10-Q 1 d91819e10-q.txt FORM 10-Q FOR QUARTER ENDED SEPTEMBER 28, 2001 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 September 28, 2001 Commission file number 0-26188 PALM HARBOR HOMES, INC. -------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Florida 59-1036634 --------------------------------------------- --------------------------------------- (State or other jurisdiction of incorporation (I.R.S. Employer Identification Number) or organization) 15303 Dallas Parkway, Suite 800, Addison, Texas 75001-4600 ---------------------------------------------------------------------- (Address of principal executive offices) (Zip code) 972-991-2422 ---------------------------------------------------- (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) Yes [X] No [ ] and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]. Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Shares of common stock $.01 par value, outstanding on November 5, 2001 - 22,816,609. PALM HARBOR HOMES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)

SEPTEMBER 28, MARCH 30, 2001 2001 ------------- ------------ (Unaudited) ASSETS Cash and cash equivalents $ 62,826 $ 61,290 Investments 26,535 25,132 Receivables 104,286 86,235 Inventories 112,195 125,917 Prepaid expenses and other current assets 8,162 8,882 ------------- ------------ Total current assets 314,004 307,456 Other assets 72,602 70,798 Property, plant and equipment, net 91,369 90,114 ------------- ------------ TOTAL ASSETS $ 477,975 $ 468,368 ============= ============ LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable $ 35,083 $ 33,766 Floor plan payable 132,976 144,747 Accrued liabilities 55,007 48,412 Current portion of long-term debt 169 163 ------------- ------------ Total current liabilities 223,235 227,088 Long-term debt, less current portion 2,656 2,745 Deferred income taxes 2,270 2,883 Shareholders' equity: Common stock, $.01 par value 239 239 Additional paid-in capital 54,149 54,149 Retained earnings 213,364 200,911 Accumulated other comprehensive income 3,306 2,869 ------------- ------------ 271,058 258,168 Less treasury shares (16,876) (16,512) Unearned compensation (4,368) (6,004) ------------- ------------ Total shareholders' equity 249,814 235,652 ------------- ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 477,975 $ 468,368 ============= ============

See accompanying notes. 1 PALM HARBOR HOMES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) (Unaudited)

THREE MONTHS ENDED SIX MONTHS ENDED SEPTEMBER 28, SEPTEMBER 29, SEPTEMBER 28, SEPTEMBER 29, 2001 2000 2001 2000 ------------- ------------- ------------- ------------- Net sales $ 173,378 $ 175,813 $ 345,938 $ 366,698 Cost of sales 117,818 118,761 238,439 250,255 Selling, general and administrative expenses 43,943 44,036 84,872 89,062 ------------- ------------- ------------- ------------- Income from operations 11,617 13,016 22,627 27,381 Interest expense (2,101) (3,206) (4,722) (6,200) Interest income and other 1,033 2,919 2,211 4,302 ------------- ------------- ------------- ------------- Income before income taxes and cumulative effect of change in accounting principle 10,549 12,729 20,116 25,483 Income tax expense 3,873 5,062 7,663 10,163 ------------- ------------- ------------- ------------- Income before cumulative effect of change in accounting principle 6,676 7,667 12,453 15,320 Cumulative effect of change in accounting principle -- -- -- (2,048) ------------- ------------- ------------- ------------- Net income $ 6,676 $ 7,667 $ 12,453 $ 13,272 ============= ============= ============= ============= Net income per common share - basic and diluted $ 0.29 $ 0.34 $ 0.55 $ 0.58 ============= ============= ============= ============= Weighted average common shares outstanding - basic 22,828 22,726 22,831 22,868 ============= ============= ============= ============= Weighted average common shares outstanding - diluted 22,828 22,736 22,831 22,881 ============= ============= ============= =============

See accompanying notes. 2 PALM HARBOR HOMES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited)

SIX MONTHS ENDED SEPTEMBER 28, SEPTEMBER 29, 2001 2000 ------------- ------------- OPERATING ACTIVITIES Income before cumulative effect of change in accounting principle $ 12,453 $ 15,320 Adjustments to reconcile income before cumulative effect of change in accounting principle to net cash provided by operating activities: Cumulative effect of change in accounting principle -- (2,048) Depreciation 5,849 5,299 Amortization 47 2,039 Deferred income tax benefit 682 (653) Provision for long-term incentive plan 1,278 1,053 Changes in operating assets and liabilities: Accounts receivable (17,527) 10,652 Inventories 13,722 (2,269) Prepaid expenses and other current assets (575) (118) Other assets (1,851) 2,152 Accounts payable and accrued liabilities 7,912 (90) ------------- ------------- Cash provided by operations 21,990 31,337 Loans originated (72,108) (75,287) Sale of loans 72,021 74,464 ------------- ------------- Net cash provided by operating activities 21,903 30,514 INVESTING ACTIVITIES Purchases of property, plant and equipment (7,104) (7,928) Purchases of investments (7,888) (3,871) Sales of investments 6,485 1,188 ------------- ------------- Net cash used in investing activities (8,507) (10,611) FINANCING ACTIVITIES Net payments on floor plan payable (11,771) (2,670) Principal payments on notes payable and long-term debt (83) (120) Net purchases of treasury stock (6) (4,779) ------------- ------------- Net cash used in financing activities (11,860) (7,569) ------------- ------------- Net increase in cash and cash equivalents 1,536 12,334 Cash and cash equivalents at beginning of period 61,290 49,138 ------------- ------------- Cash and cash equivalents at end of period $ 62,826 $ 61,472 ============= ============= Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 5,123 $ 5,965 Income taxes 4,510 6,990

See accompanying notes. 3 PALM HARBOR HOMES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation The condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments, which are, in the opinion of management, necessary for a fair and accurate presentation. Certain footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. The condensed consolidated financial statements should be read in conjunction with the audited financial statements for the year ended March 30, 2001. Results of operations for any interim period are not necessarily indicative of results to be expected for a full year. 2. Inventories Inventories consist of the following (in thousands):

SEPTEMBER 28, MARCH 30, 2001 2001 ------------- ------------- Raw materials $ 7,671 $ 7,627 Work in process 3,233 3,075 Finished goods - manufacturing 394 68 Finished goods - retail 100,897 115,147 ------------- ------------- $ 112,195 $ 125,917 ============= =============

3. Floor Plan Payable The Company has floor plan credit facilities with financial institutions totaling $175.0 million to finance a major portion of its home inventory at the Company's retail superstores. These facilities are secured by a portion of the Company's home inventory and receivables from financial institutions. The interest rates on the facilities range from prime (6.0% at September 28, 2001) to prime plus 2.0%. One of the Company's facilities, which expired June 30, 2001, requires notification from the financial institution 12 months prior to cancellation. The financial institution has extended all terms of the existing facility indefinitely. The Company has three other facilities which require notification from the financial institution six months prior to cancellation. Such notification has not been received by the Company from any of the financial institutions. The Company had $133.0 million and $144.7 million outstanding on these floor plan credit facilities at September 28, 2001 and March 30, 2001, respectively. The Company's floor plan financing agreements permit the Company to earn interest on investments made with the financial institutions, which can be withdrawn without any imposed restrictions. These investments have certain limitations depending upon the amount of floor plan balance outstanding. Interest rates on the amounts invested range from prime (6.0% at September 28, 2001) to prime minus 0.5%. The Company had $10.8 million and $16.2 million invested at September 28, 2001 and March 30, 2001, respectively, and has classified these amounts as cash and cash equivalents in the accompanying Condensed Consolidated Balance Sheets. 4 4. Line of Credit The Company has a $20.0 million secured and a $15.0 million unsecured revolving line of credit from a financial institution for general corporate purposes. The line of credit bears interest, at the option (under certain conditions) of the Company, at either the LIBOR rate (2.6% at September 28, 2001) plus 2.0% or the prime rate (6.0% at September 28, 2001) minus 0.25%. The line of credit contains provisions regarding minimum financial requirements and certain indebtedness limitations, which would limit the amount available for future borrowings. Currently, the amount available of $35.0 million is reduced by letters of credit totaling $2.6 million. The line is available through June 26, 2002 and requires an annual commitment fee of up to $50,000. The Company had no amounts outstanding on the line of credit at September 28, 2001 and March 30, 2001. 5. Business Segment Information The Company operates primarily in three business segments - retail, manufacturing and financial services. The following table summarizes information with respect to the Company's business segments for the three and six month periods ending September 28, 2001 and September 29, 2000 (in thousands):

THREE MONTHS ENDED SIX MONTHS ENDED SEPTEMBER 28, SEPTEMBER 29, SEPTEMBER 28, SEPTEMBER 29, 2001 2000 2001 2000 ------------- ------------- ------------- ------------- Net sales Retail $ 150,737 $ 152,037 $ 300,615 $ 315,586 Manufacturing 96,209 101,428 190,722 211,781 Financial services 5,731 6,018 11,661 12,190 ------------- ------------- ------------- ------------- 252,677 259,483 502,998 539,557 Intersegment sales (79,299) (83,670) (157,060) (172,859) ------------- ------------- ------------- ------------- $ 173,378 $ 175,813 $ 345,938 $ 366,698 ------------- ------------- ------------- ------------- Income from operations Retail $ 4,892 $ 4,158 $ 8,254 $ 9,651 Manufacturing 10,046 11,045 19,008 21,631 Financial services 2,546 3,043 5,381 5,831 General corporate expenses (5,591) (4,954) (9,836) (8,977) ------------- ------------- ------------- ------------- 11,893 13,292 22,807 28,136 Intersegment profits (276) (276) (180) (755) ------------- ------------- ------------- ------------- $ 11,617 $ 13,016 $ 22,627 $ 27,381 ------------- ------------- ------------- ------------- Interest expense $ (2,101) $ (3,206) $ (4,722) $ (6,200) Interest income and other 1,033 2,919 2,211 4,302 ------------- ------------- ------------- ------------- Income before income taxes and cumulative effect of change in accounting principle $ 10,549 $ 12,729 $ 20,116 $ 25,483 ============= ============= ============= =============

5 6. Reclassification Certain prior period amounts have been reclassified to conform to the current period presentation. 7. New Accounting Pronouncement Effective March 31, 2001, the Company adopted Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets," (SFAS No. 142), which requires that goodwill not be amortized but instead be tested at least annually for impairment by reporting unit and expensed against earnings when the implied fair value of a reporting unit, including goodwill, is less than its carrying amount. The adoption of the new standard increased net income by $0.7 million or $0.03 per share to $0.29 per share for the quarter ended September 28, 2001 and $1.1 million or $0.05 per share to $0.55 per share for the six months ended September 29, 2001. Comparative pro forma results for the three and six months ended September 29, 2000 would have increased income before cumulative effect of change in accounting principle and net income by $0.7 million or $0.03 per share to $0.37 per share and $1.1 million or $0.05 per share to $0.63 per share, respectively. The Company had $53.1 million and $52.9 million in goodwill at September 28, 2001 and March 30, 2001, respectively, and has classified these amounts as other assets in the accompanying Condensed Consolidated Balance Sheets. 6 PART I. Financial Information Item 1. Financial Statements See pages 1 through 5. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The manufactured housing industry continues to be challenged by the elevated credit standards which began in mid-1999 and has resulted in reduced retail sales levels, declining wholesale shipments and declining margins for most industry participants. Calendar 2001 industry multi-section shipments are off 25%; however the Company is off less than 10%. All of the Company's business segments, as well as each manufacturing facility, were profitable this quarter. Additionally, the Company profitably increased market share, maintained strong gross margin, decreased fixed expenses and reduced retail inventories. The Company has cash and cash equivalents of $62.8 million after investing over $20 million in the Company's stock buyback program and virtually no long-term debt. The Company's practice of manufacturing only to order has enabled the Company to continue to tightly manage inventories with the average new home inventory per retail superstore declining 9% since the beginning of the fiscal year. Floor plan financing per retail superstore declined 9% as well. The following table sets forth certain items of the Company's statement of income as a percentage of net sales for the period indicated.

THREE MONTHS ENDED SIX MONTHS ENDED SEPTEMBER 28, SEPTEMBER 29, SEPTEMBER 28, SEPTEMBER 29, 2001 2000 2001 2000 ------------- ------------- ------------- ------------- Net sales 100.0% 100.0% 100.0% 100.0% Cost of sales 68.0 67.5 68.9 68.2 ------ ------ ------ ------ Gross profit 32.0 32.5 31.1 31.8 Selling, general and administrative expenses 25.3 25.0 24.5 24.3 ------ ------ ------ ------ Income from operations 6.7 7.5 6.6 7.5 Interest expense (1.2) (1.8) (1.4) (1.7) Interest income and other 0.6 1.6 0.6 1.2 ------ ------ ------ ------ Income before income taxes and cumulative effect of change in accounting principle 6.1 7.3 5.8 7.0 Income tax expense 2.2 2.9 2.2 2.8 ------ ------ ------ ------ Income before cumulative effect of change in accounting principle 3.9 4.4 3.6 4.2 Cumulative effect of change in accounting principle -- -- -- (0.6) ------ ------ ------ ------ Net income 3.9% 4.4% 3.6% 3.6% ====== ====== ====== ======

7 The following table summarizes certain key sales statistics as of and for the three and six months ended September 28, 2001 and September 29, 2000.

THREE MONTHS ENDED SIX MONTHS ENDED SEPTEMBER 28, SEPTEMBER 29, SEPTEMBER 28, SEPTEMBER 29, 2001 2000 2001 2000 ------------- ------------- ------------- ------------- Company homes sold through Company-owned retail superstores 2,361 2,434 4,719 5,096 Total new homes sold 2,831 2,881 5,592 6,121 Internalization rate (1) 83% 84% 84% 83% Average new home price - retail $60,000 $60,000 $60,000 $59,000 Number of retail superstores at end of period 146 137 146 137 Homes sold to independent retailers 458 427 855 977

(1) The internalization rate is the percentage of new homes that are manufactured by the Company and sold through Company-owned retail superstores. THREE MONTHS ENDED SEPTEMBER 28, 2001 COMPARED TO THREE MONTHS ENDED SEPTEMBER 29, 2000 NET SALES. Net sales decreased 1.4% to $173.4 million in the three months ended September 28, 2001 from $175.8 million in the three months ended September 29, 2000. The decrease in net sales was primarily due to competitive conditions in the manufactured housing industry. The volume of homes sold through Company-owned superstores declined 3.3% while overall unit volume, which includes sales to independent retailers, declined 1.7% in the current quarter. This decline in volume is partially offset by a shift in product mix towards multi-section homes. 90% of the homes manufactured by the Company were multi-section homes in the second quarter of fiscal 2002 versus 86% in the second quarter of fiscal 2001. The number of superstores increased from 137 at the end of the second quarter of fiscal 2001 to 146 at the end of the second quarter of fiscal 2002. GROSS PROFIT. In the quarter ended September 28, 2001, gross profit as a percentage of net sales decreased slightly to 32.0% from 32.5% in the quarter ended September 29, 2000. Gross profit decreased 2.6% to $55.6 million in the second quarter of fiscal 2002 from $57.1 million in the second quarter of fiscal 2001 The Company sold 83% of its homes through Company-owned retail superstores in the second quarter of fiscal 2002 versus 84% in the second quarter of fiscal 2001. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses decreased to $43.9 million in the quarter ended September 28, 2001 compared to $44.0 million in the quarter ended September 29, 2000, primarily due to the Company's continued focus on reducing fixed expenses company-wide. This decline was somewhat offset by a commitment to building brand awareness via advertising, startup expenses associated with the retail superstores the Company plans to open during the third quarter of fiscal 2002 and training costs associated with people development. As planned, selling, general and administrative expenses increased, as a percentage of net sales, to 25.3% in the second quarter of fiscal 2002 from 25.0% in the second quarter of fiscal 2001. This increase is due to the growth in the Company's retail operations which, generally, have higher selling, general and administrative expenses as a percentage of net sales as compared to wholesale operations. INTEREST EXPENSE. Interest expense decreased 34.5% to $2.1 million for the second quarter of fiscal 2002 from $3.2 million in the second quarter of fiscal 2001 primarily due to a decrease in the floor plan liability coupled with a decrease in the prime interest rate from 9.5% in the second quarter of fiscal 2001 to 6.0% in the second quarter of fiscal 2002. 8 SIX MONTHS ENDED SEPTEMBER 28, 2001 COMPARED TO SIX MONTHS ENDED SEPTEMBER 29, 2000 NET SALES. Net sales decreased 5.7% to $345.9 million in the six months ended September 28, 2001 from $366.7 million in the six months ended September 29, 2000. The decrease in net sales was primarily due to competitive conditions in the manufactured housing industry. The volume of homes sold through Company-owned superstores declined 7.9% while overall unit volume, which includes sales to independent retailers, declined 8.6% in the first two quarters of fiscal 2002 compared to the first two quarters of fiscal 2001. This decline in volume is partially offset by an increase in the average selling price of a new home, which resulted from a continued shift in product mix towards multi-section homes. 91% of the homes manufactured by the Company were multi-section homes in fiscal 2002 versus 83% in fiscal 2001. The number of Company-owned retail superstores increased from 137 at the end of the second quarter of fiscal 2001 to 146 at the end of the second quarter of fiscal 2002. GROSS PROFIT. For the six months ended September 28, 2001, gross profit as a percentage of net sales declined slightly to 31.1% from 31.8% in the six months ended September 29, 2000. Gross profit decreased 7.7% to $107.5 million in the first two quarters of fiscal 2002 from $116.4 million in the first two quarters of fiscal 2001. The Company sold 84% of its homes through Company-owned retail superstores in the six months ended September 28, 2001 versus 83% in the six months ended September 29, 2000. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses decreased 4.7% to $84.9 million in the six months ended September 28, 2001 from $89.0 million in the six months ended September 29, 2000, primarily due to the Company's continued focus on reducing fixed expenses company-wide. This decline was somewhat offset by a commitment to building brand awareness via advertising, startup expenses associated with the new retail superstores opened during the first six months of fiscal 2002 and training costs associated with people development necessary to continue the Company's planned retail growth. As a percentage of net sales, selling, general and administrative expenses increased slightly, as planned, to 24.5% in the six months ended September 28, 2001 from 24.3% in the six months ended September 29, 2000. This increase is due to the growth in the Company's retail operations which, generally, have higher selling, general and administrative expenses as a percentage of net sales as compared to wholesale operations. INTEREST EXPENSE. Interest expense decreased 23.8% to $4.7 million in the six months ended September 28, 2001 primarily due to a decrease in the floor plan liability coupled with a decrease in the prime interest rate from a range of 9.0% to 9.5% in the first two quarters of fiscal 2001 to a range of 6.0% to 8.0% in the first two quarters of fiscal 2002. LIQUIDITY AND CAPITAL RESOURCES. The Company has floor plan credit facilities totaling $175.0 million to finance a major portion of its home inventory at the Company's retail superstores. One facility is with Conseco Finance, a subsidiary of Conseco, Inc. and is secured by a portion of the Company's home inventory and receivables from financial institutions. The interest rate on the facility ranges from prime (6.0% at September 28, 2001) to prime plus 2.0%. The agreement, which expired June 30, 2001, requires Conseco to provide written notification 12 months prior to cancellation. Conseco has extended all terms of this existing financing facility until Conseco and the Company can negotiate a similar facility. The Company has three other facilities with substantially the same terms as the agreement with Conseco. One of these credit facilities is with Deutsche Financial Services for $75.0 million. The interest rate on the Deutsche facility ranges from prime (6.0% at September 28, 2001) to prime plus 1.0%. The agreement is available until Deutsche provides written notification of cancellation six months in advance. Another facility for $25.0 million is with Textron Financial Corporation. The interest rate on the Textron facility ranges from prime (6.0% at September 28, 2001) to prime plus 1.0% depending on the outstanding amounts owed to Textron. The agreement is available through June 28, 2003 and requires Textron to provide written notification six 9 months prior to cancellation. The Company also secured a $10.0 million facility with Transamerica Commercial Finance Corporation. The interest rate on the Transamerica Facility ranges from prime (6.0% at September 28, 2001) to prime plus 1.0%. The agreement is available through October 11, 2002 and requires Transamerica to provide written notification six months prior to cancellation. Such written notification has not been received by the Company from any of the financial institutions. The Company's floor plan financing agreements permit the Company to earn interest on investments made with the financial institutions, which can be withdrawn without any imposed restrictions. These investments have certain limitations depending upon the amount of floor plan balance outstanding. Interest rates on the amounts invested range from prime (6.0% at September 28, 2001) to prime minus 0.5%. The Company has a $20.0 million secured and a $15.0 million unsecured revolving line of credit from a financial institution for general corporate purposes. The line of credit bears interest, at the option of the Company (under certain conditions), at either the LIBOR rate (2.6% at September 28, 2001) plus 2.0% or the prime rate (6.0% at September 28, 2001) minus 0.25%. The line of credit contains provisions regarding minimum financial requirements and certain indebtedness limitations which would limit the amount available for future borrowings. Currently, the amount available of $35.0 million is reduced by letters of credit totaling $2.6 million. The line is available through June 26, 2002 and requires an annual commitment fee of up to $50,000. The Company had no amounts outstanding on the line of credit at September 28, 2001 and March 30, 2001. Through CountryPlace Mortgage, the Company's finance subsidiary, the Company assigns approved loan contracts to one of three national finance companies. In January 2000, one of these companies, Associates Housing Finance, announced that they would be discontinuing retail and floor plan financing for the manufactured housing industry. The Company does, however, have a contract through March 31, 2002 with the Associates and they have committed to providing consumer financing to the Company throughout the duration of the contract. In July 1999, the Company's Board of Directors authorized, subject to certain business and market conditions, the use of up to $20.0 million to repurchase the Company's common stock. In July 2000, the Board of Directors authorized another $20.0 million for common stock repurchases. As of the date of this filing, the Company had invested $20.5 million in the common stock buyback program. The Company believes that cash flow from operations, together with floor plan financing and the revolving line of credit, will be adequate to support its working capital, currently planned capital expenditure needs and potential future share repurchases in the foreseeable future. The Company may, from time to time, obtain additional floor plan financing for its retail inventories. Such practice is customary in the industry. However, because future cash flows and the availability of financing will depend on a number of factors, including prevailing economic and financial conditions, business and other factors beyond the Company's control, no assurances can be given in this regard. NEW ACCOUNTING PRONOUNCEMENT. Effective March 31, 2001, the Company adopted Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets," (SFAS No. 142), which requires that goodwill not be amortized but instead be tested at least annually for impairment by reporting unit and expensed against earnings when the implied fair value of a reporting unit, including goodwill, is less than its carrying amount. The adoption of the new standard increased net income by $0.7 million or $0.03 per share to $0.29 per share for the quarter ended September 28, 2001 and $1.1 million or $0.05 per share to $0.55 per share for the six months ended September 28, 2001. Comparative pro forma results for the three and six months ended September 29, 2000 would have increased income before cumulative effect of change in accounting principle and net income by $0.7 million or $0.03 per share to $0.37 per share and $1.1 million or $0.05 per share to $0.63 per share, respectively. The Company had $53.1 million and $52.9 10 million in goodwill at September 28, 2001 and March 30, 2001, respectively, and has classified these amounts as other assets in the accompanying Condensed Consolidated Balance Sheets. FORWARD-LOOKING INFORMATION. Certain statements contained in this report are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Investors should be aware of factors, which could have a negative impact on prospects and the consistency of progress. These include political, economic or other factors such as inflation rates, recessionary or expansive trends, taxes and regulations and laws affecting the business in each of the Company's markets; competitive product, advertising, promotional and pricing activity; dependence on the rate of development and degree of acceptance of new product introductions in the marketplace; and the difficulty of forecasting sales at certain times in certain markets. 11 PART II. OTHER INFORMATION Item 1. Legal Proceedings - Not applicable Item 2. Changes in Securities - Not applicable Item 3. Defaults upon Senior Securities - Not applicable Item 4. Submission of Matters to a Vote by Security Holders - Not applicable Item 5. Other Information - Not applicable Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits - Not applicable (b) Reports on Form 8-K - Not applicable 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 thereto duly authorized. Date: November 6, 2001 Palm Harbor Homes, Inc. ------------------------- (Registrant) By: /s/ Kelly Tacke ---------------------------------- Kelly Tacke Chief Financial and Accounting Officer By: /s/ Lee Posey ---------------------------------- Lee Posey Chairman of the Board 12