<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
{ X } QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
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 1-08916
--------------
GREEN TREE FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 41-1807858
- --------------------------------- --------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1100 LANDMARK TOWERS, SAINT PAUL, MINNESOTA 55102-1639
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (612) 293-3400
--------------
- --------------------------------------------------------------------------------
(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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----------- -----------
AS OF JULY 31, 1996, 137,241,206 SHARES OF COMMON STOCK OF GREEN TREE FINANCIAL
WERE OUTSTANDING.
<PAGE>
GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED JUNE 30, 1996
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE
<S> <C> <C>
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of
Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
EXHIBIT INDEX 17
</TABLE>
CAUTIONARY STATEMENT UNDER THE
SAFE HARBOR PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This Form 10-Q for the quarter ended June 30, 1996 may contain certain "forward-
looking statements" within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Such forward-looking statements may be identified by the use of
terminology such as "may," "will," "expect," "anticipate," "estimate," "goal,"
"continue," or comparable terminology and may involve risks or uncertainties
which are qualified in their entirety by the Cautionary Statements contained in
the Company's Form 8-K filed with the Securities and Exchange Commission on July
12, 1996. These Cautionary Statements are incorporated herein by reference and
investors are specifically referred to the Cautionary Statements for a
discussion of factors which could affect the Company's operations and the
forward looking statements contained herein.
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30,1996 December 31,1995
--------------- -----------------
(unaudited)
<S> <C> <C>
Assets:
Cash and cash equivalents $ 588,913,000 $ 295,767,000
Cash deposits, restricted 162,684,000 151,811,000
Other investments 4,937,000 19,880,000
Receivables:
Excess servicing rights 1,134,793,000 764,617,000
Commercial finance (net of
allowance of $1,465,000
and $1,071,000) 236,815,000 141,793,000
Other accounts receivable 74,914,000 52,546,000
Contracts, GNMA certificates
and collateral 626,530,000 884,303,000
Property, furniture and
fixtures 63,866,000 57,104,000
Other assets 9,356,000 8,225,000
-------------- --------------
Total assets $2,902,808,000 $2,376,046,000
============== ==============
Liabilities and Stockholders' Equity:
Notes payable $ 24,467,000 $ 86,162,000
Senior notes 26,650,000 26,650,000
Senior subordinated notes
due 2002 263,461,000 263,234,000
Allowance for losses on
contracts sold with
recourse 309,811,000 163,337,000
Accounts payable and
accrued liabilities 423,261,000 266,131,000
Investor payable 302,466,000 238,448,000
Income taxes, principally
deferred 461,493,000 407,062,000
-------------- --------------
Total liabilities 1,811,609,000 1,451,024,000
Common stock, $.01 par;
authorized 400,000,000
shares,issued 139,292,206
(1996) and 137,534,266
shares (1995) 1,393,000 1,375,000
Additional paid-in capital 365,059,000 323,564,000
Retained earnings 778,660,000 653,996,000
-------------- --------------
1,145,112,000 978,935,000
Less treasury stock,
2,051,000 shares at cost (53,913,000) (53,913,000)
-------------- --------------
Total stockholders'
equity 1,091,199,000 925,022,000
-------------- --------------
$2,902,808,000 $2,376,046,000
============== ==============
</TABLE>
See notes to unaudited financial statements.
3
<PAGE>
GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30
---------------------------
1996 1995
----------- -------------
<S> <C> <C>
Income:
Net gains on contract sales $206,097,000 $131,143,000
Provision for losses on
contract sales (90,473,000) (43,500,000)
Interest 52,977,000 44,808,000
Service 17,235,000 12,318,000
Commissions and other 10,266,000 8,505,000
------------ ------------
196,102,000 153,274,000
Expenses:
Interest 17,167,000 14,857,000
Cost of servicing 12,175,000 9,360,000
General and administrative 45,112,000 29,522,000
------------ ------------
74,454,000 53,739,000
------------ ------------
Earnings before income taxes 121,648,000 99,535,000
Income taxes 46,226,000 37,823,000
------------ ------------
Net earnings $ 75,422,000 $ 61,712,000
============ ============
Earnings per common and common
equivalent share $.54 $.44
==== ====
Weighted average common and
common equivalent shares
outstanding 140,242,029 140,044,360
</TABLE>
See notes to unaudited financial statements.
4
<PAGE>
GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30
-------------------------
1996 1995
----------- ------------
<S> <C> <C>
Income:
Net gains on contract sales $ 361,581,000 $238,821,000
Provision for losses on
contract sales (148,470,000) (75,929,000)
Interest 98,159,000 77,497,000
Service 33,560,000 24,113,000
Commissions and other 19,390,000 16,971,000
------------- ------------
364,220,000 281,473,000
Expenses:
Interest 28,531,000 25,295,000
Cost of servicing 24,337,000 18,067,000
General and administrative 82,668,000 56,755,000
------------- ------------
135,536,000 100,117,000
------------- ------------
Earnings before income taxes 228,684,000 181,356,000
Income taxes 86,900,000 68,915,000
------------- ------------
Net earnings $ 141,784,000 $112,441,000
============= ============
Earnings per common and common
equivalent share $1.01 $.80
===== ====
Weighted average common and
common equivalent shares
outstanding 139,913,427 139,787,418
</TABLE>
See notes to unaudited financial statements.
5
<PAGE>
GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30
-------------------------------------
1996 1995
----------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Servicing fees and net interest
payments collected $ 118,131,000 $ 86,892,000
Net principal payments collected 59,367,000 25,464,000
Interest on contracts and
GNMA certificates 27,503,000 26,297,000
Interest on cash, commercial finance
loans and investments 31,697,000 23,357,000
Commissions 16,557,000 11,376,000
Other 843,000 2,016,000
--------------- ---------------
254,098,000 175,402,000
Cash paid to employees and suppliers (130,744,000) (79,016,000)
Interest paid on debt (27,449,000) (24,474,000)
Income taxes paid (25,080,000) (18,744,000)
Repossession losses net of recoveries (11,723,000) (2,517,000)
FHA insurance premiums (984,000) (936,000)
--------------- ---------------
(195,980,000) (125,687,000)
--------------- ---------------
NET CASH PROVIDED BY OPERATIONS 58,118,000 49,715,000
Purchase of contracts held for sale (3,171,967,000) (2,234,787,000)
Proceeds from sale of contracts
held for sale 3,468,454,000 1,759,311,000
Principal collections on contracts
held for sale 68,971,000 43,944,000
Proceeds from sale of commercial
finance loans 199,950,000 --
Commercial finance loans disbursed (1,219,647,000) (715,394,000)
Principal collections on commercial
finance loans 976,283,000 470,680,000
Cash deposits provided (13,090,000) (5,450,000)
Cash deposits returned 2,217,000 3,340,000
--------------- ---------------
NET CASH PROVIDED BY (USED FOR)
OPERATING ACTIVITIES 369,289,000 (628,641,000)
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, furniture
and fixtures (15,230,000) (7,532,000)
Net sales (purchases) of investment
securities 14,943,000 (144,000)
--------------- ---------------
NET CASH USED FOR INVESTING ACTIVITIES (287,000) (7,676,000)
--------------- ---------------
</TABLE>
(continued)
6
<PAGE>
GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(continued)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30
---------------------------------
1996 1995
-------------- ---------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facilities $ 2,574,576,000 $ 1,876,440,000
Repayments on credit facilities (2,636,271,000) (1,400,919,000)
Payment of debt -- (20,246,000)
Net common stock issued 2,959,000 45,000
Dividends paid (17,120,000) (12,812,000)
--------------- ---------------
NET CASH (USED FOR) PROVIDED BY
FINANCING ACTIVITIES (75,856,000) 442,508,000
--------------- ---------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 293,146,000 (193,809,000)
CASH AND CASH EQUIVALENTS BEGINNING
OF PERIOD 295,767,000 455,956,000
--------------- ---------------
CASH AND CASH EQUIVALENTS END OF PERIOD $ 588,913,000 $ 262,147,000
=============== ===============
RECONCILIATION OF NET EARNINGS
TO NET CASH PROVIDED BY (USED FOR)
OPERATING ACTIVITIES:
Net earnings $ 141,784,000 $ 112,441,000
Provision for income taxes 86,900,000 68,915,000
Depreciation and amortization 9,932,000 6,251,000
Net contract payments collected, less
excess servicing rights recorded (133,535,000) (122,653,000)
Amortization of deferred service income (11,023,000) (7,797,000)
Net amortization of present value
discount (35,214,000) (25,418,000)
Net increase in cash deposits (10,873,000) (2,110,000)
Purchase of contracts held for sale,
net of sales and principal
collections 365,458,000 (431,533,000)
Revolving finance loans disbursed,
net of sales and principal
collections (43,414,000) (244,714,000)
Net discount on sale of contract loans 23,710,000 15,475,000
Increase in interest payable (193,000) (148,000)
Other (24,243,000) 2,650,000
--------------- ---------------
NET CASH PROVIDED BY (USED FOR)
OPERATING ACTIVITIES $ 369,289,000 $ (628,641,000)
=============== ===============
</TABLE>
See notes to unaudited financial statements.
7
<PAGE>
GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED FINANCIAL STATEMENTS
A. Basis of Presentation
The interim financial statements have been prepared by Green Tree Financial
Corporation (the "Company"), without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission applicable to quarterly
reports on Form 10-Q. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations, although management believes that the disclosures are
adequate to make the information presented not misleading. It is suggested
that these financial statements be read in conjunction with the consolidated
financial statements and related notes and schedules included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1995.
Certain reclassifications have been made to the December 31, 1995 financial
statements to conform to the classifications used in the March 31, 1996
financial statements. These reclassifications had no effect on net earnings
or stockholders' equity as previously reported.
In the opinion of management, the information furnished reflects all
adjustments which are of a normal recurring nature and are necessary for a
fair presentation of the Company's financial position as of June 30, 1996, the
results of its operations for the three and six-month periods ended June 30,
1996 and 1995, and its cash flows for the six-month periods ended June 30,
1996 and 1995.
B. Excess Servicing Rights Receivable
Excess servicing rights receivable consists of:
<TABLE>
<CAPTION>
June 30,1996 December 31,1995
-------------------------- ----------------
(in thousands of dollars) (unaudited)
<S> <C> <C>
Gross cash flows receivable
on contracts sold $ 2,539,873 $1,407,419
Less:
Prepayment reserve (1,239,794) (674,775)
FHA insurance and other
fees (9,562) (11,100)
Deferred service income (181,122) (92,452)
Discount to present value (311,138) (183,132)
Subordinated interest in
NIM Certificates 336,536 318,657
----------- ----------
$ 1,134,793 $ 764,617
=========== ==========
</TABLE>
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Green Tree Financial Corporation is a diversified financial services company
that originates conditional sales contracts for manufactured homes, home
improvements, consumer products and equipment financing, and provides
commercial financing to manufacturers and dealers. The Company also offers
revolving credit and originates home equity and mortgage loans. The Company's
insurance agencies market physical damage and term mortgage life insurance
relating to the customers' contracts it services.
Results of Operations:
The following tables show the percentage change in income, expenses and
earnings for the three and six-month periods ended June 30, 1996 as compared
to the same periods of 1995.
<TABLE>
<CAPTION>
Three-month Six-month
period-to-period period-to-period
increase June 30, increase June 30,
1995 to 1996 1995 to 1996
------------------ ------------------
<S> <C> <C>
Income:
Net gains on contract
sales 57.2% 51.4%
Provision for losses on
contract sales 108.0 95.5
Interest 18.2 26.7
Service 39.9 39.2
Commissions and other 20.7 14.3
Expenses:
Interest 15.5 12.8
Cost of servicing 30.1 34.7
General and administrative 52.8 45.7
Earnings before income taxes 22.2 26.1
Net earnings 22.2 26.1
</TABLE>
Net gains on contract sales increased 57.2% and 51.4% for the three and six-
month periods ended June 30, 1996, respectively, over the same periods in 1995
as a result of increased dollar volume of contracts sold and longer average
terms on the manufactured home and home improvement contracts sold. This
increase in net gains on contract sales was partially offset by decreased
interest rate spreads on the manufactured housing contracts sold and a change
in mix of contracts sold in the first six months of 1996 compared to the same
period in 1995. For the six month period ended June 30, 1996, total contract
sales increased $1,716,395,000, or 96.7%.
The increases in the provision for losses on contract sales of 108.0% and
95.5% for the three and six-month periods ended June 30, 1996, respectively,
reflects the growth in total contract sales and the Company's increased
provision for losses on contract sales as a percentage of contracts sold.
This increased percentage is a
9
<PAGE>
result of increasing average contract terms and the changing mix of originations
to loans which have a lower down payment. The increase in provision for losses
on contract sales was partially offset by the change in mix of contracts sold.
The following table sets forth the Company's contract originations and sales
for the three and six-month periods ended June 30, 1996 and 1995. Dollar
amounts are in thousands.
<TABLE>
<CAPTION>
Three-month Six-month
period ended period ended
June 30, June 30,
-------------------------- ----------------------
1996 1995 1996 1995
------------ ------------ ---------- ----------
<S> <C> <C> <C> <C>
Originations:
Manufactured Housing $1,345,104 $1,114,401 $2,243,139 $1,831,534
Home Improvement/
Home Equity 354,941 184,295 517,944 300,587
Consumer Products
and Other 336,360 129,248 543,168 190,330
---------- ---------- ---------- ----------
Total $2,036,405 $1,427,944 $3,304,251 $2,322,451
========== ========== ========== ==========
Sales:
Manufactured Housing $1,364,148 $ 826,626 $2,228,183 $1,534,997
Home Improvement/
Home Equity 292,429 140,180 411,286 240,255
Consumer Products
and Other 421,031 -- 852,178 --
---------- ---------- ---------- ----------
2,077,608 966,806 3,491,647 1,775,252
Floorplan Receivables
Master Trust 199,950 -- 199,950 --
---------- ---------- ---------- ----------
Total $2,277,558 $ 966,806 $3,691,597 $1,775,252
========== ========== ========== ==========
</TABLE>
The manufactured housing market experienced an increase in new home shipments
during the first six months of 1996 compared to 1995. The Company continues to
benefit from this increase and believes that it is maintaining its market share
of contracts for financing new manufactured homes. The Company's dollar volume
of new manufactured housing contract originations rose 20% and 21% during the
three and six-month periods ended June 30, 1996, respectively, over the same
periods in 1995. The dollar volume of previously owned manufactured housing
contracts rose 44% and 36% for the three and six months, respectively. The
number of new contracts originated by the Company during the first six months of
1996 has grown from 1995 and the average contract size has also increased due to
a shift in the Company's manufactured home financing to more land-and-home
contracts and price increases by the manufactured housing manufacturers.
The dollar volume of home improvement contracts rose 12% for the quarter and 11%
for the six-month period ended June 30, 1996. In addition to home improvement
contracts, the home equity division, which commenced business in February 1996,
reported loan originations of $149 million for the quarter and $185 million for
the six-month period ended June 30, 1996. Consumer products and
10
<PAGE>
other contract originations rose 160% for the quarter and 185% for the six-month
period ended June 30, 1996. The level of growth in these divisions results from
expanding the number of relationships with dealers, contractors and remodelers
throughout the United States as well as the rapid growth in the company's home
equity originations.
Interest income is realized from contract inventory, commercial finance
receivables, cash deposits, and short-term investments, as well as amortization
of the present value discount relating to excess servicing rights receivable.
Interest income increased 18.2% and 26.7% during the three and six-month period
ended June 30, 1996 compared to the same periods in 1995 primarily from
increased earnings on the Company's commercial finance receivables, the increase
in the amortization of the present value discount on the Company's growing
excess servicing rights receivable and interest accrued on the subordinated Net
Interest Margin Certificates. Due to higher production levels, contract
inventory for the six-month period ended June 30, 1996 was higher on average
than the same period in 1995 which also contributed to the increase in interest
income.
The increase in service income of 39.9% and 39.2% during the three and six-month
periods ended June 30, 1996, respectively, resulted from the 39% growth in the
Company's average originated servicing portfolio but was partially offset by the
decline in servicing income on contracts originated by others. The average
unpaid principal balance of contracts being serviced for others decreased 19.3%
during the first six months of 1996 compared to the first six months of 1995.
The Company expects this decline in outside servicing to continue in the future
while overall servicing income should increase as its portfolio grows.
Commissions and other income, which includes commissions earned on new insurance
policies written and renewals on existing policies, as well as other income from
late fees, grew 20.7% and 14.3%, respectively, during the three and six-month
periods ended June 30, 1996, respectively, compared to the same periods in 1995.
This growth is primarily a result of the increase in net written insurance
premiums as the Company's contract originations and servicing portfolio continue
to grow.
Interest expense increased 15.5% and 12.8% during the three and six-month
periods ended June 30, 1996, respectively, as a result of the Company
maintaining a higher level of borrowings to fund its loan originations and
revolving finance portfolio compared to the same period in 1995. This increase
was partially offset by lower average interest rates on the Company's borrowings
in the three and six-month periods ended June 30, 1996 compared to the same
periods in 1995.
Green Tree's dollar amount of cost of servicing increased 30.1% and 34.7% during
the quarter and six-month period ended June 30, 1996 compared to the same
periods in 1995 as the Company's total average servicing portfolio grew 37.1%.
The Company's cost of servicing as
11
<PAGE>
a percentage of contracts serviced decreased slightly during the first six
months of 1996, compared to the same period in 1995.
General and administrative expenses rose 52.8% and 45.7% during the three and
six-month periods ended June 30, 1996, respectively. As a percentage of contract
originations, however, these expenses have remained relatively consistent with
the comparative periods in 1995. The dollar growth is due primarily to an
increase in personnel and other origination costs related to the start-up and
growth of the Company's new divisions as well as the increased volume of
contracts the Company originated during the first six months of 1996.
Capital Resources and Liquidity:
The Company's business requires continued access to the capital markets for the
purchase, warehousing and sale of contracts. To satisfy these needs, the Company
employs a variety of capital resources.
Historically, the most important liquidity source for the Company has been its
ability to sell contracts in the secondary markets through loan securitization
and sales of GNMA certificates. During the second quarter of 1996, the Company
used a senior/subordinated structure for each of its three conventional
manufactured home loan sales and enhanced a portion of the subordinated
certificates sold with a corporate guarantee. In addition, the Company's second
quarter home improvement and home equity loan sale included two separate but
cross-collateralized loan pools, both of which employed a senior/subordinate
structure with a limited guarantee on a portion of the subordinate certificates.
The Company's second quarter sale of consumer product and equipment finance
loans employed a multi-class credit tranched owner trust structure with floating
rate senior certificates and a limited corporate guarantee on the most junior
fixed rate certificates. Also sold in the second quarter of 1996 was
approximately $200 million of floorplan receivables through issuance of a
Variable Funding Certificate series under a Floorplan Receivables Master Trust
which has approximately $400 million funding capacity.
Servicing fees and net interest payments collected, which has been the Company's
principal source of cash, increased during the six-month period ended June 30,
1996 over the same period in 1995. Contributing to this growth is an increase in
normal servicing fees collected by the Company on its growing servicing
portfolio, and an increase in excess servicing collected from the additional
securitization in which the Company has not sold a portion of the related excess
servicing rights.
Net principal payments collected were positive in each of the six-month periods
ended June 30, 1996 and 1995 as a result of an increase in the contract
principal payments collected by the Company as of the end of each period but not
yet remitted to the investors/owners of the contracts. These increases are a
result of customer payoffs and the growth of the Company's servicing portfolio
of contracts which have been sold.
12
<PAGE>
Interest on cash, commercial finance receivables and investments increased
significantly during the first six months of 1996 compared to the same period in
1995 primarily as a result of the significant increase in commercial finance
receivables serviced. The Company's commercial finance division provides
inventory and asset-based financing for manufacturers and dealers in a variety
of industries, primarily manufactured housing and other products for which the
Company provides retail financing. The Company's commercial finance receivables
earned a net spread on approximately $628 million of sold receivables which it
continues to service, as well as interest income on average net receivables of
$282 million in its portfolio during the first six months of 1996. During the
same period in 1995 the Company earned interest on average net receivables
outstanding of $312 million and had not yet securitized any of its commercial
finance receivables.
Cash paid to employees and suppliers increased $51,729,000 for the six-month
period ended June 30, 1996 compared to the same period in 1995. This growth
relates primarily to the increase in the Company's portion of taxes paid in 1996
on the annual bonus of the chief executive officer pursuant to the terms of an
employment agreement, as well as the 42.9% growth in the Company's total general
and administrative expenses and servicing costs.
Dividends paid by the Company increased 33.6% in the first six months of 1996
compared to the same period in 1995 as the Company's quarterly average dividend
rate increased 33.3% over the 1995 quarterly average dividend rate for the first
six months.
The Company closed a new $500 million unsecured bank credit agreement on April
16, 1996, replacing its existing $15,000,000 unsecured facility. This new credit
facility is a three-year committed revolving line of credit which expires April
15, 1999. In addition, the Company currently has $1.3 billion in master
repurchase agreements with various investment banking firms for the purpose of
financing its contract and commercial finance loan production. At June 30, 1996,
the Company had no borrowings outstanding under these repurchase agreements and
had $22,500,000 outstanding under its bank credit agreement. The master
repurchase agreements generally provide for annual terms that are extended each
quarter by mutual agreement of the parties for an additional annual term based
upon receipt of updated quarterly financial information from the Company. The
Company believes that these agreements will continue to be renewed.
The Company also has a commercial paper program through which it is authorized
to issue up to $1 billion in notes of varying terms (not to exceed 270 days) to
meet its liquidity needs. This program is backed by the bank and master
repurchase agreements referred to above. As of June 30, 1996, the Company had no
outstandings under this program. Commercial paper is expected to be an ongoing
source of liquidity for purposes of meeting the Company's funding needs between
sales of its contract and commercial loan production.
13
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The nature of the Company's business is such that it is routinely a
party or subject to items of pending or threatened litigation.
Although the ultimate outcome of certain of these matters cannot be
predicted, management believes, based upon information currently
available and the advice of counsel, that the resolution of these
routine legal matters will not result in any material adverse effect
on its consolidated financial condition.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Green Tree's Annual Meeting of Shareholders was held May 15, 1996.
At the meeting the shareholders elected one director of the Company,
approved the Chief Executive Cash Bonus and Stock Option Plan for
the Company's Chief Executive Officer, approved an increase of the
Company's number of authorized shares of common stock to 400 million
shares and ratified the selection of KPMG Peat Marwick LLP as the
independent auditors of the Company for the fiscal year ending
December 31, 1996.
ITEM 5. OTHER INFORMATION
None.
ITEM 6.(a) EXHIBITS
10.(o) Employment Agreement, dated February 9, 1996 between the
Company and Lawrence M. Coss and related Noncompetition
Agreement, dated February 9, 1996.
10.(p) Green Tree Financial Corporation Chief Executive Cash Bonus
and Stock Option Plan and related Stock Option Agreement,
dated February 9, 1996.
11.(a) Computation of Primary Earnings Per Share.
11.(b) Computation of Fully Diluted Earnings Per Share.
14
<PAGE>
12. Computation of Ratio of Earnings to Fixed Charges.
27. Financial Data Schedule.
(b) REPORTS ON FORM 8-K
The Company filed a Cautionary Statement under the Safe Harbor
Provisions of the Private Securities Litigation Reform Act of 1995
on Form 8-K on July 12, 1996.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GREEN TREE FINANCIAL CORPORATION
DATE: August 12, 1996 /s/ Edward L. Finn
------------------------------
Edward L. Finn
Executive Vice President and
Chief Financial Officer
DATE: August 12, 1996 /s/ Joel H. Gottesman
------------------------------
Joel H. Gottesman
Senior Vice President and
General Counsel
16
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Page
- ------- ------- ----
<S> <C> <C>
10.(o) Employment Agreement, dated February 9,
1996 between the Company and Lawrence M.
Coss and related Noncompetition Agreement,
dated February 9, 1996. 18
10.(p) Green Tree Financial Corporation Chief
Executive Cash Bonus and Stock Option Plan
and related Stock Option Agreement, dated
February 9, 1996. 28
11.(a) Computation of Primary Earnings Per Share 40
11.(b) Computation of Fully Diluted Earnings Per
Share 41
12. Computation of Ratio of Earnings to
Fixed Charges 42
27. Financial Data Schedule 43
</TABLE>
17
<PAGE>
Exhibit 10.(o)
--------------
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of February 9, 1996 (the
"Agreement"), by and between Green Tree Financial Corporation, a Delaware
corporation (the "Company"), and Lawrence M. Coss, a resident of Minnesota
(the "Executive"),
WITNESSETH:
WHEREAS, the Company is engaged in the business of originating
conditional sales contracts or loans for manufactured homes, home
improvements, consumer products and commercial equipment, providing commercial
financing to manufacturers and dealers, and marketing related insurance
products, with principal executive offices located in Saint Paul, Minnesota;
and
WHEREAS, the Executive has substantial employment experience as an
executive in corporate management relating to the businesses described above;
and
WHEREAS, the Company and the Executive have previously entered into an
Employment Agreement dated May 22, 1985 (the "1985 Employment Agreement"),
which was modified and extended to December 31, 1991 by an Employment
Agreement dated December 14, 1987 (the "1987 Employment Agreement") and again
modified and extended to December 31, 1996 by an Employment Agreement dated
April 20, 1991 (the "1991 Employment Agreement"); and
WHEREAS, the Compensation Committee (the "Committee") of the Board of
Directors of the Company retained Johnson Associates, Inc. (the "Consultant"),
an executive compensation consultant, to make recommendations to the Committee
as to the terms of a new employment agreement between Company and Executive
after the end of the term of the 1991 Employment Agreement; and
WHEREAS, the Consultant prepared materials for the Committee which were
distributed to the Committee in advance of its meeting held on February 9,
1996, which materials included possible alternative contract terms and
comparative information; and
WHEREAS, the Committee and Consultant met on February 9, 1996 to review
and discuss possible terms for the new employment agreement, and the
Executive, Committee and Consultant met on February 9, 1996 and reached
agreement as to the terms of a new employment agreement (the "1997 Employment
Agreement"); and
WHEREAS, the Company desires to continue to employ the Executive, and the
Executive desires to continue to be employed by the Company as its Chairman
and Chief Executive Officer, for the period from and after January 1, 1997 to
and including December 31, 2001, upon the terms and conditions set forth in
the 1997 Employment Agreement, which agreement memorializes the terms agreed
to by Executive and the Committee.
18
<PAGE>
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter contained, the parties hereto agree as follows:
ARTICLE I
Employment
----------
The Company hereby employs the Executive to serve as its Chairman and
Chief Executive Officer, and the Executive hereby accepts such employment, on
the terms and conditions hereinafter contained.
ARTICLE II
Term of Employment
------------------
The term of employment of the Executive shall continue under the 1991
Employment Agreement to and including December 31, 1996 and shall commence
hereunder from and after January 1, 1997 and, except as hereinafter provided
in Article VI, shall continue until December 31, 2001.
ARTICLE III
Duties
------
The Executive shall, during the term of his employment hereunder, subject
to the supervision and control of the Board of Directors, perform such duties,
have such power and exercise such supervision with regard to the business of
the Company as are commonly associated with the offices of Chairman and Chief
Executive Officer. In addition, the Executive shall perform such other duties
of an executive nature as the Board of Directors may from time to time
reasonably prescribe which are consistent with the duties set forth herein,
including without limitation serving as a director and/or officer of one or
more subsidiaries of the Company if so elected. The Executive agrees to
cooperate with the Board of Directors of the Company for the purpose of
designating, by the end of his term of employment hereunder, individual
officers of the Company who may succeed to each corporate position of the
Executive at the time of his retirement from such position (whether or not
such retirement occurs at or at any time after the expiration of this
Agreement).
The Executive agrees to devote substantially all of his business time and
energy to the performance of his duties under this Agreement in a diligent and
proper manner. The Executive shall not, directly or indirectly, alone or as a
member of a partnership or as an officer, director or employee of any other
corporation, partnership or other business organization, be actively engaged
in or concerned with any other duties or pursuits which materially interfere
with the performance of his duties under this Agreement.
ARTICLE IV
Compensation and Benefits
-------------------------
A. As compensation for his services hereunder, the Executive shall be
paid an annual base salary of $600,000 during the term of his employment
hereunder. The annual base salary shall be payable
19
<PAGE>
to the Executive for the full term of this Agreement, regardless of prior
termination of employment, except as otherwise hereinafter provided in Article
VI.
B. The Executive shall be entitled to an annual bonus under and pursuant
to the terms of the Green Tree Financial Corporation Chief Executive Cash
Bonus and Stock Option Plan, attached hereto as Exhibit A (the "1997 Chief
Executive Plan"), subject to the approval of the 1997 Chief Executive Plan by
the stockholders at the 1996 Annual Meeting.
C. The Executive shall be entitled to participate in such pension or
profit sharing plans as are from time to time implemented by the Company.
D. The Executive shall also be entitled to such other employee benefits
as provided to other executives of the Company. In the case of each such
benefit subject to ERISA, copies of the Summary Plan Description therefor have
been delivered to the Executive. In addition, should the Executive become
eligible for other employee benefits now or hereafter provided by the Company,
he will be entitled to such benefits on the same basis as other executive
employees of the Company, without restriction or limitation by reason of this
Agreement.
E. The Executive shall be entitled to such paid vacation each year as is
customarily provided for senior executives of the Company.
F. The Committee agreed on February 9, 1996 to grant to the Executive
options to purchase two million shares of Common Stock of the Company at an
exercise price equal to the fair market value of the Common Stock on February
9, 1996 (the "Stock Options"). The Stock Options are granted under the 1997
Chief Executive Plan, subject to stockholder approval of said Plan and subject
to the terms and conditions set forth in the stock option agreement attached
hereto as Exhibit B (the "Stock Option Agreement").
Nothing contained in this Agreement shall prevent the Board, by
resolution duly adopted, from time to time permanently or temporarily
increasing the compensation herein established for the Executive; provided,
however, that the Board shall have no obligation to increase the compensation
of the Executive.
ARTICLE V
Acquisition, Merger or Consolidation
------------------------------------
If during the term of the employment of the Executive under this
Agreement (or within six months after any termination of this Agreement by the
Company), all or substantially all of the assets of the Company are sold to,
or 51% or more of the issued and outstanding voting stock of the Company is
acquired by any person or group of persons acting in concert, or if the
Company is merged with or into another corporation or is consolidated with
another corporation in one or more transactions in which the stockholders of
the Company exchange their shares of capital stock in the Company for stock of
a third party, cash or other property (each of the foregoing events being
hereinafter called a "Critical Event"),
20
<PAGE>
then the Executive shall have the option to terminate his employment with the
Company pursuant to Article VI(c) of this Agreement.
(a) If the Executive terminates his employment with the Company
during the term of this Agreement and within two years after
the occurrence of a Critical Event, then: (i) the salary and
bonus for the year in which the termination occurs shall be
prorated based on the number of months (including the month in
which the termination is effective) elapsed in the year in
which the termination occurs; (ii) in lieu of future salary
and cash bonuses under this Agreement, the Company shall pay
the Executive in cash the maximum amount that can be paid to
the Executive pursuant to paragraph (b) below (the
"Termination Payment"); and (iii) the Stock Options granted
pursuant to the Stock Option Agreement shall be 100% vested
immediately, subject to the terms set forth in Exhibit B.
(b) The Termination Payment shall be the lesser of:
(i) that amount which does not constitute an "excess
parachute payment" within the meaning of Section 280G of
the Internal Revenue Code of 1986, as amended, or any
successor provision or regulations promulgated
thereunder, or
(ii) an amount equal to 0.5% of the value of the aggregate
consideration received by the Company or its stockholders
in the transaction(s) resulting in the Critical Event,
provided, however, that if the transaction(s) involves
less than all of the Company or Common Stock, as the case
may be, then such aggregate consideration shall be
computed with respect to the entire Company or 100% of
the Common Stock, as applicable, by multiplying the
aggregate consideration by a fraction, the numerator or
which is 100 and the denominator of which is the
percentage of the Company or Common Stock, as the case
may be, which is involved in such transaction(s). If the
consideration received in such transaction(s) is other
than cash, such consideration shall be deemed to have the
value determined in good faith by the investment bankers
retained by the Company in connection with such Critical
Event, or if there is no such investment banker, then by
the members of the Board of Directors of the Company,
other than Executive, who were in office immediately
prior to the effective date of such Critical Event. Such
determination of value shall be final and binding on the
Company and Executive.
21
<PAGE>
ARTICLE VI
Termination
-----------
The employment of the Executive hereunder shall terminate prior to the
expiration of the term specified in Article II hereof upon the occurrence of
any of the following events:
(a) Mutual written agreement of the Company and the
Executive.
(b) The death or disability of the Executive. For purposes of this
Agreement, the term "disability" shall have the meaning as set
forth in the Long-Term Disability Plan applicable to executive
officers and if there is no such plan in effect at the
relevant time, then the term shall mean an injury or illness
which shall render the Executive unable to perform under this
Agreement for five consecutive months. In either of such
events, the salary of the Executive shall continue to be paid
to the designated beneficiary of the Executive or to the
Executive, as the case may be, for a period of six months
following such termination, it being understood that such
salary continuation arrangement does not limit the rights of
the Executive or his spouse under any other employee benefit
plan adopted by the Company. In either of such events, the
Stock Options granted pursuant to the Stock Option Agreement
shall be 100% vested immediately, subject to the terms set
forth in Exhibit B.
(c) If a Critical Event shall occur and the Executive, at his
option, by written notice to the Company, shall elect to
terminate his employment under this Agreement. Termination
under this clause (c) shall be effective thirty days after the
date of the written notice to the Company. In such event, the
base salary and bonus of the Executive shall be paid to the
Executive as provided in Article V(a).
(d) If, in the reasonable judgment of the Board, the Executive has
engaged in "serious misconduct" as hereinafter defined
detrimental to the Company or its business, and is so notified
in writing by the Company, then the employment of the
Executive under this Agreement shall terminate thirty days
after receipt of such notice; provided, however, that if
within such thirty-day period the Executive commences an
arbitration proceeding or legal action seeking a determination
of the issue, his base salary and bonus under Article IV
hereof shall continue during the pendency of such proceeding
or action, but the Executive shall not be actively employed by
the Company during the pendency of such proceeding or action,
and shall be reinstated as an active employee under this
Agreement only if the
22
<PAGE>
proceeding or action results in a determination in favor of
the Executive. If the Executive is so reinstated and a
Critical Event shall have occurred during the pendency of the
above-referenced arbitration proceeding or legal action, then
the Executive shall be entitled to the payment established in
Article V for such Critical Event. Otherwise, the Executive
shall not be entitled to such payment established in Article V
for such Critical Event. For purposes of this Agreement, the
term "serious misconduct" means the conviction of or admission
to the commission of (i) a crime constituting a felony or
gross misdemeanor under federal or state law, or (ii) an act
of fraud or embezzlement involving the Company.
(e) The occurrence of one of the following events: (i) the
termination of Executive's employment by Company for any
reason other than serious misconduct; or (ii) Executive's
voluntary termination of his employment within one year after
the Board of Directors either fails to elect Executive to the
positions as required under Article I hereof or shall
materially diminish the duties and responsibilites of
Executive; then in any such case, the compensation as set
forth in Articles IV and V shall continue to be paid to
Executive for the remainder of the term of this Agreement and
the Stock Options granted pursuant to the Stock Option
Agreement shall be 100% vested immediately, subject to the
terms set forth in Exhibit B.
(f) If Executive shall voluntarily elect to retire and in such
event the Stock Options granted pursuant to the Stock Option
Agreement shall vest as provided in Exhibit B.
(g) If the stockholders fail to approve the 1997 Chief Executive
Plan at the 1996 Annual Meeting of Stockholders.
ARTICLE VII
Noncompetition
--------------
The Executive hereby agrees to execute the Noncompetition Agreement
attached hereto as Exhibit C, the terms of which are incorporated herein by
reference.
ARTICLE VIII
Miscellaneous
-------------
This Agreement shall be binding upon and shall inure to the benefit of
the Company, its successors and assigns, but may not be assigned by the
Company without the prior written consent of the Executive.
23
<PAGE>
All notices hereunder shall be in writing, and shall be deemed to have
been duly given if delivered by hand or mailed by registered or certified
mail, return receipt requested, postage prepaid, to the party to receive the
same at the address set forth following the signature of such party hereto, or
at such other address as may have been furnished to the sender in the manner
provided herein.
The 1991 Employment Agreement shall continue in full force and effect to
and including December 31, 1996 (including the annual bonus payable pursuant
thereto with respect to the Company's fiscal year ended December 31, 1996).
With respect to the Executive's employment by the Company on and after January
1, 1997, this Agreement supersedes in its entirety the 1985 Employment
Agreement, the 1987 Employment Agreement and the 1991 Employment Agreement.
This Agreement contains the entire understanding of the parties hereto with
respect to the employment of the Executive by the Company and provisions
hereof may not be altered, amended, modified, waived, or discharged in any way
whatsoever except by subsequent written agreement executed by the parties.
Waiver of any of the terms or conditions of this Agreement, or of any breach
thereof, shall not be deemed a waiver of such term or condition for the future
or of any other term or condition for the future or of any other term or
condition hereof, or of any subsequent breach thereof.
This Agreement shall be construed and interpreted under the applicable
laws and decisions of the State of Minnesota.
The Articles and provisions of this Agreement shall be considered
severable and the invalidity of one shall not render invalid or impair the
binding nature and effect of any other Article or provision contained herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
GREEN TREE FINANCIAL CORPORATION
By //s// Robert D. Potts
----------------------------
Robert D. Potts
Its President
Address: 1100 Landmark Towers
345 St. Peter Street
Saint Paul, Minnesota 55102
//s// Lawrence M. Coss
--------------------------------
Lawrence M. Coss
Address: 1100 Landmark Towers
345 St. Peter Street
Saint Paul, Minnesota 55102
24
<PAGE>
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT is made as of February 9, 1996 (the
"Agreement"), by and between Green Tree Financial Corporation, a Delaware
corporation (the "Company"), and Lawrence M. Coss, a resident of Minnesota
(the "Executive").
WITNESSETH:
WHEREAS, the Company and the Executive have entered into an
employment agreement on the same date as stated above whereby the Executive
will be employed by the Company (the "Employment Agreement"); and
WHEREAS, under the terms of that Employment Agreement the Executive
will receive compensation including an annual base salary, bonus and options
to purchase common stock of the Company; and
WHEREAS, the Company desires to protect its business information and
relationships and competitive position from unfair encroachment by other
businesses;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants in the Employment Agreement and hereinafter contained, the parties
hereto agree as follows:
ARTICLE I
Noncompetition
--------------
Except as provided in (c) below, the Executive agrees that for a
period of six (6) years from the commencement of the term of the Employment
Agreement, he will not, either directly or indirectly, without the prior
written consent of the Company:
(e) render services to, reveal confidential information to or
assist in any manner any corporation, individual or other
entity that directly competes with any activity (i) in which
the Company or any of its subsidiaries shall have been engaged
on the day preceding the Executive's termination of employment
and (ii) in which the Company or any of its subsidiaries is
engaged on the date of such services or activity by the
Executive; or
(f) employ or attempt to employ any employee of the Company or any
of its subsidiaries, or otherwise directly or indirectly
interfere with or disrupt the employment relationship,
contractual or otherwise, between the Company or any of its
subsidiaries and any of their respective employees (it being
understood and agreed that for purposes of this clause (b) an
employee of the Company or any of its subsidiaries shall be
deemed to continue as an employee for a period of three months
following the termination of active employment).
25
<PAGE>
(c) In the event that Executive's employment is terminated under
the provisions of Article VI(e) or VI(g) of the Employment
Agreement, the provisions of the Agreement shall have no force
or effect after the date of such termination.
ARTICLE II
Consideration
-------------
The consideration for the execution of this Agreement shall be the
compensation to be paid by the Company to the Executive pursuant to Article IV
and Article V of the Employment Agreement.
ARTICLE III
Remedies of the Company
-----------------------
As a key managerial employee of the Company, the Executive has
access to customer lists, trade secrets and other confidential information of
the Company. Moreover, the Executive's continued employment will be
instrumental to the continuity and development of the Company's business. The
Executive, therefore, acknowledges that the restrictions contained in this
Agreement are a reasonable and necessary protection of the legitimate
interests of the Company, that any violation of such restrictions would cause
irreparable injury to the Company, and that the Company would not have entered
into the Employment Agreement without receiving the additional consideration
of these restrictions. Accordingly, the Executive agrees that, in the event of
any actual or threatened breach of the restrictions contained herein, the
Company shall be entitled (in addition to any other remedy) to preliminary and
permanent injunctive relief; provided the Company has performed its
obligations under the Employment Agreement.
ARTICLE IV
Savings Provisions
------------------
The Executive and the Company agree that, in the event that
restrictions in this Agreement relating to length of time, geographic area or
scope of activity are determined in any court proceedings to be overbroad or
unreasonably restrictive, this Agreement shall nevertheless be enforced in all
other respects and for such length of time, geographic area or scope of
activity deemed by the court to be reasonable.
ARTICLE V
Benefits
--------
During the term of the Noncompetition Agreement, Executive shall be
entitled to receive health insurance coverage for himself and dependents, and
if the Company maintains an aircraft, Executive shall have the right to use
Company aircraft for personal use in accordance with his prior practices
during the term of the Employment Agreement, subject to reasonable
availability of such aircraft. Executive agrees that any such personal use
will be treated as income for tax purposes in accordance with applicable tax
regulations and the Executive agrees
26
<PAGE>
that he will be obligated to pay all income taxes attributable to such
personal use.
ARTICLE VI
Miscellaneous
-------------
This Agreement shall be binding upon and shall inure to the benefit
of the Company and its successors and assigns.
This Agreement contains the entire understanding of the parties
hereto with respect to noncompetition matters and the provisions hereof may
not be altered, amended, modified, waived, or discharged in any way whatsoever
except by subsequent written agreement executed by the parties. Waiver of any
of the terms or conditions of this Agreement, or of any breach thereof, shall
not be deemed a waiver of such term or condition for the future or of any
other term or condition or of any subsequent breach thereof.
This Agreement shall be construed and interpreted under the
applicable laws and decisions of the State of Minnesota.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
GREEN TREE FINANCIAL CORPORATION
By //s// Robert D. Potts
-----------------------------
Its President
Address: 1100 Landmark Towers
345 St. Peter Street
Saint Paul, Minnesota 55102
By //s// Lawrence M. Coss
--------------------------------
Lawrence M. Coss
Address: 1100 Landmark Towers
345 St. Peter Street
Saint Paul, Minnesota 55102
27
<PAGE>
Exhibit 10.(p)
--------------
GREEN TREE FINANCIAL CORPORATION
CHIEF EXECUTIVE CASH BONUS AND STOCK OPTION PLAN
SECTION 1. Definitions. When the following terms are used herein with
initial capital letters, they shall have the following meanings:
Award. Either an Option or a Performance Bonus granted under the Plan.
Chief Executive Officer. Lawrence M. Coss or the individual serving in
that capacity for the Company as of the first day of a Performance Period.
Code. The Internal Revenue Code of 1986, as it may be amended from time to
time, and any proposed, temporary or final Treasury Regulations promulgated
thereunder.
Committee. A committee of the Board of Directors of the Company designated
by such Board to administer the Plan, which shall consist of members appointed
from time-to-time by the Board of Directors and shall be comprised of not less
than such number of directors as shall be required to permit the Plan to satisfy
the requirements of Rule 16b-3. Each member of the Committee shall be a
"disinterested person" within the meaning of Rule 16b-3. In addition, to the
extent required by Section 162(m) of the Code, all members of the Committee
shall be "outside directors" within the meaning of Section 162(m) of the Code.
Company. GREEN TREE FINANCIAL CORPORATION is a Delaware corporation.
Net Income. With respect to each Performance Period, the Company's net
income, prior to any reduction for amounts paid pursuant hereto but after taking
into account all other expenses of the Company including taxes, as computed in
accordance with generally accepted accounting principles as in effect for the
Company's fiscal year ending December 31, 1995, without regard to any changes
thereto. For purposes of the foregoing computation, extraordinary items, whether
gains or losses, shall also not be taken into account. In addition, for purposes
of the foregoing computation, discontinued operations, restructuring costs and
all acquisitions and disposition, as computed in accordance with generally
accepted accounting principles as in effect for the Company's fiscal year ending
December 31, 1995, without regard to any changes thereto, shall be taken into
account.
Option Agreement. Any written agreement, contract or other instrument or
document evidencing any Option granted under the Plan.
Participant. The Chief Executive Officer of the Company.
Performance Bonus. The right to receive a cash payment pursuant to Section
4.1 of the Plan.
28
<PAGE>
Performance Period. The period which coincides with the Company's fiscal
year.
Performance Threshold. The Company's Return on Equity must be at least
twelve percent (12%) for the Performance Period for which bonuses are being
paid.
Plan. This GREEN TREE FINANCIAL CORPORATION CHIEF EXECUTIVE CASH BONUS AND
STOCK OPTION PLAN.
Return on Equity or ROE. With respect to each Performance Period, the
Company's return on equity is a percentage computed as the Company's Net Income
divided by the Company's "equity." As used herein, Net Income shall be computed
as provided for above and with respect to each Performance Period, and "equity"
for each Performance Period shall be computed as of the last day of the
immediately preceding year-end, as computed in accordance with generally
accepted accounting principles as in effect for the Company's fiscal year ending
December 31, 1995, without regard to any changes thereto. The same principles
used in the computation of Net Income shall also be taken into account in
computing ROE.
Shares. The shares of Common Stock, $.01 par value, of the Company or such
other securities or property as may become subject to Options pursuant to an
adjustment made under Section 3.3 of the Plan.
SECTION 2. Administration.
2.1 Committee. The Plan shall be administered by the Committee.
Subject to the express provisions of the Plan and to applicable law, including
without limitation the provisions of Section 162(m) of the Code, the Committee
shall have full power and authority to: (i) designate Participants; (ii)
determine the type or types of Awards to be granted to each Participant under
the Plan; (iii) determine the number of Shares to be covered by each Option;
(iv) determine the terms and conditions of any Award; (v) amend the terms and
conditions of any Award and accelerate the exercisability of Options or the
lapse of restrictions relating to any Awards; (vi) interpret and administer the
Plan and any instrument or agreement relating to, or Award made under, the Plan;
(vii) establish, amend, suspend or waive such rules and regulations and appoint
such agents as it shall deem appropriate for the proper administration of the
Plan; and (viii) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations and other decisions under or with respect to the
Plan or any Award shall be within the sole discretion of the Committee, may be
made at any time and shall be final, conclusive and binding upon any
Participant, any holder or beneficiary of any Award and any employee of the
Company or any Affiliate.
2.2 Determinations made prior to each Performance Period. Not later
than 90 days after the beginning of each Performance Period, the Committee shall
designate Participants, in addition to the Chief Executive Officer, who are to
receive Performance Bonuses for that Performance Period.
29
<PAGE>
2.3 Certification. Following the close of each Performance Period and
prior to payment of any bonus under the Plan, the Committee must certify in
writing that the Performance Threshold has been attained and as to the
computation of the Performance Bonus provided for in Section 4.1 hereof.
2.4 Stockholder Approval. The material terms of this Plan shall be
disclosed to and approved by the stockholders of the Company at the Company's
1996 annual meeting of stockholders in accordance with Section 162(m) of the
Code. No Performance Bonus shall be paid under this Plan unless such stockholder
approval has been obtained.
SECTION 3. Options.
3.1 Grant. The Committee is hereby authorized to grant Options to
Participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan as the
Committee shall determine:
(a) Exercise Price. The purchase price per Share purchasable
under an Option shall be determined by the Committee; provided, however,
that such purchase price shall not be less than 100% of the fair market
value of a Share on the date of grant of such Option as reasonably
determined by the Committee.
(b) Option Term. The term of each Option shall be fixed by the
Committee.
(c) Time and Method of Exercise. The Committee shall determine
the time or times at which an Option may be exercised in whole or in part
and the method or methods by which, and the form or forms (including,
without limitation, cash, Shares, promissory notes, other securities, other
Awards or other property, or any combination thereof, having a fair market
value on the exercise date equal to the relevant exercise price) in which,
payment of the exercise price with respect thereto may be made or deemed to
have been made.
3.2 Shares Available. Subject to adjustment as provided in Section
3.3, the number of Shares available for granting Options under the Plan shall be
2,000,000. Shares to be issued under the Plan may be either Shares reacquired
and held in the treasury or authorized but unissued Shares. If any Shares
covered by an Option are not purchased or are forfeited, or if an Option
otherwise terminates without delivery of any Shares, then the number of Shares
counted against the aggregate number of Shares available under the Plan with
respect to such Option, to the extent of any such forfeiture or termination,
shall again be available for granting Options under the Plan.
3.3 Adjustment. In the event that the Committee shall determine that
any dividend or other distribution (whether in the form of cash, Shares, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of Shares or other securities of the Company, issuance
30
<PAGE>
of warrants or other rights to purchase Shares or other securities of the
Company or other similar corporate transaction or event affects the Shares such
that an adjustment is determined by the Committee to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan, then the Committee shall, in such manner as
it may deem equitable, adjust any or all of (i) the number and type of Shares
(or other securities or other property) which thereafter may be made the subject
of Options, (ii) the number and type of Shares (or other securities or other
property) subject to outstanding Options and (iii) the purchase or exercise
price with respect to any Options; provided, however, that the number of Shares
covered by any Option or to which such Options relates shall always be a whole
number.
3.4 Withholding. In order to comply with all applicable federal or
state income tax laws or regulations, the Company may take such action as it
deems appropriate to ensure that all applicable federal or state payroll,
withholding, income or other taxes, which are the sole and absolute
responsibility of a Participant, are withheld or collected from such
Participant. In order to assist a Participant in paying all or a portion of the
federal and state taxes to be withheld or collected upon exercise or receipt of
(or the lapse of restrictions relating to) an Option, the Committee, in its
discretion and subject to such additional terms and conditions as it may adopt,
may permit the Participant to satisfy such tax obligation by (i) electing to
have the Company withhold a portion of the Shares otherwise to be delivered upon
exercise or receipt of such Option with a fair market value, as reasonably
determined by the Committee, equal to the amount of such taxes or (ii)
delivering to the Company Shares other than Shares issuable upon exercise or
receipt of such Option with such a fair market value equal to the amount of such
taxes. The election, if any, must be made on or before the date that the amount
of tax to be withheld is determined.
3.5 Option Limitation. No Participant may be granted Options for more
than 2,000,000 Shares in any calendar year beginning with the period commencing
January 1, 1996. The foregoing annual limitation specifically includes the grant
of any Option representing "qualified performance-based compensation" within the
meaning of Section 162(m) of the Code.
SECTION 4. Performance Bonus.
4.1 Formula. Subject to the terms and conditions of the Plan,
including stockholder approval, the Chief Executive Officer of the Company shall
receive a cash, performance bonus for each Performance Period commencing January
1, 1997, in an amount equal to two and one-half percent (2.5%) of the difference
(but not less than zero) between (i) the Company's Net Income for that
Performance Period, and (ii) that amount which is equal to the amount of Net
Income which results in an ROE which is equal to the Performance Threshold.
31
<PAGE>
4.2 Limitations.
(a) No payment if Performance Threshold not achieved. In no event
shall any Participant receive a Performance Bonus hereunder if the Company
Performance Threshold is not achieved during the Performance Period.
(b) Committee may reduce bonus payment. With respect to any
Participant except for the Chief Executive Officer in office as of the date of
adoption of the Plan, the Committee retains sole discretion to reduce the amount
of any bonus otherwise payable under this Plan.
SECTION 5. Benefit Payments.
5.1 Time and Form of Payments. Subject to any deferred compensation
election pursuant to any such plans of the Company applicable hereto, benefits
shall be paid to the Participant in a single lump sum cash payment as soon as
administratively feasible after the Committee has certified the Company's Net
Income and the Performance Threshold for that Performance Period.
5.2 Nontransferability. Participants and beneficiaries shall not have
the right to assign, encumber or otherwise anticipate the payments to be made
under this Plan, and the benefits provided hereunder shall not be subject to
seizure for payment of any debts or judgments against any Participant or any
beneficiary.
5.3 Tax Withholding. In order to comply with all applicable federal
or state income tax laws or regulations, the Company may take such action as it
deems appropriate to ensure that all applicable federal or state payroll,
withholding, income or other taxes, which are the sole and absolute
responsibility of a Participant, are withheld or collected from such
Participant.
SECTION 6. General Terms of Awards.
(a) No Cash Consideration for Awards. Awards shall be granted for no
cash consideration or for such minimal cash consideration as may be required by
applicable law.
(b) Awards May Be Granted Separately or Together. Awards may, in the
discretion of the Committee, be granted either alone or in addition to, in
tandem with or in substitution for any other Award or any award granted under
any plan of the Company. Awards granted in addition to or in tandem with other
Awards or in addition to or in tandem with awards granted under any such other
plan of the Company may be granted either at the same time as or at a different
time from the grant of such other Awards or awards.
(c) Limits on Transfer of Awards. No Award and no right under any such
Award shall be transferable by a Participant otherwise than by will or by the
laws of descent and distribution; provided, however, that, if so determined by
the Committee, a Participant may, in the manner established by the Committee,
designate a beneficiary or beneficiaries to exercise the rights of the
Participant and receive any property distributable with respect
32
<PAGE>
to any Award upon the death of the Participant. Each Award or right under any
Award shall be exercisable during the Participant's lifetime only by the
Participant or, if permissible under applicable law, by the Participant's
guardian or legal representative. No Award or right under any such Award may be
pledged, alienated, attached or otherwise encumbered, and any purported pledge,
alienation, attachment or encumbrance thereof shall be void and unenforceable
against the Company or any Affiliate.
(d) Term of Awards. The term of each Award shall be for such period as
may be determined by the Committee.
(e) Restrictions; Securities Exchange Listing. All certificates for
Shares or other securities delivered under the Plan pursuant to the exercise of
any Option shall be subject to such stop transfer orders and other reasonable
restrictions as the Committee may deem advisable under the Plan or the rules,
regulations and other requirements of the Securities and Exchange Commission and
any applicable federal or state securities laws, and the Committee may cause a
legend or legends to be placed on any such certificates to make appropriate
reference to such restrictions. If the Shares or other securities are traded on
a securities exchange, the Company shall not be required to deliver any Shares
or other securities covered by an Option unless and until such Shares or other
securities have been admitted for trading on such securities exchange. The
Committee shall provide for the registration of the securities covered by the
Option pursuant to Form S-8.
SECTION 7. Amendment and Termination; Adjustments. Except to the extent
prohibited by applicable law and unless otherwise expressly provided in an Award
or in the Plan:
(a) Amendments to the Plan. The Board of Directors of the Company
may amend, alter, suspend, discontinue or terminate the Plan; provided,
however, that, notwithstanding any other provision of the Plan or any
Award, without the approval of the stockholders of the Company, no such
amendment, alteration, suspension, discontinuation or termination shall be
made that, absent such approval:
(i) would cause Rule 16b-3 to become unavailable with
respect to the Plan; or
(ii) would violate the rules or regulations of the New York
Stock Exchange, any other securities exchange or the National
Association of Securities Dealers, Inc. that are applicable to the
Company.
(b) Amendments to Awards. The Committee may waive any conditions
of or rights of the Company under any outstanding Award, prospectively or
retroactively. The Committee may not amend, alter, suspend, discontinue or
terminate any outstanding Award, prospectively or retroactively, without
the consent of the Participant or holder or beneficiary thereof, except as
otherwise herein provided.
33
<PAGE>
(c) Correction of Defects, Omissions and Inconsistencies. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it
shall deem desirable to carry the Plan into effect.
SECTION 8. Miscellaneous.
8.1 Effective Date. The Plan shall be effective as of February 9,
1996, subject to its approval by the stockholders of the Company, and no
payments shall be made pursuant to any Performance Bonus granted pursuant to the
Plan until after the Plan has been approved by the stockholders of the Company;
provided, however, that (i) a Stock Option may be granted pursuant to the Plan
at any time on or after the Effective Date, subject to such stockholder
approval; and, (ii) the first Performance Period for which a Performance Bonus
may be granted shall be for the Company's fiscal year ending December 31, 1997.
8.2 Term of the Plan. The Plan shall continue until December 31,
2006, unless sooner discontinued or terminated by the Committee.
8.3 Headings. Headings are given to the Sections and subsections of
the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
8.4 Applicability to Successors. This Plan shall be binding upon
and inure to the benefit of the Company and each Participant, the successors and
assigns of the Company, and the beneficiaries, personal representatives and
heirs of each Participant. If the Company becomes a party to any merger,
consolidation or reorganization, this Plan shall remain in full force and effect
as an obligation of the Company or its successors in interest.
8.5 Employment Rights and Other Benefit Programs. The provisions of
this Plan shall not give any Participant any right to be retained in the
employment of the Company. In the absence of any specific agreement to the
contrary, this Plan shall not affect any right of the Company, or of any
affiliate of the Company, to terminate, with or without cause, the participant's
employment at any time. This Plan is in addition to, and not in lieu of, any
other employee benefit plan or program in which any Participant may be or become
eligible to participate by reason of employment with the Company. Receipt of
benefits hereunder shall have such effect on contributions to and benefits under
such other plans or programs as the provisions of each such other plan or
program may specify.
8.6 No Rights to Awards. No Participant shall have any claim to be
granted any Award under the Plan, and there is no obligation for uniformity of
treatment of Participants or holders or beneficiaries of Awards under the Plan.
The terms and conditions of Awards need not be the same with respect to any
Participant or with respect to different Participants.
34
<PAGE>
8.7 No Limit on Other Compensation Arrangements. Nothing contained
in the Plan shall prevent the Company from adopting or continuing in effect
other or additional compensation arrangements, and such arrangements may be
either generally applicable or applicable only in specific cases.
8.8 No Trust or Fund Created. This Plan shall not create or be
construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any affiliate and a Participant or any other
person. To the extent that any person acquires a right to receive payments from
the Company or any affiliate pursuant to this Plan, such right shall be no
greater than the right of any unsecured general creditor of the Company or of
any affiliate.
8.9 Governing Law. The validity, construction and effect of the
Plan or any bonus payable under the Plan shall be determined in accordance with
the internal laws, and not the laws of conflicts, of the State of Minnesota.
8.10 Severability. If any provision of the Plan is or becomes or is
deemed to be invalid, illegal or unenforceable in any jurisdiction such
provision shall be construed or deemed amended to conform to applicable laws, or
if it cannot be so construed or deemed amended without, in the determination of
the Committee, materially altering the purpose or intent of the Plan, such
provision shall be stricken as to such jurisdiction, and the remainder of the
Plan shall remain in full force and effect.
8.11. Qualified Performance-Based Compensation. All of the terms
and conditions of the Plan shall be interpreted in such a fashion as to qualify
all compensation paid hereunder as "qualified performance-based compensation"
within the meaning of Section 162(m) of the Code.
35
<PAGE>
GREEN TREE FINANCIAL CORPORATION
STOCK OPTION AGREEMENT
THIS AGREEMENT, made as of the 9th day of February, 1996, by and
between Green Tree Financial Corporation, a Delaware corporation (the
"Company"), and Lawrence M. Coss ("Employee"),
WITNESSETH, THAT:
WHEREAS, pursuant to the Green Tree Financial Corporation Chief
Executive Cash Bonus and Stock Option Plan (the "Chief Executive Cash Bonus and
Stock Option Plan"), the Company wishes to grant this stock option to Employee.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto hereby agree as follows:
1. Grant of Option.
Subject to stockholder approval, the Company hereby grants to
Employee, on the date set forth above, the right and option (hereinafter called
"the option") to purchase all or any part of an aggregate of two million shares
of Common Stock, par value $0.01 per share, at the price of $30.875 per share on
the terms and conditions set forth herein. This option is not intended to be an
incentive stock option within the meaning of Section 422 (formerly Section 422A)
of the Internal Revenue Code of 1986, as amended (the "Code").
2. Duration and Exercisability.
(a) Except as provided in paragraph (c) below, this option may not
be exercised by Employee until January 1, 1997, and this option shall in all
events terminate ten (10) years after the date of grant. Subject to the other
terms and conditions set forth herein, this option may be exercised by Employee
in cumulative installments as follows:
Cumulative percentage
On or after each of of shares as to which
the following dates option is exercisable
------------------- ---------------------
December 31, 1997 20%
December 31, 1998 40%
December 31, 1999 60%
December 31, 2000 80%
December 31, 2001 100%
(b) During the lifetime of Employee, the option shall be
exercisable only by Employee and shall not be assignable or transferable by
Employee, other than by will or the laws of descent and distribution.
(c) Notwithstanding the installment exercise provision set forth in
paragraph (a) above and subject to the other terms and conditions set forth
herein, this option may be exercised as to 100% of the shares of Common Stock of
the Company for which this
36
<PAGE>
option was granted on the date of a "change of control" as hereinafter defined,
provided that the date of such change of control is on or after January 1, 1997.
A "change of control" shall mean any of the following:
(i) A public announcement that any person has acquired or has the
right to acquire beneficial ownership of 51% or more of the then
outstanding shares of Common Stock of the Company and, for this purpose,
the terms "person" and "beneficial ownership" shall have the meanings
provided in Section 13(d) of the Securities and Exchange Act of 1934 or
related rules promulgated by the Securities and Exchange Commission.
(ii) The commencement of or public announcement of an intention to
make a tender or exchange offer for 51% or more of the then outstanding
shares of the Common Stock of the Company.
(iii) The Compensation Committee of the Board of Directors of
the Company, in its sole and absolute discretion, determines that there
has been a sufficient change in the stock ownership of the Company to
constitute a change in control of the Company.
(d) Notwithstanding the foregoing, this option shall not be
exercisable during any dispute relating to termination of the Employee
pursuant to Article VI(d) of the Employment Agreement dated as of February 9,
1996 between the Company and the Employee (the "Employment Agreement").
3. Effect of Termination of Employment.
(a) If Employee shall cease to be employed by the Company on or
after January 1, 1997 but prior to January 1, 1999 as a result of Employee's
voluntary retirement, Employee shall have the right to exercise the option at
any time during the remaining term of the option to the extent of 50% of the
full number of shares subject to the option. If Employee shall cease to be
employed by the Company on or after January 1, 1999 pursuant to Articles VI(a)
or (f) of the Employment Agreement, Employee shall have the right to exercise
the option at any time during the remaining term of the option to the extent
of 100% of the number of shares subject to the option.
(b) If Employee's employment is terminated at any time pursuant to
Article VI(c) or (e) of the Employment Agreement, then Employee shall have the
right to exercise the option at any time during the remaining term of the
option to the extent of 100% of the number of shares subject to the option.
(c) If Employee shall, on or after January 1, 1997, (i) die while
in the employ of the Company or within two years after termination of
employment for any reason other than serious misconduct, or (ii) become
disabled (as defined in the Employment Agreement) while in the employ of the
Company, and Employee shall not have fully exercised the option, such option
may be exercised
37
<PAGE>
at any time within two years after Employee's death or disability by the
personal representatives or administrators, or if applicable guardian, of
Employee or by any person or persons to whom the option is transferred by will
or the applicable laws of descent and distribution, to the extent of the full
number of shares subject to the option, provided that no option shall be
exercisable after the expiration of the term of the option.
(d) In the event that Employee shall cease to be employed by the
Company by reason of Employee's serious misconduct (as defined in the Employment
Agreement) during the course of employment, pursuant to Article VI(d) of the
Employment Agreement, the option shall be terminated as of the date of final
termination pursuant to such Article VI(d).
4. Manner of Exercise.
(a) The option can be exercised only by Employee or other proper
party by delivering within the option period written notice to the Company at
its principal office. The notice shall state the number of shares as to which
the option is being exercised and be accompanied by payment in full of the
option price for all shares designated in the notice.
(b) Employee may pay the option price in cash, by check (bank
check, certified check or personal check), by money order, or with the
approval of the Company (i) by delivering to the Company for cancellation
Common Stock of the Company with a fair market value as of the date of
exercise equal to the option price or the portion thereof being paid by
tendering such shares, or (ii) by delivering to the Company a combination of
cash and Common Stock of the Company with an aggregate fair market value equal
to the option price; provided, however, that Employee shall not be entitled to
tender shares of the Company's Common Stock pursuant to successive,
substantially simultaneous exercises of this option or any other stock option
of the Company. For these purposes, the fair market value of the Company's
Common Stock as of any date shall be as reasonably determined by the Company
but shall not be less than (i) the closing price of the stock as reported for
composite transactions, if the Common Stock is then traded on a national
securities exchange, (ii) the last sale price if the Common Stock is then
quoted on the NASDAQ National Market System or (iii) the average of the
closing representative bid and asked prices of the Common Stock as reported on
NASDAQ on the date as of which fair market value is being determined if the
Common Stock is then quoted on NASDAQ.
5. Miscellaneous.
(a) This option is issued pursuant to the Chief Executive Cash
Bonus and Stock Option Plan and is subject to its terms. The terms of the Plan
are available for inspection during business hours at the principal offices of
the Company.
(b) This Agreement shall not confer on Employee any right with
respect to continuance of employment by the Company or any of its
subsidiaries, nor will it interfere in any way with the right of the Company
to terminate such employment at any time.
38
<PAGE>
Employee shall have none of the rights of a shareholder with respect to shares
subject to this option until such shares shall have been issued to Employee upon
exercise of this option.
(c) The exercise of all or any parts of this option shall only be
effective at such time that the sale of Common Stock pursuant to such exercise
will not violate any state or federal securities or other laws.
(d) If there shall be any change in the Common Stock of the Company
through merger, consolidation, reorganization, recapitalization, dividend in the
form of stock (of whatever amount), stock split or other change in the corporate
structure of the Company, and all or any portion of the option shall then be
unexercised and not yet expired, then appropriate adjustments in the outstanding
option shall be made by the Company, in order to prevent dilution or enlargement
of option rights. Such adjustments shall include, where appropriate, changes in
the number of shares of Common Stock and the price per share subject to the
outstanding option.
(e) The Company shall at all times during the term of the option
reserve and keep available such number of shares as will be sufficient to
satisfy the requirements of this Agreement.
(f) In order to provide the Company with the opportunity to claim
the benefit of any income tax deduction which may be available to it upon the
exercise of the option, and in order to comply with all applicable federal or
state income tax laws or regulations, the Company may take such action as it
deems appropriate to ensure that, if necessary, all applicable federal or state
payroll, withholding, income or other taxes are withheld or collected from
Employee. Employee may elect to satisfy his federal and state income tax
withholding obligations upon exercise of this option by (i) having the Company
withhold a portion of the shares of Common Stock otherwise to be delivered upon
exercise of such option having a fair market value equal to the amount of
federal and state income tax required to be withheld upon such exercise, in
accordance with the rules of the Committee, or (ii) delivering to the Company
shares of its Common Stock other than the shares issuable upon exercise of such
option with a fair market value equal to such taxes, in accordance with the
rules of the Committee.
(g) The Company shall register the shares of Common Stock subject
to the option pursuant to Form S-8 of the Securities and Exchange Commission,
promptly after the execution of this option.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on the day and year first above written.
GREEN TREE FINANCIAL CORPORATION
By //s// Robert D. Potts
-------------------------------------
Its President
//s// Lawrence M. Coss
--------------------------------------
Lawrence M. Coss
39
<PAGE>
Exhibit 11.(a)
GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES
-------------------------------------------------
COMPUTATION OF PRIMARY EARNINGS PER SHARE
-----------------------------------------
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30
----------------------------
1996 1995
------------ ------------
<S> <C> <C>
Net earnings $141,784,000 $112,441,000
============ ============
Weighted average number of common and common
equivalent shares outstanding:
Weighted average common shares outstanding 136,575,021 136,311,358
Dilutive effect of stock options after
application of treasury-stock method 3,338,406 3,476,060
------------ ------------
139,913,427 139,787,418
============ ============
Earnings per share $ 1.01 $ .80
============ ============
Three Months Ended June 30
----------------------------
1996 1995
------------ ------------
Net earnings $ 75,422,000 $ 61,712,000
============ ============
Weighted average number of common and common
equivalent shares outstanding:
Weighted average common shares outstanding 136,925,519 136,713,428
Dilutive effect of stock options after
application of treasury-stock method 3,316,510 3,330,932
------------ ------------
140,242,029 140,044,360
============ ============
Earnings per share $ .54 $ .44
============ ============
</TABLE>
40
<PAGE>
Exhibit 11.(b)
GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES
-------------------------------------------------
COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE
-----------------------------------------------
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30
----------------------------
1996 1995
------------ ------------
<S> <C> <C>
Net earnings $141,784,000 $112,441,000
============ ============
Weighted average number of common and common
equivalent shares outstanding:
Weighted average common shares outstanding 136,575,021 136,311,358
Dilutive effect of stock options after
application of treasury-stock method 3,408,706 3,587,266
------------ ------------
139,983,727 139,898,624
============ ============
Earnings per share $ 1.01 $ .80
============ ============
Three Months Ended June 30
----------------------------
1996 1995
------------ ------------
Net earnings $ 75,422,000 $ 61,712,000
============ ============
Weighted average number of common and common
equivalent shares outstanding:
Weighted average common shares outstanding 136,925,519 136,713,428
Dilutive effect of stock options after
application of treasury-stock method 3,316,510 3,377,806
------------ ------------
140,242,029 140,091,234
============ ============
Earnings per share $ .54 $ .44
============ ============
</TABLE>
41
<PAGE>
Exhibit 12.
GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES
-------------------------------------------------
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
-------------------------------------------------
<TABLE>
<CAPTION>
Six months
ended
June 30, 1996
-------------
(unaudited)
<S> <C>
Earnings:
Earnings before income taxes $228,684,000
Fixed charges:
Interest 28,531,000
One-third rent 1,302,507
------------
29,833,507
------------
$258,517,507
============
Fixed charges:
Interest $ 28,531,000
One-third rent 1,302,507
------------
$ 29,833,507
============
Ratio of earnings to fixed charges (1) 8.67
====
</TABLE>
(1) For purposes of computing the ratio, earnings consist of earnings before
income taxes plus fixed charges.
42
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
the financial statements of Green Tree Financial Corporation and Subsidiaries
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 751,597,000
<SECURITIES> 4,937,000
<RECEIVABLES> 313,193,000
<ALLOWANCES> 1,465,000
<INVENTORY> 626,530,000
<CURRENT-ASSETS> 0
<PP&E> 98,729,000
<DEPRECIATION> 34,863,000
<TOTAL-ASSETS> 2,902,808,000
<CURRENT-LIABILITIES> 0
<BONDS> 290,111,000
<COMMON> 1,393,000
0
0
<OTHER-SE> 1,089,806,000
<TOTAL-LIABILITY-AND-EQUITY> 2,902,808,000
<SALES> 361,581,000
<TOTAL-REVENUES> 364,220,000
<CGS> 0
<TOTAL-COSTS> 107,005,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 148,470,000
<INTEREST-EXPENSE> 28,531,000
<INCOME-PRETAX> 228,684,000
<INCOME-TAX> 86,900,000
<INCOME-CONTINUING> 141,784,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 141,784,000
<EPS-PRIMARY> 1.01
<EPS-DILUTED> 1.01
</TABLE>
