<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 22, 1996
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
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COACHMEN INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
INDIANA 35-1101097
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
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:
<TABLE>
<S> <C>
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
</TABLE>
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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. / /
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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. / /
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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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
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<S> <C> <C> <C> <C>
Common Stock, without par value(2)......... 1,725,000 shares(3) $27.9375 $48,192,187.50 $14,604
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</TABLE>
(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.
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<PAGE> 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.
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<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT (1) COMPANY (2)
<S> <C> <C> <C>
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Per Share.................................... $ $ $
Total (3).................................... $ $ $
</TABLE>
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(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
<PAGE> 3
<TABLE>
<S> <C>
[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]
</TABLE>
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
<PAGE> 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
<PAGE> 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):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, NINE MONTHS
-------------------------------------------------- ENDED SEPTEMBER 30,
--------------------------------
1993 1994 1995
-------------- -------------- -------------- 1995 1996
-------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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%
======== === ======== === ======== === ======== === ======== ===
</TABLE>
4
<PAGE> 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
<TABLE>
<S> <C>
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
</TABLE>
5
<PAGE> 7
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
CONSOLIDATED INCOME STATEMENT ---------------------------------------------------- -------------------------
DATA: 1991 1992 1993 1994(1) 1995(2) 1995(2) 1996
-------- -------- -------- -------- -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
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
======== ======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
-------------------------
CONSOLIDATED BALANCE SHEET DATA: ACTUAL AS ADJUSTED(4)
-------- --------------
<S> <C> <C>
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
</TABLE>
- -------------------------
(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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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."
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
-----------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
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
======== ========
</TABLE>
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.
<TABLE>
<CAPTION>
HIGH LOW
--------------- ---------------
<S> <C> <C>
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
</TABLE>
- -------------------------
(1) Through October 21, 1996
10
<PAGE> 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.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
CONSOLIDATED INCOME STATEMENT ---------------------------------------------------- -------------------------
DATA: 1991 1992 1993 1994(1) 1995(2) 1995(2) 1996
-------- -------- -------- -------- -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
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
======== ======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30, 1996
CONSOLIDATED BALANCE SHEET ---------------------------------------------------- -------------------------
DATA: 1991 1992 1993 1994 1995 ACTUAL AS ADJUSTED(4)
-------- -------- -------- -------- -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
- -------------------------
(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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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):
<TABLE>
<CAPTION> NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
-------------------------------------------------- --------------------------------
1993 1994 1995 1995 1996
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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%
======== === ======== === ======== === ======== === ======== ===
</TABLE>
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
<PAGE> 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:
<TABLE>
<S> <C>
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
</TABLE>
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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 23
MANAGEMENT
The following table sets forth the executive officers and directors of the
Company, as of October 22, 1996:
<TABLE>
<CAPTION>
NAME POSITION
- ------------------------------------ ------------------------------------------------------
<S> <C>
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
</TABLE>
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
<PAGE> 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
<PAGE> 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:
<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
-------------------------------------------------------------- ----------------
<S> <C>
Oppenheimer & Co., Inc........................................
----------------
Total.................................................... 1,500,000
=============
</TABLE>
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
<PAGE> 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
<PAGE> 27
COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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
</TABLE>
F-1
<PAGE> 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
<PAGE> 29
COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1994 AND 1995
ASSETS
<TABLE>
<CAPTION>
1994 1995
------------ ------------
<S> <C> <C>
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
============ ============
</TABLE>
The accompanying notes are part of the consolidated financial statements.
F-3
<PAGE> 30
COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
1993 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
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
------------ ------------ ------------
</TABLE>
The accompanying notes are part of the consolidated financial statements.
F-4
<PAGE> 31
COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
1993 1994 1995
------------ ----------- ------------
<S> <C> <C> <C>
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
</TABLE>
The accompanying notes are a part of the consolidated financial statements.
F-5
<PAGE> 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
<PAGE> 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
<PAGE> 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:
<TABLE>
<CAPTION>
1993 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
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
============ ============ ============
</TABLE>
NOTE 3: INVENTORIES.
Inventories consist of the following:
<TABLE>
<CAPTION>
1994 1995
---------- ----------
<S> <C> <C>
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
=========== ===========
</TABLE>
F-8
<PAGE> 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:
<TABLE>
<CAPTION>
1994 1995
---------- -----------
<S> <C> <C>
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
=========== ===========
</TABLE>
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
<PAGE> 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:
<TABLE>
<CAPTION>
NUMBER PER SHARE
OF SHARES OPTION PRICE
--------- -----------------
<S> <C> <C>
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
========
</TABLE>
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
<PAGE> 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:
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN TREASURY
SHARES CAPITAL SHARES
----------- ---------- ------------
<S> <C> <C> <C>
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)
=========== ========== ============
</TABLE>
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
<PAGE> 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:
<TABLE>
<CAPTION>
1993 1994 1995
---------- ---------- -----------
<S> <C> <C> <C>
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
========== ========== ===========
</TABLE>
F-12
<PAGE> 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:
<TABLE>
<CAPTION>
1993 1994 1995
----------- ---------- -----------
<S> <C> <C> <C>
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
=========== ========== ===========
</TABLE>
The components of the net deferred tax assets as of December 31, 1994 and
1995 are as follows:
<TABLE>
<CAPTION>
1994 1995
---------- -----------
<S> <C> <C>
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
========== ===========
</TABLE>
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
<PAGE> 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:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1994
(UNAUDITED)
-----------------
<S> <C>
Net sales............................................ $ 483,870,000
Net income........................................... 15,896,000
Net income per share................................. 1.08
</TABLE>
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
<PAGE> 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
<PAGE> 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:
<TABLE>
<CAPTION>
1994
QUARTER ENDED
---------------------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
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
</TABLE>
<TABLE>
<CAPTION>
1995
QUARTER ENDED
---------------------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
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
</TABLE>
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
<PAGE> 43
COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30,
1996
-------------
<S> <C>
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
============
</TABLE>
See notes to condensed consolidated financial statements.
F-17
<PAGE> 44
COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
---------------------------- ----------------------------
1995 1996 1995 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
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
============ ============ ============ ============
</TABLE>
See notes to condensed consolidated financial statements.
F-18
<PAGE> 45
COACHMEN INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER
30,
----------------------------
1995 1996
------------ ------------
<S> <C> <C>
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 --
</TABLE>
See notes to condensed consolidated financial statements.
F-19
<PAGE> 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:
<TABLE>
<CAPTION>
SEPTEMBER 30,
1996
------------
<S> <C>
Raw material..................................................... $ 23,423,558
Work in-process.................................................. 7,867,030
Finished goods................................................... 33,061,591
------------
Total....................................................... $ 64,352,179
============
</TABLE>
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
<PAGE> 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
<PAGE> 48
<TABLE>
<S> <C>
[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]
</TABLE>
[COA LOGO]
<PAGE> 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
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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
</TABLE>
================================================================================
================================================================================
1,500,000 SHARES
[COACHMEN LOGO]
COACHMEN
INDUSTRIES, INC.
COMMON STOCK
---------------------------
PROSPECTUS
---------------------------
[OPPENHEIMER & CO., INC. LOGO]
OPPENHEIMER & CO., INC.
, 1996
================================================================================
<PAGE> 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.
<TABLE>
<S> <C>
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
========
</TABLE>
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
<PAGE> 51
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ------------------------------------------------------------------------------------
<S> <C>
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)
</TABLE>
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
<PAGE> 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.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ----------------------------------------------
<C> <S>
/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
</TABLE>
II-3
<PAGE> 53
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ----------------------------------------------
<C> <S>
/s/ WILLIAM P. JOHNSON Director
- ---------------------------------------------
William P. Johnson
/s/ WILLIAM G. MILLIKEN Director
- ---------------------------------------------
William G. Milliken
/s/ CLAIRE C. SKINNER Director
- ---------------------------------------------
Claire C. Skinner
</TABLE>
II-4
<PAGE> 54
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ------------------------------------------------------------------------------------
<S> <C>
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)
</TABLE>
<PAGE> 1
Exhibit 1.1
1,500,000 SHARES
COACHMEN INDUSTRIES, INC.
COMMON STOCK, WITHOUT PAR VALUE
UNDERWRITING AGREEMENT
__________________, 1996
<PAGE> 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 -
<PAGE> 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 -
<PAGE> 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 -
<PAGE> 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 -
<PAGE> 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 -
<PAGE> 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 -
<PAGE> 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.
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<PAGE> 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.
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<PAGE> 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
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<PAGE> 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
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<PAGE> 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
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<PAGE> 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.
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<PAGE> 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:
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<PAGE> 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
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<PAGE> 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
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<PAGE> 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
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<PAGE> 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.
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<PAGE> 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
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<PAGE> 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
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<PAGE> 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
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<PAGE> 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
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<PAGE> 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
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<PAGE> 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
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<PAGE> 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.
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<PAGE> 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
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<PAGE> 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,
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<PAGE> 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
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<PAGE> 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
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<PAGE> 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 -
<PAGE> 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 -
<PAGE> 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 -
<PAGE> 33
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF FIRM
SHARES TO BE
NAME PURCHASED
____ ______________
<S> <C>
Oppenheimer & Co., Inc.
Total 1,500,000
</TABLE> _________
<PAGE> 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.
___________________________________________________________________________
<PAGE> 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-
<PAGE> 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-
<PAGE> 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-
<PAGE> 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.
<PAGE> 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
<PAGE> 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
