Winnebago Industries Reports Results for First Quarter of Fiscal Year 2007

FOREST CITY, Iowa--Winnebago Industries, Inc. , a leading United States motor home manufacturer, today reported financial results for the Company’s first quarter of fiscal 2007 ended November 25, 2006.

Net income for the first quarter was $7.9 million, compared to net income of $14.6 million for the first quarter of fiscal 2006. On a diluted per share basis, the Company earned 25 cents a share for the first quarter of fiscal 2007, compared to 44 cents a share for the first quarter last year.

Revenues for the first quarter ended November 25, 2006, were $201.8 million, a decrease of 13 percent, compared to revenues of $232.3 million for the first quarter of fiscal 2006.

“While we remained solidly profitable, the motor home market continues to be challenging,” said Winnebago Industries’ Chairman and CEO Bruce Hertzke. “The first quarter of fiscal 2007 was negatively impacted by lower motor home deliveries, particularly of higher priced models in all of our product classes.”

Other factors negatively impacting the quarter were increases in retail promotional programs, raw material commodities, health care costs, as well as general and administrative costs that resulted primarily from an increase in stock-based compensation in the first quarter of fiscal 2007. While stock-based compensation expense was higher in the first quarter as a result of accelerated vesting due to an increase of retirement eligible employees, it is anticipated to be lower for the full fiscal year 2007 than fiscal 2006. These increased expenses were partially offset by increased financial income and a reduction in the effective tax rate.

“We expect continued weakness in our seasonally slower second quarter due to a challenging market environment and reluctance on the part of our dealer partners to increase inventory during the winter months,” said Hertzke.

“Dealer reaction to Winnebago Industries’ new products introduced at the Recreation Vehicle Industry Association show in Louisville, Kentucky, in late November was very positive,” said Winnebago Industries’ President Ed Barker. “The new value-priced Class A gas Winnebago Vista and Itasca Sunstar are in production now and will be arriving at our dealer locations in coming weeks. The exciting new 2008 Class A rear-engine, gas and diesel pusher Winnebago Destination and Itasca Latitude will begin arriving at our dealer locations in early spring.”

As of November 25, 2006, $22.2 million remains available under the April 12, 2006, Board of Directors common stock repurchase authorization.

Winnebago Industries will conduct a conference call in conjunction with this release at 9 a.m. Central Time today, Thursday, December 14, 2006. 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 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 NYSE Arca 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, to add your name to an automatic email list for Company news releases or for information on a dollar-based stock investment service for the Company’s stock, 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, a decline in consumer confidence, availability and price of fuel, a significant increase in interest rates, 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 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)
	Nov. 25, 2006					Nov. 26, 2005
				%					%
Net revenues	$	201,765		100.0		$	232,255		100.0
Cost of goods sold		180,381		89.4			201,091		86.6
Gross profit		21,384		10.6			31,164		13.4
Operating expenses
Selling		4,727		2.4			4,673		2.0
General and administrative		6,517		3.2			5,049		2.2
Total operating expenses		11,244		5.6			9,722		4.2
Operating income		10,140		5.0			21,442		9.2
Financial income		1,563		.8			922		.4
Income before income taxes		11,703		5.8			22,364		9.6
Provision for taxes		3,767		1.9			7,794		3.3
Net income	$	7,936		3.9		$	14,570		6.3
Income per common share:
Basic	$	0.25				$	0.44
Diluted	$	0.25				$	0.44
Weighted average common shares outstanding
Basic		31,249					32,934
Diluted		31,587					33,221

Winnebago Industries, Inc.
Unaudited Consolidated Condensed Balance Sheets
(In thousands)
		Nov. 25, 2006			Aug. 26, 2006
ASSETS
Current assets:
Cash and cash equivalents	$	12,954		$	24,934
Short-term investments		129,950			129,950
Receivables, net		23,517			20,859
Inventories		97,168			77,081
Prepaid and other		15,676			14,336
Total current assets		279,265			267,160
Property and equipment, net		55,594			56,907
Deferred income taxes		24,678			25,002
Investment in life insurance		19,669			20,814
Other assets		16,362			14,832
Total assets	$	395,568		$	384,715
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	26,675		$	27,923
Income taxes payable		9,799			7,876
Accrued expenses		42,707			44,323
Total current liabilities		79,181			80,122
Postretirement health care and deferred compensation benefits, net of current portion		87,128			86,271
Stockholders’ equity		229,259			218,322
Total liabilities and stockholders’ equity	$	395,568		$	384,715

Winnebago Industries, Inc.
Unaudited Condensed Statement of Cash Flows
(In thousands)
	Quarter Ended
		Nov. 25, 2006			Nov. 26, 2005
Operating activities:
Net income	$	7,936		$	14,570
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		2,654			2,662
Stock-based compensation		2,817			1,851
Post retirement benefit income and deferred compensation expense		419			362
Deferred income taxes		(738)			276
Increase in cash surrender value of life insurance policies		(195)			(260)
Excess tax benefit of stock options		(525)			(7)
Other		102			85
Change in assets and liabilities:
Inventories		(20,087)			6,629
Receivables and prepaid assets		(3,034)			15,284
Income taxes payable		2,440			7,432
Accounts payable and accrued expenses		(3,112)			(16,162)
Postretirement and deferred compensation benefits		(254)			(333)
Net cash (used in) provided by operating activities		(11,577)			32,389
Investing activities:
Purchases of short-term investments		(80,449)			(49,500)
Proceeds from the sale or maturity of short-term investments		80,449			32,600
Purchases of property and equipment		(1,176)			(1,398)
Other		564			162
Net cash used in investing activities		(612)			(18,136)
Financing activities:
Payments for purchase of common stock		---			(5,184)
Payments of cash dividends		(3,114)			(2,969)
Proceeds from exercise of stock options		2,798			175
Excess tax benefit of stock options		525			7
Net cash provided by (used in) financing activities		209			(7,971)
Net (decrease) increase in cash and cash equivalents		(11,980)			6,282
Cash and cash equivalents at beginning of period		24,934			19,484
Cash and cash equivalents at end of period	$	12,954		$	25,766
Certain prior year information has been reclassified to conform to the current year presentation.

Winnebago Industries, Inc.
Unaudited Motor Home Deliveries
	Quarter Ended							Change
	Nov. 25, 2006		Nov. 26, 2005					Units		%
Motor home unit deliveries
Class A Gas	772		901					(129)		(14.3)
Class A Diesel	341		422					(81)		(19.2)
Total Class A	1,113		1,323					(210)		(15.9)
Class C	1,096		1,171					(75)		(6.4)
Total deliveries	2,209		2,494					(285)		(11.4)

Winnebago Industries, Inc.
Unaudited Backlog and Dealer Inventory
(Units)
	As of						Change
	Nov. 25, 2006			Nov. 26, 2005			Units/$			%
Sales order backlog
Class A Gas		552			494			58		11.7
Class A Diesel		466			495			(29)		(5.9)
Total Class A		1,018			989			29		2.9
Class C		727			1,024			(297)		(29.0)
Total backlog(a)		1,745			2,013			(268)		(13.3)
Total approximate revenue dollars (in thousands)	$	166,905		$	184,500		$	(17,595)		(9.5)
Dealer inventory		4,551			5,036			(485)		(9.6)
(a) 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.