FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For Quarter Ended September 28, 1996
OR
_____TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from ____________ to ____________
Commission file number 1-9751
CHAMPION ENTERPRISES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
MICHIGAN 38-2743168
- ---------------------------------- -----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2701 University Drive, Suite 320, Auburn Hills, MI 48326
- ----------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(810)340-9090
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
47,542,093 shares of the registrant's $1.00 par value
Common Stock were outstanding as of November 1, 1996.
PART I. FINANCIAL INFORMATION
CHAMPION ENTERPRISES, INC.
Consolidated Income Statements
(In Thousands, Except Per Share Amounts)
<TABLE>
<S> <C> <C> <C> <C>
13 Weeks Ended 39 Weeks Ended
-------------------- -------------------
Sept. 28, Sept. 30, Sept. 28, Sept. 30,
1996 1995 1996 1995
-------- -------- -------- --------
Net sales $273,766 $215,141 $723,374 $592,058
-------- -------- -------- --------
Cost of sales 231,219 182,753 610,524 504,642
Selling, general, and
administrative expenses 20,516 16,037 58,340 45,976
-------- -------- -------- --------
251,735 198,790 668,864 550,618
-------- -------- -------- --------
Operating income 22,031 16,351 54,510 41,440
Other income (expense):
Interest income 194 179 466 570
Interest expense (640) (609) (1,637) (1,885)
-------- -------- -------- --------
Income before income taxes 21,585 15,921 53,339 40,125
Income taxes 8,300 6,300 20,500 16,000
-------- -------- -------- --------
Net income $ 13,285 $ 9,621 $ 32,839 $ 24,125
======== ======== ======== ========
Net income per share
(See Note 5) $ 0.40 $ 0.30 $ 0.99 $ 0.76
======== ======== ======== ========
Weighted average shares
outstanding (See Note 5) 33,484 31,650 33,246 31,588
======== ======== ======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
CHAMPION ENTERPRISES, INC.
Consolidated Balance Sheets
(In Thousands, Except Par Value Amount)
ASSETS
Sept. 28, Dec. 30,
1996 1995
-------- -------
CURRENT ASSETS
Cash and cash equivalents $ 8,214 $ 14,995
Accounts receivable, trade 63,943 35,973
Inventories 57,573 45,558
Deferred taxes and other 15,463 11,947
-------- --------
Total current assets 145,193 108,473
-------- --------
PROPERTY AND EQUIPMENT
Cost 92,875 60,134
Less-accumulated depreciation 24,741 20,744
-------- --------
68,134 39,390
-------- --------
GOODWILL
Cost 110,670 84,709
Less-accumulated amortization 5,001 2,964
-------- --------
105,669 81,745
-------- --------
OTHER ASSETS 7,034 6,331
-------- --------
Total assets $326,030 $235,939
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable to bank $ 11,000 $ -
Accounts payable 58,711 33,791
Accrued dealer discounts 20,671 20,570
Accrued compensation and
payroll taxes 17,412 12,886
Accrued warranty obligations 15,719 12,589
Accrued insurance 7,794 5,032
Deferred portion of purchase price 3,200 8,900
Other liabilities 10,641 10,719
-------- --------
Total current liabilities 145,148 104,487
-------- --------
LONG-TERM LIABILITIES 32,780 18,349
SHAREHOLDERS' EQUITY
Preferred stock, no par value,
5,000 shares
authorized, none issued - -
Common stock, $1 par value,
1996-75,000 shares authorized,
31,016 issued and outstanding;
1995-30,000 shares authorized,
15,302 issued and outstanding
(See Note 4) 31,016 15,302
Capital in excess of par value 17,136 30,698
Retained earnings 100,918 68,079
Foreign currency translation
adjustments (968) (976)
-------- --------
Total shareholders' equity 148,102 113,103
-------- --------
Total liabilities and
shareholders' equity $326,030 $235,939
======== ========
See accompanying Notes to Consolidated Financial Statements.
CHAMPION ENTERPRISES, INC.
Consolidated Statements of Cash Flows
(In Thousands)
<TABLE>
<S> <C> <C>
39 Weeks Ended
Sept. 28, Sept 30,
1996 1995
-------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 32,839 $ 24,125
-------- --------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 6,423 4,535
Increase/decrease, net of acquisitions:
Increase in accounts receivable (22,661) (14,917)
Increase in inventories (9,452) (3,730)
Increase in accounts payable 20,872 6,157
Increase in accrued liabilities 6,552 6,866
Other, net 1,472 957
-------- --------
Total adjustments 3,206 (132)
-------- --------
Net cash provided by operating activities 36,045 23,993
-------- --------
CASH FLOWS FROM DISCONTINUED ACTIVITIES:
Decrease in net assets of discontinued operations 400 626
-------- --------
Net cash provided by discontinued activities 400 626
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions (19,520) (38,228)
Additions to property and equipment (25,223) (5,732)
Deferred purchase price payment (8,900) (2,600)
Proceeds on disposal of assets 88 276
-------- --------
Net cash used for investing activities (53,555) (46,284)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in notes payable to bank 11,000 8,134
Repayment of long-term debt (1,513) (150)
Common stock issued, net 1,407 1,081
Common stock repurchased (2,265) (1,924)
Tax benefit of stock options 1,700 800
-------- --------
Net cash provided by financing activities 10,329 7,941
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (6,781) (13,724)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 14,995 23,027
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 8,214 $ 9,303
======== ========
ADDITIONAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 1,702 $ 1,679
Income taxes $ 19,960 $ 15,513
SCHEDULE OF CASH USED FOR ACQUISITIONS:
Purchase price $ 35,500 $ 47,600
Less: Deferred portion of purchase price (14,500) (8,900)
Cash acquired, net (4,444) (799)
Plus: Payment of mortgage 1,547 -
Acquisition and merger costs 1,417 327
-------- --------
$ 19,520 $ 38,228
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
CHAMPION ENTERPRISES, INC.
Notes to Consolidated Financial Statements
1. Subsequent to quarter end, on October 24, 1996 Redman
Industries, Inc. (Redman) was merged with and into the
registrant and became a wholly owned subsidiary of the
registrant. In the merger each Redman share issued and
outstanding immediately prior to the merger was converted
into the right to receive 1.24 shares of Champion
Enterprises, Inc.'s common stock. The registrant issued
approximately 16.5 million shares of its common stock to
effect the merger, which was accounted for as a pooling of
interests. The financial statements and related notes
included in this Form 10-Q exclude the effects of the
merger.
Prior to the merger, Redman used a fiscal year ending on the
Friday nearest the end of March. Accordingly, the following
pro forma 1995 financial statements combine the registrant's
three and nine months ended September 30, 1995 with Redman's
three and nine months ended December 29, 1995. The pro forma
1996 financial statements combine the registrant's three and
nine months ended September 28, 1996 with Redman's three and
nine months ended September 27, 1996.
Summarized below are the unaudited pro forma combined
results of operations for the 13 and 39 week periods ended
September 28, 1996 and September 30, 1995 assuming the
Redman merger and Champion's 1996 acquisitions (See Note 8)
had taken place at the beginning of each respective fiscal
year. The pro forma results are not necessarily indicative
of future earnings or earnings that would have been reported
had the transactions been completed when assumed. Further,
the pro forma income should not be taken as indicative of
earnings for a full year.
(In thousands, except per share amounts)
<TABLE>
<S> <C> <C> <C> <C>
13 Weeks Ended 39 Weeks Ended
-------------------- ----------------------
Sept. 28, Sept. 30, Sept. 28, Sept. 30,
1996 1995 1996 1995
-------- -------- ---------- ----------
Net sales $447,111 $394,013 $1,252,112 $1,122,571
======== ======== ========== ==========
Income before
income taxes $ 33,666 $ 27,623 $ 89,479 $ 73,040
Income taxes 13,192 11,158 35,281 29,674
-------- -------- ---------- ----------
Net income $ 20,474 $ 16,465 $ 54,198 $ 43,366
======== ======== ========== ==========
Net income per share $ 0.41 $ 0.33 $ 1.08 $ 0.88
======== ======== ========== ==========
</TABLE>
Merger Costs and Expenses
In connection with the merger, the registrant will record
approximately $25 million of non-recurring merger charges
($18.6 million net of income taxes, or $0.37 per share) in
the fourth quarter ended December 28, 1996, the quarter the
merger was consummated. Of these charges approximately 40%
are investment banking, legal and accounting fees,
approximately 25% are reserves against costs triggered by
change in control provisions contained in employment
agreements with certain executives of Redman and the
remainder are other costs associated with combining and
realigning the operations of the two companies. These
charges are not reflected in the pro forma financial
information because they are non-recurring charges directly
associated with the merger. As of September 28, 1996
approximately $1 million of merger costs had been paid or
accrued by the registrant and are included in other current
assets.
2. For each of the dates indicated, inventories consisted of
the following (in thousands):
Sept. 28, Dec. 30,
1996 1995
-------- -------
Raw materials $34,376 $27,651
Work-in-process 5,685 4,836
Finished goods 17,512 13,071
------- -------
$57,573 $45,558
======= =======
3. The difference between income taxes provided for financial
reporting purposes and expected charges at the U.S. federal
statutory rate is due to state and foreign tax charges.
The components of the income tax provisions for the 39 week
periods ended September 28, 1996 and September 30, 1995
follow (dollars in thousands):
Sept. 28, Sept. 30,
1996 1995
-------- --------
Statutory U.S. tax rate $18,700 $14,000
Increase in rate resulting from:
Higher rates on earnings of foreign
operations 150 400
State taxes 1,650 1,600
------- -------
Total provision $20,500 $16,000
======= =======
Effective tax rates 38% 40%
======= =======
4. On April 29, 1996 the shareholders approved a proposal to
increase the number of authorized shares of common stock to
75 million from 30 million. In addition, the Board of
Directors approved a two-for-one split of the registrant's
common stock effective May 31, 1996 to holders of record on
May 16, 1996.
5. The per share amounts are calculated using the weighted
average number of shares outstanding for each of the periods
presented and includes common stock equivalents. Earnings
per share amounts and weighted average shares outstanding
for all periods presented, including pro forma amounts, have
been adjusted for the stock split.
6. The Consolidated Financial Statements are unaudited, but in
the opinion of management include all adjustments necessary
for a fair presentation of the results of the interim
period. Such adjustments consisted of normal recurring
items except for the restructuring charge recorded during
the second quarter of 1996 as discussed on page 8 of this
Form 10-Q. Financial results of the interim period are not
necessarily indicative of results that may be expected for
any other interim period or for the fiscal year.
7. Certain amounts in the prior periods' statements have been
reclassified to conform to the current periods'
presentation.
8. On March 29, 1996 the registrant purchased the assets and
assumed certain liabilities of Grand Manor, Inc., a
Georgia-based manufactured housing company. On April 26,
1996 the registrant acquired all the outstanding common
stock of Homes of Legend, Inc., an Alabama-based
manufactured housing company, and purchased the assets and
assumed certain liabilities of Legend Realty, Inc., a
related company. The combined cost of these transactions was
approximately $35.5 million, $18.5 million was paid at
closing, $2.5 million was paid in July 1996 and the balance
will be paid over the next three years. These acquisitions
were accounted for using the purchase method and resulted in
$25.7 million of goodwill, which is being amortized over 40
years. The registrant's results include these acquisitions
from the respective acquisition dates.
Summarized below are the unaudited pro forma combined
results of operations for the 13 and 39 week periods ended
September 28, 1996 and September 30, 1995 assuming the Grand
Manor and Homes of Legend transactions had taken place at
the beginning of each respective fiscal year. The pro forma
results are not necessarily indicative of future earnings or
earnings that would have been reported had the acquisitions
been completed when assumed. Further, the pro forma income
should not be taken as indicative of earnings for a full
year.
(In thousands, except per share amounts)
<TABLE>
<S> <C> <C> <C> <C>
13 Weeks Ended 39 Weeks Ended
-------------------- ---------------------
Sept. 28, Sept. 30, Sept. 28, Sept. 30,
1996 1995 1996 1995
-------- -------- --------- --------
Net sales $273,766 $241,148 $756,985 $658,498
======== ======== ======== ========
Income before
income taxes $ 21,585 $ 17,121 $ 54,675 $ 42,018
Income taxes 8,300 6,700 21,000 16,700
-------- -------- -------- --------
Net income $ 13,285 $ 10,421 $ 33,675 $ 25,318
======== ======== ======== ========
Net income per share $ 0.40 $ 0.33 $ 1.01 $ 0.80
======== ======== ======== ========
</TABLE>
CHAMPION ENTERPRISES, INC.
Management's Discussion and Analysis
of
Financial Condition and Results of Operations
13 and 39 weeks ended September 28, 1996
versus 13 and 39 weeks ended September 30, 1995
Effective October 24, 1996 Redman Industries, Inc. was merged
with and into Champion Enterprises, Inc. Approximately 16.5
million shares of the registrant's common stock were issued
pursuant to the merger agreement, which provided for 1.24
Champion shares in exchange for each Redman share issued and
outstanding at the time of the merger. As a result of the
merger, the registrant has over 3,200 independent retail
locations selling its products nationwide, 49 manufactured
housing production facilities and approximately 10,000 employees.
On a pro forma combined basis, in 1995 the registrant sold almost
54,000 homes and had sales of $1.4 billion and net income of
$56.3 million.
The following discussion and analysis is for Champion's
operations excluding the effects of the merger.
The registrant achieved record sales and net income in the
quarter ended September 28, 1996. Sales grew 27% to $274 million
in 1996 versus $215 million last year. Pretax income increased
36% to $21.6 million as compared to $15.9 million in the prior
year's comparable quarter. Net income for the quarter increased
38% to $13.3 million from $9.6 million in 1995. Income increased
as a result of higher sales volume, margin improvements in the
manufactured housing operations and inclusion of Homes of Legend,
Inc. and Grand Manor, Inc., its 1996 acquisitions. Four new
manufactured housing plants that were opened during 1996
contributed to the higher sales volume.
For the year-to-date period, net income was $32.8 million, rising
36% from $24.1 million reported last year. Included in year-to-date results
is a $1.5 million pretax restructuring charge at
Champion Home Builders Co., the registrant's largest subsidiary.
Pretax income reached $53.3 million, up from $40.1 million
reported a year ago, for a 33% increase. The 36% increase in net
income is greater than the growth in pretax income due to a lower
estimated annual effective tax rate in 1996. Net sales for the
39 weeks rose 22% to $723 million from $592 million.
The following is a reconciliation of segment sales and segment
income to operating income (in thousands):
13 Weeks Ended 39 Weeks Ended
------------------- -------------------
Sept. 28, Sept. 30, Sept. 28, Sept. 30,
1996 1995 1996 1995
-------- -------- -------- --------
Net sales:
Housing $257,183 $199,822 $677,988 $549,655
Commercial vehicles 16,583 15,319 45,386 42,403
-------- -------- -------- --------
Total net sales $273,766 $215,141 $723,374 $592,058
======== ======== ======== ========
Operating income:
Housing segment
income $ 22,894 $ 16,865 $ 57,399 $ 43,645
Commercial vehicles
segment income 718 882 2,202 2,140
-------- -------- -------- --------
Total segment
income 23,612 17,747 59,601 45,785
General corporate
expenses 1,581 1,396 5,091 4,345
-------- -------- -------- --------
Operating income $ 22,031 $ 16,351 $ 54,510 $ 41,440
======== ======== ======== ========
Effective March 29, 1996 the Company acquired Grand Manor, Inc.
in Thomasville, Georgia. Effective April 26, 1996 the registrant
acquired Homes of Legend, Inc. in Boaz, Alabama. Both companies
are producers of primarily customized manufactured homes. These
acquisitions strengthen the Company's presence in key growth
Southeastern states. The results of these companies are
included with the registrant's results commencing in the second
quarter. The four housing plants opened during 1996 together
with acquisitions brings the total number of housing plants in
operation at quarter end to 31, up from 23 at the end of last
year. In addition, Dutch Housing, Inc. is constructing a new
plant to be opened early in 1997.
Manufactured Housing
(Sales and income in millions)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
13 Weeks Ended 39 Weeks Ended
------------------------- -------------------------
Sept. 28, Sept. 30, % Sept. 28, Sept. 30, %
1996 1995 Chg. 1996 1995 Chg.
-------- -------- ---- -------- -------- ----
Net sales $257.2 $199.8 29% $678.0 $549.7 23%
Segment income $ 22.9 $ 16.9 36% $ 57.4 $ 43.6 32%
Segment margin % 8.9% 8.4% 8.5% 7.9%
Homes sold 10,163 7,931 28% 26,766 21,965 22%
Average price $25,300 $25,200 0% $25,300 $25,000 1%
</TABLE>
For the 13 week period ended September 28, 1996, manufactured
housing revenues increased 29% due to a 28% increase in unit
shipments. The multi-section mix in the third quarter was 55%
versus 57% in 1995's comparable period due to the lower multi-section mix
of Grand Manor and Homes of Legend. These companies
added $28 million to revenues and 1,252 units during the quarter.
During the year-to-date period, segment sales rose 23% and
shipments increased 22%. U.S. shipments were 26,022 units and the
multi-section mix improved to 56% from 55% a year ago. For the
year-to-date period, Grand Manor and Homes of Legend contributed
$50 million to sales and 2,223 units. U.S. market share for the
period based on homes sold was approximately 9.4%.
Segment income for the quarter and year-to-date periods increased
primarily due to higher sales volume and improved margins.
Improved margins resulted principally from reduced material costs
partially offset by higher segment general and administrative
expenses. Grand Manor and Homes of Legend added $2.6 million of
income to third quarter results and $4.5 million to year-to-date
results.
Although dealer orders can be cancelled at any time without
penalty, and unfilled orders are not necessarily an indication of
future business, the Company's unfilled orders for housing at
September 28, 1996 totaled approximately $70 million. Excluding
recent acquisitions, unfilled orders were 35% lower than a year
ago, generally due to additional capacity.
Commercial Vehicles
(Sales and income in millions)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
13 Weeks Ended 39 Weeks Ended
------------------------- -------------------------
Sept. 28, Sept. 30, % Sept. 28, Sept. 30, %
1996 1995 Chg. 1996 1995 Chg.
-------- -------- ---- -------- -------- ----
Net sales $ 16.6 $ 15.3 8% $ 45.4 $ 42.4 7%
Segment income $ 0.7 $ 0.9 (19%) $ 2.2 $ 2.1 3%
Segment margin % 4.3% 5.8% 4.9% 5.0%
Vehicles sold 338 351 (4%) 904 978 (8%)
Average price $49,100 $43,600 12% $50,200 $43,400 16%
</TABLE>
The commercial vehicles segment produced and sold fewer, but
larger buses in the first nine months of 1996, as compared to the
same period last year. Operating margins for the quarter were
affected by production inefficiencies due in part to a shortage
of chassis. As of the end of the quarter, the commercial
vehicles segment had unfilled orders of approximately $18
million, up from $10 million a year ago.
Other Expenses and Income Taxes
(Dollars in millions)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
13 Weeks Ended 39 Weeks Ended
------------------------- -------------------------
Sept. 28, Sept. 30, % Sept. 28, Sept. 30, %
1996 1995 Chg. 1996 1995 Chg.
-------- -------- ---- -------- -------- ----
General corporate
expenses $1.6 $1.4 13% $5.1 $4.3 17%
Interest expense,
net $0.4 $0.4 4% $1.2 $1.3 (11%)
Income taxes $8.3 $6.3 32% $20.5 $16.0 28%
Effective income
tax rate 38.5% 39.6% 38.4% 39.9%
</TABLE>
For the three and nine months ended September 28, 1996, general
corporate expenses increased because of higher professional fees.
Net interest expense decreased in 1996 due to reduced average
borrowings and lower interest rates. Income tax expense in 1996
increased due to higher pretax earnings, partially offset by a
lower effective tax rate due to reduced state and foreign income
taxes.
Manufactured Housing Industry Outlook
Industry wholesale unit shipments of manufactured homes increased
9.2% through September 1996, following annual increases of 12% in
1995 and 20% or more in 1994, 1993 and 1992 according to the
Manufactured Housing Institute (MHI), an industry trade
association.
Management believes that moderate changes in interest rates will
not have a significant direct impact on demand for manufactured
housing. However, to the extent that increased interest rates
reduce job growth, slow the U.S. economy, or cause a loss in
consumer confidence, demand for manufactured housing may be
adversely affected.
Long-term industry growth will be affected by, among other
things, the relative cost of manufactured housing versus other
forms of housing, including rental housing, general economic
trends, changes in demographics including new household
formations and the number of Americans on fixed incomes, and the
availability and cost of financing. Changes in regional markets
and the U.S. economy as a whole will continue to affect overall
housing industry cycles.
The Company's goal over the next three years is to achieve a
minimum compound annual growth in earnings per share of 20%, with
1995 results as the base year. The goal stated in the preceding
sentence is a forward-looking statement within the meaning of the
Securities Exchange Act of 1934 and is subject to the safe harbor
created by that statute. This goal is based on the growth in the
manufactured housing industry to date, the registrant's increased
manufacturing capacity, its increased number of independent
dealer locations, continued market share improvement and its
acquisitions. This goal is also based on a number of
assumptions, many of which are beyond the Company's control,
including continued growth in both the manufactured housing
industry and the overall general economy, only modest changes in
interest rates and continued availability of municipal funding
for commercial vehicles. There can be no assurance that these
assumptions will prove accurate and actual results may differ
substantially from this goal.
Liquidity and Capital Resources
Cash balances totaled $8.2 million at September 28, 1996, a
reduction of $6.8 million from December 30, 1995. For the nine-month
period, $36 million of cash was generated from operations,
$28 million was used for acquisition related payments, $25
million for capital improvements, $1.5 million for debt
repayments and $2.3 million for common stock repurchases. At
quarter end the registrant had $11 million of borrowings
outstanding.
Accounts receivable and payable and inventories increased
significantly during the year-to-date period due to higher sales
in September 1996 as compared to December 1995, increased
production levels and the inclusion of Grand Manor, Inc. and
Homes of Legend, Inc. which were acquired during 1996. Long-term
liabilities increased because of the acquisitions and includes
$11.3 million of deferred purchase price.
The Company has a $70 million unsecured bank line of credit,
which expires on September 29, 1998, and includes $20 million of
availability to cover letters of credit. At September 28, 1996
the Company had $7.5 million of letters of credit outstanding,
generally to support insurance obligations and licensing and
service bonding required by various states, and $11 million
outstanding under the line of credit.
The Company believes that existing cash balances, cash flow from
operations and additional availability under its line of credit
are adequate to meet its anticipated financing needs, operating
requirements and capital expenditures in the foreseeable future.
However, management may explore other opportunities to raise
capital to finance the growth of the Company. Consistent with
its plan to improve shareholder value through investments in
sound operating businesses, the Company does not plan to pay cash
dividends in the near term.
As a result of the merger with Redman on October 24, 1996,
Redman's cash balance, which was $30 million at September 27,
1996, became available to the registrant. In connection with the
merger, the Company expects non-recurring charges of
approximately $25 million due to investment banking, legal and
accounting fees, severance costs, and other cost associated with
combining and realigning the operations of the companies.
Approximately 30% to 40% of these charges will be paid during the
fourth quarter of 1996 and the remaining cash portion will be
paid in 1997.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) The following exhibit is filed as part of this report.
Exhibit No. Description
----------- -----------
27 Financial Data Schedule.
(b) A report on Form 8-K, dated August 19, 1996, was filed
by the registrant during the quarter ended for which
this Report is filed; such Report contained information
under Item 5 (Other Events) and included as Exhibits
under Item 7 the Agreement and Plan Merger by and among
Champion Enterprises, Inc., RHI Acquisition Corp. and
Redman Industries, Inc. and a copy of a press release
issued by the registrant.
A report on Form 8-K, dated October 24, 1996, was filed
by the registrant on November 6, 1996; such Report
contained information under Item 2 (Acquisition or
Disposition of Assets) and included under Item 7
financial statements of business acquired and pro forma
financial information.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
CHAMPION ENTERPRISES, INC.
By: /S/ A. JACQUELINE DOUT
---------------------------
A. Jacqueline Dout
Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
And: /S/ RICHARD HEVELHORST
---------------------------
Richard Hevelhorst
Controller (Principal
Accounting Officer)
Dated: November 7, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE COMPANY'S
UNAUDITED FINANCIAL STATEMENTS AS OF AND
FOR THE PERIOD ENDING SEPTEMBER 28, 1996,
AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-START> DEC-31-1995
<PERIOD-END> SEP-28-1996
<CASH> 8,214
<SECURITIES> 0
<RECEIVABLES> 64,147
<ALLOWANCES> 204
<INVENTORY> 57,573
<CURRENT-ASSETS> 145,193
<PP&E> 92,875
<DEPRECIATION> 24,741
<TOTAL-ASSETS> 326,030
<CURRENT-LIABILITIES> 145,148
<BONDS> 0
<COMMON> 31,016
0
0
<OTHER-SE> 117,086
<TOTAL-LIABILITY-AND-EQUITY> 326,030
<SALES> 723,374
<TOTAL-REVENUES> 723,374
<CGS> 610,524
<TOTAL-COSTS> 610,524
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,637
<INCOME-PRETAX> 53,339
<INCOME-TAX> 20,500
<INCOME-CONTINUING> 32,839
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,839
<EPS-PRIMARY> 0.99
<EPS-DILUTED> 0.99
</TABLE>
