EXHIBIT 99.3
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, SEPTEMBER 20, 2002 -- 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 Management Report, I'll update you on the status of our
restructuring actions, ongoing operations and financial position. Also, I'll
discuss various industry issues which have affected our industry forecasts for
this year and next.
Restructuring and Operations Update
The benefits of our recent restructuring actions are beginning to show.
Improvements are being realized in our ongoing operations and in our financial
position. The costs of these actions are inline with what we had previously
forecasted. An update for each of our segments follows.
Retail- Results through August indicate that, as previously announced, the 117
retail sales locations we currently operate should be at breakeven in the third
quarter. Since the end of June, we've liquidated 350 new homes at our
company-owned stores, or more than $10 million of inventory. As to market
conditions, retail traffic at our sales centers continues to hold up well and
rose about 5% per average store year-over-year in August.
Manufacturing- Excluding costs to close and consolidate manufacturing facilities
in the third quarter, our manufacturing operations continue to be profitable.
The 39 facilities we're operating are poised for improved margins and higher
profits. Independent retailers remain conservative with their inventory levels,
affecting wholesale sales in the short run but losses related to retailer
defaults remain minimal. Retailers that have joined the Champion Home Center
(CHC) distribution network total 627 locations, up from 473 at the beginning of
the year. Growing this program remains a priority.
Finance- At HomePride Finance we continue to be pleased with the volume and
quality of loans originated. In the first two months of third quarter, loans
generated totaled $15 million, bringing originations since inception to $21
million. With the uncertainty surrounding availability of chattel financing,
we're especially glad to have HomePride for home-only loans to consumers who
purchase Champion-built products.
Our recent joint venture with National City Mortgage Co. is a positive
step in providing real estate financing for our customers. National City
understands the mortgage process and has the resources and experience to provide
CHC's with a dedicated source of real estate financing. This alliance is a great
opportunity for company stores and independent locations to learn the real
estate loan process and to offer conforming real estate mortgages to their
customers.
Liquidity- In July and August we generated $15 million in cash flow from
operations even after using $2.5 million for closing-related expenses. We ended
August with $94 million in unrestricted cash, which was $9 million more than we
had at the end of the second quarter. This improved cash position is the result
of our efforts to manage our businesses for cash and our restructuring actions.
Industry Update
Deutsche- On Monday Deutsche Financial Services announced that it is liquidating
its manufactured housing floor plan lending portfolio estimated to be about $520
million. They will no longer approve loans after October 31 or fund loans after
November 15. Although the impact of Deutsche exiting the industry is not known,
the exit of Conseco Finance earlier this year has been orderly with more
financing coming from not only the national lenders, but also local and regional
banks. At the time of Conseco's exit, they had about $770 million of floor plan
loans outstanding. Regardless, the industry sure didn't need this additional
challenge!
As to our independent retailers, they have approximately $86 million of
floor plan loans for Champion-built homes outstanding with Deutsche. These loans
will either need to be transitioned to other lending sources or the homes
liquidated. Of this total, about $66 million is still under our repurchase
obligation. For our company stores we have a $5 million credit line with
Deutsche and less than $2 million utilized.
Conseco- Although no one knows how the issues regarding Conseco will unfold, we
believe that a few things are highly probable. First, Conseco's lending volume
will remain tight with the level of home-only loans they originate continuing to
decrease. We expect that they will wholesale more of their repossessions,
keeping them local and liquidating them quickly. Finally, we believe that their
$25 billion loan portfolio will continue to be serviced on an orderly basis.
Industry Forecasts- Due to uncertainty regarding wholesale and consumer
financing, retailers continue to lower new home inventory levels. We estimate
that inventories in the retail distribution channel will be reduced by 25,000
homes this year, or by more than 25% of the December 2001 total. As a result,
we've lowered our 2002 industry wholesale shipment estimate to 170,000 homes
from 180,000 previously. Our revised industry forecasts are as follows:
2001 2002 2003
(Homes, in 000's) Actual Est. Est.
------ ---- ----
Repossessions 90 90 - 80 -11%
New retail 212 195 -8% 205 +5%
Total demand 302 285 -6% 285 -
Inventories 97 72 -26% 62 -14%
Shipments/production 193 170 -12% 195 +15%
To end on a positive note, we are pleased that one of the rating
agencies recently acknowledged our restructuring actions and confirmed our
ratings as previously assigned although they changed the outlook to negative.
We look forward to talking with you on October 16, 2002 when we release
our third quarter results.
Walt
Champion Enterprises, Inc., headquartered in Auburn Hills, Michigan, is
the industry's leading manufacturer and has produced nearly 1.6 million homes
since the company was founded. The company operates 39 homebuilding facilities
and 117 retail locations. Independent retailers, including 627 Champion Home
Center locations, and approximately 400 builders and developers also sell
Champion-built homes. In addition, the company provides financing for retail
buyers of its homes. Further information can be found at the company's website,
www.championhomes.net.
This Management Report contains certain statements, including
statements regarding industry forecasts and assessments, expected restructuring
charges, cost improvements, profitability, and cash flow, and the effect on our
industry due to the business decisions by Deutsche and Conseco, 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 other
SEC filings, and those discussions regarding risk factors are incorporated
herein by reference.