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, 1996
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.)
7800 McCloud Road, Greensboro, NC 27409-9634
(Address of principal executive offices)
Post Office Box 27081, Greensboro, NC 27425-7081
(Mailing address of principal executive offices)
Registrant's telephone number, including area code: 910/664-2400
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
<PAGE>
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
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 November 29, 1996 was $957,767,598.
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
November 29, 1996 was 45,848,319 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, 1996
Proxy Statement for Annual Meeting Parts I and III
of Shareholders to be held
January 29, 1997
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. [X]
2
<PAGE>
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 255
Registrant owned and operated sales centers located primarily in the
southeastern and southwestern United States and to approximately 92 independent
retailers located primarily in the western and southern United States. The
Registrant also earns commissions on insurance written for the Registrant's
customers.
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."
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 40 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. The Registrant is presently
expanding its facilities in Moultrie, Georgia.
3
<PAGE>
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. 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, 1996, the Registrant sold manufactured homes through
255 Registrant owned and operated sales centers located in 27 states primarily
in the southeast and southwest. See "Manufactured Home Sales Centers." The
Registrant opened 60 new sales centers and closed three sales centers in fiscal
1996. 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 1996, approximately 80% of the
Registrant's total dollar volume of sales represented retail sales of new homes.
Approximately 89% of the Registrant's retail sales of new homes were homes
manufactured by the Registrant and 11% represented sales of new homes
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, 1996, the Registrant's inventory of used homes was 864 homes as
compared to 728 homes at September 30, 1995. Used homes in inventory do not
include repossessed units.
The Registrant also sells its homes to approximately 92 independent
retailers located primarily in California, Oregon, Utah, Washington, Georgia,
North Carolina, and South Carolina as well as in 10 other western and southern
states. Sales to independent retail dealers accounted for approximately 16% of
the Registrant's total dollar volume of sales in fiscal 1996 as compared
4
<PAGE>
to 25% in fiscal 1995. As the Registrant adds Registrant-owned sales centers in
the areas surrounding recent manufacturing acquisitions, the Registrant expects
that this percentage will continue to decline.
During recent years, the Registrant has placed increased emphasis on
the sale of multi-section homes. In fiscal 1996, the Registrant's retail sales
of new multi-section homes were 32% of the total number of new homes sold at
retail, as compared to 28% in fiscal 1995.
The retail sales price for new single section homes sold by the
Registrant in fiscal 1996 generally ranged from $13,000 to $51,000 with a mean
sales price of approximately $27,700. The retail sales price of multi-section
homes sold by the Registrant generally ranged from $21,000 to $95,000, with a
mean sales price of approximately $47,900.
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.
Registrant Retail Sales Financing
A significant factor affecting sales of manufactured homes is the
availability and terms of financing. Approximately 87% of the Registrant's
retail unit sales in fiscal 1996 were financed by installment sale contracts
arranged by the Registrant, each of which generally required a minimum 5% down
payment and provided for equal monthly payments generally over a period of seven
to 30 years. In fiscal 1996, of the aggregate loan originations relating to
retail unit sales and dispositions of repossessed homes, 94% were installment
sales financed and warehoused by the Registrant for investment or later sale and
6% were installment sales financed by others without recourse to the Registrant.
The remaining 13% of retail unit sales were paid for with cash. At September 30,
1996, the Registrant held installment sale contracts with a principal balance of
approximately $395,475,000 and serviced an additional $1,132,757,000 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 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.
5
<PAGE>
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 investors. During fiscal 1996, the
Registrant sold $698,411,000 of REMIC securities. The Registrant generally has
no credit exposure with respect to securitized contracts except (1) with respect
to breaches of representations and warranties, (2) to the extent of any retained
interests in a REMIC or (3) with respect to required servicer advances.
The Registrant also obtains financing from loans insured by the FHA.
These installment sale contracts are permanently funded primarily through the
GNMA pass-through program, under which the Registrant issues obligations
guaranteed by GNMA. During fiscal 1996, the Registrant issued approximately $23
million in obligations guaranteed by GNMA. FHA insurance 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 for permanent financing at
fixed rates.
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 $783,000 in fiscal
1996. The Registrant's contingent liability on installment sale contracts sold
with full and limited recourse was approximately $75 million at September 30,
1996.
Independent Dealer Retail Sales Financing
The Registrant provides permanent financing for homes sold by certain
independent dealers that sell Registrant manufactured homes. During fiscal 1996,
the Registrant financed approximately $55 million of the retail sales of these
independent dealers.
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. In fiscal 1996, purchases of loan portfolios were not
significant.
During the fourth quarter of fiscal 1996, the Registrant entered into a
joint venture with Deutsche Financial Services Corporation ("DFS"), a subsidiary
of Deutsche Bank, to provide retail sales financing for other independent
dealers. DFS is the largest wholesale financing source for manufactured housing
inventory purchased by independent dealers. The Registrant and DFS are equal
owners of the joint venture.
6
<PAGE>
Under the joint venture DFS provides marketing services and the
Registrant is responsible for loan origination and loan servicing. The
Registrant and DFS are separately compensated for their respective services.
Retail contracts are owned by the joint venture and the joint venture expects to
finance the contracts generally in the same manner as the Registrant. Because
the joint venture was recently formed, it did not have a material impact on
fiscal 1996.
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. The Registrant also
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
two of its major purchasers of installment sale contracts. The Registrant is
currently responsible for collection activities on 54% 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 1996, 1995 and 1994, as a result of expenses incurred due to defaults
and repossessions, $4,534,000, $4,937,000 and $4,339,000, respectively, was
charged to the reserve for losses on credit sales. The Registrant's reserve for
losses on credit sales at September 30, 1996 was $8,261,000, as compared to
$11,795,000 at September 30, 1995 and $14,623,000 at September 30, 1994.
In fiscal 1996, 1995 and 1994, the Registrant repossessed 2,858, 1,824
and 1,407 homes, respectively. The Registrant's inventory of repossessed homes
was 642 homes at September 30, 1996 as compared to 425 homes at September 30,
1995 and 375 homes at September 30, 1994. The estimated net realizable value of
repossessed homes in inventory at September 30, 1996 was
7
<PAGE>
approximately $15,785,000. Information concerning repossessions includes homes
repossessed as servicer.
The net losses resulting from repossessions on Registrant originated
loans as a percentage of the average principal amount of such loans outstanding
for fiscal 1996, 1995 and 1994 was 1.01%, 0.75% and 0.66%, respectively.
At September 30, 1996 and September 30, 1995, 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:
<TABLE>
<CAPTION>
Total Number Delinquency Percentage
of Contracts September 30, 1996
------------------------------------------------------------
30 days 60 days 90 days Total
<S> <C> <C> <C> <C> <C>
Registrant-serviced 1
contracts.......... 71,297 1.2% 0.5% 0.8% 2.5%
Contracts sold with full
recourse and
serviced by others..
4,705 2.9% 0.7% 0.7% 4.3%
Total Number Delinquency Percentage
of Contracts September 30, 1995
------------------------------------------------------------
30 days 60 days 90 days Total
Registrant-serviced 1
contracts.......... 56,438 1.2% 0.3% 0.6% 2.1%
Contracts sold with full
recourse and
serviced by others.
5,972 2.3% 0.5% 0.8% 3.6%
</TABLE>
- --------
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.
8
<PAGE>
At September 30, 1996 and September 30, 1995, 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:
<TABLE>
<CAPTION>
Total Value Delinquency Percentage
of Contracts September 30, 1996
------------------------------------------------------
30 days 60 days 90 days Total
<S> <C> <C> <C> <C> <C>
Registrant-serviced
contracts.......... $1,689,270,000 1.2% 0.4% 0.8% 2.4%
Contracts sold with full
recourse and
serviced by others.
$46,000,000 3.2% 0.7% 0.7% 4.6%
Total Value Delinquency Percentage
of Contracts September 30, 1995
-----------------------------------------------------------------
30 days 60 days 90 days Total
Registrant-serviced 1
contracts.......... $1,174,187,000 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%
</TABLE>
- -------------
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
Independent Retailer Repurchase Obligations
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 require the Registrant to enter into a repurchase
9
<PAGE>
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. At September 30, 1996,
the Registrant estimates that its contingent liability under these repurchase
agreements was approximately $36 million. The Registrant's losses under these
arrangements have not been significant.
Insurance
The Registrant acts as agent for certain insurance companies and earns
commissions on homeowners insurance, credit life insurance and extended warranty
contracts written for its customers. The Registrant generally requires customers
purchasing homes pursuant to installment sale contracts to have homeowners
insurance until the principal balance of the contract is paid. In fiscal 1996,
80% of the Registrant's retail customers obtained homeowners insurance through
the Registrant, 28% obtained credit life insurance through the Registrant and
47% purchased extended warranties. Historically, a substantial number of such
customers have renewed homeowners 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 the Registrant. The subsidiary's contingent
liability is without recourse to the Registrant.
Manufactured Housing Communities
The Registrant was previously engaged in the development and
management of manufactured housing rental communities. In fiscal 1996, the
Registrant sold all seven of its manufactured housing rental communities. The
Registrant does not expect to develop any additional rental communities.
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 Calabash and Greensboro communities are substantially completed
and sold. The Registrant intends to attempt to sell its remaining interests in
these four subdivisions and does not expect to develop additional subdivisions.
The Registrant also owns a 50% interest in a recreational vehicle
campground and adjoining undeveloped land located at Deltaville, Virginia. The
Registrant intends to offer this property for sale.
10
<PAGE>
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 and financing 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.
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. 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.
11
<PAGE>
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 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,
which have been amended from time to time, 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.
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, 1996 with respect to the Registrant's manufactured home
operations and retail sales financing operations are incorporated herein by
reference to page 34 of the Registrant's 1996 Annual Report to Shareholders.
Employees
At September 30, 1996, the Registrant employed 6,192 persons, of which
2,237 were engaged in sales and service, 3,294 in manufacturing 330 in consumer
finance and 331 in executive, administrative and clerical positions.
Item 2 - Properties
Offices
The Registrant owns its executive office space in Greensboro, North
Carolina which it completed in fiscal 1996. The Registrant also owns two
additional office buildings, which formerly served as its executive office
space, located in two adjacent three-story buildings in Greensboro, North
Carolina, which currently are vacant and will be offered for sale. The
Registrant also leases office space in Texas and Arizona.
12
<PAGE>
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 $17,359,000 at September 30, 1996.
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 41,875 floors annually, depending on
product mix. During fiscal 1996, the Registrant manufactured 34,950 floors at
its plants.
13
<PAGE>
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 255 sales centers at
September 30, 1996 located in 27 states distributed as follows: North Carolina
(60), Texas (39), South Carolina (20), Tennessee (15), Virginia (15), Kentucky
(14), Alabama (13), Georgia (10), Washington (8), Arizona (6), Arkansas (6),
Florida (6), Missouri (6), New Mexico (6), Idaho (4), California (3), Colorado
(3), Delaware (3), Mississippi (3), West Virginia (3), Kansas (2), Louisiana
(2), Oklahoma (2), Oregon(2), Utah (2), Indiana (1), and Ohio (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, 1996 for the leased sales centers totalled
approximately $6,657,000.
Manufactured Housing Communities
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, 1996, this property was subject to a mortgage with a total balance
of $915,000.
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.
14
<PAGE>
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 29, 1997. Information
as to the executive officers of the Registrant who are not directors or nominees
is as follows:
<TABLE>
<CAPTION>
Name Age Information About Officer
<S> <C> <C>
William G. Edwards 52 Executive Vice President - Manufacturing and Chief
Operating Officer of Homes By Oakwood, Inc. (the
Registrant's manufacturing subsidiary) since 1996;
Senior Vice President - Eastern Manufacturing 1995-96;
President and Chief Executive Officer of Destiny
Industries, Inc. (manufactured home manufacturer)
1978-1995.
Larry T. Gilmore 55 Executive Vice President - Consumer Finance and Chief
Operating Officer of Oakwood Acceptance Corporation
(the Registrant's finance subsidiary) since 1994; Vice
President and Chief Operating Officer of Oakwood
Acceptance Corporation 1991-1994.
Douglas R. Muir 42 Senior Vice President and Secretary since 1994;
Treasurer since 1993; Partner, Price Waterhouse LLP,
1988-1993.
Jeffrey D. Mick 44 Senior Vice President since 1994; Controller since
1992; Executive Vice President -
Operations/Distribution, Brendle's Incor-porated
(discount department store retailer), 1990-1992. In
November 1992, Brendle's Incorporated filed for
reorganization under Chapter 11 of the United States
Bankruptcy Code.
Myles E. Standish 42 Senior Vice President and General Counsel since 1995;
Partner, Kennedy Covington Lobdell & Hickman, L.L.P.
attorneys at law 1987-1995.
J. Michael Stidham 43 Executive Vice President - Retail and Chief Operating
Officer of Oakwood Mobile
15
<PAGE>
Homes, Inc. (the Registrant's retail sales subsidiary)
since 1994; Vice President and Chief Operating Officer
of Oakwood Mobile Homes, Inc. 1992-1994; Vice President
of Oakwood Mobile Homes, Inc., 1989-1992.
</TABLE>
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 January 31, 1996, except Mr. Edwards, who was elected to his current
position on July 1, 1996. Each officer holds office until his or her death,
resignation, retirement, removal or disqualification or until his or her
successor is elected and qualified.
PART II
Items 5-8
Items 5 and 7-8 are incorporated herein by reference to pages 13 to 36
of the Registrant's 1996 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 1996 Annual Report to
Shareholders. Item 6 is incorporated herein by reference to the information
captioned "Net sales," "Total revenues," "Net income," "Earnings per common
share--Primary and Fully diluted," "Total assets," "Notes and bonds payable" and
"Cash dividends per common share" for the five fiscal years ended September 30,
1996 on page 1 of the Registrant's 1996 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
Section 16(a) Beneficial Ownership Reporting Compliance of the Registrant's
Proxy Statement for the Annual Meeting of Shareholders to be held January 29,
1997 and to the separate item in Part I of this Report captioned Executive
Officers of the Registrant.
16
<PAGE>
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)
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)
17
<PAGE>
* 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 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
18
<PAGE>
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 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 Registrant'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 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)
19
<PAGE>
* 10.24 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)
* 10.25 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)
* 10.26 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 Performance Unit
Agreements (Exhibit 10.2 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1994)
* 10.28 Oakwood Homes Corporation Executive
Incentive Compensation Plan (Exhibit 10.1 to the
Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996)
* 10.29 Oakwood Homes Corporation Key Employee Stock
Plan (Exhibit 10.2 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30,
1996)
* 10.30 Form of Long-Term Incentive Compensation
Award Agreement dated November 15, 1995 (Exhibit 10.3
to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1996)
* 10.31 Schedule identifying omitted Long-Term
Incentive Compensation Award Agreements which are
substantially identical to the Form of Long-Term
Incentive Compensation Award Agreement and the
percentage participation under the Long-Term
Incentive Compensation Award Agreements (Exhibit 10.4
to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1996)
* 10.32 Form of Second Amendment to
Employment Agreement between the Registrant and
each of Nicholas J. St. George and A. Steven Michael
(filed herewith)
20
<PAGE>
* 10.33 Employment Agreement between the
Registrant and C. Michael Kilbourne (filed herewith)
11 Calculation of Earnings Per Share
(filed herewith)
13 The Registrant's 1996 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 Allen, Pritchett &
Bassett, CPAs (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.
21
<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 23, 1996
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.
<TABLE>
<CAPTION>
<S> <C> <C>
Signature Capacity Date
/s/ Nicholas J. St. George Director and President December 23, 1996
Nicholas J. St. George and Chief Executive
Officer (Principal
Executive Officer)
/s/ A. Steven Michael Director and Executive December 23, 1996
A. Steven Michael Vice President and
Chief Operating
Officer
/s/ C. Michael Kilbourne Director and Executive December 23, 1996
C. Michael Kilbourne Vice President, Chief
Financial Officer and
Assistant Secretary
(Principal Financial Officer)
/s/ Dennis I. Meyer Director December 23, 1996
Dennis I. Meyer
22
<PAGE>
Signature Capacity Date
/s/ Kermit G. Phillips, II Director December 23, 1996
Kermit G. Phillips, II
/s/ Roger W. Schipke Director December 23, 1996
Roger W. Schipke
/s/ Sabin C. Streeter Director December 23, 1996
Sabin C. Streeter
/s/ Francis T. Vincent, Jr. Director December 23, 1996
Francis T. Vincent, Jr.
/s/ Clarence W. Walker Director December 23, 1996
Clarence W. Walker
/s/ H. Michael Weaver Director December 23, 1996
H. Michael Weaver
/s/ Douglas R. Muir Senior Vice President, December 23, 1996
Douglas R. Muir Treasurer and
Secretary (Principal
Accounting Officer)
</TABLE>
23
<PAGE>
OAKWOOD HOMES CORPORATION
INDEX TO FINANCIAL STATEMENT SCHEDULES
The financial statements, together with the report thereon of Price
Waterhouse LLP dated November 4, 1996, appearing on pages 19 to 35 of the
accompanying 1996 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 1996
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 Allen, Pritchett & Bassett, CPAs on
financial statements of Destiny Industries, Inc. F-1
Supplementary information to notes to
consolidated financial statements F-2
24
<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-1
<PAGE>
OAKWOOD HOMES CORPORATION
AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTARY INFORMATION TO NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
The components of inventories are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
September 30,
1996 1995 1994
New manufactured homes $130,443,000 $131,632,0000 $ 78,916,000
Used manufactured homes 6,462,000 4,825,000 5,302,000
Homes in progress 2,410,000 2,220,000 2,072,000
Land/homes under
development 4,820,000 2,042,000 1,534,000
Raw materials and supplies 11,755,000 10,471,000 10,864,000
$155,890,000 $151,190,000 $ 98,688,000
</TABLE>
F-2
<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, 1996 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)
<PAGE>
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)
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 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)
<PAGE>
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 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)
<PAGE>
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)
10.28 Oakwood Homes Corporation Executive Incentive
Compensation Plan (Exhibit 10.1 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1996)
10.29 Oakwood Homes Corporation Key Employee Stock Plan
(Exhibit 10.2 to the Registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 1996)
10.30 Form of Long-Term Incentive Compensation Award Agreement
dated November 15, 1995 (Exhibit 10.3 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1996)
10.31 Schedule identifying omitted Long-Term Incentive
Compensation Award Agreements which are substantially
identical to the Form of Long-Term Incentive Compensation
Award Agreement and the percentage participation under the
Long-Term Incentive Compensation Award Agreements (Exhibit
10.4 to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996)
10.32 Form of Second Amendment to Employment Agreement
between the Registrant and each of Nicholas J. St. George and
A. Steven Michael (filed herewith)
<PAGE>
10.33 Employment Agreement between the Registrant and C.
Michael Kilbourne (filed herewith)
11 Calculation of Earnings Per Share (filed herewith)
13 The Registrant's 1996 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 Allen, Pritchett & Bassett, CPAs (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
<PAGE>
SECOND AMENDMENT EXHIBIT 10.32
to
EMPLOYMENT AGREEMENT
SECOND AMENDMENT dated as of January 31, 1996 to the EMPLOYMENT
AGREEMENT dated as of November 16, 1990 as amended by the First Amendment to
Employment Agreement dated November 16, 1990, (the "Employment Agreement"), by
and between OAKWOOD HOMES CORPORATION, a North Carolina corporation with its
principal executive offices at Greensboro, North Carolina (the "Company"), and
____________________, an individual residing at Greensboro, North Carolina (the
"Executive").
STATEMENT OF PURPOSE
The Executive is a valued key employee of the Company whose present and
future contributions to the success and growth of the Company are significant.
The Company believes that it is in the best interest of it and its shareholders
to amend the Employment Agreement to extend the term of the Employment
Agreement.
NOW, THEREFORE, the Company and the Executive hereby agree as follows:
1. Extension of Agreement. The Company and the Executive hereby
acknowledge and agree that Section 1(b) of the Employment Agreement is hereby
amended by changing the expiration date referenced in the second line of such
Section to January 31, 2001.
2. References. Each reference in the Employment Agreement to the
terms "this Agreement", "herein", "hereof", "hereunder" and other similar
terms referring to the Employment Agreement are hereby deemed to be a
reference to the Employment Agreement as previously amended as amended hereby.
3. Ratification; Confirmation. Except as amended hereby, all the terms
and conditions of the Employment Agreement shall remain in full force and
effect, and are hereby ratified and confirmed in all respects.
4. Counterparts. This Second Amendment may be executed in any one or
more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Second Amendment to be
executed and delivered as of the day and year first above set forth.
OAKWOOD HOMES CORPORATION
[CORPORATE SEAL]
ATTEST: By:
Name:
Title:
<PAGE>
EMPLOYMENT AGREEMENT EXHIBIT 10.33
EMPLOYMENT AGREEMENT dated as of the 31st day of January, 1996 between
OAKWOOD HOMES CORPORATION, a North Carolina corporation with its principal
executive offices at Greensboro, North Carolina (the "Company"), and C. MICHAEL
KILBOURNE, an individual residing at Greensboro, North Carolina (the
"Executive").
STATEMENT OF PURPOSE
The Company considers sound and vital management to be essential to
protecting and enhancing the best interests of the Company and its shareholders.
Although the Company knows of no change in control of the Company which is being
contemplated, the Company recognizes that a future change in control is always
possible and this possibility creates uncertainty and insecurity among members
of management. The Company believes that appropriate measures should be taken to
reinforce the dedication of key members of management and to provide them with a
greater sense of security so that they will be encouraged to remain in the
employ of the Company. The Company also believes that it is in the best
interests of the Company and its stockholders that appropriate measures be taken
to assure the neutrality of management in analyzing a potential change in
control and the options available to the Company and to preserve continuity in
corporate management and operations in the event of a change in control.
NOW, THEREFORE, the Company and the Executive hereby agree as follows:
1. Operation of Agreement.
(a) This Agreement shall be effective upon its execution, but, anything
in this Agreement to the contrary notwithstanding, neither this Agreement nor
any of its provisions, except its renewal provision, shall be operative unless
and until there has been a Change in Control of the Company, as defined in
Subsection 1(c) below.
(b) If no Change in Control of the Company has occurred on or before
the close of business on January 31, 2001, this Agreement shall thereupon
expire; provided, however, the parties by their written mutual assent may extend
said date on which this Agreement shall expire.
(c) A "Change in Control" shall be deemed to have occurred if (i) any
corporation, other person or "group" becomes the "beneficial owner" of more than
25% of the Company's outstanding Common Stock or (ii) the Company's outstanding
Common Stock (x) is held of record by less than 300 persons or (y) is neither
listed on a national securities exchange nor authorized to be quoted on an
inter-dealer quotation system of a registered national securities association.
"Group" shall mean persons who act in concert as described in Section 14(d)(2)
of the Securities Exchange Act of 1934, as amended (the "Act"), and "beneficial
owner" shall have the meaning which that term is given in Rule 13d-3 under the
Act.
<PAGE>
(d) Upon a Change in Control of the Company, all of the
provisions of this Agreement shall become operative immediately.
2. Employment; Period of Employment.
(a) The Company agrees to continue the Executive in its employ, and the
Executive hereby agrees to remain in the employ of the Company, for the period
set forth in Subsection 2(b) below (the "Period of Employment") in the position
and with the duties and responsibilities set forth in Section 3 below, subject
to the other terms and conditions of this Agreement.
(b) The Period of Employment shall commence on the date of any Change
in Control and, subject only to the Executive's death or termination of
employment by the Company for "Cause" or "Disability" or by the Executive for
"Good Reason" (as defined in Section 4), shall continue until the close of
business on the later of (i) that date which is two years after the date on
which the Change in Control occurred or (ii) the expiration date under
Subsection 1(b), taking into account any extensions of said expiration date.
3. Position, Duties, and Responsibilities.
(a) During the Period of Employment, the Executive shall continue to
serve as an officer of the Company, either (i) with substantially the same
offices, titles, duties and responsibilities as the Executive had immediately
prior to the Change in Control or (ii) with a higher office with titles, duties
and responsibilities commensurate with such higher office.
(b) During the Period of Employment, the Executive shall devote his
full-time efforts during normal business hours to the business and affairs of
the Company, except reasonable vacation periods and periods of illness or
incapacity, but nothing in this Agreement shall preclude the Executive from
devoting reasonable time to serving as a director or member of a committee of
one or more organizations (business, charitable, civic, religious or otherwise)
involving no conflict with the interests of the Company.
4. Termination Following Change in Control. If, after a Change in
Control of the Company has occurred, the Company shall terminate the Executive's
employment other than because of his death or for Disability or Cause or if the
Executive shall terminate his employment for Good Reason, the Executive shall be
entitled to all of the benefits and payments provided in Section 5 below.
(a) Disability. Termination based on "Disability" shall mean
termination because of the Executive's absence due to physical or mental illness
from his duties with the Company on a full-time basis for 150 consecutive
business days unless within 30 days after Notice of Termination (as defined in
Subsection 4(d) below) is given following such absence, the Executive shall
return to the full-time performance of his duties.
(b) Cause. Termination shall be deemed to have been for Cause only if
termination shall have been the result of an act or acts of dishonesty on the
part of the Executive constituting
<PAGE>
a felony and resulting or intended to result in substantial gain or personal
enrichment at the expense of the Company, or if there has been a willful and
substantial breach by the Executive of the provisions of Subsection 3(b) above,
and such breach has caused substantial injury to the Company. In no event shall
the Executive's termination by the Company be considered to have been for Cause
if such termination took place as a result of (i) the Executive's bad judgment
or negligence or (ii) any act or omission without intent of gaining a profit to
which the Executive was not legally entitled or (iii) any act or omission
believed by the Executive in good faith to have been in, or not opposed to, the
interests of the Company.
(c) Good Reason. "Good Reason" shall mean
(i) the assignment to the Executive of any
duties inconsistent with his duties described in Subsection 3(a) above or any
removal of the Executive from or any failure to re-elect the Executive to his
positions described in Subsection 3(a) above, except in connection with
promotions to higher office;
(ii) a reduction by the Company in the Executive's
base salary as in effect immediately prior to the Change in Control;
(iii) the failure by the Company to maintain
and to continue the Executive's participation in the Company's benefit or
compensation plans as in effect immediately prior to the Change in Control
(including but not limited to bonus and incentive compensation plans, stock
option, bonus, award and purchase plans, life insurance, medical, health and
accident, and disability plans); or the taking of any action by the Company
which would adversely affect the Executive's participation in or reduce the
Executive's benefits under any of such plans or deprive the Executive of any
fringe benefit he enjoyed immediately prior to the Change in Control; or the
failure to provide the Executive with the number of paid vacation days to which
he was entitled under the Company's normal vacation policy in effect immediately
prior to the Change in Control;
(iv) the relocation of the Executive's office
to anywhere other than a location within 100 miles of Greensboro, North Carolina
or the Company's requiring the Executive to be based anywhere other than within
100 miles of Greensboro, North Carolina (or such other location as shall be the
location of the Executive's office immediately prior to the Change in Control)
except for required travel on the Company's business to an extent consistent
with the Executive's business travel obligations immediately prior to the Change
in Control; or
(v) the failure by the Company to obtain the
assumption of this Agreement by any successor as contemplated in Section 7
below.
(d) Any termination of the Executive's employment, unless because of
death, shall be communicated by written Notice of Termination to the other
party. In the event of termination of employment by the Company for Cause or
Disability or by the Executive for Good Reason, the Notice of Termination shall
state the specific ground for termination (Cause, Disability or Good
<PAGE>
Reason) and set forth in reasonable detail the facts and circumstances claimed
to provide a basis for the specified ground of termination.
(e) "Termination Date" shall mean (i) if the Executive's employment is
terminated due to death, the Executive's date of death, (ii) if the Executive's
employment is terminated for Disability, thirty days after Notice of Termination
is given (provided that the Executive shall not have returned to the performance
of his duties on a full-time basis during such thirty day period), (iii) if the
Executive's employment is terminated for Cause, the date specified in the Notice
of Termination, and (iv) if the Executive's employment is terminated for any
other reason, the date on which a Notice of Termination is given.
5. Benefits.
(a) If the Company shall terminate the Executive's employment other
than because of his death or for Disability or Cause, or if the Executive shall
terminate his employment for Good Reason, then the Company shall pay to the
Executive and provide him, his dependents, beneficiaries and estate, with the
following:
(i) The Company shall pay the Executive his
full base salary through the Termination Date at the higher of the rate in
effect when Notice of Termination is given or the rate in effect one year prior
to such date, plus credit for any vacation earned but not taken. The Executive's
full base salary shall be paid at the times normally scheduled for payment of
the salaries of key members of management; provided, however, that all of such
salary shall be paid no later than the Termination Date.
(ii) The Company shall pay the Executive a lump
sum payment equal to two times the highest annual compensation (including base
salary, incentive compensation and monetary bonus or similar award) paid or
payable to the Executive by the Company for any of the three fiscal years ended
immediately prior to the Termination Date. This lump sum payment shall be due
and payable on the 10th business day after the Termination Date and bear
interest from the Termination Date until paid at the then current prime rate of
interest of First Union National Bank.
(iii) The Company shall pay all legal fees and
expenses which the Executive may incur as a result of the Company's contesting
the validity or enforceability of this Agreement, or as a result of the
Company's failure to make timely payment of any sum due to the Executive
hereunder.
(b) The Executive shall not be required to mitigate the benefits or
amounts of any payment provided for in this Section 5 by seeking other
employment or otherwise, nor shall the amount of any payment provided for in
this Section 5 be reduced by any compensation earned by the Executive as a
result of employment by another employer after the Date of Termination, or
otherwise.
<PAGE>
6. Options. All of the Executive's outstanding stock options
shall become exercisable in full on the date of a Change in Control of the
Company (as defined in Subsection 1(c)), whether or not the stock options
were exercisable on such date.
7. Successors; Binding Agreement.
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company, by agreement in form
and substance satisfactory to the Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place. As
used in this Agreement, "Company" shall mean the Company as defined in the
preamble to this Agreement and any successor to its business or assets which
executes and delivers the agreement provided for in assets which executes and
delivers the agreement provided for in this Paragraph 7 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law.
(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
8. Notices. For the purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when delivered or mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive: C. Michael Kilbourne
Post Office Box 27081
Greensboro, North Carolina
27425-7081
If to the Company: Oakwood Homes Corporation
Post Office Box 27081
Greensboro, North Carolina
27425-7081
Attention: Secretary
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
9. Governing Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State
of North Carolina.
10. Miscellaneous. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and the Company. No waiver by either party of
any breach of this Agreement shall be
<PAGE>
deemed a waiver of any prior or subsequent breach. No agreements or
representations, oral or otherwise, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement.
11. Separability. The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same Agreement.
13. Withholding of Taxes. The Company may withhold from any
benefits payable under this Agreement all federal, state, city or other taxes
as shall be required pursuant to any law or governmental regulation or ruling.
14. Non-assignability. This Agreement is personal in nature and neither
of the parties hereto shall, without the consent of the other, assign or
transfer this Agreement or any rights or obligations hereunder, except as
provided in Section 7 above. Without limiting the foregoing, the Executive's
right to receive payments hereunder shall not be assignable or transferable,
whether by pledge, creation of a security interest or otherwise, other than a
transfer by his will or by the laws of descent or distribution, and in the event
of any attempted assignment or transfer contrary to this paragraph, the Company
shall have no liability to pay any amount so attempted to be assigned or
transferred.
15. Arbitration; Fees.
(a) Any disputes between the Company and the Executive concerning this
Agreement will be settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, by a panel of three
arbitrators, one selected by the Executive, one selected by the Company and the
other selected by the two so chosen. Judgment upon the arbitration award
rendered by the arbitrators shall be binding and conclusive and may be entered
in any court having jurisdiction thereof. The costs of the arbitration shall be
borne by the Company.
(b) In the event that the Executive receives an arbitration award
pursuant to subsection (a) above, the Company shall, within thirty (30) days
after the presentation of proper receipts or invoices therefor, reimburse the
Executive the reasonable fees and disbursements of counsel incurred in
connection with such arbitration or the collection of any amounts awarded the
Executive pursuant thereto.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first above set forth.
OAKWOOD HOMES CORPORATION
ATTEST:
By:
Nicholas J. St. George,
President and Chief Executive
Officer
C. Michael Kilbourne
<PAGE>
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,
1996 1995 1994
<S> <C> <C> <C>
Weighted average number of common shares
outstanding 44,880 44,182 43,982
Add: Dilutive effect of stock
options and restricted shares,
computed using the treasury 1,741 1,912 2,002
stock method.
Less: Unearned ESOP shares (161) (96) ---
Weighted average number of common and common
equivalent shares outstanding
46,460 45,998 45,984
Net income $ 68,255 $ 45,318 $ 35,655
Earnings per common share--primary $ 1.47 $ .99 $ .78
Weighted average number of common shares 44,880 44,182 43,982
outstanding
Add: Dilutive effect of stock
options, computed using
the treasury stock method 1,802 2,027 2,028
Less: Unearned ESOP shares (161) (96) ---
Weighted average number of common shares
outstanding assuming full dilution
46,521 46,113 46,010
Net income $ 68,255 $ 45,318 $ 35,655
Earnings per common share--fully diluted $ 1.47 $ .98 $ .78
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
RESULTS OF OPERATIONS
During fiscal 1996 the Company once again reported record revenues and
earnings. Total revenues increased 19% to $974 million from $821 million last
year, following a 24% increase in 1995 from the $665 million reported for 1994.
Net income rose 51% in 1996 to $68.3 million compared to pro forma net income of
$45.3 million in 1995 and $35.7 million in 1994.
Industry shipments grew for the fifth consecutive year in 1996. According
to industry sources, shipments of manufactured homes were up approximately 9%
for the first nine months of calendar 1996, and increased 12% in calendar 1995
over 1994. Oakwood's growth far surpassed the industry, as new retail unit sales
grew by 20% in fiscal 1996 and 28% in fiscal 1995.
The following table summarizes certain key sales statistics for each of the
last three fiscal years:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Retail sales (in millions) 703.2 $ 544.6 $ 384.8
Wholesale sales (in millions) 137.0 $ 185.6 $ 201.5
Other sales-principally relating
to communities (in millions) 21.9 $ 11.3 $ 8.8
T otal sales (in millions) 862.1 $ 741.5 $ 595.1
Gross profit %-
integrated operations 31.8% 29.6% 30.5%
Gross profit %-
wholesale operations 18.0% 18.7% 17.4%
New single-section
homes sold-retail 13,639 12,073 9,715
New multi-section
homes sold-retail 6,488 4,638 3,319
Used homes sold-retail 1,908 1,940 1,675
New single-section
homes sold-wholesale 1,334 2,168 2,360
New multi-section
homes sold-wholesale 3,890 4,923 5,671
Average new single-section
sales price-retail $27,700 $25,900 $23,900
Average new multi-section
sales price-retail $47,900 $46,500 $42,800
Average new single-section
sales price-wholesale $14,200 $14,100 $11,200
Average new multi-section
sales price-wholesale $29,800 $31,200 $30,900
Weighted average retail sales
centers open during the year 227 178 136
Average new home sales
per sales center 89 94 96
Average dollar sales
per sales center (in millions) 3.1 $ 3.1 $ 2.8
</TABLE>
1996 COMPARED TO 1995
Retail sales dollar volume increased 29%, reflecting a 20% increase in new
home volume, an increase in the percentage of multi-section homes sold and
increases of 7% and 3% in the average new home sales prices of single-section
and multi-section homes, respectively. New home volume rose primarily due to a
28% increase in the weighted average number of sales centers open during the
year. Average new home sales per sales center decreased slightly, reflect-ing
the rapid pace of retail expansion during fiscal 1996, in which the Company
added 57 new sales centers compared to 46 centers in fiscal 1995. New sales
centers typically require a period of several months to reach normalized unit
sales levels. Because the Company plans to open approximately 45 to 50 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. The increase in average selling prices is principally due to
product mix. Although average new home sales per center declined, average dollar
sales per center were constant due to the increased significance of multi-
section homes in the retail unit mix. Retail sales of multi-section homes
accounted for 32% of new home unit sales in 1996 versus 28% in 1995. Total new
home sales dollars at sales centers open more than one year rose 6% in 1996.
Wholesale sales dollar volume (which represents sales by Golden West and
Destiny to independent dealers) declined 26%, substantially all of which was due
to lower volume. The decline in wholesale unit volume reflects execution of the
Company's strategy of changing the distribution of products produced by Golden
West and Destiny from independent dealers to company-owned retail sales centers.
In 1996, 34% of Golden West's and Destiny's shipments were to Oakwood sales
centers, compared to only 8% in 1995. Shipments to Oakwood sales centers from
Golden West and Destiny are not included in the wholesale dollar sales and unit
sales in the table to the left. Management expects Golden West's and Destiny's
unit sales to Oakwood to continue to increase in future years. As the Company
establishes additional 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. Gross profit margins-integrated operations
increased to 31.8% in 1996 from 29.6% in fiscal 1995. The increase in gross
margin reflects improved sourcing of retail unit sales from company-owned
manufacturing plants. Approximately 90% of the total new home retail sales
volume was manufactured by the Company in fiscal 1996 compared to 76% in 1995.
Manufacturing production increased 12% over 1995, and improved manufacturing
margins, particularly at newer plants, contributed to the increase in gross
margins overall.
13
<PAGE>
Wholesale gross profit margins decreased to 18.0% in 1996 from 18.7% last
year. The decrease in margins is primarily due to start-up costs incurred in a
plant expansion at the Albany, Oregon facility, which increased capacity by
approximately 40% during the first quarter of fiscal 1996. For the full year,
production at the Albany plant rose 22% from the level in 1995, and 74% of
Albany's 1996 production was sold at wholesale. Decreasing wholesale margins
also reflect 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 49% to $92.3 million from $62.0 million
last year. Interest income earned on loans held for investment and on loans held
for sale prior to securitization decreased from $38.2 million in 1995 to $34.6
million in 1996. 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 securitiza-tion 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 $12.2 million in 1995 to $15.9 million in 1996, reflecting the
increased size of the Company's securitized loan servicing portfolio. REMIC
residual income increased from $7.2 million to $16.2 million, reflecting the
shift in the Company's financing strategy toward secu-ritization of its loans
from holding loans for investment. Other financial services revenues, which
consist principally of credit life insurance premiums, miscellaneous fees and
other income, increased to $6.4 million from $3.6 million, and reflect the
increasing size of the Company's loan servicing portfolio.
Financial services income for 1996 and 1995 also includes gains of
approximately $19.4 million and $776,000, respectively, from the sale of asset-
backed securities. The substantially increased gains in 1996 resulted from a
widening of the excess servicing spread in two securitizations due to a bond
market rally, improved credit ratings assigned to the securities sold, and a
reduction in the credit spread over treasurys demanded by purchasers of the
securities. In addition, the shift in the Company's sales mix toward multi-
section homes has resulted in multi-section loans comprising a larger percentage
of the assets sold. Multi-section loans have longer average terms and lower
anticipated credit losses than loans for single-section homes, which contribute
to the value of residual interest in securitizations. Finally, the Company has
experienced a continuing decline in its transaction costs, reflecting
competitive conditions on Wall Street and the Company's increased experience in
securitizing loans in the public market. Except for the spread widening
resulting from the bond market rally, which will recur irregularly, management
believes that the other factors giving rise to the gain will continue to affect
its future securitizations on a regular basis, and accordingly believes that
gains on asset securitizations will be a recurring element of the Company's
earnings stream. In addition to the gains recorded on the closing dates of
securitizations, the Company expects to earn future income from its investment
in the residual REMIC interests in these transactions, consistent with its
securitizations closed in prior years. Financial services income for 1996 also
includes a $1.4 million non-recurring gain on the resecuritization of
approximately $32 million of subordinated REMIC securities.
The Company estimates the fair value of retained residual interests in
REMIC securitizations based upon default, credit loss, voluntary pre-payment and
interest rate assumptions which management believes market participants would
use for similar instruments; management believes these assumptions are
conservative. Such estimated fair values have a direct impact on the magnitude
of the gain or loss recorded on the sale of asset-backed securities. The actual
rate of voluntary prepayments and the amount and timing of credit losses affect
the Company's yield on retained REMIC residual interests and the fair value of
such interests in periods subsequent to the securitization. For the year ended
September 30, 1996, total credit losses on loans originated by the Company,
including losses relating to securitized assets, loans held for investment,
loans held for sale and loans sold with full or partial recourse, amounted to
approximately 1.01% of the average principal balance of the related loans,
compared to approximately .75% in 1995. The increase in net credit losses is due
principally to higher numbers of defaulted loans rather than to decreased
recovery rates on defaults. To counteract this trend, the Company has tightened
underwriting standards and focused additional emphasis on closing retail sales
with relatively higher credit quality customers. Continuation of this trend
could result in lower yields on retained REMIC residual interests and reduced
gains on future securitizations.
The majority of the 9% 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 24.6% of
net sales compared to 22.3% of net sales last year. The percentage increase
reflects in part the integration of Destiny and Golden West, whose general and
administrative expenses are increasingly spread over the Company's retail sales
volume as the Company reduces wholesale sales to non-exclusive independent
dealers. Non-financial services selling, general and administrative expenses
have also increased as a result of the increased accruals for long-term
management incentive compensation payable based upon the level of Company
profitability for fiscal 1994 through 1996, expenses related to the increased
number of retail sales centers
14
<PAGE>
opened during the year compared to the prior year and costs incurred in
connection with sales centers scheduled to open in future quarters. New retail
sales centers typically require a period of several months to reach unit sales
levels similar to existing outlets. Increased accruals for compensation payable
under long-term incentive compensation plans increased non-financial selling,
general and administrative expenses by .9% of net sales compared to 1995.
Financial services selling, general and administrative expenses rose 47% on
a 26% increase in the average number of loans serviced during the period and a
55% increase in total credit application volume. In addition to cost increases
associated with higher origination and servicing volume, financial services
general and administrative expenses have increased as a result of allocation to
this business unit of certain direct operating costs (principally related to
telecommunications) formerly absorbed by the parent company and allocated to
non-financial operations.
The provision for credit losses decreased 53% from 1995, principally as a
result of the decrease in the balance of loans held for investment and a
decrease in the Company's contingent liability on loans sold with full or
partial recourse. 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.
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 principally to fund the warehousing of loans
prior to their securitization. Financial services interest expense decreased 11%
due to declining and retired long-term debt balances. This decrease was offset
by a $2.4 million increase in short-term interest expense, reflecting higher
average outstanding balances on lines of credit due to the significant increase
in loan volume. Financial services interest expense associated with notes and
bonds payable is expected to continue to decline as the Company retires its
outstanding debt secured by loans.
The Company's effective income tax rate was 38.3% in fiscal 1996 compared
to a pro forma rate of 37.9% in fiscal 1995. The increase in the effective tax
rate is due primarily to higher state income taxes.
1995 COMPARED TO 1994
Retail sales dollar volume increased 42%, reflecting a 28% increase in new
home volume, an increase in the percentage of multi-section homes sold 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 46 new sales centers compared to 31 centers in fiscal 1994. As stated
above, new sales centers typically require a period of several months to
reach normalized unit sales levels. Total new home 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% in 1994. Retail sales of multi-section homes accounted for 28%
of new home unit sales in 1995 versus 25% in 1994.
Wholesale sales dollar volume declined 8%, reflecting a 12% decrease in
volume, partially 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
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 aver-age 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
began 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.
15
<PAGE>
Gross profit margin-integrated operations declined to 29.6% in 1995 from
30.5% in fiscal 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. 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. Approximately 76% of the
total new home retail sales volume was manufactured by the Company in fiscal
1995 compared to 75% in 1994.
Wholesale gross profit margins increased to 18.7% in 1995 from 17.4% in
1994. 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
in 1994. 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.
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. Other financial services
revenues, which consist principally of credit life insurance premiums, gains on
the sale of securities, 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.
The rate of voluntary prepayments and the amount and timing of credit
losses affect the Company's yield on retained REMIC residual interests and the
fair value of such interests in periods subsequent to the securitization. For
the year ended September 30, 1995 total credit losses on loans originated by the
Company, including losses relating to securitized assets, loans held for
investment, loans held for sale and loans sold with full or partial recourse,
amounted to approximately .75% of the average principal balance of the related
loans, compared to approximately .66% in 1994.
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 in the preceding year. Non-financial
selling, general and administrative expenses in 1995 include a charge of $1.2
million ($738,000 after tax, or $.02 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 head-
quarters, and a charge of $150,000 (less than $.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 $.02 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) in 1994. These costs increased
disproportionately to sales as a result of general and administrative expenses
associated with four new manufacturing plants, increased accruals relating to a
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
16
<PAGE>
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 out-standing 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").
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 treasurys required by investors
has declined, principally because of 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 believes it can finance substantially all of
its fiscal 1997 loan originations through asset securitization. During 1996 the
Company raised approximately $721 million to finance its loans, including $566
million of REMIC certificates sold by Oakwood Mortgage Investors, substantially
all of which were sold to the public. In October 1996 Oakwood Mortgage Investors
completed another REMIC offering, the proceeds of which were approximately $271
million, the largest transaction in Oakwood's history.
In each of the Company's four recurring 1996 securitizations, 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 maximize
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
1997 capital expenditures will approximate $31 million, comprised principally of
offices, leasehold improvements and fixtures relating to retail expansion,
construction of a new training center, computer hardware and software associated
with new and enhanced management information systems, improvements to
manufacturing facilities and a new manufacturing plant at Destiny. In addition
to capital expenditures, the retail expansion will require an investment of
approximately $400,000 to $500,000 of working capital for each new sales center,
or approximately $18 to $25 million for fiscal 1997. Capital expenditures and
working capital requirements in later years are dependent upon the extent of
expansion undertaken in such years.
The Company intends to finance its retail and manufacturing expansion
principally using internally generated funds and short-term lines of credit.
Because the Company sells all of the regular REMIC interests in its
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 $175 million credit facility with
a conduit commercial paper issuer to provide ware-house financing for loans
prior to securitization. This credit facility reduced the Company's funding cost
of warehouse credit by
17
<PAGE>
enabling the Company indirectly to access the commercial paper market. In
November 1996 the Company closed a new $125 million revolving credit facility
with a group of banks which is available to fund additional working capital
needs. In addition, the Company has $20 million of uncommitted lines of credit.
NEWACCOUNTING 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 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.
In June 1996 the Board adopted Statement of Financial Accounting Standards
No. 125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" ("FAS 125"), which provides that after a
transfer of financial assets, an entity recognizes the financial and servicing
assets it controls and the liabilities
it has incurred, derecognizes the financial assets when control has been
surrendered, and derecognizes liabilities when extinguished. A transfer of
financial assets in which the transferor surrenders control over those assets is
accounted for as a sale to the extent that consideration other than beneficial
interests in the transferred assets is received in exchange. Liabilities and
derivatives incurred or obtained by transferors as part of a transfer of
financial assets are initially measured at fair value, if practicable. Servicing
assets and other retained interests in the transferred assets should be measured
by allocating the previous carrying amount between the assets sold, if any, and
retained interests, if any, based on their relative fair values at the date of
transfer. In addition, servicing assets and liabilities should be subsequently
measured by (a) amortization in proportion to and over the period of estimated
net servicing income or loss and (b) assessment for asset impairment or
increased obligation based on their fair values.
The Company must adopt each of these Statements in fiscal 1997. Management
does not believe that the effect of adoption of these Statements will be
material to the Company's financial condition or results of operations.
18
<PAGE>
CONSOLIDATED STATEMENT OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
OF INCOME
<TABLE>
<CAPTION>
Year ended September 30,
1996 1995 1994
(in thousands except per share data)
<S> <C> <C> <C>
REVENUES
Net sales $862,079 $741,521 $595,127
Financial services income (Note 3) 92,346 61,995 56,771
Other income (Note 4) 19,497 17,896 12,712
Total revenues 973,922 821,412 664,610
COSTS AND EXPENSES
Cost of sales 609,303 543,320 441,364
Selling, general and administrative expenses
Non-financial services (Note 2) 211,759 165,290 128,516
Financial services 18,810 12,799 8,127
Provision for credit losses (Note 5) 1,000 2,109 5,485
Interest expense
Non-financial services 2,221 2,259 1,149
Financial services 20,149 22,638 23,260
Total costs and expenses 863,242 748,415 607,901
INCOME BEFORE INCOME TAXES 110,680 72,997 56,709
Provision for income taxes (Note 6) 42,425 26,374 20,009
NET INCOME 68,255 $ 46,623 $ 36,700
PRO FORMA INFORMATION (unaudited) (Note 1)
Historical income before income taxes $ 72,997 $ 56,709
Pro forma provision for income taxes 27,679 21,054
Pro forma net income $ 45,318 $ 35,655
EARNINGS PER SHARE (1995 and 1994 amounts are pro forma
and unaudited) (Note 1)
Primary 1.47 $ .99 $ .78
Fully diluted 1.47 $ .98 $ .78
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
CONSOLIDATED OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
BALANCE SHEET
<TABLE>
<CAPTION>
September 30,
1996 1995
(in thousands except share
and per share data)
<S> <C> <C>
ASSETS
Cash and cash equivalents 28,577 $ 6,189
Receivables and investments (Notes 5 and 10) 508,825 480,875
Inventories (Note 7) 155,890 151,190
Properties and facilities, net of accumulated depreciation
and amortization (Notes 8 and 10) 113,764 101,758
Deferred income taxes (Note 6) 9,674 15,546
Other assets 25,247 27,082
$841,977 $782,640
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term borrowings (Note 9) $145,506 $154,400
Notes and bonds payable (Note 10) 134,379 198,812
Accounts payable and accrued liabilities (Note 11) 157,929 90,589
Other long-term obligations 12,189 20,431
Shareholders' equity (Notes 12 and 13)
Common stock, $.50 par value; 100,000,000 shares
authorized;
45,621,000 and 22,171,000 shares issued and
outstanding 22,811 11,086
Additional paid-in capital 149,501 149,482
Retained earnings 226,460 160,000
398,772 320,568
Unearned compensation (Notes 13 and 14) (6,798) (2,160)
Total shareholders' equity 391,974 318,408
Contingencies (Notes 5 and 15)
$841,977 $782,640
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
CONSOLIDATED STATEMENT OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended September 30,
1996 1995 1994
(in thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income 68,255 $ 46,623 $ 36,700
Items not requiring (providing) cash
Depreciation and amortization 10,461 8,278 5,526
Deferred income taxes 5,872 (7,060) (5,413)
Provision for credit losses 1,000 2,109 5,485
Gain on sale of loans and securities (19,358) (776) (20)
Other 720 - 697
(Increase) in other receivables (39,148) (21,617) (5,162)
(Increase) in inventories (4,700) (52,502) (36,660)
Increase in accounts payable and accrued
liabilities 58,105 19,121 11,834
Increase in other long-term obligations 2,118 11,465 5,467
Cash provided by operations 83,325 5,641 18,454
Loans originated (721,414) (486,601) (343,733)
Purchase of loan portfolios (1,465) - (604)
Sale of loans 699,552 355,486 363,002
Principal receipts on loans 15,651 34,915 44,913
Cash provided (used) by operating activities 75,649 (90,559) 82,032
INVESTING ACTIVITIES
Sale of securities 21,655 7,586 -
Additions to properties and facilities (41,303) (41,870) (28,225)
Sales of manufactured housing communities 20,301 -- -
Other (1,774) (1,619) (6,661)
Cash (used) by investing activities (1,121) (35,903) (34,886)
FINANCING ACTIVITIES
Net borrowings (repayments) on short-term credit
facilities (8,894) 129,400 (1,882)
Issuance of notes and bonds payable 1,686 29,890 2,093
Payments on notes and bonds (49,043) (41,228) (56,436)
Cash dividends (1,795) (1,712) (1,635)
Proceeds from exercise of stock options 5,906 1,438 1,950
Redemption of preferred stock - - (1,150)
Cash dividends to shareholders of acquired company - (2,111) (1,348)
Cash provided (used) by financing activities (52,140) 115,677 (58,408)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 22,388 (10,785) (11,262)
CASH AND CASH EQUIVALENTS
BEGINNING OF YEAR 6,189 16,974 28,236
END OF YEAR 28,577 $ 6,189 $ 16,974
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
CONSOLIDATED STATEMENT OF OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Additional
shares Common paid-in Retained Unearned
outstanding stock capital earnings compensation
(in thousands except per share data)
<S> <C> <C> <C> <C> <C>
BALANCE AT SEPTEMBER 30, 1993 21,809 $10,904 $146,276 $ 83,803 ($779)
Net income - - - 36,700 -
Less: net income of Golden West for the three months
ended December 25, 1993 (Note 2) - - - (320) -
Exercise of stock options 201 101 1,849 - -
Cost of ESOP shares allocated - - - - 779
Cash dividends ($.04 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)
ESOP shares committed to be released - - - - 238
Cash dividends ($.04 per share) - - - (1,712) -
Cash dividends to shareholders of acquired company - - - (2,111) -
BALANCE AT SEPTEMBER 30, 1995 22,171 11,086 149,482 160,000 (2,160)
Net income - - - 68,255 -
Exercise of stock options 730 365 5,541 - -
Issuance of restricted stock 200 100 5,325 - (5,118)
ESOP shares committed to be released - - 413 - 480
Cash dividends ($.04 per share) - - - (1,795) -
2-for-1 stock split 22,520 11,260 (11,260) - -
BALANCE AT SEPTEMBER 30, 1996 45,621 $22,811 $149,501 $226,460 ($6,798)
</TABLE>
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts of Oakwood Homes
Corporation and its subsidiaries (collectively, the "Company"). All significant
intercompany transactions and balances have been eliminated in consolidation. In
April 1996 the Board of Directors declared a 2-for-1 stock split payable in the
form of a 100% stock dividend on May 31, 1996 to shareholders of record on May
17, 1996. Where appropriate, all share and per share amounts included in the
consolidated financial statements and notes thereto have been adjusted
retroactively to give effect to the stock split.
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 collat-eralized 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 inter estimated relative
fair values of such interests; costs of marketing REMIC interests sold are
charged to expense as incurred.
Effective October 1, 1994 the Company adopted Statement of Financial
Accounting Standards No. 115, "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 amortized cost which
approximates fair value. 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.
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 credit losses 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 and options on
such contracts, 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 agreements 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.
23
<PAGE>
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:
<TABLE>
<CAPTION>
Estimated
Classification useful lives
<S> <C>
Land improvements 3-20 years
Buildings and field sales offices 5-39 years
Furniture, fixtures and equipment 3-12 years
Leasehold improvements 1-10 years
Manufactured housing communities 10-20 years
</TABLE>
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 effect of adoption of FAS 109 was not
material.
Reserve for credit losses
The Company maintains reserves for estimated credit losses on loans held for
investment, on loans warehoused prior to securitization and on loans sold to
third parties with full or limited recourse. The Company provides for losses 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.
Unaudited pro forma information
Prior to its acquisition by the Company, Destiny Industries, Inc.
("Destiny," see Note 2) 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.
The pro forma provision for income taxes and amounts derived therefrom are
unaudited.
Earnings per share
Earnings per share is computed by dividing net income (pro forma net income
in 1995 and 1994) 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 46,460,000,
45,998,000 and 45,984,000 in 1996, 1995 and 1994, respectively. The weighted
average number of shares used in the computation of fully diluted earnings per
share was 46,521,000, 46,113,000 and 46,010,000 in 1996, 1995 and 1994,
respectively. The dilutive effect of stock options and unearned restricted stock
awards 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 preac-quisition periods,
historical earnings per share amounts for 1995 and 1994 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.
Use of estimates in the preparation of financial statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Reclassifications
Certain amounts previously reported for 1995 and 1994 have been reclassified
to conform to classifications used in 1996.
NOTE 2-ACQUISITIONS
On June 30, 1995 Oakwood completed its business combination with Destiny.
Oakwood issued 1,850,000 shares of its common stock in exchange for all the
outstanding common stock of Destiny (an exchange ratio of approximately 4.63
Oakwood common shares for each outstanding Destiny common share).
On September 30, 1994 Oakwood completed its business combination with
Golden West Homes ("Golden West"). Oakwood issued 1,225,714 shares of its common
stock in exchange for all the out-standing common and convertible preferred
stock of Golden West, and substituted options to acquire 174,232 shares of
Oakwood common stock for previously granted options to acquire Golden West
24
<PAGE>
common stock (an exchange ratio of approximately .12 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.
Prior to its acquisition by Oakwood, Golden West utilized a 52/53 week year
ending in December. For accounting convenience, financial statements for years
prior to fiscal 1994 were not adjusted to conform Golden West's accounting year
to the September 30 year used by Oakwood and Destiny. Accordingly, Golden West's
results of operations for the three months ended December 25, 1993 were
reflected in the 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 at September 30, 1994 in the accompanying consolidated
statement of changes in shareholders' equity.
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 $.02 per share) has been charged to operations
in 1994 and is included in selling, general and administrative expenses.
NOTE 3-FINANCIAL SERVICES BUSINESSES
The Company's financial services businesses are as follows: Oakwood
Acceptance Corporation ("Oakwood Acceptance") purchases a substantial portion of
the loans originated by the Company's retail operations. Oakwood Acceptance also
purchases loans from unrelated retailers 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 is a subsidiary of Oakwood Homes
Corporation which holds the Company's retained interests in REMIC trusts.
Oakwood Life Ltd. reinsures risk on credit life insurance policies writ-ten 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, was approximately $721 million in 1996, $368
million in 1995 and $380 million in 1994.
Oakwood Acceptance's servicing portfolio totaled approximately $1.5 billion
and $1.2 billion at September 30, 1996 and 1995, respectively, of which
approximately $1.1 billion and $787 million, respectively, represented loans
owned by REMIC trusts and other loans sold to third parties.
Condensed financial information for the Company's financial services
businesses is set forth below:
<TABLE>
<CAPTION>
1996 1995 1994
STATEMENT OF INCOME (in thousands)
<S> <C> <C> <C>
Revenues
Interest income $34,569 $38,185 $44,162
Servicing fees 15,857 12,202 7,091
REMIC residual income 16,193 7,212 3,167
Credit life insurance premiums 3,160 2,263 1,748
Gain on sale of loans
and securities 19,358 776 20
Other 3,209 1,357 583
Total revenues 92,346 61,995 56,771
Costs and expenses
Interest expense 20,149 22,638 23,260
Operating expenses 18,810 12,799 8,127
Provision for credit losses 1,000 2,109 5,485
Total costs and expenses 39,959 37,546 36,872
Income before income taxes $52,387 $24,449 $19,899
</TABLE>
<TABLE>
<CAPTION>
1996 1995
BALANCE SHEET (in thousands)
<S> <C> <C>
Loans $395,688 $405,166
REMIC regular interests 9,724 28,133
REMIC residual interests 48,971 20,599
Other assets 36,089 23,364
Total assets $490,472 $477,262
Short-term borrowings $126,800 $124,400
Notes payable secured by loans 69,980 127,650
Unearned insurance premiums 5,534 3,510
Due to affiliates 163,590 129,155
Other liabilities 6,580 6,038
Parent company's investment 117,988 86,509
Total liabilities and parent
company's investment $490,472 $477,262
</TABLE>
25
<PAGE>
Condensed financial information for Oakwood Homes Corporation with its
financial services businesses accounted for using the equity method is as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
STATEMENT OF INCOME (in thousands)
<S> <C> <C> <C>
Revenues
Net sales $862,079 $741,521 $595,127
Equity in income of financial
services businesses 52,387 24,449 19,899
Other income 19,971 18,331 12,955
Total revenues 934,437 784,301 627,981
Costs and expenses
Cost of sales 609,303 543,320 441,364
Selling, general and
administrative expenses 212,233 165,725 128,759
Interest expense 2,221 2,259 1,149
Total costs and expenses 823,757 711,304 571,272
Income before income taxes 110,680 72,997 56,709
Provision for income taxes (1) 42,425 27,679 21,054
Net income(1) 68,255 $ 45,318 $ 35,655
</TABLE>
(1) Amounts for 1995 and 1994 are pro forma. See Note 1.
<TABLE>
<CAPTION>
1996 1995
BALANCE SHEET (in thousands)
<S> <C> <C>
Current assets
Cash and cash equivalents 26,393 $ 4,974
Receivables 37,166 17,848
Inventories 155,890 151,190
Prepaid expenses 3,275 2,649
Total current assets 222,724 176,661
Properties and facilities 111,339 100,108
Investment in and advances to
financial services businesses 281,578 215,664
Other assets 17,442 28,609
$633,083 $521,042
Current liabilities
Short-term borrowings 18,706 $ 30,000
Current maturities of long-term debt 6,071 6,731
Accounts payable and accrued liabilities 151,314 84,551
Total current liabilities 176,091 121,282
Long-term debt 58,328 64,431
Other long-term obligations 6,690 16,921
Shareholders' equity 391,974 318,408
$633,083 $521,042
</TABLE>
NOTE 4-OTHER INCOME The components of other income are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
(in thousands)
<S> <C> <C> <C>
Insurance commissions $11,171 $10,198 $ 7,012
Endorsement fees 783 1,151 1,172
Investment income 358 1,047 1,114
Other 7,185 5,500 3,414
$19,497 $17,896 $12,712
</TABLE>
NOTE 5-RECEIVABLES AND INVESTMENTS The components of receivables and
investments are as follows:
<TABLE>
<CAPTION>
1996 1995
(in thousands)
<S> <C> <C>
Loans held for sale $306,465 $244,593
Loans held for investment 98,503 173,545
Trade receivables 5,771 8,025
Accrued interest 2,696 3,521
Other receivables 43,026 11,070
Less: reserve for uncollectible receivables (6,331) (8,611)
Total receivables 450,130 432,143
Retained interests in REMIC securitizations
Regular interests, at amortized cost
which approximates fair value 9,724 28,133
Residual interests, at amortized cost 48,971 20,599
Total retained REMIC interests 58,695 48,732
$508,825 $480,875
</TABLE>
The estimated principal receipts, including estimated prepayments, on loans
held for investment are $15.2 million in 1997, $14.1 mil-lion in 1998, $13.2
million in 1999, $12.4 million in 2000, $11.6 million in 2001 and the balance
thereafter.
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, Texas,
South Carolina and Virginia 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
26
<PAGE>
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 $75 million as of September 30, 1996.
The following table summarizes the transactions reflected in the reserve
for credit losses:
<TABLE>
<CAPTION>
1996 1995 1994
(in thousands)
<S> <C> <C> <C>
Balance at beginning of year $11,795 $14,623 $12,477
Provision for losses 1,000 2,109 5,485
Reserve recorded related
to acquired portfolios - - 1,000
Losses charged to the reserve (4,534) (4,937) (4,339)
Balance at end of year 8,261 $11,795 $14,623
</TABLE>
The reserve for credit losses is reflected in the consolidated balance sheet
as follows:
<TABLE>
<CAPTION>
1996 1995
(in thousands)
<S> <C> <C>
Reserve for uncollectible receivables $6,331 $ 8,611
Reserve for contingent liabilities (included in
accounts payable and accrued liabilities) 1,930 3,184
$8,261 $11,795
</TABLE>
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. The Company's yields on its
investments in REMIC residual interests are influenced by default, credit loss
and voluntary prepayment assumptions which management believes to be reasonable.
The actual rate of voluntary prepayments and the amount and timing of credit
losses affect the Company's yield on retained REMIC residual interests and the
fair value of such interests in periods subsequent to the securitization; the
actual rate of voluntary prepayments and credit losses typically varies over the
life of each transaction and from transaction to transaction. If over time the
Company's actual experience is more favorable than that assumed, the Company's
yield on its REMIC residual investments will be enhanced. Similarly, if over
time the Company's actual experience is less favorable than that assumed, such
yield could be reduced or, in extreme cases, impairment of the investments could
result.
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.
Z Golden West and Destiny are contingently liable under terms of repurchase
agreements with financial institutions providing inventor financing for
retailers of their products. These ar are customary in the industry, provide for
the repurchase of pr 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 $36 million at September 30, 1996. Losses under these agreements
have not been significant.
NOTE 6-INCOME TAXES
The components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
(in thousands)
<S> <C> <C> <C>
Current
Federal $32,426 $30,524 $23,404
State 4,127 2,910 2,018
36,553 33,434 25,422
Deferred
Federal 5,239 (6,449) (5,078)
State 633 (611) (335)
5,872 (7,060) (5,413)
Historical provision for income taxes 42,425 26,374 20,009
Pro forma provision for income taxes
on Destiny's earnings for
preacquisition periods - 1,305 1,045
Pro forma provision for income taxes $42,425 $27,679 $21,054
</TABLE>
A reconciliation of the statutory federal income tax rate to the Company's
historical and pro forma effective income tax rates follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Statutory federal income tax rate 35% 35% 35%
State income taxes, less federal
income tax benefit 3 2 2
Reduction in valuation allowance
for deferred income tax assets - (1) -
Other - 2 -
Pro forma effective income tax rate 38 38 37
Effect of Destiny's preacquisition
earnings includable in the
income tax returns of its
former shareholders - (2) (2)
Historical effective income tax rate 38% 36% 35%
</TABLE>
27
<PAGE>
Deferred income taxes includes the following components:
<TABLE>
<CAPTION>
1996 1995
(in thousands)
<S> <C> <C>
Deferred income tax assets
Reserve for credit losses 2,764 $ 3,861
REMIC residual interests 3,492 4,426
Accrued liabilities 4,899 7,470
Net operating loss carryforward 1,558 1,829
Inventories 1,144 867
Alternative minimum tax credit carryforward 58 144
Other 745 777
Gross deferred income tax assets 14,660 19,374
Deferred income tax liabilities
Properties and facilities (3,696) (2,344)
Discounts on acquired portfolios (344) (424)
Other (946) (1,060)
Gross deferred income tax liabilities (4,986) (3,828)
Net deferred income tax asset 9,674 $15,546
</TABLE>
At September 30, 1996 the remaining net operating loss carryforward is
approximately $4,650,000 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 $43.6 million, $27.4 million and
$24.8 million in 1996, 1995 and 1994, respectively.
NOTE 7-INVENTORIES
The components of inventories are as follows:
<TABLE>
<CAPTION>
1996 1995
(in thousands)
<S> <C> <C>
Manufactured homes $136,905 $136,457
Work-in-progress, materials and supplies 14,165 12,691
Land/homes under development 4,820 2,042
$155,890 $151,190
</TABLE>
NOTE 8-PROPERTIES AND FACILITIES The components of properties and facilities
are as follows:
<TABLE>
<CAPTION>
1996 1995
(in thousands)
<S> <C> <C>
Land and land improvements 16,435 $ 16,013
Buildings and field sales offices 64,321 48,255
Furniture, fixtures and equipment 58,393 45,948
Leasehold improvements 10,903 6,185
Manufactured housing communities - 16,735
150,052 133,136
Less: accumulated depreciation
and amortization (36,288) (31,378)
$113,764 $101,758
</TABLE>
Depreciation and amortization of properties and facilities was approximately
$9,502,000, $7,337,000 and $4,741,000 in 1996, 1995 and 1994, respectively.
NOTE 9-SHORT-TERM CREDIT FACILITIES
The Company has a $175 million revolving warehouse financing facility with
a conduit commercial paper issuer, secured by loans held for sale. The weighted
average interest rate on borrowings out-standing at September 30, 1996 was
5.86%, compared to an average rate of 6.81% at September 30, 1995 on borrowings
outstanding under the $130 million bank syndicated warehouse facility which was
terminated upon closing of the commercial paper program. Subsequent to September
30, 1996 the Company closed a new $125 million bank syndicated revolving credit
facility secured by the stock of certain of the Company's subsidiaries;
borrowings under the facility bear interest at LIBOR plus .5% to 1% depending
upon the level of certain financial ratios. The $125 million facility replaced a
$75 million revolving credit facility secured by inventories, borrowings under
which bore interest at LIBOR plus .75% at September 30, 1996 and LIBOR plus 1%
at September 30, 1995. The Company also has $20 million of uncommitted credit
lines.
28
<PAGE>
NOTE 10-NOTES AND BONDS PAYABLE
The components of notes and bonds payable
are as follows:
<TABLE>
<CAPTION>
1996 1995
(in thousands)
<S> <C> <C>
Non-financial services debt
9% reset debentures due 2007 22,933 $ 22,953
9.125% reset debentures due 2007 16,975 16,975
Facilities loan payable in quarterly installments
through 1998, with interest at LIBOR plus .875%
(LIBOR plus 1.5% at September 30, 1995) 8,000 12,000
Capitalized aircraft lease payable in monthly
installments through 2000, with interest at LIBOR plus
.75% 4,916 6,292
Industrial revenue bonds due in annual installments
through 2011, with interest at a variable rate
(3.70% and 4.55% at September 30, 1996 and
September 30, 1995, respectively) 4,700 4,900
Industrial revenue bond due in installments through
2001, with interest at 73% of the lender's prime rate 2,250 2,350
Other mortgage notes at interest rates ranging from 8%
to 9%, payable in varying installments through 2008 2,945 2,784
ESOP note payable in quarterly installments through
2000, with interest at LIBOR plus 1.25% 1,680 2,160
Note payable with interest at LIBOR plus 1.5% - 748
Total non-financial services debt 64,399 71,162
Financial services debt collateralized by loans
Nonrecourse debt
Notes issued by Oakwood Funding, payable in
monthly installments through December 2000,
with interest at an average rate of 8.65%
(8.89% at September 30, 1995) 22,936 39,130
REMIC certificates payable in monthly installments
with interest rates ranging from 8.86% to 10.1% - 32,789
Subordinated note payable issued by Oakwood
Funding with interest payable monthly at 12.58%,
amortizing in 1997 through 2001 8,350 8,350
Total nonrecourse debt 31,286 80,269
Recourse debt
Term loans payable in monthly installments through
December 2000, with interest at LIBOR plus .75%
(LIBOR plus 1.375% to prime plus .5% at
September 30, 1995) 25,740 29,799
Subordinated note with interest payable monthly at
10.5%, amortizing in 2001 through 2004 12,954 12,954
Notes payable with interest at 10.25% - 4,628
Total recourse debt 38,694 47,381
Total financial services debt 69,980 127,650
$134,379 $198,812
</TABLE>
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 at 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 owner-ship 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 par.
The payment of notes collateralized by loans generally is based on the
scheduled monthly payment and actual prepayments of principal on the loans
collateralizing the notes. Under the provisions of certain note agreements, the
notes are secured solely by the underlying collateral, which consists
principally of the loans collateralizing the debt. Such collateral had an
aggregate carrying value of approximately $93 million at September 30, 1996.
In connection with the issuance of certain indebtedness, the Company
incurred certain costs 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,
29
<PAGE>
was approximately $1,422,000 and $2,881,000 at September 30, 1996 and 1995,
respectively. Land, land improvements, buildings and equipment with a net book
value of approximately $30 million are pledged as collateral for the facilities
term loan, the mortgage notes and the industrial revenue bonds.
The estimated principal payments under notes and bonds payable, assuming
the reset debentures are neither called by the Company nor presented for
redemption by the holders as of the June 1, 1997 redemption date, are $24
million in 1997, $22 million in 1998, $14 million in 1999, $12 million in 2000,
$5 million in 2001 and the balance thereafter. Interest paid by the Company was
approximately $22.5 million in 1996, $24.3 million in 1995 and $23.9 million in
1994.
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, 1996.
NOTE 11-ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The components of accounts payable and accrued liabilities are as follows:
<TABLE>
<CAPTION>
1996 1995
(in thousands)
<S> <C> <C>
Accounts payable 88,710 $47,705
Accrued compensation 46,198 17,778
Accrued dealer volume bonus 2,631 3,792
Income taxes payable 791 7,607
Reserve for contingent liabilities 1,930 3,184
Other accrued liabilities 17,669 10,523
$157,929 $90,589
</TABLE>
NOTE 12-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 $20. 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 $.005 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.
NOTE 13-STOCK OPTION AND AWARD PLANS
In January 1996 the Company's shareholders ratified the Key Employee Stock
Plan (the "Stock Plan") under which 2,665,112 common shares have been reserved
for issuance to key employees. The Stock Plan provides that an additional number
of common shares shall be reserved for issuance under the Stock Plan each
October 1 equal to 1.5% of the number of common shares out-standing on such
date. Awards or grants under the plan may be made in the form of stock options,
stock appreciation rights, restricted stock and performance shares.
During 1996, 200,000 shares of the Company's common stock were awarded
under the Stock Plan. The market value of the shares awarded of $5,425,000 has
been recorded as unearned compensation and is reflected as a reduction of
shareholders' equity in the
30
<PAGE>
accompanying consolidated balance sheet. Unearned compensation is amortized
to expense over the vesting period of the award.
The Company also has a 1990 Director Stock Option Plan under which 225,000
shares of the Company's common stock were 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.
Compensation expense under the Stock Plan and under certain earlier plans
pursuant to which awards may no longer be granted was approximately $2,626,000,
$2,017,000 and $619,000 in 1996, 1995 and 1994, 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:
<TABLE>
<CAPTION>
Number Per share
of shares option price
<S> <C> <C>
Outstanding at September 30, 1993 3,153,652 $ 1.62-$12.75
Granted 432,000 11.54- 14.72
Exercised (288,756) 1.74- 11.10
Terminated (29,000) 11.10- 11.75
Outstanding at September 30, 1994 3,267,896 1.62- 14.72
Granted 352,000 10.72- 13.78
Exercised (329,098) 1.74- 14.72
Terminated (52,024) 3.33- 13.57
Outstanding at September 30, 1995 3,238,774 1.62- 14.72
Granted 1,345,496 17.97- 23.00
Exercised (1,079,434) 1.74- 14.72
Terminated (80,334) 11.22- 18.33
Outstanding at September 30, 1996 3,424,502 1.62- 23.00
Exercisable at September 30, 1996 1,512,893 1.62- 14.72
Shares reserved for future grant
September 30, 1995 1,028,308
September 30, 1996 1,471,612
</TABLE>
NOTE 14-EMPLOYEE BENEFIT PLANS
The Company maintains an employee stock ownership plan ("ESOP") and a
401(k) plan in which substantially all employees who have met certain age and
length of service requirements may participate. Contributions to the ESOP are
determined at the discretion of the Board of Directors; employee contributions
to this plan 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
401(k) plan was approximately $1,041,000, $837,000 and $806,000 in 1996, 1995
and 1994, respectively.
During 1995 the Company loaned approximately $2,398,000 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 consolidated 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 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 ESOP was approximately $997,000, $1,067,000 and
$1,471,000 in 1996, 1995 and 1994, respectively, which, in 1995 and 1994,
includes discretionary cash contributions to the ESOP unrelated to the debt
service on the bank loan.
At September 30, 1996 the ESOP held a total of 519,462 shares of the
Company's common stock having a fair value of approximately $14 million. Of the
total number of shares, 40,636 shares have been committed to be released,
142,248 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. Uncommitted ESOP shares are included at cost in unearned
compensation in the consolidated balance sheet.
31
<PAGE>
NOTES 15-CONTINGENCIES
The Company is subject to legal proceedings and claims which have arisen in
the ordinary course of its business and have not been finally adjudicated. These
actions, when ultimately concluded and determined will not, in the opinion of
management, have a material effect on results of operations or financial
condition of the Company.
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 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.
Off-balance sheet interest rate protection agreements at September 30, 1996
consisted of options on forward starting interest rate swaps in the aggregate
notional amount of $193 million expiring on October 17, 1996. These agreements
are valued at the amount payable or receivable by the Company had the contracts
been terminated at year end.
The following table sets forth the carrying amounts and estimated fair
values of the Company's financial instruments at September 30, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
ESTIMATED CARRYING Estimated Carrying
FAIR VALUE AMOUNT fair value amount
(in thousands)
<S> <C> <C> <C> <C>
Assets
Cash and cash equivalents 28,577 28,577 $ 6,189 $ 6,189
Receivables and investments
Loans held for sale 307,983 306,465 246,372 244,593
Loans held for investment
Fixed rate loans 93,434 87,526 173,135 160,732
Variable rate loans 10,977 10,977 12,813 12,813
Trade receivables 5,771 5,771 8,025 8,025
Other receivables 45,722 45,722 14,591 14,591
Less: reserve for uncollectible
receivables - (6,331) - (8,611)
Retained REMIC regular
interests 9,724 9,724 28,133 28,133
Retained REMIC residual
interests 48,971 48,971 20,599 20,599
Liabilities
Short-term borrowings 145,506 145,506 154,400 154,400
Interest rate protection
agreements 1,362 - - -
Notes and bonds payable
Fixed rate obligations 87,691 86,252 144,389 139,641
Variable rate obligations 48,127 48,127 59,171 59,171
</TABLE>
32
<PAGE>
NOTE 17-QUARTERLY FINANCIAL DATA (UNAUDITED)
A summary of quarterly financial information follows:
<TABLE>
<CAPTION>
First Second Third Fourth
quarter quarter quarter quarter Year
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
1996
Net sales $176,269 $191,223 $239,305 $255,282 $862,079
Gross profit 46,046 54,379 73,552 78,799 $252,776
Net income 13,877 16,152 17,869 20,357 68,255
Earnings per share
Primary .30 .35 .38 .44 1.47
Fully diluted .30 .35 .38 .44 1.47
1995
Net sales $149,489 $168,991 $204,240 $218,801 $741,521
Gross profit $ 37,465 $ 43,862 $ 55,348 $ 61,526 $198,201
Net income $ 8,459 $ 10,370 $ 12,791 $ 15,003 $ 46,623
Pro forma net income $ 8,212 $ 9,862 $ 12,241 $ 15,003 $ 45,318
Pro forma earnings per share
Primary $ .18 $ .21 $ .27 $ .33 $ .99
Fully diluted $ .18 $ .21 $ .27 $ .32 $ .98
</TABLE>
33
<PAGE>
NOTE18-BUSINESS SEGMENT INFORMATION
The Company operates in two principal businesses. 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 a substantial 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
was engaged in developing both rental communities and manufactured housing
subdivisions. In late 1996 the Company decided to exit the land development
business and on September 30, 1996 sold its seven manufactured housing rental
communities and related inventories for approximately $26 million. The Company
expects to dispose of its remaining land development assets, which have a
carrying value of approximately $6 million at September 30, 1996.
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.
<TABLE>
<CAPTION>
1996 1995 1994
(in thousands)
<S> <C> <C> <C>
Revenues
Manufactured housing $881,218 $758,370 $606,725
Financial services 92,346 61,995 56,771
Investment income 358 1,047 1,114
$973,922 $821,412 $664,610
Operating income
Manufactured housing(1) 82,181 $ 60,806 $ 48,812
Financial services 52,387 24,449 19,899
Combined 134,568 85,255 68,711
Non-financial interest expense (2,221) (2,259) (1,149)
Investment income 358 1,047 1,114
General corporate expenses(2) (22,025) (11,046) (11,967)
Income before income taxes $110,680 $ 72,997 $ 56,709
Identifiable assets
Manufactured housing $307,771 $286,147 $197,738
Financial services 490,472 477,262 375,507
General corporate 43,734 19,231 17,152
$841,977 $782,640 $590,397
Depreciation and amortization
Manufactured housing 7,302 $ 5,683 $ 3,782
Financial services 565 765 784
General corporate 2,594 1,830 960
10,461 $ 8,278 $ 5,526
Capital expenditures
Manufactured housing 24,290 $ 25,276 $ 23,911
Financial services 1,247 956 511
General corporate 15,766 15,638 3,803
41,303 $ 41,870 $ 28,225
</TABLE>
(1) Includes one-time charges of approximately $663,000 in 1995 relating to
the sale of a manufactured housing facility.
(2) Includes one-time charges of approximately $537,000 in 1995 relating to
down-sizing corporate overhead staff at Golden West; includes one-time charges
of approximately $1.3 million in 1994 for costs relating to the Golden West
acquisition.
34
<PAGE>
REPORT OF INDEPENDENT
ACCOUNTANTS
To the Board of Directors and Shareholders of
Oakwood Homes Corporation (Price Waterhouse LLP logo)
In our opinion, based upon our audits and the report 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, 1996 and 1995, and the results of
their operations and their cash flows for each of the three years in
the period ended September 30, 1996, 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 Destiny
Industries, Inc., a wholly-owned subsidiary, which statements reflect
total revenues of $89,080,000 for the year ended October 1, 1994
(see Note 2). Those statements were audited by other auditors,
whose report thereon has been furnished to us, and our opinion
expressed herein, insofar as it relates to the amounts included for
Destiny Industries, Inc., is based solely on the report 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 report of other auditors provide a reasonable
basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Winston-Salem, North Carolina
November 4, 1996
35
<PAGE>
COMMON OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
STOCK PRICES(1)
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
Quarter HIGH LOW High Low High Low High Low High Low
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
First 21 165/8 131/4 103/8 141/4 111/4 105/8 61/2 51/2 33/4
Second 253/4 181/2 131/2 107/8 147/8 101/8 113/4 83/4 81/4 51/8
Third 25 20 131/2 115/8 117/8 95/8 105/8 85/8 77/8 51/8
Fourth 28 203/8 181/8 127/8 141/2 111/8 13 103/8 71/2 51/4
</TABLE>
DIVIDEND
INFORMATION(1)
The Company declared a cash dividend of $.01 per common share during each of
the eight quarters in the period ended September 30, 1996.
(1) Adjusted retroactively to give effect to stock dividends and stock
splits.
36
<PAGE>
SHAREHOLDER INFORMATION GUIDE
DIRECTORS
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
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(dagger)
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.(dagger)
Elected 1993
Private Investor
ROGER W. SCHIPKE
Elected 1996
Private Investor
*Member of the Audit Committee
(dagger) Member of the Compensation
Committee
EXECUTIVE OFFICERS
NICHOLAS J. ST. GEORGE
President and
Chief Executive Officer
A. STEVEN MICHAEL
Executive Vice Pr
Chief Operating Officer
C. MICHAEL KILBOURNE
Executive Vice Pr
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
WILLIAM G. EDWARDS
Executive Vice President
Manufacturing
LARRY T. GILMORE
Executive Vice President
Consumer Finance
MAILING ADDRESS
Oakwood Homes Corporation
Post Office Box 27081
Greensboro, North Carolina 27425-7081
(910) 664-2400
LEGAL COUNSEL
Kennedy Covington Lobdell & Hickman, L.L.P.
Charlotte, North Carolina
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
Winston-Salem, North Carolina
TRANSFER AGENT AND REGISTRAR
First Union National Bank of North Carolina
Shareholder Services Group
230 South Tryon Street, 11th Floor
Charlotte, North Carolina 28288-1153
(800) 829-8432
SECURITIES EXCHANGE LISTING
New York Stock Exchange
Ticker Symbol-OH
NUMBER OF SHAREHOLDERS OF RECORD
1,044 as of November 29, 1996
CASH DIVIDENDS
Cash dividends on Oakwood Common Stock
have been paid for 21 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) 664-2360
ANNUAL MEETING
The annual meeting of shareholders will be held
in Greensboro, North Carolina at 2 p.m. on
Wednesday, January 29, 1997.
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.
Visit our website at
http://www.oakwoodhomes.com
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
Oakwood Acceptance Corporation(3) North Carolina
Oakwood Realty Services, Inc. North Carolina
Oakwood Funding Corporation Nevada
Oakwood Financial Corporation Nevada
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."
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporations by reference in the Registration
Statements on Form S-8 (Nos. 33-3797, 2-81624, 33-50408, 33-50414, 33-50416,
33-68602 and 333-01023) of Oakwood Homes Corporation of our report dated
November 4, 1996 appearing on page 35 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 23, 1996
<PAGE>
Exhibit 23.2
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 and 333-01023.
Allen, Pritchett & Bassett, CPAs
Tifton, Georgia
December 23, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE REGISTRANTS CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED
SEPT. 30, 1996 FILED AS PART OF THE REGISTRANT'S FORM 10-K FOR THE
YEAR ENDED SEPT. 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FORM 10-K.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1996
<CASH> 28,577
<SECURITIES> 0
<RECEIVABLES> 515,156
<ALLOWANCES> 6,331
<INVENTORY> 155,890
<CURRENT-ASSETS> 0
<PP&E> 150,052
<DEPRECIATION> 36,288
<TOTAL-ASSETS> 841,977
<CURRENT-LIABILITIES> 301,505
<BONDS> 134,379
0
0
<COMMON> 22,811
<OTHER-SE> 375,961
<TOTAL-LIABILITY-AND-EQUITY> 841,977
<SALES> 862,079
<TOTAL-REVENUES> 973,922
<CGS> 609,303
<TOTAL-COSTS> 839,872
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,000
<INTEREST-EXPENSE> 22,370
<INCOME-PRETAX> 110,680
<INCOME-TAX> 42,425
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 68,255
<EPS-PRIMARY> 1.47
<EPS-DILUTED> 1.47
</TABLE>
