FLE Fleetwood Enterprises

- Conference Call to Be Conducted Today at 1:30 p.m. EDT - RIVERSIDE, Calif., July 13 /PRNewswire-FirstCall/ -- Fleetwood Enterprises, Inc. (NYSE:FLE) announced today financial results for the fiscal 2006 fourth quarter and full year ended April 30, 2006. Consolidated Results Consolidated revenues from continuing operations for the fourth quarter of fiscal 2006 improved 8 percent to $602.6 million from $560.2 million in the prior year's fourth quarter. The Company generated income from continuing operations of $2.8 million, or $0.04 per diluted share, versus incurring a loss from continuing operations of $55.8 million, or $1.00 per diluted share, in the fourth quarter of the prior year. Net income for the quarter, which included results from discontinued operations, was $1.7 million, or $0.03 per diluted share, compared to a net loss of $120.5 million, or $2.16 per diluted share, in the fourth quarter of the prior year. For fiscal year 2006, consolidated revenues from continuing operations increased 2 percent to $2.43 billion from $2.37 billion in the prior year. Fleetwood's loss from continuing operations narrowed sharply to $6.1 million, or $0.10 per diluted share, from $72.6 million, or $1.31 per diluted share, in fiscal 2005. The net loss for fiscal 2006 also was reduced significantly to $28.4 million, or $0.48 per diluted share, from a net loss of $161.5 million, or $2.92 per diluted share, in the prior year. "Fleetwood's improved results reflect many factors, not the least of which is our successful restructuring effort," said Elden L. Smith, president and chief executive officer. "The effects of empowering our associates to make decisions closer to the customer are becoming more apparent in improved designs, sales, product quality, service, and morale. Although the markets for motor homes and manufactured housing are currently sluggish, we are confident that we have the correct structure to react quickly to market changes and to continue to enhance our operations." Quarterly Results by Business Segment Recreational vehicle sales for the quarter improved 13 percent to $430.2 million from $381.3 million in the prior year's fourth quarter. The RV Group produced an operating profit of $2.2 million in the fourth quarter compared to incurring an operating loss of $29.8 million in the fourth quarter of the prior year. Despite a softer market, motor home sales were up compared with the prior year partially because of reduced promotional activity, the cost of which is netted against sales. Travel trailer revenues were boosted by $34 million in sales of emergency living units (ELUs) provided for disaster relief and also benefited from reduced promotional activity, as well as improved product acceptance at the dealer level. Folding trailer sales increased 18 percent during the quarter. Revenues for the Housing Group dropped 18 percent to $157.5 million from $192.2 million in the prior fourth quarter. The decline was due primarily to the sale of the Company's retail operations, which were downsized considerably soon after their disposition. The remaining stores continue to be part of an important customer relationship, albeit with more moderate sales volume than before the divestiture. Last year, Fleetwood also filled substantial orders for national community operators. Purchases by this segment of the industry have slowed significantly. Despite the decline in revenues, the Housing Group generated operating income for the fourth quarter of $6.6 million, compared to an operating loss of $7.0 million in the fourth quarter of fiscal 2005. Fleetwood's consolidated operating income for the fourth quarter was $8.3 million versus an operating loss of $49.1 million in the prior year. Fiscal Year Results by Business Segment Recreational vehicle sales for the full fiscal year declined 3 percent to $1.61 billion from $1.66 billion in the prior year. The RV Group ended the year slightly above breakeven with $0.2 million in operating income. This represents substantial progress from the operating loss of $39.2 million in fiscal 2005, primarily because of the same factors that affected the fourth quarter. Fleetwood's Housing Group revenues for fiscal 2006 rose 1 percent to $795.6 million from $785.5 million in the prior year. The Housing Group earned operating income of $38.8 million, a six-fold improvement from $6.4 million in fiscal 2005. The contributing factors were improved labor efficiencies, primarily related to FEMA unit production, lower selling expenses and reduced service and warranty costs, all of which benefited in fiscal 2006 from decentralization and cost containment initiatives. Overall, the Company generated operating income of $29.5 million in fiscal 2006 versus an operating loss of $43.5 million in the prior year. Discontinued Operations Fleetwood's former manufactured housing retail and finance operations have been classified as discontinued operations since the fourth quarter of fiscal 2005. The loss from discontinued operations was $1.2 million in the fourth quarter of fiscal 2006, compared with a loss of $64.6 million in the prior year. The fiscal 2005 fourth quarter loss included a non-cash charge of $51.1 million to record the impairment of assets held for sale at their estimated fair market value less costs to sell. For the full year, the loss from discontinued operations was $22.4 million in fiscal 2006, compared with a loss of $88.9 million in the prior year. Balance Sheet Changes Fleetwood's cash and marketable investment holdings grew by $100.4 million during the current fiscal year to $145.9 million at April 30, 2006. In the same period, total debt, including accrued interest, declined by $158.5 million. The majority of the decline related to payment of the deferred distributions on the Company's 6% convertible trust preferred securities, lower borrowings on the secured credit facility and the elimination of $78.4 million of debt related to Fleetwood's discontinued operations. "Fleetwood ended fiscal 2006 in a strong cash position with considerably less debt than at this time last year," Smith said. " We successfully converted receivables and inventories into cash and removed the overhang of almost $60 million of deferred distributions from our capital structure through a private placement of common stock. As of the end of the year, in addition to healthy cash reserves, we had unused borrowing capacity of almost $100 million. All in all, we feel comfortable with our liquidity." First Quarter Outlook "During the first quarter, the operating environments for most of our businesses have been challenging," Smith said. "In addition, with some of our new travel trailer models, we have experienced temporary parts shortages that impacted efficiencies and will delay some shipments until the second quarter. As a result, we expect to be below breakeven at the operating income line. "We believe motor home sales have been adversely affected by concerns about fuel costs and rising interest rates," Smith continued. "It is likely that we will continue to face reduced volume and low capacity utilization until consumer confidence stabilizes. Although we are cautiously optimistic about demand for our travel trailers, many of which are new, we are closely monitoring market conditions in light of the continued slow motor home market. Early indications are that these new travel trailer product lines are being well received, and this has resulted in stronger order backlogs. We continue to focus on further product enhancements and needed improvements in labor efficiencies. So far this calendar year, our folding trailer division has increased its market share and is enjoying a stronger market. We believe that the market share move is due to our product enhancements and we attribute the improved market environment to consumers' recent move toward lighter-weight towable units, similar to what we have responded to in conventional travel trailers. "We are pleased with the efficiency of our manufactured housing operations and the acceptance of our new regional models, but sales are slower than expected in almost every geographic region," Smith said. "We are optimistic that this market will ultimately improve, as several trends that have adversely affected the business seem to have stabilized and there are indications that some factors may be heading in the right direction. These factors have generally included the high level of repossessed homes in the market, the dearth of available financing, liberal underwriting standards of many site-built lenders, and relatively low apartment rental rates. We also believe that reconstruction of the Gulf Coast is inevitable and factory-built housing will play a significant role in that effort. "We continue to focus on developing more competitive products, further reducing costs, restructuring our operations for greater efficiency, evaluating new markets for growth, and taking advantage of opportunities to further strengthen our balance sheet and financial returns," Smith concluded. "As I enter my second year as Chief Executive Officer of Fleetwood, I am confident that the significant changes made thus far to the Company's structure and operational procedures, combined with ongoing initiatives, better position us to face the current softness in the markets we serve and to thrive over the longer term. In the 30-plus years since I joined Fleetwood, there have been many industry downturns, and I am confident that we know how to manage through them." Conference Call Information On Thursday, July 13, 2006, the Company will host a conference call beginning at 1:30 p.m. EDT to review the results of operations for the fiscal 2006 fourth quarter and full year. The conference call will be broadcast live over the Internet at http://www.streetevents.com/ and http://www.earnings.com/. It also will be accessible from the Company's website, http://www.fleetwood.com/, in the Company Information section. An archive of the call will be available at all three websites shortly after the call concludes. 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 http://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 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 the Company will regain sustainable profitability in the foreseeable future; the Company's ability to comply with financial covenants on existing debt obligations and to obtain future financing needed in order to execute its business strategies; the volatility of our stock price; the impact of ongoing weakness in the manufactured housing market and more recent weakness in the motor home market; the effect of global tensions, fuel prices, interest rates, and other factors on consumer confidence, which in turn may impact demand for Fleetwood's products; the availability and cost of wholesale and retail financing for both manufactured housing and recreational vehicles; repurchase agreements with floorplan lenders, which could result in increased costs; the cyclical and seasonal nature of both the manufactured housing and recreational vehicle industries; potential increases in the frequency of product liability, wrongful death, class action, and other legal actions; expenses and uncertainties associated with the manufacturing, development and introduction of new products; the potential for excessive retail inventory levels in the manufactured housing and recreational vehicle industries; the highly competitive nature of our industries; and lack of acceptance of Fleetwood's products. Contact: Lyle Larkin, Vice President-Treasurer (951) 351-3535 Kathy A. Munson, Director-Investor Relations (951) 351-3650 Fleetwood Enterprises, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Amounts in thousands, except per share data) 13 Weeks Ended April 30, 2006 April 24, 2005 Net Sales: RV Group $430,202 $381,308 Housing Group 157,472 192,249 Supply Group 14,884 14,077 Intercompany sales -- (27,445) 602,558 560,189 Cost of products sold 503,177 485,007 Gross profit 99,381 75,182 Operating expenses 90,916 118,499 Other operating expenses, net 138 5,787 91,054 124,286 Operating income (loss) 8,327 (49,104) Other income (expense) Investment income 1,360 493 Interest expense (6,838) (7,181) Other, net -- -- (5,478) (6,688) Income (loss) from continuing operations before income taxes 2,849 (55,792) (Provision) benefit for income taxes -- (41) Income (loss) from continuing operations 2,849 (55,833) Loss from discontinued operations, net (1,187) (64,624) Net income (loss) $1,662 $(120,457) Basic Diluted Basic Diluted Earnings (loss) per common share: Income (loss) from continuing operations $0.04 $0.04 $(1.00) $(1.00) Loss from discontinued operations (0.01) (0.01) (1.16) (1.16) Net income (loss) per common share $0.03 $0.03 $(2.16) $(2.16) Weighted average common shares 63,820 64,521 55,749 55,749 Fleetwood Enterprises, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Amounts in thousands, except per share data) 53 Weeks Ended 52 Weeks Ended April 30, 2006 April 24, 2005 Net Sales: RV Group $1,612,217 $1,659,882 Housing Group 795,596 785,547 Supply Group 50,214 57,020 Intercompany sales (25,627) (127,737) 2,432,400 2,374,712 Cost of products sold 2,009,708 1,979,482 Gross profit 422,692 395,230 Operating expenses 387,133 420,187 Other operating expenses, net 6,054 18,581 393,187 438,768 Operating income (loss) 29,505 (43,538) Other income (expense) Investment income 5,437 2,385 Interest expense (29,662) (27,349) Other, net -- (2,724) (24,225) (27,688) Income (loss) from continuing operations before income taxes 5,280 (71,226) (Provision) benefit for income taxes (11,345) (1,351) Income (loss) from continuing operations (6,065) (72,577) Loss from discontinued operations, net (22,372) (88,882) Net income (loss) $(28,437) $(161,459) Basic Diluted Basic Diluted Earnings (loss) per common share: Income (loss) from continuing operations $(0.10) $(0.10) $(1.31) $(1.31) Loss from discontinued operations (0.38) (0.38) (1.61) (1.61) Net income (loss) per common share $(0.48) $(0.48) $(2.92) $(2.92) Weighted average common shares 59,506 59,506 55,332 55,332 Fleetwood Enterprises, Inc. CONSOLIDATED BALANCE SHEETS (Amounts in thousands) April 30, January 29, April 24, 2006 2006 2005 ASSETS (Unaudited) Cash $123,141 $63,725 $27,849 Marketable investments 22,768 18,108 17,627 Receivables 154,493 227,632 164,609 Inventories 177,832 225,886 233,591 Deferred taxes, net 18,847 21,849 25,762 Assets of discontinued operations -- -- 145,784 Other current assets 16,851 18,983 23,974 Total current assets 513,932 576,183 639,196 Property, plant and equipment, net 217,458 220,790 232,125 Deferred taxes, net 50,209 42,414 49,001 Cash value of Company-owned life insurance, net 29,938 30,400 36,946 Goodwill 6,316 6,316 6,316 Other assets 44,182 46,110 46,663 Total assets $862,035 $922,213 $1,010,247 LIABILITIES & SHAREHOLDERS' EQUITY Accounts payable $65,333 $68,081 $75,551 Employee compensation and benefits 53,267 58,235 59,036 Federal and state income taxes 2,217 -- -- Product warranty reserve 67,123 66,751 65,143 Short-term borrowings 7,476 5,016 56,661 Insurance reserves 17,531 17,395 18,888 Accrued interest 7,197 63,702 52,446 Liabilities of discontinued operations -- -- 84,702 Other current liabilities 67,728 73,912 82,290 Total current liabilities 287,872 353,092 494,717 Deferred compensation and retirement benefits 33,609 33,776 38,771 Insurance reserves 36,268 33,341 32,215 Long-term debt 123,199 125,249 108,946 Convertible subordinated debentures 210,142 210,142 210,142 Total liabilities 691,090 755,600 884,791 Commitments and contingencies Shareholders' equity: Common stock 63,878 63,616 56,043 Additional paid-in capital 488,906 487,041 424,782 Accumulated deficit (385,233) (386,895) (356,796) Accumulated other comprehensive income 3,394 2,851 1,427 Total shareholders' equity 170,945 166,613 125,456 Total liabilities and shareholders' equity $862,035 $922,213 $1,010,247 Fleetwood Enterprises, Inc. BUSINESS SEGMENT AND UNIT SHIPMENT INFORMATION (Unaudited) (Amounts in thousands) 53 Weeks 52 Weeks 13 Weeks Ended Ended Ended April 30, April 24, April 30, April 24, 2006 2005 2006 2005 OPERATING REVENUES: Motor homes $249,491 $245,809 $976,698 $1,097,091 Travel trailers 158,076 116,236 551,501 477,610 Folding trailers 22,635 19,263 84,018 85,181 RV Group 430,202 381,308 1,612,217 1,659,882 Housing Group 157,472 192,249 795,596 785,547 Supply Group 14,884 14,077 50,214 57,020 Intercompany sales -- (27,445) (25,627) (127,737) $602,558 $560,189 $2,432,400 $2,374,712 OPERATING INCOME (LOSS): Motor homes $1,381 $(5,185) $5,364 $27,702 Travel trailers 2,414 (18,371) 1,067 (40,897) Folding trailers (1,601) (6,271) (6,215) (25,974) RV Group 2,194 (29,827) 216 (39,169) Housing Group 6,569 (7,031) 38,818 6,387 Supply Group 15 454 2,244 3,816 Corporate and other (451) (12,700) (11,773) (14,572) $8,327 $(49,104) $29,505 $(43,538) UNITS SOLD: Recreational vehicles - Motor homes 2,201 2,356 9,074 10,566 Travel trailers 9,363 7,109 34,425 28,927 Folding trailers 2,981 2,637 11,075 11,253 14,545 12,102 54,574 50,746 Manufactured housing - Factory shipments 4,109 5,685 22,681 23,962 Less intercompany -- (742) (673) (3,486) Total shipments from continuing operations 18,654 17,045 76,582 71,222 Retail housing sales -- 946 1,393 4,157 Total Company shipments 18,654 17,991 77,975 75,379 DATASOURCE: Fleetwood Enterprises, Inc. CONTACT: Lyle Larkin, Vice President - Treasurer, +1-951-351-3535, or Kathy A. Munson, Director - Investor Relations, +1-951-351-3650, both of Fleetwood Enterprises, Inc. Web site: http://www.fleetwood.com/

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