<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Commission File Number 0-24210
AMERICAN HOMESTAR CORPORATION
(Exact name of registrant as specified in its charter)
TEXAS 76-0070846
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
2450 SOUTH SHORE BOULEVARD, SUITE 300, LEAGUE CITY, TEXAS 77573
(Address of principal executive offices, including zip code)
(281) 334-9700
(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 [ ]
Number of shares outstanding of each of the issuer's classes of common stock,
as of May 8, 2000.
Common Stock, Par Value $.05 Per Share 18,423,707
<PAGE> 2
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets - May 31, 1999 and March 31, 2000........ 2
Consolidated Statements of Operations - three months ended
February 28, 1999 and March 31, 2000 ............................. 3
Consolidated Statements of Operations - nine months ended
February 28, 1999 and March 31, 2000 ............................. 4
Consolidated Statements of Cash Flows - nine months ended
February 28, 1999 and March 31, 2000.............................. 5
Notes to Consolidated Financial Statements........................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................... 12
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K..................................... 19
</TABLE>
1
<PAGE> 3
PART I -- FINANCIAL INFORMATION
AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MAY 31, MARCH 31,
1999 2000
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash ................................................................. $ 6,865,000 $ 7,463,000
Restricted cash - insurance deposit .................................. -- 300,000
Cash in transit from financial institutions .......................... 44,414,000 29,298,000
------------ ------------
Total cash and cash equivalents ................................ 51,279,000 37,061,000
Inventories, net ..................................................... 118,681,000 100,281,000
Accounts receivable .................................................. 48,965,000 35,723,000
Manufacturer incentives receivable ................................... 543,000 540,000
Deferred tax assets .................................................. 4,488,000 4,636,000
Prepaid expenses and other current assets ............................ 12,925,000 12,757,000
------------ ------------
Total current assets ........................................... 236,881,000 190,998,000
Property, plant and equipment, net ...................................... 94,826,000 92,925,000
Goodwill (net of accumulated amortization of $11,403,000 and
$13,856,000, respectively) .......................................... 87,324,000 90,604,000
Investment in affiliates ................................................ 8,610,000 9,302,000
Other assets ............................................................ 11,675,000 10,604,000
------------ ------------
$439,316,000 $394,433,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of notes payable and capital lease .............. $ 3,086,000 $ 2,851,000
Floor plan payable, net of participations ............................ 86,671,000 80,743,000
Accounts payable ..................................................... 36,391,000 26,607,000
Accrued expenses ..................................................... 41,406,000 7,265,000
Accrued warranty costs ............................................... 8,368,000 30,163,000
------------ ------------
Total current liabilities ...................................... 175,922,000 147,629,000
Notes payable and capital lease, less current installments .............. 126,728,000 122,219,000
Deferred tax liabilities ................................................ 362,000 242,000
Minority interest in consolidated subsidiary ............................ 839,000 743,000
Shareholders' equity:
Series A convertible preferred stock, no par value, authorized
5,000,000 shares; 509,167 shares issued and outstanding ............ -- 6,110,000
Common stock, $0.05 par value; authorized 50,000,000 shares;
issued and outstanding 18,412,900 and 18,423,707 shares at
May 31, 1999 and March 31, 2000, respectively ...................... 921,000 921,000
Additional paid-in capital ........................................... 62,472,000 62,519,000
Retained earnings .................................................... 72,072,000 54,050,000
------------ ------------
Total shareholders' equity ..................................... 135,465,000 123,600,000
------------ ------------
$439,316,000 $394,433,000
============ ============
</TABLE>
2
<PAGE> 4
AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------
FEBRUARY 28, MARCH 31,
1999 2000
------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Revenues:
Net sales ........................................ $ 140,303,000 $ 120,790,000
Other revenues ................................... 11,097,000 9,565,000
------------- -------------
Total revenues ............................. 151,400,000 130,355,000
------------- -------------
Costs and expenses:
Cost of sales .................................... 112,545,000 102,485,000
Selling, general and administrative .............. 32,616,000 35,526,000
Restructuring charge ............................. -- 120,000
------------- -------------
Total costs and expenses ................... 145,161,000 138,131,000
------------- -------------
Operating income (loss) .................... 6,239,000 (7,776,000)
Interest expense .................................... (3,907,000) (4,700,000)
Other expense ....................................... (3,000) (68,000)
------------- -------------
Income (loss) before items shown below ..... 2,329,000 (12,544,000)
Income tax expense (benefit) ........................ 956,000 (5,080,000)
------------- -------------
Income (loss) before items shown below ..... 1,373,000 (7,464,000)
Earnings (loss) from affiliates ..................... 410,000 (627,000)
Minority interests .................................. 33,000 (58,000)
------------- -------------
Net income (loss) .......................... $ 1,816,000 $ (8,149,000)
============= =============
Earnings (loss) per share - basic:
Net income (loss) per share ................ $ 0.10 $ (0.44)
============= =============
Earnings (loss) per share - diluted:
Net income (loss) per share ................ $ 0.10 $ (0.44)
============= =============
</TABLE>
3
<PAGE> 5
AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
------------------------------
FEBRUARY 28, MARCH 31,
1999 2000
------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Revenues:
Net sales ......................................... $ 437,560,000 $ 404,149,000
Other revenues .................................... 30,393,000 30,774,000
------------- -------------
Total revenues .............................. 467,953,000 434,923,000
------------- -------------
Costs and expenses:
Cost of sales ..................................... 342,792,000 337,250,000
Selling, general and administrative ............... 95,089,000 107,203,000
Restructuring charges ............................. -- 2,443,000
------------- -------------
Total costs and expenses .................... 437,881,000 446,896,000
------------- -------------
Operating income (loss) ..................... 30,072,000 (11,973,000)
Interest expense ..................................... (9,382,000) (13,070,000)
Other income (expense) ............................... 81,000 (277,000)
------------- -------------
Income (loss) before items shown below ...... 20,771,000 (25,320,000)
Income tax expense (benefit) ......................... 8,536,000 (8,862,000)
------------- -------------
Income (loss) before items shown below ...... 12,235,000 (16,458,000)
Earnings (loss) from affiliates ...................... 1,219,000 (389,000)
Minority interests ................................... (97,000) (178,000)
------------- -------------
Net income (loss) ........................... $ 13,357,000 $ (17,025,000)
============= =============
Earnings (loss) per share - basic:
Net income (loss) per share ................. $ 0.75 $ (0.92)
============= =============
Earnings (loss) per share - diluted:
Net income (loss) per share ................. $ 0.71 $ (0.92)
============= =============
</TABLE>
4
<PAGE> 6
AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
------------------------------
FEBRUARY 28, MARCH 31,
1999 2000
------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ....................................................... $ 13,357,000 $ (17,025,000)
Adjustments to reconcile net income (loss) to net cash (used in)
provided by operating activities:
Depreciation and amortization ......................................... 5,056,000 12,112,000
Minority interests in income of consolidated subsidiaries ............. 97,000 178,000
Earnings in affiliates ................................................ (1,219,000) 389,000
Restructuring charge .................................................. -- 2,231,000
Deferred taxes ........................................................ 101,000 (242,000)
Change in assets and liabilities, net of acquisitions
(Increase) decrease in receivables .................................. (14,962,000) 16,930,000
(Increase) decrease in inventories .................................. (30,299,000) 22,238,000
Decrease (increase) in prepaid expenses and other current assets .... 2,837,000 (896,000)
Decrease in other assets ............................................ 861,000 1,375,000
Decrease in accounts payable ........................................ (432,000) (1,208,000)
Decrease in accrued expenses ........................................ (3,777,000) (20,650,000)
------------- -------------
Net cash (used in) provided by operating activities .......... (23,380,000) 15,432,000
------------- -------------
Cash flows from investing activities:
Payment for purchase of acquisitions, net of cash acquired .............. (32,696,000) (690,000)
Purchases of property, plant and equipment .............................. (24,324,000) (9,014,000)
------------- -------------
Net cash used in investing activities ........................ (57,020,000) (9,704,000)
------------- -------------
Cash flows from financing activities:
Participation in floor plan payable ..................................... (8,498,000) 12,552,000
Borrowings under floor plan payable ..................................... 177,648,000 114,296,000
Repayments of floor plan payable ........................................ (144,882,000) (142,043,000)
Proceeds from long-term debt borrowings ................................. 51,000,000 --
Principal payments of long-term debt .................................... (1,184,000) (2,384,000)
Exercise of stock options ............................................... 5,000 35,000
------------- -------------
Net cash provided by (used in) financing activities .......... 74,089,000 (17,544,000)
------------- -------------
Net decrease in cash and cash equivalents .................................. (11,311,000) (11,816,000)
Cash and cash equivalents, beginning of period ............................. 56,141,000 48,877,000
------------- -------------
Cash and cash equivalents, end of period ................................... $ 44,830,000 $ 37,061,000
============= =============
Supplemental disclosures of cash flow information:
Cash paid for interest .................................................. $ 9,231,000 $ 13,131,000
Cash paid for income taxes .............................................. 8,409,000 962,000
============= =============
</TABLE>
5
<PAGE> 7
AMERICAN HOMESTAR CORPORATION SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
of American Homestar Corporation and subsidiaries (the "Company") have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, they do not include all the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Because of the seasonal nature of the Company's business, operating
results for the three and nine months ended March 31, 2000, respectively, are
not necessarily indicative of the results that may be expected for the fiscal
year ending June 30, 2000. These condensed consolidated financial statements
should be read in conjunction with the financial statements and the notes
thereto included in the Company's latest annual report on Form 10-K.
In May 1999, the Board of Directors voted to change the Company's
fiscal year end from May 31 to June 30 to be effective for the year beginning
July 1, 1999. Such change was subject to IRS approval which was received on
August 31, 1999. Accordingly, the Company included the financial information for
the one month ended June 30, 1999 (the transition period) in the quarterly
report on Form 10-Q for the quarterly period ended September 30, 1999. This new
fiscal year will allow the Company to conform its quarterly reporting periods to
those predominantly used in its industry.
RECLASSIFICATIONS
Certain prior years' amounts have been reclassified to conform to
classifications used in the current period.
NON-CASH TRANSACTIONS
In connection with the Company's December 29, 1998 acquisition of
R-Anell Custom Homes, Inc. and its related manufacturing companies, Gold Medal
Homes, Inc. and Gold Medal Homes of North Carolina, Inc. (collectively
"R-Anell"), and pursuant to certain earn out provisions of the stock purchase
agreement, a third amendment to the stock purchase agreement dated September 30,
1999 was entered into by the Company and R-Anell. The purchase price was
increased by $7.5 million and paid as follows; $4.5 million (375,000 shares) of
Series A Convertible Preferred Stock (the "Series A Stock") of American Homestar
Corporation, a $1.5 million note payable and a $1.5 million payable which was
paid in cash October 15, 1999. Each share of Series A Stock is: (i) entitled to
receive dividends at a rate equal to seven and one-half percent (7-1/2%) per
annum; (ii) is generally non-voting; and (iii) is entitled to a liquidation
preference. In addition, each share of Series A Stock is convertible into one
share of the Company's Common Stock, par value $.05 per share (the "Common
Stock") from April 1, 2001 to October 1, 2001. After October 1, 2001, each share
of Series A Stock is convertible into shares of Common Stock equal to the
greater of: (1) one share of Common Stock; or (2) the number of shares of Common
Stock equal to $4.5 million divided by the average closing price of the Common
Stock. The purchase price adjustment had the effect of increasing goodwill by
$7.5 million.
On February 8, 2000, the Company entered into a settlement agreement
with DWP Management, Inc. ("DWP") and Dean W. Pollman, pursuant to which, among
other things, the Company acquired the remaining 20% interest in Pacific
Northwest Homes, Inc. As part of this settlement, the Company's $3.3 million
promissory note to DWP was cancelled and DWP and its affiliates purchased the
personal property and certain new and used home inventory of two retail sales
centers from the Company. Consideration paid by the Company for the remaining
20% interest included $690,000 in cash as well as $1.6 million (134,167 shares)
of Series A Stock. Each share of Series A Stock is: (i) entitled to receive
dividends at a rate equal to seven and one-half percent (7-1/2%) per annum; (ii)
is generally non-voting; and (iii) is entitled to a liquidation preference. In
addition, each share of Series A Stock is convertible into one share of Common
Stock from April 1, 2001 to October 1, 2001. After October 1, 2001, each share
of Series A Stock is convertible into shares of Common Stock equal to the
greater of: (1) one share of Common Stock; or (2) the number of shares of Common
Stock equal to $1.6 million divided by the average closing price of the Common
Stock.
6
<PAGE> 8
AMERICAN HOMESTAR CORPORATION SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
REPURCHASE AGREEMENTS
The Company has entered into agreements with various financial
institutions and other credit sources under which the Company has agreed to
repurchase manufactured homes sold to independent dealers in the event of
default by a dealer in its obligation to such credit sources. Under the terms of
such agreements, the Company agrees to repurchase manufactured homes at
declining prices over the periods of the agreements (which generally range from
12 to 15 months). At March 31, 2000, the Company's contingent repurchase
liability was approximately $107.7 million. Historically these repurchase
activities have been negligible, however during the three months ended March 31,
2000, the Company set up a reserve for future losses of approximately $2 million
related to such repurchase liabilities.
INVENTORIES
A summary of inventories follows:
<TABLE>
<CAPTION>
MAY 31, MARCH 31,
1999 2000
------------ ------------
<S> <C> <C>
Manufactured homes:
New ................................ $ 82,564,000 $ 78,798,000
Used ............................... 9,179,000 6,547,000
Furniture and supplies ............... 10,176,000 4,665,000
Raw materials and work-in-process .... 16,762,000 10,271,000
------------ ------------
$118,681,000 $100,281,000
============ ============
</TABLE>
INVESTMENT IN AFFILIATES
Summary financial information for the Company's 50% owned subsidiary, 21st
Century Mortgage Corporation, and the Company's 25% owned subsidiary, HomeMax,
Inc., ("HomeMax") on a stand alone basis, for the three months ended
February 28, 1999 and March 31, 2000 follows:
<TABLE>
<CAPTION>
21st Century Mortgage Corporation THREE MONTHS ENDED
---------------------------
FEBRUARY 28, MARCH 31,
1999 2000
------------ ------------
<S> <C> <C>
Total revenues ....................... $ 4,312,000 $ 4,099,000
Net income ........................... $ 820,000 $ 352,000
============ ============
</TABLE>
<TABLE>
<CAPTION>
HomeMax THREE MONTHS ENDED
---------------------------
FEBRUARY 28, MARCH 31,
1999 2000
------------ ------------
<S> <C> <C>
Total revenues ....................... -- $ 9,022,000
Net loss ............................. -- $ (3,320,000)
============ ============
</TABLE>
Summary financial information for the Company's 50% owned subsidiary, 21st
Century Mortgage Corporation, and the Company's 25% owned subsidiary, HomeMax,
on a stand alone basis, for the nine months ended February 28, 1999 and
March 31, 2000 follows:
7
<PAGE> 9
AMERICAN HOMESTAR CORPORATION SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
<TABLE>
<CAPTION>
21st Century Mortgage Corporation NINE MONTHS ENDED
---------------------------
FEBRUARY 28, MARCH 31,
1999 2000
------------ ------------
<S> <C> <C>
Total revenues ....................... $ 12,555,000 $ 12,771,000
Net income ........................... $ 2,438,000 $ 1,454,000
============ ============
</TABLE>
<TABLE>
<CAPTION>
HomeMax NINE MONTHS ENDED
---------------------------
FEBRUARY 28, MARCH 31,
1999 2000
------------ ------------
<S> <C> <C>
Total revenues ....................... -- $ 17,874,000
Net loss ............................. -- $ (7,652,000)
============ ============
</TABLE>
RESTRUCTURING CHARGES
The Company incurred a restructuring charge during the first quarter of
fiscal year 2000 of $2.3 million due to the closing of one manufacturing
facility. Certain assets used in the affected operation were written down to
their net realizable value. The Company also incurred severance and other
benefit-related costs in connection with the restructuring of this operation.
The restructuring charge is shown as a separate component of operating expenses.
In addition to the restructuring charge, the Company also took inventory
write-downs of approximately $0.7 million to allow for reduced selling prices
and selling concessions on the discontinued models of the closed manufacturing
facility at Company-owned retail sales centers and franchise locations. The
additional inventory charge is included in cost of sales for the nine months
ended March 31, 2000.
The Company incurred a restructuring charge during the third quarter of
fiscal year 2000 of $120,000 due to the idling of one manufacturing facility.
The Company incurred severance and other benefit-related costs in connection
with the restructuring of this operation. The restructuring charge is shown as a
separate component of operating expenses. In addition to the restructuring
charge, the Company also took an inventory write-down of approximately $100,000
to allow for reduced selling prices and selling concessions on the discontinued
models of the idled manufacturing facility at Company-owned retail sales centers
and franchise locations. The additional inventory charge is included in cost of
sales for the three and nine months ended March 31, 2000.
EARNINGS PER SHARE
The following data show the amounts used in computing earnings (loss)
per share and the weighted average number of shares of dilutive potential common
stock for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------
FEBRUARY 28, MARCH 31,
1999 2000
------------ ------------
<S> <C> <C>
Net income (loss) ............................. $ 1,816,000 $ (8,149,000)
============ ============
Weighted average common shares outstanding .... 18,192,645 18,423,707
Dilutive effect of stock options .............. 568,784 --
------------ ------------
Common shares denominator ..................... 18,761,429 18,423,707
============ ============
</TABLE>
8
<PAGE> 10
AMERICAN HOMESTAR CORPORATION SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
----------------------------
FEBRUARY 28, MARCH 31,
1999 2000
------------ ------------
<S> <C> <C>
Net income (loss) ............................. $ 13,357,000 $(17,025,000)
============ ============
Weighted average common shares outstanding .... 17,773,783 18,422,966
Dilutive effect of stock options .............. 929,621 --
------------ ------------
Common shares denominator ..................... 18,703,404 18,422,966
============ ============
</TABLE>
For the three and nine months ended March 31, 2000, potentially dilutive
securities, which includes outstanding stock options and Series A Stock,
totalling 194 and 134,167 and 29,097 and 509,167 shares, respectively. These
potentially dilutive options were not included in the loss per share calculation
for the three and nine months ended March 31, 2000, as their effect would be
anti-dilutive due to the net loss incurred in the respective periods.
LONG-TERM DEBT
On September 30, 1998, the Company completed the private placement of
$46 million of 7.25% Series A Senior Unsecured Notes and $5 million of 7.14%
Series B Senior Unsecured Notes with an average life of eight years and a final
maturity in September 2008. Such notes require quarterly interest payments and
equal annual principal reductions beginning in 2004. Proceeds from the notes
were used to fund acquisitions and expansions with the remainder used for
general corporate purposes.
The Company's amended loan agreements related to the 8.32% Senior
Unsecured Notes issued in July 1997 and the 7.25% Series A and 7.14% Series B
Senior Unsecured Notes described above contain certain requirements as to net
working capital, consolidated net worth, fixed charge coverage and restrictions
as to disposition of assets, additional long-term debt, redemption of common
stock, payment of dividends and prepayment of subordinated debt. The terms of
the agreements, as amended, provide for the maintenance of certain financial
covenants as well as possible increases in the interest rate based on levels of
the fixed cost coverage ratio. Because of the operating losses reported by the
Company during fiscal year 2000, the Company would not have been in compliance
with the fixed cost coverage requirement at March 31, 2000 had the noteholders
not granted a waiver of such technical defaults. The waiver extends to September
29, 2000. In addition, based on the levels of the fixed cost coverage ratios, an
additional 35 and 60 basis points was added to the interest rate for the second
and third quarters, respectively, of fiscal year 2000. The Company has met with
the noteholders and opened negotiations for a permanent solution. The
noteholders have assured management that they are agreeable to such a
longer-term solution. Substantial progress has been made and the Company
believes it is highly likely that a permanent solution will be agreed to.
BUSINESS SEGMENTS
The Company operates primarily in three business segments, retail
sales, manufacturing of manufactured housing and financial services. The
following table summarizes, for the periods indicated, information about these
segments:
9
<PAGE> 11
AMERICAN HOMESTAR CORPORATION SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS) ADJUSTMENTS/
RETAIL MANUFACTURING OTHER ELIMINATIONS TOTAL
------ ------------- ----- ------------ -----
<S> <C> <C> <C> <C> <C>
THREE MONTHS ENDED
FEBRUARY 28, 1999
Revenues from external customers .............. $ 95,675 $ 50,862 $ 4,863 $ -- $ 151,400
Intersegment revenues ......................... 980 41,694 1,507 (44,181) --
Interest expense .............................. 2,480 1,024 2,291 (1,888) 3,907
Depreciation and amortization ................. 636 736 120 -- 1,492
Segment profit (loss) before income taxes .... (2,284) 4,808 (299) 104 2,329
Earnings from affiliate ....................... -- -- 410 -- 410
Segment assets ................................ 205,755 165,248 259,241 (209,343) 420,901
Expenditures for segment assets ............... 8,020 2,460 597 -- 11,077
THREE MONTHS ENDED
MARCH 31, 2000
Revenues from external customers .............. $ 81,251 $ 45,408 $ 3,696 $ -- $ 130,355
Intersegment revenues ......................... 768 37,579 798 (39,145) --
Interest expense .............................. 2,511 1,035 2,508 (1,354) 4,700
Depreciation and amortization ................. 2,131 1,515 573 -- 4,219
Segment profit (loss) before taxes ........... (10,274) (2,287) (637) 654 (12,544)
Segment assets ................................ 207,371 150,099 332,332 (295,369) 394,433
Earnings (loss) from affiliates ............... (803) -- 176 -- (627)
Segment assets ................................ 207,371 150,099 332,332 (295,369) 394,433
Expenditures for segment assets ............... 35 2,521 252 -- 2,808
NINE MONTHS ENDED
FEBRUARY 28, 1999
Revenues from external customers .............. $ 298,620 $ 155,980 $ 13,353 $ -- $ 467,953
Intersegment revenues ......................... 2,695 138,087 4,879 (145,661) --
Interest expense .............................. 6,622 2,568 5,562 (5,370) 9,382
Depreciation and amortization ................. 2,226 2,521 309 -- 5,056
Segment profit (loss) before income taxes .... 474 24,178 (1,738) (2,143) 20,771
Earnings from affiliate ....................... -- -- 1,219 -- 1,219
Expenditures for segment assets ............... 19,175 4,129 1,020 -- 24,324
NINE MONTHS ENDED
MARCH 31, 2000
Revenues from external customers .............. $ 264,645 $ 157,804 $ 12,474 $ -- $ 434,923
Intersegment revenues ......................... 383 118,441 6,094 (124,918) --
Interest expense .............................. 8,242 3,419 7,318 (5,909) 13,070
Depreciation and amortization ................. 6,512 4,260 1,340 -- 12,112
Segment profit (loss) before income taxes .... (21,920) (2,323) (1,863) 786 (25,320)
Earnings (loss) from affiliates ............... (1,116) -- 727 -- (389)
Expenditures for segment assets ............... 3,153 5,162 699 -- 9,014
</TABLE>
Intersegment revenues are primarily sales by the manufacturing segment
to the retail segment and are transferred at market price. The adjustment to
intersegment revenue is made to eliminate intercompany sales between the
manufacturing and retail segments. The interest expense adjustment is made to
eliminate intersegment interest between the corporate and manufacturing and
retail segments and to net the interest expense on the floor plan credit
facility against the interest earned. The segment assets adjustment is primarily
made up of an adjustment to eliminate
10
<PAGE> 12
AMERICAN HOMESTAR CORPORATION SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
subsidiary's equity at the corporate level, a reclass of the floor plan
participation balance and the elimination of intercompany receivables.
SUBSEQUENT EVENT
In April 2000, the Company announced a formal plan to return its retail
operations to profitability through the conversion of selected, under-performing
non-core market Company retail stores to franchises or exclusive independent
dealer locations in the coming months. When completed, floor plan debt will be
reduced by as much as $25 million and fixed operating expenses, including
interest, will be reduced by $16 million annually. In connection with this plan,
the Company expects to incur after-tax restructuring and asset impairment
charges of approximately $18 million, or $0.98 per diluted share, in its fourth
quarter ended June 30, 2000. The restructuring charges include the write-off of
$14 million in goodwill associated with prior retail acquisitions plus a
provision for impaired leasehold improvements at the affected stores. In
addition, other related special charges are expected for impairment of inventory
at these same stores.
11
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Form 10-Q contains certain forward-looking statements and
information relating to the Company that are based on the beliefs of the
Company's management as well as assumptions made by and information currently
available to the Company's management. When used in this document, the words
"anticipate," "believe," "estimate," "should," and "expect" and similar
expressions as they relate to the Company or management of the Company are
intended to identify forward-looking statements. Such statements reflect the
current views of the Company with respect to future events and are subject to
certain risks, uncertainties and assumptions, including the risk factors
described in the Company's most recently filed registration statement. Should
one or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
described herein as anticipated, believed, estimated or expected. The Company
does not intend to update these forward-looking statements.
GENERAL
American Homestar Corporation is a national vertically integrated
manufactured housing company in the United States with operations in
manufacturing, retailing, financing and insurance.
In December 1998, the Company acquired R-Anell, which produces
manufactured and modular homes in three facilities located in North Carolina and
sells its homes through approximately 100 independent and Company-owned retail
sales centers located primarily in North Carolina, South Carolina and Virginia.
In March 1999, the Company acquired 25% of the outstanding common stock
of HomeMax from Zaring National Corporation ("Zaring") in exchange for a $4.4
million note, and the Company loaned HomeMax $4 million in exchange for a
subordinated note convertible into an additional 25% of HomeMax's common stock.
The Company also received an option to acquire all of the remaining HomeMax
common stock after three years at a predefined price. Zaring may require, or the
Company may elect, earlier exercise of this option if HomeMax meets certain
performance goals within the three-year period. In connection with this
transaction, the Company entered into a Management and Consulting Agreement with
Zaring and HomeMax pursuant to which the Company will manage the HomeMax
operations. In addition, the Company, Zaring and HomeMax entered into a
Securityholders Agreement providing for the joint control of HomeMax by the
Company and Zaring and certain restrictions on the capital stock of HomeMax.
HomeMax currently operates eleven retail sales centers in North Carolina, South
Carolina and Kentucky.
On February 8, 2000, the Company entered into a settlement agreement
with DWP Management, Inc. ("DWP") and Dean W. Pollman, pursuant to which, among
other things, the Company acquired the remaining 20% interest in Pacific
Northwest Homes, Inc. As part of this settlement, the Company's $3.3 million
promissory note to DWP was cancelled and DWP and its affiliates purchased the
personal property and certain new and used home inventory of two retail sales
centers from the Company. Consideration paid by the Company for the remaining
20% interest included $690,000 in cash as well as $1.6 million (134,167 shares)
of Series A Stock. Each share of Series A Stock is: (i) entitled to receive
dividends at a rate equal to seven and one-half percent (7-1/2%) per annum; (ii)
is generally non-voting; and (iii) is entitled to a liquidation preference. In
addition, each share of Series A Stock is convertible into one share of Common
Stock from April 1, 2001 to October 1, 2001. After October 1, 2001, each share
of Series A Stock is convertible into shares of Common Stock equal to the
greater of: (1) one share of Common Stock; or (2) the number of shares of Common
Stock equal to $1.6 million divided by the average closing price of the Common
Stock.
12
<PAGE> 14
VERTICAL INTEGRATION AND INTERNALIZATION
The Company's business strategy is based on an increasing degree of
vertical integration over time. Vertical integration allows the Company to
increase its profit margins on the manufacture and sale of its products, and
provides the ability to realize additional sources of income from financing the
sales and insuring the Company's products.
MANUFACTURING AND RETAIL RESTRUCTURING
The Company incurred a restructuring charge during the first quarter of
fiscal year 2000 of $2.3 million due to the closing of one manufacturing
facility. Certain assets used in the affected operation were written down to
their net realizable value. The Company also incurred severance and other
benefit-related costs in connection with the restructuring of this operation.
The restructuring charge is shown as a separate component of operating expenses.
In addition to the restructuring charge, the Company also took inventory
write-downs of approximately $0.7 million to allow for reduced selling prices
and selling concessions on the discontinued models of the closed manufacturing
facility at Company-owned retail sales centers and franchise locations. The
additional inventory charge is included in cost of sales for the nine months
ended March 31, 2000.
The Company incurred a restructuring charge during the third quarter of fiscal
year 2000 of $120,000 due to the idling of one manufacturing facility. The
Company incurred severance and other benefit-related costs in connection with
the restructuring of operations. The restructuring charge is shown as a separate
component of operating expenses. In addition to the restructuring charge, the
Company also took an inventory write-down of approximately $100,000 to allow for
reduced selling prices and selling concessions on the discontinued models of the
idled manufacturing facility at Company-owned retail sales centers and franchise
locations. The additional inventory charge is included in cost of sales for the
three and nine months ended March 31, 2000.
In April 2000, the Company announced a formal plan to return its retail
operations to profitability through the conversion of selected, under-performing
non-core market Company retail stores to franchises or exclusive independent
dealer locations in the coming months. When completed, floor plan debt will be
reduced by as much as $25 million and fixed operating expenses, including
interest, reduced by $16 million annually. In connection with this plan, the
Company expects to incur after-tax restructuring and asset impairment charges of
approximately $18 million, or $0.98 per diluted share, in its fourth quarter
ended June 30, 2000. The restructuring charges include the write-off of $14
million in goodwill associated with prior retail acquisitions plus a provision
for impaired leasehold improvements at the affected stores. In addition, other
related special charges are expected for impairment of inventory at these same
stores.
13
<PAGE> 15
RESULTS OF OPERATIONS
The following table summarizes certain key sales statistics for the
three and nine months ended February 28, 1999 and March 31, 2000:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------
FEBRUARY 28, MARCH 31,
1999 2000
------------ ---------
<S> <C> <C>
Company-manufactured new homes sold at retail ........... 1,215 1,214
Total new homes sold at retail .......................... 1,396 1,389
Internalization rate (1) ................................ 87% 87%
Previously-owned homes sold at retail ................... 599 596
Average retail selling price--new homes (HUD code) ...... $ 53,622 $ 55,330
Average retail selling price--new homes (modular) ....... -- $122,796
Number of retail sales centers at end of period ......... 121 120
Total manufacturing shipments ........................... 2,703 2,386
Manufacturing shipments to independent
dealers, including franchisees ...................... 1,434 1,292
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
------------------------
FEBRUARY 28, MARCH 31,
1999 2000
------------ ---------
<S> <C> <C>
Company-manufactured new homes sold at retail ......... 4,000 3,786
Total new homes sold at retail ........................ 4,706 4,303
Internalization rate (1) .............................. 85% 88%
Previously-owned homes sold at retail ................. 1,594 1,637
Average retail selling price--new homes (HUD code) .... $ 53,081 $ 55,141
Average retail selling price--new homes (modular) ..... -- $115,621
Number of retail sales centers at end of period ....... 121 120
Total manufacturing shipments ......................... 8,874 7,943
Manufacturing shipments to independent
dealers, including franchisees ..................... 4,506 4,535
</TABLE>
(1) The internalization rate is the proportion of new homes sold by
Company-owned retail sales centers that are manufactured by the Company.
14
<PAGE> 16
The following table summarizes the Company's operating results,
expressed as a percentage of revenues, for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTH ENDED
-----------------------
FEBRUARY 28, MARCH 31,
1999 2000
------------ ---------
<S> <C> <C>
Total revenues ......................... 100.0% 100.0%
Gross profit ........................... 25.7% 21.4%
Selling, general and administrative .... 21.6% 27.3%
Restructuring charge ................... -- 0.0%
Operating income (loss) ................ 4.1% (6.0%)
Net income (loss) ...................... 1.2% (6.3%)
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------------
FEBRUARY 28, MARCH 31,
1999 2000
------------ ---------
<S> <C> <C>
Total revenues ......................... 100.0% 100.0%
Gross profit ........................... 26.8% 22.5%
Selling, general and administrative .... 20.3% 24.6%
Restructuring charge ................... -- 0.6%
Operating income (loss) ................ 6.4% (2.8%)
Net income (loss) ...................... 2.9% (3.9%)
</TABLE>
Three months ended March 31, 2000 compared to three months ended February 28,
1999
Net Sales. Net sales of manufactured homes were $120.8 million for the
three months ended March 31, 2000, compared to $140.3 million for the three
months ended February 28, 1999. Prevailing industry conditions characterized by
a highly competitive retail environment, increasing interest rates and general
credit tightening were all factors contributing to decreased sales. The weighted
average number of new homes sold per retail sales center in the core Nationwide
Housing Corporation ("Nationwide") operations decreased from 12 in the third
quarter of fiscal 1999 to 11 in the third quarter of fiscal 2000. The Company
closed two retail sales centers during the third quarter of fiscal 2000.
Other Revenues. Other revenues decreased to $9.6 million for the three
months ended March 31, 2000, compared to $11.1 million for the three months
ended February 28, 1999. Revenues from insurance operations decreased to $3.7
million for the three months ended March 31, 2000, compared to $4.9 million for
the three months ended February 28, 1999.
Cost of Sales. Cost of manufactured homes sold were $102.5 million
(84.8% of net sales) for the three months ended March 31, 2000, as compared to
$112.6 million (80.2% of net sales) for the three months ended February 28,
1999. The increase in cost of sales, expressed as a percentage of sales, was
primarily the result of lower gross margins in the Company's retail operations
and in the Company's manufacturing operations due to decreased efficiency in
connection with lower operating levels.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the three months ended March 31, 2000, were $35.5
million (27.3% of total revenues), as compared to $32.6 million (21.6%
15
<PAGE> 17
of total revenues) for the three months ended February 28, 1999. The increase in
selling, general and administrative expenses is attributable to an increase in
fixed costs and expenses related to the R-Anell manufacturing facilities which
were acquired in December 1998.
Restructuring Charge. The Company incurred a restructuring charge
during the three months ended March 31, 2000 of $120,000 due to the idling of
one manufacturing facility in the third quarter of fiscal year 2000. The Company
incurred severance and other benefit-related costs in connection with the
restructuring of operations. The restructuring charge is shown as a separate
component of operating expenses. In addition to the restructuring charge, the
Company also took inventory write-downs of approximately $100,000 to allow for
reduced selling prices and selling concessions on the discontinued models of the
idled manufacturing facility at Company-owned retail sales centers and franchise
locations. The additional inventory charge is included in cost of sales for the
three months ended March 31, 2000.
Interest Expense. Interest expense increased 20.3% to $4.7 million for
the three months ended March 31, 2000, from $3.9 million for the three months
ended February 28, 1999. This increase was primarily attributable to increased
interest rates on the Company's floor plan debt, which fluctuates with prime.
Interest expense also increased as a result of a 60 basis point increase in the
interest rate on the Company's Senior Unsecured Notes due to the levels of the
fixed cost coverage ratio.
Income Taxes. The income tax expense (benefit), expressed as a
percentage of income (loss) before income taxes, minority interests and earnings
(loss) from affiliates, was a benefit of (40.5%) for the three months ended
March 31, 2000 versus expense of 41.1% for the three months ended February 28,
1999.
Nine months ended March 31, 2000 compared to nine months ended February 28, 1999
Net Sales. Net sales of manufactured homes were $404.1 million for the
nine months ended March 31, 2000, compared to $437.6 million for the nine months
ended February 28, 1999. The decrease was primarily the result of a 6% decrease
in the number of new and previously-owned homes sold at retail. Prevailing
industry conditions characterized by a highly competitive retail environment,
increasing interest rates and general credit tightening were all factors
contributing to decreased sales. The weighted average number of new homes sold
per retail sales center in the core Nationwide Housing Corporation
("Nationwide") operations decreased from 45 in the first nine months of fiscal
1999 to 35 in the first nine months of fiscal 2000. The Company closed 5 retail
sales centers during the first nine months of fiscal 2000.
Other Revenues. Other revenues increased to $30.8 million for the nine
months ended March 31, 2000, compared to $30.4 million for the nine months ended
February 28, 1999. Revenues from insurance operations decreased to $12.5 million
for the nine months ended March 31, 2000, compared to $13.4 million for the nine
months ended February 28, 1999.
Cost of Sales. Cost of manufactured homes sold were $337.3 million
(83.4% of net sales) for the nine months ended March 31, 2000, as compared to
$342.8 million (78.3% of net sales) for the nine months ended February 28, 1999.
The increase in cost of sales, expressed as a percentage of sales, was primarily
the result of lower gross margins in the Company's retail operations and in the
Company's manufacturing operations due to decreased efficiency in connection
with lower operating levels.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the nine months ended March 31, 2000, were $107.2
million (24.6% of total revenues), as compared to $95.1 million (20.3% of total
revenues) for the nine months ended February 28, 1999. The increase in selling,
general and administrative expenses is attributable to an increase in fixed
costs and expenses related to the R-Anell manufacturing facilities which were
acquired in December 1998.
16
<PAGE> 18
Restructuring Charges. The Company incurred a restructuring charge
during the nine months ended March 31, 2000 of $2.4 million due to the closing
of one manufacturing facility in the first quarter of fiscal year 2000 and the
idling of one manufacturing facility in the third quarter of fiscal year 2000.
Certain assets used in the operation of the closed facility were written down to
their net realizable value. The Company also incurred severance and other
benefit-related costs in connection with the restructuring of operations. The
restructuring charge is shown as a separate component of operating expenses. In
addition to the restructuring charge, the Company also took inventory
write-downs of approximately $0.8 million to allow for reduced selling prices
and selling concessions on the discontinued models of these manufacturing
facilities at Company-owned retail sales centers and franchise locations. The
additional inventory charge is included in cost of sales for the nine months
ended March 31, 2000.
Interest Expense. Interest expense increased 39.3% to $13.1 million for
the nine months ended March 31, 2000, from $9.4 million for the nine months
ended February 28, 1999. This increase was primarily attributable to increased
borrowings associated with the Company's private placement of 7.25% Series A and
7.14% Series B Senior Unsecured Notes totaling $51 million in September 1998 and
increased interest rates on the Company's floor plan debt, which fluctuates with
prime. Interest expense also increased as a result of a 35 and 60 basis point
increase in the interest rate for the second and third quarters, respectively,
of fiscal year 2000 on the Company's Senior Unsecured Notes due to the levels of
the fixed cost coverage ratio.
Income Taxes. The income tax expense (benefit), expressed as a
percentage of income (loss) before income taxes, minority interests and earnings
(loss) from affiliates, was a benefit of (35.0%) for the nine months ended March
31, 2000 versus expense of 41.1% for the nine months ended February 28, 1999.
The lower effective tax rate was the result of the Company's loss position for
the current year period and the proportionate relationship of permanent
differences, principally nondeductible goodwill amortization expense, to the
loss.
LIQUIDITY AND CAPITAL RESOURCES.
Cash provided by operations was $15.4 million for the nine months ended
March 31, 2000. Substantial decreases in receivables and inventory accounted for
a significant portion of the cash provided in the period.
The Company had capital expenditures of $9.0 million for the nine
months ended March 31, 2000. These expenditures were used primarily to enhance
and maintain existing retail sales centers, manufacturing capacity and for
leasehold improvements with respect to the Company's franchisees.
At March 31, 2000, the Company had a $125 million floor plan credit
facility with Associates Housing Finance, LLC ("the Associates"). The facility,
similar to a revolving credit facility, bears interest at a rate of prime less
0.05% and is used to finance the purchase of inventory of new homes at
Company-owned retail sales centers. The Company is able to purchase
participations in the floor plan credit facility, effectively reducing its net
borrowings under the facility. These participations have earned interest at a
rate of prime less 0.75% (with such interest income reported as a reduction of
total interest expense) and are immediately available to the Company in cash as
the Company redeems them. At March 31, 2000, the Company had net borrowings of
$80.7 million (gross borrowings of $110.1 million less participations of $29.4
million). In January 2000, the Associates announced that they would be
discontinuing retail and floor plan financing for the manufactured housing
industry. The Company does however have an eighteen-month contract from January
2000 until June 2001 with the Associates to continue to provide floor plan
financing. The Associates has acknowledged this and assured the Company that it
will continue to provide their floor plan credit facility under the same terms,
except that the rate paid to the Company on its participation balance is being
lowered to prime less 1.5% from prime less 0.75%. The Company has actively
engaged in the ordinary course of business to identify alternative sources of
floor plan financing. The Company has established a $50 million floor plan
credit facility with Bombardier Capital and has had discussions with other
lenders who have expressed an interest in establishing floor plan credit
facilities for the Company. The Company intends to establish smaller floor plan
credit facilities with several lenders over time so as not to be as dependent on
a single lender in the future.
17
<PAGE> 19
On September 28, 1998, the Company completed the private placement of
$46 million of 7.25% Series A Senior Unsecured Notes and $5 million of 7.14%
Series B Senior Unsecured Notes with an average life of eight years and a final
maturity in September 2008. Such notes require quarterly interest payments and
equal annual principal reductions beginning in 2004. Proceeds from the notes
were used to fund acquisitions and expansion with the remainder used for general
corporate purposes. The terms of the agreement noted above as well as the 8.32%
Senior Unsecured Notes issued in July 1997, as amended, provide for the
maintenance of certain financial covenants as well as possible increases in the
interest rate based on levels of the fixed cost coverage ratio. Because of the
operating losses reported by the Company during fiscal year 2000, the Company
would not have been in compliance with the fixed cost coverage requirement at
March 31, 2000 had the noteholders not granted a waiver of such technical
defaults. The waiver extends to September 29, 2000. In addition, based on the
levels of the fixed cost coverage ratios, an additional 35 and 60 basis points
was added to the interest rate for the second and third quarters, respectively,
of fiscal year 2000. The Company has met with the noteholders and opened
negotiations for a more permanent solution. The noteholders have assured
management that they are agreeable to such a longer-term solution. Substantial
progress has been made and the Company believes it is highly likely that a
permanent solution will be agreed to.
Management believes that current cash resources, additional borrowing
capacity and future cash provided from operations will be sufficient to satisfy
internal working capital and capital expenditure requirements for the
foreseeable future. Management's current focus is on improving performance and
profitability in existing operations rather than substantial near term growth.
Management has also undertaken a series of initiatives designed to reduce net
debt levels and to enhance overall liquidity over the next two quarters.
18
<PAGE> 20
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT REPORT WITH WHICH
DESCRIPTION NO. EXHIBIT WAS FILED
- ----------- ------- -----------------
<S> <C> <C>
Restated Articles of Incorporation of American Homestar Corporation. 3.1 S-1 Registration Statement
No. 33-78628
Amended and Restated Bylaws of American Homestar Corporation. 3.2 S-1 Registration Statement
No. 33-78628
Specimen Common Stock Certificate. 4.1 S-1 Registration Statement
No. 33-78628
First Amendment to Employment Agreement dated April 1, 2000 by 10.1 Filed herewith
and between American Homestar Corporation and Laurence A. Dawson, Jr.
First Amendment to Employment Agreement dated April 1, 2000 by 10.2 Filed herewith
and between American Homestar Corporation and Finis F. Teeter
Amended and Restated Note Purchase Agreement, 8.32% Senior 10.3 Filed herewith
Unsecured Notes due July 7, 2007 and 7.25% Series A and 7.14%
Series B Senior Unsecured Notes due September 15, 2008.
None 11
None 15
None 18
None 19
None 22
None 24
Financial Data Schedule 27 Filed herewith
None 99
</TABLE>
(b) REPORTS ON FORM 8-K - The Company did not file any reports on Form 8-K
during the quarter for which this report is filed.
19
<PAGE> 21
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.
AMERICAN HOMESTAR CORPORATION
Date: May 12, 2000 By: /s/ Craig A. Reynolds
---------------------
Craig A. Reynolds
Executive Vice President, Chief Financial
Officer and Secretary (Principal
Financial and Accounting Officer)
20
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT REPORT WITH WHICH
DESCRIPTION NO. EXHIBIT WAS FILED
- ----------- ------- -----------------
<S> <C> <C>
Restated Articles of Incorporation of American Homestar Corporation. 3.1 S-1 Registration Statement
No. 33-78628
Amended and Restated Bylaws of American Homestar Corporation. 3.2 S-1 Registration Statement
No. 33-78628
Specimen Common Stock Certificate. 4.1 S-1 Registration Statement
No. 33-78628
First Amendment to Employment Agreement dated April 1, 2000 by 10.1 Filed herewith
and between American Homestar Corporation and Laurence A. Dawson, Jr.
First Amendment to Employment Agreement dated April 1, 2000 by 10.2 Filed herewith
and between American Homestar Corporation and Finis F. Teeter
Amended and Restated Note Purchase Agreement, 8.32% Senior 10.3 Filed herewith
Unsecured Notes due July 7, 2007 and 7.25% Series A and 7.14%
Series B Senior Unsecured Notes due September 15, 2008.
None 11
None 15
None 18
None 19
None 22
None 24
Financial Data Schedule 27 Filed herewith
None 99
</TABLE>
<PAGE> 1
EXHIBIT 10.1
FIRST AMENDMENT
TO
EMPLOYMENT AGREEMENT
This First Amendment to Employment Agreement (the "Amendment"), dated
as of April 1, 2000, is entered into by and between American Homestar
Corporation, a Texas corporation ("Employer"), and Laurence A. Dawson, Jr.
("Employee"). Capitalized terms used herein but not defined herein shall have
the respective meanings ascribed to them in the Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, Employer and Employee are parties to that certain Employment
Agreement, dated as of November 15, 1996 (the "Agreement"); and
WHEREAS, Employer and Employee desire to amend the Agreement to the
extent provided herein;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
A. AMENDMENT TO AGREEMENT. The Agreement is hereby amended as follows:
(1) Section 3 of the Agreement is hereby amended to read in
its entirety as follows:
3. Term. The employment of Employee under this
Agreement shall commence on October 1, 1996, and shall
continue, unless earlier terminated pursuant to Section 6 or 7
below, until June 30, 2003; provided, however, that this
Agreement shall automatically extend for a one year period on
each June 30, commencing on June 30, 2003, unless either
Employer or Employee provides the other written notice at
least 180 days prior to the end of the then existing terms of
its intent to terminate this Agreement at the end of the then
applicable term. The initial term of this Agreement and any
renewal terms as provided above are collectively referred to
herein as the "Term".
(2) Effective as of the date of this Amendment, the yearly
salary set forth in Section 4 of the Agreement is hereby changed from $235,000
to $360,000.
<PAGE> 2
(3) The current Sections 7-19 of the Agreement are renumbered
as Sections 8-20, and any references in the Agreement to such Sections are
hereby changed accordingly.
(4) A new Section 7 is hereby added to the Agreement, which
Section shall read in its entirety as follows:
7. Change In Control.
(a) Termination Payment. Notwithstanding anything to the
contrary contained in Section 6 above, and in lieu of any
payments required by Section 6 above, if Employee's employment
with Employer is terminated by Employee or Employer, for any
reason, within the twelve month period following a Change in
Control (as defined in subsection (b) below), Employee shall
be entitled to receive:
(i) any unpaid salary and any accrued but unpaid
bonuses through the date of termination
following the occurrence of the Change in
Control (the "Triggering Date"); and
(ii) in lieu of any further salary or bonus
payments to Employee for periods subsequent
to the Triggering Date, Employer shall pay
as severance payment to Employee, not later
than the fifteenth (15th) day following the
Triggering Date, a lump sum severance
payment equal to the sum of: (i) Employee's
then current yearly salary multiplied by
three (3), plus (ii) an amount equal to the
average bonuses earned by Employee for the
last three completed fiscal years of
Employer multiplied by three (3).
Notwithstanding the above, in no event shall the aggregate
payments under this Section 7 exceed an amount equal to (i)
the product of three (3) times the base amount (as such term
is defined in Section 280(g) of the Internal Revenue Code of
1986, as amended), minus (ii) $1.00.
(b) Change in Control. A "Change in Control" will be deemed to
have occurred for purposes hereof (i) upon the acquisition of
beneficial ownership, directly or indirectly, by any person
(as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")) of securities of Employer representing 30% or more of
the combined voting power of Employer's then outstanding
securities; or (ii) upon the consummation of a sale of all or
substantially all of the assets of the Company and its
subsidiaries, taken as a whole, which are disposed of pursuant
to (1) a partial or complete liquidation or (2) a sale of
assets; provided, however, that a Change in Control will not
be deemed to have occurred for purposes hereof with respect to
any person meeting the requirements of clauses (i) and (ii) of
Rule 13d-1(b)(1) promulgated under the Exchange Act.
<PAGE> 3
B. MISCELLANEOUS.
(1) Except as specifically provided herein, the Agreement
shall remain in full force and effect. The Agreement and this Amendment contains
the entire agreement between Employee and Employer regarding the employment of
Employee by Employer, and supersedes any and all other agreements (oral or
written) regarding such subject matter.
(2) This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
AMERICAN HOMESTAR CORPORATION
By: /s/ Finis F. Teeter
------------------------------
Its: Chairman
/s/ Laurence A. Dawson, Jr.
------------------------------
Laurence A. Dawson, Jr.
<PAGE> 1
EXHIBIT 10.2
FIRST AMENDMENT
TO
EMPLOYMENT AGREEMENT
This First Amendment to Employment Agreement (the "Amendment"), dated
as of April 1, 2000, is entered into by and between American Homestar
Corporation, a Texas corporation ("Employer"), and Finis F. Teeter ("Employee").
Capitalized terms used herein but not defined herein shall have the respective
meanings ascribed to them in the Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, Employer and Employee are parties to that certain Employment
Agreement, dated as of November 15, 1996 (the "Agreement"); and
WHEREAS, Employer and Employee desire to amend the Agreement to the
extent provided herein;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
A. AMENDMENT TO AGREEMENT. The Agreement is hereby amended as follows:
(1) Section 3 of the Agreement is hereby amended to read in
its entirety as follows:
3. Term. The employment of Employee under this
Agreement shall commence on October 1, 1996, and shall
continue, unless earlier terminated pursuant to Section 6 or 7
below, until June 30, 2003; provided, however, that this
Agreement shall automatically extend for a one year period on
each June 30, commencing on June 30, 2003, unless either
Employer or Employee provides the other written notice at
least 180 days prior to the end of the then existing terms of
its intent to terminate this Agreement at the end of the then
applicable term. The initial term of this Agreement and any
renewal terms as provided above are collectively referred to
herein as the "Term".
(2) Effective as of the date of this Amendment, the yearly
salary set forth in Section 4 of the Agreement is hereby changed from $235,000
to $360,000.
<PAGE> 2
(3) The current Sections 7-19 of the Agreement are renumbered
as Sections 8-20, and any references in the Agreement to such Sections are
hereby changed accordingly.
(4) A new Section 7 is hereby added to the Agreement, which
Section shall read in its entirety as follows:
7. Change In Control.
(a) Termination Payment. Notwithstanding anything to the
contrary contained in Section 6 above, and in lieu of any
payments required by Section 6 above, if Employee's employment
with Employer is terminated by Employee or Employer, for any
reason, within the twelve month period following a Change in
Control (as defined in subsection (b) below), Employee shall
be entitled to receive:
(i) any unpaid salary and any accrued but unpaid
bonuses through the date of termination
following the occurrence of the Change in
Control (the "Triggering Date"); and
(ii) in lieu of any further salary or bonus
payments to Employee for periods subsequent
to the Triggering Date, Employer shall pay
as severance payment to Employee, not later
than the fifteenth (15th) day following the
Triggering Date, a lump sum severance
payment equal to the sum of: (i) Employee's
then current yearly salary multiplied by
three (3), plus (ii) an amount equal to the
average bonuses earned by Employee for the
last three completed fiscal years of
Employer multiplied by three (3).
Notwithstanding the above, in no event shall the aggregate
payments under this Section 7 exceed an amount equal to (i)
the product of three (3) times the base amount (as such term
is defined in Section 280(g) of the Internal Revenue Code of
1986, as amended), minus (ii) $1.00.
(b) Change in Control. A "Change in Control" will be deemed to
have occurred for purposes hereof (i) upon the acquisition of
beneficial ownership, directly or indirectly, by any person
(as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")) of securities of Employer representing 30% or more of
the combined voting power of Employer's then outstanding
securities; or (ii) upon the consummation of a sale of all or
substantially all of the assets of the Company and its
subsidiaries, taken as a whole, which are disposed of pursuant
to (1) a partial or complete liquidation or (2) a sale of
assets; provided, however, that a Change in Control will not
be deemed to have occurred for purposes hereof with respect to
any person meeting the requirements of clauses (i) and (ii) of
Rule 13d-1(b)(1) promulgated under the Exchange Act.
<PAGE> 3
B. MISCELLANEOUS.
(1) Except as specifically provided herein, the Agreement
shall remain in full force and effect. The Agreement and this Amendment contains
the entire agreement between Employee and Employer regarding the employment of
Employee by Employer, and supersedes any and all other agreements (oral or
written) regarding such subject matter.
(2) This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
AMERICAN HOMESTAR CORPORATION
By: /s/ Laurence A. Dawson, Jr.
---------------------------
Its: President
---------------------------
/s/ Finis F. Teeter
--------------------------------
Finis F. Teeter
<PAGE> 1
EXHIBIT 10.3
================================================================================
AMERICAN HOMESTAR CORPORATION
2000-A AMENDMENT AGREEMENT
dated as of April 28, 2000
to
Amended and Restated Note Purchase Agreements dated as of September 15, 1998
Re: $61,000,000 8.32% Senior Notes
Due July 10, 2007
and
Note Purchase Agreements dated as of September 15, 1998
Re: $46,000,000 7.25% Senior Notes, Series A
Due September 15, 2008
and
$5,000,000 7.14% Senior Notes, Series B
Due September 15, 2008
================================================================================
<PAGE> 2
TABLE OF CONTENTS
(Not a part of the Agreement)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION HEADING PAGE
<S> <C> <C>
SECTION 1. WAIVERS AND AMENDMENTS TO EXISTING NOTE
PURCHASE AGREEMENTS AND OUTSTANDING NOTES.................. 2
SECTION 2. CONDITIONS PRECEDENT....................................... 10
SECTION 3. REPRESENTATIONS AND WARRANTIES............................. 11
SECTION 4. MISCELLANEOUS.............................................. 11
Signature Pages............................................................. 13
</TABLE>
-i-
<PAGE> 3
AMERICAN HOMESTAR CORPORATION
2000-A AMENDMENT AGREEMENT
Re: Amended and Restated Note Purchase Agreements dated as of
September 15, 1998 and
Note Purchase Agreements dated as of September 15, 1998
Dated as of
April 28, 2000
To Each of the Noteholders
listed in Schedule I
to this 2000-A Amendment Agreement
Ladies and Gentlemen:
Reference is made to (i) the separate Amended and Restated Note
Purchase Agreements each dated as of September 15, 1998, as previously amended
and/or restated (the "Existing Amended and Restated Note Purchase Agreements")
between American Homestar Corporation, a Texas corporation (the "Company"), and
the Purchasers named on Schedule A attached thereto, respectively, under and
pursuant to which the Company issued, and there are currently outstanding
$61,000,000 aggregate principal amount of 8.32% Senior Notes due July 10, 2007
(the "Outstanding Amended and Restated Notes") and to (ii) the separate Note
Purchase Agreements each dated as of September 15, 1998, as previously amended
(the "Existing 1998 Note Purchase Agreements") between the Company and
Purchasers named on Schedule A attached thereto, respectively, under and
pursuant to which the Company issued, and there are currently outstanding
$46,000,000 aggregate principal amount of 7.25% Senior Notes, Series A, due
September 15, 2008 (the "Outstanding Series A 1998 Notes") and $5,000,000
aggregate principal amount of 7.14% Senior Notes, Series B, due September 15,
2008 (the "Outstanding Series B 1998 Notes" and together with the Outstanding
Series A 1998 Notes, the "Outstanding 1998 Notes"). The Outstanding Amended and
Restated Notes and the Outstanding 1998 Notes are sometimes hereinafter referred
to collectively as the "Outstanding Notes" and the Existing Amended and Restated
Note Purchase Agreements and Existing 1998 Note Purchase Agreements are
sometimes hereinafter referred to collectively as the "Existing Note Purchase
Agreements."
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company requests the amendment of certain
provisions of the Existing Note Purchase Agreements and Outstanding Notes as
hereinafter provided.
Upon your acceptance hereof in the manner hereinafter provided and upon
satisfaction of all conditions to the effectiveness hereof and receipt by the
Company of similar acceptances from all of the holders of the Outstanding Notes,
this 2000-A Amendment Agreement shall constitute a contract between us amending
the Existing Note Purchase Agreements and Outstanding Notes in the respects, but
only in the respects, hereinafter set forth:
<PAGE> 4
SECTION 1. WAIVERS AND AMENDMENTS TO EXISTING NOTE PURCHASE AGREEMENTS
AND OUTSTANDING NOTES.
Section 1.1. Upon satisfaction of the conditions set forth in Section 2
hereof, the Noteholders hereby waive compliance (from and after March 31, 2000
to and including September 29, 2000), and the effects of non-compliance (from
and after March 31, 2000 to and including September 29, 2000), by the Company
with Section 10.5 of the Existing Note Purchase Agreements to the extent that
the Fixed Charges Coverage Ratio is less than 1.25x. For the avoidance of doubt,
the Company specifically understands and acknowledges that the waiver set forth
above does not extend to any Default or Event of Default for the quarter ended
September 30, 2000.
The Noteholders hereby acknowledge and confirm the waiver set forth in
that certain waiver letter dated January 18, 2000 in respect of compliance from
and after December 31, 1999 to March 31, 2000 and the waiver set forth in that
certain waiver letter dated as of March 31, 2000 in respect of compliance from
and after March 31, 2000, and the effects of non-compliance from and after
December 31, 1999 to the 2000-A Amendment Effective Date, by the Company with
Section 10.5 of the Existing Note Purchase Agreements to the extent that the
Fixed Charge Coverage Ratio is less than 1.25x.
The Company understands and agrees that the waivers contained in this
Section 1.1 pertain only to the Defaults and Events of Default herein described
and only to the extent so described and not to any other Default or Event of
Default which may exist under, or any other matters arising in connection with,
the Existing Note Purchase Agreements or to any rights which the Noteholders
have arising by virtue of any such other actions or matters.
Section 1.2. Section 1.2 of each of the Existing Amended and Restated
Note Purchase Agreements shall be and is hereby amended and restated in its
entirety as follows:
"Section 1.2 Additional Interest. (a) Fixed Charges Coverage
Ratio. In addition to, and not in limitation or reduction of, any other
amounts paid or payable by the Company in respect of the Notes, in the
event the Fixed Charges Coverage Ratio determined in accordance with
Section 10.5 was less than 2.25 to 1.00 as of the end of any fiscal
quarter ending on or after September 30, 1999, the stated interest rate
payable on the Notes in respect of the next succeeding fiscal quarter
shall be increased in accordance with the following table and such
additional amounts arising therefrom shall be payable, with respect to
each Note, as additional interest on the Notes (and without limiting
the requirement of Section 10.5) on the scheduled interest payment date
at the end of said next succeeding fiscal quarter.
-2-
<PAGE> 5
<TABLE>
<CAPTION>
ACTUAL FIXED CHARGE AMOUNT OF INTEREST
COVERAGE RATIO RATE INCREASE
------------------- ------------------
<S> <C> <C>
Between 2.00x and 2.24x .20% per annum
Between 1.99x and 1.65x .35% per annum
Between 1.64x and 1.35x .50% per annum
Less than 1.35x .60% per annum
</TABLE>
No additional interest shall be payable in the event that the actual
Fixed Charges Coverage Ratio contemplated under Section 10.5 as of the
fiscal quarter ending immediately preceding an interest payment date
was greater than or equal to 2.25 to 1.00. In the event the Company
shall enter into an amendment hereto (reasonably satisfactory in form
and substance to the Required Holders) and at the expense of the
Company requiring that the Fixed Charges Coverage Ratio required under
Section 10.5 shall be at least 2.25 to 1.00, no additional interest
shall be payable under this paragraph with respect to any interest
payment date occurring subsequent to the first fiscal quarter end for
which such amendment is effective.
(b) Change in Reserve Requirement. If under applicable law or
regulation, the holder of any Note is required to post reserves at any
time and from time to time with respect to such Notes (the "Reserve
Requirement") greater than one percent (1%) of the outstanding
principal amounts of such Notes held by said holder (an "Increased
Requirement") other than solely by reason of a change in law or
regulation or a change in the interpretation or administration thereof
relating to the requirements to post such reserves, then the interest
rate on such Notes shall be increased by 1.25% per annum minus the
amount, if any, that the interest rate on such Notes has been increased
pursuant to Section 1.2(a). If during any time following an increase in
the interest rate on the Notes pursuant to this Section 1.2(b), the
Reserve Requirement is reduced to one percent (1%) or less of the
outstanding principal balance of the Notes (a "Decreased Requirement"),
the interest rate on the Notes shall be readjusted (but without
prejudice to any adjustment required by Section 1.2(a)) to the rate per
annum which would have been in effect had no adjustment been made
pursuant to this Section 1.2(b). Any upward or downward adjustment
required by this Section 1.2(b) in the rate of interest borne by the
Notes shall become effective concurrently with the effectiveness of any
Increased Requirement or Decreased Requirement, as the case may be. In
no event may the expressed interest rate on the Notes be increased by
more than 1.25% per annum pursuant to clauses (a) and (b) during any
period in which no Event of Default exists.
(c) Amendment Interest. Notwithstanding the foregoing clauses
(a) and (b) of this Section 1.2, the stated interest rate payable on
the Notes from April 1, 2000 to and including September 29, 2000 shall
be increased by 1.25% to an aggregate interest rate of 9.57% per annum
plus applicable interest payable upon an Event of Default and shall
-3-
<PAGE> 6
continue to bear interest after September 29, 2000 at such rate for any
and all periods during which (i) the Fixed Charges Coverage Ratio
determined in accordance with Section 10.5 is less than 2.25 to 1.00 or
(ii) any Event of Default shall exist and such additional amount shall
be payable, with respect to each Note, as additional interest on the
Notes on the next scheduled interest payment date. Such additional
interest is in replacement of the interest payable pursuant to clauses
(a) and (b) of this Section 1.2."
Section 1.3. Section 1.2 of each of the Existing 1998 Note Purchase
Agreements shall be and is hereby amended and restated in its entirety as
follows:
"Section 1.2 Additional Interest. (a) Fixed Charges Coverage
Ratio. In addition to, and not in limitation or reduction of, any other
amounts paid or payable by the Company in respect of the Notes, in the
event the Fixed Charges Coverage Ratio determined in accordance with
Section 10.5 was less than 2.25 to 1.00 as of the end of any fiscal
quarter ending on or after September 30, 1999, the stated interest rate
payable on the Notes in respect of the next succeeding fiscal quarter
shall be increased in accordance with the following table and such
additional amounts arising therefrom shall be payable, with respect to
each Note, as additional interest on the Notes (and without limiting
the requirement of Section 10.5) on the scheduled interest payment date
at the end of said next succeeding fiscal quarter.
<TABLE>
<CAPTION>
ACTUAL FIXED CHARGE AMOUNT OF INTEREST
COVERAGE RATIO RATE INCREASE
------------------- ------------------
<S> <C>
Between 2.00x and 2.24x .20% per annum
Between 1.99x and 1.65x .35% per annum
Between 1.64x and 1.35x .50% per annum
Less than 1.35x .60% per annum
</TABLE>
No additional interest shall be payable in the event that the actual
Fixed Charges Coverage Ratio contemplated under Section 10.5 as of the
fiscal quarter ending immediately preceding an interest payment date
was greater than or equal to 2.25 to 1.00. In the event the Company
shall enter into an amendment hereto (reasonably satisfactory in form
and substance to the Required Holders) and at the expense of the
Company requiring that the Fixed Charges Coverage Ratio required under
Section 10.5 shall be at least 2.25 to 1.00, no additional interest
shall be payable under this paragraph with respect to any interest
payment date occurring subsequent to the first fiscal quarter end for
which such amendment is effective.
(b) Change in Reserve Requirement. If under applicable law or
regulation, the holder of any Note is required to post reserves at any
time and from time to time with respect to such Notes (the "Reserve
Requirement") greater than one percent (1%) of the outstanding
principal amounts of such Notes held by said holder (an "Increased
-4-
<PAGE> 7
Requirement") other than solely by reason of a change in law or
regulation or a change in the interpretation or administration thereof
relating to the requirements to post such reserves, then the interest
rate on such Notes shall be increased by 1.25% per annum minus the
amount, if any, that the interest rate on such Notes has been increased
pursuant to Section 1.2(a). If during any time following an increase in
the interest rate on the Notes pursuant to this Section 1.2(b), the
Reserve Requirement is reduced to one percent (1%) or less of the
outstanding principal balance of the Notes (a "Decreased Requirement"),
the interest rate on the Notes shall be readjusted (but without
prejudice to any adjustment required by Section 1.2(a)) to the rate per
annum which would have been in effect had no adjustment been made
pursuant to this Section 1.2(b). Any upward or downward adjustment
required by this Section 1.2(b) in the rate of interest borne by the
Notes shall become effective concurrently with the effectiveness of any
Increased Requirement or Decreased Requirement, as the case may be. In
no event may the expressed interest rate on the Notes be increased by
more than 1.25% per annum pursuant to clauses (a) and (b) during any
period in which no Event of Default exists.
(c) Amendment Interest. Notwithstanding the foregoing clauses
(a) and (b) of this Section 1.2, the stated interest rate payable on
the Notes from April 1, 2000 to and including September 29, 2000 shall
be increased by 1.25% to an aggregate amount of 8.5% per annum in
respect of the Series A Notes, and 8.39% per annum in respect of the
Series B Notes, plus applicable interest payable upon an Event of
Default and shall continue to bear interest after September 29, 2000 at
such rate for any and all periods during which (i) the Fixed Charges
Coverage Ratio determined in accordance with Section 10.5 is less than
2.25 to 1.00 or (ii) any Event of Default shall exist and such
additional amount shall be payable, with respect to each Note, as
additional interest on the Notes on the next scheduled interest payment
date. Such additional interest is in replacement of the interest
payable pursuant to clauses (a) and (b) of this Section 1.2."
Section 1.4. Section 7.1 of each of the Existing Note Purchase
Agreements shall be and is hereby amended to (i) delete "and" at the end of
clause (f) thereof, (ii) delete "." at the end of clause (g) thereof and replace
it with "; and" and (iii) add a new clause (h) thereto to read as follows:
"(h) Ordinary Course Transfers -- promptly, and in any event
within 15 days after the end of each monthly period, a monthly
statement setting forth Transfers made in the ordinary course of
business (and the consideration received) permitted pursuant to Section
10.3 (excluding sales of inventory held for sale made in the ordinary
course of business and such other Transfers to the extent that such
Transfers during such monthly period do not aggregate in excess of
$10,000)."
Section 1.5. Section 10.3 of each of the Existing Note Purchase
Agreements shall be and is hereby amended by adding at the end of such section
the following sentence:
"In addition to and not in limitation of the foregoing, (i) the Company
shall obtain (a) the written consent of the holders of at least 75% in
aggregate principal amount of the Notes then outstanding under the
Existing Note Purchase Agreements prior to the consummation
-5-
<PAGE> 8
of a Debt Offered Prepayment Application or (b) the written consent of
the holders of 100% in aggregate principal amount of the Notes
outstanding under the Existing Note Purchase Agreements prior to a
Property Reinvestment Application, in each case to which the Net
Proceeds Amount for any Asset Disposition is applied and (ii) if the
Company (x) Transfers (other than pursuant to an operating lease under
GAAP of idle plant facilities and underperforming company stores as
determined in good faith by Resolutions of the Board of Directors of
the Company) fixed assets or any business or division (including,
without limitation, 21st Century, provided that up to 50% of the net
cash proceeds thereof may be invested in 21st Century or in a joint
venture in respect of 21st Century by way of loans, participations or
otherwise) or (y) issues any debt securities for cash consideration
(excluding in all cases from this clause (y) debt securities issued by
the Company in the ordinary course of business), the Company shall
deposit 100% of the net cash proceeds of such Transfer or issuance with
the Collateral Agent and grant a security interest therein as
collateral to secure the Notes pursuant to the Security Agreement;
provided that this clause (ii) shall not apply to equipment, fixtures,
supplies or materials no longer required in the operation of the
business of the Company or obsolete or otherwise Transferred in the
ordinary course of business. To the extent that the net cash proceeds
from any Transfer or issuance set forth in clause (ii) of the previous
sentence are deposited in the Account, then, to the extent of such
deposit, such Transfer or issuance shall be excluded from any
calculation set forth in clause (c) above. `Net cash proceeds' shall be
the cash proceeds of a Transfer as aforesaid net of all ordinary and
reasonable out-of-pocket costs and expenses actually incurred by the
Company in connection with such Transfer and all indebtedness secured
by the property being so transferred and required by its terms to be
paid in connection with the consummation of such Transfer, and, in the
case of the disposition of 21st Century, any cash expenditures made in
connection with, or to facilitate, such disposition and, in the case of
any taxable gains that arise from such dispositions, tax on such
gains."
Section 1.6. Sections 10.4(a) and (b) of each of the Existing Note
Purchase Agreements shall be and are hereby amended as follows:
"(a) Total Senior Debt minus the amount of the Collateral
subject to the Security Agreement is less than (i) in the case of any
determination prior to or on September 29, 2000, the lesser of (A)
$200,000,000 and (B) 70% of Total Capitalization, (ii) in the case of
any determination after September 29, 2000 to and including June 29,
2001, 58% of Total Capitalization and (iii) in the case of any
determination on or after June 30, 2001, 56% of Total Capitalization,
(b) the sum of Total Senior Debt plus Total Subordinated Debt
minus the amount of the Collateral subject to the Security Agreement is
less than (i) in the case of any determination prior to or on September
29, 2000, the lesser of (A) $200,000,000 and (B) 70% of Total
Capitalization and (ii) in the case of any determination after
September 29, 2000, 65% of Total Capitalization,"
Section 1.7. Section 10.7 of each of the Existing Note Purchase
Agreements shall be and is hereby amended to add at the end of such section the
following sentence:
-6-
<PAGE> 9
"Notwithstanding the foregoing, the Company shall not be in default
under this Section 10.7 if the Company maintains Consolidated Net Worth
at not less than $90,000,000 in connection with any determination prior
to or on September 29, 2000."
Section 1.8. Section 10.9(f) of each of the Existing Note Purchase
Agreements shall be and is hereby amended and restated as follows:
"(f) Liens on property or assets of the Company or
any of its Restricted Subsidiaries securing Debt owing to the
Company or to another Restricted Subsidiary and Liens created
by the Security Agreement on the collateral provided for
therein and securing the obligations provided for therein;"
Section 1.9. Section 10 of each of the Existing Note Purchase
Agreements shall be and is hereby amended to add a new Section 10.11 as follows:
"Section 10.11. Earnings Before Interest and Taxes. The
Company will maintain positive Earnings Before Interest and Taxes for
the fiscal quarter ended as of June 30, 2000."
Section 1.10. Section 11 of each of the Existing Note Purchase
Agreements shall be and is hereby amended to (i) add "or in the Security
Agreement" after the term "herein" in the second line of clause (d) thereof,
(ii) delete "." at the end of clause (j) thereof and replace it with "; or" and
(iii) add a new clause (k) thereto to read as follows:
"(k) the Security Agreement or any Lien created thereby shall
cease to be in full force and effect (other than in accordance with the
Security Agreement), or such Lien shall cease to be a valid, first
priority perfected Lien on the Collateral, in each case for any reason,
including, without limitation, a determination of any Governmental
Authority that such agreement is invalid, void or unenforceable, or the
Company shall contest or deny in writing the validity, enforceability
or priority of any of its obligations thereunder or any Lien created
thereby on any of the Collateral."
Section 1.11. Section 12.2 of each of the Existing Note Purchase
Agreements shall be and is hereby amended to add "(including, without
limitation, the rights and remedies of such holder provided in the Security
Agreement)" before the "."
Section 1.12. Schedule B of each of the Existing Note Purchase
Agreements shall be amended to add the following new defined terms in the
appropriate alphabetical locations:
"'Account' is defined in the Security Agreement."
"'Collateral' is defined in the Security Agreement."
-7-
<PAGE> 10
"'Collateral Agent' means LaSalle Bank National
Association, or any successor thereof permitted by the
Security Agreement."
"'Earnings Before Interest and Taxes' means, with
respect to any period, Consolidated Net Income of the Company
and its Restricted Subsidiaries for such period plus all
amounts deducted in the computation thereof on account of (a)
Interest Charges for such period and (b) taxes imposed on or
measured by income or excess profits of the Company and its
Restricted Subsidiaries for such period."
"'Security Agreement' means the Security Agreement
between the Company and the Collateral Agent, substantially in
the form attached hereto as Exhibit 10.3."
Section 1.13. Schedule B of each of the Existing Amended and Restated
Note Purchase Agreements shall be amended to add the following new defined term
in the appropriate alphabetical location:
"'Existing Note Purchase Agreements' means this
Agreement, the Other Agreements and the separate Note Purchase
Agreements each dated as of September 15, 1998 between the
Company and the Purchasers named on Schedule A thereto,
respectively, in each case, as amended or modified."
Section 1.14. Schedule B of each of the Existing 1998 Note Purchase
Agreements shall be amended to add the following new defined term in the
appropriate alphabetical location:
"'Existing Note Purchase Agreements' means this
Agreement, the Other Agreements and the separate Amended and
Restated Note Purchase Agreements each dated as of September
15, 1998 between the Company and the Holders named on Schedule
A thereto, respectively, in each case, as amended or
modified."
Section 1.15. The following definitions contained in Schedule B of each
of the Existing Note Purchase Agreements shall be and are hereby amended and
restated in its entirety to read as follows:
"'Default Rate' means the rate of interest that is
the greater of (i) 2.0% per annum above the rate of interest
stated in clause (a) of the first paragraph of the Notes, as
adjusted pursuant to Section 1.2, or (ii) 2.0% over the rate
of interest publicly announced by Citibank, N.A. in New York,
New York, or any successor thereof, from time to time as its
"base" or "prime" rate."
-8-
<PAGE> 11
"'Debt Offered Prepayment Application' means, with
respect to any Asset Disposition, the offering, in writing, by
the Company of cash in an amount not exceeding the Net
Proceeds Amount with respect to such Asset Disposition to pay
the Notes under the Existing Note Purchase Agreements and any
interest and premium in respect thereof, provided that in
connection with any such Asset Disposition and payment of the
Notes, the Company shall have offered to prepay the Ratable
Portion in respect of each outstanding Note under the Existing
Note Purchase Agreements and shall have prepaid each holder of
each such Note that shall have accepted such offer of
prepayment in accordance with said Section 8.4 in a principal
amount which, when added to any accrued and unpaid interest
thereon and the Modified Make-Whole Amount, equals the Ratable
Portion for such Note. As used in this definition, "Ratable
Portion" for any Note means an amount equal to the product of
(x) the Net Proceeds Amount being so applied to the payment of
the Notes multiplied by (y) a fraction the numerator of which
is the outstanding principal amount of such Note and the
denominator of which is the aggregate principal amount of all
the Notes of the Company with respect to which such offer of
prepayment is made. For purposes of Section 10.3, a Net
Proceeds Amount shall be deemed applied to a Debt Offered
Prepayment Application upon the extension of the offer in
respect of such Debt Offered Prepayment Application, provided
that if the actual prepayments in respect thereof, if any, are
not made in accordance with the requirements of such offer or,
in any case, are not made within 365 days after the applicable
Asset Disposition, such application of such Net Proceeds
Amount will be deemed not to have been made."
Section 1.16. Clause (j) of the definition of the term "Restricted
Investments" contained in Schedule B of each of the Existing Note Purchase
Agreements shall be and is hereby amended and restated in its entirety as
follows:
"(x) Investments in 21st Century, or in a joint venture in
respect of 21st Century, in connection with the Transfer thereof, and
(y) such other Investments in 21st Century, provided that (i)
with respect to any such Investment made after the date of the Closing,
the aggregate amount of such Investment and all other Investments in
21st Century made after the date of Closing (valued as set forth below)
shall not, at the time of the making of each Investment, exceed 10% of
Consolidated Net Worth, determined at such time, and (ii) the proceeds
of such Investments are used by 21st Century to assist it in the
securitization of receivables generated from the sale of Manufactured
Homes by the Company, any Restricted Subsidiary or any franchise of the
Company or any Restricted Subsidiary."
-9-
<PAGE> 12
Section 1.17. Each of the Existing Note Purchase Agreements shall be
amended to add Exhibit 10.3 which is attached hereto as Exhibit D.
Section 1.18. The Noteholders hereby appoint LaSalle Bank National
Association to act as Collateral Agent for the exclusive benefit of the holders
of the Notes.
SECTION 2. CONDITIONS PRECEDENT.
Section 2.1. Conditions Precedent. This 2000-A Amendment Agreement
shall be effective as of April 28, 2000 (the "2000-A Amendment Effective Date")
when each of the following conditions shall have been satisfied:
(a) Each Noteholder and the Collateral Agent shall have
received this 2000-A Amendment Agreement, duly executed by the Company.
(b) The Required Holders in respect of each of the Existing
Note Purchase Agreements shall have consented to this 2000-A Amendment
Agreement as evidenced by their execution thereof; provided that the
amendments contained in Sections 1.2 and 1.3 of this 2000-A Amendment
Agreement shall be effective only as to each holder of Notes which has
consented hereto.
(c) The representations and warranties of the Company set
forth in Section 3 hereof are true and correct as of the date of the
execution and delivery of this 2000-A Amendment Agreement.
(d) Each Noteholder and the Collateral Agent shall have
received the Security Agreement substantially in the form attached
hereto as Exhibit D duly executed by the Company.
(e) Any consents or approvals from any holder or holders of
any outstanding Security of the Company or any Subsidiary and any
amendments of agreements pursuant to which any Securities may have been
issued which shall be necessary to permit the consummation of the
transactions contemplated hereby shall have been obtained and all such
consents or amendments shall be reasonably satisfactory in form and
substance to the Noteholders and their special counsel.
(f) The Company shall have paid, or have provided a
satisfactory retainer for, the fees and disbursements of the
Noteholders' special counsel, Chapman and Cutler, incurred in
connection with the negotiation, preparation, execution and delivery of
this 2000-A Amendment Agreement, as required by Section 15.1 of the
Existing Note Purchase Agreements.
(g) Counsel for the Company shall have delivered such legal
opinions to the Noteholders as the Noteholders may reasonably request
in respect of the due organization and the good standing of the Company
and the legality, validity and enforceability of this
-10-
<PAGE> 13
2000-A Amendment Agreement and the Outstanding Notes as amended hereby
and the Security Agreement.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
Section 3.1. Representations and Warranties. The Company hereby
represents and warrants that as of the date hereof and as of the date of
execution and delivery of this 2000-A Amendment Agreement:
(a) This 2000-A Amendment Agreement, the Existing Note
Purchase Agreements and Outstanding Notes (as amended hereby) and the
Security Agreement are within the corporate powers of the Company, have
been duly authorized by all necessary corporate action on the part of
the Company, have been duly executed and delivered by the Company and
constitute legal, valid and binding obligations of the Company
enforceable in accordance with their respective terms.
(b) The Security Agreement (or financing statements or similar
notices thereof to the extent permitted or required by applicable law)
have been filed for record or recorded in all public offices wherein
such filing or recordation is necessary to perfect the security
interest granted by such Security Agreement in the collateral therein
described as against creditors of and purchasers from the Company and
the Security Agreement creates a valid and perfected first security
interest in such collateral effective as against creditors of and
purchasers from the Company subject only to encumbrances expressly
permitted by the terms of such Security Agreement.
(c) The Outstanding Amended and Restated Notes and the
Outstanding 1998 Notes held by the Noteholders are amended hereby as
set forth herein without regard to any exchange of Outstanding Notes
for New Notes.
(d) After giving effect to this 2000-A Amendment Agreement, no
Default or Event of Default has occurred and is continuing.
(e) The execution, delivery and performance of this 2000-A
Amendment Agreement and the Security Agreement by the Company does not
and will not result in a violation of or default under (A) the articles
of incorporation or bylaws of the Company, (B) any material agreement
to which the Company is a party or by which it is bound or to which the
Company or any of its properties is subject, (C) any order, writ,
injunction or decree binding on the Company, or (D) any statute,
regulation, rule or other law applicable to the Company.
SECTION 4. MISCELLANEOUS.
Section 4.1. Except as amended herein, all terms and provisions of the
Existing Note Purchase Agreements and the Outstanding Notes are hereby ratified,
confirmed and approved in all respects.
-11-
<PAGE> 14
Section 4.2. Any and all notices, requests, certificates and other
instruments, including the Outstanding Notes as amended hereby, may refer to the
"Note Purchase Agreements" without making specific reference to this 2000-A
Amendment Agreement, but nevertheless all such references shall be deemed to
include this 2000-A Amendment Agreement unless the context shall otherwise
require.
Section 4.3. This 2000-A Amendment Agreement and all covenants herein
contained shall be binding upon and inure to the benefit of the respective
successors and assigns of the parties hereunder. All covenants made by the
Company herein shall survive the closing and the delivery of this 2000-A
Amendment Agreement.
Section 4.4. This 2000-A Amendment Agreement shall be governed by and
construed in accordance with Illinois law.
Section 4.5. The capitalized terms used in this 2000-A Amendment
Agreement shall have the respective meanings specified in the related Existing
Note Purchase Agreements unless otherwise herein defined or the context hereof
shall otherwise require.
-12-
<PAGE> 15
The execution hereof by the respective Noteholders shall constitute a
contract among the Company and the Noteholders for the uses and purposes
hereinabove set forth. This 2000-A Amendment Agreement may be executed in any
number of counterparts, each executed counterpart constituting an original but
all together only one agreement. Counterpart signature pages are deemed to be
evidence of agreement to deliver original executed counterparts of such
signature pages as promptly as practicable thereafter.
AMERICAN HOMESTAR CORPORATION
By: /s/ Craig A. Reynolds
-----------------------------
Its: Executive Vice President, CFO
-13-
<PAGE> 16
This foregoing 2000-A Amendment Agreement is hereby accepted and agreed
to as of the date aforesaid.
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
By: David L. Babson and Company
Incorporated, as Investment Adviser
By: /s/ Richard C. Morrison
-----------------------
Name: Richard C. Morrison
Title: Managing Director
-14-
<PAGE> 17
This foregoing 2000-A Amendment Agreement is hereby accepted and agreed
to as of the date aforesaid.
ALLSTATE LIFE INSURANCE COMPANY
By: /s/ Patricia A. Wilson
----------------------
Its: Authorized Signatory
By : /s/ Daniel C. Leimbach
----------------------
Its: Authorized Signatory
-15-
<PAGE> 18
This foregoing 2000-A Amendment Agreement is hereby accepted and agreed
to as of the date aforesaid.
ALLSTATE INSURANCE COMPANY
By: /s/ Patricia A. Wilson
----------------------
Its: Authorized Signatory
By: /s/ Daniel C. Leimbach
----------------------
Its: Authorized Signatory
-16-
<PAGE> 19
This foregoing 2000-A Amendment Agreement is hereby accepted and agreed
to as of the date aforesaid.
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Richard A. Strait
-------------------------
Its: Authorized Representative
-17-
<PAGE> 20
This foregoing 2000-A Amendment Agreement is hereby accepted and agreed
to as of the date aforesaid.
NORTHERN LIFE INSURANCE COMPANY
By: /s/ James V. Wittach
--------------------
Its: Assistant Treasurer
-18-
<PAGE> 21
This foregoing 2000-A Amendment Agreement is hereby accepted and agreed
to as of the date aforesaid.
WASHINGTON SQUARE ADVISERS PRIVATE
PLACEMENT TRUST FUND
By: /s/ Frank P. Pintens
---------------------
Its: Senior Vice President
-19-
<PAGE> 22
This foregoing 2000-A Amendment Agreement is hereby accepted and agreed
to as of the date aforesaid.
RELIASTAR LIFE INSURANCE COMPANY OF
NEW YORK (FORMERLY RELIASTAR
BANKERS SECURITY LIFE INSURANCE
COMPANY)
By: /s/ James V. Wittach
---------------------------
Its: Vice President, Investments
-20-
<PAGE> 23
This foregoing 2000-A Amendment Agreement is hereby accepted and agreed
to as of the date aforesaid.
GENERAL ELECTRIC CAPITAL ASSURANCE
COMPANY (FORMERLY GREAT NORTHERN
INSURED ANNUITY CORPORATION)
By: /s/ Morion C. Mooers
--------------------
Its: Investment Officer
-21-
<PAGE> 24
This foregoing 2000-A Amendment Agreement is hereby accepted and agreed
to as of the date aforesaid.
KEMPER INVESTORS LIFE INSURANCE COMPANY
By: /s/ Gary W. Fridley
------------------------
Its: Chief Investment Officer
By: /s/ David S. Jorgensen
------------------------
Its: Controller and Treasurer
-22-
<PAGE> 25
This foregoing 2000-A Amendment Agreement is hereby accepted and agreed
to as of the date aforesaid.
FEDERAL KEMPER LIFE ASSURANCE COMPANY
By: /s/ Gary W. Fridley
------------------------
Its: Chief Investment Officer
By: /s/ David S. Jorgensen
------------------------
Its: Controller and Treasurer
-23-
<PAGE> 26
This foregoing 2000-A Amendment Agreement is hereby accepted and agreed
to as of the date aforesaid.
ZURICH LIFE INSURANCE COMPANY OF AMERICA
By: /s/ Gary W. Fridley
------------------------
Its: Chief Investment Officer
By: /s/ David S. Jorgensen
------------------------
Its: Controller and Treasurer
-24-
<PAGE> 27
This foregoing 2000-A Amendment Agreement is hereby accepted and agreed
to as of the date aforesaid.
FIDELITY LIFE ASSOCIATION
By: /s/ Gary W. Fridley
------------------------
Its: Chief Investment Officer
By: /s/ David S. Jorgensen
------------------------
Its: Controller and Treasurer
-25-
<PAGE> 28
This foregoing 2000-A Amendment Agreement is hereby accepted and agreed
to as of the date aforesaid.
AMERICAN BANKERS LIFE ASSURANCE
COMPANY OF FLORIDA
By: /s/ Gustavo C. Rodriguiz
------------------------
Its: Director of Investments
-26-
<PAGE> 29
This foregoing 2000-A Amendment Agreement is hereby accepted and agreed
to as of the date aforesaid.
AMERICAN BANKERS LIFE INSURANCE
COMPANY INC. OF FLORIDA
By: /s/ Gustavo C. Rodriguiz
------------------------
Its: Director of Investments
-27-
<PAGE> 30
This foregoing 2000-A Amendment Agreement is hereby accepted and agreed
to as of the date aforesaid.
BAYSTATE HEALTH SYSTEM, INC.
By: David L. Babson and Company Incorporated,
as Investment Sub-Adviser
By: /s/ Richard C. Morrison
-----------------------
Name: Richard C. Morrison
Title: Managing Director
-28-
<PAGE> 31
This foregoing 2000-A Amendment Agreement is hereby accepted and agreed
to as of the date aforesaid.
C.M. LIFE INSURANCE COMPANY
By: David L. Babson and Company Incorporated,
as Investment Sub-Adviser
By: /s/ Richard C. Morrison
------------------------
Name: Richard C. Morrison
Title: Managing Director
-29-
<PAGE> 32
This foregoing 2000-A Amendment Agreement is hereby accepted and agreed
to as of the date aforesaid.
RELIASTAR LIFE INSURANCE COMPANY
By: /s/ James V. Wittach
-------------------------
Its: Authorized Representative
-30-
<PAGE> 33
This foregoing 2000-A Amendment Agreement is hereby accepted and agreed
to as of the date aforesaid.
SECURITY CONNECTICUT LIFE INSURANCE
COMPANY
By: /s/ James V. Wittach
--------------------
Its: Assistant Treasurer
-31-
<PAGE> 34
This foregoing 2000-A Amendment Agreement is hereby accepted and agreed
to as of the date aforesaid.
PROVIDENT MUTUAL LIFE INSURANCE
COMPANY
By: /s/ James Kestner
-----------------
Its: Vice President
-32-
<PAGE> 35
<TABLE>
<CAPTION>
OUTSTANDING PRINCIPAL
AMOUNT OF OUTSTANDING PRINCIPAL
OUTSTANDING AMENDED AMOUNT OF
AND RESTATED NOTES OUTSTANDING 1998
NAME OF HOLDER HELD AS OF NOTES HELD AS OF
OF NOTES APRIL 28, 2000 APRIL 28, 2000
<S> <C> <C>
MASSACHUSETTS MUTUAL LIFE INSURANCE $ 9,800,000 $ 7,750,000
COMPANY $ 4,200,000 $ 2,000,000
$ 1,500,000
BAYSTATE HEALTH SYSTEM, INC $ 500,000
CM LIFE INSURANCE COMPANY $ 250,000
ALLSTATE LIFE INSURANCE COMPANY $ 1,000,000
$ 3,000,000
$ 1,500,000
$ 3,000,000
$ 1,500,000
ALLSTATE INSURANCE COMPANY $ 5,000,000
THE NORTHWESTERN MUTUAL LIFE INSURANCE $10,000,000 $10,000,000
COMPANY
NORTHERN LIFE INSURANCE COMPANY $ 4,500,000 $ 2,000,000
WASHINGTON SQUARE ADVISERS PRIVATE $ 2,500,000
PLACEMENT TRUST FUND
RELIASTAR LIFE INSURANCE COMPANY OF NEW $ 1,000,000
YORK (FORMERLY RELIASTAR BANKERS
SECURITY LIFE INSURANCE COMPANY)
RELIASTAR LIFE INSURANCE COMPANY $ 1,000,000 $ 4,000,000
SECURITY CONNECTICUT LIFE INSURANCE $ 2,000,000
COMPANY
GENERAL ELECTRIC CAPITAL ASSURANCE $ 6,000,000
COMPANY (FORMERLY GREAT NORTHERN
INSURED ANNUITY CORPORATION)
KEMPER INVESTORS LIFE INSURANCE COMPANY $ 2,900,000 $ 6,900,000
FEDERAL KEMPER LIFE ASSURANCE COMPANY $ 1,400,000 $ 3,400,000
ZURICH LIFE INSURANCE COMPANY OF $ 200,000 $ 500,000
AMERICA
FIDELITY LIFE ASSOCIATION $ 175,000 $ 1,200,000
$ 175,000
$ 150,000
AMERICAN BANKERS LIFE ASSURANCE $ 4,000,000
COMPANY OF FLORIDA
AMERICAN BANKERS LIFE INSURANCE $ 1,000,000
COMPANY INC. OF FLORIDA
PROVIDENT MUTUAL LIFE INSURANCE $ 3,000,000 $ 3,000,000
COMPANY
</TABLE>
Schedule I
(to 2000-A Amendment Agreement)
I-1
<PAGE> 36
EXHIBIT A
[FORM OF SECURITY AGREEMENT]
EXHIBIT 10.3
(to Note Purchase Agreement)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-START> JUL-01-1999
<PERIOD-END> MAR-31-2000
<CASH> 37,061,000
<SECURITIES> 0
<RECEIVABLES> 35,723,000
<ALLOWANCES> 0
<INVENTORY> 100,281,000
<CURRENT-ASSETS> 190,998,000
<PP&E> 92,925,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 394,433,000
<CURRENT-LIABILITIES> 147,629,000
<BONDS> 0
0
6,110,000
<COMMON> 921,000
<OTHER-SE> 116,569,000
<TOTAL-LIABILITY-AND-EQUITY> 394,433,000
<SALES> 404,149,000
<TOTAL-REVENUES> 434,923,000
<CGS> 337,250,000
<TOTAL-COSTS> 446,896,000
<OTHER-EXPENSES> (277,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,070,000
<INCOME-PRETAX> (25,320,000)
<INCOME-TAX> (8,862,000)
<INCOME-CONTINUING> (17,025,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17,025,000)
<EPS-BASIC> (0.92)
<EPS-DILUTED> (0.92)
</TABLE>
