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 February 28, 1999
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 April 12, 1999.
Common Stock, Par Value $.05 Per Share 18,394,772
2
PART I - FINANCIAL INFORMATION
PAGE
----
Item 1. Financial Statements
Consolidated Balance Sheets - May 31, 1998 and February 28, 1999....................... 2
Consolidated Statements of Operations - three months ended February 28, 1998
and 1999............................................................................ 3
Consolidated Statements of Operations - nine months ended February 28, 1998
and 1999............................................................................ 4
Consolidated Statements of Cash Flows - nine months ended February 28, 1998
and 1999............................................................................ 5
Notes to Consolidated Financial Statements............................................. 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................................... 13
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K....................................................... 20
1
3
PART I -- FINANCIAL INFORMATION
AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MAY 31, FEBRUARY 28,
1998 1999
------------ ------------
(unaudited)
ASSETS
Current assets:
Cash .............................................................. $ 20,852,000 $ 9,677,000
Cash in transit from financial institutions ....................... 35,289,000 35,153,000
------------ ------------
Total cash and cash equivalents ............................. 56,141,000 44,830,000
Inventories, net .................................................. 74,076,000 122,153,000
Accounts receivable ............................................... 22,468,000 47,539,000
Manufacturer incentives receivable ................................ 2,839,000 1,248,000
Deferred tax assets ............................................... 4,405,000 4,468,000
Prepaid expenses and other current assets ......................... 9,952,000 9,927,000
------------ ------------
Total current assets ........................................ 169,881,000 230,165,000
Property, plant and equipment, net ................................... 58,984,000 93,147,000
Goodwill (net of accumulated amortization of $9,173,000 and
$10,627,000, respectively) ........................................... 36,952,000 87,480,000
Investment in affiliates ............................................. 3,916,000 5,287,000
Other assets ......................................................... 3,963,000 4,822,000
------------ ------------
$273,696,000 $420,901,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of notes payable and capital leases .......... $ 941,000 $ 1,556,000
Floor plan payable, net of participations ......................... 43,463,000 81,151,000
Accounts payable .................................................. 27,840,000 32,078,000
Accrued expenses .................................................. 32,510,000 47,162,000
Accrued warranty costs ............................................ 6,260,000 7,753,000
------------ ------------
Total current liabilities ................................... 111,014,000 169,700,000
Notes payable and capital leases, less current installments .......... 63,087,000 119,610,000
Deferred tax liabilities ............................................. 199,000 363,000
Minority interest in consolidated subsidiaries ....................... 933,000 663,000
Shareholders' equity:
Preferred stock, no par value, authorized 5,000,000 shares; no
shares issued ................................................... -- --
Common stock, $0.05 par value; authorized 50,000,000 shares; issued
and outstanding 17,274,667 and 18,394,772 shares,
respectively .................................................... 864,000 920,000
Additional paid-in capital ........................................ 43,468,000 62,157,000
Retained earnings ................................................. 54,131,000 67,488,000
------------ ------------
Total shareholders' equity .................................. 98,463,000 130,565,000
------------ ------------
$273,696,000 $420,901,000
============ ============
2
4
AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED FEBRUARY 28,
------------------------------
1998 1999
------------- -------------
(unaudited) (unaudited)
Revenues:
Net sales .......................................... $ 107,103,000 $ 140,303,000
Other revenues ..................................... 10,216,000 11,097,000
------------- -------------
Total revenues ............................... 117,319,000 151,400,000
------------- -------------
Costs and expenses:
Cost of sales ...................................... 84,958,000 112,545,000
Selling, general and administrative ................ 23,133,000 32,616,000
------------- -------------
Total costs and expenses ..................... 108,091,000 145,161,000
------------- -------------
Operating income ............................. 9,228,000 6,239,000
Interest expense ...................................... (1,869,000) (3,907,000)
Other ................................................. (21,000) (3,000)
------------- -------------
Income before items shown below .............. 7,338,000 2,329,000
Income tax expense .................................... 3,017,000 956,000
------------- -------------
Income before items shown below .............. 4,321,000 1,373,000
Earnings in affiliates ................................ 198,000 410,000
Minority interests .................................... (39,000) 33,000
------------- -------------
Net income ................................... $ 4,480,000 $ 1,816,000
============= =============
Earnings per share - basic:
Net income per share ......................... $ 0.26 $ 0.10
============= =============
Earnings per share - diluted:
Net income per share ......................... $ 0.25 $ 0.10
============= =============
3
5
AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED FEBRUARY 28,
------------------------------
1998 1999
------------- -------------
(unaudited) (unaudited)
Revenues:
Net sales ....................................................... $ 344,847,000 $ 437,560,000
Other revenues .................................................. 22,219,000 30,393,000
------------- -------------
Total revenues ............................................ 367,066,000 467,953,000
------------- -------------
Costs and expenses:
Cost of sales ................................................... 276,249,000 342,792,000
Selling, general and administrative ............................. 62,398,000 95,089,000
Acquisition costs ............................................... 2,425,000 --
------------- -------------
Total costs and expenses .................................. 341,072,000 437,881,000
------------- -------------
Operating income .......................................... 25,994,000 30,072,000
Interest expense ................................................... (5,501,000) (9,382,000)
Other .............................................................. (29,000) 81,000
------------- -------------
Income before items shown below ........................... 20,464,000 20,771,000
Income tax expense ................................................. 9,267,000 8,536,000
------------- -------------
Income before items shown below ........................... 11,197,000 12,235,000
Earnings in affiliates ............................................. 684,000 1,219,000
Minority interests ................................................. (127,000) (97,000)
------------- -------------
Net income before item shown below ........................ 11,754,000 13,357,000
Extraordinary item (net of income tax benefit of $412,000) ......... (634,000) --
------------- -------------
Net income ................................................ $ 11,120,000 $ 13,357,000
============= =============
Earnings per share - basic:
Income before extraordinary item .............................. $ 0.69 $ 0.75
Extraordinary item, net of income tax benefit ................. (0.04) --
------------- -------------
Net income per share ...................................... $ 0.65 $ 0.75
============= =============
Earnings per share - diluted:
Income before extraordinary item .............................. $ 0.66 $ 0.71
Extraordinary item, net of income tax benefit ................. (0.04) --
------------- -------------
Net income per share ...................................... $ 0.62 $ 0.71
============= =============
4
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AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED FEBRUARY 28,
------------------------------
1998 1999
------------- -------------
(unaudited) (unaudited)
Cash flows from operating activities:
Net income ................................................................ $ 11,120,000 $ 13,357,000
Adjustments to reconcile net income to net cash provided by (used
in) operating activities:
Depreciation and amortization ........................................... 3,983,000 5,056,000
Minority interests in income of unconsolidated subsidiary ............... 127,000 97,000
Earnings in affiliate ................................................... (684,000) (1,219,000)
Deferred taxes .......................................................... 375,000 101,000
Extraordinary item ...................................................... 634,000 --
Conforming of year ends ................................................. (678,000) --
Change in assets and liabilities, net of acquisitions:
Increase in receivables ............................................... (8,112,000) (14,962,000)
Increase in inventories ............................................... (1,185,000) (30,299,000)
(Increase) decrease in prepaid expenses and other current
assets .............................................................. (1,016,000) 2,837,000
Decrease in other assets .............................................. 150,000 861,000
Increase (decrease) in accounts payable ............................... 1,007,000 (432,000)
Increase (decrease) in accrued expenses ............................... 5,367,000 (3,777,000)
------------- -------------
Net cash provided by (used in) operating activities ............ 11,088,000 (28,380,000)
------------- -------------
Cash flows from investing activities:
Payment for purchase of acquisitions, net of cash acquired ................ (1,987,000) (32,696,000)
Purchases of property, plant and equipment, net ........................... (7,882,000) (24,324,000)
------------- -------------
Net cash used in investing activities .......................... (9,869,000) (57,020,000)
------------- -------------
Cash flows from financing activities:
Participation in floor plan payable ....................................... (23,623,000) (8,498,000)
Borrowings under floor plan payable ....................................... 114,656,000 177,648,000
Repayments of floor plan payable .......................................... (115,099,000) (144,882,000)
Proceeds from long-term debt borrowings ................................... 61,000,000 51,000,000
Principal payments of long-term debt ...................................... (33,720,000) (1,184,000)
Exercise of stock options ................................................. 762,000 5,000
Other ..................................................................... (11,000) --
------------- -------------
Net cash provided by financing activities ...................... 3,965,000 74,089,000
------------- -------------
Net increase (decrease) in cash and cash equivalents ......................... 5,184,000 (11,311,000)
Cash and cash equivalents, beginning of period ............................... 43,348,000 56,141,000
------------- -------------
Cash and cash equivalents, end of period ..................................... $ 48,532,000 $ 44,830,000
============= =============
Supplemental disclosures of cash flow information:
Cash paid for interest .................................................... $ 5,143,000 $ 9,231,000
Cash paid for income taxes ................................................ 7,300,000 8,409,000
============= =============
5
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AMERICAN HOMESTAR CORPORATION AND 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. On June 10, 1997, the Company completed the acquisition of Brilliant
Holding Corporation ("Brilliant"). This transaction was accounted for as a
pooling of interests; accordingly, the accompanying condensed consolidated
financial statements have been restated to include the results of Brilliant for
all periods presented. Because of the seasonal nature of the Company's business,
operating results for the three and nine months ended February 28, 1999 are not
necessarily indicative of the results that may be expected for the fiscal year
ending May 31, 1999. 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.
PRONOUNCEMENTS
In June 1997, the Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" ("SFAS 130") was issued, which establishes
standards for reporting and display of comprehensive income and its components.
The components of comprehensive income refer to revenues, expenses, gains and
losses that are excluded from net income under current accounting standards,
including foreign currency translation items, minimum pension liability
adjustments and unrealized gains and losses on certain investments in debt and
equity securities. SFAS 130 requires that all items that are recognized under
accounting standards as components of comprehensive income be reported in a
financial statement displayed in equal prominence with other financial
statements and the total of other comprehensive income for a period is required
to be transferred to a component of equity that is separately displayed in a
statement of financial position at the end of an accounting period. SFAS 130 is
effective for fiscal years beginning after December 15, 1997. The adoption of
SFAS 130 for fiscal year 1999 did not have a significant impact on the
consolidated financial statements of the Company.
In June 1997, "Disclosures about Segments of an Enterprise and Related
Information" ("SFAS 131") was issued. SFAS 131 establishes standards for
disclosures about segments of an enterprise and related information. SFAS 131
establishes standards for reporting information about operating segments in
annual financial statements and requires the reporting of selected information
about operating segments in interim financial reports issued to stockholders. It
also establishes standards for related disclosures about products and services,
geographic areas and major customers. SFAS 131 is effective for fiscal years
beginning after December 15, 1997. SFAS 131 is not required to be applied to
interim financial statements in the initial year of its application. The
adoption of SFAS 131 during the fourth quarter of fiscal year 1999 will affect
the disclosure of segment information.
RECLASSIFICATIONS
Certain prior years' amounts have been reclassified to conform to
classifications used in the current period.
BUSINESS COMBINATIONS
On June 10, 1997, Brilliant was acquired by the Company, and 711,149 shares
of the Company's common stock and options to purchase 38,852 shares of the
Company's common stock were issued in exchange for all of Brilliant's
outstanding common stock and options to purchase Brilliant's common stock. This
transaction was accounted for as a pooling of interests. Prior to the
acquisition, Brilliant used a fiscal year ending on December 31. The financial
statements for the three and nine months ended February 28, 1998 combine each
company's three and nine months ended February 28, 1998. Due to the different
fiscal year ends, retained earnings includes an adjustment to record Brilliant's
net loss for the five months ended May 31, 1997, which will not be included in
the restated statements of operations for any fiscal period.
6
8
AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
A summary of Brilliant's results of operations for the five months ended
May 31, 1997 follows:
Net sales ......................... $ 28,984,000
Total costs and expenses .......... $ 29,845,000
------------
Net loss .......................... $ (678,000)
============
On June 16, 1997, the Company completed the acquisition of N.C. Mobile Home
Corporation ("NC Homes"), which operated 11 retail sales centers in North
Carolina and one in Virginia. The results of the acquired operations of NC Homes
have been included with those of the Company from the date of the acquisition.
The excess purchase price over the estimated fair value of the net assets
acquired as of the acquisition date of $3.6 million has been recorded as
goodwill and is being amortized over 25 years. The estimated fair value of
assets acquired and liabilities assumed is summarized as follows:
Current assets....................... $ 7,994,000
Other assets......................... 282,000
Goodwill............................. 3,571,000
Floor plan payable................... (6,691,000)
Accounts payable..................... (442,000)
Accrued liabilities.................. (214,000)
---------------
$ 4,500,000
===============
Consideration:
Cash.............................. $ 1,000,000
Note payable...................... 1,500,000
Common stock...................... 2,000,000
---------------
$ 4,500,000
===============
7
9
AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
On January 6, 1998, the Company completed the acquisition of Davis Homes,
Inc. ("Davis Homes") which operated three retail sales centers in Alabama. The
results of the acquired operations of Davis Homes have been included with those
of the Company from the date of the acquisition. The excess purchase price over
the estimated fair value of the net assets acquired as of the acquisition date
of $2.1 million has been recorded as goodwill and is being amortized over 25
years. The estimated fair value of assets acquired and liabilities assumed is
summarized as follows:
Current assets............................ $ 2,187,000
Other assets.............................. 518,000
Goodwill.................................. 2,075,000
Floor plan payable........................ (1,976,000)
Accrued liabilities....................... (121,000)
-----------------
$ 2,683,000
=================
Consideration:
Cash................................... $ 1,472,000
Note payable........................... 247,000
Common stock........................... 964,000
-----------------
$ 2,683,000
=================
On July 13, 1998, the Company completed the acquisition of First Value
Homes, Inc. ("First Value") which operated two retail sales centers in North
Carolina. The results of the acquired operations of First Value have been
included with those of the Company effective July 1, 1998. The excess purchase
price over the estimated fair value of the net assets acquired as of the
acquisition date of $6.7 million has been recorded as goodwill and is being
amortized over 25 years. The estimated fair value of assets acquired and
liabilities assumed is summarized as follows:
Current assets............................ $ 5,383,000
Other assets.............................. 1,179,000
Goodwill.................................. 6,719,000
Floor plan payable........................ (3,024,000)
Accrued liabilities....................... (843,000)
Accounts payable.......................... (349,000)
Notes payable and capital leases.......... (425,000)
-----------------
$ 8,640,000
=================
Consideration:
Cash................................... $ 4,633,000
Common stock........................... 4,007,000
-----------------
$ 8,640,000
=================
8
10
AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
On September 14, 1998, the Company completed the acquisition of DWP
Management, Inc. ("DWP") and its related companies, Value Homes, Inc., Value
Homes of Washington, Inc., Premiere Manufactured Homes, Inc., Premiere
Manufactured Homes, Inc. of Washington, Park Place Mobil Homes, Inc., Kilroy's
M. H., Inc. and Premiere Homes of Moses Lake, Inc. which operated six retail
sales centers in Washington, Oregon and New Mexico. The previous owner retained
a 20% interest in the newly formed corporations, Pacific Northwest Homes, Inc.
and Pacific II Northwest Homes, Inc. The results of the acquired operations of
DWP have been included with those of the Company effective September 1, 1998.
The excess purchase price over the estimated fair value of the net assets
acquired as of the acquisition date of $12.5 million has been recorded as
goodwill and is being amortized over 25 years. The estimated fair value of
assets acquired and liabilities assumed is summarized as follows:
Current assets............................ $ 12,775,000
Other assets.............................. 2,077,000
Goodwill.................................. 12,513,000
Floor plan payable........................ (8,866,000)
Accrued liabilities....................... (4,789,000)
Minority interests........................ (174,000)
Accounts and notes payable................ (637,000)
-----------------
$ 12,899,000
=================
Consideration:
Cash................................... $ 6,000,000
Note payable.............................. 3,900,000
Common stock........................... 2,999,000
-----------------
$ 12,899,000
=================
On December 29, 1998, the Company completed the 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").
R-Anell 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. The results of the acquired operations of R-Anell have
been included with those of the Company from the date of acquisition. The excess
purchase price over the estimated fair value of net assets acquired as of the
acquisition date of $29.5 million has been recorded as goodwill and is being
amortized over 40 years. The final determination of the purchase price, which is
subject to certain performance targets, will be made in fiscal 2000. The
estimated fair value of assets acquired and liabilities assumed in these
acquisitions is summarized as follows:
Current assets........................ $ 9,439,000
Property, plant and equipment......... 11,073,000
Goodwill.............................. 29,521,000
Current liabilities................... (11,156,000)
Notes payable......................... (6,300,000)
---------------
$ 32,577,000
===============
Consideration:
Cash............................... $ 21,167,000
Common stock....................... 11,113,000
Transaction costs.................. 297,000
---------------
$ 32,577,000
===============
9
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AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The pro forma effects related to the NC Homes, Davis Homes, First Value,
DWP and R-Anell acquisitions are not significant.
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 February 28, 1999, the Company's contingent repurchase liability was
approximately $80.9 million.
INVENTORIES
A summary of inventories follows:
MAY 31, FEBRUARY 28,
1998 1999
------------ ------------
Manufactured homes:
New .................................. $ 50,208,000 $ 85,951,000
Used ................................. 6,744,000 9,982,000
Furniture and supplies ................. 5,884,000 9,454,000
Raw materials and work-in-process ...... 11,240,000 16,766,000
------------ ------------
$ 74,076,000 $122,153,000
============ ============
INVESTMENT IN AFFILIATE
Summary financial information for the Company's 50% owned subsidiary, 21st
Century Mortgage Corporation, for the three and nine months ended February 28,
1998 and 1999 follows:
THREE MONTHS ENDED NINE MONTHS ENDED
FEBRUARY 28, FEBRUARY 28,
------------------------- -------------------------
1998 1999 1998 1999
----------- ----------- ----------- -----------
Total revenues ......... $ 1,477,000 $ 4,312,000 $ 5,798,000 $12,555,000
Net income ............. $ 396,000 $ 820,000 $ 1,368,000 $ 2,438,000
=========== =========== =========== ===========
10
12
AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
EARNINGS PER SHARE
The consolidated financial statements, including all references to the
number of shares of common stock and all per share information have been
adjusted to reflect the issuance of 711,149 shares of common stock exchanged for
all of the common stock of Brilliant and the 3-for-2 stock split effected on
October 31, 1997.
The following data show the amounts used in computing earnings per share
and the weighted average number of shares of dilutive potential common stock.
THREE MONTHS ENDED FEBRUARY 28,
-----------------------------------
1998 1999
---------------- ----------------
Net income ....................................... $ 4,480,000 $ 1,816,000
================ ================
Weighted average common shares outstanding ....... 17,231,582 18,192,645
Dilutive effect of stock options ................. 893,734 568,784
---------------- ----------------
Common shares denominator ........................ 18,125,316 18,761,429
================ ================
NINE MONTHS ENDED FEBRUARY 28,
-----------------------------------
1998 1999
---------------- ----------------
Net income ....................................... $ 11,120,000 $ 13,357,000
================ ================
Weighted average common shares outstanding ....... 17,171,427 17,773,783
Dilutive effect of stock options ................. 861,849 929,621
---------------- ----------------
Common shares denominator ........................ 18,033,276 18,703,404
================ ================
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 semi-annual 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 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, disposition of assets, additional long-term debt,
redemption of common stock, payment of dividends and prepayment of subordinated
debt. At February 28, 1999, the Company was in compliance with all such
restrictions.
11
13
AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
EVENTS SUBSEQUENT TO FEBRUARY 28, 1999
In March, 1999, the Company entered into an Amended and Restated Securities
Purchase Agreement (the "Purchase Agreement") with Zaring National Corporation,
("Zaring") and HomeMax, Inc., a wholly-owned subsidiary of Zaring ("HomeMax").
Pursuant to the Purchase Agreement, the Company acquired 25% of the outstanding
common stock of HomeMax from 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, and the
Company, Zaring and HomeMax entered 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 twelve retail sales
centers in North Carolina, South Carolina and Kentucky.
12
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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 (the "Company") is one of the fastest growing
vertically integrated manufactured housing companies in the United States with
operations in manufacturing, retailing, financing and insurance.
In fiscal 1993, in response to growing demand for manufactured homes, the
Company began developing its expansion and vertical integration plan by opening
nine new retail sales centers and entering into a new venture (the "Homestar
Venture") with Oak Creek Homes, Inc. ("Oak Creek"), a long-time supplier, to
start-up and operate two manufacturing facilities. The costs associated with the
start-up of two new manufacturing facilities and the new retail sales centers
had an adverse effect on the Company's operating results in the second half of
fiscal 1993 and in the first half of fiscal 1994. By October 1993, both
manufacturing facilities had become profitable.
Effective August 31, 1993, a combination was consummated with the
shareholders of Oak Creek exchanging their shares of Oak Creek common stock for
shares of the Company's common stock (the "Combination"). In connection with the
Combination, all of the retail sales management personnel and manufacturing
management personnel exchanged their shares of common stock in the Company's
subsidiaries for shares of the Company's common stock.
In September 1995, the Company formed 21st Century Mortgage Corporation
("21st Century") to originate, finance, sell and service manufactured housing
sales contracts from the Company and third parties. 21st Century is managed by
two former executive officers of Clayton Homes, Inc. ("Clayton") and its finance
subsidiary, Vanderbilt Mortgage and Finance, Inc. The Company, Clayton and
management of 21st Century own 50%, 25% and 25%, respectively, of the equity
capital of 21st Century. 21st Century commenced operation in October 1995. The
Company accounts for its investment in 21st Century using the equity method of
accounting, showing its proportionate share of 21st Century's earnings or losses
as "earnings or loss in affiliate."
In September 1996, the Company exercised its option to acquire Guerdon
Holdings, Inc. and its subsidiary, Guerdon Homes, Inc. (collectively "Guerdon")
after managing Guerdon's operations under a management agreement since March
1996. Guerdon produces manufactured homes in four facilities located in Oregon,
Idaho, Nebraska and Mississippi, and sells its homes to over 150 independent
retailers located in 17 states in the Pacific Northwest Rocky Mountain and South
Central regions of the United States.
In September 1996, the Company acquired Heartland Homes, Inc.
("Heartland"), a single plant manufacturer of low-to medium-priced homes in
North Carolina. Concurrent with the Heartland acquisition, the Company also
purchased the assets of Manu-Fac Homes Inc., a contractually affiliated group of
15 independent retailers, which have since become franchisees of the Company.
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In June 1997, the Company acquired Brilliant Holding Corporation
("Brilliant"), which operated three manufacturing plants in Northern Alabama.
Also in June 1997, the Company acquired N.C. Mobile Home Corporation, which
operated twelve retail sales centers in North Carolina and one in Virginia. In
January 1998, the Company acquired Davis Homes, Inc., which operated three
retail sales centers in Alabama. In July 1998, the Company acquired First Value
Homes, Inc. which operated two retail sales centers in North Carolina. In
September 1998, the Company acquired DWP Management, Inc and its related
companies which operated six retail sales centers in Washington, Oregon and New
Mexico.
In December 1998, the Company acquired 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"). R-Anell 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 entered into an Amended and Restated Securities
Purchase Agreement (the "Purchase Agreement") with Zaring National Corporation,
("Zaring") and HomeMax, Inc., a wholly-owned subsidiary of Zaring ("HomeMax").
Pursuant to the Purchase Agreement, the Company acquired 25% of the outstanding
common stock of HomeMax from Zaring in exchange for a note, and the Company made
a loan to HomeMax 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. HomeMax currently operates twelve retail sales centers in
North Carolina, South Carolina and Kentucky.
VERTICAL INTEGRATION AND INTERNALIZATION
The Company's growth 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.
Several elements of the Company's growth strategy center on increasing the
rate of "internalization" of its retail sales (i.e. the proportion of new homes
sold by Company-owned retail sales centers that are also manufactured by the
Company). This strategy enables the Company to earn both a manufacturing profit
and a retailing profit on those home sales; however, only retail sales revenue
is recognized. Accordingly, increasing the internalization rate (without
otherwise affecting the Company's level of manufacturing and retailing activity)
has the effect of increasing gross margins and reducing reported revenues;
however, aggregate gross profit (in dollars) is not materially affected by
changes in the internalization rate.
Another key element of the Company's growth strategy is to increase the
degree of retail penetration of its financial services. As insurance product
penetration increases, both reported revenues and earnings should increase
without a corresponding increase in retail sales activity. Similarly, as 21st
Century finances more of the Company's retail sales, the Company's earnings
should increase without a corresponding increase in retail sales activity.
RESULTS OF OPERATIONS
The following table summarizes certain key sales statistics for the three
and nine months ended February 28, 1998 and 1999:
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16
THREE MONTHS ENDED FEBRUARY NINE MONTHS ENDED
28, FEBRUARY 28,
-------------------------- --------------------------
1998 1999 1998 1999
----------- ----------- ----------- -----------
Company-manufactured new homes sold at
retail ............................................ 1,005 1,067 3,053 3,722
Total new homes sold at retail ........................ 1,161 1,232 3,643 4,397
Internalization rate (1) .............................. 87% 87% 84% 85%
Previously-owned homes sold at retail ................. 414 599 1,181 1,594
Average retail selling price--new homes ............... $ 49,453 $ 53,622 $ 48,522 $ 53,081
Average number of new homes sold per retail
sales center ....................................... 15 12 51 45
Number of retail sales centers at end of period ....... 80 121 80 121
Manufacturing shipments ............................... 2,419 2,703 7,664 8,874
Manufacturing shipments to independent
dealers ............................................ 1,407 1,434 4,523 4,506
(1) The internalization rate is the proportion of new homes sold by
Company-owned retail sales centers that are manufactured by the Company.
The following table summarizes the Company's operating results, expressed
as a percentage of revenues, for the periods indicated:
THREE MONTHS ENDED FEBRUARY NINE MONTHS ENDED
28, FEBRUARY 28,
-------------------------- --------------------------
1998 1999 1998 1999
----------- ----------- ----------- -----------
Total revenues ........................................ 100.0% 100.0% 100.0% 100.0%
Gross profit .......................................... 27.6% 25.7% 24.8% 26.8%
Selling, general and administrative before
acquisition costs .................................. 19.7% 21.6% 17.0% 20.3%
Acquisition costs ..................................... -- -- 0.7% --
Operating income ...................................... 7.9% 4.1% 7.1% 6.4%
Net income before extraordinary loss .................. 3.8% 1.2% 3.2% 2.9%
Net income ............................................ 3.8% 1.2% 3.0% 2.9%
Three months ended February 28, 1999 compared to three months ended
February 28, 1998
During the three months ended February 28, 1999 the Company experienced
disappointing levels of retail sales which had a carryover effect to the other
(manufacturing, finance and insurance) operations of the Company. The lower
than expected level of sales resulted in net income which, for the first time
since the Company became public, was substantially lower than net income in the
comparable three month period last year. The Company attributes its lower than
expected sales primarily to three factors: a highly competitive retail
environment, the lack of a full range of competitive retail financing programs
and the fact that high growth in its retail operations has stretched retail
management and experienced sale personnel to the limit.
In response, management is now placing less emphasis on growing the
Company-store base and more on expanding the Company's retail franchise network.
In addition, senior management is focusing on developing a broader range of
retail financing alternatives and on recruiting, training, development and
retention of retail management and sales personnel. Management's stated goal is
to improve retail sales performance and profitability, even at more modest
volume levels and to steadily improve overall operating results. Management is
committed to the goal of building long term shareholder value.
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Net Sales. Net sales of manufactured homes were $140.3 million for the
three months ended February 28, 1999, compared to $107.1 million for the three
months ended February 28, 1998. The increase was primarily the result of a 16%
increase in the number of new and previously-owned homes sold at retail as well
as an 8% increase in the average selling price of new homes. The weighted
average number of new homes sold per retail sales center in the core Nationwide
Housing Corporation ("Nationwide") operations decreased from 15 in the third
quarter of fiscal 1998 to 12 in the third quarter of fiscal 1999. The Company
added 11 new retail sales centers during the third quarter of fiscal 1999.
Other Revenues. Transportation revenues for the three months ended February
28, 1999 were $2.6 million, an increase of 21.6% from $2.2 million for the three
months ended February 28, 1998. Transportation is not a key growth operation of
the Company and has over time represented a declining proportion of total
revenues and net income. Other revenues increased to $8.5 million for the three
months ended February 28, 1999, compared to $8.1 million for the three months
ended February 28, 1998. This increase in other revenues is primarily due to
increased commissions and premiums generated by the Company's insurance
operations during comparable periods. Revenues from insurance operations
decreased to $4.9 million for the three months ended February 28, 1999, compared
to $6.2 million for the three months ended February 28, 1998. However, revenues
from insurance operations for the three months ended February 28, 1998 include
$4.7 million in earned physical damage insurance premiums which represented the
premiums earned for all of calendar year 1998. In the current fiscal year, these
premiums and the related selling, general and administrative expenses are being
recognized on a quarterly basis.
Cost of Sales. Cost of manufactured homes sold were $112.6 million (80.2%
of net sales) for the three months ended February 28, 1999, as compared to $85.0
million (79.3% of net sales) for the three months ended February 28, 1998. The
increase in cost of sales was primarily due to higher sales volume. The increase
in cost of sales, expressed as a percentage of sales, was primarily the result
of lower gross margins in the Company's manufacturing operations due to the loss
of volume leverage against fixed manufacturing costs. Gross margins in the core
retail operations were slightly higher for the period. Cost of sales
attributable to transportation operations for the three months ended February
28, 1999 were $2.2 million (82.7% of transportation revenues), an increase of
22.3% from $1.8 million (82.2% of transportation revenues) for the three months
ended February 28, 1998.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the three months ended February 28, 1999, were $32.6
million (21.6% of total revenues), as compared to $23.1 million (19.7% of total
revenues) for the three months ended February 28, 1998. The increase in selling,
general and administrative expenses is attributable to increased sales,
manufacturing and insurance activities as well as an increase in fixed costs and
expenses associated with new retail sales centers and expanded manufacturing
capacity. The increase in selling, general and administrative expenses,
expressed as a percentage of total revenues, was the result of new retail sales
centers which had not yet reached normal operating efficiency.
Interest Expense. Interest expense increased 109% to $3.9 million for the
three months ended February 28, 1999, from $1.9 million for the three months
ended February 28, 1998. This increase was primarily attributable to increased
gross 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 gross borrowings under its floor plan credit facility to
support a higher level of inventory due to the addition of new retail sales
centers.
Income Taxes. The income tax provision, expressed as a percentage of income
before income taxes, earnings in affiliate and minority interests, was 41.1% for
the three months ended February 28, 1998 and 1999.
Nine months ended February 28, 1999 compared to nine months ended
February 28, 1998
Net Sales. Net sales of manufactured homes were $437.6 million for the nine
months ended February 28, 1999, compared to $344.8 million for the nine months
ended February 28, 1998. The increase was primarily the result of a
16
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24% increase in the number of new and previously-owned homes sold at retail as
well as a 9% increase in the average selling price of new homes. A decline in
the weighted average number of new homes sold per retail sales center in the
core Nationwide operations from 51 in the first nine months of fiscal 1998 to 45
in the first nine months of fiscal 1999 was primarily attributable to retail
management changes necessitated by the restructuring of the Company's retail
operations. The Company added 33 new retail sales centers during the first nine
months of fiscal 1999.
Other Revenues. Transportation revenues for the nine months ended February
28, 1999 were $8.6 million, an increase of 15.2% from $7.5 million for the nine
months ended February 28, 1998. Transportation is not a key growth operation of
the Company and has over time represented a declining proportion of total
revenues and net income. Other revenues increased to $21.8 million for the nine
months ended February 28, 1999, compared to $14.7 million for the nine months
ended February 28, 1998. This increase in other revenues is primarily due to
increased commissions and premiums generated by the Company's insurance
operations. Revenues from insurance operations increased to $13.4 million for
the nine months ended February 28, 1999, compared to $9.3 million for the nine
months ended February 28, 1998.
Cost of Sales. Cost of manufactured homes sold were $342.8 million (78.3%
of net sales) for the nine months ended February 28, 1999, as compared to $276.2
million (80.1% of net sales) for the nine months ended February 28, 1998. The
increase in cost of sales was primarily due to higher sales volume. The decrease
in cost of sales, expressed as a percentage of sales, was primarily the result
of an increase in the internalization rate from 84% for the nine months ended
February 28, 1998 to 85% for the nine months ended February 28, 1999, improved
gross margins in the core retail operations and a net improvement in gross
margins in the Company's manufacturing operations during the first two quarters
of fiscal year 1999, offset somewhat by lower manufacturing gross margins in the
third quarter. Cost of sales attributable to transportation operations for the
nine months ended February 28, 1999 were $7.1 million (82.0% of transportation
revenues), an increase of 15.4% from $6.2 million (82.3% of transportation
revenues) for the nine months ended February 28, 1998.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the nine months ended February 28, 1999, were $95.1
million (20.3% of total revenues), as compared to $62.4 million (17.0% of total
revenues) for the nine months ended February 28, 1998. The increase in selling,
general and administrative expenses is attributable to increased sales,
manufacturing and insurance activities as well as an increase in fixed costs and
expenses associated with new retail sales centers and expanded manufacturing
capacity. The increase in selling, general and administrative expenses,
expressed as a percentage of total revenues, was a result of an increase in the
internalization rate from 84% from the nine months ended February 28, 1998 to
85% for the nine months ended February 28, 1999 as well as new retail sales
centers which had not yet reached normal operating efficiency.
Acquisition Costs. During the nine months ended February 28, 1998, the
Company incurred $2.4 million in costs related to the Brilliant acquisition.
These acquisition related costs primarily consisted of transaction costs and
severance and termination agreements with two former officers of Brilliant.
Interest Expense. Interest expense increased 71% to $9.4 million for the
nine months ended February 28, 1999, from $5.5 million for the nine months ended
February 28, 1998. This increase was primarily attributable to increased gross
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 gross borrowings under its floor plan credit facility to support a
higher level of inventory due to the addition of new retail sales centers.
Income Taxes. The income tax provision, expressed as a percentage of income
before income taxes, earnings in affiliate, minority interests and extraordinary
items, was 45.3% and 41.1% for the nine months ended February 28, 1998 and 1999,
respectively. The decrease in the effective tax rate was primarily the result of
nondeductible acquisition costs related to the Brilliant acquisition in fiscal
1998.
17
19
Extraordinary Loss. In connection with the private placement of $61 million
of 8.32% Senior Unsecured Notes in July 1997, the Company repaid existing
secured bank debt of approximately $31 million. Consequently, the Company
recorded an extraordinary loss of $634,000 (net of income tax benefit) which
represented the write-off of unamortized debt issue costs as well as a
prepayment penalty associated with the repayment of the bank debt.
LIQUIDITY AND CAPITAL RESOURCES.
Cash used in operations was $28.4 million for the nine months ended
February 28, 1999. Net income before depreciation and amortization accounted for
a significant portion of the cash provided by operating activities for the nine
months ended February 28, 1999. The increase in inventories and accounts
receivable accounted for the majority of cash used in operations for the first
nine months of fiscal 1999.
An important part of the Company's growth strategy is to continue to expand
the number of Company-owned retail sales centers and increase its manufacturing
capacity to supply a growing number of Company-owned retail sales centers and
franchises. Management estimates the capital required to open a new retail sales
center is approximately $1.0 million to $1.25 million, primarily for inventory
and working capital. Subject to continued increases in demand, the Company may
incur additional capital expenditures to further increase its manufacturing
capacity. The Company currently plans to curtail new retail sales center
openings for the next six to twelve months and therefore will require relatively
little capital for that purpose.
The Company had capital expenditures of $57.0 million for the nine months
ended February 28, 1999. These expenditures were used primarily to fund
acquisitions, new retail sales centers and expand manufacturing capacity. The
Company paid $4.6 million, net of cash acquired, $6.0 million, net of cash
acquired, and $21.2 million, net of cash acquired, to purchase First Value, DWP
and R-Anell, respectively.
At February 28, 1999, the Company had a $125 million floor plan credit
facility with Associates Housing Finance LLC. (the "Associates"), with an
interest rate of prime less 0.50%. This facility is similar to a revolving
credit facility and is used to finance the purchase of inventory of new homes at
the Company's retail sales centers. In order to satisfy greater working capital
requirements and to fund capital expenditures in connection with the Company's
expanding operations, the Company increased its gross borrowings under the
facility by $46.1 million during the first nine months of fiscal 1999. At
February 28, 1999, the Company had net borrowings of $81.2 million (gross
borrowings of $130.7 million less participations of $49.5 million). The
Company's participations in its floor plan credit facility earn interest at the
Associates' prime rate less 0.75%, and are immediately available to the Company
in cash.
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 semi-annual 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.
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 next two
fiscal years. Management's current focus is on improving performance and
profitability in existing operations rather than substantial near term growth.
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20
IMPACT OF YEAR 2000
Beginning in calendar 1998, the Company commenced replacement of its then
current information technology system with a new system. The replacement, which
is expected to be completed in mid-calendar 1999, is required to meet current
and future needs of the Company's business as well as to make more efficient
various administrative and operating functions. Because the Company did not
undertake this replacement for reasons of Year 2000 compliance, the costs of
this conversion have not been identified as Year 2000 compliance costs. The
current upgrading of the Company's software programs and operating systems will
cost approximately $3.1 million and the Company believes that these new programs
and systems will not be subject to the Year 2000 problem. Costs incurred to date
for external consultants for Year 2000 compliance specific costs are $48,000 and
management estimates an additional $69,000 will be required.
The Company relies upon various vendors, utility companies,
telecommunications service companies, delivery service companies and other
service providers, which are outside of the Company's control. There is no
assurance that such parties will not suffer a Year 2000 business disruption,
which could have a material adverse effect on the Company's financial condition
and results of operations.
The Company has implemented a detailed Year 2000 Project plan to assess the
Company's internal business-critical systems upon which the Company depends.
This includes information technology systems and applications ("IT"), as well as
non-IT systems and equipment with embedded technology, such as fax machines and
telephone systems. The main internal IT systems include accounting systems such
as general ledgers. Detailed testing of the Company's internal IT systems is
approximately 85% complete and some remedial work has also been completed. The
Company plans to complete its analysis by May 31, 1999 (the end of its fiscal
year) and expects all corrective action and verification to be complete by
September 30, 1999. Any problems actually encountered by the Company in
addressing its Year 2000 issue which are beyond the Company's control could have
adverse effects on the Company's future operations, results of operations or
financial condition. The Company is developing a Year 2000 contingency plan to
mitigate the effects of business disruption stemming from either internal system
failures or an interruption in critical services or supplies from external
sources over which the Company has no control. The plan is expected to be
complete by September 30, 1999.
The Company has not yet developed a most reasonably likely worst case
scenario with respect to Year 2000 issues, but instead has focused its efforts
on reducing uncertainties through the review described above.
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21
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT INDEX
EXHIBIT REPORT WITH WHICH
DESCRIPTION NO. EXHIBIT WAS FILED
- ----------- ------- -----------------
Note Purchase Agreement, 8.32% Senior Unsecured Notes due July 7, 2007 2.1 August 1997, Form 10-Q
Note Purchase Agreement, 7.25% Series A and 7.14% Series B Senior 2.2 November 1998, Form 10-Q
Unsecured Notes due September 15, 2008
Articles of Amendment and Restated Articles of Incorporation. 3.2 May 1998 Form 10-K
Amended and Restated Bylaws of American Homestar Corporation. 3.3 S-1 Registration Statement
No. 33-78630
Specimen Common Stock Certificate. 4.1 S-1 Registration Statement
No. 33-78630
Amended and Restated Securities Purchase Agreement by and among Zaring 10.1 Filed herewith
National Corporation ("Zaring"), HomeMax, Inc. ("HomeMax"), HomeMax
Operating Properties, L.L.C. ("HOP") and American Homestar
Corporation dated as of March 15, 1999.
Securityholders Agreement by and among Zaring, HomeMax, HOP and 10.2 Filed herewith
American Homestar Corporation dated March 15, 1999.
Promissory Note dated March 15, 1999 in the original principal amount 10.3 Filed herewith
of $4,411,177 payable to Zaring.
Management and Consulting Agreement by and among Zaring, HomeMax and 10.4 Filed herewith
American Homestar Corporation dated March 15, 1999.
None 15
None 18
None 19
None 22
None 24
Financial Data Schedules 27 Filed herewith
None 99
(b) REPORTS ON FORM 8-K - The Company filed a Current Report on Form 8-K on
January 11, 1999, regarding the acquisition of R-Anell Custom Homes, Inc.
and its related manufacturing companies, Gold Medal Homes, Inc. and Gold
Medal Homes of North Carolina. The Current Report on Form 8-K dated
January 11, 1999 was amended on Form 8-K/A and filed on March 12, 1999.
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22
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: April 13, 1999 By: /s/ Craig A. Reynolds
----------------------------------------
Craig A. Reynolds
Executive Vice President, Chief Financial
Officer, Secretary and Director (Duly
Authorized
Officer and Principal Financial and
Accounting Officer)
21
23
EXHIBIT INDEX
EXHIBIT REPORT WITH WHICH
DESCRIPTION NO. EXHIBIT WAS FILED
- ----------- ------- -----------------
Note Purchase Agreement, 8.32% Senior Unsecured Notes due July 7, 2007 2.1 August 1997, Form 10-Q
Note Purchase Agreement, 7.25% Series A and 7.14% Series B Senior 2.2 November 1998, Form 10-Q
Unsecured Notes due September 15, 2008
Articles of Amendment and Restated Articles of Incorporation. 3.2 May 1998 Form 10-K
Amended and Restated Bylaws of American Homestar Corporation. 3.3 S-1 Registration Statement
No. 33-78630
Specimen Common Stock Certificate. 4.1 S-1 Registration Statement
No. 33-78630
Amended and Restated Securities Purchase Agreement by and among Zaring 10.1 Filed herewith
National Corporation ("Zaring"), HomeMax, Inc. ("HomeMax"), HomeMax
Operating Properties, L.L.C. ("HOP") and American Homestar
Corporation dated as of March 15, 1999.
Securityholders Agreement by and among Zaring, HomeMax, HOP and 10.2 Filed herewith
American Homestar Corporation dated March 15, 1999.
Promissory Note dated March 15, 1999 in the original principal amount 10.3 Filed herewith
of $4,411,177 payable to Zaring.
Management Agreement by and among Zaring, HomeMax and American 10.4 Filed herewith
Homestar Corporation dated March 15, 1999.
None 15
None 18
None 19
None 22
None 24
Financial Data Schedules 27 Filed herewith
None 99