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| Fleetwood Reports Fiscal 2008 Third Quarter, Year-To-Date Results |
-Net Loss Narrows Sharply Despite Lower Revenues- RIVERSIDE, Calif., March 6 /PRNewswire-FirstCall/ -- Fleetwood Enterprises, Inc. (NYSE: FLE) announced today the results for its fiscal 2008 third quarter and first nine months ended January 27, 2008. Consolidated revenues for the quarter were down 20 percent to $355.5 million from $443.2 million in last year's third quarter. Despite the reduction in revenues, the Company's operating loss narrowed to $11.2 million from an operating loss of $24.9 million in the third quarter of the prior year. The net loss was reduced to $16.4 million, or $0.25 per share, compared with a net loss of $29.9 million, or $0.47 per share, in last year's third quarter. Operating results for the third quarter included $5.4 million, or $0.08 per share, related to gains from the sale of idle facilities partially offset by severance costs. Last year's third quarter financial results included $4.1 million of asset impairment and severance charges, or $0.06 per share. "Considering the pressure on revenues in the most recently completed quarter, the improvement to our bottom-line results is noteworthy," said Elden L. Smith, Fleetwood's president and chief executive officer. "Gross profit margin was up, operating and warranty expenses were down, and labor efficiencies improved. These results are a reflection of the dedicated efforts of our experienced operating team and its ability to manage our businesses during a seasonally slow period that was made more challenging by difficult market conditions. All of our businesses have been impacted by recent consumer uncertainty. Our success in managing costs can be seen clearly in the 13 percent reduction in year-to-date operating expenses compared with the previous year and the 28 percent reduction from the same three quarters of fiscal 2005." For the first nine months of fiscal 2008, consolidated revenues were down 10 percent to $1.36 billion from $1.50 billion in the same period last year. The operating loss for the first three quarters was $0.8 million compared with $48.4 million in the same period of fiscal 2007. The net loss in the first nine months of fiscal 2008 was $19.9 million, or $0.31 per share, compared with a net loss of $50.7 million, or $0.79 per share, for the same period last year. RV Group Results The RV Group incurred a lower operating loss of $4.2 million for the third quarter compared with a $15.8 million operating loss in the comparable period of the prior year. The improved results stemmed from an increase in gross profit and a decline in operating expenses. Revenues were off 22 percent in the quarter to $254.2 million from $324.0 million in the same period of the prior year. The motor home division sustained an operating loss of $1.2 million in the quarter compared to operating income of $5.3 million in the same quarter last year, primarily due to a 16 percent drop in revenues. The travel trailer division recorded a $1.9 million operating loss, a substantial improvement from the prior year's operating loss of $17.5 million, on revenues that were down 44 percent. The results included $5.9 million in gains related to the sale of idled properties, partially offset by severance costs of $0.6 million. The operating loss for the folding trailer division was reduced to $1.2 million from an operating loss of $3.5 million in last year's third quarter, on revenues that were up 11 percent to $15.9 million. The RV Group reported an operating loss of $1.3 million for the first nine months of fiscal 2008 on revenues of $946.8 million, compared with an operating loss of $44.0 million on revenues of $1.06 billion in the comparable period last year. Improved travel trailer results were the largest contributor to this turnaround but all of the businesses made progress from the prior year. "Our product lineup has improved and been well accepted, and we have exciting introductions planned for the new model year," Smith said. "We also are enthusiastic about the potential for Fleetwood Financial Services, a strategic alliance with Bank of America to provide wholesale and retail financing. This alliance, which was announced earlier this week, should enable us to drive sales and increase market share of our RV products. Although interest in the RV lifestyle continues to be high, sales in our industry are highly dependent upon consumer confidence and, with the current uncertainty in the economy, RV sales remain soft." Housing Group Results Despite lower revenues, the Housing Group reduced its third quarter operating loss to $2.6 million in the current year third quarter from $7.8 million in the third quarter of the prior year. Last year's results included asset impairment charges of $2.8 million in connection with an idle plant. Quarterly revenues were off 11 percent to $96.5 million from $108.7 million in the prior-year third quarter. For the first nine months of the fiscal year, the Housing Group generated $7.1 million in operating income on revenues of $390.4 million, versus an operating loss of $4.3 million on revenues of $401.3 million for the first nine months of the prior fiscal year. "Home shipments in the manufactured housing industry fell below 100,000 in 2007, creating a low that very few industry followers predicted," Smith said. "The sector is being adversely affected by widespread problems in the lending environment for conventional housing and the resulting slowdown in that market. Our industry experienced similar circumstances eight years ago and has since been subject to stricter lending standards. Growing conservatism in lending criteria for site-built housing will eventually level the playing field and may assist in a recovery of the manufactured housing industry. Meanwhile, we have successfully adjusted our cost structure to compete more profitably in this market and we are pursuing growth through our relatively new modular division, Trendsetter Homes. Our greatest success to date in this division has been in building military base housing. Very little of this business is reflected in our third quarter revenues, but at the end of the third quarter we secured a contract to build the second phase of living-space modules for barracks at Fort Bliss, and this week we secured a contract to supply similar modules at Ft. Sill. These contracts will positively affect sales in our fourth quarter and beyond." Corporate Outlook On December 15, 2008, the holders of the Company's 5% convertible senior subordinated debentures that have a face value of $100 million have the right to require Fleetwood to repurchase them at par with cash or by issuing common stock. Anticipating that the rights will be exercised, the Company plans to meet a sizable portion of the obligation with existing cash, cash proceeds from the disposition of idle or excess properties, and cash available from operations. The remaining obligation is expected to be financed well before December with the proceeds of debt and/or equity transactions without significant incremental change over the current fully diluted share count (which presently includes approximately 8.5 million shares that underlie the 5% debentures). "We expect that market conditions, which have deteriorated in the last several months, will continue to be soft for both of our industries through the fourth fiscal quarter," Smith said. "Because short-term economic signs are not positive, we have slowed production and are prepared for a sluggish spring, with fourth quarter revenues again expected to be down significantly from last year. We expect that motor home sales will be especially impacted as dealers match their orders to retail sales and adjust their inventory levels. Given our more streamlined cost structure, however, core operating expenses (before considering any positive impact from ongoing real estate dispositions or prior-year restructuring costs) are expected to be significantly reduced from the prior year and be at similar levels to the third quarter. Overall, results will be heavily influenced by uncertain market conditions and dealer sentiment." Conference Call The Company will host a conference call with interested parties at 10:30 a.m. PST/1:30 p.m. EST on Thursday, March 6, 2008. The call will be broadcast live on the Company's website, http://www.fleetwood.com under Investor Relations, and over the Internet at http://www.streetevents.com and http://www.earnings.com. About Fleetwood Fleetwood Enterprises, Inc. is a leading producer of recreational vehicles and manufactured homes through its subsidiaries. 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, including those regarding the potential for Fleetwood Financial Services to drive sales, the potential for a recovery in manufactured housing, and the projected fourth quarter results, 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 lack of assurance that we will regain sustainable profitability in the foreseeable future; the effect of ongoing weakness in both the manufactured housing and recreational vehicle markets; the effect of a decline in home equity values, volatile fuel prices and interest rates, global tensions, employment trends, stock market performance, availability of financing generally, and other factors that can have a negative impact on consumer confidence, which in turn may reduce demand for our products, particularly recreational vehicles; the availability and cost of wholesale and retail financing for both manufactured housing and recreational vehicles; our ability to comply with financial tests and covenants on existing debt obligations; our ability to obtain, on reasonable terms if at all, the financing we will need in the future to execute our business strategies and to meet the repayment terms of our outstanding convertible debt instruments, including the 5% convertible senior subordinated debentures, which the company may have to repurchase in December 2008; potential dilution associated with equity financings we may undertake to raise additional capital; the cyclical and seasonal nature of both the manufactured housing and recreational vehicle industries; expenses and uncertainties associated with the entry into new business segments or the manufacturing, development, and introduction of new products; the potential for excessive retail inventory levels in the manufactured housing and recreational vehicle industries; the volatility of our stock price; repurchase agreements with floorplan lenders, which could result in increased costs; potential increases in the frequency of product liability, wrongful death, class action, and other legal actions; and the highly competitive nature of our industries.
(tables to follow)
Fleetwood Enterprises, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
13 Weeks Ended 39 Weeks Ended
January 27, January 28, January 27, January 28,
2008 2007 2008 2007
Net sales:
RV Group $254,156 $323,976 $946,789 $1,059,793
Housing Group 96,467 108,687 390,371 401,332
Supply Group 4,875 10,509 18,715 38,391
355,498 443,172 1,355,875 1,499,516
Cost of products sold 306,423 384,597 1,145,934 1,294,172
Gross profit 49,075 58,575 209,941 205,344
Operating expenses 65,676 79,439 217,574 250,858
Other operating (income)
expense, net (5,427) 4,063 (6,881) 2,873
60,249 83,502 210,693 253,731
Operating loss (11,174) (24,927) (752) (48,387)
Other income (expense):
Investment income 1,187 1,269 3,726 4,701
Interest expense (6,161) (5,942) (18,346) (18,773)
Other, net - - - 18,530
(4,974) (4,673) (14,620) 4,458
Loss from continuing
operations before
income taxes (16,148) (29,600) (15,372) (43,929)
Provision for income
taxes (122) (70) (4,023) (4,841)
Loss from continuing
operations (16,270) (29,670) (19,395) (48,770)
Loss from discontinued
operations, net (87) (235) (521) (1,973)
Net loss $(16,357) $(29,905) $(19,916) $(50,743)
Basic and diluted loss
per common share:
Loss from continuing
operations $(.25) $(.46) $(.30) $(.76)
Loss from discontinued
operations - (.01) (.01) (.03)
Net loss per common share $(.25) $(.47) $(.31) $(.79)
Weighted average common
shares 64,255 63,937 64,219 63,933
Fleetwood Enterprises, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
January 27, October 28, January 28,
ASSETS 2008 2007 2007
Cash $20,089 $47,477 $9,722
Marketable investments 24,990 24,754 24,005
Receivables 118,717 121,678 139,131
Inventories 183,236 183,591 198,243
Deferred taxes, net 9,160 7,239 13,104
Other current assets 9,051 9,499 13,782
Total current assets 365,243 394,238 397,987
Property, plant and equipment, net 160,338 175,958 198,059
Deferred taxes, net 42,362 44,283 52,367
Cash value of company-owned life
insurance, net 15,227 20,215 23,113
Goodwill 6,316 6,316 6,316
Other assets 39,378 40,240 43,073
Total assets $628,864 $681,250 $720,915
LIABILITIES & SHAREHOLDERS' EQUITY
Accounts payable $35,552 $41,293 $53,328
Employee compensation and benefits 35,601 46,040 39,423
Federal and state income taxes 3,874 2,212 1,315
Product warranty reserves 38,723 41,453 45,015
Insurance reserves 20,326 20,149 17,616
Accrued interest 4,768 5,428 6,689
Other short-term borrowings 8,362 10,056 19,785
5% convertible senior subordinated
debentures 100,000 - -
Other current liabilities 61,885 68,175 64,959
Total current liabilities 309,091 234,806 248,130
Deferred compensation and retirement
benefits 21,646 25,840 28,703
Product warranty reserves 20,410 21,816 22,165
Insurance reserves 36,314 35,990 34,341
5% convertible senior subordinated
debentures - 100,000 100,000
6% convertible subordinated
debentures 160,142 160,142 160,142
Other long-term debt 17,482 18,811 3,880
Total liabilities 565,085 597,405 597,361
Commitments and contingencies
Shareholders' equity:
Common stock 64,257 64,250 64,041
Additional paid-in capital 496,533 495,754 492,034
Accumulated deficit (495,110) (478,753) (435,976)
Accumulated other comprehensive
income (loss) (1,901) 2,594 3,455
Total shareholders' equity 63,779 83,845 123,554
Total liabilities and
shareholders' equity $628,864 $681,250 $720,915
Fleetwood Enterprises, Inc.
BUSINESS SEGMENT AND UNIT SHIPMENT INFORMATION
(Dollar amounts in thousands)
(Unaudited)
13 Weeks Ended 39 Weeks Ended
January 27, January 28, January 27, January 28,
2008 2007 2008 2007
REVENUES:
Motor homes $192,259 $227,851 $729,716 $683,724
Travel trailers 46,007 81,786 157,631 307,585
Folding trailers 15,890 14,339 59,442 68,484
RV Group 254,156 323,976 946,789 1,059,793
Housing Group 96,467 108,687 390,371 401,332
Supply Group 4,875 10,509 18,715 38,391
$355,498 $443,172 $1,355,875 $1,499,516
OPERATING INCOME (LOSS):
Motor homes $(1,164) $5,252 $16,943 $633
Travel trailers (1,861) (17,543) (17,620) (41,881)
Folding trailers (1,206) (3,532) (606) (2,726)
RV Group (4,231) (15,823) (1,283) (43,974)
Housing Group (2,588) (7,770) 7,126 (4,319)
Supply Group (1,943) (727) (923) 1,392
Corporate and other (2,412) (607) (5,672) (1,486)
$(11,174) $(24,927) $(752) $(48,387)
UNITS SOLD:
Recreational vehicles -
Motor homes 1,530 1,838 6,088 6,110
Travel trailers 2,170 4,350 7,781 17,469
Folding trailers 1,872 1,868 6,476 7,899
5,572 8,056 20,345 31,478
Housing -
HUD 2,522 2,827 9,706 10,200
MOD 5 - 560 -
2,527 2,827 10,266 10,200
Total Company shipments 8,099 10,883 30,611 41,678
Contact: Lyle Larkin, Vice President - Treasurer (951) 351-3535
Kathy A. Munson, Director - Investor Relations (951) 351-3650
SOURCE Fleetwood Enterprises, Inc.
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