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EXHIBIT 99
Walter R. Young letterhead
July 8, 1999
Dear Fellow Shareholders:
As we start the second half of the year, we know that you are as
concerned as we are regarding the performance of Champion Enterprises stock
compared with the overall market. Housing stocks in general have under performed
the markets in 1999, and we are no exception. Given the continuation of
outstanding earnings growth and the successful implementation of our retail
strategy, we challenge ourselves as to what we can do to enhance our stock value
in a market dominated by Internet and the Dow Jones Nifty 50 stocks.
We continue to repurchase our stock pursuant to the 3.0 million share
authorization approved early in the year. We have acquired over 480,000 shares
and will continue to buy our stock opportunistically during the year.
Several brokerage firms, including Donaldson Lufkin Jenrette, Credit
Suisse First Boston, CIBC Oppenheimer, Jefferies & Co., Southwest Securities and
C.L. King, continue to recommend that investors purchase Champion stock. We
encourage other firms to pick up coverage, and often meet with potential
institutional and individual shareholders around the country.
Some of our competitors have reported problems with meeting earnings
estimates. Champion recently announced that we were comfortable with consensus
earnings estimates of $0.59 per share for the second quarter, which would be a
13 percent increase compared to last year.
The current market environment does pose some challenges, which we view
as opportunities. One of our competitors, a major public company, recently
announced that its business was up for sale. Changes such as these can cause
some uncertainty in the market. In addition, in certain regions we see too many
retail locations, suggesting an over supply of retail inventory of homes in that
region. Champion is now the clear leader in the industry, with over 20 percent
of the wholesale market, and the third largest housing retailer based on number
of company stores. We plan to use our leadership position to grow our business
and capitalize on what we see as market opportunities.
During the second quarter, Champion created a new program to introduce
retailers and home buyers to regional community developers. Our newly-created
subsidiary, Champion-Phoenix Development Corp., is the starting point for the
development and management of new communities around the country to feature our
homes. We are soliciting investors as partners in community developments to
encourage the use of manufactured homes.
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We have also started a new company called HomePride Finance
Corporation. This new subsidiary will consolidate consumer loans for
company-owned stores by region and place them with third party finance
companies. We can now offer extremely attractive lending programs to retail
customers and improve our profits through higher lending income participation.
HomePride will also help us to reduce the expense of carrying retail inventories
and increase income related to insurance packages.
In shareholder services, we are pleased to announce that American Stock
Transfer and Trust Company will now handle Champion's investor services as
registrar and transfer agent. If you have any questions regarding lost
certificates, change of address, and other shareholder matters, please contact:
American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, New York 10005
(800) 937-5449 or (212) 936-5100
(718) 236-2641 (fax)
Let me remind you that Champion's second quarter earnings will be
announced on Wednesday, July 21, 1999, and will be available on our web site,
www.champent.com. We have recently updated the investor section of our site, and
have started a web page called "Frequently Asked Questions" where we answer
shareholder questions. We are also in the process of enhancing our site with
photos and floor plans of our homes. We view the Internet as a potential
marketing tool and outreach vehicle to new home buyers, and have been pleasantly
surprised at how many inquiries have come to us already via our web site. Look
for improvements to our site throughout the summer.
We plan to keep you apprised of new initiatives and programs we are
undertaking to expand our earnings growth and position in the market. All of us
are focused on enhancing share value. Champion's overall goal continues to be to
increase earnings per share 15 percent on a compound annual basis. By expanding
sales to new home buyers through innovative marketing programs, community
developments, new retail locations, and controlling and reducing costs, we hope
to exceed that goal in the years to come.
Yours truly,
/s/ Walter R. Young
Walter R. Young
Chairman, President and CEO
This letter contains certain statements, including discussions of the company's
retail strategy, goals for sales and earnings growth, and expanding and
improving operations, 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 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 Item 1 Business of
the company's 1998 Form 10-K, and this discussion regarding risk factors is
incorporated herein by reference.