PATK » Topics » Stock award plans:

This excerpt taken from the PATK 10-K filed Apr 2, 2007.

Stock award plans:

 

The Company has adopted a stock award plan for the non-employee directors. Grants awarded during May 2006 of 21,000 shares are subject to forfeiture in the event the recipient terminates within one year from the date of grant as a director. The total fair value of unvested shares at December 31, 2006 is $262,500. These shares will vest in May 2007. The related compensation expense is being recognized over the one-year vesting period. Total compensation expense for the years ended December 31, 2006, 2005, and 2004 were $249, $211, and $202, respectively.

 

The Company has adopted a stock award plan for its officers. Grants awarded in January 2006 of 7,560 shares vest quarterly over a one year period and are subject to forfeiture in the event the officer terminates employment during the course of the year. The related compensation expense is recognized over a one year period. The total compensation expense for the year ended December 31, 2006 is $80.

 

Note 10.

Contingencies

 

The Company is subject to claims and suits in the ordinary course of business. In management's opinion, current pending legal proceedings and claims against the Company will not, individually or in the aggregate, have a material adverse effect on the Company's financial condition, results of operations, or cash flows.

 

F-21

 



Patrick Industries, Inc.

And Subsidiaries

 

Notes To Financial Statements

(in thousands, except per share amounts)

 

 

 

Note 11.

Cash Flows Information

 

Supplemental information relative to the statements of cash flows for the years ended December 31, 2006, 2005, and 2004 is as follows:


 

Note 12.

Unaudited Interim Financial Information

 

Presented below is certain selected unaudited quarterly financial information for the years ended December 31, 2006 and 2005:


 

F-22

 



Patrick Industries, Inc.

And Subsidiaries

 

Notes To Financial Statements

(in thousands, except per share amounts)

 

 

 

Note 13.

Segment Information

 

The Company has determined that its reportable segments are those that are based on the Company’s method of internal reporting, which segregates its business by product category and production/distribution process.

 

The Company’s reportable segments are as follows:

 

Primary Manufactured Products - Utilizes various materials including gypsum, particleboard, plywood, and fiberboard which are bonded by adhesives or a heating process to a number of products including vinyl, paper, foil, and high pressure laminate. These products are utilized to produce furniture, shelving, wall, counter, and cabinet products with a wide variety of finishes and textures.

 

Distribution - Distributes primarily pre-finished wall and ceiling panels, particleboard, hardboard and vinyl siding, roofing products, high pressure laminates, passage doors, building hardware, insulation, and other products.

 

Other Component Manufactured Products - Includes an adhesive division, a cabinet door division, and a machine manufacturing division. The Company closed its machine manufacturing division in the fourth quarter of 2006.

 

Engineered Solutions – Includes aluminum extrusion, distribution, and fabrication.

 

The accounting policies of the segments are the same as those described in "Significant Accounting Policies," except that segment data includes intersegment revenues. Assets are identified with the segments with the exception of cash, prepaid expenses, land and buildings, and intangibles which are identified with the corporate division. The corporate division charges rents to the segment for use of the land and buildings based upon market rates. The Company accounts for intersegment sales as if the sales were to third parties, that is, at current market prices. The Company also records income from purchase incentive agreements as corporate division revenue. The Company evaluates the performance of its segments and allocates resources to them based on a variety of indicators including revenues, cost of goods sold, operating income, and total identifiable assets.

 

F-23

 



Patrick Industries, Inc.

And Subsidiaries

 

Notes To Financial Statements

(in thousands, except per share amounts)

 

 

 

The table below presents information about the net income (loss) and segment assets used by the chief operating decision makers of the Company as of and for the years ended December 31, 2006, 2005, and 2004:

 


 

F-24

 



Patrick Industries, Inc.

And Subsidiaries

 

Notes To Financial Statements

(in thousands, except per share amounts)

 

 

 

A reconciliation of total segment sales, cost of goods sold, and operating income to consolidated sales, cost of goods sold, and segment information to the consolidated financial statements as of and for the years ended December 31, 2006, 2005, and 2004 is as follows:


 

Corporate incentive agreements include vendor rebate agreements and are included as a reduction of cost of goods sold.

 

Unallocated corporate expenses include corporate general and administrative expenses including wages, insurance, taxes, supplies, travel and entertainment, professional fees, and others.

 

F-25

 



Patrick Industries, Inc.

And Subsidiaries

 

Notes To Financial Statements

(in thousands, except per share amounts)

 

 

 

Note 14.

Subsequent Event

 

On January 29, 2007, the Company purchased all of the assets of American Hardwoods, Inc. in Phoenix, AZ for approximately $7,500 financed with long-term debt. The debt consists of a $7,500 term note with annual principal payments of $750 with a ten year amortization and a balloon payment in 2012.

 

 

 

 

 

F-26


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