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**United States**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-K**

** **

**(Mark one)**

** **

**x****     ****ANNUAL REPORT UNDER SECTION 13OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**For thefiscal year ended December 31, 2009**

 

**OR**

 

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

 

**For thetransition period from                 to                 **

 

**Commissionfile number 333-123598**

 

**J.B.POINDEXTER & CO., INC.**

(Exact name ofregistrant as specified in its charter)

 

| **Delaware**                     | ** ** | **76-0312814**                        |
|----------------------------------|------------|---------------------------------------|
| (State or other  jurisdiction of |       | (I.R.S. Employer  Identification No.) |
| incorporation or  organization)  |       |                                  |

 

**600 Travis**

### **Suite 200**

### **Houston,Texas 77002**

(Address of principalexecutive offices)

(Zip Code)

** **

**(713)  655-9800**

(Registrant’stelephone number, including area code)

 

Securitiesregistered pursuant to Section 12(b) of the Act:  **None**

 

Name of eachexchange which registered:  **None**

 

Securities registeredpursuant to Section 12(g) of the Act: **None**

 

Indicate by check mark if the registrant is a well-known seasonedissuer, as defined in Rule 405 of the Securities Act.  Yes  o  No x

 

Indicateby check mark if the registrant is not required to file reports pursuant to Section 13or Section 15(d) of the Act. Yes  x  No o

 

Indicateby check mark whether the registrant (1) has filed all reports required tobe filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days. Yes  x  No  o

 

Indicate by check markwhether the registrant has submitted electronically and posted on its corporateWebsite, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter)during the preceding 12 months (or for such shorter period that the registrantwas required to submit and post such files).  Yes  o  No  o

 

Indicateby check mark if disclosure of delinquent filers pursuant to Item 405 ofRegulation S-K is not contained herein, and will not be contained, to the bestof the registrant’s knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K.  x

 

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 ofthe Exchange Act).  (Check One):

 

| o – Large  accelerated filer |   | o – Accelerated  filer         |
|-----------------------------------|--------|-------------------------------------|
|                              |   |                                |
| x –  Non-accelerated filer   |   | o – Smaller  reporting company |

 

Indicateby check mark whether the registrant is a shell company (as defined in Rule 12b-2of the Exchange Act.)  Yes  o  No  x

 

Theaggregate market value of the voting and non-voting common equity held bynon-affiliates as of March 31, 2010 was $0.00.

 

Asof March 31, 2010, the registrant had 3,059 shares of common stock issuedand outstanding.

 

Documentsincorporated by reference. **None**

 

 

 

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**J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES**

 

**Table ofContents**

 
| **PART I**   | ** **                                                                                                        |
|-------------------|-------------------------------------------------------------------------------------------------------------------|
| ** **        | ** **                                                                                                        |
| Item 1.           | Business                                                                                                          | 3 |
| Item 1A.          | Risk Factors                                                                                                      | 12 |
| Item 1B.          | Unresolved  Staff Comments                                                                                        | 16 |
| Item 2.           | Properties                                                                                                        | 17 |
| Item 3.           | Legal Proceedings                                                                                                 | 18 |
| Item 4.           | Submission of Matters to a Vote of  Security Holders                                                              | 18 |
|              |                                                                                                              |   |
| **PART II**  |                                                                                                              |   |
| Item 5.           | Market for Registrant’s Common Equity,  Related Stockholder Matters and IssuerPurchases of Equity Securities | 18 |
| Item 6.           | Selected  Financial Data                                                                                          | 19 |
| Item 7.           | Management’s  Discussion and Analysis of Financial Condition and Results of Operations                       | 21 |
| Item 7A.          | Quantitative  and Qualitative Disclosure About Market Risk                                                        | 34 |
| Item 8.           | Financial  Statements and Supplementary Data                                                                      | 35 |
| Item 9.           | Changes in  and Disagreements with Accountants on Accounting and Financial Disclosure                             | 61 |
| Item 9A.          | Controls and  Procedures                                                                                          | 61 |
| Item 9B.          | Other Information                                                                                                 | 62 |
|              |                                                                                                              |   |
| **Part III** |                                                                                                              |   |
| Item 10.          | Directors,  Executive Officers and Corporate Governance                                                           | 62 |
| Item 11.          | Executive  Compensation                                                                                           | 63 |
| Item 12.          | Security  Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                   | 70 |
| Item 13.          | Certain  Relationships and Related Transactions, and Director Independence                                        | 70 |
| Item 14.          | Principal  Accountant Fees and Services                                                                           | 71 |
|              |                                                                                                              |   |
| **Part IV**  |                                                                                                              |   |
| Item 15.          | Exhibits  and Financial Statement Schedules                                                                       | 73 |

** **

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**PART I**

** **

**Item 1.**                                                           Business

** **

**Overview**

** **

J.B. Poindexter & Co., Inc. operatesprimarily transportation-related manufacturing businesses. Our operatingsubsidiaries or business units are Morgan Truck Body, LLC (“Morgan”), MorganOlson, LLC (“Morgan Olson”), Truck Accessories Group, LLC (“Truck Accessories”),EFP, LLC (“EFP”), MIC Group, LLC (“MIC Group”), Federal Coach, LLC (“FederalCoach”), and Eagle Specialty Vehicles, LLC (“Eagle Coach”). Eagle Coach andFederal Coach comprise the Specialty Vehicle Group. The Specialty VehicleGroup, MIC Group and EFP comprise our Specialty Manufacturing Division (“SpecialtyManufacturing”).

 

Unless the context otherwise requires, the “Company,”“we,” “our” or “us” refers to J.B. Poindexter & Co., Inc. (“JBPCO”)together with its operating subsidiaries. We are wholly owned by John B.Poindexter.

 

We operate our business in four different segments:Morgan, Morgan Olson, Truck Accessories and Specialty Manufacturing. Please seeNote 3 of our financial statements included herein for a description offinancial information by segments.

 

**Morgan**

** **

We believe Morgan is the leading United Statesmanufacturer of commercial truck bodies for medium-duty trucks based uponestimated market share and total 2009 sales volume. Morgan generallymanufactures products for medium-duty trucks having a gross vehicular weightrating of between 10,001 pounds (Class 3) and 33,000 pounds (Class 7).Trucks equipped with Morgan’s products are commonly used in a wide variety ofapplications, including general freight deliveries, moving and storage, anddistribution of refrigerated consumables. Morgan also offers service programsfor its truck bodies.

 

Morgan reaches a broad base of customers in theUnited States and Canada through its sales force and its more than 200authorized distributors and Morgan authorized service centers. Its customersinclude rental companies, truck dealers, leasing companies and companies thatoperate fleets of delivery vehicles. Through nine manufacturing plants andeight service facilities in strategic locations throughout North America,Morgan can provide timely product delivery and service to its customers.

 

The principal products Morgan manufactures and sellsare:

 

·                  dry freight bodies that are typicallyfabricated with prepainted aluminum or fiberglass-reinforced plywood panels orMorganplate® panels, a composite panel, hardwood floors andvarious door configurations to accommodate end-user loading and unloading requirements;

 

·                  refrigerated van bodies fabricated withinsulated aluminum or fiberglass-reinforced plywood panels that accommodatecontrolled temperature and refrigeration needs of end users;

 

·                  aluminum or fiberglass-reinforced plywoodcutaway van bodies that are installed only on cutaway chassis (a chassis andcutaway cab) and are available with or without access to the cargo area fromthe cab; and

 

·                  stake bodies, which are flatbeds with variousconfigurations of removable sides.

 

Morgan manufactures its products to customerspecifications and installs its products on truck chassis supplied by itscustomers.

 

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***Customers and sales. ***Morgan principally generatesrevenue through three sources:

 

·                  sales of truck bodies to commercial divisionsof leasing companies, companies with fleets of delivery vehicles and to truckdealers and distributors for ultimate sale or lease to end users such asretailers, building supply companies, contractors, delivery companies and fooddistribution companies (“Commercial” sales);

 

·                  sales of truck bodies to national consumerrental companies that then become available for rent to the general public (“ConsumerRental” sales); and

 

·                  sales of parts and service.

 

Morgan’s net sales constituted 31% of JBPCO’sconsolidated net sales in 2009, 33% in 2008 and 42% in 2007.  Morgan generates sales of truck bodiesthrough its sales force directly to large end-user customers, including Penskeand Ryder, and to distributors and truck dealers. Commercial sales of truckbodies constituted 80% of Morgan’s net sales in 2009, 78% in 2008 and 83% in2007.

 

Morgan has an independent authorized distributornetwork of 41 distributors nationwide. Most distributors sell a wide variety oftrucks and related equipment to truck dealers and end users. Generally,distributors sell Morgan products in a specified territory with limitedexclusivity.  Morgan also sells itsproducts directly to truck dealers, selling to approximately 460 dealers in 2009.

 

Consumer Rental sales are composed of sales tocompanies that maintain large fleets of one-way and local hauling vehiclesavailable for rent to the general public. Morgan makes these sales through abid process and negotiation directly with these companies through its salesforce. Primary Consumer Rental customers include Penske and U-Haul.  Morgan negotiates contracts for ConsumerRental sales annually, usually in late summer to early fall, with products tobe shipped during the first half of the following year. These sales areseasonal, with substantially all product shipments occurring in the first sixmonths of the year. Consumer Rental sales tend to be the most volatile andprice-sensitive aspect of Morgan’s business and depend on factors such as productmix and delivery schedules. Consumer Rental sales constituted 11% of Morgan’snet sales in 2009, 15% in 2008 and 11% in 2007.

 

Morgan’s two largest customers, Penske and Ryder,together have historically represented approximately 45% to 55% of Morgan’stotal net sales. Each has been Morgan’s customer for approximately25 years and we believe relations with each are good. Sales to thesecustomers represented 17% of JBPCO’s consolidated net sales in 2009, 16% in2008 and 22% in 2007.  Accounts receivablefrom these customers were $2.8 million and $2.9 million at December 31,2009 and 2008, respectively.

 

Morgan also builds truck bodies and installs them onchassis acquired under a bailment pool agreement with General Motors AcceptanceCorporation.  Pool program sales wereapproximately $0.2 million and $1.0 million for the years ended December 31,2009 and 2008, respectively.

 

Morgan offers limited service programs at its ownservice facilities and its authorized distributors. Service sales constituted 6%of Morgan’s net sales in 2009, 5% in 2008 and 5% in 2007.

 

Morgan also sells its products in Canada andMexico.  In 2009, foreign sales(primarily in Canada) represented approximately 6% of Morgan’s net sales and 2%of JBPCO’s consolidated net sales.

 

***Manufacturing andsupplies. ***Morgan, whichis headquartered in Morgantown, Pennsylvania, operates manufacturing, bodymounting, and parts and service facilities in Arizona, California, Florida,Georgia, Pennsylvania, Texas, Wisconsin and Ontario, Canada. Morgan has sales,service and body mounting facilities in Colorado, Florida, Georgia,Pennsylvania, Texas, Wisconsin, and Ontario, Canada. Many of Morgan’s domesticmanufacturing facilities are ISO 9001-2000 certified.

 

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Generally, Morgan engineers its products to thespecifications of the customer. Typically, the customer places an order andarranges for a truck chassis manufacturer to deliver the truck chassis toMorgan. Morgan manufactures and installs the body on the customer-owned chassisand the customer or Morgan arranges for delivery of the completed truck. Morgan’sproduction cycle ranges from three to seven days for dry freight products andup to 28 days for more complex refrigerated products.  Delays in chassis deliveries can disruptMorgan’s operations and can increase its working capital requirements.

 

Because contracts for Consumer Rental sales areentered into in the summer or fall but production does not begin generallyuntil the following January, Morgan typically has a significant backlog ofConsumer Rental sales orders at the end of each year that are produced andshipped through June of the following year. In addition, Morgan typicallymaintains a significant backlog of Commercial sales. Morgan’s backlog at December 31,2009 was $73.1 million compared to $47.6 million at December 31,2008. Morgan expects to complete all of the orders in its 2009 year-end backlogduring 2010.

 

Morgan provides limited warranties againstconstruction defects in its products. These warranties generally allow for thereplacement or repair of defective parts or workmanship for up to five yearsfollowing the date of sale. Warranty costs have not had a material adverseeffect on its business.

 

Morgan maintains an inventory of raw materialsnecessary to build truck bodies according to customers’ orders. Because Morganusually manufactures its products to customer orders, it does not maintainsubstantial inventories of finished goods.

 

Morgan’s principal raw materials include aluminum,steel, fiberglass-reinforced plywood and hardwood. Morgan acquires rawmaterials from a variety of sources and has not experienced significant shortagesof materials. However, there are a limited number of suppliers offiberglass-reinforced plywood, an important truck body material. While Morganhas not experienced a disruption in supply or a shortage offiberglass-reinforced plywood, such a disruption or shortage could occur in thefuture. Morgan may not be able to replace its existing supply offiberglass-reinforced plywood on acceptable terms or at all. To manage itssupply costs, Morgan occasionally enters into long-term supply contracts onprincipal materials to secure prices for up to one year if considerednecessary.  Morgan has taken advantage ofthe combined purchasing power of our companies, thereby generating savings onraw materials common to our businesses.

 

***Industry. ***Industry revenue and growthdepend primarily on the demand for delivery vehicles in the general freight,moving and storage, parcel delivery and food distribution industries, all ofwhich are affected by general economic conditions. Replacement of oldervehicles in fleets represents an important revenue source.  Replacement cycles are approximately six toseven years, depending on vehicle types. During economic downturns, replacementorders are often deferred or, in some cases, older vehicles are retired withoutreplacement. During periods of economic growth, as customers decide to increasetheir capital expenditures, sales of delivery trucks grow as customers makepurchases they deferred in prior years and expand their fleets.

 

The federally mandated emission standards for dieselengines were changed effective January 1, 2007 and will change again in2010.  These standards require areduction in the amount of pollutants allowed to be released during theoperation of the diesel engine included with the truck chassis that Morgan is providedby its customers and have increased the cost of the chassis to Morgan’scustomers and changed the economics of operating the truck. Historically,approximately 90% of Morgan truck bodies are installed on chassis with dieselengines.  We believe that the 2007 changeto the emission standards changed Morgan’s customers’ buying patterns in 2007as the inventory of chassis manufactured before the change were rapidlyconsumed throughout 2007.  We cannotpredict how our operations will be affected in 2010 as a result of theuncertain impact that the change will have on Morgan’s customers’ operations.

 

***Competition. ***The truck body manufacturingindustry is highly competitive. Morgan competes with three nationalmanufacturers: Supreme Industries, Inc., Kidron, a division of SpecializedVehicles Corporation, and America’s Body Company, some of which may be largerand have more resources than Morgan. There are a large number of smallermanufacturers that are regionally focused. Competitive factors in the industryinclude product quality, 

 

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delivery time, geographic proximity of manufacturingfacilities to customers, warranty terms, service and price. We believecustomers value Morgan’s high-quality products, competitive pricing anddelivery times.

 

**Morgan Olson**

** **

MorganOlson is one of two major manufacturers of step vans servicing the UnitedStates and Canada. Step vans are specialized vehicles designed formultiple-stop delivery applications and they enable the driver of the vehicleto easily access the cargo area of the vehicle from inside the cab. Step vansare made to customer specifications for use in parcel, food, vending, uniform,linen and other delivery applications. Morgan Olson’s step van bodies areinstalled on International (Workhorse), Fordand Freightliner truck chassis for light- and medium-duty trucks withgross vehicular weight ratings between 10,001 and 33,000 pounds (Class 3-7)with body sizes ranging from 11 to 30 feet. Morgan Olson is headquartered in Sturgis, Michigan, where it hasmanufacturing and service parts distribution facilities.

 

Morgan Olson’s net sales constituted 13%, 15% and14% of JBPCO’s consolidated net sales in 2009, 2008 and 2007, respectively.

 

***Customers and sales. ***Customers purchase step vansthrough dealers and distributors and from Morgan Olson through its direct salesforce. Two customers, United Parcel Service of America, Inc. and FedEx,purchase the majority of step vans produced in the United States. The UnitedStates Postal Service has historically been a major buyer of step vans;however, it has not placed a significant order for new step vans since thecompletion of the prior contract in early 2004 that Morgan Olson participatedin with two chassis manufacturers. Morgan Olson’s end-user customers includethese customers along with Frito-Lay, Inc., Bimbo Bakeries, W.B. Mason,ARAMARK Corporation and others. The preferences and purchasing decisions ofthese customers dramatically affect the results of operations of Morgan Olson.

 

Morgan Olson also sells step van body service partsthrough its dealers and distributors and directly to customers. Morgan Olson isa major supplier of service parts for long-lived vehicles manufactured by itfor the United States Postal Service under an agreement of indefinite term thatis reviewed annually. The United States Postal Service has the right toterminate the agreement for its convenience at any time.  We believe Morgan Olson’s relationship withthe United States Postal Service is satisfactory however, there can be noassurance that the parts supply agreement will continue.

 

Morgan Olson offers aftermarket support through itsService Parts Department for step vans manufactured by Morgan Olson and dryfreight vans manufactured by Morgan.  The Service Parts businessallows Morgan and Morgan Olson to consolidate their parts supportfunctions, with dedicated fabrication, warehousing and shippingfacilities.  This serviceprovides fleet customers with a full range of parts and partsassemblies for their vehicles. Morgan Olson Service Parts and theMorgan Service and Repair Centers offer combined support that we believegives both companies a competitive advantage.

 

Morgan Olson has one customer, United Parcel Serviceof America, Inc., that accounted for approximately 31%, 44% and 37% ofMorgan Olson’s net sales during 2009, 2008 and 2007, respectively.  Accounts receivable from this customer were $0.1million and $4.2 million at December 31, 2009 and 2008, respectively.

 

***Manufacturing andsupplies. ***Morgan Olsonhas ISO 9000 certified manufacturing and parts distribution facilities inSturgis, Michigan.

 

Generally, Morgan Olson manufactures its products tocustomer specifications. Typically, the customer places an order and arrangesfor a truck chassis manufacturer to deliver a truck chassis to Morgan Olson.Morgan Olson manufactures the complete truck body, including the installationof windows, doors, instrument panels, seating, wiring, painting and decalapplication. The customer arranges for delivery of the completed truck.  Morgan Olson’s production cycle varies from 8to 15 days.  Delays in chassis deliveriescan disrupt Morgan Olson’s operations and can increase its working capitalrequirements.

 

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At December 31, 2009, Morgan Olson’s totalbacklog was $38.1 million, compared to $18.2 million at December 31,2008. We expect that Morgan Olson will fill all 2009 backlog orders in 2010.

 

Morgan Olson provides a limited warranty againstconstruction defects in its products. These warranties generally provide forthe replacement or repair of defective parts or workmanship for up to fiveyears following the date of sale. Warranty costs have not had a materialadverse effect on its business.

 

Morgan Olson maintains an inventory of raw materialsnecessary to build step van bodies. Because Morgan Olson manufactures itsproducts to customer orders, it does not maintain substantial inventories offinished goods. Principal raw materials include steel and aluminum, and rawmaterials are acquired from a variety of sources that have not experiencedsignificant shortages. Morgan Olson has taken advantage of the combinedpurchasing power of our companies, including Morgan, thereby generating savingson raw materials common to our businesses.

 

***Industry. ***Industry revenue and growthdepend primarily on the demand for delivery vehicles, which is affected bygeneral economic conditions. Because of the concentration of customers in theindustry, the demand for delivery vehicles is significantly influenced by therequirements of the United Parcel Service of America, Inc., FedEx andpotentially the United States Postal Service. Replacement of older vehicles infleets represents an important revenue source, with replacement cycles varying,depending on vehicle types and usage. During economic downturns, replacementorders are often deferred or, in some cases, older vehicles are retired withoutreplacement. During periods of economic growth, as customers decide to increasetheir capital expenditures, sales of delivery trucks grow as customers makepurchases that were deferred in prior years and expand their fleets.

 

The federally mandated emission standards for dieselengines were changed effective January 1, 2007 and will change again in2010. Morgan Olson’s operations were not significantly affected in 2007;however, we cannot predict whether our operations will be affected in 2010 as aresult of the uncertain impact that the change will have on our customers’operations.

 

***Competition. ***The step van bodymanufacturing industry is highly competitive. Morgan Olson competes with oneother major manufacturer of step van bodies, Utilimaster, which may have moreresources than Morgan Olson. Competitive factors in the industry includeproduct quality, delivery time, warranty terms, aftermarket service and price.

 

**Truck Accessories**

** **

Webelieve Truck Accessories, which is headquartered in Elkhart, Indiana, is theleading manufacturer of hard pickup truck caps and tonneaus for thecombined United States and Canadian market. Truck Accessories markets itscap and tonneau products under the brand names Leer, Century, Raider, LoRider,BoxTop and Pace Edwards.   TruckAccessories also markets window and door components under the State Wide name.

 

Capsand tonneaus provide an engineered, stylized enclosure for the bed ofpickup trucks, transforming them into lockable weather-protected storage areas.Truck Accessories’ truck caps and tonneaus offer customers a variety of designsand features, including a number of distinctive styles, allowing themto customize the look and utility of their pickup trucks.  The TruckAccessories product line of truck caps and tonneaus ranges from standard topremium and is differentiated by features, styling and brand name. Pace Edwards offers a variety of retractable hard tonneau covers that can bemechanically retracted into an integrated storage canister behind thepickup truck cab.  State Wide manufactures windows and doors used by TruckAccessories, other cap manufacturers and horse trailer manufacturers in the assemblyof their products.

 

Keypickup truck cap features include shape and design, color and finish, windowconfigurations, roof racks, glass tint, trim, and interior features such aslighting, carpeting and special storage options. Tonneaus also offer a range ofstyling, storage and convenience alternatives. Caps and tonneaus can be designed to target specific customers. For example, Leer, Century and Raider offer lifestyle-equipped caps forhunters, fishermen and outdoors enthusiasts that are styled and designed,through storage features and product appearance, to appeal to these customers.Through 

 

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TruckAccessories’ multiple lines of caps and tonneaus, each with numerous featuresand options, we believe Truck Accessories is the industry leader inengineering, product innovation and styling.

 

Truck Accessories’ net sales constituted 24% ofJBPCO’s consolidated net sales in 2009, 19% in 2008 and 20% in 2007.

 

***Customers and sales. ***Most of TruckAccessories’ truck caps and tonneaus are purchased by individuals, smallbusinesses and fleet operators through a network of over 1,800 independent,nonexclusive dealers.

 

PaceEdwards’ retractable tonneau covers are sold primarily through automotiveaccessory warehouse distributors.  StateWide sells directly to manufacturers through its dedicated sales team.

 

Truck Accessories also sells its products in Canadaand Europe. In 2009, foreign sales (primarily in Canada) representedapproximately 17% of Truck Accessories’ net sales and 4% of JBPCO’sconsolidated net sales.

 

***Manufacturing andsupplies. ******The design and manufacture of Truck Accessories’products takes place at eight manufacturing facilities*********located inCalifornia, Indiana (five), Pennsylvania and Washington.

 

Typical product delivery times range from one to twoweeks from the time of order. Truck Accessories operates a fleet of tractorunits and trailers for the efficient and timely delivery of its products to itsdealers.

 

Truck Accessories provides a warranty period,exclusive to the original truck owner, which is, in general but withexceptions, one year for parts, five years for paint and lifetime forstructure.  Warranty costs have not had amaterial adverse effect on its business in recent years.

 

Truck Accessories obtains raw materials andcomponents from a variety of sources. The most important are resin, fiberglass,paint, aluminum, locks and automotive-quality glass.  Truck Accessories and three other of ourcompanies have committed to purchase principally all of their paintrequirements through 2014 from one supplier at favorable prices.  As a result of its size and purchasing power,Truck Accessories has maintained a stable supply of materials and components onfavorable terms and to date has not experienced significant shortages of theseitems.

 

Truck Accessories’ products are typicallymanufactured upon receipt of an order from its customers.  Consequently, its backlog representsapproximately two weeks of production. Truck Accessories’ backlog was$2.6 million at December 31, 2009 compared to $2.2 million at December 31,2008.

 

***Industry. ***Sales of caps and tonneaus,in general, correspond to the level of new pickup truck sales in the UnitedStates and Canada. In 2009, we estimate that 18% to 20% of new pickup truckswere equipped with caps and tonneaus. Based on Truck Accessories’ market sharein the United States and Canada of approximately 48%, we estimate that approximately9% of new pickup trucks are equipped with Truck Accessories’ caps and tonneaus.Factors influencing the automotive industry, including general economicconditions, customer preferences, new model introductions, interest rates andfuel costs, directly influence Truck Accessories’ business.  Cap and tonneau sales are seasonal, withsales typically being higher in the spring and fall than in the winter andsummer.

 

***Competition. ***The pickup truck fiberglasscap and tonneau industry is highly competitive. Truck Accessories competes withone other national competitor, A.R.E., Inc., and a number of smallercompanies that are regionally focused. Competitive factors include design,features, delivery times, product availability, warranty terms, quality and price.  Based on the number of products and featuresit offers, and its ability to quickly supply product for newly introducedpickup truck models, we believe Truck Accessories is the industry leader inproduct design and available accessory options.

 

**Specialty Manufacturing**

** **

Specialty Manufacturing is comprised of SpecialtyVehicle Group, MIC Group and EFP, and its sales made up 33% of JBPCO’sconsolidated net sales in 2009, 34% in 2008 and 25% in 2007.  Specialty Vehicle Group represents 

 

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approximately 27% of Specialty Manufacturing’s 2009net sales and is comprised of Federal Coach and Eagle Coach.  Specialty Vehicle Group manufactures funeralcoaches, limousines and specialized transit buses.  In late 2009, Specialty Vehicle Group decidedto consolidate its two funeral and limousine manufacturing operations into onefacility.  This consolidation is expectedto be completed in 2010.  As part of thisdecision to consolidate, Specialty Vehicle Group decided to exit thespecialized bus business and sold this product line and related assets,including certain equipment, inventory and intangible assets on December 31,2009.  See Note 6 of Notes to theConsolidated Financial Statements.

 

MIC Group represents approximately 59% of SpecialtyManufacturing’s 2009 net sales and provides manufacturing services forcustomers requiring precision machining of metal parts and machining andcasting services with a concentration of customers in the oil and gasexploration and development services industry. During 2007, MIC Group acquired three machining operations, each ofwhich also has a customer concentration in the oil and gas servicesindustry.  The three acquired operationsare located in Duncan, Oklahoma, Brenham, Texas and Houston, Texas.

 

EFP represents approximately 14% of SpecialtyManufacturing’s 2009 net sales and manufactures and sells expandablepolystyrene and polypropylene foam, engineered to customer specifications foruse by the automotive, medical, electronics, food, furniture, bath andplumbing, and appliance industries as packaging, shock-absorbing components andmaterial-handling products, including temperature-controlled containers.

 

***Products.******  ******Specialty Vehicle Group manufactures a full line offuneral coaches, limousines and specialized buses.****** ******We estimate that Specialty Vehicle’s funeral productsales represent approximately***41***% of the domestic funeral coach market.   On December 31, 2009, Specialty VehicleGroup exited the specialized bus business and sold the assets related to theseoperations.***

 

MIC Group is a contract manufacturer that producesprecision metal parts used in energy exploration and production, aerospace andother industries and performs machining and casting services for manufacturersof metal parts and components.

 

EFP manufactures and sellsmaterial-handling and protective packaging products including shock-absorbingpackaging material, reusable trays, and containers that are used fortransporting components and the protection of those products. EFP alsofabricates block and sheet products used by the Recreational Vehicle industryfor producing sidewalls and doors and by the construction industry forinsulation and commercial roofing applications. Additionally, EFP manufacturesa line of temperature-controlled shipping containers for the protection oftemperature-sensitive products such as food and medical products.

 

***Customers and sales. ******Specialty Vehicle Group manufactures and sells itsline of funeral coaches, limousines and specialized buses to end users, such aslivery companies, funeral directors and approximately 40 authorizeddealers.  Its largest customerrepresented approximately***1***% of the total net sales ofSpecialty Manufacturing in 2009, 3% in 2008 and***3***% in 2007.***

 

Specialty Vehicle Group also sells its products inCanada and Belgium.  In 2009, foreignsales represented approximately 2% of Specialty Manufacturing’s net sales and1% of JBPCO’s consolidated net sales.

 

MIC Group sells products to international oilfieldservice companies and a variety of businesses in various industries. Twooilfield service customers, Schlumberger Limited and Halliburton Company,represented approximately 39% of the total sales of Specialty Manufacturing in2009, 42% in 2008 and 28% in 2007.

 

EFP’s customers include manufacturers from a widerange of industries that require special packaging materials for protectingtheir products.

 

***Manufacturing and supplies. ***Specialty Manufacturing’soperations are located in Alabama, Arkansas, Indiana, Oklahoma, Ohio,Tennessee, Texas (three), Malaysia and Mexico. Its facilities in Alabama, Oklahomaand the three Texas plants are ISO 9000 certified and its facility in Indianais ISO 9000, ISO 14001 and ISO/TS 16949 certified.

 

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Specialty Vehicle Group engineers its products to itsown specifications as well as those of chassis manufacturers in order tomaintain the original equipment manufacturer’s warranty.  Specialty Vehicle Group takes delivery of atruck chassis or a modified sedan, usually manufactured by the Cadillac divisionof General Motors or the Lincoln division of Ford, and modifies it to itsspecifications.  Bus bodies were built ontruck chassis and funeral coaches and limousines are manufactured from amodified sedan by removing part of the interior, lengthening the body andbuilding the required vehicle.  Theproduction process typically takes between four and six weeks.  Specialty Vehicle Group utilizes metals,polymer resins, wood, fiberglass, and petrochemical-based products includingpaints, plastics, sealants and lubricants.

 

MIC Group performs a broad range of servicesincluding computer-controlled precision machining and welding, electricaldischarge machining, electron beam welding, trepanning, gun drilling,investment casting and electro mechanical assembly services. MIC Group utilizesferrous and nonferrous materials including stainless steel, alloy steels,nickel-based alloys, titanium, brass, beryllium-copper alloys and aluminum.

 

EFP’s products are manufactured from a variety ofmaterials including expandable polystyrene, polypropylene, polyethylene andresins which are subject to cost fluctuations based on changes to the price ofoil and benzene in the international markets.

 

The Specialty Vehicle Group provides a warranty onits products for a period of 48 months or 50,000 miles on the section of thebody and parts manufactured for funeral coaches and funeral limousines, 36months or 50,000 miles on the body and parts manufactured for bus bodies, and48 months or 100,000 miles on the portion of the body and parts manufacturedfor limousines.  MIC Group and EFP do notprovide warranties on their products. Warranty costs have not had a material adverse effect on SpecialtyManufacturing’s business.

 

Specialty Manufacturing’s backlog at December 31,2009 was $36.1 million compared to $81.3 million at December 31,2008.  Materials are obtained from avariety of sources and Specialty Manufacturing has not experienced significantshortages in materials.

 

***Industry. ******Specialty Vehicle Group’s funeral products are usedby funeral operators.  Sales generallyincrease with the introduction of new models by the chassis manufacturers.  VIP limousines and small to medium-sizedbuses are purchased by livery companies whose operations are influenced by thegeneral economy.***

 

MIC Group’s services are used by companies involvedin oil and gas exploration as well as automotive and aerospace. The demand forequipment and services supplied to the oilfield service industry is directlyrelated to the level of worldwide oil and gas drilling activity which isinfluenced by the price of oil and natural gas. The price of a barrel of oil as of December 31, 2009 wasapproximately $79.36 compared to $44.60 as of December 31, 2008.

 

The majority of EFP’s products are manufactured foruse by companies in the automotive, electronics, furniture, construction,appliance and other industries. It also manufactures products used as thermalinsulators for the medical and healthcare industry.  Economic conditions that affect theseindustries will subsequently affect EFP’s operations.

 

***Competition. ******Specialty Vehicle Group competes with one majormanufacturer of funeral coaches and with other businesses engaged in themanufacture of limousines and***specialized transit buses.

 

MIC Group competes with other businesses engaged inthe machining, casting and manufacturing of parts and equipment utilized in theoil and gas exploration, aerospace and other industries.

 

EFP competes with a large number of other producersof molded, expandable plastic products.

 

Some of Specialty Manufacturing’s competitors may belarger and have more resources.  Price,delivery times, technological expertise, design and capacity are the primarycompetitive factors in Specialty Manufacturing’s industries.

** **

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**JBPCO (Corporate)**

 

The members of the JBPCO (Corporate) office havehistorically provided strategic direction and support to the businessunits.  This role has been expanded toinclude procurement programs that take advantage of common raw material andcomponent purchases across all of our business units on improved economic termsand the expansion of information technology resources to develop initiativesacross all business units to reduce costs and improve data management.

 

**Trademarks and patents**

** **

We own rights to certain presentations of TruckAccessories’ Leer brand name, which we believe are valuable because we believethat Leer is recognized as being a leading brand name.  We own rights to the Federal Coach and EagleCoach names.  We also own rights tocertain other trademarks and trade names, including certain presentations ofMorgan’s name. Although these and other trademarks and trade names used by ushelp customers differentiate our product lines from those of competitors, webelieve that the trademarks or trade names themselves are less important tocustomers than the quality of the products and services. Our subsidiaries,principally Morgan, EFP and Eagle Coach, hold, directly or indirectly throughsubsidiaries, patents on certain products and components used in theirmanufacturing processes. We do not believe that the loss of any one patentwould have a material adverse effect on us.

 

**Employees (“team members”)**

** **

At December 31, 2009, we had 2,890 full-timeteam members and an average of 2,850 full-time team members throughout theyear.  Team members are unionized only atEFP’s Decatur, Alabama facility, where approximately 60 team members are aparty to a contract expiring in August 2012. We believe that relationswith our team members are good.

 

**Environmental matters**

** **

Our operations are subject to a variety of federal,state and local environmental and health and safety statutes and regulations,including those relating to emissions to the air, discharges to water,treatment, storage and disposal of waste, and remediation of contaminatedsites. In certain cases, these requirements may limit the productive capacityof our operations. Certain laws, including the Federal ComprehensiveEnvironmental Response, Compensation, and Liability Act of 1980, as amended (“Superfund”)impose strict, and under certain circumstances, joint and several, liabilityfor costs to remediate contaminated sites upon designated responsible partiesincluding site owners or operators and persons who dispose of wastes at, ortransport wastes to, such sites. Some of our operations also require permitswhich may restrict our activities and which are subject to renewal,modification or revocation by issuing authorities. In addition, we generatenonhazardous wastes, which are also subject to regulation under applicableenvironmental laws.

 

From time to time, we have received notices ofnoncompliance with respect to our operations which have typically been resolvedby investigating the alleged noncompliance, correcting any noncompliantconditions and paying fines, none of which individually or in the aggregate hashad a material adverse effect on us.   Further,we cannot ensure that we have been or will be at all times in compliance withall of these requirements, including those related to reporting or permitrestrictions, or that we will not incur material fines, penalties, costs orliabilities in connection with such requirements or a failure to comply withthem.  We expect that the nature of ouroperations will continue to make us subject to increasingly stringentenvironmental regulatory standards. Although we believe we have made sufficientcapital expenditures to maintain compliance with existing laws and regulations,future expenditures may be necessary, as compliance standards and technologychange or as unanticipated circumstances arise. Unforeseen and significantexpenditures required to comply with new or more aggressively enforced requirementsor newly discovered conditions, for example, could limit expansion or otherwisehave a material adverse effect on our business and financial condition.  For a description of currently outstandingenvironmental issues, see Note 16 of Notes to Consolidated FinancialStatements.

 

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**Reports to Security Holders**

 

Sinceall of the Company’s equity securities are privately held, the Company is notrequired by the SEC’s proxy rules or regulations, or stock exchangerequirements, to send an annual report to security holders. Nonetheless, theCompany will send to each security holder annually a copy of its Annual Reporton Form 10-K and quarterly a copy of each Quarterly Report on Form 10-Q.

 

**Item 1A.**                                                  Risk Factors

** **

An investment in our securities is subject to anumber of risks. An investor should carefully consider the following riskfactors in evaluating such an investment. Any of the following risks, as wellas other risks and uncertainties that we do not know about now or that we donot think are important, could seriously harm our business and financialresults and cause the value of our securities to decline, which in turn couldcause investors to lose all or part of their investment.

 

**Our businesses are highly cyclical. A continuation of theeconomic downturn could adversely affect our ability to generate cash and makerequired payments on our debt.**

 

Thesuccess of our business depends on general economic conditions and such factorsas:

 

·                  corporate profitability;

·                  interest rates;

·                  retail financing;

·                  fuel costs;

·                  consumer preferences;

·                  consumer spending patterns;

·                  sales of truck chassis and new pickup trucks;and

·                  levels of oil and gas exploration activity.

 

Inaddition, we sell our products to customers in inherently cyclical industries,such as the trucking industry and the energy services industry, whichexperience significant downturns from time to time. As a result of thecontinuing economic recession that began in late 2007, we have experiencedsubstantially lower sales across all our transportation businesses, namelyMorgan, Morgan Olson, Truck Accessories and the Specialty Vehicle component ofSpecialty Manufacturing.  In 2008, ourenergy-related machining business, which is a component of SpecialtyManufacturing, experienced a substantial increase in sales, including increasedsales from the three related strategic acquisitions made in 2007.  However, the price of oil decreased from$91.73 a barrel at December 31, 2007 to $44.60 a barrel at December 31,2008.  Because of this decrease in theprice of oil, sales at our energy-related machining business began to declinein the second half of 2008 and continued to decline in 2009. Although the priceper barrel of oil increased to $79.36 at December 31, 2009, sales weresubstantially lower in 2009 as demand for machining services remainedweak.  Our combined operations generatedcash of $28.8 million in 2009, and as of December 31, 2009 we had cash andcash equivalents on hand of $54.2 million and approximately $48.0 millionavailable to borrow under our revolving credit facility.

 

Therecent economic downturn has resulted in a significant decrease in our salesand could materially and adversely affect our operating cash flows and ourability to make required payments on our debt if prolonged.

 

**Demand for our truck body products depends largely on thereplacement cycle of delivery trucks.**

 

Morganand Morgan Olson produce and sell truck bodies for new delivery trucks,primarily in the general freight, moving and storage, parcel delivery anddistribution industries. Demand for these products is driven by customers 

 

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replacingolder vehicles in their delivery truck fleets, and these customers often decideto postpone their purchases of new delivery trucks during economic downturns. Ifeconomic conditions or other factors, including longer useful lives of deliverytrucks, cause our customers to reduce their capital expenditures and decreaseinvestments in new delivery trucks, our sales could be materially and adverselyaffected. As a result, our ability to generate cash and make required paymentson our debt could be negatively impacted.

 

**The cyclicality of pickup truck sales could cause a declinein Truck Accessories’ sales.**

 

TruckAccessories’ sales depend heavily on sales of new pickup trucks in NorthAmerica. New pickup trucks sales in the United States and Canada decreased29.3% from 2008 to 1.6 million units during 2009. January 2010 projectionsby industry associations indicate a 10% to 15% improvement in 2010 to an estimated1.8 million units.   A decline in pickuptruck sales would cause a decline in Truck Accessories’ sales, which couldmaterially and adversely reduce Truck Accessories’ ability to generate cash andcould reduce our ability to make required payments on our debt. Sales of pickuptrucks are characterized by periodic fluctuations in demand due to, among otherthings, changes in general economic conditions, interest rates, fuel costs, newmodel introductions, consumer spending levels and consumer preferences.

 

**We have a substantial amount of debt outstanding and may incur moredebt, which could hurt our business prospects, limit cash flow available fromour operations and prevent us from fulfilling our obligations under the 8.75%senior notes (“8.75% Notes”) and our other debt obligations.**

 

Weare significantly leveraged and will continue to be significantlyleveraged.  We had $19.4 million ofstockholder’s equity at December 31, 2009 and long-term debt of $205.2million, including $199.8 million in aggregate principal amount of 8.75% Notesdue 2014 and $5.4 million of capital lease obligations.  We had $48.6 million of secured debtavailability under our revolving credit facility and we may be able to incursubstantially more debt in the future.

 

**We may not be able to compete favorably in our industries.**

 

Weexperience direct competition in all of our product lines and some competitorshave greater financial and other resources than we have. We face competitionfrom existing competitors with entrenched positions and we could facecompetition from new ones. Changes in the nature of the industries in which weoperate could produce competition from new sources. Increased competition mayhave a material adverse effect on our business, cash flows and ability to makerequired payments on our debt by reducing our sales or profit margins.

 

**Most of our businesses rely on a small number of customers,the loss of any of which could have a material adverse effect on us.**

 

Fourof our businesses rely on a small number of customers to generate significantrevenues.

 

·                  Morgan’s two largest customers, Penske andRyder, together accounted for 54% of Morgan’s net sales in 2009, 48% in 2008and 55% in 2007 and accounted for 17% of JBPCO’s consolidated net sales during2009, 16% in 2008 and 22% in 2007.

 

·                  One customer accounted for 31% of MorganOlson’s net sales during 2009, 44% in 2008 and 37% in 2007.

 

·                  Two customers accounted for 39% of SpecialtyManufacturing’s net sales during 2009, 42% in 2008 and 28% in 2007 andaccounted for 13% of JBPCO’s consolidated net sales in 2009, 14% in 2008 and 7%in 2007.

 

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·                  Our top ten customers accounted for 39% ofJBPCO’s consolidated net sales in 2009, 44% in 2008 and 41% in 2007.

 

Becauseof the relative importance of large customers and the degree of concentrationin the industries we serve, we are subject to additional risk. We may not beable to maintain these customer relationships or maintain our historical levelsof sales to these customers. Because of the size and importance of thesecustomers, these customers may be able to exert pressure on us to lower ourprices, which may reduce our profit margins and operating cash flow. If one or moreof these customers were to experience financial difficulties, our ability tocollect receivables from it or generate new sales to it would be materially andadversely affected.

 

**Disruptions in delivery of truck or car chassis to us couldimpact the profitability of our business.**

 

Morganand Morgan Olson mount their truck bodies on customer-owned truck chassisdelivered from truck chassis manufacturers. Specialty Vehicle Group converts car chassis supplied by General Motorsand Ford into products for its customers. If truck and car chassis manufacturers or their suppliers experiencedisruptions in their businesses, resulting from plant closures or othercost-cutting initiatives, lack of cash resources, bankruptcy proceedings orother potential causes, Morgan, Morgan Olson and Specialty Vehicle Group may beunable to sell or deliver their products. Work stoppages or slowdownsexperienced by the large truck and car manufacturers that supply chassis couldresult in delays or slowdowns in our ability to deliver products to ourcustomers.

 

**Environmental and health and safety liabilities andrequirements could require us to incur material costs.**

 

Ouroperations are subject to a variety of federal, state and local environmentaland health and safety statutes and regulations, including those relating toemissions to the air, discharges to water, treatment, storage and disposal ofwaste, and remediation of contaminated sites. In certain cases, theserequirements may limit the productive capacity of our operations. Laws,including Superfund legislation, impose strict, and under certaincircumstances, joint and several, liability for costs to remediate contaminatedsites upon designated responsible parties including site owners or operatorsand persons who dispose of wastes at, or transport wastes to, such sites.

 

Fromtime to time we have received notices of noncompliance with respect to ouroperations which have typically been resolved by investigating the allegednoncompliance, correcting any noncompliant conditions and paying fines. We havefrom time to time been identified as a potentially responsible party at variousSuperfund sites, which, based on available information, we do not anticipatewill result in any material liability. However, new environmental requirementsor more aggressive enforcement of existing ones or discovery of presentlyunknown conditions could require material expenditures or result in liabilitieswhich could limit expansion or otherwise have a material adverse effect on ourbusiness, financial condition, operating cash flows and our ability to makerequired payments on our debt.

 

Fora description of current environmental issues, see Note 16 of Notes toConsolidated Financial Statements.

 

**We may incur material losses and costs as a result of productliability and warranty claims that may be brought against us.**

 

Weface an inherent risk of exposure to product liability claims if the use of ourproducts results, or is alleged to result, in personal injury and/or propertydamage. If we manufacture a defective product, we may experience materialproduct liability losses and we may incur significant costs to defend productliability claims. We also could incur significant costs in correcting anydefects, lose sales and suffer damage to our reputation. Our product liabilityinsurance coverage may not be adequate for the liabilities we could incur andmay not continue to be available on terms acceptable to us.

 

Wealso are subject to product warranty claims in the ordinary course of ourbusiness. If we produce poor-quality products or use defective materials we mayincur unforeseen costs in excess of what we have reserved in our 

 

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financialstatements. These costs could have a material adverse effect on our business,operating cash flows and ability to make required payments on our debt.

 

**We depend on the services of key management personnel, theloss of whom would materially harm us.**

 

Ourability to compete successfully and implement our business strategy depends onthe efforts of our senior management personnel, including those of JohnPoindexter, our Chairman of the Board, President and Chief Executive Officer.  The loss of the services of any of theseindividuals could have a material adverse effect on our business. We do notmaintain key-man life insurance policies on any of our executives.

 

**We may be unable to realize our business strategy ofimproving operating performance and generating cost reductions.**

 

Wehave either implemented or plan to implement strategic initiatives designed toimprove our operating performance. The failure to achieve the goals of theseinitiatives could have a material adverse effect on our business. We may decideto make significant expenditures in an effort to streamline or improve ouroperations, including combining some of our operations at existing facilities,but may be unable to successfully implement or realize the expected benefits ofthese initiatives. We also may not be able to sustain improvements made todate. We may decide to alter or discontinue some aspects of our strategy andmay adopt alternative or additional strategies, which may not be in the bestinterests of our note holders.

 

**We may not be able to consummate future acquisitions orsuccessfully integrate acquisitions into our business.**

 

Ourbusiness strategy includes growing through strategic acquisitions of otherbusinesses with complementary products, manufacturing capabilities orgeographic markets. We may not be able to continue to identify attractiveacquisition opportunities or successfully acquire identified targets.  If we fail to integrate acquired businessessuccessfully into our existing businesses or incur unforeseen expenses inconsummating acquisitions we could incur unanticipated expenses and losses.

 

Wemust successfully integrate acquired businesses into our operations to takefull advantage of projected benefits from those acquired businesses. Theintegration of future acquisitions into our operations could result inoperating difficulties and divert management and financial resources that wouldotherwise be available for the development and maintenance of our existingoperations. Our ability to make acquisitions may be constrained by our abilityto obtain additional financing and by the provisions of the indenture governingour outstanding 8.75% Notes and by the terms of our revolving credit facility.

 

Acquisitionsinvolve a number of special risks, including:

 

· unexpected losses of key employees or customers of the acquiredbusiness;

· conforming the standards, processes,procedures and controls of the acquired business with those of our existingoperations;

· coordinating our product and process development;

· hiring additional management and critical personnel; and

· increasing the scope, geographic diversity and complexity of ouroperations.

 

Acquisitionscould result in our incurrence of additional debt and contingent liabilities,including environmental, tax, pension and other liabilities. These liabilitiescould have a material adverse effect on our business, our ability to generatecash and our ability to make required payments on our debt.

 

**If we are unable to meet future capital requirements, ourcompetitive position may be adversely affected.**

 

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Asa manufacturer, we are required to expend significant amounts of capital forengineering, development, tooling and other costs. Generally we seek to recoverthese costs through revenue generation, but we may be unsuccessful due tocompetitive pressures and other market constraints. We expect to fund capitalexpenditures through operating cash flows, borrowings under our revolvingcredit facility and other sources of borrowing such as capital leases, but wemay not have adequate funds or borrowing availability to make all the necessarycapital expenditures. If we are unable to make necessary capital expenditures,our business and our competitive position may be materially and adverselyaffected.

 

**As a privately held company, we are subject to less stringentcorporate governance requirements than a company with public equity. Thisprovides less protection to our investors.**

 

Whilewe are subject to certain requirements of the Sarbanes-Oxley Act of 2002, weare not subject to many of its provisions, including rules requiring us tohave independent directors or an audit committee composed of independentdirectors. Two of our three directors, John Poindexter, our President and CEO,and Stephen Magee, the chairman of the Audit Committee of our board ofdirectors, are not independent. We are not subject to the same corporategovernance standards as a company with public equity or a company listed on anational exchange and our security holders do not have the protections providedby having independent directors or audit committee members.

 

**Item 1B.**                                                  UnresolvedStaff Comments

** **

**None.**

** **

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** **

**Item 2.**                                                           Properties

** **

Weown or lease the following manufacturing, office and sales facilities as of December 31,2009:

 
| **Location**                   | ** ** | **Principal  use**               | ** ** | **Approximate  square feet** | ** ** | **Owned  or leased** | ** ** | **Lease  expiration** | ** ** |
|--------------------------------|------------|----------------------------------|------------|------------------------------|------------|----------------------|------------|-----------------------|------------|
| ***Morgan:***                  |       |                             |       |                         |       |                 |       |                  |       |
| Ehrenberg, Arizona             |       | Manufacturing                    |       | 119,000                      |       | Owned                |       | —                |       |
| Riverside, California          |       | Manufacturing/service            |       | 62,000                       |       | Leased               |       | 2013                  |       |
| Atlanta, Georgia               |       | Parts &  service        |       | 20,000                       |       | Leased               |       | 2012                  |       |
| Rydal, Georgia                 |       | Manufacturing                    |       | 85,000                       |       | Owned                |       | —                |       |
| Ephrata, Pennsylvania          |       | Manufacturing                    |       | 51,000                       |       | Leased*              |       | 2015                  |       |
| New Morgan, Pennsylvania       |       | Manufacturing                    |       | 62,900                       |       | Leased               |       | 2010                  |       |
| Morgantown, Pennsylvania       |       | Manufacturing/service            |       | 261,000                      |       | Leased*              |       | 2015                  |       |
| Morgantown, Pennsylvania       |       | Office/warehouse                 |       | 110,000                      |       | Leased               |       | 2015                  |       |
| Corsicana, Texas               |       | Manufacturing/service            |       | 63,000                       |       | Leased*              |       | 2015                  |       |
| Janesville, Wisconsin          |       | Manufacturing/service            |       | 166,000                      |       | Leased               |       | 2015                  |       |
| Denver, Colorado               |       | Parts &  service        |       | 15,000                       |       | Leased               |       | 2012                  |       |
| Lakeland, Florida              |       | Parts &  service        |       | 47,000                       |       | Leased               |       | 2010                  |       |
| Tampa, Florida                 |       | Parts &  service        |       | 24,000                       |       | Leased               |       | 2010                  |       |
| Brampton, Ontario, Canada      |       | Office &  manufacturing |       | 35,000                       |       | Leased               |       | 2013                  |       |
| ***Morgan Olson:***            |       |                             |       |                         |       |                 |       |                  |       |
| Sturgis, Michigan              |       | Office &  manufacturing |       | 384,000                      |       | Owned                |       | —                |       |
| ***Truck Accessories:***       |       |                             |       |                         |       |                 |       |                  |       |
| Woodland, California           |       | Manufacturing                    |       | 65,000                       |       | Leased               |       | 2012                  |       |
| Elkhart, Indiana               |       | Office &  research      |       | 23,500                       |       | Owned                |       | —                |       |
| Elkhart, Indiana               |       | Manufacturing                    |       | 132,500                      |       | Leased               |       | 2010                  |       |
| Elkhart, Indiana               |       | Office &  manufacturing |       | 80,000                       |       | Owned                |       | —                |       |
| Elkhart, Indiana               |       | Manufacturing                    |       | 75,000                       |       | Leased               |       | 2013                  |       |
| Elkhart, Indiana               |       | Manufacturing                    |       | 150,000                      |       | Leased               |       | 2011                  |       |
| Elkhart, Indiana               |       | Manufacturing                    |       | 17,250                       |       | Leased               |       | 2012                  |       |
| Chickasha, Oklahoma            |       | Warehouse                        |       | 9,700                        |       | Leased               |       | 2010                  |       |
| Milton, Pennsylvania           |       | Manufacturing/retail             |       | 103,000                      |       | Leased               |       | 2012                  |       |
| Clackamas, Oregon              |       | Retail                           |       | 12,700                       |       | Leased               |       | 2013                  |       |
| Centralia, Washington          |       | Manufacturing                    |       | 45,950                       |       | Owned                |       | —                |       |
| ***Specialty Manufacturing:*** |       |                             |       |                         |       |                 |       |                  |       |
| Amelia, Ohio                   |       | Office &  manufacturing |       | 54,100                       |       | Leased               |       | 2011                  |       |
| Brenham, Texas                 |       | Office &  manufacturing |       | 125,000                      |       | Owned                |       | —                |       |
| Brenham, Texas                 |       | Office &  manufacturing |       | 151,000                      |       | Owned                |       | —                |       |
| Decatur, Alabama               |       | Manufacturing                    |       | 175,000                      |       | Leased               |       | 2012                  |       |
| Duncan, Oklahoma               |       | Office &  manufacturing |       | 53,000                       |       | Leased               |       | 2012                  |       |
| Elkhart, Indiana               |       | Office &  manufacturing |       | 211,600                      |       | Owned                |       | —                |       |
| Fort Smith, Arkansas           |       | Office &  manufacturing |       | 170,000                      |       | Leased               |       | 2010                  |       |
| Houston, Texas                 |       | Office &  manufacturing |       | 97,000                       |       | Leased               |       | 2012                  |       |
| Selangor Darul Ehsan, Malaysia |       | Office &  manufacturing |       | 30,000                       |       | Leased               |       | 2012                  |       |
| Monterrey, Mexico              |       | Manufacturing                    |       | 38,000                       |       | Leased               |       | 2011                  |       |
| Nashville, Tennessee           |       | Manufacturing                    |       | 40,900                       |       | Leased               |       | 2010                  |       |
| ***JBPCO (Corporate):***       |       |                             |       |                         |       |                 |       |                  |       |
| Houston, Texas                 |       | Office                           |       | 10,000                       |       | Leased               |       | 2019                  |       |

 

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*Effective December 12, 2008, these facilitieswere sold to and leased back from an entity owned by John Poindexter. See Note17 of Notes to Consolidated Financial Statements.

 

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We believe that our facilities are adequate for ourcurrent needs and are capable of being utilized at higher capacities to supplyincreased demand, if necessary.  Allowned properties are pledged as collateral against our revolving creditfacility.

 
| **Item 3.** | **Legal Proceedings** |
|-------------|-----------------------|

 

We are involved in variouslawsuits, which arise in the ordinary course of business. In the opinion ofmanagement, the ultimate outcome of known lawsuits will not have a materialadverse effect on us.

 
| **Item  4.** | **Submission  of Matters to a Vote of Security Holders** |
|--------------|----------------------------------------------------------|

 

**The sole shareholder ofthe Company signed a consent dated December 1, 2009 electing the followingmembers of the board of directors for the ensuing year: John B. Poindexter,Stephen P. Magee and William J. Bowen.**

 

**PART II**

 
| **Item  5.** | **Market  for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases  of Equity Securities** |
|--------------|-------------------------------------------------------------------------------------------------------------------------|

 

The registrant’s common equity is privately held andnot publicly traded.  As of March 31,2010, John Poindexter owned all of the registrant’s issued and outstandingcommon equity.  The Company has neverpaid cash dividends.

 

The covenants in the indenture regarding the 8.75%Notes and the loan agreement for the Company’s revolving credit facility bothrestrict the Company’s ability to pay dividends on its common equity. 

 

The Company has no securities authorized forissuance under equity compensation plans.

 

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**Item  6.****                                                       ****Selected Financial Data**

 

The following tables set forth selected consolidatedfinancial data and other data concerning J.B. Poindexter & Co., Inc.for each of the last five years.  Theselected financial data should be read in conjunction with “Management’sDiscussion and Analysis of Financial Condition and Results of Operations” andthe Consolidated Financial Statements and related Notes thereto.

 
| ** **                                   | ** ** | **Year ended December 31,** | ** ** |
|----------------------------------------------|------------|----------------------------------|------------|
| **(Dollars in Millions)**                    | ** ** | **2005**                         | ** ** | **2006** | ** ** | **2007** | ** ** | **2008** | ** ** | **2009** | ** ** |
| **Operating data:**                          |       |                             |       |   |   |   |   |   |   |   |   |
| Net sales                                    |       | $                                | 668.1      |   | $ | 795.4 |   | $ | 792.2 |   | $ | 706.4 |   | $ | 480.6 |   |
| Cost of sales                                |       | 593.1                            |       | 701.1 |   | 707.2 |   | 610.8 |   | 420.1 |   |
| Gross profit                                 |       | 75.0                             |       | 94.3 |   | 85.0 |   | 95.6 |   | 60.5 |   |
| Selling, general and administrative expenses |       | 50.0                             |       | 63.0 |   | 64.9 |   | 66.3 |   | 49.0 |   |
| Closed and excess facility costs             |       | 0.4                              |       | 2.7 |   | 0.2 |   | 0.8 |   | 0.6 |   |
| Gain on repurchase of 8.75% Notes            |       | —                           |       | — |   | — |   | (0.4 | ) | (0.2 | ) |
| Other expense (income)                       |       | 0.1                              |       | (0.2 | ) | (0.3 | ) | (0.8 | ) | 0.2 |   |
| Operating income                             |       | 24.5                             |       | 28.8 |   | 20.2 |   | 29.7 |   | 10.9 |   |
| Interest expense                             |       | 18.5                             |       | 18.9 |   | 18.7 |   | 18.5 |   | 18.2 |   |
| Interest income                              |       | (1.7                             | )          | (1.7 | ) | (0.8 | ) | (0.4 | ) | (0.2 | ) |
| Income tax provision (benefit)               |       | 2.6                              |       | 3.4 |   | 3.1 |   | 4.8 |   | (2.2 | ) |
| Net income (loss)                            |       | $                                | 5.1        |   | $ | 8.2 |   | $ | (0.8 | ) | $ | 6.8 |   | $ | (4.9 | ) |
| Ratio of earnings to fixed charges(a)        |       | 1.4x                             |       | 1.5x |   | 1.1x |   | 1.5x |   | 0.6x |   |
|                                         |       |                             |       |   |   |   |   |   |   |   |   |
| **Other data:**                              |       |                             |       |   |   |   |   |   |   |   |   |
| EBITDA(b)                                    |       | $                                | 37.9       |   | $ | 43.8 |   | $ | 43.5 |   | $ | 48.6 |   | $ | 28.7 |   |
| Consolidated Coverage Ratio(c)               |       | 2.1                              |       | 2.4 |   | 2.3 |   | 2.6 |   | 1.6 |   |
|                                         |       |                             |       |   |   |   |   |   |   |   |   |
| **Balance sheet data (at year end):**        |       |                             |       |   |   |   |   |   |   |   |   |
| Working capital                              |       | $                                | 114.9      |   | $ | 112.3 |   | $ | 83.3 |   | $ | 99.2 |   | $ | 99.4 |   |
| Total assets                                 |       | $                                | 273.2      |   | $ | 292.4 |   | $ | 297.2 |   | $ | 295.9 |   | $ | 286.0 |   |
| Total debt                                   |       | $                                | 205.4      |   | $ | 207.6 |   | $ | 213.6 |   | $ | 207.4 |   | $ | 205.2 |   |
| Stockholder’s equity                    |       | $                                | 9.7        |   | $ | 18.3 |   | $ | 18.3 |   | $ | 23.8 |   | $ | 19.4 |   |

 

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(a)          For the purpose of calculating the ratio of earningsto fixed charges, earnings consist of net income (loss) plus income taxes andfixed charges (excluding capitalized interest). Fixed charges consist ofinterest expense, amortization of debt issuance costs and the estimated portionof rental expenses deemed a reasonable approximation of the interest factor.

 

(b)         “EBITDA” is netincome from continuing operations increased by the sum of interest expense,income taxes, depreciation and amortization and other noncash items for thoseoperations defined as restricted subsidiaries in the indenture pertaining tothe 8.75% Notes.  EBITDA is not includedherein as operating data and should not be construed as an alternative tooperating income (determined in accordance with accounting principles generallyaccepted in the United States) as an indicator of the Company’s operatingperformance.  The Company has includedEBITDA because it is relevant for determining compliance under the indentureand because the Company understands that it is one measure used by certaininvestors to analyze the Company’s operating cash flow and historical abilityto service its indebtedness.  Thefollowing are the components of the Company’s EBITDA:

 

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| ** **                       | ** ** | **Year ended December 31,** | ** ** |
|----------------------------------|------------|----------------------------------|------------|
| **(Dollars in Millions)**        | ** ** | **2005**                         | ** ** | **2006** | ** ** | **2007** | ** ** | **2008** | ** ** | **2009** | ** ** |
| ** **                       | ** ** | ** **                       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net income (loss)                |       | $                                | 5.1        |   | $ | 8.2 |   | $ | (0.8 | ) | $ | 6.8 |   | $ | (4.9 | ) |
| Income tax provision (benefit)   |       | 2.6                              |       | 3.4 |   | 3.1 |   | 4.8 |   | (2.2 | ) |
| Interest expense                 |       | 18.5                             |       | 18.9 |   | 18.7 |   | 18.5 |   | 18.2 |   |
| Depreciation and amortization    |       | 10.4                             |       | 12.0 |   | 15.1 |   | 17.7 |   | 17.0 |   |
| Noncash charges                  |       | 0.4                              |       | 1.1 |   | — |   | 0.8 |   | 0.6 |   |
| Pro forma effect of acquisitions |       | 0.9                              |       | 0.2 |   | 7.4 |   | — |   | — |   |
|                             |       | $                                | 37.9       |   | $ | 43.8 |   | $ | 43.5 |   | $ | 48.6 |   | $ | 28.7 |   |

 

(c)          “ConsolidatedCoverage Ratio” is the ratio of EBITDA to interest expense of the Company andits subsidiaries that guarantee the 8.75% Notes.  Among other things, it is used in theindenture to limit the amount of indebtedness that the Company may incur.  All the Company’s subsidiaries are restrictedunder the terms of the indenture and guarantee the 8.75% Notes.

 

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**Item 7.**                                                         Management’sDiscussion and Analysis of Financial Condition and Results of Operations

** **

**Overview**

** **

**The current economic recessionhas affected all of our businesses but primarily our transportation-relatedbusinesses which began to experience lower demand for their products in thethird quarter of 2007 that continued through 2008 and 2009.  We reacted and are continuing to react tothese conditions by increasing market share at the expense of weakercompetitors and reducing both direct and indirect costs through improvedmanufacturing processes and the reduction of general and administrativecosts.  Our employee headcount wasapproximately 2,900 as of December 31, 2009 compared to 3,500 and 4,200 atDecember 31, 2008 and 2007, respectively. In contrast to the previous economic downturn during 2001 and 2002, oiland gas exploration activity increased in 2008 compared to the prior year whichalong with three strategic acquisitions in 2007 provided significant additionalnet sales and operating income to our Specialty Manufacturing Division.  However, as the price of oil decreased from$91.73 per barrel at December 31, 2007 to $44.60 per barrel at December 31,2008, sales at our energy-related machining business remained soft in 2009 eventhough the price per barrel of oil gradually increased throughout 2009 to$79.36 per barrel at December 31, 2009.**

** **

Duringthe year ended December 31, 2007, MIC Group acquired three manufacturingbusinesses that specialize in providing services to the oil and gas explorationand production industry, primarily large multinational oilfield servicescompanies.  MIC Group has combined themwith its operations.  MIC Group acquiredRichard’s Manufacturing Co., Inc. (“MIC Duncan”) effective April 30,2007, Tarlton Supply Company (“MIC Tarlton”) effective August 23, 2007,and Machine and Manufacturing I, Inc. (“MIC Houston”) effective September 4,2007.  The results of operations forthese businesses for the period of time subsequent to their acquisition areincluded in the results of operations of the Specialty Manufacturing Divisionfor the years ended December 31, 2009, 2008 and 2007.

 

Thefollowing table shows our net sales, operating income and operating income as apercentage of net sales for each segment for the years ended December 31,2009, 2008 and 2007.

 
| ** **                  | ** ** | **Year ended December 31,** | ** ** |
|-----------------------------|------------|----------------------------------|------------|
| **(Dollars in Millions)**   | ** ** | **2009**                         | ** ** | **2008** | ** ** | **2007** | ** ** |
| Net Sales                   |       |                             |       |   |   |   |   |
| Morgan                      |       | $                                | 146.9      |   | $ | 233.9 |   | $ | 332.9 |   |
| Morgan Olson                |       | 61.6                             |       | 104.4 |   | 110.3 |   |
| Truck Accessories           |       | 115.6                            |       | 131.9 |   | 155.6 |   |
| Specialty Manufacturing     |       | 157.9                            |       | 238.3 |   | 195.2 |   |
| Eliminations                |       | (1.4                             | )          | (2.1 | ) | (1.8 | ) |
| Consolidated                |       | $                                | 480.6      |   | $ | 706.4 |   | $ | 792.2 |   |
| Operating Income (Loss)     |       |                             |       |   |   |   |   |
| Morgan                      |       | $                                | 1.4        |   | $ | 4.0 |   | $ | 15.4 |   |
| Morgan Olson                |       | 2.6                              |       | 5.4 |   | (2.7 | ) |
| Truck Accessories           |       | 7.9                              |       | 2.4 |   | 3.2 |   |
| Specialty Manufacturing     |       | 2.9                              |       | 25.9 |   | 13.7 |   |
| JBPCO (Corporate)           |       | (3.9                             | )          | (8.0 | ) | (9.4 | ) |
| Consolidated                |       | $                                | 10.9       |   | $ | 29.7 |   | $ | 20.2 |   |
| Operating Margin Percentage |       |                             |       |   |   |   |   |
| Morgan                      |       | 1.0                              | %          | 1.7 | % | 4.6 | % |
| Morgan Olson                |       | 4.2                              | %          | 5.2 | % | (2.4 | )% |
| Truck Accessories           |       | 6.8                              | %          | 1.8 | % | 2.1 | % |
| Specialty Manufacturing     |       | 1.9                              | %          | 10.9 | % | 6.9 | % |
| Consolidated                |       | 2.3                              | %          | 4.2 | % | 2.5 | % |

 

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The following is a discussion of the key componentsof our results of operations:

 

***Source of revenues.***  We derive revenues from:

 

·                  Morgan’s sales of truck bodies, parts andservices;

 

·                  Morgan Olson’s sales of step van truckbodies, parts and services;

 

·                  Truck Accessories’ sales of pickup truck capsand tonneaus and trailer door and window components; and

 

·                  Specialty Manufacturing’s sales ofmanufacturing services to customers requiring precision machining of metalparts and casting services and specialty vehicles, including funeral coaches,buses and limousines, contract manufacturing services, packaging and otherproducts.

 

***Discounts, returns andallowances.***  Ourgross sales are reduced by discounts we provide to customers and returns andallowances in the ordinary course of our business.  We provide discounts as deemed necessary togenerate sales volume and remain price competitive. Discounts include paymentterm discounts and discretionary discounts from list price.

 

***Cost of sales.***  Cost of sales represents the costs directlyassociated with manufacturing our products and generally varies with the volumeof products produced. The components of cost of sales are materials, labor andoverhead including transportation costs. We have experienced significantfluctuations in transportation costs and in the cost of materials, such asaluminum, steel, fiberglass reinforced plywood, lumber, fiberglass resin andplastic beads, over the previous year that have affected our operating profitmargins.  However, increased prices wecharge for our products and the cost to transport them mitigated the impact ofrising prices on our financial condition and results of operations. The benefitof lower raw material and transportation costs are also mitigated by anydecrease in the prices we charge for our products necessary to remaincompetitive.  We have entered into supplycontracts for some materials at a fixed price for up to one year and in somecases prepurchased bulk quantities of materials to reduce rising prices asdeemed necessary in the current economic environment.  We increasingly source materials fromoverseas to take advantage of lower prices.  Overhead costs are allocated to production based on labor costs andinclude the depreciation and amortization costs associated with the assets usedin manufacturing including rent associated with manufacturing and indirectlabor and other costs.

 

***Selling, general andadministrative expenses.***  Selling, general and administrative expensesare made up of the costs of selling our products and administrative costsrelated to information technology, accounting, finance, human resources,procurement and engineering. Costs include personnel and related costs,including travel, equipment and facility rent expense not associated withmanufacturing activities, and professional services such as audit fees.Selling, general and administrative expenses also include our costs atcorporate headquarters to manage and provide support to our operatingsubsidiaries.

 

***Other income and expense.***  Income and expenses that we incur during theyear that are nonrecurring in nature and not directly comparable to the prioryear are included in other income and expense or are separately identified.

 

**Critical accounting policies and estimates**

 

Thediscussion and analysis of financial condition and the results of operationsare based upon our consolidated financial statements, which have been preparedin conformity with accounting principles generally accepted in the UnitedStates.  The preparation of theseconsolidated financial statements requires the use of estimates that affect thereported amounts of assets, liabilities, revenues and expenses, and relateddisclosure of contingent assets and liabilities. The estimates, including thoserelated to warranties offered on products, self-insurance reserves, bad debts,inventory obsolescence, investments, intangible assets and goodwill, incometaxes, financing operations, workers’ compensation insurance and contingentliabilities, are evaluated continually. The estimates are based on 

 

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historicalexperience and on various other assumptions that are believed to be reasonableunder the circumstances, the results of which form the basis for makingjudgments about the carrying values of assets and liabilities that are notreadily apparent from other sources. Actual results may differ from theseestimates under different assumptions or conditions.

 

We believe the following are the most criticalaccounting policies used in the preparation of our financial statements.

 

***Revenue recognition.***  Revenue is recognized upon shipment of theproduct to customers, except for Morgan and Morgan Olson where revenue isrecognized when title transfers to the customer upon final body assembly,quality inspection and customer notification. We classify amounts billed tocustomers related to shipping and handling as revenue. The costs associatedwith shipping and handling revenue are included in cost of sales.

 

***Warranties.*** Reserves for costs associated with fulfillingwarranty obligations offered on Morgan, Morgan Olson, Truck Accessories andSpecialty Vehicles Group products are established based on historicalexperience and an estimate of future claims. Increases in the incidence ofproduct defects would result in additional reserves being required in thefuture and would reduce income in the period of such determination.

 

***Self-insurance reserves.***  We utilize a combination of insurancecoverage and self-insurance programs for property, casualty, workers’compensation and healthcare insurance. We use internally determined developmentfactors to record a fully developed self-insurance reserve to cover theself-insured portion of these risks based on known facts and historicalindustry and company trends. Changes in the assumptions used could result in adifferent self-insurance reserve.

 

***Income taxes****.  *We estimate our income taxesin each of the jurisdictions in which we operate. This process involvesestimating our current tax exposure and assessing temporary differencesresulting from the differing treatment of items for tax and financial reportingpurposes. These differences result in deferred tax assets and liabilities,which are included in the consolidated balance sheet. We then assess thelikelihood that the deferred tax assets will be recovered from future taxableincome and, to the extent recovery is not likely, a valuation allowance isestablished thereby reducing the deferred tax asset. When an increase in thisallowance within a period is recorded, we include an expense in the taxprovision in the consolidated statements of operations. Management’s judgmentis required in determining the provision for income taxes, deferred tax assetsand liabilities, and any valuation allowance recorded against the net deferredtax assets. We had alternative minimumtax credit carryforward deferred tax assets of approximately $0.8 million at December 31,2009 and 2008, for U.S. federal income tax purposes, which may be carriedforward indefinitely.  At December 31, 2009 and 2008, we had a statetax net operating loss carryforward deferred tax asset of $3.7 million and $3.9million, respectively, and at December 31, 2009 and 2008, we had recordeda valuation allowance of $2.1 million and $2.5 million, respectively, againstthe portion of which realization is uncertain.  We had Canadian tax netoperating loss carryforward deferred tax asset of $1.3 million and $1.5 millionas of December 31, 2009 and 2008, respectively. As of December 31,2009 and 2008, we had recorded a valuation allowance of $1.3 million and $1.5million, respectively, against this deferred tax asset for which realization isuncertain.  Canadian net operating losses of $4.3 million were carriedback to prior years. The remaining Canadian net operating loss carryforwardsexpire at various dates ranging from 1 to 20 years. While our deferred taxassets, net of the valuation allowance, are considered realizable, actualamounts could be reduced if future taxable income is not achieved.

 

In June 2006, the Financial Accounting StandardsBoard (“FASB”) issued guidance that clarifies the accounting for uncertainty inincome taxes and prescribes a recognition threshold and measurement attributefor financial statement recognition and measurement of a tax position taken orexpected to be taken in a tax return and also provides guidance on variousrelated matters such as derecognition, interest and penalties, and disclosure. In connection with the adoptionof this guidance, we recognized an increase of approximately $0.2 million toour net tax liabilities primarily related to uncertain state income taxpositions, net of a federal tax benefit, which was accounted for as a reductionto retained earnings as of January 1, 2007. As of January 1, 2007, wehad approximately $1.6 million of unrecognized state tax liabilities, and acorresponding federal tax benefit of $0.4 

 

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million, which included$0.3 million of interest and penalties.  During 2007, we recorded anadditional provision for uncertain state tax positions of $1.0 million, and acorresponding federal tax benefit of $0.3 million, related to prior year statetax positions and an additional provision for uncertain state tax positions of$0.3 million, and a corresponding federal tax benefit of $0.1 million, relatedto current year state tax positions. During 2008, we recorded a reduction inthe provision for uncertain state tax position of $0.3 million, and acorresponding federal tax increase of $0.1 million, related to prior year statetax positions and an additional provision for uncertain state tax positions of$0.2 million, and a corresponding federal tax benefit of $0.1 million, relatedto current year state tax positions.  During 2009, we recorded a reductionin the provision for uncertain state tax positions of $0.7 million, and acorresponding federal tax increase of $0.3 million, related to prior year statetax positions, an additional provision for uncertain state tax positions of$0.1 million, and a corresponding federal tax benefit of $0.1 million, relatedto current year state tax positions and payments of $0.4 million for settlementof recorded liabilities related to prior year state tax positions.  As of December 31,2009 and 2008, we had approximately $1.8 million and $2.8 million,respectively, of unrecognized tax benefits related primarily to uncertain statetax liabilities, and a corresponding federal benefit of $0.5 million and $0.8million, respectively, including approximately $0.5 million and $0.8 million,respectively, of possible interest and the consequential late payment penaltiesfor each period, if assessed, of which $1.3 million and $2.0 million,respectively, if recognized, would reduce our income tax provision in futureperiods.

 

***Inventory valuation. ***Our inventories mainly consist of raw materials,vehicles prior to conversion, supplies and work-in-progress. Because weprimarily produce products to our customers’ orders, we maintain a relativelysmall stock of finished goods inventories. Inventories are stated at the lowerof cost (first-in, first-out method) or market. We record reserves against thevalue of inventory based upon our determination that the inventory is notusable in our products. These reserves are estimates, which could varysignificantly, either favorably or unfavorably, from actual requirements iffuture economic conditions, customer inventory levels or competitive conditionsdiffer from our expectations.

 

***Accounts receivable. ***We provide credit to our customers in the ordinarycourse of business. We are not aware of any significant credit risks related toour customer base and do not generally require collateral or other security tosupport customer receivables.  SpecialtyVehicle Group sells to certain customers on extended terms and retains title tothe vehicle until payment is complete. The carrying amount of our accountsreceivable approximates the fair value of the receivables because of their short-termnature with payment typically due within 30 days of transfer of title tothe product. We establish an allowance for doubtful accounts on a case-by-casebasis when we believe that we are unlikely to receive payment in full ofamounts owed to us. We make a judgment in these cases based on available factsand circumstances and we may record a reserve against a customer’s accountreceivable. We reevaluate the reserves and adjust them as we obtain moreinformation regarding the account. The collectability of trade receivablescould be significantly reduced if there is a greater than expected rate ofdefaults or if one or more significant customers experience financialdifficulties or are otherwise unable to make required payments.

 

***Goodwill, identified intangibles and long-livedassets impairment. ***We perform atest of our goodwill and indefinite-lived intangible assets for potentialimpairment annually as of October 1. The fair values of our reporting units for testing goodwill are based onvarious valuation methods, including multiples of earnings derived frominformation and analysis of recent acquisitions in the marketplace forcompanies with similar operations and discounted cash flow analysis. Changes inthe assumptions used in the fair value calculation could result in an estimatedreporting unit fair value that is below the carrying value, which may give riseto an impairment of our goodwill.  Inaddition to the annual review, we also test for impairment of our long-livedassets, goodwill and intangible assets should events or circumstances indicatea potential reduction in the fair value of those assets below their carryingvalue.  Lastly, on an annual basis, wedetermine that the remaining lives of identified amortizable intangible assetscontinue to be appropriate.

 

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**Comparison of 2009 to 2008**

 

***Sales.**** **Our*consolidated net salesdecreased $225.8 million, or 32.0%, to $480.6 million for 2009 compared to$706.4 million for 2008.

 

·                  Morgan’s net sales decreased $87.0 million,or 37.2%, to $146.9 million for 2009 compared to $233.9 million for 2008.General economic conditions continued to deteriorate in 2009 evidenced by lowerdemand for Class 3-7 truck bodies on already depressed levels.  Sales of truck bodies to the commercialdivisions of leasing companies, companies with fleets of delivery vehicles,truck dealers and distributors, or Commercial sales, which represented 80.3% ofMorgan’s net sales in 2009 compared to 78.4% percent in the prior year,decreased $65.6 million, or 35.8%, to $117.8 million on a 38.4% decline in unitshipments. Consumer Rental sales decreased $19.1 million, or 53.3%, on a 58.5%decrease in unit shipments. The average price of a Consumer Rental truck bodyincreased 12.6% due to decreased shipments of smaller units.  The average price per Commercial unitincreased 12.6% compared to prior year. The introduction of Portable Storage Units contributed $1.4 million forthe year.  Other sales including sales ofparts and services decreased $4.0 million, or 27.0%, to $10.7 million comparedto $14.7 million last year.

 

·                  Morgan Olson’s net sales decreased $42.8million, or 41.0%, to $61.6 million for 2009 compared to $104.4 million for2008.  Step van sales declined $33.6million, or 43.0%, on a 48.4% decrease in unit shipments for 2009.  Step van sales to customers with large fleetsof vehicles were down $33.4 million, or 63.8%, compared to the prior year.  Service parts sales and delivery incomedecreased $9.2 million due mainly to a one-time service parts purchase of $5.5million by the United States Postal Service in the prior period and decreaseddelivery income on lower service part sales.

 

·                  Truck Accessories’ net sales decreased $16.3million, or 12.3%, to $115.6 million for 2009 compared to $131.9 million for2008.   Sales of pickup truck caps andtonneaus decreased by 13.5% to approximately 117,000 units as new pickup trucksales in the United States and Canada decreased 29.3% from last year.  Sales of new pickup trucks were 1.6 millionunits during 2009.

 

·                  Specialty Manufacturing’s net sales decreasedby $80.4 million, or 33.7%, to $157.9 million for 2009 compared to$238.3 million for 2008.  Sales tocustomers in the energy services business decreased 40.1% to $93.0 millioncompared to $155.1 million in 2008 as demand for machining servicescontinued to decline as the price per barrel of oil remained significantlylower throughout the year compared to its high in 2008.  Demand for specialty vehicles includingfuneral coaches, buses and limousines declined as sales of those productsdecreased $14.3 million, or 25.0%, to $42.9 million compared to $57.2 millionfor 2008.   Sales of plastics-basedpackaging products decreased $4.0 million, or 15.3%, to $22.1 million.

 

***Backlog.***** **Consolidated backlog was$149.9 million as of December 31, 2009 compared to $149.2 million as of December 31,2008.

 

·                  Morgan’s backlog at December 31, 2009was $73.1 million compared to $47.6 million at December 31, 2008. Theincrease in backlog was due to commercial rental orders of $22.5 millioncompared to $0.1 million in the prior year.

 

·                  Morgan Olson’s backlog was $38.1 million at December 31,2009 compared to $18.2 million at December 31, 2008.  The increase was due primarily to two retailorders of $12.6 million.

 

·                  Truck Accessories’ backlog of approximatelytwo weeks of production was $2.6 million at December 31, 2009 compared to$2.2 million as of December 31, 2008.

 

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·                  Specialty Manufacturing’s backlog at December 31,2009 decreased $45.2 million to $36.1 million compared to$81.3 million at December 31, 2008. The backlog of machining services decreased $46.8 million over last yearas demand from customers in the energy services industry continued to decline.

 

***Costof sales and gross profit. ******Our***consolidated cost of salesdecreased by $190.7 million, or 31.2%, to $420.1 million for 2009 compared to$610.8 million for 2008. Consolidated gross profit decreased by $35.1 million,or 36.7%, to $60.5 million (12.6% of net sales) for 2009 compared to$95.6 million (13.5% of net sales) for 2008.  Material, labor and overhead costs made up48.3%, 14.1% and 25.0%, respectively, of cost of sales during 2009 and 50.3%,14.1% and 22.0%, respectively, during 2008.

 

·                  Morgan’s gross profit decreased by$7.0 million, or 34.4%, to $13.4 million (9.1% of its net sales) for2008 compared to $20.4 million (8.7% of its net sales) for 2008.  Although gross profit declined on lowersales, gross profit as a percentage of sales increased due to management focuson cost control that improved efficiencies in material and labor partiallyoffset by lower overhead absorption on lower production volumes.

 

·                  Morgan Olson’s gross profit decreased by$5.2 million, or 40.8%, to $7.6 million (12.3% of its net sales) for2009 compared to $12.8 million (12.3% of its net sales) for 2008.  Gross profit margin remained the same asfavorable product pricing and improved manufacturing processes were offset bylower absorption of overhead on lower production volumes.

 

·                  Truck Accessories’ gross profit increased by$3.5 million, or 22.7%, to $19.5 million (16.9% of its net sales) for2009 compared to $16.0 million (12.1% of its net sales) for 2008.  In spite of decreased sales, gross profitmargin increased due to continuous improvements in labor productivity andmaterials management.  Overhead costs asa percentage of sales also decreased as a result of management’s aggressivecost reduction efforts.  Material andlabor costs as a percentage of net sales decreased to 36.8% and 14.5% in 2009compared to 39.8% and 15.0% in 2008, respectively.  Overhead expenses as a percentage of netsales decreased to 31.8% in 2009 compared to 33.1% in 2008.

 

·                  Specialty Manufacturing’s gross profitdecreased $26.5 million, or 57.0%, to $20.0 million (12.7% of its net sales)for 2009 compared to $46.5 million (19.5% of its net sales) for 2008.  The decrease in gross profit was at themachining services business which decreased $25.2 million, or 63.2%, and atSpecialty Vehicles Group which decreased $2.2 million, or 47.8%, from lastyear.  Gross profit at the plastics-basedpackaging products business increased $0.8 million, or 37.2%, as a result ofnew products and improved materials management.

 

***Selling, general andadministrative expenses. ***Ourconsolidated selling, general and administrative expenses decreased $17.3million, or 25.7%, to $49.0 million (10.2% of net sales) for 2009 compared to$66.3 million (9.4% of net sales) for 2008.

 

·                  Morgan’s selling, general and administrativeexpenses decreased $4.9 million, or 28.3%, to $12.2 million (8.3% of its netsales) for 2009 compared to $17.1 million (7.3% of its net sales) for 2008primarily due to lower personnel costs as a result of a 16.7% reduction inheadcount as well as lower commissions and management incentive bonuses ondecreased sales.

 

·                  Morgan Olson’s selling, general andadministrative expenses decreased by $2.4 million, or 32.2%, to $5.0 million(8.1% of its net sales) for 2009 compared to $7.4 million (7.1% of its netsales) for 2008 due primarily to lower personnel costs resulting from a 26.5%reduction in headcount and lower commissions on decreased sales.

 

·                  Truck Accessories’ selling, general andadministrative expenses decreased by $1.7 million, or 12.7%, to $11.7 million(10.1% of its net sales) for 2009 from $13.4 million (10.2% of its net sales)for 2008.  The 

 

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decrease was primarily dueto lower personnel costs on a 24.7% reduction in headcount partially offset byhigher management incentive bonuses.

 

·                  Specialty Manufacturing’s selling, generaland administrative expenses decreased by $4.1 million, or 19.0%, to $15.9million (10.1% of its net sales) for 2009 from $20.0 million (8.4% of itsnet sales) for 2008. The decrease was primarily due to a 14.5% headcountreduction resulting in a decrease in sales commissions, management salaries,wages and incentive bonuses.

 

·                  Corporate selling, general and administrativeexpenses decreased by $4.3 million, or 51.2%, to $4.1 million for 2009from $8.4 million for 2008.  The decreasewas due primarily to $1.4 million of worker’s compensation and generalliability insurance claims that occurred in the prior period and a $1.2 milliondecrease in management salaries, wages and incentive bonuses.

 

***Closed and excess facility costs.***SpecialtyManufacturing completed the closure of its facility in Milwaukee, Wisconsin in2009.  Lease payments and personnelrelated costs related to the closure were $0.5 million. An additional $0.1million of noncash charges related to the write down of property, plant andequipment was recorded.

 

***Gain on repurchase of 8.75% Notes.*** As of December 31,2009, the Company had purchased $0.4 million of its 8.75% Notes on the openmarket and recognized a gain of $0.2 million on the transaction.

 

***Other expense (income).***  Specialty Vehicle Group sold its specializedbus business and recorded a $0.6 million loss on the sale on December 31,2009.  The allocation of goodwillassociated with the bus business accounted for $550,000 of the loss.   Morgan recognized $0.2 million as income onthe deferred gain of $1.9 million resulting from the sale of three of itsmanufacturing properties to Poindexter Properties, LLC, an entity owned by theCompany’s sole shareholder, in 2008. Specialty Manufacturing’s machining business recognized $0.2 millionfrom the sale of assets.

 

***Operating income. ***Due to the effect of thefactors summarized above, consolidated operating income decreased by$18.8 million, or 63.4%, to $10.9 million (2.3% of net sales) for2009 from $29.7 million (4.2% of net sales) for 2008.

 

·                  Morgan’s operating income decreased by$2.6 million, or 64.0%, to $1.4 million (1.0% of its net sales) for2009 compared to $4.0 million (1.7% of its net sales) for 2008.

 

·                  Morgan Olson’s operating income decreased by$2.8 million, or 52.6%, to $2.6 million (4.2% of its net sales) for 2009 from$5.4 million for 2008 (5.2% of its net sales).

 

·                  Truck Accessories’ operating income increasedby $5.4 million, or 226.2%, to $7.8 million (6.8% of its net sales)for 2009 compared to $2.4 million (1.8% of its net sales) for 2008.

 

·                  Specialty Manufacturing’s operating incomedecreased by $23.0 million, or 88.7%, to $2.9 million (1.9% of itsnet sales) for 2009 compared to $25.9 million (10.9% of its net sales) for2008.

 

·                  Corporate expenses decreased $4.1 million to$3.9 million for 2009 compared to $8.0 million for 2008.

 

***Interest expense(income).  ******I***nterest expense decreased$0.3 million, or 1.8%, to $18.2 million (3.8% of net sales) for 2009 comparedto $18.5 million (2.6% of net sales) for 2008.  Interest income was $0.2 million and $0.4million for 2009 and 2008 respectively.

 

***Income taxes provision (benefit).***The effectiveincome tax provision (benefit) rate was 31% and 41% of income before incometaxes for 2009 and 2008, respectively. The income tax benefit for 2009 differs from amounts computed based onthe federal statutory rate largely as a result of state taxes in certain taxjurisdictions.  The income tax provisionfor 2008 differs from amounts computed based on the federal statutory rate as aresult of 

 

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state taxes of $1.4 million, a $0.8 million increase in the valuationallowance for foreign net operating loss carryforwards, offset by a $1.1million reduction in the valuation allowance against capital loss carryforwardsand $0.3 million of research and development credits.

 

**Comparison of 2008 to 2007**

 

***Sales.**** **Our*consolidated net salesdecreased $85.8 million, or 10.8%, to $706.4 million for 2008 compared to$792.2 million for 2007.  Excludingbusinesses acquired during 2007, consolidated net sales decreased $137.7 million,or 17.9%, to $629.8 million for 2008.

 

·                  Morgan’s net sales decreased $99.0 million,or 29.7%, to $233.9 million for 2008 compared to $332.9 million for2007.  Demand for Classes 3-7 truckbodies continued at depressed levels during 2008 as a result of thedeterioration in general economic conditions. Sales of truck bodies to the commercial divisions of leasing companies,companies with fleets of delivery vehicles, truck dealers and distributors, orCommercial sales, which represented 78.4% of Morgan’s net sales in 2008compared to 83.0% percent in 2007, decreased $93.5 million, or 33.8%, to $183.4million on a 38.8% decline in unit shipments. Consumer Rental sales decreased $0.8 million, or 2.1%, on a 3.6%increase in unit shipments.  The averageprice of a Consumer Rental truck body declined 5.5% due to increased shipmentsof smaller units.  Other sales includingsales of parts and services decreased $5.5 million, or 27.1%, to $14.7 millioncompared to $20.1 million for 2007.

 

·                  Morgan Olson’s net sales decreased $5.6million, or 5.3%, to $104.4 million for 2008 compared to $110.3 million for2007.  Step van sales declined $10.9million, or 12.3%, on a 12.8% decrease in unit shipments for 2008.  Step van sales to customers with large fleetsof vehicles were down $13.6 million, or 67.0%, compared to the prior year.  The decrease in step van sales was partiallyoffset by a $6.3 million increase in parts and service sales to $23.0 million,compared to $16.7 million in 2007, due to an atypical $5.7 million serviceparts purchase by the United States Postal Service in the second quarter of2008.

 

·                  Truck Accessories’ net sales decreased $23.7million, or 15.2%, to $131.9 million for 2008 compared to $155.6 million for2007.   Shipments of caps and tonneausdecreased by 22.1% to approximately 135,000 units as new pickup trucks sales inthe United States and Canada decreased 26.3% from 2007.  Sales of new pickup trucks declined to 2.2million units during 2008.

 

·                  Specialty Manufacturing’s net sales increasedby $43.2 million, or 22.1%, to $238.3 million for 2008 compared to$195.2 million for 2007.  Sales tocustomers in the energy services business excluding acquisitions increased10.0% to $78.5 million compared to $71.3 million in 2007.  Acquisitions added an additional $51.9million of sales in 2008.  Demand forspecialty vehicles including funeral coaches, buses and limousines declined assales of those products decreased $13.2 million, or 18.8%, to $57.2 millioncompared to $70.4 million.   Sales ofplastics-based packaging products decreased $2.6 million, or 9.1%, to $26.1million.  Because of the recent largedecrease in the price per barrel of oil, which price per barrel has continuedto be well below the price per barrel at the end of 2007, it was likely thatdemand for the services of our energy-related machining business, whichsoftened in the second half of 2008, would continue to soften in 2009.

 

***Backlog.***** **Consolidated backlog was$149.2 million as of December 31, 2008 compared to $219.3 million as of December 31,2007.

 

·                  Morgan’s backlog at December 31, 2008was $47.6 million compared to $62.0 million at December 31, 2007. Thedecrease in backlog was due to the continued industrywide reduction in demandfor truck bodies.

 

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·                  Morgan Olson’s backlog was $18.2 million at December 31,2008 compared to $43.5 million at December 31, 2007.  The decrease was due primarily to a decreasein demand from customers that operate large fleets.

 

·                  Truck Accessories’ backlog of approximatelytwo weeks of production was $2.2 million at December 31, 2008 compared to$3.6 million as of December 31, 2007.

 

·                  Specialty Manufacturing’s backlog at December 31,2008 decreased $28.9 million to $81.3 million compared to$110.2 million at December 31, 2007. The backlog of machining services decreased $25.4 million over the prioryear due to lower demand from customers in the energy services industry in thesecond half of 2008.

 

***Costof sales and gross profit. ******Our***consolidated cost of salesdecreased by $96.4 million, or 13.6%, to $610.8 million for 2008 compared to$707.2 million for 2007. Consolidated gross profit increased by$10.7 million, or 12.6%, to $95.6 million (13.5% of net sales) for2008 compared to $84.9 million (10.7% of net sales) for 2007.  Material, labor and overhead costs made up50.3%, 14.1% and 22.0%, respectively, of cost of sales during 2008 and 53.7%,15.2% and 20.3%, respectively, during 2007. Excluding businesses acquired in 2007, our 2008 cost of sales was $554.5million and gross profit was $75.3 million (13.6% of net sales) compared to$686.6 million and $80.0 million (11.8% of net sales) in 2007.

 

·                  Morgan’s gross profit decreased by$13.4 million, or 39.8%, to $20.4 million (8.7% of its net sales) for2008 compared to $33.8 million (10.2% of its net sales) for 2007.  The decline in gross profit margin was due toincreased overhead costs as a result of decreased absorption of overhead onlower production volume, partly offset by a decrease in material and laborcosts as a percentage of net sales. Morgan’s manufacturing headcount was reduced by 23.0% during 2008.

 

·                  Morgan Olson’s gross profit increased by$8.6 million, or 206.2%, to $12.8 million (12.3% of its net sales)for 2008 compared to $4.2 million (3.8% of its net sales) for 2007.  Improved manufacturing processes implementedby the new management team put in place late 2007 eliminated significantamounts of material waste and overtime labor costs.

 

·                  Truck Accessories’ gross profit declined by$0.2 million, or 1.0%, to $16.0 million (12.1% of its net sales) for2008 compared to $16.1 million (10.4% of its net sales) for 2007.  The gross profit margin increased due toimprovements in labor productivity and materials management.  Material and labor costs as a percentage ofnet sales decreased to 39.8% and 15.0% in 2008 compared to 41.8% and 16.8% in2007, respectively.  Overhead expenses asa percentage of net sales increased to 33.1% in 2008 compared to 31.1% in 2007as a result of lower absorption of overhead on lower production volume alongwith higher delivery costs.

 

·                  Specialty Manufacturing’s gross profitincreased $15.8 million, or 51.3%, to $46.5 million (19.5% of its net sales)for 2008 compared to $30.8 million (15.8% of its net sales) for 2007.  The gross profit increase at the machiningservices business included $16.2 million from acquisitions made during 2007,partly offset by a $3.6 million decline in gross profit at the SpecialtyVehicle Group and the packaging business due primarily to lower productionvolumes.

 

***Selling, general andadministrative expenses. ***Ourconsolidated selling, general and administrative expenses increased $1.4million, or 2.2%, to $66.3 million (9.4% of net sales) for 2008 compared to$64.9 million (8.2% of net sales) for 2007. Excluding businesses acquired in 2007, selling, general andadministrative expenses decreased $1.0 million in 2008.

 

·                  Morgan’s selling, general and administrativeexpenses decreased $1.7 million, or 8.9%, to $17.1 million (7.3% of its netsales) for 2008 compared to $18.7 million (5.6% of its net sales) for 2007primarily due to

 

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lower personnel costs from a 22% reduction inheadcount as well as lower commissions on decreased sales.

 

·                  Morgan Olson’s selling, general andadministrative expenses increased by $0.5 million, or 7.8%, to $7.4 million(7.1% of its net sales) for 2008 compared to $6.9 million (6.2% of its netsales) for 2007 due primarily to increased sales commissions.

 

·                  Truck Accessories’ selling, general andadministrative expenses increased by $0.5 million, or 4.1%, to $13.4 million(10.2% of its net sales) for 2008 from $12.9 million (8.3% of its net sales)for 2007.  The increase was primarily dueto currency transaction gains of $0.9 million in 2007 not repeated in2008.  Truck Accessories’ manufacturingoperations in Canada were terminated in 2007.

 

·                  Specialty Manufacturing’s selling, generaland administrative expenses increased by $3.1 million, or 19.0%, to $20.1million (8.4% of its net sales) for 2008 from $17.0 million (8.7% of itsnet sales) for 2007. The increase was due to incremental costs of $2.6 millionfrom the businesses acquired in 2007, increased sales commissions and executiveincentive payments of $1.4 million offset by a decrease of $0.9 million on a22% headcount reduction at the Specialty Vehicle Group.

 

·                  Corporate selling, general and administrativeexpenses decreased by $1.1 million, or 11.2%, to $8.4 million for 2008from $9.5 million for 2007.  The decreasewas due primarily to reduction of manufacturing process consulting expenses of$0.9 million.

 

***Closed and excess facility costs.***During 2008,Specialty Manufacturing decided on a plan to vacate one of its plants and moveproduction to its other manufacturing plants and as a result recognized $0.7million of noncash charges related to the write-down of property, plant andequipment.  Also, Truck Accessoriesadopted a plan to combine two of its manufacturing facilities located inElkhart, Indiana and recognized $0.1 million of noncash charges related to theimpairment in value of certain property, plant and equipment.  During 2007, Specialty Manufacturing’spackaging business closed its plant in Tennessee due to the loss of businessresulting from the elimination of a product by a major customer.  Costs associated with the closure were $0.2 million.

 

***Gain on repurchase of 8.75% Notes.*** As of December 31,2008, the Company had purchased $0.8 million of its 8.75% Notes on the openmarket and recognized a $0.4 million gain on the transaction.

 

***Other income.***  Morgan sold its minority interest in a truckdealership in Canada that was acquired with the purchase of Morgan Canada in2004 and recognized a gain of $0.4 million. Specialty Manufacturing received insurance proceeds of $0.4 millionarising from a storm damage claim in 2007.

 

In 2008, the Company evaluated the carrying value of long-lived assetsof its business units and, through a third-party analysis, determined thatFederal Coach had an impairment of its acquired intangibles of $0.3 millionthat was recorded as a reduction in other income.

 

***Operating income. ***Due to the effect of thefactors summarized above, consolidated operating income increased by$9.5 million, or 47.2%, to $29.7 million (4.2% of net sales) for 2008from $20.2 million (2.5% of net sales) for 2007.

 

·                  Morgan’s operating income decreased by$11.4 million, or 74.3%, to $4.0 million (1.7% of its net sales) for2008 compared to $15.4 million (4.6% of its net sales) for 2007.

 

·                  Morgan Olson’s operating income increased by$8.1 million, or 302.0%, to $5.4 million for 2008 from a loss of$2.7 million for 2007.

 

·                  Truck Accessories’ operating income decreasedby $0.8 million, or 24.8%, to $2.4 million (1.8% of its net sales)for 2008 compared to $3.2 million (2.1% of its net sales) for 2007.

 

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·                  Specialty Manufacturing’s operating incomeincreased by $12.2 million, or 88.7%, to $25.9 million (10.9% of itsnet sales) for 2008 compared to $13.7 million (7.0% of its net sales) for2007.  Acquisitions contributed $15.2million of operating income during the year.

 

·                  Corporate expenses decreased $1.5 million to$8.0 million for 2008 compared to $9.5 million for 2007.

 

***Interest expense(income).  ******I***nterest expense decreased$0.2 million, or 1.1%, to $18.5 million (2.6% of net sales) for 2008 comparedto $18.7 million (2.4% of net sales) for 2007.  We earned $0.4 million of interest income onour cash and cash equivalents during 2008 compared to $0.9 million during 2007as a result of the decrease in cash and cash equivalents during the year.

 

***Income taxes.***The effective income taxrate was 41% and 134% of income before income taxes for 2008 and 2007,respectively.  The income tax provisionfor 2008 differed from amounts computed based on the federal statutory rate asa result of state taxes of $1.4 million, a $0.8 million increase in thevaluation allowance for foreign net operating loss carryforwards, offset by a$1.0 million reduction in the valuation allowance against capital losscarryforwards and $0.3 million of research and development credits. The incometax provision for 2007 differed from amounts computed based on the federalstatutory rate as a result of state and foreign taxes, a $0.8 million increasein the valuation allowance and a $0.9 million increase in reserves foruncertain tax positions.

 

**Liquidityand capital resources**

 

Historically,we have funded our operations with cash available from the proceeds of our8.75% Notes, cash generated from operations and borrowings under our revolvingcredit facility, as needed.  Workingcapital at December 31, 2009 was $99.4 million compared to$99.2 million at December 31, 2008. Our cash and cash equivalents increased $17.9 million as a result ofcash provided by operating activities of $29.2 million reduced by cash used ininvesting activities of $9.8 million and cash used in financing activities of$1.7 million.  Due to the decrease inbusiness activity as a result of the continued general decline in economicactivity in 2009, working capital, excluding cash and cash equivalents,decreased $17.7 million with a decrease in accounts receivable of $7.8 million,a decrease in inventories of $13.0 million and an increase in accounts payableof $1.1 million.  Average accountsreceivable days sales outstanding at December 31, 2009 were approximately27 compared to 22 at December 31, 2008 and inventory turns during 2009were approximately 7.0 compared to 8.5 during 2008.  Excluding vehicle chassis at SpecialtyVehicle Group (vehicle chassis remain in inventory for extended periods of timeand amounted to $8.0 million and $6.2 million at December 31, 2009 and2008, respectively) inventory turns were 7.6 and 9.0 for 2009 and 2008,respectively.

 

***Operating cash flows. ***Operating activities during2009 generated cash of $29.2 million compared to $45.5 million in 2008 and$30.8 million in 2007.  The decrease innet cash generated by operating activities during 2009 was due primarily to an$18.8 million decrease in operating income.

 

The increase in cash from operating activitiesduring 2008 compared to 2007 was due primarily to a $9.5 million increase inoperating income, a $3.1 million increase in cash from liquidation of workingcapital and a $2.6 million increase in depreciation and amortization.

 

***Investing cash flows. ******Net cash used in investing activities increased $1.3million in 2009 compared to 2008 primarily because in the prior year, Morgansold three of its manufacturing properties to Poindexter Properties, LLC for $7.1million (see Note 17 to the Consolidated Financial Statements).  Capital expenditures during 2009 were $11.3million and were comprised mainly of machinery and equipment of $4.8 millionfor Specialty Manufacturing, new product molds of $2.2 million for TruckAccessories and $2.4 million of equipment related to a Company-wide EnterpriseResource Planning project.  We acquiredapproximately $1.2 million of equipment under capital leases that were notincluded in capital expenditures.***As of December 31, 2009,we had no significant open commitments for capital expenditures.

 

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***Financing cash flows. ******Net cash used by financing activities totaled $1.7million in 2009 compared to $6.1 million in 2008.  The decrease is due to reduced borrowings andlower capital expenditures in 2009. During 2009, w***e repaid $0.4 million of ourrevolver borrowings as well as $1.3 million of long-term debt and capital leasecommitments.

 

***Our RevolvingCredit Agreement was scheduled to expire on March 15, 2010; howeverneither party to the agreement gave notice of termination and it automaticallywas extended for an additional year ending on March 15, 2011.***

 

At December 31, 2009, the Consolidated CoverageRatio, as defined in the indenture relating to our 8.75% Notes, was 1.6 to 1.0.As a result, we are limited in our ability to incur additionalindebtedness.  The Indenture Agreementpermits certain exceptions with respect to capitalized lease obligations andother arrangements that are incurred for the purpose of financing all or partof the purchase price or cost of construction or improvements of property usedin our business.  Already existingobligations and any amounts available to be drawn on our existing revolvingcredit agreement are not subject to this limitation.

 

The revolving credit facility provides for availableborrowings of up to $50.0 million in revolving loans. Available borrowingsare subject to a borrowing base of eligible accounts receivable, inventory,machinery and equipment, and real estate. Borrowings under our revolving creditfacility are collateralized by substantially all of our assets and the assetsof our existing subsidiaries. Our revolving credit facility also includes asub-facility for up to $15.0 million of letters of credit. As of December 31,2009, we had $38,000 of borrowings under the facility, $1.4 million ofletters of credit outstanding and our borrowing base would have supported debtborrowings of the entire $50.0 million under our revolving creditfacility.

 

In addition, the revolving credit facility includescovenants that place various restrictions on us, including limitation on ourability to:

 

·                  incur additional debt;

 

·                  create or become subject to liens orguarantees;

 

·                  make investments or loans;

 

·                  pay dividends or make distributions;

 

·                  prepay the 8.75% Notes or other debt;

 

·                  merge with other entities or makeacquisitions or dissolve;

 

·                  sell assets;

 

·                  change fiscal year or amend organizationaldocuments or terms of any subordinated debt;

 

·                  enter into leases; and

 

·                  enter into transactions with affiliates.

 

We believe that we will have adequate resources tomeet our working capital and capital expenditure requirements consistent withpast trends and practices for at least the next twelve months.Additionally, we believe that our cash and borrowing availability under therevolving credit facility will satisfy our cash requirements for the comingyear, given our anticipated capital expenditures, working capital requirementsand known obligations. Our ability to make payments on our debt, including the8.75% Notes, and to fund planned capital expenditures will depend on ourability to generate cash in the future. This is subject to general economicconditions, other factors influencing the industries in which we operate andcircumstances that are beyond our control. We cannot be certain that we will 

 

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generate sufficient cash flows, and if we do not, wemay have to engage in other activities such as the sale of assets to meet ourcash requirements.

 

**Off-balance-sheet arrangements**

 

We have no off-balance-sheet arrangements.

 

**Commitments and capital expenditures**

** **

We have entered into an agreement with a major paintmanufacturer under which Truck Accessories, Morgan, Morgan Olson and SpecialtyVehicle Group are committed to buy principally all of their automotive paintfor five years ending October 2014. We receive favorable pricing in return for the commitment and estimatethat we will purchase approximately $4.7 million of paint products during 2010under this agreement.  We occasionallycommit to the purchase of aluminum based on expected levels of futureproduction and at December 31, 2009, Morgan and Morgan Olson had acombined commitment of $7.0 million to buy aluminum through 2010.  We did not have any material commitments toacquire new capital equipment as of December 31, 2009.

 

Certain cash contractual obligations of ours as of December 31,2009 are summarized in the table below.

 
| **Obligations (Dollars in millions)** | ** ** | **Total** | ** ** | **Less than********1 year** | ** ** | **1-3********years** | ** ** | **4-5********years** | ** ** | **After 5********years** | ** ** |
|---------------------------------------|------------|-----------|------------|-----------------------------|------------|----------------------|------------|----------------------|------------|--------------------------|------------|
| 8.75% Notes, excluding interest       |       | $         | 198.8      |                        | $          | —               |       | $                    | —     |                     | $          | 198.8 |   | $ | — |   |
| Operating leases                      |       | 27.8      |       | 8.7                         |       | 12.0                 |       | 4.5                  |       | 2.6                      |       |
| Capital leases                        |       | 6.4       |       | 2.3                         |       | 3.3                  |       | 0.8                  |       | —                   |       |
| Total                                 |       | $         | 233.0      |                        | $          | 11.0                 |       | $                    | 15.3       |                     | $          | 204.1 |   | $ | 2.6 |   |

 

TheCompany has recorded a long-term liability of approximately $1.8 million as of December 31,2009 related to uncertain tax positions. Given the uncertainty of these positions, the company has not reflectedobligations in the above table.

 

**Other matters**

 

We are significantly leveraged and will continue tobe significantly leveraged. We had $19.4 million and $23.8 million ofstockholder’s equity at December 31, 2009 and 2008, respectively. Weoperate in cyclical businesses and the markets for our products are highlycompetitive. In addition, we have two customers that accounted for 21% of 2009consolidated net sales and our top ten customers accounted for 39% of our 2009consolidated net sales.

 

We continually evaluate, depending on marketconditions, the most efficient use of our capital and contemplate variousstrategic options, which may include, without limitation, restructuring ourbusiness, indebtedness or capital structure. Accordingly, we or oursubsidiaries may from time to time consider, among other things, purchasing, refinancingor otherwise retiring certain outstanding indebtedness (whether in the openmarket or by other means), public or private issuances of debt or equitysecurities, joint venture transactions, acquisitions or dispositions, newborrowings, tender offers, exchange offers or any combination thereof, althoughthere can be no assurances that such financing sources will be available oncommercially reasonable terms. Additionally, there can be no assurances thatthese strategic options, if pursued, will be consummated or, if consummated,what effect they will have on us.

 

Historically, inflation has not materially affectedour business.  We believe that we havethe ability to increase our selling prices to levels necessary to offset theraw material cost inflation.

 

We implemented further price increases at Morgan,Truck Accessories and Specialty Manufacturing during 2007, 2008 and 2009 butcannot predict the impact, if any, of future raw material price increases onour profitability.  Recent economicconditions have resulted in declines in raw material prices but we cannotpredict the effect that this 

 

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will have on the selling price of our manufacturedproducts.  Operating expenses, such assalaries and team member benefits, are subject to normal inflationarypressures.

 

During 2008, Poindexter Properties, LLC, which iswholly owned by Mr. Poindexter, purchased three real estate propertiesfrom Morgan for approximately $7.1 million in cash and is leasing theproperties back to Morgan.  Morganrecorded a deferred gain of approximately $1.9 million in this transaction ofwhich $230 was recorded as income in 2009. The transaction was financed by an independent lender and the propertieswere sold for prices determined by an independent appraisal.

 

Beginningin July 2006, Mr. Poindexter began receiving a salary from theCompany.  Effective July 31, 2008, Mr. Poindexterceased receiving a salary from the Company and we paid $0.5 million in fees toSouthwestern Holdings, Inc. (“Southwestern”) for the services of Mr. Poindexterduring 2009.

 

Southwesternwas a named insured under the Company’s general liability and excessumbrella insurance policies during 2007 when Southwestern became the defendantin a suit for damages resulting from a vehicle accident not involving theCompany’s assets or any of its team members.  The lawsuit was settledduring 2008 and Southwestern paid the amount of the self-insured reserve of$0.3 million.  Southwestern is no longer a named insured under the Company’sgeneral liability policy effective July 1, 2007.  Any increased premiums under the Company’sumbrella policy incurred in the future by the Company by reason of thesettlement will be reimbursed by Southwestern.

 

**Recently issued accounting standards**

 

Theeffect of recently issued accounting standards on the Company is addressed inNote 2 of Notes to Consolidated Financial Statements.

 

**Item 7A.****                                                 ****Quantitative and QualitativeDisclosure About Market Risks**

 

Weare subject to certain market risks, including interest rate risk and foreigncurrency risk. The adverse effects of potential changes in these market risksare discussed below.  See the Notes toConsolidated Financial Statements elsewhere in this 10-K for a description ofour accounting policies and other information related to these financialinstruments.

 

***Variable-rate debt. ******From time to time,*********we borrow funds under ourrevolving credit facility. The interest rates on the revolving credit facilityare based upon a spread above either the prime interest rate or the LondonInterbank Offered Rate (LIBOR), which rate used is determined at ouroption.  At December 31, 2009 and2008, we had $38,000 and $0.4 million of revolver borrowings outstanding,respectively.

 

***Fixed-rate debt. ***As of December 31,2009, the Company had $198.8 million of 8.75% Notes outstanding, with anestimated fair value of approximately $168.0****millionand $181.1 million based upon the traded value at December 31, 2009 and March 15,2010, respectively. Market risk, estimated as the potential increase in fairvalue resulting from a hypothetical 1.0% decrease in interest rates, wasapproximately $6.9 million as of December 31, 2009.

 

***Foreign currency. ***Morgan has a manufacturingplant in Canada that during 2009 generated sales of approximately $7.9 millionfor the year. The functional currency of Morgan’s Canadian operations is theCanadian dollar.  Specialty Manufacturinghas one plant in Mexico and one in Malaysia; however, the functional currencyis the U.S. dollar.  We do not currentlyemploy risk management techniques to manage potential exposure to foreigncurrency fluctuations.

 

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** **

**Item  8.**                                                        FinancialStatements and Supplementary Data

** **
| **J.B. Poindexter & Co., Inc. and  Subsidiaries** | ** ** |
|-----------------------------------------------------------------|------------|
| ** **                                                      | ** ** |
| Report  of Independent Registered Public Accounting Firm        | 36         |
| Financial  Statements:                                          |       |
| Consolidated Balance Sheets                                     | 37         |
| Consolidated Statements of Operations                           | 38         |
| Consolidated Statements of Stockholder’s Equity            | 39         |
| Consolidated Statements of Cash Flows                           | 40         |
| Notes to Consolidated Financial Statements                      | 41         |

 

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**Reportof Independent Registered Public Accounting Firm**

 

Board of Directors and Stockholder of J.B. Poindexter & Co., Inc.

 

We have audited the accompanying consolidatedbalance sheets of J.B. Poindexter & Co., Inc. and subsidiaries(Company) as of December 31, 2009 and 2008, and the related consolidatedstatements of operations, stockholder’s equity, and cash flows for each of thethree years in the period ended December 31, 2009.  These financial statements are theresponsibility of the Company’s management. Our responsibility is to express anopinion on these financial statements based on our audits.

 

We conducted our audits in accordance with thestandards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of materialmisstatement. The Company is not required to have, nor were we engaged toperform, an audit of its internal controls over financial reporting.  Our audit included consideration of internal controlover financial reporting as a basis for designing audit procedures that areappropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the Company’s internal control over financialreporting.  Accordingly, we express nosuch opinion.  An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well asevaluating the overall financial statement presentation. We believe that ouraudits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financialstatements referred to above present fairly, in all material respects, thefinancial position of J.B. Poindexter & Co., Inc. andsubsidiaries as of December 31, 2009 and 2008, and the results of theiroperations and their cash flows for each of the three years in the period endedDecember 31, 2009 in conformity with U.S. generally accepted accountingprinciples.

 

/s/ CROWE HORWATH LLP

 

SouthBend, IndianaMarch 31**,**2010

 

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**J.B. POINDEXTER & CO.,INC. AND SUBSIDIARIES**

**CONSOLIDATEDBALANCE SHEETS**

**(Dollars in Thousands)**

 
| ** **                                                                     | ** ** | **December 31,** | ** **               |
|--------------------------------------------------------------------------------|------------|-----------------------|--------------------------|
| ** **                                                                     | ** ** | **2009**              | ** **               | **2008** | ** ** |
| **Assets**                                                                     |       |                  |                     |   |   |
| Current assets                                                                 |       |                  |                     |   |   |
| Cash and cash equivalents                                                      |       | $                     |    54,176      |   | $ |   36,251 |   |
| Accounts receivable, net                                                       |       | 34,982                |                     | 42,668 |   |
| Inventories, net                                                               |       | 52,718                |                     | 68,071 |   |
| Deferred income taxes                                                          |       | 1,368                 |                     | 2,123 |   |
| Income tax receivable                                                          |       | 6,356                 |                     | 4,589 |   |
| Prepaid expenses and other                                                     |       | 2,590                 |                     | 2,715 |   |
| Total current assets                                                           |       | 152,190               |                     | 156,417 |   |
| Property, plant and equipment, net                                             |       | 70,073                |                     | 73,699 |   |
| Goodwill                                                                       |       | 35,000                |                     | 35,550 |   |
| Intangible assets, net                                                         |       | 15,836                |                     | 17,147 |   |
| Other assets                                                                   |       | 12,865                |                     | 13,125 |   |
| Total assets                                                                   |       | $                     | 285,964                  |   | $ | 295,938 |   |
| **Liabilities and stockholder’s  equity**                                 |       |                  |                     |   |   |
| Current liabilities                                                            |       |                  |                     |   |   |
| Current portion of long-term debt                                              |       | $                     |     2,259 |   | $ |     2,574 |   |
| Borrowings under revolving credit facility                                     |       | 38                    |                     | 417 |   |
| Accounts payable                                                               |       | 27,661                |                     | 26,825 |   |
| Accrued compensation and benefits                                              |       | 6,431                 |                     | 8,718 |   |
| Other accrued liabilities                                                      |       | 16,420                |                     | 18,731 |   |
| Total current liabilities                                                      |       | 52,809                |                     | 57,265 |   |
| Noncurrent liabilities                                                         |       |                  |                     |   |   |
| Long-term debt, less current portion                                           |       | 202,935               |                     | 204,411 |   |
| Deferred income taxes                                                          |       | 3,818                 |                     | 2,869 |   |
| Employee benefit obligations and other                                         |       | 6,966                 |                     | 7,605 |   |
| Total noncurrent liabilities                                                   |       | 213,719               |                     | 214,885 |   |
| Stockholder’s equity                                                      |       |                  |                     |   |   |
| Common stock, par value $0.01 per share (3,059  shares issued and outstanding) |       | —                |                     | — |   |
| Capital in excess of par value of stock                                        |       | 19,486                |                     | 19,486 |   |
| Accumulated other comprehensive income (loss)                                  |       | 290                   |                     | (254 | ) |
| Retained earnings (accumulated deficit)                                        |       | (340                  | )                        | 4,556 |   |
| Total stockholder’s equity                                                |       | 19,436                |                     | 23,788 |   |
| Total liabilities and stockholder’s equity                                |       | $                     | 285,964                  |   | $ | 295,938 |   |

 

*The accompanying notes are an integralpart of these consolidated financial statements.*

* *

*37*

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**J.B. POINDEXTER &CO., INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

**(Dollars in Thousands)**

 
| ** **                                        | ** ** | **Years ended December 31,** | ** ** |
|---------------------------------------------------|------------|-----------------------------------|------------|
| ** **                                        | ** ** | **2009**                          | ** ** | **2008** | ** ** | **2007** | ** ** |
| Net sales                                         |       | $                                 | 480,647    |   | $ | 706,409 |   | $ | 792,161 |   |
| Cost of sales                                     |       | 420,146                           |       | 610,799 |   | 707,244 |   |
| Gross profit                                      |       | 60,501                            |       | 95,610 |   | 84,917 |   |
| Selling, general and administrative expense       |       | 48,961                            |       | 66,290 |   | 64,914 |   |
| Closed and excess facility costs                  |       | 642                               |       | 788 |   | 166 |   |
| Gain on repurchase of 8.75% Notes                 |       | (186                              | )          | (416 | ) | — |   |
| Other expense (income)                            |       | 224                               |       | (733 | ) | (323 | ) |
| Operating income                                  |       | 10,860                            |       | 29,681 |   | 20,160 |   |
| Interest expense                                  |       | 18,163                            |       | 18,491 |   | 18,698 |   |
| Interest income                                   |       | (197                              | )          | (410 | ) | (877 | ) |
| Income (loss) from operations before income taxes |       | (7,106                            | )          | 11,600 |   | 2,339 |   |
| Income tax provision (benefit)                    |       | (2,210                            | )          | 4,810 |   | 3,124 |   |
| Net income (loss)                                 |       | $                                 | (4,896     | ) | $ | 6,790 |   | $ | (785 | ) |

 

*The accompanying notes arean integral part of these consolidated financial statements.*

 

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**J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY**

**(Dollars in Thousands)**

 
| **For the years ended December   31, 2009, 2008 and 2007**        | ** ** | **Shares  of  common  stock** | ** ** | **Common  stock and  paid-in  capital** | ** ** | **Retained********earnings  (accumulated********deficit)** | ** ** | **Accumulated  other  comprehensive  income (loss)** | ** ** | **Total** | ** ** |
|------------------------------------------------------------------------|------------|-------------------------------|------------|-----------------------------------------|------------|------------------------------------------------------------|------------|------------------------------------------------------|------------|-----------|------------|
| **January 1, 2007**                                               |       | 3,059                         |       | $                                       | 19,486     |                                                       | $          | (1,228                                               | )          | $         | 76         |   | $ | 18,334 |   |
| Adjustment for adoption of accounting for  uncertainty in income taxes |       | —                        |       | —                                  |       | (221                                                       | )          | —                                               |       | (221      | )          |
| Net loss                                                               |       | —                        |       | —                                  |       | (785                                                       | )          | —                                               |       | (785      | )          |
| Translation adjustment                                                 |       | —                        |       | —                                  |       | —                                                     |       | 941                                                  |       | 941       |       |
| Comprehensive income                                                   |       |                          |       |                                    |       |                                                       |       |                                                 |       | 156       |       |
| **December 31, 2007**                                             |       | 3,059                         |       | 19,486                                  |       | (2,234                                                     | )          | 1,017                                                |       | 18,269    |       |
| Net income                                                             |       | —                        |       | —                                  |       | 6,790                                                      |       | —                                               |       | 6,790     |       |
| Translation adjustment                                                 |       | —                        |       | —                                  |       | —                                                     |       | (1,271                                               | )          | (1,271    | )          |
| Comprehensive income                                                   |       |                          |       |                                    |       |                                                       |       |                                                 |       | 5,519     |       |
| **December 31, 2008**                                             |       | 3,059                         |       | 19,486                                  |       | 4,556                                                      |       | (254                                                 | )          | 23,788    |       |
| Net loss                                                               |       | —                        |       | —                                  |       | (4,896                                                     | )          | —                                               |       | (4,896    | )          |
| Translation adjustment                                                 |       | —                        |       | —                                  |       | —                                                     |       | 544                                                  |       | 544       |       |
| Comprehensive loss                                                     |       |                          |       |                                    |       |                                                       |       |                                                 |       | (4,352    | )          |
| **December 31, 2009**                                             |       | 3,059                         |       | $                                       | 19,486     |                                                       | $          | (340                                                 | )          | $         | 290        |   | $ | 19,436 |   |

 

*The accompanying notes arean integral part of these consolidated financial statements.*

 

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**J.B. POINDEXTER &CO., INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Dollars in Thousands)**

 
| ** **                                                                                       | ** ** | **Years ended December 31,** | ** ** |
|--------------------------------------------------------------------------------------------------|------------|---------------------------------------------|------------|
| ** **                                                                                       | ** ** | **2009**                                    | ** ** | **2008** | ** ** | **2007** | ** ** |
| Cash  flows from operating activities:                                                           |       |                                        |       |   |   |   |   |
| Net  income (loss)                                                                               |       | $                                           | (4,896     | ) | $ | 6,790 |   | $ | (785 | ) |
| Adjustments  to reconcile net income (loss) to net cash provided by operating activities:        |       |                                        |       |   |   |   |   |
| Depreciation  and amortization                                                                   |       | 16,998                                      |       | 17,658 |   | 15,063 |   |
| Amortization  of debt issuance costs                                                             |       | 584                                         |       | 691 |   | 791 |   |
| Gain  on redemption of 8.75% Notes                                                               |       | (186                                        | )          | (416 | ) | — |   |
| Provision  for excess and obsolete inventory                                                     |       | 1,181                                       |       | 2,218 |   | 1,796 |   |
| Provision  for doubtful accounts receivable                                                      |       | 154                                         |       | 1,181 |   | 64 |   |
| Loss  (gain) on sale of property, plant and equipment                                            |       | 355                                         |       | 199 |   | (81 | ) |
| Deferred  income tax provision                                                                   |       | 1,529                                       |       | 3,036 |   | 616 |   |
| Impairment  of intangible assets                                                                 |       | —                                      |       | 300 |   | — |   |
| Other                                                                                            |       | 177                                         |       | 127 |   | (178 | ) |
| Change  in assets and liabilities, net of the effect of business acquisitions and  dispositions: |       |                                        |       |   |   |   |   |
| Accounts  receivable                                                                             |       | 7,820                                       |       | 8,594 |   | 17,571 |   |
| Inventories                                                                                      |       | 12,998                                      |       | 9,179 |   | 7,635 |   |
| Prepaid  expenses and other                                                                      |       | 300                                         |       | (93 | ) | (533 | ) |
| Accounts  payable                                                                                |       | 1,100                                       |       | (4,715 | ) | (4,256 | ) |
| Accrued  income taxes                                                                            |       | (1,668                                      | )          | 1,076 |   | (4,414 | ) |
| Other  accrued liabilities                                                                       |       | (7,224                                      | )          | (355 | ) | (2,520 | ) |
| Net  cash provided by operating activities                                                       |       | 29,222                                      |       | 45,470 |   | 30,769 |   |
| Cash  flows from investing activities:                                                           |       |                                        |       |   |   |   |   |
| Acquisition  of businesses, net of cash acquired                                                 |       | —                                      |       | (233 | ) | (41,673 | ) |
| Proceeds  from disposition of business, property, plant and equipment                            |       | 1,811                                       |       | 7,135 |   | 89 |   |
| Purchase  of property, plant and equipment                                                       |       | (11,320                                     | )          | (14,719 | ) | (14,312 | ) |
| Issuance  of insurance collateral deposits                                                       |       | (315                                        | )          | (736 | ) | (348 | ) |
| Other                                                                                            |       | —                                      |       | — |   | 455 |   |
| Net  cash used in investing activities                                                           |       | (9,824                                      | )          | (8,553 | ) | (55,789 | ) |
| Cash  flows from financing activities:                                                           |       |                                        |       |   |   |   |   |
| Net  proceeds from revolving credit facility                                                     |       | (379                                        | )          | (3,321 | ) | 3,637 |   |
| Payments  of long-term debt and capital leases                                                   |       | (1,346                                      | )          | (2,758 | ) | (2,177 | ) |
| Net  cash provided by (used in) financing activities                                             |       | (1,725                                      | )          | (6,079 | ) | 1,460 |   |
| Translation  impacts                                                                             |       | 252                                         |       | (1,271 | ) | 940 |   |
| Change  in cash and cash equivalents                                                             |       | 17,925                                      |       | 29,567 |   | (22,620 | ) |
| Cash  and cash equivalents, beginning of year                                                    |       | 36,251                                      |       | 6,684 |   | 29,304 |   |
| Cash  and cash equivalents, end of year                                                          |       | $                                           | 54,176     |   | $ | 36,251 |   | $ | 6,684 |   |

 

*Theaccompanying notes are an integral part of these consolidated financialstatements.*

 

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**J.B.POINDEXTER & CO., INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)**

**(Dollarsin Thousands)**

 

**1.**                   Organization &Business

** **

J.B. Poindexter & Co., Inc. (“JBPCO”)and its subsidiaries or business units (the “Subsidiaries” or “business units”and together with JBPCO, the “Company”) operate primarily manufacturingbusinesses principally in North America. JBPCO is owned and controlled by JohnPoindexter.

 

The Company acquired three businesses during thethree years ended December 31, 2009 (see Note 4).

 

The Company’s operating segments are as follows:

 

***Morgan Truck Body, LLC (“Morgan”)*** manufacturestruck bodies in the United States and Canada for dry freight and refrigeratedtrucks and vans (excluding those made for pickup trucks and tractor-trailertrucks).  Morgan’s operations include itsCanadian subsidiary Morgan Canada (f/k/a Commercial Babcock, Inc.).  The truck bodies are attached to truckchassis provided by its customers. Customers include truck rental and leasing companies, truck dealers andcompanies that operate fleets of delivery vehicles. The principal raw materialsused by Morgan include steel, aluminum, fiberglass-reinforced plywood,hardwoods and lubricants acquired from a variety of sources.

 

***Morgan Olson, LLC (“MorganOlson”)*** manufactures step van bodies for parcel, food,newspaper, uniform, linen and other delivery applications. Step vans arespecialized vehicles designed for multiple-stop applications and enable thedriver of the truck to easily access the cargo area. Morgan Olson manufactures thecomplete truck body, including the fabrication of the body, the installation ofwindows, doors, the instrument panel, seating and wiring and finishing thetruck with paint and decal application. The step van bodies are installed ontruck chassis provided by Morgan Olson’s customers. The principal raw materialsused by Morgan Olson include steel and aluminum and a variety of automotivecomponents.

 

***Truck Accessories Group, LLC(“Truck Accessories”)*** manufactures pickup truckcaps and tonneau covers, which are fabricated enclosures that fit over the openbeds of pickup trucks, converting the beds into weatherproof storage areas.Truck Accessories’ brands include Leer, Century, Raider, Pace Edwards, andState Wide Aluminum.  The principal rawmaterials used by Truck Accessories are resin, fiberglass, paint, glass andmanufactured components such as locks and gas struts.

 

***Specialty ManufacturingDivision (“Specialty Manufacturing”)*** is comprised of theSpecialty Vehicle Group, MIC Group, LLC (“MIC Group”) and EFP, LLC (“EFP”). TheSpecialty Vehicle Group is comprised of Federal Coach, LLC (“Federal Coach”)and Eagle Specialty Vehicles, LLC (“Eagle Coach”).  The Specialty Vehicle Group manufacturesfuneral coaches, limousines and specialty buses.  The Specialty Vehicle Group purchases vehiclechassis from the major automotive manufacturers’ dealers for modification andsale to its customers.  Effective December 31,2009, Specialty Vehicle Group exited the specialized bus business and sold itsbus line (See Note 6).  MIC Groupacquired three companies during 2007. Effective April 30, August 23and September 4, 2007, it acquired MIC Duncan (f/k/a Richard’sManufacturing Co., Inc.), MIC Tarlton (f/k/a Tarlton Supply Company) andMIC Houston (f/k/a Machine and Manufacturing I, Inc.), respectively.  Effective December 31, 2008, thesecompanies were merged into MIC Group. MIC Group is a manufacturer, investment caster and assembler ofprecision metal parts for use in the worldwide oil and gas exploration,automotive and aerospace industries and other general industries. EFP molds,fabricates and markets expandable foam products used for packaging and thermalinsulation by various industries. The principal raw materials used by SpecialtyManufacturing are ferrous and nonferrous materials including stainless steel,alloy steels, nickel-based alloys, titanium, brass, beryllium-copper alloys,aluminum, expandable polystyrene, polypropylene, polyethylene and other resins.

 

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**J.B.POINDEXTER & CO., INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)**

**(Dollars in Thousands)**

 

**2.**                   Summary of SignificantAccounting Policies

** **

*Principles of Consolidation. *Theconsolidated financial statements have been prepared in accordance withaccounting principles generally accepted in the United States.  All intercompany accounts and transactionshave been eliminated in consolidation.

 

*Cash and Cash Equivalents.*  Cash and all highly liquid investments with amaturity of three months or less at the date of purchase, including short-termdeposits and government agency and corporate obligations, are classified ascash and cash equivalents.  At times, theCompany has maintained deposits in financial institutions in excess offederally insured limits.

 

*Revenue Recognition*.  Revenue is recognized upon shipment of theproduct to customers, except for Morgan and Morgan Olson where revenue is recognizedwhen title transfers to the customer upon final body assembly, qualityinspection and customer notification. Amounts billed to customers related to shipping and handling areclassified as revenue.  The costsassociated with the shipping and handling revenue are included in cost ofsales.

 

*Accounts Receivable. *The Companysells to customers on terms customary in its industries and typically extendsits customers 30-day payment terms. Interest is charged on accounts receivable in cases where there is aneconomic reason for extended terms. Discounts are allowed for early payment but only if economicallyjustified based on the cost of capital. Accounts receivable is stated net of an allowance for doubtful accountsof $1,028 and $1,740 at December 31, 2009 and 2008, respectively.  The Company establishes an allowance fordoubtful accounts receivable on a case-by-case basis when it believes that therequired payment of specific amounts owed is unlikely to occur.  The activity in the allowance for doubtfulaccounts for the years ended December 31 was:

 
| ** **                           | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|--------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Balance at the beginning of the year |       | $        | 1,740      |     | $          | 1,182    |       | $ | 1,547 |   |
| Provision for losses                 |       | 154      |       | 1,181    |       | 64       |       |
| Charge-offs                          |       | (620     | )          | (576     | )          | (301     | )          |
| Recoveries                           |       | (246     | )          | (47      | )          | (128     | )          |
| Balance at the end of the year       |       | $        | 1,028      |     | $          | 1,740    |       | $ | 1,182 |   |

 

The carrying amounts of trade accounts receivable approximate fairvalue because of the short maturity of those instruments.  The Company is not aware of any significantcredit risks related to its customer base and does not generally requirecollateral or other security to support customer receivables.

 

*Inventories. *Inventories arestated at the lower of cost or market. Cost is determined by the first-in, first-out (FIFO) method.

 

*Property, Plant and Equipment. *Property, plantand equipment, including property under capital leases, are stated atcost.  The cost of property under capitalleases is the lower of the present value of the future minimum lease paymentsor fair value at the inception of the lease. Depreciation and amortization is computed by using the straight-linemethod over the estimated useful lives of the applicable assets or over theshorter of the lease term or the estimated useful life of leasehold improvements.  The cost of maintenance and repairs ischarged to operating expense as incurred and the cost of major replacements andsignificant improvements is capitalized.

 

*Goodwilland Intangible Assets. *Goodwill andintangible assets with indefinite useful lives are not amortized, but are evaluatedat least annually for impairment or more frequently if facts and circumstancesindicate that the assets may be impaired. Intangible assets that are determined to have finite lives are amortizedon a straight-line basis over the period in which we expect to receive economicbenefit.  See Note 7 for furtherdiscussion on goodwill and intangible assets.

 

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**J.B.POINDEXTER & CO., INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)**

**(Dollars in Thousands)**

 

*Debt Issuance Costs. *Debt issuancecosts are amortized using the effective interest method over the term of therelated debt, which ranges from four to ten years.  Amortization of debt issuance costs isincluded in interest expense.

 

*Evaluation of Impairment of Long-Lived Assets. *The Company evaluates thecarrying value of long-lived assets whenever significant events or changes incircumstances indicate the carrying value of these assets may be impaired.  The Company evaluates potential impairment oflong-lived assets by comparing the carrying value of the assets to the expectednet future cash flows resulting from the use of the assets.  As indicated in Note 7, the Company recordedimpairment charges in 2008.

 

*Warranty. *Morgan providesproduct warranties for periods of up to five years.  Morgan Olson provides a warranty period,which is one year or 12,000 miles for components, three years or 36,000 milesfor paint, and five years or 50,000 miles for the van body structure.  Truck Accessories provides a warranty period,exclusive to the original truck owner, which is, in general but with exclusions,one year for parts, five years for paint and lifetime for structure.  The Specialty Vehicle Group provides awarranty on its products for a period of 48 months or 50,000 miles on thesection of the body and parts manufactured for funeral coaches and funerallimousines, 36 months or 50,000 miles on the body and parts manufactured forbus bodies, and 48 months or 100,000 miles on the section of the body and partsmanufactured for limousines.  Theremaining operations of Specialty Manufacturing do not provide a warranty ontheir products.  A provision for warrantycosts is included in cost of sales when goods are sold based on historicalexperience and estimated future claims. The Company had accrued warranty costs of $3,481 and $3,631 at December 31,2009 and 2008, respectively.  Theactivity in the accrued warranty cost accounts for the years ended December 31was:

 
| ** **                           | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|--------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Balance at the beginning of the year |       | $        | 3,631      |     | $          | 4,343    |       | $ | 4,185 |   |
| Provision for losses                 |       | 1,354    |       | 1,739    |       | 3,002    |       |
| Charge-offs                          |       | (1,504   | )          | (2,451   | )          | (2,844   | )          |
| Balance at the end of the year       |       | 3,481    |       | 3,631    |       | 4,343    |       |
| Less: Short-term                     |       | 1,687    |       | 1,246    |       | 2,089    |       |
| Long-term                            |       | $        | 1,794      |     | $          | 2,385    |       | $ | 2,254 |   |

 

*Advertising and Research and Development Expense.*  The Company expenses advertising costs andresearch and development (“R&D”) costs as incurred.  During the years ended December 31,2009, 2008 and 2007, advertising expense was $1,749,****$3,324and $3,606, respectively, and R&D expense was $1,192, $2,298 and $3,476,respectively.

 

*Income Taxes. *The provision(benefit) for income taxes is based on income recognized for financialstatement purposes and includes the effects of temporary and permanentdifferences between such income and that recognized for tax returnpurposes.  Deferred tax assets and liabilitiesare computed based on the difference between the financial statement and incometax bases of assets and liabilities using the enacted tax rates.  The Company considers the earnings in itsCanadian operations to be permanently invested and as such has not provided fordeferred taxes related to potential distributions of those earnings.  The amount of undistributed earnings at December 31,2009 was not material.

 

The Company’s management believes that it is more likely than not thatcurrent and long-term deferred tax assets will reduce future income taxpayments.  Should the Company determinethat it is more likely than not unable to realize all or part of the netdeferred tax asset in the future, a valuation allowance, necessary to reducethe deferred tax asset to the amount that is more likely than not to berealized,  would reduce income in theperiod such determination was made.

 

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**J.B.POINDEXTER & CO., INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)**

**(Dollars in Thousands)**

 

The Company accounts for uncertain tax positions and reports aliability for unrecognized tax benefits resulting from uncertain tax positionstaken or expected to be taken in a tax return. The Company recognizes interest and penalties, if any, related tounrecognized tax benefits in income tax expense.

 

*Self-Insurance Reserves*.  The Company utilizes a combination ofinsurance coverage and self-insurance programs for property, casualty, workers’compensation and healthcare insurance. The Company records a fully developed self-insurance reserve to coverthe self-insured portion of these risks based on known facts and historicalindustry trends.  Changes in management’sassumptions may result in a different self-insurance reserve.

 

*ContingentLiabilities. *Reserves areestablished for estimated environmental and legal loss contingencies when aloss is probable and the amount of the loss can be reasonably estimated.  Revisions to contingent liabilities arereflected in income in the period in which different facts or informationbecome known or circumstances change that affect the previous assumptions withrespect to the likelihood or amount of loss. Reserves for contingent liabilities are based upon the assumptions andestimates regarding the probable outcome of the matter.  Should the outcome differ from theassumptions and estimates, revisions to the estimated reserves for contingentliabilities would be required.

 

*Comprehensive Income.*Comprehensive incomeconsists of net income (loss) and other comprehensive income (loss).  Other comprehensive income (loss) consists offoreign currency translation adjustments, which are also recognized as a separatecomponent of equity.

 

*Translation of Foreign Financial Statements. *Assets and liabilities offoreign operations are translated at year-end rates of exchange, and the incomestatements are translated at the average rates of exchange for the year.  Gains or losses resulting from translatingforeign currency financial statements are accumulated in a separate componentof stockholder’s equity until the foreign operations are sold or substantiallyliquidated.  Gains or losses resultingfrom foreign currency transactions (transactions that require settlement in acurrency other than the Company’s functional currency) are included in netincome (loss).

 

*FairValue of Financial Instruments*.  The Company’s financial instruments consistof cash and cash equivalents, receivables and debt.  Fair values of cash and cash equivalents andreceivables approximate carrying values for these financial instruments sincethey are relatively short-term in nature. The carrying amount of debt, except for the Company’s 8.75% Notes (seeNote 10), approximates the fair value due either to length of maturity orexistence of variable interest rates that approximate prevailing marketrates.  The fair value of the Company’s8.75% Notes is determined under the provisions of applicable guidance, whichrequires an entity to maximize the use of observable inputs and minimize theuse of unobservable inputs when measuring fair value.

 

*Use of Estimates.*The preparation of financialstatements in conformity with accounting principles generally accepted in theUnited States requires management to make estimates and assumptions that affectthe reported amounts of assets and liabilities and disclosure of contingentassets and liabilities at the date of the financial statements and the reportedamounts of revenues and expenses during the reporting period.  Actual results could differ from thoseestimates.  Significant estimates subjectto change include the valuation of goodwill and other intangible assets, theallowances for doubtful accounts, shrinkage and excess and obsolete inventory,the valuation of deferred tax assets, and the allowances for self-insurancerisks, warranty claims, and environmental claims.

 

*Subsequent Events.*The Company has evaluatedsubsequent events through the filing date of this Form 10-K and hasdetermined that there were no subsequent events to recognize or disclose inthese financial statements.

 

*RecentAccounting Pronouncements*.  In December 2007,the Financial Accounting Standards Board (“FASB”) issued new guidance for theaccounting for *Business Combinations* whichestablishes principles and requirements for how an acquirer recognizes andmeasures in its financial statements the identifiable assets acquired, theliabilities assumed, any noncontrolling interest in the acquire, and thegoodwill acquired.  It also establishesdisclosure requirements to enable the evaluation of the nature and financialeffects of the business combination.  

 

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**J.B.POINDEXTER & CO., INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)**

**(Dollars in Thousands)**

 

Thisstatement was effective for us beginning in fiscal 2009.  The adoption of this guidance did not have amaterial impact on our consolidated financial statements.

 

InDecember 2007, the FASB issued guidance for the accounting for *Noncontrolling Interest in Consolidated Financial Statements*whichestablishes accounting and reporting standards for ownership interests insubsidiaries held by parties other than the parent, the amount of consolidatednet income attributable to the parent and to the noncontrolling interests,changes in a parent’s ownership interest, and the valuation of retainednoncontrolling equity investments when a subsidiary is deconsolidated.  It also establishes disclosure requirementsthat clearly identify and distinguish between the interests of the parent andthe interests of the noncontrolling owners. This statement was effective for us beginning in fiscal 2009.  The adoption of this guidance did not have amaterial impact on our consolidated financial statements.

 

In May 2009, the FASB issued guidance thatestablishes general standards of accounting for and disclosure of events thatoccur after the balance sheet date but before financial statements areissued.  The pronouncement provides: (a) theperiod after the balance sheet date during which management of a reportingentity should evaluate events or transactions that may occur for potentialrecognition or disclosure in the financial statements; (b) thecircumstances under which an entity should recognize events or transactionsoccurring after the balance sheet date in its financial statements; and (c) thedisclosures that an entity should make about events or transactions thatoccurred after the balance sheet date. The guidance was effective prospectively for interim or annual periodsending after June 15, 2009.  Theadoption of the guidance for the quarter ended June 30, 2009 did not havea material impact on the Company’s financial position, results of operationsand liquidity, and related disclosures.

 

In June 2009, the FASB issued guidance thatestablishes the FASB Accounting Standards Codification TM (“Codification”) asthe single source of authoritative U.S. generally accepted accountingprinciples (“U.S. GAAP”) recognized by the FASB to be applied bynongovernmental entities.  Rules andinterpretive releases of the SEC under authority of federal securities laws arealso sources of authoritative U.S. GAAP for SEC registrants.  The guidance and the Codification areeffective for financial statements issued for interim and annual periods endingafter September 15, 2009.  TheCodification became effective for the Company during its interim period ending September 30,2009 and its adoption did not have a material impact on its consolidatedfinancial statements.

 

**3.**                                  Segment Data

** **

TheCompany operates and manages its subsidiaries within the separate businesssegments described in Note 1.  TheCompany evaluates performance and allocates resources based on the operatingincome of each segment.  The accountingpolicies of the reportable business segments are the same as those described inthe summary of significant accounting policies.

 

Thefollowing is a summary of the business segment data for the years ended December 31:

 
| **Net Sales**           | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|-------------------------|------------|----------|------------|----------|------------|----------|------------|
| Morgan                  |       | $        | 146,902    |     | $          | 233,893  |       | $ | 332,926 |   |
| Morgan Olson            |       | 61,593   |       | 104,437  |       | 110,291  |       |
| Truck Accessories       |       | 115,607  |       | 131,871  |       | 155,564  |       |
| Specialty Manufacturing |       | 157,925  |       | 238,337  |       | 195,163  |       |
| Eliminations            |       | (1,380   | )          | (2,129   | )          | (1,783   | )          |
| Net Sales               |       | $        | 480,647    |     | $          | 706,409  |       | $ | 792,161 |   |

 

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**J.B.POINDEXTER & CO., INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)**

**(Dollars in Thousands)**

 
| **Operating Income**    | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|-------------------------|------------|----------|------------|----------|------------|----------|------------|
| Morgan                  |       | $        | 1,421      |     | $          | 3,953    |       | $ | 15,384 |   |
| Morgan Olson            |       | 2,565    |       | 5,415    |       | (2,680   | )          |
| Truck Accessories       |       | 7,839    |       | 2,403    |       | 3,196    |       |
| Specialty Manufacturing |       | 2,937    |       | 25,895   |       | 13,726   |       |
| JBPCO (Corporate)       |       | (3,902   | )          | (7,985   | )          | (9,466   | )          |
| Operating Income        |       | $        | 10,860     |     | $          | 29,681   |       | $ | 20,160 |   |

 
| **Depreciation and Amortization Expense** | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|----------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Morgan                                                   |       | $        | 1,921      |     | $          | 2,054    |       | $ | 2,506 |   |
| Morgan Olson                                             |       | 761      |       | 1,027    |       | 1,210    |       |
| Truck Accessories                                        |       | 4,057    |       | 4,191    |       | 4,237    |       |
| Specialty Manufacturing                                  |       | 10,141   |       | 10,281   |       | 7,028    |       |
| JBPCO (Corporate)                                        |       | 118      |       | 105      |       | 82       |       |
| Depreciation and Amortization Expense                    |       | $        | 16,998     |     | $          | 17,658   |       | $ | 15,063 |   |

 
| **Total Assets as of December 31,** | ** ** | **2009** | ** ** | **2008** | ** ** | ** ** | ** ** |
|--------------------------------------------------------------|------------|----------|------------|----------|------------|------------|------------|
| Morgan                                                       |       | $        | 39,819     |     | $          | 43,897     |       |   |   |
| Morgan Olson                                                 |       | 19,311   |       | 23,752   |       |       |       |
| Truck Accessories                                            |       | 58,371   |       | 62,230   |       |       |       |
| Specialty Manufacturing                                      |       | 112,712  |       | 131,329  |       |       |       |
| JBPCO (Corporate)                                            |       | 55,751   |       | 34,730   |       |       |       |
| Identifiable Assets                                          |       | $        | 285,964    |     | $          | 295,938    |       |   |   |

 
| **Capital Expenditures** | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|-------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Morgan                        |       | $        | 1,276      |     | $          | 735      |       | $ | 1,361 |   |
| Morgan Olson                  |       | 361      |       | 799      |       | 958      |       |
| Truck Accessories             |       | 2,200    |       | 3,070    |       | 5,044    |       |
| Specialty Manufacturing       |       | 5,034    |       | 9,176    |       | 6,671    |       |
| JBPCO (Corporate)             |       | 2,449    |       | 939      |       | 278      |       |
| Capital Expenditures          |       | $        | 11,320     |     | $          | 14,719   |       | $ | 14,312 |   |

 

Morganhad two customers (truck leasing and rental companies) that accounted for, on acombined basis, approximately 54%, 48% and 55% of Morgan’s net sales during2009, 2008 and 2007, respectively. Accounts receivable from these customers totaled $2,816 and $2,850 at December 31,2009 and 2008, respectively.

 

MorganOlson had one customer that accounted for approximately 31%, 44% and 37% ofMorgan Olson’s net sales during 2009, 2008 and 2007, respectively.  Accounts receivable from this customer were$123 and $4,196 at December 31, 2009 and 2008, respectively.

 

Specialty Manufacturing has two customers in the international oilfieldservice industry that accounted for approximately 39%,****42%and 28% of Specialty Manufacturing’s net sales during 2009, 2008 and 2007,

 

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** **

**J.B.POINDEXTER & CO., INC. AND SUBSIDIARIES**

**NOTES TOCONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(Dollarsin Thousands)**

 

respectively.  Accountsreceivable from these customers totaled $4,882 and $6,228 at December 31,2009 and 2008, respectively.

 

The Company, on a consolidated basis, had five customers that accountedfor approximately 33%, 37% and 36% of total net sales during 2009, 2008 and2007, respectively.  Accounts receivablefrom these customers totaled $7,821 and $12,615 at December 31, 2009 and2008, respectively.  These were customersof Morgan, Morgan Olson and Specialty Manufacturing.

 

The Company’s operations are located principally in the United States.  However, Morgan has operations located inCanada and Specialty Manufacturing has operations in Mexico and Malaysia.  Long-lived assets relating to these foreignoperations were $9,168 and****$8,231 at December 31,2009 and 2008, respectively.  Consolidatednet sales included $31,881, $31,888 and****$29,706 in2009, 2008 and 2007, respectively, of sales to customers outside the UnitedStates.

 

JBPCO(Corporate) operating expenses for all periods comprise the costs of the parentcompany office and personnel who provide strategic direction and support to thesubsidiary companies.  JBPCO (Corporate)costs were $3,902, $7,985 and $9,466 for 2009, 2008 and 2007, respectively.

 

**4.           Acquisitions**

** **

During2007, MIC Group acquired all of the common stock of Richard’s Manufacturing Co., Inc.(“MIC Duncan”), a precision machining business located in Duncan, Oklahoma,Tarlton Supply Company (“MIC Tarlton”), a precision machining and assemblybusiness located in Brenham, Texas, and Machining and Manufacturing I, Inc.(“MIC Houston”), a precision machining business located in Houston, Texas. MICDuncan, MIC Tarlton and MIC Houston were acquired on April 30, August 23and September 4, 2007, respectively. MIC Group continues to utilize the purchased assets in the same manner asprior to the acquisition and the operating results of the acquisitions havebeen included in the consolidated financial statements since the respectiveacquisition date.  MIC Duncan, MICTarlton and MIC Houston were accounted for as a purchase and the aggregate cashpurchase prices were $12,635, $18,668 and $10,603, respectively.  During 2008, MIC Group paid the former ownerof MIC Tarlton $233 (see Note 7) of additional purchase price related to taxespayable by the owner.

 

Thefollowing summarizes the estimated fair value of the assets acquired andliabilities assumed at the date ofthe acquisitions:

 
| ** **                    | ** ** | **MIC Duncan**          | ** ** | **MIC Tarlton**          | ** ** | **MIC Houston**            | ** ** |
|-------------------------------|------------|-------------------------|------------|--------------------------|------------|----------------------------|------------|
| ** **                    | ** ** | **April 30, 2007** | ** ** | **August 23, 2007** | ** ** | **September 4, 2007** | ** ** |
| Accounts receivable           |       | $                       | 755        |                     | $          | 2,793                      |       | $ | — |   |
| Inventories                   |       | 1,305                   |       | 8,394                    |       | 3,457                      |       |
| Other current assets          |       | 226                     |       | 66                       |       | —                     |       |
| Property, plant and equipment |       | 3,397                   |       | 6,502                    |       | 4,431                      |       |
| Goodwill                      |       | 3,843                   |       | 1,567                    |       | 326                        |       |
| Acquired intangibles          |       | 3,890                   |       | 2,430                    |       | 2,575                      |       |
| Current liabilities           |       | (781                    | )          | (3,049                   | )          | (186                       | )          |
| Other long-term liabilities   |       | —                  |       | (35                      | )          | —                     |       |
|                          |       | $                       | 12,635     |                     | $          | 18,668                     |       | $ | 10,603 |   |

 

Thecombined results of operations of the Company for the years ended December 31,2009, 2008 and 2007 including MIC Duncan, MIC Tarlton and MIC Houston as ifacquired on the first day of the year of their acquisition on an unaudited proforma basis would be as follows:

 

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**J.B.POINDEXTER & CO., INC. AND SUBSIDIARIES**

**NOTES TOCONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(Dollarsin Thousands)**

 
| ** **       | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|------------------|------------|----------|------------|----------|------------|----------|------------|
| Net sales        |       | $        | 480,647    |     | $          | 706,409  |       | $ | 827,536 |   |
| Operating income |       | 10,860   |       | 29,681   |       | 25,930   |       |
| Net income       |       | (4,896   | )          | 6,790    |       | 2,530    |       |
|                  |            |          |            |          |            |          |            |  |  |  |

** **

**5.**                                      Inventories

** **

Consolidated net inventoriesconsisted of the following:

 
| ** **        | ** ** | **December 31,** | ** ** |
|-------------------|------------|-----------------------|------------|
| ** **        | ** ** | **2009**              | ** ** | **2008** | ** ** |
| Raw materials     |       | $                     | 24,946     |   | $ | 33,081 |   |
| Work in process   |       | 14,894                |       | 24,553 |   |
| Finished goods    |       | 12,878                |       | 10,437 |   |
| Total inventories |       | $                     | 52,718     |   | $ | 68,071 |   |

 

Inventories are stated net of an allowance for excess and obsoleteinventory of $3,391 and****$3,166 at December 31,2009 and 2008, respectively.  Theactivity in the allowance for excess and obsolete inventory accounts for theyears ended December 31 was:

 
| ** **                           | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|--------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Balance at the beginning of the year |       | $        | 3,166      |     | $          | 1,707    |       | $ | 1,919 |   |
| Provision for losses                 |       | 1,181    |       | 2,218    |       | 1,796    |       |
| Charge-offs                          |       | (956     | )          | (759     | )          | (1,748   | )          |
| Recoveries                           |       | —   |       | —   |       | (260     | )          |
| Balance at the end of the year       |       | $        | 3,391      |     | $          | 3,166    |       | $ | 1,707 |   |

** **

**6.             Property, Plant and Equipment**

** **

Property, plant and equipment, as of December 31,2009 and 2008, consisted of the following:

 
| ** **                                | ** ** | **Range  of  Useful Lives  in Years** | ** ** | **2009** | ** ** | **2008** | ** ** |
|-------------------------------------------|------------|---------------------------------------|------------|----------|------------|----------|------------|
| Land                                      |       | —                                |       | $        | 3,079      |     | $          | 3,079 |   |
| Buildings and improvements                |       | 5-25                                  |       | 24,576   |       | 24,505   |       |
| Machinery and equipment                   |       | 3-10                                  |       | 128,978  |       | 134,231  |       |
| Furniture and fixtures                    |       | 2-10                                  |       | 14,648   |       | 15,235   |       |
| Transportation equipment                  |       | 2-10                                  |       | 5,543    |       | 5,958    |       |
| Leasehold improvements                    |       | 3-10                                  |       | 8,187    |       | 7,564    |       |
| Construction in progress                  |       | —                                |       | 8,680    |       | 6,432    |       |
|                                      |       |                                  |       | 193,691  |       | 197,004  |       |
| Accumulated depreciation and amortization |       |                                  |       | (123,618 | )          | (123,305 | )          |
| Property, plant and equipment, net        |       |                                  |       | $        | 70,073     |     | $          | 73,699 |   |

 

Machinery and equipment included approximately $14,150 and $13,628 ofequipment at cost recorded under capital leases as of December 31, 2009and 2008, respectively, and accumulated depreciation of approximately $7,118and $5,516 at December 31, 2009 and 2008, respectively.

 

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**J.B.POINDEXTER & CO., INC. AND SUBSIDIARIES**

**NOTES TOCONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(Dollarsin Thousands)**

 

In 2009 and 2008, the Company capitalized $485 and $417, respectively,of interest costs incurred related to constructed assets in progress.

 

During 2009, the Company decided to consolidate the two SpecialtyVehicle Group funeral and limousine manufacturing facilities and combine theirproduction in the Amelia, Ohio plant.  Aspart of the decision to consolidate, the Company sold its specialized busbusiness and related assets, including equipment, inventory and intangibleassets on December 31, 2009 for total proceeds of $1,375, which resultedin a net loss on sale of $584 recorded in other income on the consolidatedfinancial statements.   The allocation ofgoodwill associated with the bus business accounted for $550 of the loss.

 

The Company decided to close and consolidated one of SpecialtyManufacturing machining plants into another of its manufacturing facilities,resulting in a write-down of the carrying value of the assets by $677 in2008.   The Company also combined two ofits Truck Accessories manufacturing facilities located in Elkhart, Indiana,resulting in a write-down of the carrying value of the assets by $111 in 2008.

 

Depreciation expense was $15,299, $16,064,****and****$13,899 and included $1,688, $1,725, and $1,374 for assetsrecorded under capital leases for the years ended December 31, 2009, 2008and 2007, respectively.

 

**7.       Goodwill, Intangibles and Other Assets**

** **

Goodwill represents the excess of costs over fair value of net assetsof businesses acquired.  The Company paida premium over the fair value of net tangible and identifiable intangibleassets acquired for reasons such as the profitable expansion of its business,strategic fit, economies of scale and the value of an assembled workforce,among others.  Goodwill and intangibleassets acquired in a purchase business combination and determined to have anindefinite life are not amortized but instead tested for impairment at leastannually.

 

The Company completed its annual impairment review effective October 1,2009, 2008 and 2007, which indicated that there was a $300 impairment in thecarrying value of Federal Coach’s trade name recognized in 2008.  The fair value of our reporting units isbased on various valuation methods, including acquisition multiples of earningsand discounted cash flow analysis. 

 

Intangible assets with estimable useful lives are amortized over theirrespective estimated useful lives and are reviewed for impairment when eventsindicate their carrying amount may not be recoverable from future undiscountedcash flows.

 

The Company records impairment losses on long-lived assets used inoperations when events and circumstances indicate that the assets may beimpaired and the undiscounted cash flows estimated to be generated by thoseassets are less than the carrying amounts of those assets.

 

The Company sold its specialized bus business onDecember 31, 2009 and allocated $550 of goodwill associated with thebusiness sold.  Net sales related to thespecialized bus business were $9,504, $11,337 and $18,805 in 2009, 2008 and2007, respectively, and approximated 2.0%, 1.6%, and 2.4% of consolidated netsales in 2009, 2008 and 2007, respectively.

 

At December 31, 2009, goodwill was $7,408, $14,884 and $12,708 forthe Morgan, Truck Accessories and Specialty Manufacturing reporting units,respectively.

 

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**J.B.POINDEXTER & CO., INC. AND SUBSIDIARIES**

**NOTES TOCONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(Dollars in Thousands)**

 

The changes in the carrying amount of goodwill for the years ended December 31,2009 and 2008 were:

 
| ** **                          | ** ** | **Morgan** | ** ** | **Truck  Accessories** | ** ** | **Specialty  Manufacturing** | ** ** | **Total** | ** ** |
|-------------------------------------|------------|------------|------------|------------------------|------------|------------------------------|------------|-----------|------------|
| Balance, December 31, 2007     |       | $          | 7,408      |                   | $          | 14,884                       |       | $         | 13,025     |   | $ | 35,317 |   |
| Changes to goodwill during the year |       | —     |       | —                 |       | 233                          |       | 233       |       |
| Balance, December 31, 2008     |       | 7,408      |       | 14,884                 |       | 13,258                       |       | 35,550    |       |
| Changes to goodwill during the year |       | —     |       | —                 |       | (550                         | )          | (550      | )          |
| Balance, December 31, 2009     |       | $          | 7,408      |                   | $          | 14,884                       |       | $         | 12,708     |   | $ | 35,000 |   |

 

Goodwillrecognized in the MIC Tarlton acquisition is expected to be deductible forincome tax purposes.

 

Intangible assets and therelated accumulated amortization as of December 31, 2009 and 2008 were:

 

**December 31, 2009:**

 
| ** **                       | ** ** | ** **                 | ** ** | **Cost**   | ** ** | ** **             | ** ** |
|----------------------------------|------------|----------------------------|------------|------------|------------|------------------------|------------|
| ** **                       | ** ** | **Useful Lives  in Years** | ** ** | **Morgan** | ** ** | **Truck  Accessories** | ** ** | **SMG** | ** ** | **Total** | ** ** | **Accumulated  Amortization** | ** ** |
| Amortizable intangible assets:   |       |                       |       |       |       |                   |       |   |   |   |   |   |   |
|                             |       |                       |       |       |       |                   |       |   |   |   |   |   |   |
| Customer base                    |       | 5-20                       |       | $          | 1,760      |                   | $          | 2,556 |   | $ | 10,430 |   | $ | 14,746 |   | $ | 3,605 |   |
| Noncompete agreements            |       | 5                          |       | 216        |       | —                 |       | 663 |   | 879 |   | 646 |   |
| Supplier relationship            |       | 10                         |       | —     |       | —                 |       | 3,228 |   | 3,228 |   | 1,374 |   |
| Patents                          |       | 2                          |       | —     |       | 300                    |       | — |   | 300 |   | 300 |   |
|                             |       |                       |       | 1,976      |       | 2,856                  |       | 14,321 |   | 19,153 |   | 5,925 |   |
| Unamortizable intangible assets: |       |                       |       |       |       |                   |       |   |   |   |   |   |   |
| Trade names                      |       | —                     |       | 1,112      |       | 616                    |       | 880 |   | 2,608 |   | — |   |
| Balance, December 31, 2008  |       |                       |       | $          | 3,088      |                   | $          | 3,472 |   | $ | 15,201 |   | $ | 21,761 |   | $ | 5,925 |   |

 

**December 31, 2008:**

 
| ** **                       | ** ** | ** **                 | ** ** | **Cost**   | ** ** | ** **             | ** ** |
|----------------------------------|------------|----------------------------|------------|------------|------------|------------------------|------------|
| ** **                       | ** ** | **Useful Lives  in Years** | ** ** | **Morgan** | ** ** | **Truck  Accessories** | ** ** | **SMG** | ** ** | **Total** | ** ** | **Accumulated  Amortization** | ** ** |
| Amortizable intangible assets:   |       |                       |       |       |       |                   |       |   |   |   |   |   |   |
|                             |       |                       |       |       |       |                   |       |   |   |   |   |   |   |
| Customer base                    |       | 5-20                       |       | $          | 1,522      |                   | $          | 2,556 |   | $ | 10,400 |   | $ | 14,478 |   | $ | 2,383 |   |
| Noncompete agreements            |       | 5                          |       | 187        |       | —                 |       | 663 |   | 850 |   | 421 |   |
| Supplier relationship            |       | 10                         |       | —     |       | —                 |       | 3,218 |   | 3,218 |   | 1,052 |   |
| Patents                          |       | 2                          |       | —     |       | 300                    |       | — |   | 300 |   | 300 |   |
|                             |       |                       |       | 1,709      |       | 2,856                  |       | 14,281 |   | 18,846 |   | 4,156 |   |
| Unamortizable intangible assets: |       |                       |       |       |       |                   |       |   |   |   |   |   |   |
| Trade names                      |       | —                     |       | 961        |       | 616                    |       | 880 |   | 2,457 |   | — |   |
| Balance, December 31, 2009  |       |                       |       | $          | 2,670      |                   | $          | 3,472 |   | $ | 15,161 |   | $ | 21,303 |   | $ | 4,156 |   |

 

The amortization ofintangible assets was $1,700, $1,594 and $1,164 for the years ended December 31,2009, 2008 and 2007, respectively. Estimated amortization expense for each of the subsequent five yearsending December 31 is $1,627— 2010, $1,566— 2011, $1,378— 2012, $1,073—2013 and $1,073— 2014.

 

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**J.B.POINDEXTER & CO., INC. AND SUBSIDIARIES**

**NOTES TOCONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(Dollars in Thousands)**

 

Other assets as of December 31, 2009 and 2008consisted of the following:

 
| ** **                        | ** ** | ** **                               | ** ** | **2009**                      | ** ** | **2008**                  | ** ** |
|-----------------------------------|------------|------------------------------------------|------------|-------------------------------|------------|---------------------------|------------|
| ** **                        | ** ** | **Amortization********Period in  Years** | ** ** | **Accumulated  Amortization** | ** ** | **Net Book********Value** | ** ** | **Accumulated********Amortization** | ** ** | **Net  Book********Value** | ** ** |
| Other Assets:                     |       |                                     |       |                          |       |                      |       |   |   |   |   |
| Debt issuance costs               |       | 4-10                                     |       | $                             | 4,078      |                      | $          | 2,376 |   | $ | 3,495 |   | $ | 2,960 |   |
| Insurance cash collateral deposit |       | —                                   |       | —                        |       | 7,592                     |       | — |   | 7,277 |   |
| Other                             |       | —                                   |       | —                        |       | 2,897                     |       | — |   | 2,888 |   |
| Total                             |       |                                     |       | $                             | 4,078      |                      | $          | 12,865 |   | $ | 3,495 |   | $ | 13,125 |   |

 

The amortization of debtissuance costs was $584, $691, and $791 for the years ended December 31,2009, 2008 and 2007, respectively. Estimated amortization of debt issuance costs for each of the subsequentfive years ending December 31 is $559 — 2010, $559 — 2011, $559 — 2012, $559— 2013 and $139 - 2014.

 

The Company created a trustin favor of its insurance carrier to secure its liabilities under itsself-insured, casualty insurance program including workers’ compensationinsurance.  The liabilities werepreviously secured by an irrevocable standby letter of credit that wascancelled upon the initial deposit of $5,520 into the trust.  During the years ended December 31, 2009and 2008, the Company contributed an additional $315 and $750, respectively, tothe trust.

 

**8.         Floor Plan Notes Payable**

 

The Company has a floor planfinancing agreement with Ford Motor Credit Company for financing part of itschassis inventory at Federal Coach and Eagle Coach.  Floor plan notes payable reflect the monetaryvalue of the chassis that are in the Company’s possession as of December 31,2009 and 2008.  These obligations arereflected on the accompanying balance sheet as accounts payable, a currentliability.

 

The total amount financedunder these agreements was $791 and $1,395 as of December 31, 2009 and2008, respectively.  These borrowingsbear interest at the prime rate plus 150 basis points on balances outstandingover 90 days.  As of December 31,2009 and 2008, the weighted average interest rate on all outstanding floor plannotes payable was 0.2% and 0.4%, respectively. The average interest rate on the liabilities that bear interest was 6.8%and 4.9% at December 31, 2009 and 2008, respectively.

 

**9.             Revolving Credit Facility**

** **

On March 15, 2004, concurrently with the 8.75% Notes offeringdiscussed in Note 10, the Company entered into a revolving credit agreement(the “Revolving Credit Facility”) that expired March 15, 2008.  The Revolving Credit Facility automaticallyrenews for a twelve-month period after March 15 of each year unless noticeis provided at least 90 days prior to expiration by either party.  It was renewed for a twelve-month periodending March 15, 2011.  TheRevolving Credit Facility currently provides for borrowings by the Company ofup to $50,000.  The Revolving CreditFacility allows the Company to borrow funds up to the lesser of $50,000 or anamount based on the sum of: 1) advance rates applied to the total amounts ofeligible accounts receivable and inventories of the subsidiaries and 2) up to$20,000 collateralized by the fixed assets of the Company.  The advance rates are 85% for eligibleaccounts receivable and 60% for eligible inventory, as defined.  Borrowings against inventory may not exceed $20,000.  The Company is entitled to borrow up to anadditional $20,000 against fixed assets not to exceed the maximum amount ofcredit under the facility.  The RevolvingCredit Facility includes a subfacility for up to $15,000 of letters of credit.

 

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**J.B.POINDEXTER & CO., INC. AND SUBSIDIARIES**

**NOTES TOCONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(Dollarsin Thousands)**

 

The Revolving Credit Facility provides for borrowing at variable rates ofinterest, based on either LIBOR (London Interbank Offered Rate, which was 1.0%****at December 31, 2009) plus a margin of 1.75% or thebank’s base rate (the greater of the Federal Funds Rate plus 0.5% or its primerate, which was 3.25%****at December 31,2009).  Interest is payable monthlyincluding a fee of 0.375% on the portion of the $50,000 total commitment thatremains unused during the period.  TheSubsidiaries are also guarantors of the 8.75% Notes defined in Note 10.

 

The Revolving Credit Facility contains provisionsallowing the lender to accelerate the repayment of debt upon the occurrence ofan event the lender determines to represent a material adverse change.  The Revolving Credit Facility also containsrestrictive covenants, which, among other things, restrict the use of proceedsfrom the sale of assets, the ability of the Company to incur additional debt orpay dividends, and certain other corporate activities.  In addition, the Company is subject to afinancial covenant requiring it to maintain a minimum fixed charge coverageratio, as defined, of 1.0 to 1.0 should availability fall below $10,000.  At December 31, 2009, the Company was incompliance with all covenants of the Revolving Credit Facility. In the eventthat the Company’s borrowing availability is below $20,000, the Company’s cashbalances will become restricted.

 

At December 31, 2009 and 2008, the Company had borrowings of $38and $417, respectively, and $1,358 in standby letters of credit (see Note 16)at December 31, 2009, and had unused gross borrowing availability of$48,604 at December 31, 2009.

 

**10.          Long-Term Debt and 8.75% Notes Offering**

** **

Long-term debt as of December 31, 2009 and 2008 consisted of:

 
| ** **                                                                               | ** ** | **2009** | ** ** | **2008** | ** ** |
|------------------------------------------------------------------------------------------|------------|----------|------------|----------|------------|
| 8.75% Notes due 2014, plus unamortized premiumof $1.0 million at December 31,  2009 |       | $        | 199,839    |     | $          | 200,491 |   |
| Obligations under capital leases                                                         |       | 5,355    |       | 6,494    |       |
| Total long-term debt                                                                     |       | 205,194  |       | 206,985  |       |
| Less current portion                                                                     |       | 2,259    |       | 2,574    |       |
| Long-term debt, less current portion                                                     |       | $        | 202,935    |     | $          | 204,411 |   |

 

On March 15, 2004, the Company completed a note offering of$125,000, 8.75% Notes due in 2014 (the “8.75% Notes”) with interest payablesemiannually.  On May 17, 2004 and January 21,2005, the Company completed offers to sell an additional $30,000 and $45,000,respectively, of the 8.75% Notes.  Theadditional $30,000 of 8.75% Notes were issued at par and the $45,000 of 8.75%Notes were issued at a 5% premium.  Theadditional 8.75% Notes were issued on the same terms as the originalissue.  Net proceeds from the additionalofferings of approximately $46,400 increased the Company’s cash and short-terminvestments.  The 8.75% Notes mature on March 15,2014 and bear interest at an annual rate of 8.75% payable each September 15and March 15 to the holders of record on September 1 and March 1immediately preceding the interest payment date.  On May 11, 2005, the Company completedan offer to exchange (“2005 Exchange Offer”) $200 million principal amount ofits 8.75% Notes which had been registered under the Securities Act for any andall of its outstanding unregistered 8.75% Notes.

 

The 8.75% Notes are subordinated to borrowings under the RevolvingCredit Facility (see Note 9) and other secured indebtedness to the extent ofthe assets securing the debt.  Also, theCompany’s obligations under the 8.75% Notes are guaranteed by each wholly ownedsubsidiary of the Company (the “Subsidiary Guarantors”).  Each guarantee is a senior unsecuredobligation of the Subsidiary providing such Guarantee.  The Subsidiary Guarantors are also borrowersunder the Revolving Credit Facility (see Note 9).

 

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**J.B.POINDEXTER & CO., INC. AND SUBSIDIARIES**

**NOTES TOCONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(Dollarsin Thousands)**

 

The Company has the option to redeem the 8.75% Notes at any time on orafter March 15, 2010, at a defined premium plus accrued and unpaidinterest to the date of redemption.  On February 5and February 9, 2009, the Company purchased $150 and $250, respectively,of the 8.75% Notes on the open market, resulting in a gain of $186.

 

The8.75% Notes’ indenture includes covenants that limit the ability of the Companyto: incur additional debt, including sale and leaseback transactions; paydividends or distributions on its capital stock or repurchase capital stock;issue stock of subsidiaries; make certain investments; create liens on itsassets to secure debt; enter into transactions with affiliates; merge orconsolidate with another company; and transfer and sell assets.  As noted, the indenture contains a covenantto limit the incurrence of additional indebtedness as measured by itsConsolidated Coverage Ratio, as defined. The Company and its subsidiaries are prohibited from incurringadditional indebtedness when the Consolidated Coverage ratio falls below 2.0 to1.0.  The Indenture Agreement permitscertain exceptions with respect to capitalized lease obligations and otherarrangements that are incurred for the purpose of financing all or part of thepurchase price or cost of construction or improvements of property used in thebusiness of the Company or its subsidiaries. Already existing obligations and any amounts available to be drawn underthe Company’s existing revolving credit agreement are not subject to thislimitation.   For the twelve months endedDecember 31, 2009, the Company’s consolidated coverage ratio wasapproximately 1.6 to 1.00; below the level required by the IndentureAgreement.  Therefore, until the ratioimproves to the 2.0 to 1.0 level, the Company will be prohibited from incurringadditional or new indebtedness, except as permitted in the Indenture.  At December 31, 2009, the Company had$48.6 million of current availability under the Company’s existing revolvingcredit agreement, borrowing under which is unaffected by noncompliance with theconsolidated coverage ratio of the indenture.

 

TheCompany estimates the fair value of the 8.75% Notes at December 31, 2009and 2008 was approximately $168,000 and $95,000, respectively, based on theirmarket values at those dates compared to a recorded amounts of $199,839 and$200,491 at December 31, 2009 and 2008, respectively.

 

The Company’s obligation under capital leases is due in varying maturitydates through 2014.  The capital leasesare collateralized by certain equipment with a net book value of approximately$7,031 and $8,112 at December 31, 2009 and 2008, respectively.

 

**Maturities.**  Aggregate principal payments on long-termdebt based on scheduled maturities for the next five years as of December 31,2009 are as follows:

 
| 2010   |   | $       | 2,259   |   |
|--------|--------|---------|---------|--------|
| 2011   |   | 2,025   |    |
| 2012   |   | 1,294   |    |
| 2013   |   | 525     |    |
| 2014   |   | 199,091 |    |
|   |   | $       | 205,194 |   |

 

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**J.B.POINDEXTER & CO., INC. AND SUBSIDIARIES**

**NOTES TOCONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(Dollarsin Thousands)**

 

**11.          Operating Leases**

 

The Company leases certain manufacturing facilities and equipment undernoncancelable operating leases certain of which contain renewal options.  The future minimum lease payments subsequentto December 31, 2009 are asfollows

 
| 2010                         |   | $     | 8,675  |   |
|------------------------------|--------|-------|--------|--------|
| 2011                         |   | 6,852 |   |
| 2012                         |   | 5,148 |   |
| 2013                         |   | 2,668 |   |
| 2014                         |   | 1,836 |   |
| 2015 and thereafter          |   | 2,615 |   |
| Total minimum lease payments |   | $     | 27,830 |   |

 

Total rental expense included in continuing operations under alloperating leases was approximately $10,042, $9,711 and $9,485 for the yearsended December 31, 2009, 2008 and 2007, respectively.

 

**12.          Supplemental Cash Flow Information**

** **

The supplemental cash flow information for the yearsended December 31, 2009, 2008 and 2007 was as follows:

 
| ** **                                                     | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|----------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Cash paid for interest                                         |       | $        | 18,187     |     | $          | 18,371   |       | $ | 18,688 |   |
| Cash paid (refunded) for income taxes, net of  foreign refunds |       | (2,037   | )          | 508      |       | 6,875    |       |
| Noncash investing and financing activities:                    |       |     |       |     |       |     |       |
| Capital lease obligations for machinery and  equipment         |       | 1,219    |       | 438      |       | 4,635    |       |
|                                                                |            |          |            |          |            |          |            |  |  |  |

** **

**13.          Income Taxes**

** **

The income tax provision consists of the followingfor the years ended December 31, 2009, 2008 and 2007:

 
| ** **           | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|----------------------|------------|----------|------------|----------|------------|----------|------------|
| Current:             |       |     |       |     |       |     |       |
| Federal              |       | $        | (4,497     | )        | $          | 1,478    |       | $ | 970 |   |
| State                |       | 564      |       | 1,162    |       | 1,509    |       |
| Foreign              |       | 19       |       | (866     | )          | 29       |       |
|                 |       | (3,914   | )          | 1,774    |       | 2,508    |       |
|                 |       |     |       |     |       |     |       |
| Deferred:            |       |     |       |     |       |     |       |
| Federal              |       | 1,732    |       | 1,733    |       | 466      |       |
| State                |       | (28      | )          | 411      |       | 158      |       |
| Foreign              |       | —   |       | 892      |       | (8       | )          |
|                 |       | 1,704    |       | 3,036    |       | 616      |       |
| Income tax provision |       | $        | (2,210     | )        | $          | 4,810    |       | $ | 3,124 |   |

 

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**J.B.POINDEXTER & CO., INC. AND SUBSIDIARIES**

**NOTES TOCONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(Dollars in Thousands)**

 

The following table reconciles the differences between the federalstatutory income tax rate and the effective tax rate for the years ended December 31,2009, 2008 and 2007:

 
| ** **                                                    | ** ** | **2009**   | ** ** | **2008** | ** ** | **2007**   | ** ** |
|---------------------------------------------------------------|------------|------------|------------|----------|------------|------------|------------|
| ** **                                                    | ** ** | **Amount** | ** ** | **%**    | ** ** | **Amount** | ** ** | **%** | ** ** | **Amount** | ** ** | **%** | ** ** |
| Tax provision at federal statutory income tax rate            |       | $          | (2,415     | )        | 34         | %          | $          | 3,944 |   | 34 | % | $ | 796 |   | 34 | % |
|                                                          |       |       |       |     |       |       |       |   |   |   |   |   |   |
| Net impact of change in valuation allowance                   |       | (169       | )          | 2        |       | (304       | )          | (2 | ) | 827 |   | 35 |   |
| Nondeductible expenses                                        |       | 107        |       | (2       | )          | 127        |       | 1 |   | 201 |   | 9 |   |
| State income taxes, net of federal income tax  benefit        |       | 599        |       | (8       | )          | 1,440      |       | 12 |   | 304 |   | 13 |   |
| Uncertain state tax positions related to prior  years         |       | (343       | )          | 5        |       | (211       | )          | (2 | ) | 668 |   | 29 |   |
| Uncertain state tax positions related to current  year        |       | 93         |       | (1       | )          | 111        |       | 1 |   | 219 |   | 9 |   |
| Foreign income taxes, at rate different thanfederal rate      |       | (47        | )          | 1        |       | (93        | )          | (1 | ) | 19 |   | 1 |   |
| Other                                                         |       | (34        | )          | —   |       | (204       | )          | (2 | ) | 90 |   | 4 |   |
| Provision (benefit) for income taxes and effective  tax rates |       | $          | (2,210     | )        | 31         | %          | $          | 4,810 |   | 41 | % | $ | 3,124 |   | 134 | % |

 

The domestic and foreign components of income (loss)before income taxes were:

 
| ** ** | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|------------|------------|----------|------------|----------|------------|----------|------------|
| Domestic   |       | $        | (7,758     | )        | $          | 14,195   |       | $ | 4,374 |   |
| Foreign    |       | 652      |       | (2,595   | )          | (2,035   | )          |
| Total      |       | $        | (7,106     | )        | $          | 11,600   |       | $ | 2,339 |   |

 

Deferred income taxes are based on the estimated future tax effects ofdifferences between the financial statements and tax basis of assets and liabilitiesgiven the provisions of the enacted tax laws. The net deferred tax assets and liabilities as of December 31, 2009and 2008 were:

 
| ** **                                        | ** ** | **2009** | ** ** | **2008** | ** ** |
|---------------------------------------------------|------------|----------|------------|----------|------------|
| **Current deferred tax asset:**                   |       |     |       |     |       |
| Allowance for doubtful accounts                   |       | $        | 187        |     | $          | 437 |   |
| Employee benefit accruals and reserves            |       | 473      |       | 395      |       |
| Uncertain state tax positions tax benefit         |       | 509      |       | 814      |       |
| Other                                             |       | 199      |       | 477      |       |
| Total current deferred tax asset                  |       | 1,368    |       | 2,123    |       |
| ** **                                        |       |     |       |     |       |
| **Long-term deferred tax asset:**                 |       |     |       |     |       |
| Tax credit and state operating loss carryforwards |       | 5,960    |       | 6,135    |       |
| Warranty liabilities                              |       | 1,254    |       | 1,316    |       |
| Other                                             |       | 2,449    |       | 2,696    |       |
| Valuation allowance                               |       | (3,384   | )          | (3,977   | )          |
| Total long-term deferred tax asset                |       | 6,279    |       | 6,170    |       |
|                                                   |            |          |            |          |            |  |  |

 

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**J.B.POINDEXTER & CO., INC. AND SUBSIDIARIES**

**NOTES TOCONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(Dollars in Thousands)**

 
| ** **                              | ** ** | **2009** | ** ** | **2008** | ** ** |
|-----------------------------------------|------------|----------|------------|----------|------------|
| **Long-term deferred tax liabilities:** |       |     |       |     |       |
| Depreciation and amortization           |       | (9,394   | )          | (8,333   | )          |
| Other                                   |       | (703     | )          | (706     | )          |
| Total long-term deferred tax liability  |       | (10,097  | )          | (9,039   | )          |
| Net long-term deferred tax liability    |       | (3,818   | )          | (2,869   | )          |
| Net deferred tax liability              |       | $        | (2,450     | )        | $          | (746 | ) |
|                                         |            |          |            |          |            |  |  |

 

The Company had alternative minimum tax creditcarryforward deferred tax assets of approximately $800 at December 31,2009 and 2008 for U.S. federal income tax purposes, which may be carriedforward indefinitely.

 

**During 2009, the Company generated federal netoperating losses of approximately $4,373 and had recognized a current incometax refund receivable at December 31, 2009 related to the carryback ofthese losses. Additionally, at December 31, 2009 and 2008, the Company hadstate tax net operating loss carryforwards of approximately $67,000 and $72,000,respectively, and recognized a deferred tax asset of approximately $3,700 and$3,900, respectively. The state net operating loss carryforwards expire atvarying dates ranging from 1 to 20 years. At December 31, 2009 and 2008, the Company had recorded a valuationallowance of approximately $2,100 and $2,500, respectively, against thisdeferred tax asset as it was uncertain as to whether it would be realized.  The Company had Canadian net operating lossesof approximately $4,100 and $4,700 as of December 31, 2009 and 2008,respectively, and recognized a deferred tax asset of approximately $1,300 and$1,500, respectively.  At December 31,2009 and 2008, the Company recorded a valuation allowance of approximately$1,300 and $1,500, respectively, against this deferred tax asset as it wasuncertain as to whether it would be realized. Canadian net operating losses will be carried forward for up to 20years, with a significant majority being greater than 10 years.**

 

As of December 31, 2009and December 31, 2008, the Company had $1,821 and $2,802, respectively, oftax liabilities related to uncertain state income tax liabilities, or $1,312and $1,988, respectively, net of a federal tax benefit of $509 and $814,respectively.  The Company recognizesinterest and penalties related to unrecognized tax benefits in income taxexpense.  The tax liability includes $511and $824 of interest and penalties at December 31, 2009 and 2008,respectively.  If these uncertain taxpositions are favorably resolved, $1,312 would reduce our income tax provisionin future periods.  A reconciliation ofthe beginning and ending unrecognized tax liability is as follows:

** **
| ** **                                                                                                                     | ** ** | **Liability for  Unrecognized Tax  Benefits** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------|------------|
| Balance at January 1, 2007                                                                                                |       | $                                             | 1,637      |   |
| Additions based on tax positions related to prior years                                                                        |       | 955                                           |       |
| Additions based on tax positions related to current year                                                                       |       | 348                                           |       |
| Balance at December 31, 2007                                                                                              |       | 2,940                                         |       |
| Releases related to prior years due to expiration of statutes, net of  additions based on tax positions related to prior years |       | (311                                          | )          |
| Additions based on tax positions related to current year                                                                       |       | 173                                           |       |
| Balance at December 31, 2008                                                                                              |       | $                                             | 2,802      |   |
| Releases related to prior years due to expiration of statutes,  including settlements related to prior years                   |       | (1,123                                        | )          |
| Additions based on tax positions related to current year                                                                       |       | 142                                           |       |
| Balance at December 31, 2009                                                                                              |       | $                                             | 1,821      |   |

 

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**J.B.POINDEXTER & CO., INC. AND SUBSIDIARIES**

**NOTES TOCONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(Dollarsin Thousands)**

 

We are subject to U.S.federal income tax as well as income tax in Canada and multiple statejurisdictions. We have substantially concluded all U.S. federal income taxmatters for years through 2005. Substantially all material state and local income tax matters have beenconcluded for fiscal years through 2005. Currently, we are under audit by Revenue Canada for tax years 2001through 2004 and the Internal Revenue Service for tax year 2006.  The Company has provided for any knownpotential exposures for these examinations.

 

**14.    Common Stock**

 

As of December 31, 2009and 2008, there were 100,000 shares authorized and 3,059 shares issued andoutstanding of JBPCO common stock with a par value of $.01 per share.  JBPCO was incorporated in Delaware.  No other classes of common stock, preferredstock or common stock equivalents exist.

 

**15.    Employee Benefit Plans**

 

*EmployeeIncentive Plans*.  The Companyhas an Annual Management Incentive Plan for executives at the parent companyand at each of the business units to provide for the earning of annual bonusesbased upon the attainment of performance-based goals. Eligible participants areentitled to receive a bonus if the business unit (or the Company) attain atleast 80% of the operating income target. Individual bonuses are then allocated among the eligible employees basedupon their individual achievement of stated performance objectives includingworking capital performance objectives. The Company incurred expenses relatedto this plan totaling $2,444, $3,877 and $2,378 for the years ended December 31,2009, 2008 and 2007, respectively.

 

TheCompany has a Long-Term Performance Plan (“LTPP”) designed to align the interestsand the Company’s long-term financial performance goals with the most seniorexecutives in the Company.  Each elementof the LTPP has a three-year duration and awards are paid only at the end ofthe three-year cycle, depending upon performance versus established budgetedfinancial goals.  The Company incurredexpenses related to this plan totaling $349, $733 and $136 for the years ended December 31,2009, 2008 and 2007, respectively.

 

*JBPCO401(k) Defined Contribution Plan.* The JBPCO-sponsored 401(k) savingsplan allows participating employees to contribute through salary deductions upto 100% of gross compensation and provides for Company matching contributionsup to 1% of the first 5% or 3% of the first 6% of employee contributiondepending on the profitability of the business unit, as well as the opportunityfor an annual discretionary contribution. The Company decreased the matching percentage to 1% of the first 5% from3% of the first 6%, for certain business units, during 2008 and 2009.  The Company has not made discretionarycontributions.  Vesting in the Companymatching contribution is 20% per year over the first five years.  The Company incurred related employer matchingcontribution and administrative expenses of $632,****$1,702and $2,009 during the years ended December 31, 2009, 2008 and 2007,respectively.

 

*Defined Benefit Plan.*****TruckAccessories assumed future sponsorship of a defined benefit plan (the “Plan”)covering hourly employees at its Gem Top division that was sold with all theemployees terminated effective February 28, 2003.  The Plan was frozen effective March 31,1996 and at December 31, 2009 the Plan was underfunded by approximately$117 compared to being underfunded by approximately $160 in 2008.  The Company’s funding policy for the Plan isto make the minimum annual contributions required by applicableregulations.  Minimum contributions forthe 2009 plan year totaled $35.

 

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**J.B.POINDEXTER & CO., INC. AND SUBSIDIARIES**

**NOTES TOCONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(Dollars in Thousands)**

 

The Plan has invested its assets through a group annuity contract withan insurance company.  The targetedcomposition is set by the Company and is reallocated periodically.  The long-term portfolio is chosen based onthe duration of the Plan’s individual population and is set toward funding forbenefits payable in the future.  The fairvalue of the Plan’s assets was $456 and $307 as of December 31, 2009 and2008, respectively.  The pension expense(benefit) recognized was $24, $(4) and $5 for the years ended December 31,2009, 2008 and 2007, respectively.  Basedon the immateriality of the Plan, management does not believe expandeddisclosure is necessary.

 

**16.****                              ****Commitmentsand Contingencies**

 

*Claims and Lawsuits.*  The Company is involved in certain claims andlawsuits arising in the normal course of business.  In the opinion of management, the ultimateresolution of these matters will not have a material adverse effect on thefinancial position or results of operations and cash flows of the Company.

 

*Letters of Credit and Other Commitments.** ***The Company had $1,358 instandby letters of credit outstanding at December 31, 2009, primarilysecuring the Company’s chassis bailment pool programs.  The Company holds funds in a trust for thebenefit of its casualty insurance carrier of $7,592 to secure the Company’sinsurance programs.  Income from thetrust accrues to the Company.

 

The Company has a five-year agreement that expires October 1, 2014with a key supplier, whereby it exclusively purchases inventory from thissupplier in return for favorable pricing. The Company estimates that it will purchase approximately $4.7 millionfrom this supplier in 2010.

 

*Consigned Chassis Inventories. *The Companyobtains vehicle chassis for certain units produced at Morgan directly from thechassis manufacturer under a bailment pool agreement with General MotorsAcceptance Corporation.  Chassis areobtained directly from the manufacturer based on orders from customers, whichare typically manufacturer dealers.  Theagreements generally provide that the Company is restricted to producingcertain conversions or up-fittings on these chassis.  The manufacturer does not transfer thecertificate of origin to the Company and, accordingly, the Company accounts forthe chassis as consigned inventory belonging to the manufacturer.  Under these agreements, if the chassis is notdelivered to a customer within a specified timeframe, the Company is requiredto pay a finance charge based on the value of the chassis.  The finance charges incurred on consignedchassis inventories included in interest expense in the consolidated statementsof income totaled $28, $27 and $49 for the years ended December 31, 2009,2008 and 2007, respectively.  Totalconsigned chassis inventory was $121 and $930 at December 31, 2009 and2008, respectively.

 

*Environmental Matters*.****The Company’s operations are subject to a variety of federal,state and local environmental and health and safety statutes and regulations,including those relating to emissions to the air, discharges to water,treatment, storage and disposal of waste, and remediation of contaminated sites.In certain cases, these requirements may limit the productive capacity of itsoperations. Certain laws, including the Federal Comprehensive EnvironmentalResponse, Compensation and Liability Act of 1980, impose strict and, undercertain circumstances, joint and several liability for costs to remediatecontaminated sites upon designated responsible parties including site owners oroperators and persons who dispose of wastes at, or transport wastes to, suchsites. Some of the Company’s operations also require permits which may restrictits activities and which are subject to renewal, modification or revocation byissuing authorities. In addition, the Company generates nonhazardous wastes,which are also subject to regulation under applicable environmental laws.

 

Fromtime to time, the Company has received notices of noncompliance with respect toits operations, which typically have been resolved by investigating the allegednoncompliance, correcting any noncompliant conditions and paying fines, none ofwhich individually or in the aggregate has had a material adverse effect on theCompany.  The Company cannot ensure that it has been or will be at alltimes in compliance with all of these requirements, including those related toreporting or permit restrictions, or that it will not incur material fines,penalties, costs or 

 

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**J.B.POINDEXTER & CO., INC. AND SUBSIDIARIES**

**NOTES TOCONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(Dollarsin Thousands)**

 

liabilitiesin connection with such requirements or a failure to comply with them. Additionally, the Company expects that the nature of its operations willcontinue to make it subject to increasingly stringent environmental regulatorystandards. Although the Company believes it has made sufficient capitalexpenditures to maintain compliance with existing laws and regulations, futureexpenditures may be necessary as compliance standards and technology change oras unanticipated circumstances arise. Unforeseen and significant expendituresrequired to comply with new or more aggressively enforced requirements or newlydiscovered conditions could limit expansion or otherwise have a materialadverse effect on the Company’s business and financial condition.

 

InFebruary 2009, Morgan Olson voluntarily reported to the EnvironmentalProtection Agency (“USEPA”) potential noncompliance with the reportingrequirements applicable to certain chemicals under the Federal EmergencyPlanning and Community Right-to-know Act (“EPCRA”).  In March 2009,Morgan Olson filed with the USEPA additional EPCRA reports for certainchemicals and modified previously filed EPCRA reports for other chemicals used inoperations during calendar years 2004 through 2007.  Action by the USEPAis probable, however, the financial impact of such enforcement action, if any,is unlikely to be material.

 

InJuly 2005, Morgan notified the USEPA that it was investigating its compliancewith the filing requirements of Section 313 of the EPCRA, and regulationspromulgated thereunder. All necessary reports were completed and filed with theUSEPA by August 31, 2005.  A letter from the USEPA requestingadditional information was received in December 2006 and a responsesubmitted. Action by the USEPA is probable and the financial impact of suchenforcement action, if any, cannot be estimated but could be material.

 

**17.**                               Related-PartyTransactions

** **

The Company is party to aManagement Services Agreement with Southwestern Holdings, Inc. (“Southwestern”),a corporation owned by Mr. Poindexter. The services agreement was suspended effective June 30, 2006 when Mr. Poindexterbecame an employee of the Company and reinstated effective July 31, 2008when Mr. Poindexter ceased being an employee of the Company.  Pursuant to the Management ServicesAgreement, Southwestern provides services to the Company, including those of Mr. Poindexter.  The Company pays Southwestern a base fee ofapproximately $45 per month for these services, subject to annual automaticincreases based upon the consumer price index. The Company paid Southwestern $534, $222 and $0 during 2009, 2008 and2007, respectively, for all these services.

 

Southwesternwas a named insured under the Company’s general liability and excessumbrella insurance policies during 2007 when Southwestern became the defendantin a suit for damages resulting from a vehicle accident not involving theCompany’s assets or any of its team members.  The lawsuit was settledduring 2008 and Southwestern paid the amount of the self-insured reserve of$250.  Southwestern is no longer a named insured under the Company’sgeneral liability policy effective July 1, 2007.  Any increased premiums under the Company’sumbrella policy incurred in the future by the Company by reason of thesettlement will be reimbursed by Southwestern.

 

EffectiveDecember 12, 2008, Morgan sold and leased back three of its manufacturingfacilities to Poindexter Properties, LLC, a company owned by Mr. Poindexter.  The properties, located in Morgantown andEphrata, Pennsylvania and Corsicana, Texas, were sold at their appraised valueof $7,135.  Morgan recorded a gain on thesale of $1,854 that has been deferred and included in other current andnoncurrent liabilities in the accompanying consolidated balance sheet and willbe recognized as income over the term of the leases with $230 recognized asincome in 2009.  Morgan paid rent of $932and $51 for the use of the properties for the years ended December 31,2009 and 2008, respectively.

 

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**J.B.POINDEXTER & CO., INC. AND SUBSIDIARIES**

**NOTES TOCONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(Dollars in Thousands)**

 

***18.****                              **Selected Quarterly Information (Unaudited)*

** **

***The Company’s accounting recordsare maintained on the basis of four 13-week quarters.  Shown below are the selected unauditedquarterly data.***

 
| ** **                                   | ** ** | **March  31, 2009** | ** ** | **June  30, 2009** | ** ** | **September  30, 2009** | ** ** | **December  31, 2009** | ** ** |
|----------------------------------------------|------------|---------------------|------------|--------------------|------------|-------------------------|------------|------------------------|------------|
| Net sales                                    |       | $                   | 139,671    |               | $          | 122,671                 |       | $                      | 108,767    |   | $ | 109,538 |   |
| Cost of sales                                |       | 120,902             |       | 107,270            |       | 95,277                  |       | 96,697                 |       |
| Gross profit                                 |       | 18,769              |       | 15,401             |       | 13,490                  |       | 12,841                 |       |
| Selling, general and administrative expenses |       | 14,376              |       | 11,886             |       | 11,433                  |       | 11,266                 |       |
| Closed and excess facility costs             |       | —              |       | 642                |       | —                  |       | —                 |       |
| Gain on redemption of 8.75% Notes            |       | (186                | )          | —             |       | —                  |       | —                 |       |
| Other expense (income)                       |       | (95                 | )          | —             |       | (204                    | )          | 523                    |       |
| Operating income                             |       | 4,674               |       | 2,873              |       | 2,261                   |       | 1,052                  |       |
| Interest expense, net                        |       | 4,455               |       | 4,686              |       | 4,405                   |       | 4,420                  |       |
| Income tax provision (benefit)               |       | 334                 |       | (1,399             | )          | 155                     |       | (1,300                 | )          |
| Net loss                                     |       | $                   | (115       | )                  | $          | (414                    | )          | $                      | (2,299     | ) | $ | (2,068 | ) |
| Depreciation and amortization                |       | $                   | 4,342      |               | $          | 4,570                   |       | $                      | 4,190      |   | $ | 3,896 |   |
| Amortization of debt issuance costs          |       | $                   | 164        |               | $          | 140                     |       | $                      | 140        |   | $ | 140 |   |

 
| ** **                                   | ** ** | **March  31, 2008** | ** ** | **June  30, 2008** | ** ** | **September  30, 2008** | ** ** | **December  31, 2008** | ** ** |
|----------------------------------------------|------------|---------------------|------------|--------------------|------------|-------------------------|------------|------------------------|------------|
| Net sales                                    |       | $                   | 184,236    |               | $          | 208,235                 |       | $                      | 167,178    |   | $ | 146,760 |   |
| Cost of sales                                |       | 164,306             |       | 178,946            |       | 142,286                 |       | 125,261                |       |
| Gross profit                                 |       | 19,930              |       | 29,289             |       | 24,892                  |       | 21,499                 |       |
| Selling, general and administrative expenses |       | 15,827              |       | 16,187             |       | 17,720                  |       | 16,556                 |       |
| Closed and excess facility costs             |       | —              |       | —             |       | —                  |       | 788                    |       |
| Gain on redemption of 8.75% Notes            |       | —              |       | —             |       | —                  |       | (416                   | )          |
| Other expense (income)                       |       | 168                 |       | (342               | )          | (454                    | )          | (105                   | )          |
| Operating income                             |       | 3,935               |       | 13,444             |       | 7,626                   |       | 4,676                  |       |
| Interest expense, net                        |       | 4,565               |       | 4,623              |       | 4,118                   |       | 4,775                  |       |
| Income tax provision (benefit)               |       | 188                 |       | 3,498              |       | 1,371                   |       | (247                   | )          |
| Net income (loss)                            |       | $                   | (818       | )                  | $          | 5,323                   |       | $                      | 2,137      |   | $ | 148 |   |
| Depreciation and amortization                |       | $                   | 4,489      |               | $          | 4,550                   |       | $                      | 4,323      |   | $ | 4,296 |   |
| Amortization of debt issuance costs          |       | $                   | 196        |               | $          | 146                     |       | $                      | 165        |   | $ | 184 |   |

 

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** **

**Item 9.**                                                           Changes in andDisagreements with Accountants on Accounting and Financial Disclosure

** **

**None.**

** **

**Item 9A.**                                                  Controls andProcedures

** **

**Management’s ConclusionsRegarding Effectiveness of Disclosure Controls and Procedures**

** **

As of December 31,2009, the Company conducted an evaluation, under the supervision andparticipation of management including the Chief Executive Officer and ChiefFinancial Officer, of the effectiveness of the Company’s disclosure controlsand procedures (as defined in Rule 13a-15(e) of the SecuritiesExchange Act of 1934).  Based upon thatevaluation, the Chief Executive Officer and Chief Financial Officer concludedthat the Company’s disclosure controls and procedures were effective.

 

**Changes in Internal Control OverFinancial Reporting**

 

There have been no changesin our internal control over financial reporting that occurred during the yearended December 31, 2009 that have materially affected, or are likely tomaterially affect, our internal controls over financial reporting.

 

**Management’s Report on InternalControl Over Financial Reporting**

 

Management of the Company isresponsible for establishing and maintaining adequate internal control overfinancial reporting as defined in Rule 13a-15(f) of the SecuritiesExchange Act of 1934.  Internal controlover financial reporting provides reasonable assurance regarding thereliability of financial reporting and the preparation of financial statementsfor external purposes in accordance with generally accepted accountingprinciples.

 

The Company’s internalcontrol over financial reporting includes policies and procedures that: pertainto the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and disposition of the Company’s assets; providereasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally acceptedaccounting principles, and that the Company’s receipts and expenditures arebeing made only in accordance with authorizations of management; and providereasonable assurance regarding prevention or timely detection of unauthorizedacquisition, use or disposition of the Company’s assets that could have amaterial effect on the financial statements.

 

Because of its inherentlimitations, internal control over financial reporting may not prevent ordetect misstatements.  Also, projectionsof any evaluation of effectiveness to future periods are subject to the riskthat controls may become inadequate because of changes in conditions, or thatthe degree of compliance with the policies or procedures may deteriorate.

 

Management of the Companyhas assessed the effectiveness of the Company’s internal control over financialreporting based on criteria established in the Internal Control-IntegratedFramework issued by the Committee of Sponsoring Organizations of the TreadwayCommission.

 

Management’s assessmentincluded an evaluation of the design of the Company’s internal control overfinancial reporting and testing of the operational effectiveness of the Company’sinternal control over financial reporting. Based on this assessment, management identified no material weaknessesin the Company’s internal controls as of December 31, 2009 and managementbelieves that its internal control over financial reporting are effective.

 

This annual report does notinclude an attestation report of the Company’s independent registered publicaccounting firm regarding internal control over financial reporting.  Management’s report was not subject toattestation by the Company’s independent registered public accounting firmpursuant to temporary rules of the 

 

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Securities and ExchangeCommission that permit the Company to provide only management’s report in theannual report.

 

**Item 9B.****                                                 ****OtherInformation**

 

None.

 

**PART III**

** **

**Item 10.**                                                    Directors,Executive Officers and Corporate Governance

** **

The Company’s directors and executive officers areset forth below. All directors hold office until the next annual meeting oruntil their successors are duly elected and qualified. The executive officersare appointed by the Board of Directors annually and serve at the discretion ofthe Board of Directors.

 
| **Name**            | ** ** | **Age** | ** ** | **Position**                                                  |
|---------------------|------------|---------|------------|---------------------------------------------------------------|
| John  B. Poindexter |       | 65      |       | Chairman  of the Board, President and Chief Executive Officer |
| Stephen  P. Magee   |       | 62      |       | Director                                                      |
| William  J. Bowen   |       | 88      |       | Director                                                      |
| Robert  Preston     |       | 58      |       | Chief  Operating Officer                                      |
| David  Kay          |       | 61      |       | Chief  Financial Officer                                      |
| Larry  T. Wolfe     |       | 61      |       | Vice  President Administration and Assistant Secretary        |

 

John B. Poindexter has served as Chairman of theBoard of Directors since 1988 and Chief Executive Officer since 1994.  He was President from November 2002until September 2005 and again from November 2006 to present.

 

Stephen P. Magee has served as Director since theCompany was formed in 1988, as Treasurer from 1988 to 2001 and as ChiefFinancial Officer from 1994 to 2001. Mr. Magee also serves as Chairman ofthe Audit Committee of the Board of Directors.

 

William J. Bowen has served as Director since1988.  Mr. Bowen retired in 1992 asChairman of the Board of Transco Energy Company, a diversified energy companybased in Houston, Texas. Mr. Bowen served as Chief Executive Officer ofTransco Energy from 1974 until his retirement from that position in 1987. Mr. Bowenserves on the Company’s Audit Committee.

 

RobertPreston became the Chief Operating Officer in February 2010.  Previously, Mr. Preston served as thePresident of Eastman Chemical’s Asia Pacific company based in Shanghai.

 

DavidKay became the Chief Financial Officer in November 2009.  Prior to joining the Company, Mr. Kayserved as Chief Financial Officer at Freight Car America in Chicago, Illinoisand Gibraltar Industries, Inc in Buffalo, New York.

 

Larry T. Wolfe has served as Vice President ofAdministration since May 1995. He previously served as Vice President ofHuman Resources and Administrative Services for Transco Energy Company.

 

**Audit Committee**

 

The Audit Committee is a standing committee of theBoard of Directors. The primary purpose of the Committee is to assist the Boardof Directors in fulfilling its oversight responsibility relating to (1) theintegrity of our financial statements and financial reporting process and oursystems of internal accounting and financial controls; (2) the annualindependent audit of our financial statements, the engagement of theindependent auditors and the evaluation of the independent auditors’qualifications, independence and performance; and (3) the compliance bythe Company with legal and regulatory requirements, including disclosurecontrols and procedures. The

 

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Committee also reviews the Company’s criticalaccounting policies, annual and quarterly reports on Form 10-K and Form 10-Q,and earnings releases before they are published. The Committee has soleauthority to engage, evaluate and replace the independent auditor. TheCommittee also has the authority to retain special legal, accounting and otherconsultants it deems necessary in the performance of its duties. The Committeemeets regularly with our management and independent auditors to discussinternal controls and financial reporting process and also meets regularly withthe independent auditor in private.

 

The current members of the Audit Committee are Messrs. Magee(chairman) and Bowen. Since the Company is not a publicly traded company on alisted exchange, the Board of Directors has not designated a member of theAudit Committee as an “audit committee financial expert” who is independent asthe term is used in Item 7(d)(3)(iv) of Schedule 14A under the ExchangeAct.

 

**Other Significant Persons**

** **

Although not an executive officer, each of the following persons is anofficer of the referenced subsidiary or division thereof and is an importantcontributor to operations:

 
| **Name**         | ** ** | **Age** | ** ** | **Position**                    |
|------------------|------------|---------|------------|---------------------------------|
| Nelson Byman     |       | 63      |       | President of MIC Group          |
| Jim Donohue      |       | 53      |       | President of Truck  Accessories |
| Norbert  Markert |       | 49      |       | President  of Morgan Truck Body |
| Michael  Ownbey  |       | 58      |       | President  of Morgan Olson      |

 

Nelson Byman became President of MIC Group in June 1998.Previously, Mr. Byman was Vice President/General Manager of a domesticdivision of Weatherford/Enterra, a manufacturer of oilfield-related equipment.

 

Jim Donohue was named President of Truck Accessoriesin July 2008. Previously, Mr. Donohue spent nine years ingeneral management positions with Unison Engine and Smiths Aerospace followinga nineteen year career with SKF Group.

 

NorbertMarkert became President and Chief Operating Officer of Morgan in November 2005.  Previously, he served two years as Presidentof Autoliv of North America after having been President of PilkingtonAutomotive North America for four years.

 

MichaelOwnbey became President of Morgan Olson in December 2007.  Prior to joining Morgan Olson, Mr. Ownbeywas Vice President of Operations for Honda Motor Company’s largest subsidiaryin North America, Yachiyo Manufacturing of Alabama, LLC.

 

**Code of Ethics**

 

The Board of Directors has adopted a code of ethicsthat applies to its executive officers. Management does not believe that a codeof ethics is a substitute for an obligation to always act in an honest andethical fashion.  The code of ethics isincluded as an Exhibit to this Form 10-K.

 

**Item 11.                 Executive Compensation**

 

**Overviewof Compensation Program**

 

TheChairman of the Board of Directors (the “Chairman”) along with other Boardmembers and Company senior executives (for the purpose of this discussion, the “Committee”)has the responsibility for establishing, implementing and monitoring adherenceto the Company’s compensation program. The Committee ensures that the total compensation paid to executives isfair, reasonable and competitive.

 

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**CompensationPractices and Objectives**

 

TheCommittee believes that the most effective executive compensation program isone that is designed to reward the achievement of specific goals and whichaligns the executive’s interests with those of the Company. The Committeeevaluates both performance and compensation to ensure that it maintains itsability to attract and retain superior employees in key positions and thatcompensation provided to key employees remains competitive relative to the compensationpaid to executives at similar companies. To that end, the Committee believes executive compensation provided bythe Company to its executives, including the named executive officers, shouldinclude a combination of competitive base salaries and performance-drivenincentive plans.

 

**Role ofExecutive Officers in Compensation Decisions**

 

TheCommittee participates in compensation assessments and recommendations for theexecutive officers of the Company and the Chairman reserves the right of finalapproval.  The Chairman further reservesthe right to exercise discretion in modifying any recommended adjustments orawards.

 

**SettingExecutive Compensation**

 

TheCommittee has structured the Company’s annual and long-term incentive-basedexecutive compensation to motivate executives to achieve the financial goalsset by the Company and reward executives for achieving such goals.  In furtherance of these objectives, theCommittee periodically engages the services of outside executive compensationconsultants to provide relevant market data and alternatives to consider whenmaking compensation decisions.

 

Inmaking compensation decisions, the Committee compares the total compensationopportunity of executives as compared to a nationwide survey of similar-sizedcompanies from a cross section of manufacturing industries.  This data is updated annually and ispresented to the Company by a third-party firm expressed as 25th, 50th and 75thpercentiles.  The Company strives tomanage the base and incentive compensation to the 50th percentilewhich is further influenced by individual performance, Company performance andan executive’s length of service.

 

Asignificant portion of total compensation is provided as incentive compensationrealized by the executives as a result of the Company achieving establishedobjectives.  Historically, incentiveawards were reflective of both the Company’s achievement of establishedobjectives and the individual executive’s performance.

 

**2009Executive Compensation Components**

 

Forthe fiscal year ended December 31, 2009, the principal components ofcompensation for named executive officers were:

 

·                  Base salary

·                  Performance-based annual incentivecompensation

·                  Performance-based long-term incentivecompensation

 

TheCompany does not provide any executives with any form of non-cash compensationsuch as retirement plans or perquisites.

 

**BaseSalary**

 

TheCompany provides executive officers with a base salary to compensate them forservices rendered during the fiscal year. Salary ranges for each executive are determined based on their positionand responsibility and by using market data. The Company strives to manage an executive’s base salary compensation tothe 50th percentile of the market data provided by an outside consultant.  Salary levels are typically consideredannually as 

 

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partof the Company’s performance review process as well as upon a promotion orother change in job responsibility. Merit-based increases for executives are a result of recommendationsmade by the Committee and subject to the final approval of the Chairman.

 

**Performance-BasedAnnual Incentive Plan**

 

TheAnnual Management Incentive Plan (the “Annual Plan”) was established in themid-1990s to provide an annual incentive opportunity to executives throughoutthe Company.  The purpose of the AnnualPlan is to align the interests of the executives with the financial performanceat either their business unit or the parent. At the beginning of each calendar year, the Chairman reviews and approveseach participant’s eligibility in the Annual Plan and incentive target which isexpressed as a percent of base salary earnings for the year.

 

Participantsin the Annual Plan at the parent level have their performance measured by theconsolidated earnings performance of the Company in relationship to theearnings budget established at the beginning of each calendar year.  Participants in the Annual Plan at thebusiness unit level have their performance measured by a combination of theirbusiness unit’s performance to an established earnings budget and themanagement of working capital targets. Performance to the earnings budget accounts for 75% to 80% of theincentive award and the management of working capital accounts for 20% to25%.  However, if the earnings budget isnot achieved at least at the threshold level, no incentive awards are paid.

 

Thethreshold level is set at 80% of budgeted earnings.  Once the annual audit is complete and theearnings performance verified at both the parent and business unit level by theCompany’s outside auditors, the percent of performance to budget isestablished.  If the performance exceeds80%, that number is squared to determine what percent of a participant’s awardis paid. (Example:  If 90% earningsperformance is achieved, then 90% x 90% = 81% of a participant’s incentivetarget award is paid.)  The Annual Planmaximum payout is achieved when the earning’s performance is 130% of budgetedearnings and 169% of a participant’s incentive target.

 

Inany calendar year where performance falls below the threshold performancelevel, the Committee may make modest discretionary awards to certain AnnualPlan participants to reward exceptional individual contributions.

 

In2008, the income thresholds under the Annual Plan were reduced to offsetnegative industry trends that were not anticipated when the grants under theAnnual Plan were established, resulting in greater awards under the Annual Planthan would have been the case if those adjustments had not been made.

 

**Long-TermPerformance Plan**

 

TheLong-Term Performance Plan (“LTPP”) was established in 1999 and was designed toalign the interests and performance goals of the most senior executives in theCompany with the long-term financial performance of the Company.  Each element of the LTPP has a three-yearduration and awards are paid only at the end of the three-year cycle, dependingupon consolidated financial performance versus established budgets.

 

Eachyear, the Committee designates participants in the LTPP and provides them witha letter which outlines their participation, their targeted award and theperformance criteria.  Because of thethree-year cycle, a regular participant in the LTPP will have three cycles inprogress simultaneously, one cycle will be in its first year, one in the secondyear and one in the third year.  Targetedparticipant awards are expressed as a percent of their base annual salary atthe end of the three-year cycle.

 

Performanceof the LTPP is determined by the cumulative Profit Before Tax (“PBT”) financialperformance of the Company over each three-year period as measured against thebudgeted PBT for the same time period. Threshold performance is achieved when the Company’s cumulative PBTachieves 80% of budgeted PBT for the same period.  A scale is used to determine a participant’saward so that at the threshold, or 80% performance, a participant receives 20%of the established award.  The maximumaward is achieved when PBT is 130% or greater than plan which, based on thescale, equates to a payment of 200% of a participant’s established award.  

 

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Awardsare paid at the conclusion of each three-year cycle, following the audit of theCompany’s results of operations.

 

Forany calendar year that the Company’s performance fails to reach at least the80% threshold level, an 80% achievement factor is used for that year.  The Chairman has the authority to modify aparticipant’s award, once the Company’s performance has become known for thethree-year cycle, between 80% to 200% of the calculated award, to recognize aparticipant’s individual performance and contribution.  The Board has the authority to amend, modifyor cancel the Plan at any time.

 

**NonqualifiedDeferred Compensation Plan**

 

TheCompany sponsors a nonqualified deferred compensation plan that allows eligibleemployees to elect to tax defer any portion of their annual compensation.  There is no Company match and deferredamounts are invested in funds managed by an independent investmentcompany.  The funds earn market rates ofreturn and are subject to normal market risk. The funds are not subject to a trust arrangement and therefore may notbe available in the future to pay the liability to the employee.  Deferred amounts are eligible to bedistributed to participants after their separation from the Company.

 

**401(k) Plan**

 

TheCompany sponsors a 401(k) savings plan that allows participating employeesto contribute a portion of their gross compensation up to 100% and provides forCompany matching contributions up to 1% of the first 5% or 3% of the first 6%of employee contribution, depending on the financial performance of thebusiness unit, as well as the opportunity for an annual discretionarycontribution.  The Company decreased thematching percentage to 1% of the first 5% from 3% of the first 6% for certainbusiness units during 2008 and 2009.  TheCompany has not made a discretionary contribution to date.  Vesting in the Company’s matchingcontribution is 20% per year over the first five years of employment.

 

**Perquisitesand Other Personal Benefits**

 

TheCompany does not provide any form of perquisite, executive benefit program orpersonal benefits to any of the named executives or any other senior managementmember at the parent or business unit level.

 

**CompensationCommittee Interlocks and Insider Participation**

 

Themembers of the Committee are Messrs. Poindexter, Magee and Wolfe.  Mr. Wolfe is an officer of theCompany.  See Item 13. CertainRelationships and Related Transactions, and Director Independence, for adescription of certain transactions between the Company and Messrs. Poindexterand Magee.

 

**COMMITTEEREPORT**

 

TheCommittee of the Company has reviewed and discussed this CompensationDiscussion and Analysis and, based on such review and discussion, the Committeerecommended to the Board that this Compensation Discussion and Analysis beincluded in this 10-K.

 

The Committee

 

John Poindexter — Chairman, President & CEO

Stephen Magee — Member, Board of Directors

Larry Wolfe — Vice President of Administration and Secretary

David Kay — Chief Financial Officer

 

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The following table sets forth certain informationregarding the compensation paid to the Company’s Principal Executive Officer,the Company’s Principal Financial Officer, the Company’s three most highlycompensated executive officers (including executive officers of the Company’sbusiness units) other than the Principal Executive Officer and PrincipalFinancial Officer for each of the last three completed fiscal years(collectively, the “named officers”).

 

**SummaryCompensation Table**

 
| **Name and principal position**    | ** ** | **Year** | ** ** | **Salary** | ** ** | **Non-Equity  Incentive Plan  Compensation** | ** ** | **All Other  Compensation** | ** ** | **Total** | ** ** |
|------------------------------------|------------|----------|------------|------------|------------|----------------------------------------------|------------|-----------------------------|------------|-----------|------------|
| John B. Poindexter(a)              |       | 2009     |       | —     |       | —                                       |       | $                           | 533,714    |      | $          | 533,714 |   |
| Principal Executive Officer        |       | 2008     |       | $          | 340,984    |                                         | —     |                        | $          | 6,900     |       | $ | 347,884 |   |
|                               |       | 2007     |       | $          | 593,016    |                                         | —     |                        | $          | 6,750     |       | $ | 599,766 |   |
|                               |       |     |       |       |       |                                         |       |                        |       |      |       |
| David Kay(b)                       |       | 2009     |       | —     |       | —                                       |       | $                           | 21,600     |      | $          | 21,600 |   |
| Principal Financial Officer        |       |     |       |       |       |                                         |       |                        |       |      |       |
|                               |       |     |       |       |       |                                         |       |                        |       |      |       |
| Robert Whatley(c)                  |       | 2009     |       | $          | 180,221    |                                         | —     |                        | $          | 2,452     |       | $ | 182,673 |   |
| Principal Financial Officer        |       | 2008     |       | $          | 230,844    |                                         | $          | 65,000                      |       | $         | 10,452     |   | $ | 306,296 |   |
|                               |       | 2007     |       | $          | 220,377    |                                         | $          | 48,000                      |       | $         | 6,750      |   | $ | 275,127 |   |
|                               |       |     |       |       |       |                                         |       |                        |       |      |       |
| Norbert Markert(d)                 |       | 2009     |       | $          | 345,762    |                                         | $          | 147,870                     |       | $         | 3,300      |   | $ | 496,932 |   |
| President, Morgan                  |       | 2008     |       | $          | 359,298    |                                         | $          | 340,662                     |       | $         | 204,772    |   | $ | 904,732 |   |
|                               |       | 2007     |       | $          | 337,012    |                                         | $          | 132,184                     |       | $         | 164,086    |   | $ | 633,282 |   |
|                               |       |     |       |       |       |                                         |       |                        |       |      |       |
| Nelson Byman(e)                    |       | 2009     |       | $          | 302,548    |                                         | $          | 212,083                     |       | $         | 6,432      |   | $ | 521,063 |   |
| President, Specialty Manufacturing |       | 2008     |       | $          | 289,116    |                                         | $          | 344,453                     |       | $         | 6,900      |   | $ | 640,469 |   |
|                               |       | 2007     |       | $          | 248,654    |                                         | $          | 216,015                     |       | $         | 40,525     |   | $ | 505,194 |   |
|                               |       |     |       |       |       |                                         |       |                        |       |      |       |
| Jim Donohue(f)                     |       | 2009     |       | $          | 340,000    |                                         | $          | 226,563                     |       | $         | 10,511     |   | $ | 577,074 |   |
| President, Truck Accessories Group |       |     |       |       |       |                                         |       |                        |       |      |       |
|                               |       |     |       |       |       |                                         |       |                        |       |      |       |
| Mike Ownbey(g)                     |       | 2008     |       | $          | 234,428    |                                         | $          | 210,000                     |       | $         | 50,312     |   | $ | 494,740 |   |
| President, Morgan Olson            |       |     |       |       |       |                                         |       |                        |       |      |       |
|                               |       |     |       |       |       |                                         |       |                        |       |      |       |
| Larry Wolfe(h)                     |       | 2007     |       | $          | 270,000    |                                         | $          | 155,000                     |       | $         | 6,750      |   | $ | 431,750 |   |
| Vice President of Administration   |       |     |       |       |       |                                         |       |                        |       |      |       |

 

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(a) Mr. Poindexterreceived a salary from the Company for July 2006 until July 31, 2008.He does not receive a bonus and does not participate in either the Annual Planor LTPP. Through June 2006, Mr. Poindexter was compensated through aManagement Services Agreement between Southwestern Holdings, Inc. and theCompany. (Southwestern Holdings, Inc. is owned by Mr. Poindexter.) Forall services, the Company paid Southwestern Holdings, Inc. $533,714,$222,380 and $0 in 2009, 2008 and 2007 respectively. The Company matched $6,750of Mr. Poindexter’s contributions to the Company’s 401(k) Plan in2007.

 

(b) Mr. Kayreceived $21,600 in 2009.  He did notreceive a bonus and does not participate in either the Annual Plan or LTPP.

 

(c) Mr. Whatleyreceived a salary of $180,221 for 2009 and the Company matched $2,452, $10,542,and $6,750 of Mr. Whatley’s contributions to the Company’s 401(k) Planin 2009, 2008 and 2007, respectively.  Mr. Whatleyresigned his position as Principal Financial Officer of the Company effective October 30,2009.

 

(d) Mr. Markertwas paid $32,302 pursuant to the Annual Plan that was accrued in 2009 but paidin 2010 and received a payment of $115,568 under the LTPP. The Company matched$3,300, $7,301, and $8,081 of Mr. Markert’s contributions to the Company’s401(k) Plan in 2009, 2008 and 2007, respectively.

 

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(e) Mr. Bymanwas paid $84,208 pursuant to the Annual Plan that was accrued in 2009 but paidin 2010 and received a payment of $127,875 under the LTPP. The Company matched$6,432, $6,900, and $6,750 of Mr. Byman’s contributions to the Company’s401(k) Plan in 2009, 2008 and 2007, respectively.

 

(f) Mr. Donohuewas paid $226,563 pursuant to the Annual Plan that was accrued in 2009 but paidin 2010.  Mr. Donohue did not receivea payment under the LTPP in 2009.  TheCompany matched $3,283 and $767 of Mr. Donohue’s contributions to theCompany’s 401(k) Plan in 2009 and 2008, respectively.

 

(g) Mr. Ownbeywas paid $210,000 pursuant to the Annual Plan that was accrued in 2009 but paidin 2010.  Mr. Ownbey did not receivea payment under the LTPP in 2009.  Mr. Ownbeydid not participate in the Company’s 401(k) Plan in 2009, 2008 and 2007.

 

(h) Mr. Wolfewas paid $51,625 pursuant to the Annual Plan that was accrued in 2009 but paidin 2010 and received a payment of $105,468 under the LTPP. The Company matched$2,468, $11,900 and $6,750 of Mr. Wolfe’s contributions to the Company’s401(k) Plan in 2009, 2008 and 2007, respectively.

 

**Estimated Future Payouts Under**

**Non-Equity Incentive Plan Awards**

 
| **Name**              | ** ** | **Grant Date**       | ** ** | **Plan**    | ** ** | **Threshold** | ** ** | **Target** | ** ** | **Maximum** | ** ** |
|-----------------------|------------|----------------------|------------|-------------|------------|---------------|------------|------------|------------|-------------|------------|
| John B. Poindexter(a) |       | —               |       | —      |       | —        |       | —     |       | —      |       |
|                  |       |                 |       |        |       |          |       |       |       |        |       |
| Norbert Markert(b)    |       | January 1, 2010 |       | Annual Plan |       | $             | 110,644    |       | $          | 172,881     |       | $ | 292,169 |   |
|                  |       | January 1, 2010 |       | LTPP        |       | $             | 52,572     |       | $          | 262,860     |       | $ | 525,720 |   |
|                  |       |                 |       |        |       |          |       |       |       |        |       |
| Nelson Byman(c)       |       | January 1, 2010 |       | Annual Plan |       | $             | 96,815     |       | $          | 151,274     |       | $ | 255,653 |   |
|                  |       | January 1, 2010 |       | LTPP        |       | $             | 46,500     |       | $          | 232,500     |       | $ | 465,000 |   |
|                  |       |                 |       |        |       |          |       |       |       |        |       |
| Larry Wolfe(d)        |       | January 1, 2010 |       | Annual Plan |       | $             | 64,979     |       | $          | 101,529     |       | $ | 171,584 |   |
|                  |       | January 1, 2010 |       | LTPP        |       | $             | 38,350     |       | $          | 191,750     |       | $ | 383,500 |   |
|                  |       |                 |       |        |       |          |       |       |       |        |       |
| Jim Donohue(e)        |       | January 1, 2010 |       | Annual Plan |       | $             | 108,800    |       | $          | 170,000     |       | $ | 287,300 |   |
|                  |       | January 1, 2011 |       | LTPP        |       | $             | 51,000     |       | $          | 255,000     |       | $ | 510,000 |   |
|                  |       |                 |       |        |       |          |       |       |       |        |       |
| Bill Flint(f)         |       | January 1, 2010 |       | Annual Plan |       | $             | 71,429     |       | $          | 111,608     |       | $ | 188,618 |   |
|                  |       | January 1, 2011 |       | LTPP        |       | $             | 34,050     |       | $          | 170,250     |       | $ | 340,500 |   |
|                  |       |                 |       |        |       |          |       |       |       |        |       |
| Mike Ownbey(g)        |       | January 1, 2010 |       | Annual Plan |       | $             | 77,051     |       | $          | 120,392     |       | $ | 203,462 |   |
|                  |       | January 1, 2012 |       | LTPP        |       | $             | 36,750     |       | $          | 183,750     |       | $ | 367,500 |   |

 

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(a) Mr. Poindexteris not eligible to participate in either the Annual Plan or the LTPP.

 

(b) Mr. Markertwas granted an award under the Annual Plan with an earnings target of $5.6million for Morgan for 2009. He was eligible for the threshold amount if Morganreached 80% of that target and for the maximum amount if Morgan reached 130% ofthat target. During 2009, Mr. Markert received $115,568 under the LTPP forthe three years ended December 31, 2009. During 2009, Mr. Markert was given a performance target under theLTPP that makes him eligible for an award beginning in 2010.  The PBT earnings target for 2009 was $15.5million.  The target PBT for theremaining years in the cycle will be determined at a later date.

 

(c) Mr. Bymanwas granted an award under the Annual Plan with an earnings target of $23.9million for MIC Group for 2009. He was eligible for the threshold amount if MICGroup reached 80% of that target and for the maximum amount if MIC Groupreached 130% of that target.  During2010, Mr. Byman received $127,875 under 

 

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theLTPP for the three years ended December 31, 2009.  During 2009, Mr. Byman was given a performancetarget under the LTPP that makes him eligible for an award beginning in 2010 atthe same threshold and maximum percentages. The PBT earnings target for 2009 was $15.5 million.  The target PBT for the remaining years in thecycle will be determined at a later date.

 

(d) Mr. Wolfewas granted an award under the Annual Plan with an earnings target of $33.5million for the Company for 2009. He was eligible for the threshold amount ifthe Company reached 80% of that target and for the maximum amount if it reached130% of that target. During 2009, Mr. Wolfe received $105,468 under theLTTP plan for the three years ended December 31, 2009.  During 2009, Mr. Wolfe was given aperformance target under the LTTP that makes him eligible for an awardbeginning in 2010.  The adjusted PBTearnings target for 2009 was $15.5 million. The target PBT for the remaining years in the cycle will be determinedat a later date.

 

(e) Mr. Donohuewas granted an award under the Annual Plan with an earnings target of $6.8 millionfor Truck Accessories for 2009. He was eligible for the threshold amount if theCompany reached 80% of that target and for the maximum amount if it reached130% of that target. During 2009, Mr. Donohue was given a performancetarget under the LTTP that makes him eligible for an award beginning in2011.  The adjusted PBT earnings targetfor 2009 was $15.5 million.  The targetPBT for the remaining years in the cycle will be determined at a later date.

 

(f) Mr. Flintwas granted an award under the Annual Plan with an earnings target of $1.6million for Specialty Vehicle Group for 2009. He was eligible for the thresholdamount if the Company reached 80% of that target and for the maximum amount ifit reached 130% of that target. During 2009, Mr. Flint was given aperformance target under the LTTP that makes him eligible for an awardbeginning in 2011.  The adjusted PBTearnings target for 2009 was $15.5 million. The target PBT for the remaining years in the cycle will be determinedat a later date.

 

(g) Mr. Ownbeywas granted an award under the Annual Plan with an earnings target of $2.9million for Morgan Olson for 2009. He was eligible for the threshold amount ifthe Company reached 80% of that target and for the maximum amount if it reached130% of that target. During 2009, Mr. Ownbey was given a performancetarget under the LTTP that makes him eligible for an award beginning in2012.  The adjusted PBT earnings targetfor 2009 was $15.5 million.  The targetPBT for the remaining years in the cycle will be determined at a later date.

 

**Nonqualified DeferredCompensation**

 

Mr. Byman and Mr. Wolfe were the only twonamed executives to elect to defer a portion of their annual compensation underthe Nonqualified Deferred Compensation Plan. The balance of Mr. Byman’s account at December 31, 2009 and2008 was $322,879 and $199,940, respectively. The balance of Mr. Wolfe’s account at December 31, 2009 and2008 was $108,482 and $78,007, respectively.

 

**Director’s Compensation**

 

Directors who are officers or employees do notreceive fees for serving as directors. The Company pays $20,000 per year asdirector’s fees to each outside director. Additionally, Mr. Magee receives$8,000 per year as Chairman of the Audit Committee of the Board of Directors.

 
| **Name**         | ** ** | **Fees Earned or  Paid in Cash** | ** ** | **Non-Equity Incentive  Plan Compensation** | ** ** | **All Other  Compensation** | ** ** | **Total** | ** ** |
|------------------|------------|----------------------------------|------------|---------------------------------------------|------------|-----------------------------|------------|-----------|------------|
|             |       |                             |       |                                        |       |                        |       |      |       |
| William J. Bowen |       | $                                | 20,000     |                                        | —     |                        | —     |      | $          | 20,000 |   |
|             |       |                             |       |                                        |       |                        |       |      |       |
| Stephen Magee(a) |       | $                                | 28,000     |                                        | —     |                        | $          | 32,000    |       | $ | 60,000 |   |
|                  |            |                                  |            |                                             |            |                             |            |           |            |  |  |  |

 

----

(a) Mr. Magee is not an employee of theCompany and the amount in the All Other Compensation column represents paymentsmade to him as an independent contractor on a variety of consultingassignments.

 

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** **

**Item12.**                                                    SecurityOwnership of Certain Beneficial Owners and Management and Related StockholderMatters

** **

The following table sets forth information regardingbeneficial ownership of the Company’s common stock as of December 31,2009.  No class of the Company’ssecurities is registered pursuant to Section 13 or 15(d) of theExchange Act.

 
| **Directors,  officers and 5% stockholders**                     | ** ** | **Title of Class** | ** ** | **Beneficial  number of  shares** | ** ** | **Ownership  percent of  class** | ** ** |
|------------------------------------------------------------------|------------|--------------------|------------|-----------------------------------|------------|----------------------------------|------------|
| John Poindexter (director and named executive  officer)          |       | Common Stock       |       | 3,059                             |       | 100                              | %          |
| All other directors and executive officers as agroup (6 persons) |       | —             |       | —                            |       | —                           |       |

 

Mr. Poindexter has sole voting power withrespect to all shares of common stock that he beneficially owns and is the onlyperson who beneficially owns common stock. His address is 600 Travis St., Suite 200, Houston, Texas 77002.

 

The Company has not reserved any equity shares forissuance under any equity compensation plans.

 

**Item 13.                 CertainRelationships and Related Transactions, and Director Independence**

** **

Of the Company’s three directors, only Mr. Bowenis independent under NASDAQ’s independence standards. Mr. Magee ischairman of the audit committee and is not independent under the standardsapplicable to audit committee members by the SEC or NASDAQ.

 

The Company is party to a Management ServicesAgreement with Southwestern Holdings, Inc., (“Southwestern”) which isowned by Mr. Poindexter and of which Mr. Magee, one of the Company’s directors,serves as President.  The ManagementServices Agreement was suspended effective June 30, 2006 when Mr. Poindexterbecame an employee of the Company and reinstated effective July 31, 2008when Mr. Poindexter ceased being an employee of the Company.  Pursuant to the Management ServicesAgreement, Southwestern provided services to the Company, including those of Mr. Poindexter.The Company paid to Southwestern approximately $45,000 per month for theseservices, subject to annual automatic increases based upon the consumer priceindex. The Company may pay a discretionary annual bonus to Southwestern orraise the annual increases above normal adjustments subject to certainlimitations. For all services, the Company paid Southwestern $533,714 in 2009,$222,380 in 2008 and $0 in 2007.

 

Southwesternwas a named insured under the Company’s general liability and excessumbrella insurance policies during 2007 when Southwestern became the defendantin a suit for damages resulting from a vehicle accident not involving theCompany’s assets or any of its team members.  The lawsuit was settledduring 2008 and Southwestern paid the amount of the self-insured reserve of$250,000.  Southwestern is no longer a named insured under the Company’sgeneral liability policy effective July 1, 2007.  Any increased premiums under the Company’sumbrella policy incurred in the future by the Company by reason of thesettlement will be reimbursed by Southwestern.

 

EffectiveDecember 12, 2008, one of the Company’s subsidiaries sold and leased backthree of its manufacturing facilities to Poindexter Properties, LLC, a companyowned by Mr. Poindexter.  Theproperties, located in Morgantown and Ephrata, Pennsylvania and Corsicana,Texas, were sold at their appraised value of $7,135,000.  The Company subsidiary paid rent of $932,000to Poindexter Properties, LLC for the use of the properties in 2009.

 

Mr. Mageeprovided the Company consulting services in 2007, 2008 and 2009. The Companypaid $235,600, $228,000 and $60,000 in 2007, 2008 and 2009, respectively, fordirector’s fees and for consulting services. In addition, the Company reimbursed Mr. Magee for related businessexpenses.

 

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The Company does not have an established procedurefor the review, approval or ratification of related-party transactions. Priorto entering into any such transaction, however, the executive officers of theCompany determine whether the transaction is permitted by the terms of theCompany’s 8.75% Notes indenture, the credit facility agreement and otherrelevant contractual obligations.

 

**Item14.**Principal Accountant Feesand Services

** **

**Thefollowing table sets forth the fees billed to us by our independent auditors,Crowe Horwath, LLP (“CH”):**

 
| ** **         | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|--------------------|------------|----------|------------|----------|------------|----------|------------|
| Audit Fees         |       | $        | 337,760    |     | $          | 326,930  |       | $ | 350,000 |   |
| Audit-related Fees |       | 63,925   |       | —   |       | 51,875   |       |
| Tax Fees           |       | —   |       | —   |       | —   |       |
| Other Fees         |       | —   |       | —   |       | 208,225  |       |
| Total Fees         |       | $        | 401,685    |     | $          | 326,930  |       | $ | 610,100 |   |

 

***Audit Fees.***

 

**Auditfees are the charges billed by CH during the year in connection with theconclusion of the prior year audit and the current year audit of ourconsolidated financial statements as well as reviews of our quarterly reportson Form 10-Q.**

 

**Audit-relatedfees are the charges billed by CH for assurance and related services, includingaccounting advice related to the restatement of the Company’s 2006 consolidatedfinancial statements and other matters.**

** **

**Otherfees were comprised mainly of assistance with due diligence conducted on theCompany’s acquisitions during the year.**

** **

**Thesefees were preapproved by the Audit Committee under the procedures describedbelow.**

** **

**Preapproval Procedures**

** **

**TheCompany’s Audit Committee is responsible for the engagement of the independentauditors and for approving, in advance, all auditing services and permittednon-audit services to be provided by the independent auditors. The AuditCommittee maintains a policy governing the engagement of independent auditorsthat is intended to maintain the independence from the Company of theindependent auditors. In adopting this policy, the Company’s Audit Committeeconsidered the various services that independent auditors have historicallyperformed or may be needed to perform for the Company. Under this policy, whichis subject to review and re-adoption annually by the Audit Committee:**

** **

·                                          The Audit Committee approves theperformance by the independent auditors of audit-related services, subject torestrictions in certain cases, based on the Audit Committee’s determinationthat this action would not be likely to impair the independence of theindependent auditors from the Company;

** **

·                                          The Company’s management must obtain thespecific prior approval of the Company’s Audit Committee for each engagement ofthe independent auditors to perform any auditing or permitted non-auditservices; provided however, that specific prior approval by the Company’s AuditCommittee is not required for any auditing services that are within the scopeof a preapproved engagement and that are consistent with other servicesprovided by the auditor in the past; and provided further that specific priorapproval is not required for permitted non-audit services that:

** **

**(i)**                                     in the aggregate do not total more than $25,000;

** **

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** **

**(ii)**                                  were not recognized by the Company at the time of the engagement to benon-audit services; and

** **

**(iii)**                               are promptly brought to the attention of the Company’s Audit Committeeand approved by the Audit Committee in accordance with this policy prior to thecompletion of the audit.

** **

·                                          The performance by the independentauditors of certain types of services (bookkeeping or other services related tothe accounting records or financial statements of the Company; financialinformation systems design and implementation; appraisal or valuation services,fairness opinions or contribution-in-kind reports; actuarial services; internalaudit outsourcing services; management functions or human resources; broker ordealer, or investment adviser or investment banking services; legal servicesand expert services unrelated to the audit; and any other service that theapplicable federal oversight regulatory authority determines, by regulation, isimpermissible) is prohibited due to the likelihood that their independencewould be impaired.

** **

**Any approvalrequired under this policy must be provided by the Company’s Audit Committee,by the chairman of the Audit Committee in office at the time, or by any otherAudit Committee member to whom the Audit Committee has delegated thatauthority. The Company’s Audit Committee will not delegate its responsibilitiesto approve services performed by the independent auditors to any member ofmanagement.**

** **

**Thestandard applied by the Company’s Audit Committee in determining whether togrant approval of an engagement of the independent auditors is whether theservices to be performed, the compensation to be paid for such services andother related factors are consistent with the independent auditor’sindependence under guidelines of the Securities and Exchange Commission andapplicable professional standards. Relevant considerations include, but are notlimited to, whether the work product is likely to be subject to, or implicatedin, audit procedures during the audit of the Company’s financial statements;whether the independent auditors would be functioning in the role of managementor in an advocacy role; whether performance of the service by the independentauditors would enhance the Company’s ability to manage or control risk orimprove audit quality; whether performance of the service by the independentauditors would increase efficiency because of their familiarity with theCompany’s business, personnel, culture, systems, risk profile and otherfactors; and whether the amount of fees involved, or the proportion of thetotal fees payable to the independent auditors in the period that is for taxand other non-audit services, would tend to reduce the ability of theindependent auditors to exercise independent judgment in performing the audit.**

 

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**Part IV**

 

**Item 15.  Exhibits and Financial Statement Schedules**

 

1.             Financial Statements:

 

Thefollowing financial statements are included within the text of this report:

 

**FinancialStatement**

 

Consolidated Balance Sheets as of December 31,2009 and 2008

Consolidated Statements of Income for the yearsended December 31, 2009, 2008 and 2007

Consolidated Statements of Stockholder’s Equity forthe years endedDecember 31,2009, 2008 and 2007

Consolidated Statements of Cash Flows for the yearsended December 31, 2009, 2008 and 2007

Notes to Consolidated Financial Statements

 

2.             Financial Statement Schedules:

 

Valuationand Qualifying Accounts disclosures have been incorporated in the Notes toConsolidated Financial Statements.

 

3.             Exhibits

 

Thefollowing exhibits are included with this report:

** **
| **Exhibit  Number** | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                   |
|---------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |       |                                                                                                                                                                                                                                                                                                                                              |
| 3.1 (1)             |       | Second Restated Certificate of Incorporation of J.B. Poindexter &  Co., Inc. dated January 21, 1994.                                                                                                                                                                                                                           |
|                |       |                                                                                                                                                                                                                                                                                                                                              |
| 3.2 (2)             |       | Certificate of First Amendment to the Second Restated Certificate of  Incorporation of J.B. Poindexter & Co., Inc. dated  December 29, 1994.                                                                                                                                                                                   |
|                |       |                                                                                                                                                                                                                                                                                                                                              |
| 3.3 (2)             |       | Amended and Restated Bylaws of J.B. Poindexter & Co., Inc.  dated July 29, 1994                                                                                                                                                                                                                                                |
|                |       |                                                                                                                                                                                                                                                                                                                                              |
| 4.1(4)              |       | Indenture dated as of  March 15, 2004, with respect to J.B. Poindexter &  Co., Inc.’s 8.75% Senior Notes due 2014, among J.B.  Poindexter & Co., Inc., the subsidiary guarantors named therein  and Wilmington Trust Company, as trustee.                                                                   |
|                |       |                                                                                                                                                                                                                                                                                                                                              |
| 4.2(5)              |       | Form of 8.75% Senior Notes due 2014.                                                                                                                                                                                                                                                                                                         |
|                |       |                                                                                                                                                                                                                                                                                                                                              |
| 4.3(5)              |       | Form of Senior Note Guarantee of 8.75% Senior Notes due 2014.                                                                                                                                                                                                                                                                                |
|                |       |                                                                                                                                                                                                                                                                                                                                              |
| 4.4(5)              |       | First Supplemental Indenture dated December 14, 2004, to the  Indenture dated as of March 15, 2004, with respect to J.B.  Poindexter & Co., Inc.’s 8.75% Senior Notes due 2014, among  J.B. Poindexter & Co., Inc., the subsidiary guarantors named  therein and Wilmington Trust Company, as trustee. |
|                |       |                                                                                                                                                                                                                                                                                                                                              |
| 4.5(4)              |       | Registration Rights Agreement dated March 15, 2004, among J.B.  Poindexter & Co., Inc.,                                                                                                                                                                                                                                        |

 

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|     |   | certain guarantors listed  therein, J.P. Morgan Securities Inc. and certain initial purchasers listed  therein.                                                                                                                                                                                                                                                      |
|----------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |   |                                                                                                                                                                                                                                                                                                                                                                 |
| 4.6(5)   |   | Registration Rights Agreement dated May 17, 2004, among J.B.  Poindexter & Co., Inc., certain guarantors listed therein and  J.P. Morgan Securities Inc.                                                                                                                                                                                          |
|     |   |                                                                                                                                                                                                                                                                                                                                                                 |
| 4.7(5)   |   | Registration Rights Agreement dated January 27, 2005, among J.B.  Poindexter & Co., Inc., certain guarantors listed therein and  J.P. Morgan Securities Inc.                                                                                                                                                                                      |
|     |   |                                                                                                                                                                                                                                                                                                                                                                 |
| 4.8(7)   |   | Second Supplemental Indenture dated June 10, 2005, to the  Indenture dated as of March 15, 2004, with respect to J.B.  Poindexter & Co., Inc.’s 8.75% Senior Notes due 2014, among  J.B. Poindexter & Co., Inc., the subsidiary guarantors named  therein and Wilmington Trust Company, as trustee.                       |
|     |   |                                                                                                                                                                                                                                                                                                                                                                 |
| 4.9(8)   |   | Third Supplemental Indenture dated January 9, 2006, to the  Indenture dated as of March 15, 2004, with respect to J.B.  Poindexter & Co., Inc.’s 8.75% Senior Notes due 2014, among  J.B. Poindexter & Co., Inc., the subsidiary guarantors named  therein and Wilmington Trust Company, as trustee.                      |
|     |   |                                                                                                                                                                                                                                                                                                                                                                 |
| 4.10(8)  |   | Fourth Supplemental Indenture dated April 17, 2006, to the  Indenture dated as of March 15, 2004, with respect to J.B.  Poindexter & Co., Inc.’s 8.75% Senior Notes due 2014, among  J.B. Poindexter & Co., Inc., the subsidiary guarantors named  therein and Wilmington Trust Company, as trustee.                      |
|     |   |                                                                                                                                                                                                                                                                                                                                                                 |
| 4.11(9)  |   | Fifth Supplemental Indenture dated September 30, 2006, to the  Indenture dated as of March 15, 2004, with respect to J.B.  Poindexter & Co., Inc.’s 8.75% Senior Notes due 2014, among  J.B. Poindexter & Co., Inc., the subsidiary guarantors named  therein and Wilmington Trust Company, as trustee.                   |
|     |   |                                                                                                                                                                                                                                                                                                                                                                 |
| 4.12(10) |   | Sixth Supplemental Indenture dated September 4, 2007, to the  Indenture dated as of March 15, 2004, with respect to J.B.  Poindexter & Co., Inc.’s 8.75% Senior Notes due 2014, among  J.B. Poindexter & Co., Inc., the subsidiary guarantors named  therein and Wilmington Trust Company, as trustee.                    |
|     |   |                                                                                                                                                                                                                                                                                                                                                                 |
| 4.13(11) |   | Seventh Supplemental  Indenture dated December 31, 2008, to the Indenture dated as of  March 15, 2004, with respect to J.B. Poindexter &  Co., Inc.’s 8.75% Senior Notes due 2014, among J.B.  Poindexter & Co., Inc., the subsidiary guarantors named therein  and Wilmington Trust Company, as trustee.                 |
|     |   |                                                                                                                                                                                                                                                                                                                                                                 |
| 10.1(4)  |   | Loan and Security Agreement dated March 15, 2004, among J.B.  Poindexter & Co., Inc., certain subsidiaries thereof, certain  other loan parties signatories thereto and LaSalle Bank National Association,  a national banking association, for itself, as a lender, and as the agent for  the lenders.                                           |
|     |   |                                                                                                                                                                                                                                                                                                                                                                 |
| 10.2(4)  |   | First Amendment to Loan and Security Agreement dated May 13,  2004, among J.B. Poindexter & Co., Inc., certain subsidiaries  thereof, certain other loan parties signatories thereto and LaSalle Bank  National Association, a national banking association, for itself, as a  lender, and as the agent for the lenders.                          |
|     |   |                                                                                                                                                                                                                                                                                                                                                                 |
| 10.3(5)  |   | Limited Consent and Second Amendment to Loan and Security Agreement  dated November 3, 2004, among J.B. Poindexter & Co., Inc.,  certain subsidiaries thereof, certain other loan parties signatories thereto  and LaSalle Bank National Association, a national banking association, for  itself, as a lender, and as the agent for the lenders. |

 

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| 10.4(5)   |   | Third Amendment to Loan and Security Agreement dated January 20,  2005, among J.B. Poindexter & Co., Inc., certain subsidiaries  thereof, certain other loan parties signatories thereto and LaSalle Bank  National Association, a national banking association, for itself, as a  lender, and as the agent for the lenders.           |
|-----------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|      |   |                                                                                                                                                                                                                                                                                                                                                      |
| 10.5(4)   |   | Sales Agreement dated October 1, 2004 between E. I. du Pont de  Nemours and Company and Morgan Trailer Mfg. Co.                                                                                                                                                                                                                                      |
|      |   |                                                                                                                                                                                                                                                                                                                                                      |
| 10.6(4)   |   | Sales Agreement dated October 1, 2004 between E. I. du Pont de  Nemours and Company and Truck Accessories Group, Inc.                                                                                                                                                                                                                           |
|      |   |                                                                                                                                                                                                                                                                                                                                                      |
| 10.7 (1)  |   | Form of Incentive Plan for certain employees  of the subsidiaries of J.B. Poindexter & Co., Inc.                                                                                                                                                                                                                                       |
|      |   |                                                                                                                                                                                                                                                                                                                                                      |
| 10.8 (1)  |   | Morgan Trailer Mfg. Co. Long-Term Management  Equity Appreciation Program dated May 10, 1990.                                                                                                                                                                                                                                                        |
|      |   |                                                                                                                                                                                                                                                                                                                                                      |
| 10.9(5)   |   | Management Services Agreement dated as of May 23, 1994, between  J.B. Poindexter & Co., Inc. and Southwestern  Holdings, Inc.                                                                                                                                                                                                     |
|      |   |                                                                                                                                                                                                                                                                                                                                                      |
| 10.10 (3) |   | Management Services Agreement effective as of December 19, 2003,  between J.B. Poindexter & Co., Inc., Morgan Trailer Mfg. Co.,  and Morgan Olson.                                                                                                                                                                                     |
|      |   |                                                                                                                                                                                                                                                                                                                                                      |
| 10.11 (6) |   | Fourth Amendment to Loan and Security Agreement dated April 25,  2005, among J.B. Poindexter & Co., Inc., certain subsidiaries  thereof, certain other loan parties signatories thereto and LaSalle Bank  National Association, a national banking association, for itself, as a  lender, and as the agent for the lenders.            |
|      |   |                                                                                                                                                                                                                                                                                                                                                      |
| 10.12 (9) |   | Limited Consent, Joinder and Fourth Omnibus Amendment dated  October 10, 2006, among J.B. Poindexter & Co., Inc.,  certain subsidiaries thereof, certain other loan parties signatories thereto  and LaSalle Bank National Association, a national banking association, for  itself, as a lender, and as the agent for the lenders.    |
|      |   |                                                                                                                                                                                                                                                                                                                                                      |
| 10.13(10) |   | 10.13 Limited Consent, Joinder and Fifth Omnibus Amendment dated  April 30, 2007, among J.B. Poindexter & Co., Inc., certain  subsidiaries thereof, certain other loan parties signatories thereto and  LaSalle Bank National Association, a national banking association, for  itself, as a lender, and as the agent for the lenders. |
|      |   |                                                                                                                                                                                                                                                                                                                                                      |
| 10.14(10) |   | Limited Consent, Joinder and Sixth Omnibus Amendment dated  August 22, 2007, among J.B. Poindexter & Co., Inc.,  certain subsidiaries thereof, certain other loan parties signatories thereto  and LaSalle Bank National Association, a national banking association, for  itself, as a lender, and as the agent for the lenders.      |
|      |   |                                                                                                                                                                                                                                                                                                                                                      |
| 10.15(10) |   | Limited Consent, Joinder and Seventh Omnibus Amendment dated  September 4, 2007, among J.B. Poindexter & Co., Inc.,  certain subsidiaries thereof, certain other loan parties signatories thereto  and LaSalle Bank National Association, a national banking association, for  itself, as a lender, and as the agent for the lenders.  |
|      |   |                                                                                                                                                                                                                                                                                                                                                      |
| 10.16(11) |   | Limited Consent, Joinder and Eight Omnibus Amendment dated  October 7, 2008, among J.B. Poindexter & Co., Inc.,  certain subsidiaries thereof, certain other loan parties signatories thereto  and Bank of America, a national banking association, for itself, as a lender,  and as the agent for the lenders.                        |

 

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| 10.17* |   | Limited Consent, Joinder and Ninth Omnibus Amendment dated  January 14, 2010, among J.B. Poindexter & Co., Inc.,  certain subsidiaries thereof, certain other loan parties signatories thereto  and Bank of America, a national banking association, for itself, as a lender,  and as the agent for the lenders. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                |
| 12*    |   | Computation  of Ratio of Earnings to Fixed Charges                                                                                                                                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                |
| 14*    |   | Code  of Ethics                                                                                                                                                                                                                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                |
| 21*    |   | List  of subsidiaries of J.B. Poindexter & Co., Inc.                                                                                                                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                |
| 31.1*  |   | Rule 13(a)-14(a)/15d-14(a) Certificate  of the Chief Executive Officer                                                                                                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                |
| 31.2*  |   | Rule 13(a)-14(a)/15d-14(a) Certificate  of the Chief Financial Officer                                                                                                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                |
| 32.1*  |   | Section 1350  Certificate of the Chief Executive Officer                                                                                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                |
| 32.2*  |   | Section 1350  Certificate of the Chief Financial Officer                                                                                                                                                                                                                                                                       |

 

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#                                         Managementcontracts or compensatory plans.

*                                         Filed herewith.

 

(1)                                 Incorporated by reference toJ.B. Poindexter & Co., Inc.’s Registration Statement on Form S-1(No. 33-75154) as filed with the SEC on February 10, 1994.

(2)                                 Incorporated by reference toJ.B. Poindexter & Co., Inc.’s Annual Report on Form 10-K forthe year ended December 31, 1994, as filed with the SEC on March 31,1995.

(3)                                 Incorporated by reference toJ.B. Poindexter & Co., Inc.’s Quarterly Report on Form 10-Qfor the quarter ended September 30, 2003, as filed with the SEC on November 14,2003.

(4)                                 Incorporated by reference toJ.B. Poindexter & Co., Inc.’s Registration Statement on Form S-4(No. 333-123598) as filed with the SEC on March 25, 2005.

(5)                                 Incorporated by reference toJ.B. Poindexter & Co., Inc.’s Registration Statement as amendedon Form S-4A (No. 333-123598) as filed with the SEC on April 7,2005.

(6)                                 Incorporated by reference toJ.B. Poindexter & Co., Inc.’s Quarterly Report on Form 10-Qfor the quarter ended September 30, 2005, as filed with the SEC on November 14,2005.

(7)                                 Incorporated by reference toJ.B. Poindexter & Co., Inc.’s Annual Report on Form 10-K forthe year ended December 31, 2005, as filed with the SEC on March 31,2006.

(8)                                 Incorporated by reference toJ.B. Poindexter & Co., Inc.’s Quarterly Report on Form 10-Q/Afor the quarter ended September 30, 2006, as filed with the SEC on September 5,2007.

(9)                                 Incorporated by reference toJ.B. Poindexter & Co., Inc.’s Annual Report on Form 10-K forthe year ended December 31, 2006, as filed with the SEC on April 2,2007.

(10)                          Incorporated by reference toJ.B. Poindexter & Co., Inc.’s Quarterly Report on Form 10-Qfor the quarter ended September 30, 2007, as filed with the SEC on November 20,2007.

(11)                          Incorporated by reference toJ.B. Poindexter & Co., Inc.’s Annual Report on Form 10-K forthe year ended December 31, 2008, as filed with the SEC on March 31,2009.

 

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SIGNATURES

 

Pursuantto the requirements of Section 13 or 15(d) of the Securities ExchangeAct of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized.

 
|                       | **J.B.  POINDEXTER & CO., INC.**   |
|----------------------------|---------------------------------------------|
|                       |                                        |   |
|                       |                                        |   |
| Date:  March 31, 2010 | By                                          |   /s/ John B. Poindexter |
|                       | John  B. Poindexter, Chairman of the Board, |
|                       | Chief  Executive Officer and President      |
|                       | (Principal  Executive Officer)              |

 

Pursuantto the requirements of the Securities Exchange Act of 1934, this report hasbeen signed below by the following persons on behalf of the registrant and inthe capacities and on the dates indicated.

 

 
| Date:  March 31, 2010 | By                                            |   /s/  John B. Poindexter |
|----------------------------|-----------------------------------------------|-------------------------------------|
|                       | John  B. Poindexter, Chairman of the Board,   |
|                       | Chief  Executive Officer and President        |
|                       | (Principal  Executive Officer)                |
|                       |                                          |                                |
| Date:  March 31, 2010 | By                                            |   /s/  Stephen Magee      |
|                       | Stephen  P. Magee, Director                   |
|                       |                                          |                                |
| Date:  March 31, 2010 | By                                            |   /s/  William J. Bowen   |
|                       | William  J. Bowen, Director                   |
|                       |                                          |                                |
| Date:  March 31, 2010 | By                                            |   /s/  David Kay          |
|                       | David  Kay, Chief Financial Officer           |
|                       | (Principal  Financial and Accounting Officer) |

 

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