<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED March 31, 2000
-------------------
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)
5000 Clayton Road
Maryville, Tennessee 37804
- --------------------- -----------------
(Address of principal executive offices) (zip code)
865-380-3000
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X No.
--
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Shares of common stock $.10 par value, outstanding on March 31, 2000:
137,978,806.
1
<PAGE>
CLAYTON HOMES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - in thousands except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
2000 1999 2000 1999
----------- ----------- -------- ---------
<S> <C> <C> <C> <C>
REVENUES
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 229,378 $ 232,965 $729,584 $727,564
Financial services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,588 58,133 171,506 163,983
Rental and other income . . . . . . . . . . . . . . . . . . . . . . . . . . 18,015 17,208 52,347 50,565
----------- ----------- -------- ---------
Total revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 306,981 308,306 953,437 942,112
----------- ----------- -------- ---------
COSTS AND EXPENSES
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152,647 156,908 485,689 496,983
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . 92,164 88,382 284,790 261,064
Financial services interest . . . . . . . . . . . . . . . . . . . . . . . . 245 2,102 805 7,361
Provision for credit losses . . . . . . . . . . . . . .. . . . . . . . . . 5,200 3,600 13,600 8,859
----------- ----------- -------- ---------
Total expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,256 250,992 784,884 774,267
----------- ----------- -------- ---------
OPERATING INCOME. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,725 57,314 168,553 167,845
Interest income (expense), net/other. . . . . . . . . . . . . . . . . . . . 268 (1,882) 695 (4,103)
----------- ----------- -------- ---------
Income before income taxes. . . . . . . . . . . . . . . . . . . . . . . . . 56,993 55,432 169,248 163,742
Provision for income taxes. . . . . . . . . . . . . . . . . . . . . . . . . 21,100 20,500 62,600 60,600
----------- ----------- -------- ---------
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 35,893 $ 34,932 $106,648 $103,142
=========== =========== ======== =========
NET INCOME PER COMMON SHARE (1)
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.26 $ 0.24 $ 0.76 $ 0.71
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.26 0.24 0.76 0.70
DIVIDENDS PAID PER COMMON SHARE (1) . . . . . . . . . . . . . . . . . . . . $ 0.016 $ 0.016 $ 0.048 $ 0.048
AVERAGE SHARES OUTSTANDING (1)
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138,839 144,482 139,966 145,580
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139,121 145,187 140,395 146,358
(1) Adjusted for the December 9, 1998, 5-for-4 stock split.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited) (audited)
March 31, June 30,
2000 1999
----------- -----------
ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,000 $ 2,680
Receivables, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 660,634 707,888
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207,258 184,444
Property, plant and equipment, net. . . . . . . . . . . . . . . . . . . . . 302,723 291,503
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241,324 230,730
----------- -----------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,419,939 $1,417,245
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued liabilities. . . . . . . . . . . . . . . . . . $ 97,967 $ 130,579
Debt obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,012 96,477
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224,290 242,421
----------- -----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 416,269 469,477
SHAREHOLDERS' EQUITY
Accumulated other comprehensive income (loss) . . . . . . . . . . . . . . . (2,109) (821)
Other shareholders' equity. . . . . . . . . . . . . . . . . . . . . . . . . 1,005,779 948,589
----------- -----------
Total shareholders' equity. . . . . . . . . . . . . . . . . . . . . . . . . 1,003,670 947,768
----------- -----------
Total liabilities and shareholders' equity. . . . . . . . . . . . . . . . . $1,419,939 $1,417,245
=========== ===========
(See accompanying notes to the condensed consolidated financial statements)
</TABLE>
2
<PAGE>
CLAYTON HOMES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
2000 1999
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 106,648 $ 103,142
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . 15,078 13,123
Amortization of installment contract receivables, net of gain on sale . . . 2,846 (4,150)
Provision for credit losses . . . . . . . . . . . . . . . . . . . . . . . . 13,600 8,859
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,270) (2,696)
Decrease (increase) in other receivables, net . . . . . . . . . . . . . . . 22,635 (34,977)
Increase in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . (22,814) (7,354)
Decrease in accounts payable, accrued liabilities, and other. . . . . . . . (97,910) (51,778)
---------- ----------
Cash provided by operations . . . . . . . . . . . . . . . . . . . . . . . . 35,813 24,169
Origination of installment contract receivables . . . . . . . . . . . . . . (736,452) (771,466)
Proceeds from sales of originated installment contract receivables. . . . . 736,001 801,534
Principal collected on originated installment contract receivables. . . . . 34,784 56,876
---------- ----------
Net cash provided by operating activities . . . . . . . . . . . . . . . . . 70,146 111,113
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of installment contract receivables . . . . . . . . . . . . . . (177,654) (225,434)
Proceeds from sales of acquired installment contract receivables. . . . . . 138,142 191,618
Principal collected on acquired installment contract receivables. . . . . . 13,352 38,065
Proceeds from sales of securities available-for-sale. . . . . . . . . . . . 29,450 -
Acquisition of property, plant and equipment. . . . . . . . . . . . . . . . (26,298) (37,358)
Decrease in restricted cash . . . . . . . . . . . . . . . . . . . . . . . . 10,105 6,644
---------- ----------
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . (12,903) (26,465)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,020) (7,210)
Net borrowings on credit facilities . . . . . . . . . . . . . . . . . . . . - (77,873)
Proceeds from (repayment of) long-term debt . . . . . . . . . . . . . . . . (2,465) 77,083
Issuance of stock for incentive plans and other . . . . . . . . . . . . . . 2,669 2,736
Repurchase of common stock. . . . . . . . . . . . . . . . . . . . . . . . . (45,107) (56,428)
---------- ----------
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . (51,923) (61,692)
---------- ----------
Net increase in cash and cash equivalents . . . . . . . . . . . . . . . . . 5,320 22,956
Cash and cash equivalents at beginning of period. . . . . . . . . . . . . . 2,680 1,731
---------- ----------
Cash and cash equivalents at end of period. . . . . . . . . . . . . . . . . $ 8,000 $ 24,687
========== ==========
(See accompanying notes to the condensed consolidated financial statements)
</TABLE>
3
<PAGE>
CLAYTON HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. The condensed consolidated financial statements of Clayton Homes, Inc.
and its wholly and majority owned subsidiaries (the Company) 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, 1999.
The information furnished reflects all adjustments which are necessary for a
fair presentation of the Company's financial position as of March 31, 2000, and
the results of its operations and its cash flows for the nine month periods
ended March 31, 2000, and 1999. All such adjustments are of a normal recurring
nature.
2. The results of operations for the nine months ended March 31, 2000, and
1999 are not necessarily indicative of the results to be expected for the
respective full years.
3. Certain reclassifications have been made to the 1999 financial
statements to conform to the 2000 presentation.
4. The Company has $75 million of 6.25% Senior Notes due December 30, 2003,
which are primarily to facilitate the purchase, origination and warehousing of
loan portfolios. The Senior Notes are guaranteed by all significant
subsidiaries of the Company and are governed by various financial covenants
which require maintenance of certain financial ratios.
On January 21, 2000, the Company renewed its committed one year $300 million
commercial paper conduit facility used to facilitate interim sale of
manufactured housing contracts.
5. Reconciling items in excess of bank balances have been reclassified to
accounts payable and accrued liabilities.
6. The following reconciliation details the numerators and denominators used
to calculate basic and diluted earnings per share for the respective periods:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
(in thousands except per share data) 2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . $ 35,893 $ 34,932 $106,648 $103,142
Average shares outstanding
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138,839 144,482 139,966 145,580
Add: common stock equivalents (1). . . . . . . . . . . . . . 282 705 429 778
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . 139,121 145,187 140,395 146,358
Earnings per share
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.26 $ 0.24 $ 0.76 $ 0.71
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.26 $ 0.24 $ 0.76 $ 0.70
(1) Common stock equivalents are principally stock options.
</TABLE>
4
<PAGE>
CLAYTON HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
7. The Company operates primarily in four business segments: Retail,
Manufacturing, Financial Services and Communities. The following table
summarizes information with respect to the Company's business segments for the
three month and nine month periods ended March 31, 2000 and 1999:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
(in thousands) 2000 1999 2000 1999
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES
Retail. . . . . . . . . . . . . . $ 169,226 $ 164,370 $ 537,492 $ 512,354
Manufacturing . . . . . . . . . . 143,180 148,668 455,635 465,647
Financial Services. . . . . . . . 49,392 49,235 142,049 140,516
Communities . . . . . . . . . . . 24,451 20,006 66,420 52,961
Intersegment sales. . . . . . . . (79,268) (73,973) (248,159) (229,366)
----------- ----------- ---------- ----------
Total revenues. . . . . . . . $ 306,981 $ 308,306 $ 953,437 $ 942,112
INCOME FROM OPERATIONS
Retail. . . . . . . . . . . . . . $ 11,316 $ 13,379 $ 39,223 $ 45,344
Manufacturing . . . . . . . . . . 13,925 16,125 46,358 51,595
Financial Services. . . . . . . . 29,661 28,659 82,927 79,221
Communities . . . . . . . . . . . 4,468 4,364 11,447 10,162
Eliminations/Other. . . . . . . . (2,645) (5,213) (11,402) (18,477)
----------- ----------- ---------- ----------
Total income from operations $ 56,725 $ 57,314 $ 168,553 $ 167,845
CAPITAL EXPENDITURES
Retail. . . . . . . . . . . . . . $ 1,655 $ 4,833 $ 7,968 $ 12,036
Manufacturing . . . . . . . . . . 2,369 2,681 9,961 10,583
Financial Services. . . . . . . . 59 116 441 495
Communities . . . . . . . . . . . 2,827 3,774 7,026 12,978
Eliminations/Other. . . . . . . . 471 563 902 1,266
----------- ----------- ---------- ----------
Total capital expenditures. . $ 7,381 $ 11,967 $ 26,298 $ 37,358
March 31, June 30,
2000 1999
----------- -----------
IDENTIFIABLE ASSETS
Retail. . . . . . . . . . . . . . $ 268,514 $ 247,009
Manufacturing . . . . . . . . . . 93,708 94,773
Financial Services. . . . . . . . 849,960 901,769
Communities . . . . . . . . . . . 182,691 177,723
Eliminations/Other. . . . . . . . 25,066 (4,029)
----------- -----------
Total identifiable assets . . $1,419,939 $1,417,245
</TABLE>
5
<PAGE>
PART I - - FINANCIAL INFORMATION (Unaudited)
ITEM 1. Financial Statements.
----------------------
See pages 2 through 5.
ITEM 2. Management's Discussion and Analysis of Financial Condition and
-------------------------------------------------------------------
Results of Operations.
-----------------------
NINE MONTHS ENDED MARCH 31, 2000:
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, independent retailers and communities, the average
sales per location, and the average price per home sold in each category.
<TABLE>
<CAPTION>
First Nine Months
Fiscal Year 2000 vs 1999
------------------------
<S> <C>
Retail
Dollar sales + 5.4%
Number of retail centers + 8.2%
Dollar sales per retail center - 2.6%
Price of home + 7.9%
Wholesale
Dollar sales - 13.8%
Number of independent retailers - 3.1%
Dollar sales per independent retailer - 11.1%
Price of home + 2.8%
Communities
Dollar sales + 49.1%
Number of communities + 3.4%
Dollar sales per community + 44.1%
Price of home + 5.7%
</TABLE>
Total revenues for the nine months ended March 31, 2000, increased 1% to $953
million, as manufactured housing sales rose slightly to $730 million, financial
services income grew 5% to $172 million and rental and other income increased 4%
to $52 million.
Current conditions in the manufactured housing industry are highly competitive
at both the retail and wholesale levels. This competitive environment, as well
as rising interest rates and general credit tightening, has contributed to
decreased industry and company sales.
Net sales of the Retail group rose 5% to $491 million as the average home price
and the number of Company-owned sales centers increased 8%, offsetting a 10%
decline in the average number of homes
6
<PAGE>
sold per sales center.
Net sales of the Manufacturing group decreased 14% to $207 million as the number
of homes sold decreased 16% to 9,126. However, the average wholesale price to
independent retailers increased 3% as a result of a shift in product mix towards
multi-section homes.
Net sales of the Communities group increased 49% to $31 million as 41% more
homes were sold, and the average home selling price increased 6%.
Within the revenues for the Financial Services segment, interest and loan
servicing revenues increased $3 million, and insurance related revenues rose $4
million. Rental and other income increased 4% as Communities rental income rose
8%.
Loans sold through asset-backed securities totaled $894 million, compared to
$813 million during the same period last year.
Financial services interest expense decreased $7 million to $1 million. Average
debt collateralized by installment contract receivables dropped 26% to $10
million, while the weighted average interest rate moved from 10.42% to 10.45%.
The terms of the debt preclude prepayment by the Company.
Gross profit margins increased to 33.4% from 31.7%. The increase is
attributable to a higher percentage of retail sales in the total sales mix as
well as a shift in mix to multi-section units.
Selling, general and administrative expenses, as a percent of revenues,
increased to 29.9% from 27.7% in the prior year period primarily due to
increased set up costs associated with the shift in mix toward multi-section
units and sales of larger homes. Also contributing was an increase in the
number of Company-owned sales centers without a corresponding increase in sales.
The provision for credit losses increased to 1.9% from 1.2% of sales.
The following table represents delinquent installment sales contracts as a
percentage of the total number of installment sales contracts which the Company
services and either owns or for which it is contingently liable. A contract is
considered delinquent if any payment is more than one month past due.
<TABLE>
<CAPTION>
March 31,
2000 1999
----- -----
<S> <C> <C>
Total delinquency as a percentage of contracts outstanding:
All contracts . . . . . . . . . . . . . . . . . . . . . . . 2.36% 2.37%
Contracts originated by VMF . . . . . . . . . . . . . . . . 1.65% 2.03%
Contracts acquired from other institutions. . . . . . . . . 5.78% 3.84%
</TABLE>
7
<PAGE>
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.
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
2000 1999
------ ------
<S> <C> <C>
Net losses as a percentage of average
loans outstanding (annualized):
All contracts. . . . . . . . . . . . . . . 1.4% 1.4%
Contracts originated by VMF. . . . . . . . 1.2% 1.0%
Contracts acquired from other institutions 2.8% 3.4%
Number of contracts in repossession:
All contracts. . . . . . . . . . . . . . . 2,001 2,065
Contracts originated by VMF. . . . . . . . 1,544 1,355
Contracts acquired from other institutions 457 710
Total number of contacts in repossession
as a percentage of total contracts . . . . 1.6% 1.8%
</TABLE>
The increase in inventories as of March 31, 2000, from June 30, 1999, is
explained as follows:
<TABLE>
<CAPTION>
($ in millions)
<S> <C>
Manufacturing. . . . . . . . . . . . Increase (decrease)
- ------------------------------------ --------------------
Finished goods . . . . . . . . . . . $ 9.9
Raw materials. . . . . . . . . . . . (6.8)
Retail
- ------------------------------------
Increase in inventory levels at 306
Company-owned retail centers open at
June 30, 1999. . . . . . . . . . . . 9.6
Inventory to stock six new
Company-owned retail centers . . . . 7.5
Communities
- ------------------------------------
Increase in inventory levels at 75
Communities open at June 30, 1999. . 2.3
Inventory to stock one new Community 0.3
--------------------
$ 22.8
--------------------
</TABLE>
On March 31, 2000, the order backlog for the Manufacturing group (consisting of
Company-owned and independent retailer orders) decreased to $12 million, as
compared to $23 million for the same period last year.
8
<PAGE>
THREE MONTHS ENDED MARCH 31, 2000:
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, independent retailers and communities, the average
sales per location, and the average price per home sold in each category.
<TABLE>
<CAPTION>
Third Three Months
Fiscal Year 2000 vs 1999
<S> <C>
Retail
Dollar sales + 3.2%
Number of retail centers + 6.3%
Dollar sales per retail center - 2.9%
Price of home + 3.6%
Wholesale
Dollar sales - 15.4%
Number of independent retailers - 2.5%
Dollar sales per independent retailer - 13.2%
Price of home - 0.4%
Communities
Dollar sales + 34.9%
Number of communities + 2.0%
Dollar sales per community + 32.3%
Price of home + 5.6%
</TABLE>
Total revenues for the three months ended March 31, 2000, decreased slightly to
$307 million, as manufactured housing sales decreased 2% to $229 million,
financial services income increased 3% to $60 million and rental and other
income increased 5% to $18 million.
Current conditions in the manufactured housing industry are highly competitive
at both the retail and wholesale levels. This competitive environment, as well
as rising interest rates and general credit tightening, has contributed to
decreased industry and company sales.
Net sales of the Retail group rose 3% to $154 million on a 4% rise in the
average home price, a 6% increase in Company-owned sales centers, offsetting a
6% decrease in the average number of homes sold per sales center.
Net sales of the Manufacturing group decreased 15% to $63 million as the number
of homes sold also decreased 15% to 2,829. The average wholesale price to
independent retailers decreased slightly.
Net sales of the Communities group increased 35% to $12 million as 28% more
homes were sold, and the average home selling price increased 6%.
Within the revenues for the Financial Services segment, interest and loan
servicing revenues increased $5 million, and insurance related revenues rose $1
million. Rental and other income increased 5% on a
9
<PAGE>
9% rise in Communities rental income.
Loans sold through asset-backed securities totaled $271 million, compared to
$281 million during the same period last year.
Financial services interest expense decreased $1.9 million to $.2 million.
Average debt collateralized by installment contract receivables dropped 26% to
$9 million, while the weighted average interest rate moved from 9.98% to 10.34%.
The terms of the debt preclude prepayment by the Company.
Gross profit margins increased to 33.5% from 32.6%. The increase is
attributable to a higher percentage of retail sales in the total sales mix as
well as a shift in mix to multi-section units.
Selling, general and administrative expenses, as a percent of revenues,
increased to 30.0% from 28.7% in the prior year period partially due to
increased set up costs associated with the shift in mix toward multi-section
units and sales of larger homes. Also attributable was an increase in the
number of Company-owned sales centers without a corresponding increase in sales.
The provision for credit losses increased to 2.3% from 1.5% of sales.
The following table sets forth write-off experience for the quarters ended March
31, 2000 and 1999:
<TABLE>
<CAPTION>
Third Quarter Ended
March 31,
2000 1999
----- -----
<S> <C> <C>
Net losses as a percentage of average
loans outstanding (annualized):
All contracts. . . . . . . . . . . . . . . 1.3% 1.5%
Contracts originated by VMF. . . . . . . . 1.1% 1.1%
Contracts acquired from other institutions 2.6% 4.1%
</TABLE>
Liquidity and Capital Resources
- ----------------------------------
Cash at March 31, 2000, was $8 million as compared to $3 million at June 30,
1999. The Company anticipates meeting cash requirements with cash flow from
operations, revolving credit lines, a commercial paper conduit facility, senior
notes, and sales of installment contract and mortgage loan receivables and GNMA
certificates.
At March 31, 2000, and June 30, 1999, the Company had short-term debt
outstanding of $0 and $0 and long-term debt outstanding of $94 million and $96
million, respectively. Short-term debt available consists of $171 million
committed and $66 million uncommitted lines of credit. These lines of credit do
not require collateral and are priced on LIBOR plus rates ranging from 0.10% to
0.50%. The committed credit lines are guaranteed by all significant
subsidiaries of the Company and are governed by various financial covenants
which require maintenance of certain financial ratios.
The Company has $75 million of 6.25% Senior Notes due December 30, 2003, which
are primarily to facilitate the purchase, origination and warehousing of loan
portfolios. The Senior Notes are guaranteed by all significant subsidiaries of
the Company and are governed by various financial covenants which require
maintenance of certain financial ratios.
10
<PAGE>
On January 21, 2000, the Company renewed its committed one year $300 million
commercial paper conduit facility used to facilitate interim sale of
manufactured housing contracts. At March 31, 2000, $84 million was utilized, as
compared to $105 million at June 30, 1999.
New Accounting Pronouncements
- -------------------------------
In March 1998, the AICPA issued Statement of Position 98-1 (SOP 98-1),
Accounting for the Cost of Computer Software Developed or Obtained for Internal
Use. SOP 98-1 is effective for financial statements for the fiscal years
beginning after December 15, 1998. SOP 98-1 provides guidance on accounting for
computer software developed or obtained for internal use including the
requirement to capitalize specified costs and amortization of such costs. The
Company will adopt the provisions of SOP 98-1 in its fiscal year ending June 30,
2000, and does not expect such adoption to have a material effect on the
Company's reported results of operations, financial position, or cash flows.
In April 1998, the AICPA issued SOP 98-5, Reporting on the Costs of Start-Up
Activities, which is effective for fiscal years beginning after December 15,
1998. SOP 98-5 provides guidance on the financial reporting of start-up and
organization costs. It requires start-up activities and organization costs to
be expensed as incurred. The Company will adopt the provisions of SOP 98-5 in
its fiscal year ending June 30, 2000, and does not expect such adoption to have
a material effect on the Company's reported results of operations, financial
position, or cash flows.
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivatives and
Financial Instruments and Hedging Activities. SFAS 133 establishes accounting
and reporting standards of derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. The
adoption of SFAS 133, as amended, is not expected to have a material impact on
the Company's reported results of operations, financial position or cash flows.
Forward Looking Statements
- ----------------------------
Certain statements in this 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 fall generally within
three broad categories consisting of industry factors, management expertise, and
government policy and economic conditions. Industry factors include such
matters as potential periodic inventory adjustments by both captive and
independent retailers, general or seasonal weather conditions affecting sales
and revenues, catastrophic events impacting insurance reserves, cost of labor
and/or raw materials and industry consolidation trends creating fewer, but
stronger competitors capable of sustaining competitive pricing pressures.
Management expertise is affected by management's overall ability to anticipate
and meet consumer preferences, maintain successful marketing programs, continue
quality manufacturing output, keep a strong cost management oversight, and
project stable gain on sale accounting assumptions. Lastly, management has the
least control over government policy and economic conditions such as prevailing
interest rates, capital market liquidity, government monetary policy, stable
regulation of manufacturing standards, consumer confidence, favorable trade
policies, and general prevailing economic and employment conditions.
11
<PAGE>
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) 27. Financial Data Schedule (SEC use only)
(b) Reports on Form 8-K.
Clayton Homes, Inc./Vanderbilt Mortgage & Finance, Inc. Senior
Subordinate Pass-Through Certificates Series 2000A. Filed
February 17, 2000.
Clayton Homes, Inc./Vanderbilt Mortgage & Finance, Inc.
incorporation of financial statements of Clayton Homes, Inc. into
registration statement file no. 333-75405 pertaining to Senior
Subordinate Pass-Through Certificates Series 2000A. Filed
February 25, 2000.
12
<PAGE>
CLAYTON HOMES, INC.
-------------------
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CLAYTON HOMES, INC.
---------------------
(Registrant)
Date: May 12, 2000 /s/ Kevin T. Clayton
-------------- -----------------------
Kevin T. Clayton
Chief Executive Officer and President
Date: May 12, 2000 /s/ Amber W. Krupacs
-------------- -----------------------
Amber W. Krupacs
Vice President Finance
Date: May 12, 2000 /s/ Greg A. Hamilton
-------------- -----------------------
Greg A. Hamilton
Vice President and Controller
13
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CLAYTON HOMES, INC. FOR THE NINE MONTHS ENDED MARCH 31,
2000 AND IS QUALIFED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 8000
<SECURITIES> 33663
<RECEIVABLES> 666682
<ALLOWANCES> 6048
<INVENTORY> 207258
<CURRENT-ASSETS> 0
<PP&E> 396982
<DEPRECIATION> 94259
<TOTAL-ASSETS> 1419939
<CURRENT-LIABILITIES> 97967
<BONDS> 94012
0
0
<COMMON> 13798
<OTHER-SE> 989872
<TOTAL-LIABILITY-AND-EQUITY> 1419939
<SALES> 729584
<TOTAL-REVENUES> 953437
<CGS> 485689
<TOTAL-COSTS> 770479
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 13600
<INTEREST-EXPENSE> 110
<INCOME-PRETAX> 169248
<INCOME-TAX> 62600
<INCOME-CONTINUING> 106648
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 106648
<EPS-BASIC> .76
<EPS-DILUTED> .76
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