Winnebago Industries Reports Continued Improvement in Third Quarter Fiscal 2010
Released: 06/17/10 07:00 AM EDT

Winnebago Industries, Inc. (NYSE:WGO), the leading United States motor home manufacturer, today reported continued improvement in financial results during the Company's third quarter of fiscal year 2010.

Revenues for the third quarter of fiscal 2010 ended May 29, 2010 were $134.8 million, an increase of 165.1 percent, versus $50.8 million for the third quarter of fiscal 2009. The Company reported an operating profit of $3.4 million for the quarter, versus an operating loss of $14.8 million for the third quarter of fiscal 2009. Net income for the third quarter was $6.0 million versus a net loss of $8.6 million for the third quarter of fiscal 2009. On a diluted per share basis, the Company had net income of $.21 for the third quarter of fiscal 2010 versus a net loss of $.29 for the third quarter of fiscal 2009. The third quarter of fiscal 2010 was benefited from increased motor home unit deliveries, particularly in the Class A category. The net income for the third quarter reflected the positive effect of $2.4 million in tax benefits associated with resolution of tax audits and various tax planning initiatives.

Revenues for the first nine months of fiscal 2010 were $326.4 million, an increase of 114.6 percent, versus revenues of $152.1 million for the first nine months of fiscal 2009. The Company reported an operating loss of $4.4 million for the first nine months of fiscal 2010, versus an operating loss of $50.3 million for the first nine months of fiscal 2009. Net income for the first nine months of fiscal of 2010 was $5.4 million, or $0.18 per diluted share, versus a loss of $28.5 million, or $.98 per diluted share for the first nine months of fiscal 2009. No tax benefits have yet been recorded on the first nine months of fiscal 2010 pre-tax losses. To the extent that future pre-tax income is generated, these unrecorded tax benefits will offset tax expense until fully utilized. The $9.5 million of tax benefit recorded in the first nine months of fiscal 2010 primarily relates to tax benefits associated with the carryback of fiscal year 2009 net operating losses permitted by tax law changes and tax benefits associated with various tax planning initiatives and tax settlements.

“We are extremely pleased to report our results for the third quarter of fiscal 2010 which show profitability at the operating level for the first time since our second quarter of 2008,” said Winnebago Industries' Chairman, CEO and President Bob Olson. "We are also encouraged by continued sequential improvement in revenues and gross profit. The main driver for this improvement was increased motor home shipments which increased 120.3 percent over the third quarter of fiscal 2009 and 23.2 percent sequentially over the second quarter ended February 27, 2010. The increased volume resulted in greater efficiencies and higher utilization of our manufacturing facilities."

Dealer inventory was relatively flat with 2,000 Class A, B and C motor homes as of May 29, 2010, compared to the 2,022 at the end of the second quarter of fiscal 2010; and down 13.9 percent from dealer inventory of 2,324 on May 30, 2009. Olson continued, "Dealer inventory has leveled off, which we believe is appropriate in today's market environment. Dealers and their lending institutions are keeping a close eye on inventories to ensure that supply is consistent with retail demand. We have also seen dramatic improvement within the last year in the age of the product in dealer inventory, with much less older inventory on their lots."

Winnebago Industries' sales order backlog was 935 motor homes at May 29, 2010, an increase of 144.8 percent compared to the end of the third quarter of fiscal 2009. "While our sales order backlog increased considerably since the third quarter of fiscal 2009, it has declined 19.3 percent sequentially from the end of the second quarter of fiscal 2010," said Olson. "We are launching our new 2011 products to our dealers this month. As dealers are able to see these exciting new products, we anticipate the sales order backlog will rise accordingly."

According to Statistical Surveys, Inc., the retail reporting service for the RV industry, Winnebago Industries continues to lead the industry in retail sales of Class A and Class C motor homes combined with 19.5 percent for the first four months of calendar 2010, compared to 18.4 percent for the same period of calendar 2009.

Olson continued, "Dr. Richard Curtin, the economist for the Recreation Vehicle Industry Association, recently increased his forecast for the motor home market, estimating 22,600 Class A, B and C motor homes will be shipped to dealers in calendar 2010, a 71 percent increase over 2009. We remain cautious, however, until we see prolonged improvement in retail sales. We continue to believe that retail sales will be the key driver to sustain our recovery and for continued growth going forward."

Conference Call

Winnebago Industries, Inc. will conduct a conference call in conjunction with this release at 9 a.m. Central Time today, Thursday, June 17, 2010. 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 the 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, low consumer confidence, significant increase in repurchase obligations, inadequate liquidity or capital resources, availability and price of fuel, a further or continued 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 SEC over the last 12 months, copies of which are available from the SEC or from the Company upon request. The Company disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statements contained in this release or to reflect any changes in the Company's expectations after the date of this release or any change in events, conditions or circumstances on which any statement is based, except as required by law.

Winnebago Industries, Inc.
Unaudited Statements of Income
(In thousands, except percent and per share data)
Quarter Ended
May 29, 2010May 30, 2009
Net revenues $ 134,813 100.0 % $ 50,848 100.0 %
Cost of goods sold 125,058 92.8 % 59,133 116.3 %
Gross profit (deficit) 9,755 7.2 % (8,285 ) (16.3 )%
Operating expenses:
Selling 3,107 2.3 % 3,083 6.1 %
General and administrative 3,244 2.4 % 3,414 6.7 %

Total operating expenses

6,351 4.7 % 6,497 12.8 %
Operating income (loss) 3,404 2.5 % (14,782 ) (29.1 )%
Financial income 158 0.1 % 209 0.4 %
Income (loss) before income taxes 3,562 2.6 % (14,573 ) (28.7 )%
Benefit for taxes (2,430 ) (1.8 )% (6,020 ) (11.9 )%
Net income (loss) $ 5,992 4.4 % $ (8,553 ) (16.8 )%
Income (loss) per common share:
Basic $ 0.21 $ (0.29 )
Diluted $ 0.21 $ (0.29 )
Weighted average common shares outstanding:
Basic 29,098 29,045
Diluted 29,107 29,056
Nine Months Ended
May 29, 2010May 30, 2009
Net revenues $ 326,359 100.0 % $ 152,054 100.0 %
Cost of goods sold 311,296 95.4 % 181,025 119.1 %
Gross profit (deficit) 15,063 4.6 % (28,971 ) (19.1 )%
Operating expenses:
Selling 9,438 2.9 % 9,564 6.3 %
General and administrative 10,056 3.1 % 11,748 7.7 %

Total operating expenses

19,494 6.0 % 21,312 14.0 %
Operating loss (4,431 ) (1.4 )% (50,283 ) (33.1 )%
Financial income 289 0.1 % 1,366 0.9 %
Loss before income taxes (4,142 ) (1.3 )% (48,917 ) (32.2 )%
Benefit for taxes (9,496 ) (2.9 )% (20,387 ) (13.4 )%
Net income (loss) $ 5,354 1.6 % $ (28,530 ) (18.8 )%
Income (loss) per common share:
Basic $ 0.18 $ (0.98 )
Diluted $ 0.18 $ (0.98 )
Weighted average common shares outstanding:
Basic 29,084 29,036
Diluted 29,097 29,046
Winnebago Industries, Inc.
Unaudited Balance Sheets
(In thousands)
May 29,August 29,
20102009
ASSETS
Current assets:
Cash and cash equivalents $ 76,296 $ 36,566
Short-term investments 1,150 13,500
Receivables, net 10,105 11,717
Inventories 39,134 46,850
Prepaid expenses and other assets 3,898 3,425
Income taxes receivable 1,148 17,356
Total current assets 131,731 129,414
Property, plant, and equipment, net 24,536 28,040
Assets held for sale 6,515 6,515
Long-term investments 19,272 19,794
Investment in life insurance 23,038 22,451
Other assets 15,218 14,252
Total assets $ 220,310 $ 220,466
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 15,334 $ 10,370
Short-term ARS borrowings 610 9,100
Income taxes payable 80 299
Accrued expenses 31,788 30,185

Total current liabilities

47,812 49,954
Long-term liabilities:
Unrecognized tax benefits 6,090 9,012

Postretirement health care and deferred compensation benefits, net of
current portion

70,071 69,169
Total long-term liabilities 76,161 78,181
Stockholders' equity 96,337 92,331
Total liabilities and stockholders' equity $ 220,310 $ 220,466
Winnebago Industries, Inc.
Unaudited Statements of Cash Flows
(In thousands)
Nine Months Ended

May 29,

May 30,
20102009
Operating activities:
Net income (loss) $ 5,354 $ (28,530 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation 4,850 6,015
Stock-based compensation 414 760
Postretirement benefit income and deferred compensation expenses 927 1,030
(Reduction) provision for doubtful accounts (65 ) 58
Deferred income taxes (463 )
Increase in cash surrender value of life insurance policies (962 ) (865 )
Loss on disposal of property 14 70
Other 58 176
Change in assets and liabilities:
Inventories 7,716 57,366
Receivables and prepaid assets 843 2,164
Income taxes receivable and unrecognized tax benefits 13,736 (11,929 )
Accounts payable and accrued expenses 6,605 (11,034 )
Postretirement and deferred compensation benefits (2,679 ) (2,344 )
Net cash provided by operating activities 36,811 12,474
Investing activities:
Proceeds from the sale of investments at par 12,900 8,500
Purchases of property and equipment (1,467 ) (2,522 )
Proceeds from the sale of property 58 294
Other 127 (736 )
Net cash provided by investing activities 11,618 5,536
Financing activities:
Payments for purchase of common stock (249 ) (164 )
Payments of cash dividends (3,489 )
(Payments) borrowings on ARS portfolio (8,490 ) 9,100
Proceeds from exercise of stock options 280
Other (240 )
Net cash (used in) provided by financing activities (8,699 ) 5,447
Net increase in cash and cash equivalents 39,730 23,457
Cash and cash equivalents at beginning of period 36,566 17,851
Cash and cash equivalents at end of period $ 76,296 $ 41,308
Winnebago Industries, Inc.
Unaudited Motor Home Deliveries
Quarter EndedChange
May 29,ProductMay 30,Product%
(In units)2010Mix %2009Mix %UnitsChange
Class A gas 417 30.5 % 114 18.4 % 303 265.8 %
Class A diesel 273 20.0 % 62 10.0 % 211 340.3 %
Total Class A 690 50.5 % 176 28.4 % 514 292.0 %
Class B 76 5.6 % 56 9.0 % 20 35.7 %
Class C 600 43.9 % 388 62.6 % 212 54.6 %
Total deliveries 1,366 100.0 % 620 100.0 % 746 120.3 %
Nine Months EndedChange
May 29,ProductMay 30,Product%
(In units)2010Mix %2009Mix %UnitsChange
Class A gas 1,030 31.5 % 356 22.4 % 674 189.3 %
Class A diesel 707 21.6 % 225 14.1 % 482 214.2 %
Total Class A 1,737 53.1 % 581 36.5 % 1,156 199.0 %
Class B 202 6.2 % 99 6.2 % 103 104.0 %
Class C 1,330 40.7 % 911 57.3 % 419 46.0 %
Total deliveries 3,269 100.0 % 1,591 100.0 % 1,678 105.5 %
Winnebago Industries, Inc.
Unaudited Backlog and Dealer Inventory
As OfChange
May 29,ProductMay 30,Product
Sales order backlog (units):2010Mix2009MixUnits%
Class A gas 323 34.6 % 104 27.2 % 219 210.6 %
Class A diesel 234 25.0 % 72 18.9 % 162 225.0 %
Total Class A 557 59.6 % 176 46.1 % 381 216.5 %
Class B 34 3.6 % 2 0.5 % 32 NMF
Class C 344 36.8 % 204 53.4 % 140 68.6 %
Total backlog* 935 100.0 % 382 100.0 % 553 144.8 %
Total approximate revenue dollars ($ in thousands) $ 93,214 $ 33,556 $ 59,658 177.8 %
Dealer inventory (units) 2,000 2,324 (324 ) (13.9 )%

*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.

Contacts:

<fc:contacts xmlns="http://www.w3.org/1999/xhtml"><b>Winnebago Industries, Inc.</b><br/>Sheila Davis - PR/IR Mgr.<br/>641-585-6803<br/><a href="mailto:sdavis@winnebagoind.com">sdavis@winnebagoind.com</a></fc:contacts>