Fleetwood RV Reports Results for Third Quarter and First Nine Months
RIVERSIDE, Calif., Feb. 28 /PRNewswire-FirstCall/ -- 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 27, 2002. The Company reported a third quarter net loss of $17.3 million. As the result of the required accounting treatment for the after-tax gain on its recent exchange transaction of convertible trust preferred securities, the Company reported positive earnings of $0.31 per diluted share. The Company lost $205.0 million or $6.26 per diluted share in last year's third quarter, which included a non-cash charge of $163.2 million, or $4.86 per share, for goodwill impairment and $10.9 million, or 21 cents per share, for other non-recurring charges.
``Our quarterly revenues were up slightly on a year-over-year basis, and our gross margins improved significantly across all product lines from last year's third quarter,'' David Engelman, interim president and CEO, commented. ``However, despite improvement in most of our business segments, we continued to wrestle this quarter with some of the challenges we have faced throughout the past fiscal year.''
For the first nine months of fiscal 2002, the Company incurred a net loss of $40.8 million compared with a loss of $239.5 million in the prior year. The year-to-date earnings per share for fiscal 2002 were also affected by the required accounting treatment of the Company's recent securities exchange offer. As a result, the Company reported a year-to-date loss of $0.34 per diluted share compared with a loss of $7.31 per diluted share, including $5.40 per share in non-recurring charges, for the first nine months of the prior year.
In the exchange offer, Fleetwood exchanged new 9.5% convertible trust preferred securities with a liquidation value of $37.95 million for 6% convertible trust preferred securities with a liquidation value of $86.25 million. The $29.4 million after-tax difference between the liquidation values of the two securities is not reported on the income statement but does increase shareholders' equity, and is therefore treated as additional earnings attributable to Common shareholders in calculating earnings per share.
Consolidated revenues for the third quarter totaled $522.4 million, up 1 percent from $514.8 million in the third quarter of fiscal 2001. Nine-month revenues were down 16 percent to $1.68 billion from $1.98 billion for the same period last year.
Manufactured housing revenues in the third quarter declined 8 percent to $235.9 million from $257.1 million last year. Housing revenues included $163.1 million of wholesale factory sales to independent retailers and $72.8 million of retail sales from Company-operated sales centers. This compares with $135.6 million and $121.5 million, respectively, last year. Gross manufacturing revenues rose 6 percent to $202.1 million from $190.6 million last year, and included $39.0 million of intercompany sales to Company-owned stores. Manufacturing unit volume was up 4 percent to 7,075 homes while homes sold at the reduced number of Fleetwood retail stores dropped 41 percent to 1,650.
For the first nine months of the fiscal year, manufactured housing revenues were down 22 percent to $811.5 million from $1.04 billion in the prior year. Revenues included $542.5 million of wholesale factory sales to independent retailers and $269.0 million of sales to Company-operated stores, down from $583.6 million and $458.7 million respectively last year. Gross manufacturing revenues, including intercompany sales, were $658.4 million this year compared with $792.4 million last year. Unit shipments from manufacturing plants declined 20 percent to 23,547, while Fleetwood retail store sales dropped by 38 percent to 6,508.
Manufacturing profit in the Housing Group, before intercompany profit in inventory, was $2.7 million during the quarter, down 65 percent from $7.7 million in the prior year. The retail division lost $9.6 million compared with a loss of $35.8 million last year, which included $10.6 million of non-recurring, non-cash charges. Retail sales were down 40 percent to $72.9 million, largely due to a similar percentage decrease in the number of stores.
For the year to date, the Housing Group's manufacturing division contributed $45.0 million, excluding non-recurring charges, to operating income, which was a 37 percent increase from the prior first nine months. The retail division lost $30.6 million compared with $34.5 million last year.
``While gross profits were up due to selling price increases and operating efficiencies, overall profitability in our Housing Group for the third quarter was adversely affected by asset impairment charges of $3.5 million on two closed plants, as well as increased warranty and service costs,'' Engelman said. ``Also, the consumer finance environment continues to be problematic. Not only are lenders restricting the amount of funds that they devote to this business, but two significant participants announced this quarter that they were no longer going to be providing manufactured housing loans.''
Quarterly revenues in the RV Group were up 11 percent to $278.3 million from $250.4 million. The Company experienced an increase in motor home and travel trailer orders during and immediately after the industry trade show in late November. As a result, motor home sales for the third quarter increased 25 percent from last year to $184 million. In the towable category, despite increased orders resulting from the trade show, travel trailer sales ended the quarter at $68 million, down 12 percent from the prior year, and folding trailer sales stayed approximately even at $26 million.
Nine-month RV sales were off 8 percent to $841.5 million compared with last year's $917.2 million. Motor home revenues rose slightly to $489 million versus $482 million last year. Travel trailer sales declined to $268 million from $347 million a year ago, while folding trailer revenues dropped slightly to $84 million from last year's $88 million.
Overall, the RV Group lost $9.2 million for the quarter, compared with a loss of $29.7 million last year. For the year to date, RVs lost $36.0 million compared with $39.7 million for the first nine months of fiscal 2001.
``Our RV Group's results were mixed,'' Engelman said. ``We were pleased with the performance of the motor home division, which recovered from a loss position last year to an operating profit of $5.6 million this quarter. Travel trailers' performance improved compared to last year, but we still have work to do to eliminate this division's losses. Earnings for both divisions were affected by promotional costs. Fortunately, sales are improving and our new products are generating improved backlogs.
``While we are not satisfied with our financial performance and although we will not be profitable in the final quarter of the fiscal year, we are encouraged by our progress in key areas,'' Engelman continued. ``For next quarter, we look for our motor home division to again be profitable but, despite expected increases in travel trailer sales, we don't believe that division will reach breakeven. In manufactured housing, the industry is making progress in reducing inventory levels and production capacity, but until there is improvement in the availability and cost of retail financing, we are not likely to see any truly significant upturn in industry performance.''
The Company has scheduled a conference call with analysts and investors to discuss quarterly results. The call is scheduled for 1:05 p.m. PST on Thursday, February 28, 2002, and will be broadcast live over the Internet at www.streetevents.com and www.companyboardroom.com , and will be accessible from the Company's Website, www.fleetwood.com . The call will be archived for 14 days on all three sites.
This press release contains certain forward-looking statements and information based on the beliefs of Fleetwood's management as well as assumptions made by, and information currently available to, Fleetwood's management. Such statements reflect the current views of Fleetwood with respect to future events and are subject to certain risks, uncertainties, and assumptions, including risk factors identified in Fleetwood's 10-K and other SEC filings. These risk factors include, without limitation, ongoing weakness in the manufactured housing and recreational vehicle markets, continued acceptance of the Company's products, the availability of wholesale and retail financing in the future and changes in retail inventory levels in the manufactured housing and recreational vehicle industries. Actual results, events and performance may differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Fleetwood undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
For further information, please contact: Lyle Larkin, Vice President- Treasurer, +1-909-351-3535, or Kathy M. Snyder, Director-Investor Relations, +1-909-351-3650, both of Fleetwood Enterprises, Inc.
FLEETWOOD ENTERPRISES, INC.
Consolidated Summaries of Operations
(Unaudited)
(Amounts in thousands except per share data)
13 Weeks Ended 39 Weeks Ended
Jan. 27, Jan. 28, Jan. 27, Jan. 28,
2002 2001 2002 2001
Sales $522,381 $514,825 $1,677,269 $1,984,076
Operating
loss before
non-recurring
items $(14,210) $(56,136) $(35,150) $(56,776)
Restructuring
and impairment
charges (4,800) (174,082) (5,800) (191,484)
Operating loss $(19,010) $(230,218) $(40,950) $(248,260)
Loss before
income taxes $(23,203) $(231,075) $(52,567) $(256,374)
Benefit for
income taxes 8,562 28,907 19,943 36,434
Minority interest
in Fleetwood
Capital Trust
I, II and III,
net of taxes (2,654) (2,790) (8,147) (8,369)
Loss before
cumulative
effect of
accounting
change (17,295) (204,958) (40,771) (228,309)
Cumulative effect
of accounting
change,
net of taxes -- -- -- (11,176)
Net loss $(17,295) $(204,958) $(40,771) $(239,485)
Net income (loss)
available to Common
shareholders, basic $12,108 $(204,958) $(11,368) $(239,485)
13 Weeks Ended
Jan. 27, Jan. 28,
2002 2001
Earnings (loss)
per Common share: Basic Diluted Basic Diluted
Income (loss) before
cumulative effect
of accounting
change $.35 $.31 $(6.26) $(6.26)
Cumulative effect
of accounting change,
net of taxes -- -- -- --
Net income (loss)
per share $.35 $.31 $(6.26) $(6.26)
39 Weeks Ended
Jan. 27, Jan. 28,
2002 2001
Earnings (loss)
per Common share: Basic Diluted Basic Diluted
Income (loss) before
cumulative effect
of accounting
change $(.34) $(.34) $(6.97) $(6.97)
Cumulative effect
of accounting change,
net of taxes -- -- (.34) (.34)
Net income (loss)
per share $(.34) $(.34) $(7.31) $(7.31)
13 Weeks Ended 39 Weeks Ended
Jan. 27, Jan. 28, Jan. 27, Jan. 28,
2002 2001 2002 2001
Weighted average
Common shares:
Basic 34,969 32,755 33,519 32,755
Diluted 48,179 32,755 33,519 32,755
FLEETWOOD ENTERPRISES, INC.
Consolidated Balance Sheets (Condensed)
(Unaudited)
(Amounts in thousands)
ASSETS
January 27, October 28, January 28,
2002 2001 2001
Cash and marketable
investments $140,297 $76,208 $102,823
Receivables 137,758 121,597 130,706
Inventories 222,536 249,704 324,076
Property, plant and
equipment, net 285,558 290,289 303,235
Goodwill and intangible
assets 87,002 87,002 90,933
Other assets 242,508 257,352 269,971
$1,115,659 $1,082,152 $1,221,744
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $85,996 $74,712 $69,147
Employee compensation
and benefits 117,280 130,076 125,421
Retail flooring liability
and short-term debt 43,701 72,138 137,552
Senior unsecured notes
payable -- -- 80,000
Long-term debt 6,000 30,000 --
Other liabilities 196,481 207,406 189,459
Total liabilities 449,458 514,332 601,579
Company-obligated mandatorily
redeemable convertible
preferred securities 373,765 287,500 287,500
Shareholders' equity 292,436 280,320 332,665
$1,115,659 $1,082,152 $1,221,744
FLEETWOOD ENTERPRISES, INC.
Business Segment and Unit Shipment Information
(Unaudited)
13 Weeks 13 Weeks 39 Weeks 39 Weeks
Ended Ended Ended Ended
(Amounts in
thousands) Jan. 27, Jan. 28, Jan. 27, Jan. 28,
2002 2001 2002 2001
OPERATING REVENUES:
Manufactured housing -
Manufacturing $202,120 $190,647 $658,417 $792,403
Retail 72,852 121,554 268,998 458,670
Less intercompany (39,056) (55,057) (115,921) (208,796)
235,916 257,144 811,494 1,042,277
Recreational
vehicles 278,348 250,404 841,511 917,232
Supply operations 8,117 7,277 24,264 24,567
$522,381 $514,825 $1,677,269 $1,984,076
OPERATING INCOME
(LOSS) BEFORE
NON-RECURRING
ITEMS:
Manufactured housing* $7,422 $8,043 $45,031 $32,764
Housing - retail** (9,603) (25,264) (30,569) (34,504)
Recreational
vehicles (9,161) (29,718) (36,047) (39,736)
Supply operations 1,738 793 5,909 5,109
Corporate and other (4,606) (9,990) (19,474) (20,409)
$(14,210) $(56,136) $(35,150) $(56,776)
UNITS SOLD:
Manufactured housing -
Factory shipments 7,075 6,833 23,547 29,272
Retail sales 1,650 2,774 6,508 10,521
Less intercompany (1,381) (1,900) (4,124) (7,463)
7,344 7,707 25,931 32,330
Recreational vehicles -
Motor homes 1,987 1,751 5,719 6,117
Travel trailers 5,268 5,914 19,342 25,148
Folding trailers 4,225 4,509 12,981 14,584
11,480 12,174 38,042 45,849
* After addition (deduction) for intercompany profit in inventory as
follows: FY 2002: $1,212 QTD and $7,721 YTD; FY 2001: $35 QTD and
$(449) YTD.
** Operating income before deduction of interest expense on inventory
floor plan financing as follows: FY 2002: $1,302 QTD and
$2,940 YTD; FY 2001: $3,661 QTD and $9,381 YTD.