CHAMPION ENTERPRISES, INC. AND REDMAN INDUSTRIES, INC. COMPLETE MERGER
Auburn Hills, MI, October 24, 1996 -- Walter R. Young, Jr.,
chairman, president and chief executive officer of Champion
Enterprises, Inc. (NYSE: CHB) announced today that the merger
with Redman Industries, Inc. (NASDAQ: RDMN) was completed.
Earlier in the day, shareholders at both companies approved
proposals related to the merger at special shareholder meetings.
More than 99 percent of Redman stockholders voting approved the
merger and more than 99 percent of Champion shareholders voting
approved the additional 17.3 million shares to be issued.
"Today is a momentous day for us," said Young. "Just five years
ago, Champion had sales of less than $250 million annually. With
the merger, our 1995 pro forma sales were $1.4 billion, and 1996
sales will be even higher. Our market capitalization has gone
from less than $50 million in 1991, to more than $1 billion
currently. More important than historic performance are the
growth opportunities the merger with Redman will provide.
"We now have over 3,200 independent retail locations selling our
products nationwide. On a combined basis we sold approximately
54,000 homes in 1995 and currently have 49 manufactured housing
production facilities. We intend to continue to break new ground
in creating homes that the customers desire.
"We are optimistic about the continued long-term growth of the
industry as the market expands with new buyers who seek cost-effective,
quality homes. Our decentralized organization is
quick to recognize what regional customers want. The continued
strength in multi-section sales is a good indicator that our
homes are beginning to compete effectively with site-built homes.
We are well-positioned to continue capitalizing on that segment
of the market, as evidenced by our current combined 55 percent
multi-section mix," he explained.
"Longer term, we have increased potential for improvements in
manufacturing with the sharing of production technology,
materials purchasing, and inventory control," said Young.
"Profitability and return on investment are our most important
measures. Combined, our 1995 return on equity was in excess of
36 percent. By the end of 1996, we anticipate that Champion will
have virtually no debt. Based on our current combined balance
sheet, our investment capacity is at least $300 million, ample to
continue to grow the organization at better than a 20 percent
compound annual growth rate."
Champion will issue 1.24 shares of Champion Enterprises common
stock for each outstanding share of Redman common stock. Redman
shareholders will receive instructions in the mail shortly,
advising them on how to exchange their Redman shares for Champion
shares. Redman common stock will stop public trading at the
close of business today.
The merger will be accounted for as a pooling of interests.
On that basis, pro forma combined sales for 1995 were $1.4
billion, with net income of $56.3 million, or $1.14 per share, as
compared to the $1.01 Champion reported previously. For the nine
months ended September 28, 1996, pro forma combined sales were
$1.2 billion with net income of $53.4 million. Earnings per
share on a pro forma basis for the nine month period were $1.06
compared with $0.99 for Champion alone.
Champion Enterprises, Inc., headquartered in Auburn Hills,
Michigan, is one of the fastest growing companies in the
manufactured housing industry and is number two in U.S. market
share. The company now operates 49 manufactured housing
facilities and is represented by over 3,200 independent retail
dealer locations. Champion was cited by Forbes as having the
highest five-year average return on equity in the construction
industry and by Fortune as one of the "100 Fastest Growing
Companies in America."
FACT SHEET
PRE MERGER POST MERGER
Champion Redman Pro forma
Enterprises, Inc.* Industries, Inc. Combined
Stock Symbol NYSE:CHB NASDAQ:RDMN NYSE: CHB
Financial Data
Year Ended 12/30/95 3/29/96 Combination
Net Sales $798 million* $614 million $1,412 million
Net Income $ 32 million $ 24 million $ 56 million
EPS $1.01 $1.69 $1.14
Return on Equity 34% 41% 36%
Share Information
Weighted Average
Shares
Outstanding 33.5 million 13.6 million 50 million**
Recent Share
Price $21 3/4 $26 3/4 TBD
Operating Data
Principal markets Midwest & Central West & Southeast U.S.
Market coverage 90% of U.S. and 40 states U.S. and western
western Canada Canada
Homes sold (1995) 29,398 24,557 53,955
% Multi-section
(1995) 56% 53% 54%
Number of manu-
factured
housing plants 31 18 49
Retail dealer
locations 2,000 1,400 3,200***
Employees 6,000 4,000 10,000
Headquarters Auburn Hills, MI Dallas, TX Auburn Hills, MI
* Includes commercial vehicle net sales of $57 million.
** One Redman common share was exchanged for 1.24 shares of
Champion common shares.
*** Total combined eliminates estimated overlapping dealers.
CHAMPION ENTERPRISES, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
13 WEEKS ENDED 39 WEEKS ENDED
SEPT 28, SEPT 30, % SEPT. 28 SEPT 30, %
1996 1995 CHG. 1996 1995 CHG.
Net Sales $447,111 $368,545 21% $1,218,501 $1,041,981 17%
Cost of Sales 377,673 312,117 21% 1,028,507 885,049 16%
Selling, general
and administrative
expenses 35,778 30,342 18% 101,928 87,033 17%
413,451 342,459 21% 1,130,435 972,082 16%
Operating Income 33,660 26,086 29% 88,066 69,899 26%
Net interest income
(expense) 6 (1) 77 (417)
Income before
income taxes 33,666 26,085 29% 88,143 69,482 27%
Income taxes 13,192 10,518 25% 34,781 28,322 23%
Net income $ 20,474 $ 15,567 32% $ 53,362 $ 41,160 30%
Income Per Share $0.41 $0.31 32% $1.06 $0.83 28%
Weighted average
shares
outstanding 50,333 49,439 50,216 49,393
Homes sold 16,824 14,064 20% 46,087 40,296 14%
NOTE TO FINANCIAL INFORMATION
Effective March 29, 1996 Champion acquired Grand Manor, Inc.
Effective April 26, 1996 Champion acquired Homes of Legend, Inc.
For the quarter ended September 28, 1996, these acquisitions had
net sales of $28.1 million and segment income of $2.6 million.
Champion's results for the nine months ended September 28, 1996
include net sales of $50.1 million and segment income of $4.5
million from these acquisitions.