Winnebago Industries Reports 26% Net Income Increase for the First Quarter of Fiscal Year 2008
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FOREST CITY, Iowa December 20, 2007; Winnebago Industries, Inc., a leading United States motor home manufacturer, today reported financial results for the Company’s first quarter of fiscal year 2008 ended December 1, 2007.
Revenues for the 14-week quarter were $215.1 million, an increase of 6.6 percent, compared to revenues of $201.8 million for the 13-week first quarter last year. Net income for the first quarter was $10.0 million, an increase of 25.5 percent, compared to net income of $7.9 million for the first quarter of fiscal 2007. On a diluted per share basis, the Company earned 34 cents a share for the first quarter of fiscal 2008, compared to 25 cents per diluted share for the first quarter last year.
“We were pleased with our performance during the quarter, despite difficult market conditions,” said Winnebago Industries’ Chairman and CEO Bruce Hertzke. “In addition to the extra week in the first quarter, our results include a positive shift in the mix to a higher percentage of Class A products delivered and fewer dollars spent on retail promotional programs, which resulted in both higher revenues and higher margins for the Company.”
During the Company’s first quarter ended December 1, 2007, Winnebago Industries completed the $60 million repurchase authorization that was approved in June 2007 with the repurchase of approximately 676,000 shares of common stock for an aggregate cost of approximately $17.5 million. A total of approximately 2.2 million shares were repurchased under the $60 million repurchase program.
In the Company’s Board of Directors meeting held yesterday, a new $60 million stock repurchase program was authorized. The Board of Directors also declared a quarterly cash dividend of 12 cents a share, payable on April 7, 2008 to shareholders of record as of March 7, 2008.
“We remain committed to increasing shareholder value through the repurchase of our stock and through the payment of quarterly cash dividends,” said Hertzke.
"Our new product introductions at RVIA's National RV Show in Louisville, KY last month, including the new ERA Class B motor home that debuted at the show, were extremely well received by our dealer partners," said Winnebago Industries' President Bob Olson. “Receiving the Quality Circle Award from the Recreation Vehicle Dealers’ Association for the 12th consecutive year was also a highlight of the show. While we are pleased with the reception of our new 2008 products and our accomplishments in the first quarter of fiscal 2008, we continue to anticipate softness in motor home sales, particularly during our seasonally slow second quarter. Statistical Surveys, the retail reporting service for the RV industry, has reported continued softness in retail motor home sales, down 8.9 percent for the month of October and down 5.2 percent calendar year to date through October 2007 as compared to last year. Consumer confidence remains weak and we believe it will take some time for the recent interest rate cuts to have a positive impact on our market.”
At the beginning of the quarter, the Company adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – An Interpretation of FASB Statement No. 109” (FIN 48). As a result of the adoption, the Company recognized a cumulative effect adjustment of $8.5 million as a reduction to retained earnings, an increase of deferred tax assets of $7.1 million, and an increase of $15.6 million in tax liabilities. The total amount of unrecognized tax benefit liability was $21.8 million at the end of the first quarter, of which $19.6 million was long-term and $2.2 million was current.
About Winnebago Industries
Winnebago Industries, Inc. is a 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 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 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, 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.
Winnebago Industries, Inc.
Unaudited Consolidated Statements of Income
(In thousands, except percent and per share data)
Fourteen Weeks Ended
Thirteen Weeks Ended
Dec. 1, 2007 Nov. 25, 2006
% %
Net revenues $ 215,142 100.0 $ 201,765 100.0
Cost of goods sold 189,502 88.1 180,381 89.4
Gross profit 25,640 11.9 21,384 10.6
Operating expenses
Selling 5,605 2.6 4,727 2.4
General and administrative 6,451 3.0 6,517 3.2
Total operating expenses 12,056 5.6 11,244 5.6
Operating income 13,584 6.3 10,140 5.0
Financial income 1,240 0.6 1,563 0.8
Income before income taxes 14,824 6.9 11,703 5.8
Provision for taxes 4,862 2.3 3,767 1.9
Net income $ 9,962 4.6 $ 7,936 3.9
Income per common share:
Basic $ 0.34 $ 0.25
Diluted $ 0.34 $ 0.25
Weighted average common shares outstanding
Basic 29,352 31,249
Diluted 29,440 31,587
Winnebago Industries, Inc.
Unaudited Consolidated Condensed Balance Sheets
(In thousands)
Dec. 1, 2007
Aug. 25, 2007
ASSETS
Current assets:
Cash and cash equivalents $ 4,836 $ 6,889
Short-term investments 89,347 102,650
Receivables, net 17,464 30,285
Inventories 120,117 101,208
Prepaid and other 16,996 16,668
Total current assets 248,760 257,700
Property and equipment, net 50,210 51,389
Deferred income taxes 26,837 19,856
Investment in life insurance 20,140 20,015
Other assets 18,061 17,550
Total assets $ 364,008 $ 366,510
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 33,877 $ 35,286
Income taxes payable 2,774 4,252
Accrued expenses 47,195 49,299
Total current liabilities 83,846 88,837
Long-term liabilities:
Unrecognized tax benefits 19,555 ---
Postretirement health care and deferred compensation benefits, net of current portion
70,143
69,319
Total long-term liabilities 89,698 69,319
Stockholders’ equity 190,464 208,354
Total liabilities and stockholders’ equity $ 364,008 $ 366,510
Winnebago Industries, Inc.
Unaudited Condensed Statements of Cash Flows
(In thousands)
Fourteen Weeks
Ended
Thirteen Weeks
Ended
Dec. 1, 2007 Nov. 25, 2006
Operating activities:
Net income $ 9,962 $ 7,936
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 2,713 2,654
Stock-based compensation 2,270 2,817
Postretirement benefit income and deferred compensation expense
377
419
Deferred income taxes 478 (738 )
Increase in cash surrender value of life insurance policies (170 ) (195 )
Excess tax benefit from stock-based compensation --- (525 )
Other 62 102
Change in assets and liabilities:
Inventories (18,909 ) (20,087 )
Receivables and prepaid assets 12,724 (3,034 )
Accounts payable and accrued expenses (5,879 ) (3,112 )
Income taxes payable 4,303 2,440
Postretirement and deferred compensation benefits (344 ) (254 )
Net cash provided by (used in) operating activities 7,587 (11,577 )
Investing activities:
Purchases of short-term investments (150,072 ) (80,449 )
Proceeds from the sale or maturity of short-term investments 163,375 80,449
Purchases of property and equipment (1,505 ) (1,176 )
Other (431 ) 564
Net cash provided by (used in) investing activities 11,367 (612 )
Financing activities:
Payments for purchase of common stock (17,519 ) ---
Payments of cash dividends (3,546 ) (3,114 )
Proceeds from issuance of treasury stock 58 2,798
Excess tax benefit from stock-based compensation ---- 525
Net cash (used in) provided by financing activities (21,007 ) 209
Net decrease in cash and cash equivalents (2,053 ) (11,980 )
Cash and cash equivalents at beginning of period 6,889 24,934
Cash and cash equivalents at end of period $ 4,836 $ 12,954
Winnebago Industries, Inc.
Unaudited Motor Home Deliveries
14-Weeks
Ended
13-Weeks
Ended
Change
Dec. 1, 2007 Nov. 25, 2006 Units %
Motor home unit deliveries
Class A Gas 836 772 64 8.3
Class A Diesel 363 341 22 6.5
Total Class A 1,199 1,113 86 7.7
Class C 956 1,096 (140 ) (12.8 )
Total deliveries 2,155 2,209 (54 ) (2.4 )
Winnebago Industries, Inc.
Unaudited Backlog and Dealer Inventory
(Units)
As of Change
Dec. 1, 2007 Nov. 25, 2006 Units %
Sales order backlog
Class A Gas 449 552 (103 ) (18.7 )
Class A Diesel 299 466 (167 ) (35.8 )
Total Class A 748 1,018 (270 ) (26.5 )
Class C 1,085 727 358 49.2
Total backlog(a)
1,833 1,745 88 5.0
Total approximate revenue dollars (in thousands)
$
161,743
$
166,905
$
(5,162
)
(3.1
)
Dealer inventory 4,364 4,551 (187 ) (4.1 )
(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.