<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(MARK ONE) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
/X/ OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE
REQUIRED)
For the fiscal year ended April 27, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE
REQUIRED)
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 NO.)
3125 MYERS STREET, RIVERSIDE, CALIFORNIA 92503-5527
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (909) 351-3500
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
-------------------------------- ---------------------------------
COMMON STOCK, $1 PAR VALUE NEW YORK STOCK EXCHANGE, INC.
PACIFIC EXCHANGE, INC.
PREFERRED SHARE PURCHASE RIGHTS NEW YORK STOCK EXCHANGE, INC.
PACIFIC EXCHANGE, INC.
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
(TITLE OF CLASS)
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 _____
AGGREGATE MARKET VALUE OF COMMON STOCK HELD BY NON-AFFILIATES ON JUNE 23,
1997: $865,510,000 (29,845,171 SHARES AT CLOSING PRICE ON NEW YORK STOCK
EXCHANGE OF $29.00). FOR THIS PURPOSE ALL SHARES HELD BY OFFICERS AND DIRECTORS
ARE CONSIDERED TO BE HELD BY AFFILIATES, BUT NEITHER THE REGISTRANT NOR SUCH
PERSONS CONCEDE THAT THEY ARE AFFILIATES OF THE REGISTRANT.
COMMON STOCK OUTSTANDING ON JUNE 23, 1997: 35,889,799 SHARES
DOCUMENTS INCORPORATED BY REFERENCE:
THE COMPANY'S PROXY STATEMENT WITH RESPECT TO ITS 1997 ANNUAL MEETING.
<PAGE>
FLEETWOOD ENTERPRISES, INC.
PART I
ITEM 1. BUSINESS
GENERAL
Fleetwood Enterprises, Inc. is the nation's largest producer of manufactured
housing and recreational vehicles (motor homes, travel trailers, folding
trailers and slide-in truck campers). The Company's principal manufacturing
activities are primarily conducted in 18 states within the U.S., and to a much
lesser extent in Canada. In addition, the Company operates three supply
companies which produce components for the primary manufacturing operations,
while also generating outside sales. Fleetwood Credit Corp. (FCC), the Company's
wholly owned RV finance subsidiary, was sold in May 1996. Finance revenues from
FCC have been excluded from revenues, and results of operations have been
classified as discontinued operations.
Fleetwood's business began in 1950 through the formation of a California
corporation. The present company was incorporated in Delaware in September 1977,
and succeeded by merger to all the assets and liabilities of the predecessor
company. The Company's principal executive offices are located in Riverside,
California. As used herein, the terms "Fleetwood" or "Company" mean Fleetwood
Enterprises, Inc. and its subsidiaries, unless otherwise indicated by the
context.
FINANCIAL INFORMATION RELATING TO INDUSTRY SEGMENTS
The following table sets forth revenues by business segment and the relative
contribution of such revenues to total revenues for the past three fiscal years.
Information with respect to operating profit (loss) and identifiable assets by
industry segment is shown in the Notes to Consolidated Financial Statements in
Part II of this Form 10-K.
<TABLE>
<CAPTION>
YEARS ENDED APRIL
-------------------------------------------------------------------------
1997 % 1996 % 1995 %
------------ --- ------------ --- ------------ ---
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Manufactured housing............................. $ 1,426,940 50% $ 1,443,016 51% $ 1,370,293 49%
------------ --- ------------ --- ------------ ---
Recreational vehicles:
North American sales--
Motor homes.............................. 855,214 30 720,186 26 759,792 27
Travel trailers.......................... 453,274 16 458,159 16 493,432 17
Folding trailers......................... 86,675 3 87,208 3 82,207 3
European sales............................... -- -- 51,941 2 52,488 2
------------ --- ------------ --- ------------ ---
1,395,163 49 1,317,494 47 1,387,919 49
------------ --- ------------ --- ------------ ---
Supply operations................................ 52,323 1 48,767 2 49,650 2
------------ --- ------------ --- ------------ ---
$ 2,874,426 100% $ 2,809,277 100% $ 2,807,862 100%
------------ --- ------------ --- ------------ ---
------------ --- ------------ --- ------------ ---
</TABLE>
MANUFACTURED HOUSING
With many of the nation's households priced out of the site-built single
family home market, manufactured housing has for some time been the principal
source of housing in the economical new home market. Manufactured homes are
transported from the factory to the site in one or more sections, and are
installed utilizing their own chassis on either temporary or permanent
foundations. Although manufactured homes are transportable, they are rarely
moved after shipment from the factory to the homesite. About 60 percent of the
manufactured homes produced in the United States are placed on individually
owned lots. The balance are located on leased sites in manufactured housing
communities.
Homes manufactured by the Company are built to manufactured home
construction and safety standards established by the U.S. Department of Housing
and Urban Development. Fleetwood produces manufactured housing using efficient,
assembly-line techniques with basically the same materials that are
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used in site-built homes. The Company purchases components primarily from
outside sources, installs plumbing, electrical and heating systems and
fabricates sub-floors, walls, cabinets and wardrobes. Interior walls are
typically constructed with a drywall material and exterior walls from wood
products, anodized steel, simulated stucco or a combination of these materials.
Roofs are covered with asphalt or wood shingles or constructed of galvanized
steel.
Fleetwood's housing products are sold under various trade names with models
available in a variety of floorplans ranging in size from 820 to 2,650 square
feet. A typical manufactured home includes a living room, dining area, kitchen,
one or two bathrooms, and usually two or more bedrooms. Substantially all of the
Company's homes are equipped with carpeting, major appliances, drapes and forced
air furnaces, and may include furniture, all of which are included in the base
price. Optional features available include upgraded furniture packages, air
conditioning, automatic dishwashers and washers and dryers. Retail prices of the
Company's manufactured homes range from approximately $11,000 up to about
$120,000, although most are designed to sell for under $25,000.
In some states, manufactured homes are still classified legally and by
taxing authorities as personal property rather than real estate. Historically,
they have been financed as personal property with shorter loan maturities and
higher interest rates than conventional home mortgages. However, over the past
decade a growing number of states have begun treating manufactured homes as real
estate for tax and titling purposes. This is especially the case when they are
attached to permanent foundations on individually owned lots. Such real estate
treatment has in turn favorably affected financing. Retail financing has moved
closer to that of site-built housing, especially in those areas of the country
where multi-section homes have become a significant factor, or where land is
also being purchased and financed in the same transaction.
RECREATIONAL VEHICLES
MOTOR HOMES:
Fleetwood is the largest producer of motor homes in the United States,
manufacturing products under the brand names Bounder, Southwind, Pace Arrow,
Pace Arrow Vision, Flair, Storm, Discovery, American Eagle, American Dream,
American Tradition, Tioga and Jamboree.
Motor homes are self-propelled vehicles which are primarily utilized for
vacations, camping trips and other leisure activities. A motor home is a
bus-like unit built directly on a purchased automotive chassis. The interior
typically includes the driver area, kitchen, bathroom, dining and sleeping
areas. The Company's Bounder, Southwind, Pace Arrow, Pace Arrow Vision, Flair,
Storm, Discovery, American Eagle, American Dream and American Tradition lines
are conventional (Type A) motor homes which are fully self-contained, having
sleeping accommodations for four to eight people and such optional features as
air conditioning, auxiliary power generator and stereo radio. These units are
available in a variety of models ranging in length from 24' to 40'. Tioga and
Jamboree are more compact (Type C) motor homes built on cut-away van chassis
with basically the same features and options as full-size conventional models.
Type C units are available in various models ranging in length from 19' to 31'.
In May 1996, the Company sold its interest in its European subsidiary,
Niesmann and Bischoff, a motor home manufacturer located in Koblenz, Germany.
The Company had acquired a majority interest in this subsidiary in September
1992. The loss on disposition was recognized in the fourth quarter of fiscal
1996.
TRAVEL TRAILERS:
Fleetwood is the largest manufacturer of travel trailers in the United
States, marketing products under the brand names Prowler, Terry, Wilderness,
Mallard, Savanna, Avion and Westport.
Fleetwood's travel trailers are designed to be towed by pickup trucks, vans
or other appropriate tow vehicles, and are similar to motor homes in use and
features. Although they are not generally designed to provide permanent living
quarters, travel trailers do provide comfortable living facilities for short
periods of time. All travel trailer models produced by the Company include
sleeping, eating and bathroom facilities. In addition, all of the Company's
travel trailers are self-contained units with their own lighting,
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heating, refrigeration, fresh water storage tanks and sewage holding tanks so
that they can be lived in for short periods without being attached to utilities.
Most conventional travel trailers produced by Fleetwood are in 8' widths and
vary in length from 19' to 39' (including trailer hitch). The Avion and Westport
products are slightly larger than the standard 8' width. The Company also
produces fifth-wheel trailers which are designed to be towed exclusively by
pickup trucks. Slide-in truck campers under the Caribou, Elkhorn and Angler
brand names are manufactured in one of the Company's travel trailer factories.
These units are similar in use and features to travel trailers, but are designed
to fit in the bed of a pickup truck.
FOLDING TRAILERS:
With the acquisition of The Coleman Company's folding trailer operation in
December 1989, Fleetwood became the nation's largest manufacturer of folding
trailers. Folding trailers provide a lower cost alternative to travel trailers
and are lighter and easier to tow. All models have eating and sleeping
facilities and range in length from 17' to 25'.
SUPPLY OPERATIONS AND OTHER BUSINESSES
Supply operations consist of two fiberglass manufacturing companies and a
lumber milling operation. These operations provide a reliable source of quality
components for the Company's principal manufacturing businesses, while also
generating significant outside sales.
The Company's wholly owned insurance subsidiary, Gibraltar Insurance
Company, Ltd., established in 1977, insures primarily products liability risks
of the parent company and its subsidiaries.
During fiscal 1990, the Company purchased a 75 acre land parcel located in
Southern California, and was planning to develop the parcel as a site-built
housing tract. Preliminary work has been done with respect to planning and
approvals, but the Company has decided not to continue with the project. In
fiscal year 1996, the value of the land was written down by $4.1 million to $2.8
million, which approximates the market value of the property.
DISCONTINUED OPERATIONS
In May 1996, the Company completed the sale of its wholly owned RV finance
subsidiary, Fleetwood Credit Corp., to Associates First Capital Corporation. The
sale was a cash transaction for $156.6 million, resulting in an after-tax gain
of $33.9 million which was recognized in the first quarter of fiscal 1997. In
addition, net income of $887,000 from FCC's operations in fiscal 1997 until the
date of sale was recorded in the first quarter as income from discontinued
operations. In connection with the sale, a long-term operating agreement was
signed to assure continuing cooperation between the Company and Associates.
SALES AND DISTRIBUTION
Fleetwood's policy is to produce manufactured housing only against orders
received from dealers, and the Company does not generally maintain an inventory
of finished homes. Recreational vehicles are sometimes built for inventory,
particularly during the winter months in anticipation of heavier spring demand.
The Company sells its recreational vehicles and manufactured housing to
independent dealers operating from approximately 2,600 locations in 49 states
and Canada. Historically, the Company has sold its products through many
independent dealers, none of which individually accounted for a material part of
the Company's total sales. Large chain dealerships have in recent years become
more important distributors of the Company's manufactured housing products.
However, no single dealer accounted for as much as four percent of Fleetwood's
total sales during the most recent fiscal year. In the past, the Company has not
had many exclusive dealership arrangements and most dealers sell competitive
lines; however, the Company's housing group has recently been encouraging a
trend toward more exclusive dealership arrangements, and about 35 percent of
Fleetwood's housing retailers are exclusive.
With the exception of several vertically integrated entities, most companies
in the manufactured housing industry, including Fleetwood, have traditionally
marketed their homes through independent retailers. Recently, competition for
retail shelf space has intensified as additional industry companies have sought
to achieve vertical integration by buying existing retailers. Also,
site-builders with no previous
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involvement in the retail manufactured home business have attempted to purchase
industry retailers, and at least one financial organization has attempted to
consolidate retailers under a single ownership to create a publicly owned retail
organization. These efforts create a risk that independent distribution channels
for Fleetwood homes may not be as readily available as they have been in the
past which might require the Company to alter the way it markets its homes in
the future.
Fleetwood provides most purchasers of its recreational vehicles and
manufactured housing with a one-year warranty against defects in materials and
workmanship, excluding only certain specific components which are separately
warranted by the suppliers. With respect to manufactured homes, the Company
provides a five-year warranty on structural, plumbing and electrical system
failures for homes produced after March 15, 1993. In the case of motor homes,
the warranty period is one year or until a unit has been driven 15,000 miles,
whichever occurs first, except for structural items which are covered for three
years. Annual expenses under such warranties were approximately $104.6 million
in 1997 and $102.4 million in 1996.
For the past few years, the Company has been actively involved in the
quality improvement process which has as one of its objectives the enhancement
of customer satisfaction. This process is facilitated by the use of independent
consumer surveys to determine whether retail customers are satisfied with the
quality of their Fleetwood product and the level of service provided by the
retailer. An independent consumer research firm conducts telephone surveys and
feeds back customer responses to the Company's manufacturing entities and
dealers to reinforce quality performance and eliminate customer problems. Each
year, specific customer satisfaction goals are established for the Company's
manufacturing operations and independent retailers. Dealers who meet these
performance standards are recognized with the Company's Circle of Excellence
award, and Fleetwood manufacturing centers are similarly honored for reaching
high levels of customer satisfaction. These efforts have resulted in increased
awareness by Company employees and retailers of the importance of product
quality and service, which in turn has significantly improved the Company's
customer satisfaction ratings.
Ultimately, the level of Company sales to dealers is determined by the rate
of dealer sales to retail customers. However, in the short run the Company's
shipments may vary markedly from retail sales because of dealers' adjustments to
inventories (upward or downward) based upon such factors as seasonality, current
or impending new model introductions, expectations of future demand and
inventory financing costs. Sales of manufactured housing are somewhat seasonal
and tend to be lower during the winter months in most areas. Recreational
vehicles are used primarily by vacationers and campers and, as a result, sales
historically have been higher during the Company's first and fourth fiscal
quarters.
Sales of recreational vehicles and manufactured housing are generally made
to dealers either on a C.O.D. basis or under commitments by financial
institutions which have agreed to finance dealer purchases. From time to time,
the Company provides financing support programs exclusively for Fleetwood
products. One such program with Fleetwood Credit Corp. (FCC) provides floor plan
financing to Fleetwood recreational vehicle dealers at interest rates slightly
below market, with the Company subsidizing the interest cost. In connection with
the sale of FCC, the Company has agreed to continue this subsidy on a more
limited basis during fiscal years 1997 and 1998. A similar program exists with
another outside lending institution. Under these arrangements, the interest rate
to the dealer varies depending on market rates and the extent to which the
Company subsidizes the programs. With financing sources more readily available
to wholesale and retail buyers, the Company participation in subsidizing
financing support programs has decreased in recent years. The aggregate cost of
wholesale finance subsidies was $3.8 million in 1997 and $7.0 million in 1996.
In fiscal 1992, the Company formed an alliance with Associates, a unit of
Ford Motor Company, for the purpose of establishing wholesale and retail
financing programs exclusively for Fleetwood manufactured housing retailers. One
such program provides retail financing to buyers of Fleetwood homes at
below-market interest rates, with the Company compensating the lender for the
difference between actual and market interest rates. The cost of this program
was $869,000 in 1997 and $958,000 in 1996. Currently, about 500 retailers
representing approximately 950 sales locations participate in this program which
accounts for about 19 percent of the Company's housing volume.
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As is customary in the industry, most lenders financing dealer inventories
require the Company to execute repurchase agreements. These agreements provide
that in the event a dealer defaults on repayment of the financing, the Company
may be required to repurchase its product from the lenders in accordance with a
declining repurchase price schedule. The risk of loss under these agreements is
spread over numerous dealers and lenders, and is further reduced by the resale
value of any products which may be repurchased. The number of units repurchased
and the losses incurred under these agreements have not been significant in the
past.
IDLE FACILITIES
Idle facilities include closed plants and certain other properties which are
not in current use by the Company. There were four idle plants at the end of
both 1997 and 1996. Subsequent to year end, the Company announced that two
manufacturing facilities will be closed and that a recently constructed facility
will not be opened as planned.
Idle facilities consist solely of land and multi-purpose buildings with
nominal carrying costs. The book value of idle facilities was $5.9 million at
April 27, 1997 and $5.5 million at April 28, 1996, net of accumulated
depreciation of $2.7 million and $3.7 million, respectively. In the opinion of
management, the carrying values of idle facilities are not in excess of
realizable value. The Company has generally been successful in disposing of idle
facilities at prices that exceed carrying values.
ENGINEERING AND PRODUCT DEVELOPMENT
The Company is continually engaged in the development of new designs and
production techniques for Fleetwood products and in testing construction
materials. Amounts spent on these activities were $17.2 million in 1997 and
$19.2 million in 1996.
REGULATION (SEE ALSO "COMPETITION AND BUSINESS RISKS")
Standards established by the Federal government, several state and local
governments and the government of Canada regulate the installation of plumbing,
heating and electrical systems and construction methods utilized in the
Company's products. Accordingly, plans and specifications for Fleetwood products
are required to be approved and units may be inspected by the appropriate agency
prior to completion.
The Company is subject to provisions of the Housing and Community
Development Act of 1974, under which HUD establishes construction and safety
standards for manufactured homes, and also may require manufactured housing
producers to send notifications to customers of noncompliances with standards or
to repair manufactured homes which contain certain hazards or defects. The
Company is also subject to the National Traffic and Motor Vehicle Safety Act
under which the Department of Transportation may require manufacturers to recall
recreational vehicles which contain safety-related defects. Fleetwood has
periodically determined on its own initiative to recall and repair certain units
and, on occasion, has had disputes with such Departments over allegations that
its products fail to comply with Federal standards. The costs associated with
such notification or recall campaigns were not significant in the past.
In 1985, HUD adopted product standards regulating formaldehyde emissions
from particleboard and plywood used in manufactured homes and required an air
quality notice regarding formaldehyde to be placed prominently in all
manufactured homes. HUD's regulations are intended to preempt state and local
formaldehyde standards and notice requirements with respect to manufactured home
purchasers.
COMPETITION AND BUSINESS RISKS
Recreational vehicles produced by Fleetwood are intended for use on public
highways, and gasoline is required for the operation of motor homes and most
vehicles used to tow travel trailers and folding trailers. Shortages and
significant increases in the price of gasoline have had a substantial adverse
effect on the market for these products twice in the past and could again
adversely affect demand in the future. The substantial contraction of industry
and Fleetwood RV sales during fiscal 1980, 1981 and 1991, and the
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subsequent improvements in sales as energy concerns abated, are indicative of
the sensitivity of the RV business to energy developments.
The recreational vehicle and manufactured housing businesses are heavily
dependent on the availability and terms of financing for dealer and retail
purchases. Consequently, increases in interest rates and the tightening of
credit through governmental actions or other means have adversely affected the
Company's business in the past and are likely to do so in the future.
Some components of recreational vehicles and manufactured homes are produced
by only a small group of reputable suppliers which have the capacity to supply
large quantities on a national basis. This is especially true in the case of
motor home chassis where Ford Motor Company and General Motors Corporation are
the dominant suppliers. Shortages, production delays or work stoppages by the
employees of such suppliers could have a substantial adverse impact on the
Company's business.
The businesses of producing and selling manufactured housing and
recreational vehicles are highly competitive as to price, design, quality and
service. There is competition from many other manufacturers, some of which,
though smaller than the Company, focus on specific product lines or geographic
areas and provide significant competition.
Any limitation on the growth of the number of spaces for manufactured homes
due to any cause, including local ordinances, which affects the operation of
manufactured housing communities, could adversely affect Fleetwood's housing
business. Manufactured housing communities and individual home placements are
subject to local zoning ordinances and other local regulations relating to
utility service and construction of roadways. In the past, there has been
resistance on the part of property owners to the adoption of zoning ordinances
permitting the location of manufactured homes in residential areas, which is
believed to have adversely affected the growth of the industry. However, in
recent years, important strides have been made in the elimination of
discriminatory zoning laws as more state and local authorities have recognized
the importance of manufactured housing in the overall housing market.
EMPLOYEE RELATIONS
As of April 27, 1997, the Company and its subsidiaries had approximately
18,000 employees. Most full-time employees are provided with paid annual
vacations, group life insurance, medical and hospitalization benefits, a
retirement plan and other fringe benefits. Approximately 600 of these employees
hold management or supervisory positions and work pursuant to written contracts.
Pursuant to these contracts, such employees may receive incentive compensation
depending on the financial performance of the employer entity, which can
represent a substantial part of their total compensation.
As of April 27, 1997, collective bargaining agreements were in effect at two
of Fleetwood's manufacturing locations covering a total of approximately 800
employees. Expiration dates for these agreements are in September 1997 and
November 1999. Except for employees at these plants, no other Company employees
are represented by a certified labor organization.
ITEM 2. PROPERTIES
The Company owns its executive offices which are located at 3125 Myers
Street in Riverside, California. The administrative offices, which occupy
173,500 square feet, are situated on Company-owned parcels of land totaling
approximately 18.1 acres. The following table describes additional property and
buildings owned or leased by the Company and its subsidiaries which are utilized
for manufacturing, research and development, and administrative purposes as of
April 27, 1997.
<TABLE>
<CAPTION>
APPROXIMATE APPROXIMATE
FACILITY AND LOCATION ACREAGE SQUARE FOOTAGE
- - ------------------------------------------------ ----------- --------------
<S> <C> <C>
Plants Producing Manufactured Housing:
Hamilton, Alabama(1).................... 10.2 128,500
Glendale, Arizona....................... 41.5 120,900
Riverside, California................... 18.8 97,600
Woodland, California.................... 15.8 111,500
Auburndale, Florida..................... 13.7 97,200
</TABLE>
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<TABLE>
<CAPTION>
APPROXIMATE APPROXIMATE
FACILITY AND LOCATION ACREAGE SQUARE FOOTAGE
- - ------------------------------------------------ ----------- --------------
<S> <C> <C>
Plant City, Florida..................... 11.5 85,800
Alma, Georgia........................... 43.6 221,700
Broxton, Georgia........................ 20.0 123,100
Douglas, Georgia........................ 25.7 273,600
Douglas, Georgia........................ 20.7 134,100
Fitzgerald, Georgia..................... 18.6 120,900
Pearson, Georgia........................ 13.3 133,200
Pearson, Georgia........................ 16.2 123,900
Willacoochee, Georgia................... 33.2 131,500
Nampa, Idaho............................ 19.8 153,500
Nampa, Idaho............................ 11.4 75,700
Garrett, Indiana........................ 22.1 120,800
Garrett, Indiana........................ 20.4 104,900
Lexington, Mississippi.................. 51.6 266,400
Lexington, Mississippi.................. 30.5 109,000
Lumberton, North Carolina............... 52.0 115,100
Mooresville, North Carolina............. 21.8 119,300
Pembroke, North Carolina................ 32.4 208,900
Roxboro, North Carolina................. 20.0 94,700
Woodburn, Oregon........................ 22.4 197,300
Woodburn, Oregon........................ 29.2 56,500
Elizabethtown, Pennsylvania(1).......... 17.5 101,000
Elizabethtown, Pennsylvania............. 19.7 112,400
Gallatin, Tennessee..................... 18.2 185,900
Lafayette, Tennessee.................... 43.3 130,600
Westmoreland, Tennessee................. 38.6 146,900
Westmoreland, Tennessee................. 20.6 114,800
Belton, Texas........................... 53.1 134,600
Waco, Texas............................. 18.1 117,000
Waco, Texas............................. 8.6 78,700
Waco, Texas............................. 19.4 97,200
Waco, Texas............................. 13.0 114,600
Wichita Falls, Texas.................... 31.5 113,000
Rocky Mount, Virginia................... 13.8 83,400
Rocky Mount, Virginia................... 26.3 133,200
Woodland, Washington.................... 18.0 156,500
Plants Producing Recreational Vehicles:
Motor Homes:
Chico, California....................... 28.6 153,300
Riverside, California................... 36.8 326,700
Decatur, Indiana........................ 90.0 340,000
Decatur, Indiana........................ 25.3 179,300
Paxinos, Pennsylvania................... 71.6 206,200
Motor Home Service Facilities:
Riverside, California................... 9.5 66,000
Decatur, Indiana........................ 34.8 176,600
Travel Trailers:
Rialto, California(2)................... 18.8 115,700
Riverside, California(3)................ 18.5 100,100
Crawfordsville, Indiana................. 15.0 131,500
Hancock, Maryland....................... 20.5 102,900
</TABLE>
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<TABLE>
<CAPTION>
APPROXIMATE APPROXIMATE
FACILITY AND LOCATION ACREAGE SQUARE FOOTAGE
- - ------------------------------------------------ ----------- --------------
<S> <C> <C>
Omaha, Nebraska......................... 22.3 112,100
Edgerton, Ohio.......................... 16.6 92,700
LaGrande, Oregon........................ 32.0 98,000
Pendleton, Oregon....................... 20.8 198,700
Longview, Texas......................... 42.8 157,700
Winchester, Virginia.................... 20.6 122,700
Lindsay, Ontario, Canada................ 9.2 140,800
Folding Trailers:
Somerset, Pennsylvania.................. 42.6 392,500
Plants Producing Components:
Fontana, California..................... 11.9 83,000
Riverside, California................... 10.0 111,000
Hauser Lake, Idaho...................... 28.0 81,000
Decatur, Indiana........................ 32.1 216,500
Division Offices and Research and Development
Facilities:
Riverside, California................... 21.9 234,300
</TABLE>
The following Company-owned manufacturing facilities were not in operation
as of April 27, 1997.
<TABLE>
<CAPTION>
APPROXIMATE APPROXIMATE
FACILITY AND LOCATION ACREAGE SQUARE FOOTAGE
- - ------------------------------------------------ ----------- --------------
<S> <C> <C>
Haines City, Florida............................ 13.6 89,800
Williamsport, Maryland(4)....................... 45.1 71,600
Benton Harbor, Michigan......................... 44.1 104,700
Paxinos, Pennsylvania(5)........................ 7.1 39,600
Lindsay, Ontario, Canada........................ 20.0 72,000
</TABLE>
- - ---------
(1) Manufacturing facility deactivated subsequent to year-end.
(2) Includes 4.0 acres and 27,100 square foot building leased from unaffiliated
outside party.
(3) Includes 1.0 acre and 31,700 square foot building leased from unaffiliated
outside party.
(4) Manufacturing facility activated subsequent to year-end.
(5) Service facility closed in fiscal 1997.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in various legal proceedings, most of which are
routine litigation incident to its business, and some of which are covered in
whole or in part by insurance. In the opinion of management, none of the
uninsured cases involve realistic claims which are material in amount.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the shareholders of the Company
during the fourth quarter of fiscal year 1997.
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EXECUTIVE OFFICERS OF THE COMPANY
<TABLE>
<CAPTION>
NAME TITLE AGE
- - -------------------------------------------------------------------------- ---
<S> <C> <C>
John C. Crean Chairman of the Board and Chief Executive Officer 72
Glenn F. Kummer President and Chief Operating Officer 63
Nelson W. Potter Executive Vice President-Operations 54
Paul M. Bingham Senior Vice President-Finance, Assistant Secretary and 55
Chief Financial Officer
Mallory S. Smith Senior Vice President-Housing Group 55
Richard E. Parks Senior Vice President-Recreational Vehicle Group 50
William H. Lear Vice President-General Counsel and Secretary 57
Larry J. Hughes Vice President-Travel Trailers 53
John R. Weiss Vice President-Motor Homes 45
Larry L. Mace Vice President-Supply Subsidiaries 54
Robert W. Graham Vice President-Administration and Human Resources 60
Lyle N. Larkin Treasurer and Assistant Secretary 52
</TABLE>
None of the Company officers are related by blood, marriage or adoption. All
of the officers have been employed by the Company for at least the past five
years.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS
The following table lists the high and low sales prices for Fleetwood's
Common stock during the past two fiscal years as reported on the New York Stock
Exchange Composite Tape, along with information on dividends paid per share
during the same periods. The Company's Common stock is listed on the New York
and the Pacific stock exchanges and traded on various regional exchanges (Ticker
Symbol: FLE). Call options are traded on the American Stock Exchange.
<TABLE>
<CAPTION>
DIVIDENDS
QUARTER HIGH LOW PAID
- - --------------------------------------------- ------- ------- --------
<S> <C> <C> <C>
Fiscal 1997
First.................................... $31 1/2 $24 1/8 $.15
Second................................... 34 3/4 27 1/8 .16
Third.................................... 37 1/4 24 3/4 .16
Fourth................................... 27 3/4 24 3/8 .16
Fiscal 1996
First.................................... $22 3/4 $18 1/8 $.14
Second................................... 21 3/8 19 1/8 .15
Third.................................... 27 5/8 20 1/2 .15
Fourth................................... 29 23 1/8 .15
</TABLE>
On April 27, 1997, there were approximately 1,600 shareholders of record of
the Company's Common stock.
The Company's policy is to consider dividend payments in the context of the
overall financial strength of the Company and earnings performance over an
extended period of time. During fiscal 1997, the
9
<PAGE>
Company declared quarterly dividends of 16 cents per share. Subsequent to year
end, the Company announced an increase in the quarterly cash dividend from 16
cents to 17 cents per share. The first dividend at the new rate was declared by
the Board of Directors on June 10, 1997, and is payable to shareholders on
August 13, 1997.
ITEM 6. SELECTED FINANCIAL DATA
FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA
YEARS ENDED APRIL
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Sales................................................................. $2,874,426 $2,809,277 $2,807,862 $2,332,184 $1,907,899
Income from continuing operations..................................... 90,052 69,901 75,998 58,553 50,373
Income from discontinued
operations.......................................................... 34,778 9,708 8,635 7,375 6,197
Net income............................................................ 124,830 79,609 84,633 65,928 56,570
Net income per Common and equivalent share:
Continuing operations............................................. 2.30 1.50 1.63 1.27 1.10
Discontinued operations........................................... .89 .21 .19 .16 .13
Total............................................................. 3.19 1.71 1.82 1.43 1.23
Total assets.......................................................... 871,547 1,108,932 940,374 845,219 745,221
Long-term debt........................................................ 55,000 80,000 -- -- --
Cash dividends declared per
Common share........................................................ .64 .60 .56 .50 .47
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
1997 COMPARED TO 1996:
A strong recovery in recreational vehicle profits and a gain on the sale of
the Company's RV finance subsidiary led to record earnings in fiscal 1997. Net
income jumped 57 percent to $124.8 million or $3.19 per share compared to $79.6
million or $1.71 per share in fiscal 1996. Earnings per share increased an even
greater 87 percent due to substantial share repurchases made during fiscal 1997.
Included in net earnings for 1997 was a one-time gain of $33.9 million or 87
cents per share on the sale of Fleetwood Credit Corp. in May 1996. This
transaction and one month of operations prior to the sale were classified as
discontinued operations.
Income from continuing operations rose 29 percent to $90.1 million or $2.30
per share compared to $69.9 million and $1.50 per share in fiscal 1996. Prior
year earnings were reduced by a loss on the divestiture of a European RV
operation and a revaluation of an investment in Southern California real estate.
Excluding these unusual items, which reduced 1996 earnings by approximately
$16.4 million or 35 cents per share after taxes, income from continuing
operations increased about four percent. The better results in 1997 were
entirely driven by the vastly improved recreational vehicle earnings, which more
than offset a decline in manufactured housing profits.
Recreational vehicle sales increased six percent to $1.40 billion compared
to $1.32 billion in the prior year, entirely due to a 19 percent rise in motor
home sales. Last year's RV sales included $52 million from a European operation
which was sold in May 1996. Excluding European sales from the comparison, RV
revenues actually grew 10 percent in fiscal 1997. Motor home sales jumped to a
record $855 million in 1997 as unit volume rose seven percent to 14,345, and
sales mix shifted to larger, higher-priced products. Travel trailer sales of
$453 million were off one percent from the prior year with unit volume slipping
six percent to 32,374. The Company's folding trailer division generated sales of
nearly $87 million, off one percent from fiscal 1996, due to a nine percent
decline in shipments to 18,524 units. Recreational vehicle sales accounted for
49 percent of total Company revenues, up from 47 percent in the previous year.
10
<PAGE>
Manufactured housing sales slipped one percent in fiscal 1997 to $1.43
billion. Although housing shipments dropped five percent to 65,354 homes, the
volume of floors shipped fell only one percent to 99,378, reflecting a shift to
greater sales of multi-section homes. Housing group sales were 50 percent of
total Company revenues, down from 51 percent in fiscal 1996.
Manufacturing gross profit in 1997 declined to 18.8 percent of sales, down
from 19.0 percent in the prior year. RV margins were higher in 1997 due to
increased operating efficiencies and a more favorable sales mix, but this was
more than offset by lower housing margins. Housing profit margins were affected
by more competitive pricing and new plant start-up costs. See Note 15 of the
Notes to Consolidated Financial Statements for further information on operating
profit by industry segment.
Operating costs in 1997 declined slightly to $400.0 million, and dropped as
a percentage of sales from 14.3 percent in 1996 to 13.9 percent in 1997.
Reductions in RV group costs more than offset increases in housing group
expenses. Selling expenses of $181.7 million were down five percent and were
also lower as a percentage of sales, declining from 6.8 percent to 6.3 percent.
Virtually all of the reduction in selling costs came in the RV group, largely
due to lower product financing and sales promotion costs. The RV reductions were
substantially offset by higher costs in the housing group, mainly attributable
to increases in product warranty and sales promotion expenses. General and
administrative expenses rose three percent to $218.3 million, and increased as a
percentage of sales from 7.4 to 7.6 percent. Most of the increase occurred in
the RV group which experienced higher management incentive compensation costs
due to substantially improved profits. Cost increases in the housing group were
attributable to organizational changes and new start-up plants.
Non-operating income was $7.5 million in 1997 compared to a loss of $20.5
million in 1996. The loss on the European divestiture and the real estate
revaluation adjustment led to the loss in the prior year. Investment income of
$12.3 million was off 12 percent from last year's $14.0 million as funds
available for investment in 1997 were substantially reduced due to share
repurchases. Interest expense rose from $1.4 million to $4.0 million as a result
of the assumption of long-term debt from the Company's now-divested RV finance
subsidiary.
The combined Federal and state income tax rate was 38.8 percent in 1997
compared to 37.4 percent in 1996. The lower rate in 1996 reflects cumulative tax
benefits related to the loss on disposition of the European RV operation.
Recognition of this loss and the related tax benefits occurred in the fourth
quarter of fiscal 1996 even though the sale did not close until May 1996. See
Note 8 of the Notes to Consolidated Financial Statements for a reconciliation of
the provision for income taxes to the Federal statutory rate.
1996 COMPARED TO 1995:
Net income for fiscal year 1996 was $79.6 million or $1.71 per share
compared to $84.6 million or $1.82 per share in the prior year. Earnings were
negatively impacted by special non-recurring charges related to the divestiture
of the Company's German RV operation and the revaluation of an investment in
Southern California real estate. These special charges, which totaled $16.4
million or 35 cents per share after taxes, were recognized in the fourth quarter
of 1996 and prevented the Company from reaching record earnings. Revenues for
the year were $2.81 billion, virtually identical to the amount recorded in the
previous year. As explained in Notes 1 and 4 of the Notes to Consolidated
Financial Statements, the revenues and expenses of Fleetwood Credit Corp., the
Company's finance subsidiary sold subsequent to year-end, have been classified
as discontinued operations for all years presented.
Excluding special charges, fourth quarter earnings in 1996 were vastly
improved over the prior year. Operating income from continuing operations jumped
89 percent primarily due to an upturn in motor home sales and continuing growth
in manufactured housing profits.
Fiscal 1996 revenues and earnings were mainly driven by favorable results
from the Company's housing group which posted record sales and profits.
Manufactured housing revenues totaled $1.44 billion for the year, five percent
ahead of last year's $1.37 billion. Shipments of 68,990 homes were only slightly
ahead of the prior year despite fairly robust growth for the industry as a
whole. Capacity constraints in
11
<PAGE>
some key market areas led to a decline in market share for the Company. Housing
group sales accounted for 51 percent of total Company revenues compared to 49
percent last year.
Recreational vehicle revenues in fiscal 1996 did not keep pace with the
previous year's record $1.39 billion, falling five percent to $1.32 billion.
However, a strong recovery in motor home sales late in the year boosted RV
revenues 14 percent in the fourth quarter. RV operating profits in fiscal 1996
were well below the prior year, mainly as a result of reduced revenues during
the first three quarters of the year. RV revenues included $720 million for
domestic motor home sales, off five percent from the prior year as shipments
fell 13 percent to 13,412 units. Travel trailer revenues, which also include
slide-in truck camper sales, were also behind the prior year, easing seven
percent to $458 million on an eight percent decline in shipments to 34,315
units. By contrast, the folding trailer division posted record sales of $87
million, six percent ahead of last year. Folding trailer shipments were up four
percent to 20,407 units. The European operation recorded annual revenues of $52
million which was off one percent. Recreational vehicle sales were 47 percent of
total Company revenues, down from 49 percent last year.
Manufacturing gross profit increased as a percentage of sales from 18.5
percent to 19.0 percent with improved housing margins more than offsetting lower
RV profits. Selling price increases and lower lumber costs led to the higher
housing margins. Competitive pricing on travel trailer and folding trailer
products pressured RV margins to levels below those achieved in the prior year.
See Note 15 of the Notes to Consolidated Financial Statements for further
information on operating profit by industry segment.
Operating expenses rose less than one percent to $401.2 million, and also
increased as a percentage of sales from 14.2 percent to 14.3 percent. Selling
expenses climbed six percent to $192.0 million as higher product warranty and
customer service costs more than offset otherwise lower selling expenses. As a
percentage of sales, selling expenses rose from 6.4 percent to 6.8 percent.
General and administrative expenses dropped four percent to $209.2 million and
fell as a percentage of sales from 7.7 percent to 7.4 percent. Individual
expense variations within this category were not significant.
Non-operating items amounted to a loss of $20.5 million in 1996 compared to
income of $5.2 million in the prior year. A $28.0 million loss on disposition of
the German RV operation and a $4.1 million writedown on Southern California real
estate more than offset the effect of higher investment income and lower
interest expense. The rise in investment income primarily reflects higher
invested balances.
The combined Federal and state income tax rate was 37.4 percent, down from
last year's 41.0 percent, reflecting cumulative tax benefits related to the
German investment loss. See Note 8 of the Notes to Consolidated Financial
Statements for a reconciliation of the provision for income taxes to the Federal
statutory rate.
LIQUIDITY AND CAPITAL RESOURCES:
The Company generally relies upon internally generated cash flows to satisfy
working capital needs and to fund capital expenditures. Positive cash flows were
generated from internal sources in 1997 and 1996 to support manufacturing
operations and to fund capital expenditures and shareholder dividends.
Additionally, the Company completed the sale of Fleetwood Credit Corp. in May
1996 and received cash proceeds of $132 million, net of income taxes. Cash flow
generated from operations totaled $84.9 million in 1997 compared to $183.1
million in the prior year. Operating cash flow was unusually high in 1996,
largely as a result of a reduction in working capital used in the recreational
vehicle business. The Company maintained a strong cash position in both years,
with cash and investments totaling $110.4 million at the end of 1997 compared to
$287.9 million in 1996. Cash equivalents in 1996 received a boost near year-end
when the Company assumed $80 million in long-term debt from its finance
subsidiary and received a corresponding cash payment in return.
Cash outflows in 1997 included $311.7 million for the purchase of 23 percent
of the Company's outstanding Common stock. During the first quarter of fiscal
1997, the Company completed a Dutch Auction tender offer that resulted in the
purchase of 7.7 million shares at a cost of $240.5 million. In the second
quarter, the Company acquired another 2.6 million shares at a cost of $71.2
million. Cash outflows in 1997 also included capital expenditures of $56.2
million, dividends to shareholders of $24.4 million and a
12
<PAGE>
long-term debt repayment of $25.0 million. In the prior year, major cash outlays
included $32.9 million in capital expenditures and $27.6 million in shareholder
dividends.
Capital expenditures in 1997 and 1996 included the addition of new
manufactured housing plants and the normal replacement of machinery and
equipment. During 1997, four new manufactured housing plants were added and two
were substantially completed, one of which will come onstream early in fiscal
1998. One new manufactured housing facility was added in 1996. Improvements were
also made at several existing plant locations during 1997 and 1996.
Capital expenditures in fiscal 1998 are currently estimated to be in the
range of $30 to $40 million. It is anticipated that plant additions will include
one new manufactured housing plant that will be a satellite operation located
near an existing Fleetwood manufacturing center. In addition, plant
modifications are expected at several existing locations, along with the normal
replacement of machinery and equipment. It is anticipated that existing
financial resources and cash generated from operations will be adequate to fund
these expenditures.
During the seasonally slow winter months (typically November through
February), the Company has historically built inventories of recreational
vehicles in order to meet the peak demand for these products in the spring. This
is usually accomplished without the use of debt financing; however, there have
been occasions when the Company has required the use of bank credit lines. This
situation occurred in the third quarter of fiscal 1997 which required the
Company to use uncommitted bank credit lines. During the month of January, the
Company borrowed $21.0 million for several days to meet working capital needs.
All borrowings were paid off during the fourth quarter. The Company has credit
lines with its principal bank and another bank which are currently being used
only to support letters of credit. For fiscal year 1998 and beyond, it is
anticipated that adequate working capital to finance the Company's manufacturing
operations will be provided from internally generated funds.
In 1996, the Financial Accounting Standards Board (FASB) issued statement
No. 128, "Earnings Per Share." This statement, which must be adopted by the
Company in fiscal 1998, establishes standards for computing and presenting
earnings per share by simplifying the standards previously found in APB Opinion
No. 15, and makes them comparable to international standards. Also in 1996, the
FASB issued statement No. 129, "Disclosure of Information About Capital
Structure," which establishes standards for disclosing information about an
entity's capital structure. This new standard must also be adopted by the
Company in fiscal 1998. The Company believes that the adoption of these two new
standards will not have a material impact on its consolidated financial
condition.
During the past three years, inflation has not had a significant impact on
the Company's operations. With the exception of lumber, prices paid for raw
materials and other manufacturing inputs have remained fairly stable throughout
this period. On a longer-term basis, the Company has demonstrated an ability to
adjust the selling prices of its products in reaction to changing costs.
13
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Fleetwood Enterprises, Inc.:
We have audited the accompanying consolidated balance sheets of FLEETWOOD
ENTERPRISES, INC., (a Delaware Corporation) and subsidiaries as of April 27,
1997 and April 28, 1996, and the related consolidated statements of income,
changes in shareholders' equity, and cash flows for each of the three years in
the period ended April 27, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Fleetwood
Enterprises, Inc. and subsidiaries as of April 27, 1997 and April 28, 1996, and
the results of their operations and their cash flows for each of the three years
in the period ended April 27, 1997 in conformity with generally accepted
accounting principles.
As explained in Note 3 to the consolidated financial statements, effective
April 25, 1994, the Company adopted Statement of Financial Accounting Standards
No. 115.
ARTHUR ANDERSEN LLP
Orange County, California
June 23, 1997
14
<PAGE>
FLEETWOOD ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED APRIL
----------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Sales.................................................. $2,874,426 $2,809,277 $2,807,862
Cost of products sold.................................. 2,334,840 2,276,595 2,287,880
---------- ---------- ----------
Gross profit....................................... 539,586 532,682 519,982
Operating expenses..................................... 400,027 401,150 397,753
---------- ---------- ----------
Operating income................................... 139,559 131,532 122,229
Other income (expense):
Loss on disposition of European subsidiary......... -- (28,000) --
Investment income.................................. 12,298 14,032 9,966
Interest expense................................... (4,035) (1,429) (4,048)
Other.............................................. (772) (5,142) (700)
---------- ---------- ----------
7,491 (20,539) 5,218
---------- ---------- ----------
Income from continuing operations before provision for
income taxes and minority interest................... 147,050 110,993 127,447
Provision for income taxes............................. (56,998) (41,543) (52,254)
Minority interest in net loss of subsidiary............ -- 451 805
---------- ---------- ----------
Income from continuing operations...................... 90,052 69,901 75,998
Income from discontinued operations, net of income
taxes:
Income from operations of finance subsidiary....... 887 9,708 8,635
Gain on sale of finance subsidiary................. 33,891 -- --
---------- ---------- ----------
34,778 9,708 8,635
---------- ---------- ----------
Net income..................................... $ 124,830 $ 79,609 $ 84,633
---------- ---------- ----------
---------- ---------- ----------
Net income per Common and equivalent share:
Continuing operations.............................. $ 2.30 $ 1.50 $ 1.63
Discontinued operations:
Income from operations of finance subsidiary... .02 .21 .19
Gain on sale of finance subsidiary............. .87 -- --
---------- ---------- ----------
.89 .21 .19
---------- ---------- ----------
Total.......................................... $ 3.19 $ 1.71 $ 1.82
---------- ---------- ----------
---------- ---------- ----------
Dividends declared per share of Common stock
outstanding.......................................... $ .64 $ .60 $ .56
---------- ---------- ----------
---------- ---------- ----------
Common and equivalent shares outstanding............... 39,162 46,469 46,531
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these statements.
15
<PAGE>
FLEETWOOD ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
APRIL 27, APRIL 28,
1997 1996
---------- ----------
<S> <C> <C>
ASSETS
Cash..................................................... $ 37,890 $ 15,792
Investments.............................................. 72,544 272,138
Receivables.............................................. 181,085 173,380
Inventories:
Raw materials........................................ 101,794 94,302
Work in process and finished products................ 43,719 43,597
Net assets of discontinued operations.................... -- 97,444
Property, plant and equipment............................ 278,331 266,587
Deferred tax benefits.................................... 71,285 65,224
Cash value of Company-owned life insurance............... 46,834 30,953
Other assets............................................. 38,065 49,515
---------- ----------
$ 871,547 $1,108,932
---------- ----------
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable......................................... $ 106,749 $ 104,850
Employee compensation and benefits....................... 114,983 109,552
Federal and state taxes on income........................ 4,046 (16,850)
Insurance reserves....................................... 44,381 47,408
Long-term debt........................................... 55,000 80,000
Other liabilities........................................ 103,293 134,835
---------- ----------
428,452 459,795
---------- ----------
Contingent liabilities
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 35,747,000 at April 27, 1997
and 45,640,000 at April 28, 1996................... 35,747 45,640
Capital surplus...................................... 37,684 42,758
Retained earnings.................................... 370,653 561,500
Foreign currency translation adjustment.............. (1,163) (946)
Investment securities valuation adjustment........... 174 185
---------- ----------
443,095 649,137
---------- ----------
$ 871,547 $1,108,932
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these balance sheets.
16
<PAGE>
FLEETWOOD ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED APRIL
---------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.......................... $ 124,830 $ 79,609 $ 84,633
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation expense............ 25,581 25,857 21,973
Amortization of intangibles and
goodwill...................... 1,998 1,227 1,824
Losses on sales of property,
plant and equipment........... 772 1,036 700
Gain on sale of finance
subsidiary.................... (33,891) -- --
Loss on disposition of European
subsidiary.................... -- 28,000 --
Revaluation of real estate...... -- 4,106 --
Changes in assets and
liabilities:
(Increase) decrease in
receivables............... (7,705) (21,170) 5,844
(Increase) decrease in
inventories............... (7,614) 77,394 (31,639)
Increase in deferred tax
benefits.................. (6,061) (4,376) (3,886)
Increase in cash value of
Company-owned life
insurance................. (15,881) (27,253) (3,700)
(Increase) decrease in other
assets.................... 9,452 271 (7,009)
Increase in accounts
payable................... 1,899 8,422 15,860
Increase (decrease) in other
liabilities............... (8,242) 11,142 16,991
Foreign currency translation
adjustment.................... (217) (1,175) 1,794
----------- ----------- -----------
Net cash provided by operating
activities........................ 84,921 183,090 103,385
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investment securities:
Held-to-maturity................ (4,666,426) (4,148,530) (2,761,052)
Available-for-sale.............. (1,540,292) (537,364) (1,011,343)
Proceeds from maturity of investment
securities:
Held-to-maturity................ 4,681,526 4,131,823 2,764,061
Available-for-sale.............. 1,461,573 201,425 875,191
Proceeds from sale of
available-for-sale investment
securities........................ 263,202 173,799 131,242
Purchases of property, plant and
equipment......................... (56,184) (32,916) (67,864)
Proceeds from sales of property,
plant and equipment............... 18,087 2,076 2,705
Investment in land held for sale.... -- (38) (68)
Change in net assets of discontinued
operation......................... (887) (9,708) (8,635)
Proceeds from sale of finance
subsidiary........................ 132,222 -- --
----------- ----------- -----------
Net cash provided by (used in)
investing activities.............. 292,821 (219,433) (75,763)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Assumption of long-term debt........ -- 80,000 --
Repayment of long-term debt......... (25,000) -- --
Dividends to shareholders........... (24,408) (27,551) (25,778)
Proceeds from exercise of stock
options........................... 5,502 1,781 678
Purchase of Common stock............ (311,738) (11,505) --
----------- ----------- -----------
Net cash provided by (used in)
financing activities.............. (355,644) 42,725 (25,100)
----------- ----------- -----------
Increase in cash........................ 22,098 6,382 2,522
Cash at beginning of year............... 15,792 9,410 6,888
----------- ----------- -----------
Cash at end of year..................... $ 37,890 $ 15,792 $ 9,410
----------- ----------- -----------
----------- ----------- -----------
Supplementary disclosures:
Income taxes paid................... $ 67,330 $ 51,670 $ 69,062
Interest paid....................... 4,039 1,222 2,381
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these statements.
17
<PAGE>
FLEETWOOD ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK FOREIGN INVESTMENT
----------------------- CURRENCY SECURITIES TOTAL
NUMBER CAPITAL RETAINED TRANSLATION VALUATION SHAREHOLDERS'
OF SHARES AMOUNT SURPLUS EARNINGS ADJUSTMENT ADJUSTMENT EQUITY
----------- ---------- ---------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE APRIL 24, 1994............ 45,996 $ 45,996 $ 40,949 $ 461,086 $ (1,565) $ -- $ 546,466
ADD (DEDUCT)--
Net income.................... -- -- -- 84,633 -- -- 84,633
Cash dividends declared on
Common stock................ -- -- -- (25,778) -- -- (25,778)
Stock options exercised
(including related tax
benefits)................... 66 66 612 -- -- -- 678
Net adjustment from foreign
currency translation........ -- -- -- -- 1,794 -- 1,794
Investment securities
valuation adjustment........ -- -- -- -- -- 350 350
----------- ---------- ---------- ----------- ----------- ----- -------------
BALANCE APRIL 30, 1995............ 46,062 46,062 41,561 519,941 229 350 608,143
ADD (DEDUCT)--
Net income.................... -- -- -- 79,609 -- -- 79,609
Cash dividends declared on
Common stock................ -- -- -- (27,551) -- -- (27,551)
Stock options exercised
(including related tax
benefits)................... 105 105 1,676 -- -- -- 1,781
Stock repurchased............. (527) (527) (479) (10,499) -- -- (11,505)
Net adjustment from foreign
currency translation........ -- -- -- -- (1,175) -- (1,175)
Investment securities
valuation adjustment........ -- -- -- -- -- (165) (165)
----------- ---------- ---------- ----------- ----------- ----- -------------
BALANCE APRIL 28, 1996............ 45,640 45,640 42,758 561,500 (946) 185 649,137
ADD (DEDUCT)--
Net income.................... -- -- -- 124,830 -- -- 124,830
Cash dividends declared on
Common stock................ -- -- -- (24,408) -- -- (24,408)
Stock options exercised
(including related tax
benefits)................... 393 393 5,109 -- -- -- 5,502
Stock repurchased............. (10,286) (10,286) (10,183) (291,269) -- -- (311,738)
Net adjustment from foreign
currency translation........ -- -- -- -- (217) -- (217)
Investment securities
valuation adjustment........ -- -- -- -- -- (11) (11)
----------- ---------- ---------- ----------- ----------- ----- -------------
BALANCE APRIL 27, 1997............ 35,747 $ 35,747 $ 37,684 $ 370,653 $ (1,163) $ 174 $ 443,095
----------- ---------- ---------- ----------- ----------- ----- -------------
----------- ---------- ---------- ----------- ----------- ----- -------------
</TABLE>
The accompanying notes are an integral part of these statements.
18
<PAGE>
FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements include the accounts of Fleetwood
Enterprises, Inc. and its majority owned subsidiaries. The term "Company" used
herein means Fleetwood Enterprises, Inc. and its subsidiaries, unless otherwise
indicated by the context. All material intercompany accounts and transactions
have been eliminated.
The financial statements for prior years have been restated to show the
operations of Fleetwood Credit Corp., the Company's wholly owned finance
subsidiary, as a discontinued operation. The subsidiary was sold in May 1996 as
explained in Note 4.
(B) REVENUE RECOGNITION:
Sales are recorded when products are shipped from factories to the Company's
dealers. The vast majority of sales are made for cash; however, most dealers
finance their purchases under flooring arrangements with banks or finance
companies. Products are not sold on consignment and dealers do not have the
right to return products.
(C) FOREIGN CURRENCY TRANSLATION:
Exchange adjustments resulting from foreign currency transactions are
recognized currently in income, whereas adjustments resulting from the
translation of financial statements are reflected as a separate component of
shareholders' equity. The assets and liabilities of the Canadian operation
(which are not material) are translated to U.S. dollars at current exchange
rates. Revenues and expenses are translated at the average exchange rates for
the year. Gains or losses on foreign currency transactions in fiscal years 1997,
1996 and 1995 were not material.
(D) INVENTORY VALUATION:
Inventories are valued at the lower of cost (first-in, first-out) or market.
Cost includes materials, labor and manufacturing overhead.
(E) LONG-LIVED ASSETS:
The Company assesses the recoverability of its long-lived assets by
determining whether the net book value can be recovered through projected cash
flows over the remaining life. If projections indicate that long-lived assets
will not be recovered, an adjustment is made to reduce the net asset to an
amount consistent with future cash flows discounted at the Company's incremental
borrowing rate. Cash flow projections, although subject to a degree of
uncertainty, are based on trends of historical performance and management's
estimate of future performance, giving consideration to existing and anticipated
competitive and economic conditions.
(F) DEPRECIATION:
Depreciation is provided using straight-line or accelerated methods based on
the following estimated useful lives:
- Buildings and improvements--10-40 years
- Machinery and equipment--3-15 years
(G) WARRANTY COSTS:
Estimated costs related to product warranties are accrued at the time
products are sold.
(H) NET INCOME PER COMMON AND EQUIVALENT SHARE:
Net income per Common and equivalent share amounts are based on the weighted
average number of shares outstanding during the years, including Common stock
equivalents resulting from dilutive stock
19
<PAGE>
FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
options (See Note 13). Net income per Common and equivalent share is the same as
fully diluted earnings per share for all periods presented.
(I) ACCOUNTING PERIOD:
The Company's fiscal year ends on the last Sunday in April. The year-ending
dates for the past three fiscal years were April 27, 1997, April 28, 1996 and
April 30, 1995, respectively.
(J) CASH FLOW STATEMENTS:
For purposes of these statements, cash includes cash on hand and cash in
banks in demand deposit accounts.
(K) INSURANCE RESERVES:
Insurance reserves primarily represent estimated liabilities for products
liability and workers' compensation claims. Workers' compensation reserves
mainly consist of estimated case reserves on known claims. Products liability
reserves include both case reserves on known claims as well as estimated
liabilities for claims which have not been reported. Products reserves include
estimated amounts for unpaid claims and claim adjustment expenses which are
based on historical experience and independent actuarial calculations.
(L) USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(2) SUPPLEMENTARY INFORMATION ON INSURANCE AND REAL ESTATE SUBSIDIARIES
The insurance subsidiary was formed primarily for the purpose of insuring
products liability risks of the parent company and its subsidiaries. The real
estate subsidiaries were formed for the purposes of participating in site-built
housing construction or in the development of planned communities using
manufactured housing. As of April 27, 1997, the investment in real estate
consisted of raw land, and there were no real estate development activities in
process. Condensed financial information for these subsidiaries, excluding
intercompany eliminations, is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Insurance subsidiary:
Investments................................... $53,620 $73,488 $63,831
Other assets.................................. 3,429 6,023 6,101
Reserves for losses........................... 43,332 46,839 44,367
Other liabilities............................. 9,137 8,821 9,389
Net premiums.................................. 8,384 10,813 12,462
Underwriting income........................... 8,603 5,844 5,738
Investment income............................. 5,458 6,336 4,135
Net income.................................... 9,929 7,688 6,212
Real estate subsidiaries:
Land.......................................... $ 2,800 $ 2,800 $ 6,868
Other assets.................................. 1,082 2,860 1,213
Notes payable-parent company.................. -- 795 795
Loss on revaluation of land................... -- (4,106) --
Net loss...................................... (22) (2,421) --
</TABLE>
20
<PAGE>
FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
(3) INVESTMENTS
The Company has a cash management program which provides for the investment
of excess cash balances primarily in short-term money market instruments and
intermediate-term debt instruments. Investments consist of time deposits, U.S.
Treasury obligations, tax-exempt instruments and other non-equity type
investments stated at cost, which approximates market.
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 April 27, 1997:
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C>
AVAILABLE-FOR-SALE SECURITIES:
U.S. Treasury securities and obligations of U.S. government
agencies.................................................. $ 26,092 $ 3 $367 $ 25,728
Foreign government obligations.............................. 1,846 27 -- 1,873
Other debt securities....................................... 34,056 551 40 34,567
--------- ----- ----- ---------
$ 61,994 $581 $407 $ 62,168
--------- ----- ----- ---------
--------- ----- ----- ---------
HELD-TO-MATURITY SECURITIES:
Other debt securities....................................... $ 10,376 $ -- $ -- $ 10,376
--------- ----- ----- ---------
--------- ----- ----- ---------
</TABLE>
The amortized cost and estimated fair value of the securities at April 27,
1997, 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>
<CAPTION>
FAIR
COST VALUE
-------- --------
(AMOUNTS IN
THOUSANDS)
<S> <C> <C>
AVAILABLE-FOR-SALE:
Due in one year or less..................................... $ 34,953 $ 35,450
Due after one year through five years....................... 21,087 20,827
Due after five years through ten years...................... 5,954 5,891
-------- --------
$ 61,994 $ 62,168
-------- --------
-------- --------
HELD-TO-MATURITY:
All due in one year or less................................. $ 10,376 $ 10,376
-------- --------
-------- --------
</TABLE>
21
<PAGE>
FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
Investment income for the year ended April 27, 1997 consisted of the
following (amounts in thousands):
<TABLE>
<S> <C>
Interest income...................................................... $ 11,939
Gross realized gains................................................. 1,077
Gross realized losses................................................ (461)
Investment management fees........................................... (257)
--------
$ 12,298
--------
--------
</TABLE>
(4) DISCONTINUED OPERATIONS
In May 1996, the Company completed the sale of Fleetwood Credit Corp., a
wholly owned RV finance subsidiary, to Associates First Capital Corporation.
Under the terms of the agreement, Associates acquired all of the outstanding
stock of Fleetwood Credit Corp. for $156.6 million (before income taxes) in
cash. As part of the transaction, Fleetwood and Associates entered into an
operating agreement to assure long-term cooperation between the parties and to
facilitate wholesale and retail financing for Fleetwood dealers and customers.
(5) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost and consists of the
following:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Land.................................................. $ 18,464 $ 17,096
Buildings and improvements............................ 301,354 278,848
Machinery and equipment............................... 125,889 125,332
Idle facilities, net of accumulated depreciation...... 5,886 5,499
---------- ----------
451,593 426,775
Less accumulated depreciation......................... (173,262) (160,188)
---------- ----------
$ 278,331 $ 266,587
---------- ----------
---------- ----------
</TABLE>
Idle facilities include closed plants and certain other properties which are
not in current use by the Company. There were four idle plant facilities at the
end of both 1997 and 1996. Subsequent to year-end, the Company announced that
two manufacturing facilities will be closed and that a recently constructed
facility will not be opened as planned.
The carrying value of idle facilities was $5,886,000 at April 27, 1997 and
$5,499,000 at April 28, 1996, net of accumulated depreciation of $2,716,000 and
$3,673,000, respectively. In the opinion of management, the carrying values of
idle facilities are not in excess of net realizable value.
(6) LONG-TERM DEBT
On April 22, 1996, the Company assumed from the discontinued finance
subsidiary $80,000,000 in notes payable to The Prudential Insurance Company of
America. The debt is subject to certain financial covenants as defined in the
loan agreement. One $25,000,000 note matured and was paid off on schedule in
August 1996. The other two notes have floating interest rates and mature in
November 2001 and
22
<PAGE>
FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
June 2005. The floating rates are based on the three-month LIBOR rate. Interest
expense on these notes totaled $4.0 million for fiscal 1997.
<TABLE>
<CAPTION>
AMOUNTS CURRENT
MATURITY (IN THOUSANDS) INTEREST RATE
- - -------------------------------------------- -------------- -------------
<S> <C> <C>
Due in 2001................................. $30,000 6.109%
Due in 2005................................. 25,000 6.089
-------
$55,000
-------
-------
</TABLE>
(7) RETIREMENT AND DEFERRED COMPENSATION PLANS
The Company has qualified defined contribution retirement plans covering
substantially all employees. There are no prior service costs associated with
these plans. The Company follows the policy of funding qualified retirement plan
contributions as accrued. The Company also maintains non-qualified plans to
accrue retirement benefits subject to Internal Revenue Code limitations. The
costs associated with these retirement plans are summarized as follows:
<TABLE>
<CAPTION>
QUALIFIED NON-QUALIFIED
PLANS PLANS TOTAL
--------- ------------- -------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
1997....................................... $ 21,244 $2,081 $23,325
1996....................................... 18,756 1,984 20,740
1995....................................... 17,664 3,339 21,003
</TABLE>
In addition to non-qualified retirement plans, the Company has a deferred
compensation plan that allows for the voluntary deferral of a portion of
managers' compensation. Participant balances in the various non-qualified plans
are credited with interest at a rate set at the discretion of the Company which,
for the three years ended April 1997, was the prime rate as published by a major
U.S. bank. To enhance security for the benefits payable under these plans, the
Company has established a "Rabbi Trust," funded with Company-owned life
insurance (COLI) policies on the lives of participants. The assets of the trust
are not generally available to the Company or its creditors except in the event
of the Company's insolvency. COLI premium payments to the trust were $15.8
million in 1997, $27.6 million in 1996 and $3.9 million in 1995. The total
liability for benefits accrued under the non-qualified plans at the end of 1997
and 1996 totaled $51.9 million and $42.1 million, respectively. The cash values
of the related trust assets reflected in the accompanying balance sheets were
$46.8 million and $31.0 million, respectively, at those same dates.
(8) INCOME TAXES
The provision for income taxes for each of the three years in the period
ended April 27, 1997 is summarized below:
<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- -------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Current:
U.S. Federal.................................. $ 51,729 $36,779 $46,201
Foreign....................................... 1,020 1,034 683
State......................................... 10,310 8,106 9,256
-------- ------- -------
63,059 45,919 56,140
-------- ------- -------
Deferred, principally Federal:
Insurance reserves............................ 3,053 (2,561) 977
Other......................................... (9,114) (1,815) (4,863)
-------- ------- -------
(6,061) (4,376) (3,886)
-------- ------- -------
$ 56,998 $41,543 $52,254
-------- ------- -------
-------- ------- -------
</TABLE>
23
<PAGE>
FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The provision for income taxes computed by applying the Federal statutory
rate to income before taxes is reconciled to the actual provisions for fiscal
years 1997, 1996 and 1995 as follows:
<TABLE>
<CAPTION>
1997 1996 1995
--------------- --------------- ---------------
AMOUNT % AMOUNT % AMOUNT %
-------- ----- -------- ----- -------- -----
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Income before provision for income taxes:
U.S. Federal............................................ $144,813 98.5% $114,400 103.1% $131,749 103.4%
Foreign................................................. 2,237 1.5 (3,407) (3.1) (4,302) (3.4)
-------- ----- -------- ----- -------- -----
$147,050 100.0% $110,993 100.0% $127,447 100.0%
-------- ----- -------- ----- -------- -----
-------- ----- -------- ----- -------- -----
Computed statutory tax...................................... $ 51,468 35.0% $ 38,848 35.0% $ 44,606 35.0%
State income taxes, net..................................... 6,209 4.2 5,755 5.2 5,688 4.5
Tax-exempt income........................................... (240) (.1) (333) (.3) (323) (.3)
Other items, net............................................ (439) (.3) (2,727) (2.5) 2,283 1.8
-------- ----- -------- ----- -------- -----
$ 56,998 38.8% $ 41,543 37.4% $ 52,254 41.0%
-------- ----- -------- ----- -------- -----
-------- ----- -------- ----- -------- -----
</TABLE>
The components of the Company's deferred income tax benefits (liabilities)
as of April 27, 1997 and April 28, 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
------- -------
(AMOUNTS IN
THOUSANDS)
<S> <C> <C>
Insurance reserves.......................................... $23,245 $26,298
Deferred compensation....................................... 20,243 17,158
Product warranty reserves................................... 18,781 17,400
Dealer volume rebates....................................... 5,238 5,231
Depreciation................................................ (3,075) (4,230)
Other financial accruals.................................... 6,853 3,367
------- -------
$71,285 $65,224
------- -------
------- -------
</TABLE>
The net deferred tax asset summarized above is considered realizable;
however, the amount could be reduced if tax rates are reduced in the future.
(9) OTHER LIABILITIES
Other liabilities consist of the following:
<TABLE>
<CAPTION>
1997 1996
-------- --------
(AMOUNTS IN
THOUSANDS)
<S> <C> <C>
Dividends payable to shareholders........................... $ 5,716 $ 6,865
Dealer volume rebates....................................... 21,322 25,636
Product warranty reserves................................... 48,291 44,095
Other....................................................... 27,964 58,239
-------- --------
$103,293 $134,835
-------- --------
-------- --------
</TABLE>
(10) FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company has estimated the fair value of its financial instruments in
compliance with Financial Accounting Standard No. 107, "Disclosure About Fair
Value of Financial Instruments." The estimates were made as of April 27, 1997
based on relevant market information. Financial instruments include cash,
investments and debt. See Note 3 regarding discussion on investments. The
estimated fair value of
24
<PAGE>
FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
financial instruments and the valuation techniques used to estimate the fair
value were as follows (amounts in thousands):
<TABLE>
<CAPTION>
APRIL 27, 1997
---------------------
ESTIMATED
BOOK FAIR
VALUE VALUE
--------- ---------
<S> <C> <C>
Financial Assets:
Cash............................................... $37,890 $37,890
Financial Liabilities:
Long-term debt..................................... $55,000 $55,000
</TABLE>
CASH: The fair value approximates book value.
TERM DEBT: The fair value of term debt was estimated based on a present
value discounted cash flow analysis using rates the Company would have to pay
currently to acquire similar debt for similar remaining terms.
(11) CONTINGENT LIABILITIES
As is customary in the manufactured housing and recreational vehicle
industries, the Company is contingently liable at April 27, 1997 under the terms
of repurchase agreements with many financial institutions providing inventory
financing for dealers of the Company's products. The contingent liability under
these agreements approximates the amount financed, reduced by the resale value
of any products which may be repurchased, and the risk of loss is spread over
numerous dealers and financial institutions. Losses under these agreements have
not been significant in the past.
(12) RESULTS BY QUARTER (UNAUDITED)
The unaudited results by quarter for fiscal years 1997 and 1996 are shown
below:
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
FISCAL YEAR ENDED APRIL 1997: QUARTER QUARTER QUARTER QUARTER
- - ---------------------------------------- -------- -------- -------- --------
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE
DATA)
<S> <C> <C> <C> <C>
Revenues................................ $751,245 $748,780 $627,961 $746,440
Operating income........................ 44,678 40,927 21,265 32,689
Income before taxes..................... 48,602 42,376 22,681 33,391
Income from continuing operations....... 29,332 25,772 13,779 21,169
Income from discontinued operations..... 34,778 -- -- --
Net income.............................. 64,110 25,772 13,779 21,169
Net income per Common and equivalent
share:
Continuing operations............... $ .64 $ .68 $ .38 $ .58
Discontinued operations (NOTE)...... .76 -- -- --
-------- -------- -------- --------
Total............................... $ 1.40 $ .68 $ .38 $ .58
-------- -------- -------- --------
-------- -------- -------- --------
Common and equivalent shares
outstanding........................... 45,916 37,837 36,556 36,357
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
25
<PAGE>
FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
FISCAL YEAR ENDED APRIL 1996: QUARTER QUARTER QUARTER QUARTER
- - ---------------------------------------- -------- -------- -------- --------
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE
DATA)
<S> <C> <C> <C> <C>
Revenues................................ $704,717 $707,086 $625,444 $772,030
Operating income........................ 32,174 32,729 22,612 44,017
Income before taxes..................... 34,077 36,795 25,252 14,869
Income from continuing operations....... 20,406 21,839 14,944 12,712
Income from discontinued operations..... 2,392 2,172 2,358 2,786
Net income.............................. 22,798 24,011 17,302 15,498
Net income per Common and equivalent
share:
Continuing operations............... $ .44 $ .47 $ .32 $ .27
Discontinued operations............. .05 .05 .05 .06
-------- -------- -------- --------
Total............................... $ .49 $ .52 $ .37 $ .33
-------- -------- -------- --------
-------- -------- -------- --------
Common and equivalent shares
outstanding........................... 46,518 46,496 46,387 46,475
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
NOTE: The first quarter amount is different from the total for the fiscal year
because of the accretive effect of approximately 13 cents per share due to
share repurchases in the first half of fiscal 1997.
(13) STOCK-BASED INCENTIVE COMPENSATION PLANS
Under the Company's 1992 Stock-Based Incentive Compensation Plan, stock
options may be granted to officers and other key employees of the Company for
the purchase of up to 4,900,000 shares of the Company's Common stock. Expiration
dates for the options may not exceed ten years from the date of grant. A similar
plan adopted in 1982 expired in June 1992; however, exercisable options
representing 218,200 shares still remain outstanding at April 27, 1997. Under a
separate plan for non-employee directors adopted during fiscal 1993, up to
100,000 shares have been authorized for distribution of options. Automatic
grants are made annually under this plan. The Company accounts for these plans
under the provisions of APB Opinion 25, under which no compensation cost is
recognized for stock option grants.
Had compensation costs for these plans been determined consistent with
Financial Accounting Standard No. 123, the Company's net income and earnings per
share would have been reduced to the following pro forma amounts:
<TABLE>
<CAPTION>
1997 1996
---------- ---------
(AMOUNTS IN THOUSANDS
EXCEPT PER SHARE
DATA)
<S> <C> <C> <C>
Net income: As reported........................................... $ 124,830 $ 79,609
Pro forma............................................. 122,241 78,301
Earnings per share: As reported........................................... $ 3.19 $ 1.71
Pro forma............................................. 3.12 1.69
</TABLE>
Because the FAS No. 123 method of accounting has not been applied to options
granted prior to May 1, 1995, the resulting pro forma compensation cost may not
be representative of that to be expected in future years.
26
<PAGE>
FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
The following is a summary of the stock option activity (including those
from the expired plan) for employees and non-employee directors for fiscal years
1997, 1996 and 1995.
<TABLE>
<CAPTION>
1997 1996 1995
----------------------- ----------------------- -----------------------
WTD. AVG. WTD. AVG. WTD. AVG.
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
---------- ----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year......... 2,531,224 $ 17.47 2,293,366 $ 16.20 1,577,366 $ 14.37
Granted.................................. 476,400 28.27 343,658 25.72 782,000 19.40
Exercised................................ (392,600) 14.45 (105,800) 18.43 (66,000) 10.28
Forfeited................................ (8,500) 28.38 -- -- -- --
---------- ----------- ---------- ----------- ---------- -----------
Outstanding at end of year............... 2,606,524 $ 19.95 2,531,224 $ 17.47 2,293,366 $ 16.20
---------- ----------- ---------- ----------- ---------- -----------
---------- ----------- ---------- ----------- ---------- -----------
Exercisable at end of year............... 2,523,624 $ 19.65 2,148,224 $ 16.18 1,958,366 $ 15.84
---------- ----------- ---------- ----------- ---------- -----------
---------- ----------- ---------- ----------- ---------- -----------
Weighted average fair value of options
granted................................. $ 9.30 $ 8.10 --
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The 2,606,524 options outstanding at April 27, 1997 have exercise prices
ranging from $8.06 to $28.38, with an average exercise price of $19.95 and a
weighted average remaining contractual life of 6.9 years.
The fair value of each option granted is estimated on the date of grant
using the Black-Scholes option pricing model with the weighted-average
assumptions used for grants in fiscal years 1997 and 1996, respectively:
risk-free interest rates of 6.0 percent and 5.6 percent; an expected dividend
yield of 2.5 percent for both years; expected lives of seven and five years;
expected volatility of 35 percent and 31 percent.
(14) STOCKHOLDER RIGHTS PLAN
On November 10, 1988, the Company's Board of Directors adopted a stockholder
rights agreement, granting certain new rights to holders of the Company's Common
stock. Under the agreement, one right was granted for each share of Common stock
held as of November 23, 1988, and one right will be granted for each share
subsequently issued. Each right entitles the holder, in an unfriendly takeover
situation, and after paying the exercise price (currently $75), to purchase
Fleetwood Common stock having a market value equal to two times the exercise
price. Also, if the Company is merged into another corporation, or if 50 percent
or more of the Company's assets are sold, then rightholders are entitled, upon
payment of the exercise price, to buy common shares of the acquiring corporation
at a 50 percent discount from their then-current market value. In either
situation, these rights are not available to the acquiring party. However, these
exercise features will not be activated if the acquiring party makes an offer to
acquire all of the Company's outstanding shares at a price which is judged by
the Board of Directors to be fair to all Fleetwood stockholders. The rights may
be redeemed by the Company under certain circumstances at the rate of $.02 per
right. The rights will expire on November 9, 1998.
(15) INDUSTRY SEGMENT INFORMATION
The Company conducts manufacturing operations principally in two
industries--manufactured housing and recreational vehicles. On a smaller scale,
the Company operates supply companies which provide fiberglass parts, lumber and
other wood components to its primary businesses, while also generating outside
sales. Manufacturing operations are conducted in the United States and to a much
lesser extent in Canada. The operations of the Company's wholly owned insurance
and real estate subsidiaries have been included in the "Corporate and Other"
category because the impact on consolidated operating income is not material.
Operating profit is total revenue less cost of sales and operating expenses.
None of the following items have been included in the computation of operating
profit for the individual operating segments: corporate expenses, non-operating
income and expenses and income taxes. Identifiable assets
27
<PAGE>
FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
are those assets used in the operation of each industry segment. Corporate
assets primarily consist of cash, investments, deferred tax benefits, cash value
of Company-owned life insurance, other assets and idle facilities. Information
with respect to industry segments as of April 27, 1997, April 28, 1996 and April
30, 1995, and for each of the years then ended is set forth as follows:
<TABLE>
<CAPTION>
ADJUSTMENTS
MANUFACTURED RECREATIONAL SUPPLY CORPORATE AND
HOUSING VEHICLES OPERATIONS AND OTHER ELIMINATIONS TOTAL
------------- ------------ ----------- ---------- ------------ ------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
1997
Operating revenues............. $ 1,426,940 $ 1,395,163 $ 52,323 $ 8,384 $ (8,384) $ 2,874,426
Operating profit (loss)........ 72,980 77,641 2,170 (13,232) -- 139,559
Identifiable assets............ 286,081 280,345 39,551 265,570 -- 871,547
Depreciation................... 12,628 8,774 2,070 2,109 -- 25,581
Capital expenditures........... 40,444 8,868 2,156 4,716 -- 56,184
1996
Operating revenues............. $ 1,443,016 $ 1,317,494 $ 48,767 $ 10,811 $ (10,811) $ 2,809,277
Operating profit (loss)........ 106,433 34,086 2,971 (11,958) -- 131,532
Identifiable assets............ 249,734 269,804 42,862 546,754 (222) 1,108,932
Depreciation................... 11,370 10,132 1,905 2,450 -- 25,857
Capital expenditures........... 19,161 10,732 1,185 1,838 -- 32,916
1995
Operating revenues............. $ 1,370,293 $ 1,387,919 $ 49,650 $ 12,461 $ (12,461) $ 2,807,862
Operating profit (loss)........ 81,204 45,542 5,855 (10,372) -- 122,229
Identifiable assets............ 229,772 345,467 45,673 319,718 (256) 940,374
Depreciation................... 9,012 9,237 1,407 2,317 -- 21,973
Capital expenditures........... 39,864 18,739 4,204 5,057 -- 67,864
</TABLE>
ITEM 9. DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
MATTERS
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information regarding directors and executive officers as required by
Item 401 of Regulation S-K is set forth in Part I of this report under the
caption "Executive Officers of the Company" and on page three of the Company's
proxy statement which will be filed with the Securities and Exchange Commission
not later than 120 days after April 27, 1997, and by this reference is
incorporated herein.
ITEM 11. MANAGEMENT REMUNERATION AND TRANSACTIONS
The information required by Item 402 of Regulation S-K is set forth on pages
six through eight of the Company's proxy statement which will be filed with the
Securities and Exchange Commission not later than 120 days after April 27, 1997,
and by this reference is incorporated herein.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 403 of Regulation S-K is set forth on pages
four and five of the Company's proxy statement which will be filed with the
Securities and Exchange Commission not later than 120 days after April 27, 1997,
and by this reference is incorporated herein.
28
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information regarding certain relationships and related transactions as
required by Item 404 of Regulation S-K, if any, is set forth in the Company's
proxy statement which will be filed with the Securities and Exchange Commission
not later than 120 days after April 27, 1997, and by this reference is
incorporated herein.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
PAGE
REFERENCE
---------
(a) Financial Statements
(1) Financial Statements included in Part II of this report:
Report of Independent Public Accountants 14
Consolidated Statements of Income for each of the three
years in the period ended April 27, 1997 15
Consolidated Balance Sheets at April 27, 1997 and April 16
28, 1996
Consolidated Statements of Cash Flows for each of the
three years in the period ended April 27, 1997 17
Consolidated Statements of Changes in Shareholders' Equity
for each of the three years in the period ended April 18
27, 1997
Notes to Consolidated Financial Statements 19
(2) Financial Statement Schedules
Financial statement schedules not filed have been omitted
for the reason that the required information is shown in
the financial statements or notes thereto, the amounts
involved are not significant, or the required matter is
not present.
(3) Exhibits and Index to Exhibits*:
3. (a) Restated Certificate of Incorporation.
(b) Amendment to Restated Certificate of
Incorporation.
(c) Restated Bylaws of the Company.
4. (a) Rights Agreement dated November 10, 1988,
between the Company and the First National Bank
of Boston used in connection with a stockholder
rights plan.
(b) Certificate of Designation, Preferences and
Rights of Series A Junior Participating
Preferred Stock filed November 23, 1988.
9. Not applicable.
10. Material Contracts.
(a) Form of employment agreement between the Company
and each of its officers.
(b) Amended and Restated Deferred Compensation Plan.
(c) Amended and Restated Supplemental Benefit Plan.
(d) Amended and Restated Long-Term Incentive
Compensation Plan.
(e) 1982 Stock Option Plan.
(f) Amended and Restated Benefit Restoration Plan.
(g) Dividend Equivalent Plan.
(h) Amended and Restated 1992 Stock-Based Incentive
Compensation Plan.
(i) The 1992 Non-Employee Director Stock Option
Plan.
(j) Senior Executive Incentive Compensation Plan.
(k) Operating Agreement between Fleetwood
Enterprises, Inc. and Fleetwood Credit Corp.
11. Not applicable.
29
<PAGE>
PAGE
REFERENCE
---------
12. Not applicable.
13. Not applicable.
18. Not applicable.
19. Not applicable.
21. Subsidiaries of the Registrant.
22. Not applicable.
23. Consent of independent public accountants.
24. Not applicable.
27. Not applicable.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter of
the year ended April 27, 1997.
- - ---------
*These documents were included with previous filings as shown below and are
hereby incorporated by reference:
Filed with the Company's 10-K Annual Report for the year ended
Item 3(a): April 28, 1985.
Items 3(b) Filed with the Company's 10-K Annual Report for the year ended
and 3(c): April 26, 1987.
Items 4(a)
and 4(b): Filed with the Company's report on Form 8-K on November 10, 1988.
Filed with the Company's 10-K Annual Report for the year ended
Item 10(a): April 26, 1992.
Items 10(b),
10(c),
10(d),
10(f) and Filed with the Company's 10-K Annual Report for the year ended
10(h): April 28, 1996.
Filed with the Company's 10-K Annual Report for the year ended
Item 10(e): April 26, 1987.
Filed with the Company's 10-K Annual Report for the year ended
Item 10(g): April 29, 1990.
Filed with the Company's 10-K Annual Report for the year ended
Item 10(i): April 26, 1992.
Filed with the Company's 10-K Annual Report for the year ended
Item 10(j): April 24, 1994.
Item 10(k): Filed with the Company's report on Form 8-K on June 7, 1996.
30
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) 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.
REGISTRANT
BY PAUL M. BINGHAM
-------------------------------------
PAUL M. BINGHAM
SENIOR VICE PRESIDENT-FINANCE
Date: July 7, 1997
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
- - ------------------------------ ------------------------------ ------------
JOHN C. CREAN Chairman of the Board and July 7, 1997
- - ------------------------------ Chief Executive Officer
JOHN C. CREAN
GLENN F. KUMMER President, Chief Operating July 7, 1997
- - ------------------------------ Officer and Director
GLENN F. KUMMER
PAUL M. BINGHAM Chief Financial Officer and July 7, 1997
- - ------------------------------ Principal Accounting Officer
PAUL M. BINGHAM
DOUGLAS M. LAWSON Director July 7, 1997
- - ------------------------------
DOUGLAS M. LAWSON
WALTER F. BERAN Director July 7, 1997
- - ------------------------------
WALTER F. BERAN
THOMAS A. FUENTES Director July 7, 1997
- - ------------------------------
THOMAS A. FUENTES
JAMES L. DOTI Director July 7, 1997
- - ------------------------------
JAMES L. DOTI
31
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
At April 27, 1997, the Registrant had the following subsidiary companies,
all of which are wholly owned unless otherwise indicated in the footnotes:
<TABLE>
<CAPTION>
JURISDICTION OF
COMPANY INCORPORATION
- - ------------------------------------------------------------------------------------------- ---------------------
<S> <C>
Subsidiaries producing manufactured housing:
Fleetwood Homes of Alabama, Inc.(1).................................................... Alabama
Fleetwood Homes of Arizona, Inc........................................................ Arizona
Fleetwood Homes of California, Inc..................................................... California
Fleetwood Homes of Florida, Inc........................................................ Florida
Fleetwood Homes of Georgia, Inc........................................................ Georgia
Fleetwood Homes of Idaho, Inc.......................................................... Idaho
Fleetwood Homes of Indiana, Inc........................................................ Indiana
Fleetwood Homes of Kentucky, Inc.(2)................................................... Kentucky
Fleetwood Homes of Mississippi, Inc.................................................... Mississippi
Fleetwood Homes of North Carolina, Inc................................................. North Carolina
Fleetwood Homes of Oklahoma, Inc.(2)................................................... Oklahoma
Fleetwood Homes of Oregon, Inc......................................................... Oregon
Fleetwood Homes of Pennsylvania, Inc................................................... Pennsylvania
Fleetwood Homes of Tennessee, Inc...................................................... Tennessee
Fleetwood Homes of Texas, Inc.......................................................... Texas
Fleetwood Homes of Virginia, Inc....................................................... Virginia
Fleetwood Homes of Washington, Inc..................................................... Washington
North River Homes, Inc.(1)(3).......................................................... Alabama
Subsidiaries producing motor homes:
Fleetwood Motor Homes of California, Inc............................................... California
Fleetwood Motor Homes of Indiana, Inc.................................................. Indiana
Fleetwood Motor Homes of Pennsylvania, Inc............................................. Pennsylvania
Subsidiaries producing travel trailers:
Fleetwood Travel Trailers of California, Inc........................................... California
Fleetwood Travel Trailers of Indiana, Inc.............................................. Indiana
Fleetwood Travel Trailers of Maryland, Inc............................................. Maryland
Fleetwood Travel Trailers of Nebraska, Inc............................................. Nebraska
Fleetwood Travel Trailers of Ohio, Inc................................................. Ohio
Fleetwood Travel Trailers of Oregon, Inc............................................... Oregon
Fleetwood Travel Trailers of Texas, Inc................................................ Texas
Fleetwood Travel Trailers of Virginia, Inc............................................. Virginia
Fleetwood Canada Ltd.(4)............................................................... Ontario, Canada
Subsidiary producing folding trailers:
Fleetwood Folding Trailers, Inc........................................................ Delaware
Supply subsidiaries:
Gold Shield, Inc....................................................................... California
Gold Shield of Indiana, Inc............................................................ Indiana
Hauser Lake Lumber Operation, Inc...................................................... Idaho
Other subsidiaries:
Buckingham Development Co.............................................................. California
C.V. Aluminum, Inc.(2)................................................................. California
Continental Lumber Products, Inc....................................................... California
Fleetwood Foreign Sales Corp........................................................... U.S. Virgin Islands
Fleetwood Holidays, Inc................................................................ Florida
Fleetwood Insurance Services, Inc...................................................... California
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
JURISDICTION OF
COMPANY INCORPORATION
- - ------------------------------------------------------------------------------------------- ---------------------
<S> <C>
Fleetwood International, Inc........................................................... California
Fleetwood Recreational Vehicles of Michigan, Inc.(2)................................... Michigan
Gibraltar Insurance Company, Ltd....................................................... Bermuda
GSF Installation Co.(2)................................................................ California
</TABLE>
- - ---------
(1) Wholly owned subsidiary deactivated subsequent to April 27, 1997.
(2) Wholly owned subsidiary inactive at April 27, 1997.
(3) Wholly owned subsidiary of Fleetwood Homes of Alabama, Inc.
(4) Wholly owned subsidiary of Fleetwood International, Inc.
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated June 23, 1997, included in Fleetwood Enterprises,
Inc.'s Form 10-K for the year ended April 27, 1997, into the Company's
previously filed Registration Statement No. 2-79232.
ARTHUR ANDERSEN LLP
Orange County, California
June 23, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-27-1997
<PERIOD-END> APR-27-1997
<CASH> 37,890
<SECURITIES> 72,544
<RECEIVABLES> 181,085
<ALLOWANCES> 0
<INVENTORY> 145,513
<CURRENT-ASSETS> 0
<PP&E> 451,593
<DEPRECIATION> 173,262
<TOTAL-ASSETS> 871,547
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 35,747
<OTHER-SE> 407,348
<TOTAL-LIABILITY-AND-EQUITY> 871,547
<SALES> 2,874,426
<TOTAL-REVENUES> 2,874,426
<CGS> 2,334,840
<TOTAL-COSTS> 2,734,867
<OTHER-EXPENSES> 772
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,035
<INCOME-PRETAX> 147,050
<INCOME-TAX> 56,998
<INCOME-CONTINUING> 90,052
<DISCONTINUED> 34,778
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 124,830
<EPS-PRIMARY> 3.19
<EPS-DILUTED> 3.19
</TABLE>
