowings
|
(36,840
|
)
|
(158,563
|
)
|
|||
Exercise
of stock options
|
4,359
|
1,748
|
|||||
Other
|
-
|
1,550
|
|||||
Net
cash flows (used for) provided by financing
activities
|
(8,684
|
)
|
8,605
|
||||
Net
increase (decrease) in cash
|
36,859
|
(3,082
|
)
|
||||
Cash
and cash equivalents at beginning of period
|
6,785
|
5,085
|
|||||
Cash
and cash equivalents at end of period
|
$
|
43,644
|
$
|
2,003
|
|||
Supplemental
disclosure of cash flows information:
|
|||||||
Cash
paid during the period for:
|
|||||||
Interest
on debt
|
$
|
2,362
|
$
|
3,335
|
|||
Income
taxes, net of refunds
|
$
|
13,892
|
$
|
18,594
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
Other
|
|
|
|
Total
|
|
||||||
|
|
Common
|
|
Paid-in
|
|
Retained
|
|
Comprehensive
|
|
Treasury
|
|
Stockholders’
|
|
||||||
|
|
Stock
|
|
Capital
|
|
Earnings
|
|
Income
(Loss)
|
|
Stock
|
|
Equity
|
|||||||
(In
thousands, except shares)
|
|||||||||||||||||||
Balance
- December 31, 2006
|
$
|
238
|
$
|
53,973
|
$
|
170,038
|
$
|
106
|
$
|
(19,467
|
)
|
$
|
204,888
|
||||||
Net
income for the nine monthsended
September 30, 2007
|
33,284
|
33,284
|
|||||||||||||||||
Unrealized
loss on interest rateswap,
net of taxes
|
(154
|
)
|
(154
|
)
|
|||||||||||||||
Comprehensive
income
|
33,130
|
||||||||||||||||||
Issuance
of 236,180 shares of common stock pursuant to stockoptions
exercised
|
3
|
2,333
|
2,336
|
||||||||||||||||
Income
tax benefit relating to issuance of common stockpursuant to stock
options exercised
|
2,023
|
2,023
|
|||||||||||||||||
Stock-based
compensation expense
|
1,809
|
1,809
|
|||||||||||||||||
Balance
- September 30, 2007
|
$
|
241
|
$
|
60,138
|
$
|
203,322
|
$
|
(48
|
)
|
$
|
(19,467
|
)
|
$
|
244,186
|
Nine
Months Ended
|
Three
Months Ended
|
||||||||||||
September
30,
|
September
30,
|
||||||||||||
2007
|
|
2006
|
|
2007
|
|
2006
|
|||||||
Net
sales:
|
|||||||||||||
RV
segment
|
$
|
390,193
|
$
|
415,740
|
$
|
127,156
|
$
|
126,423
|
|||||
MH
segment
|
140,617
|
175,440
|
46,254
|
54,320
|
|||||||||
Total
net sales
|
$
|
530,810
|
$
|
591,180
|
$
|
173,410
|
$
|
180,743
|
|||||
Operating
profit:
|
|||||||||||||
RV
segment
|
$
|
53,193
|
$
|
38,034
|
$
|
17,562
|
$
|
10,675
|
|||||
MH
segment
|
10,707
|
17,464
|
3,636
|
5,158
|
|||||||||
Total
segment operating profit
|
63,900
|
55,498
|
21,198
|
15,833
|
|||||||||
Amortization
of intangibles
|
(3,014
|
)
|
(1,725
|
)
|
(1,111
|
)
|
(788
|
)
|
|||||
Corporate
and other
|
(5,801
|
)
|
(6,128
|
)
|
(1,884
|
)
|
(2,235
|
)
|
|||||
Other
income
|
707
|
638
|
51
|
64
|
|||||||||
Total
operating profit
|
$
|
55,792
|
$
|
48,283
|
$
|
18,254
|
$
|
12,874
|
Net
tangible assets acquired
|
$
|
1,259
|
||
Identifiable
intangible assets
|
6,000
|
|||
Goodwill
|
3,525
|
|||
Total
cash consideration
|
$
|
10,784
|
Net
tangible assets acquired
|
$
|
604
|
||
Identifiable
intangible assets
|
1,780
|
|||
Goodwill
|
648
|
|||
Total
cash consideration
|
$
|
3,032
|
Net
tangible assets acquired
|
$
|
548
|
||
Identifiable
intangible assets
|
4,160
|
|||
Goodwill
|
730
|
|||
Total
consideration
|
5,438
|
|||
Less:
Present value of future minimum payments
|
(1,961
|
)
|
||
Total
cash consideration
|
$
|
3,477
|
September
30,
|
December
31,
|
|||||||||
2007
|
2006
|
2006
|
||||||||
Finished
goods
|
$
|
12,665
|
$
|
15,382
|
$
|
13,513
|
||||
Work
in process
|
3,009
|
4,457
|
3,868
|
|||||||
Raw
material
|
63,551
|
79,053
|
65,695
|
|||||||
Total
|
$
|
79,225
|
$
|
98,892
|
$
|
83,076
|
September
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
perannum,
final payment to be made on April 29, 2010
|
$
|
11,000
|
$
|
15,000
|
$
|
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
|
12,321
|
14,464
|
13,929
|
|||||||
Notes
payable pursuant to the 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
|
9,000
|
31,750
|
12,000
|
|||||||
Industrial
Revenue Bonds, interest rates at September 30, 2007 of
4.68% to 6.28%, due 2008 through 2017; secured by certain
real estate and equipment
|
5,774
|
8,418
|
8,077
|
|||||||
Other
loans primarily secured by certain real estate and equipment,
due 2008 to 2011, with fixed interest rates at
September 30, 2007 of 5.18% to 6.52%
|
4,440
|
6,259
|
5,780
|
|||||||
Other
loan primarily secured by certain real estate, due
2011 with variable interest rate at
September 30, 2007 of 8.50%
|
102
|
3,381
|
1,894
|
|||||||
42,637
|
79,272
|
55,680
|
||||||||
Less
current portion
|
11,309
|
9,738
|
9,714
|
|||||||
Total
long-term indebtedness
|
$
|
31,328
|
$
|
69,534
|
$
|
45,966
|
Nine
Months Ended
|
|
Three
Months Ended
|
|
||||||||||
|
|
September
30,
|
|
September
30,
|
|
||||||||
|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|||||
Weighted
average shares outstanding
|
|||||||||||||
for
basic earnings per share
|
21,856
|
21,591
|
21,936
|
21,615
|
|||||||||
Common
stock equivalents pertaining
|
|||||||||||||
to
stock options
|
233
|
269
|
283
|
171
|
|||||||||
Total
for diluted shares
|
22,089
|
21,860
|
22,219
|
21,786
|
Nine
Months Ended
|
|
Three
Months Ended
|
|
||||||||||
|
|
September
30,
|
|
September
30,
|
|
||||||||
|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|||||
Net
sales:
|
|||||||||||||
RV
segment
|
$
|
390,193
|
$
|
415,740
|
$
|
127,156
|
$
|
126,423
|
|||||
MH
segment
|
140,617
|
175,440
|
46,254
|
54,320
|
|||||||||
Total
net sales
|
$
|
530,810
|
$
|
591,180
|
$
|
173,410
|
$
|
180,743
|
|||||
Operating
profit:
|
|||||||||||||
RV
segment
|
$
|
53,193
|
$
|
38,034
|
$
|
17,562
|
$
|
10,675
|
|||||
MH
segment
|
10,707
|
17,464
|
3,636
|
5,158
|
|||||||||
Total
segment operating profit
|
63,900
|
55,498
|
21,198
|
15,833
|
|||||||||
Amortization
of intangibles
|
(3,014
|
)
|
(1,725
|
)
|
(1,111
|
)
|
(788
|
)
|
|||||
Corporate
and other
|
(5,801
|
)
|
(6,128
|
)
|
(1,884
|
)
|
(2,235
|
)
|
|||||
Other
income
|
707
|
638
|
51
|
64
|
|||||||||
Total
operating profit
|
$
|
55,792
|
$
|
48,283
|
$
|
18,254
|
$
|
12,874
|
§ |
Net
sales for the third quarter of 2007 decreased $7 million (4 percent)
from
the third quarter of 2006. The decrease in net sales this quarter
was due
to an organic sales decline of about $16 million (approximately 9
percent)
resulting from the weakness in both the RV and manufactured housing
industries, partially offset by sales price increases of approximately
$5
million,
primarily due to material cost increases,
and sales of $4 million due to acquisitions.
|
§ |
Net
income for the third quarter of 2007 increased 60 percent from the
third
quarter of 2006 for the following reasons:
|
· |
In
response to the slowdowns in both the RV and manufactured housing
industries, over the past 15 months the Company closed 15 facilities
and
consolidated those operations into other existing facilities, and
reduced
fixed overhead where prudent, including reducing staff levels by
more than
100 salaried employees. These facility consolidations and fixed overhead
reductions increased operating profit in the third quarter of 2007
by
approximately $2.0 million ($1.2 million after taxes), and are expected
to
improve operating profit by more than $6 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 $1.2 million ($0.7 million after
taxes)
due to losses at the Indiana specialty trailer operation which was
closed
in September 2006.
|
§ |
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. (“Pivit Hitch”). Extreme Engineering and
Pivit Hitch had combined annual sales of $12 million prior to the
acquisition. The purchase price for the two companies was $10.8 million,
including transaction costs, 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
throughout the United States. Lippert has continued production at
Extreme
Engineering's existing leased facility in Riverside, California.
Lippert
has also transferred certain of its existing specialty trailer
manufacturing operations to Extreme's facility in connection with
the
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 third quarter of 2007, the Company’s sales of these
products were running at an annualized rate of approximately $120
million,
as compared to an annualized rate of approximately $105 million in
the
third quarter of 2006, an increase of approximately 14 percent, despite
the decline in industry-wide shipments of
RVs.
|
· |
Sales
from acquisitions of approximately $4 million.
|
· |
Sales
price increases of approximately $2 million, primarily due to material
cost increases.
|
· |
A
2007 organic sales decline of approximately $3 million, or 2 percent,
of
RV related products, compared to a decline of 6 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.
|
2007
|
2006
|
Percent
Change
|
||||||||
Content
per Travel Trailer and
Fifth
Wheel RVs
|
$
|
1,709
|
$
|
1,530
|
12
|
%
|
||||
Content
per Motorhomes
|
$
|
238
|
$
|
197
|
21
|
%
|
||||
Content
per all RVs
|
$
|
1,295
|
$
|
1,189
|
9
|
%
|
2007
|
2006
|
Percent
Change
|
||||||||
|
||||||||||
Travel
Trailer and Fifth Wheel
RVs |
261,600
|
309,700
|
(16
|
)%
|
||||||
Motorhomes
|
55,900
|
55,700
|
0
|
%
|
||||||
All
RVs
|
355,500
|
407,800
|
(13
|
)%
|
· |
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 $1.2 million in losses incurred in the Company’s Indiana
specialty trailer operation in the third quarter of 2006. This operation
was closed in September 2006.
|
· |
Lower
workers compensation costs.
|
· |
A
decrease in selling, general and administrative expenses to 10.9
percent
of net sales in the third quarter of 2007 from 11.7 percent of net
sales
in the third quarter of 2006 due to cost cutting measures implemented
and
lower delivery costs, partially offset by higher incentive compensation
as
a percent of net sales due to increased operating profit
margins.
|
· |
Higher
warranty costs based on claims 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 $31 million, or 7 percent,
of
RV related products.
|
· |
A
decline of approximately $17 million in hurricane-related sales compared
to the first nine months of 2006. Subsequent to March 2006, there
was no
significant hurricane-related
activity.
|
· |
A
decline of approximately $7 million in sales of specialty trailers
primarily due to the September 2006 closure of the Indiana specialty
trailer operation.
|
· |
Sales
price increases of approximately $15 million, primarily due to material
cost increases.
|
· |
Sales
from acquisitions of approximately $14 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 $3.1 million in losses incurred in the Company’s Indiana
specialty trailer operation in the first nine months of 2006. This
operation was closed in September
2006.
|
· |
Lower
workers compensation costs.
|
· |
A
decrease in selling, general and administrative expenses to 11.1
percent
of net sales in the third quarter of 2007 from 11.3 percent of net
sales
in the third quarter of 2006 due to cost cutting measures implemented
and
lower delivery costs, 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 profit
margins.
|
· |
The
negative impact on the third quarter of 2007 of spreading fixed
manufacturing costs over a smaller sales
base.
|
· |
Higher
warranty costs, based on claims 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 Home Produced
|
$
|
1,826
|
$
|
1,686
|
8
|
%
|
||||
Content
per Floor Produced
|
$
|
1,056
|
$
|
1,016
|
4
|
%
|
2007
|
2006
|
Percent
Change
|
||||||||
Total
Homes Produced
|
96,500
|
141,400
|
(32
|
)%
|
||||||
Total
Floors Produced
|
166,900
|
234,600
|
(29
|
)%
|
· |
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 15.4
percent
of net sales in the third quarter of 2007 from 13.9 percent of net
sales
in the third quarter of 2006 due primarily to the spreading of fixed
costs
over a smaller sales base.
|
· |
The
spreading of fixed manufacturing costs over a smaller sales
base.
|
· |
An
increase in selling, general and administrative expenses to 14.7
percent
of net sales in the first nine months of 2007 from 13.7 percent of
net
sales in the first nine 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 profit
margins.
|
· |
Implementation
of cost-cutting measures.
|
· |
Improved
production and procurement
efficiencies.
|
· |
Lower
workers compensation costs.
|
|
|
2007
|
|
2006
|
|
||
|
|
|
|
|
|
|
|
Net
cash flows provided by operating activities
|
|
$
|
61,138
|
|
$
|
39,057
|
|
Net
cash flows used for investment activities
|
|
$
|
(15,595
|
)
|
$
|
(50,744
|
)
|
Net
cash flows (used for) provided by financing activities
|
|
$
|
(8,684
|
)
|
$
|
8,605
|
|
Item
3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
a) |
Evaluation
of Disclosure Controls and Procedures
|
b) |
Changes
in Internal Controls
|
DREW
INDUSTRIES INCORPORATED
Registrant
|
||
|
|
|
By: | /s/ Fredric M. Zinn | |
Fredric
M. Zinn
Executive
Vice President and
Chief
Financial Officer
|
||