Fleetwood RV Reports Results for Fourth Quarter and Fiscal Year 2002
RIVERSIDE, Calif., July 15 -- Fleetwood Enterprises, Inc., the nation's largest manufacturer of recreational vehicles and a leading producer and retailer of manufactured housing, today announced results for its fourth quarter and fiscal year ended April 28, 2002. Including restructuring and asset impairment charges of $14.1 million, or 27 cents per share, the Company reported a fourth quarter net loss of $40.5 million or $1.15 per diluted share. Both the loss and the charges were due primarily to the deteriorating manufactured housing market. The Company lost $44.5 million or $1.36 per diluted share, including $9.2 million or 21 cents per share in goodwill and restructuring impairment charges, in the prior year's fourth quarter.
For fiscal year 2002, the Company reported a net loss of $161.9 million or $3.90 per diluted share. The loss included non-cash charges of $80.6 million or $2.37 per share in a write-down of goodwill related to the adoption of Financial Accounting Standards No. 142, which the Company was required to record retroactively as of the first quarter, and $19.9 million or 38 cents per share attributable to other restructuring and impairment charges. This compared with a net loss of $284.0 million or $8.67 per diluted share for the prior year, which included non-cash charges of $200.7 million or $5.63 per share for goodwill impairment and restructuring charges. Also in the prior year, Fleetwood recorded a one-time cumulative charge to earnings of $11.2 million or 34 cents per share for an accounting change.
Fleetwood also announced positive cash flow from operations for the year of $34.5 million or $1.02 per share compared with $11.8 million or 36 cents per share in fiscal 2001.
Consolidated revenues for the fourth quarter totaled $603.2 million, up 10 percent from $547.4 million in last year's fourth quarter. Revenues for the fiscal year ended April 28, 2002, were down 10 percent to $2.28 billion from $2.53 billion recorded last year.
"Despite significantly improved results in our RV Group, our overall performance continued to be affected in the fourth quarter by an extremely difficult manufactured housing market," said David S. Engelman, interim president and CEO. "In light of the adverse developments so far this calendar year -- particularly in the financing arena -- industry participants have revised projections downward. There is an industry-wide lack of visibility, but we believe that the tight lending environment and continuing competition from repossessions will delay any meaningful recovery well into calendar year 2003. These factors led us to a reevaluation of the carrying value of our assets and the levels of our reserves and we determined that it was appropriate to book the considerable non-cash charges.
"Nonetheless, we do believe that we can achieve positive results during fiscal 2003, at least at the operating income line," Engelman continued. "The fact that we were cash flow positive for the year demonstrates the magnitude and effectiveness of the cost-cutting adjustments we made in our operations, although we still face operating challenges and of course the non-cash charges decimated our results. We expect cash flow from operations to continue to be positive over the upcoming year as well. The new and refreshed products in our RV lineup have produced improved revenues and financial results, and we are similarly optimistic about the impact of several exciting introductions scheduled to be released over the next few months."
Recreational vehicle sales in the fourth quarter rose 28 percent to $371.4 million from $289.6 million in the prior year's fourth quarter, primarily due to a 46 percent surge in motor home sales. Due to continuing losses in the travel trailer segment, however, the RV Group still had an operating loss of $0.4 million. This compares with a loss of $29.9 million for the Group in the fourth quarter of 2001. Motor home sales for the quarter rose to $227 million from $156 million in the prior year's fourth quarter. In the towable category, travel trailer sales rose 5 percent to $110 million and folding trailers increased 16 percent to $34 million compared with the prior year.
RV sales for the full fiscal year 2002 were up less than 1 percent from the prior year to $1.21 billion. Motor home revenues increased 12 percent from the prior year to $717 million, while travel trailer sales declined 16 percent to $378 million and folding trailer revenues rose 1 percent to $118 million.
"Not only did RV sales rebound as the fiscal year progressed, particularly in the motor home division, but our market share improvements in that division are noteworthy," Engelman said. "By the end of the first calendar quarter of 2002, we had recaptured the number one market share position in Class A motor homes, and many of our motor home and towable brands ranked in the top 10 of their respective product segments."
Manufactured housing revenues in the fourth quarter fell 11 percent to $222 million from $249 million in the prior year. Housing revenues included $163 million of wholesale factory sales and $59 million of retail sales from Fleetwood Retail Corp. (FRC). This compares with $155 million and $94 million, respectively, last year. Quarterly gross manufacturing revenues declined to $184 million from $189 million last year, and included $21 million of intercompany sales to our Company-operated stores compared with $34 million in the prior period. Manufacturing unit volume was off 6 percent to 6,509, and homes sold at Fleetwood retail stores dropped 44 percent to 1,259. Much of the decrease in retail sales is attributable to the 26 percent reduction in the number of Company-operated stores to 137.
For the fiscal year, housing revenues were off 20 percent to $1.03 billion from $1.29 billion, which included $705 million from manufacturing operations and $328 million from FRC compared with $739 million and $553 million last year, respectively. Manufacturing unit volume declined 17 percent to 30,056 homes from 36,201. Gross manufacturing revenues were approximately $842 million, including intercompany sales of $137 million, compared with $981 million and $242 million, respectively, in the prior year.
"Both of our industries have strong futures," Engelman concluded. "Americans have an ongoing need for affordable housing and a current consumer survey points to strong demand for recreational vehicles for at least the next decade. The steps we have taken in the past two years, while painful in the short term, position us well to continue our leadership role in this healthy RV environment and to carefully manage through the remainder of the prolonged slump in the manufactured housing market."
Fleetwood also announced that it has executed an agreement with its lenders to revise the covenants on its credit facility to reflect current market conditions, and the Company expects that the combination of its credit line and its cash and cash equivalents of $111.1 million at fiscal year-end will provide adequate liquidity for at least the next twelve months. While the Company expects to report improved results in the first quarter of fiscal 2003, management does not foresee achieving profitability in the quarter.
The Company has scheduled a conference call with analysts and investors to discuss quarterly results. The call is set for 4:30 p.m. EDT on Monday, July 15, 2002, and will be broadcast live over the Internet at www.streetevents.com and www.companyboardroom.com . It also will be accessible from the Company's Website, www.fleetwood.com . An archive of the call will be available for 14 days.
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 market, 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.
FLEETWOOD ENTERPRISES, INC.
Consolidated Summaries of Operations
(Unaudited)
(Amounts in thousands, except per share data)
13 Weeks Ended 52 Weeks Ended
Apr. 28, Apr. 29, Apr. 28, Apr. 29,
2002 2001 2002 2001
Sales $603,178 $547,387 $2,280,447 $2,531,463
Operating loss
before non-recurring
items $(35,488) $(50,147) $(70,638) $(106,923)
Goodwill impairment -- 2,619 -- 165,850
Restructuring and
impairment charges 14,105 6,600 19,905 34,853
Operating loss $(49,593) $(59,366) $(90,543) $(307,626)
Loss before income
taxes $(52,645) $(62,857) $(105,212) $(319,231)
Benefit for income
taxes 17,165 21,141 37,108 57,575
Minority interest in
Fleetwood Capital
Trust I, II and III,
net of taxes (5,042) (2,789) (13,189) (11,158)
Loss before cumulative
effect of accounting
change (40,522) (44,505) (81,293) (272,814)
Cumulative effect of
accounting change,
net of taxes -- -- (80,635) (11,176)
Net loss $(40,522) $(44,505) $(161,928) $(283,990)
Net loss available to
Common shareholders,
basic and diluted $(40,522) $(44,505) $(132,525) $(283,990)
Loss per Common
share: Basic Diluted Basic Diluted Basic Diluted Basic Diluted
Loss before
cumulative
effect of
accounting
change $(1.15)$(1.15) $(1.36)$(1.36) $(1.53)$(1.53) $(8.33)$(8.33)
Cumulative
effect of
accounting
change, net
of taxes -- -- -- -- (2.37)(2.37) (.34)(.34)
Net loss
per share $(1.15)$(1.15) $(1.36)$(1.36) $(3.90)$(3.90) $(8.67)$(8.67)
Weighted average
Common shares:
Basic 35,209 32,755 33,942 32,755
Diluted 35,209 32,755 33,942 32,755
FLEETWOOD ENTERPRISES, INC.
Condensed Consolidated Balance Sheet
(Unaudited)
(Amounts in thousands)
ASSETS
April 28, January 27, April 29,
2002 2002 2001
Cash and marketable investments $111,147 $140,297 $73,103
Receivables 146,011 137,758 122,944
Inventories 218,005 222,536 273,385
Property, plant and equipment,
net 273,695 285,558 294,813
Goodwill and intangible assets 6,366 6,366 86,908
Other assets 229,716 226,908 275,708
$984,940 $1,019,423 $1,126,861
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $87,401 $85,996 $75,394
Employee compensation and
benefits 127,872 124,851 140,894
Retail flooring liability and
short-term debt 34,653 43,701 96,996
Senior unsecured notes payable -- -- 80,000
Long-term debt 8,741 8,746 3,676
Other liabilities 178,385 170,564 156,253
Total liabilities 437,052 433,858 553,213
Company-obligated mandatorily
redeemable convertible
preferred securities 373,145 373,765 287,500
Shareholders' equity 174,743 211,800 286,148
$984,940 $1,019,423 $1,126,861
FLEETWOOD ENTERPRISES, INC.
Business Segment and Unit Shipment Information
13 Weeks 13 Weeks 52 Weeks 52 Weeks
Ended Ended Ended Ended
(Dollars in Apr. 28, Apr. 29, Apr. 28, Apr. 29,
thousands) 2002 2001 2002 2001
OPERATING REVENUES:
Manufactured housing -
Manufacturing $184,119 $188,963 $842,536 $981,366
Retail 59,164 94,234 328,162 552,904
Less intercompany (21,266) (33,793) (137,187) (242,589)
222,017 249,404 1,033,511 1,291,681
Recreational vehicles 371,393 289,560 1,212,904 1,206,790
Supply operations 9,768 8,423 34,032 32,992
$603,178 $547,387 $2,280,447 $2,531,463
OPERATING INCOME (LOSS):
Manufactured housing* $(14,195) $10,133 $27,336 $30,896
Housing - retail** (34,670) (29,751) (65,239) (77,105)
Recreational vehicles (442) (29,928) (37,489) (73,066)
Supply operations 2,986 1,005 8,895 6,114
Corporate and other (3,272) (10,825) (24,046) (194,465)
$(49,593) $(59,366) $(90,543) $(307,626)
UNITS SOLD:
Manufactured housing -
Factory shipments 6,509 6,929 30,056 36,201
Retail sales 1,259 2,231 7,738 12,752
Less intercompany (762) (1,194) (4,886) (8,657)
7,006 7,966 32,908 40,296
Recreational vehicles -
Motor homes 2,647 2,031 8,366 8,148
Travel trailers 7,921 7,839 27,263 32,987
Folding trailers 4,965 4,506 17,946 19,090
15,533 14,376 53,575 60,225
*After addition for intercompany profit in inventory as follows:
$2,772 $3,933 $10,493 $3,484
**Before deduction of interest expense on inventory floor plan financing
as follows:
$712 $1,887 $4,373 $11,268