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 July 4, 1998
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 300, Auburn Hills, MI 48326
___________________________________________________ _________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (248) 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.
48,025,072 shares of the registrant's $1.00 par value Common
Stock were outstanding as of July 31, 1998.
PART I. FINANCIAL INFORMATION
CHAMPION ENTERPRISES, INC.
__________________________
Consolidated Income Statements
(In thousands, except per share amounts)
<TABLE>
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
_____________________ _______________________
July 4, June 28, July 4, June 28,
1998 1997 1998 1997
_________ _________ ___________ _________
Net sales $582,500 $442,360 $1,045,525 $805,317
Cost of sales 477,542 378,535 866,906 687,291
_________ _________ ___________ _________
Gross margin 104,958 63,825 178,619 118,026
Selling, general and
administrative expenses 58,394 33,730 101,682 65,347
_________ _________ _________ _________
Operating income 46,564 30,095 76,937 52,679
Other income (expense):
Interest income 511 407 887 823
Interest expense (4,145) (295) (5,477) (641)
_________ __________ _________ _________
Income from continuing
operations before
income taxes 42,930 30,207 72,347 52,861
Income taxes 17,100 12,100 28,900 21,100
_________ _________ _________ _________
Income-continuing operations 25,830 18,107 43,447 31,761
Income-discontinued operations - 93 - 278
_________ _________ _________ _________
Net income $ 25,830 $ 18,200 $ 43,447 $ 32,039
========= ========= ========= =========
Basic earnings per share:
Income-continuing operations $0.54 $0.38 $0.92 $0.66
Income-discontinued operations - - - 0.01
_________ _________ _________ _________
Net income $0.54 $0.38 $0.92 $0.67
========= ========= ========= =========
Weighted shares for basic EPS 47,821 48,252 47,454 48,155
========= ========= ========= =========
Diluted earnings per share:
Income-continuing operations $0.52 $0.37 $0.88 $0.64
Income-discontinued operations - - - .01
_________ _________ _________ _________
Net income $0.52 $0.37 $0.88 $0.65
========= ========= ========= =========
Weighted shares for diluted EPS 49,540 49,487 49,093 49,580
========= ========= ========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
CHAMPION ENTERPRISES, INC.
__________________________
Consolidated Balance Sheets
(In thousands, except par value amount)
July 4, January 3,
1998 1998
__________ _________
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 21,435 $ 60,280
Accounts receivable, trade 94,703 49,574
Inventories 204,877 73,291
Deferred taxes and other current assets 54,872 46,373
__________ __________
Total current assets 375,887 229,518
__________ __________
PROPERTY AND EQUIPMENT
Cost 238,485 202,749
Less-accumulated depreciation 67,145 59,230
__________ _________
171,340 143,519
__________ __________
GOODWILL
Cost 389,490 134,865
Less-accumulated amortization 19,784 15,193
__________ __________
369,706 119,672
__________ __________
OTHER ASSETS 17,341 8,541
__________ __________
Total assets $ 934,274 $ 501,250
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable to bank $ 162,000 $ -
Floor plan payable 96,087 1,112
Accounts payable 61,245 24,646
Accrued dealer discounts 36,813 42,927
Accrued warranty obligations 42,806 40,819
Accrued compensation and payroll taxes 34,639 25,014
Other current liabilities 85,476 48,906
__________ __________
Total current liabilities 519,066 183,424
__________ __________
LONG-TERM LIABILITIES
Long-term debt 3,552 1,813
Deferred portion of purchase price 12,200 5,400
Other long-term liabilities 50,345 30,197
__________ __________
66,097 37,410
__________ __________
SHAREHOLDERS' EQUITY
Preferred stock, no par value, 5,000 shares
authorized, none issued - -
Common stock, $1 par value, 120,000 shares
authorized, 47,996 and 46,600 shares issued
and outstanding, respectively 47,996 46,600
Capital in excess of par value 38,381 14,338
Retained earnings 264,189 220,742
Foreign currency translation adjustments (1,455) (1,264)
__________ __________
Total shareholders' equity 349,111 280,416
__________ __________
Total liabilities and shareholders' equity $ 934,274 $ 501,250
========== ==========
See accompanying Notes to Consolidated Financial Statements.
CHAMPION ENTERPRISES, INC.
__________________________
Consolidated Statements of Cash Flows
(In thousands)
Six Months Ended
____________________
July 4, June 28,
1998 1997
_________ _________
CASH FLOWS FROM OPERATING ACTIVITIES:
Income from continuing operations $ 43,447 $ 31,761
_________ _________
Adjustments to reconcile income from continuing
operations to net cash provided by operating
activities:
Depreciation and amortization 12,853 8,163
Deferred income taxes - (5,602)
Increase/decrease, net of acquisitions
Accounts receivable (32,283) (40,493)
Inventories (22,255) (7,248)
Accounts payable 26,210 32,365
Accrued liabilities 7,518 (5,739)
Merger reserve (138) (5,329)
Other, net (9,215) 3,566
_________ _________
Total adjustments (17,310) (20,317)
_________ _________
Net cash provided by operating activities 26,137 11,444
_________ _________
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Income from discontinued operations - 278
Proceeds on disposal 9,710 -
Change in net assets of discontinued operations (121) 7,802
_________ _________
Net cash provided by discontinued operations 9,589 8,080
_________ _________
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions (211,661) -
Additions to property and equipment (21,814) (21,066)
Deferred purchase price payments (4,850) (4,200)
Proceeds from note payoff - 1,347
Proceeds on disposal of property and equipment - 1,818
_________ _________
Net cash used for investing activities (238,325) (22,101)
_________ _________
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in notes payable to bank 162,000 -
Decrease in floor plan payable (6,085) -
Net increase (decrease) in long-term debt (1,422) 693
Common stock issued, net 5,761 4,686
Common stock repurchased - (18,835)
Tax benefit of stock options exercised 3,500 2,500
_________ _________
Net cash provided by (used for) financing activities 163,754 (10,956)
_________ _________
NET DECREASE IN CASH AND CASH EQUIVALENTS (38,845) (13,533)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 60,280 19,357
_________ _________
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 21,435 $ 5,824
========= =========
ADDITIONAL CASH FLOW INFORMATION:
Cash paid for interest $ 4,479 $ 659
Cash paid for income taxes $ 22,950 $ 20,952
SCHEDULE OF CASH FLOWS FROM ACQUISITIONS:
Cash purchase price $255,000
Less: Deferred portion of purchase price (29,240)
Cash acquired, net (15,414)
Plus: Acquisition costs 1,315
_________
$211,661
=========
See accompanying Notes to Consolidated Financial Statements.
CHAMPION ENTERPRISES, INC.
__________________________
Notes to Consolidated Financial Statements
__________________________________________
1. For each of the dates indicated, inventories consisted of the
following (in thousands):
July 4, January 3,
1998 1998
__________ __________
Raw materials and work-in-process $ 55,518 $ 49,745
Manufactured homes 149,359 23,546
__________ __________
$204,877 $ 73,291
========== ==========
2. The difference between income taxes provided for financial reporting
purposes and expected charges at the U.S. federal statutory rate is due
primarily to state tax charges.
The components of the income tax provisions for the six months ended
July 4, 1998 and June 28, 1997 follows (in thousands):
July 4, June 28,
1998 1997
_________ _________
Statutory U.S. tax rate $ 25,300 $ 18,500
Increase in rate resulting from:
State taxes 2,600 2,100
Other 1,000 500
_________ _________
Total provision $ 28,900 $ 21,100
========= =========
Effective tax rate 40% 40%
========= =========
3. Per share amounts, including pro forma amounts, are calculated in
accordance with Statement of Financial Accounting Standards No. 128,
"Earnings Per Share."
4. Year-to-date through July 4, 1998, the registrant acquired nine
manufactured housing retail organizations for $226 million in cash,
deferred payments of $29 million, and shares of Champion common stock
valued at $12.5 million. During 1998 net cash of $212 million was paid,
financed from existing cash balances and new bank debt. In addition, the
registrant is contingently obligated for additional purchase price
payments up to $149 million over the next five years depending upon the
future performance of the acquired businesses. The acquisitions were
accounted for using the purchase method and resulted in $255 million of
financial statement goodwill. Goodwill associated with retail
acquisitions is being amortized using the straight-line method generally
over 25 or 40 years. Recognition of additional purchase price related
to contingent amounts will result in the recording of a corresponding
amount of goodwill. The results of operations of the acquisitions
are included with those of the registrant from the respective
acquisition dates.
Following are pro forma results of operations for the three and six
month periods ended July 4, 1998 and June 28, 1997 assuming the
acquisitions had taken place on January 4, 1998 and December 29, 1996,
respectively. Pro forma 1997 amounts reflect three and six month
results for all acquired companies. The additional 1998 pro forma sales
and income reflect 1998 results of the acquired companies prior to their
respective acquisition dates. 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. The pro forma results
should not be taken as indicative of results for a full year.
<TABLE>
<S> <C> <C> <C> <C>
(In thousands, except Three Months Ended Six Months Ended
______________________ _______________________
per share amounts) July 4, June 28, July 4, June 28,
1998 1997 1998 1997
_________ __________ ___________ _________
Net sales $612,000 $550,360 $1,153,125 $1,010,217
Income from continuing
operations $ 26,478 $ 20,884 $ 45,628 $ 37,237
Per basic share $ 0.55 $ 0.43 $ 0.96 $ 0.77
Per diluted share $ 0.53 $ 0.42 $ 0.93 $ 0.75
</TABLE>
5. Floor plan liabilities are borrowings from various financial
institutions secured principally by retail inventories of manufactured
homes. Interest on these liabilities generally ranges from the prime
rate minus 0.5% to the prime rate plus 1.5%.
6. The sale of the commercial vehicles business for approximately $10
million was completed in February 1998. Related amounts are classified
as discontinued operations.
7. In May 1998 the registrant entered into a five-year revolving credit
agreement which provides a $325 million unsecured line of credit,
including letters of credit. The credit agreement provides for annual
reductions in the line of credit for three years until the line is
reduced to $175 million in September 2001. At the registrant's option
borrowings are subject to interest either at the bank's prime rate or
the bank's Eurodollar rate plus from 0.575% to 1.0%. In addition, the
registrant pays a facility fee ranging from 0.15% to 0.25% of the entire
line of credit and a letter of credit fee. The agreement also contains
covenants that, among other things, limit additional indebtedness and
require maintenance of certain financial ratios and minimum net worth.
The amount of unrestricted retained earnings at July 4, 1998 was $103
million.
8. 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. 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.
9. Certain amounts in the prior period's statements have been reclassified
to conform to the current period's presentation.
CHAMPION ENTERPRISES, INC.
___________________________
Management's Discussion and Analysis
____________________________________
of
Financial Condition and Results of Operations
_____________________________________________
Three and six months ended July 4, 1998 versus three and six months ended June
28, 1997
Overview
In 1998 Champion Enterprises, Inc. ("Champion" or "registrant") continued
implementing its retail strategy of acquiring key manufactured housing
retailers and rapidly expanding their operations in order to have annual
retail sales of at least $1 billion by the year 2000. Related goals are to
improve the retail buying experience for the home buyer and to enhance profits
through better merchandising techniques, improved efficiencies, control of
costs and improved home installation to reduce service costs. Year-to-date
through July 4, 1998, Champion acquired nine retail operations with 148
housing sales centers and 1997 sales of approximately $490 million. The
registrant operates 205 home centers in 23 states as of August 3, 1998,
including three sales centers from an acquisition completed on July 31, 1998.
Consolidated
(Dollars in millions)
Three Months Ended Six Months Ended
__________________ _________________
July 4, June 28, % July 4, June 28, %
1998 1997 Change 1998 1997 Change
________ ________ ______ ________ _______ ______
Net sales:
Manufacturing $494.4 $434.2 14% $918.8 $793.5 16%
Retail 144.1 17.5 210.7 25.2
Less: intercompany (56.0) (9.3) (84.0) (13.4)
Total net sales 582.5 442.4 32% 1,045.5 805.3 30%
Gross margin 105.0 63.8 64% 178.6 118.0 51%
SG&A 58.4 33.7 73% 101.7 65.3 56%
Operating income $46.6 $30.1 55% $ 76.9 $ 52.7 46%
Operating margin 8.0% 6.8% 7.4% 6.5%
In the quarter ended July 4, 1998, Champion achieved the highest quarterly
sales and earnings in its history. Consolidated revenues grew 32% due to
higher wholesale volume and the retail acquisitions. Margins in 1998 benefited
from higher wholesale volume, lower manufacturing material costs, and expanded
retail operations. Selling, general and administrative expenses ("SG&A")
increased due to retail operations and higher wholesale volume. Prior amounts
have been restated to classify as discontinued operations the commercial
vehicles business, the sale of which was completed in February 1998.
Income from continuing operations increased 43% to $26 million, compared to
$18 million in the prior year's second quarter. Net income per diluted share
for the quarter rose 41%, reaching $0.52 in 1998 compared to $0.37 in 1997.
For the year-to-date period, consolidated revenues reached $1 billion, rising
30% from a year ago. Income from continuing operations was $43 million, or
$0.88 per diluted share, compared to $32 million, or $0.64 per diluted share,
for the first six months of 1997. Earnings improved due to higher wholesale
volume, lower material costs and the expanded retail operations.
Manufacturing Operations
Three Months Ended
___________________
July 4, June 28, %
1998 1997 Change
________ _________ ______
Net sales (in millions) $ 494.4 $ 434.2 14%
Wholesale home shipments 18,456 17,302 7%
Wholesale multi-section mix 62% 55%
Wholesale floors sold 30,214 27,052 12%
Average wholesale sales price $26,788 $25,097 7%
Six Months Ended
___________________
July 4, June 28, %
1998 1997 Change
________ _________ ______
Net sales (in millions) $ 918.8 $ 793.5 16%
Wholesale home shipments 34,631 31,549 10%
Wholesale multi-section mix 61% 55%
Wholesale floors sold 56,344 49,275 14%
Average wholesale sales price $26,532 $25,150 5%
Manufacturing revenues increased in the second quarter due to higher volume,
with wholesale home shipments and floors sold up 7% and 12%, respectively,
from a year ago. A floor is a section of a home. A single-section home is
comprised of one floor, while a multi-section home is comprised of two or more
floors. Multi-section homes sold rose 20%, comprising 62% of total homes sold
compared to 55% in the second quarter last year, which resulted in a higher
average selling price per home. Wholesale shipments of single section homes
in the second quarter decreased 10% from a year ago. Of the total wholesale
shipments in the quarter, 89% were to independent retailers and 11% were to
company-operated sales centers.
Through May 1998 the registrant's U.S. wholesale shipments of HUD code homes
rose 11% from a year earlier, which resulted in a U.S. market share
improvement to 18.5% from 17.4% last year. According to data reported by the
National Conference of States on Building Codes and Standards ("NCSBCS"), U.S.
industry wholesale shipments of homes for the first five months of the year
increased 3.4% from the same period last year.
Quarterly and year-to-date manufacturing margins rose in 1998 due to lower
material costs, production efficiencies, and higher volume, which lowered
fixed costs as a percent of sales. Prior year's three and six month margins
were reduced due to plant start-up costs, low levels of unfilled orders, and
the restructuring of the product line at Redman's Indiana facilities.
Although dealer orders can be cancelled at anytime without penalty, and
unfilled orders are not necessarily an indication of future business, the
registrant's unfilled orders for wholesale housing at July 4, 1998 totaled
approximately $100 million. This amount is 150% higher than a year ago due to
strong order activity around the country. Currently, the registrant operates
57 home building facilities and expects to open two more manufacturing
locations this fall.
Retail Operations
Three Months Ended
____________________
July 4, June 28,
1998 1997
________ ________
Net sales (in millions) $ 144.1 $ 17.5
New retail homes sold 3,061 277
Average retail sales price-new homes $44,350 $61,924
Retail multi-section mix-new homes 53% 84%
Company-operated sales centers
Beginning of period 143 15
End of period 188 16
Six Months Ended
____________________
July 4, June 28,
1998 1997
________ ________
Net sales (in millions) $ 210.7 $ 25.2
New retail homes sold 4,545 400
Average retail sales price-new homes $44,180 $62,175
Retail multi-section mix-new homes 53% 87%
Company-operated sales centers
Beginning of period 22 15
End of period 188 16
Retail sales substantially increased for the quarter and year due to retail
acquisitions completed throughout 1998. Of the new retail homes sold in the
second quarter of 1998, 1,377 homes, or 45%, were Champion produced.
The average selling price per home was higher in 1997 because of the
large percentage of multi-section homes sold by the registrant's sole
retail operation. A current non-Champion supplier of homes to certain
Champion sales centers has decided to discontinue supplying its
homes to these retailers. As a result, these particular company-operated
stores are expected to sell more Champion produced homes over time.
Retail margins were strong as a result of higher volume and finance related
income. The registrant experienced solid retail traffic and sales nationwide.
Year-to-date in 1998, a non-cash accounting charge of approximately $7.0
million was recorded to eliminate the manufacturing profits in inventories of
Champion produced homes at company-operated sales centers. Similar charges
are expected to be recorded through the end of 1998 to the extent that
pre-acquisition retail inventory is replaced by Champion produced homes.
During the second quarter, 15 new sales centers were opened through internal
expansions and 30 were added by acquisitions. For the year-to-date period
through August 3, 1998, the registrant has opened 32 locations and acquired
151. The registrant operates 205 retail home centers in 23 states as of
August 3, 1998.
Other Matters
Interest expense increased in 1998 due to increased amounts outstanding on the
registrant's line of credit and floor plan payable. Income tax expense in 1998
increased based upon higher pretax income. The effective tax rate was 40% in
both 1998 and 1997.
Manufactured Housing Industry Outlook
According to NCSBCS, for the first five months of 1998 U.S. industry wholesale
shipments of HUD code homes and floors increased 3.4% and 6.2%, respectively,
compared to a year ago. Current industry analysts' estimates for 1998
industry wholesale home shipments range from 2% to 7% growth over 1997.
The registrant believes that U.S. industry retail demand continues to improve
from a year ago and excess retail inventories reported in 1997 are declining.
Management believes that moderate changes in interest rates will not have a
significant direct impact on demand for manufactured housing. Long-term
industry growth and short-term sales may be affected by many factors, which
are discussed under Forward Looking Statements in this Form 10-Q.
Liquidity and Capital Resources
Cash balances totaled $21 million at July 4, 1998, a reduction of $39 million
from year end. Year-to-date in 1998, $26 million of cash was generated from
operations, $10 million was provided from discontinued operations, and $9
million from stock option exercises and related tax benefits. Bank borrowings
increased $162 million during the year. Net cash totaling $212 million was
used for retail acquisitions, $22 million for capital improvements and $5
million for deferred purchase price payments.
Assets and liabilities substantially increased during 1998 due to the retail
acquisitions and higher wholesale revenues in June 1998 as compared to
December 1997. At quarter end debt was 43% of total capital. Earnings before
interest, taxes, depreciation and amortization totaled $90 million for the
six-month period, up from $61 million for the comparable period a year ago.
The Company has a five-year $325 million unsecured bank line of credit, which
was completed in May 1998 and includes letters of credit. At quarter end the
registrant had $15 million of letters of credit outstanding, generally to
support insurance obligations and licensing and service bonding required by
various states.
Additional borrowings may be necessary during 1998 to fund retail acquisitions
and expansions, capital expenditures and seasonal working capital needs.
Capital spending for internal expansions, including construction of four home
building facilities and the opening of approximately 40 new retail home
centers, is expected to total up to $58 million in 1998. Two new manufactur-
ing facilities were opened in North Carolina in 1998, one in March and the
other in June. Construction of new manufacturing facilities in Texas and
Idaho began this summer.
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 for operating requirements, capital expenditures and
acquisitions in the foreseeable future. However, management may explore other
opportunities to raise capital to finance growth. The registrant's long-term
goal is to increase earnings per share at a minimum compound annual growth
rate of 15%. Consistent with its plan to improve shareholder value through
investments in sound operating businesses, the registrant does not plan to pay
cash dividends in the near term.
Forward Looking Statements
Certain statements contained in this report, including industry analysts'
estimates of wholesale industry shipments for 1998, the registrant's plans for
retail expansion, capital expenditures and planned facilities, and its
earnings growth goal, could be construed as forward looking statements within
the meaning of the Securities Exchange Act of 1934. In addition, Champion or
persons acting on its behalf may from time to time publish or communicate
other items which could also be construed to be forward looking statements.
Statements of this sort are or will be based on the registrant's estimates,
assumptions and projections, and are subject to risks and uncertainties,
including those specifically listed below and those contained in Champion's
reports previously filed with the SEC, that could cause actual results to
differ materially from those included in the forward looking statements.
Long term growth in the manufactured housing industry (wholesale and retail)
may be affected by: (1) the relative cost of manufactured housing versus other
forms of housing; (2) general economic trends, including inflation and
unemployment rates, consumer confidence, job growth and interest rates; (3)
changes in demographics, including new household formations and the number of
Americans on fixed income; (4) the availability and cost of financing for
manufactured homes; (5) changes in government regulations and policies,
including HUD regulations, local building codes and zoning regulations; and
(6) changes in regional markets and the U.S. economy as a whole. In the
short-term, sales could be affected by inclement weather and inventory levels
of manufactured housing retailers. Fluctuations in interest rates may affect
the demand for manufactured housing to the extent that those changes reduce
job growth, slow the U.S. economy, or cause a loss in consumer confidence.
The profitability of the registrant may also be affected by: (1) its ability
to efficiently expand operations and to utilize production capacity; (2) its
ability to pass increased raw material costs, particularly lumber costs, on to
its customers; (3) market share position; (4) growth in the manufactured
housing industry as a whole; (5) the results of its acquisitions; and (6)
strength of retail distribution.
PAGE
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
___________________________________________________
On April 28, 1998 the registrant held its 1998 Annual Meeting of
Shareholders at which the following matters were submitted to a vote of
security holders and results of which were as follows:
1. Election of Directors
Nominee Votes For Votes Withheld
_______ __________ ______________
Walter R. Young, Jr. 41,361,387 235,483
Robert W. Anestis 41,362,247 234,623
Frank J. Feraco* 41,362,327 234,543
Selwyn Isakow 41,341,707 255,163
George R. Mrkonic 41,361,103 235,767
Johnson S. Savary 40,543,271 1,053,599
Robert W. Stark 41,336,722 260,148
Carl L. Valdiserri 41,339,351 257,519
*Mr. Feraco resigned his position effective May 19, 1998.
2. Proposal to Amend the 1995 Stock Option and Incentive Plan
Votes For - 37,412,092
Votes Against - 3,949,840
Votes Withheld/Abstentions - 234,938
Nonvotes - None
Item 6. Exhibits and Reports on Form 8-K.
_________________________________
(a) The following exhibits are filed as part of this report:
Exhibit No. Description
___________ ___________
11 Computation of EPS.
27.1 Financial Data Schedule.
27.2 Restated Financial Data Schedule.
(b) No reports on Form 8-K were filed by the registrant during the
quarter ended July 4, 1998.
<PAGE>
<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/ JOSEPH H. STEGMAYER
__________________________
Joseph H. Stegmayer
President, Retail Operations
and Chief Financial Officer
(Principal Financial Officer)
And: /S/ RICHARD HEVELHORST
_________________________
Richard Hevelhorst
Controller (Principal
Accounting Officer)
Dated: August 7, 1998
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
___________ _________________________________
11 Computation of EPS.
27.1 Financial Data Schedule
27.2 Restated Financial Data Schedule
<TABLE>
(in 000's, except per share amounts)
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
July 4, June 28, July 4, June 28,
1998 1997 1998 1997
Weighted average shares outstanding 47,821 48,252 47,454 48,155
Effect of dilutive securities 1,719 1,235 1,639 1,425
Shares for diluted EPS 49,540 49,487 49,093 49,580
========= ========= ========= =========
Income from continuing operations $ 25,830 $ 18,107 $ 43,447 $ 31,761
========= ========= ========= =========
Per share amounts:
Basic $ 0.54 $ 0.38 $ 0.92 $ 0.66
========= ========= ========= =========
Diluted $ 0.52 $ 0.37 $ 0.88 $ 0.64
========= ========= ========= =========
</TABLE>
<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 JULY 4,
1998, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> JAN-2-1999
<PERIOD-END> JUL-4-1998
<PERIOD-TYPE> 6-MOS
<CASH> 21,435
<SECURITIES> 0
<RECEIVABLES> 95,196
<ALLOWANCES> 493
<INVENTORY> 204,877
<CURRENT-ASSETS> 375,887
<PP&E> 238,485
<DEPRECIATION> 67,145
<TOTAL-ASSETS> 934,274
<CURRENT-LIABILITIES> 519,066
<BONDS> 3,552
0
0
<COMMON> 47,996
<OTHER-SE> 301,115
<TOTAL-LIABILITY-AND-EQUITY> 934,274
<SALES> 1,045,525
<TOTAL-REVENUES> 1,045,525
<CGS> 866,906
<TOTAL-COSTS> 866,906
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,477
<INCOME-PRETAX> 72,347
<INCOME-TAX> 28,900
<INCOME-CONTINUING> 43,447
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43,447
<EPS-PRIMARY> 0.92
<EPS-DILUTED> 0.88
</TABLE>
<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 JUNE 28,
1997, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> JAN-3-1998
<PERIOD-END> JUN-28-1997
<PERIOD-TYPE> 6-MOS
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 106,667
<ALLOWANCES> 480
<INVENTORY> 73,284
<CURRENT-ASSETS> 233,269
<PP&E> 187,277
<DEPRECIATION> 53,963
<TOTAL-ASSETS> 498,893
<CURRENT-LIABILITIES> 204,936
<BONDS> 1,961
0
0
<COMMON> 47,057
<OTHER-SE> 198,257
<TOTAL-LIABILITY-AND-EQUITY> 498,893
<SALES> 805,317
<TOTAL-REVENUES> 805,317
<CGS> 687,291
<TOTAL-COSTS> 687,291
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 641
<INCOME-PRETAX> 52,861
<INCOME-TAX> 21,100
<INCOME-CONTINUING> 31,761
<DISCONTINUED> 278
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,039
<EPS-PRIMARY> 0.67
<EPS-DILUTED> 0.65
</TABLE>
