SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
__X__ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended May 30, 1998
-------------------------------------
OR
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________________ to ______________________
Commission file number 1-6403
WINNEBAGO INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
IOWA 42-0803978
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P. O. Box 152, Forest City, Iowa 50436
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (515) 582-3535
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes __X__ No ____.
There were 23,048,454 shares of $.50 par value common stock outstanding on July
8, 1998.
<PAGE>
WINNEBAGO INDUSTRIES, INC. AND SUBSIDIARIES
INDEX TO REPORT ON FORM 10-Q
Page Number
-----------
PART I. FINANCIAL INFORMATION: (Interim period information unaudited)
Consolidated Balance Sheets 1 & 2
Unaudited Consolidated Statements of Operations 3
Unaudited Consolidated Condensed Statements of Cash Flows 4
Unaudited Condensed Notes to Consolidated Financial Statements 5 & 6
Management's Discussion and Analysis of Financial Condition 7 - 10
and Results of Operations
PART II. OTHER INFORMATION 11 & 12
<PAGE>
Part I Financial Information
WINNEBAGO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Dollars in thousands
MAY 30, AUGUST 30,
ASSETS 1998 1997
- ------------------------------------------------------ ---------- ----------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 54,268 $ 32,130
Receivables, less allowance for doubtful
accounts ($2,270 and $1,429, respectively) 25,980 31,322
Dealer financing receivables less allowance
for doubtful accounts ($182 and $155, respectively) 17,267 13,336
Inventories 50,634 53,584
Prepaid expenses 13,566 5,872
Deferred income taxes 4,917 4,917
---------- ----------
Total current assets 166,632 141,161
---------- ----------
PROPERTY AND EQUIPMENT, at cost
Land 1,161 1,167
Buildings 38,662 42,455
Machinery and equipment 67,702 66,142
Transportation equipment 5,043 5,004
---------- ----------
112,568 114,768
Less accumulated depreciation 80,533 81,175
---------- ----------
Total property and equipment, net 32,035 33,593
---------- ----------
LONG-TERM NOTES RECEIVABLE, less allowances
($1,541 and $1,465, respectively) 5,768 5,692
---------- ----------
INVESTMENT IN LIFE INSURANCE AND
OTHER LONG-TERM INVESTMENTS 20,976 17,641
---------- ----------
DEFERRED INCOME TAXES, NET 14,900 14,900
---------- ----------
OTHER ASSETS 486 488
---------- ----------
TOTAL ASSETS $ 240,797 $ 213,475
========== ==========
</TABLE>
See Unaudited Condensed Notes to Consolidated Financial Statements
<PAGE>
WINNEBAGO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Dollars in thousands
MAY 30, AUGUST 30,
LIABILITIES AND STOCKHOLDERS' EQUITY 1998 1997
- -------------------------------------------------- ---------- ----------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Current maturities of long-term debt $ - - - $ 695
Accounts payable, trade 23,332 20,471
Income tax payable 20,100 - - -
Accrued expenses:
Insurance 3,411 2,687
Product warranties 5,079 3,329
Vacation liability 3,539 3,012
Promotional 5,260 2,508
Other 8,938 8,524
---------- ----------
Total current liabilities 69,659 41,226
---------- ----------
POSTRETIREMENT HEALTH CARE AND DEFERRED
COMPENSATION BENEFITS 51,069 48,367
---------- ----------
STOCKHOLDERS' EQUITY
Capital stock, common, par value $.50; authorized
60,000,000 shares 12,933 12,927
Additional paid-in capital 22,590 23,109
Reinvested earnings 106,653 92,179
---------- ----------
142,176 128,215
Less treasury stock, at cost 22,107 4,333
---------- ----------
Total stockholders' equity 120,069 123,882
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 240,797 $ 213,475
========== ==========
</TABLE>
See Unaudited Condensed Notes to Consolidated Financial Statements
<PAGE>
WINNEBAGO INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
================================================================================
<TABLE>
<CAPTION>
IN THOUSANDS EXCEPT PER SHARE DATA
THIRTEEN THIRTY-NINE
WEEKS ENDED WEEKS ENDED
------------------------ ------------------------
May 30, May 31, May 30, May 31,
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net revenues $ 150,515 $ 117,226 $ 395,120 $ 336,820
Cost of goods sold 129,610 101,046 341,437 295,362
---------- ---------- ---------- ----------
Gross profit 20,905 16,180 53,683 41,458
---------- ---------- ---------- ----------
Operating expenses:
Selling and delivery 4,645 6,998 14,564 19,999
General and administrative 6,029 3,668 15,741 15,419
---------- ---------- ---------- ----------
Total operating expenses 10,674 10,666 30,305 35,418
---------- ---------- ---------- ----------
Operating income 10,231 5,514 23,378 6,040
Financial income 860 350 2,244 1,464
---------- ---------- ---------- ----------
Pre-tax income from continuing operations 11,091 5,864 25,622 7,504
Provision for taxes 3,757 2,144 8,600 4,752
---------- ---------- ---------- ----------
Income from continuing operations 7,334 3,720 17,022 2,752
Discontinued operations:
Gain from sale of discontinued Cycle-Sat subsidiary
(includes a loss on operations of $160 less
applicable income tax credits of $123 and a
gain on disposal of $16,632 less income taxes
of $13,462) - - - - - - - - - 16,472
---------- ---------- ---------- ----------
Net income $ 7,334 $ 3,720 $ 17,022 $ 19,224
========== ========== ========== ==========
Earnings per share - basic (Note 7):
Income from continuing operations $ .31 $ .15 $ .70 $ .11
Net income $ .31 $ .15 $ .70 $ .76
Earnings per share - assuming dilution (Note 7):
Income from continuing operations $ .31 $ .15 $ .69 $ .11
Net income $ .31 $ .15 $ .69 $ .75
</TABLE>
See Unaudited Condensed Notes to Consolidated Financial Statements.
================================================================================
<PAGE>
WINNEBAGO INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Dollars in thousands
Increase (decrease) in cash and cash equivalents THIRTY-NINE WEEKS ENDED
-------------------------
May 30, May 31,
1998 1997
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 17,022 $ 19,224
Adjustments to reconcile net income to net cash from
operating activities:
Pre-tax gain on sale of Cycle-Sat subsidiary - - - (29,811)
Depreciation and amortization 4,143 5,437
Realized and unrealized gains on investments, net - - - (137)
Proceeds from sale of trading securities - - - 4,453
Other 1,431 1,130
Change in assets and liabilities:
(Increase) decrease in accounts receivable (2,287) 1,273
Decrease in inventories 2,950 10,569
Increase in accounts payable and accrued expenses 9,028 3,898
Increase in income taxes payable 20,100 - - -
Increase in postretirement benefits 2,559 1,028
Other - - - (2,194)
---------- ----------
Net cash provided by operating activities 54,946 14,870
---------- ----------
Cash flows provided (used) by investing activities:
Gross proceeds from the sale of Cycle-Sat subsidiary - - - 55,883
Payments to minority shareholder from sale of Cycle-Sat - - - (7,160)
Purchases of property and equipment (3,194) (3,125)
Investments in dealer receivables (44,559) (28,782)
Collections of dealer receivables 40,601 29,191
Other (4,126) 1,580
---------- ----------
Net cash (used) provided by investing activities (11,278) 47,587
---------- ----------
Cash flows used by financing activities and capital transactions:
Payments for purchase of common stock (19,572) - - -
Payment of long-term debt of discontinued operations - - - (13,220)
Payments of long-term debt and capital leases (695) (2,002)
Payment of cash dividends (2,548) (2,542)
Other 1,285 536
---------- ----------
Net cash used by financing activities and
capital transactions (21,530) (17,228)
---------- ----------
Net increase in cash and cash equivalents 22,138 45,229
Cash and cash equivalents - beginning of period 32,130 797
---------- ----------
Cash and cash equivalents - end of period $ 54,268 $ 46,026
========== ==========
</TABLE>
See Unaudited Condensed Notes to Consolidated Financial Statements.
<PAGE>
WINNEBAGO INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of management, the accompanying unaudited consolidated
condensed financial statements contain all adjustments, consisting of
normal recurring accruals, necessary to present fairly the consolidated
financial position as of May 30, 1998, the consolidated results of
operations for the 39 and 13 weeks ended May 30, 1998 and May 31, 1997,
and the consolidated cash flows for the 39 weeks ended May 30, 1998 and
May 31, 1997. The results of operations for the 39 weeks ended May 30,
1998, are not necessarily indicative of the results to be expected for
the full year.
2. Inventories are valued at the lower of cost or market, with cost being
determined under the last-in, first-out (LIFO) method and market defined
as net realizable value.
Inventories are composed of the following (dollars in thousands):
May 30, August 30,
1998 1997
------------ ------------
Finished goods................ $ 22,409 $ 27,577
Work in process............... 13,618 13,842
Raw materials................. 33,144 29,907
------------ ------------
69,171 71,326
LIFO reserve.................. (18,537) (17,742)
------------ ------------
$ 50,634 $ 53,584
============ ============
3. Since March, 1992, the Company has had a financing and security agreement
with NationsCredit Corporation (NationsCredit). Terms of the agreement
limit borrowings to the lesser of $30,000,000 or 75 percent of eligible
inventory (fully manufactured recreation vehicles and motor home chassis
and related components). Borrowings are secured by the Company's
receivables and inventory. Borrowings under the agreement bear interest
at the prime rate, as defined in the agreement, plus 50 basis points. The
line of credit is available and continues during successive one-year
periods unless either party provides at least 90-days' notice prior to
the end of the one-year period to the other party that they wish to
terminate the line of credit. The agreement also contains certain
restrictive covenants including maintenance of minimum net worth, working
capital and current ratio. As of May 30, 1998, the Company was in
compliance with these covenants. There were no outstanding borrowings
under the line of credit at May 30, 1998 or August 30, 1997.
4. It is customary practice for companies in the recreation vehicle industry
to enter into repurchase agreements with lending institutions which have
provided wholesale floor plan financing to dealers. The Company's
agreements provide for the repurchase of its products from the financing
institution in the event of repossession upon a dealer's default. The
Company was contingently liable for approximately $162,888,000 and
$115,637,000 under repurchase agreements with lending institutions as of
May 30, 1998 and August 30, 1997, respectively. Included in these
contingent liabilities as of May 30, 1998 and August 30, 1997 are
approximately $24,954,000 and $24,868,000, respectively, of certain
dealer receivables subject to recourse agreements with NationsCredit and
Green Tree Financial Corporation.
5. For the periods indicated, the Company paid cash for the following
(dollars in thousands):
THIRTY-NINE WEEKS ENDED
------------------------------
May 30, May 31,
1998 1997
----------- -----------
Interest $ 364 $ 522
Income taxes 6,849 14,035
<PAGE>
6. As of May 30, 1998, the Company has repurchased approximately $19.6
million, or 2.1 million shares, of its common stock since announcing the
plan on December 29, 1997 to repurchase up to $36.5 million of its common
stock within 18 months (1,920,600 shares were from the Estate of John K.
Hanson with an aggregate purchase price of approximately $17 million).
Subsequent to May 30, 1998, the Company repurchased approximately an
additional 486,000 shares of its common stock with an aggregate purchase
price of approximately $5.7 million.
7. Effective December 15, 1997, the Company adopted Statement of Financial
Accounting Standards No. 128, "EARNINGS PER SHARE" (SFAS No. 128).
Earnings per share amounts presented for the 13 and 39 weeks ended May
31, 1997 have been restated for the adoption of SFAS No. 128. The
following table reflects the calculation of basic and diluted earnings
per share.
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
------------------------ ------------------------
MAY 30, MAY 31, MAY 30, MAY 31,
IN THOUSANDS EXCEPT PER SHARE DATA 1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
EARNINGS PER SHARE - BASIC
--------------------------
Income from continuing operations $ 7,334 $ 3,720 $ 17,022 $ 2,752
---------- ---------- ---------- ----------
Weighted average shares outstanding 23,642 25,460 24,434 25,423
---------- ---------- ---------- ----------
Income per share from continuing
operations - basic $ .31 $ .15 $ .70 $ .11
---------- ---------- ---------- ----------
EARNINGS PER SHARE - ASSUMING DILUTION
--------------------------------------
Income from continuing operations $ 7,334 $ 3,720 $ 17,022 $ 2,752
---------- ---------- ---------- ----------
Weighted average shares outstanding 23,642 25,460 24,434 25,423
Dilutive impact of options outstanding 270 88 196 112
---------- ---------- ---------- ----------
Weighted average shares & potential
dilutive shares outstanding 23,912 25,548 24,630 25,535
---------- ---------- ---------- ----------
Income per share from continuing
operations - assuming dilution $ .31 $ .15 $ .69 $ .11
---------- ---------- ---------- ----------
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Thirteen Weeks Ended May 30, 1998 Compared to Thirteen Weeks ended May 31, 1997
Net revenues for the 13 weeks ended May 30, 1998 were $150,515,000, an increase
of $33,289,000, or 28.4 percent from the 13 week period ended May 31, 1997.
Motor home shipments (Class A and C) were 2,554 units, an increase of 535 units,
or 26.5 percent, during the third quarter of fiscal 1998 compared to the third
quarter of fiscal 1997. During the 13 weeks ended May 30, 1998, industry demand
for motorized recreation vehicles remained strong which resulted in a much
improved spring selling season. The Company's 1998 products continued to be
received well by dealers and retail customers. Orders for the Company's motor
homes continue to run considerably ahead of last year and long-term prospects
remain bright.
Gross profit, as a percent of net revenues, was 13.9 percent for the 13 weeks
ended May 30, 1998 compared to 13.8 percent for the 13 weeks ended May 31, 1997.
The Company's increased volume of production and sales of motor homes resulted
in the improved margins.
Selling and delivery expenses were $4,645,000 or 3.1 percent of net revenues
during the third quarter of fiscal 1998 compared to $6,998,000 or 6.0 percent of
net revenues during the third quarter of fiscal 1997. The decreases in dollars
and percentage can be attributed primarily to significant decreases in
promotional programs during the third quarter of fiscal 1998 when compared to
the third quarter of fiscal 1997. Operating expenses for Winnebago Industries
Europe GmbH (WIE), a subsidiary of the Company, are reflected in the third
quarter results of fiscal 1997. Due to the sale of this subsidiary during the
fourth quarter of fiscal 1997, WIE had no impact on the Company's results for
the third quarter of fiscal 1998. Increased sales volume, during the third
quarter of fiscal 1998, also contributed to the decrease in percentage.
General and administrative expenses increased by $2,361,000 to $6,029,000
comparing the 13 weeks ended May 30, 1998 to the 13 week period ended May 31,
1997 and increased as a percentage of net revenues to 4.0 percent from 3.1
percent. The increases in dollars and percentage can be attributed primarily to
increases in the Company's employee bonus programs, an increase in bad debt
accruals for Winnebago Acceptance Corporation (WAC), a finance subsidiary, and
increased costs in the Company's postretirement health care benefits.
The Company had net financial income of $860,000 for the third quarter of fiscal
1998 compared to net financial income of $350,000 for the comparable quarter of
fiscal 1997. During the 13 weeks ended May 30, 1998, the Company recorded
$719,000 of interest income and gains of $141,000 in foreign currency
transactions. During the 13 weeks ended May 31, 1997, the Company recorded
$616,000 of interest income and losses of $266,000 in foreign currency
transactions.
For the 13 weeks ended May 30, 1998, the Company had income before taxes of
$11,091,000 and a provision for taxes of $3,757,000 resulting in net income of
$7,334,000 or $.31 per basic share. For the 13 weeks ended May 31, 1997, the
Company had income before taxes of $5,864,000 and a provision for taxes of
$2,144,000 resulting in net income of $3,720,000 or $.15 per basic share.
Thirty-Nine Weeks Ended May 30, 1998 Compared to Thirty-Nine Weeks Ended May 31,
1997
Net revenues for the 39 weeks ended May 30, 1998 were $395,120,000, an increase
of $58,300,000, or 17.3 percent from the 39 week period ended May 31, 1997.
Motor home shipments (Class A and C) were 6,625 units, an increase of 820 units,
or 14.1 percent, during the 39 weeks ended May 30, 1998 when compared to the 39
weeks ended May 31, 1997. Industry demand for motorized recreation vehicles
continued to remain strong as did the dealer's acceptance of the Company's 1998
products.
<PAGE>
Gross profit, as a percent of net revenues, was 13.6 percent for the 39 weeks
ended May 30, 1998 compared to 12.3 percent for the 39 weeks ended May 31, 1997.
The increase in gross profit percentage during the 39 weeks ended May 30, 1998
was due primarily to increased volume of production and sales of motor homes.
When comparing the 39 weeks ended May 30, 1998 to the 39 weeks ended May 31,
1997, the Company allowed a significantly larger amount of discounts during the
period ended May 31, 1997 to encourage sluggish motor home sales. Also during
the period ended May 31, 1997, the Company recorded reductions in valuations of
finished goods and parts inventories at WIE.
Selling and delivery expenses were $14,564,000 or 3.7 percent of net revenues
during the 39 weeks ended May 30, 1998 compared to $19,999,000 or 5.9 percent of
net revenues during the 39 weeks ended May 31, 1997. The decrease in dollars and
percentage can be attributed primarily to significant decreases in promotional
programs during the first three quarters of fiscal 1998 when compared to the
first three quarters of fiscal 1997. Operating expenses for WIE are reflected in
the Company's results for the 39 weeks ended May 31, 1997. Due to the sale of
WIE, during the fourth quarter of fiscal 1997, there are no expenses for WIE
reflected in the 39 weeks ended May 30, 1998. Increased sales volume, during the
first three quarters of fiscal 1998, also contributed to the decrease in
percentage.
General and administrative expenses increased by $322,000 to $15,741,000
comparing the first three quarters of fiscal 1998 to the first three quarters of
fiscal 1997 but decreased as a percentage of net revenues to 4.0 percent from
4.6 percent. Results for the 39 weeks ended May 30, 1998 included increased
costs in the Company's employee bonus programs and product liability expenses
whereas the 39 weeks ended May 31, 1997 reflected operating expenses of WIE.
Increased sales volume during the first three quarters of fiscal 1998
contributed to the decrease in percentage.
The Company had net financial income of $2,244,000 for the 39 weeks ended May
30, 1998 compared to net financial income of $1,464,000 for the 39 weeks ended
May 31, 1997. During the first three quarters of fiscal 1998, the Company
recorded $2,090,000 of interest income and gains of $154,000 in foreign currency
transactions. During the first three quarters of fiscal 1997, the Company
recorded $1,562,000 of interest income, $137,000 of realized and unrealized
gains in its trading securities portfolio and losses of $235,000 in foreign
currency transactions.
For the 39 weeks ended May 30, 1998, the Company had pre-tax income of
$25,622,000 and a provision for taxes of $8,600,000 resulting in income of
$17,022,000 or $.70 per basic share. For the 39 weeks ended May 31, 1997, the
Company had pre-tax income from continuing operations of $13,882,000 and a
pre-tax loss from WIE of $6,378,000. The $6,378,000 pre-tax loss of WIE was
considered an operating loss of a foreign subsidiary that does not qualify for a
tax deduction; therefore, the Company was required to record a provision for
taxes of $4,752,000 resulting in income from continuing operations of $2,752,000
or $.11 per basic share for the 39 weeks ended May 31, 1997.
For the 39 weeks ended May 31, 1997, the Company recorded a gain from the sale
of the discontinued Cycle-Sat subsidiary of $16,472,000 (net of income taxes of
$13,339,000), or $.65 per basic share.
During the 39 weeks ended May 30, 1998, the Company had net income of
$17,022,000, or $.70 per basic share, compared to $19,224,000, or $.76 per basic
share for the 39 weeks ended May 31, 1997.
LIQUIDITY AND FINANCIAL CONDITION
The Company meets its working capital and capital equipment requirements and
cash requirements of subsidiaries with funds generated internally and borrowings
under agreements with financial institutions.
<PAGE>
At May 30, 1998, working capital was $96,973,000, a decrease of $2,962,000 from
the amount at August 30, 1997. The Company's principal use of cash during the 39
weeks ended May 30, 1998 was $19,572,000 for the purchase of shares of the
Company's Common Stock. The Company's principal sources and uses of cash during
the 39 weeks ended May 30, 1998 are set forth in the unaudited consolidated
condensed statement of cash flows for that period.
Principal known demands at May 30, 1998 on the Company's liquid assets for the
remainder of fiscal 1998 include approximately $2,300,000 of cash dividends
declared by the Board of Directors on March 19, 1998 (payable on July 6, 1998 to
shareholders of record as of June 5, 1998) and $1,300,000 of capital
expenditures (primarily equipment replacement). On December 29, 1997, the
Company's Board of Directors authorized the repurchase of outstanding shares of
the Company's Common Stock. As of May 30, 1998, approximately $16,900,000
remained under this authorization and may be used by the Company from time to
time to repurchase additional shares.
Management currently expects its cash on hand, funds from operations and
borrowings available under existing credit facilities to be sufficient to cover
both short-term and long-term operating requirements.
NEW ACCOUNTING STANDARDS
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income" was issued in June, 1997 and must be adopted by the
Company no later than fiscal 1999. The statement requires companies to disclose
comprehensive income and its components in the general purpose financial
statements.
SFAS No. 131, "Disclosure About Segments of the Enterprise and Related
Information" was issued in June, 1997 and must be adopted by the Company no
later than fiscal 1999. The statement establishes standards which redefine how
operating segments are determined and requires public companies to report
financial and descriptive information about reportable operating segments.
SFAS No. 132, "Employer's Disclosures About Pensions and Other Postretirement
Benefits" was issued in February, 1998 and must be adopted by the Company no
later than fiscal 1999. The statement revises employers' disclosures about
pension and other postretirement benefit plans. It does not change the
measurement or recognition of those plans.
The Company has not completed the process of evaluating the effects of SFAS No.
130, SFAS No. 131, and SFAS No. 132 but does not believe the new accounting
pronouncements will significantly effect the Company's financial condition or
operating results.
FORWARD LOOKING INFORMATION
Except for the historical information contained herein, certain of the matters
discussed in this report are "forward looking statements" as defined in the
Private Securities Litigation Reform Act of 1995, which involve risks and
uncertainties, including, but not limited to demand from customers, effects of
competition, the general state of the economy, interest rates, consumer
confidence, changes in the product or customer mix or revenues and in the level
of operating expenses and other factors which may be disclosed throughout this
Form 10-Q. Any forecasts and projections in this report are "forward-looking
statements," and are based on management's current expectations of the Company's
near-term results, based on current information available pertaining to the
Company, including the aforementioned factors. Actual results could differ
materially.
<PAGE>
MILLENNIUM CHANGE
The Company has conducted a comprehensive review of its computer systems to
identify the systems that could be affected by the "Year 2000" issue and began
an implementation plan in September, 1996 to resolve this issue. It is
anticipated that all reprogramming efforts will be completed by end of fiscal
1998. The remainder of calendar year 1998 is planned to be used for testing. The
Company's Purchasing and Information Systems areas have prepared a survey of its
active vendors requesting the status of their "Year 2000" initiatives. The
Company plans on a follow-up to this survey before the end of the 1998 fiscal
year to monitor their status.
The Company presently estimates that the planned modifications to existing
systems caused by the "Year 2000" compliance issue, will cost an aggregate of
approximately $200,000. These costs will continue to be expensed as incurred.
<PAGE>
Part II
Item 5 Other Information
The Company produces and sells motor homes using chassis provided by
four different chassis suppliers, one of these being General Motors
Corporation - Chevrolet Motor Division. While the Company does maintain
a limited number of raw chassis on hand, a prolonged strike may have an
adverse effect on the Company's ability to supply motor homes built on
Chevrolet chassis to the motor home market. The Company is currently
working with its other chassis suppliers to help alleviate any
shortages which may result due to a prolonged strike.
Item 6 Exhibits and Reports on Form 8-K
(a) No exhibits are being filed as a part of this report.
(b) The Company did not file any reports on Form 8-K during the
period covered by this report.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
WINNEBAGO INDUSTRIES, INC.
----------------------------------------
(Registrant)
Date July 8, 1998 /s/ Bruce D. Hertzke
------------------ ----------------------------------------
Bruce D. Hertzke
Chairman of the Board, Chief Executive
Officer, and President
Date July 8, 1998 /s/ Edwin F. Barker
------------------ ----------------------------------------
Edwin F. Barker
Vice President - Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-29-1998
<PERIOD-END> MAY-30-1998
<CASH> 54,268
<SECURITIES> 0
<RECEIVABLES> 45,699
<ALLOWANCES> 2,452
<INVENTORY> 50,634
<CURRENT-ASSETS> 166,632
<PP&E> 112,568
<DEPRECIATION> 80,533
<TOTAL-ASSETS> 240,797
<CURRENT-LIABILITIES> 69,659
<BONDS> 0
<COMMON> 12,933
0
0
<OTHER-SE> 107,136
<TOTAL-LIABILITY-AND-EQUITY> 240,797
<SALES> 150,515
<TOTAL-REVENUES> 150,515
<CGS> 129,610
<TOTAL-COSTS> 129,610
<OTHER-EXPENSES> 10,674
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (860)
<INCOME-PRETAX> 11,091
<INCOME-TAX> 3,757
<INCOME-CONTINUING> 7,334
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,334
<EPS-PRIMARY> .31
<EPS-DILUTED> .31
</TABLE>
