-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L+40MvQr9WsDjAy+1bPFm8waLOY3Jb7LuLkeGT8GAVHurDSJIc85Gvt8yMrMeaPq XZFbc+Pv6vCus4hsTcll4Q== 0000897101-98-000010.txt : 19980112 0000897101-98-000010.hdr.sgml : 19980112 ACCESSION NUMBER: 0000897101-98-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971129 FILED AS OF DATE: 19980109 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WINNEBAGO INDUSTRIES INC CENTRAL INDEX KEY: 0000107687 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR HOMES [3716] IRS NUMBER: 420802678 STATE OF INCORPORATION: IA FISCAL YEAR END: 0828 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-06403 FILM NUMBER: 98503513 BUSINESS ADDRESS: STREET 1: P O BOX 152 CITY: FOREST CITY STATE: IA ZIP: 50436 BUSINESS PHONE: 5155826808 MAIL ADDRESS: STREET 1: P O BOX 152 CITY: FOREST CITY STATE: IA ZIP: 50436 FORMER COMPANY: FORMER CONFORMED NAME: MODERNISTIC INDUSTRIES INC DATE OF NAME CHANGE: 19670528 10-Q 1 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 November 29, 1997 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 23,566,227 shares of $.50 par value common stock outstanding on January 8, 1998. 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 and Results of Operations 7 & 8 PART II. OTHER INFORMATION 9 & 10 Part I Financial Information WINNEBAGO INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS Dollars in thousands NOVEMBER 29, AUGUST 30, ASSETS 1997 1997 - ----------------------------------------------------- -------- -------- (Unaudited) CURRENT ASSETS Cash and cash equivalents $ 56,972 $ 32,130 Receivables, less allowance for doubtful accounts ($1,463 and $1,429, respectively) 22,503 31,322 Dealer financing receivables less allowance for doubtful accounts ($189 and $155, respectively) 18,105 13,336 Inventories 53,329 53,584 Prepaid expenses 6,713 5,872 Deferred income taxes 4,917 4,917 -------- -------- Total current assets 162,539 141,161 -------- -------- PROPERTY AND EQUIPMENT, at cost Land 1,167 1,167 Buildings 38,563 42,455 Machinery and equipment 66,499 66,142 Transportation equipment 4,968 5,004 -------- -------- 111,197 114,768 Less accumulated depreciation 78,364 81,175 -------- -------- Total property and equipment, net 32,833 33,593 -------- -------- LONG-TERM NOTES RECEIVABLE, less allowances ($1,488 and $1,465, respectively) 5,653 5,692 -------- -------- INVESTMENT IN LIFE INSURANCE AND OTHER LONG-TERM INVESTMENTS 18,773 17,641 -------- -------- DEFERRED INCOME TAXES, NET 14,900 14,900 -------- -------- OTHER ASSETS 487 488 -------- -------- TOTAL ASSETS $235,185 $213,475 ======== ======== See Unaudited Condensed Notes to Consolidated Financial Statements. WINNEBAGO INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS Dollars in thousands NOVEMBER 29, AUGUST 30, LIABILITIES AND STOCKHOLDERS' EQUITY 1997 1997 - ------------------------------------------------- -------- -------- (Unaudited) CURRENT LIABILITIES Current maturities of long-term debt $ -- $ 695 Accounts payable, trade 20,561 20,471 Income tax payable 14,203 -- Accrued expenses: Insurance 3,360 2,687 Product warranties 3,953 3,329 Vacation liability 3,352 3,012 Promotional 3,339 2,508 Other 7,891 8,524 -------- -------- Total current liabilities 56,659 41,226 -------- -------- POSTRETIREMENT HEALTH CARE AND DEFERRED COMPENSATION BENEFITS 49,260 48,367 -------- -------- STOCKHOLDERS' EQUITY Capital stock, common, par value $.50; authorized 60,000,000 shares 12,930 12,927 Additional paid-in capital 23,152 23,109 Reinvested earnings 97,517 92,179 -------- -------- 133,599 128,215 Less treasury stock, at cost 4,333 4,333 -------- -------- Total stockholders' equity 129,266 123,882 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $235,185 $213,475 ======== ======== See Unaudited Condensed Notes to Consolidated Financial Statements. WINNEBAGO INDUSTRIES, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS ================================================================================ IN THOUSANDS EXCEPT PER SHARE DATA
THIRTEEN WEEKS ENDED -------------------------- November 29, November 30, 1997 1996 -------- -------- Net revenues $125,896 $113,892 Cost of goods sold 107,473 98,813 -------- -------- Gross profit 18,423 15,079 -------- -------- Operating expenses: Selling and delivery 5,729 6,338 General and administrative 5,266 4,885 -------- -------- Total operating expenses 10,995 11,223 -------- -------- Operating income 7,428 3,856 Financial income 613 369 -------- -------- Income from continuing operations before income taxes 8,041 4,225 Provision for taxes 2,703 1,519 -------- -------- Income from continuing operations 5,338 2,706 Discontinued operations: Gain from sale of discontinued Cycle-Sat subsidiary (includes a loss on operations of $160 net of applicable income tax credits of $123 and a gain on disposal of $16,632 net of income taxes of $13,462) -- 16,472 -------- -------- Net income $ 5,338 $ 19,178 ======== ======== Income per common share: Income from continuing operations $ .21 $ .11 Gain from sale of discontinued Cycle-Sat subsidiary -- .65 -------- -------- Net income $ .21 $ .76 ======== ======== Weighted average number of shares of common stock outstanding 25,481 25,379 ======== ========
See Unaudited Condensed Notes to Consolidated Financial Statements. ================================================================================ WINNEBAGO INDUSTRIES, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Dollars in thousands Increase (decrease) in cash and cash equivalents THIRTEEN WEEKS ENDED ------------------------- November 29, November 30, 1997 1996 -------- -------- Cash flows from operating activities: Net income $ 5,338 $ 19,178 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 1,369 1,665 Realized and unrealized gains on investments, net -- (120) Proceeds from sale of trading securities -- 3,707 Other 60 (112) Change in assets and liabilities: Decrease (increase) in accounts receivable 7,987 (960) Decrease in inventories 255 11,824 Increase in accounts payable and accrued expenses 16,128 11,661 Increase in postretirement benefits 915 339 Other -- (2,194) -------- -------- Net cash provided by operating activities 32,052 15,177 -------- -------- Cash flows provided (used) by investing activities: Gross proceeds from the sale of Cycle-Sat subsidiary* -- 55,883 Investments in marketable securities (813) -- Purchases of property and equipment (687) (1,106) Investments in dealer receivables (13,899) (9,128) Collections of dealer receivables 9,096 9,807 Other (258) (72) -------- -------- Net cash (used) provided by investing activities (6,561) 55,384 -------- -------- Cash flows used by financing activities and capital transactions: Payment of long-term debt of discontinued operation -- (13,220) Payments of long-term debt (695) (1,779) Other 46 261 -------- -------- Net cash used by financing activities and capital transactions (649) (14,738) -------- -------- Net increase in cash and cash equivalents 24,842 55,823 Cash and cash equivalents - beginning of period 32,130 797 -------- -------- Cash and cash equivalents - end of period $ 56,972 $ 56,620 ======== ========
* Includes $7,590 paid to the minority shareholders subsequent to November 30, 1996. See Unaudited Condensed Notes to Consolidated Financial Statements. 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 November 29, 1997, the consolidated results of operations for the 13 weeks ended November 29, 1997 and November 30, 1996, and the consolidated cash flows for the 13 weeks ended November 29, 1997 and November 30, 1996. The results of operations for the 13 weeks ended November 29, 1997, 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): November 29, August 30, 1997 1997 ------------- ------------ Finished goods............ $ 26,681 $ 27,577 Work in process........... 14,757 13,842 Raw materials............. 29,887 29,907 ------------- ------------ 71,325 71,326 LIFO reserve.............. (17,996) (17,742) ============= ============ $ 53,329 $ 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 through March 31, 1998, 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 November 29, 1997, the Company was in compliance with these covenants. There were no outstanding borrowings under the line of credit at November 29, 1997 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 $133,017,000 and $115,637,000 under repurchase agreements with lending institutions as of November 29, 1997 and August 30, 1997, respectively. Included in these contingent liabilities as of November 29, 1997 and August 30, 1997 are approximately $24,577,000 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 s (dollars in thousands): THIRTEEN WEEKS ENDED ---------------------------------------- November 29, November 30, 1997 1996 ------------------ ----------------- Interest $ 118 $ 186 Income taxes 20 4 6. On December 29, 1997, the Company repurchased 1,920,600 shares of Common Stock from the Estate of John K. Hanson. The shares were repurchased for an aggregate purchase price of $17,000,000 ($8.85125 per share). MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Thirteen weeks ended November 29, 1997 compared to thirteen weeks ended November 30, 1996 Net revenues for the 13 weeks ended November 29, 1997 were $125,896,000, an increase of $12,004,000, or 10.5 percent from the 13 week period ended November 30, 1996. Motor home shipments (Class A and C) were 2,062 units, an increase of 104 units, or 5.3 percent, during the first quarter of fiscal 1998 compared to the first quarter of fiscal 1997. Revenues increased by a larger percentage than unit sales in the first quarter of fiscal 1998 due to increased sales of higher priced Class A motor homes. The Company is encouraged by dealer reception to its 1998 products. Taking into account the order backlog the Company has on hand at this time, the Company is experiencing one of the best new product launches in its history. Gross profit, as a percent of net revenues, was 14.6 percent for the 13 weeks ended November 29, 1997 compared to 13.2 percent for the 13 weeks ended November 30, 1996. This increase can be attributed primarily to the motor home product mix change experienced during the first quarter of 1998 compared to the first quarter of fiscal 1997. Selling and delivery expenses were $5,729,000 or 4.6 percent of net revenues during the first quarter of fiscal 1998 compared to $6,338,000 or 5.6 percent of net revenues during the first quarter of fiscal 1997. The decrease in dollars and percentage can be attributed primarily to the Company's decision to sell its wholly owned subsidiary and European distributor, Winnebago Industries Europe, GmbH (WIE) during fiscal 1997. Also contributing to the decreases were lower advertising expenses. Increased sales volume contributed to the decrease in percentage. General and administrative expenses increased by $381,000 to $5,266,000 comparing the 13 weeks ended November 29, 1997 to the 13 weeks ended November 30, 1996 but decreased as a percentage of net revenues to 4.2 percent from 4.3 percent. The increase in dollars was caused primarily by an increase in the Company's product liability costs during fiscal 1998 offset partially by the elimination of WIE general and administrative costs due to the sale in fiscal 1997. The reduction in percentage was caused by the increased sales volume. The Company had net financial income of $613,000 for the first quarter of fiscal 1998 compared to net financial income of $369,000 for the comparable quarter of fiscal 1997. During the 13 weeks ended November 29, 1997, the Company recorded $660,000 of interest income and $47,000 of losses in foreign currency transactions. During the 13 weeks ended November 30, 1996, the Company recorded $309,000 of interest income, $121,000 of realized and unrealized gains in its trading securities portfolio and $61,000 of losses in foreign currency transactions. For the 13 weeks ended November 29, 1997, the Company had income from continuing operations before taxes of $8,041,000 and a provision for taxes of $2,703,000 resulting in income from continuing operations of $5,338,000 or $.21 per share. For the 13 weeks ended November 30, 1996, the Company had income from continuing operations before taxes of $4,225,000 and a provision for taxes of $1,519,000 resulting in income from continuing operations of $2,706,000 or $.11 per share. For the 13 weeks ended November 30, 1996, the Company recorded a gain from the sale of the discontinued Cycle-Sat subsidiary of $16,472,000 (net of income taxes of $13,462,000), or $.65 per share. During the 13 weeks ended November 30, 1997, the Company had net income of $5,338,000, or $.21 per share, compared to $19,178,000, or $.76 per share for the 13 weeks ended November 29, 1996. LIQUIDITY AND FINANCIAL CONDITION The Company meets its working capital and capital equipment requirements and cash requirements of subsidiaries with funds generated internally and funds from agreements with financial institutions. At November 29, 1997, working capital was $105,880,000, an increase of $5,945,000 from the amount at August 30, 1997. The Company's principal sources and uses of cash during the 13 weeks ended November 29, 1997 are set forth in the unaudited consolidated condensed statement of cash flows for that period. Principal known demands at November 29, 1997 on the Company's liquid assets for the remainder of fiscal 1998 include approximately $3,600,000 of capital expenditures (primarily equipment replacement) and $2,500,000 of cash dividends declared by the Board of Directors on October 16, 1997 (paid January 5, 1998). Subsequent to the first quarter of fiscal 1998, the Company's Board of Directors authorized the repurchase of outstanding shares of the Company's Common Stock for an aggregate purchase price of up to $36,500,000; $17,000,000 was applied to the purchase of 1,920,600 shares of Common Stock from the Estate of John K. Hanson on December 29, 1997. The remaining $19,500,000 may be used by the Company to make open-market purchases of its Common Stock from time to time over the next 18 months. 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. RECENTLY ISSUED ACCOUNTING STANDARDS Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share," was issued in February, 1997 and will be adopted by the Company in the second quarter of fiscal 1998. The adoption of SFAS No. 128 is not expected to have a significant impact on the calculation of earnings per share. 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 risk factors. Actual results could differ materially. Part II Other Information 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. 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 January 8, 1998 /s/ Fred G. Dohrmann ---------------------- ---------------------------------------- Fred G. Dohrmann Chairman of the Board and Chief Executive Officer Date January 8, 1998 /s/ Edwin F. Barker ---------------------- ---------------------------------------- Edwin F. Barker Vice President - Chief Financial Officer EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS AUG-29-1998 NOV-29-1997 56,972 0 42,260 1,652 53,329 162,539 111,197 78,364 235,185 56,659 0 0 0 12,930 116,336 235,185 125,896 125,896 107,473 107,473 10,995 0 (613) 8,041 2,703 5,338 0 0 0 5,338 .21 0
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