SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended September 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ____________ to ________________
Commission file number 1-7444
OAKWOOD HOMES CORPORATION
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(Exact name of Registrant as specified in its charter)
NORTH CAROLINA 56-0985879
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(State of incorporation) (I.R.S. Employer Identification No.)
7800 McCloud Road, Greensboro, NC 27409-9634
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(Address of principal executive offices) (Zip Code)
Company's telephone number, including area code: (336) 664-2400
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
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Common Stock, Par Value New York Stock Exchange, Inc.
$.50 Per Share
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the Company: (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 Company
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Company's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
The aggregate market value of shares of the Company's $.50 par value
Common Stock, its only outstanding class of common equity, held by
non-affiliates as of December 8, 2000 was $22,600,883.
The number of issued and outstanding shares of the Company's $.50 par
value Common Stock, its only outstanding class of common stock, as of December
8, 2000 was 47,104,704 shares.
The indicated portions of the following documents are incorporated by
reference into the indicated parts of this Annual Report on Form 10-K:
Parts Into Which
Incorporated Documents Incorporated
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Annual Report to Shareholders for the Parts I and II
Fiscal Year Ended September 30, 2000
Proxy Statement for the Annual Meeting of Part III
Shareholders to be held January 31, 2001
2
PART I
Item 1. Business.
Oakwood Homes Corporation, a North Carolina corporation (the
"Company"), which was founded in 1946, designs, manufactures and markets
manufactured and modular homes and finances the majority of its retail sales.
The Company also provides a variety of insurance products to its customers. The
Company operates five manufacturing lines in Texas, four in each of North
Carolina, Georgia, Oregon and Indiana, two in each of Arizona and Pennsylvania,
and one in each of California, Colorado, Kansas, Minnesota and Tennessee. The
foregoing includes nine idled lines. The Company's manufactured homes are
currently sold at retail through 378 Company owned and operated sales centers
located primarily in the southeastern and southwestern United States and to
approximately 700 independent retailers located throughout the United States.
The Company sells insurance for customers choosing to purchase insurance and
assumes a portion of the related underwriting risk through its captive
reinsurance business.
Manufactured Homes
The Company designs and manufactures a number of models of homes. Each
home contains a living room, dining area, kitchen, one, two, three or four
bedrooms and one or two bathrooms, and is equipped with a hot water heater and
central heating. Some homes are furnished with a sofa and matching chairs,
dinette set, coffee and end tables, carpeting, lamps, draperies, curtains and
screens. Optional furnishings and equipment include a range and oven,
refrigerator, beds, a fireplace, washing machine, dryer, microwave oven,
dishwasher, air conditioning, intercom, stereo systems, wet bar, vaulted
ceilings, skylights, hardwood cabinetry and energy conservation items. The homes
manufactured by the Company are primarily sold under the registered trademarks
"Oakwood," "Freedom," "House Smart," "Golden West," "Schult," "Crest,"
"Marlette" and the trade name "Victory."
The Company's manufactured homes are constructed and furnished at the
Company's manufacturing facilities and transported on wheels to the homesite.
The Company's manufactured homes are normally occupied as permanent residences
but can be transported on wheels to new homesites. The Company's homes are
defined as "manufactured homes" under the United States Code, and formerly were
defined as "mobile homes."
The Company manufactures 14-foot and 16-foot wide single-section homes
and multi-section homes consisting of two floors that are joined at the homesite
and are 24, 28 or 32 feet wide. The Company also manufactures a limited number
of multi-section homes consisting of three or four floors. The Company's homes
range from 40 feet to 80 feet in length. The Company's homes are sometimes
placed on rental lots in communities of similarly constructed homes.
The Company manufactures homes at thirty lines located in Hillsboro
(2), Killeen and Navasota (2), Texas; Richfield, Rockwell (2) and Pine Bluff,
North Carolina; Moultrie, Georgia (4); Etna Green (2) and Middlebury (2),
Indiana; Buckeye, Arizona (2); Albany (2) and Hermiston (2), Oregon; Lewistown
and Milton, Pennsylvania; Perris, California; Fort Morgan, Colorado; Plainville,
Kansas; Redwood Falls, Minnesota; and Pulaksi, Tennessee. The foregoing includes
nine idled lines.
3
The Company purchases components and materials used in the manufacture
of its homes on the open market and is not dependent upon any particular
supplier. The principal raw materials purchased by the Company for use in the
construction of its homes are lumber, steel, aluminum, galvanized pipe,
insulating materials, drywall and plastics. Steel I-beams, axles, wheels and
tires, roof and ceiling materials, home appliances, plumbing fixtures,
furniture, floor coverings, windows, doors and decorator items are purchased or
fabricated by the Company and are assembled and installed at various stages on
the assembly line. Construction of the manufactured homes and the plumbing,
heating and electrical systems installed in them must comply with the standards
set by the Department of Housing and Urban Development ("HUD") under the
National Manufactured Home Construction and Safety Standards Act of 1974. See
"Regulation."
The Company furnishes to each purchaser of a new home manufactured by
the Company a one- or five-year limited warranty against defects in materials
and workmanship, except for equipment and furnishings supplied by other
manufacturers which are frequently covered by the manufacturers' warranties.
Modular Homes
In addition to traditional manufactured homes, the Company also
manufactures modular homes which are built in accordance with state or local
building codes and therefore are similar in specifications and design to
site-built homes. The Company's modular homes range in size from 960 square feet
to 3,355 square feet and include a variety of single story ranch homes, one and
a half story homes, two story homes, townhouses and duplex units, all of which
can include attached garages built at the site by others.
Sales
At September 30, 2000, the Company sold manufactured homes through 378
Company owned and operated sales centers located in 29 states primarily in the
southeastern and southwestern United States. See "Properties - Manufactured Home
Sales Centers." The Company opened 11 new sales centers and closed 45 sales
centers in fiscal 2000. Each of the Company's sales centers hires and trains
sales personnel. Generally, each salesperson is paid a commission based on the
gross margin of his or her sales and certain volume targets, and each general
manager is paid a commission based on the profits of the sales center.
The Company operates its sales centers under the names Oakwood(R)
Mobile Homes, Freedom Homes(R), House Smart(R), Victory Homes, Schult(R) Homes
and Golden West Homes(R). At its sales centers, the Company sells homes
manufactured by it as well as, to a substantially lesser extent, by other
manufacturers. During fiscal 2000, substantially all the Company's retail dollar
sales of new homes were homes manufactured by the Company.
The Company also sells used homes acquired in trade-ins. At September
30, 2000, the Company's inventory of used homes was 1,211 homes as compared to
1,384 homes at September 30, 1999. Used homes in inventory do not include
repossessed units.
The Company also sells its homes to approximately 700 independent
retailers located throughout the United States. Sales to independent retail
dealers accounted for approximately 35% of the Company's total dollar volume of
sales in fiscal 2000 as compared to 31% in fiscal 1999.
During recent years, the Company has placed increased emphasis on the
sale of multi-section homes. In fiscal 2000, the Company's retail sales of new
multi-section homes represented 64% of the total number of new homes sold at
retail, as compared to 58% in fiscal 1999.
4
The retail sales price for new single-section homes sold by the Company
in fiscal 2000 generally ranged from $16,000 to $58,000 with a mean sales price
of approximately $31,300. The retail sales price of multi-section homes sold by
the Company in fiscal 2000 generally ranged from $27,000 to $136,000, with a
mean sales price of approximately $55,200.
The Company's sales have traditionally been higher in the period from
late spring through early fall than in the winter months. Because a majority of
the homes manufactured by the Company are sold directly to retail customers, the
Company does not believe its backlog of orders is material.
Company Retail Sales Financing
A significant factor affecting sales of manufactured homes is the
availability and terms of financing. Approximately 80% of the Company's retail
unit sales in fiscal 2000 were financed by installment sale contracts or loans
arranged by the Company, each of which provided for monthly payments generally
over a period of 5 to 30 years. The remaining 20% of retail unit sales were paid
for with cash or financing obtained from other sources.
In fiscal 2000, 96% of the aggregate loan originations relating to
retail unit sales and dispositions of repossessed homes were installment sales
or loans financed and warehoused by the Company for investment or later sale and
4% were installment sales or loans financed by others without recourse to the
Company. At September 30, 2000, the Company held installment sale contracts or
loans with a principal balance of approximately $190 million and serviced an
additional $4.412 billion principal balance of installment sale contracts or
loans, the substantial majority of which it originated and securitized. A
substantial majority of the installment sale contracts owned by the Company are
pledged to financial institutions as collateral for loans to the Company.
The Company processes credit applications with respect to customers
seeking financing. The Company uses a credit scoring system, updated in fiscal
1998, to improve its credit decision-making process. The most significant
criteria in the system are the stability, income and credit history of the
borrower. This system requires a minimum credit score before the Company will
consider underwriting a contract. This system allows the Company a greater
ability to standardize the process by which it decides whether to extend credit
to a customer.
The Company retains a security interest in all homes it finances. In
certain circumstances, the Company also obtains a security interest in the real
property on which a home is located.
The Company is responsible for all collection and servicing activities
with respect to installment sale contracts it owns, as well as with respect to
certain contracts that the Company originated and sold. The Company receives
servicing fees with respect to installment sale contracts that it has sold but
continues to service.
The Company's ability to finance installment sale contracts is
dependent on the availability of funds to the Company. The Company obtains funds
to finance installment sale contracts primarily through sales of real estate
mortgage investment conduit ("REMIC") trust certificates to institutional
investors. During fiscal 2000, the Company sold $1.11 billion of REMIC
securities. The Company generally has no credit exposure with respect to
securitized contracts except (i) with respect to breaches of representations and
warranties, (ii) to the extent of any retained interests in a REMIC, (iii) with
respect to required servicer
5
advances, (iv) with respect to the servicing fee (which is subordinated) and (v)
with respect to any REMIC security the Company has guaranteed.
The Company also obtains financing from time to time from loans insured
by the Federal Housing Administration ("FHA"). These installment sale contracts
are permanently funded primarily through the Government National Mortgage
Association ("GNMA") pass-through program, under which the Company issues
obligations guaranteed by GNMA. During fiscal 2000, the Company issued no
obligations guaranteed by GNMA. FHA insurance minimizes the Company's exposure
to losses on these credit sales.
The Company uses short-term credit facilities and internally generated
funds to support installment sale contracts until a pool of installment sale
contracts is accumulated to provide for permanent financing generally at fixed
rates.
In the past, the Company sold a significant number of installment sale
contracts to unrelated financial institutions with full recourse to the Company
in the event of default by the buyer. The Company receives endorsement fees from
financial institutions for installment sale contracts it has placed with them on
such a basis. Such fees totaled $140,000 in fiscal 2000. The Company's
contingent liability on installment sale contracts sold with full and limited
recourse was approximately $17 million at September 30, 2000.
Independent Dealer Retail Sales Financing
The Company provides permanent financing for homes sold by certain
independent dealers that sell Company manufactured homes. During fiscal 2000,
the Company financed approximately $121 million of the retail sales of these
independent dealers.
The Company from time to time considers the purchase of manufactured
home installment sale portfolios originated by others as well as servicing
rights to such portfolios. In fiscal 2000, the Company made no significant
purchases.
Delinquency and Repossession
In the event an installment sale contract or loan becomes delinquent,
the Company, either as owner or as servicer, normally contacts the customer
within 8 to 25 days thereafter in an effort to have the default cured. The
Company, as owner or servicer, generally repossesses the home after payments
have become 60 to 90 days delinquent if the Company is not able to work out a
satisfactory arrangement with the customer. After repossession, the Company
generally transports the home to a Company owned and operated sales center where
the Company attempts to resell the home or contracts with an independent party
to remarket the home. The Company also sells repossessed homes at wholesale.
The Company maintains a reserve for estimated credit losses on
installment sale contracts held prior to securitization and loans owned by the
Company or sold to third parties with full or limited recourse. The Company
provides for losses on credit sales in amounts necessary to maintain the
reserves at levels the Company believes are sufficient to provide for probable
losses based on the Company's historical loss experience, current economic
conditions and portfolio performance measures. For fiscal 2000, 1999 and 1998,
as a result of expenses incurred due to defaults and repossessions, $3,359,000,
$3,678,000 and $3,491,000, respectively, was charged to the reserve for losses
on credit sales. The Company's reserve
6
for losses on credit sales at September 30, 2000 was $3,983,000, as compared to
$3,546,000 at September 30, 1999 and $2,067,000 at September 30, 1998.
In fiscal 2000, 1999 and 1998, the Company repossessed 8,666, 7,830 and
5,475 homes, respectively, including 732, 854 and 534, respectively, originated
on behalf of Deutsche Financial Capital ("DFC"), a formerly 50% owned joint
venture engaged in providing consumer financing to customers of independent
retail dealers of manufactured housing in which the Company ceased participation
during the year ended September 30, 1998. At September 30, 2000 the Company had
a total of 2,603 unsold properties in repossession or foreclosure compared to
2,417 and 1,430 at September 30, 1999 and 1998, respectively. Of the total
number of unsold properties in repossession or foreclosure, 301, 417 and 295
relate to loans originated on behalf of DFC at September 30, 2000, 1999 and
1998, respectively. The estimated net realizable value of unsold properties in
repossession or foreclosure at September 30, 2000 was approximately $60 million.
The net losses resulting from repossessions on Company originated loans
as a percentage of the average principal amount of such loans outstanding for
fiscal 2000, 1999 and 1998 was 2.03%, 1.72% and 1.52%, respectively.
At September 30, 2000 and September 30, 1999, delinquent installment
sale contracts and loans expressed as a percentage of the total number of
installment sale contracts and loans that the Company (a) services or (b) has
sold with full recourse and that are serviced by others were as follows:
Total Number Of Contracts Delinquency Percentage
And Loans September 30, 2000
---------------------------- ---------------------------------------------------------
30 days 60 days 90 days Total
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Company-serviced contracts
and loans 128,036 (1) 2.0% 0.9% 1.6% 4.5%
Contracts and loans sold
with full recourse and
serviced by others 781 5.0% 1.9% 2.3% 9.2%
Total Number Of Contracts Delinquency Percentage
And Loans September 30, 1999
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30 days 60 days 90 days Total
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Company-serviced contracts
and loans 125,115 (1) 2.8% 0.8% 1.5% 5.1%
Contracts and loans sold
with full recourse and
serviced by others 1,236 3.0% 1.2% 1.6% 5.8%
(1) Excludes certain contracts and loans originated in September of each
year that were being processed at year end and not entered into the
loan servicing system until October of such year.
7
At September 30, 2000 and September 30, 1999, delinquent installment
sale contracts and loans expressed as a percentage of the total outstanding
principal balance of installment sale contracts and loans that the Company (a)
services or (b) has sold with full recourse and that are serviced by others were
as follows:
Total Value Delinquency Percentage
of Contracts September 30, 2000
---------------------------- ------------------------------------------------------------
30 days 60 days 90 days Total
------- ------- ------- -----
Company-serviced contracts
and loans $4,543,560,000 (1) 1.7% 0.8% 1.6% 4.1%
Contracts and loans sold
with full recourse and
serviced by others $4,428,000 5.1% 1.2% 1.1% 7.4%
Total Value Delinquency Percentage
Of Contracts September 30, 1999
---------------------------- ------------------------------------------------------------
30 days 60 days 90 days Total
------- ------- ------- -----
Company-serviced contracts
and loans $4,210,908,000 (1) 2.4% 0.9% 1.5% 4.8%
Contracts and loans sold
with full recourse and
serviced by others $7,927,000 2.8% 1.2% 1.7% 5.7%
(1) Excludes certain contracts and loans originated in September of each
year that were being processed at year end and not entered into the
loan servicing system until October of such year.
Independent Retailer Repurchase Obligations
Substantially all of the independent retailers who purchase homes from
the Company finance new home inventories through wholesale credit lines provided
by third parties under which a financial institution provides the retailer with
a credit line for the purchase price of the home and maintains a security
interest in the home as collateral. A wholesale credit line is used by the
retailer to finance the acquisition of its display models, as well as to finance
the initial purchase of a home from a manufacturer until the home buyers obtain
permanent financing or otherwise pay the dealer for the installed home. In
connection with the wholesale financing arrangement, the financial institution
generally requires the Company to enter into a repurchase agreement with the
financial institution under which the Company is obligated, upon default by the
retailer, to repurchase its homes. Under the terms of such repurchase
agreements, the Company agrees to repurchase homes at declining prices depending
upon the age of the units. At September 30, 2000, the Company estimates that its
contingent liability under these repurchase agreements was approximately $138
million. The Company's losses under these arrangements to date have not been
significant.
8
Insurance
On June 1, 1997, the Company ceased receiving commission income for
acting as an agent for certain insurance companies with respect to homeowners
insurance, credit life insurance and service contracts written for its
customers, and entered the reinsurance business directly through its own captive
reinsurer. This shift in activities enables the Company to participate more
fully in what management believes to be the profitable income streams associated
with the property and casualty insurance and service contract business than was
possible under the commission-based insurance agency arrangement which preceded
its formation. As an insurance underwriter, the Company recognizes insurance
premium revenues over the life of the related policies as a component of
financial services revenue, with the associated claims expenses reflected in
financial services operating expenses. Previously, insurance commission revenue
was reported upon the sale of the policies by Oakwood's retail operations, and
was included in other income.
Due to this fundamental change in the Company's insurance business,
earnings from insurance operations are now spread over the lives of the policies
rather than being recognized in full when the policies were sold. Because
reinsurance claims costs are recorded as insured events occur, underwriting
reinsurance risk may increase the volatility of the Company's earnings,
particularly with respect to property and casualty reinsurance. The Company has
purchased catastrophe reinsurance to reduce its underwriting exposure to natural
disasters.
Effective June 1, 2000 the Company entered into a quota share agreement
that will reduce the volatility of the Company's earnings by lowering its
underwriting exposure to natural disasters such as hurricanes and floods. The
agreement will reduce the levels of credit support, which currently take the
form of letters of credit and cash, to secure the reinsurance subsidiary's
obligations to pay claims and to meet regulatory capital requirements. Under the
new arrangement, which covers physical damage policies, the Company will
retro-cede 50% of the Company's physical damage premiums and losses on an
ongoing basis. In return, the Company will receive a nonrefundable commission
with the potential to receive an incremental commission based on favorable loss
experience.
In order to further reduce volatility and the required levels of credit
support, effective August 1, 2000 the Company entered into a commission-based
arrangement for its extended service contract line of business. Policies in
force on August 1, 2000 will continue to earn out over the policy term, while
the Company will earn a commission on all new business written.
Manufactured Housing Communities
The Company has under development a manufactured housing subdivision in
Hendersonville, North Carolina. The Company also owns land on which it intended
to develop a manufactured housing subdivision in Pinehurst, North Carolina. The
Pinehurst subdivision surrounds an existing golf course which the Company sold
in fiscal 1998. The Company intends to attempt to sell its remaining interests
in the Pinehurst subdivision. The Company does not intend to commit any material
resources to the land development business in the future, but may become
involved in land development or lot purchases from time to time to facilitate
retail sales.
9
The Company also owned a 50% interest in a recreational vehicle
campground and adjoining undeveloped land located in Deltaville, Virginia. The
Company sold its 50% interest to the managing partner during fiscal 2000.
Competition
The manufactured housing industry is highly competitive with particular
emphasis on price, financing terms and features offered. There are numerous
retail dealers in most locations where the Company conducts retail and financing
operations. This has served to intensify competitive conditions as well as
result in higher inventory levels across the industry. Several of the financing
sources in the industry are larger than the Company and have greater financial
resources. There are numerous firms producing manufactured homes in the
Company's market area, many of which are in direct competition with the Company.
Several of these manufacturers, which sell the majority of their homes through
independent dealers, are larger than the Company and have greater financial
resources. The Company competes with other manufacturers and retailers on the
basis of reputation, quality, financing ability, service, features offered and
price.
Manufactured homes are a form of permanent, low-cost housing and are
therefore in competition with other forms of housing, including site-built and
prefabricated homes and apartments. Historically, manufactured homes have been
financed as personal property with financing that has shorter maturities and
higher interest rates than have been available for site-built homes. In recent
years, however, there has been a growing trend toward financing manufactured
housing with maturities more similar to the financing of real estate, especially
when the manufactured housing is attached to permanent foundations on
individually-owned lots. Multi-section homes are often attached to permanent
foundations on individually-owned lots. As a result, maturities for certain
manufactured housing loans have moved closer to those for site-built housing.
Regulation
A variety of laws affect the financing of manufactured homes by the
Company. The Federal Consumer Credit Protection Act (Truth-in-Lending) and
Regulation Z promulgated thereunder require written disclosure of information
relating to such financing, including the amount of the annual percentage rate
and the finance charge. The Federal Fair Credit Reporting Act also requires
certain disclosures to potential customers concerning credit information used as
a basis to deny credit. The Federal Equal Credit Opportunity Act and Regulation
B promulgated thereunder prohibit discrimination against any credit applicant
based on certain specified grounds. The Federal Trade Commission has adopted or
proposed various Trade Regulation Rules dealing with unfair credit and
collection practices and the preservation of consumers' claims and defenses. The
Federal Trade Commission's regulations also require disclosure of a manufactured
home's insulation specification. Installment sale contracts and loans eligible
for inclusion in the GNMA Program are subject to the credit underwriting
requirements of the FHA. A variety of state laws also regulate the form of the
installment sale contracts and loan documents and the allowable deposits,
finance charge and fees chargeable pursuant to installment sale contracts and
loan documents. The sale of insurance products by the Company is subject to
various state insurance laws and regulations which govern allowable charges and
other insurance practices.
The Company is also subject to the provisions of the Fair Debt
Collection Practices Act, which regulates the manner in which the Company
collects payments on installment sale contracts, and the Magnuson-Moss Warranty
- - Federal Trade Commission Improvement Act, which regulates descriptions of
10
warranties on products. The descriptions and substance of the Company's
warranties are also subject to state laws and regulations.
The Company's manufacture of homes generally is subject to the National
Manufactured Housing Construction and Safety Standards Act of 1974. In 1976, the
Department of Housing and Urban Development ("HUD") promulgated regulations,
which have been amended from time to time, under this Act establishing
comprehensive national construction standards covering many aspects of
manufactured home construction and installation, including structural integrity,
fire safety, wind loads and thermal protection. The Company's modular homes are
subject to state and local building codes.
The transportation of manufactured homes on highways is subject to
regulation by various federal, state and local authorities. Such regulations may
prescribe size and road use limitations and impose lower than normal speed
limits and various other requirements. Manufactured homes are also subject to
local zoning and other regulations.
The Company's operations are subject to a variety of other statutes and
regulations.
Financial Information About Industry Segments
Financial information for each of the three fiscal years in the period
ended September 30, 2000 with respect to the Company's operating segments is
incorporated herein by reference to page 31 of the Company's 2000 Annual Report
to Shareholders.
Employees
At September 30, 2000, the Company employed 9,535 persons, of which
2,983 were engaged in sales and service, 5,474 in manufacturing, 546 in consumer
finance, and 532 in executive, administrative and clerical positions.
Item 2. Description of Properties.
Offices
The Company owns its executive office space in Greensboro, North
Carolina. The Company also owns two additional office buildings, which formerly
served as its executive office space, located in two adjacent three-story
buildings in Greensboro, North Carolina. The Company leases office space in
Texas, Arizona, Indiana, Washington and Florida.
Manufacturing Facilities
The location and ownership of the Company's production lines, including
idled lines, are as follows:
Location Owned/Leased
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Hillsboro, Texas (2 lines) Owned
Killeen, Texas Owned
Navasota, Texas (2 lines) Owned
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Location Owned/Leased
-------- ------------
Richfield, North Carolina Owned
Rockwell, North Carolina (2 lines) Owned
Pinebluff, North Carolina Owned
Moultrie, Georgia (4 lines) Owned
Etna Green, Indiana (2 lines) Owned
Middlebury, Indiana (2 lines) Owned
Buckeye, Arizona (2 lines) Owned
Albany, Oregon (2 lines) Leased/Owned
Hermiston, Oregon (2 lines) Owned
Lewiston, Pennsylvania Owned
Milton, Pennsylvania Owned
Perris, California Owned
Fort Morgan, Colorado Owned
Plainville, Kansas Owned
Redwood Falls, Minnesota Owned
Pulaski, Tennessee Leased
The Company also has two manufacturing facilities that are currently
being held for sale located in Gainsville and Ennis, Texas.
The Company's manufacturing facilities are generally one story metal
prefabricated structures. The Company believes its facilities are in good
condition. These facilities are located on tracts of land generally ranging from
10 to 50 acres. The production area in these facilities ranges from
approximately 50,000 to 250,000 square feet. In addition, the Company owns a
112,000 square foot warehouse in Elkhart, Indiana.
The land and buildings at all of the facilities owned by the Company
were subject to mortgages with an aggregate balance of $10,572,000 at September
30, 2000.
Based on the Company's normal manufacturing schedule of one shift per
day for a five-day week, the Company believes that its manufacturing lines,
including those idled, have the capacity to produce approximately 70,000 floors
annually, depending on product mix. During fiscal 2000, the Company manufactured
43,442 floors at its plants.
Manufactured Home Sales Centers
The Company's manufactured home retail sales centers consist of tracts
of from 3/4 to 4 1/2 acres of land on which manufactured homes are displayed,
each with a sales office containing from approximately 600 to 1,300 square feet
of floor space. The Company operated 378 sales centers at September 30, 2000
located in 29 states distributed as follows: Texas (66), North Carolina (62),
South
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Carolina (22), Tennessee (20), Georgia (19), Virginia (18), Alabama (14),
Arizona (14), Washington (13), Kentucky (12), Mississippi (12), New Mexico (12),
Florida (10), Ohio (10), Oregon (9), Colorado, (8), Louisiana (8), West Virginia
(8), Arkansas (7), Missouri (7), Idaho (6), Oklahoma (5), Nevada (4), Delaware
(3), Utah (3), California (2), Kansas (2), Michigan (1) and Wyoming (1).
Thirty-seven sales centers are on property owned by the Company and the
other locations are leased by the Company for a specified term of from one to
ten years or on a month-to-month basis. Rents paid by the Company during the
year ended September 30, 2000 for the leased sales centers totaled approximately
$14,596,000.
Manufactured Housing Communities
The Company has under development a manufactured housing subdivision in
Hendersonville, North Carolina. The Company also owns property in Pinehurst,
North Carolina on which it intended to develop a manufactured housing
subdivision. The Company intends to offer the property for sale.
The Company also owned a 50% interest in a recreational vehicle
campground and adjoining undeveloped land located in Deltaville, Virginia. The
Company sold its 50% interest to the managing partner during fiscal 2000.
Item 3. Legal Proceedings.
In November 1998 the Company and certain of its present and former officers
and directors were named as defendants in lawsuits filed on behalf of purchasers
of the Company's common stock for various periods between April 11, 1997 and
July 21, 1998 (the "Class Period"). In June 1999 a consolidated amended
complaint was filed in the United States Middle District Court in Guilford
County, North Carolina. The amended complaint, which seeks class action
certification, alleges violations of federal securities law based on alleged
fraudulent acts, false and misleading financial statements, reports filed by the
Company and other representations during the Class Period and seeks the loss of
value in class members' stockholdings. The Company filed a motion to dismiss the
amended complaint. In July 2000, the magistrate submitted a recommended order
dismissing the complaint with prejudice. This order was affirmed by the District
Court judge in October 2000 and has not yet been appealed.
During 2000 two lawsuits were filed against the Company's subsidiaries,
Oakwood Mobile Homes, Inc. and Oakwood Acceptance Corporation, and certain of
their employees in the Circuit Court of Jefferson County, Mississippi. These
lawsuits generally allege that the Company's subsidiaries and their employees
engaged in various improper business practices including false advertising and
misrepresentation of material facts relating to financing and insurance matters.
In October 2000 the attorneys for the plaintiffs filed a motion to consolidate
the two cases, add a large number of additional plaintiffs residing in various
parts of the United States to the case and add the Company as a defendant. As
the lawsuits are in the early stages of discovery, the Company is unable to
determine the effect, if any, on its financial position or results of
operations. The Company intends to defend these lawsuits vigorously.
The Company is a defendant in a number of other lawsuits that are
incidental to the conduct of its business.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
13
Separate Item. Executive Officers of the Company.
Information as to executive officers of the Company who are directors
and nominees of the Company is incorporated herein by reference to the section
captioned "Election of Directors" of the Company's Proxy Statement for the
Annual Meeting of Shareholders to be held January 31, 2001. Information as to
the executive officers of the Company who are not directors or nominees is as
follows:
Name Age Information About Officer
- ---- --- -------------------------
Douglas R. Muir 46 Executive Vice President since September 2000; Senior Vice President
from 1994 to September 2000; Secretary since 1994; Treasurer since
1993; Partner, Price Waterhouse LLP from 1988 to 1993.
Suzanne H. Wood 40 Executive Vice President and Chief Financial Officer since September
2000; Vice President, Investor Relations and Financial Risk Management
of the Company from November 1998 to September 2000; Vice President
and Chief Financial Officer of Tultex Corporation (a manufacturer,
marketer and distributor of activewear) from February 1996 to November
1998; Controller of Tultex Corporation from 1993 to February 1996.
Audit Senior Manager, Price Waterhouse LLP from 1991 to 1993. In
December 1999, Tultex Corporation filed for reorganization under
Chapter 11 of the bankruptcy code.
Each officer holds office until his or her death, resignation,
retirement, removal or disqualification or until his or her successor is elected
and qualified.
14
PART II
Items 5-8.
Items 5, 7, 7A and 8 are incorporated herein by reference to pages 5 to
32 of the Company's 2000 Annual Report to Shareholders and to the sections
captioned "Securities Exchange Listing" and "Shareholders" on the inside back
cover page of the Company's 2000 Annual Report to Shareholders. Item 6 is
incorporated herein by reference to the information captioned "Net sales,"
"Total revenues," "Net income (loss)," "Earnings (loss) per common share--Basic
and Diluted," "Total assets," "Notes and bonds payable" and "Cash dividends per
common share" for each of the five fiscal years in the period ended September
30, 2000 on page 1 of the Company's 2000 Annual Report to Shareholders.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures.
Not applicable.
PART III
Items 10-13.
Items 10-13 are incorporated herein by reference to the sections
captioned "Principal Holders of Common Stock and Holdings of Management,"
"Election of Directors," "Compensation Committee Interlocks and Insider
Participation," "Certain Relationships and Related Party Transactions,"
"Compensation Committee Report," "Shareholder Return Performance Graph"
""Executive Compensation," "Director Compensation," "Employment Arrangements"
and "Section 16(a) Beneficial Ownership Reporting Compliance" of the Company's
Proxy Statement for the Annual Meeting of Shareholders to be held January 31,
2001 and to the separate item in Part I of this Annual Report on Form 10-K
captioned "Executive Officers of the Company." Such Proxy Statement will be
filed with the Commission prior to January 28, 2001.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) Financial Statements, Financial Statement Schedules and Exhibits.
List the following documents filed as part of this report:
1. Financial Statements.
The following financial statements of the Company are
included as part of Exhibit 13 hereof:
Report of PricewaterhouseCoopers LLP
Consolidated Statements of Operations for the Years
ended September 30, 2000, 1999 and 1998
15
Consolidated Balance Sheets as of September 30, 2000
and 1999
Consolidated Statements of Cash Flows for the Years
ended September 30, 2000, 1999 and 1998
Consolidated Statement of Changes in Shareholders'
Equity and Other Comprehensive Income for the Years
ended September 30, 2000, 1999 and 1998
Notes to Consolidated Financial Statements
2. Financial Statement Schedules
See the accompanying Index to Financial Statement
Schedules at page F-1.
3. Exhibits
3.1 Restated Charter of the Company dated January 25,
1984 (Exhibit 3.2 to the Company's Annual Report on
Form 10-K for the fiscal year ended September 30,
1984)
3.2 Amendment to Restated Charter of the Company dated
February 18, 1988 (Exhibit 3 to the Company's Annual
Report on Form 10-K for the fiscal year ended
September 30, 1988)
3.3 Amendment to Restated Charter of the Company dated
April 23, 1992 (Exhibit 3.3 to the Company's Annual
Report on Form 10-K for the fiscal year ended
September 30, 1992)
3.4 Amended and Restated Bylaws of the Company adopted
February 1, 1995 (Exhibit 3.2 to the Company's
Quarterly Report on Form 10-Q for the quarter ended
December 31, 1994)
4.1 Shareholder Protection Rights Agreement between the
Company and Wachovia Bank of North Carolina, N.A., as
Rights Agent (Exhibit 4.1 to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30,
1991)
4.2 Agreement to Furnish Copies of Instruments With
Respect to Long Term Debt (filed herewith)
4.3 Indenture dated as of March 2, 1999 between the
Company and The First National Bank of Chicago, as
Trustee (Exhibit 4.1 to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31,
1999)
4.4 First Supplemental Indenture dated as of March 2,
1999 between the Company and The First National Bank
of Chicago, as Trustee (Exhibit 4.2 to the Company's
Quarterly Report on Form 10-Q for the quarter ended
March 31, 1999)
16
* 10.1 Oakwood Homes Corporation 1985 Non-Qualified
Stock Option Plan (Exhibit 10.1 to the Company's
Annual Report on Form 10-K for the fiscal year
ended September 30, 1985)
* 10.2 Oakwood Homes Corporation 1986 Nonqualified Stock
Option Plan for Nonemployee Directors (Exhibit 10.1
to the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1986)
* 10.3 Oakwood Homes Corporation 1990 Director Stock
Option Plan (Exhibit 10.24 to the Company's
Registration Statement on Form S-2 filed on April
13, 1991)
* 10.4 Oakwood Homes Corporation Executive Incentive
Compensation Plan (Exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996)
* 10.5 Oakwood Homes Corporation Key Employee Stock
Plan (Exhibit 10.2 to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30,
1996)
* 10.6 Oakwood Homes Corporation 1997 Director Stock
Option Plan (Exhibit 10 to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31,
1998)
* 10.7 Oakwood Homes Corporation Director Deferral
Plan (Exhibit 10.18 to the Company's Annual Report
on Form 10-K for the year ended September 30, 1998)
* 10.8 Form of Employment Agreement between the Company
and each of Robert A. Smith and Myles E. Standish
(Exhibit 10.19 to the Company's Annual Report on
Form 10-K for the year ended September 30, 1998)
* 10.9 Employment Agreement dated as of September 27, 1999
by and between the Company and Nicholas J. St.
George (Exhibit 10.13 to the Company's Annual
Report on Form 10-K for the year ended September
30, 1999)
13 Portions of the Company's 2000 Annual Report to
Shareholders incorporated herein by reference.
(filed herewith)
21 List of the Company's subsidiaries (filed herewith)
23.1 Consent of PricewaterhouseCoopers LLP (filed
herewith)
17
27 Financial Data Schedule (filed in electronic format
only). This schedule is furnished for the
information of the Commission and shall not be
deemed "filed" for purposes of Section 11 of the
Securities Act of 1933, Section 18 of the
Securities Exchange Act of 1934 and Section 323 of
the Trust Indenture Act.
- -------------
* Indicates a management contract or compensatory plan or arrangement
required to be filed as an exhibit to this Form 10-K.
(b) Reports on Form 8-K. On September 25, 2000, the Company filed a
Current Report on Form 8-K in which it reported, pursuant to Item 5 thereof
(Other Events), that it had issued a press release relating to certain executive
management changes. No financial statements were filed as part of such Current
Report on Form 8-K.
(c) Exhibits. See Item 14(a)(3).
(d) Financial Statement Schedules. See Item 14(a)(2)
18
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Annual Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
OAKWOOD HOMES CORPORATION
By: /s/ Suzanne H. Wood
----------------------------
Suzanne H. Wood
Executive Vice President and
Chief Financial Officer
Dated: December 29, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Annual Report has been signed below by the following persons on behalf of
the Company and in the capacities and on the date indicated.
Signature Capacity Date
--------- -------- ----
/s/ Duane D. Daggett Director, Chief December 29, 2000
- ------------------------------------ Executive Officer and President
Duane D. Daggett (Principal Executive Officer)
/s/ Dennis I. Meyer Director and Chairman December 29, 2000
- ------------------------------------
Dennis I. Meyer
/s/ Kermit G. Phillips, II Director December 29, 2000
- ------------------------------------
Kermit G. Phillips, II
/s/ Roger W. Schipke Director December 29, 2000
- ------------------------------------
Roger W. Schipke
19
/s/ Sabin C. Streeter Director December 29, 2000
- ------------------------------------
Sabin C. Streeter
/s/ Francis T. Vincent, Jr. Director December 29, 2000
- ------------------------------------
Francis T. Vincent, Jr.
/s/ Clarence W. Walker Director December 29, 2000
- ------------------------------------
Clarence W. Walker
/s/ H. Michael Weaver Director December 29, 2000
- ------------------------------------
H. Michael Weaver
/s/ Robert A. Smith Director, Executive Vice President, December 29, 2000
- ------------------------------------ Financial Operations
Robert A. Smith
/s/ Myles E. Standish Director, Executive Vice President, December 29, 2000
- ------------------------------------ Operations and General Counsel
Myles E. Standish
/s/ Suzanne H. Wood Executive Vice President and December 29, 2000
- ------------------------------------ Chief Financial Officer
Suzanne H. Wood (Principal Financial and
Accounting Officer)
20
OAKWOOD HOMES CORPORATION
INDEX TO FINANCIAL STATEMENT SCHEDULES
The financial statements, together with the report thereon of
PricewaterhouseCoopers LLP dated November 28, 2000, except for the information
presented in the third paragraph of Note 10 for which the date is December 27,
2000, appearing on pages 13 to 32 of the Company's 2000 Annual Report to
Shareholders, are incorporated by reference in this Annual Report on Form 10-K.
With the exception of the aforementioned information and the information
incorporated in Items 1, 5, 6, 7, 7A and 8, the 2000 Annual Report to
Shareholders is not deemed to be filed as part of this report. Financial
statement schedules not included in this Annual Report on Form 10-K have been
omitted because they are not applicable or the required information is shown in
the financial statements or notes thereto.
PAGE
----
Supplementary information to notes to
consolidated financial statements F-2
F-1
OAKWOOD HOMES CORPORATION
AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTARY INFORMATION TO NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
The components of inventories are as follows:
September 30, September 30, September 30,
2000 1999 1998
---- ---- ----
New manufactured homes $261,336,000 $364,770,000 $234,606,000
Used manufactured homes 11,492,000 18,047,000 8,261,000
Homes in progress 5,495,000 6,924,000 6,119,000
Land/Homes under development 14,328,000 14,318,000 6,417,000
Raw materials and supplies 30,352,000 39,539,000 35,949,000
---------- ---------- ------------
$323,003,000 $443,598,000 $291,352,000
=========== =========== ===========
F-2
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
EXHIBITS
ITEM 14(a)(3)
ANNUAL REPORT ON FORM 10-K
Commission
For the fiscal year ended File Number
September 30, 2000 1-7444
OAKWOOD HOMES CORPORATION
EXHIBIT INDEX
Exhibit No. Exhibit Description
- ----------- -------------------
3.1 Restated Charter of the Company dated
January 25, 1984 (Exhibit 3.2 to the
Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1984)
3.2 Amendment to Restated Charter of the Company
dated February 18, 1988 (Exhibit 3 to the
Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1988)
3.3 Amendment to Restated Charter of the Company
dated April 23, 1992 (Exhibit 3.3 to the
Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1992)
3.4 Amended and Restated Bylaws of the Company
adopted February 1, 1995 (Exhibit 3.2 to the
Company's Quarterly Report on Form 10-Q for
the quarter ended December 31, 1994)
4.1 Shareholder Protection Rights Agreement
between the Company and Wachovia Bank of
North Carolina, N.A., as Rights Agent
(Exhibit 4.1 to the Company's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 1991)
4.2 Agreement to Furnish Copies of Instruments
With Respect to Long Term Debt (filed
herewith)
4.3 Indenture dated as of March 2, 1999 between
the Company and The First National Bank of
Chicago, as Trustee (Exhibit 4.1 to the
Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1999)
4.4 First Supplemental Indenture dated as of
March 2, 1999 between the Company and The
First National Bank of Chicago, as Trustee
(Exhibit 4.2 to the Company's Quarterly
Report on Form 10-Q for the quarter ended
March 31, 1999)
10.1 Oakwood Homes Corporation 1985 Non-Qualified
Stock Option Plan (Exhibit 10.1 to the
Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1985)
10.2 Oakwood Homes Corporation 1986 Nonqualified
Stock Option Plan for Nonemployee Directors
(Exhibit 10.1 to the Company's Annual Report
on Form 10-K for the fiscal year ended
September 30, 1986)
10.3 Oakwood Homes Corporation 1990 Director
Stock Option Plan (Exhibit 10.24 to the
Company's Registration Statement on Form S-2
filed on April 13, 1991)
10.4 Oakwood Homes Corporation Executive
Incentive Compensation Plan (Exhibit 10.1 to
the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1996)
10.5 Oakwood Homes Corporation Key Employee Stock
Plan (Exhibit 10.2 to the Company's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996)
10.6 Oakwood Homes Corporation 1997 Director
Stock Option Plan (Exhibit 10 to the
Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1998)
10.7 Oakwood Homes Corporation Director Deferral
Plan (Exhibit 10.18 to the Company's Annual
Report on Form 10-K for the year ended
September 30, 1998)
10.8 Form of Employment Agreement between the
Company and each of Robert A. Smith and
Myles E. Standish (Exhibit 10.19 to the
Company's Annual Report on Form 10-K for the
year ended September 30, 1998)
10.9 Employment Agreement dated as of September
27, 1999 by and between the Company and
Nicholas J. St. George (Exhibit 10.13 to the
Company's Annual Report on Form 10-K for the
year ended September 30, 1999)
13 Portions of the Company's 2000 Annual Report
to Shareholders incorporated herein by
reference (filed herewith).
21 List of the Company's subsidiaries (filed
herewith)
23.1 Consent of PricewaterhouseCoopers LLP (filed
herewith)
27 Financial Data Schedule (filed in electronic
format only). This schedule is furnished for
the information of the Commission and shall
not be deemed "filed" for purposes of
Section 11 of the Securities Act of 1933,
Section 18 of the Securities Exchange Act of
1934 and Section 323 of the Trust Indenture
Act.