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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
[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
[ ] 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 000-25939
THE KELLER MANUFACTURING COMPANY, INC.
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(Exact name of registrant as specified in its charter)
INDIANA 35-0435090
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
701 N. WATER ST.
CORYDON, INDIANA 47112
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(Address of principal executive offices) (Zip Code)
812-738-2222
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Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock - No
Par Value
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 filing requirements
for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K [X]
The aggregate market value of common stock, (the only class of equity
outstanding), held by non-affiliates of the Registrant based on the closing
price of the common shares of $3.75 as of February 28, 2001 was approximately
$21,038,089 The number of shares outstanding of the registrant's common stock as
of February 28,2001 was 5,610,157
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 2000 Annual Report to Shareholders are incorporated by reference
into Parts I, II and IV. Portions of the definitive Proxy Statement dated March
27, 2001 to be delivered to shareholders in connection with the Annual Meeting
of Shareholders to be held April 27, 2001 are incorporated by reference into
Part III.
TABLE OF CONTENTS
Number Page
- ------ ----
PART I
ITEM 1 Business 3
ITEM 2 Properties 7
ITEM 3 Legal Proceedings 7
ITEM 4 Submission of Matters to a Vote of Security Holders 7
PART II
ITEM 5 Market for Registrant's Common Equity and Related 8
Stockholder Matters
ITEM 6 Selected Financial Data 8
ITEM 7 Management's Discussion and Analysis of Financial 8
Conditions and Results of Operations
ITEM 8 Financial Statements and Supplementary Data 8
ITEM 9 Changes in the Disagreements with Accountants on 8
Accounting and Financial Disclosures
PART III
ITEM 10 Directors and Executive Officers of the Registrant 9
ITEM 11 Executive Compensation 9
ITEM 12 Security Ownership of Certain Beneficial Owners 9
And Management
ITEM 13 Certain Relationships and Related Transactions 9
PART IV
ITEM 14 Exhibits, Financial Statement Schedules and Reports 10
On Form 8-K
Signatures 11
- 2 -
PART I
Item Form 10-K Annual Report (the "Report") contains certain statements
that are "forward-looking statements" within the meaning of Section 27A of
the Securities Act of and Section 21E of the Securities Exchange Act of
1934, as amended. Those statements appear in a number of places in this
Report and may include statements regarding the intent, belief or current
expectations of the Company or its officers with respect to (i) the
Company's strategic plans, (ii) the policies of the Company regarding
capital expenditures, financing and other matters, and (iii) industry
trends affecting the Company's financial condition or results of
operations. Readers of this Report are cautioned that reliance on any
forward-looking statement involves risks and uncertainties. Although The
Keller Manufacturing Company, Inc. (the "Company") believes that the
assumptions on which the forward-looking statements contained herein are
based 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 1. BUSINESS
GENERAL DEVELOPMENT OF BUSINESS
The Company history dates back to 1866 when the "Keller Store" in Corydon,
Indiana was established. From that time, the operation entered into various
businesses, including running an electrical light plant, manufacturing spokes
for farm wagons, operation in a hub-mill, farm wagon production, building barns,
producing wooden porch furniture, wooden truck bodies and refrigerator boxes, as
well as making end tables, magazine racks, chair parts - and by 1933, a drop
leaf table. The Company was incorporated in 1906 under the laws of the State of
Indiana.
Over 300,000 wagons were built from 1901-1912. In 1942, however, the invention
of the farm tractor made the Keller wagon obsolete thereby causing the Company
to end its wagon production. In late 1943, the Company developed household
furniture, including breakfast room suites and dinettes. In the early 1960's,
Keller introduced its first bedroom group. A new plant was built at Culpeper,
Virginia in 1965 and a third plant was built in 1973 at new Salisbury, Indiana.
In 1979, the Company leased four trucks and trailers to deliver furniture
directly to their furniture dealers. In 1996, the Company formed Keller
Dedicated Trucking, Inc. ("Keller Trucking"). A wholly owned subsidiary of the
Company. Its primary function is to provide delivery services for the Company.
Keller Trucking also transfers materials between plants, provides delivery for
some purchased merchandise and provides backhaul services for other companies
when available. Keller Trucking operated 22 trucks in 2000 which delivered
approximately 80% of the Company's finished products
NARRATIVE DESCRIPTION OF BUSINESS
The Company designs and manufactures various styles of solid wood dining room
and bedroom furniture using lumber which it has kiln dried at its facilities.
The Company dedicates certain production facilities to specific product lines
and generally manufactures products in response to customer orders. The dining
room furniture consists of chairs, tables, chinas, buffet/hutches and servers.
The primary items manufactured for the bedroom are chests, dressers,
nightstands, beds, entertainment decks, mirrors and entertainment centers. There
are eight different product lines made of oak, one line made of cherry, and one
of maple (the Company commonly refers to product lines as "groups" and the terms
will be used interchangeably herein). Another product line was introduced in the
Fall of 1998. This line is a product licensed by the PGA TOUR(R) ("PGA TOUR) and
is marketing as such. The licensing agreement between the PGA TOUR and the
company gives the Company an exclusive license with respect to its bedroom,
dining room and casual dining furniture and a nonexclusive license with respect
to its occasional furniture to use the verbiage "PGA TOUR" and "SENIOR PGA TOUR"
and the graphics associated with this verbiage in the design of said furniture.
The sale of the licensed products is limited to the United States, its
territories and possessions and the Commonwealth of Puerto Rico. The term of the
license extends to December 3, 2001, subject to certain events of default which
will grant the PGA TOUR the right of termination and subject to the Company's
option for an additional three year term subject to agreement of the parties and
the Company's satisfactory performance under the terms of the license. The PGA
TOUR group is an antique English style made of oak. The group is priced slightly
higher than other groups offered due to the royalty fees required for the PGA
TOUR licensing. The signature product for the group is a golf locker.
- 3 -
Keller's newest product line is, "TRANSITIONS", introduced at the High Point
October 2000 Market. Mixing elements of Shaker and Missions together with
Contemporary lines, our Transitions collection will allow the retailer to
display several very active style categories with one group. Transitions has
been the most successful introduction, with approximately $2.5 million orders
written at market. Shipments of the new group are expected to start around the
middle of March 2001.
We have also expanded into occasional offerings of our best-selling Dining and
Bedroom Groups; Chestnut Creek's Occasional Group, PGA Tour Home Collection, and
Casual Cherry Dining Collection, these collections combine solid wood with
wrought iron.
The Company's products are sold primarily in the middle to upper-middle price
range. Net sales from Bedroom Furniture, over the past three years, have
exceeded net sales from Dining Room Furniture. Bedroom Furniture Sales increased
from 51.1% in 1997 to 51.5% in 1998 and 51.6% in 1999, however in 2000 Bedroom
Furniture Sales decreased to 49.8% with Dining Room Sales at 48.0% and
Occasional Furniture at 1.2% of total Net Sales. The sales for Occasional
Furniture were approximately 3.6% of total Net Sales in 1999. In 2000, the
Bedroom Furniture ranged in price from $1,699 to $4,999. Dining Room Sets ranged
from $1,299 to $4,999.
The Company sells its products nationwide through an exclusive sales force of
commissioned employees to approximately 1,600 national, regional and local
furniture chains, independent furniture retailers and warehouse showrooms.
According to Furniture Design & Manufacturing Magazine, Keller Manufacturing was
ranked 106th in sales among furniture manufacturers in North America in 1999.
The Company's Multi-Media Plan is a pre-established fund used to advertise and
promote the Company's products. The Multi-Media Plan is budgeted for
approximately $1,355,000 in 2001 and is included in the Company's advertising
budget. The Company also promotes its products at the International Home
Furnishings Center at High Point, North Carolina by leasing showroom space to
display its products at home furnishings trade shows. Keller will be dropping
its sponsorship with the PGA TOUR in March 2001. However, Keller will keep its
licensing agreement with the PGA TOUR and continue to produce the PGA TOUR line.
RAW MATERIALS
The Company purchases lumber from approximately 50 suppliers with no single
supplier representing over 10% of purchases. There has been no difficulty
experienced in obtaining lumber. Material prices had declined in 1999 compared
to 1998. There are three primary grades of hardwood: #1, #2 and #3. #1 is the
highest quality with the least defects while #3 has the greatest number of
defects. The Company purchases #2 grade lumber, cuts out any defects and uses
this refined #2 in its manufacturing process. This practice allows the company
to manufacture furniture of comparable quality to furniture made from #1 grade
lumber but on a more cost efficient basis. The cost of lumber increased in 2000
with Cherry Lumber increasing approximately 40%. The cost of lumber is expected
to decline during 2001. For the first half of 2001 the purchase of lumber is
being reduced in order to lower inventory. The purchase of lumber during the
year will depend on the Company's orders received from our customers.
- 4 -
PATENTS, TRADEMARKS, LICENSES OR FRANCHISES
The Company currently holds no patents or franchises. The Company does have a
licensing agreement with the PGA TOUR. The Company Logo was changed in 2000 to
"KELLER FURNITURE", replacing the old Company Logo after approximately forty
years. The new Logo is not considered to provide any financial benefit to the
Company. The Logo was changed for trade and consumer purposes only.
SEASONAL EFFECTS
In previous years the company has experienced some seasonal effects on sales.
The slowest period for sales has traditionally been the second quarter. However,
in 2000 and 1999 the slowest period for sales was the fourth quarter. And while
the third quarter has traditionally been the strongest quarter for sales, in
2000 and 1999 the first quarter was the strongest. This was due in part to the
orders taken on new introductions in 3rd and 4th quarters and shipped in the
first quarter of 2000 and 1999. The economy and consumer confidence will have a
large effect on how strong or weak sales will be in 2001.
WORKING CAPITAL
The furniture manufacturing industry has no standard guideline for carrying
working capital and the Company does not require its retailers to maintain
minimum working capital. The Company meets dealer demand by scheduling cut
packages based on current and estimated sales mixes with high volume dealers
receiving priority on quick shipment of merchandise.
The Company offers extended payment terms to customers for damaged items that
are repairable. Each retailer is provided a list of items that are deemed
replaceable and will be given an allowance for shop time to repair. Usually, any
defect to merchandise that would require larger than a 25% discount will be
returned to the Company. Since the Company has its own trucking subsidiary, it
is better equipped than the industry in general to receive returned merchandise
on a cost-effective basis. Due to the high shipping costs by outside sources,
most of the industry offers discounts for dealers to keep defective merchandise.
CUSTOMERS
- ---------
The Company's ten largest customers accounted for approximately 40% of its net
sales in 2000. The Company's largest customer, Haverty's Furniture ("Havertys"),
accounted for approximately 16% of the Company's net sales in 2000. The loss of
Havertys or another large customer could have a material adverse effect on the
Company. Orders decreased approximately $259,000 in 2000 due primarily to
economic downturn.
BACKLOG
- -------
Backlog orders believed to be firm as of December 31, 2000 were approximately
$1,844,000 compared to $8,508,000 in 1999 and $6,286,000 in 1998. Backlog was
reduced to lower than usual due to slow down in fourth quarter economy.
Currently, all orders placed with the Company will be filled and shipped as
ordered within four weeks. The Company does, however, allow modification or
cancellations of orders up to the time the product is loaded for shipment. A
cancellation at such a late stage is subject to a monetary penalty and occurs
only infrequently.
- 5 -
COMPETITION
- -----------
As the Company continues to expand its product line, it becomes more difficult
to identify a specific competitive market. The Company currently manufactures
and competes in lines of bedroom, dining room and occasional furniture, and
sells to retailers nationwide. The Company's products fall in the middle to
upper-middle price line. The company's direct competitors include Kincaid
Furniture Co. ("Kincaid"), Cochrane Furniture ("Cochrane"), Sumter Cabinet co.
("Sumter"), Mobel, Inc. ("Mobel"), Durham Furniture, Inc. ("Durham"), Richardson
Brothers Co. ("Richardson Brothers") and Kimball Furniture ("Kimball"). Kincaid
is considered the Company's most direct competitor, and its dining, bedroom and
occasional groups are the strongest competing products against the Company's
product lines. Cochrane and Sumter are the next most competitive companies. They
both compete in the dining and bedroom categories. Cochrane is strongest in
dining room lines and Sumter is strongest in the bedroom lines. Both Mobel and
Durham compete directly with the Company in bedroom lines. Richardson Brothers
and Kimball both offer lines in dining room and bedroom categories but don't
offer the number of products within these groups as the aforementioned direct
competitors.
There is a growing number of import furniture from China. Mostly it is made up
of promotional and is a veneered product. Although it's not direct competition,
imports have taken more floor and warehouse space. Keller has launched a
National Floor Sales Training Campaign to get all retail floor sales people to
differentiate us vs. imports.
There are three primary methods of competition in the furniture manufacturing
industry:
1. Product Quality
2. Price; and
3. Customer Service.
The Company has several attributes, which it believes, when combined, afford it
a competitive advantage. The Company specializes in dining room and bedroom
furniture made of solid wood. Solid Wood furniture is considered higher quality
than furniture made from composite materials. This is a valuable marketing tool
in selling to consumers. Moreover, the Company applies a protective finish to
its products, which is more durable than that of most of its competitors. The
company's products are priced competitively for high quality furniture and the
range of retail prices available for various product lines makes its products
available to a wide range of customers. The Company also believes it is
positioned to effectively compete in customer service areas. The company's
entire product lines may be made available currently in four weeks. Products are
cut based on demand, which also improves the average delivery time. Moreover,
the company manufactures most of its own parts and dries all of its own lumber.
All bending for chairs, headrests and bows are also processed internally.
Finally, Keller Trucking delivers 80% of the Company's merchandise which is
shipped. This allows the furniture to be delivered faster and at a lower cost
than using outside resources. These factors allow the company to produce quality
furniture at competitive prices.
RESEARCH AND TECHNICAL DEVELOPMENT
The Company's expenditures on research and development activities can be broken
down into two categories, product development and tooling. Product development
consists of research and design, with some design being outsourced. Tooling
entails the purchase of tools, patterns, equipment and labor associated with the
introduction of a new group. Product Development expenses for 1998, 1999, and
2000 have been approximately $52,000, $99,000 and $73,000, respectively. Product
Development costs increased to $99,000 for 1999 due to an arrangement for the
Product Designer receiving a percentage for all PGA TOUR GROUP Orders. Because
of decline in PGA Orders in 2000 product developments costs were reduced to
approximately $73,000.
- 6 -
The tooling cost over the past four years including 1997, 1998, 1999 and 2000
were approximately $273,000, $386,000, $275,000, and $282,000, respectively.
Tooling cost in the future could remain about the same or decline due to more
furniture parts being outsourced, requiring no tooling cost for those parts.
ENVIRONMENTAL MATTERS
The Company has made no material expenditures in 2000 due to fines or corrective
actions for environmental violations at any of its facilities through 2000. A
project has been completed in 2000 to install a new dust collection system at
the Corydon, Indiana facility intending to eliminate any potential OSHA
violations for dust particles in the Mill Departments. This system reduces the
amount of solids found in the water drainage, and keeps the company within the
city of Corydon's Water Department's standards. Both the Corydon's Water
Department's standards. Both the Corydon and New Salisbury facilities have been
granted air permits from the State of Indiana and the Culpeper facility has
applied for an air permit from Virginia.
EMPLOYEES
The Company employed 721 individuals as of December 31, 2000, consisting of 606
hourly employees, 83 salaried employees, 23 salesmen and nine executive
officers. None of the employees belong to a labor union. The Company believes
its relations with its employees are good.
ITEM 2. PROPERTIES
The following table sets forth certain information concerning the Company's
manufacturing facilities: All manufacturing facilities and properties listed
below are owned by the Company.
Approximate Size
----------------
Location Description In Sq. Ft. Acres
-------- ----------- ---------- -----
Corydon, Indiana Corporate Office 236,681 63.07
and Manufacturing
New Salisbury, Indiana Manufacturing 203,004 91.39
Culpeper, Virginia Manufacturing 185,660 60.18
The Corydon, Indiana plant is the original facility that the Company has
operated since its incorporation in 1906. In 1966, the Culpeper, Virginia plant
was built, and its twin plant in New Salisbury, Indiana was built in 1974. In
2000, we have increased the shipping capacity by 18,000 Sq. Ft. at our New
Salisbury plant. The Company, as a whole, at the end of 2000, was estimated to
be at 100% capacity for a single shift, 65% for a double shift.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in routine litigation incidental to the conduct of its
business. The Company believes that the outcome of these routine matters will
not have a material adverse effect on its business, operations or financial
condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders of the Company during
the fourth quarter of 2000.
- 7 -
Part II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information set forth on page 8 of the 2000 Annual Report to Shareholders is
incorporated herein by reference as filed herewith as Exhibit 13.01.
ITEM 6. SELECTED FINANCIAL DATA
The information set forth on Page 1 of the 2000 Annual Report to Shareholders is
incorporated herein by reference and is filed herewith as Exhibit 13.01.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information set forth on pages 2-8 of the 2000 Annual Report to Shareholders
is incorporated herein by reference as filed herewith as Exhibit 13.01.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements for the Company and independent auditors
report set forth on pages 9-21 of the 2000 Annual Report to Shareholders is
incorporated herein by reference and is filed herewith as Exhibit 13.01.
o Independent Auditor's Report
o Consolidated Balance Sheets as of December 31, 2000 and 1999
o Consolidated Statements of Income for the three years ended December
31, 2000
o Consolidated Statements of Stockholders' Equity for the three years
ended December 31, 2000
o Consolidated Statements of Cash Flows for the three years ended
December 31, 2000
o Notes to Consolidated Financial Statements
ITEM 9. CHANGES IN DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
There have been no disagreements with the Company's independent auditors on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure or any reportable events.
- 8 -
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to Directors may be found under the caption "Directors
and Executive Management Officers" on pages 4-6 of the Company's Proxy Statement
dated March 27, 2001, for the Annual Meeting of Shareholders to be held on April
27, 2001 (the "Proxy Statement"). Such information is incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION
The information in the Proxy Statement set forth under the caption "Executive
Compensation" on page 7 is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth in the Proxy Statement under the caption "Security
Ownership of Certain Beneficial Owners and Management" on pages 3 and 4 are
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
- 9 -
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report.
(1) The financial statements set forth under Item 8 of this report on
Form 10-K are incorporated herein by reference.
Location in 10-K
----------------
Independent Auditor's Report Item 8
Consolidated Balance Sheets as of December 31, 2000 and 1999 Item 8
Consolidated Statements of Income for the three years
ended December 31, 2000 Item 8
Consolidated Statements of Stockholders' Equity for the
three years ended December 31, 2000 Item 8
Consolidated Statements of Cash Flows for the three years
ended December 31, 2000 Item 8
Notes to Consolidated Financial Statements Item 8
(2) Financial Statement Schedule
Schedules for the year ended December 31, 2000 and 1999 are
included herein.
II. VALUATION AND QUALIFYING ACCOUNTS
All other schedules are omitted, as the required information is
inapplicable or the information is presented in the consolidated
financial statements or the related notes.
(3) Exhibits
See the Index to Exhibits on page 12 of this Form 10-K.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during fourth quarter of the
Company's fiscal year.
- 10 -
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.
THE KELLER MANUFACTURING COMPANY, INC.
By /s/ Steven W. Robertson
------------------------------------
Steven W. Robertson
President and Chief Executive Officer
March 28, 2001
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 and on the dates indicated.
/s/ Steven W. Robertson President, Chief Executive Officer
- --------------------------------- and Director
Steven W. Robertson March 28, 2001
/s/ Robert W. Byrd Chairman and Director
- --------------------------------- March 28, 2001
Robert W. Byrd
/s/ Danny L. Utz Vice President-Finance
- --------------------------------- (Principal Financial and Accounting
Danny L. Utz Officer) and Director
March 28, 2001
/s/ Scott A. Armstrong Director
- --------------------------------- March 28, 2001
Scott A. Armstrong
/s/ Ronald W. Humin Director
- --------------------------------- March 28, 2001
Ronald W. Humin
/s/ Philip L. Jacobs Director
- --------------------------------- March 28, 2001
Philip L. Jacobs
/s/ Marvin C. Miller Director
- --------------------------------- March 28, 2001
Marvin C. Miller
/s/ John C. Schenkenfelder Director
- --------------------------------- March 28, 2001
John C. Schenkenfelder
/s/ Bradford T. Ray Director
- --------------------------------- March 28, 2001
Bradford T. Ray
- 11 -
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS THE KELLER MANUFACTURING
COMPANY, INC.
Col. A Col. B Col. C Col. D Col. E
BALANCE AT CHARGED TO COLLECTION ON DEDUCTIONS BALANCE AT
BEGINNING COSTS & WRITTEN OFF (BAD DEBTS END OF
DESCRIPTION OF PERIOD EXPENSES ACCTS. WRITE OFFS) PERIOD
----------- --------- -------- ------ ----------- ------
YEAR ENDED DECEMBER 31, 2000
Deducted from asset accts ................$257,118 $199,516 $ --- $235,506 $121,128
Allowance for doubtful accounts
YEAR ENDED DECEMBER 31, 1999
Deducted from asset accts ................$291,450 $ --- $ 2,875 $ 37,207 $257,118
Allowance for doubtful accounts
YEAR ENDED DECEMBER 31, 1998
Deducted from asset accts ................$336,716 $ --- $ 119 $ 45,385 $ 29,450
Allowance for doubtful accounts
- 12 -
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
The Keller Manufacturing Company, Inc.
Corydon, Indiana
We have audited the consolidated financial statements of The Keller
Manufacturing Company, Inc. and subsidiary (the Company) as of December 31, 2000
and 1999, and for each of the three years in the period ended December 31, 2000,
and have issued our report thereon dated February 21, 2001; such financial
statements and report are included in your 2000 Annual Report to Stockholders
and are incorporated herein by reference. Our audits also included the financial
statement schedule of the Company, listed in Item 14. This financial statement
schedule is the responsibility of the Company's management. Our responsibility
is to express an opinion based on our audits. In our opinion, such financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
DELOITTE & TOUCHE LLP
February 21, 2001
Louisville, Kentucky
- 13 -
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
- ------ ----------------------
3.01 Restated Articles of Incorporation of the Company
(Incorporated by reference to Exhibit 3.01 to the Company's
Amendment number 2 Form 10 filed July 23, 1999, File No.
000-25939).
3.02 Articles of Amendment of the Restated Articles of
Incorporation of the Company (Incorporated by reference to
Exhibit 3.02 to the Company's Amendment number 2 Form 10,
filed July 23, 1999, File No. 000-25939).
3.03 Articles of Amendment of the Restated Articles of
Incorporation of the Company (Incorporated by reference to
Exhibit 3.03 to the Company's Amendment number 2 Form 10,
filed July 23, 1999, File No. 000-25939).
3.04 Bylaws of the Company (Incorporated by reference to Exhibit
3.04 to the Company's Amendment number 2 Form 10, filed July
23, 1999, File No. 000-25939).
4.01 Form of Shareholders Rights Agreement, dated as of December
18, 1998, by and between the Company and J.J.B. Hilliard,
W.L. Lyons, Inc. as Rights Agent (Incorporated by reference
to Exhibit 4.01 to the Company's Amendment number 2 Form 10,
filed July 23, 1999, File No. 000-25939).
4.02 See Article IV of the Restated Articles of Incorporation of
the Company found in Exhibit 3.01 (Incorporated by reference
to Exhibit 4.02 to the Company's Amendment number 2 Form 10,
filed July 23, 1999, File No. 000-25939).
4.03 See Article II of the Bylaws of the Company found in Exhibit
3.04 (Incorporated by reference to Exhibit 4.03 to the
Company's Amendment number 2 Form 10, filed July 23, 1999,
File No. 000-25939).
10.01 Form of "Lease of Space in International Home Furnishings
Center" dated as of May 1, 1999, by and between the Company
and International Home Furnishings Center, Inc.
(Incorporated by reference to Exhibit 10.01 to the Company's
Amendment number 2 Form 10, filed July 23, 1999, File No.
000-25939).
10.02 Form of Lease Agreement by and between 1355 Market Street
Associates, L.P. d/b/a San Francisco Mart and the Company.
(Incorporated by reference to Exhibit 10.02 to the Company's
Amendment number 2 Form 10, filed July 23, 1999, File No.
000-25939).
- 14 -
10.03 Form of "Effective Management Systems, Inc. Software
License, Professional Services and Support Purchase
Agreement" dated as of July 6, 1998, by and between the
Company and Effective Management Systems, Inc. (Incorporated
by reference to Exhibit 10.03 to the Company's Amendment
number 2 Form 10, Filed July 23, 1999, File No. 000-25939).
Form of "Lease Agreement" by and between the Company and
10.05 Trailer Leasing Company. (Incorporated by reference to
Exhibit 10.05 to the Company's Amendment number 2 Form 10,
filed July 23, 1999, File No. 000-25939).
10.06 Form of "Ryder Truck Rental, Inc. Truck Lease and Service
Agreement" by and between the Company and Ryder Truck
Rental, Inc. with accompanying schedules (Incorporated by
reference to Exhibit 10.06 to the Company's Amendment number
2 Form 10, filed July 23, 1999, File No. 000-25939)
10.07 Schedules to Exhibits 10.04 and 10.05. (Incorporated by
reference to Exhibit 10.07 to the Company's Amendment number
2 Form 10, filed July 23, 1999, File No. 000-25939).
10.08 The Keller Manufacturing Company, Inc. Craftsman Stock
Option Plan (Incorporated by reference to Exhibit 10.08 to
the Company's Amendment number 2 Form 10, filed July 23,
1999, File No. 000-25939).
10.09 The Keller Manufacturing Company, Inc. Board of Directors'
Stock Bonus Awards Plan (Incorporated by reference to
Exhibit 10.09 to the Company's Amendment number 2 Form 10,
filed July 23, 1999, File No. 000-25939).
10.10 The Keller Manufacturing Company, Inc. Incentive Program for
Executive Personnel (Incorporated by reference to Exhibit
10.10 to the Company's Amendment number 2 Form 10, filed
July 23, 1999, File No. 000-25939).
10.11 License Agreement by and between the Company and PGA TOUR
Licensing (Incorporated by reference to Exhibit 10.11 to the
Company's Amendment number 2 Form 10, filed July 23, 1999,
File No. 000-25939).
10.12 Sponsorship Agreement by and between the Company and PGA
TOUR, Inc. (Incorporated by reference to Exhibit 10.12 to
the Company's Amendment number 2 Form 10, filed July 23,
1999, File No. 000-25939).
13.01 2000 Annual Report.
21.01 Subsidiaries of Company
23.01 Consent of Deloitte & Touche LLP Independent Auditors.
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