SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549



                                    FORM 10-Q


(Mark One)
- ----
  X___
_X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES - ----    EXCHANGE
    ACT OF 1934

For the quarterly period ended                   February 26,May 27, 2000
                               ------------------------------------------------------------------------------------

                                       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_X_ No ___.

There were 21,560,99221,272,601 shares of $.50 par value common stock outstanding on AprilJuly
6, 2000.




                   WINNEBAGO INDUSTRIES, INC. AND SUBSIDIARIES

                          INDEX TO REPORT ON FORM 10-Q


                                                                     
Page Number ----------- PART I. FINANCIAL INFORMATION: Consolidated Balance Sheets (Interim period information unaudited) 1 & 2 unaudited) Unaudited Consolidated Statements of Income 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 7 - 9 and Results of Operations PART II. OTHER INFORMATION 10 - 12
Part I Financial Information Item 1. WINNEBAGO INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
Dollars in thousands FEBRUARY 26,MAY 27, AUGUST 28, ASSETS 2000 1999 - ------------------------------------------------------------------------------------------------------------- ------------ ------------ (Unaudited) CURRENT ASSETS Cash and cash equivalents $ 43,49859,725 $ 48,160 Receivables, less allowance for doubtful accounts ($1,0331,224 and $960, respectively) 32,56232,030 33,342 Dealer financing receivables, less allowance for doubtful accounts ($10597 and $73, respectively) 31,20431,887 24,573 Inventories 82,50987,040 87,031 Prepaid expenses 17,5863,944 3,593 Deferred income taxes 6,982 6,982 ------------ ------------ Total current assets 214,341221,608 203,681 ------------ ------------ PROPERTY AND EQUIPMENT, at cost Land 1,1371,176 1,150 Buildings 43,36244,429 41,136 Machinery and equipment 78,24277,755 73,839 Transportation equipment 5,3175,416 5,345 ------------ ------------ 128,058128,776 121,470 Less accumulated depreciation 85,85983,877 83,099 ------------ ------------ Total property and equipment, net 42,19944,899 38,371 ------------ ------------ LONG-TERM NOTES RECEIVABLE, less allowances ($294289 and $262, respectively) 713853 787 ------------ ------------ INVESTMENT IN LIFE INSURANCE 20,35520,750 19,749 ------------ ------------ DEFERRED INCOME TAXES, NET 18,654 18,654 ------------ ------------ OTHER ASSETS 6,6296,763 4,647 ------------ ------------ TOTAL ASSETS $ 302,891313,527 $ 285,889 ============ ============
See Unaudited Condensed Notes to Consolidated Financial Statements 1 WINNEBAGO INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
Dollars in thousands FEBRUARY 26,MAY 27, AUGUST 28, LIABILITIES AND STOCKHOLDERS' EQUITY 2000 1999 - ---------------------------------------------------------------------------------------------------------------- ------------ ------------ (Unaudited) CURRENT LIABILITIES Accounts payable, trade $ 26,58231,916 $ 38,604 Income tax payable 22,8099,166 10,201 Accrued expenses: Insurance 5,3105,526 3,962 Product warranties 7,7948,610 6,407 Accrued compensation 11,71013,455 13,204 Promotional 5,2847,731 2,629 Other 5,6375,438 4,954 ------------ ------------ Total current liabilities 85,12681,842 79,961 ------------ ------------ POSTRETIREMENT HEALTH CARE AND DEFERRED COMPENSATION BENEFITS 59,79260,593 56,544 ------------ ------------ STOCKHOLDERS' EQUITY Capital stock, common, par value $.50; authorized 60,000,000 shares: issued 25,876,00025,878,000 and 25,874,000 shares, respectively 12,93812,939 12,937 Additional paid-in capital 21,98021,994 21,907 Reinvested earnings 173,524189,781 151,482 ------------ ------------ 208,442224,714 186,326 Less treasury stock, at cost 50,46953,622 36,942 ------------ ------------ Total stockholders' equity 157,973171,092 149,384 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 302,891313,527 $ 285,889 ============ ============
See Unaudited Condensed Notes to Consolidated Financial Statements 2 WINNEBAGO INDUSTRIES, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF INCOME ================================================================================
IN THOUSANDS EXCEPT PER SHARE DATA
THIRTEEN THIRTY-NINE WEEKS ENDED TWENTY-SIX WEEKS ENDED -------------------------------- -------------------------------- February 26, February--------------------------- --------------------------- May 27, February 26, FebruaryMay 29, May 27, May 29, 2000 1999 2000 1999 ------------ ------------ ------------ ------------ Net revenues $ 187,144211,137 $ 154,132191,546 $ 369,695580,832 $ 311,796503,342 Cost of goods sold 156,352 129,763 308,030 262,551174,363 157,804 482,393 420,355 ------------ ------------ ------------ ------------ Gross profit 30,792 24,369 61,665 49,24536,774 33,742 98,439 82,987 ------------ ------------ ------------ ------------ Operating expenses: Selling and delivery 5,641 5,494 11,901 10,5966,517 5,997 18,418 16,593 General and administrative 8,148 4,289 14,701 9,9836,544 6,129 21,245 16,112 ------------ ------------ ------------ ------------ Total operating expenses 13,789 9,783 26,602 20,57913,061 12,126 39,663 32,705 ------------ ------------ ------------ ------------ Operating income 17,003 14,586 35,063 28,66623,713 21,616 58,776 50,282 Financial income 905 565 1,558 1,146831 670 2,389 1,816 ------------ ------------ ------------ ------------ Pre-tax income 17,908 15,151 36,621 29,81224,544 22,286 61,165 52,098 Provision for taxes 6,057 5,197 12,389 10,2098,287 7,675 20,676 17,884 ------------ ------------ ------------ ------------ Net income $ 11,85116,257 $ 9,95414,611 $ 24,23240,489 $ 19,60334,214 ============ ============ ============ ============ Earnings per common share (Note 7): - ----------------------------------- Basic $ .54.76 $ .45.66 $ 1.101.86 $ .881.54 Diluted $ .54.74 $ .45.65 $ 1.081.83 $ .881.52 Weighted average common shares outstanding (Note 7): - ---------------------------------------------------- Basic 21,765 22,145 21,946 22,18421,531 22,190 21,808 22,186 Diluted 22,134 22,317 22,339 22,38721,848 22,517 22,176 22,483
See Unaudited Condensed Notes to Consolidated Financial Statements. ================================================================================ 3 WINNEBAGO INDUSTRIES, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Dollars in thousands TWENTY-SIXTHIRTY-NINE WEEKS ENDED --------------------------------- February 26, February------------------------------- May 27, May 29, 2000 1999 ------------ ------------ Cash flows from operating activities: Net income $ 24,23240,489 $ 19,60334,214 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,144 2,7544,826 4,212 Other 177 296431 545 Change in assets and liabilities: IncreaseDecrease (increase) in receivable and other assets (13,381) (19,045) Decrease (increase)606 (24,877) Increase in inventories 4,522 (4,423) (Decrease) increase(9) (7,589) Increase in accounts payable and accrued expenses (7,443) 2,068 Increase2,916 9,396 (Decrease) increase in income taxes payable 12,608 9,071(1,035) 16,746 Increase in postretirement benefits 2,966 2,5923,862 3,609 Other - - --- (238) ------------ ------------ Net cash provided by operating activities 26,825 12,67852,086 36,018 ------------ ------------ Cash flows used by investing activities: Purchases of property and equipment (7,147) (6,216)(11,715) (8,711) Investments in dealer receivables (53,635) (50,104)(81,963) (74,494) Collections of dealer receivables 46,978 33,29274,634 57,560 Other (2,040) 2,560(2,696) 2,067 ------------ ------------ Net cash used by investing activities (15,844) (20,468)(21,740) (23,578) ------------ ------------ Cash flows used by financing activities and capital transactions: Payments for purchase of common stock (14,490)(17,747) (8,975) Payment of cash dividends (2,189) (2,221) Other 1,036 8161,155 1,349 ------------ ------------ Net cash used by financing activities and capital transactions (15,643) (10,380)(18,781) (9,847) ------------ ------------ Net decreaseincrease in cash and cash equivalents (4,662) (18,170)11,565 2,593 Cash and cash equivalents - beginning of period 48,160 53,859 ------------ ------------ Cash and cash equivalents - end of period $ 43,49859,725 $ 35,68956,452 ============ ============
See Unaudited Condensed Notes to Consolidated Financial Statements. 4 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 February 26,May 27, 2000, the consolidated results of operations for the 2639 and 13 weeks ended February 26,May 27, 2000 and February 27,May 29, 1999, and the consolidated cash flows for the 2639 weeks ended February 26,May 27, 2000 and February 27,May 29, 1999. The resultsstatements of operationsincome for the 2639 weeks ended February 26,May 27, 2000, are not necessarily indicative of the results to be expected for the full year. The balance sheet data as of August 28, 1999 was derived from audited financial statements, but does not include all disclosures contained in the Company's Annual Report to Shareholders for the year ended August 28, 1999. The interim consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto appearing in the Company's Annual Report to Shareholders for the year ended August 28, 1999. 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):
February 26, August 28, 2000 1999 ------------------- ------------------ Finished goods................ $ 30,486 $ 25,622 Work in process............... 23,731 24,822 Raw materials................. 47,546 55,076 ------------------ ----------------- 101,763 105,520 LIFO reserve....................... (19,254) (18,489) ------------------ ----------------- $ 82,509 $ 87,031 ================== =================
May 27, August 28, 2000 1999 ----------- ----------- Finished goods........... $ 33,620 $ 25,622 Work in process.......... 22,463 24,822 Raw materials............ 51,064 55,076 ----------- ----------- 107,147 105,520 LIFO reserve............. (20,107) (18,489) ----------- ----------- $ 87,040 $ 87,031 =========== =========== 3. Since March 1992, the Company has had a financing and security agreement with Bank of America Specialty Group (formerly NationsBank Specialty Lending Unit). 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 February 26,May 27, 2000, the Company was in compliance with these financial covenants. There were no outstanding borrowings under the line of credit at February 26,May 27, 2000 or August 28, 1999. 4. It is customary practice for companies in the recreation vehicle industry to enter into repurchase agreements with lendingfinancing 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 $224,421,000$243,441,000 and $168,552,000 under repurchase agreements with lending institutions as of February 26,May 27, 2000 and August 28, 1999, respectively. Included in these contingent liabilities as of February 26,May 27, 2000 and August 28, 1999 are approximately $11,353,000$7,076,000 and $7,480,000, respectively, of certain dealer receivables subject to recourse agreements with Bank of America Specialty Group (formerly NationsBank Specialty Lending Unit) and Conseco Finance Servicing Group (formerly Green Tree Financial). 5. For the periods indicated, the Company paid cash for the following (dollars in thousands): TWENTY-SIXTHIRTY-NINE WEEKS ENDED -------------------------------------------- February 26, February-------------------------- May 27, May 29, 2000 1999 -------------------- ---------------------------- --------- Interest $ 129236 $ 9197 Income taxes 13,205 11,67021,930 18,800 5 6. On March 9, 2000, the Company completed the repurchase of outstanding shares of its common stock authorized by the Board of Directors on June 17, 1999. Under this repurchase program, 820,675 shares were repurchased for an aggregate consideration of approximately $15,000,000. On March 15, 2000, the Board of Directors authorized the repurchase of outstanding shares of the Company's common stock for an aggregate purchase price of up to $15,000,000. Between December 30, 1997 and March 9,As of May 27, 2000, the Company162,200 shares had been repurchased 4,494,098 sharesfor an aggregate consideration of its outstanding common stock.$2,747,651 under this authorization. 7. The following table reflects the calculation of basic and diluted earnings per share for the 13 and 2639 weeks ended February 26,May 27, 2000 and February 27,May 29, 1999:
THIRTEEN WEEKS ENDED TWENTY-SIXTHIRTY-NINE WEEKS ENDED -------------------------------------- ------------------------------------- FEBRUARY 26, FEBRUARY---------------------------- ---------------------------- MAY 27, FEBRUARY 26, FEBRUARYMAY 29, MAY 27, MAY 29, IN THOUSANDS EXCEPT PER SHARE DATA 2000 1999 2000 1999 ----------------- ----------------- ----------------- ---------------------------- ------------ ------------ ------------ EARNINGS PER SHARE - BASIC: --------------------------- Net income $ 11,85116,257 $ 9,95414,611 $ 24,23240,489 $ 19,603 ----------------- ----------------- ----------------- ----------------34,214 ------------ ------------ ------------ ------------ Weighted average shares outstanding 21,765 22,145 21,946 22,184 ----------------- ----------------- ----------------- ----------------21,531 22,190 21,808 22,186 ------------ ------------ ------------ ------------ Earnings per share - basic $ .54.76 $ .45.66 $ 1.101.86 $ .88 ----------------- ----------------- ----------------- ----------------1.54 ------------ ------------ ------------ ------------ EARNINGS PER SHARE - ASSUMING DILUTION: --------------------------------------- Net income $ 11,85116,257 $ 9,95414,611 $ 24,23240,489 $ 19,603 ----------------- ----------------- ----------------- ----------------34,214 ------------ ------------ ------------ ------------ Weighted average shares outstanding 21,765 22,145 21,946 22,18421,531 22,190 21,808 22,186 Dilutive impact of options outstanding 369 172 393 203 ----------------- ----------------- ----------------- ----------------317 327 368 297 ------------ ------------ ------------ ------------ Weighted average shares & potential dilutive shares outstanding 22,134 22,317 22,339 22,387 ----------------- ----------------- ----------------- ----------------21,848 22,517 22,176 22,483 ------------ ------------ ------------ ------------ Earnings per share - assuming dilution $ .54.74 $ .45.65 $ 1.081.83 $ .88 ----------------- ----------------- ----------------- ----------------1.52 ------------ ------------ ------------ ------------
There were options to purchase 166,800 shares of common stock outstanding at a price of $18.50 per share during the 13 weeks ended May 27, 2000 and options to purchase 14,000 shares of common stock outstanding at a price of $15.1875$15.375 per share during the 13 weeks ended February 27,May 29, 1999. These options were not included in the computation of diluted earnings per share because the options' exercise price was greater than the average market price of the common shares. 8. The Company defines its operations into two business segments: Recreational vehicles and other manufactured products and dealer financing. Recreation vehicles and other manufactured products includes all data relative to the manufacturing and selling of the Company's Class A, B and C motor home products as well as sales of component products for other manufacturers and recreation vehicle related parts and service revenue. Dealer financing includes floorplan unit financing for the Company's dealers whom have limited floorplan financing resources. Management focuses on operating income as a segment's measure of profit or loss when evaluating a segment's financial performance. Operating income is before interest expense, interest income, and income taxes. A variety of balance sheet ratios are used by management to measure the business. Identifiable assets are those assets used in the operations of each industry segment. General corporate assets consist of cash and cash equivalents, deferred income taxes and other corporate assets not related to the two business segments. General corporate income and expenses include administrative costs. Inter-segment sales and expenses are not significant. For the 2639 weeks ended February 26,May 27, 2000 and February 27,May 29, 1999, the Company's segment information is as follows:
RECREATION VEHICLES & OTHER MANUFACTURED DEALER GENERAL (DOLLARS IN THOUSANDS) PRODUCTS FINANCING CORPORATE TOTAL ------------------------------------------------- ----------------------- -------------- --------------- ---------------------------------------------------------------------------------------------------------------- 2639 WEEKS ENDED FEBRUARY 26,MAY 27, 2000 Net revenues $ 367,900577,956 $ 1,7952,876 $ - - --- $ 369,695580,832 Operating income (loss) 33,808 1,739 (484) 35,06356,651 2,695 (570) 58,776 Identifiable assets 183,520 32,466 86,905 302,891 26191,612 32,603 89,312 313,527 39 WEEKS ENDED FEBRUARY 27,MAY 29, 1999 Net revenues $ 310,389501,065 $ 1,4072,277 $ - - --- $ 311,796503,342 Operating income (loss) 26,359 2,397 (90) 28,66647,509 3,208 (435) 50,282 Identifiable assets 149,375 30,710 73,740 253,825152,100 31,201 84,436 267,737
6 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Thirteen Weeks Ended February 26,May 27, 2000 Compared to Thirteen Weeks Ended February 27,May 29, 1999 Net revenues for manufactured products for the 13 weeks ended February 26,May 27, 2000 were $186,219,000,$210,056,000, an increase of $32,913,000$19,379,000 or 21.510.2 percent from the 13-week period ended February 27,May 29, 1999. Motor home shipments (Class A and C) during the secondthird quarter of fiscal 2000 were 2,5923,033 units, an increase of 30752 units, or 13.41.7 percent, compared to the secondthird quarter of fiscal 1999. As a result of the Company's shipments of more units with slideout features, and a greater number of higher priced diesel-powered Class A vehicles, the percentage increase in net revenues for manufactured products in the secondthird quarter of fiscal 2000 was greater than the percentage increase in motor home shipments for that period. Even though there have been recent increasesThe Company is bracing for a slowdown in fuel costssales in light of slipping consumer confidence levels and rising interest rates and gasoline prices. Nonetheless, long-term prospects for the Company remains guardedly optimistic about continued sales growth dueremain favorable as demographic studies show that the industry's prime target market of people age 50 and older is growing and will continue to excellent traffic at early spring RV shows and current retail sales levels.grow over the next 20 years. Order backlog for the Company's Class A and Class C motor homes was approximately 2,5001,800 orders and 3,3002,200 orders at February 26,May 27, 2000 and February 27,May 29, 1999, respectively. The Company includes in its backlog all accepted purchase orders from dealers shippable within the next six months. Orders in backlog can be canceled at the option of the purchaser at any time without penalty and, therefore, backlog may not necessarily be a measure of future sales. Net revenues for dealer financing of Winnebago Acceptance Corporation (WAC) were $925,000$1,081,000 for the 13 weeks ended February 26,May 27, 2000, an increase of $99,000$211,000 or 12.024.4 percent from the 13-week period ended February 27,May 29, 1999. Increased revenues for dealer financing reflect an increase in interest rates chargedaverage dealer receivable balances and to a lesser extent an increase in average dealer receivable balancesinterest rates charged when comparing the secondthird quarter of fiscal 2000 to the comparable period of fiscal 1999. Gross profit, as a percent of net revenues, was 16.517.4 percent for the 13 weeks ended February 26,May 27, 2000 compared to 15.817.6 percent for the 13 weeks ended February 27,May 29, 1999. The Company's gross profit percentage increaseddecreased as a result of increased volume of motor home production and shipments and a favorable product mix changeincreases in raw material costs during the second quarter of fiscal 2000.13 weeks ended May 27, 2000 when compared to the 13 weeks ended May 29, 1999. Selling and delivery expenses were $5,641,000$6,517,000 or 3.03.1 percent of net revenues during the secondthird quarter of fiscal 2000 compared to $5,494,000$5,997,000 or 3.63.1 percent of net revenues during the secondthird quarter of fiscal 1999. The increase in dollars can be attributed primarily to increases in the Company's promotional programs. Increased sales volume, during the 13 weeks ended February 26, 2000, contributed to the decrease in percentage.programs and advertising costs. General and administrative expenses were $8,148,000$6,544,000 or 4.43.1 percent of net revenues during the 13 weeks ended February 26,May 27, 2000 compared to $4,289,000$6,129,000 or 2.83.2 percent of net revenues during the 13 weeks ended February 27,May 29, 1999. The increasesincrease in both dollars and percentages in general and administrative expenses when comparing the two quarters werewas primarily due to increases in Company-wide employee incentive programs and increases in the Company's legal costs recorded during the thirteen weeks ended February 26, 2000. Also impacting the increase between the two quarters was monies the Company received and recorded during the second quarter of fiscal 1999 on a previously fully-reserved receivable.programs. The Company had net financial income of $905,000$831,000 for the secondthird quarter of fiscal 2000 compared to net financial income of $565,000$670,000 for the comparable quarter of fiscal 1999. The increase in net financial income when comparing the two periods was attributed primarily to an increase in net interest income. For the secondthird quarter of fiscal 2000, the Company had net income of $11,851,000,$16,257,000, or $.54$.74 per diluted share, compared to the secondthird quarter of fiscal 1999's net income of $9,954,000,$14,611,000, or $.45$.65 per diluted share. Net income and earnings per diluted share increased by 19.111.3 percent and 20.013.8 percent, respectively, when comparing the secondthird quarter of fiscal 2000 to the secondthird quarter of fiscal 1999. 7 Twenty-SixThirty-Nine Weeks Ended February 26,May 27, 2000 Compared to Twenty-SixThirty-Nine Weeks Ended February 27,May 29, 1999 Net revenues for manufactured products for the 2639 weeks ended February 26,May 27, 2000 were $367,900,000,$577,956,000, an increase of $57,511,000,$76,891,000, or 18.515.3 percent from the 26-week39-week period ended February 27,May 29, 1999. Motor home shipments (Class A and C) were 5,2178,250 units, an increase of 466518 units, or 9.86.7 percent, during the 2639 weeks ended February 26,May 27, 2000 when compared to the 2639 weeks ended February 27,May 29, 1999. The difference in percentages when comparing the percent increase in revenue for manufactured products for the first half of fiscal 2000 to the percent increase in unit shipments for the first half of fiscal39 weeks ended May 27, 2000 was caused by the 7 shipments of more units with slideout features and to a lesser extent due to a greater number of higher priced diesel-powered Class A vehicles. Industry demand for motorized recreation vehicles remained strong during the 2639 weeks ended February 26,May 27, 2000 but due to lower levels of consumer confidence and rising interest rates and gasoline prices, the Company's 2000 products continue to be well received by dealers and retail customers.Company is bracing for a slowdown in sales which could make the next quarter or two challenging. Net revenues for dealer financing of WAC were $1,795,000$2,876,000 for the 2639 weeks ended February 26, 2000,May 27, 2000; an increase of $388,000$599,000 or 27.626.3 percent from the 2639 weeks ended February 27,May 29, 1999. Increased revenues for dealer financing reflect an increase in average dealer receivable balances and to a lesser extent, an increase in interest rates charged when comparing the first halfyear to date of fiscal 2000 to the comparable period of fiscal 1999. Gross profit, as a percent of net revenues, was 16.716.9 percent for the 2639 weeks ended February 26,May 27, 2000 compared to 15.816.5 percent for the 2639 weeks ended February 27,May 29, 1999. The Company's favorable product mix change and increased volume of motor homes during the first 2639 weeks of fiscalended May 27, 2000 were the primary causes of the improved gross margin percentage. Selling and delivery expenses were $11,901,000$18,418,000 or 3.2 percent of net revenues during the first halfnine months of fiscal 2000 compared to $10,596,000$16,593,000 or 3.43.3 percent of net revenues during the first halfcomparable period of fiscal 1999. The increase in dollars can be attributed primarily to increases in the Company's promotional programs and advertising and promotional programs. Increased sales volume, during the 26 weeks ended February 26, 2000, contributed to the decrease in percentage.costs. General and administrative expenses were $14,701,000$21,245,000 or 4.03.7 percent of net revenues during the 2639 weeks ended February 26,May 27, 2000 compared to $9,983,000$16,112,000 or 3.2 percent of net revenues during the 2639 weeks ended February 27,May 29, 1999. Increases in Company-wide employee incentive programs and in the Company's legalinsurance costs recorded during the first half of fiscal39 weeks ended May 27, 2000 were the primary reasons for the increases in both dollars and percentages in general and administrative expenses when comparing to the two periods.comparable period of fiscal 1999. Also impactingcontributing to the increase between the two fiscal half years wasthirty-nine week periods were monies the Company received and recorded during the 2639 weeks ended February 27,May 29, 1999 on a previously fully-reservedfully reserved receivable. The Company had net financial income of $1,558,000$2,389,000 for the 2639 weeks ended February 26,May 27, 2000 compared to net financial income of $1,146,000$1,816,000 for the 2639 weeks ended February 27,May 29, 1999. The increase in net financial income when comparing the two periods was attributed primarily to an increase in net interest income. For the first half of fiscalthirty-nine weeks ended May 27, 2000, the Company recorded net income of $24,232,000,$40,489,000, or $1.08$1.83 per diluted share, compared to the first half of fiscal 1999's net income for the thirty-nine weeks ended May 29, 1999 of $19,603,000,$34,214,000, or $.88$1.52 per diluted share. Net income and earnings per diluted share increased by 23.618.3 percent and 22.720.4 percent, respectively, when comparing the first half of fiscal 2000 to the first half of fiscal 1999.two thirty-nine week periods. LIQUIDITY AND FINANCIAL CONDITION The Company meets its working capital requirements, capital equipment requirements and cash requirements of subsidiaries with funds generated internally. At February 26,May 27, 2000, working capital was $129,215,000,$139,766,000, an increase of $5,495,000$16,046,000 from the amount at August 28, 1999. The Company's principal uses of cash during the 2639 weeks ended February 26,May 27, 2000 were $53,635,000$81,963,000 of dealer receivable investments, and $14,490,000$17,747,000 for the purchase of shares of the Company's Common Stock.Stock and $11,715,000 for the purchase of property and equipment. The Company's principal sources of cash during the 2639 weeks ended February 26,May 27, 2000 were income from operations and the collection of $46,978,000$74,634,000 in dealer receivables.receivables and income from operations. The Company's sources and uses of cash during the 2639 weeks ended February 26,May 27, 2000 are set forth in the unaudited consolidated condensed statement of cash flows for that period. 8 Principal known demands at February 26,May 27, 2000 on the Company's liquid assets for the remainder of fiscal 2000 include approximately $10,000,000$3,500,000 of capital expenditures and funds for payment of cash dividends. On March 15, 2000, the Board of Directors declared a cash dividend of $.10 per common share payable July 10, 2000, to shareholders of record on June 9, 2000. 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. ACCOUNTING CHANGES Recognition of Derivative Instruments and Hedging Activities SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" was issued in June 1998 and must be adopted by the Company no later than fiscal 2001. This statement requires that an entity recognizerecognizes all derivatives as either assets or liabilities in the balance sheet and measure these instruments at fair value. The Company has not completed the process of evaluating the effect of SFAS No. 133 on its financial statements. 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 availability of chassis, slower than anticipated sales of new or existing products, a significant increase in interest rates, a general slowdown in the economy, or new product introductions by competitors and other factors which may be disclosed throughout this Form 10-Q or in the Company's Annual Report on Form 10-K for the year ended August 28, 1999. 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; actual results could differ materially. YEAR 2000 (Y2K) COMPLIANCE The Company experienced no disruption of its operation as a result of Year 2000 issues related to computer systems and manufacturing operations. The Company is not aware that any of its major third party suppliers has experienced any Year 2000 problems which would have a material impact on the future operations or financial results of the Company. The total cost of the Company's Year 2000 project was previously reported not to exceed $300,000 (all of which has been expensed), and no additional costs have been incurred. The Company does not expect any future disruptions related to Year 2000 issues either internally or from third parties. 9 Part II Other Information Item 4 Submission of Matters to a Vote of Security Holders (a) The annual meeting of shareholders was held January 11, 2000. (b) The breakdown of votes for the election of eight directors was as follows*:
VOTES CAST FOR AUTHORITY WITHHELD ---------------------- -------------------------- Gerald E. Boman (2002) 18,687,848 915,051 Jerry N. Currie (2002) 17,726,715 1,876,184 Fred G. Dohrmann (2001) 18,683,590 919,309 John V. Hanson (2003) 18,676,108 926,791 Bruce D. Hertzke (2003) 18,689,024 913,875 Gerald C. Kitch (2003) 18,698,885 904,014 Richard C. Scott (2001) 18,699,122 903,777 Frederick M. Zimmerman (2002) 18,701,209 901,690
* There were no broker non-votes. ( ) Represents year of Annual Meeting that individual's term will expire. (c) The breakdown of votes to approve amendments to the Company's Articles of Incorporation to 1) provide for the classification of the Board of Directors into three classes; 2) provide that the number of directors constituting the Board of Directors shall be not more than fifteen (15) and not less than three (3), the precise number to be determined by resolution of the Board of Directors from time to time; 3) provide that Directors may be removed only for cause; and 4) require a vote of 75 percent of the outstanding shares of the Company to amend these provisions.
VOTES CAST FOR VOTES CAST AGAINST VOTES ABSTAINED ------------------------- ------------------------- ------------------------ 11,981,563 4,714,699 2,906,637 (d) Approve an amendment to the Company's Articles of Incorporation to authorize the issuance of Preferred Stock. VOTES CAST FOR VOTES CAST AGAINST VOTES ABSTAINED ------------------------- ------------------------- ------------------------ 12,108,884 4,561,968 2,932,047 (e) Vote on a shareholder proposal concerning cumulative voting. VOTES CAST FOR VOTES CAST AGAINST VOTES ABSTAINED ------------------------- ------------------------- ------------------------ 3,629,182 12,921,449 3,052,268
Item 6 Exhibits and Reports on Form 8-K (a) Exhibits - See Exhibit Index on page 12. (b) TheOn May 10, 2000, the Company did not file any reportsfiled a report on Form 8-K during the period covered by this report.relative to Winnebago Industries, Inc.'s Rights Plan Agreement. 10 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 April 6, 2000 /s/ Bruce D. Hertzke ------------------------------ ---------------------------------------------------- Bruce D. Hertzke Chairman of the Board, Chief Executive Officer, and President (Principal Executive Officer) Date April 6, 2000 /s/ Edwin F. Barker ------------------------------ ----------------------------------------------------WINNEBAGO INDUSTRIES, INC. ----------------------------------------- (Registrant) Date July 6, 2000 /s/ Bruce D. Hertzke ----------------------- ----------------------------------------- Bruce D. Hertzke Chairman of the Board, Chief Executive Officer, and President (Principal Executive Officer) Date July 6, 2000 /s/ Edwin F. Barker ----------------------- ----------------------------------------- Edwin F. Barker Vice President - Chief Financial Officer (Principal Financial Officer)
11 EXHIBIT INDEX 3a. Articles of Incorporation. 27. Financial Data Schedule. 12