Drew Industries Inc.
Drew Industries Inc.
Incorporated : 1962 as Drew Realty Corporation
Employees : 2,258
Sales : $330.6 million (1998)
Stock Exchanges : American
Ticker Symbol : DW
NAIC : 332321 Metal Window & Door Manufacturing; 332322 Sheet Metal Work Manufacturing; 3446 Ornamental & Architectural Metal Work Manufacturing; 42113 Tire & Tube Wholesalers
Drew Industries Inc. is a leading supplier of products for manufactured homes and recreational vehicles. Its Kinro, Inc. subsidiary manufactures and markets aluminum and vinyl windows for manufactured homes and aluminum windows and doors for recreational vehicles. Its Lippert Components, Inc. subsidiary manufactures and markets chassis and chassis parts for manufactured homes and recreational vehicles and galvanized roofing for manufactured homes. Its Shoals Supply, Inc. subsidiary manufactures and markets new axles and distributes reconditioned axles and new and reconditioned tires for manufactured homes.
Wide-Ranging Conglomerate: 1962–70
Drew Industries was founded in February 1962 as Drew Realty Corporation but very quickly was renamed Drew Properties Corporation. The revenues of the company’s holdings in the 12 months prior to its founding were $2.9 million, with a net loss of $178,000. Assets came to $10.8 million. Drew Properties raised $1.6 million from the sale of stock in August 1962 for the purpose of purchasing the Pickwick Hotel in San Francisco and Warren Apartments in Arlington, Virginia, and for working capital. The purchases were completed two months later. The company was based in New York City, and its chairman and president was Norman Elson. Harold Aibel was executive vice-president and treasurer.
Also in August 1962 Drew Properties, through an exchange offer, acquired interests in Phoenix Fifth Avenue Co., and stock of 14 corporations, including A & A Development, Elson-Aibel Development, and Aibel Corporation Properties, Hialeah, Florida, owners of an industrial park. The other companies owned 12 buildings in Manhattan; a shopping center in Daytona Beach, Florida; an apartment building in Phoenix; and leased office buildings in Atlanta, Louisville, Fort Lauderdale, and Miami Beach. In October 1962, along with the San Francisco and Arlington purchases, the company acquired the Dinkier-Andrew Jackson Hotel in Nashville and Belvedere Motel Hotel in Decatur, Georgia.
In 1964 Drew Properties acquired American Phoenix Corporation, another real estate investment company, through an exchange of shares. American Phoenix had assets of about $16.5 million and owned or operated eight properties, including motels in Dallas, Denver, St. Louis, and Asheville, North Carolina. American Phoenix shareholders received about 370,000 Drew shares of stock with a market value in excess of $2.9 million. Aibel, who was Elson’s brother-in-law, succeeded Elson as president of the company in 1966.
With the acquisition of Plastimayd Corporation, a specialty plastics manufacturer, in 1968, Drew Properties ceased to be purely a real estate company and consequently changed its name to Drew National Corporation. Also in 1968, it acquired Irvins Inc., a Baltimore department store chain, and Public Furniture Sales Corporation, a New York City retailer of warehouse furniture. At the end of 1968 its real properties included, in addition to the aforementioned, Howard Johnson Motor Lodges in Charlotte and Fayetteville, North Carolina; a supermarket in Jacksonville, Florida; a shopping center in Anaheim, California; and an office building and other property in Beverly Hills, California. The Manhattan buildings and the Phoenix building apparently had been sold.
The February 1969 acquisition of Eve LeCoq, Inc. and its affiliate, Scarsdale Quilting Mills, Inc., also put Drew National into the manufacture of clothing for girls and young women and quilting. Four months later, the company established Summit Mortgage Investors, an enterprise that it intended to qualify as a real estate investment trust (REIT) under federal tax laws, transferring to Summit property appraised at about $10 million. The subsequent distribution of Summit shares to Drew shareholders and the company itself had advantages because REITs enjoyed tax-exempt status if, among other things, they distributed at least 90 percent of their taxable annual income to shareholders. Summit was made an unconsolidated subsidiary of Drew in 1970. Its holdings were sold to Madison Properties Inc. in 1971 for $4.4 million.
By the end of fiscal 1970 (the year ended August 31, 1970) Drew National was a conglomerate. The finance group consisted of Summit; Drew Equity & Funding Corporation, which was making mortgage loans; and Drew National Leasing Corporation, a 77 percent-owned unconsolidated subsidiary. The industrial group consisted of Plastimayd and two Florida-based companies making chemical compounds, housewares, and hardware. The consumer group was divided into six fields. In addition to Eve LeCoq, Drew had added two more women’s wear firms, Ronnie Fashions, Inc. and Mr. Boots Ltd. Editions, Inc. Two Waterbury, Connecticut, retailers, Drew Metropolitan Corporation and Leopold’s Furniture & Appliance Co., also had been added. Penn Valley Furniture Industries, Inc. had put the company into the manufacture of convertible sofas.
Drew National’s biggest effort was being focused on door-to-door selling of furniture and major appliances in five states. The largest operation was Waterbury-based Drew-Albert Enterprises, Inc., which was covering 324 communities in Connecticut. Standard Distributors, Inc. was in charge of operations in Virginia. Acquired in 1968, Carsons of Fort Lauderdale, Inc., and Carsons of Atlanta, Inc., were active in Florida and Georgia, respectively. The M. Kovens Co., acquired in 1970, had headquarters in Baltimore and covered Maryland. Drew National had net income of $884,000 on net sales of $24.7 million in fiscal 1970. Direct sales of home furnishings accounted for about $9 million of that total.
Cutting Back Operations: 1971–80
By the end of 1972 it was clear that Drew National’s appetite for acquisitions had outpaced its digestion, the company disclosing in later restatements a loss of nearly $ 1 million in fiscal 1971 and close to $1.3 million the following year. One of the biggest losers was Drew National Leasing. Drew National sold its stake in this subsidiary in 1971. However, annual reports for fiscal 1970 through 1973 were found by the Securities and Exchange Commission to overstate the earnings and prospects of both Drew National Corporation and Drew National Leasing Corporation, resulting in the sale of the latter at an inflated price of more than $2 million. The sale was rescinded, and Drew National in 1973 sold its interest for $115,000. Trading of Drew’s stock on the American Stock Exchange came to a halt.
Drew National’s real estate operations were almost as deficit-ridden as the leasing company. By the end of fiscal 1975 the company had rid itself of all such property except the Beverly Hills office building, an Anaheim restaurant and motel, and three mortgages. The sale of the company’s leasehold interest in the Beverly Hills building in November 1976 put it out of the real estate business. The company disposed of its women’s apparel division during 1973–74 because of poor sales and also sold Drew-cTi Inc., the industrial chemicals business, in 1973. It liquidated the Baltimore clothing chain and New York retailer of warehouse furniture during 1974–75, and Penn Valley, the sofa manufacturer, in 1975. Plastimayd, the plastics manufacturer, also was sold in 1975.
Slimmed-down Drew National now was pinning its hopes on door-to-door sales of home furnishings, which in 1973 had an annualized sales rate of $28 million from over 160,000 customers in 23 locations. The company made a small profit in fiscal 1973 but lost $3.4 million, including $1.7 million from continuing operations, in fiscal 1974. The following year it lost $7.5 million and, along with 22 of its subsidiaries, filed for Chapter 11 bankruptcy. It did not emerge from bankruptcy until 1979, when the company’s unsecured Class II creditors received 12 percent of their claims, in the form of about $1.2 million and 929,716 shares of stock. Class I creditors earlier had accepted a cash payment of 20 cents on the dollar and 49,819 shares of stock. In addition, the company issued 500,000 shares of stock to certain banks and trade creditors.
Drew National narrowed its losses in fiscal 1976 and 1977 and became profitable again the following year, but only because of extraordinary credits, chiefly $5.4 million in tax credits carried over from the previous losses. Of $12.5 million in revenue in fiscal 1978, door-to-door merchandising of household furniture, appliances, and smaller household furnishings in eight cities accounted for 90 percent, with Scarsdale Quilting accounting for almost all the rest. In 1979 Bass Brothers Enterprises Inc. purchased 73 percent of the outstanding stock for $1.35 million, or ten cents a share.
Mostly Building Supplies: 1980–98
Drew National moved its offices from New York City to White Plains, New York, in 1980. Aibel resigned as president and was succeeded by Leigh J. Abrams, formerly president of Drew National Leasing and executive vice-president of the parent firm. E. W. Rose III, an investor, became chairman of the board. Also in that year, Drew National acquired manufacturer Horsman Dolls, Inc. for $6.5 million in cash and promissory notes. But the main event in 1980 was the purchase of Kinro, Inc. This company was producing aluminum-framed windows for the manufactured housing industry in four factories and had annual sales of $10 million. Beginning in 1982, Kinro acquired additional manufacturers of aluminum windows for manufactured homes and also developed a capacity to manufacture screens for its window products and, to a lesser extent, windows for minibuses.
Drew National was half-owned by Bass Brothers in early 1983, when it formed a subsidiary as part of a joint venture with Pratt Hotel Corporation, which had a majority stake in a company owning and operating the Sands Hotel & Casino in Atlantic City, New Jersey. State officials rejected the joint venture because the Bass brothers refused to file applications for a casino license and to undergo the state’s extensive licensing investigation because of their reluctance to disclose information about their finances. Accordingly, Drew National was divided in 1984. The subsidiary, Bass Brothers Enterprises, Inc., merged with Pratt, but the Basses had no interest in the newly merged company. They maintained a 34 percent interest in the second new company, Drew Industries, Inc., which held all Drew National’s non-gambling interests.
Drew Industries, in 1985, acquired Sandberg Manufacturing Co., producer of a line of wooden preschool toys, and Doolite, Inc., a manufacturer of doors for recreational vehicles. In 1987 it acquired Sun Valley Mobile Products, a purchase that enhanced its sales in the RV field. But its main acquisition, in 1985, was Leslie-Locke, Inc., a manufacturer of a diversified line of home improvement building products, with net sales of $32.3 million the previous fiscal year. Drew Industries paid 22 percent of its stock for this company. Also in 1985, the company liquidated Kupanoff Imports, Inc., an importer and distributor of Japanese-made kerosene heaters and related products that Drew National had purchased in 1982. Leslie-Locke acquired White Metal Rolling and Stamping Corporation, a manufacturer of aluminum ladders, in fiscal 1986 for $6.6 million in cash.
Merchandising operations still accounted for 14 percent of Drew Industries’ sales in fiscal 1985, but the following year the company disposed of its three remaining direct-to-consumer divisions. It also liquidated Horsman Dolls and, in April 1987, sold Sandberg for $1.3 million. Drew Industries was now almost totally a building supplies company. Kinro was one of the two leading U.S. producers of windows for manufactured housing. Leslie-Locke, now the home improvements division, had an even higher sales level, but was not pulling its weight; in fiscal 1989, it actually lost money. The White Metal aluminum-ladder subsidiary was sold in 1990, despite annual sales of about $22.8 million. Scarsdale Quilting Mills, Drew’s remaining nonbuilding supplies enterprise, disappeared about 1990.
Drew Industries’ stock was selling as cheap as 20 cents a share in 1988 and (after a 1-for-10 reverse stock split in 1989) could still be had for under $1.50 a share at one point in 1991, the year certain company officers and directors bought all the Bass family holdings. In 1992, Drew had its best year yet, attaining record net income of $3.8 million on record revenues of $109.6 million. But the home-products segment produced only eight percent of company income in 1993 despite accounting for 49 percent of sales. In 1994 the company spun this unit off to its stockholders as Leslie Building Products, Inc. Drew Industries had net income of $8.1 million on net sales of $100 million in 1995.
Drew Industries acquired Shoals Supply, Inc. for stock valued at $7.5 million in 1996. This company was a supplier of products used to transport manufactured homes. It made new and used axles and chassis parts in five factories in four states and also distributed new and refurbished tires. In 1997 Shoals acquired Pritt Tire and Axle, Inc. for $4.45 million in cash and a small amount of stock warrants. With the acquisition of Shoals, Drew’s net sales and income rose to $168.2 million and $12.6 million, respectively, in 1996.
By the end of 1996 Kinro had nine factories in the United States and an assembly operation in Juárez, Mexico. It had, in 1993, added high-quality vinyl windows to supplement its full line of aluminum primary windows, storm windows, and screens for manufactured homes. Its role in standardizing window sizes and styles for the once highly customized manufac-tured-housing industry had resulted in more timely deliveries and more dependable service at reasonable prices.
In 1997 Drew Industries purchased Lippert Components, Inc., a manufacturer and marketer of chassis and chassis parts for manufactured homes and recreational vehicles, as well as galvanized roofing for manufactured homes. The price was about $55 million in cash and stock. Lippert had revenues of about $99 million in fiscal 1997 and an operating profit of about $8.2 million. Drew had sales of $208.4 million and net income of $12 million in 1997. With the Lippert acquisition, these totals came to $330.6 million and $15.2 million, respectively, in 1998. The long-term debt rose, however, to $55.3 million at the end of the year.
Drew Industries owned 21 and leased 13 manufacturing and warehousing facilities at the end of 1997, all in the United States. Lippert accounted for 16 of these, Kinro for 12, and Shoals for six. Rose, still the company chairman, was Drew’s largest stockholder in April 1997, with 19.1 percent of the common stock. FMR Corporation held 9.6 percent of the shares at the end of 1996.
Kinro, Inc.; Kinro Holding, Inc.; Kinro Manufacturing, Inc.; Kinro Tennessee Limited Partnership; Kinro Texas Limited Partnership; Lippert Components, Inc.; Shoals Supply, Inc.; Shoals Supply Holding, Inc.; Shoals Supply Tennessee Limited Partnership; Shoals Supply Texas Limited Partnership.
“Drew Industries Plans to Buy Lippert for $55 Million,” New York Times, July 23, 1997, p. D4.
“Drew National, Aides Accept Court Orders in Securities Case,” Wall Street Journal, July 17, 1975, p. 17.
“Drew National Corp. Agrees to Sell Bulk of Its Common Shares,” Wall Street Journal, June 19, 1979, p. 14.
“Drew National Says Creditors Committee Clears Settlement Plan,” Wall Street Journal, February 2, 1978, p. 28.
“Drew National Sets Date for Distribution of Stock for Spinoff,” Wall Street Journal, May 10, 1985, p. 45.
“Drew National Sets up an Investment Trust,” Wall Street Journal, May 26, 1969, p. 14.
“Holders Approve Sale of American Phoenix to Drew Properties,” Wall Street Journal, July 9, 1964, p. 7.
Kerfoot, Kevin, “Kinro Begins Facility Construction in Rhea County,” Tennessee Manufacturer, September 1996, p. 11.
“New Jersey Approves Plan to Remove Basses from Sands Ownership,” Wall Street Journal, April 19, 1984, p. 44.