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 October 3, 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.
48,097,651 shares of the registrant's $1.00 par value Common
Stock were outstanding as of October 30, 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 Nine Months Ended
_________ _________ ___________ ___________
Oct. 3, Sept. 27, Oct. 3, Sept. 27,
1998 1997 1998 1997
_________ _________ ___________ ___________
Net sales $614,945 $440,018 $1,660,470 $1,245,335
Cost of sales 500,236 372,243 1,367,142 1,059,534
_________ _________ ___________ ___________
Gross margin 114,709 67,775 293,328 185,801
Selling, general and
administrative expenses 63,257 34,552 164,939 99,899
_________ _________ _________ _________
Operating income 51,452 33,223 128,389 85,902
Other income (expense):
Interest income 653 389 1,540 1,212
Interest expense (5,296) (232) (10,773) (873)
_________ __________ _________ _________
Income from continuing
operations before
income taxes 46,809 33,380 119,156 86,241
Income taxes 18,700 13,300 47,600 34,400
_________ _________ _________ _________
Income-continuing operations 28,109 20,080 71,556 51,841
Income-discontinued operations - 481 - 759
_________ _________ _________ _________
Net income $ 28,109 $ 20,561 $ 71,556 $ 52,600
========= ========= ========= =========
Basic earnings per share:
Income-continuing operations $0.59 $0.43 $1.50 $1.09
Income-discontinued operations - 0.01 - 0.01
_________ _________ _________ _________
Net income $0.59 $0.44 $1.50 $1.10
========= ========= ========= =========
Weighted shares for basic EPS 48,040 46,947 47,649 47,752
========= ========= ========= =========
Diluted earnings per share:
Income-continuing operations $0.57 $0.42 $1.45 $1.05
Income-discontinued operations - 0.01 - 0.02
_________ _________ _________ _________
Net income $0.57 $0.43 $1.45 $1.07
========= ========= ========= =========
Weighted shares for diluted EPS 49,587 48,293 49,257 49,151
========= ========= ========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
CHAMPION ENTERPRISES, INC.
__________________________
Consolidated Balance Sheets
(In thousands, except par value amount)
Oct. 3, Jan. 3,
1998 1998
__________ __________
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 25,199 $ 60,280
Accounts receivable, trade 103,357 49,574
Inventories 233,941 73,291
Deferred taxes and other current assets 53,518 46,373
__________ __________
Total current assets 416,015 229,518
__________ __________
PROPERTY AND EQUIPMENT
Cost 255,538 202,749
Less-accumulated depreciation 71,518 59,230
__________ __________
184,020 143,519
__________ __________
GOODWILL
Cost 408,653 134,865
Less-accumulated amortization 21,875 15,193
__________ __________
386,778 119,672
__________ __________
OTHER ASSETS 19,484 8,541
___________ __________
Total assets $1,006,297 $ 501,250
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable to bank $ 152,000 $ -
Floor plan payable 109,880 1,112
Accounts payable 86,685 24,646
Accrued dealer discounts 46,147 42,927
Accrued warranty obligations 44,834 40,819
Accrued compensation and payroll taxes 41,119 25,014
Other current liabilities 76,384 48,906
__________ __________
Total current liabilities 557,049 183,424
__________ __________
LONG-TERM LIABILITIES
Long-term debt 4,698 1,813
Deferred portion of purchase price 12,200 5,400
Other long-term liabilities 52,704 30,197
__________ __________
69,602 37,410
__________ __________
SHAREHOLDERS' EQUITY
Preferred stock, no par value, 5,000 shares
authorized, none issued - -
Common stock, $1 par value, 120,000 shares
authorized, 47,978 and 46,600 shares issued
and outstanding, respectively 47,978 46,600
Capital in excess of par value 41,033 14,338
Retained earnings 292,298 220,742
Foreign currency translation adjustments (1,663) (1,264)
__________ __________
Total shareholders' equity 379,646 280,416
__________ __________
Total liabilities and shareholders' equity $1,006,297 $ 501,250
=========== ==========
See accompanying Notes to Consolidated Financial Statements.
CHAMPION ENTERPRISES, INC.
__________________________
Consolidated Statements of Cash Flows
(In thousands)
Nine Months Ended
____________________
Oct. 3, Sept. 27,
1998 1997
_________ _________
CASH FLOWS FROM OPERATING ACTIVITIES:
Income from continuing operations $ 71,556 $ 51,841
_________ _________
Adjustments to reconcile income from continuing
operations to net cash provided by operating
activities:
Depreciation and amortization 19,427 12,484
Deferred income taxes - (1,118)
Increase/decrease, net of acquisitions
Accounts receivable (38,185) (43,066)
Inventories (40,399) (9,722)
Accounts payable 50,680 18,482
Accrued liabilities 29,239 8,253
Merger reserve (240) (6,362)
Other, net (8,016) 4,101
_________ _________
Total adjustments 12,506 (16,948)
_________ _________
Net cash provided by operating activities 84,062 34,893
_________ _________
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Income from discontinued operations - 759
Proceeds on disposal 9,710 -
Change in net assets of discontinued operations (260) 6,777
_________ _________
Net cash provided by discontinued operations 9,450 7,536
_________ _________
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions (249,838) -
Additions to property and equipment (36,227) (29,841)
Deferred purchase price payments (4,850) (4,200)
Proceeds from note payoff - 1,347
Proceeds on disposal of property and equipment - 1,830
_________ _________
Net cash used for investing activities (290,915) (30,864)
_________ _________
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in notes payable to bank 152,000 -
Increase in floor plan payable 520 -
Net increase (decrease) in long-term debt (698) 627
Common stock issued, net 6,500 5,827
Common stock repurchased - (29,590)
Tax benefit of stock options exercised 4,000 2,500
_________ _________
Net cash provided by (used for) financing activities 162,322 (20,636)
_________ _________
NET DECREASE IN CASH AND CASH EQUIVALENTS (35,081) (9,071)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 60,280 19,357
_________ _________
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 25,199 $ 10,286
========= =========
ADDITIONAL CASH FLOW INFORMATION:
Cash paid for interest $ 9,327 $ 721
Cash paid for income taxes $ 39,390 $ 32,804
SCHEDULE OF CASH FLOWS FROM ACQUISITIONS:
Cash purchase price $278,719
Less: Deferred portion of purchase price (16,300)
Cash acquired, net (14,476)
Plus: Acquisition costs 1,895
_________
$249,838
=========
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):
Oct. 3, Jan. 3,
1998 1998
__________ __________
Raw materials and work-in-process $ 61,222 $ 49,745
Manufactured homes 172,719 23,546
_________ __________
$233,941 $ 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 nine months ended
October 3, 1998 and September 27, 1997 follows (in thousands):
Oct. 3, Sept. 27,
1998 1997
_________ _________
Statutory U.S. tax rate $ 41,700 $ 30,200
Increase in rate resulting from:
State taxes 4,300 3,400
Other 1,600 800
_________ _________
Total provision $ 47,600 $ 34,400
========= =========
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 October 3, 1998, the registrant acquired 13
manufactured housing retail organizations and a company operating a
home building facility for $263 million in cash, deferred payments of
$16 million, and shares of Champion common stock valued at $12
million. During 1998 net cash of $250 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
$160 million over the next five years depending upon the future
performance of the acquired businesses. Recognition of additional
purchase price related to contingent amounts will result in the
recording of a corresponding amount of goodwill. The acquisitions
were accounted for using the purchase method and resulted in $274
million of financial statement goodwill. Goodwill associated with
acquisitions is being amortized using the straight-line method
generally over 25 or 40 years. 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 nine
month periods ended October 3, 1998 and September 27, 1997 assuming
the acquisitions had taken place on January 4, 1998 and December 29,
1996, respectively. Pro forma 1997 amounts reflect three and nine
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.
(In thousands, except Three Months Ended Nine Months Ended
_____________________ _______________________
per share amounts) Oct. 3, Sept. 27, Oct. 3, Sept. 27,
1998 1997 1998 1997
_________ _________ ___________ _________
Net sales $626,745 $565,018 $1,806,570 $1,597,535
Income from continuing
operations $ 28,287 $ 23,111 $ 74,473 $ 61,153
Per basic share $ 0.59 $ 0.49 $ 1.56 $ 1.28
Per diluted share $ 0.57 $ 0.48 $ 1.51 $ 1.24
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 convenants 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 October 3, 1998 was $120 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 nine months ended October 3, 1998
versus three and nine months ended September 27, 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 with a goal of
achieving at least $1 billion in annual retail sales 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 October 3, 1998, Champion
acquired 13 retail operations with 1997 sales of approximately $530
million. As of quarter end, Champion operated 233 home centers, up from
22 locations at January 3, 1998.
Consolidated
(Dollars in millions)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
__________________ _________________
Oct. 3, Sept. 27, % Oct. 3, Sept. 27, %
1998 1997 Change 1998 1997 Change
________ ________ ______ ________ ________ ______
Net sales:
Manufacturing $495.3 $435.1 14% $1,414.1 $1,228.5 15%
Retail 172.7 17.3 383.4 42.6
Less: intercompany (53.0) (12.4) (137.0) (25.8)
Total net sales 615.0 440.0 40% 1,660.5 1,245.3 33%
Gross margin 114.7 67.8 69% 293.3 185.8 58%
SG&A 63.2 34.6 83% 164.9 99.9 65%
Operating income $51.5 $33.2 55% $128.4 $85.9 49%
Operating margin 8.4% 7.6% 7.7% 6.9%
</TABLE>
In 1997 the registrant's retail segment was not material. For the periods
ended October 3, 1998, operating income was comprised of the following (in
millions):
Three % of Nine % of
Months Related Months Related
Ended Sales Ended Sales
______ _______ _______ _______
Manufacturing segment $46.8 9.5% $126.3 8.9%
Retail segment 13.6 7.9% 34.5 9.0%
General corporate
expenses (5.4) (16.8)
Intercompany profit
elimination (1.4) (8.7)
Amortization of goodwill (2.1) (6.9)
______ _______
Operating income $51.5 8.4% $128.4 7.7%
====== =======
In the third quarter ended October 3, 1998, Champion achieved the
highest quarterly sales and earnings in its history. Consolidated
revenues grew 40% due to higher wholesale volume and the retail
acquisitions. Margins in 1998 benefited from product mix, pricing,
higher wholesale volume, and expanded retail operations. Selling,
general and administrative expenses ("SG&A") increased due to expanded
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 40% to $28 million, or $0.57
per diluted share, compared to $20 million, or $0.42 per share, in the
prior year's third quarter. Operating income rose to $51 million, up
55% from last year's comparable quarter. Net income per diluted share
for the quarter rose 33%, reaching $0.57 in 1998 compared to $0.43 in
1997, which included $0.01 per share of income from discontinued
operations.
For the year-to-date period, consolidated revenues reached $1.7 billion,
rising 33% from a year ago. Operating income rose 49% to $128 million
and net income increased 36% to $72 million. Income from continuing
operations was $72 million, or $1.45 per diluted share, compared to $52
million, or $1.05 per share, for the first nine months of 1997.
Earnings improved due to higher wholesale volume, product mix, pricing
and the expanded retail operations.
Manufacturing Operations
Three Months Ended
_____________________
Oct. 3, Sept. 27, %
1998 1997 Change
_________ _________ ______
Net sales (in millions) $495 $435 14%
Wholesale home shipments 18,010 16,535 9%
Wholesale multi-section mix 64% 60%
Wholesale floors sold 29,889 26,721 12%
Average wholesale sales price $27,501 $26,313 5%
Nine Months Ended
_____________________
Oct. 3, Sept. 27, %
1998 1997 Change
_________ _________ ______
Net sales (in millions) $1,414 $1,229 15%
Wholesale home shipments 52,641 48,084 9%
Wholesale multi-section mix 62% 57%
Wholesale floors sold 86,233 75,996 13%
Average wholesale sales price $26,863 $25,550 5%
Manufacturing revenues increased in the third quarter due to higher
volume, with wholesale home shipments and floors sold up 9% 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
17%, comprising 64% of total homes sold compared to 60% in the third
quarter last year, which resulted in a higher average selling price per
home. Wholesale shipments of single section homes in the third quarter
decreased 3% 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.
For the year-to-date period, Champion's multi-section homes sold
increased 20%, comprising 62% of the total homes sold, up from 57% a
year earlier. Wholesale shipments to company-operated home centers
accounted for 10% of total sales for the nine-month period. The
registrant's U.S. wholesale shipments of HUD code homes rose 9.4% from a
year earlier, which resulted in a U.S. market share improvement to 18.2%
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 HUD code homes and floors for the first
nine months of the year increased 4.5% and 6.9%, respectively, from the
same period last year.
For the quarter and year-to-date periods, manufacturing margins as a
percent of sales were 9.5% and 8.9%, respectively. Margins rose due to
product mix, pricing, production efficiencies, and higher volume, which
lowered fixed costs as a percent of sales. Prior year's three and nine
month margins were reduced due to plant start-up costs and low levels of
unfilled orders. Year-to-date 1997 income was also unfavorably impacted
by the restructuring of the product line at Redman's Indiana facilities.
Although dealer orders can be canceled at any time without penalty, and
unfilled orders are not necessarily an indication of future business,
the registrant's unfilled orders for wholesale housing at October 3,
1998 totaled approximately $150 million. This amount compares to $59
million a year ago and $100 million at the end of June. Strong order
activity around the country resulted in the increases. Currently, the
registrant operates 59 home building facilities and expects to open one
more manufacturing location this November.
Retail Operations
Three Months Ended
_____________________
Oct. 3, Sept. 27,
1998 1997
________ _________
Net sales (in millions) $173 $17
New retail homes sold 3,576 285
Average retail sales price-new homes $45,734 $58,905
Retail multi-section mix-new homes 53% 86%
Company-operated sales centers
Beginning of period 188 16
End of period 233 21
Nine Months Ended
_____________________
Oct. 3, Sept. 27,
1998 1997
________ _________
Net sales (in millions) $383 $43
New retail homes sold 8,121 685
Average retail sales price-new homes $44,864 $60,815
Retail multi-section mix-new homes 53% 87%
Company-operated sales centers
Beginning of period 22 15
End of period 233 21
Retail sales substantially increased for the quarter and year due to
retail acquisitions completed throughout 1998. Of the new retail homes
sold in 1998, 50% were Champion produced in the third quarter and 47%
were Champion produced for the year-to-date period. 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.
Retail margins, excluding floor plan financing costs, were 7.9% of sales
for the quarter and 9.0% for the nine months. These strong margins were
the result of high volume and inventory turnover. Third quarter 1998
margins were affected by startup and expansion costs. Year-to-date in
1998, a non-cash accounting charge of approximately $9 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 third quarter, 45 new sales centers were opened through
internal expansions and acquisitions. For the year-to-date period
through October 3, 1998, the registrant has opened and acquired 211
locations, bringing the number of company-operated home centers to 233
locations in 24 states as of quarter end.
Other Matters
Interest expense was higher 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.
Year 2000 Issue
The company began assessments in prior years to identify the work
required to assure that its computer systems successfully operate after
January 1, 2000. This review included analyzing software internally
developed, software licensed from third parties and related issues of
significant suppliers. It has been determined that a small portion of the
registrant's computer systems could be affected by the Year 2000 Issue.
The process of replacing and modifying such software and hardware has
been started and remaining changes should be completed by mid-1999.
Costs incurred to date by the company related to the Year 2000 Issue
have been immaterial and were charged to expense as incurred. Remaining
costs to make the registrant's computer systems year 2000 compliant
should not have a material effect on results of operations, liquidity or
capital resources.
The registrant is dependent upon licensed software for a significant
portion of its computer applications. It has been represented by these
suppliers that such third-party software is year 2000 compliant. The
registrant's operations are also dependent on an adequate supply of raw
materials, energy and utilities, delivery services, and wholesale and
retail financing. The company uses a variety of vendors for these
products and services, and is reviewing its major vendors to determine
the potential impact of the Year 2000 Issue. Management is not aware of
any significant problems with these vendors relating to this issue. In
the event that certain suppliers are not year 2000 compliant, the
company could be adversely affected.
Liquidity and Capital Resources
Cash balances totaled $25 million at October 3, 1998, a reduction of $35
million from January 3, 1998. Year-to-date in 1998, $84 million of cash was
generated from operations, $9 million was provided from discontinued
operations, and $11 million from stock option exercises and related tax
benefits. Bank borrowings increased $152 million during the year. Net
cash totaling $250 million was used for retail acquisitions, $36 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 September 1998 as
compared to December 1997. At quarter end debt was 41% of total capital.
Earnings before interest, taxes, depreciation and amortization totaled
$148 million for the nine-month period, up from $98 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
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 new
retail home centers, is expected to total up to $58 million in 1998.
Two new manufacturing facilities were opened in North Carolina in 1998.
Another facility opened during the third quarter in Texas and an Idaho
plant is scheduled for opening in the fourth quarter.
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 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.
PART II. OTHER INFORMATION
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 October 3, 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
Executive Vice President, Chief
Strategic and Financial Officer
(Principal Financial Officer)
And: /S/RICHARD HEVELHORST
_________________________
Richard Hevelhorst
Controller (Principal
Accounting Officer)
Dated: November 12, 1998
<PAGE>
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
___________ ___________
11 Computation of EPS.
27.1 Financial Data Schedule.
27.2 Restated Financial Data Schedule.
<TABLE>
<S> <C> <C> <C> <C>
(in 000's, except per share amounts)
Three Months Ended Nine Months Ended
________ _________ _________ __________
Oct. 3, Sept. 27, Oct. 3, Sept. 27,
1998 1997 1998 1997
________ _________ _________ _________
Weighted average shares outstanding 48,040 46,947 47,649 47,752
Effect of dilutive securities 1,547 1,346 1,608 1,399
________ _________ _________ _________
Shares for diluted EPS 49,587 48,293 49,257 49,151
========= ========= ========= =========
Income from continuing operations $ 28,109 $ 20,080 $ 71,556 $ 51,841
========= ========= ========= =========
Per share amounts:
Basic $ 0.59 $ 0.43 $ 1.50 $ 1.09
========= ========= ========= =========
Diluted $ 0.57 $ 0.42 $ 1.45 $ 1.05
========= ========= ========= =========
</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 OCTOBER 3, 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> OCT-3-1998
<PERIOD-TYPE> 9-MOS
<CASH> 25,199
<SECURITIES> 0
<RECEIVABLES> 103,859
<ALLOWANCES> 502
<INVENTORY> 233,941
<CURRENT-ASSETS> 416,015
<PP&E> 255,538
<DEPRECIATION> 71,518
<TOTAL-ASSETS> 1,006,297
<CURRENT-LIABILITIES> 557,049
<BONDS> 4,698
<COMMON> 47,978
0
0
<OTHER-SE> 331,668
<TOTAL-LIABILITY-AND-EQUITY> 1,006,297
<SALES> 1,660,470
<TOTAL-REVENUES> 1,660,470
<CGS> 1,367,142
<TOTAL-COSTS> 1,367,142
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,773
<INCOME-PRETAX> 119,156
<INCOME-TAX> 47,600
<INCOME-CONTINUING> 71,556
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 71,556
<EPS-PRIMARY> 1.50
<EPS-DILUTED> 1.45
</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 SEPTEMBER 27, 1997,
AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> JAN-3-1998
<PERIOD-END> SEP-27-1997
<PERIOD-TYPE> 9-MOS
<CASH> 10,286
<SECURITIES> 0
<RECEIVABLES> 109,240
<ALLOWANCES> 480
<INVENTORY> 75,758
<CURRENT-ASSETS> 239,023
<PP&E> 195,818
<DEPRECIATION> 57,290
<TOTAL-ASSETS> 509,842
<CURRENT-LIABILITIES> 201,820
<BONDS> 1,915
<COMMON> 46,828
0
0
<OTHER-SE> 215,076
<TOTAL-LIABILITY-AND-EQUITY> 509,842
<SALES> 1,245,335
<TOTAL-REVENUES> 1,245,335
<CGS> 1,059,534
<TOTAL-COSTS> 1,059,534
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 873
<INCOME-PRETAX> 86,241
<INCOME-TAX> 34,400
<INCOME-CONTINUING> 51,841
<DISCONTINUED> 759
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 52,600
<EPS-PRIMARY> 1.10
<EPS-DILUTED> 1.07
</TABLE>