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SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

OR

Commission file number 1-7444

OAKWOOD HOMES CORPORATION

(336) 664-2400

     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 Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes x No o

     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 November 1, 2003 was 9,536,610 shares.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

     The interim Consolidated Financial Statements contained herein have been prepared, without audit, on a going concern basis, which assumes continuity of operations and realization of assets and satisfaction of liabilities in the ordinary course of business, and in accordance with Statement of Position 90-7 (“SOP 90-7”), “Financial Reporting by Entities in Reorganization under the Bankruptcy Code.” Accordingly, all pre-petition liabilities subject to compromise have been segregated in the Consolidated Balance Sheet and classified as Liabilities subject to compromise, at the estimated amount of allowable claims. Liabilities not subject to compromise are separately classified. Revenues, expenses, realized gains and losses and provisions for losses resulting from the reorganization are reported separately as Reorganization items in the Consolidated Statement of Operations. Cash used for reorganization items is disclosed separately.

     The ability of the Company to continue as a going concern is subject to numerous risks and uncertainties and is predicated upon, among other things, the confirmation of a reorganization plan, the ability to generate cash flows from operations and the ability to obtain financing sources sufficient to satisfy the Company’s future obligations and meet current operating needs, including continued access to the asset-backed securities or whole loan sales markets. The Consolidated Financial Statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amount and classification of liabilities that may result from the outcome of these uncertainties.

     These interim consolidated financial statements have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures contained herein are adequate to make the information presented not misleading. These Consolidated Financial Statements should be read in conjunction with the financial statements and the notes thereto included in the Company’s latest Annual Report on Form 10-K.

Oakwood Homes Corporation and Subsidiaries

Consolidated Statement of Operations (Unaudited)

(in thousands except per share data)

The accompanying notes are an integral part of the financial statements.

Oakwood Homes Corporation and Subsidiaries

Consolidated Statement of Comprehensive Income (Loss) (Unaudited)

(in thousands)

The accompanying notes are an integral part of the financial statements.

Oakwood Homes Corporation and Subsidiaries

Consolidated Balance Sheet (Unaudited)

(in thousands except share and per share data)

The accompanying notes are an integral part of the financial statements.

Oakwood Homes Corporation and Subsidiaries

Consolidated Statement of Cash Flows (Unaudited)

(in thousands)

The accompanying notes are an integral part of the financial statements.

Oakwood Homes Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

1.		The interim Consolidated Financial Statements contained herein have been prepared, without audit, on a going concern basis, which assumes continuity of operations and realization of assets and satisfaction of liabilities in the ordinary course of business, and in accordance with Statement of Position 90-7 (“SOP 90-7”), “Financial Reporting by Entities in Reorganization under the Bankruptcy Code.” Accordingly, all pre-petition liabilities subject to compromise have been segregated in the Consolidated Balance Sheet and classified as Liabilities subject to compromise, at the estimated amount of allowable claims. Liabilities not subject to compromise are separately classified. Revenues, expenses, realized gains and losses and provisions for losses resulting from the reorganization are reported separately as Reorganization items in the Consolidated Statement of Operations. Cash used for reorganization items is disclosed separately in Note 7 to the Consolidated Financial Statements. The unaudited Consolidated Financial Statements reflect all adjustments, which include only normal recurring adjustments, except as described above, which are, in the opinion of management, necessary for a fair statement of the results of operations for the periods presented. These interim statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in the Company’s latest Annual Report on Form 10-K. Results of operations for any interim period are not necessarily indicative of results to be expected for a full year.
		Unless otherwise indicated, all references to 2003 refer to the nine month transition period ended June 30, 2003 and annual periods prior to 2003 refer to fiscal years ended September 30. On April 22, 2003 the Board of Directors approved a change of the Company’s fiscal year end from September 30 to June 30.
2.		On November 15, 2002 (the “Petition Date”), Oakwood Homes Corporation and 14 of its subsidiaries (collectively, the “Debtors” and, with Oakwood Homes’ non-Debtor subsidiaries, the “Company”) filed voluntary petitions for reorganization under Chapter 11 of the federal bankruptcy laws (the “Bankruptcy Code” or “Chapter 11”) in the United States Bankruptcy Court in Wilmington, Delaware (the “Court”) under case number 02-13396. The reorganization is being jointly administered under the caption “In re Oakwood Homes Corporation, et al.” The Debtors currently are operating their business as debtors-in-possession pursuant to the Bankruptcy Code. As a debtor-in-possession, the Company is authorized to continue to operate as an ongoing business, but may not engage in transactions outside the ordinary course of business without the approval of the Court, after notice and an opportunity for a hearing.
		The Company decided to file for reorganization under Chapter 11 in order to restructure its balance sheet and access new working capital while continuing to operate in the ordinary course of business. This decision was based upon the continued poor performance of consumer loans originated by the Company, as well as extremely weak conditions in the manufactured housing industry and deteriorating terms in the asset-backed securitization market into which the Company sold its loans. Other factors contributing to the decision to file included a general economic recession, declining recovery rates in the repossession market, the substantial reduction in loan servicing fees received and the withdrawal of manufactured housing floor plan lenders offering financing to many of the Company’s independent dealers.
		The Company’s proposed reorganization plan provides for the conversion of the Company’s $303 million of senior unsecured debt, its guarantees of principal and interest on $275 million principal amount of subordinated REMIC securities and certain other unsecured indebtedness into the Company’s post restructuring common shares. As a result, Berkshire Hathaway Inc., which is the largest holder of the Company’s unsecured debt, would become the Company’s largest shareholder upon the Company’s emergence from bankruptcy. The Company’s proposed reorganization plan also provides for the conversion of the Company’s current common shares into out-of-the-money warrants

		to purchase approximately 10% of the post restructuring common shares. On October 3, 2003 the Court entered an order approving the Company’s disclosure statement and authorizing the Company to solicit its creditors to approve the plan. The deadline for voting on the plan is November 19, 2003 and a confirmation hearing currently is scheduled for November 26, 2003. However, there can be no assurances that the Company will be able to continue to operate as a going concern or that the proposed plan will be approved by the creditors of the Company and confirmed by the Court. In addition, implementation of any confirmed plan of reorganization likely would require that the Company obtain replacements for its Loan Purchase Facility and DIP Facility, which are scheduled to expire on November 30, 2003. While the Company has received a commitment from its DIP lender to provide such replacement financing, closing the replacement facility is subject to certain conditions, including execution of definitive documentation.
		As part of the Company’s operational restructuring, five manufacturing plants in various states and the Company’s loan origination operations in Texas were closed on November 14, 2002. The Company simultaneously announced the closure of approximately 75 retail locations, principally in the Deep South, Tennessee and Texas markets. In July 2003 the Company announced the closure of an additional 15 retail sales centers. Following these closures, the Company will operate approximately 98 sales centers and 14 manufacturing plants. At September 30, 2003 the Company held for sale seven manufacturing facilities with a net book value of $12.2 million.
		On November 23, 2002 the Debtors reached an agreement with Berkshire Hathaway Inc., Greenwich Capital Financial Products, Inc. and Ranch Capital LLC to provide debtor-in-possession (“DIP”) financing of up to $215 million during completion of the reorganization (the “DIP Facility”). The DIP Facility included an up to $140 million line of credit to be used for general corporate liquidity needs (the “Tranche A Revolving Loan”) and an up to $75 million loan servicing advance line (the “Tranche B Servicing Advance Loan”).
		On January 28, 2003 the Debtors closed the Tranche A Revolving Loan of the DIP Facility. Borrowings under the Tranche A Revolving Loan bear interest at the greater of (a) LIBOR plus 5% or (b) 9.5% and are secured by a priority lien on substantially all of the Debtors’ assets. The Tranche A Revolving Loan is intended to provide for the Debtors’ general liquidity needs while the Debtors complete their reorganization. On July 14, 2003 the Tranche A Revolving Loan commitment was decreased from $140 million to $90 million.
		The Tranche A Revolving Loan terminates on the earliest of (a) November 30, 2003, (b) the date of substantial consummation of a plan of reorganization as confirmed by an order of the Court, (c) the sale of a material part of any Debtor’s assets, (d) the date of the conversion of the bankruptcy case of any of the Debtors to a case under Chapter 7 of the federal bankruptcy laws, (e) the date of the dismissal of the Chapter 11 case of any of the Debtors or (f) the earlier of the date on which (i) all of the loans under the Tranche A Revolving Loan become due and payable or (ii) all of the loans under the Tranche A Revolving Loan are paid in full and the Tranche A Revolving Loan is terminated.
		In February 2003 the Company closed the second element of its DIP Facility, the Tranche B Servicing Advance Loan, which funds a substantial majority of the Company’s obligation under most of its loan servicing contracts to make advances of delinquent principal and interest (“P&I”) payments. The Company formed a wholly-owned special purpose subsidiary, Oakwood Advance Receivables Company II, LLC (“OAR II”), to borrow up to $75 million for the purchase of qualifying P&I advance receivables. Borrowings under the facility bear interest at LIBOR plus 5.0%, subject to a floor of 7.5%. The Company transfers qualifying servicing advance receivables to OAR II, which funds its purchases of receivables using the proceeds of debt obligations issued by OAR II to third party lenders. OAR II collects the receivables it purchases from the Company, and such proceeds are available to purchase additional receivables from the Company through the final receivables purchase date in November 2003. Because OAR II is not a qualifying special purpose entity under Statement of Financial Accounting Standards No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities – A Replacement of FASB Statement No. 125,” (“FAS 140”) receivables

		sold to OAR II continue to be recognized as assets of the Company and borrowings by OAR II are reflected as short-term borrowings in the accompanying Consolidated Balance Sheet.
		A summary of the funding status of OAR II at September 30, 2003 is as follows (in thousands):

		The DIP Facility contains certain provisions which, among other things, require the Company to comply with certain financial covenants defined in the agreements.
		Prior to its bankruptcy filing, the Company had a $50 million servicing advance facility substantially similar to the Tranche B Servicing Advance Loan, except that the transfers of receivables under such earlier facility qualified for derecognition under FAS 140 and accordingly such transfers were accounted for as sales of receivables.
		In February 2001 the Company entered into a sale and servicing agreement and certain related agreements, collectively, the “Loan Purchase Facility,” pursuant to which the Company sells consumer loans to an unaffiliated entity, which in turn sells the loans to Oak Leaf Holdings (“Oak Leaf”), a special purpose entity majority owned by Oakwood Capital Corporation (“Oakwood Capital”). Oak Leaf then sells the loans to OMI Note Trust (“OMI Trust”). A majority of the purchase price for the loans purchased by OMI Trust from Oak Leaf is paid in cash, using the proceeds of up to $200 million of debt obligations of OMI Trust sold to a financial institution pursuant to a note purchase agreement expiring the earlier of February 2004 or the date on which a termination event occurs. Included among such other termination events are events which were added to the terms of the Loan Purchase Facility following the Company’s bankruptcy filing, include the effectiveness of a reorganization plan under Chapter 11, the conversion of the Chapter 11 case to a liquidation under Chapter 7 of the Bankruptcy Code, or an event of default under the DIP Facility. Such consumer loans (i) are carried on the financial statements of the Company solely as a result of the consolidation of the financial statements of OMI Trust with those of the Company, (ii) are no longer owned by the Company for state law purposes, and (iii) are not available to satisfy the claims of creditors of the Company. As a condition of the Loan Purchase Facility, the Company issued to a sister company of the financial institution a warrant to acquire approximately 1.9 million shares of the Company’s common stock with an exercise price of approximately $9.76 per share. The warrant, which was immediately exercisable, expires in February 2009.
		In December 2002 and January 2003 the Court entered orders authorizing the Company’s finance subsidiary, Oakwood Acceptance Corporation, LLC (“OAC”) to (1) assign OAC’s servicing rights under the pooling and servicing agreements and certain advance receivables to Oakwood Servicing Holdings Co., LLC (“Oakwood Servicing”), a newly created limited purpose wholly-owned consolidated subsidiary of OAC and (2) enter into and perform under a subservicing agreement with Oakwood Servicing. Under this structure, Oakwood Servicing has become the servicer of record for the purposes of the servicing agreements. OAC continues to perform day-to-day servicing in accordance with the terms of the subservicing agreements. This arrangement elevated the priority of, and in certain instances increased the amount of, servicing fees, which had previously been subordinate to payments to the REMIC bondholders, to a senior position in the distribution of cash received by the REMIC trusts. The elevation of servicing fees to a senior position resulted in an increase in the cash servicing fees received by the Company. However, because the elevation of the servicing fees also has the effect

		of decreasing cash available to pay securityholders in the REMIC trusts, the Company’s obligations under guarantees of certain subordinated REMIC securities increased substantially. While the effects of the elevation of the servicing fee priority on the Company’s estimated future guarantee obligations are fully reflected in the Consolidated Financial Statements, the offsetting effects of the increased estimated future servicing fee income are limited by generally accepted accounting principles and accordingly are not fully reflected in the Consolidated Financial Statements.
		Under Section 362 of the Bankruptcy Code, actions to collect pre-petition indebtedness, as well as most other pending litigation, are stayed. Absent an order of the Court, substantially all pre-petition liabilities are subject to settlement under a plan of reorganization, should such plan be approved by the Court.
		Under the Bankruptcy Code, the Debtors may also assume or reject executory contracts, including lease obligations, subject to the approval of the Court and certain other conditions. Parties affected by these rejections may file claims with the Court in accordance with the reorganization process.
		On January 31, 2003 the Debtors filed with the Court schedules and statements of financial affairs setting forth, among other things, the assets and liabilities of the Debtors on the Petition Date, subject to the assumptions contained in certain notes filed in connection therewith. All of the schedules and statements are subject to further amendment or modification. The Bankruptcy Code provides for a claims reconciliation and resolution process. The bar date for filing claims was March 27, 2003. The ultimate number and amount of allowed claims is not presently known, and because any settlement terms of such allowed claims are subject to a confirmed plan of reorganization, the ultimate distribution, if any, with respect to allowed claims is not presently ascertainable.
		The United States Trustee has appointed an unsecured creditors committee. The official committee has a right to be heard on all matters that come before the Court and is the primary entity with which the Company has been negotiating the terms of a plan of reorganization. To date, no other committees have been appointed by the United States Trustee. There can be no assurance this committee will support the Company’s positions in the bankruptcy proceedings or the plan of reorganization, and disagreements between the Company and this committee could protract the bankruptcy proceedings, could negatively affect the Company’s ability to operate during bankruptcy and could delay the Company’s emergence from bankruptcy or cause the bankruptcy proceedings to be converted from a reorganization to a liquidation.
		The ultimate recovery, if any, by creditors, securityholders and/or common shareholders will not be determined until confirmation of a plan or plans of reorganization. No assurance can be given as to what value will be ascribed in the bankruptcy proceedings to each of these constituencies. Accordingly, the Company urges that appropriate caution be exercised with respect to existing and future investments in any of these securities.
3.		The components of loans and investments are as follows:

The following table summarizes the transactions reflected in the reserve for credit losses:

The reserve for credit losses is reflected in the Consolidated Balance Sheet as follows:

In March 2003 the Company sold approximately $260 million of installment loans under an agreement which required the Company to repurchase any of those loans which exceeded certain delinquency standards as of August 2003. The maximum amount payable by the Company pursuant to the repurchase obligation was approximately $13 million, and the purchaser retained $13 million of the purchase price to secure the Company’s repurchase obligation. In August 2003 the repurchase obligation was quantified and the Company repurchased the required loans and recorded an addition of $3.5 million to the reserve for credit losses in connection with the repurchase. Losses incurred on the repurchase were less than estimated by the Company as of the March 2003 sale date, and accordingly a gain on sale of loans of approximately $3.7 has been reflected in the quarter ended September 30, 2003. The Company also received the unused portion of the security for the repurchase obligation. In addition, the March 2003 loan sale agreement contained provisions which entitled the Company to receive additional purchase consideration for the loans if the amount ultimately realized by the purchaser of the loans on a subsequent sale of the loans exceeded a certain amount. In August 2003 the

		purchaser resold substantially all of the loans and the Company received approximately $5.1 in additional purchase consideration which has been reflected as a gain on sale of loans for the quarter ended September 30, 2003.
4.		The Company’s retained interests in securitizations are set forth below.

A reconciliation of amounts recorded for loan servicing contracts follows:

		The Company estimates the fair value of its retained interests in securitizations by determining the present value of the associated expected future cash flows over the expected life of the transactions using modeling techniques that incorporate estimates of key assumptions which management believes market participants would use for similar interests. Such assumptions include prepayment speeds, credit losses and interest rates used to discount cash flows.
		The valuation of retained interests is affected not only by the projected level of prepayments of principal and credit losses, but also by the projected timing of such prepayments and credit losses. Should such timing differ materially from the Company’s projections, it could have a material effect on the valuation of the Company’s retained interests and may result in impairment charges being recorded.
		The Company completed no securitizations during the three months ended September 30, 2003 and during the nine month transition period ended June 30, 2003.
		The following table sets forth certain data with respect to securitized loans in which the Company retains an interest, and with respect to the key economic assumptions used by the Company in estimating the fair value of such retained interests:

		The foregoing data and assumptions may not be comparable because of changes in pool demographics, such as average age of loans, and the interaction of assumptions. All data are based on weighted averages using unpaid or original principal balances of loans.
		The following table summarizes certain cash flows received from and paid to the securitization trusts during the three months ended September 30, 2003 and 2002:

Loans serviced by the Company and related loans past due 90 days or more at September 30, 2003, are set forth below:

Loans serviced by the Company and related loans past due 90 days or more at June 30, 2003, are set forth below:

5.

The Company provides consumer warranties against manufacturing defects in all new homes it sells. Warranty terms are either one or five years depending upon the item covered. Estimated future warranty costs are accrued at the time of sale. The following table sets forth the activity in the Company’s warranty accrual:

6.

The components of the restructuring provisions are as follows:

		During the fourth quarter of 2001 the Company recorded restructuring charges of approximately $17.8 million, primarily related to the closing of approximately 90 underperforming retail sales centers. At March 31, 2002 these restructuring activities were substantially complete.
		Market conditions, particularly in the South where the majority of store closings occurred, remained fluid during the six months ended March 31, 2002. While the Company closed the originally identified approximately 90 stores, these changing market conditions caused the Company to revise its initial determination of the number of stores to be either sold to independent dealers, converted to centers that exclusively market repossessed inventory or closed. The Company originally estimated that the disposition of the stores would be approximately evenly divided between those sold to independent dealers, converted to centers exclusively marketing repossessed inventory or closed. Ultimately, approximately 27 stores were sold, 23 were converted and 40 were closed. As a result of the change in the ultimate disposition of certain of the stores, as well as changes in the original estimate of costs to exit the stores, the Company reversed into income in 2002, $2.1 million of restructuring charges originally recorded in 2001.
		During the fourth quarter of 2002 the Company recorded restructuring charges of approximately $8.8 million, primarily related to the closing of approximately 40 underperforming retail sales centers and five centers that exclusively market repossessed inventory. The stores to be closed were located principally in the South and Texas, where the Company has continued to experience poor operating results and unsatisfactory credit performance.

		As part of the Company’s operational restructuring undertaken in connection with its bankruptcy filing, five manufacturing plants in various states and the Company’s loan origination operations in Texas were closed on November 14, 2002. The Company simultaneously announced the closure of approximately 75 retail locations, principally in the Deep South, Tennessee and Texas markets. In connection with these closings, the Company recorded approximately $23.1 million in restructuring charges during 2003. As a result of changes in the original estimate of costs to close certain manufacturing plants and sales centers, in 2003 the Company reversed into income $2.6 million of restructuring charges originally recorded in 2003, 2002 and 2001. In the quarter ended September 30, 2003 the Company reversed into income $0.3 million of restructuring charges principally related to charges originally recorded in 2003.
		Of the $3.9 million remaining in the restructuring reserve at September 30, 2003, approximately $0.5 million and $0.7 million relate to provisions established during the fourth quarter of 2001 and the fourth quarter of 2002, respectively. The Company is contractually obligated to pay the amounts remaining in the reserve at September 30, 2003 unless such amounts are set aside by the Court during the bankruptcy proceedings.
		The Company terminated approximately 400 employees as part of its fourth quarter 2001 plan and approximately 150 employees as part of its fourth quarter 2002 plan. The Company terminated approximately 1,550 employees, primarily in its retail and manufacturing operations, as part of its first quarter 2003 plan.
7.		Goodwill and other asset impairment charges in the three months ended September 30, 2003 relate principally to the writeoff of certain costs related to computer systems enhancements which are unlikely to be implemented by the Company.
		In the quarter ended September 30, 2002 the Company recorded impairment charges of approximately $51.2 million, principally as a result of a reassessment of the value of goodwill and other intangible assets, which the Company wrote off in their entirety.
8.		Reorganization items represent amounts incurred by the Company as a direct result of the Chapter 11 filing and are presented separately in the Consolidated Statement of Operations in accordance with SOP 90-7. Reorganization items for the three months ended September 30, 2003 include professional fees of $3.2 million representing financial, legal, real estate and valuation services directly associated with the reorganization process. Cash paid for reorganization items was approximately $4.7 million during the three months ended September 30, 2003.
		Under SOP 90-7, interest expense is only recorded to the extent it will be paid during the Chapter 11 proceeding or if it is probable it will be an allowed priority, secured or unsecured claim. In accordance with SOP 90-7, approximately $6.1 million of contractually stated interest was not recorded as interest expense during the three months ended September 30, 2003.
		Condensed financial information of the Debtors is set forth below: