SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
(MARK ONE)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________to_____________________
Commission file number 1-7160
COACHMEN INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
INDIANA 35-1101097
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification number)
2831 DEXTER DRIVE, ELKHART, INDIANA 46514
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 219-262-0123
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No _
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date:
At July 31, 1999:
Common Shares, without par value 16,682,451 shares outstanding
including an equivalent number of common share purchase rights.
<PAGE> 1
COACHMEN INDUSTRIES, INC.
INDEX
Page No.
PART I. FINANCIAL INFORMATION
Financial Statements:
Condensed Consolidated Balance Sheets-
June 30, 1999 and December 31, 1998....................... 3-4
Condensed Consolidated Statements of Income-
Three and Six Months Ended June 30, 1999 and 1998......... 5
Condensed Consolidated Statements of Cash Flows-
Six Months Ended June 30, 1999 and 1998................... 6
Notes to Condensed Consolidated Financial Statements...... 7-8
Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................... 9-14
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders. 15
Item 6. Exhibits and Reports on Form 8-K.................... 15
SIGNATURES....................................................... 16
This Form 10-Q contains certain statements that are "forward-
looking" statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as
amended. These forward looking statements involve risks and
uncertainties, and are dependent on factors which may include, but are
not limited to, the availability of gasoline, which can impact sales of
recreational vehicles; availability of chassis, which are used in the
production of many of the Company's recreational vehicle products;
interest rates, which affect the affordability of the Company's
products; government laws and regulations, particularly related to
safety, distribution and franchising, which may affect the way
business is conducted; and also on the state of the recreational vehicle
and modular housing industries in the United States. Other factors
affecting forward-looking statements include competition in these
industries and the Company's ability to maintain or increase gross
margins which are critical to profitability whether there are or are
not increased sales; and the Company's ability to implement its new
enterprise-wide software or make its software and equipment year 2000
compliant.
At times, the Company's actual performance differs materially from its
projections and estimates regarding the economy, the recreational
vehicle and housing industries and other key performance indicators.
Readers of this Report are cautioned that reliance on any forward-
looking statements involves risks and uncertainties. Although the
Company believes that the assumptions on which the forward-looking
statements contained herein are reasonable, any of those assumptions
could prove to be inaccurate given the inherent uncertainties as to the
occurrence or nonoccurrence of future events. There can be no assurance
that the forward-looking statements contained in this Report will prove
to be accurate. The inclusion of a forward-looking statement herein
should not be regarded as a representation by the Company that the
Company's objectives will be achieved.
<PAGE> 2
COACHMEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
JUNE 30, DECEMBER 31,
1999 1998
ASSETS
CURRENT ASSETS
Cash and temporary cash investments $ 22,975 $ 23,009
Marketable securities 32,787 31,279
Trade receivables, less allowance for
doubtful receivables 1999 - $1,163
and 1998 - $768 37,393 27,585
Other receivables 1,797 1,838
Refundable income taxes 857 3,741
Inventories 107,451 93,350
Prepaid expenses and other 2,379 1,341
Deferred income taxes 3,268 3,268
Total current assets 208,907 185,411
PROPERTY AND EQUIPMENT, at cost
Land and improvements 11,509 11,017
Buildings and improvements 57,297 53,761
Machinery and equipment 21,963 19,713
Transportation equipment 12,094 11,176
Office furniture and fixtures 12,638 8,850
115,501 104,517
Less, Accumulated depreciation 43,425 41,445
Net property and equipment 72,076 63,072
OTHER ASSETS
Real estate held for sale 2,622 2,622
Rental properties 1,344 1,372
Intangibles, less accumulated amortization
1999 - $580 and 1998 - $517 4,490 4,553
Deferred income taxes 579 579
Other 11,556 10,867
Total other assets 20,601 19,993
TOTAL ASSETS $301,584 $268,476
The accompanying notes are part of the condensed consolidated
financial statements.
<PAGE> 3
COACHMEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (CONT'D)
(in thousands)
JUNE 30, DECEMBER 31,
1999 1998
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 1,825 $ 2,125
Accounts payable, trade 38,482 18,997
Accrued wages, salaries and commissions 5,220 4,358
Accrued dealer incentives 2,471 3,784
Accrued warranty expense 6,227 6,138
Accrued income taxes 881 1,509
Accrued insurance 755 1,863
Other liabilities 8,505 6,944
Total current liabilities 64,366 45,718
LONG-TERM DEBT 8,966 10,191
OTHER 6,568 7,109
Total liabilities 79,900 63,018
SHAREHOLDERS' EQUITY
Common shares, without par value: authorized
60,000 shares; issued 1999 - 20,931
shares and 1998 - 20,843 shares 90,009 89,105
Additional paid-in capital 3,935 3,867
Retained earnings 160,838 145,614
Treasury shares, at cost, 1999 - 4,254
shares and 1998 - 4,258 shares (33,098) (33,128)
Total shareholders' equity 221,684 205,458
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $301,584 $268,476
The accompanying notes are part of the condensed consolidated
financial statements.
<PAGE> 4
COACHMEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1999 1998 1999 1998
Net sales $203,199 $201,069 $414,224 $376,707
Cost of goods sold 174,491 170,874 357,943 323,136
Gross profit 28,708 30,195 56,281 53,571
Operating expenses:
Selling and delivery 9,521 8,823 19,641 17,890
General and administrative 6,932 8,035 13,904 14,810
Total operating expenses 16,453 16,858 33,545 32,700
Operating income 12,255 13,337 22,736 20,871
Nonoperating income (expense):
Interest expense (543) (338) (977) (803)
Investment income 937 1,305 1,284 2,433
Gain (loss) on sale of
properties, net 1,392 (49) 1,395 (44)
Other income, net 717 61 1,049 935
Total nonoperating income 2,503 979 2,751 2,521
Income before income taxes 14,758 14,316 25,487 23,392
Income taxes 5,089 4,993 8,601 7,770
Net income $ 9,669 $ 9,323 $ 16,886 $ 15,622
Earnings per common share:
Basic $ .58 $ .54 $ 1.01 $ .90
Diluted $ .58 $ .53 $ 1.01 $ .89
Number of common shares used in
the computation of earnings
per share:
Basic 16,665 17,401 16,645 17,370
Diluted 16,744 17,568 16,711 17,536
Cash dividends per common share $ .05 $ .05 $ .10 $ .10
The accompanying notes are part of the condensed consolidated
financial statements.
<PAGE> 5
COACHMEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
SIX MONTHS
ENDED JUNE 30,
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash provided by operating activities $ 16,402 $ 13,752
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from:
Sale of marketable securities 91,322 68,129
Sale of properties 1,872 1,650
Acquisitions of:
Marketable securities (93,860) (73,622)
Property and equipment (13,296) (10,679)
Businesses - (9,002)
Other (549) 343
Net cash (used in) investing activities (14,511) (23,181)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of long-term debt (1,525) (1,925)
Issuance of common shares under stock
option and stock purchase plans 904 1,201
Tax benefit from stock options exercised 358 687
Cash dividends paid (1,662) (1,737)
Net cash (used in) financing activities (1,925) (1,774)
Decrease in cash and temporary
cash investments (34) (11,203)
CASH AND TEMPORARY CASH INVESTMENTS
Beginning of period 23,009 71,428
End of period $ 22,975 $ 60,225
Noncash investing and financing
activities:
Liabilities assumed in acquisitions
of businesses $ - $ 795
The accompanying notes are part of the condensed consolidated
financial statements.
<PAGE> 6
COACHMEN INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated balance sheet data at December 31, 1998 was
derived from audited financial statements, but does not include all
disclosures required by generally accepted accounting principles.
2. 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 six months ended June 30,
1999 are not necessarily indicative of the results to be expected
for the full year.
3. Inventories consist of the following (in thousands):
June 30, December 31,
1999 1998
Raw material $ 39,937 $ 29,692
Work-in-process 21,471 11,512
Finished goods 46,043 52,146
Total $107,451 $ 93,350
4. The Company was contingently liable at June 30, 1999 to banks
and other financial institutions on repurchase agreements in
connection with financing provided by such institutions to most of
the Company's independent dealers in connection with their purchase
of the Company's recreational vehicle products. These agreements
provide for the Company to repurchase its products from the
financing institution in the event that they have repossessed them
upon a dealer's default. The risk of loss resulting from these
agreements is spread over the Company's numerous dealers and is
further reduced by the resale value of the products repurchased.
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.
5. In 1998, the Company adopted SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." The Company
has determined that its reportable segments are those that are based
on the Company's method of internal reporting, which disaggregates
its business by product category. The Company's two reportable
segments are: Vehicles (recreational, vans and specialized),
including related parts and supplies, and Housing (modular). The
Company evaluates the performance of its segments and allocates
resources to them based on pretax income. Differences between
reported segment amounts and corresponding consolidated totals
represent corporate expenses for administrative functions and costs
or expenses relating to property and equipment that are not
allocated to segments.
<PAGE> 7
The table below presents information about segments used by the
Chief operating decision maker of the Company for the six months
ended June 30, 1999 and 1998 (in thousands):
1999 1998
Net sales:
Vehicles $342,851 $317,955
Housing 71,373 58,752
Consolidated total $414,224 $376,707
Pretax income:
Vehicles $ 16,080 $ 18,209
Housing 7,482 4,230
Other reconciling items 1,925 953
Consolidated total $ 25,487 $ 23,392
Total assets:
Vehicles $171,557 $135,675
Housing 41,902 38,398
Other reconciling items 88,125 102,629
Consolidated total $301,584 $276,702
6. Change in Accounting Principle
Effective January 1, 1999, the Company adopted SOP 98-1, Accounting
for Costs of Computer Software. For years beginning after December
15, 1998, SOP 98-1 requires internal and external costs incurred to
develop internal-use computer software during the application
development stage to be capitalized and amortized over the
software's useful life. During the quarter and six months ended
June 30, 1999, the Company capitalized $881,000 and $1,663,000,
respectively, of internal costs which previously would have been
expensed under generally accepted accounting principles. These
capitalized internal costs are related to the Company's new
enterprise computer system which is currently being implemented.
The effect of this change in accounting principle for the quarter
and six months ended June 30, 1999 was to increase net income by
approximately $577,000 and $1,103,000, respectively, or $.03 per
share (basic and diluted) for the quarter and $.07 per share (basic
and diluted) for the six months.
<PAGE> 8
COACHMEN INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial
condition, results of operations and cash flows during the periods
included in the accompanying condensed consolidated financial
statements.
A summary of the changes in the principal items included in the
condensed consolidated statements of income is shown below.
Comparison of
Three Months Six Months
Ended June 30, 1999 and 1998
($ in thousands)
Increases (Decreases)
Net sales $ 2,130 1.1% $37,517 10.0%
Cost of goods sold 3,617 2.1 34,807 10.8
Selling and
delivery expenses 698 7.9 1,751 9.8
General and
administrative expenses (1,103) (13.7) (906) (6.1)
Interest expense 205 60.7 174 21.7
Investment income (368) (28.2) (1,149) (47.2)
Gain (loss) on sale of
properties, net 1,441 * 1,439 *
Other income, net 656 * 114 12.2
Income before income taxes 442 3.1 2,095 9.0
Income taxes 96 1.9 831 10.7
Net income 346 3.7 1,264 8.1
* Not meaningful
<PAGE> 9
NET SALES
Consolidated net sales for the quarter ended June 30, 1999 were
$203.2 million, an increase of 1.1% over the $201.1 million reported for
the corresponding quarter last year. Net sales for the six months were
$414.2 million, representing an increase of 10% over the $376.7 million
reported for the same period in 1998. The Company's vehicle segment
experienced a net sales decrease of 7.1% for the quarter and a sales
increase of 5.0% for the six months. The sales decrease for the quarter
is principally due to problems with the implementation of a new
enterprise-wide software system in several of the Company's operations,
including the largest. This software implementation, together with
unrelated supplier problems, delayed the Company's ability to complete
and ship a significant number of vehicles which is reflected in the
significant amount of work-in-process inventories at June 30, 1999. The
increase in net sales for the six months is attributed to the overall
increases in the recreational vehicle market. The Company's housing
segment had a net sales increase for the 1999 quarter of 19.7% and 21.5%
for the six months with growing demand for the Company's modular housing
products and also as the result of increased capacity.
COST OF GOODS SOLD
Cost of goods sold increased 2.1% or $3.6 million for the three months
and 10.8% or $34.8 million for the six months ended June 30, 1999. The
increase for both periods is higher than the increase in net sales. As a
percentage of net sales, cost of goods sold increased .9% and .6% for
the quarter and six months, respectively, from the comparable prior year
periods. While the housing segment experienced a decrease in the
percentage of cost of goods sold to net sales, the overall percentage
increases are attributable to the RV segment. These percentages reflect
the impact of the software implementation and material shortage
problems, as well as, the costs associated with the start-up of a new
Class A production facility in Indiana.
OPERATING EXPENSES
As a percentage of net sales, operating expenses, which include selling,
delivery, general and administrative expenses, were 8.1% for both the
1999 quarter and six months and 8.4% for the 1998 quarter and 8.7% for
the 1998 six months. Selling and delivery expenses, as a percentage of
net sales, increased by .3% for the quarter with no change for the 1999
and 1998 six months. The increase for the quarter is primarily due to an
overall increase in dealer trip incentives, as well as increased dealer
volume sales incentives attributable to significantly increased sales in
the housing group. General and administrative expenses were 3.4% of net
sales for the second quarter compared to 4.0% for the 1998 corresponding
quarter and 3.4% of net sales for the six-month period compared to 3.9%
for 1998. These decreases in both the quarter and six-month periods
reflect the capitalization of compensation and related costs with the
implementation the new enterprise-wide software system. (see Note 6 of
Notes to Consolidated Financial Statements regarding Change in
Accounting Principle).
INTEREST EXPENSE
Interest expense was $543,000 and $977,000 for the three and six-month
periods in 1999 compared to $338,000 and $803,000 in the same periods
last year. Interest expense varies with the amount of long-term debt and
the increase in cash surrender value for the Company's investment in
life insurance contracts. These life insurance contracts were purchased
<PAGE> 10
to fund obligations under deferred compensation agreements with
executives and other key employees. The interest costs associated with
deferred compensation obligations and with the borrowings against the
cash value of the insurance policies are partially offset by the
increases in cash surrender values.
INVESTMENT INCOME
Investment income decreased $368,000 and $1,149,000 respectively, for
the 1999 three and six-month periods. This decrease in investment income
is principally due to the reduction in interest income as the result of
less funds being invested in the 1999 periods.
GAIN (LOSS) ON THE SALE OF PROPERTIES, NET
There was a net gain on the sale of properties for the second quarter of
1999 of $1,392,000 compared with a loss of $49,000 in the same quarter
of 1998. The net gain (loss) on the sale of properties for the first
six months was $1,395,000 and $(44,000) for 1999 and 1998, respectively.
The gain for the 1999 periods was substantially due to the sale of real
estate in Indiana, including the corporate administrative building.
Assets are continually analyzed and every effort is made to sell or
dispose of properties that are determined to be unproductive.
OTHER INCOME, NET
Other income, net, represents income of $717,000 for the second quarter
and $1,049,000 for the six months compared to income of $61,000 and
$935,000 for the 1998 second quarter and six months, respectively. The
most significant item of income for the quarter was from the sale of a
Company-owned dealership in the state of Georgia. The larger amount in
the 1998 six-month period is principally attributed to the receipt of
nontaxable income realized from corporate owned life insurance proceeds.
INCOME TAXES
For the second quarter ended June 30, 1999, the effective tax rate was
34.5% and a year-to-date rate of 33.7% compared with a 1998 second
quarter and year-to-date effective tax rate of 34.9% and 33.2%,
respectively. The Company's effective tax rate fluctuates based upon the
states where sales occur, with the level of export sales and also with
the level of nontaxable income recognized from investing activities.
LIQUIDITY AND CAPITAL RESOURCES
The Company generally relies on funds from operations as its primary
source of liquidity. In addition, the Company maintains an unsecured
committed line of credit, which totaled $30 million at June 30, 1999, to
meet its seasonal working capital needs. At June 30, 1999, there were
no borrowings against this line of credit. For the six months ended June
30, 1999, the major source of cash was from operating activities. The
significant items in operating activities were net income, depreciation
and an increase in trade accounts payable. The positive cash flow from
these items was partially offset by increases in trade receivables
and inventories. Investing activities reflected a net cash use of $14.5
million. The principal use of cash in investing activities was the
acquisition of property and equipment, including the acquisition of a
new corporate administration facility in Indiana, a new addition and
remodeling costs at an RV manufacturing facility in Georgia and the
acquisition of machinery and equipment for the Company's parts & supply
group. Software and additional hardware requirements in connection with
<PAGE> 11
the Company's implementation of a new enterprise-wide computer system
were also significant uses of cash for investing activities. The
negative cash flow from financing activities was primarily for cash
dividends and repayment of long-term debt.
At June 30, 1999, working capital increased to $144.5 million from
$139.7 million at December 31, 1998. The $23.5 million increase in
current assets at June 30, 1999 versus December 31, 1998, was primarily
due to increased trade receivables and inventories. The $18.6 million
increase in current liabilities was substantially due to increased trade
accounts payable. The increases in trade receivables, inventories and
trade accounts payable are directly related to the increased sales
activity and in part are attributable to the implementation of the new
enterprise-wide software system.
Year 2000
The Year 2000 issue relates to the way computer systems, software and
some equipment define calendar dates; they could fail or make
miscalculations due to interpreting a date including "00" to mean 1900,
not 2000. In 1997, the Company determined that certain of its computer
software was originally programmed using two digits rather than four to
define the applicable year. As a result, this software could have been
unable to process transactions beyond December 31, 1999. If correction
or replacement of the software was not completed in a timely manner, the
Year 2000 issue could have a material impact on the Company's operations
and could result in an interruption in, or failure of, certain normal
business activities or operations.
The assessment phase of the Company's software, systems and equipment
began in 1997. It was initially determined that the systems most likely
to be affected by the Year 2000 issue were the general accounting
systems and payroll. To remedy the Year 2000 issue with regard to
these areas, the Company began devoting significant resources to replace
the affected software with a new enterprise computer system. It was
decided that this enterprise computer system should also be implemented
for the manufacturing processes. The implementation of the general
accounting systems and payroll is complete as of June, 1999. As of
this date, the implementation status for manufacturing processes is
estimated to be approximately 90% complete for the vehicle segment and
approximately 80% complete for the housing segment. Full testing and
implementation of the new computer system for all divisions of the
Company is occurring on an ongoing basis throughout 1999 and is expected
to be complete in adequate time to enable proper processing of
transactions throughout the Company before January 1, 2000.
The Company also initiated a senior management focus team in 1998 to
identify and review other possible business system failures that could
occur and to assess the need for contingency plans. The focus team is
in the process of determining if the Company's equipment with embedded
systems is Year 2000 compliant. The focus team does not believe the
Company's equipment is, for the most part, calendar-date sensitive.
Nonetheless, it has initiated an inventory of all such equipment,
including telecommunications equipment and facilities. Those business
systems considered most critical to continued operations are being given
the highest priority.
The Company believes the key risk factors associated with Year 2000 are
those from outside the Company that it cannot directly control, such as
the readiness of its key material suppliers, dealers, customers,
financial institutions and public infrastructure suppliers. The Company
<PAGE> 12
relies on third parties to provide goods and services necessary for the
manufacture and distribution of its products. The focus team is in the
process of identifying and communicating with third-party suppliers
about the status of their compliance with Year 2000. As of June 30,
1999, the Company has received responses from approximately 85% of its
critical component third-party suppliers and has received responses from
approximately 60% of its non-critical component suppliers. The Company
is currently determining the status of their readiness by analyzing
these responses. The Company sells its products to numerous independent
dealers. Management believes the risk associated with Year 2000
compliance by the dealers is minimized since the risk is spread among
the dealers. Due to the uncertainty of the Year 2000 readiness of the
remaining critical and non-critical third parties, the Company is
currently unable to determine whether the consequences of Year 2000
failures of third parties will have a material impact on the Company's
operations. While the Company is working diligently to obtain assurance
from its mission critical third parties that they will be compliant,
there can be no assurance that the systems of any third party on which
the Company's operations rely will be timely compliant. Nevertheless,
the Company does not anticipate a material impact on its operations from
direct interfaces with third parties. The focus team is in the process
of assessing the risk and the need to develop contingency plans to
address potential disruptions that could be caused by third parties.
The Company believes the worst case scenario for Year 2000 issues would
be the disruption or unavailability of utility services. This could
hinder or stop the performance of normal business functions, such as
manufacturing and selling, and might disrupt retail demand. However, due
to the multiple business locations of the Company, its manufacturing
facilities, and its owned and independent retail outlets, normal
business functions could continue at those locations where utility
disruptions or unavailability did not occur. If they do occur, it is
expected they will be temporary, and some utility services may be
available from remote locations, as through electric grids. The focus
team is in the process of determining whether a contingency plan is
feasible to mitigate worst case disruptions.
The worst case scenario could include halting of production due to the
inability of a single source supplier to deliver a critical product or
component. The Company is implementing a contingency plan to identify
replacement suppliers if a key supplier is unable to adequately assure
the Company that it will be compliant, and to closely monitor inventory
levels of critical components. The largest exposure appears to be the
Company's interface with chassis manufacturers for order processing.
The Company believes these order processing systems to be Year 2000
compliant based on statements from representatives of the companies
involved. The chassis suppliers have also advised the Company that the
chassis are Year 2000 compliant.
Based on a review of its products by segment, vehicles and housing, the
Company has determined that the products it has sold and will continue
to sell should not require remediation to be Year 2000 compliant.
Accordingly, the Company does not believe that the Year 2000 presents a
material exposure as it relates to the Company's products.
The objective of the Company and each of its operating subsidiaries is
to have all of their significant business systems, including those that
affect facilities and manufacturing activities, functioning properly
with respect to Year 2000, before January 1, 2000. The total cost is
currently estimated to be in excess of $7.5 million, of which
approximately $6.9 million has been incurred as of June 30, 1999.
Of the amount incurred, $1.1 million has been expensed and $5.8 million
<PAGE> 13
has been capitalized for new systems and equipment. All costs are being
funded through operating cash flows. These costs do not include any
costs associated with the implementation of contingency plans. If
determined to be feasible, the Company intends to create its contingency
plans by September 1999.
<PAGE> 14
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
a) The annual meeting of the shareholders of Coachmen Industries,
Inc. was held on April 29, 1999.
b) The following nominees were elected Directors for a one-year
term:
Claire C. Skinner
Thomas H. Corson
Keith D. Corson
Fredrick M. Miller
William P. Johnson
Philip G. Lux
Edwin W. Miller
Robert J. Deputy
c) The tabulation of votes for each Director nominee was as
follows:
For Withheld
Election of Directors:
Claire C. Skinner 15,973,203 218,568
Thomas H. Corson 15,970,660 221,111
Keith D. Corson 15,973,824 217,947
Fredrick M. Miller 15,969,128 222,643
William P. Johnson 15,975,081 216,690
Philip G. Lux 15,965,527 226,244
Edwin W. Miller 15,973,481 218,290
Robert J. Deputy 15,969,128 222,643
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
None
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
COACHMEN INDUSTRIES, INC.
(Registrant)
Date: August 13, 1999 /s/ CLAIRE C. SKINNER
_______________________________
Claire C. Skinner, Chairman of
The Board & Chief Executive Officer
Date: August 13, 1999 /s/ WILLIAM M. ANGELO
_______________________________
William M. Angelo, Vice President
& Chief Accounting Officer
<PAGE> 16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated statement of income and consolidated balance sheet and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000021212
<NAME> COACHMEN INDUSTRIES, INC.
<MULTIPLIER> 1000
<S> <C>
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<PERIOD-END> JUN-30-1999
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0
0
<OTHER-SE> 164,773
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<OTHER-EXPENSES> (2,751)
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<EPS-BASIC> 1.01
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</TABLE>
