Date: Friday, 21-Nov-97 01:59:22 GMT Server: Open-Market-Secure-WebServer/2.0.5.RC0 MIME-version: 1.0 Security-Scheme: S-HTTP/1.1 Accept-Ranges: bytes Content-length: 11565 Last-modified: Tuesday, 04-Nov-97 23:59:37 GMT Content-type: text/html Oakwood Homes Corporation

Contact: C. Michael Kilbourne
(910) 664-2400

OAKWOOD HOMES CORPORATION REPORTS RECORD SALES, REVENUES AND NET INCOME FOR THE FOURTH QUARTER AND FISCAL YEAR ENDED SEPTEMBER 30, 1997

GREENSBORO, N.C., November 4, 1997 --- Oakwood Homes Corporation (NYSE - OH) today reported record sales, revenues and net income for the fourth quarter and fiscal year ended September 30, 1997.

Fourth quarter retail sales rose 34.2% to $294,080,000 from $219,127,000 in the year-ago period. Total sales and total revenues increased 24.7% and 22.9%, respectively, reflecting the continued integration of the production of acquired businesses into the Company's retail distribution network. Net income for the quarter was $26,509,000, a 30.2% increase over net income of $20,357,000 for the fourth quarter last year. Earnings per share on both a primary and fully diluted basis increased 27.3% to $.56 for the quarter, compared to $.44 in the fourth quarter of fiscal 1996.

For the full fiscal year, retail sales were $858,407,000, a 22.1% increase over the $703,237,000 reported last year. Total sales and total revenues increased 10.5% and 9.9%, respectively, over fiscal 1996. Net income was $81,913,000, up 20.0% from the $68,255,000 reported for fiscal 1996, and earnings per share rose 19.0% to $1.75 from the $1.47 reported last year.

In announcing the results, Nicholas J. St. George, Chairman and Chief Executive Officer, said: "Our outstanding financial performance in the fourth quarter reflects the success we achieved by continuing to implement vigorously our fundamental strategy of delivering value to consumers through vertical integration. Our vertical integration strategy enabled us to achieve a 9.7% increase in new unit sales for the year and a 24.4% new unit sales increase in the fourth quarter. In contrast, the industry as a whole, measured by industry shipments, was down 2.3% for the eleven months ended August 31, the most recent data available. We believe our fiscal 1997 performance is evidence that we have structured our operations to prosper in weak as well as in strong industry conditions.

"On a same store sales basis, we continued to gain momentum, posting an 18.2% increase in same store new dollar sales in the fourth quarter, the strongest comparison we achieved all year. For fiscal 1997 as a whole, same store new dollar sales rose 8.2%. Sales of multi-section homes accounted for 46.5% of new unit sales in the fourth quarter compared to 36.5% in the fourth quarter last year, and 47.2% of new unit sales for the year, compared to 32.2% in fiscal 1996.

"We believe consumer demand for our products remains strong, and we are well positioned to capitalize on that demand by controlling retail distribution of our homes. During the quarter, we opened or acquired 25 retail sales centers, bringing our total system to 300 locations in 28 states as of September 30. We plan to open 45 to 50 new retail sales centers in fiscal 1998, and to seek opportunities to consolidate a fragmented industry distribution system through selective acquisitions.

"On the marketing front, we saw continued strength in sales of our Sunrise Dream Home, the entry level multi-section home introduced in February. We sold approximately 1,300 Sunrise Dream Homes in the fourth quarter, bringing our total unit sales of this home to over 3,400, far exceeding our expectations. The outstanding success of the Sunrise Dream Home was the result of superior product design, a creative consumer financing plan, outstanding television marketing and enthusiastic salesmanship of this high-value product by our retailers. On October 13 we began television advertising for our new Family Dream Home, a four bedroom, 2,000 square foot mid-priced multi-section home designed to appeal to larger families. Like the Sunrise Dream Home (which remains in our product line), we believe the Family Dream Home is an outstanding consumer value. The Family Dream Home is displayed on all of our sales centers and we are building the product for inventory. We learned from the Sunrise Dream Home that multi-section homes can be built for inventory in the slower retail months of the year and successfully marketed during the peak selling season, preserving our ability to maximize production efficiency through vertical integration. Only by controlling our retail distribution could we have accomplished this first-in-the-industry achievement. The next product in our "Dream Home" campaign is well under way and is scheduled for introduction in the early Spring of 1998. Throughout fiscal 1998 we plan to use television advertising approximately two weeks out of every four, supporting our Dream Home products and intensifying our effort to build brand recognition of the Oakwood name and franchise in consumers' minds nation-wide.

"We are also prototyping the first of a new line of high-end multi-section products: elegant, "tape and texture," feature-laden homes which are virtually indistinguishable from site-built homes. We intend to compete vigorously for this important segment of the market, which is one we expect to grow at a rate faster than that of the industry as a whole.

"Our manufacturing operations were a major contributor to our success at retail. During fiscal 1997 we reconfigured a significant amount of our production capacity to enable substantially increased production of multi-section homes. This was a significant undertaking, and was accomplished by our manufacturing people in a very short period of time and with minimal loss of production during the changeover. Our ability to respond quickly and effectively to changing consumer preferences though vertical integration is a major strength of our business.

"We are also making investments in our manufacturing people. Our "Leadership on the Line" development program at manufacturing is strengthening the skill sets of our production associates to enable them more fully to support and contribute to achieving our manufacturing goals. During fiscal 1997 we completely redesigned the staffing model for our production facilities and changed our incentive compensation plans to make them support not only production targets but also objectives relating to product quality, cost reduction and plant safety.

"On the facilities side, we have begun production at our new plant in Georgia and broken ground for a new plant in Texas, which is the only new factory we have planned for fiscal 1998. In addition, we modernized several of our existing plants, including construction of a new finishing plant at our largest North Carolina multi-section site to increase productivity and support manufacturing of high-end "tape and texture" homes.

"Our consumer finance business had an outstanding quarter, booking over $293 million in new loans, compared to $231 million last year. Systemwide loan application volume rose 27.0% from the fourth quarter last year, and applications per sales center rose 10.7%. During the quarter, our financial services business completed reengineering of our mortgage loan origination and processing functions in an effort to streamline the process for both credit and retail personnel. We believe these improvements will lead to our capturing in our finance company a greater percentage of the real estate mortgage business arising from higher-end multi-section sales, and will support our planned increased retail focus on higher-end customers and products.

"The severity of credit losses on our servicing portfolio moderated in the fourth quarter to an annualized rate of 1.30% of the average balance of loans serviced, down from 1.57% in the third quarter. For the year as a whole, loan losses amounted to 1.30% of the average portfolio balance compared to 1.01% in fiscal 1996. We believe the strengthening of underwriting standards undertaken over the past eighteen months as well as enhanced focus on improving recovery rates on defaulted loans will result in improved performance of the portfolio over the long term. Credit losses, among other things, affect the yield on and may affect the carrying value of retained REMIC residual interests.

"Our new captive reinsurance underwriting business began operations on June 1. This company will enable us to participate more fully in what we believe 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 arrangements which preceded its formation. As an insurance underwriter, Oakwood recognizes insurance premium revenues over the life of the related policies as a component of financial services income, 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 the fundamental change in the Company's business, earnings for insurance operations are now spread over the lives of the policies rather than being recognized in full when the policies were sold. We estimate that conversion from an insurance agency to an insurance underwriter penalized fourth quarter earnings by approximately $2.5 million, (approximately $1.5 million after tax, or approximately $.03 per share). This anomaly in comparisons is expected to continue, with decreasing effect, through mid-1999.

"Looking forward, our plan for fiscal 1998 and beyond is to continue expansion of our retail distribution system, the cornerstone of our vertical integration strategy, and support this expansion with additional manufacturing and financial services capabilities. We believe we have the right strategy - vertical integration - and we have more experience implementing it than any competitor. Oakwood has been in the retail distribution business for over 50 years, and we believe our experience in distribution and commitment to executing all phases of our vertical integration strategy will enable us to achieve our long-term goal of becoming the dominant company in manufactured housing on a national scale. Our financial position and human resources, from shop floor to credit to retail to senior management, have never been stronger, and we are optimistic about achieving continued record results in the coming years."

Oakwood Homes Corporation and its subsidiaries are engaged in the production, sale and financing of manufactured housing, serving retail customers and wholesale dealers in more than 28 states.

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