EXHIBIT 99
FOR IMMEDIATE RELEASE
INVESTOR AND MEDIA CONTACTS:
Anthony S. Cleberg Colleen T. Bauman
Chief Financial Officer Investor Relations
(248) 340-9090 (248) 340-7731
CHAMPION MANAGEMENT REPORT
Auburn Hills, Michigan, November 13, 2001 - The following management report from
Walter R. Young, Chairman, President and CEO of Champion Enterprises, Inc.
(NYSE: CHB), was posted to Champion's website and sent to interested parties
today.
With this month's Management Report, I'll update you on industry
conditions and discuss how we're financially stronger than we were a year ago.
I'll also talk about the progress we continue to make in our retail,
manufacturing and Genesis platforms.
INDUSTRY TRENDS IMPROVING.
We're happy that the trend in industry wholesale shipments continues to
indicate that the eventual upturn draws near. After being off 41% in first
quarter and 29% in second quarter, the 16% drop in third quarter was definitely
an improvement. Despite the September tragedies, shipments for the month were
off only 13%, the lowest year-over-year decline this year. As shown in Chart 1,
industry shipments were off 47% last December, but have steadily improved every
month since.
Chart 1-Recent Industry Trends
Line chart showing year-over-year monthly production comparisons.
Month % Change Month % Change Month % Change
Jul 1999 -13.8% Apr 2000 -31.6% Jan 2001 -41.5%
Aug 1999 - 5.1% May 2000 -18.9% Feb 2001 -42.5%
Sep 1999 -11.7% Jun 2000 -25.7% Mar 2001 -38.8%
Oct 1999 -19.7% Jul 2000 -32.5% Apr 2001 -30.7%
Nov 1999 -14.7% Aug 2000 -23.5% May 2001 -28.6%
Dec 1999 -19.8% Sep 2000 -32.1% Jun 2001 -27.2%
Jan 2000 -20.9% Oct 2000 -32.0% Jul 2001 -17.5%
Feb 2000 -20.7% Nov 2000 -36.7% Aug 2001 -16.1%
Mar 2000 -23.0% Dec 2000 -47.1% Sep 2001 -13.5%
We recently received a lot of criticism for being so negative with our
2002 industry estimates. If there's one time we want to be proven wrong, this is
it! The reasons we lowered shipments (to 200,000 from 220,000) while increasing
repossessions (to 90,000 from 70,000) was due to the slowing economy and the
larger percent of non-HUD code homes currently being built and sold throughout
the industry. Our estimates assume a 5% drop in total demand, but with 31% of
that demand being met with repossessed homes. If repossessions trend down next
year, new home sales should be helped.
CHAMPION UPDATE.
FINANCIAL POSITION IMPROVED. We enter this year's seasonally slower
period in much better shape than we did a year ago. We started this year's
fourth quarter with $66 million in cash, up from $32 million at the beginning of
last year's fourth quarter. Since October 2000 we've lowered net working capital
by over $89 million and reduced debt by $62 million. The strength of our
independent retailers has also improved from a year ago, with field inventories
down about 17% in the last twelve months and only $200,000 of repurchase losses
in this year's third quarter. In last year's fourth quarter, repurchase losses
totaled $2.3 million and should be down substantially this quarter. Despite our
relatively strong October results, due to the economic uncertainty we continue
to expect a loss for the current quarter in the range of $0.07 to $0.12 per
diluted share. These results will compare to a $0.42 loss per diluted share
excluding the goodwill impairment charges a year ago. Our progress continues!
Chart 2-Cash Flow from Operations
Line chart showing quarter end cash flow from operations (in millions).
Third qtr 1999 $ 38.6
Fourth qtr 1999 $ 59.9
First qtr 2000 $ 27.8
Second qtr 2000 $ 6.8
Third qtr 2000 $ 47.2
Fourth qtr 2000 $ 32.9
First qtr 2001 $-14.4
Second qtr 2001 $ 42.8
Third qtr 2001 $ 36.8
CASH FLOW. As we've been doing since the down cycle began more than two
years ago, we continue to manage the business for cash, to keep capacity and
inventories in line with demand and to maintain tight controls over working
capital and expenses. We've been successful in these efforts over the past 27
months, having generated substantial cash flow from operations during that time
frame. As shown on Chart 2, from July 1999 to September 2001 we've generated
cash flow from operations totaling $278 million, averaging $31 million per
quarter. These efforts help us short-term, but also better position us to come
out of the downturn even stronger.
RETAIL. We're encouraged that average consumer traffic at company-owned
locations rose about 6% year-over-year in October and is now slightly above
pre-September 11th levels. Customers are coming back to our retail centers in
hopes of getting into their new homes before the holidays. Average inventories
per sales center remain at the low level of 13 new homes. We continue to look
for new sources for our inventory floor plan financing.
In our efforts to rationalize capacity and maximize profitability, we
will be closing an additional 11 retail locations this quarter. These closings
will result in minimal costs and will free up about $5 million in working
capital. We will have closed 95 retail locations since June 2000 and will be
operating 218 sales centers following the closings announced today.
MANUFACTURING. In October our manufacturing operations continued to
perform well and sales for the month were up about 3% from a year ago. With the
economic challenges we're currently facing, this is quite an accomplishment. Our
October backlog levels rose 82% from a year ago, while incoming wholesale order
rates per plant were up about 5% from last October. Margins this quarter should
be substantially improved from the 1% of revenues reported in last year's fourth
quarter.
GENESIS. The opportunities abound for Genesis Homes not only in the
single-family housing market, but also in multi-family housing and time-share
projects. We're currently finishing a scattered infill housing development in
Springfield, Ohio, which will provide housing for 70 families. We're also
building 100 time-share units in Arizona, with the potential for 300 more homes.
With all the enthusiasm Genesis is creating, we are focused on exploiting the
numerous opportunities presented.
Picture showing a 1,600 sq. foot home that was constructed for the Springfield,
Ohio development.
We hope you found this Management Report useful and informative. It's
our pleasure to keep you up-to-date with our progress as we work through the
final stage of this industry cycle.
Walt Young
Champion Enterprises, Inc., headquartered in Auburn Hills, Michigan, is
the industry's leading manufacturer and has produced more than 1.5 million homes
since the company was founded. The company operates 49 homebuilding facilities
in 16 states and western Canada and 218 company-owned retail centers in 28
states following the closings announced today. Champion's homes are also sold by
over 1,000 independent retail locations that have joined either the Champion
Home Center or Alliance of Champions retail distribution networks. Further
information can be found on our website, www.championhomes.net.
This Management Report contains certain statements, including
statements regarding industry trends, earnings estimates, repurchase loss
potential, margins and profitability, retail sales activity, retail location
closings and initiatives and strategies, which could be construed to be forward
looking statements within the meaning of the Securities and Exchange Act of
1934. These statements reflect the company's views with respect to future plans,
events and financial performance. The company does not undertake any obligation
to update the information contained herein, which speaks only as of the date of
this Management Report. The company has identified certain risk factors which
could cause actual results and plans to differ substantially from those included
in the forward looking statements. These factors are discussed in the company's
most recently filed Form 10-K, and that discussion regarding risk factors is
incorporated herein by reference.