SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
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 of incorporation) (I.R.S. Employer
Identification No.)
7025 Albert Pick, Suite 301, Greensboro, NC
(Address of principal executive offices)
Post Office Box 7386, Greensboro, NC 27417-0386
(Mailing address of principal executive offices)
Registrant's telephone number, including area code: 910/855-2400
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
------------------- ----------------
Common Stock, Par Value New York Stock Exchange, Inc.
$.50 Per Share
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.50 Per Share
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 [ ]
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The aggregate market value of shares of the Registrant's $.50 par value
Common Stock, its only outstanding class of voting stock, held by non-affiliates
as of December 1, 1995 was $875,394,271.
The number of issued and outstanding shares of the Registrant's $.50 par
value Common Stock, its only outstanding class of Common Stock, as of December
1, 1995 was 22,264,493 shares.
The indicated portions of the following documents are incorporated by
reference into the indicated parts of this Annual Report on Form 10-K:
Parts Into Which
Incorporated Documents Incorporated
---------------------- ------------
Annual Report to Shareholders for Parts I and II
for the fiscal year ended
September 30, 1995
Proxy Statement for Annual Meeting Parts I and III
of Shareholders to be held
January 31, 1996
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
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Item 1 - Business
The Registrant, which was founded in 1946, designs, manufactures and
markets manufactured homes and finances the majority of its sales. The
Registrant operates five manufacturing plants in North Carolina, four in
Georgia, three in Texas, and one each in California, Colorado, Oregon and
Tennessee. The Registrant's manufactured homes are sold at retail through 198
Registrant owned and operated sales centers located primarily in the
southeastern and southwestern United States and to approximately 365 independent
retailers located primarily in the western and southern United States. The
Registrant also develops, manages and sells manufactured housing communities and
earns commissions on insurance written for the Registrant's customers.
On June 30, 1995, the Registrant acquired Destiny Industries, Inc.
("Destiny"), a manufacturer of manufactured homes headquartered in Georgia with
four manufacturing facilities. Destiny sells its homes primarily through
approximately 195 independent retailers located primarily in Georgia, Alabama,
Mississippi, Florida and South Carolina as well as in nine other states. The
Registrant has accounted for the Destiny acquisition as a pooling of interests.
The information set forth in this Form 10-K reflects the acquisition of Destiny
and includes information regarding the business and operations of Destiny.
Manufactured Homes
The Registrant designs and manufactures several lines of homes, each with
a variety of floor plans and decors. Each home contains a living room, dining
area, kitchen, two, three or four bedrooms and one or two bathrooms, and is
equipped with a range and oven, refrigerator, hot water heater and central
heating. A large number of homes are furnished with a sofa and matching chairs,
dinette set, coffee and end tables, carpeting, lamps, draperies, curtains and
screens. Optional furnishings and equipment include beds, a fireplace, washing
machine, dryer, microwave oven, dishwasher, air conditioning, intercom, wet bar,
vaulted ceilings, skylights, hardwood cabinetry and energy conservation items.
The homes manufactured by the Registrant are sold under the registered
trademarks "Oakwood," "Freedom," Golden West," "Villa West" and "Peachtree" and
the tradenames "Victory," "Country Estate," "Bradbury," "Winterhaven," "Golden
Villa," "First Place," "Omni," "Hyatt," "Command" and "Destiny."
The Registrant's manufactured homes are constructed and furnished at the
Registrant's manufacturing facilities and transported on wheels to the homesite.
The Registrant's manufactured homes are generally occupied as permanent
residences but can be transported on wheels to new homesites. The Registrant's
homes are defined as "manufactured homes" under the United States Code, and
formerly were defined as "mobile homes."
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The Registrant manufactures 14-foot and 16-foot wide single section homes
and 24-foot and 28-foot wide multi-section homes consisting of two floors which
are joined at the homesite. The Registrant also manufactures a limited number of
multi-section homes consisting of three or four floors. The Registrant's homes
range from 50 feet to 80 feet in length. The Registrant's single-section homes
are sometimes placed on rental lots in communities of similarly constructed
homes.
The Registrant manufactures homes at sixteen plants located in Moultrie,
Georgia (4); Richfield (2); Rockwell (2) and Pinebluff, North Carolina;
Hillsboro (2) and Ennis, Texas; Perris, California; Albany, Oregon; Fort Morgan,
Colorado; and Pulaski, Tennessee. In fiscal 1995, the Registrant added a
production line at its Albany, Oregon facility as well as Destiny's four Georgia
facilities. During fiscal 1995 the Registrant sold its Sacramento, California
facility because of inadequate demand in that area.
The Registrant purchases components and materials used in the manufacture
of its homes on the open market and is not dependent upon any particular
supplier. The principal raw materials purchased by the Registrant for use in the
construction of its homes are lumber, steel, aluminum, galvanized pipe,
insulating materials, drywall and plastics. Steel I-beams, axles, wheels and
tires, roof and ceiling materials, home appliances, plumbing fixtures,
furniture, floor coverings, windows, doors and decorator items are purchased or
fabricated by the Registrant and are assembled and installed at various stages
on the assembly line. Construction of the manufactured homes and the plumbing,
heating and electrical systems installed in them must comply with the standards
set by the Department of Housing and Urban Development ("HUD") under the
National Manufactured Home Construction and Safety Standards Act of 1974. These
standards were revised effective July 1, 1994 to require stricter wind load and
set-up standards, especially with respect to homes sold in certain coastal and
other areas which are commonly subject to severe wind conditions. HUD has also
issued new thermal standards for manufactured housing, effective October 26,
1994, relating principally to insulation ratings and use of storm windows. See
"Regulation."
The Registrant furnishes to each purchaser of a new home manufactured by
the Registrant a one or five year limited warranty against defects in materials
and workmanship, except for equipment and furnishings supplied by other
manufacturers which are frequently covered by the manufacturers' warranties.
Sales
At September 30, 1995, the Registrant sold manufactured homes through 198
Registrant owned and operated sales centers located in 23 states primarily in
the southeast and southwest. See "Manufactured Home Sales Centers" at page 15
herein. The Registrant opened
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48 new sales centers and closed two sales centers in fiscal 1995. Each of the
Registrant's sales centers is assigned Registrant-trained sales personnel. Each
salesperson is paid a commission based on the gross margin of his or her sales,
and each sales manager is paid a commission based on the profits of the sales
center. These commissions may be reduced if certain operational objectives are
not met.
The Registrant operates its sales centers under the names Oakwood(R)
Mobile Homes, Freedom Homes(R), Victory Homes and Golden Homes(R). At its sales
centers, the Registrant sells homes manufactured by it as well as by other
manufacturers. The Registrant uses purchases from independent manufacturers to
supplement its manufacturing. In fiscal 1995, approximately 71% of the
Registrant's total dollar volume of sales represented sales of new homes.
Approximately 74% of the Registrant's retail sales of new homes were homes
manufactured by the Registrant and 26% represented sales of new homes at retail
manufactured by others. The Registrant has not had difficulty purchasing homes
from independent manufacturers and believes an adequate supply of such homes is
available to meet its needs.
The Registrant also sells used homes acquired in trade-ins. At September
30, 1995, the Registrant's inventory of used homes was 728 homes as compared to
665 homes at September 30, 1994. Used homes in inventory do not include
repossessed units.
The Registrant also sells its homes to approximately 365 independent
retailers located primarily in California, Oregon, Washington, Georgia, Alabama,
Mississippi, Florida and South Carolina as well as in 17 other western and
southern states. Sales to these independent retail dealers accounted for
approximately 25% of the Registrant's total dollar volume of sales in fiscal
1995.
During recent years, the Registrant has placed increased emphasis on the
sale of multi-section homes. In fiscal 1995, the Registrant's retail sales of
new multi-section homes were 28% of the total number of new homes sold at
retail, as compared to 25% in fiscal 1994.
The retail sales price for new single section homes sold by the Registrant
in fiscal 1995 generally ranged from $12,000 to $45,000 with a mean sales price
of approximately $25,900. The retail sales price of multi-section homes sold by
the Registrant generally ranged from $24,000 to $77,000, with a mean sales price
of approximately $46,500.
The Registrant's sales have traditionally been higher in the period from
late spring through early fall than in the winter months. Because a substantial
majority of the homes manufactured by the Registrant are sold directly to retail
customers, the Registrant's backlog of orders is not material.
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Retail Sales Financing
A significant factor affecting sales of manufactured homes is the
availability and terms of financing. Approximately 86% of the Registrant's
retail unit sales in fiscal 1995 were financed by installment sale contracts
arranged by the Registrant, each of which generally required a minimum 5%
downpayment and provided for equal monthly payments generally over a period of
seven to 25 years. In fiscal 1995, of the aggregate loan originations relating
to retail unit sales and dispositions of repossessed homes, 92% were installment
sales financed and warehoused by the Registrant for investment or later sale and
8% were installment sales financed by others without recourse to the Registrant.
The remaining 14% of retail unit sales were paid for with cash. At September 30,
1995, the Registrant held installment sale contracts with a principal balance of
approximately $413,777,000 and serviced an additional $787,454,000 principal
balance of installment sale contracts the substantial majority of which it
originated and securitized. A substantial majority of the installment sale
contracts held by the Registrant are pledged to financial institutions as
collateral for loans to the Registrant.
The Registrant from time to time considers the purchase of manufactured
home installment sale portfolios originated by others as well as servicing
rights to such portfolios. There were no such purchases in fiscal 1995.
The Registrant is responsible for the processing of credit applications
with respect to customers seeking financing. The Registrant uses a credit
scoring system, updated in fiscal 1995, to enhance its credit decision-making
process. The most significant criteria in the system are the stability, income
and credit history of the borrower. This system requires a minimum credit score
before the Registrant will consider underwriting a contract. This system allows
the Registrant the ability to standardize its credit-making decisions.
The Registrant retains a security interest in any home it finances. In
addition, the Registrant sometimes obtains a security interest in the real
property on which a home is attached.
The Registrant is responsible for all collection and servicing activities
with respect to installment sale contracts it owns, as well as with respect to
certain contracts which the Registrant originated and sold. The Registrant
receives servicing fees with respect to installment sale contracts which it has
sold but continues to service.
The Registrant's ability to finance installment sale contracts is
dependent on the availability of funds to the Registrant. The Registrant obtains
funds to finance installment sale contracts primarily through sales of REMIC
Trust certificates to institutional
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investors. During fiscal 1995, the Registrant sold $351,478,000 million of REMIC
securities. The Registrant generally has no potential liability or credit
exposure with respect to securitized contracts except for breaches of
representations and warranties, to the extent of any retained interests in a
REMIC or with respect to required servicer advances.
The Registrant also obtains financing from loans insured by the FHA and
VA. These installment sale contracts are permanently funded through the GNMA
pass-through program, under which the Registrant issues obligations guaranteed
by GNMA. During fiscal 1995, the Registrant issued approximately $11 million in
obligations guaranteed by GNMA. Issuance of VA and FHA insured obligations
minimizes the Registrant's exposure to losses on credit sales.
The Registrant uses short-term credit facilities and internally generated
funds to support installment sale contracts until a pool of installment sale
contracts is accumulated to provide collateral for long-term financing which is
generally at fixed rates.
The Registrant also provides permanent financing for certain of its homes
sold by independent dealers. During fiscal 1995, the Registrant financed
approximately $18 million of the retail unit sales of its homes by independent
dealers. The Registrant expects to finance an increased percentage of such sales
as it integrates recent acquisitions into its operations.
In the past, the Registrant sold a significant number of installment sale
contracts to unrelated financial institutions with full recourse to the
Registrant in the event of default by the buyer. The Registrant receives
endorsement fees from financial institutions for installment sale contracts it
has placed with them on such a basis. Such fees totalled $1,151,000 in fiscal
1995. The Registrant's contingent liability on installment sale contracts sold
to financial institutions with full and limited recourse was approximately $95
million at September 30, 1995.
Retailer Financing
Substantially all of the independent retailers who purchase homes from the
Registrant finance new home inventories through wholesale credit lines provided
by third parties under which a financial institution provides the retailer with
a credit line for the purchase price of the home and maintains a security
interest in the home as collateral. A wholesale credit line is used by the
retailer to finance the acquisition of its display models, as well as to finance
the initial purchase of a home from a manufacturer until the home buyers obtain
permanent financing or otherwise pay the dealer for the installed home. In
connection with the wholesale financing arrangement, the financial institution
may
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require the Registrant to enter into a repurchase agreement with the financial
institution under which the Registrant is obligated, upon default by the
retailer, to repurchase its homes. Under the terms of such repurchase
agreements, the Registrant agrees to repurchase homes at declining prices over
the period of the agreement (usually twelve months). At September 30, 1995, the
Registrant estimates that its contingent liability under these repurchase
agreements was approximately $52 million. The Registrant's losses under these
arrangements have not been significant.
Delinquency and Repossession
In the event an installment sale contract becomes delinquent, the
Registrant, either as owner of the contract or as servicer, or any financial
institution that may have purchased the contract with full recourse to the
Registrant, normally contacts the customer within 8 to 25 days thereafter in an
effort to have the default cured. Thereafter the Registrant is required to
repurchase the installment sale contract if it has been sold to a financial
institution with full recourse. The Registrant, as owner or servicer, generally
repossesses the home after payments have become 60 to 90 days delinquent if the
Registrant is not able to work out a satisfactory arrangement with the customer.
After repossession, the Registrant transports the home to a Registrant owned and
operated sales center where the Registrant attempts to resell the home or
contracts with an independent party to remarket the home. To a limited extent,
the Registrant sells repossessed homes at wholesale.
In an effort to minimize repossessions on contracts sold with full
recourse, the Registrant monitors the servicing and collection efforts of many
of the financial institutions to which the Registrant has sold installment sale
contracts with full recourse. In addition, the Registrant performs the
collection work on all installment sale contracts it has sold with recourse to
three of its major purchasers of installment sale contracts. The Registrant is
currently responsible for collection activities on approximately 63% of the
installment sale contracts which it has sold to independent financial
institutions with full recourse. The Registrant is paid a fee by the financial
institutions for performing this service.
The Registrant maintains a reserve for estimated credit losses on
installment sale contracts owned by the Registrant or sold to third parties with
full or limited recourse. The Registrant provides for losses on credit sales in
amounts necessary to maintain the reserves at amounts the Registrant believes
are sufficient to provide for future losses based on the Registrant's historical
loss experience, current economic conditions and portfolio performance measures.
For fiscal 1995, 1994 and 1993, as a result of expenses incurred due to defaults
and repossessions,
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$4,937,000, $4,339,000 and $3,328,000, respectively, was charged to the reserve
for losses on credit sales. The Registrant's reserve for losses on credit sales
at September 30, 1995 was $11,795,000, as compared to $14,623,000 at September
30, 1994 and $12,477,000 at September 30, 1993.
In fiscal 1995, 1994 and 1993, the Registrant repossessed 1,824, 1,407 and
1,149 homes, respectively. The Registrant's inventory of repossessed homes was
425 homes at September 30, 1995 as compared to 375 homes at September 30, 1994
and 324 homes at September 30, 1993. The estimated net realizable value of
repossessed homes in inventory at September 30, 1995 was $7,559,000. Information
concerning repossessions includes homes repossessed as servicer.
The Registrant's net losses resulting from repossessions on Registrant
originated loans as a percentage of the average principal amount of such loans
outstanding for fiscal 1995, 1994 and 1993 was 0.75%, 0.66% and 0.61%,
respectively.
At September 30, 1995 and September 30, 1994, delinquent installment sale
contracts expressed as a percentage of the total number of installment sale
contracts which the Registrant services or has sold with full recourse and are
serviced by others were as follows:
Total Number Delinquency Percentage
of Contracts September 30, 1995
------------ -----------------------------------
30 days 60 days 90 days Total
------- ------- ------- -----
Registrant-serviced
contracts....... 56,438(1) 1.2% 0.3% 0.6% 2.1%(2)
Contracts sold with
full recourse
and serviced
by others....... 5,972 2.3% 0.5% 0.8% 3.6%
Total Number Delinquency Percentage
of Contracts September 30, 1994
------------ -----------------------------------
30 days 60 days 90 days Total
------- ------- ------- -----
Registrant-serviced
contracts....... 45,046(1) 1.1% 0.3% 0.6% 2.0%(2)
Contracts sold with
full recourse
and serviced
by others....... 7,503 1.5% 0.3% 0.6% 2.4%
- ------------------
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(1)Excludes certain loans originated in September of each year which were
being processed at year end and which were not entered into the loan servicing
system until October.
(2)Includes servicing rights to acquired portfolios that were not
originated by the Registrant and had not been serviced by the Registrant prior
to its acquisition of the portfolios. The total delinquencies expressed as a
percentage of all Registrant-originated and serviced contracts, exclusive of
these portfolios, at September 30, 1995 was 2.0% and at September 30, 1994 was
1.6%.
At September 30, 1995 and September 30, 1994, delinquent installment sale
contracts expressed as a percentage of the total outstanding principal balance
of installment sale contracts which the Registrant services or has sold with
full recourse and are serviced by others were as follows:
Total Value Delinquency Percentage
of Contracts September 30, 1995
------------ -----------------------------------
30 days 60 days 90 days Total
------- ------- ------- -----
Registrant-serviced
contracts....... $1,174,187,000(1) 1.1% 0.3% 0.6% 2.0%
Contracts sold with
full recourse
and serviced
by others....... $62,000,000 2.5% 0.5% 0.7% 3.7%
Total Value Delinquency Percentage
of Contracts September 30, 1994
------------ -----------------------------------
30 days 60 days 90 days Total
------- ------- ------- -----
Registrant-serviced
contracts....... $831,873,000(1) 1.0% 0.3% 0.6% 1.9%
Contracts sold with
full recourse
and serviced
by others....... $75,000,000 1.7% 0.3% 0.7% 2.7%
- --------------
(1)Excludes certain loans originated in September of each year which were
being processed at year end and which were not entered into the loan servicing
system until October.
Insurance
The Registrant acts as agent for certain insurance companies and earns
commissions on homeowners insurance and credit life insurance written for its
customers. The Registrant requires
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customers purchasing homes pursuant to installment sale contracts to have
homeowners insurance until the principal balance of the contract is paid. In
fiscal 1995, 80% of the Registrant's customers obtained homeowners insurance
through the Registrant and 30% obtained credit life insurance through the
Registrant. Historically, a substantial number of such customers have renewed
these policies through the Registrant for which the Registrant receives renewal
commissions. The Registrant's commissions may be increased based on the actual
loss experience under homeowners policies written by the Registrant.
The Registrant reinsures, through a subsidiary, substantially all of the
credit life insurance written by it. The subsidiary's contingent liability is
without recourse to the Registrant.
Manufactured Housing Communities
The Registrant's manufactured housing communities offer residential
settings for the Registrant's products. The Registrant attempts to achieve full
occupancy at each of its rental communities and then considers a sale of the
community.
The Registrant owns manufactured housing rental communities in Augusta,
Georgia; Winchester, Virginia; Zephyrhills, Florida; Lima, Ohio; Springfield,
Missouri; Conway, South Carolina; and Tyler, Texas.
The Registrant has under development or has developed four manufactured
housing subdivisions at Calabash, Greensboro, Hendersonville and Pinehurst,
North Carolina. The Pinehurst subdivision surrounds an existing golf course
included in the property. In these subdivisions, homes and lots are sold
together.
The Registrant also owns a 50% interest in a recreational vehicle
campground and adjoining undeveloped land located at Deltaville, Virginia.
Competition
The manufactured housing industry is highly competitive with particular
emphasis on price, financing terms and features offered. There are numerous
retail dealers and financing sources in most locations where the Registrant
conducts retail operations. Several of these financing sources are larger than
the Registrant and have greater financial resources. There are numerous firms
producing manufactured homes in the Registrant's market area, many of which are
in direct competition with the Registrant. Several of these manufacturers, which
generally sell their homes through independent dealers, are larger than the
Registrant and have greater financial resources.
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The Registrant believes that its vertical integration gives it a
competitive advantage over many of its competitors. The Registrant competes on
the basis of reputation, quality, financing ability, service, features offered
and price.
Manufactured homes are a form of permanent, low-cost housing and are
therefore in competition with other forms of housing, including site-built and
prefabricated homes and apartments. Historically, manufactured homes have been
financed as personal property with financing that has shorter maturities and
higher interest rates than have been available for site-built homes. In recent
years, however, there has been a growing trend toward financing manufactured
housing with maturities more similar to the financing of real estate, especially
when the manufactured housing is attached to permanent foundations on
individually-owned lots. Multi-section homes are often attached to permanent
foundations on individually-owned lots. As a result, maturities for certain
manufactured housing loans have moved closer to those for site-built housing.
Regulation
A variety of laws affect the financing of manufactured homes by the
Registrant. The Federal Consumer Credit Protection Act (Truth-in-Lending) and
Regulation Z promulgated thereunder require written disclosure of information
relating to such financing, including the amount of the annual percentage rate
and the finance charge. The Federal Fair Credit Reporting Act also requires
certain disclosures to potential customers concerning credit information used as
a basis to deny credit. The Federal Equal Credit Opportunity Act and Regulation
B promulgated thereunder prohibit discrimination against any credit applicant
based on certain specified grounds. The Federal Trade Commission has adopted or
proposed various Trade Regulation Rules dealing with unfair credit and
collection practices and the preservation of consumers' claims and defenses. The
Federal Trade Commission regulations also require disclosure of a manufactured
home's insulation specification. Installment sale contracts eligible for
inclusion in the GNMA Program are subject to the credit underwriting
requirements of the FHA or VA. A variety of state laws also regulate the form of
the installment sale contracts and the allowable deposits, finance charge and
fees chargeable pursuant to installment sale contracts. The sale of insurance
products by the Registrant is subject to various state insurance laws and
regulations which govern allowable charges and other insurance practices.
The Registrant is also subject to the provisions of the Fair Debt
Collection Practices Act, which regulates the manner in which the Registrant
collects payments on installment sale contracts, and the Magnuson-Moss Warranty
- -- Federal Trade Commission Improvement Act, which regulates descriptions of
warranties on products. The
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descriptions and substance of the Registrant's warranties are also subject to
state laws and regulations.
The Registrant's manufacture of homes is subject to the National
Manufactured Housing Construction and Safety Standards Act of 1974. In 1976, the
Department of Housing and Urban Development ("HUD") promulgated regulations
under this Act establishing comprehensive national construction standards
covering many aspects of manufactured home construction, including structural
integrity, fire safety, wind loads and thermal protection. A HUD designated
inspection agency regularly inspects the Registrant's manufactured homes for
compliance during construction. The Registrant believes the homes it
manufactures comply with all present HUD requirements. HUD promulgated new
regulations, effective July 1, 1994, relating to wind loads and set-up
requirements, particularly with respect to homes sold in areas commonly subject
to severe wind conditions. HUD has also issued new thermal standards for
manufactured housing, effective October 26, 1994, relating principally to
insulation ratings and use of storm windows.
Bonneville Power, a public electrical utility operating in all or part of
several western states, has agreements with utilities in Oregon, Washington,
western Idaho and western Montana which provide producers of manufactured
housing with a subsidy of $1,500 for each manufactured home meeting the energy
efficiency standards of the Manufactured Housing Acquisition Program ("MAP").
The Registrant currently constructs all of its manufactured homes sold in areas
served by Bonneville Power in accordance with MAP. MAP is scheduled to terminate
in 1996.
The transportation of manufactured homes on highways is subject to
regulation by various Federal, state and local authorities. Such regulations may
prescribe size and road use limitations and impose lower than normal speed
limits and various other requirements. Manufactured homes are also subject to
local zoning and housing regulations.
Financial Information About Industry Segments
Financial information for each of the three fiscal years in the period
ended September 30, 1995 with respect to the Registrant's manufactured home
operations and retail sales financing operations are incorporated herein by
reference to page 35 of the Registrant's 1995 Annual Report to Shareholders.
Employees
At September 30, 1995, the Registrant employed 5,195 persons, of which
1,784 were engaged in sales and service, 2,839 in manufacturing and 572 in
executive, administrative and clerical positions.
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Item 2 - Properties
Offices
The Registrant leases executive office space in Greensboro, North
Carolina. The Registrant also owns two office buildings located in two adjacent
three-story buildings in Greensboro, North Carolina. This facility is situated
on a tract of approximately two acres. Because of its growth, the Registrant is
constructing a new executive office building on property it owns in the
Greensboro, North Carolina area. The Registrant also leases office space in
Texas, California and Arizona.
Manufacturing Facilities
The location and ownerships of the Registrant's production facilities are
as follows:
Owned/
Location Leased
-------- ------
Richfield, North Carolina Owned
Richfield, North Carolina Owned
Rockwell, North Carolina Owned
Rockwell, North Carolina Owned
Pinebluff, North Carolina Owned
Moultrie, Georgia Owned
Moultrie, Georgia Owned
Moultrie, Georgia Owned
Moultrie, Georgia Owned
Hillsboro, Texas Owned
Hillsboro, Texas Owned
Ennis, Texas Owned
Pulaski, Tennessee Leased
Albany, Oregon Leased/Owned
Perris, California Owned
Fort Morgan, Colorado Owned
These facilities are located on tracts of land generally ranging from 10
to 45 acres. The production area in these facilities ranges from approximately
50,000 to 125,000 square feet.
The land and buildings at these facilities were subject to mortgages with
an aggregate balance of $21,452,000 at September 30, 1995.
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The Registrant's manufacturing facilities are generally one story metal
prefabricated structures. The Registrant believes its facilities are in good
condition.
Based on the Registrant's normal manufacturing schedule of one shift per
day for a five-day week, the Registrant believes that its sixteen plants have
the capacity to produce approximately 40,875 floors annually, depending on
product mix. During fiscal 1995, the Registrant manufactured 31,149 floors at
its plants. The Registrant's Texas, Colorado and Tennessee facilities operated
significantly below capacity during the year because of plant start-ups. The
Registrant completed expansion of its Albany, Oregon facility during the fiscal
year which will add to that facility's capacity.
Manufactured Home Sales Centers
The Registrant's manufactured home retail sales centers consist of tracts
of from 3/4 to 4 1/2 acres of land on which manufactured homes are displayed,
each with a sales office containing from approximately 600 to 1,300 square feet
of floor space. The Registrant operated 198 sales centers at September 30, 1995
located in 23 states distributed as follows: North Carolina (58), Texas (35),
South Carolina (19), Virginia (15), Tennessee (14), Kentucky (7), Missouri (6),
Arizona (5), Arkansas (5), New Mexico (5), Kansas (4), Alabama (3), Colorado
(3), Delaware (3), Georgia (3), West Virginia (3), Idaho (2), Mississippi (2),
Oklahoma (2), California (1), Louisiana (1), Ohio (1) and Washington (1).
Twenty-seven sales centers are on property owned by the Registrant and the
other locations are leased by the Registrant for a specified term of from one to
ten years or on a month-to-month basis. Rents paid by the Registrant during the
year ended September 30, 1995 for the leased sales centers totalled
approximately $4,727,000.
Manufactured Housing Communities
The Registrant owns and manages manufactured housing rental communities at
the following locations with the acreage and number of rental spaces indicated:
Total
Spaces Spaces
Location of Community Acres Planned Completed
- --------------------- ----- ------- ---------
Augusta, Georgia 151 326 186
Winchester, Virginia 169 550 180
Zephyrhills, Florida 128 662 214
Lima, Ohio 58 274 --
Springfield, Missouri 90 291 133
Conway, South Carolina 110 305 158
Tyler, Texas 238 582 265
15
<PAGE>
The Registrant has under development or has developed manufactured housing
subdivisions at the following locations and with the acreage and number of lots
indicated:
Lots
Location of Community Acres Planned
- --------------------- ----- -------
Calabash, North Carolina 33 152
Greensboro, North Carolina 69 115
Hendersonville, North Carolina 71 296
Pinehurst, North Carolina 237 256
The Registrant also owns a 50% interest in a recreational vehicle
campground and adjoining undeveloped land located in Deltaville, Virginia. At
September 30, 1995, this property was subject to a mortgage with a total balance
of $1,017,000.
Item 3 - Legal Proceedings
The Registrant is a defendant in a number of suits which are incidental to
the conduct of its business.
Item 4 - Submission of Matters to a Vote of Security Holders
Not applicable.
Separate Item - Executive Officers of the Registrant
Information as to executive officers of the Registrant who are directors
and nominees of the Registrant is incorporated herein by reference to the
section captioned Election of Directors of the Registrant's Proxy Statement for
the Annual Meeting of Shareholders to be held January 31, 1996. Information as
to the executive officers of the Registrant who are not directors or nominees is
as follows:
Name Age Information About Officer
- ---- --- -------------------------
Larry T. Gilmore 54 Executive Vice President - Con-
sumer Finance and chief operat-
ing officer of Oakwood Accep-
tance Corporation (the Regis-
trant's finance subsidiary)
since 1994; Vice President and
Chief Operating Officer of Oak-
wood Acceptance Corporation
1991-1994; Vice President, Van-
derbilt Mortgage & Finance,
Inc. (financier of manufactured
homes) 1988-1991.
Thomas D. Cross 41 Executive Vice President - Man-
ufacturing since 1995; Director
16
<PAGE>
of Sales -- Fleetwood Homes of
Georgia, Incorporated, 1992-
1994; Sales Manager of
Fleetwood Homes of Texas,
Incorporated, 1991-1992. In
1991, Mr. Cross filed
individually under Chapter 7
of the bankruptcy code for
reorganization of his debts.
Douglas R. Muir 41 Senior Vice President and Sec-
retary since 1994; Treasurer
since 1993; Partner, Price Wa-
terhouse LLP, 1988-1993.
Jeffrey D. Mick 43 Senior Vice President since
1994; Controller since 1992;
Executive Vice President - Op-
erations/Distribution, Bren-
dle's Incorporated (discount
department store retailer),
1990-1992. In November 1992,
Brendle's Incorporated filed
for reorganization under Chap-
ter 11 of the United States
Bankruptcy Code.
Myles E. Standish 41 Senior Vice President and Gen-
eral Counsel since 1995; Part-
ner, Kennedy Covington Lobdell
& Hickman, L.L.P. attorneys at
law since 1987.
J. Michael Stidham 42 Executive Vice President -
Retail and chief operating of-
ficer of Oakwood Mobile Homes,
Inc. (the Registrant's retail
sales subsidiary) since 1994;
Vice President and Chief Oper-
ating Officer of Oakwood Mobile
Homes, Inc. 1992-1994; Vice
President of Oakwood Mobile
Homes, Inc., 1989-1992.
All executive officers were elected to their current positions at annual
meetings of the Board of Directors of the Registrant or its subsidiaries held on
February 1, 1995, except Mr. Cross, who was elected to his current position on
September 1, 1995 and Mr. Standish, who was elected to his current position on
March 31, 1995. Each officer holds office until his or her death, resignation,
retirement, removal or disqualification or until his or her successor is elected
and qualified.
17
<PAGE>
PART II
Items 5-8
Items 5 and 7-8 are incorporated herein by reference to pages 13 to 36 of
the Registrant's 1995 Annual Report to Shareholders and to the sections
captioned Securities Exchange Listing and Number of Shareholders of Record on
the inside back cover page of the Registrant's 1995 Annual Report to
Shareholders. Item 6 is incorporated herein by reference to the information
captioned "Net Sales," "Financial Services Income," "Endorsement Fees,"
"Insurance Commissions," "Other Income," "Net Income," "Per Share
Data--Earnings-primary and Earnings-fully diluted," "Total Assets," "Notes and
Bonds Payable" and "Per Share Data-Cash Dividends" for the five fiscal years
ended September 30, 1995 on page 44 of the Registrant's 1995 Annual Report to
Shareholders.
Item 9 - Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
Not applicable.
PART III
Items 10-13
Items 10-13 are incorporated herein by reference to the sections captioned
Principal Holders of the Common Stock and Holdings of Management, Election of
Directors, Compensation Committee Interlocks and Insider Participation,
Executive Compensation, Compensation of Directors, Employment Contracts,
Termination of Employment and Change in Control Arrangements and Compliance with
Section 16(a) of Securities Exchange Act of 1934 of the Registrant's Proxy
Statement for the Annual Meeting of Shareholders to be held January 31, 1996 and
to the separate item in Part I of this Report captioned Executive Officers of
the Registrant.
PART IV
Item 14 - Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a) Financial Statement Schedules. See accompanying Index to
Financial Statement Schedules.
(b) Exhibits.
3.1 Restated Charter of the Registrant dated January 25, 1984
(Exhibit 3.2 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended September 30, 1984)
18
<PAGE>
3.2 Amendment to Restated Charter of the Registrant dated
February 18, 1988 (Exhibit 3 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended September 30,
1988)
3.3 Amendment to Restated Charter of the Registrant dated April
23, 1992 (Exhibit 3.3 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended September 30, 1992)
3.4 Amended and Restated Bylaws of the Registrant adopted
February 1, 1995 (Exhibit 3.2 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended December 31, 1994)
4.1 Shareholder Protection Rights Agreement between the
Registrant and Wachovia Bank of North Carolina, N.A., as
Rights Agent (Exhibit 4.1 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1991)
4.2 Agreement to Furnish Copies of Instruments With Respect to
Long Term Debt (Exhibit 4.3 to the Registrant's Annual
Report on Form 10-k for the year ended September 30, 1994)
* 10.1 Form of Disability Agreement (Exhibit 10.1 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended September 30, 1984)
* 10.2 Schedule identifying omitted Disability Agreements which are
substantially identical to the Form of Disability Agreement
and payment schedules under Disability Agreements (Exhibit
10.2 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended September 30, 1984)
* 10.3 Form of Retirement Agreement (Exhibit 10.3 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended September 30, 1984)
* 10.4 Schedule identifying omitted Retirement Agreements which are
substantially identical to the Form of Retirement Agreement
and payment schedules under Retirement Agreements (Exhibit
10.4 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended September 30, 1984)
* 10.5 Oakwood Homes Corporation 1985 Non-Qualified Stock Option
Plan (Exhibit 10.1 to the Registrant's Annual Report on Form
10-K for the fiscal year ended September 30, 1985)
19
<PAGE>
10.6 Oakwood Homes Corporation 1986 Nonqualified Stock Option
Plan for Non-Employee Directors (Exhibit 10.1 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended September 30, 1986)
* 10.7 Oakwood Homes Corporation 1981 Incentive Stock Option Plan,
as amended and restated (Exhibit 10.1 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended
September 30, 1987)
* 10.8 Oakwood Homes Corporation and Designated Subsidiaries
Deferred Income Plan for Key Employees (Exhibit 10.2 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended September 30, 1987)
* 10.9 Form of Employment Agreement (Exhibit 10.4 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended September 30, 1990)
* 10.10 Schedule identifying omitted Employment Agreements which are
substantially identical to the Form of Employment Agreement
(Exhibit 10.5 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended September 30, 1990)
10.11 Oakwood Homes Corporation 1990 Director Stock Option Plan
(Exhibit 10.24 to the Registrant's Form S-2 filed on April
13, 1991)
* 10.12 Oakwood 1990 Long Term Performance Plan, as amended (Exhibit
4 to the Registrant's Registration Statement on Form S-8,
filed on August 3, 1992)
* 10.13 Amended and Restated Executive Retirement Benefit Employment
Agreement between the Registrant and Nicholas J. St. George
(Exhibit 10.21 to the Registrant's Annual Report on Form
10-K for the fiscal year ended September 30, 1992)
* 10.14 Amended and Restated Executive Disability Benefit Agreement
between the Registrant and Nicholas J. St. George (Exhibit
10.22 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended September 30, 1992)
* 10.15 Executive Retirement Benefit Employment Agreement between
the Registrant and A. Steven Michael (Exhibit 10 to the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1993)
20
<PAGE>
* 10.16 Amendment to 1990 Oakwood Long Term Performance Plan
(Exhibit 10.1 to the Registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 1993)
* 10.17 Amendment No. 1 to the Oakwood Homes Corporation and
Designated Subsidiaries Deferred Income Plan for Key
Employees (Exhibit 10.2 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1993)
* 10.18 Form of Oakwood Homes Corporation and Designated
Subsidiaries Deferred Compensation Agreement for Key
Employees (Exhibit 10.3 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1993)
* 10.19 Form of First Amendment to Employment Agreement between the
Registrant and each of Nicholas J. St. George and A. Steven
Michael (Exhibit 10.1 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended December 31, 1993)
* 10.20 First Amendment to Amended and Restated Executive Retirement
Benefit Employment Agreement between the Registrant and
Nicholas J. St. George (Exhibit 10.2 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended December
31, 1993)
* 10.21 First Amendment to Executive Retirement Benefit Employment
Agreement between the Registrant and Robert D. Harvey, Sr.
(Exhibit 10.3 to the Regi- strant's Quarterly Report on Form
10-Q for the quarter ended December 31, 1993)
* 10.22 First Amendment to Executive Retirement Benefit Employment
Agreement between the Registrant and A. Steven Michael
(Exhibit 10.4 to the Registrant's Quarterly Report on Form
10-Q for the quarter ended December 31, 1993)
* 10.23 First Amendment to Amended and Restated Executive Disability
Benefit Agreement between the Regis- trant and Nicholas J.
St. George (Exhibit 10.5 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended December 31, 1993)
* 10.24 Form of Executive Retirement Benefit Agreement between the
Registrant and each of James D. Cast- erline, Larry T.
Gilmore, C. Michael Kilbourne, J. Michael Stidham and Larry
M. Walker (Exhibit 10.7
21
<PAGE>
to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1993)
* 10.25 Schedule identifying omitted Executive Retirement Benefit
Employment Agreements which are substan- tially identical to
the Form of Executive Retire- ment Benefit Agreement in
Exhibit 10.31 and pay- ment schedules under Executive
Retirement Benefit Employment Agreements (Exhibit 10.8 to
the Regis- trant's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1993)
* 10.26 Form of Performance Unit Agreement dated November 16, 1993
(Exhibit 10.1 to the Registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 1994)
* 10.27 Schedule identifying omitted Performance Unit Agreements
which are substantially identical to the Form of Performance
Unit Agreement and the target number of performance units
under Perfor- mance Unit Agreements (Exhibit 10.2 to the
Regis- trant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1994)
* 10.28 Oakwood Homes Corporation Executive Incentive Compensation
Plan (filed herewith)
* 10.29 Oakwood Homes Corporation Key Employee Stock Plan (filed
herewith)
11 Calculation of Earnings Per Share (filed herewith)
13 The Registrant's 1995 Annual Report to Shareholders. This
Annual Report to Shareholders is furnished for the
information of the Commission only and, except for the parts
thereof incorporated by reference in this Report on Form
10-K, is not deemed to be "filed" as a part of this filing
(filed herewith)
21 List of the Registrant's Subsidiaries (filed
herewith)
23.1 Consent of Price Waterhouse LLP (filed herewith)
23.2 Consent of Price Waterhouse LLP (filed herewith)
23.3 Consent of Arthur Andersen LLP (filed herewith)
23.4 Consent of Allen, Pritchett & Bassett, CPAs (filed
herewith)
22
<PAGE>
23.5 Consent of William O. Pifer, CPA, P.C. (filed herewith)
27 Financial Data Schedule (Filed in electronic format only).
This schedule is furnished for the information of the
Commission and shall not be deemed "filed" for purposes of
Section 11 of the Securities Act of 1933, Section 18 of the
Securities Exchange Act of 1934 and Section 323 of the Trust
Indenture Act
- -------------
* Indicates a management contract or compensatory plan or arrangement
required to be filed as an exhibit to this Form 10-K.
(c) Reports on Form 8-K. No reports on Form 8-K have been filed during
the last quarter of the period covered by this Report.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Annual Report to be
signed on its behalf by the undersigned thereunto duly authorized.
OAKWOOD HOMES CORPORATION
By:/s/ C. Michael Kilbourne
---------------------------
Name: C. Michael Kilbourne
Title: Executive Vice President,
Chief Financial Officer and
and Assistant Secretary
Dated: December 27, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Annual Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
Signature Capacity Date
--------- -------- ----
/s/ Ralph L. Darling Director and Chairman December 27, 1995
- --------------------------- of the Board
Ralph L. Darling
/s/ Nicholas J. St. George Director and President December 27, 1995
- --------------------------- and Chief Executive
Nicholas J. St. George Officer (Principal
Executive Officer)
/s/ A. Steven Michael Director and Executive December 27, 1995
- --------------------------- Vice President and
A. Steven Michael Chief Operating
Officer
/s/ C. Michael Kilbourne Director and Executive December 27, 1995
- --------------------------- Vice President, Chief
C. Michael Kilbourne Financial Officer and
Assistant Secretary
(Principal Financial
Officer)
24
<PAGE>
/s/ Robert D. Harvey Director and Vice December 27, 1995
- --------------------------- President --
Robert D. Harvey Administration
/s/ Dennis I. Meyer Director December 27, 1995
- ---------------------------
Dennis I. Meyer
/s/ Kermit G. Phillips Director December 27, 1995
- ---------------------------
Kermit G. Phillips, II
/s/ Sabin C. Streeter Director December 27, 1995
- ---------------------------
Sabin C. Streeter
/s/ Francis T. Vincent Director December 27, 1995
- ---------------------------
Francis T. Vincent, Jr.
/s/ Clarence W. Walker Director December 27, 1995
- ---------------------------
Clarence W. Walker
/s/ H. Michael Weaver Director December 27, 1995
- ---------------------------
H. Michael Weaver
/s/ Douglas R. Muir Senior Vice President, December 27, 1995
- --------------------------- Treasurer and
Douglas R. Muir Secretary (Principal
Accounting Officer)
25
<PAGE>
OAKWOOD HOMES CORPORATION
INDEX TO FINANCIAL STATEMENT SCHEDULES
The financial statements, together with the report thereon of Price
Waterhouse LLP dated October 31, 1995, appearing on pages 19 to 36 of the
accompanying 1995 Annual Report to Shareholders, are incorporated by reference
in this Form 10-K Annual Report. With the exception of the aforementioned
information and the information incorporated in Items 1, 5, 6, 7 and 8, the 1995
Annual Report to Shareholders is not deemed to be filed as part of this report.
Financial statement schedules not included in this Form 10-K Annual Report have
been omitted because they are not applicable or the required information is
shown in the financial statements or notes thereto.
PAGE
Report of Arthur Andersen LLP on financial
statements of Golden West Homes F-1
Report of Allen, Pritchett & Bassett, CPAs on
financial statements of Destiny Industries, Inc. F-2
Report of William O. Pifer, CPA, P.C. on
financial statements of Destiny Industries, Inc. F-3
Supplementary information to notes to
consolidated financial statements F-4
26
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
of Golden West Homes:
We have audited the accompanying consolidated statements of income,
shareholders' equity and cash flows of GOLDEN WEST HOMES (a California
corporation) and subsidiary for the year ended December 25, 1993. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of Golden West
Homes and subsidiary for the year ended December 25, 1993, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Orange County, California
February 22, 1994
(except with respect to the
matters discussed in Note 13 as to
which the dates are March 14, 1994,
and April 11, 1994)
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Destiny Industries, Inc.
P.O. Box 1766
Moultrie, GA 31776
We have audited the balance sheet of Destiny Industries, Inc. as of October 1,
1994, and the related statements of income, retained earnings, and cash flows
for the year then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit. The financial statements of Destiny
Industries, Inc. as of October 2, 1993, were audited by other auditors whose
report dated December 22, 1993 expressed an unqualified opinion on those
statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 1994 financial statements referred to above present fairly,
in all material respects, the financial position of Destiny Industries, Inc. as
of October 1, 1994, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
Allen, Pritchett & Bassett
Tifton, Georgia
December 9, 1994
F-2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Destiny Industries, Inc.
P. O. Box 1766
Moultrie, Georgia 31776
We have audited the accompanying balance sheet of Destiny Industries, Inc. as of
October 2, 1993, and the related statements of income retained earnings, and
cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with standards established by the American
Institute of Certified Public Accountants. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly in all
material respects, the financial position of Destiny Industries, Inc. as of
October 2, 1993, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
William O. Pifer
Moultrie, GA
December 22, 1993
F-3
<PAGE>
OAKWOOD HOMES CORPORATION
AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTARY INFORMATION TO NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
The components of inventories are as follows:
September 30,
1995 1994 1993
---- ---- ----
New manufactured homes $131,632,000 $ 78,916,000 $ 47,427,000
Used manufactured homes 4,825,000 5,302,000 6,239,000
Homes in progress 2,220,000 2,072,000 1,655,000
Land/homes under
development 2,042,000 1,534,000 697,000
Raw materials and supplies 10,471,000 10,864,000 6,939,000
------------ ------------ ------------
$151,190,000 $ 98,688,000 $ 62,957,000
============ ============ ============
F-4
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
EXHIBITS
ITEM 14(a)(3)
FORM 10-K
ANNUAL REPORT
Commission
For the fiscal year ended File Number
September 30, 1995 1-7444
OAKWOOD HOMES CORPORATION
EXHIBIT INDEX
Exhibit No. Exhibit Description
3.1 Restated Charter of the Registrant dated January 25,
1984 (Exhibit 3.2 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended September 30, 1984)
3.2 Amendment to Restated Charter of the Registrant dated
February 18, 1988 (Exhibit 3 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended September
30, 1988)
3.3 Amendment to Restated Charter of the Registrant dated
April 23, 1992 (Exhibit 3.3 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended September
30, 1992)
3.4 Amended and Restated Bylaws of the Registrant adopted
February 1, 1995 (Exhibit 3.2 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended
December 31, 1994)
4.1 Shareholder Protection Rights Agreement between the
Registrant and Wachovia Bank of North Carolina, N.A., as
Rights Agent (Exhibit 4.1 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1991)
4.2 Agreement to Furnish Copies of Instruments With Respect
to Long Term Debt (Exhibit 4.3 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended
September 30, 1994)
31
<PAGE>
10.1 Form of Disability Agreement (Exhibit 10.1 to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended September 30, 1984)
10.2 Schedule identifying omitted Disability Agreements which
are substantially identical to the Form of Disability
Agreement and payment schedules under Disability
Agreements (Exhibit 10.2 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended September
30, 1984)
10.3 Form of Retirement Agreement (Exhibit 10.3 to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended September 30, 1984)
10.4 Schedule identifying omitted Retirement Agreements which
are substantially identical to the Form of Retirement
Agreement and payment schedules under Retirement
Agreements (Exhibit 10.4 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended September
30, 1984)
10.5 Oakwood Homes Corporation 1985 Non-Qualified Stock
Option Plan (Exhibit 10.1 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended September
30, 1985)
10.6 Oakwood Homes Corporation 1986 Nonqualified Stock Option
Plan for Non-Employee Directors (Exhibit 10.1 to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended September 30, 1986)
10.7 Oakwood Homes Corporation 1981 Incentive Stock Option
Plan, as amended and restated (Exhibit 10.1 t the
Registrant's Annual Report on Form 10-K for the fiscal
year ended September 30, 1987)
10.8 Oakwood Homes Corporation and Designated Subsidiaries
Deferred Income Plan for Key Employees (Exhibit 10.2 to
the Registrant's Annual Report on Form 10-K for the
fiscal year ended September 30, 1987)
10.9 Form of Employment Agreement (Exhibit 10.4 to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended September 30, 1990)
10.10 Schedule identifying omitted Employment Agreements which
are substantially identical to the
32
<PAGE>
Form of Employment Agreement (Exhibit 10.5 to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended September 30, 1990)
10.11 Oakwood Homes Corporation 1990 Director Stock Option
Plan (Exhibit 10.24 to the Registrant's Form S-2 filed
on April 13, 1991)
10.12 Oakwood 1990 Long Term Performance Plan, as amended
(Exhibit 4 to the Registrant's Registration Statement on
Form S-8, filed on August 3, 1992)
10.13 Amended and Restated Executive Retirement Benefit
Employment Agreement between the Registrant and Nicholas
J. St. George (Exhibit 10.21 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended September
30, 1992)
10.14 Amended and Restated Executive Disability Benefit
Agreement between the Registrant and Nicholas J. St.
George (Exhibit 10.22 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended September 30,
1992)
10.15 Executive Retirement Benefit Employment Agreement
between the Registrant and A. Steven Michael (Exhibit 10
to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1993)
10.16 Amendment to 1990 Oakwood Long Term Performance Plan
(Exhibit 10.1 to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1993)
10.17 Amendment No. 1 to the Oakwood Homes Corporation and
Designated Subsidiaries Deferred Income Plan for Key
Employees (Exhibit 10.2 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31,
1993)
10.18 Form of Oakwood Homes Corporation and Designated
Subsidiaries Deferred Compensation Agreement for Key
Employees (Exhibit 10.3 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31,
1993)
10.19 Form of First Amendment to Employment Agreement between
the Registrant and each of Nicholas J. St. George and A.
Steven Michael (Exhibit 10.1 to the Registrant's
Quarterly
33
<PAGE>
Report on Form 10-Q for the quarter ended December 31,
1993)
10.20 First Amendment to Amended and Restated Executive
Retirement Benefit Employment Agreement between the
Registrant and Nicholas J. St. George (Exhibit 10.2 to
the Registrant's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1993)
10.21 First Amendment to Executive Retirement Benefit
Employment Agreement between the Registrant and A.
Steven Michael (Exhibit 10.4 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended
December 31, 1993)
10.22 First Amendment to Amended and Restated Executive
Disability Benefit Agreement between the Registrant and
Nicholas J. St. George (Exhibit 10.5 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended
December 31, 1993)
10.23 Form of Executive Retirement Benefit Agreement between
the Registrant and each of James D. Casterline, Larry T.
Gilmore, C. Michael Kilbourne, J. Michael Stidham and
Larry M. Walker (Exhibit 10.7 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended
December 31, 1993)
10.24 Schedule identifying omitted Executive Retirement
Benefit Employment Agreements which are substantially
identical to the Form of Executive Retirement Benefit
Agreement in Exhibit 10.31 and payment schedules under
Executive Retirement Benefit Employment Agreements
(Exhibit 10.8 to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended December 31, 1993)
10.25 Form of Performance Unit Agreement dated November 16,
1993 (Exhibit 10.1 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1994)
10.26 Schedule identifying omitted Performance Unit Agreements
which are substantially identical to the Form of
Performance Unit Agreement and the target number of
performance units under Performance Unit Agreements
(Exhibit 10.2 to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1994)
34
<PAGE>
* 10.27 Oakwood Homes Corporation Executive Incentive
Compensation Plan (page 36 of teh sequentially numbered
pages)
* 10.28 Oakwood Homes Corporation Key Employee Stock Plan (page
41 of the sequentially numbered pages)
11 Calculation of Earnings Per Share (page 61 of the
sequentially numbered pages)
13 The Registrant's 1995 Annual Report to Shareholders.
This Annual Report to Shareholders is furnished for the
information of the Commission only and, except for the
parts thereof incorporated by reference in this Report
on Form 10-K, is not deemed to be "filed" as a part of
this filing (page 62 of the sequentially numbered pages)
21 List of the Registrant's Subsidiaries (page __ of the
sequentially numbered pages)
23.1 Consent of Price Waterhouse LLP (page __ of the
sequentially numbered pages)
23.2 Consent of Price Waterhouse LLP (page __ of the
sequentially numbered pages)
23.3 Consent of Arthur Andersen LLP (page __ of the
sequentially numbered pages)
23.4 Consent of Allen, Pritchett & Bassett, CPAs (page ___ of
the sequentially numbered pages)
23.5 Consent of William O. Pifer, C.P.A., P.C. (page ___ of
the sequentially numbered pages)
27 Financial Data Schedule (filed in electronic format
only). This schedule is furnished for the information of
the Commission and is not deemed to be "filed" for
purposes of Section 11 of the Securities Act, Section 18
of the Securities Exchange Act of 1934 and Section 323
of the Trust Indenture Act of 1940
35
EXHIBIT 10.27
OAKWOOD HOMES CORPORATION
EXECUTIVE INCENTIVE COMPENSATION PLAN
1. Name:
This plan shall be known as the "Oakwood Homes Corporation Executive
Incentive Compensation Plan" (the "Plan").
2. Purpose and Intent:
Oakwood Homes Corporation (the "Company") establishes this Plan effective
November 15, 1995 for the purpose of providing certain of its senior executive
officers with annual and long-term incentive compensation based on the
performance of the Company measured by certain objective corporate financial
performance criteria described herein. The intent of the Plan is to provide
"performance-based compensation" within the meaning of Section 162(m)(4)(C) of
the Code. The provisions of the Plan shall be construed and interpreted to
effectuate such intent.
3. Definitions:
For purposes of the Plan, the following terms shall have the following
meanings:
(a) "Code" means the Internal Revenue Code of 1986, as amended from time
to time, and references thereto shall include the valid Treasury regulations
thereunder.
(b) "Committee" means all of the members of the Compensation Committee of
the Board of Directors of the Company who are Outside Directors.
(c) "Common Stock" means the common stock of the Company.
(d) "Covered Employee" with respect to a Plan Year or Performance Period,
as applicable, means any key employee of the Company designated as such by the
Committee in accordance with the provisions of paragraphs 5 and 6 below.
(e) "Fair Market Value" of a share of Common Stock means "Fair Market
Value" as defined in the Stock Plan.
(f) "Net Income" means, with respect to a Plan Year, "net income" of the
Company for such Plan Year determined in accordance with generally accepted
accounting principles that would be reported in the Company's Annual Report to
Shareholders for such Plan Year.
(g) "Outside Director" means an "outside director" within the meaning of
Section 162(m)(4)(C)(i) of the Code, subject to any applicable transition rules
under Section 162(m) of the Code.
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(h) "Performance Period" means a period covering more than one (1) Plan
Year established by the Committee in accordance with the provisions of paragraph
6 below.
(i) "Period of Restriction" means "Period of Restriction" as
defined in the Stock Plan.
(j) "Plan Year" means the fiscal year of the Company beginning October 1
and ending September 30.
(k) "Pool" means a long term incentive compensation pool established under
the provisions of paragraph 6 pursuant to a formula based on the level of Net
Income for the applicable Performance Period.
(l) "Restricted Stock" means "Restricted Stock" as defined in
the Stock Plan.
(m) "ROE" means, with respect to a Plan Year, the Company's "return on
average common shareholders' equity" for such Plan Year determined in accordance
with generally accepted accounting principles that would be reported in the
Company's Annual Report to Shareholders for such Plan Year.
(n) "Stock Plan" means the Oakwood Homes Corporation Key Employee Stock
Plan, as the same may be amended from time to time.
4. Administration:
The Committee shall be responsible for administering the Plan. The
Committee shall have all of the powers necessary to enable it to properly carry
out its duties under the Plan. Not in limitation of the foregoing, the Committee
shall have the power to construe and interpret the Plan and to determine all
questions that shall arise thereunder. The Committee shall have such other and
further specified duties, powers, authority and discretion as are elsewhere in
the Plan either expressly or by necessary implication conferred upon it. The
Committee may appoint such agents, who need not be members of the Committee, as
it may deem necessary for the effective performance of its duties, and may
delegate to such agents such powers and duties as the Committee may deem
expedient or appropriate that are not inconsistent with the intent of the Plan.
The decision of the Committee upon all matters within its scope of authority
shall be final and conclusive on all persons, except to the extent otherwise
provided by law.
5. Annual Incentive Compensation:
The Plan shall provide for annual incentive compensation payable in
accordance with the provisions of this paragraph 5. No later than December 30 of
a Plan Year, the Committee shall determine (i) the Covered Employees who are
eligible for annual incentive compensation for the Plan Year under this
paragraph 5,
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(ii) for each such Covered Employee, a target annual bonus and (iii) a formula
based on the Net Income for such Plan Year pursuant to which a given Covered
Employee shall receive none, some, all or more than all of such Covered
Employee's target annual bonus depending on the actual Net Income for such Plan
Year. In that regard, the formula for determining the amount of a Covered
Employee's annual incentive compensation under this paragraph 5, if any, for a
Plan Year shall be a fixed formula that does not permit Committee discretion.
Any annual incentive compensation payable to a Covered Employee under this
paragraph 5 shall be paid in accordance with the provisions of paragraph 8.
6. Long Term Incentive Compensation:
The Plan shall provide for long term incentive compensation payable in
accordance with the provisions of this paragraph 6. No later than December 30 of
any Plan Year during the term of this Plan, the Committee may in its discretion
establish a Performance Period consisting of such Plan Year and one or more
succeeding Plan Years. If a Performance Period is established, then at the time
such Performance Period is established the Committee shall determine (i) the
Covered Employees who are eligible for long term incentive compensation for the
Performance Period under this paragraph 6, (ii) a formula for determining a Pool
based on the Net Income of the Company for the Performance Period, (iii) a
threshold level of ROE for the Performance Period below which no Pool shall be
established and (iv) a formula for allocating among the Covered Employees for a
Performance Period any Pool for such Performance Period. In that regard, (A) the
formula for determining the amount of the Pool for a Performance Period and (B)
the formula for allocating any Pool among the Covered Employees for the
Performance Period shall be fixed formulas that do not permit Committee
discretion. Any long term incentive compensation payable to a Covered Employee
under this paragraph 6 shall be paid in accordance with the provisions of
paragraph 8.
7. Code Section 162(m) Provisions:
(a) In accordance with Section 162(m)(4)(C)(iii) of the Code, prior to any
payment under the Plan for a Plan Year or Performance Period, as applicable, the
Committee shall certify in writing the attainment of the levels of Net Income
and ROE under the formulas in effect under paragraphs 5 and 6 above for such
Plan Year or Performance Period, as applicable, and the amount of annual
incentive compensation and long term incentive compensation, if any, payable
pursuant to such formulas for such Plan Year or Performance Period, as
applicable.
(b) Notwithstanding any provision of the Plan to the contrary, in no event
shall a Covered Employee be paid in cash more than (i) Two Million Five Hundred
Thousand Dollars ($2,500,000) of annual incentive compensation for any Plan Year
hereunder or (ii) Two Million Five Hundred Thousand Dollars ($2,500,000) of long
term
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incentive compensation for each Plan Year comprising a Performance Period
hereunder. See paragraph 8 below for provisions regarding restrictions
applicable to shares of Restricted Stock payable in accordance with this Plan.
8. Payment of Incentive Compensation:
Any annual or long term incentive compensation payable hereunder to a
Covered Employee shall be payable partly in cash and partly in shares of
Restricted Stock in accordance with, and subject to, the provisions of this
paragraph 8. At least ten percent (10%) of a Covered Employee's compensation
payable hereunder, and if and as determined by the Committee up to fifty percent
(50%) of such compensation, shall be payable in shares of Restricted Stock. The
number of shares of Restricted Stock shall equal the number of whole shares of
Common Stock that could be purchased with such compensation after applying
either a twenty percent (20%) or thirty percent (30%) discount from the Fair
Market Value of the Common Stock determined as of the last day of the applicable
Plan Year (in the case of an annual incentive compensation award hereunder) or
Performance Period (in the case of a long term incentive compensation award
hereunder). The Covered Employee shall elect the applicable discount rate. If
the Covered Employee elects the twenty percent (20%) discount rate, the
Restricted Stock shall have a two (2) year Period of Restriction beginning as of
the last day of the applicable Plan Year or Performance Period to which such
compensation relates, and if the Covered Employee elects the thirty percent
(30%) discount rate, the applicable Period of Restriction shall be four (4)
years beginning as of such date. Any shares of Restricted Stock to be issued to
a Covered Employee hereunder shall be issued from the pool of shares available
for issuance under the Stock Plan, shall be evidenced by an appropriate award
agreement under the Stock Plan and shall be subject to any applicable
limitations set forth in the Stock Plan regarding the number of shares which may
be awarded to an individual under the Stock Plan in any given calendar year. Any
cash payable hereunder shall be paid as soon as practicable following the end of
the applicable Plan Year or Performance Period. Notwithstanding the foregoing,
if a Covered Employee's employment with the Company and its affiliates is
terminated for any reason (including death) by any party prior to the Covered
Employee having received any cash or shares of Restricted Stock payable
hereunder, the Covered Employee shall forfeit and have no further right to
receive any such cash or shares of Restricted Stock. Any elections by a Covered
Employee under this paragraph 8 which are intended to provide for a deferral of
compensation shall be made by an irrevocable written election of the Covered
Employee in such form and at such time as is approved by the Committee. Any
amount payable hereunder shall be subject to applicable payroll and withholding
taxes.
9. Shareholder Approval:
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In accordance with Section 162(m)(4)(C)(ii) of the Code, the effectiveness
of the Plan and of any annual or long term incentive compensation awarded
hereunder is subject to the Plan's approval and ratification by the shareholders
of the Company after disclosure to the shareholders of the Company of the
material terms of the Plan, such approval and ratification to be obtained (i) on
or before September 30, 1996 and (ii) at such other times as required by Section
162(m)(4)(C)(ii) of the Code.
10. Amendment, Modification and Termination of the Plan:
The Board of Directors of the Company may amend, modify or terminate the
Plan at any time, provided that no amendment, modification or termination of the
Plan shall reduce the amount payable to a Covered Employee under the Plan as of
the date of such amendment, modification or termination.
11. Applicable Law:
The Plan shall be construed, administered, regulated and governed in all
respects under and by the laws of the United States to the extent applicable,
and to the extent such laws are not applicable, by the laws of the state of
North Carolina.
12. Miscellaneous:
A Covered Employee's rights and interests under the Plan may not be
assigned or transferred by the Covered Employee. To the extent the Covered
Employee acquires a right to receive payments from the Company under the Plan,
such right shall be no greater than the right of any unsecured general creditor
of the Company. Nothing contained herein shall be deemed to create a trust of
any kind or any fiduciary relationship between the Company and the Covered
Employee. Designation as a Covered Employee in the Plan shall not entitle or be
deemed to entitle a Covered Employee to continued employment with the Company.
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EXHIBIT 10.28
Oakwood Homes Corporation
Key Employee Stock Plan
Effective Date: November 15, 1995
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Contents
- ------------------------------------------------------------------
Page
Article 1. Establishment, Purpose, and Duration 1
Article 2. Definitions 1
Article 3. Administration 5
Article 4. Shares Subject to the Plan 6
Article 5. Eligibility and Participation 7
Article 6. Stock Options 7
Article 7. Stock Appreciation Rights 9
Article 8. Restricted Stock 11
Article 9. Performance Shares 12
Article 10. Performance Measures 13
Article 11. Beneficiary Designation 14
Article 12. Deferrals 14
Article 13. Rights of Key Employees 14
Article 14. Change in Control 14
Article 15. Amendment, Modification, and Termination 17
Article 16. Withholding 17
Article 17. Indemnification 18
Article 18. Successors 18
Article 19. Legal Construction 18
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<PAGE>
Oakwood Homes Corporation
Key Employee Stock Plan
Article 1. Establishment, Purpose, and Duration
1.1 Establishment of the Plan. Oakwood Homes Corporation, a North Carolina
corporation (hereinafter referred to as the "Company"), hereby establishes an
incentive compensation plan to be known as the "Oakwood Homes Corporation Key
Employee Stock Plan" (hereinafter referred to as the "Plan"), as set forth in
this document. The Plan permits the grant of Nonqualified Stock Options,
Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, and
Performance Shares.
Subject to approval by the Company's shareholders, the Plan shall become
effective as of November 15, 1995 (the "Effective Date") and shall remain in
effect as provided in Section 1.3 hereof. The Plan shall not become effective
unless shareholder approval is obtained.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the success
and enhance the value of the Company by linking the personal interests of
Participants to those of the Company's shareholders, and by providing
Participants with an incentive for outstanding performance.
The Plan is further intended to provide flexibility to the Company in its
ability to motivate, attract, and retain the services of Participants upon whose
judgment, interest and special effort the successful conduct of its operation
largely is dependent.
1.3 Duration of the Plan. The Plan shall commence on the Effective Date, as
described in Section 1.1 hereof, and shall remain in effect, subject to the
right of the Board of Directors to amend or terminate the Plan at any time
pursuant to Article 15 hereof, until all Shares subject to it shall have been
purchased or acquired according to the Plan's provisions. However, in no event
may an Award of an ISO be granted under the Plan after November 14, 2005.
Article 2. Definitions
Whenever used in the Plan, the following terms shall have the meanings set
forth below and, when the meaning is intended, the initial letter of the word is
capitalized:
2.1 "Award" means, individually or collectively, a grant under this Plan of
Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights,
Restricted Stock or Performance Shares.
2.2 "Award Agreement" means an agreement entered into by the Company and
each Participant setting forth the terms and provisions applicable to Awards
granted under this Plan.
2.3 "Board" or "Board of Directors" means the Board of Directors of the
Company.
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2.4 "Change in Control" of the Company shall have occurred when any
Acquiring Person (other than the Company, any employee benefit plan of the
Company, or any person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan), alone or together with
its Affiliates and Associates, shall become the beneficial owner of 25% or more
of the shares of Common Stock of the Company then outstanding (except pursuant
to an offer for all outstanding shares of the Company's Common Stock at a price
and upon such terms and provisions as a majority of the Continuing Directors
determine to be in the best interests of the Company and its shareholders [other
than the Acquiring Person or any Affiliate or Associate thereof on whose behalf
the offer is being made]), and the Continuing Directors no longer constitute a
majority of the Board. For purposes of this definition, the following terms
shall have the following meanings:
(a) "Acquiring Person" means any individual, firm, corporation or other
entity who or which, together with all Affiliates and Associates, shall
be the beneficial owner of a substantial block of the Company's Common
Stock.
(b) "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 as promulgated under the Exchange Act.
(c) "Continuing Director" means any individual who is a member of the Board,
while such individual is a member of the Board, who is not an Acquiring
Person, or an Affiliate or Associate of an Acquiring Person, or a
representative or nominee of an Acquiring Person or of any such Affiliate
or Associate, and was a member of the Board prior to the occurrence of
the Change in Control date; or any successor of a Continuing Director,
while such successor is a member of the Board, and who is not an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or
a representative or nominee of an Acquiring Person or of any such
Affiliate or Associate, and is recommended or elected to succeed the
Continuing Director by a majority of the Continuing Directors.
2.5 "Code" means the Internal Revenue Code of 1986, as amended from time to
time. References to the Code shall include the valid and binding governmental
regulations, court decisions and other regulatory and judicial authority issued
or rendered thereunder.
2.6 "Committee" means the Compensation Committee of the Board, as specified
in Article 3 herein, appointed by the Board to administer the Plan with respect
to grants of Awards.
2.7 "Common Stock" means the common stock of the Company.
2.8 "Company" means Oakwood Homes Corporation, a North Carolina corporation,
and any successor as provided in Article 18 herein.
2.9 "Director" means any individual who is a member of the Board of
Directors of the Company.
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2.10 "Disability" with respect to a Participant, means "disability" as
defined from time to time under any long-term disability plan of the Company or
Subsidiary with which the Participant is employed.
2.11 "Earnings Per Share" means "earnings per common share" of the Company
determined in accordance with generally accepted accounting principles that
would be reported in the Company's Annual Report to Shareholders.
2.12 "Effective Date" shall have the meaning ascribed to such term in
Section 1.1 hereof.
2.13 "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor act thereto.
2.14 "Fair Market Value" with respect to a share of the Company's Common
Stock at a particular time, shall be that value as determined by the Committee
which shall be (i) if such Common Stock is listed on a national securities
exchange, on any given date, (A) the average of the highest and lowest market
prices of shares of Common Stock, as reported on the consolidated transaction
reporting system for such exchange for that date, or if shares of Common Stock
were not traded on such date, on the next preceding day on which shares of
Common Stock were traded, or (B) if the Common Stock is not reported on the
consolidated transaction reporting system for such exchange, the mean between
the highest price and the lowest price at which the Common Stock shall have been
sold regular way on a national securities exchange on said date, or, if no sales
occur on said date, then on the next preceding date on which there were such
sales of Common Stock; or (ii) if the Common Stock shall not be listed on a
national securities exchange, the mean between the average high bid and low
asked prices last reported by the National Association of Securities Dealers,
Inc. for the over-the-counter market on said date or, if no bid and asked prices
are reported on said date, then on the next preceding date on which there were
such quotations; or (iii) if at any time quotations for the Common Stock shall
not be reported by the National Association of Securities Dealers, Inc. for the
over-the-counter market and the Common Stock shall not be listed on any national
securities exchange, the fair market value determined by the Committee on the
basis of available prices for such Common Stock or in such other manner as the
Committee may deem reasonable.
2.15 "Freestanding SAR" means an SAR that is granted independently of any
Options.
2.16 "Incentive Stock Option" or "ISO" means an option to purchase Shares,
granted under Article 6 herein, and which is designated as an Incentive Stock
Option which is intended to meet the requirements of Section 422 of the Code.
2.17 "Insider" shall mean an individual who is, on the relevant date, an
officer, director or ten percent (10%) beneficial owner of any class of the
Company's equity securities that is registered pursuant to Section 12 of the
Exchange Act, all as defined under Section 16 of the Exchange Act.
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2.18 "Key Employee" means an employee of the Company, including an officer
of the Company, in a managerial or other important position who can make
important contributions to the Company, all as determined by the Committee in
its discretion.
2.19 "Named Executive Officer" means, for a calendar year, a Participant who
is one of the group of "covered employees" for such calendar year within the
meaning of Code Section 162(m) or any successor statute.
2.20 "Net Income" means "net income" of the Company determined in accordance
with generally accepted accounting principles that would be reported in the
Company's Annual Report to Shareholders.
2.21 "Nonqualified Stock Option" or "NQSO" means an option to purchase
Shares granted to Key Employees under Article 6 herein, and which is not
intended to meet the requirements of Code Section 422.
2.22 "Option" means an Incentive Stock Option or a Nonqualified Stock
Option.
2.23 "Option Price" means the price at which a Share may be purchased by a
Participant pursuant to an Option.
2.24 "Participant" means a Key Employee who has outstanding an Award granted
under the Plan.
2.25 "Performance-Based Exception" means the performance-based exception set
forth in Code Section 162(m)(4)(C) from the deductibility limitations of Code
Section 162(m).
2.26 "Performance Share" means an Award granted to a Key Employee, as
described in Article 9 herein.
2.27 "Period of Restriction" means the period during which the transfer of
Shares of Restricted Stock is limited in some way (based on the passage of time,
the achievement of performance goals, or upon the occurrence of other events as
determined by the Committee, at its discretion), and the Shares are subject to a
substantial risk of forfeiture, as provided in Article 8 herein.
2.28 "Restricted Stock" means an Award granted to a Participant pursuant to
Article 8 herein.
2.29 "Return on Assets" means "return on average assets" of the Company
determined in accordance with generally accepted accounting principles that
would be reported in the Company's Annual Report to Shareholders.
2.30 "Return on Equity" means "return on average common shareholders'
equity" of the Company determined in accordance with generally accepted
accounting principles that would be reported in the Company's Annual Report to
Shareholders.
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2.31 "Revenues" means the "revenues" of the Company determined in accordance
with generally accepted accounting principles that would be reported in the
Company's Annual Report to Shareholders.
2.32 "Shares" means the shares of Common Stock of the Company.
2.33 "Stock Appreciation Right" or "SAR" means an Award, granted alone or in
connection with a related Option, designated as an SAR, pursuant to the terms of
Article 7 herein.
2.34 "Subsidiary" means any corporation, partnership, joint venture,
affiliate, or other entity in which the Company has an ownership interest, and
which the Committee designates as a participating entity in the Plan.
2.35 "Tandem SAR" means an SAR that is granted in connection with a related
Option, the exercise of which shall require forfeiture of the right to purchase
a Share under the related Option (and when a Share is purchased under the
Option, the Tandem SAR shall similarly be canceled).
2.36 "Total Shareholder Return" means the percentage change in value of an
initial investment in Shares over a specified period assuming reinvestment of
all dividends during the period.
Article 3. Administration
3.1 The Committee. The Plan shall be administered by the Compensation
Committee of the Board or by any other Committee appointed by the Board
consisting of not less than two (2) Directors. All of the members of the
Committee shall comply with the "disinterested administration" rules of Rule
16b-3 under the Exchange Act, if applicable. The members of the Committee shall
be appointed from time to time by, and shall serve at the discretion of, the
Board of Directors. In addition, any action taken with respect to Named
Executive Officers for purposes of meeting the Performance-Based Exception shall
be taken by the Committee only if all of the members of the Committee are
"outside directors" within the meaning of Code Section 162(m), subject to any
applicable transition rules under Code Section 162(m). If all of the members of
the Committee are not "outside directors," such action shall be taken by a
subcommittee of the Committee comprised of at least two (2) members who are
"outside directors."
3.2 Authority of the Committee. Except as limited by law, or by the Articles
of Incorporation or Bylaws of the Company, and subject to the provisions herein,
the Committee shall have full power to select Key Employees who shall
participate in the Plan; determine the sizes and types of Awards; determine the
terms and provisions of Awards in a manner consistent with the Plan; construe
and interpret the Plan and any agreement or instrument entered into under the
Plan; establish, amend, or waive rules and regulations for the Plan's
administration; and (subject to the provisions of Article 15 herein), amend the
terms and provisions of any outstanding Award to the extent such
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terms and provisions are within the discretion of the Committee as provided in
the Plan. Further, the Committee shall make all other determinations which may
be necessary or advisable for the administration of the Plan. To the extent
permitted by law, the Committee may delegate its authority hereunder.
3.3 Decisions Binding. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Board shall be final, conclusive and binding on all persons,
including the Company, its shareholders, employees, Participants, and their
estates and beneficiaries.
Article 4. Shares Subject to the Plan
4.1 Number of Shares Available for Grants. Beginning on the Effective Date,
there is hereby reserved for grants of Awards under the Plan a number of Shares
equal to:
(a) one million (1,000,000) Shares; plus
(b) one and one-half percent (1.5%) of the outstanding Shares as of October
1, 1995 and each subsequent October 1.
Such Shares available for grants of Awards in any year shall be increased by the
number of Shares available under this Section 4.1 in previous years but not
covered by Awards granted under this Plan in those years plus any Shares as to
which Awards granted under this Plan have lapsed, expired, terminated, or been
canceled. The number of Shares reserved for grants of Awards under this Section
4.1 shall be subject to adjustment as provided in Section 4.3.
In no event shall a Participant receive an Award or Awards of Options,
Freestanding SARs, Restricted Stock or Performance Shares during any one (1)
calendar year covering in the aggregate more than Two Hundred Fifty Thousand
(250,000) Shares.
4.2 Lapsed Awards. If any Award granted under this Plan is canceled,
terminates, expires, or lapses for any reason (with the exception of the
termination of a Tandem SAR upon exercise of the related Option, or the
termination of a related Option upon exercise of the corresponding Tandem SAR),
any Shares subject to such Award again shall be available for the grant of an
Award under the Plan.
4.3 Adjustments in Authorized Shares. In the event of any change
in corporate capitalization, such as a stock split, or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any reorganization (whether or
not such reorganization comes within the definition of such term in Code Section
368) or any partial or complete liquidation of the Company, such adjustment
shall be made in the number and class of Shares which may be delivered under the
Plan, and in the number and class of and/or price of Shares subject to
outstanding Awards granted under the Plan, as may be determined to be
appropriate and equitable by the Committee, in its sole discretion, to prevent
dilution or enlargement of rights; provided, however, that the number of Shares
subject to any Award shall always be a whole number.
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Article 5. Eligibility and Participation
5.1 Eligibility. Persons eligible to participate in this Plan are all Key
Employees of the Company, as determined by the Committee, including Key
Employees who are Directors, but excluding Directors who are not Key Employees.
5.2 Actual Participation. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all eligible Key Employees those
to whom Awards shall be granted and shall determine the nature and amount of
each Award.
Article 6. Stock Options
6.1 Grant of Options. Subject to the terms and provisions of the Plan,
Options may be granted to Key Employees in such number, and upon such terms, and
at any time and from time to time as shall be determined by the Committee.
6.2 Award Agreement. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as the
Committee shall determine. The Award Agreement also shall specify whether the
Option is intended to be an ISO within the meaning of Section 422 of the Code,
or an NQSO whose grant is intended not to fall under Code Section 422.
6.3 Option Price. The Committee shall determine the Option Price for each
grant of an Option under this Plan, which such Option Price shall be set forth
in the applicable Award Agreement; provided, however, that the Option Price
shall be at least equal to one hundred percent (100%) of the Fair Market Value
of a Share on the date the Option is granted with respect to the grant of either
(i) an Option granted to a Named Executive Officer that is intended to satisfy
the Performance-Based Exception or (ii) an ISO.
6.4 Duration of Options. Each Option shall expire at such time as the
Committee shall determine at the time of grant; provided, however, that no
Option shall be exercisable later than the tenth (10th) anniversary date of its
grant.
6.5 Exercise of Options. Options granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve and which shall be set forth in the
applicable Award Agreement, which need not be the same for each grant or for
each Participant.
6.6 Payment. Options shall be exercised by the delivery of a written notice
of exercise to the Company, setting forth the number of Shares with respect to
which the Option is to be exercised, accompanied by full payment for the Shares.
The Option Price upon exercise of any Option shall be payable to the Company
in full either: (a) in cash or its equivalent, or (b) by tendering previously
acquired Shares having an aggregate Fair Market Value at the time of exercise
equal to the total Option Price (provided that the Shares which are tendered
must have been held by the Participant for at least six (6) months prior to
their tender to satisfy the Option Price), or (c) by a combination of (a) and
(b).
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The Committee also may allow cashless exercise as permitted under Federal
Reserve Board's Regulation G or Regulation T, subject to applicable securities
law restrictions, or by any other means which the Committee determines to be
consistent with the Plan's purpose and applicable law.
As soon as practicable after receipt of a written notification of exercise
and full payment, the Company shall deliver to the Participant, in the
Participant's name, Share certificates in an appropriate amount based upon the
number of Shares purchased under the Option(s).
6.7 Restrictions on Share Transferability. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article 6 as it may deem advisable, including, without
limitation, restrictions under applicable Federal securities laws, under the
requirements of any stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities laws applicable
to such Shares.
6.8 Termination of Employment. Each Participant's Option Award Agreement
shall set forth the extent to which the Participant shall have the right to
exercise the Option following termination of the Participant's employment with
the Company and its Subsidiaries. Such provisions shall be determined in the
sole discretion of the Committee, shall be included in the Award Agreement
entered into with Participants, need not be uniform among all Options issued
pursuant to this Article 6, may reflect distinctions based on the reasons for
termination of employment and may include provisions relating to the
Participant's competition with the Company after termination of employment. In
that regard, if an Award Agreement permits exercise of an Option following the
death of the Participant, the Award Agreement shall provide that such Option
shall be exercisable to the extent provided therein by any person that may be
empowered to do so under the Participant's will, or if the Participant shall
fail to make a testamentary disposition of the Option or shall have died
intestate, by the Participant's executor or other legal representative.
6.9 Nontransferability of Options.
(a) Incentive Stock Options. No ISO granted under this Article 6 may be
sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. Further, all ISOs granted to a Participant under the Plan
shall be exercisable during his or her lifetime only by such
Participant.
(b) Nonqualified Stock Options. Except as otherwise provided in a
Participant's Award Agreement, no NQSO granted under this Article 6 may
be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. Further, except as otherwise provided in a Participant's
Award Agreement, all NQSOs granted to a Participant under this Article 6
shall be exercisable during his or her lifetime only by such
Participant.
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6.10 No Rights. A Participant granted an Option shall have no rights as a
shareholder of the Company with respect to the Shares covered by such Option
except to the extent that Shares are issued to the Participant upon the due
exercise of the Option.
Article 7. Stock Appreciation Rights
7.1 Grant of SARs. Subject to the terms and provisions of the Plan, SARs may
be granted to Key Employees at any time and from time to time as shall be
determined by the Committee. The Committee may grant Freestanding SARs, Tandem
SARs, or any combination of these forms of SAR.
The Committee shall have complete discretion in determining the number of
Shares covered by SARs granted hereunder (subject to Article 4 herein) and,
consistent with the provisions of the Plan, in determining the terms and
provisions pertaining to such SARs. The number of Shares covered by a
Freestanding SAR shall be counted against the number of Shares available for
grants of Awards under Section 4.1, but the number of Shares covered by a Tandem
SAR shall not be so counted.
The grant price of a Freestanding SAR shall equal the Fair Market Value of a
Share on the date of grant of the SAR. The grant price of Tandem SARs shall
equal the Option Price of the related Option.
7.2 Exercise of Tandem SARs. Tandem SARs may be exercised for all or part of
the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.
Notwithstanding any other provision of this Plan to the contrary, with
respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR
will expire no later than the expiration of the underlying ISO; (ii) the value
of the payout with respect to the Tandem SAR may be for no more than one hundred
percent (100%) of the difference between the Option Price of the underlying ISO
and the Fair Market Value of the Shares subject to the underlying ISO at the
time the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only
when the Fair Market Value of the Shares subject to the ISO exceeds the Option
Price of the ISO.
7.3 Exercise of Freestanding SARs. Freestanding SARs may be exercised upon
whatever terms and provisions the Committee, in its sole discretion, imposes
upon them.
7.4 SAR Agreement. Each SAR grant shall be evidenced by an Award Agreement
that shall specify the grant price, the term of the SAR, and such other
provisions as the Committee shall determine.
7.5 Term of SARs. The term of an SAR granted under the Plan shall be
determined by the Committee, in its sole discretion; provided, however, that
such term shall not exceed ten (10) years.
7.6 Payment of SAR Amount. Upon exercise of an SAR, a Participant shall be
entitled to receive payment from the Company in an amount determined by
multiplying:
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(a) The difference between the Fair Market Value of a Share on the date of
exercise over the grant price; by
(b) The number of Shares with respect to which the SAR is exercised.
At the discretion of the Committee, the payment upon SAR exercise may be in
cash, in Shares of equivalent value, or in some combination thereof; provided,
however, that from and after the date of a Change in Control, the exercise of an
SAR may be settled only in cash.
7.7 Rule 16b-3 Requirements. Notwithstanding any other provision of the
Plan, the Committee may impose such conditions on exercise of an SAR (including,
without limitation, the right of the Committee to limit the time of exercise to
specified periods) as may be required to satisfy the requirements of Section 16
(or any successor provision) of the Exchange Act.
7.8 Termination of Employment. Each SAR Award Agreement shall set forth the
extent to which the Participant shall have the right to exercise the SAR
following termination of the Participant's employment with the Company and its
Subsidiaries. Such provisions shall be determined in the sole discretion of the
Committee, shall be included in the Award Agreement entered into with
Participants, need not be uniform among all SARs issued pursuant to the Plan,
and may reflect distinctions based on the reasons for termination of employment.
In that regard, if an Award Agreement permits exercise of an SAR following the
death of the Participant, the Award Agreement shall provide that such SAR shall
be exercisable to the extent provided therein by any person that may be
empowered to do so under the Participant's will, or if the Participant shall
fail to make a testamentary disposition of the SAR or shall have died intestate,
by the Participant's executor or other legal representative.
7.9 Nontransferability of SARs. Except as otherwise provided in a
Participant's Award Agreement, no SAR granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, except as
otherwise provided in a Participant's Award Agreement, all SARs granted to a
Participant under the Plan shall be exercisable during his or her lifetime only
by such Participant.
7.10 No Rights. A Participant granted an SAR shall have no rights as a
shareholder of the Company with respect to the Shares covered by such SAR except
to the extent that Shares are issued to the Participant upon the due exercise of
the SAR.
Article 8. Restricted Stock
8.1 Grant of Restricted Stock. Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to eligible Key Employees in such amounts as the Committee
shall determine.
8.2 Restricted Stock Award Agreement. Each Restricted Stock grant shall be
evidenced by a Restricted Stock Award Agreement that shall specify the Period of
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Restriction, or Periods, the number of Shares of Restricted Stock granted, and
such other provisions as the Committee shall determine.
8.3 Transferability. Except as provided in this Article 8, the Shares of
Restricted Stock granted herein may not be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated until the end of the applicable Period of
Restriction established by the Committee and specified in the Restricted Stock
Award Agreement, or upon earlier satisfaction of any other conditions, as
specified by the Committee in its sole discretion and set forth in the
Restricted Stock Agreement. All rights with respect to the Restricted Stock
granted to a Participant under the Plan shall be available during his or her
lifetime only to such Participant.
8.4 Other Restrictions. The Committee may impose such other conditions
and/or restrictions on any Shares of Restricted Stock granted pursuant to the
Plan as it may deem advisable including, without limitation, a requirement that
Participants pay a stipulated purchase price for each Share of Restricted Stock,
restrictions based upon the achievement of specific performance goals
(Company-wide, divisional, and/or individual), time-based restrictions on
vesting following the attainment of the performance goals, and/or restrictions
under applicable Federal or state securities laws.
The Company shall retain the certificates representing Shares of Restricted
Stock in the Company's possession until such time as all conditions and/or
restrictions applicable to such Shares have been satisfied.
Except as otherwise provided in this Article 8 or in the applicable Award
Agreement, Shares of Restricted Stock covered by each Restricted Stock grant
made under the Plan shall become freely transferable by the Participant after
the last day of the Period of Restriction.
8.5 Voting Rights. During the Period of Restriction, Participants holding
Shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to those Shares.
8.6 Dividends and Other Distributions. During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder may be
credited with regular cash dividends paid with respect to the underlying Shares
while they are so held. The Committee may apply any restrictions to the
dividends that the Committee deems appropriate.
In the event that any dividend constitutes a "derivative security" or an
"equity security" pursuant to Rule 16(a) under the Exchange Act, such dividend
shall be subject to a vesting period equal to the remaining vesting period of
the Shares of Restricted Stock with respect to which the dividend is paid.
8.7 Termination of Employment. Each Restricted Stock Award Agreement shall
set forth the extent to which the Participant shall have the right to receive
unvested Restricted Shares following termination of the Participant's employment
with the Company and its Subsidiaries. Such provisions shall be determined in
the sole discretion of the Committee, shall be included in the Award Agreement
entered into with
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Participants, need not be uniform among all Shares of Restricted Stock issued
pursuant to the Plan, and may reflect distinctions based on the reasons for
termination of employment. In amplification but not limitation of the foregoing,
in the case of an award of Restricted Stock to a Named Executive Officer which
is intended to qualify for the Performance-Based Exception, the Award Agreement
may provide that such Restricted Stock may become payable in the event of a
termination of employment by reason of death, Disability or Change in Control,
such payment not to occur before attainment of the related performance goal.
8.8 Coordination With Incentive Plan. The Company maintains the Oakwood
Homes Corporation Executive Incentive Compensation Plan (the "EIC Plan") to
provide annual and long-term cash incentives to certain executive officers of
the Company. In accordance with the EIC Plan, an executive officer receiving a
cash award under the EIC Plan must receive at least 10% of such award, and if
and as determined by the Committee as much as 50% of such award, as Shares of
Restricted Stock, with the number of such Shares determined on a discount basis
that depends on the length of the Period of Restriction selected by the
executive officer. Notwithstanding any provision of this Plan to the contrary,
the Committee shall award from this Plan any Shares of Restricted Stock to be
received by an executive officer under the EIC Plan as described above, the
number of such Shares and the applicable Period of Restriction to be determined
in accordance with the terms of the EIC Plan and set forth in an appropriate
Award Agreement.
Article 9. Performance Shares
9.1 Grant of Performance Shares. Subject to the terms and provisions of the
Plan, Performance Shares may be granted to eligible Key Employees in such amount
and upon such terms, and at such time(s), as shall be determined by the
Committee. The number and/or vesting of Performance Shares granted, in the
Committee's discretion, shall be contingent upon the degree of attainment of
specified performance goals or other conditions over a specified period (the
"Performance Period"). The terms and provisions of an Award of Performance
Shares shall be evidenced by an appropriate Award Agreement.
9.2 Value of Performance Shares. The value of a Performance Share at any
time shall equal the Fair Market Value of a Share at such time.
9.3 Form and Timing of Payment of Performance Shares. During the course of a
Performance Period, the Committee shall determine the number of Performance
Shares as to which the Participant has earned a right to be paid pursuant to the
terms of the applicable Award Agreement. The Committee shall pay any earned
Performance Shares as soon as practicable after they are earned in the form of
cash, Shares or a combination thereof (as determined by the Committee) having an
aggregate Fair Market Value equal to the value of the earned Performance Shares
as of the date they are earned. Any Shares used to pay out earned Performance
Shares may be granted subject to any restrictions deemed appropriate by the
Committee. In addition, the Committee, in its discretion, may cancel any earned
Performance Shares and grant Stock Options to the Participant which the
Committee determines to be of equivalent value based on a conversion formula
stated in the Performance Shares Award Agreement.
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The Committee, in its discretion, may also grant dividend equivalents rights
with respect to earned but unpaid Performance Shares as evidenced by the
applicable Award Agreement. Performance Shares shall not have any voting rights.
9.4 Termination of Employment. Each Performance Share Award Agreement shall
set forth the extent to which the Participant shall have the right to receive
unearned Performance Shares following termination of the Participant's
employment with the Company and its Subsidiaries. Such provisions shall be
determined in the sole discretion of the Committee, shall be included in the
Award Agreements entered into with Participants, need not be uniform among all
Performance Shares awarded pursuant to the Plan, and may reflect distinctions
based on the reasons of termination of employment. In amplification but not
limitation of the foregoing, in the case of an award of Performance Shares to a
Named Executive Officer which is intended to qualify for the Performance-Based
Exception, the Award Agreement may provide that such Performance Shares may
become payable in the event of a termination of employment by reason of death,
Disability or Change in Control, such payment not to occur before attainment of
the related performance goal.
9.5 Nontransferability. Except as otherwise provided in a Participant's
Award Agreement, Performance Shares may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. Further, except as otherwise provided in a
Participant's Award Agreement, a Participant's rights under the Plan shall be
exercisable during the Participant's lifetime only by the Participant.
Article 10. Performance Measures
The performance measure(s) to be used for purposes of Awards (other than
Options) to Named Executive Officers which are designed to qualify for the
Performance-Based Exception shall be chosen from among the following
alternatives:
(a) Earnings Per Share;
(b) Net Income;
(c) Return On Assets;
(d) Return On Equity;
(e) Revenues; or
(f) Total Shareholder Return.
In the event that applicable tax and/or securities laws change to permit
Committee discretion to alter the governing performance measures without
obtaining shareholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining shareholder approval.
Article 11. Beneficiary Designation
Each Participant under the Plan may, from time to time, name any beneficiary
or beneficiaries (who may be named contingently or successively) to whom any
benefit
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under the Plan is to be paid in case of his or her death before he or she
receives any or all of such benefit. Each such designation shall revoke all
prior designations by the same Participant, shall be in a form prescribed by the
Company, and will be effective only when filed by the Participant in writing
with the Company during the Participant's lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant's death shall be paid
to the Participant's estate.
Article 12. Deferrals
The Committee may permit a Participant to defer such Participant's receipt
of the payment of cash or the delivery of Shares that would otherwise be due to
such Participant by virtue of the exercise of an Option or SAR, the lapse or
waiver of restrictions with respect to Restricted Stock, or the satisfaction of
any requirements or goals with respect to Performance Shares. If any such
deferral election is required or permitted, the Committee shall, in its sole
discretion, establish rules and procedures for such payment deferrals.
Article 13. Rights of Key Employees
13.1 Employment. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate any Participant's employment at any
time, nor confer upon any Participant any right to continue in the employ of the
Company. For purposes of this Plan, a transfer of a Participant's employment
between the Company and a Subsidiary, or between Subsidiaries, shall not be
deemed to be a termination of employment.
13.2 Participation. No Key Employee shall have the right to be selected to
receive an Award under this Plan, or, having been so selected, to be selected to
receive a future Award.
Article 14. Change in Control
14.1 Treatment of Outstanding Awards. Upon the occurrence of a Change in
Control, unless otherwise specifically prohibited under applicable laws, or by
the rules and regulations of any governing governmental agencies or national
securities exchanges:
(a) Any and all Options and SARs granted hereunder shall become immediately
exercisable, and shall remain exercisable throughout their entire term;
(b) Any restriction periods and restrictions imposed on shares of Restricted
Stock shall lapse; and
(c) The target payout opportunities attainable under all outstanding Awards
of Restricted Stock and Performance Shares shall be deemed to have been
fully earned for the entire Performance Period(s) as of the effective
date of the Change in Control, and the vesting of all Awards shall be
accelerated as of the effective date of the Change in Control.
14.2 Limitation on Change-in-Control Benefits. It is the intention of the
Company and the Participants to reduce the amounts payable or distributable to a
Participant hereunder if the aggregate Net After Tax Receipts (as defined below)
to the Participant would thereby be increased, as a result of the application of
the excise tax provisions of Section 4999 of the Code. Accordingly, anything in
this Plan to the contrary notwith-
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standing, in the event that the independent accountants regularly employed by
the Company immediately prior to any "change" described below (the "Accounting
Firm") shall determine that receipt of all Payments (as defined below) would
subject the Participant to tax under Section 4999 of the Code, it shall
determine whether some amount of Payments would meet the definition of a
"Reduced Amount," (as defined below). If the Accounting Firm determines that
there is a Reduced Amount, the aggregate Payments shall be reduced to such
Reduced Amount in accordance with the provisions of Section 14.2(b) below.
(a) For purposes of this Section 14.2(a):
(i) A "Payment" shall mean any payment or distribution in the nature of
compensation to or for the benefit of a Participant who is a
"disqualified individual" within the meaning of Section 280G(c) of
the Code and which is contingent on a "change" described in Section
280G(b)(2)(A)(i) of the Code with respect to the Company, whether
paid or payable pursuant to this Plan or otherwise;
(ii) "Plan Payment" shall mean a Payment paid or payable pursuant to this
Plan (disregarding this Section 14.2);
(iii) "Net After Tax Receipt" shall mean the Present Value of a Payment,
net of all taxes imposed on the Participant with respect thereto
under Sections 1 and 4999 of the Code, determined by applying the
highest marginal rate under Section 1 of the Code which applied to
the Participant's Federal taxable income for the immediately
preceding taxable year;
(iv) "Present Value" shall mean such value determined in accordance with
Section 280G(d)(4) of the Code; and
(v) "Reduced Amount" shall mean the smallest aggregate amount of Payments
which (A) is less than the sum of all Payments and (B) results in
aggregate Net After Tax Receipts which are equal to or greater than
the Net After Tax Receipts which would result if all Payments were
paid to or for the benefit of the Participant.
(b) If the Accounting Firm determines that aggregate Payments should be
reduced to the Reduced Amount, the Committee shall promptly give the
Participant notice to that effect and a copy of the detailed calculation
thereof, and the Participant may then elect, in the Participant's sole
discretion, which and how much of the Payments, including without
limitation Plan Payments, shall be eliminated or reduced (as long as
after such election the Present Value of the aggregate Payments is equal
to the Reduced Amount), and shall advise the Committee in writing of such
election within ten (10) days of the Participant's receipt of notice. If
no such election is made by the Participant within such ten (10) day
period, the Committee may elect which of the Payments, including without
limitation Plan Payments, shall be eliminated or reduced (as long as
after such election the Present Value of the aggregate Payments is equal
to the Reduced Amount) and shall notify the Participant promptly of such
election. All determinations made by the
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Accounting Firm under this Section 14.2 shall be binding upon the Company
and the Participant and shall be made within sixty (60) days immediately
following the event constituting the "change" referred to above. As
promptly as practicable following such determination, the Company shall
pay to or distribute for the benefit of the Participant such Payments as
are then due to the Participant under this Plan.
(c) At the time of the initial determination by the Accounting Firm
hereunder, it is possible that amounts will have been paid or distributed
by the Company to or for the benefit of the Participant pursuant to this
Plan which should not have been so paid or distributed ("Overpayment") or
that additional amounts which will have not been paid or distributed by
the Company to or for the benefit of the Participant pursuant to this
Plan could have been so paid or distributed ("Underpayment"), in each
case, consistent with the calculation of the Reduced Amount hereunder. In
the event that the Accounting Firm, based either upon the assertion of a
deficiency by the Internal Revenue Service against the Company or the
Participant which the Accounting Firm believes has a high probability of
success or controlling precedent or other substantial authority,
determines that an Overpayment has been made, any such Overpayment paid
or distributed by the Company to or for the benefit of the Participant
shall be treated for all purposes as a loan ab initio to the Participant
which the Participant shall repay to the Company together with interest
at the applicable Federal rate provided for in Section 7872(f)(2) of the
Code; provided, however, that no such loan shall be deemed to have been
made and no amount shall be payable by the Participant to the Company if
and to the extent such deemed loan and payment would not either reduce
the amount on which the Participant is subject to tax under Section 1 and
Section 4999 of the Code or generate a refund of such taxes.
In the event that the Accounting Firm, based upon controlling precedent
or other substantial authority, determines that an Underpayment has
occurred, any such Underpayment shall be promptly paid by the Company to
or for the benefit of the Participant together with interest at the
applicable Federal rate provided for in Section 7872(f)(2) of the Code.
14.3 Termination, Amendment, and Modifications of Change-in-Control
Provisions. Notwithstanding any other provision of this Plan or any Award
Agreement provision, the provisions of this Article 14 may not be terminated,
amended, or modified on or after the date of a Change in Control to affect
adversely any Award theretofore granted under the Plan without the prior written
consent of the Participant with respect to said Participant's outstanding
Awards; provided, however, the Board of Directors, upon recommendation of the
Committee, may terminate, amend, or modify this Article 14 at any time and from
time to prior to the date of a Change in Control.
Article 15. Amendment, Modification, and Termination
15.1 Amendment, Modification, and Termination. The Board may at any time and
from time to time, alter, amend, suspend or terminate the Plan in whole or in
part; provided, however, that no amendment which requires shareholder approval
in order for the Plan to continue to comply with Rule 16b-3 under the Exchange
Act, including any
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successor to such Rule, shall be effective unless such amendment shall be
approved by the requisite vote of shareholders of the Company entitled to vote
thereon.
The Committee shall not have the authority to cancel outstanding Awards and
issue substitute Awards in replacement thereof.
15.2 Awards Previously Granted. No termination, amendment, or modification of
the Plan shall adversely affect in any material way any Award previously granted
under the Plan, without the written consent of the Participant holding such
Award.
15.3 Acceleration of Award Vesting; Waiver of Restrictions. Notwithstanding
any provision of this Plan or any Award Agreement provision to the contrary, the
Committee, in its sole and exclusive discretion, shall have the power at any
time to (i) accelerate the vesting of any Award granted under the Plan,
including without limitation, acceleration to such a date that would result in
said Awards becoming immediately vested, or (ii) waive any restrictions of any
Award granted under the Plan.
Article 16. Withholding
16.1 Tax Withholding. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state, and local taxes (including the
Participant's FICA obligation) required by law to be withheld with respect to
any taxable event arising as a result of this Plan.
16.2 Share Withholding. With respect to withholding required upon the
exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock,
or upon any other taxable event arising as a result of Awards granted hereunder,
Participants may elect, subject to the approval of the Committee, to satisfy the
withholding requirement, in whole or in part, by having the Company withhold
Shares having a Fair Market Value on the date as of which the tax is to be
determined equal to the minimum statutory total tax which could be imposed on
the transaction. All such elections shall be irrevocable, made in writing,
signed by the Participant, and shall be subject to any restrictions or
limitations that the Committee, in its sole discretion, deems appropriate.
Article 17. Indemnification
Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit, or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with the Company's approval, or paid by him or her in satisfaction of any
judgment in any such action, suit, or proceeding against him or her, provided he
or she shall give the Company an opportunity, at its own expense, to handle and
defend the same before he or she undertakes to handle and defend it on his or
her own behalf. The foregoing right of indemnification shall not be exclusive of
any other rights of indemnification to which such persons may be entitled under
the Company's Articles of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
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Article 18. Successors
All obligations of the Company under the Plan with respect to Awards granted
hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
Article 19. Legal Construction
19.1 Gender and Number. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
19.2 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
19.3 Requirements of Law. The granting of Awards and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required.
19.4 Securities Law Compliance. With respect to Insiders, transactions under
this Plan are intended to comply with all applicable conditions or Rule 16b-3 or
its successors under the Exchange Act. To the extent any provision of the plan
or action by the Committee fails to so comply, it shall be deemed null and void,
to the extent permitted by law and deemed advisable by the Committee.
19.5 Governing Law. To the extent not preempted by Federal law, the Plan, and
all agreements hereunder, shall be construed in accordance with and governed by
the laws of the State of North Carolina.
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EXHIBIT 11
OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
CALCULATION OF PRIMARY AND FULLY DILUTED EARNINGS PER COMMON SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
September 30, September 30, September 30,
1995 1994 (1) 1993 (1)
------------- ------------- -------------
<S> <C> <C> <C>
Weighted average number of common
shares outstanding 22,091 21,991 20,145
Add: Dilutive effect of stock
options, computed using the
treasury stock method 956 1,001 1,021
Less: Unearned ESOP shares (48) --- ---
------------ ------------ ------------
Weighted average number of common
and common equivalent shares
outstanding 22,999 22,992 21,166
------------ ------------ ------------
Net income $ 45,318 $ 35,655 $ 25,715
------------ ------------ ------------
Earnings per common share--primary $ 1.97 $ 1.55 $ 1.21
------------ ------------ ------------
Weighted average number of common 22,091 21,991 20,145
shares outstanding
Add: Dilutive effect of stock
options, computed using
the treasury stock method 1,013 1,014 1,064
Add: Additional shares assumed to
be outstanding from
conversion of convertible
securities --- --- 818
Less: Unearned ESOP shares (48) --- ---
------------ ------------ ------------
Weighted average number of common
shares outstanding assuming
full dilution 23,056 23,005 22,027
------------ ------------ ------------
Net income $ 45,318 $ 35,655 $ 25,715
Add: Interest on convertible
securities, net of income
taxes --- --- 237
------------ ------------ ------------
Net income, as adjusted $ 45,318 $ 35,655 $ 25,952
============ ============= ============
Earnings per common share--fully
diluted $ 1.97 $ 1.55 $ 1.18
============ ============= ============
</TABLE>
(1) Restated to reflect the combined results of Oakwood, Golden West and
Destiny. See Note 1 to the financial statements incorporated by reference
herein.
OAKWOOD
[LOGO] HOMES
CORPORATION
1995
ANNUAL REPORT
RECORD YEAR
PERFORMANCE
NOW AND TOMORROW
<PAGE>
about the company Oakwood Homes Corporation is a fully integrated manufactured
housing company--manufacturing, retailing and financing quality homes in a
30-state region stretching from coast to coast. Our strategy of vertical
integration, which we have implemented more completely than any competitor,
enables us to control all the factors that influence our customers' home buying
decision: product features and design, quality of materials and workmanship,
effectiveness of the retail selling process, availability of financing options
that meet customer needs, and service after the sale. With 198 retail sales
centers, we sell more homes than any other retailer, and our sales centers are
consistently among the most productive in the industry in terms of the average
number of new homes sold per center. As the fifth largest manufacturer in the
industry, our 16 plants located across our market areas support the needs of our
company-owned retail centers and, in certain markets, independent retailers. Our
consumer finance arm makes the American dream of home ownership come true,
providing almost one-half billion dollars in customer financing last year. We
also provide home siting options for our customers in our rental communities and
land/home subdivisions. Through our efforts in each of these areas, we provide a
level of service and responsiveness to our customers that is greater than our
competitors are able or willing to provide. Combining skills in retailing,
manufacturing and finance, we are delivering the promise of complete customer
satisfaction that today's value conscious consumer demands. Founded in 1946, our
headquarters is located in Greensboro, North Carolina, and our common shares are
listed on the New York Stock Exchange.
<PAGE>
OAKWOOD HOMES CORPORATION
- ---------------------------
SELECTED FINANCIAL DATA
- ---------------------------
<TABLE>
<CAPTION>
Year Ended September 30,
-------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990
-------------------------------------------------------------------------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Net sales $741,521 $595,127 $422,103 $313,272 $247,911 $245,995
Total revenues $821,412 $664,610 $483,736 $360,446 $285,540 $277,124
Pro forma net income $ 45,318 $ 35,655 $ 25,715 $ 14,334 $ 8,823 $ 7,504
Pro forma earnings per common share
Primary $1.97 $1.55 $1.21 $0.91 $0.67 $0.65
Fully diluted $1.97 $1.55 $1.18 $0.83 $0.63 $0.62
Total assets $782,640 $590,397 $596,950 $459,924 $380,063 $305,536
Notes and bonds payable $198,812 $207,990 $264,225 $297,033 $235,377 $193,493
Cash dividends per common share $0.08 $0.08 $0.08 $0.06 $0.05 $0.04
</TABLE>
[The 3 tables below were represented as bar graphs in the printed report]
Net Sales
(in millions
1990 ................... $246
1991 ................... $248
1992 ................... $313
1993 ................... $422
1994 ................... $595
1995 ................... $742
5 year compound growth rate: 25%
Pro Forma Net Income
(in millions)
1990 ................... $ 7.5
1991 ................... $ 8.8
1992 ................... $14.3
1993 ................... $25.7
1994 ................... $35.7
1995 ................... $45.3
5 year compound growth rate: 43%
Pro Forma Fully Diluted EPS
1990 ................... $0.62
1991 ................... $0.63
1992 ................... $0.83
1993 ................... $1.18
1994 ................... $1.55
1995 ................... $1.97
5 year compound growth rate: 26%
1
<PAGE>
- -----------------------
TO OUR SHAREHOLDERS
- -----------------------
We are very pleased to share with you the record results we achieved in fiscal
1995. Revenues for the year increased 24% to $821 million from $665 million last
year. Net income advanced 27% to $45 million from $36 million, and earnings per
share were $1.97, a 27% increase from the $1.55 reported for 1994. Over the past
five years, revenues have grown at a compound annual rate of 24% and earnings
per share at an annual compound rate of 26%.
While 1995 was a great year in terms of profitability, the more important
story is what we accomplished toward making Oakwood Homes the preeminent
manufactured housing company in America. We intend to compete in every
significant manufactured housing market in the nation because we believe the
industry has substantial opportunities for growth in the coming years.
Manufactured housing has significant advantages over many other forms of
shelter. As site-built homes lose their investment appeal in a non-inflationary
environment, the outstanding value and high quality represented in the product
today are key factors driving the industry. Improvements in the features,
styling and construction of manufactured homes have made them attractive to a
larger segment of the population than ever before. In a time when the average
site-built home costs about $55 per square foot and the average manufactured
home costs only about $25 per square foot, each excluding land, more and more
consumers are looking for value. Moreover, there is significant change taking
place in America, change which in many markets is reducing or stagnating family
[The table below is represented as a bar graph in the printed report]
Cumulative Growth since 1990
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
Oakwood Retail Home Sales ...... 12% 51% 98% 165% 239%
Industry Shipments ............. -9% 2% 29% 54% 73%
(PICTURE)
2
<PAGE>
incomes despite increasing numbers of two-earner households. The substantial
decrease in unemployment over the past few years has been deceptive, in that
many people work in relatively lower-skilled service positions or have been
rehired in jobs paying less than they previously made. As these consumers become
more value conscious, they turn increasingly to manufactured housing, which now
accounts for almost one-third of all new single-family homes sold in the United
States. And while apartments are a competing form of lower cost housing,
rational construction lending and income tax policies grounded in sound
economics have limited the number of new lower cost apartments being
constructed.
We are positioning Oakwood to take advantage of positive industry trends
through execution of our vertical integration strategy, in which we control
every facet of our customers' home buying experience, from design to
manufacturing, retail, financing and after-sale service. Vertical integration
means agility and flexibility--the ability to respond to customer needs faster
and more effectively than the competition. In some highly competitive states
where our retail distribution system is well established, our retail market
share is as high as 20%. We intend to grow by competing in attractive markets in
which we currently have little or no presence and by improving productivity in
our more established markets. Over the past five years, the industry's shipments
have grown by 73%, while our retail home sales have grown at over three times
that rate. We are gaining market share, and the reason is vertical integration.
Our four largest competitors are together over six times our size, so we have a
lot of market share left to gain.
With last year's acquisition of Golden West Homes we signaled a dramatic
acceleration of our expansion plans and claimed a meaningful share of attractive
markets in the West and Northwest. This year, our acquisition of Destiny
Industries gave us a strong foothold in the Deep South and complemented our
existing retail network in the Southeast. In fiscal 1996, we will be
concentrating on melding Golden West and Destiny into our vertically integrated
operations by establishing a strong retail presence in their markets and laying
the groundwork for expansion into new and existing markets in 1997 and beyond.
During 1995 we did not neglect the most important prerequisite to achieving
our long-term growth plans. We have added significantly to our management team
to ensure we have the people to manage successfully a rapidly expanding
business. We have continued to seek out the best people in their fields, and in
the coming year we will be investing in additional training for all our Oakwood
people to give them the new skills they need to keep us the best team in the
industry. This year's results clearly reflect the quality of our people, and
their talent and dedication are key to our future.
As we turn our attention to the coming year, we are eager and enthusiastic
to continue execution of our vertical integration strategy and our focus on
customer value. Our confidence is bolstered by strong industry trends that
continue to make our products more attractive to consumers. We believe there are
considerable opportunities to grow our retail system in current and new markets,
and these efforts will benefit greatly from our recent acquisitions. Finally, we
have the financial and management resources to execute the bold plans we have
set in motion to enhance the value of our franchise, and with it the value of
the Company.
Sincerely yours,
/s/ Nicholas J. St. George
Nicholas J. St. George
President and Chief Executive Officer
/s/ Ralph L. Darling
Ralph L. Darling
Chairman
(PICTURE)
Nicholas J. St. George
3
<PAGE>
(PICTURE)
Oakwood's Presence
(MAP SHOWING RETAIL CENTER NETWORK)
4
<PAGE>
- ----------------------------
CONTROLLING DISTRIBUTION
- ----------------------------
growth
Control of retail distribution is the cornerstone of Oakwood's growth strategy.
This control ensures consistent quality and service throughout the entire
customer encounter--not only in how the home is built, but also in the way it is
sold and serviced. Company-owned retail distribution differentiates our products
from the competition's through exclusivity, and creates brand loyalty among our
customers. When industry conditions are not so robust as they are today, control
over retail distribution should help insulate us from margin pressures because
we will not have to compete with other manufacturers for retail shelf space, and
it should enable market share gains as small, thinly capitalized retailers exit
the market.
Operating retail and manufacturing as a single business also enables us to
respond effectively to customer problems, avoiding the battle between retailer
and manufacturer about whether the problem was caused in manufacturing, delivery
or installation. The result: a satisfied customer who refers others to us. The
retail distribution network also feeds substantial loan origination volume into
our finance company, acting as referral agents without the origination fees
normally associated with that activity.
Control of retail distribution has made Oakwood the largest retailer of
manufactured housing in America. In fiscal 1995 we sold 16,711 new homes at
retail, an increase of 28% over 1994 and 239% over our total just five years
ago.
[The table below is represented as a bar graph in the printed report]
New Homes Sold at Retail
1990 ................... 4,926
1991 ................... 5,515
1992 ................... 7,453
1993 ................... 9,756
1994 ................... 13,034
1995 ................... 16,711
5 year compound growth rate: 28%
[GRAPHIC OMITTED] WE ENDED FISCAL 1995 WITH 198 COMPANY-OWNED OUTLETS, UP FROM
152 AT THE END OF FISCAL 1994, AND HAVE APPROXIMATELY 45 NEW
CENTERS PLANNED FOR FISCAL 1996.
[GRAPHIC OMITTED] OUR COMPANY-OWNED RETAIL DISTRIBUTION SYSTEM ENHANCES
CUSTOMER SATISFACTION THROUGH SUPERIOR SERVICE AND SERVES AS
THE LOAN ORIGINATION NETWORK FOR THE FINANCIAL SERVICES
BUSINESS.
[GRAPHIC OMITTED] WE HAVE A PROVEN ABILITY TO CAPTURE SIGNIFICANT MARKET SHARE
IN FULLY PENETRATED MARKETS.
[GRAPHIC OMITTED] THERE ARE HUNDREDS OF ATTRACTIVE MARKETS IN WHICH WE HAVE
LITTLE OR NO PRESENCE, REPRESENTING SUBSTANTIAL
OPPORTUNITIES FOR GROWTH.
[GRAPHIC OMITTED] WE PLAN TO EXPAND AND ENHANCE THE EXCLUSIVE DEALER BASE AT
GOLDEN WEST AND DESTINY IN SEVERAL WAYS, INCLUDING
INTRODUCTION OF OUR FINANCIAL SERVICES PRODUCTS TO THESE
DEALERS' CUSTOMERS.
5
<PAGE>
- --------------------------------------------
ENHANCING PRODUCTIVITY AND PROFITABILITY
- --------------------------------------------
agility
In addition to being the largest retailer of manufactured housing in the nation,
Oakwood is also one of the most productive retailers, selling significantly more
new homes per sales center than most of our competitors. Average new unit sales
per sales center fell only slightly in 1995 despite our adding 48 new sales
centers during the year, the most ambitious expansion effort we've ever
undertaken. Extensive salesperson training, proven marketing programs, and
state-of-the-art information systems scheduled for implementation at our sales
centers over the next year should enable our retail centers to improve unit
sales in the coming years.
To complement enhanced retail productivity, we are in the process of an
extensive project to reengineer how we design and build houses, eliminating
non-value added activities and processes. We are also working to improve the
coordination between our retail and manufacturing units to help them operate
more fully as a single business with a single focus: the retail customer.
We believe consolidated gross margins should improve in the coming years as
we realize the benefits of manufacturing cost reductions through our
reengineering efforts and through the increased buying power we enjoy as a much
larger company than we were even two years ago. Margins will also benefit from
higher production levels from new manufacturing plants, enabling us to source a
greater percentage of our retail sales from company-owned facilities. Margins
should also benefit from distributing an increasing percentage of the homes
manufactured by Golden West and Destiny through our expanded company-owned
retail network. This will not only allow us to add the retail gross profit to
the manufacturing profit we already earn, but also position us to profit from
offering financial services products to our customers.
We are also looking to technology to improve productivity and efficiency in
our financial services businesses. The new retail information systems to be
deployed in 1996 include automated loan application and loan document
preparation features, and we are investigating new technology to make other
elements of our credit and servicing operations more effective.
[GRAPHIC OMITTED] IN FISCAL 1995 COMPANY-OWNED RETAIL CENTERS AVERAGED 94 NEW
HOMES SALES EACH, AN INCREASE OF 31% SINCE 1990.
[GRAPHIC OMITTED] CONSOLIDATED GROSS MARGINS INCREASED TO 26.7% IN FISCAL
1995, UP 4.8 PERCENTAGE POINTS OVER THE PAST FIVE YEARS.
[GRAPHIC OMITTED] INTEGRATING MANUFACTURING WITH RETAIL ENHANCES EFFICIENCY
BECAUSE IT REDUCES THE EFFECTS ON PRODUCTIVITY OF THE
SEASONALITY IN RETAIL SALES--WE CAN BUILD HOMES FOR
INVENTORY AND DO NOT HAVE TO AWAIT DEALER ORDERS.
[GRAPHIC OMITTED] THE INTEGRATION OF GOLDEN WEST AND DESTINY INTO THE
COMPANY-OWNED DISTRIBUTION SYSTEM WILL ENHANCE MARGINS.
[GRAPHIC OMITTED] OUR LONG-TERM GROSS MARGIN TARGET OF 30% IS ACHIEVABLE.
6
<PAGE>
[The tables below are represented as a bar graph in the printed report]
New Home Sales Per Sales Center
1990 ................... 72
1991 ................... 73
1992 ................... 77
1993 ................... 87
1994 ................... 96
1995 ................... 94
Gross Profit Margin
1990 ................... 21.9%
1991 ................... 23.1%
1992 ................... 24.3%
1993 ................... 24.9%
1994 ................... 25.8%
1995 ................... 26.7%
(PICTURE)
7
<PAGE>
(PICTURE)
THE OAKWOOD
ONE-STOP SHOPPING EXPERIENCE
[GRAPHIC FLOW CHART SHOWING OAKWOOD'S ONE-SHOPPING EXPERIENCE]
8
<PAGE>
- ----------------------------
MEETING CUSTOMERS' NEEDS
- ----------------------------
quality
Our objective is to offer our customers quality homes covering approximately 80%
of the price points in every market we serve. We plan to avoid the high-end and
low-end niche products in favor of building the high-volume price point homes
that maximize the economies of factory-built housing. Toward this end, in 1995
we made progress in significantly expanding the price range of products offered
by Golden West, which prior to its acquisition by Oakwood produced principally
high-end multi-section homes. This broader product line, to be supported by a
significant expansion at the Albany, Oregon facility, will not only provide the
range of homes needed by the company-owned retail centers we are opening in
Golden West's markets, but also should enhance the prospects for stronger
relationships on an exclusive basis with Golden West's independent dealers.
One of our important efforts over the past five years has been to build our
presence in the growing multi-sectional market, which comprises approximately
one-half of the industry's unit shipments, but which accounted for less than 30%
of our retail home sales in 1995. While single-section homes will always remain
an essential part of the market because of their strong value, multi-section
homes will likely gain increased popularity because they closely match the look,
function and lifestyle offered by site-built homes. These attributes, coupled
with the quality and craftsmanship of factory construction, are increasingly
drawing new clientele to manufactured housing, including retirees, professionals
and "empty nest" families--all of whom recognize the unmatched shelter value
these homes provide.
[The table below is represented as a bar graph in the printed report]
Multi-Section Sales
(% of new retail home sales)
1990 ................... 12%
1991 ................... 15%
1992 ................... 25%
1993 ................... 25%
1994 ................... 25%
1995 ................... 28%
[GRAPHIC OMITTED] OAKWOOD'S VERTICAL INTEGRATION STRATEGY PROVIDES "ONE-STOP"
SHOPPING TO SATISFY EVERY CUSTOMER NEED.
[GRAPHIC OMITTED] THE DESTINY AND GOLDEN WEST ACQUISITIONS MAKE IT POSSIBLE TO
TEAM VERTICAL INTEGRATION AND RETAIL EXPANSION IN THE DEEP
SOUTH AND NORTHWEST, WHICH ARE THE FOCUS OF OUR 1996
EXPANSION PLANS.
[GRAPHIC OMITTED] WE INTEND TO OFFER COMPETITIVE PRODUCTS AT ALL HIGH-VOLUME
PRICE POINTS IN EVERY MARKET WE SERVE.
[GRAPHIC OMITTED] THE OPPORTUNITY TO MARKET ADDITIONAL MULTI-SECTION HOMES
PROVIDES THE POTENTIAL FOR SALES GROWTH EVEN IF THE OVERALL
MARKET SLOWS.
9
<PAGE>
- ----------------------------------
EMPHASIZING FINANCIAL SERVICES
- ----------------------------------
performance
An important element of the over-all one-stop shopping experience we provide for
our customers is our financial services capability. Oakwood Acceptance has
originated over $1.2 billion in loans in the past five years and has provided
other important financial services to our customers to make home ownership a
reality for thousands of families.
With this dramatic growth, our financial services business has become an
increasingly important contributor to our profitability. We now finance through
Oakwood Acceptance more than 90% of our retail credit sales, providing a
significant stream of revenues to complement what we earn from manufacturing and
retail. We seek to minimize the effect of credit losses by using highly
effective credit scoring systems and employing sophisticated loan servicing
procedures. Moreover, by using the power of our extensive retail network, we can
maximize recoveries on defaulted loans.
Our successful origination and servicing record has enhanced our access to
the capital markets. The cumulative net proceeds of our loan securitization
program now exceed $1 billion. We expect to continue regular issuance of
asset-backed securities in the public market through our Oakwood Mortgage
Investors subsidiary and to continue our securitization relationship with a
long-term institutional investor. During 1995 we also obtained Fannie Mae and
Freddie Mac mortgage seller/servicer authorization as an additional step in
exploring alternative loan financing opportunities.
With our recent acquisitions in the Deep South and in the West--operations
that previously had no captive finance sources --we foresee attractive
opportunities to increase our loan originations hand in hand with our retail
expansion and through closer relationships with our exclusive independent
dealers.
[GRAPHIC OMITTED] OVER THE LAST FIVE YEARS, LOAN ORIGINATIONS HAVE GROWN AT AN
ANNUAL RATE OF 51%.
[GRAPHIC OMITTED] OUR SERVICING PORTFOLIO AT YEAR END STOOD AT $1.2 BILLION,
UP FROM $185 MILLION FIVE YEARS AGO.
[GRAPHIC OMITTED] LOANS OVER 30 DAYS PAST DUE WERE 2.0% OF THE PORTFOLIO AT
YEAR END, UP FROM A NEAR ALL-TIME LOW OF 1.6% LAST YEAR, BUT
DOWN FROM 3.0% IN 1990.
[GRAPHIC OMITTED] CREDIT LOSSES WERE .75% OF THE AVERAGE PORTFOLIO IN 1995, UP
SLIGHTLY FROM THE .66% RECORDED LAST YEAR, BUT WELL BELOW
OUR 1.0% TARGET.
[GRAPHIC OMITTED] OUR SUCCESSFUL LOAN SECURITIZATION PROGRAM HAS MADE OUR
FINANCIAL SERVICES OPERATIONS SELF-FUNDING--THIS FUNDAMENTAL
CHANGE, COUPLED WITH STRONG OPERATING CASH FLOW, SHOULD
ENABLE US TO EXECUTE OUR EXPANSION PLANS WITHOUT THE NEED TO
RAISE SIGNIFICANT NEW LONG-TERM CAPITAL.
10
<PAGE>
[The tables below are represented as bar graps in the printed report]
Serviced Loan Portfolio
(in millions)
1990 ................... $ 185
1991 ................... $ 237
1992 ................... $ 346
1993 ................... $ 538
1994 ................... $ 843
1995 ................... $1,201
Loan Originations
(in millions)
1990 ................... $ 63
1991 ................... $ 76
1992 ................... $131
1993 ................... $212
1994 ................... $344
1995 ................... $487
5 year compound growth rate: 51%
(PICTURE)
11
<PAGE>
outlook
In the coming years we plan to continue execution of the broad strategies that
have proven so successful in the past. At the forefront of these efforts will be
our unwavering commitment to quality and customer satisfaction, enhanced control
over distribution to drive market share growth, the maximization of revenues at
each stage of a vertically integrated enterprise, and the quest for greater
manufacturing efficiencies to enhance profitability.
A significant part of Oakwood's growth in fiscal 1996 is expected to come
from the ongoing expansion of our retail sales network, which will be carried
out in three distinct ways. First, we will continue to use the manufacturing
presence of Golden West as a springboard for new market penetration in key
western states, such as Arizona, California, Oregon and Washington. We plan to
have 15 new sales centers in Northwest markets in operation by the end of fiscal
1996. Second, we will implement our Deep South expansion strategy using a core
of 31 exclusive independent Destiny dealers as critical mass for the addition of
35 to 40 company-owned retail centers in strong manufactured housing states like
Alabama, Florida, Georgia and Mississippi--four of the top ten markets in the
country and ones in which we previously had little or no presence. Third, we
will continue to enter new, attractive markets that are contiguous with our
present marketing region. In doing so, we will establish relationships with
independent dealers to serve smaller markets and target the most attractive
areas for additional company-owned outlets.
Most of the planned expansion into other new markets will await fiscal 1997
as we concentrate on the Deep South and Northwest in 1996. As we look toward
1997 and 1998, we plan to attack the mature manufactured housing markets in the
central United States, such as Ohio, Illinois, Indiana and Michigan. Between now
and the end of 1998, we plan to establish a presence in substantially all the
major markets in the country, although we expect full penetration of those
markets to take us into the next century.
We expect to participate in the continuing consolidation in our industry,
and would prefer to acquire existing manufacturers to meet our production needs,
if quality candidates are available at a reasonable price.
We believe that the vertical integration strategy that has served us well
to this point makes even more sense in the current environment. Companies like
WalMart have shown that control of distribution and focus on customer value are
what it takes to be successful. We believe our increasing financial strength and
the inherent power of a vertically integrated company should enable us to
continue to gain market share in all market conditions, and should provide for
continued growth in revenues and earnings in the years ahead.
[GRAPHIC OMITTED] WE WILL CONTINUE EXPANSION OF COMPANY-OWNED SALES CENTERS TO
SOLIDIFY RETAIL DOMINANCE.
[GRAPHIC OMITTED] WE EXPECT TO IMPROVE GROSS MARGINS THROUGH INCREASED
PRODUCTION AT NEW PLANTS, COST REDUCTIONS AND DISTRIBUTION
OF GOLDEN WEST AND DESTINY PRODUCTS THROUGH COMPANY-OWNED
SALES CENTERS.
[GRAPHIC OMITTED] WE EXPECT INCREASING PROFITABILITY FROM OUR FINANCIAL
SERVICES OPERATIONS FROM THE ANNUITY PROVIDED BY A RAPIDLY
GROWING LOAN SERVICING PORTFOLIO, CAREFUL UNDERWRITING,
SUPERIOR LOAN SERVICING AND DEFAULT LOSS MINIMIZATION.
12
<PAGE>
OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
- -------------------------------------------------
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 Notes 1 and 3 to the financial
statements.
RESULTS OF OPERATIONS
During fiscal 1995 the Company continued to achieve significant growth in both
revenues and earnings. Total revenues increased 24% to $821 million from $665
million last year, following a 37% increase in 1994 from the $484 million
reported for 1993. Pro forma net income rose 27% in 1995 to $45.3 million
compared to $35.7 million in 1994 and $25.7 million in 1993.
Industry shipments grew for the fourth consecutive year in 1995. According
to industry sources, shipments of manufactured homes were up approximately 12%
for the first nine months of calendar 1995, and increased 20% in calendar 1994
over 1993. Oakwood's growth was more impressive, as new retail home sales grew
by 28% in fiscal 1995 and 34% in fiscal 1994. In 1995, the Company continued
executing its plan to become a national competitor, acquiring Destiny
Industries, Inc. in Moultrie, Georgia, to serve as a springboard for expansion
into the Deep South and expanding its retail network at the most rapid pace in
its history.
The following table summarizes certain key sales statistics for each of the
last three fiscal years:
1995 1994 1993
- --------------------------------------------------------------------------------
Retail sales (in millions) $ 543.8 $ 385.8 $ 258.8
Wholesale sales (in millions) $ 185.6 $ 201.5 $ 161.2
Other sales--principally relating
to communities
(in millions) $ 12.1 $ 7.8 $ 2.1
Total sales (in millions) $ 741.5 $ 595.1 $ 422.1
Gross profit %--
integrated operations 29.6% 30.4% 31.0%
Gross profit %--
wholesale operations 18.7% 17.4% 15.2%
New single-section
homes sold--retail 12,073 9,715 7,305
New multi-section
homes sold--retail 4,638 3,319 2,451
Used homes sold--retail 1,940 1,675 1,138
New single-section
homes sold--wholesale 2,168 2,360 1,778
New multi-section homes
sold--wholesale 4,923 5,671 4,873
Average new single-section
sales price--retail $25,900 $23,900 $21,400
Average new multi-section
sales price--retail $46,500 $42,800 $38,500
Average new single-section
sales price--wholesale $14,100 $11,200 $12,000
Average new multi-section
sales price--wholesale $31,200 $30,900 $28,700
Weighted average retail sales
centers open during the year 178 136 112
Average new home sales
per sales center 94 96 87
1995 COMPARED TO 1994
Retail sales dollar volume increased 41%, reflecting a 28% increase in new home
volume and increases of 8% and 9% in the average new home sales prices of
single-section and multi-section homes, respectively. New home volume rose
primarily due to a 31% increase in the weighted average number of sales centers
open during the year. Average new home sales per sales center decreased
slightly, reflecting the rapid pace of retail expansion during fiscal 1995, in
which the Company added 48 new sales centers compared to 32 centers in fiscal
1994. New sales centers typically require a period of several months to reach
normalized unit sales levels. Because the Company plans to open approximately 35
to 45 new sales centers annually over the next several years, management does
not expect any significant increase in the average number of new homes sold per
sales center over the near term. Total sales dollars at sales centers open more
than one year rose 9% in 1995.
The increase in the average new home 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 ("HUD"), as well as an increase in
the portion of new home sales derived from the Southwest region, where the
average home size is somewhat larger than in the Southeast. Sales in the
Southwest comprised 38% of total new manufactured housing sales dollars in 1995
compared to 27% last year. Because the new HUD standards have been in effect for
over one year and because the majority of 1996 retail expansion will take place
in the Deep South, which typically favors lower price points than the Company's
historical markets, the Company does not expect an increase in average home
sales prices in 1996 consistent with the past two years. Retail sales of
multi-section homes accounted for 28% of new home unit sales in 1995 versus 25%
in 1994.
Wholesale sales dollar volume (which represents sales by Golden West and
Destiny to independent dealers) declined 8%, reflecting a 12% decrease in volume
offset by increases of 26% and 1% in the average sales prices of new
single-section and multi-section homes, respectively. The decline in wholesale
volume is the result of a number of factors, including soft market conditions in
the Pacific Northwest early in the year as a result of increased industry
capacity and reduced demand for Golden West's relatively high price point
products resulting from higher 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
13
<PAGE>
exclusive dealer arrangements. In addition, the Company sold Golden West's
Sacramento, California plant in the third quarter because it was not well
aligned geographically with the Company's retail expansion plans. Destiny's
single-section home volume declined 8% from 1994, while the average
single-section selling price increased 26%. During 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 home. Because of improving
conditions in Destiny's markets, Destiny produced significantly fewer park
models in fiscal 1995, focusing instead on traditional manufactured housing
products which carry higher gross margins.
In addition, sales to independent dealers have declined because the Company
has begun distributing homes manufactured by Golden West and Destiny through its
company-owned retail sales centers. In 1995, Golden West and Destiny shipped 653
homes to Oakwood sales centers, which are not included in the wholesale dollar
sales and home sales in the table above. Management expects Golden West's and
Destiny's home sales to Oakwood to increase in future years. 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 the retail gross profit
earned on retail sales as well as the manufacturing gross profit on retail sales
of homes manufactured by the Company, including the manufacturing gross profit
earned by Golden West and Destiny on their sales to the Oakwood retail
operation. Gross profit margins--integrated operations declined to 29.6% in 1995
from 30.4% in 1994. The reduction in gross margin reflects a .4% decline in
retail margins attributable to increasing competition at retail and to the
results of certain new sales centers which in early 1995 did not meet gross
profit expectations. During 1995, management provided additional training of
retail personnel in order to improve retail margins and also implemented a new
prospect tracking and follow-up program. Manufacturing margins also declined in
1995, principally due to start-up costs and manufacturing inefficiencies
associated with new manufacturing plants in Texas, Tennessee and Colorado. As
the year progressed, gross profit margin--integrated operations improved, rising
from 29.1% in the first quarter to 30.1% in the fourth quarter.
Approximately 76% of the total new home retail sales volume was
manufactured by the Company in fiscal 1995 compared to 75% in 1994. To the
extent production levels at new manufacturing facilities increase at a faster
rate than new home sales, and manufacturing costs at new plants can be
controlled, margins should increase as retail home sales are increasingly
sourced from company-owned manufacturing facilities.
Wholesale gross profit margins increased to 18.7% in 1995 from 17.4% last
year. The increase in margins over the prior year reflects reduced production of
low margin park models at Destiny, reduced product liability, property and
workers' compensation insurance costs at Golden West, and improved pricing of
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 because they are ordered with fewer
high margin option packages.
Financial services income increased 9% to $62.0 million from $56.8 million
last year. Interest income earned on loans held for investment and on loans held
for sale prior to securitization decreased from $44.2 million in 1994 to $38.2
million in 1995. This decrease reflects the amortization of and prepayments on
loans held for investment, a decrease in the average balance of loans held for
sale resulting from more frequent loan securitization, and a decrease in the
average yield on these 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 $7.1 million in 1994 to $12.2 million in 1995, reflecting the
increased size of the Company's securitized loan servicing portfolio. REMIC
residual income increased from $3.2 million to $7.2 million, reflecting the
shift in the Company's financing strategy toward securitization of its loans
from holding loans for investment and the adoption of sales accounting for
securitizations in 1993. Other financial services revenues, which consist
principally of credit life insurance premiums, miscellaneous fees and other
income, increased to $4.4 million from $2.4 million, and reflect the increasing
size of the Company's loan servicing portfolio.
14
<PAGE>
The majority of the 41% increase in other income is related to increased
insurance commissions resulting from the increase in retail home sales.
Non-financial selling, general and administrative expenses rose to 22.3% of
net sales compared to 21.6% of net sales last year. Non-financial selling,
general and administrative expenses in 1995 include a charge of $1.2 million
($738,000 after tax, or $.03 per share) for costs associated with the sale of
Golden West's Sacramento, California facility and costs resulting from staffing
and overhead reductions at Golden West's Santa Ana, California headquarters, and
a charge of $150,000 ($.01 per share) for costs associated with the Destiny
merger. Non-financial selling, general and administrative expenses in 1994
include a charge of approximately $1.3 million ($973,000 after tax, or $.04 per
share) for costs relating to the acquisition of Golden West Homes. Exclusive of
these charges, non-financial selling, general and administrative expenses rose
29% to $163,940,000 (22.1% of net sales) compared to $127,216,000 (21.4% of net
sales) last year. These costs increased disproportionately to sales as a result
of general and administrative expenses associated with four new manufacturing
plants, increased accruals relating to the 1996 long-term management incentive
compensation plan, increased accruals for stock appreciation rights resulting
from the increase in the price of the Company's common stock, costs associated
with the Company's ongoing business reengineering projects and increased
headcount levels, particularly in the management information systems, human
resources and internal audit areas. Higher accruals for compensation payable
under the incentive compensation plan and for stock appreciation rights granted
under an earlier plan increased non-financial selling, general and
administrative expenses by .5% of net sales compared to 1994.
Financial services selling, general and administrative expenses rose 57% on
a 34% increase in the average number of loans serviced during the period and a
56% increase in total credit application volume. This somewhat disproportionate
growth in costs is largely due to increased headcount in the credit and
collections areas. The Company has been adding headcount in advance of portfolio
volume growth in order to help ensure that adequate numbers of properly trained
personnel are available to originate and service anticipated loan origination
growth.
The provision for losses on credit sales decreased 62% from 1994,
reflecting the increased seasoning of loans held for investment and loans sold
with full or limited recourse. As the portfolio ages, its overall credit quality
generally increases because the majority of credit losses generally are incurred
relatively early in the term of the loans. The Company provides for estimated
losses based on the Company's historical loss experience, current repossession
trends and costs and management's assessment of the current credit quality of
the loan portfolio.
Non-financial services interest expense rose from $1,149,000 to $2,259,000
due principally to new indebtedness relating to permanent financing for new
manufacturing facilities, the purchase of a corporate aircraft and the
leveraging of the employee stock ownership plan.
Financial services interest expense includes interest expense associated
with long-term debt secured by loans 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 decreased 3% due to
declining and retired long-term debt balances. This decrease was offset by a
$3.2 million increase in short-term interest expense, reflecting higher average
outstanding balances on lines of credit due to the significant increase in loan
volume, as well as higher short-term interest rates. 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 pro forma effective income tax rate was 37.9% in fiscal 1995
compared to 37.5% 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" ("FAS 109")).
15
<PAGE>
1994 COMPARED TO 1993
Retail sales dollar volume rose 49% in 1994, reflecting a 34% increase in new
home volume and increases of 12% and 11% in the average sales prices of new
single-section and multi-section homes, respectively. New home volume increased
due to a 21% increase in the weighted average number of sales centers open
during the year and a 10% increase in average new home sales per sales center.
Total sales dollars for sales centers open at least one year rose 20%. The
increase in the average new home selling price reflects price increases required
to offset rising lumber prices, the effect of the Company's entry into the Texas
market where the average home size is larger than in the Southeast and higher
selling prices in the Southeast due to a change in product mix toward higher-end
homes. Sales in the Southwest comprised 27% of total new manufactured housing
retail sales dollars during 1994 compared to 11% in 1993. Retail sales of
multi-section homes accounted for approximately 25% of new home unit sales in
both 1994 and 1993.
Wholesale sales dollar volume increased 25%, reflecting a 21% increase in
home volume and an 8% increase in the average sales price of new multi-section
homes, offset by a 7% decrease in the average sales price of new single-section
homes. The sales volume increases were primarily due to continued strong demand
for manufactured housing in the western and southern United States and increased
park model production at Destiny. The increase in the average wholesale
multi-section selling price reflects price increases required to offset rising
lumber prices, as well as changes in the product mix. The average single-section
selling price declined due to increased production of park models.
Gross profit margin--integrated operations decreased to 30.4% in 1994 from
31.0% in 1993. Margins rose in the Southeast, principally due to manufacturing
efficiencies resulting from higher production levels, but were offset by the
effects of the Company's expansion into the Southwest, where a substantial
portion of the new home sales volume was sourced from third party manufacturers.
Of the total 1994 new home sales volume, 75% was manufactured by the Company
compared to 82% in 1993.
Wholesale gross profit margins increased to 17.4% in 1994 from 15.2% in
1993. This improvement in margin was primarily due to greater operating
efficiencies associated with a higher sales volume which allows for a more
consistent production cycle. In addition, Golden West's 1993 results were
negatively affected by a rapid rise in the cost of lumber, only a portion of
which could be passed on in the form of sales price increases.
Financial services income increased 13% to $56.8 million in 1994 from $50.1
million in 1993. Interest income rose 4% to $44.2 million from $42.3 million in
1993 as a result of higher average loans held for sale during the period.
Interest on loans held for investment is declining as the underlying loans
amortize; because the Company is selling through securitization substantially
all its loan originations, loans held for investment and the related interest
income will decline over time. Loan servicing fees increased to $7.1 million in
1994 from $4.9 million in 1993, reflecting the increased size of the Company's
securitized loan servicing portfolio. REMIC residual income increased from
$754,000 to $3.2 million, reflecting the adoption of sales accounting for the
Company's REMIC securitizations in 1993. Other financial services revenues
increased to $2.4 million from $2.1 million, and reflect the increasing size of
the Company's loan servicing portfolio.
Other income rose to $12.7 million in 1994 from $11.6 million in 1993. The
1993 amount includes a gain of $1.6 million on the sale of manufactured housing
communities (approximately $1 million after tax, or $.05 per share). Excluding
this gain, other income rose 27%, principally due to increased insurance
commissions resulting from an improvement in the percentage of total sales for
which physical damage coverage was written by the Company's agency and the
overall increase in sales. This growth was offset by a decline in endorsement
fee income resulting from the Company's emphasis on internal financing of credit
sales. Endorsement fee income will continue to decline because the Company has
ceased selling installment sale contracts on a full recourse basis.
Non-financial selling, general and administrative expenses increased to
21.6% of net sales in 1994 from 20.2% in 1993. Non-financial selling, general
and administrative expenses include a one-time charge of approximately $1.3
million ($973,000 after tax, or $.04 per share) for costs relating to the
acquisition of Golden West Homes. Excluding this one-time item, non-financial
services selling, general and administrative expenses were 21.4% of net sales in
1994. The increase in costs as a percentage of net sales reflects a provision
for long-term management incentive compensation pursuant to a long-term
incentive compensation plan adopted in 1994. The plan provides for cash bonuses
to key management personnel payable in 1996 if certain earnings performance
targets are achieved. Long-term incentive compensation previously was provided
principally in the form of stock options, and accordingly did not result in a
charge to earnings. The provision for compensation payable
16
<PAGE>
under the plan amounted to approximately .6% of 1994 net sales. In addition,
non-financial selling, general and administrative expenses in 1994 reflect costs
associated with the Company's business process reengineering efforts, costs
associated with a new Texas manufacturing plant opened during the year and four
additional plants which began production at or soon after year end.
Financial services selling, general and administrative expenses rose 20% on
a 45% increase in the average number of loans serviced and a 43% increase in
total credit application volume.
The provision for losses on credit sales decreased 21% from 1993,
reflecting the increased seasoning of loans held for investment and sold with
full or limited recourse.
Non-financial services interest expense decreased primarily due to the
redemption or conversion of the Company's convertible subordinated debentures in
November and December 1992. Financial services interest expense decreased
because the Company has adopted sales accounting for its REMIC securitizations;
prior to 1993, REMIC securitizations were treated as collateralized borrowings.
Effective October 1, 1993 the Company adopted prospectively FAS 109, which
requires the use of the asset and liability method to account for temporary
differences between the financial reporting and income tax bases of the
Company's assets and liabilities. Prior to fiscal 1994 the Company accounted for
the timing differences between financial and taxable income using the deferred
method. Adoption of FAS 109 had the effect of reducing the provision for income
taxes and increasing net income by $214,000 ($.01 per share) in the first
quarter of fiscal 1994. Excluding the effects of adoption of FAS 109, the
Company's pro forma effective income tax rate was 37.5% in 1994 compared to
37.2% in 1993.
LIQUIDITY AND CAPITAL RESOURCES
Retail financing of sales of the Company's products is an integral part of the
Company's vertical integration strategy. Such financing consumes substantial
amounts of capital, which the Company has obtained principally by issuing debt
collateralized by its loans or by securitizing such loans, primarily using
REMICs. Over the past five years, the Company has been able to obtain from
investors and lenders an increasing percentage of the capital required to fund
its finance business, and the related yield over treasuries required by
investors has declined, principally because of continued improvement in the
performance of loans originated by the Company, increasing investor and lender
familiarity with asset-backed financing transactions in the manufactured housing
industry, declining interest rates, and because of the Company's increasingly
strong financial performance. The Company expects to originate in excess of $600
million of loans in fiscal 1996 and believes it can finance substantially all of
this amount through securitization of the loans. During 1995 the Company raised
approximately $362 million to finance its loans, including $281 million from
REMIC certificates sold by Oakwood Mortgage Investors, substantially all of
which was sold to the public. In October 1995 Oakwood Mortgage Investors
completed another REMIC offering, the proceeds of which were approximately $187
million.
In each of the Company's four public REMIC securities offerings, the
Company has sold REMIC interests having a principal balance equal to 100% of the
par value of the related loans, and the Company intends to sell all of the
regular REMIC interests in its future securitizations. This decision eliminates
the Company's need for cash to finance retained REMIC interests and
substantially reduces the need to obtain other long-term financing. Because the
Company intends to continue to expand significantly its retail distribution
network and because a large percentage of the Company's customers purchase on
credit, the Company will have a substantial need for financing of its loans in
the coming years, and intends to utilize both the public and private markets to
broaden the number of sources of financing and minimize its financing costs.
In addition to the ongoing need to access the asset-backed capital market
for capital to fund its financing operations, the Company will require capital
to execute its ongoing expansion strategy. The Company estimates that its fiscal
1996 capital expenditures will approximate $37 million, comprised principally of
offices, leasehold improvements and fixtures relating to retail expansion,
remaining construction and upfit costs on a new headquarters building,
development of existing manufactured housing communities, computer hardware and
software associated with new and enhanced management information systems and
improvements to manufacturing facilities. In addition to capital expenditures,
the retail expansion will require an investment of approximately $400,000 of
working capital for each new sales center, or approximately $16 million for
fiscal 1996. Capital expenditures and working capital requirements in later
years are dependent upon the extent of expansion undertaken in such years.
17
<PAGE>
The Company intends to finance its retail and manufacturing expansion
principally using internally generated funds and short-term lines of credit.
Because the Company has decided to sell all of the regular REMIC interests in
its future securitizations, additional permanent corporate financing is not
expected to be required to fund expansion of the financial services businesses.
However, the Company continues to monitor the debt and equity markets and
evaluate the sources and cost of long-term capital in light of management's
assessment of existing and future conditions in the capital markets and its
assessment of the appropriate components of the Company's capital structure.
While management believes that existing financing is sufficient to provide for
the Company's needs for the foreseeable future, the Company may seek to raise
additional long-term debt or equity if compelling market conditions arise.
The Company has several credit facilities in place to provide for its
short-term liquidity needs. The Company has a $130 million line of credit
facility with a group of banks to provide warehouse financing for loans, which
bears interest at LIBOR plus 1%. The Company also has a $75 million revolving
line of credit secured by inventory bearing interest at LIBOR plus 1%. The
Company currently is negotiating additional short-term credit, and expects to
achieve a reduction in the interest rate on short-term borrowings.
NEW ACCOUNTING STANDARDS
In March 1995 the Financial Accounting Standards Board (the "Board") adopted
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
("FAS 121"), which requires that companies assess potential impairments of
long-lived assets, certain identifiable intangibles and associated goodwill when
there is evidence that events or changes in circumstances have made recovery of
an asset's carrying value unlikely, and recognize an impairment loss when the
sum of expected future net cash flows is less than the carrying amount.
In May 1995 the Board issued Statement of Financial Accounting Standards
No. 122, "Accounting for Mortgage Servicing Rights" ("FAS 122"), which
eliminates the accounting distinction between rights to service mortgage loans
that are acquired through loan origination activities and those acquired through
purchase transactions. FAS 122 requires that an entity which sells or
securitizes loans while retaining the mortgage servicing rights applicable to
the loans, allocate a portion of the costs of acquiring/originating the loans to
mortgage servicing rights based on their relative fair values. The resulting
asset is then amortized and evaluated for impairment. The Company is studying
the applicability of FAS 122 to its loan originations, only a small portion of
which are mortgages.
In October 1995 the Board adopted Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" ("FAS 123"), which
provides that companies adopt a method of accounting for stock compensation
awards based on estimated fair value at the date the awards are granted using an
accepted pricing model. The resulting charge to income is recognized over the
period during which the options or awards vest. The Board encourages recognition
of such expense in the statement of income but does not require it. If expense
is not recorded in the financial statements, FAS 123 requires pro forma
disclosures regarding the effects on net income and earnings per share had
expense been recognized.
Management is evaluating the potential effects on the Company's financial
statements of adoption of these statements, each of which the Company must adopt
in fiscal 1997. While such evaluation is not complete, management currently does
not expect adoption of the statements will have a material effect on its
financial condition or results of operations.
18
<PAGE>
OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
- ------------------------------------
CONSOLIDATED STATEMENT OF INCOME
- ------------------------------------
(in thousands except per share data)
<TABLE>
<CAPTION>
Year ended September 30,
-------------------------------------
1995 1994 1993
-------------------------------------
<S> <C> <C> <C>
Revenues
Net sales $741,521 $595,127 $422,103
Financial services income (Note 4) 61,995 56,771 50,051
Other income (Note 5) 17,896 12,712 11,582
-------------------------------------
Total revenues 821,412 664,610 483,736
-------------------------------------
Costs and expenses
Cost of sales 543,320 441,364 316,974
Selling, general and administrative expenses
Non-financial services (Note 3) 165,290 128,516 85,382
Financial services 12,799 8,127 6,748
Provision for losses on credit sales (Note 6) 2,109 5,485 6,945
Interest expense
Non-financial services 2,259 1,149 1,706
Financial services 22,638 23,260 25,054
-------------------------------------
Total costs and expenses 748,415 607,901 442,809
-------------------------------------
Income before income taxes 72,997 56,709 40,927
Provision for income taxes (Note 7) 26,374 20,009 14,876
-------------------------------------
Net income $ 46,623 $ 36,700 $ 26,051
=====================================
Pro forma information (unaudited) (Note 2)
Historical income before income taxes $ 72,997 $ 56,709 $ 40,927
Pro forma provision for income taxes 27,679 21,054 15,212
-------------------------------------
Pro forma net income $ 45,318 $ 35,655 $ 25,715
=====================================
Pro forma earnings per share (unaudited) (Note 2)
Primary $ 1.97 $ 1.55 $ 1.21
=====================================
Fully diluted $ 1.97 $ 1.55 $ 1.18
=====================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
- ------------------------------
CONSOLIDATED BALANCE SHEET
- ------------------------------
(in thousands except share and per share data)
<TABLE>
<CAPTION>
September 30,
--------------------------
1995 1994
--------------------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 6,189 $ 16,974
Receivables and investments (Notes 6 and 11) 480,875 372,278
Inventories (Note 8) 151,190 98,688
Properties and facilities, net of accumulated depreciation
and amortization (Notes 9 and 11) 101,758 67,225
Deferred income taxes (Note 7) 15,546 7,403
Other assets 27,082 27,829
--------------------------
$ 782,640 $ 590,397
==========================
Liabilities and shareholders' equity
Short-term borrowings (Note 10) $ 154,400 $ 25,000
Notes and bonds payable (Note 11) 198,812 207,990
Accounts payable and accrued liabilities (Note 12) 87,405 68,284
Reserve for contingent liabilities (Note 6) 3,184 3,827
Other long-term obligations 20,431 8,966
Shareholders' equity (Notes 13 and 14)
Common stock, $.50 par value; 100,000,000 shares authorized;
22,171,000 and 22,010,000 shares issued and outstanding 11,086 11,005
Additional paid-in capital 149,482 148,125
Retained earnings 160,000 117,200
--------------------------
320,568 276,330
Unearned ESOP shares (Note 15) (2,160) --
--------------------------
Total shareholders' equity 318,408 276,330
Contingencies (Note 6)
--------------------------
$ 782,640 $ 590,397
==========================
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
- ----------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
- ----------------------------------------
(in thousands)
<TABLE>
<CAPTION>
Year ended September 30,
--------------------------------------
1995 1994 1993
--------------------------------------
<S> <C> <C> <C>
Operating activities
Net income $ 46,623 $ 36,700 $ 26,051
Items not requiring (providing) cash
Depreciation and amortization 8,278 5,526 5,069
Deferred income taxes (7,060) (5,413) (4,014)
Provision for losses on credit sales 2,109 5,485 6,945
Gain on sale of manufactured housing communities -- -- (1,636)
Other -- 697 699
(Increase) in other receivables (21,617) (5,162) (5,549)
(Increase) in inventories (52,502) (36,660) (11,991)
Increase in accounts payable and accrued liabilities 19,121 11,834 20,890
Increase in other long-term obligations 11,465 5,467 1,328
--------------------------------------
Cash provided by operations 6,417 18,474 37,792
Loans originated (486,601) (343,733) (211,860)
Purchase of loan portfolios -- (604) (28,337)
Sale of loans 362,296 362,982 85,683
Principal receipts on loans 34,915 44,913 43,550
--------------------------------------
Cash provided (used) by operating activities (82,973) 82,032 (73,172)
--------------------------------------
Investing activities
Additions to properties and facilities (41,870) (28,225) (14,069)
Proceeds from sales of manufactured housing communities -- -- 6,194
Other (1,619) (6,661) (3,066)
--------------------------------------
Cash (used) by investing activities (43,489) (34,886) (10,941)
--------------------------------------
Financing activities
Net borrowings (repayments) on short-term credit facilities 129,400 (1,882) 24,886
Issuance of notes and bonds payable 29,890 2,093 58,555
Payments on notes and bonds (41,228) (56,436) (45,942)
Cash dividends (1,712) (1,635) (1,482)
Proceeds from exercise of stock options 1,438 1,950 3,623
Proceeds from sale of common stock -- -- 53,602
Redemption of preferred stock -- (1,150) (1,150)
Cash dividends to shareholders of acquired company (2,111) (1,348) (443)
--------------------------------------
Cash provided (used) by financing activities 115,677 (58,408) 91,649
--------------------------------------
Net increase (decrease) in cash and cash equivalents (10,785) (11,262) 7,536
Cash and cash equivalents
Beginning of year(*) 16,974 28,236 21,632
--------------------------------------
End of year $ 6,189 $ 16,974 $ 29,168
======================================
</TABLE>
* The beginning cash balance for 1994 does not agree to the ending balance
for 1993 because of the differing accounting periods used by Oakwood and
Golden West. See Note 1.
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
- -----------------------------------
CONSOLIDATED STATEMENT OF
CHANGES IN SHAREHOLDERS' EQUITY
- -----------------------------------
(in thousands except per share data)
<TABLE>
<CAPTION>
Shares outstanding Additional Unearned
------------------- Preferred B Common paid-in Retained ESOP
Preferred B Common stock stock capital earnings shares
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1992 12 14,665 $ 3,000 $ 7,332 $ 46,757 $ 59,677 ($1,019)
Net income -- -- -- -- -- 26,051 --
Exercise of stock options -- 418 -- 209 3,414 -- --
Sale of common stock -- 2,875 -- 1,437 52,165 -- --
Conversion of debentures -- 3,851 -- 1,926 42,090 -- --
Redemption of preferred stock (12) -- (3,000) -- 1,850 -- --
Cost of ESOP shares allocated -- -- -- -- -- -- 240
Cash dividends ($.08 per share) -- -- -- -- -- (1,482) --
Cash dividends to shareholders of
acquired company -- -- -- -- -- (443) --
------------------------------------------------------------------------------
Balance at September 30, 1993 -- 21,809 -- 10,904 146,276 83,803 (779)
Net income -- -- -- -- -- 36,700 --
Less: net income of Golden West
for the three months ended
December 25, 1993 (Note 1) -- -- -- -- -- (320) --
Exercise of stock options -- 201 -- 101 1,849 -- --
Cost of ESOP shares allocated -- -- -- -- -- -- 779
Cash dividends ($.08 per share) -- -- -- -- -- (1,635) --
Cash dividends to shareholders of
acquired company -- -- -- -- -- (1,348) --
------------------------------------------------------------------------------
Balance at September 30, 1994 -- 22,010 -- 11,005 148,125 117,200 --
Net income -- -- -- -- -- 46,623 --
Exercise of stock options -- 161 -- 81 1,357 -- --
Purchase of ESOP shares -- -- -- -- -- -- (2,398)
Cost of ESOP shares committed
to be released -- -- -- -- -- -- 238
Cash dividends ($.08 per share) -- -- -- -- -- (1,712) --
Cash dividends to shareholders of
acquired company -- -- -- -- -- (2,111) --
------------------------------------------------------------------------------
Balance at September 30, 1995 -- 22,171 $ -- $11,086 $149,482 $160,000 ($2,160)
==============================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
- -------------------------
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
- -------------------------
NOTE 1--BASIS OF PRESENTATION
On June 30, 1995 Oakwood Homes Corporation ("Oakwood") acquired Destiny
Industries, Inc. ("Destiny"), and on September 30, 1994 Oakwood acquired Golden
West Homes ("Golden West"). Each of these acquisitions has been accounted for as
a pooling of interests as described in Note 3. The accompanying financial
statements reflect the combined results of operations and financial position of
Oakwood, Destiny and Golden West for all periods presented.
Prior to its acquisition by Oakwood, Golden West utilized a 52/53 week year
ending in December. For accounting convenience, the accompanying financial
statements for the year ended September 30, 1993 have not been adjusted to
conform Golden West's accounting year to the September 30 year used by Oakwood
and Destiny. Amounts set forth in the accompanying financial statements for 1993
reflect the results of operations of Oakwood and Destiny for the twelve months
ended September 30, 1993, and the results of operations of Golden West for the
twelve months ended December 1993. Accordingly, Golden West's results of
operations for the three months ended December 25, 1993 have been reflected in
the accompanying financial statements for both 1994 and 1993, and such results
of operations have been reflected as a reduction in the opening balance of
retained earnings for the year ended September 30, 1994 in the accompanying
statement of changes in shareholders' equity.
The consolidated financial statements include the accounts of Oakwood Homes
Corporation and its subsidiaries, including Destiny and Golden West
(collectively, the "Company"). All significant intercompany transactions and
balances have been eliminated in consolidation.
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Retail financing
A substantial majority of the Company's retail customers purchase homes on
credit. The related loans are evidenced by either installment sale contracts or
mortgages originated by the Company's finance subsidiary, Oakwood Acceptance
Corporation, or, to a much lesser extent, by third party financial institutions.
The Company finances its lending activities primarily by securitizing the
loans it originates using Real Estate Mortgage Investment Conduits ("REMICs")
or, for certain FHA-insured loans, using collateralized mortgage obligations
issued under authority granted to the Company by the Government National
Mortgage Association ("GNMA"). Indebtedness of the Company secured by loans,
including REMIC securitizations completed prior to fiscal 1993 when the Company
adopted sales accounting for its REMICs, is reflected in the financial
statements as collateralized borrowings.
REMIC securitizations consummated in fiscal 1993 and thereafter and all
GNMA securitizations are treated as sales of receivables. The Company allocates
the sum of its basis in the loans conveyed to each REMIC and the costs of
forming the REMIC among the interests retained and the interests sold to
investors based upon the estimated relative fair values of such interests; costs
of marketing REMIC interests sold are charged to expense as incurred. The
aggregate gains on securitization transactions have not been material.
Effective October 1, 1994 the Company adopted Statement of Financial
Accounting Standards, "Accounting for Certain Investments in Debt and Equity
Securities" ("FAS 115"). REMIC residual interests retained by the Company
following securitization are considered held to maturity under the provisions of
FAS 115 and are carried at amortized cost; retained regular REMIC interests are
considered available for sale and are carried at their estimated fair values.
The Company has no securities held for trading purposes. Prior to adoption of
FAS 115, both regular and residual REMIC interests retained by the Company were
carried at amortized cost.
Loans held for investment are carried at their outstanding principal
amounts, less unamortized discounts and plus unamortized premiums. Loans held
for sale are carried at the lower of cost or market.
Revenue recognition--manufactured housing
The Company records a retail sale upon passage of title to the home to the
customer and, in the case of credit sales, upon execution of the loan agreement
and other required documentation and receipt of a designated minimum down
payment. Homes sold to independent dealers are manufactured to order; the
Company recognizes a sale upon completion and transfer of title to the home.
The Company receives an agent's commission on insurance policies issued by
unrelated insurance companies. Insurance commissions are recognized in income at
the time the policies are written.
The Company receives an endorsement fee from certain unrelated financial
institutions in exchange for guaranteeing loans sold to such institutions.
Endorsement fees are recognized on the level yield method over the life of the
related loans; such fees relate principally to loans sold prior to 1990 when the
Company substantially ceased selling loans on a full recourse basis.
23
<PAGE>
Revenue recognition--financial services
Interest income on loans is recognized in accordance with the terms of the loans
(principally 30 day accrual). The Company retains servicing rights for
substantially all loans it originates, except for loans sold without recourse.
Servicing fee income is recognized as earned. Income on retained REMIC residual
interests, net of associated credit losses, is recorded as earned using the
level yield method over the period such interests are outstanding.
The Company periodically purchases portfolios of loans. The Company adds to
the reserve for losses on credit sales an estimate of future credit losses on
such loans and includes such amount as a component of the purchase price of the
acquired portfolios. The difference between the aggregate purchase price of the
acquired portfolios and the aggregate principal balance of the loans included
therein, representing discount or premium on the loans, is amortized to income
over the life of the loans using the level yield method.
Interest rate risk management
The Company periodically enters into off-balance sheet financial agreements,
principally forward contracts to enter into interest rate swaps, in order to
hedge the sales price of REMIC interests to be sold in securitization
transactions. The net settlement proceeds or cost from termination of the
contracts is included in the determination of gain or loss on the sale of the
REMIC interests.
Inventories
Inventories are valued at the lower of cost or market, with cost determined
using the specific identification method for new and used manufactured homes and
the first-in, first-out method for all other items.
Properties and facilities
Properties and facilities are carried at cost less accumulated depreciation and
amortization. The Company provides depreciation and amortization using
principally the straight-line method over the assets' estimated useful lives,
which are as follows:
Estimated
Classification useful lives
- ----------------------------------------------------------------
Land improvements 3-20 years
Buildings and field sales offices 8-50 years
Furniture, fixtures and equipment 2-10 years
Leasehold improvements 3-10 years
Manufactured housing communities 10-20 years
Income taxes
Effective October 1, 1993 Oakwood adopted prospectively the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("FAS 109"), which requires use of the asset and liability method to
account for deferred income taxes. Prior to 1994, Oakwood accounted for income
taxes using the deferred method. The excess of Oakwood's aggregate net deferred
income tax asset as of October 1, 1993, computed using the asset and liability
method, over the aggregate net deferred income tax asset as of September 30,
1993, computed using the deferred method, was approximately $214,000 ($.01 per
share) and has been reflected as a reduction in the provision for income taxes
for 1994. Golden West utilized the asset and liability method for all periods
presented. The Company's results of operations for 1993 would not have been
materially different had Oakwood adopted FAS 109 as of the beginning of that
year.
Reserve for losses on credit sales
The Company maintains reserves for estimated credit losses on loans held for
investment or sold to third parties with full or limited recourse. The Company
provides for losses on credit sales in amounts necessary to maintain the
reserves at amounts the Company believes are sufficient to provide for future
losses based upon the Company's historical loss experience, current economic
conditions and an assessment of current portfolio performance measures.
During fiscal 1995 the Company began presenting the effects of current and
anticipated future credit losses relating to retained REMIC residual interests
as an element of financial services income as opposed to including such effects
in the provision for credit losses. Amounts previously reported for 1994 have
been reclassified to conform to the basis of presentation adopted in 1995.
Unaudited pro forma information
Prior to its acquisition by the Company, Destiny was an S corporation, and
accordingly its earnings were includable in the income tax returns of its former
shareholders. As a consequence, Destiny's financial statements did not reflect a
provision for income taxes for periods prior to its acquisition by the Company.
The pro forma provision for income taxes and pro forma net income set forth in
the statement of income reflect the Company's provision for income taxes on a
pro forma basis assuming Destiny's results of operations had been included in
the Company's income tax returns for preacquisition periods. Deferred income
taxes relating to Destiny's assets and liabilities as of the acquisition date
were not material and have been charged to the provision for income taxes for
the year ended September 30, 1995.
24
<PAGE>
The pro forma provision for income taxes and amounts derived therefrom are
unaudited.
Earnings per share
Primary earnings per share is computed by dividing pro forma net income by the
weighted average number of common and dilutive common equivalent shares
outstanding during the year. The weighted average number of shares used in the
computation of primary earnings per share was 22,999,000, 22,992,000 and
21,166,000 in 1995, 1994 and 1993, respectively. Fully diluted earnings per
share is computed by dividing pro forma net income, adjusted for interest
accruing on the convertible subordinated debentures, net of income taxes, by the
sum of the weighted average number of common and dilutive common equivalent
shares outstanding and the number of common shares into which the convertible
subordinated debentures could be converted during periods in which such
convertible securities were outstanding. During 1993 the Company called for
redemption of all the outstanding convertible subordinated debentures as
described in Note 13. The weighted average number of shares used in the
computation of fully diluted earnings per share was 23,056,000, 23,005,000 and
22,027,000 in 1995, 1994 and 1993, respectively. The dilutive effect of stock
options is computed using the treasury stock method.
Because the Company's historical results of operations do not reflect a
provision for income taxes on Destiny's earnings for preacquisition periods,
historical earnings per share amounts are not meaningful and accordingly have
been omitted.
Cash and cash equivalents
Short-term investments having initial maturities of three months or less are
considered cash equivalents.
Reclassifications
Certain amounts previously reported for 1994 and 1993 have been reclassified to
conform to classifications used in 1995.
NOTE 3--ACQUISITIONS
On June 30, 1995 Oakwood completed its business combination with Destiny.
Oakwood issued 925,000 shares of its common stock in exchange for all the
outstanding common stock of Destiny (an exchange ratio of approximately 9.25
Oakwood common shares for each outstanding Destiny common share).
On September 30, 1994 Oakwood completed its business combination with
Golden West. Oakwood issued 612,857 shares of its common stock in exchange for
all the outstanding common and convertible preferred stock of Golden West, and
substituted options to acquire 87,116 shares of Oakwood common stock for
previously granted options to acquire Golden West common stock (an exchange
ratio of approximately .23 of an Oakwood common share for each outstanding
Golden West common share and each right to acquire a Golden West common share).
These business combinations have been accounted for as poolings of
interests, and accordingly the accompanying financial statements reflect the
combined results of operations and financial position of Oakwood, Destiny and
Golden West for all periods presented, as more fully described in Note 1.
Summary results of operations for Oakwood (including Golden West) and
Destiny for periods prior to the Destiny acquisition are set forth below. Gross
profit recorded by Destiny on sales to Oakwood in preacquisition periods has
been eliminated with respect to homes in Oakwood's inventory as of the
combination date.
Nine months Year ended
ended June 30, September 30,
1995 (unaudited) 1994 1993
---------------------------------------
(in thousands)
Net sales
Oakwood $451,249 $506,187 $350,441
Destiny 71,471 88,940 71,662
------------------------------------
$522,720 $595,127 $422,103
====================================
Income before income taxes
Oakwood $ 45,691 $ 53,923 $ 40,031
Destiny 3,520 2,786 896
------------------------------------
$ 49,211 $ 56,709 $ 40,927
====================================
Pro forma net income
Oakwood $ 28,100 $ 33,914 $ 25,155
Destiny 2,215 1,741 560
------------------------------------
$ 30,315 $ 35,655 $ 25,715
====================================
Costs incurred by Oakwood and Destiny in completing the business
combination totalling approximately $150,000 (approximately $.01 per share,
after tax) have been charged to operations in 1995 and are included in selling,
general and administrative expenses.
Oakwood incurred approximately $500,000 of costs and expenses directly
related to completing the Golden West acquisition. In addition, Golden West
incurred approximately $800,000 of costs relating to completion of the
acquisition and relating to Golden West's planned initial public offering of
common stock, which was terminated in connection with the business combination
with Oakwood. The aggregate amount of these costs of approximately $1.3 million
($973,000 net of income taxes, or $.04 per share) has been charged to operations
in 1994 and is included in selling, general and administrative expenses.
25
<PAGE>
NOTE 4--FINANCIAL SERVICES BUSINESSES
The Company's financial services businesses include Oakwood Acceptance
Corporation ("Oakwood Acceptance"), which purchases a substantial portion of the
loans originated by the Company's retail operations and from time to time
purchases portfolios of loans from third parties. Oakwood Acceptance retains
servicing on substantially all loans held for investment or securitized by
Oakwood Acceptance or its subsidiary, Oakwood Mortgage Investors, Inc. Oakwood
Funding Corporation ("Oakwood Funding") is a special-purpose subsidiary of
Oakwood Acceptance which has issued non-recourse notes secured by specific pools
of loans. Oakwood Acceptance has from time to time also issued notes in its own
name secured by loans. Oakwood Financial Corporation ("Oakwood Financial") is a
subsidiary of Oakwood Homes Corporation which holds the Company's retained
interests in REMIC trusts. Oakwood Life Ltd. ("OLL") reinsures risk on credit
life insurance policies written by an unrelated insurance company in connection
with sales of Company products.
The aggregate principal balance of loans sold to third parties, including
securitization transactions in which the Company retained an interest, was
approximately $368 million in 1995, $380 million in 1994 and $92 million in
1993.
Oakwood Acceptance's servicing portfolio totalled approximately $1.2
billion and $843 million at September 30, 1995 and 1994, respectively, of which
approximately $787 million and $509 million, respectively, represented loans
owned by REMIC trusts treated as sales of receivables and other loans sold to
third parties.
Condensed financial information for the Company's financial services
businesses is set forth below:
1995 1994 1993
-------------------------------
(in thousands)
Statement of income
Revenues
Interest income $38,185 $44,162 $42,307
Servicing fees 12,202 7,091 4,913
REMIC residual income 7,212 3,167 754
Credit life insurance premiums 2,263 1,748 1,172
Gain on sale of securities 776 20 354
Other 1,357 583 551
-------------------------------
Total revenues 61,995 56,771 50,051
-------------------------------
Costs and expenses
Interest expense 31,142 32,066 30,541
Other operating expenses 12,799 8,127 6,748
Provision for losses
on credit sales 2,109 5,485 6,945
-------------------------------
Total costs and expenses 46,050 45,678 44,234
-------------------------------
Income before intercompany
interest elimination
and income taxes 15,945 11,093 5,817
Add: intercompany interest expense 8,504 8,806 5,487
-------------------------------
Income before income taxes $24,449 $19,899 $11,304
===============================
1995 1994
-----------------------
(in thousands)
Balance sheet
Loans $405,166 $324,472
REMIC regular interests 28,133 22,811
REMIC residual interests 20,599 6,628
Other assets 23,364 21,596
-----------------------
Total assets $477,262 $375,507
=======================
Short-term borrowings $124,400 $ 15,000
Notes payable secured by loans 127,650 155,709
Unearned insurance premiums 3,510 2,107
Due to affiliates 129,155 155,530
Reserve for contingent liabilities 3,184 3,827
Other liabilities 2,854 1,330
Parent company's investment 86,509 42,004
-----------------------
Total liabilities and parent
company's investment $477,262 $375,507
=======================
Condensed financial information for Oakwood Homes Corporation with its
financial services businesses accounted for using the equity method is as
follows:
1995 1994 1993
----------------------------------
(in thousands)
Statement of income
Revenues
Net sales $741,521 $595,127 $422,103
Equity in income of financial
services businesses 24,449 19,899 11,304
Other income 18,331 12,955 11,773
----------------------------------
Total revenues 784,301 627,981 445,180
----------------------------------
Costs and expenses
Cost of sales 543,320 441,364 316,974
Selling, general and
administrative expenses 165,725 128,759 85,573
Interest expense 2,259 1,149 1,706
----------------------------------
Total costs and expenses 711,304 571,272 404,253
----------------------------------
Income before income taxes 72,997 56,709 40,927
Pro forma provision
for income taxes 27,679 21,054 15,212
----------------------------------
Pro forma net income $ 45,318 $ 35,655 $ 25,715
==================================
26
<PAGE>
1995 1994
---------------------
(in thousands)
Balance sheet
Current assets
Cash and cash equivalents $ 4,974 $ 14,234
Receivables 17,848 13,677
Inventories 151,190 98,688
Prepaid expenses 2,649 2,333
---------------------
Total current assets 176,661 128,932
Properties and facilities 100,108 66,185
Investment in and advances to
financial services businesses 215,664 197,534
Other assets 28,609 19,393
---------------------
$521,042 $412,044
=====================
Current liabilities
Short-term borrowings $ 30,000 $ 10,000
Current maturities of long-term debt 6,731 814
Accounts payable and accrued liabilities 84,551 66,573
---------------------
Total current liabilities 121,282 77,387
Long-term debt 64,431 51,467
Other long-term obligations 16,921 6,860
Shareholders' equity 318,408 276,330
---------------------
$521,042 $412,044
=====================
NOTE 5--OTHER INCOME
The components of other income are as follows:
1995 1994 1993
-----------------------------------
(in thousands)
Insurance commissions $10,198 $ 7,012 $ 4,618
Endorsement fees 1,151 1,172 1,482
Investment income 1,047 1,114 1,000
Gain on sale of manufactured
housing communities -- -- 1,636
Other 5,500 3,414 2,846
-----------------------------------
$17,896 $12,712 $11,582
===================================
Note 6--Receivables and Investments
The components of receivables and investments are as follows:
1995 1994
----------------------
(in thousands)
Loans held for sale $244,593 $136,615
Loans held for investment 173,545 198,396
Trade receivables 8,025 7,480
Accrued interest 3,521 3,472
Other receivables 11,070 7,672
Less: reserve for uncollectible receivables (8,611) (10,796)
----------------------
Total receivables 432,143 342,839
Retained interests in REMIC
securitizations treated as sales
of receivables
Regular interests, at amortized cost
which approximates fair value 28,133 22,811
Residual interests, at amortized cost 20,599 6,628
----------------------
Total retained REMIC interests 48,732 29,439
----------------------
$480,875 $372,278
======================
The estimated principal receipts, including estimated prepayments, on loans
held for investment are $26.4 million in 1996, $24.7 million in 1997, $23.0
million in 1998, $21.6 million in 1999 and $20.3 million in 2000.
Loans in which the Company retains an interest, either directly by owning
them or indirectly through the Company's retained interests in REMIC
securitizations, are located in over forty states, with North Carolina, South
Carolina, Virginia and Texas accounting for the majority of the loans. Because
of the nature of the Company's retail business, loans are not concentrated with
any single customer or among any group of customers. Trade receivables represent
amounts due from Golden West and Destiny independent dealers, which are located
principally in the Pacific Northwest and in the Southeast.
Substantially all the loans included in the Company's GNMA securitizations
are covered by FHA insurance which generally limits the Company's risk to 10% of
credit losses incurred on such loans. The Company's risk associated with
nonrecourse debt secured by loans is limited to the Company's equity in the
underlying collateral. The Company retains all of the credit risk associated
with loans used to secure debt issued by the Company and with respect to which
creditors have recourse to the general credit of the Company in addition to the
collateral for the indebtedness. The Company's contingent liability as guarantor
of loans sold to third parties on a recourse basis was approximately $95 million
as of September 30, 1995.
27
<PAGE>
The following table summarizes the transactions reflected in the reserve for
losses on credit sales:
1995 1994 1993
-----------------------------------
(in thousands)
Balance at beginning of year $14,623 $12,477 $ 7,360
Provision for losses 2,109 5,485 6,945
Reserve recorded related to
acquired portfolios -- 1,000 1,500
Losses charged to the reserve (4,937) (4,339) (3,328)
-----------------------------------
Balance at end of year $11,795 $14,623 $12,477
===================================
The reserve for losses on credit sales is reflected in the balance sheet as
follows:
1995 1994
---------------------
(in thousands)
Reserve for uncollectible receivables $ 8,611 $10,796
Reserve for contingent liabilities 3,184 3,827
---------------------
$11,795 $14,623
=====================
The Company also retains credit risk on REMIC securitizations because the
related trust agreements provide that all losses incurred on REMIC loans are
charged to REMIC interests retained by the Company before any losses are charged
to REMIC interests sold to third party investors; such credit risk is considered
in determining the carrying value of the investments and the Company's yield
thereon.
The Company has retained servicing on substantially all loans it has
originated since 1989 with respect to which the Company has retained any credit
risk.
Golden West and Destiny are contingently liable under terms of repurchase
agreements with financial institutions providing inventory financing for
retailers of their products. These arrangements, which are customary in the
industry, provide for the repurchase of products sold to retailers in the event
of default on payments by the retailer. Although Golden West and Destiny are
contingently liable under these agreements, the risk of loss is spread over
numerous retailers and financing institutions and is further reduced by the
resale value of repurchased homes. The estimated potential obligations under
such agreements approximated $52 million at September 30, 1995. Losses under
these agreements have not been significant.
NOTE 7--INCOME TAXES
The components of the provision for income taxes are as follows:
1995 1994 1993
-----------------------------------
(in thousands)
Current
Federal $30,524 $23,404 $17,410
State 2,910 2,018 1,480
-----------------------------------
33,434 25,422 18,890
-----------------------------------
Deferred
Federal (6,449) (5,078) (3,517)
State (611) (335) (497)
-----------------------------------
(7,060) (5,413) (4,014)
-----------------------------------
Historical provision
for income taxes 26,374 20,009 14,876
Pro forma provision for income
taxes on Destiny's earnings
for preacquisition periods 1,305 1,045 336
-----------------------------------
Pro forma provision for
income taxes $27,679 $21,054 $15,212
===================================
A reconciliation of the statutory federal income tax rate to the Company's
historical and pro forma effective income tax rates follows:
1995 1994 1993
-----------------------------
Statutory federal income tax rate 35% 35% 35%
State income taxes, less federal
income tax benefit 2 2 2
Reduction in valuation allowance
for deferred income tax assets (1) -- --
Other 2 -- --
-----------------------------
Pro forma effective income tax rate 38 37 37
Effect of Destiny's preacquisition
earnings includable in the
income tax returns of its
former shareholders (2) (2) --
-----------------------------
Historical effective income tax rate 36% 35% 37%
=============================
28
<PAGE>
Deferred income taxes includes the following components:
1995 1994
---------------------
(in thousands)
Deferred income tax assets
Reserve for losses on credit sales $ 3,861 $ 5,364
REMIC residual interests 4,426 800
Accrued liabilities 7,470 3,341
Net operating loss carryforward 1,829 2,100
Inventories 867 413
Alternative minimum tax
credit carryforward 144 341
Other 777 622
---------------------
Gross deferred income tax assets 19,374 12,981
---------------------
Deferred income tax liabilities
Properties and facilities (2,344) (2,001)
Deferred installment sale income -- (475)
Discounts on acquired portfolios (424) (426)
Other (1,060) (576)
---------------------
Gross deferred income tax liabilities (3,828) (3,478)
---------------------
Valuation allowance for deferred
income tax assets -- (2,100)
---------------------
Net deferred income tax asset $15,546 $ 7,403
=====================
During 1995 the Company recognized an income tax benefit of approximately
$2.1 million relating to net operating loss carryforwards, of which
approximately $1,083,000 was applied to reduce to zero the excess of cost over
fair value of net assets acquired and $1,017,000 was credited to the provision
for income taxes. At September 30, 1995 the remaining net operating loss
carryforward is approximately $5,425,000 for federal income tax purposes.
Utilization of such carryforward is dependent upon the realization of taxable
income by Golden West, and such utilization is limited to a maximum of
approximately $775,000 annually through 2002.
Income tax payments were approximately $27.4 million, $24.8 million and
$13.8 million in 1995, 1994 and 1993, respectively.
NOTE 8--INVENTORIES
The components of inventories are as follows:
1995 1994
----------------------
(in thousands)
Manufactured homes $136,457 $84,218
Work-in-progress, materials and supplies 12,691 12,936
Land/homes under development 2,042 1,534
----------------------
$151,190 $98,688
======================
NOTE 9--PROPERTIES AND FACILITIES
The components of properties and facilities are as follows:
1995 1994
----------------------
(in thousands)
Land and land improvements $ 16,013 $ 14,500
Buildings and field sales offices 48,255 35,484
Furniture, fixtures and equipment 45,948 29,467
Leasehold improvements 6,185 4,335
Manufactured housing communities 16,735 8,920
----------------------
133,136 92,706
Less: accumulated depreciation
and amortization (31,378) (25,481)
----------------------
$101,758 $ 67,225
======================
Depreciation and amortization of properties and facilities was
approximately $7,337,000, $4,741,000 and $4,116,000 in 1995, 1994 and 1993,
respectively.
NOTE 10--SHORT-TERM CREDIT FACILITIES
The Company has a $130 million line of credit facility with a group of
commercial banks secured by loans held for sale, with interest payable at either
LIBOR plus 1% or prime. The Company has a $75 million line of credit with a
commercial bank secured by manufactured housing inventory with interest payable
at either LIBOR plus 1% or prime.
29
<PAGE>
NOTE 11--NOTES AND BONDS PAYABLE
The components of notes and bonds payable are as follows:
<TABLE>
<CAPTION>
1995 1994
---------------------------
(in thousands)
<S> <C> <C>
Non-financial services debt
9% reset debentures due 2007 $ 22,953 $ 23,000
9.125% reset debentures due 2007 16,975 17,000
Term loan payable in quarterly installments through 1998, with interest at LIBOR plus 1.5% 12,000 --
Capitalized aircraft lease payable in monthly installments through
2000, with interest at LIBOR plus .75% 6,292 --
Industrial revenue bonds due in annual installments through 2011, with interest at a variable rate
(4.55% and 4.2% at September 30, 1995 and September 30, 1994, respectively) 4,900 5,100
Industrial revenue bond due in installments through 2001, with
interest at 73% of the lender's prime rate 2,350 2,450
Other mortgage notes at interest rates ranging from
8% to 9%, payable in varying installments through 2006 2,784 3,354
ESOP note payable in quarterly installments through 2000, with interest at LIBOR plus 1.25% 2,160 --
Note payable in monthly installments through November 1998, with interest
at LIBOR plus 1.50% (prime plus .75% prior to 1995) 748 977
Other -- 400
---------------------------
Total non-financial services debt 71,162 52,281
---------------------------
Financial services debt collateralized by loans
Nonrecourse debt
Notes issued by Oakwood Funding Corporation, payable in monthly installments
through May 2001, with interest at an average rate of 8.89%
(8.99% at September 30, 1994) 39,130 54,784
REMIC Trust 1990 subordinated certificates payable in monthly
installments through September 2001, with interest at 10.1% 12,854 15,123
REMIC Trust 1992-1 certificates payable in monthly installments
through April 2001 with interest at 8.86% 12,482 15,676
REMIC Trust 1991-1 certificates payable in monthly installments
through September 1999 with interest at 9.5% 7,453 10,313
Subordinated note payable with interest payable monthly
at 12.58%, amortizing in 1998 through 2001 8,350 8,350
REMIC Trust 1988-1 certificates payable through 1995 with interest at 10.1% -- 1,446
---------------------------
Total nonrecourse debt 80,269 105,692
---------------------------
Recourse debt
Term loans payable in monthly installments through December 2000, with
interest at rates ranging from LIBOR plus 1.375% to prime plus .5%
(LIBOR plus 2% to prime plus .5% at September 30, 1994) 29,799 28,223
Subordinated note with interest payable monthly at 10.51%, amortizing in 2001 through 2004 12,954 12,954
Notes payable in quarterly installments through December 1998, with interest at 10.25% 4,628 8,840
---------------------------
Total recourse debt 47,381 50,017
---------------------------
Total financial services debt 127,650 155,709
---------------------------
$198,812 $207,990
===========================
</TABLE>
30
<PAGE>
The interest rates on the reset debentures will reset on June 1, 1997 and
June 1, 2002 to a rate to be determined by the Company in its sole discretion.
The reset debentures are redeemable at par at the option of the holders thereof
upon the occurrence of certain events, the most significant of which, generally,
involve a substantial recapitalization of the Company, merger or consolidation
of the Company, or acquisition of more than 30% of the beneficial ownership in
the Company by any person. In addition, the holders of the reset debentures may
call for their redemption as of either interest reset date. The reset debentures
are callable at the option of the Company at 101% of par and at par beginning
June 1, 1996.
The payment of notes collateralized by loans and REMIC certificates
generally is based on the scheduled monthly payment and actual prepayments of
principal on the loans collateralizing the notes or held by the REMIC trusts.
Under the provisions of certain note agreements and the trust indentures of each
REMIC trust, the notes and REMIC certificates are secured solely by the
underlying collateral, which consists principally of the loans collateralizing
the debt or held by the REMIC trusts. Such collateral had an aggregate carrying
value of approximately $174 million at September 30, 1995.
In connection with the issuance of certain indebtedness, the Company
incurred certain costs and discounts which are being amortized over the life of
the related obligations using the level yield method. The unamortized portion of
these costs, which is included in other assets, was approximately $2,881,000 and
$4,014,000 at September 30, 1995 and 1994, respectively. Land, land
improvements, buildings and equipment with a net book value of approximately $26
million are pledged as collateral for the $12 million term loan, the mortgage
notes and the industrial revenue bonds. The $4.9 million industrial revenue bond
is also secured by a letter of credit provided by a major bank through 1996.
The estimated principal payments under notes and bonds payable are $37
million in 1996, $34 million in 1997, $28 million in 1998, $20 million in 1999,
$15 million in 2000 and the balance thereafter. Interest paid by the Company was
approximately $24.3 million in 1995, $23.9 million in 1994 and $26.5 million in
1993.
Various of the Company's debt agreements and loan servicing agreements
contain covenants which, among other things, require the Company and/or Oakwood
Acceptance to maintain certain minimum financial ratios. The Company and Oakwood
Acceptance were in compliance with all such covenants at September 30, 1995.
NOTE 12--ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The components of accounts payable and accrued liabilities are as follows:
1995 1994
----------------------
(in thousands)
Accounts payable $47,705 $36,195
Accrued compensation 17,778 12,980
Accrued dealer volume bonus 3,792 4,260
Income taxes payable 7,607 2,608
Other accrued liabilities 10,523 12,241
----------------------
$87,405 $68,284
======================
NOTE 13--SHAREHOLDERS' EQUITY
The Company has adopted a Shareholder Protection Rights Plan (the "Plan") to
protect shareholders against unsolicited attempts to acquire control of the
Company that do not offer what the Company believes to be an adequate price to
all shareholders. Under the Plan each outstanding share of the Company's common
stock has associated with it a right to purchase (each, a "Right" and,
collectively, the "Rights"), upon the occurrence of certain events, one
two-hundredth of a share of junior participating Class A preferred stock
("Preferred Stock") at an exercise price of $40. The Rights will become
exercisable only if a person or group (an "Acquiring Person"), without the
Company's consent, commences a tender or exchange offer for, or acquires 20% or
more of the voting power of, the Company.
In such event, each holder of Preferred Stock, other than the Acquiring
Person, will be entitled to acquire that number of shares of the Company's
common stock having a market value of twice the exercise price. Similarly, if,
without the Company's consent, the Company is acquired in a merger or other
business combination transaction, each holder of Preferred Stock, other than the
Acquiring Person, will be entitled to acquire voting shares of the acquiring
company having a value of twice the exercise price. The Rights may be redeemed
at a price of $.01 per Right by the Company at any time prior to any person or
group acquiring 20% or more of the Company's voting power or certain other
triggering events, and will expire on August 22, 2001.
The Company's authorized capital stock includes 500,000 shares of $100 par
value preferred stock. The preferred stock may be issued in one or more series
with such terms, preferences, limitations and relative rights as the Board of
Directors shall determine. No Oakwood preferred stock has been issued.
31
<PAGE>
In November 1993 Golden West redeemed for $1,150,000 cash its previously
outstanding Series B preferred stock. The excess of the stated value of the
Series B preferred stock over the redemption price has been reflected as
additional paid-in capital in the accompanying financial statements.
In fiscal 1993 the Company called for redemption two classes of convertible
debentures. Of the outstanding principal balance at the redemption date,
approximately $44.9 million was converted into 3,827,410 common shares and $.4
million was redeemed for cash. Primary earnings per share, computed assuming the
convertible debentures had been converted into common stock as of the beginning
of 1993, would have been $1.18 per share.
NOTE 14--STOCK OPTION AND AWARD PLANS
The Company has adopted the 1990 Long-Term Performance Plan under which
1,687,500 shares of the Company's common stock have been reserved for issuance
to key employees. Awards or grants under the plan may be made in the form of
incentive and nonqualified stock options, stock appreciation rights, restricted
stock and restricted unit grants, and performance equity and performance unit
grants.
The Company also has adopted the 1990 Director Stock Option Plan under
which 112,500 shares of the Company's common stock have been reserved for grant
to non-employee directors of the Company. The exercise price of options granted
is the fair market value of the Company's common stock on the date of grant.
Options granted under the plan become exercisable six months from the date of
grant and expire 10 years from the date of grant.
The Company has a 1985 Nonqualified Stock Option Plan under which 585,937
shares of the Company's common stock were reserved for issuance to key
employees. The plan authorizes two types of options--Book Value Stock Options
and Fair Market Value Stock Options. The exercise price of Book Value Stock
Options is the undiluted book value per common share as of the most recent
quarter end prior to the date of exercise. Fair Market Value Stock Options may
be granted with an exercise price of not less than 100% of the fair market value
of the Company's common stock on the date of grant. When exercising a Book Value
Stock Option, an employee is entitled to receive a loan from the Company for the
exercise amount plus, at the discretion of the Board of Directors, an amount
equal to any taxes payable by such employees as a result of such exercise.
Compensation expense under these plans was approximately $2,017,000,
$619,000 and $1,086,000 in 1995, 1994 and 1993, respectively.
The following table summarizes the changes in the number of shares under
option pursuant to the plans described above and pursuant to certain earlier
plans under which options may no longer be granted:
Number Per share
of shares option price
----------------------------
Outstanding at September 30, 1992 1,960,520 $3.24-$13.63
Granted 109,034 9.38-25.50
Exercised (431,526) 3.47-11.94
Terminated (61,202) 8.76-9.38
---------
Outstanding at September 30, 1993 1,576,826 3.24-25.50
Granted 216,000 23.07-29.44
Exercised (144,378) 3.47-22.19
Terminated (14,500) 22.19-23.50
---------
Outstanding at September 30, 1994 1,633,948 3.24-29.44
Granted 176,000 21.44-27.56
Exercised (164,549) 3.47-29.44
Terminated (26,012) 6.66-27.13
---------
Outstanding at September 30, 1995 1,619,387 3.24-29.44
=========
Exercisable at September 30, 1995 717,372 3.24-29.44
=========
Shares reserved for future grant
September 30, 1994 673,154
September 30, 1995 514,154
NOTE 15--EMPLOYEE BENEFIT PLANS
The Company maintains profit-sharing, employee stock ownership ("ESOP") and
401(k) plans in which substantially all employees who have met certain age and
service requirements may participate. Contributions to the profit-sharing plan
and ESOP are determined at the discretion of the Board of Directors; employees
contributions to these plans are not permitted. Employee contributions to the
401(k) plan are limited to a percentage of their compensation and are matched by
the Company on a sliding scale subject to certain limitations. Compensation cost
under the profit-sharing and 401(k) plans was approximately $837,000, $806,000
and $588,000 in 1995, 1994 and 1993, respectively.
During 1995 the Company loaned approximately $2,398,000 million to the ESOP
to enable the ESOP to purchase Company common stock on the open market. The ESOP
refinanced the Company's loan with the proceeds of a loan from a commercial bank
which the Company has guaranteed; the Company has reflected the note payable as
a liability in the accompanying balance sheet. The bank loan provides that
shares are released ratably upon repayment of the principal of the loan.
Compensation cost relating to shares acquired with the proceeds of the loan is
measured by reference to the fair value of the shares committed to be released
32
<PAGE>
during the period, in accordance with Statement of Position 93-6. Compensation
cost relating to shares acquired under similar arrangements prior to fiscal 1995
was measured using the shares allocated method; all of such shares were
committed to being released on or before September 30, 1994. Total compensation
cost under the plan was approximately $1,067,000, $1,471,000 and $440,000 in
1995, 1994 and 1993, respectively.
At September 30, 1995 the ESOP held a total of 254,681 shares of the
Company's common stock having a fair value of approximately $9 million. Of the
total number of shares, 10,057 shares have been committed to be released, 91,443
shares are held in suspense and the balance, representing shares acquired using
cash contributed to the ESOP in excess of its debt service requirements and
shares acquired in prior years, have been allocated to plan participants.
NOTE 16--FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company is a party to on- and off-balance sheet financial instruments as a
result of its financing and funding activities. On-balance sheet financial
assets include loans originated in conjunction with retail home sales, loans
purchased from third parties, trade receivables arising from sales of homes to
independent dealers and other receivables. The Company has estimated the fair
value of consumer loans receivable by discounting the estimated future cash
flows relating thereto using interest rates which approximate the interest rates
charged by Oakwood Acceptance as of year end for loans of similar character and
duration. Due to their short-term nature, the fair values of trade and other
receivables approximates their carrying values.
The Company estimates the fair value of retained regular and residual
interests in REMIC securitizations treated as sales of receivables based upon
default, prepayment and interest rate assumptions which management believes
market participants would use for similar instruments. However, there exists no
active market for manufactured housing residual REMIC interests or uniformly
accepted valuation methodologies. Based on current estimates, management
believes that the fair value of the Company's retained REMIC interests
approximates their carrying values.
On-balance sheet financial obligations consist of amounts outstanding under
the Company's short-term credit facilities and notes and bonds payable. The
Company estimates the fair values of debt obligations using rates currently
offered to the Company for borrowings having similar character, collateral and
duration or, in the case of the Company's outstanding reset debentures, by
reference to quoted market prices.
There were no outstanding forward interest rate agreements in place at
September 30, 1995 and the amount of such agreements in place at September 30,
1994 was not material.
The following table sets forth the carrying amounts and estimated fair
values of the Company's on-balance sheet financial instruments at September 30,
1995 and 1994.
1995 1994
--------------------------------------------
Estimated Carrying Estimated Carrying
fair value amount fair value amount
--------------------------------------------
(in thousands)
Assets
Cash and cash equivalents $ 6,189 $ 6,189 $ 16,974 $ 16,974
Receivables and investments
Loans held for sale 246,372 244,593 136,615 136,615
Loans held for investment
Fixed rate loans 173,135 160,732 194,682 183,784
Variable rate loans 12,813 12,813 14,612 14,612
Trade receivables 8,025 8,025 7,480 7,480
Other receivables 14,591 14,591 11,144 11,144
Less: reserve for
uncollectible receivables -- (8,611) -- (10,796)
Retained REMIC
regular interests 28,133 28,133 22,811 22,811
Retained REMIC
residual interests 20,599 20,599 6,628 6,628
Liabilities
Short-term borrowings 154,400 154,400 25,000 25,000
Notes and bonds payable
Fixed rate obligations 144,389 139,641 173,072 172,057
Variable rate obligations 59,171 59,171 35,933 35,933
33
<PAGE>
NOTE 17--QUARTERLY FINANCIAL DATA (UNAUDITED)
The accompanying financial statements for 1994 and 1993 have been retroactively
restated to include the financial position and results of operations of Destiny
for all periods presented, as described in Notes 1 and 3. A summary of certain
quarterly financial information (which, for 1994 and the first two quarters of
1995, differs from that previously reported due to the pooling of interests
accounting method applied to the Destiny acquisition) follows:
<TABLE>
<CAPTION>
First Second Third Fourth
quarter quarter quarter quarter Year
------------------------------------------------------------------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
1995
Net sales
Oakwood and Golden West $127,443 $143,925 $179,881 $198,138 $649,387
Destiny 22,046 25,066 24,359 20,663 92,134
------------------------------------------------------------------
Combined $149,489 $168,991 $204,240 $218,801 $741,521
==================================================================
Gross profit
Oakwood and Golden West $ 34,203 $ 40,214 $ 51,504 $ 57,882 $183,803
Destiny 3,262 3,648 3,844 3,644 14,398
------------------------------------------------------------------
Combined $ 37,465 $ 43,862 $ 55,348 $ 61,526 $198,201
==================================================================
Net income
Oakwood and Golden West $ 7,648 $ 9,116 $ 11,336 $ 14,612 $ 42,712
Destiny 811 1,254 1,455 391 3,911
------------------------------------------------------------------
Combined $ 8,459 $ 10,370 $ 12,791 $ 15,003 $ 46,623
==================================================================
Pro forma net income
Oakwood and Golden West $ 7,648 $ 9,116 $ 11,336 $ 14,612 $ 42,712
Destiny 564 746 905 391 2,606
------------------------------------------------------------------
Combined $ 8,212 $ 9,862 $ 12,241 $ 15,003 $ 45,318
==================================================================
Pro forma earnings per share
Primary
Oakwood and Golden West $ .35 $ .41 $ .52 $ .64 $ 1.92
Effect of Destiny .01 .02 .01 .01 .05
------------------------------------------------------------------
As adjusted $ .36 $ .43 $ .53 $ .65 $ 1.97
==================================================================
Fully diluted
Oakwood and Golden West $ .35 $ .41 $ .52 $ .64 $ 1.92
Effect of Destiny .01 .02 .01 .01 .05
------------------------------------------------------------------
As adjusted $ .36 $ .43 $ .53 $ .65 $ 1.97
==================================================================
1994
Net sales
Oakwood and Golden West $ 96,316 $111,677 $145,596 $152,598 $506,187
Destiny 19,379 23,520 23,144 22,897 88,940
------------------------------------------------------------------
Combined $115,695 $135,197 $168,740 $175,495 $595,127
==================================================================
Gross profit
Oakwood and Golden West $ 26,899 $ 30,649 $ 40,958 $ 43,265 $141,771
Destiny 2,409 3,116 3,251 3,216 11,992
------------------------------------------------------------------
Combined $ 29,308 $ 33,765 $ 44,209 $ 46,481 $153,763
==================================================================
Net income
Oakwood and Golden West $ 6,634 $ 7,460 $ 10,001 $ 9,819 $ 33,914
Destiny 507 749 868 662 2,786
------------------------------------------------------------------
Combined $ 7,141 $ 8,209 $ 10,869 $ 10,481 $ 36,700
==================================================================
Pro forma net income
Oakwood and Golden West $ 6,634 $ 7,460 $ 10,001 $ 9,819 $ 33,914
Destiny 317 443 542 439 1,741
------------------------------------------------------------------
Combined $ 6,951 $ 7,903 $ 10,543 $ 10,258 $ 35,655
==================================================================
Pro forma earnings per share
Primary
Oakwood and Golden West $ .30 $ .34 $ .45 $ .45 $ 1.54
Effect of Destiny -- -- .01 -- .01
------------------------------------------------------------------
As adjusted $ .30 $ .34 $ .46 $ .45 $ 1.55
==================================================================
Fully diluted
Oakwood and Golden West $ .30 $ .34 $ .45 $ .45 $ 1.54
Effect of Destiny -- -- .01 -- .01
------------------------------------------------------------------
As adjusted $ .30 $ .34 $ .46 $ .45 $ 1.55
==================================================================
</TABLE>
34
<PAGE>
NOTE 18--BUSINESS SEGMENT INFORMATION
The Company operates in two principal business. The manufactured housing segment
includes the Company's retail and manufacturing operations. The Company's retail
business purchases homes primarily from the Company's manufacturing operations
but supplements these purchases in certain markets with purchases from third
party manufacturers. The Company's manufacturing operations sell the majority of
its homes to the Company's retail operations, with a lesser portion distributed
through independent dealers. The manufactured housing segment also includes the
Company's communities development arm, which is engaged in developing both
rental communities and manufactured housing subdivisions. Prior to fiscal 1995,
the communities development operations were reported as a separate business
segment. These operations have been combined with the manufactured housing
segment in 1995 (with prior years' information similarly reclassified) because
these operations have been redirected principally to a retail support role and
are not significant to the Company's consolidated financial position and results
of operations.
The financial services segment provides retail financing to customers of
the manufactured housing segment as well as to customers of independent retail
dealers. This segment both originates and services loans, and securitizes the
loans in the public and private markets as a source of capital. The segment also
reinsures credit life insurance risk on policies sold to retail customers.
Segment operating income is income before general corporate expenses,
non-financial interest expense, investment income and income taxes. Identifiable
assets include those assets directly related to the Company's operations in the
different segments; general corporate assets consist principally of cash,
certain property and other investments.
1995 1994 1993
----------------------------------
(in thousands)
Revenues
Manufactured housing(1) $758,370 $606,725 $432,685
Financial services 61,995 56,771 50,051
Investment income 1,047 1,114 1,000
----------------------------------
$821,412 $664,610 $483,736
==================================
Operating income
Manufactured housing(1)(2) $ 60,806 $ 48,812 $ 35,235
Financial services 24,449 19,899 11,304
----------------------------------
Combined 85,255 68,711 46,539
Non-financial interest expense (2,259) (1,149) (1,706)
Investment income 1,047 1,114 1,000
General corporate expenses(3) (11,046) (11,967) (4,906)
----------------------------------
Income before income taxes $ 72,997 $ 56,709 $ 40,927
==================================
Identifiable assets
Manufactured housing $286,147 $197,738 $138,065
Financial services 477,262 375,507 437,617
General corporate 19,231 17,152 21,268
----------------------------------
$782,640 $590,397 $596,950
==================================
Depreciation and amortization
Manufactured housing $ 5,683 $ 3,782 $ 3,841
Financial services 765 784 818
General corporate 1,830 960 410
----------------------------------
$ 8,278 $ 5,526 $ 5,069
==================================
Capital expenditures
Manufactured housing $ 25,276 $ 23,911 $ 11,038
Financial services 956 511 680
General corporate 15,638 3,803 2,351
----------------------------------
$ 41,870 $ 28,225 $ 14,069
==================================
(1) Includes a gain of approximately $1.6 million in 1993 from the sale of
manufactured housing communities
(2) Includes one-time charges of approximately $663,000 in 1995 relating to the
sale of a manufactured housing facility
(3) Includes one-time charges of approximately $537,000 in 1995 relating to
downsizing corporate overhead staff at Golden West and $150,000 for costs
associated with the Destiny acquisition; includes one-time charges of
approximately $1.3 million in 1994 for costs relating to the Golden West
acquisition
35
<PAGE>
- -------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- -------------------------------------
Price Waterhouse LLP [LOGO]
To the Board of Directors and Shareholders of
Oakwood Homes Corporation
In our opinion, based upon our audits and the reports of other auditors, the
accompanying consolidated balance sheet and the related consolidated statements
of income, of cash flows and of changes in shareholders' equity present fairly,
in all material respects, the financial position of Oakwood Homes Corporation
and its subsidiaries at September 30, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
September 30, 1995, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We did not audit the financial statements of Golden West Homes, a
wholly-owned subsidiary, which statements reflect total revenues of $89,564,000
for the year ended December 25, 1993 (see Note 1). We also did not audit the
financial statements of Destiny Industries, Inc., a wholly-owned subsidiary,
which statements reflect total assets of $15,210,000 at October 1, 1994 and
total revenues of $89,080,000 and $71,766,000 for the years ended October 1,
1994 and October 2, 1993, respectively (see Note 1). Those statements were
audited by other auditors, whose reports thereon have been furnished to us, and
our opinion expressed herein, insofar as it relates to the amounts included for
Golden West Homes and for Destiny Industries, Inc., is based solely on the
reports of the other auditors. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits and the reports of other auditors provide a
reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Winston-Salem, North Carolina
October 31, 1995
- -----------------------
COMMON STOCK PRICES
- -----------------------
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
Quarter High Low High Low High Low High Low High Low
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
First 26 5/8 20 3/4 28 5/8 22 5/8 21 3/8 13 11 7 5/8 6 4 1/8
Second 27 21 3/4 29 3/4 20 3/8 23 1/2 17 1/2 16 1/2 10 1/8 9 5/8 5 3/4
Third 27 1/8 23 1/4 23 3/4 19 1/4 21 1/4 17 1/4 15 3/4 10 1/8 10 1/8 6 3/4
Fourth 36 3/8 25 7/8 29 1/8 22 3/8 26 1/8 20 3/4 15 10 1/2 9 3/8 6 7/8
</TABLE>
- ------------------------
DIVIDEND INFORMATION
- ------------------------
The Company declared a cash dividend of $.02 per common share during each of the
eight quarters in the period ended September 30, 1995.
36
<PAGE>
SHAREHOLDER INFORMATION GUIDE
DIRECTORS
Ralph L. Darling
Elected 1971
Chairman
Nicholas J. St. George
Elected 1972
President and
Chief Executive Officer
A. Steven Michael
Elected 1992
Executive Vice President and
Chief Operating Officer
C. Michael Kilbourne
Elected 1995
Executive Vice President and
Chief Financial Officer
Robert D. Harvey, Sr.
Elected 1984
Vice President Administration
Clarence W. Walker*
Elected 1971
Partner, Kennedy Covington
Lobdell & Hickman, L.L.P.
Attorneys at Law
Kermit G. Phillips, II*
Elected 1979
Chairman, Phillips Management
Group, Inc. (Real Estate
Development and Management)
Dennis I. Meyer+
Elected 1983
Partner, Baker & McKenzie,
Attorneys at Law
H. Michael Weaver+*
Elected 1991
Chairman, W. H. Weaver
Construction Company (Real
Estate Development and
Management)
Sabin C. Streeter+
Elected 1993
Managing Director,
Donaldson, Lufkin & Jenrette
Securities Corporation
Francis T. Vincent, Jr.+
Elected 1993
Private Investor
* Member of the Audit Committee
+ Member of the Compensation Committee
EXECUTIVE OFFICERS
Ralph L. Darling
Chairman
Nicholas J. St. George
President and
Chief Executive Officer
A. Steven Michael
Executive Vice President and
Chief Operating Officer
C. Michael Kilbourne
Executive Vice President and
Chief Financial Officer
Douglas R. Muir
Senior Vice President,
Secretary and Treasurer
Jeffrey D. Mick
Senior Vice President
and Controller
Myles E. Standish
Senior Vice President and
General Counsel
J. Michael Stidham
Executive Vice President
Retail
Thomas E. Cross
Executive Vice President
Manufacturing
Larry T. Gilmore
Executive Vice President
Consumer Finance
Mailing Address
Oakwood Homes Corporation
Post Office Box 7386
Greensboro, North Carolina
27417-0386
(910) 855-2400
Legal Counsel
Kennedy Covington Lobdell &
Hickman, L.L.P.
Attorneys at Law
Charlotte, North Carolina
Independent Accountants
Price Waterhouse LLP
Winston-Salem, North Carolina
Transfer Agent and Registrar
Wachovia Bank of
North Carolina, N.A.
301 North Church Street
Second Floor East
Winston-Salem,
North Carolina 27101
(800) 633-4236
Securities Exchange Listing
New York Stock Exchange
Ticker Symbol--OH
Number of Shareholders of Record
1,046 as of December 1, 1995.
Cash Dividends
Cash dividends on Oakwood Common Stock have been paid for 20 consecutive years.
Cash dividends are ordinarily paid on or about the end of November, February,
May and August.
Shareholder Inquiries
Inquiries by shareholders and securities analysts should be directed to Douglas
R. Muir, Senior Vice President (910) 855-2360
Annual Meeting
The annual meeting of shareholders will be held in Greensboro, North Carolina at
2 p.m. on Wednesday, January 31, 1996.
10-K Report
The Corporation will provide without charge a copy of its annual report on Form
10-K as filed with the Securities and Exchange Commission upon receipt of a
written request. This request should be addressed to the Corporate Secretary,
P.O. Box 7386, Greensboro, North Carolina 27417-0386.
Design: Curran & Connors, Inc.
<PAGE>
Oakwood Homes Corporation
[logo] P.O. Box 7386
Greensboro, North Carolina 27417-0386
910/855-2400
EXHIBIT 21
LIST OF SUBSIDIARIES OF THE REGISTRANT
Name of Subsidiary(1) Jurisdiction of Incorporation
- --------------------- -----------------------------
Oakwood Mobile Homes, Inc.(2) North Carolina
Homes by Oakwood, Inc. North Carolina
Homes By Fisher, Inc. North Carolina
Oakwood Land Development Corporation North Carolina
Oakwood Acceptance Corporation(3) North Carolina
Oakwood Realty Services, Inc. North Carolina
The Oakwood Agency, Inc. North Carolina
Oakwood Funding Corporation Nevada
Oakwood Financial Corporation Nevada
Acorn Acquisition Corporation Delaware
Acorn Financial Corporation Delaware
Pin Oak Financial Corporation Delaware
Oakwood Life, Ltd. Turks and Caicos
Islands
Oakwood Mortgage Investors, Inc. North Carolina
Golden West Homes California
Golden Circle Financial Services California
Destiny Industries, Inc. Georgia
- -----------------------
(1) Each subsidiary does business under its corporate name.
(2) Also does business under the name "Freedom Homes" and "Victory Homes" and
"Golden Homes."
(3) Also does business under the names "Nationwide Mortgage" and "Golden Circle
Financial Services" and "Destiny Financial Services."
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporations by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 33-55459) and
in the Registration Statements on Form S-8 (Nos. 33-3797, 2-81624, 33-50408,
33-50414, 33-50416 and 33-68602) of Oakwood Homes Corporation of our report
dated October 31, 1995 appearing on page 36 of the Annual Report to Stockholders
which is incorporated in this Annual Report on Form 10-K.
PRICE WATERHOUSE LLP
Winston-Salem, North Carolina
December 26, 1995
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Proxy
Statement/Prospectus constituting part of the Registration Statement on Form S-4
(No. 33-55177) of Oakwood Homes Corporation of our report dated October 31, 1995
appearing on page 36 of the Annual Report to Stockholders which is incorporated
in this Annual Report on Form 10-K. We also consent to the references to us
under the headings "Experts" and "Selected Consolidated Financial Information"
in such Proxy Statement/Prospectus. However, it should be noted that Price
Waterhouse LLP has not prepared or certified such "Selected Consolidated
Financial Information".
PRICE WATERHOUSE LLP
Winston-Salem, North Carolina
December 26, 1995
Exhibit 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
reports included in this Form 10-K, into the Company's previously filed
Registration Statement File Nos. 2-81624, 33-3797, 33-50414, 33-50416, 33-50408,
33-68602, 33-55177 and 33-55459.
ARTHUR ANDERSEN LLP
Orange County, California
December 26, 1995
Exhibit 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 10-K, into the Company's previously filed
Registration Statement File Nos. 2- 81624, 33-3797, 33-50414, 33-50416,
33-50408, 33-68602, 33-55177 and 33-55459.
ALLEN, PRITCHETT & BASSETT, CPAs
Tifton, Georgia
December 26, 1995
Exhibit 23.5
CONSENT OF INDEPENDENT PUBLIC ACCOUNTS
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 10-K, into the Company's previously filed
Registration Statement File No.s 2- 81624, 33-3797, 33-50414, 33-50416,
33-50408, 33-68602, 33-55177 and 33-55459.
WILLIAM O. PIFER, CPA, P.C.
Moultrie, Georgia
December 26, 1995
<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 year ended September
30, 1994 and is qualified in its entirety by reference to such Form 10-K
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-START> OCT-01-1993
<PERIOD-END> SEP-30-1994
<EXCHANGE-RATE> 1
<CASH> 16,974
<SECURITIES> 0
<RECEIVABLES> 383,074
<ALLOWANCES> 10,796
<INVENTORY> 98,688
<CURRENT-ASSETS> 0
<PP&E> 92,706
<DEPRECIATION> 25,481
<TOTAL-ASSETS> 590,397
<CURRENT-LIABILITIES> 93,284
<BONDS> 207,990
0
0
<COMMON> 11,005
<OTHER-SE> 265,325
<TOTAL-LIABILITY-AND-EQUITY> 590,397
<SALES> 595,127
<TOTAL-REVENUES> 664,610
<CGS> 441,364
<TOTAL-COSTS> 578,007
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 5,485
<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
<FN>
In June 1995, Oakwood acquired Destiny Industries, Inc. a subchapter S
Corporation whose earnings were includable in the tax returns of its
shareholders. Consequently, Destiny's financial statements did not reflect a
provision for income taxes prior to its acquisition by the Company. Income taxes
and net income above are on a historical basis, however, EPS is only presented
on a proforma basis (assuming Destiny's results had been includable in the
Company's tax returns) as historical EPS is not meaningful. Proforma taxes and
net income were $21,054 and $35,655, respectively.
</FN>
</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
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-1-1994
<PERIOD-END> DEC-31-1994
<EXCHANGE-RATE> 1
<CASH> 4,026
<SECURITIES> 0
<RECEIVABLES> 329,596
<ALLOWANCES> 10,035
<INVENTORY> 124,508
<CURRENT-ASSETS> 0
<PP&E> 107,144
<DEPRECIATION> 26,446
<TOTAL-ASSETS> 565,978
<CURRENT-LIABILITIES> 71,160
<BONDS> 196,280
0
0
<COMMON> 11,024
<OTHER-SE> 273,545
<TOTAL-LIABILITY-AND-EQUITY> 565,978
<SALES> 149,489
<TOTAL-REVENUES> 167,129
<CGS> 112,024
<TOTAL-COSTS> 147,883
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 151
<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
<FN>
In June 1995, Oakwood acquired Destiny Industries, Inc. a subchapter S
Corporation whose earnings were includable in the tax returns of its
shareholders. Consequently, Destiny's financial statements did not reflect a
provision for income taxes prior to its acquisition by the Company. Income taxes
and net income above are on a historical basis, however, EPS is only presented
on a proforma basis (assuming Destiny's results had been includable in the
Company's tax returns) as historical EPS is not meaningful. Proforma taxes and
net income were $5,033 and $8,212, respectively.
</FN>
</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 31,
1995 and is qualified in its entirety by reference to such Form 10-Q.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> 1
<CASH> 3,376
<SECURITIES> 0
<RECEIVABLES> 367,363
<ALLOWANCES> 9,192
<INVENTORY> 149,187
<CURRENT-ASSETS> 0
<PP&E> 114,537
<DEPRECIATION> 27,908
<TOTAL-ASSETS> 633,930
<CURRENT-LIABILITIES> 106,014
<BONDS> 219,653
0
0
<COMMON> 11,050
<OTHER-SE> 281,326
<TOTAL-LIABILITY-AND-EQUITY> 633,930
<SALES> 318,480
<TOTAL-REVENUES> 354,211
<CGS> 266
<TOTAL-COSTS> 312,845
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 266
<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
<FN>
In June 1995, Oakwood acquired Destiny Industries, Inc. a subchapter S
Corporation whose earnings were includable in the tax returns of its
shareholders. Consequently, Destiny's financial statements did not reflect a
provision for income taxes prior to its acquisition by the Company. Income taxes
and net income above are on a historical basis, however, EPS is only presented
on a proforma basis (assuming Destiny's results had been includable in the
Company's tax returns) as historical EPS is not meaningful. Proforma taxes and
net income were $11,245 and $18,074, respectively.
</FN>
</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 Form 10-Q.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1995
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1
<CASH> 6,011
<SECURITIES> 0
<RECEIVABLES> 348,339
<ALLOWANCES> 9,326
<INVENTORY> 156,914
<CURRENT-ASSETS> 0
<PP&E> 123,881
<DEPRECIATION> 29,421
<TOTAL-ASSETS> 634,236
<CURRENT-LIABILITIES> 103,049
<BONDS> 208,675
0
0
<COMMON> 11,072
<OTHER-SE> 291,979
<TOTAL-LIABILITY-AND-EQUITY> 684,236
<SALES> 522,720
<TOTAL-REVENUES> 580,354
<CGS> 386,045
<TOTAL-COSTS> 511,381
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,237
<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
<FN>
In June 1995, Oakwood acquired Destiny Industries, Inc. a subchapter S
Corporation whose earnings were includable in the tax returns of its
shareholders. Consequently, Destiny's financial statements did not reflect a
provision for income taxes prior to its acquisition by the Company. Income taxes
and net income above are on a historical basis, however, EPS is only presented
on a proforma basis (assuming Destiny's results had been includable in the
Company's tax returns) as historical EPS is not meaningful. Proforma taxes and
net income were $18,896 and $30,315, respectively.
</FN>
</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,
1995 filed as part of the Registrant's Form 10-K for the year ended September
30, 1995 and is qualified in its entirety by reference to such Form 10-K
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 1
<CASH> 6,189
<SECURITIES> 0
<RECEIVABLES> 489,486
<ALLOWANCES> 8,611
<INVENTORY> 151,190
<CURRENT-ASSETS> 0
<PP&E> 133,136
<DEPRECIATION> 31,378
<TOTAL-ASSETS> 782,640
<CURRENT-LIABILITIES> 241,805
<BONDS> 198,812
0
0
<COMMON> 11,086
<OTHER-SE> 307,322
<TOTAL-LIABILITY-AND-EQUITY> 782,640
<SALES> 741,521
<TOTAL-REVENUES> 821,412
<CGS> 543,320
<TOTAL-COSTS> 721,409
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,109
<INTEREST-EXPENSE> 24,897
<INCOME-PRETAX> 72,997
<INCOME-TAX> 26,374
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 46,623
<EPS-PRIMARY> 1.97
<EPS-DILUTED> 1.97
<FN>
In June 1995, Oakwood acquired Destiny Industries, Inc. a subchapter S
Corporation whose earnings were includable in the tax returns of its
shareholders. Consequently, Destiny's financial statements did not reflect a
provision for income taxes prior to its acquisition by the Company. Income taxes
and net income above are on a historical basis, however, EPS is only presented
on a proforma basis (assuming Destiny's results had been includable in the
Company's tax returns) as historical EPS is not meaningful. Proforma taxes and
net income were $27,679 and $45,318, respectively.
</FN>
</TABLE>