-----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, WPEIEeyL1DiJUJbeeeKGkqYU6xJ8lOyFBjPjGrpon4+dlJBuxvFCGqs4Ch/MJ5XH gv80HMcHyAaUeMS5kNnv/Q== 0000950168-97-000355.txt : 19970222 0000950168-97-000355.hdr.sgml : 19970222 ACCESSION NUMBER: 0000950168-97-000355 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970214 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OAKWOOD HOMES CORP CENTRAL INDEX KEY: 0000073609 STANDARD INDUSTRIAL CLASSIFICATION: MOBILE HOMES [2451] IRS NUMBER: 560985879 STATE OF INCORPORATION: NC FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07444 FILM NUMBER: 97533938 BUSINESS ADDRESS: STREET 1: 2225 S HOLDEN RD STREET 2: P O BOX 7386 CITY: GREENSBORO STATE: NC ZIP: 27417-0386 BUSINESS PHONE: 9198552400 MAIL ADDRESS: STREET 1: 2225 S HOLDEN ROAD STREET 2: P O BOX 7386 CITY: GREENSBORO STATE: NC ZIP: 27417-0386 10-Q 1 48054 10-Q 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 or ( ) Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _______ to _______ Commission File Number 1-7444 OAKWOOD HOMES CORPORATION (Exact name of registrant as specified in its charter) North Carolina 56-0985879 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 7800 McCloud Road, Greensboro, North Carolina 27409-9634 (Address of principal executive offices) Post Office Box 27081, Greensboro, North Carolina 27425-7081 (Mailing address of principal executive offices) (910) 664-2400 (Registrant's telephone number, including area code) ----------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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, 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 January 31, 1997. Common Stock, Par Value $.50 Per Share . . . . . . . . . . 45,989,129 1 QUARTERLY REPORT ON FORM 10-Q CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Quarter Ended December 31, 1996 OAKWOOD HOMES CORPORATION AND SUBSIDIARIES Greensboro, North Carolina The consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures contained herein are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's latest annual report on Form 10-K. 2 OAKWOOD HOMES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) (in thousands except per share data) Three months ended December 31, 1996 1995 Revenues Net sales $ 177,782 $176,269 Financial services income 24,772 24,239 Other income 4,636 3,928 Total revenues 207,190 204,436 Costs and expenses Cost of sales 123,812 130,223 Selling, general and administrative expenses Non-financial services 48,367 41,199 Financial services 5,784 4,126 Interest expense Non-financial services 832 619 Financial services 3,489 5,519 Total costs and expenses 182,284 181,686 Income before income taxes 24,906 22,750 Provision for income taxes 9,713 8,873 Net income $ 15,193 $ 13,877 Earnings per share Primary $ .33 $ .30 Fully diluted $ .33 $ .30 Dividends per share $ .01 $ .01 Average shares outstanding Primary 46,732 46,174 Fully diluted 46,732 46,194 3 OAKWOOD HOMES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (UNAUDITED) (in thousands except share and per share data) December 31, September 30, ASSETS 1996 1996 Cash and cash equivalents $ 19,976 $ 28,577 Receivables and investments 363,935 508,825 Inventories Manufactured homes 170,018 136,905 Work-in-process, materials and supplies 15,080 14,165 Land/homes under development 4,618 4,820 189,716 155,890 Properties and facilities 116,985 113,764 Deferred income taxes 9,544 9,674 Other assets 51,497 25,247 $751,653 $841,977 LIABILITIES AND SHAREHOLDERS' EQUITY Short-term borrowings $125,900 $145,506 Notes and bonds payable 122,782 134,379 Accounts payable and accrued liabilities 81,632 157,929 Other long-term obligations 11,823 12,189 Shareholders' equity Common stock, $.50 par value; 100,000,000 shares authorized; 45,977,000 and 45,621,000 shares issued and outstanding 22,989 22,811 Additional paid-in capital 152,041 149,501 Retained earnings 241,196 226,460 416,226 398,772 Less: Unearned compensation (6,710) (6,798) 409,516 391,974 $751,653 $841,977 4 OAKWOOD HOMES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (in thousands)
Three months ended December 31, 1996 1995 Operating activities Net income $ 15,193 $ 13,877 Items not requiring (providing) cash Depreciation and amortization 3,210 2,350 Deferred income taxes 130 104 Gain on sale of loans (4,964) (6,538) Other 744 -- Decrease in other receivables 25,044 3,290 (Increase) in inventories (33,826) (4,545) (Decrease) in accounts payable and accrued liabilities (75,079) (3,449) (Decrease) in other long-term obligations (366) (2,615) Cash provided (used) by operations (69,914) 2,474 Loans originated (174,297) (123,744) Purchase of loan portfolios -- (1,465) Sale of loans 291,912 189,972 Receipts on installment receivables 7,426 6,933 Cash provided by operating activities 55,127 74,170 Investing activities Loan to joint venture (25,000) -- Additions to properties and facilities (6,181) (9,715) Other (2,394) (1,490) Cash used by investing activities (33,575) (11,205) Financing activities Net repayments on short-term credit facilities (19,606) (46,500) Payments on notes and bond (11,477) (11,396) Cash dividends (457) (444) Proceeds from exercise of stock options 1,387 1,185 Cash used by financing activities (30,153) (57,155) Net increase (decrease) in cash and cash equivalents (8,601) 5,810 Cash and cash equivalents Beginning of period 28,577 6,189 End of period $ 19,976 $ 11,999
5 OAKWOOD HOMES CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) 1. The consolidated financial statements reflect all adjustments, which included only normal recurring adjustments, which are, in the opinion of management, necessary to present fairly the results of operations for the periods presented. Results of operations for any interim period are not necessarily indicative of results to be expected for a full year. 2. The Company is contingently liable as guarantor on installment sale contracts sold to unrelated financial institutions on a full or limited recourse basis. The amount of this contingent liability was approximately $70 million at December 31, 1996. The Company is also contingently liable under terms of repurchase agreements with financial institutions providing inventory financing for retailers of homes produced by Destiny and Golden West Homes, manufacturing subsidiaries of the Company doing business with independent dealers. The Company estimates that its potential obligation under repurchase agreements approximated $37 million at December 31, 1996. 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Three months ended December 31, 1996 compared to three months ended December 31, 1995 The following table summarizes certain key statistics for the quarters ended December 31, 1996 and 1995 : 1996 1995 Retail sales (in millions) $ 150.2 $ 133.2 Wholesale sales (in millions) $ 25.8 $ 39.8 Other sales - principally relating to communities (in millions) $ 1.8 $ 3.3 Total sales (in millions) $ 177.8 $ 176.3 Gross profit % - integrated operations 33.1% 29.5% Gross profit % - wholesale operations 16.2% 15.4% New single-section homes sold - retail 2,243 2,556 New multi-section homes sold - retail 1,639 1,294 Used homes sold - retail 456 461 New single-section homes sold - wholesale 211 433 New multi-section homes sold - wholesale 721 1,102 Average new single-section sales price - retail $29,100 $26,700 Average new multi-section sales price - retail $49,600 $47,400 Average new single-section sales price - wholesale $14,600 $14,100 Average new multi-section sales price - wholesale $31,200 $30,200 Weighted average retail sales centers open during the period 259 208 Retail sales dollar volume increased 13%, reflecting a 1% increase in new unit volume, increases of 9% and 5% in the average new unit sales prices of single-section and multi-section homes, respectively, and an increase in the percentage of total retail unit volume represented by multi-section homes from 34% last year to 42% in the first quarter of fiscal 1997. Single-section unit volume decreased 12%, while multi-section unit volume rose 27% from the first quarter of last year. The relative weakness in single-section demand experienced in the quarter is expected to continue and accordingly, the Company has realigned its production capacity to enable increased production of multi-section products. In the near future, only four of the Company's 16 plants will be exclusively dedicated to single-section homes, while eight plants will build exclusively multi-section homes. The remaining four plants will build both products, shifting between single-section and multi-section homes based on market demand. 7 In addition to the general weakness in new single-section retail unit volume, the Company experienced particular weakness in both single-section and multi-section new unit sales in the Southwest. The Company has reassigned responsibility for this market within the retail management organization and acted to strengthen the quality of retail supervisory personnel to whom sales center managers in the Southwest report. In addition, the Company believes multi-section sales in the Southwest were adversely affected by excessive manufacturing lead times and insufficient breadth of product offerings. Management believes that redirecting manufacturing capacity to multi-section products will help reduce manufacturing backlogs and enable the Company to offer a broader assortment of products in the Southwest. The average selling price for new single-section and multi-section homes sold at retail increased primarily due to a shift in product mix toward higher price points. Total new retail sales dollars at sales centers open more than one year decreased 5% in the first quarter of fiscal 1997, primarily due to the weakness in the Southwest. In the first three months of fiscal 1997, the Company opened or acquired seven new sales centers compared to 18 sales centers in the first three months of fiscal 1996. New sales centers typically require a period of several months to reach normalized unit sales levels. Wholesale sales dollar volume (which represents sales by Golden West and Destiny to independent dealers) declined by 35%, reflecting a 39% decrease in unit volume. This decrease was slightly offset by increases of 4% and 3% in the average sales price of new single-section homes and multi-section homes, respectively. The decline in wholesale unit volume reflects execution of the Company's strategy of changing the distribution of products produced by Golden West and Destiny from independent dealers to company-owned retail sales centers. During the quarter ended December 31, 1996, 55% of Golden West's and Destiny's shipments were to Oakwood sales centers, compared to 24% in the first quarter of fiscal 1996; these shipments are not included in the wholesale dollar sales and unit sales in the table above. Management expects Golden West's and Destiny's unit sales to Oakwood to increase in future quarters. To the extent the Company is successful in establishing company- owned retail centers in Golden West and Destiny markets, the decline in sales to wholesale dealers will continue. Gross profit margin - integrated operations reflects gross profit earned on all sales at retail as well as the manufacturing gross profit on retail sales of units manufactured by the Company. Gross profit margin integrated operations increased to 33.1% in the current period from 29.5% in the first quarter of last year, reflecting improved gross margins at both retail and manufacturing and an increase in the percentage of new homes sold at retail which were produced in company-owned manufacturing plants from approximately 85% during the prior year quarter to approximately 95% in the first quarter of fiscal 1997. Wholesale gross profit margins increased to 16.2% in the current quarter from 15.4% last year, primarily due to start-up costs incurred in the first quarter last year associated with a plant expansion at the Albany, Oregon facility, which increased capacity by approximately 40% during the first quarter one year ago. Financial services income increased 2% to $24.8 million from $24.2 million last year. Interest income earned on loans held for investment and on loans held for sale prior to securitization decreased from $9.3 million in the first quarter of fiscal 1996 to $7.3 million this 8 year. This decrease reflects the amortization of and prepayments on loans held for investment, a decrease in the average balance of loans held for sale resulting from more frequent loan securitization, and a decrease in the average yield on those assets as older, higher-yielding loans are liquidated. The Company is selling via securitization substantially all the loans it originates, and accordingly interest income should continue to decline as the remaining loans held for investment are liquidated. Loan servicing fees increased from $3.6 million for the first quarter of 1996 to $4.9 million in the first quarter of 1997, reflecting the increased size of the Company's securitized loan servicing portfolio. REMIC residual income increased from $3.2 million to $6.1 million, reflecting the shift in the Company's financing strategy toward securitization of its loans from holding loans for investment. Financial services income for the first quarter of fiscal 1997 and 1996 also includes gains of approximately $4.9 million and $6.6 million, respectively, or $.06 per share and $.09 per share, respectively, from the sale of asset-backed securities. The fiscal 1996 gain was unusually large due to a bond market rally in the fall of 1995 which significantly reduced the Company's permanent financing costs on securities sold that quarter. In addition to the gains recorded on the closing date of the securitizations, the Company expects to earn future income from its investment in the residual REMIC interests in these transactions, consistent with its securitizations closed in prior years. The Company estimates the fair value of retained residual interests in REMIC securitizations based upon default, credit loss, voluntary prepayment and interest rate assumptions which management believes market participants would use for similar instruments; management believes these assumptions are conservative. Such estimated fair values have a direct impact on the magnitude of the gain or loss recorded on the sale of asset-backed securities. The actual rate of voluntary prepayments and the amount and timing of credit losses affect the Company's yield on retained REMIC residual interests and the fair value of such interests in periods subsequent to the securitization. For the quarter ended December 31, 1996, total credit losses on loans originated by the Company, including losses relating to securitized assets, loans held for investment, loans held for sale and loans sold with full or partial recourse, amounted to approximately 1.13% on an annualized basis of the average principal balance of the related loans, compared to approximately .83% on an annualized basis one year ago. The increase in net credit losses is due principally to higher numbers of defaulted loans rather than to decreased recovery rates on defaults. To counteract this trend, the Company has tightened underwriting standards and focused additional emphasis on closing retail sales with relatively higher credit quality customers. Increased credit losses reduce the Company's yield on retained REMIC residual interests and could also reduce gains on future securitizations. The majority of the 18% increase in other income is related to increased insurance commissions resulting from the overall increase in new home dollar sales. Non-financial services selling, general and administrative expenses rose to 27.2% of net sales compared to 23.4% of net sales last year. The increase in non-financial services selling, general and administrative expenses as a percentage of net sales was caused by higher selling expenses at retail resulting from a new retail pay plan and the integration of Destiny and Golden West, whose general and administrative expenses are increasingly spread over the Company's retail sales volumes as the Company reduces wholesale sales to non-exclusive independent dealers. This was partially offset by a reduction in accruals relating to long-term incentive compensation plans. Management is currently reviewing its retail compensation plans to 9 ensure the Company's cost structure and related selling expenses are in line with the level of business activity. Financial services selling, general and administrative expenses rose 40% on a 27% increase in the average number of loans serviced during the period, a 20% increase in total credit application volume and a 41% increase in loan originations. The fiscal 1997 quarter includes certain general and administrative expenses related to credit operations dedicated to Deutsche Financial Capital, the Company's new joint venture with Deutsche Financial Services, which began operations during the fourth quarter of fiscal 1996. Non-financial services interest expense rose from $619,000 to $832,000 due principally to interest related to new corporate office facilities. Financial services interest expense includes interest expense associated with long-term debt secured by loans and interest expense associated with short-term line of credit borrowings used to fund the warehousing of loans prior to their securitization. Financial services interest expense decreased 37% primarily due to declining and retired long-term debt balances. In addition, short-term interest expense declined slightly due to lower average outstanding balances, as well as lower interest rates on short-term lines of credit. Financial services interest expense associated with notes and bonds payable is expected to continue to decline as the Company retires its outstanding debt secured by loans. The Company's effective income tax rate was 39.0% in fiscal 1997 and 1996. LIQUIDITY AND CAPITAL RESOURCES Receivables and investments decreased from September 30, 1996 primarily due to the timing of the Company's securitization of loans held for sale, as well as the continued amortization of loans held for investment. The Company originates loans and warehouses them until sufficient receivables have been accumulated for a securitization. Through its Oakwood Mortgage Investors subsidiary, the Company securitized approximately $271 million of loans in October 1996. The increase in inventories from September 30, 1996 reflects the normal seasonal manufacture of inventory during the winter months in preparation for the spring and summer selling season. Short-term borrowings principally reflect outstanding advances on the Company's warehousing facility used to finance originated loans prior to securitization or other permanent financing. Management believes that permanent financing for its loans remains readily available and anticipates securitizing installment sale contracts using REMICs approximately every three to four months. Management currently believes that it can obtain the cash it needs to continue its planned expansion through internally generated funds. However, the Company continues to monitor the credit and equity markets and evaluate the sources and costs of the long-term capital required to finance the demands of both planned expansion and higher operating levels within existing operations. The Company will seek to raise additional equity or long-term debt based upon anticipated business demands, management's assessment of existing and future 10 conditions in the capital markets, and management's assessment of the appropriate components of the Company's capital structure. 11 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders At the Annual Meeting of Shareholders of the Registrant held on January 29, 1997, the shareholders approved (i) the election of Kermit G. Phillips, II, H. Michael Weaver, Francis T. Vincent, Jr. and Roger W. Schipke as directors; and (ii) the selection of Price Waterhouse LLP as independent accountants. The following table sets forth the votes on each such matter:
FOR AGAINST ABSTAIN NOT VOTED Election of Directors (by nominee) Kermit G. Phillips, II 38,010,902 526,115 0 7,311,302 H. Michael Weaver 37,984,342 552,675 0 7,311,302 Francis T. Vincent, Jr. 38,011,242 525,775 0 7,311,302 Roger W. Schipke 38,011,142 525,875 0 7,311,302 Approval of selection of Price 38,505,372 10,723 20,922 7,311,302 Waterhouse LLP as Independent Auditors
12 Item 6. Exhibits and Reports on Form 8-K a) Exhibits (4) Agreement to Furnish Copies of Instruments with Respect to Long-term Debt (10) Employment Agreement between Oakwood Homes Corporation and A. Steven Michael (11) Statement re Computation of Earnings Per Share (27) Financial Data Schedule (filed in electronic format only) b) Reports on Form 8-K No reports on Form 8-K were filed for the quarter ended December 31, 1996. Items 1, 2, 3 and 5 are inapplicable and are omitted. 13 OAKWOOD HOMES CORPORATION AND SUBSIDIARIES SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: February 14, 1997 OAKWOOD HOMES CORPORATION BY: s/ C. Michael Kilbourne C. Michael Kilbourne Executive Vice President (Chief Financial Officer) (Duly Authorized Officer) 14 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 EXHIBITS ITEM 6(a) FORM 10-Q QUARTERLY REPORT For the quarter ended Commission File Number December 31, 1996 1-7444 OAKWOOD HOMES CORPORATION EXHIBIT INDEX Exhibit No. Exhibit Description 4 Agreement to Furnish Copies of Instruments with respect to Long-Term Debt 10 Employment Agreement between Oakwood Homes Corporation and A. Steven Michael 11 Statement re Computation of Earnings Per Share 27 Financial Data Schedule (filed in electronic format only) 15 EX-4 2 EXHIBIT 4 EXHIBIT 4 AGREEMENT TO FURNISH COPIES OF INSTRUMENTS WITH RESPECT TO LONG-TERM DEBT The Registrant has entered into certain agreements with respect to long-term indebtedness which do not exceed ten percent of the total assets of the Registrant and its subsidiaries on a consolidated basis. The Registrant hereby agrees to furnish a copy of such agreements to the Commission upon request of the Commission. OAKWOOD HOMES CORPORATION By: s/ C. Michael Kilbourne C. Michael Kilbourne Executive Vice President 16 EX-10 3 EXHIBIT 10 EXHIBTI 10 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of the 31st day of December 1996, by and between A. STEVEN MICHAEL, an individual resident of the State of North Carolina ("Michael"), and OAKWOOD HOMES CORPORATION, a North Carolina corporation having its principal office and place of business in Greensboro, North Carolina (the "Company"). STATEMENT OF PURPOSE Michael, who has been a senior executive and director of the Company for several years, wishes to continue his employment with the Company, but in a different capacity from that in which he is currently serving, and the Company has agreed to such change of assignment. The Company and Michael have therefore agreed that Michael will continue to render services to the Company on the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the mutual covenants herein contained, the Company and Michael agree as follows: 1. Employment Period. For a period of twenty-four (24) months beginning January 1, 1997, subject to extension as provided in the following sentence (the "Employment Period"), Michael shall serve as Executive Vice President and Special Assistant to the President of the Company, or in such other office as the Board of Directors of the Company (the "Board") shall determine, and in such positions he shall have such duties as are assigned to him from time to time by the Company's Chief Executive Officer. Unless either Michael or the Company has given written notice to the other of his or its desire to terminate this Agreement by no later than November 30, 1998, the Employment Period shall automatically be extended for an additional twenty-four (24) months beginning January 1, 1999. 2. Duties. During his full-time employment hereunder Michael shall devote his full working time and energies to the business and affairs of the Company, and shall use his best efforts, skill and abilities to promote the Company's interests; provided, however, that Michael may participate in civic, charitable, educational or religious activities and affairs so long as such activities do not interfere with the performance of his duties and obligations to the Company. 3. Compensation. (a) Salary and Incentive Compensation. The Company shall pay or cause to be paid to Michael during his full-time employment hereunder a base salary of not less than Two Hundred and Fifty-Five Thousand Dollars ($255,000.00) per annum, payable in monthly or more frequent installments in accordance with the Company's regular payroll practices. In addition, although he would be disqualified because of his change of assignment, Michael shall be entitled to receive the full amount that he would otherwise have earned under the Company's annual incentive compensation program for the fiscal year ending September 30, 1997, subject to the provisions of the Company's Executive Incentive Compensation Plan. The Long Term Incentive Compensation Award Agreement between the Company and Michael dated November 15, 1995, is terminated, and Michael shall receive no payments thereunder. For services after September 30, 1997, Michael's incentive compensation or bonus, if any, shall be at the discretion of the Compensation Committee of the Board. 2 (b) Benefits. During Michael's full-time employment hereunder, except as otherwise provided in Paragraph 3(a) above, he shall remain eligible to participate, on the same basis as other executives of similar rank of the Company, in any employee benefit plan hereafter existing to the extent that he is then eligible under the general provisions thereof, and in any group insurance, hospitalization, medical, health and accident, disability or similar plans and programs of the Company to the extent that he is then eligible under the general provisions thereof then pertaining. 4. Termination of Service. (a) Discharge for Cause. The Board may discharge Michael for cause at any time and thereby terminate his full-time employment hereunder. Such discharge shall be effected by written notice (the "Discharge Notice") to Michael which shall specify the reasons for his discharge and the effective date thereof. As used herein, the term "for cause" shall mean (i) any breach by Michael of any material provisions of this Agreement, (ii) commission of a wrongful act by Michael that has or will have a material adverse effect on the business, operations or financial condition of the Company, excluding matters of business judgment that do not involve willful misconduct or gross negligence, (3) any intentional falsification of reports, records or information submitted by Michael to the Company or any subsidiary of the Company, or any officer of any thereof, (iv) fraud, criminal conduct, dishonesty or embezzlement by Michael, (v) misappropriation by Michael of any assets or business opportunities of the Company, or (vi) refusal or failure by Michael to follow reasonable specific instructions to him from the Chief Executive Officer or the Board; provided, however, that to the extent that the cause for termination arises under clause (i) or 3 (vi) of this sentence and can be remedied, Michael shall be given thirty (30) days prior written notice of the Company's intention to terminate his employment for cause, during which period he shall have the opportunity to remedy the act, omission or condition giving rise to such cause, and if he successfully remedies such act, omission or condition, Michael's employment shall not be terminated. Upon termination pursuant to this Paragraph 4(a), Michael's compensation and benefits hereunder shall forthwith cease and, except as otherwise provided in Paragraphs 6 and 7 below, this Agreement shall terminate. (b) Discharge Without Cause. The Company retains the right to discharge Michael without cause at any time by written notice of termination of employment given to him, in which case his employment shall terminate on the effective date specified in such notice. If the Company discharges Michael without cause, he shall be relieved of his obligations under Section 2 hereof but shall continue to receive his base salary as provided in the first sentence of Paragraph 3(a) above until the end of the Employment Period; and, in addition, Michael shall be relieved of his obligations and restraints under Paragraph 7 below to the extent such obligations would otherwise extend beyond the period during which he is receiving compensation in accordance with the forepart of this sentence. (c) Termination by Michael. Michael may voluntarily terminate his employment hereunder by thirty (30) days advance written notice to the Company given at any time within thirty (30) days after Nicholas J. St. George ceases to be the Company's Chief Executive Officer. Termination by Michael pursuant to this Paragraph 4(c) shall be deemed for all purposes to be his voluntary resignation with the consent of the Board. Upon termination pursuant to this Paragraph 4(c), Michael shall continue for twelve calendar 4 months to receive the base salary then being paid to him, but all other compensation and benefits being paid to him shall forthwith cease and, except as otherwise provided in this sentence and in Paragraphs 6 and 7 below, this Agreement shall terminate. 5. Expenses. Upon submission of proper vouchers, the Company will pay or reimburse Michael for all transportation, hotel and living expenses incurred by him on the Company's business during the Employment Period, all in accordance with the Company's policies in effect from time to time 6. Confidentiality. Michael acknowledges that, as a result of his past positions with the Company and in his continuing employment, he has had and will have access to proprietary confidential information that directly and indirectly relates to the business of the Company and its subsidiaries (the "Business"). Michael agrees that, for a period from the date hereof through and including the later of five years after Michael ceases to be employed by the Company and December 31, 2006 (the "Confidentiality Period"), he will not, without the prior written consent of the Company, (i) disclose to any person any confidential information obtained with respect to the Business, except for information which at the time is known to the public other than as a result of a disclosure by Michael not permitted hereunder, or lawfully acquired from a third party who is not obligated to the Company to maintain such information in confidence, or (ii) retain any papers or documents or papers relating to any such confidential information. This Paragraph 6 shall survive the termination of this Agreement. 5 7. Competition. (a) Covenant. In consideration of the Company's agreeing to his request for a change of assignment, agreeing to employ him during the Employment Period, and agreeing to continue his participation in the 1997 Annual Incentive Compensation Program, Michael covenants and agrees that during the time he is entitled to receive his base salary hereunder and (except for termination by Michael under Paragraph 4(c) above) for one year thereafter he will not, directly or indirectly, in any geographic market in which the Company at the time is conducting business (i) enter into the employment of, or render services to, any Competitive Business (as defined below); (ii) engage in any Competitive Business for his own account; or (iii) become interested in any Competitive Business as an individual, partner, shareholder, creditor, director, officer, principal, agent, employee, trustee, consultant, advisor or any in any other relationship or capacity; provided, however, that the provisions of this Paragraph 7(c) shall not be deemed to prohibit Michael from acquiring or holding, solely as an investment, publicly traded securities of such corporation so long as such securities do not, in the aggregate, constitute more than 5% of any class or series of outstanding securities of such corporation; (iv) employ or solicit for employment, or advise or recommend to any other person that they employ or solicit for employment, any employee of the Company or any of its subsidiaries engaged in the Business; or 6 (v) discuss with any employee of the Company or any of its subsidiaries engaged in the Business, the formation or operation of any Competitive Business or the possible future employment of such employee by any Competitive Business if Michael has or expects to acquire a proprietary interest in such business or is or expects to be made a director or executive officer thereof. (b) Definitions. For purposes of this Paragraph 7, (i) a "Competitive Business" shall mean any business that is engaged, in whole or in part, in the manufacture, sale (at wholesale or retail, except occasional retail sales incident to the operation of a mobile home park) or financing, of manufactured or other non-site-built housing of any kind, (ii) the "geographic markets" in which the Company at a particular time conducts business are and will be those described in the Company's then most recent Annual Report to Shareholders and Form 10-K Report, and (iii) a "proprietary interest" in a business shall mean ownership, through direct or indirect stockholdings or otherwise, of more than 5% of such business, and Michael shall be deemed to expect to acquire a proprietary interest in a business or to be made a director or executive officer of such business if such possibility has been discussed by any officer, director, employee, agent or promotor of such business. (c) Injunctive Relief. Michael acknowledges that in view of the nature of the Business and his own unique knowledge and skills, the restrictions contained in this Paragraph 7 and in Paragraph 6 above are reasonable and necessary to protect the Company's legitimate business interests, that any violation of such restrictions will cause irreparable injury to the Company for which money damages will not adequately compensate and that if 7 he violates any of such restrictions the Company should and will be entitled to preliminary and permanent injunctive relief in addition to appropriate monetary accounting and damages. (d) Survival. This Paragraph 7 shall survive the termination of this Agreement. 8. Notices. Any notices, requests, demands or other communications under this Agreement to a party hereto shall be in writing and shall be deemed to have been duly given when delivered in person or deposited in the United States mail, postage prepaid, by registered or certified mail, return receipt requested, to the parties hereto at the following addresses: As to Michael: Mr.A. Steven Michael 1217 Heathrow Drive Greensboro, North Carolina 27410 As to Company: Oakwood Homes Corporation 7800 McCloud Road Greensboro, North Carolina 27409-9634 Attention: Chief Executive Officer Either party hereto may change his or its address to which notices or other communications hereunder are to be directed by giving notice thereto to the other party hereto as hereinabove provided. 9. Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision hereof, all of which provisions are intended to be severable and to remain in full force and effect. 10. No Waivers. The failure of either party at any time or times to enforce or require performance of any provisions hereof shall not affect the right of such party at a later time to enforce or require performance thereof. No waiver by either party of the breach of any provision hereof, whether by conduct or otherwise, shall be construed as a further or 8 continuing waiver of any such breach, or as a waiver of the breach of any othe provision hereof. 11. Applicable Law. This Agreement shall be enforced, interpreted and construed under the laws of the State of North Carolina. 12. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto, and their respective heirs, executors, administrators, legal representa- tives, successors and assigns, if any. 13. Entire Agreement; Modifications. This Agreement contains the entire agreement between the Company and Michael with respect to the subject matter hereof; provided, however, that the following agreements between Michael and the Company shall remain in effect according to their respective terms: (a) All stock option award agreements and all deferred compensation agreements between the Company and Michael; (b) Employment Agreement dated November 16, 1990, as amended ("Golden Parachute Agreement"); and (c) Executive Retirement Benefit Employment Agreement dated June 3, 1993, as amended ("Executive Retirement Agreement"); provided, however, that the Executive Retirement Agreement is hereby amended by adding the following to the end of Section 4(d) thereof: "Voluntary termination by Executive in accordance with Paragraph 4(c) of the Employment Agreement between Executive and the Company dated as of December 31, 1996, shall be deemed to be Approved Voluntary Termination and shall entitle Executive to receive payments in the amount and in accordance with the schedule set out in Schedule E attached hereto (i) without further approval of the Board of Directors, (ii) without the 180 days notice referred to above, and (iii) without 9 requiring that Executive be at least 50 years of age (any earlier age to be treated as 50 years of age for purposes of Schedule E)." This Agreement may not be modified or amended except by a writing signed by the party against whom enforcement is sought. 14. No Duplication of Payment. Notwithstanding anything to the contrary herein, Michael shall receive no compensation payments hereunder after his full time employment with the Company terminates if Michael at the time has received, is receiving or is entitled to receive, payments under the Golden Parachute Agreement, it being intended that Michael shall not receive post-employment payments hereunder and under the Golden Parachute Agreement. 15. Duplicate Originals. This Agreement is executed in duplicate originals, each of which shall be deemed an original hereof. IN WITNESS WHEREOF, Michael has hereunto set his hand and seal, and the Company has caused this Agreement to be executed by its duly authorized representatives, all as of the day and year first above. Witness: /s/ A. Steven Michael [SEAL] A. Steven Michael /s/ Debbie Fain "Michael" [CORPORATE SEAL] OAKWOOD HOMES CORPORATION ATTEST: By: /s/ Nicholas J. St. George By: /s/ Douglas R. Muir Title: President Title:Senior Vice President "Company" 10 EX-11 4 EXHIBIT 11 EXHIBIT 11 OAKWOOD HOMES CORPORATION AND SUBSIDIARIES STATEMENT RE COMPUTATION OF EARNINGS PER SHARE (in thousands, except per share data) Three months ended December 31, 1996 1995 Weighted average number of common shares outstanding 45,550 44,446 Add: Dilutive effect of stock options and restricted shares, computed using the treasury stock method 1,319 1,902 Less: Unearned ESOP shares (137) (174) Weighted average number of common and common equivalent shares outstanding 46,732 46,174 Net income $15,193 $13,877 Earnings per common share - primary $ .33 $ .30 Weighted average number of common shares outstanding 45,550 44,446 Add: Dilutive effect of stock options and restricted shares computed using the treasury stock method 1,319 1,922 Less: Unearned ESOP shares (137) (174) Weighted average number of common and common equivalent shares outstanding 46,732 46,194 Net income $15,193 $13,877 Earnings per common share - fully diluted $ .33 $ .30 17 EX-27 5 FDS
5 This schedule contains information extracted from the Registrant's consolidated financial statements for the quarter ended December 31, 1996 filed as part of the Registrant's form 10-Q for the quarter ended December 31, 1996 and is qualified in its entirety by reference to such financial statements. 3-MOS SEP-30-1997 DEC-31-1996 19,976 0 369,682 5,747 189,716 0 156,079 39,094 751,653 205,844 122,782 22,989 0 0 386,527 751,653 177,782 207,190 123,812 177,963 0 0 4,321 24,906 9,713 15,193 0 0 0 15,193 .33 .33
-----END PRIVACY-ENHANCED MESSAGE-----