EXHIBIT 99.1
FOR IMMEDIATE RELEASE
INVESTOR AND MEDIA CONTACTS:
Phyllis A. Knight Colleen T. Bauman
Chief Financial Officer Investor Relations
(248) 340-9090 (248) 340-7731
CHAMPION ENTERPRISES, INC.
ANNOUNCES PLANS TO STRENGTHEN OPERATIONS AND ENHANCE FINANCIAL PERFORMANCE
COMPANY TO CLOSE FOUR MANUFACTURING FACILITIES AND 35 RETAIL SALES CENTERS
AUBURN HILLS, MICH., SEPTEMBER 5, 2003--CHAMPION ENTERPRISES, INC.
(NYSE: CHB), the nation's leading housing manufacturer, today announced
operational restructuring actions to accelerate its strategy to achieve
sustained profitability. Following a thorough review of Champion's operations
that began in early July, the company is closing four manufacturing facilities
and 35 retail sales centers.
Chairman, President and Chief Executive Officer, Al Koch, commented,
"We are committed to a return to sustained profitability and believe today's
actions, together with our previously-announced plans to exit consumer
financing, are necessary steps in this strategy. Operating margins for both our
manufacturing and retail segments should improve with the closing of under
performing locations. These decisive steps to size operations to lower industry
demand are required in light of continued tough market conditions. We also
believe they will position the company with substantial operating leverage if
and when the market improves, particularly with nine idle facilities that could
be re-opened as opportunities arise."
As a result of these actions, the company expects to record estimated
pretax restructuring charges of $35 million, including non-cash asset impairment
charges and other non-cash items of $26 million, primarily in its third quarter
ending September 27, 2003. These restructuring charges consist of $22 million
for manufacturing, $7 million for retail and $6 million for the
previously-announced closing of HomePride Finance Corp. In addition to the
restructuring charges, the company expects to record pretax non-cash goodwill
impairment charges of approximately $39 million. An estimated 1,000 employees
will be affected by these closings.
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"Only approximately $9 million of the total restructuring charges will
result in cash outlays. When combined with anticipated proceeds from inventory
liquidations and payments to extinguish certain liabilities, no net cash
outflows from restructuring actions are expected. Cash flows remain an important
focus as we manage through this down cycle," Koch said.
OPERATIONS
MANUFACTURING- Champion expects to close four homebuilding facilities and
relocate production at one additional plant to an idle facility to improve
profitability, increase capacity utilization and reduce its cost structure. The
closed facilities are located in Georgia, Kentucky, North Carolina and Texas.
Manufacturing restructuring charges to be recorded primarily in the third
quarter consist of non-cash asset impairments of approximately $16 million and
other closing costs of an estimated $6 million. Following today's announced
closings, the company will operate 30 homebuilding facilities in 14 states and
two Canadian provinces.
RETAIL- Retail restructuring costs, excluding goodwill impairments of
approximately $35 million, total an estimated $7 million, which consists of
non-cash asset impairments of $5 million and lease termination and other costs
of $2 million. The company expects to generate net cash of approximately $7
million from new home inventory liquidations and to reduce overhead expenses in
this segment. Following the closings announced today, Champion will operate 80
stores in 22 states.
FINANCE- As previously announced, Champion is exiting its consumer finance
business and will record related restructuring charges primarily in the third
quarter. These charges, excluding goodwill impairments totaling $4 million,
consist of approximately $1 million to value loans at the lower of cost or
market and $5 million for other closing related expenses. The company expects to
complete the closing of its finance operations by mid-October.
Koch concluded, "The plans announced today, in conjunction with other
ongoing cost cutting initiatives, are expected to allow us to be profitable on a
consistent basis at the low industry levels we're currently experiencing, while
maintaining our ability to take advantage of opportunities if and when industry
conditions improve. Short-term results, as well as long-term earnings potential,
should benefit as a result of these actions. Serving our current and future
customers remains a priority. Accordingly, we intend to work closely with our
retailer network to achieve a seamless transition and minimize any impact from
the closings. We plan to leverage our size and tap efficiencies to remain the
leader in the manufactured housing industry."
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Champion Enterprises, Inc., headquartered in Auburn Hills, Michigan, is
the industry's leading manufacturer and has produced more than 1.6 million homes
since the company was founded. Following the closings announced today, the
company expects to operate 30 homebuilding facilities and 80 retail sales
centers. Independent retailers, including approximately 650 Champion Home Center
locations, and an estimated 500 builders and developers also sell Champion-built
homes. Further information can be found at the company's website,
www.championhomes.net.
This news release contains certain statements, including statements
regarding restructuring charges, goodwill impairments, operating margins,
operating leverage, expected profitability, net proceeds from inventory
liquidations, future cash flows, the size of operations, the timing of closings,
short-term results and long-term earnings potential that 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 press release. 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 those discussions regarding risk
factors are incorporated herein by reference.
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