Fleetwood Reports Third Quarter and Nine-Month Results
RIVERSIDE, Calif., March 1 Fleetwood Enterprises, Inc.
, the nation's largest manufacturer of recreational vehicles and a
leading producer and retailer of manufactured housing, today announced results
for the third quarter and nine months ended January 28, 2001. The Company
reported a third quarter net loss of $205.0 million or $6.26 per diluted
share, which included a non-cash charge of $4.86 per share for goodwill
impairment and 21 cents per share for other non-recurring charges. The loss
also reflects significantly reduced sales volume in both of the Company's core
businesses. The Company earned a profit of $15.9 million or 48 cents per
diluted share in last year's third quarter.
Fleetwood's President and Chief Operating Officer, Nelson W. Potter,
commented on the non-cash charges: "Conditions in the manufactured housing
market have been in a state of decline for the past two years, but have
deteriorated further in recent months. This has prompted us to downsize our
retail housing operations and to take a third quarter charge to reduce the
value of goodwill related to prior acquisitions of retail businesses. In
addition, we have closed 13 housing manufacturing operations over the past
18 months, three of which occurred during the third quarter."
For the first nine months of fiscal 2001, the Company incurred a net loss
of $239.5 million or $7.31 per diluted share. This compares with a profit of
$72.1 million or $2.04 per diluted share for the corresponding period in the
prior year. Current year results were adversely affected by non-recurring
restructuring and asset impairment charges totaling $5.40 per diluted share,
which included the goodwill impairment charge, as well as other charges
related to the closing of manufacturing and retail operations and other
downsizing initiatives. Also in the current year, the Company recorded a
one-time cumulative charge to earnings of $11.2 million after taxes or
34 cents per diluted share, which was related to a change in accounting for
retail housing credit sales.
Consolidated revenues for the third quarter totaled $510 million, down
40 percent from the record $852 million in last year's third quarter.
Nine-month revenues fell 30 percent to $1.96 billion from a record
$2.82 billion recorded in the similar period last year.
"Revenues were down sharply in the third quarter for both recreational
vehicles and manufactured housing," Potter said. "Recreational vehicle sales
in the third quarter declined 42 percent to $251 million from a record
$434 million in last year's comparable quarter, with all three Fleetwood RV
divisions posting lower sales. This resulted in an operating loss for the RV
group. We believe the market slowdown is mainly attributable to declining
consumer confidence, concerns about the slowing economy, higher interest rates
and fuel prices. The market for RV products has proven to be very resilient
in the past, which gives us reason to be optimistic about improved results for
the Company as general economic concerns abate," Potter said.
Within the RV group, motor home sales for the quarter declined to
$148 million from a record $274 million last year. In the towable category,
travel trailer and folding trailer sales declined to $78 million and
$25 million, respectively, compared to $134 million and $26 million in the
prior year.
Nine-month RV sales were off 35 percent to $921 million compared to last
year's record $1.42 billion. Motor home revenues fell to $492 million versus
$891 million last year. Travel trailer sales declined to $344 million from
$433 million a year ago, while folding trailer revenues eased to $85 million
from last year's $92 million.
Manufactured housing revenues in the third quarter fell 38 percent to
$252 million from $407 million last year. Housing revenues included
$130 million of wholesale factory sales and $122 million of retail sales from
Company-owned sales centers. This compares with $262 million and
$145 million, respectively, last year. Gross manufacturing revenues declined
to $183 million from $341 million last year, and included $53 million of
intercompany sales to Company-owned stores. Manufacturing unit volume was off
51 percent to 6,833 homes and homes sold at Fleetwood retail stores dropped
22 percent to 2,774.
"Our housing manufacturing operations were profitable in the third
quarter, despite very challenging market conditions," Potter said. "We were
able to partially offset the effect of lower volume by slightly improving
gross margins and by sharply reducing operating costs."
"We have been taking strong steps to adjust our manufacturing and retail
capacities and to cut costs throughout the organization," Potter continued.
"We have reduced our Company-wide employment base by approximately 5,500 or
28 percent since its peak in October 1999. We believe our downsizing and cost
reduction moves will serve us well in the quarters ahead. Despite these
actions, it is not likely in the current operating environment that we will be
profitable in the fourth quarter. Also, we will incur some further charges
for restructuring and downsizing initiatives in the final quarter."
As a consequence of the Company's operating results and non-cash charges
during the third fiscal quarter, the Company is in violation of certain
financial covenants in the agreement governing $80 million of unsecured notes
with the Prudential Insurance Company of America. The Company is current as
to all interest and principal payments due under the Prudential notes, but the
terms of the agreement provide that defaults allow Prudential to accelerate
the notes or exercise other remedies. An uncured default under the Prudential
agreement may result in a default under other debt agreements, including
approximately $100 million of secured financing on inventory at the Company's
retail sales centers. The Company is currently in discussions with Prudential
regarding a possible waiver of the covenant violations or an amendment that
would eliminate any default. No assurance can be given, however, that the
Company will reach an agreement on satisfactory terms with Prudential.
FLEETWOOD ENTERPRISES, INC.
Consolidated Summaries of Earnings
(Unaudited)
(Amounts in thousands
except per share data) 13 Weeks 13 Weeks
Ended Ended
Jan. 28, 2001 Jan. 30, 2000
Sales $510,199 $852,265
Operating income (loss)
before non-recurring items $(56,136) $32,717
Pre-tax non-recurring items:
Goodwill impairment charges (163,231) --
Other non-recurring items (10,851) --
Operating income (loss) $(230,218) $32,717
Income (loss) before
income taxes $(235,457) $27,466
Benefit (provision)
for income taxes 30,499 (11,564)
Income (loss) before
cumulative effect of
accounting change (204,958) 15,902
Cumulative effect of
accounting change,
net of taxes -- --
Net income (loss) for
basic earnings per share (204,958) 15,902
Effect of dilutive
preferred securities (Note) -- 2,784
Net income (loss) for
diluted earnings
per share $(204,958) $18,686
Earnings (loss) per share: Basic Diluted Basic Diluted
Income (loss) before
cumulative effect
of accounting change $(6.26) $(6.26) $.49 $.48
Cumulative effect of
accounting change,
net of taxes -- -- -- --
Net income (loss) per share $(6.26) $(6.26) $.49 $.48
Weighted average
Common shares:
Basic 32,755 32,724
Diluted (Note) 32,755 38,653
Note: The distribution on preferred securities in fiscal 2001 is
anti-dilutive and is therefore not added back to basic earnings
in computing dilutive earnings (loss) per share.
FLEETWOOD ENTERPRISES, INC.
Consolidated Summaries of Earnings
(Unaudited)
(Amounts in thousands
except per share data) 39 Weeks 40 Weeks
Ended Ended
Jan. 28, 2001 Jan. 30, 2000
Sales $1,962,484 $2,819,082
Operating income (loss)
before non-recurring items $(56,776) $137,415
Pre-tax non-recurring items:
Goodwill impairment charges (163,231) --
Other non-recurring items (28,253) --
Operating income (loss) $(248,260) $137,415
Income (loss) before
income taxes $(269,518) $123,021
Benefit (provision)
for income taxes 41,209 (50,967)
Income (loss) before
cumulative effect of
accounting change (228,309) 72,054
Cumulative effect of
accounting change,
net of taxes (11,176) --
Net income (loss) for
basic earnings per share (239,485) 72,054
Effect of dilutive
preferred securities (Note) -- 8,352
Net income (loss)
for diluted earnings
per share $(239,485) $80,406
Earnings (loss) per share: Basic Diluted Basic Diluted
Income (loss) before
cumulative effect of
accounting change $(6.97) $(6.97) $2.16 $2.04
Cumulative effect of
accounting change,
net of taxes (.34) (.34) -- --
Net income (loss) per share $(7.31) $(7.31) $2.16 $2.04
Weighted average
Common shares:
Basic 32,755 33,404
Diluted (Note) 32,755 39,355
Note: The distribution on preferred securities in fiscal 2001 is
anti-dilutive and is therefore not added back to basic earnings
in computing dilutive earnings (loss) per share.
Fleetwood Enterprises, Inc.
Business Segment and Unit Shipment Information
13 Weeks 13 Weeks 39 Weeks 40 Weeks
Ended Ended Ended Ended
Jan. 28, Jan. 30, Jan. 28, Jan. 30,
(Dollars in thousands) 2001 2000 2001 2000
OPERATING REVENUES:
Manufactured housing
- Manufacturing $182,637 $341,352 $757,951 $1,136,419
Retail 121,554 145,044 458,670 465,013
Less intercompany (52,483) (79,484) (199,012) (235,918)
251,708 406,912 1,017,609 1,365,514
Recreational vehicles 251,306 434,124 920,542 1,415,823
Supply operations 7,185 11,229 24,333 37,745
$510,199 $852,265 $1,962,484 $2,819,082
OPERATING INCOME (LOSS) BEFORE NON-RECURRING ITEMS:
Manufactured housing* $8,043 $15,538 $32,764 $56,920
Housing - retail** (25,264) (1,406) (34,504) 8,317
Recreational vehicles (29,718) 20,391 (39,736) 80,419
Supply operations 793 4,445 5,109 15,814
Corporate and other (9,990) (6,251) (20,409) (24,055)
$(56,136) $32,717 $(56,776) $137,415
UNITS SOLD:
Manufactured housing
- Factory shipments 6,833 14,030 29,272 46,597
Retail sales 2,774 3,569 10,521 11,238
Less intercompany (1,900) (3,350) (7,463) (9,271)
7,707 14,249 32,330 48,564
Recreational vehicles
- Motor homes 1,751 3,489 6,117 11,915
Travel trailers 5,914 9,433 25,148 30,918
Folding trailers 4,509 4,828 14,584 16,354
12,174 17,750 45,849 59,187
* After deduction (addition) for intercompany profit in inventory
as follows: FY 2001: $(35) QTD and $449 YTD; FY 2000: $4,873 QTD
and $10,891 YTD.
** Operating income before deduction of interest expense on inventory
floor plan financing as follows: FY 2001: $2,940 QTD and $9,381 YTD;
FY 2000: $2,752 QTD and $8,440 YTD.
