EX-99.1 2 v118169_ex99-1.htm Unassociated Document
Exhibit 99.1

FLEETWOOD REPORTS FINANCIAL RESULTS FOR
FISCAL 2008 FOURTH QUARTER, FULL YEAR

Riverside, Calif., June 26, 2008— Fleetwood Enterprises, Inc. (NYSE:FLE) announced today financial results for its fiscal 2008 fourth quarter and full year ended April 27, 2008.

Consolidated Results
Consolidated revenues for the quarter declined 26 percent to $363.5 million from $488.3 million in last year’s fourth quarter. Benefiting from profitable asset dispositions, the Company reported $18.0 million in consolidated operating income compared to a consolidated operating loss of $12.1 million in the fourth quarter of the prior year. Net income from continuing operations for the quarter totaled $21.7 million, or $0.30 per share, compared to a net loss from continuing operations of $32.0 million, or $0.50 per share, for the corresponding quarter of the prior year. Non-recurring asset dispositions during the quarter generated $24.1 million of gains on previously announced real estate sales, while the prior-year quarter included $9.6 million of expenses primarily related to restructuring of the travel trailer division, partially offset by real estate gains.

“Beyond the one-time events, our operating results reflect, in part, the work we’ve done to reduce overhead expenses in response to a lower revenue base in the face of continued weakness in manufactured housing and an increasingly challenging environment in recreational vehicles,” said Elden L. Smith, Fleetwood’s president and chief executive officer. “Our cost-containment initiatives yielded a 24 percent reduction in operating expenses for the most recent quarter to $55.4 million from $72.7 million in the prior-year period. Industry-wide sales for the motor home and travel trailer industries are down substantially calendar year to date. This is clearly the result of volatile and rising fuel prices and the crisis in the home mortgage market, which have driven consumer confidence to its lowest mark in 16 years. The drop in volume has been most notable in Class A motor homes, triggering a swing for the motor home division from a substantial operating profit last year to an operating loss this year.”

Results for the full fiscal year were increasingly affected by these same issues as the year progressed. Consequently, consolidated revenues for fiscal year 2008 were down 14 percent to $1.66 billion from $1.92 billion in the same period last year. Operating income for the year, however, was $17.8 million, reflecting cost reductions and non-recurring gains, compared to an operating loss of $57.8 million in fiscal 2007. Net income from continuing operations for fiscal 2008 was $2.9 million, or $0.05 per share, compared to a net loss from continuing operations of $78.0 million, or $1.22 per share, for the same period last year.

RV Group Quarterly Results
The RV Group generated operating income of $5.6 million for the fourth quarter compared to a $12.1 million operating loss in the comparable period of the prior year. Current-year results included an $8.8 million gain on the previously announced sale of an RV supply plant.

The motor home division incurred an operating loss of $2.2 million in the quarter compared to operating income of $11.5 million in the same quarter last year, due to a 32 percent drop in revenues and a shift away from higher-margin Class A products. The travel trailer division generated operating income of $0.9 million, which included the benefit from a reduction to warranty reserves of $3.9 million, prompted by better-than-expected warranty experience and reduced volumes. In the prior year, the division incurred an operating loss of $23.4 million, including $10.2 million in restructuring costs, on revenues that were 27 percent higher.

“The travel trailer division has made progress in many of its key metrics,” Smith said, “and we will continue to make further adjustments in that division until it achieves consistent profitability. In the motor home division, we have seen an improvement in shipments and market share of both the lower-priced and fuel-efficient Class C categories that we specifically targeted last year, as well as some of our Class A products. While it is our intention to engage in minimal discounting in this highly competitive environment, the outlook for the RV industry remains quite challenging, at least for the balance of this calendar year and into the spring of 2009. Accordingly, we will continue to carefully manage our production and overhead costs going forward, while working to maintain or improve our market share.”

Housing Group Quarterly Results 
The Housing Group remained profitable for the quarter despite a further reduction in revenues, earning $0.5 million in operating income compared with $2.1 million in the prior year. Quarterly revenues were $106.3 million, off 9 percent compared with the prior year’s $117.1 million. The modular division accounted for 8 percent of sales versus none in the prior year.

“The manufactured housing industry shows no immediate sign of a turnaround,” Smith said. “We continue to battle stiff competition from foreclosed site-built homes, as well as the turmoil in the mortgage industry and sluggishness in our traditional retiree market. Despite the immediacy of these concerns, we do not believe they fundamentally alter the positive long-term outlook for a business that provides affordable housing in this country. We are operating above breakeven at current depressed sales levels and continue to be opportunistically poised in the regions and markets in which we participate to take advantage of any recovery. Meanwhile, Trendsetter Homes, our modular division, is carefully but successfully growing its business in the military and commercial fields. We are placing greater emphasis on this sector and have begun to allocate incremental resources to more aggressively pursue additional contracts.”

Discontinued Operations
On May 12, 2008, the Company completed the sale of Fleetwood Folding Trailers, Inc. The folding trailer division’s revenues and results are now accounted for as discontinued operations, and the financial statements for prior years have been restated accordingly.

Balance Sheet Changes
As of fiscal year end, cash and investments were $100 million, up from both the third quarter and the prior year. This includes $33.5 million from the sale of the corporate headquarters complex, a portion of which the Company is now leasing, and the sale of an RV supply plant. The remaining increase came from improved working capital utilization, primarily reductions in inventory levels.

On June 25, 2008, the Company completed a public offering for 12 million shares of its common stock that raised almost $39 million in net proceeds, which will be used to repurchase a portion of the $100 million 5% convertible senior subordinated debentures and for general corporate purposes. The holders of the debentures are expected to exercise their right to require Fleetwood to repurchase them at par on December 15, 2008, and the Company has the flexibility to redeem them with cash, by issuing common stock, or through a combination of both. The Company also plans to pursue additional sales of idle real estate as well as real estate financing on certain unencumbered facilities to provide additional redemption funding as well as liquidity for ongoing operations.

Corporate Outlook
“We expect sales to remain soft in the manufactured housing business and very challenging in recreational vehicles until fuel prices and home values stabilize and consumer confidence begins to recover,” Smith said. “However, we continue working to improve our share of available sales through enhanced, more competitive product offerings and better dealer relations.

“We believe that Fleetwood Financial Services, a previously announced strategic RV wholesale and retail financing alliance with Bank of America, the largest lender in the industry, will play an important role in supporting our efforts and differentiating us from our competition in the RV industry,” Smith continued.

RV dealers seem likely to conservatively manage their inventories in the coming months, especially for motor homes. Such conservatism has resulted in lower production volumes so far in the first fiscal quarter. This has led to costs related to short work weeks and layoffs that will negatively impact near-term margins. Operating expenses are expected to show continued year-over-year declines, although at a reduced rate compared with recent quarters.

“Overall, despite expectations of a challenging fiscal 2009, we are confident that the changes we continue to make in all sectors of our Company will enable us to weather current conditions and to capitalize on an upturn,” Smith concluded.

Conference Call
The Company will host a conference call with interested parties at 10:30 a.m. PDT/1:30 p.m. EDT on Thursday, June 26, 2008. The call will be broadcast live on the Company’s website, www.fleetwood.com under Investor Relations, and over the Internet at www.streetevents.com and www.earnings.com.

About Fleetwood
Fleetwood Enterprises, Inc., through its subsidiaries, is a leading producer of recreational vehicles and manufactured homes. This Fortune 1000 company, headquartered in Riverside, Calif., is dedicated to providing quality, innovative products that offer exceptional value to its customers. Fleetwood operates facilities strategically located throughout the nation, including recreational vehicle, manufactured housing and supply subsidiary plants. For more information, visit the Company’s website at www.fleetwood.com.
  
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, including those regarding our outlook for the RV and housing industries, the effect of Fleetwood Financial Services on our competitive position, our pursuit of modular business, our ability to meet the upcoming $100 million obligation with cash, and our expectation for first quarter revenues and results, 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 lack of assurance that we will regain sustainable profitability in the foreseeable future; the effect of ongoing weakness in both the manufactured housing and the recreational vehicle markets; the effect of a decline in home equity values, volatile fuel prices and interest rates, global tensions, employment trends, stock market performance, availability of financing generally, and other factors that can and have had a negative impact on consumer confidence, which may reduce demand for our products, particularly recreational vehicles; the availability and cost of wholesale and retail financing for both manufactured housing and recreational vehicles; our ability to comply with financial tests and covenants on existing debt obligations; our ability to obtain, on reasonable terms if at all, the financing we will need in the future to execute our business strategies and to meet the repayment terms of our outstanding convertible debt instruments, including the 5% convertible senior subordinated debentures; potential dilution associated with equity financings we may undertake to raise additional capital and the risk that the equity pricing may not be favorable; the cyclical and seasonal nature of both the manufactured housing and recreational vehicle industries; expenses and uncertainties associated with the entry into new business segments or the manufacturing, development, and introduction of new products; the potential for excessive retail inventory levels in the manufactured housing and recreational vehicle industries; the volatility of our stock price; repurchase agreements with floorplan lenders, which could result in increased costs; potential increases in the frequency of product liability, wrongful death, class action, and other legal actions; and the highly competitive nature of our industries.
  
All financial information is unaudited and subject to possible adjustment prior to the finalization of the Company’s Annual Report on Form 10-K.

(tables to follow)
 
Fleetwood Enterprises, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
 

   
13 Weeks Ended
  
52 Weeks Ended
  
   
April 27, 2008
  
April 29, 2007
  
April 27, 2008
  
April 29, 2007
  
Net Sales:
                        
 
RV Group
  
$
257,259
  
$
371,240
  
$
1,163,041
  
$
1,400,886
 
Housing Group 
    
106,288
   
117,075
   
496,939
   
518,461
 
 
    
363,547
   
488,315
   
1,659,980
   
1,919,347
 
                           
Cost of products sold
    
313,765
   
418,151
   
1,410,133
   
1,654,370
 
Gross profit 
    
49,782
   
70,164
   
249,847
   
264,977
 
 
                          
Operating expenses
    
55,360
   
72,674
   
262,474
   
310,269
 
Other operating (income) expenses, net
    
(23,557
)
  
9,608
   
(30,460
)
  
12,487
 
 
    
31,803
   
82,282
   
232,014
   
322,756
 
 
                          
Operating income (loss) 
    
17,979
   
(12,118
)
  
17,833
   
(57,779
)
Other income (expense):
                          
Investment income 
    
733
   
1,201
   
4,459
   
5,902
 
Interest expense 
    
(4,664
)
  
(6,784
)
  
(23,010
)
  
(25,557
)
Other, net 
    
-
   
-
   
-
   
18,530
 
 
                          
 
    
(3,931
)
  
(5,583
)
  
(18,551
)
  
(1,125
)
Income (loss) from continuing operations
                          
before income taxes 
    
14,048
   
(17,701
)
  
(718
)
  
(58,904
)
Benefit (provision) for income taxes
    
7,660
   
(14,268
)
  
3,637
   
(19,109
)
Income (loss) from continuing operations
     21,708     (31,969 )  
2,919
    
(78,013
)
 
                          
Loss from discontinued operations, net
     (2,805 )  
(7,249
)
  
(3,932
)
  
(11,948
)
 
                          
Net income (loss)
  
$
18,903
  
$
(39,218
)
$
(1,013
)
$
(89,961
)
 
   
Basic
 
Diluted
 
Basic
 
Diluted
 
Basic
 
Diluted
 
Basic
 
Diluted
 
                                   
Net income (loss) per common share:
                                                  
Income (loss) from continuing operations 
  
$
0.34
  
$
0.30
  
$
(0.50
)
$
(0.50
)
$
0.05
  
$
0.05
  
$
(1.22
)
$
(1.22
)
Loss from discontinued operations 
    
(0.05
)
  
(0.04
)
  
(0.11
)
  
(0.11
)
  
(0.07
)
  
(0.07
)
  
(0.19
)
  
(0.19
)
                                                   
Net income (loss) per common share
  
$
0.29
  
$
0.26
  
$
(0.61
)
$
(0.61
)
$
(0.02
)
$
(0.02
)
$
(1.41
)
$
(1.41
)
                                                   
Weighted average common shares
    
64,257
   
72,965
   
64,058
   
64,058
   
64,228
   
64,582
   
63,933
   
63,933
 
 
 
Fleetwood Enterprises, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
 

   
April 27, 2008
  
January 27, 2008
  
April 29, 2007
  
ASSETS
              
               
Cash and cash equivalents
  
$
58,262
  
$
20,088
  
$
52,127
  
Restricted cash and investments (A)
    
41,877
   
24,990
   
24,161
 
Receivables
    
102,420
   
112,930
   
118,334
 
Inventories
    
139,813
   
172,503
   
162,944
 
Other current assets
    
40,649
    
47,109
   
53,273
 
Total current assets
    
383,021
    
377,620
   
410,839
 
                     
Property, plant and equipment, net
    
146,573
   
154,277
   
185,454
 
Deferred taxes, net
    
45,909
    
42,362
   
42,577
 
Other assets
    
50,067
   
54,605
   
64,301
 
Total assets
  
$
625,570
  
$
628,864
  
$
703,171
  
                     
LIABILITIES & SHAREHOLDERS' EQUITY
                    
                     
Accounts payable
  
$
27,701
  
$
32,720
  
$
49,625
  
Employee compensation and benefits
    
32,253
   
32,098
   
47,018
 
Other short-term borrowings
    
9,568
   
8,362
   
7,314
 
5% convertible senior subordinated debentures
    
100,000
   
100,000
   
-
 
Other current liabilities
    
109,621
    
127,024
   
142,689
 
Total current liabilities
    
279,143
    
300,204
   
246,646
 
                     
5% convertible senior subordinated debentures
    
-
   
-
   
100,000
 
6% convertible subordinated debentures
    
160,142
   
160,142
   
160,142
 
Other long-term debt
    
16,145
   
17,482
   
17,508
 
Other non-current liabilities
    
83,873
    
85,403
   
92,868
 
Total non-current liabilities
    
260,160
    
263,027
   
370,518
 
                     
Total shareholders' equity
    
86,267
   
65,633
   
86,007
 
                     
Total liabilities and shareholders' equity
  
$
625,570
  
$
628,864
  
$
703,171
  
 
(A)
Includes $16.8 million of restricted cash proceeds from a real estate sale pledged in connection with the Company's secured credit facility. The restriction lapsed on May 23, 2008, following the completion of the substitution of alternative real estate collateral.
 
 
Fleetwood Enterprises, Inc.
CONDENSED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
 

   
13 Weeks Ended
  
52 Weeks Ended
  
   
4/27/2008
  
4/29/2007
  
4/27/2008
  
4/29/2007
  
CASH FLOWS FROM OPERATING ACTIVITIES:
                  
Income (loss) from continuing operations
  
$
21,708
  
$
(31,969
)
$
2,919
  
$
(78,013
)
Adjustments to reconcile net income (loss) to net cash
                          
provided by (used in) operating activities:
                          
Depreciation and amortization expense
    
4,446
   
6,430
   
19,538
   
25,074
 
Stock-based compensation
    
2,508
   
976
   
5,141
   
3,438
 
Gain on sale of property, plant and equipment
    
(24,084
)
  
(561
)
  
(32,487
)
  
(4,325
)
Deferred taxes, net
    
(7,700
)
  
11,136
   
(4,887
)
  
14,721
 
Other non-cash items
    
479
   
(1
)
  
286
   
(15,763
)
Changes in assets and liabilities:
                          
Inventories 
    
32,690
   
18,545
   
23,131
   
5,076
 
Other assets and liabilities, net 
    
(5,495
)
  
31,717
   
(44,689
)
  
18,447
 
                           
Net cash provided by (used in) operating activities
    
24,552
   
36,273
    
(31,048
)
  
(31,345
)
                           
CASH FLOWS FROM INVESTING ACTIVITIES:
                          
Purchases and sales of investments, net
    
(292
)
  
(298
)
  
(1,237
)
  
(1,085
)
Purchases of property, plant and equipment, net
    
(793
)
  
(2,083
)
  
(6,019
)
  
(7,752
)
Proceeds from sale of property, plant and equipment
    
32,739
   
3,149
   
59,699
   
12,398
 
Change in restricted cash
    
(16,790
)
  
--
   
(16,790
)
  
--
 
                           
Net cash provided by investing activities
    
14,864
   
768
   
35,653
   
3,561
 
                           
CASH FLOWS FROM FINANCING ACTIVITIES:
                          
Change in short-term borrowings
    
1,171
   
2,420
   
1,984
   
(341
)
Changes in long-term debt
    
(1,302
)
  
(1,263
)
  
(1,093
)
  
(5,512
)
Redemption of convertible subordinated debentures
    
--
   
--
   
--
   
(30,385
)
Proceeds from exercise of stock options
    
--
   
234
   
872
   
1,063
 
                           
Net cash provided by (used in) financing activities
    
(131
)
  
1,391
   
1,763
   
(35,175
)
                           
CASH FLOWS FROM DISCONTINUED OPERATIONS:
                          
                           
Net cash provided by (used in) discontinued operations
    
(1,111
)
  
3,159
    
(494
)
  
(8,523
)
                           
Foreign currency translation adjustment
    
--
   
815
   
261
   
469
 
                           
Increase (decrease) in cash
    
38,174
   
42,406
   
6,135
   
(71,013
)
                           
Cash at beginning of period
    
20,088
   
9,721
   
52,127
   
123,140
 
                           
Cash at end of period
  
$
58,262
  
$
52,127
  
$
58,262
  
$
52,127
  
 
 
Fleetwood Enterprises, Inc.
BUSINESS SEGMENT AND UNIT SHIPMENT INFORMATION
(Dollar amounts in thousands)
(Unaudited)
 

   
13 Weeks Ended
  
52 Weeks Ended
  
   
April 27, 2008
  
April 29, 2007
  
April 27, 2008
 
April 29, 2007
  
REVENUES:
                  
Motor homes
  
$
189,862
  
$
278,201
  
$
919,578
  
$
961,925
  
Travel trailers
    
61,383
   
83,725
   
219,014
   
391,310
 
RV supply
    
6,014
   
9,314
   
24,449
   
47,651
 
RV Group
    
257,259
   
371,240
   
1,163,041
   
1,400,886
 
Housing Group
    
106,288
   
117,075
   
496,939
   
518,461
 
   
$
363,547
  
$
488,315
  
$
1,659,980
  
$
1,919,347
  
                           
OPERATING INCOME (LOSS):
                          
Motor homes
  
$
(2,176
)
$
11,489
  
$
14,767
  
$
12,122
  
Travel trailers
    
855
   
(23,420
)
  
(16,765
)
  
(65,301
)
RV supply
    
6,896
   
(131
)
  
4,998
   
1,598
 
RV Group
    
5,575
   
(12,062
)
  
3,000
   
(51,581
)
Housing Group
    
507
   
2,099
   
8,608
   
(2,557
)
Corporate and other
    
11,897
   
(2,155
)
  
6,225
   
(3,641
)
   
$
17,979
  
$
(12,118
)
$
17,833
  
$
(57,779
)
                           
UNITS SOLD:
                          
Recreational vehicles -
                          
Motor homes
    
1,716
   
2,386
   
7,804
   
8,496
 
Travel trailers
    
3,145
   
4,566
   
10,926
   
22,035
 
     
4,861
   
6,952
   
18,730
   
30,531
 
                           
Housing -
                          
HUD
    
2,631
   
3,057
   
12,337
   
13,257
 
MOD
    
220
   
-
   
759
   
-
 
     
2,851
   
3,057
   
13,096
   
13,257
 
                           
Total Company shipments
    
7,712
   
10,009
   
31,826
   
43,788
 
 
 
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