SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT TO APPLICATION OR REPORT
Filed pursuant to Section 12, 13, or 15(d) of the Securities
Exchange Act of 1934
CHAMPION ENTERPRISES, INC.
(Exact name of registrant as specified in charter)
2701 University Drive, Suite 320, Auburn Hills, Michigan 48326
(Address of principal executive offices) (Zip Code)
AMENDMENT NO. 1
The undersigned registrant hereby amends the following
items, financial statements, exhibits or other portions of its
Current Report on Form 8-K dated February 3, 1995 as set forth in
the pages attached hereto:
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired
(b) Pro Forma Financial Information
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this amendment to be
signed on its behalf by the undersigned, thereunto duly
authorized.
CHAMPION ENTERPRISES, INC.
(Registrant)
By /s/ A. JACQUELINE DOUT
(Signature)
A. Jacqueline Dout
Executive Vice President-
Treasurer and Chief Financial
Officer
April 18, 1995
<PAGE>
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired
Filed with this Report are the following audited
financial statements of Chandeleur Homes, Inc. (CHI) and Crest
Ridge Homes, Inc. (CRHI):
(1) Audited Balance Sheets as of December 31, 1994
and 1993; and
(2) Audited Statements of Income, Shareholders'
Equity and Cash Flows for the years ended
December 31, 1994 and 1993.
(b) Pro Forma Financial Information
Filed with this report are the following unaudited pro
forma financial statements of the registrant:
(1) Pro Forma Consolidated Balance Sheet as of
December 31, 1994.
(2) Pro Forma Consolidated Statement of Operations
for the year ended December 31, 1994.
<PAGE>
CHANDELEUR HOMES, INC.
AUDITED FINANCIAL STATEMENTS
For The Years Ended December 30, 1994 and December 31, 1993
<PAGE>
TABLE OF CONTENTS
Page No.
INDEPENDENT AUDITORS' REPORT . . . . . . . . . . . . .. . . 1
FINANCIAL STATEMENTS
Balance Sheets . . . . . . . . . . . . . . . .. . . 2
Statements of Retained Earnings . . . . . . . . . .3
Statements of Income . . . . . . . . . . . . . . . .4
Statements of Cash Flows . . . . . . . . . . . . . .5
Notes to Financial Statements . . . . . . . . . . .6
<PAGE>
STEWART, COCHRAN AND WHEELER, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
301 SOUTH BROAD STREET
ALBERTVILLE, ALABAMA 35950
PHONE (205) 878-6481
FAX (205) 878-7148
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Chandeleur Homes, Inc.
Boaz, Alabama
We have audited the accompanying balance sheets of Chandeleur
Homes, Inc., an Alabama Corporation as of December 30, 1994 and
December 31, 1993, and the related statements of income, retained
earnings, and cash flows for the years then ended. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Chandeleur Homes, Inc. as of December 30, 1994 and December
31, 1993, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted
accounting principles.
/S/Stewart, Cochran and Wheeler, P.C.
March 28, 1995
<PAGE>
CHANDELEUR HOMES, INC.
BALANCE SHEETS
December 30, 1994 and December 31, 1993
1994 1993
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 5,495,384 $ 2,076,264
Accounts receivable 1,601,740 1,083,686
Inventories 1,389,426 855,944
Prepaid expenses 71,268 104,824
___________ ___________
TOTAL CURRENT ASSETS 8,557,818 4,120,718
PROPERTY, PLANT, AND EQUIPMENT,
net 2,550,875 2,534,166
DEPOSITS 395 395
___________ ___________
$11,109,088 $ 6,655,279
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 1,272,007 $ 830,943
Current portion of capitalized
lease obligations 105,953 122,448
Accrued expenses 6,629,934 1,223,736
__________ ___________
TOTAL CURRENT LIABILITIES 8,007,894 2,177,127
___________ ___________
CAPITALIZED LEASE OBLIGATIONS,
less current portion 1,126,194 1,291,745
___________ __________
STOCKHOLDERS' EQUITY
Common stock, $1 par,
1,000 shares authorized,
issued and outstanding 1,000 1,000
Contributed capital 504,401 504,401
Retained earnings 1,469,599 2,681,006
___________ ___________
TOTAL STOCKHOLDERS' EQUITY 1,975,000 3,186,407
___________ ___________
$11,109,088 $ 6,655,279
=========== ===========
The accompanying notes are an integral part of these financial
statements.
<PAGE>
CHANDELEUR HOMES, INC.
STATEMENTS OF RETAINED EARNINGS
For The Years Ended December 30, 1994 and December 31, 1993
BALANCE, January 1, 1993 $ 2,117,125
Net income 3,153,052
Cash Dividends ($2,589 per share) (2,589,171)
___________
BALANCE, December 31, 1993 2,681,006
Net income 6,827,083
Cash Dividends ($4,495 per share) (4,495,586)
Dividends Declared ($3,543 per share) (3,542,904)
___________
BALANCE, December 30, 1994 $ 1,469,599
============
The accompanying notes are an integral part of these financial
statements.
<PAGE>
CHANDELEUR HOMES, INC.
STATEMENTS OF INCOME
For The Years Ended December 30, 1994 and December 31, 1993
1994 1993
SALES, net $ 62,190,575 $ 33,440,545
COST OF GOODS SOLD 51,862,822 28,167,325
_____________ ______________
GROSS PROFIT 10,327,753 5,273,220
OTHER OPERATING EXPENSES 3,636,087 2,165,787
_____________ ______________
NET OPERATING INCOME 6,691,666 3,107,433
_____________ ______________
OTHER INCOME
Interest income 135,417 44,314
Miscellaneous -- 1,305
___________ ______________
TOTAL OTHER INCOME 135,417 45,619
_____________ _____________
NET INCOME $ 6,827,083 $ 3,153,052
============= ==============
The accompanying notes are an integral part of these financial
statements.
<PAGE>
CHANDELEUR HOMES, INC.
STATEMENTS OF CASH FLOWS
For The Years Ended December 30, 1994 and December 31, 1993
1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $6,827,083 $3,153,052
Adjustments to reconcile
net Income to net cash
provided by operating
activities:
Depreciation 153,537 101,067
Changes in Assets
and Liabilities:
Accounts receivable (518,054) (343,196)
Inventories (533,482) (248,650)
Prepaid expenses 33,556 (49,760)
Deposits -- (15)
Accounts payable 441,065 228,555
Accrued expense 1,863,563 378,570
____________ _____________
NET CASH PROVIDED BY
OPERATING ACTIVITIES 8,267,268 3,219,623
____________ _____________
CASH FLOWS FROM
INVESTING ACTIVITIES
Maturity of
certificate of
deposit, restricted -- 200,000
Purchase of fixed assets (170,246) (1,591,165)
____________ _____________
NET CASH USED BY
INVESTING ACTIVITIES (170,246) (1,391,165)
_____________ ______________
CASH FLOWS FROM
FINANCING ACTIVITIES
Receipt of bond
proceeds -- 1,300,000
Repayment of
capitalized lease
obligations (182,046) (165,340)
Payment of dividends (4,495,856) (2,589,171)
_____________ _____________
NET CASH USED BY
FINANCING ACTIVITIES (4,677,902) (1,454,511)
_____________ _____________
NET INCREASE IN CASH 3,419,120 373,947
CASH AND CASH EQUIVALENTS,
Beginning of year 2,076,264 1,702,317
_____________ _____________
CASH AND CASH EQUIVALENTS,
End of year $5,495,384 $2,076,264
============ =============
SUPPLEMENTAL DISCLOSURE OF CASH
FLOWS
Interest paid $ 91,507 $ 30,719
============ =============
The accompanying notes are an integral part of these financial
statements.
<PAGE>
CHANDELEUR HOMES, INC.
NOTES TO FINANCIAL STATEMENTS
December 30, 1994 and December 31, 1993
NOTE A-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company, located in Boaz, Alabama, manufactures mobile homes
for sale to retailers.
Fiscal year
The Company utilizes a fiscal year that ends on the Friday
closest to
December 31. Consequently, the fiscal year may have either 52
weeks or 53 weeks.
Allowance for Doubtful Accounts
The Company has made arrangements with dealers for all sales to
be funded by an approved financial institution. Therefore,
collection is made from a third party on all sales. Based on
Company experience and these facts, no allowance for doubtful
accounts is recorded.
Inventory
Inventories are valued at approximately the lower of cost or
market. Completed mobile homes and mobile homes in process are
valued at standard costs by individual component plus standard
labor and allocated overhead. All standard costs are
periodically reviewed and adjusted to actual cost. Raw
materials, parts, and accessories are valued at cost.
Property, Plant, and Equipment
Property, plant and equipment are stated at cost and depreciated
using the straight-line method, according to generally accepted
accounting principles, for financial statement purposes. The
Company uses accelerated depreciation methods for income tax
purposes.
Cash and Cash Equivalents
For purpose of the statement of cash flows, the Company considers
all highly liquid investments purchased with a maturity of three
months or less at the date of acquisition to be cash equivalents.
Warranty Service
The Company offers a one-year warranty from the time of retail
sale on all homes. Warranty expense is currently accrued at
approximately 2.5% of sales.
Income Taxes
The Company has elected to be treated as a Small Business
Corporation under subchapter S of the Internal Revenue Code,
whereby profits and losses are passed directly to the
shareholders for the inclusion in their personal income tax
returns. Accordingly, no liability or provision for Federal or
State income taxes is included in the accompanying statements.
Management has not determined the amount of provision for Federal
income taxes that would have been reflected had such an election
not been in effect. This election was also made for State income
tax reporting.
NOTE B-ACCOUNTS RECEIVABLE
Accounts receivable consist of the following at December 30, 1994
and December 31, 1993:
1994 1993
Trade receivables $ 1,553,928 $ 1,011,366
Trade receivables-related
party (Note I) 44,689 70,840
Other 3,123 1,480
____________ ____________
$ 1,601,740 $ 1,083,686
============ ============
NOTE C-PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment consist of the following at
December 30, 1994 and December 31, 1993:
1994 1993
Land $ 74,949 $ 74,949
Land improvements 174,308 156,680
Buildings 1,396,582 1,339,758
Machinery and equipment 815,906 749,684
Tractors 173,346 141,225
Office furniture 247,706 280,673
Automobiles 164,481 118,174
____________ ____________
3,047,278 2,861,143
Accumulated depreciation (496,403) (326,977)
____________ _____________
$ 2,550,875 $ 2,534,166
============= =============
NOTE D-INVENTORIES
Inventories consist of the following at December 30, 1994 and
December 31, 1993:
1994 1993
Mobile homes in process $ 129,410 $ 120,100
Raw materials, parts, and
accessories 1,260,016 735,844
____________ ____________
$ 1,389,426 $ 855,944
============ ============
NOTE E-CAPITALIZED LEASE OBLIGATIONS
Capitalized lease obligations consist of the following at
December 30, 1994 and December 31, 1993:
1994 1993
Capitalized lease obligation
to the Industrial Development
Board of Boaz (South Trust
Bank) in monthly installments
of $14,433 including principal
and interest at prime
maturing October, 2003. $ 1,125,966 $1,284,092
Capitalized lease obligation
to the Industrial Development
Board of Boaz (South Trust
Bank) in monthly installments
of $2,561 including principal
and interest at prime
maturing January, 2004. 106,181 130,101
____________ _____________
1,232,147 1,414,193
Less Current Portion 105,953 122,448
____________ _____________
$ 1,126,194 $ 1,291,745
============ ============
South Trust Bank's prime lending rate at December 30, 1994 was
8.5%.
Maturities on capital leases for the next five years are as
follows:
1995 $ 105,953
1996 114,371
1997 123,461
1998 133,271
1999 143,862
Thereafter 611,229
____________
Total $ 1,232,147
============
These leases are secured by substantially all property, plant and
equipment of the Company.
NOTE F-ACCRUED WARRANTY EXPENSE
As of the balance sheet date, the Company had a total accrued
warranty expense provision of $800,000. This amount is provided
for pursuant to the asset purchase agreement (Note L) between the
Company and Champion Enterprises, Inc.
NOTE G-COMMITMENTS AND CONTINGENCIES
The Company is contingently liable for nonpayment by dealers of
coaches financed by various financial institutions. Chandeleur
Homes, Inc. must repurchase the coaches if the dealers are unable
to repay their obligation to the financial institutions. The
coaches are then owned by Chandeleur Homes and may be
refurbished, if necessary, for resale. The amount of loss on
repurchased coaches for 1994 and 1993 is $0.
NOTE H-CONCENTRATION OF CREDIT RISK
The Company maintains its cash accounts with financial
institutions located in the state of Alabama. Accounts are
guaranteed by the Federal Deposit Insurance Corporation
(F.D.I.C.) up to $100,000 at each institution. A summary of the
total insured and uninsured cash balances follows:
1994 1993
Total cash held in Alabama
financial institutions $ 5,495,384 $ 2,076,264
Portion insured by F.D.I.C. 300,000 218,862
____________ _____________
Uninsured cash balances $ 5,195,384 $ 1,857,402
============ =============
NOTE I-RELATED PARTY TRANSACTIONS
The Company made sales of $2,648,909 and $1,668,075 in 1994 and
1993 to a business owned by a major stockholder. All sales were
made at arms length. Accounts receivable associated with these
related party sales were $44,689 and $70,840 at December 30, 1994
and December 31, 1993, respectively (Note B).
NOTE J-COMMON CONTROL
The Company's stockholders collectively own 62.25% of the
outstanding stock of Crestridge Homes, Inc. (Crestridge), a
mobile home manufacturer, located in Breckenridge, Texas. There
were no material transactions between the Company and Crestridge.
NOTE K-DIVIDENDS DECLARED
Pursuant to the Asset Purchase Agreement (Note L) dated January
5, 1995, the Board has declared a dividend of $3,542,904, thereby
maintaining a minimum required preacquisition capital level of
$1,975,000.
NOTE L-SUBSEQUENT EVENT
On January 5, 1995, the stockholders of the Company and the
management of Champion Enterprises, Inc. (Champion) executed an
Asset Purchase Agreement pursuant to which Champion agreed to
acquire 100 percent of the assets and certain of the liabilities
of the Company and Crestridge Homes, Inc. (Note J). Consummation
of the agreement occurred on February 3, 1995.
<PAGE>
CREST RIDGE HOMES, INC.
AUDITED FINANCIAL STATEMENTS
December 31, 1994 and 1993
<PAGE>
CREST RIDGE HOMES, INC.
AUDITED FINANCIAL STATEMENTS
TABLE OF CONTENTS
Independent Auditor's Report 1
Balance Sheet 2
Statement of Income and Retained Earnings 3
Statement of Cash Flows 4
Notes to Financial Statements 5
<PAGE>
DAVID L. DUGGAN, CPA
Member - American Institute
of Certified Public Accountants;
Texas Society of Certified
Public Accountants
1612 W. Walker, P.O. Box 1638
Breckenridge, Texas 76424
Tel: (817) 559-8218
Fax: (817) 559-8210
To The Stockholders
Crest Ridge Homes, Inc.
Breckenridge, Texas
I have audited the accompanying balance sheets of Crest Ridge
Homes, Inc. (a S corporation) as of December 31, 1994 and 1993,
and the related statements of income, retained earnings, and cash
flows for the years then ended. These financial statements are
the responsibility of the Company's management. My
responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted
auditing standards. Those standards require that I 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. I believe that my
audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above
presently fairly, in all material respects, the financial
position of Crest Ridge Homes, Inc. as of December 31, 1994 and
1993, and the results of its operations and its cash flows for
the years then ended in conformity with generally accepted
accounting principles.
/s/David L. Duggan, CPA
January 29, 1995
<PAGE>
CREST RIDGE HOMES, INC.
BALANCE SHEETS
December 31, 1994 and 1993
ASSETS
1994 1993
CURRENT ASSETS
Cash $2,377,490 $1,524,361
Accounts receivable-trade 938,943 327,373
Stock subscriptions receivable - 82,327
Inventories 572,189 388,547
Other current assets 32,791 15,286
__________ __________
TOTAL CURRENT ASSETS 3,921,413 2,337,894
PROPERTY AND EQUIPMENT
Land & land improvements 260,708 221,886
Building improvements 144,878 124,598
Machinery and equipment 467,348 343,950
Trucks, autos, tractors &
lift trucks 87,332 60,547
Office furniture and equipment 103,761 47,862
__________ __________
1,064,027 798,843
Accumulated depreciation 111,542 48,890
__________ __________
952,485 749,953
__________ __________
TOTAL ASSETS $4,873,898 $3,087,847
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term notes payable
& current portion of
long-term debt $ 6,001 $ 5,513
Accounts payable-trade 937,212 511,665
Sales tax payable 60,727 33,250
State dues payable 14,700 10,400
Services fees payable 4,600 29,503
Accrued liabilities 2,535,371 749,248
Deferred sales revenue 5,640 59,130
__________ __________
TOTAL CURRENT LIABILITIES 3,564,251 1,398,709
LONG-TERM LIABILITIES
Long-term debt, net of current
portion 134,647 140,648
STOCKHOLDERS' EQUITY
Common stock, $1 par value,
1,000 shares authorized,
issued and outstanding 1,000 1,000
Additional paid-in capital 558,000 539,000
Capital stock subscribed - 19,000
Retained earnings 616,000 989,490
__________ __________
1,175,000 1,548,490
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $4,873,898 $3,087,847
========== ==========
The accompany notes are an integral part of this statement.
<PAGE>
CREST RIDGE HOMES, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
For The Years Ended December 31, 1994 and 1993
1994 1993
INCOME
Sales (net of allowances) $29,807,239 $17,321,006
COST OF GOODS SOLD
Material 18,894,193 10,840,399
Labor 3,310,695 1,973,847
Direct manufacturing 2,112,907 1,081,656
___________ ___________
24,317,795 13,895,902
NET OPERATING INCOME 5,489,444 3,425,104
DIRECT EXPENSE
Selling 322,380 168,740
Transportation (22,161) (9,827)
Warranty service 580,690 370,118
___________ ___________
880,909 529,031
GROSS PROFIT 4,608,535 2,896,073
OTHER EXPENSE
Fixed manufacturing 618,955 463,929
Selling & administrative 143,087 160,162
General & administrative 946,851 660,992
Other income & expense (143,329) (103,425)
___________ ___________
1,565,564 1,181,658
NET INCOME (LOSS) 3,042,971 1,714,415
Less: stockholder
distributions (3,416,461) (552,605)
RETAINED EARNINGS, BEGINNING 989,490 (172,320)
___________ ___________
RETAINED EARNINGS, ENDING $ 616,000 $ 989,490
=========== ===========
The accompanying notes are an integral part of this statement.
<PAGE>
CREST RIDGE HOMES, INC.
STATEMENTS OF CASH FLOWS
For The Years Ended December 31, 1994 and 1993
1994 1993
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income (loss) $3,042,971 $1,714,415
Adjustments to reconcile net
income to cash provided by
operating activities:
Depreciation 62,652 41,008
(Increase) decrease in
accounts receivable-trade (605,930) 4,376
(Increase) decrease in stock
subscription receivable 82,327 (63,327)
(Increase) decrease in
inventories (183,642) (104,430)
(Increase) decrease in
other current assets (17,505) (4,050)
Increase (decrease) in
accounts payable-trade 425,547 (86,534)
Increase (decrease) in
accounts payable-other 6,874 38,206
Increase (decrease) in
accrued liabilities 1,786,123 694,644
Increase (decrease) in
deferred sales revenue (59,130) 59,130
__________ __________
Net cash provided by
operating activities 4,540,287 2,293,438
CASH FLOWS PROVIDED BY
(USED FOR) INVESTING
ACTIVITIES
Purchase of land and
building improvements (59,102) (142,696)
Purchase of machinery and
equipment (123,398) (66,864)
Purchase of trucks &
automobiles - (7,000)
Purchase of tractors
and lift trucks (26,785) -
Purchase of furniture
and fixtures (55,899) (10,220)
__________ __________
Net cash used for
investing activities (265,184) (226,780)
CASH FLOWS PROVIDED BY
(USED FOR) FINANCING
ACTIVITIES
Principal payments on debt (5,513) (368,520)
Distributions to
stockholders (3,416,461) (552,605)
__________ __________
Net cash used for
financing activities (3,421,974) (921,125)
NET INCREASE IN CASH 853,129 1,145,533
CASH BALANCE
BEGINNING OF PERIOD 1,524,361 378,828
__________ __________
CASH AT END OF PERIOD $2,377,490 $1,524,361
========== ==========
Total Interest Expense $ 12,212 $ 24,406
========== ==========
The accompanying notes are an integral part of this statement.
<PAGE>
CREST RIDGE HOMES, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1994 and 1993
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Crest Ridge
Homes, Inc. (the Company) is presented to assist in understanding
the Company's financial statements. These accounting policies
conform to generally accepted accounting principles.
Business Activity
The Company was organized under the laws of the State of Texas
and maintains its headquarters in Texas. The Company
manufactures mobile homes which are sold to home dealers in the
southwest. No products are manufactured which have not been
ordered by dealers thereby eliminating finished product inventory
at the end of the accounting period.
Inventories
Inventories consist of raw materials and homes in process. Raw
material inventories are stated at the lower of cost or market
value using the first-in, first-out method. Inventories consist
of the following classifications:
12/31/94 12/31/93
Raw Materials $489,895 $309,217
Work-in-Process 82,294 79,330
________ ________
Total Inventories $572,189 $388,547
======== ========
Property and Equipment
Property and equipment are carried at cost and is depreciated
using the straight line method for financial statement reporting
purposes using the following estimated useful lives:
Years
Buildings & improvements 32
Land improvements 20
Machinery & equipment 15
Office furniture & equipment 10
Trucks & autos 5
Tractors & lift trucks 5
Appropriate cost for improvements extending the life of assets
are capitalized with repair and maintenance cost expensed. The
provisions for depreciation are:
12/31/94 12/31/93
Building & improvements $ 4,752 $ 2,218
Land improvements 4,162 1,317
Machinery & equipment 28,537 21,308
Office furniture & equipment 9,476 4,094
Trucks & autos 2,152 1,361
Tractors & lift trucks 13,573 10,710
_______ _______
Total provisions $62,652 $41,008
======= =======
Income Taxes
The stockholders have elected under the Internal Revenue Code to
be an S corporation for federal income tax purposes. As a result
of this election, the income or loss of the Company is passed
through to the stockholders and taxed at the individual level.
Therefore, there is no provision for federal income taxes in
these financial statements.
NOTE B - CONCENTRATIONS OF CREDIT RISK
Cash Balances
The Company maintains its cash balances in one financial
institution in Breckenridge, Texas. The balances are insured by
the Federal Deposit Insurance Corporation up to $100,000. The
Company's uninsured cash balances totaled $2,277,490 and
$1,383,237 as of December 31, 1994 and 1993 respectively.
Accounts Receivable
The Company has made arrangements with retailers for sales to be
funded by an approved financial institution. Therefore,
collections are made by third parties. The Company is
contingently liable for nonpayment by retailers of homes floor-
planned by these financial institutions. Crest Ridge Homes, Inc.
must repurchase the homes if the retailer is in default. The
homes would then be owned by Crest Ridge Homes, Inc. These
repurchased homes would then be refurbished, if necessary, for
resale. The Company has accrued $20,500 and $20,000 as
repurchase loss as of December 31, 1994 and 1993 respectively.
Actual losses which the Company would incur should all retailers
default on their obligations is not determinable at year end.
NOTE C - ACCRUED LIABILITIES
Accrued liabilities at December 31, 1993 consisted of the
following:
12/31/94 12/31/93
Accrued bonus $166,523 $112,136
Accrued sales commissions 22,450 12,642
Accrued volume incentive 477,768 360,565
Accrued warranty expense 300,000 135,000
Accrued repurchase 20,500 20,000
Accrued legal expense 10,000 15,000
Accrued state franchise
taxes 135,525 78,250
Accrued payroll 10,435 14,070
Accrued holiday pay 4,938 1,585
Accrued drug screen 7,225 -
Accrued employee welfare 500 -
Accrued stockholder
dividends 1,379,507 -
__________ ________
$2,535,371 $749,248
========== ========
NOTE D - LONG-TERM DEBT
Long-term note payable at December 31, 1994 consist of the
following:
Note payable to two stockholders, interest at 8.5%
with monthly principle payments beginning
April 1, 1993. Secured by Warranty
Deed with Vendor's Lien. $140,648
Less current maturities 6,001
________
Long-term portion $134,647
========
Maturities of long-term debt are as follows:
Year Ending
December 31 Amount
1995 $ 6,001
1996 6,531
1997 7,108
1998 7,736
1999 8,420
Thereafter 104,852
________
$140,648
========
NOTE E - RELATED PARTY TRANSACTIONS
The Company is indebted to some of the stockholders who have made
loans to the Company. Currently there is one note outstanding
payable to two stockholders as described in note D above.
The Company purchases home furnishings from a manufacturing
concern owned by a stockholder.
All related party transactions were consummated on terms
equivalent to those that prevail in arm's length transactions.
NOTE F - BUY/SELL AGREEMENT
The Company and stockholders have entered into an agreement
restricting the transfer of stock to any third party without
first offering the shares to the Company or other stockholders.
The agreement is not intended to prevent the stockholder from
transferring the stock to immediate family members.
NOTE G - OTHER FINANCIAL INFORMATION
Certain disclosures relating to the statement of income and
retained earnings is as follows:
12/31/94 12/31/93
Interest expense $ 12,212 $ 24,406
_________ ________
Other (income) and expense:
Scrap sales $(11,187) $ (5,634)
Interest income (54,240) (21,614)
Miscellaneous income (82,393) (101,231)
Misc. tool sales (11,040) -
Misc. expense 500 648
Interest long-term debt 12,212 10,936
Interest - other - 13,470
Uninsured losses 2,819 -
________ ________
$143,329 $103,425
======== ========
The Company stockholders have elected to be treated as an S
corporation under Internal Revenue Code. This election has been
in effect since the Company began doing business and, therefore,
retained earnings consist of accumulated adjustments and does not
contain any other components of S corporation retained earnings
as of the end of the year.
NOTE H - SUBSEQUENT EVENTS
The stockholders have tentatively agreed to sell all of the
assets of the Company to a major corporation. The scheduled
effective date of the transaction is February 3, 1995.
<PAGE>
CHAMPION ENTERPRISES, INC.,
CHANDELEUR HOMES, INC.
AND
CREST RIDGE HOMES, INC.
PRO FORMA FINANCIAL INFORMATION
Unaudited Pro Forma Combined
Balance Sheet and Notes Thereto
Set forth below are the respective historical balance sheets of
Champion Enterprises, Inc. and subsidiaries (Champion),
Chandeleur Homes, Inc. (CHI), Crest Ridge Homes, Inc. (CRHI) and
the pro forma combined position at December 31, 1994. The
presentation reflects (i) the purchase of all assets and the
assumption of certain liabilities of CHI and CRHI and (ii) the
combined purchase price of $48 million which was funded from
available cash and bank borrowings. The pro forma combined
balance sheet should be read in conjunction with the historical
financial statements of Champion and the historical financial
statements of both CHI and CRHI and the pro forma combined
statement of operations included with this amendment. The pro
forma financial statements include allocations of the purchase
price to assets and liabilities based on a preliminary review of
the respective fair values. Final allocations will be made based
upon independent appraisals, valuations and other studies which
will be conducted. The pro forma information set forth below is
not necessarily indicative of the future financial position or
the financial position that would have been reported had the
transaction been completed on December 31, 1994.
<PAGE>
<TABLE>
<CAPTION>
CHAMPION ENTERPRISES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1994
(In thousands)
ASSETS
Pro forma
adjustments Proforma
Champion CHI CRHI Debit Credit Combined
<S> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash, cash equivalents
and short-term
investments $ 23,027 $ 5,495 $2,378 $23,200(A) $42,873(E) $ 11,227
Accounts receivable,
trade 24,277 1,602 939 0 0 26,818
Inventories 39,644 1,389 572 0 0 41,605
Deferred taxes and other 10,884 72 33 560(H) 0 11,549
________ _______ ______ _______ ________ ________
Total Current Assets 97,832 8,558 3,922 23,760 42,873 91,199
________ _______ ______ _______ ________ ________
PROPERTY AND EQUIPMENT,
NET 30,059 2,551 952 0 0 33,562
GOODWILL 37,076 0 0 45,103(I) 0 82,179
OTHER ASSETS 6,263 0 0 755(B) 0 7,018
________ _______ ______ _______ _______ ________
$171,230 $11,109 $4,874 $69,618 $42,873 $213,958
======== ======= ====== ======= ======= ========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C> <C> <C> <C> <C>
CURRENT LIABILITIES:
Notes payable to bank $0 $0 $0 $ 2,950(F) $23,200(C) $ 20,250
Accounts payable 29,098 1,272 937 0 0 31,307
Other accrued
liabilities 49,981 6,736 2,627 4,923(G) 3,968(D) 58,389
_______ ______ _____ _______ _____ ______
Total current
liabilities 79,079 8,008 3,564 7,873 27,168 109,946
________ _______ _______ ______ _______ ________
OTHER LONG-TERM
LIABILITIES 12,857 1,126 135 0 10,600(J) 24,718
SHAREHOLDERS' EQUITY:
Common Stock 7,553 1 1 2(K) 0 7,553
Capital in excess
of par value 36,981 504 558 1,062(L) 0 36,981
Retained earnings 35,829 1,470 616 2,086(M) 0 35,829
Foreign currency
translation
adjustment (1,069) 0 0 0 0 (1,069)
________ _______ _______ _____ _______ ________
79,294 1,975 1,175 3,150 0 79,294
________ _______ _______ _______ _______ ________
$171,230 $11,109 $4,874 $11,023 $37,768 $213,958
======== ======= ======= ======= ======= ========
</TABLE>
<PAGE>
Notes to Unaudited Pro Forma Consolidated Balance Sheet
Note 1: Pro forma Adjustments to the Balance Sheet
The total purchase price and fair value of net assets acquired
at December 31, 1994 to record the acquisition of CHI and CRHI
are summarized as follows (in thousands):
Purchase price $46,900
Estimated acquisition and other costs 355
Additional employee costs 598
Adjustments to conform accounting policies
Additional warranty obligation $ 1,200
Additional environmental reserve 500
To record net deferred tax assets (1,300)
________
Total adjustments 400
_______
$48,253
=======
Net assets acquired:
Fair value of net assets of CHI and CRHI $3,150
Excess of purchase price over the fair
value of net assets acquired, recorded
as goodwill 45,103
_______
$48,253
=======
1. To record the borrowing of funds to finance the CHI and CRHI
acquisitions:
DR(CR)
Cash $ 23,200 (A)
Other assets (bank fees) 15 (B)
Notes payable to bank (23,200)(C)
Other accrued liabilities (15)(D)
_______
$0
=======
2. To record the retirement of CHI and CRHI accrued liabilities
and reduce debt by cash received:
Cash ($7,873)(E)
Notes payable to bank 2,950 (F)
Other accrued liabilities 4,923 (G)
_______
$0
=======
3. To record acquisition of CHI and CRHI and eliminate CHI's and
CRHI's shareholders' equity:
Cash (purchase of CHI and CRHI assets) ($35,000) (E)
Deferred taxes and other (record
short-term deferred tax asset) 560 (H)
Goodwill (excess of purchase price over fair
value of CHI and CRHI net assets acquired) 45,103 (I)
Other assets (record long-term deferred
tax asset) 740 (B)
Other accrued liabilities
Deferred purchase price ($3,000)
Acquisition costs (355)
Employee costs (598)
_______
(3,953) (D)
Other long-term liabilities
Deferred purchase price (8,900)
Warranty obligations (1,200)
Environmental reserve (500)
_______
(10,600) (J)
Common stock 2 (K)
Paid in capital 1,062 (L)
Retained earnings 2,086 (M)
_______
$0
=======
<PAGE>
CHAMPION ENTERPRISES, INC.,
CHANDELEUR HOMES, INC.
AND
CREST RIDGE HOMES, INC.
PRO FORMA FINANCIAL INFORMATION
Unaudited Pro forma Combined
Statement of Operations and Notes Thereto
Set forth below are the respective historical results of
operations of Champion Enterprises, Inc. and subsidiaries
(Champion), Chandeleur Homes, Inc. (CHI), Crest Ridge Homes, Inc.
(CRHI) and the pro forma combined results of operations for the
twelve months ended December 31, 1994, as if the transaction had
been completed as of January 2, 1994. The presentation reflects
the purchase of all assets and the assumption of certain
liabilities of CHI and CRHI. The pro forma combined statement of
operations should be read in conjunction with the historical
financial statements of Champion and the historical financial
statements of both CHI and CRHI and the pro forma combined
balance sheet included with this amendment. The pro forma
combined statement of operations is not necessarily indicative of
future earnings or earnings that would have been reported for the
period indicated had the transaction been completed at January 2,
1994.
<PAGE>
<TABLE>
<CAPTION>
CHAMPION ENTERPRISES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
(In thousands, except per share amounts)
Pro Forma Pro Forma
Champion CHI CRHI Adjustments Combined
<S> <C> <C> <C> <C> <C>
Net sales $615,668 $65,957 $31,471 $0 $713,096
________ _______ _______ ________ ________
Cost of products sold 531,696 55,629 27,058 0 614,383
Selling, general and
administrative expense 47,271 3,544 1,412 1,129(A) 53,356
______ _____ _____ _____ ______
578,967 59,173 28,470 1,129 667,739
_______ ______ ______ _____ _______
Operating income 36,701 6,784 3,001 (1,129) 45,357
Other income (expense):
Interest income 966 135 54 (558)(B) 597
Interest expense (816) (92) (12) (2,618)(C) (3,538)
Environmental reserve (2,700) 0 0 0 (2,700)
Other income (expense),
net (61) 0 0 0 (61)
_______ _____ _____ ______ _______
Income from continuing
operations before income
taxes 34,090 6,827 3,043 (4,305) 39,655
Income taxes 8,900 0 0 2,100(D) 11,000
______ ______ _____ ______ ______
Income from continuing
operations $ 25,190 $ 6,827 $ 3,043 $(6,405) $ 28,655
====== ====== ====== ======= ======
Income from continuing
operations per share $3.26 $0.43 $3.69
===== ===== =====
Weighted average shares
outstanding 7,733 24 7,757
===== ===== ======
</TABLE>
<PAGE>
Notes to Unaudited Pro Forma Consolidated Statement of Operations
Note 1: Pro forma Adjustments to Statement of Operations
(In thousands) DR(CR)
1. Amortization of goodwill over 40 years $1,129(A)
2. To adjust interest income to record the
use of cash to purchase CHI and CRHI 558(B)
3. To adjust interest expense for borrowings
to fund CHI and CRHI acquisitions 2,618(C)
______
Total adjustments to income from continuing
operations before income taxes 4,305
4. To accrue income taxes on CHI and CRHI income
and record tax benefit of pro forma
adjustments 2,100(D)
_____
Total adjustments to Statement of Operations $6,405
======
Note 2: Income Taxes
The pro forma provision for income taxes has been calculated on a
consolidated basis as if the transaction had been completed on
January 2, 1994. The difference between taxes provided for
financial reporting purposes and expected charges at the
statutory rate is principally due to net operating loss
carryforwards partially offset by tax charges at profitable
foreign operations.
On a fully-taxed basis the pro forma tax provision would have
been $15.9 million and income from continuing operations would
have been $23.8 million ($3.06 per share).
Note 3: Earnings Per Share
Pro forma earnings per share is based on the average number of
shares outstanding during the period including options issued to
CHI and CRHI executives under stock option agreements entered
into upon the acquisitions.
Note 4: Reclassifications
CHI's and CRHI's delivery reimbursement revenue and delivery
expenses have been reclassified to sales and cost of goods sold,
respectively, from selling, general, and administrative expenses
to conform with Champion's classification of these items. Other
expenses have also been reclassified for conformity purposes.
