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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Year End Commission File Number
December 31, 1996 0-13646
DREW INDUSTRIES INCORPORATED
(Exact Name of Registrant as Specified in its Charter)
Delaware 13-3250533
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
200 Mamaroneck Avenue, White Plains, N.Y. 10601
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number including Area Code: (914) 428-9098
Securities Registered pursuant to Section 12(b) of the Act: None
Securities Registered pursuant to Section 12(g) of the Act:
Common Stock
(Title of Class)
Check mark indicates whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |_|
Aggregate market value of voting stock (Common Stock, $.01 par value) held by
non-affiliates of Registrant (computed by reference to the closing price as of
March 17, 1997) was $88,441,534.
The number of shares outstanding of the Registrant's Common Stock, as of the
latest practicable date (March 17, 1997) was 9,151,171 shares of Common Stock,
adjusted for two-for-one split payable March 21, 1997.
Documents Incorporated by Reference
Annual Report to Stockholders for year ended December 31, 1996 is incorporated
by reference into Items 6, 7 and 8 of Part II.
Proxy Statement with respect to Annual Meeting of Stockholders to be held on May
13, 1997 is incorporated by reference into Part III.
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Item 1. BUSINESS
Introduction
Drew Industries Incorporated ("Drew" or the "Company"), through its
wholly-owned subsidiaries, Kinro, Inc., ("Kinro"), manufactures and markets
aluminum and vinyl windows for manufactured homes, and aluminum windows and
doors for recreational vehicles; and through its wholly-owned subsidiary, Shoals
Supply, Inc. ("Shoals"), manufactures and distributes new axles and chassis
parts, and distributes refurbished axles and new and refurbished tires, for the
manufactured housing industry.
The Company was incorporated under the laws of Delaware on March 20, 1984,
and is the successor to Drew National Corporation, which was incorporated under
the laws of Delaware in 1962. The Company's principal executive and
administrative offices are located at 200 Mamaroneck Avenue, White Plains, New
York 10601; telephone number (914) 428-9098.
In connection with the spin-off of Leslie Building Products, Inc., and its
wholly owned subsidiary, Leslie-Locke, Inc. ("Leslie-Locke"), by the Company,
which was effective on July 29, 1994, the Company and Leslie Building Products
entered into a Shared Services Agreement. Pursuant to the Shared Services
Agreement, the Company and Leslie Building Products agreed to share certain
administrative functions and employee services, such as management overview and
planning, tax preparation, financial reporting, coordination of independent
audit, stockholder relations, and regulatory matters. The Company is reimbursed
by Leslie Building Products for the fair market value of such services. The
Shared Services Agreement expires on December 31, 1997 but may be extended.
BUSINESS OF THE COMPANY
Kinro, acquired by the Company in October 1980, initially manufactured
only aluminum primary and storm windows for the manufactured housing industry.
Since 1982, Kinro acquired additional manufacturers of aluminum windows for
manufactured housing and manufacturers of doors and windows for recreational
vehicles, and developed its own capacity to manufacture screens for its window
products, and to a lesser extent, manufactures windows for mini buses. In 1993,
Kinro commenced production of vinyl windows in addition to aluminum windows.
Each of the businesses acquired by Kinro expanded Kinro's geographic
market and product line, and, in certain instances, added manufacturing
facilities. All manufacturing, distribution and administrative functions of the
acquired businesses were integrated with those of Kinro. Although definitive
information is not readily available, the Company believes that the two leading
manufacturers of windows for manufactured housing within the United States are
Kinro and Philips Industries, Inc., and that there are approximately 10
significant suppliers of windows and doors for the recreational vehicle
industry, several of which are substantially larger than Kinro.
Raw materials used by Kinro, consisting of extruded aluminum, glass, vinyl
and various adhesive and insulating components, are readily available from a
number of sources. Kinro, through the Company, maintains an aluminum hedging
program under which it purchases futures contracts on the London Metals Exchange
to hedge the prices of a portion of its anticipated aluminum requirements.
Kinro's operations consist primarily of fabricating and assembling the
components into the finished windows, doors and screens. Kinro also tempers
glass for use in its own windows and for sale to other window manufacturers.
Kinro's line of products is sold by eleven sales personnel, working exclusively
for Kinro and Shoals, to major builders of manufactured housing, such as Clayton
Homes, Inc., Oakwood Homes Corporation and Redman
Page -2-
Industries, Inc., and to major manufacturers of recreational vehicles such as
Fleetwood Enterprises, Inc., Thor Industries, Inc., and Skyline Corporation.
Kinro's operations are conducted at ten manufacturing and warehouse
facilities located in Mansfield, Texas; Double Springs, Alabama; Liberty, North
Carolina; Thomasville, Georgia; Morraine, Ohio; Goshen (two facilities) and
Elkhart, Indiana; Fontana, California; and Dayton, Tennessee; as well as a
Maquilodora operation in Juarez, Mexico. In addition, Kinro is currently
constructing a third facility in Goshen, Indiana.
Shoals, acquired by the Company in February 1996, manufactures and
distributes new axles and chassis parts, and distributes refurbished axles and
new and refurbished tires, for the manufactured housing industry.
Manufactured homes are transported by producers to dealers via roadway on
steel chassis which are fitted with axles and tires sufficient in number to
support the weight of the home. When the home is installed at the site, the
axles and tires are removed by the dealer. Regulations promulgated by the United
States Housing and Urban Development Authority ("HUD") require the axles to be
inspected after each use and refurbished or, if necessary, replaced. Shoals
purchases from dealers, and repairs and refurbishes, used axles and tires, and
markets the reconditioned axles and tires to producers of manufactured homes. In
addition, Shoals manufactures and distributes new axles and chassis parts, and
distributes new tires, to producers of manufactured homes.
Shoals competes with a number of regional suppliers of refurbished axles
and tires, as well as several manufacturers of new axles, certain of which are
larger than Shoals. Although definitive information is not readily available,
the Company believes that Shoals is among the three largest suppliers of
refurbished axles within the United States. Shoals competes on the basis of
price, customer service, product quality, and reliability.
Raw materials used by Shoals, consisting primarily of fabricated steel
parts for new axles and chassis parts, are either fabricated by Shoals or
purchased from suppliers. Fabricated parts and new tires are readily available
from a number of sources. Used axles and tires, which are refurbished by Shoals,
are purchased from dealers of manufactured homes, and their availability is
subject to competitive pricing.
Shoals products are sold by one sales person, working exclusively for
Shoals, and five of Kinro's sales personnel, to major producers of manufactured
homes in the southeastern and southcentral United States, such as Fleetwood
Enterprises, Inc., Oakwood Homes Corporation and Clayton Homes, Inc. Shoals
operations are conducted at five facilities located in Bear Creek and Phil
Campbell, Alabama; Rockwell, North Carolina; Elm Mott, Texas; and Maynardsville,
Tennessee.
In accordance with regulations promulgated by HUD, refurbished axle
assemblies distributed by Shoals are reconditioned in accordance with a detailed
Quality Control Program formulated by an independent inspection agency. Shoals'
compliance with the Quality Control Program is monitored by the inspection
agency on a monthly basis. All expenses of formulating the program, inspection,
and monitoring are paid for by Shoals. In addition, new and refurbished tires
distributed by Shoals are subject to regulations promulgated by the United
States Department of Transportation Federal Highway Administration and by HUD
relating to weight tolerance, maximum speed, size, and components. Kinro's and
Shoals' operations are also subject to certain federal, state and local
regulatory requirements relating to the use, storage, discharge and disposal of
hazardous chemicals used during their manufacturing processes.
The Company believes that Kinro and Shoals are currently operating in
compliance with applicable laws and regulations, and does not believe that the
expense of compliance with these laws and regulations, as currently in effect,
will have a material effect on Kinro's or Shoals' capital expenditures, earnings
or competitive position.
Page -3-
Recent Events
On February 13, 1997, the Company's Board of Directors approved a
two-for-one stock split by means of 100% stock dividend on its Common Stock. The
stock split was effective on March 21, 1997, for stockholders of record on March
4, 1997. Assuming the exercise of all options, prior to the stock split and the
purchase of shares from Edward W. Rose, III discussed below, the Company had
approximately 5,676,000 shares outstanding, and following the stock split and
purchase of shares, the Company has approximately 9,752,000 shares outstanding.
On February 13, 1997, the Company announced that it would purchase from
Edward W. Rose, III, Chairman of the Board of the Company, 800,000 shares of the
Company's Common Stock, representing approximately 15% of the Company's
outstanding stock and 50% of the Company's shares owned by Mr. Rose, at a price
of $26 per share. The purchase price was paid by a short-term promissory note of
the Company in the amount of $20.8 million bearing interest at 7% per annum (the
"Purchase Note").
Before giving effect to the purchase, Mr. Rose owned beneficially and of
record 1,641,740 pre-split shares of the Company's Common Stock, and owned
beneficially a partial interest in an additional 86,200 pre-split shares held in
retirement accounts, representing an aggregate of 32.2% of the Company's
outstanding shares. After giving effect to the purchase and the stock split, Mr.
Rose continues to own beneficially and of record 1,683,480 shares, and continues
to beneficially own a partial interest in the additional 172,400 shares,
representing an aggregate of 20.3% of the Company's outstanding shares. Members
of Mr. Rose's immediate family continue to beneficially own an additional
258,000 shares, in which Mr. Rose disclaims any beneficial interest.
Mr. Rose intends to remain active in management of the Company and to
continue as Chairman of the Board. Mr. Rose's decision to sell a portion of his
shares was motivated by his interest to diversify his investments. The long-term
increase in the price of the Company's stock resulted in Mr. Rose's investment
in the Company constituting a disproportionate share of his net assets. Purchase
of Mr. Rose's shares was advantageous to the Company because the purchase price
was below the market price, and the repurchase was accretive to earnings per
share.
The Company has received a commitment letter from Chase Manhattan bank to
increase Drew's line of credit to $40 million, of which approximately $21
million will be utilized to repurchase Mr. Rose's shares and the balance will be
used for potential acquisitions and working capital.
Employees
The approximate number of persons employed full-time by the Company at
December 31, 1996 was as follows:
Drew....................... 6
Kinro...................... 1,031
Shoals..................... 275
-----
Total.................. 1,312
=====
None of the Company's or its subsidiaries' employees are represented by a
union. The Company and its subsidiaries believe that relations with its
employees are good.
Page -4-
Item 2. PROPERTIES
Drew leases its principal executive offices in White Plains, New York,
consisting of approximately 2,800 square feet of office space.
Kinro owns four and leases six manufacturing and warehouse facilities
consisting of an aggregate of approximately 725,000 square feet, in Mansfield,
Texas; Double Springs, Alabama; Liberty, North Carolina; Thomasville, Georgia;
Morraine, Ohio; Goshen (two facilities) and Elkhart, Indiana; Fontana,
California; and Dayton, Tennessee; and leases its corporate offices in
Arlington, Texas consisting of approximately 8,500 square feet of office space.
Kinro is currently constructing a third manufacturing and warehouse facility,
consisting of 104,000 square feet, on land owned by Kinro in Goshen, Indiana.
Shoals owns one and leases four manufacturing and warehouse facilities
consisting of an aggregate of approximately 200,000 square feet in Bear Creek
and Phil Campbell, Alabama; Rockwell, North Carolina; Elm Mott, Texas; and
Maynardsville, Tennessee.
See Note 10 of Notes to Consolidated Financial Statements with respect to
the Company's lease obligations as of December 31, 1996.
Item 3. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings which, in the opinion
of Management, could have a material adverse effect on the Company or its
consolidated financial position.
See Note 6 of Notes to Consolidated Financial Statements with respect to
certain product liability claims pending against White Metal Rolling and
Stamping Corp. ("White Metal"), a subsidiary of Leslie-Locke, arising in
connection with the ladder manufacturing business formerly conducted by White
Metal. Although the Company was named as a defendant in certain actions
commenced in connection with these claims, the Company has not been held
responsible, and the Company disclaims any liability for the obligations of
White Metal.
See Note 6 of Notes to Consolidated Financial Statements with respect to
the filing by White Metal, on September 30, 1994, of a voluntary petition
seeking liquidation under the provisions of chapter 7 of the United States
Bankruptcy Code. On May 7, 1996, the Company and its subsidiary, Kinro, Inc.,
and Leslie Building Products, Inc. and its subsidiary, Leslie-Locke, were served
with a summons and complaint in an adversary proceeding commenced by the chapter
7 trustee of White Metal. The complaint, which appears to allege several
duplicate claims, seeks damages in the aggregate amount of $10.6 million plus
attorneys fees, of which up to approximately $8.4 million is sought, jointly and
severally, from the Company, Kinro, Leslie Building Products and Leslie-Locke.
The proceeding is based principally upon the trustee's allegations, previously
disclosed by the Company, that the Company and its affiliated companies obtained
tax benefits attributable to the use of White Metal's net operating losses. The
trustee seeks to recover the purported value of the tax savings achieved, which
appears to be approximately $7.5 million. Management believes that the trustee's
allegations are without merit and have no basis in fact. In addition, the
trustee alleges that White Metal made certain payments to the Company which were
preferential and are recoverable by White Metal, in the approximate amount of
$900,000. The Company denies liability for any such amount and is vigorously
defending against the allegations. However, an estimate of potential loss, if
any, cannot be made at this time. The Company believes that it has sufficient
accruals for the defense of this proceeding and that such defense will not have
a material adverse impact on the Company's financial condition or results of
operations.
Page -5-
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following tables set forth certain information with respect to the
Directors and Executive Officers of the Company as of December 31, 1996.
Name Position
Leigh J. Abrams President, Chief Executive Officer and Director of
(Age 54) the Company since March 1984.
Edward W. Rose, III Chairman of the Board of Directors of the Company
(Age 55) since March 1984.
David L. Webster Director of the Company since March 1984.
(Age 61)
James F. Gero Director since May 1992.
(Age 51)
Gene H. Bishop Director since June 1995.
(Age 67)
Fredric M. Zinn Chief Financial Officer of the Company since
(Age 45) January 1986.
Harvey J. Kaplan Secretary and Treasurer of the Company since
(Age 62) March 1984.
LEIGH J. ABRAMS has also been President, Chief Executive Officer and a
Director of Leslie Building Products since July 1994.
EDWARD W. ROSE, III, for more than the past five years, has been President
and principal stockholder of Cardinal Investment Company, Inc., an investment
firm. Mr. Rose also serves as Co-Managing General Partner of the Texas Rangers
Baseball Team and as a director of the following public companies: Osprey
Holding, Inc., previously engaged in selling computer software for hospitals;
and ACE Cash Express, Inc. engaged in check cashing services. Since July 1994,
Mr. Rose has been Chairman of the Board of Leslie Building Products.
DAVID L. WEBSTER, since November 1980, has been President and Chief Executive
Officer of Kinro, Inc., a subsidiary of the Company, and Chairman of Kinro, Inc.
since November 1984. Mr. Webster has also been President and Chief Executive
Officer of Shoals Supply, Inc., a subsidiary of the Company, since its
acquisition in February 1996.
JAMES F. GERO, since March 1992, has been Chairman and Chief Executive
Officer of Sierra Technologies, Inc., a manufacturer of defense systems
technologies. From July 1987 to October 1989, Mr. Gero was Chairman and Chief
Executive Officer of Varo, Inc., a manufacturer of defense electronics, and from
1985 to 1987, Mr. Gero was President and Chief Executive Officer of Varo, Inc.
Mr. Gero also serves as a director of the following public
Page -6-
companies: Recognition Equipment, Inc., engaged in providing hardware, software
and services to automate work processing systems; American Medical Electronics,
Inc., engaged in manufacturing and distributing orthopedic and neurosurgical
medical devices; and Spar Aerospace Ltd., engaged in space robotics,
communications equipment and aerospace products and services. Since July 1994,
Mr. Gero has been a Director of Leslie Building Products.
GENE H. BISHOP, from March 1975 until July 1990, was Chief Executive Officer
of MCorp, a bank holding company, and from October 1990 to November 1991, was
Vice Chairman and Chief Financial Officer of Lomas Financial Corporation, a
financial services company. From November 1991 until his retirement in October
1994, Mr. Bishop served as Chairman and Chief Executive Officer of Life Partners
Group, Inc., a life insurance holding company, of which he continues to serve as
a director. Mr. Bishop also serves as a director of the following publicly-owned
companies: First USA, Inc., engaged in the credit card business;
Liberte-Investors, engaged in real estate loans and investments; Southwest
Airlines Co., a regional airline; and Southwestern Public Service Company, a
public utility.
FREDRIC M. ZINN has also been Chief Financial Officer of Leslie Building
Products since July 1994. Mr. Zinn is a Certified Public Accountant.
HARVEY J. KAPLAN has also been Secretary and Treasurer of Leslie Building
Products since July 1994. Mr. Kaplan is a Certified Public Accountant.
Compliance with Section 16(a) of the Securities Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who beneficially own more than ten
percent of the Company's equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission and the
American Stock Exchange. Officers, directors and greater than ten-percent
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
Based on its review of the copies of such forms received by it, the Company
believes that during 1996 all such filing requirements applicable to its
officers and directors (the Company not being aware of any ten percent holder
during 1995 other than Edward W. Rose, III a Director) were complied with,
except that Gene H. Bishop, a director of the Company, inadvertently filed late
with respect to an aggregate of 800 shares of the Common Stock of the Company
purchased for his children.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Per Share Market Price Information
The Common Stock of the Company is traded on the American Stock Exchange
(symbol: DW). On February 26, 1997, there were 2,369 holders of record of the
Common Stock. The Company estimates that 2,000 to 4,000 additional stockholders
own shares of its Common Stock held in the name of Cede & Co. and other broker
and nominee names.
The table below sets forth, for the periods indicated, the range of high and
low closing prices per share for the Common Stock as reported by the American
Stock Exchange since February 8, 1995, and by the National Association of
Securities Dealers ("NASD") prior to February 8, 1995. The prices set forth
below for the period prior to February
Page -7-
8, 1995 represent quotations between dealers, without adjustment for retail
mark-up, mark-down or commissions, and do not necessarily represent actual
transactions.
High Low
Calendar 1995
Quarter ended March 31......................... $ 5.25 $ 4.19
Quarter ended June 30.......................... $ 6.56 $ 5.19
Quarter ended September 30..................... $ 6.94 $ 5.75
Quarter ended December 31...................... $ 8.19 $ 6.32
Calendar 1996
Quarter ended March 31 ........................ $ 8.00 $ 6.75
Quarter ended June 30.......................... $ 9.25 $ 7.32
Quarter ended September 30..................... $12.32 $ 8.38
Quarter ended December 31...................... $13.62 $10.62
The closing price per share for the Common Stock on February 26, 1997 was
$13.62.
All of the above prices have been retroactively adjusted to reflect the
two-for-one split effective March 21, 1997 to stockholders of record on March 4,
1997.
Dividend Information
The Company has not paid any cash dividends on its Common Stock. Future
dividend policy with respect to the Common Stock will be determined by the Board
of Directors of the Company in light of prevailing financial needs and earnings
of the Company and other relevant factors.
The Company's dividend policy is subject to restrictions contained in
financing agreements relating to its secured line of credit, which provide that
dividends upon the Common Stock may be payable only with the consent of the
lender. See Note 8 of Notes to Consolidated Financial Statements.
On February 13, 1997, the Company declared a two-for-one stock split by
means of a 100% stock dividend, payable on March 21, 1997 to stockholders of
record on March 4, 1997.
Item 6. SELECTED FINANCIAL DATA, Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, and Item 8. FINANCIAL STATEMENTS
AND SUPPLEMENTARY DATA, are incorporated by reference to Selected Financial
Data, Financial Review, and Consolidated Financial Statements and Notes to
Consolidated Financial Statements, respectively, in the Company's Annual Report
to Stockholders for the year ended December 31, 1996.
Item 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
Part III of Form 10-K is incorporated by reference to the Company's Proxy
Statement with respect to its Annual Meeting of Stockholders to be held on May
13, 1997.
Page -8-
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES and REPORTS ON FORM 8-K
(a) Documents Filed
(1) Financial Statements. The Consolidated Financial Statements
of the Company and its subsidiaries are incorporated by
reference to the Consolidated Financial Statements and
Notes to Consolidated Financial Statements in the Company's
Annual Report to Stockholders for the year ended December
31, 1996.
(2) Schedules. Schedule II - Valuation and Qualifying
Accounts.
(3) Exhibits. See "List of Exhibits" at the end of this report
incorporated herein by reference.
(b) Reports on Form 8-K
No Current Reports on Form 8-K were filed during the quarter ended
December 31, 1996.
Page -9-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Registrant has duly caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized.
DREW INDUSTRIES INCORPORATED
Date: March 24, 1997 By: /s/Leigh J. Abrams
-----------------------------------
Leigh J. Abrams, President
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and dates indicated.
Each person whose signature appears below hereby authorizes Leigh J.
Abrams and Harvey J. Kaplan, or either of them, to file one or more amendments
to the Annual Report on Form 10-K which amendments may make such changes in such
Report as either of them deems appropriate, and each such person hereby appoints
Leigh J. Abrams and Harvey J. Kaplan, or either of them, as attorneys-in-fact to
execute in the name and on behalf of each such person individually, and in each
capacity stated below, such amendments to such Report.
Date Signature Title
- ---- --------- -----
March 24, 1997 By:/s/Leigh J. Abrams Director, President and Chief
--------------------- Executive Officer
(Leigh J. Abrams)
March 24, 1997 By:/s/Harvey J. Kaplan Secretary and Treasurer
---------------------
(Harvey J. Kaplan)
March 24, 1997 By:/s/Fredric M. Zinn Chief Financial Officer
---------------------
(Fredric M. Zinn)
March 24, 1997 By:/s/John F. Cupak Controller
---------------------
(John F. Cupak)
March 24, 1997 By:/s/Edward W. Rose, III Director
---------------------
(Edward W. Rose, III)
March 24, 1997 By:/s/David L. Webster Director
---------------------
(David L. Webster)
March 24, 1997 By:/s/James F. Gero Director
---------------------
(James F. Gero)
March 24, 1997 By:/s/Gene H. Bishop Director
---------------------
(Gene H. Bishop)
Page -10-
Report of Independent Auditors
The Board of Directors
Drew Industries Incorporated
Under date of February 12, 1997, except for the first paragraph of Note 14,
which is as of March 21, 1997, we reported on the consolidated balance sheets of
Drew Industries Incorporated and subsidiaries as of December 31, 1996 and 1995,
and the related consolidated statements of income, stockholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1996, as
contained on pages 10 through 19 in the 1996 annual report to stockholders.
These consolidated financial statements and our report thereon are incorporated
by reference in the annual report on Form 10-K for the year 1996. In connection
with our audits of the aforementioned consolidated financial statements, we also
have audited the related financial statement schedule as listed in Item 14. This
financial statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion on this financial statement schedule
based on our audits.
In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.
KPMG Peat Marwick LLP
Stamford, Connecticut
February 12, 1997
Page -11-
DREW INDUSTRIES INCORPORATED AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------- -------- ----------------------- -------- --------
Additions
-----------------------
Balance At Charged To Charged To Balance At
Beginning Costs and Other End
Of Period Expenses Accounts Deductions Of Period
- ------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1996:
Allowance for doubtful accounts
receivable, trade $ 266 $23 $30(a) $ 11(b) $308
Reserve for liquidation losses -
disposal of businesses 9 9
Reserve for revaluation of loans 334 27 361
Reserve for notes receivable 692 (321) (127)(c) 498
YEAR ENDED DECEMBER 31, 1995:
Allowance for doubtful accounts
receivable, trade $ 197 $74 $ 5(b) $266
Reserve for liquidation losses -
disposal of businesses 9 9
Reserve for revaluation of loans 319 15 334
Reserve for notes receivable 533 46 (113)(c) 692
YEAR ENDED DECEMBER 31, 1994:
Allowance for doubtful accounts
receivable, trade $ 177 $17 $ (3)(b) $197
Reserve for liquidation losses -
disposal of businesses 9 9
Reserve for revaluation of loans 304 15 319
Reserve for notes receivable 564 144 175(c) 533
(a) Represents balance at date of acquisition of Shoals Supply, Inc.
(b) Represents accounts written-off net of recoveries.
(c) Represents write-off of uncollectible portion of notes, net of recoveries.
Page -12-
EXHIBIT INDEX
Exhibit Sequentially
Number Description Numbered Page
3. Articles of Incorporation and By-laws.
3.1 Drew Industries Incorporated Restated Certificate of
Incorporation.
3.2 Drew Industries Incorporated By-laws, as amended.
Exhibit 3.1 is incorporated by reference to Exhibit III to the Proxy
Statement-Prospectus constituting Part I of the Drew National Corporation and
Drew Industries Incorporated Registration Statement on Form S-14 (Regis tration
No. 2-94693).
Exhibit 3.2 is incorporated by reference to the Exhibit bearing the same
number included in the Annual Report of Drew Industries Incorporated on Form
10-K for the fiscal year ended August 31, 1985.
10 Material Contracts.
10.27 Lease between Kinro, Inc. and Robert A. White and Larry B. White,
dated June 1, 1979, as amended.
10.39 Leases between Robert A. White, Larry B. White and Kinro, Inc. dated
July 25, 1983, as amended.
10.47 Registration Agreement among Drew Industries Incorporated and the
Leslie-Locke Shareholders dated August 28, 1985.
10.49 Loan and Pledge Agreements between Drew Industries Incorporated and
Robert S. Sandlin, Ralph C. Pepper and James S. Roach, respectively,
dated August 28, 1985.
10.56 Agreement by and between Drew Industries Incorporated and Invest,
Inc., dated October 16, 1986.
10.57 Security Agreement by and among Drew Industries Incorporated, Invest,
Inc. and Carsons of Atlanta, Inc., dated October 16, 1986.
10.58 Pledge and Security Agreement by and between Drew Industries
Incorporated and Invest, Inc., dated October 16, 1986.
10.59 Secured Promissory Note in the amount of $795,000 of Invest, Inc.,
dated October 16, 1986.
10.66 Employment Agreement by and between Kinro, Inc. and David L. Webster,
dated March 31, 1996.
10.91 Lease between Kinro, Inc. and 1700 Industry Associates, dated April
30, 1987.
10.100 Drew Industries Incorporated Stock Option Plan.
Page -13-
10.122 Guaranty and Non-competition Agreement given by Drew Industries
Incorporated and Leslie-Locke, Inc., in favor of R.D. Werner Co.,
Inc., dated as of November 23, 1990.
10.134 Letter, dated April 28, 1988, from Drew Industries Incorporated to
Leigh J. Abrams confirming compensation arrangement.
10.135 Description of split-dollar life insurance plan for certain executive
officers.
10.139 Guaranty Agreement between Drew Industries, Inc. and BBT dated June
21, 1993.
10.140 Credit Agreement dated as of July 30, 1993 among Drew Industries
Incorporated, Kinro, Inc., Leslie-Locke, Inc. and Chemical Bank.
10.141 $15,000,000 Revolving Note of Kinro, Inc. to Chemical Bank dated July
30, 1993.
10.142 $15,000,000 Revolving Note of Leslie-Locke, Inc. to Chemical Bank
dated July 30, 1993.
10.143 Pledge and Security Agreement dated as of July 30, 1993 between Drew
Industries Incorporated and Chemical Bank.
10.144 Patent and Trademark Security Assignment (As Collateral) dated as of
July 30, 1993 between Kinro, Inc. and Chemical Bank.
10.145 $15,000,000 Intercompany Notes from Drew Industries Incorporated to
Kinro, Inc. and Leslie-Locke, Inc., and from Kinro, Inc. and
Leslie-Locke, Inc. to Drew Industries Incorporated dated July 30,
1993.
10.146 Form of Plan and Agreement of Distribution between Leslie Building
Products, Inc. and Drew Industries Incorporated dated July 29, 1994.
10.147 Form of Shared Services Agreement between Leslie Building Products,
Inc. and Drew Industries Incorporated dated July 29, 1994.
10.148 Form of Tax Matters Agreement between Leslie Building Products, Inc.
and Drew Industries Incorporated dated July 29, 1994.
10.149 Credit Agreement dated July 29, 1994 among Drew Industries
Incorporated, Kinro, Inc. and Chemical Bank.
10.150 Pledge Agreement dated as of July 29, 1994 made by Drew Industries
Incorporated in favor of Chemical Bank.
10.151 Asset Purchase Agreement, dated February 15, 1996, by and among Shoals
Supply, Inc., Lecil V. Thomas, and Drew Industries Incorporated.
10.152 Non-Negotiable Promissory Note, dated February 15, 1996, of Shoals
Acquisition Corp., to the order of Shoals Supply, Inc. in the
principal amount of $760,000, guaranteed by Drew Industries
Incorporated.
10.153 Bill of Sale, dated February 15, 1996 by and between Shoals Supply,
Inc. and Drew Industries Incorporated.
10.154 Registration Rights Agreement, dated February 15, 1996, by and among
Drew Industries Incorporated, Shoals Supply, Inc., and Lecil V.
Thomas.
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10.155 Consulting and Non-Competition Agreement, dated February 15, 1996, by
and between Drew Industries Incorporated and Lecil V. Thomas.
10.156 Leases, dated February 15, 1996, between Thomas Family Partnership,
Ltd. and Shoals Acquisition Corp.
10.157 Employment Bonus Agreements, dated February 15, 1996, by and between
Shoals Supply, Inc. and the employees named therein.
10.158 Assignment, dated February 15, 1996, by and among Shoals Supply, Inc.,
Lecil V. Thomas and Drew Industries Incorporated.
10.159 Stock Purchase and Pledge Agreement and Non-Negotiable Promissory
Note, dated March 7, 1997 by and between Drew Industries Incorporated
and Edward W. Rose, III.
Exhibit 10.27 is incorporated by reference to the Exhibits bearing the
same number indicated on the Registration Statement of Drew National Corporation
on Form S-1 (Registration No. 2-72492).
Exhibit 10.39 is incorporated by reference to the Exhibit included in the
Annual Report of Drew National Corporation on Form 10-K for the fiscal year
ended August 31, 1983.
Exhibits 10.47 and 10.49 are incorporated by reference to the Exhibits
included in the Company's Current Report on Form 8-K dated September 6, 1985.
Exhibits 10.56-10.59 are incorporated by reference to the Exhibits bearing
the same numbers included in the Company's Annual Report on Form 10-K for the
fiscal year ended August 31, 1987.
Exhibit 10.66 is filed herewith.
Exhibit 10.91 is incorporated by reference to the Exhibits bearing the
same numbers included in the Company's Annual Report on Form 10-K for the fiscal
year ended August 31, 1987.
Exhibit 10.100 is incorporated by reference to Exhibit A to the Proxy
Statement of the Company dated May 10, 1995.
Exhibit 10.122 is incorporated by reference to the Exhibits included in
the Company's Current Report on Form 8-K, dated November 28, 1990.
Exhibits 10.123-10.130 are incorporated by reference to the Exhibits
included in the Company's Current Report on Form 8-K dated December 23, 1991.
Exhibits 10.131 and 10.132 are incorporated by reference to the Exhibits
included in Amendment No. 5 on Form 8, dated October 20, 1992, to the Company's
Current Report on Form 8-K dated January 9, 1987.
Exhibit 10.134 is incorporated by reference to the Exhibit bearing the
same number included in the Company's Transition Report on Form 10-K for the
period September 1, 1992 to December 31, 1993.
Exhibit 10.135 is incorporated by reference to the Exhibit bearing the
same number included in the Company's Transition Report on Form 10-K for the
period September 1, 1992 to December 31, 1993.
Exhibits 10.139-10.145 are incorporated by reference to the Exhibits
bearing the same number included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1993.
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Exhibits 10.146-10.148 are incorporated by reference to the Exhibits
bearing numbers 10.1, 10.3 and 10.4, respectively, included in Post-Effective
amendment No. 1 on Form 10/A, dated August 30, 1994, to the Registration
Statement of Leslie Building Products, Inc. on Form 10 (Registration No.
0-24094).
Exhibits 10.149 and 10.150 are incorporated by reference to the Exhibits
bearing the same numbers included in the Company's Annual Report on Form 10-K
for the year ended December 31, 1994.
Exhibits 10.151 - 10.158 are incorporated by reference to the Exhibits
included in the Company's Current Report on Form 8-K dated February 29, 1996.
Exhibit 10.159 is filed herewith.
13. 1996 Annual Report to Stockholders.
Exhibit 13 is filed herewith.
21. Subsidiaries
Exhibit 21 is filed herewith.
23. Consent of Independent Auditors.
Exhibit 23 is filed herewith.
24. Powers of Attorney.
Powers of Attorney of persons signing this Report are included as part of
this Report.
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