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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

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

 
For the Year End
December 31, 2004		 Commission File Number
0-13646
 

DREW INDUSTRIES INCORPORATED
(Exact Name of Registrant as Specified in its Charter)

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

200 Mamaroneck Avenue, White Plains, N.Y. 10601
(Address of principal executive offices)   (Zip Code)

Registrant’s Telephone Number including Area Code: (914) 428-9098
Securities Registered pursuant to Section 12(b) of the Act: None
Securities Registered pursuant to Section 12(g) of the Act:
Common Stock
(Title of Class)

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

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

Indicate by check mark whether Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes 
No 

Aggregate market value of voting stock (Common Stock, $.01 par value) held by non-affiliates of Registrant (computed by reference to the closing price as of March 3, 2005) was $226,445,566.

The number of shares outstanding of the Registrant’s Common Stock, as of the latest practicable date (February 28, 2005) was 10,354,464 shares of Common Stock.

Documents Incorporated by Reference

Proxy Statement with respect to the 2005 Annual Meeting of Stockholders to be held on May 18, 2005 is incorporated by reference into Items 10, 11, 12 and 14 of Part III.



FORWARD LOOKING STATEMENTS AND RISK FACTORS

                This Form 10-K and the documents incorporated by reference contain certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive position, growth opportunities for existing products, plans and objectives of management, markets for Drew Industries Incorporated (“Drew” or the “Company”) common stock and other matters. Statements in this Form 10-K, including those incorporated by reference, that are not historical facts are “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Exchange Act and Section 27A of the Securities Act. Forward-looking statements, including, without limitation, those relating to the Company’s future business prospects, revenues and income, wherever they occur in this Form 10-K, are necessarily estimates reflecting the best judgment of the Company’s senior management, at the time such statements were made, and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by forward-looking statements. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. You should consider forward-looking statements, therefore, in light of various important factors, including those set forth in this Form 10-K.

                There are a number of factors, many of which are beyond the Company’s control, which could cause actual results and events to differ materially from those described in the forward-looking statements. These factors include pricing pressures due to competition, raw material costs (particularly steel, vinyl, aluminum, glass, and ABS resin), availability of retail and wholesale financing for manufactured homes, availability and costs of labor, inventory levels of retailers and manufacturers, levels of repossessed manufactured homes, the financial condition of our customers, interest rates, oil prices, the outcome of litigation and adverse weather conditions impacting retail sales. In addition, national and regional economic conditions and consumer confidence may affect the retail sale of recreational vehicles and manufactured homes.

PART I

Item 1.  BUSINESS.

Introduction

                Drew has two reportable operating segments, the recreational vehicle and leisure products segment (the “RV Segment”) and the manufactured housing products segment (the “MH Segment”). Drew’s wholly-owned subsidiaries, Kinro, Inc. and its subsidiaries (collectively, “Kinro”), and Lippert Components, Inc. and its subsidiaries (collectively, “Lippert”), each have operations in both the RV Segment and the MH Segment.

                Kinro manufactures and markets primarily aluminum windows and doors for recreational vehicles, and vinyl and aluminum windows and screens and thermo-formed bath and shower units for manufactured and modular homes and offices. Lippert manufactures and markets primarily steel chassis, steel chassis parts, slide-out mechanisms and related power units, and electric stabilizer jacks for recreational vehicles, and steel chassis and steel chassis parts for manufactured and modular homes and offices. Lippert also manufactures specialty trailers for equipment hauling, boats, personal watercraft and snowmobiles.

                The Company has continually acquired manufacturers of products for both manufactured homes and recreational vehicles, expanded its geographic market and product lines, added manufacturing facilities, integrated manufacturing, distribution and administrative functions, and developed new and innovative products. As a result, at December 31, 2004, the Company operated 51 manufacturing facilities in 18 states and one in Canada, and achieved consolidated sales of $531 million for 2004.

                The Company was incorporated under the laws of Delaware on March 20, 1984, and is the successor to Drew National Corporation, which was incorporated under the laws of Delaware in 1962. The Company’s principal executive and administrative offices are located at 200 Mamaroneck Avenue, White Plains, New York 


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10601;  telephone number (914) 428-9098; website www.drewindustries.com; e-mail drew@drewindustries.com. The Company makes available free of charge on its website its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K (and amendments to those reports) filed with the Securities and Exchange Commission as soon as reasonably practicable after such materials are electronically filed.

Recent Events

                On May 4, 2004, the Company acquired California-based Zieman Manufacturing Company (“Zieman”). Zieman is a manufacturer of specialty trailers for equipment hauling, boats, personal watercraft and snowmobiles, and chassis and chassis parts for towable recreational vehicles and manufactured homes. The purchase price was $21.4 million, plus $5.2 million of Zieman’s debt which the Company assumed. The purchase price was funded with borrowings under the Company’s credit agreement. Zieman had 10 plants in 4 states in the western United States.

                The results of the acquired Zieman business have been included in the Company’s Consolidated Statement of Income beginning May 4, 2004. Zieman’s sales for its fiscal year ended December 31, 2003 were approximately $42 million, and for the year ended December 31, 2004 Zieman’s sales were approximately $58 million, including $40 million subsequent to its acquisition by the Company. The operations of Zieman are being integrated with those of Lippert. The production processes and raw materials used by Zieman are substantially similar to those of Lippert, and it is expected that the operating margins achieved by this newly-acquired business will, over time, approximate those achieved by Lippert.

                Steel is one of the Company’s primary raw materials in both segments, representing about 50 percent of the Company’s raw material costs. In mid December 2003 and continuing into 2004, the Company was notified by its steel suppliers of unprecedented steel cost increases. The prices the Company pays for steel, depending on the type of steel purchased, are currently double to triple the levels they were a year ago. To offset the impact of higher steel costs the Company implemented surcharges and sales price increases to its customers. The Company estimates that substantially all steel cost increases received through the end of 2004 were passed on to customers by early 2005. In 2004, the Company also received cost increases from suppliers of other raw materials. However, unrecovered steel and other raw material cost increases reduced net income in the second half of 2004 by between $1.5 million and $2.5 million.

                The Company does not expect to earn additional profit from the sales price increases implemented in response to rising steel costs. As a result, the Company’s material cost as a percent of sales has increased, particularly for products which are made primarily from steel. However, if steel costs remain stable, the steel cost increases experienced in 2004 are not expected to have a significant effect on operating profit in 2005 because they will be substantially offset by the sales price increases which have been implemented, the last of which took effect in early 2005. While the Company has historically been able to obtain sales price increases to offset raw material cost increases, there are no assurances that future raw material costs increases can be passed on to customers in the form of sales price increases. The aggregate cost of the Company’s inventories of steel has increased substantially because of the steel cost increases and higher quantities of steel on hand due to the increase in sales volume.

                On February 11, 2005, the Company consummated the refinancing of its line of credit with JPMorgan Chase Bank, N.A., Key Bank National Association and HSBC Bank USA, National Association (collectively, the “Lenders”). The maximum borrowings under the credit agreement were increased to $60 million and can be increased by an additional $30 million, upon approval of the Lenders. Interest on borrowings from the credit agreement is designated from time to time by the Company as either the Prime Rate, or LIBOR plus additional interest from 1% to 1.80%, currently 1.25%, depending on the Company’s performance and financial condition. This credit agreement expires June 30, 2009.

                Simultaneously, the Company consummated a three year “shelf-loan” facility with Prudential Investment Management, Inc. (“Prudential”), pursuant to which the Company can issue, and Prudential’s affiliates may, in their sole discretion, consider purchasing in one or a series of transactions, senior promissory notes (the “Senior Promissory Notes”) of the Company in the aggregate principal amount of up to $60 million, to mature no more


3


than seven years after the date of original issue of each transaction. Prudential and its affiliates have no obligation to purchase the Senior Promissory Notes. Interest payable on the principal of the Senior Promissory Notes will be at rates determined within five business days after the Company gives Prudential a request for purchase of Senior Promissory Notes.

                The credit agreement is, and the Senior Promissory Notes if and when issued will be, secured by first priority liens on the capital stock (or other equity interests) of each of the Company’s direct and indirect subsidiaries in favor of the Lenders and Prudential on a pari passu basis.

                In December 2004, a jury rendered a verdict in favor of plaintiff that included compensatory damages of $464,000 and punitive damages of $4 million. Counsel for Lippert has advised the Company that, under California law, the award for punitive damages will most likely be reduced to not in excess of four times the compensatory damages, or a maximum of $1.9 million, although there can be no assurance of the final decision. Lippert intends to move for a new trial or appeal the verdict based on the advice of counsel for Lippert that the verdict is unsupported by the evidence. See Item 3. “Legal Proceedings.” The Company has recorded a charge of $1.9 million ($945,000 after taxes and the direct impact on incentive compensation) related to this case.

                In November 2004, the Company received notification from Institutional Stockholders Services, Inc., (“ISS”) a Rockville, Maryland-based independent research firm that advises institutional investors, that the Company’s corporate governance policies outranked 98.5 percent of all companies listed in the Russell 3000 index. The Company has no business relationships with ISS.

RV Segment

                Through its wholly-owned subsidiaries, the Company manufactures and markets a number of components for recreational vehicles, primarily travel trailers and fifth wheels, including aluminum windows, a variety of doors, steel chassis, steel chassis parts, RV slide-out mechanisms and related power units, and electric stabilizer jacks. In 2004, the Company introduced slide-out mechanisms and leveling devices for motor homes, and axles, steps and bath products. The Company also manufactures and markets specialty trailers for equipment hauling, boats, personal watercraft and snowmobiles. In 2004, the RV Segment represented approximately 65% of the Company’s consolidated sales, and 63% of consolidated segment operating profit.

                Raw materials used by the Company’s RV Segment, consisting primarily of fabricated steel (coil, sheet, tube and I-beam), extruded aluminum, glass, and various adhesive and insulating components, are available from a number of sources. See Item 1. “Recent Events” for a discussion of increases in the cost of steel and other raw materials utilized by the Company.

                Operations of the Company’s RV Segment consist primarily of fabricating, welding, painting and assembling components into finished products, and tempering glass. The Company’s RV Segment operations are conducted at 33 manufacturing and warehouse facilities throughout the United States and one in Canada, strategically located in proximity to the customers they serve. Of these facilities, 12 also conduct operations in the Company’s MH Segment. See Item 2. “Properties.”

                The Company’s recreational vehicle and leisure products are sold by 15 sales personnel, working exclusively for the Company, primarily to major manufacturers of recreational vehicles such as Fleetwood Enterprises, Forest River and Thor Industries each of which accounted for more than 10% of consolidated sales. The loss of any customer accounting for more than 10% of the Company’s consolidated sales could have a material adverse impact on the Company; however, because the Company sells a variety of products to these customers in several geographic regions, the Company believes it is unlikely to lose the entire business of any of these customers.

                The Company’s RV Segment operations compete on the basis of price, customer service, product quality, and reliability. Although definitive information is not readily available, the Company believes that its market share for most of its towable recreational vehicle window and door products exceeds 50%. The Company’s recreational


4


vehicles chassis and chassis parts operations compete with several other manufacturers of chassis and chassis parts, as well as with certain manufacturers of recreational vehicles that produce their own chassis and chassis parts. The Company’s market share for chassis and chassis parts for recreational vehicles has increased substantially since 1997. Although definitive information is not readily available, the Company believes that its market share for chassis and chassis parts for towable recreational vehicles exceeds 70%.

                Sales of the Company’s slide-out mechanisms and related power units have grown from virtually zero in 2001 to sales in excess of $65 million during 2004. The Company competes with several other manufacturers of slide-out mechanisms. Although definitive information is not readily available, the Company believes that its market share for slide-out mechanisms for travel trailers and fifth wheel RVs currently exceeds 80%. See Item 1. “Intellectual Property” for a description of the patent license agreement applicable to the Company’s slide-out mechanisms. The Company expects future growth in sales of its slide-out products to come primarily from slide-out products for motor homes, which the Company began selling in 2004.

                The Company’s operation as a manufacturer of specialty trailers for equipment hauling, boats, personal watercraft and snowmobiles competes with several other manufacturers of specialty trailers. Although definitive information is not readily available, the Company believes that its overall market share for specialty trailers in the product lines the Company supplies is approximately 10%, but is significantly greater on the West Coast.

MH Segment

                The Company’s subsidiaries in the MH Segment manufacture and market a number of components for manufactured homes and, to a lesser extent, modular housing and office units, including vinyl and aluminum windows and screens, thermo-formed bath and shower units, steel chassis and steel chassis parts. In 2004, the MH Segment represented approximately 35% of the Company’s consolidated sales, and 37% of consolidated segment operating profit. The MH Segment also supplies related products to other industries, representing less than 5% of sales of this segment.

                Raw materials used by the Company’s MH Segment, consisting of fabricated steel (coil, sheet, and I-beam), extruded aluminum and vinyl, glass, ABS resin, and various adhesive and insulating components, are available from a number of sources. See Item 1. “Recent Events” for a discussion of increases in the cost of steel and other raw materials utilized by the Company.

                Operations of the Company’s MH Segment consist primarily of fabricating, welding, thermo-forming, painting and assembling components into finished products. The Company’s MH Segment operations are conducted at 29 manufacturing and warehouse facilities throughout the United States, strategically located in proximity to the customers they serve. Of these facilities, 12 also conduct operations in the Company’s RV Segment. See Item 2. “Properties.”

                The Company’s manufactured housing products are sold by 13 sales personnel, working exclusively for the Company, to major builders of manufactured homes such as Cavalier Homes, Champion Enterprises, Clayton Homes, Fleetwood Enterprises, Oakwood Homes, and Skyline. Of these customers, Fleetwood Enterprises accounted for more than 10% of consolidated sales. The loss of any customer accounting for more than 10% of the Company’s consolidated sales could have a material adverse impact on the Company; however, because the Company sells a variety of products to these customers in several geographic regions, the Company believes it is unlikely to lose the entire business of any of these customers. In 2003 and 2004, Clayton Homes and Oakwood Homes, both customers of the Company, were acquired by Berkshire Hathaway Inc.

                The Company’s MH Segment competes on the basis of price, customer service, product quality, and reliability. Although definitive information is not readily available, the Company believes that the two leading suppliers of windows for manufactured homes are the Company and Philips Industries, a subsidiary of Tomkins, PLC, and that the Company’s market share for windows and screens is more than 50%. The Company’s MH chassis and chassis parts operations compete with several other manufacturers of chassis and chassis parts, as well as with builders of manufactured homes, most of which produce their own chassis and chassis parts. The Company’s


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thermo-formed bath unit operation competes with three other manufacturers of bath units. Although definitive information is not readily available, the Company believes that its market share for chassis and chassis parts for manufactured homes is approximately 15% percent, and that its market share of the market for all types of bath units is approximately 35%.

Sales and Manufacturing

                Other than the activities of its sales personnel and maintenance of customer relationships through price, quality of its products, service, and customer satisfaction, the Company does not engage in significant marketing efforts nor incur significant marketing or advertising expenditures.

                The Company does not have any significant long-term supply agreements or other formal relationship with its customers. Both the RV Segment and the MH Segment typically ship products on average within one week of receipt of orders from their customers and, as a result, neither segment has any significant backlog.

                Due to increases in demand for the Company’s RV products, a number of facilities which produce RV products are operating at 80% or more of their practical capacity. Overall, most of the Company’s facilities which produce MH products have the ability to approximately double production capacity should the manufactured housing industry demand grow. The Company has 51 facilities, and for most products has the ability to fill demand in excess of capacity at individual facilities by shifting production to other facilities, but the Company would incur additional freight costs. To alleviate forecasted capacity constraints, capital expenditures for 2004 were $27 million compared to an average of $12 million in the prior five years. The need to expand capacity in certain product areas, as well as the potential reallocation of existing resources, is monitored regularly by management.

                The Company’s operations are somewhat seasonal as sales are slower in the winter months, as are the industries which the Company supplies.

Intellectual Property

                The Company manufactures and sells certain of its slide-out mechanisms pursuant to a non-exclusive license granted by the exclusive licensee and owner of three patents until October 24, 2017, the date of the last to expire of the patents. In connection with the license, the Company made an initial payment to the licensor of $1 million representing royalties for 2002 and prior years. Pursuant to the license, royalties are payable by the Company on an annual declining percentage (3% for 2003 and 2004; 1.5% for 2005 and 2006; and 1% from 2007 to expiration of the patents) of sales of certain slide-out mechanisms produced by the Company with annual minimum royalties of $1,250,000 for the years 2003 through 2006. For 2004, the Company paid a royalty of approximately $1,300,000 on sales of applicable slide-out systems of approximately $42 million. Aggregate royalties for the period from 2007 through the expiration of the patents are limited to $5 million.

                The Company holds several United States patents that relate to various products sold by the Company. While the Company believes that its patents are valuable and patent protection is important, none of these patents is essential to the Company or its business segments.

                From time to time the Company has received notices that it may be infringing certain patent rights of others, and the Company has given notices to others that they may be infringing certain patent rights of the Company. No material litigation or claims are pending as a result of these notices.

Regulatory Matters

                Windows produced by the Company for manufactured homes must comply with performance and construction regulations promulgated by the United States Housing and Urban Development Authority (“HUD”) and by the American Architectural Manufacturers Association relating to air and water infiltration, thermal performance, emergency exit conformance, and hurricane resistance. Thermo-formed bath and shower units


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manufactured by the Company for manufactured homes must comply with performance and construction regulations promulgated by HUD, the American National Standards Institute, the American Society for Testing and Materials, and Underwriters Laboratory relating to fire resistance, electrical safety, color fastness, and stain resistance.

                Windows and doors produced by the Company for the recreational vehicle industry are regulated by The United States Department of Transportation Federal Highway Administration (“DOT”), National Fire and Protection Agency, and the National Electric Code governing safety glass performance, egressability, door hinge and lock systems, egress window retention hardware, and baggage door ventilation.

                Manufactured homes are built on steel chassis which are fitted with axles and tires sufficient in number to support the weight of the home, and are transported by producers to dealers via roadway. The Company sells a small number of new tires and axles. New tires distributed by the Company are subject to regulations promulgated by DOT and by HUD relating to weight tolerance, maximum speed, size, and components.

                Trailers produced by the Company for equipment hauling, boats, personal watercraft and snowmobiles must comply with regulations promulgated by the National Highway Traffic Safety Administration of the DOT and Federal Motor Vehicle Safety Standards relating to lighting, breaking, wheels, tires and other vehicle systems.

                The Company is subject to the rules promulgated under the Transportation Recall Enhancement, Accountability and Documentation Act (the “Act”). The rules require manufacturers of motor vehicles and certain motor vehicle related equipment to regularly make reports and submit documents and certain historical data to the National Highway Traffic Safety Administration to enhance motor vehicle safety. Although the reporting deadline has been delayed twice, certain operations of the Company have begun reporting and the Company is in the process of determining its full requirements under the Act.

                The Company’s operations are also subject to certain Federal, state and local regulatory requirements relating to the use, storage, discharge and disposal of hazardous chemicals used during their manufacturing processes.

                The Company believes that it is currently operating in compliance with applicable laws and regulations, and does not believe that the expense of compliance with these laws and regulations, as currently in effect, will have a material effect on the Company’s capital expenditures, earnings or competitive position. The Company has not yet determined the effect of compliance with the Transportation Recall Enhancement, Accountability and Documentation Act.

Employees

                The number of persons employed full-time by the Company and its subsidiaries at December 31, 2004 was approximately 3,670. Of the total, 3,030 were in manufacturing and product research and development, 125 in transportation, 28 in sales, 168 in customer support and servicing, and 319 in administration. None of the employees of the Company and its subsidiaries are subject to collective bargaining agreements. The Company and its subsidiaries believe that relations with its employees are good.

Item 2.   PROPERTIES.

                The Company’s manufacturing operations are conducted at facilities that are used for both manufacturing and warehousing. In addition, the Company maintains administrative facilities used for corporate and administrative functions. The following is a chart identifying the Company’s properties:


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RV PRODUCT SEGMENT
 
City   State  
Square Feet
   Owned   Leased  
 
 
 
 
 
                   
Fontana(1)   California  
87,000
  
ü
      
Rialto   California  
62,700
  
ü
  
Fitzgerald(1)   Georgia  
15,800
  
ü
  
Bristol   Indiana  
97,500
  
ü
  
Goshen   Indiana  
41,500
  
ü
  
Elkhart   Indiana  
53,950
  
ü
  
Goshen   Indiana  
118,000
  
ü
  
Goshen   Indiana  
87,800
  
ü
  
Goshen   Indiana  
53,000
  
ü
  
Pendleton   Oregon  
56,800
  
ü
  
Denver(1)   Pennsylvania  
29,200
  
ü
  
Longview   Texas  
58,900
  
ü
  
Berkley Springs   West Virginia  
53,400
  
ü
  
Ontario   Canada  
39,900
  
ü
  
Elkhart   Indiana  
42,000
  
ü
  
Goshen(1)   Indiana  
46,400
  
ü
  
Goshen(1)   Indiana  
61,000
  
ü
  
Middlebury(1)   Indiana  
35,700
  
ü
  
Sugarcreek(1)   Ohio  
3,500
  
ü
  
Goshen   Indiana  
9,000
  
ü
  
Goshen   Indiana  
4,000
  
 
ü
  
Goshen   Indiana  
6,400
  
 
ü
  
Smith Center   Kansas  
25,900
  
ü
  
Milford   Indiana  
52,000
  
ü
  
Goshen   Indiana  
22,000
  
ü
  
San Bernardino   California  
20,300
  
ü
  
Phoenix(1)   Arizona  
20,000
  
ü
  
Woodland   California  
25,000
  
ü
  
Hemet(1)   California  
43,800
  
ü
  
McMinnville(1)   Oregon  
17,300
  
ü
  
Whittier   California  
47,500
  
ü
  
Boise(1)   Idaho  
24,800
  
ü
  
McMinnville(1)   Oregon  
7,400
  
ü
  
Lake Havasau   Arizona  
17,700
  
 
ü
  
       
         
       
1,387,150
          
       
         
 
(1) These plants also produce products for manufactured homes.

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MH PRODUCTS SEGMENT
                   
City   State  
Square Feet
   Owned   Leased  
 
 
 
 
 
                   
Boaz   Alabama  
86,600
  
ü
      
Double Springs   Alabama  
109,000
  
ü
  
Phoenix (1)   Arizona  
9,900
  
ü
  
Fontana (1)   California  
21,800
  
ü
  
Hemet (1)   California  
16,200
  
ü
  
Woodland   California  
13,900
  
 
ü
  
Ocala   Florida  
47,100
  
ü
  
Fitzgerald (1)   Georgia  
63,200
  
ü
  
Boise (1)   Idaho  
8,200
  
ü
  
Nampa   Idaho  
39,500
  
 
ü
  
Goshen   Indiana  
110,000
  
ü
  
Goshen (1)   Indiana  
11,600
  
ü
  
Goshen (1)   Indiana  
7,000
  
ü
  
Middlebury (1)   Indiana  
43,700
  
ü
  
Arkansas City   Kansas  
7,800
  
 
ü
  
Bossier City   Louisiana  
11,400
  
ü
  
Cairo   Georgia  
105,000
  
ü
  
Waxahachie   Texas  
200,000
  
ü
  
Whitehall   New York  
12,700
  
ü
  
Harrisburg   North Carolina  
58,000
  
ü
  
Liberty   North Carolina  
47,000
  
 
ü
  
Sugarcreek (1)   Ohio  
11,000
  
ü
  
McMinnville (1)   Oregon  
7,400
  
ü
  
McMinnville (1)   Oregon  
4,600
  
ü
  
Denver (1)   Pennsylvania  
54,100
  
ü
  
Dayton   Tennessee  
100,000
  
ü
  
Mansfield   Texas  
61,500
  
 
ü
  
Alvarado   Texas  
71,000
  
ü
  
Lancaster   Wisconsin  
12,300
  
ü
  
       
 
       
1,351,500
  
       
 
 
(1) These plants also produce products for recreational vehicles.
 
ADMINISTRATIVE
                   
City   State  
Square Feet
   Owned   Leased  
 
 
 
 
 
                   
Arlington   Texas   8,500      
ü
  
Naples   Florida   4,500  
ü
  
Goshen   Indiana   6,000  
 
ü
  
Goshen   Indiana   6,000  
 
ü
  
White Plains   New York   3,200  
 
ü
  
Whittier   California   3,500  
ü
  
       
     
        31,700      
       
     

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                The Company owns a 33,500 square feet building in McAdoo, Pennsylvania and a 43,000 square feet building in Waco, Texas that are leased to third parties. The Company owns a 21,600 square feet building in Garrett, Indiana, a 26,900 square feet building in Campbellsville, Kentucky, and leases a 12,000 square feet building in Denver, Indiana, all of which are vacant. The Company also owns an 83,500 square feet facility in Nampa, Idaho and a 61,000 square feet facility in Phoenix, Arizona which are scheduled to open in 2005.

Item 3.   LEGAL PROCEEDINGS.

                Lippert Components, Inc. (“Lippert”) a subsidiary of Drew, is a defendant in an action entitled SteelCo., Inc. vs. Lippert Components, Inc. and DOES 1 though 20, inclusive, commenced in Superior Court of the State of California, County of San Bernardino District, on July 16, 2002. On motion of Lippert, the case was removed to the U.S. District Court, Central District of California, Riverside Division.

                Plaintiff alleges that Lippert violated certain provisions of the California Business and Professions Code (Sec. 17000 et. seq.) by allegedly selling chassis and component parts below Lippert’s costs, engaging in acts intended to destroy competition, wrongfully interfering with plaintiff’s economic advantage, and engaging in unfair competition. Plaintiff seeks compensatory damages of $8.2 million, treble damages, punitive damages, costs and expenses incurred in the proceeding, and injunction relief.

                Management believes that the case has no merit, and Lippert is vigorously defending against the allegations in the complaint. In addition, Lippert asserted counterclaims against Plaintiff.

                Court-ordered mediation did not result in settlement. On February 22, 2005, the court granted Lippert’s motion for partial summary judgment limiting plaintiff’s damages to those incurred prior to December 31, 2002, thereby reducing plaintiff’s damage claim from over $8 million (before trebling) to an amount which the Company believes could be less than $1 million based on counsel’s analysis of the testimony of plaintiff’s and Lippert’s damage experts, although there can be no assurance of the outcome. The court also granted Lippert’s motions for partial summary judgment as to all aspects of plaintiff’s unfair competition claim and plaintiff’s claim for an injunction. The court denied Lippert’s attempt to limit damages to those incurred prior to May 10, 2002, and certain other aspects of Lippert’s defense. The court set a trial date of April 5, 2005.

                Lippert is a defendant in an action entitled Marlon Harris vs. Lippert Components, Inc. pending in the Superior Court of the State of California, County of San Bernardino (Case No. SCVSS 094954). Plaintiff, a former employee of Lippert, sustained injuries to his arm and hand while operating a power brake press, allegedly due to the removal or failure to provide guards on the machine.

                In December 2004, a jury rendered a verdict in favor of plaintiff that included compensatory damages of $464,000 and punitive damages of $4 million. Counsel for Lippert has advised the Company that, under California law, the award for punitive damages will most likely be reduced to not in excess of four times the compensatory damages, or a maximum of $1.9 million, although there can be no assurance of the final decision. Lippert intends to move for a new trial or appeal the verdict based on the advice of counsel for Lippert that the verdict is unsupported by the evidence.

                On August 6, 2004, Keystone RV Company, Inc. filed a third-party petition against Lippert in an action entitled Feagins, et. al. v. D.A.R., Inc. d/b/a Fun Time RV, et. al. pending in The Probate Court, Denton County, State of Texas (Case No. IA-2002-330-01). Keystone’s claim is for proportionate responsibility/contribution from Lippert in connection with a wrongful death action against defendants arising from an accident involving an RV allegedly manufactured by Keystone. Keystone alleges that Lippert supplied certain components of the R.V. Neither plaintiffs nor any of the other five defendants filed claims against Lippert. Lippert’s counsel has advised that, at this stage of the case, based on the current theories of plaintiff’s expert, Lippert did not commit any act or omission that contributed to or caused the accident; however, plaintiff’s expert could change his theory to focus on an alleged act or omission by Lippert. A co-defendant’s expert could also assert a theory of liability against Lippert. Plaintiffs seek compensatory damages in excess of $130 million plus $25 million of exemplary damages from each defendant. The case is in the discovery stage, and there has been no determination of liability. Lippert’s


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 liability insurer has assigned counsel to defend Keystone’s claim against Lippert.

                    In the normal course of business, the Company is subject to proceedings, lawsuits and other claims. All such matters are subject to many uncertainties and outcomes that are not predictable with assurance. While these matters could materially affect operating results when resolved in future periods, it is management’s opinion that after final disposition, including anticipated insurance recoveries, any monetary liability or financial impact to the Company beyond that provided in the consolidated balance sheet as of December 31, 2004, would not be material to the Company’s financial position or annual results of operations.

Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

                None.

                DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

                The following tables set forth certain information with respect to the Directors and Executive Officers of the Company as of December 31, 2004.

 
Name   Position
           
Leigh J. Abrams
    (Age 62) 		 
President, Chief Executive Officer and Director of the Company since March 1984.
     
Edward W. Rose, III
    (Age 63) 		 
Chairman of the Board of Direc­tors of the Company since March 1984.
     
David L. Webster
    (Age 69) 		 
Director of the Company and Chairman, President and CEO of Kinro, Inc. since March 1984.
     
L. Douglas Lippert
    (Age 57) 		 
Director of the Company and Chairman of Lippert Components, Inc. since November 1997. President and CEO of Lippert Components from November 1997 until February 2003.
     
James F. Gero
    (Age 59) 		 
Director of the Company since May 1992.
     
Gene H. Bishop
    (Age 75) 		 
Director of the Company since June 1995.
     
Frederick B. Hegi, Jr.
    (Age 61) 		 
Director of the Company since May 2002.
     
David A. Reed
    (Age 57 ) 		 
Director of the Company since May 2003.
     
Jason D. Lippert
    (Age 32) 		 
President and Chief Executive Officer of Lippert Components, Inc. since February 5, 2003 and Executive Vice President and Chief Operating Officer of Lippert Components, Inc. from May 2000 to February 2003.
     
Fredric M. Zinn
    (Age 53) 		 
Chief Financial Officer of the Company since January 1986 and Executive Vice President of the Company since February 2001.
     
Harvey F. Milman
    (Age 63) 		 
Vice President-Chief Legal Officer of the Company since March 2005.
     
John F. Cupak
    (Age 55) 		 
Secretary and Director of Internal Audit of the Company since May 2003, and Director of Taxation until November 2004.
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