-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SyCJqkayZNJ0XhLTsqGGsAjvx5anpOrugXah8s6erm964kL4RIqBApFYUzPrrXoY bL1k7l3OiTWv7WdzSYdbDw== 0000719547-01-500012.txt : 20010514 0000719547-01-500012.hdr.sgml : 20010514 ACCESSION NUMBER: 0000719547-01-500012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010511 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CLAYTON HOMES INC CENTRAL INDEX KEY: 0000719547 STANDARD INDUSTRIAL CLASSIFICATION: MOBILE HOMES [2451] IRS NUMBER: 621671360 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08824 FILM NUMBER: 1629418 BUSINESS ADDRESS: STREET 1: 5000 CLAYTON ROAD CITY: MARYVILLE STATE: TN ZIP: 37804 BUSINESS PHONE: 8653803000 MAIL ADDRESS: STREET 1: 5000 CLAYTON ROAD CITY: MARYVILLE STATE: TN ZIP: 37804 10-Q 1 edgar.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED March 31, 2001 -------------------- COMMISSION FILE NUMBER 1-8824 --------- CLAYTON HOMES, INC. (Exact name of registrant as specified in its charter) Delaware 62-1671360 - -------- ---------- (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) Number) 5000 Clayton Road Maryville, Tennessee 37804 - --------------------- ----------------- (Address of principal (zip code) executive offices) 865-380-3000 - ------------ (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No. -- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Shares of common stock $.10 par value, outstanding on March 31, 2001: 137,804,362. 1 CLAYTON HOMES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited - in thousands except per share data)
Three Months Ended Nine Months Ended March 31, March 31, 2001 2000 2001 2000 --------- -------- --------- -------- REVENUES Net sales $191,171 $229,378 $625,217 $729,584 Financial services 63,086 59,588 177,824 171,506 Rental and other income 17,813 18,015 54,689 52,347 --------- -------- --------- -------- Total revenues 272,070 306,981 857,730 953,437 --------- -------- --------- -------- COSTS AND EXPENSES Cost of sales 127,037 152,647 417,035 485,689 Selling, general and administrative 93,547 92,164 280,639 284,790 Financial services interest 166 245 560 805 Provision for credit losses 12,700 5,200 30,000 13,600 --------- -------- --------- -------- Total expenses 233,450 250,256 728,234 784,884 --------- -------- --------- -------- OPERATING INCOME 38,620 56,725 129,496 168,553 Interest income (expense), net/other (868) 268 (2,197) 695 --------- -------- --------- -------- Income before income taxes 37,752 56,993 127,299 169,248 Provision for income taxes 14,000 21,100 47,100 62,600 --------- -------- --------- -------- Net income $ 23,752 $ 35,893 $ 80,199 $106,648 ========= ======== ========= ======== NET INCOME PER COMMON SHARE Basic $ 0.17 $ 0.26 $ 0.58 $ 0.76 Diluted 0.17 0.26 0.58 0.76 DIVIDENDS PAID PER COMMON SHARE $ 0.016 $ 0.016 $ 0.048 $ 0.048 AVERAGE SHARES OUTSTANDING Basic 137,767 138,839 137,638 139,966 Diluted 138,722 139,121 138,179 140,395
CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
(unaudited) (audited) March 31, June 30, 2001 2000 ---------- ----------- ASSETS Cash and cash equivalents $ 197,209 $ 43,912 Trade receivables 11,151 21,796 Other receivables, net 424,048 500,942 Residual interests in installment contract receivables 161,511 150,329 Inventories 184,373 222,431 Property, plant and equipment, net 308,461 305,479 Other assets 254,135 261,489 ---------- ----------- Total assets $1,540,888 $1,506,378 ========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable and accrued liabilities $ 82,998 $ 122,760 Debt obligations 96,837 99,216 Other liabilities 246,759 248,027 ---------- ----------- Total liabilities 426,594 470,003 SHAREHOLDERS' EQUITY Accumulated other comprehensive income (loss) 1,477 (681) Other shareholders' equity 1,112,817 1,037,056 ---------- ----------- Total shareholders' equity 1,114,294 1,036,375 ---------- ----------- Total liabilities and shareholders' equity $1,540,888 $1,506,378 ========== ===========
(See accompanying notes to the condensed consolidated financial statements) 2 CLAYTON HOMES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited - in thousands)
Nine Months Ended March 31, 2001 2000 ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 80,199 $ 106,648 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 15,765 15,078 Amortization of installment contract receivables, net of gain on sale 5,730 2,846 Provision for credit losses 30,000 13,600 Realized loss on securities available-for-sale 488 484 Deferred income taxes (8,579) (4,270) Decrease in other receivables, net 4,800 33,540 Decrease (increase) in inventories 38,058 (22,814) Decrease in accounts payable, accrued liabilities, and other (76,858) (108,815) ---------- ---------- Cash provided by operations 89,603 36,297 Origination of installment contract receivables (593,871) (736,452) Proceeds from sales of originated installment contract receivables 667,002 736,001 Principal collected on originated installment contract receivables 27,509 34,784 ---------- ---------- Net cash provided by operating activities 190,243 70,630 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of installment contract receivables (273,619) (177,654) Proceeds from sales of acquired installment contract receivables 219,454 138,142 Principal collected on acquired installment contract receivables 16,339 13,352 Proceeds from sales of securities available-for-sale 29,527 28,966 Acquisition of property, plant and equipment (18,747) (26,298) Decrease (increase) in restricted cash (3,083) 10,105 ---------- ---------- Net cash used in investing activities (30,129) (13,387) CASH FLOWS FROM FINANCING ACTIVITIES Dividends (7,001) (7,020) Repayment of long-term debt (2,379) (2,465) Issuance of stock for incentive plans and other 3,045 2,669 Repurchase of common stock (482) (45,107) ---------- ---------- Net cash used in financing activities (6,817) (51,923) ---------- ---------- Net increase in cash and cash equivalents 153,297 5,320 Cash and cash equivalents at beginning of period 43,912 2,680 ---------- ---------- Cash and cash equivalents at end of period $ 197,209 $ 8,000 ========== ==========
(See accompanying notes to the condensed consolidated financial statements) 3 CLAYTON HOMES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. The condensed consolidated financial statements of Clayton Homes, Inc. and its wholly and majority owned subsidiaries (the Company) have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with Generally Accepted Accounting Principles have been omitted. The condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report to Shareholders for the year ended June 30, 2000. The information furnished reflects all adjustments which are necessary for a fair presentation of the Company's financial position as of March 31, 2001, and the results of its operations and its cash flows for the three-month and nine-month periods ended March 31, 2001, and 2000. All such adjustments are of a normal recurring nature. In the first quarter of 2001, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities, which was subsequently amended by SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities. SFAS No. 133 establishes accounting and reporting standards for derivative instruments embedded in other contracts and for hedging activities. Such adoption did not have a material impact on the Company's reported results of operations, financial position or cash flows. The Company also adopted the Financial Accounting Standards Board's (FASB) Emerging Issues Task Force (EITF) Issue No. 00-10, Accounting for Shipping and Handling Revenues and Costs, in the first quarter of 2001. Such adoption did not have a material impact on the Company's reported results of operations, financial position or cash flows. 2. The results of operations for the nine months ended March 31, 2001, are not necessarily indicative of the results to be expected for the respective full year. 3. Certain reclassifications have been made to the 2000 financial statements to conform to the 2001 presentation. 4. The Company has $75 million of 6.25% Senior Notes due December 30, 2003, which are primarily to facilitate the purchase, origination and warehousing of loan portfolios. The Senior Notes are guaranteed by all significant subsidiaries of the Company and are governed by various financial covenants which require maintenance of certain financial ratios. On January 11, 2001, the Company cancelled its committed one-year $300 million commercial paper conduit facility used to facilitate the sale of manufactured housing contracts. The Company is currently considering a replacement facility for a lower amount. 5. Reconciling items in excess of bank balances have been reclassified to "Accounts payable and accrued liabilities" in the accompanying balance sheets. 4 CLAYTON HOMES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) 6. The following reconciliation details the numerators and denominators used to calculate basic and diluted earnings per share for the respective periods:
Three Months Ended Nine Months Ended March 31, March 31, (in thousands except per share data) 2001 2000 2001 2000 ---------- -------- ---------- -------- Net income $ 23,752 $ 35,893 $ 80,199 $106,648 Average shares outstanding Basic 137,767 138,839 137,638 139,966 Add: common stock equivalents (1) 955 282 541 429 ---------- -------- ---------- -------- Diluted 138,722 139,121 138,179 140,395 Net income per common share Basic $0.17 $0.26 $0.58 $0.76 Diluted $0.17 $0.26 $0.58 $0.76
(1) Common stock equivalents are principally stock options. 7. The reserves for credit losses and contingent liabilities at March 31, 2001, and June 30, 2000, were $33,150,000 and $35,725,000, respectively. 8. In December 1999, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements. It summarizes the SEC's views in applying generally accepted accounting principles to selected revenue recognition issues. An amendment was issued in June 2000, which delays the implementation until no later than the fourth quarter of fiscal years beginning after December 15, 1999. The Company believes that its practices already comply with the provisions of SAB No. 101, and its adoption is not expected to have a material impact on the Company's reported results of operations, financial position or cash flows. In September 2000, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, which replaced SFAS No. 125. SFAS No. 140 revises the standards for accounting for securitizations and other transfers of financial assets and collateral and requires certain disclosures. This statement is effective for fiscal years ending after December 15, 2000. Such adoption is not expected to have a material impact on the Company's reported results of operations, financial position or cash flows. In October 2000, the Emerging Issues Task Force of the Financial Accounting Standards Board issued a new accounting requirement for the recognition of other than temporary impairments on purchased and retained beneficial interests resulting from securitization transactions. This requirement is summarized in EITF Issue No. 99-20, Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets. 5 CLAYTON HOMES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) Under previously existing accounting requirements, declines in fair value of such beneficial interests were recognized as other than temporary impairment when the present value of the underlying cash flows discounted at a risk-free rate using current assumptions were less than the carrying value of such assets. Pursuant to EITF Issue No. 99-20, declines in fair value are to be considered other than temporary when: (i) the carrying value of the beneficial interests exceeds the fair value of such beneficial interests using current assumptions, and (ii) the timing and/or extent of cash flows expected to be received on the beneficial interests has adversely changed - - as defined - from the previous valuation date. Initial adoption of this new accounting guidance will be required for the Company's fourth quarter of fiscal 2001 and is to be reflected as a cumulative effect of an accounting change at the time of adoption. The Company is currently evaluating the timing of adoption of this new accounting requirement and its potential impact on the accounting for the Company's residual, regular and other interests retained at the time of its securitization transactions. 6 CLAYTON HOMES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) 9. The Company operates primarily in four business segments: Retail, Manufacturing, Financial Services and Communities. The following table summarizes information with respect to the Company's business segments for the three-month and nine-month periods ended March 31, 2001 and 2000:
Three Months Ended Nine Months Ended March 31, March 31, (in thousands) 2001 2000 2001 2000 ----------- ----------- ----------- ---------- REVENUES Retail $ 152,791 $ 169,226 $ 485,099 $ 537,492 Manufacturing 110,895 143,180 359,802 455,635 Financial Services 51,867 49,392 145,609 142,049 Communities 20,814 24,451 63,368 66,420 Intersegment sales (64,297) (79,268) (196,148) (248,159) ----------- ----------- ----------- ---------- Total revenues $ 272,070 $ 306,981 $ 857,730 $ 953,437 INCOME FROM OPERATIONS Retail $ 5,463 $ 11,316 $ 17,979 $ 39,223 Manufacturing 5,595 13,925 25,146 46,358 Financial Services 25,197 29,661 78,735 82,927 Communities 3,416 4,468 9,706 11,447 Eliminations/Other (1,051) (2,645) (2,070) (11,402) ----------- ----------- ----------- ---------- Total income from operations $ 38,620 $ 56,725 $ 129,496 $ 168,553 CAPITAL EXPENDITURES Retail $ 310 $ 1,655 $ 3,901 $ 7,968 Manufacturing 886 2,369 3,267 9,961 Financial Services - 59 146 441 Communities 2,441 2,827 10,772 7,026 Eliminations/Other 782 471 661 902 ----------- ----------- ----------- ---------- Total capital expenditures $ 4,419 $ 7,381 $ 18,747 $ 26,298 March 31, June 30, 2001 2000 ----------- ----------- IDENTIFIABLE ASSETS Retail $ 244,973 $ 287,705 Manufacturing 80,093 100,112 Financial Services 804,458 902,913 Communities 190,317 185,784 Eliminations/Other 221,047 29,864 ----------- ----------- Total identifiable assets $1,540,888 $1,506,378
7 PART I - - FINANCIAL INFORMATION (Unaudited) ITEM 1. Financial Statements. ---------------------- See pages 2 through 7. ITEM 2. Management's Discussion and Analysis of Financial Condition and ------------------------------------------------------------------- Results of Operations. ----------------------- NINE MONTHS ENDED MARCH 31, 2001: The following table reflects the percentage changes in retail sales for the Company's retail and community sales centers and wholesale sales to independent retailers. It also reflects percentage changes in the average number of Company-owned retail centers, independent retailers and communities, the average sales per location, and the average price per home sold in each category.
Nine Months Ended March 31, Fiscal Year 2001 vs 2000 ------------------------- Retail Dollar sales -10.9% Number of retail centers + 1.1% Dollar sales per retail center -11.9% Price of home - 0.9% Wholesale Dollar sales -22.0% Number of independent retailers + 3.9% Dollar sales per independent retailer -24.9% Price of home + 6.5% Communities Dollar sales -16.9% Number of communities + 1.3% Dollar sales per community -17.9% Price of home - 0.1%
Total revenues for the nine months ended March 31, 2001, decreased 10% to $858 million, which consisted of a 14% decrease in manufactured housing sales to $625 million, a 4% increase in financial services income to $178 million and a 4% increase in rental and other income to $55 million. Current conditions in the manufactured housing industry are highly competitive at both the retail and wholesale levels. Presently, the industry is faced with over-capacity in manufacturing and too many retail centers. This competitive environment, as well as an increase in industry foreclosures and aged retailer inventory, has contributed to decreased industry and Company sales. The Retail group experienced a reduction of net sales of 11% to $437 million as the average home price decreased 1% and the number of Company-owned sales centers increased 1%. Reflecting the competitive industry environment, as well as increased repossessed home sales and higher interest rates, the average number of homes sold per sales center declined 11%. In addition, net sales of the 8 Manufacturing group to independent retailers decreased 22% to $162 million, while wholesale shipments declined 27% to 6,683. The Communities group net sales decreased 17% to $26 million as 17% less homes were sold, and the average home selling price remained constant. Within the revenues for the Financial Services segment, interest and loan servicing revenues increased $13 million, and insurance related revenues rose $5 million. Rental and other income increased 4% as Communities rental income rose 8%. Loans sold through asset-backed securities totaled $886 million, compared to $894 million during the same period last year. Financial services interest expense decreased $.2 million to $.6 million. Debt collateralized by installment contract receivables dropped 31% to an average of $7 million, and the weighted average interest rate increased to 10.59% from 10.45%. Gross profit margins decreased slightly to 33.3% from 33.4%. Selling, general and administrative expenses, as a percent of revenues, increased to 32.7% from 29.9% in the prior year period. This increase was primarily due to a decline in overall sales volume in addition to growth of Company-owned sales centers with a decrease in sales, and reduced capacity utilization in manufacturing. Additional set up costs associated with the shift in mix toward larger homes was also a factor. The increase in the provision for credit losses was primarily due to the additional number of contracts in repossession from the same period last year. The following table represents delinquent installment sales contracts as a percentage of the total number of installment sales contracts which the Company services and either owns or for which it is contingently liable. A contract is considered delinquent if any payment is more than one month past due.
March 31, 2001 2000 ----- ----- Total delinquency as a percentage of contracts outstanding: All contracts 2.53% 2.36% Contracts originated by VMF 2.10% 1.65% Contracts acquired from other institutions 4.56% 5.78%
9 The following table sets forth information related to loan loss/repossession experience for all installment contract receivables which the Company either owns or for which it is contingently liable.
Nine Months Ended March 31, 2001 2000 ------ ------ Net losses as a percentage of average loans outstanding (annualized): All contracts 1.7% 1.4% Contracts originated by VMF 1.6% 1.2% Contracts acquired from other institutions 2.1% 2.8% Number of contracts in repossession: All contracts 2,611 2,001 Contracts originated by VMF 2,109 1,544 Contracts acquired from other institutions 502 457 Total number of contracts in repossession as a percentage of total contracts 1.9% 1.6%
The decrease in inventories as of March 31, 2001, from June 30, 2000, is explained as follows:
($ in millions) Manufacturing Increase (decrease) - ------------- -------------------- Finished goods $ 4.7 Raw materials (8.7) Retail - ------- Decrease in inventory levels at Company-owned retail centers (32.7) Communities - ----------- Increase in inventory levels at 76 Communities open at June 30, 2000 (1.7) Inventory to stock one new Community 0.3 -------------------- $(38.1) --------------------
On March 31, 2001, the order backlog for the Manufacturing group (consisting of Company-owned and independent retailer orders) increased to $21 million, as compared to $12 million for the same period last year. 10 THIRD QUARTER ENDED MARCH 31, 2001: The following table reflects the percentage changes in retail sales for the Company's retail and community sales centers and wholesale sales to independent retailers. It also reflects percentage changes in the average number of Company-owned retail centers, independent retailers and communities, the average sales per location, and the average price per home sold in each category.
Third Quarter Ended March 31, Fiscal Year 2001 vs 2000 ------------------------- Retail Dollar sales -11.0% Number of retail centers - 0.8% Dollar sales per retail center -10.2% Price of home - 0.1% Wholesale Dollar sales -27.0% Number of independent retailers + 2.5% Dollar sales per independent retailer -28.8% Price of home + 8.0% Communities Dollar sales -34.3% Number of communities + 1.3% Dollar sales per community -35.1% Price of home + 2.8%
Total revenues for the three months ended March 31, 2001, decreased 11% to $272 million, which consisted of a 17% decrease in manufactured housing sales to $191 million, a 6% increase in financial services income to $63 million and a 1% decrease in rental and other income to $18 million. Current conditions in the manufactured housing industry remain highly competitive at both the retail and wholesale levels. Presently, the industry is faced with over-capacity in manufacturing and too many retail centers. This competitive environment, as well as an increase in industry foreclosures and aged retailer inventory, has contributed to decreased industry and Company sales. The Retail group experienced a reduction of net sales of 11% to $137 million, as the average home price remained constant while the number of Company-owned sales centers decreased 1%. Reflecting the competitive industry environment, as well as increased foreclosed home sales and higher interest rates, the average number of homes sold per sales center declined 10%. In addition, net sales of the Manufacturing group to independent retailers decreased 27% to $46 million, while wholesale shipments decreased 32% to 1,911. However, the Company's market share increased to 11% from 9% a year earlier. The Communities group net sales decreased 34% to $8 million as 36% less homes were sold to 241, while the average home selling price increased 3%. Within the revenues for the Financial Services segment, interest and loan servicing revenues increased $5 million, and insurance related revenues rose $2 million. Rental and other income decreased 1% as Communities rental income rose 7%. 11 Loans sold through asset-backed securities totaled $353 million, compared to $271 million during the same period last year. Financial services interest expense decreased $.1 million to $.2 million. Debt collateralized by installment contract receivables dropped 34% to an average of $6 million, and the weighted average interest rate increased to 10.60% from 10.34%. Gross profit margins remained constant at 33.5%. Selling, general and administrative expenses, as a percent of revenues, increased to 34.4% from 30.0% in the prior year period. This increase was primarily due to a decline in overall sales volume in addition to growth of Company-owned sales centers with a decrease in sales, and reduced capacity utilization in manufacturing. Additional set up costs associated with the shift in mix toward larger homes was also a factor. The increase in the provision for credit losses was primarily due to the additional number of contracts in repossession from the same period last year. The following table sets forth information related to loan loss/repossession experience for all installment contract receivables which the Company either owns or for which it is contingently liable.
Third Quarter Ended March 31, 2001 2000 ----- ----- Net losses as a percentage of average loans outstanding (annualized): All contracts 1.7% 1.3% Contracts originated by VMF 1.7% 1.1% Contracts acquired from other institutions 2.3% 2.6%
Liquidity and Capital Resources - ---------------------------------- Cash was $197 million and $44 million at March 31, 2001 and June 30, 2000, respectively. The Company anticipates meeting cash requirements with cash flow from operations, revolving credit lines, senior notes, and sales of installment contract and mortgage loan receivables and GNMA certificates. The Company's debt to capital ratio was 8% at March 31, 2001. The Company had long-term debt outstanding of $97 million and $99 million at March 31, 2001, and June 30, 2000, respectively. Short-term debt available consists of $115 million committed and $67 million uncommitted lines of credit. These lines of credit do not require collateral and are priced on LIBOR rates. The committed credit lines are guaranteed by all significant subsidiaries of the Company and are governed by various financial covenants which require maintenance of certain financial ratios. The Company has $75 million of 6.25% Senior Notes due December 30, 2003, which are primarily to facilitate the purchase, origination and warehousing of loan portfolios. The Senior Notes are guaranteed by all significant subsidiaries of the Company and are governed by various financial covenants which require maintenance of certain financial ratios. On January 11, 2001, the Company cancelled its committed one-year $300 million commercial paper conduit facility used to facilitate the sale of manufactured housing contracts. The Company is currently considering a replacement facility for a lower amount. The Company owns its own inventory; therefore no floorplanning arrangements are necessary. 12 Forward Looking Statements - ---------------------------- Certain statements in this quarterly report are forward looking as defined in the Private Securities Litigation Reform Law. These statements involve certain risks and uncertainties that may cause actual results to differ materially from expectations as of the date of this report. These risks fall generally within three broad categories consisting of industry factors, management expertise, and government policy and economic conditions. Industry factors include such matters as potential periodic inventory adjustments by both captive and independent retailers, availability of wholesale and retail financing, general or seasonal weather conditions affecting sales and revenues, catastrophic events impacting insurance reserves, cost of labor and/or raw materials and industry consolidation trends creating fewer, but stronger, competitors capable of sustaining competitive pricing pressures. Management expertise is affected by management's overall ability to anticipate and meet consumer preferences, maintain successful marketing programs, continue quality manufacturing output, keep a strong cost management oversight, and project stable gain on sale accounting assumptions. Lastly, management has the least control over government policy and economic conditions such as prevailing interest rates, capital market liquidity, government monetary policy, stable regulation of manufacturing standards, consumer confidence, favorable trade policies, and general prevailing economic and employment conditions. 13 PART II - - OTHER INFORMATION ITEM 1 - There were no reportable events for Item 1 through Item 5. ITEM 6 - Exhibits and Reports for Form 8-K. --------------------------------------- (a) Reports on Form 8-K. Clayton Homes, Inc./Vanderbilt Mortgage & Finance, Inc. Senior Subordinate Pass-Through Certificates Series 2001A. Filed February 15, 2001. Clayton Homes, Inc./Vanderbilt Mortgage & Finance, Inc. Incorporation of financial statements of Clayton Homes, Inc. into registration statement file no. 333-75405 pertaining to Senior Subordinate Pass-Through Certificates Series 2001A. Filed February 26, 2001. 14 CLAYTON HOMES, INC. ------------------- SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CLAYTON HOMES, INC. --------------------- (Registrant) Date: May 11, 2001 /s/ Kevin T. Clayton -------------- ----------------------- Kevin T. Clayton Chief Executive Officer and President Date: May 11, 2001 /s/ Amber W. Krupacs -------------- ----------------------- Amber W. Krupacs Vice President Finance Date: May 11, 2001 /s/ Greg A. Hamilton -------------- ----------------------- Greg A. Hamilton Vice President and Controller 15 -----END PRIVACY-ENHANCED MESSAGE-----