<PAGE> 1
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
(MARK ONE:)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 0-24268
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
Palm Harbor Homes, Inc.
Employee Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
Palm Harbor Homes, Inc.
15303 N. Dallas Pkwy. Suite 800
Addison, TX 75001-4600
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FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE AND EXHIBIT
Palm Harbor Homes, Inc. Employee Savings Plan
Years ended December 31, 1999 and 1998 with Report of Independent Auditors
<PAGE> 3
Palm Harbor Homes, Inc.
Employee Savings Plan
Financial Statements and
Supplemental Schedule and Exhibit
Years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
CONTENTS
<S> <C>
Report of Ernst & Young LLP, Independent Auditors.................................................... 1
Audited Financial Statements
Statements of Net Assets Available for Benefits...................................................... 2
Statements of Changes in Net Assets Available for Benefits........................................... 3
Notes to Financial Statements........................................................................ 4
Supplemental Schedule and Exhibit
Schedule H; Line 4i - Schedule of Assets Held for Investment Purposes
at End of Year.................................................................................... 10
Consent of Ernst & Young LLP, Independent Auditors................................................... 11
</TABLE>
<PAGE> 4
Report of Ernst & Young LLP, Independent Auditors
Plan Administrator
Palm Harbor Homes, Inc. Employee Savings Plan
We have audited the accompanying statements of net assets available for benefits
of the Palm Harbor Homes, Inc. Employee Savings Plan as of December 31, 1999 and
1998, and the related statements of changes in net assets available for benefits
for the years then ended. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above, present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1999 and 1998, and the changes in its net assets available for
benefits for the years then ended, in conformity with accounting principles
generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
held for investment purposes at end of year as of December 31, 1999, is
presented for purposes of additional analysis and is not a required part of the
financial statements but is supplementary information required by the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule is the
responsibility of the Plan's management. This supplemental schedule has been
subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Ernst & Young LLP
Dallas, Texas
May 12, 2000
<PAGE> 5
Palm Harbor Homes, Inc. Employee Savings Plan
Statements of Net Assets Available for Benefits
<TABLE>
<CAPTION>
DECEMBER 31
1999 1998
----------- -----------
<S> <C> <C>
ASSETS
Investments, at fair value $43,520,643 $33,446,773
Participant loans receivable 2,028,900 1,302,062
----------- -----------
Total investments 45,549,543 34,748,835
Receivables:
Employee contributions 400,229 445,254
Employer contributions 128,436 157,337
Interest income 496 165
----------- -----------
Total receivables 529,161 602,756
----------- -----------
Total assets 46,078,704 35,351,591
LIABILITIES
Contributions refundable 209,743 360,692
----------- -----------
Net assets available for benefits $45,868,961 $34,990,899
=========== ===========
</TABLE>
See accompanying notes.
2
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Palm Harbor Homes, Inc. Employee Savings Plan
Statements of Changes in Net Assets Available for Benefits
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998
----------- -----------
<S> <C> <C>
ADDITIONS
Investment income:
Net appreciation in fair value of investments $ 1,611,171 $ 3,671,080
Interest and dividend income 3,807,964 2,066,298
----------- -----------
5,419,135 5,737,378
Contributions:
Employee 6,680,174 5,984,815
Employer 2,024,514 1,859,745
Rollover 186,249 209,264
----------- -----------
8,890,937 8,053,824
Transfers from merged plans -- 1,022,705
----------- -----------
14,310,072 14,813,907
DEDUCTIONS
Distributions to participants 3,389,305 2,523,052
Administrative expenses 42,705 27,600
----------- -----------
3,432,010 2,550,652
----------- -----------
Net increase 10,878,062 12,263,255
Net assets available for benefits:
Beginning of year 34,990,899 22,727,644
----------- -----------
End of year $45,868,961 $34,990,899
=========== ===========
</TABLE>
See accompanying notes.
3
<PAGE> 7
Palm Harbor Homes, Inc. Employee Savings Plan
Notes to Financial Statements
December 31, 1999 and 1998
1. DESCRIPTION OF PLAN
The following description of the Palm Harbor Homes, Inc. Employee Savings Plan
(Plan) provides only general information. Participants should refer to the
Summary Plan Description for a more complete description of the Plan's
provisions.
GENERAL
The Plan is a defined contribution plan covering all employees of Palm Harbor
Homes, Inc. (the Company) and certain unrelated employers who have at least
three consecutive months of service. The Plan is subject to the provisions of
the Employee Retirement Income Security Act of 1974 (ERISA).
Effective January 1, 1998, the Company amended the Plan to change a
participant's vested interest in his employer-matching contributions and to
allow for the merger of the participants of the Cedar Creek Pro Plan from Ken
McGee Enterprises, Inc., into the Plan.
Effective July 1, 1998, the Company merged the Countryside Mobile Homes, Inc.
401(k) Plan, Carna Mobile Homes, Inc. 401(k) Plan, All Star Homes, Inc. 401(k)
Plan, Cannon Manufacturing Housing Group 401(k) Plan, and the Star Mobile Homes,
Inc. 401(k) Plan (collectively, the merged plans) into the Plan. Additionally,
the participants of the merged plans are eligible to participate in the Palm
Harbor Homes, Inc. Employee Savings Plan effective July 1, 1998. The assets of
the merged plans were transferred in August 1998.
CONTRIBUTIONS
Each year, participants may contribute up to 15% of pretax annual compensation,
as defined in the Plan. Participants may also contribute amounts representing
distributions from other qualified plans. The Company contributes on a Plan-year
basis 50% of the first 6% of compensation that a participant contributes to the
Plan. Participants are eligible for allocation of the employer contributions
beginning on the enrollment date coinciding or following the date on which they
have completed one year of eligible service.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contributions, the
Company's matching contributions and allocations of Plan earnings. Allocations
of Plan earnings are based on participant account balances, as defined. The
benefit to which a participant is entitled is the benefit that can be provided
from the participant's account. Forfeited
4
<PAGE> 8
Palm Harbor Homes, Inc. Employee Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF PLAN (CONTINUED)
balances of terminated participants' nonvested accounts are used to reduce Plan
expenses and/or future Company contributions. At December 31, 1999 and 1998,
$10,592 and $10,257, respectively, were available to be used for future Plan
expenses or Company contributions. During 1999 and 1998, forfeitures of $524,244
and $362,896, respectively, were used to supplement the Company contributions.
VESTING
Participants are immediately vested in their contributions plus actual earnings
thereon. Vesting in the Company contribution portion of their accounts plus
actual earnings thereon is based on years of continuous service. Effective
January 1, 1998, participants vest in Company contributions as follows: two
years - 20%, three years - 40%, four years - 60%, and five years - 100%.
INVESTMENT OPTIONS
Upon enrollment in the Plan, a participant may direct employer and employee
contributions in 1% increments in any of ten investment options.
Participants may change their investment options daily.
PARTICIPANT LOANS RECEIVABLE
Participants may borrow from their fund accounts a minimum of $1,000 up to the
lesser of 50% of their vested account balance or $50,000 (adjusted for loan
payments during the previous year). A participant may have only one loan
outstanding at any time. Loan terms range from up to five years or up to ten
years for the purchase of a primary residence. The loans are secured by the
balance in the participant's account and bear interest at a rate commensurate
with local prevailing rates at the prime rate plus 1% as determined by the Plan
Administrator. Principal and interest is paid ratably through monthly payroll
deductions.
5
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Palm Harbor Homes, Inc. Employee Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF PLAN (CONTINUED)
PAYMENT OF BENEFITS
On termination of service, a participant or beneficiary may receive a lump-sum
amount equal to the vested value of his or her account, or, upon death,
disability, or retirement, elect to receive annual installments over a certain
period which does not extend beyond the life expectancy of the participant or
his beneficiary. Upon the death of a participant who is a current employee, the
account is automatically 100% vested. If a participant's account is $5,000 or
less, the balance of such account will be distributed in a lump-sum amount upon
retirement, disability, death, or termination of employment.
ADMINISTRATION
The Plan was administered by the Company. Fidelity Management Trust Company
serves as trustee, and Fidelity Institutional Retirement Services Company serves
as recordkeeper.
Costs and expenses of administering the Plan are paid by the Company, unless
paid by the Plan.
PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination,
participants will become 100% vested in their accounts.
2. SUMMARY OF ACCOUNTING POLICIES
INVESTMENTS
Investments in mutual funds are recorded at quoted market prices which
represents the net asset value of the shares held by the Plan at year-end.
Investments in the unitized stock fund are determined by the combined value of
the underlying common stock and short-term cash position. The fair value of the
common stock portion of the fund is based on the closing price of the common
stock on its primary exchange times the number of shares held in the fund.
Participant loans and the short term cash portion of the unitized stock fund are
recorded at cost which approximates fair value.
6
<PAGE> 10
Palm Harbor Homes, Inc. Employee Savings Plan
Notes to Financial Statements (continued)
2. SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
BASIS OF ACCOUNTING
The financial statements are prepared on the accrual basis of accounting.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
RECLASSIFICATION
Certain amounts in the 1998 financial statements have been reclassified to
conform to the 1999 presentation.
3. INVESTMENTS
During 1999 and 1998, the Plan's investments (including investments purchased,
sold, as well as held during the year) appreciated (depreciated) in fair value
as determined by quoted market prices as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998
----------- -----------
<S> <C> <C>
Common stock $ (622,863) $ (187,954)
Shares of registered investment companies 2,234,034 3,859,034
----------- -----------
Net appreciation in fair value of investments $ 1,611,171 $ 3,671,080
=========== ===========
</TABLE>
7
<PAGE> 11
Palm Harbor Homes, Inc. Employee Savings Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
Individual investments that represent 5% or more of the Plan's net assets at
December 31, are as follows:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Palm Harbor Common Stock * $2,016,574
Fidelity Magellan Fund $11,636,801 7,750,722
Fidelity Contrafund 10,940,449 7,508,301
Fidelity Growth and Income Fund 9,271,823 8,161,956
Fidelity Asset Manager Fund 3,350,421 2,762,177
Fidelity Retirement Government Money Market Fund 4,747,269 4,188,160
</TABLE>
*Investment did not represent 5% or more of the Plan's net assets as of December
31, 1999.
4. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated August 11, 1995, stating that the Plan is qualified under Section 401(a)
of the Internal Revenue Code (the Code) and, therefore, the related trust is
exempt from taxation. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The Plan Administrator
believes the Plan is being operated in compliance with the applicable
requirements of the Code and, therefore, believes that the Plan is qualified and
the related trust is tax exempt.
5. CONTRIBUTIONS REFUNDABLE
Contributions refundable represents excess contributions refundable to certain
participants in order to comply with certain nondiscrimination requirements.
8
<PAGE> 12
Palm Harbor Homes, Inc. Employee Savings Plan
Notes to Financial Statements (continued)
6. RECONCILIATION OF FINANCIAL STATEMENTS TO THE FORM 5500
The following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500:
<TABLE>
<CAPTION>
DECEMBER 31
1999 1998
---------------- ----------------
<S> <C> <C>
Net assets available for benefits per the financial statements
$45,868,961 $34,990,899
Less: Amounts allocated to withdrawing participants (3,750) (83,438)
---------------- ----------------
Net assets available for benefits per the Form 5500 $45,865,211 $34,907,461
================ ================
</TABLE>
The following is a reconciliation of distributions to participants per the
financial statements to the Form 5500:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1999
------------------
<S> <C>
Distributions to participants per the financial
statements $3,389,305
Add: Amounts allocated on Form 5500 to withdrawn participants at end
of year 3,750
Less: Amounts allocated on Form 5500 to withdrawn participants at
beginning of year (83,438)
----------------
Distributions to participants per the Form 5500 $3,309,617
================
</TABLE>
Amounts allocated to withdrawing participants are recorded on the Form 5500 for
distributions that have been processed and approved for payment prior to
December 31 but not yet paid as of that date.
9
<PAGE> 13
Palm Harbor Homes, Inc. Employee Savings Plan
Schedule H; Line 4i - Schedule of Assets Held for
Investment Purposes at End of Year
EIN: 59-1036634
Plan #: 333
December 31, 1999
<TABLE>
<CAPTION>
(c)
(b) DESCRIPTION OF INVESTMENT INCLUDING
IDENTITY OF ISSUE, BORROWER, LESSOR, OR MATURITY DATE, RATE OF INTEREST, (d) (e)
(a) SIMILAR PARTY COLLATERAL, PAR, OR MATURITY VALUE COST CURRENT VALUE
------ --------------------------------------- ------------------------------------- ---- ---------------
<S> <C> <C> <C> <C>
* Fidelity Management Trust Company Magellan Fund; 85,170 shares ** $11,636,801
Contrafund; 182,280 shares ** 10,940,449
Growth and Income Fund;
196,604 shares ** 9,271,823
Asset Manager Fund;
182,286 shares ** 3,350,421
Retirement Government Money
Market Fund; 4,747,269 shares ** 4,747,269
Palm Harbor Common Stock;
95,051 shares ** 1,710,918
Institutional Cash Portfolio; 81,275
shares ** 85,025
Puritan Fund; 20,148 shares ** 383,411
GNMA Fund; 17,231 shares ** 178,513
Value Fund; 10,916 shares ** 478,218
Diversified International Fund; 28,798
shares ** 737,795
* Participants Loans with interest rates from 9.25% -
10%; various maturity dates through
2009; secured by participant vested
accrued benefits -- 2,028,900
------- -----------
$ -- $45,549,543
======= ===========
</TABLE>
*Denotes party-in-interest
**Investments are participant-directed thus cost information is not applicable.
10
<PAGE> 14
S I G N A T U R E S
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the Trustee of the Palm Harbor Homes, Inc. Employee Savings Plan has duly caused
this annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
PALM HARBOR HOMES, INC. EMPLOYEE SAVINGS PLAN
Name of Plan
Date: June 28, 2000 By /s/ Kelly Tacke
-----------------------------------------
Kelly Tacke
Vice President - Finance
Chief Financial Officer and Secretary
11
<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
23 Consent of Ernst & Young LLP, Independent Auditors
</TABLE>
