FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
X OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1994
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File Number 1-7699
FLEETWOOD ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-1948322
_______________________
_____________________________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3125 Myers Street, Riverside, California 92503-5527
_________________________________________________________________
__________
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (909) 351-
3500
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the
issuer's classes of Common stock as of the close of the period
covered by this report.
Class Outstanding at July 31, 1994
_________________________
_______________________________________
Common stock, $1 par value 45,996,542 shares
Preferred share purchase rights --
CONDENSED FINANCIAL STATEMENTS
The following unaudited interim condensed financial
statements have been prepared by the Company pursuant to the
rules and regulations of the Securities and Exchange
Commission. Such financial statements have been reviewed by
Arthur Andersen & Co. in accordance with standards
established by the American Institute of Certified Public
Accountants. As indicated in their report included herein,
Arthur Andersen & Co. does not express an opinion on these
statements.
Certain information and note disclosures normally
included in annual financial statements prepared in
accordance with generally accepted accounting principles have
been condensed or omitted pursuant to those rules and
regulations, although the Company believes that the
disclosures made are adequate to make the information
presented not misleading. In the Company's opinion, the
statements reflect all adjustments (which include only normal
recurring adjustments) necessary to present fairly the
results of operations for the periods ending July 31, 1994
and July 25, 1993 and the balances as of July 31, 1994 and
April 24, 1994. It is suggested that these condensed
financial statements be read in conjunction with the
financial statements and the notes thereto included in the
Company's latest annual report on Form 10-K.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the board of directors and shareholders of Fleetwood
Enterprises, Inc.:
We have made a review of the accompanying condensed
consolidated balance sheet of FLEETWOOD ENTERPRISES, INC. (a
Delaware Corporation) and subsidiaries as of July 31, 1994,
and the related condensed consolidated statements of income
for the fourteen-week period ended July 31, 1994 and the
thirteen-week period ended July 25, 1993, the condensed
consolidated statements of cash flows for the fourteen-week
period ended July 31, 1994 and the thirteen-week period ended
July 25, 1993 and the condensed consolidated statement of
changes in shareholders' equity for the fourteen-week period
ended July 31, 1994, in accordance with standards established
by the American Institute of Certified Public Accountants.
A review of interim financial information consists
principally of obtaining an understanding of the system for
the preparation of interim financial information, applying
analytical review procedures to the financial data and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit in
accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding
the financial statements taken as a whole. Accordingly, we
do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the condensed
consolidated financial statements referred to above for them
to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally
accepted auditing standards, the consolidated balance sheet
of Fleetwood Enterprises, Inc. and subsidiaries as of April
24, 1994, and the related consolidated statements of income,
cash flows and changes in shareholders' equity for the year
then ended (not presented herein), and, in our report dated
June 23, 1994 we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed
consolidated balance sheet as of April 24, 1994, is fairly
stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
ARTHUR ANDERSEN & CO.
Orange County, California
August 31, 1994
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FLEETWOOD ENTERPRISES, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(CONSENSED)
(Amounts in thousands except per share data)
(UNAUDITED)
Fourteen Thirteen
Weeks Ended Weeks
Ended
July 31, July
25,
1994 1993
<S> <C> <C>
OPERATING REVENUES:
Manufacturing sales $ 753,578 $
528,288
Finance interest income 10,720
9,139
764,298
537,427
COSTS AND EXPENSES:
Cost of products sold 608,536
432,177
Operating expenses 103,889
78,970
Finance interest expense 4,645
3,978
717,070
515,125
Operating income 47,228
22,302
OTHER INCOME
(EXPENSE):
Investment income 2,334
2,545
Interest expense (818)
(573)
Other (11)
40
1,505
2,012
Income before provision for income taxes and
cumulative effect of accounting change 48,733
24,314
Provision for income taxes (19,646)
(9,381)
Minority interest in net loss
of subsidiary 165
193
Income before cumulative effect of
accounting change 29,252
15,126
Cumulative effect of change in accounting
for income taxes --
(1,500)
Net income $ 29,252 $
13,626
Income per share before cumulative effect
of accounting change $.63
$.33
Cumulative effect of change in accounting
for income taxes --
(.03)
Net income per Common and
equivalent share $.63
$.30
Dividends declared per share
of Common stock outstanding $.14
$.125
Common and equivalent shares
outstanding 46,457
46,002
See accompanying notes to financial statements.
FLEETWOOD ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONDENSED)
(Amounts in thousands)
ASSETS
July 31, April
24,
1994
1994
(Unaudited)
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<C> <C>
Cash $ 33,269 $
37,267
Investments 181,675
121,212
Receivables:
Manufacturing 158,402
158,054
Finance company 302,273
386,207
Inventories:
Raw materials 113,383
117,778
Work in process and finished products 53,763
65,876
Land held for future development 6,800
6,800
Property, plant and equipment 235,581
220,788
Deferred tax benefits 63,640
59,084
Other assets 54,278
51,057
$1,203,064
$1,224,123
LIABILITIES AND SHAREHOLDERS'EQUITY
Accounts payable $ 87,810 $
80,568
Commercial paper borrowings and long-term debt 273,887
360,601
Employee compensation and benefits 98,878
98,004
Federal and state taxes on income 16,826
(4,323)
Insurance reserves 43,626
45,343
Other liabilities 112,955
97,715
Total liabilities 633,982
677,908
Contingent liabilities
Minority interest (435)
(251)
Shareholders' equity:
Preferred stock, $1 par value,authorized
10,000,000 shares, none outstanding --
- --
Common stock, $1 par value, authorized
75,000,000 shares, outstanding 45,997,000
at July 31, 1994 and 45,996,000
at April 24,1994 45,997
45,996
Capital surplus 40,956
40,949
Retained earnings 483,899
461,086
Foreign currency translation adjustment (1,248)
(1,565)
Investment securities valuation adjustment (87)
- --
569,517
546,466
$1,203,064
$1,224,123
See accompanying notes to financial statements.
FLEETWOOD ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONDENSED)
(Amounts in thousands)
(UNAUDITED)
Fourteen
Thirteen
Weeks
Weeks
Ended
Ended
July 31,
July 25,
1994
1993
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<C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $29,252
$13,626
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation expense 5,108
4,091
Amortization of intangibles and goodwill 497
455
Provision for credit losses 1,387
672
(Gain) loss on sales of property, plant
and equipment 11
(40)
Changes in assets and liabilities:
(Increase) decrease in manufacturing receivables (348)
19,549
Decrease in inventories 16,508
2,263
Increase in deferred tax benefits
and other assets (8,274)
(6,165)
Increase in accounts payable 7,242
3,447
Increase in employee compensation and benefits 874
99
Increase in Federal and state taxes on income 21,149
10,344
Increase in other liabilities 13,523
5,042
Foreign currency translation adjustment 317
(718)
Net cash provided by operating activities 87,246
52,665
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of finance receivables (310,504)
(239,461)
Principal collected on finance receivables 267,624
222,951
Proceeds from sale of retail sales contracts 125,427
- --
Purchases of investment securities:
Held-to-maturity (1,684,253)
(1,751,377)
Available-for-sale (213,201)
(58,420)
Proceeds from maturity of investment securities:
Held-to-maturity 1,664,110
1,753,597
Available-for-sale 135,970
7,414
Proceeds from sale of available-for-sale
investment securities 36,824
36,173
Purchases of property, plant and equipment, net (19,912)
(25,372)
Minority interest in subsidiary (184)
(193)
Net cash provided by (used in) investing activities 1,901
(54,688)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of commercial paper 471,971
323,448
Principal payments on commercial paper (558,685)
(317,858)
Dividends to shareholders (6,439)
(5,708)
Proceeds from exercise of stock options 8
- -
Net cash used in financing activities (93,145)
(118)
Decrease in cash (3,998)
(2,141)
Cash at beginning of period 37,267
34,834
Cash at end of period $33,269
$32,693
Supplementary disclosures:
Income taxes paid $2,434
$618
Interest paid 6,330
6,041
See accompanying notes to financial statements.
FLEETWOOD ENTERPRISES, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS' EQUITY (CONDENSED)
(Amounts in thousands)
Foreign
Investment
Common Stock Currency
Securities Total
Number Capital Retained
Translation Valuation Shareholders'
of Shares Amount Surplus Earnings
Adjustment Adjustment Equity
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Balance April 24,
1994 45,996 $45,996 $40,949 $461,086 $(1,565)
$ -- $546,466
Add (deduct)-
Net income -- -- -- 29,252 --
- -- 29,252
Cash dividends
declared on Common
stock -- -- -- (6,439) --
- -- (6,439)
Stock options
exercised 1 1 7 -- --
- -- 8
Foreign currency
translation
adjustment -- -- -- -- 317
- -- 317
Investment securities
valuation
adjustment -- -- -- -- --
(87) (87)
Balance July 31,
1994 45,997 $45,997 $40,956 $483,899 $(1,248)
$ (87) $569,517
See accompanying notes to financial statements.
</TABLE>
FLEETWOOD ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1994
1) Reference to Annual Report
Reference is made to the Notes to Consolidated Financial
Statements included in the Company's Form 10-K annual report
for the year ended April 24, 1994.
2) Investment Securities
Effective with the beginning of fiscal year 1995, the Company
adopted FAS No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." The statement requires that
all applicable investments be classified as trading
securities, available-for-sale securities or held-to-
maturity securities. The Company did not have any
investments classified as trading securities during the
periods presented. The statement further requires that
held-to-maturity securities be reported at amortized cost
and available-for-sale securities be reported at fair
value, with unrealized gains and losses excluded from
earnings but reported in a separate component of
shareholders' equity (net of the effect of income taxes)
until they are sold. At the time of sale, any gains or
losses, calculated by the specific identification method,
will be recognized as a component of operating results.
The following is a summary of investment securities as of July
31, 1994:
<TABLE>
(Amounts in
thousands)
Gross Gross Estimated
Amortized Unrealized
Unrealized Fair
Cost Gains Losses Value
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<C>
Available-for-Sale Securities:
U.S. Treasury securities and
obligations of U.S.
government agencies $ 37,664 $ 30 $ 97
$ 37,597
Obligations of states and
political subdivisions 33,741 25 18
33,748
U.S. Corporate securities 1,002 -- --
1,002
Foreign government
obligations 7,634 250 18
7,866
Other debt securities 39,793 336 646
39,483
$119,834 $641 $779
$119,696
Held-to-Maturity Securities:
Foreign government
obligations $ 4,689 $ -- $ --
$ 4,689
Other debt securities 57,239 -- --
57,239
$61,928 $ -- $ --
$61,928
</TABLE>
The amortized cost and estimated fair value of the
securities at July 31, 1994, by contractual maturity, are
shown below. Expected maturities will differ from
contractual maturities because the issuers of the securities
may have the right to prepay obligations without prepayment
penalties.
<TABLE>
(Amounts in thousands)
Fair
Cost Value
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<C>
Available-for-Sale:
Due in one year or less $ 81,084 $
80,657
Due after one year through five years 20,242
20,248
Due after five years through ten years 18,508
18,791
$119,834 $119,696
Held-to-Maturity:
All due in one year or less $61,928$61,928
</TABLE>
Investment income for the quarter ended July 31, 1994
consisted of the following:
Amount
Interest income $2,054
Gross realized gains 299
Gross realized losses (9)
Investment management fees (10)
$2,334
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Current Quarter Compared to Same Quarter Last Year
Significant sales gains from both of the Company's major
business segments led to record earnings for the first quarter
of fiscal 1995. Net income for the quarter ended July 31, 1994,
increased 115 percent to $29,252,000 or 63 cents per share, up
from $13,626,000 or 30 cents per share last year. Last year's
first period earnings included a $1,500,000 charge or 3 cents
per share for a change in accounting for income taxes. Also,
this year's first quarter contained 14 weeks compared to 13
weeks in last year's similar period. Total revenues for the
Company reached $764.3 million for the quarter, 42 percent ahead
of last year's $537.4 million.
Strong demand for manufactured housing in most regions of the
country and an expanding Fleetwood market share resulted in the
highest quarterly housing revenues on record. Housing revenues
jumped 55 percent in the first quarter to $351.9 million, up
from $227.6 million a year ago. The Company sold 18,359 homes
in the period, 49 percent ahead of last year's first quarter.
Housing group sales represented 47 percent of total Company
revenues compared to 43 percent last year.
Recreational vehicle revenues reached a new first quarter high
of $389.9 million, 32 percent ahead of the $294.3 recorded a
year ago. Strong sales gains from motor homes and travel
trailers led to the increase. Motor home revenues were up 36
percent to a first quarter record $220.0 million on a 26
percent gain in unit volume to 4,668. The travel trailer
division also posted record sales for a July quarter with a 29
percent increase to $135.4 million. Unit volume was up 25
percent to 10,755. The Company's folding trailer division
recorded revenues of $21.6 million, a new first quarter high
and 8 percent ahead of last year's exceptionally strong first
period. Folding trailer shipments rose 1 percent to 5,257
units. Fleetwood's European RV operation generated first
quarter revenues of $12.9 million, 66 percent ahead of last
year's $7.7 million. Recreational vehicle sales accounted for
52 percent of total Company revenues, down from 56 percent last
year.
Manufacturing gross profit increased to 19.2 percent of sales
from 18.2 percent last year, reflecting higher profit margins
for both housing and recreational vehicles. This resulted from
a combination of factors, including improved pricing,
relatively stable direct labor and raw material costs, and the
favorable effect of higher volume on certain manufacturing
overhead costs which are not directly variable with sales.
Operating expenses rose 32 percent to $103.9 million, but
decreased as a percentage of revenues from 14.7 percent to 13.6
percent, reflecting the effect of higher volume. Selling
expenses of $43.4 million were up 54 percent, and also rose as
a percentage of revenues from 5.2 percent to 5.7 percent. Cost
increases were primarily volume-related and included higher
product warranty expenses, as well as increases for sales
commissions, marketing programs and product financing. General
and administrative expenses increased 19 percent to $60.5
million primarily due to higher employee compensation and
benefits, much of which was related to increased management
incentive compensation based upon improved profitability.
Non-operating income for the first quarter included net
interest income of $1.5 million, down 23 percent from $2.0
million last year. The decline reflects reduced investment
income primarily caused by lower rates of return and higher
interest expense for the Company's European operation.
The combined Federal and state income tax rate increased to
40.3 percent from last year's 38.6 percent primarily due to
higher amounts accrued for state income taxes in the current
year.
PART II OTHER INFORMATION
There are no other items to be reported or exhibits to be filed.
SIGNATURE
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 thereunto duly authorized.
FLEETWOOD ENTERPRISES, INC.
Paul M. Bingham
Financial Vice President
and Chief Financial Officer
August 31, 1994
