**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

**FORM 10-K**

**(Mark one)**

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

**Forthe fiscal year ended December 31, 2006**

**OR**

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

**Forthe transition period from                  to                   .**

**Commissionfile number 333-123598**

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

(Exact name of registrantas specified in its charter)

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

 

| **1100 Louisiana**                        |   | ** ** |
|-------------------------------------------|--------|------------|
| **Suite  5400**                           |   | ** ** |
| **Houston,  Texas**                       |   | **77002**  |
| (Address of  principal executive offices) |   | (Zip Code) |

 

**(713)  655-9800**

(Registrant’s telephonenumber, including area code)

Securities registered pursuant to Section 12(b) of theAct:  **None**

Name of each exchange which registered:  **None**

Securities registered pursuant to Section 12(g) of theAct:  **None**

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

Indicate by check mark if the registrant is notrequired to file reports pursuant to Section 13 or Section 15(d) of the Act.   Yes  x   No  o

Indicate by check mark whether the registrant (1) hasfiled all reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days.   Yes  x   No  o

Indicate by check mark if disclosure of delinquentfilers pursuant to Item 405 of Regulation S-K is not contained herein, and willnot be contained, to the best of the registrant’s knowledge, in definitiveproxy or information statements incorporated by reference in Part III of thisForm 10-K or any amendment to this Form 10-K.   x

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

The aggregate market value of the voting andnon-voting common equity held by non-affiliates as of March 30, 2007 was $0.00.

Indicate by check mark whether the registrant is alarge accelerated filer, an accelerated filer, or a non-accelerated filer (asdefined in Rule 12b-2 of the Exchange Act). (Check One):

| o   Large  accelerated filer |   | o   Accelerated  filer |   | x   Non-accelerated  filer |
|---------------------------------------------|--------|---------------------------------------|--------|-------------------------------------------|

 

As of March 30, 2007, the registrant had 100,000shares authorized and 3,059 shares of common stock issued.

Documentsincorporated by reference.  **None**

 

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

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

 

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

**PART I**

**Item 1.**                          Business

**Overview**

Weoperate primarily transportation-related manufacturing businesses.  Our operating subsidiaries are Morgan TruckBody, LLC (“Morgan”), Morgan Olson, LLC (“Morgan Olson”), Truck AccessoriesGroup, LLC (“Truck Accessories”), EFP, LLC (“EFP”), MIC Group, LLC (“MIC Group”),Federal Coach, LLC (“Federal Coach”), and Eagle Specialty Vehicles, LLC (“EagleCoach”). We acquired Eagle Coach on January 3, 2006, and it and Federal Coachcomprise the Specialty Vehicle Group. The Specialty Vehicle Group, MIC Group and EFP comprise our SpecialtyManufacturing Division (“Specialty Manufacturing”).

Unless the context otherwiserequires, the “Company”, “we”, “our” or “us” refers to J.B. Poindexter &Co., Inc. (“JBPCO”) together with its consolidated subsidiaries. We are whollyowned by John Poindexter.  EffectiveSeptember 30, 2006, each of Morgan (formerly Morgan Corporation), Morgan Olson(formerly Morgan Olson Corporation), Truck Accessories (formerly TruckAccessories Group, Inc.), EFP (formerly EFP Corporation), MIC Group (formerlyMIC Group, Inc.) and Eagle Coach (formerly Eagle Specialty Vehicles, Inc.) was,by means of a merger or statutory conversion, converted into a Delaware limitedliability company. Each of those subsidiaries was and remains a wholly ownedsubsidiary of the Company with only the form of entity being changed.

DuringMarch 2004, we issued $125 million in aggregate principal amount of8.75% senior notes due 2014 (“8.75% Notes”). With the proceeds of that offeringwe redeemed the $76 million in aggregate principal amount of the thenoutstanding 12.50% senior secured notes due 2007, paid accrued interest ofapproximately $4 million and repaid outstanding borrowings under our revolvingcredit facilities and other loans of approximately $37 million.  At the same time as the issuance of$125 million in aggregate principal amount of 8.75% Notes, we entered intoa new $30 million revolving credit facility with a new lender. We currentlyhave no borrowings outstanding under this revolving credit facility.  In May 2004 and January 2005, we issuedan additional $30 million and $45 million, respectively, in aggregateprincipal amount of our 8.75% Notes, the proceeds from which increased our cashand cash equivalents.  We operate ourbusiness in four different segments: Morgan, Morgan Olson, Truck Accessoriesand Specialty Manufacturing. Please see Note 3 of our financial statementsincluded herein for a description of financial information by segments.

**Morgan**

Webelieve Morgan is the leading United States manufacturer of commercial truckbodies for medium-duty trucks based upon estimated market share and total 2006sales volume. Morgan generally manufactures products for medium-duty truckshaving a gross vehicular weight rating of between 10,001 pounds (Class 3)and 33,000 pounds (Class 7). Trucks equipped with Morgan’s products arecommonly used in a wide variety of applications, including general freightdeliveries, moving and storage and distribution of refrigerated consumables.Morgan also offers service programs for its truck bodies.

Morganreaches a broad base of customers in the United States and Canada through itssales force and its more than 180 authorized distributors and Morgan authorizedservice centers.  Its customers includerental companies, truck dealers, leasing companies and companies that operatefleets of delivery vehicles. Through nine manufacturing plants and sevenservice facilities in strategic locations throughout North America, Morgan canprovide timely product delivery and service to its customers.

The principal productsMorgan manufactures and sells are:

·             dry freight bodies that are typicallyfabricated with prepainted aluminum or fiberglass-reinforced plywood panels,hardwood floors and various door configurations to accommodate end user loadingand unloading requirements;

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

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

·             aluminum or fiberglass-reinforcedplywood cutaway van bodies that are installed only on cutaway chassis and areavailable with or without access to the cargo area from the cab; and

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

Morganmanufactures its products to customer specifications and installs its productson truck chassis supplied by its customers.

***Customers and sales. ***Morgan principallygenerates revenue through three sources:

·             sales of truck bodies to commercial divisionsof leasing companies, companies with fleets of delivery vehicles, truck dealersand distributors (“Commercial” sales);

·             sales of truck bodies to consumer rentalcompanies (“Consumer Rental” sales); and

·             sales of parts and service.

Morgan’snet sales constituted 54% of our consolidated net sales in 2004, 54% in 2005and 48% in 2006.  Morgan makes sales oftruck bodies through its sales force directly to large end user customers,including Penske and Ryder, and to distributors and truck dealers. Commercialsales of truck bodies, not including Consumer Rental sales, constituted 80% ofMorgan’s net sales in 2004, 86% in 2005 and 85% in 2006.

Morganhas an independent authorized distributor network of 45 distributorsnationwide. Most distributors sell a wide variety of trucks or relatedequipment to truck dealers and end users. Generally, distributors sell Morganproducts in a specified territory with limited exclusivity.  Morgan also sells its products directly totruck dealers, selling to more than 120 dealers in 2006.

ConsumerRental sales are composed of sales to companies that maintain large fleets ofone-way and local hauling vehicles available for rent to the general public.Morgan makes these sales through a bid process and negotiation directly withthese companies through its sales force. Primary Consumer Rental customersinclude Penske, U-Haul and Budget. Morgan negotiates contracts for ConsumerRental sales annually, usually in late summer to early fall, with products tobe shipped during the first half of the next year. These sales are seasonal,with substantially all product shipments occurring the first six months of theyear. Consumer Rental sales tend to be the most volatile and price-sensitiveaspect of Morgan’s business, and depend on factors such as product mix anddelivery schedules. Consumer Rental sales constituted 13% of Morgan’s net salesin 2004, 9% in 2005 and 10% in 2006.

Morgan’stwo largest customers, Ryder and Penske, together have historically representedapproximately 40% to 50% of Morgan’s total net sales. Each has been Morgan’scustomer for approximately 20 years and we believe relations with each aregood. Sales to these customers represented 25% of our consolidated net sales in2004, 24% in 2005 and 22% in 2006.

Morganalso builds truck bodies and installs them on chassis acquired under a bailmentpool agreement with General Motors Acceptance Corporation.  The truck is then placed with a dealer fordisplay and ultimate sale.  Pool programsales were $0.5 million during 2006.

Morganoffers limited service programs at its own service facilities and itsauthorized distributors. Service sales constituted 5% of Morgan’s net sales in2004, 3% in 2005 and 4% in 2006.

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

***Manufacturingand supplies. ***Morgan, which isheadquartered in Morgantown, Pennsylvania, operates manufacturing, bodymounting, and parts and service facilities in Arizona, California, Florida,Georgia, Pennsylvania, Texas, Wisconsin, and Ontario, Canada. Morgan also hassales, service and body mounting facilities in Colorado, Florida, Georgia,Pennsylvania, Texas, Wisconsin, and Ontario, Canada. All of Morgan’s domesticmanufacturing facilities are ISO 9000 certified.

Generally,Morgan engineers its products to the specifications of the customer. Typically,the customer places an order and arranges for a truck chassis manufacturer todeliver the truck chassis to Morgan. Morgan monitors delivery schedules fromchassis manufacturers to ensure it has appropriate levels of labor andmaterials to fulfill orders. Morgan manufactures and installs the body on thecustomer’s chassis and the customer or Morgan arranges for delivery of thecompleted truck. Morgan’s production cycle ranges from three to seven days fordry freight products and up to 28 days for more complex refrigeratedproducts.  Delays in chassis deliveriescan disrupt Morgan’s operations and can increase its working capital requirements.

Becausecontracts for Consumer Rental sales are entered into in the summer or fall butproduction does not begin generally until the following January, Morgan has asignificant backlog of Consumer Rental sales orders at the end of each yearthat is processed through May of the following year. In addition, Morgantypically maintains a significant backlog of Commercial sales. Morgan’s backlogat December 31, 2006 was $114.6 million compared to$94.7 million at December 31, 2005. Morgan expects to complete all ofthe orders in its 2006 backlog during 2007.

Morganprovides limited warranties against construction defects in its products. Thesewarranties generally allow for the replacement or repair of defective parts orworkmanship for up to five years following the date of sale. Warranty costshave not had a material adverse effect on its business.

Morganmaintains an inventory of raw materials necessary to build truck bodiesaccording to customers’ orders. Because Morgan usually manufactures itsproducts to customer orders, it does not maintain substantial inventories offinished goods.

Morgan’sprincipal raw materials include aluminum, steel, fiberglass-reinforcedplywood and hardwood. Morgan acquires raw materials from a variety of sourcesand has not experienced significant shortages of materials. However, there area limited number of suppliers of fiberglass-reinforced plywood, animportant truck body material. While Morgan has not experienced a disruption insupply or a shortage of fiberglass-reinforced plywood, such a disruptionor shortage could occur in the future. Morgan may not be able to replace itsexisting supply of fiberglass-reinforced plywood on acceptable terms orat all. To manage its supply costs, Morgan sometimes enters into long-termsupply contracts on principal materials to secure prices for up to one year ifconsidered necessary.

***Industry. ***Industry revenue andgrowth depend primarily on the demand for delivery vehicles in the generalfreight, moving and storage, parcel delivery and food distribution industries,all of which are affected by general economic conditions. Replacement of oldervehicles in fleets represents an important revenue source with replacementcycles of approximately six to seven years, depending on vehicle types. Duringeconomic downturns, replacement orders are often deferred or, in some cases,older vehicles are retired without replacement. During periods of economicgrowth, as customers decide to increase their capital expenditures, sales ofdelivery trucks grow as customers make purchases they deferred in prior years.

Thefederally mandated emission standards for diesel engines were changed effectiveJanuary 1, 2007 and will change again in 2010. These standards reduce the amount of pollutants allowed to be releasedduring the operation of the diesel engine built into the truck chassis thatMorgan is provided by its customers. Historically, approximately 90% of Morgan truck bodies are installed onchassis with diesel engines.  Truckoperators must evaluate the economic impact of the new diesel engines and havethe option of changing to an alternative power unit such as gasolineengines.  Our operations will be affectedin 2007 and 2010 as a result of the uncertain impact that the changes will haveon our customers’ operations.

***Competition. ***The truck bodymanufacturing industry is highly competitive. Morgan competes with threenational manufacturers: Supreme Industries, Inc., Kidron, a division ofSpecialized Vehicles Corporation, and Utilimaster

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

Corporation,some of which may be larger and have more resources than Morgan. There are alarge number of smaller manufacturers that are regionally focused. Competitivefactors in the industry include product quality, delivery time, geographicproximity of manufacturing facilities to customers, warranty terms, service andprice. We believe customers value Morgan’s high-quality products, competitivepricing and delivery times.

**Morgan Olson**

MorganOlson is one of two major manufacturers of step vans. Step vans are specializedvehicles designed for multiple-stop delivery applications and they enable thedriver of the vehicle to easily access the cargo area of the vehicle frominside the cab. Step vans are made to customer specifications for use inparcel, food, vending, uniform, linen and other delivery applications. MorganOlson’s step van bodies are installed on International, Ford, Freightliner andWorkhorse truck chassis in body sizes ranging from 11 to 30 feet. Morgan Olsonis headquartered in Sturgis, Michigan, where it has manufacturing and partsdistribution facilities.

Morgan Olson’s net salesconstituted 12%, 9% and 13% of our consolidated net sales in 2004, 2005 and2006, respectively.

***Customersand sales. ***Customers purchase stepvans through dealers and distributors and directly from Morgan Olson throughits direct sales force. Two customers, United Parcel Service ofAmerica, Inc. and FedEx, purchase the majority of step vans produced inthe United States. The United States Postal Service has historically been amajor buyer of step vans; however, it has not placed a significant order fornew step vans since the completion of the prior contract in early 2004 thatMorgan Olson participated in through two chassis manufacturers. Morgan Olson’send user customers include these customers along with Frito-Lay, Inc.,Bimbo Bakeries, DHL, W.B. Mason, ARAMARK Corporation and others. Thepreferences and purchasing decisions of these customers dramatically affect theresults of operations of Morgan Olson.

MorganOlson also sells step van body service parts through its dealers anddistributors and directly to customers. Morgan Olson is a major supplier ofservice parts for step vans manufactured by it for the United States PostalService under an agreement of indefinite term that is reviewed annually. TheUnited States Postal Service has the right to terminate the agreement forconvenience at any time, but we believe Morgan Olson’s relationship with theUnited States Postal Service is satisfactory. However, there can be noassurance that the parts supply agreement will continue at all or for anylength of time.

MorganOlson offers aftermarket support through its Service Parts Department for bothstep vans manufactured by Morgan Olson and dry freight vans manufacturedby Morgan.  The Service Parts business allows Morgan and MorganOlson to consolidate their parts support functions, with dedicatedfabrication, warehousing, and shipping facilities.  This service provides fleetcustomers with a full range of parts and parts assemblies for theirvehicles. Morgan Olson Service Parts and the Morgan Service and RepairCenters offer combined support that we believe gives both companies acompetitive advantage.

***Manufacturingand supplies. ***Morgan Olson has ISO9000 certified manufacturing and parts distribution facilities in Sturgis,Michigan.

Generally,Morgan Olson manufactures its products to customer specifications. Typically,the customer places an order and arranges for a truck chassis manufacturer todeliver a truck chassis to Morgan Olson. Morgan Olson manufactures the completetruck body, including the installation of windows, doors, instrument panels,seating, wiring, painting and decal application. The customer arranges fordelivery of the completed truck.

AtDecember 31, 2006, Morgan Olson’s total backlog was $25.1 million,compared to $9.3 million at December 31, 2005. We expect that Morgan Olsonwill fill all 2006 backlog orders in 2007.

MorganOlson provides a limited warranty against construction defects in its products.These warranties generally provide for the replacement or repair of defectiveparts or workmanship for up to five years following the date of sale. Warrantycosts have not had a material adverse effect on its business.

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

MorganOlson maintains an inventory of raw materials necessary to build step vanbodies. Because Morgan Olson manufactures its products to customer orders, itdoes not maintain substantial inventories of finished goods.  Principal raw materials include steel andaluminum and raw materials are acquired from a variety of sources that have notexperienced significant shortages. Morgan Olson has taken advantage of thecombined purchasing power of our companies, including Morgan, therebygenerating savings on raw materials common to our businesses.

MorganOlson’s customers purchase their truck chassis from major truck manufacturingcompanies. The delivery of truck chassis to Morgan Olson depends upon truckmanufacturers’ production schedules, which are beyond Morgan Olson’s control.Delays in chassis deliveries can disrupt Morgan Olson’s operations and canincrease its working capital requirements.

***Industry. ***Industry revenue andgrowth depend primarily on the demand for delivery vehicles, which is affectedby general economic conditions. Because of the concentration of customers inthe industry, the demand for delivery vehicles is significantly influenced bythe requirements of the United States Postal Service, FedEx and United ParcelService of America, Inc. Replacement of older vehicles in fleets represents animportant revenue source, with replacement cycles varying, depending on vehicletypes and usage. During economic downturns, replacement orders are oftendeferred or, in some cases, older vehicles are retired without replacement.During periods of economic growth, as customers decide to increase theircapital expenditures, sales of delivery trucks grow as customers make purchasesthat were deferred in prior years.

The federallymandated emission standards for diesel engines were changed effective January1, 2007 and will change again in 2010. Morgan Olson’s operations in 2007 and2010 will be affected by the uncertain impact changed standards will have onits customers.

***Competition. ***The step van bodymanufacturing industry is highly competitive. Morgan Olson competes with oneother major manufacturer of step van bodies, Utilimaster, which is larger andmay have more resources than Morgan Olson. Competitive factors in the industryinclude product quality, delivery time, warranty terms, aftermarket service andprice.

**Truck Accessories**

We believe Truck Accessories, which is headquartered inElkhart, Indiana, is the leading manufacturer of pickup truck caps and tonneausfor the combined United States and Canadian market. Truck Accessoriesmarkets its products under the brand names Leer, Century, Raider, LoRider,BoxTop and Pace Edwards.

Caps and tonneaus provide an engineered, stylizedenclosure for the bed of pickup trucks, transforming them into lockableweather-protected storage areas. Truck Accessories’ truck caps and tonneausoffer customers a variety of designs and features, including a number ofdistinctive styles, allowing them to customize the look and utility oftheir pickup trucks.  The Truck Accessories product line of truck caps andtonneaus ranges from standard to premium and is differentiated byfeatures, styling and brand name.  Pace Edwards offers a variety ofretractable hard tonneau covers that can be mechanically retracted into anintegrated storage canister behind the pickup truck cab.  State Widemanufactures windows and doors used by Truck Accessories, other cap and tonneaumanufacturers, and horse trailer manufacturers in the assembly of their products.

Key pickup truck cap features include shape and design,color and finish, window configurations, roof racks, glass tint, trim, andinterior features such as lighting, carpeting and special gear storage options.Tonneaus also offer a range of styling, storage and conveniencealternatives.  Caps and tonneaus can bedesigned to target specific customers.  For example, Leer offers lifestyleequipped caps for hunters, fishermen and outdoors enthusiasts that are styledand designed, through gear storage features and product appearance, to appealto these customers. Through Truck Accessories’ multiple lines of caps andtonneaus, each with numerous features and options, we believe Truck Accessoriesis the industry leader in engineering, product innovation and style.

Truck Accessories’ net salesconstituted 23% of our consolidated net sales in 2004, 23% in 2005 and 20% in2006.

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

***Customers and sales. ***Most of TruckAccessories’ truck caps and tonneaus are purchased by individuals, smallbusinesses and fleet operators through a network of over 1,270 independent,non-exclusive dealers using brand-specific sales forces.

Pace Edwards’ retractable tonneau covers are soldprimarily through automotive accessory warehouse distributors.  State Wide sells directly to manufacturersthrough its dedicated sales team.

TruckAccessories also sells its products in Canada. In 2006, foreign sales(primarily in Canada) represented approximately 14% of Truck Accessories’ netsales and 3% of our consolidated net sales.

***Manufacturingand supplies. ******Thedesign and manufacture of Truck Accessories’ products takes place at six************manufacturingfacilities*********located in California, Indiana, Pennsylvania andWashington. During the fourth quarter of 2006, Truck Accessories announced thatit would discontinue manufacturing operations at its Canadian facility duringthe first quarter of 2007.  Consequently,the Raider product line was transferred to other facilities in the UnitedStates during February 2007.  All Raiderdealers are now supplied Raider products from these new locations although wewill maintain a sales office and sales personnel in Canada.

Typicalproduct delivery times range from one to two weeks from the time of order.Truck Accessories operates a fleet of trucks and trailers to manage theefficient and timely delivery of its products to its dealers.

Truck Accessories provides awarranty period, exclusive to the original truck owner, which is, in generalbut with exclusions, one year for parts, five years for paint and lifetime forstructure. Warranty costs have not had a material adverse effect on its business inrecent years.

TruckAccessories obtains raw materials and components from a variety of sources. Themost important are resin, fiberglass, paint, aluminum, locks, windows anddoors.  Truck Accessories purchaseswindows and doors for caps from two main suppliers, and effective March 17,2006, acquired State Wide, one of these suppliers.  Although the loss of the remainingindependent supplier would disrupt production activities until internalproduction is increased, we do not believe that such loss would have asignificant adverse effect on us.  TruckAccessories and three other of our companies have committed to purchaseprincipally all of their paint requirements through 2008 from one supplier atfavorable prices.  As a result of itssize and purchasing power, Truck Accessories has maintained a stable supply ofmaterials and components on favorable terms and to date has not experiencedsignificant shortages of these items.

TruckAccessories’ products are typically manufactured upon receipt of an order fromits customers and, consequently, its backlog represents between one and twoweeks of production. Truck Accessories’ backlog was $4.1 million atDecember 31, 2006 compared to $4.0 million at December 31, 2005.

***Industry. ***Sales of caps andtonneaus correspond to the level of new pickup truck sales in the United Statesand Canada. In 2006, we estimate that 18% to 20% of new pickup trucks were equippedwith caps and tonneaus. Based on Truck Accessories’ market share in the UnitedStates and Canada of approximately 39%, we estimate that approximately 8% ofnew 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, will directly influence Truck Accessories’ business. Cap andtonneau sales are seasonal, with sales typically being higher in the spring andfall than in the winter and summer.

***Competition. ***The pickup truckcap 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 andprice.   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.

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

**SpecialtyManufacturing**

SpecialtyManufacturing is comprised of Specialty Vehicle Group, MIC Group and EFP, andits sales made up 11% of our consolidated net sales in 2004, 14% in 2005 and20% in 2006.  Specialty Vehicle Grouprepresents approximately 46% of Specialty Manufacturing’s net sales and iscomprised of Federal Coach and Eagle Coach. Specialty Vehicle Group manufactures funeral coaches, limousines andspecialized transit buses.

MICGroup represents approximately 35% of Specialty Manufacturing’s net sales andprovides contract manufacturing services for customers requiring precisionmachining of metal parts and machining and casting services with aconcentration of customers in the oil and gas exploration and developmentindustry.

EFPrepresents approximately 19% of Specialty Manufacturing’s net sales andmanufactures and sells expandable polystyrene and polypropylene foam,engineered to customer specifications for use by the automotive, electronics,food, furniture, bath and plumbing, and appliance industries as packaging,shock-absorbing components and material handling products.

***Products.******  ******SpecialtyVehicle Group manufactures a full line of funeral coaches, family cars(modified limousines for use in funerals), limousines and specialized buses.****** ******SpecialtyVehicle’s funeral product sales represent approximately 40% of the domesticfuneral coach market.***

MICGroup is a contract manufacturer that produces precision metal parts used inenergy exploration and production, aerospace and other industries and performsmachining and casting services for manufacturers of metal parts and components.

EFPmanufactures and sells material handling and protective packaging productsincluding shock-absorbing packaging material, reusable trays and containersthat are used for transporting components and the protection of customers’products. EFP also produces block and sheet products used by the RV industryfor producing sidewalls and doors and the construction industry for insulationand commercial roofing applications. EFP has also recently introduced a line oftemperature-controlled shipping containers for the protection oftemperature-sensitive products such as food and medical products.

***Customersand sales. ******SpecialtyVehicle Group manufactures and sells its line of funeral coaches, limousinesand specialized buses to end users, such as livery companies, and approximately48 authorized dealers.  Its largestcustomer represented approximately 8% of the total net sales of SpecialtyManufacturing in 2005 and 2006.***

MICGroup sells products to international oilfield service companies and a varietyof businesses in various industries. One oilfield service customer representedapproximately 18% of the total sales of Specialty Manufacturing in 2004, 15% in2005 and 15% in 2006.

EFP’scustomers include manufacturers that require special packaging materials forprotecting their products, as well as companies in the automotiveindustry.  ***Onecustomer represented approximately 7% of the total sales of SpecialtyManufacturing in 2004, 3% in 2005 and 3% in 2006.***

***Manufacturingand supplies. ***Specialty Manufacturing’soperations are located in Alabama, Arkansas, Indiana, Ohio, Tennessee, Texas,Wisconsin and Mexico. Its facilities in Alabama, Indiana and Texas are ISO 9000certified and its facility in Wisconsin is QS 9000 certified.

Specialty Vehicle Group engineers its product toits own 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 Cadillacdivision of General Motors or the Lincoln division of Ford, and modifies it toits specifications.  Bus bodies are builton cutaway chassis and funeral coaches and limousines are manufactured from amodified sedan by removing part of the interior contents, lengthening the bodyand building 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

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

(paints, plastics, sealantsand lubricants) and participates in the paint supply contract negotiated byTruck Accessories.

MICGroup performs a broad range of services including computer-controlledprecision machining and welding, electrostatic discharge machining, electronbeam welding, trepanning, gun drilling and investment casting. MIC Group utilizesferrous and nonferrous materials including stainless steel, alloy steels,nickel-based alloys, titanium, brass, beryllium-copper alloys andaluminum.

EFP’sproducts are manufactured from a wide variety of materials including expandablepolystyrene, polypropylene, polyethylene and resins which are subject to costfluctuations based on changes to the price of oil and benzene in theinternational markets.

The Specialty Vehicle Groupprovides a warranty on its products for a period of 36 months or 36,000 mileson the section of the body and parts manufactured for funeral coaches andfuneral limousines, 12 months or 12,000 miles on the body and partsmanufactured for bus bodies and 24 months or 24,000 miles on the portion of thebody and parts manufactured for limousines.  MIC Group and EFP do not provide warrantieson their products.  Warranty costs havenot had a material adverse effect on Specialty Manufacturing’s business.

Specialty Manufacturing’sbacklog at December 31, 2006 was $54.1 million compared to$35.7 million at December 31, 2005. Materials are obtained from a varietyof sources and Specialty Manufacturing has not experienced significantshortages in materials.

***Industry. ******SpecialtyVehicle Group’s funeral products are used by funeral operators and salesgenerally increase with the introduction of new models by the OEMs.  VIP limousines and small to medium-sizedbuses are purchased by livery companies, churches and small tour bus operatorswhose businesses are influenced by the general economy.***

MICGroup’s services are used by companies in the automotive, aerospace and otherindustries with a concentration of companies involved in oil and gasexploration. The demand for equipment and services supplied to the oilfieldservice industry is directly correlated to the level of worldwide oil and gasdrilling activity.

Themajority of EFP’s products are manufactured for use by manufacturing companiesin other industries; economic conditions that affect those other industrieswill influence its operations.

Growthor downturns in the general economy and specifically the entertainment,automotive, electronics, furniture and appliance industries have acorresponding effect on Specialty Manufacturing’s business.

***Competition. ******SpecialtyVehicles competes with one major manufacturer of funeral coaches and with otherbusinesses engaged in the manufacture of limousines and***passenger shuttle/executive buses.

MICGroup competes with other businesses engaged in the machining, casting andmanufacturing of parts and equipment utilized in the oil and gas exploration,aerospace and other industries.

EFPcompetes with a large number of other molded, expandable plastic producers.

Some ofSpecialty Manufacturing’s competitors may be larger and have moreresources.  Price, delivery times,technological know-how, design and capacity are the primary competitive factorsin Specialty Manufacturing’s industries.

**Trademarksand 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

9

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

presentationsof Morgan’s name. Although these and other trademarks and trade names used byus help 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 themanufacturing processes. We do not believe that the loss of any one patentwould have a material adverse effect on us.

**Employees**

AtDecember 31, 2006, we had approximately 4,500 full-time employees and anaverage of 4,625 full-time employees throughout the year.  Personnel are unionized only at EFP’sDecatur, Alabama facility (covering approximately 60 persons, with a contractexpiring in August 2009). We believe that relations with our employees aregood.

**Environmental matters**

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, these requirementsmay limit the productive capacity of our operations.Certain laws, including the Federal Comprehensive Environmental Response,Compensation, and Liability Act of 1980, as amended (“Superfund”) imposestrict, and under certain circumstances, joint and several, liability for coststo remediate contaminated sites upon designated responsible parties includingsite owners or operators and persons who dispose of wastes at, or transportwastes to, such sites. Some of our operations also require permits which mayrestrict our activities and which are subject to renewal, modification orrevocation by issuing authorities. In addition, we generate non-hazardouswastes, which are also subject to regulation under applicable environmentallaws.

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 minor fines, none of which individually or in the aggregatehas had a material adverse effect on us.  Further, we cannotensure that we have been or will be at all times in compliance with all ofthese 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.  However,we expect that the nature of our operations will continue to make us subject toincreasingly stringent environmental regulatory standards. Although we believewe have made sufficient capital expenditures to maintain compliance withexisting laws and regulations, future expenditures may be necessary, ascompliance standards and technology change or as unanticipated circumstancesarise. Unforeseen and significant expenditures required, for example, to complywith new or more aggressively enforced requirements or newly discoveredconditions could limit expansion or otherwise have a material adverse effect onour business and financial condition. For a description of currently outstanding environmental issues, seeNote 16 of Notes to the Financial Statements.

**Reports to Security Holders**

Since all of the Company’s equity securities areprivately held, the Company is not required by the SEC’s proxy rules orregulations, or stock exchange requirements, to send an annual report tosecurity holders. Nonetheless, the Company will send to each security holderannually a copy of its Annual Report on Form 10-K and quarterly a copy of eachQuarterly Report on Form 10-Q.

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

**Item1A.**                                               RiskFactors

An investment in oursecurities is subject to a number of risks. An investor should carefullyconsider the following risk factors in evaluating this investment. Any of thefollowing risks, as well as other risks and uncertainties that we do not knowabout now or that we do not think are important, could seriously harm ourbusiness and financial results and cause the value of our securities todecline, which in turn could cause investors to lose all or part of theirinvestment.

**Our businesses are highly cyclical.An economic downturn could adversely affect our ability to generate cash andmake required payments on our debt.**

The success of our business depends on general economicconditions and such factors as:

·      corporateprofitability;

·      interestrates;

·      fuelcosts;

·      consumerpreferences;

·      consumerspending patterns;

·      salesof truck chassis and new pickup trucks; and

·      levelsof oil and gas exploration activity.

In addition, we sell our products to customers ininherently cyclical industries, such as the trucking industry and the energyservices industry, which experience significant downturns from time to time. Asa result of an economic recession and adverse conditions in the truckingindustry, we experienced substantially lower sales at Morgan  during 2001 and 2002   Morgan’s business began a recovery in 2003.During the same time period, a decline in oil and gas exploration activityresulted in substantially lower sales at Specialty Manufacturing. As a resultof these conditions and a reduction in the availability of credit from banksand securities markets, we did not expect to have enough cash to retire ourunsecured senior notes, initially issued by us in 1994, when they were due tomature in May 2004. In June 2003, we exchanged those unsecured notes forsecured notes and extended the maturity to May 2007. The secured notes weresubsequently redeemed by us in March 2004 prior to the original maturitydate. Another prolonged economic downturn or recession would result in asignificant decrease in our sales and would materially and adversely affect ouroperating cash flows and our ability to make required payments on our debt.

**Demand for our truck body productsdepends largely on the replacement cycle of delivery trucks.**

Morgan and Morgan Olson produce and sell truckbodies for new delivery trucks, primarily in the general freight, moving andstorage, parcel delivery and distribution industries. Demand for these productsis driven by customers replacing older vehicles in their delivery truck fleetsand these customers often decide to postpone their purchases of new deliverytrucks during economic downturns. If economic conditions or other factors,including longer useful lives of delivery trucks, cause our customers to reducetheir capital expenditures and decrease investments in new delivery trucks, oursales would be materially and adversely affected. As a result, our ability togenerate cash and make required payments on our debt would be reduced.

**The cyclicality of pickup trucksales could cause a decline in Truck Accessories’ sales.**

Truck Accessories’ sales depend on the sales of newpickup trucks in North America. A decline in pickup truck sales would cause adecline in Truck Accessories’ sales, which would materially and adverselyreduce Truck Accessories’ ability to generate cash and could reduce our abilityto make required payments on our debt. Sales of pickup trucks are characterizedby periodic fluctuations in demand due to, among other things, changes ingeneral economic conditions, interest rates, fuel costs, new modelintroductions, consumer spending levels and consumer preferences.

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

**We have a substantial amount of debt outstanding and can 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%Notes and our other debt obligations.**

We are significantly leveragedand will continue to be significantly leveraged although we had$19.0 million of stockholder’s equity at December 31, 2006 compared to$9.7 million at December 31, 2005. Of our debt of $207.6 million, $5.8 million is secured indebtedness andcapital lease obligations.  In addition,we had $27.7 million of secured debt availability under our revolving creditfacility and we may be able to incur substantially more debt in the future.

**We may not be able to competefavorably in our industries.**

We experience direct competition in each of ourproduct lines and some competitors have greater financial and other resourcesthan we have. We face competition from existing competitors with entrenchedpositions and we could face competition from new ones. Changes in the nature ofthe industries in which we operate and our business could produce competitionfrom new sources. Increased competition may have a material adverse effect onour business, cash flows and ability to make required payments on our debt byreducing our sales or margins.

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

Four of our businesses rely on a small number ofcustomers to generate significant revenues.

·     Morgan’stwo largest customers, Penske and Ryder, together accounted for 46% of Morgan’snet sales in 2004, 47% in 2005 and 46% in 2006 and accounted for 25% of ourconsolidated net sales during 2004, 25% in 2005 and 22% in 2006.

·     Twocustomers accounted for 81% of Morgan Olson’s net sales during 2004, 38% in2005 and 56% in 2006.

·     Onecustomer accounted for 18% of Specialty Manufacturing’s net sales during 2004,15% in 2005 and 15% in 2006.

·     Ourtop ten customers accounted for 40% of our consolidated net sales in 2004, 35%in 2005 and 40% in 2006.

Because of the relative importance of largecustomers and the degree of concentration in the industries we serve, we aresubject to additional risk. We may not be able to maintain these customerrelationships or maintain our historical levels of sales to these customers.Because of the size and importance of these customers, these customers may beable to exert pressure on us to lower our prices, which may reduce our marginsand operating cash flow. If one of these customers were to experience financialdifficulties, our ability to collect receivables from it or generate new salesto it would be materially and adversely affected.

**Disruptions in delivery of truckchassis to us could impact the profitability of our business.**

Morgan and Morgan Olson mount their truck bodies ontruck chassis delivered from truck chassis manufacturers. If truck chassismanufacturers experience disruptions in their businesses, Morgan and MorganOlson may be unable to sell or deliver their products. Work stoppages orslowdowns experienced by the large truck manufacturers that supply truckchassis could result in delays or slowdowns in our ability to deliver productsto our customers.

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

**Environmental and health and safetyliabilities and requirements could require us to incur material costs.**

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. Laws, including Superfund legislation, impose strict, andunder certain circumstances, joint and several, liability for costs toremediate contaminated sites upon designated responsible parties including siteowners or operators and persons who dispose of wastes at, or transport wastesto, such sites.

From time to time, we have received notices ofnoncompliance with respect to our operations, which have typically beenresolved by investigating the alleged noncompliance, correcting anynoncompliant conditions and paying of minor fines. We have from time to timebeen identified as a potentially responsible party at various Superfund sites,which, based on available information, we do not expect to result in materialliability. However, new environmental requirements or more aggressiveenforcement of existing ones or discovery of presently unknown conditions couldrequire material expenditures or result in liabilities which could limitexpansion or otherwise have a material adverse effect on our business,financial condition, operating cash flows and our ability to make requiredpayments on our debt.

For a description of current environmental issues,see “Item 1.   Business — EnvironmentalMatters.”

**We may incur material losses andcosts as a result of product liability and warranty claims that may be broughtagainst us.**

We face an inherent risk of exposure to productliability claims if the use of our products result, or are alleged to result,in personal injury and/or property damage. If we manufacture a defectiveproduct, we may experience material product liability losses and we may incursignificant costs to defend product liability claims. We also could incursignificant costs in correcting any defects, lose sales and suffer damage toour reputation. Our product liability insurance coverage may not be adequatefor the liabilities we could incur and may not continue to be available onterms acceptable to us.

We also are subject to product warranty claims inthe ordinary course of our business. If we produce poor-quality products or usedefective materials, we may incur unforeseen costs in excess of what we havereserved in our financial statements. These costs could have a material adverseeffect on our business, operating cash flows and ability to make requiredpayments on our debt.

**We depend on the services of keymanagement personnel, the loss of whom would materially harm us.**

Our ability to compete successfully and implementour business strategy depends on the efforts of our senior managementpersonnel, including those of John Poindexter, 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 ourbusiness strategy of improving operating performance and generating costreductions.**

We have either implemented or plan to implementstrategic initiatives designed to improve our operating performance. Thefailure to achieve the goals of these initiatives would have a material adverseeffect on our business. We may decide to make significant expenditures in aneffort to streamline our operations, including combining some of our operationsat existing facilities, but be unable to successfully implement or realize theexpected benefits of these initiatives. We also may not be able to sustainimprovements made to date. We may decide to alter or discontinue some aspectsof our strategy and may adopt alternative or additional strategies, which maynot be in the best interests of our note holders.

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

**We may not be able to consummatefuture acquisitions or successfully integrate acquisitions into our business.**

Our business strategy includes growing throughstrategic acquisitions of other businesses with complementary products,manufacturing capabilities or geographic markets. If we fail to integrateacquired businesses successfully into our existing businesses, or incurunforeseen expenses in consummating acquisitions, we could incur unanticipatedexpenses and losses.

We must successfully integrate acquired businessesinto our operations to take full advantage of projected benefits from thoseacquired businesses. The integration of future acquisitions into our operationscould result in operating difficulties and divert management and financialresources that would otherwise be available for the development and maintenanceof our existing operations. Our ability to make acquisitions may be constrainedby our ability to obtain additional financing and by the provisions of theindenture governing our outstanding 8.75% Notes and by the terms of ourrevolving credit facility.

Acquisitions may involve a number of special risks,including:

·     unexpectedlosses of key employees or customers of the acquired business;

·     conformingthe standards, processes, procedures and controls of the acquired business withthose of our existing operations;

·     coordinatingour product and process development;

·     hiringadditional management and critical personnel; and

·     increasingthe scope, geographic diversity and complexity of our operations.

Acquisitions could result in our incurrence ofadditional debt and contingent liabilities, including environmental, tax,pension and other liabilities. These liabilities could have a material adverseeffect on our business, our ability to generate cash and our ability to makerequired payments on our debt.

**If we are unable to meet futurecapital requirements, our competitive position may be adversely affected.**

As a manufacturer, we are required to expendsignificant amounts of capital for engineering, development, tooling and othercosts. Generally we seek to recover these costs through revenue generation, butwe may be unsuccessful due to competitive pressures and other marketconstraints. We expect to fund capital expenditures through operating cashflows, borrowings under our revolving credit facility and other sources ofborrowing such as capital leases, but we may not have adequate funds orborrowing availability to make all the necessary capital expenditures. If weare unable to make necessary capital expenditures, our business and ourcompetitive position will be materially and adversely affected.

**As a privately held company, we aresubject to less stringent corporate governance requirements than a company withpublic equity. This provides less protection to our investors.**

While we are subject to certain requirements of theSarbanes-Oxley Act of 2002, we will not be subject to many of its provisions,including rules requiring us to have independent directors or an auditcommittee composed of independent directors. Two of our three directors, JohnPoindexter, our President and CEO, and Stephen Magee, the chairman of the AuditCommittee of our board of directors, are not independent. We will not besubject to the same corporate governance standards as a company with publicequity or a company listed on a national exchange and our security holders willnot have the protections provided by having independent directors or auditcommittee members.

**Item 1B.**                 Unresolved StaffComments

None.

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

**Item 2.**                          Properties

We own or lease the following manufacturing,office and sales facilities as of December 31, 2006:
| **Location**                    | ** **   | **Principal  use**         | ** **   | **Approximate  square feet** | ** **   | **Owned  or leased** | ** **   | **Lease  expiration** |
|---------------------------------|--------------|----------------------------|--------------|------------------------------|--------------|----------------------|--------------|-----------------------|
| *** ***                    | *** *** | *** ***               | *** *** | *** ***                 | *** *** | *** ***         | *** *** | *** ***          |
| ***Morgan:***                   | *** *** | *** ***               | *** *** | *** ***                 | *** *** | *** ***         | *** *** | *** ***          |
| Ehrenberg, Arizona              |         | Manufacturing              |         | 125,000                      |         | Owned                |         | —                |
| Riverside, California           |         | Manufacturing/service      |         | 62,000                       |         | Leased               |         | 2013                  |
| Atlanta, Georgia                |         | Parts & service        |         | 20,000                       |         | Leased               |         | 2009                  |
| Rydal, Georgia                  |         | Manufacturing              |         | 85,000                       |         | Owned                |         | —                |
| Ephrata, Pennsylvania           |         | Manufacturing              |         | 51,000                       |         | Owned                |         | —                |
| New Morgan, Pennsylvania        |         | Manufacturing              |         | 62,900                       |         | Leased               |         | 2008                  |
| Morgantown, Pennsylvania        |         | Manufacturing/service      |         | 261,000                      |         | Owned                |         | —                |
| Morgantown, Pennsylvania        |         | Office/warehouse           |         | 110,000                      |         | Leased               |         | 2009                  |
| Corsicana, Texas                |         | Manufacturing/service      |         | 63,000                       |         | Owned                |         | —                |
| Janesville, Wisconsin           |         | Manufacturing/service      |         | 166,000                      |         | Leased               |         | 2010                  |
| 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 |         | 41,000                       |         | Leased               |         | 2008                  |
| Mississauga, Ontario, Canada    |         | Manufacturing              |         | 22,000                       |         | Leased               |         | 2009                  |
|                            |         |                       |         |                         |         |                 |         |                  |
| ***Morgan  Olson:***            | *** *** | *** ***               | *** *** | *** ***                 | *** *** | *** ***         | *** *** | *** ***          |
| Sturgis, Michigan               |         | Office & manufacturing |         | 380,255                      |         | Owned                |         | —                |
|                            |         |                       |         |                         |         |                 |         |                  |
| ***Truck  Accessories:***       | *** *** | *** ***               | *** *** | *** ***                 | *** *** | *** ***         | *** *** | *** ***          |
| Woodland, California            |         | Manufacturing              |         | 65,000                       |         | Leased               |         | 2009                  |
| Elkhart, Indiana                |         | Office & research      |         | 23,500                       |         | Owned                |         | —                |
| Elkhart, Indiana                |         | Manufacturing              |         | 132,500                      |         | Leased               |         | 2007                  |
| Elkhart, Indiana                |         | Office & manufacturing |         | 80,000                       |         | Owned                |         | —                |
| Elkhart, Indiana                |         | Manufacturing              |         | 10,000                       |         | Leased               |         | 2008                  |
| Elkhart, Indiana                |         | Manufacturing              |         | 150,000                      |         | Leased               |         | 2011                  |
| Chickasha, Oklahoma             |         | Warehouse                  |         | 9,700                        |         | Leased               |         | 2007                  |
| Salem, Oregon                   |         | Warehouse                  |         | 20,900                       |         | Leased               |         | 2008                  |
| Milton, Pennsylvania            |         | Manufacturing/retail       |         | 105,000                      |         | Leased               |         | 2009                  |
| Clackamas, Oregon               |         | Retail                     |         | 10,000                       |         | Leased               |         | 2008                  |
| Centralia, Washington           |         | Manufacturing              |         | 45,950                       |         | Owned                |         | —                |
|                            |         |                       |         |                         |         |                 |         |                  |
| ***Specialty  Manufacturing:*** | *** *** | *** ***               | *** *** | *** ***                 | *** *** | *** ***         | *** *** | *** ***          |
| Amelia, Ohio                    |         | Office & manufacturing |         | 44,250                       |         | Leased               |         | 2010                  |
| Brenham, Texas                  |         | Office & manufacturing |         | 125,000                      |         | Owned                |         | —                |
| Decatur, Alabama                |         | Manufacturing              |         | 175,000                      |         | Leased               |         | 2009                  |
| Elkhart, Indiana                |         | Office & manufacturing |         | 211,600                      |         | Owned                |         | —                |
| Fort Smith, Arkansas            |         | Office & manufacturing |         | 170,000                      |         | Leased               |         | 2010                  |
| Gordonsville, Tennessee         |         | Manufacturing              |         | 40,000                       |         | Leased               |         | 2007                  |
| Milwaukee, Wisconsin            |         | Office & manufacturing |         | 70,000                       |         | Leased               |         | 2010                  |
| Monterrey, Mexico               |         | Manufacturing              |         | 38,000                       |         | Leased               |         | 2009                  |
| Nashville, Tennessee            |         | Manufacturing              |         | 40,900                       |         | Leased               |         | 2007                  |

 

Webelieve that our facilities are adequate for our current needs and are capableof being utilized at higher capacities to supply increased demand, ifnecessary.

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

**Item 3.**                          LegalProceedings

We areinvolved in various lawsuits, which arise in the ordinary course of business.In the opinion of management, the ultimate outcome of known lawsuits will nothave a material adverse effect on us.

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

**No matters were submitted to avote of security holders during the twelve months ended December 31, 2006covered by this report.**

**PARTII**

**Item 5.****                         ****Market for Registrant’s Common Equity, RelatedStockholder Matters and Issuer Purchases of Equity Securities**

Theregistrant’s common equity is privately held and not publicly traded.  As of March 30, 2007, John Poindexter ownedall of the registrant’s issue and outstanding common equity.  The Company has never paid cash dividends.

Theindenture regarding the 8.75% Notes, dated as of March 15, 2004, and theRevolving Credit Facility, as amended and dated as of March 15, 2004 withLaSalle Bank National Association, restricts the Company’s ability to paydividends on its common equity.

TheCompany has no securities authorized for issuance under equity compensationplans.

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

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

The following selected consolidated financial data as ofDecember 31, 2006 and 2005, and for the years ended December 31, 2006, 2005 and2004, have been derived from our consolidated audited financial statementsincluded elsewhere in this Form 10-K. The selected consolidated financial data as of December 31, 2004, 2003and 2002 and for the years ended December 31, 2003 and 2002 have been derivedfrom our consolidated audited financial statements not included or incorporatedby reference in this Form 10-K. 

|                                                 | ** ** | **Year ended December 31,** | ** ** |
|-------------------------------------------------|------------|--------------------------------------------|------------|
| **(Dollars in millions)**             | ** ** | **2002**                                   | ** ** | **2003** | ** ** | **2004** | ** ** | **2005** | ** ** | **2006** | ** ** |
| **Operating  data:**                            |       |                                       |       |   |   |   |   |   |   |   |   |
| Net sales                                       |       | $                                          | 320.5      |   | $ | 435.5 |   | $ | 584.9 |   | $ | 668.1 |   | $ | 795.3 |   |
| Cost of sales                                   |       | 277.9                                      |       | 373.8 |   | 513.4 |   | 593.1 |   | 699.9 |   |
| Selling, general  and administrative expense    |       | 37.4                                       |       | 36.9 |   | 40.6 |   | 50.0 |   | 63.0 |   |
| Refinancing  costs                              |       | —                                     |       | 0.8 |   | — |   | — |   | — |   |
| Loss (gain) on  extinguishment of debt          |       | —                                     |       | (0.4 | ) | 2.4 |   | — |   | — |   |
| Closed and  excess facility costs               |       | 0.3                                        |       | — |   | — |   | 0.4 |   | 2.7 |   |
| Other expense  (income)                         |       | (0.9                                       | )          | — |   | (0.4 | ) | 0.1 |   | (0.2 | ) |
| Operating income                                |       | 5.8                                        |       | 24.4 |   | 28.9 |   | 24.5 |   | 29.9 |   |
| Interest expense                                |       | 12.4                                       |       | 12.4 |   | 14.5 |   | 18.5 |   | 18.9 |   |
| Interest income                                 |       | —                                     |       | — |   | (0.1 | ) | (1.7 | ) | (1.7 | ) |
| Income tax  provision (benefit)                 |       | (1.1                                       | )          | 2.7 |   | 4.1 |   | 2.6 |   | 3.8 |   |
| Income (loss)  before discontinued operations   |       | (5.5                                       | )          | 9.3 |   | 10.4 |   | 5.1 |   | 8.9 |   |
| Loss from  discontinued operations              |       | (6.6                                       | )          | (0.2 | ) | (0.5 | ) | — |   | — |   |
| Net income  (loss)                              |       | $                                          | (12.1      | ) | $ | 9.1 |   | $ | 9.9 |   | $ | 5.1 |   | $ | 8.9 |   |
| Ratio of  earnings to fixed charges(a)          |       | —                                     | (b)        | 1.8x |   | 1.9x |   | 1.4x |   | 1.6x |   |
|                                            |       |                                       |       |   |   |   |   |   |   |   |   |
| **Other  Data:**                                |       |                                       |       |   |   |   |   |   |   |   |   |
| EBITDA(c)                                       |       | $                                          | 15.2       |   | $ | 36.6 |   | $ | 46.4 |   | $ | 37.9 |   | $ | 45.7 |   |
| Consolidated  Coverage Ratio(d)                 |       | 1.3                                        |       | 3.0 |   | 3.2 |   | 2.1 |   | 2.4 |   |
|                                            |       |                                       |       |   |   |   |   |   |   |   |   |
| **Balance  sheet data (at period end):**        |       |                                       |       |   |   |   |   |   |   |   |   |
| Working capital                                 |       | $                                          | 6.6        |   | $ | 14.9 |   | $ | 75.8 |   | $ | 114.9 |   | $ | 112.9 |   |
| Total assets                                    |       | 114.0                                      |       | 146.9 |   | 217.5 |   | 273.2 |   | 293.5 |   |
| Total debt                                      |       | 103.0                                      |       | 107.8 |   | 158.4 |   | 205.4 |   | 207.6 |   |
| Stockholder’s equity  (capital deficiency) |       | $                                          | (18.0      | ) | $ | (5.4 | ) | $ | 4.6 |   | $ | 9.7 |   | $ | 19.0 |   |

 

(a)             Forthe purpose of calculating the ratio of earnings to fixed charges, earningsconsist of net income (loss) plus income taxes and fixed charges (excludingcapitalized interest). Fixed charges consist of interest expense, amortizationof debt issuance costs and the estimated portion of rental expenses deemed areasonable approximation of the interest factor.

(b)            Earningswere insufficient to cover fixed charges by $6.9 million for 2002.

(c)             “EBITDA”is net income from continuing operations increased by the sum of interestexpense, income taxes, depreciation and amortization and other non-cash itemsfor those operations defined as restricted subsidiaries in the indenturepertaining to the 8.75% Notes.  EBITDA isnot included herein as operating data and should not be construed as analternative to operating income (determined in accordance with accountingprinciples generally accepted in the United States) as an indicator of theCompany’s operating performance.  TheCompany has included EBITDA because it is relevant for determining complianceunder the Indenture and because the Company understands that it is one measureused by certain investors to analyze the Company’s 

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

operating cash flow andhistorical ability to service its indebtedness. The following are the components of the Company’s EBITDA:

|                                                                       | ** ** | **Year ended December 31,** | ** ** |
|-----------------------------------------------------------------------|------------|--------------------------------------------|------------|
| **(Dollars in millions)**                                   | ** ** | **2002**                                   | ** ** | **2003** | ** ** | **2004** | ** ** | **2005** | ** ** | **2006** | ** ** |
| Income (loss)  before extraordinary items and discontinued operations |       | $                                          | (5.5       | ) | $ | 9.3 |   | $ | 10.4 |   | $ | 5.1 |   | $ | 8.9 |   |
| Income tax  provision (benefit)                                       |       | (1.1                                       | )          | 2.7 |   | 4.1 |   | 2.6 |   | 3.8 |   |
| Interest expense                                                      |       | 12.4                                       |       | 12.4 |   | 14.5 |   | 18.5 |   | 18.9 |   |
| Depreciation and  amortization                                        |       | 9.1                                        |       | 9.2 |   | 9.5 |   | 10.4 |   | 12.8 |   |
| Non-cash charges  (income)                                            |       | 0.3                                        |       | (0.4 | ) | 2.4 |   | 0.4 |   | 1.1 |   |
| Pro forma effect  of acquisitions                                     |       | —                                     |       | 3.4 |   | 5.5 |   | 0.9 |   | 0.2 |   |
|                                                                  |       | $                                          | 15.2       |   | $ | 36.6 |   | $ | 46.4 |   | $ | 37.9 |   | $ | 45.7 |   |

 

(d)            “ConsolidatedCoverage Ratio” is the ratio of EBITDA to interest expense of the Company andits subsidiaries that guarantee the 8.75% Notes.  It is used in the indenture to limit theamount 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.

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

**Overview**

The following table shows our net sales, operating income and operatingincome as a percentage of net sales for each segment for the years endedDecember 31, 2004, 2005 and 2006.
| ** **                          | ** ** | **Year ended December 31,** | ** ** |
|-------------------------------------|------------|--------------------------------------------|------------|
| **(Dollars in millions)** | ** ** | **2004**                                   | ** ** | **2005** | ** ** | **2006** | ** ** |
| Net Sales                           |       |                                       |       |   |   |   |   |
| Morgan                              |       | $                                          | 315.5      |   | $ | 358.2 |   | $ | 379.4 |   |
| Morgan Olson                        |       | 71.0                                       |       | 60.8 |   | 100.4 |   |
| Truck Accessories                   |       | 135.4                                      |       | 153.7 |   | 159.3 |   |
| Specialty Manufacturing             |       | 64.3                                       |       | 95.7 |   | 155.9 |   |
| Eliminations                        |       | (1.3                                       | )          | (0.3 | ) | 0.4 |   |
| Consolidated                        |       | $                                          | 584.9      |   | $ | 668.1 |   | $ | 795.4 |   |
| Operating Income  (Loss)            |       |                                       |       |   |   |   |   |
| Morgan                              |       | $                                          | 19.6       |   | $ | 20.7 |   | $ | 21.6 |   |
| Morgan Olson                        |       | 1.9                                        |       | (1.9 | ) | 3.9 |   |
| Truck Accessories                   |       | 10.5                                       |       | 8.3 |   | 3.5 |   |
| Specialty Manufacturing             |       | 2.8                                        |       | 2.5 |   | 9.8 |   |
| JBPCO (Corporate)                   |       | (5.9                                       | )          | (5.1 | ) | (8.9 | ) |
| Consolidated                        |       | $                                          | 28.9       |   | $ | 24.5 |   | $ | 29.9 |   |
| Operating Margin  Percentage        |       |                                       |       |   |   |   |   |
| Morgan                              |       | 6.2                                        | %          | 5.8 | % | 5.7 | % |
| Morgan Olson                        |       | 2.7                                        | %          | (3.1 | %) | 3.9 | % |
| Truck Accessories                   |       | 7.8                                        | %          | 5.4 | % | 2.2 | % |
| Specialty Manufacturing             |       | 4.4                                        | %          | 2.6 | % | 6.2 | % |
| Consolidated                        |       | 4.9                                        | %          | 3.7 | % | 3.8 | % |

 

18

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

The following is adiscussion of the key components of our results of operations:

***Sourceof 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

·             Specialty Manufacturing’s sales of specialtyvehicles, primarily funeral coaches, contract manufacturing services, packagingand other products.

***Discounts,returns and allowances.***  Our gross sales are reduced bydiscounts we provide to customers and returns and allowances in the ordinarycourse of our business.  We providediscounts as deemed necessary to generate sales volume and remain price competitive.Discounts include payment term discounts and discretionary discounts from listprice.

***Costof 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. We have experienced significant increases in the cost of materials,such as aluminum, steel, fiberglass-reinforced plywood, lumber,fiberglass resin, plastic beads and truck cap windows that have affected ouroperating profit margins.  However,increased sales and the prices we charge for our products have mitigated theimpact on our financial condition and results of operations. Additionally, weenter into supply contracts for some materials at a fixed price for up to oneyear and in some cases pre-buy bulk quantities of materials to manage materialscosts. Overhead costs are allocated to production based on labor costs andinclude the depreciation and amortization costs associated with the assets usedin manufacturing.

***Selling,general and administrative expenses.*** Selling, general and administrative expenses are made up of the costs ofselling our products and administrative costs such as information technologies,accounting, finance, human resources and engineering. Costs include personneland related costs, including travel, equipment and facility rent expense, andprofessional services such as audit fees. Selling, general and administrativeexpenses also include our costs at corporate headquarters to manage and providesupport to our operating subsidiaries.

***Otherincome and expense.***  Income and expenses that weincur during the year that are nonrecurring in nature and not directlycomparable to the prior year are included in other income and expense or areseparately identified such as debt issuance costs.

**Basis of financialstatements**

Various items in ourfinancial statements have been restated for all prior periods, as describedbelow.

On March 15, 2004, weacquired from John Poindexter, the sole shareholder of the Company, the stockof Morgan Olson that he had acquired effective July 15, 2003. The resultsof operations for all periods presented have been restated to reflect themerger on a basis similar to a pooling of interests so as to combine thefinancial statements of both companies for the period they were under commoncontrol.

During 2004, MIC Group,which is included in Specialty Manufacturing, reclassified certainmanufacturing overhead costs from selling, general and administrative expenseto cost of sales, consistent with our other subsidiaries.

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

**Critical accounting policiesand 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 are evaluatedcontinually, including those related to warranties offered on products,self-insurance reserves, bad debts, inventory obsolescence, investments,intangible assets and goodwill, income taxes, financing operations, workers’compensation insurance and contingent liabilities. The estimates are based onhistorical experience and on various other assumptions that are believed to bereasonable under the circumstances, the results of which form the basis formaking judgments about the carrying values of assets and liabilities that arenot readily apparent from other sources. Actual results may differ from theseestimates under different assumptions or conditions.

We believe the following arethe most critical accounting policies used in the preparation of our financialstatements.

***Revenuerecognition.***  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 the 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-insurancerisks.***  We utilize a combination of insurancecoverage and self-insurance programs for property, casualty, workers’compensation and health care insurance. We record an actuarially determined,fully developed self-insurance reserve to cover the self-insured portion ofthese risks based on known facts and historical industry trends. Changes in theassumptions used by the actuary could result in a different self-insurancereserve.

***Incometaxes. ***We estimate our income taxes in each of thejurisdictions in which we operate. This process involves estimating our currenttax exposure together with assessing temporary differences resulting from thediffering treatment of items for tax and financial reporting purposes. Thesedifferences result in deferred tax assets and liabilities, which are includedin the consolidated balance sheet. We then assess the likelihood that thedeferred tax assets will be recovered from future taxable income, and, to theextent recovery is not likely, a valuation allowance is established thusreducing the deferred tax asset. When an increase in this allowance within aperiod is recorded, we include an expense in the tax provision in theconsolidated statements of operations. Management’s judgment is required indetermining the provision for income taxes, deferred tax assets and liabilitiesand any valuation allowance recorded against the net deferred tax assets. TheCompany had alternative minimum tax credit carryforwards of approximately $0.5million and $3.0 million at December 31, 2006 and 2005, respectively, for U.S.federal income tax purposes, which may be carried forward indefinitely.   We had a capital loss carryforward deferredtax asset of approximately $3.6 million at December 31, 2006 and 2005, andrecorded a valuation allowance of an equal amount against the asset as it isuncertain as to whether we will generate future capital gains necessary toutilize the loss carryforward.  AtDecember 31, 2006 and 2005, the Company had a state tax net operating losscarryforward deferred tax asset of $4.1 million and $3.4 million, respectively,and at December 31, 2006 had recorded a valuation allowance of $2.5 millionagainst the portion of which it is uncertain as to whether it will berealized.  The Company recognized areduction in the valuation allowance of $1.0 million during 2005 which reducedthe tax provision by an equal amount for the year.  The Company had Canadian net operating losscarryforwards of approximately $5.5 million as of December 31, 2006 andrecognized deferred tax asset of $1.9 million. The Canadian net operating loss carryforwards expire at varying datesranging from 1 to 20****years.  While our deferred tax assets, net of thevaluation allowance, are considered realizable, actual amounts could be reducedif future taxable income is not achieved.

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

***Inventoryvaluation. ***Our inventories mainly consist of rawmaterials, vehicles prior to conversion, supplies and work-in-progress. Becauseour largest segments, Morgan, Morgan Olson and Truck Accessories, primarilyproduce products to their customers’ orders, we maintain a relatively smallstock of finished goods inventories. Inventories are stated at the lower ofcost (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.

***Accountsreceivable. ***We provide credit to our customers in theordinary course of business. We are not aware of any significant credit risksrelated to our customer base and do not generally require collateral or othersecurity to support customer receivables. Specialty Vehicles sells to certain customers on extended terms andretains title to the vehicle until payment is complete. The carrying amount ofour accounts receivable approximates the fair value of the receivables becauseof their short-term nature with payment typically due within 30 days afteran invoice is sent. We establish an allowance for doubtful accounts on a caseby case basis when we believe that we are unlikely to receive payment in fullof amounts owed to us. We make a judgment in these cases based on availablefacts and circumstances and we may record a reserve against a customer’saccount receivable. We re-evaluate the reserves and adjust them as we obtainmore information regarding the account. The collectibility 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-lived assets impairment. ***We perform a test of our goodwill forpotential impairment annually as of October 1 as prescribed by Statementof Financial Accounting Standards No. 142, *“Goodwilland Other Intangibles.”* The fair values of our reporting units arebased on multiples of earnings derived from information and analysis of recentacquisitions in the marketplace for companies with similar operations. Changesin the assumptions used in the fair value calculation could result in anestimated reporting unit fair value that is below the carrying value, which maygive rise to an impairment of our goodwill. In addition to the annual review, we also test for impairment of ourlong-lived assets, goodwill and indefinite- lived intangible assets shouldevents or circumstances indicate a potential reduction in the fair value ofthose assets below their carrying value. Lastly, on an annual basis, we determine that the remaining lives ofidentified amortizable intangible assets continue to be appropriate.

**Comparisonof 2006 to 2005**

***Sales.**** **Our*consolidated net sales increased $127.3million, or 19.0%, to $795.4 million for 2006 compared to$668.1 million for 2005.

·             Morgan’s net sales increased $21.2 million,or 5.9%, to $379.4 million for 2006 compared to $358.2 million for2005.  Truck body sales increased $21.1million or 6.2%.  The increase was dueprimarily to a 5.5% increase in the average unit price of a truck body and a0.7% increase in the number of units shipped. 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 85% of Morgan’s net sales this year,increased $15.5 million, or 5.0%, to $324.4 million.  Consumer Rental sales increased $5.7 millionor 6.2% on an 11% increase in unit shipments. Sales of parts and services increased slightly to $12.9 million comparedto $11.5 million last year.  Discountsdecreased slightly to $9.9 million in 2006 or 2.6% of net sales compared to$10.6 million or 3.0% of net sales in 2005.

·             Morgan Olson’s net sales increased $39.6million, or 65.1%, to $100.4 million for 2006 compared to $60.8 million for2005.  Step van body sales increased$39.7 million or 91.0% on an 82.0% increase in unit shipments.  The increase in unit shipments was dueprimarily to a 200% increase in sales to UPS from approximately 1,118 units in2005 to 3,340 units this year.  Parts andservice sales were $4.0 million in 2006 and $4.4 million in 2005.

·             Truck Accessories’ net sales increased $5.6million, or 3.6%, to $159.3 million for 2006 compared to $153.7 million for2005.   Excluding State Wide, which wasacquired in March of 2006, sales revenue

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

decreased 3.8% or $5.9 million.  Shipments of caps and tonneaus decreased by9.2% partially offset by a 5.4% increase in the average price per unit.   Pickup truck sales in the United States andCanada decreased 10.1% during 2006 compared to 2005.

·             Specialty Manufacturing’s net sales increasedby $60.2 million, or 62.9%, to $155.9 million for 2006 compared to$95.7 million for 2005.  Sales tocustomers in the energy services business increased 46.5% to $41.8 millioncompared to $28.6 million during 2005. Specialty Vehicles Group’s sales increased $49.3 million, or 218%, dueto the acquisition of Eagle Coach on January 3, 2006 and $29.1 million, or128.5%, due to the acquisition of Federal Coach on June 6, 2005.

***Backlog.***** **Consolidated backlog was$198.1 million as of December 31, 2006 compared to $143.6 million as ofDecember 31, 2005.

·             Morgan’s backlog at December 31, 2006 was$114.6 million compared to $94.7 million at December 31, 2005. The increasefrom a year earlier was due primarily to the timing of the receipt of fleetorders from its two largest customers.

·             Morgan Olson’s backlog was $25.1 million atDecember 31, 2006 compared to $9.3 million at December 31, 2005.  The increase was due primarily to an orderfrom UPS for $8.9 million included in the 2006 backlog.

·             Truck Accessories’ backlog of approximatelytwo weeks of production was $4.1 million at December 31, 2006 compared to$3.9 million as of December 31, 2005.

·             Specialty Manufacturing’s backlog at December31, 2006 increased $16.6 million to $52.3 million compared to$35.7 million at December 31, 2005. The backlog of machining services increased $14.7 million over lastyear.

***Cost of sales and grossprofit. ******Our***consolidated cost of sales increased by$106.9 million, or 18.0%, to $700.0 million for 2006 compared to$593.1 million for 2005. Consolidated gross profit increased by$20.4 million, or 27.2%, to $95.4 million (12.0% of net sales) for2006 compared to $75.0 million (11.2% of net sales) for 2005.  Material, labor and overhead costs made up53.7%, 14.9% and 19.4%, respectively, of cost of sales during 2006 and 52.9%,15.2% and 20.7%, respectively, during 2005.

·             Morgan’s gross profit increased by$2.6 million, or 6.6%, to $42.2 million (11.1% of its net sales) for2006 compared to $39.6 million (11.1% of its net sales) for 2005.

·             Morgan Olson’s gross profit increased by$7.6 million, or 339.4%, to $9.9 million (9.8% of its net sales) for2006 compared to $2.2 million (3.7% of its net sales) for 2005.  The increase in gross profit was due toimproved labor efficiencies and overhead absorption on higher productionvolumes.

·             Truck Accessories’ gross profit declined by$1.9 million, or 8.9%, to $19.6 million (12.3% of its net sales) for2006 compared to $21.6 million (14.0% of its net sales) for 2005. Grossprofit decreased $3.9 million excluding the results of State Wide which wasacquired in March 2006.  The decline ingross profit can be attributed to lower volumes, delivery inefficiencies, andongoing labor issues at our Raider plant partially offset by reduced materialcomponent costs as a result of the acquisition of State Wide.

·             Specialty Manufacturing’s gross profitincreased $12.1 million, or 104.2%, to $23.7 million (15.2% of its net sales)for 2006 compared to $11.6 million (12.1% of its net sales) for 2005.  The acquisition of Eagle Coach on January 3,2006 added $3.7 million to gross profit for the Specialty Vehicle Group which contributed$10.1 million of gross profit in 2006 compared to $1.9 million in 2005.  The remaining operations of SpecialtyManufacturing increased gross profit by $3.9 million or 40.2%.

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

***Selling, general and administrative expenses. ***Our consolidated selling, general andadministrative expenses increased $13.0 million, or 26.0%, to$63.0 million (7.9% of net sales) for 2006 compared to $50.0 million (7.5%of net sales) for 2005.

·             Morgan’sselling, general and administrative expenses increased $1.8 million, or9.7%, to $20.7 million (5.5% of its net sales) for 2006 compared to$18.9 million (5.3% of its net sales) for 2005.  The majority of the increase was due to $1.4million of expenses related to the new Enterprise Resource Planning (ERP)system being implemented.

·             MorganOlson’s selling, general and administrative expenses increased by$1.8 million, or 42.2%, to $6.0 million (5.9% of its net sales) for2006 compared to $4.2 million (6.9% of its net sales) for 2005.  An increase in general and administrativeexpenses of $1.8 million was primarily due to an increase in sales personnelfrom 21 to 33.  Selling, general andadministrative expenses as a percentage of sales decreased by 1.0% from 6.9% in2005 to 5.9% for 2006.

·             TruckAccessories’ selling, general and administrative expenses increased by$0.8 million, or 6.3%, to $13.4 million (8.4% of its net sales) for 2006from $12.6 million (8.2% of its net sales) for 2005. Costs increased primarilydue to the incremental expenses of $1.0 million from the acquisition of StateWide.

·             SpecialtyManufacturing’s selling, general and administrative expenses increased by$4.9 million, or 52.5%, to $14.1 million (9.0% of its net sales) for2006 from $9.2 million (9.6% of its net sales) for 2005. The acquisitionof Eagle Coach in 2006 added $2.2 million and the acquisition of Federal Coachin June 2005 added $2.1 million of expenses this year.

·             Corporateselling, general and administrative expenses increased by $3.8 million, or74.2%, to $8.9 million for 2006 from $5.1 million for 2005, primarily dueto approximately $0.5 million in executive severance pay and  $3.2 million of consulting costs related toour productivity initiatives.

***Closed and excess facility costs.***During the fourth quarter of 2006, TruckAccessories announced a plan to close its manufacturing facility in Canada andmove production of its Raider product line to other manufacturing locations. Asa result of this decision, Truck Accessories recorded a closed and excessfacility charge of $2.7 million during this period.  The $2.7 million expense includesapproximately $1.1 million of non-cash charges related to the write-down ofproperty, plant and equipment.  Thecharge also included estimated personnel costs. Manufacturing operations ceasedat this location effective February 2007.

***Operating income. ***Due to the effect of the factors summarizedabove, consolidated operating income increased by $5.4 million, or 21.8%,to $29.9 million (3.8% of net sales) for 2006 from $24.5 million(3.7% of net sales) for 2005.

·             Morgan’soperating income increased by $0.9 million, or 3.9%, to $21.6 million(5.7% of its net sales) for 2006 compared to $20.7 million (5.8% of itsnet sales) for 2005.

·             MorganOlson’s operating income increased by $5.8 million to $3.9 million for 2006(3.9% of its net sales) from a $1.9 million operating loss (3.2% of itsnet sales) for 2005.

·             TruckAccessories’ operating income decreased by $4.8 million, or 57.8%, to$3.5 million (2.2% of its net sales) for 2006 compared to $8.3 million (5.4%of its net sales) for 2005.  State Wide’soperating income was $1.1 million for the 2006 period.

·             SpecialtyManufacturing’s operating income increased by $7.3 million, or 295.1%, to$9.8 million (6.2% of its net sales) for 2006 compared to $2.5 million(2.6% of its net sales) for 2005.

·             Corporateexpenses increased $3.8 million to $8.9 million for 2006 compared to $5.1million for 2005.

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

***Interest expense(income).  ******I***nterest expense increased $0.4 million, or2.6%, to $18.9 million (2.4% of net sales) for 2006 compared to$18.5 million (2.8% of net sales) for 2005.  The increase was due to $0.2 million ofadditional interest in 2006 on the 8.75% Note offering, completed January 21,2005, and interest on additional capital leases of $0.2 million.  We earned $1.8 million of interest income onour cash, cash equivalents and short-term investments during 2006.

***Income taxes.***The effective income tax rate was 30.0% and33.6% of income before income taxes for 2006 and 2005, respectively.  The income tax provisions for 2006 and 2005differ from amounts computed based on the federal statutory rate as a result ofstate and foreign taxes, a $0.7 million increase in the state net operatingloss carryforwards and a $1.0 million reduction in the valuation allowance thatreduced the income tax provision in 2006 and 2005, respectively, and othervarious items.

**Comparisonof 2005 to 2004**

***Sales.**** **Our*consolidated net sales increased $83.2million, or 14.2%, to $668.1 million for 2005 compared to$584.9 million for 2004.

·             Morgan’s net sales increased $42.8 million,or 13.6%, to $358.2 million for 2005 compared to $315.5 million for2004.  Excluding Commercial Babcock,which was acquired in December 2004, net sales increased $22.6 million or7.2%.  Truck body sales increased $24.7million or 8.4%.  The increase was dueprimarily to a 16.0% increase in the average unit price of a truck body partlyoffset by a 6.6% decline in the number of units shipped.  Commercial sales, which represented 86% ofMorgan’s net sales in 2005, increased $36.4 million, or 14.4%, to $289.1million.  Shipments of Commercial unitsincreased approximately 2% during 2005; however, compared to a 44% increase in2004, this increase could indicate an unfavorable change in the replacementcycle of our major fleet company customers. Consumer Rental sales decreased $11.7 million or 27.8% on a 35% declinein unit shipments.  Commercial Babcock’snet sales were $20.9 million during 2005. Sales of parts and services decreased $4.9 million or 31.3% dueprimarily to the transfer of the parts business to Morgan Olson.  Discounts decreased slightly to $10.6 millionor 2.9% of net sales in 2005 compared to $10.8 million or 3.3% of net sales in2004.

·             Morgan Olson’s net sales decreased $10.2million, or 14.4% to $60.8 million for 2005. Step van body sales decreased 25.1% or $14.7 million, on a 33.6% declinein unit shipments.  The reduction in unitshipments was due primarily to a 42% reduction in sales to UPS from 1,200 unitsin 2005 compared to approximately 1,800 units in 2004 with a 56% decline in thefourth quarter of 2005.  This trend didnot continue into 2006 as orders from UPS increased to 3,200 units for deliveryin 2006.  Parts and service salesincreased $4.5 million to $17.1 million compared to $12.6 million in 2004; theincrease was due to the transfer of the Morgan parts business to Morgan Olson.

·             Truck Accessories’ net sales increased $18.3million, or 13.5%, to $153.7 million for 2005 compared to $135.4 million for2004.   The increase was due primarily tothe acquisition of Pace Edwards in November of 2004, which contributed $16.1million to net sales in 2005 compared to $2.7 million in 2004.  Sales of caps and tonneaus, excluding PaceEdwards, increased by 3.7%, or $4.9 million, on a 3.3% decrease in unitshipments.  Pickup truck sales in theUnited States and Canada decreased 1% during 2005 compared to a 3% increase in2004 with sales increasing 10% during the first, second and third quarters of2005 and declining 9% in the fourth quarter.

·             Specialty Manufacturing’s net sales(excluding Federal Coach) increased by $8.7 million, or 13.5%, to$73.0 million for 2005 compared to $64.3 million for 2004.  Sales to customers in the energy servicesbusiness increased 28.9% to $28.6 million compared to $22.2 millionduring 2004 due to an increase in demand in the oil and gas industry.  Federal Coach’s net sales were $22.6 millionfor the six-month period subsequent to its acquisition in 2005.

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

***Backlog****.* Consolidated backlog was $143.6 million as of December 31, 2005compared to $127.2 million as of December 31, 2004.

·            Morgan’s backlog at December 31, 2005 was$94.7 million compared to $101.9 million at December 31, 2004. Thedecrease from a year earlier was due primarily to the timing of the receipt offleet orders from its two largest customers.

·            Morgan Olson’s backlog was $9.3 million atDecember 31, 2005 compared to $8.1 million at December 31, 2004.

·            Truck Accessories’ backlog of approximatelytwo weeks of production was $3.9 million at December 31, 2005 compared to$4.6 million as of December 31, 2004.

·            Specialty Manufacturing’s backlog at December31, 2005 increased $23.1 million to $35.7 million compared to $12.6 millionat December 31, 2004.  Excluding FederalCoach’s backlog of $6.6 million at December 31, 2005, the backlog of machiningservices increased $16.5 million over the previous year.

***Cost of sales and grossprofit. ******Our***consolidated cost of sales increased by $79.6million, or 15.5%, to $593.1 million for 2005 compared to $513.5 millionfor 2004. Consolidated gross profit increased by $3.5 million, or 5.0%, to$75.0 million (11.2% of net sales) for 2005 compared to $71.5 million(12.2% of net sales) for 2004.

·             Morgan’s gross profit increased by$4.5 million, or 12.9%, to $39.6 million (11.1% of its net sales) for2005 compared to $35.1 million (11.1% of its net sales) for 2004.  Excluding Commercial Babcock, Morgan’s grossprofit increased $1.6 million or 4.7% on higher sales in 2005.

·             Morgan Olson’s gross profit declined by$4.8 million, or 68.2%, to $2.2 million (3.7% of its net sales) for2005 compared to $7.1 million (9.9% of its net sales) for 2004.  The decline in gross profit and gross profitmargins was due to lower labor productivity and higher overhead expensesrelative to sales.

·             Truck Accessories’ gross profit increased by$1.4 million, or 7.0%, to $21.6 million (14.0% of its net sales) for2005 compared to $20.2 million (14.9% of its net sales) for 2004. Grossprofit increased $4.1 million as a result of the incremental gross profit ofPace Edwards, which was part of Truck Accessories for the twelve months of 2005and only for two months of 2004, partially offset by a $2.7 million decrease ingross profits at the remaining Truck Accessories’ operations due primarily toincreased raw material costs and delivery costs.  Delivery costs increased approximately $2.8million in 2005 mainly due to increased fuel prices.

·             Specialty Manufacturing’s gross profitincreased $2.4 million, or 26.4%, to $11.6 million (12.1% of its net sales) for2005 compared to $9.2 million (14.2% of its net sales) for 2004.  The acquisition of Federal Coach in June of2005 added $1.9 million to gross profits for 2005 and the remaining increasewas due to higher sales of machining services.

***Selling, general and administrative expenses. ***Our consolidated selling, general andadministrative expenses increased $9.4 million, or 23.2%, to$50.0 million (7.5% of net sales) for 2005 compared to $40.6 million (7.0%of net sales) for 2004.

·             Morgan’sselling, general and administrative expenses increased $3.4 million, or22.2%, to $18.9 million (5.3% of its net sales) for 2005 compared to$15.4 million (4.9% of its net sales) for 2004.  $2.4 million of the increase was due to theaddition of Commercial Babcock late in 2004 and to increased commissions andpromotional expenses related to efforts to increase sales.

·             MorganOlson’s selling, general and administrative expenses decreased by $0.7 million,or 14.3%, to $4.2 million (6.9% of its net sales) for 2005 compared to$4.9 million (6.9% of its net sales) for 2004.  A

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

reductionin general and administrative expenses of $1.0 million was partly offset by a$0.3 million or 16.2% increase in selling expense primarily due to an increasein sales personnel from 17 to 21.

·             TruckAccessories’ selling, general and administrative expenses increased by$2.9 million, or 30.2%, to $12.6 million (8.2% of its net sales) for 2005from $9.7 million (7.1% of its net sales) for 2004. Costs increased primarilydue to the incremental expenses of $2.6 million from the acquisition of PaceEdwards.

·             SpecialtyManufacturing’s selling, general and administrative expenses increased by$2.4 million, or 36.3%, to $9.2 million (9.6% of its net sales) for2005 from $6.8 million (10.5% of its net sales) for 2004. The acquisitionof Federal Coach added $1.7 million of expenses in 2005.

·             Corporate selling, general and administrativeexpenses increased by $1.4 million, or 38.2%, to $5.1 million (0.8%of consolidated net sales) for 2005 from $3.7 million (0.6% ofconsolidated net sales) for 2004, primarily due to additional personnel andrelated costs of approximately $0.8 million.

***Loss on extinguishment of debt.*** During 2004, we wrote off deferred loan costs of $2.4 million as aresult of the refinancing of our then outstanding debt.

***Closed and excess facility costs. ***In the third quarter of 2005, we decided to consolidate the TruckAccessories plants in Canada which resulted in a write-down in the carryingvalue of our Drinkwater facility.  Thenon-cash write-down of $377,000 was recorded as closed and excess facilitycosts for 2005.

***Operating income. ***Due to the effect of the factors summarizedabove, consolidated operating income decreased by $4.4 million, or 15.2%,to $24.5 million (3.7% of net sales) for 2005 from $28.9 million(4.9% of net sales) for 2004.

·             Morgan’soperating income increased by $1.2 million, or 5.9%, to $20.8 million(5.8% of its net sales) for 2005 compared to $19.6 million (6.2% of itsnet sales) for 2004.  Commercial Babcock’soperating income was $0.7 million (3.4% of its net sales) for 2005.

·             MorganOlson’s operating income decreased by $3.8 million to a $1.9 millionoperating loss for 2005 compared to operating income of $1.9 million for 2004.

·             TruckAccessories’ operating income decreased by $2.2 million, or 20.9%, to$8.3 million (5.4% of its net sales) for 2005 compared to $10.5 million(7.8% of its net sales) for 2004.  PaceEdwards’ operating income was $1.4 million for the 2005 period.

·             SpecialtyManufacturing’s operating income decreased by $0.3 million, or 10.8%, to$2.5 million (2.6% of its net sales) for 2005 compared to$2.8 million (4.3% of its net sales) for 2004.

·             Corporateexpenses decreased $0.8 million to $5.1 million for 2005 compared to $5.9million for 2004.  The loss onextinguishment of debt of $2.4 million in 2004 was included in corporateexpenses for that period.

***Interest expense(income).  ******I***nterest expense increased $4.0 million, or27.5%, to $18.5 million (2.8% of net sales) for 2005 compared to$14.5 million (2.5% of net sales) for 2004.  The increase was due to a $56.1 millionincrease in average debt outstanding during 2005, primarily as a result of theadditional 8.75% Note offering totaling $45 million in January of 2005.  We earned $1.6 million of interest on ourcash and short-term investments during 2005.

***Incometaxes.***The 2005 income tax rate approximated the statutoryrate.  A reduction in the valuationallowance of $1.0 million reduced the rate but was offset by recurring stateincome tax provisions and various other items. In 2004, the income tax provision was approximately 28% of pre-taxincome.  The rate was reduced by a $0.5million reduction in the valuation allowance and various other items.

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

**Liquidityand capital resources**

Historically, we have funded our operations with cashavailable from the proceeds of our 8.75% Notes, cash generated from operationsand borrowings under our revolving credit facility, as needed.  Working capital at December 31, 2006 was$112.9 million compared to $114.9 million at December 31, 2005.  Our cash, cash equivalents and short-term investmentsdecreased by $26.8 million this year compared to last year due primarily to cashpaid for acquisitions during 2006 of $13.9 million and a reduction in cashprovided by operating activities caused by increases in accounts receivable andinventories.  Excluding cash andshort-term investments, working capital increased $26.9 million primarily as aresult of an increase in accounts receivable of $17.1 million and inventoriesof $18.9 million.  Average accountsreceivable days sales outstanding at December 31, 2006 were approximately 31compared to 27 at December 31, 2005, and inventory turns during the year wereapproximately 9.2 compared to 10.4 during 2005. Inventory turns declined somewhat due to the inclusion in inventory ofvehicle chassis at Morgan and Specialty Vehicle Group (vehicle chassis remainin inventory for extended periods of time and amounted to $10.9 million and$6.9 million at December 31, 2006 and 2005, respectively).  Excluding vehicle chassis, inventory turnswere 10.7 for 2006 and 11.8 for 2005.

***Operating cash flows. ***Operating activitiesduring 2006 generated cash of $3.0 million compared to $14.6 millionduring 2005 and $11.8 million during 2004. The decrease in net cash generatedby operating activities during 2006 was due primarily to an increase in theinvestment in working capital, primarily accounts receivable and inventories,of $18.3 million offset by higher net income and increased depreciation.

The increase in cash from operating activities during2005 compared to 2004 was due primarily to a smaller investment in workingcapital in 2005.

***Investing cash flows. ******Net cashused in investing activities decreased $25.0 million in 2006 compared to2005.   During 2006 we realized proceedsof $15.3 million from the sale of short-term investments compared to a netincrease in short-term investment of $10.3 million in 2005.  We acquired two companies in 2006 for acombined purchase price of $13.9 million, compared to a similar amount paid in2005 for one acquisition.  Capitalexpenditures decreased $1.6 million to $13.9 million in 2006 and were comprisedprimarily of information technology costs related to the new ERP system of $3.6million, machinery and equipment of $5.4 million and molds of $2.0 million atTruck Accessories.  We acquiredapproximately $4.0 million of equipment under capital leases that were notincluded in capital expenditures.***

We acquired Federal Coach during the second quarter of2005 using cash proceeds of approximately $12.3 million from our 8.75% Noteofferings.  Capital expenditures for 2005were $15.5 million and included $6.1 million of new machine tools and pressesfor Specialty Manufacturing, $2.4 million of new product molds at TruckAccessories and a $1.5 million investment in information technologyassets.   We acquired approximately $1.0million of equipment under capital leases that were not included in capitalexpenditures.

As of December 31, 2006, we had no significant opencommitments for capital expenditures.

Net cash used in investing activities increased to $38.0million during 2005 compared to $36.2 million during 2004.

We acquired two new businesses during the fourth quarterof 2004 using cash from the proceeds of our 8.75% Note offering ofapproximately $17.9 million.  Capitalexpenditures for 2004 were $9.4 million, which included Morgan’s purchase ofits manufacturing facility in Georgia for $2.2 million and new productionequipment of $2.0 million. Specialty Manufacturing acquired productionequipment of $1.2 million and Truck Accessories invested in $2.2 million of newproduction molds.  We acquiredapproximately $2.2 million of production equipment for Specialty Manufacturingunder capital leases that are not included in capital expenditures.

During the fourth quarter of 2004, we substituted a cashcollateral deposit for standby letters of credit that had been used to secureour liabilities under our casualty insurance programs.  We deposited $5.5 million of cash into anaccount restricted by the terms of a trust agreement in favor of our insurancecarrier.  The insurance carrier has the 

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

right to demand payment from the trust in the event thatwe are unable to pay our liabilities for previously incurred insurance claims.

Cash generated from investing activities during 2004 bydiscontinued operations was made up primarily of the proceeds from the sale ofthe distribution business of Truck Accessories for approximately $1.3 million.

***Financing cash flows. ******Net cashused in financing activities totaled $1.6 million in 2006, a decrease of $46.6million compared to the prior year. ***We generated $45.0 million of cash fromfinancing activities for 2005 as the result of obtaining $45.0 million inaggregate principal amount from our sale of 8.75%Notes due 2014 (see below) at a 5% premium, the net proceeds of whichwere approximately $46.4 million of increased cash and short-terminvestments.  During 2004, we generated$43.8 million of cash from financing activities.  We issued $155.0 million of 8.75% Notes due 2014 and used the netproceeds to repay term and revolving debt and debt issuance costs of$112.9 million and pay accrued interest on the retired debt of$3.9 million.

***Long-term debt. ******AtDecember 31, 2006, our long-term debt was $207.6 million and was comprised of$201.8 million of our***8.75% Notes***, whichincluded an unamortized premium on sale of $1.8 million, and $5.8 million ofcapital lease obligations. ***On March 15, 2004, we issued$125.0 million in aggregate principal amount of 8.75% Notes, the proceeds of which we used to repay existingdebt, including (i) $79.8 million of our 12.50% senior secured notesdue 2007, which amount included accrued interest of $3.9 million,(ii) borrowings under our then revolving loan agreement of approximately$22.0 million and (iii) Morgan Olson debt of approximately$14.3 million. Concurrently with issuing $125.0 million in aggregateprincipal amount of 8.75% Notes, weentered into a new revolving credit facility that provides for availableborrowings of up to $30.0 million in revolving loans.

EffectiveMay 15, 2004, we completed an additional sale of $30.0 million inaggregate principal amount of 8.75% Noteswith net proceeds of approximately $30.0 million going to cash. Otherfinancing activities during 2004 included $4.9 million of costs associatedwith our 8.75% Notes and thenegotiation of our new revolving credit facility.

***On January 27, 2005, we completed anoffer to sell $45.0 million of our***8.75% Notes***at apremium of 5% over par on the same terms as the original issue.  Net proceeds of approximately $46.4 millionincreased cash and short-term investments.***

AtDecember 31, 2006, the Consolidated Coverage Ratio, as defined in the indenturerelating to our 8.75% Notes, was 2.4 to 1.0. As a result, we are able to incuradditional borrowings including borrowings for capital expenditures. Ourindenture and revolving loan agreement restrict our ability to incur debt, paydividends and undertake certain corporate activities. We are in compliance withthe terms of the indenture and revolving loan agreement.

The revolving credit facility provides for availableborrowings of up to $30.0 million in revolving loans. We have the option,subject to certain conditions, to increase the amount we are permitted toborrow under the facility to $50.0 million. As of December 31, 2006, webelieve we have satisfied those conditions. Available borrowings are subject toa borrowing base of eligible accounts receivable, inventory, machinery andequipment, and real estate. Borrowings under our revolving credit facility aresecured by substantially all of our assets and the assets of our existingsubsidiaries. Our revolving credit facility also includes a sub-facility for upto $15.0 million of letters of credit. As of December 31, 2006, we had$2.3 million of letters of credit outstanding and our borrowing base wouldhave supported debt borrowings of the entire $30.0 million under ourrevolving credit facility.

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;

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

·             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 to meetour working capital and capital expenditure requirements consistent with pasttrends and practices for at least the next twelve months. Additionally, webelieve that our cash and borrowing availability under the revolving creditfacility will satisfy our cash requirements for the coming year, given ouranticipated capital expenditures, working capital requirements and knownobligations. Our ability to make payments on our debt, including the 8.75%Notes, and to fund planned capital expenditures will depend on our ability to generatecash in the future. This is subject to general economic conditions, otherfactors influencing the industries in which we operate and circumstances thatare beyond our control.  We cannot becertain that we will generate sufficient cash flows, and if we do not, we mayhave to engage in other activities such as the sale of assets to meet our cashrequirements.

**Off balance sheet arrangements**

We have no off balance sheet arrangements.

**Commitmentsand capital expenditures**

We have entered into an agreement with a major paintmanufacturer whereby Truck Accessories, Morgan, Morgan Olson and SpecialtyVehicles Group are committed to buying principally all of their automotivepaint requirements from this manufacturer for five years.  We receive favorable pricing in return forthe commitment and estimate that we will purchase approximately $8.0 million ofpaint products during 2007 under this agreement.  We sometimes commit to the purchase ofaluminum based on expected levels of future production and at December 31, 2006Morgan had a commitment of $2.2 million. We did not have any material commitments to acquire new capitalequipment as of December 31, 2006.

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

Certaincash contractualobligations of ours as of December 31, 2006 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                                          |       | $         | 200.0      |                            | $          | —         |       | $              | —     |                    | $          | — |   | $ | 200.0 |   |
| Operating leases                                     |       | 46.6      |       | 7.7                             |       | 12.1           |       | 7.3            |       | 19.5                    |       |
| Capital leases                                       |       | 5.8       |       | 1.7                             |       | 3.7            |       | 0.4            |       | —                  |       |
| Total                                                |       | $         | 252.4      |                            | $          | 9.4            |       | $              | 20.4       |                    | $          | 7.2 |   | $ | 215.4 |   |

 

**Othermatters**

We are significantly leveraged and will continue to besignificantly leveraged. We had $19.0 million of stockholder’s equity atDecember 31, 2006 compared to $9.7 million at December 31, 2005. Weoperate in cyclical businesses and the markets for our products are highlycompetitive. In addition, we have two customers that accounted for 22% of 2006consolidated net sales and our top ten customers accounted for 40% of our 2006 consolidatednet sales.

We continually evaluate, depending on market conditions,the most efficient use of our capital and contemplate various strategicoptions, which may include, without limitation, restructuring our business,indebtedness or capital structure. Accordingly, we or our subsidiaries may fromtime to time consider, among other things, purchasing, refinancing or otherwiseretiring certain outstanding indebtedness (whether in the open market or byother means), public or private issuances of debt or equity securities, jointventure transactions, acquisitions or dispositions, new borrowings, tenderoffers, exchange offers or any combination thereof, although there can be noassurances that such financing sources will be available on commercially reasonableterms. Additionally, there can be no assurances that these strategic options,if pursued, will be consummated or, if consummated, what effect they will haveon us.

Historically, inflation has not materially affected ourbusiness; however, a rapid acceleration of material price inflation reduced ouroperating profit margins during 2005 and 2004. We believe that we have increased our selling prices to levels necessaryto offset the raw material cost inflation that has been experienced during both2005 and 2004.  We implemented furtherprice increases at Morgan, Truck Accessories and Specialty Manufacturing during2006 and 2007 but cannot predict the impact, if any, of future raw materialprice increases on our profitability. Operating expenses, such as salaries and employee benefits, are subjectto normal inflationary pressures.

During 2006, we paid $0.3 million in fees to SouthwesternHoldings, Inc., which is wholly owned by Mr. Poindexter, for servicesprovided by Mr. Poindexter during 2006. Beginning in July 2006,Mr. Poindexter began receiving a salary from the Company.

**Recently issued accountingstandards**

**InSeptember 2006, the Securities and Exchange Commission (“SEC”) issued StaffAccounting Bulletin (SAB) No. 108, *“Considering the Effectsof Prior Year Misstatements When Quantifying Misstatements in Current YearFinancial Statements.”*  SABNo. 108 was issued in order to eliminate the diversity of practice surroundinghow public companies quantify financial statement misstatements.  In SAB No. 108, the SEC staff established anapproach that requires quantification of financial statement misstatementsbased on the effects of the misstatements on each of the company’s financialstatements and the related financial statement disclosures.  This model is commonly referred to as a “dualapproach” because it requires quantification of errors under both the ironcurtain and the roll-over methods.  SABNo. 108 permits existing public companies to initially apply its provisioneither by (i) restating prior financial statements as if the “dual approach”had always been used or (ii) recording the value of assets and liabilities asof January 1, 2006 with an offsetting adjustment recorded to the openingbalance of retained earnings.  SAB No.108 is effective for fiscal years beginning after November 15, 2006.**

**TheCompany has elected to apply the provisions of SAB No. 108 using the cumulativeeffect transition method in connection with the preparation of the financialstatements for the year ended December 31, 2006.  As a result, the Company recorded a decreasein accrued liabilities and an increase in retained earnings in the amount of$0.4**

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

**million,net of tax of $0.2 million, as of January 1, 2006.  This adjustment resulted from the Companyoverstating liabilities for certain compensation agreements, which was deemedimmaterial to the financial statements in each respective period.  This misstatement, decreasing net income inthe year reported, originated as follows: 2005 — $0.1 million; 2004 — $0.1million; and prior to 2004 — $0.2 million.**

**InSeptember 2006, the Financial Accounting Standards Board (“FASB”) issued SFASNo. 158, *“Employers’ Accounting for Defined Benefit Pensionand Other Postretirement Plans.”*, an amendment to FASB StatementsNo. 87, 88, 106 and 132(R).  Thisstandard requires an employer to recognize the over-funded or under-fundedstatus of a defined benefit pension and other postretirement benefit plan as anasset or liability in its statement of financial position and to recognizechanges in that funded status in the year in which the changes occur throughcomprehensive income.  The standard alsorequires disclosure in the notes to the financial statements of additionalinformation about certain effects on net periodic benefit costs of the nextfiscal year that arise from delayed recognition of gains or losses, priorservice costs and transition asset or obligation.  The Company will adopt this standard duringfiscal year 2007 as required, which is not expected to have any significantimpact on the Company’s financial position, results of operations or cash flow.**

**InSeptember 2006, the FASB issued SFAS No. 157, *“Fair ValueMeasurements.”*, which provides a definition of fair value,establishes a framework for measuring fair value and requires expandeddisclosures about fair value measurements. The Company will adopt this standard during fiscal year 2007 asrequired, which is not expected to have any significant impact on the Company’sfinancial position, results of operations or cash flows.**

**In July2006, the FASB released Interpretation No. 48, *“Accountingfor Uncertainty in Income Taxes.”* This Interpretation revises the recognition tests for tax positionstaken in tax returns such that a tax benefit is recorded only when it is morelikely than not that the tax provision will be allowed upon examination bytaxing authorities.  The amount of such atax benefit to be recorded is the largest amount that is more likely than notto be allowed.  Any reduction in deferredtax assets or increase in tax liabilities upon adoption will correspondinglyreduce retained earnings.  The Companyhas not yet determined the effect of adopting this interpretation, which iseffective for periods beginning January 1, 2007.**

**In May2005, the FASB issued SFAS No. 154, *“Accounting Changes andError Corrections.”* SFAS 154changes the requirements for the accounting for and reporting of voluntarychange in accounting principle, and for changes required by an accountingpronouncement that does not have a specific transition provision.  When recognizing a change in accountingprinciple, retrospective application of the principle to the prior period’sfinancial statements is generally specified. The effective date for the Company is for fiscal year 2006. The adoptionof the standard did not   have asignificant impact on the Company’s financial position, results of operationsor cash flows.**

**InDecember 2004, the FASB issued SFAS No. 153, *“Exchange ofNon-monetary Assets — an amendment of APB Opinion No. 29.”* Thestandard eliminates certain exceptions that were contained in APB Opinion No.29 to the principle that exchanges of non-monetary assets should be measuredbased on the fair value of assets exchanged. The effective date for the Company is for fiscal year 2006.  The adoption of this standard did not have asignificant impact on the Company’s financial position, results of operationsor cash flows.**

**InNovember 2004, the FASB issued SFAS No. 151, *“InventoryCosts — an amendment of APB No. 43, Chapter 4.”*  The standard states that idle facilityexpense, freight, handling costs and wasted material be accounted for ascurrent-period expense regardless of whether they meet the criterion of “abnormal,”as previously defined.  The effectivedate for the Company is fiscal year 2006. The adoption of this standard did not have a significant impact on theCompany’s financial position, results of operations or cash flows.**

**Item 7a.**                    Quantitativeand Qualitative Disclosure about Market Risk

We are subject to certainmarket risks, including interest rate risk and foreign currency risk. Theadverse effects of potential changes in these market risks are discussedbelow.  See the notes to our consolidatedfinancial statements elsewhere in this 10-K for a description of our accountingpolicies and other information related to these financial instruments.

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

***Variable-rate debt. ***We currently have noborrowings outstanding under our revolving credit facility. The interest rateson the revolving credit facility are based upon a spread above either the primeinterest rate or the London Interbank Offered Rate (LIBOR), which rate used isdetermined at our option.

***Fixed-rate debt. ***As of December 31, 2006,the Company had $200.0 million of 8.75% Notes outstanding, with anestimated fair value of approximately $171.0****millionand $186.0 million based upon the traded value at December 31, 2006 and March23, 2007, respectively. Market risk, estimated as the potential increase infair value resulting from a hypothetical 1.0% decrease in interest rates, wasapproximately $9.1 million as of December 31, 2006

***Foreign currency. ***Morgan and TruckAccessories each had manufacturing plants in Canada during 2006 which generatedsales of approximately $44.0 million for the year. The functional currencyof our Canadian operations is the Canadian dollar.  Specialty Manufacturing has a plant inMexico, however the functional currency is the U.S. dollar.  We do not currently employ risk managementtechniques to manage potential exposure to foreign currency fluctuations.

A significant amount of the production from the TruckAccessories plant was exported to customers in the United States. The weakeningof the United States dollar in relation to the Canadian dollar decreased TruckAccessories’ gross margins in Canada and contributed to the decision in late2006 to close the plant and move production to the United States.

 

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**Item 8.**                          FinancialStatements and Supplementary Data
| **J.B. Poindexter & Co., Inc.**                                                                                                                 | ** ** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|
| ** **                                                                                                                                          | ** ** | ** ** |
| Report of  Independent Registered Public Accounting Firm as of December 31, 2006 and  2005 and for the years ended December 31, 2006, 2005 and 2004 |       | 34         |
|                                                                                                                                                |       |       |
| Financial Statements:                                                                                                                               |       |       |
|                                                                                                                                                |       |       |
| Consolidated  Balance Sheets as of December 31, 2006 and 2005                                                                                       |       | 35         |
|                                                                                                                                                |       |       |
| Consolidated  Statements of Income for the years ended December 31, 2006, 2005 and 2004                                                             |       | 36         |
|                                                                                                                                                |       |       |
| Consolidated  Statements of Stockholder’s Equity (Capital Deficiency) for the years ended  December 31, 2006, 2005 and 2004                    |       | 37         |
|                                                                                                                                                |       |       |
| Consolidated  Statements of Cash Flows for the years ended December 31, 2006, 2005 and 2004                                                         |       | 38         |
|                                                                                                                                                |       |       |
| Notes to  Consolidated Financial Statements                                                                                                         |       | 39         |

 

33

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**Report of Independent Registered Public AccountingFirm**

Board of Directors andStockholder ofJ.B. Poindexter & Co., Inc.

We have audited theaccompanying consolidated balance sheets of J.B. Poindexter &Co., Inc. and subsidiaries (Company) as of December 31, 2006 and 2005and the related consolidated statements of income, stockholder’s equity(capital deficiency), and cash flows for each of the three years in the periodended December 31, 2006.  These financialstatements are the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financial statements based onour audits.

We conducted our audits inaccordance with the standards of the Public Company Accounting Oversight Board(United States). Those standards require that we plan and perform the audit toobtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. An auditalso includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financialstatement presentation. We believe that our audits provide a reasonable basisfor our opinion.

In our opinion, theconsolidated financial statements referred to above present fairly, in allmaterial respects, the financial position of J.B. Poindexter &Co., Inc. and subsidiaries as of December 31, 2006 and 2005, and theresults of its operations and its cash flows for each of the three years in theperiod ended December 31, 2006 in conformity with U.S. generally acceptedaccounting principles.

As disclosed in Note 1 tothe consolidated financial statements, the Company has adopted Staff AccountingBulletin No. 108, “Considering the Effects of Prior Year Misstatements whenQuantifying Misstatements in Current Year Financial Statements” and accordinglyadjusted assets and liabilities at the beginning of 2006 with an offsettingadjustment to the opening balance of accumulated deficit.
| /s/ CROWE CHIZEK AND COMPANY  LLC |   |
|-----------------------------------|--------|
|                              |   |
| South Bend,  Indiana              |   |
| March 23, 2007                    |   |

 

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**J.B. POINDEXTER& CO., INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Dollars in Thousands)**
| ** **                                                                     | ** ** | **December 31,** | ** ** |
|--------------------------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                                     | ** ** | **2006**              | ** ** | **2005** | ** ** |
| **Assets**                                                                     |       |                  |       |   |   |
| Current assets                                                                 |       |                  |       |   |   |
| Cash and cash  equivalents                                                     |       | $                     | 29,304     |   | $ | 40,855 |   |
| Short-term  investments                                                        |       | —                |       | 15,266 |   |
| Accounts receivable,  net                                                      |       | 67,227                |       | 50,156 |   |
| Inventories, net                                                               |       | 76,080                |       | 57,207 |   |
| Deferred income  taxes                                                         |       | 1,771                 |       | 1,399 |   |
| Income tax  receivable                                                         |       | —                |       | 1,759 |   |
| Prepaid expenses  and other                                                    |       | 1,735                 |       | 2,219 |   |
| Total current  assets                                                          |       | 176,117               |       | 168,861 |   |
| Property, plant and  equipment, net                                            |       | 60,615                |       | 54,333 |   |
| Goodwill                                                                       |       | 29,814                |       | 24,759 |   |
| Intangible assets, net                                                         |       | 11,414                |       | 9,330 |   |
| Deferred income taxes                                                          |       | 1,135                 |       | 1,073 |   |
| Other assets                                                                   |       | 14,414                |       | 14,820 |   |
| Total assets                                                                   |       | $                     | 293,509    |   | $ | 273,176 |   |
|                                                                           |       |                  |       |   |   |
| **Liabilities and stockholder’s  equity**                                 |       |                  |       |   |   |
| Current liabilities                                                            |       |                  |       |   |   |
| Current portion  of long-term debt                                             |       | $                     | 1,934      |   | $ | 1,017 |   |
| Accounts payable                                                               |       | 32,790                |       | 29,288 |   |
| Accrued  compensation and benefits                                             |       | 11,142                |       | 7,976 |   |
| Accrued income  taxes                                                          |       | 474                   |       | — |   |
| Other accrued  liabilities                                                     |       | 16,835                |       | 15,681 |   |
| Total current  liabilities                                                     |       | 63,175                |       | 53,962 |   |
| Noncurrent liabilities                                                         |       |                  |       |   |   |
| Long-term  debt, less current portion                                          |       | 205,679               |       | 204,365 |   |
| Employee benefit  obligations and other                                        |       | 5,646                 |       | 5,198 |   |
| Total noncurrent  liabilities                                                  |       | 211,325               |       | 209,563 |   |
| 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)                                 |       | 76                    |       | (10 | ) |
| Accumulated  deficit                                                           |       | (553                  | )          | (9,825 | ) |
| Total  stockholder’s equity                                               |       | 19,009                |       | 9,651 |   |
| Total liabilities and  stockholder’s equity                               |       | $                     | 293,509    |   | $ | 273,176 |   |

 

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

35

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**J.B. POINDEXTER& CO., INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME(Dollars in Thousands)**
| ** **                                                                         | ** ** | **Years ended December 31,** | ** ** |
|------------------------------------------------------------------------------------|------------|---------------------------------------------|------------|
| ** **                                                                         | ** ** | **2006**                                    | ** ** | **2005** | ** ** | **2004** | ** ** |
| Net sales                                                                          |       | $                                           | 795,379    |   | $ | 668,118 |   | $ | 584,921 |   |
| Cost of sales                                                                      |       | 699,985                                     |       | 593,120 |   | 513,472 |   |
| Gross profit                                                                       |       | 95,394                                      |       | 74,998 |   | 71,449 |   |
| Selling, general and  administrative expense                                       |       | 63,034                                      |       | 49,965 |   | 40,601 |   |
| Closed and excess  facility costs                                                  |       | 2,678                                       |       | 377 |   | — |   |
| Other expense (income)                                                             |       | (202                                        | )          | 127 |   | (438 | ) |
| Loss on extinguishment  of debt                                                    |       | —                                      |       | — |   | 2,394 |   |
| Operating income                                                                   |       | 29,884                                      |       | 24,529 |   | 28,892 |   |
| Interest expense                                                                   |       | 18,929                                      |       | 18,452 |   | 14,508 |   |
| Interest income                                                                    |       | (1,766                                      | )          | (1,617 | ) | (151 | ) |
| Income from continuing  operations before income taxes and discontinued operations |       | 12,721                                      |       | 7,694 |   | 14,535 |   |
| Income tax provision                                                               |       | 3,821                                       |       | 2,582 |   | 4,134 |   |
| Income before  discontinued operations                                             |       | 8,900                                       |       | 5,112 |   | 10,401 |   |
| Loss from discontinued  operations, net of applicable taxes                        |       | —                                      |       | — |   | (527 | ) |
| Net income                                                                         |       | $                                           | 8,900      |   | $ | 5,112 |   | $ | 9,874 |   |

 

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

36

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**J.B. POINDEXTER& CO., INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY (CAPITAL DEFICIENCY)(Dollars in Thousands)**
| **For the years ended  December 31, 2006, 2005 and 2004** | ** ** | **Shares of  common  stock** | ** ** | **Common  stock and  paid-in  capital** | ** ** | **Accumulated  deficit** | ** ** | **Accumulated  other  comprehensive  income (loss)** | ** ** | **Total** | ** ** |
|---------------------------------------------------------------------------------------------------|------------|-----------------------------------|------------|----------------------------------------------|------------|--------------------------|------------|-----------------------------------------------------------|------------|-----------|------------|
| **January 1, 2004**                                                                               |       | 3,059                             |       | $                                            | 19,486     |                     | $          | (24,811                                                   | )          | $         | (82        | ) | $ | (5,407 | ) |
| Net income                                                                                        |       | —                            |       | —                                       |       | 9,874                    |       | —                                                    |       | 9,874     |       |
| Translation adjustment                                                                            |       | —                            |       | —                                       |       | —                   |       | 155                                                       |       | 155       |       |
| Comprehensive income                                                                              |       |                              |       |                                         |       |                     |       |                                                      |       | 10,029    |       |
| **December 31, 2004**                                                                             |       | 3,059                             |       | 19,486                                       |       | (14,937                  | )          | 73                                                        |       | 4,622     |       |
| Net income                                                                                        |       | —                            |       | —                                       |       | 5,112                    |       | —                                                    |       | 5,112     |       |
| Translation adjustment                                                                            |       | —                            |       | —                                       |       | —                   |       | (172                                                      | )          | (172      | )          |
| Unrealized gain on investments                                                                    |       | —                            |       | —                                       |       | —                   |       | 89                                                        |       | 89        |       |
| Comprehensive income                                                                              |       |                              |       |                                         |       |                     |       |                                                      |       | 5,029     |       |
| **December 31, 2005**                                                                             |       | 3,059                             |       | 19,486                                       |       | (9,825                   | )          | (10                                                       | )          | 9,651     |       |
| Cumulative effect  adjustment, adoption of SAB No. 108, net of tax                                |       | —                            |       | —                                       |       | 372                      |       | —                                                    |       | 372       |       |
| Net income                                                                                        |       | —                            |       | —                                       |       | 8 ,900                   |       | —                                                    |       | 8,900     |       |
| Translation adjustment                                                                            |       | —                            |       | —                                       |       | —                   |       | 86                                                        |       | 86        |       |
| Comprehensive income                                                                              |       |                              |       |                                         |       |                     |       |                                                      |       | 8,986     |       |
| **December 31, 2006**                                                                             |       | 3,059                             |       | $                                            | 19,486     |                     | $          | (553                                                      | )          | $         | 76         |   | $ | 19,009 |   |

 

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

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**J.B. POINDEXTER& CO., INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(Dollars in Thousands)**
| ** **                                                                             | ** ** | **Years ended December 31,** | ** ** |
|----------------------------------------------------------------------------------------|------------|---------------------------------------------|------------|
| ** **                                                                             | ** ** | **2006**                                    | ** ** | **2005** | ** ** | **2004** | ** ** |
| Cash flows from  operating activities:                                                 |       |                                        |       |   |   |   |   |
| Net income                                                                             |       | $                                           | 8,900      |   | $ | 5,112 |   | $ | 9,874 |   |
| Adjustments to  reconcile net income to net cash provided by operating activities:     |       |                                        |       |   |   |   |   |
| Depreciation and  amortization                                                         |       | 12,017                                      |       | 10,360 |   | 9,527 |   |
| Amortization of  debt issuance costs                                                   |       | 761                                         |       | 598 |   | 592 |   |
| Loss on disposal  of discontinued operations                                           |       | —                                      |       | — |   | 175 |   |
| Closed and excess  facility costs                                                      |       | 1,161                                       |       | 377 |   | — |   |
| Loss on  extinguishment of debt                                                        |       | —                                      |       | — |   | 2,394 |   |
| Provision for  excess and obsolete inventory                                           |       | 1,397                                       |       | 563 |   | 382 |   |
| Provision for  doubtful accounts receivable                                            |       | 333                                         |       | 195 |   | 470 |   |
| Loss (gain) on  sale of property, plant and equipment                                  |       | (7                                          | )          | 223 |   | 1 |   |
| Deferred income  tax provision (benefit)                                               |       | (434                                        | )          | 834 |   | 2,123 |   |
| Operating cash  flows from discontinued operations                                     |       | —                                      |       | (319 | ) | (48 | ) |
| Other                                                                                  |       | 393                                         |       | (63 | ) | 232 |   |
| Change in assets and  liabilities, net of the effect of acquisitions and dispositions: |       |                                        |       |   |   |   |   |
| Accounts  receivable                                                                   |       | (13,092                                     | )          | 2,437 |   | (7,240 | ) |
| Inventories                                                                            |       | (15,781                                     | )          | (1,045 | ) | (10,903 | ) |
| Prepaid expenses  and other                                                            |       | (103                                        | )          | (1,647 | ) | 263 |   |
| Accounts payable                                                                       |       | 1,412                                       |       | 910 |   | (1,936 | ) |
| Accrued income  taxes                                                                  |       | 2,235                                       |       | (2,481 | ) | 152 |   |
| Other accrued  liabilities                                                             |       | 3,847                                       |       | (1,410 | ) | 5,712 |   |
| Net cash  provided by operating activities                                             |       | 3,039                                       |       | 14,644 |   | 11,770 |   |
| Cash flows from  investing activities:                                                 |       |                                        |       |   |   |   |   |
| Acquisition of  businesses, net of cash acquired                                       |       | (13,897                                     | )          | (12,270 | ) | (17,906 | ) |
| Proceeds from  disposition of business, property, plant and equipment                  |       | 214                                         |       | 58 |   | 294 |   |
| Purchase of  property, plant and equipment                                             |       | (13,874                                     | )          | (15,501 | ) | (9,428 | ) |
| Purchases of  short-term investments                                                   |       | —                                      |       | (53,728 | ) | (30,600 | ) |
| Proceeds from  sale of short-term investments                                          |       | 15,266                                      |       | 43,462 |   | 25,600 |   |
| Issuance of  insurance collateral deposits                                             |       | (659                                        | )          | — |   | (5,520 | ) |
| Net investing  activities of discontinued operations                                   |       | —                                      |       | — |   | 1,343 |   |
| Net cash used in  investing activities                                                 |       | (12,950                                     | )          | (37,979 | ) | (36,217 | ) |
| Cash flows from  financing activities:                                                 |       |                                        |       |   |   |   |   |
| Net payments of  revolving lines of credit and short-term debt                         |       | —                                      |       | — |   | (19,718 | ) |
| Proceeds from  long-term debt                                                          |       | —                                      |       | 47,251 |   | 155,000 |   |
| Payments of long-term  debt and capital leases                                         |       | (1,583                                      | )          | (1,047 | ) | (87,636 | ) |
| Debt issuance  costs                                                                   |       | —                                      |       | (1,197 | ) | (5,160 | ) |
| Change in  restricted cash                                                             |       | —                                      |       | — |   | 1,351 |   |
| Net cash  provided by (used in) financing activities                                   |       | (1,583                                      | )          | 45,007 |   | 43,837 |   |
| Effect of  exchange rate on cash                                                       |       | (57                                         | )          | (249 | ) | 42 |   |
| Change in cash and cash  equivalents                                                   |       | (11,551                                     | )          | 21,423 |   | 19,432 |   |
| Cash and cash  equivalents, beginning of year                                          |       | 40,855                                      |       | 19,432 |   | — |   |
| Cash and cash equivalents, end of year                                                 |       | $                                           | 29,304     |   | $ | 40,855 |   | $ | 19,432 |   |

 

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

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**J.B. POINDEXTER& CO., INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in Thousands)**

**1.**                        Organization & Business

J.B. Poindexter & Co., Inc. (“JBPCO”) andits subsidiaries (the “Subsidiaries” and together with JBPCO, the “Company”)operate primarily manufacturing businesses principally in North America. JBPCOis owned and controlled by John Poindexter.

The Company has acquired five businesses during the threeyears ended December 31, 2006 (see Note 4).

The Company’s operating segments are as follows:

***Morgan Truck Body, LLC (“Morgan”)*** manufactures truckbodies in the United States and Canada for dry freight and refrigerated trucksand vans (excluding those made for pickup trucks and tractor-trailertrucks).  Morgan’s operations includeCommercial Babcock, Inc.  The truckbodies are attached to truck chassis provided by its customers.  Customers include rental companies, truckdealers and companies that operate fleets of delivery vehicles. The principalraw materials used by Morgan include steel, aluminum, fiberglass reinforcedplywood, hardwoods and oil acquired from a variety of sources.

***Morgan Olson, LLC (“Morgan Olson”)*** manufactures step vanbodies for parcel, food, vending, uniform, linen and other deliveryapplications. Step vans are specialized vehicles designed for multiple stopapplications and enable the driver of the truck to easily access the cargoarea. Morgan Olson manufactures the complete truck body, including theinstallation of windows, doors, instrument panels, seating, wiring andpainting. The step van bodies are installed on truck chassis provided by MorganOlson’s customers. The principal raw materials used by Morgan Olson includesteel and aluminum.

***Truck Accessories Group, LLC (“Truck Accessories”)*** manufactures pickuptruck caps and tonneau covers, which are fabricated enclosures that fit overthe open beds of pickup trucks, converting the beds into weatherproof storageareas. Truck Accessories includes Leer, Century, Raider Industries Inc. (“Raider”),Pace Edwards and State Wide, which was acquired on March 17, 2006 (see Note 4).Effective May 28, 2004, the Company sold principally all the assets of MidwestTruck Aftermarket (“MTA”), the distribution business of Truck Accessories, and,accordingly, it was presented as a discontinued operation.  The loss from discontinued operations totaled$527 for the year ended December 31, 2004, which included $300, less an incometax benefit of $125, of loss  ondisposal.  The principal raw materialsused by Truck Accessories include resin, fiberglass, paint, and manufacturedlocks and windows.

***Specialty Manufacturing Division (“Specialty Manufacturing”)*** is comprised of theSpecialty Vehicle Group, MIC Group, LLC (“MIC Group”), and EFP, LLC (“EFP”).The Specialty Vehicle Group is comprised of Federal Coach, LLC (“Federal Coach”)and Eagle Specialty Vehicles, LLC (“Eagle Coach”), which was acquired effectiveJanuary 3, 2006 (see Note 4).  TheSpecialty Vehicle Group manufactures funeral coaches, limousines and specialtybuses.  MIC Group is a manufacturer,investment caster and assembler of precision metal parts for use in theworldwide oil and gas exploration, automotive and aerospace industries andother general industries. EFP molds, fabricates and markets expandable foamproducts which are used as packaging, shock absorbing and materials handlingproducts primarily by the automotive, electronics, furniture, construction,appliance and other industries. It also manufactures products used as thermalinsulators. The principal raw materials used by Specialty Manufacturing areexpandable polystyrene, polypropylene, polyethylene, resins, ferrous andnonferrous materials including stainless steel, alloy steels, nickel-basedalloys, titanium, brass, beryllium-copper alloys and aluminum.  The Specialty Vehicle Group purchases vehiclechassis from the major automotive manufacturers’ dealers for modification andsale to its customers.

EffectiveSeptember 30, 2006, each of Morgan (formerly Morgan Corporation), Morgan Olson(formerly Morgan Olson Corporation), Truck Accessories (formerly TruckAccessories Group, Inc.), EFP (formerly EFP Corporation), MIC Group (formerlyMIC Group, Inc.) and Eagle Coach (formerly Eagle Specialty Vehicles, Inc.) was,by means of a merger or statutory conversion, converted into a Delaware limitedliability company. Each of 

39

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**J.B. POINDEXTER& CO., INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in Thousands)**

thosesubsidiaries was and remains a wholly owned subsidiary of the Company with onlythe form of entity being changed.

**2.**                   Summary of Significant Accounting Policies

*Principles of Consolidation. *The consolidated financial statements havebeen prepared in accordance with accounting principles generally accepted inthe United States.  All intercompanyaccounts and transactions have been eliminated in consolidation.

*Cash and Cash Equivalents.*  Cash and all highly liquidinvestments with a maturity of three months or less at the date of purchase,including short-term deposits and government agency and corporate obligations,are classified as cash and cash equivalents.

*Short-Term Investments.*  Short-term investments,considered to be available-for-sale investments, include auction rate municipalbond securities with original maturities beyond three months.  Available-for-sale investments are thosewhich the Company may decide to sell if needed for liquidity, asset-liabilitymanagement or other reasons.  Available-for-saleinvestments are reported at fair value with unrealized gains or losses includedas a separate component of equity.  Therewere no auction rate securities at December 31, 2006 with maturities beyondthree months.  Unrealized gains or losseson auction rate securities at December 31, 2005 total $89.  Interest and dividend income, adjusted by theamortization of purchase premium or discount, is included in earnings.  Realized gains or losses are determined basedon the amortized cost of the specific investment sold and are included inearnings.  There were no realized gainsor losses on the sale of investments included in the determination of netincome for 2006, 2005 and 2004.

*Revenue Recognition*.  Revenue is recognized uponshipment of the product to customers, except for Morgan and Morgan Olson whererevenue is recognized when title transfers to the customer upon final bodyassembly, quality inspection and customer notification.  Amounts billed to customers related toshipping and handling is classified as revenue. The costs associated with the shipping and handling revenue are includedin cost of sales.

*Accounts Receivable. *The Company sells to customers as iscustomary in its industries and typically extends its customers 30-day paymentterms.  Interest is not normally chargedon accounts receivable.  Accounts receivableis stated net of an allowance for doubtful accounts of $1,547 and $1,490 atDecember 31, 2006 and 2005, respectively. The Company establishes an allowance for doubtful accounts receivable ona case by case basis when it believes that the required payment of specificamounts owed is unlikely to occur.  Theactivity in the allowance for doubtful accounts for the years ended December 31was:
| ** **                           | ** ** | **2006** | ** ** | **2005** | ** ** | **2004** | ** ** |
|--------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Balance at the beginning of the year |       | $        | 1,490      |     | $          | 993      |       | $ | 909 |   |
| Provision for losses                 |       | 333      |       | 195      |       | 470      |       |
| Charge-offs                          |       | (340     | )          | (153     | )          | (520     | )          |
| Recoveries                           |       | (3       | )          | 30       |       | 2        |       |
| Acquisitions                         |       | 67       |       | 425      |       | 132      |       |
| Balance at the  end of the year.     |       | $        | 1,547      |     | $          | 1,490    |       | $ | 993 |   |

 

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 are stated at the lower of costor market.  Cost is determined by thefirst-in, first-out (FIFO) method.

40

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**J.B. POINDEXTER& CO., INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in Thousands)**

*Property, Plant and Equipment. *Property, plant and equipment, includingproperty under capital leases, are stated at cost.  The cost of property under capital leasesrepresents the present value of the future minimum lease payments at theinception of the lease.  Depreciation andamortization is computed by using the straight-line method over the estimateduseful lives of the applicable assets. The cost of maintenance and repairs is charged to operating expense asincurred and the cost of major replacements and significant improvements iscapitalized.  The Company recordsimpairment losses on long-lived assets used in operations when events andcircumstances indicate that the assets may be impaired and the undiscountedcash flows estimated to be generated by those assets are less than the carryingamounts of those assets.

*Debt Issuance Costs. *Debt issuance costs are amortized using theeffective interest method over the term of the related debt, which ranges fromfour to ten years.  Amortization of debtissuance costs is included in interest expense.

*Evaluation of Impairment of Long-Lived Assets. *In accordance with Statement of Financial Accounting Standard (“SFAS”)No. 144, *“Impairment or Disposal of Long-Lived Assets*”,the Company evaluates the carrying value of long-lived assets wheneversignificant events or changes in circumstances indicate the carrying value ofthese assets may be impaired.  TheCompany evaluates potential impairment of long-lived assets by comparing thecarrying value of the assets to the expected net future cash flows resultingfrom the use of the assets.  As indicatedin Note 6, the Company recorded impairment charges in 2006 and 2005.

*Warranty. *Morgan provides product warranties forperiods up to five years.  Morgan Olsonprovides a warranty period, which is one year or 12,000 miles for components,three years or 36,000 miles for paint and five years or 50,000 miles for thevan body structure.  Truck Accessoriesprovides a warranty period, exclusive to the original truck owner, which is, ingeneral but with exclusions, one year for parts, five years for paint andlifetime for structure.  The SpecialtyVehicle Group provides a warranty on its products for a period of 36 months or36,000 miles on the section of the body and parts manufactured for funeralcoaches and funeral limousines, 12 months or 12,000 miles on the body and partsmanufactured for bus bodies and 24 months or 24,000 miles on the section of thebody and parts manufactured for limousines. The remaining operations of Specialty Manufacturing do not provide awarranty on their products.  A provisionfor warranty costs is included in cost of sales when goods are sold based onhistorical experience and estimated future claims.  The Company had accrued warranty costs of$4,185 and $4,255 at December 31, 2006 and 2005, respectively.  The activity in the accrued warranty costaccounts for the years ended December 31 was:
| ** **                           | ** ** | **2006** | ** ** | **2005** | ** ** | **2004** | ** ** |
|--------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Balance at the beginning of the year |       | $        | 4,255      |     | $          | 4,233    |       | $ | 3,214 |   |
| Provision for losses                 |       | 4,362    |       | 4,136    |       | 4,273    |       |
| Charge-offs                          |       | (4,545   | )          | (4,180   | )          | (3,548   | )          |
| Acquisitions                         |       | 113      |       | 66       |       | 294      |       |
| Balance at the end of the year       |       | 4,185    |       | 4,255    |       | 4,233    |       |
| Less: Short-term                     |       | 1,795    |       | 2,219    |       | 1,978    |       |
| Long-term                            |       | $        | 2,390      |     | $          | 2,036    |       | $ | 2,255 |   |

 

*Advertising and Research and Development Expense.*  TheCompany expenses advertising costs and research and development (“R&D”)costs as incurred.  During the yearsended December 31, 2006, 2005 and 2004, advertising expense was $3,474,****$3,340 and $2,371, respectively and R&D expense was$3,495, $2,240 and $1,554, respectively.

*Income Taxes. *The Company accounts for income taxes underthe provisions of SFAS No. 109, *“Accounting for IncomeTaxes.*”  Under SFASNo. 109, deferred tax assets and liabilities are computed based on thedifference between the financial statement and income tax bases of assets andliabilities using the enacted tax rates.

41

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**J.B. POINDEXTER& CO., INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in Thousands)**

The Company’s management believes that it is more likely than not thatcurrent and long-term deferred tax assets will reduce future income taxpayments.  The Company has consideredongoing prudent and feasible tax planning strategies in making this assessment.There are significant assumptions inherent in the Company’s prudent andfeasible tax planning strategies. Changes in these assumptions would impact the estimated amount ofdeferred tax assets realized by these tax planning strategies.  Should the Company determine that it is morelikely than not unable to realize all or part of the net deferred tax asset inthe future, a valuation allowance, necessary to reduce the deferred tax assetto the amount that is more likely than not to be realized,  would reduce income in the period such determinationwas made.

*Self-Insurance Risks*.  The Company utilizes acombination of insurance coverage and self-insurance programs for property,casualty, workers’ compensation and health care insurance.  The Company records an actuariallydetermined, fully developed self-insurance reserve to cover the self-insuredportion of these risks based on known facts and historical industrytrends.  Changes in the assumptions usedby the actuary could result in a different self-insurance reserve.

*Contingent Liabilities. *Reserves are established for estimatedenvironmental and legal loss contingencies when a loss is probable and theamount of the loss can be reasonably estimated. Revisions to contingent liabilities are reflected in income in theperiod in which different facts or information become known or circumstanceschange that affect the previous assumptions with respect to the likelihood oramount of loss.  Reserves for contingentliabilities are based upon the assumptions and estimates regarding the probableoutcome of the matter.  Should theoutcome differ from the assumptions and estimates, revisions to the estimatedreserves for contingent liabilities would be required.

*Comprehensive Income.*Comprehensive income consists of net income and other comprehensiveincome.  Other comprehensive income includesforeign currency translation adjustments and unrealized gains and losses onavailable-for-sale investments, which are also recognized as separatecomponents of equity.

*Translation of Foreign Financial Statements. *Assets and liabilities of foreign operations are translated at year-endrates of exchange, and the income statements are translated at the averagerates of exchanges for the year.  Gainsor losses resulting from translating foreign currency financial statements areaccumulated in a separate component of stockholder’s equity until the foreignoperations are sold or substantially liquidated.  Gains or losses resulting from foreigncurrency transactions (transactions that require settlement in a currency otherthan the Company’s functional currency) are included in net income.

*Fair Value of Financial Instruments*.  TheCompany’s financial instruments consist of cash and cash equivalents,receivables, and debt.  Fair values ofcash and cash equivalents and receivables approximate carrying values for thesefinancial instruments since they are relatively short-term in nature.  The carrying amount of debt, except for theCompany’s 8.75% Notes (see Note 10), approximates the fair value due either tolength of maturity or existence of variable interest rates that approximateprevailing market rates.

*Use of Estimates.*The preparation of financial statements in conformity with accountingprinciples generally accepted in the United States requires management to makeestimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities at the date ofthe financial statements and the reported amounts of revenues and expensesduring the reporting period.  Actualresults could differ from those estimates. Significant estimates subject to change include the valuation ofgoodwill and other intangible assets, the allowances for doubtful accounts andshrinkage and excess and obsolete inventory, the valuation of deferred taxassets, and the allowances for self-insurance risks, warranty claims, andenvironmental claims.

*Reclassifications.* Certain prior year amounts have been reclassified to conform to theclassifications used in fiscal 2006.

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**J.B. POINDEXTER& CO., INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in Thousands)**

***Recent Accounting Pronouncements***.  In September 2006, the Securities and ExchangeCommission (“SEC”) issued Staff Accounting Bulletin (SAB) No. 108, *“Considering the Effects of Prior Year Misstatements when QuantifyingMisstatements in Current Year Financial Statements*.*”*  SAB No. 108 wasissued in order to eliminate the diversity of practice surrounding how publiccompanies quantify financial statement misstatements.  In SAB No. 108, the SEC staff established anapproach that requires quantification of financial statement misstatementsbased on the effects of the misstatements on each of the company’s financialstatements and the related financial statement disclosures.  This model is commonly referred to as a “dualapproach” because it requires quantification of errors under both the ironcurtain and the roll-over methods.  SABNo. 108 permits existing public companies to initially apply its provisioneither by (i) restating prior financial statements as if the “dual approach”had always been used or (ii) recording the value of assets and liabilities asof January 1, 2006 with an offsetting adjustment recorded to the openingbalance of retained earnings.  SAB No.108 is effective for fiscal years beginning after November 15, 2006.

**TheCompany has elected to apply the provisions of SAB No. 108 using the cumulativeeffect transition method in connection with the preparation of the financialstatements for the year ended December 31, 2006.  As a result, the Company recorded a decreasein accrued liabilities and an increase in retained earnings in the amount of$372, net of tax of $159, as of January 1, 2006.  This adjustment resulted from the Companyoverstating liabilities for certain compensation agreements, which was deemedimmaterial to the financial statements in each respective period.  This misstatement, decreasing net income inthe year reported, originated as follows: 2005 — $81; 2004 — $81; and, prior to2004— $210.**

**InSeptember 2006, the Financial Accounting Standards Board (“FASB”) issued SFASNo. 158, “*Employers’ Accounting for Defined Benefit Pensionand Other Postretirement Plans*”, an amendment to FASB Statements No.87, 88, 106 and 132(R).  This standardrequires an employer to recognize the over funded or under funded status of adefined benefit pension and other postretirement benefit plan as an asset orliability in its statement of financial position and to recognize changes inthat funded status in the year in which the changes occur through comprehensiveincome.  The standard also requiresdisclosure in the notes to the financial statements of additional informationabout certain effects on net periodic benefit costs of the next fiscal yearthat arise from delayed recognition of gains or losses, prior service costs andtransition asset or obligation.  TheCompany will adopt this standard during fiscal year 2007 as required, which isnot expected to have any significant impact on the Company’s financialposition, results of operations or cash flows.**

**InSeptember 2006, the FASB issued SFAS No. 157, “*Fair ValueMeasurements*”, which provides a definition of fair value,establishes a framework for measuring fair value and requires expandeddisclosures about fair value measurements. The Company has not yet determined the effect of adopting this standard,which is effective for fiscal years beginning after November 15, 2007.**

**In July2006, the FASB released Interpretation No. 48 “*Accountingfor Uncertainty in Income Taxes.*” This Interpretation revises the recognition tests for tax positionstaken in tax returns such that a tax benefit is recorded only when it is morelikely than not that the tax provision will be allowed upon examination bytaxing authorities.  The amount of such atax benefit to be recorded is the largest amount that is more likely than notto be allowed.  Any reduction in deferredtax assets or increase in tax liabilities upon adoption will correspondinglyreduce retained earnings.  The Companyhas not yet determined the effect of adopting this Interpretation, which iseffective for periods beginning January 1, 2007.**

**In May2005, the FASB issued SFAS No. 154 “*Accounting Changes andError Corrections”.* SFAS 154changes the requirements for the accounting for and reporting of voluntarychange in accounting principle, and for changes required by an accountingpronouncement that does not have a specific transition provision.  When recognizing a change in accountingprinciple, retrospective application of the principle to the prior period’sfinancial statements is generally specified. The effective date for the Company is for fiscal year 2006. The adoptionof the standard did not   have asignificant impact on the Company’s financial position, results of operationsor cash flows.**

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**J.B. POINDEXTER& CO., INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in Thousands)**

**InDecember 2004, the FASB issued SFAS No. 153, *“Exchange ofNon-monetary Assets — an amendment of APB Opinion No. 29.”* Thestandard eliminates certain exceptions that were contained in APB Opinion No.29 to the principle that exchanges of non-monetary assets should be measuredbased on the fair value of assets exchanged. The effective date for the Company is for fiscal year 2006.  The adoption of this standard did not have asignificant impact on the Company’s financial position, results of operationsor cash flows.**

**InNovember 2004, the FASB issued SFAS No. 151, *“InventoryCosts — an amendment of APB No. 43, Chapter 4.”*  This standard states that idle facilityexpense, freight, handling costs and wasted material be accounted for ascurrent-period expense regardless of whether they meet the criterion of “abnormal,”as previously defined.  The effectivedate for the Company is fiscal year 2006. The adoption of this standard did not have a significant impact on theCompany’s financial position, results of operations or cash flows.**

**3.**                   Segment Data

The Company operates and manages its subsidiaries within the separatebusiness segments described in Note 1. The Company evaluates performance and allocates resources based on theoperating income of each segment.  Theaccounting policies of the reportable business segments are the same as thosedescribed in the summary of significant accounting policies.

The following is a summary of the business segment data for the yearsended December 31:
| ** **                                 | ** ** | **2006** | ** ** | **2005** | ** ** | **2004** | ** ** |
|--------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| **Net  Sales**                             |       |     |       |     |       |     |       |
| Morgan                                     |       | $        | 379,434    |     | $          | 358,216  |       | $ | 315,454 |   |
| Morgan Olson                               |       | 100,361  |       | 60,793   |       | 70,995   |       |
| Truck  Accessories                         |       | 159,310  |       | 153,726  |       | 135,385  |       |
| Specialty  Manufacturing                   |       | 155,856  |       | 95,658   |       | 64,347   |       |
| Eliminations                               |       | 418      |       | (275     | )          | (1,260   | )          |
| Net Sales                                  |       | $        | 795,379    |     | $          | 668,118  |       | $ | 584,921 |   |
| ** **                                 |       |     |       |     |       |     |       |
| **Operating  Income**                      |       |     |       |     |       |     |       |
| Morgan                                     |       | $        | 21,576     |     | $          | 20,771   |       | $ | 19,605 |   |
| Morgan Olson                               |       | 3,904    |       | (1,942   | )          | 1,939    |       |
| Truck  Accessories                         |       | 3,524    |       | 8,327    |       | 10,480   |       |
| Specialty  Manufacturing                   |       | 9,759    |       | 2,470    |       | 2,770    |       |
| JBPCO  (Corporate)                         |       | (8,879   | )          | (5,097   | )          | (5,902   | )          |
| Operating Income                           |       | $        | 29,884     |     | $          | 24,529   |       | $ | 28,892 |   |
| ** **                                 |       |     |       |     |       |     |       |
| **Depreciation  and Amortization Expense** |       |     |       |     |       |     |       |
| Morgan                                     |       | $        | 2,241      |     | $          | 2,661    |       | $ | 2,773 |   |
| Morgan Olson                               |       | 958      |       | 901      |       | 809      |       |
| Truck  Accessories                         |       | 4,233    |       | 3,701    |       | 3,275    |       |
| Specialty  Manufacturing                   |       | 4,547    |       | 3,066    |       | 2,653    |       |
| JBPCO  (Corporate)                         |       | 38       |       | 31       |       | 17       |       |
| Depreciation and  Amortization Expense     |       | $        | 12,017     |     | $          | 10,360   |       | $ | 9,527 |   |

 

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**J.B. POINDEXTER& CO., INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in Thousands)**
| ** **                          | ** ** | **2006** | ** ** | **2005** | ** ** | ** ** | **2004** | ** ** |
|-------------------------------------|------------|----------|------------|----------|------------|------------|----------|------------|
| **Total Assets as of December 31,** |       |     |       |     |       |       |     |       |
| Morgan                              |       | $        | 93,295     |     | $          | 83,620     |     |       |   |   |
| Morgan Olson                        |       | 29,459   |       | 24,430   |       |       |     |       |
| Truck Accessories                   |       | 67,435   |       | 62,186   |       |       |     |       |
| Specialty Manufacturing             |       | 82,872   |       | 56,113   |       |       |     |       |
| JBPCO (Corporate)                   |       | 20,448   |       | 46,827   |       |       |     |       |
| Identifiable Assets                 |       | $        | 293,509    |     | $          | 273,176    |     |       |   |   |
|                                |       |     |       |     |       |       |     |       |
| **Capital Expenditures**            |       |     |       |     |       |       |     |       |
| Morgan                              |       | $        | 1,764      |     | $          | 2,953      |     |       | $ | 4,222 |   |
| Morgan Olson                        |       | 328      |       | 599      |       |       | 633      |       |
| Truck Accessories                   |       | 3,569    |       | 4,457    |       |       | 3,376    |       |
| Specialty Manufacturing             |       | 4,485    |       | 6,740    |       |       | 1,192    |       |
| JBPCO (Corporate)                   |       | 3,728    |       | 752      |       |       | 5        |       |
| Capital  Expenditures               |       | $        | 13,874     |     | $          | 15,501     |     |       | $ | 9,428 |   |

 

Morgan has two customers(truck leasing and rental companies) that accounted for, on a combined basis,approximately 46%, 47% and 46% of Morgan’s net sales during 2006, 2005 and2004, respectively.  Accounts receivable from these customers totaled$8,375 and $4,655 at December 31, 2006 and 2005, respectively.  Specialty Manufacturing has one customer inthe international oil field service industry that accounted for approximately15%,****15% and 18% of Specialty Manufacturing’snet sales during 2006, 2005 and 2004, respectively.  Accountsreceivable from this customer totaled $ 2,622 and $1,839 atDecember 31, 2006 and 2005, respectively.

MorganOlson has two customers that accounted for approximately 56%, 38% and 81% ofMorgan Olson’s net sales during 2006, 2005 and 2004 respectively.  Accounts receivable from these customerstotaled $2,170 and $33 at December 31, 2006 and 2005, respectively.  Morgan Olson manufactured and shipped truck bodiesfor Morgan’s Canadian operations and charged Morgan $937 during the year endedDecember 31, 2006 for the products.

The Company, on a consolidated basis, has two customers that accountedfor approximately, 22%, 25% and 25% of total net sales during 2006, 2005 and2004, respectively.  Accounts receivablefrom these customers totaled $8,375 and $4,655 at December 31, 2006 and 2005,respectively.  These are customers ofMorgan.

The Company’s operations are located principally in the UnitedStates.  However, Morgan and TruckAccessories have operations located in Canada and Specialty Manufacturing hasoperations in Mexico.  Long-lived assetsrelating to these foreign operations were $10,185 and****$9,738at December 31, 2006 and 2005, respectively. Consolidated net sales included $29,610, $21,476 and****$17,169in 2006, 2005 and 2004, respectively, of sales to customers outside the UnitedStates.

JBPCO (Corporate) operatingexpenses for all periods comprise the costs of the parent company office andpersonnel that provide strategic direction and support to the subsidiarycompanies.  The JBPCO (Corporate) costs of $8,879, $5,097 and $5,902 for 2006, 2005and 2004, respectively, included consulting fees associated with manufacturingprocess improvements of $3,200 in 2006 and the loss on extinguishment of debtof $2,394 during the 2004 period.

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**J.B. POINDEXTER& CO., INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in Thousands)**

**4.**                        Acquisitions

EffectiveMarch 15, 2004, the Company acquired from John Poindexter, the sole shareholderof the Company, the stock of Morgan Olson, a truck body manufacturing companythat he acquired effective July 15, 2003. Mr. Poindexter acquired certain assets of Morgan Olson from GrummanOlson Industries, Inc. in a bankruptcy proceeding and contributed those assetsto the Company.  Mr. Poindexter paid$13,942 for the assets including $3,000 in cash that he contributed as equityof Morgan Olson and assumed certain liabilities of approximately $1,518.  The purchase price was allocated to theassets based on the estimated fair values as of the date of acquisition.  There was no goodwill recorded with theacquisition. The historical financial statements of the Company have beenrestated to reflect the merger on a basis similar to a pooling of interests soas to combine the financial statements of both companies for the period theywere under common control.

The cash purchase price wasallocated to the acquired net assets based on the estimated fair values as ofthe date of the original acquisition as follows:
| **Morgan Olson**             | ** ** | **July 15,  2003** | ** ** |
|-----------------------------------|------------|-------------------------|------------|
| Accounts receivable               |       | $                       | 2,905      |   |
| Inventories                       |       | 4,050                   |       |
| Prepaid expenses and other        |       | 328                     |       |
| Property, plant and equipment     |       | 8,177                   |       |
| Accrued compensation and benefits |       | (160                    | )          |
| Accrued warranty                  |       | (450                    | )          |
| Other accrued expenses            |       | (908                    | )          |
|                              |       | $                       | 13,942     |   |

 

EffectiveNovember 5, 2004 the Company acquired substantially all of the assets of PaceEdwards Company (“Pace Edwards”).  Theresults of Pace Edwards’ operations have been included in the consolidatedfinancial statements since that date. Pace Edwards is located in Washington state and is a leadingmanufacturer of retractable tonneau covers in the pickup truck accessoriesbusiness.  Pace Edwards operates as adivision of Truck Accessories and continues to utilize the purchased assets inthe same manner as prior to the acquisition. The aggregate purchase price was $9,649 for the assets of PaceEdwards.  The acquisition has beenaccounted for as a purchase and, accordingly, the acquired assets andliabilities assumed have been recorded at their estimated fair values at thedate of acquisition and approximated the following:
| **Pace Edwards**         | ** ** | **November 5,  2004** | ** ** |
|-------------------------------|------------|----------------------------|------------|
| Accounts receivable           |       | $                          | 1,532      |   |
| Inventories                   |       | 1,510                      |       |
| Property, plant and equipment |       | 2,431                      |       |
| Goodwill                      |       | 971                        |       |
| Acquired intangibles          |       | 3,472                      |       |
| Current liabilities           |       | (87                        | )          |
| Accrued warranty              |       | (180                       | )          |
|                          |       | $                          | 9,649      |   |

 

Effective December 15,2004 the Company acquired all of the outstanding stock of Commercial BabcockInc. (“Commercial Babcock”), a Canadian company located in Brampton, Ontario.The results of Commercial Babcock’s operations have been included in theconsolidated financial statements since that date.  Commercial Babcock is a manufacturer andmarketer of medium-duty truck bodies for the eastern Canadian market.  Commercial Babcock operates as a division ofMorgan and continues to utilize the purchased assets in the same 

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**J.B. POINDEXTER& CO., INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in Thousands)**

manner as prior to theacquisition.  The aggregate purchaseprice was $8,850 for the outstanding stock of Commercial Babcock.  Theacquisition has been accounted for as a purchase and, accordingly, the acquiredassets and liabilities assumed have been recorded at their estimated fairvalues at the date of acquisition and approximated the following:
| **Commercial Babcock**   | ** ** | **December 15,  2004** | ** ** |
|-------------------------------|------------|-----------------------------|------------|
| Cash                          |       | $                           | 593        |   |
| Accounts receivable           |       | 2,581                       |       |
| Inventories                   |       | 1,783                       |       |
| Other current assets          |       | 89                          |       |
| Property, plant and equipment |       | 701                         |       |
| Goodwill                      |       | 5,422                       |       |
| Acquired intangibles          |       | 2,686                       |       |
| Accounts payable              |       | (2,897                      | )          |
| Accrued warranty              |       | (114                        | )          |
| Other current liabilities     |       | (800                        | )          |
| Other long-term liabilities   |       | (60                         | )          |
| Deferred income taxes         |       | (1,134                      | )          |
|                          |       | $                           | 8,850      |   |

 

Effective June 6, 2005, the Company acquired 100% of the membershipinterests in Federal Coach LLC (“Federal Coach”).  The results of Federal Coach’s operationshave been included in the consolidated financial statements of the Companysince that date.   Federal Coach islocated in Fort Smith, Arkansas and is a manufacturer of funeral coaches,limousines and mid-sized buses.  FederalCoach operates as a division of Specialty Manufacturing and continues toutilize the purchased assets in the same manner as prior to theacquisition.  The acquisition wasaccounted for as a purchase and the aggregate purchase price was $12,270.

The following summarizes the fair values of the assets acquired andliabilities assumed at the date of acquisition:
| **Federal Coach**        | ** ** | **June 6,  2005** | ** ** |
|-------------------------------|------------|------------------------|------------|
| Accounts receivable           |       | $                      | 2,465      |   |
| Inventories                   |       | 9,330                  |       |
| Other current assets          |       | 15                     |       |
| Property, plant and equipment |       | 649                    |       |
| Goodwill                      |       | 1,850                  |       |
| Acquired intangibles          |       | 3,650                  |       |
| Accounts payable              |       | (4,336                 | )          |
| Customer deposits             |       | (343                   | )          |
| Accrued warranty              |       | (66                    | )          |
| Other current liabilities     |       | (944                   | )          |
|                          |       | $                      | 12,270     |   |

 

Effective January 3, 2006,The Company acquired all of the outstanding stock of Kellerman Coach Co., Inc.(“Eagle Coach”).  The results of EagleCoach’s operations have been included in the consolidated financial statementssince that date.  Eagle Coach is locatedin Amelia, Ohio and manufactures funeral coaches.  Eagle Coach and Federal Coach comprise theSpecialty Vehicle Group that operates as a division of the SpecialtyManufacturing segment and Eagle Coach continues to utilize the purchased assetsin the same manner as prior to the acquisition. The acquisition was accounted for as a purchase and the purchase pricewas $7,440.  The following summarizes thefair value of the assets acquired and liabilities assumed at the date ofacquisition: 

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**J.B. POINDEXTER& CO., INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in Thousands)**
| **Eagle Coach**          | ** ** | **January 3,  2006** | ** ** |
|-------------------------------|------------|---------------------------|------------|
| Accounts receivable           |       | $                         | 1,933      |   |
| Inventories                   |       | 1,658                     |       |
| Other current assets          |       | 18                        |       |
| Property, plant and equipment |       | 232                       |       |
| Other long-term assets        |       | 161                       |       |
| Goodwill                      |       | 1,527                     |       |
| Acquired intangibles          |       | 2,900                     |       |
| Current liabilities           |       | (954                      | )          |
| Accrued warranty              |       | (35                       | )          |
|                          |       | $                         | 7,440      |   |

 

Effective March 17, 2006,the Company acquired all of the outstanding stock of State Wide Aluminum, Inc.(“State Wide”).  The results of StateWide’s operation have been included in the consolidated financial statementssince that date.  State Wide is locatedin Elkhart, Indiana and is one of Truck Accessories’ two principal suppliers ofwindows and doors used in the manufacture of pickup truck caps.  State Wide operates as a division of TruckAccessories and continues to utilize the purchased assets in the same manner asprior to the acquisition.  Theacquisition was accounted for as a purchase and the purchase price was$6,457.  The following summarizes thefair value of the assets acquired and liabilities assumed at the date ofacquisition:
| **State Wide**           | ** ** | **March 17,  2006** | ** ** |
|-------------------------------|------------|--------------------------|------------|
| Accounts receivable           |       | $                        | 2,181      |   |
| Inventories                   |       | 2,493                    |       |
| Other current assets          |       | 149                      |       |
| Property, plant and equipment |       | 923                      |       |
| Goodwill                      |       | 3,528                    |       |
| Current liabilities           |       | (2,782                   | )          |
| Other long-term liabilities   |       | (35                      | )          |
|                          |       | $                        | 6,457      |   |

 

The combined results ofoperations of the Company for the years ended December 31, 2006, 2005 and 2004including Pace Edwards, Commercial Babcock, Federal Coach, Eagle Coach andState Wide for the periods prior to their acquisition on an unaudited pro formabasis would be as follows:
| ** **                             | ** ** | **2006** | ** ** | **2005** | ** ** | **2004** | ** ** |
|----------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Net sales                              |       | $        | 800,861    |     | $          | 722,150  |       | $ | 687,457 |   |
| Operating income                       |       | 29,944   |       | 26,853   |       | 36,434   |       |
| Income before  discontinued operations |       | 8,902    |       | 6,657    |       | 15,878   |       |
|                                        |            |          |            |          |            |          |            |  |  |  |

 

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**J.B. POINDEXTER& CO., INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in Thousands)**

**5.**                        Inventories

Consolidated net inventoriesconsisted of the following:
| ** **        | ** ** | **December 31,** | ** ** |
|-------------------|------------|-----------------------|------------|
| ** **        | ** ** | **2006**              | ** ** | **2005** | ** ** |
| Raw materials     |       | $                     | 46,345     |   | $ | 36,172 |   |
| Work in process   |       | 22,547                |       | 13,879 |   |
| Finished goods    |       | 7,188                 |       | 7,156 |   |
| Total inventories |       | $                     | 76,080     |   | $ | 57,207 |   |

 

Inventories are stated net of an allowance for excess and obsoleteinventory of $1,919 and****$2,529 atDecember 31, 2006 and 2005, respectively.  The activity in the allowance for excess andobsolete inventory accounts for the years ended December 31 was:
| ** **                            | ** ** | **2006** | ** ** | **2005** | ** ** | **2004** | ** ** |
|---------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Balance at the  beginning of the year |       | $        | 2,529      |     | $          | 2,753    |       | $ | 2,593 |   |
| Provision for  losses                 |       | 1,397    |       | 563      |       | 382      |       |
| Charge-offs                           |       | (2,049   | )          | (1,137   | )          | (992     | )          |
| Recoveries                            |       | —   |       | —   |       | —   |       |
| Acquisitions                          |       | 42       |       | 350      |       | 770      |       |
| Balance at the end of  the year       |       | $        | 1,919      |     | $          | 2,529    |       | $ | 2,753 |   |

 

**6.**                        Property, Plant and Equipment

Property, plant andequipment, as of December 31, 2006 and 2005, consisted of the following:

|                                            | ** ** | **Range of  Useful Lives  in years** | ** ** | **2006** | ** ** | **2005** | ** ** |
|--------------------------------------------|------------|-----------------------------------------------------|------------|----------|------------|----------|------------|
| Land                                       |       | —                                              |       | $        | 4,785      |     | $          | 4,679 |   |
| Buildings and  improvements                |       | 5-25                                                |       | 29,339   |       | 27,924   |       |
| Machinery and  equipment                   |       | 3-10                                                |       | 104,787  |       | 95,207   |       |
| Furniture and  fixtures                    |       | 2-10                                                |       | 15,861   |       | 17,182   |       |
| Transportation  equipment                  |       | 2-10                                                |       | 5,672    |       | 4,870    |       |
| Leasehold  improvements                    |       | 3-10                                                |       | 6,700    |       | 6,435    |       |
| Construction in  progress                  |       | —                                              |       | 6,365    |       | 3,809    |       |
|                                       |       |                                                |       | 173,509  |       | 160,106  |       |
| Accumulated  depreciation and amortization |       |                                                |       | (112,894 | )          | (105,773 | )          |
| Property, plant and  equipment, net        |       |                                                |       | $        | 60,615     |     | $          | 54,333 |   |

 

Machinery and Equipment included approximately $7,792 and $4,290 ofequipment at cost recorded under capital leases as of December 31, 2006 and2005, respectively, and accumulated depreciation of approximately $2,155 and$1,355 at December 31, 2006 and 2005, respectively.

In the fourth quarter of 2006, the Company decided to close itsremaining Truck Accessories’ Canadian operations, resulting in a write-down ofthe carrying value of the assets by $1,161. A $2,678 charge has been recorded as closed and excess facility coststhat included the write-down of assets and certain personnel related 

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**J.B. POINDEXTER& CO., INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in Thousands)**

costs.  As of December 31, 2006,none of these amounts have been expended. The Company expects to pay out severance and other employee costs in2007.

In the third quarter of 2005, the Company decided to consolidate itstwo Truck Accessories’ locations in Canada which resulted in a write-down ofits Drinkwater facility.  The write-downof $377 has been recorded as closed and excess facility costs.

Depreciation expense was $11,201,****$9,725 and$9,104 and included $1,044, $742 and $324 for assets recorded under capitalleases, for the years ended December 31, 2006, 2005 and 2004, respectively.

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

Goodwill represents the excess of costs over fair value of net assetsof businesses acquired.  Pursuant to SFASNo. 142, *“Goodwill and Other Intangible Assets*”,goodwill and intangible assets acquired in a purchase business combination anddetermined to have an indefinite life are not amortized, but instead tested forimpairment at least annually.

The Company completed its annual impairment review effective October 1,2006, 2005 and 2004, which indicated that there was no impairment.  The fair value of our reporting units isbased on acquisition multiples, which are derived from information and analysisof recent acquisitions in the marketplace for companies with similaroperations.

SFAS No. 142 also requires that intangible assets with estimable usefullives be amortized over their respective estimated useful lives and reviewedfor impairment in accordance with SFAS No. 144, “*Accountingfor Impairment or Disposal of Long-Lived Assets*.”

TheCompany records impairment losses on long-lived assets used in operations whenevents and circumstances indicate that the assets may be impaired and theundiscounted cash flows estimated to be generated by those assets are less thanthe carrying amounts of those assets.  AtDecember 31, 2006 goodwill comprised of approximately $7,408, $14,884 and$7,522 for the Morgan, Truck Accessories, and Specialty Manufacturing reportingunits, respectively.

EffectiveNovember 5, 2004, the Company acquired substantially all of the assets of PaceEdwards, a manufacturing company in the pickup cap and tonneau business (seeNote 4) that was combined with the Truck Accessories segment.  Goodwill of $971 and acquired intangiblesestimated to be approximately $3,472 was recorded at the time of purchase.

EffectiveDecember 15, 2004, the Company acquired all of the outstanding stock ofCommercial Babcock, a manufacturer and marketer of truck bodies in the easternCanadian market and combined it with the Morgan segment (see Note 4).  Goodwill of approximately $5,422 and acquiredintangibles estimated to be approximately $2,686 was recorded at the time ofpurchase.

EffectiveJune 6, 2005, the Company acquired all of the membership interests in FederalCoach, a manufacturer of funeral coaches, limousines and specialty buses, andcombined it with the Specialty Manufacturing segment.  Goodwill of approximately $1,850 and acquiredintangibles of approximately $3,650 was recorded at the time of purchase.

EffectiveJanuary 3, 2006, the Company acquired all of the outstanding stock of EagleCoach, a manufacturer of funeral coaches and combined it with the SpecialtyManufacturing segment.  Goodwill ofapproximately $1,527 and acquired intangibles of approximately $2,900 wasrecorded at the time of purchase.

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**J.B. POINDEXTER& CO., INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in Thousands)**

EffectiveMarch 17, 2006, the Company acquired all of the outstanding stock of State Widea manufacturer of windows and doors used in pickup truck caps. State Wideoperates as a division of Truck Accessories. Goodwill of approximately $3,528 was recorded at the time of purchase.

Thechanges in the carrying amount of goodwill for the years ended December 31,2006 and 2005 were:
| ** **                         | ** ** | **Morgan** | ** ** | **Truck  Accessories** | ** ** | **Specialty  Manufacturing** | ** ** | **Total** | ** ** |
|------------------------------------|------------|------------|------------|------------------------|------------|------------------------------|------------|-----------|------------|
| Balance, January  1, 2005          |       | $          | 7,408      |                   | $          | 11,356                       |       | $         | 4,145      |   | $ | 22,909 |   |
| Goodwill  acquired during the year |       | —     |       | —                 |       | 1,850                        |       | 1,850     |       |
| Balance,  December 31, 2005        |       | 7,408      |       | 11,356                 |       | 5,995                        |       | 24,759    |       |
| Goodwill  acquired during the year |       | —     |       | 3,528                  |       | 1,527                        |       | 5,055     |       |
| Balance, December 31,  2006        |       | $          | 7,408      |                   | $          | 14,884                       |       | $         | 7,522      |   | $ | 29,814 |   |

 

Intangible assets (all acquired in connection with theacquisitions described in Note 4) and the related accumulated amortization asof December 31, 2006 and 2005 were:
| **December 31, 2006:**  | ** ** | ** **                           | ** ** | ** ** | ** ** | **Cost**               | ** ** | ** ** | ** ** | ** ** | ** ** |
|-----------------------------------|------------|--------------------------------------|------------|------------|------------|------------------------|------------|------------|------------|------------|------------|
| ** **                        | ** ** | **Useful Lives  in Years** | ** ** | **Morgan** | ** ** | **Truck  Accessories** | ** ** | **SMG**    | ** ** | **Total**  | ** ** | **Accumulated  Amortization** | ** ** |
| Amortizable  intangible assets:   |       |                                 |       |       |       |                   |       |       |       |       |       |   |   |
| Customer base                     |       | 20                                   |       | $          | 1,588      |                   | $          | 2,575      |       | $          | 2,060      |   | $ | 6,223 |   | $ | 546 |   |
| Non-compete  agreements           |       | 5                                    |       | 188        |       | —                 |       | 110        |       | 298        |       | 103 |   |
| Supplier  relationship            |       | 10                                   |       | —     |       | —                 |       | 3,200      |       | 3,200      |       | 442 |   |
| Patents                           |       | 2                                    |       | —     |       | 300                    |       | —     |       | 300        |       | 300 |   |
|                              |       |                                 |       | 1,776      |       | 2,875                  |       | 5,370      |       | 10,021     |       | 1,391 |   |
| Unamortizable  intangible assets: |       |                                 |       |       |       |                   |       |       |       |       |       |   |   |
| Trade names                       |       | —                               |       | 988        |       | 616                    |       | 1,180      |       | 2,784      |       | — |   |
| Balance, December 31,  2006       |       |                                 |       | $          | 2,764      |                   | $          | 3,491      |       | $          | 6,550      |   | $ | 12,805 |   | $ | 1,391 |   |

 
| **December 31, 2005:**  | ** ** | ** **                           | ** ** | ** ** | ** ** | **Cost**               | ** ** | ** ** | ** ** | ** ** | ** ** |
|-----------------------------------|------------|--------------------------------------|------------|------------|------------|------------------------|------------|------------|------------|------------|------------|
| ** **                        | ** ** | **Useful Lives  in Years** | ** ** | **Morgan** | ** ** | **Truck  Accessories** | ** ** | **SMG**    | ** ** | **Total**  | ** ** | **Accumulated  Amortization** | ** ** |
| Amortizable  intangible assets:   |       |                                 |       |       |       |                   |       |       |       |       |       |   |   |
| Customer base                     |       | 20                                   |       | $          | 1,588      |                   | $          | 2,575      |       | $          | 1,100      |   | $ | 5,263 |   | $ | 233 |   |
| Non-compete  agreements           |       | 5                                    |       | 188        |       | —                 |       | 50         |       | 238        |       | 45 |   |
| Supplier  relationship            |       | 10                                   |       | —     |       | —                 |       | 1,700      |       | 1,700      |       | 122 |   |
| Patents                           |       | 2                                    |       | —     |       | 300                    |       | —     |       | 300        |       | 175 |   |
|                              |       |                                 |       | 1,776      |       | 2,875                  |       | 2,850      |       | 7,501      |       | 575 |   |
| Unamortizable  intangible assets: |       |                                 |       |       |       |                   |       |       |       |       |       |   |   |
| Trade names                       |       | —                               |       | 988        |       | 616                    |       | 800        |       | 2,404      |       | — |   |
| Balance, December 31,  2005       |       |                                 |       | $          | 2,764      |                   | $          | 3,491      |       | $          | 3,650      |   | $ | 9,905 |   | $ | 575 |   |

 

The amortization of intangible assets was $816, $523 and $422 for theyears ended December 31, 2006, 2005 and 2004, respectively. Estimatedamortization expense for each of the subsequent five years ending December 31is as follows: 2007 **—**$699, 2008**—**$699, 2009**—**$686, 2010**—**$651 and 2011**—**$647.

51

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**J.B. POINDEXTER& CO., INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in Thousands)**

Other assets, as of December 31, 2006 and 2005, consisted of thefollowing:
| ** **                              | ** ** | ** **                              | ** ** | **2006**                      | ** ** | ** **               | **2005**   | ** ** |
|-----------------------------------------|------------|-----------------------------------------|------------|-------------------------------|------------|--------------------------|------------|------------|
| ** **                              | ** ** | **Amortization  Period in  Years** | ** ** | **Accumulated  Amortization** | ** ** | **Net Book  Value** | ** ** | ** ** | **Accumulated  Amortization** | ** ** | **Net Book  Value** | ** ** |
| Other Assets:                           |       |                                    |       |                          |       |                     |       |       |   |   |   |   |
| Cash surrender  value of life insurance |       | —                                  |       | $                             | —     |                     | $          | 1,181      |   |   | $ | — |   | $ | 1,103 |   |
| Debt issuance  costs                    |       | 4-10                                    |       | 2,013                         |       | 4,342                    |       |       | 1,252 |   | 5,101 |   |
| Insurance cash  collateral deposit      |       | —                                  |       | —                        |       | 6,179                    |       |       | — |   | 5,520 |   |
| Other                                   |       | 3-10                                    |       | 1,504                         |       | 2,712                    |       |       | 695 |   | 3,096 |   |
| Total                                   |       |                                    |       | $                             | 3,517      |                     | $          | 14,414     |   |   | $ | 1,947 |   | $ | 14,820 |   |

 

The amortization of debt issuance costs was $761, $598 and $592 for theyears ended December 31, 2006, 2005 and 2004, respectively.  Estimated amortization expense for each ofthe subsequent five years ending December 31 is $840 per year.

TheCompany created a trust in favor of its insurance carrier to secure itsliabilities under its self insured, casualty insurance program including workmen’scompensation insurance.  The liabilitieswere previously secured by an irrevocable standby letter of credit that wascancelled upon the initial deposit of $5,520 into the trust.  During 2006, the Company deposited anadditional $659 to the 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 31,2006 and 2005.  These obligations arereflected on the accompanying balance sheet as accounts payables, a currentliability.

The total amount financedunder these agreements was $4,735 and $2,719 as of December 31, 2006 and 2005,respectively.  These borrowings bearinterest at the prime rate plus 150 basis points on balances outstanding over90 days.  As of December 31, 2006 and2005, the weighted average interest rate on all outstanding floor plan notespayable was 2.1% and 1.6%, respectively. The average interest rate on the liabilities that bear interest was9.61% and 8.75% at December 31, 2006 and 2005, respectively.

**9.             Revolving Credit Facility**

OnMarch 15, 2004, concurrently with the 8.75%Note offering discussed in Note 10, the Company entered into a securedrevolving credit agreement (the “Revolving Credit Facility”) that expires March15, 2008.  The Revolving Credit Facilitycurrently provides for borrowings by the Company of up to $30,000, which may beincreased to $50,000 at the Company’s option. The Revolving Credit Facilityallows the Company to borrow funds up to the lesser of $30,000 or an amountbased on the sum of: 1) advance rates applied to the total amounts of eligibleaccounts receivable and inventories of the Subsidiaries and 2) up to $20,000secured by the fixed assets of the Company. The advance rates are 85% for eligible accounts receivable and 60% foreligible inventory, as defined. Borrowings against inventory may not exceed $20,000.  The Company is entitled to include initiallyin the borrowing base up to an additional $20,000 of fixed assets, asdefined.  The availability of fundssecured by the fixed assets will amortize to zero over 60 months for thatportion secured by machinery and equipment and 120 months for real estate orthe remaining term of the Revolving Credit Facility, whichever is shorter.  The Revolving Credit Facility includes asub-facility for up to $15,000 of letters of credit.

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**J.B. POINDEXTER& CO., INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in Thousands)**

TheRevolving Credit Facility provides for borrowing at variable rates of interest,based on either LIBOR (London Interbank Offered Rate, which was 5.3%****at December 31, 2006) plus a margin of 1.75% or the bank’sbase rate (the greater of the Federal Funds Rate plus 0.5% or its prime rate,which was 8.25%****at December 31, 2006).  Interest is payable monthly including a feeof 0.375% on the portion of the maximum amount of borrowings of the $50,000total commitment, including the option to increase the commitment, that remainunused 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, 2006, 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.

Asof December 31, 2006 and 2005, the Company had no borrowings outstanding and$2,322 in standby letters of credit (see Note 16) and had unused grossborrowing availability, based on eligible accounts receivable and inventory, inexcess of the $30,000 borrowing limit under the Revolving Credit Facility.

**10.          Long-term Debt and 8.75% Note Offering**

Long-term debt as ofDecember 31, 2006 and 2005 consisted of:
| ** **                                                                           | ** ** | **2006** | ** ** | **2005** | ** ** |
|--------------------------------------------------------------------------------------|------------|----------|------------|----------|------------|
|                                                                                 |       |     |       |     |       |
| 8.75% Notes due 2014,  plus unamortized premium of $1.8 million at December 31, 2006 |       | $201,780 |       | $202,025 |       |
| Obligations under  capital leases                                                    |       | 5,833    |       | 3,357    |       |
| Total long-term  debt                                                                |       | 207,613  |       | 205,382  |       |
| Less current portion                                                                 |       | 1,934    |       | 1,017    |       |
| Long-term debt,  less current portion                                                |       | $205,679 |       | $204,365 |       |

 

OnMarch 15, 2004 the Company completed a note offering of $125,000, 8.75% seniornotes due in 2014 (the “8.75% Notes”)with interest payable semiannually.  Theproceeds, net of costs, of the note offering of approximately $121,600 wereused to: (1) redeem the Company’s 12.5% senior secured notes due 2007 in theamount of $79,800 including accrued interest through the redemption date ofApril 15, 2004 of  $3,900, (2) repayoutstanding revolver debt of the Company of $22,000 including interest, (3) repay outstanding term and revolver debtof Morgan Olson of $14,000 including accrued interest and prepayment penalties,(4) repay Specialty Manufacturing’s outstanding term loan of $773 includingaccrued interest and (5) provide temporary cash collateral for standby lettersof credit of $6,100.  The cash collateralfor standby letters of credit was subsequently refunded upon the cancellationof the letters of credit.  On May 17,2004 and January 21, 2005, the Company completed offers to sell an additional$30,000 and $45,000, respectively, of 8.75%Notes.  The additional $30,000 of 8.75% Notes were issued at par and the$45,000 of 8.75% Notes were issued ata 5% premium.  The additional 8.75% Notes were issued on the same termsas the original issue.  Net proceeds fromthe additional offerings of approximately $46,400 increased the Company’s cashbalance.  The 8.75% Notes mature on March 15, 2014 and bear interest at anannual rate of 8.75% payable each September 15 and March 15 to the holders ofrecord on September 1 and March 1 immediately preceding the interest paymentdate.  Costs associated with the $45,000offering of 8.75% Notes totaling approximately $1,300 have been capitalized asdebt issuance costs (see Note 7) 

53

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**J.B. POINDEXTER& CO., INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in Thousands)**

andwill be amortized over the term of the 8.75% Notes.  The debt issuance costs related to theretired 12.5% senior secured notes due 2007 of approximately $2,400 wereexpensed during the year ended December 31, 2004.On May 11, 2005, the Company completed anoffer to exchange (“2005 Exchange Offer”) $200 million principal amount of its8.75% Notes which had been registered under the Securities Act for any and allof its outstanding unregistered 8.75% Notes.

The8.75% Notes are subordinated toborrowings under the Revolving Credit Facility (see Note 9) and other securedindebtedness to the extent of the assets securing the debt.  Also, the Company’s obligations under the 8.75% Notes are guaranteed by each whollyowned subsidiary 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).

TheCompany has the option to redeem the 8.75%Notes at any time on or after March 15, 2009, at a defined premium plusaccrued and unpaid interest to the date of redemption.  The Company may redeem up to 35% of the 8.75% Notes prior to March 15, 2007, at adefined premium plus accrued and unpaid interest to the date of redemption, inconnection with an Equity Offering, as defined.

The 8.75% Notes’ indentureincludes covenants that limit the ability of the Company to: incur additionaldebt, including sale and leaseback transactions; pay dividends or distributionson its capital stock or repurchase capital stock; issue stock of subsidiaries;make certain investments; create liens on its assets to secure debt; enter intotransactions with affiliates; merge or consolidate with another company; andtransfer and sell assets.  As noted, theindenture contains a covenant to limit the incurrence of additionalindebtedness as measured by its Consolidated Coverage Ratio, as defined.  The Company may incur indebtedness if thisratio is greater than 2.0 to 1.0 and there is no other event of default, asdefined.  At December 31, 2006, the ConsolidatedCoverage Ratio, as defined, was 2.4 to 1.0.

The Company estimates the fair value of the 8.75% Notes at December 31, 2006 and 2005 was approximately$171,000 and $169,000, respectively, based on their market value at that datecompared to a recorded amount of $200,000.

The Company’s obligation under capital leases is due in varyingmaturity dates through 2011.  The capitalleases are secured by certain equipment with a net book value of approximately$6,165 and $2,935 at December 31, 2006 and 2005, respectively.

**Maturities.** Aggregate principal payments on long-term debt based on scheduledmaturities for the next five years and thereafter as of December 31, 2006are as follows: ** **
| 2007                 |   | $       | 1,934   |   |
|----------------------|--------|---------|---------|--------|
| 2008                 |   | 1,878   |    |
| 2009                 |   | 1,557   |    |
| 2010                 |   | 988     |    |
| 2011                 |   | 668     |    |
| 2012 and  thereafter |   | 200,588 |    |
|                 |   | $       | 207,613 |   |

 

54

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**J.B. POINDEXTER& CO., INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in Thousands)**

**11.**            OperatingLeases

The Company leases certain manufacturing facilities and equipment undernon-cancelable operating leases certain of which contain renewal options.  The future minimum lease payments subsequentto December 31, 2006 are as follows:
| 2007                          |   | $      | 7,692  |   |
|-------------------------------|--------|--------|--------|--------|
| 2008                          |   | 6,496  |   |
| 2009                          |   | 5,611  |   |
| 2010                          |   | 4,551  |   |
| 2011                          |   | 2,677  |   |
| 2012 and  thereafter          |   | 19,611 |   |
| Total minimum lease  payments |   | $      | 46,638 |   |

 

Total rental expense included in continuing operations under alloperating leases was approximately $8,933, $8,542 and $9,217 for the yearsended December 31, 2006, 2005 and 2004, respectively.

**12.          Supplemental Cash Flow Information**

The supplemental cash flowinformation for the years ended December 31, 2006, 2005 and 2004 was asfollows:
| ** **                                             | ** ** | **2006** | ** ** | **2005** | ** ** | **2004** | ** ** |
|--------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Cash paid for  interest                                |       | $        | 18,070     |     | $          | 16,517   |       | $ | 12,069 |   |
| Cash paid for  income taxes                            |       | 2,022    |       | 4,228    |       | 942      |       |
| Non-cash  investing and financing activities:          |       |     |       |     |       |     |       |
| Capital lease  obligations for machinery and equipment |       | 4,051    |       | 970      |       | 2,950    |       |
|                                                        |            |          |            |          |            |          |            |  |  |  |

 

**13.**                               Income Taxes

Theincome tax provision from continuing operations consists of the following forthe years ended December 31, 2006, 2005 and 2004:
| ** **            | ** ** | **2006** | ** ** | **2005** | ** ** | **2004** | ** ** |
|-----------------------|------------|----------|------------|----------|------------|----------|------------|
| Current:              |       |     |       |     |       |     |       |
| Federal               |       | $        | 3,390      |     | $          | 1,819    |       | $ | 176 |   |
| State                 |       | 865      |       | 362      |       | 1,441    |       |
| Foreign               |       | —   |       | (433     | )          | 394      |       |
|                  |       | 4,255    |       | 1,748    |       | 2,011    |       |
| Deferred:             |       |     |       |     |       |     |       |
| Federal               |       | 3,174    |       | 1,784    |       | 1,972    |       |
| State                 |       | (1,739   | )          | (950     | )          | 151      |       |
| Foreign               |       | (1,869   | )          | —   |       | —   |       |
|                  |       | (434     | )          | 834      |       | 2,123    |       |
| Income tax  provision |       | $        | 3,821      |     | $          | 2,582    |       | $ | 4,134 |   |

 

55

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**J.B. POINDEXTER& CO., INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in Thousands)**

The following tablereconciles the differences between the federal statutory income tax rate andthe effective tax rate for the years ended December 31, 2006, 2005 and2004:
| ** **                                                    | ** ** | **2006**   | ** ** | **2005** | ** ** | **2004**   | ** ** |
|---------------------------------------------------------------|------------|------------|------------|----------|------------|------------|------------|
| ** **                                                    | ** ** | **Amount** | ** ** | **%**    | ** ** | **Amount** | ** ** | **%** | ** ** | **Amount** | ** ** | **%** | ** ** |
| Tax provision at federal statutory income tax rate            |       | $          | 4,452      |     | 35         | %          | $          | 2,616 |   | 34 | % | $ | 4,960 |   | 34 | % |
| Valuation allowance                                           |       | —     |       | —   |       | (1,000     | )          | (13 | ) | (511 | ) | (4 | ) |
| Increase in state net  operating loss carryforwards           |       | (700       | )          | (6       | )          | —     |       | — |   | — |   | — |   |
| Non-deductible expenses                                       |       | 336        |       | 3        |       | 81         |       | 1 |   | (47 | ) | (1 | ) |
| State income taxes, net of federal income tax  benefit        |       | 453        |       | 3        |       | 239        |       | 3 |   | 951 |   | 7 |   |
| Foreign income and withholding taxes, net of federal  benefit |       | (167       | )          | (1       | )          | 106        |       | 2 |   | 260 |   | 2 |   |
| Other                                                         |       | (553       | )          | (4       | )          | 540        |       | 7 |   | (1,479 | ) | (10 | ) |
| Provision for  income taxes and effective tax rates           |       | $          | 3,821      |     | 30         | %          | $          | 2,582 |   | 34 | % | $ | 4,134 |   | 28 | % |

 

Thedomestic and foreign components of income (loss) from continuing operationsbefore income taxes and discontinued operations were:
| ** ** | ** ** | **2006** | ** ** | **2005** | ** ** | **2004** | ** ** |
|------------|------------|----------|------------|----------|------------|----------|------------|
| Domestic   |       | $        | 18,187     |     | $          | 8,934    |       | $ | 13,512 |   |
| Foreign    |       | (5,466   | )          | (1,240   | )          | 1,023    |       |
| Total      |       | $        | 12,721     |     | $          | 7,694    |       | $ | 14,535 |   |

 

Deferred income taxes are based on the estimated future tax effects ofdifferences between the financial statements and tax basis of assets andliabilities given the provisions of the enacted tax laws.  The net deferred tax assets and liabilitiesas of December 31, 2006 and 2005 were: 
| ** **                                        | ** ** | **2006** | ** ** | **2005** | ** ** |
|---------------------------------------------------|------------|----------|------------|----------|------------|
| **Current deferred tax asset:**                   |       |     |       |     |       |
| Allowance for doubtful accounts                   |       | $        | 346        |     | $          | 329 |   |
| Employee benefit accruals and reserves            |       | 1,191    |       | 951      |       |
| Other                                             |       | 234      |       | 119      |       |
|                                              |       |     |       |     |       |
| Total current deferred tax asset                  |       | 1,771    |       | 1,399    |       |
|                                              |       |     |       |     |       |
| **Long-term deferred tax asset:**                 |       |     |       |     |       |
| Tax credit and state operating loss carryforwards |       | 7,858    |       | 7,810    |       |
| Warranty liabilities                              |       | 1,384    |       | 1,455    |       |
| Other                                             |       | 2,436    |       | 2,271    |       |
| Valuation allowance                               |       | (3,754   | )          | (3,754   | )          |
|                                              |       |     |       |     |       |
| Total long-term deferred tax asset                |       | 7,924    |       | 7,782    |       |
|                                              |       |     |       |     |       |
| **Long-term deferred tax liabilities:**           |       |     |       |     |       |
| Depreciation and amortization                     |       | (5,655   | )          | (5,575   | )          |
| Intangible assets                                 |       | (1,134   | )          | (1,134   | )          |
|                                              |       |     |       |     |       |
| Total long-term deferred tax liability            |       | (6,789   | )          | (6,709   | )          |
| Net long-term deferred tax asset                  |       | 1,135    |       | 1,073    |       |
| Net deferred tax  asset                           |       | $        | 2,906      |     | $          | 2,472 |   |

 

 

56

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**J.B. POINDEXTER& CO., INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in Thousands)**

TheCompany had alternative minimum tax credit carryforwards of approximately $536and $3,000 at December 31, 2006 and 2005, respectively, for U.S. federal incometax purposes, which may be carried forward indefinitely.  The Company had capital loss carryforwards ofapproximately $3,600 at December 31, 2006 and 2005 for U.S. federal income taxpurposes, which may be carried forward for five years and can only offsetcapital gains.  At December 31, 2006 theCompany had a full valuation allowance against the capital loss carryforwards.

**As aresult of the Company’s subsidiaries conversion into Delaware limited liabilitycompanies in September 2006, the Company was able to generate additional statenet operating loss carryforwards, which provided an after tax benefit of$700.  At December 31, 2006 and 2005, theCompany had state tax net operating loss carryforwards of approximately $80,000and $63,000, respectively, and recognized a deferred tax asset of $4,100 and$3,400, respectively.  The state netoperating loss carryforwards expire at varying dates ranging from 1 to 20 years.  At December 31, 2006, the Company recorded avaluation allowance of approximately $2,500 against this deferred tax asset asit was uncertain as to whether it would be realized.  In 2005, the Company reduced the state taxvaluation reserve by approximately $1,000. The Company had Canadian net operating loss carryforwards ofapproximately $5,500 as of December 31, 2006 and recognized a deferred taxasset of $1.9 million.  The Canadian netoperating loss carryforwards expire at varying dates ranging from 1 to 20years, with a significant majority being greater than 10 years.**

**14.**            Common Stock

Asof December 31, 2006 and 2005, there were 100,000 shares authorized and3,059 shares issued and outstanding of JBPCO common stock with a par value of$.01 per share.  JBPCO was incorporatedin Delaware.  No other classes of commonstock, preferred stock or common stock equivalents exist.

**15.**            Employee Benefit Plans

*Employee Incentive Plans*.  TheCompany has an incentive compensation planfor members of upper management of each of the subsidiaries to provide for thepayments of annual bonuses based upon the attainment of performance-basedgoals. Eligible employees are entitled to receive a bonus if the subsidiaryattains or surpasses a stated percentage of that subsidiary’s earnings beforeinterest and taxes, with the amount of bonus being tied to the subsidiary’sactual pre-tax profits. Individual bonuses are then allocated among theeligible employees based upon their individual achievement of statedperformance objectives including working capital performance objectives. TheCompany incurred expenses related to this plan totaling $3,125, $1,539 and$1,508 for the years ended December 31, 2006, 2005 and 2004, respectively.

*JBPCO 401(k) Defined Contribution Plan.* The JBPCO-sponsored 401(k) savings plan allowsparticipating employees to contribute through salary deductions up to 100% ofgross compensation and provides for Company matching contributions up to 3percent of the first 6 percent of gross pay as well as the opportunity for anannual discretionary contribution.  TheCompany increased the matching percentage to 3 percent from 2.5 percenteffective June 1, 2005.  The Company hasnot made discretionary contributions. Vesting in the Company matching contribution is 20% per year over thefirst five years.  The Company incurredrelated employer matching contribution and administrative expenses of $1,634,****$1,366 and $1,029 during the years ended December 31, 2006,2005 and 2004, respectively.

*Defined Benefit Plan.*****Truck Accessories assumed future sponsorshipof a defined benefit plan (the “Plan”) covering hourly employees at its Gem Topdivision that was sold with all the employees terminated effective February 28,2003.  The Plan was frozen effectiveMarch 31, 1996 and at December 31, 2006 and 2005 the Plan was under-funded byapproximately $87 and $33, respectively. The Company’s funding policy for the Plan is to make the minimum annualcontributions required by applicable regulations.  Minimum contributions for the 2006 plan yeartotaled $66.

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**J.B. POINDEXTER& CO., INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED 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 $314 and $286 as of December 31, 2006 and 2005,respectively.  The pension expenserecognized was $23, $39 and $28 for the years ended December 31, 2006, 2005 and2004, respectively.  Based on theimmateriality of the Plan, Management does not believe expanded disclosure isnecessary.

**16.**            Commitments and Contingencies

*Claims and Lawsuits.*  The Company is involved incertain claims and lawsuits 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 of the Company.

*Letters of Credit and Other Commitments.** ***The Company had $2,322 in standby letters ofcredit outstanding at December 31, 2006 and 2005, primarily securing theCompany’s insurance programs.  During2004, the Company deposited $5,520 into a trust account in favor of itsinsurance carrier (see Note 7).  Thefunds held in trust were increased to $6,179 during 2006 and will be held intrust to secure the Company’s insurance programs.  Income from the trust accrues to the Company.

During 2005, the Company entered into an agreement with a key supplier,whereby it will exclusively purchase inventory from this supplier for fiveyears, in return for favorable pricing. The Company estimates that it will purchase approximately $8,000 fromthis supplier in 2007.

*Consigned ChassisInventories. *The Company obtains vehicle chassis forcertain units produced at Morgan and Commercial Babcock 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 consolidatedstatements of income totaled $76, $28 and $0 for the years ended December 31,2006, 2005 and 2004, respectively.  Totalconsigned chassis inventory totaled $1,020 and $1,400 at December 31, 2006 and2005, respectively.

*Environmental Matters*.*** *** The Company’s operations are subject to avariety of federal, state and local environmental and health and safetystatutes and regulations, including those relating to emissions to the air,discharges to water, treatment, storage and disposal of waste and remediationof contaminated sites. In certain cases, these requirements may limit theproductive capacity of itsoperations.Certain laws, including Superfund 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. Someof the Company’s operations also require permits which may restrict itsactivities and which are subject to renewal, modification or revocation byissuing authorities. In addition, the Company generates non-hazardous 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 have typically been resolved by investigating the allegednoncompliance, correcting any noncompliant conditions and paying minor fines,none of which individually or in the aggregate has had a material adverseeffect on it.   Further,the Company cannot ensure that it has been or will be at all times incompliance with all of these requirements, 

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**J.B. POINDEXTER& CO., INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in Thousands)**

including those related toreporting or permit restrictions or that it will not incur material fines,penalties, costs or liabilities in connection with such requirements or afailure to comply with them.  However,the Company expects that the nature of its operations will continue to make itsubject to increasingly stringent environmental regulatory standards. Althoughthe Company believes it has made sufficient capital expenditures to maintaincompliance with existing laws and regulations, future expenditures may benecessary, as compliance standards and technology change or as unanticipatedcircumstances arise. Unforeseen and significant expenditures required, forexample, 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.

MorganOlson’s two manufacturing sites in Sturgis, Michigan overlie, or are in closeproximity to, a regional plume of volatile organic compound groundwatercontamination. Available information indicates that one of the sites was alikely source of part of the groundwater contamination, and that groundwatercontamination is present under the second site. In August 2003, MorganOlson submitted applications for Baseline Environmental Assessments for eachsite to the Michigan Department of Environmental Quality (“MDEQ”). InOctober 2003, the MDEQ accepted these applications and granted to it aliability exemption for any pre-acquisition releases of volatile organiccompounds from these sites that may have contributed to the regionalgroundwater contamination subject to certain conditions, including an agreementnot to use chlorinated solvents and to implement certain engineering controlsto minimize future releases at the sites. Based on the granting of theliability exemption, Morgan Olson does not believe that it has anyresponsibility for the investigation or remediation of the regional groundwatercontamination. However, the exemption does not apply to other applicable lawsor regulations, and there can be no guarantee that newly discovered conditionsor future activities at the sites will not result in significant costs.

In June 2005, Morgan Olsonwas notified by the MDEQ that it had failed to file certain reports related toits air permit, wastewater discharge, and chemical inventory. Morgan Olsonagreed to settle these alleged violations and the final consent order wassigned by both parties in September 2006 with payment of an immaterial penalty.

In July, 2005, Morgannotified the Environmental Protection Agency (“EPA”) that it was investigatingthe possible need to file reports required pursuant to Section 313 of theEmergency Planning and Community Right-to-Know Act, and regulations promulgatedthereunder. All necessary reports were completed and filed with the EPA byAugust 31, 2005.  Action by the EPA isprobable and the financial impact of such enforcement action, if any cannot beeliminated but could be material. A letter from EPA requesting additionalinformation was received in December 2006 and a response submitted.

Beginning in 2003, TruckAccessories submitted a request to modify its air permit and increase theemission limits. During this process, the Pennsylvania Department ofEnvironmental Protection (“DEP”) made the Company aware that it believed thatthe plant had ongoing violations. The Company has investigated the allegedviolations and does not fully agree with the DEP.  In an attempt to settle the matter andimprove the operating capacity of the operation, the company has completedpermit and recordkeeping modifications at the request of the DEP.  The proposed penalty is $75 and is subject tofurther negotiation and the consent order should be signed in the secondquarter of 2007.

**17.          Related Party Transactions**

The Company was party to a Management Services Agreement withSouthwestern Holdings, Inc. (“Southwestern”), a corporation owned by Mr.Poindexter.  The services agreement wasterminated June 30, 2006 when Mr. Poindexter became an employee of theCompany.  Pursuant to the ManagementServices Agreement, Southwestern provided services to the Company, includingthose of Mr. Poindexter.  The Companypaid to Southwestern a base fee of approximately $46 per month for theseservices, subject to annual automatic increases based upon the consumer priceindex.  The Company may also pay adiscretionary annual bonus to Southwestern subject to certain limitations; nonewas paid in 2006, 2005 and 2004. The Company paid Southwestern $346, $569 and$549 during 2006, 2005 and 2004, respectively, for all these services.

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**J.B. POINDEXTER& CO., INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in Thousands)**

EffectiveJuly 18, 2004, Morgan acquired from a partnership, of which Mr. Poindexter andMr. Magee were partners, a certain real property located in Georgia.  Morgan paid approximately $2,200 for theproperty, which was determined to be the fair market value of theproperty.  The property had been leasedfrom the partnership since 1990 and is used by Morgan for manufacturing truckbodies.  Morgan paid $174****inrent to the partnership in 2004 pursuant to such lease.

***18.          SelectedQuarterly Information (Unaudited)***

***The Company’saccounting records are maintained on the basis of four 13 week quarters.  Shown below are the selected unauditedquarterly data.***
| ** **                                  | ** ** | **March 31,  2006** | ** ** | **June 30,  2006** | ** ** | **September 30,  2006** | ** ** | **December 31,  2006** | ** ** |
|---------------------------------------------|------------|--------------------------|------------|-------------------------|------------|------------------------------|------------|-----------------------------|------------|
| Net sales                                   |       | $                        | 185,541    |                    | $          | 226,046                      |       | $                           | 197,968    |   | $ | 185,824 |   |
| Cost of sales                               |       | 165,348                  |       | 196,605                 |       | 172,580                      |       | 165,452                     |       |
| Gross profit                                |       | 20,193                   |       | 29,441                  |       | 25,388                       |       | 20,372                      |       |
| Selling, general and administrative expense |       | 15,140                   |       | 15,569                  |       | 16,127                       |       | 16,198                      |       |
| Closed and excess facility costs            |       | —                   |       | —                  |       | —                       |       | 2,678                       |       |
| Other expense (income)                      |       | (181                     | )          | (4                      | )          | 10                           |       | (27                         | )          |
| Operating income                            |       | 5,234                    |       | 13,876                  |       | 9,251                        |       | 1,523                       |       |
| Interest expense, net                       |       | 4,469                    |       | 3,826                   |       | 4,244                        |       | 4,624                       |       |
| Income tax provision (benefit)              |       | 304                      |       | 3,830                   |       | 852                          |       | (1,165                      | )          |
| Net income                                  |       | $                        | 461        |                    | $          | 6,220                        |       | $                           | 4,155      |   | $ | (1,936 | ) |
| Depreciation and amortization               |       | $                        | 2,773      |                    | $          | 2,988                        |       | $                           | 3,185      |   | $ | 3,071 |   |
| Amortization of debt issuance costs         |       | $                        | 128        |                    | $          | 180                          |       | $                           | 129        |   | $ | 324 |   |
|                                        | ** ** | **March 31,  2005**      | ** ** | **June 30,  2005**      | ** ** | **September  30, 2005**      | ** ** | **December 31,  2005**      | ** ** |
| Net sales                                   |       | $                        | 162,465    |                    | $          | 178,279                      |       | $                           | 173,927    |   | $ | 153,447 |   |
| Cost of sales                               |       | 144,986                  |       | 155,635                 |       | 152,788                      |       | 139,711                     |       |
| Gross profit                                |       | 17,479                   |       | 22,644                  |       | 21,139                       |       | 13,736                      |       |
| Selling, general and administrative expense |       | 11,595                   |       | 12,341                  |       | 13,176                       |       | 12,853                      |       |
| Other expense (income)                      |       | (49                      | )          | 201                     |       | 409                          |       | (57                         | )          |
| Operating income                            |       | 5,933                    |       | 10,102                  |       | 7,554                        |       | 940                         |       |
| Interest expense, net                       |       | 4,232                    |       | 3,931                   |       | 4,513                        |       | 4,159                       |       |
| Income tax provision (benefit)              |       | 488                      |       | 2,304                   |       | 1,657                        |       | (1,827                      | )          |
| Net income                                  |       | $                        | 1,253      |                    | $          | 3,867                        |       | $                           | 1,384      |   | $ | (1,392 | ) |
| Depreciation and amortization               |       | $                        | 2,732      |                    | $          | 2,535                        |       | $                           | 2,497      |   | $ | 2,596 |   |
| Amortization of  debt issuance costs        |       | $                        | 138        |                    | $          | 184                          |       | $                           | 133        |   | $ | 143 |   |

 

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

**Item 9.**                          Changesin and Disagreements with Accountants on Accounting and Financial Disclosure

**None.**

**Item 9a.**                    Controls andProcedures

Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a—15 ofthe Securities Exchange Act of 1934 (“Exchange Act”) promulgated there under,the Company’s chief executive officer and principal financial officer haveevaluated the effectiveness of disclosure controls and procedures as of the endof the period covered by this report (the “Evaluation Date”).  Based on such evaluation, the Company’s chiefexecutive officer and principal financial officer have concluded thatdisclosure controls and procedures were effective as of the Evaluation Date toensure that information required to be disclosed in reports that are filed orsubmitted under the Exchange Act are recorded, processed, summarized andreported within the required time periods. There have been no changes in internal controls over financial reportingduring the period covered by this report that were identified in connectionwith the evaluation referred to above that have materially affected, or arereasonably likely to materially affect, internal control over financialreporting.

**Item 9b.**                    OtherInformation

None.

**PART III**

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

The Company’s directors and executive officers are setforth below. All directors hold office until the next annual meeting or untiltheir successors are duly elected and qualified. The executive officers areappointed by the Board of Directors annually and serve at the discretion of theBoard of Directors.
| Name                | **Age** | ** ** | **Position**                                                  |
|---------------------|---------|------------|---------------------------------------------------------------|
| John B.  Poindexter | 62      |       | Chairman of the Board, President and Chief Executive  Officer |
| Stephen P. Magee    | 59      |       | Director                                                      |
| William J. Bowen    | 85      |       | Director                                                      |
| Robert S.  Whatley  | 55      |       | Vice President Finance, Secretary and Treasurer               |
| Joseph M.  Fiamingo | 57      |       | Senior Vice President of Operations                           |
| Larry T. Wolfe      | 58      |       | Vice President Administration and Assistant Secretary         |

 

John B.Poindexter has served as Chairman of the Board of Directors since 1988 andChief Executive Officer since 1994.  Hewas President from November 2002 until September 2005 and again from November2006 to present.  From 1985 through 1994,Mr. Poindexter was the majority limited partner of J.B.Poindexter & Co., L.P., a privately held, long-term equity investmentand management firm formed by Mr. Poindexter in 1985. From 1983 through1985, he was co-managing partner of KD/P Equities, a privately held equityinvestment firm that he co-founded. From 1976 through 1983, Mr. Poindexterworked for Smith Barney, Harris Upham & Co. While with Smith Barney,he became a senior vice president in its Smith Barney Venture Corporation andSmith Barney Capital Corporation affiliates and a partner in First CenturyPartnership II, an investment fund managed by Smith Barney Capital Corporation.

StephenP. Magee has served as Director since the Company was formed in 1988, asTreasurer from 1988 to 2001 and as Chief Financial Officer from 1994 to 2001.Mr. Magee also serves as Chairman of the Audit Committee of the Board ofDirectors.

WilliamJ. Bowen has served as Director since 1988. Mr. Bowen retired in 1992 as the Chairman of the Board of Transco EnergyCompany, a diversified energy company based in Houston, Texas. Mr. Bowenserved as Chief 

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

ExecutiveOfficer of Transco Energy from 1974 until his retirement from that position in1987. Mr. Bowen serves on the Company’s Audit Committee.

RobertS. Whatley has served as Vice President since June 1994. He served asChief Financial Officer of a petrochemical trading company and Vice Presidentof Finance and Treasurer of Weatherford International, an energy servicescompany. He is a Certified Public Accountant and a member of the Institute ofChartered Accountants in England and Wales.

JosephM. Fiamingo was named Senior Vice President of Operations of J.B. Poindexter& Co. on June 16, 2006.  Prior tojoining the Company, he had spent the prior six years serving as President of avariety of companies owned by the private equity company Hicks, Muse, Tate andFurst, Inc.

LarryT. Wolfe has served as Vice President of Administration since May 1995. Hepreviously served as Vice-President of Human Resources and AdministrativeServices for Transco Energy Company.

**Audit Committee**

The Audit Committee is astanding committee of the Board of Directors. The primary purpose of theCommittee is to assist the Board of Directors in fulfilling its oversightresponsibility relating to (1) the integrity of our financial statements andfinancial reporting process and our systems of internal accounting andfinancial controls; (2) the performance of the internal audit servicesfunction; (3) the annual independent audit of our financial statements, theengagement of the independent auditors and the evaluation of the independentauditors’ qualifications, independence and performance; and (4) the complianceby the Company with legal and regulatory requirements, including disclosurecontrols and procedures. The 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 sole authorityto engage, evaluate and replace the independent auditor. The Committee also hasthe authority to retain special legal, accounting and other consultants itdeems necessary in the performance of its duties. The Committee meets regularlywith our management, independent auditors and internal auditors to discussinternal controls and financial reporting process and also meets regularly withthe independent auditors and internal auditors in private.

The current members of theAudit Committee are Messrs. Magee (chairman) and Bowen. Since the Company isnot a publicly traded company, on a listed exchange, the Board of Directors hasnot designated a member of the Audit Committee as an “audit committee financialexpert” who is independent as the term is used in Item 7(d)(3)(iv) of Schedule14A under the Exchange Act.

**Other significant persons**

Although not an executiveofficer, each of the following persons is an officer of the referencedsubsidiary or division thereof and is an important contributor to operations:
| Name               | **Age** | ** ** | **Position**                         |
|--------------------|---------|------------|--------------------------------------|
| Nelson Byman       | 60      |       | President of Specialty Manufacturing |
| Bruce Freeman      | 53      |       | President of Truck Accessories       |
| Bill Flint, Jr.    | 57      |       | President of EFP                     |
| Norbert Markert    | 46      |       | President of Morgan Truck Body       |
| Patrick Warmington | 53      |       | President of Morgan Olson            |
| Robert  Whitehouse | 52      |       | President of Specialty Vehicle Group |

 

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

Nelson Byman became President of MIC Group in June 1998and President of Specialty Manufacturing in January 2001. Previously,Mr. Byman was Vice President/General Manager of a domestic division ofWeatherford/Enterra, a manufacturer of oilfield-related equipment.

Bruce Freeman was named Senior Vice President ofOperations of J.B Poindexter & Co., Inc. on November 15, 2001and became President of Truck Accessories during July 2002. Previously,Mr. Freeman spent 20 years with the General Electric Company in avariety of operations and senior management assignments followed by four yearsas President of AEC Sterling and later as a Senior Vice President withNorthwestern Growth Corporation.

Bill Flint, Jr. was named President of EFP onOctober 6, 2003. Previously, Mr. Flint was President and ChiefOperating Officer of Flambeau Corporation, a plastics manufacturing company.

Norbert Markert became the President and Chief Operating Officer ofMorgan in November 2005.  Previously, heserved two years as the President of Autoliv of North America after having beenthe President of Pilkington Automotive North America for four years.

Patrick Warmington became the President of Morgan Olson on November 21,2005.  Prior to joining Morgan Olson, Mr.Warmington had held a variety of senior management positions in the aluminum,wire and trailer industries that included assignments as President of AkronSpecialized Products, CEO of Transcraft Corporation and President of RavenTrailers.

Robert Whitehouse became the President of the Specialty Vehicles Groupon December 19, 2005.  Mr. Whitehouse hadserved for ten years as the President and CEO of IC Corporation, formerly knownas American Transportation Corporation.

**Code of Ethics**

The Board of Directors has adopted a code of ethics thatapplies to its executive officers. Management does not believe that a code ofethics is a substitute for an obligation to always act in an honest and ethicalfashion.  The code of ethics is includedas an Exhibit to this Form 10-K.

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

**Item 11.**                   Executive Compensation

**Overviewof Compensation Program**

The Chairman of the Board of Directors (the “Chairman”) along withother Board members and Company senior executives (for the purpose of thisdiscussion, the “Committee”) has the responsibility for establishing,implementing and monitoring adherence to the Company’s compensationprogram.  The Committee ensures that thetotal compensation paid to executives is fair, reasonable and competitive.

**Compensation Philosophy and Objectives**

The Committee believes that the most effective executive compensationprogram is one that is designed to reward the achievement of specific goals andwhich aligns 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 thecompensation paid to executives at similar companies.  To that end, the Committee believes executivecompensation provided by the Company to its executives, including the namedexecutive officers, should include a combination of competitive base salariesand performance-driven incentive plans.

**Role of Executive Officers in Compensation Decisions**

The Committee participates in compensation assessments and recommendationsfor the executive officers of the Company and the Chairman reserves the rightof final approval.  The Chairman furtherreserves the right to exercise discretion in modifying any recommendedadjustments or awards.

**Setting Executive Compensation**

The Committee has structured the Company’s annual and long-termincentive-based executive compensation to motivate executives to achieve thefinancial goals set by the Company and reward executives for achieving suchgoals.  In furtherance of these objectives,the Committee periodically engages the services of outside executivecompensation consultants to provide relevant market data and alternatives toconsider when making compensation decisions

In making compensation decisions, the Committee compares the totalcompensation opportunity of executives as compared to a nationwide survey ofsimilar-sized companies from a cross section of manufacturing industries.  These data are updated annually and arepresented to the Company by a third-party firm expressed as 25th, 50th and 75th percentiles.  The Company strives to manage the base andincentive compensation to the 50th percentile which is further influenced byindividual performance, Company performance and an executive’s length ofservice.

A significant portion of total compensation is provided as incentivecompensation realized by the executives as a result of the Company achievingestablished objectives.  Historically,and in fiscal 2006, incentive awards were reflective of both the Company’sachievement of established objectives and the individual executive’sperformance.

**2006 Executive Compensation Components**

For the fiscal year ended December 31, 2006, the principal componentsof compensation for named executive officers were:

·                  Base salary

·                  Performance-based annual incentivecompensation

·                  Performance-based long-term incentivecompensation

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

The Company does not provide any executives with any form of non-cashcompensation such as retirement plans or perquisites.

**Base Salary**

The Company provides executive officers with a base salary tocompensate them for services rendered during the fiscal year.  Salary ranges for each executive aredetermined based on their position and responsibility and by using market data.  The Company strives to manage an executive’sbase salary compensation to the 50th percentile of the market data provided by anoutside consultant.  Salary levels aretypically considered annually as part of the Company’s performance reviewprocess as well as upon a promotion or other change in job responsibility.  Merit-based increases for executives are aresult of recommendations made by the Committee and subject to the finalapproval of the Chairman.

**Performance Based Annual Incentive Plan   **

The Annual Management Incentive Plan (the “Annual Plan”) wasestablished in the mid-1990s to provide an annual incentive opportunity tosenior executives throughout the Company. The purpose of the Annual Plan is to align the interests of theexecutives with the financial performance at either their subsidiary or theparent.  At the beginning of eachcalendar year, the Chairman reviews and approves each participant’s eligibilityin the Annual Plan and his incentive target which is expressed as a proportionof base salary earnings for the year.

Participants in the Annual Plan at the parent level have theirperformance measured by the consolidated earnings performance of the Company inrelationship to the earnings budget established at the beginning of eachcalendar year.  Participants in theAnnual Plan at the subsidiary level have their performance measured by acombination of their subsidiary’s performance to an established earnings budgetand the management of working capital targets. Performance to the earnings budget accounts for 75% of the incentiveaward and the management of working capital accounts for 25%.  However, if the earnings budget is notachieved at least at the threshold level, no incentive awards are paid.

The threshold level is set at 80% of budgeted earnings.  Once the annual audit is complete and theearnings performance verified at both the parent and subsidiary 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 incentive targetaward is paid.)  The Annual Plan maximumpayout is achieved when the earning’s performance is 130% of budgeted earningsand 169% of a participant’s incentive target.

In any calendar year where the Company’s or a subsidiary’s performancefalls below the threshold performance level, the Committee may make modestdiscretionary awards to certain Annual Plan participants to reward exceptionalperformance.

In 2007, the income thresholds under the Annual Plan were reduced tooffset negative industry trends that were not anticipated when the grants underthe Annual Plan were established, resulting in greater awards under the AnnualPlan than would have been the case if those adjustment had not been made.

**Long-Term Performance Plan  **

The Long-Term Performance Plan (“LTPP”) was established in 1999 and wasdesigned to align the interests and performance goals of the most seniorexecutives in the Company with the long-term financial performance of theCompany.  Each element of the LTPP has athree-year duration and awards are paid only at the end of the three-yearcycle, depending upon performance versus established goals.

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

Each year, the Committee designates participants in the LTPP andprovides them with a letter which outlines their participation, their targetedaward and the performance criteria. Because of the three-year cycle, a regular participant in the LTPP willhave three cycles in progress simultaneously, one cycle will be in it’s firstyear, one in the second year and one in the third year.  Targeted participant awards are expressed asa percent of their base annual salary at the end of the three-year cycle.

Performance of the LTPP is determined by the cumulative Profit BeforeTax (“PBT”) financial performance of the Company over each three-year period asmeasured against the budgeted PBT for the same time period.  Threshold performance is achieved when theCompany’s cumulative PBT achieves 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.  Awards are paid at the conclusion of eachthree-year cycle, following the audit of the Company’s results of operations.

For any calendar year that the Company’s performance fails to reach atleast the 80% threshold level, an 80% achievement factor is used for thatyear.  The Chairman has the authority toamend, modify or cancel the Plan at any time following the receipt ofrecommendations from the Committee.

**Nonqualified Deferred Compensation Plan**

The Company sponsors a nonqualified deferred compensation plan thatallows eligible employees to elect to defer a portion of their annualcompensation for tax purposes.  There isno company match and deferred amounts are invested in funds managed by anindependent investment company.  Thefunds earn market rates of return and are subject to normal market risk.

**401-K Plan**

The Company sponsors a 401(k) savings plan that allows participatingemployees to contribute a portion of their gross compensation and provides forCompany matching contributions up to three percent of the first six percent ofgross pay, as well as the opportunity for an annual discretionarycontribution.  The Company has not made adiscretionary contribution to date. Vesting in the Company’s matching contribution is 20% per year over thefirst five years. 

**Perquisites and Other Personal Benefits   **

The Company does not provide any form of perquisite, executive benefitprogram or personal benefits to any of the named executives or any other seniormanagement member at the parent or subsidiary Company level.

**COMMITTEE REPORT**

The Committee of the Company has reviewed this Compensation Discussionand Analysis and, based on such review, the Committee recommended to the Boardthat this Compensation Discussion and Analysis be include in this 10-K.

The Committee

John Poindexter —Chairman, President & CEO

Stephen Magee — Member,Board of Directors

Larry Wolfe — VicePresident of Administration

Robert Whatley — VicePresident Finance & Treasurer

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

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’ssubsidiaries) other than the Principal Executive Officer and PrincipalFinancial Officer at the end of the last completed fiscal year, and anexecutive officer that would have been included in the above but for the factthat he was no longer employed by the Company at the end of the year(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)                                       |       | 2006     |       | $          | 296,508    |                                              | —     |                             | $          | 352,200   |       | $ | 648,708 |   |
| Principal Executive Officer                                 |       |     |       |       |       |                                              |       |                             |       |      |       |
|                                                             |       |     |       |       |       |                                              |       |                             |       |      |       |
|                                                        |       |     |       |       |       |                                              |       |                             |       |      |       |
| Robert Whatley(b)                                           |       | 2006     |       | $          | 201,500    |                                              | $          | 63,362                           |       | 6,100     |       | $ | 270,962 |   |
| Principal  Financial Officer                                |       |     |       |       |       |                                              |       |                             |       |      |       |
|                                                        |       |     |       |       |       |                                              |       |                             |       |      |       |
| Norbert Markert(c)                                          |       | 2006     |       | $          | 326,848    |                                              | $          | 136,975                          |       | 7,500     |       | $ | 471,323 |   |
| President, Morgan                                           |       |     |       |       |       |                                              |       |                             |       |      |       |
|                                                             |       |     |       |       |       |                                              |       |                             |       |      |       |
|                                                        |       |     |       |       |       |                                              |       |                             |       |      |       |
| Nelson Byman(d)                                             |       | 2006     |       | $          | 229,901    |                                              | $          | 155,535                          |       | 7,500     |       | $ | 392,936 |   |
| President,  Specialty Manufacturing                         |       |     |       |       |       |                                              |       |                             |       |      |       |
|                                                        |       |     |       |       |       |                                              |       |                             |       |      |       |
|                                                        |       |     |       |       |       |                                              |       |                             |       |      |       |
| Patrick Warmington(e)                                       |       | 2006     |       | $          | 202,885    |                                              | $          | 167,153                          |       | 7,500     |       | $ | 377,538 |   |
| President, Morgan Olson                                     |       |     |       |       |       |                                              |       |                             |       |      |       |
|                                                             |       |     |       |       |       |                                              |       |                             |       |      |       |
|                                                        |       |     |       |       |       |                                              |       |                             |       |      |       |
| Stormy T.W.  Hicks(f)                                       |       | 2006     |       | $          | 326,848    |                                              | —     |                             | $          | 189,080   |       | $ | 515,928 |   |
| President and Chief  Operating Officer through October 2006 |       |     |       |       |       |                                              |       |                             |       |      |       |

 

(a) Mr. Poindexter began receiving a salary from the Company beginningJuly 2006. He does not receive a bonus and does not participate in either theAnnual Plan or LTPP. Through June 2006, Mr. Poindexter was compensated througha Management Services Agreement between Southwestern Holdings, Inc. and theCompany. (Southwestern Holdings, Inc. is owned by Mr. Poindexter.) For allservices, the Company paid Southwestern Holdings, Inc. $346,000 in 2006. TheCompany matched $6,200 of Mr. Poindexter’s contributions to the Company’s 401-KPlan in 2006.

(b) Mr. Whatley was paid $63,362 pursuant to the Annual Plan that wasaccrued in 2006 but paid in 2007. Mr. Whatley does not participate in the LTPPPlan. The Company matched $6,100 of Mr. Whatley’s contributions to the Company’s401-K Plan in 2006.

(c) Mr. Markert was paid $136,975 pursuant to the Annual Plan that wasaccrued in 2006 but paid in 2007 and received no payment under the LTPP Plan.The Company matched $7,500 of Mr. Markert’s contributions to the Company’s401-K Plan in 2006.  The Companyreimbursed Mr. Markert $17,060 for interest paid on his unsold privateresidence.

(d) Mr. Byman was paid $155,535 pursuant to the Annual Plan that wasaccrued in 2006 but paid in 2007 and received no payment under the LTPP Plan.The Company matched $7,500 of Mr. Byman’s contributions to the Company’s 401-KPlan in 2006.

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

(e) Mr. Warmington was paid $167,153 pursuant to the Annual Plan thatwas accrued in 2006 but paid in 2007 and received no payment under the LTPPPlan. The Company matched $7,500 of Mr. Warmington’s contributions to theCompany’s 401-K Plan in 2006.

(f) Mr. Hicks resigned as President and Chief Operating Officer of theCompany and as a member of its Board of Directors effective October 18, 2006.In accordance with the provisions outlined in his employment agreement andfurther outlined to Mr. Hicks in a separation letter agreed to by Mr. Hicks, hewas provided the following separation considerations:  continuation of his base salary for twelvemonths or until he commences new employment, whichever occurs first ($416,416was paid in 2006); the opportunity to continue medical insurance coverageproviding he pays the equivalent employee premium ($3,614 was incurred in2006); and reimbursement of relocation expenses ($35,000 was paid in 2007).

**Estimated Future Payouts Under**

**Non-Equity Incentive Plan Awards**
| Name                  | ** ** | **Grant Date** | ** ** | **Plan**     | ** ** | **Threshold** | ** ** | **Target** | ** ** | **Maximum** | ** ** |
|-----------------------|------------|---------------------|------------|--------------|------------|---------------|------------|------------|------------|-------------|------------|
| John B. Poindexter(a) |       | —              |       | —       |       | —        |       | —     |       | —      |       |
|                       |       |                |       |         |       |          |       |       |       |        |       |
|                  |       |                |       |         |       |          |       |       |       |        |       |
| Robert Whatley(b)     |       | January  1, 2006    |       | Annual  Plan |       | $             | 45,000     |       | $          | 70,527      |       | $ | 119,000 |   |
|                  |       |                |       |         |       |          |       |       |       |        |       |
|                  |       |                |       |         |       |          |       |       |       |        |       |
| Norbert Markert(c)    |       | January  1, 2006    |       | Annual  Plan |       | $             | 105,000    |       | $          | 163,424     |       | $ | 276,000 |   |
|                       |       | January  1, 2006    |       | LTPP         |       | $             | 49,000     |       | $          | 245,136     |       | $ | 490,000 |   |
|                       |       |                |       |         |       |          |       |       |       |        |       |
|                  |       |                |       |         |       |          |       |       |       |        |       |
| Nelson Byman(d)       |       | January  1, 2006    |       | Annual  Plan |       | $             | 73,000     |       | $          | 114,951     |       | $ | 194,000 |   |
|                  |       | January  1, 2006    |       | LTPP         |       | $             | 34,000     |       | $          | 172,426     |       | $ | 345,000 |   |
|                  |       |                |       |         |       |          |       |       |       |        |       |
|                  |       |                |       |         |       |          |       |       |       |        |       |
| Patrick Warmington(e) |       | January  1, 2006    |       | Annual  Plan |       | $             | 65,000     |       | $          | 101,442     |       | $ | 171,000 |   |
|                       |       | January  1, 2006    |       | LTPP         |       | $             | 30,000     |       | $          | 152,164     |       | $ | 304,000 |   |
|                       |       |                |       |         |       |          |       |       |       |        |       |
|                  |       |                |       |         |       |          |       |       |       |        |       |
| Stormy T.W.  Hicks(f) |       | January  1, 2006    |       | Annual  Plan |       | $             | 131,000    |       | $          | 205,000     |       | $ | 346,000 |   |
|                  |       | January 1, 2006     |       | LTPP         |       | $             | 62,000     |       | $          | 308,000     |       | $ | 615,000 |   |

 

(a) Mr. Poindexter is not eligible to participate in either the AnnualPlan or the LTPP.

(b) Mr. Whatley was granted an award under the Annual Plan with anearnings target of $37.9 million for the Company for 2006. He was eligible forthe threshold amount if the Company reached 80% of that target and for themaximum amount if the Company reached 130% of that target. Mr. Whatley does notparticipate in the LTPP.

(c) Mr. Markert was granted an award under the Annual Plan with anearnings target of $23.4 million for Morgan for 2006. He was eligible for thethreshold amount if Morgan reached 80% of that target and for the maximumamount if Morgan reached 130% of that target. During 2006, Mr. Markert wasgiven a performance target under the LTPP that makes him eligible for an awardbeginning in 2008.  The PBT earningstarget for 2006, the first year of the three year cycle in which he is eligibleto participate was $21.2 million.  Thetarget PBT for the remaining years in the cycle will be determined at a laterdate.

(d) Mr. Byman was granted an award under the Annual Plan with anearnings target of $2.7 million for MIC Group for 2006. He was eligible for thethreshold amount if MIC Group reached 80% of that target and for the maximumamount if MIC Group reached 130% of that target.  During 2006, Mr. Byman was given aperformance target under the LTPP that makes him eligible for an awardbeginning in 2008 at the same threshold and maximum percentages.  The PBT earnings target for 2006, the firstyear of the three year cycle in which he is eligible to participate was $21.2million.

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

(e) Mr. Warmington was granted an award under the Annual Plan with anearnings target of $2.7 million for Morgan Olson for 2006. He was eligible forthe threshold amount if Morgan Olson reached 80% of that target and for themaximum amount if Morgan Olson reached 130% of that target. During 2006, Mr.Warmington was given a performance target under the LTTP that makes himeligible for an award beginning in 2008. The PBT earnings target for 2006, the first year of the three year cyclein which he is eligible to participate was $21.2 million.  The target PBT for the remaining years in thecycle will be determined at a later date.

(f) Mr. Hicks was not granted an award under the Annual Plan.  During 2006, Mr. Hicks was given aperformance target under the LTTP that makes him eligible for an awardbeginning in 2008.  The PBT earningstarget for 2006, the first year of the three year cycle that he is eligible toparticipate in, was $21.2 million.  Mr.Hicks forfeited his eligibility to participate in the LTPP upon termination ofhis employment.

**NonqualifiedDeferred Compensation**

Mr. Byman was the only named executive to elect to defera portion of his annual compensation under the Nonqualified DeferredCompensation.  During the year endedDecember 31, 2006, Mr. Byman contributed $25,976 to the plan, earned $7,035 ofincome for the year, and made no withdrawals. The balance of Mr. Byman’s account at December 31, 2006 was $173,928.

**Director’s Compensation**

Directors who are officers or employees do not receivefees for serving as directors. The Company pays $20,000 per year as director’sfees to each outside director. Additionally, Mr. Magee receives $8,000 peryear 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     |                                                  | —     |                             | $          | 69,629    |       | $ | 97,629 |   |
|                  |            |                                                      |            |                                                       |            |                                  |            |           |            |  |  |  |

 

(a) Mr. Magee is an employee of the Company and theamount in the All Other Compensation Column represents his salary and othercompensation as an employee of the Company.

**Item 12.**                   SecurityOwnership of Certain Beneficial Owners and Management and Related StockholderMatters

Thefollowing table sets forth information regarding beneficial ownership of theCompany’s common stock as of December 31, 2006. No class of the Company’s securities is registered pursuant toSection 13 or 15(d) of the Exchange 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 a group (6 persons) |       | —                       |       | —                                     |       |                                      | —     |   |   |

 

69

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

Mr. Poindexterhas sole voting power with respect to all shares of common stock that hebeneficially owns and is the only person who beneficially owns commonstock.  His address is1100 Louisiana St., Suite 5400, Houston, Texas 77002.

TheCompany has not reserved any equity shares for issuance under any equitycompensation plans.

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

Of the Company’s three directors, only Mr. Bowen isindependent under NASDAQ’s independence standards. Mr. Magee is chairman of theaudit committee and is not independent under the standards applicable to auditcommittee members by the SEC or NASDAQ.

TheCompany had entered into a ManagementServices Agreement up until June 2006 with Southwestern Holdings, Inc.,which is owned by Mr. Poindexter and of which Mr. Magee, one of theCompany’s directors, serves as President.Pursuant to the Management Services Agreement, Southwestern Holdings, Inc.provided services to the Company,including those of Mr. Poindexter. The Company paid to Southwestern Holdings, Inc.approximately $46,000 per month for these services, subject to annual automaticincreases based upon the consumer price index. The Company may pay a discretionary annual bonus to SouthwesternHoldings, Inc. or raise the annual increases above normal adjustmentssubject to certain limitations. For all services, the Company paid Southwestern Holdings, Inc., $549,000in 2004, $569,000 in 2005 and $346,000 in 2006. In addition to the consultingfee, Mr. Poindexter is covered under the Company’s employee medicalinsurance plan; he participates in the 401(k) plan and the nonqualifieddeferred compensation plan and is reimbursed for travel and other miscellaneousexpenses.

Effective July 18, 2004, Morgan acquired from apartnership, of which Mr. Poindexter and Mr. Magee were partners, real propertylocated in Georgia.  Morgan paidapproximately $2.2 million for the property, which was determined to be the fairmarket value of the property.  The propertyhad been leased from the partnership since 1990 and is used by Morgan formanufacturing truck bodies.  Morgan paid $174,000****inrent to the partnership in 2004 pursuant to such lease.

In connection with the Morgan Olson acquisition inMarch 2004, Mr. Poindexter contributed all of his shares of MorganOlson to the Company. Mr. Poindexter previously owned 100% of Morgan Olson. Effectivewith his original acquisition of Morgan Olson, the Company,through Morgan, agreed to provide certain management services to Morgan Olsonpursuant to a Management Services Agreement between Morgan Olson and theCompany. The Company charged Morgan Olson management fees ofapproximately $160,000 during 2004.

Mr. Magee provided the Company consultingservices in 2004, 2005 and 2006. The Company paid $44,400, $180,955 and $99,629 in 2004, 2005 and 2006, respectively,for directors’ fees and for consulting services.  In addition the Company reimbursed Mr. Mageefor related business expenses.

Mr. Poindexterpreviously held $4.5 million in aggregate principal amount of the 12.5%senior secured notes due 2007 and Mr. Magee previously held$0.1 million in aggregate principal amount of these senior secured notes.The Company redeemed the notes with the proceeds of the initial offering of$125 million in aggregate principal amount of 8.75% Notes, effectiveMarch, 2004, and paid them 100% of the principal amount plus accrued interest.

TheCompany does not have an established procedure for the review, approval orratification of related-party transactions. Prior to entering into any suchtransaction, however, the executive officers of the Company determine whetherthe transaction is permitted by the terms of the Company’s 8.75% Notesindenture, the credit facility agreement and other relevant contractualobligations.

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

**Item 14.**                   PrincipalAccountant Fees and Services

**Thefollowing table sets forth the fees billed to us by our independent auditors,Crowe Chizek and Company LLC (“CCC”):**

|                     | ** ** | **2006** | ** ** | **2005** | ** ** |
|---------------------|------------|----------|------------|----------|------------|
| Audit Fees          |       | $        | 296,500    |     | $          | 303,000 |   |
| Audit-related  Fees |       | 8,000    |       | 23,000   |       |
| Tax Fees            |       | —   |       | —   |       |
| Other Fees          |       | —   |       | $        | 20,000     |   |
| Total Fees          |       | $        | 304,500    |     | $          | 346,000 |   |

 

***AuditFees.***

**Auditfees are the charges billed by CCC in connection with the audit of ourconsolidated financial statements as well as reviews of our quarterly reportson Form 10-Q.**

**Audit-relatedfees are the charges billed by CCC for assurance and related services,including accounting advice related to debt offerings in 2005 and for the auditof the Company’s 401(k) Defined Contribution Plan for the year ended December31, 2004.**

**Thesefees were pre-approved by the Audit Committee under the procedures describedbelow.**

**Pre-Approval 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 the performance by the independentauditors of audit-related services, subject to restrictions in certain cases,based on the Audit Committee’s determination that this action would not belikely to impair the independence of the independent auditors from the Company;

**·**                                          The Company’s management must obtain the specific prior approval of theCompany’s Audit Committee for each engagement of the independent auditors toperform any auditing or permitted non-audit services; provided however, thatspecific prior approval by the Company’s Audit Committee is not required forany auditing services that are within the scope of a pre-approved engagementand that are consistent with other services provided by the auditor in thepast; and provided further that specific prior approval is not required forpermitted non-audit services that:

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

**(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.

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

**·**                                          The performance by the independent auditors of certain types ofservices (bookkeeping or other services related to the accounting records orfinancial statements of the Company; financial information systems design andimplementation; appraisal or valuation services, fairness opinions orcontribution-in-kind reports; actuarial services; internal audit outsourcingservices; management functions or human resources; broker or dealer, orinvestment adviser or investment banking services; legal services and expertservices unrelated to the audit; and any other service that the applicablefederal oversight regulatory authority determines, by regulation, is impermissible)is prohibited due to the likelihood that their independence would be impaired.

**Anyapproval required under this policy must be provided by the Company’s AuditCommittee, by the chairman of the Audit Committee in office at the time, or byany other Audit 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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**J.B.POINDEXTER & CO., INC. AND SUBSIDIARIES**

**Part IV**

**Item 15.**                   Exhibits,Financial Statement Schedules and Reports on Form 10-K

1.             Financial Statements:

Thefollowing financial statements are included within the text of this report
| **Financial Statement** |
|-------------------------|
| ** **              |
|                    | Consolidated Balance Sheets as of December 31, 2006  and 2005 |
|                    | Consolidated Statements of Income for the years  ended December 31, 2006, 2005 and 2004 |
|                    | Consolidated Statements of Stockholder’s Equity  (Capital Deficiency) for the years ended       December 31, 2006, 2005 and 2004 |
|                    | Consolidated Statements of Cash Flows for the years  ended December 31, 2006, 2005 and 2004 |
|                    | 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 Note 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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**J.B.POINDEXTER & CO., INC. AND SUBSIDIARIES**

 
|         |   | 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*   |   | 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.                                  |
|    |   |                                                                                                                                                                                                                                                                                                                                                  |
| 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. |
|    |   |                                                                                                                                                                                                                                                                                                                                                  |
| 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                                                                                                                                                                                                                                                               |

 

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

 
|                                  |   | 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*   |   | 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. |
|                             |   |                                                                                                                                                                                                                                                                                                                                    |
| *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                                                                                                                                                                                                                                                                                |
|                             |   |                                                                                                                                                                                                                                                                                                                                    |

 

*                    Filedherewith.

**             Furnished herewith.

#                    Managementcontracts or compensatory plans.

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

 
| (1)Incorporated by reference  to J.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  to J.B. Poindexter & Co., Inc.’s Annual Report on Form 10-K for the year  ended December 31, 1994, as filed with the SEC on March 31, 1995.            |
| (3)Incorporated by reference  to J.B. Poindexter & Co., Inc.’s Quarterly Report on Form 10-Q for the  quarter ended September 30, 2003, as filed with the SEC on November  14, 2003. |
| (4)Incorporated by reference  to J.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  to J.B. Poindexter & Co., Inc.’s Registration Statement as amended on  Form S-4A (No. 333-123598) as filed with the SEC on April 7, 2005.                        |
| (6)Incorporated by reference  to J.B. Poindexter & Co., Inc.’s Quarterly Report on Form 10-Q for the  quarter ended September 30, 2005, as filed with the SEC on November  14, 2005. |
| (7)Incorporated by reference  to J.B. Poindexter & Co., Inc.’s Annual Report on Form 10-K for the year  ended December 31, 2005, as filed with the SEC on March 31, 2006.                      |
| (8)Incorporated by reference  to J.B. Poindexter & Co., Inc.’s Quarterly Report on Form 10-Q for the  quarter ended September 30, 2006, as filed with the SEC on November  14, 2006. |

 

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

SIGNATURES

Pursuant to the requirements of Section 13 or15(d) of the Securities Exchange Act of 1934, the registrant has duly causedthis report to be signed on its behalf by the undersigned, thereunto dulyauthorized.
|                                 |   | **J.B. POINDEXTER & CO., INC.** |
|---------------------------------|--------|-------------------------------------|
|                            |   |                                | ** ** |
|                            |   |                                | ** ** |
| Date:  March 30, 2007 |   | By                                  | /s/ John B. Poindexter |
|                            |   |                                | John B. Poindexter, Chairman of the Board, |
|                            |   |                                | Chief Executive Officer and President |
|                            |   |                                | (Principal Executive Officer) |
|                            |   |                                |   |

 

Pursuant to therequirements of the Securities Exchange Act of 1934, this report has beensigned below by the following persons on behalf of the registrant and in thecapacities and on the dates indicated.
| Date:  March 30, 2007 |   | By     | /s/ John B. Poindexter                       |
|---------------------------------|--------|--------|----------------------------------------------|
|                            |   |   | John B. Poindexter, Chairman of the Board,   |
|                            |   |   | Chief Executive Officer and President        |
|                            |   |   | (Principal Executive Officer)                |
|                            |   |   |                                         |
| Date:  March 30, 2007 |   | By     | /s/ Stephen P. Magee                         |
|                            |   |   | Stephen P. Magee, Director                   |
|                            |   |   |                                         |
|                            |   |   |                                         |
|                            |   |   |                                         |
| Date:  March 30, 2007 |   | By     | /s/ William J. Bowen                         |
|                            |   |   | William J. Bowen, Director                   |
|                            |   |   |                                         |
|                            |   |   |                                         |
|                            |   |   |                                         |
| Date:  March 30, 2007 |   | By     | /s/ Robert S. Whatley                        |
|                            |   |   | Robert S. Whatley, Vice President Finance,   |
|                            |   |   | Secretary and Treasurer                      |
|                            |   |   | (Principal Financial and Accounting Officer) |
|                            |   |   |                                         |

 

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