-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G9JgtRMgRkKzJAlic4RxW90+xNi7CchDQou7y1bcQTJC9yXsz2puIjCw9PEtPo6c qrYsnf+UdaoHFzUcfWHO0Q== 0000021212-01-500021.txt : 20020410 0000021212-01-500021.hdr.sgml : 20020410 ACCESSION NUMBER: 0000021212-01-500021 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COACHMEN INDUSTRIES INC CENTRAL INDEX KEY: 0000021212 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR HOMES [3716] IRS NUMBER: 351101097 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07160 FILM NUMBER: 1782987 BUSINESS ADDRESS: STREET 1: 2831 DEXTER DR CITY: ELKHART STATE: IN ZIP: 46514 BUSINESS PHONE: 2192620123 MAIL ADDRESS: STREET 1: 2831 DEXTER DR CITY: ELKHART STATE: IN ZIP: 46514 10-Q 1 r10q3q01.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q (MARK ONE) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2001 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________to__________________ Commission file number 1-7160 COACHMEN INDUSTRIES, INC. (Exact name of registrant as specified in its charter) INDIANA 35-1101097 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification number) 2831 Dexter Drive, Elkhart, Indiana 46514 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 219-262-0123 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No _ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date: At October 31, 2001: Common Shares, without par value 15,918,403 shares outstanding including an equivalent number of common share purchase rights. COACHMEN INDUSTRIES, INC. INDEX Page No. PART I. FINANCIAL INFORMATION Financial Statements: Condensed Consolidated Balance Sheets- September 30, 2001 and December 31, 2000 4-5 Condensed Consolidated Statements of Operations- Three and Nine Months Ended September 30, 2001 and 2000 6 Condensed Consolidated Statements of Cash Flows- Nine Months Ended September 30, 2001 and 2000 7 Notes to Condensed Consolidated Financial Statements 8-11 Management's Discussion and Analysis of Financial Condition and Results of Operations 12-15 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 16 SIGNATURES 17 This Form 10-Q contains certain statements that are "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and uncertainties, and are dependent on factors which may include, but are not limited to, the availability and price 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; the functioning of the Company's information technology systems, which can impact the Company's day-to-day operations; changing government regulations, such as those covering accounting standards, environmental matters or product warranties and recalls, which may affect costs of operations, revenues, product acceptance and profitability; legislation governing the relationships of the Company with its recreational vehicle dealers, which may affect the Company's options and liabilities in the event of a general economic downturn; the impact of economic uncertainty on high-cost discretionary product purchases; and also on the state of the recreational vehicle and modular housing and building 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 industry, the housing and building industries and other key performance indicators. Readers of this Report are cautioned that reliance on any forward-looking statements involves risks and uncertainties. Although the Company believes that the assumptions on which the forward-looking statements contained herein are reasonable, any of those assumptions could prove to be inaccurate given the inherent uncertainties as to the occurrence or nonoccurrence of future events. There can be no assurance that the forward-looking statements contained in this Report will prove to be accurate. The inclusion of a forward-looking statement herein should not be regarded as a representation by the Company that the Company's objectives will be achieved. For further discussion of the elements involved in the Report, see the Company's most recent Annual Report or Form 10-K. COACHMEN INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) SEPTEMBER 30, DECEMBER 31, 2001 2000 ASSETS CURRENT ASSETS Cash and temporary cash investments $ 31,634 $ 2,614 Marketable securities 12,852 18,737 Trade receivables, less allowance for doubtful receivables 2001 - $1,185 and 2000 - $1,066 31,697 37,743 Other receivables 4,068 2,336 Refundable income taxes 1,522 4,600 Inventories 85,850 97,315 Prepaid expenses and other 5,462 2,221 Deferred income taxes 8,858 8,384 Total current assets 181,943 173,950 PROPERTY AND EQUIPMENT, at cost 141,203 139,029 Less, Accumulated depreciation 58,899 54,866 Property and equipment, net 82,304 84,163 INTANGIBLES, net of accumulated amortization 2001 - $1,786 and 2000 - $917 18,775 15,983 OTHER 27,653 22,350 TOTAL ASSETS $310,675 $296,446 The accompanying notes are part of the condensed consolidated financial statements. COACHMEN INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) SEPTEMBER 30, DECEMBER 31, 2001 2000 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current maturities of long-term debt $ 927 $ 865 Accounts payable, trade 33,715 24,015 Accrued income taxes - 845 Accrued expenses and other liabilities 42,403 31,988 Total current liabilities 77,045 57,713 LONG-TERM DEBT 11,379 11,795 DEFERRED INCOME TAXES 3,349 3,370 OTHER 8,204 8,619 TOTAL LIABILITIES 99,977 81,497 SHAREHOLDERS' EQUITY Common shares, without par value: authorized 60,000 shares; issued 2001 - 21,039 shares and 2000 - 21,020 shares 91,019 90,861 Additional paid-in capital 5,578 5,563 Accumulated other comprehensive net loss (824) - Retained earnings 164,882 169,766 Treasury shares, at cost: 2001 - 5,123 Shares and 1999 - 5,317 shares (49,957) (51,241) TOTAL SHAREHOLDERS' EQUITY 210,698 214,949 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $310,675 $296,446 The accompanying notes are part of the condensed consolidated financial statements. COACHMEN INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) THREE MONTHS NINE MONTHS ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, 2001 2000 2001 2000 Net sales $149,577 $188,473 $464,860 $584,384 Cost of sales 123,436 161,267 394,538 496,513 Gross profit 26,141 27,206 70,322 87,871 Operating expenses: Delivery 8,023 7,875 24,366 24,508 Selling 7,882 9,186 21,983 25,500 General and administrative 8,022 8,228 25,707 24,020 Total operating expenses 23,927 25,289 72,056 74,028 Operating income (loss) 2,214 1,917 (1,734) 13,843 Nonoperating income (expense): Interest expense (711) (545) (2,262) (1,600) Investment income (loss) (117) 569 (6) 830 Gain on sale of properties, net 147 1,216 209 1,252 Other income (expense), net 76 119 (143) 506 Total nonoperating income (expense), net (605) 1,359 (2,202) 988 Income (loss) before income taxes 1,609 3,276 (3,936) 14,831 Income taxes (benefit) 604 1,003 (1,425) 4,828 Net income (loss) $ 1,005 $ 2,273 $ (2,511) $ 10,003 Earnings (loss) per common share: Basic $ .06 $ .15 $ (.16) $ .64 Diluted $ .06 $ .15 $ (.16) $ .64 Number of common shares used in the computation of earnings (loss) per common share: Basic 15,815 15,574 15,811 15,566 Diluted 15,875 15,577 15,867 15,573 Cash dividends per common share $ .05 $ .05 $ .15 $ .15 The accompanying notes are part of the condensed consolidated financial statements. COACHMEN INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) NINE MONTHS ENDED SEPTEMBER 30, 2001 2000 CASH FLOWS FROM OPERATING ACTIVITIES Net cash provided by operating activities $ 42,591 $ 24,445 CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES Proceeds from: Sale of marketable securities 40,975 101,820 Sale of properties 1,583 2,085 Sale of businesses - 5,644 Acquisitions of: Marketable securities (37,633) (91,842) Property and equipment (3,968) (10,219) Businesses, net of cash acquired (7,273) (7,201) Other (578) 901 Net cash from (used in) investing activities (6,894) 1,188 CASH FLOWS USED IN FINANCING ACTIVITIES Proceeds from long-term debt 13,500 - Payments of long-term debt (18,521) (1,946) Issuance of common shares under stock option and stock purchase plans 717 386 Tax benefit from stock options exercised - 81 Cash dividends paid (2,373) (2,339) Net cash used in financing activities (6,677) (3,818) Increase in cash and temporary cash investments 29,020 21,815 CASH AND TEMPORARY CASH INVESTMENTS Beginning of period 2,614 4,269 End of period $ 31,634 $ 26,084 The accompanying notes are part of the condensed consolidated financial statements. COACHMEN INDUSTRIES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands) 1. BASIS OF PRESENTATION The consolidated balance sheet data at December 31, 2000 was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. In the opinion of management, the information furnished herein includes all adjustments of a normal and recurring nature necessary to reflect a fair statement of the interim periods reported. The results of operations for the three and nine-month periods ended September 30, 2001 are not necessarily indicative of the results to be expected for the full year. 2. SEGMENT INFORMATION The Company has determined that its reportable segments are those that are based on the Company's method of internal reporting, which disaggregates its business by product category. The Company's two reportable segments are: Recreational Vehicles, including related parts and supplies, and Modular Housing and Building. The Company evaluates the performance of its segments and allocates resources to them based on pretax income. Differences between reported segment amounts and corresponding consolidated totals represent corporate expenses for administrative functions and costs or expenses relating to property and equipment that are not allocated to segments. The table below presents information about segments used by the chief operating decision maker of the Company for the three and nine month periods ended September 30, 2001 and 2000: Three Months Nine Months Ended September 30, Ended September 30, 2001 2000 2001 2000 Net sales: Recreational vehicles $ 78,527 $140,066 $278,705 $451,325 Modular housing and building 71,050 48,407 186,155 133,059 Consolidated total $149,577 $188,473 $464,860 $584,384 Pretax income (loss): Recreational vehicles $ (1,551) $ 543 $ (9,060) $ 9,506 Modular housing and building 6,288 3,873 12,486 9,900 Other reconciling items (3,128) (1,140) (7,362) (4,575) Consolidated total $ 1,609 $ 3,276 $ (3,936) $ 14,831 As of As of September 30, December 31, 2001 2000 Total assets: Recreational vehicles $ 97,529 $139,383 Modular housing and building 109,284 100,340 Other reconciling items 103,862 56,723 Consolidated total $310,675 $296,446 3. INVENTORIES Inventories consist of the following: September 30, December 31, 2001 2000 Raw materials $ 29,023 $ 35,963 Work in process 9,327 8,244 Finished goods 47,500 53,108 Total $ 85,850 $ 97,315 4. EARNINGS PER SHARE Basic earnings per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding plus the dilutive effect of stock options and stock awards. The dilutive effect of stock options and awards did not enter into the computation of diluted earnings per share for the nine months ended September 30, 2001, because their inclusion would have been antidilutive. The sum of quarterly earnings per share for the three quarters may not equal year-to-date earnings per share due to rounding and changes in the diluted potential common shares. 5. COMPREHENSIVE INCOME Other comprehensive loss represents unrealized depreciation of available-for-sale securities, net of deferred income taxes. Other comprehensive income (loss) was $382 and $(824) for the 2001 third quarter and nine months, respectively. There was no other comprehensive income recorded for the quarter or nine months ended September 30, 2000. Total comprehensive income (loss) combines reported net income (loss) and other comprehensive loss. Total comprehensive income (loss) for the quarters ended September 30, 2001 and 2000 was $1,387 and $2,273, respectively, and $(3,335) and $10,003 for the nine months ended September 30, 2001 and 2000, respectively. 6. COMMITMENTS AND CONTINGENCIES The Company was contingently liable at September 30, 2001 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 financing institution in the event that they have repossessed them upon a dealer's default. 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. Historically, the Company has not experienced significant losses under these agreements. However, in the fourth quarter of 2000 and continuing to a lesser extent through the third quarter of 2001, as a result of business conditions affecting the recreational vehicle industry, the Company experienced losses under repurchase agreements. Accordingly, the Company is recording an accrual for estimated losses under repurchase agreements. The Company is involved in various legal proceedings which are ordinary disputes incidental to the industry and many of which are covered in whole or in part by insurance. Management believes that the ultimate outcome of these matters and any liabilities in excess of insurance coverage and self-insurance accruals will not have a material adverse impact on the Company's consolidated financial position or on its future business operations. 7. ACQUISITION OF A BUSINESS On February 12, 2001, the Company acquired all of the issued and outstanding shares of capital stock of Kan Build, Inc. ("Kan Build"), a manufacturer of modular buildings. The purchase price aggregated $21.6 million and consisted of $8.9 million cash paid at closing and the assumption of $12.7 million of liabilities. The excess of purchase price over fair value of assets acquired ("goodwill"), which approximated $3.7 million, is being amortized on a straight-line basis over 20 years. The acquisition was accounted for as a purchase and the operating results of Kan Build are included in the Company's consolidated financial statements from the date of acquisition. When acquired, Kan Build had facilities in Osage City, Kansas; Loveland, Colorado; and a new plant under construction in Millikin, Colorado. During the second quarter of 2001, all manufacturing operations in the Loveland, Colorado facility were relocated to the newly constructed facility in Millikin, Colorado. The lease on the Loveland, Colorado facility was subsequently terminated. Unaudited pro forma financial information as if this acquisition had occurred at the beginning of each period is as follows: Nine Months Ended September 30, 2001 2000 Net sales $468,383 $605,250 Net income (loss) (2,423) 11,078 Earnings (loss) per share: Basic $ (.15) $ .71 Diluted (.15) .71 8. NEW AND PENDING ACCOUNTING PRONOUNCEMENTS Effective January 1, 2001, the Company adopted two new accounting pronouncements of the Emerging Issues Task Force ("EITF") of the Financial Accounting Standards Board ("FASB"). EITF 00-10, "Accounting for Shipping and Handling Fees and Costs," requires freight billed to customers to be considered as sales revenue. Previously, the Company netted freight billed to customers against delivery expenses. EITF 00-22, "Accounting for Points and Certain Time or Volume-Based Sales Incentive Offers...," requires certain volume-based sales rebates to be netted against sales revenue. Previously, the Company included such rebates in selling expenses. Net sales, delivery expenses and selling expenses for prior periods have been restated to conform with the current presentation. The adoption of these two new EITF pronouncements had no impact on net income. In June 2001, the FASB issued Statement No. 141, "Business Combinations" and Statement No. 142, "Goodwill and Other Intangible Assets." Statement No. 141 eliminates the pooling of interests method of accounting for business acquisitions and Statement No. 142 eliminates the amortization of goodwill and requires the Company to evaluate goodwill for impairment on an annual basis. Any impairment of goodwill must be recognized currently as a charge to earnings in the financial statements. The Company will be required to apply the provisions of the Statements to all business combinations initiated after June 30, 2001. For goodwill and intangible assets arising from business combinations completed before July 1, 2001, the Company will be required to apply the provisions of Statement No. 142 beginning on January 1, 2002. Application of the nonamortization provisions of the Statement in the year ending 2002 is expected to reduce intangibles amortization by approximately $1.2 million and increase net earnings by approximately $.4 million ($.03 per diluted share). During 2002, the Company will perform the initial impairment tests of goodwill and indefinite lived intangible assets as of January 1, 2002. The Company has not yet determined what effect these tests will have on its consolidated results of operations or financial position. COACHMEN INDUSTRIES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (in thousands, except per share amounts) The following is management's discussion and analysis of certain significant factors which have affected the Company's financial condition, results of operations and cash flows during the periods included in the accompanying condensed consolidated financial statements. A summary of the changes in the principal items included in the condensed consolidated statements of income is shown below. Comparison of Three Months Nine Months Ended September 30, 2001 and 2000 Increases (Decreases) Amount Percentage Amount Percentage Net sales $(38,896) (20.6)% $(119,524) (20.5)% Cost of sales (37,831) (23.5) (101,975) (20.5) Delivery expense 148 1.9 (142) (0.6) Selling expenses (1,304) (14.2) (3,517) (13.8) General and administrative expenses (206) (2.5) 1,687 7.0 Interest expense 166 30.5 662 41.4 Investment income (loss) (686) (120.6) (836) (100.7) Gain on sale of properties, net (1,069) (87.9) (1,043) (83.3) Other income, net (43) (36.1) (649) (128.3) Income (loss) before income taxes (1,667) (50.9) (18,767) (126.5) Income taxes (399) (39.8) (6,253) (129.5) Net income (loss) (1,268) (55.8) (12,514) (125.1) NET SALES Consolidated net sales for the quarter ended September 30, 2001 were $149.6 million, a decrease of 20.6% from the $188.5 million reported for the corresponding quarter last year. Net sales for the nine months were $464.9 million, representing a decrease of 20.5% from the $584.4 million reported for the same period in 2000. The Company's recreational vehicle segment experienced a net sales decrease of 43.9% for the quarter and a decrease of 38.2% for the nine months. Both the motorized and towable products had decreases in the number of units and sales dollars from the 2000 periods reflecting a continuing industry-wide softness in the recreational vehicle industry during the three and nine month comparable periods. After adjustments for sold or discontinued RV operations, sales for 2000 were $128.6 million for the third quarter and $412.2 million for the first nine months of the year. The Company's modular housing and building segment experienced a net sales increase for the 2001 quarter of 46.8% and 39.9% for the nine months. This increase was principally attributable to net sales of acquired businesses during the past twelve month period. COST OF SALES Cost of sales decreased 23.5% or $37.8 million for the three months and 20.5% or $102.0 million for the nine months ended September 30, 2001. The decrease for the quarter is greater than the decrease in net sales while the decrease for the nine months approximates the decrease in net sales for the corresponding period. As a percentage of sales, cost of sales decreased 3.1 percentage points and .1 percentage points for the quarter and nine months, respectively, from the comparable prior year periods. The most recent quarter was favorably impacted by continued cost cutting efforts including the improved utilization of the recreational vehicle manufacturing facilities resulting from the consolidations that took place earlier in the year. Margin improvements were also affected by the increased influence of the modular housing and building segment to overall sales of the Corporation. OPERATING EXPENSES As a percentage of net sales, operating expenses, which include delivery, selling, general and administrative expenses, were 16.0% and 15.5% for the 2001 quarter and nine months compared to 13.4% and 12.7% for the quarter and nine months of 2000. As a percentage of net sales, delivery expenses increased by 1.2 percentage points for the three months and 1.0 percentage points for the nine months compared to the prior year three and nine month periods. This increase was mainly attributable to higher fuel costs and fuel surcharges from outside carriers. In addition, as a result of lower sales volume in the current periods, there was less efficient utilization of Company-owned transportation equipment. Selling expenses, at 5.3% of net sales for the quarter ended September 30, 2001, were .4% higher than the comparable quarter of the previous year. This was mainly attributable to increased sales promotions in the recreational vehicle segment necessitated by the challenging sales environment. For the nine month period, selling expenses in 2001, as a percentage of net sales of 4.7%, were .3 percentage points higher than the 4.4% in 2000. While total dollars spent were down 13.8% for the nine month period, revenue declined 20.5%. General and administrative expenses were 5.4% of net sales for the third quarter compared to 4.4% for the 2000 corresponding quarter and 5.5% of net sales for the nine month period compared to 4.1% for 2000. These increases in both the quarter and nine month periods were primarily the result of goodwill amortization for companies acquired during the past twelve month period, which were not included in last year's results for the first nine months. INTEREST EXPENSE Interest expense was $711 and $2,662 for the three and nine month periods in 2001 compared to $545 and $1,600 in the same periods last year. Interest expense varies with the amount of long-term debt and the increase in cash surrender value 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 partially offset by the increases in cash surrender values. The increase in interest expense is primarily the result of Industrial Revenue Bonds assumed in the acquisitions of Mod-U-Kraf Homes, Inc. and Miller Building Systems, Inc. during 2000. INVESTMENT INCOME (LOSS) There was an investment loss of $117 for the quarter ended September 30, 2001 compared to investment income of $569 for the third quarter of 2000. For the nine month period, investment loss in 2001 was $6 compared to investment income of $830 the previous year. This decrease is principally attributable to realized losses incurred from the sale of preferred stocks of certain utility companies as well as a reduction of interest income resulting from lower interest rates during the 2001 periods. GAIN ON THE SALE OF PROPERTIES, NET There was a net gain on the sale of properties for the third quarter of 2001 of $147 compared with a gain of $1,216 in the same quarter of 2000. The net gain on the sale of properties for the first nine months of 2001 and 2000 was $209 and $1,252, respectively. During the quarter ended September 30, 2000, the Company exited the furniture business with the sale of the business operations and assets of its Lux Company subsidiary. The pretax gain on the sale, which was primarily attributable to the sale of real property, approximated $1.2 million. This current year gain represents the net result of the amount of gain or loss recognized upon the disposition of various small properties. OTHER INCOME, NET Other income, net, represents income of $76 for the third quarter of 2001 and an expense of $143 for the nine months compared to income of $119 and $506 for the 2000 third quarter and nine months, respectively. The most significant item of expense for the 2001 nine month period was a $400 charge to write-down the carrying value of property held for sale that was subsequently sold. INCOME TAXES For the third quarter ended September 30, 2001, the effective tax rate was 37.5% and a year-to-date rate of 36.2% compared with a 2000 third quarter and year-to-date rate of 30.6% and 32.6%, respectively. The Company's effective tax rate fluctuates based upon the states where sales occur, with the level of export sales, and also with the amount of nontaxable dividend income on investments. LIQUIDITY AND CAPITAL RESOURCES The Company generally relies on funds from operations as its primary source of liquidity. In addition, the Company maintains a $30 million secured bank line of credit to meet its seasonal working capital needs. The loan agreement contains covenants whereby the Company must maintain certain financial ratios. At September 30, 2001, there were no borrowings against this line of credit. This agreement was amended on November 5, 2001 to modify available borrowings to $30 million from $50 million, to provide certain collateral to the bank and to modify certain financial covenants to reflect current business conditions. For the nine months ended September 30, 2001, the major source of cash was from operating activities. Net cash provided by operating activities aggregated $42,591 and $24,445 for the nine months ended September 30, 2001 and 2000, respectively. The significant items in operating activities for the nine months ended September 30, 2001 were depreciation, a decrease in trade accounts receivable, a decrease in inventories and increases in trade accounts payable and accrued expenses. The positive cash flow from these items was partially offset by the net loss and a decrease in deferred income taxes. The cash used in investing activities included the purchase of Kan Build and the acquisition of property and equipment. The cash used in financing activities consisted of cash dividends paid and the repayment of long- term debt. At September 30, 2001, working capital decreased to $104.9 million from the $116.2 million at December 31, 2000. The $8.0 million increase in current assets at September 30, 2001 versus December 31, 2000, was primarily due to increases in cash and marketable securities of $23.1 million during the nine month period. This was mostly offset by decreases in trade accounts receivable and inventories. The increase in current liabilities of $19.3 million was primarily due to increases in accounts payable, customer deposits and accrued expenses. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS There have been no material changes from the information provided in the Company's Annual Report on Form 10-K for the year ended December 31, 2000. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits None (b) Reports on Form 8-K during the quarter ended September 30, 2001 Form 8-K, dated August 9, 2001, reporting an Item 5 event (a press release announcing second quarter results and declaring 76th consecutive quarterly dividend). Form 8-K, dated August 23, 2001, reporting an Item 4 event (changes in registrant's certifying accountant) and an Item 5 event (a press release announcing Coachmen's new models winning rave reviews during its recent dealer seminar in Las Vegas). Form 8-K, dated September 11, 2001, reporting an Item 9 event (a press release announcing expected profitability in 2001 but at lower levels than previously anticipated). SIGNATURES Pursuant to the requirements of the Securities and 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. (Registrant) Date: November 13, 2001 By: /s/ Joseph P. Tomczak________________ Joseph P. Tomczak, Executive Vice President and Chief Financial Officer Date: November 13, 2001 By: /s/ Gary L. Near_____________________ Gary L. Near, Vice President and Controller -----END PRIVACY-ENHANCED MESSAGE-----