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Winnebago Industries Reports 2006 Revenues and Earnings

FOREST CITY, Iowa--March 16, 2006--Winnebago Industries, Inc., , the leading United States (U.S.) motor home manufacturer, today reported financial results for the Company's second quarter and first six months ended February 25, 2006.

Net income for the second quarter was $7.7 million, a decrease of 38.7 percent compared to net income of $12.6 million for the second quarter last year. On a diluted per share basis, the Company earned 23 cents a share for the second quarter of fiscal 2006, compared to net income of 37 cents a share for the second quarter last year. Included as a reduction to net income in the second quarter of fiscal 2006 was $804,000, or 2 cents per diluted share, of stock option expense due to the adoption of Statement of Financial Accounting Standards No. 123R, Share-Based Payment beginning August 28, 2005, which was not effective in the second quarter of last year.

Revenues for the second quarter of fiscal 2006 were $206.4 million, a decrease of 13.8 percent compared to revenues of $239.4 million for the second quarter of fiscal 2005.

Net income for the first six months of fiscal 2006 was $22.3 million, a decrease of 30.7 percent compared to net income of $32.1 million for same period in fiscal 2005. On a diluted per share basis, the Company earned 67 cents a share for the first six months of fiscal 2006, compared to 94 cents a share for the first six months of fiscal 2004. Included as a reduction to net income for the first six months of fiscal 2006 was $2.3 million, or 7 cents per diluted share, of stock option expense.

Revenues for the first six months of fiscal 2006 were $438.7 million, a decrease of 13.2 percent compared to revenue of $505.5 million for the same period in fiscal 2005.

"Revenues and net income for the quarter and first six months were negatively impacted primarily by lower motor home deliveries as a result of decreased industry retail demand," said Winnebago Industries' Chairman and CEO Bruce Hertzke. "We were also impacted by a shift towards lower priced motor home products. This shift in product mix is occurring industry-wide. Based on statistics from the Recreation Vehicle Industry Association for calendar 2005, Class A motor home shipments decreased 12.7 percent while Class C shipments for the industry decreased only 1.7 percent for the same period."

The Company's sales order backlog was 1,581 units at February 25, 2006, compared to the backlog of 2,108 units at February 26, 2005. Hertzke continued, "As evidenced by the composition of the backlog, we continue to see a shift in the mix of products on order by our dealer partners to lower priced motor homes. The introduction of our new Winnebago View and Itasca Navion fuel efficient Class C diesel motor homes was particularly timely and continues to have a positive impact on our Class C backlog."

According to Statistical Surveys, Inc., an independent retail reporting service, Winnebago Industries completed calendar 2005 in the number one position with combined Class A and Class C retail sales market share of 17.9 percent. "Manufacturers' and dealers' inventories were high at the beginning of calendar 2005, leading many manufacturers to promotionally discount their products into the marketplace," said Winnebago Industries' President Ed Barker. "As we've previously stated, our primary goal is profitability, so we did not participate in offering incentives at the same level as our major competitors. Consequently, our market share for the combined Class A and C markets declined from 19.0 percent for calendar 2004, driven primarily by lower Class A market share. However, as calendar 2005 progressed and discounts in the marketplace decreased, we did see recovery in our market share, achieving 19.3 percent of the combined Class A and C market for the fourth quarter of calendar 2005."

Winnebago Industries repurchased 100,000 shares of the Company's common stock for an aggregate consideration of approximately $3.1 million during the second quarter of fiscal 2006. The Company has approximately $21.7 million remaining on the current share repurchase authorization.

About Winnebago Industries

Winnebago Industries, Inc. is the 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 and Itasca 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, Chicago and Pacific Stock Exchanges and traded under the symbol WGO. Options for the Company's common stock are traded on the Chicago Board Options Exchange.

                      
                      Winnebago Industries, Inc.
              Unaudited Consolidated Statements of Income
               (In thousands, except per share amounts)
                                 Quarter Ended      Six Months Ended
                              February   February  February  February
                                  25,       26,       25,       26,
                                2006     2005 (a)    2006    2005 (a)
                              ---------- --------- --------- ---------
Net revenues                   $206,425  $239,359  $438,680  $505,492
Cost of goods sold              186,105   210,098   387,196   436,167
                              ---------- --------- --------- ---------
   Gross profit                  20,320    29,261    51,484    69,325
                              ---------- --------- --------- ---------

Operating expenses
   Selling                        4,505     4,564     9,178     9,118
   General and administrative     5,284     5,798    10,333    11,355
                              ---------- --------- --------- ---------
      Total operating
       expenses                   9,789    10,362    19,511    20,473
                              ---------- --------- --------- ---------

Operating income                 10,531    18,899    31,973    48,852
Financial income                  1,314       639     2,236     1,133
                              ---------- --------- --------- ---------

Income before income taxes       11,845    19,538    34,209    49,985
Provision for taxes               4,145     6,967    11,939    17,870
                              ---------- --------- --------- ---------

Net income                       $7,700   $12,571   $22,270   $32,115
                              ========================================

Income per common share:
     Basic                        $0.23     $0.37     $0.68     $0.95
     Diluted                      $0.23     $0.37     $0.67     $0.94
Weighted average common
   shares outstanding:
     Basic                       32,806    33,672    32,870    33,647
     Diluted                     33,147    34,254    33,167    34,224

(a) As restated


                      Winnebago Industries, Inc.
            Unaudited Consolidated Condensed Balance Sheets
                            (In thousands)
                                              February 25, August 27,
                                                  2006         2005
                                              ------------ -----------
ASSETS
Current assets:
   Cash and cash equivalents                      $18,825     $19,484
   Short-term investments                         144,250      93,100
   Receivables, net                                29,225      40,910
   Inventories                                     90,888     120,655
   Other                                           13,838      13,943
                                              ------------ -----------
      Total current assets                        297,026     288,092
Property and equipment, net                        60,349      63,853
Deferred income taxes                              24,236      24,997
Investment in life insurance                       20,437      22,066
Other assets                                       15,849      13,952
                                              ------------ -----------
      Total assets                               $417,897    $412,960
                                              ============ ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                               $33,436     $37,229
   Income taxes payable                             7,523       4,458
   Accrued expenses                                42,217      48,936
                                              ------------ -----------
      Total current liabilities                    83,176      90,623
Postretirement health care and deferred
  compensation benefits, net of current
  portion                                          86,541      86,450
Stockholders' equity                              248,180     235,887
                                              ------------ -----------
      Total liabilities and stockholders'
       equity                                    $417,897    $412,960
                                              ============ ===========


                      Winnebago Industries, Inc.
              Unaudited Condensed Statement of Cash Flows
                        (Dollars in thousands)
                                                 Six Months Ended
                                             February 25, February 26,
                                                2006        2005 (a)
                                             ------------ ------------
Operating activities:
   Net income                                    $22,270      $32,115
Adjustments to reconcile net income to net
 cash
  provided by operating activities:
  Depreciation                                     5,328        4,931
  Stock-based compensation                         2,895           41
  Deferred income taxes                            1,538           (3)
  Deferred compensation and postretirement
   expense                                           638          630
  Excess tax benefit from stock-based
   compensation                                     (174)         ---
  Other                                             (212)          33
Change in operating assets and liabilities:
  Receivable and other assets                     10,986       18,210
  Inventories                                     29,767      (12,926)
  Accounts payable and accrued expenses          (10,336)      (3,436)
  Income taxes payable                             3,257        7,005
  Postretirement and deferred compensation
   benefits                                         (663)        (352)
                                             ------------ ------------
Net cash provided by operating activities         65,294       46,248
                                             ------------ ------------

Investing activities:
  Purchases of short-term investments           (110,100)    (147,473)
  Proceeds from the sale or maturity of
   short-term investments                         58,950      101,094
  Purchases of property and equipment             (1,968)      (4,178)
  Other                                               70         (365)
                                             ------------ ------------
Net cash used in investing activities            (53,048)     (50,922)
                                             ------------ ------------

Financing activities:
  Payments for purchase of common stock           (8,284)      (1,787)
  Payment of cash dividends                       (5,922)      (4,712)
  Proceeds from issuance of treasury stock         1,127        2,835
  Excess tax benefit from stock-based
   compensation                                      174          ---
                                             ------------ ------------
Net cash used in financing activities            (12,905)      (3,664)
                                             ------------ ------------

Net decrease in cash and cash equivalents           (659)      (8,338)

Cash and cash equivalents at beginning of
 period                                           19,484       24,445
                                             ------------ ------------

Cash and cash equivalents at end of period       $18,825      $16,107
                                             ============ ============

Certain prior period information has been reclassified to conform to
the current year presentation.
(a) As restated


                      Winnebago Industries, Inc.
                    Unaudited Motor Home Deliveries

                               Quarter Ended       Six Months Ended
                           2/25/2006  2/26/2005  2/25/2006  2/26/2005
                           ---------- ---------- ---------- ----------
Unit deliveries
  Class A gas                    658      1,117      1,559      2,443
  Class A diesel                 471        550        893      1,146
  Class C                      1,139        887      2,310      1,790
                           ---------- ---------- ---------- ----------
     Total deliveries          2,268      2,554      4,762      5,379


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

                                                         As of
                                                 2/25/2006  2/26/2005
                                                 ---------- ----------
Sales order backlog
  Class A gas                                          464        683
  Class A diesel                                       245        453
  Class C                                              872        972
                                                 ---------- ----------
     Total backlog (a)                               1,581      2,108
Total approximate revenue
  dollars (in thousands)                          $127,800   $181,400

Dealer inventory                                     5,436      5,601

(a) The Company includes in its backlog all accepted purchase
orders from dealers scheduled to be shipped within the next six
months. Orders in backlog can be canceled 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.