-----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, O2V90HJuA5PllxJGTzcoW4S2VA1+V6kfyEqc49VV4TwLSSFhxYgSz39KHjOyRa2C rv1+rTBNBPQwOmVXlSWBHA== 0000314132-97-000009.txt : 19971126 0000314132-97-000009.hdr.sgml : 19971126 ACCESSION NUMBER: 0000314132-97-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971026 FILED AS OF DATE: 19971125 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: 97727747 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 October 26, 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 October 26, 1997 _______________________ _____________________________ Common stock, $1 par value 35,979,799 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 October 26, 1997 and October 27, 1996, and the balances as of October 26, 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 October 26, 1997, and the related condensed consolidated statements of income for the thirteen and twenty-six week periods ended October 26, 1997 and October 27, 1996, the condensed consolidated statements of cash flows for the twenty-six week periods ended October 26, 1997 and October 27, 1996, and the condensed consolidated statement of changes in shareholders' equity for the twenty-six week period ended October 26, 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 November 24, 1997 FLEETWOOD ENTERPRISES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Amounts in thousands except per share data) (UNAUDITED) Thirteen Thirteen Twenty-six Twenty-six Weeks Weeks Weeks Weeks Ended Ended Ended Ended Oct. 26, Oct. 27, Oct. 26, Oct. 27, 1997 1996 1997 1996 Sales $769,089 $748,780 $1,497,543 $1,500,025 Cost of products sold 617,909 607,268 1,212,694 1,212,609 ------- ------- ------- ------- Gross profit 151,180 141,512 284,849 287,416 Operating expenses 106,730 100,585 207,505 201,811 ------- ------- ------- ------- Operating income 44,450 40,927 77,344 85,605 Other income (expense): Investment income 2,580 2,660 4,873 8,054 Interest expense (895) (1,024) (1,774) (2,474) Other (273) (187) 15,763 (207) ------- ------- ------- ------- 1,412 1,449 18,862 5,373 ------- ------- ------- ------- Income from continuing operations before income taxes 45,862 42,376 96,206 90,978 Provision for income taxes (17,738) (16,604) (37,140) (35,874) ------ ------ ------- ------ Income from continuing operations 28,124 25,772 59,066 55,104 Income from discontinued operations: Income from operations of finance subsidiary (net of income taxes) -- -- -- 887 Gain on sale of finance subsidiary (net of income taxes) -- -- -- 33,891 ------ ------ ------ ------ -- -- -- 34,778 ------ ------ ------ ------ Net income $28,124 $25,772 $59,066 $89,882 ======= ======= ======= ======= Net income per Common and equivalent share: Continuing operations $.77 $.68 $1.61 $1.32 Discontinued operations: Income from operations of finance subsidiary -- -- -- .02 Gain on sale of finance subsidiary -- -- -- .81 ----- ----- ----- ----- -- -- -- .83 ----- ----- ----- ----- Total $.77 $.68 $1.61 $2.15 ==== ==== ===== ===== Dividends declared per share of Common stock outstanding $.17 $.16 $.34 $.32 ==== ==== ==== ==== Common and equivalent shares outstanding 36,514 37,837 36,584 41,877 ====== ====== ====== ====== See accompanying notes to financial statements. FLEETWOOD ENTERPRISES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (CONDENSED) (Amounts in thousands) ASSETS October 26, April 27, 1997 1997 (Unaudited) Cash $ 22,723 $ 37,890 Investments 161,882 72,544 Receivables 175,483 181,085 Inventories: Raw materials 106,680 101,794 Work in process and finished products 41,397 43,719 Property, plant and equipment 278,008 278,331 Deferred tax benefits 69,781 71,285 Cash value of Company-owned life insurance 47,120 46,834 Other assets 42,597 38,065 -------- -------- $945,671 $871,547 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable $117,617 $106,749 Employee compensation and benefits 125,051 114,983 Federal and state taxes on income 4,660 4,046 Insurance reserves 19,306 44,381 Long-term debt 55,000 55,000 Other liabilities 125,932 103,293 -------- --------- 447,566 428,452 -------- --------- 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 35,980,000 at October 26, 1997 and 35,747,000 at April 27, 1997 35,980 35,747 Capital surplus 44,882 37,684 Retained earnings 417,507 370,653 Foreign currency translation adjustment (854) (1,163) Investment securities valuation adjustment 590 174 ------- ------- 498,105 443,095 ------- ------- $945,671 $871,547 ======== ======== See accompanying notes to financial statements. FLEETWOOD ENTERPRISES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (CONDENSED) (Amounts in thousands) (UNAUDITED) Twenty-six Twenty-six Weeks Ended Weeks Ended October 26, October 27, 1997 1996 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $59,066 $89,882 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense 13,581 12,586 Amortization of intangibles and goodwill 130 834 Losses on sales of property, plant and equipment 417 207 Gain on sale of finance subsidiary -- (33,891) Changes in assets and liabilities: Decrease in receivables 5,602 2,813 Increase in inventories (2,564) (32,907) (Increase) decrease in deferred tax benefits 1,504 (6,863) (Increase) decrease in cash value of Company-owned life insurance (286) 71 (Increase) decrease in other assets (4,662) 8,873 Increase (decrease) in accounts payable 10,868 (3,161) Increase in other liabilities 8,246 14,447 Foreign currency translation adjustment 309 514 ------- ------- Net cash provided by operating activities 92,211 53,405 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of investment securities: Held-to-maturity (3,533,322) (2,245,865) Available-for-sale (10,443) (1,515,797) Proceeds from maturity of investment securities: Held-to-maturity 3,444,498 2,256,168 Available-for-sale 2,853 1,460,752 Proceeds from sale of available-for-sale investment securities 7,492 230,726 Purchases of property, plant and equipment, net (13,675) (22,344) Proceeds from sale of finance subsidiary, net of income taxes -- 132,222 Change in net assets of discontinued operation -- (887) -------- -------- Net cash provided by (used in) investing activities (102,597) 294,975 -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Retirement of long-term debt -- (25,000) Dividends to shareholders (12,212) (12,985) Proceeds from exercise of stock options 7,431 3,810 Purchase of Common stock -- (311,738) -------- --------- Net cash used in financing activities (4,781) (345,913) -------- --------- Increase (decrease) in cash (15,167) 2,467 Cash at beginning of period 37,890 15,792 -------- --------- Cash at end of period $22,723 $18,259 ======== ======== Supplementary disclosures: Income taxes paid $31,673 $40,256 Interest paid 1,776 2,421 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 -- -- -- 59,066 -- -- 59,066 Cash dividends declared on Common stock -- -- -- (12,212) -- -- (12,212) Stock options exercised (net of tax benefit) 233 233 7,198 -- -- -- 7,431 Foreign currency translation adjustment -- -- -- -- 309 -- 309 Investment securities valuation adjustment -- -- -- -- -- 416 416 ------ ------- ------- ------- ----- ---- -- - ------ Balance October 26, 1997 35,980 $35,980 $44,882 $417,507 $(854) $590 $498,105 ====== ======= ======= ======== ===== ==== ======= See accompanying notes to financial statements.
FLEETWOOD ENTERPRISES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 26, 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 October 26, 1997 and October 27, 1996 is shown below: 13 Weeks 13 Weeks 26 Weeks 26 Weeks Ended Ended Ended Ended Oct. 26, Oct. 27, Oct. 26, Oct. 27 1997 1996 1997 1996 OPERATING REVENUES: Manufactured housing $390,652 $385,497 $ 757,301 $ 762,642 Recreational vehicles 366,654 348,835 717,347 706,689 Supply operations 11,783 14,448 22,895 30,694 -------- ------- ---------- ---------- $769,089 $748,780 $1,497,543 $1,500,025 ======== ======== ========== ========== OPERATING INCOME: Manufactured housing $ 25,309 $ 24,563 $ 41,139 $ 54,008 Recreational vehicles 17,944 19,704 34,057 38,813 Supply operations 3,860 78 7,252 1,471 Corporate and other* (2,663) (3,418) (5,104) (8,687) -------- ------- --------- -------- $ 44,450 $ 40,927 $ 77,344 $ 85,605 ======== ======== ========= ========= * 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 and 26-week periods ended October 26, 1997. The amounts shown below apply only to continuing operations. Thirteen Weeks Twenty-six Weeks Ended Ended October 26, 1997 October 26, 1997 Increase % Increase % (Decrease) Change (Decrease) Change Sales $20,309 2.7% $(2,482) (.2)% Cost of products sold 10,641 1.8 85 -- ------- --- ------- --- Gross profit 9,668 6.8 (2,567) (.9) Selling expenses 5,516 12.4 9,407 10.7 General and admin. expenses 629 1.1 (3,713) (3.2) ------- ---- ------ ---- Operating expenses 6,145 6.1 5,694 2.8 ------- ---- ------ --- Operating income 3,523 8.6 (8,261) (9.7) Other income (expense) (37) (2.6) 13,489 251.1 Income before taxes 3,486 8.2 5,228 5.7 Provision for income taxes 1,134 6.8 1,266 3.5 Net income $2,352 9.1% $3,962 7.2% ====== ==== ====== ===
Current Quarter Compared to Same Quarter Last Year Net income for the quarter ended October 26, 1997 increased nine percent to a record $28.1 million or 77 cents per share compared to $25.8 million or 68 cents per share in last year's similar period. A rebound in profitability for the manufactured housing and supply groups stimulated the second quarter earnings gain, which was partially offset by lower recreational vehicle earnings. Total revenues rose three percent to a record $769.1 million in the second quarter, up from $748.8 million a year ago, largely due to higher recreational vehicle sales. Recreational vehicle revenues reached $366.6 million, five percent ahead of last year's $348.8 million. Motor home revenues of $215.2 million were almost unchanged from last year's second quarter, despite an 11 percent decline in unit volume to 3,144 motor homes. Towable RV products did considerably better as both travel trailers and folding trailers produced sales gains. Travel trailer revenues were up 11 percent to $122.7 million as unit volume rose five percent to 8,319. Folding trailer sales jumped 31 percent to $28.7 million on a 15 percent gain in shipments to 5,472 units. Recreational vehicle sales accounted for 48 percent of total Company revenues, up from 47 percent last year. Manufactured housing revenues for the second quarter were a record $390.7 million, up about one percent from last year's comparable period. A total of 17,248 homes were sold in the quarter, three percent below last year's similar period, but the number of floors shipped were two percent higher due to a heavier mix of multi-section homes. Housing group sales represented 51 percent of total Company revenues which was unchanged from last year's second quarter. Fleetwood's supply operations contributed second quarter revenues of $11.8 million compared to last year's $14.4 million. Gross profit rose as a percentage of sales from 18.9 percent to 19.7 percent, as improved manufactured housing margins more than offset lower RV margins. Operating expenses increased six percent to $106.7 million, and rose as a percentage of sales from 13.4 percent to 13.9 percent. Selling expenses climbed 12 percent to $50.0 million primarily reflecting higher sales promotion and advertising costs. As a percentage of sales, selling expenses rose from 5.9 percent to 6.5 percent. General and administrative expenses increased one percent to $56.7 million, but declined as a percentage of sales from 7.5 percent to 7.4 percent. The dollar increase was primarily a result of higher management incentive compensation, which is directly related to improved profits. The effective tax rate decreased from 39.2 percent to 38.7 percent primarily because of reduced state income tax accruals. Current Year-To-Date Compared to Same Period Last Year Earnings from continuing operations for the first six months of fiscal 1998 rose seven percent to $59.1 million or $1.61 per share versus $55.1 million and $1.32 per share for last year's first half. Earnings per share increased an even greater 22 percent due to fewer outstanding shares stemming from large share repurchases last year. The current year earnings improvement resulted from a non-recurring gain of $10.4 million or 28 cents per share from a significant reinsurance transaction involving the Company's captive insurance operation. Last year's first half included income from discontinued operations of $34.8 million or 83 cents per share which, when added to income from continuing operations, resulted in total earnings of $89.9 million or $2.15 per share. The income from discontinued operations reflected an after-tax gain of $33.9 million or 81 cents per share from the sale of the Company's RV finance subsidiary. Six-month RV revenues totaled $717.3 million, a two percent gain over last year's first half. This improvement resulted from a six percent increase in travel trailer sales and a strong 35 percent gain in folding trailer volume. Travel trailer sales totaled $242.0 million and folding trailers reached a record volume of $52.7 million. Travel trailer shipments were up one percent to 16,873 units and folding trailer unit volume rose 23 percent to 10,192 units. The motor home division recorded first half revenues of $422.7 million, off four percent from last year's record pace, while shipments dropped 16 percent to 6,461 units. This reflects a shift in product mix toward higher-priced and more fully-featured Class A motor homes. RV revenues, as a percentage of total Company revenues, increased from 47 percent a year ago to 48 percent in the current year. For the first six months of fiscal 1998, housing revenues eased one percent to $757.3 million on a five percent drop in shipments to 33,607 homes. A shift to higher-priced multi-section homes resulted in a one percent increase in floor shipments. Housing revenues remained unchanged from last year at 51 percent of total Company revenues. For the six months, supply operations generated revenues of $22.9 million versus $30.7 million in last year's first half. Gross profit margin for the first half of fiscal 1998 declined from 19.2 percent to 19.0 percent. Both housing and recreational vehicle groups experienced higher direct labor and manufacturing overhead costs that more than offset material cost reductions. Operating expenses rose three percent to $207.5 million, and also increased as a percentage of sales from 13.5 percent to 13.9 percent. As a percentage of sales, selling expenses were up from 5.8 percent a year ago to 6.5 percent, while general and administrative expenses fell from 7.6 percent to 7.4 percent this year. Selling expenses increased 11 percent to $97.0 million primarily due to higher promotional and advertising costs and product warranty and service expenses. General and administrative expenses declined three percent to $110.5 million reflecting lower insurance costs and slightly reduced management incentive compensation for the first half of fiscal 1998. Non-operating income of $18.9 million included $16.2 million for the reinsurance transaction previously mentioned. Investment income was down 39 percent to $4.9 million, reflecting higher cash balances available for investment last year primarily as a result of the sale of Fleetwood Credit Corp. The effective tax rate for the current year was 38.6 percent compared to 39.4 percent last year, largely reflecting reduced state income tax accruals. Liquidity and Capital Resources The Company generally relies upon internally generated cash flows to satisfy working capital needs and to fund capital expenditures. Cash generated from operations improved to $92.2 million for the first half of fiscal 1998 compared to $53.4 million last year. This change primarily reflects a $30.3 million difference in the change in inventory levels, year over year. Last year's cash flows included $132.2 million, net of income taxes, received from the sale of Fleetwood Credit Corp. These proceeds, along with the sale of investment securities, yielded net cash from investing activities of $295.0 million in last year's first half, most of which was used to make share repurchases. In the first six months of last year, the Company purchased approximately 23 percent of its outstanding Common stock at a cost of $311.7 million. Also, $25.0 million in long- term debt was retired last year. Cash outlays in the current year included $12.2 million in dividends to shareholders and $13.7 million for capital expenditures. This compares with $13.0 million and $22.3 million, respectively, last year. Millennium Computer Project The Company is dependent on a cluster of centralized computers to provide data in support of vital company-wide operational and accounting functions. Many of the computer routines used to generate this data were programmed in-house, following the common practice of using only two digits to designate a year. As a consequence, as we approach the year 2000, programs with date-related logic will not be able to distinguish between the years 1900 and 2000, potentially causing software and hardware to fail, generate erroneous calculations or present information in an unusable form. In recognition of this potential, the Company launched a "Year 2000" conversion project in February 1996 to correct and fully test all offending computer codes by mid-1998. At this date, the project is progressing as planned and is expected to be completed on schedule. Given these efforts, management does not anticipate any appreciable impact on Company operations consequent to the use of the Company's computer systems in the new millennium. PART II OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders At Fleetwood's Annual Meeting of Shareholders held on September 9, 1997, the following directors were elected to three-year terms to Fleetwood's Board of Directors: Glenn F. Kummer, Thomas A. Fuentes and Dr. James L. Doti. The following directors continued in office after the meeting, but were not elected at the meeting: John C. Crean, William W. Weide, Dr. Douglas M. Lawson, Walter F. Beran and Andrew Crean. The shareholder votes on the elections were as follows: For Withheld Vote ---- ------------ Glenn F. Kummer 32,392,739 230,361 Thomas A. Fuentes 31,813,452 809,648 James L. Doti 32,216,197 406,903
Item 6(b). Exhibits and Reports on Form 8-K On October 8, 1997, the Company filed a Form 8-K regarding the formation of an alliance with Pulte Corporation for the purpose of entering the manufactured housing retail business. 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 November 25, 1997 FLEETWOOD ENTERPRISES, INC. CONSOLIDATED FINANCIAL INFORMATION FINANCIAL DATA SCHEDULE [SROS] NYSE [SROS] PSE EX-27 2 ART. 5 FDS FOR 2ND QUARTER 10-Q
5 1,000 6-MOS APR-26-1998 OCT-26-1997 22,723 161,882 175,483 0 148,077 0 456,479 178,471 945,671 0 0 35,980 0 0 462,125 945,671 1,497,543 1,497,543 1,212,694 1,420,199 417 0 1,774 96,206 37,140 59,066 0 0 0 59,066 1.61 1.61 Amounts for current assets and current liabilities are not shown since balance sheet is presented in nonclassified format.
-----END PRIVACY-ENHANCED MESSAGE-----