SOURCE: Winnebago Industries, Inc.

June 20, 2008 07:00 ET

Winnebago Industries Reports Results for Third Quarter and First 40 Weeks Fiscal Year 2008

FOREST CITY, IA--(Marketwire - June 20, 2008) - Winnebago Industries, Inc. (NYSE: WGO) today reported financial results for the Company's third quarter and first 40 weeks of fiscal year 2008 ended May 31, 2008.

Revenues for the quarter were $139.7 million, a decrease of 39.7 percent, compared to revenues of $231.7 million for the third quarter last fiscal year. The Company reported an operating loss of $6.9 million for the quarter, compared to operating income of $14.7 million for the third quarter of fiscal 2007. During the third quarter, tax benefits of $8.9 million were recorded that related to favorable settlements of uncertain tax positions, a reduction of the effective tax rate due to lower year-to-date pre-tax income, and tax planning initiatives. Net income for the third quarter was $3.0 million, a decrease of 73.3 percent compared to net income of $11.3 million for the third quarter of fiscal 2007. On a diluted per share basis, the Company had net income of 10 cents a share for the third quarter of fiscal 2008, compared to 35 cents per share for the third quarter last fiscal year.

The third quarter was negatively impacted by lower motor home deliveries which resulted in a significant reduction in production and very low absorption of fixed costs, a decline in the average selling price of the Company's motor homes due to a higher mix of lower priced Class C motor home deliveries including increased rental unit sales, and increased wholesale and retail promotions.

Revenues for the first 40 weeks of fiscal 2008 were $519.1 million, a decrease of 17.9 percent compared to $632.5 million for the first 39 weeks of fiscal 2007. Operating income was $9.1 million for the first 40 weeks of fiscal 2008, compared to $34.2 million for the first 39 weeks of fiscal 2007. Net income for the first 40 weeks of fiscal 2008 was $15.5 million, a decrease of 42.1 percent compared to $26.7 million for the first 39 weeks of fiscal 2007. On a diluted per share basis, the Company earned 53 cents a share for the first 40 weeks of fiscal 2008, compared to 84 cents a share for the first 39 weeks of fiscal 2007.

"The motor home market has changed significantly in the past year, with dramatic declines in the past few months," said Winnebago Industries' Chairman, CEO and President Bob Olson. "Discretionary purchases have declined in the United States as the country is faced with unstable fuel prices, consumer confidence at 16-year lows and a tighter credit environment. Industry-wide, the motor home market has faced double digit retail sales percentage declines for eight of the last nine consecutive months. Statistical Surveys, Inc., a retail reporting service for the RV industry, recently reported a decrease in retail sales of Class A and C motor homes of 26.1 percent for the first four months of calendar 2008, with a decline of over 30 percent in both March and April, which are typically some of the seasonally strongest months. On a wholesale basis, industry forecasts indicate volumes will decline to levels that haven't been seen since calendar 1991."

"It is an understatement to say that we were not pleased with our operating results in the third quarter," said Olson. "As recently announced, in order to better position ourselves for the declining motor home market, we will idle our Charles City Manufacturing Facility by August 1, 2008 and transfer Class C motor home production to the Forest City campus. Also, additional consolidation opportunities are currently being undertaken to continue to reduce our overhead cost structure. This will result in an estimated fourth quarter restructuring charge of $2.5 to $5.5 million, primarily dependent upon the amount of the potential impairment of the Charles City Manufacturing Facility."

"Our Dealer Days event was held in May in Las Vegas and we were pleased with the positive reaction to the introduction of our new 2009 Winnebago, Itasca and ERA products," said Olson. "The new fuel-efficient ERA Class B continues to be very well received by both dealers and retail customers.

"Overall, our dealer partners continue to be very cautious with their inventory levels. While dealer inventory of Winnebago Industries' products have been reduced by 10.3 percent during the quarter, our dealers continue to emphasize reducing inventories and increasing turn rates for their dealerships, which is evident from the dramatic decline in our current sales order backlog."

Winnebago Industries will conduct a conference call in conjunction with this release at 9 a.m. Central Time today, Friday, June 20, 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, 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 the effect of global tensions, declines in consumer confidence, the availability and price of fuel, a significant increase in interest rates, a slowdown in the economy, availability of chassis or other key component parts, sales order cancellations, slower than anticipated sales of new or existing products, new products introduced by competitors 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
                                    May 31, 2008          May 26, 2007
                                --------------------  ---------------------
                                                %                     %
Net revenues                    $ 139,736      100.0  $  231,692     100.0
Cost of goods sold                137,112       98.1     205,436      88.7
                                ---------  ---------  ---------- ---------
  Gross profit                      2,624        1.9      26,256      11.3
                                ---------  ---------  ---------- ---------
Operating expenses
  Selling                           5,085        3.6       5,511       2.4
  General and administrative        4,442        3.2       6,086       2.6
                                ---------  ---------  ---------- ---------
  Total operating expenses          9,527        6.8      11,597       5.0
                                ---------  ---------  ---------- ---------
Operating (loss) income            (6,903)      (4.9)     14,659       6.3
Financial income                    1,053        0.7       1,799       0.8
                                ---------  ---------  ---------- ---------
(Loss) income before income
 taxes                             (5,850)      (4.2)     16,458       7.1
(Credit) provision for taxes       (8,850)      (6.3)      5,205       2.2
                                ---------  ---------  ---------- ---------
Net income                      $   3,000        2.1  $   11,253       4.9
                                =========  =========  ========== =========
Income per common share:
  Basic                         $    0.10             $     0.36
  Diluted                       $    0.10             $     0.35
Weighted average common shares
 outstanding
  Basic                            29,013                 31,524
  Diluted                          29,048                 31,761



                                   40 Weeks Ended        39 weeks Ended
                                    May 31, 2008          May 26, 2007
                                --------------------  ---------------------
                                                %                     %
Net revenues                    $ 519,081      100.0  $  632,471     100.0
Cost of goods sold                478,648       92.2     565,866      89.5
                                ---------  ---------  ---------- ---------
  Gross profit                     40,433        7.8      66,605      10.5
                                ---------  ---------  ---------- ---------
Operating expenses
  Selling                          14,948        2.9      14,553       2.3
  General and administrative       16,350        3.1      17,893       2.8
                                ---------  ---------  ---------- ---------
  Total operating expenses         31,298        6.0      32,446       5.1
                                ---------  ---------  ---------- ---------
Operating income                    9,135        1.8      34,159       5.4
Financial income                    3,529        0.6       4,964       0.8
                                ---------  ---------  ---------- ---------
Income before income taxes         12,664        2.4      39,123       6.2
(Credit) provision for taxes       (2,815)      (0.6)     12,402       2.0
                                ---------  ---------  ---------- ---------
Net income                      $  15,479        3.0  $   26,721       4.2
                                =========  =========  ========== =========
Income per common share:
  Basic                         $    0.53             $     0.85
  Diluted                       $    0.53             $     0.84
Weighted average common shares
 outstanding
  Basic                            29,116                 31,411
  Diluted                          29,183                 31,697



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

                                              May 31, 2008   Aug. 25, 2007
                                              -------------- --------------
ASSETS
Current assets:
  Cash and cash equivalents                   $       46,200 $        6,889
  Short-term investments                                 ---        102,650
  Receivables, net                                    10,132         30,285
  Inventories                                        110,960        101,208
  Prepaid and other                                    3,257          3,981
  Deferred income taxes                               11,967         12,687
                                              -------------- --------------
      Total current assets                           182,516        257,700

Long-term investments                                 40,148            ---
Property and equipment, net                           46,472         51,389
Deferred income taxes                                 24,970         19,856
Investment in life insurance                          20,094         20,015
Other assets                                          17,395         17,550
                                              -------------- --------------
      Total assets                            $      331,595 $      366,510
                                              ============== ==============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                            $       20,092 $       35,286
  Income taxes payable                                 1,939          4,252
  Accrued expenses                                    42,986         49,299
                                              -------------- --------------
      Total current liabilities                       65,017         88,837

Long-term liabilities:
  Unrecognized tax benefits                            8,803            ---
  Postretirement health care and deferred
   compensation benefits, net of current
   portion                                            69,750         69,319
                                              -------------- --------------
     Total long-term liabilities                      78,553         69,319

Stockholders' equity                                 188,025        208,354
                                              -------------- --------------
       Total liabilities and stockholders'
        equity                                $      331,595 $      366,510
                                              ============== ==============



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


                                            40 Weeks Ended  39 Weeks Ended
                                             May 31, 2008    May 26, 2007
                                            --------------  --------------
Operating activities:
  Net income                                $       15,479  $       26,721
  Adjustments to reconcile net income to
   net cash provided by operating
   activities:
    Depreciation                                     7,583           7,942
    Stock-based compensation                         3,617           4,374
    Postretirement benefit income and
     deferred compensation expense                   1,065           1,154
    Deferred income taxes                            4,070          (6,165)
    Increase in cash surrender value of
     life insurance policies                          (596)           (585)
    Excess tax benefit from stock-based
     compensation                                      (89)         (1,926)
    Other                                              132              54
  Change in assets and liabilities:
    Inventories                                     (9,752)        (13,781)
    Receivables and prepaid assets                  20,812          (1,423)
    Income taxes payable                            (8,871)          1,391
    Accounts payable and accrued expenses          (21,868)          8,372
    Postretirement and deferred
     compensation benefits                          (1,123)           (980)
                                            --------------  --------------
  Net cash provided by operating activities         10,459          25,148
                                            --------------  --------------

Investing activities:
  Purchases of investments                        (228,069)       (238,649)
  Proceeds from the sale or maturity of
   investments                                     288,119         223,649
  Purchases of property and equipment               (3,025)         (3,677)
  Other                                               (619)            904
                                            --------------  --------------
Net cash provided by (used in) investing
 activities                                         56,406         (17,773)
                                            --------------  --------------

Financing activities:
  Payments for purchase of common stock            (17,767)        (20,548)
  Payments of cash dividends                       (10,509)         (9,412)
  Proceeds from exercise of stock options              633           7,636
  Excess tax benefit from stock-based
   compensation                                         89           1,926
                                            --------------  --------------
Net cash used in financing activities              (27,554)        (20,398)
                                            --------------  --------------

Net increase (decrease) in cash and cash
 equivalents                                        39,311         (13,023)

Cash and cash equivalents at beginning of
 period                                              6,889          24,934
                                            --------------  --------------

Cash and cash equivalents at end of period  $       46,200  $       11,911
                                            ==============  ==============



                        Winnebago Industries, Inc.
                      Unaudited Motor Home Deliveries


                                      Quarter Ended              Change
                              May 31, 2008     May 26, 2007   Units    %
                            ---------------- ---------------- -----  -----
Motor home unit deliveries
  Class A Gas                            457              904  (447) (49.5)
  Class A Diesel                         151              397  (246) (62.0)
                            ---------------- ---------------- -----  -----
    Total Class A                        608            1,301  (693) (53.3)
  Class B                                 47              ---    47    ---
  Class C                                972            1,268  (296) (23.3)
                            ---------------- ---------------- -----  -----
    Total deliveries                   1,627            2,569  (942) (36.7)
                            ================ ================ =====  =====



                                 40 Weeks      39 Weeks
                                   Ended         Ended         Change
                               May 31, 2008  May 26, 2007   Units     %
                               ------------- ------------- -------  ------
Motor home unit deliveries
  Class A Gas                          1,844         2,562    (718)  (28.0)
  Class A Diesel                         801         1,168    (367)  (31.4)
                               ------------- ------------- -------  ------
    Total Class A                      2,645         3,730  (1,085)  (29.1)
  Class B                                 48           ---      48     ---
  Class C                              2,786         3,151    (365)  (11.6)
                               ------------- ------------- -------  ------
    Total deliveries                   5,479         6,881  (1,402)  (20.4)
                               ============= ============= =======  ======



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


                                   As of                   Change
                         May 31, 2008 May 26, 2007     Units          %
                         ------------ ------------ -------------  --------
Sales order backlog
  Class A Gas                     280          907          (627)    (69.1)
  Class A Diesel                  136          409          (273)    (66.7)
                         ------------ ------------ -------------  --------
    Total Class A                 416        1,316          (900)    (68.4)
  Class B                         216          ---           216       ---
  Class C                         515        1,059          (544)    (51.4)
                         ------------ ------------ -------------  --------
    Total backlog*              1,147        2,375        (1,228)    (51.7)
                         ============ ============ =============  ========

Total approximate
 revenue dollars
 (in thousands)          $     93,927 $    207,569 $    (113,642)    (54.7)

Dealer inventory                4,341        4,604          (263)     (5.7)


* 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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