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Fleetwood Reports Second Quarter Fiscal 2006 Results
RIVERSIDE, Calif., Dec. 8 /PRNewswire-FirstCall/ -- Fleetwood Enterprises, Inc. (NYSE: FLE) , one of the nation's leading producers of recreational vehicles and manufactured housing, announced today its results for the second quarter and first half of fiscal 2006 ended October 30, 2005. Consolidated revenues for the quarter were $629.5 million, down 2.5 percent from $645.9 million in last year's second quarter. Income from continuing operations totaled $3.8 million or $.07 per diluted share in the current period, compared with $15.3 million or $0.25 per diluted share in the prior year. The Company incurred a net loss, including discontinued operations, of $1.9 million, or $.03 per diluted share, compared with net income in last year's second quarter of $8.1 million, or $0.14 per diluted share. Discontinued operations, which include the manufactured housing retail and financial services businesses that were recently sold, incurred a loss of $5.7 million or $0.10 per diluted share in the second quarter, compared to a loss of $7.2 million or $0.11 per diluted share in the comparable period last year. The majority of this quarter's loss from discontinued operations related to the retail business, which was sold midway through the fiscal quarter, as well as ongoing general and administrative expenses. The current quarter loss includes severance and related costs totaling $0.8 million, reduced by a gain on sale from insurance assets of $2.4 million. "The quarter's results show marked sequential improvement over the first quarter," said Elden L. Smith, Fleetwood's president and chief executive officer. "We are pleased with the progress in our restructuring plan and with the boost provided by significant orders for disaster relief shelter received by both our travel trailer and manufactured housing operations. On the other hand, the slower market for motor homes negatively impacted our results. Declining consumer confidence, driven by higher fuel prices and rising interest rates, has led to an industry decline of approximately 8 percent in motor home retail sales so far in calendar 2005. In turn, this caused dealers to reduce their inventories, and both factors contributed to a slowing of the Company's sales. Last year, dealer inventories were still increasing, exaggerating the year-over-year decline in wholesale shipments." For the first six months of fiscal 2006, consolidated revenues declined 4.5 percent to $1.25 billion compared with $1.31 billion for the first half of last year. RV Group sales were down 12.7 percent while Housing Group sales improved 4.8 percent. The net loss in the first half of fiscal 2006 was $31.5 million or $0.56 per diluted share compared with net income of $13.7 million, or $0.25 per diluted share in the first six months of fiscal 2005. Loss from continuing operations for the first six months of fiscal 2006 was $13.6 million compared to income of $27.8 million last year. Housing Group Results The Housing Group generated operating income of $14.2 million in the second quarter, an improvement of 21 percent compared with $11.7 million of operating income in the prior year second quarter. Quarterly revenues for the Group grew 5 percent to $225.0 million from $213.9 million in last year's second quarter. The second quarter included revenues of approximately $30 million from the sale of homes for disaster relief, compared with approximately $44 million in the same quarter last year. For the first half of the fiscal year, Housing Group revenues increased 4.8 percent to $429.3 million from $409.6 million in the prior year. Operating income climbed to $19.2 million for the first six months, compared with $17.8 million in the first six months of last year. "The longer-term outlook for our Housing Group is quite positive," Smith said. "Beyond the immediate need for emergency housing, we expect to see increased demand for two to three years for replacement permanent housing throughout the areas affected by this season's hurricanes. These areas are traditionally strong markets for manufactured housing. Because the bulk orders from FEMA result in extended production runs, we are able to achieve enhanced labor efficiencies that directly benefit our gross margin." RV Group Results The RV Group incurred an operating loss of $0.7 million for the quarter on revenues of $393.5 million, compared to operating income of $8.6 million for the same quarter of the prior year, on revenues of $450.3 million. In the first six months of fiscal 2006, the Group reported an operating loss of $5.8 million on revenues of $816.7 million, compared with operating income of $24.2 million on revenues of $936.0 million in the comparable period last year. The primary reason for the deterioration in operating results was the 13 percent decline in revenues in both the second quarter and first half, largely due to slowing motor home sales, similar to that experienced throughout the industry. In the second quarter, the operating performance in both travel trailers and folding trailers was significantly improved, but was more than offset by the decline in the motor home division's operating results. The travel trailer division's operating loss narrowed to $3.8 million compared with $6.7 million in the prior year period, while operating income for the folding trailer division improved to $0.3 million from $0.1 million. The motor home division's operating income dropped to $2.9 million compared with the prior year's $15.1 million. "Our travel trailer operations in the second quarter benefited from the sale of $30 million in FEMA units, which compares to $5 million in similar units last year," Smith said. "As with the Housing Group, the large FEMA orders allow for improved labor efficiency, positively impacting travel trailer gross margin. In addition, because of the size of the FEMA trailer orders, we will be building these units throughout our fiscal third quarter and into the fourth quarter, after ramping up production more than midway through the second quarter. The timing of this production will provide an excellent bridge for both the Company and our dealers, because we can maintain a high production level without building and carrying inventory during the winter season. At these higher levels of production, we can then quickly build to meet our dealers' orders for the spring selling season. "At last week's national RV show in Louisville, Kentucky, we were encouraged by the dealers' cautious optimism regarding next spring's selling season," Smith continued. "Even more importantly, our products were met with enthusiasm. We had new floor plans on display that were directly targeted to respond to dealer and consumer requests. We were also pleased to introduce our unique full-wall-slide technology, which was successfully introduced in our Pace Arrow product in last year's show, with updated floor plans in three more of our best-selling motor home brands. And 12 of the 24 travel trailers displayed were designed to compete against the most popular floor plans in the industry. In addition, we launched lighter-weight versions of several of our top brands." Corporate Events Subsequent to the end of the quarter, the Company completed a direct placement of 7 million common shares, raising net proceeds of approximately $66 million. The proceeds will be used to pay deferred distributions plus interest on the Company's 6% convertible trust preferred securities on the next scheduled payment date of February 15, 2006, in the amount of $58.8 million. The remaining proceeds will be used for general corporate purposes. Corporate Outlook "Due in large part to the FEMA orders, we expect that sales in our third quarter, which is usually seasonally weak, will approach second-quarter levels and will significantly outpace last year's third quarter," Smith concluded. "Further, we anticipate that results from continuing operations will be at similar levels to those of the second quarter. The expected reduction in the loss from discontinued operations should enable us to achieve our previously indicated sequential improvement in our results at the net income line. We believe that long-term consumer demographics, our leadership position in both of our industries, and our ongoing corporate revitalization will enable us to post consistently better results over time." The Company will host a conference call with interested parties at 10:30 a.m. PST/1:30 p.m. EST on Thursday, December 8, 2005. The call will be broadcast live over the Internet at http://www.streetevents.com/, http://www.earnings.com/, and the Company's website, http://www.fleetwood.com/ under Company Information. About Fleetwood Fleetwood Enterprises, Inc. is a leading producer of recreational vehicles and manufactured homes. This Fortune 1000 company, headquartered in Riverside, Calif., is dedicated to providing quality, innovative products that offer exceptional value to its customers. Fleetwood operates facilities strategically located throughout the nation, including recreational vehicle, manufactured housing and supply subsidiary plants. For more information, visit the Company's website at http://www.fleetwood.com/. 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 risks and uncertainties include, without limitation, the cyclical nature of both the manufactured housing and recreational vehicle industries; ongoing weakness in the manufactured housing market; continued acceptance of the Company's products; the potential impact on demand for Fleetwood's products as a result of changes in consumer confidence levels; the effect of global tensions, gasoline prices and other factors on consumer confidence; expenses and uncertainties associated with the introduction and manufacturing of new products; the future availability of manufactured housing retail financing, as well as housing and RV wholesale financing; availability and pricing of raw materials; changes in retail inventory levels in the manufactured housing and recreational vehicle industries; competitive pricing pressures; the ability to attract and retain quality dealers, executive officers and other personnel; and the Company's ability to obtain financing needed in order to execute its business strategies. Actual results, events and performance may differ materially. Contact: Lyle Larkin, Vice President-Treasurer (951) 351-3535
Kathy A. Munson, Director-Investor Relations (951) 351-3650
Fleetwood Enterprises, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS (CONDENSED)
(Unaudited)
(Amounts in thousands, except per share data)
27 Weeks 26 Weeks
13 Weeks Ended Ended Ended
Oct. 30, Oct. 24, Oct. 30, Oct. 24,
2005 2004 2005 2004
Net Sales:
RV Group $393,471 $450,280 $816,673 $935,983
Housing Group 224,981 213,877 429,312 409,564
Supply Group 11,888 16,172 25,618 30,232
Intercompany sales (839) (34,396) (25,627) (70,417)
629,501 645,933 1,245,976 1,305,362
Cost of products sold 517,484 524,953 1,033,896 1,063,126
Gross profit 112,017 120,980 212,080 242,236
Operating expenses 100,878 98,858 197,504 197,625
Other, net 1,004 (2) 5,334 (28)
101,882 98,856 202,838 197,597
Operating income 10,135 22,124 9,242 44,639
Other income (expense):
Investment income 1,151 428 2,156 915
Interest expense (7,283) (6,483) (14,682) (13,399)
Other, net -- -- -- (2,724)
(6,132) (6,055) (12,526) (15,208)
Income (loss) from
continuing operations
before income taxes 4,003 16,069 (3,284) 29,431
Provision for income
taxes (212) (731) (10,338) (1,641)
Income (loss) from
continuing operations 3,791 15,338 (13,622) 27,790
Loss from discontinuing
operations, net (5,709) (7,203) (17,853) (14,103)
Net income (loss) $(1,918) $8,135 $(31,475) $13,687
13 Weeks Ended
Oct. 30, Oct. 24,
2005 2004
Basic Diluted Basic Diluted
Net income (loss) per common share:
Income (loss) from continuing
operations $0.07 $0.07 $0.28 $0.25
Loss from discontinued operations (0.10) (0.10) (0.13) (0.11)
$(0.03) $(0.03) $0.15 $0.14
Weighted average common shares 56,481 57,209 55,419 65,657
27 Weeks Ended 26 Weeks Ended
Oct. 30, Oct. 24,
2005 2004
Basic Diluted Basic Diluted
Net income (loss) per common share:
Income (loss) from continuing
operations $(0.24) $(0.24) $0.50 $0.46
Loss from discontinued operations (0.32) (0.32) (0.25) (0.21)
$(0.56) $(0.56) $0.25 $0.25
Weighted average common shares 56,302 56,302 55,044 65,326
Fleetwood Enterprises, Inc.
CONSOLIDATED BALANCE SHEETS (CONDENSED)
(Unaudited)
(Amounts in thousands)
Oct. 30, July 31, Oct. 24,
2005 2005 2004
ASSETS
Cash $-- $2,077 $68
Marketable investments -- available
for sale 109,922 49,402 40,006
Receivables 181,690 186,234 238,610
Inventories 211,604 188,303 254,409
Deferred taxes, net 44,760 46,404 58,065
Assets of discontinued operations -- 145,511 159,732
Other current assets 22,107 25,947 22,511
Total current assets 570,083 643,878 773,401
Property, plant and equipment, net 224,657 230,832 238,773
Deferred taxes, net 19,503 17,859 17,858
Cash value of Company-owned life
insurance, net 36,623 37,061 49,341
Goodwill 6,316 6,316 6,316
Other assets 59,878 47,363 48,591
Total assets $917,060 $983,309 $1,134,280
LIABILITIES & SHAREHOLDERS' EQUITY
Accounts payable $84,209 $72,191 $100,731
Employee compensation & benefits 76,604 71,665 80,970
Product warranty reserve 65,393 64,686 58,443
Short-term borrowings 19,981 13,044 26,729
Accrued interest 60,045 54,666 44,899
Liabilities of discontinued
operations -- 81,025 61,986
Other current liabilities 89,227 115,363 60,111
Total current liabilities 395,459 472,640 433,869
Deferred compensation and retirement
benefits 39,656 39,133 50,798
Insurance reserves 47,579 35,328 32,693
Long-term debt 126,507 128,156 108,688
Convertible subordinated debentures 210,142 210,142 210,142
Total liabilities 819,343 885,399 836,190
Commitments and contingencies
Shareholders' equity:
Common stock
Additional paid-in-capital 56,499 56,352 55,464
Accumulated deficit 427,120 426,279 421,719
Accumulated other comprehensive
loss (388,271) (386,353) (180,534)
Total shareholders' equity 2,369 1,632 1,441
Total liabilities and
shareholders' equity 97,717 97,910 298,090
$917,060 $983,309 $1,134,280
Fleetwood Enterprises, Inc.
BUSINESS SEGMENT AND UNIT SHIPMENT INFORMATION
(Unaudited)
(Amounts in thousands)
27 Weeks 26 Weeks
13 Weeks Ended Ended Ended
Oct. 30, Oct. 24, Oct. 30, Oct. 24,
2005 2004 2005 2004
OPERATING REVENUES:
RV Group $393,471 $450,280 $816,673 $935,983
Housing Group 224,981 213,877 429,312 409,564
Supply Group 11,888 16,172 25,618 30,232
Intercompany sales (839) (34,396) (25,627) (70,417)
$629,501 $645,933 $1,245,976 $1,305,362
OPERATING INCOME (LOSS):
RV Group $(703) $8,585 $(5,784) $24,153
Housing Group 14,156 11,722 19,176 17,785
Supply Group 878 1,745 2,599 2,772
Corporate and other (4,196) 72 (6,749) (71)
$10,135 $22,124 $9,242 $44,639
UNITS SOLD:
Manufactured housing --
Factory shipments 6,610 6,680 12,468 12,744
Recreational vehicles --
Motor homes 2,284 2,868 5,251 6,113
Travel trailers 7,739 7,177 14,351 15,719
Folding trailers 3,399 3,562 5,845 6,282
13,422 13,607 25,447 28,114
Less intercompany (22) (996) (673) (1,952)
Total shipments from
continuing operations 20,010 19,291 37,242 38,906
Retail housing sales 304 1,141 1,393 2,327
Total Company shipments 20,314 20,432 38,635 41,233
Website: http://www.streetevents.com/
Website: http://www.earnings.com/ Website: http://www.fleetwood.com/ |
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