##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
 For Quarterly period ended June 30, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
 For the transition period fromto
 Commission
file number 1-9751
 CHAMPION ENTERPRISES, INC.
  Michigan
    
    38-2743168(State or other jurisdiction of incorporation or 
organization)
    
    (I.R.S. Employer
Identification No.)2701 Cambridge Court, Suite 300Auburn Hills, MI 48326
 (Address of principal executive offices)
   þ o
  þ o o
 o þ




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TABLE OF CONTENTS  PART I. FINANCIAL INFORMATIONItem 1. Financial StatementsItem 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPART II. OTHER INFORMATIONItem 1A. Risk FactorsItem 4. Submission of Matters to a Vote of Security HoldersItem 6. Exhibits and Reports on Form 8-KSIGNATURESSection 302 Certification of Chief Executive OfficerSection 302 Certification of Chief Financial OfficerSection 906 Certification of Chief Executive and Financial Officers    Table of Contents  
 PART I. FINANCIAL INFORMATION
 
  CHAMPION ENTERPRISES, INC.
 Unaudited
    
    
    UnauditedThree Months Ended
    
    
    Six Months EndedJune 30,
    
    
    July 1,
    
    
    June 30,
    
    
    July 1,2007
    
    
    2006
    
    
    2007
    
    

2006(Restated)
    
    
    
    
    
    
    (Restated)Net sales
    
    $
    330,360
    
    
    $
    370,717
    
    
    $
    590,157
    
    
    $
    717,246Cost of sales
    
    
    278,488
    
    
    
    313,878
    
    
    
    506,272
    
    
    
    606,114Gross margin
    
    
    51,872
    
    
    
    56,839
    
    
    
    83,885
    
    
    
    111,132Selling, general and administrative expenses
    
    
    36,747
    
    
    
    40,027
    
    
    
    73,647
    
    
    
    77,258Amortization of intangible assets
    
    
    1,417
    
    
    
    1,299
    
    
    
    2,819
    
    
    
    1,391Operating income
    
    
    13,708
    
    
    
    15,513
    
    
    
    7,419
    
    
    
    32,483Interest income
    
    
    1,209
    
    
    
    1,189
    
    
    
    2,047
    
    
    
    2,730Interest expense
    
    
    (4,932
    )
    
    
    (5,200
    )
    
    
    (9,810
    )
    
    
    (8,811
    )Income (loss) from continuing operations
before income taxes
    
    
    9,985
    
    
    
    11,502
    
    
    
    (344
    )
    
    
    26,402Income tax expense (benefit)
    
    
    2,527
    
    
    
    (100,503
    )
    
    
    (563
    )
    
    
    (99,303
    )Income from continuing operations
    
    
    7,458
    
    
    
    112,005
    
    
    
    219
    
    
    
    125,705Income from discontinued operations, net of taxes
    
    
    7
    
    
    
    77
    
    
    
    
    
    
    
    24Net income
    
    $
    7,465
    
    
    $
    112,082
    
    
    $
    219
    
    
    $
    125,729Basic income per share:Income from continuing operations
    
    $
    0.10
    
    
    $
    1.47
    
    
    $
    
    
    
    $
    1.65Income from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Basic income per share
    
    $
    0.10
    
    
    $
    1.47
    
    
    $
    
    
    
    $
    1.65Weighted shares for basic EPS
    
    
    76,796
    
    
    
    76,343
    
    
    
    76,676
    
    
    
    76,212Diluted income per share:Income from continuing operations
    
    $
    0.10
    
    
    $
    1.44
    
    
    $
    
    
    
    $
    1.62Income from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Diluted income per share
    
    $
    0.10
    
    
    $
    1.44
    
    
    $
    
    
    
    $
    1.62Weighted shares for diluted EPS
    
    
    77,658
    
    
    
    77,495
    
    
    
    77,506
    
    
    
    77,438
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CHAMPION ENTERPRISES, INC.
 UnauditedJune 30,
    
    
    December 30,2007
    
    
    2006ASSETSCurrent assetsCash and cash equivalents
    
    $
    104,755
    
    
    $
    70,208Accounts receivable, trade
    
    
    73,646
    
    
    
    47,645Inventories
    
    
    83,004
    
    
    
    102,350Deferred tax
assets
    
    
    31,565
    
    
    
    32,303Other current assets
    
    
    11,836
    
    
    
    10,677Total current assets
    
    
    304,806
    
    
    
    263,183Property, plant and equipmentLand and improvements
    
    
    28,218
    
    
    
    25,805Buildings and improvements
    
    
    119,022
    
    
    
    123,483Machinery and equipment
    
    
    89,175
    
    
    
    89,037236,415
    
    
    
    238,325Less-accumulated depreciation
    
    
    129,762
    
    
    
    125,798106,653
    
    
    
    112,527Goodwill
    
    
    290,036
    
    
    
    287,789Amortizable intangible assets, net of
accumulated amortization
    
    
    45,501
    
    
    
    47,675Deferred tax
assets
    
    
    76,880
    
    
    
    71,600Other non-current assets
    
    
    17,012
    
    
    
    17,841$
    840,888
    
    
    $
    800,615LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesAccounts payable
    
    $
    88,363
    
    
    $
    54,607Accrued warranty obligations
    
    
    29,234
    
    
    
    30,423Accrued volume rebates
    
    
    23,517
    
    
    
    30,891Accrued compensation and payroll taxes
    
    
    17,212
    
    
    
    13,933Accrued self-insurance
    
    
    27,843
    
    
    
    29,219Other current liabilities
    
    
    51,417
    
    
    
    44,130Total current liabilities
    
    
    237,586
    
    
    
    203,203Long-term liabilitiesLong-term debt
    
    
    253,288
    
    
    
    252,449Deferred tax
liabilities
    
    
    10,178
    
    
    
    10,600Other long-term liabilities
    
    
    32,504
    
    
    
    32,601295,970
    
    
    
    295,650Contingent liabilities (Note 7)Shareholders equityCommon stock, $1 par value, 120,000 shares authorized,
76,855 and 76,450 shares issued and outstanding, respectively
    
    
    76,855
    
    
    
    76,450Capital in excess of par value
    
    
    201,159
    
    
    
    199,597Retained earnings
    
    
    16,664
    
    
    
    16,445Accumulated other comprehensive income
    
    
    12,654
    
    
    
    9,270Total shareholders equity
    
    
    307,332
    
    
    
    301,762$
    840,888
    
    
    $
    800,615
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CHAMPION ENTERPRISES, INC.
 UnauditedSix Months EndedJune 30,
    
    
    July 1,2007
    
    
    2006(Restated)Cash flows from operating activitiesNet income
    
    $
    219
    
    
    $
    125,729Income from discontinued operations
    
    
    
    
    
    
    (24
    )Adjustments to reconcile net income to net cash provided by
continuing operating activities:Depreciation and amortization
    
    
    10,032
    
    
    
    8,064Stock-based compensation
    
    
    1,556
    
    
    
    3,348Change in deferred taxes
    
    
    (4,492
    )
    
    
    (101,900
    )Gain on disposal of fixed assets
    
    
    (593
    )
    
    
    (4,528
    )Increase/decrease:Accounts receivable
    
    
    (25,159
    )
    
    
    11,199Inventories
    
    
    19,705
    
    
    
    5,952Accounts payable
    
    
    32,285
    
    
    
    (266
    )Accrued liabilities
    
    
    (2,352
    )
    
    
    (10,394
    )Other, net
    
    
    (743
    )
    
    
    2,014Net cash provided by continuing operating activities
    
    
    30,458
    
    
    
    39,194Cash flows from investing activitiesAdditions to property, plant and equipment
    
    
    (3,647
    )
    
    
    (9,058
    )Acquisitions
    
    
    
    
    
    
    (123,192
    )Proceeds from disposal of fixed assets
    
    
    3,404
    
    
    
    5,763Distributions from unconsolidated affiliates
    
    
    884
    
    
    
    Net cash provided by (used for) investing activities
    
    
    641
    
    
    
    (126,487
    )Cash flows from financing activitiesPayments on long-term debt
    
    
    (1,036
    )
    
    
    (829
    )Proceeds from Term Loan
    
    
    
    
    
    
    78,561Increase in deferred financing costs
    
    
    
    
    
    
    (995
    )Decrease in restricted cash
    
    
    15
    
    
    
    382Common stock issued, net
    
    
    1,421
    
    
    
    1,955Net cash provided by financing activities
    
    
    400
    
    
    
    79,074Net cash provided by operating activities of discontinued operations
    
    
    92
    
    
    
    486Net cash provided by investing activities of discontinued operations
    
    
    
    
    
    
    568Net cash provided by discontinued operations
    
    
    92
    
    
    
    1,054Effect of exchange rate changes on cash and cash equivalents
    
    
    2,956
    
    
    
    1,832Net increase (decrease) in cash and cash equivalents
    
    
    34,547
    
    
    
    (5,333
    )Cash and cash equivalents at beginning of period
    
    
    70,208
    
    
    
    126,979Cash and cash equivalents at end of period
    
    $
    104,755
    
    
    $
    121,646
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AccumulatedCapital in
    
    
    
    
    
    otherCommon stock
    
    excess of
    
    Retained
    
    comprehensiveShares
    
    Amount
    
    par value
    
    earnings
    
    income
    
    TotalBalance at December 30, 2006
    
    
    76,450
    
    
    $
    76,450
    
    
    $
    199,597
    
    
    $
    16,445
    
    
    $
    9,270
    
    
    $
    301,762Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    219
    
    
    
    
    
    
    
    219Stock compensation plans
    
    
    405
    
    
    
    405
    
    
    
    1,562
    
    
    
    
    
    
    
    
    
    
    
    1,967Foreign currency translation
adjustments, including tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,384
    
    
    
    3,384Balance at June 30, 2007
    
    
    76,855
    
    
    $
    76,855
    
    
    $
    201,159
    
    
    $
    16,664
    
    
    $
    12,654
    
    
    $
    307,332
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CHAMPION ENTERPRISES, INC.  Notes to Condensed Consolidated Financial Statements
 NOTE 1  Summary of Significant Accounting Policies
     NOTE 2  Acquisitions
    Three Months Ended
    
    Six Months EndedJuly 1,
    
    July 1,2006
    
    2006Unaudited
    
    UnauditedNet sales (in thousands)
    
    $
    378,365
    
    
    $
    779,838Net income (in thousands)
    
    
    113,742
    
    
    
    130,941Diluted income per share
    
    $
    1.47
    
    
    $
    1.69
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NOTE 3  Income Taxes
 Accounting for Uncertainty in Income Taxesan interpretation of
FASB Statement No. 109
       NOTE 4  Inventories, Long-Term Construction Contracts and Other Current Liabilities
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June 30,
    
    
    December 30,2007
    
    
    2006(In thousands)New manufactured homes
    
    $
    23,021
    
    
    $
    27,579Raw materials
    
    
    28,719
    
    
    
    35,737Work-in-process
    
    
    11,090
    
    
    
    14,284Other inventory
    
    
    20,174
    
    
    
    24,750$
    83,004
    
    
    $
    102,350
    NOTE 5  Product Warranty
  Six Months EndedJune 30,
    
    
    July 1,2007
    
    
    2006(In thousands)Reserves at beginning of period
    
    $
    36,923
    
    
    $
    40,009Warranty expense provided
    
    
    21,454
    
    
    
    26,606Warranty reserves from acquisitions
    
    
    
    
    
    
    483Cash warranty payments
    
    
    (22,643
    )
    
    
    (26,610
    )Reserves at end of period
    
    $
    35,734
    
    
    $
    40,488
 NOTE 6  Debt
  June 30,
    
    
    December 30,2007
    
    
    2006(In thousands)7.625% Senior Notes due 2009
    
    $
    82,298
    
    
    $
    82,298Term Loan due 2012
    
    
    70,500
    
    
    
    71,000Sterling Term Loan due 2012
    
    
    89,111
    
    
    
    87,623Obligations under industrial revenue bonds
    
    
    12,430
    
    
    
    12,430Other debt
    
    
    1,121
    
    
    
    1,266Total debt
    
    
    255,460
    
    
    
    254,617Less: current portion of long-term debt
    
    
    (2,172
    )
    
    
    (2,168
    )Long-term debt
    
    $
    253,288
    
    
    $
    252,449
  Page 8




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NOTE 7  Contingent Liabilities
   Page 9




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NOTE 8  Earnings Per Share, Stock Options and Stock-Based Incentive Plans
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    July 1,
    
    
    June 30,
    
    
    July 1,2007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands)
    
    
    (In thousands)Numerator:Net income
    
    $
    7,465
    
    
    $
    112,082
    
    
    $
    219
    
    
    $
    125,729Less: Income from discontinued operations
    
    
    (7
    )
    
    
    (77
    )
    
    
    
    
    
    
    (24
    )Income from continuing operations
available to common shareholders for
basic and diluted EPS
    
    
    7,458
    
    
    
    112,005
    
    
    
    219
    
    
    
    125,705Income from discontinued operations
available to common shareholders for
basic and diluted EPS
    
    
    7
    
    
    
    77
    
    
    
    
    
    
    
    24Income available to common
shareholders for basic and diluted EPS
    
    $
    7,465
    
    
    $
    112,082
    
    
    $
    219
    
    
    $
    125,729Denominator:Shares for basic EPSweighted average
shares outstanding
    
    
    76,796
    
    
    
    76,343
    
    
    
    76,676
    
    
    
    76,212Plus dilutive securities:Stock options and awards
    
    
    862
    
    
    
    1,152
    
    
    
    830
    
    
    
    1,226Shares for diluted EPS
    
    
    77,658
    
    
    
    77,495
    
    
    
    77,506
    
    
    
    77,438
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Weighted
    
    
    Intrinsic valueNumber
    
    
    average exercise
    
    
    of optionsof shares
    
    
    price per share
    
    
    exercised(In thousands)
    
    
    
    
    
    
    (In thousands)Outstanding at December 30, 2006
    
    
    1,732
    
    
    $
    9.84Exercised
    
    
    (163
    )
    
    
    2.85
    
    
    $
    976Forfeited
    
    
    (98
    )
    
    
    17.18Expired
    
    
    (28
    )
    
    
    17.18Outstanding at March 31, 2007
    
    
    1,443
    
    
    
    9.99Exercised
    
    
    (98
    )
    
    
    9.75
    
    
    $
    99Forfeited
    
    
    (22
    )
    
    
    20.39Expired
    
    
    (49
    )
    
    
    20.12Outstanding at June 30, 2007
    
    
    1,274
    
    
    $
    9.46
   NOTE 9  Segment Information
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Three Months EndedJune 30,
    
    
    July 1,2007
    
    
    2006(In thousands)Net sales:Manufacturing segment
    
    $
    258,319
    
    
    $
    319,943International segment
    
    
    56,887
    
    
    
    27,131Retail segment
    
    
    21,354
    
    
    
    35,043Less: intercompany
    
    
    (6,200
    )
    
    
    (11,400
    )Consolidated net sales
    
    $
    330,360
    
    
    $
    370,717Income from continuing operations
before income taxes:Manufacturing segment income
    
    $
    17,217
    
    
    $
    21,039International segment income
    
    
    4,458
    
    
    
    1,199Retail segment income
    
    
    666
    
    
    
    2,379General corporate expenses
    
    
    (7,416
    )
    
    
    (7,605
    )Amortization of intangible assets
    
    
    (1,417
    )
    
    
    (1,299
    )Interest expense, net
    
    
    (3,723
    )
    
    
    (4,011
    )Intercompany profit eliminations
    
    
    200
    
    
    
    (200
    )Consolidated income from continuing
operations before income taxes
    
    $
    9,985
    
    
    $
    11,502
 Six Months EndedJune 30,
    
    
    July 1,2007
    
    
    2006(In thousands)Net sales:Manufacturing segment
    
    $
    457,615
    
    
    $
    651,594International segment
    
    
    103,418
    
    
    
    27,131Retail segment
    
    
    39,424
    
    
    
    62,321Less: intercompany
    
    
    (10,300
    )
    
    
    (23,800
    )Consolidated net sales
    
    $
    590,157
    
    
    $
    717,246(Loss) income from continuing operations
before income taxes:Manufacturing segment income
    
    $
    17,313
    
    
    $
    47,005International segment income
    
    
    7,582
    
    
    
    1,199Retail segment income
    
    
    1,538
    
    
    
    3,892General corporate expenses
    
    
    (16,695
    )
    
    
    (17,222
    )Amortization of intangible assets
    
    
    (2,819
    )
    
    
    (1,391
    )Interest expense, net
    
    
    (7,763
    )
    
    
    (6,081
    )Intercompany profit eliminations
    
    
    500
    
    
    
    (1,000
    )Consolidated (loss) income from continuing
operations before income taxes
    
    $
    (344
    )
    
    $
    26,402
 NOTE 10  Discontinued Operations
  NOTE 11  Restructuring Charges
  Page 12




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Six Months EndedJune 30,2007(In thousands)Balance at beginning of year
    
    $
    1,018Additions:Severance
    
    
    873Cash payments:Warranty
    
    
    (506
    )Severance and other costs
    
    
    (805
    )Reversalsother costs
    
    
    (86
    )Balance June 30, 2007
    
    $
    494Period end balance comprised of:Warranty costs
    
    $
    426Severance and other costs
    
    
    68$
    494
  NOTE 12  Total Comprehensive Income
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    July 1,
    
    
    June 30,
    
    
    July 1,2007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands)
    
    
    (In thousands)(Restated)
    
    
    
    
    
    (Restated)Net income
    
    $
    7,465
    
    
    $
    112,082
    
    
    $
    219
    
    
    $
    125,729Other comprehensive income:Foreign currency translation
adjustments, net of income taxes
    
    
    3,135
    
    
    
    2,600
    
    
    
    3,384
    
    
    
    2,501Total comprehensive income
    
    $
    10,600
    
    
    $
    114,682
    
    
    $
    3,603
    
    
    $
    128,230
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CHAMPION ENTERPRISES, INC.
 Results of Operations
Three and Six Months Ended June 30, 2007
versus the Three and Six Months Ended July 1, 2006
 Overview
         Page 14




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Consolidated Results of Operations
 Three Months EndedJune 30,
    
    
    July 1,
    
    
    %2007
    
    
    2006
    
    
    Change(Dollars in thousands)Net salesManufacturing segment
    
    $
    258,319
    
    
    $
    319,943
    
    
    
    (19
    %)International segment
    
    
    56,887
    
    
    
    27,131
    
    
    
    110
    %Retail segment
    
    
    21,354
    
    
    
    35,043
    
    
    
    (39
    %)Less: intercompany
    
    
    (6,200
    )
    
    
    (11,400
    )
    
    
    (46
    %)Total net sales
    
    $
    330,360
    
    
    $
    370,717
    
    
    
    (11
    %)Gross margin
    
    $
    51,872
    
    
    $
    56,839
    
    
    
    (9
    %)Selling, general and administrative
expenses (SG&A)
    
    
    36,747
    
    
    
    40,027
    
    
    
    (8
    %)Amortization of intangible assets
    
    
    1,417
    
    
    
    1,299
    
    
    
    9
    %Operating income
    
    
    13,708
    
    
    
    15,513
    
    
    
    (12
    %)Interest expense, net
    
    
    3,723
    
    
    
    4,011
    
    
    
    (7
    %)Income from continuing
operations before income taxes
    
    $
    9,985
    
    
    $
    11,502
    
    
    
    (13
    %)As a percent of net salesGross margin
    
    
    15.7
    %
    
    
    15.3
    %SG&A
    
    
    11.1
    %
    
    
    10.8
    %Operating income
    
    
    4.1
    %
    
    
    4.2
    %Income from continuing
operations before income taxes
    
    
    3.0
    %
    
    
    3.1
    %
 Six Months EndedJune 30,
    
    
    July 1,
    
    
    %2007
    
    
    2006
    
    
    Change(Dollars in thousands)Net salesManufacturing segment
    
    $
    457,615
    
    
    $
    651,594
    
    
    
    (30
    %)International segment
    
    
    103,418
    
    
    
    27,131
    
    
    
    281
    %Retail segment
    
    
    39,424
    
    
    
    62,321
    
    
    
    (37
    %)Less: intercompany
    
    
    (10,300
    )
    
    
    (23,800
    )
    
    
    (57
    %)Total net sales
    
    $
    590,157
    
    
    $
    717,246
    
    
    
    (18
    %)Gross margin
    
    $
    83,885
    
    
    $
    111,132
    
    
    
    (25
    %)Selling, general and administrative
expenses (SG&A)
    
    
    73,647
    
    
    
    77,258
    
    
    
    (5
    %)Amortization of intangible assets
    
    
    2,819
    
    
    
    1,391
    
    
    
    103
    %Operating income
    
    
    7,419
    
    
    
    32,483
    
    
    
    (77
    %)Interest expense, net
    
    
    7,763
    
    
    
    6,081
    
    
    
    28
    %(Loss) income from continuing
operations before income taxes
    
    $
    (344
    )
    
    $
    26,402
    
    
    
    (101
    %)As a percent of net salesGross margin
    
    
    14.2
    %
    
    
    15.5
    %SG&A
    
    
    12.5
    %
    
    
    10.8
    %Operating income
    
    
    1.3
    %
    
    
    4.5
    %(Loss) income from continuing
operations before income taxes
    
    
    (0.1
    %)
    
    
    3.7
    %
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Manufacturing Segment
  Page 17




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Three Months EndedJune 30,
    
    
    July 1,
    
    
    %2007
    
    
    2006
    
    
    ChangeManufacturing segment net sales (in thousands)
    
    $
    258,319
    
    
    $
    319,943
    
    
    
    (19
    %)Manufacturing segment income (in thousands)
    
    $
    17,217
    
    
    $
    21,039
    
    
    
    (18
    %)Manufacturing segment margin %
    
    
    6.7
    %
    
    
    6.6
    %Homes and units sold:HUD code homes
    
    
    2,752
    
    
    
    4,185
    
    
    
    (34
    %)Modular homes and units
    
    
    1,002
    
    
    
    1,246
    
    
    
    (20
    %)Canadian homes
    
    
    430
    
    
    
    236
    
    
    
    82
    %Other units
    
    
    10
    
    
    
    25
    
    
    
    (60
    %)Total homes and units sold
    
    
    4,194
    
    
    
    5,692
    
    
    
    (26
    %)Floors sold
    
    
    8,098
    
    
    
    11,048
    
    
    
    (27
    %)Multi-section mix
    
    
    79
    %
    
    
    83
    %Average unit selling price, excluding delivery
    
    $
    55,100
    
    
    $
    51,300
    
    
    
    7
    %
 Six Months EndedJune 30,
    
    
    July 1,
    
    
    %2007
    
    
    2006
    
    
    ChangeManufacturing segment net sales (in thousands)
    
    $
    457,615
    
    
    $
    651,594
    
    
    
    (30
    %)Manufacturing segment income (in thousands)
    
    $
    17,313
    
    
    $
    47,005
    
    
    
    (63
    %)Manufacturing segment margin %
    
    
    3.8
    %
    
    
    7.2
    %Homes and units sold:HUD code homes
    
    
    4,912
    
    
    
    8,950
    
    
    
    (45
    %)Modular homes and units
    
    
    1,769
    
    
    
    2,240
    
    
    
    (21
    %)Canadian homes
    
    
    774
    
    
    
    538
    
    
    
    44
    %Other units
    
    
    22
    
    
    
    43
    
    
    
    (49
    %)Total homes and units sold
    
    
    7,477
    
    
    
    11,771
    
    
    
    (36
    %)Floors sold
    
    
    14,463
    
    
    
    22,362
    
    
    
    (35
    %)Multi-section mix
    
    
    79
    %
    
    
    79
    %Average unit selling price, excluding delivery
    
    $
    55,000
    
    
    $
    50,500
    
    
    
    9
    %Manufacturing facilities at end of period
    
    
    28
    
    
    
    32
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International Segment
  Three Months EndedJune 30,
    
    July 1,2007
    
    2006(Dollars in thousands)International segment net sales
    
    $
    56,887
    
    
    $
    27,131International segment income
    
    $
    4,458
    
    
    $
    1,199International segment margin %
    
    
    7.8
    %
    
    
    4.4
    %
 Six Months EndedJune 30,
    
    July 1,2007
    
    2006(Dollars in thousands)International segment net sales
    
    $
    103,418
    
    
    $
    27,131International segment income
    
    $
    7,582
    
    
    $
    1,199International segment margin %
    
    
    7.3
    %
    
    
    4.4
    %
  Page 19




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##### Table of Contents



Retail Segment
  Three Months EndedJune 30,
    
    July 1,
    
    %2007
    
    2006
    
    ChangeRetail segment net sales (in thousands)
    
    $
    21,354
    
    
    $
    35,043
    
    
    
    (39
    %)Retail segment income (in thousands)
    
    $
    666
    
    
    $
    2,379
    
    
    
    (72
    %)Retail segment margin %
    
    
    3.1
    %
    
    
    6.8
    %New homes sold
    
    
    99
    
    
    
    185
    
    
    
    (46
    %)% Champion produced new homes sold
    
    
    94
    %
    
    
    84
    %New home multi-section mix
    
    
    99
    %
    
    
    97
    %Average new home retail price
    
    $
    212,500
    
    
    $
    187,400
    
    
    
    13
    %
 Six Months EndedJune 30,
    
    July 1,
    
    %2007
    
    2006
    
    ChangeRetail segment net sales (in thousands)
    
    $
    39,424
    
    
    $
    62,321
    
    
    
    (37
    %)Retail segment income (in thousands)
    
    $
    1,538
    
    
    $
    3,892
    
    
    
    (60
    %)Retail segment margin %
    
    
    3.9
    %
    
    
    6.2
    %New homes sold
    
    
    195
    
    
    
    328
    
    
    
    (41
    %)% Champion produced new homes sold
    
    
    88
    %
    
    
    87
    %New home multi-section mix
    
    
    98
    %
    
    
    96
    %Average new home retail price
    
    $
    202,000
    
    
    $
    188,000
    
    
    
    7
    %Sales centers at end of period
    
    
    17
    
    
    
    21
  Discontinued Operations
  Restructuring Charges
  Page 20




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Interest Income and Interest Expense
   Income Taxes
    Liquidity and Capital Resources
     Page 21




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Contingent liabilities and obligations
    Page 22




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##### Table of Contents



Summary of liquidity and capital resources
   Critical Accounting Policies
  Impact of Recently Issued Accounting Pronouncements
 Accounting for Uncertainty in Income Taxesan interpretation of FASB Statement No. 109
 Forward-Looking Statements
  Page 23




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PART II. OTHER INFORMATION
 
   
    Nominee
    
    Votes For
    
    
    Votes WithheldRobert W. Anestis
    
    
    67,814,023
    
    
    
    844,396Eric S. Belsky
    
    
    68,004,104
    
    
    
    654,315William C. Griffiths
    
    
    67,936,077
    
    
    
    722,342Selwyn Isakow
    
    
    67,937,439
    
    
    
    720,980Brian D. Jellison
    
    
    67,942,790
    
    
    
    715,629G. Michael Lynch
    
    
    66,406,503
    
    
    
    2,251,916Thomas A. Madden
    
    
    67,947,662
    
    
    
    710,757Shirley D. Peterson
    
    
    67,900,296
    
    
    
    758,123David S. Weiss
    
    
    68,134,580
    
    
    
    523,839
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##### Table of Contents



Exhibit No
    
    Description10.1
    
    Second Amendment to Amended and Restated Credit Agreement, dated June
20, 2007, by and among Champion Home Builders Co. and various
financial institutions and other parties thereto as Lender, filed as
Exhibit 10.1 to the Companys Current Report on Form 8-K filed June
22, 2007 and incorporated herein by reference.31.1
    
    Certification of Chief Executive Officer dated July 26, 2007,
relating to the Registrants Quarterly Report on Form 10-Q for the
quarter ended June 30, 2007.31.2
    
    Certification of Chief Financial Officer dated July 26, 2007,
relating to the Registrants Quarterly Report on Form 10-Q for the
quarter ended June 30, 2007.32.1
    
    Certification of Chief Executive Officer and Chief Financial Officer
of the Registrant, dated July 26, 2007, pursuant to 18 U.S.C. Section
1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, relating to the Registrants Quarterly Report on Form 10-Q for
the quarter ended June 30, 2007.
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SIGNATURES
  CHAMPION ENTERPRISES, INC.By:
    /s/  PHYLLIS A. KNIGHTPhyllis A. KnightExecutive Vice President, Treasurer and
Chief Financial Officer
(Principal Financial Officer)And:
    /s/  RICHARD HEVELHORSTRichard Hevelhorst

Vice President and Controller

(Principal Accounting Officer)  Page 27