SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(X) Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended March 31, 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
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(Exact name of registrant as specified in its charter)
North Carolina 56-0985879
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7800 McCloud Road, Greensboro, North Carolina 27409
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(Address of principal executive offices)
Post Office Box 27081, Greensboro, North Carolina 27425-7081
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(Mailing address of principal executive offices)
(910) 664-2400
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(Registrant's telephone number, including area code)
Not Applicable
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(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
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Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock as of April 30, 1997.
Common Stock, Par Value $.50 Per Share . . . . . . . . . . 46,034,729
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QUARTERLY REPORT ON FORM 10-Q
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Quarter Ended March 31, 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.
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OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(in thousands except per share data)
Three months ended
March 31,
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1997 1996
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Revenues
Net sales $190,652 $191,223
Financial services income 25,475 25,432
Other income 4,162 4,548
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Total revenues 220,289 221,203
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Costs and expenses
Cost of sales 129,038 136,844
Selling, general and administrative expenses
Non-financial services 52,265 46,966
Financial services 4,964 4,620
Interest expense
Non-financial services 810 634
Financial services 4,509 5,694
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Total costs and expenses 191,586 194,758
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Income before income taxes 28,703 26,445
Provision for income taxes 10,989 10,293
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Net income $ 17,714 $ 16,152
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Earnings per share
Primary $ .38 $ .35
Fully diluted $ .38 $ .35
Dividends per share $ .01 $ .01
Weighted average number of
common shares outstanding
Primary 46,598 46,394
Fully diluted 46,598 46,480
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OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(in thousands except per share data)
Six months ended
March 31,
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1997 1996
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Revenues
Net sales $368,434 $367,492
Financial services income 50,247 49,671
Other income 8,798 8,476
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Total revenues 427,479 425,639
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Costs and expenses
Cost of sales 252,850 267,067
Selling, general and administrative expenses
Non-financial services 100,632 88,165
Financial services 10,748 8,746
Interest expense
Non-financial services 1,642 1,253
Financial services 7,998 11,213
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Total costs and expenses 373,870 376,444
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Income before income taxes 53,609 49,195
Provision for income taxes 20,702 19,166
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Net income $ 32,907 $ 30,029
======== ========
Earnings per share
Primary $ .71 $ .65
Fully diluted $ .71 $ .65
Dividends per share $ .02 $ .02
Weighted average number of
common shares outstanding
Primary 46,665 46,284
Fully diluted 46,665 46,337
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OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
(in thousands except share and per share data)
March 31, September 30,
ASSETS 1997 1996
---- ----
Cash and cash equivalents $ 22,516 $ 28,577
Receivables and investments 358,849 508,825
Inventories
Manufactured homes 203,023 136,905
Work-in-process, materials and supplies 17,692 14,165
Land/homes under development 4,919 4,820
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225,634 155,890
Properties and facilities 122,524 113,764
Deferred income taxes 9,242 9,674
Other assets 76,712 25,247
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$ 815,477 $ 841,977
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LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term borrowings $ 159,089 $ 145,506
Notes and bonds payable 115,184 134,379
Accounts payable and accrued liabilities 100,646 157,929
Other long-term obligations 12,956 12,189
Shareholders' equity
Common stock, $.50 par value; 100,000,000
shares authorized; 46,033,000 and 45,621,000
shares issued and outstanding 23,016 22,811
Additional paid-in capital 152,324 149,501
Retained earnings 258,450 226,460
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433,790 398,772
Less: Unearned compensation (6,188) (6,798)
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427,602 391,974
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$ 815,477 $ 841,977
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OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(in thousands)
Six months ended
March 31,
----------------
1997 1996
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Operating activities
Net income $ 32,907 $ 30,029
Items not requiring (providing) cash
Depreciation and amortization 6,783 4,803
Deferred income taxes 432 (272)
Gain on sale of loans (11,281) (14,248)
Other 1,408 --
(Increase) decrease in other receivables 22,866 (5,081)
(Increase) in inventories (69,744) (13,398)
Increase (decrease) in accounts payable
and accrued liabilities (61,467) 6,575
Increase (decrease) in other long-term
obligations 489 (2,668)
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Cash provided (used) by operations (77,607) 5,740
Loans originated (350,587) (278,930)
Purchase of loan portfolios -- (1,465)
Sale of loans 478,015 391,002
Receipts on installment receivables 16,338 11,801
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Cash provided by operating activities 66,159 128,148
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Investing activities
Loan to joint venture (49,000) --
Additions to properties and facilities (14,798) (18,478)
Other (3,741) (3,594)
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Cash used by investing activities (67,539) (22,072)
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Financing activities
Net borrowings (repayments) on short-term
credit facilities 13,583 (74,400)
Payments on notes and bonds (18,955) (21,257)
Cash dividends (917) (859)
Proceeds from exercise of stock options 1,608 2,409
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Cash used by financing activities (4,681) (94,107)
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Net increase (decrease) in cash and cash equivalents (6,061) 11,969
Cash and cash equivalents
Beginning of period 28,577 6,189
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End of period $ 22,516 $ 18,158
========= =========
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OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
1. The consolidated financial statements reflect all adjustments, which
included only normal recurring adjustments, which are, in the opinion of
management, necessary to present fairly the results of operations for the
periods presented. Results of operations for any interim period are not
necessarily indicative of results to be expected for a full year.
2. 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 $66 million at March
31, 1997. The Company is also contingently liable under terms of
repurchase agreements with financial institutions providing inventory
financing for retailers of homes produced by Destiny and Golden West
Homes, manufacturing subsidiaries of the Company doing business with
independent dealers. The Company estimates that its potential obligation
under repurchase agreements approximated $34 million at March 31, 1997.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three months ended March 31, 1997 compared to three months ended March 31, 1996
The following table summarizes certain key statistics for the quarters
ended March 31, 1997 and 1996:
1997 1996
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Retail sales (in millions) $169.9 $153.5
Wholesale sales (in millions) $20.3 $33.1
Other sales - principally relating to
communities in 1996 (in millions) $.5 $4.6
Total sales (in millions) $190.7 $191.2
Gross profit % - integrated operations 33.9% 31.4%
Gross profit % - wholesale operations 19.5% 15.8%
New single-section homes sold - retail 2,542 3,376
New multi-section homes sold - retail 1,922 1,203
Used homes sold - retail 524 515
New single-section homes sold - wholesale 138 349
New multi-section homes sold - wholesale 589 967
Average new single-section sales price - retail $28,900 $27,200
Average new multi-section sales price - retail $47,900 $47,800
Average new single-section sales price - wholesale $16,000 $13,800
Average new multi-section sales price - wholesale $30,600 $28,400
Weighted average retail sales centers
open during the period 265 227
Retail sales dollar volume increased 11%, reflecting a 3% decrease in new
unit volume offset by an increase of 6% in the average new unit sales price of
single-section homes and an increase in the percentage of total retail new unit
volume represented by multi-section homes from 26% last year to 43% in the
second quarter of fiscal 1997.
Single-section unit volume decreased 25%, while multi-section unit volume
rose 60%. The relative weakness in single-section sales experienced in the
quarter is expected to continue and accordingly, the Company has realigned its
production capacity to enable increased production of multi-section products.
Only four of the Company's 16 plants are exclusively dedicated to single-section
homes, while eight plants build exclusively multi-section homes. The remaining
four plants build both products, shifting between single-section and
multi-section homes based on market demand.
Late in the second quarter, the Company experienced the first effects of
the production capacity realignment, especially in the Southwest where
multi-section sales increased 46% over the second quarter of last year, compared
to a 9% decline in the first quarter of fiscal 1997. The Company believes
multi-section sales in the Southwest in the first quarter were
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adversely affected by excessive manufacturing lead times and insufficient
breadth of product offerings. Management believes that redirecting manufacturing
capacity to multi-section products has helped reduce manufacturing backlogs and
enabled the Company to offer a broader assortment of products in the Southwest.
In addition, the Company is supplementing its multi-section product line in the
Southwest by purchasing some multi-section homes from third party manufacturers.
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.
Total new retail sales dollars at sales centers open more than one year
decreased 3.8% in the second quarter, primarily due to weakness in the
Southwest. Management believes that the capacity realignment toward
multi-section homes will improve the Company's competitive position in the
retail market generally, and that changes in retail operating management in the
Southwest will improve the Company's results in that market. Same store new
dollar sales for the month of March rose 2.8%, with each of the Company's retail
marketing regions performing more strongly in March than for the quarter as a
whole. In the second quarter, the Company opened or acquired eight new sales
centers compared to 18 sales centers in the second quarter of fiscal 1996. New
sales centers typically require a period of several months to reach normalized
unit sales levels.
Wholesale sales dollar volume (which represents sales by Golden West and
Destiny to independent dealers) declined by 39%. 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 March
31, 1997, 66% of Golden West's and Destiny's shipments were to Oakwood sales
centers, compared to 35% in the second quarter of fiscal 1996; these shipments
are not included in the wholesale dollar and unit sales in the table above.
Management expects Golden West's and Destiny's unit sales to Oakwood to increase
in future quarters. To the extent the Company is successful in establishing
Company-owned retail centers in Golden West and Destiny markets, the decline in
sales to wholesale dealers will continue.
Gross profit margin - integrated operations reflects gross profit earned
on all sales at retail as well as the manufacturing gross profit on retail sales
of units manufactured by the Company. Gross profit margin integrated operations
increased to 33.9% in the current period from 31.4% in the second quarter of
last year, reflecting improved gross margins at manufacturing and an increase in
the percentage of new homes sold at retail which were produced in Company-owned
manufacturing plants from approximately 89% for the three months ended March 31,
1996 to approximately 95% in the second quarter of fiscal 1997.
Wholesale gross profit margins increased to 19.5% in the quarter from
15.8% last year, primarily due to start-up costs incurred in the second quarter
last year associated with a plant expansion at the Albany, Oregon facility,
which increased its capacity by approximately 40%. In addition, margins at
Destiny increased due to a shift towards higher price point homes carrying
higher margins and due to higher operating levels.
Financial services income increased to $25.5 million from $25.4 million
last year. Interest income earned on loans held for investment and on loans held
for sale prior to securitization decreased from $8.8 million in the second
quarter of fiscal 1996 to $8.0 million this year. This decrease reflects the
lower principal balance of loans held for investment and
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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 $3.8 million for
the second quarter of 1996 to $5.1 million in the second quarter of 1997,
reflecting the increased size of the Company's securitized loan servicing
portfolio. REMIC residual income increased from $3.9 million to $4.9 million,
reflecting the shift in the Company's financing strategy toward securitization
of its loans from holding loans for investment. Other financial services revenue
decreased from $1.4 million for the quarter ended March 31, 1996 to $1.1 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 second quarter of fiscal 1997 and 1996
also includes gains of approximately $6.3 million and $7.6 million,
respectively, or $.08 per share and $.10 per share, respectively, from the sale
of asset-backed securities. The fiscal 1996 gain was unusually large due to a
bond market rally that lasted through mid-February 1996 which significantly
reduced the Company's permanent financing costs on securities sold during the
second quarter of fiscal 1996. Last year's quarter 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 quarter ended March 31, 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 1.36% on an annualized basis of
the average principal balance of the related loans, compared to approximately
1.08% 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; however, the
loss ratio does not give effect to the fact that generally the Company charges
customers with relatively lower down payments a higher interest rate on their
loans than customers with relatively higher down payments. 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. Higher losses could also reduce gains on future
securitizations and residual REMIC income. 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 8% decrease in other income reflects decreased
insurance commissions resulting from the overall decrease in retail unit sales
during the quarter, as well as 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.
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Non-financial services selling, general and administrative expenses rose
to 27.4% of net sales compared to 24.6% of net sales last year. The increase in
non-financial services selling, general and administrative expenses as a
percentage of net sales 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, and by higher retail selling expenses. These
increases were partially offset by a reduction in accruals relating to long-term
incentive compensation plans.
Financial services selling, general and administrative expenses rose 7%
due to a 28% increase in the average number of loans serviced during the period,
a 13% increase in total credit application volume and a 14% increase in loan
originations. Financial services selling, general and administrative expenses
for the quarter also includes a credit of approximately $450,000 relating to
adjustments to the Company's fees charged to Deutsche Financial Capital for
underwriting and origination services performed from its inception in July 1996
through February 1997.
Non-financial services interest expense rose from $634,000 to $810,000 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 21%
primarily due to declining and retired long-term debt balances. This decrease
was offset by a $552,000 increase in short-term interest expense due to higher
average outstanding balances, offset by lower weighted average interest rates on
short-term borrowings. 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 the second quarter
of fiscal 1997 compared to the effective tax rate of 38.9% in fiscal 1996.
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Six months ended March 31, 1997 compared to six months ended March 31, 1996
The following table summarizes certain key statistics for the six months
ended March 31, 1997 and 1996 :
1997 1996
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Retail sales (in millions) $320.1 $286.7
Wholesale sales (in millions) $46.1 $72.9
Other sales - principally relating to
communities in 1996 (in millions) $2.2 $7.9
Total sales (in millions) $368.4 $367.5
Gross profit % - integrated operations 33.5% 30.6%
Gross profit % - wholesale operations 17.6% 15.6%
New single-section homes sold - retail 4,785 5,932
New multi-section homes sold - retail 3,561 2,497
Used homes sold - retail 980 976
New single-section homes sold - wholesale 349 782
New multi-section homes sold - wholesale 1,310 2,069
Average new single-section sales price - retail $29,000 $27,000
Average new multi-section sales price - retail $48,700 $47,600
Average new single-section sales price - wholesale $15,200 $13,900
Average new multi-section sales price - wholesale $31,000 $29,300
Weighted average retail sales centers
open during the period 262 218
Retail sales dollar volume increased 12%, reflecting a 1% decrease in new
unit volume offset by increases of 7% and 2% in the average new unit sales price
of single-section and multi-section homes, respectively, and an increase in the
percentage of total retail unit volume represented by multi-section homes from
30% last year to 43% in the first six months of fiscal 1997.
Single-section unit volume decreased 19%, while multi-section unit volume
rose 43% from the first six months of fiscal 1996. As more fully described
above, during the second quarter the Company realigned its production capacity
to enable increased production of multi-section products.
The average selling price for new single-section and multi-section homes
sold at retail increased primarily due to a shift in product mix toward higher
price points.
Total new retail sales dollars at sales centers open more than one year
decreased 5% during the first six months of fiscal 1997, primarily due to the
weakness in the Southwest. For the six months ended March 31, 1997, the Company
opened or acquired 15 new sales centers compared to 36 sales centers in the
first six months of fiscal 1996.
Wholesale sales dollar volume declined by 37%, 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 six months ended March 31, 1997, 63% of Golden West's and
Destiny's shipments were to Oakwood sales centers, compared to 28% in the six
months ended March 31, 1996; these shipments are not included in the wholesale
dollar and unit sales in the table above.
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Gross profit margin - integrated operations increased to 33.5% in the
first six months of the current year from 30.6% in the first six months of last
year, reflecting improved gross margins at both retail and manufacturing and an
increase in the percentage of new homes sold at retail which were produced in
Company-owned manufacturing plants from approximately 87% during the prior year
to approximately 95% in the first six months of fiscal 1997.
Wholesale gross profit margins increased to 17.6% in the first six months
of fiscal 1997 from 15.6% last year, primarily due to start-up costs incurred in
the first quarter last year associated with the Albany, Oregon plant expansion.
Financial services income increased to $50.2 million from $49.7 million
last year. Interest income earned on loans held for investment and on loans held
for sale prior to securitization decreased from $18.0 million in the first six
months of fiscal 1996 to $15.2 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 $7.4
million for the six months ended March 31, 1996 to $10.1 million in the six
months ended March 31, 1997, reflecting the increased size of the Company's
securitized loan servicing portfolio. REMIC residual income increased from $7.0
million to $11.1 million, reflecting the shift in the Company's financing
strategy toward securitization of its loans from holding loans for investment.
Other financial services income decreased slightly from $2.9 million for the six
months ended March 31, 1996 to $2.6 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 six months of fiscal 1997 and 1996
also includes gains of approximately $11.3 million and $14.2 million,
respectively, or $.15 per share and $.19 per share, respectively, from the sale
of asset-backed securities. The fiscal 1996 gains were unusually large due to a
bond market rally in the fall of 1995 that lasted through mid-February 1996
which significantly reduced the Company's permanent financing costs on
securities sold during the first six month of fiscal 1996. 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 six months ended March 31, 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 1.24% on an annualized basis of
the average principal balance of the related loans, compared to approximately
.96% 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. While the Company does not find such losses high in historical terms,
the Company has tightened underwriting standards, focused additional emphasis on
closing retail sales with relatively higher credit quality customers and
implemented programs to improve recovery rates and reduce the severity of
losses. Increased credit losses reduced the
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Company's yield on retained REMIC residual interests and could also reduce gains
on future securitizations.
The majority of the 4% increase in other income is related to increased
insurance commissions resulting from the overall increase in new retail home
dollar sales.
Non-financial services selling, general and administrative expenses rose
to 27.3% of net sales compared to 24.0% 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 23%
due to a 27% increase in the average number of loans serviced during the period,
a 16% increase in total credit application volume and a 26% increase in loan
originations.
Non-financial services interest expense rose from $1,253,000 to $1,642,000
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 29%
primarily due to declining and retired long-term debt balances. This decrease
was offset by a slight 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 and February 1997
totaling approximately $456 million.
The increase in inventories from September 30, 1996 reflects the normal
seasonal manufacture of inventory during the winter months in preparation for
the spring and summer selling season.
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 pending closing of a
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warehousing facility with a conduit commercial paper issuer. The Company's
investment in and advances to the joint venture approximated $51 million at
March 31, 1997, which is included in other assets on the consolidated balance
sheet. Management anticipates that the warehousing facility will be closed
during the third quarter of fiscal 1997, which will significantly reduce the
need for funding of Deutsche Financial Capital by the Company.
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 reset the interest rate on the reset
debentures to 8%, effective in June 1997. Holders of these securities have the
option of requiring the Company to redeem the debentures at par through May
1997. The Company intends to finance any redemption of the securities using
short-term credit facilities. Redemption of a significant amount of debentures
may influence the timing of any decision by the Company to seek additional
long-term financing and the amount of any such financing.
15
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
Information required by this item was provided in the Form 10-Q
filed for the quarter ended December 31, 1996.
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 March 31,
1997.
Items 1, 2, 3 and 5 are inapplicable and are omitted.
16
<PAGE>
OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Date: May 14, 1997
OAKWOOD HOMES CORPORATION
BY: s/ C. Michael Kilbourne
------------------------
C. Michael Kilbourne
Executive Vice President
(Chief Financial Officer)
(Duly Authorized Officer)
17
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
ITEM 6(a)
FORM 10-Q
QUARTERLY REPORT
For the quarter ended Commission File Number
March 31, 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)
18
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
19
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 Six months ended
March 31, March 31,
--------- ---------
1997 1996 1997 1996
----- ----- ----- ----
<S> <C> <C> <C> <C>
Weighted average number of common
shares outstanding 45,804 44,764 45,677 44,605
Add: Dilutive effect of stock
options, computed using the
treasury stock method 921 1,794 1,120 1,848
Less: Unearned ESOP shares
(127) (132) (169)
-------- -------- --------
(164)
-----
Weighted average number of common
and common equivalent shares
outstanding 46,598 46,394 46,665 46,284
======== ======== ======== ========
Net income $ 17,714 $ 16,152 $ 32,907 $ 30,029
======== ======== ======== ========
Earnings per common share - primary $ .38 $ .35 $ .71 $ .65
======== ======== ======== ========
Weighted average number of common
shares outstanding 45,804 44,764 45,677 44,605
Add: Dilutive effect of stock
options, computed using
the treasury stock method 921 1,880 1,120 1,901
Less: Unearned ESOP shares (127) (164) (132)
-------- -------- --------
-----
(169)
Weighted average number of common
and common equivalent shares
outstanding 46,598 46,480 46,665 46,337
======== ======== ======== ========
Net income $ 17,714 $ 16,152 $ 32,907 $ 30,029
======== ======== ======== ========
Earnings per common share - fully diluted $ .38 $ .35 $ .71 $ .65
======== ======== ======== ========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Registrant's consolidated financial statements for the quarter ended March 31,
1997 filed as part of the Registrant's Form 10-Q for the quarter ended March 31,
1997 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 22,516
<SECURITIES> 0
<RECEIVABLES> 364,082
<ALLOWANCES> 5,223
<INVENTORY> 225,634
<CURRENT-ASSETS> 0
<PP&E> 164,087
<DEPRECIATION> 41,563
<TOTAL-ASSETS> 815,477
<CURRENT-LIABILITIES> 258,455
<BONDS> 115,184
0
0
<COMMON> 23,016
<OTHER-SE> 404,586
<TOTAL-LIABILITY-AND-EQUITY> 815,477
<SALES> 190,652
<TOTAL-REVENUES> 220,289
<CGS> 129,038
<TOTAL-COSTS> 186,267
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,319
<INCOME-PRETAX> 28,703
<INCOME-TAX> 10,989
<INCOME-CONTINUING> 17,714
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,714
<EPS-PRIMARY> .38
<EPS-DILUTED> .38
</TABLE>