UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended April 3, 1998 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: 0-21204
SOUTHERN ENERGY HOMES, INC.
(Exact name of registrant as specified in its charter)
Delaware 63-1083246
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Highway 41 North, P.O. Box 390, Addison, Alabama 35540
(Address of principal executive offices) (Zip Code)
(256) 747-8589
(Registrant's telephone number, including area code)
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 [ ]
Indicate the number of shares outstanding of each of
the issuer's classes of common stock, as of the
latest practicable date.
13,824,373 shares of Common Stock, $.0001 par value, as of April 20, 1998
SOUTHERN ENERGY HOMES, INC. AND SUBSIDIARIES
INDEX
Page
PART I
FINANCIAL INFORMATION:
Consolidated Condensed Balance Sheets,
April 3, 1998 and January 2, 1998 2
Consolidated Condensed Statements of
Operations Thirteen Weeks Ended April 3, 1998
and April 4, 1997 3
Consolidated Condensed Statements of Cash
Flows Thirteen Weeks Ended April 3,
1998 and April 4, 1997 4
Notes to Consolidated Condensed Financial
Statements 5
Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II OTHER INFORMATION 10
SIGNATURES 11
I. FINANCIAL INFORMATION
Item 1. Financial Statements
SOUTHERN ENERGY HOMES, INC. AND
SUBSIDIARIES CONSOLIDATED CONDENSED
BALANCE SHEETS
(Unaudited)
April January
3, 2,
1998 1998
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 10,921,000 $ 17,676,000
Accounts receivable (less allowance
for doubtful accounts of 32,463,000 22,399,000
$192,000 and $180,000,
respectively)
Installment contracts receivable 165,000 165,000
Inventories 32,493,000 28,479,000
Deferred tax benefits 1,750,000 1,816,000
Prepayments and other 1,542,000 1,134,000
79,334,000 71,669,000
PROPERTY AND EQUIPMENT:
Property and equipment, at cost 29,440,000 28,982,000
Less - accumulated depreciation 7,702,000 7,130,000
21,738,000 21,852,000
INTANGIBLES AND OTHER ASSETS
Installment contracts receivable,
less allowance for credit
losses of $451,000 and $696,000, 10,349,000 9,673,000
respectively
Goodwill 14,117,000 14,258,000
Non-compete agreements 436,000 421,000
Organization and pre-operating 828,000 825,000
costs
Other assets 4,693,000 4,555,000
30,423,000 29,732,000
$131,495,000 $123,253,000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 19,055,000 $ 15,932,000
Current maturities of long-term 545,000 1,106,000
debt
Accounts payable 9,902,000 3,449,000
Accrued liabilities 20,502,000 18,279,000
50,004,000 38,766,000
LONG-TERM DEBT 5,026,000 4,720,000
STOCKHOLDERS' EQUITY:
Preferred stock, $.0001 par value,
1,000,000 shares authorized, - -
none outstanding
Common stock, $.0001 par value,
40,000,000 shares authorized,
15,573,476 issued at April 3, 2,000 2,000
1998 and 15,572,326 shares issued at
January 2, 1998
Treasury stock, at cost, 1,755,100
shares at April 3, 1998 and (15,966,000) (10,201,000)
1,122,100 shares at January 2, 1998
Capital in excess of par 37,225,000 37,215,000
Retained earnings 55,204,000 52,751,000
76,465,000 79,767,000
$131,495,000 $123,253,000
The accompanying notes are an integral part of these
consolidated condensed financial statements.
SOUTHERN ENERGY HOMES, INC. AND
SUBSIDIARIES CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS
(Unaudited)
Thirteen Weeks Ended
April 3, April 4,
1998 1997
Net revenues $76,105,000 $80,116,000
Cost of sales 64,486,000 67,618,000
Gross profit 11,619,000 12,498,000
Operating Expenses:
Selling 3,352,000 2,925,000
General and 3,751,000 2,991,000
administrative
Amortization of 262,000 250,000
intangibles
7,365,000 6,166,000
Operating income 4,254,000 6,332,000
Interest expense 548,000 277,000
Interest income 263,000 43,000
Income before 3,969,000 6,098,000
income taxes
Provision for income 1,516,000 2,315,000
taxes
Net income $ 2,453,000 $ 3,783,000
Net income per common
share:
Basic $ 0.18 $ 0.25
Diluted $ 0.17 $ 0.24
Weighted average number
of common
shares:
Basic 13,989,296 15,437,801
Diluted 14,093,491 15,567,433
SOUTHERN ENERGY HOMES, INC. AND
SUBSIDIARIES CONSOLIDATED CONDENSED
STATEMENTS OF CASH FLOWS
(Unaudited)
Thirteen Weeks Ended
April 3, April 4,
1998 1997
Operating activities:
Net income $2,453,000 $3,783,000
Adjustments to reconcile net income to net
cash used in operating activities:
Equity income of joint ventures (145,000) -
Depreciation of property and equipment 572,000 515,000
Amortization of intangibles 262,000 250,000
Provision (credit) for deferred income 66,000 (57,000)
taxes
Gain on sale of property and equipment (12,000) -
Provision (credit) for doubtful 17,000 (70,000)
accounts receivable
Origination of installment contracts (713,000) (1,145,000)
Principal collected on originated 37,000 119,000
installment contracts
Change in assets and liabilities, net
of effect from purchase of subsidiary:
Inventories (3,235,000) 1,844,000
Accounts receivable (10,081,000) (14,224,000)
Prepayments and other (393,000) (1,099,000)
Accounts payable 6,453,000 3,500,000
Accrued liabilities 2,223,000 1,251,000
Net cash used in operating (2,496,000) (5,333,000)
activities
Investing activities:
Purchase of subsidiary, net of cash (857,000) -
acquired
Capital expenditures (433,000) (1,756,000)
Investment in joint ventures - (481,000)
Increase in organizational and pre- (94,000) -
operating costs
Proceeds from sale of property and 12,000 -
equipment
Net cash used in investing activities (1,372,000) (2,237,000)
Financing activities:
Purchase of treasury stock (5,765,000) -
Net borrowings on notes payable 3,123,000 4,132,000
Repayments on long-term debt (255,000) -
Proceeds from exercise of stock options 10,000 -
Net cash provided by (used in) (2,887,000) 4,132,000
financing activities
Net increase (decrease) in cash and cash (6,755,000) (3,438,000)
equivalents
Cash and cash equivalents at the beginning of17,676,000 5,299,000
period
Cash and cash equivalents at the end of $10,921,000 $1,861,000
period
Supplemental cash flow information:
Cash paid for interest $ 670,000 $ 293,000
Cash paid for income taxes $ 236,000 1,383,000
The accompanying notes are an integral part of these consolidated condensed
financial statements.
SOUTHERN ENERGY HOMES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION:
The consolidated condensed balance sheet as of
January 2, 1998, which has been derived from audited
financial statements, and the unaudited interim
consolidated condensed financial statements as of
April 3, 1998, have been prepared by the Company
without audit, but in the opinion of management
reflect all adjustments (which include only normal
recurring adjustments) necessary for the fair
presentation of the information set forth therein.
Results of operations for the interim 1998 period
is not necessarily indicative of results expected
for the full year. While 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 the rules and regulations of the
Securities and Exchange Commission, the Company
believes that the disclosures herein are adequate to
make the information presented not misleading. These
financial statements should be read in conjunction
with the audited financial statements and the notes
thereto included in the Company's Annual Report to
Stockholders for the fiscal year ended January 2,
1998.
2. INVENTORIES:
Inventories are valued at first-in, first-out
("FIFO") cost, which is not in excess of market. An
analysis of inventories follows:
April January
3, 2,
1998 1998
(Unaudited)
Raw materials $10,675,000 $ 9,498,000
Work in progress 1,158,000 1,089,000
Finished goods 20,660,000 17,892,000
$32,493,000 $ 28,479,000
3. NET INCOME PER SHARE:
In February 1997, the Financial Accounting Standards
Board ("FASB") issued Statement of Financial
Accounting Standards ("SFAS") No. 128, Earnings per Share, which
establishes standards for computing and presenting
earnings per share ("EPS"). It replaces the
presentation of primary EPS with a presentation of
basic EPS, requires a dual presentation of basic and
diluted EPS on the face of the income statement, and
requires a reconciliation of the numerator and
denominator of the basic EPS computation to the
numerator and denominator of the diluted EPS
computation.
The Company adopted this Statement in fiscal year
1997 and in accordance with SFAS No. 128, has
restated all prior period EPS data presented. The
EPS results are as follows:
Shares Available
Net to Common
Income Shareholders Earnings Per Share
April 3, 1998
Basic $2,453,000 $13,989,296 $0.18
Dilutive effect of
options issued - 104,195 (0.01)
Diluted $2,453,000 $14,093,491 $0.17
April 4, 1997
Basic $3,783,000 $15,437,801 $0.25
Dilutive effect of
options issued - 129,632 (0.01)
Diluted $3,783,000 $15,567,433 $0.24
4. PENDING ACCOUNTING PRONOUNCEMENTS:
In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position ("SOP") 98-5, Reporting on the Costs of Start-Up
Activities. This SOP provides guidance on the financial reporting of start-up
costs and organization costs. It requires costs of start-up activities and
organization costs to be expensed as incurred. This SOP is effective for
fiscal years beginning after December 15, 1998. Initial application of this
SOP will be reported as the cumulative effect of a change in accounting
principal.
5. REPURCHASE AGREEMENTS:
It is customary practice for companies in the
manufactured home industry to enter into repurchase
agreements with financial institutions, which provide
financing to independent dealers. Generally, the
agreements provide for the repurchase of the
manufactured homes from the financing institution in
the event of repossession upon an independent
dealer's default. The Company's contingent liability
under such agreements is approximately $92 million as
of April 3, 1998. Losses experienced under these
agreements have not been significant and, in the
opinion of management, any future losses under these
agreements should not have a material effect on the
accompanying financial statements.
6. LEGAL PROCEEDINGS:
The Company is a defendant in a lawsuit filed on
March 27, 1996 in Fulton County Superior Court,
Georgia, by EurAm International, Inc., a sales agent
for the Company. On April 29, 1996, the Company
removed the case to the United States District Court
for the Northern District of Georgia in Atlanta. In
this lawsuit, the plaintiff alleges that the Company
has breached an agreement relating to the sale of the
Company's modular homes in Germany, including alleged
misrepresentations and faulty performance, resulting
in damages alleged to amount to $25 million. The
Company believes the claim is without merit and
intends to vigorously defend the claim, but there can
be no assurances as to its likely outcome.
In addition, the Company has been informed by
Gesellschoft fur Bauen Und Wohnen Hannover MbH
("GBH"), a German housing authority, that it has
replaced the Company with a local company to complete
a contract that GBH had entered into with the Company
for the purchase and erection of modular housing in
Hannover, Germany. In connection with the contract,
the Company posted a $660,000 letter of credit in
favor of GBH. In March 1997, GBH made a claim against
the Company for damages of approximately $800,000
arising from the shift in suppliers and attempted to
draw upon the letter of credit posted by the Company.
In March 1997, the Company obtained a temporary
restraining order preventing GBH from drawing upon
the letter of credit. In February 1998, the Alabama
Supreme Court issued an opinion
allowing GBH to draw on the letter of credit. GBH
promptly drew on the Company's letter of credit in
the amount of $580,000. In the opinion of management,
after consultation with legal counsel, there is no
other material exposure with regard to GBH, but there
can be no assurance that GBH will not assert additional
claims against the Company or as to the outcome of any
such claims.
The Company is a party to various other legal
proceedings incidental to its business. The majority
of these legal proceedings relate to employment
matters or product warranty liability claims for
which management believes adequate reserves are
maintained. In the opinion of management, after
consultation with legal counsel, the ultimate
liability, if any, with respect to these proceedings
will not materially affect the financial position or
results of operations of the Company; however, the
ultimate resolution of these matters, which could
occur within one year, could result in losses in
excess of the amounts reserved.
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
Thirteen weeks ended April 3, 1998 as compared with
thirteen weeks ended April 4, 1997.
Net Revenues
Total net revenues (gross revenues less volume
discounts, returns, and allowances) and finance
revenue for the quarter ended April 3, 1998 were
$76.1 million, compared with $80.1 million for the
comparable prior period, a decrease of 5.0%.
Net revenues from the wholesale sale of manufactured homes
were $58.8 million for the quarter ended April 3, 1998, as
compared with $67.5 million for the prior year period, a
decrease of 12.9%. The decline in revenues was attributable
to a decline in the number of homes shipped, which was partially
offset by an increase in the average wholesale price
per home shipped. Total homes shipped in the quarter
ended April 3, 1998 was 2,274, down 9.6% from the
number of homes shipped in the prior year period.
The decrease in homes sold was attributable to an
overall industry decline in the Company's core market
areas and increased competition within these market
areas. The average wholesale price per home in 1998
was $27,306, as compared with $26,851 in 1997, an
increase of 1.7%.
Net revenues from the retail sale of manufactued homes were
$17.0 million for the quarter ended April 3, 1998, as
compared with $11.9 million for the prior year
period, an increase of 42.4%. Total retail homes sold
in the quarter ended April 3, 1998 was 453, up 45.7%
from the number of homes sold in the prior year
period. The increase in retail revenues and retail
homes sold was attributable to an increase in the
total number of retail sales centers from 8 in the comparable
prior quarter to 20 in the current quarter.
Revenues from the retail finance subsidiary
were $300,000 for the quarter ended April 3, 1998, as
compared with $680,000 for the prior year period.
This decrease was attributable to the decreased
lending activity by the Company's wholly owned
subsidiary, Wenco Finance, Inc. ("Wenco Finance").
Wenco Finance originated and serviced consumer loans
primarily for homes manufactured by the Company. In
February 1997, the Company formed a joint venture
with 21st Century Mortgage Corporation ("21st
Century"). The joint venture, Wenco 21, will continue
to offer consumer financing for homes manufactured by
the Company as well as for other homes sold through
its retail centers and independent dealers. In light of the
shift in consumer finance activities to Wenco 21,
Wenco Finance limited its loan origination activities
to previously repossessed homes.
Gross Profit
Gross profit consists of net revenues less the cost
of sales, which includes labor, materials, and
overhead. Gross profit for the quarter ended April 3,
1998 was $11.6 million, or 15.3% of net revenues, as
compared with $12.5 million, or 15.6% of net
revenues, in the prior year period. The decline in
gross profit percentage was attributable to the decline
in manufacturing revenues and an associated decline in
margins on wholesale sales, partially offset by increased
sales from the Company's retail segment, which have a
higher gross margin than sales to independent dealers.
Selling Expenses
Selling expenses include primarily sales commissions,
advertising expenses, salaries for support personnel,
and freight costs. Selling expenses were $3.4
million, or 4.4% of net revenues, during the quarter
ended April 3, 1998, as compared with $2.9 million,
or 3.7% of net revenues, during the prior year
period. The increase in selling expense as a
percentage of net revenues was attributable primarily
to the higher level of selling expenses generally associated
with the Company's retail operation.
General and Administrative Expenses
General and administrative expenses include
administrative salaries, executive and management
bonuses, insurance costs, and professional fees.
General and administrative expenses were $3.8
million, or 4.9% of net revenues, for the quarter
ended April 3, 1998, as compared with $3.0 million,
or 3.7% of net revenues, for the same period of 1997.
The increase in general and administrative expenses
as a percentage of net revenues was attributable
primarily to salary increases and the addition of new
employees who were hired in order to staff retail
operations and to resolve staffing shortages.
Interest Expense
Interest expense for the quarter ended April 3, 1998
was $548,000, as compared with $277,000 for the
quarter ended April 4, 1997. The increase in interest
expense in the current quarter was a result of increased
notes payable associated with the floor plan
financing of the Company's retail inventory and the
addition of long-term debt in the fourth quarter of
1997.
Interest Income
Interest income for the quarter ended April 3, 1998
was $263,000, as compared with $43,000 for the quarter
ended April 4, 1997. The increase in interest income
reflects higher average cash and cash equivalent
balances during the quarter ended April 3, 1998, as
well as interest income from the $16.7 million
installment contracts receivable portfolio sold
through an asset backed securitization during the
third quarter of 1997.
Provision for Income Taxes
Income taxes are provided for based on the tax effect
of revenue and expense transactions included in the
determination of pre-tax book income. Income tax
expense for the quarter ended April 3,
1998 was $1.5 million, or an effective tax rate of
38.2%, compared with $2.3 million, or an effective
tax rate 38.0%, for the quarter ended April 4, 1997.
The decline in income tax expense is a result of
lower income in 1998.
LIQUIDITY AND CAPITAL RESOURCES
Since its organization, the Company has financed its
operations primarily with cash generated from a
combination of operations, stock offerings, and
borrowings.
Cash Flows
During the quarter ended April 3, 1998, the Company's
cash used by operations was approximately $2.5
million. Cash used by operations included
originations of installment contracts of $713,000 and
increased accounts receivable, inventories and
prepayments of $13.4 million. These amounts were
partially offset by net income of $2.5 million and
increased accounts payable and accrued liabilities of
$8.7 million. In addition to cash provided by
operating activities, other significant cash flows
included purchase of subsidiary for $857,000, capital
expenditures of $433,000, purchase of treasury stock
of $5.8 million, increased borrowings on notes
payable of $3.1 million and repayments of long-term
debt of $255,000.
During the quarter ended April 4, 1997, the
Company's cash used by operations was approximately
$5.3 million. Cash used by operations includes
originations of installment contracts of $1.1 million
and increased accounts receivable and prepayments of
$15.3 million. These amounts were partially offset
by net income of $3.8 million, decreased inventory of
$1.8 million and increased accounts payable and
accrued liabilities of $4.7 million. In addition to
cash provided by operating activities, other
significant cash flows included capital expenditures
of $1.8 million and borrowings of $4.1 million.
At April 3, 1998, the Company's net working capital
was $29.3 million, including $10.9 million in cash
and cash equivalents, as compared with $32.9 million
at April 4, 1997, including $17.7 million in cash and
cash equivalents. The decrease in net working capital
was primarily a result of a decrease in cash and cash
equivalents of $6.8 million, an increase in accounts
receivable of approximately $10.1 million and increased
inventories of $4.0 million, partially offset by
increased notes payable of approximately $3.1
million and increased accounts payable and accrued
liabilities of approximately $8.7 million. The
Company also has a $15 million unsecured line of credit
which is renewable annually and bears interest at the
London Interbank Offered Rate ("LIBOR") plus 1.5%.
The Company's ability to draw upon this line of credit
is dependent upon meeting certain financial ratios and
covenants. The Company has no outstanding borrowings under this
line.
Substantially all of the Company's dealers finance
their purchases through "floor-plan" arrangements
under which a financial institution provides the
dealer with a loan for the purchase price of the home
and maintains a security interest in the home as
collateral. In connection with a floor-plan
agreement, the financial institution which provides
the dealer financing customarily requires the Company
to enter into a separate repurchase agreement with
the financial institution under which the Company is
obligated, upon default by the dealer, to repurchase
the homes at the Company's original invoice price
plus certain administrative and shipping expenses
less any principal payments made by the dealer. At
April 3, 1998, the Company's contingent repurchase
liability under floor plan financing arrangements was
approximately $92 million. While homes
that have been repurchased by the Company under floor-
plan financing arrangements are usually sold to other
dealers and losses experienced to date under these
arrangements have been insignificant, no assurance
can be given that the Company will be able to sell to
other dealers homes which it may be obligated to
repurchase in the future under such floor plan
financing arrangements or that the Company will not
suffer losses with respect to, and as a consequence
of, those arrangements.
Expansion
In April 1998, the Company acquired substantially all
of the assets of a manufactured housing retailer in
Kentucky and West Virginia. The purchase price
consisted of approximately $5.1 million in cash.
Inflation
The Company believes that the relatively moderate
rate of inflation over the past few years has not had
a significant impact on its sales or profitability.
The Company has in the past been able to pass on most
of the increases in its costs by increasing selling
prices, although there can be no assurance that the
Company will be able to do so in the future.
Year 2000 Compliance
The Company may be required to modify or replace some
of the computer systems that it uses in order to
insure that the Company's existing application
software programs will be able to accommodate this
date value. The company is currently in the preliminary
stages of assessing the costs of making its computer systems
year 2000 compliant. Accordingly, no determination can be
made at this time regarding the costs or timing of
completion.
To the extent the Company's systems are not fully year 2000
compliant, there can be no assurance that potential systems
interruptions or the cost necessary to update software would
not have a material adverse effect on the Company's business,
financial condition, results of operations and business prospects.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995 Forward-looking
statements in this report, including without
limitation, statements relating to the adequacy of
the Company's resources, are made pursuant to the
safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Investors are
cautioned that such forward-looking statements
involve risks and uncertainties, including without
limitation: the cyclical and seasonal nature of
housing markets; the availability of financing for
prospective purchasers of the Company's homes; the
amount of capital that the Company may commit to its
Wenco 21 joint venture to make available consumer
loans; the performance of the loans held by the
Company's finance subsidiary; the availability and
pricing of raw materials; the concentration of the
Company's business in certain regional markets; the
Company's ability to execute and manage its expansion
plans; the availability of labor to implement those
plans; the highly competitive nature of the
manufactured housing industry; federal, state and
local regulation of the Company's business; the
company's contingent repurchase liabilities with
respect to dealer financing; the Company's reliance
on independent dealers; and other risks indicated
from time to time in the Company's filings with the
Securities and Exchange Commission.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is a defendant in a lawsuit filed on
March 27, 1996 in Fulton County Superior Court,
Georgia, by EurAm International, Inc., a sales agent
for the Company. On April 29, 1996, the Company
removed the case to the United States District Court
for the Northern District of Georgia in Atlanta. In
this lawsuit, the
plaintiff alleges that the Company has breached an
agreement relating to the sale of the Company's
modular homes in Germany, including alleged
misrepresentations and faulty performance, resulting
in damages alleged to amount to $25 million. The
Company believes the claim is without merit and
intends to vigorously defend the claim, but there can
be no assurances as to its likely outcome.
In addition, the Company has been informed by
Gesellschoft fur Bauen Und Wohnen Hannover MbH
("GBH"), a German housing authority, that it has
replaced the Company with a local company to complete
a contract that GBH had entered into with the Company
for the purchase and erection of modular housing in
Hannover, Germany. In connection with the contract,
the Company posted a $660,000 letter of credit in
favor of GBH. In March 1997, GBH made a claim against
the Company for damages of approximately $800,000
arising from the shift in suppliers and attempted to
draw upon the letter of credit posted by the Company.
In March 1997, the Company obtained a temporary
restraining order preventing GBH from drawing upon
the letter of credit. In February 1998, the Alabama
Supreme Court issued an opinion allowing GBH to draw
on the letter of credit. GBH promptly drew on the
Company's letter of credit in the amount of $580,000.
In the opinion of management, after consultation with
legal counsel, there is no other material exposure
with regard to GBH, but there can be no assurance that
GBH will not assert additional claims against the Company
or as to the outcome of any such claims.
The Company is a party to various other legal
proceedings incidental to its business. The majority
of these legal proceedings relate to employment
matters or product warranty liability claims for
which management believes adequate reserves are
maintained. In the opinion of management, after
consultation with legal counsel, the ultimate
liability, if any, with respect to these proceedings
will not materially affect the financial position or
results of operations of the Company; however, the
ultimate resolution of these matters, which could
occur within one year, could result in losses in
excess of the amounts reserved.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The following Exhibits are incorporated herein
by reference.
4.1 Certificate of incorporation of the Company, as amended
(filed as Exhibit 4.1 to the Registration Statement on
Form S-3, Registration No. 333-32933)
4.2 By-Laws of the Company. (Filed as Exhibit 3.2 to the
Registration Statement on Form S-1, Registration No.
33-57420) 4.3 Specimen of Stock Certificate. (Filed
as Exhibit 4.1 to the Registration Statement on Form
S-1, Registration No. 33-57420) 4.4 Southern
Development Council, Inc. Promissory Note. (Filed as
Exhibit 4.10 to the Registration Statement on Form S-
1, Registration No. 33-57420)
4.5 Stockholders' Agreement, dated as of June 8,
1989 (Filed as Exhibit 4.12 to the Registration
Statement on Form S-1, Registration No. 33-57420)
4.6 Form of First Amendment to Stockholders'
Agreement, dated as of January 13, 1993. (Filed as
Exhibit 4.13 to the Registration Statement on Form S-1,
Registration No. 33-57420)
(b) Reports on Form 8-K None
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 thereunto duly authorized.
SOUTHERN ENERGY HOMES, INC.
Date: April 27, 1998 By: /s/ Wendell L. Batchelor
Wendell L. Batchelor, Chairman, President
and Chief Executive Officer
Date: April 27, 1998 By: /s/ Keith W. Brown
Keith W. Brown, Executive Vice President,
Chief Financial Officer, Treasurer and
Secretary
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