Item 1. Business
Coachmen Industries, Inc. (the "Company" or the "Registrant") was incorporated under the laws of the State of Indiana on December 31, 1964, as the successor to a proprietorship established earlier that year. All references to the Company include its wholly owned subsidiaries and divisions.
The Company is one of the largest full-line producers of recreational vehicles ("RVs") and is the largest builder of modular homes in the country. The Company's RVs are marketed under various brand names including Coachmen, Shasta, and Viking through approximately 1,200 independent dealers located in 49 states and internationally and six Company-owned dealerships. Modular homes are manufactured by the Company's All American Homes operation which sells homes through approximately 300 builder/dealers.
The Company maintains approximately 52 trademarks, which are up for renewal from 1998 through 2010, and approximately 5 patents due to expire between 1997 and 2006. There are no material licenses, franchises, or concessions and no material foreign operations.
The Company operates primarily in two business segments, vehicles and housing. The vehicle segment consists of the manufacture and distribution of Class A and Class C motorhomes, travel trailers, fifth wheel trailers, camping trailers, truck campers, van campers, van and truck conversions and related parts and supplies. The housing segment consists of factory produced modular homes.
The table below sets forth the composition of the Company's net sales for each of the last three years (dollar amounts in thousands):
1996 1995 1994 Amount % Amount % Amount % Vehicles: Motorhomes $327,802 54 $279,917 54 $177,583 45 Travel Trailers 119,268 20 102,229 20 98,147 25 Camping Trailers 19,013 3 12,728 2 10,764 3 Truck Campers 2,306 1 3,748 1 3,117 1 Parts and Supplies 39,327 6 33,991 7 31,397 8 Ambulances - - - - 6,423 1
Total Vehicles 507,716 84 432,613 84 327,431 83
Housing 98,758 16 83,249 16 66,593 17
Total $606,474 100 $515,862 100 $394,024 100
Note: See Note 3 of Notes to Consolidated Financial Statements regarding segment information on page 25.
Vehicles Segment
The Vehicles Segment consists of two groups of businesses, recreational vehicles and parts and supplies. The RV group is comprised of five divisions: Coachmen Recreational Vehicle Company, Georgie Boy Mfg., Inc., Shasta Industries, Coachmen Vans and Viking Recreational Vehicles, Inc. Recreational vehicles are either driven or towed and serveas temporary living quarters for camping, travel and other leisure activities. Recreational vehicles may be categorized as motorhomes, travel trailers, camping trailers or truck campers. A motorhome is a self-powered mobile dwelling built on a special heavy duty chassis. A travel trailer is a mobile dwelling designed to be towed behind another vehicle. Camping trailers are smaller towed units constructed with sidewalls that may be raised up and folded out. Truck campers are designed to be mounted on the bed of a pickup truck.
The Company's principal brand names for its recreational vehicles are Coachmen, Shasta, Viking, Travelmaster, Cruise Air, Encounter, Cruise Master, Swinger, Pursuit, Custom Swinger, Dearborn, Jimmy, Greenbriar and Saratoga. Other brand names the Company has protected and used and anticipates using in the future include Sportscoach, Normandy, Cross Country, Pathfinder and Frolic.
The parts and supplies group is composed of Viking Formed Products and The Lux Company, Inc. which provide a variety of products to the recreational vehicle and automotive industries, as well as other industries. Viking Formed Products is a diversified manufacturer of fiberglass and thermoplastic parts, including fiberglass van camper tops and raised roofs for van conversions, and conducts ground effects production through its Prodesign operations. Types of products produced include plastic and fiberglass flared fenders, running boards and lower front and rear moldings. The Lux Company, Inc. manufactures seating products for the RV, office and healthcare industries. The largest portion of Lux's sales are in the RV seating category, including sofa beds, convertible pit groups, swivel chairs and ergonomic pilot seats. Lux also manufactures office managerial, conference, guest and high-back executive chairs. Lux healthcare products encompass end-opening sofas and task chairs for laboratory and emergency care workers.
In 1988, the Company acquired various assets of The Bentley Corporation, incorporated under the name of Transcoach, Inc. (d/b/a Good Times Van) and expanded its van conversion business into the Southern market. During 1991, the Company discontinued its Good Times Van manufacturing operation, sold a minority interest in Transcoach, Inc. and began producing van, pickup and suburban conversions under the name Luxury Conversions. In 1994, the Company sold its remaining interest in Transcoach, Inc.
In 1986, the Company acquired a 90% interest in Southern Ambulance Builders, Inc., La Grange, Georgia and increased that interest to 100% in 1990. In April 1994, the Company sold certain assets of this subsidiary consisting of inventories, property and equipment and other miscellaneous assets. The Company sold the land of Southern Ambulance in a separate transaction later in the year. Southern Ambulance
manufactured and sold ambulances and other emergency vehicles. Also, during 1994, the Company sold all of the assets of its wholly owned subsidiary, Auranco, a steel fabricator and diversified supplier of parts for the recreational vehicle, manufactured housing, and transportation industries. (See Note 10 of Notes to Consolidated Financial Statements on page 34 regarding disposition information.)
In January 1995, the Company acquired all of the issued and outstanding capital stock of Georgie Boy Mfg., Inc., the nation's third largest manufacturer of Class A motorhomes. All manufacturing facilities for Georgie Boy are located in Edwardsburg, Michigan. (See Note 10 of Notes to Consolidated Financial Statements on page 33 regarding acquisition information.)
The Company currently produces recreational vehicles on an assembly line basis in Indiana, Michigan, Georgia and Oregon. Components used in the manufacture of recreational vehicles are primarily purchased from outside sources. However, in some cases (such as cushions, fiberglass products and furniture) where it is profitable for the Company to do so, or where the Company has experienced shortages of supplies, the Company has undertaken to manufacture its own supplies. The Company depends on the availability of chassis from a limited number of manufacturers. Occasionally, chassis availability has limited the Company's production. (See Note 11 of Notes to Consolidated Financial Statements on page 35 for information concerning the use of converter pool agreements to purchase vehicle chassis.)
The Company considers itself as being customer driven. Sales and service representatives regularly visit dealers in their regions, and respond quickly to questions and suggestions. Divisions host dealer advisory groups and conduct informative dealer seminars and specialized training classes in areas such as sales and service. Open forum meetings with owners are held at campouts, providing ongoing focus group feedback for product improvements. Engineers and product development team members are encouraged to travel and vacation in Company RVs to gain a complete understanding and appreciation for the products.
The Company believes it has the ability to respond promptly to changes in market conditions. Most of the manufacturing facilities can be changed over to the assembly of other existing products in two to six weeks. In addition, these facilities may be used for other types of light manufacturing or assembly operations. This flexibility enables the Company to adjust its manufacturing capabilities in response to changes in demand for its products.
Recreational vehicles are generally manufactured against orders received from the Company's dealers. Sales are seasonal with the highest level of sales occurring during the spring and summer months. Agreements with most of its dealers are cancelable on short notice, provide for minimum inventory levels and establish sales territories. No dealer accounts for more than 5% of the Company's net sales.
Most dealers' purchases of RVs from the Company are financed through "floor plan" arrangements. Under these arrangements, a bank or other financial institution agrees to lend the dealer all or most of the purchase price of its RV inventory, collateralized by a lien on such inventory. The Company generally executes repurchase agreements at the request of the financing institution. These agreements provide that, for up to twelve months after a unit is financed, the Company will repurchase a unit which has been repossessed by the financing institution for the amount then due to the financing institution, which is usually less than 100% of the dealer's cost. Risk of loss resulting from these agreements is spread over the Company's numerous dealers and is further reduced by the resale value of the products repurchased. (See Note 11 of Notes to Consolidated Financial Statements on page 34.) In addition, the Company guarantees certain obligations of some dealers to a financial institution for purchases of the Company's products. The Company's annual aggregate obligations under this arrangement are limited to 2% of the average annual outstanding floor plan obligations to the financial institution which currently approximate $36 million. Over the past three years, the Company has not reported any significant losses from the repurchase agreements or the guarantee arrangement. The Company does not finance retail consumer purchases of its products, nor does it generally guarantee consumer financing.
Housing Segment
The Company's housing group, which is the largest producer of modular homes in the country, is composed of four All American Homes ("All American") operations strategically located in Indiana, Iowa, North Carolina and Tennessee. Together these plants serve more than 300 builder/dealers in 18 states.
All American's modular homes are built to the same local building codes as site-built homes by skilled craftsmen in a factory environment unaffected by weather conditions. Nearly complete when they leave the plant, modular homes are delivered to their final location, typically in two to five sections, and are crane set onto a waiting basement or crawl space foundation. Production takes place on an assembly line, with components moving from workstation to workstation for framing, electrical, plumbing, drywall, roofing, and cabinet setting, among other operations. An average two-module home can be produced in just a few days.
All American regularly conducts builder meetings to review the latest in new design options and component upgrades. These meetings provide an opportunity for valuable builder input and suggestions from their customers at the planning stage.
In September 1994, the Company acquired substantially all of the operating assets of the North Carolina division of Muncy Building Enterprises, L.P., a manufacturer of modular homes. The assets acquired consisted principally of property and equipment and inventories of modular homes. (See Note 10 of Notes to Consolidated Financial Statements on page 34 regarding disposition information.)
Business Factors
Many RVs produced by the Company require gasoline for their operation. Gasoline has, at various times in the past, been difficult to obtain, and there can be no assurance that the supply of gasoline will continue uninterrupted, that rationing will not be imposed or that the price of, or tax on, gasoline will not significantly increase in the future. Shortages of gasoline and significant increases in gasoline prices have had a substantial adverse effect on the demand for RV's in the past and could have a material adverse effect on demand in the future.
The vehicle and housing businesses are dependent upon the availability of and terms of the financing used by dealers and retail purchasers. Consequently, increases in interest rates and the tightening of credit through governmental action or other means have adversely affected the Company's business in the past and could do so in the future.
Competition and Regulation
The RV and housing industries are highly competitive, and the Company has numerous competitors and potential competitors in each of its classes of products, some of whom have greater financial and other resources. Initial capital requirements for entry into the manufacture of recreational vehicles or housing are comparatively small; however, codes, standards, and safety requirements introduced in recent years may deter potential competitors.
Recreational vehicles, the largest portion of the Company's business, generally compete in the lower to mid-price range markets. The Company believes it is a leader in the RV industry in its focus on quality. A quality product and a strong commitment to competitive pricing are emphasized by the Company in the markets it serves. The Company estimates that its current share of the recreational vehicle market is in excess of eight percent.
The Company continues to recognize its obligations to protect the environment insofar as its operations are concerned. To date, the Company has not experienced any material adverse effect from existing federal, state, or local environmental regulations.
Employees
At December 31, 1996, Coachmen employed 3,813 persons, of whom 716 were employed in office and administrative capacities. The Company provides group life, dental, hospitalization, and major medical plans under which the employee pays a portion of the cost. In addition, employees can participate in a stock purchase plan and certain employees can participate in a stock option plan. The Company considers its relations with employees to be good.
Research and Development
During 1996, the Company spent approximately $2,721,000 on research related to the development of new products and improvement of existing products. The amounts spent in 1995 and 1994 were approximately $2,240,000 and $1,925,000, respectively.
Item 2.
Item 2. Properties
The Registrant owns or leases 2,808,679 square feet of plant and office space, located on 1,115 acres, of which 1,886,641 square feet are used for manufacturing, 213,618 square feet are used for warehousing and distribution, 41,675 square feet are used for research and development, 92,138 square feet are used for customer service and 137,450 square feet are offices. 145,974 square feet are leased to others and 291,183 square feet are available for sale or lease. The Registrant believes that its present facilities, consisting primarily of steel clad, steel frame or wood frame construction and the machinery and equipment contained therein, are well maintained and in good condition.
The following table indicates the location, number and size of the Registrant's properties by segment as of December 31, 1996:
No. of Building Area Location Acreage Buildings (Sq. Ft.)
Properties Owned and Used by Registrant:
Vehicles
Elkhart, Indiana 62 14 258,135 Middlebury, Indiana 503 33 759,178 Fitzgerald, Georgia 17 3 67,070 Centreville, Michigan 105 4 84,865 Edwardsburg, Michigan 83 12 303,254 Colfax, North Carolina 4 2 14,000 Grants Pass, Oregon 10 1 62,400
Subtotal 784 69 1,548,902
Housing
Decatur, Indiana 44 3 247,600 Dyersville, Iowa 20 1 107,400 Springfield, Tennessee 45 1 121,800 Rutherfordton, North Carolina 38 1 125,000
Subtotal 147 6 601,800
Total owned 931 75 2,150,702
Properties (Continued)
Properties Leased and Used by Registrant:
Vehicles
Elkhart, Indiana 12 5 108,920 Goshen, Indiana 17 1 80,000 Banning, California 3 1 2,700 Ft. Myers, Florida 3 1 10,400 Mt. Morris, Michigan 8 1 9,200 Marietta, Georgia 5 1 9,600
Subtotal 48 10 220,820
Properties Owned by Registrant and Leased to Others:
Vehicles
Winter Garden, Florida 5 1 42,176 Lake Park, Georgia 8 1 11,720 Crooksville, Ohio 9 2 39,230 Grapevine, Texas 5 4 52,848
Subtotal 27 8 145,974
Properties Owned by Registrant and Available for Sale or Lease:
Vehicles
Perris, California 15 - - Grapevine, Texas 4 - - Longview, Texas 30 1 55,200
Housing
Ellenboro, North Carolina 24 3 77,700 Montezuma, Georgia 36 2 158,283
Subtotal 109 6 291,183
Total 1,115 99 2,808,679
Item 3.
Item 3. Legal Proceedings
From time to time, the Company is involved in certain litigation arising out of its operations in the normal course of business. The Company believes that there are no claims or litigation pending, the outcome of which will have a material adverse effect on the financial position of the Company.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted during the quarter ended December 31, 1996 to a vote of security holders.
Executive Officers of the Registrant
The following table sets forth the executive officers of the Company, as of December 31, 1996:
Name Position
*Thomas H. Corson.....Chairman of the Board and Chief Executive Officer
*Claire C. Skinner....Vice Chairman of the Board
*Keith D. Corson......President and Chief Operating Officer and Director
*Gary L. Groom........Executive Vice President, Finance, Secretary and Director
*Gene E. Stout........Executive Vice President, Corporate Development
* Member of Finance Committee
Thomas H. Corson (age 69) has served as Chairman of the Company since it was incorporated in 1964 and has been actively involved in the management and direction of the Company since that date.
Claire C. Skinner (age 42) has served as Vice Chairman of the Company since May 1995, and served as Executive Vice President from 1990 to 1995. Since 1987 through the present, Ms. Skinner has been the President of Coachmen RV, the Company's largest division. Prior to that, she held several management positions in operations and marketing since 1983.
Keith D. Corson (age 61) has served as President and Chief Operating Officer of the Company since November 1991. From June 1991 to November 1991 he served in the position of Office of the President after rejoining the Company. Mr. Corson was owner and President of Koszegi Products, a soft case manufacturer for the eight years prior to June 1991. He was a co-founder of the Company in 1964, and served in several senior management positions from 1964 until 1982, including President of the Company from 1978 until 1982.
Gary L. Groom (age 51) has served as Executive Vice President, Finance and Secretary of the Company since May 1983 and served as Senior Vice President, Finance and Secretary from 1980 to 1983. He was Corporate Controller from 1975 through 1980. From 1972 to 1975 he was Assistant Controller.
Gene E. Stout (age 63) has served as Executive Vice President, Corporate Development of the Company since May 1983. From April 1982 to May 1983 he was Senior Vice President Corporate Planning and Industry Relations. Between 1971 and 1982 he held various management positions with the Company.
Part II
Item 5.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
The following table discloses the high and low sales prices for Coachmen's common stock during the past two years as reported on the New York Stock Exchange, along with information on dividends paid per share during the same periods.
High & Low Prices Dividends Paid 1996 1995 1996 1995
1st Quarter $13.875 -$ 9.4375 $ 9.1875 -$7.4375 $.035 $.035
2nd Quarter 19.5625 - 12.875 9.25 - 6.6875 .05 .035
3rd Quarter 26.75 - 15.375 8.8125 - 7.0625 .05 .035
4th Quarter 29.00 - 24.125 11.8125 - 8.0625 .05 .035
The Company's common stock is traded on the New York Stock Exchange. The number of shareholders of record as of January 31, 1997 was 1,537.
Item 6.
Item 6. Selected Financial Data
Five-Year Summary of Selected Financial Data -Year Ended December 31-
1996 1995 1994 1993 1992
Net sales $606,474,128 $515,862,065 $394,023,774 $329,511,226 $292,790,134
Net income 29,630,813* 17,549,400 14,784,094 12,695,727 8,136,793
Earnings per share 1.94* 1.18 1.00 .87 .57
Cash dividends per share .185 .14 .12 .095 .04
At year end:
Total assets 227,447,572 150,248,757 125,021,282 94,736,482 88,836,412 Long-term debt 14,841,262 12,117,756 7,023,394 3,749,950 5,336,277
*Net income and net income per share for 1996 include $2,293,893 and $.15, respectively, for the cumulative effect of an accounting change (see Note 2 of Notes to Consolidated Financial Statements).
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the Selected Financial Data and the Consolidated Financial Statements.
OVERVIEW
The Company was founded in 1964 as a manufacturer of RVs and began manufacturing modular homes in 1982. Since that time, the Company has evolved into a market leader in both business segments through a combination of internal growth and strategic acquisitions. As part of its continuing effort to focus on its two core businesses, the Company acquired in January 1995 the third largest Class A motorhome producer, Georgie Boy Mfg., Inc. (the "Georgie Boy Acquisition"), which more than doubled the Company's market share in this sector of the motorized RV market. In September 1994, the Company acquired the assets of a modular home business, the North Carolina Division of Muncy Building Enterprises, L.P. (the "North Carolina Acquisition"), which enabled the Company to enter a new geographic market, resulting in an increase in overall market share.
The Company's new plant openings have been an important component of its internal growth strategy. In May 1995, the Company opened a new modular housing plant in Tennessee (the "Tennessee Plant Opening"). In addition, the Company further expanded its modular housing production
capacity with the late 1996 construction of a new facility for the North Carolina housing operation (the "North Carolina Expansion"). In February 1996, the Company increased its RV production capacity by opening a new fifth wheel and conventional travel trailer plant in Oregon (the "Oregon Plant Opening"). An additional travel trailer plant in Indiana also became operational in December 1996 to capitalize on the growing market share of the value-priced travel trailer segment of its RV business.
The Company's business segments are cyclical and subject to certain seasonal demand cycles and changes in general economic and political conditions. Demand in the RV and modular housing industries generally declines during the winter season, while sales and profits are generally highest during the spring and summer months. Inflation and changing prices have had minimal direct impact on the Company in the past in that selling prices and material costs have generally followed the rate of inflation.
RESULTS OF OPERATIONS Comparison of 1996 to 1995
Consolidated net sales increased $90.6 million, or 17.6% to $606.5 million in 1996 from $515.9 million in 1995. The Company's vehicle segment, which includes the parts and supply group of companies, experienced a net sales increase of 17.4% while the housing segment had a net sales increase of 18.6%. The vehicle segment continued its 1995 trend by outpacing the industry with market share gains in most of its product categories. Both vehicles and housing experienced increases in unit sales and in the average sales price per unit during 1996. Historically, the Company's first and fourth quarters are the slowest for sales in both segments. See Note 13 of Notes to Consolidated Financial Statements for unaudited interim financial information.
Gross profit for the year increased to $88.5 million, or 14.6% of net sales, from $71.2 million, or 13.8% of net sales in 1995. The increase in gross profit for 1996 was primarily attributable to the increase in net sales in 1996. The increase in the gross profit percentage represents the spreading of fixed costs over higher production volume. The housing segment continued experiencing lower gross margins associated with the North Carolina Expansion and the Tennessee Plant Opening. As these plants better utilize their capacity, inefficiencies associated with the plant expansion and opening should be reduced and eventually eliminated.
Operating expenses, which include selling, delivery, general and administrative expenses, were $48.8 million and $44.6 million, or as a percentage of net sales, 8.1% and 8.6% for 1996 and 1995, respectively. Selling expenses for 1996 decreased .4% as a percentage of net sales, primarily as a result of increased demand for the Company's products. As a percentage of net sales, delivery expenses remained relatively unchanged. General and administrative expenses were $21.1 million or
3.5% of net sales compared with $19.0 million and 3.7% in 1995 and decreased as a percentage of sales due to the increase in net sales. The increase in general and administrative expenses during 1996 in absolute dollars was principally the result of increased administrative requirements and related salaries and payroll taxes associated with the Company's growth.
Operating income was $39.7 million in 1996 compared with $26.7 million in 1995, an increase of 48.8%. This increase was consistent with the $17.3 million increase in gross profit and the overall decrease of .5% in operating expenses as a percentage of net sales. The Company's vehicle segment produced operating income of $29.9 million, or 5.9% of vehicle net sales, compared with operating income of $18.1 million, or 4.2% of vehicle net sales in 1995. The modular housing segment generated 1996 operating income of $9.7 million, or 9.8% of housing net sales, compared with 1995 operating income of $8.6 million, or 10.4% of housing net sales. The decrease in operating income as a percentage of net sales for the Company's housing segment was attributable to the North Carolina Expansion and Tennessee Plant Opening.
Interest expense for 1996 decreased to $1.6 million, or .3% of net sales, from $3.1 million, or .6% of net sales in 1995 primarily as a result of a change to the cash surrender value method of accounting for the Company's investment in life insurance contracts. These life insurance contracts were purchased to fund obligations under deferred compensation agreements with executives and other key employees. The interest costs associated with deferred compensation obligations and with the borrowings against the cash value of the insurance policies are now partially offset by the increases in cash surrender values each accounting period. Previously, the increases in cash surrender values were not recognized, since the investment in life insurance contracts consisted only of the capitalized insurance premiums.
Interest income for 1996 increased to $1.6 million from $1.3 million for 1995, primarily due to the amounts of cash and temporary cash investments in 1996 versus 1995. Increases in cash and temporary cash investments were primarily generated from operating activities throughout the year and the sale of 2,070,000 shares of common stock in November 1996.
The gain on sales of properties decreased to $726,000 for 1996 from $793,000 for 1995. This variance is the result of the amount of gain recognized upon the disposition of various small properties. Assets are continually analyzed and every effort is made to sell or dispose of properties that are determined to be unproductive.
Other income, net, represents income of $1.0 million for 1996 compared to income of $2.3 million for 1995. The 1996 income was primarily from a final determination of insurance proceeds from assets destroyed in a fire which consumed the Company's Prodesign production facility in August 1995 and interest participation in finance company transactions. The 1995 income was primarily from the Prodesign fire. See Note 12 of Notes to Consolidated Financial Statements.
Income taxes for 1996 increased to $14.1 million, or 2.3% of net sales, from $10.4 million, or 2.0% of net sales in 1995. The effective tax rate was 34.1% compared to 37.2% in 1995. The decrease in the effective tax rate for 1996 is attributable to an increase in nontaxable income and the reversals of federal and state income tax accruals of $250,000 and $550,000, respectively, resulting from favorable settlements of tax examinations.
Net income for 1996 was $29.6 million compared to $17.5 million in 1995, which includes the $2.3 million cumulative effect of an accounting change for Company-owned life insurance. See Note 2 of Notes to Consolidated Financial Statements.
Comparison of 1995 to 1994
Consolidated net sales for 1995 were $515.9 million, an increase of 30.9% over $394.0 million reported in 1994. The Company's vehicle segment, which includes the parts and supply businesses, experienced a sales increase of 32.1%, while the housing segment of the Company's business increased by 25.0%. Vehicle segment sales in 1995 were augmented by the sales resulting from the Georgie Boy Acquisition. Also, 1994 included the net sales of Southern Ambulance Builders, Inc., which was sold on April 29, 1994. After eliminating the net sales of Georgie Boy from 1995 and Southern Ambulance from 1994, the Company's vehicle segment experienced a net sales increase of 8.2%. New product introductions and aggressive pricing resulted in significant market share gains in most RV product categories, while the industry as a whole experienced a sales decline. The Company's increased capacity in the housing segment, resulting from the North Carolina Acquisition and the Tennessee Plant Opening, enabled continued growth and contributed to a substantial gain of market share. The Company's RV and modular housing segments experienced increases in both the number of units sold and the average sales price per unit.
Gross profit was $71.2 million and was 13.8% of net sales in 1995 compared to $58.5 million and 14.8% reported for 1994. The decline in the gross profit percentage reflects an industry wide sales decline in van conversions and intensified competition in camping trailers, as well as lower profitability levels attributable to the North Carolina Acquisition and Tennessee Plant Opening. The industry decline in sales of van conversions and increased competition in camping trailers led to strong pricing competition and underutilized capacity. The increase in motorized product sales resulting from the Georgie Boy Acquisition contributed to a higher cost of goods sold since motorized products generally have a higher cost of goods manufactured as a percentage of net sales due to the chassis cost.
Operating expenses, consisting of selling, delivery and general and administrative expenses, were $44.6 million or 8.6% of net sales in 1995 compared with $36.0 million or 9.1% of net sales in 1994. Selling and
delivery expenses were $25.6 million, or 5.0% of net sales, in 1995 compared with $20.1 million, or 5.1% in 1994. Delivery expenses tend to fluctuate with sales mix, as well as changes in geographical areas to which products are delivered. The overall decrease in selling and delivery expenses as a percentage of net sales was primarily the result of increased demand for the Company's products. General and administrative expenses were $19.0 million or 3.7% of net sales in 1995 compared with $15.9 million or 4.0% of net sales in 1994. The .3% reduction in general and administrative expenses as a percentage of net sales was caused by the spreading of the Company's expenses in this category over increased net sales. The increase in general and administrative expenses in absolute dollars was due to increases in the administrative salaries and payroll taxes associated with the Georgie Boy Acquisition, the North Carolina Acquisition and the Tennessee Plant Opening.
Interest expense increased in 1995 to $3.1 million from $1.5 million in 1994 as a result of increases in long-term debtassociated with the Georgie Boy Acquisition, the North Carolina Acquisition and the economic development bond used to finance the Tennessee Plant Opening, as well as a general increase in interest rates from 1994 to 1995. Interest income increased from $.7 million in 1994 to $1.3 million in 1995 due to the Company's cash and temporary investment activity in 1995 compared with 1994, and a general rise in interest rates from 1994 to 1995.
The net gain on the sales of properties decreased to $793,000 in 1995 from $889,000 in 1994. The net gain in 1995 resulted from the disposition of investment and rental properties located in Florida, Georgia and Indiana, while the net gain in 1994 reflected the disposition of idle properties located in Georgia and Indiana.
Other nonoperating income increased $2.1 million in 1995 from $.2 million in 1994 to $2.3 million in 1995. This increase consisted primarily of estimated insurance proceeds in excess of the net book value of assets destroyed in a fire which consumed the Company's Prodesign production facility in August 1995. The assets were generally insured at replacement value and the recognized gain offset the loss in profitability suffered while the division was recovering.
The 1995 provision for income taxes was $10.4 million and represented an effective tax rate of 37.2% compared to $8.0 million and 35.2% in 1994. During the first quarter of 1994, the federal tax provision was reduced by a deferred tax credit of approximately $.5 million, resulting from the elimination of a remaining valuation allowance.
Net income for the year ended December 31, 1995 was $17.5 million compared to $14.8 million for the prior period.
Liquidity and Capital Resources
The Company generally relies on funds from operations as its primary source of working capital and liquidity. In addition, the Company maintains an unsecured committed line of credit, which totaled $30 million at December 31, 1996, to meet its seasonal working capital needs. There were no borrowings against this line of credit during 1996, 1995 and 1994. The Company's operating activities have been a principal source of cash flows in each of the last three years. Operating cash flows were $15.9 million, $13.5 million and $17.4 million for 1996, 1995 and 1994, respectively. For each of these years, net income, adjusted by certain noncash items such as depreciation, was the significant factor in generating operating cash flows. In 1996, net income was utilized to fund the increased inventory levels associated with higher sales and production. Investing activities used cash of $15.7 million, $11.7 million and $2.0 million in 1996, 1995 and 1994, respectively. The principal use of cash for investing activities in each of the last three years has been property, plant and equipment acquisitions. Major capital expenditures during 1996 included, the North Carolina Expansion (financed in part by a $5.0 million industrial revenue bond) and the Oregon Plant Opening. Significant capital expenditures in 1995 were primarily associated with the Tennessee Plant Opening. Financing cash flows for 1996 included $48 million of proceeds from a public sale of the Company's common shares and $5 million of proceeds from the industrial revenue bond mentioned above. In 1994, financing cash flows included $4 million proceeds from an industrial revenue bond to finance the construction of the Tennessee plant. The principal uses of cash by financing activities in all three years are generally the payment of long-term debt and cash dividends. For a more detailed analysis of the Company's cash flows for each of the last three years, see the Consolidated Statements of Cash Flows. The Company's cash and temporary cash investments at December 31, 1996 were $66.4 million, or an increase of $49.4 million over 1995, which is principally attributable to the proceeds from the public offering. The Company anticipates that available funds, together with anticipated cash flows generated from future operations and amounts available under its line of credit will be sufficient to fund the Company's planned capital expenditures and other operating cash requirements through the end of 1997.
In 1996, working capital increased $64.8 million, from $60.6 million to $125.4 million. The $62.2 million increase in current assets at December 31, 1996 versus December 31, 1995, was primarily due to increased cash and temporary cash investments from the proceeds of the public offering and increases in inventories associated with increased sales volumes. The $2.6 million decrease in current liabilities is substantially due to decreases in accounts payable and other liabilities, principally payroll taxes and accrued insurance.
Forward Looking Statements
Some matters set forth herein are forward looking statements that are dependent on certain risks and uncertainties including such factors, among others, as the availability of gasoline, which can impact sales of recreational vehicles; availability of chassis, which are used in the production of many of the Company's recreational vehicle products; interest rates, which affect the affordability of the Company's products; and also on the state of the recreational vehicle and modular housing industries in the United States. Other factors affecting forward looking statements include competition in these industries and the Company's ability to maintain or increase gross margins which are critical to profitability whether there are or are not increased sales. At times, the Company's actual performance differs materially from its projections and estimates regarding the economy, the recreational vehicle and housing industries and other key performance indicators. The Company's actual results could vary significantly from the performance projected in the forward looking statements.
Other Matters
In February 1997, Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS No. 128") was issued by the Financial Accounting Standards Board. The Company is required to adopt this pronouncement in its financial statements for the year ended December 31, 1997. SFAS No. 128 will require the Company to make a dual presentation of basic and diluted earnings per share on the face of its consolidated statements of income. The Company does not anticipate SFAS No. 128 will have a significant impact on the Company's consolidated statements of income.
Item 8.
Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of Coachmen Industries, Inc.:
We have audited the accompanying consolidated balance sheets of Coachmen Industries, Inc. and subsidiaries as of December 31, 1996 and 1995, and the related consolidated statements of income and retained earnings and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Coachmen Industries, Inc. and subsidiaries as of December 31, 1996 and 1995, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles.
As discussed in Note 2 to the consolidated financial statements, effective January 1, 1996 the Company changed its method of accounting for its investments in life insurance contracts.
COOPERS & LYBRAND L.L.P. ------------------------------ COOPERS & LYBRAND L.L.P.
South Bend, Indiana January 31, 1997
Coachmen Industries, Inc. And Subsidiaries
Consolidated Balance Sheets as of December 31, 1996 and 1995
ASSETS 1996 1995
CURRENT ASSETS Cash and temporary cash investments $ 66,448,901 $ 17,020,744 Certificate of deposit 500,000 500,000 Trade receivables, less allowance for doubtful receivables 1996 - $919,000 and 1995 - $844,000 20,575,048 19,780,160 Other receivables 2,103,168 4,244,387 Refundable income taxes 1,865,000 507,000 Inventories 68,311,038 55,434,497 Prepaid expenses and other 930,244 1,570,492 Deferred income taxes 3,180,000 2,665,000
Total current assets 163,913,399 101,722,280
PROPERTY AND EQUIPMENT, at cost Land and improvements 6,640,920 5,537,033 Buildings and improvements 33,516,736 27,405,744 Machinery and equipment 14,563,955 10,524,486 Transportation equipment 9,619,667 11,307,747 Office furniture and fixtures 4,830,577 4,269,837
69,171,855 59,044,847
Less, Accumulated depreciation 29,314,413 27,297,851
39,857,442 31,746,996
OTHER ASSETS Real estate held for sale 4,902,105 3,458,539 Rental properties 2,530,608 925,538 Intangibles, less accumulated amortization 1996 - $380,363 and 1995 - $244,771 5,063,913 5,199,505 Deferred income taxes 600,000 875,000 Other 10,580,105 6,320,899
23,676,731 16,779,481
TOTAL ASSETS $227,447,572 $150,248,757
The accompanying notes are part of the consolidated financial statements.
LIABILITIES AND SHAREHOLDERS' EQUITY 1996 1995
CURRENT LIABILITIES Current maturities of long-term debt $ 2,278,519 $ 2,094,472 Accounts payable, trade 14,532,948 18,435,562 Accrued wages, salaries and commissions 4,410,925 3,583,423 Accrued dealer incentives 3,064,437 2,289,376 Accrued warranty expense 4,460,137 3,784,712 Accrued income taxes 628,051 981,800 Accrued insurance 3,697,709 4,487,548 Other accrued liabilities 5,449,270 5,477,885
Total current liabilities 38,521,996 41,134,778
LONG-TERM DEBT 14,841,262 12,117,756 OTHER 6,428,373 5,958,995
Total liabilities 59,791,631 59,211,529
COMMITMENTS AND CONTINGENCIES (Note 11)
SHAREHOLDERS' EQUITY Common shares, without par value: authorized 60,000,000 shares; issued 1996 - 20,527,644 shares and 1995 - 18,282,672 shares 86,248,042 37,151,202 Additional paid-in capital 2,313,743 1,664,889 Retained earnings 94,670,593 67,824,816
183,232,378 106,640,907
Less, Cost of shares reacquired for the treasury 1996 - 3,340,996 shares and 1995 - 3,345,004 shares 15,576,437 15,603,679
Total shareholders' equity 167,655,941 91,037,228
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $227,447,572 $150,248,757
Coachmen Industries, Inc. And Subsidiaries
Consolidated Statements Of Income And Retained Earnings for the years ended December 31, 1996, 1995 and 1994
1996 1995 1994
Net sales $606,474,128 $515,862,065 $394,023,774 Cost of goods sold 517,966,127 444,626,666 335,566,707
Gross profit 88,508,001 71,235,399 58,457,067
Operating expenses: Selling and delivery 27,719,131 25,593,164 20,080,353 General and administrative 21,116,814 18,983,252 15,877,111
48,835,945 44,576,416 35,957,464
Operating income 39,672,056 26,658,983 22,499,603
Nonoperating income (expense): Interest expense (1,572,092) (3,141,763) (1,480,784) Interest income 1,615,442 1,306,148 667,004 Gain on sale of properties, net 726,023 793,412 888,902 Other, net 1,041,401 2,340,620 237,369
1,810,774 1,298,417 312,491 Income before income taxes and cumulative effect of accounting change 41,482,830 27,957,400 22,812,094
Income taxes 14,146,000 10,408,000 8,028,000
Income before cumulative effect of accounting change 27,336,830 17,549,400 14,784,094
Cumulative effect of accounting change for Company-owned life insurance policies 2,293,983 - -
Net income 29,630,813 17,549,400 14,784,094
Retained earnings, beginning of the year 67,824,816 52,359,629 39,345,043
Cash dividends (per common share: 1996 - $.185, 1995 - $.14, and 1994 - $.12) (2,785,036) (2,084,213) (1,769,508)
Retained earnings, end of year $ 94,670,593 $67,824,816 $ 52,359,629
Earnings per common share: Income before cumulative effect of accounting change $ 1.79 $ 1.18 $ 1.00 Cumulative effect of accounting change .15 - -
Net income $ 1.94 $ 1.18 $ 1.00
The accompanying notes are part of the consolidated financial statements.
Coachmen Industries, Inc. And Subsidiaries
Consolidated Statements Of Cash Flows for the years ended December 31, 1996, 1995 and 1994
1996 1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES Net income $29,630,813 $ 17,549,400 $ 14,784,094 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 5,487,528 3,993,282 3,089,602 Amortization of intangibles 135,592 136,620 10,881 Gain on sale of properties (726,023) (793,412) (888,902) Gain on insurance settlement (393,014) (2,124,539) - Realized gains on sale of investments - (13,888) (142,373) Cumulative effect of accounting change (2,293,983) - - Increase in cash surrender value of life insurance policies (1,087,678) - - Deferred income taxes (240,000) (93,000) (858,000) Other 113,666 121,131 (68,054) Changes in certain assets and liabilities, net of effect of acquisitions and dispositions: Receivables, excluding current portion of notes (717,229) (2,285,849) (3,350,130) Inventories (11,077,327) 1,361,916 (7,925,926) Prepaid expenses and other 640,248 (304,327) (340,019) Accounts payable, trade (3,902,614) (4,188,586) 8,764,214 Income taxes - accrued and refundable (1,091,318) (1,181,039) 1,597,379 Other current liabilities 1,447,503 1,277,349 2,729,901 Net cash provided by operating activities 15,926,164 13,455,058 17,402,667
CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from: Sale of properties 925,452 3,477,934 1,269,607 Sale of investments - 263,888 1,629,661 Sale of subsidiaries - - 3,364,848 Insurance settlement 2,821,014 846,463 - Acquisitions of: Property and equipment (14,919,168) (15,222,794) (5,133,151) Real estate held for sale and rental properties (1,861,458) - - Acquisition of businesses net of acquired cash (1,852,596) (4,313,046) (1,387,740) (Advances) collections on notes receivable, net (1,136,340) 39,177 1,537,170 Unexpended industrial revenue bond proceeds (254,463) 3,337,122 (3,337,122) Other 560,195 (130,153) 73,313 Net cash (used in) investing activities (15,717,364) (11,701,409) (1,983,414)
Consolidated Statements of Cash Flows (Continued) for the years ended December 31, 1996, 1995 and 1994
1996 1995 1994
CASH FLOWS FROM FINANCING ACTIVITIES Payment of short-term borrowings - (900,000) - Proceeds from long-term debt 5,000,000 - 4,000,000 Payments of long-term debt (2,092,447) (1,833,892) (793,568) Sale of common stock, net of offering expenses 47,970,779 - - Issuance of common shares under stock option and stock purchase plans 1,126,061 550,815 477,297 Cash dividends paid (2,785,036) (2,084,213) (1,769,508) Net cash provided by (used in) financing activities 49,219,357 (4,267,290) 1,914,221
Increase (decrease) in cash and temporary cash investments 49,428,157 (2,513,641) 17,333,474
CASH AND TEMPORARY CASH INVESTMENTS Beginning of year 17,020,744 19,534,385 2,200,911
End of year $ 66,448,901 $ 17,020,744 $ 19,534,385
Supplemental disclosures of cash flow information: Cash paid during the year for: Interest $ 2,018,439 $ 2,398,000 $ 1,463,000 Income taxes 15,628,000 12,265,000 7,454,000
The accompanying notes are a part of the consolidated financial statements.
Coachmen Industries, Inc. And Subsidiaries
Notes To Consolidated Financial Statements for the years ended December 31, 1996, 1995 and 1994
1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES.
Nature of Operations - Coachmen Industries, Inc. and its subsidiaries (the "Company") manufacture a full line of recreational vehicles and van conversions through eight divisions with manufacturingfacilities located in Indiana, Georgia, Michigan and Oregon. These products are marketed through a nationwide dealer network. The Company's housing divisions, with locations in Indiana, Iowa, North Carolina and Tennessee, supply modular housing to builder/dealers in eighteen adjoining states. The Company's parts and supply divisions concentrate primarily on providing parts and supplies to the recreational vehicle and van conversion industries, and also have an important interest in the office furniture market.
Principles of Consolidation - The accompanying consolidated financial statements include the accounts of Coachmen Industries, Inc. and its subsidiaries, all of which are wholly owned.
Use of Estimates in the Preparation of Financial Statements - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition, Concentrations of Credit Risk and Allowances for Credit Losses - Sales are recognized as revenue upon shipment. The Company has a concentration of credit risk in the recreational vehicle industry, although there is no geographic concentration of credit risk. The Company performs ongoing credit evaluations of its customers' financial condition and sales to its recreational vehicle dealers are generally subject to preapproved dealer floor plan financing whereby the Company is paid upon delivery or shortly thereafter. The Company generally requires no collateral from its customers. Future credit losses are provided for currently through the allowance for doubtful receivables and actual credit losses are charged to the allowance when incurred.
At December 31, 1996 cash and temporary cash investments include approximately $45.2 million invested in variable rate demand notes with a seven-day put option. In addition, cash and temporary cash investments include $20.8 million and $16.5 million invested in a money market mutual fund at December 31, 1996 and 1995, respectively.
Cash Flows and Noncash Activities - For purposes of the consolidated statements of cash flows, cash and temporary cash investments include cash, cash investments and any highly liquid investments purchased with an original maturity of three months or less. The Company's acquisitions of and dispositions of subsidiaries included certain noncash activities (see Note 10). During 1994, the Company sold certain real property in exchange for notes receivable of $312,000. For each of the three years in the period ended December 31, 1996, the Company issued common shares with a market value of $55,665, $38,280 and $17,163, respectively, in lieu of cash compensation. The Company recognizes a tax benefit in additional paid- in capital from exercise of stock options (see Note 7).
Coachmen Industries, Inc. And Subsidiaries
Notes To Consolidated Financial Statements, Continued for the years ended December 31, 1996, 1995 and 1994
1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES, Continued.
Fair Value of Financial Instruments - The carrying amounts of cash equivalents, certificates of deposit, receivables, and accounts payable approximated fair value as of December 31, 1996 and 1995, because of the relatively short maturities of these instruments. The carrying amount of long-term debt, including current maturities, approximated fair value as of December 31, 1996 and 1995, based upon terms and conditions currently available to the Company in comparison to terms and conditions of the existing long-term debt. The Company has investments in life insurance contracts to fund obligations under deferred compensation agreements (see Notes 2 and 8). At December 31, 1996, the carrying amount of these policies, which equaled their fair value, was $8.9 million (cash surrender value of $20.3 million net of $11.4 million of policy loans). At December 31, 1995, the cash surrender values of these policies, net of policy loans of $10.2 million, aggregated $7.9 million which exceeded the $5.6 million carrying amount of the investments in insurance contracts.
Inventories - Inventories are valued at the lower of cost (first-in, first-out method) or market.
Property and equipment - Depreciation is computed by the straight-line method on the costs of the assets, at rates based on their estimated useful lives as follows: land improvements 3-15 years; buildings and improvements 10-30 years; machinery and equipment 3-10 years; transportation equipment 2-7 years; and office furniture and fixtures 2-10 years.
Upon sale or retirement of property and equipment, including real estate held for sale and rental properties, the asset cost and related accumulated depreciation is removed from the accounts and any resulting gain or loss is included in income.
Real Estate Held For Sale - Real estate held for sale represents real properties which are carried at the lower of estimated realizable value or cost less accumulated depreciation. As of December 31, 1996 and 1995, the carrying value of real estate held for sale (and the related accumulated depreciation) aggregated $5,269,155 ($367,050) and $3,682,007 ($223,468), respectively.
Rental Properties - Rental properties represent owned facilities which are currently leased to others under lease agreements with expiring terms through December 1, 1999. Certain of the lease agreements contain options for the lessee to renew the lease or purchase the facilities. Lease income for the years ended December 31, 1996, 1995 and 1994 aggregated $256,855, $381,287 and $570,955, respectively. Future minimum annual lease income under these lease agreements is as follows: 1997 - $413,400, 1998 - $255,000 and 1999 - $233,750. The rental properties are carried at cost less accumulated depreciation, which is not in excess of net realizable value. The rental properties are depreciated by the straight-line method over the estimated useful lives of the assets (15-20 years). At December 31, 1996 and 1995, the cost of rental properties (and the related accumulated depreciation) aggregated $3,488,179 ($957,571) and $1,795,504 ($869,966), respectively.
Coachmen Industries, Inc. And Subsidiaries
Notes To Consolidated Financial Statements, Continued for the years ended December 31, 1996, 1995 and 1994
1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES, Continued.
Intangibles - Intangibles represent the excess of cost over the fair value of net assets of businesses acquired, and are being amortized over a 40-year period by the straight-line method.
Income Taxes - The provision for income taxes is based on income recognized for financial statement purposes and includes the effects of temporary differences between such income and that recognized for tax return purposes. Deferred tax assets and liabilities are established for the expected future tax consequences of events that have been included in the financial statements or tax returns using enacted tax rates in effect for the years in which the differences are expected to reverse.
Research and Development Expenses - Research and development expenses charged to operations were approximately $2,721,000, $2,240,000 and $1,925,000 for the years ended December 31, 1996, 1995 and 1994, respectively.
Warranty Expense - The Company accrues an estimated warranty liability at the time the warranted products are sold.
Stock-Based Compensation - The Company has adopted the disclosure only provisions of Statement of Financial Standards No. 123, "Accounting for Stock-Based Compensation," and accordingly accounts for its stock option plan under the provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees."
2. ACCOUNTING CHANGES.
Effective January 1, 1996, the Company changed its method of accounting for its investments in life insurance contracts which were purchased to fund liabilities under deferred compensation agreements with executives and other key employees. Prior to January 1, 1996, the Company accounted for its investments in life insurance contracts by capitalizing premiums under the ratable charge method (a method of accounting which was acceptable when the insurance contracts were originally acquired and continued to be acceptable for contracts acquired prior to November 14, 1985). Effective January 1, 1996, the Company changed to the cash surrender value method of accounting which is the preferred method under generally accepted accounting principles, as this method more accurately reflects the economic value of the contracts.
On January 1, 1996, the Company recorded a $2.3 million noncash credit for the cumulative effect of this accounting change. This accounting method change also increased net income for the year ended December 31, 1996 by $1,087,678 or $.07 per share. Pro forma net income and net income per share, assuming the cash surrender value method had been applied during the years ended December 31, 1995 and 1994 along with actual results are presented below:
Coachmen Industries, Inc. And Subsidiaries
Notes To Consolidated Financial Statements, Continued for the years ended December 31, 1996, 1995 and 1994
2. ACCOUNTING CHANGES, Concluded.
1995 1994
Net income As reported $17,549,400 $14,784,094 Pro forma 18,292,792 15,254,749
Net income per share As reported 1.18 1.00 Pro forma 1.23 1.03
Also effective January 1, 1996, the Company adopted Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This Statement requires that long-lived assets and certain identifiable intangibles to be held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. During 1996, the Company determined that no impairment losses need be recognized for applicable assets.
3. OPERATIONS IN DIFFERENT INDUSTRIES.
The Company's business and operations are comprised of two segments: Vehicles (recreational, vans, specialized and related parts and accessories) and Housing (modular). Segment information is set forth in the following table:
1996 1995 1994 Net sales: Vehicles $507,715,622 $432,612,786 $327,430,404 Housing 98,758,506 83,249,279 66,593,370
Total $606,474,128 $515,862,065 $394,023,774
Operating income (loss): Vehicles $ 29,934,813 $ 18,136,796 $ 15,434,057 Housing 9,674,894 8,644,906 8,192,322 General Corporate 62,349 (122,719) (1,126,776)
Total $ 39,672,056 $ 26,658,983 $ 22,499,603
Identifiable assets: Vehicles $109,701,864 $ 89,173,588 $ 71,153,298 Housing 31,406,963 23,957,173 20,907,090 General Corporate 86,338,745 37,117,996 32,960,894
Total $227,447,572 $150,248,757 $125,021,282
Depreciation: Vehicles $ 2,931,270 $ 2,218,420 $ 1,814,505 Housing 2,140,587 1,487,159 965,627 General Corporate 415,671 287,703 309,470
Total $ 5,487,528 $ 3,993,282 $ 3,089,602
Coachmen Industries, Inc. And Subsidiaries
Notes To Consolidated Financial Statements, Continued for the years ended December 31, 1996, 1995 and 1994
3. OPERATIONS IN DIFFERENT INDUSTRIES, Concluded.
1996 1995 1994
Additions to property and equipment(including property and equipment acquired in the acquisition of businesses): Vehicles $ 11,421,971 $ 8,905,728 $ 2,714,736 Housing 6,846,332 6,834,516 3,740,864 General Corporate 482,865 2,602,967 224,791
Total $ 18,751,168 $ 18,343,211 $ 6,680,391
4. INVENTORIES.
Inventories consist of the following:
1996 1995
Raw materials $ 20,951,906 $ 16,580,013 Work in process 6,467,066 7,268,705 Finished goods 40,892,066 31,585,779
Total $ 68,311,038 $ 55,434,497
5. SHORT-TERM BORROWINGS.
At December 31, 1996 and 1995, the Company has an unsecured bank line of credit aggregating $30 million with interest on outstanding borrowings payable monthly at a formula rate, which approximates the bank's cost of funds plus a mark-up, which generally results in a rate below the prime rate. There were no outstanding borrowings under this bank line of credit at December 31, 1996 and 1995.
6: LONG-TERM DEBT.
Long-term debt consists of the following: 1996 1995 Obligations under industrial development revenue bonds, variable rates, with various maturities through 2011 $10,832,781 $ 6,666,125
Promissory notes payable, issued or assumed in the acquisition of Georgie Boy (see Note 10), principal payable in annual installments through January 2001, interest payable monthly at the prime rate, (8.25% at December 31, 1996), unsecured 6,266,998 7,492,173
Other 20,002 53,930
Total 17,119,781 14,212,228
Less, Current maturities 2,278,519 2,094,472
Long-term debt $14,841,262 $12,117,756
Coachmen Industries, Inc. And Subsidiaries
Notes To Consolidated Financial Statements, Continued for the years ended December 31, 1996, 1995 and 1994
6. LONG-TERM DEBT, Concluded.
Aggregate maturities of long-term debt for each of the next five years ending December 31 are as follows: 1997 - $2,278,519; 1998 - $2,258,519; 1999 - $2,258,519; 2000 - $1,957,924 and 2001 - $1,766,298.
In connection with four of its industrial development revenue bond obligations, the Company obtained, as a credit enhancement for the bondholders, irrevocable letters of credit in favor of the bond trustees. The agreements relating to these letters of credit contain, among other provisions, certain covenants relating to required amounts of working capital and net worth and the maintenance of certain required financial ratios.
7. COMMON STOCK MATTERS AND EARNINGS PER SHARE.
Stock Split
On July 17, 1996, the Board of Directors declared a two-for-one stock split of the Company's common shares, which was paid on August 28, 1996 to shareholders of record on August 7, 1996. All share and per share data in the accompanying consolidated financial statements have been retroactively restated to reflect this stock split. Also on July 17, 1996, the Board of Directors adopted a resolution to amend the Company's Articles of Incorporation to increase the authorized common shares from 30,000,000 shares to 60,000,000 shares.
Stock Offering
In November 1996, the Company completed a public stock offering consisting of 2,070,000 shares of its common stock at $24.50 per share. Net of underwriting fees and offering expenses, proceeds to the Company aggregated $48 million.
Stock Option Plan
The Company's stock option plan provides for the granting to eligible key employees of options to purchase common shares. Under terms of the plan, the Company may grant incentive stock options or non-qualified stock options. The option price for options granted to key employees is an amount per share of not less than the fair market value per share on the date of granting the option. No such options may be exercised during the first year after grant, and are exercisable cumulatively in four installments of 25% each year thereafter.
Coachmen Industries, Inc. And Subsidiaries
Notes To Consolidated Financial Statements, Continued for the years ended December 31, 1996, 1995 and 1994
7. COMMON STOCK MATTERS AND EARNINGS PER SHARE, Continued.
The following table summarizes stock option activity:
Weighted Average Number Exercise Of Shares Price
Outstanding, January 1, 1994 415,650 $ 4.40 Granted 174,600 7.46 Canceled (5,450) 3.93 Exercised (126,000) 3.45
Outstanding, December 31, 1994 458,800 5.50 Granted 272,400 7.98 Canceled (33,150) 7.54 Exercised (123,150) 3.71
Outstanding, December 31, 1995 574,900 6.95 Granted 251,800 12.61 Canceled (14,100) 7.65 Exercised (165,500) 5.88
Outstanding, December 31, 1996 647,100 9.36
Options outstanding at December 31, 1996 are exercisable at prices ranging from $2.94 to $27.125 and have a weighted average remaining contractual life of 3.17 years. The following table summarizes information about stock options outstanding at December 31, 1996.
Outstanding Exercisable Weighted- Number Average Weighted- Number Weighted- Range of Outstanding at Remaining Average Exercisable at Average Exercise December 31, Contractual Exercise December 31, Exercise Price 1996 Life Price 1996 Price
$ 2.94 - $ 4.00 25,450 .3 $ 3.21 25,450 $3.21 4.01 - 8.00 193,100 2.2 6.87 107,600 6.68 8.01 - 12.00 330,250 3.6 9.11 45,588 8.39 12.01 - 15.00 48,800 4.3 14.07 - - 15.01 - 27.125 49,500 4.5 19.08 - -
647,100 178,638
At December 31, 1995 and 1994, there were exercisable options to purchase 153,623 and 164,613 shares at weighted-average exercise prices of $5.14 and $3.64, respectively. The weighted-average grant-date fair value of options granted during the year ended December 31, 1996 and 1995 was $3.08 and $2.08, respectively. As of December 31, 1996, 787,100 shares were reserved for the granting of future stock options, compared with 1,024,800 shares at December 31, 1995.
Coachmen Industries, Inc. And Subsidiaries
Notes To Consolidated Financial Statements, Continued for the years ended December 31, 1996, 1995 and 1994
7. COMMON STOCK MATTERS AND EARNINGS PER SHARE, Continued
Had the Company adopted the provisions of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," the Company's net income and net income per share would have been:
1996 1995
Pro forma net income $29,512,000 $17,499,000 Pro forma net income per share 1.93 1.18
The pro forma amounts shown above and the weighted-average grant-date fair- value of options granted are estimated using the Black-Scholes option- pricing model with the following assumptions:
1996 1995
Risk free interest rate 6.00% 6.87% Expected life 2.75 years 2.75 years Expected volatility 30.7% 30.7% Expected dividends 1.2% 1.2%
Stock Purchase Plan
The Company has an employee stock purchase plan under which a total of 576,228 shares of the Company's common stock are reserved for purchase by full-time employees through payroll deductions, cash payments, or a combination of both at a price equal to 90% of the market price of the Company's common stock on the purchase date. As of December 31, 1996, there were 233 employees actively participating in the plan. Since its inception, a total of 223,772 shares have been purchased by employees under the plan. Certain restrictions in the plan limit the amount of payroll deductions and cash payments an employee may make in any one quarter. There are also limitations as to the amount of ownership in the Company an employee may acquire under the plan.
Coachmen Industries, Inc. And Subsidiaries
Notes To Consolidated Financial Statements, Continued for the years ended December 31, 1996, 1995 and 1994
7. COMMON STOCK MATTERS AND EARNINGS PER SHARE, Continued.
Changes in Common Shares, Additional Paid-In Capital and Treasury Shares
Additional Common Paid-in Treasury Shares Capital Shares
Balance, January 1, 1994 $36,123,090 $ 1,188,757 $(15,650,990)
Issuance of 6,526 common shares under employee stock purchase plan 42,315 - -
Issuance of 2,340 common shares from treasury - 1,298 15,865
Issuance of 126,000 common shares upon the exercise of stock options 434,982 - -
Tax benefit from current and prior years' exercise of stock options - 241,000 -
Balance, December 31, 1994 36,600,387 1,431,055 (15,635,125)
Issuance of 12,130 common shares under employee stock purchase plan 94,396 - -
Issuance of 4,638 common shares from treasury - 6,834 31,446
Issuance of 123,150 common shares upon the exercise of stock options 456,419 - -
Tax benefit from current year's exercise of stock options - 227,000 -
Balance, December 31, 1995 37,151,202 1,664,889 (15,603,679)
Sale of 2,070,000 common shares, net of offering expenses 47,970,779 - -
Issuance of 9,472 common shares under employee stock purchase plan 152,646 - -
Issuance of 4,008 common shares from treasury - 28,423 27,242
Issuance of 165,500 common shares upon the exercise of stock options 973,415 - -
Tax benefit from current year's exercise of stock options - 620,431 -
Balance, December 31, 1996 $86,248,042 $ 2,313,743 $(15,576,437)
Coachmen Industries, Inc. And Subsidiaries
Notes To Consolidated Financial Statements, Continued for the years ended December 31, 1996, 1995 and 1994
7. COMMON STOCK MATTERS AND EARNINGS PER SHARE, Concluded.
Shareholder Rights Plan
On January 19, 1990, the Board of Directors adopted a shareholder rights plan and declared a dividend distribution of one common share purchase right on each outstanding common share. Such rights only become exercisable, or transferable apart from the common shares, (i) ten days after a person or group of persons ("Acquiring Person") acquires or obtains the right to acquire beneficial ownership of 20% or more of the Company's common shares or (ii) ten business days (or such later date established by the Board) following the commencement of a tender offer or exchange offer for 20% or more of the Company's common shares. Upon the occurrence of certain events and after the rights become exercisable, each right would, subject to certain adjustments and alternatives, entitle the rightholder to purchase the number of common shares of the Company or the acquiring company having a market value of twice the $15 exercise price of the right (except that the Acquiring Person would not be able to purchase common shares of the Company on these terms). The rights are nonvoting, may be redeemed by the Company at a price of $.005 per right at any time prior to the date on which an Acquiring Person acquires 20% or more of the Company's common shares and expire February 15, 2000.
Earnings Per Share
Earnings per share are based on the weighted average number of common shares outstanding (1996 - 15,280,578, 1995 - 14,881,968 and 1994 - 14,743,926). The common share equivalents (employee stock options) have not entered into the computation of earnings per share because their inclusion in each year reported would have been immaterial. Fully-diluted earnings per share do not differ materially from primary earnings per share.
8. INCENTIVE AND DEFERRED COMPENSATION PLANS.
The Company has incentive compensation plans for its officers and other key management personnel. The amounts charged to expense for the years ended December 31, 1996, 1995 and 1994 aggregated $2,662,668, $2,577,692 and $2,146,905, respectively.
The Company has established a deferred compensation plan for executives and other key employees. The plan provides for benefit payments upon termination of employment, retirement, disability, or death. The Company recognizes the cost of this plan over the projected service lives of the participating employees based on the present value of the estimated future payments to be made. The plan is funded by insurance contracts on the lives of the participants, and investments in insurance contracts (included in other assets) aggregating $8.9 million as of December 31, 1996. The carrying value of the investment in life insurance contracts aggregated $5.6 million at December 31, 1995 (see Note 2). The deferred compensation obligations, which aggregated $6,500,123 and $5,952,958 as of December 31, 1996 and 1995, respectively, are included in other non- current liabilities, with the current portion ($186,559 and $186,854 at December 31, 1996 and 1995, respectively) included in other accrued expenses.
Coachmen Industries, Inc. And Subsidiaries
Notes To Consolidated Financial Statements, Continued for the years ended December 31, 1996, 1995 and 1994
8. INCENTIVE AND DEFERRED COMPENSATION PLANS, Concluded.
All full-time employees of the Company (subject to certain eligibility restrictions) are eligible to participate in the Coachmen Assisted Retirement For Employees (C.A.R.E.) program which provides a mechanism for each eligible employee to establish an individual retirement account and receive matching contributions from the Company based on the amount contributed by the employee, the employee's years of service and the profitability of the Company. Company matching contributions charged to expense under the C.A.R.E. program aggregated $704,173, $537,118 and $546,984 for the years ended December 31, 1996, 1995 and 1994, respectively.
9. INCOME TAXES.
Income taxes are summarized as follows:
1996 1995 1994 Federal: Current $13,553,000 $ 9,530,000 $ 7,918,000 Deferred (210,000) (79,000) (730,000) 13,343,000 9,451,000 7,188,000
State: Current 833,000 971,000 968,000 Deferred (30,000) (14,000) (128,000) 803,000 957,000 840,000 Total $14,146,000 $10,408,000 $ 8,028,000
The following is a reconciliation of the provision for income taxes computed at the federal statutory rate (35%) to the reported provision for income taxes:
1996 1995 1994 Computed federal income tax at federal statutory rate $14,519,000 $ 9,785,000 $ 7,984,000 Changes resulting from: Increase in cash surrender value of life insurance contracts (381,000) - - Foreign Sales Corporation subject to lower tax rate (310,000) (222,000) (186,000) State income taxes, net of federal income tax benefit 522,000 622,000 546,000 Valuation allowance - - (526,000) Other, net (204,000) 223,000 210,000
Total $14,146,000 $10,408,000 $ 8,028,000
Coachmen Industries, Inc. And Subsidiaries
Notes To Consolidated Financial Statements, Continued for the years ended December 31, 1996, 1995 and 1994
9. INCOME TAXES, Concluded.
The components of the net deferred tax assets are as follows:
1996 1995
Current deferred tax asset: Accrued warranty expense $1,784,000 $1,321,000 Allowance for doubtful receivables 368,000 317,000 Other 1,028,000 1,027,000
Net current deferred tax asset $3,180,000 $2,665,000
Noncurrent deferred tax asset (liability): Deferred compensation $2,600,000 $2,400,000 Property and equipment (1,434,000) (1,441,000) Intangible assets (566,000) (84,000)
Net noncurrent deferred tax asset $ 600,000 $ 875,000
10. ACQUISITIONS AND DISPOSITIONS.
In September 1996, the Company acquired a recreational vehicle dealership for $1.9 million cash, which approximated the fair value of the acquired assets. The acquisition, which has been accounted for as a purchase, was immaterial to the Company's consolidated financial statements.
On January 3, 1995, the Company acquired all of the issued and outstanding capital stock of Georgie Boy Mfg., Inc. ("Georgie Boy") a manufacturer of Class A motorhomes. The purchase price aggregated $12.8 million and consisted of $6.7 million in cash and a $6.1 million promissory note payable to the seller. In conjunction with the acquisition, the Company assumed liabilities of $8,757,000.
The acquisition was accounted for using the purchase method, and the operating results of Georgie Boy have been included in the Company's 1995 consolidated financial statements from the date of acquisition. The excess of the purchase price over the cost of acquired net assets ("goodwill") of $5.0 million is being amortized on a straight-line basis over forty years. Unaudited pro forma financial information for 1994, as if this acquisition had occurred on January 1, 1994, is as follows:
Year Ended December 31, 1994 (Unaudited)
Net sales $483,870,000 Net income 15,896,000 Net income per share 1.08
Coachmen Industries, Inc. And Subsidiaries
Notes To Consolidated Financial Statements, Continued for the years ended December 31, 1996, 1995 and 1994
10. ACQUISITIONS AND DISPOSITIONS, Concluded.
On September 23, 1994, the Company acquired substantially all of the operating assets of the North Carolina division of Muncy Building Enterprises, L.P. ("Muncy"), a manufacturer of modular homes. The assets acquired consisted principally of property and equipment and inventories of modular homes. The purchase price of $2,761,740 was allocated to the assets acquired and consisted of $1,387,740 in cash and $1,374,000 of assumed liabilities, including long-term debt of $843,917. The acquisition was accounted for as a purchase and, accordingly, the operating results of Muncy are included in the Company's consolidated financial statements from the date of acquisition. Pro forma results of operations for 1994 are not presented herein as the amounts would not be materially different from the Company's historical results.
On April 29, 1994, the Company sold certain assets of its wholly owned subsidiary, Southern Ambulance Builders, Inc., for $1,589,809 consisting of $789,809 in cash and a promissory note for $800,000, which was subsequently collected. The assets sold consisted of inventories, property and equipment (excluding land) and other miscellaneous assets. The sales price equaled the net book value of the assets sold. In a separate transaction, the Company sold certain land of Southern Ambulance Builders, Inc. for $611,998 in cash, resulting in a pre-tax gain of $170,129. In addition, during 1994, the Company sold its 52% ownership interest in Luxury Conversions for $133,721, and substantially all the assets of its wholly owned subsidiary, Auranco, for $1,129,320. The Auranco transaction resulted in a pre-tax gain of $143,907. There was no gain or loss on the Luxury Conversions sale.
11: COMMITMENTS AND CONTINGENCIES.
Lease Commitments
The Company leases various manufacturing and office facilities under noncancelable agreements which expire at various dates through November 2006. Several of the leases contain renewal options and options to purchase and require the payment of property taxes, normal maintenance and insurance on the properties. Certain office and delivery equipment are also leased under various noncancelable agreements. The above described leases are accounted for as operating leases.
Future minimum annual lease commitments at December 31, 1996 aggregated $3,383,000 and are payable as follows: 1997 - $1,167,700; 1998 - $1,043,500; 1999 - $735,300; 2000 - $309,000; 2001 - $82,500 and thereafter - $45,000.
Total rental expense for the years ended December 31, 1996, 1995 and 1994 aggregated $1,754,272, $1,222,156 and $1,396,183, respectively.
Coachmen Industries, Inc. And Subsidiaries
Notes To Consolidated Financial Statements, Continued for the years ended December 31, 1996, 1995 and 1994
11. COMMITMENTS AND CONTINGENCIES, Concluded.
Obligation to Purchase Consigned Inventories
The Company obtains vehicle chassis for its recreational and specialized vehicle products directly from automobile manufacturers under converter pool agreements. The agreements generally provide that the manufacturer will provide a supply of chassis at the Company's various production facilities under the terms and conditions as set forth in the agreement. Chassis are accounted for as consigned inventory until either assigned to a unit in the production process or 90 days have passed. At the earlier of these dates, the Company is obligated to purchase the chassis and it is recorded as inventory. At December 31, 1996 and 1995, chassis inventory, accounted for as consigned inventory, approximated $11.0 million and $18.0 million, respectively.
Repurchase Agreements
The Company is contingently liable to banks and other financial institutions on repurchase agreements in connection with financing provided by such institutions to most of the Company's independent dealers in connection with their purchase of the Company's recreational vehicle products. These agreements provide for the Company to repurchase its products from the financial institution in the event that they have repossessed them upon a dealer's default. Although the total contingent liability approximated $171 million at December 31, 1996 ($129 million at December 31, 1995), the risk of loss resulting from these agreements is spread over the Company's numerous dealers and is further reduced by the resale value of the products repurchased.
Self-Insurance
The Company is self-insured for a portion of its product liability and certain other liability exposures. Depending on the nature of the claim and the date of occurrence, the Company's maximum exposure ranges from $250,000 to $500,000 per claim. The Company accrues an estimated liability based on various factors, including sales levels and the amount of outstanding claims. Management believes the liability recorded is adequate to cover the Company's self-insured risk.
Litigation
The Company is involved in various legal proceedings which are ordinary routine litigations incidental to the industry and which are covered in whole or in part by insurance. Management believes that any liability which may result from these proceedings will not be significant.
Coachmen Industries, Inc. And Subsidiaries
Notes To Consolidated Financial Statements, Continued for the years ended December 31, 1996, 1995 and 1994
12. INSURANCE SETTLEMENT.
On August 14, 1995, a fire destroyed the Company's Prodesign production facility. The loss was covered by insurance and estimated insurance proceeds in excess of the net book value of destroyed assets and related expenses resulted in a gain of $2.5 million which was included in other nonoperating income ($.4 million in 1996 and $2.1 million in 1995). Other receivables at December 31, 1995 include $2.4 million of estimated insurance recoveries.
13: UNAUDITED INTERIM FINANCIAL INFORMATION.
Certain selected unaudited quarterly financial information for the years ended December 31, 1996 and 1995 is as follows:
Quarter Ended March 31 June 30 September 30 December 31
Net sales $148,640,023 $166,715,051 $154,244,238 $136,874,816 Gross profit 19,151,520 24,961,977 24,156,880 20,237,624 Income before cumulative effect of accounting change 3,956,973 8,685,723 8,332,563 6,361,571 Net income 6,250,956 8,685,723 8,332,563 6,361,571 Income before cumulative effect of accounting change per common share .26 .58 .55 .40
Quarter Ended March 31 June 30 September 30 December 31
Net sales $131,770,379 $128,192,670 $130,973,395 $124,925,621 Gross profit 16,562,112 17,960,958 18,661,458 18,050,871 Net income 3,203,464 4,212,086 4,683,426 5,450,424 Net income per common share .22 .28 .31 .37
The fourth quarter of 1996 was favorably impacted by reversals of federal and state income tax accruals of $250,000 and $550,000, respectively, resulting from favorable settlements of tax examinations.
The fourth quarter of 1995 includes a $2.1 million pre-tax gain on insurance settlements (see Note 12).
The common share equivalents described in Note 7 did not enter into the computations of net income per common share for any of the quarters during 1996 and 1995 because their inclusion was immaterial.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not Applicable
Part III.
Item 10.
Item 10. Directors and Executive Officers of the Registrant
(a) Identification of Directors
Information for Item 10(a) is contained on page 3 of the Company's Proxy Statement dated March 24, 1997 and is incorporated herein by reference.
(b) Executive Officers of the Company
See "Executive Officers of the Registrant" on page 8.
Item 11.
Item 11. Executive Compensation
Information for Item 11 is contained under the heading "Compensation of Executive Officers and Directors" in the Company's Proxy Statement dated March 25, 1996 and is incorporated herein by reference.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information for Item 12 is contained on pages 2 and 3 of the Company's Proxy Statement dated March 24, 1997 and is incorporated herein by reference.
Item 13.
Item 13. Certain Relationships and Related Transactions
Not Applicable
Part IV.
Item 14.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) (1) Financial Statements Page Reference Financial statements included in Part II of the report:
Report of Independent Accountants 17 Consolidated Balance Sheets as of December 31, 1996 and 1995 18-19 Consolidated Statements of Income and Retained Earnings for the years ended December 31, 1996, 1995 and 1994 20 Consolidated Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994 21-22 Notes to Consolidated Financial Statements for the years ended December 31, 1996, 1995 and 1994 23-36
(a) (2) Financial Statement Schedules
Report of Independent Accountants on Financial Statement Schedule 39
Schedule II - Valuation and Qualifying Accounts 40
All other financial statement schedules have been omitted as they are not required, not applicable or because the information is included in the Notes to Consolidated Financial Statements.
(a) (3) Exhibits
See Index to Exhibits
(b) Reports on Form 8-K
No reports on Form 8-K were required to be filed during the last quarter of the period covered by this report.
Report of Independent Accountants on Financial Statement Schedule
To the Board of Directors of Coachmen Industries, Inc.:
Our report on the consolidated financial statements of Coachmen Industries, Inc. and subsidiaries is included on page 17 of this Form 10-K. In connection with our audits of such financial statements, we have also audited the related financial statement schedule listed in Item 14(a)(2) of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein.
COOPERS & LYBRAND L.L.P. ---------------------------- COOPERS & LYBRAND L.L.P.
South Bend, Indiana January 31, 1997
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
Balance At Charged Balance Beginning To Costs Deductions- At End Description Of Period And Expenses Describe Of Period
Allowance for doubtful receivables - deducted from trade receivables and notes receivable in the consolidated balance sheets:
For the year ended December 31, 1996 $ 844,000 $ 158,000 $ (83,000) (A) $919,000 (B)
For the year ended December 31, 1995 986,000 292,000 434,000 (A) 844,000 (B)
For the year ended December 31, 1994 1,059,000 (121,000) (48,000) (A) 986,000 (B)
Allowance for decline in market value of common stock invest- ment - deducted from investments in the consolidated balance sheets:
For the year ended December 31, 1996 $ - - - -
For the year ended December 31, 1995 - - - -
For the year ended December 31, 1994 58,325 - 58,325 (C) -
(A) Write-off of bad debts, less recoveries.
(B) Reflected in the consolidated balance sheets as deducted from trade receivables and current portion of notes receivable.
(C) Reversal of the balance of the allowance for unrealized security losses upon disposition of related common stock investment in 1994.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
COACHMEN INDUSTRIES, INC.
Date: March 27, 1997 G. L. Groom ----------------------------- G. L. Groom (Chief Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities as of March 27, 1997.
P. C. Barker K. D. Corson - ------------------------------- ------------------------------ P. C. Barker K. D. Corson (Director) (Director)
T. H. Corson G. L. Groom - ------------------------------- ------------------------------ T. H. Corson G. L. Groom (Director) (Director) (Chief Executive Officer) (Chief Financial Officer)
R. J. Harring W. P. Johnson - ------------------------------- ------------------------------ R. J. Harring W. P. Johnson (Director) (Director)
P. G. Lux W. G. Milliken - ------------------------------- ------------------------------ P. G. Lux W. G. Milliken (Director) (Director)
C. C. Skinner W. M. Angelo - ------------------------------- ------------------------------ C. C. Skinner W. M. Angelo (Director) (Chief Accounting Officer)
INDEX TO EXHIBITS
Number Assigned In Regulation S-K, Item 601 Description of Exhibit
(9) No exhibit
(10) No exhibit
(11) No exhibit - See Consolidated Statements of Income and Retained Earnings (on page 20 herein) and Note 7 of Notes to Consolidated Financial Statements (on page 27 herein).
(13) No exhibit
(16) No exhibit
(18) No exhibit
(21) Registrant and Subsidiaries of the Registrant
(22) No exhibit
(23) Consent of Independent Accountants
(24) No exhibit
(27) Financial Data Schedule (EDGAR filing only)
(28) No exhibit