Fleetwood Reports Improved Results for the First Quarter of Fiscal 2003
RIVERSIDE, Calif., Sept. 5 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 first quarter of fiscal 2003, ended July 28, 2002. The Company reported a first quarter net loss of $1.5 million or 4 cents per diluted share, compared with a loss of $91.8 million or $2.80 per diluted share for the same period last year. Last year's loss includes the previously reported $80.6 million write-off of the remaining goodwill at Fleetwood's retail housing division. The Company adopted Statement of Financial Accounting Standards No. 142 in the first quarter of fiscal 2002, and under the guidelines of the Statement had until the end of the fiscal year to determine, and retroactively record, the appropriate adjustment to goodwill. Prior to the adjustment, the quarterly loss was reported as $11.1 million or 34 cents per diluted share."This quarter's results demonstrate the effectiveness of our investments in RV product development and our downsizing actions throughout the Company," said Edward B. Caudill, president and chief executive officer. "Each of our manufacturing divisions was profitable at the operating line. We are particularly pleased with the improved performance of our motor home and travel trailer divisions. Our housing group, too, performed well in a difficult environment, generating an operating profit in the manufacturing division. The industry-wide challenges in manufactured housing prevented us from achieving a net profit, but our progress is very encouraging and we believe Fleetwood's turnaround is now well underway."
At the operating income level, the RV Group earned $17.7 million, compared with a loss of $17.8 million last year. Most of the improvement was due to better market conditions and favorable customer reaction to Fleetwood's new and renovated Class A motor homes. Recreational vehicle sales in the first quarter rose 39 percent to $371.0 million from $266.3 million in the prior year. Revenues saw double-digit percentage gains in all three categories, with motor homes improving by 63 percent from $134 million to $218 million. In the towable category, travel trailer and folding trailer sales rose from $107 million and $26 million, respectively, to $122 million and $31 million this year.
"All three of the RV divisions were strongly profitable this quarter," Caudill said. "Our motor home division produced a 73% upsurge in diesel sales, primarily due to the introduction of new products during the year. In addition to increased sales, the travel trailer division reduced its operating expenses by 16 percent and improved its gross margin significantly, which was key to achieving profitability."
The manufactured housing group, excluding retail operations, generated operating income of $3.0 million during the quarter, compared with $21.0 million in the prior year. Manufactured housing revenues in the first quarter fell 20 percent to $230.9 million from $290.0 million in the comparable period last year. Housing revenues included $158.1 million of wholesale factory sales and $72.8 million of retail sales from Company-owned sales centers. This compares with $181.5 million and $108.5 million, respectively, last year. Gross manufacturing revenues declined 12 percent to $191.3 million from $216.2 million, including $33.3 million of intercompany sales to Fleetwood sales centers. Manufacturing unit volume was off 17 percent to 6,462 homes, including intercompany unit sales of 1,107, and homes sold at Fleetwood sales centers dropped 43 percent to 1,505 while the average number of stores during the quarter fell 29 percent. The retail operations generated a loss of $9.7 million compared with a loss of $12.0 million last year.
"The manufactured housing industry continues to face challenges," Caudill said. "The restrictive retail financing conditions persist. Additional pressure has been put on independent retailers as the wholesale lending situation has tightened and dealers in Texas are adapting to the new lending law in that very significant state. Repossessions have not yet slowed significantly and continue to represent formidable competition for the sale of new homes. Consumer demand for manufactured homes remains healthy, however. We believe that we are well positioned to capitalize on the eventual turnaround in the financing and repossession cycle.
"Fleetwood has aggressively addressed the major issues that are within the Company's control," Caudill continued. "It is especially gratifying to see the recovery on the RV side of our business, where our team has been proactive in dealing with our past mistakes and has, we believe, re-established the Fleetwood brand. The entire manufactured housing industry is experiencing the same pressures that we are, but our improving RV performance puts us in a good position to weather the housing storm. I intend to be an active presence in driving our exceptional associates through the remaining challenges and in seizing opportunities. At this time, we expect to show a net profit for the second quarter."
The Company has scheduled a conference call with analysts and investors to discuss quarterly results. The call is scheduled for 1:35 PM EDT/10:35 AM PDT on Thursday, September 5, 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.
FLEETWOOD ENTERPRISES, INC.
Condensed Consolidated Summaries of Operations
(Unaudited)
13 Weeks Ended
(Amounts in thousands except July 28, 2002 July 29, 2001
share and per share data)
Sales $611,275 $564,132
Operating income (loss) $9,181 $(9,613)
Income (loss) before income taxes,
minority interest and $6,900 $(14,164)
cumulative effect of accounting change
(Provision) benefit for income taxes (3,374) 5,826
Minority interest in Fleetwood Capital Trusts,
net of taxes (5,046) (2,789)
Loss before cumulative effect of
accounting change (1,520) (11,127)
Cumulative effect of accounting change,
net of taxes -- (80,635)
Net loss $(1,520) $(91,762)
Basic and diluted loss per Common share:
Loss before cumulative effect of
accounting change $(.04) $(.34)
Cumulative effect of accounting change,
net of taxes -- (2.46)
Basic and diluted net loss per share $(.04) $(2.80)
Weighted average Common shares:
Basic and diluted 35,694 32,756
FLEETWOOD ENTERPRISES, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)
ASSETS
July 28, April 28, July 29,
2002 2002 2001
Cash and marketable investments $133,985 $111,147 $87,551
Receivables 144,883 146,011 128,990
Inventories 218,233 218,005 261,147
Property, plant and equipment, net 271,399 273,695 292,062
Goodwill and intangible assets 6,366 6,366 6,366
Other assets 201,997 229,716 246,140
$976,863 $984,940 $1,022,256
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and
book overdraft $84,503 $78,446 $85,152
Employee compensation
and benefits 131,890 127,872 132,217
Retail flooring liability
and short-term debt 17,627 34,653 60,030
Senior unsecured notes payable -- -- 68,188
Long-term debt 2,564 8,741 --
Other liabilities 188,684 187,340 194,750
Total liabilities 425,268 437,052 540,337
Company-obligated mandatorily
redeemable convertible
preferred securities 373,453 373,145 287,500
Shareholders' equity 178,142 174,743 194,419
$976,863 $984,940 $1,022,256
FLEETWOOD ENTERPRISES, INC.
Business Segment and Unit Shipment Information
(Dollars in thousands)
13 Weeks Ended
July 28, 2002 July 29, 2001
OPERATING REVENUES:
Manufactured housing -
Manufacturing $191,339 $216,232
Retail 72,807 108,511
Less intercompany (33,271) (34,726)
230,875 290,017
Recreational vehicles 370,950 266,308
Supply operations 9,450 7,807
$611,275 $564,132
OPERATING INCOME (LOSS):
Manufactured housing* $3,004 $21,029
Housing - retail** (9,672) (12,019)
Recreational vehicles 17,663 (17,810)
Supply operations 1,013 2,207
Corporate and other (2,827) (3,020)
$9,181 $(9,613)
UNITS SOLD:
Manufactured housing -
Factory shipments 6,462 7,769
Retail sales 1,505 2,646
Less intercompany (1,107) (1,229)
6,860 9,186
Recreational vehicles -
Motor homes 2,482 1,733
Travel trailers 8,612 7,579
Folding trailers 4,225 3,694
15,319 13,006
* After addition for changes in intercompany profit in inventory of
$2,243 at July 28, 2002, and $4,838 at July 29, 2001.
** Operating income before deduction of interest expense on inventory
floor plan financing of $644 at July 28, 2002, and $1,495 at
July 29, 2001.