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FOR IMMEDIATE RELEASE
INVESTOR AND MEDIA CONTACTS:
Joseph H. Stegmayer Colleen T. Bauman
Chief Financial Officer Investor Relations
(248) 340-9090 (248) 340-7731
CHAMPION ENTERPRISES, INC.
COMMENTS ON OUTLOOK
AUBURN HILLS, MICH., JUNE 16, 2000--CHAMPION ENTERPRISES, INC.
(NYSE: CHB), the nation's leading housing manufacturer, today announced that it
expects to be in line with consensus estimates for its second quarter ending
July 1, 2000. The First Call consensus estimate for the quarter is $0.05 per
share. This amount compares to $0.59 per share in the second quarter of 1999.
Revenues are expected to be an estimated $520 million, down from $665 million a
year ago.
Chairman, President, and Chief Executive Officer, Walter R. Young,
commented, "Tightened consumer credit standards, increased industry
repossessions, higher interest rates, and high industry retail inventory levels
continue to negatively impact near term results. In response to challenging and
unpredictable industry conditions, during the quarter we closed manufacturing
facilities in Talladega, Alabama and Gulfport, Mississippi. If necessary, we
will further consolidate production to keep capacity in line with demand.
"Our second quarter margins will be adversely affected by lower
wholesale and retail sales volume. Plant closing costs are expected to be
partially offset by unrelated insurance gains. With these weak industry
conditions, which could continue into early next year, earnings and sales
estimates for the year are extremely difficult to predict," Young said.
Champion also announced that it has received bank approval and is
finalizing documentation to amend its revolving credit facility, through which
the company will reduce the facility from $200 million to $100 million and
receive more flexible terms from its lenders. The company stated that it
believes the $100 million facility, along with anticipated cash flows and
inventory financing availability, should provide adequate funds to meet its
expected liquidity needs. The company currently has $31 million of letters of
credit and $5 million of borrowings outstanding under the facility.
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In addition, Champion announced that it has suspended its February
1999 share repurchase program. To date, the company has repurchased 1.9 million
of the 3.0 million shares approved for repurchase under the program. Young
commented, "We will not be repurchasing additional shares so that we can
maintain a solid balance sheet and positive cash flow.
"Tough conditions, as well as concerns about inventory financing
availability for retailers, continue to hurt the industry," said Young. "We are
encouraged that business practices are improving, which should make for a
stronger industry in the long term.
"We are pleased that our company-owned stores and independent retail
locations are reducing inventories and that we are gaining wholesale and retail
market share. Champion is meeting the need for quality, affordable housing.
Wholesale market share improved in the first quarter of 2000 to 21.2% from 19.9%
in 1999. Our retail market share including company stores and independent
retailers is now about 19.9%, up from 18.5% a year ago," Young said.
"In addition to improving business practices and strengthening our
share of traditional core markets, we are targeting new consumer segments. Our
Target 2000 Developer Series continues to generate much interest and to be well
received by builder/developers and consumers. We are also excited about our
Internet strategy and website, which links to independent retailers and
developers and allows us to market our homes to new customers who may not have
considered the quality and value of a Champion home. We are positioning the
company for long-term growth and to expand our share of the overall housing
market," Young concluded.
Champion Enterprises, Inc., headquartered in Auburn Hills, Michigan, is
the industry's leading manufacturer and has produced more than 1.4 million homes
since the company was founded. The company operates 58 homebuilding facilities
and 289 retail stores. In addition, its homes are sold by over 1,000 locations
that have joined the Alliance of Champions marketing program. Further
information can be found using the company's website at championhomes.net.
This news release contains certain statements, including earnings,
revenues, and cash flow forecasts, assessments of current industry conditions,
long-term prospects, initiatives to implement change, marketing and expansion
strategies, and the adequacy of funds to meet liquidity needs, which could be
construed to be forward looking statements within the meaning of the Securities
and Exchange Act of 1934. These statements reflect the company's views with
respect to future plans, events and financial performance. The company does not
undertake any obligation to update the information contained herein, which
speaks only as of the date of this press release. The company has identified
certain risk factors which could cause actual results and plans to differ
substantially from those included in the forward looking statements. These
factors are discussed in the company's most recently filed Form 10-K, and this
discussion regarding risk factors is incorporated herein by reference.
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