Winnebago Industries Reports Improved Results for Second Quarter Fiscal 2010

FOREST CITY, IA - March 18, 2010: Winnebago Industries, Inc., the leading United States motor home manufacturer, today reported improved financial results for the Company’s second quarter of fiscal year 2010.

“We are pleased to see a continued trend of sequential growth in revenues and gross profit”

Revenues for the second quarter of fiscal 2010 ended February 27, 2010 were $110.5 million, an increase of 247 percent, versus $31.8 million for the second quarter of fiscal 2009. The second quarter of fiscal 2010 was positively impacted by a significant increase in motor home unit deliveries, particularly in the Class A category, which resulted in an increase in production volumes and greater efficiencies and higher utilization of the manufacturing facilities. The Company reported an operating loss of $1.9 million for the quarter, versus an operating loss of $18.6 million for the second quarter of fiscal 2009. Net income for the second quarter was $706,000 versus a net loss of $10.4 million for the second quarter of fiscal 2009. On a diluted per share basis, the Company had net income of $.02 for the second quarter of fiscal 2010 versus a net loss of $.36 for the second quarter of fiscal 2009. The net income for the second quarter reflected the positive impact of $2.2 million in tax benefits associated with various tax planning initiatives and tax settlements; however, no tax benefits have been recorded on second quarter fiscal 2010 pre-tax losses which are not immediately subject to refund.

Revenues for the first six months of fiscal 2010 were $191.5 million, an increase of 89 percent, versus revenues of $101.2 million for the first six months of fiscal 2009. The Company reported an operating loss of $7.8 million for the first six months of fiscal 2010, versus an operating loss of $35.5 million for the first six months of fiscal 2009. Net loss for the first six months of fiscal of 2010 was $638,000, or $.02 per diluted share, versus an operating loss of $2.0 million, or $.69 per diluted share for the first six months of the last fiscal year. The net loss for the first six months of fiscal 2010 reflected the positive impact of $4.9 million in tax benefits associated with additional fiscal year 2009 net operating loss carryback due to recent tax law changes and the additional $2.2 million of second quarter tax benefits associated with various tax planning initiatives and tax settlements; however, no tax benefits have been recorded on the first six months of fiscal 2010 pre-tax losses which are not immediately subject to refund.

“We are pleased to see a continued trend of sequential growth in revenues and gross profit,” said Winnebago Industries’ Chairman, CEO and President Bob Olson. "After hitting our lowest shipment levels in decades during the second quarter last year, we have seen improvement in revenues and gross profit each quarter since that time. We also saw a sequential increase in dealer inventory this past quarter for the first time in two years as we increased our production levels to satisfy our sales order backlog. While we are encouraged with these improvements, the economic outlook remains uncertain and we believe retail sales will be the key driver to sustain our recovery and for continued growth going forward."

Winnebago Industries’ sales order backlog was 1,159 motor homes at February 27, 2010, an increase of 246.0% compared to the end of the second quarter of fiscal 2009.

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 19.2 percent for calendar 2009, compared to 18.3 percent for calendar 2008.

Cash and equivalents increased by $5.0 million in the first six months of fiscal 2010. A major component of this was the receipt of a federal tax refund of $21.9 million. As a result, cash and cash equivalents at the end of the quarter were $41.6 million.

Winnebago Industries, Inc.
Unaudited Statements of Income
(In thousands, except percent and per share data)
		Quarter Ended
		February 27, 2010							February 28, 2009
Net revenues		$	110,529			100.0	%		$	31,808			100.0	%
Cost of goods sold		105,745				95.7	%		43,600				137.1	%
Gross profit (deficit)		4,784				4.3	%		(11,792		)		(37.1	)%
Operating expenses
Selling		3,102				2.8	%		2,816				8.8	%
General and administrative		3,540				3.2	%		4,003				12.6	%
Total operating expenses		6,642				6.0	%		6,819				21.4	%
Operating loss		(1,858		)		(1.7	)%		(18,611		)		(58.5	)%
Financial income		364				0.3	%		633				2.0	%
Loss before income taxes		(1,494		)		(1.4	)%		(17,978		)		(56.5	)%
Benefit for taxes		(2,200		)		(2.0	)%		(7,597		)		(23.9	)%
Net income (loss)		$	706			0.6	%		$	(10,381	)		(32.6	)%
Income (loss) per common share:
Basic		$	0.02						$	(0.36	)
Diluted		$	0.02						$	(0.36	)
Weighted average common shares outstanding:
Basic		29,080							29,037
Diluted		29,091							29,046
		Six Months Ended
		February 27, 2010							February 28, 2009
Net revenues		$	191,546			100.0	%		$	101,206			100.0	%
Cost of goods sold		186,238				97.2	%		121,892				120.4	%
Gross profit (deficit)		5,308				2.8	%		(20,686		)		(20.4	)%
Operating expenses
Selling		6,331				3.3	%		6,481				6.4	%
General and administrative		6,812				3.6	%		8,334				8.2	%
Total operating expenses		13,143				6.9	%		14,815				14.6	%
Operating loss		(7,835		)		(4.1	)%		(35,501		)		(35.0	)%
Financial income		131				0.1	%		1,157				1.1	%
Loss before income taxes		(7,704		)		(4.0	)%		(34,344		)		(33.9	)%
Benefit for taxes		(7,066		)		(3.7	)%		(14,367		)		(14.2	)%
Net loss		$	(638	)		(0.3	)%		$	(19,977	)		(19.7	)%
Loss per common share:
Basic		$	(0.02	)					$	(0.69	)
Diluted		$	(0.02	)					$	(0.69	)
Weighted average common shares outstanding:
Basic		29,077							29,032
Diluted		29,088							29,041

Winnebago Industries, Inc.
Unaudited Condensed Balance Sheets
(In thousands)
		February 27,				August 29,
		2010				2009
ASSETS
Current assets:
Cash and cash equivalents		$	41,609			$	36,566
Short-term investments		9,000				13,500
Receivables, net		20,344				11,717
Inventories		59,824				46,850
Income taxes receivable		559				17,356
Prepaid and other		2,844				3,425
Total current assets		134,180				129,414
Property and equipment, net		25,646				28,040
Assets held for sale		6,515				6,515
Long-term investments, less impairments		19,748				19,794
Investment in life insurance		22,999				22,451
Other assets		15,888				14,252
Total assets		$	224,976			$	220,466
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	17,110			$	10,370
Short-term ARS borrowings		6,320				9,100
Income taxes payable		231				299
Accrued expenses		32,453				30,185
Total current liabilities		56,114				49,954
Long-term liabilities:
Unrecognized tax benefits		8,014				9,012
Postretirement health care and deferred compensation benefits, net of current portion		70,273				69,169
Total long-term liabilities		78,287				78,181
Stockholders' equity		90,575				92,331
Total liabilities and stockholders' equity		$	224,976			$	220,466

Winnebago Industries, Inc.
Unaudited Condensed Statement of Cash Flows
(In thousands)
		Six Months Ended
		February 27,				February 28,
		2010				2009
Operating activities:
Net loss		$	(638	)		$	(19,977	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		3,296				4,146
Stock-based compensation		291				526
Postretirement benefit income and deferred compensation expense		624				711
Deferred income taxes		—				(503		)
Increase in cash surrender value of life insurance policies		(535		)		(513		)
Other		(15		)		158
Change in assets and liabilities:
Inventories		(12,974		)		37,818
Receivables and prepaid assets		(8,347		)		1,290
Accounts payable and accrued expenses		8,975				(11,734		)
Income taxes receivable and unrecognized tax benefits		15,983				(12,756		)
Postretirement and deferred compensation benefits		(1,758		)		(1,424		)
Net cash provided by (used in) operating activities		4,902				(2,258		)
Investing activities:
Proceeds from the sale of investments at par		4,700				8,500
Purchases of property and equipment		(943		)		(1,344		)
Other		(396		)		(744		)
Net cash provided by investing activities		3,361				6,412
Financing activities:
Payments for purchase of common stock		(249		)		(162		)
Payments of cash dividends		—				(3,489		)
(Payments) borrowings on ARS portfolio		(2,780		)		9,100
Proceeds from issuance of treasury stock		94				—
Other		(285		)		—
Net cash (used in) provided by financing activities		(3,220		)		5,449
Net increase in cash and cash equivalents		5,043				9,603
Cash and cash equivalents at beginning of period		36,566				17,851
Cash and cash equivalents at end of period		$	41,609			$	27,454

Winnebago Industries, Inc.
Unaudited Motor Home Deliveries
		Quarter Ended														Change
		February 27,				Product			February 28,				Product
Motor home unit deliveries:		2010				Mix %			2009				Mix %			Units					%
Class A Gas		378				34.1	%		77				24.4	%		301					390.9	%
Class A Diesel		254				22.9	%		45				14.3	%		209					464.4	%
Total Class A		632				57.0	%		122				38.7	%		510					418.0	%
Class B		64				5.8	%		8				2.5	%		56					700.0	%
Class C		413				37.2	%		185				58.8	%		228					123.2	%
Total deliveries		1,109				100.0	%		315				100.0	%		794					252.1	%
		Six Months Ended														Change
		February 27,				Product			February 28,				Product
Motor home unit deliveries:		2010				Mix %			2009				Mix %			Units					%
Class A Gas		613				32.2	%		242				24.9	%		371					153.3	%
Class A Diesel		434				22.8	%		163				16.8	%		271					166.3	%
Total Class A		1,047				55.0	%		405				41.7	%		642					158.5	%
Class B		126				6.6	%		43				4.4	%		83					193.0	%
Class C		730				38.4	%		523				53.9	%		207					39.6	%
Total deliveries		1,903				100.0	%		971				100.0	%		932					96.0	%
Winnebago Industries, Inc.
Unaudited Backlog and Dealer Inventory
(Units)
		As of														Change
		February 27,				Product			February 28,				Product
Sales order backlog:		2010				Mix			2009				Mix			Units					%
Class A Gas		372				32.1	%		67				20.0	%		305					455.2	%
Class A Diesel		263				22.7	%		27				8.1	%		236					874.1	%
Total Class A		635				54.8	%		94				28.1	%		541					575.5	%
Class B		16				1.4	%		9				2.7	%		7					77.8	%
Class C		508				43.8	%		232				69.2	%		276					119.0	%
Total backlog*		1,159				100.0	%		335				100.0	%		824					246.0	%
Total approximate revenue dollars (in thousands)		$	110,916						$	27,389						$	83,527				305.0	%
Dealer inventory		2,022							2,918							(896		)			(30.7	)%

* 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.