-----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, JJXdmn91qhMMp7MgFokVShasju/SJGLxLO8wgB0ra9yr7ryV5yLFuz1tylqzMFkz a0I+ioMEhXjU8UjVcWaEeQ== 0000950144-97-011779.txt : 19971111 0000950144-97-011779.hdr.sgml : 19971111 ACCESSION NUMBER: 0000950144-97-011779 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971110 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: SEC FILE NUMBER: 001-08824 FILM NUMBER: 97712032 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 September 30, 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 September 30, 1997 - 118,650,868. 2 CLAYTON HOMES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited - in thousands except per share data)
Three Months Ended September 30, 1997 1996 -------- -------- Revenues Net sales $208,946 $193,874 Financial services 41,050 30,852 Rental and other income 12,699 11,478 -------- -------- Total revenues 262,695 236,204 -------- -------- Costs and expenses Cost of sales 143,554 133,472 Selling, general and administrative 70,794 60,855 Financial services interest 602 778 Provision for credit losses 1,000 1,000 -------- -------- Total expenses 215,950 196,105 -------- -------- Operating income 46,745 40,099 Interest income (expense), net/other 1,134 1,204 -------- -------- Income before income taxes 47,879 41,303 Provision for income taxes 18,200 15,700 -------- -------- Net income $ 29,679 $ 25,603 ======== ======== Earnings per share: (1) $ 0.25 $ 0.22 Dividends paid per share: (1) $ 0.020 $ 0.016 Average shares outstanding: (1) 119,347 119,903
(1) Adjusted for the December 11, 1996 5-for-4 stock split. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
(unaudited) (audited) September 30, June 30, 1997 1997 ---------- ---------- ASSETS: Cash and cash equivalents $ 72,366 $ 89,695 Receivables, net 495,744 478,691 Inventories 113,796 119,434 Property, plant and equipment, net 217,777 214,072 Deferred income taxes 5,284 0 Other assets 160,831 143,869 ---------- ---------- Total assets $1,065,798 $1,045,761 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY: Accounts payable and accrued liabilities $ 99,334 $ 99,498 Long-term debt 21,238 22,806 Deferred income taxes 0 14,074 Other liabilities 162,843 154,857 Shareholders' equity 782,383 754,526 ---------- ---------- Total liabilities and shareholders' equity $1,065,798 $1,045,761 ========== ==========
(See accompanying notes to the condensed consolidated financial statements) 2 3 CLAYTON HOMES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited - in thousands)
Three Months Ended September 30, 1997 1996 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 29,679 $ 25,603 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,430 3,042 Gain on sale of installment contract receivables, net of amortization (8,684) (3,189) Provision for credit losses 1,000 1,000 Deferred income taxes (19,358) (580) Increase in other receivables, net (12,649) (5,059) Decrease in inventories 5,638 2,966 Increase (decrease) in accounts payable, accrued liabilities, and other 3,003 (22,463) --------- --------- Cash provided by operations 2,059 1,320 Origination of installment contract receivables (173,274) (134,668) Proceeds from sales of originated installment contract receivables 174,629 128,557 Principal collected on originated installment contract receivables 3,365 25,295 --------- --------- Net cash provided by operating activities 6,779 20,504 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of installment contract receivables (75,096) (15,304) Proceeds from sales of acquired installment contract receivables 71,926 9,309 Principal collected on acquired installment contract receivables 1,730 3,315 Acquisition of property, plant and equipment, net (7,135) (7,241) Increase in restricted cash and investments (12,143) (4,896) --------- --------- Net cash used in investing activities (20,718) (14,817) CASH FLOWS FROM FINANCING ACTIVITIES Dividends (2,400) (1,905) Proceeds from short-term borrowings 34,653 4,475 Repayment of short-term borrowings (34,653) (4,475) Repayment of long-term debt (1,568) (1,851) Issuance of stock for incentive plans and other 1,534 2,040 Repurchase of common stock (956) 0 --------- --------- Net cash used in financing activities (3,390) (1,716) --------- --------- Net increase (decrease) in cash and cash equivalents (17,329) 3,971 Cash and cash equivalents at beginning of period 89,695 47,400 --------- --------- Cash and cash equivalents at end of period $ 72,366 $ 51,371 ========= =========
(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, 1997. The information furnished reflects all adjustments which are necessary for a fair presentation of the Company's financial position as of September 30, 1997; the results of it's operations and it's cash flows for the three month periods ended September 30, 1997 and 1996. All such adjustments are of a normal recurring nature. 2. The results of operations for the three months ended September 30, 1997 are not necessarily indicative of the results to be expected for the respective full years. 3. Certain reclassifications have been made to the 1996 financial statements to conform to the 1997 presentation. 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. THREE MONTHS ENDED SEPTEMBER 30, 1997: 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 Three Months Fiscal year 1997 vs 1996 ------------ Retail Dollar sales +10.5% Number of retail centers +13.0% Dollar sales per retail center -2.2% Price of home +6.0% Wholesale Dollar sales +4.3% Number of independent retailers +12.8% Dollar sales per independent retailer -7.2% Price of home +4.7% Communities Dollar sales 0.0% Number of communities +3.1% Dollar sales per community -4.0% Price of home +14.1%
Total revenues for the three months ended September 30, 1997 increased 11% to $263 million. As manufactured housing sales rose 8% to $209 million, financial services income grew 33% to $41 million and rental and other income increased 11% to $13 million. Net sales of the Retail group rose 11% to $126 million on a 6% rise in the average home price, and a 13% increase in Company-owned sales centers, offsetting an 8% decrease in the average number of homes sold per sales center. 5 6 Net sales of the Manufacturing group increased 4% to $75 million as the number of homes sold remained constant. The average wholesale price to independent retailers increased 5% as a result of a shift in product mix towards multi-section homes. Net sales of the Communities group remained constant as 12% less homes were sold and the average home selling price increased 14%. Financial services income increased 33%. Interest and loan servicing revenues grew $8 million, and insurance related revenues rose $1 million. Rental and other income increased 11% on a 15% rise in Communities rental income and a $0.2 million increase in other income. Financial services interest expense decreased 23% to $0.6 million. Average debt collateralized by installment contract receivables dropped 26% to $22 million, while the weighted average interest rate moved from 10.72% to 11.15%. The terms of the debt preclude prepayment by the Company. Gross profit margins improved to 31.3% from 31.2%. The slight 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, increased to 26.9% from 25.8% in the year earlier period. The provision for credit losses remained 0.5% of sales. 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.
September 30, 1997 1996 ----- ---- Total delinquencies as percentage of contracts outstanding: All contracts 2.23% 2.28% Contracts originated by VMF 2.15% 1.96% Contracts acquired from other institutions 2.77% 4.48%
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.
Three Months Ended September 30, 1997 1996 ---- ---- Net losses as a percent of average loans outstanding (annualized): All contracts 0.6% 0.2% Contracts originated by VMF 0.6% 0.0% Contracts acquired from other institutions 0.7% 2.4% Number of contracts in repossession: All contracts 1,160 944 Contracts originated by VMF 1,060 830 Contracts acquired from other institutions 100 114 Total number of contracts in repossession as percentage of total contracts 1.3% 1.0%
The decrease in inventories as of September 30, 1997 from June 30, 1997, is explained as follows:
Increase (decrease) ---------- Manufacturing Finished goods $5.5 Raw materials (8.8) Retail Decrease in average inventory levels at 245 Company-owned sales centers (3.4) Inventory to stock five new Company-owned sales centers 0.7 Communities Total of all communities 0.4 ----- $(5.6) =====
On September 30, 1997, the order backlog for the Manufacturing group (consisting of Company-owned and independent retailer orders) was $44 million, as compared to $27 million for the prior year. Liquidity and Capital Resources Cash at September 30, 1997, was $72.4 million as compared to $89.7 million on June 30, 1997. The Company anticipates meeting cash requirements with cash flows from operations, current cash balances, and the sale of installment contracts receivable and GNMA certificates. 7 8 ' Forward Looking Statements Certain statements in the 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 include, but are not limited to, adverse weather conditions impacting sales; inventory adjustments by major retailers; competitive pricing pressures; success of marketing and cost-management programs; and shifts in market demand. 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 (SEC use only) 8 9 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: November 10, 1997 /s/Joseph H. Stegmayer ----------------------------------- Joseph H. Stegmayer Vice Chairman of the Board and Chairman of the Executive Committee Date: November 10, 1997 /s/John J. Kalec ----------------------------------- John J. Kalec Sr. Vice President, Chief Financial Officer and Secretary 9 EX-11 2 COMPUTATION OF EARNING PER SHARE 1 Exhibit 11 Earnings 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:
Three Months Ended September 30, 1997 1996 ------- ------- (in thousands except per share data) Net income (fully diluted) $29,679 $25,603 Weighted average shares outstanding (fully diluted) 119,347 119,903 Earnings per share: (fully diluted) $ .25 $ .22
EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF CLAYTON HOMES, INC FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS JUN-30-1998 JUL-1-1997 SEP-30-1997 72,366 0 500,663 4,919 113,796 0 274,660 56,883 1,065,798 99,334 21,238 0 0 11,865 770,518 1,065,798 208,946 262,695 143,554 214,348 0 1,000 (532) 47,879 18,200 29,679 0 0 0 29,679 0.25 0.25
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