Palm Harbor Homes Reports Second Quarter Earnings For Fiscal 2007

DALLAS (October 17, 2006) - Palm Harbor Homes, Inc. (NASDAQ: PHHM) today reported financial results for the second quarter and first six months of fiscal 2007 ended September 29, 2006.

Net sales for the second quarter totaled $179.4 million compared with $171.0 million in the year-earlier period. Net loss for the second quarter of 2007 totaled $5.3 million, or ($0.23) per share, compared with net income of $1.0 million, or $0.04 per share, a year ago. Results for the second quarter of fiscal 2007 included $8.3 million, or ($0.22) per diluted share, for restructuring charges related to closing eight retail stores and one less-than-efficient factory in Alabama and the write-off of the Company's investment in BSM Financial, L.P. Excluding these charges, the Company essentially would have reported a break-even quarter. For the second quarter of fiscal 2006, losses associated with Hurricane Rita incurred by the Company's insurance company, Standard Casualty, and from transportation and delivery delays in Texas reduced profitability for the quarter by approximately $0.06 per share. Net sales for the first six months of fiscal 2007 were $373.9 million compared with $337.2 million in the year-earlier period. Net loss for the first half of fiscal 2007 totaled $1.7 million, or ($0.08) per share, compared with net income of $3.6 million, or $0.16 per share, in the first half of fiscal 2006.

Larry Keener, chairman and chief executive officer of Palm Harbor Homes, Inc., said, "We are pleased to report year-over-year improvement in sales in the second fiscal quarter, even as conditions in the HUD manufacturing industry continued to be challenging. Shipment levels for the industry reflect the underlying weakness for traditional HUD manufactured housing. The lower end of the market continues to be pressured by a lack of financing capacity for retail buyers, while the higher-end products are facing greater competition from site-built housing. As previously announced, in response to this trend, we have reduced our retail housing operations by eight retail stores and closed one less-than-efficient factory in Alabama. We remain focused on managing Palm Harbor for the long term and believe we have taken the right steps to operate profitably in the current business environment.  read more