-----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, G0wzCFPHaTEax3pgZHYx5avYcaKWoD+eMiaLsQos5vJ1R/azkZP8Pn+2yFQk+Id3 3NaGIUKRBW+LIN4YWVJnxQ== 0000950124-96-004446.txt : 19961023 0000950124-96-004446.hdr.sgml : 19961023 ACCESSION NUMBER: 0000950124-96-004446 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19961022 SROS: NYSE 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: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-14579 FILM NUMBER: 96646070 BUSINESS ADDRESS: STREET 1: 601 E BEARDSLEY AVE STREET 2: P O BOX 3300 CITY: ELKHART STATE: IN ZIP: 46514 BUSINESS PHONE: 2192620123 MAIL ADDRESS: STREET 1: 601 E BEARDSLEY AVE CITY: ELKHART STATE: IN ZIP: 46515 S-3 1 FORM S-3 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 22, 1996 REGISTRATION NO. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------------------ FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------------------ 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 No.)
601 EAST BEARDSLEY AVENUE ELKHART, INDIANA 46514 (219) 262-0123 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) GARY L. GROOM EXECUTIVE VICE PRESIDENT, FINANCE AND SECRETARY COACHMEN INDUSTRIES, INC. 601 EAST BEARDSLEY AVENUE ELKHART, INDIANA 46514 (219) 262-0123 (Name, address, including zip code, and telephone number, including area code, of agent for service) ------------------------ Copy to: John H. McDermott Jonathan K. Layne William J. Quinlan, Jr. Gibson, Dunn & Crutcher LLP McDermott, Will & Emery 333 South Grand Avenue 227 West Monroe Street Los Angeles, California Chicago, Illinois 60606-5096 90071 (312) 372-2000 (213) 229-7000
------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. ------------------------ If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / / If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. / / If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / ------------------ - ------------------ If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / - ------------------ If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / ------------------------ CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------- PROPOSED PROPOSED AMOUNT MAXIMUM MAXIMUM AMOUNT OF TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE FEE - --------------------------------------------------------------------------------------------------------------------- Common Stock, without par value(2)......... 1,725,000 shares(3) $27.9375 $48,192,187.50 $14,604 - --------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------
(1) Estimated solely for purposes of calculating the amount of the registration fee pursuant to Rule 457(c) of the Securities Act of 1933, based on the average of the high and low sales price of a share of Common Stock of the Registrant on the New York Stock Exchange as reported in the consolidated reporting system on October 16, 1996. (2) There are also being registered hereunder an equal number of common share purchase rights, which are currently attached to and transferable only with the shares of Common Stock registered hereby. (3) Includes up to 225,000 shares which may be purchased by the Underwriters to cover over-allotments, if any. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED OCTOBER 22, 1996 1,500,000 SHARES COA LOGO COACHMEN INDUSTRIES, INC. COMMON STOCK ------------------------ All 1,500,000 shares of Common Stock offered hereby are being sold by Coachmen Industries, Inc. (the "Company"). The Company's Common Stock is listed on the New York Stock Exchange and trades under the symbol "COA." The last reported sale price of the Common Stock on the New York Stock Exchange on October 21, 1996 was $28.125 per share. SEE "INVESTMENT CONSIDERATIONS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED HEREBY. ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO PUBLIC DISCOUNT (1) COMPANY (2) - ---------------------------------------------------------------------------------------------------- Per Share.................................... $ $ $ Total (3).................................... $ $ $
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (1) See "Underwriting" for information concerning indemnification of the Underwriters and other information. (2) Before deducting offering related expenses payable by the Company estimated at $315,000. (3) The Company has granted the Underwriters an option, exercisable within 30 days of the date hereof, to purchase up to an aggregate of 225,000 additional shares of Common Stock at the Price to Public per share, less the Underwriting Discount, for the purpose of covering over-allotments, if any. If the Underwriters exercise such option in full, the Price to Public, Underwriting Discount and Proceeds to Company will be $ , $ and $ , respectively. See "Underwriting." ------------------------ The shares of Common Stock are offered by the Underwriters when, as and if received and accepted by them, subject to their right to withdraw, modify, cancel or reject orders in whole or in part and subject to certain other conditions. It is expected that delivery of certificates representing the shares will be made against payment on or about , 1996 at the offices of Oppenheimer & Co., Inc., Oppenheimer Tower, World Financial Center, New York 10281. ------------------------ [OPPENHEIMER & CO., INC. LOGO] Oppenheimer & Co., Inc. The date of this Prospectus is , 1996 3 [Picture of Coachmen Catalina Travel Trailer] [Picture of Shasta Class C Mini Motorhome] [Picture of Chevy Express Van Conversion by [Picture of Georgie Boy Cruise Air Class A Coachmen Vans] Motorhome] [Picture of Shasta Fifth Wheel Travel Trailer] [Picture of The Charleston by All American Homes--Modular Home]
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET, OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. 2 4 AVAILABLE INFORMATION Coachmen Industries, Inc. ("Coachmen" or the "Company") is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith, files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements, the registration statement related to this offering and other information filed by the Company may be inspected and copied at the public reference facilities of the Commission located at 450 Fifth Street N.W., Washington D.C. 20549 and at the Commission's regional offices located at Seven World Trade Center, Suite 1300, New York, New York 10048 and at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can also be obtained at prescribed rates from the Public Reference Section of the Commission at 450 Fifth Street, N.W. Washington, D.C. 20549. In addition, reports, proxy statements and other information filed by the Company may be inspected at the offices of the New York Stock Exchange (the "NYSE") upon which the Common Stock of the Company is traded. The Commission maintains a Web site that contains reports, proxy statements and other information that has been filed electronically by the Company with the Commission. The address of the Commission's Web site is http://www.sec.gov. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents have been filed with the Commission (File No. 1-7160) pursuant to the Exchange Act and are incorporated herein by reference and made a part of this Prospectus: 1. The Company's Annual Report on Form 10-K for the year ended December 31, 1995; 2. The Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1996, June 30, 1996 and September 30, 1996; 3. The Company's Current Report on Form 8-K dated August 6, 1996; 4. Description of the Company's Common Stock contained in the Company's Registration Statement on Form 8-A; and 5. Description of the Company's Common Share Purchase Rights contained in the Company's Registration Statement on Form 8-A. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Company's common stock (the "Common Stock") shall be deemed to be incorporated herein by reference and made a part of this Prospectus from the respective filing dates of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge a copy of any and all information that has been incorporated by reference in the Registration Statement of which this Prospectus is a part (other than exhibits to such information, unless such exhibits are specifically incorporated by reference into such information) upon written or oral request to the Company at its headquarters, 601 East Beardsley Avenue, Elkhart, Indiana 46514, attention: Secretary (telephone number: 219-262-0123). 3 5 PROSPECTUS SUMMARY The following summary is qualified in its entirety by the information appearing elsewhere in this Prospectus and in the documents and financial statements included and incorporated herein by reference. Unless otherwise indicated, the information in this Prospectus does not give effect to the exercise of the Underwriters' over-allotment option described under "Underwriting." All share and per share data have been retroactively adjusted to give effect to a two-for-one stock split effective August 28, 1996. THE COMPANY Coachmen is one of the largest full-line producers of recreational vehicles and is the largest builder of modular homes in the country. The Company's recreational vehicles ("RVs") are marketed under various brand names including Coachmen, Shasta and Viking through approximately 1,200 independent dealers located in 49 states and internationally and six Company-owned dealerships. In 1995, according to the Recreational Vehicle Industry Association ("RVIA"), RV manufacturers shipped approximately 247,000 units having an aggregate retail value of approximately $6 billion. The Company's market share as measured by wholesale unit shipments grew from 5.7% in 1992 to 7.5% in 1995. Modular homes are manufactured by the Company's All American Homes operation which sells homes through approximately 300 builder/dealers. Recreational vehicles are either driven or towed and serve as temporary living quarters for camping, travel and other leisure activities. Recreational vehicles may be categorized as motorhomes, travel trailers, camping trailers or truck campers. A motorhome is a self-powered mobile dwelling built on a special heavy duty chassis. A travel trailer is a mobile dwelling designed to be towed behind another vehicle. Camping trailers are smaller towed units constructed with sidewalls that may be raised up and folded out. Truck campers are designed to be mounted on the bed of a pickup truck. The Company also produces a number of parts and supplies for the RV and other related industries. These components, which are used in the Company's products as well as sold to other RV manufacturers, include van tops, running boards and furniture. In addition, the Company has developed a line of ergonomically designed office chairs. The Company manufactures RVs and related components in Indiana, Michigan, Georgia and Oregon. The Company's factory-produced modular homes are designed to serve as permanent living quarters and are constructed on a conventional wood floor system, similar to those used in traditional site-built houses. Modular homes are transported on special carriers to a permanent location where the home is usually set by crane on a basement or crawl space foundation. The Company's modular homes are produced on an assembly line basis in plants located in Indiana, Iowa, North Carolina and Tennessee. The table below sets forth the composition of the Company's net sales for each of the last three years and the nine months ended September 30, 1995 and 1996 (dollar amounts in thousands):
YEAR ENDED DECEMBER 31, NINE MONTHS -------------------------------------------------- ENDED SEPTEMBER 30, -------------------------------- 1993 1994 1995 -------------- -------------- -------------- 1995 1996 -------------- -------------- Vehicles: Motorhomes............. $159,057 48% $177,583 45% $279,917 54% $213,313 55% $255,990 55% Travel Trailers........ 67,999 21 98,147 25 102,229 20 79,185 20 93,796 20 Camping Trailers....... 9,757 3 10,764 3 12,728 2 10,495 2 15,559 3 Truck Campers.......... 3,512 1 3,117 1 3,748 1 3,293 1 2,011 -- Parts and Supplies..... 25,724 8 31,397 8 33,991 7 25,961 7 30,625 7 Ambulances............. 15,035 4 6,423 1 -- -- -- -- -- -- -------- --- -------- --- -------- --- -------- --- -------- --- Total Vehicles....... 281,084 85 327,431 83 432,613 84 332,247 85 397,981 85 Housing.................. 48,427 15 66,593 17 83,249 16 58,689 15 71,618 15 -------- --- -------- --- -------- --- -------- --- -------- --- Total.............. $329,511 100% $394,024 100% $515,862 100% $390,936 100% $469,599 100% ======== === ======== === ======== === ======== === ======== ===
4 6 INDUSTRY DEMOGRAPHICS The industry is currently experiencing favorable demographic trends. According to a 1994 University of Michigan study sponsored by the RVIA (the "Michigan Study"), approximately 8.2 million households owned RVs (including van conversions) in 1993, up from 7.7 million households in 1988 and 5.8 million households in 1980. Recreational vehicles are purchased by adults in all age ranges, but the highest market penetration is with those in the 50 to 65 age group. While the average RV owner is 48 years old, the typical motorhome and travel trailer owners are 63 and 52 years old, respectively. According to the Census Bureau of the U.S. Department of Commerce, the number of Americans aged 55 to 64 years old is projected to grow 12.1% from 1993 through the year 2000 compared to 7.1% for the overall population. Baby Boomers are defined as those born between the years 1946 and 1964, thus the leading edge of the Baby Boom generation began turning 50 years of age in 1996. As Baby Boomers enter and travel through the important 50 to 65 age group for RV sales, they represent the potential for a secular uptrend in the RV industry. BUSINESS STRATEGY The Company's business strategy is to consistently grow its earnings by remaining focused primarily on the two major industries it currently serves: RVs and housing. Management also intends to grow its parts and supply businesses, which manufacture products related to the RV and similar industries. The Company's objective is to reduce the impact of the cyclical nature of its RV and modular home businesses by (i) emphasizing its long-standing reputation for quality and customer service, and (ii) utilizing its financial strength to opportunistically acquire other businesses, thereby increasing its market share as a means of providing consistent earnings growth. The Company seeks to increase its market share in both the RV and the modular housing industries through growth in existing operations as well as through strategic acquisitions and new plant openings. THE OFFERING Common Stock Offered by the Company................ 1,500,000 shares Common Stock Outstanding After the Offering........ 16,603,780 shares Use of Proceeds.................................... For general corporate purposes, including working capital requirements, expenditures for plant and equipment, and the potential acquisition of compatible businesses New York Stock Exchange Symbol..................... COA
5 7 SUMMARY CONSOLIDATED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
NINE MONTHS ENDED YEAR ENDED DECEMBER 31, SEPTEMBER 30, CONSOLIDATED INCOME STATEMENT ---------------------------------------------------- ------------------------- DATA: 1991 1992 1993 1994(1) 1995(2) 1995(2) 1996 -------- -------- -------- -------- -------- -------- -------------- Net sales..................... $231,368 $292,790 $329,511 $394,024 $515,862 $390,936 $469,599 Cost of goods sold............ 205,192 250,609 281,822 335,567 444,627 337,752 401,329 -------- -------- -------- -------- -------- -------- -------- Gross profit.............. 26,176 42,181 47,689 58,457 71,235 53,184 68,270 -------- -------- -------- -------- -------- -------- -------- Operating expenses: Selling and delivery........ 19,180 19,041 19,232 20,080 25,593 19,586 20,545 General and administrative............ 19,843 15,302 15,789 15,877 18,983 14,429 16,152 -------- -------- -------- -------- -------- -------- -------- 39,023 34,343 35,021 35,957 44,576 34,015 36,697 -------- -------- -------- -------- -------- -------- -------- Operating income (loss)... (12,847) 7,838 12,668 22,500 26,659 19,169 31,573 -------- -------- -------- -------- -------- -------- -------- Nonoperating income (expense): Interest expense............ (3,573) (2,917) (2,028) (1,481) (3,142) (2,306) (1,239) Interest income............. 495 435 474 667 1,306 891 979 Gain on sale of properties, net....................... 2,362 402 225 889 793 786 728 Other, net.................. 282 2,504 1,357 237 2,341 714 958 -------- -------- -------- -------- -------- -------- -------- (434) 424 28 312 1,298 85 1,426 -------- -------- -------- -------- -------- -------- -------- Income (loss) before income taxes and cumulative effect of accounting change....... (13,281) 8,262 12,696 22,812 27,957 19,254 32,999 Income taxes.................. 153 125 -- 8,028 10,408 7,155 12,024 -------- -------- -------- -------- -------- -------- -------- Income (loss) before cumulative effect of accounting change....... (13,434) 8,137 12,696 14,784 17,549 12,099 20,975 Cumulative effect of accounting change........... -- -- -- -- -- -- 2,294 -------- -------- -------- -------- -------- -------- -------- Net income (loss)......... $(13,434) $ 8,137 $ 12,696 $ 14,784 $ 17,549 $ 12,099 $ 23,269 ======== ======== ======== ======== ======== ======== ======== Weighted average number of shares of Common Stock outstanding(3).............. 14,327 14,362 14,608 14,744 14,882 14,871 15,029 ======== ======== ======== ======== ======== ======== ======== Net income (loss) per share of Common Stock(3)............. $ (.94) $ .57 $ .87 $ 1.00 $ 1.18 $ .81 $ 1.55 ======== ======== ======== ======== ======== ======== ======== Cash dividends per share of Common Stock(3)............. $ .04 $ .04 $ .095 $ .12 $ .14 $ .105 $ .135 ======== ======== ======== ======== ======== ======== ========
SEPTEMBER 30, 1996 ------------------------- CONSOLIDATED BALANCE SHEET DATA: ACTUAL AS ADJUSTED(4) -------- -------------- Working capital............................................................. $ 70,509 $110,340 Total assets................................................................ 187,919 227,750 Long-term debt.............................................................. 10,260 10,260 Shareholders' equity........................................................ 113,321 153,152
- ------------------------- (1) The operating assets and business of the North Carolina division of Muncy Building Enterprises, L.P. were acquired on September 23, 1994, and certain assets and the business of Southern Ambulance Builders, Inc., were sold on April 29, 1994. See Note 9 of Notes to Consolidated Financial Statements. (2) Georgie Boy Mfg., Inc. was acquired on January 3, 1995. See Note 9 of Notes to Consolidated Financial Statements. (3) All share and per share data have been retroactively adjusted to give effect to a two-for-one stock split effective August 28, 1996. (4) Adjusted to give effect to this offering and the application of the net proceeds therefrom. See "Use of Proceeds." 6 8 CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION Certain statements contained in this Prospectus, such as those concerning the Company's business strategy, the expected future demand for RVs and modular housing, capital requirements and other statements regarding matters that are not historical facts are forward looking statements (as such term is defined in the rules promulgated pursuant to the Securities Act of 1933, as amended (the "Securities Act")). Because such forward looking statements include risks and uncertainties, actual results may differ materially from those expressed in or implied by such forward looking statements. Factors that could cause actual results to differ materially include, but are not limited to, those discussed herein under "Investment Considerations," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business." The Company undertakes no obligation to release publicly the results of any revisions to these forward looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. INVESTMENT CONSIDERATIONS Prospective investors should read the entire Prospectus carefully and should consider, among other things, the investment considerations set forth below. CYCLICALITY OF BUSINESS; POTENTIAL FLUCTUATIONS IN OPERATING RESULTS The RV and housing industries are highly cyclical. Companies within these industries are subject to volatility in operating results due to external factors such as economic, demographic and political changes. These factors include fuel availability and fuel prices, overall consumer confidence and general economic conditions, the level of discretionary consumer spending, interest rates and unemployment. In addition, the Company's future sales and operating results could fluctuate significantly from period to period due to factors such as competition, the number of dealers, the mix of RVs sold, the ability to utilize manufacturing resources efficiently, the timing of trade shows and rallies, the introduction and consumer acceptance of new models and designs by the Company and its competitors, the availability of alternative housing, population growth and population aging. Due to the relatively high selling prices of the Company's products, small variations in the number of RVs and modular houses sold in any quarter can have a significant effect on sales and operating results for that quarter. Accordingly, the results for any prior period may not be indicative of results for any future period. Seasonal factors, over which the Company has no control, also have an effect on the demand for the Company's products. Demand in the RV and modular housing industries generally declines during the winter season, while sales and profits are generally highest during the spring and summer months. In addition, unusually severe weather conditions in certain markets could delay the timing of shipments from one quarter to another. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." POTENTIAL LIABILITIES UNDER REPURCHASE AGREEMENTS The Company, as is common in the RV industry, enters into repurchase agreements with the lending institutions which finance dealer purchases of the Company's RV products. These agreements obligate the Company, under certain circumstances, to repurchase its products in the dealer's inventory in the event of a default by the dealer to its lender. If the Company were obligated to repurchase a substantial number of vehicles in the future, it could result in losses and could reduce new vehicle sales. See Note 10 of Notes to Consolidated Financial Statements for the years ended December 31, 1993, 1994 and 1995. AVAILABILITY AND PRICE OF GASOLINE Many RVs produced by the Company require gasoline for their operation. Gasoline has, at various times in the past, been difficult to obtain, and there can be no assurance that the supply of gasoline will continue uninterrupted, that rationing will not be imposed or that the price of, or tax on, gasoline will not significantly increase in the future. Shortages of gasoline and significant increases in gasoline prices have had a substantial adverse effect on the demand for RVs in the past and could have a material adverse effect on demand in the future. 7 9 COMPETITION The markets for RVs and modular housing are highly competitive, and the Company has numerous competitors and potential competitors in these industries. Some of these competitors have greater financial and other resources than the Company. Initial capital requirements for entry into the manufacture of RVs and modular housing are relatively small. There can be no assurance that either existing or new competitors will not develop products that are superior to the Company's or that achieve better consumer acceptance, or that the Company will continue to remain competitive. See "Business -- Competition." POTENTIAL CHANGES IN CONSUMER PREFERENCES; NEW PRODUCT INTRODUCTIONS There can be no assurance that historical consumer preferences for RVs in general and for the Company's products in particular will remain unchanged. The Company believes that, with respect to its RV operations, the introduction of new features and new models will be critical to its future success. Delays in the introduction of new models or product features or a lack of market acceptance of new models or features could have a material adverse effect on the Company's business. There also can be no assurance that product introductions in the future will not disrupt revenues from existing models and adversely affect operating results. DEPENDENCE ON CERTAIN SUPPLIERS The chassis for the Company's RVs are purchased from a limited number of manufacturers. Chassis availability, from time to time, has constrained the Company's production and no assurances can be given this will not occur in the future. Limited chassis availability in the future could have a material adverse effect on the Company's sales and operating results. See "Business -- Recreational Vehicles -- Production and Distribution." ENVIRONMENTAL REGULATION The Company's RV and modular housing operations are subject to a variety of federal and state environmental regulations relating to the use, generation, storage, treatment, emission, and disposal of hazardous materials and wastes and noise pollution. Such laws and regulations are becoming more stringent, and it is likely that future amendments to these environmental statutes and additional regulations promulgated thereunder will be applicable to the Company, its manufacturing operations and its products in the future. The failure of the Company to comply with present or future regulations could result in fines being imposed on the Company, potential civil and criminal liability, suspension of production or operations, alterations to the manufacturing process or costly cleanup or capital expenditures. REGULATORY MATTERS The Company, its products and its manufacturing operations are subject to a variety of federal, state and local regulations, including the National Traffic and Motor Vehicle Safety Act, and numerous state consumer protection laws and regulations relating to the operation of motor vehicles, including so-called "Lemon Laws." Amendments to these regulations and the implementation of new regulations could significantly increase the costs of manufacturing, purchasing, operating or selling the Company's products and could have a material adverse effect on the Company's sales and operating results. The failure of the Company to comply with present or future regulations could result in fines being imposed on the Company, potential civil and criminal liability, suspension of sales or production or cessation of operations. Certain U.S. tax laws currently afford favorable tax treatment for the purchase and sale of RVs which are financed through mortgage borrowings. These laws and regulations have historically been amended frequently, and it is likely that further amendments and additional regulations will be applicable to the Company and its products in the future. Amendments to these laws and regulations and the implementation of new regulations could have a material adverse effect on the Company. The Company is subject to regulations which may require the Company to recall products with design or safety defects. Product defects may also result in a large number of product liability or warranty claims. The Company's operating results could be materially and adversely affected by a major product recall or if warranty or product liability claims in any period exceed accrued liabilities for future warranty claims. 8 10 The Company's modular housing operations are subject to a variety of federal, state and local laws and building and zoning codes. Amendments to these laws and codes and the implementation of new regulations could significantly increase the costs of manufacturing, purchasing, operating or selling the Company's modular homes and could have a material adverse effect on the Company's sales of these products. The failure of the Company to comply with present or future regulations could result in fines being imposed on the Company, potential civil and criminal liability, suspension of production or cessation of operations. The manufactured housing industry is an indirect competitor of the Company's modular housing business. At present, the manufactured housing industry is subject to U.S. Department of Housing and Urban Development ("HUD") building regulations which require that manufactured homes be constructed on steel frames, whereas the Company's modular homes are constructed with conventional wood floor systems. Lobbyists for the manufactured housing industry are actively trying to amend the HUD regulations to permit the use of conventional wood floor systems in manufactured homes. To the extent that this lobbying effort is successful, the Company will be subject to increased competition from and may lose market share to the manufactured housing industry. LEGAL MATTERS The Company has from time to time been subject to product liability claims, although no material litigation is currently pending against the Company. To date, the Company has been successful in obtaining product liability insurance on terms the Company considers acceptable. The Company's current policies jointly provide coverage against claims based on occurrences within the policy periods up to a maximum of $27 million for each occurrence and $27 million in the aggregate. In addition, the Company self insures for the first $250,000 to $500,000 per product liability claim and for worker's compensation. There can be no assurance that the Company will be able to obtain insurance coverage in the future at acceptable levels or that the costs of insurance will be reasonable. Furthermore, successful assertion against the Company of one or a series of large uninsured claims, or of one or a series of claims exceeding the applicable insurance coverage, could have a material adverse effect on the Company's operating results and financial condition. POSSIBLE VOLATILITY OF STOCK PRICE The market price of the Company's Common Stock has been and may continue to be subject to wide fluctuations in response to quarter-to-quarter variations in operating results, changes in earnings estimates by analysts, announcements of new products by the Company or its competitors, general conditions in the RV and modular housing markets, general economic and political conditions, general stock market conditions and other events or factors. In addition, the stocks of many publicly held RV and modular housing companies have in the past experienced price and volume fluctuations which have not necessarily been directly related to such companies' operating performance, and the market price of the Company's Common Stock has experienced and may in the future experience similar fluctuations. ANTI-TAKEOVER PROVISIONS The Company's shareholder rights plan provides for a bundling of common share purchase rights with all issuances of Common Stock. These common share purchase rights could delay or prevent a change in control of the Company or could impede a merger, consolidation, takeover or other business combination involving the Company or discourage a potential acquiror from making a tender offer or otherwise attempting to obtain control of the Company. See "Description of Common Stock -- Shareholder Rights Plan." The Company's bylaws contain a 60 day notice provision for director nominations. This provision allows nominations for the election of directors to be made by the Board of Directors or by any stockholder entitled to vote for the election of directors. Such nominations must be made by notice in writing not less than 60 days prior to any meeting of the stockholders called for the election of directors. This notice provision could delay or prevent a change in control of the Company or could impede a merger, consolidation, takeover or other business combination involving the Company or discourage a potential acquiror from making a tender offer or otherwise attempting to obtain control of the Company. 9 11 USE OF PROCEEDS The Company estimates that the net proceeds from the sale of the Common Stock offered hereby (after deducting the underwriting discount and the estimated offering expenses) will be $39,831,000. The Company intends to use such proceeds, together with cash on hand, for general corporate purposes, including working capital requirements and expenditures for plant and equipment. Such proceeds may also be used for the acquisition of compatible businesses. To date, the Company has no understandings, arrangements or agreements with respect to any acquisitions. DIVIDEND POLICY The Company has paid a quarterly cash dividend since the fourth quarter of 1982. The most recent quarterly cash dividend was $0.05 per share and was declared on July 17, 1996. It is presently the intent of the Company to retain a substantial portion of its earnings for general corporate purposes, including business expansion, and for possible acquisitions. The declaration and payment of future dividends will be at the sole discretion of the Board of Directors and will depend on the Company's profitability, financial condition, capital needs, future prospects and other factors deemed relevant by the Board of Directors. CAPITALIZATION The table below sets forth cash and temporary cash investments, current maturities of long-term debt and total capitalization of the Company at September 30, 1996, and as adjusted to give effect to the sale of the 1,500,000 shares of Common Stock offered hereby, and the application of the estimated proceeds therefrom. See "Use of Proceeds."
SEPTEMBER 30, 1996 ----------------------- ACTUAL AS ADJUSTED -------- ----------- (IN THOUSANDS) Cash and temporary cash investments.................................... $ 26,853 $ 66,684 ======== ======== Current maturities of long-term debt................................... $ 2,109 $ 2,109 ======== ======== Long-term debt......................................................... $ 10,260 $ 10,260 Total shareholders' equity............................................. 113,321 153,152 -------- -------- Total capitalization.............................................. $123,581 $ 163,412 ======== ========
PRICE RANGE OF COMMON STOCK The Company's Common Stock is listed on the NYSE (stock symbol -- COA). The following table sets forth for the quarters indicated the high and low composite per share sales prices as reported by the NYSE.
HIGH LOW --------------- --------------- 1994: First quarter........................................................... $ 9 3/16 $ 7 1/4 Second quarter.......................................................... 8 15/16 6 1/4 Third quarter........................................................... 7 5/8 5 7/8 Fourth quarter.......................................................... 7 13/16 5 7/8 1995: First quarter........................................................... $ 9 3/16 $ 7 7/16 Second quarter.......................................................... 9 1/4 6 11/16 Third quarter........................................................... 8 13/16 7 1/16 Fourth quarter.......................................................... 11 13/16 8 1/16 1996: First quarter........................................................... $13 7/8 $ 9 7/16 Second quarter.......................................................... 19 9/16 12 7/8 Third quarter........................................................... 26 3/4 15 3/8 Fourth quarter(1)....................................................... 28 1/2 24 5/8
- ------------------------- (1) Through October 21, 1996 10 12 SELECTED CONSOLIDATED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) The selected consolidated financial data set forth below for the years ended December 31, 1991, 1992, 1993, 1994 and 1995, have been derived from the Company's consolidated financial statements for such years which have been audited by Coopers & Lybrand L.L.P., independent accountants. The selected consolidated financial data for the nine months ended September 30, 1995 and 1996, have been derived from the Company's unaudited consolidated financial statements and contain all adjustments necessary for a fair presentation of such financial information. The data set forth below should be read in conjunction with the Consolidated Financial Statements and Condensed Consolidated Financial Statements and the notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this Prospectus.
NINE MONTHS ENDED YEAR ENDED DECEMBER 31, SEPTEMBER 30, CONSOLIDATED INCOME STATEMENT ---------------------------------------------------- ------------------------- DATA: 1991 1992 1993 1994(1) 1995(2) 1995(2) 1996 -------- -------- -------- -------- -------- -------- -------------- Net sales..................... $231,368 $292,790 $329,511 $394,024 $515,862 $390,936 $469,599 Cost of goods sold............ 205,192 250,609 281,822 335,567 444,627 337,752 401,329 -------- -------- -------- -------- -------- -------- -------- Gross profit.............. 26,176 42,181 47,689 58,457 71,235 53,184 68,270 -------- -------- -------- -------- -------- -------- -------- Operating expenses: Selling and delivery........ 19,180 19,041 19,232 20,080 25,593 19,586 20,545 General and administrative............ 19,843 15,302 15,789 15,877 18,983 14,429 16,152 -------- -------- -------- -------- -------- -------- -------- 39,023 34,343 35,021 35,957 44,576 34,015 36,697 -------- -------- -------- -------- -------- -------- -------- Operating income (loss)... (12,847) 7,838 12,668 22,500 26,659 19,169 31,573 -------- -------- -------- -------- -------- -------- -------- Nonoperating income (expense): Interest expense............ (3,573) (2,917) (2,028) (1,481) (3,142) (2,306) (1,239) Interest income............. 495 435 474 667 1,306 891 979 Gain on sale of properties, net....................... 2,362 402 225 889 793 786 728 Other, net.................. 282 2,504 1,357 237 2,341 714 958 -------- -------- -------- -------- -------- -------- -------- (434) 424 28 312 1,298 85 1,426 -------- -------- -------- -------- -------- -------- -------- Income (loss) before income taxes and cumulative effect of accounting change....... (13,281) 8,262 12,696 22,812 27,957 19,254 32,999 Income taxes.................. 153 125 -- 8,028 10,408 7,155 12,024 -------- -------- -------- -------- -------- -------- -------- Income (loss) before cumulative effect of accounting change....... (13,434) 8,137 12,696 14,784 17,549 12,099 20,975 Cumulative effect of accounting change........... -- -- -- -- -- -- 2,294 -------- -------- -------- -------- -------- -------- -------- Net income (loss)......... $(13,434) $ 8,137 $ 12,696 $ 14,784 $ 17,549 $ 12,099 $ 23,269 ======== ======== ======== ======== ======== ======== ======== Weighted average number of shares of Common Stock outstanding(3).............. 14,327 14,362 14,608 14,744 14,882 14,871 15,029 ======== ======== ======== ======== ======== ======== ======== Net income (loss) per share of Common Stock(3)............. $ (.94) $ .57 $ .87 $ 1.00 $ 1.18 $ .81 $ 1.55 ======== ======== ======== ======== ======== ======== ======== Cash dividends per share of Common Stock(3)............. $ .04 $ .04 $ .095 $ .12 $ .14 $ .105 $ .135 ======== ======== ======== ======== ======== ======== ========
DECEMBER 31, SEPTEMBER 30, 1996 CONSOLIDATED BALANCE SHEET ---------------------------------------------------- ------------------------- DATA: 1991 1992 1993 1994 1995 ACTUAL AS ADJUSTED(4) -------- -------- -------- -------- -------- -------- -------------- Working capital............... $ 16,113 $ 26,071 $ 38,250 $ 51,334 $ 60,558 $ 70,509 $110,340 Total assets.................. 86,489 88,836 94,736 125,021 150,249 187,919 227,750 Long-term debt................ 6,807 5,336 3,750 7,023 12,118 10,260 10,260 Shareholders' equity.......... 40,459 48,589 61,006 74,756 91,037 113,321 153,152
- ------------------------- (1) The operating assets and business of the North Carolina division of Muncy Building Enterprises, L.P. were acquired on September 23, 1994, and certain assets and the business of Southern Ambulance Builders, Inc., were sold on April 29, 1994. See Note 9 of Notes to Consolidated Financial Statements. (2) Georgie Boy Mfg., Inc. was acquired on January 3, 1995. See Note 9 of Notes to Consolidated Financial Statements. (3) All share and per share data have been retroactively adjusted to give effect to a two-for-one stock split effective August 28, 1996. (4) Adjusted to give effect to this offering and the application of the net proceeds therefrom. See "Use of Proceeds." 11 13 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the Selected Consolidated Financial Data, the Consolidated Financial Statements for the Years Ended December 31, 1993, 1994 and 1995 and the Condensed Consolidated Financial Statements for the Nine Months Ended September 30, 1995 and 1996, appearing elsewhere herein. OVERVIEW The Company was founded in 1964 as a manufacturer of RVs and began manufacturing modular homes in 1982. Since that time, the Company has evolved into a market leader in both business segments through a combination of internal growth and strategic acquisitions. As part of its continuing effort to focus on its two core businesses, the Company acquired in January 1995 the third largest Class A motorhome producer, Georgie Boy Mfg., Inc. (the "Georgie Boy Acquisition"), which more than doubled the Company's market share in this sector of the motorized RV market. In September 1994, the Company acquired the assets of a modular home business, the North Carolina division of Muncy Building Enterprises, L.P. (the "North Carolina Acquisition"), which enabled the Company to enter a new geographic market, resulting in an increase in overall market share. The Company's new plant openings have been an important component of its internal growth strategy. In May 1995, the Company opened a new modular housing plant in Tennessee (the "Tennessee Plant Opening"). In February 1996, the Company further increased its market share by opening a new fifth wheel and conventional travel trailer plant in Oregon (the "Oregon Plant Opening"). The Company plans to open an additional travel trailer plant in Indiana in December 1996 to capitalize on the growing market share of the value-priced travel trailer segment of its RV business. The Company's business segments are cyclical and subject to certain seasonal demand cycles and changes in general economic and political conditions. See "Investment Considerations." Demand in the RV and modular housing industries generally declines during the winter season, while sales and profits are generally highest during the spring and summer months. Inflation and changing prices have had minimal direct impact on the Company in the past in that selling prices and material costs have generally followed the rate of inflation. RESULTS OF OPERATIONS Comparison of the Nine Months Ended September 30, 1996 to the Nine Months Ended September 30, 1995. Consolidated net sales increased $78.7 million, or 20.1% to $469.6 million during the first nine months of 1996 from $390.9 million during the first nine months of 1995. The Company's vehicle segment, which includes the parts and supply group of companies, experienced a net sales increase of 19.8% while the housing segment had a net sales increase of 22.0%. Both vehicles and housing experienced increases in unit sales and in the average sales price per unit during the 1996 period. Gross profit for the first nine months of 1996 increased to $68.3 million, or 14.5% of net sales, from $53.2 million and 13.6% of net sales in the first nine months of 1995. The increase in gross profit was primarily due to the net sales increase in the first nine months of 1996 from the corresponding period in 1995. The increase in the gross profit percentage represents the spreading of fixed costs over higher production volume. The housing segment continued experiencing lower gross margins associated with the North Carolina Acquisition and the Tennessee Plant Opening. As a percentage of net sales, operating expenses, which include selling, delivery, general and administrative expenses, were 7.8% and 8.7% for the first nine months of 1996 and 1995. Selling expenses for the 1996 period represented a decrease of 0.6%, primarily resulting from increased demand for the Company's products. As a percentage of net sales, delivery expenses remained relatively unchanged. General and administrative expenses were 3.4% of net sales for the nine months compared to 3.7% in 1995 due to an increase in net sales. General and administrative expenses increased during the 1996 period due to increased incentive compensation earned as a result of increased profits. 12 14 Interest expense for the first nine months of 1996 decreased to $1.2 million, or 0.3% of net sales, from $2.3 million, or 0.6% of net sales, for the first nine months of 1995, primarily as a result of a change to the cash surrender value method of accounting for the Company's investment in life insurance contracts. These life insurance contracts were purchased to fund obligations under deferred compensation agreements with executives and other key employees. The interest costs associated with deferred compensation obligations and with the borrowings against the cash value of the insurance policies are now partially offset by the increases in cash surrender values each accounting period. Previously, the increases in cash surrender values were not recognized, since the investment in life insurance contracts consisted only of the capitalized insurance premiums. Interest income for the first nine months of 1996 increased to $1.0 million from $0.9 million for the comparable period in 1995, primarily due to the amounts of cash and temporary cash investments in 1996 versus 1995. Increases in cash and temporary cash investments were primarily generated from operating activities. Net gain on the sale of properties decreased to $728,000 for the first nine months of 1996 from $786,000 for the first nine months of 1995. This variance is the result of the amount of gain recognized upon the disposition of various small properties. Assets are continually analyzed and every effort is made to sell or dispose of properties that are determined to be unproductive. Other income, net, represents income of $1.0 million for the 1996 nine months compared to income of $0.7 million for the 1995 nine months. The most significant variance was due to a final determination of insurance proceeds from assets destroyed in a fire which consumed the Company's Prodesign production facility in August 1995. Income taxes for the first nine months of 1996 increased to $12.0 million, or 2.6% of net sales, from $7.2 million, or 1.8% of net sales, for the first nine months of 1995. The 1996 effective tax rate was 36.4% compared to 37.2% in 1995. The decrease in the effective tax rate for 1996 is attributable to an increase in nontaxable income in 1996. Net income for the nine months ended September 30, 1996 was $23.3 million compared to $12.1 million for the nine months ended September 30, 1995, which includes the $2.3 million cumulative effect of an accounting change. See Note C of Notes to Condensed Consolidated Financial Statements for the nine months ended September 30, 1995 and 1996. Comparison of the Year Ended December 31, 1995 to the Year Ended December 31, 1994 Consolidated net sales for 1995 were $515.9 million, an increase of 30.9% over $394.0 million reported in 1994. The Company's RV segment, which includes the parts and supply businesses, experienced a sales increase of 32.1%, while the housing segment of the Company's business increased by 25.0%. Recreational vehicle segment sales were augmented by the sales resulting from the Georgie Boy Acquisition. In addition, 1994 included the net sales of Southern Ambulance Builders, Inc., which was sold on April 29, 1994. After eliminating the net sales of Georgie Boy from 1995 and Southern Ambulance from 1994, the Company's RV segment experienced a net sales increase of 8.2%. New product introductions and aggressive pricing resulted in significant market share gains in most RV product categories, while the industry as a whole experienced a reported sales decline. The Company's increased capacity in the housing segment, resulting from the North Carolina Acquisition and the Tennessee Plant Opening, enabled continued growth and contributed to a substantial gain of market share. The Company's RV and modular housing segments experienced increases in both the number of units sold and the average sales price per unit. Historically, the Company's first and fourth quarters are the slowest for sales in both the RV and modular housing segments. Strong sales volume throughout 1995 allowed for more efficient production through the normally slower winter months. See Note 12 of Notes to Consolidated Financial Statements for unaudited interim financial information. Gross profit as a percentage of net sales for 1995 was 13.8% compared to 14.8% reported for 1994. This decrease reflects an industry wide sales decline in van conversions and intensified competition in camping trailers, as well as lower profitability levels attributable to the North Carolina Acquisition and Tennessee Plant 13 15 Opening. The Company expects that as these plants reach full capacity, inefficiencies associated with the plant acquisition and opening should be reduced and eventually eliminated. The industry decline in sales of van conversions and increased competition in camping trailers has led to strong pricing competition and underutilized capacity. The increase in motorized product sales resulting from the Georgie Boy Acquisition contributed to a higher cost of goods sold since motorized products generally have a higher cost of goods manufactured as a percentage of net sales due to the chassis cost. Operating expenses, consisting of selling and delivery and general and administrative expenses, were $44.6 million or 8.6% of net sales in 1995 compared with $36.0 million or 9.1% of net sales in 1994. Selling and delivery expenses were $25.6 million, or 5.0% of net sales, in 1995 compared with $20.1 million, or 5.1% in 1994. Delivery expenses tend to fluctuate with sales mix, as well as changes in geographical areas to which products are delivered. The overall decrease in selling and delivery expenses as a percentage of net sales was primarily the result of increased demand for the Company's products. General and administrative expenses were $19.0 million or 3.7% of net sales in 1995 compared with $15.9 million or 4.0% of net sales in 1994. The 0.3% reduction in general and administrative expenses as a percentage of net sales was caused by the spreading of the Company's relatively fixed expenses in this category over increased net sales. The increase in general and administrative expenses in absolute dollars was due to increases in the administrative salaries and payroll taxes associated with the Georgie Boy Acquisition, the North Carolina Acquisition and the Tennessee Plant Opening. Operating income was $26.7 million in 1995 compared with $22.5 million in 1994, an increase of 18.5%. This increase was consistent with a $12.8 million increase in gross profit and an overall decrease of 0.5% in operating expenses as a percentage of net sales. The Company's RV segment produced operating income of $18.1 million, or 4.2% of RV net sales, compared with operating income of $15.4 million, or 4.7% of RV net sales in 1994, while the modular housing segment generated 1995 operating income of $8.6 million, or 10.4% of modular housing net sales, compared with 1994 operating income of $8.2 million, or 12.3% of modular housing net sales. See Note 2 of Notes to Consolidated Financial Statements. The decrease in operating income as a percentage of net sales for the Company's housing segment was attributable to the North Carolina Acquisition and Tennessee Plant Opening. Interest expense increased in 1995 to $3.1 million from $1.5 million in 1994 as a result of increases in long-term debt associated with the Georgie Boy Acquisition, the North Carolina Acquisition and the economic development bond used to finance the Tennessee Plant Opening, as well as a general increase in interest rates from 1994 to 1995. There were no borrowings on the Company's short-term line of credit during 1995 or 1994. Interest income increased from $0.7 million in 1994 to $1.3 million in 1995 due to the Company's cash and temporary investment activity in 1995 compared with 1994, and a general rise in interest rates from 1994 to 1995. The net gain on the sale of properties decreased to $793,000 in 1995 from $884,000 in 1994. The gain in 1995 resulted from the disposition of investment and rental properties located in Florida, Georgia and Indiana, while the net gain in 1994 reflected the disposition of idle properties located in Georgia and Indiana. Other nonoperating income increased $2.1 million in 1995 from $0.2 million in 1994 to $2.3 million in 1995. This increase consisted primarily of estimated insurance proceeds in excess of the net book value of assets destroyed in a fire which consumed the Company's Prodesign production facility in August 1995. See Note 11 of Notes to Consolidated Financial Statements. The assets were generally insured at replacement value and the recognized gain offset the loss in profitability suffered while the division was recovering. The 1995 provision for income taxes represents an effective tax rate of 37.2% compared to 35.2% in 1994. During the first quarter of 1994, the federal tax provision was reduced by a deferred tax credit of approximately $0.5 million, resulting from the elimination of a remaining valuation allowance. Net income for the year ended December 31, 1995 was $17.5 million compared to $14.8 million for the prior period. 14 16 LIQUIDITY AND CAPITAL RESOURCES The Company generally relies on funds from operations as its primary source of working capital and liquidity. In addition, the Company maintains an unsecured committed line of credit, which totaled $30 million at September 30, 1996, to meet its seasonal working capital needs. There were no borrowings against this line of credit during 1994, 1995 or the first nine months of 1996. The Company's major source of cash was from operating activities during 1994, 1995 and the first nine months of 1996. The most significant items in this category for all three periods, were net income, depreciation, and in 1994, increases in accounts payable and other accrued expenses. These increases were offset in 1994 by increases in receivables and inventories, and in 1995 by increases in receivables and decreases in accounts payable. For the first nine months of 1996, significant increases in receivables and inventories were largely offset by increases in accounts payable and accrued expenses, including income taxes. In 1994 the principal sources of cash flow from investing activities were proceeds from the sale of investments, the sale of subsidiaries and the collection of notes receivable, offset by $5.1 million of investment in property and equipment and $1.4 million for the North Carolina Acquisition. In 1995, the principal sources from investing activities were from the sale of properties and the use of unexpended industrial revenue bond proceeds. At the same time, the Company invested $15.2 million in property and equipment, primarily in connection with the expansion of its capacity in the housing segment and $4.3 million for the Georgie Boy Acquisition. For the first nine months of 1996, the principal use of cash in investing activities was $12.1 million for property and equipment, including construction in progress for a new housing facility in North Carolina and the Oregon Plant Opening. In 1994, the Company experienced positive cash flow financing activities primarily from an increase in long-term debt associated with the economic development bond used to finance the Tennessee Plant Opening. The negative cash flow in 1995 and the first nine months of 1996 for financing activities was primarily caused by the payment of cash dividends and the repayment of long-term debt. The Company's profitability has strengthened its financial position during all three periods. In 1995 working capital increased $9.3 million, from $51.3 million to $60.6 million. At September 30, 1996, working capital increased $9.9 million from December 31, 1995 to $70.5 million. The $12.6 million increase in current assets at December 31, 1995 versus 1994, was due to increased receivables and inventories primarily associated with the Georgie Boy Acquisition. The $3.3 million increase in current liabilities is substantially the result of increases in other liabilities, primarily insurance and warranty accruals. The $26.8 million increase in current assets at September 30, 1996 versus December 31, 1995, was primarily due to increased receivables, cash and inventories. The $16.8 million increase in liabilities is substantially due to increased trade payables, as well as, insurance accruals. The Company anticipates that available funds, together with anticipated cash flows generated from future operations, amounts available under its bank line of credit and the application of the proceeds of this offering will be sufficient to fund its planned capital expenditures and other operating cash requirements through the end of 1997. 15 17 BUSINESS OVERVIEW Coachmen is one of the largest full-line producers of RVs and is the largest builder of modular homes in the country. The Company's RVs are marketed under various brand names including Coachmen, Shasta and Viking through approximately 1,200 independent dealers located in 49 states and internationally and six Company-owned dealerships. In 1995, according to the RVIA, RV manufacturers shipped approximately 247,000 units having an aggregate retail value of approximately $6 billion. The Company's market share as measured by wholesale unit shipments grew from 5.7% in 1992 to 7.5% in 1995. Modular homes are manufactured by the Company's All American Homes operation which sells homes through approximately 300 builder/dealers. Recreational vehicles are either driven or towed and serve as temporary living quarters for camping, travel and other leisure activities. Recreational vehicles may be categorized as motorhomes, travel trailers, camping trailers or truck campers. A motorhome is a self-powered mobile dwelling built on a special heavy duty chassis. A travel trailer is a mobile dwelling designed to be towed behind another vehicle. Camping trailers are smaller towed units constructed with sidewalls that may be raised up and folded out. Truck campers are designed to be mounted on the bed of a pickup truck. The Company also produces a number of parts and supplies for the RV and other related industries. These components, which are used in the Company's products as well as sold to other RV manufacturers, include van tops, running boards and furniture. In addition, the Company has developed a line of ergonomically designed office chairs. The Company manufactures RVs and related components in Indiana, Michigan, Georgia and Oregon. The Company's factory-produced modular homes are designed to serve as permanent living quarters and are constructed on a conventional wood floor system, the same as those used for traditional site-built houses. Modular homes are transported on special carriers to a permanent location where the home is usually set by crane on a basement or crawl space foundation. The Company's modular homes are produced on an assembly line basis in plants located in Indiana, Iowa, North Carolina and Tennessee. The table below sets forth the composition of the Company's net sales for each of the last three years and the nine months ended September 30, 1995 and 1996 (dollar amounts in thousands):
NINE MONTHS YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30, -------------------------------------------------- -------------------------------- 1993 1994 1995 1995 1996 -------------- -------------- -------------- -------------- -------------- Vehicles: Motorhomes......... $159,057 48% $177,583 45% $279,917 54% $213,313 55% $255,990 55% Travel Trailers.... 67,999 21 98,147 25 102,229 20 79,185 20 93,796 20 Camping Trailers... 9,757 3 10,764 3 12,728 2 10,495 2 15,559 3 Truck Campers...... 3,512 1 3,117 1 3,748 1 3,293 1 2,011 -- Parts and Supplies........ 25,724 8 31,397 8 33,991 7 25,961 7 30,625 7 Ambulances......... 15,035 4 6,423 1 -- -- -- -- -- -- -------- --- -------- --- -------- --- -------- --- -------- --- Total Vehicles...... 281,084 85 327,431 83 432,613 84 332,247 85 397,981 85 Housing.............. 48,427 15 66,593 17 83,249 16 58,689 15 71,618 15 -------- --- -------- --- -------- --- -------- --- -------- --- Total...... $329,511 100% $394,024 100% $515,862 100% $390,936 100% $469,599 100% ======== === ======== === ======== === ======== === ======== ===
RECREATIONAL VEHICLES INDUSTRY OVERVIEW The term "recreational vehicle" encompasses a wide range of product types, including folding camping trailers, truck campers, fifth wheel trailers, conventional travel trailers and Class A, B and C motorhomes and van conversions. Although the retail prices of these vehicles range from $3,000 for the simplest folding 16 18 camping trailers to over $750,000 for certain highly customized Class A motorhomes, the 1995 industry average retail price for each product type is as follows: Folding Camping Trailers............................................ $ 4,752 Truck Campers....................................................... 9,994 Fifth Wheel Trailers................................................ 20,694 Conventional Travel Trailers........................................ 12,979 Class A Motorhomes.................................................. 82,951 Class B Motorhomes.................................................. 40,110 Class C Motorhomes.................................................. 41,800 Van Conversions..................................................... 27,792
Source: RVIA 1995 Recreational Vehicle Profile According to the Michigan Study, approximately 8.2 million households owned RVs (including van conversions) in 1993, up from 7.7 million households in 1988 and 5.8 million households in 1980. Recreational vehicles are purchased by adults in all age ranges, but the highest market penetration is with those in the 50 to 65 age group. While the average RV owner is 48 years old, the typical motorhome and travel trailer owners are 63 and 52 years old, respectively. According to the Census Bureau of the U.S. Department of Commerce, the number of Americans aged 55 to 64 years old is projected to grow 12.1% from 1993 through the year 2000 compared to 7.1% for the overall population. Baby Boomers are defined as those born between the years 1946 and 1964, thus the leading edge of the Baby Boom generation began turning 50 years of age in 1996. As Baby Boomers enter and travel through the important 50 to 65 age group for RV sales, they represent the potential for a secular uptrend in the RV industry. Historically, wholesale RV shipments have fluctuated. According to the RVIA, the number of units shipped (excluding conversion vehicles) has increased steadily since 1991, reaching a 15-year peak of 259,200 in 1994. While 1995 unit shipments dropped 4.7% to 247,000, which was the second largest number of shipments in the last decade, the total retail value of 1995 shipments increased by 3.6% from approximately $5.7 billion in 1994 to approximately $5.9 billion in 1995. INDUSTRY PRODUCTS Recreational vehicles provide simple to luxurious living quarters for traveling, camping, outdoor sports and other leisure-time pursuits. An increasing number of people, are also using RVs for business travel and for full-time RVing. RVs are broadly classified as "towable" (folding camping trailers, conventional travel trailers, fifth wheel travel trailers and truck campers) and "motorized" (full-size Class A motorhomes, Class B van campers, Class C mini-motorhomes and van conversions). Towables Folding camping trailers are constructed with collapsible "tent" sidewalls which fold for easy towing. When opened, camping trailers provide nearly all the comforts of conventional travel trailers, with beds, dinettes and fully functional kitchenettes. Conventional travel trailers have solid sidewalls and solid interior walls. Like folding camping trailers, these RVs are towed by a bumper or frame hitch attached to the towing vehicle. Fifth wheel trailers are transported by a pickup truck equipped with a device known as a fifth-wheel hitch. They are distinguished by their raised forward section which extends over the bed of the pickup truck to form a spacious and functional bi-level floorplan. Truck campers slide into the bed of a pickup truck. They can be unloaded and parked at home or at the campsite, enabling owners to use the truck with or without the camper. Truck campers are especially suited for hunting, fishing and other off-the-beaten-path activities. 17 19 Motorized Class A motorhomes are built on specially designed motor vehicle chassis, and the RV manufacturer constructs the driving compartment as well as the "house" portion of the motorhome. Because of their expansive interior and exterior storage space, Class A motorhomes can be used for full-time living and provide the ultimate in RV travel. These models are bus-style motorhomes equipped with a wide range of kitchen and bathroom appliances, stereo, television and other amenities, including one or more bathrooms, separate bedrooms, deluxe carpeting and fabrics, couches, dining tables, air conditioners, closets and other luxurious options. Class B motorhomes, also known as van campers, are automotive vans that are transformed by the RV manufacturer to provide sleeping, kitchen and toilet facilities. They offer maximum mobility and are believed to be growing in popularity among experienced RV users as well as newcomers to the RV lifestyle. Class C motorhomes are constructed on a chopped van chassis. Retaining the cab section of the van, RV manufacturers add the body section with complete living quarters including various amenities such as full bathrooms, separate bedrooms, full kitchens with a choice of appliances and other options. Van conversions are automotive vans converted by van upfitters to include such features as entertainment centers, ultra-comfortable seating and luxurious window treatment and lighting. Van conversions typically serve their owners as a spacious, elegantly appointed second car. COMPANY PRODUCTS The RV group is comprised of six divisions: Coachmen Recreational Vehicle Company, Georgie Boy Mfg., Inc., Shasta Industries, Travelmaster, Coachmen Vans, and Viking Recreational Vehicles, Inc. Coachmen Recreational Vehicle Company ("Coachmen RV") is the Company's largest operating division, with manufacturing facilities in Indiana, Georgia and Oregon. Coachmen RV manufacturers and markets all types of RVs, including fold-down camping trailers, truck campers, travel trailers, fifth wheel trailers, Class C and Class A motorhomes. Models at multiple price points are offered in each RV type to appeal to entry-level buyers through upscale repeat owners. Well known Coachmen product names include Catalina, Santara, Leprechaun, Maxxum and Destiny. The keys to Coachmen RV's success are its innovative customer-oriented product development efforts and its commitment to its dealer organization. Coachmen RV was recognized as one of the best manufacturers in the 1995 Recreational Vehicle Dealer Association Dealer Satisfaction Index poll. In recognition of the need to add capacity to meet future demand, Coachmen RV recently purchased a 60,000 square foot facility in Grants Pass, Oregon to supply its western dealers more quickly and at significantly reduced delivery costs. Coachmen RV also plans to open an additional travel trailer plant in Goshen, Indiana in December 1996. Georgie Boy Mfg., Inc. ("Georgie Boy"), which was acquired in January 1995, is the nation's third largest Class A motorhome manufacturer. Georgie Boy's brand names include Cruise Air and Encounter in the upper mid-price range, Cruise Master and Swinger in the mid-price range and Pursuit and Swinger Custom in the low-priced category. The Pursuit and Swinger Custom, which accounted for approximately 35% of Georgie Boy's 1995 sales, appeal to younger buyers and to consumers who would otherwise consider purchasing a late model used motorhome. In late 1995, Georgie Boy entered the Class C market with the introduction of the Maverick brand mini-motorhome. The Maverick is built in an existing facility which had been previously under-utilized, therefore, the Company has only experienced nominal increases in overhead from the new product line. Shasta Industries ("Shasta"), produces Class C motorhomes, travel trailers and fifth wheel trailers in the low to mid-price range. Shasta, one of the oldest names in the RV industry (having just celebrated its 55th anniversary) recently improved its manufacturing capabilities and updated its product mix. It introduced numerous new models in 1995 including many with slide-out rooms that increase living areas. 18 20 Travelmaster Class C mini-motorhomes are manufactured by Shasta, but marketed through a separate dealer organization. Positioned at the mid-priced segment, Travelmaster mini-homes feature distinctive exterior graphic designs and upscale interiors. Coachmen Vans, a leading name in luxurious van conversions and value packed van campers, sells products through franchised automotive dealers. The Challenger targets the mid-price range and offers many standard features and luxurious comfort, while the more elegant Countess sells in the mid-high price range. The Class B Van Camper and Saratoga motorhomes are built on Ford, GM and Dodge 19-foot length chassis and provide sleeping accommodations, fully equipped kitchens, bathroom facilities, wardrobe and storage space and are designed for easy handling. These motorhomes are marketed toward Baby Boomers who wish to combine camping with a second family vehicle. In 1995, Coachmen Vans entered the growing pickup truck conversion market, offering exciting design options for Ford, Chevy and Dodge trucks. Interior treatments include walnut wood trim and accessories, upgraded fabrics and optional leather seating. Exteriors are customized with flared fenders, running boards, multi-color accent graphics, and vinyl and fiberglass tonneau bed covers. Viking Recreational Vehicles, Inc. makes and markets folding camping trailers which are popular with first time buyers. The vehicles are designed for young families or other camping enthusiasts offering compact, light-weight tent campers that are easily towed and set-up. Typical features in these products include a stainless steel sink, built-in icebox, cooktop range, queen beds and air conditioners. Other brand names the Company has protected and used and anticipates using in the future include Sportscoach, Normandy, Cross Country, Pathfinder and Frolic. PARTS AND SUPPLY GROUP The Company's parts and supply group is composed of Viking Formed Products and The Lux Company, Inc., which provide a variety of products to the recreational vehicle and automotive industries, as well as other industries. Viking Formed Products ("Viking") is a diversified manufacturer of fiberglass and thermoplastic parts, including fiberglass van camper tops and raised roofs for van conversions, and conducts ground effects production through its Prodesign operations. These stylized molded parts add aesthetics and aerodynamics to vans, light trucks and sport utility vehicles. Types of products produced include plastic and fiberglass flaired fenders, running boards and lower front and rear moldings. In addition, Viking supplies exterior fiberglass caps and bumpers for recreational vehicles. Viking's and Prodesign's broad proprietary product line covers over 200 different styles. These products are designed for a wide range of automotive offerings, including most vans, sport utility vehicles and pickup trucks, as well as medium duty trucks. Viking also supplies aftermarket restylers with similar ground effects packages. The Lux Company, Inc. ("Lux") manufactures seating products for the RV, office and healthcare industries. Lux utilizes a sales network of national independent representatives which, together with innovative new products, has helped fuel its growth. The largest portion of Lux's sales are in the RV seating category, including sofa beds, convertible pit groups, swivel chairs and ergonomic pilot seats, complete with monogramming. Lux recently introduced the INLINE series of office managerial, conference, guest and high-back executive chairs. The Company believes these ergonomically designed chairs meet today's office seating requirements, while keeping in mind fixed office budgets and modern styling demands. Lux healthcare products encompass end-opening sofas and task chairs for laboratory and emergency care workers. PRODUCTION AND DISTRIBUTION The Company currently produces RVs on an assembly line basis in Indiana, Michigan, Georgia and Oregon. Components used in the manufacture of RVs are primarily purchased from outside sources. However, in some cases (such as cushions, fiberglass products and furniture) where it is profitable for the Company to do so, or where the Company has experienced shortages of supplies, the Company has undertaken to manufacture its own supplies. The Company depends on the availability of chassis from a limited number of manufacturers. Occasionally, chassis unavailability has limited the Company's production. 19 21 The Company prides itself on being customer driven. Sales and service representatives regularly visit dealers in their regions, and respond quickly to questions and suggestions. Divisions host dealer advisory groups and conduct informative dealer seminars and specialized training classes in areas such as sales and service. Open forum meetings with owners are held at campouts, providing ongoing focus group feedback for product improvements. Engineers and product development team members are encouraged to travel and vacation in Company RVs to gain a complete understanding and appreciation for the products. The Company believes it has the ability to respond promptly to changes in market conditions. Most of the manufacturing facilities can be changed over to the assembly of other existing products in two to six weeks. In addition, these facilities may be used for other types of light manufacturing or assembly operations. This flexibility enables the Company to adjust its manufacturing capabilities in response to changes in demand for its products. Recreational vehicles are generally manufactured against orders received from the Company's dealers. Sales are seasonal with the highest level of sales occurring during the spring and summer months. Coachmen's RVs are distributed through approximately 1,200 independent dealers located in 49 states and internationally and six Company-owned dealers. Agreements with most of its dealers are cancelable on short notice, provide for minimum inventory levels and establish sales territories. No dealer accounts for more than 5% of the Company's net sales. Most dealers' purchases of RVs from the Company are financed through "floor plan" arrangements. Under these arrangements, a bank or other financial institution agrees to lend the dealer all or most of the purchase price of its RV inventory, collateralized by a lien on such inventory. The Company generally executes repurchase agreements at the request of the financing institution. These agreements provide that, for up to twelve months after a unit is financed, the Company will repurchase a unit which has been repossessed by the financing institution for the amount then due to the financing institution, which is usually less than 100% of the dealer's cost. Risk of loss resulting from these agreements is spread over the Company's numerous dealers and is further reduced by the resale value of the products repurchased. See Note 10 of Notes to Consolidated Financial Statements. In addition, the Company guarantees certain obligations of some dealers to a financial institution for purchases of the Company's products. The Company's annual aggregate obligations under this arrangement are limited to 2% of the average annual outstanding floor plan obligations to the financial institution which currently approximate $35 million. Over the past three years, the Company has not reported any significant losses from the repurchase agreements or the guarantee arrangement. The Company does not finance retail consumer purchases of its products, nor does it generally guarantee consumer financing. MODULAR HOUSING INDUSTRY OVERVIEW Modular housing is a small but rapidly growing segment of the housing industry. Modular homes are built to the same local building codes as site-built homes by skilled craftsmen in a factory environment unaffected by weather conditions. Nearly complete when they leave the plant, modular homes are delivered to their final location, typically in two to five sections, and are crane set onto a waiting basement or crawl space foundation. Often homes are ready for the builder and customer within one or two days of arriving at the site. Because modular homes are built to local codes, they are less subject to the zoning restrictions often encountered by manufactured housing and are virtually indistinguishable from site-built homes. Builders who purchase modular homes are often former site builders who find they can increase sales volume and have fewer management difficulties with modular homes. The local builder usually works with the final customer to select the style of home and either modify one of the manufacturer's standard floor plans or design a custom home. Most modular home manufacturers use CAD systems that allow them to customize floor plans and produce drawings for the production line. Production takes place on an assembly line, with components moving from workstation to workstation for framing, electrical, plumbing, drywall, roofing, and cabinet setting, among other operations. An average two-module home can be produced in just a few days. 20 22 COMPANY PRODUCTS The Company's housing group, which is the largest producer of modular homes in the country, is composed of four All American Homes ("All American") operations strategically located in Decatur, Indiana, Dyersville, Iowa, Forest City, North Carolina and Springfield, Tennessee. Together these plants serve approximately 300 builder/dealers in 18 states. In 1995, All American delivered 1,850 new homes to residential neighborhoods. The Company offers homes that appeal to a wide range of buyers, including first time buyers, those moving up to a larger home, and "empty nesters" returning to a more modest design. All American offers over 100 floorplans and variations of the Ranch, Cape Cod, and full two-story home designs ranging in size from 900 to 2,900 square feet. Buyers enjoy the All American advantage, which provides them with the opportunity to customize their home with variations to floorplans, kitchens, floor coverings, windows and other features. All American's homes are constructed inside large manufacturing facilities, reducing weather-related problems and pilferage. Quality is enhanced because building materials are always dry, and homes, which meet local and state building codes, are constructed within an environmentally-controlled facility. The Company regularly conducts builder meetings to review the latest in new design options and component upgrades. These meetings provide an opportunity for valuable builder input and suggestions from their customers at the planning stage. COMPETITION The RV and housing industries are highly competitive, and the Company has numerous competitors and potential competitors in each of its classes of products, some of whom have greater financial and other resources. Initial capital requirements for entry into the manufacture of recreational vehicles or housing are comparatively small; however, codes, standards and safety requirements introduced in recent years may deter potential competitors. In the RV sector, the Company generally competes in the lower to mid-price range markets. The Company believes it is a leader in the RV industry in its focus on quality. A quality product and a strong commitment to competitive pricing are emphasized by the Company in the markets it serves. The Company estimates that its current share of the RV market is in excess of 7%. EMPLOYEES At September 30, 1996, Coachmen employed 3,829 persons, of whom 688 were employed in office and administrative capacities. The Company provides group life, dental, hospitalization, and major medical plans under which the employee pays a portion of the cost. In addition, employees can participate in a stock purchase plan and certain employees can participate in a stock option plan. The Company considers its relations with employees to be good. PROPERTIES The Company owns 2,754,783 square feet of plant and office space, located on 1,183 acres and leases 220,820 square feet of plant and office space, located on 48 acres. Of these properties, 1,951,641 square feet are used for manufacturing, 221,318 square feet are used for warehousing and distribution, 41,675 square feet are used for research and development, 92,138 square feet are used for customer service, 142,450 square feet are offices, 92,078 square feet are leased to others and 213,483 square feet are available for sale or lease. The Company believes that its present facilities, consisting primarily of steel clad, steel frame or wood frame construction, and the machinery and equipment contained therein, are well maintained and in good condition. LEGAL PROCEEDINGS From time to time, the Company is involved in certain litigation arising out of its operations in the normal course of business. The Company believes that there are no claims or litigation pending, the outcome of which will have a material adverse effect on the financial position of the Company. 21 23 MANAGEMENT The following table sets forth the executive officers and directors of the Company, as of October 22, 1996:
NAME POSITION - ------------------------------------ ------------------------------------------------------ Thomas H. Corson.................... Chairman of the Board and Chief Executive Officer Claire C. Skinner................... Vice Chairman of the Board Keith D. Corson..................... President, Chief Operating Officer and Director Gary L. Groom....................... Executive Vice President, Finance, Secretary and Director Gene E. Stout....................... Executive Vice President, Corporate Development James P. Skinner.................... Senior Vice President, Parts and Supply Group John T. Trant....................... Senior Vice President, Housing Group William M. Angelo................... Corporate Controller Philip C. Barker.................... Director R. James Harring.................... Director William P. Johnson.................. Director William G. Milliken................. Director Philip G. Lux....................... Director
THOMAS H. CORSON (age 69) has served as Chairman of the Company since it was incorporated in 1964 and has been actively involved in the management and direction of the Company since that date. CLAIRE C. SKINNER (age 42) has served as Vice Chairman of the Company since May, 1995, and served as Executive Vice President from 1990 to 1995. Since 1987 through the present, Ms. Skinner has been the President of Coachmen RV, the Company's largest division. Prior to that, she held several management positions in operations and marketing since 1983. KEITH D. CORSON (age 61) has served as President and Chief Operating Officer of the Company since November 1991. From June 1991 to November 1991 he served in the position of Office of the President after rejoining the Company. Mr. Corson was owner and President of Koszegi Products, a soft case manufacturer, for eight years prior to June 1991. He was a co-founder of the Company in 1964, and served in several senior management positions from 1964 until 1982, including President of the Company from 1978 until 1982. GARY L. GROOM (age 50) has served as Executive Vice President, Finance and Secretary of the Company since May 1983 and served as Senior Vice President, Finance and Secretary from 1980 to 1983. He was Corporate Controller from 1975 through 1980. From 1972 to 1975 he was Assistant Controller. GENE E. STOUT (age 63) has served as Executive Vice President, Corporate Development of the Company since May 1983. From April 1982 to May 1983 he was Senior Vice President Corporate Planning and Industry Relations. Between 1971 and 1982 he held various management positions with the Company. JOHN T. TRANT (age 57) has served as the Company's Senior Vice President, Housing Group since January 1990. Mr. Trant joined the Company in 1987 and from 1988 until 1990 he was Vice President of Operations, RV and Housing Groups. JAMES P. SKINNER (age 45) has served as the Company's Senior Vice President, Parts and Supply Group since January 1995. From January 1990 through December 1994 he was Senior Vice President of the Company. From 1983 until 1990, he held various management positions with the Company. WILLIAM M. ANGELO (age 53) has served as the Corporate Controller of the Company since May 1980. From 1975 until 1980 he held various positions in the Company's accounting area. PHILIP C. BARKER (age 69) is an attorney with the firm Hartzog, Barker, Hepler and Saunders. He has served on the Company's Board since 1969. R. JAMES HARRING (age 72) is a retired Vice President of Planning of Motorola, Inc. He has served on the Company's Board since 1978. 22 24 WILLIAM P. JOHNSON (age 55) is Chairman of the Board of Goshen Rubber Company for more than the last five years. Mr. Johnson has served on the Company's Board since 1978. PHILIP G. LUX (age 67) is a retired President of the Company. Prior to retiring in 1991, he was the Company's President and Chief Executive Officer from 1985 through 1990 and served as Vice Chairman during the year 1991. WILLIAM G. MILLIKEN (age 73) is a former Governor of the State of Michigan, having held that post from 1970 until 1983. He has been a member of the Company's Board since 1985. Mr. Thomas Corson is the brother of Keith Corson and the father of Claire Skinner, who is the wife of James Skinner. DESCRIPTION OF COMMON STOCK The authorized capital stock of the Company consists of 60,000,000 shares of Common Stock, without par value. Holders of the Common Stock are entitled to such dividends as may be declared by the Board of Directors out of assets legally available therefor and are entitled to one vote for each share held at all meetings of shareholders. In the event of any liquidation of the Company, all assets available for distribution on the Common Stock are distributable among the holders thereof in proportion to their respective holdings. The Common Stock is not redeemable and does not have any preemptive, subscription or conversion rights. The outstanding Common Stock is, and the shares of Common Stock offered hereby shall be, when paid for and issued, fully paid and nonassessable. The transfer agent and registrar for the Common Stock is First Chicago Trust Company of New York. SHAREHOLDER RIGHTS PLAN On January 19, 1990, the Board of Directors of the Company declared a dividend distribution of one common share purchase right (the "Rights") on each outstanding share of Common Stock. The distribution was made to shareholders of record on February 16, 1990 (the "Record Date"). The description and terms of the Rights are set forth in a Rights Agreement, dated as of February 16, 1990 (the "Rights Agreement"), between the Company and First Chicago Trust Company of New York, as Rights Agent. Except as set forth below, each Right will entitle the registered holder thereof to purchase from the Company one share of Common Stock, at a purchase price of $15 per share, subject to anti-dilutive adjustments contained in the Rights Agreement. The Shareholder Rights Plan (the "Plan") provides that, unless the Rights shall have been redeemed, one Right will be granted for each additional share of Common Stock issued by the Company after the date the Plan was adopted and prior to the earlier of the time the Rights become exercisable or February 15, 2000, the termination date of the Plan. Such Rights only become exercisable upon the occurrence of certain events as set forth in the Rights Agreement. See Note 6 of Notes to Consolidated Financial Statements. Each of the shares of Common Stock offered hereby will be accompanied by a Right. 23 25 UNDERWRITING Subject to the terms and conditions set forth in the underwriting agreement (the "Underwriting Agreement") between the Company and Oppenheimer & Co., Inc., as the representative of the Underwriters (the "Representative"), each of the Underwriters named below has severally agreed to purchase from the Company, and the Company has agreed to sell to each of the Underwriters, the respective number of shares of Common Stock set forth opposite its name below:
UNDERWRITER NUMBER OF SHARES -------------------------------------------------------------- ---------------- Oppenheimer & Co., Inc........................................ ---------------- Total.................................................... 1,500,000 =============
The Underwriting Agreement provides that the obligations of the several Underwriters thereunder are subject to approval of certain legal matters by counsel and to various other conditions. The nature of the Underwriters' obligations is such that they are committed to purchase and pay for all of the above shares of Common Stock if any are purchased. The Underwriters propose to offer the shares of Common Stock directly to the public at the offering price set forth on the cover page of this Prospectus, and at such price less a concession not in excess of $ per share of Common Stock to certain other dealers who are members of the National Association of Securities Dealers, Inc. The Underwriters may allow, and such dealers may reallow, concessions not in excess of $ per share to certain other dealers. The Underwriters have been granted a 30-day over-allotment option to purchase from the Company up to an aggregate of 225,000 additional shares of Common Stock at the public offering price less the underwriting discount. If the Underwriters exercise such over-allotment option, then each of the Underwriters has agreed, subject to certain conditions, to purchase approximately the same percentage thereof as the number of shares of Common Stock to be purchased by it as shown in the above table bears to the total number of shares of Common Stock offered hereby. The Underwriters may exercise such option only to cover over-allotments made in connection with the sale of Common Stock offered hereby. The Underwriters have advised the Company that they do not intend to confirm sales to any accounts over which they exercise discretionary authority. The Company has agreed to indemnify the Underwriters against certain liabilities, losses and expenses, including liabilities under the Securities Act or to contribute to payments that the Underwriters may be required to make in respect thereof. The Company, its directors and certain of its officers have agreed that for a period of 90 days after the date of this Prospectus they will not sell, contract to sell or otherwise dispose of, directly or indirectly, any shares of Common Stock, any securities convertible into or exchangeable for Common Stock or any rights to purchase or acquire Common Stock without the prior written consent of the Representative (other than (i) the issuance of stock options pursuant to the Company's stock option plan and the issuance of Common Stock upon the exercise of stock options previously granted by the Company and (ii) 80,000 shares of Common Stock which one such officer and director may transfer by way of gifts). The Representative, in its discretion, may waive the foregoing restrictions in whole or in part, with or without a public announcement of such action. 24 26 LEGAL MATTERS The validity of the shares of Common Stock offered hereby will be passed upon for the Company by McDermott, Will & Emery, Chicago, Illinois. Certain legal matters will be passed upon for the Underwriters by Gibson, Dunn & Crutcher LLP, Los Angeles, California. EXPERTS The consolidated balance sheets of the Company and its subsidiaries as of December 31, 1994 and 1995 and the consolidated statements of income and retained earnings and cash flows for each of the three years in the period ended December 31, 1995, included herein, and the financial statement schedule from the Company's 1995 Annual Report on Form 10-K, incorporated by reference herein, have been included and incorporated in reliance on the reports of Coopers & Lybrand L.L.P., independent accountants, given on the authority of such firm as experts in accounting and auditing. 25 27 COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE ---- Report of Independent Accountants...................................................... F-2 Consolidated Balance Sheets as of December 31, 1994 and 1995........................... F-3 Consolidated Statements of Income and Retained Earnings for the years ended December 31, 1993, 1994 and 1995..................................................... F-4 Consolidated Statements of Cash Flows for the years ended December 31, 1993, 1994 and 1995..................................................... F-5 Notes to Consolidated Financial Statements............................................. F-6 Condensed Consolidated Balance Sheet as of September 30, 1996 (unaudited).............. F-17 Condensed Consolidated Statements of Income for the three months and nine months ended September 30, 1995 and 1996 (unaudited).............................................. F-18 Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 1995 and 1996 (unaudited).............................................. F-19 Notes to Condensed Consolidated Financial Statements (unaudited)....................... F-20
F-1 28 REPORT OF INDEPENDENT ACCOUNTANTS To the Shareholders and Board of Directors of Coachmen Industries, Inc.: We have audited the accompanying consolidated balance sheets of Coachmen Industries, Inc. and subsidiaries as of December 31, 1994 and 1995, and the related consolidated statements of income and retained earnings and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Coachmen Industries, Inc. and subsidiaries as of December 31, 1994 and 1995, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. COOPERS & LYBRAND L.L.P. Elkhart, Indiana January 26, 1996, except as to the information presented in Note 13 for which the date is July 17, 1996 F-2 29 COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 1994 AND 1995 ASSETS
1994 1995 ------------ ------------ CURRENT ASSETS Cash and temporary cash investments........................... $ 19,534,385 $ 17,020,744 Certificates of deposit....................................... 750,000 500,000 Trade receivables, less allowance for doubtful receivables 1994 -- $986,000 and 1995 -- $863,000...................... 15,410,757 19,780,160 Other receivables............................................. 2,121,910 4,244,387 Refundable income taxes....................................... -- 507,000 Inventories................................................... 48,152,342 55,434,497 Prepaid expenses and other.................................... 1,229,475 1,570,492 Deferred income taxes......................................... 1,954,000 2,665,000 ------------ ------------ Total current assets.................................. 89,152,869 101,722,280 ------------ ------------ PROPERTY AND EQUIPMENT, at cost Land and improvements......................................... 4,646,331 5,537,033 Buildings and improvements.................................... 20,618,726 27,405,744 Machinery and equipment....................................... 8,316,127 10,524,486 Transportation equipment...................................... 6,978,543 11,307,747 Office furniture and fixtures................................. 3,795,421 4,269,837 ------------ ------------ 44,355,148 59,044,847 Less, Accumulated depreciation................................ 25,144,558 27,297,851 ------------ ------------ 19,210,590 31,746,996 ------------ ------------ OTHER ASSETS Real estate held for sale..................................... 3,458,883 3,458,539 Rental properties............................................. 1,796,193 925,538 Unexpended industrial revenue bond proceeds................... 3,337,122 -- Intangibles, less accumulated amortization 1994 -- $108,151 and 1995 -- $244,771....................................... 327,121 5,199,505 Deferred income taxes......................................... 1,493,000 875,000 Other......................................................... 6,245,504 6,320,899 ------------ ------------ 16,657,823 16,779,481 ------------ ------------ TOTAL ASSETS.................................................... $125,021,282 $150,248,757 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current maturities of long-term debt.......................... $ 1,530,553 $ 2,094,472 Accounts payable, trade....................................... 20,398,679 18,435,562 Accrued wages, salaries and commissions....................... 3,075,622 3,583,423 Accrued dealer incentives..................................... 2,071,042 2,289,376 Accrued warranty expense...................................... 2,710,068 3,784,712 Accrued income taxes.......................................... 1,728,200 981,800 Other accrued expenses........................................ 6,304,825 9,965,433 ------------ ------------ Total current liabilities............................. 37,818,989 41,134,778 LONG-TERM DEBT.................................................. 7,023,394 12,117,756 OTHER........................................................... 5,422,953 5,958,995 ------------ ------------ Total liabilities..................................... 50,265,336 59,211,529 ------------ ------------ COMMITMENTS AND CONTINGENCIES (Note 10) SHAREHOLDERS' EQUITY Common shares, without par value: authorized 60,000,000 shares; issued 1994 -- 18,147,392 shares and 1995 -- 18,282,672 shares.................................. 36,600,387 37,151,202 Additional paid-in capital.................................... 1,431,055 1,664,889 Retained earnings............................................. 52,359,629 67,824,816 ------------ ------------ 90,391,071 106,640,907 Less, Cost of shares reacquired for the treasury 1994 -- 3,349,642 shares and 1995 -- 3,345,004 shares...... 15,635,125 15,603,679 ------------ ------------ Total shareholders' equity............................ 74,755,946 91,037,228 ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY............ $125,021,282 $150,248,757 ============ ============
The accompanying notes are part of the consolidated financial statements. F-3 30 COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
1993 1994 1995 ------------ ------------ ------------ Net sales............................................ $329,511,226 $394,023,774 $515,862,065 Cost of goods sold................................... 281,822,135 335,566,707 444,626,666 ------------ ------------ ------------ Gross profit............................... 47,689,091 58,457,067 71,235,399 ------------ ------------ ------------ Operating expenses: Selling and delivery............................... 19,231,613 20,080,353 25,593,164 General and administrative......................... 15,789,485 15,877,111 18,983,252 ------------ ------------ ------------ 35,021,098 35,957,464 44,576,416 ------------ ------------ ------------ Operating income........................... 12,667,993 22,499,603 26,658,983 ------------ ------------ ------------ Nonoperating income (expense): Interest expense................................... (2,027,709) (1,480,784) (3,141,763) Interest income.................................... 474,101 667,004 1,306,148 Gain on sale of properties, net.................... 224,452 888,902 793,412 Other, net......................................... 1,356,890 237,369 2,340,620 ------------ ------------ ------------ 27,734 312,491 1,298,417 ------------ ------------ ------------ Income before income taxes................. 12,695,727 22,812,094 27,957,400 Income taxes......................................... -- 8,028,000 10,408,000 ------------ ------------ ------------ Net income................................. 12,695,727 14,784,094 17,549,400 Retained earnings, beginning of the year............. 28,037,418 39,345,043 52,359,629 Cash dividends (per common share: 1993 -- $.095, 1994 -- $.12, and 1995 -- $.14)..... (1,388,102) (1,769,508) (2,084,213) ------------ ------------ ------------ Retained earnings, end of year....................... $ 39,345,043 $ 52,359,629 $ 67,824,816 ------------ ------------ ------------ Net income per common share.......................... $ .87 $ 1.00 $ 1.18 ------------ ------------ ------------
The accompanying notes are part of the consolidated financial statements. F-4 31 COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
1993 1994 1995 ------------ ----------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net income............................................... $ 12,695,727 $14,784,094 $ 17,549,400 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation........................................ 2,867,068 3,089,602 3,993,282 Amortization of intangibles......................... 10,881 10,881 136,620 Gain on sale of properties.......................... (224,452) (888,902) (793,412) Gain on insurance settlement........................ -- -- (2,124,539) Realized gain on sale of investments................ (70,896) (142,373) (13,888) Unrealized appreciation of investments.............. (267,025) (58,325) -- Deferred income taxes............................... (2,450,000) (858,000) (93,000) Other............................................... (703,062) (9,729) 121,131 Changes in certain assets and liabilities, net of effects of acquisitions and dispositions: Receivables, excluding current portion of notes........................................ (277,581) (2,950,130) (2,792,849) Inventories..................................... (4,656,603) (7,925,926) 1,361,916 Prepaid expenses and other...................... 244,623 (340,019) (304,327) Accounts payable, trade......................... 3,000,228 8,764,214 (4,188,586) Accrued income taxes............................ 459,003 1,197,379 (674,039) Other current liabilities....................... 2,710,421 2,729,901 1,277,349 ------------ ----------- ------------ Net cash provided by operating activities.... 13,338,332 17,402,667 13,455,058 ------------ ----------- ------------ CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from: Sale of properties..................................... 3,614,452 1,269,607 3,477,934 Sale of investments.................................... 427,258 1,629,661 263,888 Sale of subsidiaries................................... -- 3,364,848 -- Insurance settlement................................... -- -- 846,463 Acquisitions of: Investments............................................ (500,000) -- -- Property and equipment................................. (4,676,321) (5,133,151) (15,222,794) Real estate held for sale and rental properties........ (93,561) -- -- Acquisition of businesses, net of acquired cash.......... -- (1,387,740) (4,313,046) Collections on notes receivable, net..................... 641,295 1,537,170 39,177 Unexpended industrial revenue bond proceeds.............. -- (3,337,122) 3,337,122 Proceeds from life insurance death benefit............... 981,987 -- -- Other.................................................... 305,738 73,313 (130,153) ------------ ----------- ------------ Net cash provided by (used in) investing activities...................................... 700,848 (1,983,414) (11,701,409) ------------ ----------- ------------ CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term borrowings...................... 9,916,729 -- -- Payment of short-term borrowings......................... (20,816,200) -- (900,000) Proceeds from long-term debt............................. -- 4,000,000 -- Payments of long-term debt............................... (1,727,329) (793,568) (1,833,892) Cash dividends paid...................................... (1,388,102) (1,769,508) (2,084,213) Proceeds from issuance of common shares.................. 654,661 477,297 550,815 ------------ ----------- ------------ Net cash provided by (used in) financing activities...................................... (13,360,241) 1,914,221 (4,267,290) ------------ ----------- ------------ Increase (decrease) in cash and temporary cash investments.............................................. 678,939 17,333,474 (2,513,641) CASH AND TEMPORARY CASH INVESTMENTS Beginning of year........................................ 1,521,972 2,200,911 19,534,385 ------------ ----------- ------------ End of year.............................................. $ 2,200,911 $19,534,385 $ 17,020,744 ------------ ----------- ------------ Supplemental disclosures of cash flow information: Cash paid during the year for: Interest............................................ $ 2,203,000 $ 1,463,000 $ 2,398,105 Income taxes........................................ 2,447,000 7,454,000 12,265,000
The accompanying notes are a part of the consolidated financial statements. F-5 32 COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 NOTE 1: NATURE OF OPERATIONS AND ACCOUNTING POLICIES. Nature of Operations -- Coachmen Industries, Inc. and its subsidiaries (the "Company") manufacture a full line of recreational vehicles and van conversions through eight divisions with manufacturing facilities located in Indiana, Georgia, Michigan and Oregon. These products are marketed through a nationwide dealer network. The Company's housing divisions, with locations in Indiana, Iowa, North Carolina and Tennessee, supply modular housing to builder/dealers in eighteen adjoining states. The Company's parts and supply divisions concentrate primarily on providing parts and supplies to the recreational vehicle and van conversion industries, and also have an important interest in the office furniture market. Principles of Consolidation -- The accompanying consolidated financial statements include the accounts of Coachmen Industries, Inc. and its subsidiaries. Use of Estimates in the Preparation of Financial Statements -- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition, Concentrations of Credit Risk and Allowances for Credit Losses -- Sales are recognized as revenue upon shipment. The Company has a concentration of credit risk in the recreational vehicle industry, although there is no geographic concentration of credit risk. The Company performs ongoing credit evaluations of its customers' financial condition and sales to its recreational vehicle dealers are generally subject to preapproved dealer floor plan financing whereby the Company is paid upon delivery or shortly thereafter. The Company generally requires no collateral from its customers. Future credit losses are provided for currently through the allowance for doubtful receivables and actual credit losses are charged to the allowance when incurred. Cash and temporary cash investments at December 31, 1994 and 1995 include approximately $18,500,000 and $16,500,000, respectively, which is invested in a money market mutual fund. Cash Flows and Noncash Activities -- For purposes of the consolidated statements of cash flows, cash and temporary cash investments include cash, cash investments and any highly liquid investments purchased with an original maturity of three months or less. The Company's acquisitions of and dispositions of subsidiaries included certain noncash activities (see Note 9). During 1994, the Company sold certain real property in exchange for notes receivable of $312,000. For each of the three years in the period ended December 31, 1995, the Company issued common shares with a market value of $20,747, $17,163 and $38,280 respectively, in lieu of cash compensation. The Company recognizes a tax benefit in additional paid-in capital from exercise of stock options (see Note 6). Fair Value of Financial Instruments -- The carrying amounts of cash equivalents, certificates of deposit, receivables, and accounts payable approximated fair value as of December 31, 1995, because of the relatively short maturities of these instruments. The carrying amount of long-term debt, including current maturities, approximated fair value as of December 31, 1995, based upon terms and conditions currently available to the Company in comparison to terms and conditions of the existing long-term debt. The Company has investments in life insurance contracts to fund obligations under deferred compensation agreements (see Note 7). At December 31, 1995, the cash surrender values of these policies, net of policy loans of $10.2 million, aggregated $7.9 million which exceeded the $5.6 million carrying amount of the investments in insurance contracts. Inventories -- Inventories are valued at the lower of cost (first-in, first-out method) or market. F-6 33 COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 Property and equipment -- Depreciation is computed by the straight-line method on the costs of the assets, at rates based on their estimated useful lives as follows: land improvements 3-15 years; buildings and improvements 10-30 years; machinery and equipment 3-10 years; transportation equipment 2-7 years; and office furniture and fixtures 2-10 years. Upon sale or retirement of property and equipment, including real estate held for sale and rental properties, the asset cost and related accumulated depreciation is removed from the accounts and any resulting gain or loss is included in income. Real Estate Held For Sale -- Real estate held for sale represents real properties which are carried at the lower of estimated realizable value or cost less accumulated depreciation. As of December 31, 1994 and 1995, the carrying value of real estate held for sale (and the related accumulated depreciation) aggregated $3,682,007 ($223,124) and $3,682,007 ($223,468), respectively. Rental Properties -- Rental properties represent owned facilities which are currently leased to others under lease agreements with expiring terms through August 31, 1997. Certain of the lease agreements contain options for the lessee to renew the lease or purchase the facilities. Lease income for the years ended December 31, 1993, 1994 and 1995 aggregated $539,919, $570,955 and $381,287, respectively. Future minimum annual lease income under these lease agreements is as follows: 1996 - $237,600 and 1997 - $158,400. The rental properties are carried at cost less accumulated depreciation, which is not in excess of net realizable value. The rental properties are depreciated by the straight-line method over the estimated useful lives of the assets (15-20 years). At December 31, 1994 and 1995, the cost of rental properties (and the related accumulated depreciation) aggregated $2,944,062 ($1,147,869) and $1,795,504 ($869,966), respectively. Intangibles -- Intangibles represent the excess of cost over the fair value of net assets of businesses acquired, and are being amortized over a 40-year period by the straight-line method. The Company reviews the carrying value of intangibles to assess recoverability annually or whenever events or changes in circumstances warrant. Impairments are recognized in operating results when a permanent diminution in value has occurred. Income Taxes -- The provision for income taxes is based on income recognized for financial statement purposes and includes the effects of temporary differences between such income and that recognized for tax return purposes. Deferred tax assets and liabilities are established for the expected future tax consequences of events that have been included in the financial statements or tax returns using enacted tax rates in effect for the years in which the differences are expected to reverse. Research and Development Expenses -- Research and development expenses charged to operations were approximately $2,012,000, $1,925,000 and $2,240,000 for the years ended December 31, 1993, 1994 and 1995, respectively. Warranty Expense -- The Company accrues an estimated warranty liability at the time the warranted products are sold. Impairment of Long-Lived Assets -- In March 1995, Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of" ("SFAS No. 121"), was issued by the Financial Accounting Standards Board. The Company is required to adopt this pronouncement in 1996. The Company does not anticipate that adoption of SFAS No. 121 will have a significant impact on the Company's consolidated financial condition or results of operations. F-7 34 COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 NOTE 2: OPERATIONS IN DIFFERENT INDUSTRIES. The Company's business and operations are comprised of two segments: Vehicles (recreational, vans, specialized and related parts and accessories) and Housing (modular). Segment information is as follows:
1993 1994 1995 ------------ ------------ ------------ Net sales: Vehicles....................................... $281,084,221 $327,430,404 $432,612,786 Housing........................................ 48,427,005 66,593,370 83,249,279 ------------ ------------ ------------ Total.................................. $329,511,226 $394,023,774 $515,862,065 ============ ============ ============ Operating income (loss): Vehicles....................................... $ 7,404,742 $ 15,434,057 $ 18,136,796 Housing........................................ 6,043,283 8,192,322 8,644,906 General Corporate.............................. (780,032) (1,126,776) (122,719) ------------ ------------ ------------ Total.................................. $ 12,667,993 $ 22,499,603 $ 26,658,983 ============ ============ ============ Identifiable assets: Vehicles....................................... $ 65,084,605 $ 71,153,298 $ 89,173,588 Housing........................................ 12,544,448 20,907,090 23,957,173 General Corporate.............................. 17,107,429 32,960,894 37,117,996 ------------ ------------ ------------ Total.................................. $ 94,736,482 $125,021,282 $150,248,757 ============ ============ ============ Depreciation: Vehicles....................................... $ 1,795,676 $ 1,814,505 $ 2,218,420 Housing........................................ 764,494 965,627 1,487,159 General Corporate.............................. 306,898 309,470 287,703 ------------ ------------ ------------ Total.................................. $ 2,867,068 $ 3,089,602 $ 3,993,282 ============ ============ ============ Additions to property and equipment (including property and equipment acquired in the acquisition of businesses): Vehicles.................................... $ 3,130,908 $ 2,714,736 $ 8,905,728 Housing..................................... 1,418,231 3,740,864 6,834,516 General Corporate........................... 127,182 224,791 2,602,967 ------------ ------------ ------------ Total.................................. $ 4,676,321 $ 6,680,391 $ 18,343,211 ============ ============ ============
NOTE 3: INVENTORIES. Inventories consist of the following:
1994 1995 ---------- ---------- Raw materials..................................... $15,751,077 $16,580,013 Work in process................................... 5,053,551 7,268,705 Finished goods.................................... 27,347,714 31,585,779 ----------- ----------- Total................................... $48,152,342 $55,434,497 =========== ===========
F-8 35 COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 NOTE 4: SHORT-TERM BORROWINGS. At December 31, 1995, the Company has an unsecured bank line of credit aggregating $30 million ($20 million at December 31, 1994) with interest on outstanding borrowings payable monthly at a formula rate, which approximates the bank's cost of funds plus a mark-up, which generally results in a rate below the prime rate. There were no outstanding borrowings under this bank line of credit at December 31, 1994 and 1995. NOTE 5: LONG-TERM DEBT. Long-term debt consists of the following:
1994 1995 ---------- ----------- Obligations under industrial development revenue bonds, variable rates, with various maturities through 2009..................................... $7,591,006 $ 6,666,125 Promissory notes payable, issued or assumed in the acquisition of Georgie Boy (see Note 9), payable in annual installments through January 2001, interest payable monthly at the prime rate (8 1/2% at December 31, 1995), unsecured......... -- 7,492,173 Real estate mortgages, paid in full in 1995........ 873,491 -- Other.............................................. 89,450 53,930 ----------- ----------- Total.................................... 8,553,947 14,212,228 Less, Current maturities......................... 1,530,553 2,094,472 ----------- ----------- Long-term debt........................... $7,023,394 $12,117,756 =========== ===========
Aggregate maturities of long-term debt for each of the next five years ending December 31 are as follows: 1996 -- $2,094,472; 1997 -- $2,076,496; 1998 -- $2,058,519; 1999 -- $2,058,519 and 2000 -- $1,757,924. In connection with three of its industrial development revenue bond obligations, the Company obtained, as a credit enhancement for the bondholders, irrevocable letters of credit in favor of the bond trustees. The agreements relating to these letters of credit contain, among other provisions, certain covenants relating to required amounts of working capital and net worth and the maintenance of certain required financial ratios. NOTE 6: COMMON STOCK MATTERS AND EARNINGS PER SHARE. On January 19, 1990, the Board of Directors adopted a shareholder rights plan and declared a dividend distribution of one common share purchase right on each outstanding common share. Such rights only become exercisable, or transferable apart from the common shares, (i) ten days after a person or group of persons ("Acquiring Person") acquires or obtains the right to acquire beneficial ownership of 20% or more of the Company's common shares or (ii) ten business days (or such later date established by the Board) following the commencement of a tender offer or exchange offer for 20% or more of the Company's common shares. Upon the occurrence of certain events and after the rights become exercisable, each right would, subject to certain adjustments and alternatives, entitle the rightholder to purchase the number of common shares of the Company or the acquiring company having a market value of twice the $15 exercise price of the right (except that the Acquiring Person would not be able to purchase common shares of the Company on these terms). The rights are nonvoting, may be redeemed by the Company at a price of $.005 per right at any time prior to the date on which an Acquiring Person acquires 20% or more of the Company's common shares and expire February 15, 2000. F-9 36 COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 NOTE 6: COMMON STOCK MATTERS AND EARNINGS PER SHARE (CONTINUED). The Company's stock option plan provides for the granting to eligible key employees of options to purchase common shares. Under terms of the plan, the Company may grant incentive stock options or non-qualified stock options. In the case of options granted to an employee of the Company who is a 10% or more shareholder, the option price is an amount per share of not less than 110% of the fair market value per share on the date of granting the option. The option price for options granted to all other key employees is an amount per share of not less than the fair market value per share on the date of granting the option. No such options may be exercised during the first year after grant, and are exercisable cumulatively in four installments of 25% each year thereafter. The transactions for shares under options for each of the two years in the period ended December 31, 1995 were as follows:
NUMBER PER SHARE OF SHARES OPTION PRICE --------- ----------------- Outstanding, January 1, 1994................... 415,650 $1.9375 - $8.3750 Granted...................................... 174,600 6.4375 - 8.4375 Canceled..................................... (5,450) 1.9375 - 8.4375 Exercised.................................... (126,000) 1.9375 - 8.3750 -------- Outstanding, December 31, 1994................. 458,800 1.9375 - 8.4375 Granted...................................... 272,400 7.4375 - 8.4375 Canceled..................................... (33,150) 1.9375 - 8.4375 Exercised.................................... (123,150) 1.9375 - 8.4375 -------- Outstanding, December 31, 1995................. 574,900 2.1875 - 8.4375 ======== Exercisable, December 31, 1995................. 153,262 2.1875 - 8.4375 ========
As of December 31, 1995, 1,024,800 shares were reserved for the granting of future stock options, compared with 1,264,050 shares at December 31, 1994. The Company has an employee stock purchase plan under which a total of 585,700 shares of the Company's common stock are reserved for purchase by full-time employees through payroll deductions, cash payments, or a combination of both at a price equal to 90% of the market price of the Company's common stock on the purchase date. As of December 31, 1995, there were 157 employees actively participating in the plan. Since its inception, a total of 214,300 shares have been purchased by employees under the plan. Certain restrictions in the plan limit the amount of payroll deductions and cash payments an employee may make in any one quarter. There are also limitations as to the amount of ownership in the Company an employee may acquire under the plan. In October 1995, Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"), was issued by the Financial Accounting Standards Board. This statement requires the fair value of stock options and other stock-based compensation issued to employees to either be included as compensation expense in the income statement, or the pro forma effect on net income and earnings per share of such compensation expense to be disclosed in the notes to the financial statements. The Company expects to adopt SFAS No. 123 on a disclosure basis only, and the disclosure requirements are effective for fiscal years beginning after December 15, 1995. As such, implementation of SFAS No. 123 will not impact the Company's consolidated balance sheet or income statement. F-10 37 COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 A summary of the changes in common shares, additional paid-in capital and treasury shares for each of the three years in the period ended December 31, 1995 follows:
ADDITIONAL COMMON PAID-IN TREASURY SHARES CAPITAL SHARES ----------- ---------- ------------ Balance, January 1, 1993................ $35,468,429 $ 752,397 $(15,669,377) Sale of 2,554 common shares under employee stock purchase plan....... 17,333 -- -- Issuance of 2,712 common shares from treasury........................... -- 2,360 18,387 Issuance of 162,500 common shares upon the exercise of stock options...... 637,328 -- -- Tax benefit from current and prior years' exercise of stock options... -- 434,000 -- ----------- ---------- ------------ Balance, December 31, 1993.............. 36,123,090 1,188,757 (15,650,990) Sale of 6,526 common shares under employee stock purchase plan....... 42,315 -- -- Issuance of 2,340 common shares from treasury........................... -- 1,298 15,865 Issuance of 126,000 common shares upon the exercise of stock options...... 434,982 -- -- Tax benefit from current and prior years' exercise of stock options... -- 241,000 -- ----------- ---------- ------------ Balance, December 31, 1994.............. 36,600,387 1,431,055 (15,635,125) Sale of 12,130 common shares under employee stock purchase plan....... 94,396 -- -- Issuance of 4,638 common shares from treasury........................... -- 6,834 31,446 Issuance of 123,150 common shares upon the exercise of stock options...... 456,419 -- -- Tax benefit from current year exercise of stock options................... -- 227,000 -- ----------- ---------- ------------ Balance, December 31, 1995.............. $37,151,202 $1,664,889 ($15,603,679) =========== ========== ============
Earnings per share are based on the weighted average number of common shares outstanding (1993 -- 14,608,392, 1994 -- 14,743,926 and 1995 -- 14,881,968). The common share equivalents (employee stock options) have not entered into the computation of earnings per share because their inclusion in each year reported would have been immaterial. Fully-diluted earnings per share do not differ materially from primary earnings per share. F-11 38 COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 NOTE 7: INCENTIVE AND DEFERRED COMPENSATION PLANS. The Company has incentive compensation plans for its officers and other key management personnel. The amounts charged to expense for the years ended December 31, 1993, 1994 and 1995 aggregated $1,760,967, $2,146,905 and $2,577,692, respectively. The Company has established a deferred compensation plan for executives and other key employees. The plan provides for benefit payments upon termination of employment, retirement, disability, or death. The Company recognizes the cost of this plan over the projected service lives of the participating employees based on the present value of the estimated future payments to be made. The plan is funded by insurance contracts on the lives of the participants, and investments in insurance contracts (included in other assets) aggregating $5,623,123 as of December 31, 1994 and 1995. The deferred compensation obligations, which aggregated $5,460,677 and $5,952,958 as of December 31, 1994 and 1995, respectively, are included in other non-current liabilities, with the current portion ($180,207 and $186,854 at December 31, 1994 and 1995, respectively) included in other accrued expenses. The Company adopted the Coachmen Assisted Retirement For Employees (C.A.R.E.) program effective January 1, 1994. All full-time employees of the Company (subject to certain eligibility restrictions) are eligible to participate. C.A.R.E. provides a mechanism for each eligible employee to establish an individual retirement account and receive matching contributions from the Company based on the amount contributed by the employee, the employee's years of service and the profitability of the Company. Company matching contributions charged to expense under the C.A.R.E. program aggregated $546,984 and $537,118 for the years ended December 31, 1994 and 1995, respectively. NOTE 8: INCOME TAXES. Income taxes are summarized as follows:
1993 1994 1995 ---------- ---------- ----------- Federal: Current................................. $2,000,000 $7,918,000 $ 9,530,000 Deferred................................ (2,000,000) (730,000) (79,000) ---------- ---------- ----------- -- 7,188,000 9,451,000 ---------- ---------- ----------- State: Current................................. 450,000 968,000 971,000 Deferred................................ (450,000) (128,000) (14,000) ---------- ---------- ----------- -- 840,000 957,000 ---------- ---------- ----------- Total........................... $ -- $8,028,000 $10,408,000 ========== ========== ===========
F-12 39 COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 The following is a reconciliation of the provision for income taxes computed at the federal statutory rate (34% in 1993, 35% in 1994 and 35% in 1995) to the reported provision for income taxes:
1993 1994 1995 ----------- ---------- ----------- Computed federal income tax at federal statutory rate........................................... $ 4,344,000 $7,984,000 $ 9,785,000 Changes resulting from: Nontaxable life insurance proceeds............. (285,000) -- -- Foreign Sales Corporation subject to lower tax rate........................................ (230,000) (186,000) (222,000) State income taxes, net of federal income tax benefit..................................... -- 546,000 622,000 Alternative minimum tax credit................. (275,000) -- -- Tax benefit of utilization of net operating loss carryforward........................... (2,233,000) -- -- Valuation allowance............................ (1,519,000) (526,000) -- Other, net..................................... 198,000 210,000 223,000 ----------- ---------- ----------- Total.................................. $ -- $8,028,000 $10,408,000 =========== ========== ===========
The components of the net deferred tax assets as of December 31, 1994 and 1995 are as follows:
1994 1995 ---------- ----------- Current deferred tax asset: Accrued warranty expense......................... $1,084,000 $ 1,321,000 Allowance for doubtful receivables............... 394,000 317,000 Other............................................ 476,000 1,027,000 ---------- ----------- Net current deferred tax asset........... $1,954,000 $ 2,665,000 ========== =========== Noncurrent deferred tax asset (liability): Deferred compensation............................ $2,220,000 $ 2,400,000 Operating loss carryforwards, primarily state.... 600,000 -- Property and equipment........................... (727,000) (1,441,000) Intangible assets................................ -- (84,000) ---------- ----------- 2,093,000 875,000 Less, valuation allowance..................... 600,000 -- ---------- ----------- Net noncurrent deferred tax asset........ $1,493,000 $ 875,000 ========== ===========
NOTE 9: ACQUISITIONS AND DISPOSITIONS. On January 3, 1995, the Company acquired all of the issued and outstanding capital stock of Georgie Boy Mfg., Inc. ("Georgie Boy") a manufacturer of Class A motorhomes. The purchase price aggregated $12.8 million and consisted of $6.7 million in cash and a $6.1 million promissory note payable to the seller. In conjunction with the acquisition, the Company assumed liabilities of $8,757,000. F-13 40 COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 NOTE 9: ACQUISITIONS AND DISPOSITIONS (CONCLUDED). The acquisition was accounted for using the purchase method, and the operating results of Georgie Boy have been included in the Company's 1995 consolidated financial statements from the date of acquisition. The excess of the purchase price over the cost of acquired net assets ("goodwill") of $5.0 million is being amortized on a straight-line basis over forty years. Unaudited pro forma financial information for 1994, as if this acquisition had occurred on January 1, 1994, is as follows:
YEAR ENDED DECEMBER 31, 1994 (UNAUDITED) ----------------- Net sales............................................ $ 483,870,000 Net income........................................... 15,896,000 Net income per share................................. 1.08
On September 23, 1994, the Company acquired substantially all of the operating assets of the North Carolina division of Muncy Building Enterprises, L.P. ("Muncy"), a manufacturer of modular homes. The assets acquired consisted principally of property and equipment and inventories of modular homes. The purchase price of $2,761,740 was allocated to the assets acquired and consisted of $1,387,740 in cash and $1,374,000 of assumed liabilities, including long-term debt of $843,917. The acquisition was accounted for as a purchase and, accordingly, the operating results of Muncy are included in the Company's consolidated financial statements from the date of acquisition. Pro forma results of operations for 1993 and 1994 are not presented herein as the amounts would not be materially different from the Company's historical results. On April 29, 1994, the Company sold certain assets of its wholly owned subsidiary, Southern Ambulance Builders, Inc., for $1,589,809 consisting of $789,809 in cash and a promissory note for $800,000, which was subsequently collected. The assets sold consisted of inventories, property and equipment (excluding land) and other miscellaneous assets. The sales price equaled the net book value of the assets sold. In a separate transaction, the Company sold certain land of Southern Ambulance Builders, Inc. for $611,998 in cash, resulting in a pre-tax gain of $170,129. In addition, during 1994, the Company sold its 52% ownership interest in Luxury Conversions for $133,721, and substantially all the assets of its wholly owned subsidiary, Auranco, for $1,129,320. The Auranco transaction resulted in a pre-tax gain of $143,907. There was no gain or loss on the Luxury Conversions sale. NOTE 10: COMMITMENTS AND CONTINGENCIES. Lease Commitments The Company leases various manufacturing and office facilities under noncancelable agreements which expire at various dates through November 2006. Several of the leases contain renewal options and options to purchase and require the payment of property taxes, normal maintenance and insurance on the properties. Certain office and delivery equipment are also leased under various noncancelable agreements. The above described leases are accounted for as operating leases. Future minimum annual lease commitments at December 31, 1995 aggregated $3,476,300 and are payable as follows: 1996 -- $1,037,600; 1997 -- $1,008,700; 1998 -- $834,900; 1999 -- $374,500; 2000 -- $123,000 and thereafter -- $97,600. Total rental expense for the years ended December 31, 1993, 1994 and 1995 aggregated $1,604,576, $1,396,183 and $1,222,156, respectively. F-14 41 COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 Obligation to Purchase Consigned Inventories The Company obtains vehicle chassis for its recreational and specialized vehicle products directly from automobile manufacturers under converter pool agreements. The agreements generally provide that the manufacturer will provide a supply of chassis at the Company's various production facilities under the terms and conditions as set forth in the agreement. Chassis are accounted for as consigned inventory until either assigned to a unit in the production process or 90 days have passed. At the earlier of these dates, the Company is obligated to purchase the chassis and it is recorded as inventory. At December 31, 1994 and 1995, chassis inventory, accounted for as consigned inventory, approximated $14.0 million and $18.0 million, respectively. Repurchase Agreements The Company is contingently liable to banks and other financial institutions on repurchase agreements in connection with financing provided by such institutions to most of the Company's independent dealers in connection with their purchase of the Company's recreational vehicle products. These agreements provide for the Company to repurchase its products from the financial institution in the event that they have repossessed them upon a dealer's default. Although the total contingent liability approximated $129 million at December 31, 1995 ($90 million at December 31, 1994), the risk of loss resulting from these agreements is spread over the Company's numerous dealers and is further reduced by the resale value of the products repurchased. Self-Insurance The Company is self-insured for a portion of its product liability and certain other liability exposures. Depending on the nature of the claim and the date of occurrence, the Company's maximum exposure ranges from $250,000 to $500,000 per claim. The Company accrues an estimated liability based on various factors, including sales levels and the amount of outstanding claims. Management believes the liability recorded is adequate to cover the Company's self-insured risk. Litigation The Company is involved in various legal proceedings which are ordinary routine litigations incidental to the industry and which are covered in whole or in part by insurance. Management believes that any liability which may result from these proceedings will not be significant. NOTE 11: INSURANCE SETTLEMENT. On August 14, 1995, a fire destroyed the Company's Prodesign production facility. The loss was covered by insurance and estimated insurance proceeds in excess of the net book value of destroyed assets and related expenses resulted in a gain of $2.1 million which is included in other nonoperating income. Other receivables at December 31, 1995 include $2.4 million of estimated insurance recoveries. F-15 42 COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONCLUDED) FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 NOTE 12: UNAUDITED INTERIM FINANCIAL INFORMATION. Certain selected unaudited quarterly financial information for the years ended December 31, 1994 and 1995 is as follows:
1994 QUARTER ENDED --------------------------------------------------------------- MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 ------------ ------------ ------------ ------------ Net sales......................... $ 93,635,237 $100,320,091 $102,974,854 $ 97,093,592 Gross profit...................... 12,111,138 15,592,188 15,345,676 15,408,065 Income before income taxes........ 3,313,785 6,584,343 6,140,566 6,773,400 Net income........................ 2,620,785 4,118,343 3,808,566 4,236,400 Net income per common share....... .18 .28 .26 .29
1995 QUARTER ENDED --------------------------------------------------------------- MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 ------------ ------------ ------------ ------------ Net sales......................... $131,770,379 $128,192,670 $130,973,395 $124,925,621 Gross profit...................... 16,562,112 17,960,958 18,661,458 18,050,871 Income before income taxes........ 5,086,464 6,709,086 7,458,426 8,703,424 Net income........................ 3,203,464 4,212,086 4,683,426 5,450,424 Net income per common share....... .22 .28 .31 .37
The fourth quarter of 1995 includes a $2.1 million pre-tax gain on insurance settlements (see Note 11). The common share equivalents described in Note 6 did not enter into the computations of net income per common share for any of the quarters during 1994 and 1995 because their inclusion was immaterial. The sum of quarterly earnings per share for the four quarters may not equal annual earnings per share due to changes in the average common shares. NOTE 13: SUBSEQUENT EVENTS. On July 17, 1996, the Board of Directors declared a two-for-one stock split of the Company's common shares, which was paid on August 28, 1996 to shareholders of record on August 7, 1996. All share and per share data in the accompanying consolidated financial statements and notes thereto have been retroactively restated to reflect this stock split. Also on July 17, 1996, the Board of Directors adopted a resolution to amend the Company's Articles of Incorporation to increase the authorized common shares from 30,000,000 shares to 60,000,000 shares. F-16 43 COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
SEPTEMBER 30, 1996 ------------- ASSETS CURRENT ASSETS Cash and temporary cash investments......................................... $ 26,853,025 Certificates of deposit..................................................... 500,000 Trade receivables and current portion of notes receivable, less allowance for doubtful receivables of $1,048,000................................... 30,864,067 Other receivables........................................................... 1,883,291 Inventories................................................................. 64,352,179 Prepaid expenses and other.................................................. 1,366,374 Deferred income taxes....................................................... 2,665,000 ------------ Total current assets................................................... 128,483,936 ------------ PROPERTY AND EQUIPMENT, at cost Land and improvements....................................................... 6,770,639 Buildings and improvements.................................................. 33,632,165 Machinery and equipment..................................................... 13,133,044 Transportation equipment.................................................... 10,330,812 Office furniture and fixtures............................................... 4,761,627 ------------ 68,628,287 Less, Accumulated depreciation.............................................. 28,520,970 ------------ 40,107,317 ------------ OTHER ASSETS Real estate held for sale................................................... 3,627,322 Rental properties........................................................... 879,715 Intangibles, less accumulated amortization of $346,849...................... 5,097,427 Deferred income taxes....................................................... 875,000 Other....................................................................... 8,847,827 ------------ 19,327,291 ------------ TOTAL ASSETS.................................................................. $ 187,918,544 ============ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current maturities of long-term debt........................................ $ 2,108,979 Accounts payable, trade..................................................... 29,297,459 Accrued wages, salaries and commissions..................................... 5,201,283 Accrued dealer incentives................................................... 2,046,807 Accrued warranty expense.................................................... 4,417,314 Accrued income taxes........................................................ 2,645,340 Other accrued expenses...................................................... 12,257,440 ------------ Total current liabilities.............................................. 57,974,622 LONG-TERM DEBT................................................................ 10,260,075 OTHER......................................................................... 6,363,202 ------------ Total liabilities...................................................... 74,597,899 ------------ SHAREHOLDERS' EQUITY Common shares, without par value: authorized 60,000,000 shares; issued 18,441,624 shares........................................................ 38,139,317 Additional paid-in capital.................................................. 1,693,312 Retained earnings........................................................... 89,064,453 ------------ 128,897,082 Less, Cost of shares reacquired for the treasury, 3,340,996 shares.......... 15,576,437 ------------ Total shareholders' equity............................................. 113,320,645 ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.................................... $ 187,918,544 ============
See notes to condensed consolidated financial statements. F-17 44 COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS NINE MONTHS ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, ---------------------------- ---------------------------- 1995 1996 1995 1996 ------------ ------------ ------------ ------------ Net sales............................. $130,973,395 $154,244,238 $390,936,444 $469,599,312 Cost of goods sold.................... 112,311,937 130,087,358 337,751,916 401,328,935 ------------ ------------ ------------ ------------ Gross profit................ 18,661,458 24,156,880 53,184,528 68,270,377 ------------ ------------ ------------ ------------ Operating expenses: Selling and delivery................ 6,753,034 6,572,380 19,586,516 20,545,700 General and administrative.......... 4,308,232 4,888,141 14,428,916 16,151,897 ------------ ------------ ------------ ------------ 11,061,266 11,460,521 34,015,432 36,697,597 ------------ ------------ ------------ ------------ Operating income............ 7,600,192 12,696,359 19,169,096 31,572,780 ------------ ------------ ------------ ------------ Nonoperating income (expense): Interest expense.................... (793,353) (398,520) (2,306,449) (1,239,555) Interest income..................... 372,889 374,114 891,010 979,056 Gain on sale of properties, net..... 13,394 1,979 786,540 728,548 Other, net.......................... 265,304 509,631 713,779 958,430 ------------ ------------ ------------ ------------ (141,766) 487,204 84,880 1,426,479 ------------ ------------ ------------ ------------ Income before income taxes and cumulative effect of accounting change......... 7,458,426 13,183,563 19,253,976 32,999,259 Income taxes.......................... 2,775,000 4,851,000 7,155,000 12,024,000 ------------ ------------ ------------ ------------ Income before cumulative effect of accounting change.................... 4,683,426 8,332,563 12,098,976 20,975,259 Cumulative effect of accounting change for Company-owned life insurance policies............................ -- -- -- 2,293,983 ------------ ------------ ------------ ------------ Net income.................. $ 4,683,426 $ 8,332,563 $ 12,098,976 23,269,242 ============ ============ ============ ============ Earnings per common share: Income before cumulative effect of accounting change........... $ .31 $ .55 $ .81 $ 1.40 Cumulative effect of accounting change......................... -- -- -- .15 ------------ ------------ ------------ ------------ Net income....................... $ .31 $ .55 $ .81 $ 1.55 ============ ============ ============ ============ Weighted average number of common shares outstanding.................. 14,895,930 15,070,652 14,871,300 15,028,672 ============ ============ ============ ============ Cash dividends per common share....... $ .035 $ .05 $ .105 $ .135 ============ ============ ============ ============
See notes to condensed consolidated financial statements. F-18 45 COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, ---------------------------- 1995 1996 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net cash provided by operating activities...................... $ 18,707,227 $ 22,764,705 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from: Sale of property and equipment, real estate held for sale and rental properties..................................... 2,899,362 1,380,557 Sale of investments......................................... 263,888 -- Acquisitions of property and equipment......................... (10,162,117) (12,066,649) Acquisition of a business, net of acquired cash................ (4,313,046) -- Unexpended industrial revenue bond proceeds.................... 3,337,122 -- Proceeds from life insurance death benefit..................... -- 171,770 Other.......................................................... (92,417) 466,562 ------------ ------------ Net cash (used in) investing activities..................... (8,067,208) (10,047,760) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES Payments of short-term borrowings.............................. (900,000) -- Payments of long-term debt..................................... (1,598,786) (1,843,174) Cash dividends paid............................................ (1,561,372) (2,029,605) Proceeds from issuance of common shares........................ 352,687 988,115 ------------ ------------ Net cash (used in) financing activities..................... (3,707,471) (2,884,664) ------------ ------------ Increase in cash and temporary cash investments.................. 6,932,548 9,832,281 CASH AND TEMPORARY CASH INVESTMENTS Beginning of period............................................ 19,534,385 17,020,744 ------------ ------------ End of period.................................................. $ 26,466,933 $ 26,853,025 ============ ============ Noncash investing and financing activities: Liabilities assumed in acquisition of a business............... $ 8,757,472 $ -- Long-term debt issued in conjunction with acquisition of a business.................................................... 6,141,129 --
See notes to condensed consolidated financial statements. F-19 46 COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1995 AND 1996 (UNAUDITED) NOTE A: BASIS OF PRESENTATION. In the opinion of management, the information furnished herein includes all adjustments of a normal and recurring nature necessary to reflect a fair statement of the interim periods reported. The results of operations for the three and nine-month periods ended September 30, 1996 are not necessarily indicative of the results to be expected for the full year. NOTE B: INVENTORIES. Inventories consist of the following:
SEPTEMBER 30, 1996 ------------ Raw material..................................................... $ 23,423,558 Work in-process.................................................. 7,867,030 Finished goods................................................... 33,061,591 ------------ Total....................................................... $ 64,352,179 ============
NOTE C: ACCOUNTING CHANGE. Effective January 1, 1996, the Company changed its method of accounting for its investments in life insurance contracts which were purchased to fund liabilities under deferred compensation agreements with executives and other key employees. Prior to January 1, 1996, the Company accounted for its investments in life insurance contracts by capitalizing premiums under the ratable charge method (a method of accounting which was acceptable when the insurance contracts were originally acquired and continued to be acceptable for contracts acquired prior to November 14, 1985). Effective January 1, 1996, the Company changed to the cash surrender value method of accounting which is the preferred method under generally accepted accounting principles, as this method more accurately reflects the economic value of the contracts. On January 1, 1996, the Company recorded a $2.3 million noncash credit for the cumulative effect of this accounting change. This accounting method change also increased net income for the nine months ended September 30, 1996 by $749,970 or $.05 per share. On a pro forma basis, net income and net income per share for the nine months ended September 30, 1995 would have been $12,656,520 and $.85, respectively, if this accounting change had been made prior to 1995. NOTE D: COMMON STOCK MATTERS. On July 17, 1996, the Board of Directors declared a two for-one stock split of the Company's common shares, which was paid on August 28, 1996 to shareholders of record on August 7, 1996. All share and per share data in the accompanying condensed consolidated financial statements have been retroactively restated to reflect this stock split. Also on July 17, 1996, the Board of Directors adopted a resolution to amend the Company's Articles of Incorporation to increase the authorized common shares from 30,000,000 shares to 60,000,000 shares. NOTE E: COMMITMENTS AND CONTINGENCIES. The Company was contingently liable at September 30, 1996 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 F-20 47 COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONCLUDED) FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1995 AND 1996 (UNAUDITED) agreements provide for the Company to repurchase its products from the financing institution in the event that they have repossessed them upon a dealer's default. The risk of loss resulting from these agreements is spread over the Company's numerous dealers and is further reduced by the resale value of the products repurchased. The Company is involved in various legal proceedings which are ordinary litigations incidental to the industry and which are covered in whole or in part by insurance. Management believes that any liability which may result from these proceedings will not be significant. NOTE F: SUBSEQUENT EVENT. On October 18, 1996, the Company's Board of Directors approved a resolution to cancel the Company's stock repurchase program. F-21 48 [Picture of Folding Camping Trailer by Viking [Picture of Coachmen Ranger Truck Camper] Rv] [Picture of Executive and Task Seating [Picture of Fiberglass Running Boards by Lux Company] from Viking Formed Products] [Picture of Destiny Luxury Class A Motorhome] [Picture of All American Homes' Easton Cape Cod--Modular Home]
[COA LOGO] 49 ================================================================================ NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE AS OF WHICH INFORMATION IS FURNISHED. ------------------ TABLE OF CONTENTS
PAGE ---- Available Information................................... 3 Incorporation of Certain Documents by Reference......... 3 Prospectus Summary...................................... 4 Cautionary Statement Regarding Forward Looking Information........................................... 7 Investment Considerations............................... 7 Use of Proceeds......................................... 10 Dividend Policy......................................... 10 Capitalization.......................................... 10 Price Range of Common Stock............................. 10 Selected Consolidated Financial Data.................... 11 Management's Discussion and Analysis of Financial Condition and Results of Operations................... 12 Business................................................ 16 Management.............................................. 22 Description of Common Stock............................. 23 Underwriting............................................ 24 Legal Matters........................................... 25 Experts................................................. 25 Index to Consolidated Financial Statements.............. F-1
================================================================================ ================================================================================ 1,500,000 SHARES [COACHMEN LOGO] COACHMEN INDUSTRIES, INC. COMMON STOCK --------------------------- PROSPECTUS --------------------------- [OPPENHEIMER & CO., INC. LOGO] OPPENHEIMER & CO., INC. , 1996 ================================================================================ 50 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following are the expenses (estimated except for the SEC registration fee and NASD filing fee) for the issuance and distribution of the securities being registered, all of which will be paid by the Registrant. SEC Registration Fee............................................... $ 14,604 Printing and Engraving Costs....................................... 80,000 Legal Fees and Expenses (not including Blue Sky)................... 150,000 Accounting Fees and Expenses....................................... 48,000 Blue Sky Fees and Expenses......................................... 10,000 NASD Filing Fee.................................................... 5,310 Transfer Agent and Registrar Fees and Expenses..................... 5,000 Miscellaneous...................................................... 2,086 -------- Total......................................................... $315,000 ========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Sections 23-1-37-9 and 23-1-37-13 of the Indiana Business Corporation Law (the "BCL") provide for indemnification of directors and officers for expenses incurred in defending actions brought against them in such capacities if such director or officer was wholly successful in such defense, unless the corporation's Articles of Incorporation provide otherwise. The Company's Articles of Incorporation do not restrict or limit the application of these provisions. Additionally, Sections 23-1-37-8 and 23-1-37-13 of the BCL provide that a corporation may indemnify directors and officers for liabilities incurred in proceedings brought against them in such capacities if (a) the individual's conduct was in good faith; and (b) the individual reasonably believed: (i) in the case of conduct in the individual's official capacity with the corporation, that the individual's conduct was in its best interests; (ii) in other cases, that the individual's conduct was at least not opposed to its best interests; and (iii) with respect to any criminal action or proceeding, the individual either had reasonable cause to believe his conduct was lawful or no reasonable cause to believe his conduct was unlawful. The Company's Bylaws provide that the Company shall indemnify persons to the fullest extent to which it is empowered to do so by the BCL or any other applicable laws. The registrant maintains directors and officers liability insurance covering all directors and officers of the Company against claims arising out of the performance of their duties. Reference is hereby made to Section 7 of the Underwriting Agreement, filed as Exhibit 1 hereto, for a statement of certain agreements concerning indemnification of directors and officers by the Underwriters. II-1 51 ITEM 16. EXHIBITS.
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ------- ------------------------------------------------------------------------------------ 1 Form of Underwriting Agreement 4.1 Articles of Incorporation of the Company, as amended on May 30, 1995 (incorporated by reference to Exhibit 3(i) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995) 4.2 Articles of Amendment to the Company's Articles of Incorporation 4.3 By-Laws of the Company (incorporated by reference to Exhibit 3(ii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995) 4.4 Shareholder Rights Plan (incorporated by reference to the Company's Registration Statement on Form 8-A). 5 Opinion of McDermott, Will & Emery 23(a) Consent of McDermott, Will & Emery (included as part of Exhibit 5) 23(b) Consent of Coopers & Lybrand L.L.P. 24 Powers of Attorney (included on signature page of the Registration Statements)
ITEM 17. UNDERTAKINGS. 1. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described in Item 15, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 2. The undersigned registrant hereby undertakes that: (a) For purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (b) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (c) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-2 52 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3, and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in Elkhart, Indiana on October 21, 1996. COACHMEN INDUSTRIES, INC. By: /s/ THOMAS H. CORSON ------------------------------------ Thomas H. Corson Chairman of the Board and Chief Executive Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Thomas H. Corson and Gary L. Groom and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities (including his capacity as a director and/or officer of Coachmen Industries, Inc.) to sign any or all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on October 21, 1996.
SIGNATURE TITLE - --------------------------------------------- ---------------------------------------------- /s/ THOMAS H. CORSON Chairman of the Board, Chief Executive Officer - --------------------------------------------- and Director (Principal Executive Officer) Thomas H. Corson /s/ GARY L. GROOM Executive Vice President, Finance, Secretary - --------------------------------------------- and Director (Chief Financial Officer) Gary L. Groom /s/ WILLIAM M. ANGELO Chief Accounting Officer - --------------------------------------------- William M. Angelo /s/ PHILIP C. BARKER Director - --------------------------------------------- Philip C. Barker /s/ KEITH D. CORSON Director - --------------------------------------------- Keith D. Corson /s/ R. JAMES HARRING Director - --------------------------------------------- R. James Harring /s/ PHILIP G. LUX Director - --------------------------------------------- Philip G. Lux
II-3 53
SIGNATURE TITLE - --------------------------------------------- ---------------------------------------------- /s/ WILLIAM P. JOHNSON Director - --------------------------------------------- William P. Johnson /s/ WILLIAM G. MILLIKEN Director - --------------------------------------------- William G. Milliken /s/ CLAIRE C. SKINNER Director - --------------------------------------------- Claire C. Skinner
II-4 54 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ------- ------------------------------------------------------------------------------------ 1 Form of Underwriting Agreement 4.1 Articles of Incorporation of the Company, as amended on May 30, 1995 (incorporated by reference to Exhibit 3(i) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995) 4.2 Articles of Amendment to the Company's Articles of Incorporation 4.3 By-Laws of the Company (incorporated by reference to Exhibit 3(ii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995) 4.4 Shareholder Rights Plan (incorporated by reference to the Company's Registration Statement on Form 8-A). 5 Opinion of McDermott, Will & Emery 23(a) Consent of McDermott, Will & Emery (included as part of Exhibit 5) 23(b) Consent of Coopers & Lybrand L.L.P. 24 Powers of Attorney (included on signature page of the Registration Statement)
EX-1.1 2 UNDERWRITING AGREEMENT 1 Exhibit 1.1 1,500,000 SHARES COACHMEN INDUSTRIES, INC. COMMON STOCK, WITHOUT PAR VALUE UNDERWRITING AGREEMENT __________________, 1996 2 1,500,000 SHARES COACHMEN INDUSTRIES, INC. COMMON STOCK UNDERWRITING AGREEMENT _______________, 1996 Oppenheimer & Co., Inc. Oppenheimer Tower World Financial Center New York, New York 10281 On behalf of the several Underwriters named on Schedule I attached hereto; Ladies and Gentlemen: Coachmen Industries, Inc., an Indiana corporation (the "Company"), proposes to sell to you and the other underwriters named on Schedule I to this Agreement (the "Underwriters") for whom you are acting as representative (the "Representative"), an aggregate of 1,500,000 shares (the "Firm Shares") of the Company's Common Stock, without par value (the "Common Stock"). In addition, the Company proposes to grant to the Underwriters an option to purchase up to an additional 225,000 shares (the "Option Shares") of Common Stock from it for the purpose of covering over-allotments in connection with the sale of the Firm Shares. The Firm Shares and the Option Shares are together called the "Shares." 1. SALE AND PURCHASE OF THE SHARES. On the basis of the representations, warranties and agreements contained in, and subject to the terms and conditions of, this Agreement: (a) The Company agrees to sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company, at $_____ per share (the "Initial Price"), the number of Firm Shares set forth opposite the name of such Underwriter on Schedule I to this Agreement. (b) The Company grants to the several Underwriters an option to purchase, severally and not jointly, all or any part of the Option Shares at the Initial Price. The number of Option Shares to be purchased by each Underwriter shall be the same percentage (adjusted by the Representative to eliminate fractions) of the total number of Option Shares to be purchased by the Underwriters as such Underwriter is purchasing - 1 - 3 of the Firm Shares. Such option may be exercised only to cover over-allotments in the sales of the Firm Shares by the Underwriters and may be exercised in whole or in part at any time on or before 12:00 noon, New York City time, on the second business day before the Firm Shares Closing Date (as defined below), and only once thereafter within 30 days after the date of this Agreement, in each case upon written or telegraphic notice, or verbal or telephonic notice confirmed by written or telegraphic notice, by the Representative to the Company no later than 12:00 noon, New York City time, on the second business day before the Firm Shares Closing Date or at least three business days before the Option Shares Closing Date (as defined below), as the case may be, setting forth the number of Option Shares to be purchased and the time and date (if other than the Firm Shares Closing Date) of such purchase. 2. DELIVERY AND PAYMENT. Delivery by the Company of the Firm Shares to the Representative for the respective accounts of the Underwriters, and payment of the purchase price by certified or official bank check or checks payable in New York Clearing House (next day) funds to the Company shall take place at the offices of Oppenheimer & Co., Inc., at Oppenheimer Tower, World Financial Center, New York, New York 10281, at 10:00 a.m., New York City time, on the third business day following the date of this Agreement (or the fourth business day if permitted by Rule 15c6-1(c) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), or at such time on such other date, not later than 10 business days after the date of this Agreement, as shall be agreed upon by the Company and the Representative (such time and date of delivery and payment are called the "Firm Shares Closing Date"). In the event the option with respect to the Option Shares is exercised, delivery by the Company of the Option Shares to the Representative for the respective accounts of the Underwriters and payment of the purchase price by certified or official bank check or checks payable in New York Clearing House (next day) funds to the Company shall take place at the offices of Oppenheimer & Co., Inc. specified above at the time and on the date (which may be the same date as, but in no event shall be earlier than, the Firm Shares Closing Date) specified in the notice referred to in Section 1(b) (such time and date of delivery and payment are called the "Option Shares Closing Date"). The Firm Shares Closing Date and the Option Shares Closing Date are called, individually, a "Closing Date" and, together, the "Closing Dates." Certificates evidencing the Shares shall be registered in such names and shall be in such denominations as the Representative shall request at least two full business days before the Firm Shares Closing Date or, in the case of Option Shares, on the day of notice of exercise of the option as described in Section 1(b) and shall be made available to the Representative for checking and packaging, at such place as is designated by the Representative, on the full business day before the Firm Shares Closing Date (or the Option Shares Closing Date in the case of the Option Shares). 3. REGISTRATION STATEMENT AND PROSPECTUS; PUBLIC OFFERING. The Company has prepared in conformity with the requirements of the Securities Act of 1933, as amended (the "Securities Act"), and the published rules and regulations thereunder (the - 2 - 4 "Rules") adopted by the Securities and Exchange Commission (the "Commission") a registration statement on Form S-3 (No. 333-_____), including a preliminary prospectus relating to the Shares, and has filed with the Commission the Registration Statement (as hereinafter defined) and such amendments thereof as may have been required to the date of this Agreement. Copies of such Registration Statement (including all amendments thereof) and of the related preliminary prospectus have heretofore been delivered by the Company to you. The term "preliminary prospectus" as used hereinafter means any preliminary prospectus (as described in Rule 430 of the Rules) relating to the Shares included at any time as a part of the Registration Statement. The Registration Statement as amended at the time and on the date it becomes effective (the "Effective Date"), including all exhibits and information, if any, deemed to be part of the Registration Statement pursuant to Rule 424(b), Rule 430A and Rule 434 of the Rules, is called the "Registration Statement." The term "Prospectus" means the prospectus relating to the Shares in the form first used to confirm sales of the Shares (whether such prospectus was included in the Registration Statement at the time of effectiveness or was subsequently filed with the Commission pursuant to Rule 424(b) of the Rules). Any reference herein to the Registration Statement, to any preliminary prospectus or to the Prospectus shall be deemed to refer to and include any documents incorporated by reference therein, and, in the case of any reference herein to any Prospectus, also shall be deemed to include any documents incorporated by reference therein, and any supplements or amendments thereto, filed with the Commission after the date of filing of the Prospectus under Rules 424(b) or 430A of the Rules, and prior to the termination of the offering of the Shares by the Underwriters. The Company understands that the Underwriters propose to make a public offering of the Shares, as set forth in and pursuant to the Prospectus, as soon after the Effective Date and the date of this Agreement as the Representative deems advisable. The Company hereby confirms that the Underwriters and dealers have been authorized to distribute or cause to be distributed each preliminary prospectus and are authorized to distribute the Prospectus (as from time to time amended or supplemented if the Company furnishes amendments or supplements thereto to the Underwriters). 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to each Underwriter as follows: (a) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Indiana. The Company is duly qualified and in good standing as a foreign corporation in each jurisdiction in which the character or location of its assets or properties (owned, leased or licensed) or the nature of its business makes such qualification necessary, except for such jurisdictions where the failure to so qualify would not have a material adverse effect on the assets or properties, business, results of operations, prospects or financial condition of the Company. The Company does not own, lease or license any asset or property or conduct any business outside the United States of America. Each of All American Homes, Inc., an Indiana corporation, All American Homes of Iowa, Inc., an Iowa corporation, All American Homes of North Carolina, Inc. a North Carolina corporation, All American Homes of Tennessee, Inc., a Tennessee corporation, - 3 - 5 Georgie Boy Mfg., Inc., an Indiana corporation, The Lux Company, Inc., an Indiana corporation, Southern Ambulance Builders, Inc., a Georgia corporation, and Viking Recreational Vehicles, Inc., a Michigan corporation (collectively, the "Subsidiaries"), has been duly incorporated and is validly existing as a corporation in good standing under the laws of its state of incorporation. Each Subsidiary is duly qualified and in good standing as a foreign corporation in each jurisdiction in which the character or location of its assets or properties (owned, leased or licensed) or the nature of its business makes such qualification necessary, except for such jurisdictions where the failure to qualify would not have a material adverse affect on the assets or properties, business, results of operations or financial condition of the Company. The Company does not control, directly or indirectly, any corporation, partnership, joint venture, association or other business organization other than the Subsidiaries. (b) The Company and each of the Subsidiaries has all requisite corporate power and authority, and all necessary authorizations, approvals, consents, orders, licenses, certificates and permits of and from all governmental or regulatory bodies or any other person or entity, including any and all licenses, permits and approvals required under any federal, state or local law, to own, lease and license its assets and properties and to conduct its businesses as now being conducted and as proposed to be conducted as described in the Registration Statement and the Prospectus. The Company and each of the Subsidiaries have fulfilled and performed in all material respects all of their obligations with respect to such authorizations, approvals, consents, orders, licenses, certificates and permits, and neither the Company nor any Subsidiary is in violation of any term or provision of any such authorizations, approvals, consents, orders, licenses, certificates or permits, nor has any event occurred which allows, or after notice or lapse of time would allow, revocation or termination thereof or which could result in any material impairment of the rights of the holder thereof. No such authorization, approval, consent, order, license, certificate or permit contains a materially burdensome restriction other than as disclosed in the Registration Statement and the Prospectus. Neither the Company nor any of the Subsidiaries has any reason to believe that any governmental or regulatory body is considering modifying, limiting, conditioning, suspending, revoking or not renewing any such authorizations, approvals, consents, orders, licenses, certificates or permits of the Company or any of the Subsidiaries or that such governmental or regulatory bodies are investigating the Company or any of the Subsidiaries or related parties. (c) The Company and/or its Subsidiaries own, or have enforceable rights to use, all trademarks, trademark applications, trade names, service marks, copyrights, copyright applications, licenses, know-how and other similar rights, technology and proprietary knowledge (collectively, "Intangibles") necessary for the conduct of the business of the Company as described in the Registration Statement and the Prospectus. Neither the Company nor any of the Subsidiaries has received any notice of, and they are not aware of, any infringement of, or conflict with asserted rights of others with respect to, any Intangibles which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a material adverse effect upon the - 4 - 6 assets or properties, business, results of operations, prospects or financial condition of the Company. The Intangibles are free and clear of all liens and encumbrances of every nature and kind. Except as disclosed in the Registration Statement and the Prospectus, neither the Company nor any of the Subsidiaries has violated or infringed any patent, trademark, tradename, trade secret or copyright held by others or any license, authorization or permit held by them, in any manner which may materially adversely affect the Intangibles or the business of the Company. Except in connection with transactions entered into in the ordinary course of business, neither the Company nor any of the Subsidiaries has granted any licenses or other rights or has any obligations to grant licenses or any other rights to any Intangibles. Neither the Company nor any of the Subsidiaries has made any material claim of violation or infringement by others of rights to, or in connection with, the Intangibles, and the Company knows of no basis for making any such claim. There are no interferences or other contested proceedings, either pending or, to the knowledge of the Company, threatened, in the United States Copyright Office, the United States Patent and Trademark Office or any federal, state or local court or before any other governmental agency or tribunal, relating to any pending application with respect to the Intangibles. (d) The Company and each of the Subsidiaries has (i) good and valid title to each of the items of personal property and good, marketable and insurable fee title to all real property reflected in its financial statements referred to in Section 4(s) or referred to in the Registration Statement and the Prospectus as being owned by it and (ii) valid and enforceable leasehold interests in each of the items of real and personal property which are referred to in the Registration Statement and the Prospectus as being leased by it, in each case free and clear of all liens, encumbrances, claims, security interests, defects or rights of way. No financing statement under the Uniform Commercial Code with respect to any assets of the Company or the Subsidiaries has been filed in any jurisdiction, and neither the Company nor any of the Subsidiaries has signed any such financing statement or any security agreement authorizing any secured party thereunder to file any such financing statement. All real property of the Company and the Subsidiaries reflected in the financial statements referred to in Section 4(s) or referred to in the Registration Statement and the Prospectus as being owned by the Company or the Subsidiaries is in good condition and conforms in all material respects with all applicable building, zoning, land use and other laws, ordinances, codes, orders and regulations (other than environmental laws, which are addressed in Section 4(f)) and the use of such real property conforms in all material respects with such laws, ordinances, codes, orders and regulations, and all necessary occupancy, certificates and permits for the lawful use and occupancy thereof and the equipment thereof have been issued. All notices of violations of law, ordinances, codes, orders or regulations issued by any governmental authority having jurisdiction over or affecting any such real property have been complied with by the Company or the Subsidiaries, as applicable. (e) Except as described in the Registration Statement and the Prospectus, there is no pending or, to the knowledge of the Company, threatened, lawsuit or claim - 5 - 7 with respect to the Company or any of the Subsidiaries which (i) involves a claim by or against the Company or any of the Subsidiaries, as applicable, of more than $50,000, (ii) seeks injunctive relief that could have an adverse effect on the Company or (iii) could materially and adversely affect the performance by the Company or any of the Subsidiaries of their obligations pursuant to this Agreement or the transactions contemplated hereby. Neither the Company nor any of the Subsidiaries is in default under any judgment, order or decree of any court, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, applicable to it or any of its respective properties, assets, operations or businesses. There is no legal or governmental or other proceeding or investigation before any court or before or by any public body or board pending or, to the Company's best knowledge, threatened (and the Company does not know of any basis therefor) against or involving the assets, properties or business of the Company or the assets, properties or business of any of the Subsidiaries, that would materially adversely affect the value or the operation of any such assets or properties in the hands of the Company or the Subsidiaries or the business, results of operations, prospects or financial condition of the Company. (f) Neither the Company nor any of the Subsidiaries has at any time engaged in the handling, manufacture, treatment, storage, use or generation of any Hazardous Materials (as defined below) upon any real property owned or leased by it, except for such quantities handled, stored and used in connection with the normal operation of manufacturers and distributors of recreational vehicles and modular homes in the ordinary course of the business of the Company or the Subsidiaries, as applicable. Neither the Company nor any of the Subsidiaries has been a party to any litigation in which it is alleged, nor have any of them at any time received written notice of any allegation or investigation of the possibility, that any of them or any of their assets is or was subject to any liability, clean-up or other obligation arising out of or relating to any discharge, or the storage, handling or disposal, of any Hazardous Material. There has been no discharge at any time by the Company or any of the Subsidiaries of any Hazardous Material that the Company or any of the Subsidiaries has reported or is or was obligated to report to any governmental agency the occurrence of which may have a material adverse effect on the Company. For the purposes of this Agreement, "Hazardous Material" means any substance: (i) the presence of which requires investigation or remediation under any federal, state or local statute, regulation, ordinance, order, action, policy or common law; (ii) that is or becomes defined as a "hazardous waste," "hazardous substance," pollutant or contaminant under any federal, state or local statute, regulation, rule or ordinance or amendments thereto including, without limitation the Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C. 9601 et seq.) and/or the Resource Conservation and Recovery Act (42 U.S.C. section 6901 et seq.); (iii) that is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous and is or becomes regulated by any governmental authority, agency, department, commission, board, agency or instrumentality of the United States or of any state or any political subdivision thereof; or (iv) which contains - 6 - 8 polychlorinated biphenyls (PCBs), asbestos, urea formaldehyde foam insulation or radon gas. (g) Subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, and except as described therein, (i) there has not been any material adverse change in the assets or properties, business, results of operations, prospects or financial condition of the Company or the Subsidiaries, whether or not arising from transactions in the ordinary course of business; (ii) neither the Company nor any of the Subsidiaries has sustained any loss or interference with its assets, businesses or properties (whether owned or leased) from fire, explosion, earthquake, flood or other calamity, whether or not covered by insurance, or from any labor dispute or any court or legislative or other governmental action, order or decree that would have a material adverse effect on the Company; and (iii) and since the date of the latest balance sheets included in the Registration Statement and the Prospectus, except as reflected therein, neither the Company nor any of the Subsidiaries has (A) issued any securities or incurred any liability or obligation, direct or contingent, for borrowed money, except such liabilities or obligations incurred in the ordinary course of business, (B) entered into any transaction not in the ordinary course of business or (C) declared or paid any dividend or made any distribution on any shares of its stock or redeemed, purchased or otherwise acquired or agreed to redeem, purchase or otherwise acquire any shares of its stock. (h) There is no document or contract of a character required to be described in the Registration Statement or Prospectus or to be filed as an exhibit to the Registration Statement which is not described or filed as required. Each agreement listed in the Exhibits to the Registration Statement is in full force and effect and is valid and enforceable by and against the Company or the Subsidiaries, as applicable, in accordance with its terms, assuming the due authorization, execution and delivery thereof by each of the other parties thereto, except for agreements that have expired by their terms or have been fully performed. Neither the Company, nor, to the Company's knowledge, any other party is in default, nor is any Subsidiary party thereto in default, in the observance or performance of any term or obligation to be performed by it under any such agreement, and no event has occurred which with notice or lapse of time or both would constitute such a default, in any such case in which a default or event would have a material adverse effect on the assets or properties, business, results of operations, prospects or financial condition of the Company. No default exists, and no event has occurred which with notice or lapse of time or both would constitute a default, in the due performance and observance of any term, covenant or condition by the Company or any of the Subsidiaries of any other agreement or instrument to which the Company or any of the Subsidiaries is now a party or by which it or its properties or business may be bound or affected which default or event would have a material adverse effect on the assets or properties, business, results of operations, prospects or financial condition of the Company. - 7 - 9 (i) Neither the Company nor any of the Subsidiaries is in violation of any term or provision of its charter or by-laws or of any judgment, decree, order, statute, rule or regulation, where the consequences of such violation would have a material adverse effect on the assets or properties, business, results of operations, prospects or financial condition of the Company. (j) There is no labor strike, dispute or work stoppage or lockout pending, or, to the knowledge of the Company, threatened, against or affecting the Company or the Subsidiaries, and no such labor strike, dispute, work stoppage or lockout has occurred with respect to any employees of the Company or the Subsidiaries during the two years prior to the date of this Agreement. No union organization campaign is in progress with respect to the employees of the Company or the Subsidiaries, and no question concerning representation exists with respect to such employees. No unfair labor practice charge or complaint against the Company or the Subsidiaries is pending or, to the knowledge of the Company, threatened, before the National Labor Relations Board or similar foreign authorities, and no such charge or complaint against the Company or any of the Subsidiaries has been filed during the past two years. There is no pending, or, to the knowledge of the Company, threatened, grievance that, if adversely decided, would have a material adverse effect on the business, results of operations, prospects or financial condition of the Company. No charges with respect to or relating to the Company or the Subsidiaries are pending before the Equal Employment Opportunity Commission or any state, local or foreign agency responsible for the prevention of unlawful employment practices, and no such charges have been filed with respect to the Company, any of the Subsidiaries or any of the businesses currently operated by the Subsidiaries during the past two years. (k) Each of the Company and the Subsidiaries has correctly and timely filed all necessary federal, state, local and foreign income, property and franchise tax returns and paid all taxes required to be shown as due thereon and all assessments received by it to the extent that the same are material and have become due. Neither the Company nor any of its officers has any knowledge of any tax deficiency of the Company or any of the Subsidiaries or any tax proceeding or action pending or threatened against the Company or any of the Subsidiaries that would materially adversely affect the business, financial position, stockholders' equity or results of operations, present or prospective, of the Company. There are no liens for taxes on the assets of the Company or the Subsidiaries, except for taxes not yet due. There are no audits pending of the Company's or any of the Subsidiaries' tax returns (federal, state, local or foreign), and there are no claims which have been or, to the best of the Company's knowledge, may be asserted relating to any such tax returns which, if determined adversely, would result in the assertion by any governmental agency of any deficiency material to the Company. There have been no waivers of any statute of limitations by the Company or any of the Subsidiaries relating to tax returns (federal, state, local and foreign). The Internal Revenue Service has not asserted or threatened to assert any assessment, claim or liability for taxes due or to become due in connection with any review or examination of the tax returns of the Company or any of the Subsidiaries for any year. - 8 - 10 (l) None of the Company, any Subsidiary or any officer or director purporting to act on behalf of the Company or any Subsidiary has during the past five years (i) made any contributions to any candidate for political office, or failed to disclose fully any such contributions, in violation of law; or (ii) made any payment to any Federal, state, local or foreign governmental officer or official, or other person charged with similar public or quasi-public duties, other than payments required or allowed by applicable law; or (iii) made any payment outside the ordinary course of business to any purchasing or selling agent or person charged with similar duties of any entity to which the Company or such Subsidiary as applicable, sells (or has in the past sold) or from which the Company or such Subsidiary, as applicable, buys (or has in the past bought) products for the purpose of influencing such agent or person to buy products from or sell products to the Company or such Subsidiary, as applicable; or (iv) engaged in any transaction, maintained any bank account or used any corporate funds except for transactions, bank accounts and funds which have been and are reflected in the normally maintained books and records of the Company or such Subsidiary, as applicable. (m) Each of the Company and the Subsidiaries has adequate liability and other insurance policies insuring it against the risks of loss arising out of or related to its businesses, as described in the Registration Statement and Prospectus, issued by insurers of recognized financial responsibility. (n) The Company and each of the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is (or was) taken with respect to any differences. (o) On the Effective Date, the Registration Statement complied, and on the date of the Prospectus, on the date any post-effective amendment to the Registration Statement shall become effective, on the date any supplement or amendment to the Prospectus is filed with the Commission and on each Closing Date, the Registration Statement and the Prospectus (and any amendment thereof or supplement thereto) will comply, in all material respects, with the applicable provisions of the Securities Act and the Rules and the Exchange Act and the rules and regulations of the Commission thereunder; the Registration Statement did not, as of the Effective Date, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading; and on the other dates referred to above neither the Registration Statement nor the Prospectus, nor any amendment thereof or supplement thereto, will contain any untrue statement of a material fact or will omit to state any material fact required to be stated - 9 - 11 therein or necessary in order to make the statements therein (in light of the circumstances in which they were made) not misleading. When any related preliminary prospectus was first filed with the Commission (whether filed as part of the Registration Statement or any amendment thereto or pursuant to Rule 424(a) of the Rules) and when any amendment thereof or supplement thereto was first filed with the Commission, such preliminary prospectus as amended or supplemented complied in all material respects with the applicable provisions of the Securities Act and the Rules and did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein (in light of the circumstances in which they were made) not misleading. Notwithstanding the foregoing, the Company makes no representation or warranty as to the paragraph with respect to stabilization on the inside front cover page of the Prospectus and the statements contained under the caption "Underwriting" in the Prospectus. The Company acknowledges that the statements referred to in the previous sentence constitute the only information furnished in writing by the Representative on behalf of the several Underwriters specifically for inclusion in the Registration Statement, any preliminary prospectus or the Prospectus. (p) The Company has all requisite corporate power and authority to enter into, deliver and perform this Agreement and to issue and sell the Shares. All necessary corporate action has been duly and validly taken by the Company to authorize the execution, delivery and performance of this Agreement and the issuance and sale of the Shares by the Company. This Agreement has been duly and validly authorized, executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (A) as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and by general equitable principles and (B) to the extent that rights to indemnity or contribution under this Agreement may be limited by Federal and state securities laws or the public policy underlying such laws. (q) Neither the execution, delivery and performance of this Agreement by the Company, as applicable, nor the consummation of any of the transactions contemplated hereby (including, without limitation, the issuance and sale by the Company of the Shares) will give rise to a right to terminate or accelerate the due date of any payment due under, or conflict with or result in the breach of any term or provision of, or constitute a default (or an event which with notice or lapse of time or both would constitute a default) under, or require any consent or waiver under, or result in the execution or imposition of any lien, charge or encumbrance upon any properties or assets of the Company or any Subsidiary pursuant to the terms of, any indenture, mortgage, deed of trust or other agreement or instrument to which the Company or any Subsidiary is a party or by which it or any of its properties or businesses is bound, or any franchise, license, permit, judgment, decree, order, statute, rule or regulation applicable to the Company or any Subsidiary or violate any provision - 10 - 12 of the charter or by-laws of the Company or any Subsidiary, except for such consents or waivers which have already been obtained and are in full force and effect. (r) No authorization, approval, consent, order, license, certificate or permit is required of or from any governmental or regulatory body under any federal, state or local law for the execution, delivery and performance of this Agreement or for the consummation of the transactions contemplated hereby or thereby, except such as have been obtained. This Agreement has been presented to any and all governmental agencies or authorities to the extent required, and this Agreement and the transactions contemplated hereby and thereby were approved by or on behalf of such governmental agencies or authorities to the extent required, and such approvals have not been revoked, modified or rescinded. (s) The financial statements of the Company (including all notes and schedules thereto) set forth or incorporated by reference in the Registration Statement and Prospectus present fairly the financial position, the results of operations and cash flows and the stockholders' equity and the other information purported to be shown therein of the Company at the respective dates and for the respective periods to which they apply; and such financial statements have been prepared in conformity with generally accepted accounting principles, consistently applied throughout the periods involved, and all adjustments necessary for a fair presentation of the results for such periods have been made. (t) Coopers & Lybrand L.L.P., whose report is incorporated by reference as a part of the Registration Statement and Prospectus, are and, during the periods covered by their reports were, independent public accountants as required by the Securities Act and the Rules. (u) The Company has authorized and outstanding capital stock as set forth under the caption "Capitalization" in the Prospectus. All of the outstanding shares of Common Stock have been duly and validly issued and are fully paid and nonassessable and none of them was issued in violation of any preemptive or other similar right. The Shares, when issued and sold pursuant to this Agreement, will be duly and validly issued, fully paid and nonassessable and none of them will be issued in violation of any preemptive or other similar rights. Except as disclosed in the Registration Statement and the Prospectus, there is no outstanding option, warrant or other right calling for the issuance of, and there is no commitment, plan or arrangement to issue, any share of stock of the Company or any security convertible into, or exercisable or exchangeable for, such stock. The Common Stock and the Shares conform in all material respects to all statements in relation thereto contained in the Registration Statement and the Prospectus. (v) All of the outstanding shares of capital stock of the Subsidiaries have been duly and validly issued. All of the outstanding shares of capital stock of the Subsidiaries are owned by the Company, directly or indirectly, free and clear of any - 11 - 13 liens, charges or encumbrances, such shares of capital stock are fully paid and nonassessable, and none of them was issued in violation of any preemptive or other similar right. Except as disclosed in the Registration Statement and the Prospectus, there is no outstanding option, warrant or other right calling for the issuance of, and there is no commitment, plan or arrangement to issue, any share of capital stock of any Subsidiary or any security convertible into, or exercisable or exchangeable for, such stock. (w) Except as described in the Registration Statement and Prospectus, there are no persons with registration or other similar rights to have any securities registered pursuant to the Registration Statement or otherwise registered by the Company or any Subsidiary under the Securities Act. Each stockholder, director and executive officer of the Company has delivered to the Representative his enforceable written agreement that he or she will not, for a period of 90 days after the date of this Agreement, offer for sale, sell, distribute, grant any option for the sale of, or otherwise dispose of, directly or indirectly, or exercise any registration rights with respect to, any shares of Common Stock (or any securities convertible into, exercisable for, or exchangeable for any shares of Common Stock) owned by him or her, without the prior written consent of the Representative, except that one certain executive officer and director may transfer by way of a gift an aggregate of [80,000] shares of Common Stock to charitable foundations or charitable trusts during such period. (x) No transaction has occurred between or among the Company or any Subsidiary and any of their officers or directors or any affiliate or affiliates of any such officer or director that is required to be described in and is not described in the Registration Statement and the Prospectus. (y) The Shares have been duly approved for quotation on the New York Stock Exchange (the "NYSE"). (z) The Company is not an "investment company" or an entity "controlled" by an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended. (aa) None of the Company or any of its directors, officers or controlling persons has taken or will take, directly or indirectly, any action resulting in a violation of Rule 10b-6 under the Exchange Act, or designed to cause or result under the Securities Act or otherwise in, or which has constituted or which reasonably might be expected to constitute, the stabilization or manipulation of the price of any securities of the Company or facilitation of the sale or resale of the Shares. (bb) Neither the Company nor any of the Subsidiaries has incurred any liability for finder's or broker's fees or agent's commissions in connection with the execution and delivery of this Agreement, the offer and sale of the Shares or the transactions contemplated hereby. - 12 - 14 (cc) The Company is not required to register as a "broker" or "dealer" in accordance with the provisions of the Exchange Act or the rules and regulations promulgated thereunder. 5. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of the Underwriters under this Agreement are several and not joint. The respective obligations of the Underwriters to purchase the Shares are subject to each of the following terms and conditions: (a) The Prospectus shall have been timely filed with the Commission in accordance with Section 6(A)(i) of this Agreement. (b) No order preventing or suspending the use of any preliminary prospectus or the Prospectus shall have been or shall be in effect and no order suspending the effectiveness of the Registration Statement shall be in effect and no proceedings for such purpose shall be pending before or threatened by the Commission, and any requests for additional information on the part of the Commission (to be included in the Registration Statement or the Prospectus or otherwise) shall have been complied with to the satisfaction of the Representative. (c) The representations and warranties of the Company contained in this Agreement and in the certificates delivered pursuant to Section 5(d) shall be true and correct when made and on and as of each Closing Date as if made on such date and the Company shall have performed all covenants and agreements and satisfied all the conditions contained in this Agreement required to be performed or satisfied by it at or before such Closing Date. (d) The Representative shall have received on each Closing Date a certificate, addressed to the Representative and dated such Closing Date, of the chief executive or chief operating officer and the chief financial officer or chief accounting officer of the Company to the effect that the signers of such certificate have carefully examined the Registration Statement, the Prospectus and this Agreement and that the representations and warranties of the Company in this Agreement are true and correct on and as of such Closing Date with the same effect as if made on such Closing Date and the Company has performed all covenants and agreements and satisfied all conditions contained in this Agreement required to be performed or satisfied by it at or prior to such Closing Date. (e) The Representative shall have received on the Effective Date, at the time this Agreement is executed and on each Closing Date, a signed letter from Coopers & Lybrand L.L.P. addressed to the Representative and dated, respectively, the Effective Date, the date of this Agreement and each such Closing Date, in form and substance reasonably satisfactory to the Representative, confirming that they are independent accountants within the meaning of the Securities Act and the Rules, that the response to Item 10 of the Registration Statement is correct insofar as it relates to them and stating in effect that: - 13 - 15 (i) in their opinion the audited financial statements and financial statement schedules set forth in or incorporated by reference in the Registration Statement and the Prospectus and reported on by them comply as to form in all material respects with the applicable accounting requirements of the Securities Act and the Rules; (ii) on the basis of a reading of the amounts included in the Registration Statement and the Prospectus under the headings "Selected Consolidated Financial and Other Data" and the latest unaudited financial statements of the Company, carrying out certain procedures (but not an examination in accordance with generally accepted auditing standards) which would not necessarily reveal matters of significance with respect to the comments set forth in such letter, a reading of the minutes of the meetings of the stockholders and directors of the Company, and inquiries of certain officials of the Company who have responsibility for financial and accounting matters of the Company as to transactions and events subsequent to the date of the latest audited financial statements, except as disclosed in the Registration Statement and the Prospectus, nothing came to their attention which caused them to believe that: (A) the unaudited financial statements and supporting schedules of the Company set forth in or incorporated by reference in the Registration Statement do not comply as to form in all material respects with the applicable accounting requirements of the Securities Act and the Rules or are not presented in conformity with generally accepted accounting principles applied on a basis substantially consistent with that of the audited financial statements set forth in or incorporated by reference in the Registration Statement; (B) the amounts in "Selected Consolidated Financial and Other Data" set forth in or incorporated by reference in the Registration Statement and the Prospectus and the latest unaudited financial statements of the Company do not agree with the corresponding amounts in the audited and unaudited financial statements from which such amounts were derived; or (C) with respect to the Company, there were, at a specified date not more than five business days prior to the date of the letter, any increases in long-term liabilities of the Company or any decreases in net income or the stockholders' equity in the Company, as compared with the amounts shown on the Company's audited balance sheet dated December 31, 1995 and the unaudited balance sheet dated September 30, 1996 set forth in or incorporated by reference in the Registration Statement; and - 14 - 16 (iii) they have performed certain other procedures as a result of which they determined that certain information of an accounting, financial or statistical nature (which is limited to accounting, financial or statistical information derived from the general accounting records of the Company) set forth in or incorporated by reference in the Registration Statement and the Prospectus and reasonably specified by the Representative agrees with the accounting records of the Company. References to the Registration Statement and the Prospectus in this paragraph (e) are to such documents as amended and supplemented at the date of the letter. (f) The Representative shall have received on each Closing Date from McDermott, Will & Emery, counsel for the Company, an opinion, addressed to the Representative and dated such Closing Date, and stating in effect that: (i) The Company and the Subsidiaries are in good standing as foreign corporations in all jurisdictions in which the nature of their businesses requires them to be qualified to do business as a foreign corporation. (ii) The Company and each of the Subsidiaries has been duly incorporated and is validly existing as a corporation in good standing under the laws of the state of its incorporation or organization. The Company has authorized and issued capital stock as set forth in the Registration Statement and the Prospectus; the certificates evidencing the Shares are in due and proper legal form and have been duly authorized for issuance by the Company; all of the outstanding shares of Common Stock of the Company have been duly and validly authorized and have been duly and validly issued and are fully paid and nonassessable and none of them was issued in violation of any preemptive or other similar right. The Shares, when issued and sold pursuant to this Agreement, will be duly and validly issued, outstanding, fully paid and nonassessable and none of them will have been issued in violation of any preemptive or other similar right. To such counsel's knowledge, except as disclosed in the Registration Statement and the Prospectus, there is no outstanding subscription, option, warrant or other right calling for the issuance of any share of stock of the Company or any Subsidiary or any security convertible into, exercisable for, or exchangeable for stock of the Company or any Subsidiary. The Common Stock and the Shares conform in all material respects to the descriptions thereof contained in the section of the Registration Statement and the Prospectus entitled "Description of Capital Stock." All of the issued and outstanding shares of capital stock of each of the Subsidiaries have been duly authorized and validly issued, are fully paid and nonassessable and are owned of record by the Company, directly or through a wholly-owned Subsidiary. Assuming that the Company acquired such shares in good faith and without knowledge of any adverse claim, to the best of such counsel's - 15 - 17 knowledge, the Company holds such shares free and clear of any security interest, lien, encumbrance or other adverse claim. To such counsel's knowledge, except as disclosed in the Registration Statement and the Prospectus, there is no outstanding subscription, option, warrant or other right calling for the issuance of any share of stock of any of the Subsidiaries or any security convertible into, exercisable for, or exchangeable for stock of any Subsidiary. (iii) The Company and each of the Subsidiaries has all requisite corporate power and authority and all necessary authorizations, approvals, consents, orders, licenses, certificates and permits required to own, lease and license its assets and properties and to conduct its business as now being conducted and as described in the Registration Statement and the Prospectus. The Company and each of the Subsidiaries has all requisite corporate power and authority and all necessary authorizations, approvals, consents, orders, licenses, certificates and permits to enter into, deliver and perform this Agreement and, in the case of the Company, to issue and sell the Shares, other than those authorizations, approvals, consents, orders licenses, certificates and permits required under state and foreign securities laws. To such counsel's knowledge, the Company and each of the Subsidiaries have fulfilled and performed in all material respects all of their obligations with respect to such permits, and neither the Company nor any Subsidiary is in violation of any term or provision of any such permits, nor has any event occurred which allows, or after notice or lapse of time would allow, revocation or termination thereof or which could result in any material impairment of the rights of the holder of any such permits. To such counsel's knowledge, the Company does not control, directly or indirectly, any corporation, partnership, joint venture, association or other business organization other than the Subsidiaries. (iv) No permits are required for the performance of this Agreement or for the consummation of the transactions contemplated hereby or any other transaction described in the Registration Statement to be entered into prior to or contemporaneously with the sale of the Shares, except as disclosed in the Registration Statement and except for such permits that have been obtained. (v) All necessary corporate action has been duly and validly taken by the Company to authorize the execution, delivery and performance of this Agreement, and the issuance and sale of the Shares. This Agreement has been duly and validly authorized, executed and delivered by the Company, and constitutes the valid and binding obligation of the Company, enforceable against the Company, in accordance with its terms, except (A) as such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent transfer or conveyance, reorganization, receivership, moratorium or other similar laws then or thereafter in effect relating to or affecting the rights of creditors generally and by general equitable principles regardless of whether enforcement is - 16 - 18 considered in proceedings at law or in equity (including the possible unavailability of specific performance or injunctive relief and the general discretion of the court or tribunal considering the matter) and (B) to the extent that rights to indemnity or contribution under this Agreement may be unenforceable under certain circumstances under law or court decisions with respect to a liability where indemnification or contribution is contrary to law or public policy. (vi) Neither the execution, delivery and performance of this Agreement by the Company nor the consummation of any of the transactions contemplated hereby or thereby (including, without limitation, the issuance and sale by the Company of the Shares) will violate any provision of the charter or bylaws of the Company or the Subsidiaries or any franchise, license, permit, judgment, decree, order, statute, rule or regulation binding upon or applicable to the Company or the Subsidiaries. (vii) To such counsel's knowledge, neither the Company nor any of the Subsidiaries is in violation of any term or provision of its charter or bylaws. Except as disclosed in the Registration Statement and the Prospectus, to such counsel's knowledge, no default exists and no event has occurred which with notice or lapse of time, or both, would constitute a default in the due performance and observance of any express term, covenant or condition by the Company or any of the Subsidiaries of any indenture, mortgage, deed of trust, note or any other agreement or instrument to which the Company or any of the Subsidiaries are parties or by which they or any of their assets or properties or businesses may be bound or effected, where the consequences of such default would have a material adverse effect on the assets, properties, business, results of operations, prospects or financial condition of the Company. (viii) Neither the execution, delivery and performance of this Agreement by the Company nor the consummation of any of the transactions contemplated hereby (including, without limitation, the issuance and sale by the Company of the Shares) will give rise to a right to terminate or accelerate the due date of any payment due under, or conflict with or result in the breach of any term or provision of, or constitute a default (or any event which with notice or lapse of time, or both, would constitute a default) under, or require a consent or waiver under, or result in the execution or imposition of any lien, charge or encumbrance upon any properties or assets of the Company or any Subsidiary, pursuant to the express terms of any indenture, mortgage, deed of trust, note or other agreement or instrument filed as an exhibit to the Registration Statement and to which the Company or any Subsidiary is a party or by which it or any of its properties or businesses is bound, or any franchise, license, permit, judgment, decree, order, statute, rule or regulation binding upon or applicable to the Company or any Subsidiary. - 17 - 19 (ix) Except as described in the Registration Statement and the Prospectus, to such counsel's knowledge, no default exists, and no event has occurred which with notice or lapse of time, or both, would constitute a default in the due performance and observance of any express term, covenant or condition by the Company or any Subsidiary of any indenture, mortgage, deed of trust, note or any other agreement filed as an exhibit to or incorporated by reference in the Registration Statement, where the consequences of such default would have a material and adverse effect on the assets, properties or business of the Company. (x) To such counsel's knowledge, neither the Company nor any of the Subsidiaries is in violation of any term or provision of any franchise, license, permit, judgment, decree, order, statute, rule or regulation under Federal law, where the consequences of such violation would have a material adverse effect on the assets, properties or business, results of operations, prospects or financial condition of the Company. (xi) No authorization, approval, consent, order, license, certificate or permit or order of any court or governmental agency or body is required under Federal law for the execution, delivery or performance of this Agreement or the consummation of the transactions contemplated hereby or thereby or any other transaction described in the Registration Statement to be entered into prior to or contemporaneously with the sale of the Shares, except (a) as disclosed in the Registration Statement, (b) such as have been obtained and (c) such as are required under state and foreign securities laws. (xii) To such counsel's knowledge, there is no litigation or governmental or other proceeding or investigation before any court or before or by any public body or board pending or threatened against the Company or any of the Subsidiaries which is required to be disclosed in the Prospectus and which is not so disclosed. (xiii) The statements in the Prospectus under the captions "______" and "__________," insofar as such statements constitute a summary of documents referred to therein or matters of law, are fair summaries in all material respects and accurately present the information called for by the Securities Act and the Rules with respect to such documents and matters. To such counsel's knowledge, all contracts and other documents required to be filed as exhibits to, or described in, the Registration Statement have been so filed with the Commission or are fairly described in the Registration Statement, as the case may be. (xiv) The statements in the Prospectus under the captions of "Description of Common Stock" insofar as such statements constitute a - 18 - 20 summary of the Articles of Incorporation and Bylaws of the Company referred to therein or matters of Indiana law, are correct in all material respects. (xv) The Registration Statement, all preliminary prospectuses and the Prospectus and each amendment or supplement thereto (except for the financial statements and schedules and other financial and statistical data included therein, as to which such counsel expresses no opinion) comply as to form in all material respects with the requirements of the Securities Act and the Rules. (xvi) The Registration Statement has become effective under the Securities Act, and, to such counsel's knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are threatened, pending or contemplated. (xvii) The Company is not an "investment company" or an entity "controlled" by an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended. (xviii) The Shares have been duly approved for listing on the NYSE. (xix) To such counsel's knowledge, there are no persons with registration or other similar rights to have any securities registered pursuant to the Registration Statement or otherwise registered by the Company under the Securities Act, except as disclosed in the Registration Statement and the Prospectus. (xx) The issuance and sale of 10,733,236 additional shares of the Common Stock (the "Additional Common Stock"), pursuant to the Company's 1994 Omnibus Stock Incentive Program (the "Plan") and its two-for-one stock split effected August 28, 1996 (the "Stock Split") have been duly authorized by all necessary corporate action on the part of the Company; (xxi) The Additional Common Stock has been duly approved for listing on the NYSE. (xxii) The Additional Common Stock is validly issued, fully paid and nonassessable and none of them have been issued in violation of any preemptive or other similar right. To the extent deemed advisable by such counsel, they may rely as to matters of fact on certificates of officers of the Company, Subsidiaries and public officials and on the opinions of other counsel satisfactory to the Representative as to matters which are governed by laws other than the laws of the State of New York and the Federal laws of the United States; provided that such counsel shall state that in their opinion that they - 19 - 21 believe the Underwriters and they are justified in relying on such other opinions. Copies of such certificates and other opinions shall be furnished upon request to the Representative and counsel for the Underwriters. In addition, such opinion shall include a statement to the effect that, although such counsel has not verified, and is not passing upon and does not assume any responsibility for, the accuracy, completeness or fairness of the statements contained in the Registration Statement and the Prospectus (except as specified in the foregoing opinion), no facts have come to the attention of such counsel which lead such counsel to believe that, under the Securities Act and the Rules, the Registration Statement at the time it became effective contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or that, as of the date of the Prospectus, as amended or supplemented, the Prospectus as so amended or supplemented contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (in each case except with respect to the financial statements and notes and schedules thereto and other financial and statistical data, as to which such counsel need make no statement). (g) All proceedings taken in connection with the sale of the Firm Shares and the Option Shares as herein contemplated shall be reasonably satisfactory in form and substance to the Representative and their counsel and the Underwriters shall have received from Gibson, Dunn & Crutcher LLP a favorable opinion, addressed to the Representative and dated such Closing Date, with respect to the Shares, the Registration Statement and the Prospectus, and such other related matters, as the Representative may reasonably request, and the Company shall have furnished to Gibson, Dunn & Crutcher LLP such documents as they may reasonably request for the purpose of enabling them to pass upon such matters. (h) The Company and each of the Subsidiaries shall have furnished or caused to be furnished to the Representative such further certificates and documents as the Representative shall have reasonably requested. 6. COVENANTS OF THE COMPANY. (A) The Company covenants and agrees as follows: (i) The Company shall prepare the Prospectus in a form approved by the Underwriter and file such Prospectus pursuant to Rule 424(b) under the Securities Act not later than the Commission's close of business on the second business day following the execution and delivery of this Agreement, or, if applicable, such earlier time as may be required by Rule 430A(a)(3) under the Securities Act, and shall promptly advise the Representative (a) when any amendment to the Registration Statement shall have become effective, (b) of any request by the Commission for any amendment of the Registration Statement or the Prospectus or for any additional information, (c) of - 20 - 22 the prevention or suspension of the use of any preliminary prospectus or the Prospectus or of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the institution or threatening of any proceeding for that purpose and (d) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. The Company shall not file or prepare any amendment of the Registration Statement or supplement to the Prospectus unless the Company has furnished the Representative a copy for its review within a reasonable amount of time prior to filing or use and shall not file or use any such proposed amendment or supplement to which the Representative reasonably object. The Company shall use its best efforts to prevent the issuance of any such stop order and, if issued, to obtain as soon as possible the withdrawal thereof. (ii) If, at any time when a prospectus relating to the Shares is required to be delivered under the Securities Act and the Rules, any event occurs as a result of which the Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading, or if it shall be necessary to amend or supplement the Prospectus to comply with the Securities Act or the Rules, the Company promptly shall prepare and file with the Commission, subject to the second sentence of paragraph (i) of this Section 6(A), an amendment or supplement which shall correct such statement or omission or an amendment which shall effect such compliance. (iii) The Company shall make generally available to its security holders and to the Representative as soon as practicable, but not later than 45 days after the end of the 12-month period beginning at the end of the fiscal quarter of the Company during which the "effective date" (as defined in Rule 158 of the Rules) occurs (or 90 days if such 12-month period coincides with the Company's fiscal year), an earnings statement (which need not be audited) of the Company, covering such 12-month period, which shall satisfy the provisions of Section 11(a) of the Securities Act. The Company may satisfy this requirement by complying with Rule 158 of the Rules. (iv) The Company shall furnish to the Representative and counsel for the Underwriters, without charge, three signed copies of the Registration Statement (including all exhibits thereto and amendments thereof) and each other Underwriter a copy of the Registration Statement (without exhibits thereto) and all amendments thereof and, so long as delivery of a prospectus by an Underwriter or dealer may be required by the Securities Act or the Rules, as many copies of any preliminary prospectus and the Prospectus and any amendments thereof and supplements thereto as the Representative may reasonably request. (v) The Company shall cooperate with the Representative and its counsel in endeavoring to qualify the Shares for offer and sale under the laws of such jurisdictions as the Representative may designate and shall maintain such qualifications in effect so - 21 - 23 long as required for the distribution of the Shares; provided, however, that the Company shall not be required in connection therewith, as a condition thereof, to qualify as a foreign corporation or to execute a general consent to service of process in any jurisdiction or subject itself to taxation as doing business in any jurisdiction. In each jurisdiction in which the Shares have been so qualified, the Company will file such statements and reports as may be required by the laws of such jurisdiction to continue such qualification in effect for a period of not less than one year from the Effective Date. (vi) For a period of five years after the date of this Agreement, the Company shall supply to the Representative and to each other Underwriter who may so request in writing, copies of such financial statements and other periodic and special reports as the Company may from time to time distribute generally to the holders of any class of its capital stock and to furnish to the Representative a copy of each annual or other report it shall be required to file with the Commission. (vii) Without the prior written consent of the Representative, for a period of 90 days after the date of this Agreement, the Company shall not issue, sell or register with the Commission (other than on Form S-8 or on any successor form), or otherwise dispose of, directly or indirectly, any equity securities of the Company (or any securities convertible into or exercisable or exchangeable for equity securities of the Company), except for the issuance of the Shares pursuant to the Registration Statement and the issuance of shares pursuant to the Company's existing stock option plan. In the event that, during this period, (a) any shares are issued pursuant to the Company's existing stock option plan or (b) any registration is effected on Form S-8 or on any successor form, the Company shall obtain the written agreement of each grantee or purchaser or holder of such registered securities who obtains 50,000 or more shares or rights to purchase shares that vest within such 90 day period that, for a period of 90 days after the date of this Agreement, such person will not, without the prior written consent of the Oppenheimer & Co., Inc., offer for sale, sell, distribute, grant any option for the sale of, or otherwise dispose of, directly or indirectly, or exercise any registration rights with respect to, any shares of Common Stock (or any securities convertible into, exercisable for, or exchangeable for any shares of Common Stock) owned by such person, except that one executive officer and director may transfer by way of a gift [80,000] shares of Common Stock to charitable foundations or charitable trusts during the period of 90 days after the date of this Agreement. (viii) On or before completion of this offering, the Company shall make all filings required under applicable securities laws and by the NYSE (including any required registration under the Exchange Act). (ix) Prior to a Closing Date, the Company will not issue, directly or indirectly, without the Representative's prior written consent which shall not be unreasonably withheld, any press release or other communication or hold any press conference with respect to the Company or its activities or this offering, other than - 22 - 24 press releases issued in the ordinary course of the Company's business with respect to the Company's operations. (x) The Company will comply with all of the provisions of any undertakings contained in the Prospectus or the Registration Statement. (xi) The Company will apply the net proceeds from the sale of the Shares substantially in accordance with the description set forth in the Prospectus. (xii) Except as stated in this Agreement and in the Prospectus, the Company will not take, directly or indirectly (except for any action taken by the Underwriters), any action designed to or that might reasonably be expected to cause or result in stabilization or manipulation of the price of the Common Stock to facilitate the sale or resale of the Shares. (xiii) The Company will not make any payments or distributions to its shareholders for the purpose of funding, directly or indirectly, any tax liabilities of its shareholders. (B) The Company agrees to pay, or reimburse if paid by the Representative, whether or not the transactions contemplated hereby are consummated or this Agreement is terminated, all costs and expenses incident to the public offering of the Shares and the performance of the obligations of the Company under this Agreement including those relating to: (i) the preparation, printing, filing and distribution of the Registration Statement including all exhibits thereto, each preliminary prospectus, the Prospectus, all amendments and supplements to the Registration Statement and the Prospectus, and the printing, filing and distribution of this Agreement; (ii) the preparation and delivery of certificates for the Shares to the Representative; (iii) the registration or qualification of the Shares for offer and sale under the securities or Blue Sky laws of the various jurisdictions referred to in Section 6(A)(v), including the reasonable fees and disbursements of counsel for the Underwriters in connection with such registration and qualification and the preparation, printing, distribution and shipment of preliminary and supplementary Blue Sky memoranda; (iv) the furnishing (including costs of shipping and mailing) to the Representative and to the Underwriters of copies of each preliminary prospectus, the Prospectus and all amendments or supplements to the Prospectus, and of the several documents required by this Section to be so furnished, as may be reasonably requested for use in connection with the offering and sale of the Shares by the Underwriters or by dealers to whom Shares may be sold; (v) the filing fees of the National Association of Securities Dealers, Inc. in connection with its review of the terms of the public offering; (vi) the furnishing (including costs of shipping and mailing) to the Representative and to the Underwriters of copies of all reports and information required by Section 6(A)(vi); (vii) inclusion of the Shares for quotation on the NYSE; and (viii) all transfer taxes, if any, with respect to the sale and delivery of the Shares by the Company to the Underwriters. Subject to the provisions of Section 9, the Underwriters agree to pay, whether or not the transactions contemplated hereby are consummated or this Agreement is terminated, all costs and expenses incident to the performance of the obligations of the Underwriters under this - 23 - 25 Agreement not payable by the Company pursuant to the preceding sentence, including, without limitation, the fees and disbursements of counsel for the Underwriters. 7. INDEMNIFICATION. (a) The Company agrees to indemnify and hold harmless each Underwriter, each of their respective officers, directors, partners, employees, agents and counsel, and each person, if any, who controls any Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act against any and all losses, claims, damages and liabilities, joint or several (including any reasonable investigation, legal and other expenses incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted), to which they, or any of them, may become subject under the Securities Act, the Exchange Act or other Federal or state law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus, the Registration Statement or the Prospectus or any amendment thereof or supplement thereto, or arise out of or are based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that such indemnity shall not inure to the benefit of any Underwriter (or any officers, directors, parties, employees, agents, counsel or any person controlling such Underwriter) on account of any losses, claims, damages or liabilities arising from the sale of the Shares to any person by such Underwriter if such untrue statement or omission or alleged untrue statement or omission was made in such preliminary prospectus, the Registration Statement or the Prospectus, or such amendment or supplement, in reliance upon and in conformity with the information furnished in writing to the Company by the Representative on behalf of any Underwriter specifically for use therein as described in Section 4(o). This indemnity agreement will be in addition to any liability which the Company may otherwise have. (b) Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, each director of the Company, and each officer of the Company who signs the Registration Statement, to the same extent as the foregoing indemnity from the Company to each Underwriter, but only insofar as such losses, claims, damages or liabilities arise out of or are based upon any untrue statement or omission or alleged untrue statement or omission which was made in any preliminary prospectus, the Registration Statement or the Prospectus, or any amendment thereof or supplement thereto, in reliance upon and in conformity with information furnished in writing to the Company by the Representative on behalf of such Underwriter specifically for use therein; provided, however, that the obligation of each Underwriter to indemnify the Company (including any controlling person, director or officer thereof) shall be limited to the net proceeds received by the Company from such Underwriter. - 24 - 26 (c) Any party that proposes to assert the right to be indemnified under this Section will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim is to be made against an indemnifying party or parties under this Section, notify each such indemnifying party of the commencement of such action, suit or proceeding, enclosing a copy of all papers served. No indemnification provided for in Section 7(a) or 7(b) shall be available to any party who shall fail to give notice as provided in this Section 7(c) if the party to whom notice was not given was unaware of the proceeding to which such notice would have related and was materially prejudiced by the failure to give such notice but the omission so to notify such indemnifying party of any such action, suit or proceeding shall not relieve it from any liability that it may have to any indemnified party for contribution or otherwise than under this Section. In case any such action, suit or proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in, and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof and the approval by the indemnified party of such counsel, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses, except as provided below and except for the reasonable costs of investigation subsequently incurred by such indemnified party in connection with the defense thereof. The indemnified party shall have the right to employ its counsel in any such action, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the employment of counsel by such indemnified party has been authorized in writing by the indemnifying parties, (ii) the indemnified party shall have reasonably concluded that there may be a conflict of interest between the indemnifying parties and the indemnified party in the conduct of the defense of such action (in which case the indemnifying parties shall not have the right to direct the defense of such action on behalf of the indemnified party) or (iii) the indemnifying parties shall not have employed counsel to assume the defense of such action within a reasonable time after notice of the commencement thereof, in each of which cases the fees and expenses of counsel shall be at the expense of the indemnifying parties. An indemnifying party shall not be liable for any settlement of any action, suit, proceeding or claim effected without its written consent; provided, however, that such consent has not been unreasonably withheld. 8. CONTRIBUTION. In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in Section 7(a) is due in accordance with its terms but for any reason is held to be unavailable from the Company, the Company and the Underwriters shall contribute to the aggregate losses, claims, damages and liabilities (including any investigation, legal and other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claims asserted, but after deducting any contribution received by the Company from persons other than the Underwriters, such as persons who control the Company within the meaning of the Securities - 25 - 27 Act, officers of the Company who signed the Registration Statement and directors of the Company, who may also be liable for contribution) to which the Company and one or more of the Underwriters may be subject in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other from the offering of the Shares or, if such allocation is not permitted by applicable law or indemnification is not available as a result of the indemnifying party not having received notice as provided in Section 7 hereof, in such proportion as is appropriate to reflect not only the relative benefits referred to above but also the relative fault of the Company on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Underwriters shall be deemed to be in the same proportion as (x) the total proceeds from the offering (net of underwriting discounts but before deducting expenses) received by the Company, as set forth in the table on the cover page of the Prospectus, bear to (y) the underwriting discounts received by the Underwriters, as set forth in the table on the cover page of the Prospectus. The relative fault of the Company or the Underwriters shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact related to information supplied by the Company or the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 8 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this Section 8, (i) in no case shall any Underwriter (except as may be provided in the Agreement Among Underwriters) be liable or responsible for any amount in excess of the underwriting discount applicable to the Shares purchased by such Underwriter hereunder, and (ii) the Company shall be liable and responsible for any amount in excess of such underwriting discount; provided, however, that no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 8, each person, if any, who controls the Underwriter within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act shall have the same rights to contribution as such Underwriter, and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act, each officer of the Company who shall have signed the Registration Statement and each director of the Company shall have the same rights to contribution as the Company, subject in each case to clauses (i) and (ii) in the immediately preceding sentence of this Section 8. Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties under this Section, notify such party or parties from whom contribution may be sought, but the omission so to notify such party or parties from whom contribution may be sought shall not relieve the party or parties from whom contribution may be sought from any obligation it or they may have hereunder or otherwise than under this Section, except to the extent of any material prejudice resulting from such failure to notify. No party shall be liable for contribution with respect to any action, suit, - 26 - 28 proceeding or claim settled without its written consent; provided, however, that such written consent has not been unreasonably withheld. The Underwriters' obligations to contribute pursuant to this Section 8 are several in proportion to their respective underwriting commitments and not joint. 9. TERMINATION. This Agreement may be terminated with respect to the Shares to be purchased on a Closing Date by the Representative by notifying the Company at any time (a) in the sole and absolute discretion and judgment of the Representative at or before any Closing Date: (i) if the Company shall have sustained a material or substantial loss by fire, flood, accident, hurricane, earthquake, theft, sabotage or other calamity or malicious act which, whether or not said loss shall have been insured, will make it inadvisable to proceed with the offering; (ii) if there has been, since the respective dates as of which information is given in the Registration Statement and the Prospectus, any material adverse change in the business, operations, earnings, prospects, properties or financial condition of the Company, whether or not arising in the ordinary course of business; (iii) if on or prior to such date, any domestic or international event or act or occurrence has materially disrupted, or in the opinion of the Representative will in the future materially disrupt, the securities markets; (iv) if there has occurred any new outbreak or material escalation of hostilities or other calamity or crisis the effect of which on the financial markets of the United States is such as to make it, in the judgment of the Representative, inadvisable to proceed with the offering; (v) if there shall be such a material adverse change in general financial, political or economic conditions or the effect of international conditions on the financial markets in the United States is such as to make it, in the judgment of the Representative, inadvisable or impracticable to market the Shares; (vi) if trading in the Shares has been suspended by the Commission or trading generally on the NYSE or on the American Stock Exchange, Inc. has been suspended or limited, or minimum or maximum ranges for prices for securities shall have been fixed, or maximum ranges for prices for securities have been required, by said exchanges or by order of the Commission, the National Association of Securities Dealers, Inc., or any other governmental or regulatory authority; or (vii) if a banking moratorium has been declared by any state or Federal authority, or (b) at or before any Closing Date, that any of the conditions specified in Section 5 shall not have been fulfilled when and as required by this Agreement. If this Agreement is terminated pursuant to any of its provisions, the Company shall not be under any liability to any Underwriter, and no Underwriter shall be under any liability to the Company, except that (y) if this Agreement is terminated by the Representative or the Underwriters because of any failure, refusal or inability on the part of the Company to comply with the terms or to fulfill any of the conditions of this Agreement, the Company will reimburse the Underwriters for all out-of-pocket expenses (including the reasonable fees and disbursements of their counsel) incurred by them in connection with the proposed purchase and - 27 - 29 sale of the Shares or in contemplation of performing their obligations hereunder and (z) no Underwriter who shall have failed or refused to purchase the Shares agreed to be purchased by it under this Agreement, without some reason sufficient hereunder to justify cancellation or termination of its obligations under this Agreement, shall be relieved of liability to the Company or to the other Underwriters for damages occasioned by its failure or refusal. 10. SUBSTITUTION OF UNDERWRITERS. If one or more of the Underwriters shall fail (other than for a reason sufficient to justify the cancellation or termination of this Agreement under Section 9) to purchase on any Closing Date the Shares agreed to be purchased on such Closing Date by such Underwriter or Underwriters, the Representative may find one or more substitute underwriters to purchase such Shares or make such other arrangements as the Representative may deem advisable or one or more of the remaining Underwriters may agree to purchase such Shares in such proportions as may be approved by the Representative, in each case upon the terms set forth in this Agreement. If no such arrangements have been made by the close of business on the business day following such Closing Date, (a) if the number of Shares to be purchased by the defaulting Underwriters on such Closing Date shall not exceed 10% of the Shares that all the Underwriters are obligated to purchase on such Closing Date, then each of the nondefaulting Underwriters shall be obligated to purchase such Shares on the terms herein set forth in proportion to their respective obligations hereunder; provided, that in no event shall the maximum number of Shares that any Underwriter has agreed to purchase pursuant to Section 1 be increased pursuant to this Section 10 by more than one-ninth of such number of Shares without the written consent of such Underwriter, or (b) if the number of Shares to be purchased by the defaulting Underwriters on such Closing Date shall exceed 10% of the Shares that all the Underwriters are obligated to purchase on such Closing Date, then the Company shall be entitled to an additional business day within which it may, but is not obligated to, find one or more substitute underwriters reasonably satisfactory to the Representative to purchase such Shares upon the terms set forth in this Agreement. In any such case, either the Representative or the Company shall have the right to postpone the applicable Closing Date for a period of not more than five business days in order that necessary changes and arrangements (including any necessary amendments or supplements to the Registration Statement or Prospectus) may be effected by the Representative and the Company. If the number of Shares to be purchased on such Closing Date by such defaulting Underwriter or Underwriters shall exceed 10% of the Shares that all the Underwriters are obligated to purchase on such Closing Date, and none of the nondefaulting Underwriters or the Company shall make arrangements pursuant to this Section within the period stated for the purchase of the Shares that the defaulting Underwriters agreed to purchase, this Agreement shall terminate with respect to the Shares to be purchased on such Closing Date without liability on the part of any nondefaulting Underwriter to the Company and without liability on the part of the Company, except in both cases as provided in Sections - 28 - 30 6(B), 7, 8 and 9. The provisions of this Section shall not in any way affect the liability of any defaulting Underwriter to the Company or the nondefaulting Underwriters arising out of such default. A substitute underwriter hereunder shall become an Underwriter for all purposes of this Agreement. 11. MISCELLANEOUS. The respective agreements, representations, warranties, indemnities and other statements of the Company or its officers and of the Underwriters set forth in or made pursuant to this Agreement shall remain in full force and effect, regardless of any indemnification made by or on behalf of any Underwriter or the Company or any of the officers, directors or controlling persons referred to in Sections 7 and 8 hereof, and shall survive delivery of and payment for the Shares. The provisions of Sections 6(B), 7, 8 and 9 shall survive the termination or cancellation of this Agreement. This Agreement has been and is made for the benefit of the Underwriters and the Company and their respective successors and assigns, and, to the extent expressed herein, for the benefit of persons controlling any of the Underwriters or the Company, and directors and officers of the Company, and their respective successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. The term "successors and assigns" shall not include any purchaser of Shares from any Underwriter merely because of such purchase. All notices and communications hereunder shall be in writing and mailed or delivered or by telephone or telegraph if subsequently confirmed in writing, (a) if to the Representative, c/o Oppenheimer & Co., Inc., Oppenheimer Tower, World Financial Center, New York, New York 10281 Attention: [Richard D. White], and (b) if to the Company, to its agent for service as such agent's address appears on the cover page of the Registration Statement. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflict of laws. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. - 29 - 31 Please confirm that the foregoing correctly sets forth the agreement among us. Very truly yours, COACHMEN INDUSTRIES, INC. By:_______________________________ Thomas H. Corson, Chairman of the Board and Chief Executive Officer - 30 - 32 Confirmed: OPPENHEIMER & CO., INC. By: OPPENHEIMER & CO., INC. Acting severally on behalf of itself and as representative of the several Underwriters named in Schedule I annexed hereto By: _________________________ Mark Harms, Managing Director - 31 - 33 SCHEDULE I
NUMBER OF FIRM SHARES TO BE NAME PURCHASED ____ ______________ Oppenheimer & Co., Inc. Total 1,500,000
_________ EX-4.2 3 ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION 1 Exhibit 4.2 ARTICLES OF AMENDMENT OF THE Provided by: Joseph H. Hogsett [LOGO] ARTICLES OF INCORPORATION SECRETARY OF STATE OF INDIANA State Form 38333 (R5/9-91) CORPORATIONS DIVISION State Board of Accounts Approved 1988 INSTRUCTIONS: Use 8 1/2 X 11 inch white Indiana Code 23-1-38-1 et seg. paper for inserts. Filing requirements - FILING FEE $30.00 Present original and one copy to address in upper right corner of this form. ___________________________________________________________________________ ARTICLES OF AMENDMENT OF THE ARTICLES OF INCORPORATION OF: ___________________________________________________________________________ COACHMEN INDUSTRIES, INC. ___________________________________________________________________________ The undersigned officers of Coachmen Industries, Inc. ___________________________________________________________________________ (hereinafter referred to as the "Corporation") existing pursuant to the provisions of: (Indicate appropriate act) /X/ Indiana Business Corporation Law / / Indiana Professional Corporation Act of 1983 as amended (hereinafter referred to as the "Act"), desiring to give notice of corporate action effectuating amendment of certain provisions of its Articles of Incorporation, certify the following facts: ___________________________________________________________________________ ARTICLE I Amendment(s) ___________________________________________________________________________ SECTION 1 The date of incorporation of the corporation is: December 31, 1964. ___________________________________________________________________________ SECTION 2 The name of the corporation following this amendment to the Articles of Incorporation is: Coachmen Industries, Inc. ___________________________________________________________________________ 2 SECTION 3 The exact text of Article(s) V of the Articles of Incorporation is now as follows: See Exhibit A attached hereto. ___________________________________________________________________________ SECTION 4 Date of each amendment's adoption: ___________________________________________________________________________ ARTICLE II Manner of Adoption and Vote ___________________________________________________________________________ SECTION 1 Action by Directors: The Board of Directors of the Corporation duly adopted a resolution proposing to amend the terms and provisions of Article(s) _____V_____ of the Articles of Incorporation and directing a meeting of the Shareholders, to be held on ___________________, allowing such Shareholders to vote on the proposed amendment. The resolution was adopted by: (Select appropriate paragraph) (a) Vote of the Board of Directors at a meeting held on July 17, 1996, at which a quorum of such Board was present. (b) Written consent executed on _______________________, 19__, and signed by all members of the Board of Directors. Adopted in accordance with Section 23-1-38-2(4). ___________________________________________________________________________ SECTION 2 Action by Shareholders. Not Applicable The Shareholders of the Corporation entitled to vote in respect of the Articles of Amendment adopted the proposed amendment. The amendment was adopted by: (Select appropriate paragraph) (a) Vote of such Shareholders during the meeting called by the Board of Directors. The result of such vote is as follows: TOTAL SHAREHOLDERS ENTITLED TO VOTE: ____________ SHAREHOLDERS VOTED IN FAVOR: ____________ -2- 3 SHAREHOLDERS VOTED AGAINST: ____________ (b) Written consent executed on ________________, 19__, and signed by all such Shareholders. ___________________________________________________________________________ SECTION 3 Compliance with Legal Requirements. The manner of the adoption of the Articles of Amendment an the vote by which they were adopted constitute full legal compliance with the provisions of the Act, the Articles of Incorporation, and the by-Laws of the Corporation. ___________________________________________________________________________ I hereby verify subject to the penalties of perjury that the statements contained are true this 16th day of August, 1996. ___________________________________________________________________________ /s/ Gary L. Groom Gary L. Groom Current Officer's Signature Officer's Name Printed ___________________________________________________________________________ Officer's Title: Executive Vice President ___________________________________________________________________________ -3- 4 Exhibit A to Articles of Amendment of the Articles of Incorporation of COACHMEN INDUSTRIES, INC. ARTICLE FIVE. Prior to August 28, 1996, the Corporation had authority to issue Thirty Million (30,000,000) shares of Common Stock, without par value. Effective on August 28, 1996, each issued and outstanding share of the Corporation's Common Stock, without par value, shall be split two-for-one. The split-up of all shares shall occur automatically and without any action on the part of any holder thereof. To effectuate such split, the Corporation shall distribute on or about August 28, 1996 one additional share of Common Stock, without par value, for each one outstanding share of Common Stock, without par value, to the shareholders of record at the close of business on August 7, 1996. The split-up shall not affect the capital accounts of the Corporation. Giving effect to the aforesaid stock split, the number of shares that the Corporation shall have authority to issue as of August 28, 1996, is Sixty Million (60,000,000) shares of Common Stock, without par value. -4- EX-5 4 OPINION OF MCDERMOTT, WILL & EMERY 1 EXHIBIT 5 McDERMOTT, WILL & EMERY 227 West Monroe Street, Suite 3100 Chicago, Illinois 60606-5096 October 21, 1996 Coachmen Industries, Inc. 601 East Beardsley Avenue Elkhart, Indiana 46514 Ladies and Gentlemen: You have requested our opinion in connection with the Registration Statement on Form S-3 (the "Registration Statement") to be filed with the Securities and Exchange Commission by Coachmen Industries, Inc. (the "Company") under the Securities Act of 1933, as amended (the "Securities Act"). The Registration Statement relates to the sale of 1,500,000 shares of the Common Stock, without par value, plus up to an additional 225,000 shares of Common Stock granted to the underwriters by the Company to cover over-allotments (the "Shares") to be issued and sold by the Company. In arriving at the opinion expressed below, we have examined the Registration Statement and such other documents as we have deemed necessary to enable us to express the opinion hereinafter set forth. In addition, we have examined and relied, to the extent we deem proper, on certificates of officers of the Company as to factual matters, and on the originals or copies certified or otherwise identified to our satisfaction, of all such corporate records of the Company and such other instruments and certificates of public officials and other persons as we have deemed appropriate. In our examination, we have assumed the authenticity of all documents submitted to us as originals, the conformity to the original documents of all documents submitted to us as copies, the genuineness of all signatures on documents reviewed by us and the legal capacity of natural persons. Based upon and subject to the foregoing, we are of the opinion that the Shares have been duly authorized and, when issued in accordance with the terms and conditions set forth in the underwriting agreement which is an exhibit to the Registration Statement, will be validly issued, fully paid and non-assessable. 2 Coachmen Industries, Inc. October 21, 1996 Page 2 We hereby consent to the references to our firm under the caption "Legal Matters" in the Registration Statement and to the use of this opinion as an exhibit to the Registration Statement. In giving this consent, we do not hereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act, or the rules and regulations of the Commission thereunder. Very truly yours, /s/ McDermott, Will & Emery McDermott, Will & Emery EX-23.(B) 5 CONSENT OF COOPERS & LYBRAND 1 EXHIBIT 23(B) CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the inclusion in this registration statement of Coachmen Industries, Inc. on Form S-3 of our report dated January 26, 1996, except as to the information presented in Note 13 for which the date is July 17, 1996, on our audit of the consolidated financial statements of Coachmen Industries, Inc. and subsidiaries as of December 31, 1994 and 1995, and for each of the three years in the period ended December 31, 1995. In addition, we consent to the incorporation by reference in this registration statement of our report dated January 26, 1996, on our audit of the financial statement schedule of Coachmen Industries, Inc. and subsidiaries for each of the three years in the period ended December 31, 1995, which report is included in the Annual Report on Form 10-K of Coachmen Industries, Inc. for the year ended December 31, 1995. We also consent to the reference to our firm under the caption "Experts." COOPERS & LYBRAND L.L.P. South Bend, Indiana October 21, 1996 -----END PRIVACY-ENHANCED MESSAGE-----