Drew Industries
Incorporated
|
Delaware
|
13-3250533
|
|
State
or other jurisdiction of incorporation or organization
|
(I.R.S.
Employer Identification
No.)
|
200 Mamaroneck Avenue, White Plains,
NY
|
10601
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Title
of each class
|
Name
of each exchange on which registered
|
|
Common Stock, par value
$0.01
|
New York Stock
Exchange
|
●Towable
RV steel chassis
|
●Aluminum
windows and screens
|
●Towable
RV axles and suspension solutions
|
●Chassis
components
|
●RV
slide-out mechanisms and solutions
|
●Furniture
and mattresses
|
●Thermoformed
products
|
●Entry and baggage
doors
|
●Toy hauler ramp
doors
|
●Entry
steps
|
●Manual,
electric and hydraulic stabilizer
|
●Other
towable accessories
|
and lifting systems
|
●Specialty
trailers for hauling boats, personal
|
watercraft, snowmobiles and
equipment
|
RV
PRODUCTS SEGMENT
|
||||||||||||||
City
|
State
|
Square Feet
|
Owned
|
Leased
|
||||||||||
Fontana
|
California
|
108,800 |
P
|
|||||||||||
Rialto
(1)
|
California
|
56,430 |
P
|
|||||||||||
Fitzgerald
(1)
|
Georgia
|
15,800 |
P
|
|||||||||||
Burley
|
Idaho
|
17,000 |
P
|
|||||||||||
Goshen
(1)
|
Indiana
|
340,000 |
P
|
|||||||||||
Goshen
|
Indiana
|
171,000 |
P
|
|||||||||||
Elkhart
|
Indiana
|
100,000 |
P
|
|||||||||||
Goshen
|
Indiana
|
93,000 |
P
|
|||||||||||
Goshen
(1)
|
Indiana
|
69,900 |
P
|
|||||||||||
Topeka
|
Indiana
|
67,560 |
P
|
|||||||||||
Goshen
|
Indiana
|
65,000 |
P
|
|||||||||||
Goshen
|
Indiana
|
53,500 |
P
|
|||||||||||
Elkhart
|
Indiana
|
53,289 |
P
|
|||||||||||
Goshen
|
Indiana
|
41,500 |
P
|
|||||||||||
Pendleton
|
Oregon
|
56,800 |
P
|
|||||||||||
McMinnville
(1)
|
Oregon
|
12,350 |
P
|
|||||||||||
Waxahachie
(1)
|
Texas
|
40,000 |
P
|
|||||||||||
Longview
(1)
|
Texas
|
29,450 |
P
|
|||||||||||
Kaysville
|
Utah
|
75,000 |
P
|
|||||||||||
1,466,379 | (2) |
(1)
|
These
plants also produce products for manufactured homes. The square footage
indicated above represents that portion of the building that is utilized
for manufacture of products for RVs.
|
(2)
|
At
December 31, 2007, the Company’s RV Segment used an aggregate of 1,644,001
square feet for manufacturing and
warehousing.
|
MH
PRODUCTS SEGMENT
|
||||||||||||||
City
|
State
|
Square Feet
|
Owned
|
Leased
|
||||||||||
Double
Springs
|
Alabama
|
109,000 |
P
|
|||||||||||
Rialto
(1)
|
California
|
6,270 |
P
|
|||||||||||
Ocala
|
Florida
|
47,100 |
P
|
|||||||||||
Cairo
|
Georgia
|
105,000 |
P
|
|||||||||||
Fitzgerald
(1)
|
Georgia
|
63,200 |
P
|
|||||||||||
Nampa
|
Idaho
|
83,500 |
P
|
|||||||||||
Goshen
|
Indiana
|
110,000 |
P
|
|||||||||||
Goshen
(1)
|
Indiana
|
70,000 |
P
|
|||||||||||
Middlebury
|
Indiana
|
61,113 |
P
|
|||||||||||
Goshen
(1)
|
Indiana
|
25,800 |
P
|
|||||||||||
Arkansas
City
|
Kansas
|
7,800 |
P
|
|||||||||||
McMinnville
(1)
|
Oregon
|
12,350 |
P
|
|||||||||||
Denver
|
Pennsylvania
|
40,200 |
P
|
|||||||||||
Dayton
|
Tennessee
|
100,000 |
P
|
|||||||||||
Waxahachie
(1)
|
Texas
|
160,000 |
P
|
|||||||||||
Mansfield
|
Texas
|
61,500 |
P
|
|||||||||||
Longview
(1)
|
Texas
|
29,450 |
P
|
|||||||||||
1,092,283 | (2) |
(1)
|
These
plants also produce products for RVs. The square footage indicated above
represents that portion of the building that is utilized for manufacture
of products for manufactured homes.
|
(2)
|
At
December 31, 2007, the Company’s MH Segment used an aggregate of 1,197,770
square feet for manufacturing and
warehousing.
|
ADMINISTRATIVE
|
||||||||||||||
City
|
State
|
Square Feet
|
Owned
|
Leased
|
||||||||||
White
Plains
|
New
York
|
4,059 |
P
|
|||||||||||
Goshen
|
Indiana
|
15,500 |
P
|
|||||||||||
Arlington
|
Texas
|
8,500 |
P
|
|||||||||||
Goshen
|
Indiana
|
22,000 |
P
|
|||||||||||
Phoenix
|
Arizona
|
1,000 |
P
|
|||||||||||
Lake
Havasu
|
Arizona
|
2,000 |
P
|
|||||||||||
53,059 |
City
|
State
|
Square Feet
|
||||
Boaz
|
Alabama
|
86,600 | ||||
Elkhart
*
|
Indiana
|
42,000 | ||||
Howe
|
Indiana
|
60,000 | ||||
Phoenix
|
Arizona
|
61,000 | ||||
Middlebury
|
Indiana
|
12 acres of land
|
||||
Arkansas City
|
Kansas
|
5 acres of land
|
Name
|
Position
|
|
Fredric
M. Zinn
(Age
57)
|
Chief
Executive Officer since January 1, 2009, President and Director since May
2008.
|
|
Leigh
J. Abrams
(Age
66)
|
Chairman
of the Board of Directors since January 1, 2009.
|
|
Edward
W. Rose, III
(Age
67)
|
Lead
Director of the Board of Directors since January 1,
2009.
|
|
|
||
James
F. Gero
(Age
63)
|
Director
since May 1992.
|
|
Frederick
B. Hegi, Jr.
(Age
65)
|
Director
since May 2002.
|
|
David
A. Reed
(Age
61)
|
Director
since May 2003.
|
|
John
B. Lowe, Jr.
(Age
69)
|
Director
since May
2005.
|
Jason
D. Lippert
(Age
36)
|
Director
since May 2007, President and Chief Executive Officer of Lippert
Components, Inc. since February 2003, and President
and Chief Executive Officer of Kinro, Inc. since January 1,
2009.
|
|
Joseph
S. Giordano III
(Age
39)
|
Chief
Financial Officer since May 2008, Treasurer since May
2003.
|
|
Scott
T. Mereness
(Age
37)
|
Executive
Vice President and Chief Operating Officer of Lippert Components, Inc.
since February 2003, Vice President of Kinro, Inc. since January 1,
2009.
|
|
Number of securities
to be issued upon exercise of outstanding options, warrants and rights |
Weighted average
exercise price of outstanding options, warrants and rights |
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected
in column (a))
|
|||||||||
Plan category
|
(a)
|
(b)
|
(c)
|
|||||||||
Equity
compensation plans approved by security holders
|
2,201,522 | $ | 22.01 | 346,921 | ||||||||
Equity
compensation plans not approved by security holders
|
N/A | N/A | N/A | |||||||||
Total
|
2,201,522 | $ | 22.01 | 346,921 |
Years Ended December 31,
|
||||||||||||||||||||
(In thousands, except per share amounts)
|
2008
|
2007
|
2006
|
2005
|
2004
|
|||||||||||||||
Operating Data:
|
||||||||||||||||||||
Net
sales
|
$ | 510,506 | $ | 668,625 | $ | 729,232 | $ | 669,147 | $ | 530,870 | ||||||||||
Operating
profit
|
$ | 19,898 | $ | 65,959 | $ | 55,295 | $ | 57,729 | $ | 43,996 | ||||||||||
Income
before income taxes
|
$ | 19,021 | $ | 63,344 | $ | 50,694 | $ | 54,063 | $ | 40,857 | ||||||||||
Provision
for income taxes
|
$ | 7,343 | $ | 23,577 | $ | 19,671 | $ | 20,461 | $ | 15,749 | ||||||||||
Net
income
|
$ | 11,678 | $ | 39,767 | $ | 31,023 | $ | 33,602 | $ | 25,108 | ||||||||||
Net
income per common share:
|
||||||||||||||||||||
Basic
|
$ | 0.54 | $ | 1.82 | $ | 1.43 | $ | 1.60 | $ | 1.22 | ||||||||||
Diluted
|
$ | 0.53 | $ | 1.80 | $ | 1.42 | $ | 1.56 | $ | 1.18 | ||||||||||
Financial Data:
|
||||||||||||||||||||
Working
capital
|
$ | 84,378 | $ | 89,861 | $ | 61,979 | $ | 76,146 | $ | 57,204 | ||||||||||
Total
assets
|
$ | 311,358 | $ | 345,737 | $ | 311,276 | $ | 307,428 | $ | 238,053 | ||||||||||
Long-term
obligations
|
$ | 9,763 | $ | 23,128 | $ | 47,327 | $ | 64,768 | $ | 61,806 | ||||||||||
Stockholders’
equity
|
$ | 258,878 | $ | 251,536 | $ | 204,888 | $ | 167,709 | $ | 122,044 |
●Towable
RV steel chassis
|
●Aluminum
windows and screens
|
●Towable
RV axles and suspension solutions
|
●Chassis
components
|
●RV
slide-out mechanisms and solutions
|
●Furniture
and mattresses
|
●Thermoformed
products
|
●Entry and baggage
doors
|
●Toy hauler ramp
doors
|
●Entry
steps
|
●Manual,
electric and hydraulic stabilizer
|
●Other
towable accessories
|
and lifting systems
|
●Specialty
trailers for hauling boats, personal
|
|
watercraft, snowmobiles and equipment
|
●Vinyl
and aluminum windows and screens
|
●Steel
chassis
|
●Thermoformed
bath and kitchen products
|
●Steel
chassis parts
|
●Axles
|
Wholesale
|
Retail
|
|||||||
Quarter
ended March 31, 2008
|
(8 | )% | (16 | )% | ||||
Quarter
ended June 30, 2008
|
(18 | )% | (19 | )% | ||||
Quarter
ended September 30, 2008
|
(38 | )% | (27 | )% | ||||
Quarter
ended December 31, 2008
|
(63 | )% | (36 | )% | ||||
Year
ended December 31, 2008
|
(29 | )% | (23 | )% | ||||
Year
ended December 31, 2007
|
(10 | )% | 4 | % |
2008
|
2007
|
2006
|
||||||||||
Net
sales:
|
||||||||||||
RV
Segment
|
$ | 368,092 | $ | 491,830 | $ | 508,824 | ||||||
MH
Segment
|
142,414 | 176,795 | 220,408 | |||||||||
Total
net sales
|
$ | 510,506 | $ | 668,625 | $ | 729,232 | ||||||
Operating
profit:
|
||||||||||||
RV
Segment
|
$ | 28,725 | $ | 63,132 | $ | 43,623 | ||||||
MH
Segment
|
11,016 | 15,061 | 20,131 | |||||||||
Total
segment operating profit
|
39,741 | 78,193 | 63,754 | |||||||||
Amortization
of intangibles
|
(5,055 | ) | (4,178 | ) | (2,546 | ) | ||||||
Corporate
|
(7,217 | ) | (7,583 | ) | (7,094 | ) | ||||||
Other
items
|
(7,571 | ) | (473 | ) | 1,181 | |||||||
Total
operating profit
|
$ | 19,898 | $ | 65,959 | $ | 55,295 |
2008
|
2007
|
2006
|
||||||||||
Net
sales:
|
||||||||||||
RV
Segment
|
72% | 74% | 70% | |||||||||
MH
Segment
|
28% | 26% | 30% | |||||||||
Total
net sales
|
100% | 100% | 100% | |||||||||
Operating
profit:
|
||||||||||||
RV
Segment
|
72% | 81% | 68% | |||||||||
MH
Segment
|
28% | 19% | 32% | |||||||||
Total
segment operating profit
|
100% | 100% | 100% |
2008
|
2007
|
2006
|
||||||||||
RV
Segment
|
7.8% | 12.8% | 8.6% | |||||||||
MH
Segment
|
7.7% | 8.5% | 9.1% |
|
§
|
Net
sales for 2008, excluding the impact of sales price increases and
acquisitions, decreased $202 million (30 percent) from 2007, primarily as
a result of the 29 percent decline in industry-wide wholesale shipments of
travel trailers and fifth wheel RVs in 2008, as well as a 14 percent
decline in industry-wide wholesale production of manufactured homes. In
addition, 2008 sales were negatively affected by the 49 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 2008 decreased 71 percent from 2007, primarily due to the
decrease in net sales and higher raw material costs. In addition, the
Company recorded a non-cash charge for impairment of goodwill, as well as
an executive retirement charge, aggregating $4.9 million after
taxes.
|
|
§
|
For
2009, the Company anticipates a continuing weak economy, a tight credit
market, low consumer confidence, volatile fuel prices, and continued
weakness in the real estate and mortgage markets. All of these factors are
expected to cause consumers to be extremely cautious, which would likely
impact the purchases of discretionary big-ticket items, such as RVs. In
response to slow retail sales during 2008, RV manufacturers significantly
reduced their output, which negatively affected the Company in 2008, and
will likely continue into 2009. In response to the current economic
environment, the Company has been extremely proactive and taken the
following steps:
|
|
·
|
Reduced
its workforce and production capacity to be more in line with anticipated
demand.
|
|
·
|
Closed
facilities and reduced fixed overhead
costs.
|
|
·
|
Implemented
synergies between the operations of Kinro and Lippert by combining certain
administrative functions and sales
efforts.
|
|
§
|
On
November 25, 2008, the Company entered into an agreement for a $50.0
million line of credit with JPMorgan Chase Bank, N.A., and Wells Fargo
Bank N.A. Simultaneously, the Company entered into a $125.0 million
“shelf-loan” facility with Prudential Investment Management, Inc., and its
affiliates. At December 31, 2008, the collective availability under these
facilities was $117.2 million. Such availability, along with available
cash and anticipated cash flows from operations, is expected to be
adequate to finance the Company’s anticipated working capital and capital
expenditure requirements during
2009.
|
|
§
|
On
July 1, 2008, Lippert acquired certain assets and liabilities, and the
business of Seating Technology, Inc. and its affiliated companies
(“Seating Technology”), a manufacturer of a wide variety of furniture
products primarily for towable RVs, including a full line of upholstered
furniture, mattresses, decorative pillows, wood-backed valances and
quilted soft good products. Seating Technology had annual sales of $40
million in 2007. The purchase price was $28.7 million, which was financed
from available cash. Subsequent to the acquisition, Lippert closed two of
Seating Technology's five leased facilities in Indiana, and consolidated
those operations into existing
facilities.
|
|
§
|
Steel
and aluminum are among the Company’s principal raw materials. Since late
2007, the costs of steel and aluminum have been volatile, and although the
Company was able to raise sales prices, higher cost raw materials, net of
sales price increases, reduced 2008 earnings by approximately $0.10 to
$0.13 per diluted share. Raw material costs have recently declined from
their peak levels, largely due to the global economic downturn. However,
the Company still has higher priced raw materials in inventory, which will
adversely impact operating results for the first few months of 2009,
although the impact is estimated to be less than it was in
2008.
|
|
·
|
An
organic sales decline of approximately $141 million, or 30 percent, of
RV-related products. This 30 percent decline was due largely to the 29
percent decrease in industry-wide wholesale shipments of travel trailers
and fifth wheel RVs, the Company’s primary RV market. In addition,
industry-wide wholesale shipments of motorhomes, components for which
represent about 5 percent of the Company’s RV Segment net sales, were down
49 percent during 2008.
|
|
·
|
An
organic sales decline of approximately $14 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 and 2007 acquisitions aggregating approximately $19
million.
|
|
·
|
Sales
price increases of approximately $12 million, primarily due to raw
material cost increases.
|
2008
|
2007
|
Percent Change
|
||||||||||
Content
per Travel Trailer and Fifth Wheel RV
|
$ | 1,928 | $ | 1,700 | 13 | % | ||||||
Content
per Motorhome
|
$ | 574 | $ | 429 | 34 | % | ||||||
Content
per all RVs
|
$ | 1,574 | $ | 1,326 | 19 | % |
2008
|
2007
|
Percent Change
|
||||||||||
Travel
Trailer and Fifth Wheel RVs
|
185,100 | 261,700 | (29 | )% | ||||||||
Motorhomes
|
28,300 | 55,400 | (49 | )% | ||||||||
All
RVs
|
237,000 | 353,400 | (33 | )% |
|
·
|
Higher
raw material costs.
|
|
·
|
Labor
inefficiencies due to the sharp drop in sales during the latter part of
2008.
|
|
·
|
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 were gained as a
result.
|
|
·
|
An
increase in selling, general and administrative expenses to 12.4 percent
of net sales in 2008 from 11.3 percent of net sales in 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 expense 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
|
$ | 1,652 | $ | 1,754 | (6 | )% | ||||||
Content
per Floor Produced
|
$ | 1,000 | $ | 1,026 | (3 | )% |
2008
|
2007
|
Percent Change
|
||||||||||
Total
Homes Produced
|
81,900 | 95,800 | (14 | )% | ||||||||
Total
Floors Produced
|
135,300 | 163,700 | (17 | )% |
|
·
|
The
spreading of fixed manufacturing costs over a smaller sales
base.
|
|
·
|
Higher
health insurance costs.
|
|
·
|
An
increase in selling, general and administrative expenses to 16.5 percent
of net sales in 2008 from 14.6 percent of net sales in 2007 due to higher
fuel and delivery costs as a percent of net sales, as well as the
spreading of fixed administrative costs over a smaller sales
base.
|
|
·
|
Changes
in product mix.
|
|
·
|
The
elimination of certain low margin business exited in the latter half of
2007.
|
|
·
|
Implementation
of cost-cutting measures.
|
|
·
|
Improved
production efficiencies.
|
Year Ended
|
||||||||
December 31,
|
||||||||
2008
|
2007
|
|||||||
Cost
of sales:
|
||||||||
Other
|
$ | - | $ | (236 | ) | |||
Selling,
general and administrative expenses:
|
||||||||
Legal
proceedings
|
2,109 | 1,616 | ||||||
Gain
on sold facilities
|
(3,523 | ) | (2,253 | ) | ||||
Loss
on sold facilities and write-downs to estimated current market value of
facilities to be sold
|
1,602 | 2,231 | ||||||
Incentive
compensation impact of other non-segment items
|
(96 | ) | (178 | ) | ||||
Goodwill
impairment (before the direct effect on incentive
compensation)
|
5,487 | - | ||||||
Executive
retirement
|
2,667 | - | ||||||
Other
(income) from the collection of the previously reserved
Note
|
(675 | ) | (707 | ) | ||||
$ | 7,571 | $ | 473 |
|
§
|
Net
sales for 2007 decreased $61 million (8 percent) from 2006. The decrease
in net sales was due to an organic sales decline of $106 million (15
percent) resulting from declines in both the RV and manufactured housing
industries, partially offset by sales of $18 million resulting from
acquisitions, and sales price increases of approximately $28 million,
primarily to offset material cost increases. The organic sales decline was
due primarily to a 10 percent decline in industry-wide wholesale shipments
of travel trailers and fifth wheel RVs in 2007, as well as an 18 percent
decline in industry-wide wholesale production of manufactured
homes.
|
|
§
|
Despite
the sales decline, net income for 2007 increased 28 percent from 2006 for
the following reasons:
|
|
·
|
In
response to the slowdowns in both the RV and manufactured housing
industries, since late 2006, the Company closed 18 facilities and
consolidated those operations into other existing facilities, and reduced
fixed overhead where prudent, including reducing staff levels by more than
120 salaried employees. These facility consolidations and fixed overhead
reductions increased operating profit in 2007 by approximately $6.1
million ($3.8 million after taxes).
|
|
·
|
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 $3.2 million ($2.0 million after taxes)
due to losses at the Indiana specialty trailer operation which was closed
in September 2006.
|
|
·
|
Lower
workers compensation costs which improved operating profit by
approximately $2.2 million ($1.4 million after
taxes).
|
|
·
|
The
impact of 3 acquisitions completed in 2007 and the incremental impact of 2
acquisitions completed in 2006.
|
|
·
|
A
reduction in interest expense of $2.0 million ($1.2 million after taxes)
due primarily to a decrease in average debt
levels.
|
|
·
|
The
negative impact on 2007 of spreading fixed manufacturing and
administrative costs over a smaller sales
base.
|
|
·
|
An
increase in amortization expense of $1.6 million ($1.0 million after
taxes) due to acquisitions.
|
|
§
|
On
July 6, 2007, Lippert acquired certain assets and 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. In
2008, this business was impacted by prolonged declines in industry
shipments of small and medium-sized boats that worsened late in 2008, and
as a result, the Company recorded an impairment of the entire goodwill
associated with this acquisition. The Company has taken significant steps
to improve the results of its specialty trailer business in 2008,
including consolidating this operation into one facility shared with other
product lines.
|
|
§
|
On
May 21, 2007, Lippert acquired certain assets and liabilities, 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. Upon acquisition, the Company integrated Coach Step’s
business into existing Lippert
facilities.
|
|
§
|
On
January 2, 2007, Lippert acquired Trailair, Inc. (“Trailair”) and certain
assets and liabilities, and the business of Equa-Flex, Inc. (“Equa-Flex”),
two affiliated companies, which manufacture several patented products,
including innovative suspension systems used primarily for towable RVs.
Trailair and Equa-Flex had combined annual sales of $3 million prior to
the acquisition. The minimum aggregate purchase price was $5.7 million, of
which $3.5 million was paid at closing and the balance is being paid
annually over the five years subsequent to the acquisition. The aggregate
purchase price could increase to a maximum of $8.3 million if certain
sales targets for these products are achieved by Lippert over the five
years subsequent to the acquisition. In 2007 and 2008, additional purchase
price of less than $0.1 million has been paid. The acquisition was
financed with borrowings under the Company’s line of credit. Upon
acquisition, the Company integrated Trailair and Equa-Flex’s business into
existing Lippert facilities.
|
|
·
|
An
organic sales decline of approximately $24 million, or 5 percent, of RV
related products. The 5 percent organic sales decline in the Company’s RV
related products was lower than the 8 percent decrease in industry-wide
wholesale shipments of travel trailers and fifth wheel RVs (excluding an
estimated 9,000 units purchased by dealers in early 2006 related to the
2005 Gulf Coast hurricanes), primarily because the Company introduced new
products and gained market share.
|
|
·
|
A
decline of approximately $17 million in sales related to the 2005 Gulf
Coast hurricanes compared to 2006. Subsequent to March 2006, there was no
significant hurricane-related
business.
|
|
·
|
A
decline of approximately $10 million in sales of specialty trailers
primarily due to the September 2006 closure of the Indiana specialty
trailer operation and a decline in the West Coast marine
industry.
|
|
·
|
Sales
resulting from 2007 and 2006 acquisitions aggregating approximately $18
million.
|
|
·
|
Sales
price increases of approximately $16 million, primarily to offset material
cost increases.
|
2007
|
2006
|
Percent Change
|
||||||||||
Content
per Travel Trailer and Fifth Wheel RV
|
$ | 1,700 | $ | 1,555 | 9 | % | ||||||
Content
per Motorhome
|
$ | 429 | $ | 336 | 28 | % | ||||||
Content
per all RVs
|
$ | 1,326 | $ | 1,212 | 9 | % |
2007
|
2006
|
Percent Change
|
||||||||||
Travel
Trailer and Fifth Wheel RVs
|
261,700 | 292,400 | (10 | )% | ||||||||
Motorhomes
|
55,400 | 55,900 | (1 | )% | ||||||||
All
RVs
|
353,400 | 390,500 | (10 | )% |
|
·
|
Implementation
of cost-cutting measures.
|
|
·
|
Improved
production efficiencies and global
sourcing.
|
|
·
|
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 $3.3 million in segment operating losses incurred in the
Company’s Indiana specialty trailer operation in 2006. This operation was
closed in September 2006.
|
|
·
|
Lower
workers compensation costs.
|
|
·
|
A
decrease in selling, general and administrative expenses to 11.3 percent
of net sales in 2007 from 11.7 percent of net sales in 2006, largely due
to cost cutting measures implemented and lower delivery
costs.
|
|
·
|
The
negative impact on 2007 of spreading fixed manufacturing and
administrative costs over a smaller sales
base.
|
|
·
|
Higher
warranty costs, based on claims experience, an industry-wide increase in
the number of months between production and the retail sale of RVs, and an
increase in the portion of the Company’s products that are more
complex.
|
2007
|
2006
|
Percent Change
|
||||||||||
Content
per Home Produced
|
$ | 1,754 | $ | 1,784 | (2 | )% | ||||||
Content
per Floor Produced
|
$ | 1,026 | $ | 1,014 | 1 | % |
2007
|
2006
|
Percent Change
|
||||||||||
Total
Homes Produced
|
95,800 | 117,400 | (18 | )% | ||||||||
Total
Floors Produced
|
163,700 | 206,600 | (21 | )% |
|
·
|
The
spreading of fixed manufacturing costs over a smaller sales
base.
|
|
·
|
An
increase in selling, general and administrative expenses to 14.6 percent
of net sales in 2007 from 14.0 percent of net sales in 2006 partly 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.
|
Year Ended
|
||||||||
December 31,
|
||||||||
2007
|
2006
|
|||||||
Cost
of sales:
|
||||||||
Other
|
$ | (236 | ) | $ | (457 | ) | ||
Selling,
general and administrative expenses:
|
||||||||
Legal
proceedings
|
1,616 | (16 | ) | |||||
Gain
on sold facilities
|
(2,253 | ) | (1,763 | ) | ||||
Loss
on sold facilities and write-downs to estimated current market value of
facilities to be sold
|
2,231 | 889 | ||||||
Due
diligence costs for an acquisition which was not completed
|
- | 486 | ||||||
Other
|
- | 114 | ||||||
Incentive
compensation impact of other non-segment items
|
(178 | ) | 204 | |||||
Other
(income) from the collection of the previously reserved
Note
|
(707 | ) | (638 | ) | ||||
$ | (473 | ) | $ | (1,181 | ) |
2008
|
2007
|
2006
|
||||||||||
Net
cash flows provided by operating activities
|
$ | 4,657 | $ | 84,910 | $ | 67,021 | ||||||
Net
cash flows used for investing activities
|
$ | (25,492 | ) | $ | (11,641 | ) | $ | (51,925 | ) | |||
Net
cash flows used for financing activities
|
$ | (26,686 | ) | $ | (23,841 | ) | $ | (13,396 | ) |
Payments due by period
|
||||||||||||||||||||
Less than
|
More than
|
|||||||||||||||||||
Total
|
1 year
|
1-3 years
|
3-5 years
|
5 years
|
||||||||||||||||
Total
indebtedness
|
$ | 8,683 | $ | 5,833 | $ | 2,205 | $ | 220 | $ | 425 | ||||||||||
Interest
on fixed rate indebtedness (a)
|
304 | 266 | 38 | - | - | |||||||||||||||
Interest
on variable rate indebtedness (b)
|
126 | 27 | 44 | 32 | 23 | |||||||||||||||
Operating
leases
|
18,238 | 5,474 | 8,289 | 3,816 | 659 | |||||||||||||||
Capital
leases
|
64 | 44 | 20 | - | - | |||||||||||||||
Employment
contracts (c)
|
10,986 | 5,147 | 5,646 | 193 | - | |||||||||||||||
Royalty
agreements (d)
|
2,260 | 741 | 999 | 520 | - | |||||||||||||||
Purchase
obligations (e)
|
36,316 | 30,812 | 2,454 | 1,277 | 1,773 | |||||||||||||||
Taxes
(f)
|
4,565 | 4,565 | - | - | - | |||||||||||||||
Total
|
$ | 81,542 | $ | 52,909 | $ | 19,695 | $ | 6,058 | $ | 2,880 |
|
(a)
|
The
Company has used the contractual payment dates and fixed interest rates to
determine the estimated future interest payments on fixed rate
indebtedness.
|
|
(b)
|
The
Company has used the contractual payment dates and the variable interest
rates in effect as of December 31, 2008, to determine the estimated future
interest payments for variable rate
indebtedness.
|
|
(c)
|
This
includes amounts payable under employment contracts and arrangements,
retirement and severance agreements, and deferred compensation. These
amounts do not include $1.3 million in deferred compensation, as the
timing of paying the deferred compensation has not yet been determined as
it is based on the participants’
elections.
|
(d)
|
In
addition to the minimum commitments shown here, a license agreement
provides for the Company to pay a royalty of 1 percent of sales of certain
slide-out systems for the right to use certain patents related to
slide-out systems through the expiration of the patents. Pursuant to this
license agreement, royalty payments subsequent to December 31, 2008
through the expiration of the patents can not exceed an aggregate of $4.4
million.
|
(e)
|
These
contractual obligations are primarily comprised of purchase orders issued
in the normal course of business. Also included are several longer term
purchase commitments, for which the Company has estimated the expected
future obligation based on current prices and
usage.
|
|
(f)
|
In
November 2008, the Company and the Indiana Department of Revenue reached
an agreement in principle to settle tax years 1998 to 2000 for $0.6
million, as well as 2001 to 2006 for $4.0 million, subject to final
documentation. This amount has been fully reserved, and is
expected to be paid in the first half of 2009. At December 31, 2008, the
Company has reserved $2.2 million for additional uncertain tax positions
and the related interest and penalties, the amount and timing of which
cannot be reasonably estimated, and as such have been excluded from the
above table.
|
|
The
above table also does not include the obligation to make payments of up to
$2.6 million if certain sales targets for Equa-Flex products are achieved
by Lippert over the five year period subsequent to the January 2007
Equa-Flex acquisition. In 2007 and 2008, less than $0.1 million has been
paid under this potential
obligation.
|
Year Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Net
sales
|
$ | 510,506 | $ | 668,625 | $ | 729,232 | ||||||
Cost
of sales
|
403,000 | 509,875 | 575,156 | |||||||||
Gross
profit
|
107,506 | 158,750 | 154,076 | |||||||||
Selling,
general and administrative expenses
|
80,129 | 93,498 | 99,419 | |||||||||
Goodwill
impairment
|
5,487 | - | - | |||||||||
Executive
retirement
|
2,667 | - | - | |||||||||
Other
(income)
|
(675 | ) | (707 | ) | (638 | ) | ||||||
Operating
profit
|
19,898 | 65,959 | 55,295 | |||||||||
Interest
expense, net
|
877 | 2,615 | 4,601 | |||||||||
Income
before income taxes
|
19,021 | 63,344 | 50,694 | |||||||||
Provision
for income taxes
|
7,343 | 23,577 | 19,671 | |||||||||
Net
income
|
$ | 11,678 | $ | 39,767 | $ | 31,023 | ||||||
Net
income per common share:
|
||||||||||||
Basic
|
$ | 0.54 | $ | 1.82 | $ | 1.43 | ||||||
Diluted
|
$ | 0.53 | $ | 1.80 | $ | 1.42 |
December 31,
|
||||||||
2008
|
2007
|
|||||||
ASSETS
|
||||||||
Current
assets
|
||||||||
Cash
and cash equivalents
|
$ | 8,692 | $ | 56,213 | ||||
Accounts
receivable, trade, less allowances of
|
||||||||
$1,666
in 2008 and $1,160 in 2007
|
7,913 | 15,740 | ||||||
Inventories
|
93,934 | 76,279 | ||||||
Prepaid
expenses and other current assets
|
16,556 | 12,702 | ||||||
Total
current assets
|
127,095 | 160,934 | ||||||
Fixed
assets, net
|
88,731 | 100,616 | ||||||
Goodwill
|
44,113 | 39,547 | ||||||
Other
intangible assets
|
42,787 | 32,578 | ||||||
Other
assets
|
8,632 | 12,062 | ||||||
Total
assets
|
$ | 311,358 | $ | 345,737 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities
|
||||||||
Notes
payable, including current maturities
|
||||||||
of
long-term indebtedness
|
$ | 5,833 | $ | 8,881 | ||||
Accounts
payable, trade
|
4,660 | 17,524 | ||||||
Accrued
expenses and other current liabilities
|
32,224 | 44,668 | ||||||
Total
current liabilities
|
42,717 | 71,073 | ||||||
Long-term
indebtedness
|
2,850 | 18,381 | ||||||
Other
long-term liabilities
|
6,913 | 4,747 | ||||||
Total
liabilities
|
$ | 52,480 | $ | 94,201 | ||||
Stockholders'
equity
|
||||||||
Common
stock, par value $.01 per share: authorized
|
||||||||
50,000,000
shares; issued 24,122,054 shares at December 31, 2008
|
||||||||
and
24,082,974 shares at December 31, 2007
|
$ | 241 | $ | 241 | ||||
Paid-in
capital
|
64,954 | 60,919 | ||||||
Retained
earnings
|
221,483 | 209,805 | ||||||
Accumulated
other comprehensive income
|
- | 38 | ||||||
286,678 | 271,003 | |||||||
Treasury
stock, at cost: 2,596,725 shares in 2008 and
|
||||||||
2,149,325
shares in 2007
|
(27,800 | ) | (19,467 | ) | ||||
Total
stockholders' equity
|
258,878 | 251,536 | ||||||
Total
liabilities and stockholders' equity
|
$ | 311,358 | $ | 345,737 |
Year Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
income
|
$ | 11,678 | $ | 39,767 | $ | 31,023 | ||||||
Adjustments
to reconcile net income to cash flows
|
||||||||||||
provided
by operating activities:
|
||||||||||||
Depreciation
and amortization
|
17,078 | 17,557 | 15,669 | |||||||||
Deferred
taxes
|
(2,145 | ) | (1,488 | ) | 653 | |||||||
Gain
on disposal of fixed assets, net
|
(2,393 | ) | (351 | ) | (913 | ) | ||||||
Stock-based
compensation expense
|
3,636 | 2,489 | 2,981 | |||||||||
Goodwill
impairment
|
5,487 | - | - | |||||||||
Changes
in assets and liabilities, net of business acquisitions:
|
||||||||||||
Accounts
receivable, net
|
9,497 | 3,061 | 17,272 | |||||||||
Inventories
|
(12,695 | ) | 8,994 | 20,219 | ||||||||
Prepaid
expenses and other assets
|
(1,980 | ) | 1,478 | (2,213 | ) | |||||||
Accounts
payable, accrued expenses and other liabilities
|
(23,506 | ) | 13,403 | (17,670 | ) | |||||||
Net
cash flows provided by operating activities
|
4,657 | 84,910 | 67,021 | |||||||||
Cash
flows from investing activities:
|
||||||||||||
Capital
expenditures
|
(4,199 | ) | (8,770 | ) | (22,250 | ) | ||||||
Acquisition
of businesses
|
(28,764 | ) | (17,299 | ) | (33,695 | ) | ||||||
Proceeds
from sales of fixed assets
|
10,541 | 14,492 | 4,032 | |||||||||
Other
investing activities
|
(3,070 | ) | (64 | ) | (12 | ) | ||||||
Net
cash flows used for investing activities
|
(25,492 | ) | (11,641 | ) | (51,925 | ) | ||||||
Cash
flows from financing activities:
|
||||||||||||
Proceeds
from line of credit and other borrowings
|
14,600 | 23,800 | 182,670 | |||||||||
Repayments
under line of credit and other borrowings
|
(33,179 | ) | (52,218 | ) | (200,955 | ) | ||||||
Exercise
of stock options
|
402 | 4,577 | 3,339 | |||||||||
Purchase
of treasury stock
|
(8,333 | ) | - | - | ||||||||
Other
financing activities
|
(176 | ) | - | 1,550 | ||||||||
Net
cash flows used for financing activities
|
(26,686 | ) | (23,841 | ) | (13,396 | ) | ||||||
Net
(decrease) increase in cash
|
(47,521 | ) | 49,428 | 1,700 | ||||||||
Cash
and cash equivalents at beginning of year
|
56,213 | 6,785 | 5,085 | |||||||||
Cash
and cash equivalents at end of year
|
$ | 8,692 | $ | 56,213 | $ | 6,785 | ||||||
Supplemental
disclosure of cash flow information:
|
||||||||||||
Cash
paid during the year for:
|
||||||||||||
Interest
on debt
|
$ | 1,319 | $ | 3,426 | $ | 4,555 | ||||||
Income
taxes, net of refunds
|
$ | 13,852 | $ | 16,881 | $ | 18,619 |
Accumulated
|
||||||||||||||||||||||||
Other
|
Total
|
|||||||||||||||||||||||
Common
|
Paid-in
|
Retained
|
Comprehensive
|
Treasury
|
Stockholders’
|
|||||||||||||||||||
Stock
|
Capital
|
Earnings
|
Income
|
Stock
|
Equity
|
|||||||||||||||||||
Balance
- December 31, 2005
|
$ | 236 | $ | 47,655 | $ | 139,015 | $ | 270 | $ | (19,467 | ) | $ | 167,709 | |||||||||||
Net
income
|
31,023 | 31,023 | ||||||||||||||||||||||
Unrealized
loss on interest rate
|
||||||||||||||||||||||||
swaps,
net of taxes
|
(164 | ) | (164 | ) | ||||||||||||||||||||
Comprehensive
income
|
30,859 | |||||||||||||||||||||||
Issuance
of 199,940 shares of
|
||||||||||||||||||||||||
common
stock pursuant to stock
|
||||||||||||||||||||||||
options
and deferred stock units
|
2 | 1,769 | 1,771 | |||||||||||||||||||||
Income
tax benefit relating to
|
||||||||||||||||||||||||
issuance
of common stock
|
||||||||||||||||||||||||
pursuant
to stock options
|
1,568 | 1,568 | ||||||||||||||||||||||
Stock-based
compensation
expense
|
2,981 | 2,981 | ||||||||||||||||||||||
Balance
- December 31, 2006
|
238 | 53,973 | 170,038 | 106 | (19,467 | ) | 204,888 | |||||||||||||||||
Net
income
|
39,767 | 39,767 | ||||||||||||||||||||||
Unrealized
loss on interest rate
|
||||||||||||||||||||||||
swaps,
net of taxes
|
(68 | ) | (68 | ) | ||||||||||||||||||||
Comprehensive
income
|
39,699 | |||||||||||||||||||||||
Issuance
of 249,929 shares of
|
||||||||||||||||||||||||
common
stock pursuant to stock
|
||||||||||||||||||||||||
options
and deferred stock units
|
3 | 2,510 | 2,513 | |||||||||||||||||||||
Income
tax benefit relating to
|
||||||||||||||||||||||||
issuance
of common stock
|
||||||||||||||||||||||||
pursuant
to stock options
|
1,947 | 1,947 | ||||||||||||||||||||||
Stock-based
compensation expense
|
2,489 | 2,489 | ||||||||||||||||||||||
Balance
- December 31, 2007
|
241 | 60,919 | 209,805 | 38 | (19,467 | ) | 251,536 | |||||||||||||||||
Net
income
|
11,678 | 11,678 | ||||||||||||||||||||||
Unrealized
loss on interest rate
|
||||||||||||||||||||||||
swap,
net of taxes
|
(38 | ) | (38 | ) | ||||||||||||||||||||
Comprehensive
income
|
11,640 | |||||||||||||||||||||||
Issuance
of 39,080 shares of
|
||||||||||||||||||||||||
common
stock pursuant to stock
|
||||||||||||||||||||||||
options
and deferred stock units
|
340 | 340 | ||||||||||||||||||||||
Income
tax benefit relating to
|
||||||||||||||||||||||||
issuance
of common stock
|
||||||||||||||||||||||||
pursuant
to stock options
|
59 | 59 | ||||||||||||||||||||||
Stock-based
compensation
expense
|
3,636 | 3,636 | ||||||||||||||||||||||
Purchase
of 447,400 shares of
|
||||||||||||||||||||||||
treasury
stock
|
(8,333 | ) | (8,333 | ) | ||||||||||||||||||||
Balance
- December 31, 2008
|
$ | 241 | $ | 64,954 | $ | 221,483 | $ | - | $ | (27,800 | ) | $ | 258,878 |
●Steel
chassis
|
●Vinyl
and aluminum windows and doors
|
●Axles
and suspension solutions
|
●Chassis
components
|
●RV
slide-out mechanisms and solutions
|
●Furniture
and mattresses
|
●Thermoformed
products
|
●Entry and baggage
doors
|
●Toy hauler ramp
doors
|
●Entry
steps
|
●Manual,
electric and hydraulic stabilizer
|
●Other
towable accessories
|
and lifting systems
|
●Specialty
trailers for hauling boats, personal
|
watercraft, snowmobiles and
equipment
|
2008
|
2007
|
2006
|
||||||||||
Balance
at beginning of period
|
$ | 803 | $ | 1,081 | $ | 1,313 | ||||||
Provision
for doubtful accounts
|
1,066 | (163 | ) | 273 | ||||||||
Additions
related to acquired companies
|
30 | 85 | 69 | |||||||||
Accounts
written off, net of recoveries
|
(413 | ) | (200 | ) | (574 | ) | ||||||
Balance
at end of period
|
$ | 1,486 | $ | 803 | $ | 1,081 |
2008
|
2007
|
2006
|
||||||||||
Risk-free
interest rate
|
2.17% | 3.83% | 4.57% | |||||||||
Expected
volatility
|
42.5% | 33.8% | 33.1% | |||||||||
Expected
life
|
4.8
years
|
5.0
years
|
5.7
years
|
|||||||||
Contractual
life
|
6.0
years
|
6.0
years
|
6.0
years
|
|||||||||
Dividend
yield
|
N/A | N/A | N/A | |||||||||
Fair
value of stock options granted
|
$ | 4.68 | $ | 11.68 | $ | 10.58 |
●Towable
RV steel chassis
|
●Aluminum
windows and screens
|
●Towable
RV axles and suspension solutions
|
●Chassis
components
|
●RV
slide-out mechanisms and solutions
|
●Furniture
and mattresses
|
●Thermoformed
products
|
●Entry and baggage
doors
|
●Toy hauler ramp
doors
|
●Entry
steps
|
●Manual,
electric and hydraulic stabilizer
|
●Other
towable accessories
|
and lifting systems
|
●Specialty
trailers for hauling boats, personal
|
watercraft, snowmobiles and
equipment
|
●Vinyl
and aluminum windows and screens
|
●Steel
chassis
|
●Thermoformed
bath and kitchen products
|
●Steel
chassis parts
|
●Axles
|
Segments
|
Corporate
|
Intangible
|
||||||||||||||||||||||
RV
|
MH
|
Total
|
and
Other
|
Assets
|
Total
|
|||||||||||||||||||
Year
ended December 31, 2008
|
||||||||||||||||||||||||
Revenues
from external
|
||||||||||||||||||||||||
customers(a)
|
$ | 368,092 | $ | 142,414 | $ | 510,506 | $ | - | $ | - | $ | 510,506 | ||||||||||||
Operating
profit (loss)(b)(e)
|
28,725 | 11,016 | 39,741 | (14,788 | ) | (5,055 | ) | 19,898 | ||||||||||||||||
Total
assets(c)
|
143,205 | 47,373 | 190,578 | 33,615 | 87,165 | 311,358 | ||||||||||||||||||
Expenditures
for long-lived
|
||||||||||||||||||||||||
assets(d)
|
5,488 | 719 | 6,207 | 31 | - | 6,238 | ||||||||||||||||||
Depreciation
and amortization
|
8,636 | 3,353 | 11,989 | 34 | 5,055 | 17,078 | ||||||||||||||||||
Year
ended December 31, 2007
|
||||||||||||||||||||||||
Revenues
from external
|
||||||||||||||||||||||||
customers(a)
|
$ | 491,830 | $ | 176,795 | $ | 668,625 | $ | - | $ | - | $ | 668,625 | ||||||||||||
Operating
profit (loss)(b)(e)
|
63,132 | 15,061 | 78,193 | (8,056 | ) | (4,178 | ) | 65,959 | ||||||||||||||||
Total
assets(c)
|
140,531 | 51,969 | 192,500 | 80,803 | 72,434 | 345,737 | ||||||||||||||||||
Expenditures
for long-lived
|
||||||||||||||||||||||||
assets(d)
|
8,080 | 1,002 | 9,082 | 119 | - | 9,201 | ||||||||||||||||||
Depreciation
and amortization
|
9,017 | 4,346 | 13,363 | 16 | 4,178 | 17,557 | ||||||||||||||||||
Year
ended December 31, 2006
|
||||||||||||||||||||||||
Revenues
from external
|
||||||||||||||||||||||||
customers(a)
|
$ | 508,824 | $ | 220,408 | $ | 729,232 | $ | - | $ | - | $ | 729,232 | ||||||||||||
Operating
profit (loss)(b)(e)
|
43,623 | 20,131 | 63,754 | (5,913 | ) | (2,546 | ) | 55,295 | ||||||||||||||||
Total
assets(c)
|
149,961 | 75,468 | 225,429 | 26,091 | 59,756 | 311,276 | ||||||||||||||||||
Expenditures
for long-lived
|
||||||||||||||||||||||||
assets(d)
|
17,009 | 6,598 | 23,607 | 4 | - | 23,611 | ||||||||||||||||||
Depreciation
and amortization
|
7,816 | 5,290 | 13,106 | 17 | 2,546 | 15,669 |
a)
|
Thor
Industries, Inc., a customer of the RV Segment, accounted for 21 percent,
23 percent and 23 percent of the Company’s consolidated net sales in the
years ended December 31, 2008, 2007, and 2006, respectively. Berkshire
Hathaway Inc. (through its subsidiaries Forest River, Inc. and Clayton
Homes, Inc.), a customer of both segments, accounted for 22 percent, 20
percent and 19 percent of the Company’s consolidated net sales in the
years ended December 31, 2008, 2007 and 2006, respectively. No other
customers accounted for more than 10 percent of consolidated net sales in
the years ended December 31, 2008, 2007 and
2006.
|
b)
|
Certain
general and administrative expenses of Kinro and Lippert are allocated
between the segments based upon sales or operating profit, depending upon
the nature of the expense.
|
c)
|
Segment
assets include accounts receivable, inventories and fixed assets.
Corporate and other assets include cash and cash equivalents, prepaid
expenses and other current assets, deferred taxes and other assets.
Intangibles include goodwill, other intangible assets and deferred charges
which are not considered in the measurement of each segment’s
performance.
|
d)
|
Segment
expenditures for long-lived assets include capital expenditures and fixed
assets purchased as part of the acquisition of companies and businesses.
The Company purchased $2.0 million, $0.4 million and $1.4 million of fixed
assets as part of the acquisitions of businesses in 2008, 2007 and 2006,
respectively. Expenditures for other long-lived assets, goodwill and other
intangible assets are not included in the segment since they are not
considered in the measurement of each segment’s
performance.
|
e)
|
The
operating loss for the Corporate and Other column is comprised of
Corporate expenses of $7.2 million, $7.6 million and $7.1 million for
2008, 2007 and 2006, respectively, and Other non-segment items of $7.6
million, $0.5 million, and $(1.2) million for 2008, 2007, and 2006,
respectively. In 2008, Other non-segment items included a
goodwill impairment charge of $5.5 million, as well as executive
retirement charges of $2.7
million.
|
2008
|
2007
|
2006
|
||||||||||
Recreational
Vehicles:
|
||||||||||||
Chassis,
chassis parts and
|
||||||||||||
slide-out
mechanisms
|
$ | 228,310 | $ | 315,875 | $ | 321,168 | ||||||
Windows,
doors and screens
|
79,279 | 107,693 | 117,985 | |||||||||
Axles
|
30,024 | 42,025 | 39,153 | |||||||||
Specialty
trailers
|
13,773 | 20,749 | 24,983 | |||||||||
Furniture
|
11,726 | - | - | |||||||||
Other
|
4,980 | 5,488 | 5,535 | |||||||||
368,092 | 491,830 | 508,824 | ||||||||||
Manufactured
Housing:
|
||||||||||||
Windows,
doors and screens
|
62,924 | 72,580 | 88,827 | |||||||||
Chassis
and chassis parts
|
56,869 | 70,428 | 87,221 | |||||||||
Shower
and bath units
|
18,108 | 19,921 | 19,792 | |||||||||
Axles
and tires
|
3,811 | 10,502 | 18,390 | |||||||||
Other
|
702 | 3,364 | 6,178 | |||||||||
142,414 | 176,795 | 220,408 | ||||||||||
Net
Sales
|
$ | 510,506 | $ | 668,625 | $ | 729,232 |
Net
tangible assets acquired
|
$ | 6,693 | ||
Customer
relationships
|
9,400 | |||
Other
identifiable intangible assets
|
2,575 | |||
Goodwill
(tax deductible)
|
9,991 | |||
Total
cash consideration
|
$ | 28,659 |
Net
tangible assets acquired
|
$ | 1,238 | ||
Identifiable
intangible assets
|
5,600 | |||
Goodwill
(tax deductible)
|
3,974 | |||
Total
cash consideration
|
$ | 10,812 |
Net
tangible assets acquired
|
$ | 604 | ||
Identifiable
intangible assets
|
1,830 | |||
Goodwill
(tax deductible)
|
598 | |||
Total
cash consideration
|
$ | 3,032 |
Net
tangible assets acquired
|
$ | 625 | ||
Identifiable
intangible assets
|
4,160 | |||
Goodwill
(tax deductible)
|
267 | |||
Goodwill
(non tax deductible)
|
426 | |||
Total
consideration
|
5,478 | |||
Less
present value of future minimum payments
|
(1,961 | ) | ||
Total
cash consideration
|
$ | 3,517 |
Net
tangible assets acquired
|
$ | 3,925 | ||
Patents
|
9,600 | |||
Other
identifiable intangible assets
|
6,400 | |||
Goodwill
(tax deductible)
|
10,338 | |||
Total
consideration
|
30,263 | |||
Less
debt assumed
|
(732 | ) | ||
Total
cash consideration
|
$ | 29,531 |
Net
tangible assets acquired
|
$ | 756 | ||
Identifiable
intangible assets
|
1,520 | |||
Goodwill
(tax deductible)
|
1,888 | |||
Total
cash consideration
|
$ | 4,164 |
Accumulated
|
Estimated Useful
|
||||||||||||
Gross
|
Amortization
|
Net
|
Life in Years
|
||||||||||
Non-compete
agreements
|
$ | 3,231 | $ | 1,130 | $ | 2,101 |
3
to 7
|
||||||
Customer
relationships
|
24,870 | 6,225 | 18,645 |
8
to 16
|
|||||||||
Tradenames
|
6,251 | 1,846 | 4,405 |
5
to 14
|
|||||||||
Patents
|
21,183 | 3,547 | 17,636 |
5
to 19
|
|||||||||
Other
intangible assets
|
$ | 55,535 | $ | 12,748 | $ | 42,787 |
Accumulated
|
Estimated
Useful
|
||||||||||||
Gross
|
Amortization
|
Net
|
Life in Years
|
||||||||||
Non-compete
agreements
|
$ | 2,596 | $ | 810 | $ | 1,786 |
3
to 7
|
||||||
Customer
relationships
|
15,470 | 3,971 | 11,499 |
8
to 16
|
|||||||||
Tradenames
|
4,220 | 1,105 | 3,115 |
5
to 14
|
|||||||||
Patents
|
18,205 | 2,027 | 16,178 |
5
to 19
|
|||||||||
Other
intangible assets
|
$ | 40,491 | $ | 7,913 | $ | 32,578 |
MH Segment
|
RV Segment
|
Total
|
||||||||||
Balance
- January 1, 2007
|
$ | 9,251 | $ | 25,093 | $ | 34,344 | ||||||
Acquisitions
|
- | 5,203 | 5,203 | |||||||||
Balance
- December 31, 2007
|
9,251 | 30,296 | 39,547 | |||||||||
Acquisitions
|
- | 10,053 | 10,053 | |||||||||
Impairments
|
- | (5,487 | ) | (5,487 | ) | |||||||
Balance
- December 31, 2008
|
$ | 9,251 | $ | 34,862 | $ | 44,113 |
2008
|
2007
|
|||||||
Finished
goods
|
$ | 10,801 | $ | 12,698 | ||||
Work
in process
|
2,946 | 2,975 | ||||||
Raw
materials
|
80,187 | 60,606 | ||||||
Total
|
$ | 93,934 | $ | 76,279 |
Estimated
Useful
|
|||||||||
2008
|
2007
|
Life in Years
|
|||||||
Land
|
$ | 8,323 | $ | 10,488 | |||||
Buildings
and improvements
|
63,508 | 66,814 |
10
to 40
|
||||||
Leasehold
improvements
|
1,182 | 1,475 |
3
to 10
|
||||||
Machinery
and equipment
|
77,653 | 74,657 |
3
to 12
|
||||||
Transportation
equipment
|
2,985 | 3,352 |
3
to 7
|
||||||
Furniture
and fixtures
|
8,356 | 8,739 |
2
to 10
|
||||||
Construction
in progress
|
1,294 | 255 | |||||||
|
163,301
|
165,780 | |||||||
Less
accumulated depreciation and amortization
|
74,570 | 65,164 | |||||||
Fixed
assets, net
|
$ | 88,731 | $ | 100,616 |
2008
|
2007
|
2006
|
||||||||||
Charged
to cost of sales
|
$ | 10,292 | $ | 11,497 | $ | 11,081 | ||||||
Charged
to selling, general and
|
||||||||||||
administrative
expenses
|
1,731 | 1,882 | 1,905 | |||||||||
Total
|
$ | 12,023 | $ | 13,379 | $ | 12,986 |
2008
|
2007
|
|||||||
Accrued
employee compensation and benefits
|
$ | 13,010 | $ | 20,833 | ||||
Accrued
warranty
|
4,510 | 4,360 | ||||||
Accrued
expenses and other
|
14,704 | 19,475 | ||||||
Total
|
$ | 32,224 | $ | 44,668 |
2008
|
2007
|
2006
|
||||||||||
Balance
at beginning of period
|
$ | 5,762 | $ | 3,990 | $ | 3,139 | ||||||
Provision
for warranty expense
|
3,984 | 6,335 | 5,160 | |||||||||
Warranty
costs paid
|
(4,327 | ) | (4,563 | ) | (4,309 | ) | ||||||
Balance
at end of period
|
$ | 5,419 | $ | 5,762 | $ | 3,990 |
2008
|
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 percent per
|
||||||||
annum,
final payment to be made on April 29, 2010
|
$ | 6,000 | $ | 10,000 | ||||
Notes
payable pursuant to a Credit Agreement, with
|
||||||||
interest
at prime rate or LIBOR plus a rate margin based
|
||||||||
upon
the Company's performance (a)
(b)
|
- | 8,000 | ||||||
Industrial
Revenue Bonds, interest rates at December 31,
|
||||||||
2008
of 3.48 percent to 4.68 percent, due 2009 through 2017;
|
||||||||
secured
by certain real estate and equipment
|
1,662 | 5,448 | ||||||
Other
loans primarily secured by certain real estate and
|
||||||||
equipment,
due in 2009, with fixed interest rates of
|
||||||||
5.18
percent to 5.28 percent
|
1,021 | 3,727 | ||||||
Other
loan primarily secured by certain real estate,
|
||||||||
with
a variable interest rate
|
- | 87 | ||||||
8,683 | 27,262 | |||||||
Less
current portion
|
5,833 | 8,881 | ||||||
Total
long-term indebtedness
|
$ | 2,850 | $ | 18,381 |
|
(a)
|
The
weighted average interest rate on these borrowings, including the effect
of the interest rate swap described below, was 4.35 percent at December
31, 2007. Pursuant to the performance schedule, the interest rate on LIBOR
loans was LIBOR plus 2.0 percent at December 31, 2008 and LIBOR plus 1.0
percent at December 31, 2007.
|
|
(b)
|
As
of December 31, 2008 and 2007, the Company had letters of credit of $7.6
million and $2.1 million, respectively, outstanding under the existing
line of credit.
|
2009
|
$ | 5,833 | ||
2010
|
2,101 | |||
2011
|
104 | |||
2012
|
108 | |||
2013
|
112 | |||
Thereafter
|
425 | |||
$ | 8,683 |
2008
|
2007
|
2006
|
||||||||||
Current:
|
||||||||||||
Federal
|
$ | 7,312 | $ | 20,774 | $ | 15,284 | ||||||
State
|
2,176 | 4,291 | 3,734 | |||||||||
Total
Current
|
9,488 | 25,065 | 19,018 | |||||||||
Deferred:
|
||||||||||||
Federal
|
(1,721 | ) | (1,137 | ) | 807 | |||||||
State
|
(424 | ) | (351 | ) | (154 | ) | ||||||
Total
Deferred
|
(2,145 | ) | (1,488 | ) | 653 | |||||||
Total
income tax provision
|
$ | 7,343 | $ | 23,577 | $ | 19,671 |
2008
|
2007
|
2006
|
||||||||||
Income
tax at Federal statutory rate
|
$ | 6,657 | $ | 22,171 | $ | 17,743 | ||||||
State
income taxes, net of Federal income tax benefit
|
1,139 | 2,561 | 2,327 | |||||||||
Non-deductible
expenses
|
169 | 135 | 197 | |||||||||
Manufacturing
credit pursuant to Jobs Creation Act
|
(407 | ) | (1,123 | ) | (443 | ) | ||||||
Tax
free interest income
|
(7 | ) | (277 | ) | - | |||||||
Other
|
(208 | ) | 110 | (153 | ) | |||||||
Provision
for income taxes
|
$ | 7,343 | $ | 23,577 | $ | 19,671 |
|
2008
|
2007
|
||||||
Prepaid
expenses and other current assets
|
$ | 9,436 | $ | 7,171 | ||||
Other
long-term assets
|
306 | 118 | ||||||
$ | 9,742 | $ | 7,289 |
2008
|
2007
|
|||||||
Deferred
tax assets:
|
||||||||
Employee
benefits
|
$ | 3,765 | $ | 2,919 | ||||
Goodwill
and other intangible assets
|
2,741 | 1,514 | ||||||
Inventories
|
1,759 | 1,330 | ||||||
Post
retirement
|
1,474 | 327 | ||||||
Deferred
compensation
|
1,270 | 1,452 | ||||||
Accrued
insurance
|
996 | 1,179 | ||||||
Accounts
receivable
|
758 | 596 | ||||||
Other
|
1,812 | 1,603 | ||||||
Total
deferred tax assets
|
14,575 | 10,920 | ||||||
Deferred
tax liabilities:
|
||||||||
Fixed
assets
|
4,833 | 3,607 | ||||||
Other
|
- | 24 | ||||||
Total
deferred tax liabilities
|
4,833 | 3,631 | ||||||
Net
deferred tax asset
|
$ | 9,742 | $ | 7,289 |
2008
|
2007
|
|||||||
Balance
at beginning of period
|
$ | 4,829 | $ | 3,752 | ||||
Additions
for tax positions of prior years
|
819 | 373 | ||||||
Additions
based on tax positions
|
||||||||
related
to the current year
|
363 | 791 | ||||||
Expiration
of statute of limitations
|
(229 | ) | (87 | ) | ||||
Balance
at end of period
|
$ | 5,782 | $ | 4,829 |
2009
|
$ | 5,474 | ||
2010
|
4,482 | |||
2011
|
3,807 | |||
2012
|
2,558 | |||
2013
|
1,258 | |||
Thereafter
|
659 | |||
Total
minimum lease payments
|
$ | 18,238 |
Weighted
|
||||||||||||
Average
|
||||||||||||
Number of
|
Stock Option
|
Exercise
|
||||||||||
Option Shares
|
Exercise Price
|
Price
|
||||||||||
Outstanding at December 31, 2005
|
1,578,460 | $ | 4.55 – $28.71 | $ | 17.78 | |||||||
Granted
|
45,000 | $ | 26.39 | 26.39 | ||||||||
Exercised
|
(197,480 | ) | $ | 4.55 – $16.16 | 8.97 | |||||||
Forfeited
|
(61,900 | ) | $ | 4.55 – $28.33 | 18.15 | |||||||
Outstanding at December 31, 2006
|
1,364,080 | $ | 4.55 – $28.71 | 19.33 | ||||||||
Granted
|
586,000 | $ | 28.09 – $32.61 | 32.32 | ||||||||
Exercised
|
(248,840 | ) | $ | 4.55 – $28.71 | 10.10 | |||||||
Forfeited
|
(41,600 | ) | $ | 12.78 – $28.33 | 24.84 | |||||||
Outstanding at December 31, 2007
|
1,659,640 | $ | 7.88 – $32.61 | 25.16 | ||||||||
Granted
|
515,500 | $ | 11.59 – $14.22 | 11.92 | ||||||||
Exercised
|
(38,200 | ) | $ | 7.88 – $12.78 | 8.93 | |||||||
Forfeited
|
(60,600 | ) | $ | 12.78 – $32.61 | 26.18 | |||||||
Outstanding at December 31, 2008
|
2,076,340 | $ | 11.59 – $32.61 | $ | 22.14 | |||||||
Exercisable at December 31, 2008
|
932,480 | $ | 12.78 – $32.61 | $ | 21.69 |
Option
|
Option
|
||||||||||||
Exercise
|
Shares
|
Remaining
|
Shares
|
||||||||||
Price
|
Outstanding
|
Life
(Years)
|
Exercisable
|
||||||||||
$ |
12.78
|
356,700 | 0.9 | 356,700 | |||||||||
$ |
13.80
|
30,000 | 1.0 | 30,000 | |||||||||
$ |
16.15
|
40,000 | 2.0 | 40,000 | |||||||||
$ |
16.16
|
12,000 | 1.9 | 9,000 | |||||||||
$ |
28.33
|
|
473,640 | 2.9 | 277,080 | ||||||||
$ |
28.71
|
37,500 | 3.0 | 37,500 | |||||||||
$ |
26.39
|
37,500 | 4.0 | 37,500 | |||||||||
$ |
32.61
|
536,000 | 4.9 | 107,200 | |||||||||
$ |
28.09
|
37,500 | 5.0 | 37,500 | |||||||||
$ |
11.59
|
449,000 | 5.9 | - | |||||||||
$ |
13.03
|
4,000 | 5.9 | - | |||||||||
$ |
14.22
|
62,500 | 6.0 | - |
Stock Price
|
||||||||
Number of
|
at Date
|
|||||||
Shares
|
of Issuance
|
|||||||
Outstanding at December 31, 2005
|
59,506 | |||||||
Issued
|
9,451 | $ | 25.01 – $37.35 | |||||
Exercised
|
(2,460 | ) | $ | 13.90 – $29.95 | ||||
Outstanding at December 31, 2006
|
66,497 | $ | 6.87 – $37.35 | |||||
Issued
|
10,589 | $ | 26.01 – $43.02 | |||||
Exercised
|
(1,089 | ) | $ | 7.61 – $12.78 | ||||
Outstanding at December 31, 2007
|
75,997 | $ | 6.87 – $43.02 | |||||
Issued
|
21,995 | $ | 11.59 – $27.40 | |||||
Exercised
|
(880 | ) | $ | 25.01 – $37.35 | ||||
Outstanding at December 31, 2008
|
97,112 | $ | 6.87 – $43.02 |
2008
|
2007
|
2006
|
||||||||||
Weighted
average shares outstanding for
|
||||||||||||
basic
earnings per share
|
21,808,073 | 21,892,656 | 21,619,455 | |||||||||
Common
stock equivalents pertaining to
|
||||||||||||
stock
options
|
109,048 | 233,244 | 247,542 | |||||||||
Total
for diluted shares
|
21,917,121 | 22,125,900 | 21,866,997 |
First
|
Second
|
Third
|
Fourth
|
|||||||||||||||||
Quarter
|
Quarter
|
Quarter
|
Quarter
|
Year
|
||||||||||||||||
Year
ended December 31, 2008
|
||||||||||||||||||||
Net
sales
|
$ | 159,148 | $ | 150,523 | $ | 124,274 | $ | 76,561 | $ | 510,506 | ||||||||||
Gross
profit
|
36,579 | 36,804 | 24,982 | 9,141 | 107,506 | |||||||||||||||
Income
(loss) before income taxes
|
14,895 | 15,310 | 4,207 | (15,391 | ) | 19,021 | ||||||||||||||
Net
income (loss)
|
$ | 9,105 | $ | 9,190 | $ | 2,593 | $ | (9,210 | ) | $ | 11,678 | |||||||||
Net
income (loss) per common share:
|
||||||||||||||||||||
Basic
|
$ | 0.41 | $ | 0.42 | $ | 0.12 | $ | (0.43 | ) | $ | 0.54 | |||||||||
Diluted
|
$ | 0.41 | $ | 0.42 | $ | 0.12 | $ | (0.43 | ) | $ | 0.53 | |||||||||
Stock
market price
|
||||||||||||||||||||
High
|
$ | 28.69 | $ | 26.81 | $ | 20.58 | $ | 16.05 | $ | 28.69 | ||||||||||
Low
|
$ | 21.47 | $ | 15.95 | $ | 14.80 | $ | 9.65 | $ | 9.65 | ||||||||||
Close
(at end of quarter)
|
$ | 24.46 | $ | 15.95 | $ | 17.11 | $ | 12.00 | $ | 12.00 | ||||||||||
Year
ended December 31, 2007
|
||||||||||||||||||||
Net
sales
|
$ | 172,944 | $ | 184,456 | $ | 173,410 | $ | 137,815 | $ | 668,625 | ||||||||||
Gross
profit
|
39,887 | 46,750 | 41,456 | 30,657 | 158,750 | |||||||||||||||
Income
before income taxes
|
15,642 | 20,344 | 17,810 | 9,548 | 63,344 | |||||||||||||||
Net
income
|
$ | 9,589 | $ | 12,562 | $ | 11,133 | $ | 6,483 | $ | 39,767 | ||||||||||
Net
income per common share:
|
||||||||||||||||||||
Basic
|
$ | 0.44 | $ | 0.57 | $ | 0.51 | $ | 0.29 | $ | 1.82 | ||||||||||
Diluted
|
$ | 0.44 | $ | 0.57 | $ | 0.50 | $ | 0.29 | $ | 1.80 | ||||||||||
Stock
market price
|
||||||||||||||||||||
High
|
$ | 30.72 | $ | 35.29 | $ | 41.98 | $ | 44.18 | $ | 44.18 | ||||||||||
Low
|
$ | 24.26 | $ | 28.21 | $ | 32.86 | $ | 26.75 | $ | 24.26 | ||||||||||
Close
(at end of quarter)
|
$ | 28.68 | $ | 33.14 | $ | 40.68 | $ | 27.40 | $ | 27.40 |
|
(a)
|
Management’s Annual
Report on Internal Control over Financial
Reporting.
|
/s/
Fredric M. Zinn
|
/s/
Joseph S. Giordano III
|
President
and
|
Chief
Financial Officer and
|
Chief
Executive Officer
|
Treasurer
|
(1)
|
Financial
Statements.
|
Exhibit
Number
|
Description
|
|
3
|
Articles
of Incorporation and By-laws.
|
|
3.1
|
Drew
Industries Incorporated Restated Certificate of
Incorporation.
|
|
3.2
|
Drew
Industries Incorporated By-laws, as
amended.
|
10
|
Material
Contracts.
|
10.194*
|
Drew
Industries Incorporated 2002 Equity Award and Incentive Plan, as
amended.
|
|
10.195
|
License
Agreement, dated February 28, 2003, by and among Versa Technologies, Inc.,
VT Holdings II, Inc. and Engineered Solutions LP, and Lippert Components,
Inc.
|
|
10.197*
|
Amended
Change of Control Agreement by and between Fredric M. Zinn and Registrant,
dated March 3, 2006, as amended on July 18, 2006 and December 23,
2008.
|
|
10.198
|
Amended
and Restated Credit Agreement dated as of February 11, 2005 by and among
Kinro, Inc., Lippert Components, Inc., KeyBank, National Association, HSBC
Bank USA, National Association, and JPMorgan Chase Bank, N.A.,
individually and as Administrative Agent.
|
|
10.199
|
Amended
and Restated Subsidiary Guarantee Agreement dated as of February 11, 2005
by and among Lippert Tire & Axle, Inc., Kinro Holding, Inc., Lippert
Tire & Axle Holding, Inc., Lippert Holding, Inc., Kinro Manufacturing,
Inc., Lippert Components Manufacturing, Inc., Kinro Texas Limited
Partnership, Kinro Tennessee Limited Partnership, Lippert Tire & Axle
Texas Limited Partnership, Lippert Components Texas Limited Partnership,
BBD Realty Texas Limited Partnership, LD Realty, Inc., LTM Manufacturing,
L.L.C., Coil Clip, Inc., Zieman Manufacturing Company, with and in favor
of JPMorgan Chase Bank, N.A., as Administrative Agent for the
Lenders.
|
|
10.200
|
Amended
and Restated Company Guarantee Agreement dated as of February 11, 2005 by
and among Drew Industries Incorporated, with and in favor of JPMorgan
Chase Bank, N.A., as Administrative Agent for the
Lenders.
|
|
10.201
|
Amended
and Restated Subordination Agreement dated as of February 11, 2005 by and
among Kinro, Inc., Lippert Tire & Axle, Inc., Lippert Components,
Inc., Kinro Holding, Inc., Lippert Tire & Axle Holding, Inc., Lippert
Holding, Inc., Kinro Manufacturing, Inc., Lippert Components
Manufacturing, Inc., Lippert Components of Canada, Inc., Coil Clip, Inc.,
Zieman Manufacturing Company, Kinro Texas Limited Partnership, Kinro
Tennessee Limited Partnership, Lippert Tire & Axle Texas Limited
Partnership, BBD Realty Texas Limited Partnership, Lippert Components
Texas Limited Partnership, LD Realty, Inc., LTM Manufacturing, L.L.C.,
with and in favor of JPMorgan Chase Bank, N.A., as Administrative
Agent.
|
|
10.202
|
Amended
and Restated Pledge Agreement dated as of February 11, 2005 by and among
Drew Industries Incorporated, Kinro, Inc., Lippert Tire & Axle, Inc.,
Kinro Holding, Inc., Lippert Tire & Axle Holding, Inc., Lippert
Components, Inc., Lippert Holding, Inc., with and in favor of JPMorgan
Chase Bank, N.A., as Administrative Agent.
|
|
10.203
|
Revolving
Credit Note dated as of February 11, 2005 by and among Kinro, Inc.,
Lippert Components, Inc., payable to the order of JPMorgan Chase Bank,
N.A. in the principal amount of Twenty-Five Million ($25,000,000)
Dollars.
|
|
10.204
|
Revolving
Credit Note dated as of February 11, 2005 by and among Kinro, Inc.,
Lippert Components, Inc., payable to the order of KeyBank National
Association in the principal amount of Twenty Million ($20,000,000)
Dollars.
|
|
10.205
|
Revolving
Credit Note dated as of February 11, 2005 by and among Kinro, Inc.,
Lippert Components, Inc., payable to the order of HSBC USA, National
Association in the principal amount of Fifteen Million ($15,000,000)
Dollars.
|
|
10.206
|
Note
Purchase and Private Shelf Agreement dated as of February 11, 2005 by and
among Kinro, Inc., Lippert Components, Inc., Drew Industries Incorporated
and Prudential Investment Management,
Inc.
|
10.207
|
Form
of Senior Note (Shelf Note).
|
|
10.208
|
Parent
Guarantee Agreement dated as of February 11, 2005 by and among Drew
Industries Incorporated, Prudential Investment Management, Inc. and the
Noteholders.
|
|
10.209
|
Subsidiary
Guaranty dated as of February 11, 2005 by and among Lippert Tire &
Axle, Inc., Kinro Holding, Inc., Lippert Tire & Axle Holding, Inc.,
Lippert Holding, Inc., Kinro Manufacturing, Inc., Lippert Components
Manufacturing, Inc., Kinro Texas Limited Partnership, Kinro Tennessee
Limited Partnership, Lippert Tire & Axle Texas Limited Partnership,
Lippert Components Texas Limited Partnership, BBD Realty Texas Limited
Partnership, LD Realty, Inc., LTM Manufacturing, L.L.C., Coil Clip, Inc.,
Zieman Manufacturing Company, with and in favor of Prudential Investment
Management, Inc. and the Noteholders listed thereto.
|
|
10.210
|
Intercreditor
Agreement dated as of February 11, 2005 by and among Prudential Investment
Management, Inc., JPMorgan Bank, N.A. (as Lender and Administrative
Agent), KeyBank, National Association, HSBC Bank USA, National Association
and JPMorgan Bank, N.A. (as Trustee and Administrative
Agent).
|
|
10.211
|
Subordination
Agreement dated as of February 11, 2005 by and among Drew Industries
Incorporated, Kinro, Inc., Lippert Tire & Axle, Inc., Lippert
Components, Inc., Kinro Holding, Inc., Lippert Tire & Axle Holding,
Inc., Lippert Holding, Inc., Kinro Manufacturing, Inc., Lippert Components
Manufacturing, Inc., Lippert Components of Canada, Inc., Coil Clip, Inc.,
Zieman Manufacturing Company, Kinro Texas Limited Partnership, Kinro
Tennessee Limited Partnership, Lippert Tire & Axle Texas Limited
Partnership, BBD Realty Texas Limited Partnership, Lippert Components
Texas Limited Partnership, LD Realty, Inc., LTM Manufacturing, L.L.C.,
with and in favor of Prudential Investment Management,
Inc.
|
|
10.212
|
Pledge
Agreement dated as of February 11, 2005 by and among Drew Industries
Incorporated, Kinro, Inc., Lippert Tire & Axle, Inc., Kinro Holding,
Inc., Lippert Tire & Axle Holding, Inc., Lippert Components, Inc.,
Lippert Holding, Inc. in favor of JPMorgan Chase Bank, N.A. as security
trustee.
|
|
10.213
|
Collateralized
Trust Agreement dated as of February 11, 2005 by and among Kinro, Inc.,
Lippert Components, Inc., Prudential Investment Management, Inc. and
JPMorgan Chase Bank, N.A. as security trustee for the
Noteholders.
|
|
10.214*
|
Amended
and Restated Employment Agreement between Registrant and David L. Webster,
dated February 17, 2005.
|
|
10.221
|
Form
of Indemnification Agreement between Registrant and its officers and
independent directors.
|
|
10.222*
|
Employment
Agreement by and between Lippert Components, Inc. and Jason D. Lippert,
effective January 1, 2006, as amended and supplemented.
|
|
10.223*
|
Amended
Change of Control Agreement by and between Harvey F. Milman and
Registrant, dated March 3, 2006, as amended on July 18, 2006 and December
23, 2008.
|
|
10.224*
|
Memorandum
to Leigh J. Abrams from the Compensation Committee of the Board of
Directors dated November 14, 2007.
|
|
10.230
|
Second
Amendment to Amended and Restated Credit Agreement dated as of March 10,
2006 by and among Kinro, Inc., Lippert Components, Inc., KeyBank, National
Association, HSBC Bank USA, National Association, and JPMorgan Chase Bank,
N.A., individually and as Administrative
Agent.
|
10.231*
|
Executive
Non-Qualified Deferred Compensation Plan, as amended.
|
|
10.232*
|
Compensation
Memorandum of Lippert Components Manufacturing, Inc. to Scott T. Mereness
dated January 30, 2008.
|
10.233
|
Second
Amended and Restated Credit Agreement dated as of November 25, 2008 by and
among Kinro, Inc., Lippert Components, Inc., JPMorgan Chase Bank, N.A.,
individually and as Administrative Agent, and Wells Fargo Bank, N.A.
individually and as Documentation Agent.
|
|
10.234
|
Second
Amended and Restated Subsidiary Guarantee Agreement dated as of November
25, 2008 by and among Lippert Tire & Axle, Inc., Kinro Holding, Inc.,
Lippert Tire & Axle Holding, Inc., Lippert Holding, Inc., Kinro
Manufacturing, Inc., Lippert Components Manufacturing, Inc., Kinro Texas
Limited Partnership, Kinro Tennessee Limited Partnership, Lippert Tire
& Axle Texas Limited Partnership, Lippert Components Texas Limited
Partnership, BBD Realty Texas Limited Partnership, LD Realty, Inc., LTM
Manufacturing, L.L.C., Trailair, Inc., Coil Clip, Inc., Zieman
Manufacturing Company, with and in favor of JPMorgan Chase Bank, N.A., as
Administrative Agent for the Lenders.
|
|
10.235
|
Second
Amended and Restated Company Guarantee Agreement dated as of November 25,
2008 by and among Drew Industries Incorporated, with and in favor of
JPMorgan Chase Bank, N.A., as Administrative Agent for the
Lenders.
|
|
10.236
|
Second
Amended and Restated Subordination Agreement dated as of November 25, 2008
by and among Drew Industries Incorporated, Kinro, Inc., Lippert Tire &
Axle, Inc., Lippert Components, Inc., Kinro Holding, Inc., Lippert Tire
& Axle Holding, Inc., Lippert Holding, Inc., Kinro Manufacturing,
Inc., Lippert Components Manufacturing, Inc., Coil Clip, Inc., Zieman
Manufacturing Company, Kinro Texas Limited Partnership, Kinro Tennessee
Limited Partnership, Lippert Tire & Axle Texas Limited Partnership,
BBD Realty Texas Limited Partnership, Lippert Components Texas Limited
Partnership, LD Realty, Inc., LTM Manufacturing, L.L.C., Trailair, Inc,
with and in favor of JPMorgan Chase Bank, N.A., as Administrative
Agent.
|
|
10.237
|
Second
Amended and Restated Pledge and Security Agreement dated as of November
25, 2008 by and among Drew Industries Incorporated, Kinro, Inc., Lippert
Tire & Axle, Inc., Kinro Holding, Inc., Lippert Tire & Axle
Holding, Inc., Lippert Components, Inc., Lippert Holding, Inc., with and
in favor of JPMorgan Chase Bank, N.A., as Administrative
Agent.
|
|
10.238
|
Second
Amended and Restated Revolving Credit Note dated as of November 25, 2008
by and among Kinro, Inc., Lippert Components, Inc., payable to the order
of JPMorgan Chase Bank, N.A. in the principal amount of Thirty Million
($30,000,000) Dollars.
|
|
10.239
|
Revolving
Credit Note dated as of November 25, 2008 by and among Kinro, Inc.,
Lippert Components, Inc., payable to the order of Wells Fargo Bank, N.A.
in the principal amount of Twenty Million ($20,000,000)
Dollars.
|
|
10.240
|
Second
Amended and Restated Note Purchase and Private Shelf Agreement dated as of
November 25, 2008 by and among Prudential Investment Management, Inc. and
Affiliates, and Kinro, Inc. and Lippert Components, Inc., guaranteed by
Drew Industries Incorporated.
|
|
10.241
|
Form
of Fixed Rate Shelf Note.
|
|
10.242
|
Form
of Floating Rate Shelf Note.
|
|
10.243
|
Confirmation,
Reaffirmation and Amendment of Parent Guarantee Agreement dated as of
November 25, 2008 by and among Drew Industries Incorporated, Prudential
Investment Management, Inc. and the Noteholders listed
thereto.
|
10.244
|
Confirmation,
Reaffirmation and Amendment of Subsidiary Guaranty dated as of November
25, 2008 by and among Lippert Tire & Axle, Inc., Kinro Holding, Inc.,
Lippert Tire & Axle Holding, Inc., Lippert Holding, Inc., Kinro
Manufacturing, Inc., Lippert Components Manufacturing, Inc., Kinro Texas
Limited Partnership, Kinro Tennessee Limited Partnership, Lippert Tire
& Axle Texas Limited Partnership, Lippert Components Texas Limited
Partnership, BBD Realty Texas Limited Partnership, LD Realty, Inc., LTM
Manufacturing, L.L.C., Coil Clip, Inc., Zieman Manufacturing Company, with
and in favor of Prudential Investment Management, Inc. and Affiliates and
the Noteholders listed thereto.
|
|
10.245
|
Amended
and Restated Intercreditor Agreement dated as of November 25, 2008 by and
among Prudential Investment Management, Inc. and Affiliates, JPMorgan
Bank, N.A. (as Lender), Wells Fargo, N.A. (as Lender), and JPMorgan Bank,
N.A. (as Administrative Agent, Collateral Agent and Trustee).
|
|
10.246
|
Confirmation,
Reaffirmation and Amendment of Subordination Agreement dated as of
November 25, 2008 by and among Drew Industries Incorporated, Kinro, Inc.,
Lippert Tire & Axle, Inc., Lippert Components, Inc., Kinro Holding,
Inc., Lippert Tire & Axle Holding, Inc., Lippert Holding, Inc., Kinro
Manufacturing, Inc., Lippert Components Manufacturing, Inc., Coil Clip,
Inc., Zieman Manufacturing Company, Kinro Texas Limited Partnership, Kinro
Tennessee Limited Partnership, Lippert Tire & Axle Texas Limited
Partnership, BBD Realty Texas Limited Partnership, Lippert Components
Texas Limited Partnership, LD Realty, Inc., LTM Manufacturing, L.L.C.,
with and in favor of Prudential Investment Management, Inc. and
Affiliates.
|
|
10.247
|
Confirmation,
Reaffirmation and Amendment of Pledge Agreement dated as of November 25,
2008 by and among Drew Industries Incorporated, Kinro, Inc., Lippert Tire
& Axle, Inc., Kinro Holding, Inc., Lippert Tire & Axle Holding,
Inc., Lippert Components, Inc., Lippert Holding, Inc. in favor of JPMorgan
Chase Bank, N.A. as trustee.
|
|
10.248
|
Collateralized
Trust Agreement dated as of November 25, 2008 by and among Kinro, Inc.,
Lippert Components, Inc., Prudential Investment Management, Inc. and
Affiliates and JPMorgan Chase Bank, N.A. as security trustee for the
Noteholders.
|
10.249*
|
Amended
Change of Control Agreement by and between Joseph S. Giordano III and
Registrant dated July 18, 2006, as amended on December 23,
2008.
|
|
10.250*
|
Amended
Change of Control Agreement by and between Christopher L. Smith and
Registrant dated July 17, 2006, as amended on December 23, 2008 and March
5, 2009.
|
14
|
Code
of Ethics.
|
14.1
|
Code
of Ethics for Senior Financial Officers.
Exhibit
14.1 is incorporated by reference to Exhibit 14 included in the Company’s
Annual Report on Form 10-K for the year ended December 31,
2003.
|
14.2
|
Guidelines
for Business Conduct.
Exhibit
14.2 is filed herewith.
|
21
|
Subsidiaries
of the Registrant.
Exhibit
21 is filed herewith.
|
23
|
Consent
of Independent Registered Public Accounting Firm.
Exhibit
23 is filed herewith.
|
24
|
Powers
of Attorney.
Powers
of Attorney of persons signing this Report are included as part of this
Report.
|
31
|
Rule
13a-14(a)/15d-14(a) Certifications.
|
31.1
|
Rule
13a-14(a) Certificate of Chief Executive Officer.
|
31.2
|
Rule
13a-14(a) Certificate of Chief Financial Officer.
|
32
|
Section
1350 Certifications.
|
32.1
|
Section
1350 Certificate of Chief Executive Officer.
|
32.2
|
Section
1350 Certificate of Chief Financial Officer.
|
Exhibits
31.1 - 32.2 are filed
herewith.
|
Date:
March 12, 2009
|
DREW
INDUSTRIES INCORPORATED
|
|
By:
|
/s/ Fredric M. Zinn
|
|
Fredric
M. Zinn, President and Chief Executive
Officer
|
Date
|
Signature
|
Title
|
|||
March
12, 2009
|
By:
|
/s/ Fredric M. Zinn
|
Director,
President and
|
||
(Fredric
M. Zinn)
|
Chief
Executive Officer
|
||||
March
12, 2009
|
By:
|
/s/ Joseph S. Giordano III
|
Chief
Financial Officer and Treasurer
|
||
(Joseph
S. Giordano III)
|
|||||
March
12, 2009
|
By:
|
/s/ Christopher L. Smith
|
Corporate
Controller
|
||
(Christopher
L. Smith)
|
|||||
March
12, 2009
|
By:
|
/s/ Edward W. Rose III
|
Lead
Director
|
||
(Edward
W. Rose III)
|
|||||
March
12, 2009
|
By:
|
/s/ Leigh J. Abrams
|
Chairman
of the Board of Directors
|
||
(Leigh
J. Abrams)
|
|||||
March
12, 2009
|
By:
|
/s/ James F. Gero
|
Director
|
||
(James
F. Gero)
|
|||||
March
12, 2009
|
By:
|
/s/ Frederick B. Hegi, Jr.
|
Director
|
||
(Frederick
B. Hegi, Jr.)
|
|||||
March
12, 2009
|
By:
|
/s/ David A. Reed
|
Director
|
||
(David
A. Reed)
|
|||||
March
12, 2009
|
By:
|
/s/ John B. Lowe, Jr.
|
Director
|
||
(John
B. Lowe, Jr.)
|
|||||
March
12, 2009
|
By:
|
/s/ Jason D. Lippert
|
Director
|
||
(Jason
D. Lippert)
|