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 30, 2002
-------------------------------------------------
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
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WINNEBAGO INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
IOWA 42-0802678
(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: (641) 585-3535
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 18,780,709 shares of $.50 par value common stock outstanding on
January 14, 2003.
WINNEBAGO INDUSTRIES, INC. AND SUBSIDIARIES
INDEX TO REPORT ON FORM 10-Q
Page Number
PART I. FINANCIAL INFORMATION: -----------
Item I. Unaudited Consolidated Balance Sheets 1 & 2
Unaudited Consolidated Statements of Income 3
Unaudited Condensed Consolidated Statements of Cash
Flows 4
Unaudited Notes to Condensed Consolidated Financial
Statements 5 - 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9 - 11
Item 3. Quantities and Qualitative Disclosures About Market
Risk 11
Item 4. Controls and Procedures 11
Independent Accountants' Report 12
PART II. OTHER INFORMATION 13 - 16
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 13
PART I Financial Information
Item 1.
WINNEBAGO INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
Dollars in thousands
NOVEMBER 30, AUGUST 31,
ASSETS 2002 2002
- ----------------------------------------------------- -------- --------
CURRENT ASSETS
Cash and cash equivalents $ 66,084 $ 42,225
Receivables, less allowance for doubtful
accounts ($192 and $120, respectively) 22,426 28,616
Dealer financing receivables, less allowance
for doubtful accounts ($109 and $96, respectively) 43,038 37,880
Inventories 104,859 113,654
Prepaid expenses 4,561 4,314
Deferred income taxes 7,633 6,907
-------- --------
Total current assets 248,601 233,596
-------- --------
PROPERTY AND EQUIPMENT, at cost
Land 1,023 972
Buildings 52,426 47,953
Machinery and equipment 89,185 86,744
Transportation equipment 5,612 5,641
-------- --------
148,246 141,310
Less accumulated depreciation 93,970 92,383
-------- --------
Total property and equipment, net 54,276 48,927
-------- --------
INVESTMENT IN LIFE INSURANCE 23,586 23,602
-------- --------
DEFERRED INCOME TAXES, NET 23,024 22,438
-------- --------
OTHER ASSETS 9,765 8,514
-------- --------
TOTAL ASSETS $359,252 $337,077
======== ========
See Unaudited Notes to Condensed Consolidated Financial Statements.
1
WINNEBAGO INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
Dollars in thousands
NOVEMBER 30, AUGUST 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 2002 2002
- ----------------------------------------------------- -------- --------
CURRENT LIABILITIES
Accounts payable, trade $ 37,408 $ 44,230
Income tax payable 13,205 2,610
Accrued expenses:
Insurance 6,205 5,967
Product warranties 8,749 8,151
Accrued compensation 14,156 18,673
Promotional 6,137 4,499
Other 4,476 4,471
-------- --------
Total current liabilities 90,336 88,601
-------- --------
POSTRETIREMENT HEALTH CARE AND DEFERRED
COMPENSATION BENEFITS 70,367 68,661
-------- --------
STOCKHOLDERS' EQUITY
Capital stock, common, par value $.50; authorized
60,000,000 shares: issued 25,888,000 shares 12,944 12,944
Additional paid-in capital 25,941 25,740
Reinvested earnings 301,127 284,856
-------- --------
340,012 323,540
Less treasury stock, at cost 141,463 143,725
-------- --------
Total stockholders' equity 198,549 179,815
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $359,252 $337,077
======== ========
See Unaudited Notes to Condensed Consolidated Financial Statements.
2
WINNEBAGO INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
================================================================================
In thousands except per share data
THIRTEEN WEEKS FOURTEEN WEEKS
ENDED ENDED
NOVEMBER 30, DECEMBER 1,
2002 2001
-------- --------
Net revenues $234,089 $177,802
Cost of goods sold 198,275 153,570
-------- --------
Gross profit 35,814 24,232
-------- --------
Operating expenses
Selling 4,687 4,817
General and administrative 5,137 4,104
-------- --------
Total operating expenses 9,824 8,921
-------- --------
Operating income 25,990 15,311
Financial income 181 892
-------- --------
Pre-tax income 26,171 16,203
Provision for taxes 9,893 5,493
======== ========
Net income $ 16,278 $ 10,710
======== ========
Income per share-basic (Note 8) $ .87 $ .52
======== ========
Income per share-diluted (Note 8) $ .85 $ .51
======== ========
Weighted average shares of common stock
outstanding
Basic 18,719 20,674
======== ========
Diluted 19,107 21,103
======== ========
See Unaudited Notes to Condensed Consolidated Financial Statements.
================================================================================
3
WINNEBAGO INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THIRTEEN FOURTEEN
Dollars in thousands WEEKS ENDED WEEKS ENDED
NOVEMBER 30, DECEMBER 1,
2002 2001
--------- ---------
Cash flows from operating activities
Net income $ 16,278 $ 10,710
Adjustments to reconcile net income
to net cash provided by operating activities
Depreciation and amortization 1,961 2,048
Tax benefit of stock options 550 1,679
Other (50) (55)
Change in assets and liabilities
Decrease in receivable and other assets 5,955 8,884
Decrease (increase) in inventories 8,795 (1,662)
Increase in deferred income taxes (1,312) --
Decrease in accounts payable and accrued
expenses (8,860) (13,757)
Increase in income taxes payable 10,595 3,756
Increase in postretirement benefits 1,568 1,825
--------- ---------
Net cash provided by operating activities 35,480 13,428
--------- ---------
Cash flows provided (used) by investing activities
Purchases of property and equipment (7,359) (1,671)
Investments in dealer receivables (27,296) (16,958)
Collections of dealer receivables 22,125 21,730
Other (997) (943)
--------- ---------
Net cash (used) provided by investing activities (13,527) 2,158
--------- ---------
Cash flows used by financing activities and capital transactions
Payments for purchase of common stock -- (4,078)
Proceeds from issuance of common and treasury stock 1,906 1,706
--------- ---------
Net cash provided (used) by financing activities and
capital transactions 1,906 (2,372)
--------- ---------
Net increase in cash and cash equivalents 23,859 13,214
Cash and cash equivalents - beginning of period 42,225 102,280
--------- ---------
Cash and cash equivalents - end of period $ 66,084 $ 115,494
========= =========
See Unaudited Notes to Condensed Consolidated Financial Statements.
4
WINNEBAGO INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments, consisting of
normal recurring accruals, necessary to present fairly the consolidated
financial position as of November 30, 2002, the consolidated results of
operations and the consolidated cash flows for the 13 weeks ended November
30, 2002 and the 14 weeks ended December 1, 2001. The statement of income
for the 13 weeks ended November 30, 2002, is not necessarily indicative of
the results to be expected for the full year. The balance sheet data as of
August 31, 2002 was derived from audited financial statements, but does not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. These 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 31, 2002.
Certain prior year balances have been reclassified to conform to the
current year presentation. These reclassifications had no impact on
previously reported net income.
NOTE 2: NEW ACCOUNTING PRONOUNCEMENTS
The Company adopted Emerging Issues Task Force (EITF) Issue No. 01-9,
Accounting for Consideration Given by a Vendor to a Customer or a Reseller
of the Vendor's Products, at the beginning of the third quarter of fiscal
2002. This guidance was effective for periods beginning after December 5,
2001. EITF No. 01-9 requires that certain payments to customers for
cooperative advertising and certain sales incentive offers that were
historically classified in selling expense be shown as a reduction in net
revenues. The adoption of this new accounting policy had no impact on
previously reported operating income, net income, or earnings per share.
In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. This standard reviews the accounting for
certain exit costs and disposal activities currently set forth in EITF
Issue No. 94-3, Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs
Incurred in a Restructuring). The principal change of the new statement is
that it now requires that a liability for a cost associated with an exit or
disposal activity be recognized when the liability is incurred versus the
date of commitment to an exit plan. This statement is effective for exit
and disposal activities initiated after December 31, 2002. The Company does
not believe adoption of this standard will significantly affect the
Company's financial condition or operating results.
NOTE 3: INVENTORIES
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 30, August 31,
2002 2002
---------- ----------
Finished goods............. $ 42,198 $ 48,037
Work in process............ 30,242 26,995
Raw materials.............. 56,359 62,194
---------- ----------
128,799 137,226
LIFO reserve............... (23,940) (23,572)
---------- ----------
$ 104,859 $ 113,654
========== ==========
5
NOTE 4: CONTINGENT LIABILITIES AND COMMITMENTS
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 $303,973,000 and
$245,828,000 under repurchase agreements with lending institutions as of
November 30, 2002 and August 31, 2002, respectively. Included in these
contingent liabilities as of November 30, 2002 and August 31, 2002 are
approximately $615,000 and $1,049,000, respectively, of certain dealer
receivables subject to recourse agreements with Bank of America Specialty
Group. Also included in these contingent liabilities are approximately
$1,608,000 and $1,698,000 under a repurchase agreement with Transamerica
Commercial Finance Corporation, Canada as of November 30, 2002 and August
31, 2002, respectively.
NOTE 5: SUPPLEMENTAL CASH FLOW DISCLOSURE
For the periods indicated, the Company paid cash for the following (dollars
in thousands):
Thirteen Weeks Fourteen Weeks
Ended Ended
November 30, December 1,
2002 2001
---------- ----------
Interest $ -- $ --
Income taxes -- --
During the first quarters of fiscal 2003 and 2002, the Company did not pay
any interest expense or any income taxes.
NOTE 6: DIVIDEND DECLARED
On October 9, 2002 the Board of Directors declared a cash dividend of $.10
per common share payable January 6, 2003 to shareholders of record on
December 6, 2002.
NOTE 7: REPURCHASE OF OUTSTANDING STOCK
On June 19, 2002, the Board of Directors authorized the repurchase of
outstanding shares of the Company's common stock, depending on market
conditions, for an aggregate purchase price of up to $15,000,000. As of
November 30, 2002, 119,900 shares had been repurchased for an aggregate
consideration of approximately $4,294,000 under this authorization.
6
NOTE 8: INCOME PER SHARE
The following table reflects the calculation of basic and diluted earnings
per share for the 13 and 14 weeks ended November 30, 2002 and December 1,
2001:
Thirteen Weeks Fourteen Weeks
Ended Ended
November 30, December 1,
2002 2001
---------- ----------
In thousands except per share data
Earnings per share - basic:
---------------------------
Net income $ 16,278 $ 10,710
---------- ----------
Weighted average shares outstanding 18,719 20,674
---------- ----------
Earnings per share - basic $ .87 $ .52
---------- ----------
Earnings per share - assuming dilution:
---------------------------------------
Net income $ 16,278 $ 10,710
---------- ----------
Weighted average shares outstanding 18,719 20,674
Dilutive impact of options outstanding 388 429
---------- ----------
Weighted average shares & potential
dilutive shares outstanding 19,107 21,103
---------- ----------
Earnings per share - assuming dilution $ .85 $ .51
---------- ----------
For the 13 weeks ended November 30, 2002 and the 14 weeks ended December 1,
2001, all options were included in the computation of diluted earnings per
share because no options' exercise price was greater than the average
market price of the common stock.
NOTE 9: BUSINESS SEGMENT INFORMATION
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 relating 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, used and rental unit financing for a limited number of
the Company's dealers. Management focuses on operating income as a
segment's measure of profit or loss when evaluating a segment's financial
performance. Operating income for recreational vehicles and other
manufactured products is before interest expense, interest income, and
income taxes. Operating income for dealer financing includes interest
income and interest expense, but is before income taxes. A variety of
balance sheet ratios are used by management to measure the business.
Maximizing the return from each segment's assets excluding cash and cash
equivalents is the primary focus. 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 includes interest income and administrative and
miscellaneous costs. Inter-segment sales and expenses are not significant.
7
For the 13 weeks ended November 30, 2002 and the 14 weeks ended December 1,
2001, the Company's segment information is as follows:
RECREATION VEHICLES &
OTHER MANUFACTURED DEALER GENERAL
(DOLLARS IN THOUSANDS) PRODUCTS FINANCING CORPORATE TOTAL
----------------------------------------------------------- --------- --------- ---------
13 Weeks Ended November 30, 2002
Net revenues $ 233,347 $ 742 $ -- $ 234,089
Operating income 25,433 246 311 25,990
Identifiable assets 215,666 43,311 100,275 359,252
14 Weeks Ended December 1, 2001
Net revenues $ 176,857 $ 945 $ -- $ 177,802
Operating income 14,674 384 253 15,311
Identifiable assets 170,266 35,838 147,427 353,531
Certain prior year information has been reclassified to conform to current
year presentation.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD LOOKING INFORMATION
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, reactions to
actual or threatened terrorist attacks, availability and price of fuel, a
significant increase in interest rates, a slowdown in the economy, availability
of chassis, slower than anticipated sales of new or existing products, new
product introductions by competitors, collections of dealer financing
receivables and other factors which may be disclosed throughout this report. 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. The Company undertakes no obligation to publicly update or revise
any forward looking statements whether as a result of new information, future
events or otherwise, except as required by law or the rules of the New York
Stock Exchange.
CRITICAL ACCOUNTING POLICIES
In preparing the consolidated financial statements, we follow accounting
principles generally accepted in the United States of America, which in many
cases requires us to make assumptions, estimates and judgments that affect the
amounts reported. There are some policies that are especially critical because
they are important in determining the financial condition and results of
operations. These policies are described below and involve additional management
judgment due to the sensitivity of the methods, assumptions and estimates
necessary in determining the related income statement, asset and/or liability
amounts.
The Company offers to its customers a variety of warranties on its products
ranging from 1 to 10 years in length. Estimated costs related to product
warranty are accrued at the time of sale and included in cost of sales.
Estimated costs are based upon past warranty claims and unit sales history and
adjusted as required to reflect actual costs incurred, as information becomes
available.
The Company has reserves for other loss exposures such as product liability,
litigation and accounts receivable. The Company also has loss exposure on loan
guarantees and repurchase agreements (see Note 4 of Unaudited Notes to Condensed
Consolidated Financial Statements). Establishing loss reserves for these matters
requires the use of estimates and judgment in regards to risk exposure and
ultimate liability. The Company estimates losses under the programs using
consistent and appropriate methods; however, changes in assumptions could
materially affect the Company's recorded liabilities for loss.
RESULTS OF OPERATION
Thirteen Weeks Ended November 30, 2002 Compared to Fourteen Weeks Ended December
1, 2001
Net revenues for recreation vehicle and other manufactured products for the 13
weeks ended November 30, 2002 were $233,347,000, an increase of $56,490,000, or
31.9 percent from the 14-week period ended December 1, 2001. Motor home unit
sales (Class A and C) were 2,925 units, an increase of 608 units, or 26.2
percent, during the first quarter of fiscal 2003 compared to the first quarter
of fiscal 2002. The percentage increase in net revenues for the first quarter of
fiscal 2003 was greater than the percentage increase in motor home unit sales
for that period as a result of the Company's sales of more units, as a
percentage of the total unit sales, with the higher-priced slideout feature
during the first quarter of fiscal 2003. The Company believes the increases and
growth were the result of the excellent acceptance of the Company's new 2003
motor homes and the continued low interest rate environment.
Net revenues for dealer financing of Winnebago Acceptance Corporation (WAC) were
$742,000 for the 13 weeks ended November 30, 2002; a decrease of $203,000 or
21.5 percent from the 14-week period ended December 1, 2001. Decreased revenues
for dealer financing reflect a significant decrease in interest rates partially
offset by higher average outstanding dealer receivable balances when comparing
the two periods.
9
Gross profit, as a percent of net revenues, was 15.3 percent for the 13 weeks
ended November 30, 2002 compared to 13.6 percent for the 14 weeks ended December
1, 2001. The Company's higher margins were due primarily to increased volume of
motor home production and deliveries to dealers.
Selling expenses were $4,687,000 or 2.0 percent of net revenues during the first
quarter of fiscal 2003 compared to $4,817,000 or 2.7 percent of net revenues
during the first quarter of fiscal 2002. The decrease in dollars was caused
primarily by reductions in advertising expenses during the first quarter of
fiscal 2003. The increased sales volume caused the reduction in percentage
during the first quarter of fiscal 2003.
General and administrative expenses were $5,137,000 or 2.2 percent of net
revenues during the 13 weeks ended November 30, 2002 compared to $4,104,000 or
2.3 percent of net revenues during the 14 weeks ended December 1, 2001. The
increase in dollars when comparing the two quarters was primarily due to
increases in employee incentive programs during the first quarter of fiscal
2003. The slight decrease in percentage was caused by the increased sales volume
during the first quarter of fiscal 2003.
The Company had net financial income of $181,000 for the first quarter of fiscal
2003 compared to net financial income of $892,000 for the comparable quarter of
fiscal 2002. The decrease in interest income when comparing the two periods was
due primarily to lower cash balances available for investing and, to a lesser
degree, lower interest rates during the period ended November 30, 2002 than
during the period ended December 1, 2001.
The effective income tax rate increased to 37.8 percent during the first quarter
of fiscal 2003 from 33.9 percent during the first quarter of fiscal 2002. The
increase in the effective tax rate was caused primarily by losses in the
Winnebago Health Care Management Company which are likely not deductible for tax
purposes due to a change in the Company's tax planning, increased state taxes
and a reduction of tax-free financial income during the first quarter of fiscal
2003.
For the first quarter of fiscal 2003, the Company had net income of $16,278,000,
or $.85 per diluted share compared to the first quarter of fiscal 2002's net
income of $10,710,000, or $.51 per diluted share. Net income and earnings per
diluted share increased by 52.0 percent and 66.7 percent, respectively, when
comparing the first quarter of fiscal 2003 to the first quarter of fiscal 2002.
The differences in percentages when comparing net income to net earnings per
share were primarily due to a lower number of outstanding shares of the
Company's common stock during the 13 weeks ended November 30, 2002 due to the
Company's repurchase of shares during fiscal 2002. (See Note 8 of the Unaudited
Notes to Condensed Consolidated Financial Statements.)
LIQUIDITY AND FINANCIAL CONDITION
The Company generally meets its working capital, capital equipment and cash
requirements with funds generated from operations.
At November 30, 2002, working capital was $158,265,000, an increase of
$13,270,000 from the amount at August 31, 2002. The Company's principal uses of
cash during the 13 weeks ended November 30, 2002 were $7,359,000 for the
purchase of property and equipment. The Company's sources and uses of cash
during the 13 weeks ended November 30, 2002 are set forth in the unaudited
consolidated condensed statement of cash flows for that period.
Principal known demands at November 30, 2002 on the Company's liquid assets for
the remainder of fiscal 2003 include capital expenditures of approximately
$18,000,000 and the payments of cash dividends.
Management currently expects its cash on hand and funds from operations to be
sufficient to cover both short-term and long-term operating requirements.
COMPANY OUTLOOK
Long-term demographics are favorable to the Company, as the target market of
U.S. consumers age 50 and older is anticipated to nearly double within the next
30 years. Studies completed also found the age of people interested in
purchasing recreation vehicles is expanding to include younger buyers as well as
older buyers. Order backlog for the
10
Company's Class A and Class C motor homes was 1,950 orders at November 30, 2002,
an increase of 23.5 percent over sales order backlog of 1,579 at the end of the
first quarter last year, but down from the 3,248 backlog reported on August 31,
2002. The Company includes in its backlog all accepted purchase orders from
dealers shippable within the next six months. Orders in backlog can be canceled
or postponed at the option of the purchaser at any time without penalty and,
therefore, backlog may not necessarily be a measure of future sales.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of November 30, 2002, the Company has an investment portfolio of fixed income
securities, which are classified as cash and cash equivalents of $66,084,000, of
which $63,400,000 are fixed income investments that are subject TO interest rate
risk.
As of November 30, 2002, the Company had dealer-financing receivables in the
amount of $43,038,000. Interest rates charged on these receivables vary based on
the prime rate.
ITEM 4. CONTROLS AND PROCEDURES
Within the 90-day period prior to the filing of this report, an evaluation was
carried out under the supervision and with the participation of the Company's
management, including our Chief Executive Officer and Chief Financial Officer,
of the effectiveness of our disclosure controls and procedures (as defined in
Rule 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934). Based
on their evaluation, our Chief Executive Officer and Chief Financial Officer
have concluded that the Company's disclosure controls and procedures are, to the
best of their knowledge, effective to ensure that information required to be
disclosed by the Company in reports that it files or submits under the Exchange
Act is recorded, processed, summarized and reported within the time periods
specified in Securities and Exchange Commission rules and forms. Subsequent to
the date of their evaluation, there were no significant changes in the Company's
internal controls or in other factors that could significantly affect these
controls, including any corretive actions with regard to significant
deficiencies and material weaknesses.
11
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors of
Winnebago Industries, Inc.
Forest City, Iowa
We have reviewed the accompanying condensed consolidated balance sheet of
Winnebago Industries, Inc. and subsidiaries (the Company) as of November 30,
2002, and the related condensed consolidated statements of income and cash flows
for the 13-week and 14-week periods ended November 30, 2002 and December 1,
2001, respectively. These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with auditing standards generally accepted in the United States of America
(generally accepted auditing standards), the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with accounting principles generally accepted in the United States of
America.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of the Company as of August 31, 2002,
and the related consolidated statements of income, stockholders' equity, and
cash flows for the year then ended (not presented herein); and in our report
dated October 4, 2002, we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying condensed consolidated balance sheet as of August 31, 2002 is
fairly stated, in all material respects, in relation to the consolidated balance
sheet from which it has been derived.
/s/ Deloitte & Touche LLP
Minneapolis, Minnesota
December 16, 2002
12
PART II Other Information
Item 1. Legal Proceedings
There have been no further material developments regarding the purported
class action suit titled Sanft, et al vs. Winnebago Industries, Inc. from
that contained in our 2002 Annual Report on Form 10-K.
The Company is also involved in various other legal proceedings which are
ordinary routine litigation to its business, many of which are covered in
whole or in part by insurance. While it is impossible to estimate with
certainty the ultimate legal and financial liability with respect to this
litigation, management is of the opinion that while the final resolution of
any such litigation may have an impact on the Company's consolidated
results for a particular reporting period, the ultimate disposition of such
litigation will not have any material adverse effect on the Company's
financial position, results of operations or liquidity.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
99. 906 certification.
(b) The Company did not file any reports on Form 8-K during the period
covered by this report.
13
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 14, 2003 /s/ Bruce D. Hertzke
---------------- ------------------------------------------------
Bruce D. Hertzke
Chairman of the Board, Chief Executive Officer,
and President
(Principal Executive Officer)
Date January 14, 2003 /s/ Edwin F. Barker
---------------- ------------------------------------------------
Edwin F. Barker
Vice President - Chief Financial Officer
(Principal Financial Officer)
14
CERTIFICATION BY CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Bruce D. Hertzke, Chief Executive Officer of Winnebago Industries, Inc.,
certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Winnebago
Industries, Inc. (the "Registrant");
2. Based on my knowledge, this Quarterly Report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this Quarterly Report;
3. Based on my knowledge, the financial statements, and other financial
information included in this Quarterly Report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Registrant as of, and for, the periods presented in
this Quarterly Report;
4. The Registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant
and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
Quarterly Report is being prepared;
b) evaluated the effectiveness of the Registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this Quarterly Report (the "Evaluation Date"); and
c) presented in this Quarterly Report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The Registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the Registrant's auditors and the
audit committee of Registrant's Board of Directors (or persons
performing the equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Registrant's
ability to record, process, summarize and report financial data
and have identified for the Registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involved management
or other employees who have a significant role in the
Registrant's internal controls; and
6. The Registrant's other certifying officer and I have indicated in this
Quarterly Report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: January 14, 2003
----------------
By: /s/ Bruce D. Hertzke
-----------------------
Bruce D. Hertzke
Chief Executive Officer
15
CERTIFICATION BY CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Edwin F. Barker, Chief Financial Officer of Winnebago Industries, Inc.,
certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Winnebago
Industries, Inc. (the "Registrant");
2. Based on my knowledge, this Quarterly Report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this Quarterly Report;
3. Based on my knowledge, the financial statements, and other financial
information included in this Quarterly Report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Registrant as of, and for, the periods presented in
this Quarterly Report;
4. The Registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant
and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
Quarterly Report is being prepared;
b) evaluated the effectiveness of the Registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this Quarterly Report (the "Evaluation Date"); and
c) presented in this Quarterly Report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The Registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the Registrant's auditors and the
audit committee of Registrant's Board of Directors (or persons
performing the equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Registrant's
ability to record, process, summarize and report financial data
and have identified for the Registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involved management
or other employees who have a significant role in the
Registrant's internal controls; and
6. The Registrant's other certifying officer and I have indicated in this
Quarterly Report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: January 14, 2003
----------------
By: /s/ Edwin F. Barker
-----------------------
Edwin F. Barker
Chief Financial Officer
16
EXHIBIT 99
WRITTEN STATEMENT BY THE CHIEF EXECUTIVE OFFICER AND THE
CHIEF FINANCIAL OFFICER
1. Bruce D. Hertzke, Chief Executive Officer and President and Edwin F.
Barker, Chief Financial Officer, each certify that:
(a) The Quarterly Report on Form 10-Q ("periodic report") of Winnebago
Industries, Inc. (the "issuer"), for the quarter ended November 30,
2002, as filed with the Securities and Exchange Commission on the date
of this certificate, which this statement accompanies, fully complies
with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, and
(b) the information contained in that periodic report fairly represents,
in all material respects, the financial condition and results of
operations of the issuer.
2. This statement is provided pursuant to the requirements of Section 906 of
the Sarbanes - Oxley Act of 2002, codified as Section 1350 of Chapter 63 of
Title 18 U.S.C.
Date: January 14, 2003
----------------
By: /s/ Bruce D. Hertzke
-----------------------
Bruce D. Hertzke
Chief Executive Officer
By: /s/ Edwin F. Barker
-----------------------
Edwin F. Barker
Chief Financial Officer