SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
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240.14a-12
Patrick Industries, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name Of Person(S) Filing Proxy Statement, if other than the Registrant)
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PATRICK INDUSTRIES, INC.
1800 South 14th Street
P.O. Box 638
Elkhart, Indiana 46515
574-294-7511
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 15, 2002
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Patrick
Industries, Inc., an Indiana corporation, will be held at the Company's Patrick
Metals Division offices, 5020 Lincolnway East, Mishawaka, Indiana, on Wednesday,
May 15, 2002 at 10:30 a.m., Mishawaka time, for the following purposes:
1. To elect three directors of the Company to serve until 2005.
2. To consider and transact such other business as may properly come
before the meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on March 15, 2002,
as the record date for the determination of the holders of shares of the
Company's outstanding Common Stock entitled to notice of and to vote at the
Annual Meeting of Shareholders. Each shareholder is entitled to one vote per
share on all matters to be voted on at the meeting.
Whether or not you expect to attend the meeting, you are urged to sign,
date, and return the enclosed proxy in the enclosed envelope.
By Order of the Board of Directors,
KEITH V. KANKEL
SECRETARY
April 12, 2002
PLEASE DATE, SIGN AND MAIL THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED WHICH
REQUIRES NO POSTAGE FOR MAILING IN THE UNITED STATES. A PROMPT RESPONSE IS
HELPFUL, AND YOUR COOPERATION WILL BE APPRECIATED.
PATRICK INDUSTRIES, INC.
1800 South 14th Street
P.O. Box 638
Elkhart, Indiana 46515
574-294-7511
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PROXY STATEMENT
Annual Meeting of Shareholders
To Be Held May 15, 2002
-------------------------------
This Proxy Statement is being mailed to shareholders of Patrick Industries,
Inc. (the "Company") on or about April 12, 2002, and is furnished in connection
with the Board of Directors' solicitation of proxies for the Annual Meeting of
Shareholders to be held on May 15, 2002 for the purpose of considering and
acting upon the matters specified in the Notice of Annual Meeting of
Shareholders accompanying this Proxy Statement. If the form of proxy which
accompanies this Proxy Statement is executed and returned, it may be revoked by
the person giving it at any time prior to the voting thereof by written notice
to the Secretary, by delivery of a later dated proxy or by requesting to vote in
person at the meeting. Additional solicitations, in person or by telephone or
telegraph, may be made by certain directors, officers and employees of the
Company without additional compensation. Expenses incurred in the solicitation
of proxies, including postage, printing and handling, and actual expenses
incurred by brokerage houses, custodians, nominees, and fiduciaries in
forwarding documents to beneficial owners, will be paid by the Company.
The Annual Report to shareholders for the year ended December 31, 2001,
accompanies this Proxy Statement. Additional copies of the Annual Report may be
obtained by writing the Secretary of the Company.
VOTING INFORMATION
Each shareholder is entitled to one vote for each share of the Company's
Common Stock held as of the record date. For purposes of the meeting, a quorum
means a majority of the outstanding shares. As of the close of business on March
15, 2002, the record date for shareholders entitled to vote at the annual
meeting, there were outstanding 4,529,666 shares of Common Stock, entitled to
one vote each. In determining whether a quorum exists at the meeting, all shares
represented in person or by proxy will be counted. A shareholder may, with
respect to the election of directors, (i) vote for the election of all named
director nominees, (ii) withhold authority to vote for all named director
nominees or (iii) vote for the election of all named director nominees other
than any nominee with respect to whom the shareholder withholds authority to
vote by so indicating in the appropriate space on the proxy. Proxies properly
executed and received by the Company prior to the meeting and not revoked will
be voted as directed therein on all matters presented at the meeting. In the
absence of a specific direction from the shareholder, proxies will be voted for
the election of all named director nominees.
The Directors are elected by a plurality of the votes cast by shares
present in person or by proxy at the Annual Meeting and entitled to vote.
Withholding authority to vote in the election of Directors will have no effect
on that matter. Any other matter which may properly come before the meeting will
be approved if the votes cast favoring the action exceed the votes cast opposing
the action. Broker non-votes will have no effect on any matter at the Annual
Meeting.
The Board of Directors knows of no other matter which may come up for
action at the meeting. However, if any other matter properly comes before the
meeting, the persons named in the proxy form enclosed will vote in accordance
with their judgment upon such matter.
Shareholder proposals for inclusion in proxy materials for the next Annual
Meeting should be addressed to the Company's Secretary, P.O. Box 638, Elkhart,
Indiana 46515, and must be received no later than December 13, 2002. In
addition, the Company's By-laws require notice of any other business to be
brought before a meeting by a shareholder (but not included in the proxy
statement) to be delivered to the Company's Secretary, together with certain
prescribed information, not less than 20 nor more than 50 days prior to such
meeting. Likewise, the Articles of Incorporation and By-laws require that
shareholder nominations to the Board of Directors be delivered to the Secretary,
together with certain prescribed information, not less than 20 nor more than 50
days prior to a meeting at which directors are to be elected.
STOCK OWNERSHIP INFORMATION
The following table sets forth, as of the record date, information
concerning the only parties known to the Company having beneficial ownership of
more than 5 percent of its outstanding Common Stock and information with respect
to the stock ownership of all directors and executive officers of the Company as
a group.
Number of
Shares
Beneficially Percent
Name and Address of Beneficial Owner Owned of Class
------------------------------------ ----- --------
Mervin D. Lung . . . . . . . . . . . . . . . . . . . . . . . 995,786 21.98%
Chairman Emeritus of the Company
P.O. Box 638
Elkhart, Indiana 46515
Dimensional Fund Advisors, Inc. . . . . . . . . . . . . . . 399,842 8.83%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
FMR Corp . . . . . . . . . . . . . . . . . . . . . . . . . . 453,000 10.00%
82 Devonshire Street
Boston, Massachusetts 02109
Heartland Advisors, Inc. . . . . . . . . . . . .. . . . .. . 361,000 7.97%
789 North Water Street
Milwaukee, Wisconsin 53202
Directors and Executive Officers as a group (12 persons) . . 1,240,886 27.40%(1)
- ---------
(1) The stock ownership of the executive officers named in the Summary
Compensation Table is set forth under the heading "Election of Directors",
except for R. Lynn Brandon (10,000 shares) and Alan M. Rzepka (250 shares).
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that certain
of the Company's officers, its directors and 10% shareholders file with the
Securities and Exchange Commission and Nasdaq an initial statement of beneficial
ownership and certain statements of changes in beneficial ownership of Common
Stock of the Company. Based solely on its review of such forms received by the
Company and written representation from the directors and officers that no other
reports were required, the Company is unaware of any instances of noncompliance,
or late compliance, with such filings during the fiscal year ended December 31,
2001.
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, with the members of
each class serving staggered three-year terms. Accordingly, at the 2002 Annual
Meeting three directors will be elected to hold office until the 2005 Annual
Meeting or until their successors are duly elected and qualified.
It is intended that the proxies will be voted for the nominees listed
below, unless otherwise indicated on the proxy form. It is expected that these
nominees will serve, but, if for any unforeseen cause any such nominee should
decline or be unable to serve, the proxies will be voted to fill any vacancy so
arising in accordance with the discretionary authority of the persons named in
the proxies.
The following information concerning principal occupations and the number
of shares of Common Stock of the Company owned beneficially as of March 15,
2002, has been furnished by the nominees and directors continuing in office:
Common Percent
First Stock of
Year of the Common
Principal Occupation Elected Company Stock
Name and Age and Other Directorships Director Owned(1) Owned
------------ ----------------------- -------- -------- -----
Nominees to Serve Until the 2005 Annual Meeting:
- ------------------------------------------------
Robert C. Timmins, 80 . . . Vice President and Director of 1987 45,300 1.00%
a Musical Instrument Company and
CPA and Partner of McGladrey & Pullen
(certified public accountants) until 1985.
Terrence D. Brennan, 63 . . Retired President and CEO of NBD Bank, 1999 13,000 less
Elkhart, IN, from 1973 to 1997. than
1%
Larry D. Renbarger, 63 . . . Retired as CEO of Shelter Components - - - - 10,500 less
in 1998. Currently serving on Boards for than
Planet Earth, Inc. (retail science and nature 1%
Stores), Therm-O-Lite, Inc. (manufacturer
of windows), and The Utility Bodywerks
(converter of mid-size trucks).
Directors to Serve Until the 2003 Annual Meeting:
- -------------------------------------------------
Thomas G. Baer, 70 . . . . . . Retired Vice President of Operations, 1970 15,008 less
from 1975 through 1998. than
1%
Walter Wells, 63 . . . . . . Retired President and CEO of Schul 2001 6,000 less
Homes Corporation and Director of than
Pleasant Street, LLC (home builders) 1%
David D. Lung, 54 . . . . . . President (Chief Executive Officer) 1977 75,556 1.68%
since 1989. Son of Mervin D. Lung.
Common Percent
First Stock of
Year of the Common
Principal Occupation Elected Company Stock
Name and Age and Other Directorships Director Owned(1) Owned
------------ ----------------------- -------- -------- -----
Directors to Serve Until the 2004 Annual Meeting:
- -------------------------------------------------
Keith V. Kankel, 59 . . . . Vice President of Finance since 1987 1977 16,686 less
and Secretary-Treasurer since 1974. than
1%
Mervin D. Lung, 79 . . . . Chairman Emeritus, President since 1961 995,786 21.98%
incorporation in 1961 until 1989,
and father of David D. Lung.
John H. McDermott, 70 . . . Of counsel to the Chicago, Illinois 1969 35,000 less
law firm of McDermott, Will & Emery, than
which firm has been retained by the 1%
Company since 1968 for certain legal
matters.
Harold E. Wyland, 65 . . . . Chairman in 2001. 1989 17,800 less
Retired Vice President of Sales, than
from 1990 through 1998. 1%
- - - - - - - -
(1) Each individual has sole voting and dispositive power over the shares
indicated.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Summary Compensation Table
Long-Term Compensation
----------------------
Securities
Annual Compensation Underlying All Other
Name and Principal Position Year Salary ($) Bonus ($) Options(#)(1) Compensation ($)(2)
- --------------------------- ---- ---------- --------- ------------- -------------------
Mervin D. Lung 2001 246,918 - - - 37,500 420
Chairman Emeritus 2000 249,326 - - - - - - 700
1999 243,436 146,393 50,000 850
David D. Lung 2001 312,137 - - - 37,500 420
President and CEO 2000 244,182 - - - 12,000 700
1999 238,443 167,664 50,000 850
Keith V. Kankel 2001 192,638 - - - 15,000 420
Vice President of Finance 2000 151,890 - - - 7,500 700
1999 148,413 146,393 20,000 850
Alan M. Rzepka 2001 177,777 - - - 7,500 420
Vice President Sales/Marketing 2000 141,615 - - - 12,000 700
R. Lynn Brandon 2001 192,638 - - - 231
Vice President of Operations 2000 147,987 - - - 7,500 0
1999 77,885 63,214 - - - 0
- - - - - - - - - -
(1) Options granted on July 8, 1999 to officers Mervin D. Lung, David D. Lung,
Keith V. Kankel, and Alan M. Rzepka, in the amounts of 50,000, 50,000,
20,000, and 10,000, respectively, were cancelled in 2001. Six months and
one day later, options equal to 75% of the options cancelled were granted
to these same officers at the market price on that date (see ten-year
option re-pricing table on the next page).
(2) Company contributions to 401(k) Savings Plan.
EMPLOYMENT CONTRACTS
The Company entered into Employment Agreements with David Lung, Alan
Rzepka, Keith Kankel, and R. Lynn Brandon pursuant to which they agreed to serve
as executive officers of the Company. The initial term of the Employment
Agreements were for three (3) years, subject to extension at the discretion of
the Board of Directors of the Company. The Agreements with David Lung and Alan
Rzepka provide for a minimum annual base salary of $300,000 and $165,000,
respectively, and expire on May 15, 2004. The Agreements with Keith Kankel and
R. Lynn Brandon provide for a minimum base salary of $139,724 and expire on May
15, 2003.
Ten Year Option Re-pricings
Securities Market Length of
Underlying Price of Exercise Original Option
Number of Stock at Price at New Term Remaining
Options Time of Time of Exercise at Date of
Date Repriced (#) Repricing Repricing Price Repricing
---- ------------ --------- --------- ----- ---------
David D. Lung . . . . . . . . . . . . . . . . 11/01/01 37,500 $6.30 $14.75 $6.30 6 years
Keith V. Kankel . . . . . . . . . . . . . . . 11/01/01 15,000 $6.30 $14.75 $6.30 6 years
Alan M. Rzepka . . . . . . . . . . . . . . . 11/01/01 7,500 $6.30 $14.75 $6.30 6 years
Mervin D. Lung . . . . . . . . . . . . . . . 11/01/01 37,500 $6.30 $14.75 $6.30 6 years
Option Grants in Last Fiscal Year
% of Total Potential Realizable Value
Options At Assumed Annual Rates
Granted of Stock Price Appreciation
Options to Exercise Expiration For Option Term
Granted Employees Price Date 5% 10%
------- --------- ----------- ----------------- -----------------------------------
David D. Lung . . . . . . . . . . 37,500 15.6 $6.30 11/01/2007 214,260 254,615
Keith V. Kankel . . . . . . . . . 15,000 6.3 $6.30 11/01/2007 85,704 101,846
Alan M. Rzepka . . . . . . . . . . 7,500 4.2 $6.30 11/01/2007 42,852 50,923
Mervin D. Lung . . . . . . . . . . 37,500 15.6 $6.30 11/01/2007 214,260 254,615
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values
Number of Value of
Securities Underlying Unexercised
Unexercised In-the-Money
Options at FY- Options at FY-
End (#) End ($)*
Exercisable / Exercisable /
Name Nonexercisable Nonexercisable
- ---- -------------- --------------
David D. Lung . . . . . . .. . . . . . . . 21,750/27,750 $17,925/23,775
Keith V. Kankel . . . . . .. . . . . . . . 9,375/13,125 $ 7,828/11,484
Alan M. Rzepka . . . . . .. . . . . . . . 6,750/12,750 $ 5,925/11,775
R. Lynn Brandon . . . . . .. . . . . . . . 1,875/ 5,625 $ 1,828/ 5,484
Mervin D. Lung . . . . . .. . . . . . . . 18,750/18,750 $15,000/15,000
- - - - - - -
* Market value of the underlying stock at exercise date or year-end as the case
may be, minus the exercise price of the options.
Under the Company's 1987 Stock Option Program as Amended, the Company may
grant to key employees (including employees who may also be officers and
directors, as long as they do not serve on the committee overseeing the
administration of the Program) stock options that may either be incentive stock
options or non-qualified stock options, related stock appreciation rights and
stock awards.
The executive officers of the Company have deferred compensation agreements
which provide that the Company will pay each of these employees or their
beneficiaries 60% of their base salary for 120 months upon retirement (if the
employee continues in the employ of the Company until the age of 65) or upon the
employee's death or total disability, up to a maximum of $102,000 per year for
Mervin D. Lung, $82,000 per year for David D. Lung, $72,000 per year for Keith
V. Kankel, and 40% of base salary up to a maximum $72,000 per year for R. Lynn
Brandon and Alan M. Rzepka. The cost of these agreements is being funded with
insurance contracts purchased by the Company
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors has an Audit Committee comprised of Terrence D.
Brennan, Walter E. Wells, John H. McDermott and Robert C. Timmins, who are not
employees of the Company. The Audit Committee's responsibilities include
recommending to the Board of Directors the independent accountants to be
employed for the purpose of conducting the annual examination of the Company's
financial statements, discussing with the independent accountants the scope of
their examination, reviewing the Company's financial statements and the
independent accountants' report thereon with Company personnel and the
independent accountants, and inviting the recommendations of the independent
accountants regarding internal controls and other matters. All of the members of
the Audit Committee are independent as defined in the Nasdaq listing standards.
The Audit Committee met four times in 2001.
The Board of Directors also has a Stock Option Committee, comprised of John
H. McDermott, Terrence D. Brennan, Walter E. Wells, and Robert C. Timmins. The
Stock Option Committee met three times in 2001.
The Board of Directors also has a Compensation Committee which met four
times in 2001 and their actions are described on the following pages of this
Proxy Statement.
The Board of Directors had four regular and three telephonic meetings in
2001 and all directors attended at least six meetings. Non-employee directors
are paid $600 for each meeting they attend. Employee directors receive no
compensation as such. On a bi-annual basis in May, each non-employee director is
automatically granted a restricted stock award for 6,000 shares of the Company's
Common Stock which will vest upon such director's continued service as a member
of the Board of Directors for two years or earlier upon certain events.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report of the Compensation Committee and the following Performance
Graph shall not be deemed incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filing under the
Securities Act of 1933 or under the Securities Exchange Act of 1934, except to
the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
OVERVIEW
The Committee policy is to design compensation programs for salaries,
incentive bonus programs, other benefits, and long-term incentive programs for
all key executives, including the officers named in the Summary Compensation
Table. The goals and objectives of the Committee are to attract and retain top
quality management employees and ensure that an appropriate relationship exists
between executive pay and the creation of shareholder value. The criteria used
to determine the compensation of the Chief Executive Officer will also be used
in determining compensation for the other officers. The Committee will also
receive the recommendation of the Chief Executive Officer regarding the
compensation of the other officers.
Federal tax law imposes a $1 million limit on the tax deduction for certain
executive compensation payments. Because the compensation paid to any executive
office is significantly below the $1 million threshold, the Compensation
Committee has not yet had to address the issues relative thereto.
SALARIES
The executive salaries are reviewed annually. The Committee sets executive
salaries based on competitive market levels, experience, individual and company
performance, levels of responsibility, and pay practices of other companies
relating to executives of similar responsibility. The Committee considered the
compensation levels of executives at comparable companies and fixed the
compensation for the CEO and other executive officers at levels approximating
the midrange of such companies. The Committee includes in its consideration
comparable companies listed in the CRSP Index for lumber and wood products and
other in building products industries. See "Performance Graph."
ANNUAL INCENTIVE
The Company provides an annual bonus plan for executive officers that gives
them the opportunity to earn additional compensation based on the performance of
the Company. The Chief Executive Officer and the other officers share in this
program to achieve certain bonus amounts based on various levels of
profitability of the Company. In 2001, there was no bonus due to the Company not
having income before taxes.
OPTION RE-PRICINGS
The Compensation Committee approved and authorized the cancellation and
re-grant of the stock options disclosed in the "Ten-Year Option Re-pricing
Table." The decision to approve this cancellation and re-grant followed a review
of existing option grants and the recognition that granting stock options
motivates high levels of performance and provides an effective means of
recognizing employee contributions to the success of the Company. The offer
provided an opportunity for the Company to offer eligible employees a valuable
incentive to stay with the Company. By making the offer to exchange outstanding
options for new options that had an exercise price at least equal to the market
value of the Company's Common Stock on the grant date, the Company intended to
provide its eligible employees with the benefit of owning options that over time
may have a greater potential to increase in value, create better performance
incentives for eligible employees and thereby maximize shareholder value. Option
holders who agreed to the cancellation of their options were required to accept
a 25% reduction in the number of shares under the option and to wait six months
and one day before the grant of new options. This waiting period was necessary
in order to avoid variable stock option accounting under generally accepted
accounting principles. The new options have an exercise price equal to the fair
market value of the Company's Common Stock on the grant date.
David D. Lung
Walter E. Wells
John H. McDermott
Terrence D. Brennan
Robert C. Timmins
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
David D. Lung is President and Chief Executive Officer of the Company.
David D. Lung did not participate in the final decisions with respect to his
compensation. John H. McDermott is of counsel to the Chicago, Illinois law firm
of McDermott, Will & Emery which provides various legal services to the Company.
CERTAIN TRANSACTIONS
The Company leases a distribution warehouse and various facilities for its
manufacturing operations from Mervin D. Lung, the Company's Chairman Emeritus,
under an agreement which expires September 30, 2005, with an option to renew for
three years. The agreement provides for monthly rental of $27,801, and the
payment of property taxes and insurance premiums on the property. The Company
has agreed to purchase this complex from Mervin Lung in 2002. The Company also
leases two buildings from Mr. Lung used for distribution and manufacturing,
under an agreement expiring on September 30, 2004, with an option to renew for
five years. The agreement provides for monthly rental of $25,029, and the
payment of property taxes and insurance premiums on the property. The Company
also leases two manufacturing facilities from Mr. Lung under agreements that
expire on March 31, 2004 with options to renew for three years. The agreements
provide for monthly rentals of $11,149, and the payment of property taxes and
insurance premiums on the property. The Company also leases three manufacturing
facilities from Mr. Lung under agreements that expire on July 31, 2004, August
31, 2003, and October 31, 2003 with options to renew for three years. The
agreements provide for monthly rentals of $25,680, and the payment for property
taxes and insurance premiums on the property. The Company also leases an
aircraft from Mr. Lung under an agreement that expires on October 31, 2002. The
agreement provides for monthly rentals of $18,350, and the payment of insurance
premiums and maintenance on the aircraft.
Mr. Lung owns a building supply firm which does not serve the Manufactured
Housing and Recreational Vehicle industries. The Company purchases certain
specialty items from and sells products to such firm. During the year ended
December 31, 2001, purchases from such firm totaled $21,419 and sales to such
firm totaled $51,859.
The Company believes that the terms of each of the above transactions are
at least as favorable as those which could have been obtained from unrelated
parties.
AUDIT COMMITTEE REPORT
The responsibilities of the Audit Committee, which are set forth in the
Audit Committee Charter adopted by the Board of Directors, include providing
oversight to the Company's financial reporting process through periodic meetings
with the Company's independent auditors, principal accounting officer, and
management to review accounting, auditing, internal controls, and financial
reporting matters. The management of the Company is responsible for the
preparation and integrity of the financial reporting information and related
systems of internal controls. The Audit Committee, in carrying out its role,
relies on the Company's senior management, including senior financial
management, and its independent auditors.
We have reviewed and discussed with senior management the Company's audited
financial statements included in the 2001 Annual Report to Shareholders.
Management has confirmed to us that such financial statements (i) have been
prepared with integrity and objectivity and are responsibility of management
and, (ii) have been prepared in conformity with generally accepted accounting
principles.
We have discussed with McGladrey & Pullen, LLP, our independent auditors,
the matters required to be discussed by SAS 61 (Communications with Audit
Committee). SAS 61 requires our independent auditors to provide us with
additional information regarding the scope and results of their audit of the
Company's financial statements, including with respect to (i) their
responsibility under generally accepted auditing standards, (ii) significant
accounting policies, (iii) management judgements and estimates, (iv) any
significant audit adjustments, (v) any disagreements with management, and (vi)
any difficulties encountered in performing the audit.
We have received from McGladrey & Pullen, LLP a letter providing the
disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees) with respect to any
relationships between McGladrey & Pullen, LLP and the Company that in their
professional judgment may reasonably be thought to bear on independence.
McGladrey & Pullen, LLP has discussed its independence with us, and has
confirmed in such letter that, in its professional judgment, it is independent
of the Company within the meaning of the federal securities laws.
Based on the review and discussions described above with respect to the
Company's audited financial statements included in the Company's 2001 Annual
Report to Shareholders, we have recommended to the Board of Directors that such
financial statements be included in the Company's Annual Report on Form 10-K for
filing with the Securities and Exchange Commission.
As specified in the Audit Committee Charter, it is not the duty of the
Audit Committee to plan or conduct audits or to determine that the Company's
financial statements are complete and accurate and in accordance with generally
accepted accounting principles. That is the responsibility of management and the
Company's independent auditors. In giving our recommendation to the Board of
Directors, we have relied on (i) management's representation that such financial
statements have been prepared with integrity and objectivity and in conformity
with generally accepted accounting principles, and (ii) the report of the
Company's independent auditors with respect to such financial statements.
John H. McDermott
Terrence D. Brennan
Robert C. Timmins
Walter E. Wells
PERFORMANCE GRAPH*
Set forth below is a line graph comparing the yearly cumulative total
shareholder return on the Company's Common Stock against the cumulative total
return of the indices indicated for the period of five fiscal years commencing
December 31, 1996 and ended December 31, 2001. This graph assumes that $100 was
invested on December 31, 1996 and that all dividends were reinvested. The stock
price performance shown on the graph below is not necessarily indicative of
future price performance.
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
PATRICK INDUSTRIES, INC.
Produced on 03/08/2002 including data to 12/31/2001
[GRAPH OMITTED]
- ------------------------------------------------------------------------------------------------------------------------
LEGEND
Symbol CRSP Total Returns Index for: 12/1996 12/1997 12/1998 12/1999 12/2000 12/2001
- ------ ----------------------------- ------- ------- ------- ------- ------- -------
PATRICK INDUSTRIES, INC. 100.0 98.3 103.8 68.3 40.3 50.9
Nasdaq Stock Market (US Companies) 100.0 122.5 172.7 320.8 193.0 153.1
NASDAQ Stocks (SIC 2400-2499 US Companies) 100.0 112.3 113.2 107.9 74.0 209.3
Lumber and wood products, except furniture
NOTES:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on
the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a
trading day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 12/31/1996.
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*Prepared by Center for Research in Securities Prices, University of
Chicago/Graduate School of Business.
ACCOUNTING INFORMATION
The Board of Directors has reappointed McGladrey & Pullen, LLP as
independent auditors to audit the financial statements of the Company for 2002.
Representatives of McGladrey & Pullen, LLP are expected to be present at the
annual meeting and will be given the opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions.
AUDIT FEES
The aggregate fees billed by the Company's independent auditors for
professional services rendered in connection with (i) the audit of the Company's
annual financial statements set forth in the Company's Annual Report on Form
10-K for the year ended December 31, 2001, and (ii) the review of the Company's
quarterly financial statements set forth in the Company's Quarterly Reports on
Form 10-Q for the quarters ended March 31, 2001, June 30, 2001, and September
30, 2001, were approximately $110,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
There were no fees billed by the Company's independent auditors for the
Company's most recent fiscal year for professional services in this category.
All Other Fees
The aggregate fees for all other services rendered by its independent
auditors or affiliates for the Company's most recent fiscal year were
approximately $56,000. These fees include work performed by the independent
auditors with respect to employee benefit plan audits, income tax services, and
general advisory services.
The Audit Committee has advised the Company that it has determined that the
non-audit services rendered by the Company's independent auditors during the
Company's most recent fiscal year are compatible with maintaining the
independence of such auditors.
By Order of the Board of Directors
KEITH V. KANKEL
Secretary
April 12, 2002
- --------------------------------------------------------------------------------
PROXY - PATRICK INDUSTRIES, INC.
- --------------------------------------------------------------------------------
1800 SOUTH 14TH STREET, P.O. BOX 638, ELKHART, INDIANA 46515
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Mervin D. Lung, David D. Lung, and Keith V.
Kankel, and each of them, as the undersigned's proxies, each with full power of
substitution, to represent and to vote, as designated below, all of the
undersigned's Common Stock in Patrick Industries, Inc. at the annual meeting of
shareholders of Patrick Industries, Inc. to be held on Wednesday, May 15, 2002,
and at any adjournment thereof, with the same authority as if the undersigned
were personally present.
This Proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholders. If no specific direction is made, this proxy will
be voted FOR the election of Directors.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(Continued and to be signed on reverse side.)
PATRICK INDUSTRIES, INC.
Use a black pen. Print in
CAPITAL letters inside the grey
areas as shown in this example. /A B C/ /1 2 3 X /
/ / Mark this box with an X if
you have made changes to
your name or address details
above.
- --------------------------------------------------------------------------------
ANNUAL MEETING PROXY CARD
- --------------------------------------------------------------------------------
A. ELECTION OF DIRECTORS:
The Board of Directors recommends a vote FOR the listed nominees.
For Withhold
01 - Robert C. Timmins
02 - Terrence D. Brennan
03 - Larry D. Renbarger
In their discretion, the Proxies are authorized
to vote upon such other business as may properly
come before the meeting.
B. AUTHORIZED SIGNATURES - SIGN HERE - This section must be completed for your
instructions to be executed.
Please sign exactly as name appears hereon. For joint accounts, all tenants
should sign. Executors, Administrators, Trustees, etc., should so indicate when
signing.
Signature 1 Signature 2 Date (dd/mm/yyyy)
/ /
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