-----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, SGpjdGiHpRzEK9TJRQcRd5uU7AHEw+E48SREvid3m0pV6OyWag2jAhYOnaJBVQIB C7TN7ljrDPkQ0y+HJinq9g== 0000940397-03-000059.txt : 20030514 0000940397-03-000059.hdr.sgml : 20030514 20030514120252 ACCESSION NUMBER: 0000940397-03-000059 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20030331 FILED AS OF DATE: 20030514 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: 03697599 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 coamay0310q.txt FIRST QUARTER OF 2003 1 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 March 31, 2003 -------------- 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 574-262-0123 ------------ 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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). 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 April 30, 2003: Common Shares, without par value 15,493,722 shares outstanding including an equivalent number of common share purchase rights. - -------------------------------------------------------------------------------- 2 COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES FORM 10-Q INDEX PAGE NO. PART I. FINANCIAL INFORMATION - ------------------------------ Financial Statements: Consolidated Balance Sheets- March 31, 2003 and December 31, 2002 3-4 Consolidated Statements of Operations- Three Months Ended March 31, 2003 and 2002 5 Consolidated Statements of Cash Flows- Three Months Ended March 31, 2003 and 2002 6 Notes to Consolidated Financial Statements 7-13 Management's Discussion and Analysis of Financial Condition and Results of Operations 14-17 Quantitative and Qualitative Disclosures About Market Risk 18 Controls and Procedures 19 PART II. OTHER INFORMATION - --------------------------- Item 6. Exhibits and Reports on Form 8-K 20 Signatures 21 Certifications 22-23 2 3 COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands) March 31, December 31, 2003 2002 ---- ---- (Unaudited) ASSETS Current assets: Cash and temporary cash investments $ 4,933 $ 16,549 Marketable securities 6,925 7,641 Trade receivables, less allowance for doubtful receivables 2003 - $860 and 2002 - $861 35,443 29,408 Other receivables 2,265 1,572 Refundable income taxes 1,610 2,878 Inventories 101,658 85,010 Prepaid expenses and other 4,382 4,412 Deferred income taxes 6,902 6,885 -------- -------- Total current assets 164,118 154,355 -------- -------- Property, plant and equipment, at cost 149,780 148,439 Less, Accumulated depreciation 71,812 69,550 -------- -------- Property, plant and equipment, net 77,968 78,889 -------- -------- Goodwill 18,954 18,954 Cash value of life insurance 34,711 33,155 Real estate held for sale 276 276 Other 7,706 7,656 -------- -------- Total assets $303,733 $293,195 ======== ======== See Notes to Consolidated Financial Statements. 3 4 COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (continued) (in thousands) March 31, December 31, 2003 2002 ---- ---- (Unaudited) LIABILITIES Current liabilities: Accounts payable, trade $ 32,619 $ 18,801 Accrued income taxes 239 1,222 Accrued expenses and other liabilities 39,398 39,856 Short-term borrowings and current portion of long-term debt 5,896 902 -------- -------- Total current liabilities 78,152 60,781 Long-term debt 10,090 10,097 Deferred income taxes 4,123 4,123 Other 9,391 8,768 -------- -------- Total liabilities 101,756 83,769 -------- -------- SHAREHOLDERS' EQUITY Common shares, without par value: authorized 60,000 shares; issued 2003 - 21,068 shares and 2002 - 21,062 shares 91,338 91,283 Additional paid-in capital 6,753 6,133 Unearned compensation (892) - Accumulated other comprehensive loss (689) (661) Retained earnings 165,309 169,054 Treasury shares, at cost: 2003 - 5,556 shares and 2002 - 5,395 shares (59,842) (56,383) -------- -------- Total shareholders' equity 201,977 209,426 --------- -------- Total liabilities and shareholders' equity $303,733 $293,195 ======== ======== See Notes to Consolidated Financial Statements. 4 5 COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (Unaudited) Three Months Ended March 31, 2003 2002 ---- ---- Net sales $146,387 $152,846 Cost of goods sold 129,353 134,576 -------- -------- Gross profit 17,034 18,270 -------- -------- Operating expenses: Delivery 6,989 6,989 Selling 5,719 5,034 General and administrative 8,723 7,658 -------- -------- 21,431 19,681 -------- -------- Operating loss (4,397) (1,411) -------- -------- Nonoperating (income) expense: Interest expense 362 540 Investment income (395) (232) Gain on sale of properties, net (5) (665) Other, net (62) (158) -------- -------- Total nonoperating income, net (100) (515) -------- -------- Loss before income taxes (4,297) (896) Income taxes (benefit) (1,477) (306) -------- -------- Net loss $ (2,820) $ (590) ======== ======== Loss per common share: Basic $ (.18) $ (.04) Diluted $ (.18) $ (.04) Number of shares used in the computation of loss per common share: Basic 15,473 16,040 Diluted 15,473 16,040 Cash dividends per common share $ .06 $ .05 See Notes to Consolidated Financial Statements. 5 6 COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) Three Months Ended March 31, 2003 2002 ---- ---- Cash flows from operating activities: Net loss $ (2,820) $ (590) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation 2,384 2,538 Provision for doubtful receivables 47 30 Provision for write-down of property to net realizable value - (469) Gain on sale of properties, net (5) (665) Increase in cash surrender value of life insurance policies (451) (451) Net realized and unrealized (gains) losses on marketable securities and derivatives (169) 265 Deferred income taxes (17) (74) Tax benefit from stock options exercised - 102 Other 954 480 Changes in certain assets and liabilities, net of effects of acquisitions and dispositions: Receivables (6,775) (13,465) Inventories (16,648) 4,553 Prepaid expenses and other 30 (4) Accounts payable, trade 13,818 14,235 Income taxes - accrued and refundable 285 53 Accrued expenses and other liabilities (458) 4,904 -------- -------- Net cash provided by (used in) operating activities (9,825) 11,442 -------- -------- Cash flows from investing activities: Proceeds from sales of marketable securities 6,880 11,415 Proceeds from sale of property and equipment 10 2,137 Investments in marketable securities (7,432) (11,711) Purchases of property and equipment (1,450) (1,079) Other 146 35 -------- -------- Net cash provided by (used in) investing activities (1,846) 797 -------- -------- Cash flows from financing activities: Proceeds from short-term debt 7,000 - Payments of short-term debt (2,000) - Payments of long-term debt (13) (14) Issuance of common shares under stock incentive plans 89 390 Purchases of common shares for treasury (4,096) (10) Cash dividends paid (925) (802) -------- -------- Net cash provided by (used in) financing activities 55 (436) -------- -------- Increase (decrease) in cash and temporary cash investments (11,616) 11,803 Cash and temporary cash investments Beginning of period 16,549 28,416 -------- -------- End of period $ 4,933 $ 40,219 ======== ======== See Notes to Consolidated Financial Statements. 6 7 COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands) (Unaudited) 1. BASIS OF PRESENTATION The consolidated balance sheet data as of December 31, 2002 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 presentation of the statements of the interim periods reported. The results of operations for the three months ended March 31, 2003 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 income 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 months ended March 31, 2003 and 2002: 2003 2002 ---- ---- Net sales: Recreational vehicles $107,396 $108,333 Modular housing and building 38,991 44,513 -------- -------- Consolidated total $146,387 $152,846 ======== ======== Pretax income (loss): Recreational vehicles $ (1,521) $ (573) Modular housing and building (2,038) (512) Other reconciling items (738) 189 -------- -------- Consolidated total $ (4,297) $ (896) ======== ======== 7 8 2. SEGMENT INFORMATION, Continued. March 31, December 31, 2003 2002 ---- ---- Total assets: Recreational vehicles $112,524 $ 93,571 Modular housing and building 103,921 97,765 Other reconciling items 87,288 101,859 -------- -------- Consolidated total $303,733 $293,195 ======== ======== 3. INVENTORIES Inventories consist of the following: March 31, December 31, 2003 2002 ---- ---- Raw materials $ 31,992 $ 28,432 Work in process 14,519 11,054 Finished goods 55,147 45,524 -------- --------- Total $101,658 $ 85,010 ======== ======== 4. ACCRUED EXPENSES AND OTHER LIABILITIES Accrued expenses and other liabilities consist of the following: March 31, December 31, 2003 2002 ---- ---- Wages, salaries, bonuses and commissions $ 3,553 $ 5,661 Dealer incentives, including volume bonuses, dealer trips, interest reimbursement, co-op advertising and other rebates 4,454 4,368 Warranty 7,868 8,796 Insurance-products and general liability, workers compensation, group health and other 7,605 7,434 Customer deposits and unearned revenues 6,302 5,598 Other current liabilities 9,616 7,999 -------- -------- Total $ 39,398 $ 39,856 ======== ======== Changes in the Company's warranty liability during the quarter ended March 31, 2003 were as follows: Balance of accrued warranty at January 1, 2003 $ 8,796 Warranties issued during the period and changes in liability for pre-existing warranties 2,992 Cash settlements made during the quarter (3,920) ------ Balance of accrued warranty at March 31, 2003 $ 7,868 ======= 8 9 5. EARNINGS PER SHARE Basic earnings per share is based on the weighted average number of shares outstanding during the period. Diluted earnings per common share is based on the weighted average number of shares outstanding during the period, after consideration of the dilutive effect of stock options and awards. Basic and diluted earnings per share for the three months ended March 31, 2003 and 2002 were calculated as follows: 2003 2002 ---- ---- Numerator: Net loss applicable to common stock $(2,820) $ (590) Denominator: Number of shares outstanding, end of period: Common stock 15,512 16,079 Effect of weighted average shares outstanding during period (39) (39) ------ ------ Weighted average number of common shares used in basic EPS 15,473 16,040 ====== ====== As the Company reported net losses for the three months ended March 31, 2003 and 2002, 66 and 139 common stock equivalents related to stock options and awards, respectively, did not enter into the computation of diluted earnings per share because their inclusion would have been antidilutive. For the periods ended March 31, 2003 and 2002, 314 and 370 shares of outstanding stock options were not included in the computation of diluted earnings per share because their exercise price was greater than the average market prices for the periods and their inclusion would have been antidilutive. During the quarter ended March 31, 2003, the Company repurchased 272 shares of common stock at a cost of $4,096. 6. OTHER COMPREHENSIVE INCOME (LOSS) The changes in components of other comprehensive income (loss) for the three months ended March 31, 2003 and 2002 are as follows: 2003 2002 ---- ---- Net loss $(2,820) $ (590) Unrealized gains on securities held for sale, net of taxes 96 54 Unrealized losses on cash flow hedges, net of taxes (124) - ------- ------- Other comprehensive loss $(2,848) $ (536) ======= ======= As of March 31, 2003 and 2002, the accumulated other comprehensive income (loss), net of tax, relating to unrealized losses on securities held for sale was ($565) and ($661), respectively, and relating to deferred losses on cash flow hedges was ($124) and $0, respectively. 9 10 7. RECLASSIFICATION Certain information in the accompanying consolidated statements of operations for the three months ended March 31, 2002 has been reclassified to conform to the 2003 presentation. The reclassifications had no effect on net income (loss) as previously reported. 8. COMMITMENTS, CONTINGENCIES AND GUARANTEES The Company was contingently liable under guarantees to financial institutions of their loans to independent dealers for amounts totaling approximately $.7 million at March 31, 2003. The Company was contingently liable at March 31, 2003 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. Products repurchased from dealers under these agreements are accounted for as a reduction in revenue at the time of repurchase. Although the estimated guarantee approximates $209 million at March 31, 2003, 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 experienced losses under these agreements and accordingly, has recorded an accrual for the fair value of the guarantees of $.3 million for estimated losses under repurchase agreements. 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 March 31, 2003, chassis inventory, accounted for as consigned inventory, approximated $18.3 million. During the first quarter of 2003, the Company made commitments for the construction of a new Class C manufacturing facility to be located on its complex in Middlebury, Indiana. The estimated completed cost of this project is $4.0 million. As of March 31, 2003, the Company made commitments to this project totaling $2.9 million, of which $2.6 million remained outstanding as of the end of the period. The Company also entered into a commitment for a facility located in Fitzgerald, Georgia to be used for towable recreational vehicle production. Total cost to convert this facility to towable production is estimated at $1.5 million. The Company had $.9 million in outstanding commitments as of March 31, 2003 related to this project. The Company is involved in various legal proceedings, most of which are ordinary disputes incidental to the industry and most of which are covered in whole or in part by insurance. Management believes 10 11 8. COMMITMENTS, CONTINGENCIES AND GUARANTEES, Continued 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, future business operations or cash flows. 9. STOCK-BASED COMPENSATION The Company has stock option plans and an employee stock purchase plan. The Company accounts for these plans under the recognition and measurement principles of APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. No stock-based employee compensation cost is reflected in net earnings for these plans, as all options granted under these plans have an exercise price equal to the market value of the underlying common stock at the date of grant. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," to stock-based compensation. Had the Company adopted the provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," the Company's pro forma net income (loss) and net income (loss) per share for the periods ended March 31, 2003 and 2002 would have been: 2003 2002 ---- ---- Net loss, as reported $(2,820) $ (590) Deduct total stock-based employee compensation expense determined under fair value based method for all awards, net of taxes (110) (161) ------- ------- Pro forma net loss $(2,930) $ (751) ======= ======= Loss per share: Basic - as reported (.18) (.04) Basic - pro forma (.19) (.05) Diluted - as reported (.18) (.04) Diluted - pro forma (.19) (.05) On March 1, 2003, the Company adopted the Performance Based Restricted Stock Plan initiated to motivate and reward participants for superior achievement of the Company's pre-established long-term financial performance goals. This new plan, effective as of January 1, 2003, utilizes variable plan accounting, meaning that awards are expensed based upon the fair value of shares awarded throughout the vesting period. During the quarter ended March 31, 2003, a total of 88.5 shares were awarded under the plan. The amount expensed during the quarter ended March 31, 2003 was $97. 11 12 10. NEW ACCOUNTING PRONOUNCEMENTS In July 2002, the FASB issued SFAS. 146, "Accounting for Costs Associated with Exit or Disposal Activities." Statement No. 146 addresses the timing of recognition and related measurement of the costs of one-time termination benefits. SFAS 146 was adopted on January 1, 2003 and did not have a significant impact on the Company's consolidated financial position or results of operations. FASB Interpretation No. (FIN) 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others," changes current practice in accounting for, and disclosure of, guarantees. FIN 45 will require certain guarantees to be recorded as liabilities at fair value on the Company's balance sheet. Current practice requires that liabilities related to guarantees be recorded only when a loss is probable and reasonably estimable, as those terms are defined in FASB Statement No. 5, "Accounting for Contingencies." FIN 45 also requires a guarantor to make significant new disclosures, even when the likelihood of making any payments under the guarantee is remote, which is another change from current practice. The disclosure requirements of FIN 45 are effective immediately and are included in Notes 4 and 8. The initial recognition and measurement provisions are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. The recognition and measurement provisions were adopted, prospectively, as of January 1, 2003 and did not have a significant impact on the Company's consolidated financial position or results of operations. In December 2002, the FASB issued SFAS 148, "Accounting for Stock-Based Compensation - Transition and Disclosure - an amendment of FASB Statement No. 123." SFAS 148 amends SFAS. 123, "Accounting for Stock-Based Compensation," to provide alternative methods of transition for a voluntary change to the fair-value based method of accounting for stock-based employee compensation. In addition, SFAS 148 amends the disclosure requirements of Statement No. 123 to require disclosure in interim financial statements regarding the method used on reported results. The Company does not intend to adopt a fair-value based method of accounting for stock-based employee compensation until a final standard is issued by the FASB that requires this accounting. Pro forma disclosures of quarterly earnings are included in Note 9 of this quarterly statement. In November 2002, the Emerging Issues Task Force reached a consensus on Issue 00-21, "Accounting for Revenue Arrangements with Multiple Deliverables," which addresses how to account for arrangements that may involve the delivery or performance of multiple products, services, and/or rights to use assets. Revenue arrangements with multiple deliverables should be divided into separate units of accounting if the deliverables in the arrangement meet the following criteria: (1) value to the customer exists on a stand alone basis,(2) there is objective and reliable evidence of the fair value of the undelivered items and (3) the arrangement includes a general right of return, where delivery or performance of the undelivered items is considered probable and substantially in the control of the vendor. Arrangement consideration should be allocated among the separate deliverables based on their relative fair values. The accounting for revenue arrangements under EITF 00-21 is applicable for all new agreements entered into in periods beginning after June 15, 2003. The Company has not yet determined what effect, if any, the new recognition and measurement provisions will have on the Company's 12 13 10. NEW ACCOUNTING PRONOUNCEMENTS, Continued recognition and measurement provisions will have on the Company's future financial results. In January 2003, the FASB issued FIN 46, "Consolidation of Variable Interest Entities". This standard clarifies the application of Accounting Research Bulletin No. 51, "Consolidated Financial Statements", and addresses consolidation by business enterprises of variable interest entities (more commonly known as Special Purpose Entities or SPE's). FIN 46 requires existing unconsolidated variable interest entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse risk among the parties involved. FIN 46 also enhances the disclosure requirements related to variable interest entities. This statement is effective for variable interest entities created or in which an enterprise obtains an interest after January 31, 2003. FIN 46 will be effective for the Company beginning January 1, 2004 for all interest in variable interest entities acquired before February 1, 2003. The adoption of FIN 46 is not expected to have a material impact on the Company's consolidated financial statements. 13 14 COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (in thousands, except per share data) 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 consolidated financial statements. A summary of the changes in the principal items included in the consolidated statements of operations is shown below. Comparison of Three Months Ended March 31, 2003 and 2002 Increases (Decreases) --------------------- Amount Percentage ------ ---------- Net sales $ (6,459) (4.2)% Cost of goods sold (5,223) (3.9) Delivery - - Selling 685 13.6 General and administrative 1,065 13.9 Interest expense (178) (33.0) Investment income 163 70.3 Gain on sale of properties, net (660) (99.2) Other, net (96) (60.8) Loss before income taxes 3,401 379.6 Income tax benefit 1,171 382.7 Net loss 2,230 378.0 14 15 NET SALES Consolidated net sales for the quarter ended March 31, 2003 were $146.4 million, a decrease of 4.2% from the $152.8 million reported in the same quarter of 2002. The Company's recreational vehicle segment experienced a sales decrease of .9%. Sales dollars for motorized products increased slightly while revenue for towable products posted a slight decrease. However, unit shipments of both motorized and towable products were down from the prior year. Product mix accounted for higher sales dollars on fewer units for motorized products. For towable products, camping trailers experienced the most significant decline in unit shipments, off 17.2% while shipments of other towable products increased or were off only slightly. Compared to 2002, there was a decrease in unit shipments of approximately 3.0% in the recreational vehicle segment. The Company's modular housing and building segment experienced a 12.4% decrease in net sales for the quarter compared to last year's first quarter. A significant factor for this decrease was the result of delivery delays caused by unusually bad weather in several of the regions. COST OF GOODS SOLD Cost of goods sold decreased 3.9% or $5.2 million for the three months ended March 31, 2003 compared to the same quarter for 2002. As a percentage of net sales, cost of goods sold was 88.4% for the 2003 quarter compared to 88.0% for the 2002 quarter. The decrease in the dollar amount of cost of goods sold in the current quarter is attributable to lower variable expenses as a result of the decrease in sales. The increase in the cost of goods sold percentage to net sales for the 2003 quarter is primarily related to sales mix, with sales from the recreational vehicle segment comprising 73.4% of total sales in 2003 as compared to 70.9% in 2002. Sales from recreational vehicle segment are typically at lower profit margins as compared to sales from the modular housing and building segment. OPERATING EXPENSES As a percentage of net sales, operating expenses, which include delivery, selling, general and administrative expenses, were 14.6% and 12.9% for the quarters ended March 31, 2003 and 2002, respectively. The percentage of delivery expense to net sales increased .2 percentage points and the percentage of selling expense to net sales increased .6 percentage points. Dollars spent for delivery were unchanged while selling expenses increased $.7 million in 2003 as compared to the same period for 2002. The increase in delivery expense as a percentage of net sales was mainly due to higher fuel costs and resulting increased rates from outside carriers. The increase in selling expenses was primarily related to increased payroll costs and travel-related expenses. General and administrative expenses were 6.0% of net sales for the first quarter of 2003 and 5.0% of net sales for the first quarter of 2002, representing an increase of $1.1 million. Most of this increase is the result of personnel- related expenses and professional services that are not expected to occur in future periods. INTEREST EXPENSE Interest expense was $362 and $540 for the quarters ended March 31, 2003 and 2002, respectively. Interest expense varies with the amount of long- 15 16 term debt and the amounts borrowed against the cash value of 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. In September of 2002, as a better utilization of the Company's available cash at that time, $18.5 million in loans against the cash value of life insurance policies were repaid. The resulting reduction in interest expense for the current period is the direct result of paying off those loans. This reduction in expense was somewhat offset by interest charges incurred from borrowings against the Company's credit facility during the current quarter. INVESTMENT INCOME Investment income was $395 for the 2003 quarter compared with $232 for the 2002 comparable quarter. The increase was principally attributable to the improved performance of the Company's investments in marketable securities. GAIN (LOSS) ON THE SALE OF PROPERTIES, NET There were no significant gains or losses from property transactions for the quarter ended March 31, 2003. For the quarter ended March 31, 2002, the gain on the sale of properties was $665. The major component of the gain in 2002 was from the sale of a previously closed manufacturing facility located in Middlebury, Indiana. OTHER INCOME, NET Other income, net, represents income of $62 for the 2003 first quarter and $158 for the 2002 first quarter. No items of significance caused the variances between the comparable quarters. INCOME TAXES For the first quarter ended March 31, 2003, the effective tax rate was a 34.4% benefit compared to a first quarter tax benefit rate of 34.2% in 2002. The Company's effective tax rate fluctuates based upon the states where sales occur, the level of export sales and the amount of nontaxable dividend income on investments. LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION 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. At March 31, 2003, primarily due to increases in inventories, there were outstanding borrowings of $5.0 million against this bank line of credit. At March 31, 2002, there were no borrowings against credit facilities. For the three months ended March 31, 2003, the major use of cash was from operating activities, which primarily consisted of increases in receivables and inventories offset by an increase in accounts payable. The cash used in investing activities included investments in marketable securities and cash value life insurance policies and purchases of property and equipment. The cash used in financing activities included the purchase of common shares for the 16 17 treasury and payment of cash dividends, offset by borrowings against credit facilities. At March 31, 2003, working capital decreased to $86.0 million from $93.6 at December 31, 2002. The $9.8 million increase in current assets at March 31, 2003 versus December 31, 2002 was primarily due to increased trade receivables and inventories, offset by an $11.6 million decrease in cash. The increase in current liabilities of $17.4 million was substantially due to increased trade payables and borrowings against credit facilities. During the first quarter of 2003, the Company entered into an agreement for the construction of a new Class C manufacturing facility to be located on its complex in Middlebury, Indiana. The expected completion date is July 2003 and the estimated completed cost of the project is $4.0 million. The Company also entered into a commitment for a facility located in Fitzgerald, Georgia to be used for towable recreational vehicle production. Total cost to convert this facility to towable production is estimated at $1.5 million and the Company expects to begin manufacturing in this facility in June 2003. FORWARD-LOOKING STATEMENTS 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 potential fluctuations in the Company's operating results; the condition of the telecommunications industry which purchases modular structures; the availability and price of gasoline and diesel products, which can impact the sale 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; changing accounting standards and government regulations, such as those covering accounting practices, 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, which can hinder the sales of recreational vehicles; the demand for commercial structures in the various industries that the modular housing and building segment serves; the ability of the housing and building segment to perform in new market segments where it has limited experience; and also on the state of the recreational vehicle and modular housing industries in the United States. Other factors affecting forward-looking statements include the cyclical and seasonal nature of the Company's businesses, adverse weather, changes in property taxes and energy costs, changes in federal income tax laws and federal mortgage financing programs, changes in public policy, competition in these industries, the Company's ability to maintain or increase gross margins which are critical to profitability whether there are or are not increased sales, further developments in the war on terrorism and related international crises; and other risks and uncertainties. At times, the Company's actual performance differs materially from its projections and estimates regarding the economy, the recreational vehicle and modular housing and building industries and other key performance 17 18 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 this report, see the notes and other materials included with the Company's latest Annual Report on Form 10-K. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK In the normal course of business, operations of the Company are exposed to fluctuations in interest rates. These fluctuations can vary the costs of financing and investing yields. The Company utilized its short-term credit facility during the first quarter of 2003 for working capital needs resulting from an increase in inventories. Under normal conditions, changes in interest rates would primarily impact the Company's long-term debt. At March 31, 2003, the Company had $11.0 million of long-term debt, including current maturities. Long-term debt consists mainly of industrial development revenue bonds that have variable or floating rates. In January of 2003, the Company entered into various interest rate swap agreements that become effective beginning in October of 2003. These swap agreements, which are designated as cash flow hedges for accounting purposes, effectively convert a portion of the Company's variable-rate borrowings to a fixed-rate basis through November of 2011, thus reducing the impact of changes in interest rates on future interest expense. The fair value of the Company's interest rate swap agreements represents the estimated receipts or payments that would be made to terminate the agreements. A loss of $.1 million, net of taxes, attributable to changes in the fair value of interest rate swap agreements was recorded as a component of accumulated other comprehensive gain (loss) in the first quarter of 2003. If in the future the interest rate swap agreements were determined to be ineffective or were terminated before the contractual termination dates, or if it became probable that the hedged variable cash flows associated with the variable-rate borrowings would stop, the Company would be required to reclassify into earnings all or a portion of the unrealized losses on cash flow hedges included in accumulated other comprehensive gain (loss). At March 31, 2003, the Company had $7.0 million invested in short-term and $4.5 million in long-term marketable securities. The Company's marketable securities consist of public utility preferred stocks which typically pay quarterly fixed rate dividends. These financial instruments are subject to market risk in that available energy supplies and changes in available interest rates would impact the market value of the preferred stocks. The Company utilizes U.S. Treasury bond futures options as a protection against the impact of increases in interest rates on the fair value of the Company's investments in these fixed rate preferred stocks. Outstanding options are marked to market with market value changes recognized in current earnings. The U.S. Treasury bond futures options generally have terms ranging from 90 to 180 days. Based on the Company's overall interest rate exposure at March 31, 2003, including variable or floating rate debt and derivatives used to hedge the fair value of fixed rate preferred stocks, a hypothetical 10 percent change in 18 19 interest rates applied to the fair value of the financial instruments as of March 31, 2003, would have no material impact on earnings, cash flows or fair values of interest rate risk sensitive instruments over a one-year period. ITEM 4. CONTROLS AND PROCEDURES Within 90 days prior to the date of filing this quarterly report on Form 10-Q, an evaluation was performed under the supervision and with the participation of the Company's management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on and as of the time of such evaluation, the Company's management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company's disclosure controls and procedures were effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company's periodic filing with the Securities and Exchange Commission. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect internal controls subsequent to the time of such evaluation. 19 20 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits See index to Exhibits (b) Reports on Form 8-K during the quarter ended March 31, 2003 Form 8-K filed on January 21, 2003, reporting an item 5 event (a press release dated January 20, 2003 reporting an expectation of gain in fourth quarter and full year 2002 earnings). Form 8-K filed on February 5, 2003, reporting an item 5 event (a press release dated February 5, 2003 declaring a regular quarterly dividend and appointment of a new board member). Form 8-K filed on February 10, 2003, reporting an item 5 event (a press release dated February 6, 2003 announcing a partnership between All American Homes(R) and Town & Country Cedar Homes). Form 8-K filed on February 12, 2003 (and 2 Forms 8-K/A filed on February 13, 2002), reporting an item 5 event (a press release dated February 11, 2003 announcing confirmation of a strong gain in fourth quarter and full year earnings). Form 8-K filed on March 14, 2003, reporting an item 5 event (a press release dated March 13, 2003 announcing a major expansion at the Indiana and Georgia facilities). 20 21 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: May 14, 2003 By: /s/ Claire C. Skinner ----------------------------------------- Claire C. Skinner, Chairman of the Board and Chief Executive Officer Date: May 14, 2003 By: /s/ Joseph P. Tomczak ----------------------------------------- Joseph P. Tomczak, Executive Vice President and Chief Financial Officer Date: May 14, 2003 By: /s/ Gary L. Near ----------------------------------------- Gary L. Near, Vice President and Controller 21 22 CERTIFICATION I, Claire C. Skinner, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Coachmen Industries, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 14, 2003 By: /s/ Claire C. Skinner -------------------------------------- Claire C. Skinner Chairman of the Board and Chief Executive Officer 22 23 CERTIFICATION I, Joseph P. Tomczak, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Coachmen Industries, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 14, 2003 By: /s/ Joseph P. Tomczak -------------------------------------- Joseph P. Tomczak Executive Vice President and Chief Financial Officer 23 24 INDEX TO EXHIBITS Number Assigned In Regulation S-K, Item 601 Description of Exhibit *10(a) Supplemental Deferred Compensation Plan amended and restated as of January 1, 2003 (filed herewith) 99.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 99.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 * Management Contract or Compensatory Plan. 24 EX-10 3 coasupdefpln.txt AMENDED/RESTATED SUPP DEFERRED COMPENSATION PLAN 25 EXHIBIT 10(a) COACHMEN INDUSTRIES, INC. SUPPLEMENTAL DEFERRED COMPENSATION PLAN (Amended and Restated as of January 1, 2003) 26 Coachmen Industries, Inc. established the Coachmen Industries, Inc. Supplemental Deferred Compensation Plan, effective January 1, 2001, for the benefit of a select group of management and other highly compensated employees eligible to participate therein. The Employer has amended from time to time and now completely restates the Plan, effective January 1, 2003, in the form stated herein below. ARTICLE 1 ESTABLISHMENT/PURPOSE 1.01 PURPOSE: This Plan is intended to permit the Employer to establish an unfunded, non-qualified deferred compensation plan for a select group of its management or highly compensated employees. Accordingly, it is intended that this Plan be exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA. 1.02 ADOPTION OF PLAN: The Employer, through the Committee, adopts this restatement of the Plan pursuant to a directive of the Board. ARTICLE 2 DEFINITIONS When used in this Plan and its Schedules, the following words shall have the meanings defined below, unless the context clearly indicates otherwise: 2.01 ACCOUNT: The bookkeeping accounts maintained by the Service Provider on behalf of the Employer, with appropriate sub-accounts, to reflect: (i) Salary Deferral Contributions, contributed to the Plan, as may be elected by each Participant; (ii) Employer Contributions (whether Employer Matching Contributions, Employer Basic Contributions or Employer Special Contributions), each as adjusted for Deemed investment experience, transfers, withdrawals and distributions made in accordance with this Plan. 2.02 AFFILIATE: Any entity which is part of (i) a controlled group of corporations or businesses under common control pursuant to Code ss.ss.414(b) or (c); (ii) an affiliated service group pursuant to Code ss.414(m); or (iii) any other entity required to be aggregated with the Employer for purposes of Code ss.414(o). 2.03 BENEFICIARY: Any person who is designated by a Participant to receive payment of benefits under this Plan, to the extent available, after the Participant's death. The Participant may specify his Beneficiaries on a form approved by the Committee, and may make such changes to his Beneficiary designation at such times as may be allowed by the Committee. Notwithstanding anything in this Plan to the contrary, if the Participant designates his spouse as a Beneficiary of benefits payable hereunder, and the Participant's marriage to that spouse is later terminated (whether by divorce, annulment, dissolution, 27 or otherwise), the Participant's designation of his spouse as a Beneficiary shall be null and void, and the portion of the Participant's benefits that would, but for this provision, be payable to the Participant's spouse will be payable as designated in the Participant's Beneficiary designation, as if the spouse had predeceased the Participant. 2.04 BONUS COMPENSATION: Any item of Compensation that would be payable to a Participant as a bonus but for the existence of a Salary Reduction Agreement executed by a Participant authorizing deferral of Bonus Compensation. 2.05 BONUS DEFERRAL CONTRIBUTIONS: A contribution to the Plan made pursuant to Section 4.01 of the Plan, and allocated to the Accounts of Participants entering into a Salary Reduction Agreement authorizing the deferral of Bonus Compensation. 2.06 BOARD: The Board of Directors (or other governing board) of the Employer. 2.07 CHANGE IN CONTROL: A Change in Control shall mean the occurrence of any of the following: (i) any "person" (as that term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding the Employer, its affiliates, and any qualified or non-qualified plan maintained by the Company or its affiliates) becomes the "beneficial owner" (as defined in Rule 13d-3 promulgated under such Act), directly or indirectly, of securities of the Employer representing more than 20% of the combined voting power of the Employer's then outstanding securities; (ii) during a period of 24 months, a majority of the Board of Directors of the Employer ceases to consist of the existing membership or successors nominated by the existing membership or their similar successors; (iii) shareholder approval of a merger or consolidation of the Employer with any other corporation, other than a merger or consolidation which would result in the voting securities of the Employer outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than sixty percent (60%) of the combined voting power of the voting securities of the Employer or such surviving entity outstanding immediately after such merger or consolidation; or (iv) shareholder approval of either (A) a complete liquidation or dissolution of the Employer or (B) a sale or other disposition of all or substantially all of the assets of the Employer, or a transaction having a similar effect. 2.08 COA HOLDING: That bookkeeping account maintained in the Plan for the purpose of holding contributions that are to be converted to an equivalent of the common stock of the Employer as described in Plan Section 4.04(b)(i). 2.09 CODE: The Internal Revenue Code of 1986, and amendments thereto. 2 28 2.10 COMMITTEE: The Committee as provided for in this Plan, which shall have the authority to direct the operations of the Plan and such other authority as may be prescribed by the Plan. To the extent that the Employer does not appoint a Committee, the Employer shall have the duties assigned to the Committee by the Plan. 2.11 COMPENSATION: Any Employee's base salary (unreduced by deferrals made on a pre-tax basis to any plan maintained under Code ss.ss.401(k) or 125) plus Bonus Compensation. 2.12 DEEMED: When the word "Deemed" modifies any other word, a Participant's Account shall be adjusted or treated as if such other word actually occurred or existed within or to the Participant's Account. 2.13 DISABILITY: The inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months. The permanence and degree of such impairment shall be supported by medical evidence. The Employer shall determine the existence of a Disability based on its current disability policy, applied on a uniform and nondiscriminatory basis. 2.14 EFFECTIVE DATE: The Effective Date of this restatement is January 1, 2003. 2.15 ELIGIBLE EMPLOYEE: An Employee who has been designated by the Employer to be eligible to be a Participant in this Plan for the Plan Year. Eligible Employees shall be assigned to either Group A or Group B as designated by the Employer. 2.16 EMPLOYEE: Any employee of the Employer maintaining the Plan. 2.17 EMPLOYER: Coachmen Industries, Inc. and any successor to the business of the Employer establishing the Plan. An entity that is related to the Employer by virtue of being a parent-subsidiary or brother-sister controlled group with the Employer, pursuant to Code ss.ss.414(b) or (c) may also be an Employer under the Plan with the consent of the Board. 2.18 EMPLOYER BASIC CONTRIBUTIONS: Those contributions to the Plan made pursuant toss.4.01 and allocated to the Accounts of Participants pursuant to Schedule B. 2.19 EMPLOYER CONTRIBUTION: An Employer Basic Contribution, Employer Matching Contribution, or Employer Special Contribution. 2.20 EMPLOYER MATCHING CONTRIBUTIONS: Those contributions to the Plan made pursuant toss.4.01 and allocated as a matching contribution to the Salary Reduction Contributions or Bonus Deferral Contributions. 2.21 EMPLOYER SPECIAL CONTRIBUTION: Those contributions to the Plan made pursuant toss.4.01 and allocated pursuant to the provisions of an agreement entered into between the Employer and a Participant. 3 29 2.22 EMPLOYMENT COMMENCEMENT DATE: The date on which an Employee first is employed by the Employer. 2.23 ERISA: The Employee Retirement Income Security Act of 1974, as amended. 2.24 INVESTMENT FUND: One of the funds provided for in this Plan, as selected by the Employer or the Committee. The common stock of the Employer may be an Investment Fund. 2.25 NORMAL RETIREMENT AGE: The date on which a Participant attains age 65. 2.26 PARTICIPANT: An Eligible Employee who has been selected to participate in the Plan and who has contributions credited to his or her Account. An individual who has an Account in the Plan shall continue to be a Participant despite no longer being an Eligible Employee. 2.27 PLAN: The non-qualified deferred compensation plan established by the Employer, which is intended to be a "top-hat" plan, as defined in Department of Labor Regulation ss.2520.104-23, and exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA. 2.28 PLAN YEAR: The twelve-month period ending each December 31. 2.29 QUALIFIED PLAN: The Coachmen Industries, Inc. Retirement Plan and Trust, as amended from time to time. 2.30 SALARY REDUCTION AGREEMENT: An election of the Participant made annually to forego payment of Compensation in exchange for the Employer's promise to pay benefits pursuant to this Plan. Such Salary Reduction Agreement, to be valid, must (i) be in writing, signed by the Participant prior to the start of the Plan Year to which it relates (except that an Eligible Employee may enter into a Salary Reduction Agreement effective for the remainder of the Plan Year in which the Participant's participation in the Plan commences, provided that any reduction in Compensation specified in the Salary Reduction Agreement has effect only with respect to Compensation not yet earned or payable); (ii) take effect as of the start of the following Plan Year (or the date the Participant commences participation in the Plan, if later); (iii) be irrevocable during the Plan Year in which it is in effect (except that a Salary Reduction Agreement may be revoked in its entirety with respect to the remainder of the Plan Year upon election of the Participant); and (iv) be on a form and submitted as prescribed by the Committee. A Participant shall be permitted to enter into separate Salary Reduction Agreements for base pay and Bonus Compensation in a Plan Year. Any Salary Reduction Agreement in effect as of the last day of the Plan Year shall be deemed automatically renewed for each succeeding Plan Year unless a proper election modifying or terminating the prior Salary Reduction Agreement is duly filed with the Committee during the period of time prescribed by the Committee. 4 30 2.31 SALARY REDUCTION CONTRIBUTION: A contribution made to this Plan pursuant to the Employer's obligation to provide certain benefits in consideration of a Participant entering into a Salary Reduction Agreement. 2.32 SERVICE PROVIDER: That entity appointed by the Committee to perform administrative services in connection with the operation of the Plan. 2.33 TRUST: The revocable grantor/rabbi trust established in connection with the Plan. The Employer or the Committee, as the case may be, shall have the discretion to determine whether or not a Trust shall be established in connection with the Plan; provided, however, in the event of a Change in Control, such discretion shall be removed from the Employer and the Committee, and a Trust shall be established (if not already in existence) and fully funded in accordance with Plan Section 4.03. 2.34 TRUST AGREEMENT: An agreement entered into between the Trustee and the Employer providing for trust services in connection with a grantor trust that may be established in connection with this Plan. As of the Effective Date, the Trust Agreement is The Amended and Restated Coachmen Industries, Inc. Executive Benefit and Estate Accumulation Trust, as amended effective December 13, 2000, and as may be amended from time to time. 2.35 TRUSTEE: That individual or individuals or corporate entity having trust powers that is appointed by the Committee to perform trust services in connection with the Plan, whose responsibilities shall be governed by the Plan and by the Trust Agreement. 2.36 YEAR OF SERVICE: A consecutive 12-month period of continuous service in the employ of the Employer commencing on the latest of: (i) the Employee's Employment Commencement Date; (ii) the effective date of the Employer's establishment of this Plan; or (iii) the date the Employee becomes a Participant in the Plan. ARTICLE 3 ELIGIBILITY AND PARTICIPATION 3.01 ELIGIBILITY: Employees will be designated as Eligible Employees and will be assigned as either Group A or Group B Participants in the sole and absolute discretion of the Board (or its designee). The Board (or its designee) may impose such terms and conditions upon each Eligible Employee prior to becoming a Participant, which shall be communicated to such Eligible Employee, in writing, prior to commencement of participation. An Eligible Employee shall commence Participation as of any date specified by the Board. 3.02 PARTICIPATION: A Participant shall commence participation in Plan upon completion of an appropriate Salary Reduction Agreement specifying that his or her compensation be reduced, or by being credited with an Employer Contribution to his or her Account. 5 31 ARTICLE 4 CONTRIBUTIONS/ACCOUNTS 4.01 CONTRIBUTIONS: In accordance with this Plan and the agreement entered into with the Participant, the Employer shall establish each of the following book entries and credit each Participant's Account with: a) SALARY REDUCTION CONTRIBUTIONS: The amount of any Salary Reduction Contribution elected by an Eligible Employee in a Salary Reduction Agreement for the Plan Year; b) BONUS DEFERRAL CONTRIBUTIONS: The Amount of any Bonus Deferral Contribution elected by an Eligible Employee in a Salary Reduction Agreement for the Plan Year; c) EMPLOYER BASIC CONTRIBUTIONS: An amount, as determined in the sole discretion of the Employer, which will be allocated to the Accounts of Participants pursuant to an allocation formula specified by the Board. There shall be no requirement that a Basic Contribution be made, or if made, that it be made in the same amount or for any or all Participants in the Plan; d) Employer Matching Contributions: A contribution made on account of a Participant's Salary Reduction Contribution, which amount is described in Schedule A of the Plan. e) EMPLOYER SPECIAL CONTRIBUTIONS: An amount determined and allocated according to the Board. There is no requirement that any Employer Special Contribution be made, or if made, that it be made in the same amount or for any or all Participants in the Plan. Benefits payable pursuant to this Plan shall be calculated with reference to the contributions credited to the Participant's Account, together with any adjustments made thereto pursuant to the provisions of this Plan. 4.02 PARTICIPANT ACCOUNTS: Each Participant shall have established an Account (with sub-accounts as may be appropriate) which shall reflect any contributions credited pursuant to Section 4.01 of this Plan. All contribution credits shall be bookkeeping entries only and shall not constitute an actual allocation of any assets of the Employer, or be deemed to create any trust, custodial account, or deposit with respect to any assets which may be utilized to satisfy the obligation of the Employer to provide the benefits specified in this Plan. 4.03 RABBI TRUST: a) UNSECURED OBLIGATION: The obligation of the Employer to provide benefits pursuant to this Plan shall be the sole unsecured promise of the 6 32 Employer with respect to this Plan. Notwithstanding the foregoing, the Employer or the Committee may establish a trust, pursuant to a Trust Agreement, for the purpose of setting aside funds to provide for the payment of benefits under this Plan. However, the assets of the Trust shall at all time remain subject to the claims of the general creditors of the Employer, and no Participant or Beneficiary shall have any claim or right with respect to the assets held in the Trust, except to the extent that the Participant or Beneficiary is a general creditor of the Employer. b) SPRINGING TRUST: Notwithstanding anything in this Plan (or the Trust Agreement) to the contrary, upon a Change in Control, the Employer shall (i) establish a trust (if not already established) as described in Plan Section 2.33, (ii) maintain in the Trust an amount of money which is at all times at least equal to its obligations under this Plan by making sufficient contributions to the Trust, immediately upon such Change in Control in an amount equal to the Plan's total liabilities; and (iii) direct the Trustee to invest the assets of the Trust proportionally in accordance with investment directions given by each Participant. 4.04 INVESTMENTS: a) GENERALLY: To the extent that the Employer establishes a Trust, such contributions made to the Trust shall be invested in one or more Investment Funds as selected by the Committee. At the discretion of the Employer, a Participant may be entitled to request that his or her Account be adjusted for investment gains and losses, as if invested in one or more Investment Funds in accordance with a Deemed investment election of a Participant. Deemed investment elections may be (i) made with respect to existing Account balances or current contributions to the Participant's Account, and (ii) shall be subject to any limitations imposed by the Committee from time to time, and made by such means as the Employer and Trustee may agree. The Employer or Service Provider (as the case may be) shall make such adjustments in Participants' Accounts to reflect any investment gains or losses such Participants' Accounts would experience if funds were actually invested in one or more Investment Funds pursuant to the Participant's election. b) RULES FOR INVESTMENT CHANGES: Participants may make changes in Deemed investment elections at such time, and in such manner as may be specified by the Committee. Any Deemed investment election, or changes to Deemed investment elections, shall remain in effect until further changed by the Participant. Notwithstanding the preceding sentence, the following rules shall apply to a Participant for whom a Matching Employer Contributions sub-Account is maintained: i) Beginning each calendar quarter on and after January 1, 2003, any contribution that is to be Deemed invested in the common stock of the 7 33 Employer and any Deemed dividends paid on amounts Deemed to be invested in the common stock of the Employer shall be accumulated in COA Holding until the last business day of the calendar quarter. On such last business day, the closing price of one share of the Employer's common stock on the first business day of the calendar quarter shall be compared with the closing price of one share of the Employer's common stock on the last business day of the calendar quarter, and amounts tracked on behalf of each Participant in COA Holding shall be converted to Deemed shares of the Employer by dividing the total amount in COA Holding by the lower of the first business day closing price or the last business day closing price and by allocating those shares to each Participant based on his or her contributions. Once allocated to Participants, the Deemed shares are credited to the Participants' appropriate sub-Accounts and COA Holding is reduced to zero. The closing prices shall be as provided on the New York Stock Exchange Composite Transaction Tape and reported in the Wall Street Journal, Midwest Edition, or as reported in another reputable publication (determined at the sole discretion of the Committee) if the Wall Street Journal is not available for the respective dates. All calculations shall include fractional shares carried to the ninth decimal place. ii) A Participant shall not be permitted to redirect the Deemed investment of his Matched Stock Account any time prior to the calendar year in which he attains age fifty-five (55). In the calendar year in which the Participant attains age fifty-five (55), and in any calendar year thereafter until the Participant attains age sixty-five (65), a Participant may redirect the Deemed investment of up to twenty percent (20%) of his or her Matched Stock Account balance among the other Investment Funds available in the Plan. iii) Notwithstanding the redirection provisions of this Section 4.04, a Participant may redirect the Deemed investment of his or her Matched Stock Account any time following the attainment of age sixty-five (65) or a Change in Control. A Beneficiary of a Participant shall have the right to redirect the Deemed investment of the Participant's Matched Stock Account at any time following the Participant's death. iv) A Participant who elects to receive a payment in the form of Employer stock for the amount represented by the Matched Stock Account will receive shares restricting his or her right or ability to sell or transfer such shares until the Participant has attained age fifty-five (55). v) For so long as Employer stock is a Deemed investment under the Plan, no Participant shall have the right to direct the vote or tender any Employer stock that is Deemed to be credited to his Account. 8 34 vi) The Committee may in its sole discretion refuse to recognize participant elections that it determines may cause the Participant's Accounts to become subject to the short-swing profit provisions of Section 16b of the Securities Exchange Act of 1934 and establish special election procedures for participants subject to Section 16 of such Act. 4.05 EMPLOYER STOCK: Deemed purchases and allocations of Employer stock to the bookkeeping entry Accounts of Plan Participants shall occur on a quarterly basis. Deemed purchases shall be allocated to such Accounts as of the last business day of each calendar quarter and shall be valued at the lesser of the stock's closing price on the New York Stock Exchange on either the first business day of the quarter or the last business day of the quarter. Nothing herein shall be deemed to prevent the maintenance in the Participants' Accounts of fractional shares. All dividends payable on the Employer's common stock shall be Deemed to be reinvested in additional shares of the Employer's common stock. Those additional shares attributable to the Matched Stock Account shall be credited to the Matched Stock Account and any other dividends Deemed received will be credited to the respective sub-Account that is not the Matched Stock Account. 4.06 PROVISIONS UPON A CHANGE IN CONTROL: If there occurs Change in Control, in addition to other requirements of the Plan, the Board may take any additional actions deemed reasonably necessary or desirable to accomplish the stated purposes of this Plan, and the Committee may cause the contribution by the Employer of any amount equal to up to three (3) years of additional Participant Contributions for select Group "A" Participants as determined by the Plan Sponsor, along with the Employer Matching Contributions to the Plan that would have been paid on such Participant Contributions, as if the Participants in Group "A" had contributed the maximum fifteen percent (15%) of base salary and Bonus Compensation each year. 9 35 ARTICLE 5 VESTING AND FORFEITURE 5.01 VESTING a) A Participant's sub-Account consisting of his or her Salary Reduction Contributions and Bonus Deferral Contributions, adjusted for Deemed earnings and losses thereon, shall always be 100% vested. b) A Participant's sub-Accounts consisting of Employer Contributions, adjusted for Deemed earnings and losses thereon shall be vested according to the vesting schedule prescribed in either Schedule A or Schedule B, as applicable. c) Notwithstanding the preceding provisions of this Section 5.01, a Participant shall be 100% vested in the value of his sub-Accounts consisting of Employer Contributions adjusted for Deemed earnings and losses thereon upon the earliest to occur of any of the following: (i) a Change in Control; (ii) termination of employment with the Employer as a result of the Participant's death or Disability; (iii) termination of employment at or after Normal Retirement Age; or (iv) effective January 1, 2003, a termination of employment as a result of such other extenuating circumstance, as the Committee shall determine, in its sole discretion. 5.02 FORFEITURES: The Participant shall forfeit any portion of his or her Account that is not vested at the time the Participant terminates employment with the Employer. Additionally, the Participant shall forfeit all of his or her Account attributable to Employer Contributions and Deemed earnings and losses thereon, regardless of the extent to which such Account is vested under Section 5.01 of the Plan, if the Participant, without the express written consent of the Employer and within six (6) months following his or her termination of employment with the Employer or its Affiliates, works in any capacity for or on behalf of any direct competitor (including the competitor's affiliates) of the Employer or of any of its Affiliates and during such time violates his or her "Business Protection Agreement" with the Employer or its Affiliates, including the post-termination-of-employment restrictions on competition with the Employer, solicitation of the Employer's employees, or solicitation of the Employer's or its Affiliates' vendors or customers (regardless of the enforceability of any such restrictions). 5.03 NON-VESTED AMOUNTS: To the extent that the Employer has made a contribution to the Trust in connection with respect to this Plan, the amount of any such contributions held in trust and forfeited pursuant to Section 5.02 shall be returned to the Employer if the Trust is revocable; or if not revocable, then the forfeited amounts shall continue to be held in trust until full satisfaction of all of Employer's obligations under this Plan. 10 36 ARTICLE 6 BENEFITS/PAYMENTS 6.01 GENERAL: A Participant shall be entitled to receive a benefit, when payable pursuant to the terms of this Plan, in an amount equal to the total value of all vested contributions credited to his or her Account, and adjusted for any Deemed investment gains or losses. All benefit payments shall be made by the Employer, except as may be provided for in the Trust Agreement. All appropriate taxes, as determined by the Employer, shall be withheld from any payment distribution, as may be required by law, and remitted to the appropriate taxing authority by the Employer, or its agent. 6.02 PAYMENT EVENTS: A Participant shall be entitled to receive a distribution from the Plan, pursuant to his or her election as to the form of distribution in accordance with the following: a) SALARY REDUCTION AND BONUS REDUCTION ACCOUNTS: A Participant shall receive the balance of his or her Salary Reduction and Bonus Reduction sub-Accounts, adjusted for Deemed earnings and losses thereon, as soon as practicable following his or her termination of employment, in conformity with the Employer's payroll practices, but no later than 100 days following the Participant's termination of employment. b) EMPLOYER CONTRIBUTION SUB-ACCOUNTS: A Participant shall receive the balance of his or her Employer Contribution sub-Accounts that have not been forfeited under Section 5.02 of the Plan six (6) months following his or termination of employment with the Employer and all of its Affiliates. c) CHANGE IN CONTROL: Notwithstanding the provisions of paragraphs (a) and (b) above, a Participant shall receive the vested balance of his or her entire Account as soon as practicable following the third anniversary of a Change in Control, regardless of whether such Participant has incurred a termination of employment from the Employer or its Affiliates. If there occurs a Change in Control, the Committee and the Employer shall direct the Trustee to remit to the Employer amounts necessary to pay any taxes that may be due for such payments to the Participant within the time period described herein. After remittance of the tax reimbursement to the Employer, the Trustee shall remit the balance of the remaining account balances maintained on behalf of the Participant directly to the Participant. The Trustee shall not be responsible for the preparation of any tax reporting materials, nor the remittance of any such taxes, to any tax authorities. Such responsibilities shall be exclusively the responsibility of the Employer. 11 37 6.03 FORM OF PAYMENT: a) A Participant shall irrevocably elect to receive a payment of his or her benefits in either a single lump sum payment or annual installment payments over a period that shall not be less than 10 annual installments. b) A Participant's benefits shall be paid to him or her in cash only. 6.04 DEATH DISTRIBUTIONS: To the extent not forfeited pursuant to the terms of this Plan, upon the death of the Participant, any benefit to which the Participant would be entitled to (but for his or her death) shall be paid to the Participant's Beneficiary or Beneficiaries in a form elected by the Participant. To the extent the Participant has not designated a Beneficiary to receive his or her benefits pursuant to this Plan, the Participant's benefits (or the portion thereof not so payable to a Beneficiary) shall be paid to the Participant's estate. 6.05 VALUATION OF BENEFIT PAYMENTS: Each day that the New York Stock Exchange is open shall be a valuation date for the Plan. For purposes of assigning a value to a distribution to occur under either Sections 6.02 or 6.04 of the Plan, the Committee (or in the case of a Change in Control, the Trustee), shall designate the value of the Participant's Account as of the date or dates such Account is to be paid out to the Participant. ARTICLE 7 ADMINISTRATION OF THE PLAN 7.01 PLAN ADMINISTRATION: The Plan shall be administered by the Committee. A Participant who also is a member of the Committee shall not participate in any decision involving such individual's rights, duties and obligations as a Participant under the Plan, if such participation constitutes a conflict of interest. Subject to the limitations of Section 8.01 of the Plan, any action to be taken by the Employer in the Plan may be taken by the Committee. 7.02 COMMITTEE ACTION: A majority of the Committee (if it has more than two members) shall constitute a quorum for the transaction of business. All actions taken by the Committee at a meeting shall be by the vote of a majority of those present at such meeting but any action may be taken by the Committee without a meeting upon written consent signed by all of the members of the Committee. The Committee is expressly authorized to delegate any and all authority granted it under this Plan to any employee of the Company, or to any other person. 7.03 PLAN RULES AND REGULATIONS: The Committee may from time to time establish rules and regulations for the administration of the Plan and adopt standard forms to be used under the Plan, such as beneficiary designation forms, provided such rules and forms are not inconsistent with the provisions of the Plan. Any duties or responsibilities of the Committee may be delegated to any individual employee or departmental function within the Company. 12 38 7.04 DETERMINATIONS BY COMMITTEE: All determinations of the Committee, irrespective of their character or nature, including, but not limited to, all questions of construction and interpretation, shall be final, binding and conclusive on all parties. The Committee shall have discretionary authority in making all decisions under the Plan, including factual determinations. In construing or applying the provisions of the Plan, the Committee shall have the right to rely upon a written opinion of legal counsel, which may be independent legal counsel or legal counsel regularly employed by the Company, whether or not any question or dispute has arisen as to any distribution from the Plan. 7.05 PLAN RECORDS: The Committee shall be responsible for maintaining books and records for the Plan. Each Participant or the Participant's beneficiary or Representative shall be notified annually of the balance in the Participant's Account including the vested portion thereof. 7.06 PLAN EXPENSES: The Company shall pay all expenses of administering the Plan. 7.07 CLAIM PROCEDURE: Any person who believes he or she is being denied rights or benefits under the Plan may file a written claim with the Committee. The Committee will notify the claimant in writing if the claim is denied. The notice will: (i) state the reasons for the denial, (ii) reference pertinent Plan provisions on which the denial is based, (iii) describe any additional material or information needed; and (iv) state the steps to be taken to request review of the decision. The notice will be given within 90 days after the Committee receives the claim (or within 180 days if special circumstances require an extension and written notice of the extension and circumstances is given to the claimant within the initial 90 day period). If the notice is not given within this period, the claim will be considered denied as of the last day of such period and the claimant may request review of the claim. 7.08 REVIEW PROCEDURE: Within 60 days of receipt by the claimant of the written notice of denial of the claim, or within 60 days after the claim is deemed denied, the claimant may file a written request with the Committee for review of the denied claim, including the conducting of a hearing, if deemed necessary by the Committee. The claimant may review pertinent documents and submit issues and comments in writing. The Committee will give its written decision on the claim appeal promptly, but not later than 60 days after the receipt of the claimant's request for review, unless special circumstances (such as the need to hold a hearing) require an extension of time, in which case the 60 day period may be extended to 120 days. The Committee shall notify the claimant in writing of the extension. The decision on review will: (i) state the reasons for the decision, and (ii) contain references to pertinent Plan provisions upon which the decision is based. 13 39 ARTICLE 8 MISCELLANEOUS 8.01 AMENDMENT OR TERMINATION: The Employer reserves the right to amend or terminate this Plan or its Trust (including the ability to revoke the Trust, but subject to Plan Section 4.03) at any time, or from time to time, in any respect, retroactively or prospectively, by written instrument adopted by the Committee, provided, however, that any amendment to the Plan intended to change the level or type of benefits provided under the Plan (whether by increasing or decreasing such benefits) must be approved by a written instrument adopted by the Compensation Committee of the Board. No amendment or termination of the Plan shall reduce, diminish, or otherwise alter the right of a Participant or Beneficiary to benefits to which he or she was entitled, had the Participant terminated employment with the Employer on the day before the effective date of the amendment or termination. 8.02 SPENDTHRIFT PROVISIONS: Participants and Beneficiaries shall have no right of anticipation of any benefits hereunder, and may not sell, transfer, assign, pledge, attach, or otherwise alienate any benefits payable hereunder. Any such attempt at alienation shall be void, and not obligate the Employer, Committee, or Trustee, or their agents or designees, except to the extent provided for in this Plan. 8.03 NON-CONTRACTUAL PLAN: Nothing contained in this Plan shall be construed as a commitment or agreement on the part of the Employer to continue the employment of any person employed by the Employer; to continue the employment of any person employed by the Employer; to continue employment of any person at any rate of pay or salary; or diminish the right of the Employer to discharge any Employee. The provisions of this Plan shall not operate as a guarantee that sufficient assets will exist for the Employer to pay any benefits pursuant to this Plan. Participants shall be general creditors of the Employer with respect to benefits payable hereunder. 8.04 SEVERABILITY: To the extent that any provision of this Plan is deemed to be unenforceable, or would in any way cause this Plan to be subject to Parts 2, 3 or 4 of Title I of ERISA, it shall be deemed severed from this Plan, of no further force or effect, and shall not affect any other provision of this Plan which shall continue without the offending provision. 8.05 GOVERNING LAW: The provisions of this Plan shall be governed by the laws of the State of Indiana to the extent not preempted by federal law. 8.06 CORPORATE SUCCESSORS: This Plan shall not automatically be terminated upon the sale, transfer, merger, or other conveyance of the Employer to, or with, another entity, but shall survive unless amended or terminated pursuant to Section 8.01 of the Plan. 14 40 Executed on this the _____ day of March, 2003. THE COMMITTEE: Chief Financial Officer Controller Treasurer Sr. Vice President - Human Resources 15 41 SCHEDULE A Employees designated to be in the Plan as Group "A" Participants shall be administered within the parameters of this Schedule A. Schedule A is sometimes referred to as the Supplemental Executive Retirement Plan or "SERP". 1. ELIGIBILITY: Group A Participants are eligible to participate in the Plan effective January 1, 2001. Participants are not required to first contribute to the Qualified Plan to be eligible to defer in this Plan. 2. DEFERRAL LIMITS: Group A Participants may elect to defer no less than 1% nor more than 15% of each of his or her base salary and his or her Bonus Compensation into this Plan. 3. EMPLOYER MATCHING CONTRIBUTION: Until modified by the Committee or the Board, Group A Participants shall receive an Employer Matching Contribution each pay period in an amount equal to 50% of the amount deferred by the Group A Participant for such week. Fifty percent of the Employer Matching Contribution shall be Deemed to be invested Employer common stock; the remaining 50% shall be Deemed to be invested in accordance with Plan Section 4.04. 4. VESTING: Employer Contributions for Group A Participants shall vest according to the following, subject to Plan Section 5.01: Years of Service Percent Vested ---------------- -------------- 0-4 0% 5 or more 100% 42 SCHEDULE B Employees designated to be in the Plan as Group "B" Participants shall be administered within the following parameters of this Schedule B. Schedule B is sometimes referred to as the "Mirror Plan" or Excess Benefit Plan. 1. ELIGIBILITY: Group B Participants are eligible to Participate in the Plan effective January 1, 2001. Group B Participants must participate in the Qualified Plan up to the limitations prescribed by the Qualified Plan. 2. DEFERRAL LIMITS: Group B Participants may elect to defer no less than 1% nor more than 15% of each of his or her base salary and his or her Bonus Compensation into this Plan; provided, however, that the combined contributions between the Qualified Plan and this Plan may not exceed 20% of the Participant's Compensation. 3. EMPLOYER MATCHING CONTRIBUTION: Until modified by the Committee or the Board, Group B Participants shall receive an Employer Matching Contribution each pay period in an amount equal to 40% of the amount deferred by such Participant for such pay period, taking into account no more than 6% of such Participant's Compensation deferred through this Plan and the Qualified Plan for such pay period. Fifty percent of the Employer Matching Contribution shall be Deemed to be invested Employer common stock; the remaining 50% shall be Deemed to be invested in accordance with Plan Section 4.04. 4. VESTING: Employer Contributions for Group B Participants shall vest according to the following, subject to Plan Section 5.01: Years of Service Percent Vested ---------------- -------------- 1 20% 2 40% 3 60% 4 80% 5 100% 43 TABLE OF CONTENTS ARTICLE 1.............................................................................1 1.01 Purpose.................................................................1 1.02 Adoption of Plan........................................................1 ARTICLE 2.....................................................................1 2.01 Account..................................................................1 2.02 Affiliate................................................................1 2.03 Beneficiary..............................................................1 2.04 Bonus Compensation.......................................................2 2.05 Bonus Deferral Contributions.............................................2 2.06 Board....................................................................2 2.07 Change of Control........................................................2 2.08 COA Holding.............................................................2 2.09 Code....................................................................2 2.10 Committee................................................................3 2.11 Compensation.............................................................3 2.12 Deemed...................................................................3 2.13 Disability...............................................................3 2.14 Effective Date...........................................................3 2.15 Eligible Employee........................................................3 2.16 Employee.................................................................3 2.17 Employer.................................................................3 2.18 Employer Basic Contributions.............................................3 2.19 Employer Contribution....................................................3 2.20 Employer Matching Contributions..........................................3 2.21 Employer Special Contribution............................................3 i 44 2.22 Employment Commencement Date.............................................4 2.23 ERISA....................................................................4 2.24 Investment Fund..........................................................4 2.25 Normal Retirement Age....................................................4 2.26 Participant..............................................................4 2.27 Plan.....................................................................4 2.28 Plan Year................................................................4 2.29 Qualified Plan...........................................................4 2.30 Salary Reduction Agreement...............................................4 2.31 Salary Reduction Contribution............................................5 2.32 Service Provider.........................................................5 2.33 Trust....................................................................5 2.34 Trust Agreement..........................................................5 2.35 Trustee..................................................................5 2.36 Year of Service..........................................................5 ARTICLE 3.....................................................................5 3.01 Eligibility..............................................................5 3.02 Participation............................................................5 ARTICLE 4.....................................................................6 4.01 Contributions............................................................6 4.02 Participant Accounts.....................................................6 4.03 Rabbi Trust..............................................................6 4.04 Investments..............................................................7 4.05 Employer Stock...........................................................9 4.06 Provisions Upon a Change in Control......................................9 ARTICLE 5....................................................................10 5.01 Vesting.................................................................10 ii 45 5.02 Forfeitures.............................................................10 5.03 Non-vested Amounts......................................................10 ARTICLE 6....................................................................11 6.01 General.................................................................11 6.02 Payment Events..........................................................11 6.03 Form of Payment.........................................................12 6.04 Death Distributions.....................................................12 6.05 Valuation of Benefit Payments...........................................12 ARTICLE 7....................................................................12 7.01 Plan Administration.....................................................12 7.02 Committee Action........................................................12 7.03 Plan Rules and Regulations..............................................12 7.04 Determinations by Committee.............................................13 7.05 Plan Records............................................................13 7.06 Plan Expenses...........................................................13 7.07 Claim Procedure.........................................................13 7.08 Review Procedure........................................................13 ARTICLE 8....................................................................14 8.01 Amendment or Termination................................................14 8.02 Spendthrift Provisions..................................................14 8.03 Non-contractual Plan....................................................14 8.04 Severability............................................................14 8.05 Governing Law...........................................................14 8.06 Corporate Successors....................................................14 iii EX-99.1 4 coa10q103991.txt CEO CERTIFICATION 46 EXHIBIT 99.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 In connection with the Quarterly Report on Form 10-Q of Coachmen Industries, Inc. (the "Company") for the quarterly period ended March 31, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report") I, Claire C. Skinner, Chairman of the Board and Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that, based on my knowledge: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period(s) covered in the Report. By: /s/ Claire C. Skinner ------------------------------------------------- Claire C. Skinner Chairman of the Board and Chief Executive Officer Date: May 14, 2003 EX-99.2 5 coa10q103992.txt CFO CERTIFICATION 47 EXHIBIT 99.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 In connection with the Quarterly Report on Form 10-Q of Coachmen Industries, Inc. (the "Company") for the quarterly period ended March 31, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report") I, Joseph P. Tomczak, Executive Vice President and Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that , based on my knowledge: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period(s) covered in the Report. By: /s/ Joseph P. Tomczak --------------------------------------------------- Joseph P. Tomczak Executive Vice President and Chief Financial Officer Date: May 14, 2003 -----END PRIVACY-ENHANCED MESSAGE-----