-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Q8032V9dFkAHEM6VJANTsPRxnb3du5BbeF5UgPVQU0wNOhtAzoK6ywcEp10as5wb P4HN4Ss6ZXTqs07M3Aio9A== 0000314132-97-000006.txt : 19970912 0000314132-97-000006.hdr.sgml : 19970911 ACCESSION NUMBER: 0000314132-97-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970727 FILED AS OF DATE: 19970828 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLEETWOOD ENTERPRISES INC/DE/ CENTRAL INDEX KEY: 0000314132 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR HOMES [3716] IRS NUMBER: 951948322 STATE OF INCORPORATION: DE FISCAL YEAR END: 0428 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07699 FILM NUMBER: 97671521 BUSINESS ADDRESS: STREET 1: 3125 MYERS ST STREET 2: P O BOX 7638 CITY: RIVERSIDE STATE: CA ZIP: 92523 BUSINESS PHONE: 9093513500 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) X OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 27, 1997 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) ______ OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number 1-7699 FLEETWOOD ENTERPRISES, INC. (Exact name of registrant as specified in its charter) Delaware 95-1948322 _______________________ __________________________________________ (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) 3125 Myers Street, Riverside, California 92503-5527 ________________________________________________________________________ (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (909) 351-3500 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No _____ Indicate the number of shares outstanding of each of the issuer's classes of Common stock as of the close of the period covered by this report. Class Outstanding at July 27, 1997 _________________________ ___________________________________ Common stock, $1 par value 35,940,799 shares Preferred share purchase rights - -- CONDENSED FINANCIAL STATEMENTS The following unaudited interim condensed financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Such financial statements have been reviewed by Arthur Andersen LLP in accordance with standards established by the American Institute of Certified Public Accountants. As indicated in their report included herein, Arthur Andersen LLP does not express an opinion on these statements. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information presented not misleading. In the Company's opinion, the statements reflect all adjustments (which include only normal recurring adjustments) necessary to present fairly the results of operations for the periods ending July 27, 1997 and July 28, 1996, and the balances as of July 27, 1997 and April 27, 1997. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's latest annual report on Form 10-K. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the board of directors and shareholders of Fleetwood Enterprises, Inc.: We have made a review of the accompanying condensed consolidated balance sheet of FLEETWOOD ENTERPRISES, INC. (a Delaware Corporation) and subsidiaries as of July 27, 1997, and the related condensed consolidated statements of income and cash flows for the thirteen-week periods ended July 27, 1997 and July 28, 1996, and the condensed consolidated statement of changes in shareholders' equity for the thirteen-week period ended July 27, 1997. These financial statements are the responsibility of the company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to the financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Fleetwood Enterprises, Inc. and subsidiaries as of April 27, 1997, and the related consolidated statements of income, cash flows and changes in shareholders' equity for the year then ended (not presented herein), and, in our report dated June 23, 1997, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of April 27, 1997, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. ARTHUR ANDERSEN LLP Orange County, California August 26, 1997 FLEETWOOD ENTERPRISES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Amounts in thousands except per share data) (UNAUDITED) 13 Weeks Ended 13 Weeks Ended July 27, 1997 July 28, 1996 Sales $728,454 $751,245 Cost of products sold 594,785 605,341 -------- -------- Gross profit 133,669 145,904 Operating expenses 100,775 101,226 -------- -------- Operating income 32,894 44,678 Other income (expense): Investment income 2,293 5,394 Interest expense (879) (1,450) Other 16,036 (20) -------- ------- 17,450 3,924 -------- ------- Income from continuing operations before income taxes 50,344 48,602 Provision for income taxes (19,402) (19,270) --------- -------- Income from continuing operations 30,942 29,332 Income from discontinued operations: Income from operations of finance subsidiary (net of income taxes of $511) -- 887 Gain on sale of finance subsidiary (net of income taxes of $19,607) -- 33,891 -------- -------- -- 34,778 -------- -------- Net income $30,942 $64,110 ======== ======= Net income per Common and equivalent share: Continuing operations $.84 $.64 Discontinued operations: Income from operations of finance subsidiary -- .02 Gain on sale of finance subsidiary -- .74 ------- ------- Total $.84 $1.40 ======= ======= Dividends declared per share of Common stock outstanding $.17 $.16 ======= ======= Common and equivalent shares outstanding 36,668 45,916 ======= ======= See accompanying notes to financial statements. FLEETWOOD ENTERPRISES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (CONDENSED) (Amounts in thousands) ASSETS July 27, April 27, 1997 1997 (Unaudited) Cash $ 16,032 $ 37,890 Investments 116,191 72,544 Receivables 184,637 181,085 Inventories: Raw materials 117,700 101,794 Work in process and finished products 43,252 43,719 Property, plant and equipment 279,829 278,331 Deferred tax benefits 68,338 71,285 Cash value of Company-owned life insurance 46,977 46,834 Other assets 41,962 38,065 --------- ---------- $914,918 $871,547 ======== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable $109,107 $106,749 Employee compensation and benefits 116,875 114,983 Federal and state taxes on income 16,343 4,046 Insurance reserves 24,368 44,381 Long-term debt 55,000 55,000 Other liabilities 117,899 103,293 -------- -------- 439,592 428,452 -------- -------- Contingent liabilities Shareholders' equity: Preferred stock, $1 par value, authorized 10,000,000 shares, none outstanding -- -- Common stock, $1 par value, authorized 75,000,000 shares, outstanding 35,941,000 at July 27, 1997 and 35,747,000 at April 27, 1997 35,941 35,747 Capital surplus 44,024 37,684 Retained earnings 395,494 370,653 Foreign currency translation adjustment (757) (1,163) Investment securities valuation adjustment 624 174 --------- --------- 475,326 443,095 --------- --------- $914,918 $871,547 ========= ========= See accompanying notes to financial statements. FLEETWOOD ENTERPRISES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (CONDENSED) (Amounts in thousands) (UNAUDITED) 13 Weeks Ended 13 Weeks Ended July 27, 1997 July 28, 1996 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $30,942 $64,110 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense 6,761 6,161 Amortization of intangibles and goodwill 65 180 Losses on sales of property, plant and equipment 144 20 Gain on reinsurance transaction (16,180) -- Gain on sale of finance subsidiary -- (33,891) Changes in assets and liabilities: Increase in receivables (3,552) (17,349) Increase in inventories (15,439) (14,210) (Increase) decrease in deferred tax benefits 2,947 (5,432) (Increase) decrease in cash value of Company-owned life insurance (143) 36 (Increase) decrease in other assets (3,962) 13,207 Increase (decrease) in accounts payable 2,358 (3,851) Increase in other liabilities 24,962 31,897 Foreign currency translation adjustment 406 132 ------- -------- Net cash provided by operating activities 29,309 41,010 ------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of investment securities: Held-to-maturity (1,550,024) (1,127,754) Available-for-sale (3,839) (1,268,533) Proceeds from maturity of investment securities: Held-to-maturity 1,507,950 1,136,450 Available-for-sale -- 1,228,874 Proceeds from sale of available-for-sale investment securities 2,716 111,730 Purchases of property, plant and equipment, net (8,403) (3,319) Proceeds from sale of finance subsidiary -- 132,222 Change in net assets of discontinued operation -- (887) --------- --------- Net cash provided by (used in) investing activities (51,600) 208,783 --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Dividends to shareholders (6,101) (7,305) Proceeds from exercise of stock options 6,534 2,731 Purchase of Common stock -- (240,541) --------- --------- Net cash provided by (used in) financing activities 433 (245,115) --------- --------- Increase (decrease) in cash (21,858) 4,678 Cash at beginning of period 37,890 15,792 --------- -------- Cash at end of period $16,032 $20,470 ========= ======= Supplementary disclosures: Income taxes paid $ 1,094 $ 4,176 Interest paid 884 1,431 ======= ====== See accompanying notes to financial statements. FLEETWOOD ENTERPRISES, INC. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (CONDENSED) (Amounts in thousands) (UNAUDITED) Invest- ment Foreign Secu- Currency rities Trans- Valu- Total Common Stock lation ation Share- Number of Capital Retained Adjust- Adjust- holders' Shares Amount Surplus Earnings ment ment Equity Balance April 27, 1997 35,747 $35,747 $37,684 $370,653 $(1,163) $174 $443,095 Add (deduct)- Net income -- -- -- 30,942 -- -- 30,942 Cash dividends declared on Common stock -- -- -- (6,101) -- -- (6,101) Stock options exercised (net of tax benefit) 194 194 6,340 -- -- -- 6,534 Foreign currency translation adjustment -- -- -- -- 406 -- 406 Investment securities valuation adjustment -- -- -- -- -- 450 450 ------ ---- ----- ----- ---- ---- - - ----- Balance July 27, 1997 35,941 $35,941 $44,024 $395,494 $(757) $ 624 $475,326 ====== ======= ======= ======== ===== ==== ======== See accompanying notes to financial statements.
FLEETWOOD ENTERPRISES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JULY 27, 1997 1) Reference to Annual Report Reference is made to the Notes to Consolidated Financial Statements included in the Company's Form 10-K annual report for the year ended April 27, 1997. 2) Industry Segment Information Information with respect to industry segments for the periods ending July 27, 1997 and July 28, 1996 is shown below: 13 Weeks Ended 13 Weeks Ended July 27, 1997 July 28, 1996 OPERATING REVENUES: Manufactured housing $366,649 $377,145 Recreational vehicles 350,693 357,854 Supply operations 11,112 16,246 -------- -------- $728,454 $751,245 ======== ======== OPERATING INCOME: Manufactured housing $ 15,830 $ 29,893 Recreational vehicles 16,113 19,837 Supply operations 3,392 1,464 Corporate and other* (2,441) (6,516) -------- -------- $ 32,894 $ 44,678 ======== ======== * Including adjustments and eliminations.
FLEETWOOD ENTERPRISES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Amounts in thousands) The following is an analysis of changes in key items included in the consolidated statements of income for the 13-week period ended July 27, 1997 compared to the 13-week period ended July 28, 1996. The amounts shown below apply only to continuing operations. Thirteen Weeks Ended July 27, 1997 Increase % (Decrease) Change Sales $(22,791) (3.0)% Cost of products sold (10,556) (1.7) ------- ---- Gross profit (12,235) (8.4) Selling expenses 3,891 9.0 General and administrative expenses (4,342) (7.5) ------- ---- Operating expenses (451) (.4) -------- ---- Operating income (11,784) (26.4) Other income (expense) 13,526 344.7 Income before taxes 1,742 3.6 Provision for income taxes 132 .7 Net income $1,610 5.5% ====== ====
Current Quarter Compared to Same Quarter Last Year Income from continuing operations in the first quarter of fiscal 1998 was $30,942,000 or 84 cents per share, and included $10,400,000 or 28 cents per share from a non-recurring insurance transaction. This compares to $29,332,000 or 64 cents per share a year ago. Per share earnings from continuing operations were up 31 percent in fiscal 1998 due to fewer outstanding shares stemming from large share repurchases last year. Current quarter earnings were favorably impacted by a significant reinsurance transaction involving the Company's captive insurance operation. In this transaction, a portion of the Company's products liability risk underwritten by the wholly owned captive was reinsured in the commercial insurance market, freeing up insurance reserves previously accrued by the Company. The net effect of this transaction was an addition to earnings before taxes of $16.2 million which was classified as a non- operating item because of its unusual nature. Last year's first quarter included income from discontinued operations of $34.8 million or 76 cents per share which, when added to income from continuing operations, resulted in total earnings of $64.1 million or $1.40 per share in the year ago period. The income from discontinued operations reflected an after-tax gain of $33.9 million or 74 cents per share on the sale of Fleetwood Credit Corp., the Company's RV finance subsidiary, and two cents per share for the final month of finance company operations. First quarter operating income was 26 percent behind last year's record quarter primarily due to lower gross margins and higher operating costs in the manufactured housing segment. In the past year, the Company has added five new housing factories which has increased fixed operating costs, and this has been accompanied by lower operating rates and reduced housing revenues. In addition, the Company incurred a loss of approximately $2.2 million before taxes due to flood damage at its Mississippi manufactured housing operation, and was also saddled with plant startup and plant shutdown costs totaling about $3.0 million. Recreational vehicle profits were also off from last year's strong first quarter because of slower motor home sales and non-recurring costs related to a realignment of motor home plant production. Slower sales of both manufactured housing and recreational vehicles led to a three percent decline in consolidated revenues from $751.2 million to $728.5 million. Manufactured housing revenues slipped three percent to $366.6 million on a six percent decline in unit sales to 16,359 homes. A higher mix of multi- section homes, which rose from 47 percent to 55 percent, resulted in a moderate one percent decline in floor shipments. Housing group sales represented 50 percent of total Company revenues, which was virtually identical to last year's percentage. Recreational vehicle revenues in the first quarter totaled $350.7 million compared to $357.9 million in last year's strong first period. A seven percent decline in motor home sales was partially offset by higher sales of towable RV products. Motor home revenues eased to $207.5 million on a 21 percent decline in shipments to 3,317 units. In the towable category, travel trailer sales rose two percent to $119.3 million on a three percent decline in unit sales to 8,554, while folding trailer revenues jumped 40 percent to $23.9 million on a 34 percent unit volume increase to 4,720 units. As in the prior year, recreational vehicle sales accounted for 48 percent of total Company revenues. The Company's supply group recorded sales of $11.1 million in the July quarter compared to $16.2 million in last year's similar period. Manufacturing gross profit declined as a percentage of sales from 19.4 percent to 18.3 percent primarily due to lower manufactured housing margins stemming from more competitive pricing. Recreational vehicle margins were also off from last year's strong first quarter, largely as a result of less efficient motor home operations and slimmer travel trailer margins caused by West Coast pricing adjustments. Operating expenses of $100.8 million were down less than one percent from last year's similar period, but increased as a percentage of sales from 13.5 percent to 13.8 percent on the reduced sales volume. Selling expenses were up nine percent to $47.0 million, primarily reflecting higher housing marketing expenses as well as increased product warranty and service costs. As a percentage of sales, selling expenses rose from 5.7 percent to 6.5 percent. General and administrative expenses declined seven percent to $53.8 million, and decreased as a percentage of sales from 7.7 percent to 7.4 percent. This reduction was primarily related to lower management incentive compensation which resulted from the decline in profits. Also included in general and administrative costs was the $2.2 million flood loss mentioned previously. Non-operating income of $17.5 million included the one-time insurance transaction mentioned earlier. Income from investments of $2.3 million was 57 percent below last year's first quarter, largely due to significantly higher cash balances that were available for investment last year, most of which arose from the sale of Fleetwood Credit Corp. The effective income tax rate declined to 38.5 percent in the first quarter from 39.6 percent a year ago, primarily as a result of lower state income tax accruals. The lower tax rate added about 1.5 cents per share to earnings. Liquidity and Capital Resources The Company generally relies upon internally generated cash flows to satisfy working capital needs and to fund capital expenditures. The Company's cash equivalents (cash plus investments) totaled $132.2 million at the end of July compared to $110.4 million at the end of April. Cash flow from operations decreased to $29.3 million in the first quarter compared to $41.0 million in the prior year, primarily as a result of the decline in profitability. Cash received during last year's first quarter included the proceeds from the sale of Fleetwood Credit Corp., which totaled $132.2 million net of income taxes. During last year's first quarter, the Company completed a Dutch Auction tender offer resulting in the purchase of 7.7 million shares, or approximately 17 percent of its outstanding Common stock, at a cost of $240.5 million. Cash outflows during the current quarter included $6.1 million for quarterly dividends to shareholders and $8.4 million in capital expenditures. PART II OTHER INFORMATION There are no other items to be reported or exhibits to be filed. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FLEETWOOD ENTERPRISES, INC. ___________________________ Paul M. Bingham Senior Vice President-Finance and Chief Financial Officer August 28, 1997 FLEETWOOD ENTERPRISES, INC. CONSOLIDATED FINANCIAL INFORMATION FINANCIAL DATA SCHEDULE [SROS] NYSE [SROS] PSE EX-27 2 ART. 5 FDS FOR 1ST QUARTER 10-Q
5 1,000 3-MOS APR-26-1998 JUL-27-1997 16,032 116,191 184,637 0 160,952 0 455,082 175,253 914,918 0 0 35,941 0 0 439,385 914,918 728,454 728,454 594,785 695,560 144 0 879 50,344 19,402 30,942 0 0 0 30,942 .84 .84 Amounts for current assets and current liabilities are not shown since balance sheet is presented in nonclassified format.
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