SOURCE: Winnebago Industries, Inc.

October 16, 2008 07:00 ET

Winnebago Industries Reports Results for Fourth Quarter and Fiscal 2008

FOREST CITY, IA--(Marketwire - October 16, 2008) - Winnebago Industries, Inc. (NYSE: WGO), a leading United States motor home manufacturer, today reported financial results for the Company's fourth quarter and fiscal year ended August 30, 2008 and announced the suspension of its cash dividend.

Revenues for the fourth quarter ended August 30, 2008 were $85.3 million, a decrease of 64.1 percent, versus revenues of $237.7 million for the fourth quarter last year. The Company reported an operating loss of $18.9 million for the quarter, versus operating income of $20.7 million for the fourth quarter of fiscal 2007. Included in the operating loss for the quarter was a $4.7 million charge relating to the impairment incurred as a result of the idling of the Charles City Manufacturing Facility (CCMF) on August 1st and severance-related costs of approximately $750,000 due to workforce reductions across all facilities. Net loss for the fourth quarter was $12.7 million, versus net income of $14.8 million for the fourth quarter of fiscal 2007. On a diluted per share basis, the Company had a net loss of 44 cents for the fourth quarter of fiscal 2008, versus net income of 49 cents for the fourth quarter last year.

The fourth quarter was negatively impacted by a sharp decline in motor home deliveries which resulted in a significant reduction in plant utilization. Also, due to increased wholesale and retail product incentives and a higher mix of lower priced products sold in the quarter, the average motor home selling price decreased, which negatively impacted revenue and gross profit. In addition, the Company also recorded an impairment charge for the idling of CCMF, which primarily manufactured Class C products. The reduction in revenue for the quarter is reflective of the continuing deterioration of conditions in the marketplace.

Revenues for fiscal year 2008 were $604.4 million, a decrease of 30.5 percent, versus $870.2 million for the previous year. Net income for fiscal 2008 was $2.8 million, versus $41.6 million for 2007. On a diluted per share basis, the Company earned 10 cents for fiscal 2008, versus $1.32 for 2007.

"As difficult as conditions have been all fiscal year, the Company's fourth quarter was even more challenging," said Winnebago Industries' Chairman, CEO and President Bob Olson. "While fuel prices stabilized somewhat during the quarter, the U.S. economy continued to falter, with the availability of credit and rising interest rates becoming major concerns for both our retail customers and our dealers. As reflected by the motor home industry's reports in both wholesale deliveries and retail sales, conditions have continued to deteriorate throughout the year. Wholesale shipments of motor homes as reported by the Recreation Vehicle Industry Association are down 39 percent calendar year to date through August and deteriorated significantly in our fiscal fourth quarter; with industry shipments down 54 percent in June, 56 percent in July and 65 percent in August. Likewise, Statistical Surveys, Inc., the retail reporting service for the RV industry, has reported Class A, B and C motor home retail sales for the industry down 37 percent calendar year to date through August and over 50 percent in our fiscal fourth quarter. As a result of these market conditions, our dealer partners are continuing to focus on lowering their inventory levels. Winnebago Industries' dealer inventory decreased nearly 700 units in the fourth quarter, or approximately 16 percent. In many cases, our dealers are choosing not to reorder inventory as it is retailed, which has also had a negative impact on the sales order backlog.

"Due to the decline in motor home market conditions, we have continued to reduce our head count through attrition and workforce reductions in order to more closely match production to the current demand," said Olson. "During the fourth quarter ended August 30, 2008, Winnebago Industries reduced its workforce company-wide by approximately 600 full-time hourly and salaried employees which included the closure of CCMF and reductions that occurred in the rest of the Company. Since the end of the fourth quarter, we have reduced our head count by an additional 300 employees and currently have approximately 1,930 employees, a 42 percent decrease since August 25, 2007. It is extremely difficult to lose valued employees, but it is also imperative to reduce our overhead costs to more closely align to the current motor home market. In addition to workforce reductions, we continue to look at various other cost savings initiatives to operate as efficiently as possible with lower volumes."

Winnebago Industries paid a quarterly cash dividend of 12 cents a share on October 6, 2008 to shareholders of record as of September 5, 2008. Olson continued, "In a meeting held yesterday, Winnebago Industries' Board of Directors decided to suspend cash dividend payments in order to conserve capital and to maintain liquidity. The Board will review the cash dividend policy at subsequent board meetings throughout the fiscal year."

"The Company's 50th anniversary was cause for celebration in fiscal 2008; due to negative market conditions, however, it was also a very challenging year," said Olson. "Since we produce a discretionary product in a cyclical industry, we've certainly experienced a number of downturns throughout the past 50 years. We have learned a great deal in the process of managing our business throughout these downturns, ultimately coming out stronger each time when the U.S. economy and the motor home market recover. According to Statistical Surveys, we have a leading position in retail market share of 18.7 percent calendar year to date through August. We intend to continue to develop innovative new products to meet the needs of our customers' ever changing demands and will be ready to take advantage of a growing market when the economy turns around."

Winnebago Industries will conduct a conference call in conjunction with this release at 9 a.m. Central Time today, Thursday, October 16, 2008. Members of the news media, investors and the general public are invited to access a live broadcast of the conference call via the Investor Relations page of the Company's website at http://www.winnebagoind.com/investor.html. The event will be archived and available for replay for the next 90 days.

About Winnebago Industries

Winnebago Industries, Inc. is a leading U.S. manufacturer of motor homes which are self-contained recreation vehicles used primarily in leisure travel and outdoor recreation activities. The Company builds quality motor homes under the Winnebago, Itasca and ERA brand names with state-of-the-art computer-aided design and manufacturing systems on automotive-styled assembly lines. The Company's common stock is listed on the New York and Chicago Stock Exchanges and traded under the symbol WGO. Options for the Company's common stock are traded on the Chicago Board Options Exchange. For access to Winnebago Industries' investor relations material or to add your name to an automatic email list for Company news releases, visit, http://www.winnebagoind.com/investor.html.

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements are inherently uncertain. A number of factors could cause actual results to differ materially from these statements, including, but not limited to interest rates and availability of credit, a decline in consumer confidence, availability and price of fuel, a slowdown in the economy, availability of chassis and other key component parts, sales order cancellations, slower than anticipated sales of new or existing products, new product introductions by competitors, the effect of global tensions, and other factors. Additional information concerning certain risks and uncertainties that could cause actual results to differ materially from that projected or suggested is contained in the Company's filings with the Securities and Exchange Commission (SEC) over the last 12 months, copies of which are available from the SEC or from the Company upon request.

                        Winnebago Industries, Inc.
                Unaudited Consolidated Statements of Income
            (In thousands, except percent and per share data)


                                              Quarter Ended
                                    Aug. 30, 2008         Aug. 25, 2007
                                --------------------  ---------------------
                                                 %                     %
Net revenues                    $  85,271      100.0  $  237,681     100.0
Cost of goods sold                 90,932      106.6     205,089      86.3
                                ---------  ---------  ---------- ---------
  Gross (deficit) profit           (5,661)      (6.6)     32,592      13.7
                                ---------  ---------  ---------- ---------
Operating expenses
  Selling                           3,534        4.1       5,312       2.2
  General and administrative        5,009        5.9       6,553       2.8
  Asset impairment                  4,686        5.5       - - -     - - -
                                ---------  ---------  ---------- ---------
  Total operating expenses         13,229       15.5      11,865       5.0
                                ---------  ---------  ---------- ---------
Operating (loss) income           (18,890)     (22.1)     20,727       8.7
Financial income                      785        0.9       1,559       0.7
                                ---------  ---------  ---------- ---------
(Loss) income before income
 taxes                            (18,105)     (21.2)     22,286       9.4
(Benefit) provision for taxes      (5,410)      (6.3)      7,443       3.1
                                ---------  ---------  ---------- ---------
Net (loss) income               $ (12,695)     (14.9) $   14,843       6.3
                                =========  =========  ========== =========
Income (loss) per common share:
  Basic                         $   (0.44)            $     0.49
  Diluted                       $   (0.44)            $     0.49
Weighted average common shares
 outstanding
  Basic                            29,021                 30,417
  Diluted                          29,047                 30,576




                                   53 Weeks Ended        52 Weeks Ended
                                    Aug. 30, 2008         Aug. 25, 2007
                                --------------------  ---------------------
                                                 %                     %
Net revenues                    $ 604,352      100.0  $  870,152     100.0
Cost of goods sold                569,580       94.2     770,955      88.6
                                ---------  ---------  ---------- ---------
  Gross profit                     34,772        5.8      99,197      11.4
                                ---------  ---------  ---------- ---------
Operating expenses
  Selling                          18,482        3.1      19,865       2.3
  General and administrative       21,359        3.5      24,446       2.8
  Asset impairment                  4,686        0.8       - - -     - - -
                                ---------  ---------  ---------- ---------
  Total operating expenses         44,527        7.4      44,311       5.1
                                ---------  ---------  ---------- ---------
Operating (loss) income            (9,755)      (1.6)     54,886       6.3
Financial income                    4,314        0.7       6,523       0.8
                                ---------  ---------  ---------- ---------
(Loss) income before income
 taxes                             (5,441)      (0.9)     61,409       7.1
(Benefit) provision for taxes      (8,225)      (1.4)     19,845       2.3
                                ---------  ---------  ---------- ---------
Net income                      $   2,784        0.5  $   41,564       4.8
                                =========  =========  ========== =========
Income per common share:
  Basic                         $    0.10             $     1.33
  Diluted                       $    0.10             $     1.32
Weighted average common shares
 outstanding
  Basic                            29,093                 31,162
  Diluted                          29,144                 31,415



                        Winnebago Industries, Inc.
              Unaudited Consolidated Condensed Balance Sheets
                              (In thousands)


                                             Aug. 30, 2008   Aug. 25, 2007
                                            --------------- ---------------
ASSETS
Current assets:
   Cash and cash equivalents                $        17,851 $         6,889
   Short-term investments                             3,100         102,650
   Receivables, net                                   9,426          30,285
   Inventories                                      110,596         101,208
   Income taxes receivable                            6,618           - - -
   Prepaid and other                                 15,290          16,668
                                            --------------- ---------------
      Total current assets                          162,881         257,700

Property and equipment, net                          40,097          51,389
Long-term investments, less impairments              37,538           - - -
Deferred income taxes                                26,862          19,856
Investment in life insurance                         22,123          20,015
Other assets                                         15,954          17,550
                                            --------------- ---------------
      Total assets                          $       305,455 $       366,510
                                            =============== ===============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                         $        15,631 $        35,286
   Income taxes payable                                  76           4,252
   Accrued expenses                                  38,626          49,299
                                            --------------- ---------------
      Total current liabilities                      54,333          88,837

Unrecognized long-term tax benefit                    9,469           - - -
Postretirement health care and deferred
 compensation benefits, net of current
 portion                                             67,729          69,319
Stockholders' equity                                173,924         208,354
                                            --------------- ---------------
      Total liabilities and stockholders'
       equity                               $       305,455 $       366,510
                                            =============== ===============


                        Winnebago Industries, Inc.
               Unaudited Condensed Statements of Cash Flows
                              (In thousands)


                                            53 Weeks Ended  52 Weeks Ended
                                            Aug. 30, 2008   Aug. 25, 2007
                                            --------------  --------------
Operating activities:
   Net income                               $        2,784  $       41,564
 Adjustments to reconcile net income to
  net cash provided by operating
  activities:
   Depreciation                                      9,907          10,495
   Asset impairment                                  4,686           - - -
   Stock-based compensation                          3,915           4,871
   Postretirement benefit income and
    deferred compensation                            1,414           1,539
   Deferred income taxes                             3,490          (3,232)
   Increase in cash surrender value of
    life insurance policies                           (759)           (871)
   Excess tax benefit from stock-based
    compensation                                       (92)         (1,587)
   Other                                               241             230
 Change in assets and liabilities:
   Inventories                                      (9,388)        (24,127)
   Receivables and prepaid assets                   21,022          (8,325)
   Accounts payable and accrued expenses           (31,301)         11,686
   Income taxes payable and unrecognized
    tax benefit                                    (17,665)         (3,243)
   Postretirement and deferred
    compensation benefits                           (2,632)         (1,249)
                                            --------------  --------------
 Net cash (used in) provided by operating
  activities                                       (14,378)         27,751
                                            --------------  --------------

Investing activities:
   Purchases of short-term investments            (228,069)       (308,149)
   Proceeds from the sale or maturity of
    short-term investments                         288,119         335,449
   Purchases of property and equipment              (3,720)         (5,245)
   Other                                                43            (285)
                                            --------------  --------------
Net cash provided by investing activities           56,373          21,770
                                            --------------  --------------

Financing activities:
   Payments for purchase of common stock           (17,771)        (64,650)
   Payments of cash dividends                      (13,997)        (12,517)
   Proceeds from exercise of stock options             643           8,014
   Excess tax benefit from stock-based
    compensation                                        92           1,587
                                            --------------  --------------
Net cash used in financing activities              (31,033)        (67,566)
                                            --------------  --------------

Net increase (decrease)  in cash and cash
 equivalents                                        10,962         (18,045)
Cash and cash equivalents at beginning of
 period                                              6,889          24,934
                                            --------------  --------------
Cash and cash equivalents at end of period  $       17,851  $        6,889
                                            ==============  ==============



                        Winnebago Industries, Inc.
                      Unaudited Motor Home Deliveries


                                Quarter Ended               Change
                             Aug. 30,    Aug. 25,
                               2008        2007       Units         %
                            ----------- ----------- ----------  ----------
Motor home unit deliveries
  Class A Gas                       285         977       (692)      (70.8)
  Class A Diesel                     99         324       (225)      (69.4)
                            ----------- ----------- ----------  ----------
    Total Class A                   384       1,301       (917)      (70.5)
  Class B                            92       - - -         92       - - -
  Class C                           452       1,287       (835)      (64.9)
                            ----------- ----------- ----------  ----------
    Total deliveries                928       2,588     (1,660)      (64.1)
                            =========== =========== ==========  ==========


                             53 Weeks    52 Weeks
                              Ended       Ended             Change
                             Aug. 30,    Aug. 25,
                               2008        2007       Units         %
                            ----------- ----------- ----------  ----------
Motor home unit deliveries
  Class A Gas                     2,129       3,539     (1,410)      (39.8)
  Class A Diesel                    900       1,492       (592)      (39.7)
                            ----------- ----------- ----------  ----------
    Total Class A                 3,029       5,031     (2,002)      (39.8)
  Class B                           140       - - -        140       - - -
  Class C                         3,238       4,438     (1,200)      (27.0)
                            ----------- ----------- ----------  ----------
    Total deliveries              6,407       9,469     (3,062)      (32.3)
                            =========== =========== ==========  ==========




                        Winnebago Industries, Inc.
                  Unaudited Backlog and Dealer Inventory
                                  (Units)


                                    As of                   Change
                             Aug. 30,    Aug. 25,
                               2008        2007       Units         %
                            ----------- ----------- ----------  ----------
Sales order backlog
  Class A Gas                       119         619       (500)      (80.8)
  Class A Diesel                    100         419       (319)      (76.1)
                            ----------- ----------- ----------  ----------
    Total Class A                   219       1,038       (819)      (78.9)
  Class B                            46       - - -         46       - - -
  Class C                           331         837       (506)      (60.5)
                            ----------- ----------- ----------  ----------
    Total backlog*                  596       1,875     (1,279)      (68.2)
                            =========== =========== ==========  ==========

Total approximate revenue
 dollars (in thousands)     $    50,599 $   179,700 $ (129,101)      (71.8)

Dealer inventory                  3,663       4,471       (808)      (18.1)


* The Company includes in its backlog all accepted orders from dealers to
be shipped within the next six months.  Orders in backlog can be cancelled
or postponed at the option of the purchaser at any time without penalty
and, therefore, backlog may not necessarily be an accurate measure of
future sales.

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