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☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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(Exact name of registrant as specified in its charter)
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Delaware
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13-3250533
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification Number)
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||
3501 County Road 6 East
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46514
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Elkhart, Indiana
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(Zip Code)
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(Address of principal executive offices)
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Title of each class
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Name of each exchange
on which registered
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Common Stock, $.01 par value
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New York Stock Exchange
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Page
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PART I
–
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ITEM 1 - BUSINESS
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ITEM 1A - RISK FACTORS
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ITEM 1B - UNRESOLVED STAFF COMMENTS
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ITEM 2 - PROPERTIES
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ITEM 3 - LEGAL PROCEEDINGS
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ITEM 4 - MINE SAFETY DISCLOSURES
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PART II
–
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ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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ITEM 6 - SELECTED FINANCIAL DATA
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ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
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ITEM 9A - CONTROLS AND PROCEDURES
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ITEM 9B - OTHER INFORMATION
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PART III
–
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ITEM 10 - DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
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ITEM 11 - EXECUTIVE COMPENSATION
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ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
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ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
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ITEM 14 - PRINCIPAL ACCOUNTING FEES AND SERVICES
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PART IV
–
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ITEM 15 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES
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ITEM 16 - FORM 10-K SUMMARY
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EXHIBIT 23 - CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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EXHIBIT 31.1 - SECTION 302 CEO CERTIFICATION
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EXHIBIT 31.2 - SECTION 302 CFO CERTIFICATION
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EXHIBIT 32.1 - SECTION 906 CEO CERTIFICATION
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EXHIBIT 32.2 - SECTION 906 CFO CERTIFICATION
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•
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the failure to successfully integrate departments and systems, including IT and accounting systems, technologies, books and records and procedures,
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•
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the need for additional investments post-acquisition that could be greater than anticipated,
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•
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the assumption of liabilities of the acquired businesses that could be greater than anticipated,
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•
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incorrect estimates made in the accounting for acquisitions, incurrence of non-recurring charges, and write-off of significant amounts of goodwill or other assets that could adversely affect our operating results, and
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•
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the potential loss of key employees or existing customers or adverse effects on existing business relationships with suppliers and customers.
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City
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State/Province
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Square Feet
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Owned
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Leased
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|||
Double Springs
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Alabama
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109,000
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☑
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Gilbert
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Arizona
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11,600
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☑
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Rialto
|
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California
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62,700
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☑
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Lakeland
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Florida
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15,000
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☑
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Kissimmee
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Florida
|
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4,246
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☑
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Fitzgerald
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Georgia
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79,000
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☑
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Nampa
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Idaho
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125,000
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☑
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Nampa
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Idaho
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83,500
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☑
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Nampa
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Idaho
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22,000
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☑
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Twin Falls
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Idaho
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16,060
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☑
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Goshen
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Indiana
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410,000
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☑
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|
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South Bend
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Indiana
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379,902
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☑
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Goshen
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Indiana
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355,960
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☑
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Goshen
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Indiana
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341,000
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☑
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Elkhart
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Indiana
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308,864
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☑
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Elkhart
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Indiana
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250,000
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☑
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Elkhart
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Indiana
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160,000
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☑
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Goshen
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Indiana
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153,200
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☑
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Goshen
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Indiana
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144,500
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☑
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Fort Wayne
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Indiana
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140,000
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☑
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Middlebury
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Indiana
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122,226
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☑
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Auburn
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Indiana
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119,000
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☑
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Goshen
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Indiana
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118,125
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☑
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Goshen
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Indiana
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110,000
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☑
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Elkhart
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Indiana
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102,900
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☑
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Middlebury
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Indiana
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101,776
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☑
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Goshen
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Indiana
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95,960
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☑
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Elkhart
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Indiana
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92,000
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☑
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Goshen
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Indiana
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87,800
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☑
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Elkhart
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Indiana
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87,000
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☑
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Goshen
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Indiana
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74,200
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☑
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Howe
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Indiana
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60,000
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☑
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Goshen
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Indiana
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53,500
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☑
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Elkhart
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Indiana
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28,000
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☑
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Goshen
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Indiana
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22,000
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☑
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Elkhart
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Indiana
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18,000
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☑
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Millersburg
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Indiana
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10,000
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☑
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Calenzano
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Italy
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15,000
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☑
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Sterling Heights
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Michigan
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37,018
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|
|
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☑
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(1)
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At December 31,
2015
, the Company used an aggregate of 4,791,182 square feet for manufacturing and warehousing.
|
City
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|
State/Province
|
|
Square Feet
|
|
Owned
|
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Leased
|
|||
Phoenix
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Arizona
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61,000
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|
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☑
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Mishawaka
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Indiana
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332,356
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|
|
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☑
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|
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Elkhart
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Indiana
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144,000
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|
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☑
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South Bend
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Indiana
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134,235
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☑
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Mishawaka
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Indiana
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107,600
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|
|
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☑
|
|
|
|
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779,191
|
|
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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)
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(c)
|
Equity compensation plans approved by security holders
|
765,949
|
$0.60
|
1,049,752
|
Equity compensation plans not approved by security holders
|
N/A
|
N/A
|
N/A
|
Total
|
765,949
|
$0.60
|
1,049,752
|
|
|
Year Ended December 31,
|
||||||||||||||||||
(In thousands, except per share amounts)
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
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|
||||||||||
Operating Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
|
$
|
1,678,898
|
|
|
$
|
1,403,066
|
|
|
$
|
1,190,782
|
|
|
$
|
1,015,576
|
|
|
$
|
901,123
|
|
Severance
|
|
$
|
—
|
|
|
$
|
3,716
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Sale of extrusion assets
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,954
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Executive succession
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,876
|
|
|
$
|
1,456
|
|
Operating profit
|
|
$
|
200,850
|
|
|
$
|
116,254
|
|
|
$
|
95,487
|
|
|
$
|
78,298
|
|
|
$
|
58,132
|
|
Income before income taxes
|
|
$
|
199,172
|
|
|
$
|
114,369
|
|
|
$
|
95,057
|
|
|
$
|
77,947
|
|
|
$
|
57,802
|
|
Provision for income taxes
|
|
$
|
69,501
|
|
|
$
|
40,024
|
|
|
$
|
32,791
|
|
|
$
|
27,828
|
|
|
$
|
20,462
|
|
Net income
|
|
$
|
129,671
|
|
|
$
|
74,345
|
|
|
$
|
62,266
|
|
|
$
|
50,119
|
|
|
$
|
37,340
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income per common share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
5.26
|
|
|
$
|
3.06
|
|
|
$
|
2.60
|
|
|
$
|
2.15
|
|
|
$
|
1.66
|
|
Diluted
|
|
$
|
5.20
|
|
|
$
|
3.02
|
|
|
$
|
2.56
|
|
|
$
|
2.11
|
|
|
$
|
1.64
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends per common share
|
|
$
|
1.40
|
|
|
$
|
2.00
|
|
|
$
|
2.00
|
|
|
$
|
—
|
|
|
$
|
2.00
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net working capital
|
|
$
|
218,043
|
|
|
$
|
146,964
|
|
|
$
|
100,451
|
|
|
$
|
107,339
|
|
|
$
|
84,243
|
|
Total assets
|
|
$
|
786,904
|
|
|
$
|
622,856
|
|
|
$
|
543,841
|
|
|
$
|
453,184
|
|
|
$
|
373,868
|
|
Long-term obligations
|
|
$
|
87,284
|
|
|
$
|
85,419
|
|
|
$
|
41,758
|
|
|
$
|
21,380
|
|
|
$
|
19,843
|
|
Stockholders’ equity
|
|
$
|
550,269
|
|
|
$
|
438,575
|
|
|
$
|
394,898
|
|
|
$
|
313,613
|
|
|
$
|
284,245
|
|
(In thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Net sales:
|
|
|
|
|
|
||||||
OEM Segment:
|
|
|
|
|
|
||||||
RV OEMs:
|
|
|
|
|
|
||||||
Travel trailers and fifth-wheels
|
$
|
1,099,882
|
|
|
$
|
938,787
|
|
|
$
|
841,497
|
|
Motorhomes
|
116,191
|
|
|
86,513
|
|
|
70,332
|
|
|||
Adjacent industries OEMs
|
332,018
|
|
|
274,760
|
|
|
215,197
|
|
|||
Total OEM Segment net sales
|
1,548,091
|
|
|
1,300,060
|
|
|
1,127,026
|
|
|||
Aftermarket Segment:
|
|
|
|
|
|
||||||
Total Aftermarket Segment net sales
|
130,807
|
|
|
103,006
|
|
|
63,756
|
|
|||
Total net sales
|
$
|
1,678,898
|
|
|
$
|
1,403,066
|
|
|
$
|
1,190,782
|
|
|
|
|
|
|
|
||||||
Operating profit:
|
|
|
|
|
|
||||||
OEM Segment
|
$
|
180,850
|
|
|
$
|
105,224
|
|
|
$
|
88,744
|
|
Aftermarket Segment
|
20,000
|
|
|
14,746
|
|
|
8,697
|
|
|||
Total segment operating profit
|
200,850
|
|
|
119,970
|
|
|
97,441
|
|
|||
Severance
|
—
|
|
|
(3,716
|
)
|
|
—
|
|
|||
Sale of extrusion assets
|
—
|
|
|
—
|
|
|
(1,954
|
)
|
|||
Total operating profit
|
$
|
200,850
|
|
|
$
|
116,254
|
|
|
$
|
95,487
|
|
|
2016
|
|
2015
|
|
2014
|
OEM Segment
|
11.7%
|
|
8.1%
|
|
7.9%
|
Aftermarket Segment
|
15.3%
|
|
14.3%
|
|
13.6%
|
● Steel chassis and related components
|
● Furniture and mattresses
|
● Axles and suspension solutions
|
● Electric and manual entry steps
|
● Slide-out mechanisms and solutions
|
● Awnings and awning accessories
|
● Thermoformed bath, kitchen and other products
|
● Electronic components
|
● Vinyl, aluminum and frameless windows
|
● Appliances
|
● Manual, electric and hydraulic stabilizer and
leveling systems |
● Televisions, sound systems, navigation
systems and backup cameras |
● Entry, luggage, patio and ramp doors
|
● Other accessories
|
•
|
An estimated
33,300
unit increase in retail demand in
2016
, or
11 percent
, as compared to
2015
. In addition, retail demand is typically revised upward in subsequent months, primarily due to delayed RV registrations.
|
•
|
RV dealers increasing inventory levels by an estimated
12,300
units in
2016
, compared to the decrease in inventory levels of
2,700
units in
2015
.
|
|
Wholesale
|
|
Retail
|
|
Estimated Unit
Impact on
Dealer
|
|||||
|
Units
|
|
Change
|
|
Units
|
|
Change
|
|
Inventories
|
|
Year ended December 31, 2016
|
362,700
|
|
|
15%
|
|
350,400
|
|
11%
|
|
12,300
|
Year ended December 31, 2015
|
314,400
|
|
|
5%
|
|
317,100
|
|
14%
|
|
(2,700)
|
Year ended December 31, 2014
|
298,900
|
|
|
12%
|
|
277,300
|
|
11%
|
|
21,600
|
•
|
Enclosed trailers. According to Statistical Surveys, approximately 176,000, 184,000 and 174,000 enclosed trailers were sold in 2016, 2015 and 2014, respectively.
|
•
|
Pontoon boats. Statistical Surveys also reported approximately 44,800, 41,300 and 38,500 pontoon boats were sold in 2016, 2015 and 2014, respectively.
|
•
|
School buses. According to Wards Communications and R.L. Polk & Co., there were approximately 32,800, 29,600 and 28,200 school buses sold in 2016, 2015 and 2014, respectively.
|
•
|
Manufactured housing. According to the Institute for Building Technology and Safety, there were approximately 81,100, 70,500 and 64,300 manufactured home wholesale shipments in 2016, 2015 and 2014, respectively.
|
•
|
Consolidated net sales for the year ended December 31,
2016
increased to a record
$1.7 billion
,
20 percent
higher than consolidated net sales for the year ended December 31,
2015
of
$1.4 billion
. Acquisitions completed by the Company in
2016
added $64 million in net sales. The
15 percent
increase in industry-wide wholesale shipments of travel trailer and fifth-wheel RVs, LCI’s primary OEM market, as well as increased content per RV unit, positively impacted net sales growth in
2016
. Further, the Company organically increased sales to adjacent industries and the aftermarket.
|
•
|
Net income for the full-year
2016
increased to
$129.7 million
, or
$5.20
per diluted share, up from net income of
$74.3 million
, or
$3.02
per diluted share, in
2015
.
|
•
|
Consolidated operating profits during
2016
increased
73 percent
, to
$200.9 million
from
$116.3 million
in
2015
. Operating profit margin increased to
12.0 percent
in
2016
from
8.3 percent
in
2015
.
|
•
|
The Company continues to take actions to improve its cost structure. The Company seeks to continuously manage its labor cost, particularly indirect labor, while supporting the growth of the business. Lean manufacturing teams continue working to reduce cost and implement processes to better utilize available floorspace. The Company has also reduced direct labor attrition which improves efficiency and reduces other costs associated with workforce turnover.
|
•
|
The cost of aluminum and steel used in certain of the Company’s manufactured components declined during the second half of 2015 and continued into 2016; however, certain commodities have experienced cost increases in the second half of 2016 from market low points. Raw material costs continue to fluctuate and are expected to remain volatile.
|
•
|
During
2016
, the Company completed five acquisitions, all of which have been accretive to earnings:
|
•
|
Camping Connection -- A Myrtle Beach, South Carolina and Kissimmee, Florida RV repair and service provider, with estimated annual sales of $2 million, completed
November 2016
;
|
•
|
Atwood Seating and Chassis Components -- An Elkhart, Indiana-based seating and chassis components business of Atwood Mobile Products, a subsidiary of Dometic Group, with estimated annual sales of $30 million, completed
November 2016
;
|
•
|
Project 2000 S.r.l. -- An Italian manufacturer of innovative, space-saving bed lifts and retractable steps, with estimated annual sales of $14 million, completed
May 2016
;
|
•
|
Flair Interiors -- A Goshen, Indiana-based manufacturer of RV furniture, with estimated annual sales of $25 million, completed February 2016; and
|
•
|
Highwater Marine Furniture -- An Elkhart, Indiana-based marine furniture operation providing furniture solutions for Highwater Marine, LLC, a manufacturer of pontoon boats. Estimated annual sales for the marine furniture operation were $20 million, completed January 2016.
|
•
|
Return on equity for
2016
, which is calculated by taking net income over equity, improved to 26.0 percent, from the 18.4 percent return on equity in
2015
.
|
•
|
In April, June and September 2016, the Company paid a quarterly dividend of $0.30 per share, aggregating $7.3 million, $7.4 million and $7.4 million, respectively. In December 2016, the Company paid a quarterly dividend of $0.50 per share, aggregating $12.4 million.
|
(In thousands)
|
2016
|
|
2015
|
|
Change
|
||||
RV OEMs:
|
|
|
|
|
|
||||
Travel trailers and fifth-wheels
|
$
|
1,099,882
|
|
|
$
|
938,787
|
|
|
17%
|
Motorhomes
|
116,191
|
|
|
86,513
|
|
|
34%
|
||
Adjacent industries OEMs
|
332,018
|
|
|
274,760
|
|
|
21%
|
||
Total OEM Segment net sales
|
$
|
1,548,091
|
|
|
$
|
1,300,060
|
|
|
19%
|
|
2016
|
|
2015
|
|
Change
|
||
Travel trailer and fifth-wheel RVs
|
362,700
|
|
|
314,400
|
|
|
15%
|
Motorhomes
|
54,800
|
|
|
47,300
|
|
|
16%
|
Content per:
|
2016
|
|
2015
|
|
Change
|
||||
Travel trailer and fifth-wheel RV
|
$
|
3,022
|
|
|
$
|
2,987
|
|
|
1%
|
Motorhome
|
$
|
2,011
|
|
|
$
|
1,810
|
|
|
11%
|
•
|
Better fixed cost absorption by spreading fixed costs over a
$248 million
larger sales base.
|
•
|
Increasing sales to Adjacent Industries OEMs.
|
•
|
Lower material costs for certain raw materials. Steel and aluminum costs declined in the second half of 2015 and continued into 2016. Costs for these commodities experienced some increases in the second and third quarters of 2016. Material costs, which are subject to global supply and demand forces, are expected to remain volatile.
|
•
|
Sales mix and pricing changes of products, including increased sales of fifth-wheel products which has a higher margin.
|
•
|
Indirect labor cost savings initiated in the fourth quarter of 2015 to reduce such costs on an annualized basis.
|
•
|
Investments over the past several years to increase capacity and improve operating efficiencies. Further, the Company has implemented efficiency improvements, including lean manufacturing initiatives, increased use of automation and employee retention initiatives. The Company has also reduced direct labor attrition which improves efficiency and reduces other costs associated with workforce turnover.
|
•
|
Lower group health and workers’ compensation claims. The Company actively works to manage and reduce these costs, however, these costs remain subject to fluctuation.
|
•
|
Fixed costs which were approximately $6 million to $7 million higher than in 2015. 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 2016 and beyond. In addition to investments in fixed costs to expand manufacturing capacity, the Company has 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 amortization costs of intangible assets related to those businesses.
|
•
|
While the Company seeks to continuously manage its labor cost, it has added staff to support the growth of the business. The results also reflect variable compensation increases based on achieving profitability targets.
|
(In thousands)
|
|
2016
|
|
2015
|
|
Change
|
||||
Total Aftermarket Segment net sales
|
|
$
|
130,807
|
|
|
$
|
103,006
|
|
|
27%
|
•
|
Consolidated net sales for the year ended December 31,
2015
increased to
$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 OEM market, as well as increased content per unit through market share gains, positively impacted net sales growth in
2015
. Further, the Company organically increased sales to adjacent industries and the aftermarket.
|
•
|
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
.
|
•
|
Consolidated operating profits during
2015
increased
22 percent
, to
$116.3 million
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 continued 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.
|
•
|
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 Quebec, 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; and
|
•
|
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.
|
•
|
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.
|
(In thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||
RV OEMs:
|
|
|
|
|
|
|
||||
Travel trailers and fifth-wheels
|
|
$
|
938,787
|
|
|
$
|
841,497
|
|
|
12%
|
Motorhomes
|
|
86,513
|
|
|
70,332
|
|
|
23%
|
||
Adjacent industries
|
|
274,760
|
|
|
215,197
|
|
|
28%
|
||
Total OEM Segment net sales
|
|
$
|
1,300,060
|
|
|
$
|
1,127,026
|
|
|
15%
|
|
|
2015
|
|
2014
|
|
Change
|
||
Travel trailer and fifth-wheel RVs
|
|
314,400
|
|
|
298,900
|
|
|
5%
|
Motorhomes
|
|
47,300
|
|
|
43,900
|
|
|
8%
|
Content per:
|
|
2015
|
|
2014
|
|
Change
|
||||
Travel trailer and fifth-wheel RV
|
|
$
|
2,987
|
|
|
$
|
2,816
|
|
|
6%
|
Motorhome
|
|
$
|
1,810
|
|
|
$
|
1,602
|
|
|
13%
|
•
|
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 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 came 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.
|
•
|
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 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.
|
•
|
Better fixed costs absorption by spreading fixed costs over a
$173 million
larger sales base.
|
(In thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||
Total Aftermarket Segment net sales
|
|
$
|
103,006
|
|
|
$
|
63,756
|
|
|
62%
|
(In thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net cash flows provided by operating activities
|
|
$
|
203,407
|
|
|
$
|
95,018
|
|
|
$
|
107,020
|
|
Net cash flows used for investing activities
|
|
(91,707
|
)
|
|
(66,116
|
)
|
|
(144,074
|
)
|
|||
Net cash flows used for financing activities
|
|
(37,835
|
)
|
|
(16,601
|
)
|
|
(29,222
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
|
$
|
73,865
|
|
|
$
|
12,301
|
|
|
$
|
(66,276
|
)
|
•
|
A $56.5 million increase in the change for accounts payable and accrued expenses and other liabilities in
2016
compared to a $37.1 million decrease in
2015
, primarily due to the increases in sales, production and earnings, as well as the timing of these payments.
|
•
|
A
$55.3 million
increase
in net income in
2016
compared to
2015
.
|
•
|
A smaller increase in the change for inventories of $23.4 million in
2016
compared to
2015
. The increase in inventories in
2016
was primarily due to increases in sourced products and acquisitions completed in 2016. Inventory turnover for
2016
increased to 7.5 turns compared to 6.9 turns for
2015
. The Company is working to improve inventory turnover, however, inventory turns may trend lower due to growth in product categories such as imported furniture and Furrion electronics.
|
•
|
Increases in non-cash charges against net income in
2016
including:
|
•
|
A $4.5 million increase in depreciation and amortization primarily due to investments in acquisitions and capital expenditures.
|
•
|
A $1.4 million increase in stock-based compensation in
2016
compared to
2015
.
|
•
|
A
$13.9 million
increase in accounts receivable in
2016
compared to a
$2.1 million
decrease in
2015
, primarily due to an increase in days sales outstanding to 16 at
December 31, 2016
, compared to 14 at
December 31, 2015
.
|
•
|
A higher increase in the change for prepaid expense and other assets of $13.3 million in
2016
compared to
2015
. The increase in
2016
was primarily due to a $4.5 million higher tax receivable at
December 31, 2016
, as well as an increase in short-term deposits related to 2017 capital expenditures and inventory.
|
•
|
A larger increase in the change for 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 was also due to strategic positions to take advantage of favorable market conditions and included the strategic onboarding of a new supplier. Inventory turnover for 2015 decreased to 6.9 turns compared to 8.2 turns for 2014.
|
•
|
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. 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.
|
•
|
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.
|
•
|
A $12.1 million increase in net income in 2014 compared to 2013.
|
•
|
A $24.0 million larger increase in the change for 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 the change for 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.
|
•
|
An $18.5 million larger increase in the change for 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.
|
|
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)
|
5,388
|
|
|
1,675
|
|
|
3,350
|
|
|
363
|
|
|
—
|
|
|
—
|
|
||||||
Operating leases
|
40,503
|
|
|
9,388
|
|
|
14,046
|
|
|
9,052
|
|
|
8,017
|
|
|
—
|
|
||||||
Employment contracts
(b)
|
7,441
|
|
|
7,070
|
|
|
221
|
|
|
150
|
|
|
—
|
|
|
—
|
|
||||||
Deferred compensation
(c)
|
13,574
|
|
|
160
|
|
|
609
|
|
|
3,486
|
|
|
5,380
|
|
|
3,939
|
|
||||||
Royalty agreements and contingent consideration payments
(d)
|
11,639
|
|
|
6,252
|
|
|
2,275
|
|
|
1,560
|
|
|
1,552
|
|
|
—
|
|
||||||
Purchase obligations
(e)
|
539,891
|
|
|
300,741
|
|
|
238,280
|
|
|
870
|
|
|
—
|
|
|
—
|
|
||||||
Taxes
(f)
|
3,100
|
|
|
3,100
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
671,536
|
|
|
$
|
328,386
|
|
|
$
|
258,781
|
|
|
$
|
65,481
|
|
|
$
|
14,949
|
|
|
$
|
3,939
|
|
(a)
|
The Company has used the contractual payment dates and the fixed interest rates in effect as of December 31,
2016
, 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.
|
(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.
|
|
Year ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
(In thousands, except per share amounts)
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Net sales
|
$
|
1,678,898
|
|
|
$
|
1,403,066
|
|
|
$
|
1,190,782
|
|
Cost of sales
|
1,249,995
|
|
|
1,097,064
|
|
|
935,859
|
|
|||
Gross profit
|
428,903
|
|
|
306,002
|
|
|
254,923
|
|
|||
Selling, general and administrative expenses
|
228,053
|
|
|
186,032
|
|
|
157,482
|
|
|||
Severance
|
—
|
|
|
3,716
|
|
|
—
|
|
|||
Sale of extrusion assets
|
—
|
|
|
—
|
|
|
1,954
|
|
|||
Operating profit
|
200,850
|
|
|
116,254
|
|
|
95,487
|
|
|||
Interest expense, net
|
1,678
|
|
|
1,885
|
|
|
430
|
|
|||
Income before income taxes
|
199,172
|
|
|
114,369
|
|
|
95,057
|
|
|||
Provision for income taxes
|
69,501
|
|
|
40,024
|
|
|
32,791
|
|
|||
Net income
|
$
|
129,671
|
|
|
$
|
74,345
|
|
|
$
|
62,266
|
|
|
|
|
|
|
|
||||||
Net income per common share:
|
|
|
|
|
|
||||||
Basic
|
$
|
5.26
|
|
|
$
|
3.06
|
|
|
$
|
2.60
|
|
Diluted
|
$
|
5.20
|
|
|
$
|
3.02
|
|
|
$
|
2.56
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
24,631
|
|
|
24,295
|
|
|
23,911
|
|
|||
Diluted
|
24,933
|
|
|
24,650
|
|
|
24,334
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
(In thousands)
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Consolidated net income
|
$
|
129,671
|
|
|
$
|
74,345
|
|
|
$
|
62,266
|
|
Other comprehensive loss:
|
|
|
|
|
|
||||||
Net foreign currency translation adjustment
|
(1,798
|
)
|
|
—
|
|
|
—
|
|
|||
Total comprehensive income
|
$
|
127,873
|
|
|
$
|
74,345
|
|
|
$
|
62,266
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
(In thousands, except per share amount)
|
|
|
|
||||
|
|
|
|
||||
ASSETS
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
86,170
|
|
|
$
|
12,305
|
|
Accounts receivable, net
|
57,374
|
|
|
41,509
|
|
||
Inventories, net
|
188,743
|
|
|
170,834
|
|
||
Prepaid expenses and other current assets
|
35,107
|
|
|
21,178
|
|
||
Total current assets
|
367,394
|
|
|
245,826
|
|
||
Fixed assets, net
|
172,748
|
|
|
150,600
|
|
||
Goodwill
|
89,198
|
|
|
83,619
|
|
||
Other intangible assets, net
|
112,943
|
|
|
100,935
|
|
||
Deferred taxes
|
31,989
|
|
|
29,391
|
|
||
Other assets
|
12,632
|
|
|
12,485
|
|
||
Total assets
|
$
|
786,904
|
|
|
$
|
622,856
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable, trade
|
$
|
50,616
|
|
|
$
|
29,700
|
|
Accrued expenses and other current liabilities
|
98,735
|
|
|
69,162
|
|
||
Total current liabilities
|
149,351
|
|
|
98,862
|
|
||
Long-term indebtedness
|
49,949
|
|
|
49,910
|
|
||
Other long-term liabilities
|
37,335
|
|
|
35,509
|
|
||
Total liabilities
|
236,635
|
|
|
184,281
|
|
||
|
|
|
|
||||
Stockholders’ equity
|
|
|
|
||||
Common stock, par value $.01 per share: authorized
|
|
|
|
||||
75,000 shares; issued 27,434 shares at December 31, 2016
|
|
|
|
||||
and 27,039 shares at December 31, 2015
|
274
|
|
|
270
|
|
||
Paid-in capital
|
185,981
|
|
|
166,566
|
|
||
Retained earnings
|
395,279
|
|
|
301,206
|
|
||
Accumulated other comprehensive loss
|
(1,798
|
)
|
|
—
|
|
||
Stockholders’ equity before treasury stock
|
579,736
|
|
|
468,042
|
|
||
Treasury stock, at cost, 2,684 shares at December 31, 2016
|
|
|
|
||||
and December 31, 2015
|
(29,467
|
)
|
|
(29,467
|
)
|
||
Total stockholders’ equity
|
550,269
|
|
|
438,575
|
|
||
Total liabilities and stockholders’ equity
|
$
|
786,904
|
|
|
$
|
622,856
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
(In thousands)
|
|
|
|
|
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
129,671
|
|
|
$
|
74,345
|
|
|
$
|
62,266
|
|
Adjustments to reconcile net income to cash flows provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
46,167
|
|
|
41,624
|
|
|
32,596
|
|
|||
Stock-based compensation expense
|
15,420
|
|
|
14,043
|
|
|
10,817
|
|
|||
Deferred taxes
|
(2,598
|
)
|
|
1,062
|
|
|
(5,493
|
)
|
|||
Other non-cash items
|
1,540
|
|
|
1,335
|
|
|
2,796
|
|
|||
Changes in assets and liabilities, net of acquisitions of businesses:
|
|
|
|
|
|
||||||
Accounts receivable, net
|
(13,899
|
)
|
|
2,082
|
|
|
(606
|
)
|
|||
Inventories, net
|
(7,856
|
)
|
|
(31,276
|
)
|
|
(21,940
|
)
|
|||
Prepaid expenses and other assets
|
(15,553
|
)
|
|
(2,249
|
)
|
|
(4,610
|
)
|
|||
Accounts payable, trade
|
18,800
|
|
|
(21,783
|
)
|
|
21,269
|
|
|||
Accrued expenses and other liabilities
|
31,715
|
|
|
15,835
|
|
|
9,925
|
|
|||
Net cash flows provided by operating activities
|
203,407
|
|
|
95,018
|
|
|
107,020
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Capital expenditures
|
(44,671
|
)
|
|
(28,989
|
)
|
|
(42,458
|
)
|
|||
Acquisitions of businesses, net of cash acquired
|
(48,725
|
)
|
|
(41,058
|
)
|
|
(106,782
|
)
|
|||
Proceeds from note receivable
|
2,000
|
|
|
2,000
|
|
|
1,750
|
|
|||
Proceeds from sales of fixed assets
|
698
|
|
|
2,337
|
|
|
3,587
|
|
|||
Other investing activities
|
(1,009
|
)
|
|
(406
|
)
|
|
(171
|
)
|
|||
Net cash flows used for investing activities
|
(91,707
|
)
|
|
(66,116
|
)
|
|
(144,074
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Exercise of stock-based awards, net of shares tendered for
payment of taxes |
2,574
|
|
|
1,470
|
|
|
5,769
|
|
|||
Proceeds from line of credit borrowings
|
81,458
|
|
|
614,629
|
|
|
425,330
|
|
|||
Repayments under line of credit borrowings
|
(81,458
|
)
|
|
(630,279
|
)
|
|
(409,680
|
)
|
|||
Payment of dividends
|
(34,437
|
)
|
|
(48,227
|
)
|
|
(46,706
|
)
|
|||
Proceeds from shelf-loan borrowing
|
—
|
|
|
50,000
|
|
|
—
|
|
|||
Payment of contingent consideration related to acquisitions
|
(4,944
|
)
|
|
(3,974
|
)
|
|
(3,739
|
)
|
|||
Other financing activities
|
(1,028
|
)
|
|
(220
|
)
|
|
(196
|
)
|
|||
Net cash flows used for financing activities
|
(37,835
|
)
|
|
(16,601
|
)
|
|
(29,222
|
)
|
|||
|
|
|
|
|
|
||||||
Net increase (decrease) in cash and cash equivalents
|
73,865
|
|
|
12,301
|
|
|
(66,276
|
)
|
|||
|
|
|
|
|
|
||||||
Cash and cash equivalents at beginning of year
|
12,305
|
|
|
4
|
|
|
66,280
|
|
|||
Cash and cash equivalents at end of year
|
$
|
86,170
|
|
|
$
|
12,305
|
|
|
$
|
4
|
|
|
|
|
|
|
|
||||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Cash paid during the year for:
|
|
|
|
|
|
||||||
Interest
|
$
|
1,992
|
|
|
$
|
2,113
|
|
|
$
|
641
|
|
Income taxes, net of refunds
|
$
|
65,792
|
|
|
$
|
33,782
|
|
|
$
|
30,947
|
|
|
Common
Stock
|
Paid-in
Capital
|
Retained
Earnings
|
Accumulated Other Comprehensive Loss
|
Treasury
Stock
|
Total
Stockholders’
Equity
|
||||||||||||
(In thousands, except shares and per share amounts)
|
|
|
|
|
|
|
||||||||||||
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, net of shares tendered for payment of taxes
|
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
|
|
||||||
Net income
|
—
|
|
—
|
|
129,671
|
|
—
|
|
—
|
|
129,671
|
|
||||||
Issuance of 395,274 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes
|
4
|
|
(5,413
|
)
|
—
|
|
—
|
|
—
|
|
(5,409
|
)
|
||||||
Income tax benefit relating to issuance of common stock pursuant to stock-based awards
|
—
|
|
7,983
|
|
—
|
|
—
|
|
—
|
|
7,983
|
|
||||||
Stock-based compensation expense
|
—
|
|
15,420
|
|
—
|
|
—
|
|
—
|
|
15,420
|
|
||||||
Issuance of 4,784 deferred stock units relating to prior year compensation
|
—
|
|
264
|
|
—
|
|
—
|
|
—
|
|
264
|
|
||||||
Other comprehensive loss
|
—
|
|
—
|
|
—
|
|
(1,798
|
)
|
—
|
|
(1,798
|
)
|
||||||
Cash dividends ($1.40 per share)
|
—
|
|
—
|
|
(34,437
|
)
|
—
|
|
—
|
|
(34,437
|
)
|
||||||
Dividend equivalents on stock-based awards
|
—
|
|
1,161
|
|
(1,161
|
)
|
—
|
|
—
|
|
—
|
|
||||||
Balance - December 31, 2016
|
$
|
274
|
|
$
|
185,981
|
|
$
|
395,279
|
|
$
|
(1,798
|
)
|
$
|
(29,467
|
)
|
$
|
550,269
|
|
Cash consideration
|
$
|
12,463
|
|
|
|
||
Customer relationships
|
$
|
2,116
|
|
Net other assets
|
10,347
|
|
|
Total fair value of net assets acquired
|
$
|
12,463
|
|
Cash consideration net of cash acquired
|
$
|
16,137
|
|
Contingent consideration
|
1,322
|
|
|
Total fair value of consideration given
|
$
|
17,459
|
|
|
|
||
Customer relationships
|
$
|
9,694
|
|
Other identifiable intangible assets
|
5,193
|
|
|
Net other assets
|
128
|
|
|
Total fair value of net assets acquired
|
$
|
15,015
|
|
|
|
||
Goodwill (not tax deductible)
|
$
|
2,444
|
|
Cash consideration
|
$
|
8,100
|
|
|
|
||
Customer relationships
|
$
|
3,700
|
|
Net other assets
|
2,378
|
|
|
Total fair value of net assets acquired
|
$
|
6,078
|
|
|
|
||
Goodwill (tax deductible)
|
$
|
2,022
|
|
Cash consideration
|
$
|
10,000
|
|
|
|
||
Customer relationships
|
$
|
8,100
|
|
Net tangible assets
|
1,307
|
|
|
Total fair value of net assets acquired
|
$
|
9,407
|
|
|
|
||
Goodwill (tax deductible)
|
$
|
593
|
|
Cash consideration
|
$
|
16,000
|
|
Contingent consideration
|
3,556
|
|
|
Total fair value of consideration given
|
$
|
19,556
|
|
|
|
||
Customer relationships
|
$
|
7,500
|
|
Net other assets
|
4,023
|
|
|
Total fair value of net assets acquired
|
$
|
11,523
|
|
|
|
||
Goodwill (tax deductible)
|
$
|
8,033
|
|
Cash consideration
|
$
|
22,335
|
|
Contingent consideration
|
1,211
|
|
|
Total fair value of consideration given
|
$
|
23,546
|
|
|
|
||
Customer relationships
|
$
|
10,100
|
|
Net other assets
|
4,381
|
|
|
Total fair value of net assets acquired
|
$
|
14,481
|
|
|
|
||
Goodwill (tax deductible)
|
$
|
9,065
|
|
Cash consideration
|
$
|
9,248
|
|
|
|
||
Identifiable intangible assets
|
$
|
480
|
|
Net tangible assets
|
8,868
|
|
|
Total fair value of net assets acquired
|
$
|
9,348
|
|
|
|
||
Gain on bargain purchase
|
$
|
100
|
|
Cash consideration
|
$
|
18,000
|
|
Contingent consideration
|
1,914
|
|
|
Total fair value of consideration given
|
$
|
19,914
|
|
|
|
||
Customer relationships
|
$
|
10,500
|
|
Net other assets
|
5,000
|
|
|
Total fair value of net assets acquired
|
$
|
15,500
|
|
|
|
||
Goodwill (tax deductible)
|
$
|
4,414
|
|
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
|
|
Cash consideration
|
$
|
12,232
|
|
|
|
||
Customer relationships
|
$
|
4,400
|
|
Net other assets
|
2,718
|
|
|
Total fair value of net assets acquired
|
$
|
7,118
|
|
|
|
||
Goodwill (tax deductible)
|
$
|
5,114
|
|
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
|
|
(In thousands)
|
OEM Segment
|
|
Aftermarket Segment
|
|
Total
|
||||||
Net balance – December 31, 2014
|
$
|
52,815
|
|
|
$
|
13,706
|
|
|
$
|
66,521
|
|
Acquisitions – 2015
|
17,007
|
|
|
91
|
|
|
17,098
|
|
|||
Net balance – December 31, 2015
|
69,822
|
|
|
13,797
|
|
|
83,619
|
|
|||
Acquisitions – 2016
|
5,059
|
|
|
738
|
|
|
5,797
|
|
|||
Other
|
(218
|
)
|
|
—
|
|
|
(218
|
)
|
|||
Net balance – December 31, 2016
|
$
|
74,663
|
|
|
$
|
14,535
|
|
|
$
|
89,198
|
|
(In thousands)
|
2016
|
|
2015
|
||||
OEM Segment
|
$
|
97,689
|
|
|
$
|
84,752
|
|
Aftermarket Segment
|
15,254
|
|
|
16,183
|
|
||
Other intangible assets
|
$
|
112,943
|
|
|
$
|
100,935
|
|
(In thousands)
|
Gross
Cost |
|
Accumulated
Amortization |
|
Net
Balance |
|
Estimated Useful
Life in Years |
||||||||
Customer relationships
|
$
|
110,784
|
|
|
$
|
32,414
|
|
|
$
|
78,370
|
|
|
6
|
to
|
16
|
Patents
|
56,468
|
|
|
34,066
|
|
|
22,402
|
|
|
3
|
to
|
19
|
|||
Tradenames
|
10,041
|
|
|
5,667
|
|
|
4,374
|
|
|
3
|
to
|
15
|
|||
Non-compete agreements
|
5,852
|
|
|
2,975
|
|
|
2,877
|
|
|
3
|
to
|
6
|
|||
Other
|
309
|
|
|
76
|
|
|
233
|
|
|
2
|
to
|
12
|
|||
Purchased research and development
|
4,687
|
|
|
—
|
|
|
4,687
|
|
|
Indefinite
|
|||||
Other intangible assets
|
$
|
188,141
|
|
|
$
|
75,198
|
|
|
$
|
112,943
|
|
|
|
|
|
(In thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Cost of sales
|
$
|
5,967
|
|
|
$
|
6,017
|
|
|
$
|
5,092
|
|
Selling, general and administrative
|
11,791
|
|
|
10,038
|
|
|
7,612
|
|
|||
Amortization expense
|
$
|
17,758
|
|
|
$
|
16,055
|
|
|
$
|
12,704
|
|
(In thousands)
|
2017
|
2018
|
2019
|
2020
|
2021
|
||||||||||
Cost of sales
|
$
|
5,809
|
|
$
|
4,973
|
|
$
|
4,330
|
|
$
|
3,283
|
|
$
|
2,743
|
|
Selling, general and administrative
|
10,989
|
|
10,405
|
|
9,362
|
|
8,060
|
|
7,466
|
|
|||||
Amortization expense
|
$
|
16,798
|
|
$
|
15,378
|
|
$
|
13,692
|
|
$
|
11,343
|
|
$
|
10,209
|
|
(In thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Balance at beginning of period
|
$
|
844
|
|
|
$
|
917
|
|
|
$
|
705
|
|
Provision for doubtful accounts
|
(83
|
)
|
|
(5
|
)
|
|
178
|
|
|||
Additions related to acquired businesses
|
29
|
|
|
33
|
|
|
58
|
|
|||
Recoveries
|
—
|
|
|
8
|
|
|
4
|
|
|||
Accounts written off
|
(135
|
)
|
|
(109
|
)
|
|
(28
|
)
|
|||
Balance at end of period
|
$
|
655
|
|
|
$
|
844
|
|
|
$
|
917
|
|
(In thousands)
|
2016
|
|
2015
|
|
|
||||
Raw materials
|
$
|
155,044
|
|
|
$
|
144,397
|
|
|
|
Work in process
|
7,509
|
|
|
4,932
|
|
|
|
||
Finished goods
|
26,190
|
|
|
21,505
|
|
|
|
||
Inventories, net
|
$
|
188,743
|
|
|
$
|
170,834
|
|
|
|
|
|
|
|
Estimated Useful
|
|||||
(In thousands)
|
2016
|
|
2015
|
Life in Years
|
|||||
Land
|
$
|
13,802
|
|
|
$
|
11,064
|
|
|
|
Buildings and improvements
|
106,831
|
|
|
89,616
|
|
10 to 40
|
|||
Leasehold improvements
|
11,918
|
|
|
11,147
|
|
3 to 10
|
|||
Machinery and equipment
|
167,691
|
|
|
153,784
|
|
3 to 15
|
|||
Furniture and fixtures
|
27,053
|
|
|
20,653
|
|
3 to 8
|
|||
Construction in progress
|
10,067
|
|
|
5,512
|
|
|
|
||
Fixed assets, at cost
|
337,362
|
|
|
291,776
|
|
|
|
||
Less accumulated depreciation and amortization
|
164,614
|
|
|
141,176
|
|
|
|
||
Fixed assets, net
|
$
|
172,748
|
|
|
$
|
150,600
|
|
|
|
(In thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Cost of sales
|
$
|
22,993
|
|
|
$
|
21,289
|
|
|
$
|
16,364
|
|
Selling, general and administrative expenses
|
5,140
|
|
|
4,137
|
|
|
3,440
|
|
|||
Total
|
$
|
28,133
|
|
|
$
|
25,426
|
|
|
$
|
19,804
|
|
(In thousands)
|
2016
|
|
2015
|
|
|
||||
Employee compensation and benefits
|
$
|
47,459
|
|
|
$
|
25,147
|
|
|
|
Current portion of accrued warranty
|
20,393
|
|
|
17,020
|
|
|
|
||
Customer rebates
|
9,329
|
|
|
7,993
|
|
|
|
||
Other
|
21,554
|
|
|
19,002
|
|
|
|
||
Accrued expenses and other current liabilities
|
$
|
98,735
|
|
|
$
|
69,162
|
|
|
|
(In thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Balance at beginning of period
|
$
|
26,204
|
|
|
$
|
21,641
|
|
|
$
|
17,325
|
|
Provision for warranty expense
|
20,985
|
|
|
17,267
|
|
|
12,860
|
|
|||
Warranty liability from acquired businesses
|
125
|
|
|
240
|
|
|
688
|
|
|||
Warranty costs paid
|
(14,921
|
)
|
|
(12,944
|
)
|
|
(9,232
|
)
|
|||
Balance at end of period
|
32,393
|
|
|
26,204
|
|
|
21,641
|
|
|||
Less long-term portion
|
12,000
|
|
|
9,184
|
|
|
7,125
|
|
|||
Current portion of accrued warranty
|
$
|
20,393
|
|
|
$
|
17,020
|
|
|
$
|
14,516
|
|
(In thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
United States
|
$
|
196,827
|
|
|
$
|
113,280
|
|
|
$
|
95,057
|
|
Foreign
|
2,345
|
|
|
1,089
|
|
|
—
|
|
|||
Total earnings before income taxes
|
$
|
199,172
|
|
|
$
|
114,369
|
|
|
$
|
95,057
|
|
(In thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
61,073
|
|
|
$
|
31,132
|
|
|
$
|
32,142
|
|
State and local
|
10,560
|
|
|
7,670
|
|
|
6,142
|
|
|||
Foreign
|
466
|
|
|
160
|
|
|
—
|
|
|||
Total current provision
|
72,099
|
|
|
38,962
|
|
|
38,284
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
(2,506
|
)
|
|
466
|
|
|
(4,545
|
)
|
|||
State and local
|
(110
|
)
|
|
596
|
|
|
(948
|
)
|
|||
Foreign
|
18
|
|
|
—
|
|
|
—
|
|
|||
Total deferred provision
|
(2,598
|
)
|
|
1,062
|
|
|
(5,493
|
)
|
|||
Provision for income taxes
|
$
|
69,501
|
|
|
$
|
40,024
|
|
|
$
|
32,791
|
|
(In thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Income tax at federal statutory rate
|
$
|
69,710
|
|
|
$
|
40,029
|
|
|
$
|
33,270
|
|
State income tax, net of federal income tax impact
|
6,480
|
|
|
4,386
|
|
|
3,376
|
|
|||
Foreign tax rate differential
|
(614
|
)
|
|
(82
|
)
|
|
—
|
|
|||
Manufacturing credit pursuant to Jobs Creation Act
|
(5,067
|
)
|
|
(2,336
|
)
|
|
(2,258
|
)
|
|||
Federal tax credits
|
(1,736
|
)
|
|
(919
|
)
|
|
(681
|
)
|
|||
Other
|
728
|
|
|
(1,054
|
)
|
|
(916
|
)
|
|||
Provision for income taxes
|
$
|
69,501
|
|
|
$
|
40,024
|
|
|
$
|
32,791
|
|
(In thousands)
|
2016
|
|
2015
|
|
|
||||
Deferred tax assets:
|
|
|
|
|
|
||||
Goodwill and other intangible assets
|
$
|
10,952
|
|
|
$
|
11,879
|
|
|
|
Stock-based compensation
|
7,550
|
|
|
7,428
|
|
|
|
||
Deferred compensation
|
5,184
|
|
|
5,310
|
|
|
|
||
Warranty
|
11,679
|
|
|
8,809
|
|
|
|
||
Inventory
|
6,572
|
|
|
5,974
|
|
|
|
||
Other
|
5,000
|
|
|
4,922
|
|
|
|
||
Total deferred tax assets
|
46,937
|
|
|
44,322
|
|
|
|
||
Deferred tax liabilities:
|
|
|
|
|
|
||||
Fixed assets
|
(14,948
|
)
|
|
(14,931
|
)
|
|
|
||
Net deferred tax assets
|
$
|
31,989
|
|
|
$
|
29,391
|
|
|
|
(In thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Balance at beginning of period
|
$
|
2,854
|
|
|
$
|
1,526
|
|
|
$
|
1,369
|
|
Changes in tax positions of prior years
|
214
|
|
|
912
|
|
|
84
|
|
|||
Additions based on tax positions related to the current year
|
1,252
|
|
|
866
|
|
|
603
|
|
|||
Payments
|
—
|
|
|
(85
|
)
|
|
—
|
|
|||
Closure of tax years
|
(573
|
)
|
|
(365
|
)
|
|
(530
|
)
|
|||
Balance at end of period
|
$
|
3,747
|
|
|
$
|
2,854
|
|
|
$
|
1,526
|
|
2017
|
$
|
9,388
|
|
|
|
|
2018
|
7,978
|
|
|
|
|
|
2019
|
6,068
|
|
|
|
|
|
2020
|
4,936
|
|
|
|
|
|
2021
|
4,116
|
|
|
|
|
|
Thereafter
|
8,017
|
|
|
|
|
|
Total minimum lease payments
|
$
|
40,503
|
|
|
|
|
(In thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Balance at beginning of period
|
$
|
10,840
|
|
|
$
|
8,129
|
|
|
$
|
7,414
|
|
Acquisitions
|
1,322
|
|
|
4,766
|
|
|
3,370
|
|
|||
Payments
|
(4,944
|
)
|
|
(3,974
|
)
|
|
(3,739
|
)
|
|||
Accretion
(a)
|
1,274
|
|
|
1,196
|
|
|
1,075
|
|
|||
Fair value adjustments
(a)
|
749
|
|
|
723
|
|
|
9
|
|
|||
Balance at end of the period
(b)
|
9,241
|
|
|
10,840
|
|
|
8,129
|
|
|||
Less current portion in accrued expenses and other current liabilities
|
(5,829
|
)
|
|
(3,877
|
)
|
|
(3,622
|
)
|
|||
Total long-term portion in other long-term liabilities
|
$
|
3,412
|
|
|
$
|
6,963
|
|
|
$
|
4,507
|
|
(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, 2016
are
$11.6 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.
|
|
July 2016 - June 2017
|
$ 90 million
|
|
|
|
July 2017 - June 2018
|
$127 million
|
|
|
|
July 2018 - June 2019
|
$172 million
|
|
|
(In thousands, except per share data)
|
Per Share
|
|
Record Date
|
|
Payment Date
|
|
Total Paid
|
||||
First Quarter 2016
|
$
|
0.30
|
|
|
04/01/16
|
|
04/15/16
|
|
$
|
7,344
|
|
Second Quarter 2016
|
0.30
|
|
|
06/06/16
|
|
06/17/16
|
|
7,363
|
|
||
Third Quarter 2016
|
0.30
|
|
|
08/19/16
|
|
09/02/16
|
|
7,371
|
|
||
Fourth Quarter 2016
|
0.50
|
|
|
11/28/16
|
|
12/09/16
|
|
12,359
|
|
||
Total 2016
|
$
|
1.40
|
|
|
|
|
|
|
$
|
34,437
|
|
(In thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Stock options
|
$
|
444
|
|
|
$
|
974
|
|
|
$
|
1,412
|
|
Deferred stock units
|
7,830
|
|
|
7,023
|
|
|
4,343
|
|
|||
Restricted stock
|
1,770
|
|
|
1,031
|
|
|
910
|
|
|||
Stock awards
|
5,376
|
|
|
5,015
|
|
|
4,152
|
|
|||
Stock-based compensation expense
|
$
|
15,420
|
|
|
$
|
14,043
|
|
|
$
|
10,817
|
|
|
Number of Option Shares
|
Weighted Average
Exercise Price
|
|||
Outstanding at December 31, 2013
|
723,661
|
|
$
|
15.46
|
|
Exercised
|
(258,530
|
)
|
$
|
12.89
|
|
Forfeited
|
(11,800
|
)
|
$
|
16.93
|
|
Reduction for special cash dividend
|
—
|
|
$
|
(2.00
|
)
|
Outstanding at December 31, 2014
|
453,331
|
|
$
|
16.89
|
|
Exercised
|
(214,601
|
)
|
$
|
14.48
|
|
Forfeited
|
(26,700
|
)
|
$
|
14.30
|
|
Reduction for special cash dividend
|
—
|
|
$
|
(2.00
|
)
|
Outstanding at December 31, 2015
|
212,030
|
|
$
|
15.38
|
|
Exercised
|
(183,600
|
)
|
$
|
15.10
|
|
Forfeited
|
(1,550
|
)
|
$
|
17.17
|
|
Outstanding at December 31, 2016
(a)
|
26,880
|
|
$
|
17.17
|
|
Exercisable at December 31, 2016
(a)
|
26,880
|
|
$
|
17.17
|
|
(a)
|
The aggregate intrinsic value for option shares outstanding and option shares exercisable is
$2.4 million
. The weighted average remaining term for option shares outstanding and option shares exercisable is
0.9 years
.
|
(In thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Intrinsic value of stock options exercised
|
$
|
13,204
|
|
|
$
|
9,424
|
|
|
$
|
7,860
|
|
Cash receipts from stock options exercised
|
$
|
2,772
|
|
|
$
|
3,280
|
|
|
$
|
3,333
|
|
Income tax benefits from stock option exercises
|
$
|
4,435
|
|
|
$
|
2,885
|
|
|
$
|
3,660
|
|
Grant date fair value of stock options vested
|
$
|
506
|
|
|
$
|
1,055
|
|
|
$
|
1,561
|
|
|
Number of Shares
|
Weighted Average Price
|
|||
Outstanding at December 31, 2013
|
692,961
|
|
$
|
30.26
|
|
Issued
|
56,212
|
|
$
|
46.08
|
|
Granted
|
187,490
|
|
$
|
46.94
|
|
Dividend equivalents
|
27,532
|
|
$
|
50.45
|
|
Forfeited
|
(38,855
|
)
|
$
|
29.83
|
|
Exercised
|
(187,052
|
)
|
$
|
29.90
|
|
Outstanding at December 31, 2014
|
738,288
|
|
$
|
36.96
|
|
Issued
|
54,982
|
|
$
|
47.51
|
|
Granted
|
90,184
|
|
$
|
60.22
|
|
Dividend equivalents
|
20,922
|
|
$
|
59.94
|
|
Forfeited
|
(23,604
|
)
|
$
|
44.78
|
|
Exercised
|
(353,259
|
)
|
$
|
32.62
|
|
Outstanding at December 31, 2015
|
527,513
|
|
$
|
44.94
|
|
Issued
|
10,742
|
|
$
|
72.01
|
|
Granted
|
173,097
|
|
$
|
54.67
|
|
Dividend equivalents
|
9,075
|
|
$
|
87.01
|
|
Forfeited
|
(10,893
|
)
|
$
|
48.98
|
|
Exercised
|
(203,087
|
)
|
$
|
43.55
|
|
Outstanding at December 31, 2016
|
506,447
|
|
$
|
50.00
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
Granted
|
17,439
|
|
|
20,558
|
|
|
19,439
|
|
|||
Weighted average stock price
|
$
|
74.55
|
|
|
$
|
59.60
|
|
|
$
|
46.82
|
|
Fair value of stock granted
|
$
|
1,300
|
|
|
$
|
1,220
|
|
|
$
|
910
|
|
|
Number of Shares
|
Stock Price
|
|||
Outstanding at December 31, 2013
|
193,602
|
|
$
|
30.84
|
|
Granted
|
103,500
|
|
$
|
51.20
|
|
Dividend equivalents
|
7,675
|
|
$
|
50.45
|
|
Exercised
|
(31,959
|
)
|
$
|
26.88
|
|
Outstanding at December 31, 2014
|
272,818
|
|
$
|
39.03
|
|
Granted
|
96,010
|
|
$
|
60.29
|
|
Dividend equivalents
|
8,992
|
|
$
|
59.94
|
|
Forfeited
|
(16,534
|
)
|
$
|
60.29
|
|
Exercised
|
(98,830
|
)
|
$
|
29.70
|
|
Outstanding at December 31, 2015
|
262,456
|
|
$
|
49.36
|
|
Granted
|
86,918
|
|
$
|
54.47
|
|
Dividend equivalents
|
3,811
|
|
$
|
88.04
|
|
Forfeited
|
(10,832
|
)
|
$
|
53.95
|
|
Exercised
|
(109,731
|
)
|
$
|
39.94
|
|
Outstanding at December 31, 2016
|
232,622
|
|
$
|
55.60
|
|
(In thousands)
|
2016
|
|
2015
|
|
2014
|
|||
Weighted average shares outstanding for basic earnings per share
|
24,631
|
|
|
24,295
|
|
|
23,911
|
|
Common stock equivalents pertaining to stock-based awards
|
302
|
|
|
355
|
|
|
423
|
|
Weighted average shares outstanding for diluted earnings per share
|
24,933
|
|
|
24,650
|
|
|
24,334
|
|
|
2016
|
|
2015
|
||||||||||||||||||||||
(In thousands)
|
Total
|
Level 1
|
Level 2
|
Level 3
|
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Unrealized gain on derivative
instruments
|
$
|
2,296
|
|
$
|
—
|
|
$
|
2,296
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Contingent consideration
|
$
|
9,241
|
|
$
|
—
|
|
$
|
—
|
|
$
|
9,241
|
|
|
$
|
10,836
|
|
$
|
—
|
|
$
|
—
|
|
$
|
10,836
|
|
|
2016
|
|
2015
|
|
2014
|
||||||||||||||||||
(In thousands)
|
Carrying
Value |
|
Non-Recurring
Losses |
|
Carrying
Value |
|
Non-Recurring
Losses |
|
Carrying
Value |
|
Non-Recurring
Losses |
||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Vacant owned facilities
|
$
|
2,496
|
|
|
$
|
—
|
|
|
$
|
2,537
|
|
|
$
|
—
|
|
|
$
|
3,863
|
|
|
$
|
—
|
|
Net assets of acquired businesses
|
44,250
|
|
|
—
|
|
|
28,727
|
|
|
—
|
|
|
66,169
|
|
|
—
|
|
||||||
Total assets
|
$
|
46,746
|
|
|
$
|
—
|
|
|
$
|
31,264
|
|
|
$
|
—
|
|
|
$
|
70,032
|
|
|
$
|
—
|
|
|
Segments
|
Corporate
|
|
||||||||||||
(In thousands)
|
OEM
|
Aftermarket
|
Total
|
and Other
|
Total
|
||||||||||
2016
|
|
|
|
|
|
||||||||||
Net sales to external customers
(a)
|
$
|
1,548,091
|
|
$
|
130,807
|
|
$
|
1,678,898
|
|
$
|
—
|
|
$
|
1,678,898
|
|
Operating profit
(b)
|
180,850
|
|
20,000
|
|
200,850
|
|
—
|
|
200,850
|
|
|||||
Total assets
(c)
|
569,385
|
|
65,211
|
|
634,596
|
|
152,308
|
|
786,904
|
|
|||||
Expenditures for long - lived assets
(d)
|
80,588
|
|
6,014
|
|
86,602
|
|
—
|
|
86,602
|
|
|||||
Depreciation and amortization
|
$
|
42,593
|
|
$
|
3,298
|
|
$
|
45,891
|
|
$
|
276
|
|
$
|
46,167
|
|
|
|
|
|
|
|
||||||||||
2015
|
|
|
|
|
|
||||||||||
Net sales to external customers
(a)
|
$
|
1,300,060
|
|
$
|
103,006
|
|
$
|
1,403,066
|
|
$
|
—
|
|
$
|
1,403,066
|
|
Operating profit (loss)
(b)
|
105,224
|
|
14,746
|
|
119,970
|
|
(3,716
|
)
|
116,254
|
|
|||||
Total assets
(c)
|
500,734
|
|
56,683
|
|
557,417
|
|
65,439
|
|
622,856
|
|
|||||
Expenditures for long - lived assets
(d)
|
65,492
|
|
2,095
|
|
67,587
|
|
—
|
|
67,587
|
|
|||||
Depreciation and amortization
|
$
|
38,583
|
|
$
|
2,898
|
|
$
|
41,481
|
|
$
|
143
|
|
$
|
41,624
|
|
|
|
|
|
|
|
||||||||||
2014
|
|
|
|
|
|
||||||||||
Net sales to external customers
(a)
|
$
|
1,127,026
|
|
$
|
63,756
|
|
$
|
1,190,782
|
|
$
|
—
|
|
$
|
1,190,782
|
|
Operating profit (loss)
(b)
|
88,744
|
|
8,697
|
|
97,441
|
|
(1,954
|
)
|
95,487
|
|
|||||
Total assets
(c)
|
441,127
|
|
54,489
|
|
495,616
|
|
48,225
|
|
543,841
|
|
|||||
Expenditures for long - lived assets
(d)
|
119,715
|
|
27,655
|
|
147,370
|
|
—
|
|
147,370
|
|
|||||
Depreciation and amortization
|
$
|
30,954
|
|
$
|
1,554
|
|
$
|
32,508
|
|
$
|
88
|
|
$
|
32,596
|
|
(a)
|
Thor Industries, Inc. (“Thor”), a customer of both segments, accounted for
37 percent
,
28 percent
and
33 percent
of the Company’s consolidated net sales for the years ended
December 31, 2016
,
2015
and
2014
, respectively. Berkshire Hathaway Inc. (through its subsidiaries Forest River, Inc. and Clayton Homes, Inc.), a customer of both segments, accounted for
26 percent
,
26 percent
and
28 percent
of the Company’s consolidated net sales for the years ended
December 31, 2016
,
2015
and
2014
, respectively. Jayco, Inc., a customer of both segments, accounted for
10 percent
of the Company’s consolidated net sales for the year ended December 31, 2015, this customer was subsequently acquired by Thor and is included in the Thor’s 2016 percentage above. No other customer accounted for more than
10 percent
of consolidated net sales in the years ended
December 31, 2016
,
2015
and
2014
. International sales, primarily in Europe and Australia, and export sales represented approximately
2 percent
,
1 percent
and
1 percent
of consolidated net sales in
2016
,
2015
and
2014
, respectively.
|
(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
$42.0 million
,
$38.6 million
and
$105.0 million
of long-lived assets, as part of the acquisitions of businesses in the years ended
December 31, 2016
,
2015
and
2014
, respectively.
|
(In thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
OEM Segment:
|
|
|
|
|
|
||||||
Chassis, chassis parts and slide-out mechanisms
|
$
|
743,160
|
|
|
$
|
664,542
|
|
|
$
|
593,756
|
|
Windows and doors
|
335,717
|
|
|
301,171
|
|
|
258,915
|
|
|||
Furniture and mattresses
|
245,596
|
|
|
161,840
|
|
|
132,356
|
|
|||
Axles and suspension solutions
|
115,538
|
|
|
108,464
|
|
|
88,909
|
|
|||
Other
|
108,080
|
|
|
64,043
|
|
|
53,090
|
|
|||
Total OEM Segment net sales
|
1,548,091
|
|
|
1,300,060
|
|
|
1,127,026
|
|
|||
Total Aftermarket Segment net sales
|
130,807
|
|
|
103,006
|
|
|
63,756
|
|
|||
Total net sales
|
$
|
1,678,898
|
|
|
$
|
1,403,066
|
|
|
$
|
1,190,782
|
|
(In thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Net sales:
|
|
|
|
|
|
||||||
OEM Segment:
|
|
|
|
|
|
||||||
RV OEMs:
|
|
|
|
|
|
||||||
Travel trailers and fifth-wheels
|
$
|
1,099,882
|
|
|
$
|
938,787
|
|
|
$
|
841,497
|
|
Motorhomes
|
116,191
|
|
|
86,513
|
|
|
70,332
|
|
|||
Adjacent industries OEMs
|
332,018
|
|
|
274,760
|
|
|
215,197
|
|
|||
Total OEM Segment net sales
|
1,548,091
|
|
|
1,300,060
|
|
|
1,127,026
|
|
|||
Aftermarket Segment:
|
|
|
|
|
|
||||||
Total Aftermarket Segment net sales
|
130,807
|
|
|
103,006
|
|
|
63,756
|
|
|||
Total net sales
|
$
|
1,678,898
|
|
|
$
|
1,403,066
|
|
|
$
|
1,190,782
|
|
(In thousands, except per share amounts)
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
|
Year
|
||||||||||
Year ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
|
$
|
422,798
|
|
|
$
|
440,831
|
|
|
$
|
412,370
|
|
|
$
|
402,899
|
|
|
$
|
1,678,898
|
|
Gross profit
|
|
$
|
108,441
|
|
|
$
|
116,904
|
|
|
$
|
105,550
|
|
|
$
|
98,008
|
|
|
$
|
428,903
|
|
Income before income taxes
|
|
$
|
55,252
|
|
|
$
|
58,975
|
|
|
$
|
44,742
|
|
|
$
|
40,203
|
|
|
$
|
199,172
|
|
Net income
|
|
$
|
35,959
|
|
|
$
|
37,569
|
|
|
$
|
29,844
|
|
|
$
|
26,299
|
|
|
$
|
129,671
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income per common share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
1.46
|
|
|
$
|
1.52
|
|
|
$
|
1.21
|
|
|
$
|
1.06
|
|
|
$
|
5.26
|
|
Diluted
|
|
$
|
1.45
|
|
|
$
|
1.51
|
|
|
$
|
1.19
|
|
|
$
|
1.05
|
|
|
$
|
5.20
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Stock market price:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
High
|
|
$
|
64.46
|
|
|
$
|
85.09
|
|
|
$
|
102.46
|
|
|
$
|
112.95
|
|
|
$
|
112.95
|
|
Low
|
|
$
|
52.85
|
|
|
$
|
60.75
|
|
|
$
|
84.61
|
|
|
$
|
84.20
|
|
|
$
|
52.85
|
|
Close (at end of quarter)
|
|
$
|
64.46
|
|
|
$
|
84.84
|
|
|
$
|
98.02
|
|
|
$
|
107.75
|
|
|
$
|
107.75
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
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
|
|
|
|
/s/ Jason D. Lippert
|
/s/ Brian M. Hall
|
Chief Executive Officer
|
Chief Financial Officer
|
|
|
Exhibit
Number
|
Description
|
3.1*
|
LCI Industries Restated Certificate of Incorporation, as amended effective December 30, 2016.
|
3.2
|
Amended and Restated By-laws of LCI Industries (incorporated by reference to Exhibit 3.2 included in the Registrant’s Form 8-K filed on December 19, 2016).
|
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 (incorporated by reference to Exhibit 10.231 included in the Registrant's Form 10-K for the year ended December 31, 2015).
|
10.259†
|
LCI Industries 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).
|
10.268†
|
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).
|
10.273†
|
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).
|
10.278†
|
Change in Control Agreement between Registrant and Robert A. Kuhns, dated April 4, 2013, as amended May 20, 2013 (incorporated by reference to Exhibit 10.278 included in the Registrant’s Form 10-K for the year ended December 31, 2013).
|
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).
|
10.294†
|
Form of Executive Employment Agreement (incorporated by reference to Exhibit 10.1 included in the Registrant's Form 8-K filed March 4, 2015).
|
10.296†
|
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).
|
10.299
|
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).
|
10.303
|
Third Amended and Restated Credit Agreement dated as of April 27, 2016 among Drew Industries Incorporated, Lippert Components, Inc., Lippert Components Canada, Inc., JPMorgan Chase Bank, N.A., individually and as Administrative Agent, Wells Fargo Bank N.A., individually and as Documentation Agent, Bank of America, N.A., and 1st Source Bank (together with JPMorgan Chase Bank, N.A., Wells Fargo Bank, N.A. and Bank of America, N.A., the “Lenders”) (incorporated by reference to Exhibit 10.1 included in the Registrant's Form 8-K filed May 3, 2016).
|
10.304
|
Form of Revolving Credit Note dated as of April 27, 2016 by Lippert Components, Inc., and Lippert Components Canada, Inc., payable to the order of the Lenders pursuant to that certain Third Amended and Restated Credit Agreement (incorporated by reference to 10.2 included in the Registrant's Form 8-K filed May 3, 2016).
|
10.305
|
Fourth Amended and Restated Pledge and Security Agreement dated as of April 27, 2016, made by Drew Industries Incorporated, Lippert Components, Inc. and certain subsidiaries thereof, in favor of JPMorgan Chase Bank, N.A. as Collateral Agent (incorporated by reference to Exhibit 10.3 included in the Registrant's Form 8-K filed May 3, 2016).
|
10.306
|
Fourth Amended and Restated Company Guarantee Agreement dated as of April 27, 2016, made by Drew Industries Incorporated, with and in favor of JPMorgan Chase Bank, N.A. as Administrative Agent (incorporated by reference to Exhibit 10.4 included in the Registrant's Form 8-K filed May 3, 2016).
|
10.307
|
Fourth Amended and Restated Subsidiary Guarantee Agreement dated as of April 27, 2016, made by certain subsidiaries 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 10.5 included in the Registrant's Form 8-K filed May 3, 2016).
|
10.308
|
Fourth Amended and Restated Subordination Agreement dated as of April 27, 2016, made by Drew Industries Incorporated and certain subsidiaries of Drew Industries Incorporated, 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 May 3, 2016).
|
10.309
|
Fourth Amended and Restated Note Purchase and Private Shelf Agreement dated as of April 27, 2016, by and among PGIM, Inc. and Affiliates, and Lippert Components, Inc., guaranteed by Drew Industries Incorporated (incorporated by reference to Exhibit 10.7 included in the Registrant's Form 8-K filed May 3, 2016).
|
10.310
|
Form of Shelf Note of Lippert Components, Inc. pursuant to the Fourth Amended and Restated Note Purchase and Private Shelf Agreement (incorporated by reference to Exhibit 10.8 included in the Registrant's Form 8-K filed May 3, 2016).
|
10.311
|
Second Amended and Restated Parent Guarantee Agreement dated as of April 27, 2016, made by Drew Industries Incorporated in favor of PGIM, Inc. and the Noteholders thereto from time to time (incorporated by reference to Exhibit 10.9 included in the Registrant's Form 8-K filed May 3, 2016).
|
10.312
|
Second Amended and Restated Subsidiary Guarantee Agreement dated as of April 27, 2016, made by certain subsidiaries (other than Lippert Components, Inc.) of Drew Industries Incorporated, in favor of PGIM, 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 May 3, 2016).
|
10.313
|
Second Amended and Restated Pledge and Security Agreement dated as of April 27, 2016, 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 Collateral Agent for the benefit of the Noteholders (incorporated by reference to Exhibit 10.11 included in the Registrant's Form 8-K filed May 3, 2016).
|
10.314
|
Second Amended and Restated Subordination Agreement dated as of April 27, 2016, made by Lippert Components, Inc., Drew Industries Incorporated and certain subsidiaries of Drew Industries Incorporated, with and in favor of PGIM, Inc. and the Noteholders thereto from time to time (incorporated by reference to Exhibit 10.12 included in the Registrant's Form 8-K filed May 3, 2016).
|
10.315
|
Second Amended and Restated Collateral Agency Agreement dated as of April 27, 2016, by and among Lippert Components, Inc. and PGIM, Inc. and the Noteholders thereto from time to time, and JPMorgan Chase Bank, N.A. as collateral agent for the Noteholders (incorporated by reference to Exhibit 10.13 included in the Registrant's Form 8-K filed May 3, 2016).
|
10.316
|
Third Amended and Restated Intercreditor Agreement dated as of April 27, 2016 by and among PGIM, Inc. and Affiliates, JPMorgan Chase Bank, N.A. (as Administrative Agent, as Credit Agreement Collateral Agent and Notes Collateral Agent) (incorporated by reference to Exhibit 10.14 included in the Registrant's Form 8-K filed May 3, 2016).
|
10.317†
|
Description of the transition, separation and severance compensation arrangement between Registrant and David M. Smith (incorporated by reference to Item 5.02 included in the Registrant's Form 8-K filed September 26, 2016).
|
10.318†*
|
Grantor Trust Agreement, effective January 15, 2017, between Registrant and Wells Fargo Bank, National Association.
|
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.
|
Date:
|
February 28, 2017
|
LCI INDUSTRIES
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Jason D. Lippert
|
|
|
|
|
Jason D. Lippert
|
|
|
|
|
Chief Executive Officer
|
|
Date
|
Signature
|
Title
|
|
|
|
February 28, 2017
|
By:
/s/ Jason D. Lippert
(Jason D. Lippert)
|
Chief Executive Officer and Director (principal executive officer)
|
|
|
|
February 28, 2017
|
By:
/s/ Brian M. Hall
(Brian M. Hall)
|
Chief Financial Officer
(principal financial and accounting officer)
|
|
|
|
February 28, 2017
|
By:
/s/ James F. Gero
(James F. Gero)
|
Chairman of the Board of Directors
|
|
|
|
February 28, 2017
|
By:
/s/ Leigh J. Abrams
(Leigh J. Abrams)
|
Director
|
|
|
|
February 28, 2017
|
By:
/s/
Frank J. Crespo
(Frank J. Crespo)
|
Director
|
|
|
|
February 28, 2017
|
By:
/s/ Brendan J. Deely
(Brendan J. Deely)
|
Director
|
|
|
|
February 28, 2017
|
By:
/s/ Tracy D. Graham
(Tracy D. Graham)
|
Director
|
|
|
|
February 28, 2017
|
By:
/s/ Frederick B. Hegi, Jr.
(Frederick B. Hegi, Jr.)
|
Director
|
|
|
|
February 28, 2017
|
By:
/s/ John B. Lowe, Jr.
(John B. Lowe, Jr.)
|
Director
|
|
|
|
February 28, 2017
|
By:
/s/ Kieran M. O’Sullivan
(Kieran M. O’Sullivan) |
Director
|
|
|
|
February 28, 2017
|
By:
/s/ David A. Reed
(David A. Reed)
|
Director
|
|
|
DREW INDUSTRIES INCORPORATED
|
||
|
|
|
|
|
|
|
By:
|
/s/ Robert A. Kuhns
|
|
|
|
|
Name: Robert A. Kuhns
|
|
|
|
|
Title: Vice President - Chief Legal Officer and Secretary
|
|
|
DREW INDUSTRIES INCORPORATED
|
||
|
|
|
|
|
|
|
By:
|
/s/ Robert A. Kuhns
|
|
|
|
|
Name: Robert A. Kuhns
|
|
|
|
|
Title: Vice President
|
(a)
|
WHEREAS
, the Company has adopted the nonqualified deferred compensation Plans and Agreements (the “Arrangements”) listed in Attachment A to this Trust Agreement;
|
(b)
|
WHEREAS
, the Company has incurred or expects to incur liability under the terms of such Arrangements with respect to the individuals participating in such Arrangements (the “Participants and Beneficiaries”);
|
(c)
|
WHEREAS
, the Company hereby establishes a Trust (the “Trust”) and shall contribute to the Trust assets that shall be held therein, subject to the claims of the Company’s creditors in the event of the Company’s Insolvency, as herein defined, until paid to Participants and their Beneficiaries in such manner and at such times as specified in the Arrangements and in this Trust Agreement;
|
(d)
|
WHEREAS
, it is the intention of the parties that this Trust shall constitute an unfunded arrangement and shall not affect the status of the Arrangements as an unfunded plan maintained for the purpose of providing deferred compensation for a select group of management or highly compensated employees for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”); and
|
(e)
|
WHEREAS
, it is the intention of the Company to make contributions to the Trust to provide itself with a source of funds (the “Fund”) to assist it in satisfying its liabilities under the Arrangements.
|
(a)
|
The Trust is intended to be a Grantor Trust, of which the Company is the Grantor, within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended (the “Code”), and shall be construed accordingly.
|
(b)
|
The Company shall be considered a Grantor for the purposes of the Trust.
|
(c)
|
Subject to Section 1(h), the Trust hereby established is irrevocable.
|
(d)
|
The Company hereby deposits with the Trustee in the Trust one-thousand dollars and zero cents ($1,000.00) (“Initial Contribution”) which shall become the principal of the Trust to be held, administered and disposed of by the Trustee as provided in this Trust Agreement.
|
(e)
|
The principal of the Trust and any earnings thereon shall be held separate and apart from other funds of the Company and shall be used exclusively for the uses and purposes of Participants and general creditors as herein set forth. Participants and their Beneficiaries shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Arrangements and this Trust Agreement shall be unsecured contractual rights of Participants and their Beneficiaries against the Company. Any assets held by the Trust will be subject to the claims of the general creditors of the Company under federal and state law in the event the Company is Insolvent, as defined in Section 3(a) herein.
|
(f)
|
The Company, in its sole discretion, may at any time, or from time to time, make additional deposits of cash or other property acceptable to the Trustee in the Trust to augment the principal to be held, administered and disposed of by the Trustee as provided in this Trust Agreement. Prior to a Change in Control, neither the Trustee nor any Participant or Beneficiary shall have any right to compel additional deposits.
|
(g)
|
In addition to the Initial Contribution, the Company shall make such other contributions as shall from time to time be authorized by due corporate action. Any such contributions made by the Company may be in cash, by letter of credit or, prior to the date as of which a Change in Control occurs, in such property (including, without limitation, securities issued by the Company) as the Company may determine. The Company shall keep accurate books and records with respect to the interest of each Participant in any Arrangement and shall provide copies of such books and records to the Trustee at any time as the Trustee shall request. Upon a Potential Change in Control, as defined herein, the Company shall, as soon as possible, but in no event longer than thirty (30) days following the occurrence of a Potential Change in Control, make a contribution to the Trust in an amount that is sufficient (taking into account the Trust assets, if any, resulting from prior contributions) to fund the Trust in an amount equal to no less than 100% but no more than 120% of the Required Funding plus an amount equal to the Expense Reserve. The Required Funding shall be equal to the amount necessary to pay each Participant or Beneficiary the benefits to which Participants or their Beneficiaries would be entitled pursuant to the terms of the Arrangements as of the date of the Potential Change in Control or Change in Control as of which the Required Funding is being calculated. The Expense Reserve shall be equal to the lesser of: 1) the estimated trustee and recordkeeper expenses and fees for one year or 2) seventy-five thousand dollars ($75,000). Annually, the Company shall recalculate the Required Funding and Expense Reserve as of December 31 of the preceding year and, if the assets of the trust are less than the sum of the Required Funding and Expense Reserve, the Company shall
|
(h)
|
In the event a Change in Control, as defined herein, does not occur within two years of a Potential Change in Control, the Company shall have the right to recover any amounts contributed to and remaining on hand in the Trust pursuant to a payment made upon the occurrence of a Potential Change in Control in accordance with Section 1(g).
|
(i)
|
Upon a Change in Control, the Company shall, as soon as possible, but in no event longer than thirty (30) days following the occurrence of a Change in Control, make an irrevocable contribution to the Trust in an amount that is sufficient (taking into account the Trust assets, if any, resulting from prior contributions) to fund the Trust in an amount equal to no less than 100% but no more than 120% of the Required Funding as of the date on which the Change in Control occurred. The Company shall also fund an Expense Reserve for the Trustee, which shall be equal to the lesser of: 1) the estimated trustee and record-keeper expenses and fees for one year or 2) seventy-five thousand dollars ($75,000). Annually, the Company shall recalculate the Required Funding and Expense Reserve as of December 31 of the preceding year and, if the assets of the trust are less than the sum of the Required Funding and Expense Reserve, the Company shall make a contribution to the Trust in an amount equal to no less than 100% but no more than 120% of the Required Funding plus an amount equal to the Expense Reserve.
|
Section 2.
|
Payments to Participants and Their Beneficiaries
|
(a)
|
Prior to a Change in Control, distributions from the Trust shall be made by the Trustee to Participants and Beneficiaries at the direction of the Company. Prior to a Change in Control, the entitlement of a Participant or his or her Beneficiaries to benefits under the Arrangements shall be determined by the Company under the Arrangements, and any claim for such benefits shall be considered and reviewed under the procedures set out in the Arrangements.
|
(b)
|
The Company may make payment of benefits directly to Participants or their Beneficiaries as they become due under the terms of the Arrangements. The Company shall notify the Trustee of its decision to make payment of benefits directly prior to the time amounts are payable to Participants or their Beneficiaries. Before a Potential Change in Control or Change in Control, the Company may direct the Trustee in writing to reimburse the Company from the Trust assets for amounts paid directly to the Participants or their Beneficiaries by the Company. The Trustee shall reimburse the Company for such payments promptly after receipt by the Trustee of satisfactory evidence that the Company has made the direct payments. No such reimbursement shall be allowed upon or during a Potential Change in Control or after Change in Control that would result in Trust assets equaling less than 100% of the Required Funding and Expense Reserve.
|
(c)
|
The Company shall deliver to the Trustee a schedule of benefits, to include state and federal tax withholding guidelines, due under the Arrangements on an annual basis. Immediately after a Potential
|
(d)
|
The Trustee agrees that it will not itself institute any action at law or at equity, whether in the nature of an accounting, interpleading action, request for a declaratory judgment or otherwise, requesting a court or administrative or quasi-judicial body to make the determination required to be made by the Trustee under this Section 2 in the place and stead of the Trustee. The Trustee may (and, if necessary or appropriate, shall) institute an action to collect a contribution due the Trust following a Change in Control or in the event that the Trust should ever experience a short-fall in the amount of assets necessary to make payments pursuant to the terms of the Arrangements.
|
Section 3.
|
Trustee Responsibility Regarding Payments
|
(a)
|
The Trustee shall cease payment of benefits to Participants and their Beneficiaries if the Company is Insolvent. The Company shall be considered "Insolvent" for purposes of this Trust Agreement if (i) the Company is unable to pay its debts as they become due, or (ii) the Company is subject to a pending proceeding as a debtor under the United States Bankruptcy Code.
|
(b)
|
At all times during the continuance of this Trust, the principal and income of the Trust shall be subject to claims of general creditors of the Company under federal and state law as set forth below.
|
(c)
|
Provided that there are sufficient assets, if the Trustee discontinues the payment of benefits from the Trust pursuant to Section 3(b) hereof and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to Participants or their Beneficiaries under the terms of the Arrangements for the period of such discontinuance, less the aggregate amount of any payments made to Participants or their Beneficiaries by the Company in lieu of the payments provided for hereunder during any such period of discontinuance.
|
Section 4.
|
Payments When a Short-Fall of the Trust Assets Occurs
|
(a)
|
If there are not sufficient assets for the payment of current and expected future benefits pursuant to Section 2 or Section 3(c) hereof and the Company does not otherwise make such payments within a reasonable time after demand from the Trustee, the Trustee shall allocate the Trust assets among the Participants or their Beneficiaries in the following order of priority:
|
(1)
|
vested Participants (regardless of whether they are actively employed) and their Beneficiaries; and
|
(2)
|
non-vested Participants (regardless of whether they are actively employed) and their Beneficiaries
|
(b)
|
Within each category, assets shall be allocated pro-rata with respect to the total present value of benefits expected for each Participant or Beneficiary within the category, and payments to each Participant or Beneficiary shall be made to the extent of the assets allocated to each Participant or Beneficiary.
|
(c)
|
Upon receipt of a contribution from the Company necessary to make up for a short-fall in the payments due, the Trustee shall resume payments to all the Participants and Beneficiaries under the Arrangements. Following a Change in Control, the Trustee shall have the right and duty to compel a contribution to the Trust from the Company to make-up for any short-fall.
|
(a)
|
Except as provided in Section 1(h), Section 2(b), Section 3, Section 5(b), and Section 8(a) hereof, the Company shall have no right or power to direct the Trustee to return to the Company or to divert
|
(b)
|
In the event that the Company, prior to a Change in Control, or the Trustee in its sole and absolute discretion, after a Change in Control, determines that the Trust assets exceed one-hundred twenty percent (120%) of the Required Funding plus an amount equal to two times the Expense Reserve, the Trustee, at the written direction of the Company shall distribute to the Company such excess portion of Trust assets.
|
(a)
|
Prior to a Change in Control, the Company shall have the right, subject to this Section, to direct the Trustee with respect to investments.
|
a.
|
Notwithstanding anything in this Trust Agreement to the contrary, the Trustee shall be indemnified and saved harmless by the Company from and against any and all personal liability to which the Trustee may be subjected by carrying out any directions of an investment manager or investment committee issued pursuant hereto or for failure to act in the absence of directions of the investment manager or investment committee including all expenses reasonably incurred in its defense in the event the Company fails to provide such defense; provided, however, the Trustee shall not be so indemnified if it participates knowingly in, or knowingly undertakes to conceal, an act or omission of an investment manager or investment committee, having actual knowledge that such act or omission is a breach of a fiduciary duty; provided further, however, that the Trustee shall not be deemed to have knowingly participated in or knowingly undertaken to conceal an act or omission of an investment manager or investment committee with knowledge that such act or omission was a breach of fiduciary duty by merely complying with directions of an investment manager or investment committee or for failure to act in the absence of directions of an investment manager or investment committee. The Trustee may rely upon any order, certificate, notice, direction or other documentary confirmation purporting to have been issued by the investment manager or investment committee which the Trustee believes to be genuine and to have been issued by the investment manager or investment committee. The Trustee shall not be charged with knowledge of the termination of the appointment of any investment manager or investment committee until it receives written notice thereof from the Company.
|
b.
|
The Company, prior to a Change in Control, may direct the Trustee to invest in securities (including stock and the rights to acquire stock) or obligations issued by the Company.
|
c.
|
All rights associated with respect to any investment held by the Trust, including but not limited to, exercising or voting of proxies, in person or by general or limited proxy, shall be in accordance with and as directed in writing by the Company or its authorized representative.
|
(b)
|
Subsequent to a Change in Control, the Trustee shall have the power in investing and reinvesting the Fund in its sole discretion:
|
(c)
|
Following a Change in Control, the Trustee shall have the sole and absolute discretion in the management of the Trust assets and shall have all the powers set forth under Section 6(b). In investing the Trust assets, the Trustee shall consider:
|
(2)
|
the need for matching of the Trust assets with the liabilities of the Arrangements; and
|
(3)
|
the duty of the Trustee to act solely in the best interests of the Participants and their Beneficiaries.
|
(d)
|
The Trustee shall have the right, in its sole discretion, to delegate its investment responsibility to an investment manager who may be an affiliate of the Trustee. In the event the Trustee shall exercise this right, the Trustee shall remain, at all times responsible for the acts of an investment manager. The Trustee shall have the right to purchase an insurance policy or an annuity to fund the benefits of the Arrangements.
|
(e)
|
The Company shall have the right at any time, and from time to time in its sole discretion, to substitute assets (other than securities issued by the Trustee or the Company) of equal fair
|
(a)
|
To the extent that the Trustee is directed by the Company prior to a Change in Control to invest part or all of the Fund in insurance contracts, the type and amount thereof shall be specified by the Company. The Trustee shall be under no duty to make inquiry as to the propriety of the type or amount so specified.
|
(b)
|
Each insurance contract issued shall provide that the Trustee shall be the owner thereof with the power to exercise all rights, privileges, options and elections granted by or permitted under such contract or under the rules of the insurer. The exercise by the Trustee of any incidents of ownership under any contract shall, prior to a Change in Control, be subject to the direction of the Company. After a Change in Control, the Trustee shall have all such rights.
|
(c)
|
The Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor Trustee (or to one or more Participants or Beneficiaries in satisfaction of any obligation to those Participants or Beneficiaries under any Arrangement), or to loan to any person the proceeds of any borrowing against an insurance policy held in the Fund.
|
(d)
|
No insurer shall be deemed to be a party to the Trust and an insurer’s obligations shall be measured and determined solely by the terms of contracts and other agreements executed by the insurer.
|
(a)
|
Prior to and following a Change in Control, all income received by the Trust, net of expenses and taxes payable by the Trust, shall be accumulated and reinvested within the Trust.
|
(a)
|
The Trustee shall keep accurate records and accounts of all investments, receipts, and disbursements, and other transactions hereunder. As soon as reasonably practicable following the close of each annual accounting period of the Trust, and as soon as reasonably practicable after the resignation or removal of a Trustee has become effective, the Trustee shall file with the Company a written or electronic account setting forth all investments, receipts, disbursements, and other transactions effected by it during such year, or during the part of the year to the date the resignation or removal is effective, as the case may be, and containing a description of all securities purchased and sold, the cost or net proceeds of sale, the securities and investments held at the end of such period, and the cost of each item thereof as carried on the books of the Trustee. If the fair market value of an asset in the Fund is not available when necessary for accounting or reporting purposes, the fair value of the asset shall be determined in good faith by the Company, assuming an orderly liquidation at the
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(b)
|
Upon the expiration of ninety (90) days from the date of filing such annual or other account, the Trustee shall be forever released and discharged from any liability or accountability to anyone with respect to the propriety of its acts or transactions shown in such account except with respect to any acts or transactions as to which the Company shall within such ninety‑day period file with the Trustee a written statement claiming negligence, willful misconduct or lack of good faith on the part of the Trustee.
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(c)
|
The Trustee shall retain its records relating to the Trust as long as necessary for the proper administration thereof and at least for any period required by applicable law.
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(a)
|
The Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, provided, however, that the Trustee shall incur no liability to any person for any action taken pursuant to a direction, request or approval given by the Company which is contemplated by, and in conformity with, the terms of the Arrangements and this Trust and is given in writing by the Company. In the event of a dispute between the Company and a party, the Trustee may apply to a court of competent jurisdiction to resolve the dispute, subject, however to Section 2(d) hereof.
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(b)
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The Company hereby indemnifies the Trustee against losses, liabilities, claims, costs and expenses in connection with the administration of the Trust, unless resulting from the negligence or willful misconduct of Trustee. To the extent the Company fails to make any payment on account of an indemnity provided in this paragraph 10(b), in a reasonably timely manner, the Trustee may obtain payment from the Trust. If the Trustee undertakes or defends any litigation arising in connection with this Trust or to protect a Participant’s or Beneficiary’s rights under the Arrangements, the Company agrees to indemnify the Trustee against the Trustee's costs, reasonable expenses and liabilities (including, without limitation, attorneys' fees and expenses) relating thereto and to be primarily liable for such payments. If the Company does not pay such costs, expenses and liabilities in a reasonably timely manner, the Trustee may obtain payment from the Trust. This indemnification and any other hold harmless provisions in this Trust Agreement shall survive the termination of this Trust Agreement.
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(c)
|
Prior to a Change in Control, the Trustee may consult with legal counsel (who may also be counsel for the Company generally) with respect to any of its duties or obligations hereunder. Following a Change in Control the Trustee shall select independent legal counsel and may consult with counsel or other persons with respect to its duties and with respect to the rights of Participants or their Beneficiaries under the Arrangements.
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(d)
|
The Trustee may hire agents, accountants, actuaries, investment advisors, financial consultants or other professionals to assist it in performing any of its duties or obligations hereunder and may rely on any determinations made by such agents and information provided to it by the Company.
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(e)
|
The Trustee shall have, without exclusion, all powers conferred on the Trustee by applicable law, unless expressly provided otherwise herein.
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(f)
|
Notwithstanding any powers granted to the Trustee pursuant to this Trust Agreement or to applicable law, the Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of section 301.7701-2 of the Procedure and Administration Regulations promulgated pursuant to the Internal Revenue Code.
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(g)
|
The Trustee is not a party to, and has no duties or responsibilities under, the Arrangements other than those that may be expressly contained in this Trust Agreement. In any case in which a provision of this Trust Agreement conflicts with any provision in the Arrangements, this Trust Agreement shall control.
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(h)
|
The Trustee shall have no duties, responsibilities or liability with respect to the acts or omissions of any prior or successor Trustee.
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(a)
|
Prior to a Change in Control, the Trustee may resign at any time by written notice to the Company, which shall be effective sixty (60) days after receipt of such notice unless the Company and the Trustee agree otherwise. Following a Change in Control, the effective date of the Trustee’s resignation shall be the effective date of the appointment of a successor Trustee.
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(b)
|
The Trustee may be removed by the Company on sixty (60) days’ notice or upon shorter notice accepted by the Trustee prior to a Potential Change in Control. Subsequent to a Potential Change in Control, the Trustee may only be removed by the Company with the consent of a Majority of the Participants.
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(c)
|
Upon resignation or removal of the Trustee and appointment of a successor Trustee, all assets shall subsequently be transferred to the successor Trustee. The transfer shall be completed within sixty (60) days after receipt of notice of resignation, removal or transfer, unless the Company extends the time limit.
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(d)
|
If the Trustee resigns or is removed, a successor shall be appointed by the Company, in accordance with Section 13 hereof, by the effective date of resignation or removal under paragraph(s) (a) or (b) of this section. If no such appointment has been made, the Trustee may apply to a court of competent jurisdiction for appointment of a successor or for instructions. All expenses of the Trustee in connection with the proceeding shall be allowed as administrative expenses of the Trust.
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(a)
|
If the Trustee resigns or is removed in accordance with Section 12 hereof, the Company may appoint, subject to Section 12, any third party, such as a bank trust department or other third party that may be granted corporate trustee powers under state law, as a successor to replace the Trustee upon resignation or removal. The appointment shall be effective when accepted in writing by the successor trustee, who shall have all of the rights and powers of the former Trustee, including ownership rights in the Trust assets. The former Trustee shall execute any instrument necessary or reasonably requested by the Company or the successor Trustee to evidence the transfer.
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(b)
|
The successor Trustee need not examine the records and acts of any prior Trustee and may retain or dispose of existing Trust assets, subject to Section 9 and 10 hereof. The successor Trustee shall not be responsible for and the Company shall indemnify and defend the successor Trustee from any claim or liability resulting from any action or inaction of any prior Trustee or from any other past event, or any condition existing at the time it becomes successor Trustee.
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Section 14.
|
Amendment or Termination
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(a)
|
This Trust Agreement may be amended by a written instrument executed by the Trustee and the Company, except as otherwise provided in this Section 14. Notwithstanding the foregoing, no such amendment shall conflict with the terms of the Arrangements or shall make the Trust revocable.
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(b)
|
Following a Change in Control, the Trust shall not terminate until the date on which Participants and their Beneficiaries have received all of the benefits due to them under the terms and conditions of the Arrangements.
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(c)
|
Upon written approval of all Participants or Beneficiaries entitled to payment of benefits pursuant to the terms of the Arrangements, the Company may terminate this Trust prior to the time all benefit payments under the Arrangements have been made. All assets in the Trust at termination shall be returned to the Company.
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(d)
|
This Trust Agreement may not be amended by the Company following a Potential Change in Control or Change in Control without the written consent of a Majority of the Participants. In the event a Change in Control, as defined herein, does not occur within two (2) years of a Potential Change in Control, the Company’s right to amend the Trust without the consent of a Majority of Participants shall be restored pursuant to Section 14(a).
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(a)
|
For purposes of this Trust, the following terms shall be defined as set forth below:
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(3)
|
Majority of Participants shall mean Participants whose vested account balance(s) within the Arrangement(s) indicated on Attachment A of this Trust Agreement exceed 50% of the Trust Assets.
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(b)
|
An Executive Officer of the Company shall have the specific authority to determine whether a Potential Change in Control or Change in Control has transpired, and to determine whether the Potential Change in Control is void under the guidance of this Section 15 and shall be required to give the Trustee notice of a Potential Change in Control, a Change in Control, or a void Potential Change in Control. The Trustee shall be entitled to rely upon such notice, but if the Trustee receives notice of a Change in Control from another source, the Trustee shall make its own independent determination.
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(a)
|
Any provision of this Trust Agreement prohibited by law shall be ineffective to the extent of any such prohibition, without invalidating the remaining provisions hereof.
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(b)
|
The Company hereby represents and warrants that all of the Arrangements have been established, maintained and administered in accordance with all applicable laws, including without limitation, ERISA. The Company hereby indemnifies and agrees to hold the Trustee harmless from all liabilities, including attorneys’ fees, relating to or arising out of the establishment, maintenance and administration of the Arrangements. To the extent the Company does not pay any of such liabilities in a reasonably timely manner, the Trustee may obtain payment from the Trust.
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(c)
|
Benefits payable to Participants and their Beneficiaries under this Trust Agreement may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution or other legal or equitable process.
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(e)
|
If a provision of this Trust Agreement requires that a communication or document be provided to the Trustee in writing or written form, that requirement may also be satisfied by a facsimile transmission, electronic mail or other electronic transmission of text (including electronic records attached thereto), if the Trustee reasonably believes such communication or document has been signed, sent or presented (as applicable) by any person or entity authorized to act on behalf of the Company. If this Trust Agreement requires that a communication or document be signed, an electronic signature satisfies that requirement. Any electronic mail or other electronic transmission of text will be deemed signed by the sender if the sender’s name or electronic address appears as part of, or is transmitted with, the electronic record. The Trustee will not incur any liability to anyone resulting from actions taken in good faith reliance on such communication or document. Nor shall the Trustee incur any liability in executing instructions from any person or entity authorized to act on behalf of the Company prior to receipt by it of notice of the revocation of the written authority of such person or entity.
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LCI INDUSTRIES
|
WELLS FARGO BANK, NATIONAL ASSOCIATION as TRUSTEE
|
By:
__/s/ Nick Fletcher
__________________
|
By:
__/s/ Alan C. Frazier
_________________
|
Its: Chief Human Resources Officer
|
Its: Senior Vice President
|
|
|
ATTEST:
|
ATTEST:
|
By:
__/s/ Kevin Wilcox
___________________
|
By:
__/s/ Tonya M. Inscore
______________
|
Its: Director HR Services
|
Its: Senior Vice President
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1.
|
Drew Industries Incorporated Executive Non-Qualified Deferred Compensation Plan
|
2.
|
Change in Control Agreements as set forth on a schedule to be provided to the Trustee by the Company prior to a Change in Control
|
3.
|
Severance Plans as set forth on a schedule to be provided to the Trustee by the Company prior to a Change in Control
|
•
|
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.
|
I.
|
PROTECTING THE COMPANY’S ASSETS
|
II.
|
RECORDING AND REPORTING INFORMATION-WHISTLEBLOWER POLICY
|
•
|
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.
|
III.
|
BUSINESS CONTACTS WITH COMPETITORS
|
IV.
|
ACQUIRING AND USING INFORMATION ABOUT OTHERS
|
V.
|
BRIBES, GIFTS, ENTERTAINMENT AND SOLICITATIONS
|
VI.
|
CONFLICT OF INTEREST
|
VII.
|
POLITICAL CONTRIBUTIONS
|
VIII.
|
USING INSIDE INFORMATION
|
•
|
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
|
X.
|
COMPETITION LAW AND BUSINESS CONDUCT
|
XI.
|
MEDIA AND OTHER OUTSIDE COMMUNICATION
|
XII
.
|
COMPLIANCE WITH COPYRIGHT LAWS
|
Active Subsidiaries of Registrant
|
|||
|
Name
|
|
State of Organization
|
|
|
|
|
|
Zieman Manufacturing Company
|
|
California
|
|
Lippert Components, Inc.
|
|
Delaware
|
|
Lipper Components International Sales, Inc.
|
|
Delaware
|
|
Lippert Components Manufacturing, Inc.
|
|
Delaware
|
|
LCI Service Corp.
|
|
Indiana
|
|
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 VI, LLC
|
|
Indiana
|
|
LCM Realty VII, LLC
|
|
Indiana
|
|
LCM Realty VIII, LLC
|
|
Indiana
|
|
LCM Realty IX, LLC
|
|
Indiana
|
|
LCM Realty X, LLC
|
|
Indiana
|
|
LCM Realty XI, LLC
|
|
Indiana
|
|
LCI Italy, S.r.l.
|
|
Italy
|
|
Project 2000, S.r.l.
|
|
Italy
|
|
Sessa Klein S.p.A.
|
|
Italy
|
|
Innovative Design Solutions, Inc.
|
|
Michigan
|
|
LCM Realty V, LLC
|
|
Michigan
|
|
Lippert Components Canada, Inc.
|
|
Quebec, Canada
|
|
Kinro Texas, Inc.
|
|
Texas
|
1)
|
I have reviewed this annual report on Form 10-K of LCI Industries;
|
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.
|
1)
|
I have reviewed this annual report on Form 10-K of LCI Industries;
|
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.
|
(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/ Jason D. Lippert
|
Chief Executive Officer
|
Principal Executive Officer
|
February 28, 2017
|
(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/ Brian M. Hall
|
Chief Financial Officer
|
Principal Financial Officer
|
February 28, 2017
|