-----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, O7CIVyF0ehf9v6c9ip+vHgjj/vPyi8vHLjHIcas3pU8+S5UJdP7sk627Y6bgsAD+ KI7KYkir8i8pTi+gdnbcJg== 0000950144-97-005621.txt : 19970514 0000950144-97-005621.hdr.sgml : 19970514 ACCESSION NUMBER: 0000950144-97-005621 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970513 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: 97602810 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, INC. 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 March 31, 1997 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) 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 March 31, 1997 - 118,417,699. 1 2 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, 1997 1996 1997 1996 ---- ---- ----- ---- Revenues Net sales $178,091 $169,117 $563,262 $524,430 Financial services 37,049 28,630 98,941 80,895 Rental and other income 11,483 13,627 35,297 32,545 -------- -------- -------- -------- Total revenues 226,623 211,374 697,500 637,870 Expenses Cost of sales 118,431 114,976 380,451 356,061 Selling, general and administrative 64,557 57,224 187,856 168,607 Financial services interest 621 774 2,127 2,704 Provision for credit losses 1,000 1,000 3,000 3,000 -------- -------- -------- -------- Total expenses 184,609 173,974 573,434 530,372 -------- -------- -------- -------- Operating income 42,014 37,400 124,066 107,498 Interest income, net 284 854 2,611 3,231 -------- -------- -------- -------- Income before income taxes 42,298 38,254 126,677 110,729 Provision for income taxes 16,000 14,300 48,100 41,500 -------- -------- -------- -------- Net income $ 26,298 $ 23,954 $ 78,577 $ 69,229 ======== ======== ======== ======== Average earnings per share: (1) $ 0.22 $ 0.20 $ 0.66 $ 0.58 Dividends paid per share: (1) $ 0.02 $ 0.02 $ 0.06 $ 0.05 Average shares outstanding: (1) 119,214 119,733 119,582 119,234
(1) Adjusted for the December 11, 1996 5-for-4 stock split. CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited) (audited) March 31, June 30, 1997 1996 ---- ---- ASSETS: Cash and cash equivalents $ 74,700 $ 47,400 Receivables, net 414,671 402,039 Inventories 114,976 124,280 Property, plant and equipment, net 207,987 184,271 Other assets 153,860 128,360 -------- -------- Total assets $966,194 $886,350 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable and accrued liabilities $ 84,514 $ 91,064 Long-term debt 24,680 30,290 Deferred income taxes 10,236 5,680 Other liabilities 128,536 109,127 Shareholders' equity 718,228 650,189 -------- -------- Total liabilities and shareholders' equity $966,194 $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)
Nine Months Ended March 31, 1997 1996 ---- ---- OPERATING ACTIVITIES Net Income $ 78,577 $ 69,229 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 9,306 6,378 Gain on sale of installment contract receivables, net of amortization (11,132) (4,505) Provision for credit losses 3,000 3,000 Increase (decrease) in deferred income taxes 4,556 (5,792) Increase in other receivables, net (20,427) (2,660) Decrease (increase) in inventories 9,304 (35,211) Decrease in operating liabilities (6,550) (14,654) Other (12,978) 8,373 --------- --------- Cash provided from operations 53,656 24,158 Origination of installment contract receivables (417,999) (313,333) Proceeds from sale of originated installment contract receivables 414,004 206,355 Principal collected on originated installment contract receivables 37,317 16,269 --------- --------- Net cash provided by (used in) operating activities 86,978 (66,551) INVESTING ACTIVITIES Acquisition of installment contract receivables (80,326) (20,659) Proceeds from sale of acquired installment contract receivables 52,889 30,065 Principal collected on acquired installment contract receivables 10,042 12,681 Acquisition of property, plant and equipment, net (33,022) (33,037) Decrease (increase) in restricted cash and investments 10,367 (36,142) --------- --------- Net cash provided by (used in) investing activities (40,050) (47,092) FINANCING ACTIVITIES Dividends (6,675) (4,933) Proceeds from short-term borrowings 22,141 169,752 Repayment of short-term borrowings (22,141) (98,812) Repayment of long-term debt (5,610) (11,702) Issuance of stock for incentive plans and other 3,074 1,857 Repurchase of Common Stock (10,417) 0 --------- --------- Net cash provided by (used in) financing activities (19,628) 56,162 --------- --------- Net increase (decrease) in cash and cash equivalents 27,300 (57,481) Cash and cash equivalents at beginning of period 47,400 69,755 --------- --------- Cash and cash equivalents at end of period $ 74,700 $ 12,274 ========= =========
(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 March 31, 1997; the results of its operations for the three month and nine month periods ended March 31, 1997 and 1996; and the changes in its cash position for the nine months ended March 31, 1997 and 1996. All such adjustments are of a normal recurring nature. 2. The results of operations for the nine months ended March 31, 1997 and 1996 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. In February 1997, the FASB issued Statement of Accounting Standards No, 128, Earnings Per Share (EPS). The Statement simplifies the standards for computing earnings per share by replacing the presentation of primary earnings per share with a presentation of basic earnings per share. Additionally, the Statement requires dual presentation of basic and diluted EPS on the face of the income statement and requires a reconciliation of the numerator and denominator of the diluted EPS calculation. The Company plans to adopt the provisions of the Statement 128 in fiscal year 1998 and the impact on the Company's financial statements has not been determined. 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. NINE MONTHS ENDED MARCH 31, 1997 AND 1996: 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 Nine Months Fiscal year 1997 vs 1996 ------------------------ Retail Dollar sales + 8.5% Number of retail centers + 9.9% Dollar sales per retail center - 1.3% Price of home + 1.1% Wholesale Dollar sales + 4.3% Number of independent retailers +31.5% Dollar sales per independent retailer -20.7% Price of home + 2.9% Communities Dollar Sales +19.1% Number of communities + 9.2% Dollar sales per community + 9.1% Price of home + 6.3%
Total revenues for the nine months ended March 31, 1997 increased 9% to $698 million. As manufactured housing sales rose 7% to $563 million, financial services income grew 22% to $99 million and rental and other income increased 9% to $35 million. Net sales of the Retail Group rose 9% to $340 million on a 1% rise in the average home price, and a 10% increase in company-owned sales centers, offsetting a 2% decrease in the average number of homes sold per sales center. 5 6 Net sales of the Manufacturing group increased 4% to $197 million as the number of homes sold was up 1%. The average wholesale price to independent retailers increased 3%, as a result of a shift in product mix toward multi-section homes. Net sales of the Communities group rose 19% to $25 million as 12% more homes were sold and the average home selling price increased 6%. Financial services income increased 22%. Interest and loan servicing revenues grew $12 million, and insurance related revenues rose $5 million. Rental and other income increased 9% on a 9% rise in Communities rental income and a $1 million increase in other income. Financial services interest expense decreased 21%, to $2.1 million. Average debt collateralized by installment contract receivables dropped 22% to $27 million, while the weighted average interest rate moved from 10.35% to 10.49%. The terms of the debt preclude prepayment by the Company. Gross profit margins improved to 32.5% from 32.1%. The increase is primarily attributable to a higher percentage of retail sales in the total sales mix. Selling, general and administrative expenses, as a percent of revenues, were 26.9%, slightly above the 26.4% in the year earlier period. The provision for credit losses was 0.5% of sales versus 0.6% last year. 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.
March 31, 1997 1996 ---- ---- Total delinquencies as percentage of contracts outstanding: All contracts 2.12% 1.94% Contracts originated by VMF 1.86% 1.67% Contracts acquired from other institutions 2.79% 3.61%
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.
Nine months ended March 31, 1997 1996 ---- ---- Net losses as a percent of average loans outstanding (annualized): All contracts 0.2% 0.3% Contracts originated by VMF 0.0% 0.0% Contracts acquired from other institutions 3.6% 4.5% Number of contracts in repossession: Total 954 621 Contracts originated by VMF 858 542 Contracts acquired from other institutions 96 79 Total number of contracts in repossession as percentage of total contracts 1.2% 0.86%
The $9.3 million decrease in inventories as of March 31, 1997 from June 30, 1996, is explained as follows:
Manufacturing Group Increase (decrease) ------------------- ------------------ Finished goods $ 5.6 Raw materials (8.5) Retail Group ------------ Average stocking levels at 229 sales centers owned by the Company at March 31, 1997 (13.2) Inventory to stock thirteen new company-owned sales centers 5.6 Communities Group ----------------- Total of all communities 1.2 ----- $(9.3) =====
On March 31, 1997, the order backlog for the Manufacturing group (consisting of company-owned and independent retailer orders) was $37 million, as compared to $40 million for the prior year. 7 8 THIRD QUARTER ENDED MARCH 31, 1997 AND 1996: 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.
Third Three Months Fiscal year 1997 vs 1996 ------------------------ Retail Dollar sales + 8.1% Number of retail centers + 7.1% Dollar sales per retail center + 0.9% Price of home - 2.5% Wholesale Dollar sales - 1.5% Number of independent retailers +25.5% Dollar sales per independent retailer -21.5% Price of home + 6.3% Communities Dollar Sales +22.3% Number of communities + 3.1% Dollar sales per community +18.6% Price of home + 4.8%
Total revenues for the three months ended March 31, 1997, increased 7% on a 5% increase in manufactured housing sales to $178 million, a 29% increase in financial services income to $37 million and an overall 16% decrease in other income to $11 million. Net sales of the Retail group rose 8% to $110 million as the number of company-owned sales centers was up 7% and the average number of homes sold per sales center increased. The Manufacturing group's net sales decreased to $59 million as the number of homes sold was down 7%. The average wholesale price to independent retailers increased 6%, a reflection of product mix. Net sales of the Communities group jumped 22% to $9 million primarily on a 17% increase in units sold and a 5% increase in the average home price. Financial services income climbed 29% as interest and loan servicing revenues increased $8 million, and insurance related revenues rose $1 million. 8 9 Rental and other income decreased 16% on a 4% increase in communities rental income and a $2 million decrease in other income. Financial services interest expense decreased 20%, to $.6 million. Average debt collateralized by installment contract receivables dropped 23% to $25 million, while the weighted average interest rate increased from 9.52% to 9.90%. The terms of the debt preclude prepayment by the Company. Gross profit margins improved to 33.5% from 32.0%. The increase is primarily attributable to a higher percentage of retail sales in the total sales mix. Retail sales comprised 62% of total sales this quarter compared to 60% last year in the quarter. Selling, general and administrative expenses, were 28.5% of revenues compared to 27.1% in the prior comparable period, mainly attributable to the start-up of new financial service product lines and higher insurance claims. The provision for credit losses remained constant as a percent of sales at 0.6%. The following table presents write-off experience for the quarters ended March 31, 1997 and 1996:
Third Quarter Ended March 31, 1997 1996 ---- ---- Net losses as a percent of average loans outstanding (annualized): All contracts 0.2% 0.3% Contracts originated by VMF 0.0% 0.0% Contracts acquired from other institutions 3.6% 6.2%
Liquidity and Capital Resources Cash at March 31, 1997, was $74.7 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: 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:
Nine Months Ended March 31, (in thousands except per share data) 1997 1996 ---- ---- Net income (fully diluted) $ 78,577 $ 69,229 Weighted average shares outstanding (fully diluted) 119,582 119,234 Earnings per share: (fully diluted) $ .66 $ .58
(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: May 9, 1997 s/Joseph H. Stegmayer -------------------- ------------------------------------------ Joseph H. Stegmayer President, Chief Operating Officer, Treasurer and Director Date: May 9, 1997 s/John J. Kalec -------------------- ------------------------------------------ John J. Kalec Vice President and Chief Financial Officer (Principal Financial Officer) 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF CLAYTON HOMES, INC. FOR THE NINE MONTHS ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S. DOLLARS 9-MOS JUN-30-1997 JUL-01-1996 MAR-31-1997 1 74,700 0 423,827 9,156 114,976 0 258,647 50,660 966,194 84,514 24,680 0 0 11,843 706,385 966,194 563,262 697,500 380,451 568,307 0 3,000 (484) 126,677 48,100 78,577 0 0 0 78,577 0.66 0.66
-----END PRIVACY-ENHANCED MESSAGE-----