Exhibit 99.1
FLEETWOOD REPORTS RESULTS FOR SECOND QUARTER
AND FIRST SIX MONTHS OF FISCAL 2008
—Company Generates Better-Than-Expected Operating Results; Short-Term Outlook Is Cautious—
Riverside, Calif., December 6, 2007 — Fleetwood Enterprises, Inc. (NYSE:FLE) announced today its results for the second quarter and first half of fiscal 2008 ended October 28, 2007.
Consolidated revenues for the quarter were $490.1 million, down 7 percent from $526.6 million in last year’s second quarter. RV Group sales were off 9 percent, while Housing Group sales improved 2 percent. The Company generated operating income of $4.4 million in the current quarter, compared to an operating loss of $15.2 million in the prior year. The net loss for the quarter was reduced significantly to $1.2 million, or $0.02 per share, from a net loss of $20.4 million, or $0.32 per share, in the second quarter of fiscal 2007.
Operating income for the current quarter was negatively impacted by $3.1 million, or $0.05 per share, consisting of impairment write downs on idle facilities and restructuring costs, partially offset by gains from the sale of idle properties. The operating loss in the second quarter of fiscal 2007 included a net charge of $0.9 million, or $0.01 per share, consisting of restructuring costs offset by gains from selling idle properties.
“Our much-improved operating results despite lower revenues are encouraging,” said Elden L. Smith, Fleetwood’s president and chief executive officer. “Except for the revenue decline, virtually every other metric improved year over year, with motor home results being particularly strong. Our cost-cutting and capacity-consolidation initiatives are taking hold, allowing us to make further progress. Each of our operating divisions was profitable for the quarter except for the travel trailer unit, and its loss was cut by 42 percent compared with the prior year, despite a revenue decline of 54 percent.”
For the first six months of fiscal 2008, consolidated revenues declined 5 percent to $1.00 billion from $1.06 billion for the first half of fiscal 2007. RV Group sales were down 6 percent, while Housing Group sales improved slightly. Operating income for the first six months of fiscal 2008 was $10.4 million, compared to an operating loss of $23.5 million in last year’s corresponding period. The net loss for the first half of fiscal 2008 was reduced to $3.6 million, or $0.06 per share, compared with a net loss of $20.8 million, or $0.33 per share, last year.
RV Group Results
The RV Group posted operating income of $1.0 million on revenues of $333.4 million for the quarter, compared with an operating loss of $14.9 million on revenues of $364.6 million for the same quarter of the prior year. In the first six months of fiscal 2008, the Group reported operating income of $2.9 million on revenues of $692.6 million, versus an operating loss of $28.2 million on revenues of $735.8 million in the comparable period last year. Group operating results for the quarter were improved due to higher motor home sales, significantly lower labor costs in the motor home and travel trailer divisions, and lower warranty and service costs.
The motor home division generated operating income of $9.1 million in the second quarter, compared to an operating loss of $1.1 million in fiscal 2007, and the travel trailer division cut its operating loss to
$8.3 million from $14.4 million in the prior year period. Operating income for the folding trailer division was $0.3 million versus $0.6 million a year ago.
“The progress in the RV Group’s operating results, particularly in the motor home division, is noteworthy,” Smith said. “We shipped more units in both the Class A and Class C categories than last year, and have successfully introduced products in new markets for Fleetwood, including the more affordable and more fuel-efficient motor home segments. The downsizing in our travel trailer division over the past year has given rise to improved labor and material costs, resulting in higher gross margins despite lower revenues. At last week’s national RV trade show in Louisville, Kentucky, our dealers were upbeat. We received positive feedback on our new products, and had many dealers express interest in carrying our product lines. We believe they are well positioned to withstand economic headwinds, although they remain cautious.”
Housing Group Results
The Housing Group recorded a threefold increase in operating income for the second quarter to $4.7 million on revenues of $149.7 million, compared with operating income of $1.4 million on revenues of $147.0 million for the same quarter of the prior year. For the first half of the fiscal year, operating income for the Housing Group advanced to $9.7 million on $293.9 million in revenues, up from $3.5 million on revenues of $292.6 million for the first six months of last year.
“Considering that the manufactured housing market continues to be quite weak in many areas of the country, our results clearly demonstrate that the operating strategies we have put in place are working,” Smith said. “This quarter’s performance benefited from some modular business, most notably the military barracks that we are building for Fort Bliss, Texas. While turmoil persists in the conventional housing market, we are dealing with increased competition from discounted housing prices, as well as delayed sales of existing homes of those potential retirement customers who are looking to move to manufactured home communities. We believe that more disciplined lending criteria in the site-built market will eventually be of considerable help to the manufactured housing industry, which lost many customers because of attractive site-built mortgages that are no longer available. We continue to adjust our manufacturing capacity to better match demand. Our plants in Oregon and Washington have been consolidated, and during the third quarter our Gallatin, Tenn., plant will be relocated to Lafayette, Tenn., where we expect to achieve lower costs and greater efficiencies.”
Corporate Outlook
“Our third quarter includes three seasonally slow months, and the current environment in both of our industries is characterized by consumer and dealer caution, as well as very competitive pricing by manufacturers,” Smith said. “These factors will be most apparent in our motor home business, which enjoyed double-digit growth year over year in the first six months of the fiscal year. However, we continue to make operational progress in the face of challenging market conditions. We anticipate an operating loss in the third quarter that will be meaningfully lower than that of the prior year because of the aggressive steps we have taken to improve our cost structure and because our products are meeting with greater approval from dealers and retail customers alike.
“We generated cash from operations during the second quarter of $12.8 million, and ended the period with $72.2 million in cash and investments, which is quite similar to the level at this time last year,” Smith concluded. “We have ample liquidity for current operations and projected capital expenditures, and we are well within the limits of the requirements of our borrowing agreement.”
The Company will host a conference call at 10:30 a.m. PST/1:30 p.m. EST on Thursday, December 6, 2007. The call will be broadcast live over the Internet at www.streetevents.com, www.earnings.com, and the Company’s website, www.fleetwood.com under Investor Relations.
About Fleetwood
Fleetwood Enterprises, Inc., through its subsidiaries, 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 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, but not limited to, the Company’s ability to post consistently better results, the expectation that tightened lending criteria in the site-built market will eventually help the manufactured housing industry, and the belief that industry recovery will lead to financial gains, 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 the manufactured housing market and more recent weakness in the recreational vehicle market; the effect of global tensions, volatile fuel prices, interest rates, 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 the financing we will need in the future to execute our business strategies; 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
(Unaudited)
(Amounts in thousands, except per share data)
|
| 13 Weeks Ended |
| 26 Weeks Ended |
| ||||||||
|
| October 28, 2007 |
| October 29, 2006 |
| October 28, 2007 |
| October 29, 2006 |
| ||||
Net Sales: |
|
|
|
|
|
|
|
|
| ||||
RV Group |
| $ | 333,380 |
| $ | 364,591 |
| $ | 692,633 |
| $ | 735,817 |
|
Housing Group |
| 149,696 |
| 146,981 |
| 293,904 |
| 292,645 |
| ||||
Supply Group |
| 7,059 |
| 15,001 |
| 13,840 |
| 27,882 |
| ||||
|
| 490,135 |
| 526,573 |
| 1,000,377 |
| 1,056,344 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Cost of products sold |
| 405,844 |
| 453,058 |
| 839,511 |
| 909,575 |
| ||||
Gross profit |
| 84,291 |
| 73,515 |
| 160,866 |
| 146,769 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating expenses |
| 76,783 |
| 87,867 |
| 151,898 |
| 171,419 |
| ||||
Other operating (income) expenses, net |
| 3,110 |
| 874 |
| (1,454 | ) | (1,190 | ) | ||||
|
| 79,893 |
| 88,741 |
| 150,444 |
| 170,229 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating income (loss) |
| 4,398 |
| (15,226 | ) | 10,422 |
| (23,460 | ) | ||||
Other income (expense): |
|
|
|
|
|
|
|
|
| ||||
Investment income |
| 1,222 |
| 1,292 |
| 2,539 |
| 3,432 |
| ||||
Interest expense |
| (6,669 | ) | (6,058 | ) | (12,185 | ) | (12,831 | ) | ||||
Other, net |
| — |
| — |
| — |
| 18,530 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
|
| (5,447 | ) | (4,766 | ) | (9,646 | ) | 9,131 |
| ||||
Income (loss) from continuing operations before income taxes |
| (1,049 | ) | (19,992 | ) | 776 |
| (14,329 | ) | ||||
Benefit (provision) for income taxes |
| (96 | ) | 223 |
| (3,901 | ) | (4,771 | ) | ||||
Loss from continuing operations |
| (1,145 | ) | (19,769 | ) | (3,125 | ) | (19,100 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Loss from discontinued operations, net |
| (68 | ) | (658 | ) | (434 | ) | (1,738 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Net loss |
| $ | (1,213 | ) | $ | (20,427 | ) | $ | (3,559 | ) | $ | (20,838 | ) |
|
|
|
|
|
|
|
|
|
| ||||
Basic and diluted loss per common share: |
|
|
|
|
|
|
|
|
| ||||
Loss from continuing operations |
| $ | (0.02 | ) | $ | (0.31 | ) | $ | (0.05 | ) | $ | (0.30 | ) |
Loss from discontinued operations |
| — |
| (0.01 | ) | (0.01 | ) | (0.03 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Net loss per common share |
| $ | (0.02 | ) | $ | (0.32 | ) | $ | (0.06 | ) | $ | (0.33 | ) |
|
|
|
|
|
|
|
|
|
| ||||
Weighted average common shares |
| 64,243 |
| 63,919 |
| 64,201 |
| 63,905 |
|
Fleetwood Enterprises, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in thousands)
|
| October 28, 2007 |
| July 29, 2007 |
| October 29, 2006 |
| |||
ASSETS |
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
| |||
Cash |
| $ | 47,477 |
| $ | 26,536 |
| $ | 55,172 |
|
Marketable investments |
| 24,754 |
| 24,466 |
| 23,505 |
| |||
Receivables |
| 121,678 |
| 133,193 |
| 136,306 |
| |||
Inventories |
| 183,591 |
| 183,809 |
| 197,382 |
| |||
Deferred taxes, net |
| 7,239 |
| 7,239 |
| 13,197 |
| |||
Other current assets |
| 9,499 |
| 12,806 |
| 15,941 |
| |||
Total current assets |
| 394,238 |
| 388,049 |
| 441,503 |
| |||
|
|
|
|
|
|
|
| |||
Property, plant and equipment, net |
| 175,958 |
| 187,058 |
| 204,874 |
| |||
Deferred taxes, net |
| 44,283 |
| 44,283 |
| 52,274 |
| |||
Cash value of Company-owned life insurance, net |
| 20,215 |
| 19,853 |
| 29,722 |
| |||
Goodwill |
| 6,316 |
| 6,316 |
| 6,316 |
| |||
Other assets |
| 40,240 |
| 41,572 |
| 40,045 |
| |||
|
|
|
|
|
|
|
| |||
Total assets |
| $ | 681,250 |
| $ | 687,131 |
| $ | 774,734 |
|
|
|
|
|
|
|
|
| |||
LIABILITIES & SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
| |||
Accounts payable |
| $ | 41,293 |
| $ | 49,347 |
| $ | 59,411 |
|
Employee compensation and benefits |
| 46,040 |
| 49,077 |
| 45,023 |
| |||
Federal and state income taxes |
| 2,212 |
| 3,326 |
| 2,211 |
| |||
Product warranty reserves |
| 41,453 |
| 44,244 |
| 44,997 |
| |||
Insurance reserves |
| 20,149 |
| 19,324 |
| 17,588 |
| |||
Other short-term borrowings |
| 10,056 |
| 4,884 |
| 20,661 |
| |||
Accrued interest |
| 5,428 |
| 3,242 |
| 6,356 |
| |||
Other current liabilities |
| 68,175 |
| 63,962 |
| 70,887 |
| |||
Total current liabilities |
| 234,806 |
| 237,406 |
| 267,134 |
| |||
|
|
|
|
|
|
|
| |||
Deferred compensation and retirement benefits |
| 25,840 |
| 28,240 |
| 34,637 |
| |||
Product warranty reserves |
| 21,816 |
| 22,685 |
| 21,510 |
| |||
Insurance reserves |
| 35,990 |
| 35,292 |
| 34,232 |
| |||
5% convertible senior subordinated debentures |
| 100,000 |
| 100,000 |
| 100,000 |
| |||
6% convertible subordinated debentures |
| 160,142 |
| 160,142 |
| 160,142 |
| |||
Other long-term debt |
| 18,811 |
| 20,131 |
| 4,360 |
| |||
|
|
|
|
|
|
|
| |||
Total liabilities |
| 597,405 |
| 603,896 |
| 622,015 |
| |||
|
|
|
|
|
|
|
| |||
Commitments and contingencies |
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
| |||
Shareholders’ equity: |
|
|
|
|
|
|
| |||
Common stock |
| 64,250 |
| 64,241 |
| 63,969 |
| |||
Additional paid-in capital |
| 495,754 |
| 494,289 |
| 490,863 |
| |||
Accumulated deficit |
| (478,753 | ) | (477,540 | ) | (406,071 | ) | |||
Accumulated other comprehensive income |
| 2,594 |
| 2,245 |
| 3,958 |
| |||
|
|
|
|
|
|
|
| |||
Total shareholders’ equity |
| 83,845 |
| 83,235 |
| 152,719 |
| |||
|
|
|
|
|
|
|
| |||
Total liabilities and shareholders’ equity |
| $ | 681,250 |
| $ | 687,131 |
| $ | 774,734 |
|
Fleetwood Enterprises, Inc.
BUSINESS SEGMENT AND UNIT SHIPMENT INFORMATION
(Unaudited)
(Dollar amounts in thousands)
|
| 13 Weeks Ended |
| 26 Weeks Ended |
| ||||||||
|
| October 28, 2007 |
| October 29, 2006 |
| October 28, 2007 |
| October 29, 2006 |
| ||||
REVENUES: |
|
|
|
|
|
|
|
|
| ||||
Motor homes |
| $ | 263,776 |
| $ | 230,645 |
| $ | 537,457 |
| $ | 455,873 |
|
Travel trailers |
| 47,972 |
| 104,113 |
| 111,624 |
| 225,799 |
| ||||
Folding trailers |
| 21,632 |
| 29,833 |
| 43,552 |
| 54,145 |
| ||||
RV Group |
| 333,380 |
| 364,591 |
| 692,633 |
| 735,817 |
| ||||
Housing Group |
| 149,696 |
| 146,981 |
| 293,904 |
| 292,645 |
| ||||
Supply Group |
| 7,059 |
| 15,001 |
| 13,840 |
| 27,882 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
|
| $ | 490,135 |
| $ | 526,573 |
| $ | 1,000,377 |
| $ | 1,056,344 |
|
|
|
|
|
|
|
|
|
|
| ||||
OPERATING INCOME (LOSS): |
|
|
|
|
|
|
|
|
| ||||
Motor homes |
| $ | 9,104 |
| $ | (1,141 | ) | $ | 18,107 |
| $ | (4,619 | ) |
Travel trailers |
| (8,334 | ) | (14,361 | ) | (15,759 | ) | (24,338 | ) | ||||
Folding trailers |
| 269 |
| 604 |
| 600 |
| 806 |
| ||||
RV Group |
| 1,039 |
| (14,898 | ) | 2,948 |
| (28,151 | ) | ||||
Housing Group |
| 4,686 |
| 1,384 |
| 9,714 |
| 3,451 |
| ||||
Supply Group |
| 268 |
| 871 |
| 1,020 |
| 2,119 |
| ||||
Corporate and other |
| (1,595 | ) | (2,583 | ) | (3,260 | ) | (879 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
|
| $ | 4,398 |
| $ | (15,226 | ) | $ | 10,422 |
| $ | (23,460 | ) |
|
|
|
|
|
|
|
|
|
| ||||
UNITS SOLD: |
|
|
|
|
|
|
|
|
| ||||
Recreational vehicles - |
|
|
|
|
|
|
|
|
| ||||
Motor homes |
| 2,125 |
| 2,074 |
| 4,558 |
| 4,272 |
| ||||
Travel trailers |
| 2,225 |
| 5,935 |
| 5,611 |
| 13,119 |
| ||||
Folding trailers |
| 2,374 |
| 3,301 |
| 4,604 |
| 6,031 |
| ||||
|
| 6,724 |
| 11,310 |
| 14,773 |
| 23,422 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Housing - |
|
|
|
|
|
|
|
|
| ||||
HUD |
| 3,619 |
| 3,672 |
| 7,184 |
| 7,373 |
| ||||
MOD |
| 307 |
| — |
| 555 |
| — |
| ||||
|
| 3,926 |
| 3,672 |
| 7,739 |
| 7,373 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total Company shipments |
| 10,650 |
| 14,982 |
| 22,512 |
| 30,795 |
|
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