8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): July 20, 2005

CHAMPION ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)

Michigan	1-9751	38-2743168
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

2701 Cambridge Court, Suite 300
Auburn Hills, Michigan 48326

(Address of principal executive offices)

Registrant’s telephone number, including area code: (248) 340-9090

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 140.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

Press Release dated July 19, 2005

Item 2.02. Results of Operations and Financial Condition.

     On July 19, 2005, Champion Enterprises, Inc. issued a press release announcing its financial results for the second quarter ended July 2, 2005. This press release is being furnished pursuant to Item 2.02 of Form 8-K. The full text of the press release is furnished as Exhibit 99.1 to this Report and is incorporated herein by reference.

The registrant’s press release issued July 19, 2005 contains a table that reconciles net income and includes a subtotal of pretax internal operating results, which excludes mark-to-market credits (charges) for a stock warrant, debt retirement (loss) gain, income tax (expense) benefit, and (loss) income from discontinued operations. Management believes that pretax internal operating results, which exclude non-cash capital structure related items, income taxes, and discontinued operations, is useful in understanding the results of its core operations of producing and selling factory-built housing.

Item 9.01. Financial Statements and Exhibits.

Exhibits.

Exhibit
Number
99.1	Press Release dated July 19, 2005

SIGNATURES

     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 hereunto duly authorized.

	CHAMPION ENTERPRISES, INC.
	/s/ Phyllis A. Knight
	Phyllis A. Knight,
	Executive Vice President and Chief Financial Officer
Date: July 20, 2005

INDEX TO EXHIBITS

Exhibit No.	Description
99.1	Press Release dated July 19, 2005

EX-99.1

Contacts:
Phyllis Knight, CFO
Champion Enterprises
(248) 340-9090 Exhibit 99.1

Or

Tim Hanson and Paul Kesman
Identity Investor Relations
(248) 258-2333
chb@identitypr.com

Champion Enterprises Reports Net Income of $0.17
Per Diluted Share for the Second Quarter of 2005

Highlighted by double-digit percentage increases in revenues and operating income

AUBURN HILLS, Mich., July 19, 2005 – Champion Enterprises, Inc. (NYSE: CHB), a leader in the factory-built housing industry, announced today results for the second quarter ending July 2, 2005. Revenues for the second quarter of 2005 climbed 17 percent to $317.1 million, compared to $270.5 million for the second quarter of 2004. Second quarter 2005 operating income rose 16 percent to $18.5 million, compared to $16.0 million for the comparable quarter of 2004. For the quarter, the Company posted net income of $13.5 million, or $0.17 per diluted share, compared to $23.4 million, or $0.30 per diluted share for the same period last year.

The second quarter of 2004 was favorably impacted by a number of non-operating items, including a $12.0 million tax benefit and $4.4 million of income related to common stock warrant valuation and debt retirement gains. As a result, provided below is a table summarizing Champion’s pretax internal operating results, which management regards as useful in evaluating its core operations because non-cash capital structure related items and income taxes are excluded.

	Three months ended									Six months ended
(in millions)	July 2,			July 3,			Better /			July 2,			July 3,			Better /
	2005			2004			(worse)			2005			2004			(worse)
Manufacturing segment income	$	24.7		$	17.6		$	7.1		$	35.8		$	22.2		$	13.6
Retail segment income		2.6			1.4			1.2			3.9			2.2			1.7
Corporate, interest expense and intercompany		(12.0	)		(11.7	)		(0.3	)		(22.7	)		(22.7	)		0.0
Pretax internal operating results		15.3			7.3			8.0			17.0			1.7			15.3
Warrant and debt retirement (loss) gain		(0.4	)		4.4			(4.8	)		3.4			(4.0	)		7.4
Income tax (expense) benefits		(0.6	)		11.4			(12.0	)		(0.9	)		11.1			(12.0	)
Income (loss) – continuing operations		14.3			23.1			(8.8	)		19.5			8.8			10.7
(Loss) income – discontinued operations		(0.8	)		0.3			(1.1	)		(3.3	)		0.3			(3.6	)
Net income	$	13.5		$	23.4		$	(9.9	)	$	16.2		$	9.1		$	7.1

2701 Cambridge Court, Suite 300 / Auburn Hills, Michigan 48326
(248) 340-9090 / www.championhomes.net

Champion Enterprises Reports Net Income of $0.17
Per Diluted Share for the Second Quarter of 2005
Page 2 ~

Second Quarter 2005 Highlights

Overall Results

• Pretax internal operating results improved 110 percent to $15.3 million from $7.3 million in the second quarter of 2004.

Manufacturing Segment

• Manufacturing net sales increased 8 percent to $291.6 million from $269.1 million in the second quarter of 2004.

• Manufacturing segment income for the quarter climbed 40 percent to $24.7 million from $17.6 million in the second quarter of 2004.

• Manufacturing margins for the quarter stood at 8.5 percent, marking the ninth consecutive quarter of year-over-year improving margins and the segment’s highest quarterly margin since 1998.

• The average home selling price climbed 10.8 percent compared to the same period in the prior year. The Company said this increase was a result of both higher raw material costs relative to last year’s second quarter and the shift in mix toward a higher percentage of modular homes.

• Modular home sales increased 18 percent compared to last year’s second quarter and represented approximately 20 percent of manufacturing revenues.

• Factory backlog was stable at approximately $91 million as compared to approximately $90 million to end the second quarter of 2004.

Retail Segment

• The Company’s California-based retail segment sales increased 37 percent to $38.8 million, compared to $28.3 million for the second quarter of 2004.

• Retail segment income grew 80 percent to $2.6 million, compared to $1.4 million in the same period last year.

Champion Enterprises Reports Net Income of $0.17
Per Diluted Share for the Second Quarter of 2005
Page 3 ~

Discontinued Operations

• Earlier this week the Company completed the sale of its remaining traditional retail operations, which it reclassified as discontinued operations last quarter. Since announcing its divestiture plan in the fourth quarter of 2004, the Company has sold 49 sales lots generating approximately $26 million of cash after related debt repayments, incurred an aggregate loss of less than $1 million, and generated an estimated $80 million of additional tax loss carryforwards.

Other Highlights

• Cash flow from continuing operating activities totaled $17.4 million for the quarter, and cash and cash equivalents stood at approximately $150 million at quarter end.

• During the quarter, Champion repurchased $9.1 million of its 2007 senior notes for cash totaling $9.9 million and, as previously announced, retired its common stock warrant for cash totaling $4.5 million.

• Earlier today it was also announced that Champion has entered into an agreement to acquire New Era Building Systems, a leading modular homebuilder, and its affiliates, Castle Housing of Pennsylvania and Carolina Building Solutions, for cash consideration of $41 million, pending regulatory and selling shareholder approval.

“This quarter was one in which we achieved several milestones in our quest to build a better Champion,” said William Griffiths, president and chief executive officer. “It was our ninth consecutive quarter of year-over-year improvement in manufacturing margins, and, at 8.5 percent, this was the highest quarterly margin since 1998. Our goal of achieving peak manufacturing margins of 8.3 percent for the full year 2006 is in sight.

“In addition to making progress with our operations strategy, we also successfully completed the divestiture of our traditional retail business which, in the aggregate, generated net cash of approximately $26 million,” continued Griffiths. “As we took the final step in that strategy we also took the first step in our modular growth strategy with the announcement of the agreement to acquire the New Era group of companies. This is expected to add over $100 million in modular revenues annually and be immediately accretive to earnings. It will also make Champion the largest modular homebuilder in the United States.

“While we have made strong progress thus far in building a solid foundation for the future, we still have many opportunities for further improvement. We are excited about the quarter’s results and today’s acquisition announcement, and are well on our way toward building a better Champion,” concluded Griffiths.

Champion Enterprises Reports Net Income of $0.17
Per Diluted Share for the Second Quarter of 2005
Page 4 ~

Second Quarter 2005 Conference Call

Champion Enterprises will host a conference call tomorrow, July 20, at 11 a.m. EDT to discuss these results and current business trends. To listen to the call, please call 800-561-2813 for domestic or 617-614-3529 for international. Passcode is 45945319. Or listen live via the website at www.championhomes.net under the investor relations link. A replay of the call will be available approximately one hour after its conclusion through midnight, Wednesday, July 27, 2005. To access the replay, please go to the investor relations link on the Company’s website, or call 888-286-8010 for domestic or 617-801-6888 for international, passcode is 40272982.

About Champion

Champion Enterprises, headquartered in Auburn Hills, Mich., a leading manufacturer of factory-built housing, has produced more than 1.6 million homes since 1953. Today, Champion operates 29 homebuilding manufacturing facilities in North America and partners with over 2,900 independent retailers, builders and developers. For more information, please visit www.championhomes.net.

Forward Looking Statements

This news release contains certain statements, including statements regarding the Company’s financial position, future margins, growth opportunities, future acquisitions and divestitures, modular revenues, and earnings, each of 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 does not undertake any obligation to update the information contained herein, which speaks only as of the date of this press release. 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 the Company’s most recently filed Form 10-K and other SEC filings, in each case under the section entitled “Forward Looking Statements,” and those discussions regarding risk factors are incorporated herein by reference.

Champion Enterprises Reports Net Income of $0.17
Per Diluted Share for the Second Quarter of 2005
Page 5 ~

CHAMPION ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED) (1)
(Dollars and weighted shares in thousands, except per share amounts)

	Three Months Ended									Six Months Ended
	July 2,			July 3,			%			July 2,			July 3,			%
	2005			2004			Change			2005			2004			Change
Net sales:
Manufacturing	$	291,595		$	269,084			8	%	$	530,333		$	478,940			11	%
Retail (1)		38,805			28,300			37	%		63,942			47,778			34	%
Less: intercompany		(13,300	)		(26,900	)					(32,900	)		(49,500	)
Total net sales		317,100			270,484			17	%		561,375			477,218			18	%
Cost of sales		261,527			224,890			16	%		468,538			404,167			16	%
Gross margin		55,573			45,594			22	%		92,837			73,051			27	%
Selling, general and administrative expenses		36,642			33,927			8	%		68,311			62,170			10	%
Mark-to-market (credit) charge for common stock warrant (2)		(500	)		(3,900	)					(4,300	)		1,200
Loss (gain) on debt retirement (3)		901			(450	)					901			2,776
Operating income		18,530			16,017			16	%		27,925			6,905			304	%
Interest expense, net		3,699			4,341			(15	%)		7,507			9,164			(18	%)
Income (loss) from continuing operations before income taxes (4)		14,831			11,676			27	%		20,418			(2,259	)		1004	%
Income tax expense (benefit) (5)		600			(11,400	)					900			(11,100	)
Income from continuing operations		14,231			23,076			(38	%)		19,518			8,841			121	%
(Loss) income from discontinued operations, net of taxes (1)		(751	)		356						(3,309	)		268
Net income	$	13,480		$	23,432			(42	%)	$	16,209		$	9,109			78	%
Income from continuing operations	$	14,231		$	23,076					$	19,518		$	8,841
Less: dividends on preferred stock		(34	)		(259	)					(293	)		(419	)
Less: amount allocated to participating securities (6)		(195	)		(1,594	)					(793	)		(545	)
Income from continuing operations available to common shareholders	$	14,002		$	21,223			(34	%)	$	18,432		$	7,877			134	%
Basic income (loss) per share (6):
Income from continuing operations	$	0.19		$	0.30			(37	%)	$	0.25		$	0.11			127	%
(Loss) income from discontinued operations		(0.01	)		0.01						(0.05	)		0.01
Net income	$	0.18		$	0.31			(42	%)	$	0.20		$	0.12			67	%
Weighted shares for basic EPS		75,176			70,657						73,861			69,380
Diluted income (loss) per share (6):
Income from continuing operations	$	0.18		$	0.29			(38	%)	$	0.25		$	0.11			127	%
(Loss) income from discontinued operations		(0.01	)		0.01						(0.05	)		—
Net income	$	0.17		$	0.30			(43	%)	$	0.20		$	0.11			82	%
Weighted shares for diluted EPS		76,042			72,253						74,756			71,152

See accompanying Notes to Financial Information.

Champion Enterprises Reports Net Income of $0.17
Per Diluted Share for the Second Quarter of 2005
Page 6 ~

CHAMPION ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) (1)
(In thousands)

	July 2,		April 2,		January 1,
	2005		2005		2005
Assets
Cash and cash equivalents	$	149,899	$	142,119	$	142,266
Restricted cash		528		4,694		529
Accounts receivable, trade		41,694		34,245		22,119
Inventories		80,886		83,869		71,616
Current assets of discontinued operations		9,780		14,751		35,463
Other current assets		13,736		13,003		13,535
Total current assets		296,523		292,681		285,528
Property, plant and equipment, net		78,207		77,999		80,957
Goodwill		126,564		126,583		126,591
Non-current assets of discontinued operations		4,701		6,478		7,747
Other non-current assets		13,371		15,726		16,219
	$	519,366	$	519,467	$	517,042
Liabilities, Redeemable Convertible Preferred Stock and Shareholders’ Equity
Accounts payable	$	33,673	$	28,664	$	13,819
Current liabilities of discontinued operations		5,422		9,051		21,411
Other accrued liabilities		136,620		137,052		141,128
Total current liabilities		175,715		174,767		176,358
Long-term debt		191,543		200,710		200,758
Long-term liabilities of discontinued operations		342		417		432
Other long-term liabilities		34,660		40,492		41,444
Redeemable convertible preferred stock		—		20,750		20,750
Shareholders’ equity		117,106		82,331		77,300
	$	519,366	$	519,467	$	517,042

See accompanying Notes to Financial Information.

Champion Enterprises Reports Net Income of $0.17
Per Diluted Share for the Second Quarter of 2005
Page 7 ~

CHAMPION ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED CASH FLOW STATEMENTS (UNAUDITED) (1)
(In thousands)

	Three Months Ended						Six Months Ended
	July 2,			July 3,			July 2,			July 3,
	2005			2004			2005			2004
Income from continuing operations	$	14,231		$	23,083		$	19,518		$	8,841
Adjustments:
Depreciation		2,524			2,672			5,063			5,342
Mark-to-market (credit) charge for common stock warrant (2)		(500	)		(3,900	)		(4,300	)		1,200
Loss (gain) on debt retirement (3)		901			(450	)		901			2,776
Gains on fixed asset sales		(1,029	)		(111	)		(2,624	)		(74	)
Changes in working capital		391			(1,810	)		(9,143	)		(26,865	)
Changes in accrued liabilities		(408	)		(1,007	)		(2,222	)		(6,025	)
Decease in allow. for tax adjustments (5)		—			(12,000	)		—			(12,000	)
Other		1,316			(1,745	)		5,141			(967	)
Cash provided by (used for) continuing operating activities		17,426			4,732			12,334			(27,772	)
(Loss) income from discontinued operations		(751	)		349			(3,309	)		268
Proceeds from sales of retail business		4,744			—			24,312			—
(Increase) decrease in net assets of discontinued operations		(1,132	)		(3,841	)		(11,127	)		(7,196	)
Cash provided by (used for) discontinued operations (1)		2,861			(3,492	)		9,876			(6,928	)
Additions to property, plant and equipment		(2,902	)		(2,250	)		(5,370	)		(4,130	)
Proceeds on disposal of fixed assets		310			1,017			5,056			1,240
Other		—			(51	)		(55	)		(109	)
Cash (used for) provided by investing activities		(2,592	)		(1,284	)		(369	)		(2,999	)
Decrease in floor plan payable, net		—			—			—			(29	)
Repayment of industrial revenue bond and other debt		(77	)		(126	)		(128	)		(5,939	)
Purchase of Senior Notes (3)		(9,885	)		(10,395	)		(9,885	)		(10,395	)
Decrease (increase) in restricted cash		4,166			6,000			1			7,710
Purchase of common stock warrant (2)		(4,500	)		—			(4,500	)		—
Preferred stock issued, net		—			—			—			12,000
Common stock issued, net		415			2,901			597			4,512
Dividends paid on preferred stock		(34	)		(48	)		(293	)		(160	)
Cash (used for) provided by financing activities		(9,915	)		(1,668	)		(14,208	)		7,699
Increase (decrease) in cash and cash equivalents		7,780			(1,712	)		7,633			(30,000	)
Cash and cash equivalents at beginning of period		142,119			117,580			142,266			145,868
Cash and cash equivalents at end of period	$	149,899		$	115,868		$	149,899		$	115,868

See accompanying Notes to Financial Information.

Champion Enterprises Reports Net Income of $0.17
Per Diluted Share for the Second Quarter of 2005
Page 8 ~

CHAMPION ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL INFORMATION (UNAUDITED)

(1) The Company’s discontinued operations consists of its traditional retail business, and former consumer finance business, excluding its non-traditional California retail operations. Prior traditional retail amounts have been restated to reflect this classification.

(2) In the quarter ended July 2, 2005 Champion recorded a $0.5 million credit for the change in estimated fair value of an outstanding common stock warrant for 2.2 million shares. This warrant valuation resulted in a credit of $3.9 million in the comparable quarter a year earlier. In addition, during the second quarter of 2005, the Company repurchased and subsequently cancelled the common stock warrant in exchange for a cash payment of $4.5 million and the preferred shareholder elected to immediately convert the outstanding Series B-2 and Series C preferred stock into 3.1 million shares of common stock under the terms of the respective preferred stock agreements.

(3) During the second quarter of 2005, the Company purchased $9.1 million of its Senior Notes for cash consideration of $9.9 million, resulting in a pretax loss of $0.9 million.

(4) The Company evaluates the performance of its manufacturing and retail segments based on earnings before interest, income taxes and general corporate expenses. A reconciliation of income (loss) from continuing operations before income taxes for the three and six months ended follows (dollars in thousands):

	July 2,			Related			July 3,			Related			%
Three months ended:	2005			Sales			2004			Sales			Change
Manufacturing segment income	$	24,667			8.5	%	$	17,567			6.5	%		40	%
Retail segment income		2,602			6.7	%		1,445			5.1	%		80	%
General corporate expenses		(8,738	)					(6,845	)					(28	%)
Mark-to-market credit (charge) for stock warrant		500						3,900
(Loss) gain on debt retirement		(901	)					450
Intercompany eliminations		400						(500	)
Interest expense, net		(3,699	)					(4,341	)					15	%
Income from continuing operations before income taxes	$	14,831			4.7	%	$	11,676			4.3	%		27	%

	July 2,			Related			July 3,			Related			%
Six months ended	2005			Sales			2004			Sales			Change
Manufacturing segment income	$	35,857			6.8	%	$	22,221			4.6	%		61	%
Retail segment income		3,869			6.1	%		2,228			4.7	%		74	%
General corporate expenses		(16,800	)					(12,868	)					(31	%)
Mark-to-market credit (charge) for stock warrant		4,300						(1,200	)
Loss on debt retirement		(901	)					(2,776	)
Intercompany eliminations		1,600						(700	)
Interest expense, net		(7,507	)					(9,164	)					18	%
Income (loss) from continuing operations before income taxes	$	20,418			3.6	%	$	(2,259	)		(0.5	%)		1004	%

(5) The effective tax rates for the periods presented differ from the 35 percent federal statutory rate because the Company has a 100 percent deferred tax asset valuation allowance. In addition, the Company is in a federal tax loss carryforward position and tax benefits can only be recorded to the extent of current taxable income. Income tax expense consisted of state and foreign income taxes.

(6) EPS for periods reported reflect the adoption of EITF 03-6, which requires the use of the two-class method for enterprises with participating securities. The Company’s participating securities during the periods consisted of its convertible preferred stock and common stock warrant, which may participate in dividends paid on common stock pursuant to the terms of the securities. The Company has no plans to pay dividends on its common stock in the near term. As a result of the repurchase and cancellation of the warrant and the conversion of all convertible preferred stock in April 2005, the Company’s participating securities have been eliminated for future periods.

Champion Enterprises Reports Net Income of $0.17
Per Diluted Share for the Second Quarter of 2005
Page 9 ~

CHAMPION ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL INFORMATION (UNAUDITED)

	Three Months Ended									Six Months Ended
	July 2,			July 3,			%			July 2,			July 3,			%
	2005			2004			Change			2005			2004			Change
MANUFACTURING
Homes sold
HUD Code		4,843			5,264			(8	%)		8,857			9,386			(6	%)
Modular		868			838			4	%		1,648			1,532			8	%
Canadian		264			252			5	%		460			441			4	%
Total homes sold		5,975			6,354			(6	%)		10,965			11,359			(3	%)
Less: intercompany		216			556			(61	%)		555			1,002			(45	%)
Homes sold to independent retailers/builders		5,759			5,798			(1	%)		10,410			10,357			1	%
Floors sold		11,406			12,037			(5	%)		21,015			21,761			(3	%)
Multi-section mix		84	%		83	%					85	%		85	%
Average home prices
Total	$	45,200		$	40,800			11	%	$	44,700		$	40,700			10	%
HUD Code	$	42,800								$	42,200
Modular	$	60,500								$	58,600