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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
[X] OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended April 24, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
[_] OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
COMMISSION FILE NUMBER 1-7699
FLEETWOOD ENTERPRISES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-1948322
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
3125 MYERS STREET, RIVERSIDE, 92503-5527
CALIFORNIA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (909) 351-3500
SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ------------------------
COMMON STOCK, $1 PAR VALUE NEW YORK STOCK EXCHANGE, INC.
PACIFIC STOCK EXCHANGE, INC.
PREFERRED SHARE PURCHASE RIGHTS NEW YORK STOCK EXCHANGE, INC.
PACIFIC STOCK EXCHANGE, INC.
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
(TITLE OF CLASS)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO
- -
AGGREGATE MARKET VALUE OF COMMON STOCK HELD BY NON-AFFILIATES ON JUNE 23,
1994: $738,545,000 (37,394,692 SHARES AT CLOSING PRICE ON NEW YORK STOCK
EXCHANGE OF $19.75). FOR THIS PURPOSE ALL SHARES HELD BY OFFICERS AND DIRECTORS
ARE CONSIDERED TO BE HELD BY AFFILIATES, BUT NEITHER THE REGISTRANT NOR SUCH
PERSONS CONCEDE THAT THEY ARE AFFILIATES OF THE REGISTRANT.
COMMON STOCK OUTSTANDING ON JUNE 23, 1994: 45,995,542 SHARES
DOCUMENTS INCORPORATED BY REFERENCE:
THE COMPANY'S PROXY STATEMENT WITH RESPECT TO ITS 1994 ANNUAL MEETING.
FLEETWOOD ENTERPRISES, INC.
PART I
ITEM 1. BUSINESS
GENERAL
Fleetwood Enterprises, Inc. is the nation's largest producer of recreational
vehicles (motor homes, travel trailers, folding trailers and slide-in truck
campers) and manufactured housing. The Company's principal manufacturing
activities are primarily conducted in 18 states within the U.S., and to a much
lesser extent in Canada and Europe. In addition, the Company operates three
supply companies which produce components for the primary manufacturing
operations, while also generating outside sales. The Company's wholly owned
finance subsidiary, Fleetwood Credit Corp., provides wholesale and retail
financing for Fleetwood recreational vehicles.
Fleetwood's business began in 1950 through the formation of a California
corporation. The present company was incorporated in Delaware in September
1977, and succeeded by merger to all the assets and liabilities of the
predecessor company. The Company's principal executive offices are located in
Riverside, California. As used herein, the terms "Fleetwood" or "Company" mean
Fleetwood Enterprises, Inc. and its subsidiaries, unless otherwise indicated by
the context.
FINANCIAL INFORMATION RELATING TO INDUSTRY SEGMENTS
The following table sets forth revenues by business segment and the relative
contribution of such revenues to total revenues for the past three fiscal
years. Information with respect to operating profit (loss) and identifiable
assets by industry segment is shown in the Notes to Consolidated Financial
Statements in Part II of this Form 10-K.
YEARS ENDED APRIL
----------------------------------------------
1994 % 1993 % 1992 %
---------- --- ---------- --- ---------- ---
(DOLLARS IN THOUSANDS)
Recreational vehicles:
North American shipments--
Motor homes................. $ 706,105 30% $ 625,145 32% $ 592,792 37%
Travel trailers............. 433,441 18 405,505 21 330,409 21
Folding trailers............ 72,671 3 64,454 3 48,852 3
European shipments............ 29,199 1 18,923 1 -- --
---------- --- ---------- --- ---------- ---
1,241,416 52 1,114,027 57 972,053 61
---------- --- ---------- --- ---------- ---
Manufactured housing............ 1,054,267 44 774,784 40 574,149 36
---------- --- ---------- --- ---------- ---
Supply operations............... 36,501 2 19,088 1 11,855 1
---------- --- ---------- --- ---------- ---
Finance revenues................ 37,191 2 34,022 2 31,291 2
---------- --- ---------- --- ---------- ---
$2,369,375 100% $1,941,921 100% $1,589,348 100%
========== === ========== === ========== ===
RECREATIONAL VEHICLES
Motor Homes:
Fleetwood is the largest producer of motor homes in the United States,
manufacturing products under the brand names American Eagle, Bounder, Coronado,
Flair, Jamboree, Pace Arrow, Southwind and Tioga.
Motor homes are self-propelled vehicles which are primarily utilized for
vacations, camping trips and other leisure activities. A motor home is a bus-
like unit built directly on a purchased automotive chassis. The interior
typically includes the driver area, kitchen, bathroom, dining and sleeping
areas. The Company's American Eagle, Bounder, Coronado, Flair, Pace Arrow and
Southwind lines are conventional (Type A)
1
motor homes which are fully self-contained, having sleeping accommodations for
four to eight people and such optional features as air conditioning, auxiliary
power generator and stereo radio. These units are available in a variety of
models ranging in length from 22' to 39'. Jamboree and Tioga are more compact
(Type C) motor homes built on cut-away van chassis with basically the same
features and options as full-size conventional models. Type C units are
available in various models ranging in length from 18' to 31'.
In September 1992, the Company acquired an 80 percent interest in Niesmann &
Bischoff, a European motor home manufacturer located in Koblenz, Germany. This
acquisition was the Company's first venture into the European recreational
vehicle market. Until recently, this company was primarily a maker of luxury-
priced motor homes under the "Clou Liner" and "Clou Trend" brand names. During
fiscal 1994, the subsidiary expanded its product offering to include a more
moderately priced Class C motor home under the Flair brand name.
Travel Trailers:
Fleetwood is the largest manufacturer of travel trailers in the United
States, marketing products under the brand names Avion, Mallard, Prowler,
Savanna, Terry and Wilderness.
Fleetwood's travel trailers are designed to be towed by pickup trucks, vans
or other appropriate tow vehicles, and are similar to motor homes in use and
features. Although they are not generally designed to provide permanent living
quarters, travel trailers do provide comfortable living facilities for short
periods of time. All travel trailer models produced by the Company include
sleeping, eating and bathroom facilities. In addition, all of the Company's
travel trailers are self-contained units with their own lighting, heating,
refrigeration, fresh water storage tanks and sewage holding tanks so that they
can be lived in for short periods without being attached to utilities.
Conventional travel trailers produced by Fleetwood are in 8' widths and vary
in length from 16' to 39' (including trailer hitch). The Company also produces
fifth-wheel trailers which are designed to be towed exclusively by pickup
trucks. Slide-in truck campers under the Caribou and Elkhorn brand names are
manufactured in some of the Company's travel trailer factories. These units are
similar in use and features to travel trailers, but are designed to fit in the
bed of a pickup truck.
Folding Trailers:
With the acquisition of The Coleman Company's folding trailer operation in
December 1989, Fleetwood became the nation's largest manufacturer of folding
trailers. Folding trailers provide a lower cost alternative to travel trailers
and are lighter and easier to tow. All models have eating and sleeping
facilities and range in length from 17' to 23'.
MANUFACTURED HOUSING
With many of the nation's households priced out of the site-built single
family home market, manufactured housing has for some time been the principal
source of housing in the economical new home market. Manufactured homes are
transported from the factory to the site in one or more sections, and are
installed utilizing their own chassis on either temporary or permanent
foundations. Although manufactured homes are transportable, they are rarely
moved after shipment from the factory to the homesite. About 60 percent of the
manufactured homes produced in the United States are placed on individually
owned lots. The balance are located on leased sites in manufactured housing
communities.
Homes manufactured by the Company are built to manufactured home construction
and safety standards established by the U.S. Department of Housing and Urban
Development. Fleetwood produces manufactured housing using efficient, assembly-
line techniques with basically the same materials that are used in site-built
homes. The Company purchases components primarily from outside sources,
installs plumbing, electrical and heating systems and fabricates sub-floors,
walls, cabinets and wardrobes. Interior walls are
2
typically constructed with a drywall material and exterior walls from wood
products, anodized steel, simulated stucco or a combination of these materials.
Roofs are covered with asphalt or wood shingles or constructed of galvanized
steel.
Fleetwood's housing products are sold under various trade names with models
available in a variety of floorplans ranging in size from 480 to 2,450 square
feet. A typical manufactured home includes a living room, dining area, kitchen,
one or two bathrooms, and usually two or more bedrooms. Substantially all of
the Company's homes are equipped with carpeting, major appliances, drapes and
forced air furnaces, and may include furniture, all of which are included in
the base price. Optional features available include upgraded furniture
packages, air conditioning, automatic dishwashers and washers and dryers.
Retail prices of the Company's manufactured homes range from approximately
$10,000 up to about $70,000, although most are designed to sell for under
$25,000.
In some states, manufactured homes are still classified legally and by taxing
authorities as personal property rather than real estate. Historically, they
have been financed as personal property with shorter loan maturities and higher
interest rates than conventional home mortgages. However, over the past decade
a growing number of states have begun treating manufactured homes as real
estate for tax and titling purposes. This is especially the case when they are
attached to permanent foundations on individually owned lots. Such real estate
treatment has in turn favorably affected financing. Retail financing has moved
closer to that of site-built housing, especially in those areas of the country
where multi-section homes have become a significant factor, or where land is
also being purchased and financed in the same transaction.
FLEETWOOD CREDIT CORP.
The Company's wholly owned finance subsidiary, Fleetwood Credit Corp.,
provides wholesale and retail financing to purchasers of the Company's
recreational vehicles. Financing is provided on terms which are customary in
the industry and secured by the product being financed. Lending operations for
this subsidiary began early in fiscal 1987 with the opening of a Southern
California office. With the addition of regional offices in Northern
California, Oregon, Indiana, Georgia, Massachusetts, Texas, New Jersey and
Kansas, the credit company has since become a nationwide lending operation with
the capability of servicing most of Fleetwood's RV dealer network. Up to the
present time, the finance subsidiary's growth has been funded through a
combination of capital contributions from the parent company, commercial paper
borrowings, long-term debt and the sale of retail sales contracts to investors.
Future growth is expected to be financed by using similar sources. See Notes 1,
2, 4, 6, 10, 11 and 15 of the Notes to Consolidated Financial Statements in
Part II of this Form 10-K for further information.
SUPPLY OPERATIONS AND OTHER BUSINESSES
Supply operations consist of two fiberglass manufacturing companies and a
lumber milling operation. These operations provide a reliable source of quality
components for the Company's principal manufacturing businesses, while also
generating some outside sales.
The Company's wholly owned insurance subsidiary, Gibraltar Insurance Company,
Ltd., established in 1977, insures primarily products liability risks of the
parent company and its subsidiaries.
During fiscal 1990, the Company purchased a 75 acre land parcel located in
Southern California, and was planning to develop the parcel as a site-built
housing tract. Preliminary work has been done with respect to planning and
approvals, but the project is currently on hold.
SALES AND DISTRIBUTION
Fleetwood's policy is to produce manufactured housing only against orders
received from dealers, and the Company does not generally maintain an inventory
of finished homes. Recreational vehicles are sometimes built for inventory,
particularly during the winter months in anticipation of heavier spring
3
demand. The Company sells its recreational vehicles and manufactured housing to
independent dealers operating from approximately 3,000 locations in 49 states
and Canada. Historically, the Company has sold its products through many
independent dealers, none of which individually accounted for a material part
of the Company's total sales. Large chain dealerships have in recent years
become more important distributors of the Company's manufactured housing
products. However, no single dealer accounted for more than two percent of
Fleetwood's total sales during the most recent fiscal year. In the past, the
Company has not had many exclusive dealership arrangements and most dealers
sell competitive lines; however, there is a growing trend toward more exclusive
dealership arrangements.
Fleetwood provides most purchasers of its recreational vehicles and
manufactured housing with a one-year warranty against defects in materials and
workmanship, excluding only certain specific components which are separately
warranted by the suppliers. With respect to manufactured homes, the Company
provides a five-year warranty on structural, plumbing and electrical system
failures for homes produced after March 15, 1993. In the case of motor homes,
the warranty period is one year or until a unit has been driven 15,000 miles,
whichever occurs first. Annual expenses under such warranties were
approximately $59.4 million in 1994 and $47.1 million in 1993. Until fiscal
1994, the Company also had a program under which dealers were compensated for
inspecting Fleetwood recreational vehicles at the time of sale. This program
was discontinued during fiscal 1994. Expenses under this program were
approximately $596,000 in 1994 and $1.6 million in 1993.
For the past few years, the Company has been actively involved in the quality
improvement process which has as one of its objectives the enhancement of
customer satisfaction. This process is facilitated by the use of independent
consumer surveys to determine whether retail customers are satisfied with the
quality of their Fleetwood product and the level of service provided by the
retailer. An independent consumer research firm conducts telephone surveys and
feeds back customer responses to the Company's manufacturing entities and
dealers to reinforce quality performance and eliminate customer problems. Each
year, specific customer satisfaction goals are established for the Company's
manufacturing operations and independent retailers. Dealers who meet these
performance standards are recognized with the Company's Circle of Excellence
award, and Fleetwood manufacturing centers are similarly honored for reaching
high levels of customer satisfaction. These efforts have resulted in increased
awareness by Company employees and retailers of the importance of product
quality and service, which in turn has significantly improved the Company's
customer satisfaction ratings.
Ultimately, the level of Company sales to dealers is determined by the rate
of dealer sales to retail customers. However, in the short run the Company's
shipments may vary markedly from retail sales because of dealers' adjustments
to inventories (upward or downward) based upon such factors as seasonality,
current or impending new model introductions, expectations of future demand and
inventory financing costs. Sales of manufactured housing are somewhat seasonal
and tend to be lower during the winter months in most areas. Recreational
vehicles are used primarily by vacationers and campers and, as a result, sales
historically have been higher during the Company's first and fourth fiscal
quarters.
Sales of recreational vehicles and manufactured housing are generally made to
dealers either on a C.O.D. basis or under commitments by financial institutions
which have agreed to finance dealer purchases. The Company provides financing
support programs exclusively for Fleetwood products. One such program with the
Company's finance subsidiary provides floor plan financing to Fleetwood
recreational vehicle dealers at below-market interest rates, with the Company
subsidizing the interest cost. A similar program exists with an outside lending
institution. Under these arrangements, the interest rate to the dealer varies
depending on market rates and the extent to which the Company subsidizes the
programs. The aggregate cost of these wholesale finance subsidies was $6.5
million in 1994 and $6.3 million in 1993. The Company also has a retail
financing support program for retail buyers of Fleetwood recreational vehicles.
Through Fleetwood Credit Corp. and an outside financial institution, the
Company provides retail financing at below-market interest rates, compensating
the financing source for the difference between the actual and market interest
rates. The estimated cost to the Company for retail financing was $4.4 million
in 1994 and $3.1 million in 1993.
4
In fiscal 1992, the Company formed an alliance with Associates Corporation of
North America, a unit of Ford Motor Company, for the purpose of establishing a
wholesale and retail financing program exclusively for Fleetwood manufactured
housing retailers. Currently, about 1,000 retailers participate in this program
representing nearly 55 percent of the Company's housing volume. There is no
investment or direct cost on the part of the Company in this financing program.
As is customary in the industry, most lenders financing dealer inventories
require the Company to execute repurchase agreements. These agreements provide
that in the event a dealer defaults on repayment of the financing, the Company
may be required to repurchase its product from the lenders in accordance with a
declining repurchase price schedule. The risk of loss under these agreements is
spread over numerous dealers and lenders, and is further reduced by the resale
value of any products which may be repurchased. The number of units repurchased
and the losses incurred under these agreements have not been significant in the
past.
IDLE FACILITIES
Idle facilities include closed plants and certain other properties which are
not in current use by the Company. There were five idle plants at the end of
1994 and nine in 1993. During fiscal 1994, three idle facilities were sold and
one previously idle plant was activated.
There are no immediate plans to reopen any of the closed plants. The
remaining idle facilities consist solely of land and multi-purpose buildings
with nominal carrying costs. The book value of idle facilities was $6.9 million
at April 24, 1994 and $9.1 million at April 25, 1993, net of accumulated
depreciation of $3.5 million and $5.4 million, respectively. In the opinion of
management, the carrying values of idle facilities are not in excess of
realizable value. The Company has generally been successful in disposing of
idle facilities at prices that exceed carrying values.
ENGINEERING AND PRODUCT DEVELOPMENT
The Company is continually engaged in the development of new designs and
production techniques for Fleetwood products and in testing construction
materials. Amounts spent on these activities were $16.7 million in 1994 and
$14.7 million in 1993.
REGULATION (SEE ALSO "COMPETITION AND BUSINESS RISKS")
Standards established by the Federal government, several state and local
governments and the government of Canada regulate the installation of plumbing,
heating and electrical systems and construction methods utilized in the
Company's products. Accordingly, plans and specifications for Fleetwood
products are required to be approved and units may be inspected by the
appropriate agency prior to completion. The U.S. Department of Housing and
Urban Development (HUD), which establishes construction and safety standards
affecting the Company's manufactured homes, recently promulgated significant
changes concerning wind safety and energy standards which will become effective
during fiscal year 1995. These regulations will impose substantial cost
increases on manufactured homes in certain geographic areas, hurricane-prone
zones in the case of wind safety standards and, in the case of energy
standards, areas where heating or air conditioning use is especially prevalent.
The Company is subject to provisions of the Housing and Community Development
Act of 1974, under which HUD may require manufactured housing producers to send
notifications to customers of noncompliances with standards or to repair
manufactured homes which contain certain hazards or defects. Amendments to the
Act, which would reduce the current notification requirements and make a number
of other changes, are currently under consideration. The Company is also
subject to the National Traffic and Motor Vehicle Safety Act under which the
Department of Transportation may require manufacturers to recall recreational
vehicles which contain safety-related defects. Fleetwood has periodically
determined on its
5
own initiative to recall and repair certain units and, on occasion, has had
disputes with such Departments over allegations that its products fail to
comply with Federal standards. The costs associated with such notification or
recall campaigns were not significant in the past.
In 1985, HUD adopted product standards regulating formaldehyde emissions from
particleboard and plywood used in manufactured homes and required an air
quality notice regarding formaldehyde to be placed prominently in all
manufactured homes. HUD's regulations are intended to preempt state and local
formaldehyde standards and notice requirements with respect to manufactured
home purchasers.
In recent years, laws and regulations concerning outdoor air pollution have
imposed substantial compliance costs on manufacturers. This is especially true
in Southern California, home of the South Coast Air Quality Management District
(SCAQMD), where the Company's corporate headquarters and five manufacturing
plants are located. SCAQMD enforcement efforts have increased in recent years.
COMPETITION AND BUSINESS RISKS
Recreational vehicles produced by Fleetwood are intended for use on public
highways, and gasoline is required for the operation of motor homes and most
vehicles used to tow travel trailers and folding trailers. Shortages and
significant increases in the price of gasoline have had a substantial adverse
effect on the market for these products twice in the past and could again
adversely affect demand in the future. The substantial contraction of industry
and Fleetwood RV sales during fiscal 1980 and 1981, and the subsequent
improvements in sales as energy concerns abated, are indicative of the
sensitivity of the RV business to energy developments.
The recreational vehicle and manufactured housing businesses are heavily
dependent on the availability and terms of financing for dealer and retail
purchases. Consequently, increases in interest rates and the tightening of
credit through governmental actions or other means have adversely affected the
Company's business in the past and are likely to do so in the future.
Some components of recreational vehicles and manufactured homes are produced
by only a small group of reputable suppliers which have the capacity to supply
large quantities on a national basis. This is especially true in the case of
motor home chassis where General Motors Corporation and Ford Motor Company are
the dominant suppliers. Shortages, production delays or work stoppages by the
employees of such suppliers could have a substantial adverse impact on the
Company's business.
The businesses of producing and selling manufactured housing and recreational
vehicles are highly competitive as to price, design, quality and service. There
is competition from many other manufacturers, some of which, though smaller
than the Company, focus on specific product lines or geographic areas and
provide significant competition.
Any limitation on the growth of the number of spaces for manufactured homes
due to any cause, including local ordinances, which affects the operation of
manufactured housing communities, could adversely affect Fleetwood's housing
business. Manufactured housing communities are subject to local zoning
ordinances and other local regulations relating to utility service and
construction of roadways. In the past, there has been resistance on the part of
property owners to the adoption of zoning ordinances permitting the location of
manufactured homes in residential areas, which is believed to have adversely
affected the growth of the industry. However, in recent years, important
strides have been made in the elimination of discriminatory zoning laws as more
state and local authorities have recognized the importance of manufactured
housing in the overall housing market.
6
EMPLOYEE RELATIONS
As of April 24, 1994, the Company and its subsidiaries had approximately
16,000 employees. Employment during the preceding 12 months ranged from
approximately 14,000 to 16,000 employees. Most full-time employees are provided
with paid annual vacations, group life insurance, medical and hospitalization
benefits, a retirement plan and other fringe benefits. Approximately 600 of
these employees hold management or supervisory positions and work pursuant to
written contracts. Pursuant to these contracts, such employees may receive
incentive compensation depending on the financial performance of the employer
entity, which can represent a substantial part of their total compensation.
As of April 24, 1994, collective bargaining agreements were in effect at two
of Fleetwood's manufacturing locations covering a total of approximately 800
employees. Expiration dates for these agreements are in September 1994 and
October 1996. Except for employees at these plants, no other Company employees
are represented by a certified labor organization.
ITEM 2. PROPERTIES
The Company owns its executive offices which are located at 3125 Myers Street
in Riverside, California. The administrative offices, which occupy 173,500
square feet, are situated on Company-owned parcels of land totaling
approximately 18.1 acres. The following table describes additional property and
buildings owned or leased by the Company and its subsidiaries which are
utilized for manufacturing, research and development, and administrative
purposes as of April 24, 1994.
APPROXIMATE
APPROXIMATE SQUARE
FACILITY AND LOCATION ACREAGE FOOTAGE
- --------------------- ----------- -----------
Plants Producing Recreational Vehicles:
Motor Homes:
Chico, California................................... 28.6 153,300
Riverside, California............................... 36.8 326,700
Decatur, Indiana.................................... 90.0 327,900
Decatur, Indiana.................................... 29.3 179,300
Paxinos, Pennsylvania............................... 71.6 187,400
Polch, Germany...................................... 32.1 126,000
Motor Home Service Facilities:
Riverside, California............................... 9.5 60,600
Decatur, Indiana.................................... 24.6 90,000
Paxinos, Pennsylvania............................... 7.1 39,600
Travel Trailers:
Rialto, California(1)............................... 18.8 115,700
Crawfordsville, Indiana............................. 15.0 131,500
Hancock, Maryland................................... 20.5 102,900
Omaha, Nebraska..................................... 18.5 112,100
Edgerton, Ohio...................................... 16.6 92,700
LaGrande, Oregon.................................... 32.0 98,000
Pendleton, Oregon................................... 20.8 218,700
Longview, Texas..................................... 42.8 152,900
Winchester, Virginia................................ 20.6 122,700
Lindsay, Ontario, Canada............................ 9.2 140,800
Folding Trailers:
Somerset, Pennsylvania.............................. 42.6 392,500
Plants Producing Manufactured Housing:
Hamilton, Alabama................................... 10.2 116,300
Glendale, Arizona................................... 9.3 118,300
Riverside, California............................... 18.8 93,200
7
APPROXIMATE
APPROXIMATE SQUARE
FACILITY AND LOCATION ACREAGE FOOTAGE
- --------------------- ----------- -----------
Woodland, California.............................. 15.8 100,700
Auburndale, Florida............................... 13.7 97,200
Haines City, Florida.............................. 13.6 89,800
Plant City, Florida............................... 11.5 74,000
Alma, Georgia..................................... 43.6 173,100
Broxton, Georgia.................................. 20.0 80,900
Douglas, Georgia.................................. 25.7 273,600
Douglas, Georgia.................................. 20.7 114,600
Fitzgerald, Georgia............................... 18.6 116,400
Pearson, Georgia.................................. 13.3 126,300
Pearson, Georgia.................................. 11.2 88,500
Nampa, Idaho...................................... 19.8 153,500
Garrett, Indiana.................................. 22.1 108,800
Garrett, Indiana.................................. 20.4 99,700
Lexington, Mississippi............................ 51.6 172,100
Lumberton, North Carolina......................... 55.0 87,300
Mooresville, North Carolina....................... 21.8 110,900
Pembroke, North Carolina.......................... 32.4 151,100
Roxboro, North Carolina........................... 20.0 94,700
Woodburn, Oregon.................................. 22.4 183,400
Elizabethtown, Pennsylvania....................... 17.5 101,000
Elizabethtown, Pennsylvania....................... 19.7 112,400
Gallatin, Tennessee............................... 18.2 183,800
Westmoreland, Tennessee........................... 38.6 143,900
Westmoreland, Tennessee........................... 20.6 114,800
Waco, Texas....................................... 34.2 283,200
Waco, Texas....................................... 13.0 114,600
Rocky Mount, Virginia............................. 13.8 83,400
Woodland, Washington.............................. 18.0 95,400
Plants Producing Components:
Fontana, California............................... 11.9 83,000
Riverside, California............................. 10.0 111,000
Hauser Lake, Idaho................................ 28.0 81,000
Decatur, Indiana.................................. 29.7 216,500
Division Offices and Research and Development
Facilities:
Riverside, California............................. 21.9 234,300
The following Company-owned manufacturing facilities were not in operation as
of April 24, 1994. There are no immediate plans to reopen any of these
facilities.
APPROXIMATE
APPROXIMATE SQUARE
FACILITY AND LOCATION ACREAGE FOOTAGE
- --------------------- ----------- -----------
Riverside, California................................... 17.6 73,700
Williamsport, Maryland.................................. 45.1 71,600
Benton Harbor, Michigan(2).............................. 44.1 104,700
Cushing, Oklahoma....................................... 15.2 70,000
Lindsay, Ontario, Canada................................ 20.0 72,000
- --------
(1) Includes 4.0 acres and 27,100 square foot building leased from unaffiliated
outside party.
(2) A portion of this facility is being leased to an unaffiliated party who has
an option to purchase.
8
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in various legal proceedings, most of which are
routine litigation incident to its business, and some of which are covered in
whole or in part by insurance. In the opinion of management, none of the
uninsured cases involve realistic claims which are material in amount.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the shareholders of the Company during
the fourth quarter of fiscal year 1994.
EXECUTIVE OFFICERS OF THE COMPANY
NAME TITLE AGE
---- ----- ---
John C. Crean Chairman of the Board
and Chief Executive Officer 69
Glenn F. Kummer President and Chief Operating Officer 60
Jon A. Nord Senior Vice President-Housing Group 54
Elden L. Smith Senior Vice President-Recreational
Vehicle Group 54
Lawrence F. Pittroff Senior Vice President and President
of Fleetwood Credit Corp. 59
Paul M. Bingham Financial Vice President, Assistant
Secretary and Chief Financial Officer 52
William H. Lear Vice President-General Counsel
and Secretary 54
Edward R. Skillin Vice President-Motor Homes 55
Larry J. Hughes Vice President-Travel Trailers 50
Mallory S. Smith Vice President-Housing Group Operations 52
Larry L. Mace Vice President-Supply Subsidiaries 51
Robert W. Graham Vice President-Administration and
Human Resources 57
Jerry L. Hewitt Vice President-Quality 50
Nelson W. Potter Vice President-Planning and Corporate
Development 51
Lyle N. Larkin Treasurer and Assistant Secretary 49
None of the Company officers are related by blood, marriage, or adoption.
With the exception of Mr. Hewitt who joined the Company during fiscal year
1992, all of the officers have been employed by the Company for at least the
past five years.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
The following table lists the high and low sales prices for Fleetwood's
Common stock during the past two fiscal years as reported on the New York Stock
Exchange Composite Tape, along with information on dividends paid per share
during the same periods. The fiscal 1993 figures have been adjusted to give
retroactive effect to a two-for-one stock split, effected as a 100% stock
dividend, on March 1, 1993. The
9
Company's Common stock is listed on the New York and the Pacific stock
exchanges and traded on various regional exchanges (Ticker Symbol: FLE). Call
options are traded on the American Stock Exchange.
DIVIDENDS
QUARTER HIGH LOW PAID
------- ------- ------- ---------
Fiscal 1994
First............................................... $ 22 $16 1/2 $.125
Second.............................................. 24 5/8 19 1/4 .125
Third............................................... 25 7/8 20 5/8 .125
Fourth.............................................. 26 18 3/4 .125
Fiscal 1993
First............................................... $19 1/4 $12 3/4 $ .11
Second.............................................. 18 1/8 13 1/8 .115
Third............................................... 24 7/8 17 5/8 .115
Fourth.............................................. 26 7/8 17 7/8 .115
On April 24, 1994, there were approximately 2,000 shareholders of record of
the Company's Common stock.
The Company's policy is to consider dividend payments in the context of the
overall financial strength of the Company and earnings performance over an
extended period of time. During fiscal 1994, the Company paid quarterly
dividends of 12.5 cents per share. Subsequent to year end, the Company
announced an increase in the quarterly cash dividend from 12.5 cents to 14
cents per share. The first dividend at the new rate was declared by the Board
of Directors on June 14, 1994 and is payable to shareholders on August 10,
1994.
ITEM 6. SELECTED FINANCIAL DATA
FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA
YEARS ENDED APRIL
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
Revenues................ $2,369,375 $1,941,921 $1,589,348 $1,400,894 $1,549,424
Net income.............. 65,928 56,570 40,224 30,440 55,039
Net income per share.... 1.43 1.23 .88 .68 1.21
Total assets............ 1,224,123 1,061,910 915,024 768,490 817,480
Cash dividends declared
per Common share....... .50 .47 .44 .42 .38
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
1994 COMPARED TO 1993:
Earnings for fiscal year 1994 increased to $65,928,000 or $1.43 per share, 17
percent ahead of last year's $56,570,000 and $1.23 per share. Net income in
1994 was reduced by $1,500,000 or 3 cents per share due to a change in
accounting for income taxes under Statement of Financial Accounting Standards
No. 109. Earnings growth in fiscal 1994 was mainly driven by strong demand for
the Company's manufactured housing products. As a result of sales gains from
all operating groups, consolidated revenues reached a new high in 1994, rising
22 percent to $2.37 billion. This surpasses the previous high of $1.94 billion
recorded in fiscal 1993.
Housing group revenues in fiscal 1994 were the highest on record, rising 36
percent to $1.05 billion. This follows a 35 percent revenue increase in the
prior year when sales reached $775 million. In terms of unit volume, the
Company solidified its position as America's largest homebuilder by shipping
56,753 homes, up 27 percent over fiscal 1993. The sharp rise in housing volume
reflects the continuing recovery of the manufactured housing market, as well as
an expanded market share for the Company. Housing group sales represented 45
percent of total Company revenues compared to 40 percent last year.
10
Fleetwood's recreational vehicle group posted record revenues of $1.24
billion in fiscal 1994, 11 percent ahead of last year's $1.11 billion. Sales
gains were posted by all North American RV divisions mainly due to improving
economic conditions and a healthy RV market. The RV group was led by the motor
home division which registered sales of $706 million, 13 percent above the
prior year. Motor home shipments increased 8 percent to 15,062 units. Travel
trailer sales increased 7 percent in 1994 to a new high of $433 million. With a
boost from successful new products introduced in fiscal 1994, travel trailer
shipments rose 6 percent to 34,983 units. On the strength of a strong first
half performance, the folding trailer division also established record sales in
1994. Despite softening demand in the second half of the year, folding trailer
revenues increased 13 percent to $73 million on a 12 percent gain in unit
volume to 18,421. Fleetwood's European RV operation contributed 1994 revenues
of $29 million, up from $19 million in 1993. Last year's sales covered a seven-
month period from the date of acquisition. Recreational vehicle sales accounted
for 52 percent of total Company revenues, down from 57 percent last year.
Manufacturing gross profit declined to 18.3 percent of sales from 19.2
percent last year, primarily because of tighter profit margins for recreational
vehicles. Gross margin was also slightly lower for the housing group as a
result of rising lumber costs. See Note 15 of the Notes to Consolidated
Financial Statements for further information on operating profit by industry
segment.
Operating expenses rose 14 percent to $343.7 million, but declined as a
percentage of sales from 15.6 percent to 14.5 percent as a result of increased
sales. Selling expenses, most of which are volume-related, were up 24 percent
to $133.7 million. Higher costs were incurred for product warranties, product
financing, advertising and sales incentives. General and administrative
expenses increased 8 percent to $210.0 million primarily reflecting higher
employee compensation and benefits. Staffing additions related to new plant
openings, increased incentive compensation on improved profits and higher
retirement plan costs all contributed to the increase.
Non-operating income in fiscal 1994 included net interest income of $7.3
million which was 12 percent below the $8.4 million posted last year. Lower
rates of return and reduced balances of invested funds led to the decline.
Fleetwood Credit Corp., the Company's wholly owned finance subsidiary,
provided financing for more than 69 percent of Fleetwood's RV factory sales
compared to 63 percent last year. Operating income for FCC was up 21 percent in
1994 to $12.5 million primarily due to higher loan servicing income.
Receivables being serviced grew 12 percent to over $855 million. Owned finance
receivables at year end were $399 million, up from $346 million a year ago.
The combined Federal and state income tax rate, excluding the $1.5 million
adjustment to record the cumulative effect of the change in accounting for
income taxes, was 40.9 percent compared to last year's 38.1 percent. This
increase reflects the recently enacted Federal corporate tax increase and the
effect of losses from European operations which carry no tax benefit. The
effective tax rate for 1994 was above the U.S. Federal tax rate of 35 percent
largely because of the inclusion of state income taxes. See Note 8 of the Notes
to Consolidated Financial Statements for a reconciliation of the provision for
income taxes to the Federal statutory rate.
1993 COMPARED TO 1992:
Net income jumped 41 percent in fiscal year 1993 to $56,570,000 or $1.23 per
share compared to $40,224,000 or 88 cents per share in the prior year. The
vastly improved results were largely driven by a substantial rise in
manufactured housing sales. Results were also favorably influenced by higher
recreational vehicle sales and a significant turnaround in the profitability of
supply operations.
Housing revenues increased 35 percent in 1993 to an all-time record $775
million, up from $574 million in the previous year. This strong performance
reflects a vigorous recovery in the manufactured housing market as well as
market share growth for the Company. Fleetwood shipments in fiscal 1993 were up
26
11
percent to 44,763 homes. Housing group sales in 1993 represented 40 percent of
total Company revenues compared to 36 percent last year.
Recreational vehicle sales also improved in 1993, rising 15 percent to $1.11
billion compared to $972 million a year ago. Included in RV sales for fiscal
1993 were $19 million for the recently acquired European RV operation. Domestic
motor home sales were up 5 percent to $625 million on a 1 percent rise in
shipments to 13,941 units. Travel trailer revenues of nearly $406 million were
up 23 percent as unit volume improved 19 percent to 32,911. Sales for the
folding trailer division increased sharply in 1993, rising to over $64 million
as shipments surged 26 percent to 16,393 units. Recreational vehicle sales in
total accounted for 57 percent of total Company revenues in 1993, down from 61
percent in the prior year.
Manufacturing gross profit increased to 19.2 percent of sales from 18.7
percent last year reflecting higher gross margins for both the recreational
vehicle and manufactured housing groups. Slightly lower RV margins were
experienced in the fourth quarter of fiscal 1993 because of competitive
pressures. Management expects this margin pressure to continue for the
foreseeable future due to the very competitive RV market. See Note 15 of the
Notes to Consolidated Financial Statements for further information on operating
profit by industry segment.
Operating expenses rose 19 percent to $302.2 million, but declined as a
percentage of sales from 16.0 percent to 15.6 percent. Most of the cost
increases were related to higher volume. Selling costs and general and
administrative expenses both increased 19 percent to $107.8 million and $194.4
million, respectively. The higher selling expenses primarily reflect increases
in product warranty costs and sales promotion efforts. The greater general and
administrative expenses were largely due to higher employee compensation and
benefits, principally resulting from increased management compensation based on
improved profitability.
Non-operating income declined 17 percent to $7.8 million primarily as a
result of lower investment income. Investment income was affected by lower
rates of return as well as reduced balances of invested funds.
Fleetwood Credit Corp., the Company's wholly owned RV finance subsidiary,
provided financing for more than 63 percent of Fleetwood's RV factory sales in
fiscal year 1993, up from about 60 percent in the prior year. Operating income
rose 28 percent to $10.4 million, up from $8.1 million in fiscal 1992, largely
as a result of higher loan servicing income. In addition to more attractive
loan servicing fees in fiscal 1993, the level of receivables being serviced by
FCC increased 14 percent to more than $760 million. Owned finance receivables
at year end were $346 million compared to $275 million a year ago.
The combined Federal and state income tax rate was 38.1 percent in fiscal
year 1993 compared to last year's 37.3 percent, reflecting higher taxable
operating income and less impact from tax-exempt investment income. The
effective tax rate for both years was above the U.S. Federal tax rate of 34
percent principally because of the inclusion of state income taxes. See Note 8
of the Notes to Consolidated Financial Statements for a reconciliation of the
provision for income taxes to the Federal statutory rate.
LIQUIDITY AND CAPITAL RESOURCES 1994 AND 1993:
The Company continued to maintain a strong financial position throughout 1994
and 1993. Positive cash flows were generated from internal sources to support
higher manufacturing operating rates and to fund capital expenditures and
shareholder dividends. As a result of profitable operations and tight controls
over working capital, cash flow from operations increased to $79.3 million in
1994, up from $27.2 million in the prior year. Despite healthy capital
expenditures in 1994 and 1993, the Company was able to maintain a strong cash
position in both years. Cash and investments totaled $158.5 million at the end
of 1994, virtually unchanged from the prior year.
During 1994 and 1993, the Company's finance subsidiary secured cash to
support lending operations primarily through the issuance of commercial paper
and term debt, as well as the sale to investors of securities backed by retail
sales contracts.
12
Cash outflows in 1994 included capital expenditures of $72.8 million and
dividends to shareholders of $22.9 million. In the prior year, major cash
outlays included $42.1 million in capital expenditures and $21.5 million in
shareholder dividends.
Capital expenditures in 1994 and 1993 included the addition of new
manufactured housing plants and the normal replacement of machinery and
equipment. In 1994, the housing group added 8 plant facilities, one of which
was obtained through the acquisition of a business in Alabama. Four of the 8
facilities added in 1994 represented satellite operations located near existing
Fleetwood operations. During 1993, two new facilities were added, both of which
were stand-alone housing operations.
Capital expenditures in fiscal 1995 are currently estimated to be in the
range of $50 to $60 million. It is anticipated that 4 manufactured housing
production facilities and a motor home service facility will be added. In
addition, plant modifications are expected at several existing locations, along
with the normal replacement of machinery and equipment. It is anticipated that
existing financial resources and cash generated from operations will be
adequate to fund these expenditures.
During the seasonally slow winter months (typically November through
February), the Company has historically built inventories of recreational
vehicles in order to meet the peak demand for these products in the spring. In
recent years, this has been accomplished without the use of debt financing. In
the past, however, there have been occasions when the Company has required the
use of bank credit lines. Apart from separate credit facilities established for
the finance operations, the Company currently has credit lines with its
principal bank and another bank which are being used only to support letters of
credit. For fiscal year 1995 and beyond, it is anticipated that adequate
working capital to finance the Company's manufacturing operations will be
provided from internally generated funds.
The Company's finance subsidiary maintains a committed revolving credit
facility with a number of major banks for $250 million which is used to support
the issuance of commercial paper. For the most part, the finance subsidiary
expects to finance its future operations primarily through a combination of
commercial paper, sales of retail receivables to investors and term debt.
During the past three years, inflation has not had a significant impact on
the Company's operations. With the exception of lumber, prices paid for raw
materials and other manufacturing inputs have remained fairly stable throughout
this period. On a longer-term basis, the Company has demonstrated an ability to
adjust the selling prices of its products in reaction to changing costs.
13
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Fleetwood Enterprises, Inc.:
We have audited the accompanying consolidated balance sheets of FLEETWOOD
ENTERPRISES, INC., (a Delaware Corporation) and subsidiaries as of April 24,
1994 and April 25, 1993, and the related consolidated statements of income,
changes in shareholders' equity, and cash flows for each of the three years in
the period ended April 24, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Fleetwood
Enterprises, Inc. and subsidiaries as of April 24, 1994 and April 25, 1993, and
the results of their operations and their cash flows for each of the three
years in the period ended April 24, 1994 in conformity with generally accepted
accounting principles.
As explained in Notes 1 and 8 to the financial statements, effective April
26, 1993, the Company adopted the Statement of Financial Accounting Standards
No. 109.
Our audits were made for the purpose of forming an opinion on the financial
statements taken as a whole. The schedules listed in the index of financial
statements are presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic financial statements.
These schedules have been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, fairly state in
all material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
Arthur Andersen & Co.
Orange County, California
June 23, 1994
14
FLEETWOOD ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
FOR THE YEARS ENDED APRIL
----------------------------------
1994 1993 1992
---------- ---------- ----------
OPERATING REVENUES:
Manufacturing sales...................... $2,332,184 $1,907,899 $1,558,057
Finance revenues......................... 37,191 34,022 31,291
---------- ---------- ----------
2,369,375 1,941,921 1,589,348
---------- ---------- ----------
COSTS AND EXPENSES:
Cost of products sold.................... 1,905,659 1,541,277 1,266,051
Operating expenses....................... 343,729 302,190 253,758
Finance interest expense................. 15,622 14,979 14,827
---------- ---------- ----------
2,265,010 1,858,446 1,534,636
---------- ---------- ----------
Operating income......................... 104,365 83,475 54,712
OTHER INCOME (EXPENSE):
Investment income........................ 9,890 10,420 11,816
Interest expense......................... (2,549) (2,043) (1,964)
Other.................................... 326 (575) (446)
---------- ---------- ----------
7,667 7,802 9,406
---------- ---------- ----------
Income before provision for income taxes
and cumulative effect of accounting
change.................................... 112,032 91,277 64,118
Provision for income taxes................. (45,858) (34,772) (23,894)
Minority interest in net loss of
subsidiary................................ 1,254 65 --
---------- ---------- ----------
Income before cumulative effect of
accounting change......................... 67,428 56,570 40,224
Cumulative effect of change in accounting
for income taxes.......................... (1,500) -- --
---------- ---------- ----------
Net income............................. $ 65,928 $ 56,570 $ 40,224
========== ========== ==========
Net income per Common and equivalent share. $ 1.43 $ 1.23 $ .88
========== ========== ==========
Dividends declared per share of Common
stock outstanding......................... $ .50 $ .47 $ .44
========== ========== ==========
Common and equivalent shares outstanding... 46,207 45,961 45,648
========== ========== ==========
The accompanying notes are an integral part of these statements.
15
FLEETWOOD ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
APRIL 24, APRIL 25,
1994 1993
---------- ----------
ASSETS
------
Cash................................................... $ 37,267 $ 34,834
Investments............................................ 121,212 123,641
Receivables:
Manufacturing........................................ 158,054 136,125
Finance company...................................... 386,207 336,776
Inventories:
Raw materials........................................ 117,778 91,147
Work in process and finished products................ 65,876 63,593
Land held for future development....................... 6,800 6,734
Property, plant and equipment.......................... 220,788 172,395
Deferred tax benefits.................................. 59,084 52,764
Other assets........................................... 51,057 43,901
---------- ----------
$1,224,123 $1,061,910
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Accounts payable....................................... $ 80,568 $ 54,492
Commercial paper borrowings and long-term debt......... 360,601 299,549
Employee compensation and benefits..................... 98,004 84,277
Federal and state taxes on income...................... (4,323) 374
Insurance reserves..................................... 45,343 40,226
Other liabilities...................................... 97,715 79,612
---------- ----------
Total liabilities.................................. 677,908 558,530
---------- ----------
Contingent liabilities
Minority interest...................................... (251) 791
Shareholders' equity:
Preferred stock, $1 par value, authorized 10,000,000
shares,
none outstanding.................................... -- --
Common stock, $1 par value, authorized 75,000,000
shares,
outstanding 45,996,000 at April 24, 1994 and
45,667,000
at April 25, 1993................................... 45,996 45,667
Capital surplus...................................... 40,949 40,983
Retained earnings.................................... 461,086 416,031
Foreign currency translation adjustment.............. (1,565) (92)
---------- ----------
546,466 502,589
---------- ----------
$1,224,123 $1,061,910
========== ==========
The accompanying notes are an integral part of these balance sheets.
16
FLEETWOOD ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
FOR THE YEARS ENDED APRIL
----------------------------------
1994 1993 1992
---------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................... $ 65,928 $ 56,570 $ 40,224
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation expense................... 18,598 15,628 15,068
Amortization of intangibles and
goodwill.............................. 1,817 1,711 2,058
Provision for credit losses............ 3,644 3,791 1,583
Losses (gains) on sales of property,
plant and equipment................... (326) 575 446
Changes in assets and liabilities--
Increase in manufacturing
receivables......................... (21,929) (30,065) (14,420)
Increase in inventories.............. (28,914) (42,443) (18,151)
Increase in deferred tax benefits.... (6,320) (9,327) (6,169)
(Increase) decrease in other assets.. (8,973) (15,374) 245
Increase (decrease) in accounts
payable............................. 26,076 13,018 (6,357)
Increase in other liabilities........ 31,208 34,511 36,004
Foreign currency translation
adjustment............................ (1,473) (1,411) (390)
---------- ---------- ----------
Net cash provided by operating
activities.............................. 79,336 27,184 50,141
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of finance receivables....... (1,028,016) (876,944) (742,468)
Principal collected on finance
receivables............................. 781,921 685,222 548,661
Proceeds from sales of retail sales
contracts, net.......................... 193,020 120,059 111,888
(Additions to) decreases in investments.. 2,429 45,740 (10,548)
Purchases of property, plant and
equipment............................... (72,816) (42,062) (25,597)
Proceeds from sales of property, plant
and equipment........................... 6,151 3,856 3,314
Investment in land held for future
development............................. (66) (100) (117)
Pooling of interest...................... 2,006 -- --
---------- ---------- ----------
Net cash used in investing activities.... (115,371) (64,229) (114,867)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of commercial
paper and long-term debt................ 1,752,054 1,879,349 1,636,056
Principal payments on commercial paper
and long-term debt...................... (1,691,002) (1,813,753) (1,553,706)
Dividends to shareholders................ (22,878) (21,455) (19,958)
Proceeds from exercise of stock options.. 294 57 14,661
---------- ---------- ----------
Net cash provided by financing
activities.............................. 38,468 44,198 77,053
---------- ---------- ----------
Increase in cash........................... 2,433 7,153 12,327
Cash at beginning of year.................. 34,834 27,681 15,354
---------- ---------- ----------
Cash at end of year........................ $ 37,267 $ 34,834 $ 27,681
========== ========== ==========
Supplementary disclosures:
Income taxes paid........................ $ 58,409 $ 42,755 $ 28,173
Interest paid............................ 17,140 16,014 13,234
========== ========== ==========
The accompanying notes are an integral part of these statements.
17
FLEETWOOD ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(AMOUNTS IN THOUSANDS)
COMMON STOCK FOREIGN
----------------- CURRENCY TOTAL
NUMBER CAPITAL RETAINED TRANSLATION SHAREHOLDERS'
OF SHARES AMOUNT SURPLUS EARNINGS ADJUSTMENT EQUITY
--------- ------- ------- -------- ----------- -------------
BALANCE APRIL 28, 1991.. 43,786 $43,786 $21,927 $360,650 $ 1,709 $428,072
ADD (DEDUCT)--
Net income............ -- -- -- 40,224 -- 40,224
Cash dividends
declared on Common
stock................ -- -- -- (19,958) -- (19,958)
Stock options
exercised (including
related tax
benefits)............ 1,820 1,820 18,216 -- -- 20,036
Net adjustment from
foreign currency
translation.......... -- -- -- -- (390) (390)
------ ------- ------- -------- ------- --------
BALANCE APRIL 26, 1992.. 45,606 45,606 40,143 380,916 1,319 467,984
ADD (DEDUCT)--
Net income............ -- -- -- 56,570 -- 56,570
Cash dividends
declared on Common
stock................ -- -- -- (21,455) -- (21,455)
Stock options
exercised (including
related tax
benefits)............ 7 7 50 -- -- 57
Stock issued for
acquisition of
subsidiary........... 54 54 790 -- -- 844
Net adjustment from
foreign currency
translation.......... -- -- -- -- (1,411) (1,411)
------ ------- ------- -------- ------- --------
BALANCE APRIL 25, 1993.. 45,667 45,667 40,983 416,031 (92) 502,589
ADD (DEDUCT)--
Pooling of interest... 312 312 (311) 2,005 -- 2,006
Net income............ -- -- -- 65,928 -- 65,928
Cash dividends
declared on Common
stock................ -- -- -- (22,878) -- (22,878)
Stock options
exercised (including
related tax
benefits)............ 17 17 277 -- -- 294
Net adjustment from
foreign currency
translation.......... -- -- -- -- (1,473) (1,473)
------ ------- ------- -------- ------- --------
BALANCE APRIL 24, 1994.. 45,996 $45,996 $40,949 $461,086 $(1,565) $546,466
====== ======= ======= ======== ======= ========
The accompanying notes are an integral part of these statements.
18
FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of consolidation:
The consolidated financial statements include the accounts of Fleetwood
Enterprises, Inc. and its majority owned subsidiaries. The term "Company" used
herein means Fleetwood Enterprises, Inc. and its subsidiaries, unless otherwise
indicated by the context. All material intercompany accounts and transactions
have been eliminated.
On March 10, 1994, North River Homes (North River) was merged with and into
the Company and 312,000 shares of the Company's Common stock were issued in
exchange for all of the outstanding stock of North River. The merger was
accounted for as an immaterial pooling of interest.
(b) Foreign currency translation:
Exchange adjustments resulting from foreign currency transactions are
recognized currently in income, whereas adjustments resulting from the
translation of financial statements are reflected as a separate component of
shareholders' equity. The assets and liabilities of the Canadian and German
operations (which are not material) are translated to U.S. dollars at current
exchange rates. Revenues and expenses are translated at the average exchange
rates for the year. Gains or losses on foreign currency transactions in fiscal
years 1994, 1993 and 1992 were not material.
(c) Finance receivables:
Retail sales contracts have a maximum term of 180 months while wholesale
loans are due on demand. It has been the finance company's experience that a
portion of the retail sales contracts generally is repaid before the scheduled
maturity dates.
Income on retail sales contracts is earned on a simple interest method at
fixed rates of interest. Interest on wholesale loans is earned on a simple
interest method using a variable rate of interest that is based on the prime
rate. The average yield on finance receivables, excluding intercompany
subvention income and dealer participation, was 7.50 percent in 1994, 7.92
percent in 1993 and 9.04 percent in 1992.
(d) Inventory valuation:
Inventories are valued at the lower of cost (first-in, first-out) or market.
Cost includes materials, labor and manufacturing overhead.
(e) Depreciation:
Depreciation is provided using straight-line or accelerated methods based on
the following estimated useful lives:
. Buildings and improvements--10-40 years
. Machinery and equipment--3-15 years
(f) Warranty costs:
Estimated costs related to product warranties are accrued at the time
products are sold.
(g) Net income per Common and equivalent share:
Net income per Common and equivalent share amounts are based on the weighted
average number of shares outstanding during the years, including Common stock
equivalents resulting from dilutive stock options (See Note 13). Net income per
Common and equivalent share is the same as fully diluted earnings per share for
all periods presented.
19
FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(h) Accounting period:
The Company's fiscal year ends on the last Sunday in April. The year ending
dates for the past three fiscal years were April 24, 1994, April 25, 1993 and
April 26, 1992, respectively. The fiscal year for Fleetwood Credit Corp., the
Company's wholly owned finance subsidiary, ends on April 30. The fiscal year
for the German subsidiary ends on August 31.
(i) Cash flow statements:
For purposes of these statements, cash includes cash on hand and cash in
banks in demand deposit accounts.
(j) Provision and reserve for finance credit losses:
Fleetwood Credit Corp. provides for potential credit losses based on net
receivable additions, considering historical and industry experience. Actual
losses, net of recoveries, are charged against the reserve.
(k) Interest rate management:
The finance company periodically enters into agreements to reduce its
exposure to interest rate fluctuations which may affect the sale of its retail
receivables. Changes in the value of these hedging agreements are deferred and
recognized as part of the sale of the related retail receivables. When
participating in these agreements, the finance company may be exposed to credit
loss in the event of non-performance by counterparties to the agreements. The
finance company minimizes this risk through various credit procedures, and has
never experienced non-performance by a counterparty. No such agreements were
outstanding as of April 30, 1994. Subsequent to year end, the finance company
entered into two interest rate swap agreements related to the next sale of
retail receivables. The combined notionable amount of these two agreements of
$130,000,000 will be closed out when the receivables are sold, which is
expected to occur in June 1994.
(l) Income taxes:
During the year, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 109 on Accounting for Income Taxes (see Note 8).
20
FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(2) SUPPLEMENTARY INFORMATION ON FINANCE, INSURANCE AND REAL ESTATE
SUBSIDIARIES
The finance subsidiary provides wholesale and retail financing for the
Company's recreational vehicle products. The insurance subsidiary was formed
primarily for the purpose of insuring products liability risks of the parent
company and its subsidiaries. The real estate subsidiaries were formed for the
purposes of participating in site-built housing construction or in the
development of planned communities using manufactured housing. As of April 24,
1994, the investment in real estate consisted of raw land, and there were no
real estate development activities in process. Condensed financial information
for these subsidiaries, excluding intercompany eliminations, is as follows
(amounts in thousands):
1994 1993 1992
-------- -------- --------
Finance subsidiary:
Finance receivables (net)......................... $384,057 $335,147 $272,579
Cash and temporary investments.................... 60,386 43,587 29,847
Other assets...................................... 11,777 7,780 6,507
Commercial paper borrowings and long-term debt.... 360,601 299,549 233,953
Other liabilities................................. 17,145 15,866 15,078
Revenues.......................................... 44,244 40,329 36,595
Interest expense.................................. 15,593 14,979 14,827
Operating costs................................... 16,135 14,993 13,717
Net income........................................ 7,375 6,197 4,815
======== ======== ========
Insurance subsidiary:
Investments....................................... $ 54,803 $ 68,517 $ 61,702
Other assets...................................... 9,586 6,300 5,311
Reserves for losses............................... 45,343 40,226 37,612
Other liabilities................................. 9,772 7,730 7,058
Net premiums...................................... 12,320 11,454 9,133
Underwriting income............................... 5,185 2,620 1,264
Investment income................................. 6,818 4,658 3,716
Net income........................................ 7,414 4,518 3,059
======== ======== ========
Real estate subsidiaries:
Land held for future development.................. $ 6,800 $ 6,734 $ 6,634
Other assets...................................... 1,282 1,348 1,447
Notes payable--parent company..................... 795 795 795
Net loss.......................................... -- -- (103)
======== ======== ========
(3) INVESTMENTS
The Company has a cash management program which provides for the investment
of excess cash balances primarily in short-term money market instruments and
intermediate-term debt instruments. Investments consist of time deposits, U.S.
Treasury obligations, tax-exempt instruments and other non-equity type
investments stated at cost, which approximates market.
(4) SALE OF RETAIL SALES CONTRACTS, SERVICING INCOME AND FINANCE RECEIVABLES
Periodically, Fleetwood Credit Corp. sells retail contracts it has purchased
from dealers of Fleetwood products. The finance company continues to service
sold retail receivables for the benefit of purchasers, for which it receives a
servicing fee. During fiscal years 1994, 1993 and 1992, the finance subsidiary
sold net
21
FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
retail contracts of $193,020,000, $120,059,000 and $111,888,000, respectively.
There was no gain or loss recognized on these transactions in any of the years.
At April 30, 1994 and 1993, respectively, the outstanding balance of the sold
receivables was $456,546,000 and $414,751,000.
In each of the past three years, the finance company sold retail contracts
through a special purpose subsidiary which retained a portion of the pools of
receivables as an investment and sold the remainder. The retained portion of
the receivables originally sold totaled 5 percent of the pools in 1994, 8
percent in 1993 and 9 percent in 1992. During the year, the subsidiary sold the
majority of the retained portion of the receivable pools. The retained portion,
which is included in finance receivables for financial statement purposes, was
$265,000 and $22,419,000 as of April 30, 1994 and 1993, respectively.
The subsidiary will absorb any losses related to these pools to the extent of
its cash held in trust and future excess servicing income. The past loss
experience on retail receivables has been significantly less than the amount of
any recourse provisions.
(5) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost and consists of the following
(amounts in thousands):
1994 1993
--------- ---------
Land................................................ $ 13,749 $ 10,765
Buildings and improvements.......................... 225,339 177,341
Machinery and equipment............................. 99,689 85,740
Idle facilities, net of accumulated depreciation.... 6,937 9,082
--------- ---------
345,714 282,928
Less accumulated depreciation....................... (124,926) (110,533)
--------- ---------
$ 220,788 $ 172,395
========= =========
Idle facilities include closed plants and certain other properties which are
not in current use by the Company. The Company began depreciating these
facilities in fiscal year 1992. There were five idle plant facilities at the
end of 1994 and nine in 1993.
The carrying value of idle facilities was $6,937,000 at April 24, 1994 and
$9,082,000 at April 25, 1993, net of accumulated depreciation of $3,484,000 and
$5,423,000, respectively. In the opinion of management, the carrying values of
idle facilities are not in excess of net realizable value.
(6) LINES OF CREDIT, COMMERCIAL PAPER AND LONG-TERM DEBT
As of April 30, 1994, Fleetwood Credit Corp. had $180,895,000 of commercial
paper outstanding, net of unamortized discount of $294,000, bearing interest at
rates of 3.71 percent to 4.05 percent and maturing at various dates through May
1994. The discount is amortized as interest expense over the term of the
related notes.
During fiscal 1994, the Company placed privately with institutional investors
$60,000,000 of medium-term notes maturing in three to five years. As of April
30, 1994, a total of $180,000,000 of medium-term notes was outstanding.
Interest rates are variable on $90,000,000 of the notes while the remaining
$90,000,000 is at fixed rates of interest.
Fleetwood Credit Corp. maintains revolving credit facilities, which mature on
October 15, 1996, to support 100 percent of commercial paper outstanding. At
April 30, 1994, the finance company's contractually committed credit facilities
provided $250,000,000 of available credit, none of which was being used.
22
FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(7) RETIREMENT PLANS
The Company has defined contribution retirement plans covering substantially
all employees. There are no prior service costs associated with these plans.
The Company follows the policy of funding retirement plan contributions as
accrued. Contributions to these plans are summarized as follows (amounts in
thousands):
1994............................. $19,422
1993............................. 17,119
1992............................. 15,460
(8) INCOME TAXES
The provision for income taxes for each of the three years in the period
ended April 24, 1994 is summarized below (amounts in thousands):
1994 1993 1992
------- ------- -------
Current:
U.S. Federal....................................... $46,915 $35,574 $21,918
Foreign............................................ 76 (176) 1,052
State.............................................. 7,690 7,330 4,933
------- ------- -------
54,681 42,728 27,903
------- ------- -------
Deferred, principally Federal:
Insurance reserves................................. (4,444) (1,199) (1,076)
Other.............................................. (4,379) (6,757) (2,933)
------- ------- -------
(8,823) (7,956) (4,009)
------- ------- -------
$45,858 $34,772 $23,894
======= ======= =======
The provision for income taxes computed by applying the Federal statutory
rate to income before taxes is reconciled to the actual provisions for fiscal
years 1994, 1993 and 1992 as follows (amounts in thousands):
1994 1993 1992
--------------- -------------- --------------
AMOUNT % AMOUNT % AMOUNT %
-------- ----- ------- ----- ------- -----
Income before provision for
income taxes:
U.S. Federal............... $118,923 106.2% $91,802 100.6% $61,765 96.3%
Foreign.................... (6,891) (6.2) (525) (.6) 2,353 3.7
-------- ----- ------- ----- ------- -----
$112,032 100.0% $91,277 100.0% $64,118 100.0%
======== ===== ======= ===== ======= =====
Computed statutory tax....... $ 39,211 35.0% $31,034 34.0% $21,800 34.0%
State income taxes, net...... 4,663 4.2 4,548 5.0 3,066 4.8
Tax-exempt income............ (256) (.2) (817) (.9) (1,231) (1.9)
Other items, net............. 2,240 2.0 7 -- 259 .4
-------- ----- ------- ----- ------- -----
$ 45,858 40.9% $34,772 38.1% $23,894 37.3%
======== ===== ======= ===== ======= =====
In fiscal 1994, the Company adopted Statement of Financial Accounting
Standards No. 109 on Accounting for Income Taxes. The new standard requires a
recalculation of deferred tax amounts to reflect current income tax rates in
effect when the taxes are payable. The effect of this change was a one-time
cumulative charge of $1.5 million which was applied to current year earnings.
23
FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The components of the Company's deferred income tax benefit (liability) as of
April 24, 1994 are as follows (amounts in thousands):
Insurance reserves............................................... $24,714
Deferred compensation............................................ 12,497
Warranty reserves................................................ 12,405
Dealer volume rebates............................................ 2,475
Depreciation..................................................... (4,110)
Other financial accruals......................................... 11,103
-------
$59,084
=======
(9) OTHER LIABILITIES
Other liabilities consist of the following (amounts in thousands):
1994 1993
------- -------
Dividends payable to shareholders........................ $ 5,749 $ 5,708
Dealer volume rebates.................................... 17,355 12,267
Product warranty reserves................................ 31,361 26,696
Other.................................................... 43,250 34,941
------- -------
$97,715 $79,612
======= =======
(10) FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company has estimated the fair value of its financial instruments in
compliance with Financial Accounting Standard No. 107, "Disclosure About Fair
Value of Financial Instruments." The estimates were made as of April 24, 1994
(April 30, 1994 for instruments held by Fleetwood Credit Corp.) based on
relevant market information. Financial instruments include cash, investments,
finance receivables and debt. The estimated fair value of financial instruments
and the valuation techniques used to estimate the fair value were as follows
(amounts in thousands):
APRIL 24, 1994
------------------
ESTIMATED
BOOK FAIR
VALUE VALUE
-------- ---------
Financial Assets:
Cash....................................................... $ 37,267 $ 37,267
Investments................................................ 121,212 122,513
Finance receivables........................................ 386,207 386,608
Financial Liabilities:
Commercial paper borrowings................................ 180,601 180,601
Term debt.................................................. 180,000 182,929
CASH--The fair value approximates book value.
INVESTMENTS--The fair value is based on quoted market prices.
FINANCE RECEIVABLES--The fair value of retail receivables (fixed rate) was
estimated by discounting future expected cash flows at average interest rates
offered by the Company at April 30, 1994.
24
FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The fair value of wholesale loans and interest receivable were determined to
approximate existing carrying values because interest rates on wholesale loans
adjust with changes in market interest rates and interest receivable has a
short-term maturity.
COMMERCIAL PAPER--The fair value of commercial paper approximates carrying
value because interest rates on these instruments adjust with changes in market
interest rates due to their short-term maturity.
TERM DEBT--The fair value of term debt was estimated based on a present value
discounted cash flow analysis using rates the Company would have to pay
currently to acquire similar debt for similar remaining terms.
(11) CONTINGENT LIABILITIES
As is customary in the manufactured housing and recreational vehicle
industries, the Company is contingently liable at April 24, 1994, under the
terms of repurchase agreements with many financial institutions providing
inventory financing for dealers of the Company's products. The contingent
liability under these agreements approximates the amount financed, reduced by
the resale value of any products which may be repurchased, and the risk of loss
is spread over numerous dealers and financial institutions. Losses under these
agreements have not been significant in the past.
Fleetwood Credit Corp. has commitments to extend credit to wholesale dealers
totaling approximately $421,000,000, of which $314,051,000 was outstanding as
of April 30, 1994. Such commitments are reviewed periodically throughout the
year on a case-by-case basis, and generally continue as long as there are no
violations under the terms of the agreements. Loans against these commitments
are secured by the dealers' inventories. Management does not anticipate any
material losses as a result of these commitments.
(12) RESULTS BY QUARTER (UNAUDITED)
The unaudited results by quarter for fiscal years 1994 and 1993 are shown
below (amounts in thousands except per share data):
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
FISCAL YEAR ENDED APRIL 1994:
Revenues................................ $537,427 $567,445 $548,623 $715,880
Operating income........................ 22,302 25,828 19,601 36,634
Income before taxes..................... 24,314 28,695 20,722 38,301
Net income.............................. 13,626* 17,075 12,112 23,115
Net income per Common and equivalent
share.................................. $ .30* $ .37 $ .26 $ .50
Common and equivalent shares
outstanding............................ 46,002 46,208 46,245 46,375
FISCAL YEAR ENDED APRIL 1993:
Revenues................................ $470,539 $473,283 $444,952 $553,147
Operating income........................ 21,368 22,875 15,426 23,806
Income before taxes..................... 23,311 25,319 17,200 25,447
Net income.............................. 14,473 15,595 10,811 15,691
Net income per Common and equivalent
share.................................. $ .32 $ .34 $ .23 $ .34
Common and equivalent shares
outstanding............................ 45,806 45,836 46,100 46,101
- --------
* After deduction of $1.5 million or 3 cents per share for change in
accounting for income taxes.
25
FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(13) STOCK-BASED INCENTIVE COMPENSATION PLANS
Under the Company's 1992 Stock-Based Incentive Compensation Plan adopted
during fiscal 1993, incentive stock options or non-qualified options (among
other forms of incentive compensation devices) may be granted to officers and
other key employees of the Company for the purchase of up to 2,900,000 shares
of the Company's Common stock. Expiration dates for the options may not exceed
ten years from the date of grant. The options are exercisable at prices which
equal or exceed the fair market value of the Company's Common stock valued at
the date of grant. At April 24, 1994, there were 20 employees who held options
under the plan. A similar plan adopted in 1982 expired in June 1992; however,
exercisable options representing 452,600 shares still remain outstanding at
April 24, 1994. Under a separate plan for non-employee directors adopted during
fiscal 1993, up to 100,000 shares have been authorized for distribution of
options. Automatic grants are made annually under this plan. The following is a
summary of stock option activity (including those from the expired plan) for
employees and non-employee directors for the year ended April 24, 1994:
SHARES OPTION PRICE
--------- -------------
Options outstanding at beginning of year........ 1,141,600 --
Options granted................................. 452,766 $17.88-$25.69
Exercised....................................... (17,000) $16.81-$17.88
---------
Outstanding at end of year...................... 1,577,366 $ 8.06-$25.69
=========
Exercisable at end of year...................... 1,125,228 $ 8.06-$13.19
=========
Available for grant............................. 1,858,234
=========
(14) STOCKHOLDER RIGHTS PLAN
On November 10, 1988, the Company's Board of Directors adopted a stockholder
rights agreement, granting certain new rights to holders of the Company's
Common stock. Under the agreement, one right was granted for each share of
Common stock held as of November 23, 1988, and one right will be granted for
each share subsequently issued. Each right entitles the holder, in an
unfriendly takeover situation, and after paying the exercise price (currently
$75), to purchase Fleetwood Common stock having a market value equal to two
times the exercise price. Also, if the Company is merged into another
corporation, or if 50 percent or more of the Company's assets are sold, then
rightholders are entitled, upon payment of the exercise price, to buy common
shares of the acquiring corporation at a 50 percent discount from their then-
current market value. In either situation, these rights are not available to
the acquiring party. However, these exercise features will not be activated if
the acquiring party makes an offer to acquire all of the Company's outstanding
shares at a price which is judged by the Board of Directors to be fair to all
Fleetwood stockholders. The rights may be redeemed by the Company under certain
circumstances at the rate of $.02 per right. The rights will expire on November
9, 1998.
(15) INDUSTRY SEGMENT INFORMATION
The Company conducts manufacturing operations principally in two industries--
recreational vehicles and manufactured housing. On a smaller scale, the Company
operates supply companies which provide fiberglass parts, lumber and other wood
components to its primary businesses, while also generating outside sales.
Manufacturing operations are conducted in the United States and to a much
lesser extent in Canada and Europe. In addition, the Company's wholly owned
finance subsidiary provides wholesale and retail financing to buyers of
Fleetwood recreational vehicles. The operations of the Company's wholly owned
insurance and real estate subsidiaries have been included in the "Corporate and
Other" category because the
26
FLEETWOOD ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
impact on consolidated operating income is not material. Operating profit is
total revenue less cost of sales, operating expenses and finance interest
expense. None of the following items have been included in the computation of
operating profit for the individual operating segments: corporate expenses,
non-operating income and expenses and income taxes. Identifiable assets are
those assets used in the operation of each industry segment. Corporate assets
primarily consist of cash, investments, deferred tax benefits, other assets and
idle facilities. Information with respect to industry segments as of April 24,
1994, April 25, 1993 and April 26, 1992, and for each of the years then ended
is set forth below:
ADJUSTMENTS
RECREATIONAL MANUFACTURED SUPPLY FINANCE CORPORATE AND
AMOUNTS IN THOUSANDS VEHICLES HOUSING OPERATIONS OPERATIONS AND OTHER ELIMINATIONS TOTAL
- -------------------- ------------ ------------ ---------- ---------- --------- ------------ ----------
1994
Operating revenues...... $1,241,416 $1,054,267 $36,501 $ 44,244 $ 12,320 $(19,373) $2,369,375
Operating profit (loss). 43,883 56,860 4,969 12,516 (13,863) -- 104,365
Identifiable assets..... 332,311 188,493 40,331 477,486 205,600 (20,098) 1,224,123
Depreciation............ 7,922 6,881 1,221 332 2,242 -- 18,598
Capital expenditures.... 21,321 45,235 2,308 273 3,679 -- 72,816
1993
Operating revenues...... $1,114,027 $ 774,784 $19,088 $ 40,329 $ 11,454 $(17,761) $1,941,921
Operating profit (loss). 47,095 39,735 2,298 10,357 (16,010) -- 83,475
Identifiable assets..... 303,929 123,518 32,373 406,039 213,948 (17,897) 1,061,910
Depreciation............ 6,513 5,234 1,026 474 2,381 -- 15,628
Capital expenditures.... 14,703 22,708 1,490 97 3,064 -- 42,062
1992
Operating revenues...... $ 972,053 $ 574,149 $11,855 $ 36,595 $ 9,133 $(14,437) $1,589,348
Operating profit (loss). 40,424 20,284 (2,748) 8,050 (11,298) -- 54,712
Identifiable assets..... 235,089 96,607 24,741 326,044 247,080 (14,537) 915,024
Depreciation............ 6,370 4,590 1,063 327 2,718 -- 15,068
Capital expenditures.... 6,325 13,712 2,120 710 2,730 -- 25,597
27
FLEETWOOD ENTERPRISES, INC.
SCHEDULE I--MARKETABLE SECURITIES--OTHER INVESTMENTS
(DOLLARS IN THOUSANDS)
NUMBER OF SHARES/ COST OF MARKET VALUE OF CARRYING VALUE
NAME OF ISSUER AND PRINCIPAL AMOUNTS OF EACH EACH ISSUE AT OF EACH ISSUE AT
TITLE OF EACH ISSUE BONDS AND NOTES ISSUE APRIL 24, 1994 APRIL 24, 1994
------------------- -------------------- -------- --------------- ----------------
U.S. Government Treasury
Bills/Notes............ -- $ 2,674 $ 2,654 $ 2,674
Corporate Notes--
U.S. Institutions...... -- 13,661 13,993 13,661
Corporate Notes--
International
Institutions........... -- 60,117 61,127 60,117
Certificates of
Deposits............... -- 26,148 26,148 26,148
Foreign Governments and
Municipalities Notes... -- 157 155 157
Municipal Bonds......... -- 9,298 9,279 9,298
Guaranteed Investment
Contract............... -- 5,078 5,078 5,078
Other................... -- 4,079 4,079 4,079
-------- -------- --------
Total............... $121,212 $122,513 $121,212
======== ======== ========
- --------
Note: No single issuer accounts for more than two percent of total investments.
FLEETWOOD ENTERPRISES, INC.
SCHEDULE IX--SHORT-TERM BORROWINGS
COMMERCIAL PAPER BORROWINGS OF FLEETWOOD CREDIT CORP.
(DOLLARS IN THOUSANDS)
WEIGHTED AVERAGE WEIGHTED AVERAGE
BALANCE AT INTEREST RATE AT MAXIMUM AMOUNT AVERAGE AMOUNT INTEREST RATE FOR
YEAR END(1) YEAR END OUTSTANDING(1) OUTSTANDING(2) THE PERIOD(3)
----------- ---------------- -------------- -------------- -----------------
1992.................... $134,498 4.16% $203,561 $154,100 5.53%
1993.................... 149,744 3.26 242,072 166,766 3.72
1994.................... 181,189 3.89 249,535 164,782 3.41
- --------
(1) Amounts shown are before deductions for unamortized discount (see Note 6 of
Notes to Consolidated Financial Statements) and amounts owed to affiliated
grantor trust.
(2) The average amount outstanding is a dollar-day weighted average.
(3) The weighted average interest rate is computed by dividing the annual
interest expense by the average borrowings outstanding for the year.
28
ITEM 9. DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
MATTERS
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information regarding directors and executive officers as required by
Item 401 of Regulation S-K is set forth in Part I of this report under the
caption "Executive Officers of the Company" and on page two of the Company's
proxy statement which will be filed with the Securities and Exchange Commission
not later than 120 days after April 24, 1994, and by this reference is
incorporated herein.
ITEM 11. MANAGEMENT REMUNERATION AND TRANSACTIONS
The information required by Item 402 of Regulation S-K is set forth on pages
four through six of the Company's proxy statement which will be filed with the
Securities and Exchange Commission not later than 120 days after April 24,
1994, and by this reference is incorporated herein.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 403 of Regulation S-K is set forth on pages
three and four of the Company's proxy statement which will be filed with the
Securities and Exchange Commission not later than 120 days after April 24,
1994, and by this reference is incorporated herein.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information regarding certain relationships and related transactions as
required by Item 404 of Regulation S-K, if any, is set forth in the Company's
proxy statement which will be filed with the Securities and Exchange Commission
not later than 120 days after April 24, 1994, and by this reference is
incorporated herein.
29
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
PAGE
REFERENCE
---------
(a) Financial Statements
(1) Financial Statements included in Part II of this report:
Report of Independent Public Accountants 14
Consolidated Statements of Income for each of the three years
in the period ended April 24, 1994 15
Consolidated Balance Sheets at April 24, 1994 and April 25,
1993 16
Consolidated Statements of Cash Flows for each of the three
years in the period ended April 24, 1994 17
Consolidated Statements of Changes in Shareholders' Equity for
each of the three years in the period ended April 24, 1994 18
Notes to Consolidated Financial Statements 19
(2) Financial Statement Schedules
Schedule I Marketable Securities--Other Investments 28
Schedule IX Short-Term Borrowings 28
Financial statement schedules not filed have been omitted for
the reason that the required information is shown in the
financial statements or notes thereto, the amounts involved
are not significant, or the required matter is not present.
(3) Exhibits and Index to Exhibits:
3. (a) Restated Certificate of Incorporation.*
(b) Amendment to Restated Certificate of Incorporation.**
(c) Restated Bylaws of the Company.**
4. (a) Rights Agreement dated November 10, 1988, between the
Company and the First National Bank of Boston used in
connection with a stockholder rights plan.***
(b) Certificate of Designation, Preferences and Rights of
Series A Junior Participating Preferred Stock filed
November 23, 1988.***
9. Not applicable.
10. Material contracts.****
(a) Form of employment agreement between the Company and
each of its officers.
(b) Deferred Compensation Plan.
(c) Supplemental Benefit Plan.
(d) Long-term Incentive Compensation Plan.
(d)(1) Amended and Restated Long-Term Incentive
Compensation Plan.
(e) 1982 Stock Option Plan.
(f) Benefit Restoration Plan.
(g) Dividend Equivalent Plan.
(h) The 1992 Stock-Based Incentive Compensation Plan.
(i) The 1992 Non-Employee Director Stock Option Plan.
(j) Senior Executive Incentive Compensation Plan.
11. Not applicable.
12. Not applicable.
13. Not applicable.
18. Not applicable.
19. Not applicable.
21. Subsidiaries of the Registrant.
22. Not applicable.
23. Consent of independent public accountants.
24. Not applicable.
27. Not applicable.
30
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter of the year
ended April 24, 1994.
- --------
*The Restated Certificate of Incorporation of the Company was filed with the
Company's 10-K Annual Report for the year ended April 28, 1985, and by this
reference is incorporated herein.
**The Amendment to the Restated Certificate of Incorporation and the Restated
Bylaws of the Company, both of which were adopted during fiscal 1987, were
filed with the Company's 10-K Annual Report for the year ended April 26,
1987, and by this reference are incorporated herein.
***The rights agreement and exhibits used in connection with the Company's
stockholder rights plan were filed with the Company's report on Form 8-K on
November 10, 1988, and by this reference are incorporated herein.
****Item 10(a) listed above under "Material Contracts", which was amended
effective April 27, 1992, was filed with the Company's 10-K Annual Report
for the year ended April 26, 1992, and by this reference is incorporated
herein. Items 10(b), 10(c) and 10(f), which were amended during fiscal year
1990, and item 10(g), adopted during fiscal 1990, were filed with the
Company's 10-K Annual Report for the year ended April 29, 1990, and by this
reference are incorporated herein. Item 10(e), amended and restated as of
June 9, 1987, was filed with the Company's 10-K Annual Report for the year
ended April 26, 1987, and by this reference is incorporated herein. Items
10(h) and 10(i), adopted on June 9, 1992 and approved by shareholders at the
Company's Annual Meeting in September 1992, were filed with the Company's
10-K Annual Report for the year ended April 26, 1992, and by this reference
are incorporated herein. Item 10(d), which was adopted in fiscal year 1988
and amended during fiscal year 1990, was filed with the Company's 10-K
Annual Report for the year ended April 29, 1990, and by this reference is
incorporated herein. This plan document has continuing applicability through
fiscal year 1995. Item 10(d)(1), the Amended and Restated Long-Term
Incentive Plan applicable to award periods ending after fiscal year 1995,
was adopted by the Board of Directors during fiscal year 1994 subject to
shareholder approval at the 1994 Annual Meeting of Shareholders, and is
included herewith. Item 10(j), which is included herewith, was adopted by
the Compensation Committee of the Board of Directors during fiscal year
1994, and ratified by the Board of Directors thereafter, subject to
shareholder approval at the 1994 Annual Meeting of Shareholders.
31
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
Fleetwood Enterprises, Inc.
Registrant
Paul M. Bingham
By___________________________________
Paul M. Bingham
Financial Vice President
Date: July 7, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
John C. Crean Chairman of the Board and July 7, 1994
- ------------------------------------ Chief Executive Officer
John C. Crean
Glenn F. Kummer President, Chief Operating July 7, 1994
- ------------------------------------ Officer and Director
Glenn F. Kummer
Paul M. Bingham Chief Financial Officer and July 7, 1994
- ------------------------------------ Principal Accounting
Paul M. Bingham Officer
Douglas M. Lawson Director July 7, 1994
- ------------------------------------
Douglas M. Lawson
Walter F. Beran Director July 7, 1994
- ------------------------------------
Walter F. Beran
Dale T. Skinner Director July 7, 1994
- ------------------------------------
Dale T. Skinner
Thomas A. Fuentes Director July 7, 1994
- ------------------------------------
Thomas A. Fuentes
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