OAKWOOD HOMES CORP
10-Q, 1997-08-14
MOBILE HOMES
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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM 10-Q

(X)  Quarterly report pursuant to section 13 or 15(d) of the Securities
     Exchange Act of 1934 for the quarterly period ended June 30, 1997 or
( )  Transition report pursuant to section 13 or 15(d) of the Securities
     Exchange Act of 1934 for the transition period from _______ to _______


Commission File Number         1-7444

                            OAKWOOD HOMES CORPORATION
             (Exact name of registrant as specified in its charter)


     North Carolina                                              56-0985879
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)


               7800 McCloud Road, Greensboro, North Carolina 27409
                    (Address of principal executive offices)

                Post Office Box 27081, Greensboro, North Carolina
                    27425-7081 (Mailing address of principal
                               executive offices)

                                 (910) 664-2400
              (Registrant's telephone number, including area code)

                                 Not Applicable
              (Former name, former address and former fiscal year,
                         if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.

Yes  [ X ]           No  [  ]

Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock as of July 31, 1997.

     Common Stock, Par Value $.50 Per Share . . . . . . . . . . 46,139,479



                                       1

<PAGE>


                          QUARTERLY REPORT ON FORM 10-Q

                   CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                       For the Quarter Ended June 30, 1997

                   OAKWOOD HOMES CORPORATION AND SUBSIDIARIES

                           Greensboro, North Carolina


         The consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and disclosures
normally included in annual financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted pursuant
to such rules and regulations, although the Company believes that the
disclosures contained herein are adequate to make the information presented not
misleading. These consolidated financial statements should be read in
conjunction with the financial statements and the notes thereto included in the
Company's latest annual report on Form 10-K.


                                       2
<PAGE>



                   OAKWOOD HOMES CORPORATION AND SUBSIDIARIES

                  CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
                      (in thousands except per share data)

<TABLE>
<CAPTION>
                                                        Three months ended
                                                             June 30,

                                                   1997                  1996
                                                   ----                  ----
<S>                                                 <C>                   <C>     
Revenues
     Net sales                                      $266,015              $239,305
     Financial services income                        22,235                18,909
     Other income                                      4,187                 5,253
                                                  ----------            ----------
       Total revenues                                292,437               263,467
                                                    --------              --------

Costs and expenses
     Cost of sales                                   181,516               165,753
     Selling, general and administrative expenses
       Non-financial services                         63,401                58,914
       Financial services                              5,410                 4,591
     Interest expense
       Non-financial services                            838                   510
       Financial services                              4,647                 4,373
                                                  ----------            ----------
       Total costs and expenses                      255,812               234,141
                                                    --------              --------

Income before income taxes                            36,625                29,326
Provision for income taxes                            14,128                11,457
                                                   ---------             ---------

Net income                                          $ 22,497              $ 17,869
                                                    ========              ========

Earnings per share
     Primary                                      $      .48            $      .38
     Fully diluted                                $      .48            $      .38

Dividends per share                               $      .01            $      .01

Weighted average number of
     common shares outstanding
     Primary                                          46,696                46,686
     Fully diluted                                    46,864                46,686
</TABLE>


                                       3
<PAGE>




                   OAKWOOD HOMES CORPORATION AND SUBSIDIARIES

                  CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
                      (in thousands except per share data)


<TABLE>
<CAPTION>
                                                        Nine months ended
                                                            June 30,

                                                   1997                  1996
                                                   ----                  ----
<S>                                                 <C>                   <C>     
Revenues
     Net sales                                      $634,449              $606,797
     Financial services income                        72,482                68,580
     Other income                                     12,985                13,729
                                                   ---------            ----------
       Total revenues                                719,916               689,106
                                                   ---------             ---------

Costs and expenses
     Cost of sales                                   434,366               432,820
     Selling, general and administrative expenses
       Non-financial services                        164,033               147,079
       Financial services                             16,158                13,337
     Interest expense
       Non-financial services                          2,480                 1,763
       Financial services                             12,645                15,586
                                                   ---------             ---------
       Total costs and expenses                      629,682               610,585
                                                    --------              --------

Income before income taxes                            90,234                78,521
Provision for income taxes                            34,830                30,623
                                                   ---------             ---------

     Net income                                     $ 55,404              $ 47,898
                                                    ========              ========

Earnings per share
     Primary                                        $   1.19            $     1.03
     Fully diluted                                  $   1.19            $     1.03

Dividends per share                                 $    .03            $      .03

Weighted average number of
     common shares outstanding
     Primary                                          46,675                46,418
     Fully diluted                                    46,731                46,453
</TABLE>



                                       4
<PAGE>




                   OAKWOOD HOMES CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEET (UNAUDITED)
                 (in thousands except share and per share data)


<TABLE>
<CAPTION>

                                                      June 30,            September 30,
ASSETS                                                  1997                  1996
                                                        ----                  ----

<S>                                                     <C>                   <C>      
Cash and cash equivalents                               $  23,034             $  28,577
Receivables and investments                               403,251               508,825
Inventories
     Manufactured homes                                   208,007               136,905
     Work-in-process, materials and supplies               17,664                14,165
     Land/homes under development                           4,605                 4,820
                                                      -----------           -----------
                                                          230,276               155,890
Properties and facilities                                 126,816               113,764
Deferred income taxes                                       9,491                 9,674
Other assets                                               45,774                25,247
                                                       ----------            ----------
                                                         $838,642              $841,977
                                                         ========              ========

LIABILITIES AND SHAREHOLDERS' EQUITY

Short-term borrowings                                    $159,657              $145,506
Notes and bonds payable                                    85,212               134,379
Accounts payable and accrued liabilities                  117,099               157,929
Other long-term obligations                                26,281                12,189

Shareholders' equity
     Common stock, $.50 par value; 100,000,000
       shares authorized; 46,049,000 and 45,621,000
       shares issued and outstanding                       23,025                22,811
     Additional paid-in capital                           152,521               149,501
     Retained earnings                                    280,486               226,460
                                                        ---------             ---------
                                                          456,032               398,772
     Less:  Unearned compensation                          (5,639)               (6,798)
                                                      -----------           -----------
                                                          450,393               391,974
                                                        ---------             ---------
                                                         $838,642              $841,977
                                                         ========              ========
</TABLE>


                                       5

<PAGE>


                   OAKWOOD HOMES CORPORATION AND SUBSIDIARIES

                CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                 Nine months ended
                                                                       June 30,
                                                               1997                  1996
Operating activities
<S>                                                          <C>                   <C>      
     Net income                                              $  55,404             $  47,898
     Items not requiring (providing) cash
       Depreciation and amortization                            10,721                 7,678
       Deferred income taxes                                       183                  (755)
       Gain on sale of loans                                   (15,016)             (15,020)
       Other                                                     1,618                   290
       (Increase) decrease in other receivables                 17,062               (12,627)
       (Increase) in inventories                               (74,386)              (16,354)
       Increase (decrease) in accounts payable and accrued
            liabilities                                        (47,857)               46,606
       Increase (decrease) in other long-term obligations       12,966               (2,087)
                                                             ---------          -----------
         Cash provided (used) by operations                    (39,305)               55,629
       Loans originated                                       (589,875)             (490,330)
       Purchase of loan portfolios                                 --                 (1,465)
       Sale of loans                                           676,483               497,374
       Receipts on installment receivables                      25,214                18,434
                                                             ---------            ----------
         Cash provided by operating activities                  72,517                79,642
                                                             ---------            ----------

Investing activities
     Net loans to joint venture                                 (4,000)                   --
     Additions to properties and facilities                    (22,265)              (29,569)
     Other                                                     (17,478)               (1,833)
                                                             ---------            ----------
       Cash used by investing activities                       (43,743)              (31,402)
                                                             ---------             ---------

Financing activities
     Net borrowings on short-term credit facilities             14,151                18,007
     Payments on notes and bonds                               (48,807)              (41,597)
     Cash dividends                                             (1,378)               (1,342)
     Proceeds from exercise of stock options                     1,717                 3,415
                                                             ---------            ----------
       Cash used by financing activities                       (34,317)              (21,517)
                                                             ---------             ---------

Net increase (decrease) in cash and cash equivalents            (5,543)               26,723

Cash and cash equivalents
     Beginning of period                                        28,577                 6,189
                                                             ---------           -----------
     End of period                                           $  23,034             $  32,912
                                                             =========             =========
</TABLE>


                                       6

<PAGE>



                   OAKWOOD HOMES CORPORATION AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                                   (Unaudited)

1.   The consolidated financial statements reflect all adjustments, which
     included only normal recurring adjustments, which are, in the opinion of
     management, necessary to present fairly the results of operations for the
     periods presented. Results of operations for any interim period are not
     necessarily indicative of results to be expected for a full year.

2.  The Company is contingently liable as guarantor on installment sale
    contracts sold to third parties on a full or limited recourse basis. The
    amount of this contingent liability was approximately $62 million at June
    30, 1997. The Company is also contingently liable as guarantor on
    subordinated securities issued by REMIC trusts in the aggregate principal
    amount of approximately $18 million at June 30, 1997. In addition, the
    Company is contingently liable under terms of repurchase agreements with
    financial institutions providing inventory financing for retailers of homes
    produced by Destiny and Golden West Homes, manufacturing subsidiaries of the
    Company doing business with independent dealers. The Company estimates that
    its potential obligation under repurchase agreements approximated $32
    million at June 30, 1997.



                                       7

<PAGE>



                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


                              RESULTS OF OPERATIONS

Three months ended June 30, 1997 compared to three months ended June 30, 1996

The following table summarizes certain key statistics for the quarters ended
June 30, 1997 and 1996 :

<TABLE>
<CAPTION>
                                                                   1997             1996
<S>                                                               <C>              <C>
Retail sales (in millions)                                        $244.2           $197.4
Other sales (in millions)                                          $21.8            $41.9
Total sales (in millions)                                         $266.0           $239.3
Gross profit %                                                      31.8%            30.7%
New single-section homes sold - retail                             2,902            3,902
New multi-section homes sold - retail                              3,390            1,807
Used homes sold - retail                                             523              445
New single-section homes sold - wholesale                             98              322
New multi-section homes sold - wholesale                             578              958
Average new single-section sales price - retail                  $28,700          $27,700
Average new multi-section sales price - retail                   $46,100          $47,400
Average new single-section sales price - wholesale               $15,400          $14,200
Average new multi-section sales price - wholesale                $31,100          $30,700
Weighted average retail sales centers open during the period         271              241
Average new home dollar sales per sales center (in millions)         $.9              $.8
</TABLE>

         Retail sales dollar volume increased 24%, reflecting a 10% increase in
new unit volume and an increase in the percentage of total retail new unit
volume represented by multi-section homes from 32% last year to 54% in the third
quarter of fiscal 1997. New unit volume rose primarily due to a 12% increase in
the weighted average number of sales centers open during the period. The Company
opened or acquired 9 new sales centers compared to 12 sales centers in the third
quarter of fiscal 1996. The Company also closed 2 underperforming sales centers
during the quarter.

         Single-section unit volume decreased 26%, while multi-section unit
volume rose 88%, resulting in a 10% increase in average new home dollar sales
per sales center. New retail dollar sales at centers open at least one year rose
13% in the quarter. This increase, in part, reflects the effects of the
Company's capacity realignment toward multi-section homes. Management believes
that redirecting manufacturing capacity to multi-section products during the
second quarter helped reduce manufacturing backlogs and enabled the Company to
offer a broader assortment of products, especially in the Southwest, where new
multi-section unit sales increased 113% over the third quarter last year,
following a 9% decrease and a 46% increase in the first and second quarters of
fiscal 1997, respectively. The increase in multi-section sales is also
attributable to the introduction of the Sunrise Dream Home, a high volume price
point multi-section home supported by the Company's first national marketing
campaign.


                                       8
<PAGE>

         The 4% increase in the average selling price for new single-section
homes sold at retail resulted primarily from a shift in product mix toward
higher price points. The 3% decrease in the average selling price for new
multi-section homes sold at retail is due to sales of the Sunrise Dream Home,
the average selling price of which is lower than the average selling price of
multi-section homes generally. Over 1700 Dream Homes were sold during the third
quarter.

         Other sales dollar volume (which primarily represents wholesale sales
by Golden West and Destiny to independent dealers) declined 48%. The decline in
wholesale unit volume reflects execution of the Company's strategy of changing
the distribution of products produced by Golden West and Destiny from
non-exclusive independent dealers to Company-owned retail sales centers. During
the quarter ended June 30, 1997, 75% of Golden West's and Destiny's shipments
were to Oakwood sales centers, compared to 40% in the third quarter of fiscal
1996; these shipments are not included in the dollar and unit sales in the table
above.

         Gross profit margin increased to 31.8% in the current period from 30.7%
in the third quarter of last year, reflecting improved gross margins and higher
operating levels at manufacturing, greater internal sourcing of retail sales and
the reduced significance of relatively lower margin wholesale sales. The
percentage of new homes sold at retail which were produced in Company-owned
manufacturing plants increased from approximately 92% for the three months ended
June 30, 1996 to approximately 97% in the third quarter of fiscal 1997.

         Financial services income increased to $22.2 million from $18.9 million
last year. Interest income earned on loans held for investment and on loans held
for sale prior to securitization decreased from $8.2 million in the third
quarter of fiscal 1996 to $7.0 million this year. This decrease reflects the
lower principal balance of loans held for investment and loans held for sale, as
well as a decrease in the average yield on those assets as older,
higher-yielding loans are liquidated. The Company is selling via securitization
substantially all the loans it originates, and accordingly interest income
should continue to decline as the remaining loans held for investment are
liquidated. Loan servicing fees increased from $4.0 million for the third
quarter of 1996 to $5.5 million in the third quarter of 1997, reflecting the
increased size of the Company's securitized loan servicing portfolio. REMIC
residual income increased from $4.2 million to $4.5 million: an increase in the
average balance of REMIC residual interests during the period was partially
offset by a decrease in the average yield on those investments, arising
principally from higher credit losses more fully described below. Other
financial services revenue decreased from $1.7 million for the quarter ended
June 30, 1996 to $1.4 million for the current year, due to the Company's equity
in losses generated by the Company's joint venture, Deutsche Financial Capital,
which is in its start-up phase, offset in part by increases in miscellaneous
fees and other income.

         Financial services income for the third quarter of fiscal 1997 and 1996
also includes gains from the sale of asset-backed securities of approximately
$3.7 million and $772,000, respectively (after tax, $.05 and $.01 per share,
respectively).

         The Company estimates the fair value of retained residual interests in
REMIC securitizations based upon default, credit loss, voluntary prepayment and
interest rate assumptions which management believes market participants would
use for similar instruments. Such estimated fair values have a direct impact on
the magnitude of the gain or loss recorded on the sale of asset-backed
securities. The actual rate of voluntary prepayments and the amount and timing
of credit losses affect the Company's yield on retained REMIC residual interests
and the fair value of such interests in periods subsequent to the
securitization. For the

                                       9
<PAGE>

quarter ended June 30, 1997, total credit losses on loans originated by the
Company, including losses relating to securitized assets, loans held for
investment, loans held for sale and loans sold with full or partial recourse,
amounted to approximately 1.56% on an annualized basis of the average principal
balance of the related loans, compared to approximately 1.20% one year ago. The
increase in net credit losses is due in part to the industry-wide trend toward
lower down payments which began in 1994. The higher loss ratio also reflects
increased frequency of repossession in addition to loss severity, and had the
effect of reducing the yields on the Company's retained interests in securitized
assets. Continuation of these trends could adversely affect future yields on or
the carrying value of certain retained REMIC residual interests. To counteract
this trend, the Company has tightened underwriting standards and focused
additional emphasis on closing retail sales with relatively higher credit
quality customers. In addition, the Company has begun implementing programs to
improve recovery rates on defaulted loans in order to reduce the severity of
credit losses.

         The majority of the 20% decrease in other income reflects decreased
insurance commissions resulting from the increase in multi-section unit sales
with respect to which the Company's insurance penetration rate is lower because
of more competitive market conditions. During the quarter, the Company formed
Blue Ridge Insurance Company Ltd., a captive reinsurance company. With the
formation of Blue Ridge, the Company expects to earn insurance underwriting and
investment income, while insurance commissions will continue to decrease as the
Company exits the commission-based insurance agency business. Because
reinsurance claim costs are recorded as insured events occur, underwriting
reinsurance risk may increase the volatility of the Company's earnings,
particularly with respect to property and casualty reinsurance. Under the
Company's terminated commission-based agency business, the Company had the
opportunity to earn contingent commissions if the losses on policies sold by the
Company were less than anticipated. Conversely, if such losses were greater than
anticipated, the Company experienced prospective downward adjustments to its
commission rates. The Company has purchased catastrophe reinsurance to reduce
its underwriting exposure to natural disasters.

         Non-financial services selling, general and administrative expenses
declined to 23.8% of net sales compared to 24.6% of net sales last year. The
decrease in non-financial services selling, general and administrative expenses
as a percent of sales was primarily due to a reduction in accruals relating to
long-term incentive compensation plans and lower service costs. The decrease was
partially offset by an increase that reflects the integration of Destiny and
Golden West, whose general and administrative expenses are increasingly spread
over the Company's retail sales volumes as the Company reduces wholesale sales
to non-exclusive independent dealers.

         Financial services selling, general and administrative expenses rose
18% due to a 28% increase in the average number of loans serviced during the
period and a 13% increase in total credit application volume.

         Non-financial services interest expense rose from $510,000 to $838,000
due principally to interest costs related to new corporate office facilities.

         Financial services interest expense includes interest expense
associated with long-term debt secured by loans and interest expense associated
with short-term line of credit borrowings used to fund the warehousing of loans
prior to their securitization. Financial services interest expense increased 6%
primarily due to a $1.4 million increase in short-term interest expense

                                       10
<PAGE>

due to higher average outstanding balances and higher weighted average interest
rates on short-term borrowings. This increase was partially offset by a decrease
in interest on long-term debt due to declining and retired long-term balances.

         The Company's effective income tax rate was 38.6 % in the third quarter
of fiscal 1997 compared to the effective tax rate of 39.1% in fiscal 1996.


 Nine months ended June 30, 1997 compared to nine months ended June 30, 1996

The following table summarizes certain key statistics for the nine months ended
June 30, 1997 and 1996 :

<TABLE>
<CAPTION>
                                                                 1997             1996
<S>                                                              <C>              <C>
Retail sales (in millions)                                       $564.3           $484.1
Other sales (in millions)                                         $70.1           $122.7
Total sales (in millions)                                        $634.4           $606.8
Gross profit %                                                     31.5%            28.7%
New single-section homes sold - retail                            7,687            9,834
New multi-section homes sold - retail                             6,951            4,304
Used homes sold - retail                                          1,503            1,421
New single-section homes sold - wholesale                           447            1,104
New multi-section homes sold - wholesale                          1,888            3,027
Average new single-section sales price - retail                 $28,900          $27,300
Average new multi-section sales price - retail                  $47,400          $47,500
Average new single-section sales price - wholesale              $15,200          $14,000
Average new multi-section sales price - wholesale               $31,000          $29,800
Weighted average retail sales centers open during the period        264              226
Average new home dollar sales per sales center (in millions)       $2.1             $2.1
</TABLE>


         Retail sales dollar volume increased 17%, reflecting a 4% increase in
new unit volume, a 6% increase in the average new single-section sales price and
an increase in the percentage of total retail new unit volume represented by
multi-section homes from 30% last year to 47% in the first nine months of fiscal
1997.

         Single-section unit volume decreased 22%, while multi-section unit
volume rose 62% from the first nine months of fiscal 1996. The average selling
price for new single-section homes sold at retail increased primarily due to a
shift in product mix toward higher price points. The average selling price for
new multi-section homes sold at retail remained relatively constant.

         Total new retail sales dollars at sales centers open more than one year
increased 3% during the first nine months of fiscal 1997, primarily due to the
effects of the capacity realignment towards multi-section homes late in the
second quarter and the introduction of the Sunrise Dream Home discussed in the
third quarter section above. For the nine months ended June 30, 1997, the
Company opened or acquired 24 new sales centers compared to 48 sales centers in
the first nine months of fiscal 1996. The Company also closed 4 underperforming
sales centers during 1997.

                                       11
<PAGE>


         Other sales dollar volume declined by 43%, reflecting the Company's
strategy of changing the distribution of products produced by Golden West and
Destiny from non-exclusive independent dealers to Company-owned retail sales
centers. During the nine months ended June 30, 1997, 67% of Golden West's and
Destiny's shipments were to Oakwood sales centers, compared to 29% in the nine
months ended June 30, 1996; these shipments are not included in the wholesale
dollar and unit sales in the table above.

         Gross profit margin increased to 31.5% in the first nine months of the
current year from 28.7% in the first nine months of last year, reflecting
improved gross margins and higher operating levels at manufacturing, greater
internal sourcing of retail sales and the reduced significance of relatively
lower margin wholesale sales. The percentage of new homes sold at retail which
were produced in Company-owned manufacturing plants increased from approximately
89% during the prior year to approximately 96% in the first nine months of
fiscal 1997.

         Financial services income increased to $72.5 million from $68.6 million
last year. Interest income earned on loans held for investment and on loans held
for sale prior to securitization decreased from $26.2 million in the first nine
months of fiscal 1996 to $22.3 million this year. This decrease reflects the
decline in the principal balance of loans held for investment and loans held for
sale, as well as a decrease in the average yield on those assets as older,
higher-yielding loans are liquidated. Loan servicing fees increased from $11.4
million for the nine months ended June 30, 1996 to $15.6 million in the nine
months ended June 30, 1997, reflecting the increased size of the Company's
securitized loan servicing portfolio. REMIC residual income increased from $11.3
million to $15.6 million, reflecting an increase in the average balance of REMIC
residual interests during the period. This increase was partially offset by a
decrease in the average yield on those investments, arising principally from
higher credit losses. Other financial services income decreased slightly from
$4.7 million for the nine months ended June 30, 1996 to $4.0 million for the
current year, due to the Company's equity in losses generated by the Company's
joint venture, Deutsche Financial Capital, offset in part by increases in
miscellaneous fees and other income.

         Financial services income for the first nine months of both fiscal 1997
and 1996 also includes gains of approximately $15.0 million, or $.20 per share,
after tax from the sale of asset-backed securities. Last year also included a
non-recurring gain on a resecuritization transaction of $1.4 million, or $.02
per share, after tax.

         The Company estimates the fair value of retained residual interests in
REMIC securitizations based upon default, credit loss, voluntary prepayment and
interest rate assumptions which management believes market participants would
use for similar instruments. Such estimated fair values have a direct impact on
the magnitude of the gain or loss recorded on the sale of asset-backed
securities. The actual rate of voluntary prepayments and the amount and timing
of credit losses affect the Company's yield on retained REMIC residual interests
and the fair value of such interests in periods subsequent to the
securitization. For the nine months ended June 30, 1997, total credit losses on
loans originated by the Company, including losses relating to securitized
assets, loans held for investment, loans held for sale and loans sold with full
or partial recourse, amounted to approximately 1.33% on an annualized basis of
the average principal balance of the related loans, compared to approximately
1.03% on an annualized basis one year ago. As discussed above, the increase in
net credit losses is due both to higher numbers of defaulted loans and loss
severity.


                                       12
<PAGE>

         The majority of the 5% decrease in other income reflects decreased
insurance commissions resulting from the increase in multi-section unit sales
with respect to which the Company's insurance penetration rate is lower because
of more competitive market conditions.

         Non-financial services selling, general and administrative expenses
rose to 25.9% of net sales compared to 24.2% of net sales last year. The
increase in non-financial services selling, general and administrative expenses
as a percentage of net sales was caused by higher selling expenses at retail and
the integration of Destiny and Golden West, whose general and administrative
expenses are increasingly spread over the Company's retail sales volumes as the
Company reduces wholesale sales to non-exclusive independent dealers. This was
partially offset by a reduction in accruals relating to long-term incentive
compensation plans.

         Financial services selling, general and administrative expenses rose
21% due to a 27% increase in the average number of loans serviced during the
period and a 15% increase in total credit application volume.

         Non-financial services interest expense rose from $1,763,000 to
$2,480,000 due principally to interest costs related to new corporate office
facilities.

         Financial services interest expense includes interest expense
associated with long-term debt secured by loans and interest expense associated
with short-term line of credit borrowings used to fund the warehousing of loans
prior to their securitization. Financial services interest expense decreased 19%
primarily due to declining and retired long-term debt balances. This decrease
was offset by a $1.9 million increase in short-term interest expense related to
higher average outstanding balances, offset by lower weighted average interest
rates on short-term lines of credit. Financial services interest expense
associated with notes and bonds payable is expected to continue to decline as
the Company retires its outstanding debt secured by loans.

         The Company's effective income tax rate was 38.6% in fiscal 1997
compared to the effective tax rate of 39.0% in fiscal 1996.

                         LIQUIDITY AND CAPITAL RESOURCES

         Receivables and investments decreased from September 30, 1996 primarily
due to the timing of the Company's securitization of loans held for sale, as
well as the continued amortization of loans held for investment. The Company
originates loans and warehouses them until sufficient receivables have been
accumulated for a securitization. Through its Oakwood Mortgage Investors
subsidiary, the Company closed securitizations in October 1996, February 1997
and May 1997 totaling approximately $634 million.

         The increase in inventories from September 30, 1996 reflects the normal
seasonal manufacture of inventory in preparation for the summer selling season,
as well as the increase in multi-section homes as a percentage of total
inventory. At September 30, 1996, multi-section homes comprised approximately
39% of retail unit inventory compared with 43% at June 30, 1997.

         The Company and Deutsche Financial Services each have funded one-half
the operating cash needs of their Deutsche Financial Capital joint venture. Such
funding has been used principally to finance loans warehoused prior to
securitization and prior to the closing of a warehousing facility with a conduit
commercial paper issuer in June 1997. The Company's

                                       13
<PAGE>

investment in and advances to the joint venture approximated $7 million at June
30, 1997, which is included in other assets on the consolidated balance sheet.
Deutsche Financial Capital completed its first securitization in June 1997.

         Short-term borrowings principally reflect outstanding advances on the
Company's warehousing facility and other short-term credit facilities.
Management believes that permanent financing for its loans remains readily
available and anticipates securitizing installment sale contracts approximately
every three months.

         Management believes that it can obtain the cash needed to continue its
planned expansion through internally generated funds. However, the Company
continues to monitor the credit and equity markets and evaluate the sources and
cost of the long-term capital required to finance the demands of both planned
expansion and higher operating levels within existing operations. The Company
will seek to raise additional equity or long-term debt based upon anticipated
business demands, management's assessment of existing and future conditions in
the capital markets, and management's assessment of the appropriate components
of the Company's capital structure. In order to maintain maximum flexibility in
the timing of any acquisition of permanent or long-term financing, the Company
intends to focus on maintaining its short-term liquidity. As a consequence, the
Company intends to sell all the regular REMIC interests in its securitizations,
and retain only REMIC residual interests.

         In February 1997 the rating on the Company's $40 million of reset
debentures was raised to BBB- by Standard & Poor's Ratings Group and in May 1997
was raised to Baa3 by Moody's Investors Service. Management believes that
achieving an investment grade rating from two major credit rating agencies
enhances the Company's flexibility in obtaining both short and long-term
financing. In April 1997 the Company reduced the interest rate on its
outstanding reset debentures from 9% and 9 1/8% to 8%, effective in June 1997.
Holders of these securities had the option of requiring the Company to redeem
the debentures at par prior to the effective date of the reduction in the
interest rate. In June 1997 $23 million of the debentures were redeemed, which
was financed using short-term credit facilities.

                                       14
<PAGE>




   PART II.  OTHER INFORMATION

   Item 6.   Exhibits and Reports on Form 8-K

             a)      Exhibits

                     (4)     Agreement to Furnish Copies of Instruments
                             with Respect to Long-term Debt

                     (11)    Statement re Computation of Earnings Per Share

                     (27)    Financial Data Schedule (filed in electronic
                             format only)

             b)      Reports on Form 8-K

                     No reports on Form 8-K were filed for the quarter
                     ended June 30, 1997.

             Items 1, 2, 3, 4 and 5 are inapplicable and are omitted.


                                       15

<PAGE>



                   OAKWOOD HOMES CORPORATION AND SUBSIDIARIES

                                   SIGNATURES


          Pursuant to the requirements of the Securities Exchange Act of 1934,
   the Registrant has caused this report to be signed on its behalf by the
   undersigned thereunto duly authorized.

   Date:  August 14, 1997


                                       OAKWOOD HOMES CORPORATION




                                       BY:  s/  C. Michael Kilbourne
                                            C. Michael Kilbourne
                                            Executive Vice President
                                            (Chief Financial Officer)
                                            (Duly Authorized Officer)

                                       16


<PAGE>



                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    EXHIBITS

                                    ITEM 6(a)

                                    FORM 10-Q

                                QUARTERLY REPORT


For the quarter ended                                     Commission File Number
June 30, 1997                                                     1-7444


                            OAKWOOD HOMES CORPORATION
                                  EXHIBIT INDEX

   Exhibit No.                                Exhibit Description

        4                       Agreement to Furnish Copies of Instruments with
                                respect to Long-Term Debt

       11                       Statement re Computation of Earnings Per Share

       27                       Financial Data Schedule (filed in electronic
                                format only)


                                       17


<PAGE>



                                                                       EXHIBIT 4

                   AGREEMENT TO FURNISH COPIES OF INSTRUMENTS
                         WITH RESPECT TO LONG-TERM DEBT


         The Registrant has entered into certain agreements with respect to
long-term indebtedness which do not exceed ten percent of the total assets of
the Registrant and its subsidiaries on a consolidated basis. The Registrant
hereby agrees to furnish a copy of such agreements to the Commission upon
request of the Commission.




                                            OAKWOOD HOMES CORPORATION



                                            By:      s/  C. Michael Kilbourne
                                                     C. Michael Kilbourne
                                                     Executive Vice President

                                       18



                                                                      EXHIBIT 11


                   OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
                 STATEMENT RE COMPUTATION OF EARNINGS PER SHARE

                      (in thousands, except per share data)

<TABLE>
<CAPTION>
                                               Three months ended     Nine months ended
                                                     June 30,               June 30,

                                                 1997       1996        1997        1996
                                             --------    --------    --------    --------
<S>                                            <C>         <C>         <C>         <C>   
Weighted average number of common
         shares outstanding                    45,838      44,999      45,730      44,736
Add:     Dilutive effect of stock
         options, computed using the
         treasury stock method                    975       1,844       1,072       1,847
Less:    Unearned ESOP shares                    (117)       (157)       (127)       (165)
                                             --------    --------    --------    --------
Weighted average number of common
         and common equivalent shares
         outstanding                           46,696      46,686      46,675      46,418
                                             ========    ========    ========    ========
Net income                                   $ 22,497    $ 17,869    $ 55,404    $ 47,898
                                             ========    ========    ========    ========
Earnings per common share - primary          $    .48    $    .38    $   1.19    $   1.03
                                             ========    ========    ========    ========


Weighted average number of common
         shares outstanding                    45,838      44,999      45,730      44,736
Add:     Dilutive effect of stock
         options, computed using
         the treasury stock method              1,143       1,844       1,128       1,882
Less:    Unearned ESOP shares                    (117)       (157)       (127)       (165)
                                             --------    --------    --------    --------
Weighted average number of common
         and common equivalent shares
         outstanding                           46,864      46,686      46,731      46,453
                                             ========    ========    ========    ========
Net income                                   $ 22,497    $ 17,869    $ 55,404    $ 47,898
                                             ========    ========    ========    ========
Earnings per common share - fully diluted    $    .48    $    .38    $   1.19    $   1.03
                                             ========    ========    ========    ========
</TABLE>

                                       19


<TABLE> <S> <C>


<ARTICLE>                     5
<LEGEND>
     The Registrant's Consolidated Financial Statements for the quarter ended
     June 30, 1997 filed as part of the Registrant's Form 10-Q for the
     quarter ended June 30, 1997.
</LEGEND>
<MULTIPLIER>                                   1,000
<CURRENCY>                                     U.S. Dollars
       
<S>                             <C>
<PERIOD-TYPE>                   3-MOS
<FISCAL-YEAR-END>                              SEP-30-1997
<PERIOD-START>                                 APR-01-1997
<PERIOD-END>                                   JUN-30-1997
<EXCHANGE-RATE>                                1
<CASH>                                         23,034
<SECURITIES>                                   0
<RECEIVABLES>                                  407,434
<ALLOWANCES>                                   4,183
<INVENTORY>                                    230,276
<CURRENT-ASSETS>                               0
<PP&E>                                         170,344
<DEPRECIATION>                                 43,528
<TOTAL-ASSETS>                                 838,642
<CURRENT-LIABILITIES>                          275,493
<BONDS>                                        85,212
                          0
                                    0
<COMMON>                                       23,025
<OTHER-SE>                                     427,368
<TOTAL-LIABILITY-AND-EQUITY>                   838,642
<SALES>                                        266,015
<TOTAL-REVENUES>                               292,437
<CGS>                                          181,516
<TOTAL-COSTS>                                  250,327
<OTHER-EXPENSES>                               0
<LOSS-PROVISION>                               0
<INTEREST-EXPENSE>                             5,485
<INCOME-PRETAX>                                36,625
<INCOME-TAX>                                   14,128
<INCOME-CONTINUING>                            22,497
<DISCONTINUED>                                 0
<EXTRAORDINARY>                                0
<CHANGES>                                      0
<NET-INCOME>                                   22,497
<EPS-PRIMARY>                                  0.48
<EPS-DILUTED>                                  0.48
        


</TABLE>


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