For
the Year End
December
31, 2005
|
Commission
File Number
0-13646
|
Delaware
(State
or other jurisdiction of incorporation
or organization)
|
13-3250533
(I.R.S.
Employer Identification
Number)
|
RV
PRODUCT SEGMENT
|
City
|
State
|
Square
Feet
|
Owned
|
Leased
|
|||||
|
|
||||||||
Phoenix
(1)
|
Arizona
|
15,000
|
P
|
|
|||||
Fontana
(1)
|
California
|
87,000
|
P
|
|
|||||
Hemet
(1)
|
California
|
35,000
|
P
|
|
|||||
Rialto
|
California
|
62,700
|
P
|
|
|||||
San
Bernardino
|
California
|
20,300
|
P
|
|
|||||
Whittier
|
California
|
47,500
|
P
|
|
|||||
Woodland
|
California
|
25,000
|
P
|
|
|||||
Ontario
|
Canada
|
39,900
|
P
|
|
|||||
Fitzgerald
(1)
|
Georgia
|
15,800
|
P
|
|
|||||
Bristol
|
Indiana
|
97,500
|
P
|
|
|||||
Elkhart
|
Indiana
|
42,000
|
P
|
|
|||||
Elkhart
|
Indiana
|
53,950
|
P
|
|
|||||
Garrett
|
Indiana
|
21,600
|
P
|
|
|||||
Goshen
|
Indiana
|
68,000
|
P
|
|
|||||
Goshen
|
Indiana
|
41,500
|
P
|
|
|||||
Goshen
|
Indiana
|
87,800
|
P
|
|
|||||
Goshen
|
Indiana
|
9,000
|
P
|
|
|||||
Goshen
|
Indiana
|
118,000
|
P
|
|
|||||
Goshen
|
Indiana
|
53,000
|
P
|
|
|||||
Goshen
|
Indiana
|
53,500
|
P
|
|
|||||
Goshen
(1)
|
Indiana
|
432,500
|
P
|
|
|||||
Goshen
(1)
|
Indiana
|
68,900
|
P
|
|
|||||
Middlebury
(1)
|
Indiana
|
78,525
|
P
|
|
|||||
Milford
|
Indiana
|
52,000
|
P
|
||||||
Smith
Center
|
Kansas
|
25,900
|
P
|
|
|||||
McMinnville
(1)
|
Oregon
|
12,350
|
P
|
|
|||||
Pendleton
|
Oregon
|
56,800
|
P
|
|
|||||
Denver
(1)
|
Pennsylvania
|
29,200
|
P
|
|
|||||
Longview
(1)
|
Texas
|
56,900
|
P
|
|
|||||
Waxahachie(1)
|
Texas
|
40,000
|
P
|
|
|||||
|
1,847,125
|
|
(1)
These plants also produce products for manufactured
homes.
|
MH
PRODUCT SEGMENT
|
City
|
State
|
Square
Feet
|
Owned
|
Leased
|
|||||
|
|
||||||||
Boaz
|
Alabama
|
86,600
|
P
|
|
|||||
Double
Springs
|
Alabama
|
109,000
|
P
|
|
|||||
Phoenix
(1)
|
Arizona
|
14,900
|
P
|
|
|||||
Phoenix
|
Arizona
|
61,000
|
P
|
|
|||||
Fontana
(1)
|
California
|
21,800
|
P
|
|
|||||
Hemet
(1)
|
California
|
25,000
|
P
|
|
|||||
Woodland
|
California
|
13,900
|
P
|
||||||
Ocala
|
Florida
|
47,100
|
P
|
|
|||||
Cairo
|
Georgia
|
105,000
|
P
|
|
|||||
Fitzgerald
(1)
|
Georgia
|
63,200
|
P
|
|
|||||
Nampa
|
Idaho
|
83,500
|
P
|
|
|||||
Elkhart
|
Indiana
|
37,000
|
P
|
|
|||||
Goshen
|
Indiana
|
110,000
|
P
|
|
|||||
Goshen
(1)
|
Indiana
|
35,000
|
P
|
|
|||||
Goshen
(1)
|
Indiana
|
24,800
|
P
|
|
|||||
Howe
|
Indiana
|
60,000
|
P
|
|
|||||
Middlebury
(1)
|
Indiana
|
43,700
|
P
|
|
|||||
Arkansas
City
|
Kansas
|
7,800
|
P
|
||||||
Bossier
City
|
Louisiana
|
11,400
|
P
|
|
|||||
Whitehall
|
New
York
|
12,700
|
P
|
|
|||||
Liberty
|
North
Carolina
|
47,000
|
P
|
||||||
Sugarcreek
|
Ohio
|
14,500
|
P
|
|
|||||
McMinnville
(1)
|
Oregon
|
12,350
|
P
|
|
|||||
Denver
(1)
|
Pennsylvania
|
54,100
|
P
|
|
|||||
Dayton
|
Tennessee
|
100,000
|
P
|
|
|||||
Longview
(1)
|
Texas
|
2,000
|
P
|
|
|||||
Mansfield
|
Texas
|
61,500
|
P
|
||||||
Waxahachie
(1)
|
Texas
|
160,000
|
P
|
|
|||||
Lancaster
|
Wisconsin
|
12,300
|
P
|
|
|||||
|
1,437,150
|
|
(1)
These plants also produce products for
RVs.
|
ADMINISTRATIVE
|
City
|
State
|
Square
Feet
|
Owned
|
Leased
|
|||||
|
|
||||||||
Naples
|
Florida
|
4,500
|
P
|
|
|||||
Goshen
|
Indiana
|
6,000
|
P
|
||||||
Goshen
|
Indiana
|
13,500
|
P
|
|
|||||
Goshen
|
Indiana
|
2,000
|
P
|
|
|||||
Goshen
|
Indiana
|
6,000
|
P
|
||||||
Arlington
|
Texas
|
8,500
|
P
|
||||||
White
Plains
|
New
York
|
3,400
|
P
|
||||||
Whittier
|
California
|
2,000
|
P
|
||||||
Lake
Havasu
|
Arizona
|
2,000
|
P
|
||||||
|
47,900
|
|
Name
|
Position
|
Leigh
J. Abrams
(Age
63)
|
President,
Chief Executive Officer and Director of the Company since March
1984.
|
Edward
W. Rose, III
(Age
64)
|
Chairman
of the Board of Directors of the Company since March 1984.
|
David
L. Webster
(Age
70)
|
Director
of the Company and Chairman, President and CEO of Kinro, Inc. since
March
1984.
|
L.
Douglas Lippert
(Age
58)
|
Director
of the Company and Chairman of Lippert Components, Inc. since November
1997.
|
James
F. Gero
(Age
60)
|
Director
of the Company since May 1992.
|
Frederick
B. Hegi, Jr.
(Age
62)
|
Director
of the Company since May 2002.
|
David
A. Reed
(Age
58 )
|
Director
of the Company since May 2003.
|
John
B. Lowe, Jr.
(Age
66)
|
Director
of the Company since May 2005.
|
Jason
D. Lippert
(Age
33)
|
President
and Chief Executive Officer of Lippert Components, Inc. since February
5,
2003.
|
Fredric
M. Zinn
(Age
54)
|
Chief
Financial Officer of the Company since January 1986 and Executive
Vice
President of the Company since February 2001.
|
Scott.
T. Mereness
(Age
34)
|
Executive
Vice President and Chief Operating Officer of Lippert Components,
Inc.
since February 2003.
|
Domenic
D. Gattuso
(Age
65)
|
Executive
Vice President of Kinro, Inc. since February 2004 and Chief Financial
Officer of Kinro, Inc. since September
1985.
|
Years
Ended December 31,
|
||||||||||||||||
(In
thousands, except per share amounts)
|
2005
|
2004
|
2003
|
2002
|
2001
|
|||||||||||
Operating
Data:
|
||||||||||||||||
Net
sales
|
$
|
669,147
|
$
|
530,870
|
$
|
353,116
|
$
|
325,431
|
$
|
254,770
|
||||||
Operating
profit
|
$
|
57,729
|
$
|
43,996
|
$
|
34,277
|
$
|
29,213
|
$
|
20,345
|
||||||
Income
from continuing operations before income taxes and cumulative effect
of
change in accounting principle
|
$
|
54,063
|
$
|
40,857
|
$
|
31,243
|
$
|
25,647
|
$
|
16,194
|
||||||
Provision
for income taxes
|
$
|
20,461
|
$
|
15,749
|
$
|
11,868
|
$
|
9,883
|
$
|
6,364
|
||||||
Income
from continuing operations before cumulative effect of change in
accounting principle
|
$
|
33,602
|
$
|
25,108
|
$
|
19,375
|
$
|
15,764
|
$
|
9,830
|
||||||
Discontinued
operations (net of taxes)
|
$
|
48
|
$
|
(200
|
)
|
$
|
(896
|
)
|
||||||||
Cumulative
effect of change in accounting principle for goodwill (net of
taxes)
|
$
|
(30,162
|
)
|
|||||||||||||
Net
income (loss)
|
$
|
33,602
|
$
|
25,108
|
$
|
19,423
|
$
|
(14,598
|
)
|
$
|
8,934
|
|||||
Income
(loss) per common share:
|
||||||||||||||||
Income
from continuing operations:
|
||||||||||||||||
Basic
|
$
|
1.60
|
$
|
1.22
|
$
|
.96
|
$
|
.81
|
$
|
.51
|
||||||
Diluted
|
$
|
1.56
|
$
|
1.18
|
$
|
.94
|
$
|
.79
|
$
|
.51
|
||||||
Discontinued
operations:
|
||||||||||||||||
Basic
|
$
|
(.01
|
)
|
$
|
(.05
|
)
|
||||||||||
Diluted
|
$
|
(.01
|
)
|
$
|
(.05
|
)
|
||||||||||
Cumulative
effect of change in accounting principle for goodwill:
|
||||||||||||||||
Basic
|
$
|
(1.54
|
)
|
|||||||||||||
Diluted
|
$
|
(1.51
|
)
|
|||||||||||||
Net
income (loss):
|
||||||||||||||||
Basic
|
$
|
1.60
|
$
|
1.22
|
$
|
.96
|
$
|
(.75
|
)
|
$
|
.46
|
|||||
Diluted
|
$
|
1.56
|
$
|
1.18
|
$
|
.94
|
$
|
(.73
|
)
|
$
|
.46
|
|||||
Financial
Data:
|
||||||||||||||||
Working
capital
|
$
|
76,146
|
$
|
57,204
|
$
|
29,700
|
$
|
24,067
|
$
|
12,816
|
||||||
Total
assets
|
$
|
307,428
|
$
|
238,053
|
$
|
160,104
|
$
|
145,396
|
$
|
156,975
|
||||||
Long-term
obligations
|
$
|
64,768
|
$
|
61,806
|
$
|
27,737
|
$
|
39,102
|
$
|
43,936
|
||||||
Stockholders’
equity
|
$
|
167,709
|
$
|
122,044
|
$
|
93,653
|
$
|
70,104
|
$
|
81,210
|
Year
Ended December 31,
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Net
sales:
|
||||||||||
RV
segment
|
$
|
447,854
|
$
|
347,584
|
$
|
219,505
|
||||
MH
segment
|
221,293
|
183,286
|
133,611
|
|||||||
Total
|
$
|
669,147
|
$
|
530,870
|
$
|
353,116
|
||||
Operating
profit:
|
||||||||||
RV
segment
|
$
|
41,738
|
$
|
31,832
|
$
|
24,779
|
||||
MH
segment
|
23,972
|
18,547
|
14,358
|
|||||||
Amortization
of intangibles
|
(1,427
|
)
|
(1,032
|
)
|
(782
|
)
|
||||
Corporate
and other
|
(6,685
|
)
|
(5,779
|
)
|
(4,078
|
)
|
||||
Other
income
|
131
|
428
|
-
|
|||||||
Total
|
$
|
57,729
|
$
|
43,996
|
$
|
34,277
|
Year
Ended December 31,
|
|||||||||||||
2005
|
2004
|
2003
|
|||||||||||
Net
sales:
|
|||||||||||||
RV
segment
|
67
|
%
|
65
|
%
|
62
|
%
|
|||||||
MH
segment
|
33
|
%
|
35
|
%
|
38
|
%
|
|||||||
Total
|
100
|
%
|
100
|
%
|
100
|
%
|
|||||||
Operating
profit:
|
|||||||||||||
RV
segment
|
72
|
%
|
72
|
%
|
72
|
%
|
|||||||
MH
segment
|
42
|
%
|
42
|
%
|
42
|
%
|
|||||||
Amortization
of intangibles
|
(2
|
)%
|
(2
|
)%
|
(2
|
)%
|
|||||||
Corporate
and other
|
(12
|
)%
|
(13
|
)%
|
(12
|
)%
|
|||||||
Other
income
|
-
|
1
|
%
|
-
|
|||||||||
Total
|
100
|
%
|
100
|
%
|
100
|
%
|
Year
Ended December 31,
|
|||||||||||||
2005
|
2004
|
2003
|
|||||||||||
RV
segment
|
9.3
|
%
|
9.2
|
%
|
11.3
|
%
|
|||||||
MH
segment
|
10.8
|
%
|
10.1
|
%
|
10.7
|
%
|
§
|
Net
sales for 2005 increased $138 million (26 percent) from 2004. The
increase
in net sales in 2005 consisted of organic growth of about $40-$45
million,
sales price increases of $30-$33 million, sales growth of about $30
million due to acquisitions, and sales of components for emergency
shelters purchased primarily by the Federal Emergency Management
Agency
(“FEMA”) of approximately $32-$35 million.
|
§
|
The
Company’s RV segment outperformed the industry by achieving a $100 million
(29 percent) increase in sales to a record $448 million in 2005.
Sales
growth included organic growth of approximately $40 million, sales
resulting from acquisitions of $13 million, sales price increases
$21
million, and FEMA related sales of approximately $26
million.
|
§
|
The
Company’s MH segment sales increased 21 percent to $221 million in 2005,
up from $183 million last year. Sales growth included organic growth
of
approximately $2 million, sales resulting from acquisitions of $17
million, sales price increases $11 million, and FEMA related sales
of
approximately $8 million.
|
§
|
Net
income for 2005 increased 34 percent from 2004, greater than the
26
percent increase in net sales due
to:
|
·
|
The
favorable impact on 2005 of spreading fixed costs over a larger sales
base.
|
·
|
The
negative impact on 2004 results of increases in steel costs that
were not
fully passed on to customers until early 2005. Also, sales price
increases
obtained in 2004 were largely without profit margin.
|
·
|
Start-up
losses in 2005 of approximately $3.3 million ($1.7 million after
taxes and
the direct impact on incentive compensation) related to new products
and
recently opened facilities. The Company expects to incur further
start-up
costs during the first quarter of 2006, although less than in the
fourth
quarter of 2005.
|
·
|
During
2005 the Company has increased its quality control efforts by adding
dedicated quality control personnel at many of its larger manufacturing
facilities. Quality control costs increased about $2.5 million ($1.3
million after taxes and the direct impact on incentive compensation)
over
2004.
|
§
|
On
May 20, 2005, the Company acquired the business and certain assets
of
Venture Welding (“Venture”) for approximately $18.5 million in cash.
Venture Welding had annualized sales prior to the acquisition of
approximately $18 million. Venture manufactures chassis and chassis
parts
for manufactured homes, modular homes and office units. Among the
assets
acquired are patents that will enable the Company to improve its
production efficiencies for chassis for manufactured
homes.
|
§
|
During
late 2004 and 2005, Drew introduced several new products for the
RV and
specialty trailer markets, including products for the motorhome market,
a
relatively new RV category for the Company. New products introduced
in
2004 and 2005 included slide-out mechanisms and leveling devices
for
motorhomes, axles for towable RVs and specialty trailers, entry steps
for
towable RVs, and thermo-formed bath products and exterior parts for
both
towable RVs and motorhomes. The Company estimates that the market
potential of these products is approximately $700 million, and in
the
fourth quarter of 2005, the Company’s sales of these products were running
at an annualized rate of more than $70
million.
|
§
|
On
May 4, 2004, the Company completed the acquisition of California-based
Zieman Manufacturing Company (“Zieman”), a manufacturer of a variety of
specialty trailers (trailers for hauling equipment, boats, personal
watercraft and snowmobiles), and chassis and chassis parts for RVs
and
manufactured homes, with sales of approximately $42 million in 2003.
The
acquisition was immediately accretive to the Company’s earnings per share,
adding approximately $.02 per share in the eight months since it
was
acquired.
|
§
|
Net
sales for 2004 were up 50 percent compared to 2003, or more than
26
percent excluding sales price increases and the acquisition of Zieman.
|
§
|
Net
income for 2004, of $25.1 million, was 29 percent higher than in
2003. Net
income did not increase as rapidly as net sales for several reasons,
including:
|
·
|
Sales
price increases did not fully offset the increases in the cost of
steel
and other raw material used by the Company. With additional sales
price
increases implemented in early 2005, substantially all increases
in raw
material costs experienced in 2004 have been passed on to
customers.
|
·
|
The
Company did not earn any additional profit from the sales price increases
which have been implemented, which caused the profit margin to decline.
|
·
|
The
Company recorded a charge of $1.9 million ($945,000 after taxes
and the
direct impact on incentive compensation) related to an adverse
jury
verdict related to a workplace injury.
|
·
|
Costs
related to compliance with the Sarbanes-Oxley Act were approximately
$1.1
million before taxes, without considering management time, which
reduced
net income by approximately $650,000 for 2004.
|
·
|
During
2004, Drew’s Lippert subsidiary implemented plans to close six profitable,
but underperforming factories. The production at these factories
will now
be absorbed by nearby Lippert factories. The anticipated savings
from
consolidating production will more than offset the charge of $890,000
($450,000 after taxes and the direct impact on incentive compensation)
in
2004 relating to plant closings.
|
§
|
Net
sales of the Company’s MH segment increased 37 percent in 2004, or more
than 10 percent excluding sales price increases and the acquisition
of
Zieman, compared to 2003, while industry-wide wholesale shipments
of
manufactured homes in 2004 were the same as in 2003.
|
Year
Ended December 31,
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Net
cash flows provided by operating activities
|
$
|
32,102
|
$
|
8,880
|
$
|
31,541
|
||||
Net
cash flows used for investing activities
|
$
|
(41,441
|
)
|
$
|
(48,420
|
)
|
$
|
(12,392
|
)
|
|
Net
cash flows provided by (used for) financing activities
|
$
|
12,000
|
$
|
33,183
|
$
|
(10,684
|
)
|
a)
|
A
$13.4 million greater increase in accounts payable, accrued expenses
and
other current liabilities in 2005, compared to 2004. The larger increase
in 2005 was primarily due to (i) an increase in purchases of inventory
during the fourth quarter of 2005 to meet FEMA demand, (ii) the strategic
buying of certain raw materials ahead of announced price increases,
and
(iii) the timing of payments. Trade payables are generally paid within
the
discount period.
|
b)
|
A
$1.1 million smaller increase in inventories during 2005, as compared
to
2004. The larger increase in inventory in 2004 resulted from (i)
substantial increases in the cost of steel and other raw materials
used by
the Company, (ii) additional inventory requirements to meet increased
sales volume, and (iii) the Company’s strategic buying of steel in advance
of the numerous price increases, so that the Company could postpone
sales
price increases to its customers for as long as possible. The increase
in
inventory in 2005 resulted from (i) additional inventory requirements
to
meet increased sales volume due largely to FEMA-related orders,
seasonality and new product offerings, (ii) additional inventory
purchased
from overseas sources which requires a longer lead time, and (iii)
the
Company’s strategic buying of raw materials in advance of announced price
increases, partially offset by a concerted effort by management to
reduce
inventory on hand at all locations. On both December 31, 2005 and
2004,
there was less than a two week supply of finished goods on hand.
|
c)
|
An
offset to the changes in inventory and accounts payable, accrued
expenses
and other current liabilities resulted from a $1.4 million greater
increase in accounts receivable for 2005. The increase in accounts
receivable for 2005 was due largely to an increase in net sales.
Days
sales outstanding in receivables remained steady at approximately
21 days,
the same as in 2004.
|
a)
|
An
increase of $6.1 million in accounts receivable (excluding receivables
obtained in the acquisition of Zieman on May 4, 2004), due largely
to an
increase in net sales, and, to a lesser extent, an increase in days
sales
outstanding to approximately 21 days. The increase in days sales
outstanding was partly due to the timing of collections. In addition,
the
accounts receivable of newly-acquired Zieman have a longer collection
cycle.
|
b)
|
Inventories
increased $28.4 million during 2004 (excluding the inventory obtained
in
the acquisition of Zieman on May 4, 2004), of which approximately
$12
million is due to the increase in the cost of steel and other raw
materials, and $10-$12 million is due to the increase in unit sales
excluding Zieman. Inventories have also increased because of the
recent
introduction of several new products. Higher inventory levels are
required
during the initial stages of product introductions. The inventory
increase
is substantially all in raw materials, as there was less than a two
week
supply of finished goods on hand at December 31,
2004.
|
c)
|
The
increase in inventory was partially offset by a $6.3 million increase
in
accounts payable, accrued expenses and other liabilities during
2004. The
increase in these liabilities was less than would be expected on
a $28.4
million increase in inventory, because inventories declined during
the
fourth quarter of 2004, so that fourth quarter purchases, and therefore
year-end payables, were less than would otherwise be expected.
Trade
payables are generally paid within the discount
period.
|
2006
|
2007
|
2008
|
After
2008
|
Total
|
||||||||||||
Long-term
indebtedness
|
$
|
11,140
|
$
|
7,688
|
$
|
9,259
|
$
|
45,146
|
$
|
73,233
|
||||||
Operating
leases
|
2,781
|
2,210
|
1,921
|
3,046
|
9,958
|
|||||||||||
Capital
Leases
|
186
|
186
|
104
|
21
|
497
|
|||||||||||
Employment
contracts
|
2,055
|
1,978
|
1,526
|
1,324
|
6,883
|
|||||||||||
Royalty
agreement (a)
|
1,250
|
313
|
1,563
|
|||||||||||||
Purchase
obligations (b)
|
3,652
|
25
|
19
|
3,696
|
||||||||||||
Total
|
$
|
21,064
|
$
|
12,400
|
$
|
12,829
|
$
|
49,537
|
$
|
95,830
|
(a)
|
In
addition to the minimum commitments shown here, the Royalty agreement
provides for the Company to pay a royalty of 1 percent for the right
to
use certain patents related to slide-out systems commencing January
1,
2007 through the expiration of the patents, with aggregate payments
subsequent to January 1, 2007 not to exceed $5
million.
|
(b)
|
These
contractual obligations include commitments primarily for capital
expenditures.
|
Year
Ended December 31,
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Net
income, as reported
|
$
|
33,602
|
$
|
25,108
|
$
|
19,423
|
||||
Add:
Compensation expense related to stock options included in reported
net
income, net of related tax effects
|
668
|
550
|
122
|
|||||||
Deduct:
Total compensation expense related to stock options determined
under fair
value method for all stock option awards, net of related tax
effects
|
(740
|
)
|
(799
|
)
|
(409
|
)
|
||||
Pro
forma net income
|
$
|
33,530
|
$
|
24,859
|
$
|
19,136
|
||||
Net
income per common share:
|
||||||||||
Basic
- as reported
|
$
|
1.60
|
$
|
1.22
|
$
|
.96
|
||||
Basic
- pro forma
|
$
|
1.60
|
$
|
1.21
|
$
|
.95
|
||||
Diluted
- as reported
|
$
|
1.56
|
$
|
1.18
|
$
|
.94
|
||||
Diluted
- pro forma
|
$
|
1.56
|
$
|
1.17
|
$
|
.93
|
Year
Ended December 31,
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Net
sales
|
$
|
669,147
|
$
|
530,870
|
$
|
353,116
|
||||
Cost
of sales
|
519,000
|
414,491
|
266,435
|
|||||||
Gross
profit
|
150,147
|
116,379
|
86,681
|
|||||||
Selling,
general and administrative expenses
|
92,549
|
72,811
|
52,404
|
|||||||
Other
income
|
131
|
428
|
||||||||
Operating
profit
|
57,729
|
43,996
|
34,277
|
|||||||
Interest
expense, net
|
3,666
|
3,139
|
3,034
|
|||||||
Income
from continuing operations before income taxes
|
54,063
|
40,857
|
31,243
|
|||||||
Provision
for income taxes
|
20,461
|
15,749
|
11,868
|
|||||||
Income
from continuing operations
|
33,602
|
25,108
|
19,375
|
|||||||
Discontinued
operations (net of taxes)
|
|
48 | ||||||||
Net
income
|
$
|
33,602
|
$
|
25,108
|
$
|
19,423
|
||||
Income
per common share:
|
||||||||||
Income
from continuing operations:
|
||||||||||
Basic
|
$
|
1.60
|
$
|
1.22
|
$
|
.96
|
||||
Diluted
|
$
|
1.56
|
$
|
1.18
|
$
|
.94
|
||||
Net
income:
|
||||||||||
Basic
|
$
|
1.60
|
$
|
1.22
|
$
|
.96
|
||||
Diluted
|
$
|
1.56
|
$
|
1.18
|
$
|
.94
|
December
31,
|
|||||||
2005
|
2004
|
||||||
ASSETS
|
|||||||
Current
assets
|
|||||||
Cash
and cash equivalents
|
$
|
5,085
|
$
|
2,424
|
|||
Accounts
receivable, trade, less allowances of $2,090 in 2005 and $1,526 in
2004
|
33,583
|
26,099
|
|||||
Inventories
|
100,617
|
72,332
|
|||||
Prepaid
expenses and other current assets
|
11,812
|
10,552
|
|||||
Total
current assets
|
151,097
|
111,407
|
|||||
Fixed
assets, net
|
116,828
|
99,781
|
|||||
Goodwill
|
22,118
|
16,755
|
|||||
Other
intangible assets
|
10,652
|
6,070
|
|||||
Other
assets
|
6,733
|
4,040
|
|||||
Total
assets
|
$
|
307,428
|
$
|
238,053
|
|||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
Current
liabilities
|
|||||||
Notes
payable, including current maturities of long-term
indebtedness
|
$
|
11,140
|
$
|
12,121
|
|||
Accounts
payable, trade
|
26,404
|
13,371
|
|||||
Accrued
expenses and other current liabilities
|
37,407
|
28,711
|
|||||
Total
current liabilities
|
74,951
|
54,203
|
|||||
Long-term
indebtedness
|
62,093
|
59,303
|
|||||
Other
long-term liabilities
|
2,675
|
2,503
|
|||||
Total
liabilities
|
$
|
139,719
|
$
|
116,009
|
|||
Stockholders’
equity
|
|||||||
Common
stock, par value $.01 per share: authorized 30,000,000 shares; issued
23,625,793 shares in 2005 and 22,770,381 shares in 2004
|
$
|
236
|
$
|
228
|
|||
Paid-in
capital
|
47,655
|
35,811
|
|||||
Retained
earnings
|
139,015
|
105,413
|
|||||
Accumulated
other comprehensive income
|
270
|
59
|
|||||
187,176
|
141,511
|
||||||
Treasury
stock, at cost - 2,149,325 shares in 2005 and 2004
|
(19,467
|
)
|
(19,467
|
)
|
|||
Total
stockholders’ equity
|
167,709
|
122,044
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
307,428
|
$
|
238,053
|
Year
Ended December 31,
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Cash
flows from operating activities:
|
||||||||||
Net
income
|
$
|
33,602
|
$
|
25,108
|
$
|
19,423
|
||||
Adjustments
to reconcile net income to cash flows provided by operating
activities:
|
||||||||||
Discontinued
operations, net of taxes
|
(48
|
)
|
||||||||
Income
from continuing operations
|
33,602
|
25,108
|
19,375
|
|||||||
Depreciation
and amortization
|
11,945
|
9,300
|
7,863
|
|||||||
Deferred
taxes
|
(215
|
)
|
(1,394
|
)
|
383
|
|||||
(Gain)
loss on disposal of fixed assets
|
(43
|
)
|
828
|
92
|
||||||
Stock
based compensation expense
|
1,341
|
1,113
|
411
|
|||||||
Changes
in assets and liabilities, net of business acquisitions:
|
||||||||||
Accounts
receivable, net
|
(7,484
|
)
|
(6,127
|
)
|
(1,001
|
)
|
||||
Inventories
|
(27,357
|
)
|
(28,447
|
)
|
218
|
|||||
Prepaid
expenses and other assets
|
653
|
2,232
|
2,524
|
|||||||
Accounts
payable, accrued expenses and other liabilities
|
19,660
|
6,267
|
926
|
|||||||
Net
cash flows provided by continuing operating activities
|
32,102
|
8,880
|
30,791
|
|||||||
Income
from discontinued operations
|
48
|
|||||||||
Changes
in discontinued operations
|
702
|
|||||||||
Net
cash flows provided by operating activities
|
32,102
|
8,880
|
31,541
|
|||||||
Cash
flows from investing activities:
|
||||||||||
Capital
expenditures
|
(26,092
|
)
|
(27,058
|
)
|
(5,073
|
)
|
||||
Acquisition
of businesses
|
(17,880
|
)
|
(21,388
|
)
|
(7,397
|
)
|
||||
Proceeds
from sales of fixed assets
|
2,663
|
369
|
78
|
|||||||
Other
investments
|
(132
|
)
|
(343
|
)
|
||||||
Net
cash flows used for investing activities
|
(41,441
|
)
|
(48,420
|
)
|
(12,392
|
)
|
||||
Cash
flows from financing activities:
|
||||||||||
Proceeds
from credit agreement and other borrowings
|
199,275
|
221,846
|
31,550
|
|||||||
Repayments
under credit agreement and other borrowings
|
(197,466
|
)
|
(190,418
|
)
|
(45,949
|
)
|
||||
Exercise
of stock options
|
10,511
|
2,111
|
3,715
|
|||||||
Other
|
(320
|
)
|
(356
|
)
|
||||||
Net
cash flows provided by (used for)
|
||||||||||
financing
activities
|
12,000
|
33,183
|
(10,684
|
)
|
||||||
Net
increase (decrease) in cash
|
2,661
|
(6,357
|
)
|
8,465
|
||||||
Cash
and cash equivalents at beginning of year
|
2,424
|
8,781
|
316
|
|||||||
Cash
and cash equivalents at end of year
|
$
|
5,085
|
$
|
2,424
|
$
|
8,781
|
||||
Supplemental
disclosure of cash flows information:
|
||||||||||
Cash
paid during the year for:
|
||||||||||
Interest
on debt
|
$
|
3,713
|
$
|
2,987
|
$
|
3,071
|
||||
Income
taxes, net of refunds
|
$
|
14,607
|
$
|
15,053
|
$
|
9,449
|
Common
Stock
|
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income
|
Treasury
Stock
|
Total
Stockholders’
Equity
|
||||||||||||||
Balance
- December 31, 2002
|
$
|
220
|
$
|
28,469
|
$
|
60,882
|
$
|
-
|
$
|
(19,467
|
)
|
$
|
70,104
|
||||||
Net
income
|
19,423
|
19,423
|
|||||||||||||||||
Issuance
of 536,760 shares of common stock pursuant to stock option
plan
|
6
|
2,845
|
2,851
|
||||||||||||||||
Income
tax benefit relating to issuance of common stock pursuant to stock
option
plan
|
864
|
864
|
|||||||||||||||||
Stock-based
compensation expense
|
411
|
411
|
|||||||||||||||||
Balance
- December 31, 2003
|
226
|
32,589
|
80,305
|
-
|
(19,467
|
)
|
93,653
|
||||||||||||
Net
income
|
25,108
|
25,108
|
|||||||||||||||||
Unrealized
gain on interest rate swap, net of taxes
|
59
|
59
|
|||||||||||||||||
Comprehensive
income
|
25,167
|
||||||||||||||||||
Issuance
of 213,370 shares of common stock pursuant to stock option
plan
|
2
|
1,279
|
1,281
|
||||||||||||||||
Income
tax benefit relating to issuance of common stock pursuant to stock
option
plan
|
830
|
830
|
|||||||||||||||||
Stock-based
compensation expense
|
1,113
|
1,113
|
|||||||||||||||||
Balance
- December 31, 2004
|
228
|
35,811
|
105,413
|
59
|
(19,467
|
)
|
122,044
|
||||||||||||
Net
income
|
33,602
|
33,602
|
|||||||||||||||||
Unrealized
gain on interest rate swap, net of taxes
|
211
|
211
|
|||||||||||||||||
Comprehensive
income
|
33,813
|
||||||||||||||||||
Issuance
of 847,020 shares of common stock pursuant to stock option
plan
|
8
|
5,141
|
5,149
|
||||||||||||||||
Income
tax benefit relating to issuance of common stock pursuant to stock
option
plan
|
5,362
|
5,362
|
|||||||||||||||||
Stock-based
compensation expense
|
1,341
|
1,341
|
|||||||||||||||||
Balance
- December 31, 2005
|
$
|
236
|
$
|
47,655
|
$
|
139,015
|
$
|
270
|
$
|
(19,467
|
)
|
$
|
167,709
|
2005
|
2004
|
2003
|
|
Risk-free
interest rate
|
4.50%
|
3.54%
|
3.30%
|
Expected
volatility
|
32.1%
|
34.7%
|
32.5%
|
Expected
life
|
4.8
years
|
5.2
years
|
4.8
years
|
Contractual
life
|
6.0
years
|
6.0
years
|
6.0
years
|
Dividend
yield
|
N/A
|
N/A
|
N/A
|
Fair
value of options granted
|
$10.05
|
$5.91
|
$4.31
|
Year
Ended December 31,
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Net
income, as reported
|
$
|
33,602
|
$
|
25,108
|
$
|
19,423
|
||||
Add:
Compensation expense related to stock options included in reported
net
income, net of related tax effects
|
668
|
550
|
122
|
|||||||
Deduct:
Total compensation expense related to stock options determined under
fair
value method for all stock option awards, net of related tax
effects
|
(740
|
)
|
(799
|
)
|
(409
|
)
|
||||
Pro
forma net income
|
$
|
33,530
|
$
|
24,859
|
$
|
19,136
|
||||
Net
income per common share:
|
||||||||||
Basic
- as reported
|
$
|
1.60
|
$
|
1.22
|
$
|
.96
|
||||
Basic
- pro forma
|
$
|
1.60
|
$
|
1.21
|
$
|
.95
|
||||
Diluted
- as reported
|
$
|
1.56
|
$
|
1.18
|
$
|
.94
|
||||
Diluted
- pro forma
|
$
|
1.56
|
$
|
1.17
|
$
|
.93
|
Segments
|
Corporate
|
||||||||||||||||||
RV
|
MH
|
Total
|
and
Other
|
Intangibles
|
Total
|
||||||||||||||
Year
ended December 31, 2005
|
|||||||||||||||||||
Revenues
from external customers(a)
|
$
|
447,854
|
$
|
221,293
|
$
|
669,147
|
$
|
669,147
|
|||||||||||
Segment
operating profit (loss)(d)
|
41,738
|
23,972
|
65,710
|
$
|
(6,554
|
)
|
$
|
(1,427
|
)
|
57,729
|
|||||||||
Segment
assets(b)
|
162,546
|
88,436
|
250,982
|
22,881
|
33,565
|
307,428
|
|||||||||||||
Expenditures
for long-lived assets(c)
|
17,542
|
8,511
|
26,053
|
39
|
26,092
|
||||||||||||||
Depreciation
and amortization
|
6,429
|
4,062
|
10,491
|
27
|
1,427
|
11,945
|
|||||||||||||
Year
ended December 31, 2004
|
|||||||||||||||||||
Revenues
from external customers(a)
|
$
|
347,584
|
$
|
183,286
|
$
|
530,870
|
$
|
530,870
|
|||||||||||
Segment
operating profit (loss)(d)
|
31,832
|
18,547
|
50,379
|
$
|
(5,351
|
)
|
$
|
(1,032
|
)
|
43,996
|
|||||||||
Segment
assets(b)
|
120,974
|
77,196
|
198,170
|
16,301
|
23,582
|
238,053
|
|||||||||||||
Expenditures
for long-lived assets(c)
|
25,466
|
13,377
|
38,843
|
36
|
38,879
|
||||||||||||||
Depreciation
and amortization
|
4,196
|
4,043
|
8,239
|
29
|
1,032
|
9,300
|
|||||||||||||
Year
ended December 31, 2003
|
|||||||||||||||||||
Revenues
from external customers(a)
|
$
|
219,505
|
$
|
133,611
|
$
|
353,116
|
$
|
353,116
|
|||||||||||
Segment
operating profit (loss)(d)
|
24,779
|
14,358
|
39,137
|
$
|
(4,078
|
)
|
$
|
(782
|
)
|
34,277
|
|||||||||
Segment
assets(b)
|
69,158
|
55,172
|
124,330
|
17,822
|
17,952
|
160,104
|
|||||||||||||
Expenditures
for long-lived assets(c)
|
3,725
|
1,798
|
5,524
|
26
|
5,550
|
||||||||||||||
Depreciation
and amortization
|
3,055
|
4,007
|
7,062
|
19
|
782
|
7,863
|
a)
|
One
customer of the RV segment accounted for 21 percent, 22 percent and
23
percent of the Company’s consolidated net sales in the years ended
December 31, 2005, 2004, and 2003, respectively. Another customer
of the
RV segment accounted for 13 percent, 12 percent and 11 percent of
the
Company’s consolidated net sales in the years ended December 31, 2005,
2004 and 2003, respectively. One customer of both segments accounted
for
12 percent of the Company’s consolidated net sales for the years ended
December 31, 2004 and 2003,
respectively.
|
b)
|
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,
excluding intangible assets. Intangibles include goodwill, other
intangible assets and deferred charges which are not considered in
the
measurement of each segment’s
performance.
|
c)
|
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 $5,404,000, $11,821,000 and $477,000 of fixed
assets
as part of the acquisitions of businesses in 2005, 2004 and 2003,
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.
|
d)
|
Certain
general and administrative costs of Kinro and Lippert are allocated
between the segments based upon sales or operating
profit.
|
2005
|
2004
|
||||||
Recreational
Vehicles:
|
|||||||
Chassis
and chassis parts
|
$
|
194,113
|
$
|
156,873
|
|||
Windows,
doors and screens
|
112,269
|
98,040
|
|||||
Slide-out
mechanisms
|
89,661
|
66,441
|
|||||
Specialty
trailers
|
33,064
|
17,231
|
|||||
Axles
|
9,974
|
501
|
|||||
Other
|
8,773
|
8,498
|
|||||
447,854
|
347,584
|
||||||
Manufactured
Housing:
|
|||||||
Windows,
doors and screens
|
93,563
|
80,222
|
|||||
Chassis
and chassis parts
|
83,013
|
68,606
|
|||||
Shower
and bath units
|
19,425
|
17,159
|
|||||
Axles
and tires
|
14,346
|
6,396
|
|||||
Other
|
10,946
|
10,903
|
|||||
221,293
|
183,286
|
||||||
Net
Sales
|
$
|
669,147
|
$
|
530,870
|
Net
tangible assets acquired
|
$
|
5,810
|
||
Identifiable
intangible assets
|
6,707
|
|||
Goodwill
|
6,056
|
|||
Total
cash consideration
|
$
|
18,573
|
Net
tangible assets acquired
|
$
|
19,644
|
||
Identifiable
intangible assets
|
2,600
|
|||
Goodwill
|
3,691
|
|||
Total
consideration
|
25,935
|
|||
Less:
Debt assumed
|
(5,240
|
)
|
||
Total
cash consideration
|
$
|
20,695
|
Net
tangible assets acquired
|
$
|
739
|
||
Identifiable
intangible assets
|
1,330
|
|||
Goodwill
|
5,328
|
|||
Total
cash consideration
|
$
|
7,397
|
Gross
|
Accumulated
Amortization
|
Net
|
Estimated
Useful
Life
in Years
|
||||||||||
Non-compete
agreements
|
$
|
681
|
$
|
317
|
$
|
364
|
4
to 7
|
||||||
Customer
relationships
|
6,100
|
1,130
|
4,970
|
8
to 12
|
|||||||||
Tradenames
|
1,100
|
302
|
798
|
5
to 7
|
|||||||||
Patents
|
3,653
|
220
|
3,433
|
5
to 15
|
|||||||||
9,565
|
|||||||||||||
Royalty
agreement(a)
|
1,087
|
||||||||||||
Other
intangible assets
|
$
|
10,652
|
Gross
|
Accumulated
Amortization
|
Net
|
Estimated
Useful
Life
in Years
|
||||||||||
Non-compete
agreements
|
$
|
549
|
$
|
350
|
$
|
199
|
5
to 7
|
||||||
Customer
relationships
|
2,700
|
424
|
2,276
|
8
to 12
|
|||||||||
Tradenames
|
800
|
108
|
692
|
7
|
|||||||||
Patents
|
795
|
65
|
730
|
8
to 12
|
|||||||||
3,897
|
|||||||||||||
Royalty
agreement(a)
|
2,173
|
||||||||||||
Other
intangible assets
|
$
|
6,070
|
a)
|
In
February 2003, the Company entered into an agreement for a non-exclusive
license for certain patents related to slide-out-systems. Royalties
are
payable on an annual declining percentage of sales of certain slide-out
systems produced by the Company, with a minimum annual royalty of
$1,000,000 for 2002 and annual minimum royalties of $1,250,000 for
2003
through 2006. The agreement also provides for the Company to pay
a royalty
of 1 percent on sales of certain slide-out systems commencing January
1,
2007 through the expiration of the patents, with aggregate payments
subsequent to January 1, 2007 not to exceed $5 million.
|
MH
Segment
|
RV
Segment
|
Total
|
||||||||
Balance
- January 1, 2004
|
$
|
3,161
|
$
|
9,172
|
$
|
12,333
|
||||
Acquisition
in 2004
|
40
|
4,344
|
4,384
|
|||||||
Adjustment
to 2003 acquisitions
|
|
38
|
38
|
|||||||
Balance
- December 31, 2004
|
3,201
|
13,554
|
16,755
|
|||||||
Acquisition
in 2005
|
6,056
|
|
6,056
|
|||||||
Adjustment
to 2004 acquisition
|
(6
|
)
|
(687
|
)
|
(693
|
)
|
||||
Balance
- December 31, 2005
|
$
|
9,251
|
$
|
12,867
|
$
|
22,118
|
4.
|
INVENTORIES
|
December
31,
|
|||||||
2005
|
2004
|
||||||
Finished
goods
|
$
|
16,140
|
$
|
10,816
|
|||
Work
in process
|
3,256
|
2,112
|
|||||
Raw
materials
|
81,221
|
59,404
|
|||||
Total
|
$
|
100,617
|
$
|
72,332
|
5.
|
FIXED
ASSETS
|
December
31,
|
Estimated
Useful
|
|||||||||
2005
|
2004
|
Life
in Years
|
||||||||
Land
|
$
|
14,608
|
$
|
12,362
|
||||||
Buildings
and improvements
|
73,823
|
60,423
|
8
to 39
|
|||||||
Leasehold
improvements
|
3,213
|
1,438
|
2
to 20
|
|||||||
Machinery
and equipment
|
61,049
|
47,187
|
3
to 10
|
|||||||
Transportation
equipment
|
3,665
|
3,113
|
1
to 7
|
|||||||
Furniture
and fixtures
|
6,975
|
4,997
|
3
to 10
|
|||||||
Construction
in progress
|
3,720
|
14,013
|
|
|||||||
|
167,053
|
143,533
|
||||||||
Less
accumulated depreciation and amortization
|
50,225
|
43,752
|
||||||||
Fixed
assets, net
|
$
|
116,828
|
$
|
99,781
|
Year
Ended December 31,
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Charged
to cost of sales
|
$
|
8,828
|
$
|
7,115
|
$
|
6,354
|
||||
Charged
to selling, general and administrative expenses
|
1,554
|
991
|
726
|
|||||||
Total
|
$
|
10,382
|
$
|
8,106
|
$
|
7,080
|
6.
|
ACCRUED
EXPENSES AND OTHER CURRENT
LIABILITIES
|
December
31,
|
|||||||
2005
|
2004
|
||||||
Accrued
employee compensation and fringes
|
$
|
23,349
|
$
|
17,749
|
|||
Accrued
expenses and other
|
14,058
|
10,962
|
|||||
Total
|
$
|
37,407
|
$
|
28,711
|
7.
|
RETIREMENT
AND OTHER BENEFIT PLANS
|
8.
|
LONG-TERM
INDEBTEDNESS
|
December
31,
|
|||||||
2005
|
2004
|
||||||
Senior
Notes payable at the rate of $8,000 per annum on January 28, with
interest
payable semi-annually at the rate of 6.95 percent per annum, final
payment
paid January 28, 2005
|
$
|
-
|
$
|
8,000
|
|||
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
|
18,000
|
-
|
|||||
Notes
payable pursuant to the Credit Agreement expiring June
30, 2009 consisting
of a line of credit, not to exceed $60,000 at December 31, 2005 and
$45,000 at December 31, 2004; interest at prime rate or LIBOR plus
a rate
margin based upon the Company’s performance(a)
(b)
|
31,425
|
34,725
|
|||||
Industrial
Revenue Bonds, interest rates at December 31, 2005 of 4.65 percent
to 6.28
percent, due 2008 through 2017; secured by certain real estate and
equipment
|
9,416
|
10,917
|
|||||
Real
estate mortgage payable at the rate of $70 per month with a balloon
payment of $3,371 in May 2006, interest at 9.03 percent per
annum
|
3,544
|
4,035
|
|||||
Other
loans primarily secured by certain real estate and equipment, due
2009 to
2011, with fixed rates of 5.18 percent to 7.75 percent
|
7,510
|
9,183
|
|||||
Other
loans primarily secured by certain real estate and equipment, due
2006 to
2016, with variable rates of 6.25 percent to 7.25 percent
|
3,338
|
4,564
|
|||||
73,233
|
71,424
|
||||||
Less
current portion
|
11,140
|
12,121
|
|||||
Total
long-term indebtedness
|
$
|
62,093
|
$
|
59,303
|
(a)
|
The
weighted average interest rate on these borrowings, including the
affect
of the interest rate swap described below, was 5.43 percent and 4.66
percent at December 31, 2005 and 2004, respectively. Pursuant to
the
performance schedule, the interest rate on LIBOR loans was LIBOR
plus 1.0
percent and 1.5 percent at December 31, 2005 and 2004, respectively.
|
(b)
|
As
of December 31, 2005 and 2004, the Company had letters of credit
of $5.9
million and $5.3 million outstanding under the Credit Agreement,
respectively.
|
2006
|
$
|
11,140
|
||
2007
|
7,688
|
|||
2008
|
9,259
|
|||
2009
|
38,132
|
|||
2010
|
2,691
|
|||
Thereafter
|
4,323
|
|||
73,233
|
||||
Less
current portion
|
11,140
|
|||
Total
long-term indebtedness
|
$
|
62,093
|
9.
|
INCOME
TAXES
|
Year
Ended December 31,
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Current:
|
||||||||||
Federal
|
$
|
17,745
|
$
|
14,655
|
$
|
10,009
|
||||
State
|
2,931
|
2,487
|
1,476
|
|||||||
Deferred:
|
||||||||||
Federal
|
(373
|
)
|
(1,114
|
)
|
516
|
|||||
State
|
158
|
(279
|
)
|
(133
|
)
|
|||||
Total
income tax provision
|
$
|
20,461
|
$
|
15,749
|
$
|
11,868
|
Year
Ended December 31,
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Income
tax at Federal statutory rate
|
$
|
18,922
|
$
|
14,300
|
$
|
10,935
|
||||
State
income taxes, net of Federal income tax benefit
|
2,008
|
1,435
|
873
|
|||||||
Non-deductible
expenses
|
138
|
152
|
90
|
|||||||
Manufacturing
credit pursuant to Jobs Creation Act
|
(540
|
)
|
||||||||
Other
|
(67
|
)
|
(138
|
)
|
(30
|
)
|
||||
Provision
for income taxes
|
$
|
20,461
|
$
|
15,749
|
$
|
11,868
|
December
31,
|
|||||||
2005
|
2004
|
||||||
Deferred
tax assets:
|
|||||||
Accounts
receivable
|
$
|
906
|
$
|
722
|
|||
Inventories
|
1,649
|
1,330
|
|||||
Goodwill
and other assets
|
2,963
|
3,638
|
|||||
Accrued
insurance
|
2,440
|
1,806
|
|||||
Employee
benefits
|
1,463
|
1,324
|
|||||
Other
|
1,444
|
1,502
|
|||||
Total
deferred tax assets
|
10,865
|
10,322
|
|||||
Deferred
tax liabilities:
|
|||||||
Fixed
assets
|
4,660
|
4,354
|
|||||
Other
|
169
|
38
|
|||||
Total
deferred tax liabilities
|
4,829
|
4,392
|
|||||
Net
deferred tax asset
|
$
|
6,036
|
$
|
5,930
|
December
31,
|
|||||||
2005
|
2004
|
||||||
Prepaid
expenses and other current assets
|
$
|
7,712
|
$
|
6,585
|
|||
Other
long-term liabilities
|
(1,676
|
)
|
(655
|
)
|
|||
$
|
6,036
|
$
|
5,930
|
10.
|
COMMITMENTS
AND CONTINGENCIES
|
Operating
Leases
|
Capital
Leases
|
||||||
2006
|
$
|
2,781
|
$
|
186
|
|||
2007
|
2,210
|
186
|
|||||
2008
|
1,921
|
104
|
|||||
2009
|
1,384
|
21
|
|||||
2010
|
717
|
-
|
|||||
Thereafter
|
945
|
-
|
|||||
Total
minimum lease payments
|
$
|
9,958
|
497
|
||||
Less
amounts representing interest
|
39
|
||||||
Present
value of minimum lease payments
|
458
|
||||||
Less
current portion
|
164
|
||||||
Total
long term portion of capital lease obligations
|
$
|
294
|
11.
|
STOCKHOLDERS’
EQUITY
|
Deferred
Stock Units
|
Stock
Options
|
||||||||||||
Number
of
Shares
|
Stock
Price
at
Date
of
Issuance
|
Number
of
Option
Shares
|
Option
Price
|
||||||||||
Outstanding
at December 31, 2002
|
9,208
|
1,724,400
|
|||||||||||
Issued
|
25,006
|
|
$7.59-$12.78
|
||||||||||
Granted
|
793,000
|
|
$12.78
- $13.80
|
||||||||||
Exercised
|
(536,760
|
)
|
|
$4.41
- $6.25
|
|||||||||
Canceled
|
(12,000
|
)
|
|
$4.41
- $6.25
|
|||||||||
Outstanding
at December 31, 2003
|
34,214
|
1,968,640
|
|||||||||||
Issued
|
12,836
|
|
$13.90-$20.51
|
||||||||||
Granted
|
65,000
|
|
$16.15
- $16.16
|
||||||||||
Exercised
|
(204,560
|
)
|
|
$4.41
- $12.78
|
|||||||||
Canceled
|
(13,800
|
)
|
|
$4.55
- $12.78
|
|||||||||
Outstanding
at December 31, 2004
|
47,050
|
1,815,280
|
|||||||||||
Issued
|
12,456
|
|
$18.06-$29.95
|
||||||||||
Granted
|
626,000
|
|
$28.33
- $28.71
|
||||||||||
Exercised
|
(847,020
|
)
|
|
$2.84
- $16.15
|
|||||||||
Canceled
|
(15,800
|
)
|
|
$4.55
- $12.78
|
|||||||||
Outstanding
at December 31, 2005
|
59,506
|
|
$6.87-$29.95
|
1,578,460
|
|
$4.55
- $28.71
|
|||||||
Exercisable
at December 31, 2005
|
424,660
|
|
$4.55
- $16.16
|
Option
Exercise
Price
|
Shares
Outstanding
|
Option
Remaining
Life
(Years)
|
Shares
Exercisable
|
||
$
4.55
|
214,960
|
1.9
|
123,960
|
||
$
4.63
|
20,000
|
1.0
|
20,000
|
||
$
7.88
|
30,000
|
3.0
|
30,000
|
||
$
12.78
|
592,500
|
3.9
|
167,700
|
||
$
13.80
|
40,000
|
4.0
|
40,000
|
||
$
16.15
|
40,000
|
5.0
|
40,000
|
||
$
16.16
|
15,000
|
4.9
|
3,000
|
||
$
28.33
|
581,000
|
5.9
|
-
|
||
$
28.71
|
45,000
|
6.0
|
-
|
Year
Ended December 31,
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Weighted
average shares outstanding for basic earnings per share
|
21,011,792
|
20,563,222
|
20,150,812
|
|||||||
Common
stock equivalents pertaining to stock options
|
532,410
|
635,518
|
443,004
|
|||||||
Total
for diluted shares
|
21,544,202
|
21,198,740
|
20,593,816
|
12.
|
QUARTERLY
RESULTS OF OPERATIONS (UNAUDITED)
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
Year
|
||||||||||||
Year
Ended December 31, 2005
|
||||||||||||||||
Net
sales
|
$
|
154,546
|
$
|
163,023
|
$
|
170,791
|
$
|
180,787
|
$
|
669,147
|
||||||
Gross
profit
|
33,018
|
37,801
|
38,646
|
40,682
|
150,147
|
|||||||||||
Income
from continuing operations before income taxes
|
9,499
|
14,075
|
15,721
|
14,768
|
54,063
|
|||||||||||
Net
income
|
5,816
|
8,661
|
9,787
|
9,338
|
33,602
|
|||||||||||
Net
income per common share:
|
||||||||||||||||
Basic
|
.28
|
.41
|
.46
|
.44
|
1.60
|
|||||||||||
Diluted
|
.27
|
.40
|
.45
|
.43
|
1.56
|
|||||||||||
Stock
Market Price
|
||||||||||||||||
High
|
$
|
19.75
|
$
|
22.70
|
$
|
26.27
|
$
|
31.66
|
$
|
31.66
|
||||||
Low
|
$
|
17.98
|
$
|
18.62
|
$
|
21.16
|
$
|
24.75
|
$
|
17.98
|
||||||
Close
(at end of quarter)
|
$
|
18.83
|
$
|
22.70
|
$
|
25.81
|
$
|
28.19
|
$
|
28.19
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
Year
|
||||||||||||
Year
Ended December 31, 2004
|
||||||||||||||||
Net
sales
|
$
|
108,023
|
$
|
141,687
|
$
|
148,830
|
$
|
132,330
|
$
|
530,870
|
||||||
Gross
profit
|
24,879
|
32,560
|
32,902
|
26,038
|
116,379
|
|||||||||||
Income
from continuing operations before income taxes
|
9,823
|
13,362
|
12,174
|
5,498
|
40,857
|
|||||||||||
Net
income
|
5,992
|
8,151
|
7,514
|
3,451
|
25,108
|
|||||||||||
Net
income per common share:
|
||||||||||||||||
Basic
|
.29
|
.40
|
.36
|
.17
|
1.22
|
|||||||||||
Diluted
|
.28
|
.38
|
.35
|
.16
|
1.18
|
|||||||||||
Stock
Market Price
|
||||||||||||||||
High
|
$
|
19.89
|
$
|
20.84
|
$
|
20.42
|
$
|
18.30
|
$
|
20.84
|
||||||
Low
|
$
|
13.60
|
$
|
17.38
|
$
|
16.23
|
$
|
15.64
|
$
|
13.60
|
||||||
Close
(at end of quarter)
|
$
|
17.54
|
$
|
20.35
|
$
|
17.92
|
$
|
18.08
|
$
|
18.08
|
/s/
LEIGH J. ABRAMS
|
/s/
FREDRIC M. ZINN
|
President
and
Chief
Executive Officer
|
Executive
Vice President and
Chief
Financial Officer
|
(a)
|
Documents
Filed:
|
|
(1) Financial
Statements.
|
||
|
||
(2) Schedules.
Schedule II - Valuation and Qualifying Accounts.
|
||
(3) Exhibits.
See Item 15 (c) - “List of Exhibits” incorporated herein by
reference.
|
||
(b)
|
Exhibits
- List of Exhibits.
|
Exhibit
Number
|
Description
|
Sequentially
Numbered
Page
|
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.
|
10.135
|
Description
of split dollar life insurance plan for certain executive
officers.
|
10.164
|
Executive
Employment and Non-Competition Agreement, dated January 2, 2004,
by and
between Lippert Components, Inc. and L. Douglas
Lippert.
|
10.194
|
Drew
Industries Incorporated 2002 Equity Award and Incentive
Plan.
|
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.
|
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.
|
10.216
|
Stock
Purchase Agreement dated as of May 4, 2004 among Lippert Components,
Inc.,
Ronald J. Anderson, Manuel Baca, William Boyles, Eric Day, John B.
Pollara, Curtis L. Strong, and James E.
Zieman.
|
10.217
|
Employment
and Non-Competition Agreement dated as of May 4, 2004 between Zieman
Manufacturing Company and John P.
Pollara.
|
10.220
|
Employment
and Non-Competition Agreement dated as of May 4, 2004 between Zieman
Manufacturing Company and Ronald J.
Anderson.
|
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.
|
10.223
|
Amended
Change of Control Agreement by and between Harvey F. Milman and
Registrant, dated March 3, 2006.
|
10.224
|
Memorandum
to Leigh J. Abrams from the Compensation Committee of the Board of
Directors dated November 15, 2005.
|
10.225
|
Asset
Purchase Agreement dated as of May 20, 2005, by and among Lippert
Components Manufacturing, Inc., Banks Corporation, William P. Banks
and
John K. Banks.
|
10.226
|
Non-Competition
Agreement dated as of May 20, 2005, by and between Lippert Components
Manufacturing Inc., and William P.
Banks.
|
10.227
|
Non-Competition
Agreement dated as of May 20, 2005, by and between Lippert Components
Manufacturing Inc., and John P.
Banks.
|
10.228
|
Amendment
to Asset Purchase Agreement by and among Lippert Components Manufacturing,
Inc., Banks Corporation, William P. Banks and John K.
Banks.
|
10.229
|
Contract
for Purchase and Sale of Real Estate by and between Lippert Components
Manufacturing, Inc. and Banks Enterprises,
Inc.
|
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.
|
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.
|
(c)
|
Financial
statement schedules are included in this
Report.
|
Date:
March 14, 2006
|
DREW
INDUSTRIES INCORPORATED
|
By:
/s/
Leigh J. Abrams
Leigh
J. Abrams, President
|
Date
|
Signature
|
Title
|
March
14, 2006
|
By: /s/
Leigh J. Abrams
(Leigh
J. Abrams)
|
Director,
President and
Chief
Executive Officer
|
March
14, 2006
|
By: /s/
Fredric M. Zinn
(Fredric
M. Zinn)
|
Executive
Vice President and
Chief
Financial Officer
|
March
14, 2006
|
By:/s/
Joseph S. Giordano
III
(Joseph
S. Giordano III)
|
Corporate
Controller and Treasurer
|
March
14, 2006
|
By: /s/
Edward W. Rose, III
(Edward
W. Rose, III)
|
Director
|
March
14, 2006
|
By: /s/
David L. Webster
(David
L. Webster)
|
Director
|
March
14, 2006
|
By: /s/
L. Douglas Lippert
(L.
Douglas Lippert)
|
Director
|
March
14, 2006
|
By:
/s/
James F. Gero
(James
F. Gero)
|
Director
|
March
14, 2006
|
By:
/s/
Frederick B. Hegi, Jr.
(Frederick
B. Hegi, Jr.)
|
Director
|
March
14, 2006
|
By:
/s/
David A. Reed
(David
A. Reed)
|
Director
|
March
14, 2006
|
By:
/s/
John B. Lowe, Jr.
(John
B. Lowe, Jr.)
|
Director
|