2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Basis of Consolidation

The consolidated financial statements reflect the accounts of the Company and its wholly-owned and majority-owned subsidiaries. All significant intercompany profits, transactions and balances have been eliminated in consolidation.

b. Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that directly affect the amounts reported in its consolidated financial statements and accompanying notes. Actual results could differ from these estimates.

c. Revenue Recognition

The Company recognizes revenue from the sale of its products when the customer has made a fixed commitment to purchase a product for a fixed or determinable price, collection is reasonably assured under the Company’s normal billing and credit terms and ownership and all risk of loss has been transferred to the buyer, which is normally upon shipment to or pick up by the customer. Revenues on certain long-term contracts are recorded on a percentage of completion method, measured by the actual labor incurred to the estimated total labor for each project. Revenues exclude all taxes collected from the customer. Shipping and handling fees are included in Net Sales and the associated costs included in Cost of Sales in the Consolidated Statements of Operations.

d. Used Trailer Trade Commitments and Residual Value Guarantees

The Company has commitments with certain customers to accept used trailers on trade for new trailer purchases. These commitments arise in the normal course of business related to future new trailer orders at the time a new trailer order is placed by the customer. The Company acquired used trailers on trade of approximately $26.2 million, $19.5 million and $16.2 million in 2013, 2012 and 2011, respectively. As of December 31, 2013 and 2012, the Company had approximately $15.6 million and $10.8 million, respectively, of outstanding trade commitments. On occasion, the amount of the trade allowance provided for in the used trailer commitments, or cost, may exceed the net realizable value of the underlying used trailer. In these instances, the Company’s policy is to recognize the loss related to these commitments at the time the new trailer revenue is recognized. Net realizable value of used trailers is measured considering market sales data for comparable types of trailers. The net realizable value of the used trailers subject to the remaining outstanding trade commitments was estimated by the Company to be approximately $15.3 million and $10.8 million as of December 31, 2013 and 2012, respectively.

e. Cash and Cash Equivalents

Cash and cash equivalents include all highly liquid investments with a maturity of three months or less at the time of purchase.

f. Accounts Receivable

Accounts receivable are shown net of allowance for doubtful accounts and primarily include trade receivables. The Company records and maintains a provision for doubtful accounts for customers based upon a variety of factors including the Company’s historical experience, the length of time the account has been outstanding and the financial condition of the customer. If the circumstances related to specific customers were to change, the Company’s estimates with respect to the collectability of the related accounts could be further adjusted. The Company’s policy is to write-off receivables when they are determined to be uncollectible. Provisions to the allowance for doubtful accounts are charged to both General and Administrative Expenses and Selling Expenses in the Consolidated Statements of Operations. The following table presents the changes in the allowance for doubtful accounts (in thousands):

	Years Ended December 31,
	2013		2012		2011
Balance at beginning of year	$	858	$	1,233	$	2,241
Provision		908		(153)		(981)
Write-offs, net of recoveries		292		(222)		(27)
Balance at end of year	$	2,058	$	858	$	1,233

g. Inventories

Inventories are stated at the lower of cost, determined on the first-in, first-out (FIFO) method, or market. The cost of manufactured inventory includes raw material, labor and overhead. Inventories consist of the following (in thousands):

	December 31,
	2013		2012
Raw materials and components	$	54,699	$	57,187
Work in progress		20,749		24,849
Finished goods		82,673		82,930
Aftermarket parts		10,389		9,882
Used trailers		15,663		14,639
	$	184,173	$	189,487

h. Prepaid Expenses and Other

Prepaid expenses and other as of December 31, 2013 and 2012 were $9.6 million and $8.2 million, respectively. Prepaid expenses and other primarily includes items such as insurance premiums, maintenance agreements, restricted cash balances and other receivables. Insurance premiums and maintenance agreements are charged to expense over the contractual life, which is generally one year or less. As of December 31, 2012, the Company had restricted cash balances totaling $2.5 million pertaining to a financing arrangement for the expansion of its production facility in Cadiz, Kentucky which was fully utilized in 2013. Other receivables primarily consist of costs in excess of billings on long-term contracts for which the Company recognizes revenue on a percentage of completion basis.

i. Property, Plant and Equipment

Property, plant and equipment are recorded at cost, net of accumulated depreciation. Maintenance and repairs are charged to expense as incurred, while expenditures that extend the useful life of an asset are capitalized. Depreciation is recorded using the straight-line method over the estimated useful lives of the depreciable assets. The estimated useful lives are up to 33 years for buildings and building improvements and range from three to ten years for machinery and equipment. Depreciation expense, which is recorded in Cost of Sales and General and Administrative Expenses in the Consolidated Statements of Operations, as appropriate, on property, plant and equipment was $15.7 million, $12.7 million and $10.2 million for 2013, 2012 and 2011, respectively, and includes amortization of assets recorded in connection with the Company’s capital lease agreements. In February 2012, the Company renegotiated a new, ten-year lease extension for its manufacturing facility in Cadiz, Kentucky resulting in a capital lease obligation for this facility of $2.7 million and a cash payment at closing of $0.8 million. Additionally, in connection with the purchase of certain assets of Beall in February 2013, the Company entered into a separate ten-year capital lease agreement for Beall’s manufacturing facility in Portland, Oregon, with an obligation totaling $4.3 million. As of December 31, 2013 and 2012, the assets related to the Company’s capital lease agreements are recorded within Property, Plant and Equipment in the Consolidated Balance Sheet for the amount of $10.9 million and $6.5 million, respectively, net of accumulated depreciation of $2.4 million and $1.4 million, respectively.

Property, plant and equipment consist of the following (in thousands):

	December 31,
	2013		2012
Land	$	26,398	$	23,986
Buildings and building improvements		112,208		106,679
Machinery and equipment		200,567		184,859
Construction in progress		9,543		8,753
	$	348,716	$	324,277
Less: accumulated depreciation		(206,634)		(192,131)
	$	142,082	$	132,146

Intangible Assets

As of December 31, 2013, the balances of intangible assets, other than goodwill, were as follows (in thousands):

	Weighted Average Amortization Period	Gross Intangible Assets		Accumulated Amortization		Net Intangible Assets
Tradenames and trademarks	20 years	$	39,222	$	(6,291)	$	32,931
Customer relationships	10 years		152,109		(40,112)		111,997
Technology	12 years		16,517		(2,264)		14,253
Other	9 years		17,939		(17,939)		-
Total	12 years	$	225,787	$	(66,606)	$	159,181

As of December 31, 2012, the balances of intangible assets, other than goodwill, were as follows (in thousands):

	Weighted Average Amortization Period	Gross Intangible Assets		Accumulated Amortization		Net Intangible Assets
Tradenames and trademarks	20 years	$	37,600	$	(4,336)	$	33,264
Customer relationships	10 years		146,000		(21,738)		124,262
Technology	12 years		15,300		(850)		14,450
Other	9 years		17,939		(17,925)		14
Total	12 years	$	216,839	$	(44,849)	$	171,990

Intangible asset amortization expense was $21.8 million, $10.6 million and $3.0 million for 2013, 2012 and 2011, respectively. Annual intangible asset amortization expense for the next 5 fiscal years is estimated to be $21.9 million in 2014; $21.3 million in 2015; $20.1 million in 2016; $16.9 million in 2017 and $15.5 million in 2018.

k. Goodwill

The changes in the carrying amounts of goodwill, all of which is included in the Company’s Diversified Products segment as of December 31, 2013 except for approximately $10.2 million allocated to the Company’s Retail segment, for the years ended December 31, 2013 and 2012 were as follows (in thousands):

Balance as of December 31, 2011	$	-

Goodwill acquired		146,444

Balance as of December 31, 2012	$	146,444

Goodwill acquired		1,784
Acquisition adjustment - Walker		2,054
Effects of foreign currency		(315)

Balance as of December 31, 2013	$	149,967

Goodwill represents the excess purchase price over fair value of the net assets acquired. The Company reviews goodwill for impairment annually on October 1 and whenever events or changes in circumstances indicate its carrying value may not be recoverable in accordance with ASC 350, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment, ("ASU 2011-08"). Under this guidance, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, the Company determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary.

In assessing the qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company assesses relevant events and circumstances that may impact the fair value and the carrying amount of the reporting unit. The identification of relevant events and circumstances and how these may impact a reporting unit's fair value or carrying amount involve significant judgments and assumptions. The judgments and assumptions include the identification of macroeconomic conditions, industry and market conditions, cost factors, overall financial performance and Company specific events and making the assessment on whether each relevant factor will impact the impairment test positively or negatively and the magnitude of any such impact.

Based on the result of the qualitative assessment of the Company's reporting units, the Company believes it is more likely than not that the fair value of its reporting units are greater than their carrying amount. No impairment was recognized in 2013, 2012 or 2011.

Other Assets

The Company capitalizes the cost of computer software developed or obtained for internal use. Capitalized software is amortized using the straight-line method over three to seven years. As of December 31, 2013 and 2012, the Company had software costs, net of amortization, of $0.2 million and $0.9 million, respectively. Amortization expense for 2013, 2012 and 2011 was $0.7 million, $2.3 million and $2.3 million, respectively.

Long-Lived Assets

Long-lived assets, consisting primarily of intangible assets and property, plant and equipment, are reviewed for impairment whenever facts and circumstances indicate that the carrying amount may not be recoverable. Specifically, this process involves comparing an asset’s carrying value to the estimated undiscounted future cash flows the asset is expected to generate over its remaining life. If this process were to result in the conclusion that the carrying value of a long-lived asset would not be recoverable, a write-down of the asset to fair value would be recorded through a charge to operations. Fair value is determined based upon discounted cash flows or appraisals as appropriate.

Other Accrued Liabilities

The following table presents the major components of Other Accrued Liabilities (in thousands):

	December 31,
	2013		2012
Warranty	$	14,719	$	14,886
Payroll and related taxes		29,399		23,342
Self-insurance		9,399		7,702
Accrued taxes		8,520		5,578
Customer deposits		30,730		43,158
All other		6,591		10,207
	$	99,358	$	104,873

The following table presents the changes in the product warranty accrual included in Other Accrued Liabilities (in thousands):

	2013		2012
Balance as of January 1	$	14,886	$	11,437
Provision for warranties issued in current year		6,269		5,521
Walker acquisition		-		3,887
Provisions for (Recovery of) pre-existing warranties, net		(779)		(750)
Payments		(5,657)		(5,209)
Balance as of December 31	$	14,719	$	14,886

The Company offers a limited warranty for its products with a coverage period that ranges between one and five years, provided that the coverage period for DuraPlate® trailer panels beginning with those panels manufactured in 2005 or after is ten years. The Company passes through component manufacturers’ warranties to our customers. The Company’s policy is to accrue the estimated cost of warranty coverage at the time of the sale.

The following table presents the changes in the self-insurance accrual included in Other Accrued Liabilities (in thousands):

	Self-Insurance
	Accrual
Balance as of January 1, 2012	$	5,390
Expense		25,336
Walker acquisition		2,034
Payments		(25,058)
Balance as of December 31, 2012	$	7,702
Expense		38,191
Payments		(36,494)
Balance as of December 31, 2013	$	9,399

The Company is self-insured up to specified limits for medical and workers’ compensation coverage. The self-insurance reserves have been recorded to reflect the undiscounted estimated liabilities, including claims incurred but not reported, as well as catastrophic claims as appropriate.

Income Taxes

The Company determines its provision or benefit for income taxes under the asset and liability method. The asset and liability method measures the expected tax impact at current enacted rates of future taxable income or deductions resulting from differences in the tax and financial reporting basis of assets and liabilities reflected in the Consolidated Balance Sheets. Future tax benefits of tax losses and credit carryforwards are recognized as deferred tax assets. Deferred tax assets are reduced by a valuation allowance to the extent management determines that it is more-likely-than-not the Company would not realize the value of these assets.

The Company accounts for income tax contingencies by prescribing a “more-likely-than-not” recognition threshold that a tax position is required to meet before being recognized in the financial statements.

Concentration of Credit Risk

Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash, cash equivalents and customer receivables. We place our cash and cash equivalents with high quality financial institutions. Generally, we do not require collateral or other security to support customer receivables.

Research and Development

Research and development expenses are charged to earnings as incurred and were $2.2 million, $1.7 million and $1.0 million in 2013, 2012 and 2011, respectively.

New Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, which amends ASC 220, Comprehensive Income. This ASU requires the disclosure of amounts reclassified out of accumulated other comprehensive income by component and by net income line item. The disclosure may be provided either on the face of the financial statements or in the notes. ASU 2013-02 is effective for annual and interim impairment tests performed for fiscal years beginning after December 15, 2012. The adoption did not have a material effect on the Company’s audited consolidated financial statements.