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.
EmployerIdentification
No.)
|
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
|
17-32
|
||
|
|||
Item
3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
|
33
|
||
|
|||
Item
4 - CONTROLS AND PROCEDURES
|
34
|
||
|
|||
PART
II - OTHER
INFORMATION
|
|
||
|
|||
Item
1 - LEGAL PROCEEDINGS
|
35-36
|
||
|
|||
Item
1A - RISK FACTORS
|
36-37
|
||
|
|||
Item
2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
|
37
|
||
|
|||
Item
6 - EXHIBITS
|
38
|
||
|
|||
SIGNATURES
|
39
|
||
|
|||
EXHIBIT
31.1 - SECTION 302 CEO CERTIFICATION
|
40
|
||
|
|||
EXHIBIT
31.2 - SECTION 302 CFO CERTIFICATION
|
41
|
||
|
|||
EXHIBIT
32.1 - SECTION 906 CEO CERTIFICATION
|
42
|
||
|
|||
EXHIBIT
32.2 - SECTION 906 CFO CERTIFICATION
|
43
|
Nine
Months Ended
|
Three
Months Ended
|
||||||||||||
September
30,
|
September
30,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
(In
thousands, except per share amounts)
|
|||||||||||||
Net
sales
|
$
|
433,945
|
$
|
530,810
|
$
|
124,274
|
$
|
173,410
|
|||||
Cost
of sales
|
335,580
|
402,717
|
99,292
|
131,954
|
|||||||||
Gross
profit
|
98,365
|
128,093
|
24,982
|
41,456
|
|||||||||
Selling,
general and administrative expenses
|
64,026
|
73,008
|
20,481
|
23,253
|
|||||||||
Other
income
|
675
|
707
|
29
|
51
|
|||||||||
Operating
profit
|
35,014
|
55,792
|
4,530
|
18,254
|
|||||||||
Interest
expense, net
|
602
|
1,996
|
323
|
444
|
|||||||||
Income
before income taxes
|
34,412
|
53,796
|
4,207
|
17,810
|
|||||||||
Provision
for income taxes
|
13,524
|
20,512
|
1,614
|
6,677
|
|||||||||
Net
income
|
$
|
20,888
|
$
|
33,284
|
$
|
2,593
|
$
|
11,133
|
|||||
Net
income per common share:
|
|||||||||||||
Basic
|
$
|
0.95
|
$
|
1.52
|
$
|
0.12
|
$
|
0.51
|
|||||
Diluted
|
$
|
0.95
|
$
|
1.51
|
$
|
0.12
|
$
|
0.50
|
|||||
Weighted
average common shares outstanding:
|
|||||||||||||
Basic
|
21,879
|
21,856
|
21,702
|
21,936
|
|||||||||
Diluted
|
22,023
|
22,089
|
21,815
|
22,219
|
September
30,
|
December
31,
|
|||||||||
2008
|
2007
|
2007
|
||||||||
(In
thousands, except shares and per share amount)
|
||||||||||
ASSETS
|
||||||||||
Current
assets
|
||||||||||
Cash
and cash equivalents
|
$
|
9,185
|
$
|
43,644
|
$
|
56,213
|
||||
Accounts
receivable, trade, less allowances
|
23,874
|
38,313
|
15,740
|
|||||||
Inventories
|
107,272
|
79,225
|
76,279
|
|||||||
Prepaid
expenses and other current assets
|
11,924
|
13,703
|
12,702
|
|||||||
Total
current assets
|
152,255
|
174,885
|
160,934
|
|||||||
Fixed
assets, net
|
93,957
|
105,582
|
100,616
|
|||||||
Goodwill
|
49,864
|
39,305
|
39,547
|
|||||||
Other
intangible assets
|
43,099
|
33,959
|
32,578
|
|||||||
Other
assets
|
6,386
|
11,380
|
12,062
|
|||||||
Total
assets
|
$
|
345,561
|
$
|
365,111
|
$
|
345,737
|
||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||||
Current
liabilities
|
||||||||||
Notes
payable, including current maturities of
|
||||||||||
long-term
indebtedness
|
$
|
11,797
|
$
|
11,309
|
$
|
8,881
|
||||
Accounts
payable, trade
|
14,273
|
25,012
|
17,524
|
|||||||
Accrued
expenses and other current liabilities
|
41,585
|
48,400
|
44,668
|
|||||||
Total
current liabilities
|
67,655
|
84,721
|
71,073
|
|||||||
Long-term
indebtedness
|
5,315
|
31,328
|
18,381
|
|||||||
Other
long-term liabilities
|
5,660
|
4,876
|
4,747
|
|||||||
Total
liabilities
|
78,630
|
120,925
|
94,201
|
|||||||
Stockholders’
equity
|
||||||||||
Common
stock, par value $.01 per share: authorized
|
||||||||||
50,000,000
shares; issued 24,088,454 shares at September 2008,
|
||||||||||
24,070,314
shares at September 2007 and 24,082,974 at
|
||||||||||
December
2007
|
241
|
241
|
241
|
|||||||
Paid-in
capital
|
63,802
|
60,138
|
60,919
|
|||||||
Retained
earnings
|
230,693
|
203,322
|
209,805
|
|||||||
Accumulated
other comprehensive (loss) income
|
(5
|
)
|
(48
|
)
|
38
|
|||||
294,731
|
263,653
|
271,003
|
||||||||
Treasury
stock, at cost - 2,596,725 shares at September 2008,
|
||||||||||
2,149,325
at September 2007 and December 2007
|
(27,800
|
)
|
(19,467
|
)
|
(19,467
|
)
|
||||
Total
stockholders’ equity
|
266,931
|
244,186
|
251,536
|
|||||||
Total
liabilities and stockholders’ equity
|
$
|
345,561
|
$
|
365,111
|
$
|
345,737
|
Nine
Months Ended
|
|||||||
September
30,
|
|||||||
2008
|
2007
|
||||||
(In
thousands)
|
|||||||
Cash
flows from operating activities:
|
|||||||
Net
income
|
$
|
20,888
|
$
|
33,284
|
|||
Adjustments
to reconcile net income to cash flows (used for) provided
by operating activities:
|
|||||||
Depreciation
and amortization
|
12,534
|
13,276
|
|||||
Deferred
taxes
|
-
|
102
|
|||||
(Gain)/loss
on disposal of fixed assets
|
(2,410
|
)
|
541
|
||||
Stock-based
compensation expense
|
2,809
|
1,809
|
|||||
Changes
in assets and liabilities, net of business acquisitions:
|
|||||||
Accounts
receivable, net
|
(6,384
|
)
|
(19,512
|
)
|
|||
Inventories
|
(26,357
|
)
|
6,165
|
||||
Prepaid
expenses and other assets
|
115
|
1,317
|
|||||
Accounts
payable, accrued expenses and other liabilities
|
(4,703
|
)
|
24,156
|
||||
Net
cash flows (used for) provided by operating
activities
|
(3,508
|
)
|
61,138
|
||||
Cash
flows from investing activities:
|
|||||||
Capital
expenditures
|
(3,274
|
)
|
(7,452
|
)
|
|||
Acquisition
of businesses
|
(28,442
|
)
|
(17,293
|
)
|
|||
Proceeds
from sales of fixed assets
|
9,800
|
9,184
|
|||||
Other
investments
|
(3,195
|
)
|
(34
|
)
|
|||
Net
cash flows used for investing activities
|
(25,111
|
)
|
(15,595
|
)
|
|||
Cash
flows from financing activities:
|
|||||||
Proceeds
from line of credit and other borrowings
|
-
|
23,797
|
|||||
Repayments
under line of credit and other borrowings
|
(10,150
|
)
|
(36,840
|
)
|
|||
Exercise
of stock options
|
74
|
4,359
|
|||||
Purchase
of treasury stock
|
(8,333
|
)
|
-
|
||||
Net
cash flows used for financing activities
|
(18,409
|
)
|
(8,684
|
)
|
|||
Net
(decrease) increase in cash
|
(47,028
|
)
|
36,859
|
||||
Cash
and cash equivalents at beginning of period
|
56,213
|
6,785
|
|||||
Cash
and cash equivalents at end of period
|
$
|
9,185
|
$
|
43,644
|
|||
Supplemental
disclosure of cash flow information:
|
|||||||
Cash
paid during the period for:
|
|||||||
Interest
on debt
|
$
|
1,021
|
$
|
2,362
|
|||
Income
taxes, net of refunds
|
$
|
13,577
|
$
|
13,892
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
Other
|
|
|
|
Total
|
|
||||||
|
|
Common
|
|
Paid-in
|
|
Retained
|
|
Comprehensive
|
|
Treasury
|
|
Stockholders’
|
|
||||||
|
|
Stock
|
|
Capital
|
|
Earnings
|
|
Income
(Loss)
|
|
Stock
|
|
Equity
|
|||||||
(In
thousands, except shares)
|
|
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|
|
|||||||||||||
Balance
- December 31, 2007
|
$
|
241
|
$
|
60,919
|
$
|
209,805
|
$
|
38
|
$
|
(19,467
|
)
|
$
|
251,536
|
||||||
Net
income for the nine months ended
September
30, 2008
|
-
|
-
|
20,888
|
-
|
-
|
20,888
|
|||||||||||||
Unrealized
loss on interest rate swap,
net of taxes
|
-
|
-
|
-
|
(43
|
)
|
-
|
(43
|
)
|
|||||||||||
Comprehensive
income
|
20,845
|
||||||||||||||||||
Issuance
of 5,480 shares of common stock pursuant to stock options and
deferred
stock units exercised
|
-
|
59
|
-
|
-
|
-
|
59
|
|||||||||||||
Purchase
of 447,400 shares of treasury
stock
|
-
|
-
|
-
|
-
|
(8,333
|
)
|
(8,333
|
)
|
|||||||||||
Income
tax benefit relating to issuance
of common stock pursuant to stock options exercised
|
-
|
15
|
-
|
-
|
-
|
15
|
|||||||||||||
Stock-based
compensation expense
|
-
|
2,809
|
-
|
-
|
-
|
2,809
|
|||||||||||||
Balance
- September 30, 2008
|
$
|
241
|
$
|
63,802
|
$
|
230,693
|
$
|
(5
|
)
|
$
|
(27,800
|
)
|
$
|
266,931
|
1. |
Basis
of Presentation
|
2. |
Segment
Reporting
|
·
|
Aluminum
windows and screens
|
·
|
Doors
|
·
|
Steel
chassis
|
·
|
Steel
chassis parts
|
·
|
Slide-out
mechanisms and related power units
|
·
|
Leveling
devices
|
·
|
Axles
|
·
|
Steps
|
·
|
Electric
stabilizer jacks
|
·
|
Bed
lifts
|
·
|
Suspension
systems
|
·
|
Ramp
doors
|
·
|
Thermoformed
exterior panels
|
·
|
Upholstered
furniture
|
·
|
Thermoformed
bath and kitchen products
|
·
|
Vinyl
and aluminum windows and screens
|
·
|
Steel
chassis
|
·
|
Steel
chassis parts
|
·
|
Axles
|
·
|
Thermoformed
bath and kitchen products
|
|
Nine
Months Ended
|
|
Three
Months Ended
|
|
|||||||||
|
|
September
30,
|
|
September
30,
|
|
||||||||
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|||||
Net
sales:
|
|
|
|
|
|||||||||
RV
Segment
|
$
|
320,941
|
$
|
390,193
|
$
|
85,694
|
$
|
127,156
|
|||||
MH
Segment
|
113,004
|
140,617
|
38,580
|
46,254
|
|||||||||
Total
net sales
|
$
|
433,945
|
$
|
530,810
|
$
|
124,274
|
$
|
173,410
|
|||||
Operating
profit:
|
|||||||||||||
RV
Segment
|
$
|
31,848
|
$
|
53,128
|
$
|
4,598
|
$
|
17,007
|
|||||
MH
Segment
|
10,989
|
12,153
|
3,913
|
4,047
|
|||||||||
Total
segment operating profit
|
42,837
|
65,281
|
8,511
|
21,054
|
|||||||||
Amortization
of intangibles
|
(3,670
|
)
|
(3,014
|
)
|
(1,547
|
)
|
(1,111
|
)
|
|||||
Corporate
|
(5,714
|
)
|
(5,801
|
)
|
(1,747
|
)
|
(1,884
|
)
|
|||||
Other
items
|
1,561
|
(674
|
)
|
(687
|
)
|
195
|
|||||||
Total
operating profit
|
$
|
35,014
|
$
|
55,792
|
$
|
4,530
|
$
|
18,254
|
3. |
Acquisitions
and Other Investments
|
Net
tangible assets acquired
|
$
|
7,255
|
||
Identifiable
intangible assets
|
11,000
|
|||
Goodwill
(tax deductible)
|
10,187
|
|||
Total
cash consideration
|
$
|
28,442
|
4. |
Cash
and Cash Equivalents
|
5. |
Inventories
|
September
30,
|
December
31,
|
|||||||||
2008
|
2007
|
2007
|
||||||||
Finished
goods
|
$
|
12,276
|
$
|
12,665
|
$
|
12,698
|
||||
Work
in process
|
3,376
|
3,009
|
2,975
|
|||||||
Raw
material
|
91,620
|
63,551
|
60,606
|
|||||||
Total
|
$
|
107,272
|
$
|
79,225
|
$
|
76,279
|
6. |
Long-term
Indebtedness
|
September
30,
|
December
31,
|
|||||||||
2008
|
2007
|
2007
|
||||||||
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% per
|
||||||||||
annum,
final payment to be made on April 29, 2010
|
$
|
7,000
|
$
|
11,000
|
$
|
10,000
|
||||
Senior
Promissory Notes, prepaid in full on
|
||||||||||
December
28, 2007
|
-
|
12,321
|
-
|
|||||||
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
|
5,000
|
9,000
|
8,000
|
|||||||
Industrial
Revenue Bonds, interest rates at September 30, 2008
|
||||||||||
of
3.77% to 6.28%, due 2009 through 2017; secured by
|
||||||||||
certain
real estate and equipment
|
2,895
|
5,774
|
5,448
|
|||||||
Other
loans primarily secured by certain real estate and
|
||||||||||
equipment,
due 2009 to 2011, with fixed interest rates
|
||||||||||
at
September 30, 2008 of 5.18% to 6.52%
|
2,217
|
4,440
|
3,727
|
|||||||
Other
loan primarily secured by certain real estate,
|
||||||||||
with
a variable interest rate
|
-
|
102
|
87
|
|||||||
17,112
|
42,637
|
27,262
|
||||||||
Less
current portion
|
11,797
|
11,309
|
8,881
|
|||||||
Total
long-term indebtedness
|
$
|
5,315
|
$
|
31,328
|
$
|
18,381
|
7. |
Weighted
Average Common Shares
Outstanding
|
Nine
Months Ended
|
Three
Months Ended
|
||||||||||||
September
30,
|
September
30,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
|
|||||||||||||
Weighted
average shares outstanding for basic earnings per share
|
21,879
|
21,856
|
21,702
|
21,936
|
|||||||||
Common
stock equivalents pertaining to
stock options
|
144
|
233
|
113
|
283
|
|||||||||
Total
for diluted shares
|
22,023
|
22,089
|
21,815
|
22,219
|
8. |
Commitments
and Contingencies
|
9. |
Stockholders’
Equity
|
10. |
New
Accounting Pronouncements
|
·
|
Aluminum
windows and screens
|
·
|
Doors
|
·
|
Steel
chassis
|
·
|
Steel
chassis parts
|
·
|
Slide-out
mechanisms and related power units
|
·
|
Leveling
devices
|
·
|
Axles
|
·
|
Steps
|
·
|
Electric
stabilizer jacks
|
·
|
Bed
lifts
|
·
|
Suspension
systems
|
·
|
Ramp
doors
|
·
|
Thermoformed
exterior panels
|
·
|
Upholstered
furniture
|
·
|
Thermoformed
bath and kitchen products
|
·
|
Vinyl
and aluminum windows and screens
|
·
|
Steel
chassis
|
·
|
Steel
chassis parts
|
·
|
Axles
|
·
|
Thermoformed
bath and kitchen products
|
Wholesale
|
Retail
|
|||||
Quarter
ended March 31
|
(8%)
|
|
(17%)
|
|||
Quarter
ended June 30
|
(18%)
|
|
(19%)
|
|||
July
|
(33%)
|
|
(26%)
|
|||
August
|
(41%)
|
|
(26%)
|
|||
September
|
(39%)
|
|
Not
yet available
|
|
Nine
Months Ended
|
Three
Months Ended
|
|||||||||||
September
30,
|
September
30,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Net
sales:
|
|||||||||||||
RV
Segment
|
$
|
320,941
|
$
|
390,193
|
$
|
85,694
|
$
|
127,156
|
|||||
MH
Segment
|
113,004
|
140,617
|
38,580
|
46,254
|
|||||||||
Total
net sales
|
$
|
433,945
|
$
|
530,810
|
$
|
124,274
|
$
|
173,410
|
|||||
Operating
profit:
|
|||||||||||||
RV
Segment
|
$
|
31,848
|
$
|
53,128
|
$
|
4,598
|
$
|
17,007
|
|||||
MH
Segment
|
10,989
|
12,153
|
3,913
|
4,047
|
|||||||||
Total
segment operating profit
|
42,837
|
65,281
|
8,511
|
21,054
|
|||||||||
Amortization
of intangibles
|
(3,670
|
)
|
(3,014
|
)
|
(1,547
|
)
|
(1,111
|
)
|
|||||
Corporate
|
(5,714
|
)
|
(5,801
|
)
|
(1,747
|
)
|
(1,884
|
)
|
|||||
Other
items
|
1,561
|
(674
|
)
|
(687
|
)
|
195
|
|||||||
Total
operating profit
|
$
|
35,014
|
$
|
55,792
|
$
|
4,530
|
$
|
18,254
|
§
|
Net
sales for the third quarter of 2008, excluding the impact of sales
price
increases and acquisitions, decreased $66 million (38 percent) from
the
third quarter of 2007, primarily as a result of the 38 percent decline
in
industry-wide wholesale shipments of travel trailers and fifth wheel
RVs
in the third quarter of 2008, as well as a 15 percent decline in
industry
wholesale shipments of manufactured homes. In addition, 2008 third
quarter
sales were negatively affected by the 62 percent decline in industry-wide
wholesale shipments of motorhomes, and the severe industry-wide decline
in
sales of small and medium sized boats, particularly on the West Coast,
for
which the Company supplies specialty trailers.
|
§
|
Net
income for the third quarter of 2008 decreased 77 percent from the
third
quarter of 2007, primarily due to the decrease in net sales and higher
raw
material costs.
|
§
|
Facility
consolidations and fixed overhead reductions improved operating profit
in
the third quarter of 2008 by approximately $1.1 million, compared
to the
third quarter of 2007, and are expected to improve operating profit
by
over $5 million for all of 2008 as compared to 2007. These fixed
cost
reductions are expected to further benefit 2009 operating profit
as
compared to 2008 by over $1
million.
|
§
|
On
July 1, 2008, Lippert acquired certain assets and the business of
Seating
Technology, Inc. and its affiliated companies (“Seating Technology”).
Seating Technology had annual sales of $40 million in 2007. The purchase
price was $28.4 million, which was financed from available cash.
Seating
Technology manufactures a wide variety of furniture products primarily
for
towable RVs, including folding sofas for toy hauler RVs, a full line
of
upholstered furniture, mattresses, decorative pillows, wood-backed
valances and quilted soft good products. This acquisition has added
an
entirely new product line for the Company. Lippert is in the process
of
closing two of Seating Technology's five leased facilities in Indiana,
and
consolidating those operations into existing facilities.
|
§
|
Steel
and aluminum are among the Company’s principal raw materials. Since late
2007, the cost of steel and aluminum has been volatile. Assuming
the cost
of raw materials remains at the current escalated levels, the Company’s
cost of sales would increase by approximately $40 million on an annualized
basis. Although the Company was able to raise sales prices, the higher
cost raw materials, net of sales price increases, reduced 2008 third
quarter earnings by approximately $0.06 to $0.08 per diluted share.
Raw
material costs have recently declined from their peak levels, largely
due
to the global economic downturn, but remain well above prior-year
levels.
However, the Company still has higher priced raw materials in inventory,
which will adversely impact operating results for the fourth quarter
of
2008, although the impact is estimated to be less than it was in
the third
quarter of 2008.
|
· |
An
organic sales decline of approximately $51 million, or 42 percent,
of
RV-related products. This 42 percent decline was due largely to the
38
percent decrease in industry-wide wholesale shipments of travel trailers
and fifth wheel RVs, the Company’s primary RV market. Industry-wide
wholesale shipments of motorhomes, components for which represent
about 5
percent of the Company’s RV segment net sales, were down 62 percent during
the third quarter of 2008.
|
· |
An
organic sales decline of approximately $3 million in specialty trailers,
due primarily to a severe
industry-wide decline in sales of small and medium size boats,
particularly on the West Coast, the Company’s primary specialty trailer
market.
|
· |
Sales
generated from 2008 acquisitions aggregating approximately $7 million.
|
· |
Sales
price increases of approximately $5 million, primarily due to raw
material
cost increases.
|
2008
|
2007
|
Percent
Change
|
||||||||
Content
per Travel Trailer and Fifth
Wheel RVs
|
$
|
1,889
|
$
|
1,673
|
13%
|
|||||
Content
per Motorhomes
|
$
|
554
|
$
|
403
|
37%
|
|||||
Content
per all RVs
|
$
|
1,528
|
$
|
1,295
|
18%
|
2008
|
2007
|
Percent
Change
|
||||||||
Travel
Trailer and Fifth Wheel
RVs
|
218,900
|
261,600
|
(16)%
|
|||||||
Motorhomes
|
37,300
|
55,900
|
(33)%
|
|||||||
All
RVs
|
284,200
|
355,500
|
(20)%
|
·
|
Higher
raw material costs.
|
·
|
Labor
inefficiencies due to the sharp drop in
sales.
|
·
|
The
spreading of fixed manufacturing costs over a smaller sales
base.
|
·
|
Higher
health insurance costs.
|
·
|
Higher
than expected integration costs of the Seating Technology acquisition,
and
costs incurred for prototype expenses for potential new customer
accounts.
New customer accounts have already been
gained.
|
·
|
An
increase in selling, general and administrative expenses to 12.5
percent
of net sales in the third quarter of 2008 from 11.0 percent of
net sales
in the third quarter of 2007, largely due to an increase in bad
debt
expense, and higher fuel and delivery costs, as well as the spreading
of
fixed administrative costs over a smaller sales base. This was
partially
offset by lower incentive compensation as a percent of net sales
due to
reduced operating profit margins.
|
·
|
Implementation
of cost-cutting measures.
|
·
|
Lower
overtime, supplies and repair
costs.
|
·
|
An
organic sales decline of approximately $82 million, or 22 percent,
of RV
related products. This 22 percent decline was due largely to
the 21
percent decrease in industry-wide wholesale shipments of travel
trailers
and fifth wheel RVs. Industry-wide wholesale shipments of motorhomes,
components for which represent about 5 percent of the Company’s RV segment
net sales, were down 42 percent during the first nine months
of
2008.
|
·
|
An
organic sales decline of approximately $11 million in specialty
trailers,
due primarily to a severe industry-wide decline in sales of small
and
medium size boats, particularly on the West Coast, the Company’s primary
specialty trailer market.
|
·
|
Sales
generated from 2007 and 2008 acquisitions aggregating approximately
$15
million.
|
·
|
Sales
price increases of approximately $9 million, primarily due to
raw material
cost increases.
|
·
|
Higher
raw material costs.
|
·
|
Labor
inefficiencies due to the sharp drop in
sales.
|
·
|
The
spreading of fixed manufacturing costs over a smaller sales
base.
|
·
|
Higher
health insurance costs.
|
·
|
An
increase in selling, general and administrative expenses
to 12.1 percent
of net sales in the first nine months of 2008 from 11.1
percent of net
sales in the same period of 2007, largely due to an increase
in bad debt
expense, and higher fuel and delivery costs, as well
as the spreading of
fixed administrative costs over a smaller sales base.
This was partially
offset by lower incentive compensation as a percent of
net sales due to
reduced operating profit margins.
|
·
|
Implementation
of cost-cutting measures.
|
·
|
Lower
overtime and warranty costs.
|
2008
|
2007
|
Percent
Change
|
||||||||
Content
per Home Produced
|
$
|
1,603
|
$
|
1,826
|
(12)%
|
|||||
Content
per Floor Produced
|
$
|
961
|
$
|
1,056
|
(9)%
|
2008
|
2007
|
Percent
Change
|
||||||||
Total
Homes Produced
|
88,400
|
96,500
|
(8)%
|
|||||||
Total
Floors Produced
|
147,400
|
166,900
|
(12)%
|
·
|
Changes
in product mix.
|
·
|
The
elimination of certain low margin business exited in the latter
half of
2007.
|
·
|
Improved
production efficiencies.
|
·
|
The
spreading of fixed manufacturing costs over a smaller sales
base.
|
·
|
An
increase in selling, general and administrative expenses to 16.0
percent
of net sales in the third quarter of 2008 from 14.3 percent of
net sales
in third quarter of 2007 due to higher fuel and delivery costs
as a
percent of net sales, as well as the spreading of fixed costs
over a
smaller sales base.
|
·
|
Changes
in product mix.
|
·
|
The
elimination of certain low margin business exited in the latter
half of
2007.
|
·
|
Improved
production efficiencies.
|
·
|
The
spreading of fixed manufacturing costs over a smaller sales
base.
|
·
|
Higher
health insurance costs.
|
·
|
An
increase in selling, general and administrative expenses
to 15.7 percent
of net sales in the first nine months of 2008 from 14.3 percent
of net
sales in same period of 2007 due to higher fuel and delivery
costs as a
percent of net sales, as well as the spreading of fixed costs
over a
smaller sales base.
|
Nine
Months Ended
|
Three
Months Ended
|
||||||||||||
September
30,
|
September
30,
|
||||||||||||
|
2008
|
|
2007
|
|
2008
|
|
2007
|
||||||
Cost
of sales:
|
|
|
|
|
|||||||||
Other
|
$
|
-
|
$
|
(236
|
)
|
$
|
-
|
$
|
-
|
||||
Selling,
general and administrative expenses:
|
|||||||||||||
Legal
proceedings
|
1,382
|
1,048
|
530
|
698
|
|||||||||
(Gain)
on sold facilities
|
(3,523
|
)
|
(1,279
|
)
|
(248
|
)
|
(1,050
|
)
|
|||||
Loss
on sold facilities and write-
|
|||||||||||||
downs
to estimated current market
|
|||||||||||||
value
of facilities to be sold
|
1,005
|
2,080
|
558
|
160
|
|||||||||
Other
|
-
|
(5
|
)
|
-
|
(4
|
)
|
|||||||
Incentive
compensation impact of
|
|||||||||||||
above
items
|
250
|
(227
|
)
|
(123
|
)
|
52
|
|||||||
$
|
(886
|
)
|
$
|
1,381
|
$
|
717
|
$
|
(144
|
)
|
2008
|
2007
|
||||||
Net
cash flows (used for) provided by operating activities
|
$
|
(3,508
|
)
|
$
|
61,138
|
||
Net
cash flows used for investing activities
|
$
|
(25,111
|
)
|
$
|
(15,595
|
)
|
|
Net
cash flows used for financing activities
|
$
|
(18,409
|
)
|
$
|
(8,684
|
)
|
Item
3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
Item
4.
|
CONTROLS
AND PROCEDURES
|
a)
|
Evaluation
of Disclosure Controls and Procedures
|
b)
|
Changes
in Internal Controls
|
Issuer
Purchases of Equity Securities
|
||||
(a)
|
(b)
|
(c)
|
(d)
|
|
Period
|
Total
Number of Shares Purchased
|
Average
Price Paid per Share
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans or
Programs
|
Maximum
Number of Shares that May Yet Be Purchased Under the Plans or
Programs
|
August
1 - 31, 2008
|
250,000
|
$15.38
|
250,000
|
552,600
|
a) |
Exhibits
as required by item 601 of Regulation
S-K:
|
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 32.1 is 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
|
||
|
|
|
By: | /s/ Joseph S. Giordano III | |
Joseph
S. Giordano III
Chief
Financial Officer and Treasurer
|