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, 1995 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.)
7025 Albert Pick Road, Greensboro, North Carolina 27409
(Address of principal executive offices)
Post Office Box 7386, Greensboro, North Carolina 27417-0386
(Mailing address of principal executive offices)
(910) 855-2400
(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, 1995.
Common Stock, Par Value $.50 Per Share . . . . . . . . . . 22,145,115
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QUARTERLY REPORT ON FORM 10-Q
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Quarter Ended June 30, 1995
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.
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OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(in thousands except per share data)
Three months ended
June 30,
1995 1994
Revenues
Net sales $204,240 $168,740
Financial services income 18,770 15,138
Other income 5,455 3,530
Total revenues 228,465 187,408
Costs and expenses
Cost of sales 148,892 124,531
Selling, general and administrative expenses
Non-financial services 46,455 35,373
Financial services 3,189 1,888
Provision for losses on credit sales 3,293 2,599
Interest expense
Non-financial services 648 295
Financial services 6,096 5,828
Total costs and expenses 208,573 170,514
Income before income taxes 19,892 16,894
Provision for income taxes 7,101 6,025
Net income $ 12,791 $ 10,869
Pro forma information (Note 2)
Income before income taxes $ 19,892 $ 16,894
Provision for income taxes 7,651 6,351
Net income $ 12,241 $ 10,543
Pro forma earnings per share (Note 2)
Primary $ .53 $ .46
Fully diluted $ .53 $ .46
Dividends per share $ .02 $ .02
Average shares outstanding
Primary 22,940 22,928
Fully diluted 22,943 22,962
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OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(in thousands except per share data)
Nine months ended
June 30,
1995 1994
Revenues
Net sales $522,720 $419,632
Financial services income 51,264 44,545
Other income 12,684 8,925
Total revenues 586,668 473,102
Costs and expenses
Cost of sales 386,045 312,350
Selling, general and administrative expenses
Non-financial services 116,789 89,211
Financial services 8,547 5,878
Provision for losses on credit sales 7,551 6,630
Interest expense
Non-financial services 1,662 836
Financial services 16,863 18,023
Total costs and expenses 537,457 432,928
Income before income taxes 49,211 40,174
Provision for income taxes 17,591 13,955
Net income $ 31,620 $ 26,219
Pro forma information (Note 2)
Income before income taxes $ 49,211 $ 40,174
Provision for income taxes 18,896 14,777
Net income $ 30,315 $ 25,397
Pro forma earnings per share (Note 2)
Primary $ 1.32 $ 1.10
Fully diluted $ 1.32 $ 1.10
Dividends per share $ .06 $ .06
Average shares outstanding
Primary 22,975 22,989
Fully diluted 23,025 23,006
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OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
(dollar amounts in thousands except share and per share data)
June 30, September 30,
ASSETS 1995 1994
Cash and cash equivalents $ 6,011 $ 16,974
Receivables, principally installment
contracts, net 339,013 371,287
Inventories:
Manufactured homes 141,970 84,218
Work-in-process, materials and supplies 13,143 12,936
Land/homes under development 1,801 1,534
156,914 98,688
Manufactured housing communities, net 14,493 8,766
Property, plant and equipment, net 79,967 58,459
Deferred income taxes 9,123 7,403
Other assets 28,715 28,820
$ 634,236 $ 590,397
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term borrowings $ 21,000 $ 25,000
Notes and bonds payable 208,675 207,990
Accounts payable and accrued liabilities 82,049 68,284
Reserve for contingent liabilities 2,800 3,827
Other long-term obligations 16,661 8,966
Shareholders' equity
Common stock, $.50 par value; 100,000,000
shares authorized; 22,145,115 and
22,010,004
shares issued and outstanding 11,072 11,005
Additional paid-in capital 148,819 148,125
Retained earnings 145,440 117,200
305,331 276,330
Less: Unearned ESOP shares (2,280) -
303,051 276,330
$ 634,236 $ 590,397
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OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(in thousands)
Nine Months Ended
June 30,
1995 1994
Operating activities
Net income $ 31,620 $ 26,219
Items not requiring (providing) cash
Depreciation and amortization 6,715 4,123
Deferred income taxes (1,720) (3,062)
Provision for losses on credit sales,
net of actual losses 1,589 3,357
Other 344 726
(Increase) in other receivables (18,795) (7,129)
(Increase) in inventories (58,226) (33,573)
Increase in accounts payable and
accrued liabilities 13,765 11,795
Increase in other long-term obligations 7,695 3,665
Cash provided (used) by operations (17,013) 6,121
Installment receivables issued (333,772) (240,690)
Purchase of installment loan portfolio - (604)
Sale of installment loans 353,175 264,758
Receipts on installment receivables 28,632 38,250
Cash provided by operating activities 31,022 67,835
Investing activities
Additions to property, plant and
equipment (26,460) (15,575)
Additions to manufactured housing
communities (5,902) (4,062)
Other (1,409) (300)
Cash used by investing activities (33,771) (19,937)
Financing activities
Net repayments on short-term credit
facilities (4,000) (6,882)
Issuance of notes and bonds payable 29,890 1,150
Payments on notes and bonds (31,485) (36,940)
Cash dividends (1,269) (1,225)
Distributions to S corporation
shareholders (2,111) (648)
Proceeds from exercise of stock options 761 686
Redemption of preferred stock - (1,150)
Cash used by financing activities (8,214) (45,009)
Net increase (decrease) in cash and
cash equivalents (10,963) 2,889
Cash and cash equivalents
Beginning of period 16,974 28,236
End of period $ 6,011 $ 31,125
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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.On June 30, 1995 Oakwood Homes Corporation ("Oakwood")
completed its business combination with Destiny Industries,
Inc. ("Destiny") by issuing 925,000 shares of its common stock
in exchange for all the outstanding common stock of Destiny.
The business combination has been accounted for as a pooling
of interests, and accordingly the accompanying financial
statements reflect the combined results of operations and
financial position of Oakwood and Destiny for all periods
presented.
Prior to the merger, Destiny was a Subchapter S corporation,
and accordingly its results of operations were includable in
the income tax returns of its former shareholders. The pro
forma financial information set forth in the consolidated
statements of income reflects, on a pro forma basis, a
provision for income taxes and net income assuming Destiny's
results of operations had been included in Oakwood's income
tax returns for all periods presented.
Because earnings per share computed on the basis of historical
net income would not reflect income taxes attributable to
Destiny's earnings, historical earnings per share amounts are
not meaningful and accordingly have been omitted. Pro forma
earnings per share have been computed on the basis of pro
forma net income.
3.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 $92 million at
June 30, 1995. 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 $57 million at June 30,
1995.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion includes the results of operations of
Destiny Industries, Inc. for all periods presented. See Note 2
to the Consolidated Financial Statements.
RESULTS OF OPERATIONS
Three months ended June 30, 1995 compared to three months ended
June 30, 1994
The following table summarizes certain key statistics for the
quarters ended June 30, 1995 and 1994 :
1995 1994
Retail sales dollar volume (in millions) $155.2 $112.7
Wholesale sales dollar volume (in millions) 46.0 53.4
Other sales - principally relating to
communities (in millions) 3.0 2.6
Total sales dollar volume (in millions) 204.2 168.7
Gross profit % - integrated operations 29.6% 30.3%
Gross profit % - wholesale operations 19.1% 17.9%
New units sold - retail 4,832 3,742
Used units sold - retail 476 439
New units sold - wholesale 1,740 2,106
Average new single-section sales price -
retail $26,200 $24,100
Average new multi-section sales price -
retail $46,300 $43,200
Average new home sales price - wholesale $26,500 $25,400
Weighted average retail sales centers 186 140
New retail unit sales per sales center 26.0 26.7
Retail sales dollar volume increased 38%, reflecting a 29%
increase in new unit volume and increases of 9% and 7% in the
average new unit sales prices of single-section and multi-section
homes, respectively. New unit volume rose primarily due to a 33%
increase in the weighted average number of sales centers open
during the period, while average new unit sales per sales center
decreased 3%. In the first nine months of fiscal 1995, the
Company opened or acquired 36 new sales centers (including five
in the third quarter) compared to 27 sales centers in the first
nine months of fiscal 1994 (including nine in the third quarter).
Total new retail sales dollars at sales centers open more
than one year rose 8% in the quarter, while same store unit sales
increased 1%. The year-over-year same store sales comparison
improved from the second quarter. The Company introduced
several new homes at price points on the low end of the Company's
traditional range of product offerings in an effort to ensure
that the Company's products are responsive to consumer needs.
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The increase in the average new unit retail sales price
reflects increases in the cost of certain raw materials and price
increases implemented to recover increased costs associated with
new wind and thermal standards adopted by the Department of
Housing and Urban Development during calendar 1994. In addition,
sales in the Southwest, where the average home size is somewhat
larger than in the Southeast, comprised 39% of total new
manufactured housing sales dollars in the third quarter of 1995
compared to 29% last year.
Wholesale sales dollar volume (which represents sales by
Golden West and Destiny to independent dealers) declined by 14%,
reflecting a 17% decrease in unit volume offset by a 4% increase
in the average selling price. The decline in wholesale unit
volume is due to a softer market in the Pacific Northwest
compared to last year, as a result of increased industry capacity
and reduced demand for the relatively high price point products
traditionally manufactured by Golden West as a result of
increases in interest rates. In late March 1995, Golden West
introduced several new home models at price points lower than
those traditionally targeted by Golden West in order to broaden
its product line, to lessen its dependence on higher end homes
and to increase the attractiveness of exclusive dealer
arrangements. In addition, Destiny's single-section unit volume
declined 25% from 1994, while the average single-section selling
price increased 29%. During the third quarter of fiscal 1994
Destiny produced a large number of park model homes (which
typically contain less than 400 square feet of living space and
which are not designed for year-round habitation) which wholesale
for between $5,000 and $6,000 per unit. Because of improving
conditions in Destiny's markets, Destiny did not produce park
models in the third quarter of fiscal 1995, focusing instead on
traditional manufactured housing products which carry higher
gross margins.
In addition, sales to independent dealers have declined as
the Company increases its utilization of Golden West and Destiny
manufactured product to source Company owned retail sales
centers. During the quarter ended June 30, 1995, Golden West and
Destiny shipped 158 homes to Oakwood sales centers; 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, including the manufacturing gross profit earned by
Golden West and Destiny on its sales to the Oakwood retail
organization. Gross profit margin - integrated operations was
29.6% in the current period compared to 29.4% in the second
quarter and 30.3% in the third quarter last year. The decrease
from last year reflects a slight decline in gross margins at
retail, which decreased to 23.5% from 23.6% in the third quarter
last year and from 23.8% in the second quarter of fiscal 1995, as
well as effects of starting up new manufacturing facilities.
Approximately 77% of the total new unit retail sales volume was
manufactured by the Company in the third quarter of fiscal 1995,
compared to 75% in the third quarter one year ago. However,
because of manufacturing inefficiencies associated with plant
start-ups, production sourced from new plants had virtually no
positive impact on consolidated gross margins. To the extent
production levels at new manufacturing facilities increase at a
faster rate than new unit sales, and manufacturing costs at new
plants can be controlled, margins should increase as retail unit
sales are increasingly sourced from Company owned manufacturing
facilities. During the current period, the Company's five North
Carolina plants operated at or near capacity while
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production levels at the Company's four new manufacturing facilities
increased to 47% of capacity for the quarter, up from 34% in the
second quarter and 20% in the first quarter.
Wholesale gross profit margins increased to 19.1% in the
current quarter from 17.9% last year, primarily due to Destiny's
shift away from low margin park models, a reduction in Golden
West's product liability, property and workers' compensation
insurance costs and reduced costs for certain materials and
components resulting from taking advantage of Oakwood's
purchasing power with certain vendors. These savings were
partially offset by the effects of a shift in Golden West's
product mix toward lower price point homes which typically carry
lower margins, inefficiencies at Golden West's Sacramento plant
(which was sold during the quarter as more fully described below)
and start-up costs incurred in preparation for a plant expansion
at the Albany, Oregon, facility. During the third quarter of
fiscal 1995, Golden West's Albany plant operated at approximately
90% of capacity, as compared to full capacity in the third
quarter of fiscal 1994. The decline in utilization reflects the
softening dealer demand discussed above. However, the
introduction of products at new price points contributed to an
improvement in plant utilization from the second quarter, and the
plant currently is running at capacity. Management expects to
begin production at a new line in Albany during the fourth
quarter which will increase the plant's capacity by approximately
40%. The Company intends to use the new line to produce homes
which sell at lower price points than those traditionally
manufactured in Oregon. Utilization at the Perris, California
plant increased during the quarter to 69% from 56% last year,
principally as the result of producing new models for Oakwood
retail centers.
Financial services income, which consists primarily of
interest income on installment sale contracts retained by the
Company, loan servicing fees and earnings on the Company's
retained interests in REMIC securitizations accounted for as
sales of receivables, increased 24% to $18.8 million from $15.1
million last year. Financial services income is not increasing
proportionately with the increase in the Company's installment
sale contract servicing portfolio because the Company's REMIC
securitizations since fiscal 1993 have been structured as sales
of receivables rather than as collateralized borrowings. The
effect on the financial statements of this structural change is
to cause the Company's earnings on the retained interests in
REMICs structured as sales of receivables to be included as a
single amount within financial services income, as compared to
presenting interest income on the installment sale contracts
conveyed to the REMIC as interest income and interest expense on
REMIC interests purchased by investors as interest expense in the
consolidated statement of income. Structuring REMIC
securitizations as sales of receivables will cause slower rates
of growth in interest income and interest expense compared to
that which would occur if such securitizations were structured as
collateralized borrowings. In addition, income from retained
REMIC interests is increasing more slowly than would otherwise be
the case because the Company generally is selling a larger share
of the interests in its REMICs in the current year than in prior
years. See Liquidity and Capital Resources below. Credit sales
represented approximately 88% and 83% of the Company's retail
unit volume in fiscal 1995 and 1994, respectively. The Company's
credit subsidiary captured approximately 91% of loan originations
in the third quarter of fiscal 1995 compared to 93% in the prior
year period.
The majority of the 55% increase in other income is related
to increased insurance commissions resulting from the overall
increase in unit sales.
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Non-financial services selling, general and administrative
expenses rose to 22.7% of net sales compared to 21.0% of net
sales last year. Non-financial selling, general and
administrative expenses in 1995 include a one-time charge of $1.2
million ($738,000 after tax, or $.03 per share) for costs
associated with the sale during the quarter of Golden West's
Sacramento, California, facility and costs resulting from
staffing and overhead reductions at Golden West's Santa Ana,
California, headquarters. Non-financial selling, general and
administrative expenses also includes a one-time charge of
$150,000 ($.01 per share) for costs associated with the Destiny
merger. Excluding the one-time items, non-financial selling,
general and administrative expenses rose 28% to 22.1% of net
sales from 21.0% last year. These costs increased
disproportionately to sales as a result of increased accruals for
long-term management incentive compensation payable based upon
the level of Company profitability for fiscal 1994 through 1996,
costs associated with the Company's ongoing business process
reengineering projects, and increased headcount levels,
particularly in the management information systems, human
resources and internal audit areas. Financial services costs
rose 69% on a 42% increase in the average number of loans
serviced during the period and a 66% increase in total credit
application volume. This somewhat disproportionate growth in
costs is largely due to increased headcount in the credit and
collections areas as the Company positions itself to remain ahead
of the curve in terms of staffing levels and training in advance
of portfolio volume growth.
The provision for losses on credit sales increased 27% over
the prior period. The Company provides for estimated future
losses on current period retail credit sales financed by the
Company. The amounts provided are based on the Company's
historical loss experience, current repossession trends and costs
and management's assessment of the current credit quality of the
installment sale contract portfolio. Accordingly, the provision
for losses on credit sales is not necessarily directly related to
current period sales. Repossessions as a percentage of the
average number of contracts outstanding on an annualized basis
were 3.21% in fiscal 1995 and 3.12% in fiscal 1994.
Non-financial services interest expense increased 120% from
$295,000 to $648,000 due to interest expense associated with the
Fort Morgan, Colorado manufacturing plant, interest on $12
million of permanent financing closed during the second quarter
relating to other new manufacturing facilities and interest costs
associated with the purchase of a corporate aircraft.
Financial services interest expense includes interest
expense associated with long-term debt secured by installment
sale contracts and interest associated with short-term line of
credit borrowings used to fund the warehousing of loans prior to
their securitization. Financial services interest expense
increased 5% due to higher interest expense associated with short-
term borrowings which was not fully offset by a decrease in
interest expense on declining and retired long-term debt
balances. The increase in short-term interest expense reflects
higher average outstanding balances on the lines of credit due to
the significant increase in loan volume, as well as higher short-
term interest rates. Long-term financial services interest
expense is expected to continue to decline as the Company retires
its outstanding debt secured by installment sale contracts.
The Company's effective income tax rate was 38.5% in fiscal
1995 compared to 37.6% in fiscal 1994. The increase in the
effective tax rate is due primarily to higher state income taxes.
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Nine months ended June 30, 1995 compared to nine months ended
June 30, 1994
The following table summarizes certain key statistics for the
nine months ended June 30, 1995 and 1994 :
1995 1994
Retail sales dollar volume (in millions) $372.5 $267.3
Wholesale sales dollar volume (in millions) 142.4 146.8
Other sales - principally relating to
communities (in millions) 7.8 5.5
Total sales dollar volume (in millions) 522.7 419.6
Gross profit % - integrated operations 29.4% 30.5%
Gross profit % - wholesale operations 18.0% 16.9%
New units sold - retail 11,654 9,182
Used units sold - retail 1,439 1,175
New units sold - wholesale 5,540 5,904
Average new single-section sales price
- retail $25,700 $23,600
Average new multi-section sales price
- retail $46,200 $42,200
Average new home sales price - wholesale $25,700 $24,900
Weighted average sales centers 174 133
New unit sales per sales center 67.0 69.0
Retail sales dollar volume increased 39%, reflecting a 27%
increase in new unit volume and a 9% increase in the average new
unit sales price of both single-section and multi-section homes.
New unit volume rose primarily due to a 31% increase in the
weighted average number of sales centers open during the period.
Average new unit sales per sales center decreased slightly with
the addition of 36 new sales centers during the period compared
to 27 centers in 1994. New sales centers typically require a
period of several months to reach normalized unit sales levels.
Management believes that the increased number of immature new
Company owned sales centers, an increased number of competitors
at retail, and the siting of many new sales centers in markets
which, although attractive, are unlikely to duplicate the
performance of markets targeted in earlier years, are the
principal causes of the decline in average new unit sales per
sales center.
Total new retail sales dollars at sales centers open more
than one year rose 6% in the period, while same store unit sales
were down 2%. The weakness in same store unit sales was
primarily related to the focus on sales center expansion,
particularly in the first and second quarters, as well as
increased competitive pressures discussed above.
The increase in the average new unit sales price reflects
increases in the cost of certain raw materials and price
increases implemented to recover increased costs associated with
new wind and thermal standards adopted by the Department of
Housing and Urban Development. Sales in the Southwest, where the
average home size is somewhat larger than in the Southeast,
comprised 38% of total new manufactured housing sales dollars in
1995 compared to 26% last year.
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Wholesale sales dollar volume (which represents sales by
Golden West and Destiny to independent dealers) decreased 3%,
reflecting a 6% decrease in unit volume, offset by a 3% increase
in the average selling price. This decline in unit volume is
primarily related to Destiny's shift in product mix away from
park models and decreased backlog in the Pacific Northwest
coupled with the increase in utilization of Golden West and
Destiny product to source Company owned sales centers as
discussed above in the quarterly results section.
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 margins - integrated operations declined
to 29.4% in the current period from 30.5% in the prior year. The
reduction in gross margins reflects the effects of starting up
new manufacturing facilities and a reduction in the percentage of
new homes sold at retail manufactured by Company owned plants, as
well as the results of certain relatively new sales centers where
gross margins attained at retail did not meet expectations.
Management has provided additional training of retail personnel
in the affected markets in order to improve retail margins in
those areas and also implemented a new prospect tracking and
follow-up program in the second quarter. Approximately 75% of
the total new unit retail sales volume was manufactured by the
Company in the first nine months of fiscal 1995 compared to 76%
in 1994. To the extent production levels at new manufacturing
facilities during the balance of the year increase at a faster
rate than new unit sales, margins should increase as retail unit
sales are increasingly sourced from Company owned manufacturing
facilities.
Wholesale gross profit margins increased to 18.0% in the
current period from 16.9% last year. The increase in margins
over the prior year is primarily due Destiny's change in product
mix as discussed above and reductions in Golden West's insurance
and materials costs, as well as a one-time favorable premium
adjustment in the second quarter. These improvements were
partially offset by the effects of a shift in product mix at
Golden West towards less expensive homes which are typically
ordered with fewer high margin option packages and start up costs
associated with bringing new capacity on line at Albany. During
the first nine months of fiscal 1995, Golden West's Albany,
Oregon plant operated at approximately 92% of capacity, as
compared to full capacity for the same period in the prior year.
The decline in utilization reflects the softening dealer demand
discussed above. Utilization at Golden West's Perris, California
increased during the period to 63% from 49% last year,
principally due to the production of new models for Oakwood
retail sales centers, including lower priced multi-sections
introduced in January 1995.
Financial services income, which consists primarily of
interest income on installment sale contracts retained by the
Company, loan servicing fees and earnings on the Company's
retained interests in REMIC securitizations accounted for as
sales of receivables, increased 15% to $51.3 million from $44.5
million last year. Credit sales represented approximately 86%
and 85% of the Company's retail unit volume in fiscal 1995 and
1994, respectively. The Company's credit subsidiary captured
approximately 92% of loan originations in the first nine months
of fiscal 1995 compared to 94% in 1994.
The majority of the 42% increase in other income is related
to increased insurance commissions resulting from the overall
increase in unit sales.
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Total selling, general and administrative expenses increased
32% from $95.1 million (20.1% of revenues) in fiscal 1994 to
$125.3 million (21.4% of revenues) in fiscal 1995. Exclusive of
the one-time charges described in the quarterly discussion above,
non-financial selling, general and administrative expenses rose
29% to 22.1% of net sales compared to 21.3% of net sales last
year. This increase is due to costs associated with new sales
centers which have not yet achieved normal revenue levels,
general and administrative expenses associated with the four new
manufacturing plants, increased accruals for long-term management
incentive compensation, costs associated with ongoing
reengineering projects and increased headcount (as more fully
described in the quarterly discussion above). Financial services
costs rose 45% on a 44% increase in the average number of loans
serviced during the period and a 51% increase in total credit
application volume.
The provision for losses on credit sales increased 14% over
the prior period. As described in the discussion of third
quarter results above, the provision for losses on credit sales
is not necessarily directly related to current period sales.
Repossessions as a percentage of the average number of contracts
outstanding on an annualized basis were 3.11% in fiscal 1995 and
3.04% in fiscal 1994.
Non-financial services interest expense rose 99% from
$836,000 to $1,662,000 due to interest costs associated with
second quarter capital expenditures as described in the
discussion of the third quarter's results above.
Financial services interest expense decreased because the
Company is now structuring its REMIC securitizations as sales of
receivables instead of as collateralized borrowings. Financial
services interest expense is expected to continue to decline as
the Company retires its outstanding debt secured by installment
sale contracts.
The Company's effective income tax rate was 38.4% in fiscal
1995 compared to 37.3% in fiscal 1994 (excluding in 1994 a
$214,000 reduction in income tax expense arising from the
adoption of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ). The increase in the effective
tax rate is primarily due to higher state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
The Company's financial position at June 30, 1995 reflects
the normal seasonal increase in inventories in preparation for
the typically strong fourth quarter selling season. In addition,
the Company's retail expansion has resulted in an increased
investment in inventories. The increase in inventories since
September 30, 1994 reflects stocking levels at the 36 new sales
centers opened during the first nine months, normal seasonal
patterns at sales centers open at year end, manufacturing
inventories at new plants and an increase in unit costs
principally due to costs of complying with HUD wind and thermal
standards and a shift in product mix to higher end homes,
primarily in the Southwest. Short-term borrowings principally
reflect outstanding advances on the Company's warehouse line of
credit used to finance installment sale contracts prior to
securitization or other permanent financing.
14
<PAGE>
Receivables, which consist principally of installment sale
contracts and retained interests in REMIC securitizations,
decreased primarily as a result of the Company's structuring of
installment sale contract securitizations as sales of receivables
rather than as collateralized borrowings. During the nine months
ended June 30, 1995, the Company originated approximately $334
million of installment sale contracts and sold approximately $353
million of installment sale contracts via REMIC securitizations
and GNMA pools. The Company retained an average 1.5% interest in
the REMIC securitizations completed during the first nine months
of fiscal 1995. Management believes that financing for
installment sale contracts remains readily available and
anticipates securitizing installment sale contracts using REMICs
approximately every four months.
During the third quarter, the Company renegotiated its
installment loan warehouse facility, increasing the available
line from $110 million to $130 million and reducing the interest
rate from LIBOR plus 1.625% to LIBOR plus 1%. The Company has
also renegotiated its line of credit secured by inventory,
increasing the line to $75 million from $50 million and also
decreasing the interest rate to LIBOR plus 1% from LIBOR plus
1.75%. Management believes that the availability of permanent
financing for installment sale contracts, the Company's short-
term credit facilities and cash generated by operations are
sufficient to provide for the Company's short-term liquidity
needs.
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 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 has generally been selling a larger portion of its REMIC
securitizations in the current year than in prior years, and may
decrease the level of its retained interests in both future and
past securitizations.
15
<PAGE>
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
(27.1) Financial Data Schedule for the quarter ended June 30,
1995 (filed in electronic format only)
(27.2) Restated Financial Data Schedule for the fiscal year
ended September 30, 1995 (filed in electronic format
only)
(27.3) Restated Financial Data Schedule for the quarter ended
December 31, 1994 (filed in electronic format only)
(27.4) Restated Financial Data Schedule for the quarter ended
March 31, 1995 (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, 1995.
Items 1, 2, 3, 4 and 5 are inapplicable and are omitted.
16
<PAGE>
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 10, 1995
OAKWOOD HOMES CORPORATION
BY: s/ Douglas R. Muir
Douglas R. Muir
Senior Vice President
(Chief Accounting Officer)
(Duly Authorized Officer)
17
<PAGE>
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, 1995 1-7444
OAKWOOD HOMES CORPORATION
EXHIBIT INDEX
Exhibit No. Exhibit Description
4 Agreement to Furnish Copies of Instruments
with respect to Long-Term Debt (page 19 of
the sequentially numbered pages)
11 Statement re Computation of Earnings Per
Share (page 20 of the sequentially numbered
pages)
27.1 Financial Data Schedule for the quarter ended
June 30, 1995 (filed in electronic format only)
27.2 Restated Financial Data Schedule for the fiscal year
ended September 30, 1994 (filed in electronic format
only)
27.3 Restated Financial Data Schedule for the quarter ended
December 31, 1995 (filed in electronic format only)
27.4 Restated Financial Data Schedule for the quarter ended
March 31, 1995 (filed in electronic format only)
18
<PAGE>
<PAGE>
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/ Douglas R. Muir
Douglas R. Muir
Senior Vice President
<PAGE>
EXHIBIT 11
OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF EARNINGS PER SHARE
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Weighted average number of common
shares outstanding 22,121 21,995 22,072 21,986
Add: Dilutive effect of stock
options, computed using the 918 933 936 1,003
treasury stock method
Less: Unearned ESOP shares (99) - (33) -
Weighted average number of common
and common equivalent shares
outstanding 22,940 22,928 22,975 22,989
Pro forma net income $ 12,241 $ 10,543 $ 30,315 $ 25,397
Pro forma earnings per common
share - primary $ .53 $ .46 $ 1.32 $ 1.10
Weighted average number of common
shares outstanding 22,121 21,995 22,072 21,986
Add: Dilutive effect of stock
options, computed using
the treasury stock method 921 967 986 1,020
Less: Unearned ESOP shares (99) - (33) -
Weighted average number of common
and common equivalent shares 22,943 22,962 23,025 23,006
outstanding
Pro forma net income $12,241 $10,543 $30,315 $25,397
Pro forma earnings per common
share - fully diluted .53 .46 1.32 1.10
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER ENDED JUNE 30,
1995 FILED AS PART OF THE REGISTRANT'S FORM 10-Q FOR THE QUARTER ENDED JUNE 30,
1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FORM 10-Q
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 6,011
<SECURITIES> 0
<RECEIVABLES> 355,488
<ALLOWANCES> 16,475
<INVENTORY> 156,914
<CURRENT-ASSETS> 0
<PP&E> 109,059
<DEPRECIATION> 29,092
<TOTAL-ASSETS> 634,236
<CURRENT-LIABILITIES> 103,049
<BONDS> 208,675
<COMMON> 11,072
0
0
<OTHER-SE> 291,979
<TOTAL-LIABILITY-AND-EQUITY> 634,236
<SALES> 522,720
<TOTAL-REVENUES> 586,668
<CGS> 386,045
<TOTAL-COSTS> 511,381
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 7,651
<INTEREST-EXPENSE> 18,525
<INCOME-PRETAX> 49,211
<INCOME-TAX> 17,591
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,620
<EPS-PRIMARY> 1.32
<EPS-DILUTED> 1.32
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED
SEPTEMBER 30, 1994 FILED AS PART OF THE REGISTRANT'S FORM 10-K FOR
THE QUARTER ENDED SEPTEMBER 30, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FORM 10-Q.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-START> OCT-01-1993
<PERIOD-END> SEP-30-1994
<CASH> 16,974
<SECURITIES> 0
<RECEIVABLES> 385,146
<ALLOWANCES> 13,859
<INVENTORY> 98,688
<CURRENT-ASSETS> 0
<PP&E> 83,786
<DEPRECIATION> 25,327
<TOTAL-ASSETS> 590,397
<CURRENT-LIABILITIES> 93,284
<BONDS> 207,990
<COMMON> 11,005
0
0
<OTHER-SE> 265,325
<TOTAL-LIABILITY-AND-EQUITY> 590,397
<SALES> 595,127
<TOTAL-REVENUES> 668,169
<CGS> 441,364
<TOTAL-COSTS> 578,004
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 9,044
<INTEREST-EXPENSE> 24,409
<INCOME-PRETAX> 56,709
<INCOME-TAX> 20,009
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,700
<EPS-PRIMARY> 1.55
<EPS-DILUTED> 1.55
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER ENDED
DECEMBER 31, 1994 FILED AS PART OF THE REGISTRANT'S FORM 10-Q FOR
THE QUARTER ENDED DECEMBER 31, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FORM 10-Q.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 4,026
<SECURITIES> 0
<RECEIVABLES> 333,969
<ALLOWANCES> 14,408
<INVENTORY> 124,548
<CURRENT-ASSETS> 0
<PP&E> 97,385
<DEPRECIATION> 26,266
<TOTAL-ASSETS> 565,978
<CURRENT-LIABILITIES> 71,160
<BONDS> 196,280
<COMMON> 11,024
0
0
<OTHER-SE> 273,545
<TOTAL-LIABILITY-AND-EQUITY> 565,978
<SALES> 149,489
<TOTAL-REVENUES> 168,910
<CGS> 112,024
<TOTAL-COSTS> 147,883
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,932
<INTEREST-EXPENSE> 5,850
<INCOME-PRETAX> 13,245
<INCOME-TAX> 4,786
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,459
<EPS-PRIMARY> .36
<EPS-DILUTED> .36
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER ENDED
MARCH 31, 1995 FILED AS PART OF THE REGISTRANT'S FORM 10-Q FOR
THE QUARTER ENDED MARCH 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FORM 10-Q.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> MAR-31-1995
<CASH> 3,376
<SECURITIES> 0
<RECEIVABLES> 373,168
<ALLOWANCES> 14,997
<INVENTORY> 149,187
<CURRENT-ASSETS> 0
<PP&E> 102,825
<DEPRECIATION> 27,689
<TOTAL-ASSETS> 633,930
<CURRENT-LIABILITIES> 106,014
<BONDS> 219,653
<COMMON> 11,050
0
0
<OTHER-SE> 281,326
<TOTAL-LIABILITY-AND-EQUITY> 633,930
<SALES> 318,480
<TOTAL-REVENUES> 358,203
<CGS> 237,153
<TOTAL-COSTS> 312,845
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 4,258
<INTEREST-EXPENSE> 11,781
<INCOME-PRETAX> 29,319
<INCOME-TAX> 10,490
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,829
<EPS-PRIMARY> .79
<EPS-DILUTED> .79
</TABLE>
