DREW INDUSTRIES Inc (Form: 10-K, Received: 02/29/2016 16:34:46)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)



☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2015



☐	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 001-13646

DREW INDUSTRIES INCORPORATED

(Exact name of registrant as specified in its charter)



Delaware		13-3250533
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

3501 County Road 6 East		46514
Elkhart, Indiana		(Zip Code)
(Address of principal executive offices)

(574) 535-1125

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:




Title of each class		Name of each exchange on which registered
Common Stock, $.01 par value		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232-405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.) Yes ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229-405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12(b)-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐

Non-accelerated filer ☐ (Do not check if a smaller reporting company) Smaller reporting company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter was $1,332,983,449. The registrant has no non-voting common equity.

The number of shares outstanding of the registrant’s common stock, as of the latest practicable date ( February 15, 2016 ) was 24,380,291 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Proxy Statement with respect to the 2016 Annual Meeting of Stockholders to be held on May 26, 2016 is incorporated by reference into Items 10, 11, 12, 13 and 14 of Part III.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains certain “forward-looking statements” with respect to our financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive position, growth opportunities, acquisitions, plans and objectives of management, markets for the Company’s Common Stock and other matters. Statements in this Form 10-K that are not historical facts are “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, and involve a number of risks and uncertainties.

Forward-looking statements, including, without limitation, those relating to the Company’s future business prospects, net sales, expenses and income (loss), cash flow, and financial condition, whenever they occur in this Form 10-K are necessarily estimates reflecting the best judgment of the Company’s senior management at the time such statements were made. There are a number of factors, many of which are beyond the Company’s control, which could cause actual results and events to differ materially from those described in the forward-looking statements. These factors include, in addition to other matters described in this Form 10-K, pricing pressures due to domestic and foreign competition, costs and availability of raw materials (particularly steel, steel based components and aluminum) and other components, seasonality and cyclicality in the industries to which we sell our products, availability of credit for financing the retail and wholesale purchase of products for which we sell our components, inventory levels of retail dealers and manufacturers, availability of transportation for products for which we sell our components, the financial condition of our customers, the financial condition of retail dealers of products for which we sell our components, retention and concentration of significant customers, the costs, pace of and successful integration of acquisitions and other growth initiatives, availability and costs of labor, employee benefits, employee retention, realization and impact of efficiency improvements and cost reductions, the successful entry into new markets, the costs of compliance with environmental laws and increased governmental regulation and oversight, information technology performance and security, the ability to protect intellectual property, interest rates, oil and gasoline prices, the impact of international, national and regional economic conditions and consumer confidence on the retail sale of products for which we sell our components, and other risks and uncertainties discussed more fully under the caption “Risk Factors” in this Annual Report on Form 10-K, and in our subsequent filings with the Securities and Exchange Commission. The Company disclaims any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law.

DREW INDUSTRIES INCORPORATED

TABLE OF CONTENTS



		Page
PART I –

	ITEM 1 - BUSINESS	5

	ITEM 1A - RISK FACTORS	11

	ITEM 1B - UNRESOLVED STAFF COMMENTS	16

	ITEM 2 - PROPERTIES	16

	ITEM 3 - LEGAL PROCEEDINGS	19

	ITEM 4 - MINE SAFETY DISCLOSURES	19

PART II –

	ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	20

	ITEM 6 - SELECTED FINANCIAL DATA	21

	ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	21

	ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	39

	ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	40

	ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	71

	ITEM 9A - CONTROLS AND PROCEDURES	71

	ITEM 9B - OTHER INFORMATION	72

PART III –

	ITEM 10 - DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	72

	ITEM 11 - EXECUTIVE COMPENSATION	72



	ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	72

	ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	72

	ITEM 14 - PRINCIPAL ACCOUNTING FEES AND SERVICES	73

PART IV –

	ITEM 15 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES	73

SIGNATURES		77

EXHIBIT 23 - CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

EXHIBIT 31.1 - SECTION 302 CEO CERTIFICATION

EXHIBIT 31.2 - SECTION 302 CFO CERTIFICATION

EXHIBIT 32.1 - SECTION 906 CEO CERTIFICATION

EXHIBIT 32.2 - SECTION 906 CFO CERTIFICATION

PART I

Item 1. BUSINESS.

Summary

Drew Industries Incorporated (“Drew” and collectively with its subsidiaries, the “Company” or the “Registrant”), through its wholly-owned subsidiary, Lippert Components, Inc. and its subsidiaries (collectively, “Lippert Components” or “LCI”), supplies a broad array of components in the United States and abroad for the leading manufacturers of recreational vehicles (“RVs”) and manufactured homes and for the related aftermarkets of those industries. The Company also supplies components for adjacent industries including buses; trailers used to haul boats, livestock, equipment and other cargo; pontoon boats; modular housing; and factory-built mobile office units.

The Company has two reportable segments: the recreational vehicle products segment (the “RV Segment”) and the manufactured housing products segment (the “MH Segment”). The RV Segment accounted for 92 percent of consolidated net sales for 2015 , and the MH Segment accounted for 8 percent of consolidated net sales for 2015 . Approximately 73 percent of the Company’s RV Segment net sales in 2015 were of products to manufacturers of travel trailer and fifth-wheel RVs.

The Company is focused on profitable growth, both organic and through the acquisition of manufacturers of components for RVs, manufactured homes and adjacent industries. In order to support this growth, over the past several years the Company has expanded its geographic market and product lines, consolidated manufacturing facilities, and integrated manufacturing, distribution and administrative functions. At December 31, 2015 , the Company operated 42 manufacturing and distribution facilities in 16 states and Quebec, Canada, and reported consolidated net sales of $1.4 billion for the year ended December 31, 2015 .

The Company was incorporated under the laws of Delaware on March 20, 1984, and is the successor to Drew National Corporation, which was incorporated under the laws of Delaware in 1962. The Company’s principal executive and administrative offices are located at 3501 County Road 6 East, Elkhart, Indiana 46514; telephone number (574) 535-1125; website www.drewindustries.com ; e-mail drew@drewindustries.com . The Company makes available free of charge on its website its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K (and amendments to those reports) filed with the SEC as soon as reasonably practicable after such materials are electronically filed.

Recent Developments

Sales and Profits

Consolidated net sales for 2015 increased to a record $1.4 billion , 18 percent higher than 2014 . Acquisitions completed by the Company in 2015 , as well as the Furrion Limited (“Furrion”) distribution and supply agreement for premium electronics (the “Furrion Agreement”), added $52 million in net sales in 2015 . A five percent increase in industry-wide wholesale shipments of travel trailer and fifth-wheel RVs, the Company’s primary RV market, as well as increased content per unit through market share gains, also positively impacted net sales growth in 2015 .

In 2015 , the Company continued to grow sales to both adjacent industries and the aftermarket for the RV and MH Segments. Aggregate net sales to adjacent industries increased 40 percent to $193 million and aftermarket net sales increased 62 percent to $103 million . Together, these markets now account for 21 percent of consolidated net sales, double the percentage from 2010.

For the full-year 2015 , the Company’s net income increased to $74.3 million , or $3.02 per diluted share, up from net income of $62.3 million , or $2.56 per diluted share, in 2014 . Excluding certain charges for severance, environmental and legal costs in 2015 , net income would have been $79.0 million in 2015 , or $3.20 per diluted share, and excluding the 2014 loss on the sale of the Company's aluminum extrusion-related assets, net income would have been $63.5 million in 2014 , or $2.61 per diluted share.

In Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the Company describes in detail the increase in its sales and profits during 2015 .

Acquisitions

During 2015 and early 2016 the Company completed five acquisitions:

In January 2015 , the Company acquired the business and certain assets of EA Technologies, LLC (“EA Technologies”), an Elkhart, Indiana-based manufacturer of custom steel and aluminum parts and provider of electro-deposition (‘e-coat’) and powder coating services for RV, bus, medium-duty truck, automotive, recreational marine, specialty and utility trailer, and military applications. Net sales reported by EA Technologies for 2014 were $17 million . The purchase price was $9.2 million, of which $6.6 million was paid in the fourth quarter of 2014, with the balance paid at closing. In connection with this acquisition, the Company also acquired a 250,000 square foot facility.

In August 2015, the Company acquired the business and certain assets of Roehm Marine, LLC, also known as Signature Seating (“Signature”), a Ft. Wayne, Indiana-based manufacturer of furniture solutions for fresh water boat manufacturers, primarily pontoon boats. Net sales reported by Signature for the twelve months ended June 2015 were approximately $16 million. The purchase price was $16.0 million paid at closing, plus contingent consideration based on future sales of this operation.

In January 2016, the Company acquired the business and certain assets of the pontoon furniture manufacturing operation of Highwater Marine, LLC (“Highwater”), a leading manufacturer of pontoon and other recreational boats located in Elkhart, Indiana. Estimated net sales of the marine furniture business were approximately $20 million . The purchase price was $10.0 million paid at closing. Concurrently with the acquisition, the Company entered into a five-year supply agreement for marine furniture and other products with Highwater and Elkhart, Indiana-based Bennington, the largest manufacturer of pontoon boats in the United States.

In February 2016, the Company acquired the business and certain assets of Flair Interiors, Inc. (“Flair”), a Goshen, Indiana-based manufacturer of RV furniture. Net sales reported by Flair for 2015 were approximately $25 million. The purchase price was $8.1 million paid at closing.

Other Developments

On April 10, 2015, a special dividend of $2.00 per share of the Company’s Common Stock, representing an aggregate of $48.2 million , was paid to stockholders of record as of March 27, 2015.

In July 2015, the Company entered into a 6-year exclusive distribution and supply agreement with Furrion, a Hong Kong based firm that designs, engineers and manufacturers premium electronics. This agreement provides the Company with the rights to distribute Furrion’s complete line of products to OEMs and aftermarket customers in the RV, specialty vehicle, utility trailer, horse trailer, marine, transit bus and school bus industries throughout the United States and Canada. Furrion currently supplies a premium line of LED televisions, sound systems, navigation systems, wireless backup cameras, solar prep units, power solutions and kitchen appliances, primarily to the RV industry.

RV Segment

Through its wholly-owned subsidiaries, the Company manufactures or distributes a variety of products used in the production of RVs, including:



● Steel chassis for towable RVs	● Furniture and mattresses
● Axles and suspension solutions for towable RVs	● Entry, luggage, patio and ramp doors
● Slide-out mechanisms and solutions	● Electric and manual entry steps
● Thermoformed bath, kitchen and other products	● Awnings and awning accessories
● Windows	● Electronic components
● Manual, electric and hydraulic stabilizer and leveling systems	● LED televisions, sound systems, navigation systems and wireless backup cameras
● Chassis components	● Other accessories

The Company also supplies certain of these products to the RV aftermarket and to adjacent industries, including buses, trailers used to haul boats, livestock, equipment and other cargo, and pontoon boats. In 2015 , the RV Segment represented 92 percent of the Company’s consolidated net sales, and 90 percent of consolidated segment operating profit. RVs may be motorized (motorhomes) or towable (travel trailers, fifth-wheel travel trailers, folding camping trailers and truck campers). Approximately 73 percent of the Company’s RV Segment net sales in 2015 were of products to manufacturers of travel trailer and fifth-wheel RVs.

Raw materials used by the Company’s RV Segment, consisting primarily of steel (coil, sheet, tube and I-beam), extruded aluminum, glass, wood, fabric and foam are available from a number of sources, both domestic and foreign.

Operations of the Company’s RV Segment consist primarily of fabricating, welding, thermoforming, painting, sewing and assembling components into finished products. The Company’s RV Segment operations are conducted at 38 manufacturing and warehouse facilities throughout the United States and Canada, strategically located in proximity to the customers they serve. Of these facilities, 7 also conduct operations in the Company’s MH Segment. See Item 2. “Properties.”

The Company’s RV Segment products are sold primarily to major manufacturers of RVs such as Thor Industries (symbol: THO), Forest River (a Berkshire Hathaway company, symbol: BRKA), Jayco (a private company) and other OEMs, and, to a lesser extent, to manufacturers in adjacent industries and distributors and retail dealers of aftermarket products.

The RV industry is highly competitive, both among manufacturers of RVs and the suppliers of RV components, generally with low barriers to entry other than compliance with industry standards, codes and safety requirements, and the initial capital investment required to establish manufacturing operations. The Company competes with several other component suppliers on a regional and national basis with respect to a broad array of components for both towable and motorized RVs. The Company’s RV Segment operations compete on the basis of customer service, quality, functionality, product innovation, price and reliability. Although definitive information is not readily available, the Company believes with respect to its principal RV products (i) it is the leading supplier of windows and doors for towable RVs; (ii) it is the leading supplier of chassis and slide-out mechanisms for towable RVs; (iii) the leading suppliers of axles for towable RVs are the Company and Dexter Axle Company; (iv) it is the leading supplier of furniture for towable RVs, and the Company competes with several other manufacturers; (v) the Company is the leading supplier of leveling systems for towable RVs; and (vi) the leading suppliers of awnings for towable RVs are the Company, Carefree of Colorado and Dometic Corporation.

The Company’s share of the market for its products in adjacent industries cannot be readily determined; however, RV Segment net sales to adjacent industries increased from $113 million in 2014 to $172 million in 2015 . The Company’s share of the aftermarket for RV parts also cannot be readily determined; however, RV Segment net sales to the aftermarket increased from $50 million in 2014 to $87 million in 2015 . The Company has made investments in people, technology and equipment to increase its share of both adjacent industries and the aftermarket, and is committed to continue these expansion efforts.

Detailed narrative information about the results of operations of the RV Segment is included in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Financial information relating to the Company’s business segments is included in Note 2 of the Notes to Consolidated Financial Statements in Item 8 of this Report.

MH Segment

Through its wholly-owned subsidiaries, the Company manufactures or distributes a variety of products used in the production of manufactured homes, including:



●Vinyl and aluminum windows	●Aluminum and vinyl patio doors
●Thermoformed bath and kitchen products	●Steel chassis and related components
●Steel and fiberglass entry doors	●Axles

The Company also supplies certain of these products to the manufactured housing aftermarket and to adjacent industries, including modular housing and mobile office units. In 2015 , the MH Segment represented 8 percent of the Company’s consolidated net sales, and 10 percent of consolidated segment operating profit. Certain of the Company’s MH Segment customers manufacture both manufactured homes and modular homes, and certain of the products manufactured by the Company are suitable for both types of homes. As a result, the Company is not always able to determine in which type of home its products are installed.

Raw materials used by the Company’s MH Segment, consisting primarily of steel (coil, sheet and I-beam), extruded aluminum and vinyl, glass, and ABS resin, are available from a number of sources, both domestic and foreign.

Operations of the Company’s MH Segment consist primarily of fabricating, welding, thermoforming, painting and assembling components into finished products. The Company’s MH Segment operations are conducted at 13 manufacturing and warehouse facilities throughout the United States, strategically located in proximity to the customers they serve. Of these facilities, 7 also conduct operations in the Company’s RV Segment. See Item 2. “Properties.”

The Company’s manufactured housing products are sold primarily to major producers of manufactured homes such as Clayton Homes (a Berkshire Hathaway company, symbol: BRKA), Cavco Industries, Inc. (symbol: CVCO), and other OEMs, and, to a lesser extent, to manufacturers in adjacent industries and distributors of aftermarket products.

The manufactured housing industry is also highly competitive among manufacturers and suppliers. The Company competes with several other component suppliers with respect to a broad array of components, as well as with manufacturers of manufactured homes with vertically integrated operations. The Company’s MH Segment competes on the basis of customer service, quality, product innovation, price and reliability. Although definitive information is not readily available, the Company believes with respect to its principal manufactured housing products (i) it is the leading supplier of windows for manufactured homes; (ii) the Company’s manufactured housing chassis and chassis parts operations compete with several other manufacturers of chassis and chassis parts, as well as with builders of manufactured homes, many of which produce their own chassis and chassis parts; and (iii) the Company’s thermoformed bath and kitchen unit operation competes with several other manufacturers of bath and kitchen units.

The Company’s share of the market for its products in adjacent industries and the aftermarket cannot be readily determined. MH Segment net sales to adjacent industries and the aftermarket was $20 million and $16 million in 2015 , respectively. The Company has made investments in people, technology and equipment to increase its share of both adjacent industries and the aftermarket, and is committed to continue these expansion efforts.

Detailed narrative information about the results of operations of the MH Segment is included in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Financial information relating to the Company’s business segments is included in Note 2 of the Notes to Consolidated Financial Statements in Item 8 of this Report.

Sales and Marketing

The Company’s sales activities are related to developing new customer relationships and maintaining existing customer relationships, primarily through the quality of its products, innovation, service, price and customer satisfaction. As a result of the Company's strategic decision to increase its sales to the aftermarket and adjacent industries, as well as expand into international markets, the Company has increased its annual marketing and advertising expenditures over the past few years, which were approximately $2 million in 2015 .

The Company has several supply agreements or other arrangements with certain of its customers that provide for prices of various products to be fixed for periods generally not in excess of eighteen months; however, in certain cases the Company has the right to renegotiate the prices on sixty-days’ notice. Both the RV Segment and the MH Segment typically ship products on average within one to two weeks of receipt of orders from their customers and, as a result, neither segment has any significant backlog.

Capacity

In 2015 , the Company’s facilities operated at an average of approximately 55 percent of their practical capacity, assuming at least two shifts of production at all facilities. However, while certain facilities could add a second shift of production in the short term, the Company has found this to be inefficient over the long term. Capacity varies significantly based on seasonal demand, as well as by facility, product line and geographic region, with certain facilities at times operating below 50 percent utilization, and other facilities at times operating above 90 percent utilization.

At December 31, 2015 , the Company operated 42 manufacturing and distribution facilities, and for most products has the ability to fill demand in excess of capacity at individual facilities by shifting production to other facilities, but the Company would incur additional freight costs. Capital expenditures for 2015 were $29 million , and included approximately $15 million of “replacement” capital expenditures and approximately $14 million of “growth” capital expenditures. The ability to expand capacity in certain product areas, if necessary, as well as the potential to reallocate existing resources, is monitored regularly by management to help ensure the Company can maintain a high level of production efficiencies throughout its operations.

Seasonality

The RV and manufactured housing industries, as well as other industries where the Company sells products or where its products are used, historically have been seasonal and generally at the highest levels when the weather is moderate. Accordingly, the Company’s sales and profits have generally been the highest in the second quarter and lowest in the fourth quarter. However, because of fluctuations in dealer inventories, the addition of major RV open houses for dealers to the September/October timeframe, and the impact of international, national and regional economic conditions and consumer confidence on retail sales of RVs and other products for which the Company sells its components, as well as the impact of severe weather conditions on the timing of industry-wide shipments from time to time, current and future seasonal industry trends may be different than in prior years.

International

Over the past several years, the Company has been gradually growing international RV sales, primarily in Europe and Australia, and export sales represented approximately 1 percent of consolidated net sales in 2015 . The Company continues to focus on developing products tailored for international RV markets. The Company participates in the largest RV shows in Europe and has been receiving positive feedback on its products, especially its proprietary slide-out products. The Company has spent more than two years developing three slide-out systems suited to the needs of the European market, which were recently featured on new RV models. As a result, the Company believes it will see additional orders from European RV OEMs. The Company’s Director of International Business Development spends time in Australia, Europe and other international markets, assessing the dynamics of the local marketplace, building relationships with OEMs and helping the Company introduce its existing products and develop new products for those markets, with the goal of identifying long-term growth opportunities. The Company estimates the addressable market for annual net sales of its products outside of North America to be $750 million.

Intellectual Property

The Company holds 190 United States and foreign patents and has over 50 patent applications pending that relate to various products sold by the Company. The Company has also granted certain licenses that permit third parties to manufacture and sell products in consideration for royalty payments. The Company believes its patents are valuable and vigorously protects its patents when appropriate.

From time to time, the Company has received notices or claims it may be infringing certain patent or other intellectual property rights of others, and the Company has given notices to, or asserted claims against, others that they may be infringing certain patent or other intellectual property rights of the Company. However, no material litigation is currently pending as a result of these claims.

Research and Development

The Company strives to be an industry leader in product innovation and is focused on developing new products, as well as improving existing products. Research and development expenditures are expensed as they are incurred. Research and development expenses were approximately $8 million in 2015 and $5 million in both 2014 and 2013, respectively.

Regulatory Matters

Rules promulgated under the Transportation Recall Enhancement, Accountability and Documentation Act (the “Tread Act”) require manufacturers of motor vehicles and certain motor vehicle related equipment to regularly make reports and submit documents and certain historical data to the National Highway Traffic Safety Administration (“NHTSA”) of the United States Department of Transportation (“DOT”) to enhance motor vehicle safety, and to respond to requests for information relating to specific complaints or incidents.

Trailers produced by the Company for hauling boats, personal watercraft, snowmobiles and equipment must comply with Federal Motor Vehicle Safety Standards (“FMVSS”) promulgated by NHTSA relating to lighting, braking, wheels, tires and other vehicle systems.

Windows and doors produced by the Company for the RV industry must comply with regulations promulgated by NHTSA governing safety glass performance, egress ability, door hinge and lock systems, egress window retention hardware, and baggage door ventilation. Windows produced by the Company for buses also must comply with FMVSS promulgated by NHTSA.

Upholstered products and mattresses produced by the Company for RVs and buses must comply with FMVSS promulgated by NHTSA regarding flammability. In addition, upholstered products and mattresses produced by the Company for RVs must comply with regulations promulgated by the Consumer Products Safety Commission regarding flammability, as well as standards for toxic chemical levels and labeling requirements promulgated by the California Office of Environmental Health Hazard Assessment. Plywood, particleboard and fiberboard used in RV products are required to comply with standards for formaldehyde emission levels promulgated by the California Air Resources Board and adopted by the Recreation Vehicle Industry Association (“RVIA”).

Windows and entry doors produced by the Company for manufactured homes must comply with performance and construction regulations promulgated by the U.S. Department of Housing and Urban Development (“HUD”) and by the American Architectural Manufacturers Association relating to air and water infiltration, structural integrity, thermal performance, emergency exit conformance, and hurricane resistance. Certain of the Company’s products must also comply with the International Code Council standards, such as the IRC (International Residential Code), the IBC (International Building Code), and the IECC (International Energy Conservation Code) as well as state and local building codes. Thermoformed bath products manufactured by the Company for manufactured homes must comply with performance and construction regulations promulgated by HUD.

The Company believes it is currently operating in compliance, in all material respects, with applicable laws and regulations and has made reports and submitted information as required. The Company does not believe the expense of compliance with these laws and regulations, as currently in effect, will have a material effect on the Company's operations, financial condition or competitive position; however, there can be no assurance this trend will continue as health and safety laws, regulations or other pertinent requirements evolve.

Environmental

The Company’s operations are subject to certain Federal, state and local regulatory requirements relating to the use, storage, discharge, transport and disposal of hazardous materials used during the manufacturing processes. Although the Company believes its operations have been consistent with prevailing industry standards, and are in substantial compliance with applicable environmental laws and regulations, one or more of the Company’s current or former operating sites, or adjacent sites owned by third-parties, have been affected by releases of hazardous materials. As a result, the Company may incur expenditures for future investigation and remediation of these sites, and recorded a pre-tax charge of $1.5 million related to environmental costs in 2015. In the past, environmental compliance costs have not had, and are not expected in the future to have, a material effect on the Company’s operations or financial condition; however, there can be no assurance that this trend will continue.

Employees

The number of persons employed full-time by the Company at December 31, 2015 was 6,576, compared to 5,845 at December 31, 2014 . The total at December 31, 2015 included 5,362 in manufacturing, 288 in transportation, 93 in sales, 172 in customer support and servicing, and 661 in administration. None of the employees of the Company are subject to collective bargaining agreements. The Company believes that relations with its employees are good.

Executive Officers

The following table sets forth our executive officers as of December 31, 2015 :



Name	Position

Jason D. Lippert	Chief Executive Officer and Director
Scott T. Mereness	President
David M. Smith	Chief Financial Officer
Robert A. Kuhns	Vice President – Chief Legal Officer and Secretary
Jamie M. Schnur	Chief Administrative Officer
Nick C. Fletcher	Chief Human Resources Officer

Officers are elected annually by the Board of Directors. There are no family relationships between or among any of the executive officers or Directors of the Company. Additional information with respect to the Company’s Directors is included in the Company’s Proxy Statement for the Annual Meeting of Stockholders to be held on May 26, 2016 .

JASON D. LIPPERT (age 43) became Chief Executive Officer of the Company effective May 10, 2013, and has been Chief Executive Officer of Lippert Components since February 2003. Mr. Lippert has over 16 years of experience with Drew and its subsidiaries, and has served in a wide range of leadership positions.

SCOTT T. MERENESS (age 44) became President of the Company effective May 10, 2013, and has been President of Lippert Components since July 2010. Mr. Mereness has over 16 years of experience with Drew and its subsidiaries, and has served in a wide range of leadership positions.

DAVID M. SMITH (age 52) has been the Chief Financial Officer since September 2015. Prior to joining the Company, Mr. Smith served for the past ten years as Senior Vice President and Chief Financial Officer of Key Safety Systems, Inc., a global leader in the design, development and manufacturing of passive safety systems primarily to the automotive industry.

ROBERT A. KUHNS (age 50) joined the Company in March 2013, and has been Vice President – Chief Legal Officer and Secretary since July 2013. Prior to joining the Company, he was a partner in the Corporate Group at the Minneapolis office of Dorsey & Whitney LLP, a full-service global law firm.

JAMIE M. SCHNUR (age 44) became Chief Administrative Officer of the Company effective May 2013. Mr. Schnur has over 19 years of experience with the Company, and has served in a wide range of leadership positions with Lippert Components.

NICK C. FLETCHER (age 55) joined the Company on February 2013 as Vice President of Human Resources. Since January 2015, he has been Chief Human Resources Officer. Prior to joining the Company, Mr. Fletcher provided consulting services and held roles in senior level positions at American Commercial Lines, Continental Tire, Wabash National, Siemens and TRW.

Other Officers

BRIAN M. HALL (age 41) joined the Company in March 2013, and has been Corporate Controller since July 2013. Prior to joining the Company, he was a Senior Manager at Crowe Horwath LLP. Mr. Hall is a Certified Public Accountant.

Item 1A. RISK FACTORS.

The following risk factors should be considered carefully in addition to the other information contained in this Annual Report on Form 10-K. The risks and uncertainties described below are not the only ones we face, but represent the most significant risk factors that we believe may adversely affect the RV, manufactured housing and other industries we supply our products to, as well as our business, operations or financial position. The risks and uncertainties discussed in this report are not exclusive and other risk factors that we may consider immaterial or do not anticipate may emerge as significant risks and uncertainties.

Industry Risk Factors

Economic and business factors beyond our control, including cyclicality and seasonality in the industries where we sell our products, could lead to fluctuations in our operating results .

The RV and manufactured housing markets, as well as other markets where we sell our products or where our products are used, have been characterized by cycles of growth and contraction in consumer demand. Periods of economic recession have adversely affected, and could again adversely affect, our operating results. Companies in these industries are subject to volatility in production levels, shipments, sales and operating results due to changes in external factors such as general economic conditions, including credit availability, consumer confidence, employment rates, prevailing interest rates, inflation, fuel prices and other economic conditions affecting consumer demand and discretionary consumer spending, as well as demographic and political changes. Consequently, our operating results for any prior period may not be indicative of results for any future period.

Additionally, manufacturing operations in the RV and manufactured housing industries, as well as other industries where we sell our products or where our products are used, historically have been seasonal and are generally at the highest levels when the weather is moderate. Accordingly, our sales and profits have generally been the highest in the second quarter and lowest in the fourth quarter. However, because of fluctuations in dealer inventories, and the impact of international, national and regional economic conditions and consumer confidence on retail sales of RVs and other products for which we sell our components, current and future seasonal industry trends may be different than in prior years. Unusually severe weather conditions in some geographic areas may also, from time to time, impact the timing of industry-wide shipments from one period to another.

Reductions in the availability of wholesale financing limits the inventories carried by retail dealers of RVs and manufactured homes and other products which use our components, which would cause reduced production by our customers, and therefore reduced demand for our products .

Retail dealers of RVs and manufactured homes and other products which use our components generally finance their purchases of inventory with financing known as floor-plan financing provided by lending institutions. Reduction in the availability of floor-plan financing has in the past caused, and would likely cause, many dealers to reduce inventories, which would result in reduced production, resulting in reduced demand for our products. Moreover, dealers which are unable to obtain adequate financing could cease operations. Their remaining inventories would likely be sold at discounts, disrupting the market. Such sales have historically caused a decline in orders for new inventory, which reduced demand for our products.

Conditions in the credit market could limit the ability of consumers to obtain retail financing for RVs and manufactured homes, resulting in reduced demand for our products .

Restrictions on the availability of consumer financing for RVs and manufactured homes and increases in the costs of such financing have in the past limited, and could again limit, the ability of consumers to purchase RVs and manufactured homes, which would result in reduced production of RVs and manufactured homes by our customers, and therefore reduce demand for our products.

Loans used to finance the purchase of manufactured homes usually have shorter terms and higher interest rates, and are more difficult to obtain, than mortgages for site-built homes. Historically, lenders required a higher down payment, higher credit scores and other criteria for these loans. Current lending criteria are higher than historical criteria, and many potential buyers of manufactured homes may not qualify.

The availability, cost, and terms of these manufactured housing loans are also dependent on economic conditions, lending practices of financial institutions, government policies, and other factors, all of which are beyond our control. Reductions in the availability of financing for manufactured homes and increases in the costs of this financing have limited, and could continue to limit, the ability of consumers to purchase manufactured homes, resulting in reduced production of manufactured homes by our customers, and therefore reduced demand for our products. In addition, certain provisions of the Dodd-Frank Act, which regulate financial transactions, could make certain types of mortgages more difficult to obtain – in particular those historically used to finance the purchase of manufactured homes. Although legislation has been introduced to address this matter, and the Bureau of Consumer Financial Protection has been reviewing this matter, there can be no assurance of the outcome.

Excess inventories at dealers and manufacturers can cause a decline in the demand for our products .

Dealers and manufacturers could accumulate unsold inventory. High levels of unsold inventory have in the past caused, and would cause, a reduction in orders, which would likely cause a decline in demand for our products.

Gasoline shortages, or high prices for gasoline, could lead to reduced demand for our products .

Fuel shortages, and substantial increases in the price of fuel, have had a material adverse effect on the RV industry as a whole in the past, and could again in the future. Travel trailer and fifth-wheel RVs, components for which represented approximately 73 percent of our RV Segment net sales in 2015 , are usually towed by light trucks or SUVs. Generally, these vehicles use more fuel than automobiles, particularly while towing RVs. High prices for gasoline, or anticipation of potential fuel shortages, can affect consumer use and purchase of light trucks and SUVs, which could result in reduced demand for travel trailer and fifth-wheel RVs, and therefore reduced demand for our products.

The manufactured housing industry has experienced a significant long-term decline in shipments, which has led to reduced demand for our products .

Our MH Segment, which accounted for 8 percent of consolidated net sales for 2015 , operates in an industry which has experienced a decline in production of new homes compared to the peak of production in 1998. The downturn was caused, in part, by limited availability and high cost of financing for manufactured homes, and was exacerbated by economic and political conditions during the financial crisis.

Although industry-wide wholesale production of manufactured homes has improved in recent years, our annual results of operations could decline if manufactured housing industry conditions were to worsen.

Company-Specific Risk Factors

A significant percentage of our sales are concentrated in the RV industry, and declines in industry-wide wholesale shipments of travel trailer and fifth-wheel RVs could reduce demand for our products and adversely impact our operating results and financial condition .

In 2015 , the RV Segment represented 92 percent of our consolidated net sales, and 90 percent of consolidated segment operating profit. Approximately 73 percent of our RV Segment net sales in 2015 were of products to manufacturers of travel trailer and fifth-wheel RVs. While we measure our RV Segment sales against industry-wide wholesale shipment statistics, the underlying health of the RV industry is determined by retail demand. Retail sales of RVs historically have been closely tied to general economic conditions, as well as consumer confidence which was above historical averages in 2015. Declines in industry-wide wholesale shipments of travel trailer and fifth-wheel RVs could reduce demand for our products and adversely affect our operating results and financial condition.

Volatile raw material costs could adversely impact our financial condition and operating results .

The prices we pay for steel and aluminum represented approximately 45 percent and 15 percent, respectively, of our raw material costs in 2015 . These, and other key raw materials, have historically been volatile and can fluctuate dramatically with changes in the global demand and supply for such products.

Because competition and business conditions may limit the amount or timing of increases in raw material costs that can be passed through to our customers in the form of sales price increases, future increases in raw material costs could adversely impact our financial condition and operating results. Conversely, as raw material costs decline, we may not be able to maintain selling prices consistent with higher cost raw materials in our inventory, which could adversely affect our operating results.

We import a portion of our raw materials and the components we sell and the effect of foreign exchange rates could adversely affect our operating results

We negotiate for the purchase of a significant portion of raw materials and semi-finished components with suppliers that are not located in the United States. As such, the prices we pay in part are dependent upon the rate of exchange for US Dollars versus the currency of the local supplier. A dramatic weakening of the US Dollar could increase our cost of goods sold and such cost increases may not be offset through price increases for our products, adversely impacting our margins.

Inadequate supply of raw materials or components used to make our products could adversely impact our financial condition and operating results .

Our business depends on our ability to source raw materials, such as steel and aluminum, and certain components in a timely and cost efficient manner. If raw materials or components that are used in manufacturing our products, particularly those which we import, become unavailable, or if the supply of these raw materials and components is interrupted or delayed, our manufacturing operations could be adversely affected. We currently import, or purchase from suppliers who import, approximately 24 percent of our raw materials and components. Consequently, we rely on the free flow of goods through open and operational ports and on a consistent basis for a significant portion of our raw materials and components. Labor disputes at various ports or at our suppliers create significant risks for our business, particularly if these disputes result in work slowdowns, lockouts, strikes or other disruptions, and could have an adverse impact on our operating results if we are unable to fulfill customer orders or required to accumulate excess inventory or find alternate sources of supply, if available, at higher costs.

The loss of any customer accounting for more than 10 percent of our consolidated net sales could have a material adverse impact on our operating results .

Two customers of the RV Segment accounted for a combined 39 percent, and another customer of both the RV Segment and the MH Segment accounted for 26 percent, of our consolidated net sales in 2015 . The loss of any of these customers would have a material adverse impact on our operating results and financial condition.

Changes in consumer preferences relating to our products could cause reduced sales .

Changes in consumer preferences, or our inability to anticipate changes in consumer preferences, for RVs or manufactured homes, or for the products we make for RVs and manufactured homes, could reduce demand for our products and adversely affect our operating results and financial condition.

Competitive pressures could reduce demand for our products or impact our sales prices .

Domestic and foreign competitors may lower prices on products which currently compete with our products, or develop product improvements, which could reduce demand for our products or cause us to reduce prices for our products. In addition, the manufacture by our customers themselves of products supplied by us could reduce demand for our products and adversely affect our operating results and financial condition.

Increases in demand could result in difficulty obtaining additional skilled labor, and available capacity may initially not be utilized efficiently .

In certain geographic regions in which we have manufacturing facilities we have experienced, and could again experience, shortages of qualified employees. Competition for skilled workers, especially during improving economic times, may increase the cost of our labor and create employee retention and recruitment challenges, as employees with knowledge and experience have the ability to change employers relatively easily. If such conditions become extreme, we may not be able to increase production to timely satisfy demand, and may initially incur higher labor and production costs, which could adversely impact our operating results and financial condition.

We may incur unexpected expenses, or face unanticipated delays, in connection with investments we make in our business, which could adversely impact our results .

It may take longer than initially anticipated for us to realize expected results from investments in research and development or acquired businesses, as well as initiatives we have implemented to increase capacity and improve production efficiencies, automation, customer service and other aspects of our business, or we may incur unexpected expenses in connection with these matters. These conditions could have an adverse effect on our operating results and financial condition.

We have recently entered new markets in order to enhance our growth potential. Uncertainties with respect to these new markets could impact our operating results .

We are a leading supplier of components for RVs and manufactured housing, and currently have a significant share of the market for certain of our products, which limits our ability to expand our market share for those products. We have made investments in order to expand the sale of our products in the RV and manufactured housing aftermarket, and in adjacent industries beyond RVs and manufactured housing. We are also exploring opportunities to increase export sales of our products to international markets. Limited operating experience or limited brand recognition in new markets may limit our expansion strategy. Lack of demand for our products in these markets or competitive pressures requiring us to lower prices for our products could adversely impact our business growth in these markets and our results of operations.

If acquired businesses are not successfully integrated into our operations, our financial condition and operating results could be adversely impacted .

We have completed several business acquisitions and may continue to engage in acquisitions or similar activities, including joint ventures and other business transactions that involve potential risks, including failure to successfully integrate and realize the expected benefits of such transactions, assumption of liabilities of the acquired businesses, and possible culture conflicts. Integrating acquired operations is a significant challenge and there is no assurance that we will be able to manage the integrations successfully. If we are unable to efficiently integrate these businesses, the attention of our management could be diverted from our existing operations, which could impair our ability to execute our business plans. Failure to successfully integrate acquired operations or to realize the expected benefits of such acquisitions may have an adverse impact on our results of operations and financial condition.

The loss of key management could reduce our ability to execute our business strategy and could adversely affect our business and results of operations .

We are dependent on the knowledge, experience and skill of our managerial personnel. The loss of the services of one or more key managers or the failure to attract or retain qualified management staff could impair our ability to execute our business strategy, which would have a material adverse effect on our business, financial condition and results of operations.

Our business is subject to numerous international, federal, state and local regulations, and increased costs of compliance, failure in our compliance efforts or events beyond our control could result in damages, expenses or liabilities that could adversely impact our financial condition and operating results .

We are subject to numerous federal, state and local regulations governing the manufacture and sale of our products, including regulations and standards promulgated by the National Highway Traffic Safety Administration (“NHTSA”) of the United States Department of Transportation (“DOT”), the Consumer Products Safety Commission, the United States Department of Housing and Urban Development (“HUD”), and consumer safety standards promulgated by state regulatory agencies and industry associations, and the failure to comply with present or future regulations and standards could subject us to lawsuits, administrative penalties, and civil remedies, including fines, injunctions, and recalls of our products. Sales in foreign countries may be subject to similar regulations. Any recalls of our products, voluntary or involuntary, could adversely impact our financial condition and operating results. Changes in laws or regulations that impose additional regulatory requirements on us could increase our cost of doing business or restrict our actions, causing our results of operations to be adversely affected.

Further, certain U.S. and foreign laws and regulations affect our activities. Areas of our business affected by such laws and regulations include, but are not limited to, labor, advertising, consumer protection, quality of services, warranty, product liability, real estate, intellectual property, tax, import and export, and competition. We are also subject to compliance with the U.S. Foreign Corrupt Practices Act (“FCPA”), and other anti-bribery laws applicable to our operations. Compliance with these laws and others may be onerous and costly, at times, and may be inconsistent from jurisdiction to jurisdiction, which further complicates compliance efforts. Violations of any such laws could subject us to sanctions or other penalties that could negatively affect our reputation, business and operating results.

In addition, potentially significant expenditures could be required in order to comply with evolving healthcare, health and safety laws, regulations or other pertinent requirements that may be adopted or imposed in the future by governmental authorities. Our operating profit margin in 2015 was impacted by higher health insurance costs, largely due to increased employee participation, which we believe is largely due to the new healthcare requirements, and operating profit will likely continue to be impacted in future periods.

Our operations are subject to certain environmental laws and regulations, and costs of compliance, investigation or remediation of environmental conditions could have an adverse effect on our business and results of operations .

Our operations are also subject to certain federal, state and local environmental laws and regulations relating to air, water, noise pollution and the use, storage, discharge and disposal of hazardous materials used during the manufacturing processes. Under certain of these laws, namely the Comprehensive Environmental Response, Compensation, and Liability Act and its state counterparts, liability for investigation and remediation of hazardous substance contamination at currently or formerly owned or operated facilities or at third-party waste disposal sites is joint and several. Although we believe that our operations and facilities have been and are being operated in compliance, in all material respects, with such laws and regulations, one or more of our current or former operating sites, or adjacent sites owned by third-parties, have been affected by releases of hazardous materials. As a result, we may incur expenditures for future investigation and remediation. If other potentially responsible persons (“PRPs”) are unable or otherwise not obligated to contribute to remediation costs, we could be held responsible for their portion of the remediation costs, and those costs could be material. The operation of our manufacturing facilities entails risks, and we cannot assure that our costs in relation to these environmental matters or compliance with environmental laws in general will not have an adverse effect on our business and results of operations.

We may not be able to protect our intellectual property and may be subject to infringement claims .

We rely on certain trademarks and patents, including contractual rights with third parties. We endeavor to protect our rights; however, third parties may infringe upon our intellectual property rights. We may be forced to take steps to protect our rights, including through litigation. This could result in a diversion of resources. The inability to protect our intellectual property rights could have a material adverse effect on our business. We may also be subject to claims by third parties, seeking to enforce their claimed intellectual property rights.

Compliance with conflict mineral disclosure requirements will create additional compliance cost and may create reputational challenges .

The SEC adopted rules pursuant to Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act setting forth new disclosure requirements concerning the use or potential use of certain minerals, deemed conflict minerals (tantalum, tin, gold and tungsten), that are mined from the Democratic Republic of Congo and adjoining countries. These requirements necessitate due diligence efforts on our part to assess whether such minerals are used in our products in order to make the relevant required annual disclosures. There will be costs associated with complying with these disclosure requirements, including for diligence to determine the sources of conflict minerals used in our products and other potential changes to products, processes or sources of supply as a consequence of such verification activities. The implementation of these rules could adversely affect the sourcing, supply and pricing of materials used in our products. As there may be only a limited number of suppliers

offering conflict-free minerals, we cannot be sure that we will be able to obtain necessary conflict minerals from such suppliers in sufficient quantities or at competitive prices, which could adversely affect our ability to meet customer demand. We may also face reputational challenges if we determine that certain of our products contain minerals not determined to be conflict free or if we are unable to sufficiently verify the origins for all conflict minerals used in our products through the procedures we may implement.

If our information technology systems fail to perform adequately or are breached, our operations could be disrupted and could adversely affect our business, reputation and results of operation .

The efficient operation of our business depends on our information technology systems. We rely on our information technology systems to effectively manage our business data, inventory, supply chain, order entry and fulfillment, manufacturing, distribution, warranty administration, invoicing, collection of payments, and other business processes. We use information systems to report and support the audit our operational and financial results. Additionally, we rely upon information systems in our sales, marketing, human resources and communication efforts. The failure of our information technology systems to perform as we anticipate could disrupt our business and could result in transaction errors, processing inefficiencies, and the loss of sales and customers, causing our business and results of operations to suffer. In addition, our information technology systems may be vulnerable to damage or interruption from circumstances beyond our control, including fire, natural disasters, security breaches, telecommunications failures, computer viruses, hackers, and other manipulation or improper use of our systems. Any such events could result in legal claims or proceedings, liability or penalties under privacy laws, disruption in operations, and damage to our reputation, which could adversely affect our business. Due to our reliance on our information systems, we have established various levels of security, backup and disaster recovery procedures. Further, we have selected and have begun implementing a new enterprise resource planning (“ERP”) system, the full implementation of which is expected to take several years; however, there may be other challenges and risks as we upgrade and standardize our ERP system on a company-wide basis.

If we expand our business internationally, we will be subject to new operational and financial risks .

We have been gradually growing sales overseas, primarily in Europe and Australia, and export sales represented approximately 1 percent of 2015 consolidated net sales. We plan to continue pursuing international opportunities. Business outside of the United States is subject to various risks, many of which are beyond our control, including: changes in tariffs, trade restrictions, trade agreements, and taxations; difficulties in managing or overseeing foreign operations and agents; differences in regulatory environments, labor practices and market practices; cultural and linguistic differences; foreign currency fluctuations and limitations on the repatriation of funds because of foreign exchange controls; different liability standards; and intellectual property laws of countries which do not protect our rights in our intellectual property to the same extent as the laws of the United States. The occurrence or consequences of any of these factors may have an adverse impact on our operating results and financial condition, as well as impact our ability to operate in international markets.

Item 1B. UNRESOLVED STAFF COMMENTS.

None.

Item 2. PROPERTIES.

The Company’s manufacturing operations are conducted at facilities that are used for both manufacturing and warehousing. In addition, the Company maintains administrative facilities used for corporate and administrative functions. At December 31, 2015 , the Company’s properties were as follows:



		RV SEGMENT

City	State/Province	Square Feet	Owned	Leased
Double Springs ⁽¹⁾	Alabama	54,500	☑
Gilbert	Arizona	11,600		☑
Rialto ⁽¹⁾	California	56,430	☑
Lakeland	Florida	15,000		☑
Nampa	Idaho	147,000		☑
Nampa ⁽¹⁾	Idaho	29,225	☑
Twin Falls	Idaho	16,060		☑
Goshen ⁽¹⁾	Indiana	459,200	☑



		RV SEGMENT

City	State/Province	Square Feet		Owned	Leased
Goshen	Indiana	355,960		☑
Goshen	Indiana	363,000			☑
Elkhart	Indiana	308,864		☑
South Bend	Indiana	275,973			☑
Elkhart	Indiana	250,000		☑
Goshen	Indiana	144,500		☑
Fort Wayne	Indiana	140,000			☑
Goshen ⁽¹⁾	Indiana	138,700		☑
Middlebury	Indiana	122,226		☑
Auburn	Indiana	119,000			☑
Elkhart	Indiana	102,900			☑
Middlebury	Indiana	101,776		☑
Goshen	Indiana	95,960			☑
Elkhart	Indiana	92,000		☑
Goshen	Indiana	87,800		☑
Goshen	Indiana	53,500		☑
Goshen	Indiana	50,000		☑
Elkhart	Indiana	28,000			☑
Goshen	Indiana	22,000			☑
Elkhart	Indiana	18,000			☑
Sterling Heights	Michigan	27,363			☑
Jackson Center	Ohio	12,000			☑
Pendleton	Oregon	56,800		☑
McMinnville ⁽¹⁾	Oregon	17,850		☑
Granby	Quebec	60,000			☑
Gaffney	South Carolina	55,000			☑
Springfield	Tennessee	60,000			☑
Waxahachie ⁽¹⁾	Texas	25,000		☑
Kaysville	Utah	70,000			☑
		4,043,187	⁽²⁾

____________________________


(1)	These plants also produce products for the MH Segment. The square footage indicated above represents that portion of the building that is utilized for the manufacture of products for the RV Segment.


(2)	At December 31, 2014 , the Company’s RV Segment used an aggregate of 3,353,867 square feet for manufacturing and warehousing.



		MH SEGMENT

City	State	Square Feet	Owned	Leased
Double Springs ⁽¹⁾	Alabama	54,500	☑
Rialto ⁽¹⁾	California	6,270	☑
Fitzgerald	Georgia	79,000	☑
Nampa ⁽¹⁾	Idaho	54,275	☑
Goshen	Indiana	110,000	☑



		MH SEGMENT

City	State	Square Feet		Owned	Leased
Howe	Indiana	60,000		☑
Goshen ⁽¹⁾	Indiana	25,000		☑
Goshen ⁽¹⁾	Indiana	14,500		☑
Arkansas City	Kansas	7,800			☑
McMinnville ⁽¹⁾	Oregon	17,850		☑
Denver	Pennsylvania	40,200			☑
Chester	South Carolina	108,600		☑
Waxahachie ⁽¹⁾	Texas	170,000		☑
		747,995	⁽²⁾

____________________________


(1)	These plants also produce products for the RV Segment. The square footage indicated above represents that portion of the building that is utilized for the manufacture of products for the MH Segment.


(2)	At December 31, 2014 , the Company’s MH Segment used an aggregate of 747,995 square feet for manufacturing and warehousing.



		ADMINISTRATIVE

City	State/Province	Square Feet	Owned	Leased
Double Springs	Alabama	7,200	☑
Elkhart	Indiana	49,200		☑
Goshen	Indiana	40,000	☑
South Bend	Indiana	25,000		☑
Goshen	Indiana	25,000		☑
Elkhart	Indiana	20,000	☑
Goshen	Indiana	15,500	☑
Goshen	Indiana	11,000	☑
Elkhart	Indiana	8,000	☑
Goshen	Indiana	6,000		☑
Goshen	Indiana	1,680	☑
Sterling Heights	Michigan	6,387		☑
Granby	Quebec	5,000		☑
Gaffney	South Carolina	2,500		☑
Springfield	Tennessee	2,500		☑
Waxahachie	Texas	16,000		☑
Waxahachie	Texas	5,000	☑
Kaysville	Utah	5,000		☑
		250,967

At December 31, 2015 , the Company maintained the following facilities, or partial facilities, not currently used in production.



City	State	Square Feet
Phoenix*	Arizona	61,000
South Bend*	Indiana	238,164
Goshen	Indiana	68,125

____________________________

*Currently leased to a third party.

Item 3. LEGAL PROCEEDINGS.

In the normal course of business, the Company is subject to proceedings, lawsuits, regulatory agency inquiries and other claims. All such matters are subject to uncertainties and outcomes that are not predictable with assurance. While these matters could materially affect operating results when resolved in future periods, it is management’s opinion that, after final disposition, including anticipated insurance recoveries in certain cases, any monetary liability or financial impact to the Company beyond that provided for in the Consolidated Balance Sheet as of December 31, 2015 , would not be material to the Company’s financial position or annual results of operations.

Item 4. MINE SAFETY DISCLOSURES.

Not applicable.

PART II

Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

As of January 29, 2016, there were 373 holders of the Company’s Common Stock, in addition to beneficial owners of shares held in broker and nominee names. The Company’s Common Stock trades on the New York Stock Exchange under the symbol “DW”.

Information concerning the high and low closing prices of the Company’s Common Stock for each quarter during 2015 and 2014 is set forth in Note 15 of the Notes to Consolidated Financial Statements in Item 8 of this Report.

Equity Compensation Plan Information as of December 31, 2015 :



Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)	(b)	(c)
Equity compensation plans approved by security holders	1,002,000	$3.25	1,305,440
Equity compensation plans not approved by security holders	N/A	N/A	N/A
Total	1,002,000	$3.25	1,305,440

Pursuant to the Drew Industries Incorporated Equity Award and Incentive Plan, As Amended and Restated (the “Plan”), which was approved by stockholders in May 2011, the Company may grant to its directors, employees, and consultants equity-based awards, such as stock options, restricted stock and deferred stock units. The number of shares available for granting awards under the Plan was 1,305,440 at December 31, 2015 , and 1,389,506 at December 31, 2014 . The Plan is the Company’s only equity compensation plan.

Dividend Information

On April 10, 2015, the Company paid a special cash dividend of $2.00 per share to holders of record of its Common Stock on March 27, 2015, and on January 6, 2014, the Company paid a special cash dividend of $2.00 per share to holders of record of its Common Stock on December 20, 2013. Future dividend policy with respect to the Common Stock will be determined by the Board of Directors of the Company in light of prevailing financial needs and earnings of the Company and other relevant factors. The Company’s dividend policy is not subject to specific restrictions in its financing agreements, but rather is limited by certain of the debt covenant calculations.

Item 6. SELECTED FINANCIAL DATA.

The following table summarizes certain selected historical financial and operating information of the Company and is derived from the Company’s Consolidated Financial Statements. Historical financial data may not be indicative of the Company’s future performance. The information set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements and Notes thereto included in Item 7 and Item 8 of this Report, respectively.



	Year Ended December 31,
(In thousands, except per share amounts)	2015		2014		2013		2012		2011

Operating Data:
Net sales	$	1,403,066	$	1,190,782	$	1,015,576	$	901,123	$	681,166
Severance	$	3,716	$	—	$	—	$	—	$	—
Sale of extrusion assets	$	—	$	1,954	$	—	$	—	$	—
Executive succession	$	—	$	—	$	1,876	$	1,456	$	—
Operating profit	$	116,254	$	95,487	$	78,298	$	58,132	$	48,548
Income before income taxes	$	114,369	$	95,057	$	77,947	$	57,802	$	48,256
Provision for income taxes	$	40,024	$	32,791	$	27,828	$	20,462	$	18,197
Net income	$	74,345	$	62,266	$	50,119	$	37,340	$	30,059

Net income per common share:
Basic	$	3.06	$	2.60	$	2.15	$	1.66	$	1.35
Diluted	$	3.02	$	2.56	$	2.11	$	1.64	$	1.34

Financial Data:
Net working capital	$	169,580	$	100,451	$	107,339	$	84,243	$	85,657
Total assets	$	622,946	$	543,841	$	453,184	$	373,868	$	351,083
Long-term obligations	$	85,509	$	41,758	$	21,380	$	19,843	$	21,876
Stockholders’ equity	$	438,575	$	394,898	$	313,613	$	284,245	$	277,296

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company’s Consolidated Financial Statements and Notes thereto included in Item 8 of this Report.

Drew Industries Incorporated (“Drew”, and collectively with its subsidiaries, the “Company”), through its wholly-owned subsidiary, Lippert Components, Inc. and its subsidiaries (collectively, “Lippert Components” or “LCI”), supplies a broad array of components in the United States and abroad for the leading manufacturers of recreational vehicles (“RVs”) and manufactured homes and for the related aftermarkets of those industries. The Company also supplies components for adjacent industries including buses; trailers used to haul boats, livestock, equipment and other cargo; pontoon boats; modular housing; and factory-built mobile office units.

The Company has two reportable segments: the recreational vehicle products segment (the “RV Segment”) and the manufactured housing products segment (the “MH Segment”). Intersegment sales are insignificant. At December 31, 2015 , the Company operated 42 manufacturing and distribution facilities in the United States and Canada.

Net sales and operating profit were as follows for the years ended December 31:



(In thousands)	2015			2014			2013
Net sales:
RV Segment:
RV OEMs:
Travel trailers and fifth-wheels	$	938,787		$	841,497		$	727,783
Motorhomes	86,513			70,332			47,937
RV aftermarket	87,447			49,570			25,334
Adjacent industries	172,181			113,049			92,640
Total RV Segment net sales	1,284,928			1,074,448			893,694
MH Segment:
Manufactured housing OEMs	82,032			77,421			80,245
Manufactured housing aftermarket	15,559			14,186			13,719
Adjacent industries	20,547			24,727			27,918
Total MH Segment net sales	118,138			116,334			121,882
Total net sales	$	1,403,066		$	1,190,782		$	1,015,576

Operating profit:
RV Segment	$	107,485		$	86,571		$	68,248
MH Segment	12,485			10,870			11,926
Total segment operating profit	119,970			97,441			80,174
Severance	(3,716		)	—			—
Sale of extrusion assets	—			(1,954		)	—
Executive succession	—			—			(1,876		)
Total operating profit	$	116,254		$	95,487		$	78,298

In the third quarter of 2015, the Company refined its methodology for categorizing sales within the RV Segment. This change improves accuracy, but has no impact on total RV Segment net sales or trends. Prior periods have been reclassified to conform to this presentation.

Corporate expenses are allocated between the segments based upon net sales. Accretion related to contingent consideration and other non-segment items are included in the segment to which they relate.

Net sales and operating profit by segment, as a percent of the total, were as follows for the years ended December 31:



	2015	2014	2013
Net sales
RV Segment	92%	90%	88%
MH Segment	8%	10%	12%
Total net sales	100%	100%	100%

Operating Profit:
RV Segment	90%	89%	85%
MH Segment	10%	11%	15%
Total segment operating profit	100%	100%	100%

Operating profit margin by segment was as follows for the years ended December 31:



	2015	2014	2013
RV Segment	8.4%	8.1%	7.6%
MH Segment	10.6%	9.3%	9.8%

The Company’s RV Segment manufactures or distributes a variety of products used in the production of RVs, including:



● Steel chassis for towable RVs	● Furniture and mattresses
● Axles and suspension solutions for towable RVs	● Entry, luggage, patio and ramp doors
● Slide-out mechanisms and solutions	● Electric and manual entry steps
● Thermoformed bath, kitchen and other products	● Awnings and awning accessories
● Windows	● Electronic components
● Manual, electric and hydraulic stabilizer and leveling systems	● LED televisions, sound systems, navigation systems and wireless backup cameras
● Chassis components	● Other accessories

The Company also supplies certain of these products to the RV aftermarket and to adjacent industries, including buses, trailers used to haul boats, livestock, equipment and other cargo, and pontoon boats. RVs may be motorized (motorhomes) or towable (travel trailers, fifth-wheels, folding camping trailers and truck campers). Approximately 73 percent of the Company’s RV Segment net sales in 2015 were of products to original equipment manufacturers (“OEMs”) of travel trailer and fifth-wheel RVs. Travel trailer and fifth-wheel RVs accounted for 84 percent of all RVs shipped by the industry in 2015 .

The Company’s MH Segment manufactures or distributes a variety of products used in the production of manufactured homes, including:



●Vinyl and aluminum windows	●Aluminum and vinyl patio doors
●Thermoformed bath and kitchen products	●Steel chassis and related components
●Steel and fiberglass entry doors	●Axles

The Company also supplies certain of these products to the manufactured housing aftermarket and to adjacent industries, including modular housing and mobile office units. Certain of the Company’s MH Segment customers manufacture both manufactured homes and modular homes, and certain of the products manufactured by the Company are suitable for both types of homes. As a result, the Company is not always able to determine in which type of home its products are installed.

The RV and manufactured housing industries, as well as other industries where the Company sells products or where its products are used, historically have been seasonal and are generally at the highest levels when the weather is moderate. Accordingly, the Company’s sales and profits have generally been the highest in the second quarter and lowest in the fourth quarter. However, because of fluctuations in dealer inventories, the impact of international, national and regional economic conditions and consumer confidence on retail sales of RVs and other products for which the Company sells its components, the timing of dealer orders, and the impact of severe weather conditions on the timing of industry-wide shipments from time to time, current and future seasonal industry trends may be different than in prior years.

Over the past several years, largely due to the growth the Company has experienced in its RV Segment, the MH Segment

is now a smaller part of the Company. MH Segment net sales were 8 percent of consolidated 2015 net sales. In addition, the Company has recently increased its focus on the significant opportunities in the aftermarket. The Company continues to evaluate the information provided to its Chief Operating Decision Maker (“CODM”), and assess how changes to its reporting structures would be used by the CODM to assess the performance of the Company’s operating segments and make decisions about resource allocations. Any such changes could necessitate a revision to the operating segments the Company reports.

INDUSTRY BACKGROUND

Recreational Vehicle Industry

An RV is a vehicle designed as temporary living quarters for recreational, camping, travel or seasonal use. RVs may be motorized (motorhomes) or towable (travel trailers, fifth-wheel travel trailers, folding camping trailers and truck campers).

The annual sales cycle for the RV industry has historically started in October after the “Open House” in Elkhart, Indiana where many of the largest RV OEMs display product to RV retail dealers, and ends after the conclusion of the summer selling season in September in the following calendar year. Between October and March, industry-wide wholesale shipments of travel trailer and fifth-wheel RVs have historically exceeded retail sales as dealers build inventories to support anticipated sales. Between April and September, the spring and summer selling seasons, retail sales of travel trailer and fifth-wheel RVs have historically exceeded industry-wide wholesale shipments. Based on dealer surveys and information from wholesale finance companies, industry analysts report dealer inventories of travel trailer and fifth-wheel RVs are in-line with anticipated retail demand in the upcoming

spring 2016 selling season. During 2015, wholesale sales of travel trailers and fifth-wheel RV exceeded retail sales by less than 1 percent, indicating dealers are managing their inventories more tightly and suggesting that changes in retail demand could more closely affect wholesale sales than in recent history.

According to the Recreation Vehicle Industry Association (“RVIA”), industry-wide wholesale shipments of travel trailer and fifth-wheel RVs in 2015 , the Company’s primary RV markets, increased 5 percent to 314,400 units compared to 2014 , as a result of:


•	An estimated 35,900 unit increase in retail demand in 2015 , or 13 percent , as compared to 2014 . In addition, retail demand is typically revised upward in subsequent months, primarily due to delayed RV registrations.


•	RV dealers increasing inventory levels by 1,200 units in 2015 .

While the Company measures its RV sales against industry-wide wholesale shipment statistics, the underlying health of the RV industry is determined by retail demand. A comparison of the number of units and the year-over-year percentage change in industry-wide wholesale shipments and retail sales of travel trailers and fifth-wheel RVs, as reported by Statistical Surveys, Inc., as well as the resulting estimated change in dealer inventories, for both the United States and Canada, is as follows:



	Wholesale		Retail		Estimated Unit Impact on Dealer
	Units	Change	Units	Change	Inventories
Year ended December 31, 2015	314,400	5%	313,200	13%	1,200
Year ended December 31, 2014	298,900	12%	277,300	11%	21,600
Year ended December 31, 2013	268,000	10%	250,800	13%	17,200

According to the RVIA, industry-wide wholesale shipments of motorhome RVs in 2015 increased 8 percent to 47,300 units compared to 2014 . Retail demand for motorhome RVs also increased 12 percent in 2015 , following a 16 percent increase in retail demand in 2014 .

The RVIA has projected a modest increase in industry-wide wholesale shipments of travel trailer and fifth-wheel RVs for 2016 . Several RV OEM customers are introducing new product lines, additional features and adding production capacity. Retail sales of RVs historically have been closely tied to general economic conditions, as well as consumer confidence which was above historical averages in 2015. Furthermore, retail sales of travel trailer and fifth-wheel RVs have increased in 72 of the last 74 months on a year-over-year basis. Industry resources report strong attendance and high consumer interest at RV shows around the United States and Canada in late 2015 and into early 2016.

Although future retail demand is inherently uncertain, RV industry fundamentals in 2015 , including generally low unemployment, low fuel prices and available credit for dealers and RV consumers, were strong, as evidenced by the 13 percent increase in industry-wide retail sales of travel trailer and fifth-wheel RVs. The Company believes the strong RV industry fundamentals, aided by product innovation, demographic tailwinds, industry promotion and the advent of stronger dealer networks, are positive signs for 2016 . The Company also remains confident in its ability to exceed industry growth rates through new product introductions, market share gains, aftermarket sales, acquisitions and ongoing investments in research and development, engineering, quality and customer service.

Over the long term, the Company expects RV industry sales to be aided by positive demographics and the continued popularity of the “RV Lifestyle”. The number of consumers between the ages of 55 and 70 are projected to total 56 million by 2020, 27 percent higher than in 2010, according to U.S. Census figures, and one in ten vehicle-owning households between the ages of 50 and 64 own at least one RV. The RVIA reported much of the success of the RV industry has been driven by the Baby Boomer generation. The size of that generation is beginning to wane, and younger generations, Generation X and Millennials are becoming more relevant to future industry growth. Generation X and Millennials are more diverse, requiring new and creative marketing approaches to attract them to the RV industry. The RVIA has an advertising campaign promoting the “RV Lifestyle” targeted at both parents aged 30 - 49 with children at home, as well as couples aged 50 - 64 with no children at home. In addition, the RV OEMs have developed more entry level units, specifically targeting younger families, in both towables and motorhomes. The popularity of traveling in RVs to NASCAR and other sporting events, more family-oriented domestic vacations, and using RVs as second homes, are trends that could continue to motivate consumer demand for RVs. RVIA studies indicate RV vacations cost significantly less than other forms of vacation travel, even when factoring in fuel prices and the cost of RV ownership. More details can be found at www.RVIA.org.

Manufactured Housing Industry

Manufactured homes are built entirely in a factory on permanent steel undercarriages or chassis to which axles and wheels are attached. The homes are then transported to a manufactured housing dealer which sells and transports the home to the buyer’s home site. The manufactured home is installed pursuant to a federal building code administered by the U.S. Department of Housing and Urban Development (“HUD”). The federal standards regulate manufactured housing design and construction, methods to site and secure the home at a home site, strength and durability, transportability, fire resistance, energy efficiency and quality. The HUD code also sets performance standards for the heating, plumbing, air conditioning, thermal and electrical systems. It is the only federally regulated national building code.

Manufactured homes contain one or more “floors” or sections which can be joined to make larger homes. A typical section may range in size from 800 to 1,200 square feet. During 2015 , multi-section homes were 54 percent of the total manufactured homes produced, consistent with 2012 - 2014. Multi-section homes averaged 64 percent of the total manufactured homes produced between 2007 - 2010. Multi-section manufactured homes generally contain more of the Company’s products than single-section manufactured homes.

The Institute for Building Technology and Safety (“IBTS”) reported industry-wide wholesale shipments of manufactured homes were 70,500 units in 2015 , an increase of 10 percent from 2014 . For the full year 2014 , there were 64,300 industry-wide wholesale shipments of manufactured homes, an increase of 7 percent compared to 2013 .

For the 20 years prior to the sub-prime boom in home financing, manufactured housing industry-wide wholesale shipments represented 20 percent or more of single-family housing starts. During the sub-prime years of 2003 - 2007, when low cost loans were available for financing purchases of site-built homes, many traditional buyers of manufactured homes were able to purchase site-built homes instead of manufactured homes, and manufactured housing’s share of the single-family market dropped to below 10 percent. Since the sub-prime “bubble” burst in 2007 and 2008, this market share has averaged about 11 percent, despite interest rates for manufactured home loans remaining historically high relative to interest rates for site-built home loans. Accordingly, the Company believes the manufactured housing industry may experience a modest recovery if the economy continues to improve and home buyers look at affordable housing options. However, because of the current real estate, credit and economic environment, including the availability of site built homes at stable prices and high interest rate spreads between conventional mortgages for site-built homes and loans for manufactured homes, the Company expects industry-wide wholesale shipments of manufactured homes to remain low until these conditions improve.

In addition, certain provisions of the Dodd-Frank Act, which regulate financial transactions, have made certain types of mortgages, including chattel loans, more difficult or more expensive to obtain – in particular those historically used to finance the purchase of manufactured homes. Although the Consumer Financial Protection Bureau has been reviewing this matter and legislation has been passed by the U.S. House of Representatives to address this matter, there can be no assurance of the outcome.

Nevertheless, the Company believes long-term growth prospects for manufactured housing remain positive because of the quality and affordability of the home, and favorable demographic trends, including the increasing number of retirees who, in the past, had represented a significant market for manufactured homes.

RESULTS OF OPERATIONS

Year Ended December 31, 2015 Compared to Year Ended December 31, 2014

Consolidated Highlights

•

Consolidated net sales for the year ended December 31, 2015 increased to a record $1.4 billion , 18 percent higher than the year ended December 31, 2014 . Acquisitions completed by the Company in 2015 , as well as the Furrion Limited (“Furrion”) distribution and supply agreement for premium electronics (the “Furrion Agreement”), added $52 million in net sales in 2015 . The five percent increase in industry-wide wholesale shipments of travel trailer and fifth-wheel RVs, the Company’s primary RV market, as well as increased content per unit through market share gains, positively impacted net sales growth in 2015 .


•	In 2015 , the Company continued to grow sales to both adjacent industries and the aftermarket for the RV and manufactured housing segments. Aggregate net sales to adjacent industries increased 40 percent to $193 million and aftermarket net sales increased 62 percent to $103 million . Together, these markets now account for 21 percent of consolidated net sales, double the percentage from 2010.

•


•	Consolidated operating profits during 2015 increased 22 percent , to $116.3 million in 2015 from $95.5 million in 2014 . Operating profit margin increased to 8.3 percent in 2015 from 8.0 percent in 2014 .

•

Raw material costs continue to fluctuate. In particular, aluminum rose nearly 20 percent during the second half of 2014, and dropped during the second half of 2015. Similarly, the cost of steel used in certain of the Company’s manufactured components dropped during the course of 2015; however, certain market prices have increased in early 2016 from the low points experienced during 2015. Raw material costs are expected to remain volatile.


•	During 2015 the Company completed three acquisitions:


•	Signature Seating -- A Ft. Wayne, Indiana-based manufacturer of furniture solutions for fresh water boat manufacturers, primarily pontoon boats, with annual sales of approximately $16 million;


•	Spectal Industries -- A Canada-based manufacturer of windows and doors primarily for school buses, as well as commercial buses, emergency vehicles, trucks, agricultural equipment and RVs, with annual sales of $25 million.


•	EA Technologies -- An Elkhart, Indiana-based manufacturer of custom steel and aluminum parts and provider of electro-deposition (‘e-coat’) and powder coating services for RV, bus, medium-duty truck, automotive, recreational marine, specialty and utility trailer, and military applications, with annual sales of $17 million.

The Company plans to grow sales and leverage its purchasing power and manufacturing capabilities in addition to its engineering and design resources to improve the cost structure of the acquired operations. After funding these acquisitions in 2015, the Company believes it has access to sufficient financial capital and staff to take advantage of additional investment opportunities.


•	For 2015 , the Company achieved an 18.4 percent return on equity, an improvement from the 17.5 percent return on equity in 2014 .


•	In April 2015, the Company paid a special dividend of $2.00 per share, aggregating $48.2 million.

RV Segment

Net sales of the RV Segment in 2015 increased 20 percent , or $210 million , compared to 2014 . Net sales of components were to the following markets for the years ending December 31:



(In thousands)	2015		2014		Change
RV OEMs:
Travel trailers and fifth-wheels	$	938,787	$	841,497	12%
Motorhomes	86,513		70,332		23%
RV aftermarket	87,447		49,570		76%
Adjacent industries	172,181		113,049		52%
Total RV Segment net sales	$	1,284,928	$	1,074,448	20%

According to the RVIA, industry-wide wholesale shipments for the years ended December 31, were:



	2015	2014	Change
Travel trailer and fifth-wheel RVs	314,400	298,900	5%
Motorhomes	47,300	43,900	8%

The Company’s net sales growth in components for travel trailer and fifth-wheel RVs during 2015 exceeded the increase in industry-wide wholesale shipments of travel trailer and fifth-wheel RVs during the same period primarily due to market share gains and acquisitions completed in 2015 , which acquisitions added $6 million in net sales during 2015 .

The Company’s net sales growth in components for motorhomes during 2015 exceeded the increase in industry-wide wholesale shipments of motorhomes during the same period primarily due to market share gains and an acquisition completed in 2014 , which acquisition added $8 million in net sales during 2015 . Over the past few years, the Company has been expanding its product line of components for motorhomes in order to increase its customer base and market penetration, and further growth is expected.

The trend in the Company’s average product content per RV produced is an indicator of the Company’s overall market share of components for new RVs. The Company’s average product content per type of RV, calculated based upon the Company’s net sales of components to RV OEMs for the different types of RVs produced for the years ended December 31, divided by the industry-wide wholesale shipments of the different types of RVs for the same period, was:



Content per:	2015		2014		Change
Travel trailer and fifth-wheel RV	$	2,987	$	2,816	6%
Motorhome	$	1,810	$	1,602	13%

In the third quarter of 2015, the Company refined the calculation of RV content per unit. This change improves accuracy, but has no impact on total RV Segment net sales or trends of content per unit. Prior periods have been reclassified to conform to this presentation.

The Company’s average product content per type of RV excludes sales to the aftermarket and adjacent industries. Content per RV is impacted by market share gains, acquisitions, new product introductions, and changes in selling prices for the Company’s products, as well as changes in the types of RVs produced industry-wide.

The Company’s net sales to the RV aftermarket increased during 2015 primarily due to market share gains and acquisitions completed in 2014 , which acquisitions added $20 million in net sales during 2015 . With an estimated 10 million households in North America owning an RV and the Company’s increasing content per unit, the Company continues to believe there are significant opportunities in the RV aftermarket.

The Company’s net sales to adjacent industries, including components for buses, trailers used to haul boats, livestock, equipment and other cargo, and pontoon boats, increased during 2015 primarily due to market share gains and acquisitions completed in 2015 , which acquisitions added $37 million in net sales during 2015 . The Company continues to believe there are significant sales growth opportunities in adjacent industries.

Excluding the severance charges in 2015 and the loss on sale of extrusion assets in 2014, operating profit of the RV Segment was $ 107.5 million in 2015 , an improvement of $ 20.9 million, reflecting a 10 percent incremental margin compared to 2014 . This increase in RV Segment operating profit was less than the Company’s expected 15 to 20 percent incremental margin. The operating profit margin of the RV Segment in 2015 was adversely impacted by:

•

Fixed costs which were approximately $15 to $20 million higher than in 2014. Over the past couple of years, the Company made significant investments in manufacturing capacity, both facilities and personnel, to prepare for the expected increase in net sales in 2015 and beyond. In addition to investments in fixed costs to expand manufacturing capacity, the Company made improvements in marketing, human resources, engineering, customer service and other critical departments. The Company also added the teams from acquired businesses as well as related amortization of intangible assets. As industry-wide wholesale shipments growth has slowed from multi-year double-digit rates to mid-single-digit rates, the Company evaluated its expenses and in the fourth quarter of 2015 initiated a focused program to reduce indirect labor costs to improve operating leverage. Annual cost savings of approximately $8 to $10 million were identified and implemented late in 2015 and will come from aligning staff levels more closely to anticipated growth.


•	An increase in stock-based compensation of approximately $3.2 million due to the implementation of the new 2015 compensation program for management.


•	Sales mix changes of its products, including lower sales of fifth-wheel products.


•	A charge of $1.5 million related to environmental costs.


•	A voluntary safety recall of the Company’s double and triple Coach Steps, for which the Company recorded a reserve of $1.1 million for the contingent obligation in selling, general and administrative expenses.

Partially offset by:

•

Investments over the past several years to increase capacity and improve operating efficiencies, which benefit operating results. The Company added capacity ahead of projected demand, which enabled it to efficiently fulfill customer orders as demand increased. Further, the Company has implemented additional efficiency improvements, including lean, automation and employee retention initiatives to improve operating efficiencies going forward.


•	Lower material costs for certain raw material inputs. After increasing in the latter part of 2014, steel and aluminum costs declined over the course of 2015. Nevertheless, material costs, which are subject to global supply and demand forces, remain volatile.


•	Better fixed costs absorption by spreading fixed costs over a $212 million larger sales base.

MH Segment

Net sales of the MH Segment in 2015 increased 2 percent , or $2 million , compared to 2014 . Net sales of components were to the following markets for the years ending December 31:



(In thousands)	2015		2014		Change
Manufactured housing OEMs	$	82,032	$	77,421	6%
Manufactured housing aftermarket	15,559		14,186		10%
Adjacent industries	20,547		24,727		(17)%
Total MH Segment net sales	$	118,138	$	116,334	2%

According to the IBTS, industry-wide wholesale shipments for the years ended December 31, were:



	2015	2014	Change
Total homes produced	70,500	64,300	10%
Total floors produced	109,600	99,200	10%

Industry-wide wholesale shipments of manufactured homes increased during 2015 when compared to 2014 , as well as the Company’s net sales of components for new manufactured homes increased during 2015 , primarily due to customer mix, as the Company’s content per unit varies between customers.

Manufactured homes contain one or more “floors” or sections which can be joined to make larger homes. The larger homes typically contain more of the Company’s products. The Company’s average product content per manufactured home produced by the industry and total manufactured home floors produced by the industry, calculated based upon the Company’s net sales of components to manufactured housing OEMs for newly produced manufactured homes for the years ended December 31, divided by the number of manufactured homes and manufactured home floors produced by the industry, respectively, for the same period, was:



Content per:	2015		2014		Change
Home produced	$	1,163	$	1,203	(3)%
Floor produced	$	748	$	783	(4)%

The Company’s average product content per manufactured home excludes sales of replacement parts to the aftermarket and sales to adjacent industries. Content per manufactured home and content per floor are impacted by market share changes, acquisitions and new product introductions, and changes in selling prices for the Company’s products, as well as changes in the types of floors produced industry-wide.

Operating profit of the MH Segment was $ 12.5 million in 2015 , an increase of $ 1.6 million compared to 2014 primarily due to the increase in net sales from higher unit sales.

Year Ended December 31, 2014 Compared to Year Ended December 31, 2013

Consolidated Highlights


•	Consolidated net sales for the year ended December 31, 2014 increased to $1.2 billion , 17 percent higher than the year ended December 31, 2013 , primarily due to the 20 percent increase in net sales of the Company’s RV Segment. Acquisitions completed by the Company in 2014 added $36 million in net sales in 2014 . The twelve percent increase

in industry-wide wholesale shipments of travel trailer and fifth-wheel RVs, the Company’s primary RV market, as well as increased content per unit through market share gains, positively impacted net sales growth in 2014 .


•	In 2014 , the Company continued to grow both adjacent industries and the aftermarket for the RV and manufactured housing segments. Aggregate net sales to adjacent industries increased 14 percent to $138 million and aftermarket net sales increased 63 percent to $64 million .

•

For the full-year 2014 , the Company’s net income increased to $62.3 million , or $2.56 per diluted share, up from net income of $50.1 million , or $2.11 per diluted share, in 2013 . Excluding the loss related to the sale of the Company’s aluminum extrusion-related assets in 2014 and charges for executive succession in 2013 , net income would have been $63.5 million in 2014 , or $2.61 per diluted share, up from net income of $51.3 million, or $2.16 per diluted share, in 2013 . Net income in 2014 was also impacted by facility start-up and realignment costs, which reduced net income per diluted share by approximately $0.09.


•	Consolidated operating profits during 2014 increased 22 percent , to $95.5 million in 2014 from $78.3 million in 2013 . Operating profit margin increased to 8.0 percent in 2014 from 7.7 percent in 2013 . As a result of facility start-up and realignment costs, as well as higher health insurance costs, the Company’s incremental margin in 2014 was lower than its historical average.


▪	During 2014 the Company completed four acquisitions, which added approximately $68 million of acquired annual sales, of which $36 million occurred in 2014. The four operations acquired by the Company during 2014 were:


▪	Innovative Design Solutions, Inc. (“IDS”) - A designer, developer and manufacturer of electronic systems encompassing a wide variety of RV, automotive, medical and industrial applications, with annual sales of $19 million, of which $15 million were to the Company;


▪	Star Design, LLC (“Star Design”) - A manufacturer of thermoformed sheet plastic products for the RV, bus and specialty vehicle industries, with annual sales of $10 million;


▪	Power Gear ^® and Kwikee ^® brands (RV business of Actuant Corporation) - A manufacturer of leveling systems, slide-out mechanisms and steps, primarily for motorhome RVs, with annual sales of $28 million;


▪	Duncan Systems, Inc. (“Duncan Systems”) - A supplier of replacement motorhome windshields, awnings, and RV, heavy truck, and specialty vehicle glass and windows, primarily to fulfill insurance claims, with annual sales of $26 million.


•	For 2014 , the Company achieved a 17.5 percent return on equity, an improvement from the 16.0 percent return on equity in 2013 .


•	In January 2014, the Company paid a special dividend of $2.00 per share, aggregating $47 million.

RV Segment

Net sales of the RV Segment in 2014 increased 20 percent , or $181 million , compared to 2013 . Net sales of components were to the following markets for the years ending December 31:



(In thousands)	2014		2013		Change
RV OEMs:
Travel trailers and fifth-wheels	$	841,497	$	727,783	16%
Motorhomes	70,332		47,937		47%
RV aftermarket	49,570		25,334		96%
Adjacent industries	113,049		92,640		22%
Total RV Segment net sales	$	1,074,448	$	893,694	20%

According to the RVIA, industry-wide wholesale shipments for the years ended December 31, were:



	2014	2013	Change
Travel trailer and fifth-wheel RVs	298,900	268,000	12%
Motorhomes	43,900	38,300	15%

The Company’s net sales growth in components for travel trailer and fifth-wheel RVs during 2014 exceeded the increase in industry-wide wholesale shipments of travel trailer and fifth-wheel RVs primarily due to market share gains and acquisitions completed in 2014 , which acquisitions added $4 million in net sales during 2014 .

The Company’s net sales to the RV aftermarket increased during 2014 primarily due to market share gains and acquisitions completed in 2014 , which acquisitions added $9 million in net sales during 2014 . With an estimated 10 million households in North America owning an RV, the Company continues to believe there are significant opportunities in the RV aftermarket.



Content per:	2014		2013		Change
Travel trailer and fifth-wheel RV	$	2,816	$	2,713	4%
Motorhome	$	1,602	$	1,272	26%

The Company’s net sales to the RV aftermarket increased during 2014 primarily due to market share gains and acquisitions completed in 2014, which acquisitions added $15 million in net sales during 2014.

The Company’s net sales to adjacent industries, including components for buses, trailers used to haul boats, livestock, equipment and other cargo, truck campers and truck caps, increased during 2014 primarily due to market share gains and acquisitions completed in 2014, which acquisitions added $8 million in net sales during 2014.

Operating profit of the RV Segment was $86.6 million in 2014, an improvement of $18.3 million compared to 2013. This increase in RV Segment operating profit was less than the Company’s expected 15 to 20 percent incremental margin. The operating profit margin of the RV Segment in 2014 was adversely impacted by:


•	Higher health insurance costs, largely due to increased employee participation.


•	Fixed costs, which were approximately $15 million higher than in 2013. In response to the increase in net sales, the Company bolstered its administrative staff during 2014, including the teams that were acquired through acquisitions and new employees hired in preparation for future growth and investment opportunities.

In early 2014, the Company entered into two new leases which added more than 700,000 square feet of production and distribution capacity. These two new leased facilities became operational during the latter half of 2014 and the realignment of the related operations were completed.

Partially offset by:


•	The elimination of production inefficiencies and costs incurred as a result of significant growth which occurred in 2012 and early 2013.


•	Lower payroll costs as a percent of sales, largely due to a reduction in state unemployment tax rates and improved employee retention.


•	Lower warranty costs as a percent of sales, largely due to lower claim experience.


•	The spreading of fixed costs over a $181 million larger sales base.

MH Segment

Net sales of the MH Segment in 2014 decreased 5 percent , or $6 million, compared to 2013 . Net sales of components were to the following markets for the years ending December 31:



(In thousands)	2014		2013		Change
Manufactured housing OEMs	$	77,421	$	80,245	(4)%
Manufactured housing aftermarket	14,186		13,719		3%
Adjacent industries	24,727		27,918		(11)%
Total MH Segment net sales	$	116,334	$	121,882	(5)%

According to the IBTS, industry-wide wholesale shipments for the years ended December 31, were:



	2014	2013	Change
Total homes produced	64,300	60,200	7%
Total floors produced	99,200	92,900	7%

The Company’s net sales growth in components for new manufactured homes was less than the increase in industry-wide wholesale shipments of manufactured homes, primarily due to customer mix, as the Company’s content per unit varies between customers, and loss of market share for certain products. Content per manufactured home and content per floor are impacted by market share changes, acquisitions and new product introductions, changes in selling prices for the Company’s products, as well as changes in the types of floors produced industry-wide.

Net sales to the manufactured housing aftermarket increased due to market share gains.

The trend in the Company’s average product content per manufactured home produced is an indicator of the Company’s overall market share of components for new manufactured homes. Manufactured homes contain one or more “floors” or sections which can be joined to make larger homes. The larger homes typically contain more of the Company’s products. The Company’s average product content per manufactured home produced by the industry and total manufactured home floors produced by the industry, calculated based upon the Company’s net sales of components to manufactured housing OEMs for newly produced manufactured homes for the years ended December 31, divided by the number of manufactured homes and manufactured home floors produced by the industry, respectively, for the same period, was:



Content per:	2014		2013		Change
Home produced	$	1,203	$	1,332	(10)%
Floor produced	$	783	$	864	(9)%

Operating profit of the MH Segment was $10.9 million in 2014 , a decrease of $1.1 million compared to 2013 primarily due to the decline in net sales.

Sale of Extrusion Assets

In April 2014, the Company entered into a six -year aluminum extrusion supply agreement, and concurrently sold certain aluminum extrusion assets. The Company recorded a pre-tax loss of $2.0 million in the second quarter of 2014 on the sale of the aluminum extrusion-related assets. In connection with the sale, the Company received $0.3 million at closing and a $7.2 million note receivable collectible over the next four years , recorded at its present value of $6.4 million on the date of closing. During 2015 and 2014, the Company received installments of $3.8 million under the note. At December 31, 2015 , the present value of the remaining amount due under the note receivable was $3.2 million .

In July 2015, the Company agreed to terminate the supply agreement, and as consideration the Company received a $2.0 million note receivable collectible in 2019 and 2020. The Company recorded this note receivable at its present value of $1.6 million and a corresponding gain of $1.6 million in the 2015 third quarter. At December 31, 2015 , the present value of the remaining amount due under the note receivable was $1.6 million .

Severance and Executive Succession

In 2015, the Company initiated a focused program to reduce indirect labor costs. In connection with this cost reduction program, the Company incurred severance charges of $3.7 million .

In 2013, in connection with the Company’s executive succession and corporate relocation from White Plains, New York to Elkhart County, Indiana, the Company recorded pre-tax charges of $1.9 million, related to contractual obligations for severance and the acceleration of equity awards held by certain employees whose employment terminated as a result of the executive succession and relocation to Indiana. The liability for executive succession and severance obligations were paid through 2015.

Provision for Income Taxes

The effective income tax rate for 2015 was 35.0 percent , more than the 34.5 percent in 2014 . Both 2015 and 2014 benefited from federal and state tax credits, as well as the reversal of federal and state tax reserves, due to the closure of the statutes of limitation of federal and state tax years, with a larger benefit in 2014 . The Company estimates the 2016 effective income tax rate to be approximately 35 percent to 36 percent.

The effective income tax rate for 2014 was 34.5 percent compared to 35.7 percent in 2013 .

LIQUIDITY AND CAPITAL RESOURCES

The Consolidated Statements of Cash Flows reflect the following for the years ended December 31:



(In thousands)	2015			2014			2013
Net cash flows provided by operating activities	$	95,018		$	107,020		$	82,677
Net cash flows used for investing activities	(66,116		)	(144,074		)	(36,055		)
Net cash flows (used for) provided by financing activities	(16,601		)	(29,222		)	9,719
Net increase (decrease) in cash	$	12,301		$	(66,276	)	$	56,341

Cash Flows from Operations

Net cash flows from operating activities in 2015 were $12.0 million lower than in 2014 , primarily due to:

•

A larger increase in inventories of $9.3 million in 2015 compared to 2014 . The increase in inventories in 2015 was primarily due to increases in sourced products, including inventory to support the Furrion Agreement (discussed immediately below) and acquisitions completed in 2015. A portion of the increase in inventory is also due to strategic positions to take advantage of favorable market conditions and include the strategic onboarding of a new supplier. Inventory turnover for 2015 decreased to 6.9 turns compared to 8.2 turns for 2014 . The Company is working to improve inventory turnover over the coming quarters, however, inventory turns may trend lower due to growth in product categories such as imported furniture and Furrion electronics.

•

In July 2015, the Company entered into a 6-year exclusive distribution and supply agreement with Furrion Limited (“Furrion”), a Hong Kong based firm that designs, engineers and manufactures premium electronics. This agreement provides the Company with the rights to distribute Furrion’s complete line of products to OEMs and aftermarket customers in the RV, specialty vehicle, utility trailer, horse trailer, marine, transit bus and school bus industries throughout the United States and Canada. Furrion currently supplies a premium line of LED televisions, sound systems, navigation systems, wireless backup cameras, solar prep units, power solutions and kitchen appliances, primarily to the RV industry. In connection with this agreement, the Company acquired Furrion’s current inventory, as well as Furrion’s deposits on inventory scheduled for delivery, for approximately $11 million.


•	A $5.9 million decrease in accounts payable and accrued expenses and other liabilities in 2015 compared to a $31.2 million increase in 2014 , primarily due to increased imports and other prepaid inventories, efforts to increase consignments as well as the timing of purchases.

Partially offset by:


•	A $12.1 million increase in net income in 2015 compared to 2014 .


•	Increases in non-cash charges against net income in 2015 including:


•	A $9.0 million increase in depreciation and amortization primarily due to investments in acquisitions and capital expenditures.


•	A $3.2 million increase in stock-based compensation in 2015 compared to 2014 .


•	An increase in deferred taxes of $1.1 million in 2015 compared to a $5.5 million decrease in 2014 due to an increase in certain expenses currently not deductible for tax purposes in 2015 .

Over the long term, based on the Company’s historical collection and payment patterns, as well as inventory turnover, and also giving consideration to emerging trends and changes to the sales mix, the Company expects working capital to increase or decrease equivalent to approximately 11 to 14 percent of the increase or decrease, respectively, in net sales. However, there are many factors that can impact this relationship, especially in the short term.

Depreciation and amortization was $41.6 million in 2015 , and is expected to be approximately $42 million to $47 million for fiscal year 2016 . Non-cash stock-based compensation in 2015 was $16.1 million, including $2.0 million of deferred stock units issued to certain executive officers in lieu of cash for a portion of their 2014 incentive compensation in accordance with their compensation arrangements. Non-cash stock-based compensation is expected to be approximately $16 million to $18 million in 2016 .

Net cash flows from operating activities in 2014 were $24.3 million higher than in 2013 , primarily due to:


•	A $12.1 million increase in net income in 2014 compared to 2013.


•	A $24.0 million larger increase in accounts payable and accrued expenses and other liabilities in 2014 compared to 2013, primarily due to the increases in sales, production and earnings, as well as the timing of these payments.


•	An $8.5 million smaller increase in accounts receivable in 2014 compared to 2013, primarily due to a decrease in days sales outstanding to 15 at December 31, 2014, compared to 17 at December 31, 2013.


•	A $5.1 million increase in depreciation and amortization primarily due to the acquisitions completed during 2014 and capital expenditures over the last couple years.

Partially offset by:


•	An $18.5 million larger increase in inventories in 2014 as compared to 2013. The larger increase in inventories in 2014 was primarily to support the 41 percent increase in net sales in January 2015. Higher raw material costs and increased lead time on imports also contributed to the increase in inventory. Inventory turnover for 2014 improved to 8.2 turns compared to 7.9 turns for 2013.


•	An increase in deferred taxes of $5.5 million in 2014 compared to a $0.3 million decrease in 2013 due to an increase in certain expenses not currently deductible for tax purposes in 2014.

Cash Flows from Investing Activities

Cash flows used for investing activities of $66.1 million in 2015 were primarily comprised of $41.1 million for the acquisition of businesses and $29.0 million for capital expenditures.

In January 2015 , the Company acquired the business and certain assets of EA Technologies, a manufacturer of custom steel and aluminum parts and provider of electro-deposition (‘e-coat’) and powder coating services for RV, bus, medium-duty truck, automotive, recreational marine, specialty and utility trailer, and military applications. The purchase price was $9.2 million , of which $6.6 million was paid in the fourth quarter of 2014, with the balance paid at closing.

In April 2015, the Company acquired the business and certain assets of Spectal, a Canada-based manufacturer of windows and doors primarily for school buses, as well as commercial buses, emergency vehicles, trucks, agricultural equipment and RVs. The purchase price was $22.3 million paid at closing, plus contingent consideration based on future sales of this operation.

In August 2015, the Company acquired the business and certain assets of Roehm Marine, LLC, also known as Signature Seating, a manufacturer of furniture solutions for fresh water boat manufacturers, primarily pontoon boats. The purchase price was $16.0 million paid at closing, plus contingent consideration based on future sales of this operation.

The Company’s capital expenditures are primarily for replacement and growth. Over the long term, based on the Company’s historical capital expenditures, the replacement portion has averaged approximately 2 percent of net sales, while the growth portion has averaged approximately 10 to 12 percent of the annual increase in net sales. However, there are many factors that can impact the actual spending compared to these historical averages. In 2015 capital expenditures of $29 million were in line with historical averages. However, in 2014, the Company’s capital expenditures were $42.5 million, higher than the aforementioned historical averages. The increased spending was the result of several long-term growth and capacity expansion initiatives. As such, coupled with the success achieved in lean manufacturing to free up additional manufacturing space, the Company believes it is well positioned to meet the increased manufacturing demands expected for 2016 and into 2017 with capital expenditures at or below the historical levels.

The Company estimates capital expenditures will be $20 million to $26 million in 2016 , including $11 million to $14 million of “replacement” capital expenditures and $9 million to $12 million of “growth” capital expenditures. Additional capital expenditures may be required in 2016 depending on the extent of the sales growth, the effect of any acquisitions and other initiatives by the Company.

The 2015 capital expenditures and acquisitions were funded by cash from operations and periodic borrowings under the Company’s line of credit and $50 million of Senior Promissory Notes issued under the “shelf-loan” facility with Prudential. The

2016 capital expenditures are expected to be funded primarily from cash generated from operations, as well as periodic borrowings under the Company’s line of credit.

Cash flows used for investing activities of $144.1 million in 2014 were primarily comprised of $42.5 million for capital expenditures and $106.8 million for the acquisition of businesses.

In February 2014 , the Company acquired IDS, a designer, developer and manufacturer of electronic systems encompassing a wide variety of RV applications. IDS also manufactures electronic systems for automotive, medical and industrial applications. The purchase price was $35.9 million , of which $34.2 million was paid at closing, with the balance to be paid out annually over the subsequent three years , plus contingent consideration based on future sales of this operation.

In March 2014 , the Company acquired the business and certain assets of Star Design, which manufactures thermoformed sheet plastic products for the RV, bus and specialty vehicle industries. The purchase price was $12.2 million paid at closing.

In August 2014 , the Company acquired the business and certain assets of Duncan Systems, an aftermarket distributor of replacement motorhome windshields, awnings, and RV, heavy truck and specialty vehicle glass and windows, primarily to fulfill insurance claims. The purchase price was $18.0 million paid at closing, plus contingent consideration based on future sales of this operation.

Cash Flows from Financing Activities

Cash flows used by financing activities in 2015 included the payment of a special dividend of $2.00 per share of the Company’s Common Stock, representing an aggregate of $48.2 million , paid to stockholders of record as of March 27, 2015, partially offset by a net increase in indebtedness of $34.4 million . The increase in indebtedness includes new debt comprised of $50.0 million of Senior Promissory Notes drawn in March 2015 under the Prudential Investment Management, Inc. “shelf-loan” facility, partially offset by a $15.7 million decrease in debt due to paying down the Company’s line of credit. The Company had no outstanding borrowings under the line of credit as of December 31, 2015 , but borrowings reached a high of $71.6 million during 2015 . In addition, the Company made $4.0 million in payments for contingent consideration related to acquisitions.

Cash flows used for financing activities in 2014 included the payment of a special dividend of $2.00 per share of the Company’s Common Stock, representing an aggregate of $46.7 million , paid to stockholders of record as of December 20, 2013, partially offset by a net increase in indebtedness of $15.6 million. The increase in indebtedness was due to borrowings under the Company’s line of credit. In addition, in 2014 , the Company received $5.8 million in cash and the related tax benefits from the exercise of stock-based compensation, offset by $3.7 million in payments for contingent consideration related to acquisitions.

In connection with certain business acquisitions, if established sales targets for the acquired products are achieved, the Company is contractually obligated to pay additional cash consideration. The Company has recorded a $10.8 million liability for the aggregate fair value of these expected contingent consideration liabilities at December 31, 2015 , including $3.9 million recorded as a current liability. For further information, see Note 11 of the Notes to the Consolidated Financial Statements.

On February 24, 2014, the Company entered into a $75.0 million line of credit (the “Credit Agreement”) with JPMorgan Chase Bank, N.A. and Wells Fargo Bank, N.A., amending an existing facility first entered into in 2008. On March 3, 2015, in accordance with the terms of the Credit Agreement, the Company increased its line of credit by $25.0 million to $100.0 million. The Credit Agreement expires on January 1, 2019. At December 31, 2015 , the Company had $2.7 million in standby letters of credit under the line of credit primarily to secure certain insurance arrangements. Availability under the Company’s line of credit was $97.3 million at December 31, 2015 .

On February 24, 2014, the Company also entered into a $150.0 million “shelf-loan” facility with Prudential Investment Management, Inc. and its affiliates (“Prudential”). The facility provides for Prudential to consider purchasing, at the Company’s request, in one or a series of transactions, Senior Promissory Notes of the Company in the aggregate principal amount of up to $150.0 million, to mature no more than twelve years after the date of original issue of each Senior Promissory Note. Prudential has no obligation to purchase the Senior Promissory Notes. This facility expires on February 24, 2017. On March 20, 2015, the Company issued $50.0 million of Senior Promissory Notes to Prudential, under the “shelf-loan” facility, for a term of five years, at a fixed interest rate of 3.35 percent per annum, payable quarterly in arrears, of which the entire amount was outstanding at December 31, 2015 . Availability under the Company’s “shelf-loan” facility, subject to the approval of Prudential, was $100.0 million at December 31, 2015 .

Pursuant to the Credit Agreement and “shelf-loan” facility, at December 31, 2015 , the Company was required to maintain minimum interest and fixed charge coverages, and to meet certain other financial requirements. At December 31, 2015 , the Company was in compliance with all such requirements.

Availability under both the Credit Agreement and the “shelf-loan” facilities is subject to a maximum leverage ratio covenant which limits the amount of consolidated outstanding indebtedness to 2.5 times the trailing twelve-month EBITDA, as defined in the agreements. This limitation did not impact the Company’s borrowing availability at December 31, 2015 . The remaining availability under these facilities was $197.3 million at December 31, 2015 . The Company believes the availability under the Credit Agreement and “shelf-loan” facility in conjunction with cash from operations is adequate to finance the Company’s anticipated cash requirements for the next twelve months.

Additional information on the Company’s Credit Agreement and “shelf-loan” facility is included in Note 9 of the Notes to the Condensed Consolidated Financial Statements.

Future minimum commitments relating to the Company’s contractual obligations at December 31, 2015 were as follows:



	Payments due by period
			Less than						More than
(In thousands)	Total		1 year		1-3 years		3-5 years		5 years		Other
Total indebtedness	$	50,000	$	—	$	—	$	50,000	$	—	$	—
Interest on fixed rate indebtedness ^(a)	7,063		1,675		3,350		2,038		—		—
Operating leases	39,672		7,472		12,314		8,795		11,091		—
Employment contracts ^(b)	15,200		8,311		6,889		—		—		—
Deferred compensation ^(c)	11,485		185		2,892		951		4,118		3,339
Royalty agreements and contingent consideration payments ^(d)	14,444		4,045		7,287		2,034		1,078		—
Purchase obligations ^(e)	587,854		238,553		261,447		87,854		—		—
Taxes ^(f)	2,927		2,927		—		—		—		—
Total	$	728,645	$	263,168	$	294,179	$	151,672	$	16,287	$	3,339


(a)	The Company has used the contractual payment dates and the fixed interest rates in effect as of December 31, 2015 , to determine the estimated future interest payments for fixed rate indebtedness.


(b)	Includes amounts payable under employment contracts and arrangements, and retirement and severance agreements.


(c)	Includes amounts payable under deferred compensation arrangements. The Other column represents the liability for deferred compensation for employees that have elected to receive payment upon separation from service from the Company.


(d)	Comprised of estimated future contingent consideration payments for which a liability has been recorded in connection with business acquisitions over the past few years.


(e)	Primarily comprised of (i) purchase orders issued in the normal course of business and (ii) long term purchase commitments, for which the Company has estimated the expected future obligation based on current prices and usage.


(f)	Represents unrecognized tax benefits, as well as related interest and penalties.

These commitments are described more fully in the Notes to Consolidated Financial Statements.

CORPORATE GOVERNANCE

The Company is in compliance with the corporate governance requirements of the Securities and Exchange Commission (“SEC”) and the New York Stock Exchange. The Company’s governance documents and committee charters and key practices have been posted to the Company’s website ( www.drewindustries.com ) and are updated periodically. The website also contains, or provides direct links to, all SEC filings, press releases and investor presentations. The Company has also established a Whistleblower Policy, which includes a toll-free hotline (877-373-9123) to report complaints about the Company’s accounting, internal controls, auditing matters or other concerns. The Whistleblower Policy and procedure for complaints can be found on the Company’s website ( www.drewindustries.com ).

CONTINGENCIES

Additional information required by this item is included under Item 3 of Part I of this Annual Report on Form 10-K.

CRITICAL ACCOUNTING POLICIES

The Company’s Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America which requires certain estimates and assumptions be made that affect the amounts and disclosures reported in those financial statements and the related accompanying notes. Actual results could differ from these estimates and assumptions. The following critical accounting policies, some of which are impacted significantly by judgments, assumptions and estimates, affect the Company’s Consolidated Financial Statements. Management has discussed the development and selection of its critical accounting policies with the Audit Committee of the Company’s Board of Directors and the Audit Committee has reviewed the disclosure presented below relating to the critical accounting policies.

Inventories

Inventories (finished goods, work in process and raw materials) are stated at the lower of cost, determined on a first-in, first-out basis, or market. Cost is determined based solely on those charges incurred in the acquisition and production of the related inventory (i.e. material, labor and manufacturing overhead costs). The Company estimates an inventory reserve for excess quantities and obsolete items based on specific identification and historical write-offs, taking into account future demand and market conditions. To the extent actual demand or market conditions in the future differ from original estimates, adjustments to recorded inventory reserves may be required.

Self-Insurance

The Company is self-insured for certain health and workers’ compensation benefits up to certain stop-loss limits. Such costs are accrued based on known claims and an estimate of incurred, but not reported (“IBNR”) claims. IBNR claims are estimated using historical lag information and other data provided by third-party claims administrators. This estimation process is subjective, and to the extent actual results differ from original estimates, adjustments to recorded accruals may be required.

Warranty

The Company provides warranty terms based upon the type of product sold. The Company estimates the warranty accrual based upon various factors, including (i) historical warranty costs, (ii) current trends, (iii) product mix, and (iv) sales. The accounting for warranty accruals requires the Company to make assumptions and judgments, and to the extent actual results differ from original estimates, adjustments to recorded accruals may be required.

Income Taxes

The Company’s tax provision is based on pre-tax income, statutory tax rates, federal and state tax credits, and tax planning strategies. Significant management judgment is required in determining the tax provision and in evaluating the Company’s tax position. The Company establishes additional provisions for income taxes when, despite the belief the tax positions are fully supportable, there remain certain tax positions that are likely to be challenged and may or may not be sustained on review by tax authorities. The Company adjusts these tax accruals in light of changing facts and circumstances. The effective tax rate in a given financial statement period may be materially impacted by changes in the expected outcome of tax audits. The Company’s accompanying Consolidated Balance Sheets also include deferred tax assets resulting from deductible temporary differences, which are expected to reduce future taxable income. These assets are based on management’s estimate of realizability, which is reassessed each quarter based upon the Company’s forecast of future taxable income. Failure to achieve forecasted taxable income could affect the ultimate realization of certain deferred tax assets, and may result in the recognition of a valuation reserve. For additional information, see Note 10 of the Notes to Consolidated Financial Statements.

Fair Value of Net Assets of Acquired Businesses

The Company values the assets and liabilities associated with the acquisitions of businesses on the respective acquisition dates. Depending upon the type of asset or liability acquired, the Company uses different valuation techniques in determining the fair value. Those techniques include comparable market prices, long-term sales, profitability and cash flow forecasts, assumptions regarding future industry-specific economic and market conditions, a market participant’s weighted average cost of capital, as well as other techniques as circumstances required. By their nature, these assumptions require judgment, and if management had

chosen different assumptions, the fair value of net assets of acquired businesses would have been different. For further information on acquired assets and liabilities, see Notes 3 and 13 of the Notes to Consolidated Financial Statements.

Impairment of Long-Lived Assets, including Other Intangible Assets and Goodwill

The Company performs recoverability and impairment tests of noncurrent assets in accordance with accounting principles generally accepted in the United States. For certain assets, recoverability and/or impairment tests are required only when conditions exist that indicate the carrying value may not be recoverable. When such events or circumstances occur, the Company assesses the recoverability of long-lived assets by determining whether the carrying value will be recovered through the expected undiscounted future cash flows resulting from the use of the asset. In the event the sum of the expected undiscounted future cash flows is less than the carrying value of the asset, an impairment loss equal to the excess of the asset’s carrying value over its fair value would be recorded.

For other assets, impairment tests are required at least annually, or more frequently, if events or circumstances indicate that an asset may be impaired. The impairment test for other assets consists of an assessment of qualitative factors. If such qualitative factors do not support that the fair value of the reporting unit is greater than the carrying amount, the Company then uses a discounted cash flow model to estimate the fair value of the reporting unit.

The Company’s assessment of the recoverability and impairment tests of noncurrent assets involve critical accounting estimates. These estimates require significant management judgment, include inherent uncertainties and are often interdependent; therefore, they do not change in isolation. Factors that management must estimate include, among others, the economic life of the asset, sales volume, pricing, cost of raw materials, delivery costs, inflation, cost of capital, tax rates, capital spending and proceeds from the sale of assets. These factors are even more difficult to predict when financial markets are highly volatile. The estimates management uses when assessing the recoverability of noncurrent assets are consistent with those management uses in its internal planning. When performing impairment tests, management estimates the fair values of the assets using management’s best assumptions, which is believed to be consistent with what a hypothetical marketplace participant would use. Estimates and assumptions used in these tests are evaluated and updated as appropriate. The variability of these factors depends on a number of conditions, including uncertainty about future events, and thus accounting estimates may change from period to period. If other assumptions and estimates had been used when these tests were performed, impairment charges could have resulted. As mentioned above, these factors do not change in isolation and, therefore, the Company does not believe it is practicable or meaningful to present the impact of changing a single factor. Furthermore, if management uses different assumptions or if different conditions occur in future periods, future impairment charges could result.

Contingent Consideration Payments

In connection with several acquisitions, in addition to the cash paid at closing, additional payments could be required depending upon the level of sales generated from certain of the acquired products. The fair value of the aggregate estimated contingent consideration payments has been recorded as a liability in the Consolidated Balance Sheets. Each quarter, the Company is required to re-evaluate the fair value of the liability for the estimated contingent consideration payments for such acquisitions. The fair value of the contingent consideration payments is estimated using a discounted cash flow model. This model involves the use of estimates and significant judgments that are based on a number of factors including sales of certain products, future business plans, economic projections, weighted average cost of capital, and market data. Actual results may differ from forecasted results.

Other Estimates

The Company makes a number of other estimates and judgments in the ordinary course of business including, but not limited to, those related to product returns, sales and purchase rebates, accounts receivable, lease terminations, asset retirement obligations, long-lived assets, executive succession, post-retirement benefits, stock-based compensation, segment allocations, environmental liabilities, contingencies and litigation. Establishing reserves for these matters requires management’s estimate and judgment with regard to risk and ultimate liability or realization. As a result, these estimates are based on management’s current understanding of the underlying facts and circumstances and may also be developed in conjunction with outside advisors, as appropriate. Due to uncertainties related to the ultimate outcome of these issues or the possibilities of changes in the underlying facts and circumstances, actual results and events could differ significantly from management estimates.

New Accounting Pronouncements

Information required by this item is included in Note 14 of the Notes to the Consolidated Financial Statements.

INFLATION

The prices of key raw materials, consisting primarily of steel and aluminum, and components used by the Company which are made from these raw materials, are influenced by demand and other factors specific to these commodities, rather than being directly affected by inflationary pressures. Prices of these commodities have historically been volatile, and over the past few months prices have continued to fluctuate. The Company did not experience any significant increases in its labor costs in 2015 related to inflation.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

At December 31, 2015 , the Company had $50.0 million of fixed rate debt outstanding. Assuming there is an increase of 100 basis points in the interest rate for borrowings of a similar nature subsequent to December 31, 2015 , which the Company becomes unable to capitalize on in the short-term as a result of the structure of its fixed rate financing, future cash flows would be approximately $0.3 million lower per annum than if the fixed rate financing could be obtained at current market rates.

The Company is also exposed to changes in the prices of raw materials, specifically steel and aluminum. The Company has, from time to time, entered into derivative instruments for the purpose of managing a portion of the exposures associated with fluctuations in aluminum prices. While these derivative instruments are subject to fluctuations in value, these fluctuations are generally offset by the changes in fair value of the underlying exposures. At December 31, 2015 , the Company had no derivative instruments outstanding.

The Company has historically been able to obtain sales price increases to partially offset the majority of raw material cost increases. However, there can be no assurance future cost increases, if any, can be partially or fully passed on to customers, or that the timing of such sales price increases will match raw material cost increases.

Additional information required by this item is included under the caption “Inflation” in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of this Report.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA .

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Drew Industries Incorporated:

We have audited the accompanying consolidated balance sheets of Drew Industries Incorporated and subsidiaries (the “Company”) as of December 31, 2015 and 2014 , and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2015 . We also have audited the Company’s internal control over financial reporting as of December 31, 2015 , based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management’s Annual Report on Internal Control over Financial Reporting.” Our responsibility is to express an opinion on these consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included 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. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Drew Industries Incorporated and subsidiaries as of December 31, 2015 and 2014 , and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2015 , in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015 , based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

/s/ KPMG LLP

Chicago, Illinois

February 29, 2016

DREW INDUSTRIES INCORPORATED

CONSOLIDATED STATEMENTS OF INCOME



	Year ended December 31,
	2015		2014		2013
(In thousands, except per share amounts)

Net sales	$	1,403,066	$	1,190,782	$	1,015,576
Cost of sales	1,097,064		935,859		802,467
Gross profit	306,002		254,923		213,109
Selling, general and administrative expenses	186,032		157,482		132,935
Severance	3,716		—		—
Sale of extrusion assets	—		1,954		—
Executive succession	—		—		1,876
Operating profit	116,254		95,487		78,298
Interest expense, net	1,885		430		351
Income before income taxes	114,369		95,057		77,947
Provision for income taxes	40,024		32,791		27,828
Net income	$	74,345	$	62,266	$	50,119

Net income per common share:
Basic	$	3.06	$	2.60	$	2.15
Diluted	$	3.02	$	2.56	$	2.11

Weighted average common shares outstanding:
Basic	24,295		23,911		23,321
Diluted	24,650		24,334		23,753

The accompanying notes are an integral part of these Consolidated Financial Statements.

DREW INDUSTRIES INCORPORATED

CONSOLIDATED BALANCE SHEETS



	December 31,
	2015			2014
(In thousands, except per share amount)

ASSETS
Current assets
Cash and cash equivalents	$	12,305		$	4
Accounts receivable, net	41,509			37,987
Inventories, net	170,834			132,492
Deferred taxes	22,616			18,709
Prepaid expenses and other current assets	21,178			18,444
Total current assets	268,442			207,636
Fixed assets, net	150,600			146,788
Goodwill	83,619			66,521
Other intangible assets, net	100,935			96,959
Deferred taxes	6,775			11,744
Other assets	12,575			14,193
Total assets	$	622,946		$	543,841

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable, trade	$	29,700		$	49,534
Accrued expenses and other current liabilities	69,162			57,651
Total current liabilities	98,862			107,185
Long-term indebtedness	50,000			15,650
Other long-term liabilities	35,509			26,108
Total liabilities	184,371			148,943

Stockholders’ equity
Common stock, par value $.01 per share: authorized
75,000 shares; issued 27,039 shares at December 31, 2015
and 26,534 shares at December 31, 2014	270			265
Paid-in capital	166,566			147,186
Retained earnings	301,206			276,914
Stockholders’ equity before treasury stock	468,042			424,365
Treasury stock, at cost, 2,684 shares at December 31, 2015
and December 31, 2014	(29,467		)	(29,467		)
Total stockholders’ equity	438,575			394,898
Total liabilities and stockholders’ equity	$	622,946		$	543,841

The accompanying notes are an integral part of these Consolidated Financial Statements.

DREW INDUSTRIES INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS



	Year Ended December 31,
	2015			2014			2013
(In thousands)
Cash flows from operating activities:
Net income	$	74,345		$	62,266		$	50,119
Adjustments to reconcile net income to cash flows provided by operating activities:
Depreciation and amortization	41,624			32,596			27,500
Stock-based compensation expense	14,043			10,817			10,839
Deferred taxes	1,062			(5,493		)	269
Other non-cash items	1,335			2,796			1,867
Changes in assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net	2,082			(606		)	(9,013		)
Inventories, net	(31,276		)	(21,940		)	(3,403		)
Prepaid expenses and other assets	(2,249		)	(4,610		)	(2,288		)
Accounts payable, trade	(21,783		)	21,269			2,296
Accrued expenses and other liabilities	15,835			9,925			4,491
Net cash flows provided by operating activities	95,018			107,020			82,677
Cash flows from investing activities:
Capital expenditures	(28,989		)	(42,458		)	(32,595		)
Acquisitions of businesses	(41,058		)	(106,782		)	(4,750		)
Proceeds from note receivable	2,000			1,750			—
Proceeds from sales of fixed assets	2,337			3,587			1,444
Other investing activities	(406		)	(171		)	(154		)
Net cash flows used for investing activities	(66,116		)	(144,074		)	(36,055		)
Cash flows from financing activities:
Exercise of stock-based awards, net of shares tendered for payment of taxes	1,470			5,769			15,175
Proceeds from line of credit borrowings	614,629			425,330			135,452
Repayments under line of credit borrowings	(630,279		)	(409,680		)	(135,452		)
Payment of special dividend	(48,227		)	(46,706		)	—
Proceeds from shelf-loan borrowing	50,000			—			—
Payment of contingent consideration related to acquisitions	(3,974		)	(3,739		)	(5,456		)
Other financing activities	(220		)	(196		)	—
Net cash flows (used for) provided by financing activities	(16,601		)	(29,222		)	9,719

Net increase (decrease) in cash	12,301			(66,276		)	56,341

Cash and cash equivalents at beginning of year	4			66,280			9,939
Cash and cash equivalents at end of year	$	12,305		$	4		$	66,280

Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest	$	2,113		$	641		$	364
Income taxes, net of refunds	$	33,782		$	30,947		$	26,799

The accompanying notes are an integral part of these Consolidated Financial Statements.

DREW INDUSTRIES INCORPORATED

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY



	Common Stock		Paid-in Capital			Retained Earnings			Treasury Stock			Total Stockholders’ Equity
(In thousands, except shares and per share amounts)
Balance - December 31, 2012	$	254	$	100,412		$	213,046		$	(29,467	)	$	284,245
Net income	—		—			50,119			—			50,119
Issuance of 681,426 shares of common stock pursuant to stock-based awards	7		13,440			—			—			13,447
Income tax benefit relating to issuance of common stock pursuant to stock-based awards	—		1,534			—			—			1,534
Stock-based compensation expense	—		10,839			—			—			10,839
Issuance of 3,776 deferred stock units relating to prior year compensation	—		135			—			—			135
Special cash dividend ($2.00 per share)	—		—			(46,706		)	—			(46,706		)
Balance - December 31, 2013	261		126,360			216,459			(29,467		)	313,613
Net income	—		—			62,266			—			62,266
Issuance of 476,047 shares of common stock pursuant to stock-based awards	4		2,298			—			—			2,302
Income tax benefit relating to issuance of common stock pursuant to stock-based awards	—		3,914			—			—			3,914
Stock-based compensation expense	—		10,817			—			—			10,817
Issuance of 43,188 deferred stock units relating to prior year compensation	—		1,986			—			—			1,986
Dividend equivalents on stock-based awards	—		1,811			(1,811		)	—			—
Balance - December 31, 2014	265		147,186			276,914			(29,467		)	394,898
Net income	—		—			74,345			—			74,345
Issuance of 505,312 shares of common stock pursuant to stock-based awards	5		(7,563		)	—			—			(7,558		)
Income tax benefit relating to issuance of common stock pursuant to stock-based awards	—		9,028			—			—			9,028
Stock-based compensation expense	—		14,043			—			—			14,043
Issuance of 36,578 deferred stock units relating to prior year compensation	—		2,046			—			—			2,046
Special cash dividend ($2.00 per share)	—		—			(48,227		)	—			(48,227		)
Dividend equivalents on stock-based awards	—		1,826			(1,826		)	—			—
Balance - December 31, 2015	$	270	$	166,566		$	301,206		$	(29,467	)	$	438,575

The accompanying notes are an integral part of these Consolidated Financial Statements.

DREW INDUSTRIES INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Consolidated Financial Statements include the accounts of Drew Industries Incorporated and its wholly-owned subsidiaries (“Drew” and collectively with its subsidiaries, the “Company”). Drew has no unconsolidated subsidiaries. Drew, through its wholly-owned subsidiary, Lippert Components, Inc. and its subsidiaries (collectively, “Lippert Components” or “LCI”), supplies a broad array of components in the United States and abroad for the leading manufacturers of recreational vehicles (“RVs”) and manufactured homes and for the related aftermarkets of those industries, and also supplies components for adjacent industries including buses; trailers used to haul boats, livestock, equipment and other cargo; pontoon boats; modular housing; and factory-built mobile office units. At December 31, 2015 , the Company operated 42 manufacturing and distribution facilities.

The Company is not aware of any significant events, except as disclosed in the Notes to Consolidated Financial Statements, which occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on the Consolidated Financial Statements.

All significant intercompany balances and transactions have been eliminated. Certain prior year balances have been reclassified to conform to current year presentation.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents.

Accounts Receivable

Accounts receivable are stated at historical carrying value, net of write-offs and allowances. The Company establishes allowances based upon historical experience and any specific customer collection issues identified by the Company. Uncollectible accounts receivable are written off when a settlement is reached or when the Company has determined the balance will not be collected.

Inventories

Inventories are stated at the lower of cost (using the first-in, first-out method) or market. Cost includes material, labor and overhead; market is replacement cost or realizable value after allowance for costs of distribution.

Fixed Assets

Fixed assets which are owned are stated at cost less accumulated depreciation, and are depreciated on a straight-line basis over the estimated useful lives of the properties and equipment. Leasehold improvements and leased equipment are amortized over the shorter of the lives of the leases or the underlying assets. Maintenance and repair costs that do not improve service potential or extend economic life are expensed as incurred; significant improvements are capitalized.

Income Taxes

Deferred tax assets and liabilities are determined based on the temporary differences between the financial reporting and tax basis of assets and liabilities, applying enacted statutory tax rates in effect for the year in which the differences are expected to reverse.

DREW INDUSTRIES INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

The Company accounts for uncertainty in tax positions by recognizing in its financial statements the impact of a tax position only if that position is more likely than not of being sustained on audit, based on the technical merits of the position. Further, the Company assesses the tax benefits of the tax positions in its financial statements based on experience with similar tax positions, information obtained during the examination process and the advice of experts. The Company recognizes previously unrecognized tax benefits upon the earlier of the expiration of the period to assess tax in the applicable taxing jurisdiction or when the matter is constructively settled and upon changes in statutes or regulations and new case law or rulings.

The Company classifies interest and penalties related to income taxes as income tax expense in its Consolidated Financial Statements.

Goodwill

Goodwill represents the excess of the total consideration given in an acquisition of a business over the fair value of the net tangible and identifiable intangible assets acquired. Goodwill is not amortized, but instead is tested at the reporting unit level for impairment annually in November, or more frequently if certain circumstances indicate a possible impairment may exist. In 2015 and 2014 , the Company assessed qualitative factors of its reporting units to determine whether it was more likely than not the fair value of the reporting unit was less than its carrying amount, including goodwill. The qualitative impairment test consists of an assessment of qualitative factors, including general economic and industry conditions, market share and input costs.

Other Intangible Assets

Intangible assets with estimable useful lives are amortized, primarily on an accelerated basis, over their respective estimated useful lives to their estimated residual values, and reviewed for impairment. The amortization of other intangible assets is done using a method, straight-line or accelerated, which best reflects the pattern in which the estimated future economic benefits of the asset will be consumed. The useful lives of intangible assets are determined after considering the expected cash flows and other specific facts and circumstances related to each intangible asset.

Impairment of Long-Lived Assets

Long-lived assets, other than goodwill, are tested for impairment when changes in circumstances indicate their carrying value may not be recoverable. A determination of impairment, if any, is made based on the undiscounted value of estimated future cash flows, salvage value or expected net sales proceeds, depending on the circumstances. Impairment is measured as the excess of the carrying value over the estimated fair value of such assets.

Asset Retirement Obligations

Asset retirement obligations are legal obligations associated with the retirement of long-lived assets. The Company records asset retirement obligations on certain of its owned and leased facilities and leased machinery and equipment. These liabilities are initially recorded at fair value and are adjusted for changes resulting from revisions to the timing or the amount of the original estimate.

Environmental Liabilities

Accruals for environmental matters are recorded when it is probable a liability has been incurred and the amount of the liability can be reasonably estimated, based upon current law and existing technologies. These amounts, which are not discounted and are exclusive of claims against potentially responsible third parties, are adjusted periodically as assessment and remediation efforts progress or additional technical or legal information becomes available. Environmental exposures are difficult to assess for numerous reasons, including the identification of new sites, developments at sites resulting from investigatory studies and remedial activities, advances in technology, changes in environmental laws and regulations and their application, the scarcity of reliable data pertaining to identified sites, the difficulty in assessing the involvement and financial capability of other potentially responsible parties and the Company’s ability to obtain contributions from other parties, and the lengthy time periods over which site remediation occurs. It is possible some of these matters (the outcomes of which are subject to various uncertainties) may be resolved unfavorably against the Company, and could materially affect operating results when resolved in future periods.

DREW INDUSTRIES INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Financial Instruments

The carrying values of cash and cash equivalents, accounts receivable and accounts payable approximated their fair value due to the short-term nature of these instruments.

Stock-Based Compensation

All stock-based compensation awards are expensed over their vesting period, based on fair value. For awards having a service-only vesting condition, the Company recognizes stock-based compensation expense on a straight-line basis over the requisite service periods. For awards with a performance vesting condition, which are subject to certain pre-established performance targets, the Company recognizes stock-based compensation expense on a graded-vesting basis to the extent it is probable the performance targets will be met. The fair value for stock options is determined using the Black-Scholes option-pricing model, while the fair values of deferred stock units, restricted stock and stock awards are based on the market price of the Company’s Common Stock, all on the date the stock-based awards are granted.

Revenue Recognition

The Company recognizes revenue when products are shipped and the customer takes ownership and assumes risk of loss, collectability is reasonably assured, and the sales price is fixed or determinable. Sales taxes collected from customers and remitted to governmental authorities, which are not significant, are accounted for on a net basis and therefore are excluded from net sales in the Consolidated Statements of Income.

Shipping and Handling Costs

The Company records shipping and handling costs within selling, general and administrative expenses. Such costs aggregated $45.8 million , $40.9 million and $36.4 million in the years ended December 31, 2015 , 2014 and 2013 , respectively.

Legal Costs

The Company expenses all legal costs associated with litigation as incurred. Legal expenses are included in selling, general and administrative expenses in the Consolidated Statements of Income.

Fair Value Measurements

Fair value is determined using a hierarchy that has three levels based on the reliability of the inputs used to determine fair value. Level 1 refers to fair values determined based on quoted prices in active markets for identical assets. Level 2 refers to fair values estimated using significant other observable inputs, and Level 3 includes fair values estimated using significant unobservable inputs.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, net sales and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates, including, but not limited to, those related to product returns, sales and purchase rebates, accounts receivable, inventories, goodwill and other intangible assets, net assets of acquired businesses, income taxes, warranty and product recall obligations, self-insurance obligations, lease terminations, asset retirement obligations, long-lived assets, post-retirement benefits, stock-based compensation, segment allocations, contingent consideration, environmental liabilities, contingencies and litigation. The Company bases its estimates on historical experience, other available information and various other assumptions believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities not readily apparent from other resources. Actual results and events could differ significantly from management estimates.

2. SEGMENT REPORTING

DREW INDUSTRIES INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

The RV Segment, which accounted for 92 percent , 90 percent , and 88 percent of consolidated net sales for the years ended December 31, 2015 , 2014 and 2013 respectively, manufactures or distributes a variety of products used in the production of RVs, including:



● Steel chassis for towable RVs	● Furniture and mattresses
● Axles and suspension solutions for towable RVs	● Entry, luggage, patio and ramp doors
● Slide-out mechanisms and solutions	● Electric and manual entry steps
● Thermoformed bath, kitchen and other products	● Awnings and awning accessories
● Windows	● Electronic components
● Manual, electric and hydraulic stabilizer and leveling systems	● LED televisions, sound systems, navigation systems and wireless backup cameras
● Chassis components	● Other accessories

The Company also supplies certain of these products to the RV aftermarket, and to adjacent industries, including buses and trailers used to haul boats, livestock, equipment and other cargo, and pontoon boats. Approximately 73 percent of the Company’s RV Segment net sales in 2015 were of products to original equipment manufacturers (“OEMs”) of travel trailer and fifth-wheel RVs.

The MH Segment, which accounted for 8 percent , 10 percent and 12 percent of consolidated net sales for the years ended December 31, 2015 , 2014 and 2013 , respectively, manufactures or distributes a variety of products used in the production of manufactured homes, including:



●Vinyl and aluminum windows	●Aluminum and vinyl patio doors
●Thermoformed bath and kitchen products	●Steel chassis and related components
●Steel and fiberglass entry doors	●Axles

The Company also supplies certain of these products to the manufactured housing aftermarket, and to adjacent industries, including modular housing and mobile office units. Certain of the Company’s MH Segment customers manufacture both manufactured homes and modular homes, and certain of the products manufactured by the Company are suitable for both types of homes. As a result, the Company is not always able to determine in which type of home its products are installed.

Decisions concerning the allocation of the Company’s resources are made by the Company’s key executives, with oversight by the Board of Directors. This group evaluates the performance of each segment based upon segment operating profit or loss, generally defined as income or loss before interest and income taxes. Decisions concerning the allocation of resources are also based on each segment’s utilization of assets. Management of debt is a corporate function. The accounting policies of the RV and MH Segments are the same as those described in Note 1 of the Notes to Consolidated Financial Statements.

Corporate expenses are allocated between the segments based upon net sales. Accretion related to contingent consideration and other non-segment items are included in the segment to which they relate.

Information relating to segments follows for the years ended December 31:



	Segments						Corporate
(In thousands)	RV		MH		Total		and Other			Total
2015
Net sales to external customers ^(a)	$	1,284,928	$	118,138	$	1,403,066	$	—		$	1,403,066
Operating profit (loss) ^(b)	$	107,485	$	12,485	$	119,970	$	(3,716	)	$	116,254
Total assets ^(c)	$	519,795	$	27,702	$	547,497	$	75,449		$	622,946
Expenditures for long - lived assets ^(d)	$	30,126	$	1,193	$	31,319	$	—		$	31,319
Depreciation and amortization	$	39,065	$	2,412	$	41,477	$	147		$	41,624

DREW INDUSTRIES INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)



	Segments						Corporate
(In thousands)	RV		MH		Total		and Other			Total
2014
Net sales to external customers ^(a)	$	1,074,448	$	116,334	$	1,190,782	$	—		$	1,190,782
Operating profit (loss) ^(b)	$	86,571	$	10,870	$	97,441	$	(1,954	)	$	95,487
Total assets ^(c)	$	451,264	$	29,482	$	480,746	$	63,095		$	543,841
Expenditures for long - lived assets ^(d)	$	145,406	$	2,039	$	147,445	$	—		$	147,445
Depreciation and amortization	$	29,933	$	2,568	$	32,501	$	95		$	32,596

2013
Net sales to external customers ^(a)	$	893,694	$	121,882	$	1,015,576	$	—		$	1,015,576
Operating profit (loss) ^(b)	$	68,248	$	11,926	$	80,174	$	(1,876	)	$	78,298
Total assets ^(c)	$	306,139	$	32,948	$	339,087	$	114,097		$	453,184
Expenditures for long - lived assets ^(d)	$	34,989	$	2,682	$	37,671	$	—		$	37,671
Depreciation and amortization	$	24,615	$	2,806	$	27,421	$	79		$	27,500

(a)

Thor Industries, Inc., a customer of the RV Segment, accounted for 29 percent , 33 percent and 34 percent of the Company’s consolidated net sales for the years ended December 31, 2015 , 2014 and 2013 , respectively. Berkshire Hathaway Inc. (through its subsidiaries Forest River, Inc. and Clayton Homes, Inc.), a customer of both segments, accounted for 26 percent , 28 percent and 28 percent of the Company’s consolidated net sales for the years ended December 31, 2015 , 2014 and 2013 , respectively. Jayco, Inc., a customer of the RV Segment, accounted for 10 percent of the Company's consolidated net sales for the year ended December 31, 2015 . No other customer accounted for more than 10 percent of consolidated net sales in the years ended December 31, 2015 , 2014 and 2013 .


(b)	Certain general and administrative expenses are allocated between the segments based upon net sales or operating profit, depending upon the nature of the expense.


(c)	Segment assets include accounts receivable, inventories, fixed assets, goodwill and other intangible assets. Corporate and other assets include cash and cash equivalents, prepaid expenses and other current assets, deferred taxes, and other assets.


(d)	Expenditures for long-lived assets include capital expenditures, as well as fixed assets, goodwill and other intangible assets purchased as part of the acquisition of businesses. The Company purchased $38.6 million , $105.0 million and $4.8 million of long-lived assets, as part of the acquisitions of businesses in the years ended December 31, 2015 , 2014 and 2013 , respectively.

Net sales by product were as follows for the years ended December 31:



(In thousands)	2015		2014		2013
RV Segment:
Chassis, chassis parts and slide-out mechanisms	$	638,261	$	564,543	$	493,244
Windows and doors	245,016		204,054		181,934
Furniture and mattresses	163,380		133,371		100,196
Axles and suspension solutions	114,531		92,261		69,818
Other	123,740		80,219		48,502
Total RV Segment net sales	$	1,284,928	$	1,074,448	$	893,694

MH Segment:
Windows and doors	$	73,035	$	66,140	$	67,029
Chassis and chassis parts	29,798		33,842		38,359
Other	15,305		16,352		16,494
Total MH Segment net sales	$	118,138	$	116,334	$	121,882

Total net sales	$	1,403,066	$	1,190,782	$	1,015,576

DREW INDUSTRIES INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

The composition of net sales was as follows for the years ended December 31:



(In thousands)	2015		2014		2013
Net sales:
RV Segment:
RV OEMs:
Travel trailers and fifth-wheels	$	938,787	$	841,497	$	727,783
Motorhomes	86,513		70,332		47,937
RV aftermarket	87,447		49,570		25,334
Adjacent industries	172,181		113,049		92,640
Total RV Segment net sales	$	1,284,928	$	1,074,448	$	893,694

MH Segment:
Manufactured housing OEMs	$	82,032	$	77,421	$	80,245
Manufactured housing aftermarket	15,559		14,186		13,719
Adjacent industries	20,547		24,727		27,918
Total MH Segment net sales	$	118,138	$	116,334	$	121,882

Total net sales	$	1,403,066	$	1,190,782	$	1,015,576

Potential Future Changes to Reporting Segments

Over the past several years, largely due to the growth the Company has experienced in its RV Segment, the MH Segment is now a smaller part of the Company. Net sales to manufactured housing OEMs are 6 percent of consolidated net sales for the year ending December 31, 2015 . In addition, the Company has recently increased its focus on the significant opportunities in the aftermarket. The Company continues to evaluate the information provided to its Chief Operating Decision Maker (“CODM”), and assess how changes to its reporting structures would be used by the CODM to assess the performance of the Company’s operating segments and make decisions about resource allocations. Any such changes could necessitate a revision to the operating segments the Company reports.

3. ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS

Acquisitions in 2016

Flair Interiors

In February 2016, the Company acquired the business and certain assets of Flair Interiors, Inc. (“Flair”), a manufacturer of RV furniture. Net sales reported by Flair for 2015 were approximately $25 million . The purchase price was $8.1 million paid at closing.

Highwater Marine Furniture

In January 2016, the Company acquired the business and certain assets of the pontoon furniture manufacturing operation of Highwater Marine, LLC (“Highwater”), a leading manufacturer of pontoon and other recreational boats located in Elkhart, Indiana. Estimated net sales of the marine furniture business were approximately $20 million . The purchase price was $10.0 million paid at closing. The results of the acquired business will be included in the Company’s RV Segment and in the Consolidated Statements of Income subsequent to the acquisition date. The Company is in the process of allocating the consideration for the fair value of the assets acquired.

DREW INDUSTRIES INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Acquisitions in 2015

Signature Seating

In August 2015 , the Company acquired the business and certain assets of Roehm Marine, LLC, also known as Signature Seating (“Signature”), a manufacturer of furniture solutions for fresh water boat manufacturers, primarily pontoon boats. Net sales reported by Signature for the twelve months ended June 2015 were approximately $16 million . The purchase price was $16.0 million paid at closing, plus contingent consideration based on future sales of this operation. The results of the acquired business have been included in the Company’s RV Segment and in the Consolidated Statements of Income since the acquisition date. The acquisition of this business was recorded on the acquisition date as follows (in thousands) :



Cash consideration	$	16,000
Contingent consideration	3,556
Total fair value of consideration given	$	19,556

Customer relationships	$	7,500
Other identifiable intangible assets	390
Net tangible assets	3,633
Total fair value of net assets acquired	$	11,523

Goodwill (tax deductible)	$	8,033

The customer relationships intangible asset is being amortized over its preliminary estimated useful life of 15 years . The consideration given was greater than the fair value of the net assets acquired, resulting in goodwill, because the Company anticipates leveraging its existing experience and manufacturing capacity with respect to these product lines, and also believes the diversified customer base will further its expansion into adjacent industries.

Spectal Industries

In April 2015 , the Company acquired the business and certain assets of Industries Spectal, Inc. (“Spectal”), a Canada-based manufacturer of windows and doors primarily for school buses, as well as commercial buses, emergency vehicles, trucks, agricultural equipment and RVs. Net sales reported by Spectal for 2014 were $25 million . The purchase price was $22.3 million paid at closing, plus contingent consideration based on future sales of this operation. The results of the acquired business have been included in the Company’s RV Segment and in the Consolidated Statements of Income since the acquisition date. The acquisition of this business was recorded on the acquisition date as follows (in thousands) :



Cash consideration	$	22,335
Contingent consideration	1,211
Total fair value of consideration given	$	23,546

Customer relationships	$	10,100
Other identifiable intangible assets	700
Net tangible assets	3,681
Total fair value of net assets acquired	$	14,481

Goodwill (tax deductible)	$	9,065

The customer relationships intangible asset is being amortized over its estimated useful life of 15 years . The consideration given was greater than the fair value of the net assets acquired, resulting in goodwill, because the Company anticipates leveraging its existing experience and manufacturing capacity with respect to these product lines, and also believes the diversified customer base will further its expansion into adjacent industries.

DREW INDUSTRIES INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

EA Technologies

In January 2015 , the Company acquired the business and certain assets of EA Technologies, LLC (“EA Technologies”), a manufacturer of custom steel and aluminum parts and provider of electro-deposition (‘e-coat’) and powder coating services for RV, bus, medium-duty truck, automotive, recreational marine, specialty and utility trailer, and military applications. Net sales reported by EA Technologies for 2014 were $17 million . The purchase price was $9.2 million , of which $6.6 million was paid in the fourth quarter of 2014, with the balance paid at closing. The results of the acquired business have been included in the Company’s RV Segment and in the Consolidated Statements of Income since the acquisition date. The acquisition of this business was recorded on the acquisition date as follows (in thousands) :



Cash consideration	$	9,248

Customer relationships	$	400
Other identifiable intangible assets	80
Net tangible assets	8,868
Total fair value of net assets acquired	$	9,348

Gain on bargain purchase	$	100

Acquisitions in 2014

Duncan Systems

In August 2014 , the Company acquired the business and certain assets of Duncan Systems, Inc. (“Duncan Systems”), an aftermarket distributor of replacement motorhome windshields, awnings, and RV, heavy truck and specialty vehicle glass and windows, primarily to fulfill insurance claims. Net sales reported by Duncan Systems for the twelve months ended July 2014 were $26 million . The purchase price was $18.0 million paid at closing, plus contingent consideration based on future sales of this operation. The results of the acquired business have been included in the Company’s RV Segment and in the Consolidated Statements of Income since the acquisition date. The acquisition of this business was recorded on the acquisition date as follows (in thousands) :



Cash consideration	$	18,000
Contingent consideration	1,914
Total fair value of consideration given	$	19,914

Customer relationships	$	10,500
Other identifiable intangible assets	930
Net tangible assets	4,070
Total fair value of net assets acquired	$	15,500

Goodwill (tax deductible)	$	4,414

The customer relationships intangible asset is being amortized over its estimated useful life of 14 years. The consideration given was greater than the fair value of the assets acquired, resulting in goodwill, because the Company anticipates the attainment of synergies and an increase in market share for the distributed products.

Power Gear and Kwikee Brands

In June 2014 , the Company acquired the RV business of Actuant Corporation, which manufactures leveling systems, slide-out mechanisms and steps, primarily for motorhome RVs, under the Power Gear and Kwikee brands. Net sales reported by the acquired business for the twelve months ended May 2014 were $28 million , consisting of sales to OEMs and the aftermarket. The purchase price was $35.5 million , paid at closing. The results of the acquired business have been included in the Company’s RV Segment and in the Consolidated Statements of Income since the acquisition date.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

The acquisition of this business was recorded on the acquisition date as follows (in thousands) :



Cash consideration	$	35,500

Customer relationships	$	12,300
Patents	5,300
Other identifiable intangible assets	2,130
Net tangible assets	2,227
Total fair value of net assets acquired	$	21,957

Goodwill (tax deductible)	$	13,543

The customer relationships intangible asset is being amortized over its estimated useful life of 14 years and the patents are being amortized over their estimated useful life of 8 years. The consideration given was greater than the fair value of the assets acquired, resulting in goodwill, because the Company anticipates the attainment of synergies and an increase in the markets for the acquired products.

Star Design

In March 2014 , the Company acquired the business and certain assets of Star Design, LLC (“Star Design”). Net sales reported by Star Design for 2013 were $10 million , comprised primarily of thermoformed sheet plastic products for the RV, bus and specialty vehicle industries. The purchase price was $12.2 million paid at closing. The results of the acquired business have been included in the Company’s RV Segment and in the Consolidated Statements of Income since the acquisition date. The acquisition of this business was recorded on the acquisition date as follows (in thousands) :



Cash consideration	$	12,232

Customer relationships	$	4,400
Other identifiable intangible assets	610
Net tangible assets	2,108
Total fair value of net assets acquired	$	7,118

Goodwill (tax deductible)	$	5,114

The customer relationships intangible asset is being amortized over its estimated useful life of 14 years. The consideration given was greater than the fair value of the net assets acquired, resulting in goodwill, because the Company anticipates leveraging its existing experience and manufacturing capacity with respect to these product lines, and also believes the diversified customer base will further its expansion into adjacent industries.

Innovative Design Solutions

In February 2014 , the Company acquired Innovative Design Solutions, Inc. (“IDS”), a designer, developer and manufacturer of electronic systems encompassing a wide variety of RV applications. IDS also manufactures electronic systems for automotive, medical and industrial applications. Net sales reported by IDS for 2013 were $19 million , of which $15 million were to the Company. The purchase price was $35.9 million , of which $34.2 million was paid at closing, with the balance to be paid out annually over the subsequent three years , plus contingent consideration based on future sales of this operation. The results of the acquired business have been included in the Company’s RV Segment and in the Consolidated Statements of Income since the acquisition date.

DREW INDUSTRIES INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

The acquisition of this business was recorded on the acquisition date as follows (in thousands) :



Cash consideration	$	34,175
Present value of future payments	1,739
Contingent consideration	710
Total fair value of consideration given	$	36,624

Patents	$	6,000
Customer relationships	4,000
Other identifiable intangible assets	3,180
Net tangible assets	1,894
Total fair value of net assets acquired	$	15,074

Goodwill (tax deductible)	$	21,550

The patents are being amortized over their estimated useful life of 10 years and the customer relationships intangible asset is being amortized over its estimated useful life of 12 years . The consideration given was greater than the fair value of the assets acquired, resulting in goodwill, because the Company anticipates an increase in the markets for the acquired products, market share growth in both existing and new markets, as well as attainment of synergies.

Acquisitions in 2013

Fortress Technologies

In December 2013 , the Company acquired the business and certain assets of Fortress Technologies, LLC (“Fortress”), a manufacturer of specialized RV chassis. Net sales reported by Fortress for 2013 were $3 million . The results of the acquired business have been included in the Company’s RV Segment and in the Consolidated Statements of Income since the acquisition date. The acquisition of this business was recorded on the acquisition date as follows (in thousands):



Cash consideration	$	3,299

Working capital, net	$	(111	)
Net tangible assets	3,410
Total fair value of net assets acquired	$	3,299

Midstates Tool & Die and Engineering

In June 2013 , the Company acquired the business and certain assets of Midstates Tool & Die and Engineering, Inc. (“Midstates”), a manufacturer of tools and dies, as well as automation equipment. Net sales reported by the acquired business for the twelve months ended May 2013 were $2 million . The results of the acquired business have been included in the Company’s RV Segment and in the Consolidated Statements of Income since the acquisition date. The acquisition of this business was recorded on the acquisition date as follows (in thousands) :



Cash consideration	$	1,451

Non-compete agreement	$	40
Net tangible assets	1,043
Total fair value of net assets acquired	$	1,083

Goodwill (tax deductible)	$	368

The consideration given was greater than the fair value of assets acquired, resulting in goodwill, because the Company anticipates the tool and die and automation capabilities of the acquired business will help improve its operating efficiencies.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Sale of Extrusion Assets

Goodwill

Goodwill by reportable segment was as follows:



(In thousands)	RV Segment			MH Segment			Total
Accumulated cost	$	61,679		$	10,025		$	71,704
Accumulated impairment	(41,276		)	(9,251		)	(50,527		)
Net balance – December 31, 2012	20,403			774			21,177
Acquisitions – 2013	368			—			368
Net balance – December 31, 2013	20,771			774			21,545
Acquisitions – 2014	44,976			—			44,976
Net balance – December 31, 2014	65,747			774			66,521
Acquisitions – 2015	17,098			—			17,098
Net balance – December 31, 2015	$	82,845		$	774		$	83,619

Accumulated cost	$	124,121		$	10,025		$	134,146
Accumulated impairment	(41,276		)	(9,251		)	(50,527		)
Net balance – December 31, 2015	$	82,845		$	774		$	83,619

The Company performed its annual goodwill impairment procedures for all of its reporting units as of November 30, 2015 , 2014 and 2013 , and concluded no goodwill impairment existed at that time. The Company plans to update its review as of November 30, 2016 , or sooner if events occur or circumstances change that could reduce the fair value of a reporting unit below its carrying value.

Other Intangible Assets

Other intangible assets, by segment, consisted of the following at December 31:



(In thousands)	2015		2014
RV Segment	$	100,418	$	95,075
MH Segment	517		1,884
Other intangible assets	$	100,935	$	96,959

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Other intangible assets consisted of the following at December 31, 2015 :



(In thousands)	Gross Cost		Accumulated Amortization		Net Balance		Estimated Useful Life in Years
Customer relationships	$	94,560	$	30,514	$	64,046	6	to	16
Patents	54,293		28,255		26,038		3	to	19
Tradenames	8,935		4,751		4,184		3	to	15
Non-compete agreements	4,493		2,800		1,693		3	to	6
Other	594		307		287		2	to	12
Purchased research and development	4,687		—		4,687		Indefinite
Other intangible assets	$	167,562	$	66,627	$	100,935

Other intangible assets consisted of the following at December 31, 2014 :



(In thousands)	Gross Cost		Accumulated Amortization		Net Balance		Estimated Useful Life in Years
Customer relationships	$	81,260	$	27,553	$	53,707	6	to	16
Patents	54,333		22,389		31,944		3	to	19
Tradenames	9,173		4,525		4,648		3	to	15
Non-compete agreements	3,948		2,233		1,715		3	to	6
Other	360		102		258		2	to	12
Purchased research and development	4,687		—		4,687		Indefinite
Other intangible assets	$	153,761	$	56,802	$	96,959

Amortization expense related to other intangible assets was as follows for the years ended December 31:



(In thousands)	2015		2014		2013
Cost of sales	$	6,017	$	5,092	$	3,610
Selling, general and administrative	10,038		7,612		6,398
Amortization expense	$	16,055	$	12,704	$	10,008

Estimated amortization expense for other intangible assets for the next five years is as follows:



(In thousands)	2016		2017		2018		2019		2020
Cost of sales	$	6,186	$	5,732	$	4,911	$	4,235	$	3,014
Selling, general and administrative	9,523		8,460		7,813		7,174		5,983
Amortization expense	$	15,709	$	14,192	$	12,724	$	11,409	$	8,997

4. RECEIVABLES

The following table provides a reconciliation of the activity related to the Company’s allowance for doubtful accounts receivable, for the years ended December 31:



(In thousands)	2015			2014			2013
Balance at beginning of period	$	917		$	705		$	677
Provision for doubtful accounts	(5		)	178			194
Additions related to acquired businesses	33			58			5
Recoveries	8			4			1
Accounts written off	(109		)	(28		)	(172		)
Balance at end of period	$	844		$	917		$	705

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

In addition to the allowance for doubtful accounts receivable, the Company had an allowance for prompt payment discounts in the amount of $0.4 million and $0.4 million at December 31, 2015 and 2014 , respectively.

5. INVENTORIES

Inventories consisted of the following at December 31:



(In thousands)	2015		2014
Raw materials	$	144,397	$	111,366
Work in process	4,932		2,624
Finished goods	21,505		18,502
Inventories, net	$	170,834	$	132,492

6. FIXED ASSETS

Fixed assets consisted of the following at December 31:



					Estimated Useful
(In thousands)	2015		2014		Life in Years
Land	$	11,064	$	10,792
Buildings and improvements	89,616		85,002		10 to 40
Leasehold improvements	11,147		8,114		3 to 10
Machinery and equipment	153,784		138,025		3 to 15
Furniture and fixtures	20,653		20,729		3 to 8
Construction in progress	5,512		9,515
Fixed assets, at cost	291,776		272,177
Less accumulated depreciation and amortization	141,176		125,389
Fixed assets, net	$	150,600	$	146,788

Depreciation and amortization of fixed assets was as follows for the years ended December 31:



(In thousands)	2015		2014		2013
Cost of sales	$	21,289	$	16,364	$	14,667
Selling, general and administrative expenses	4,137		3,440		2,773
Total	$	25,426	$	19,804	$	17,440

7. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following at December 31:



(In thousands)	2015		2014
Employee compensation and benefits	$	25,147	$	21,473
Current portion of accrued warranty	17,020		14,516
Other	26,995		21,662
Accrued expenses and other current liabilities	$	69,162	$	57,651

Estimated costs related to product warranties are accrued at the time products are sold. In estimating its future warranty obligations, the Company considers various factors, including the Company’s (i) historical warranty costs, (ii) current trends, (iii) product mix, and (iv) sales.

DREW INDUSTRIES INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

The following table provides a reconciliation of the activity related to the Company’s accrued warranty, including both the current and long-term portions, for the years ended December 31 :



(In thousands)	2015			2014			2013
Balance at beginning of period	$	21,641		$	17,325		$	12,729
Provision for warranty expense	17,267			12,860			13,874
Warranty liability from acquired businesses	240			688			21
Warranty costs paid	(12,944		)	(9,232		)	(9,299		)
Balance at end of period	26,204			21,641			17,325
Less long-term portion	9,184			7,125			5,594
Current portion of accrued warranty	$	17,020		$	14,516		$	11,731

8. RETIREMENT AND OTHER BENEFIT PLANS

Defined Contribution Plan

The Company maintains a discretionary defined contribution 401(k) profit sharing plan covering all eligible employees. The Company contributed $2.5 million , $1.8 million and $1.4 million to this plan during the years ended December 31, 2015 , 2014 and 2013 , respectively.

Deferred Compensation Plan

The Company has an Executive Non-Qualified Deferred Compensation Plan (the “Plan”). Pursuant to the Plan, certain management employees are eligible to defer all or a portion of their regular salary and incentive compensation. Participants deferred $1.2 million , $1.6 million and $1.7 million during the years ended December 31, 2015 , 2014 and 2013 , respectively. The amounts deferred under this Plan are credited with earnings or losses based upon changes in values of the notional investments elected by the Plan participants. Each Plan participant is fully vested in their deferred compensation and earnings credited to his or her account as all contributions to the Plan are made by the participant. The Company is responsible for certain costs of Plan administration, which are not significant, and will not make any contributions to the Plan. Pursuant to the Plan, payments to the Plan participants are made from the general unrestricted assets of the Company, and the Company’s obligations pursuant to the Plan are unfunded and unsecured. Participants withdrew $0.8 million , $0.4 million and $0.2 million from the Plan during the years ended December 31, 2015 , 2014 and 2013 , respectively. At December 31, 2015 and 2014 , deferred compensation of $11.7 million and $10.7 million , respectively, was recorded in other long-term liabilities, and deferred compensation of $0.2 million and $0.8 million , respectively, was recorded in accrued expenses and other current liabilities.

9. LONG-TERM INDEBTEDNESS

At December 31, 2015 , the Company had no outstanding borrowings on its line of credit. At December 31, 2014 , the Company had $15.7 million of outstanding borrowings on its line of credit at a weighted average interest rate of 1.9 percent .

On February 24, 2014, the Company entered into a $75.0 million line of credit (the “Credit Agreement”) with JPMorgan Chase Bank, N.A. and Wells Fargo Bank, N.A. On March 3, 2015, in accordance with the terms of the Credit Agreement, the Company increased its line of credit by $25.0 million to $100.0 million . Interest on borrowings under the line of credit is designated from time to time by the Company as either (i) the Prime Rate, minus a rate ranging from 0.75 to 1.0 percent (minus 1.0 percent at December 31, 2015 ), but not less than 1.5 percent , or (ii) LIBOR, plus additional interest ranging from 1.75 to 2.0 percent (plus 1.75 percent at December 31, 2015 ) depending on the Company’s performance and financial condition. The Credit Agreement expires on January 1, 2019 . At December 31, 2015 and 2014 , the Company had $2.7 million and $1.9 million , respectively, in standby letters of credit under the line of credit. Availability under the Company’s line of credit was $97.3 million at December 31, 2015 .

DREW INDUSTRIES INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

determined by Prudential within five business days after the Company issues a request to Prudential. This facility expires on February 24, 2017 . On March 20, 2015, the Company issued $50.0 million of Senior Promissory Notes to Prudential for a term of five years, at a fixed interest rate of 3.35 percent per annum, payable quarterly in arrears, of which the entire amount was outstanding at December 31, 2015 . Availability under the Company’s “shelf-loan” facility, subject to the approval of Prudential, was $100.0 million at December 31, 2015 . At December 31, 2015 , the fair value of the Company’s long-term debt approximates the carrying value, as estimated using quoted market prices and discounted future cash flows based on similar borrowing arrangements.

Borrowings under both the line of credit and the “shelf-loan” facility are secured on a pari-passu basis by first priority liens on the capital stock or other equity interests of each of the Company’s direct and indirect subsidiaries.

Pursuant to the Credit Agreement and “shelf-loan” facility, at December 31, 2015 and 2014 , the Company was required to maintain minimum interest and fixed charge coverages, and to meet certain other financial requirements. At December 31, 2015 and 2014 , the Company was in compliance with all such requirements, and expects to remain in compliance for the next twelve months.

10. INCOME TAXES

The provision for income taxes in the Consolidated Statements of Income was as follows for the years ended December 31:



(In thousands)	2015		2014			2013
Current:
Federal	$	31,292	$	32,142		$	23,430
State	7,670		6,142			4,129
Total current provision	$	38,962	$	38,284		$	27,559
Deferred:
Federal	$	466	$	(4,545	)	$	68
State	596		(948		)	201
Total deferred provision	$	1,062	$	(5,493	)	$	269
Provision for income taxes	$	40,024	$	32,791		$	27,828

The provision for income taxes differs from the amount computed by applying the federal statutory rate to income before income taxes for the following reasons for the years ended December 31:



(In thousands)	2015			2014			2013
Income tax at federal statutory rate	$	40,029		$	33,270		$	27,281
State income tax, net of federal income tax impact	5,373			3,376			2,815
Manufacturing credit pursuant to Jobs Creation Act	(2,336		)	(2,258		)	(1,444		)
Federal tax credits	(1,049		)	(681		)	(747		)
Other	(1,993		)	(916		)	(77		)
Provision for income taxes	$	40,024		$	32,791		$	27,828

At December 31, 2015 , federal income taxes receivable of $8.1 million and state income taxes receivable of $0.4 million were included in prepaid expenses and other current assets. At December 31, 2014 , federal and state income taxes receivable of $1.3 million were included in prepaid expenses and other current assets, and state income taxes payable of $0.8 million were included in accrued expenses and other current liabilities.

DREW INDUSTRIES INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows at December 31:



(In thousands)	2015			2014
Deferred tax assets:
Goodwill and other intangible assets	$	11,879		$	14,066
Stock-based compensation	7,428			7,172
Deferred compensation	5,310			5,040
Warranty	8,809			7,845
Inventory	5,974			3,897
Other	4,922			3,189
Total deferred tax assets	44,322			41,209
Deferred tax liabilities:
Fixed assets	(14,931		)	(10,756		)
Net deferred tax assets	$	29,391		$	30,453

The Company concluded it is more likely than not the deferred tax assets at December 31, 2015 will be realized in the ordinary course of operations based on projected future taxable income and scheduling of deferred tax liabilities.

Excess tax benefits on stock-based compensation of $9.0 million , $3.9 million and $1.5 million were credited directly to stockholders’ equity during the years ended December 31, 2015 , 2014 and 2013 , respectively, relating to tax benefits which exceeded the compensation cost for stock-based compensation recognized in the Consolidated Financial Statements.

At December 31, 2015 , the remaining pool of excess tax benefits from prior exercises of stock-based compensation in stockholders’ equity was $23.4 million .

Unrecognized Tax Benefits

The following table reconciles the total amounts of unrecognized tax benefits, at December 31:



(In thousands)	2015			2014			2013
Balance at beginning of period	$	1,526		$	1,369		$	1,701
Changes in tax positions of prior years	912			84			(29		)
Additions based on tax positions related to the current year	866			603			676
Payments	(85		)	—			(126		)
Closure of tax years	(365		)	(530		)	(853		)
Balance at end of period	$	2,854		$	1,526		$	1,369

In addition, the total amount of accrued interest and penalties related to taxes was $0.2 million , $0.2 million and $0.2 million at December 31, 2015 , 2014 and 2013 , respectively.

The total amount of unrecognized tax benefits, net of federal income tax benefits, of $2.7 million , $1.2 million and $1.0 million at December 31, 2015 , 2014 and 2013 , respectively, would, if recognized, increase the Company’s earnings, and lower the Company’s annual effective tax rate in the year of recognition.

The Company periodically undergoes examinations by the Internal Revenue Service (“IRS”), as well as various state taxing authorities. The IRS and other taxing authorities may challenge certain deductions and positions reported by the Company on its income tax returns. For federal income tax purposes, the tax years 2012 through 2014 remain subject to examination. For Indiana state income tax purposes, the tax years 2012 through 2014 remain subject to examination. Approximately 80 percent of the Company’s operations are located in Indiana.

The Company has assessed its risks associated with all tax return positions, and believes its tax reserve estimates reflect its best estimate of the deductions and positions it will be able to sustain, or it may be willing to concede as part of a settlement. At this time, the Company cannot estimate the range of reasonably possible change in its tax reserve estimates in 2016 . While these tax matters could materially affect operating results when resolved in future periods, it is management’s opinion that after

DREW INDUSTRIES INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

final disposition, any monetary liability or financial impact to the Company beyond that provided for in the Consolidated Balance Sheet as of December 31, 2015 , would not be material to the Company’s financial position or annual results of operations.

11. COMMITMENTS AND CONTINGENCIES

Leases

The Company’s lease commitments are primarily for real estate, machinery and equipment, and vehicles. The significant real estate leases provide for renewal options and require the Company to pay for property taxes and all other costs associated with the leased property.

Future minimum lease payments under operating leases at December 31, 2015 are as follows ( in thousands ):



2016	$	7,472
2017	6,761
2018	5,553
2019	4,752
2020	4,043
Thereafter	11,093
Total minimum lease payments	$	39,674

Rent expense for operating leases was $9.8 million , $8.6 million and $7.1 million for the years ended December 31, 2015 , 2014 and 2013 , respectively.

Contingent Consideration

In connection with several business acquisitions, if certain sales targets for the acquired products are achieved, the Company would pay additional cash consideration. The Company has recorded a liability for the fair value of this contingent consideration at December 31, 2015 and 2014 , based on the present value of the expected future cash flows using a market participant’s weighted average cost of capital of 13.9 percent and 15.0 percent , respectively.

As required, the liability for this contingent consideration is measured at fair value quarterly, considering actual sales of the acquired products, updated sales projections, and the updated market participant weighted average cost of capital. Depending upon the weighted average costs of capital and future sales of the products which are subject to contingent consideration, the Company could record adjustments in future periods.

The following table provides a reconciliation of the Company’s contingent consideration liability for the years ended December 31 :



(In thousands)	2015			2014			2013
Balance at beginning of period	$	8,129		$	7,414		$	11,519
Acquisitions	4,766			3,370			—
Payments	(3,974		)	(3,739		)	(5,456		)
Accretion ^(a)	1,196			1,075			1,308
Fair value adjustments ^(a)	723			9			43
Balance at end of the period ^(b)	10,840			8,129			7,414
Less current portion in accrued expenses and other current liabilities	(3,877		)	(3,622		)	(3,462		)
Total long-term portion in other long-term liabilities	$	6,963		$	4,507		$	3,952


(a)	Recorded in selling, general and administrative expense in the Consolidated Statements of Income.

(b)

Amounts represent the fair value of estimated remaining payments. The total estimated remaining undiscounted payments as of December 31, 2015 are $14.4 million . The liability for contingent consideration expires at various dates through September 2029. Certain of the contingent consideration arrangements are subject to a maximum payment amount, while the remaining arrangements have no maximum contingent consideration.

DREW INDUSTRIES INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Furrion Distribution and Supply Agreement

In July 2015, the Company entered into a 6 -year exclusive distribution and supply agreement with Furrion Limited (“Furrion”), a Hong Kong based firm that designs, engineers and manufactures premium electronics. This agreement provides the Company with the rights to distribute Furrion’s complete line of products to OEMs and aftermarket customers in the RV, specialty vehicle, utility trailer, horse trailer, marine, transit bus and school bus industries throughout the United States and Canada. Furrion currently supplies a premium line of LED televisions, sound systems, navigation systems, wireless backup cameras, solar prep units, power solutions and kitchen appliances, primarily to the RV industry. Furrion’s sales were approximately $35 million in 2014.

In connection with this agreement, the Company acquired Furrion’s current inventory, as well as Furrion’s deposits on inventory scheduled for delivery, for approximately $11 million . In addition, the Company entered into the following minimum purchase obligations (“MPOs”):



	July 2015 - June 2016	$ 60 million
	July 2016 - June 2017	$ 90 million
	July 2017 - June 2018	$127 million
	July 2018 - June 2019	$172 million

If the Company misses an MPO in any given year by more than ten percent, after taking into account excess purchases from the previous year, Furrion has the right to either terminate the distribution agreement with six months’ notice or remove exclusivity from the Company. If exclusivity is withdrawn, the Company, at its election, can terminate the distribution agreement with six months’ notice. Upon termination of the agreement, Furrion has agreed to purchase from the Company any non-obsolete stocks of Furrion products at the cost paid by the Company. After the first year, Furrion and the Company have agreed to review these MPOs on an annual basis and adjust the MPOs as necessary based upon current economic and industry conditions, the development and customer acceptance of new Furrion products, competition and other factors which impact demand for Furrion products.

Product Recalls

From time to time, the Company cooperates with and assists its customers on their product recalls and inquiries, and occasionally receives inquiries directly from the National Highway Traffic Safety Administration (“NHTSA”) regarding reported incidents involving the Company’s products. In February 2015, NHTSA opened a Preliminary Evaluation as a result of four Vehicle Owner Questionnaires (VOQs) alleging failure of the Company’s electrically powered step (“Coach Step”), which was primarily supplied for motorhome RVs between model years 2008 and 2014. The Coach Step was no longer manufactured after 2014. In March 2015, NHTSA sent a formal request for information, data and supporting documentation from the Company regarding the Coach Step, which the Company provided in April 2015. After a thorough review of the design and operation of the Coach Step, the Company initiated a voluntary safety recall in September 2015 of all double and triple Coach Steps. The Company recorded a reserve of $1.1 million for the contingent obligation in selling, general and administrative expenses.

Environmental

The Company’s operations are subject to certain Federal, state and local regulatory requirements relating to the use, storage, discharge and disposal of hazardous materials used during the manufacturing processes. Although the Company believes its operations have been consistent with prevailing industry standards, and are in substantial compliance with applicable environmental laws and regulations, one or more of the Company’s current or former operating sites, or adjacent sites owned by third-parties, have been affected by releases of hazardous materials. As a result, the Company may incur expenditures for future investigation and remediation of these sites, and recorded a pre-tax charge of $1.5 million related to environmental costs in 2015.

Litigation

DREW INDUSTRIES INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

provided in the Consolidated Balance Sheet as of December 31, 2015 , would not be material to the Company’s financial position or annual results of operations.

Executive Succession and Severance

In 2015, the Company initiated a focused program to reduce indirect labor costs. In connection with this cost reduction program, the Company incurred severance charges of $3.7 million .

In 2013, in connection with the Company’s executive succession and corporate relocation from White Plains, New York to Elkhart County, Indiana, the Company recorded pre-tax charges of $1.9 million , related to contractual obligations for severance and the acceleration of equity awards held by certain employees whose employment terminated as a result of the executive succession and relocation to Indiana. The liability for executive succession and severance obligations were paid through 2015.

12. STOCKHOLDERS' EQUITY

Special Dividend

On April 10, 2015, a special dividend of $2.00 per share of the Company’s Common Stock, representing an aggregate of $48.2 million , was paid to stockholders of record as of March 27, 2015. On January 6, 2014, a special dividend of $2.00 per share of the Company’s Common Stock, representing an aggregate of $46.7 million , was paid to stockholders of record as of December 20, 2013. In connection with these special dividends, holders of deferred stock units, restricted stock and stock awards were credited with deferred stock units, restricted stock or stock equal to $2.00 per special dividend for each deferred stock unit, share of restricted stock or stock award, representing $1.8 million in total for each of the 2015 and 2014 special dividends. In connection with each of these special cash dividends, the exercise price of all outstanding stock options was reduced by $2.00 per share. These reductions in exercise price were made pursuant to the terms of the outstanding awards, resulting in no incremental stock-based compensation expense.

Stock-Based Awards

Pursuant to the Drew Industries Incorporated Equity Award and Incentive Plan, as Amended and Restated (the “Equity Plan”), which was approved by stockholders in May 2011, the Company may grant to its directors, employees, and other eligible persons Common Stock-based awards, such as stock options, restricted stock and deferred stock units. All such awards granted under the Equity Plan must be approved by the Compensation Committee of Drew’s Board of Directors (the “Committee”). The Committee determines the period for which all such awards may be exercisable, but in no event may such an award be exercisable more than 10 years from the date of grant. The number of shares available under the Equity Plan, and the exercise price of all such awards granted under the Equity Plan, are subject to adjustments by the Committee to reflect stock splits, dividends, recapitalization, mergers, or other major corporate actions.

At the Annual Meeting of Stockholders held on May 22, 2014 , stockholders approved an amendment to the Equity Plan to increase the number of shares of common stock available for issuance pursuant to awards by 1,678,632 shares.

The number of shares available for granting awards was 1,305,440 , 1,389,506 and 246,368 at December 31, 2015 , 2014 and 2013 , respectively.

Stock-based compensation resulted in charges to operations as follows for the years ended December 31:



(In thousands)	2015		2014		2013
Stock options	$	974	$	1,412	$	2,325
Deferred stock units	7,023		4,343		5,425
Restricted stock	1,031		910		911
Stock awards	5,015		4,152		2,178
Stock-based compensation expense	$	14,043	$	10,817	$	10,839

Stock-based compensation expense is recorded in the Consolidated Statements of Income in the same line as cash compensation to those employees is recorded, primarily in selling, general and administrative expenses. In addition, for the years ended December 31, 2015 , 2014 and 2013 , the Company issued deferred stock units to certain executive officers in lieu of cash for a portion of prior year incentive compensation, in accordance with their compensation arrangements, of $2.0 million , $2.0

DREW INDUSTRIES INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

million and $0.1 million , respectively. In February 2016 , the Company issued deferred stock units valued at $0.3 million , to certain officers in lieu of cash for a portion of their 2015 incentive compensation in accordance with their compensation arrangements.

Stock Options

The Equity Plan provides for the grant of stock options that qualify as incentive stock options under Section 422 of the Internal Revenue Code, and non-qualified stock options. The exercise price for stock options granted under the Equity Plan must be at least equal to 100 percent of the fair market value of the shares subject to such stock option on the date of grant. The exercise price may be paid in cash or in shares of the Company’s Common Stock which have been held for a minimum of six months . Historically, upon exercise of stock options, new shares have been issued instead of using treasury shares.

Outstanding stock options expire six years from the date of grant, and either vest ratably over the service period of five years for employees or, for certain executive officers, based on achievement of specified performance conditions. As a result of the Company’s executive succession and corporate relocation, the vesting of certain stock options was accelerated pursuant to contractual obligations with certain employees whose employment terminated as a result of the relocation to Indiana.

Transactions in stock options under the Equity Plan are summarized as follows:



	Number of Option Shares			Stock Option Exercise Price	Weighted Average Exercise Price
Outstanding at December 31, 2012	1,320,819		$ 8.09 - $29.11		$	19.92
Exercised	(574,288	)	$ 8.09 - $29.11		$	23.04
Forfeited	(22,870	)	$ 8.09 - $29.11		$	19.36
Outstanding at December 31, 2013	723,661		$ 8.09 - $21.17		$	15.46
Exercised	(258,530	)	$ 6.09 - $19.17		$	12.89
Forfeited	(11,800	)	$6.09 - $19.17		$	16.93
Reduction for cash dividend	—		$ 6.09 - $19.17		$	(2.00	)
Outstanding at December 31, 2014	453,331		$15.49 - $19.17		$	16.89
Exercised	(214,601	)	$13.49 - $19.17		$	14.48
Forfeited	(26,700	)	$13.49 - $19.17		$	14.30
Reduction for cash dividend	—		$13.49 - $17.17		$	(2.00	)
Outstanding at December 31, 2015	212,030		$13.67 - $17.17		$	15.38
Exercisable at December 31, 2015	162,170		$13.67 - $17.17		$	14.83

Additional information for the exercise of stock options is as follows for the years ended December 31:



(In thousands)	2015		2014		2013
Intrinsic value of stock options exercised	$	9,424	$	7,860	$	9,062
Cash receipts from stock options exercised	$	3,280	$	3,333	$	13,231
Income tax benefits from stock option exercises	$	2,885	$	3,660	$	3,473
Grant date fair value of stock options vested	$	1,055	$	1,561	$	2,252

The following table summarizes information about stock options outstanding at December 31, 2015 :



Exercise Price		Option Shares Outstanding		Remaining Life in Years	Option Shares Exercisable
$	13.67	108,450		0.9	108,450
$	17.17	103,580		1.9	53,720
Total Shares		212,030	(a)		162,170	(a)


(a)	The aggregate intrinsic value for option shares outstanding and option shares exercisable is $9.6 million and $7.5 million , respectively. The weighted average remaining term for option shares outstanding and option shares exercisable is 1.4 years and 1.2 years , respectively.

DREW INDUSTRIES INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

As of December 31, 2015 , there was $0.4 million of total unrecognized compensation costs related to unvested stock options, which are expected to be recognized over a weighted average remaining period of 0.9 years .

Deferred Stock Units

The Equity Plan provides for the grant or issuance of deferred stock units (“DSUs”) to directors, employees and other eligible persons. Recipients of DSUs are entitled to receive shares at the end of a specified deferral period. Holders of DSUs receive dividends granted to holders of the Common Stock, payable in additional DSUs, and are subject to the same vesting criteria as the original grant.

DSUs vest (i) ratably over the service period, (ii) at a specified future date, or (iii) for certain officers, based on achievement of specified performance conditions. As a result of the Company’s executive succession and corporate relocation, the vesting of certain deferred stock units was accelerated pursuant to contractual obligations with certain employees whose employment terminated. In addition, DSUs are issued in lieu of cash compensation.

Transactions in DSUs under the Equity Plan are summarized as follows:



	Number of Shares		Stock Price
Outstanding at December 31, 2012	613,754		$ 6.16 - $33.32
Issued	32,462		$33.84 - $48.53
Granted	140,461		$36.58 - $50.85
Forfeited	(4,505	)	$30.50
Exercised	(89,211	)	$20.20 - $30.65
Outstanding at December 31, 2013	692,961		$ 6.16 - $50.85
Issued	56,212		$36.68 - $51.46
Granted	187,490		$45.98 - $46.95
Dividend equivalents	27,532		$50.45
Forfeited	(38,855	)	$26.98 - $50.89
Exercised	(187,052	)	$19.98 - $50.89
Outstanding at December 31, 2014	738,288		$ 6.16 - $51.20
Issued	54,982		$52.20 - $60.92
Granted	90,184		$52.20 - $61.53
Dividend equivalents	20,922		$59.94
Forfeited	(23,604	)	$30.50 - $60.29
Exercised	(353,259	)	$20.89 - $51.46
Outstanding at December 31, 2015	527,513		$ 6.16 - $61.53

As of December 31, 2015 , there was $12.7 million of total unrecognized compensation costs related to DSUs, which is expected to be recognized over a weighted average remaining period of 1.9 years .

Restricted Stock

The Equity Plan provides for the grant of restricted stock to directors, employees and other eligible persons. The restriction period is established by the Committee, but may not be less than one year. Holders of restricted stock have all the rights of a stockholder of the Company, including the right to vote and the right to receive dividends granted to holders of the Common Stock, payable in additional shares of restricted stock, and subject to the same vesting criteria as the original grant. Shares of restricted stock are not transferable during the restriction period. Restricted stock grants, which were all made to directors, were as follows (in thousands except share and per share amounts):



	2015		2014		2013
Granted	20,558		19,439		17,885
Stock price	$58.96 - $61.53		$	46.82	$	50.89
Fair value of stock granted	$	1,220	$	910	$	910

DREW INDUSTRIES INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

As of December 31, 2015 , there was $1.0 million of total unrecognized compensation costs related to restricted stock, which is expected to be recognized over a weighted average remaining period of 0.8 years .

Stock Awards

In accordance with the Executive Employment and Non-Competition Agreements for various officers of the Company, such officers are entitled to receive an annual long-term award consisting of the right to earn shares of common stock. These shares are earned during the subsequent three year period based on growth in the Company’s earnings per diluted share.

Transactions in stock awards under the Equity Plan are summarized as follows:



	Number of Shares		Stock Price
Outstanding at December 31, 2012	90,102		$26.88
Granted	103,500		$32.25 - $43.70
Outstanding at December 31, 2013	193,602		$26.88 - $43.70
Granted	103,500		$51.20
Dividend equivalents	7,675		$50.45
Exercised	(31,959	)	$26.88
Outstanding at December 31, 2014	272,818		$26.88 - $51.45
Granted	96,010		$60.29
Dividend equivalents	8,992		$59.94
Forfeited	(16,534	)	$60.29
Exercised	(98,830	)	$26.88 - $43.70
Outstanding at December 31, 2015	262,456		$32.25 - $60.29

As of December 31, 2015 , there was $6.7 million of total unrecognized compensation costs related to outstanding stock awards, which is expected to be recognized over a weighted average remaining period of 1.5 years .

Weighted Average Common Shares Outstanding

The following reconciliation details the denominator used in the computation of basic and diluted earnings per share for the years ended December 31:



(In thousands)	2015	2014	2013
Weighted average shares outstanding for basic earnings per share	24,295	23,911	23,321
Common stock equivalents pertaining to stock-based awards	355	423	432
Weighted average shares outstanding for diluted earnings per share	24,650	24,334	23,753

The weighted average diluted shares outstanding for the years ended December 31, 2015 , 2014 and 2013 , exclude the effect of 255,547 , 293,860 and 303,240 shares of common stock, respectively, subject to stock-based awards. Such shares were excluded from total diluted shares because they were anti-dilutive or the specified performance conditions that those shares were subject to were not yet achieved.

DREW INDUSTRIES INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

13. FAIR VALUE MEASUREMENTS

Recurring

The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis at

December 31:



	2015								2014
(In thousands)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets
Deferred compensation	$	7,774	$	7,774	$	—	$	—	$	7,388	$	7,388	$	—	$	—
Total assets	$	7,774	$	7,774	$	—	$	—	$	7,388	$	7,388	$	—	$	—

Liabilities
Contingent consideration	$	10,840	$	—	$	—	$	10,840	$	8,129	$	—	$	—	$	8,129
Deferred compensation	11,836		11,836		—		—		11,478		11,478		—		—
Total liabilities	$	22,676	$	11,836	$	—	$	10,840	$	19,607	$	11,478	$	—	$	8,129

Deferred Compensation

The Company has an Executive Non-Qualified Deferred Compensation Plan (the “Plan”). The amounts deferred under the Plan are credited with earnings or losses based upon changes in values of the notional investments elected by the Plan participants. The Company invests approximately 65 percent of the amounts deferred by the Plan participants in life insurance contracts, matching the investments elected by the Plan participants. Deferred compensation assets and liabilities were valued using a market approach based on the quoted market prices of identical instruments.

Contingent Consideration Related to Acquisitions

Liabilities for contingent consideration related to acquisitions were fair valued using management’s projections for long-term sales forecasts, including assumptions regarding market share gains and future industry-specific economic and market conditions, and a market participant’s weighted average cost of capital. Over the next six years , the Company’s long-term sales growth forecasts for products subject to contingent consideration arrangements average approximately 13 percent per year. For further information on the inputs used in determining the fair value, and a roll-forward of the contingent consideration liability, see Note 11 of the Notes to Consolidated Financial Statements.

Changes in either of the inputs in isolation would result in a change in the fair value measurement. A change in the assumptions used for sales forecasts would result in a directionally similar change in the fair value liability, while a change in the weighted average cost of capital would result in a directionally opposite change in the fair value liability. If there is an increase in the fair value liability, the Company would record a charge to selling, general and administrative expenses, and if there is a decrease in the fair value liability, the Company would record a benefit in selling, general and administrative expenses.

Non-recurring

The following table presents the carrying value on the measurement date of any assets and liabilities which were measured at fair value and recorded at the lower of cost or fair value, on a non-recurring basis, using significant unobservable inputs (Level 3), and the corresponding non-recurring losses recognized during the years ended December 31 :



	2015				2014				2013
(In thousands)	Carrying Value		Non-Recurring Losses		Carrying Value		Non-Recurring Losses		Carrying Value		Non-Recurring Losses
Assets
Vacant owned facilities	$	2,537	$	—	$	3,863	$	—	$	3,197	$	145
Other intangible assets	—		—		—		—		—		—
Net assets of acquired businesses	28,727		—		66,169		—		4,382		—
Total assets	$	31,264	$	—	$	70,032	$	—	$	7,579	$	145

DREW INDUSTRIES INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Vacant Owned Facilities

During 2015 , the Company reviewed the recoverability of the carrying value of three vacant owned facilities, of which one of these facilities was sold and one was reopened. At December 31, 2015 , the Company had one vacant owned facility, with an estimated fair value of $3.1 million and a carrying value of $2.5 million , classified in fixed assets in the Consolidated Balance Sheets.

During 2014 , the Company reviewed the recoverability of the carrying value of four vacant owned facilities. At December 31, 2014 , the Company had three vacant owned facilities with an estimated combined fair value of $4.2 million and a combined carrying value of $3.9 million , classified in fixed assets in the Consolidated Balance Sheets.

During 2013 , the Company reviewed the recoverability of the carrying value of six vacant owned facilities. The fair value of two of these vacant owned facilities did not exceeded their carrying value, therefore an impairment charge of $0.1 million was recorded in selling, general, and administrative expenses in the Consolidated Statements of Income. At December 31, 2013 , the Company had three vacant owned facilities, with an estimated combined fair value of $3.6 million and a combined carrying value of $3.2 million , classified in fixed assets in the Consolidated Balance Sheets.

The determination of fair value was based on the best information available, including internal cash flow estimates, market prices for similar assets, broker quotes and independent appraisals, as appropriate.

Net Assets of Acquired Businesses

The Company valued the assets and liabilities associated with the acquisitions of businesses on the respective acquisition dates. Depending upon the type of asset or liability acquired, the Company used different valuation techniques in determining the fair value. Those techniques included comparable market prices, long-term sales, profitability and cash flow forecasts, assumptions regarding future industry-specific economic and market conditions, a market participant’s weighted average cost of capital, as well as other techniques as circumstances required. For further information on acquired assets and liabilities, see Note 3 of the Notes to Consolidated Financial Statements.

14. NEW ACCOUNTING PRONOUNCEMENTS

In November 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-17, Balance Sheet Classification of Deferred Taxes. This ASU requires entities with a classified balance sheet to present all deferred tax assets and liabilities as non-current. This ASU is effective for annual and interim periods beginning after December 15, 2016, and can be applied prospectively or retrospectively to adjustments with early adoption permitted at the beginning of an interim or annual reporting period. The Company is evaluating the effect of adopting this new accounting guidance, but does not expect adoption will have a material impact on the Company’s results of operations, cash flows or financial position.

In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments. This ASU applies to restating prior periods to reflect adjustments made to provisional amounts recognized in a business combination. Under the new guidance, an acquirer must recognize adjustments to provisional amounts identified during the measurement period in the reporting period in which the adjustment amounts are determined. This ASU is effective for annual and interim periods beginning after December 15, 2015, and is to be applied prospectively to adjustments to provisional amounts occurring after the effective date with early adoption permitted at the beginning of an interim or annual reporting period. The Company is evaluating the effect of adopting this new accounting guidance, but does not expect adoption will have a material impact on the Company’s results of operations, cash flows or financial position.

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. This ASU applies to inventory measured using the first-in, first-out (“FIFO”) or average cost methods. Under the updated guidance, an entity should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This ASU is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption permitted at the beginning of an interim or annual reporting period. Adoption of this ASU will not have a material impact on the Company’s results of operations, cash flows or financial position.

DREW INDUSTRIES INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs . This ASU requires debt issuance costs be presented on the balance sheet as a direct reduction from the related debt liability rather than as an asset. Amortization of the costs would be reported as interest expense. The amendments in this ASU are to be applied retrospectively and are effective for interim and annual reporting periods beginning after December 15, 2015. Adoption of this ASU will not have a material impact on the Company’s results of operations, cash flows or financial position.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers . This ASU provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU is for annual periods, and interim periods within those years, beginning after December 15, 2017, with early adoption permitted for years beginning after December 15, 2016, to be applied retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company is evaluating the effect of adopting this new accounting guidance, but does not expect adoption will have a material impact on the Company’s results of operations, cash flows or financial position.

DREW INDUSTRIES INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

15. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

Interim unaudited financial information follows:



(In thousands, except per share amounts)	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Year
Year ended December 31, 2015
Net sales	$	361,457	$	362,085	$	345,296	$	334,228	$	1,403,066
Gross profit	$	76,403	$	82,060	$	74,125	$	73,414	$	306,002
Income before income taxes	$	31,649	$	33,019	$	26,576	$	23,125	$	114,369
Net income	$	20,073	$	20,869	$	17,263	$	16,140	$	74,345

Net income per common share:
Basic	$	0.83	$	0.86	$	0.71	$	0.66	$	3.06
Diluted	$	0.82	$	0.85	$	0.70	$	0.65	$	3.02

Stock market price:
High	$	64.61	$	62.60	$	59.42	$	61.90	$	64.61
Low	$	47.63	$	55.26	$	52.42	$	53.55	$	47.63
Close (at end of quarter)	$	61.54	$	58.02	$	54.61	$	60.89	$	60.89

Year ended December 31, 2014
Net sales	$	285,377	$	321,783	$	294,271	$	289,351	$	1,190,782
Gross profit	$	63,200	$	72,012	$	62,483	$	57,228	$	254,923
Income before income taxes	$	25,926	$	29,075	$	22,941	$	17,115	$	95,057
Net income	$	16,164	$	18,618	$	15,488	$	11,996	$	62,266

Net income per common share:
Basic	$	0.68	$	0.78	$	0.65	$	0.50	$	2.60
Diluted	$	0.67	$	0.77	$	0.64	$	0.49	$	2.56

Stock market price:
High	$	54.20	$	54.15	$	50.83	$	51.69	$	54.20
Low	$	45.53	$	45.80	$	41.00	$	41.95	$	41.00
Close (at end of quarter)	$	54.20	$	50.01	$	42.19	$	51.07	$	51.07

The sum of per share amounts for the four quarters may not equal the total per share amounts for the year as a result of changes in the weighted average common shares outstanding or rounding.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

Item 9A. CONTROLS AND PROCEDURES.

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure, in accordance with the definition of “disclosure controls and procedures” in Rule 13a-15 under the Exchange Act. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, cannot provide absolute assurance of achieving the desired control objectives. Management included in its evaluation the cost-benefit relationship of possible controls and procedures. The Company continually evaluates its disclosure controls and procedures to determine if changes are appropriate based upon changes in the Company’s operations or the business environment in which it operates.

As of the end of the period covered by this Form 10-K, the Company performed an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective.

(a) Management’s Annual Report on Internal Control over Financial Reporting .

We are responsible for the preparation and integrity of the Consolidated Financial Statements appearing in the Annual Report on Form 10-K. We are also responsible for establishing and maintaining adequate internal control over financial reporting. We maintain a system of internal control that is designed to provide reasonable assurance as to the fair and reliable preparation and presentation of the Consolidated Financial Statements, as well as to safeguard assets from unauthorized use or disposition. The Company continually evaluates its system of internal control over financial reporting to determine if changes are appropriate based upon changes in the Company’s operations or the business environment in which it operates.

Our control environment is the foundation for our system of internal control over financial reporting and is embodied in our Guidelines for Business Conduct. It sets the tone of our organization and includes factors such as integrity and ethical values. Our internal control over financial reporting is supported by formal policies and procedures which are reviewed, modified and improved as changes occur in business conditions and operations.

We conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Although there are inherent limitations in the effectiveness of any system of internal control over financial reporting, based on our evaluation, we have concluded that our internal control over financial reporting was effective as of December 31, 2015 .

KPMG LLP, an independent registered public accounting firm, has audited the Consolidated Financial Statements included in this Report and, as part of their audit, has issued their attestation report on the effectiveness of our internal control over financial reporting, included elsewhere in this Form 10-K.




/s/ Jason D. Lippert	/s/ David M. Smith
Chief Executive Officer	Chief Financial Officer

(b) Report of the Independent Registered Public Accounting Firm .

The attestation report of our independent registered public accounting firm on the effectiveness of our internal control over financial reporting is included in Item 8. “Financial Statements and Supplementary Data.”

There were no changes in the Company’s internal controls over financial reporting during the quarter ended December 31, 2015 , that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

The Company has selected a new enterprise resource planning (“ERP”) system, and has begun implementing that system. Although to date there have been no significant changes in the Company’s internal controls, the Company anticipates internal controls will be strengthened incrementally due both to the installation of the new ERP software and business process changes. The full implementation is expected to take several years.

Item 9B. OTHER INFORMATION.

None.

PART III

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Information with respect to the Company’s Directors, Executive Officers and Corporate Governance is incorporated by reference from the information contained under the proposal entitled “Election of Directors” and under the caption “Corporate Governance and Related Matters – Board Committees” in the Company’s Proxy Statement for the Annual Meeting of Stockholders to be held on May 26, 2016 (the “ 2016 Proxy Statement”) and from the information contained under “Executive Officers of the Registrant” in Part I, Item 1, “Business,” in this Report.

Information regarding Section 16 reporting compliance is incorporated by reference from the information contained under the caption “Voting Securities – Compliance with Section 16(a) of the Exchange Act” in the Company’s 2016 Proxy Statement.

The Company has adopted Governance Principles, Guidelines for Business Conduct, a Whistleblower Policy, and a Code of Ethics for Senior Financial Officers (“Code of Ethics”), each of which, as well as the Charter and Key Practices of the Company’s Audit Committee, Compensation Committee, and Corporate Governance and Nominating Committee, are available on the Company’s website at www.drewindustries.com . A copy of any of these documents will be furnished, without charge, upon written request to Secretary, Drew Industries Incorporated, 3501 County Road 6 East, Elkhart, Indiana 46514.

If the Company makes any substantive amendment to the Code of Ethics or the Guidelines for Business Conduct, or grants a waiver to a Director or Executive Officer from a provision of the Code of Ethics or the Guidelines for Business Conduct, the Company will disclose the nature of such amendment or waiver on its website or in a Current Report on Form 8-K. There have been no waivers to Directors or Executive Officers of any provisions of the Code of Ethics or the Guidelines for Business Conduct.

Item 11. EXECUTIVE COMPENSATION.

The information required by this item is incorporated by reference from the information contained under the caption “Executive Compensation” and “Director Compensation” in the Company’s 2016 Proxy Statement.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The information required by this item is incorporated by reference from the information contained under the caption “Voting Securities – Security Ownership of Certain Beneficial Owners and Management” in the Company’s 2016 Proxy Statement and the Equity Compensation Plan Information contained in Part I, Item 5 in this Report.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

The information required by this item with respect to transactions with related persons and director independence is incorporated by reference from the information contained under the captions “Transactions with Related Persons” and “Corporate Governance and Related Matters – Board of Directors and Director Independence” in the Company’s 2016 Proxy Statement.

Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

The information required by this item is incorporated by reference from the information contained under the proposal entitled “Appointment of Auditors – Fees for Independent Auditors” in the Company’s 2016 Proxy Statement.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a) Documents Filed:

(1) Financial Statements.

(2) Exhibits. See Item 15 (b) - “List of Exhibits” incorporated herein by reference.

(b) Exhibits - List of Exhibits.



Exhibit Number	Description
3.1*	Drew Industries Incorporated Restated Certificate of Incorporation.
3.2	Amended and Restated By-laws of Drew Industries Incorporated (incorporated by reference to Exhibit 4.2 included in the Registrant’s Registration Statement on Form S-8 filed on December 31, 2014 (Registration No. 333-201336)).
10.221	Form of Indemnification Agreement between Registrant and its officers and independent directors (incorporated by reference to Exhibit 10.1 included in the Registrant's Form 8-K filed on May 26, 2015).
10.231†*	Executive Non-Qualified Deferred Compensation Plan, as amended.
10.233	Second Amended and Restated Credit Agreement dated as of November 25, 2008 by and among Kinro, Inc., Lippert Components, Inc., JPMorgan Chase Bank, N.A., individually and as Administrative Agent, and Wells Fargo Bank, N.A. individually and as Documentation Agent (incorporated by reference to Exhibit 10.1 included in the Registrant’s Form 8-K filed on December 2, 2008).
10.257	First Amendment dated February 24, 2011 to the Second Amended and Restated Credit Agreement dated as of November 25, 2008 among Kinro, Inc., Lippert Components, Inc., JPMorgan Chase Bank, N.A., individually and as Administrative Agent, and Wells Fargo Bank, N.A. individually and as Documentation Agent (incorporated by reference to Exhibit 10.1 included in the Registrant’s Form 8-K filed on February 25, 2011).
10.259†	Drew Industries Incorporated Equity Award and Incentive Plan, As Amended and Restated (incorporated by reference to Appendix A included in the Registrant’s Definitive Proxy Statement on Schedule 14A filed on April 11, 2014).
10.263†	Executive Compensation and Non-Competition Agreement between Registrant and Joseph S. Giordano III, dated February 10, 2012 (incorporated by reference to Exhibit 10(iii)(A) included in the Registrant’s Form 8-K filed on February 13, 2012).
10.268†	Change in Control Agreement between Registrant and Jason D. Lippert, dated April 9, 2012 (incorporated by reference to Exhibit 10.02 included in the Registrant’s Form 8-K filed on April 10, 2012).



10.269†	Change in Control Agreement between Registrant and Scott T. Mereness, dated April 9, 2012 (incorporated by reference to Exhibit 10.03 included in the Registrant’s Form 8-K filed on April 10, 2012).
10.270†	Amended and Restated Executive Employment and Non-Competition Agreement among Drew Industries Incorporated, Lippert Components Manufacturing, Inc., Kinro Manufacturing, Inc. and Jason D. Lippert, dated February 26, 2013 (incorporated by reference to Exhibit 10(iii)(A) included in the Registrant’s Form 8-K filed on February 26, 2013).
10.271†	Amended and Restated Executive Employment and Non-Competition Agreement among Drew Industries Incorporated, Lippert Components Manufacturing, Inc., Kinro Manufacturing, Inc. and Scott T Mereness, dated March 4, 2013 (incorporated by reference to Exhibit 10(iii)(A) included in the Registrant’s Form 8-K filed on March 5, 2013).
10.272†	Amendment to Executive Compensation and Non-Competition Agreement between Registrant and Joseph S. Giordano III, dated April 10, 2013 (incorporated by reference to Exhibit 10(iii)(A) included in the Registrant’s Form 8-K filed on April 11, 2013).
10.273†	Amendment to Change in Control Agreement between Registrant and Jason D. Lippert, dated May 10, 2013 (incorporated by reference to Exhibit 10(ii)(A)-2 included in the Registrant’s Form 8-K filed on May 10, 2013).
10.274†	Amendment to Change in Control Agreement between Registrant and Scott T. Mereness, dated May 10, 2013 (incorporated by reference to Exhibit 10(ii)(A)-3 included in the Registrant’s Form 8-K filed on May 10, 2013).
10.276†	Severance Agreement between Registrant and Robert A. Kuhns, dated February 11, 2014 (incorporated by reference to Exhibit 10(iii)(A) included in the Registrant’s Form 8-K filed on February 14, 2014).
10.277†	Description of 2014 executive compensation arrangement between Registrant and Robert A. Kuhns (incorporated by reference to Item 5.02 included in the Registrant’s Form 8-K filed on February 14, 2014).
10.278†	Change in Control Agreement between Registrant and Robert A. Kuhns, dated April 4, 2013, as amended May 20, 2013.
10.279	Second Amendment dated as of February 24, 2014 to Second Amended and Restated Credit Agreement dated as of November 25, 2008 among Kinro, Inc., Lippert Components, Inc., JPMorgan Chase Bank, N.A., individually and as Administrative Agent, and Wells Fargo Bank N.A., individually and as Documentation Agent (incorporated by reference to Exhibit 10.1 included in the Registrant’s Form 8-K filed on February 26, 2014).
10.280	Restated Revolving Credit Note dated as of February 24, 2014 by Lippert Components, Inc., payable to the order of JPMorgan Chase Bank, N.A. in the principal amount of Forty-Five Million ($45,000,000) Dollars (incorporated by reference to Exhibit 10.2 included in the Registrant’s Form 8-K filed on February 26, 2014).
10.281	Restated Revolving Credit Note dated as of February 24, 2014 by Lippert Components, Inc., payable to the order of Wells Fargo Bank, N.A. in the principal amount of Thirty Million ($30,000,000) Dollars (incorporated by reference to Exhibit 10.3 included in the Registrant’s Form 8-K filed on February 26, 2014).
10.282	Third Amended and Restated Pledge and Security Agreement dated as of February 24, 2014, made by Drew Industries Incorporated, Lippert Components, Inc. and Lippert Components Manufacturing, Inc., in favor of JPMorgan Chase Bank, N.A. as Collateral Agent (incorporated by reference to Exhibit 10.4 included in the Registrant’s Form 8-K filed on February 26, 2014).



10.283	Third Amended and Restated Company Guarantee Agreement dated as of February 24, 2014, made by Drew Industries Incorporated, with and in favor of JPMorgan Chase Bank, N.A. as Administrative Agent (incorporated by reference to Exhibit 10.5 included in the Registrant’s Form 8-K filed February 26, 2014).
10.284	Third Amended and Restated Subsidiary Guarantee Agreement dated as of February 24, 2014, made by each direct and indirect subsidiary of Drew Industries Incorporated and Lippert Components, Inc., with and in favor of JPMorgan Chase Bank, N.A. as Administrative Agent (incorporated by reference to Exhibit 10.6 included in the Registrant’s Form 8-K filed on February 26, 2014).
10.285	Third Amended and Restated Subordination Agreement dated as of February 24, 2014, made by Drew Industries Incorporated and each direct and indirect subsidiary of Drew Industries Incorporated, with and in favor of JPMorgan Chase Bank, N.A. as Administrative Agent (incorporated by reference to Exhibit 10.7 included in the Registrant’s Form 8-K filed February 26, 2014).
10.286	Third Amended and Restated Note Purchase and Private Shelf Agreement dated as of February 24, 2014, by and among Prudential Investment Management, Inc. and Affiliates, and Lippert Components, Inc., guaranteed by Drew Industries Incorporated (incorporated by reference to Exhibit 10.8 included in the Registrant’s Form 8-K filed February 26, 2014).
10.287	Form of Shelf Note of Lippert Components, Inc. pursuant to the Third Amended and Restated Note Purchase and Private Shelf Agreement (incorporated by reference to Exhibit 10.9 included in the Registrant’s Form 8-K filed February 26, 2014).
10.288	Amended and Restated Parent Guarantee Agreement dated as of February 24, 2014, made by Drew Industries Incorporated in favor of Prudential Investment Management, Inc. and the Noteholders thereto from time to time (incorporated by reference to Exhibit 10.10 included in the Registrant’s Form 8-K filed February 26, 2014).
10.289	Amended and Restated Subsidiary Guarantee Agreement dated as of February 24, 2014, made by each direct and indirect subsidiary (other than Lippert Components, Inc.) of Drew Industries Incorporated, in favor of Prudential Investment Management, Inc. and each of the Noteholders thereto from time to time (incorporated by reference to Exhibit 10.11 included in the Registrant’s Form 8-K filed February 26, 2014).
10.290	Amended and Restated Pledge and Security Agreement dated as of February 24, 2014, made by Drew Industries Incorporated, Lippert Components, Inc., Lippert Components Manufacturing, Inc. and the other Subsidiary Guarantors, in favor of JPMorgan Chase Bank, N.A., as Trustee for the benefit of the Noteholders (incorporated by reference to Exhibit 10.12 included in the Registrant’s Form 8-K filed February 26, 2014).
10.291	Amended and Restated Subordination Agreement dated as of February 24, 2014, made by Lippert Components, Inc., Drew Industries Incorporated and each direct and indirect subsidiary of Drew Industries Incorporated, with and in favor of Prudential Investment Management, Inc. and each of the Noteholders thereto from time to time (incorporated by reference to Exhibit 10.13 included in the Registrant’s Form 8-K filed February 26, 2014).
10.292	Amended and Restated Collateralized Trust Agreement dated as of February 24, 2014, by and among Lippert Components, Inc. and Prudential Investment Management, Inc. and each of the Noteholders thereto from time to time, and JPMorgan Chase Bank, N.A. as Trustee for the Noteholders (incorporated by reference to Exhibit 10.14 included in the Registrant’s Form 8-K filed February 26, 2014).
10.293	Second Amended and Restated Intercreditor Agreement dated as of February 24, 2014 by and among Prudential Investment Management, Inc. and Affiliates, JPMorgan Chase Bank, N.A. (as Lender and Administrative Agent), Wells Fargo Bank, N.A. (as Lender), and JPMorgan Chase Bank, N.A. (as Collateral Agent and Trustee) (incorporated by reference to Exhibit 10.15 included in the Registrant’s Form 8-K filed February 26, 2014).
10.294†	Form of Executive Employment Agreement (incorporated by reference to Exhibit 10.1 included in the Registrant's Form 8-K filed March 4, 2015).



10.295†	2015 Annual Incentive Plan (incorporated by reference to Exhibit 10.2 included in the Registrant's Form 8-K filed March 4, 2015).
10.296†	Form of Performance Stock Award (incorporated by reference to Exhibit 10.3 included in the Registrant's Form 8-K filed March 4, 2015).
10.297†	Form of Deferred Stock Award (incorporated by reference to Exhibit 10.4 included in the Registrant's Form 8-K filed March 4, 2015).
10.298	Incremental Joinder Agreement dated March 3, 2015 among Lippert Components, Inc., Drew Industries Incorporated, each subsidiary of Drew Industries Incorporated listed therein, the Lenders listed therein, and JPMorgan Chase Bank, individually and as Administrative Agent (incorporated by reference to Exhibit 10.1 included in the Registrant's Form 8-K filed March 6, 2015).
10.299	Form of 3.35% Series A Senior Notes due March 20, 2020 of Lippert Components, Inc. pursuant to the Third Amended and Restated Note Purchase and Private Shelf Agreement (incorporated by reference to Exhibit 10.2 included in the Registrant's Form 8-K filed March 23, 2015).
10.300†	Transition, Separation and General Release Agreement, dated August 14, 2015, between Drew Industries Incorporated and Joseph S. Giordano III (incorporated by reference to Exhibit 10.1 included in the Registrant's Form 8-K filed August 20, 2015).
10.301†	Transition, Separation and General Release Agreement, dated January 1, 2016, between Drew Industries Incorporated and Todd Driver (incorporated by reference to Exhibit 10.1 included in the Registrant's Form 8-K filed January 7, 2016).
10.302†	2016 Annual Incentive Plan (incorporated by reference to Exhibit 10.1 included in the Registrant's Form 8-K filed February 12, 2016).
14.1*	Code of Ethics for Senior Financial Officers.
14.2*	Guidelines for Business Conduct.
21*	Subsidiaries of the Registrant.
23*	Consent of Independent Registered Public Accounting Firm.
24*	Powers of Attorney (included on the signature page of this Report).
31.1*	Certification of Chief Executive Officer required by Rule 13a-14(a).
31.2*	Certification of Chief Financial Officer required by Rule 13a-14(a).
32.1*	Certification of Chief Executive Officer required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code.
32.2*	Certification of Chief Financial Officer required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code.
101	Interactive Data Files.

*Filed herewith

†Denotes a compensation plan or arrangement

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.



Date: February 29, 2016	DREW INDUSTRIES INCORPORATED

	By:	/s/ Jason D. Lippert
		Jason D. Lippert
		Chief Executive Officer

Pursuant to the requirements of the Securities and Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and dates indicated.

Each person whose signature appears below hereby authorizes Jason D. Lippert and David M. Smith, or either of them, to file one or more amendments to the Annual Report on Form 10-K which amendments may make such changes in such Report as either of them deems appropriate, and each such person hereby appoints Jason D. Lippert and David M. Smith, or either of them, as attorneys-in-fact to execute in the name and on behalf of each such person individually, and in each capacity stated below, such amendments to such Report.



Date	Signature	Title

February 29, 2016	By: /s/ Jason D. Lippert (Jason D. Lippert)	Chief Executive Officer and Director (principal executive officer)

February 29, 2016	By: /s/ David M. Smith (David M. Smith)	Chief Financial Officer (principal financial officer)

February 29, 2016	By: /s/ Brian M. Hall (Brian M. Hall)	Corporate Controller (principal accounting officer)

February 29, 2016	By: /s/ James F. Gero (James F. Gero)	Chairman of the Board of Directors

February 29, 2016	By: /s/ Leigh J. Abrams (Leigh J. Abrams)	Director

February 29, 2016	By: /s/ Frederick B. Hegi, Jr. (Frederick B. Hegi, Jr.)	Director

February 29, 2016	By: /s/ David A. Reed (David A. Reed)	Director

February 29, 2016	By: /s/ John B. Lowe, Jr. (John B. Lowe, Jr.)	Director

February 29, 2016	By: /s/ Brendan J. Deely (Brendan J. Deely)	Director

February 29, 2016	By: /s/ Frank J. Crespo (Frank J. Crespo)	Director

February 29, 2016	By: /s/ Kieran M. O’Sullivan (Kieran M. O’Sullivan)	Director

Exhibit 3.1

RESTATED CERTIFICATE OF INCORPORATION

DREW INDUSTRIES INCORPORATED

The present name of the corporation is DREW INDUSTRIES INCORPORATED (hereinafter the “Corporation”). The Corporation was incorporated under the name “Drew Industrial Corporation” by the filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware on March 20, 1984. This Restated Certificate of Incorporation of the Corporation only restates and integrates and does not further amend the provisions of the Corporation’s certificate of incorporation as heretofore amended, restated and supplemented, and there is no discrepancy between the provisions of the certificate of incorporation as heretofore amended, restated and supplemented and the provisions of this Restated Certificate of Incorporation. This Restated Certificate of Incorporation was duly adopted in accordance with the provisions of Section 245 of the General Corporation Law of the State of Delaware. The certificate of incorporation of the Corporation as heretofore amended, restated and supplemented is hereby integrated and restated to read in its entirety as follows:

FIRST : The name of the Corporation is

DREW INDUSTRIES INCORPORATED

SECOND : The registered office of the Corporation is located at 2711 Centerville Road, Suite 400, in the City of Wilmington 19808, in the County of New Castle, in the State of Delaware. The name of its registered agent at that address is Corporation Service Company.

THIRD : The purpose of the Corporation is to engage in any lawful act or activity for which a Corporation may be organized under the General Corporation Law of Delaware.

FOURTH : Section A. The total number of shares of all classes of stock which the Corporation shall have the authority to issue is seventy-five million (75,000,000) shares of Common Stock, par value $0.01 per share.

Section B. Each holder of Common Stock shall be entitled to one vote for each share of Common Stock held of record on all matters on which stockholders generally are entitled to vote. Subject to the provisions of law, dividends may be paid on the Common Stock at such times and in such

amounts as the Board of Directors shall determine.

FIFTH : Section A. The business and affairs of the Corporation shall be managed under the direction of the Board of Directors, which shall consist of not less than three nor more than twelve persons. The exact number of directors that constitute the whole Board within the minimum and maximum limitations specified in the preceding sentence shall be such number as from time to time shall be fixed by, or in the manner provided in, the Corporation’s by-laws.

Section B. Subject to the rights of the holders of any series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors and any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall be filled by a majority vote of the directors then in office, and directors so chosen shall hold office for a term expiring at the next following Annual Meeting of Stockholders. No decrease in the number of directors constituting the Board of Directors shall be effective until the next following Annual Meeting of Stockholders.

Section C. The Board of Directors shall have power without the assent or vote of the stockholders to make, alter, amend, change, add or to repeal the By-Laws of the Corporation; to fix and vary the amount of shares of stock, or capital of the Corporation to be reserved for any proper purpose; to authorize and cause to be executed mortgages and liens upon all or any part of the property of the Corporation; to determine the use and disposition of any surplus or net profits; and to fix the times for the declaration and payment of dividends.

Section D. In addition to the powers expressly conferred upon them in this Certificate of Incorporation or by statute, the directors are further empowered to exercise all powers and do all acts as may be exercised or done by the Corporation; subject, nevertheless, to the provisions of the statutes of Delaware, of this Certificate of Incorporation, and to any By-Laws from time to time made by the stockholders; provided, however, that no By-Laws so made shall invalidate any prior act of the directors

which would have been valid if such By-Laws had not been made.

Section E. Special meetings of the stockholders of the Corporation may be called by the Board of Directors or by the President or by a majority of the stockholders entitled to vote at such a meeting.

SIXTH : The Corporation shall, to the full extent permitted by Section 145 of the Delaware General Corporation Law, as amended from time to time, indemnify all persons whom it may indemnify pursuant thereto. If Section 145 shall be repealed, the Corporation shall indemnify any persons, and to the same extent, as it would have been able to do under Section 145 in the form Section 145 existed immediately before its repeal as if it had not been repealed. The by-laws of the Corporation as adopted and amended from time to time by the Board of Directors may make any provision with respect to the indemnification permitted by this Article SIXTH in furtherance of the indemnification provisions of this Article SIXTH, provided such by-law or by-laws are not inconsistent with this Article SIXTH or Section 145, and provided further that no by-law in any way diminishes the scope or extent of the indemnification provided for in this Article SIXTH or in Section 145. No director of the corporation shall be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit.

SEVENTH : The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation in the manner now or hereafter prescribed by law, and all rights and powers conferred herein on stockholders, directors and officers are subject to this reserved power.

IN WITNESS WHEREOF, the Corporation has caused this Restated Certificate of Incorporation to be executed by the undersigned, its duly authorized officer, on this 16th day of December, 2015.



		DREW INDUSTRIES INCORPORATED

		By:	/s/ Robert A. Kuhns
			Name: Robert A. Kuhns
			Title: Vice President

Exhibit 10.231

DREW INDUSTRIES INCORPORATED

EXECUTIVE NON-QUALIFIED DEFERRED COMPENSATION PLAN

(Effective December 1, 2006)

(Amended and Restated Effective December 1, 2008)

DREW INDUSTRIES INCORPORATED

EXECUTIVE NON-QUALIFIED DEFERRED COMPENSATION PLAN

THIS EXECUTIVE NON-QUALIFIED DEFERRED COMPENSATION PLAN (the " Plan ") is adopted and enacted as of the 1 ^st day of December, 2006 , by Drew Industries Incorporated, a corporation organized and existing under the laws of the State of Delaware, hereinafter referred to as “ Drew ” or the “ Plan Sponsor ”.

WHEREAS , effective as of December 1, 2006, the Plan Sponsor adopted a non-tax qualified plan of deferred compensation for the benefit of a select group of its management and highly compensated employees to be evidenced by and to be in accordance with the terms of this Plan, and

WHEREAS , effective as of December 1, 2008, the Plan Sponsor has amended and restated the aforesaid Plan in its entirety to be evidenced by and to be in accordance with the terms of this Plan for the benefit of a select group of its management and highly compensated employees; and

WHEREAS , the Plan Sponsor intends that the Plan shall at all times be administered and interpreted in such a manner as to constitute a “Top-hat” unfunded nonqualified deferred compensation plan for tax purposes and for purposes of Title I of ERISA within the meaning of Regulation Section 2520.104-23 promulgated by the Department of Labor; confirms that the Plan is not intended to qualify for favorable tax treatment pursuant to Section 401(a) of the Code or any successor section or statute; and confirms that the Plan is intended to comply with the requirements of Section 409A of the Code, as added by The American Jobs Creation Act of 2004, and any Treasury Regulations and other applicable guidance thereunder issued by the Treasury Department or the Internal Revenue Service; and

WHEREAS , pursuant to the Plan, payments to the Participants and every Beneficiary hereunder shall be made from assets which, for all purposes, shall be part of the general, unrestricted assets of the Employer, no person shall have any interest in any such asset by virtue of any provision of this Plan and the Employer’s obligation hereunder shall be an unfunded and unsecured promise to pay money in the future.

NOW, THEREFORE , the Plan Sponsor hereby adopts the Plan, as set forth below.

ARTICLE 1

Definitions

For the purpose of this Plan, unless otherwise clearly apparent from the context, the following phrases or terms shall have the following indicated meanings:

1.1 “Account or Accounts” shall mean a book account reflecting amounts credited to a Participant’s Separation From Service Account and/or Scheduled Withdrawal Account as adjusted for deemed investment performance and all distributions or withdrawals made by the Participant or his or her Beneficiary. To the extent that it is considered necessary or appropriate, the Plan Administrator shall maintain separate subaccounts for each Plan Year for each source of contribution under this Plan or shall otherwise provide a means for determining that portion of an Account attributable to each contribution source.

1.2 “ Affiliate” shall mean any business entity that is a member of a controlled group of corporations, within the meaning of Section 414(b) of the Code, of which the Plan Sponsor is a member; any other trade or business organization (whether or not incorporated) under common control, within the meaning of Section 414(c) of the Code, with the Plan Sponsor; and any service organization that is a member of an affiliated service group, within the meaning of Section 414(m) of the Code, of which the Plan Sponsor is a member; and any other organization that is required to be aggregated with the Plan Sponsor under Section 414(o) of the Code and whose Eligible Employees are authorized to participate in this Plan by the Plan Administrator.

1.3 “Annual Bonus” shall mean any compensation, in addition to Base Salary and Performance-Based Compensation relating to services performed during any Plan Year, whether or not paid in such Plan Year or included on the Federal Income Tax Form W-2 for such Plan Year, payable to a Participant as an employee under any of the Employer’s annual bonus or cash incentive plans, excluding stock options. Annual Bonus shall consist of any amount or portion of any amount that will be paid either regardless of performance or based on a level of performance that is substantially certain to be met.

1.4 “ Annual Deferral Amount” shall mean that portion of a Participant’s Base Salary, Annual Bonus and/or Performance-Based Compensation that a Participant elects to defer for any one Plan Year.

1.5 “Applicable Guidance” shall mean Section 409A of the Code and any Treasury Regulations and other applicable guidance thereunder issued by the Treasury Department or the Internal Revenue Service, including, as applicable, any Code Section 409A guidance in effect prior to January 1, 2009.

1.6 “ Base Salary” shall mean the annual cash compensation relating to services performed during any Plan Year (excluding bonuses, commissions, overtime, fringe benefits, incentive payments, non-monetary awards, relocation expenses, retainers, directors fees and other fees, severance allowances, pay in lieu of vacations, insurance premiums paid by the Employer, insurance benefits paid to the Participant or his or her Beneficiary, stock options and grants, and car allowances) paid to a Participant for services rendered to the Employer or an Affiliate. Base Salary shall be calculated before reduction for compensation voluntarily deferred or contributed by the Participant pursuant to all qualified or non-qualified plans of the Employer or an Affiliate and shall be calculated to include amounts not otherwise included in the Participant’s gross income under Sections 125, 402(e)(3), 402(h), or 403(b) of the Code pursuant to plans established by the Employer or an Affiliate; provided, however, that all such amounts will be included in Compensation only to the extent that, had there been no such Plan, the amounts would have been payable in cash to the Participant.

1.7 “ Beneficiary” shall mean one or more persons, trusts, estates or other entities that are entitled to receive benefits under this Plan upon the death of the Participant.

1.9 “ Change of Control” shall mean the occurrence of the events described in any of Subparagraph (a), (b), or (c), below, or any combination of said event(s) as described within the meaning of Treasury Regulations 1.409A-3(i)(5):

(a) Change of Ownership of the Employer. A change of ownership occurs on the date that any one person, or more than one person acting as a group, acquires ownership of the stock of the Employer that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Employer or of any corporation that owns at least fifty percent (50%) of the total fair market value and total voting power of the Employer, as such ownership is computed under the provisions of Applicable Guidance.

However, if any person, or more than one person acting as a group, is considered to own more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Employer, the acquisition of additional stock by the same person or group of persons is not considered to cause a Change of Control. For this purpose, an increase in the percentage of stock owned by any one person or group, as a result of a transaction in which the Employer acquires its stock in exchange for property will be treated as an acquisition of stock. The rule set forth in the immediately preceding sentence applies only when there is a transfer of stock of the Employer (or issuance of stock of the Employer) and the stock of the Employer remains outstanding after the transaction.

Persons will not be considered to be acting as a group solely because they purchase or own stock of the Employer at the same time or as a result of the same public offering. However, persons will be considered to be acting as a group if they are shareholders of a corporation that enters into a merger, consolidation, purchase or acquisition of stock or similar business transaction with the Employer. Persons will also be considered to be acting as a group to the extent set forth in Applicable Guidance.

(b) Effective Change of Control. Effective Change of Control shall occur on the date that any one person, or more than one person acting as a group, acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Employer possessing thirty percent (30%) or more of the total voting power of the stock of the Employer. or, a majority of the members of Employer’s Board of Directors is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of Employer’s Board of Directors prior to the date of the appointment or election.”

However, if any person, or more than one person acting as a group, is considered to effectively control a corporation, the acquisition of additional control of the corporation by the same person or group of persons will not be considered to cause a Change of Control.

business transaction with the Employer. Persons will also be considered to be acting as a group to the extent set forth in Applicable Guidance.

(c) Change in Ownership of Employer’s Assets . A change in the ownership of a substantial portion of the Employer’s assets occurs on the date that any one person, or more than one person acting as a group, acquires or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons of assets from the Employer that have a total fair market value equal to more than forty percent (40%) of the total gross fair market value of all of the assets of the Employer immediately prior to such initial acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the Employer, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

There will be no Change of Control under this Subparagraph (c) when there is a transfer to an entity that is controlled by the shareholders of the Employer immediately after the transfer. A transfer of assets by the Employer is not treated as a change in ownership of such assets if the assets are transferred to:

(i) A shareholder of the Employer (immediately before the asset transfer) in exchange for or with respect to its stock;

(ii) An entity, fifty percent (50%) or more of the total value or total voting power of the stock of which is owned directly or indirectly by the Employer;

(iii) A person, or more than one person acting as a group, that owns, directly or indirectly, fifty percent (50%) or more of the total value or total voting power of the stock of the Employer; or

(iv) An entity, at least fifty percent (50%) of the total value or total voting power of the Stock which is owned, directly or indirectly, by a person described in (iii) above.

For purposes of the definition of Change of Control, Change of Control of the Employer shall include a Change of Control of any corporation that is considered to own more than 50% of the total fair market value and total voting power of the Employer.

For purposes of determining whether a Change of Control has occurred ownership shall be determined in accordance with the rules set forth in Applicable Guidance.

Notwithstanding the above, the definition of Change of Control shall in any event comply with Section 409A and Applicable Guidance.

1.9 “Claimant” shall mean a person who believes that he or she is being denied a benefit to which he or she is entitled hereunder.

1.10 “Code” shall mean the Internal Revenue Code of 1986, as amended.

1.11 “Compensation” shall mean the total cash remuneration, including Base Salary, Annual Bonus, and Performance-Based Compensation, payable by the Employer to an Eligible Employee with respect to his or her services performed for the Employer during any Plan Year.

1.12 “Deemed Investments” shall be defined as provided in Paragraph 5.2 below.

1.13 “Deemed Investment Options” shall be defined as provided in Paragraph 5.1 below.

1.14 “ Disability” shall mean a condition of the Participant whereby he or she either: (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Employer. The Plan Administrator will determine whether a Participant has incurred a Disability based on its own good faith determination and may require a Participant to submit to reasonable physical and mental examinations for this purpose. A Participant will also be deemed to have incurred a Disability if determined to be totally disabled by the Social Security Administration or in accordance with a disability insurance program,

provided that the definition of disability applied under such disability insurance program complies with the requirements of Treasury Regulation 1.409A-3(g)(4) and Applicable Guidance.

1.15 “ Drew ” shall mean Drew Industries Incorporated, a corporation organized and existing under the laws of the State of Delaware and the owner of 100% of the stock of the Plan Sponsor.

1.16 “Drew 2002 Plan” shall mean the Drew Industries Incorporated 2002 Equity Award and Incentive Plan as amended from time to time.

1.17 “ Effective Date” shall mean December 1, 2006.

1.18 “Election Form” shall mean the form or forms established from time to time by the Plan Administrator on which the Participant makes certain designations as required on that form and under the terms of this Plan.

1.19 “ Eligible Employee” shall mean for any Plan Year (or applicable portion of a Plan Year), a person who is determined by the Plan Sponsor, or its designee, to be a member of a select group of management or highly compensated employees of the Employer, and who is designated by the Plan Sponsor, or its designee, to be an Eligible Employee under the Plan. If the Plan Sponsor, or its designee, determines that an individual first becomes an Eligible Employee during a Plan Year, the Employer shall notify the individual of said determination and of the date during the Plan Year on which the individual shall first become an Eligible Employee.

1.20 “ Employer ” shall mean the person or entity receiving the services of the -Participant. The Employer may either be the Plan Sponsor or any of its wholly owned subsidiaries who adopt this Plan with the consent of the Plan Sponsor.

1.21 “Entry Date” shall mean the first day of the pay period following the date on which a Participant’s election to defer Compensation becomes irrevocable as provided in Paragraph 3.2.

1.22 “ ERISA” shall mean the Employee Retirement Income Security Act of 1974, as it may be amended from time to time.

1.23 “ Participant” shall mean any (a) Eligible Employee (i) who is selected to participate in this Plan, (ii) who elects to participate in this Plan by signing a Participation Agreement, (iii) who completes and signs certain Election Form(s) required by the Plan Administrator, and (iv) whose signed Election Form(s) are accepted by the Plan Administrator or (b) former Eligible Employee who continues to be entitled to a benefit under this Plan. A spouse or former spouse of a Participant shall not be treated as a Participant in this Plan or have an Account balance under this Plan, even if he or she has an interest in the Participant’s benefits under this Plan as a result of applicable law or property settlements resulting from legal separation or marital dissolution or divorce.

1.24 “ Participation Agreement” shall mean the document executed by the Eligible Employee and Plan Administrator whereby the Eligible Employee agrees to participate in the Plan.

1.25 “Performance-Based Compensation” shall mean that portion of a Participant’s Compensation that is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least twelve (12) consecutive months in which the Participant performs services. Organizational or individual performance criteria are considered pre-established if established in writing by no later than ninety (90) days after the commencement of the period of services to which the criteria relate, provided that the right to receive the contingent portion is substantially uncertain, or the amount of the contingent portion itself is not readily ascertainable, at the time the criteria are established, within the meaning of Treasury Regulation 1.409A-1(e) and Applicable Guidance.

1.26 “Permissible Payment” shall mean a payment made to a Participant or his Beneficiary under the terms of this Plan upon the occurrence of one or more of the following six (6) events: (i) the Participant’s Separation from Service, (ii) the Participant’s death, (iii) the Participant’s Disability, (iv) a Change of Control, (v) the occurrence of an Unforeseeable Emergency, or (vi) a time (or pursuant to a fixed schedule) selected by the Participant in accordance with this Plan, within the meaning of Treasury Regulation 1.409A-3(a) and Applicable Guidance.

1.27 “ Plan” shall mean the Drew Industries Incorporated Executive Non-Qualified Deferred Compensation Plan, which shall be evidenced by this instrument, as amended from time to time.

1.28 “ Plan Administrator” shall be a group consisting of the CEO, CFO and the Chief Legal Officer of Drew and their designees. A Participant in the Plan may not serve as a singular Plan Administrator. If a Participant is part of a group of

persons designated as a committee or Plan Administrator, then the Participant may not participate in any activity or decision relating solely to his or her individual benefits under this Plan. Matters solely affecting the applicable Participant will be resolved by the remaining Plan Administrator members.

1.29 “ Plan Year” shall mean, for the first plan year, the period beginning on January 1, 2007 and ending December 31 of such calendar year, and thereafter, a twelve (12) month period beginning January 1 of each calendar year and continuing through December 31 of such calendar year.

1.30 “Scheduled Withdrawal Account” shall mean: (i) the sum of (A) the Participant’s Annual Deferral Amount that may be allocated in whole or in part by a Participant pursuant to his or her deferral election to the Scheduled Withdrawal Account for any Plan Year, plus (B) amounts credited (net of amounts debited, which may result in an aggregate negative number) from Deemed Investment Options, less (ii) the sum of (A) all distributions made to, and all withdrawals by, the Participant or his or her Beneficiary and (B) all tax withholding amounts which may have been deducted from the Participant’s Scheduled Withdrawal Account. At the time of the Participant’s deferral election for each Plan Year, the Participant shall specify the time and form in which payment shall be made to the Participant or his or her Beneficiary from this Account. The Participant may be permitted to change the time or form of payment subject to Paragraph 7.7 (Subsequent Changes in the Time or Form of Payment) below.

1.31 “Section 409A” shall mean Section 409A of the Code and the Treasury Regulations or other authoritative guidance issued under that Section.

1.32 “ Specified Employee” shall mean a key employee (as defined by Section 416(i) of the Code without regard to paragraph (5) thereof, and as further defined in Treasury Regulation 1.409A-(1)(i)) of the Employer where the stock of the Employer (or the stock of any Affiliate) is publicly traded on an established securities market or otherwise within the meaning of Section 409A(2)(B)(i). Notwithstanding other provisions of this Plan to the contrary, distributions to Specified Employees (if any) may not be made or commence before the date which is six (6) months after the date of Separation From Service (or, if earlier, the date of death of the Specified Employee). A Participant meeting the definition of Specified Employee on any December 31 or during the 12 month period ending December 31 will be treated as a Specified Employee for the 12 month period commencing the following April 1.

1.33 “Separation From Service” shall mean a Participant’s termination of active employment, whether voluntary or involuntary (other than by death or Disability) with the Employer and any Affiliate, within the meaning of Treasury Regulation 1.409A-1(h). The Plan Administrator will determine whether the Participant has terminated active employment (and incurred a Separation From Service) based upon facts and circumstances as described in Treasury Regulation 1.409A-1(h)(1)(ii). A Participant incurs a Separation From Service if the Employer and the Participant reasonably anticipate the Participant will not perform any additional services after a certain date or that the level of bona fide services (as an Employee or independent contractor) will permanently decrease to no more than twenty (20%) percent of the average level of bona fide services performed over the immediately preceding 36-month period. A Participant does not incur a Separation From Service while on a bona fide leave of absence of not more than six months or if longer, so long as the Participant has a legal right to reemployment, as described in Treasury Regulation 1.409A-1(h)(1)(i).

1.34 “Separation From Service Account” shall mean (i) the sum of (A) the Participant’s Annual Deferral Amount that may be allocated in whole or in part by a Participant pursuant to his or her deferral election to the Separation From Service Account for any Plan Year, plus (B) amounts credited (net of amounts debited, which may result in an aggregate negative number) from Deemed Investment Options, less (ii) the sum of (A) all distributions made to, and all withdrawals by, the Participant and his or her Beneficiary and (B) all tax withholding amounts which may have been deducted from the Participant’s Separation From Service Account. At the time of the Participant’s deferral election for each Plan Year, the Participant may specify the form in which payment shall be made to the Participant or his or her Beneficiary from this Account. The Participant may be permitted to change the form of payment subject to Paragraph 7.7 (Subsequent Changes in the Time or Form of Payment) below.

1.35 “Treasury Regulations” shall mean regulations promulgated by the Internal Revenue Service for the U.S. Department of the Treasury, either proposed, temporary or final, as they may be amended from time to time.

1.36 “Trust” shall mean a trust that may be established in accordance with the terms of Article 12 of this Plan.

1.37 “ Unforeseeable Emergency” shall mean a severe financial hardship of the Participant or Beneficiary resulting from an illness or accident of the Participant or Beneficiary, the Participant’s or Beneficiary’s spouse, or the Participant’s or Beneficiary’s dependent(s) (as defined in Section 152(a) of the Code) or loss of the Participant’s or Beneficiary’s property due to casualty or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant or Beneficiary, within the meaning of Section 409A and Treasury Regulation 1.409A-3(g)(3).

1.38 “ Valuation Date” shall mean each day at the close of business (currently 4:00 p.m. Eastern Time) of the New York Stock Exchange (“ NYSE ”), on days that the NYSE is open for trading or any other day on which there is sufficient trading in securities of the applicable fund to materially affect the unit value of the fund and the corresponding unit value of the Participant’s Deemed Investment Options. If the NYSE extends its closing beyond 4:00 p.m. Eastern Time, and continues to value after the time of closing, the Plan Administrator reserves the right to treat communications received after 4:00 p.m. Eastern Time as being received as of the beginning of the next day.

1.39 “ Year of Plan Participation” shall mean each twelve (12) month period during which the Participant is employed on a full-time basis by the Employer (determined without regard to whether deferrals have been made by a Participant for any Plan Year), inclusive of any approved leaves of absence, beginning on the Participant’s Entry Date.

1.40 “ Year of Service” shall mean each twelve (12) month period during which the Participant is employed on a full-time basis by the Employer, with a minimum of 1,000 hours of service, inclusive of any approved leaves of absence, beginning on the Participant’s date of hire.

ARTICLE 2

Selection, Enrollment, Eligibility

2.1 Selection by Plan Sponsor . Participation in this Plan shall be limited to a select group of management or highly compensated employees of the Employer, as determined by the Plan Sponsor in its sole and absolute discretion. The initial group of Eligible Employees shall become Participants on the Effective Date of this Plan. Any individual selected as an Eligible Employee after the Effective Date, shall become a Participant on the first Entry Date occurring on or after the date on which he or she becomes an Eligible Employee.

2.2 Re-Employment. If a Participant who incurs a Separation from Service is subsequently re-employed by the Employer, he or she may, at the sole and absolute discretion of the Plan Administrator, become a Participant in accordance with the provisions of this Plan.

2.3 Enrollment Requirements. As a condition to participation in this Plan, each selected Eligible Employee shall complete, execute, and return to the Plan Administrator a Participation Agreement and Election Form within the time specified by the Plan Administrator in accordance with Article 3. In addition, the Plan Administrator shall establish such other enrollment requirements as it determines necessary or advisable. All elections to defer Compensation with respect to a Plan Year shall be irrevocable, except as permitted in the event of an Unforeseeable Emergency pursuant to Paragraph 3.2(d) below.

2.4 Plan Aggregation Rules . This Plan shall constitute an “account balance plan” as defined in Treasury Regulation 31.3121(v)(2)-1(c)(1)(ii)(A). For purposes of Section 409A, all amounts deferred by or on behalf of a Participant under this Plan shall be aggregated with deferred amounts under other “account balance plans” currently maintained or adopted in the future by the Employer, as required by Applicable Guidance and all amounts shall be treated as deferred under the rules governing a single plan.

ARTICLE 3

Contributions and Credits

3.1 Annual Deferral Amount .

(a) Minimum Deferrals . For each Plan Year, a Participant may elect to defer Compensation in fixed dollar amounts or percentages subject to the minimums (if any) set forth in his or her Election Form. If the election is made for less than the stated minimum amount, or if no election is made, the amount deferred shall be zero.

(b) Maximum Deferrals . For each Plan Year, a Participant may elect to defer Compensation in fixed dollar amounts or percentages subject to the maximums (if any) set forth in his or her Election Form. If the election is made for more than the stated maximum amount, then the amount deferred shall default to the maximum amount.

3.2 Election to Defer Compensation .

(a) Deferral Election Rules. A Participant shall make an election to defer Compensation for each Plan Year on the Election Form provided by the Plan Sponsor. The Election Form must be delivered to the Plan Administrator during the Participant’s taxable year before the Plan Year in which the services are performed. An election to defer Compensation

is not considered made until it becomes irrevocable. An election may be changed any number of times during the period prior to the election becoming irrevocable. An election shall become irrevocable on the last day of the Participant’s taxable year before the Plan Year in which the services are performed. If no Election Form is timely delivered for a Plan Year, the Annual Deferral Amount shall be zero for that Plan Year. An election to defer Compensation shall include an election as to both the time and form of payment.

(b) Short Plan Year. If an Eligible Employee becomes a Participant after the beginning of a Plan Year, he or she may make an initial deferral election within thirty (30) days after the date he or she first becomes an Eligible Employee with respect to Compensation payable for services to be performed subsequent to the election becoming irrevocable. Any such election shall become irrevocable on the thirtieth (30 ^th ) day following the date the Participant first becomes an Eligible Employee (or such earlier date as may be specified by the Plan Sponsor in the initial deferral Election Form provided to the Participant). In the event an election of deferral is made with respect to an Annual Bonus in the first year of eligibility but after the beginning of a performance period, the deferral election will apply to the portion of the Annual Bonus payable for services performed subsequent to the election and will be calculated based on the total Annual Bonus for the performance period multiplied by a fraction whose numerator is the number of days remaining in the performance period after the election and whose denominator is the total number of days in the performance period.

(c) Bonus Qualifying as Performance-Based Compensation. Notwithstanding anything in Paragraph 3.2(a) or (b) above to the contrary, to the extent that the Employer determines that an Eligible Employee’s bonus constitutes Performance-Based Compensation, within the meaning of Section 409A(a)(4)(B)(iii) of the Code, based on services performed over a period of at least twelve (12) months, an election to defer Performance-Based Compensation with respect to a performance period shall be made on or before the day which is six (6) months before the end of the performance period. In no event may an election to defer Performance-Based Compensation be made after such has become both substantially certain to be paid and readily ascertainable, within the meaning of Treasury Regulations 1.409A-2(a)(7).

(d) Terminations of Deferral Elections Following an Unforeseeable Emergency. If a Participant receives a payment upon an Unforeseeable Emergency under this Plan, the deferral election for that Plan Year shall terminate upon payment from his or her Account to the Participant. A Participant may again elect to defer Compensation for any succeeding Plan Year, in accordance with the terms of this Plan.

(e) Changes in Status/Re-Employment. If a Participant who incurs a Separation from Service is subsequently re-employed by the Employer and is again designated an Eligible Employee, he or she shall be eligible to participate in this Plan and may elect to defer Compensation payable for services performed for the Employer during the Plan Year following the year in which he or she was again designated an Eligible Employee. Notwithstanding the foregoing to the contrary, if a Participant has been paid the entire balance of his or her Accounts and on or before the last payment ceases to be eligible to participate in this Plan, but thereafter becomes an Eligible Employee, he or she (i) shall be treated as initially eligible to participate in this Plan and (ii) shall be permitted to make an initial deferral election as provided in Paragraph 3.2 (b). If a Participant ceases to be eligible to participate in this Plan (other than for adjustments to his or her Accounts for deemed investment performance and distributions), regardless of whether the Participant has been paid the entire balance of his or her Accounts, and subsequently becomes and Eligible Employee, he or she (i) shall be treated as initially eligible to participate in this Plan provided that the period during which such Participant was ineligible was at least twenty-four (24) months and (ii) shall be permitted to make an initial deferral election as provided in Paragraph 3.2 (b). The provisions of this Paragraph 3.2(e) shall be applied in accordance with Treasury Regulation 1.409A-2(a)(7).

3.3 Withholding and Crediting of Annual Deferral Amounts. For each Plan Year, the Base Salary portion of the Annual Deferral Amount shall be withheld from each regularly scheduled payroll in approximately equal amounts (or as otherwise specified by the Plan Administrator), as adjusted from time to time for increases and decreases in Base Salary if the Annual Deferral Amount with respect to Base Salary is expressed as a percentage. The Annual Bonus and/or Performance-Based Compensation portion of the Annual Deferral Amount shall be withheld at the time such Compensation otherwise would be paid to the Participant. Annual Deferral Amounts shall be credited to a Participant’s Separation From Service Account and/or Scheduled Withdrawal Account at the time such amounts would otherwise have been paid to a Participant.

ARTICLE 4

Account Allocation Elections

4.1 Scheduled Withdrawal Account and Separation From Service Account Allocation . In connection with a Participant’s election to defer Compensation for any one Plan Year, a Participant may irrevocably elect to allocate all or a portion of the Annual Deferral Amount for that Plan Year to his or her Scheduled Withdrawal Account and/or his or her Separation From Service Account.

ARTICLE 5

Earnings or Losses on Account(s)

5.1 Deemed Investment Options . The Plan Administrator shall select from time to time certain mutual funds, insurance company separate accounts, indexed rates or other methods (the “Deemed Investment Options” ) for purposes of crediting or debiting additional amounts to each Participant’s Account(s). The Plan Administrator may discontinue, substitute or add Deemed Investment Options. Any discontinuance, substitution, or addition of a Deemed Investment Option will take effect as soon as administratively practical.

5.2 Allocation of Deemed Earnings or Losses on Accounts . Subject to Paragraph 5.3 below, each Participant shall have the right to direct the Plan Administrator as to how the Participant’s Annual Deferral Amounts shall be deemed to be invested, (“ Deemed Investments ”), subject to any operating rules and procedures imposed from time to time by the Plan Administrator. As of each Valuation Date, the Participant’s Account(s) will be credited or debited to reflect the Participant’s Deemed Investments.

5.3 Deemed Investment Directions of Participants . A Participant’s Deemed Investment directions for his or her Separation From Service Account and/or Scheduled Withdrawal Account shall be subject to the following rules:

(a) Any initial or subsequent Deemed Investment direction shall be in writing, on a form supplied by and filed with the Plan Administrator (or made in any other manner specified by the Plan Administrator), and shall be effective on such date as specified by the Plan Administrator.

(b) All Deemed Investment directions shall continue indefinitely until changed by the Participant in the manner permitted by the Plan Administrator.

(c) If the Plan Administrator receives an initial or revised Deemed Investment direction which it determines to be incomplete, unclear or improper, the Participant’s Deemed Investment direction then in effect shall remain in effect (or, in the case of a deficiency in an initial Deemed Investment direction, the Participant shall be deemed to have filed no Deemed Investment direction) until a date so designated by the Plan Administrator in its sole and absolute discretion, unless the Plan Administrator provides for, and permits the application of, corrective action prior to that date.

(d) Each Participant, as a condition of his or her participation in the Plan, agrees to indemnify and hold harmless the Plan Sponsor, his or her Employer and the Plan Administrator from any losses or damages of any kind relating to the Deemed Investment of the Participant’s Account(s).

(e) Each reference in this Article to a Participant shall be deemed to include, where applicable, the Beneficiary.

(f) In making any election described in this Article, the Participant shall specify on the deemed investment Election Form (or in any other manner specified by the Plan Administrator), in increments of at least one full percent (1.0%), the percentage of the Participant’s Account(s) to be allocated to a Deemed Investment Option. A Participant’s election must total one hundred percent (100%). If the Plan Administrator possesses (or is deemed to possess, as provided in Paragraph 5.3(c) above) at any time Deemed Investment directions of less than 100% of a Participant’s Separation From Service Account, or Scheduled Withdrawal Account, the Participant shall be deemed to have directed that the undesignated portion of the said Account(s) be deemed to be invested in a money market, fixed income, or similar fund made available under this Plan as determined by the Plan Administrator.

(g) The Deemed Investment Options are to be used for measurement purposes only, and a Participant’s election of any such Deemed Investments, the allocation of such Deemed Investments to his or her Account(s), the calculation of additional amounts and the crediting or debiting of such amounts to a Participant’s Account(s) shall not be considered or construed in any manner as an actual investment of his or her Account balance in any such Deemed Investments. In the event that the Plan Sponsor, the Employer or the trustee of the Trust, in its own discretion, decides to invest funds in any or all of the investments on which any of the Deemed Investments are based, no Participant (or Beneficiary) shall have any rights in or to such investments themselves. Without limiting the foregoing, a Participant’s Account(s) shall at all times be a bookkeeping entry only and shall not represent any investment made on his or her behalf by the Plan Sponsor or the Trust. The Participant (or Beneficiary) shall at all times remain an unsecured creditor of the Employer. Any liability of the Employer to any Participant, former Participant, or Beneficiary with respect to a right to payment shall be based solely upon contractual obligations created by this Plan.

ARTICLE 6

Vesting and Taxes

6.1 Vesting of Benefits. A Participant shall at all times be 100% vested in his or her Separation From Service Account and Scheduled Withdrawal Account.

6.2 FICA, Withholding and Other Taxes .

(a) Annual Deferral Amounts. For each Plan Year in which an Annual Deferral Amount is being withheld from a Participant, the Employer shall withhold from that portion of the Participant’s Base Salary, Annual Bonus, and Performance-Based Compensation that is not being deferred, in a manner determined in the sole discretion of the Employer, the Participant’s share of FICA and other employment taxes on such Annual Deferral Amount. If necessary, the Employer may reduce all or a portion of the Annual Deferral Amount in order to comply with this Paragraph 6.2.

(b) Distributions . The Employer, or trustee of the Trust, shall withhold from any payments made to a Participant or Beneficiary under this Plan all federal, state and local income, employment and other taxes required to be withheld by the Employer in a manner elected by the Participant or Beneficiary (or in the absence of such an election, in a manner determined in the sole and absolute discretion of the Employer or the trustee of the Trust), provided that such manner complies with applicable tax withholding requirements.

ARTICLE 7

Permissible Payments, Changes in Time and Form of Payments, Method of Payments

7.1 Payment Following Separation From Service. A Participant shall be paid his or her Account balance with payments being made on the 90 ^th day following the Participant’s Separation From Service. Notwithstanding the above, if the Participant is a Specified Employee, such payment shall instead be made or commence six (6) months after the Participant’s Separation From Service.

7.2 Payment Following Disability. In the event of a Participant’s Disability, the Participant shall be paid his or her Account balance with payment or payments being made or commencing on the 90 ^th day following the determination of a Participant’s Disability. Notwithstanding anything in this Plan to the contrary, any payment following the determination of a Participant’s Disability shall be deemed to have been made solely on account of such Disability and shall not require a Participant’s termination of active employment.

7.3 Payment Following Death. In the event of the Participant’s death, the Participant’s Beneficiary shall be paid the Participant’s Account balance with payment or payments being made or commencing on the 90 ^th day following the date of death of the Participant (without regard to whether the Participant was treated as a Specified Employee).

7.4 Payment at a Specified Time. In connection with each Plan Year election to defer Compensation, a Participant may irrevocably elect to allocate some or all of the Annual Deferral Amount for that Plan Year to a Scheduled Withdrawal Account. The Scheduled Withdrawal Account shall be adjusted for amounts credited or debited in the manner provided for in Article 5. The Participant will select a specific date for payment (or commencement of payment) of his or her Scheduled Withdrawal Account. The Plan Sponsor, in its sole discretion, may require the specified date of payment (or commencement of payment) to be no earlier than a stated number of years subsequent to the deferral election Plan Year. A Scheduled Withdrawal Account shall be paid (or commence to be paid) on the 60 ^th day after the selected scheduled withdrawal date. Notwithstanding anything in this Paragraph 7.4 to the contrary, should any Permissible Payment event set forth in Paragraphs 7.1, 7.2, 7.3 or 7.5 occur before distributions have commenced or been made from a Participant's Scheduled Withdrawal Account(s), all remaining amounts credited to such Accounts shall be paid in accordance with the Participant's election as to the time and form of payment which relates to the Permissible Payment event which triggers the distribution and not under the Participant's election as to the time and form of payment which relates to his or her Scheduled Withdrawal Account(s).

7.5 Payment Following Change in Control. A Participant shall be paid his or her vested Account balance following a Change in Control with payments being made or commencing on the 90 ^th day following the Change in Control, but only to the extent such payment(s) complies with Applicable Guidance.

7.6 Payment in the Event of an Unforeseeable Emergency. If the Participant experiences an Unforeseeable Emergency, the Participant may petition the Plan Administrator for payment of an amount that shall not exceed the lesser of: (i) the Participant’s Account(s), or (ii) the amount reasonably needed to satisfy the Unforeseeable Emergency plus amounts necessary

to pay taxes reasonably anticipated as a result of the payment. A Participant may not receive such a payment to the extent that the Unforeseeable Emergency is or may be relieved: (a) through reimbursement or compensation by insurance or otherwise, or (b) by liquidation of the Participant’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship. If the Plan Administrator approves a Participant’s petition for such a payment, then the Participant shall receive said payment, in a lump sum, as soon as administratively feasible after such approval.

7.7 Subsequent Changes in the Time or Form of Payment. If permitted by the Plan Sponsor, but subject to limitations below, a Participant may elect to change the time or form of payment to him or her, by submitting a new Election Form to the Plan Administrator, provided the following conditions are met:

(i) Such change will not take effect until at least twelve (12) months after the date on which the new election is made and approved by the Plan Administrator;

(ii) With respect to an election related to payments made at a specified time or on a fixed schedule, such change cannot be made less than twelve (12) months before the date of the first scheduled original payment; and

(iii) In the case of an election related to a payment other than a payment on account of death, Disability, or Unforeseeable Emergency , the first payment with respect to which the change is made must be deferred for a period of not less than five (5) years from the date such payment would otherwise have been made.

Notwithstanding anything in this Paragraph 7.7 or in this Plan to the contrary, the Plan shall recognize any permissible Participant elections made on or before December 31, 2008, including changes to such elections with respect to the time or form of payment of a pre-2009 Plan Year Annual Deferral Amount, provided such elections or changes were made in accordance with Notice 2007-86 or other Applicable Guidance.

7.8 Effect of Other Permissible Payment Events . In the event a Participant is receiving distributions under this Plan as a result of the occurrence of an event set forth in either Paragraph 7.1 or 7.4 above, and an intervening event (“ Intervening Event ”) occurs with respect to such Participant that would have triggered distributions to him or her under any of Paragraphs 7.1, 7.2, 7.3, or 7.5, any Account balances then being distributed to the Participant shall be paid to him or her in accordance with the provisions of the stated Paragraph triggered by the occurrence of the Intervening Event, but only in accordance with Treasury Regulation 1.409A-3(j)(1) and other Applicable Guidance. Notwithstanding any of the foregoing, in the event of the death of a Participant after installment payments have commenced as a result of the occurrence of any other Permissible Payment event, the remaining balance in all of his or her Accounts will be paid in a lump sum to the Beneficiary in accordance with Paragraph 7.3.

7.9 Method of Payment .

(a) Cash Payments. All Permissible Payments made under the Plan shall be made in cash.

(b) Definition of Payment. Except as otherwise provided in Paragraph 7.9(c), each "payment" for purposes of applying Paragraph 7.7 is each separately identified amount that is to be paid to a Participant pursuant to this Plan on a determinable date and includes amounts paid for the benefit of the Participant. An amount is "separately identified" only if the Employer can objectively determine the amount. A payment includes the provision of any taxable benefit, including payment in cash.

(c) Installment Payments and Life Annuities . A life annuity is treated as a single payment. For purposes of this Paragraph, a "life annuity” is a series of substantially equal periodic payments, payable not less frequently than annually, for the life (or life expectancy) of the Participant, or the joint lives (or life expectancies) of the Participant and his/her Beneficiary. A change in the form of payment from one type of life annuity to another before any payment has been made is not subject to the change payment election requirements provided that the annuities are actuarially equivalent, applying reasonable actuarial assumptions. A series of installment payments which is not a life annuity shall be treated as a series of separate payments. For purposes of this Paragraph, a series of installment payments means payment of a series of substantially equal periodic amounts to be paid over a predetermined number of years, except to the extent that any increase in the payment amounts reflects reasonable earnings through the date of payment.

(d) Form of Payment. If permitted by the Plan Sponsor, a Participant, in connection with his or her commencement of participation in the Plan, may elect the form (method) of payment for the applicable Permissible Payment event. Upon the occurrence of a Permissible Payment event, the Account(s) shall be calculated as of the Valuation Date of said event. If a Participant has failed to select a payment form, his or her Account(s) shall be paid in a lump sum. Installment payments

(if applicable) made after the first payment shall be paid on each applicable anniversary of the first payment date until all required installments have been paid. The amount of each payment shall be determined by dividing the value of the Account(s) immediately prior to such payment by the number of payments remaining to be paid. Any unpaid Account Balance shall continue to be deemed to be invested pursuant to Article 5, in which case any deemed income, gains, losses, or expenses shall be reflected in the actual payments. The final installment payment shall be equal to the balance of the Account(s), calculated as of the applicable anniversary.

(e) Lump Sum Payment of Minimum Account Balances . Notwithstanding anything else contained herein to the contrary, if a Participant or Beneficiary is to receive a Permissible Payment in the form of installments, and if the Account balances for a Participant at the due date of the first installment is Fifty Thousand Dollars ($50,000.00) or less, payment of the Account(s) shall be made instead in a lump sum, and no installment payments shall be available.

7.10 No Accelerations. Notwithstanding anything in this Plan to the contrary, neither the Plan Sponsor, the Employer nor a Participant may accelerate the time of any payment or amount scheduled to be paid under this Plan, except as otherwise permitted by Applicable Guidance. The Plan Sponsor shall deny any change made to an election if the Plan Sponsor determines that the change violates the requirements of Applicable Guidance. The Plan Sponsor may, however, in its sole discretion and without Participant discretion or election, elect to accelerate the time or schedule of payment of certain distributions under this Plan in any or all of the circumstances described in Treasury Regulation §§ 1.409A-3(j)(4)(ii) through (xiv), including but not limited to:

(a) Domestic Relations Order . Direct payment of a Participant’s vested Account Balance may be made to an individual other than a Participant as necessary to fulfill a domestic relations order, as defined in Section 414(p)(1)(B) of the Code.

(b) De Minimis and Specified Amounts . The time of payment to a Participant may be accelerated, provided that: (i) the payment accompanies the termination in the entirety of the Participant’s interest in this Plan and all similar plans; (ii) the payment is made on or before the later of: (A) December 31 of the calendar year in which occurs the Participant’s Separation From Service, and (B) the date which is 2 ½ months after the Participant’s Separation From Service; and (iii) the payment is not greater than the applicable dollar amount in effect under Section 402(g)(1)(B) of the Code.

(c) Payment of Employment Taxes . The time of a payment to pay the Federal Insurance Contributions Act (FICA) tax imposed on Compensation deferred by a Participant under this Plan (the “ FICA amount ”) may be accelerated. Additionally, the acceleration of the time a payment to pay the income tax on wages imposed as a result of the payment of the FICA amount, and to pay the additional income tax on wages attributable to the pyramiding of wages and taxes also is permissible. However, the total payment under this acceleration provision may not exceed the aggregate of the FICA amount plus the income tax required to be withheld with respect to such FICA amount.

(d) Payment upon Income Inclusion under Section 409A . The time of a payment to a Participant may be accelerated at any time this Plan fails to meet the requirements of Section 409A and related Treasury Regulations. However, such payment may not exceed the amount required to be included in income as a result of the failure to comply with the requirements of Section 409A and Applicable Guidance.

7.11 Unsecured General Creditor Status of Participant .

(a) Every payment to a Participant or Beneficiary hereunder shall be made from assets which shall continue, for all purposes, to be part of the general, unrestricted assets of the Employer and no person shall have any interest in any such asset by virtue of any provision of this Plan. The Employer’s obligation hereunder shall be an unfunded and unsecured promise to pay money in the future. To the extent that any person acquires a right to receive payments from the Employer under the provisions hereof, such right shall be no greater than the right of any unsecured general creditor of the Employer and no such person shall have or acquire any legal or equitable right, interest or claim in or to any property or assets of the Employe r .

(b) In the event that the Employer purchases an insurance policy or policies insuring the life of a Participant, to allow the Employer to recover or meet the cost of providing benefits, in whole or in part, hereunder, no Participant or Beneficiary shall have any rights whatsoever in said policy or the proceeds therefrom, but all of such policies and the proceeds therefrom shall be subject to the claims of the creditors of the Employer. The Employer, or the Trustee of the Trust, shall be the owner and beneficiary of any such insurance policy and shall possess and may exercise all incidents of ownership therein.

(c) If the Employer chooses to obtain insurance on the life of a Participant in connection with its obligations under this Plan, the Participant hereby agrees to take such physical examinations and to truthfully and completely supply such information as may be required by the Employer or the insurance company designated by the Employer.

7.12 Facility of Payment . If a distribution is to be made to a minor, or to a person who is otherwise incompetent, then the Plan Administrator may make such distribution: (i) to the legal guardian, or if none, to a parent of a minor payee with whom the payee maintains his or her residence, or (ii) to the conservator or administrator or, if none, to the person having custody of an incompetent payee or as a court of competent jurisdiction should otherwise direct. Any such distribution shall fully discharge the Plan Sponsor and the Plan Administrator from further liability on account thereof.

7.13 Delay in Payment by Employer . In the case of payments by the Employer to a Participant or Beneficiary, the deduction for which would be limited or eliminated by the application of Section 162(m) of the Code, payments that would otherwise violate securities laws, or payments that would violate loan covenants or other contractual terms to which the Employer is a party, and where such a violation would result in material harm to the Employer, said payments may be delayed. In the case of deduction limitations imposed by Section 162(m) of the Code, payment will be deferred either to any date in the first calendar year in which the Employer reasonably anticipates that a payment of such amount would not result in a limitation under Section 162(m) or in the year in which the Participant experiences Separation From Service. Payments delayed for other permissible reasons must be made in the first calendar year in which the Employer reasonably anticipates that the payment would not violate the applicable loan covenants or other terms, the violation would not result in material harm to the Employer, and the payment would not result in a violation of Federal securities laws or other applicable laws .

7.14 Treatment of Payment as Made on Designated Payment Date . Each payment under this Plan is deemed made on the required payment date even if the payment is made after such date, provided the payment is made by the later of: (i) in case the Plan Administrator cannot calculate the payment amount on account of administrative impracticality which is beyond the Participant's control (or the control of the Participant's estate), in the first calendar year in which payment is practicable; and (ii) in case the Employer does not have sufficient funds to make the payment without jeopardizing the Employer’s solvency, in the first calendar year in which the Employer’s funds are sufficient to make the payment without jeopardizing the Employer’s solvency.

ARTICLE 8

Beneficiary Designation

8.1 Designation of Beneficiaries .

(a) Each Participant may designate any person or persons (who may be named contingently or successively) to receive any benefits payable under this Plan upon the Participant’s death, and the designation may be changed from time to time by the Participant by filing a new designation. Each designation will revoke all prior designations by the same Participant, shall be in the form prescribed by the Plan Administrator, and shall be effective only when filed in writing with the Plan Administrator during the Participant’s lifetime.

(b) In the absence of a valid Beneficiary designation, or if, at the time any benefit payment is due to a Beneficiary, there is no living Beneficiary validly named by the Participant, the benefit payment shall be made to the Participant’s spouse, if then living, and if the spouse is not then living to the Participant’s then living descendants, if any, per stripes, and if there are no living descendants, to the Participant’s estate. In determining the existence or identity of anyone entitled to a benefit payment, the Plan Administrator may rely conclusively upon information supplied by the Participant’s personal representative, executor or administrator.

(c) If a question arises as to the existence or identity of anyone entitled to receive a death benefit payment under this Plan, or if a dispute arises with respect to any death benefit payment under this Plan, the payment may be made to the Participant’s estate without liability for any tax or other consequences and the Plan Administrator and the Employer may take any other action which they deem to be appropriate.

8.2 Information to be Furnished by Participants and Beneficiaries; Inability to Locate Participants or Beneficiaries. Any communication, statement or notice addressed to a Participant or to a Beneficiary at his or her last post office address as shown on the Plan Administrator’s records shall be binding on the Participant or Beneficiary for all purposes of this Plan. Neither the Plan Administrator nor the Employer shall be obligated to search for any Participant or Beneficiary beyond the sending of a letter to the last known address in accordance with the provisions of Paragraph 13.6 below.

ARTICLE 9

Termination

9.1 Plan Termination . The Plan Sponsor reserves the right to terminate this Plan in accordance with one of the following, subject to the restrictions imposed by Section 409A and Applicable Guidance:

(a) Corporate Dissolution or Bankruptcy . This Plan may be terminated within twelve (12) months of a corporate dissolution taxed under Section 331 of the Code, or with the approval of a bankruptcy court pursuant to 11 U.S.C. Section 503(b)(1)(A), and distributions may then be made to Participants provided that the amounts deferred under this Plan are included in the Participants’ gross income in the latest of:

(i) the calendar year in which the Plan termination occurs;

(ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or

(iii) the first calendar year in which the payment is administratively practicable.

(b) Change of Control . This Plan may be terminated within the thirty (30) days preceding or the twelve (12) months following a Change of Control. This Plan will then be treated as terminated only if all substantially similar arrangements sponsored by the Employer or any of its Affiliates are terminated so that all participants in all similar arrangements are required to receive all amounts of Compensation deferred under the terminated arrangements within twelve (12) months of the date of termination of the arrangements.

(i) All plans sponsored by the Plan Sponsor or its Affiliates that would be aggregated with any terminated arrangements under Treasury Regulations 1.409A-1(c) if the same Participants participated in both arrangements are terminated;

(ii) No payments other than payments that would be payable under the terms of this Plan if the termination had not occurred are made within twelve (12) months of this Plan’s termination date;

(iii) All payments are made within twenty-four (24) months of this Plan’s termination date; and

(iv) Neither the Plan Sponsor nor any of its Affiliates adopts a new plan that would be aggregated with any terminated plan if the same Participant participated in both arrangements, at any time within three years following the date of termination of this Plan.

9.2 Plan Suspension . Each Employer reserves the right to suspend the operation of this Plan, but only for itself, for a fixed or indeterminate period of time.

ARTICLE 10

Administration

10.1 Plan Administrator Duties. The Plan Administrator shall be responsible for the management, operation and administration of the Plan. The Plan Administrator shall act at meetings by affirmative vote of a majority of its members. Any action permitted to be taken at a meeting may be taken without a meeting if, prior to such action, a unanimous written consent to the action is signed by all members and such written consent is filed with the minutes of the proceedings of the Plan Administrator, provided, however, that no member may vote or act upon any matter which relates solely to himself or herself as a Participant. The Chair or any other member or members of the Plan Administrator designated by the Chair may execute any certificate or other written direction on behalf of the Plan Administrator. When making a determination or calculation, the Plan Administrator shall be entitled to rely on information furnished by a Participant or the Employer. No provision of this Plan shall be construed as imposing on the Plan Administrator any fiduciary duty under ERISA or other law, or any duty similar to any fiduciary duty under ERISA or other law.

10.2 Plan Administrator Authority. The Plan Administrator shall enforce this Plan in accordance with its terms, shall be charged with the general administration of this Plan, and shall have all powers necessary to accomplish its purposes, including, but not by way of limitation, the following:

(a) to select the Deemed Investment Options available from time to time;

(b) to construe and interpret the terms and provisions of this Plan;

(c) to compute and certify the amount and kind of benefits payable to Participants and their Beneficiaries; to determine the time and manner in which such benefits are paid; and to determine the amount of any withholding taxes to be deducted;

(d) to maintain all records that may be necessary for the administration of this Plan;

(e) to provide for the disclosure of all information and the filing or provision of all reports and statements to Participants, Beneficiaries and governmental agencies as shall be required by law;

(f) to make and publish such rules for the regulation of this Plan and procedures for the administration of this Plan as are not inconsistent with the terms hereof;

(g) to administer this Plan’s claims procedures;

(h) to approve election forms and procedures for use under this Plan; and

(i) to appoint a Plan record keeper or any other agent, and to delegate to them such powers and duties in connection with the administration of this Plan as the Plan Administrator may from time to time prescribe.

10.3 Binding Effect of Decision. The decision or action of the Plan Administrator with respect to any question arising out of or in connection with the administration, interpretation and application of this Plan and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in this Plan.

10.4 Compensation and Expenses. The Plan Administrator shall serve without compensation for services rendered hereunder. The Plan Administrator is authorized at the expense of the Employer to employ such legal counsel and/or Plan record keeper as it may deem advisable to assist in the performance of its duties hereunder. Expense and fees in connection with the administration of this Plan shall be paid by the Plan Sponsor.

10.5 Employer Information. To enable the Plan Administrator to perform its functions, the Employer shall supply full and timely information to the Plan Administrator on all matters relating to the Compensation of its employees who are Participants, the date and circumstances of the Disability, death, or Separation From Service of its employees who are Participants, and such other pertinent information as the Plan Administrator may reasonably require.

10.6 Periodic Statements. Under procedures established by the Plan Administrator, a Participant shall be provided a statement of account on an annual basis (or more frequently as the Plan Administrator shall determine) with respect to such Participant’s Accounts.

ARTICLE 11

Claims Procedures

11.1 Claims Procedure . This Article is based on final regulations issued by the Department of Labor and published in the Federal Register on November 21, 2000 and codified in Section 2560.503-1 of the Department of Labor Regulations. If any provision of this Article conflicts with the requirements of those regulations, as the same may be modified from time to time, the requirements of those regulations will prevail.

(a) Claim . A Participant or Beneficiary (hereinafter referred to as a “Claimant” ) who believes he or she is entitled to any Plan benefit under this Plan may file a claim with his or her Employer. The Employer shall review the claim itself or appoint an individual or entity to review the claim.

(b) Claim Decision . The Claimant shall be notified within ninety (90) days after the claim is filed whether the claim is allowed or denied, unless the Claimant receives written notice from his or her Employer or appointee of the Employer prior to the end of the ninety (90) day period stating that special circumstances require an extension of the time for decision. Such extension is not to extend beyond the day which is one hundred eighty (180) days after the day the claim is filed. If the Employer denies the claim, it must provide to the Claimant, in writing or by electronic communication:

(i) the specific reasons for such denial;

(ii) specific reference to pertinent provisions of this Plan on which such denial is based;

(iii) a description of any additional material or information necessary for the Claimant to perfect his or her claim and an explanation why such material or such information is necessary; and

(iv) a description of the Plan’s appeal procedures and the time limits applicable to such procedures, including a statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA following a denial of the appeal of the denial of the benefits claim.

(c) Review Procedures . A request for review of a denied claim must be made in writing to the Employer within sixty (60) days after receiving notice of denial. The decision upon review will be made within sixty (60) days after the Employer’s receipt of a request for review, unless special circumstances require an extension of time for processing, in which case a decision will be rendered not later than one hundred twenty (120) days after receipt of a request for review. A notice of such an extension must be provided to the Claimant within the initial sixty (60) day period and must explain the special circumstances and provide an expected date of decision. The reviewer shall afford the Claimant an opportunity to review and receive, without charge, all relevant documents, information and records and to submit issues and comments in writing to the Employer. The reviewer shall take into account all comments, documents, records and other information submitted by the Claimant relating to the claim regardless of whether the information was submitted or considered in the benefit determination. Upon completion of its review of an adverse initial claim determination, the Employer will give the Claimant, in writing or by electronic notification, a notice containing:

(i) its decision;

(ii) the specific reasons for the decision;

(iii) the relevant Plan provisions on which its decision is based;

(iv) a statement that the Claimant is entitled to receive, upon request and without charge, reasonable access to, and copies of, all documents, records and other information in the Plan’s files which is relevant to the Claimant’s claim for benefit;

(v) a statement describing the Claimant’s right to bring an action for judicial review under Section 502(a) of ERISA; and

(vi) if an internal rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination on review, a statement that a copy of the rule, guideline, protocol or other similar criterion will be provided without charge to the Claimant upon request.

(d) Calculation of Time Periods. For purposes of the time periods specified in this Article, the period of time during which a benefit determination is required to be made begins at the time a claim is filed in accordance with this Plan’s procedures without regard to whether all the information necessary to make a decision accompanies the claim. If a period of time is extended due to a Claimant’s failure to submit all information necessary, the period for making the determination shall be tolled from the date the notification is sent to the Claimant until the date the Claimant responds.

(e) Failure of Plan to Follow Procedures. If the Employer fails to follow the claims procedure required by this Article, a Claimant shall be deemed to have exhausted the administrative remedies available under this Plan and shall be entitled to pursue any available remedy under Section 502(a) of ERISA on the basis that this Plan has failed to provide a reasonable claims procedure that would yield a decision on the merits of the claim.

(f) Failure of Claimant to Follow Procedures. A Claimant’s compliance with the foregoing provisions of this Article is a mandatory prerequisite to the Claimant’s right to commence any legal action with respect to any claim for benefits under the Plan.

11.2 Arbitration of Claims . All claims or controversies arising out of or in connection with this Plan shall, subject to the initial review provided for in the foregoing provisions of this Article, be resolved through arbitration as provided in this Paragraph 11.2. Except as otherwise agreed mutually by the parties, any arbitration shall be administered under and by the Judicial Arbitration & Mediation Services, Inc. (“ JAMS ”), in accordance with the JAMS procedure then in effect. The arbitration shall

be held in the JAMS office nearest to where the Claimant is or was last employed by the Employer or at a mutually agreeable location. The prevailing party in the arbitration shall have the right to recover its reasonable attorney’s fees, disbursements and costs of the arbitration (including enforcement of the arbitration decision), subject to any contrary determination by the arbitrator.

ARTICLE 12

The Trust

12.1 Establishment of Trust . Each Employer may establish for itself a grantor trust, of which the Employer is the grantor, within the meaning of subpart E, part I, subchapter J, subtitle A of the Code, to pay benefits under this Plan (the “Trust” ). If the Employer establishes the Trust, all benefits payable under this Plan to a Participant shall be paid directly by the Employer from the Trust. To the extent such benefits are not paid from the Trust, the benefits shall be paid from the general assets of the Employer. The Trust, if any, shall be an irrevocable grantor trust which conforms to the terms of the model trust as described in IRS Revenue Procedure 92-64, I.R.B. 1992-33, as same may be amended or modified from time to time. If the Employer establishes a Trust, the assets of the Trust will be subject to the claims of the Employer’s creditors in the event of its insolvency as set forth in applicable Revenue Procedures. Except as may otherwise be provided under the Trust, the Employer shall not be obligated to set aside, earmark or escrow any funds or other assets to satisfy its obligations under this Plan, and the Participant and/or his or her designated Beneficiaries shall not have any property interest in any specific assets of the Employer other than the unsecured right to receive payments from the Employer, as provided in this Plan.

12.2 Interrelationship of the Plan and the Trust . The provisions of this Plan shall govern the rights of a Participant to receive distributions pursuant to this Plan. The provisions of the Trust (if established) shall govern the rights of the Participant and the creditors of the Employer to the assets transferred to the Trust. The Employer and each Participant shall at all times remain liable to carry out its obligations under this Plan. The Employer’s obligations under this Plan may be satisfied with Trust assets distributed pursuant to the terms of the Trust.

12.3 Contribution to the Trust . Amounts may be contributed by the Employer to the Trust at the sole discretion of the Employer.

ARTICLE 13

Miscellaneous

13.1 Validity . In case any provision of this Plan shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal or invalid provision had never been inserted herein. To the extent any provision of this Plan is determined by the Plan Administrator (acting in good faith), the Internal Revenue Service, the United States Department of the Treasury or a court of competent jurisdiction to fail to comply with Section 409A of the Code or Applicable Guidance with respect to any Participant or Participants, such provision shall have no force or effect with respect to such Participant or Participants.

13.2 Nonassignability. Neither any Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate, alienate or convey in advance of actual receipt, the amounts, if any, payable hereunder, or any part hereof, 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, attachment, garnishment (except to the extent the Employer may be required to garnish amounts from payments due under this Plan pursuant to applicable law) or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency or be transferable to a spouse as a result of a property settlement or otherwise. If any Participant, Beneficiary or successor in interest is adjudicated bankrupt or purports to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber transfer, hypothecate, alienate or convey in advance of actual receipt, the amount, if any, payable hereunder, or any part thereof, the Plan Administrator, in its discretion, may cancel such distribution or payment (or any part thereof) to or for the benefit of such Participant, Beneficiary or successor in interest in such manner as the Plan Administrator shall direct.

13.3 Not a Contract of Employment. The terms and conditions of this Plan shall not be deemed to constitute a contract of employment between the Employer and the Participant. Nothing in this Plan shall be deemed to give a Participant the right to be retained in the service of the Employer as an employee or otherwise or to interfere with the right of the Employer to discipline or discharge the Participant at any time.

13.4 Unclaimed Benefits . In the case of a benefit payable on behalf of a Participant, if the Plan Administrator is unable to locate the Participant or Beneficiary to whom such benefit is payable, such Plan benefit may be forfeited to the Employer upon the Plan Administrator’s determination. Notwithstanding the foregoing, if, subsequent to any such forfeiture, the Participant

or Beneficiary to whom such Plan benefit is payable makes a valid claim for such Plan benefit, such forfeited Plan benefit shall be paid by the Employer to the Participant or beneficiary, without interest from the date it would have otherwise been paid.

13.5 Governing Law . Subject to ERISA, the provisions of this Plan shall be construed and interpreted according to the internal laws of the State of Delaware, without regard to its conflicts of laws principles.

13.6 Notice. Any notice, consent or demand required or permitted to be given under the provisions of this Plan shall be in writing and shall be signed by the party giving or making the same. If such notice, consent or demand is (i) delivered personally, the date of such delivery shall be deemed the date of notice, consent or demand, (ii) mailed, either it shall be sent by United States certified mail, postage prepaid, addressed to the addressee’s last known address as shown on the records of the Employer, in which case the date which is five days after such mailing shall be deemed the date of notice, consent or demand, and (iii) sent by recognized overnight courier, the date which is the second business day after such sending shall be deemed the date of notice, consent or demand. Any person may change the address to which notice, consent or demand is to be sent by giving notice of the change of address in the manner aforesaid.

13.7 Coordination with Other Benefits . The benefits provided for a Participant and Participant’s Beneficiary under this Plan are in addition to any other benefits available to such Participant under any other plan or program for employees of the Employer. This Plan shall supplement and shall not supersede, modify or amend any other such plan or program except as may otherwise be expressly provided herein.

13.8 Compliance . A Participant shall have no right to receive payment with respect to the Participant’s Account balance until all legal and contractual obligations of the Plan Sponsor relating to establishment of the Plan and the making of such payments shall have been complied with in full.

13.9 Amendment. The Plan Sponsor reserves the right to amend this Plan at any time to comply with Code Section §409A, Treasury Regulations §1.409A and other Applicable Guidance or for any other purpose, provided that such amendment will not cause the Plan to violate the provisions of Code Section 409A. Except as this Plan and Applicable Guidance otherwise may require, the Plan Sponsor may make any such amendments effective immediately. Except to the extent necessary to bring this Plan into compliance with Section 409A: (i) no amendment or modification shall be effective to decrease the value or vested percentage of a Participant’s Account(s) in existence at the time an amendment or modification is made, and (ii) no amendment or modification shall materially and adversely affect the Participant’s rights to be credited with additional amounts on such Account(s), or otherwise materially and adversely affect the Participant’s rights with respect to such Account(s). A change in the Deemed Investment Options offered under this Plan shall not constitute an amendment or modification that is materially adverse to the Participant’s rights with respect to the Participant’s Account(s) for purposes of the preceding sentence.

13.10 Drew 2002 Plan . Subject to the provisions of Paragraph 13.11 below, this Plan shall be subject to the Drew 2002 Plan to the extent that the Drew 2002 Plan supplements but does not contradict, the Provisions of this Plan.

13.11 Compliance with Code Section 409A and Fair Construction . Notwithstanding anything in this Plan to the contrary, the Employer, Participants, Beneficiaries and the Plan Administrator intend that all provisions of this Plan, in form and in operation, including but not limited to, the definitions of terms, elections to defer, and distributions, shall be made in accordance with and shall comply with Code Section 409A, the regulations thereunder and all other present and future Applicable Guidance. The Plan Sponsor will amend the terms of this Plan retroactively if necessary, to the extent required to comply with Code Section 409A and any Applicable Guidance. No provision of this Plan shall be followed to the extent that following such provision would result in a violation of Code Section 409A or the Applicable Guidance, and no election made by a Participant hereunder, and no change made by a Participant to a previous election, shall be accepted by the Plan Administrator if it determines that acceptance of such election or change could violate any of the requirements of Code Section 409A or the Applicable Guidance. This Plan and any accompanying forms shall be interpreted in a manner which is consistent with Code Section 409A, the regulations thereunder and other Applicable Guidance. However, as required under Treasury Regulation § 1.409A-1(c)(1), the “interpretation” of the Plan does not permit the deletion of material terms which are expressly contrary to Code Section 409A and the regulations thereunder and also does not permit the addition of missing terms necessary to comply therewith. Such deletions or additions may be accomplished only by means of a Plan amendment under Paragraph 13.9. The Plan Administrator, to minimize or avoid any sanction or damages to a Participant or Beneficiary, to itself, to the Employer or to any other person resulting from a violation of Code Section 409A under the Plan, may undertake correction of any violation or participate in any available correction program, as described in Notice 2008-113 or other Applicable Guidance.

Exhibit 14.1

Drew Industries Incorporated

Code of Ethics

Senior Financial Officers of Drew and its Subsidiaries

Drew Industries expects all employees, in carrying out their job responsibilities, to act in accordance with the highest standards of personal and professional integrity, to comply with all applicable laws, and to abide by the Company’s Guidelines for Business Conduct and other corporate policies and procedures adopted from time to time. The Chief Executive Officer, President, Chief Financial Officer, Controllers, and other key financial personnel of Drew and its subsidiaries as determined from time to time by the Chief Financial Officer and Chief Legal Officer of Drew (collectively, the “Financial Professionals”), have a special role to adhere to ethical conduct and integrity generally, and to promote accurate, fair and timely reporting of our Company’s financial results and condition and other information we release to the public market and include in reports we file with the Securities and Exchange Commission. Because of this special role, the Financial Professionals of Drew and its subsidiaries are bound by the following Code of Ethics, which supplements the Guidelines for Business Conduct and under which each agrees that in connection with the performance of their responsibilities to the Company he or she shall:


•	Act with honesty and integrity, avoiding actual or apparent conflicts of interest in personal and professional relationships, including disclosure to the Chairman of the Audit Committee of any material transaction or relationship that reasonably could be expected to give rise to such a conflict.


•	Provide information within the scope of his or her duties in a manner which promotes full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with, or submits to, government agencies, and in the Company’s other public communications.


•	Comply with all applicable rules and regulations of federal, state, and local governments, and other appropriate private and public regulatory agencies.


•	Act in good faith, responsibly, and with due care, competence and diligence, without misrepresenting material facts or allowing one’s independent judgment to be subordinated.


•	Take all reasonable measures to protect the confidentiality of non-public information about the Company or its subsidiaries and their customers and vendors obtained or created in connection with his or her activities, and to prevent the unauthorized disclosure of such information unless required by applicable law or regulation or legal or regulatory process.


•	Proactively promote and be an example of honest and ethical behavior.


•	Achieve responsible use of and control over all assets and resources employed or entrusted.


•	Promptly report to the Chief Legal Officer and the Chairman of the Audit Committee any conduct that the individual believes to be, or would give rise to, a violation of any provision of the Company’s Guidelines for Business Conduct involving any management or other employees who have a significant role in the Company’s financial reporting, disclosures or internal controls.


•	Promptly report to the Chief Legal Officer and the Chairman of the Audit Committee any conduct that the individual believes to be, or would give rise to, a material violation of the securities or other laws, rules or regulations applicable to the Company and the operation of its business, by the Company or any agent thereof.

All Financial Professionals are prohibited from directly or indirectly taking any action to coerce, manipulate, mislead or fraudulently influence Drew’s independent public accountant engaged in the performance of an audit or review of the financial statements of the Company for the purpose of rendering the financial statements of Drew misleading.

Violations of this Code of Ethics, including failures to report potential violations by others, will be viewed as a severe disciplinary matter that may result in personnel action, including termination of employment. Violations of this Code of Ethics may also constitute violations of law, and may result in civil and criminal penalties for the individual, his or her supervisor and/or Drew.

If you believe that a violation of the Code of Ethics has occurred, please contact the Chairman of Drew’s Audit Committee by email at AuditChair@drewindustries.com.

The Company has also adopted a Whistleblower Policy to establish policies and procedures for the reporting of complaints by employees and other stakeholders of the Company, on a confidential and anonymous basis, regarding questionable accounting or auditing matters, internal controls, illegal practices, or violations of adopted policies of the Company. The Whistleblower Policy and procedure for complaints can be found on the Company’s website at www.drewindustries.com under Our Company - Corporate Governance - Whistleblower Policy. It is against the Company’s policy to retaliate against any employee for the good faith reporting of violations of this Code.

The Audit Committee of the Board of Directors shall approve any waiver or amendment of this Code of Ethics, and any such waiver or substantive amendment shall be disclosed promptly as required by law or SEC regulations.

Exhibit 14.2

DREW INDUSTRIES INCORPORATED

GUIDELINES FOR BUSINESS CONDUCT

These Guidelines for Business Conduct apply to the daily activities of employees of Drew Industries Incorporated, its wholly owned subsidiary Lippert Components, Inc., and subsidiaries of Lippert. Guidelines applicable to employees of the Company are also applicable to all members of the Board of Directors of Drew and its subsidiaries as the context requires.

Drew and Lippert are committed to doing business in an ethical and legal manner at all times. These Guidelines are designed to help you make the right decisions for yourself and the Company. Everyone is expected to be familiar with the Guidelines and its contents and to consult it for guidance. Officers, managers and supervisors have a special responsibility in helping employees follow the Guidelines, in addressing questions about them, and in seeking additional assistance when necessary. Failure to read or attest to the Guidelines does not excuse you from responsibility to comply with the Guidelines, policies and regulations applicable to your job.

These Guidelines are not intended to address every issue or situation you may face in the course of your employment, nor do they replace other more detailed Company policies. If you have questions, there are several resources available to you. These include your manager, Human Resources, and the Company’s Legal Department. The Company has also adopted a Whistleblower Policy and toll-free hot line (877-373-9123) for the reporting of complaints, on a confidential and anonymous basis, regarding questionable accounting or auditing matters, illegal activities or violations of Company policies (see Section II, Recording and Reporting Information). Please make use of these resources.

DEFINITIONS

“Drew” means Drew Industries Incorporated.

“Lippert” means Lippert Components, Inc. and its direct and indirect subsidiaries.

For ease of reference, the term “Company” means the company with which you are employed consisting of either Drew or Lippert.


I.	PROTECTING THE COMPANY’S ASSETS

Every employee is responsible not only for protecting Company property (including confidential information), entrusted to him or her, but also for helping protect the Company’s assets in general.

Use of the Company’s Assets

Facilities, equipment and supplies must be used only for conducting the Company’s business.

Funds or assets of the Company may be used only for conducting the Company’s business, and not for any unlawful or improper purposes.

Confidential Information

Confidential (proprietary) information includes any non-public business, financial and product plans. It includes, but is not limited to, designs, engineering and manufacturing know-how and processes, customer and supplier information, pricing, and a variety of internal information, such as personnel and salary information.

One obligation that you have, as an employee and at any time after you leave employment, is not to disclose to anyone outside the Company any confidential information. Another obligation is to use such information only in the Company’s business. If questions from someone outside the Company come to you, do not answer them unless you’re authorized to do so.

Inadvertent disclosure of confidential information by loyal employees can harm the Company’s interest. For example, other than as may be necessary for purposes of conducting the Company’s business, you should not discuss with anyone outside the Company, products, products being developed or prices. You should never discuss with anyone outside the Company earnings or business volume that have not been made public, marketing strategies, business plans or other confidential information.

Even if you retire, or leave the Company for any other reason, you may not disclose or misuse confidential information.


II.	RECORDING AND REPORTING INFORMATION-WHISTLEBLOWER POLICY

You should record and report information not only accurately but honestly.

Every employee records or submits to the Company information of some kind. Reporting time worked is an example, as is the recording of financial information by accounting personnel. Expense accounts are another important record.

Particularly serious would be the reporting of false or misleading financial information.

The Company has adopted a WHISTLEBLOWER POLICY to establish policies and procedures for:


•	The reporting of complaints (“Complaints”) by employees and other stakeholders of the Company, on a confidential and anonymous basis, regarding questionable accounting or auditing matters, internal controls, illegal practices, or violations of adopted policies of the Company;


•	The receipt, retention, and treatment of Complaints received by the Company; and


•	The protection of employees from retaliatory actions for reporting Complaints.

The Whistleblower Policy and procedure for Complaints can be found on the Company’s website at www.drewindustries.com under Our Company - Corporate Governance - Whistleblower Policy.

Even though Complaints may be reported directly to Federal or state government authorities, the Company encourages the reporting of Complaints within the Company for investigation and appropriate action.


III.	BUSINESS CONTACTS WITH COMPETITORS

Be careful of your relationship with any competitor.

In all contacts with competitors, the general rule is to avoid discussing such matters as pricing policy, terms and conditions, costs, customer information, supplier information, inventories, products plans, production plans or methods and, of course, any information which is confidential.

Collaboration or discussion with competitors on these subjects can be illegal. If a competitor raises any of them you should object and stop the discussion immediately, and report the incident to your supervisor.


IV.	ACQUIRING AND USING INFORMATION ABOUT OTHERS

In the normal course of doing business, you may acquire information about customers, suppliers, prospects or information about their employees. In itself, this is ethical.

There are limits, however, on how such information should be acquired and used, especially information about competitors. No person should, through improper means , acquire a competitor’s trade secrets or other confidential information.

Industrial espionage - burglary, wiretapping, stealing and so forth - is obviously wrong. So is hiring a competitor’s employees to get confidential information or urging a competitor’s employees or customers to disclose confidential data.

You should also be sensitive to how you use information about other companies and their employees.


V.	BRIBES, GIFTS, ENTERTAINMENT AND SOLICITATIONS

Gifts between employees of different companies range from widely distributed advertising novelties of small value, which you may both give and receive, to bribes, which unquestionably you may not. You may pay for and accept customary business amenities such as meals, provided the expenses involved are kept at a reasonable level.

There is, however, a point of unacceptability. The difficulty lies in determining where that point is. One way to approach this question is to recognize that the purpose of both gifts and entertainment in business is to create goodwill. If they do more than that and unduly influence the recipient or make that person feel obligated to “pay back” the other company or individual by giving it business, then they are unacceptable.

Neither you, nor any member of your family, may ask for or accept, from a supplier or customer, money or a gift that may reasonably be construed as having any connection with the Company’s business relationship. Gifts also include discounts on personal purchases.

You may not give money or any gift to an executive, official or employee of any supplier, customer, government agency or other organization if it could reasonably be construed as having any connection with the Company’s business or property.

While the Company encourages all of its employees to participate in charitable causes and other community service organizations, the Company also recognizes that solicitations of customers or suppliers for charitable or political contributions or services can, in certain instances, impact the Company’s business relationships and cause an appearance of impropriety. Accordingly, you should not solicit any customer or supplier for charitable or political contributions, unless you obtain the approval of the Chief Executive Officer , or unless the solicitation is made to an individual in the context of a personal friendship, on your own time and away from Company premises, and does not involve the Company or its business in any manner. Under no circumstances may an employee solicit customers or suppliers on behalf of the Company for political contributions or services.

The U.S. Foreign Corrupt Practices Act makes it illegal for any officer or employee of the Company to bribe foreign officials to induce or influence an official decision or to obtain an improper advantage. Civil and criminal penalties for violation of this law are severe. Gifts, payments, or offerings of anything of value to foreign officials or domestic officials are strictly prohibited by the Company.


VI.	CONFLICT OF INTEREST

A conflict of interest would exist for you if you had any interests or activities outside the Company that you could benefit from to the detriment of the Company. In other words, given your responsibilities to the outside interest and your responsibilities to the Company as an employee, your loyalty becomes divided.

Your Personal Financial Interest

You should not have a financial interest in a supplier, competitor, customer, distributor or any other organization that could cause a conflict of interest.

A financial interest would be improper if the combination of your job, the amount of your investment and the particular company in which you invested could, viewed objectively by another person, influence your actions as an employee of the Company.

In the case of a supplier, ask yourself whether you have anything to do, directly or indirectly, with a decision on whether the Company does business with this other company. If you do, you should not have any financial interest at all in the other company.

You should not evade these guidelines on investments by acting indirectly through anyone else, including family members.

Your Non Work Activity - Competing with the Company

You may not market products or services which compete with the Company’s products. Nor, without the Company’s consent, may you work for a competitor during your employment with the Company as an employee, consultant or member of its board of directors, since usually that would create a conflict of interest.

Supplying the Company

You may not accept money or any benefits from any supplier for business advice or services with respect to the supplier’s business with the Company. Nor may you represent a supplier to the Company, be a part of its operating management or work on anything offered by that supplier to the Company. Also, although there may be exceptions established by the Company, you may not, as a general rule, be a supplier to the Company in your own right.

Use of the Company’s Time and Assets

You may not perform outside work or solicit business on your own behalf while on the Company premises or the Company’s time. Nor may you use the Company’s equipment, materials, resources or proprietary information for any outside work.

Waiver of Conflict of Interest

If you have any interests or activities outside the Company that could, or could appear to, possibly influence your decisions or actions as an employee of the Company, you must disclose the interests or activities to the Chief Legal Officer of the Company. If the Chief Legal Officer determines that a waiver of the conflict of interest may be appropriate, a written waiver must be obtained from the Company upon approval of Drew’s Audit Committee. Failure to make disclosure of a conflict of interest and obtain a written waiver is cause for dismissal. The Company’s Chief Legal Officer will report to the Audit Committee quarterly all requests for waivers.


VII.	POLITICAL CONTRIBUTIONS

The Company will not make contributions or payments to political parties or candidates. Nor will the Company provide any other form of support that may be considered a contribution.


VIII.	USING INSIDE INFORMATION

A specific area of concern in investing is the improper use of what is called inside information; non-public information about the Company or another company, such as a customer. The improper use of such information for your own financial benefit is a violation of law.

Here are some examples:

If you know, due to your position as an insider, that our Company, an affiliate, or a customer or supplier is about to make an announcement that could affect the price of its stock, you should not buy or sell that stock, nor suggest that someone else do so, until after expiration of two full New York Stock Exchange trading days after the announcement.

You should not buy or sell the stock of a customer or supplier based on any inside information you have about that company.

As with investments, you should not evade these guidelines by acting through anyone else, including your family members.


IX.	TECHNOLOGY RESOURCES

Technology resources consist of all electronic devices, software, and means of electronic communication, including access to the Internet. All such resources (including, but not limited to e-mail) are the property of the Company and may from time to time be accessed by the Company without an employee's permission or knowledge. The Company's technology resources are to be used by employees only for the purpose of conducting Company business. Employees may, however, use the Company's technology resources for incidental personal use so long as such use does not interfere with the employee's duties, is not done for pecuniary gain, does not conflict with the Company's business and does not violate any Company policy. Finally, all e-mail messages sent from the Company, even if personal, should be business-like and messages that are harassing or improper are strictly forbidden.


X.	COMPETITION LAW AND BUSINESS CONDUCT

Under competition (antitrust) laws, companies may not enter into agreements with other companies, even informally, that unreasonably restrict the competitive system. An example of such a prohibited agreement is one between competitors to charge the same price for their products. Other examples include agreements between competitors to divide markets or control production and a company’s agreement with its suppliers that they will not sell to its competitors, or with its distributors that they will not handle competitive products.

Except for arrangements already approved - such as standard types of contracts like sales and purchasing agreements - all other contracts or arrangements between the Company and other persons or companies should be reviewed by the Company’s legal counsel.


XI.	MEDIA AND OTHER OUTSIDE COMMUNICATION

From time to time, the Company's employees may receive inquiries from the media, attorneys, accountants or others regarding the Company or its customers. All such inquiries should be immediately referred to their supervisor. Employees should never respond to these inquiries, unless under specific instructions to do so. Investor inquiries shall be referred to the Chief Executive Officer, President and/or Chief Financial Officer. The only persons authorized to speak to the media on behalf of the Company are the Chairman of the Board, Chief Executive Officer, President, Chief Financial Officer, Chief Legal Officer, Vice President of Marketing and Public Relations, or other persons specifically designated by them to speak with respect to a particular topic or purpose. If any employee is required to provide information pursuant to a subpoena or court order, their supervisor must be immediately notified and the Company will aid the employee in providing accurate, relevant information.


XII .	COMPLIANCE WITH COPYRIGHT LAWS

Photocopying and dissemination of material contained in books, newsletters and other periodicals and computer software can result in substantial corporate and personal liability for copyright infringement. Photocopying newsletters on a systematical and cover-to-cover basis, even for internal use, creates a high risk of liability for copyright infringement and is prohibited. Additionally, unless specifically permitted in the license agreement accompanying computer software, copying computer software is a copyright infringement and is prohibited.

XIII. ALCOHOL AND DRUG USE

The safety and health of employees continue to be of utmost concern to the Company. Also, the productivity, effectiveness, and morale of employees are matters of high and legitimate priority to the Company. In its commitment to maintain a safe and healthy work environment and a productive employee group, the Company has set forth this policy against alcohol and drug abuse.

It is the policy of the Company to prohibit the manufacture, distribution, sale or transfer, or unauthorized use or possession of, alcohol and unprescribed controlled substances on Company property (including parking lots) or during working time at any location. It is also a violation of policy for any employee to appear for or to work while under the influence of alcohol or an unprescribed controlled substance.

Prescription drugs prescribed by the employee’s physician may be taken during working hours, but the employee must notify the supervisor if the prescription drugs may affect the employee’s work performance or behavior. Abuse of prescription drugs will be regarded as a violation of this policy.

The Company may perform random and/or reasonable suspicion drug testing of employees as part of its commitment to maintaining a drug-free workplace.

XIV. DISCRIMINATION AND HARASSMENT

The Company is committed to maintaining a work environment in which all individuals, employees and non-employees alike, are treated with respect and dignity. Each person has the right to work in a professional atmosphere that promotes equal opportunities, prohibits discriminatory practices and is free from all forms of harassment based on any protected characteristic, including sexual harassment. Discrimination or harassment, whether based on race, color, religion, gender, national origin, age, disability or sexual orientation, whether it is verbal or physical, and whether it occurs on the Company’s premises, at work assignments outside the Company’s premises, at Company sponsored social functions or elsewhere, is unacceptable and will not be tolerated.

Prohibited harassment includes unwelcome or unwanted sexual advances, requests for sexual favors, and other verbal, nonverbal or physical conduct of a sexual nature or which is undertaken on the basis of a protected characteristic when: (1) submission to or rejection of such conduct by an individual is used as a factor in decisions affecting hiring, evaluation, promotion, termination or other aspects of employment; or (2) such conduct substantially interferes with an individual’s employment or creates an intimidating, hostile or offensive work environment.

Examples of unacceptable conduct include behavior such as teasing; racial slurs; ethnic jokes or disparaging remarks; repeated unwelcome flirtations, advances or propositions; graphic or verbal commentary about an individual’s body or sexual prowess or deficiencies; leering; whistling; touching, pinching or other unwelcome physical contact; suggestive, insulting, obscene or demeaning comments or gestures; and display in the workplace of sexually suggestive objects or pictures.

Even consenting sexual relationships between employees may lead to unforeseen complications. Every employee should be aware of the possible risks of even an apparently consensual sexual relationship, including the possible difficulty of showing mutual consent. The Company may alter the responsibilities of employees engaged in a consenting relationship to diminish the job related contact they may have with each other.

The same risks are present in seemingly mutual or consensual “horseplay” involving behavior that is demeaning or derogatory towards individuals based on a particular characteristic.

The Company encourages employees to report all incidents of discrimination or prohibited harassment, regardless of whom the offender might be, in the manner established by the Company’s policies that have been made available to its employees. Often a frank discussion with the alleged offender will resolve the problem. If the offensive behavior continues, or an employee is uncomfortable discussing the behavior with the offending individual, a supervisor or the human resource manager is available to talk with the employee. In all cases, the human resource manager should be kept apprised of the situation.

Complaints will be promptly investigated in accordance with the Company’s established procedures, including interviews of the complaining individual, the alleged offender and any identified witnesses. Confidentiality will be maintained to the maximum extent possible. If the allegations of improper behavior are confirmed, appropriate disciplinary action will be taken, up to and including dismissal.

It is also a violation of this policy to retaliate against any individual who in good faith complains of discriminatory or harassing behavior or who assists in investigations of complaints. No employee will be discriminated against, or discharged, because of bringing, or assisting in the investigation of, a complaint of discrimination or prohibited harassment. Retaliatory conduct may result in discipline, up to and including discharge. If, however, after investigating any complaint of harassment or discrimination, the Company determines that an employee has provided false information regarding the complaint, disciplinary action may be taken against that individual.

XV. COMPANY PROPERTY

Products and Production

All inventions, designs, specifications, creations, ideas, techniques and methods involving any products or services offered by the Company, or any manufacturing techniques, and any modifications or improvements to any of these, that are invented, discovered or implemented by any employee of the Company during his/her employment with the Company are the property of the Company and are owned by the Company. This is the case whether or not the employee used the Company’s facilities, equipment, materials or personnel, and whether or not the Company markets or utilizes these inventions, discoveries or implementations. Upon request, employees are required to sign and deliver to the Company any documents needed to establish or record the Company’s title to these inventions, discoveries or implementations.

Information Systems

All computer software systems and developments, including specifications, programs, documentation, source codes, object codes, algorithms, computer routines, flow charts, diagrams, data and data bases made or conceived or developed by any employee of the Company during his/her employment with the Company relating to any aspect of the Company’s business are the property of the Company and are owned by the Company. This is the case whether or not the employee used the Company’s facilities, equipment, materials or personnel, and whether or not the Company utilizes these software systems and developments. Upon request, employees are required to sign and deliver

to the Company any documents needed to establish or record the Company’s title to these systems and developments.

XVI. COMPLIANCE WITH LAW

It is the Company's policy to, and the Company expects all employees to, comply with the Equal Pay Act (provides for equal pay for males and females for comparable work), the Fair Labor Standards Act (regulates minimum wage and overtime compensation), the Family Medical Leave Act (requires employers to allow eligible employees to take up to 12 weeks of unpaid leave for the care of a child, spouse, or parent with a serious health condition, the birth or adoption of a child, or the employee's own serious health condition), Title VII of the Civil Rights Act of 1964 (prohibits employment discrimination on the basis of race, color, religion, national origin or sex), the Americans with Disabilities Act (prohibits discrimination in the workplace against qualified individuals with disabilities), the Age Discrimination in Employment Act (prohibits employers from discriminating against employees 40 years of age or older), the Occupational Safety and Health Act (requires employers to furnish their workers with a workplace that is free from recognized hazards that cause or are likely to cause, death or serious injury) and all other federal, state and local laws applicable to employment.

XVII. DISCIPLINARY ACTIONS FOR VIOLATIONS; WAIVERS

Alleged violations of these Guidelines will be investigated in a manner consistent with Company policy. Violation of the foregoing Guidelines by any officer or employee will result in appropriate disciplinary action that may include demotion or termination of employment. The Company shall not retain any individual who, in the good faith judgment of the Company, has shown a propensity to engage in illegal activities. If necessary, legal proceedings may also commence to recover the amount of any improper expenditure or profits realized by the offending employee and any financial detriment sustained by the Company.

Those in our Company who lead others hold a special position of responsibility to proactively promote and be an example of honest and ethical behavior. As a result, only the Board of Directors or an appropriate Committee of the Board may waive a provision of these Guidelines for an executive officer or director. Any such waiver shall be disclosed promptly as required by law or SEC regulations.

Exhibit 21



Active Subsidiaries of Registrant
	Name	State of Organization

	Lippert Components, Inc.	Delaware
	Lipper Components International Sales, Inc.	Delaware
	Lippert Components Manufacturing, Inc.	Delaware
	Kinro Texas, Inc.	Texas
	Zieman Manufacturing Company	California
	Innovative Design Solutions, Inc.	Michigan
	DSI Acquisition Corp.	Indiana
	Lippert Components Canada, Inc.	Quebec, Canada
	KM Realty, LLC	Indiana
	KM Realty II, LLC	Indiana
	LCM Realty, LLC	Indiana
	LCM Realty II, LLC	Indiana
	LCM Realty III, LLC	Indiana
	LCM Realty IV, LLC	Indiana
	LCM Realty V, LLC	Michigan
	LCM Realty VI, LLC	Indiana
	LCM Realty VII, LLC	Indiana
	LCM Realty VIII, LLC	Indiana
	LCM Realty IX, LLC	Indiana

Exhibit 23

Consent of Independent Registered Public Accounting Firm

The Board of Directors

Drew Industries Incorporated:

We consent to the incorporation by reference in the Registration Statements (Nos. 333-91174, 333-141276, 333-152873, 333-161242, 333-181272 and 333-201336) on Form S-8 of Drew Industries Incorporated of our report dated February 29, 2016 , with respect to the consolidated balance sheets of Drew Industries Incorporated and subsidiaries as of December 31, 2015 and 2014 , and the related consolidated statements of income, stockholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2015 and the effectiveness of internal control over financial reporting as of December 31, 2015 , which report appears in the December 31, 2015 annual report on Form 10-K of Drew Industries Incorporated and subsidiaries.

/s/ KPMG LLP

Chicago, Illinois

February 29, 2016

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 13a-14(a)

UNDER THE SECURITIES EXCHANGE ACT OF 1934

I, Jason D. Lippert, Chief Executive Officer, certify that:


1)	I have reviewed this annual report on Form 10-K of Drew Industries Incorporated;


2)	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3)	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4)	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5)	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 29, 2016

By /s/ Jason D. Lippert

Jason D. Lippert, Chief Executive Officer

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 13a-14(a)

UNDER THE SECURITIES EXCHANGE ACT OF 1934

I, David M. Smith, Chief Financial Officer, certify that:


1)	I have reviewed this annual report on Form 10-K of Drew Industries Incorporated;


2)	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3)	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4)	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5)	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 29, 2016

By /s/ David M. Smith

David M. Smith, Chief Financial Officer

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C.

SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the annual report on Form 10-K of Drew Industries Incorporated (the “Company”) for the period ended December 31, 2015 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Jason D. Lippert, Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:


(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

By /s/ Jason D. Lippert

Chief Executive Officer

Principal Executive Officer

February 29, 2016

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C.

SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the annual report on Form 10-K of Drew Industries Incorporated (the “Company”) for the period ended December 31, 2015 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), David M. Smith, Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:


(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By /s/ David M. Smith

Chief Financial Officer

Principal Financial Officer

February 29, 2016