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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000.
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 of incorporation (IRS Employer Identification No.)
or organization)
2831 Dexter Drive, Elkhart, Indiana 46514
(Address of principal executive offices) (Zip Code)
(219) 262-0123
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, Without Par Value New York Stock Exchange
(Title of each class) (Name of each exchange on
which registered)
Securities registered pursuant to Section 12(g) of the Act: None
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. X Yes _ 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 the registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment hereto. _
While it is difficult to determine the number of shares owned by non-
affiliates (within the meaning of such term under the applicable
regulations of the Securities and Exchange Commission), the registrant
estimates that the aggregate market value of the registrant's Common
Stock on March 20, 2001 held by non-affiliates was $133.6 million
(based upon the closing price on the New York Stock Exchange and an
estimate that 89.6% of such shares are owned by non-affiliates).
As of March 20, 2001, 15,762,026 shares of the registrant's Common Stock
were outstanding.
Page 1
Documents Incorporated by Reference
Parts of Form 10-K into which
Document the Document is Incorporated
Portions of the Proxy Statement for
the Annual Meeting of Shareholders
to be held on May 3, 2001 Part III
Page 2
Part I
Item 1. Business
Coachmen Industries, Inc. (the "Company" or the "Registrant") was incorporated
under the laws of the State of Indiana on December 31, 1964, as the successor
to a proprietorship established earlier that year. All references to the
Company include its wholly owned subsidiaries and divisions.
The Company is one of the largest full-line producers of recreational vehicles
in the United States and is a major manufacturer of modular housing/buildings.
The Company's All American Homes subsidiary is the largest manufacturer of
Modular homes in the United States. The Company's recreational vehicles are
marketed under various brand names including Coachmen, Georgie Boy, Shasta,
and Viking. Modular buildings are marketed by All American Homes, Miller
Building Systems, Mod-U-Kraf Homes, and the newly acquired KanBuild.
The Company operates in two primary business segments, recreational vehicles
and modular housing and buildings. The Recreational Vehicle ("RV") Segment
consists of the manufacture and distribution of Class A and Class C
motorhomes, travel trailers, fifth wheels, camping trailers, truck campers and
related parts and supplies. The Modular Housing and Building Segment ("Housing
and Building") consists of the manufacture and distribution of factory-built
homes, commercial buildings and telecommunication shelters.
Recreational Vehicle Segment
Products
The RV Segment consists of recreational vehicles and parts and supplies. This
group consists of five companies: Coachmen RV Company, LLC; Georgie Boy
Manufacturing, LLC; Shasta Industries, LLC; Viking Recreational Vehicles, LLC;
and Prodesign, LLC (a producer of composite and plastic parts) and two
Company-owned retail dealerships.
The pricipal brand names for the RV group are Catalina, Royal, Prospera,
Futura, Catalina Sport, Leprechaun, Santara, Mirada, Sportscoach, Sport,
Ranger, Flyte, Phoenix, Travelmaster, Cheyenne, Sprite, Pursuit, Landau,
Cruise Air, Cruise Master, Maverick, Suite, Viking and Clipper. Other brand
names that have been protected, used and are available for use in the future
include Normandy, Roadmaster, Frolic, Cross Country and Pathfinder.
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 RV group currently produces recreational vehicles on an assembly line
basis in Indiana, Michigan, and Georgia. Components used in the manufacturing
of recreational vehicles are primarily purchased from outside sources.
However, in some cases (such as fiberglass products) where it is profitable
for the RV group to do so, or where it has experienced shortages of supplies,
the RV group has undertaken to manufacture its own supplies. The RV group
depends on the availability of chassis from a limited number of manufacturers.
Occasionally, chassis availability has limited the group's production (see
Note 13 of Notes to Consolidated Financial Statements for information
concerning the use of converter pool agreements to purchase vehicle chassis).
Prodesign, LLC, located in Indiana, is a custom manufacturer of diversified
thermoformed and composite products for the automotive, marine, recreational
vehicle, afterlife, medical and heavy truck industries.
Page 3
On January 4, 2000, the Company disposed of its Coachmen Automotive Division,
which produced and sold van campers, van and truck conversions. The principal
brand names sold with the Coachmen Automotive Division included Starflyte,
Dearborn, Greenbriar and Saratoga. On October 2, 2000, the Company sold the
business operations and assets of its Lux Company subsidiary which
manufactured a variety of seating products for the recreational vehicle,
office and healthcare industries. In addition, during the third and fourth
quarters of 2000, the Company completed the closing and liquidation of four of
its Company-owned dealerships pursuant to its previously announced plan to
exit this line of business with the exception of two Company-owned stores
which were retained for research and development and regional service
purposes. The Company previously sold the business operations and certain
assets of two other Company-owned dealerships during 1999. See Note 12 of
Notes to Consolidated Financial Statements for additional information
regarding disposal of business operations within the RV Segment.
Marketing
The RV group considers itself as 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 recreational vehicles to gain a complete understanding and
appreciation for the products.
The RV group 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 RV group to adjust its
manufacturing capabilities in response to changes in demand for its products.
Recreational vehicles are generally manufactured against orders received from
RV dealers. These products are marketed through approximately 1,300
independent dealers located in 49 states and internationally and through the
two Company-owned dealerships. 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 RV group 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
recreational vehicle inventory, collateralized by a lien on such inventory.
The RV group 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 that has been
repossessed by the financing institution for the amount then due to the
financing institution. This 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 13 of Notes to Consolidated Financial Statements).
Historically, the Company has not reported any significant losses from the
repurchase agreements. However, in 2000 as a result of business conditions
negatively affecting the recreational industry, the Company has experienced
losses under repurchase agreements. Accordingly, at December 31, 2000, the
Company has recorded an accrual for estimated losses under repurchase
agreements. In addition, at December 31, 2000, the group was contingently
liable under guarantees to a financial institution of their loans to
independent dealers for amounts totaling approximately $15.1 million. The RV
group does not finance retail consumer purchases of its products, nor does it
generally guarantee consumer financing.
Page 4
Business Factors
Many recreational vehicles produced by the RV group 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 recreational vehicles in the past
and could have a material adverse effect on demand in the future.
Recreational vehicle businesses are dependent upon the availability and terms
of financing used by dealers and retail purchasers. Consequently, increases in
interest rates and the tightening of credit through governmental action or
other means have adversely affected recreational vehicle business in the past
and could do so in the future.
Competition and Regulation
The RV industry is highly competitive, and the RV group has numerous
competitors and potential competitors in each of its classes of products, some
of which have greater financial and other resources. Initial capital
requirements for entry into the manufacture of recreational vehicles are
comparatively small; however, codes, standards, and safety requirements
introduced in recent years may deter potential competitors.
The RV group's recreational vehicles generally compete in the lower to mid-
price range markets. The RV group believes it is a leader in the RV industry
in its focus on quality. The RV group emphasizes a quality product and a
strong commitment to competitive pricing in the markets it serves. The RV
group estimates that its current share of the recreational vehicle market is
approximately eight percent.
The recreational vehicle industry is highly regulated. NHTSA, state lemon law
statutes and state legislation protecting motor vehicle dealerships all impact
the way the RV group conducts its recreational vehicle business.
The RV group continues to recognize its obligations to protect the environment
insofar as its operations are concerned. To date, the RV group has not
experienced any material adverse effect from existing federal, state, or local
environmental regulations.
Modular Housing and Building Segment
Products
The Modular Housing and Building Segment consists of housing, commercial
buildings and telecommunication shelters. The Company's modular housing and
building subsidiaries (All American Homes, LLC; Mod-U-Kraf Homes, LLC;
KanBuild, Inc., acquired in February 2001; and Miller Building Systems, Inc.)
produce single-family residences, multi-family duplexes and apartments,
specialized structures for municipal and commercial use and telecommunication
shelters.
All American Homes, Mod-U-Kraf and KanBuild design, manufacture and market
factory-built modular housing. All American Homes is the largest producer of
modular homes in the United States and has five operations strategically
located in Indiana, Iowa, North Carolina, Ohio and Tennessee. Mod-U-Kraf,
acquired in June 2000, operates from a plant in Virginia. KanBuild, acquired
in February 2001, operates from locations in Kansas and Colorado. Together
these plants serve approximately 450 builders in 29 states. 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
Page 5
locations, typically in two to five sections, and are crane set onto a waiting
basement or crawl space foundation. 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. The
housing group regularly conduct 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.
Miller Building Systems, Inc. ("Miller Building") designs, manufactures and
markets factory-built modular buildings for use as commercial buildings and
telecommunication shelters. Miller Building specializes in the education and
medical fields with its commercial modular buildings. It is also a major
supplier of shelters to house sophisticated telecommunications equipment for
cellular and digital telephones, data transmission systems and two-way
wireless communications. Miller Building also offers site construction
services, which range from site management to full turnkey operations.
Depending on the specific requirements of its customers, Miller Building uses
wood, wood and steel, concrete and steel, cam-lock panels or all concrete to
fabricate it structures. Miller Building manufactures its buildings in a
factory, and the assembled modules are delivered to the site location for
final installation.
Marketing
The Housing and Building group participates in an expanding market for the
factory-built housing, commercial buildings and telecommunication shelters.
This group does not sell their housing and commercial buildings directly to
the end-user. Their customers will sell, rent or lease the buildings to the
end-user. Housing is marketed directly to approximately 450 builders in 29
states. Commercial buildings are marketed to approximately 75 companies in 31
states. The telecommunication shelters are sold directly to approximately 75
customers in 36 states, who are the end-users of the buildings. These
customers have been principally telecommunication and utility companies.
Customers may be national, regional or local in nature. The Housing and
Building group believes its success is the result of innovative designs that
are created by listening to customer needs and taking advantage of
advancements in technology. While price is often a key factor in the potential
customer's purchase decision, other factors may also apply, including,
delivery time, quality and prior experience with a certain manufacturer. A
significant benefit to the customer is the speed with which factory-built
buildings can be made available for use compared to on-site construction, and
the ability to relocate the building to another location if the end-user's
utilization requirements change. The sales staff calls on prospective
customers in addition to maintaining continuing contact with existing
customers and assists its customers in developing building specifications to
facilitate the preparation of a quotation. The sales staff, in conjunction
with the engineering staff, maintains ongoing contact with the customer for
the duration of the building project.
Business Factors
As a result of transportation costs, the effective distribution range of
factory built homes and commercial buildings is limited. The shipping area
from each manufacturing facility is approximately 200 to 300 miles for modular
homes and 600 miles for commercial buildings. The potential shipping radius
of the telecommunication shelters is not as restrictive as that of factory
built homes and commercial buildings; however, the marketing of these shelters
is concentrated in geographic areas where there is a freight advantage over a
large portion of its competitors.
The overall strength of the economy and the availability and terms of
financing used by builders, dealers and end-users have a direct impact on the
sales of the Housing and Building group. Consequently, increases in interest
rates and the tightening of credit through government action or other means
Page 6
have adversely affected the group's business in the past and could do so in
the future.
Competition and Regulation
Competition in the factory-built building industry is intense and the Housing
and Building group competes with a number of entities, some of which may have
greater financial and other resources. To the extent that factory-built
buildings become more widely accepted as an alternative to conventional on-
site construction, competition from local contractors and manufacturers of
other pre-engineered building systems may increase. In addition to the
competition from companies designing and constructing on-site buildings, the
Housing and Building group competes with numerous factory-built building
manufactures that operate in particular geographical regions.
The Housing and Building group competes for orders from its customers
primarily on the basis of price, quality, timely delivery, engineering
capability and reliability. The group believes that the principal basis on
which it competes with on-site construction is the combination of: the
timeliness of factory versus on-site construction, the cost of its products
relative to on-site construction, the quality and appearance of its buildings,
its ability to design and engineer buildings to meet unique customer
requirements, and reliability in terms of completion time. Manufacturing
efficiencies, quantity purchasing and generally lower wage rates of factory
construction, even with the added transportation expense, result in the cost
of factory-built buildings being equal to or lower than the cost of on-site
construction of comparable quality. With manufacturing facilities
strategically located throughout the country, the Housing and Building group
provides a streamlined construction process. This process of manufacturing
the building in a weather-free, controlled environment, while the site is
prepared, significantly reduces the time to completion on a customer's
project.
Customers of the Housing and Building group are generally required to obtain
building installation permits from applicable governmental agencies.
Buildings completed by the group are manufactured and installed in accordance
with applicable building codes set forth by the particular state or local
regulatory agencies.
State building code regulations applicable to factory-built buildings vary
from state to state. Many states have adopted codes that apply to the design
and manufacture of factory-built buildings, even if the buildings are
manufactured outside the state and delivered to a site within that state's
boundaries. Generally, obtaining state approvals is the responsibility of the
manufacturer. Some states require certain customers to be licensed in order to
sell or lease factory-built buildings. Additionally, certain states require a
contractor's license from customers for the construction of the foundation,
building installation, and other on-site work. On occasion, the Housing and
Building group has experienced regulatory delays in obtaining the various
required building plan approvals. In addition to some of its customers, the
group actively seeks assistance from various regulatory agencies in order to
facilitate the approval process and reduce the regulatory delays.
Page 7
General
(Applicable to all of the Company's principal markets)
Business Segment
The table below sets forth the composition of the Company's net sales for each
of the last three years (dollar amounts in millions):
2000 1999 1998
Amount % Amount % Amount %
Recreational Vehicles
Motorhomes $331.7 46.7 $455.1 53.7 $401.0 53.1
Travel Trailers
and Fifth Wheels 145.3 20.4 160.5 18.9 150.6 19.9
Camping Trailers 24.0 3.4 26.1 3.1 25.7 3.4
Truck Campers 1.8 .3 2.2 .3 3.7 .5
Parts and Supplies 35.6 5.0 47.2 5.6 44.7 5.9
Total RV 538.4 75.8 691.1 81.6 625.7 82.8
Modular Housing
and Buildings 171.6 24.2 155.9 18.4 130.3 17.2
Total $710.0 100.0 $847.0 100.0 $756.0 100.0
Note: See Note 3 of Notes to Consolidated Financial Statements
regarding segment information.
Seasonality
Historically, the Company has experienced greater sales during the second and
third quarters with lesser sales during the first and fourth quarters. This
reflects the seasonality of RV sales for products used during the summer
camping season and also the adverse impact of weather on general construction
for the modular building applications.
Employees
At December 31, 2000, Coachmen employed 4,149 persons, of whom 929 were
employed in office and administrative capacities. The Company provides group
life, dental, vision services, hospitalization, and major medical plans under
which the employee pays a portion of the cost. In addition, employees can
participate in a 401(k) plan and a stock purchase plan. Certain employees can
participate in a stock option plan (see Notes 9 and 10 of Notes to
Consolidated Financial Statements). The Company considers its relations with
employees to be good.
Patents and Trademarks
The Company maintains approximately 60 trademarks, which are up for renewal
from 2001 through 2013, and approximately 10 patents due to expire between
2001 and 2016.
Research and Development
During 2000, the Company spent approximately $5,959 on research related to
the development of new products and improvement of existing products. The
amounts spent in 1999 and 1998 were approximately $5,727 and $4,706,
respectively.
Page 8
Item 2. Properties
The Registrant owns or leases 3,769,223 square feet of plant and office
space, located on 1,261.3 acres, of which 3,035,892 square feet are used
for manufacturing, 384,533 square feet are used for warehousing and
distribution, 46,024 square feet are used for research and development,
70,844 square feet are used for customer service and 231,930 square feet
are offices. Included in these numbers are 138,854 square feet leased to
others and 646,107 square feet available for sale or lease. The Registrant
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.
The following table indicates the location, number and size of the
Registrant's properties by segment as of December 31, 2000:
No. of Building Area
Location Acreage Buildings (Sq. Ft.)
Properties Owned and Used by Registrant:
Recreational Vehicles
Elkhart, Indiana 35.0 9 281,811
Middlebury, Indiana 518.6 34 863,593
Fitzgerald, Georgia 17.0 3 67,070
Centreville, Michigan 105.0 4 84,865
Edwardsburg, Michigan 83.1 12 303,254
Colfax, North Carolina 7.0 3 15,200
Goshen, Indiana 18.0 1 80,000
Subtotal 783.7 66 1,695,793
Modular Housing and Building
Decatur, Indiana 40.0 1 210,184
Elkhart, Indiana 20.0 3 132,300
Dyersville, Iowa 20.0 1 168,277
Leola, Pennsylvania 20.0 2 113,100
Springfield, Tennessee 45.0 1 131,453
Rutherfordton, North Carolina 37.8 1 169,177
Zanesville, Ohio 23.0 1 129,753
Bennington, Vermont 5.0 1 28,900
Rocky Mount, Virginia 39.6 2 105,325
Subtotal 250.4 13 1,188,469
Total owned and used 1,034.1 79 2,884,262
Properties Leased and Used by Registrant:
Recreational Vehicles
Elkhart, Indiana 1.6 1 8,000
Grants Pass, Oregon 9.4 - -
Subtotal 11.0 1 8,000
Page 9
Properties (Continued)
Properties Leased and Used by Registrant
Modular Housing and Building
Binghamton, New York 11.0 1 55,900
Sioux Falls, South Dakota 5.0 2 36,100
Subtotal 16.0 3 92,000
Total leased and used 27.0 4 100,000
Properties Owned by Registrant and Leased to Others:
Recreational Vehicles
Lake Park, Georgia 8.0 1 11,720
Winter Garden, Florida 5.0 1 42,176
Crooksville, Ohio 10.0 2 39,310
Grapevine, Texas 4.8 3 45,648
Total owned and leased 27.8 7 138,854
Properties Owned by Registrant and Available for Sale or Lease:
Recreational Vehicles
Adelanto, California 1.1 - -
Perris, California 15.5 - -
Melbourne, Florida 8.1 1 32,000
Marietta, Georgia 5.2 1 17,400
Elkhart, Indiana 44.9 8 256,065
Grants Pass, Oregon 24.5 1 62,563
Grapevine, Texas 4.0 - -
Longview, Texas 9.2 - -
Subtotal 112.5 11 368,028
Modular Housing and Building
Decatur, Indiana 3.3 2 78,996
Montezuma, Georgia 42.6 2 158,283
Rocky Mount, Virginia 14.0 2 40,800
Subtotal 59.9 6 278,079
Total owned and available
For sale or lease 172.4 17 646,107
Total Company 1,261.3 107 3,769,223
Item 3. 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.
Page 10
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted during the quarter ended December 31, 2000 to
a vote of security holders.
Executive Officers of the Registrant
The following table sets forth the executive officers of the Company, as
of December 31, 2000:
Name Position
Claire C. Skinner Chairman of the Board, Chief Executive Officer and
President
James E. Jack (a) Executive Vice President and Chief Financial Officer
Richard M. Lavers Executive Vice President and General Counsel and
Secretary
Gene E. Stout Executive Vice President, Corporate Development
(a) Resigned effective February 13, 2001
Claire C. Skinner (age 46) assumed the Presidency of the Company in September
2000 and has served as Chairman of the Board and Chief Executive Officer
since August 1997. Before that, Vice Chairman of the Company since May 1995,
and served as Executive Vice President from 1990 to 1995. From 1987 through
July 1997, Ms. Skinner served as the President of Coachmen RV, the Company's
largest division. Prior to that, she held several management positions in
operations and marketing since 1983.
James E. Jack (age 59) served as Executive Vice President and Chief
Financial Officer of the Company from October 1999 to February 2001. From 1997
to September 1999 he served as a Managing Consultant at Towers Perrin and
prior to that he held various positions beginning in 1963 at Associates First
Capital Corporation, including Director, Senior Executive Vice President and
Chief Financial Officer.
Richard M. Lavers (age 53) assumed the position of Secretary of the Company in
May 2000 and has served as Executive Vice President and General Counsel of the
Company since October 1997. From 1994 through 1997 Mr. Lavers was Vice
President, Secretary and General Counsel of RMT, Inc. and Heartland
Environmental Holding Company.
Gene E. Stout (age 67) 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.
Page 11
Part II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters
The following table discloses the high and low sales prices for
Coachmen's common stock during the past two years as reported on the New
York Stock Exchange, along with information on dividends paid per share
during the same periods.
High & Low Sales Prices Dividends Paid
2000 1999 2000 1999
1st Quarter $16.63 - $10.56 $26.88 - $17.88 $.05 $.05
2nd Quarter 17.50 - 11.13 24.00 - 18.13 .05 .05
3rd Quarter 11.69 - 9.50 24.00 - 15.38 .05 .05
4th Quarter 10.75 - 7.50 17.63 - 13.25 .05 .05
The Company's common stock is traded on the New York Stock Exchange: Stock
symbol COA. The number of shareholders of record as of January 31, 2000 was
2,011.
Item 6. Selected Financial Data
Five-Year Summary of Selected Financial Data
-Year Ended December 31-
(in thousands, except per share amounts)
2000 1999 1998 1997 1996
Net sales $709,975 $847,024 $756,030 $661,591 $606,474
Net income 2,164 29,502 33,063 24,763 28,505
Net income per share:
Basic .14 1.80 1.93 1.44 1.87
Diluted .14 1.80 1.92 1.42 1.84
Cash dividends per share .20 .20 .20 .20 .185
At year end:
Total assets 296,446 285,766 269,341 259,654 228,040
Long-term debt 11,795 8,346 10,191 12,591 14,841
*Net income and net income per share for 1996 includes $2,294 and $.15,
respectively, for the cumulative effect of an accounting change.
Page 12
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion should be read in conjunction with the Selected
Financial Data and the Consolidated Financial Statements.
OVERVIEW
The Company was founded in 1964 as a manufacturer of recreational vehicles
and began manufacturing modular homes in 1982. Since that time, the Company
has evolved into a leading manufacturer in both the recreational vehicle ("RV")
and modular housing and building business segments through a combination of
internal growth and strategic acquisitions.
The Company's new plant openings have been an important component of its
internal growth strategy. In 1995, the Company opened a new modular housing
plant in Tennessee and in 1996, the Company expanded its modular housing
production capacity with the construction of a new facility for the North
Carolina housing operation. The construction of a new modular housing facility
in Ohio became fully operational in 1998. Increases in production capacity
also included additions to the modular housing plant in Iowa with an addition
completed in 1998. In 2000 new additions to expand the North Carolina and Iowa
modular housing production facilities were completed. Additional travel
trailer plants in Indiana became operational in 1996 and 1997. These
additional plants helped capitalize on the growing market share of value-
priced travel trailers. In 1999, a new service building was constructed at the
RV production facility in Georgia. In addition, construction was completed in
1999 for a new manufacturing facility in Indiana for Class A motorhomes.
During 2000, the Company significantly expanded its modular housing and
building segment with the acquisitions of Mod-U-Kraf Homes, Inc. ("Mod-U-Kraf
Homes") on June 30, 2000 and Miller Building Systems, Inc. ("Miller Building")
on October 31, 2000 (see Note 12 of Notes to Consolidated Financial Statements
for further details, including unaudited pro forma financial information). In
addition, during 2000 and 1999, the Company sold or liquidated its Company-
owned dealerships, with the exception of two Company-owned stores which will
be retained for research and development and regional service purposes.
The Company's business segments are cyclical and subject to certain seasonal
demand cycles and changes in general economic and political conditions. Demand
in the RV and certain portions of the housing and building segment 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 2000 to 1999
Consolidated net sales decreased $137.0 million, or 16.2% to $710.0 million in
2000 from $847.0 million in 1999. The Company's recreational vehicle segment
experienced a net sales decrease of 22.1%. The RV segment's net sales in 2000
and 1999 included $60.7 million and $122.5 million, respectively, of net sales
attributable to RV segment business units which were sold or liquidated during
2000 and 1999 (see Note 12 of Notes to Consolidated Financial Statements). The
modular housing and building segment had a net sales increase of $15.7
million, or 10.1%. The Company's existing modular business had a $4.9 million
decrease in net sales in 2000 compared to 1999, which when combined with the
$20.6 million of sales from Mod-U-Kraf Homes and Miller Building resulted in
the $15.7 million increase in net sales. Sales decreases in the RV segment are
attributable to a decline in overall market conditions affecting the
recreational vehicle industry as a whole. Increases in interest rates, high
fuel prices, dealer inventory adjustments and reduced consumer confidence
Page 13
negatively impacted RV industry shipments. While the RV segment experienced a
slight increase in the average sales price per unit the modular housing and
building segment experienced increases in both unit sales, including unit
sales of acquired businesses, and in the average sales price per unit during
2000. Historically, the Company's first and fourth quarters are the slowest
for sales in both segments.
Gross profit was $78.6 million, or 11.1% of net sales, in 2000 compared to
$108.0 million, or 12.7% of net sales, in 1999. While the modular housing and
building segment experienced a small decrease in gross profit as a percentage
of net sales, the majority of the gross profit percentage decrease is
attributable to the RV segment. The decrease in the gross profit percentage
for this segment reflects the impact of significantly lower production volume
accompanying a decrease in total net sales and the impact from nonrecurring
special pretax charges recorded in the fourth quarter of 2000. Nonrecurring
special charges affecting gross profit were related to plant consolidation,
losses on the closing and liquidation of four retail dealerships and write-
downs of certain real estate held for sale. In addition, during the fourth
quarter of 2000, the Company increased accruals for excess inventory
quantities, warranty liabilities and estimated losses under repurchase
agreements.
Operating expenses, consisting of selling, delivery, general and
administrative expenses, were $76.1 million and $67.3 million, or as a
percentage of net sales, 10.7% and 8.0% for 2000 and 1999, respectively.
Selling and delivery expenses were $42.5 million in 2000, or 6.0% of net
sales, compared with $39.0 million, or 4.6% of net sales in 1999. Selling
expenses increased in 2000 as a result of overall increases in dealer
incentives in both segments of the Company's business. During 2000, the
Company responded to discounting in the RV marketplace with strong incentives
and marketing programs in an effort to stimulate retail sales. General and
administrative expenses were $33.6 million in 2000, or 4.7% of net sales,
compared with $28.4 million, or 3.3% of net sales, in 1999. The general and
administrative percentage increase in 2000 reflects increased internal costs
for compensation and related expenses which were capitalized in 1999 in
connection with the implementation of the new enterprise-wide technology
systems (see Note 2 of Notes to Consolidated Financial Statements).
Operating income was $2.5 million in 2000 compared with $40.6 million in 1999,
a decrease of 93.8%. This decrease is consistent with the $29.4 million
decrease in gross profit and the overall increase of $8.8 million in operating
expenses.
Interest expense for 2000 and 1999 was $2.2 million and $1.8 million,
respectively. 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 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 increase in cash surrender value.
Interest expense also increased as a result of assumed debt obligations in the
acquisitions of Mod-U-Kraf Homes and Miller Building. Investment income for
2000 decreased to $1.4 million from $2.7 million in 1999. The decrease in the
investment income was principally due to less funds being invested in 2000
than in 1999. Cash and temporary cash investments were used in investing
activities during 2000, including the acquisitions of Mod-U-Kraf Homes and
Miller Building.
The gain on sale of properties decreased $1.1 million in 2000. The larger
amount in 1999 was substantially due to the sale of real estate in Indiana,
which included the previous corporate administrative building and various
other miscellaneous properties. In 2000, the major gain on property was from
the sale of the Lux Company facility in Indiana, which approximated $1.2
Page 14
million. Assets are continually analyzed and every effort is made to sell or
dispose of properties that are determined to be excess or unproductive.
Pretax income for 2000 was $2.9 million compared with $45.0 million for 1999.
The Company's RV segment incurred a pretax loss of $5.8 million, or (1.1)% of
vehicle net sales in 2000, compared with pretax income of $28.1 million, or
4.1% of the RV segment's net sales in 1999. The modular housing and building
segment generated 2000 pretax income of $11.6 million and in 1999, $14.9
million, or 6.7% and 9.5%, respectively, of modular net sales. The pretax
income (loss) of the two segments does not include an allocation of additional
depreciation expense of $1.8 million associated with the enterprise-wide
technology systems which were placed in service during 1999. This corporate
expense is included in "other reconciling items" in the segment disclosures
(see Note 3 of Notes to Consolidated Financial Statements).
The provision for income taxes was $.7 million for 2000 and $15.5 million for
1999, representing an effective tax rate of 25.0% and 34.5%, respectively. The
Company's effective tax rate fluctuates based upon the states where sales
occur, the level of export sales, with the mix of nontaxable investment income
and other factors (see Note 11 of Notes to Consolidated Financial Statements).
Net income for the year ended December 31, 2000 was $2.2 million compared to
$29.5 million for 1999.
Comparison of 1999 to 1998
Consolidated net sales for 1999 were $847.0 million, an increase of 12.0% over
the $756.0 million reported in 1998. The Company's RV segment experienced a
sales increase of 10.5%, while the modular housing and building segment's
sales increased by 19.6%. The increase in sales for the RV segment was
attributed to increased capacity, increased sales of Class A motorhomes and
the overall growth in the recreational vehicle market. The Company's modular
segment experienced sales growth due to increased capacity and increased
penetration into the respective markets served. The Company's RV segment
experienced an increase in the average sales price per unit, while the
Company's modular segment experienced increases in both unit sales and the
average sales price per unit.
Gross profit for 1999 decreased to $108.0 million, or 12.8% of net sales, from
$109.9 million, or 14.5% of net sales, in 1998. The decrease in gross profit
for 1999 was primarily attributable to the change in the sales mix for
recreational vehicles and the Company's investment in new enterprise-wide
technology and operating systems. In addition, the Company experienced higher
costs associated with the start-up of a new Class A production facility in
Indiana. Also affecting gross profit for 1999 was the additional accrual of
$1.5 million resulting from increased losses under the Company's self-
insurance programs for general liability, product liability and workers'
compensation and increased costs associated with the Company's self-insured
group medical plan.
Operating expenses, which include selling, delivery, general and
administrative expenses, were $67.3 million, or 8.0% of net sales in 1999,
compared with $64.0 million, or 8.5% of net sales in 1998. Selling and
delivery expenses were $39.0 million, or 4.6% of net sales, in 1999 compared
with $36.0 million, and 4.8% in 1998. The increase in selling and delivery
expenses was primarily due to increased sales. General and administrative
expenses were $28.4 million, or 3.3% of net sales in 1999, compared with $28.0
million, or 3.7% of net sales in 1998. The administrative cost percentage
decrease was primarily the result of capitalization of compensation and
related costs with the implementation of the new enterprise-wide technology
systems.
Operating income was $40.6 million in 1999 compared with $45.9 million in
1998, a decrease of 11.5%. This decrease was consistent with the $1.9 million
decrease in gross profit and the overall increase of $3.4 million in operating
expenses.
Page 15
Interest expense increased in 1999 to $1.8 million from $1.7 million in 1998.
Investment income decreased to $2.7 million from $4.8 million in 1998. The
decrease in investment income was principally due to less funds being invested
in 1999 than in 1998. During 1999, cash and temporary cash investments were
used in investing activities and for the open market purchase of common shares
for the treasury.
The net gain on the sales of properties increased $1.9 million in 1999. This
increase was substantially due to the sale of real estate in Indiana, which
included the corporate administration building subsequent to the move to a
larger facility.
Pretax income was $45.0 million in 1999 compared with $50.3 million in 1998.
The Company's RV segment produced $28.1 million and $36.2 million of pretax
income in 1999 and 1998, respectively. The modular housing and building
segment produced pretax income of $14.9 million in 1999 and $11.2 million in
1998 (see Note 3 of Notes to Consolidated Financial Statements).
The provision for income taxes was $15.5 million for 1999 and $17.2 million
for 1998, representing an effective tax rate of 34.5%, and 34.3%,
respectively.
Net income for the year ended December 31, 1999 was $29.5 million compared
with $33.1 million for the prior year.
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 credit
facilities to meet its seasonal working capital needs (see Note 6 of Notes to
Consolidated Financial Statements). During 2000, there were short-term
borrowings of $30 million under the credit facilities to finance the cash
purchase price of Miller Building and such borrowings were subsequently
repaid. There were no short-term borrowings outstanding at December 31, 2000,
1999 or 1998.
The Company's operating activities have been the principal source of cash
flows in each of the last three years. Operating cash flows were $29.9
million, $22.2 million and $14.0 million for 2000, 1999 and 1998,
respectively. For the year 2000, net income, depreciation and the decreases
in receivables and inventories, offset by decreases in accounts payable,
trade were the major sources of cash flows. The decrease in receivables was
directly related to the decrease of 30.3% in total net sales for the fourth
quarter of 2000 compared to 1999's fourth quarter. For the years 1999 and
1998, net income, adjusted by certain noncash items such as depreciation, was
a significant factor in generating operating cash flows. In 1999 increases in
trade accounts payable and, accrued expenses and other liabilities were
significantly offset by increases in receivables and inventories. This
increase in receivables was related to the 12.0% increase in annual sales and
the 11.6% increase in fourth quarter sales volume. In 1998, cash flows from
net income and depreciation were partially offset by an $18.8 million increase
in inventories. This increase in inventories was directly related to the 1998
increase in sales over 1997, as well as, the acquisition of three retail
dealerships during 1998.
Investing activities used cash of $25.0 million, $17.9 million and $42.1
million in 2000, 1999 and 1998, respectively. In 2000, the sale of marketable
securities, net of purchases, provided cash flows of $12.7 million and these
proceeds were used in part to fund the acquisition of Mod-U-Kraf Homes. In
1999 and 1998, purchases of marketable securities, net of sales, used $2.1
million and $16.3 million of cash flows. Proceeds from the sale of businesses
provided cash of $4.8 million in 2000 and $3.3 million in 1999 while
acquisitions of businesses consumed cash of $34.4 million in 2000 and $9.0
Page 16
million in 1998 (see Note 12 of Notes to Consolidated Financial Statements).
Otherwise the principal use of cash for investing activities in each of the
last three years has been property, plant and equipment acquisitions. Major
capital expenditures during 2000 included expanding production facilities in
North Carolina and Iowa for the modular housing and building segment. In 1999,
major capital expenditures included expanding production facilities for the RV
segment, as well as capitalization of internal costs associated with the
enterprise-wide technology system. Major capital expenditures during 1998
included acquisitions, construction of and additions to production facilities
for both the recreational vehicle and modular housing and building segments,
as well as the capitalized cost of hardware and software associated with the
enterprise-wide technology system.
In 2000, cash flows reflected short-term borrowings and repayment of $30
million, which was used for the purchase of Miller Building. In 1999 and 1998
the principal use of cash flows from financing activities was the $19.1
million and $16.8 million, respectively, used to purchase common shares under
the Company's share repurchase programs. Other financing activities for 2000,
1999 and 1998, which used cash in each of the years, were payments of long-
term debt and cash dividends. These negative cash flows were partially offset
by the issuance of common shares under stock option and stock purchase plans.
For a more detailed analysis of the Company's cash flows for each of the last
three years, see the Consolidated Statements of Cash Flows.
The Company's cash and temporary cash investments at December 31, 2000 were
$2.6 million, or a decrease of $1.7 million from 1999. The Company
anticipates that available funds, together with anticipated cash flows
generated from future operations and amounts available under its credit
facilities will be sufficient to fund the Company's acquisition of KanBuild,
Inc. on February 12, 2001 (see Note 14 of Notes to Consolidated Financial
Statements), planned capital expenditures and other operating cash
requirements through the end of 2001. In addition, the Company has $18.7
million of marketable securities, which are invested in public utility
preferred stocks under a dividend capture program.
A downturn in the U.S. economy, lack of consumer confidence and other factors
adversely impact the RV industry. This has a negative impact on the Company's
sales of recreational vehicles and also increases the Company's loss exposure
under repurchase agreements with lenders to the Company's independent dealers
(See Note 13 of Notes to Consolidated Financial Statements).
In 2000, working capital decreased $18.9 million, from $135.1 million to
$116.2 million. The $16.9 million decrease in current assets at December 31,
2000 versus December 31, 1999 was primarily due to the decrease in marketable
securities. The $2.0 million increase in current liabilities is substantially
due to increases in accrued expenses and other liabilities.
Forward-Looking Statements
This Annual Report 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 and price
of gasoline and the impact of economic uncertainty on high-cost discretionary
product purchases, which can hinder the 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; the functioning of the Company's
enterprise-wide technology system, which can impact the Company's day-to-day
operations; legislation governing the relationships of the Company with its
recreational vehicle dealers, which may affect the Company's options and
liabilities in the event of a general economic downturn; and also on the state
of the recreational vehicle and modular housing and building industries in
the United States. Other factors affecting forward-looking statements include
the cyclical and seasonal nature of the Company's businesses, adverse weather,
Page 17
changes in property taxes and energy costs, changes in federal income tax laws
and federal mortgage financing programs, changes in public policy,
competition, government regulations and the Company's ability to maintain or
increase gross margins which are critical to the profitability whether there
are or are not increased sales.
At times, the Company's actual performance differs materially from its
projections and estimates regarding the economy, the recreational vehicle and
modular housing and building 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.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
In the normal course of business, operations of the Company are exposed
to fluctuations in interest rates. These fluctuations can vary the costs
of financing and investing yields. The Company utilized its short-term credit
facility in 2000 in connection with the acquisition of Miller Building and
such borrowings were repaid within sixty days. The Company had not utilized
its short-term credit facilities during 1999 or 1998. Accordingly, changes in
interest rates would primarily impact the Company's long-term debt. At
December 31, 2000, the Company had $12.7 million of long-term debt, including
current maturities. Long-term debt consists of industrial development revenue
bonds that have variable or floating rates. The Company's marketable
securities consist of public utility preferred stocks which pay quarterly
fixed rate dividends. These financial instruments are subject to market risk
in that changes in interest rates would impact the market value of the
preferred stocks. As discussed in Note 1 of the Notes to Consolidated
Financial Statements, the Company utilizes U.S. Treasury bond future options
as a protection against the impact of increases in interest rates on the fair
value of the Company's investments in these fixed rate preferred stocks.
Outstanding options are marked to market with market value changes recognized
in current earnings. The U.S. Treasury bond futures options generally have
terms ranging from 90 to 180 days. Based on the Company's overall interest
rate exposure at December 31, 2000, including variable or floating rate debt
and derivatives used to hedge the fair value of fixed rate preferred stocks, a
hypothetical 10 percent change in interest rates applied to the fair value of
the financial instruments as of December 31, 2000, would have no material
impact on earnings, cash flows or fair values of interest rate risk sensitive
instruments over a one-year period.
Page 18
Item 8. Financial Statements and Supplementary Data
Index to Financial Statements Page
Financial Statements:
Report of Independent Accountants 20
Consolidated Balance Sheets at December 31, 2000 and 1999 21
Consolidated Statements of Income
for the years ended December 31, 2000, 1999 and 1998 22
Consolidated Statement of Shareholders' Equity
for the years ended December 31, 2000, 1999 and 1998 23
Consolidated Statements of Cash Flows for the years
ended December 31, 2000, 1999 and 1998 24-25
Notes to Consolidated Financial Statements 26-44
Financial Statement Schedule:
II - Valuation and Qualifying Accounts for the years
ended December 31, 2000, 1999 and 1998 46
All other schedules are omitted because they are not applicable
or the required information is shown in the financial statements
or notes thereto.
Page 19
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Coachmen Industries, Inc.:
In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of Coachmen Industries, Inc. and its subsidiaries at December 31,
2000 and 1999, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 2000, in conformity
with accounting principles generally accepted in the United States of America.
In addition, in our opinion, the financial statement schedule listed in the
accompanying index presents fairly, in all material respects, the information
set forth therein when read in conjunction with the related consolidated
financial statements. These financial statements and financial statement
schedule are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits. We conducted our audits of
these statements in accordance with auditing standards generally accepted in
the United States of America, which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
As more fully described in Note 2 to the consolidated financial statements,
effective January 1, 1999, the Company adopted Statement of Position No. 98-1,
"Accounting for Costs of Computer Software Developed or Obtained for Internal
Use."
PricewaterhouseCoopers LLP
------------------------------
PricewaterhouseCoopers LLP
South Bend, Indiana
February 2, 2001, except for the information
in Note 6, for which the date is
February 9, 2001, and Note 14,
for which the date is February 12, 2001
Page 20
Coachmen Industries, Inc. and Subsidiaries
Consolidated Balance Sheets
December 31, 2000 and 1999
(in thousands)
Assets
2000 1999
CURRENT ASSETS
Cash and temporary cash investments $ 2,614 $ 4,269
Marketable securities 18,737 32,550
Trade receivables, less allowance for
doubtful receivables 2000 - $1,066
and 1999 - $550 37,743 39,398
Other receivables 2,336 2,892
Refundable income taxes 4,600 4,748
Inventories 97,315 100,008
Prepaid expenses and other 2,221 2,214
Deferred income taxes 8,384 4,743
Total current assets 173,950 190,822
Property and equipment, net 84,163 74,678
Intangibles, less accumulated amortization
2000 - $917 and 1999 - $644 15,983 4,426
Cash value of life insurance 12,378 11,291
Other 9,972 4,549
TOTAL ASSETS $296,446 $285,766
Liabilities and Shareholders' Equity
CURRENT LIABILITIES
Current maturities of long-term debt $ 865 $ 1,543
Accounts payable, trade 24,015 25,041
Accrued income taxes 845 1,096
Accrued expenses and other liabilities 31,988 28,039
Total current liabilities 57,713 55,719
Long-term debt 11,795 8,346
Deferred income taxes 3,370 1,489
Other 8,619 6,566
Total liabilities 81,497 72,120
COMMITMENTS AND CONTINGENCIES (Note 13)
SHAREHOLDERS' EQUITY
Common shares, without par value: authorized
60,000 shares; issued 2000 - 21,020
shares and 1999 - 20,971 shares 90,861 90,405
Additional paid-in capital 5,563 4,623
Retained earnings 169,766 170,716
Treasury shares, at cost, 2000 - 5,317
shares and 1999 - 5,443 shares ( 51,241) (52,098)
Total shareholders' equity 214,949 213,646
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $296,446 $285,766
The accompanying notes are a part of the consolidated financial statements.
Page 21
Coachmen Industries, Inc. and Subsidiaries
Consolidated Statements of Income
for the years ended December 31, 2000, 1999 and 1998
(in thousands, except per share amounts)
2000 1999 1998
Net sales $709,975 $847,024 $756,030
Cost of sales 631,344 739,034 646,119
Gross profit 78,631 107,990 109,911
Operating expenses:
Selling and delivery 42,478 38,972 35,974
General and administrative 33,637 28,375 28,009
76,115 67,347 63,983
Operating income 2,516 40,643 45,928
Nonoperating income (expense):
Interest expense (2,152) (1,829) (1,738)
Investment income 1,401 2,747 4,831
Gain on sale of properties, net 891 1,962 46
Other income, net 231 1,518 1,224
371 4,398 4,363
Income before income taxes 2,887 45,041 50,291
Income taxes 723 15,539 17,228
Net income $ 2,164 $ 29,502 $33,063
Earnings per common share:
Basic $ .14 $ 1.80 $ 1.93
Diluted .14 1.80 1.92
Shares used in the computation of
earnings per common share:
Basic 15,584 16,370 17,132
Diluted 15,639 16,421 17,261
The accompanying notes are a part of the consolidated financial statements.
Page 22
Coachmen Industries, Inc. and Subsidiaries
Consolidated Statements of Shareholders' Equity
for the years ended December 31, 2000, 1999 and 1998
(in thousands, except per share amounts)
Additional Total
Common Shares Paid-In Retained Treasury Shares Shareholders'
Number Amount Capital Earnings Number Amount Equity
Balance,
January 1,
1998 20,689 $87,520 $3,013 $114,858 (3,388) $(16,381) $189,010
Net income - - - 33,063 - - 33,063
Issuance of common
shares upon the
exercise of stock
options 139 1,272 - - - - 1,272
Issuance of common
shares under
employee stock
purchase plan 15 313 - - - - 313
Issuance of common
shares from treasury - - 40 - 3 17 57
Acquisition of common
shares for treasury - - - - (873) (16,674) (16,674)
Tax benefit from
exercise of stock
options - - 814 - - - 814
Cash dividends of
$.20 per common
share - - - (3,433) - - (3,433)
Balance,
December 31,
1998 20,843 89,105 3,867 144,488 (4,258) (33,128) 204,332
Net income - - - 29,502 - - 29,502
Issuance of common
shares upon the
exercise of stock
options 107 981 - - - - 981
Issuance of common
shares under
employee stock
purchase plan 21 319 - - - - 319
Issuance of common
shares from
treasury - - 318 - 21 151 469
Acquisition of common
shares for treasury - - - - (1,206) (19,121) (19,121)
Tax benefit from
exercise of stock
options - - 438 - - - 438
Cash dividends of
$.20 per common
share - - - (3,274) - - (3,274)
Balance,
December 31,
1999 20,971 90,405 4,623 170,716 (5,443) (52,098) 213,646
Net income - - - 2,164 - - 2,164
Issuance of common
shares upon the
exercise of stock
options 21 173 (308) - 109 748 613
Issuance of common
shares under
employee stock
purchase plan 28 283 - - - - 283
Issuance of common
shares from
treasury - - 200 - 17 109 309
Conversion of stock
options of acquired
business to stock
options of the
Company - - 957 - - - 957
Tax benefit from
exercise of stock
options - - 91 - - - 91
Cash dividends of
$.20 per common
share - - - (3,114) - - (3,114)
Balance,
December 31,
2000 21,020 $90,861 $5,563 $169,766 (5,317) $(51,241) $214,949
The accompanying notes are a part of the consolidated financial statements.
Page 23
Coachmen Industries, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
for the years ended December 31, 2000, 1999 and 1998
(in thousands)
2000 1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,164 $ 29,502 $ 33,063
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 10,941 9,146 7,574
Amortization and write-off of
intangibles 273 127 374
Provision for (recovery of) doubtful
receivables 435 117 (175)
Net realized and unrealized losses on
marketable securities and derivatives 1,112 825 902
Gain on sale of properties, net (891) (1,962) (46)
Increase in cash surrender value of
life insurance policies (903) (750) (956)
Deferred income taxes (1,758) 559 388
Other 976 175 (203)
Changes in certain assets and liabilities,
net of effects of acquisitions and
dispositions:
Receivables 14,631 (13,199) (1,545)
Inventories 12,420 (9,908) (18,848)
Prepaid expenses and other 955 (873) (93)
Accounts payable, trade (8,237) 6,044 (3,821)
Income taxes - accrued and refundable (942) (794) (2,626)
Accrued expenses and other liabilities(1,244) 3,234 16
Net cash provided by
operating activities 29,932 22,243 14,004
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from:
Sale of marketable securities 134,673 186,794 152,126
Sale of properties 1,931 2,596 4,104
Sale of businesses 4,826 3,298 -
Acquisitions of:
Marketable securities (121,972) (188,890) (168,455)
Property and equipment (8,222) (21,400) (22,196)
Businesses, net of acquired cash of $2,675
in 2000 (34,351) - (9,002)
Other (1,898) (297) 1,331
Net cash (used in)
investing activities (25,013) (17,899) (42,092)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings 30,000 - -
Payments of short-term borrowings (30,000) - -
Payments of long-term debt (4,447) (2,427) (2,533)
Issuance of common shares 896 1,300 1,586
Tax benefit from stock options exercised 91 438 814
Cash dividends paid (3,114) (3,274) (3,433)
Purchases of common shares for treasury - (19,121) (16,764)
Net cash (used in)
financing activities (6,574) (23,084) (20,330)
Page 24
Consolidated Statements of Cash Flows, Concluded
for the years ended December 31, 2000, 1999 and 1998
(in thousands)
2000 1999 1998
Decrease in cash and temporary cash
investments ( 1,655) (18,740) (48,418)
CASH AND TEMPORARY CASH INVESTMENTS
Beginning of year 4,269 23,009 71,427
End of year $ 2,614 $ 4,269 $ 23,009
Supplemental disclosures of cash flow
information:
Cash paid during the year for:
Interest $ 2,192 $ 1,305 $ 1,709
Income taxes 3,770 15,716 19,071
The accompanying notes are a part of the consolidated financial statements.
Page 25
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(in thousands, except per share amounts)
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 with manufacturing
facilities located in Indiana, Georgia, Michigan and Oregon (closed during
2000). These products are marketed through a nationwide dealer network. The
Company's modular housing and building segment manufactures modular homes and
other specialized modular structures and has locations in Indiana, Iowa, New
York, North Carolina, Ohio, Pennsylvania, South Dakota, Tennessee, Vermont and
Virginia. The modular products (modular homes, townhouses and specialized
structures) are sold to builders/dealers or directly to the end user for certain
of the specialized modular structures.
Principles of Consolidation - The accompanying consolidated financial statements
include the accounts of Coachmen Industries, Inc. and its subsidiaries, all of
which are wholly owned.
Use of Estimates in the Preparation of Financial Statements - The preparation of
financial statements in conformity with accounting principles generally accepted
in the United States of America 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 - For the vehicle segment, the shipping terms are free on
board ("FOB") shipping point and title and risk of ownership are transferred to
the independent dealers at that time. Accordingly, sales are recognized as
revenue at the time the products are shipped. For the modular housing and
building segment, the shipping terms are generally FOB destination. Title and
risk of ownership are transferred when the Company completes installation of the
product. The Company recognizes the revenue at the time delivery and
installation are completed. Revenue from final set-up procedures, which are
perfunctory, is deferred and recognized when such set-up procedures are
completed.
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 original maturities
of three months or less.
Noncash investing and financing activities are as follows:
2000 1999 1998
Issuance of common shares, at
market value, in lieu of cash
compensation $ 309 $469 $ 57
Liabilities assumed in business
acquisitions 21,926 - 800
Liabilities assumed by buyers in the
disposition of businesses 1,414 - -
Promissory note receivable received
in the disposition of a business - - 650
Page 26
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued
(in thousands, except per share amounts)
1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES, Continued.
Concentrations of Credit Risk - Financial instruments which potentially subject
the Company to credit risk consist primarily of cash and temporary cash
investments and trade receivables.
At December 31, 2000 and 1999, cash and temporary cash investments include $.2
million and $3.8 million, respectively, invested in a money market mutual fund.
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.
Marketable Securities - Marketable securities consist of public utility
preferred stocks which pay quarterly cash dividends. The preferred stocks are
part of a dividend capture program whereby preferred stocks are bought and held
for the purpose of capturing the quarterly preferred dividend. The securities
are then sold and the proceeds reinvested again in preferred stocks. The
Company's dividend capture program is a tax planning strategy to maximize
dividend income which is 70% excludable from taxable income under the Internal
Revenue Code and related state tax provisions. As a result, a dividend capture
program generally provides a higher after-tax return than other short-term
investment alternatives. The Company accounts for its marketable securities
under Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting
for Certain Investments in Debt and Equity Securities," which requires certain
securities to be categorized as either trading, available-for-sale or held-to-
maturity. The Company's marketable securities at December 31, 2000 and 1999 are
classified as available-for-sale and, accordingly, are carried at fair value
with net unrealized appreciation (depreciation) recorded as a separate component
of shareholders' equity. At December 31, 2000 and 1999, the cost of marketable
securities approximated their fair value and, accordingly, the Company
recognized no unrealized appreciation (depreciation). The cost of securities
sold is determined by the specific identification method.
The Company utilizes U.S. Treasury bond futures options as protection against
the impact of increases in interest rates on the fair value of the Company's
investments in marketable securities (fixed rate preferred stocks). The options
are marked to market with market value changes recognized in the statements of
income in the period of change.
Page 27
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued
(in thousands, except per share amounts)
1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES, Continued.
Investment income consists of the following:
2000 1999 1998
Interest income $ 836 $1,029 $3,184
Dividend income on
preferred stocks 1,677 2,543 2,549
Net realized (losses) on sale
of preferred stocks (189) (1,220) (120)
Net realized gains (losses) on
closed U.S. Treasury bond
futures options (821) 314 (597)
Unrealized gains (losses) on
open U.S. Treasury bond
futures options _ (102) _ 81 (185)
Total $1,401 $2,747 $4,831
Fair Value of Financial Instruments - The carrying amounts of cash and temporary
cash investments, receivables and accounts payable approximated fair value as of
December 31, 2000 and 1999, 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, 2000 and 1999, 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 10). At December 31, 2000 and 1999, the carrying amount of
these policies, which equaled their fair value, was $12.4 million and $11.3
million, respectively (cash surrender values of $28.6 million and $26.2 million,
net of $16.2 million and $14.9 million of policy loans, respectively).
At December 31, 2000 and 1999, the carrying amounts of U.S. Treasury
bond futures options aggregated $71 and $558, respectively. The
carrying amounts represented fair value since these futures options are
marked to market at the end of each reporting period.
Inventories - Inventories are valued at the lower of cost (first-in, first-out
method) or market.
Property and Equipment - Property and equipment are carried at cost less
accumulated depreciation. 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, including capitalized computer software, 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.
Intangibles - Intangibles, consisting principally of excess of cost over the
fair value of net assets of businesses acquired ("goodwill"), are being
amortized on a straight-line basis over 5 to 40 years.
Page 28
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued
(in thousands, except per share amounts)
1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES, Concluded.
Evaluation of Impairment of Long-Lived Assets - In accordance with SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be
Disposed Of," the Company evaluates the carrying value of long-lived assets
whenever significant events or changes in circumstances indicate the carrying
value of these assets may be impaired. The Company evaluates potential
impairment of long-lived assets by comparing the carrying value of the assets to
the expected net future cash inflows resulting from use of the assets. During
the year ended December 31, 1998, the Company determined because of recurring
losses and a forecast of negative undiscounted future cash flows that the
carrying value of goodwill of one of its Company-owned dealerships was impaired.
Accordingly, the Company charged-off the $239 of remaining unamortized goodwill.
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 $5,959, $5,727 and $4,706 for the years ended
December 31, 2000, 1999 and 1998, respectively.
Warranty Expense - The Company accrues an estimated warranty liability at the
time the warranted products are sold.
Stock-Based Compensation - The Company has adopted the disclosure only
provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," and,
accordingly, accounts for its stock option plan under the provisions of
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees."
New Accounting Pronouncement - As required by SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities", the Company will adopt the
requirements of SFAS No. 133 effective January 1, 2001. SFAS No. 133 requires
that all derivative instruments be recorded on the balance sheet at their fair
value. Changes in the fair value of derivatives are recorded each period in
current earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge transaction and, if it is, the type
of hedge transaction. The Company utilizes U.S. Treasury bond futures options,
which are derivative instruments, and changes in market value are recognized in
current earnings. Accordingly, due to its limited use of derivative instruments
and the fact that changes in fair value are currently recognized in earnings,
the adoption of SFAS No. 133 is not expected to have any significant effect on
the Company's financial statements.
Page 29
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued
(in thousands, except per share amounts)
2. ACCOUNTING CHANGE.
Effective January 1, 1999, the Company adopted American Institute of Certified
Public Accountants' Statement of Position ("SOP") No. 98-1, "Accounting for
Costs of Computer Software Developed or Obtained for Internal Use". 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. Prior to January 1, 1999, these costs were expensed as incurred. During
the years ended December 31, 2000 and 1999, the Company capitalized $96 and
$2,591, respectively, of internal costs which prior to January 1, 1999 would
have been expensed under generally accepted accounting principles. These
capitalized costs were related to the Company's new enterprise computer system.
The effect of this change in accounting principle for the years ended December
31, 2000 and 1999 was to increase net income by approximately $59 ($-0- per
share) and $1,399 ($.09 per share), respectively.
3. SEGMENT 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 recreational
vehicles, including related parts and supplies, and modular housing and
building. The Company evaluates the performance of its segments and allocates
resources to them based on pretax income. The accounting policies of the
segments are the same as those described in Note 1 and there are no inter-
segment revenues. 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 30
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued
(in thousands, except per share amounts)
3. SEGMENT INFORMATION, Concluded.
The table below presents information about segments used by the chief operating
decision maker of the Company for the years ended December 31:
2000 1999 1998
Net sales:
Recreational vehicles $538,380 $691,173 $625,747
Modular housing and building 171,595 155,851 130,283
Consolidated total $709,975 $847,024 $756,030
Pretax income:
Recreational vehicles $ (5,784) $ 28,148 $ 36,156
Modular housing and building 11,578 14,870 11,164
Other reconciling items (2,907) 2,023 2,971
Consolidated total $ 2,887 $ 45,041 $ 50,291
Total assets:
Recreational vehicles $139,383 $166,288 $141,657
Modular housing and building 100,340 37,837 38,948
Other reconciling items 56,723 81,641 88,736
Consolidated total $296,446 $285,766 $269,341
The following specified amounts are included in the measure of segment pretax
income or loss reviewed by the chief operating decision maker:
2000 1999 1998
Interest expense:
Recreational vehicles $ 142 $ 794 $ 474
Modular housing and building 393 324 354
Other reconciling items 1,617 711 910
Consolidated total $ 2,152 $ 1,829 $ 1,738
Depreciation:
Recreational vehicles $ 4,662 $ 4,649 $ 4,216
Modular housing and building 3,568 2,902 2,583
Other reconciling items 2,711 1,595 775
Consolidated total $10,941 $ 9,146 $ 7,574
4. INVENTORIES.
Inventories consist of the following:
2000 1999
Raw materials $ 35,963 $ 39,926
Work in process 8,244 11,131
Finished goods 53,108 48,951
Total $ 97,315 $100,008
Page 31
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued
(in thousands, except per share amounts)
5. PROPERTY AND EQUIPMENT.
Property and equipment consists of the following:
2000 1999
Land and improvements $ 15,013 $ 12,858
Buildings and improvements 67,198 58,199
Machinery and equipment 24,418 22,351
Transportation equipment 14,130 12,534
Office furniture and fixtures 18,270 16,242
139,029 122,184
Less, Accumulated depreciation 54,866 47,506
Property and equipment, net $ 84,163 $ 74,678
6. SHORT-TERM BORROWINGS.
On October 6, 2000, the Company obtained $155 million of Senior Credit
Facilities under two (2) credit agreements (collectively referred to as the
"Credit Agreement") with the Lenders, as defined, and Bank One, NA,
administrative agent for the Lenders. The Credit Agreement provides for two
(2) unsecured credit facilities: (i) a 364-day revolving credit facility, in a
maximum amount of up to $51,667 and (ii) a three-year revolving credit
facility in a maximum amount of up to $103,333. The initial 364-day period
for the 364-day revolving credit facility may be extended for an additional
364-day period upon appropriate notice and agreement by the Lenders. The
three-year revolving credit facility provides for floating rate advances or
eurodollar advances or a combi-nation thereof or swing line loans, not to
exceed $10 million at any one time, and all swing line loans must be repaid
with interest on the fifth business day after such swing line loan is made.
Floating rate or euro-dollar advances under the three-year revolving credit
facility shall be in the minimum amount of $5 million. The Senior Credit
Facilities have a termination date of October 6, 2003. Borrowings under the
Credit Agreement bear interest equal to: (i) a eurodollar rate plus an applic-
able margin ranging from .525% to 1.175%, depending on the Company's leverage
ratio, as defined, or (ii) a floating rate equal to the greater of the prime
rate or the federal funds rate plus .50%. The Company is also required to pay
a facility fee ranging from .225% to .325%, depending on the Company's
leverage ratio.
At December 31, 2000, there were no borrowings outstanding under the Credit
Agreement.
The Credit Agreement also contains customary affirmative and negative
covenants including financial covenants requiring maintenance of specified
consolidated interest coverage and leverage ratios and a required minimum net
worth. At December 31, 2000, the Company was not in compliance with the
interest coverage ratio. On February 9, 2001, the Lenders and Bank One, NA
waived this violation pursuant to a Waiver and Amendment No. 1 to 364-Day
Credit Agreement, and also reduced the aggregate commitment of the 364-day
revolving credit facility from $51,667 to $16,667, changed applicable margin
to .975% to 1.175% and eliminated swing line loans through March 30, 2001.
Page 32
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued
(in thousands, except per share amounts)
6. SHORT-TERM BORROWINGS, Concluded.
At December 31, 1999, the Company had an unsecured bank line of credit
aggregating $30 million with interest on outstanding borrowings payable
monthly at a rate of LIBOR plus a margin of .50% to .75%. There were no
borrowings under this bank line of credit during 1999 and 1998.
7. LONG-TERM DEBT.
Long-term debt consists of the following:
2000 1999
Obligations under industrial development
revenue bonds, variable rates (effective
weighted average interest rates of 5.2%
and 5.6% at December 31, 2000 and 1999,
respectively), with various maturities
through 2015 $12,660 $ 7,400
Promissory notes payable, interest at the
prime rate (8.5% at December 31, 1999),
unsecured - 2,489
Total 12,660 9,889
Less, Current maturities 865 1,543
Long-term debt $11,795 $ 8,346
Aggregate maturities of long-term debt for each of the next five years ending
December 31 are as follows: 2001 - $865; 2002 - $865; 2003 - $865; 2004 - $865
and 2005 - $1,165.
In connection with the 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. Under the industrial revenue
bond for the Mod-U-Kraf Homes' manufacturing facility in Virginia, the issuer of
the letter of credit holds a first lien and security interest on that facility.
The letter of credit 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.
8. ACCRUED EXPENSES AND OTHER LIABILITIES.
Accrued expenses and other liabilities consist of the following:
2000 1999
Wages, salaries and commissions $ 2,134 $ 5,338
Dealer incentives 4,397 4,307
Warranty 7,796 7,195
Insurance 4,518 5,291
Customer deposits and unearned revenues 4,769 1,525
Other current liabilities 8,374 4,383
Total $31,988 $28,039
Page 33
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued
(in thousands, except per share amounts)
9. COMMON STOCK MATTERS AND EARNINGS PER SHARE.
Stock Award Program
On October 19, 1998, the Board of Directors approved a Stock Award Program which
provides for the awarding to key employees of up to 109 shares of common stock
from shares reserved under the Company's stock option plan. On December 1, 1998,
the Company awarded 64 shares to certain employees, subject to the terms,
conditions and restrictions of the award program. During the year ended December
31, 1999, no shares were awarded, 14.4 shares were issued and 6.1 awarded shares
were canceled. During the year ended December 31, 2000, no shares were awarded,
12 shares were issued and 7.6 awarded shares were canceled. The shares under the
stock awards are issuable in four annual installments of 25% beginning one year
from the date of grant. The Company recognizes compensation expense over the
term of the awards and compensation expense of $263 and $208 was recognized for
the years ended December 31, 2000 and 1999, respectively.
Stock Option Plan
The Company has stock option plans, including the 2000 Omnibus Stock Incentive
Program (the "2000 Plan") which was approved by the shareholders on May 4, 2000.
The 2000 Plan provides for an additional one million common shares to be
reserved for grants under the Company's stock option and award plans. The
Company's stock option plan provides for the granting of options to directors,
officers and eligible key employees to purchase common shares. The 2000 Plan
permits the issuance of either incentive stock options or nonqualified stock
options. Stock Appreciation Rights ("SARs") may be granted in tandem with stock
options or independently of and without relation to options. There were no SARs
outstanding at December 31, 2000. The option price for incentive stock options
shall be an amount of not less than 100% of the fair market value per share on
the date of grant and the option price for nonqualified stock options shall be
an amount of not less than 90% of the fair market value per share on the date
the option is granted. No such options may be exercised during the first year
after grant, and are exercisable cumulatively in four installments of 25% each
year thereafter. Options have terms ranging from five to ten years.
The following table summarizes stock option activity:
Weighted-
Average
Number Exercise
of Shares Price
Outstanding, January 1, 1998 675 $13.07
Granted 177 24.46
Canceled (52) 11.05
Exercised (139) 9.19
Outstanding, December 31, 1998 661 16.77
Granted 395 20.39
Canceled (83) 7.44
Exercised (107) 9.18
Page 34
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued
(in thousands, except per share amounts)
9. COMMON STOCK MATTERS AND EARNINGS PER SHARE, Continued.
Outstanding, December 31, 1999 866 18.94
Granted 804 7.79
Canceled (152) 18.78
Exercised (130) 4.72
Outstanding, December 31, 2000 1,388 13.83
The granted options in 2000 include 508 options granted to holders of options to
acquire shares of an acquired business, Miller Building Systems, Inc. (see Note
12). The weighted average exercise price of these converted options was $6.59
per share and such options were vested and exercisable at the date of
conversion.
Options outstanding at December 31, 2000 are exercisable at prices ranging from
$2.43 to $24.88 per share and have a weighted average remaining contractual life
of 6.2 years. The following table summarizes information about stock options
outstanding and exercisable at December 31, 2000.
Options Outstanding Options Exercisable
Weighted-
Number Average Weighted- Number Weighted-
Outstanding at Remaining Average Exercisable at Average
Range of December 31, Contractual Exercise December 31, Exercise
Exercise Price 2000 Life Price 2000 Price
$ 2.43 - $ 7.00 201 9.8 $ 5.26 201 $ 5.26
7.01 - 12.00 567 8.8 9.62 272 9.37
12.01 - 17.00 198 3.1 14.78 81 14.97
17.01 - 22.00 144 1.4 19.93 106 19.96
22.01 - 24.88 278 2.7 24.78 97 24.73
1,388 757
At December 31, 1999 and 1998 there were exercisable options to purchase 270 and
243 shares, respectively, at weighted-average exercise prices of $15.55 and
$11.94, respectively. The weighted-average grant-date fair value of options
granted during the years ended December 31, 2000, 1999 and 1998 were $3.11,
$5.92 and $6.99, respectively. As of December 31, 2000, 474 shares were reserved
for the granting of future stock options and awards, compared with 112 shares at
December 31, 1999.
Had the Company adopted the provisions of SFAS No. 123, "Accounting for Stock-
Based Compensation," the Company's pro forma net income and net income per share
would have been:
2000 1999 1998
Pro forma net income $1,588 $29,013 $32,656
Pro forma net income per share:
Basic .10 1.77 1.91
Diluted .10 1.77 1.89
Page 35
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued
(in thousands, except per share amounts)
9. COMMON STOCK MATTERS AND EARNINGS PER SHARE, Concluded.
The pro forma amounts and the weighted-average grant-date fair-value of options
granted were estimated using the Black-Scholes option-pricing model with the
following assumptions:
2000 1999 1998
Risk free interest rate 5.77% 5.49% 5.04%
Expected life 2.75 years 2.75 years 2.75 years
Expected volatility 46.6% 39.8% 37.9%
Expected dividends 1.7% 1.1% 1.0%
Stock Purchase Plan
The Company has an employee stock purchase plan under which a total of
498 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, 2000, there were 263 employees actively
participating in the plan. Since its inception, a total of 302 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.
Earnings Per Share
Basic earnings per share is computed by dividing net income by the weighted
average number of shares of common stock outstanding during the period. Diluted
earnings per share is computed by dividing net income by the weighted average
number of shares of common stock outstanding plus the dilutive effect of stock
options and stock awards.
Shareholder Rights Plan
On October 21, 1999, the Company's Board of Directors adopted a new shareholder
rights plan to replace an existing rights plan that was due to expire on
February 15, 2000. The new rights plan, which became effective January 12, 2000
(the "Record Date"), provides for a dividend distribution of one common share
purchase right (the "Rights") for each outstanding common share to each
shareholder of record on the Record Date. The Rights will be represented by
common share certificates and will not be exercisable or transferable apart from
the common shares until the earlier to occur of (i) ten (10) business days
following a public announcement that a person or group of persons (an "Acquiring
Person") has acquired, obtained the right to acquire, beneficial ownership of
20% or more of the outstanding common shares or (ii) ten (10) business days
following the commencement of (or announcement of an intention to make) a
tender offer or exchange offer if, upon consummation thereof, such an Acquiring
Person would be the beneficial owner to 20% or more of the outstanding common
shares. Upon the occurrence of the certain events and after the Rights become
exercisable, each right would entitle the rightholder (other than the Acquiring
Person) to purchase one fully paid and nonaccessable common share of the Company
at a purchase price of $75 per share, subject to anti-dilutive adjustments. The
Rights are nonvoting and expire February 1, 2010, and at any time prior to a
person or a group of persons becoming an Acquiring Person, the Company's Board
of Directors may redeem the Rights in whole, but not in part, at a purchase
price $.01 per Right.
Page 36
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued
(in thousands, except per share amounts)
10. COMPENSATION AND BENEFIT PLANS.
Incentive Compensation
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, 2000, 1999 and 1998 aggregated $1,085, $3,344 and $3,346,
respectively.
Deferred Compensation
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) aggregated $12.4
million and $11.3 million as of December 31, 2000 and 1999, respectively. The
deferred compensation obligations, which aggregated $7,327 and $6,782 at
December 31, 2000 and 1999, respectively, are included in other non-current
liabilities, with the current portion ($367 and $342 at December 31, 2000 and
1999, respectively) included in other current liabilities.
In connection with the two business acquisitions in 2000, which are discussed
in Note 12, the Company assumed obligations under existing deferred
compensation agreements. These obligations aggregated $1,877 at December 31,
2000. As part of the acquisition, the Company assumed ownership of life
insurance contracts and trust accounts established for the benefit of
participating executives. Such assets, which are valued at fair value,
aggregated $763 at December 31, 2000.
Employee Benefit Plans
Effective January 1, 2000, the Company established a retirement plan (the
"Plan"), under Section 401(k) of the Internal Revenue Code that covers all
eligible employees. The Plan is a defined contribution plan and allows
employees to make voluntary contributions up to 15% of annual compensation.
Under the Plan, the Company may make discretionary matching contributions up to
6% of participants' compensation. Expense under the Plan aggregated $1,434 for
the year ended December 31, 2000.
Prior to January 1, 2000, the Company sponsored a Coachmen Assisted Retirement
For Employees (C.A.R.E.) program which provided 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
$735 and $857 for the years ended December 31, 1999 and 1998, respectively.
Page 37
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued
(in thousands, except per share amounts)
11. INCOME TAXES.
Income taxes are summarized as follows:
2000 1999 1998
Federal:
Current $ 1,695 $13,591 $15,492
Deferred (1,564) 489 339
131 14,080 15,831
State:
Current 786 1,389 1,348
Deferred (194) 70 49
592 1,459 1,397
Total $ 723 $15,539 $17,228
The following is a reconciliation of the provision for income taxes
computed at the federal statutory rate (34% in 2000 and 35% in 1999
and 1998) to the reported provision for income taxes:
2000 1999 1998
Computed federal income tax
at federal statutory rate $ 982 $15,765 $17,602
Changes resulting from:
Increase in cash surrender
value of life insurance
contracts (233) (150) (245)
Foreign Sales Corporation
subject to lower tax rate (391) (368) (315)
State income taxes, net of
federal income tax benefit 391 948 908
Preferred stock dividend
exclusion (399) (622) (548)
Settlement of IRS tax
examinations 216 - -
Other, net 157 ( 34) (174)
Total $ 723 $15,539 $17,228
Page 38
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued
(in thousands, except per share amounts)
11. INCOME TAXES, Concluded.
The components of the net deferred tax assets are as follows:
2000 1999
Current deferred tax asset:
Accrued warranty expense $ 2,981 $ 2,971
Inventories 948 556
Receivables 389 227
Other 4,066 989
Net current deferred
tax asset $ 8,384 $ 4,743
Noncurrent deferred tax
asset (liability):
Deferred compensation $ 2,931 $ 2,713
Property and equipment and other
real estate (5,677) (3,256)
Intangible assets (778) (721)
Other 154 (225)
Net noncurrent deferred
tax liability $(3,370) $(1,489)
12. ACQUISITIONS AND DISPOSITIONS.
Acquisitions
Effective June 30, 2000, the Company acquired all of the issued and
outstanding capital stock of Mod-U-Kraf Homes, Inc. ("Mod-U-Kraf"), a
manufacturer of modular housing, located in Virginia. The purchase price
aggregated $15.1 million and consisted of $9.7 million of cash paid at closing
and the assumption of $5.4 million of liabilities. The excess of purchase
price over fair value of assets acquired ("good-will"), which approximated
$1.5 million, is being amortized on a straight-line basis over 20 years.
On October 31, 2000, the Company acquired all of the issued and out-standing
capital stock of Miller Building Systems, Inc. ("Miller Building"). Miller
Building designs, manufactures and markets factory-built buildings for use as
commercial modular buildings and telecommunication shelters. The purchase
price aggregated $43.8 million and consisted of $27.3 million of cash paid at
closing and the assumption of $16.5 million of liabilities. In addition to the
cash purchase price and assumption of liabilities, the Company assumed Miller
Building's obligations under its stock option plan by converting options to
acquire Miller Building common shares into options to acquire a like number of
common shares of the Company for an adjusted exercise price. The difference
between per share fair value of the Company's common shares less adjusted
exercise price represented additional purchase price and was accounted for as
a credit to additional paid-in capital. The excess of purchase price over
fair value of assets acquired ("goodwill"), which approximated $9.1 million,
is being amortized on a straight-line basis over 20 years.
Page 39
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued
(in thousands, except per share amounts)
12. ACQUISITIONS AND DISPOSITIONS, Continued.
The acquisitions of Mod-U-Kraf Homes and Miller Building have been accounted
for as a purchase and the operating results of the acquired businesses are
included in the Company's consolidated financial statements from the
respective dates of acquisition.
Unaudited pro forma financial information as if the acquisitions of Mod-U-Kraf
and Miller Building had occurred at the beginning of each period is as
follows:
2000 1999
Net sales $784,999 $933,709
Net income 3,797 33,524
Earnings per share:
Basic .24 2.05
Diluted .24 2.04
On February 3, 1998, the Company acquired certain assets and the operations of
three retail recreational vehicle dealerships, two located in Florida and one
in Georgia. The purchase price, which aggregated $9.8 million and approximated
the fair value of the acquired assets, consisted of $9.0 million in cash and
the assumption of certain liabilities of the sellers. The acquisitions were
accounted for as a purchase and the operating results of the acquired
businesses are included in the Company's consolidated financial statements
from the date of acquisition. Pro forma financial information for 1998 has not
been presented as it is not materially different from the Company's historical
results.
Dispositions
During the years ended December 31, 2000 and 1999, the Company disposed of
certain business operations within its vehicle segment.
On January 12, 2000, the Company sold certain assets and the business
operations of its automotive division (converter of vans and specialty
vehicles). The sales price consisted of cash of $2.3 million and the buyer's
assumption of certain liabilities.
During the quarter ended September 30, 2000, the Company sold the business
operations and assets of its Lux Company subsidiary. The sales price
consisted of cash of $2.5 million and the buyers assumption of certain
liabilities. The pretax gain on the sale, which was primarily attributable to
the sale of real property, approximated $1.2 million.
During the third and fourth quarters of 2000, the Company completed the
closing and liquidation of four of its Company-owned dealerships pursuant to
its previously announced plan to exit this line of business with the exception
of two Company-owned stores which will be retained for research and
development and regional service purposes.
Page 40
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued
(in thousands, except per share amounts)
12. ACQUISITIONS AND DISPOSITIONS, Concluded.
During the year ended December 31, 1999, the Company sold the business
operations and certain assets of two of its Company-owned dealerships. The
sales proceeds consisted of $3,298 cash and a promissory note receivable of
$650. The Company recognized a $650 gain on the sale of these businesses
which is included in other nonoperating income.
Net sales and pretax losses (including gains and losses on sale, disposal or
liquidation) of these business operations were as follows:
2000 1999 1998
Net sales $60,732 $122,510 $102,912
Pretax losses (5,195) (2,473) (871)
13. 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, 2000 aggregated $1,310
and are payable as follows: 2001 - $548; 2002 - $495; 2003 - $171; 2004 - $77;
2005 - $14 and thereafter - $5. Total rental expense for the years ended
December 31, 2000, 1999 and 1998 aggregated $850, $1,179 and $1,149,
respectively.
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, 2000 and 1999, chassis inventory, accounted for as consigned
inventory, approximated $16.5 million and $17.8 million, respectively.
Page 41
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued
(in thousands, except per share amounts)
13. COMMITMENTS AND CONTINGENCIES, Continued.
Corporate Guarantees
At December 31, 2000, the Company was contingently liable under guarantees to
financial institutions of their loans to independent dealers for amounts
totaling approximately $15.1 million (none in 1999).
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 estimated contingent liability approximates
$272 million at December 31, 2000 ($239 million at December 31, 1999), 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. Historically, the Company has not experienced losses under these
agreements. However, in 2000 as a result of business conditions negatively
affecting the recreational vehicle industry, the Company has experienced
losses under repurchase agreements. Accordingly, at December 31, 2000, the
Company has recorded an accrual for estimated losses under repurchase
agreements.
Share Repurchase Programs
During 2000, 1999 and 1998, the Company repurchased common shares for its
treasury under share repurchase programs authorized by the Board of Directors.
Under the repurchase programs, common shares are purchased from time to time,
depending on market conditions and other factors, on the open market or
through privately negotiated transactions. As of December 31, 2000, the
Company has authorization to repurchase up to 871 additional common shares.
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 to $500 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.
Change of Control Agreements
On February 3, 2000, the Company entered into Change of Control Agreements
with 25 key executives. Under the terms of these agreements, in the event of
a change in control of the Company, as defined, the Company would be obligated
to pay these key executives for severance and other benefits aggregating
approximately $13 million based on salaries and benefits at December 31, 2000.
In addition, in the event of a change of control of the Company, all
outstanding stock options and SARs shall become immediately exercisable, all
stock awards shall immediately vest and all performance goals under incentive
compensation plans shall be deemed fully achieved.
Page 42
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued
(in thousands, except per share amounts)
13. COMMITMENTS AND CONTINGENCIES, Concluded.
Also on February 3, 2000, the Company established a rabbi trust, which in the
event of a change of control, as defined, will be funded to cover the
Company's obligations under its deferred compensation plan (see Note 10).
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.
14. SUBSEQUENT EVENT.
On February 12, 2001, the Company acquired all the issued and outstanding
shares of capital stock of KanBuild, Inc. ("KanBuild"), a manufacturer of
modular buildings with facilities in Osage City, Kansas; Loveland, Colorado;
and a new plant under construction in Millikin, Colorado. The purchase price
aggregated $21.5 million and consisted of $8.8 cash paid at closing and the
assumption of $12.7 of liabilities. The acquisition will be accounted for as
a purchase.
15. UNAUDITED INTERIM FINANCIAL INFORMATION.
Certain selected unaudited quarterly financial information for the years
ended December 31, 2000 and 1999 is as follows:
2000
Quarter Ended
March 31 June 30 September 30 December 31
Net sales $195,228 $187,910 $182,690 $144,147
Gross profit 24,166 23,726 21,423 9,316
Net income (loss) 4,030 3,700 2,273 (7,839)
Net income (loss) per
common share:
Basic .26 .24 .15 (.50)
Diluted .26 .24 .15 (.50)
1999
Quarter Ended
March 31 June 30 September 30 December 31
Net sales $211,025 $203,199 $226,114 $206,686
Gross profit 27,573 27,872 31,090 21,455
Net income 7,217 9,014 9,525 3,746
Net income per common
share:
Basic .43 .54 .58 .24
Diluted .43 .54 .58 .24
Page 43
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued
(in thousands, except per share amounts)
15. UNAUDITED INTERIM FINANCIAL INFORMATION, Concluded.
The fourth quarter of 2000 was adversely impacted by $2.6 million of
nonrecurring special charges which consisted of the following: $646 for
closing of the Oregon plant, $1,270 for closing and liquidation of four
Company-owned retail facilities and $673 for writing-down the carrying value of
certain real estate held for sale or not currently used in production. In
addition, the 2000 fourth quarter's operating results were adversely effected
by increased accruals for excess inventory quantities, warranty liabilities and
estimated losses under repurchase agreements all the result of the unfavorable
market conditions affecting the recreational vehicle industry.
The fourth quarter of 1999 was adversely impacted by a year-end adjust-ment for
a $1.5 million pretax charge to increase accruals for self-insured product
liability, general liability and workers' compensation which resulted from
increased claims experience in 1999.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not Applicable
Part III.
Item 10. Directors and Executive Officers of the Registrant
(a) Identification of Directors
Information for Item 10(a) is contained on page 4 of the Company's Proxy
Statement dated March 29, 2001 and is incorporated herein by reference.
(b) Executive Officers of the Company
See "Executive Officers of the Registrant" on page 7.
(c) Beneficial Ownership Reporting Compliance
Information for "Section 16 (a)" Beneficial Ownership Reporting Compliance is
contained on page 3 of the Company's Proxy Statement dated March 29, 2001 and
is incorporated herein by reference.
Item 11. Executive Compensation
Information for Item 11 is contained under the heading "Compensation of
Executive Officers and Directors" in the Company's Proxy Statement dated
March 29, 2001 and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information for Item 12 is contained on pages 3 and 4 of the Company's
Proxy Statement dated March 29, 2001 and is incorporated herein by
reference.
Page 44
Item 13. Certain Relationships and Related Transactions
Not Applicable
Part IV.
Item 14. Exhibits, Financial Statement
Schedules, and Reports on Form 8-K
(a) The following financial statements and financial statement
Schedule are included in Item 8 herein.
1. Financial Statements
Report of Independent Accountants
Consolidated Balance Sheets at December 31, 2000 and 1999
Consolidated Statements of Income
for the years ended December 31, 2000, 1999 and 1998
Consolidated Statements of Shareholders' Equity
for the years ended December 31, 2000, 1999 and 1998
Consolidated Statements of Cash Flows for the years
ended December 31, 2000, 1999 and 1998
Notes to Consolidated Financial Statements for the years
ended December 31, 2000, 1999 and 1998
2. Financial Statement Schedules
Schedule II - Valuation and Qualifying Accounts
3. Exhibits
See Index to Exhibits
(b) Reports on Form 8-K during the quarter ended
December 31, 2000
Form 8-K, dated October 2, 2000, reporting an Item 5 event (a
press release announcing the sale of assets of the Lux Company).
Form 8-K, dated October 19, 2000, reporting an Item 5 event (a
press release announcing lower than expected earnings).
Form 8-K, dated October 26, 2000, reporting an Item 9 disclosure
(a disclosure announcing third quarter earnings, progress on
strategic plan and $155 million bank credit facility).
Form 8-K, dated November 13, 2000, reporting an Item 5 event (a
press release announcing completion of Miller Building Systems
Merger).
Form 8-K, dated November 21, 2000, reporting Item 5 events (a
notice that the Company modified its By-Laws and a press release
announcing the proposed acquisition of KanBuild, Inc.).
Page 45
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
Balance At Charged Balance
Beginning To Costs Deductions- At End
Description Of Period And Expenses Describe Of Period
Allowance for doubtful
receivables - deducted
from trade receivables
in the consolidated
balance sheets:
For the year ended $ (137,000)(A)
December 31, 2000 $ 550,000 $ 435,000 218,000 (B) $1,066,000
For the year ended
December 31, 1999 $ 768,000 $ (183,000) $ (35,000)(A) $ 550,000
For the year ended
December 31, 1998 $1,354,000 $ (175,000) $ (411,000)(A) $ 768,000
(A) Write-off of bad debts, less recoveries.
(B) Allowance for doubtful receivables of acquired businesses.
Page 46
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities 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.
Date: March 30, 2001
-----------------------------
R. M. Lavers
(General Counsel, Secretary and
Interim Chief Financial Officer)
-----------------------------
W. M. Angelo
(Vice President and
Chief Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities as of March 30, 2001.
- ------------------------------- ------------------------------
C. C. Skinner K. D. Corson
(Director) (Director)
(Chief Executive Officer)
- ------------------------------- ------------------------------
T. H. Corson W. P. Johnson
(Director) (Director)
- ------------------------------- ------------------------------
F. M. Miller E. W. Miller
(Director) (Director)
- ------------------------------- ------------------------------
P. G. Lux R. J. Deputy
(Director) (Director)
- ------------------------------- ------------------------------
G. B. Bloom D. W. Hudler
(Director) (Director)
Page 47
INDEX TO EXHIBITS
Number Assigned
In Regulation
S-K, Item 601 Description of Exhibit
(3)(a)(i) 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).
(3)(a)(ii) Articles of Amendment to Articles of Incorporation
(incorporated by reference to Exhibit 4.2 to the
Company's Form S-3 Registration Statement, File
No. 333-14579).
(3)(b) By-Laws as modified through February 1, 2001 (filed
herewith).
(4)(a) $155 million bank credit facility (incorporated by
reference to the Company's Form 8-K filed October 26,
2000).
(4)(b) Stockholder Rights Agreement (incorporated by reference
to Exhibit 1 to Form 8-A dated January 5, 2000).
*10 (a) Executive Benefit and Estate Accumulation Plan, as
amended and restated effective as of May 31, 2000
(filed herewith).
*10 (b) 2000 Omnibus Stock Incentive Program (incorporated by
reference to Exhibit A to the Company's Proxy Statement
dated March 27, 2000 for its Annual Meeting in 2000).
*10 (c) Form of Change in Control Agreements for certain
executive officers (Tier 1)(filed herewith).
*10 (d) Form of Change in Control Agreements for certain
executive officers (Tier 2)(filed herewith).
11 No Exhibit - See Consolidated Statements of Income and
Note 9 of Notes to Consolidated Financial Statements,
Contained herein.
21 Registrant and Subsidiaries of the Registrant.
23 Consent of Independent Accountants.
* Management Contract or Compensatory Plan.
Exhibit 3(b)
BY-LAWS OF
COACHMEN INDUSTRIES, INC.
(as modified through February 1, 2001)
ARTICLE I
OFFICES
Principal Offices. The principal office of the Corporation shall be in
the City of Elkhart, Indiana, and the Corporation may have such other offices,
either within or without the State of Indiana, as it may require from
time-to-time.
ARTICLE II
SHAREHOLDERS
Section 2.1 - Place of Meetings. All meetings of the shareholders for
the election of Directors shall be held at the offices of the Corporation in
the City of Elkhart, State of Indiana, or elsewhere as the Board of Directors
may designate. Meetings of shareholders for any purpose may be held at such
place as shall be stated in the notice of the meeting, or in a duly executed
waiver of notice thereof.
Section 2.2 - Annual Meetings. An annual meeting of the shareholders,
commencing with the year 1983, shall be held at 10:00 a.m. on the fifth
Thursday after the end of the first quarter, but if a legal holiday, then on
the next secular day following, or at such other time as the Board of
Directors shall determine, at which they shall elect a Board of Directors and
transact such other business as may properly be brought before such meeting.
Section 2.3 - Special Meetings. Special meetings of the shareholders may
be called by the Chairman, or by a majority of the Board of Directors.
Section 2.4 - Shareholders Suits. From and after the adoption of this
Section 2.4, as a condition precedent to any shareholder in a representative
capacity bringing any action or suit against the Corporation or its directors or
officers, or any of them or any combination thereof (in their respective
capacities), including but not limited to allegations of securities
irregularities or fraud, the shareholder must enter into a written agreement
with the Corporation providing that the prevailing party(ies) shall be
reimbursed by the adverse party(ies) for its/his/their reasonable attorney's
fees, court costs and other expenses of litigation incurred in connection
with the action or suit.
Section 2.5 - Notice of Meetings. Written or printed notice stating the place,
day, and hour of the meeting of shareholders, and in case of a special meeting,
the purpose or purposes for which the meeting is called shall be delivered not
less than ten days nor more than sixty days before the meeting, either
personally or by mail, by or at the direction of the Chairman, the President,
or the Secretary, or the officer or persons calling the meeting, to each
shareholder of record entitled to vote at suchmeeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail,
addressed to the shareholder at his address as it appears on the records of
the Corporation, with postage thereon prepaid. No business may be transacted
at a special meeting other than that described in the notice thereof.
Section 2.6 - Shareholders Entitled to Vote. The Board of Directors may
fix a date as the record date in order to determine the shareholders entitled to
notice of a shareholders meeting, to demand a special meeting, to vote, or to
take any other action, such date in any case to be not more than seventy days
before the meeting or action requiring a determination of shareholders.
Section 2.7 - Voting Lists. The officer or agent who has charge of the
transfer books for shares of the Corporation shall make, at least five business
days before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, for a period
beginning five business days prior to such meeting and continuing through the
meeting, shall be kept on file at the principal office of the Corporation and
shall be subject to inspection of any shareholder in accordance with applicable
law during the whole time of the meeting. The original share ledger or transfer
book, or a duplicate thereof kept in this state shall be prima facie evidence
as to who are the shareholders entitled to examine such list or share ledger or
transfer books or to vote at any meeting of shareholders. Failure to comply
with the requirements of this Section 2.7 shall not affect the validity of any
action taken at a shareholders' meeting.
Section 2.8 - Quorum. A majority of the outstanding shares of the
Corporation entitled to vote at any meeting, represented in person or by proxy,
shall constitute a quorum at any meeting of shareholders, provided that if less
than such quorum is present, the meeting may be adjourned, in accordance with
Section 2.10 of this Article, until a quorum is present.
Section 2.9 - Manner of Acting. Every decision (other than the election
of Directors) with respect to which the votes cast in favor exceed the votes
cast in opposition shall be approved as a corporate act unless a larger
affirmative vote is required by statute, the Articles of Incorporation of the
Corporation, these by-laws, or the Board of Directors. Directors are elected
by a plurality of the votes cast by shares entitled to vote in the election at
a meeting at which a quorum is present, unless otherwise provided in the
Articles of Incorporation of the Corporation.
Section 2.10 - Adjournment. If an annual or special shareholders'
meeting is adjourned to a different date, time, or place, notice thereof need
not be given if the new time, date, or place is announced at the meeting before
the adjournment. A new record date need not be set if the adjournment is within
one hundred twenty days of the original meeting date.
Section 2.11 - Proxies. At all meetings of shareholders, a shareholder
may vote either in person or by proxy executed in writing by the shareholder or
by his duly authorized attorney in fact. Such proxy shall be filed with the
meeting. No proxy shall be valid after eleven months from the date of its
execution, unless otherwise provided in the proxy.
Section 2.12 - Voting of Shares. At every such meeting, each shareholder
shall be entitled to cast one vote in person or proxy for each voting share of
stock held in his name upon each matter submitted to vote.
Shares of its own stock belonging to this Corporation shall not be voted,
directly or indirectly, at any meeting and shall not be counted in determining
the total number of outstanding shares at any given time, but shares of its own
stock held by it in a fiduciary capacity may be voted and shall be counted in
determining thetotal number of outstanding shares at any given time.
Section 2.13 - Voting of Shares by Certain Holders. Shares standing in
the name of another corporation, domestic or foreign, may be voted by such
officer, agent or proxy as the Board of Directors of such corporation may
appoint or as the by-laws of such corporation may prescribe.
Shares standing in the name of a deceased person, a minor ward, or an
incompetent person may be voted by his administrator, executor, court
appointed guardian or conservator, either in person or by proxy without a
transfer of such shares into the name of such administrator, executor, court
appointed guardian or conservator. Shares standing in the name of a trustee
may be voted by him, either in person or by proxy.
Shares standing in the name of a receiver or trustee in bankruptcy may be
voted by such receiver or trustee in bankruptcy, and shares held by or under the
control of a receiver or trustee in bankruptcy may be voted by such receiver or
trustee in bankruptcy without the transfer thereof into his name if authority so
to do be contained in an appropriate order of the court by which such receiver
or trustee in bankruptcy was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee,
and thereafter the pledgee shall be entitled to vote shares so transferred.
Section 2.14 - Voting by Ballot. Voting on any question may be viva
voce unless the presiding officer shall order that voting be by written ballot,
and except that voting in elections shall be by written ballot, if a shareholder
so requests.
Section 2.15 - Notice of Director Nominations and Shareholder Proposals
(a) Nominations for the election of Directors may be made by the Board of
Directors or by any stockholder entitled to vote for the election of Directors.
Nominations by stockholders shall be made by notice in writing, either delivered
to the Secretary of the Corporation, or mailed to the Secretary of the
Corporation by first-class United States mail, postage prepaid, and in either
case received by the Secretary of the Corporation not less than sixty days prior
to the month and day of the anniversary of the last meeting of the stockholders
called for the election of Directors. Notice of nominations which are proposed
by the Board of Directors shall be given to the Secretary by the Chairman on
behalf of the Board, by any reasonable means before the mailing of the proxy
statement.
(b) Each notice under subsection (a) must contain certain information about each
proposed nominee, including his age, business and residence addresses, principal
occupation, the number of shares of Common Stock beneficially owned by him, and
such other information as would be required to be included in a proxy statement
soliciting proxies for the election of such proposed nominee.
(c) Stockholders wishing to bring a proposal before a meeting of stockholders,
whether or not it is to be included in a proxy statement, must submit it to the
Secretary of the Corporation in writing, either delivered to the Secretary of
the Corporation or mailed to the Secretary of the Corporation by first class
United States mail, postage prepaid, and in either case received by the
Secretary of the Corporation not less than sixty days prior to the month and day
of mailing of the prior year's proxy statement, together with identification and
address of the proposing stockholder and such other information as would be
required to determine the appropriateness of including the proposal in a proxy
statement. The Secretary, in conjunction with the Chairman and such
professional advisors as they deem necessary, shall determine whether and in
what form to include the stockholder proposal in proxy materials.
(d) If the Chairman of the meeting of stockholders determines that a
nomination or a proposal was not made in accordance with the foregoing
procedures, such nomination is void and such proposal shall not be submitted
for consideration at the meeting.
ARTICLE III
DIRECTORS
Section 3.1 - General Powers. The business and affairs of the Corporation
shall be managed under the direction of its Board of Directors.
Section 3.2 - Number, Tenure, and Qualifications. The number of Directors
of the Corporation shall be not less than seven nor more than ten, the exact
number of Directors to be determined from time-to-time by resolution of the
Board of Directors. Each Director shall hold office until the next annual
meeting of shareholders or until his successor shall have been elected and
qualified. Directors need not be residents of Indiana or shareholders of the
Corporation. No person shall be eligible for election of the Board of Directors
who will have attained the full age of seventy-five years prior to the
beginning of the term for which said person is to serve as a Director.
Directors may be removed in any manner provided in the Articles of
Incorporation of the Corporation. In addition, unless the Articles of
Incorporation of the Corporation provide otherwise, a Director may be removed
with or without cause by the shareholders or Directors in the manner provided
by statute or the Articles of Incorporation of the Corporation.
Section 3.3 - Committees. The Board of Directors, by resolution dopted
by a majority of Directors, may create one or more committees and appoint
members of the Board to serve on the committee or committees. Each committee
shall have one or more members, who serve at the pleasure of the Board.
To the extent specified by the Board of Directors or in the Articles of
Incorporation or these by-laws, each committee may exercise the authority of
the Board of Directors under the Indiana Business Corporation Law, provided,
however, a committee may not: (1) authorize distributions, except a committee
may authorize or approve a reacquisition of shares if done according to a
formula or method prescribed by the Board of Directors; (2) approve or propose
to shareholders action that requires shareholders' approval under the Indiana
Business Corporation Law; (3) fill vacancies on the Board of Directors or on
any of its committees; (4) amend the Articles of Incorporation of this
Corporation; (5) adopt, amend, or repeal these by-laws; or (6) approve a plan
of merger not requiring shareholder approval.
Section 3.4 - Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this by-law, immediately
after, and at the same place as the annual meeting of shareholders. If such
meeting is not held asabove provided, the election of officers may be held at
any subsequent meeting of the Board of Directors specifically called in the
manner hereinafter provided. The Board of Directors may provide, by
resolution, the time and place, either within or without the State of Indiana,
for the holding of additional regular meetings without other notice than such
resolution.
Section 3.5 - Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the Chairman or any three
Directors. The person or persons authorized to call special meetings of the
Board of Directors may fix any place, either within or without the State of
Indiana, as the place for holding any special meeting of the Board of
Directors called by them.
Section 3.6 - Notice Notice of any special meeting of Directors shall
be given to be effective at least three (3) days prior to the meeting.
Notice shall include the date, time and place of the meeting, but need not
describe the purpose of the meeting, except as may be otherwise required in
these Bylaws or the Articles of Incorporation. Written notice of any special
meeting of Directors shall be given as follows: by mail (which includes U.S.
mail and private carrier service); or, by electronic mail or facsimile to an
address or number provided by the Director(s) for such purposes; or, by
personal delivery, telegram, teletype or other form of wire or wireless
communication; in all cases, to each Director at his/her business address,
or, in the event delivery is to be made on a Saturday, Sunday, or legal
holiday, then to the resident address of each Director. Written notice is
effective at the earliest of the following: when received; five (5) days
after the date of mailing, as evidenced by the postmark or private carrier
receipt, if correctly addressed to the address listed in the most current
records of the corporation; or, on the date shown on the return receipt of a
mailing, if the receipt is signed by or on behalf of the addressee. If sent
by electronic mail or facsimile, such notice will be presumed and determined
to be delivered when the electronic records indicate that a good transmission
was made unless proven otherwise. For purposes of dealing with an emergency
situation, as conclusively determined by the Director(s) calling the meeting,
notice may be given in person, orally or by any means that reasonably may be
expected to provide notice under the circumstances, not less than two (2) hours
prior to the meeting. If the Secretary fails or refuses to give such notice,
then the notice may be given by the Director(s) calling the meeting. Any
Director may waive notice of any meeting. The attendance of a Director at any
meeting shall constitute a waiver of notice of such meeting, except where a
Director attends and announces that the express purpose of his/her attendance
at the beginning of the meeting is to object to the holding of the meeting or
the transaction of any business because the meeting is not lawfully called or
convened, and provided that such Director does not thereafter participate in
any way, vote for or assent or dissent to or on the record abstain from
voting on any action taken at the meeting. Neither the business to be
transacted at, nor the purpose of any regular or special meeting of the Board
of Directors need be specified in the notice or waiver of notice of such
meeting.
Section 3.7 - Quorum. A majority of the number of Directors fixed by these by-
laws shall constitute a quorum for the transaction of business at any meeting
of the Board of Directors, provided that if less than a majority of such
Directors present may adjourn the meeting from time-to-time without further
notice.
Section 3.8 - Manner of Acting. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the
Board of Directors.
Section 3.9 - Vacancies. Any vacancy occurring in the Board of Directors, and
any Directorship to be filled by reason of an increase in the number of
Directors, may be filled by the remaining Directors, though less than a quorum,
at a regular or special meeting thereof.
Section 3.10 - Compensation. By resolution of the Board of Directors,
irrespective of any personal interest of any of the members, the Directors may
be compensated for their services to the Corporation in any reasonable manner,
including but not limited to payment of their expenses, if any, of attendance
at each meeting of the Board, or any duly organized Committee of the Board of
which they are members, and/or payment of a fixed sum for attendance at such
meeting(s) , and/or payment of a stated periodic amount for serving on the
Board and/or any committee thereof. Alternatively or additionally, the
Directors may be paid either by issuance of a fixed number of shares of the
Corporation, or payment of the fixed sums may be made by issuance of shares of
the Corporation of an equivalent value as the amount due, as determined by the
Board. No such payment shall preclude any Director from serving the
Corporation in any other capacity and receiving compensation therefor.
Section 3.11 - Presumption of Assent. A Director of the Corporation who is
present at a meeting of the Board of Directors, at which action on any
corporate matter is taken, shall be conclusively presumed to have assented to
the action taken, unless his dissent shall be entered in the minutes of the
meeting, or unless he shall file his written dissent to such action with the
person acting as the secretary of the meeting before the adjournment thereof,
or shall forward such dissent by registered mail to the Secretary of the
Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a Director who voted in favor of such action taken.
Section 3.12 - Informal Action by Directors. Any action required to be taken at
a meeting of the Board of Directors, or any other action which may be taken at a
meeting of the Board of Directors, or any duly organized committee thereof
acting within the scope of its delegated authority, may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the Directors entitled to vote with respect to the subject
matter thereof or by all the members of such committee, as the case may be, and
such consent is included in the minutes or filed with the corporate records
reflecting the action taken.
ARTICLE IV
OFFICERS
Section 4.1 - Number. The officers of the Corporation shall include a Chairman,
a President, a Treasurer, and a Secretary, all of whom shall be elected by the
Board of Directors.
The Board of Directors may appoint such other officers as they deem necessary
which may include various levels of Vice Presidents, a Controller, a Chief
Financial Officer, a General Counsel, and others who shall have such authority
and shall perform such duties as from time to time may be prescribed by the
Board of Directors. Any two or more offices may be held by the same person.
The officers of the Corporation shall have such powers and authority in the
control and management of the property and business of the Corporation as is
usual and proper in the case of, and incident to, such corporate offices,
except insofar as such power and authority is limited by these by-laws or
by resolution of the Board of Directors. Officers shall report as
designated by the Board of Directors or by these Bylaws, or if there is
no such designation, then as designated by the Chairman.
Section 4.2 - Election and Term of Office. The officers of the Corporation
shall be elected annually, by the Board of Directors, at the first meeting
of the Board of Directors held after each annual meeting of shareholders.
If the election of officers shall not be held at such meeting, such
election shall be held as soon thereafter as conveniently may be.
Vacancies may be filled, or new offices filled, at any meeting of the
Board of Directors. Each officer shall hold office until his successor
shall have been duly elected and shall have qualified, or until his death,
or until he shall resign or shall have been removed in the manner
hereinafter provided.
Section 4.3 - Removal. Any officer or agent of the Corporation may be removed
at any time by the Chairman, the Chairman's designee, or by the Board of
Directors whenever, in his/its judgment, the best interests of the Corporation
would be served thereby, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed; and, any such removal by the
Chairman (or the Chairman's designee) shall be subject to ratification by the
Board of Directors, provided that such ratification shall be effective
retroactive in effect to the date of removal.
Section 4.4 - Vacancies. A vacancy in any office because of death, resignation,
removal, disqualification or otherwise, may be filled by the Board of Directors
for the unexpired portion of the term.
Section 4.5 - Bonds. If the Board of Directors by resolution shall so require,
any officer or agent of the Corporation shall give bond to the Corporation in
such amount and with such surety as the Board of Directors may deem sufficient,
conditioned upon the faithful performance of their respective duties and
offices.
Section 4.6 - Chairman. The Chairman shall be chosen from the Board of
Directors and shall be the chief executive officer of the Corporation. The
Chairman shall have executive authority to see that all orders and resolutions
of the Board of Directors are carried into effect and, subject to the control
vested in the Board of Directors by statute, by the Articles of Incorporation
or by these by-laws, shall administer and be responsible for the overall
management of the business and affairs of the Corporation. The Chairman shall
preside at all meetings of the shareholders and of the Board of Directors, and
in general shall perform all duties incident to the office of the Chairman of
the Board and such other duties as from time-to-time may be assigned to him by
the Board of Directors.
Section 4.7 - President. The President shall be chosen by the Board of
Directors, shall be directly responsible to the Chairman, and shall be directly
in charge of all of the Corporation's operations. He may sign with the
Secretary, or any other proper officer of the Corporation thereunto authorized
by the Board of Directors, certificates for shares of the Corporation, any
deeds, mortgages, bonds, contracts, or other instruments which the Board of
Directors has authorized to be executed, except in cases where the signing
and execution thereof shall be expressly delegated by the Board of Directors,
or by these by-laws, to some other officer or agent of the Corporation, or
shall be required by law to be otherwise signed or executed and, in general,
shall perform all duties as may be prescribed by the Board of Directors
from time-to-time.
Section 4.8 - Vice Presidents and Other Officers. Any Vice President may sign
with the Secretary, or an Assistant Secretary, certificates for shares of the
Corporation. Vice Presidents and other Officers shall have such authority
within an appointed area as determined by the Board of Directors, and shall
perform such other duties as from time to time may be assigned to them by the
President, the Chairman, or the Board of Directors.
Section 4.9 - Treasurer. If required by the Board of Directors, the Treasurer
shall give a bond for the faithful discharge of his duties in such sum and with
such surety or sureties as the Board of Directors shall determine. He shall:
(a) have charge and custody of and be responsible for all funds and securities
of the Corporation; receive and give receipts for moneys due and payable to the
Corporation from any source whatsoever, and deposit all such moneys in the name
of the Corporation in such banks, trust companies or other depositaries as
shall be selected in accordance with the provisions of Article V of these by-
laws; (b) in general, perform all duties incident to the office of Treasurer
and such other duties as from time-to-time may be assigned to him by the
Chairman, the President or the Board of Directors.
Section 4.10 - Secretary. The Secretary shall: (a) keep the minutes of the
shareholders and Board of Directors' meetings in one or more books provided for
that purpose; (b) see that all notices are duly given in accordance with the
provisions of these by-laws or as required by law; (c) be custodian of the
Corporate records and of the seal of the Corporation and see that the seal of
the Corporation is affixed to all documents, the execution of which on behalf
of the Corporation under its seal is duly authorized in accordance with the
provisions of these by-laws; (d) keep a register of the post office address of
each shareholder; (e) have general charge of the share transfer books of the
Corporation; (f) in general, perform all duties incident to the office of
Secretary and such other duties as from time-to-time may be assigned to him
by the Chairman, the President or by the Board of Directors.
Section 4.11 - Assistant Treasurers and Assistant Secretaries. The Assistant
Treasurers shall, respectively, if required by the Board of Directors, give
bonds for the faithful discharge of their duties in such sums and with such
sureties as the Board of Directors shall determine. The Assistant
Secretaries, as thereunto authorized by the Board of Directors, may sign with
the President or a Vice President, certificates for shares of the Corporation
the issue of which shall have been authorized by a resolution of the Board of
Directors. The Assistant Treasurers and Assistant Secretaries, in general,
shall perform such duties as shall be assigned to them by the Treasurer or
the Secretary, respectively, or by, the Chairman, the President or the Board
of Directors.
Section 4.12 - Compensation. The compensation of the officers shall be
fixed from time-to-time by the Board of Directors and no officer shall be
prevented from receiving such compensation by reason of the fact that he is
also a Director of the Corporation.
Section 4.13 - Succession. In case of the unexplained absence of, or
inability to reach, the Chairman for a period of forty-eight (48) hours, or
in the event of the Chairman's inability to act or his refusal to act in
accordance with the law or the directives of the Board of Directors, the
President shall perform the duties of the Chairman.
In case of the unexplained absence of, or inability to reach, the President
for a period of forty-eight (48) hours, or in the event of the President's
inability to act or his refusal to act in accordance with the law or the
directives of the Board of Directors, the Chairman or any other officer whom
the Chairman shall designate shall perform the duties of the President.
In case of the unexplained absence or inability to reach both the President
and the Chairman for a period of forty eight (48) hours, or the inability to
act of both the Chairman and the President, then the officer: in the order
previously designated by the Board of Directors; or, in the absence of any
designation by the Board of Directors, in the order previously designated by
the Chairman; or, in the absence of any designation by either of them, first
the Executive Vice President(s), then the Senior Vice President(s) and then
the Vice President(s), each in the order of their last appointment, shall
temporarily perform the duties of President and Chairman until action by the
Board of Directors. Such officer shall call a Special Meeting of theBoard
of Directors within seven (7) days of assuming the duties of President and
Chairman, for the express purpose of filling those vacancies and appointing
new officers, as appropriate, unless the President and the Chairman resume
their duties in the interim.
ARTICLE V
CONTRACTS, LOANS, CHECKS, AND DEPOSITS
Section 5.1 - Contracts. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of, and on behalf of, the Corporation, and such
authority may be general or confined to specific instances.
Section 5.2 - Loans. No loans shall be contracted on behalf of the Corporation,
and no evidences of indebtedness shall be issued in its name unless authorized
by a resolution of the Board of Directors. Such authority may be general or
confined to specific instances.
Section 5.3 - Checks, Drafts, Etc. All checks, drafts, or other order for the
payment of money, notes, or other evidences of indebtedness issued in the name
of the Corporation shall be signed by such officer or officers, agent or agents
of the Corporation, and in such manner as shall from time-to-time be determined
by resolution of the Board of Directors.
Section 5.4 - Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time-to-time to the credit of the Corporation in such
banks, trust companies, or other depositaries as the Board of Directors may
select.
ARTICLE VI
SHARES, CERTIFICATES FOR SHARES, AND TRANSFER OF SHARES
Section 6.1 - Regulation. The Board of Directors may make such rules and
regulations as it may deem expedient concerning the issuance, transfer, and
registration of certificates for shares of the Corporation, including the
appointment of transfer agents and registrars.
Section 6.2 - Certificates for Shares. Certificates representing shares of the
Corporation shall be respectively numbered serially for each class of shares,
or series thereof, as they are issued, may be impressed with the Corporate seal,
or a facsimile thereof, and shall be signed by the Chairman, President or a
Vice President, and by the Treasurer or an Assistant Treasurer or the Secretary
or an Assistant Secretary, provided that such signatures may be facsimile if
the certificate is counter signed by a transfer agent, or registered by a
registrar other than the Corporation itself or its employee. Each certificate
shall state the name of the Corporation, the fact that the Corporation is
organized or incorporated under the laws of the State of Indiana, the name
of the person to whom issued, the date of issue, the class (or series of
any class), the number of shares thereby or a statement that such shares
are without par value. If the Articles of Incorporation of the Corporation
authorize the issuance of more than one class of shares, a statement of the
designations, preferences, qualifications, limitations, restrictions and
special or relative rights of the shares of each class shall be set forth
in full or summarized on the face or back of the certificates which the
Corporation shall issue or in lieu thereof, the certificate may set forth
that such a statement or summary will be furnished to any shareholder upon
request without charge. Each certificate shall be otherwise in such form
as may be prescribed by the Board of Directors and as shall conform to the
rules of any stock exchange on which the shares may be listed.
The Corporation shall not issue certificates representing fractional shares and
shall not be obligated to make any transfers creating a fractional interest in
a share of stock. The Corporation may, but shall not be obligated to, issue
script in lieu of any fractional shares, such scrip to have terms and conditions
specified by the Board of Directors.
Section 6.3 - Cancellation of Certificates. All certificates surrendered to the
Corporation for transfer shall be cancelled and no new certificates shall be
issued in lieu thereof until the former certificate for a like number of shares
shall have been surrendered and cancelled, except as herein provided with
respect to lost, stolen, or destroyed certificates.
Section 6.4 - Lost, Stolen, or Destroyed Certificates. Any shareholder claiming
that his certificate for shares is lost, stolen, or destroyed may make an
affidavit or affirmation of that fact and lodge the same with the Secretary of
the Corporation, accompanied by a signed application for a new certificate.
Thereupon, and upon the giving of a satisfactory bond of indemnity to the
Corporation not exceeding in amount double the value of the shares represented
by such certificate, such value to be determined by the Chairman and Treasurer
of the Corporation, a new certificate may be issued of the same tenor and
representing the same number, class, and series of shares as were represented
by the certificate alleged to be lost, stolen, or destroyed.
Section 6.5 - Transfer of Shares. Shares of the Corporation shall be
transferable on the books of the Corporation by the holder thereof in person or
by his duly authorized attorney, upon the surrender and cancellation of a
certificate or certificates for a like number of shares. Upon presentation and
surrender of a certificate for shares properly endorsed and payment of all taxes
therefor, the transferee shall be entitled to a new certificate or certificates
in lieu thereof. As against the Corporation, a transfer of shares can be made
only on the books of the Corporation and in the manner hereinabove provided, and
the Corporation shall be entitled to treat the holder of record of any share as
the owner thereof and shall not be bound to recognize any equitable or other
claim to or interest in such share on the part of any other person, whether or
not it shall have express or other notice thereof, save as expressly provided
by the statutes of the State of Indiana.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall end of the last day of December in each
calendar year.
ARTICLE VIII
DIVIDENDS
The Board of Directors may from time-to-time fix a record date, declaration
date, and payment date with respect to any share dividend or distribution to
shareholders in the manner and upon the terms and conditions provided by
law and its Articles of Incorporation.
ARTICLE IX
SEAL
The Board of Directors shall provide a Corporate seal which shall be in the form
of a circle and shall have inscribed thereon the name of the Corporation and
the words "Corporate Seal, Indiana."
ARTICLE X
WAIVER OF NOTICE
Whenever any notice is required to be given under the provisions of these by-
laws or under the provisions of the Articles of Incorporation or under the
provisions of the Indiana Business Corporation Law, or otherwise, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice. Attendance at any meeting, in person, or by proxy
shall constitute a waiver of notice of such meeting, unless the person or
persons entitled to such notice at the beginning of the meeting objects to
holding the meeting.
ARTICLE XI
INDEMNIFICATION
Section 11.1 - General. The Corporation shall, to the fullest extent to which
it is empowered to do so by the Indiana Business Corporation Law, or any other
applicable laws, as from time-to-time in effect, indemnify any Indemnified
Officer who was or is a party, or is threatened to be made a party, to any
threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal administrative, or investigative, and whether formal or informal, by
reason of the fact that he is or was a Director, officer, employee, or agent of
the Corporation, or who, while serving as such Director, officer, employee, or
agent of the Corporation, is or was serving at the request of the Corporation
as a Director, officer, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan, or other
enterprise, whether for profit or not, against judgments, settlements,
penalties and fines (including excise taxes assessed with respect to employee
benefit plans) and reasonable expenses (including counsel fees) incurred by him
in accordance with such action, suit or proceeding, if he acted in good faith
and in a manner he reasonably believed, in the case of conduct in his official
capacity, was in the best interests of the Corporation, and in all other cases,
was not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, he either had reasonable cause to believe
his conduct was lawful or no reasonable cause to believe his conduct was
unlawful.
Any other person may be so indemnified if it is determined by the Board of
Directors by a majority vote of a quorum none of whom were at the time parties
to such action that such indemnification is in the interest of the Corporation,
subject to the provisions of this Article.
The termination of any action, suit or proceeding by judgment, order, settlement
or conviction, or upon a plea of nolo contendere or its equivalent, shall not,
of itself, create a presumption that the person did not meet the prescribed
standard of conduct.
Section 11.2 - Authorization of Indemnification. To the extent that an
Indemnified Officer of the Corporation has been successful, on the merits or
otherwise in the defense of any action, suit or proceeding referred to in
Section 11.1 of this Article, or in the defense of any claim, issue or matter
therein, the Corporation shall indemnify such person against reasonable
expenses (including counsel fees) incurred by such person in connection
therewith. Any other indemnification under Section 11.1 of this Article
(unless ordered by a court) shall be made by the Corporation only as
indemnification of the person to be indemnified is permissible in the
circumstances because he has met the applicable standard of conduct, and as
authorized as provided below.
Determination as to whether indemnification is permissible shall be made
(a) by the Board of Directors by a majority vote of a quorum none of whom were
at the time parties to such action, suit or proceeding; or (2) if a quorum
cannot be obtained under subdivision (1) by majority vote of a committee duly
designated by the Board of Directors (in which designation Directors who are
parties may participate), consisting solely of two or more Directors not at the
time parties to such action, suit, or proceeding; or (3) by special legal
counsel: (A) selected by the Board of Directors or its committee in the manner
prescribed in subdivision (1) or (2), or (B) if a quorum of the Board of
Directors cannot be obtained under subdivision (1) and a committee cannot be
designated under subdivision (2), selected by majority vote of the full Board
of Directors; or (4) by the shareholders, but shares owned by or voted under
the control of Directors who are at the time parties to such action, suit or
proceeding may not be voted on the determination.
Authorization of indemnification, the extent of indemnification and evaluation
as to reasonableness of expenses shall be made in the same manner as the
determination that indemnification is permissible, except that if the
determination is made by special legal counsel, authorization of
indemnification and evaluation as to reasonableness of expenses shall be made
by those entitled under sub-section (3) to select counsel.
Section 11.3 - Good Faith Defined. For purposes of any determination under this
Article XI, a person shall be deemed to have acted in good faith and to have
otherwise met the applicable standard of conduct set forth in Section 11.1 if
his action is based on information, opinions, reports, or statements, including
financial statements and other financial data if prepared or presented by
(1) one or more other Directors, officers or employees of the Corporation or
another enterprise whom he reasonably believes to be reliable and competent in
the matters presented; (2) legal counsel, public accountants, appraisers or
other persons as to matters he reasonably believes are within the person's
professional or expert competence; or (3) a committee of the Board of Directors
of the Corporation or another enterprise of which the person is not a member if
he reasonably believes the committee merits confidence. The term "another
enterprise" as used in this Section 11.3 shall mean any other corporation or
any partnership, joint venture, trust, employee benefit plan or other
enterprise of which such a person is or was serving at the request of the
Corporation as a Director, officer, partner, trustee, employee, or agent. The
provisions of this Section 11.3 shall not be deemed to be exclusive or to limit
in any way the circumstances in which a person may be deemed to have met the
applicable standards of conduct set forth in Section 11.1 of this Article XI.
Section 11.4 - Payment of Expenses in Advance. Reasonable expenses incurred in
connection with any civil or criminal action, suit or proceeding may be paid for
or reimbursed by the Corporation in advance of the final disposition of such
action, suit, or proceeding, as authorized in the specific case in the same
manner described in Section 11.2 of this Article, upon receipt of a written
affirmation of the person to be indemnified's good faith belief that he has met
the standard of conduct described in Section 11.1 of this Article and upon
receipt of a written undertaking by or on behalf of the said person to repay
such amount if it shall ultimately be determined that he did not meet the
standard of conduct set forth in this Article XI, and a determination is made
that the facts then known to those making the determination would not preclude
indemnification under this Article XI.
Section 11.5 - Provisions Not Exclusive. The indemnification provided by this
Article shall not be deemed exclusive of any other rights to which a person
seeking indemnification may be entitled under the Articles of Incorporation of
this Corporation, any other by-law, any resolution of the Board of Directors or
shareholders, any other authorization, whenever adopted, after notice, by a
majority vote of all voting shares then outstanding, or any contract, both as
to action in this official capacity and as to action in another capacity while
holding such office.
Section 11.6 - Vested Right to Indemnification. The right of any individual to
indemnification under this Article shall vest at the time of occurrence or
performance of any event, act or omission giving rise to any action, suit, or
proceeding of the nature referred to in Section 11.1 of this Article and, once
vested, shall not later be impaired as a result of any amendment, repeal,
alteration or other modification of any or all of these by-laws, or by a change
in his employment status or other capacity entitling him to indemnification,
and shall inure to the benefit of the heirs, executors and administrators of
such an individual. Notwithstanding the foregoing, the indemnification
afforded under this Article shall be applicable to all alleged prior acts or
omissions of any individual seeking indemnification hereunder, regardless of
the fact that such alleged acts or omissions may have occurred prior to the
adoption of this Article, and to the extent such prior acts or omissions cannot
be deemed to be covered by this Article XI, the right of any individual to
indemnification shall be governed by the indemnification provisions in effect
at the time of such prior acts or omissions.
Section 11.7 - Insurance. The Corporation may purchase and maintain insurance
on behalf of any person who is or was a Director, officer, employee, or agent
of the Corporation or who is or was serving at the request of the Corporation
as a Director, officer, partner, trustee, employee, or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against any liability asserted against or incurred by the individual
in that capacity or arising from the individual's status as a Director, officer,
employee, or agent, whether or not the Corporation would have power to indemnify
the individual against the same liability.
Section 11.8 - Additional Definitions. For purposes of this Article, references
to "the Corporation" shall include any domestic or foreign predecessor entity
of the Corporation in a merger or other transaction in which the predecessor's
existence ceased upon consummation of the transaction.
For purposes of this Article, serving an employee benefit plan at the request of
the Corporation shall include any service as a Director, officer, employee, or
agent of the Corporation which imposes duties on, or involves services by such
Director, officer, employee, or agent with respect to an employee benefit plan,
its participants, or beneficiaries. A person who acted in good faith and in a
manner he reasonably believed to be in the best interests of the participants
and beneficiaries of any employee benefit plan shall be deemed to have acted in
a manner "not opposed to the best interest of the Corporation" referred to in
this Article.
For purposes of this Article, "party" includes any individual who is or was a
plaintiff, defendant, or respondent in any action suit or proceeding, or who is
threatened to be made a named defendant or respondent in any action, suit or
proceeding.
For purposes of this Article, "official capacity," when used with respect to a
Director, shall mean the office of Director of the Corporation; and when used
with respect to an individual other than a Director shall mean the office in the
Corporation held by the officer or the employment or agency relationship
undertaken by the employee or agent on behalf of the Corporation. "Official
capacity" does not include service for any other foreign or domestic corporation
or any partnership, joint venture, trust, employee benefit plan, or other
enterprise, whether for profit or not.
For the purpose of this Article, "Indemnified Officer" means any Officer or
Director of the Corporation, any member of the Management Group (as hereafter
defined) of a division of the Corporation, and any Officer or Director of any
wholly owned subsidiary of the Corporation.
For the purpose of this Article, "Management Group" means the Division or
General Manager of the division, and those employees who have division-wide
responsibility whose titles are or include President,
(Executive/Senior/Assistant) Vice President, or (Assistant) Controller.
Section 11.9 - Payments a Business Expense. Any payments made to any
indemnified party under these by-laws or under any other right to
indemnification shall be deemed to be an ordinary and necessary business
expense of the Corporation, and payment thereof shall not subject any person
responsible for the payment, or the Board of Directors, to any action for
corporate waste or to any similar action.
ARTICLE XII
AMENDMENTS
These by-laws may be altered, amended, or repealed and new by-laws may be
adopted by a majority of the Directors present at any meeting of the Board of
Directors of the Corporation at which a quorum is present.
Exhibit 10(a)
COACHMEN INDUSTRIES, INC.
EXECUTIVE BENEFIT AND ESTATE ACCUMULATION PLAN
(Amended and Restated Effective as of May 31, 2000)
Coachmen Industries, Inc., an Indiana corporation ("Company"),
hereby amends and restates the Executive Benefit and Estate Accumulation Plan
("Plan") by action of its Board of Directors, effective as of this lst day of
May, 1992 for the purpose of appropriately compensating, motivating and
retaining certain executives of the Company and its subsidiaries to the end
that their contributions to the growth and success of the Company's business
will continue.
I.
DEFINITIONS AND CERTAIN PROVISIONS
1.1 "Agreement" means the written agreement (substantially in
the form attached to this Plan) entered into between the Company and the
Employee to carry out the Plan with respect to such Employee.
1.2 "Employee" means any employee of the Company (or subsidiary
or affiliated company) who has been selected to participate in the Plan and
enters into an Agreement.
1.3 "Service" means continuous full-time or substantially full-
time service with the Company as an employee.
1.4 A "Year of Service" means a complete year of continuous
service with the Company. A "Year" is a period of twelve (12) consecutive
calendar months.
1.5 "Eligible Benefit Date", means the date upon which the
Employee would become eligible for Normal Benefits (as provided in Section
3.1) if his service with the Company were terminated. To be eligible for
Normal Benefits with respect to any Benefit Unit, the Employee must have
participated in the Plan for eight (8) years or completed his deferrals of the
Total Employee's Deferral Amount with respect to such Benefit Unit and have
(a) attained age sixty (60) and been employed by the Company for fifteen (15)
years; (b) attained age fifty-five (55) and been employed by the Company for
twenty (20) years; or (c) attained age sixty-five (65). The Eligible Benefit
Date shall be determined separately for each Benefit Unit.
1.6 "Retirement Date" means the date of termination of service
of the Employee subsequent to his Eligible Benefit Date.
1.7 "Termination of Service" means the Employee's ceasing his
service with the Company for any reason whatsoever, whether voluntary or
involuntary, except death.
1.8 "Committee" means the Administrative Committee appointed to
manage and administer the Plan pursuant to Section 4.1.
1.9 "Beneficiary" means the person or persons
designated by an Employee pursuant to Section 3.6.
1.10 References to an Employee's or Beneficiary's age are to his
or her chronological age.
1.11 "T Bill Rate" means the average bond equivalent interest rate for
ninety (90) day U.S. Treasury Bills for the week including the first day
of each month as provided by the Company averaged over the applicable period.
1.12 "Disability", means any termination of service before an Employee
attains age sixty (60) which the Committee, in its complete and sole discretion,
determines is by reason of an Employee's total and permanent disability. If an
Employee makes application for disability benefits under the Social Security
Act, as now in effect or as hereafter amended, and qualifies for such benefits,
he shall be presumed to qualify as totally and permanently disabled under this
Plan. The Committee may require the Employee to submit to an examination by a
competent physician or medical clinic selected by the Committee. On the basis
of such medicalevidence, the determination of the Committee as to whether or
not a condition of total and permanent disability exists shall be conclusive.
To constitute disability, the same must be continuous for at least six (6)
months and must commence after the Employee has become a participant in the
Plan and must commence before the Employee
attains age sixty (60).
1.13 "Benefit Unit" means each separate unit of participation by an
Employee under the Plan. A separate Benefit Unit shall exist with respect
to the Total Employee's Deferral Amount associated with each separate annual
election or special "rollover" election. A separate Exhibit A to the
Agreement shall be completed for each separate Benefit Unit.
1.14 "Total Employee's Deferral Amount" means the total aggregate
deferral amount which the Employee has agreed to invest with respect to a
particular Benefit Unit under the Plan.
1.15 "Deferred Benefit Account" means the separate account maintained
for each Employee for each Benefit Unit as defined in Section 2.1 of the
Agreement.
1.16 "Special Company Credits" means the total amount added to Deferred
Benefit Account.
II.
EMPLOYEE COMPENSATION REDUCTION
2.1 Employee Compensation. In order to participate in any Benefit
Unit under the Plan, an Employee shall execute the Agreement and irrevocably
elect to reduce the amount of his compensation to be earned following the
effective date of the Plan in the amounts and with respect to the years
specified in paragraph 4 and Schedule A of the Agreement. A separate
Exhibit A to the Agreement shall be completed for each separate Benefit Unit.
The original effective date of the Plan was June 1, 1984, and the first year
of the Plan ended on December 31, 1984. Thereafter, the Plan year will be
on a calendar year basis. Any eligible Employee electing to participate
in a Benefit Unit under the Plan during the first Plan year made an election
prior to the effective date of the Plan. Thereafter, any eligible Employee
electing to participate in a Benefit Unit under the Plan during a subsequent
Plan year shall make an election prior to the beginning of such Plan year.
2.2 Special Rollover. In its sole discretion, the Committee may
permit an Employee to make a special "rollover" election to transfer amounts
which were previously deferred under the Company's Management Incentive Plan
to this Plan. In such event the Committee shall establish and maintain a
separate Rollover Deferred Benefit Account for each Employee who makes a
rollover transfer to this Plan. Such Rollover Deferred Benefit Account
shall be deemed to bear interest at the same rate and subject to the same
conditions as other Deferred Benefit Accounts pursuant to paragraph 6 of
the Agreement. Each Employee who makes a rollover transfer to a Rollover
Deferred Benefit Account shall be treated for purposes of determining
benefits under the Plan as having a Benefit Unit with respect to which (a)
the amount of the rollover transfer shall be treated as the "Total
Employee's Deferral Amount" and (b) the total Employee's Deferral Amount
shall be treated as completed.
III.
BENEFITS
3.1 Normal Benefit. Subject to the Employee's continuation in Service
until his Eligible Benefit Date, the Company shall pay to the Employee
monthly as compensation for services rendered prior to such date the amount
per annum specified in paragraph 7 of the Agreement for twenty (20)
consecutive years. The first such payment shall be made on the last day
of the first full calendar month following the month during which the
Employee reaches his Retirement Date.
3.2 Continuation of Normal Benefit. If an Employee has reached his
Eligible Benefit Date and dies prior to receiving payment of all of his
Normal Benefit, his Beneficiary shall be entitled to receive the remaining
Normal Benefit payments, if any, that would have been paid to the Employee
if the Employee had survived until he had received two hundred forty (240)
monthly payments of Normal Benefits.
3.3 Alternate Benefit. In lieu of the Normal Benefit, if the Employee
continues in Service until his Eligible Benefit Date, the Employee may
elect in writing, at any time before the end of the Plan year preceding
his Retirement Date, to receive a lump sum payment of the balance of his
Retirement Deferred Benefit Accounts for all of his Benefit Units
calculated as provided in paragraphs 2.1 and 7 of the Agreement. Payment
of the Alternate Benefit shall be made within thirty (30) days following
the Employee's Retirement Date. No Survivor Benefits or other benefits
shall be payable under the Plan after the Employee receives payment of
the Alternate Benefit.
3.4 Termination Benefits. Except as provided in Section 3.5, upon any
Termination of Service of the Employee before his Eligible Benefit Date,
the Company shall pay to the Employee as compensation for services
rendered prior to his Termination of Service the following, subject to
paragraph 8 of the Agreement: (a) A lump sum equal to the amounts by which
his compensation has been reduced pursuant to paragraph 4 of the Agreement,
plus any amounts contributed by the Company toward funding of the Company's
obligation to the Employee for payment of the termination benefit, plus
interest on the aforesaid amounts at the T Bill Rate (or at the Retirement
Interest Yield, as defined in paragraph 2.3(a) of the Agreement, with
respect to any Benefit Unit which the Employee has participated in for at
least eight (8) years and has completed his deferrals of the Total
Employee's Deferral Amount) credited in the manner provided in paragraph 8
of the Agreement (the "Termination Benefit"). For the purpose of the Plan,
the date of making reductions in the compensation paid to the Employee
shall be specified by the Committee, and all reductions in compensation
paid to the Employee during the Plan year shall be considered to have been
made not later than the last day of the applicable Plan year. Payment of
the Termination Benefit shall be made within thirty (30) days following
Termination of Service. (b) The Committee, in its sole discretion, may
elect to make payment of the amount set forth in subparagraph (a) above
in five (5) consecutive annual installments, the first of which shall be
paid within thirty (30) days following Termination of Service. Interest
shall continue to be credited on the unpaid amounts as provided in
paragraph 8 of the Agreement.
3.5 Survivor Benefits. If the Employee dies while in the Service of
the Company and prior to his Eligible Benefit Date, the Company shall
pay to the Employee's Beneficiary in annual installments for a period
of twenty (20) years the survivor benefit described in paragraph 9(a)
of the Agreement. The first of such payments shall be paid on the last
day of the first full calendar month following the month of the
Employee's death. If the Employee was eligible to receive the Normal
Benefit at his death, his Beneficiary shall be entitled to receive the
remaining Normal Benefit payments, and thereafter his surviving spouse
(if any) shall receive two-thirds of his annual Normal Benefit for the
remainder of her lifetime; provided, however, that in the event the
surviving spouse is more than three (3) years younger than the
Employee at the time of his death, the benefit payable to the surviving
spouse shall be reduced on an actuarial basis. No Survivor Benefits or
other benefits shall be payable under the Plan after an Employee
receives payment of the Alternate Benefit as provided in Section 3.3.
There shall be a 50% or 100% reduction in Survivor Benefits with respect
to a Benefit Unit in the event of a 50% or 100% withdrawal,
respectively, from such Benefit Unit pursuant to Section 3.8.
3.6 Recipients of Payments; Designation of Beneficiary. All payments
to be made by the Company under the Plan shall be made to the Employee
during his lifetime provided that if the Employee dies prior to the
completion of such payments, then all subsequent payments under the
Plan shall be made by the Company to the beneficiary or beneficiaries
designated in accordance with this Section. The Employee may from
time to time change the designated beneficiary or beneficiaries by
filing a new designation in writing with the Committee. In the event
the Employee shall designate more than one (1) beneficiary, the
Employee shall also designate the percentage of benefit to be paid to
each. If no designation shall be in effect at the time when any
benefits payable under this Plan become due, the beneficiary shall be
determined pursuant to paragraph 12(c) of the Agreement.
3.7 Disability Benefits. If the Employee becomes disabled as
hereinbefore defined while in the Service of the Company prior to the
time when the Employee would be entitled to the Normal Benefit and
prior to attainment of age sixty (60), the Company shall pay to the
Employee during the period such disability continues, in monthly
installments, the annual disability benefit described in paragraph 10
of the Agreement until the Employee has attained age sixty (60),
at which time the Employee shall be entitled to receive Normal
Benefits or Alternate Benefits as defined in Sections 3.1 and 3.3
hereof even though the Employee may not meet thelength of service
or the length of participation provisions hereof. The disability
benefit shall be paid in accordance with paragraph 10 of the
Agreement and shall beprorated for any period of less than one
(1) year, and the first monthly payment of disability benefits
shall be on the last day of the sixth full calendar monthfollowing
the onset of such disability.
3.8 Withdrawals. (a) A Participant who is in active Service may elect
at any time to receive an immediate lump sum payment of either 50% or
100% of the balance of his Deferred Benefit Accounts for all of his
Benefit Units, reduced by a penalty, which shall be forfeited to the
Company, equal to ten percent (10%) of the portion (50% or 100%) of
the balance of such Deferred Benefit Accounts to be withdrawn, in
lieu of payments in accordance with the form previously elected by
the Participant. (b) A Participant who is no longer in active Service
or a Beneficiary of a deceased Participant may elect at any time to
receive an immediate lump sum payment or 100% of the balance of his
interest in Deferred Benefit Accounts for all Benefit Units, reduced
by a penalty, which shall be forfeited to the Company, equal to
ten percent (10%) of his interest in the balance of such Deferred
Benefit Accounts, in lieu of payments in accordance with the form
previously elected by the Participant. (c) Upon a finding that a
Participant or Beneficiary has suffered a Financial Hardship, the
Administrative Committee may, in its sole discretion, permit
withdrawals under paragraphs (a) or (b) above without imposing any
penalty. Applications for hardship withdrawals and determinations
thereon by the AdministrativeCommittee shall be in writing, and a
Participant or Beneficiary may be required to furnish written proof
of the Financial Hardship. A "Financial Hardship" shall mean an
immediate and heavy financial need of the Participant or Beneficiary,
determined by the Administrative Committee on the basis of written
information supplied by the Participant or Beneficiary, in
accordance with such standards as are, from time to time, established
by the Administrative Committee. (d) All withdrawals shall result in
a termination of the Benefit Unit, if 100% of the Deferred Benefit
Account is withdrawn, or reduction of the Benefit Unit, if 50% of the
Deferred Benefit Account is withdrawn, which shall be treated in
the manner described in paragraph 13(a) or (b) of the Agreement,
respectively.
3.8 Withholding and Employment Taxes. To the extent required by the
law in effect at the time payments are made, the Company shall
withhold any taxes required to be withheld by the federal or any
state or local government from paymentsmade hereunder.
IV.
CONDITIONS RELATED TO BENEFITS
4.1 Administration of Agreement. The Board of Directors shall appoint
an Administrative Committee consisting of one or more persons to
administer the Plan and to interpret and apply its provisions in
accordance with its terms. The Committee shall select the Employees
who are eligible to participate in the Plan. A member of the Committee
shall not vote or act upon any matter which relates solely to such
member as an Employee. In the absence of the appointment of an
Administrative Committee, references herein to the Committee shall
mean the Board of Directors of the Company.
4.2 Rights on Termination of Service. Except as expressly provided
in this Plan, the Company shall not be required or be liable to make
any payment under this Plan subsequent to the Termination of Service
of the Employee.
4.3 No Right to Company Assets. Neither the Employee nor any other
person shall acquire by reason of the Plan or Agreement any right in
or title to any assets, funds or property of the Company whatsoever
including, without limiting the generality of the foregoing, any
specific funds or assets which the Company, in itssole discretion,
may set aside in anticipation of a liability hereunder, nor in or
to any policy or policies of insurance on the life of the Employee
owned by the Company. No trust shall be created in connection with
or by the execution or adoption of this Plan or the Agreement, and
any benefits which become payable hereunder shall be paid from the
general assets of the Company. The Employee shall have only a
contractual right to the amounts, if any, payable hereunder unsecured
by any asset of the Company.
4.4 No Employment Rights. Nothing herein shall constitute a contract
of continuing service or in any manner obligate the Company to
continue the services of the Employee or obligate the Employee to
continue in the service of the Company, and nothing herein shall be
construed as fixing or regulating the compensation payable
to the Employee.
4.5 Company's Right to Terminate. The Company reserves the sole
right to terminate the Plan and/or the Agreement pertaining to the
Employee at any time prior to the commencement of payment of his
benefits or the occurrence of an event which entitles him to payment
of his benefits, provided, however, that the Company may only
terminate the Agreement pertaining to the Employee if it terminates
the Agreements of all similarly situated Employees. In the event
of any such termination, the Employee shall be entitled to the
amount specified in Section 3.4 of this Plan at the time of
termination of the Plan and/or his Agreement.
4.6 Protective Provisions. The Employee will cooperate with the
Company by furnishing any and all information requested by the
Company in order to facilitate the payment of benefits hereunder,
taking such physical examinations as the Company may deem necessary
and taking such other actions as may be requested by the Company.
If the Employee refuses to cooperate, the Company shall have no
further obligation to the Employee under the Plan or his Agreement.
In the event of the Employee's suicide during the first two (2)
years of his deferral period for any Benefit Unit or if the Employee
makes any material misstatement of information or non-disclosure of
medical history, then benefits may be payable to the Employee under
the Plan in a reduced amount, in the Company's sole discretion,
provided that the benefits shall at least be equal to the aggregate
amounts deferred under the Plan by the Employee.
4.7 Offset. If at the time payments or installments of payments
are to be made hereunder the Employee or the beneficiary or both
are indebted or obligated to the Company, then the payments
remaining to be made to the Employee or the beneficiary or both may,
at the discretion of the Company, be reduced by the amount of such
indebtedness or obligation; provided, however, that an election by
the Company not to reduce any such payment or payments shall not
constitute a waiver of its claim for such indebtedness or
obligation.
4.8 Arbitration. Any controversy or claim arising out of or
relating to this Plan or the Agreement, or the breach thereof,
shall be settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, and
judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof. The arbitration
shall occur in Elkhart,
Indiana. The fees and expenses of any arbitration shall be awarded
by the arbitrator(s).
V.
MISCELLANEOUS
5.1 Nonassiqnability. Neither the Employee nor any other person
shall have any right to commute, sell, assign, pledge, anticipate,
mortgage or otherwise encumber, transfer, hypothecate or convey in
advance of actual receipt the amounts, if any, payable hereunder,
or any part thereof, which are and all rights to which are
expressly declared to be unassignable and non-transferable. No
part of the amounts payable shall, prior to actual payment, be
subject to seizure or sequestration for the payment of any debts,
judgments, alimony or separate maintenance owed by the Employee
or any other person, or be transferable by operation of law in
the event of the Employee's or any other person's bankruptcy or
insolvency.
5.2 Gender and Number. Wherever appropriate herein, the masculine
may mean the feminine and the singular may mean the plural or vice
versa.
5.3 Notice. Any notice required or permitted to be given under the
Plan shall be sufficient if in writing and hand delivered, or sent
by registered or certified mail, and if given to the Company,
delivered to the principal office of the Company, directed to the
attention of the President of the Company. Such notice shall
be deemed given as of the date of delivery or, if delivery is made
by mail, as of the date shown on the postmark or the receipt for
registration or certification.
5.4 Amendments. This Plan and any Agreements pursuant to this Plan
shall be subject to amendment from time to time as the Board of
Directors, in its sole discretion and upon advice of counsel, shall
deem necessary or desirable to accomplish the intended purposes of
the Plan and to avoid unintended burdens upon the Company which may
arise from changes in law or regulations becoming effective after
the date of approval of this Plan, or arising from adverse business
conditions or for any other reason. Such amendments shall become
effective only on and after the date of adoption of such amendments
and shall operate prospectively only and may not be more adverse to
an Employee than if the Plan or his Agreement were terminated
pursuant to Section 4.5 of the Plan.
5.5 Invalid Provisions. If any provision or provisions of this
Plan or of any Agreement shall be determined to be invalid, such
invalid provision or provisions shall not affect any other
provisions of this Plan or of the Agreements, and all other
provisions shall remain in full force and effect.
Exhibit 10(c)
CHANGE IN CONTROL, TIER 1
THIS CHANGE IN CONTROL AGREEMENT ("Agreement") is entered into
effective , 2000, by and between Coachmen Industries, Inc. (the
"Company") and (the "Executive"). Terms with initial capitalization that
are not otherwise defined in this Agreement shall have the meanings set forth
in Schedule A hereto.
In consideration of the mutual promises and agreements herein contained,
and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, both parties intending to be legally bound
hereby, the Company and Executive hereby agree as follows:
1. Term of Agreement. This Agreement shall terminate, except to the
extent that any obligation of the Company hereunder remains unpaid as of such
time, upon the first to occur of (a) the termination of Executive's
employment with the Company or (b) the third anniversary of the date of a
Change in Control of the Company if Executive is employed by the Company upon
such third anniversary.
2. Severance Benefits Upon Termination Following Change in Control.
(a) If a Change in Control of the Company shall have occurred while
Executive is still an employee of the Company, and Executive's employment
with the Company is terminated during the three (3) year period following the
date of such Change in Control by reason of a termination (1) by the Company
without Cause, or (2) by Executive with Good Reason, Executive shall be
entitled to the following severance benefits:
(i) Within five (5) business days after the date of Executive's
termination, the Company shall make a lump sum payment to Executive in an
amount equal to the sum of (A) his accrued but unpaid annual base salary
through the date of termination at the greater of the rate in effect at the
time the Change in Control occurred or the rate in effect when the notice of
termination was given, (B) an amount equal to 100% of Executive's Target
Annual Bonus multiplied by a fraction, the numerator of which is the number
of days in the fiscal year of the Company to which such Target Annual Bonus
relates during which Executive was employed by the Company, and the
denominator of which is 365, and (C) an amount equal to Executive's
supplemental benefit compensation accrued but unpaid through the date of
termination.
(ii) Within thirty (30) days after the date of Executive's
termination, the Company shall make a lump sum payment to Executive in an
amount equal to three (3) times the sum of (A) Executive's annual base salary
at the greater of the rate in effect at the time the Change in Control
occurred or the rate in effect when the notice of termination was given, plus
(b)Executive's Target Annual Bonus.
(iii) Within thirty (30) days after the date of a Change in Control,
the Company shall amend the Coachmen Industries, Inc. Retirement Plan & Trust
(the "401(k) Plan) to provide for full vesting of the Executive's account,
effective as of the date of the Change in Control; and, to provide for a
special matching contribution to be made on behalf of the Executive equal to
three (3) times the annual match that would be made for the Executive at the
rate Executive was deferring income into the 401(k) plan as of the date of
the Change in Control as if Executive had completed a full year of such
deferrals, but in any event not to exceed the amount that would satisfy the
401(k) Plan's actual contribution percentage nondiscrimination testing under
Section 401(m) of the Internal Revenue Code.
(iv) Any outstanding options to purchase stock of the Company held by
Executive as of the date of termination shall immediately vest and become
exercisable in full.
(v) The restrictions on any shares of restricted stock held by Executive
which have not yet terminated will terminate immediately.
(vi) Until the earlier of the third anniversary of the date of termination
or the date on which Executive becomes employed by a new employer, the
Company shall pay the reasonable costs of an outplacement service selected by
Executive and approved by the Company.
(vii) Until the earlier of the third anniversary of the date of termination
or the date on which Executive becomes employed by a new employer, the
Company shall, at its expense, provide Executive and Executive's family
members with medical, dental, life insurance, disability and accidental death
and dismemberment benefits at the highest level provided to Executive and
Executive's family members during the period beginning immediately prior to
the Change of Control and ending on the date of termination, provided,
however, that if Executive becomes employed by a new employer which maintains
a major medical plan that either (i) does not cover Executive and Executive's
family members with respect to a pre-existing condition which was covered
under the Company's major medical plan, or (ii) does not cover Executive and
Executive's family members for a designated waiting period, Executive's
coverage under the Company's major medical plan shall continue (but shall be
limited in the event of noncoverage due to a preexisting condition, to the
preexisting condition itself) until the earlier of the end of the applicable
period of noncoverage under the new employer's plan or the third anniversary
of the date of termination.
(viii) The Company shall pay any amounts previously deferred by Executive
pursuant to any deferred compensation plan or arrangement maintained by the
Company.
(b) The payments provided for under this Section 2 shall be in addition to
any non-severance compensation and benefits provided for under any of the
Company's employee benefit plans, policies and practices or under the terms
of any other contracts, but in lieu of any severance pay under any Company
employee benefit plan, policy and practice or under the terms of any other
contract including any employment contract.
3. Termination for Cause, Disability, and without Good Reason. No
compensation shall be payable under this Agreement in the event Executive's
employment with the Company is terminated by reason of (1) a termination by
the Company for Cause or for Disability, or (2) a termination by Executive
without Good Reason. For purposes of this Agreement:
(a) Disability. The Company may terminate Executive's employment for
"Disability" if, due to physical or mental illness or incapacity, Executive
shall not have performed his duties with the Company on a substantially
full-time basis for (i) six (6) consecutive months, or (ii) for a total of
180 days in any given period of twelve consecutive months, but only if
Executive shall not have returned to the full-time performance of his duties
with the Company during the thirty (30) day period following the delivery by
the Company of a written notice of termination for Disability.
(b) Cause. The Company may terminate Executive's employment for any reason
whatsoever at any time during the term of this Agreement, with or without
Cause. Any purported termination of employment by the Company for Cause
shall be communicated by a written notice of termination to Executive setting
forth in reasonable detail all of the facts and circumstances claimed to
provide a basis for such termination. If Executive disputes the existence of
Cause for any such termination, such termination shall not be considered
effective and Executive's rights under this Agreement (excluding his right to
terminate with Good Reason under Section 3(c) hereof) shall continue until
such dispute is finally determined, whether by mutual agreement by the
parties or upon final judgment, order or decree of a court of competent
jurisdiction (the time for appeal therefrom having expired and no appeal
having been perfected).
(c) Good Reason. Executive may terminate his employment at any time during
the term of this Agreement, with or without a Good Reason; provided however
that Executive may not terminate this Agreement for Good Reason during any
period in which Executive is contesting a termination of Executive's
employment by the Company for Cause. Executive's continued employment after
the expiration of 60 days from any action that would otherwise constitute
Good Reason shall constitute a waiver of rights with respect to such action
constituting Good Reason under this Agreement.
4. No Obligation To Seek Further Employment; Confidential Information.
(a) Executive shall not be required to seek other employment, nor shall the
amount of any payment provided for under this Agreement be reduced by any
compensation earned by Executive as the result of employment by another
employer after the date of termination, or otherwise. The Company's
obligations hereunder also shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against Executive. Payments to Executive pursuant to this
Agreement shall constitute the entire obligation of the Company for severance
pay and full settlement of any claim for severance pay under law or in equity
that Executive might otherwise assert against the Company or any of its
employees, officers or directors on account of Executive's termination. In
consideration for the protection and benefits provided for under this
Agreement, Executive hereby agrees to execute a release, substantially in the
form of Exhibit B hereto, of any claims for severance pay under law or in
equity that Executive might otherwise assert as described in the preceding
sentence.
(b) Following the date of termination, Executive shall not disclose to any
person, or use to the significant disadvantage of the Company or any of its
affiliates, any Confidential Information; provided that nothing contained in
this Section 4(b) shall prevent Executive from being employed by a competitor
of the Company or utilizing Executive's general skills, experience, and
knowledge, including those developed while employed by the Company.
(c) If a Change in Control of the Company shall have occurred while
Executive is still an employee of the Company, and Executive's employment
with the Company is terminated during the three (3) year period following the
date of such Change in Control by reason of a termination (1) by the Company
without Cause, or (2) by Executive with Good Reason, Executive shall thereby
be automatically released without the need of providing notice: from any
other agreement between Executive and the Company entered into before the
effective date of this Agreement that imposes any post-employment non-
competition or non-solicitation obligations on the Executive; and, from any
confidentiality obligations different from the foregoing Section 4(b);
including the Business Protection Agreement, and any Confidentiality
Agreement or Confidentiality, Conflict of Interest and Invention Agreement
between the Company and Executive.
5. Successors. The Company will require any successor or assign (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the Company, to assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession or
assignment had taken place. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor or assign to its
business and/or assets as aforesaid which executes and delivers the agreement
provided for in this Section 5 or which otherwise becomes bound by all the
terms and provisions of this Agreement by operation of law, or otherwise.
This Agreement shall inure to the benefit of and be enforceable by
Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive should
die while any amounts are still payable to him hereunder, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms
of this Agreement to Executive's estate.
6. Excise Taxes.
(a) In the event it shall be determined that any payment, distribution or
benefit of any type by the Company to or for the benefit of the Executive,
whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise by reason of a Change of Control of the
Company or termination of his employment with the Company (collectively, the
"Payments") would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended ("Code") or any successor
provision, or any interest or penalties are incurred by Executive with
respect to such excise tax (such excise tax, together with any such interest
and penalties, hereinafter collectively referred to as the "Excise Tax"), the
Company shall pay Executive, at least 30 business days prior to the time
payment of any such Excise Tax is due, an additional amount (the "Gross-Up
Payment") such that the net amount retained by Executive, after deduction of
any Excise Tax and any federal and state and local taxes imposed on the
Gross-Up Payment, shall be equal to the Excise Tax imposed on the Payments.
(b) For purposes of determining whether any of the Payments will be subject
to the Excise Tax and the amount of such Excise Tax, (1) the Payments shall
be treated as "parachute payments" within the meaning of Section 280G(b)(2)
of the Code, and all "excess parachute payments" within the meaning of
Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax,
unless in the opinion of tax counsel selected by the independent accounting
firm retained by the Company on the date of Change in Control (the
"Accounting Firm"), and acceptable to Executive the Payments (in whole or in
part) do not constitute parachute payments or excess parachute payments or
are otherwise not subject to the Excise Tax, (2) the amount of the Payments
which shall be treated as subject to the Excise Tax shall be equal to the
amount of "excess parachute payments" within the meaning of Section
280G(b)(1) (after applying clause (1) above), and (3) the value of any
non-cash benefits or any deferred payment or benefit shall be determined by the
Accounting Firm in accordance with the principles of Section 280G(d)(3) and
(4) of the Code. For purposes of determining the amount of the Gross-Up
Payment, Executive shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of Executive's
residence on the date of termination, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and local
taxes.
(c) Determination By Accountant. All determinations required to be made
under this Section 6, other than those made by tax counsel pursuant to
Section 6(b) hereof, including whether a Gross-Up Payment is required and the
amount of such Gross-Up Payment, shall be made at Company's expense by the
Accounting Firm, which shall provide detailed supporting calculations both to
the Company and Executive within fifteen (15) business days of the
Termination Date, if applicable, or such earlier time as is requested by the
Company. If the Accounting Firm determines that no Excise Tax is payable by
Executive, it shall furnish Executive with an opinion that he has substantial
authority not to report any Excise Tax on his federal income tax return. Any
determination by the Accounting Firm shall be binding upon the Company and
Executive. As a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been
made by the Company should have been made ("Underpayment"), consistent with
the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 6(d) hereof and Executive
thereafter is required to make a payment of any Excise Tax, the Accounting
Firm shall determine the amount of the Underpayment that has occurred and any
such Underpayment shall be promptly paid by the Company to or for the benefit
of Executive.
(d) Notification Required. Executive shall notify the Company in writing of
any audit or review by the Internal Revenue Service of Executive's federal
income tax return for the year in which a payment under this Agreement is
made, within ten business (10) days of Executive's receipt of notification of
such audit or review. In addition, Executive shall also notify the Company
in writing of the final resolution of such audit or review within ten
business (10) days of such resolution. Executive shall not pay any claim that
would require payment by the Company of the Gross-Up Payment prior to the
expiration of the thirty (30) day period following the the date on which
Executive gives notice to the Company of such final resolution (or such
shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies Executive in writing prior to
the expiration of such period that it desires to contest such claim,
Executive shall
(i) give the Company any information reasonably requested by the Company
relating to such claim,
(ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim
by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order to effectively
contest such claim,
(iv) permit the Company to participate in any proceedings relating to such
claim, provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold Executive harmless,
on an after-tax basis, for any Excise Tax or income tax, including interest
and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 6(d), the Company shall control all
proceedings taken in connection with such contest and, at its sole option,
may pursue or forgo any and all administrative appeals, proceedings, hearings
and conferences with the taxing authority in respect of such claim and may,
at its sole option, either direct Executive to pay the tax claimed and sue
for a refund, or contest the claim in any permissible manner, and Executive
agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the
Company directs Executive to pay such claim and sue for refund, the Company
shall advance the amount of such payment to Executive, on an interest-free
basis and shall indemnify and hold Executive harmless, on an after-tax basis,
from any Excise Tax or income tax, including interest or penalties with
respect thereto, imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes for the
taxable year of Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore,
the Company's control of the contest shall be limited to issues with respect
to which a Gross-Up Payment would be payable hereunder and Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by
the Internal Revenue Service or any other taxing authority.
e. Repayment. If Executive becomes entitled to receive any refund with
respect to any payment or advance made pursuant to this Section 6, Executive
shall promptly pay to the Company the amount of such refund (together with
any interest paid or credited thereon after taxes applicable thereto). If,
after the receipt by Executive of an amount advanced by the Company pursuant
to Section 6(d), a determination is made that Executive shall not be entitled
to any refund with respect to such claim and the Company does not notify
Executive in writing of its intent to contest such denial of refund prior to
the expiration of thirty (30) days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the
amount of such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
7. Miscellaneous.
(a) Amendments, Waivers. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed
to in writing signed by Executive and the Company. Except as otherwise
provided in Section 3(c) hereof, no waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition
or provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time.
(b) Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
(c) Confidentiality. Executive agrees that unless Executive is otherwise
required by law to disclose this Agreement, Executive will keep the existence
and terms of this Agreement completely confidential, and will not discuss the
terms, amount, or existence of this Agreement with anyone other than
Executive's spouse, attorneys or tax advisors, provided that these
individuals also keep the existence, terms, and amount of this Agreement
completely confidential.
(d) Fees and Expenses. Company shall pay all reasonable legal fees and
related expenses (including the reasonable costs of experts, evidence and
counsel), when and as incurred by Executive, as a result of contesting or
disputing any termination of employment of Executive following a Change in
Control, or enforcing the terms of this Agreement whether or not such contest
or dispute is resolved in Executive's favor but only if Executive was seeking
in good faith to obtain or enforce any right or benefit provided by this
Agreement or by any other plan or arrangement maintained by the Company under
which Executive is or may be entitled to receive benefits.
(e) Survival of Obligations. The obligations of Company under Sections 2
and 6 hereof shall survive the expiration of the term of this Agreement.
(f) Governing Law. The laws of Indiana shall be controlling in all matters
relating to this Agreement.
(g) Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not set forth expressly in
this Agreement and this Agreement shall supersede any and all prior
agreements, understandings or negotiations with respect to the subject matter
hereof.
(h) Non-Exclusivity of Rights. Except as explicitly modified by Section (b)
of this Agreement, nothing in this Agreement shall prevent or limit
Executive's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by Company and for which
Executive may qualify, nor shall anything herein limit or reduce such rights
as Executive may have under any other agreements with Company. Amounts which
are vested benefits or which Executive is otherwise entitled to receive under
any plan or program of Company shall be payable in accordance with such plan
or program.
(i) Employment. This Agreement applies, and is in full force and effect,
and is Fully enforceable against and binding upon Company, whether Executive
is employed by Company, or by any corporation, limited liability company,
or other legal entity owned or controlled by Company (the "Subsidiaries").
Prior to a Change in Control, Executive may be transferred by Company to
any one of its Subsidiaries, or may be deemed to be a loaned, shared or
joint employee of one or more of Company's Subsidiaries, and such transfer,
loan, sharing or joint employment occurring will not be or be deemed to be
a termination of this Agreement. Transfer subsequent to a Change in Control
without the prior written consent of Executive shall allow the Executive to
terminate his employment with Good Reason.
EXHIBIT A
DEFINITIONS
"Cause" shall mean Executive's:
(i) (i) fraud, misappropriation, embezzlement or other willful and knowing
act of material misconduct against the Company or any of its affiliates;
(ii) substantial and willful failure to render services in accordance with
the terms of Executive's employment, provided that (A) a demand for
performance of services has been delivered to the Executive by the Board of
Directors of the Company at least 30 days prior to termination identifying
the manner in which such Board of Directors believes that the Executive has
failed to perform and (B) the Executive has thereafter failed to remedy such
failure to perform within thirty (30) days after delivery of such demand for
performance;
(iii) willful and knowing violation of any rules or regulations of any
governmental or regulatory body material to the business of the Company; or
(iv) conviction of or plea of nolo contendere to a felony.
"Change in Control" of the Company shall mean the occurrence of any of
the following:
(i) any "person" (as that term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, but excluding the Company, its affiliates,
any qualified or non-qualified plan maintained by the Company or its affiliates,
and any Passive Investor) becomes the "beneficial owner" (as defined in Rule
13d-3 promulgated under such Act), directly or indirectly, of securities of the
Company representing more than 20% of the combined voting power of the Company's
then outstanding securities;
(ii) during a period of 24 months, a majority of the Board of Directors of the
Company ceases to consist of the existing membership or successors nominated by
the existing membership or their similar successors;
(iii) shareholder approval of a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would result in
the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than sixty percent (60%)
of the combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation; or
(iv) shareholder approval of either (A) a complete liquidation or dissolution
of the Company or (B) a sale or other disposition of all or substantially all of
the assets of the Company, or a transaction having a similar effect.
For these purposes, "Passive Investor" shall mean any person who becomes a
beneficial owner of 20% or more of the combined voting power of the Company's
then outstanding securities solely because (A) of a change in the aggregate
number of voting shares outstanding since the last date on which the person
acquired beneficial ownership of any voting shares, or (B) (I) the person
acquired beneficial ownership of the shares based on calculations correctly
performed and using the Company's most current reports publicly on file with
the Securities and Exchange Commission which indicated that acquisition of the
shares would not cause the persons to become the beneficial owner of 20% or more
of the voting shares then outstanding, and (II) the person had no notice or
reason to believe that acquisition of the shares would result in the person
becoming the beneficial owner of 20% or more of the voting shares then
outstanding, and (III) the person sells a number of shares that reduced the
person's beneficial ownership of the voting shares to less than 20% of the
voting shares outstanding within ten (10) business days after receiving
notice from the Company that the 20% threshold had been exceeded.
"Confidential Information" means any non-public information relating
to the business plans, marketing plans, customers or employees of the Company
or any of its subsidiaries or affiliates other than information the
disclosure of which cannot reasonably be expected to adversely affect the
business of the Company or its subsidiaries or affiliates.
"Good Reason" shall mean any of the following which occurs subsequent
to a Change in Control of the Company without Executive's prior consent:
(i) any adverse change or reduction in Executive's authorities,
duties, or responsibilities (including reporting responsibilities); the
assignment to Executive of any duties or work responsibilities which are
inconsistent with such authorities or responsibilities; or any removal of
Executive from, or failure to reappoint or reelect him to any office;
(ii) a reduction in or failure to pay any portion of Executive's
Annual Base Salary or annual bonus (except for failure to meet reasonable
conditions for receipt of the bonus) as in effect on the date of the Change
in Control or as the same may be increased from time to time thereafter;
(iii) the failure by Company to provide Executive with compensation and
benefits (including, without limitation, incentive, bonus and other
compensation plans and any vacation, medical, hospitalization, life
insurance, dental or disability benefit plan), or cash compensation in lieu
thereof, which are, in the aggregate, no less favorable than those provided
by Company to Executive immediately prior to the occurrence of the Change in
Control, other than an isolated, immaterial, and inadvertent failure not
taken in bad faith and which are remedied by the Company promptly after
receipt of a reasonable written notice thereof given by Executive;
(iv) any material breach by Company of any provision of this Agreement;
(v) Executive being required to relocate to a principal place of employment
more than fifty (50) miles from his current place of employment; or
(vi) the failure of Company to obtain a satisfactory agreement from any
successor or assign of Company to assume and agree to perform this Agreement,
as required in Section 5 hereof; or
"Target Annual Bonus" shall mean the bonus Executive could have earned under
the Company's bonus program for senior management for the fiscal year of the
Company in which his date of termination occurs. For the fiscal and calendar
year 2001, and for subsequent years so long as the variously called "Annual
Bonus Incentive Plan for Management" or "Executive Annual Performance
Incentive Plan" (the "Plan") approved by the Board of Directors of the
Company at its October, 2000 Board Meeting is in effect before a Change in
Control, the "Target Annual Bonus" as used in this Agreement is: the "Target
Bonus Level" under the Plan, which is the Bonus to be awarded the Executive
as if 100% of the Performance Metrics (as defined in the Plan) targets set
for the Executive were achieved; plus such additional amount, if any, as the
Compensation Committee of the Board of Directors in its discretion shall
award based on the circumstances as of the Change in Control; provided that
the total of the Target Bonus Level and such additional amount shall not
exceed the Ultimate, or maximum Bonus, that could be earned by the Executive
under the Plan if the Performance Metrics targets were exceeded by 140%.
Exhibit 10(d)
CHANGE IN CONTROL, TIER 2
THIS CHANGE IN CONTROL AGREEMENT ("Agreement") is entered into
effective , 2000, by and between Coachmen Industries, Inc. (the
"Company") and (the "Executive"). Terms with initial capitalization that
are not otherwise defined in this Agreement shall have the meanings set forth
in Schedule A hereto.
In consideration of the mutual promises and agreements herein contained,
and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, both parties intending to be legally bound
hereby, the Company and Executive hereby agree as follows:
1. Term of Agreement. This Agreement shall terminate, except to the
extent that any obligation of the Company hereunder remains unpaid as of such
time, upon the first to occur of (a) the termination of Executive's
employment with the Company or (b) the third anniversary of the date of a
Change in Control of the Company if Executive is employed by the Company upon
such third anniversary.
2. Severance Benefits Upon Termination Following Change in Control.
(a) If a Change in Control of the Company shall have occurred while
Executive is still an employee of the Company, and Executive's employment
with the Company is terminated during the three (3) year period following the
date of such Change in Control by reason of a termination (1) by the Company
without Cause, or (2) by Executive with Good Reason, Executive shall be
entitled to the following severance benefits:
(i) Within five (5) business days after the date of Executive's
termination, the Company shall make a lump sum payment to Executive in an
amount equal to the sum of (A) his accrued but unpaid annual base salary
through the date of termination at the greater of the rate in effect at the
time the Change in Control occurred or the rate in effect when the notice of
termination was given, (B) an amount equal to 100% of Executive's Target
Annual Bonus multiplied by a fraction, the numerator of which is the number
of days in the fiscal year of the Company to which such Target Annual Bonus
relates during which Executive was employed by the Company, and the
denominator of which is 365, and (C) an amount equal to Executive's
supplemental benefit compensation accrued but unpaid through the date of
termination.
(ii) Within thirty (30) days after the date of Executive's
termination, the Company shall make a lump sum payment to Executive in an
amount equal to two (2) times the sum of (A) Executive's annual base salary
at the greater of the rate in effect at the time the Change in Control
occurred or the rate in effect when the notice of termination was given, plus
(b)Executive's Target Annual Bonus.
(iii) Within thirty (30) days after the date of a Change in Control,
the Company shall amend the Coachmen Industries, Inc. Retirement Plan & Trust
(the "401(k) Plan) to provide for full vesting of the Executive's account,
effective as of the date of the Change in Control; and, to provide for a
special matching contribution to be made on behalf of the Executive equal to
two (2) times the annual match that would be made for the Executive at the
rate Executive was deferring income into the 401(k) plan as of the date of
the Change in Control as if Executive had completed a full year of such
deferrals, but in any event not to exceed the amount that would satisfy the
401(k) Plan's actual contribution percentage nondiscrimination testing under
Section 401(m) of the Internal Revenue Code.
(iv) Any outstanding options to purchase stock of the Company held by
Executive as of the date of termination shall immediately vest and become
exercisable in full.
(v) The restrictions on any shares of restricted stock held by Executive
which have not yet terminated will terminate immediately.
(vi) Until the earlier of the third anniversary of the date of termination
or the date on which Executive becomes employed by a new employer, the
Company shall pay the reasonable costs of an outplacement service selected by
Executive and approved by the Company.
(vii) Until the earlier of the third anniversary of the date of termination
or the date on which Executive becomes employed by a new employer, the
Company shall, at its expense, provide Executive and Executive's family
members with medical, dental, life insurance, disability and accidental death
and dismemberment benefits at the highest level provided to Executive and
Executive's family members during the period beginning immediately prior to
the Change of Control and ending on the date of termination, provided,
however, that if Executive becomes employed by a new employer which maintains
a major medical plan that either (i) does not cover Executive and Executive's
family members with respect to a pre-existing condition which was covered
under the Company's major medical plan, or (ii) does not cover Executive and
Executive's family members for a designated waiting period, Executive's
coverage under the Company's major medical plan shall continue (but shall be
limited in the event of noncoverage due to a preexisting condition, to the
preexisting condition itself) until the earlier of the end of the applicable
period of noncoverage under the new employer's plan or the third anniversary
of the date of termination.
(viii) The Company shall pay any amounts previously deferred by Executive
pursuant to any deferred compensation plan or arrangement maintained by the
Company.
(b) The payments provided for under this Section 2 shall be in addition to
any non-severance compensation and benefits provided for under any of the
Company's employee benefit plans, policies and practices or under the terms
of any other contracts, but in lieu of any severance pay under any Company
employee benefit plan, policy and practice or under the terms of any other
contract including any employment contract.
3. Termination for Cause, Disability, and without Good Reason. No
compensation shall be payable under this Agreement in the event Executive's
employment with the Company is terminated by reason of (1) a termination by
the Company for Cause or for Disability, or (2) a termination by Executive
without Good Reason. For purposes of this Agreement:
(a) Disability. The Company may terminate Executive's employment for
"Disability" if, due to physical or mental illness or incapacity, Executive
shall not have performed his duties with the Company on a substantially
full-time basis for (i) six (6) consecutive months, or (ii) for a total of
180 days in any given period of twelve consecutive months, but only if
Executive shall not have returned to the full-time performance of his duties
with the Company during the thirty (30) day period following the delivery by
the Company of a written notice of termination for Disability.
(b) Cause. The Company may terminate Executive's employment for any reason
whatsoever at any time during the term of this Agreement, with or without
Cause. Any purported termination of employment by the Company for Cause
shall be communicated by a written notice of termination to Executive setting
forth in reasonable detail all of the facts and circumstances claimed to
provide a basis for such termination. If Executive disputes the existence of
Cause for any such termination, such termination shall not be considered
effective and Executive's rights under this Agreement (excluding his right to
terminate with Good Reason under Section 3(c) hereof) shall continue until
such dispute is finally determined, whether by mutual agreement by the
parties or upon final judgment, order or decree of a court of competent
jurisdiction (the time for appeal therefrom having expired and no appeal
having been perfected).
(c) Good Reason. Executive may terminate his employment at any time during
the term of this Agreement, with or without a Good Reason; provided however
that Executive may not terminate this Agreement for Good Reason during any
period in which Executive is contesting a termination of Executive's
employment by the Company for Cause. Executive's continued employment after
the expiration of 60 days from any action that would otherwise constitute
Good Reason shall constitute a waiver of rights with respect to such action
constituting Good Reason under this Agreement.
4. No Obligation To Seek Further Employment; Confidential Information.
(a) Executive shall not be required to seek other employment, nor shall the
amount of any payment provided for under this Agreement be reduced by any
compensation earned by Executive as the result of employment by another
employer after the date of termination, or otherwise. The Company's
obligations hereunder also shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against Executive. Payments to Executive pursuant to this
Agreement shall constitute the entire obligation of the Company for severance
pay and full settlement of any claim for severance pay under law or in equity
that Executive might otherwise assert against the Company or any of its
employees, officers or directors on account of Executive's termination. In
consideration for the protection and benefits provided for under this
Agreement, Executive hereby agrees to execute a release, substantially in the
form of Exhibit B hereto, of any claims for severance pay under law or in
equity that Executive might otherwise assert as described in the preceding
sentence.
(b) Following the date of termination, Executive shall not disclose to any
person, or use to the significant disadvantage of the Company or any of its
affiliates, any Confidential Information; provided that nothing contained in
this Section 4(b) shall prevent Executive from being employed by a competitor
of the Company or utilizing Executive's general skills, experience, and
knowledge, including those developed while employed by the Company.
(c) If a Change in Control of the Company shall have occurred while
Executive is still an employee of the Company, and Executive's employment
with the Company is terminated during the three (3) year period following the
date of such Change in Control by reason of a termination (1) by the Company
without Cause, or (2) by Executive with Good Reason, Executive shall thereby
be automatically released without the need of providing notice: from any
other agreement between Executive and the Company entered into before the
effective date of this Agreement that imposes any post-employment non-
competition or non-solicitation obligations on the Executive; and, from any
confidentiality obligations different from the foregoing Section 4(b);
including the Business Protection Agreement, and any Confidentiality
Agreement or Confidentiality, Conflict of Interest and Invention Agreement
between the Company and Executive.
5. Successors. The Company will require any successor or assign (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the Company, to assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession or
assignment had taken place. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor or assign to its
business and/or assets as aforesaid which executes and delivers the agreement
provided for in this Section 5 or which otherwise becomes bound by all the
terms and provisions of this Agreement by operation of law, or otherwise.
This Agreement shall inure to the benefit of and be enforceable by
Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive should
die while any amounts are still payable to him hereunder, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms
of this Agreement to Executive's estate.
6. Excise Taxes
(a) If it is determined (as hereafter provided) that any payment or
distribution by the Company to or for the benefit of the Executive, whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise pursuant to or by reason of any other agreement,
policy, plan, program or arrangement, including without limitation any stock
option, stock appreciation right or similar right, or the lapse or
termination of any restriction on or the vesting or exercisability of any of
the foregoing (a "Severance Payment"), would be subject to the excise tax
imposed by Section 4999 of the Code (or any successor provision thereto) by
reason of being "contingent on a change in ownership or control" of the
Company, within the meaning of Section 280G of the Code (or any successor
provision thereto) or to any similar tax imposed by state or local law, or
any interest or penalties with respect to such excise tax (such tax or taxes,
together with any such interest and penalties, are hereafter collectively
referred to as the "Excise Tax"), then the payments under this Agreement
shall be reduced until no portion of the payments are subject to the Excise
Tax; provided, however, that in the event the foregoing limitation applies,
any reduction in payments will not affect any payments hereunder which do not
constitute "parachute payments" within the meaning of Section 280G(b)(2) of
the Code. To comply with this provision, the Company and the Executive may
agree to reduce the amount permitted to be paid pursuant to this paragraph or
other payments and compensation which may be made subject to the provisions
of Section 280G of the Code. Notwithstanding the foregoing, the payments
shall not be reduced if the net after-tax benefit to the Executive resulting
from the receipt of all payments (without any reduction) exceeds the net
after-tax benefit to the Executive resulting from the receipt of payments
(after reduction).
(b) Subject to the provisions of Section 6(a) hereof, all determinations
required to be made under this Section 6, including whether an excise Tax
would be payable by the Executive, the amount of such Excise Tax, and whether
the payments hereunder should be reduced, shall be made at Company's expense
by the Company's independent auditors (the "Accounting Firm") used by the
Company prior to the Change in Control (or, if such Accounting Firm declines
to serve, the Accounting Firm shall be a nationally recognized firm of
certified public accountants selected by the Executive). The Accounting Firm
shall be directed by the Company or the Executive to submit its determination
and detailed supporting calculations to both the Company and the Executive
within 15 calendar days after the termination date, if applicable, and any
other such time or times as may be reasonably requested by the Company or the
Executive.
(c) The federal, state and local income or other tax returns filed by the
Executive, and any filing made by a consolidated tax group which includes the
Company, shall be prepared and filed on a basis consistent with the
determination of the Accounting Firm. The Executive shall make proper
payment of the amount of any Excise Tax payable, and at the request of the
Company, provide to the Company true and correct copies (with any
amendments) of his/her federal income tax return as filed with the Internal
Revenue Service and corresponding state and local tax returns, if any, as
filed with the applicable taxing authority, and such other documents
reasonably requested by the Company, evidencing such payment.
7. Miscellaneous.
(a) Amendments, Waivers. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed
to in writing signed by Executive and the Company. Except as otherwise
provided in Section 3(c) hereof, no waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition
or provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time.
(b) Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
(c) Confidentiality. Executive agrees that unless Executive is otherwise
required by law to disclose this Agreement, Executive will keep the existence
and terms of this Agreement completely confidential, and will not discuss the
terms, amount, or existence of this Agreement with anyone other than
Executive's spouse, attorneys or tax advisors, provided that these
individuals also keep the existence, terms, and amount of this Agreement
completely confidential.
(d) Fees and Expenses. Company shall pay all reasonable legal fees and
related expenses (including the reasonable costs of experts, evidence and
counsel), when and as incurred by Executive, as a result of contesting or
disputing any termination of employment of Executive following a Change in
Control, or enforcing the terms of this Agreement whether or not such contest
or dispute is resolved in Executive's favor but only if Executive was seeking
in good faith to obtain or enforce any right or benefit provided by this
Agreement or by any other plan or arrangement maintained by the Company under
which Executive is or may be entitled to receive benefits.
(e) Survival of Obligations. The obligations of Company under Sections 2
and 6 hereof shall survive the expiration of the term of this Agreement.
(f) Governing Law. The laws of Indiana shall be controlling in all matters
relating to this Agreement.
(g) Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not set forth expressly in
this Agreement and this Agreement shall supersede any and all prior
agreements, understandings or negotiations with respect to the subject matter
hereof.
(h) Non-Exclusivity of Rights. Except as explicitly modified by Section (b)
of this Agreement, nothing in this Agreement shall prevent or limit
Executive's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by Company and for which
Executive may qualify, nor shall anything herein limit or reduce such rights
as Executive may have under any other agreements with Company. Amounts which
are vested benefits or which Executive is otherwise entitled to receive under
any plan or program of Company shall be payable in accordance with such plan
or program.
(i) Employment. This Agreement applies, and is in full force and effect,
and is Fully enforceable against and binding upon Company, whether Executive
is employed by Company, or by any corporation, limited liability company,
or other legal entity owned or controlled by Company (the "Subsidiaries").
Prior to a Change in Control, Executive may be transferred by Company to any
one of its Subsidiaries, or may be deemed to be a loaned, shared or joint
employee of one or more of Company's Subsidiaries, and such transfer, loan,
sharing or joint employment occurring will not be or be deemed to be a
termination of this Agreement. Transfer subsequent to a Change in Control
without the prior written consent of Executive shall allow the Executive
to terminate his employment with Good Reason.
EXHIBIT A
DEFINITIONS
"Cause" shall mean Executive's:
(i) fraud, misappropriation, embezzlement or other willful and knowing act
of material misconduct against the Company or any of its affiliates;
(ii) substantial and willful failure to render services in accordance with
the terms of Executive's employment, provided that (A) a demand for
performance of services has been delivered to the Executive by the Board of
Directors of the Company at least 30 days prior to termination identifying
the manner in which such Board of Directors believes that the Executive has
failed to perform and (B) the Executive has thereafter failed to remedy such
failure to perform within thirty (30) days after delivery of such demand for
performance;
(iii) willful and knowing violation of any rules or regulations of any
governmental or regulatory body material to the business of the Company; or
(iv) conviction of or plea of nolo contendere to a felony.
"Change in Control" of the Company shall mean the occurrence of any of
the following:
(i) any "person" (as that term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, but excluding the Company, its affiliates,
any qualified or non-qualified plan maintained by the Company or its
affiliates, and any Passive Investor) becomes the "beneficial owner" (as
defined in Rule 13d-3 promulgated under such Act), directly or indirectly,
of securities of the Company representing more than 20% of the combined
voting power of the Company's then outstanding securities;
(ii) during a period of 24 months, a majority of the Board of Directors
of the Company ceases to consist of the existing membership or successors
nominated by the existing membership or their similar successors;
(iii) shareholder approval of a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity) more than sixty percent (60%) of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation; or
(iv) shareholder approval of either (A) a complete liquidation or
dissolution of the Company or (B) a sale or other disposition of all or
substantially all of the assets of the Company, or a transaction having
a similar effect.
For these purposes, "Passive Investor" shall mean any person who becomes
a beneficial owner of 20% or more of the combined voting power of the
Company's then outstanding securities solely because (A) of a change in the
aggregate number of voting shares outstanding since the last date on which
the person acquired beneficial ownership of any voting shares, or (B) (I)
the person acquired beneficial ownership of the shares based on calculations
correctly performed and using the Company's most current reports publicly
on file with the Securities and Exchange Commission which indicated that
acquisition of the shares would not cause the persons to become the
beneficial owner of 20% or more of the voting shares then outstanding,
and (II) the person had no notice or reason to believe that acquisition
of the shares would result in the person becoming the beneficial owner of
20% or more of the voting shares then outstanding, and (III) the person
sells a number of shares that reduced the person's beneficial ownership
of the voting shares to less than 20% of the voting shares outstanding
within ten (10) business days after receiving notice from the Company that
the 20% threshold had been exceeded.
"Confidential Information" means any non-public information relating
to the business plans, marketing plans, customers or employees of the Company
or any of its subsidiaries or affiliates other than information the
disclosure of which cannot reasonably be expected to adversely affect the
business of the Company or its subsidiaries or affiliates.
"Good Reason" shall mean any of the following which occurs subsequent
to a Change in Control of the Company without Executive's prior consent:
(i) any adverse change or reduction in Executive's authorities,
duties, or responsibilities (including reporting responsibilities); the
assignment to Executive of any duties or work responsibilities which are
inconsistent with such authorities or responsibilities; or any removal of
Executive from, or failure to reappoint or reelect him to any office;
(ii) a reduction in or failure to pay any portion of Executive's
Annual Base Salary or annual bonus (except for failure to meet reasonable
conditions for receipt of the bonus) as in effect on the date of the Change
in Control or as the same may be increased from time to time thereafter;
(iii) the failure by Company to provide Executive with compensation and
benefits (including, without limitation, incentive, bonus and other
compensation plans and any vacation, medical, hospitalization, life
insurance, dental or disability benefit plan), or cash compensation in lieu
thereof, which are, in the aggregate, no less favorable than those provided
by Company to Executive immediately prior to the occurrence of the Change in
Control, other than an isolated, immaterial, and inadvertent failure not
taken in bad faith and which are remedied by the Company promptly after
receipt of a reasonable written notice thereof given by Executive;
(iv) any material breach by Company of any provision of this Agreement;
(v) Executive being required to relocate to a principal place of employment
more than fifty (50) miles from his current place of employment; or
(vi) the failure of Company to obtain a satisfactory agreement from any
successor or assign of Company to assume and agree to perform this Agreement,
as required in Section 5 hereof; or
"Target Annual Bonus" shall mean the bonus Executive could have earned under
the Company's bonus program for senior management for the fiscal year of the
Company in which his date of termination occurs. For the fiscal and calendar
year 2001, and for subsequent years so long as the variously called "Annual
Bonus Incentive Plan for Management" or "Executive Annual Performance
Incentive Plan" (the "Plan") approved by the Board of Directors of the
Company at its October, 2000 Board Meeting is in effect before a Change in
Control, the "Target Annual Bonus" as used in this Agreement is: the "Target
Bonus Level" under the Plan, which is the Bonus to be awarded the Executive
as if 100% of the Performance Metrics (as defined in the Plan) targets set
for the Executive were achieved; plus such additional amount, if any, as the
Compensation Committee of the Board of Directors in its discretion shall
award based on the circumstances as of the Change in Control; provided that
the total of the Target Bonus Level and such additional amount shall not
exceed the Ultimate, or maximum Bonus, that could be earned by the Executive
under the Plan if the Performance Metrics targets were exceeded by 140%.
Exhibit 21
Registrant and Subsidiaries of the Registrant
Percent of Voting
State of Securities Owned
Incorporation By the Registrant
Coachmen Industries, Inc. (Registrant) Indiana 100%
COA Recreational Vehicle Group, Inc. Indiana 100%
Coachmen Recreational Vehicle Company, Inc. Indiana 100%
Southern Ambulance Builders, Inc. Georgia 100%
Georgie Boy Mfg, Inc. Indiana 100%
GBMD, Inc. Indiana 100%
Viking Recreational Vehicles, Inc. Michigan 100%
Northwoods RV Country, Inc. (Inactive) Michigan 100%
Shasta Industries, Inc. Indiana 100%
Michiana Easy Livin' Country, Inc. Indiana 100%
Colfax Country RV, Inc. North Carolina 100%
Consolidated Housing and
Building Systems, LLC Indiana 100%
All American Homes, Inc. Indiana 100%
All American Homes of Indiana, Inc. Indiana 100%
All American Homes of Ohio, Inc. Ohio 100%
All American Homes of Iowa, Inc. Iowa 100%
All American Homes of North Carolina, Inc. North Carolina 100%
All American Homes of Tennessee, Inc. Tennessee 100%
Mod-U-Kraf Homes, Inc. Virginia 100%
Miller Building Systems, Inc. Delaware 100%
Miller Building Systems of Indiana, Inc. Indiana 100%
Miller Building Systems
of Pennsylvania, Inc. Indiana 100%
Miller Building Systems
of South Dakota, Inc. South Dakota 100%
Miller Construction Services, Inc. Indiana 100%
United Structures, Inc. New York 100%
Miller Building Systems
of Kansas, Inc. (Inactive) Kansas 100%
P.M.E. Pacific Systems, Inc. (Inactive) California 100%
Consolidated Business Development, Inc. Indiana 100%
Prodesign, Inc. Indiana 100%
Coachmen Technical Services, Inc. Indiana 100%
Coachmen Transportation, Inc. Indiana 100%
Coachmen Aviation, Inc. Indiana 100%
Coachmen Administrative Services, Inc. Indiana 100%
Coachmen Financial Services, Inc. Delaware 100%
COA Finance Company, LTD Bermuda 100%
Coachmen Foreign Sales Corporation U.S. Virgin
Islands 100%
Coachmen Properties, Inc. Indiana 100%
Coachmen Industries of Texas, Inc. Texas 100%
Coachmen Industries of California, Inc. California 100%
Rover Industries, Inc. Ohio 100%
Clarion Motors Corporation (Inactive) Indiana 100%
Coachmen Casualty
Insurance Company (Inactive) Arizona 100%
Gulf Coast Easy Livin' Country, Inc. Florida 100%
Coachmen Industries of Oregon, Inc. Oregon 100%
Coachmen Properties of Georgia, Inc. Georgia 100%
Exhibit 23
(Letterhead of PricewaterhouseCoopers LLP)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statements of Coachmen Industries, Inc. on Form S-8 (File No. 333-52378,
No. 33-59251, No. 2-45373, No. 2-47923, No. 2-56027 and No. 2-64572) and
in the related Prospectus of our report dated February 2, 2001 (except for
information in Note 6, for which the date is February 9, 2001, and Note 14,
for which the date is February 12, 2001), on our audits of the consolidated
financial statements and financial statement schedule of Coachmen
Industries, Inc. and subsidiaries at December 31, 2000 and 1999,
and for each of the three years in the period ended December 31, 2000,
which report is included in this Annual Report on Form 10-K.
------------------------------
PricewaterhouseCoopers LLP
South Bend, Indiana
March 28, 2001