FLE Fleetwood Enterprises

- Conference Call to Be Conducted Today at 1:30 p.m. EDT - RIVERSIDE, Calif., July 12 /PRNewswire-FirstCall/ -- Fleetwood Enterprises, Inc. (NYSE:FLE) announced today financial results for the fiscal 2007 fourth quarter and full year ended April 29, 2007. Consolidated Results Consolidated revenues for the fourth quarter of fiscal 2007 declined 16 percent to $508.4 million from $602.6 million in the same period of the prior year. Fleetwood's consolidated operating loss was $18.6 million versus operating income of $8.3 million in the fourth quarter of the prior year. The Company's net loss, which included results from discontinued operations, was $39.2 million, or $0.61 per share, compared to net income of $1.7 million, or $0.03 per share, in the fourth quarter last year. The current quarter loss included one-time severance costs of $10.2 million, or $0.16 per share, associated with the closure of five travel trailer plants and a non-cash adjustment to the Company's deferred tax asset of $11.1 million, or $0.17 per share. In total, these costs were $21.3 million, or $0.33 per share. For fiscal year 2007, consolidated revenues fell 17 percent to $2.01 billion from $2.43 billion in the prior year. Fleetwood's consolidated operating loss was $67.0 million versus operating income of $29.5 million in the prior year. The net loss totaled $90.0 million, or $1.41 per share, compared to a net loss of $28.4 million, or $0.48 per share, in fiscal 2006. The fiscal 2007 loss included severance costs of $14.0 million, or $0.22 per share, and adjustments to the Company's deferred tax asset of $14.7 million, or $0.23 per share. "Despite the significant restructuring costs from plant closures, the fourth quarter operating loss was, as expected, narrower than the third quarter," said Elden L. Smith, president and chief executive officer. "The difficult market environment was particularly evident in our travel trailer division, where poor operating results prompted us to reduce manufacturing capacity by closing five smaller or underperforming travel trailer plants. We have also made significant improvements to our model year 2008 travel trailers and streamlined our product offering. We have been gratified by the reaction to the early shipments of our '08 travel trailer products. We believe that our company-wide efforts to eliminate inefficiencies, curtail costs, and increase revenues through enhanced products will provide a foundation for Fleetwood's consistent operational improvement. These factors combined with more efficient operations are expected to yield considerably better financial results in the next year." Fourth Quarter Results by Business Segment Recreational vehicle sales were down 11 percent to $382.0 million from $430.2 million in the fourth quarter of the prior year. The RV Group incurred a quarterly operating loss of $18.4 million compared to the prior-year fourth quarter operating profit of $2.2 million, which was aided by $33 million in sales of emergency living units provided by the travel trailer division in support of FEMA's disaster relief effort. Motor home sales for the quarter increased by 12 percent, and the division generated operating income of $11.5 million, its best performance in more than two years. These results were encouraging, but were overshadowed by losses in the travel and folding trailer divisions, including the restructuring costs. Revenues for the Housing Group dropped 26 percent to $116.9 million from $157.5 million in the fourth quarter of the prior year. Despite the sharp decline in revenues, the Housing Group generated operating income of $1.7 million, compared with $6.6 million in last year's fourth quarter. Fiscal Year Results by Business Segment Recreational vehicle sales for the full fiscal year declined 11 percent to $1.44 billion from $1.61 billion in the prior year. The RV Group's operating loss was $62.4 million, compared to operating income of $0.2 million last year. The travel trailer division's results were responsible for the swing, as the division lost $65.3 million in fiscal 2007 but earned $1.1 million in the previous year. Fleetwood's Housing Group revenues fell 35 percent to $518.3 million from $795.6 million in the prior year, or by 27 percent excluding FEMA sales of $86.8 million in fiscal 2006. The Group posted a loss of $2.6 million, compared to the prior year's operating income of $38.8 million. In addition to the steep decline in revenues, the comparison was also impacted by higher labor efficiencies associated with FEMA unit production in the prior year. Balance Sheet Changes As a result of the net loss for the year and the redemption of $50 million in debt securities, cash and marketable securities on Fleetwood's balance sheet declined by almost $70 million year over year. At the same time, total debt, including the credit facility, dropped by almost $56 million. Despite the reduction in cash, the year-end balance sheet reflects more than $70 million in liquid assets; and liquidity, as defined under the Company's secured credit facility (bank cash balances plus unused borrowing availability), stood at $117.4 million, well in excess of the $50 million benchmark set in the credit agreement for testing financial covenants. Over the course of the year, the Company sold six idle facilities, generating more than $10 million in proceeds and $4 million in gains. Fleetwood will continue to aggressively market idle real estate properties in fiscal 2008 as part of its strategy to deploy capital as effectively as possible. "The recent three-year renewal of the bank credit agreement on favorable terms, along with the amendment finalized shortly after fiscal year end, affords the Company good financial flexibility and resets covenant requirements that reflect recent restructuring decisions and management's expectations of financial results," Smith said. "We anticipate that current cash balances, borrowing capacity under the credit facility and improved cash flow from operations will provide the resources needed to execute our business strategies as we move forward. First Quarter Outlook "A successful turnaround of our travel trailer business will be key to the extent and timing of our financial improvement in fiscal 2008," Smith said. "In all other areas of our business, we believe we are positioned well for the current markets, as evidenced by backlogs that are improved and healthy in motor homes and improving in housing (up 36 percent and 58 percent respectively from the prior year as of the end of the quarter). The strength of the manufactured housing market continues to vary widely by geographic area, but despite the uncertain environment, we are increasingly optimistic about our Housing Group's prospects. "Although market conditions in all of our businesses remain flat or worse than last year at this time, we expect improved operating results for the first quarter of fiscal 2008 compared to the prior year," Smith concluded. "We have created a more cost-efficient structure and believe that we are gaining market share in some key segments. As a result, operating results (before interest and taxes) for the first quarter of fiscal 2008 should be close to the breakeven level." Conference Call Information On Thursday, July 12, 2007, the Company will host a conference call beginning at 1:30 p.m. EDT to review the results of operations for the fiscal 2007 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 Investor Relations 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, such as those regarding improved efficiency, adequate liquidity, market share gains, and improving operating 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 the manufactured housing market and more recent weakness in the recreational vehicle market; the effect of global tensions, fuel prices, interest rates, and other factors on consumer confidence, which in turn 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 the financing we will need in the future to execute our business strategies; 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. Contact: Lyle Larkin, Vice President - Treasurer (951)351-3535 Kathy A. Munson, Director - Investor Relations (951)351-3650 (tables to follow) Fleetwood Enterprises, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share data) 13 Weeks Ended April 29, 2007 April 30, 2006 Net Sales: RV Group $382,017 $430,202 Housing Group 116,926 157,472 Supply Group 9,463 14,884 Intercompany Housing Group sales -- -- 508,406 602,558 Cost of products sold 436,364 503,177 Gross profit 72,042 99,381 Operating expenses 81,042 90,916 Other operating expenses, net 9,629 138 90,671 91,054 Operating income (loss) (18,629) 8,327 Other income (expense): Investment income 1,201 1,360 Interest expense (9,684) (6,838) Other, net -- -- (8,483) (5,478) Income (loss) from continuing operations before income taxes (27,112) 2,849 Provision for income taxes (11,768) -- Income (loss) from continuing operations (38,880) 2,849 Loss from discontinued operations, net (338) (1,187) Net income (loss) $(39,218) $1,662 Basic Diluted Basic Diluted Net, income (loss) per common share: Income (loss) from continuing operations $(0.61) $(0.61) $0.04 $0.04 Loss from discontinued operations -- -- (0.01) (0.01) Net income (loss) per common share $(0.61) $(0.61) $0.03 $0.03 Weighted average common shares 64,058 64,058 63,820 64,521 52 Weeks Ended 53 Weeks Ended April 29, 2007 April 30, 2006 Net Sales: RV Group $1,441,810 $1,612,217 Housing Group 518,258 795,596 Supply Group 47,854 50,214 Intercompany Housing Group sales -- (25,627) 2,007,922 2,432,400 Cost of products sold 1,730,536 2,009,708 Gross profit 277,386 422,692 Operating expenses 331,900 387,133 Other operating expenses, net 12,502 6,054 344,402 393,187 Operating income (loss) (67,016) 29,505 Other income (expense): Investment income 5,902 5,437 Interest expense (28,457) (29,662) Other, net 18,530 -- (4,025) (24,225) Income (loss) from continuing operations before income taxes (71,041) 5,280 Provision for income taxes (16,609) (11,345) Income (loss) from continuing operations (87,650) (6,065) Loss from discontinued operations, net (2,311) (22,372) Net income (loss) $(89,961) $(28,437) Basic Diluted Basic Diluted Net, income (loss) per common share: Income (loss) from continuing operations $(1.37) $(1.37) $(0.10) $(0.10) Loss from discontinued operations (0.04) (0.04) (0.38) (0.38) Net income (loss) per common share $(1.41) $(1.41) $(0.48) $(0.48) Weighted average common shares 63,964 63,964 59,506 59,506 Fleetwood Enterprises, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands) April 29, January 28, April 30, 2007 2007 2006 ASSETS (Unaudited) Cash $52,128 $9,722 $123,141 Marketable investments - available for sale 24,161 24,005 22,768 Receivables 123,535 139,131 154,493 Inventories 174,910 198,243 177,832 Deferred taxes benefits - current 7,847 13,104 14,374 Other current assets 11,256 13,782 16,851 Total current assets 393,837 397,987 509,459 Property, plant and equipment, net 192,229 198,059 217,458 Deferred taxes benefits - non-current 46,488 52,367 54,682 Cash value of Company-owned life insurance, net 22,956 23,113 29,938 Goodwill and intangible assets 6,316 6,316 6,316 Other assets 41,345 43,073 44,182 Total assets $703,171 $720,915 $862,035 LIABILITIES & SHAREHOLDERS' EQUITY Accounts payable $52,226 $53,328 $65,333 Employee compensation and benefits 50,766 39,423 53,267 Federal and state income taxes 2,961 1,315 2,217 Product warranty reserves 45,926 45,015 45,488 Insurance reserves 18,629 17,616 17,531 Other short-term borrowings 7,314 19,785 7,476 Accrued interest 7,526 6,689 7,197 Other current liabilities 69,970 64,959 67,728 Total current liabilities 255,318 248,130 266,237 Deferred compensation and retirement benefits 28,237 28,703 33,609 Product warranty reserves 23,253 22,165 21,635 Insurance reserves 34,560 34,341 36,268 Convertible senior subordinated debentures 100,000 100,000 100,000 Convertible subordinated debentures 160,142 160,142 210,142 Other long-term debt 17,508 3,880 23,199 Total liabilities 619,018 597,361 691,090 Commitments and contingencies Shareholders' equity: Common stock 64,111 64,041 63,878 Additional paid-in capital 493,174 492,034 488,906 Accumulated deficit (475,194) (435,976) (385,233) Accumulated other comprehensive income 2,062 3,455 3,394 Total shareholders' equity 84,153 123,554 170,945 Total liabilities and shareholders' equity $703,171 $720,915 $862,035 Fleetwood Enterprises, Inc. BUSINESS SEGMENT AND UNIT SHIPMENT INFORMATION (Dollar amounts in thousands) 52 Weeks 53 Weeks 13 Weeks Ended Ended Ended April 29, April 30, April 29, April 30, 2007 2006 2007 2006 REVENUES: Motor homes $278,201 $249,491 $961,925 $976,698 Travel trailers 83,725 158,076 391,310 551,501 Folding trailers 20,091 22,635 88,575 84,018 RV Group 382,017 430,202 1,441,810 1,612,217 Housing Group 116,926 157,472 518,258 795,596 Supply Group 9,463 14,884 47,854 50,214 Intercompany Housing Group sales -- -- -- (25,627) $508,406 $602,558 $2,007,922 $2,432,400 OPERATING INCOME (LOSS): Motor homes $11,489 $1,381 $12,122 $5,364 Travel trailers (23,420) 2,414 (65,301) 1,067 Folding trailers (6,511) (1,601) (9,237) (6,215) RV Group (18,442) 2,194 (62,416) 216 Housing Group 1,705 6,569 (2,614) 38,818 Supply Group 263 15 1,655 2,244 Corporate and other (2,155) (451) (3,641) (11,773) $(18,629) $8,327 $(67,016) $29,505 UNITS SOLD: Recreational vehicles - Motor homes 2,386 2,201 8,496 9,074 Travel trailers 4,566 9,363 22,035 34,425 Folding trailers 2,324 2,981 10,223 11,075 9,276 14,545 40,754 54,574 Manufactured housing - Factory shipments 3,057 4,109 13,257 22,681 Less intercompany -- -- -- (673) Total shipments from continuing operations 12,333 18,654 54,011 76,582 Retail housing sales -- -- -- 1,393 Total Company shipments 12,333 18,654 54,011 77,975 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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