-----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, JZt1qXxk1jZQgIQvJAn+t3zA7nXSzJgC1fVZ9y6W/jxn12O6VmgCNn3GCehChjLW 9G9Wkw8KP53fvRYoYNTS+Q== 0000950168-97-002261.txt : 19970815 0000950168-97-002261.hdr.sgml : 19970815 ACCESSION NUMBER: 0000950168-97-002261 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 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: 97661738 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 OAKWOOD HOMES CORPORATION - 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 June 30, 1997 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 (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) Not Applicable (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 July 31, 1997. Common Stock, Par Value $.50 Per Share . . . . . . . . . . 46,139,479 1 QUARTERLY REPORT ON FORM 10-Q CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Quarter Ended June 30, 1997 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 June 30, 1997 1996 ---- ---- Revenues Net sales $266,015 $239,305 Financial services income 22,235 18,909 Other income 4,187 5,253 ---------- ---------- Total revenues 292,437 263,467 -------- -------- Costs and expenses Cost of sales 181,516 165,753 Selling, general and administrative expenses Non-financial services 63,401 58,914 Financial services 5,410 4,591 Interest expense Non-financial services 838 510 Financial services 4,647 4,373 ---------- ---------- Total costs and expenses 255,812 234,141 -------- -------- Income before income taxes 36,625 29,326 Provision for income taxes 14,128 11,457 --------- --------- Net income $ 22,497 $ 17,869 ======== ======== Earnings per share Primary $ .48 $ .38 Fully diluted $ .48 $ .38 Dividends per share $ .01 $ .01 Weighted average number of common shares outstanding Primary 46,696 46,686 Fully diluted 46,864 46,686
3 OAKWOOD HOMES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) (in thousands except per share data)
Nine months ended June 30, 1997 1996 ---- ---- Revenues Net sales $634,449 $606,797 Financial services income 72,482 68,580 Other income 12,985 13,729 --------- ---------- Total revenues 719,916 689,106 --------- --------- Costs and expenses Cost of sales 434,366 432,820 Selling, general and administrative expenses Non-financial services 164,033 147,079 Financial services 16,158 13,337 Interest expense Non-financial services 2,480 1,763 Financial services 12,645 15,586 --------- --------- Total costs and expenses 629,682 610,585 -------- -------- Income before income taxes 90,234 78,521 Provision for income taxes 34,830 30,623 --------- --------- Net income $ 55,404 $ 47,898 ======== ======== Earnings per share Primary $ 1.19 $ 1.03 Fully diluted $ 1.19 $ 1.03 Dividends per share $ .03 $ .03 Weighted average number of common shares outstanding Primary 46,675 46,418 Fully diluted 46,731 46,453
4 OAKWOOD HOMES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (UNAUDITED) (in thousands except share and per share data)
June 30, September 30, ASSETS 1997 1996 ---- ---- Cash and cash equivalents $ 23,034 $ 28,577 Receivables and investments 403,251 508,825 Inventories Manufactured homes 208,007 136,905 Work-in-process, materials and supplies 17,664 14,165 Land/homes under development 4,605 4,820 ----------- ----------- 230,276 155,890 Properties and facilities 126,816 113,764 Deferred income taxes 9,491 9,674 Other assets 45,774 25,247 ---------- ---------- $838,642 $841,977 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Short-term borrowings $159,657 $145,506 Notes and bonds payable 85,212 134,379 Accounts payable and accrued liabilities 117,099 157,929 Other long-term obligations 26,281 12,189 Shareholders' equity Common stock, $.50 par value; 100,000,000 shares authorized; 46,049,000 and 45,621,000 shares issued and outstanding 23,025 22,811 Additional paid-in capital 152,521 149,501 Retained earnings 280,486 226,460 --------- --------- 456,032 398,772 Less: Unearned compensation (5,639) (6,798) ----------- ----------- 450,393 391,974 --------- --------- $838,642 $841,977 ======== ========
5 OAKWOOD HOMES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (in thousands)
Nine months ended June 30, 1997 1996 Operating activities Net income $ 55,404 $ 47,898 Items not requiring (providing) cash Depreciation and amortization 10,721 7,678 Deferred income taxes 183 (755) Gain on sale of loans (15,016) (15,020) Other 1,618 290 (Increase) decrease in other receivables 17,062 (12,627) (Increase) in inventories (74,386) (16,354) Increase (decrease) in accounts payable and accrued liabilities (47,857) 46,606 Increase (decrease) in other long-term obligations 12,966 (2,087) --------- ----------- Cash provided (used) by operations (39,305) 55,629 Loans originated (589,875) (490,330) Purchase of loan portfolios -- (1,465) Sale of loans 676,483 497,374 Receipts on installment receivables 25,214 18,434 --------- ---------- Cash provided by operating activities 72,517 79,642 --------- ---------- Investing activities Net loans to joint venture (4,000) -- Additions to properties and facilities (22,265) (29,569) Other (17,478) (1,833) --------- ---------- Cash used by investing activities (43,743) (31,402) --------- --------- Financing activities Net borrowings on short-term credit facilities 14,151 18,007 Payments on notes and bonds (48,807) (41,597) Cash dividends (1,378) (1,342) Proceeds from exercise of stock options 1,717 3,415 --------- ---------- Cash used by financing activities (34,317) (21,517) --------- --------- Net increase (decrease) in cash and cash equivalents (5,543) 26,723 Cash and cash equivalents Beginning of period 28,577 6,189 --------- ----------- End of period $ 23,034 $ 32,912 ========= =========
6 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 third parties on a full or limited recourse basis. The amount of this contingent liability was approximately $62 million at June 30, 1997. The Company is also contingently liable as guarantor on subordinated securities issued by REMIC trusts in the aggregate principal amount of approximately $18 million at June 30, 1997. In addition, the Company is 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 $32 million at June 30, 1997. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Three months ended June 30, 1997 compared to three months ended June 30, 1996 The following table summarizes certain key statistics for the quarters ended June 30, 1997 and 1996 :
1997 1996 Retail sales (in millions) $244.2 $197.4 Other sales (in millions) $21.8 $41.9 Total sales (in millions) $266.0 $239.3 Gross profit % 31.8% 30.7% New single-section homes sold - retail 2,902 3,902 New multi-section homes sold - retail 3,390 1,807 Used homes sold - retail 523 445 New single-section homes sold - wholesale 98 322 New multi-section homes sold - wholesale 578 958 Average new single-section sales price - retail $28,700 $27,700 Average new multi-section sales price - retail $46,100 $47,400 Average new single-section sales price - wholesale $15,400 $14,200 Average new multi-section sales price - wholesale $31,100 $30,700 Weighted average retail sales centers open during the period 271 241 Average new home dollar sales per sales center (in millions) $.9 $.8
Retail sales dollar volume increased 24%, reflecting a 10% increase in new unit volume and an increase in the percentage of total retail new unit volume represented by multi-section homes from 32% last year to 54% in the third quarter of fiscal 1997. New unit volume rose primarily due to a 12% increase in the weighted average number of sales centers open during the period. The Company opened or acquired 9 new sales centers compared to 12 sales centers in the third quarter of fiscal 1996. The Company also closed 2 underperforming sales centers during the quarter. Single-section unit volume decreased 26%, while multi-section unit volume rose 88%, resulting in a 10% increase in average new home dollar sales per sales center. New retail dollar sales at centers open at least one year rose 13% in the quarter. This increase, in part, reflects the effects of the Company's capacity realignment toward multi-section homes. Management believes that redirecting manufacturing capacity to multi-section products during the second quarter helped reduce manufacturing backlogs and enabled the Company to offer a broader assortment of products, especially in the Southwest, where new multi-section unit sales increased 113% over the third quarter last year, following a 9% decrease and a 46% increase in the first and second quarters of fiscal 1997, respectively. The increase in multi-section sales is also attributable to the introduction of the Sunrise Dream Home, a high volume price point multi-section home supported by the Company's first national marketing campaign. 8 The 4% increase in the average selling price for new single-section homes sold at retail resulted primarily from a shift in product mix toward higher price points. The 3% decrease in the average selling price for new multi-section homes sold at retail is due to sales of the Sunrise Dream Home, the average selling price of which is lower than the average selling price of multi-section homes generally. Over 1700 Dream Homes were sold during the third quarter. Other sales dollar volume (which primarily represents wholesale sales by Golden West and Destiny to independent dealers) declined 48%. 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 non-exclusive independent dealers to Company-owned retail sales centers. During the quarter ended June 30, 1997, 75% of Golden West's and Destiny's shipments were to Oakwood sales centers, compared to 40% in the third quarter of fiscal 1996; these shipments are not included in the dollar and unit sales in the table above. Gross profit margin increased to 31.8% in the current period from 30.7% in the third quarter of last year, reflecting improved gross margins and higher operating levels at manufacturing, greater internal sourcing of retail sales and the reduced significance of relatively lower margin wholesale sales. The percentage of new homes sold at retail which were produced in Company-owned manufacturing plants increased from approximately 92% for the three months ended June 30, 1996 to approximately 97% in the third quarter of fiscal 1997. Financial services income increased to $22.2 million from $18.9 million last year. Interest income earned on loans held for investment and on loans held for sale prior to securitization decreased from $8.2 million in the third quarter of fiscal 1996 to $7.0 million this year. This decrease reflects the lower principal balance of loans held for investment and loans held for sale, as well as 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 $4.0 million for the third quarter of 1996 to $5.5 million in the third quarter of 1997, reflecting the increased size of the Company's securitized loan servicing portfolio. REMIC residual income increased from $4.2 million to $4.5 million: an increase in the average balance of REMIC residual interests during the period was partially offset by a decrease in the average yield on those investments, arising principally from higher credit losses more fully described below. Other financial services revenue decreased from $1.7 million for the quarter ended June 30, 1996 to $1.4 million for the current year, due to the Company's equity in losses generated by the Company's joint venture, Deutsche Financial Capital, which is in its start-up phase, offset in part by increases in miscellaneous fees and other income. Financial services income for the third quarter of fiscal 1997 and 1996 also includes gains from the sale of asset-backed securities of approximately $3.7 million and $772,000, respectively (after tax, $.05 and $.01 per share, respectively). 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. 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 9 quarter ended June 30, 1997, 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 1.56% on an annualized basis of the average principal balance of the related loans, compared to approximately 1.20% one year ago. The increase in net credit losses is due in part to the industry-wide trend toward lower down payments which began in 1994. The higher loss ratio also reflects increased frequency of repossession in addition to loss severity, and had the effect of reducing the yields on the Company's retained interests in securitized assets. Continuation of these trends could adversely affect future yields on or the carrying value of certain retained REMIC residual interests. To counteract this trend, the Company has tightened underwriting standards and focused additional emphasis on closing retail sales with relatively higher credit quality customers. In addition, the Company has begun implementing programs to improve recovery rates on defaulted loans in order to reduce the severity of credit losses. The majority of the 20% decrease in other income reflects decreased insurance commissions resulting from the increase in multi-section unit sales with respect to which the Company's insurance penetration rate is lower because of more competitive market conditions. During the quarter, the Company formed Blue Ridge Insurance Company Ltd., a captive reinsurance company. With the formation of Blue Ridge, the Company expects to earn insurance underwriting and investment income, while insurance commissions will continue to decrease as the Company exits the commission-based insurance agency business. Because reinsurance claim costs are recorded as insured events occur, underwriting reinsurance risk may increase the volatility of the Company's earnings, particularly with respect to property and casualty reinsurance. Under the Company's terminated commission-based agency business, the Company had the opportunity to earn contingent commissions if the losses on policies sold by the Company were less than anticipated. Conversely, if such losses were greater than anticipated, the Company experienced prospective downward adjustments to its commission rates. The Company has purchased catastrophe reinsurance to reduce its underwriting exposure to natural disasters. Non-financial services selling, general and administrative expenses declined to 23.8% of net sales compared to 24.6% of net sales last year. The decrease in non-financial services selling, general and administrative expenses as a percent of sales was primarily due to a reduction in accruals relating to long-term incentive compensation plans and lower service costs. The decrease was partially offset by an increase that reflects 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. Financial services selling, general and administrative expenses rose 18% due to a 28% increase in the average number of loans serviced during the period and a 13% increase in total credit application volume. Non-financial services interest expense rose from $510,000 to $838,000 due principally to interest costs 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 increased 6% primarily due to a $1.4 million increase in short-term interest expense 10 due to higher average outstanding balances and higher weighted average interest rates on short-term borrowings. This increase was partially offset by a decrease in interest on long-term debt due to declining and retired long-term balances. The Company's effective income tax rate was 38.6 % in the third quarter of fiscal 1997 compared to the effective tax rate of 39.1% in fiscal 1996. Nine months ended June 30, 1997 compared to nine months ended June 30, 1996 The following table summarizes certain key statistics for the nine months ended June 30, 1997 and 1996 :
1997 1996 Retail sales (in millions) $564.3 $484.1 Other sales (in millions) $70.1 $122.7 Total sales (in millions) $634.4 $606.8 Gross profit % 31.5% 28.7% New single-section homes sold - retail 7,687 9,834 New multi-section homes sold - retail 6,951 4,304 Used homes sold - retail 1,503 1,421 New single-section homes sold - wholesale 447 1,104 New multi-section homes sold - wholesale 1,888 3,027 Average new single-section sales price - retail $28,900 $27,300 Average new multi-section sales price - retail $47,400 $47,500 Average new single-section sales price - wholesale $15,200 $14,000 Average new multi-section sales price - wholesale $31,000 $29,800 Weighted average retail sales centers open during the period 264 226 Average new home dollar sales per sales center (in millions) $2.1 $2.1
Retail sales dollar volume increased 17%, reflecting a 4% increase in new unit volume, a 6% increase in the average new single-section sales price and an increase in the percentage of total retail new unit volume represented by multi-section homes from 30% last year to 47% in the first nine months of fiscal 1997. Single-section unit volume decreased 22%, while multi-section unit volume rose 62% from the first nine months of fiscal 1996. The average selling price for new single-section homes sold at retail increased primarily due to a shift in product mix toward higher price points. The average selling price for new multi-section homes sold at retail remained relatively constant. Total new retail sales dollars at sales centers open more than one year increased 3% during the first nine months of fiscal 1997, primarily due to the effects of the capacity realignment towards multi-section homes late in the second quarter and the introduction of the Sunrise Dream Home discussed in the third quarter section above. For the nine months ended June 30, 1997, the Company opened or acquired 24 new sales centers compared to 48 sales centers in the first nine months of fiscal 1996. The Company also closed 4 underperforming sales centers during 1997. 11 Other sales dollar volume declined by 43%, reflecting the Company's strategy of changing the distribution of products produced by Golden West and Destiny from non-exclusive independent dealers to Company-owned retail sales centers. During the nine months ended June 30, 1997, 67% of Golden West's and Destiny's shipments were to Oakwood sales centers, compared to 29% in the nine months ended June 30, 1996; these shipments are not included in the wholesale dollar and unit sales in the table above. Gross profit margin increased to 31.5% in the first nine months of the current year from 28.7% in the first nine months of last year, reflecting improved gross margins and higher operating levels at manufacturing, greater internal sourcing of retail sales and the reduced significance of relatively lower margin wholesale sales. The percentage of new homes sold at retail which were produced in Company-owned manufacturing plants increased from approximately 89% during the prior year to approximately 96% in the first nine months of fiscal 1997. Financial services income increased to $72.5 million from $68.6 million last year. Interest income earned on loans held for investment and on loans held for sale prior to securitization decreased from $26.2 million in the first nine months of fiscal 1996 to $22.3 million this year. This decrease reflects the decline in the principal balance of loans held for investment and loans held for sale, as well as a decrease in the average yield on those assets as older, higher-yielding loans are liquidated. Loan servicing fees increased from $11.4 million for the nine months ended June 30, 1996 to $15.6 million in the nine months ended June 30, 1997, reflecting the increased size of the Company's securitized loan servicing portfolio. REMIC residual income increased from $11.3 million to $15.6 million, reflecting an increase in the average balance of REMIC residual interests during the period. This increase was partially offset by a decrease in the average yield on those investments, arising principally from higher credit losses. Other financial services income decreased slightly from $4.7 million for the nine months ended June 30, 1996 to $4.0 million for the current year, due to the Company's equity in losses generated by the Company's joint venture, Deutsche Financial Capital, offset in part by increases in miscellaneous fees and other income. Financial services income for the first nine months of both fiscal 1997 and 1996 also includes gains of approximately $15.0 million, or $.20 per share, after tax from the sale of asset-backed securities. Last year also included a non-recurring gain on a resecuritization transaction of $1.4 million, or $.02 per share, after tax. 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. 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 nine months ended June 30, 1997, 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 1.33% on an annualized basis of the average principal balance of the related loans, compared to approximately 1.03% on an annualized basis one year ago. As discussed above, the increase in net credit losses is due both to higher numbers of defaulted loans and loss severity. 12 The majority of the 5% decrease in other income reflects decreased insurance commissions resulting from the increase in multi-section unit sales with respect to which the Company's insurance penetration rate is lower because of more competitive market conditions. Non-financial services selling, general and administrative expenses rose to 25.9% of net sales compared to 24.2% 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 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. Financial services selling, general and administrative expenses rose 21% due to a 27% increase in the average number of loans serviced during the period and a 15% increase in total credit application volume. Non-financial services interest expense rose from $1,763,000 to $2,480,000 due principally to interest costs 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 19% primarily due to declining and retired long-term debt balances. This decrease was offset by a $1.9 million increase in short-term interest expense related to higher average outstanding balances, offset by lower weighted average 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 38.6% in fiscal 1997 compared to the effective tax rate of 39.0% in fiscal 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 closed securitizations in October 1996, February 1997 and May 1997 totaling approximately $634 million. The increase in inventories from September 30, 1996 reflects the normal seasonal manufacture of inventory in preparation for the summer selling season, as well as the increase in multi-section homes as a percentage of total inventory. At September 30, 1996, multi-section homes comprised approximately 39% of retail unit inventory compared with 43% at June 30, 1997. The Company and Deutsche Financial Services each have funded one-half the operating cash needs of their Deutsche Financial Capital joint venture. Such funding has been used principally to finance loans warehoused prior to securitization and prior to the closing of a warehousing facility with a conduit commercial paper issuer in June 1997. The Company's 13 investment in and advances to the joint venture approximated $7 million at June 30, 1997, which is included in other assets on the consolidated balance sheet. Deutsche Financial Capital completed its first securitization in June 1997. Short-term borrowings principally reflect outstanding advances on the Company's warehousing facility and other short-term credit facilities. Management believes that permanent financing for its loans remains readily available and anticipates securitizing installment sale contracts approximately every three months. Management believes that it can obtain the cash needed 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 cost 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 conditions in the capital markets, and management's assessment of the appropriate components of the Company's capital structure. In order to maintain maximum flexibility in the timing of any acquisition of permanent or long-term financing, the Company intends to focus on maintaining its short-term liquidity. As a consequence, the Company intends to sell all the regular REMIC interests in its securitizations, and retain only REMIC residual interests. In February 1997 the rating on the Company's $40 million of reset debentures was raised to BBB- by Standard & Poor's Ratings Group and in May 1997 was raised to Baa3 by Moody's Investors Service. Management believes that achieving an investment grade rating from two major credit rating agencies enhances the Company's flexibility in obtaining both short and long-term financing. In April 1997 the Company reduced the interest rate on its outstanding reset debentures from 9% and 9 1/8% to 8%, effective in June 1997. Holders of these securities had the option of requiring the Company to redeem the debentures at par prior to the effective date of the reduction in the interest rate. In June 1997 $23 million of the debentures were redeemed, which was financed using short-term credit facilities. 14 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K a) Exhibits (4) Agreement to Furnish Copies of Instruments with Respect to Long-term Debt (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 June 30, 1997. Items 1, 2, 3, 4 and 5 are inapplicable and are omitted. 15 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: August 14, 1997 OAKWOOD HOMES CORPORATION BY: s/ C. Michael Kilbourne C. Michael Kilbourne Executive Vice President (Chief Financial Officer) (Duly Authorized Officer) 16 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 EXHIBITS ITEM 6(a) FORM 10-Q QUARTERLY REPORT For the quarter ended Commission File Number June 30, 1997 1-7444 OAKWOOD HOMES CORPORATION EXHIBIT INDEX Exhibit No. Exhibit Description 4 Agreement to Furnish Copies of Instruments with respect to Long-Term Debt 11 Statement re Computation of Earnings Per Share 27 Financial Data Schedule (filed in electronic format only) 17 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 18 EX-11 3 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 Nine months ended June 30, June 30, 1997 1996 1997 1996 -------- -------- -------- -------- Weighted average number of common shares outstanding 45,838 44,999 45,730 44,736 Add: Dilutive effect of stock options, computed using the treasury stock method 975 1,844 1,072 1,847 Less: Unearned ESOP shares (117) (157) (127) (165) -------- -------- -------- -------- Weighted average number of common and common equivalent shares outstanding 46,696 46,686 46,675 46,418 ======== ======== ======== ======== Net income $ 22,497 $ 17,869 $ 55,404 $ 47,898 ======== ======== ======== ======== Earnings per common share - primary $ .48 $ .38 $ 1.19 $ 1.03 ======== ======== ======== ======== Weighted average number of common shares outstanding 45,838 44,999 45,730 44,736 Add: Dilutive effect of stock options, computed using the treasury stock method 1,143 1,844 1,128 1,882 Less: Unearned ESOP shares (117) (157) (127) (165) -------- -------- -------- -------- Weighted average number of common and common equivalent shares outstanding 46,864 46,686 46,731 46,453 ======== ======== ======== ======== Net income $ 22,497 $ 17,869 $ 55,404 $ 47,898 ======== ======== ======== ======== Earnings per common share - fully diluted $ .48 $ .38 $ 1.19 $ 1.03 ======== ======== ======== ========
19 EX-27 4 FDS -- OAKWOOD MORTGAGE CORPORATION
5 The Registrant's Consolidated Financial Statements for the quarter ended June 30, 1997 filed as part of the Registrant's Form 10-Q for the quarter ended June 30, 1997. 1,000 U.S. Dollars 3-MOS SEP-30-1997 APR-01-1997 JUN-30-1997 1 23,034 0 407,434 4,183 230,276 0 170,344 43,528 838,642 275,493 85,212 0 0 23,025 427,368 838,642 266,015 292,437 181,516 250,327 0 0 5,485 36,625 14,128 22,497 0 0 0 22,497 0.48 0.48
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