-----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, BwJq/EwHwAewNYu3AYJnCMtWMcHr/6ejQ9ExJXCiNIZXP/OGkozgs1FCo0RKqpxQ 47C/Z3kWcu9q8V5FHSTsXA== 0000950144-97-001433.txt : 19970222 0000950144-97-001433.hdr.sgml : 19970222 ACCESSION NUMBER: 0000950144-97-001433 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970214 SROS: CSX SROS: NYSE SROS: PHLX FILER: COMPANY DATA: COMPANY CONFORMED NAME: CLAYTON HOMES INC CENTRAL INDEX KEY: 0000719547 STANDARD INDUSTRIAL CLASSIFICATION: MOBILE HOMES [2451] IRS NUMBER: 620794407 STATE OF INCORPORATION: TN FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08824 FILM NUMBER: 97534706 BUSINESS ADDRESS: STREET 1: 623 MARKET ST CITY: KNOXVILLE STATE: TN ZIP: 37902 BUSINESS PHONE: 6159707200 MAIL ADDRESS: STREET 1: PO BOX 15169 CITY: KNOXVILLE STATE: TN ZIP: 37901 10-Q 1 CLAYTON HOMES FORM 10-Q 1 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 December 31, 1996 ----------------- COMMISSION FILE NUMBER 1-8824 ------ CLAYTON HOMES, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Tennessee 62-0794407 - ------------------------------- ------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) Number) P. O. Box 15169 623 Market Street Knoxville, Tennessee 37902 - --------------------------------------- ------------------------------- (Address of principal executive offices) (zip code) 423-970-7200 - ---------------------------------------------------- (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 December 31, 1996 - 118,495,665. 1 2 CLAYTON HOMES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited - in thousands except per share data)
Three Months Ended Six Months Ended December 31 December 31, 1996 1995 1996 1995 ---- ---- ---- ---- Revenues Net sales $191,298 $177,529 $385,171 $355,313 Financial services 31,039 23,668 61,891 52,265 Rental and other income 12,335 9,986 23,814 18,918 -------- -------- -------- -------- Total revenues 234,672 211,183 470,876 426,496 Expenses Cost of sales 128,546 120,060 262,019 241,085 Selling, general and administrative 62,444 54,227 123,299 111,383 Financial services interest 728 910 1,506 1,930 Provision for credit losses 1,000 1,000 2,000 2,000 -------- -------- -------- -------- Total expenses 192,718 176,197 388,824 356,398 -------- -------- -------- -------- Operating income 41,954 34,986 82,052 70,098 Interest income, net 1,122 1,327 2,327 2,377 -------- -------- -------- -------- Income before income taxes 43,076 36,313 84,379 72,475 Provision for income taxes 16,400 13,600 32,100 27,200 -------- -------- -------- -------- Net income $ 26,676 $ 22,713 $ 52,279 $ 45,275 ======== ======== ======== ======== Average earnings per share: (1) $ 0.22 $ 0.19 $ 0.44 $ 0.38 Dividends paid per share: (1) $ 0.02 $ 0.02 $ 0.04 $ 0.04 Average shares outstanding: (1) 119,142 119,139 119,359 119,061
(1) Adjusted for the December 11, 1996 5-for-4 stock split. CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited) (audited) Dec. 31, June 30, 1996 1996 ---- ---- ASSETS: Cash and cash equivalents $ 33,875 $ 47,400 Receivables, net 410,413 402,039 Inventories 113,514 124,280 Property, plant and equipment, net 194,619 184,271 Other assets 178,789 128,360 -------- -------- Total assets $931,210 $886,350 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable and accrued liabilities $ 82,840 $ 91,064 Long-term debt 26,105 30,290 Deferred income taxes 5,100 5,680 Other liabilities 124,738 109,127 Shareholders' equity 692,427 650,189 -------- -------- Total liabilities and shareholders' equity $931,210 $886,350 ======== ========
(See accompanying notes to the condensed consolidated financial statements) 2 3 CLAYTON HOMES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited - in thousands)
Six Months Ended December 31, 1996 1995 ---- ---- OPERATING ACTIVITIES Net Income $ 52,279 $ 45,275 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 6,070 4,079 Gain on sale of installment contract receivables, net of amortization (5,465) (4,415) Provision for credit losses 2,000 2,000 Decrease in deferred income taxes (580) (3,104) Decrease in other receivables, net 2,517 773 Decrease (increase) in inventories 10,766 (13,576) Decrease in operating liabilities (8,224) (15,553) Other (29,447) 16,466 -------- ------ Cash provided (required) from operations 29,916 31,945 Origination of installment contract receivables (266,437) (212,823) Proceeds from sale of originated installment contract receivables 241,726 202,028 Principal collected on originated installment contract receivables 23,045 12,907 -------- -------- Net cash provided from operating activities 28,250 34,057 INVESTING ACTIVITIES Acquisition of installment contract receivables (41,530) (5,110) Proceeds from sale of acquired installment contract receivables 24,369 25,832 Principal collected on acquired installment contract receivables 11,401 5,643 Acquisition of property, plant and equipment, net (16,418) (21,700) Increase in restricted cash and investments (5,410) (32,411) -------- -------- Net cash used in investing activities (27,588) (27,746) FINANCING ACTIVITIES Dividends (4,305) (3,033) Proceeds from short-term borrowings 4,475 24,295 Repayment of short-term borrowings (4,475) (24,295) Repayment of long-term debt (4,185) (9,702) Issuance of stock for incentive plans and other 2,923 2,031 Repurchase of Common Stock (8,620) 0 -------- -------- Net cash used in financing activities (14,187) (10,704) -------- -------- Net decrease in cash and cash equivalents (13,525) (4,393) Cash and cash equivalents at beginning of period 47,400 69,755 -------- -------- Cash and cash equivalents at end of period $ 33,875 $ 65,362 ======== ========
(See accompanying notes to the condensed consolidated financial statements) 3 4 Clayton Homes, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 1. The condensed consolidated financial statements of Clayton Homes, Inc. and its subsidiaries 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, 1996. The information furnished reflects all adjustments which are necessary for a fair presentation of the Company's financial position as of December 31, 1996; the results of its operations for the six months ended December 31, 1996 and 1995; and the changes in its cash position for the same periods. All such adjustments are of a normal recurring nature. 2. The results of operations for the six months ended December 31, 1996 and 1995 are not necessarily indicative of the results to be expected for the respective full years. 3. Effective July 1, 1996, the Company adopted Statement of Accounting Standards No. 123, Accounting and Disclosure of Stock-Based Compensation, which encourages but does not require companies to recognize stock awards based on their fair value at the date of grant. As the Company elected to adopt only the disclosure requirements of the new standard, it will continue to apply the provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25), and related interpretations in accounting for its employee stock options. Under APB 25, because the exercise price of the Company's employee stock options equal the market price of the underlying stock on the date of grant, no compensation expense is recognized. 4 5 PART 1 - - FINANCIAL INFORMATION ITEM 1. Financial Statements. See Pages 2 through 4. ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995: 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, communities and independent retailers, the average sales per location, and the average price per home sold in each category.
First Six Months Fiscal year 1997 vs 1996 ------------------------ Retail Dollar sales + 8.7% Number of retail centers + 9.4% Dollar sales per retail center - 0.7% Price of home + 2.9% Wholesale Dollar sales + 7.0% Number of independent retailers +30.4% Dollar sales per independent retailer -18.0% Price of home + 1.1% Communities Dollar Sales +17.4% Number of communities + 9.3% Dollar sales per community + 7.4% Price of home + 7.1%
Total revenues for the six months ended December 31, 1996 increased 10% as manufactured housing sales rose 8% to $385 million, financial services income grew 18% to $62 million and rental and other income increased 26% to $24 million. Net sales of the Retail Group rose 9% to $231 million on a 3% rise in the average home price, and a 9% increase in company-owned sales centers, offsetting a 3% decrease in the average number of homes sold per sales center. The increase in the average home price is primarily attributable to a greater percentage of multi-section homes sold. 5 6 Net sales of the Manufacturing group increased 7% to $138 million as the number of homes sold was up 6%. The average wholesale price to independent retailers increased 1%, as a result of variations within the mix of homes sold. Net sales of the Communities group rose 17% to $16 million primarily as 10% more homes were sold and the average home selling price increased 7%. Financial services income increased 18%. Interest and loan servicing revenues grew $8 million, and insurance related revenues rose $4 million. Rental and other income increased 26% on a 12% increase in Communities rental income and a $3 million increase in other income. Financial services interest expense decreased 22%, to $1.5 million. Average debt collateralized by installment contract receivables dropped 22% to $28 million, while the weighted average interest rate increased from 10.72% to 10.76%. The terms of the debt preclude prepayment by the Company. Gross profit margins decreased slightly to 32.0% from 32.1%, attributable to a reduction in the mix of sales from the Company's Manufacturing group to its Retail group. Selling, general and administrative expenses, as a percent of revenues, were 26.2%, slightly higher than the 26.1% in the prior comparable period. The provision for credit losses declined as a percent of sales to 0.5% from 0.6% last year, and credit losses were .2% for the period. The following table represents delinquent installment sales contracts as a percentage of the total number of installment sales contracts which the Company serviced and either owned or was contingently liable. A contract is considered delinquent if any payment is more than one month past due.
December 31, 1997 1996 ---- ---- Total delinquencies as percentage of contracts outstanding: All contracts 2.65% 2.62% Contracts originated by VMF 2.33% 2.40% Contracts acquired from other institutions 5.09% 3.85%
6 7 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.
Six months ended December 31, 1997 1996 ---- ---- Net losses as percentage of average loans outstanding (annualized): All contracts 0.2% 0.2% Contracts originated by VMF 0.0% 0.0% Contracts acquired from other institutions 3.8% 3.6% Number of contracts in repossession: Total 995 677 Contracts originated by VMF 891 548 Contracts acquired from other institutions 104 129 Total number of contracts in repossession as percentage of total contracts 1.3% 1.0%
The $11 million decrease in inventories as of December 31, 1996 from June 30, 1996, is explained as follows:
Increase (decrease) ------------------ Manufacturing Group Finished goods $ 1.7 Raw materials (6.2) Retail Group Average stocking levels at 216 sales centers owned by the Company at June 30, 1996 (10.8) Inventory to stock nine new company-owned sales centers 4.2 Communities Group Total of all communities 0.3 ------ $(10.8) ======
On December 31, 1996, the order backlog for the Manufacturing group (consisting of company-owned and independent retailer orders) was $17 million, as compared to $51 million for the prior year. 7 8 SECOND QUARTER ENDED DECEMBER 31, 1996 AND 1995: 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, communities and independent retailers, the average sales per location, and the average price per home sold in each category.
Second Three Months Fiscal year 1997 vs 1996 ------------------------ Retail Dollar sales +11.6% Number of retail centers + 9.8% Dollar sales per retail center + 1.6% Price of home + 1.5% Wholesale Dollar sales - 0.1% Number of independent retailers +27.0% Dollar sales per independent retailer -21.3% Price of home + 4.2% Communities Dollar Sales +28.3% Number of communities + 3.2% Dollar sales per community +24.3% Price of home +10.3%
Total revenues for the three months ended December 31, 1996 increased 11% primarily due to a 8% increase in manufactured housing sales to $191 million, a 31% increase in financial services income to $31 million and a 24% increase in rental and other income to $12 million. Net sales of the Retail group rose 12% to $117 million due to a 2% rise in the average home price and a 10% increase in company-owned sales centers, as the average number of homes sold per sales center remained constant. The Manufacturing group's net sales remained at $67 million as the number of homes sold was down 4%. The average wholesale price to independent retailers increased 4%. Net sales of the Communities group rose 28% to $8 million primarily due to a 16% increase in units sold and a 10% increase in the average home price. Financial services income increased 31% as interest and loan servicing revenues increased $6 million, and insurance related revenues rose $2 million. 8 9 Rental and other income increased 24% primarily on a 3% increase in communities rental income and a $2 million increase in other income. Financial services interest expense decreased 20%, to $.7 million. Average debt collateralized by installment contract receivables dropped 23% to $27 million, while the weighted average interest rate increased from 10.44% to 10.80%. The terms of the debt preclude prepayment by the Company. Gross profit margins increased to 32.8% from 32.4%. The increase is primarily attributable to an increased percentage of retail sales in the total sales mix. Retail sales comprised 65% of total sales this quarter compared to 62% last year in the quarter. Selling, general and administrative expenses, as a percent of revenues, were 26.6% compared to 25.7% in the prior comparable period, mainly attributable to the start-up of new product lines and financial service and higher insurance claims. The provision for credit losses declined as a percent of sales to 0.5% from 0.6% last year, as credit losses were .2% for the period. The following table presents write-off experience for the quarters ended December 31, 1996 and 1995:
Second Quarter Ended December 31, 1996 1995 ---- ---- Net losses as percentage of average loans outstanding (annualized): All contracts 0.1% 0.2% Contracts originated by VMF 0.0% 0.0% Contracts acquired from other institutions 3.5% 3.8%
Liquidity and Capital Resources Cash at December 31, 1996, was $33.9 million as compared to $47.4 million on June 30, 1996. The Company anticipates meeting cash requirements with cash flows from operations, current cash balances, and the sale of installment contracts receivable and GNMA certificates. 9 10 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) 11. Statement regarding computation of per share earnings: (b) 27. Financial Data Schedule (for SEC use only) 10 11 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: February 10, 1997 s/Joseph H. Stegmayer ----------------- ----------------------------------------- Joseph H. Stegmayer President, Chief Operating Officer, Treasurer and Director Date: February 10, 1997 s/John J. Kalec ----------------- ------------------------------------------ John J. Kalec Vice President and Chief Financial Officer (Principal Financial Officer) 11 EX-11 2 COMPUTATION OF EARNINGS 1 Exhibit 11. Statement regarding computation of per share earnings: Net income per share is computed on the weighted average number of shares outstanding during the quarter after giving effect to the equivalent shares which are issuable upon the exercise of stock options determined by the treasury stock method. The calculation of earnings per share follows:
Six Months Ended December 31, (in thousands except per share data) 1996 1995 ---- ---- Net income (fully diluted) $ 52,279 $ 45,275 Weighted average shares outstanding (fully diluted) 119,359 119,061 Earnings per share: (fully diluted) $ .44 $ .38
12 EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF CLAYTON HOMES, INC FOR THE SIX MONTHS ENDED DECEMBER 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS JUN-30-1997 JUL-01-1996 DEC-31-1996 33,875 0 419,199 8,786 113,514 0 242,605 47,986 931,210 82,840 26,105 0 0 11,850 680,577 931,210 385,171 470,876 262,019 385,318 0 2,000 (821) 84,379 32,100 52,279 0 0 0 52,279 .44 .44
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