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Champion Enterprises Reports Second Quarter 2006 Results Revenues increase 17 percent, driven by 62 percent increase in modular sales, despite weaker manufactured housing order rates and declining backlogs. Deferred tax assets reinstated on historical profitability and favorable outlook.

AUBURN HILLS, Mich., July 24, 2006
Champion Enterprises, Inc., a leader in factory-built construction, today announced results for its second quarter ended July 1, 2006. Revenues for the quarter increased 16.9 percent to $370.7 million compared to $317.1 million for the second quarter of 2005. Net income for the quarter totaled $119.9 million, or $1.55 per diluted share, compared to net income of $13.5 million, or $0.17 per diluted share for the second quarter of 2005. Net income included $109.7 million of income from the reversal of the previously recorded deferred tax asset valuation allowance.

Income from continuing operations before income taxes fell 22.4 percent to $11.5 million compared to $14.8 million for the second quarter of 2005.

Operating Highlights - North American Manufacturing Segment
* North American manufacturing ("manufacturing segment") net sales increased 9.7 percent to $319.9 million from $291.6 million in the second quarter of 2005.

* Revenues from the sale of modular homes totaled $88 million, climbing 62 percent for the second quarter of 2006, compared to the same period a year ago, and representing 28 percent of total manufacturing segment sales for the quarter. Modular sales increased 14 percent organically, while the remainder of the increase was a result of acquisitions. Modular unit sales increased 46 percent during the quarter.

* Manufacturing segment income for the quarter decreased $3.8 million to $21.0 million from $24.8 million in the second quarter of 2005.

* Manufacturing segment margins were 6.6 percent compared to 8.5 percent in the second quarter of 2005. The decrease was the result of lower incoming order rates and backlogs throughout the quarter, resulting in decreased factory utilization and efficiency. Manufacturing segment margin for the last twelve months now stands at 7.7 percent.

* Manufacturing segment backlogs ended the quarter at $52 million compared to $91 million at the end of the second quarter of 2005. On a per plant unit basis, backlogs at the end of the quarter stood at their lowest level since the first quarter of 2003. This low level of backlog is expected to continue to pressure margins for the remainder of the year, making it unlikely that the Company will reach its goal of 8.3 percent for the year.

* As a result of ongoing poor market conditions in the Midwest, the Company has idled an additional plant at its LaGrange, Ind. complex, where it continues to operate two manufacturing facilities.

Operating Highlights - International Manufacturing Segment
* International manufacturing ("international segment") consists of United Kingdom-based Calsafe Group (Holdings) Ltd. and its operating subsidiary Caledonian Building Systems which were acquired in April 2006. International segment sales totaled $27.1 million for the partial quarter.

* International segment income totaled $1.2 million for the period, resulting in a segment margin of 4.4 percent in Caledonian's seasonally slowest period. Caledonian's historical fiscal year end of March 31 will be changed to coincide with Champion's beginning with the fiscal year ending December 30, 2006.

* International segment order backlogs remain strong, with firm contracts and orders pending contracts under framework agreements totaling approximately $120 million, sufficient to secure production levels through the remainder of the fiscal year.

Operating Highlights - Retail Segment
* The Company's California-based retail segment reported revenues of $35.0 million compared to $38.8 million for the second quarter of 2005.

* Retail segment income totaled $2.4 million for the quarter compared to $2.6 million in 2005 while the segment margin improved to 6.8 percent from 6.7 percent for the second quarter of 2005.

Other Highlights
* Cash flow from continuing operations totaled $12.6 million for the second quarter of 2006 compared to $18.5 million for the same period last year.

* Cash and cash equivalents totaled $121.6 million at the end of the quarter compared to $132.1 million at the end of last quarter. During the quarter the Company used approximately $22 million of cash to complete the Calsafe acquisition.

* As of July 1, 2006 Champion reversed its previously recorded deferred tax asset valuation allowance after having achieved sufficient historical and expected future profitability. As a result, future quarters will reflect a normalized tax rate. The Company's cash tax rate will continue to primarily consist of foreign taxes, as most of its taxable income generated in the U.S. will continue to be offset by available tax loss carryforwards. Available U.S. federal tax loss carryforwards totaled approximately $130 million at the beginning of this fiscal year, with an additional approximately $49 million becoming available this year.

"The overall manufactured housing market continues to be challenging. Excluding FEMA temporary home sales, the manufactured housing market declined 3.9 percent in 2005 and has declined a further 3.8 percent during the first five months of 2006," said William Griffiths, chairman, president and CEO of Champion Enterprises, Inc. "We see no evidence that this trend will reverse in the second half of the year.

"This underlying trend continues to validate our long-term strategy focused on growing our residential, commercial and international modular businesses, both organically and through acquisitions. During the second quarter, with the overall housing market softening, we posted organic growth of 14 percent in our modular business. On a year-over-year basis, including acquisitions, our companywide modular revenues more than doubled and now represent over 30 percent of our sales," said Griffiths.

"Our two acquisitions this year performed as expected during the quarter, with both Highland and Caledonian making solid contributions to Champion's overall results."

Griffiths concluded, "While we expect future growth to be primarily driven by modular construction, we remain committed to the manufactured housing market, which accounts for a significant portion of our revenue and cash flow. Manufactured housing provides an important source of cash for purposes of investing in future growth opportunities. We will continue to work toward transforming Champion from a manufactured housing company to one more equally balanced between manufactured housing and modular construction, both domestic and international."

Second Quarter 2006 Conference Call
Champion Enterprises will host a conference call on Tuesday, July 25, 2006 at 11 a.m. EDT to discuss these results and current business trends. To listen to the call, please call 888-481-7939 for domestic callers or 617-847-8707 for international callers. The pass code is 62964900. You can also listen to the call via the Company's website at under the Investor Relations link.

A telephone replay of the call will be available approximately one hour after the call's conclusion through Thursday, August 10, 2006, and on the Company's website for 90 days. To access the telephone replay, please call (888) 286-8010 for domestic callers or (617) 801-6888 for international callers. The passcode is 29219498. The replay will also be available under the Investor Relations link at the Company's website under Audio Archives.

About Champion
Auburn Hills, Michigan-based Champion Enterprises, Inc. is a leader in factory-built construction, operating 35 manufacturing facilities in North America and the United Kingdom, and partnering with over 3,000 independent retailers, builders and developers. The Company produces manufactured and modular homes through its family of homebuilders, as well as modular commercial buildings for military and commercial applications. For more information, please visit .

Forward-Looking Statements
This news release contains certain statements, including statements regarding backlogs, margins, goals, fiscal year changes, firm contracts, orders pending contracts under framework agreements, production levels, cash tax rate, taxable income, tax loss carryforwards, housing market trends, long-term strategy, expected future growth, growth opportunities and transformation of Champion, each of which could be construed to be forward- looking statements within the meaning of the Securities and Exchange Act of 1934.

These statements reflect the Company's views with respect to future plans, events and financial performance. The Company does not undertake any obligation to update the information contained herein, which speaks only as of the date of this press release. The Company has identified certain risk factors, which could cause actual results and plans to differ substantially from those included in the forward-looking statements. These factors are discussed in the Company's most recently filed Form 10-K and other SEC filings, in each case under the section entitled "Forward-Looking Statements," and those discussions regarding risk factors are incorporated herein by reference.

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