EX-99.1 2 a04-7645_1ex99d1.htm EX-99.1

Exhibit 99.1

 

FLEETWOOD REPORTS FISCAL 2004 FOURTH QUARTER

AND FULL YEAR FINANCIAL RESULTS

 

– Company Increases Revenues, Generates Operating Profit and Narrows Net Loss –

 

Riverside, Calif., July 8, 2004 — Fleetwood Enterprises, Inc. (NYSE:FLE), the nation’s leader in recreational vehicle sales and a leading producer and retailer of manufactured housing, today announced financial results for its fiscal 2004 fourth quarter and full year ended April 25, 2004.

 

For the fourth quarter, consolidated revenues increased 20.4 percent to $689.4 million from $572.7 million in the prior year’s fourth quarter. Net loss narrowed to $17.8 million, or 42 cents per diluted share, compared to a net loss of $55.4 million, or $1.54 per diluted share, in the fourth quarter of the prior year. Results include non-cash charges related to the valuation allowance against the Company’s deferred tax asset of $15.0 million in 2004 and $28.4 million to establish the allowance in 2003, as well as $4.0 million in restructuring and asset impairment charges in 2003. Loss before income taxes was $1.9 million, compared to a loss before income taxes of $43.0 million in the fourth quarter of fiscal 2003.

 

For fiscal year 2004, revenues grew 12.5 percent to $2.61 billion from $2.32 billion in the prior year. Net loss was $22.3 million, or 58 cents per diluted share, down from a net loss of $70.7 million, or $1.97 per diluted share, in fiscal 2003. Loss before income taxes was $3.8 million, compared to a loss before income taxes of $66.2 million in fiscal 2003.

 

“We achieved strong fourth quarter revenue growth in both RVs and Housing and continued our solid progress toward profitability,” said Edward B. Caudill, president and CEO. “Success in our key initiatives of RV product innovation, with a focus on higher-end motor homes, and Housing vertical integration drove the improvement.  For fiscal 2004, we earned an operating profit for the first time since 2000, and notably, a fourth quarter operating profit of $11.3 million, compared with an operating loss of $33.1 million in last year’s fourth quarter. Continued sales growth in motor homes and travel trailers along with favorable comparisons in both the wholesale and retail divisions of the Housing Group all contributed to the positive momentum.

 

“The manufactured housing industry is continuing to show promising signs of recovery as the inventory of repossessed homes is declining,” Caudill said. “And while industry shipments have not yet recovered, our 21 percent increase in fourth quarter sales suggests that Fleetwood is slightly ahead of the industry’s recovery, commensurate with our longstanding leadership position.”

 

For fiscal year 2004, Fleetwood earned an operating profit of $41.3 million, compared to an operating loss of $26.4 million in fiscal 2003. Powered by the motor home division, the RV Group earned an operating profit of $58.1 million, a 64 percent increase from the $35.4 million generated in the prior year. The Housing Group improved to an operating loss of $28.8 million this year from an operating loss of $57.6 million in fiscal 2003. Before intercompany profit elimination, the wholesale division earned $5.4 million and the retail division lost $35.9 million, compared to losses of $13.5 million and $49.7 million in fiscal 2003, respectively.

 

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Recreational vehicle sales in the fourth quarter rose 19 percent to $482.7 million from $405.4 million in the same period of the prior year. Motor home sales for the quarter rose 22 percent to $301.3 million and travel trailers posted a 17 percent gain to $154.4 million, while folding trailer sales edged up 2 percent to $27.0 million.

 

RV sales for the full fiscal year rose 20 percent from the prior year to $1.78 billion. Motor home revenues climbed 20 percent to $1.10 billion and travel trailer sales increased 29 percent to $570.4 million, while folding trailer revenues declined 15 percent to $104.2 million.

 

“Our motor home division continues to perform exceptionally well, with consistent growth in revenues, operating income, and operating margins over the past three years,” Caudill said. “We expect continued progress by expanding operating margins and launching the innovative products in our pipeline. While we are encouraged by the sales performance of our improved travel trailer products, the division’s operating results were still disappointing. We continue to focus on improving our production efficiencies and ensuring timely delivery of our product. Sales of our folding trailers declined at a rate similar to that experienced by the industry as a whole. Industry retail registrations in this segment were down 15.6 percent in 2003, although we saw some easing in the trend for the first quarter of calendar 2004 with only a 2.4 percent year-over-year reduction in unit sales.”

 

Manufactured housing revenues in the fourth quarter grew 21 percent to $191.6 million, compared to $158.3 million in the prior year. This was the first increase in fourth quarter revenues in the Housing Group since fiscal 1999. Housing Group revenues included $163.6 million of wholesale factory sales and $48.2 million of retail sales, before elimination of intercompany sales of $20.2 million. This compares with $135.8 million of wholesale factory sales and $43.9 million of retail sales, before elimination of intercompany sales of $21.4 million in the prior year. Wholesale unit volume for the quarter was up 20 percent to 5,350, and homes sold at Fleetwood retail stores increased 4 percent to 918. Operating profit was $0.1 million for the quarter in the wholesale division as opposed to a $10.0 million operating loss last year, with a much-reduced fourth quarter operating loss in the retail division of $11.2 million compared to $23.2 million last year.

 

Because of the 21 percent jump in sales in the fourth quarter, Fleetwood’s Housing Group revenues for fiscal 2004 were down only 2 percent from the prior year to $782.8 million. Wholesale factory sales and retail sales were $657.4 million and $242.5 million, respectively, before elimination of intercompany sales of $117.1 million. This compares with $667.1 million of wholesale factory sales and $245.1 million of retail sales, before elimination of intercompany sales of $115.9 million in fiscal 2003. Wholesale unit volume for the year was down 6 percent to 20,859, and homes sold at Fleetwood retail stores also decreased by 6 percent to 4,727 homes.

 

“As previously mentioned, we recorded a $15 million fourth quarter non-cash charge to reduce the amount of our deferred tax asset,” Caudill continued. “Because we have generated net losses in recent years, the carrying amount of this asset is determined by reference to various available tax planning strategies. Paradoxically, the primary reason for the fourth quarter adjustment was an increase to the market value of our 6% convertible trust preferred securities. An improved overall financial condition combined with upward movement in our stock price has contributed to a lower discount from par value and has diminished the magnitude of unrealized taxable gains in these securities. We

 

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continue to believe that the combination of all positive and negative factors will enable us to realize the full value of the deferred tax asset.

 

“Fleetwood has prevailed as a leader and innovator in both our industries,” Caudill concluded. “We have worked diligently to be positioned for a recovery in the manufactured housing arena by maintaining a strong dealer network, vertically integrating our Housing Group to offer financial services, entering appropriate new markets, and designing homes for the contemporary consumer. Our recent balance sheet strategies will also contribute to improved results, as we have eliminated $17.9 million of annualized interest expense by converting or redeeming all of our 9.5% convertible trust preferred securities. In addition, we expect to record substantial savings from our amended credit facility due to newly negotiated terms. As a result, we are very optimistic for fiscal 2005, and expect the Company will be profitable in the first quarter, which ends on July 25, and significantly profitable for the full fiscal year.”

 

On Thursday, July 8, 2004, the Company will host a conference call beginning at 1:30 p.m. EDT to review the results of operations for the fourth quarter and full year of fiscal 2004. The conference call will be broadcast live over the Internet at www.streetevents.com and www.companyboardroom.com. It also will be accessible from the Company’s website, www.fleetwood.com, in the Company Information section. An archive of the call will be available for one year at all three websites shortly after the call concludes.

 

This press release contains certain forward-looking statements and information based on the beliefs of Fleetwood’s management as well as assumptions made by, and information currently available to, Fleetwood’s management. Such statements reflect the current views of Fleetwood with respect to future events and are subject to certain risks, uncertainties, and assumptions, including risk factors identified in Fleetwood’s 10-K and other SEC filings. These risks and uncertainties include, without limitation, the cyclical nature of both the manufactured housing and recreational vehicle industries; ongoing weakness in the manufactured housing market; continued acceptance of the Company’s products; the potential impact on demand for Fleetwood’s products as a result of changes in consumer confidence levels; the effect of global tensions on consumer confidence; expenses and uncertainties associated with the introduction and manufacturing of new products; the future availability of manufactured housing retail financing, as well as housing and RV wholesale financing; exposure to interest rate and market changes affecting certain of the Company’s assets and liabilities; availability and pricing of raw materials; changes in retail inventory levels in the manufactured housing and recreational vehicle industries; competitive pricing pressures; the ability to attract and retain quality dealers, executive officers and other personnel; and the Company’s ability to obtain financing needed in order to execute its business strategies.

 

 (tables to follow)

 

 

FLEETWOOD ENTERPRISES, INC.

Condensed Consolidated Summaries of Operations
(Unaudited)
(Amounts in thousands except per share data)

 

 

 

13 Weeks Ended

 

52 Weeks Ended

 

 

 

Apr. 25,

 

Apr. 27,

 

Apr. 25,

 

Apr. 27,

 

 

 

2004

 

2003

 

2004

 

2003

 

Sales

 

$

689,364

 

$

572,657

 

$

2,607,988

 

$

2,318,293

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

$

11,325

 

$

(33,096

)

$

41,330

 

$

(26,431

)

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

$

(1,902

)

$

(42,955

)

$

(3,812

)

$

(66,237

)

 

 

 

 

 

 

 

 

 

 

(Provision) benefit for income taxes

 

(15,862

)

(12,460

)

(18,449

)

(4,502

)

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(17,764

)

$

(55,415

)

$

(22,261

)

$

(70,739

)

 

 

 

 

 

 

 

 

 

 

Net loss per common share:

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(.42

)

$

(1.54

)

$

(.58

)

$

(1.97

)

 

 

 

 

 

 

 

 

 

 

Weighted average common shares:

 

 

 

 

 

 

 

 

 

Basic and diluted

 

42,497

 

35,935

 

38,357

 

35,869

 

 

(more)

 

 

FLEETWOOD ENTERPRISES, INC.

Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)

 

ASSETS

 

 

 

 

April 25,

 

January 25,

 

April 27,

 

 

 

2004

 

2004

 

2003

 

Cash and marketable investments

 

$

123,822

 

$

82,448

 

$

69,776

 

Receivables

 

184,687

 

198,645

 

143,452

 

Inventories

 

262,810

 

257,674

 

240,521

 

Property, plant and equipment, net

 

259,052

 

255,014

 

260,318

 

Other assets

 

245,338

 

264,807

 

240,027

 

Total assets

 

$

1,075,709

 

$

1,058,588

 

$

954,094

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

98,804

 

$

81,413

 

$

78,890

 

Employee compensation and benefits

 

119,695

 

126,183

 

128,202

 

Product warranty reserve

 

53,921

 

55,817

 

62,137

 

Retail flooring liability and short-term debt

 

32,319

 

19,349

 

31,411

 

Long-term debt

 

102,159

 

102,211

 

2,357

 

Convertible subordinated debentures

 

272,791

 

403,905

 

403,905

 

Other liabilities

 

149,738

 

131,837

 

136,224

 

Total liabilities

 

829,427

 

920,715

 

843,126

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

246,282

 

137,873

 

110,968

 

 

 

$

1,075,709

 

$

1,058,588

 

$

954,094

 

 

(more)

 

 

FLEETWOOD ENTERPRISES, INC.

Business Segment and Unit Shipment Information
(Amounts in thousands)
(Unaudited)

 

 

 

13 Weeks Ended

 

52 Weeks Ended

 

 

 

Apr. 25,

 

Apr. 27,

 

Apr. 25,

 

Apr. 27,

 

 

 

2004

 

2003

 

2004

 

2003

 

OPERATING REVENUES:

 

 

 

 

 

 

 

 

 

Recreational vehicles

 

$

482,676

 

$

405,355

 

$

1,779,233

 

$

1,482,595

 

Housing

 

 

 

 

 

 

 

 

 

Wholesale

 

163,562

 

135,808

 

657,388

 

667,087

 

Retail

 

48,233

 

43,893

 

242,505

 

245,076

 

Less intercompany

 

(20,214

)

(21,428

)

(117,135

)

(115,903

)

 

 

191,581

 

158,273

 

782,758

 

796,260

 

 

 

 

 

 

 

 

 

 

 

Supply operations

 

13,670

 

8,269

 

41,120

 

37,178

 

Financial services

 

1,437

 

760

 

4,877

 

2,260

 

 

 

$

689,364

 

$

572,657

 

$

2,607,988

 

$

2,318,293

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME (LOSS):

 

 

 

 

 

 

 

 

 

Recreational vehicles

 

$

16,545

 

$

5,995

 

$

58,146

 

$

35,355

 

Housing

 

(10,390

)

(33,039

)

(28,841

)

(57,598

)

Supply operations

 

1,989

 

281

 

6,065

 

2,079

 

Financial services

 

(516

)

(812

)

(1,627

)

(2,089

)

Corporate and other

 

3,697

 

(5,521

)

7,587

 

(4,178

)

 

 

$

11,325

 

$

(33,096

)

$

41,330

 

$

(26,431

)

 

 

 

 

 

 

 

 

 

 

UNITS SOLD:

 

 

 

 

 

 

 

 

 

Manufactured housing -

 

 

 

 

 

 

 

 

 

Factory shipments

 

5,350

 

4,473

 

20,859

 

22,176

 

Retail sales

 

918

 

880

 

4,727

 

5,004

 

Less intercompany

 

(570

)

(688

)

(3,414

)

(3,790

)

 

 

5,698

 

4,665

 

22,172

 

23,390

 

Recreational vehicles -

 

 

 

 

 

 

 

 

 

Motor homes

 

3,020

 

2,657

 

11,203

 

9,935

 

Travel trailers

 

9,037

 

8,236

 

34,351

 

30,016

 

Folding trailers

 

3,786

 

3,556

 

14,543

 

17,118

 

 

 

15,843

 

14,449

 

60,097

 

57,069

 

 

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