Date: Fri, 21 Nov 1997 02:06:37 GMT Server: CommerceServer400/1.0 Content-Length: 3709 Content-Type: text/html Last-Modified: Sat, 15 Nov 1997 03:54:32 GMT Shareholders' Message – Second Quarter
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Second Quarter

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To Our Shareholders:

We are pleased to report to you record breaking sales for another quarter. For the second quarter, sales increased 1.6% to a record $169,368,233 compared with the $166,715,051 reported for the second quarter of 1996. Sales for the six months ended June 30, 1997 were $327,474,044, also a record, and ahead of 1996's six months sales of $315,355,074 by 3.8%.

Net income for the second quarter was $6,429,629 compared with last year's second quarter net income of $8,685,723. Earnings per share for the quarter were 37 cents compared with last year's 58 cents. Six months net income was $10,848,663, down from 1996's six months net income of $12,642,696 before the cumulative effect of an accounting change amounting to $2,293,983. Earnings per share for the six months were 63 cents compared with 1996's 84 cents before the accounting change which contributed an additional 16 cents.

Although sales were a record, they were below planned levels as difficult weather during the spring months, particularly in the Midwest and Southeast, hindered dealer optimism. Margins tightened as additional capacity invested in to meet planned sales levels was not utilized to the extent anticipated. Much of the RV production capacity added is for the production of larger travel trailers and fifth wheels with slideouts. These units continue to be popular with RV consumers.

Recreational vehicle sales in the second quarter were down 1% while the parts and supply group was down 6%. Modular housing sales were up 17% and this group continues to experience excellent demand. A second shift has been added to our Indiana modular plant to meet the growing backlog there. While the second shift was costly to implement during the second quarter, it should lead to greater profitablity for an already highly profitable plant.

As has been widely publicized and consistent with prior succession planning, I have announced my retirement as Chairman and CEO of Coachmen effective August 1. Your Board has unanimously elected Vice Chairman Claire C. Skinner to the Chairman and CEO position. The remaining senior officers will continue to serve in their current positions and I am confident Coachmen is being left in very competent hands. I thank you for the opportunity to serve you over these many years.

July 25, 1997

Thomas H. Corson
Chairman and CEO

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