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 March 1, 2003
-------------------------------------------------
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 42-0802678
(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 is an accelerated filer
(as defined in Rule 12b-2 of the Act). Yes __X__ No ___.
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 18,129,274 shares of $.50 par value common stock outstanding on April
11, 2003.
WINNEBAGO INDUSTRIES, INC. AND SUBSIDIARIES
INDEX TO REPORT ON FORM 10-Q
Page Number
-----------
PART I. FINANCIAL INFORMATION:
Item I. Unaudited Condensed Consolidated Balance Sheets 1 - 2
Unaudited Condensed 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 - 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk 12
Item 4. Controls and Procedures 12
Independent Accountants' Report 13
PART II. OTHER INFORMATION 14 - 18
Item 1. Legal Proceedings 14
Item 6. Exhibits and Reports on Form 8-K 14
PART I Financial Information
Item 1.
WINNEBAGO INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
Dollars in thousands
MARCH 1, AUGUST 31,
ASSETS 2003 2002
- ------------------------------------------------------------ -------------------- -------------------
CURRENT ASSETS
Cash and cash equivalents $ 39,507 $ 42,225
Receivables, less allowance for doubtful
accounts ($274 and $120, respectively) 17,887 28,616
Dealer financing receivables, less allowance
for doubtful accounts ($109 and $96, respectively) 42,941 37,880
Inventories 127,405 113,654
Prepaid expenses 4,526 4,314
Deferred income taxes 7,801 6,907
-------------------- -------------------
Total current assets 240,067 233,596
-------------------- -------------------
PROPERTY AND EQUIPMENT, at cost
Land 1,005 972
Buildings 54,174 47,953
Machinery and equipment 92,595 86,744
Transportation equipment 8,959 5,641
-------------------- -------------------
156,733 141,310
Less accumulated depreciation 94,379 92,383
-------------------- -------------------
Total property and equipment, net 62,354 48,927
-------------------- -------------------
INVESTMENT IN LIFE INSURANCE 23,344 23,602
-------------------- -------------------
DEFERRED INCOME TAXES, NET 22,956 22,438
-------------------- -------------------
OTHER ASSETS 9,484 8,514
-------------------- -------------------
TOTAL ASSETS $ 358,205 $ 337,077
==================== ===================
See Unaudited Notes to Condensed Consolidated Financial Statements.
1
WINNEBAGO INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
Dollars in thousands
MARCH 1, AUGUST 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 2003 2002
- ----------------------------------------------------------------------------------------- --------------------
CURRENT LIABILITIES
Accounts payable, trade $ 42,437 $ 44,230
Income tax payable 4,347 2,610
Accrued expenses
Insurance 5,728 5,967
Product warranties 9,370 8,151
Accrued compensation 13,209 18,673
Promotional 8,477 4,499
Other 5,166 4,471
------------------ --------------------
Total current liabilities 88,734 88,601
------------------ --------------------
POSTRETIREMENT HEALTH CARE AND DEFERRED
COMPENSATION BENEFITS 70,489 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 26,201 25,740
Reinvested earnings 311,556 284,856
------------------ --------------------
350,701 323,540
Less treasury stock, at cost 151,719 143,725
------------------ --------------------
Total stockholders' equity 198,982 179,815
------------------ --------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 358,205 $ 337,077
=================== ====================
See Unaudited Notes to Condensed Consolidated Financial Statements.
2
WINNEBAGO INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
================================================================================
In thousands except per share data
TWENTY-SIX TWENTY-SEVEN
THIRTEEN WEEKS ENDED WEEKS ENDED WEEKS ENDED
------------------------------------- -------------------- --------------------
MARCH 1, MARCH 2, MARCH 1, MARCH 2,
2003 2002 2003 2002
------------------ ----------------- -------------------- --------------------
Net revenues $ 186,728 $ 183,055 $ 420,817 $ 360,857
Cost of goods sold 159,590 160,117 357,865 313,687
------------------ ----------------- -------------------- --------------------
Gross profit 27,138 22,938 62,952 47,170
------------------ ----------------- -------------------- --------------------
Operating expenses
Selling 4,068 4,493 8,755 9,310
General and administrative 2,950 5,031 8,087 9,135
------------------ ----------------- -------------------- --------------------
Total operating expenses 7,018 9,524 16,842 18,445
------------------ ----------------- -------------------- --------------------
Operating income 20,120 13,314 46,110 28,725
Financial income 312 912 493 1,804
------------------ ----------------- -------------------- --------------------
Pre-tax income 20,432 14,326 46,603 30,529
Provision for taxes 8,123 4,878 18,016 10,371
------------------ ----------------- -------------------- --------------------
Net income $ 12,309 $ 9,448 $ 28,587 $ 20,158
================== ================= ==================== ====================
Income per share-basic (Note 9) $ .66 $ .46 $ 1.52 $ .97
================== ================= ==================== ====================
Income per share-diluted (Note 9) $ .64 $ .45 $ 1.50 $ .95
================== ================= ==================== ====================
Weighted average shares of
common stock outstanding
Basic 18,775 20,760 18,750 20,715
================== ================= ==================== ====================
Diluted 19,112 21,215 19,113 21,157
================== ================= ==================== ====================
See Unaudited Notes to Condensed Consolidated Financial Statements.
================================================================================
3
WINNEBAGO INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THIRTEEN THIRTEEN TWENTY-SIX TWENTY-SEVEN
Dollars in thousands WEEKS ENDED WEEKS ENDED WEEKS ENDED WEEKS ENDED
MARCH 1, MARCH 2, MARCH 1, MARCH 2,
2003 2002 2003 2002
-----------------------------------------------------------------
Cash flows from operating activities
Net income as shown on the statements of income $ 12,309 $ 9,448 $ 28,587 $ 20,158
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation and amortization 2,056 1,913 4,017 3,961
Tax benefit of stock options 317 1,329 867 3,008
Other 194 141 144 86
Change in assets and liabilities
Decrease (increase) in receivable and other assets 4,519 (9,258) 10,474 (374)
Increase in inventories (22,546) (1,654) (13,751) (3,316)
Increase in deferred income taxes (100) - - - (1,412) - - -
(Decrease) increase in accounts payable and accrued expenses 7,256 22,565 (1,604) 8,808
Increase in income taxes payable (8,858) 1,963 1,737 5,719
Increase in postretirement benefits 775 1,413 2,343 3,238
----------------------------------------------------------------
Net cash provided by operating activities (4,078) 27,860 31,402 41,288
----------------------------------------------------------------
Cash flows used by investing activities
Purchases of property and equipment (10,200) (1,995) (17,559) (3,666)
Investments in dealer receivables (32,050) (35,837) (59,346) (52,795)
Collections of dealer receivables 32,147 33,157 54,272 54,887
Other (203) (1,094) (1,200) (2,037)
----------------------------------------------------------------
Net cash used by investing activities (10,306) (5,769) (23,833) (3,611)
----------------------------------------------------------------
Cash flows used by financing activities and capital transactions
Payments for purchase of common stock (10,521) - - - (10,521) (4,078)
Payment of cash dividends (1,887) (2,075) (1,887) (2,075)
Proceeds from issuance of common and treasury stock 215 (1,033) 2,121 673
----------------------------------------------------------------
Net cash used by financing activities and
capital transactions (12,193) (3,108) (10,287) (5,480)
----------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents (26,577) 18,983 (2,718) 32,197
Cash and cash equivalents - beginning of period 66,084 115,494 42,225 102,280
----------------------------------------------------------------
Cash and cash equivalents - end of period $ 39,507 $ 134,477 $ 39,507 $ 134,477
================================================================
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 March 1, 2003, the consolidated results of
operations for the 26 and 13 weeks ended March 1, 2003 and the 27 and 13
weeks ended March 2, 2002, and the consolidated cash flows for the 26 weeks
ended March 1, 2003 and the 27 weeks ended March 2, 2002. The statement of
income for the 26 weeks ended March 1, 2003, 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 or shareholders' equity.
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 Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (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 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.
In November 2002, the FASB issued FASB Interpretation No. (FIN) 45,
Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others. FIN 45 clarifies
the requirements for a guarantor's accounting for and disclosure of certain
guarantees issued and outstanding. The initial recognition and initial
measurement provisions of FIN 45 are applicable to guarantees issued or
modified after December 31, 2002. The disclosure requirements of FIN 45 are
effective for financial statements of interim or annual periods ending
after December 15, 2002. The adoption of FIN 45 did not have an impact on
the consolidated results of operations, financial position, or cash flows.
See Note 4 for expanded warranty disclosure requirements of this new
standard.
In December 2002, the FASB issued SFAS N0. 148, ACCOUNTING FOR STOCK-BASED
COMPENSATION - TRANSITION AND DISCLOSURE - AN AMENDMENT OF FASB STATEMENT
NO. 123. SFAS N0. 148 provides alternative methods of transition for a
voluntary change to the fair value based method of accounting for
stock-based employee compensation. In addition, SFAS No. 148 amends the
disclosure requirements of SFAS No. 123 to require prominent disclosures in
both annual and interim financial statements about the method of accounting
for stock-based employee compensation
5
and the effect of the method used on reported results. The Company will
continue to account for stock-based compensation in accordance with APB
Opinion No. 25. As such, the Company does not expect this standard will
have a material impact on the consolidated financial position or results of
operations. The Company will adopt the disclosure-only provisions of SFAS
No. 148 in the third quarter of 2003.
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):
March 1, August 31,
2003 2002
-------------------- --------------------
Finished goods................ $ 59,105 $ 48,037
Work in process............... 30,886 26,995
Raw materials................. 61,673 62,194
------------------ -----------------
151,664 137,226
LIFO reserve.................. (24,259) (23,572)
------------------ -----------------
$ 127,405 $ 113,654
================== =================
NOTE 4: WARRANTIES
Estimated warranty costs are provided at the time of sale of the warranted
products. Estimates of future warranty costs are based on prior experience
and known current events. The changes in the provision for warranty reserve
for the 26 weeks ended March 1, 2003, are as follows (dollars in
thousands):
Balance as of August 31, 2002 $ 8,151
Product warranty provision 6,723
Payments (5,504)
------------------
Balance at March 1, 2003 $ 9,370
==================
NOTE 5: 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 $275,355,000 and
$206,155,000 under repurchase agreements with lending institutions as of
March 1, 2003 and August 31, 2002, respectively. These repurchase
obligations have a term of one year from the date of the original invoice.
The Company's losses under these repurchase agreements were approximately
$39,000 during the 26 weeks ended March 1, 2003. Included in these
contingent liabilities as of March 1, 2003 and August 31, 2002 are
approximately $531,000 and $1,049,000, respectively, of certain dealer
receivables subject to recourse agreements with Bank of America Specialty
Group. The Company did not incur any actual losses under these recourse
agreements during the 26 weeks ended March 1, 2003.
The Company has also entered into a repurchase agreement with a lending
institution that covers approximately $1,564,000 and $1,698,000 of
repurchase liability as of March 1, 2003 and August 31, 2002, respectively.
This repurchase obligation has a term of two years from the date of the
original invoice. The Company did not incur any actual losses under these
repurchase agreements during the 26 weeks ended March 1, 2003.
The Company records repurchase and recourse reserves based on prior
experience and known current events. The combined repurchase and recourse
reserve balances are approximately $392,000 and $333,000 as of March 1,
2003 and August 31, 2002, respectively.
6
NOTE 6: SUPPLEMENTAL CASH FLOW DISCLOSURE
For the periods indicated, the Company paid cash for the following (dollars
in thousands):
Twenty-Six Weeks Twenty-Seven
Ended Weeks Ended
March 1, March 2,
2003 2002
------------------ --------------------
Interest $ - - - $ - - -
Income taxes 16,707 4,500
NOTE 7: DIVIDEND DECLARED
On March 19, 2003 the Board of Directors declared a cash dividend of $.10
per common share payable July 7, 2003 to shareholders of record on June
6, 2003.
NOTE 8: 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
March 1, 2003, 450,200 shares had been repurchased for an aggregate
consideration of approximately $14,814,000 under this authorization. On
March 19, 2003, the Board of Directors authorized the purchase of
outstanding shares of the Company's common stock for an aggregate price
of up to $20 million.
NOTE 9: INCOME PER SHARE
The following table reflects the calculation of basic and diluted
earnings per share for the 13 and 26 weeks ended March 1, 2003 and the 13
and 27 weeks ended March 2, 2002.
Twenty-Six Twenty-Seven
Thirteen Weeks Ended Weeks Ended Weeks Ended
---------------- -------------- ----------------- ------------------
In thousands except per share data March 1, March 2, 2002 March 1, March 2,
2003 2003 2002
---------------- -------------- ----------------- ------------------
Earnings per share - basic
--------------------------
Net income $ 12,309 $ 9,448 $ 28,587 $ 20,158
---------------- -------------- ----------------- ------------------
Weighted average shares outstanding 18,775 20,760 18,750 20,715
---------------- -------------- ----------------- ------------------
Earnings per share - basic $ .66 $ .46 $ 1.52 $ .97
---------------- -------------- ----------------- ------------------
Earnings per share - assuming dilution
--------------------------------------
Net income $ 12,309 $ 9,448 $ 28,587 $ 20,158
---------------- -------------- ----------------- ------------------
Weighted average shares outstanding 18,775 20,760 18,750 20,715
Dilutive impact of options outstanding 337 455 363 442
---------------- -------------- ----------------- ------------------
Weighted average shares & potential
dilutive shares outstanding 19,112 21,215 19,113 21,157
---------------- -------------- ----------------- ------------------
Earnings per share - assuming dilution $ .64 $ .45 $ 1.50 $ .95
---------------- -------------- ----------------- ------------------
There were options to purchase 14,000 shares of common stock outstanding at
a price of $39.475 per share during the 13 weeks ended March 1, 2003. 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 stock.
7
NOTE 10: 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
segments. 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.
For the 26 weeks ended March 1, 2003 and the 27 weeks ended March 2, 2002,
the Company's segment information is as follows:
Recreation
Vehicles & Other
Manufactured Dealer General
(dollars in thousands) Products Financing Corporate Total
----------------------------------------------------------------------------------------------------------
26 Weeks Ended March 1, 2003
Net revenues $ 419,305 $ 1,512 $ - - - $ 420,817
Operating income 45,383 559 168 46,110
Identifiable assets 236,605 43,193 78,407 358,205
27 Weeks Ended March 2, 2002
Net revenues $ 359,209 $ 1,648 $ - - - $ 360,857
Operating income 27,752 630 343 28,725
Identifiable assets 182,137 38,483 170,849 391,469
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 the war with
Iraq, 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
are adjusted as required to reflect actual costs incurred, as information
becomes available (see Note 4 of Unaudited Notes to Condensed Consolidated
Financial Statements).
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 5 of Unaudited Notes to Condensed
Consolidated Financial Statements). Establishing loss reserves for these matters
requires the use of estimates and judgments in regards to risk exposure and
ultimate liability. The Company estimates losses using consistent and
appropriate methods; however, changes in assumptions could materially affect the
Company's recorded liabilities for loss. Reference is also made to the
description of the Company's critical accounting policies included in the
Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2002.
RESULTS OF OPERATIONS
Thirteen Weeks Ended March 1, 2003 Compared to Thirteen Weeks Ended
- --------------------------------------------------------------------
March 2, 2002
- -------------
Net revenues for recreation vehicle and other manufactured products for the 13
weeks ended March 1, 2003 were $185,958,000, an increase of $3,606,000, or 2.0
percent from the 13-week period ended March 2, 2002. Motor home unit sales
(Class A and C) were 2,259 units, a decrease of 189 units, or 7.7 percent,
during the second quarter of fiscal 2003 compared to the second quarter of
fiscal 2002. When comparing the two quarters, the Company, as a percentage of
the total unit sales, sold more higher-priced slideout featured units during the
second quarter of fiscal 2003 than during the second quarter of fiscal 2002. The
introduction of the Company's Vista and Sunstar Class C motor homes during the
second quarter of fiscal 2002 contributed to the difference in number of unit
shipments.
Net revenues for dealer financing of Winnebago Acceptance Corporation (WAC) were
$770,000 for the 13 weeks ended March 1, 2003; an increase of $67,000 or 9.5
percent from the 13-week period ended March 2, 2002. Increased revenues for
dealer financing reflect higher average outstanding dealer receivable balances
partially offset by a decrease in interest rates.
9
Gross profit, as a percent of net revenues, was 14.5 percent for the 13 weeks
ended March 1, 2003 compared to 12.5 percent for the 13 weeks ended March 2,
2002. The Company's higher margins were due primarily to an improved mix of
products and a favorable physical inventory adjustment which were partially
offset by the start-up costs of the new production facility in Charles City,
Iowa.
Selling expenses were $4,068,000 or 2.2 percent of net revenues during the
second quarter of fiscal 2003 compared to $4,493,000 or 2.5 percent of net
revenues during the second quarter of fiscal 2002. The decreases in dollars and
percentage were caused primarily by reductions in advertising expenses during
the second quarter of fiscal 2003.
General and administrative expenses were $2,950,000 or 1.6 percent of net
revenues during the 13 weeks ended March 1, 2003 compared to $5,031,000 or 2.7
percent of new revenues during the 13 weeks ended March 2, 2002. The decreases
in dollars and percentage were caused primarily by lower stock-based incentive
compensation expense, decreases in management incentive programs and a reduction
in the Company's product liability expense.
The Company had net financial income of $312,000 for the second quarter of
fiscal 2003 compared to net financial income of $912,000 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,
principally as a result of Company stock buybacks during the past 12 months and,
to a lesser degree, lower interest rates during the period ended March 1, 2003.
The effective income tax rate increased to 39.8 percent during the second
quarter of fiscal 2003 from 34.0 percent during the second 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 and a reduction of
tax-free financial income during the second quarter of fiscal 2003.
For the second quarter of fiscal 2003, the Company had net income of
$12,309,000, or $.64 per diluted share compared to the second quarter of fiscal
2002's net income of $9,448,000, or $.45 per diluted share. Net income and
earnings per diluted share increased by 30.3 percent and 42.2 percent,
respectively, when comparing the second quarter of fiscal 2003 to the second
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 March 1, 2003 due
to the Company's repurchase of shares during fiscal 2003 and 2002. (See Note 9
of the Unaudited Notes to Condensed Consolidated Financial Statements.)
Twenty-Six Weeks Ended March 1, 2003 Compared to Twenty-Seven Weeks Ended
- -------------------------------------------------------------------------
March 2, 2002
- -------------
Net revenues for recreation vehicle and other manufactured products for the 26
weeks ended March 1, 2003 were $419,305,000, an increase of $60,096,000, or 16.7
percent from the 27-week period ended March 2, 2002. Motor home unit sales
(Class A and C) were 5,184 units, an increase of 419 units, or 8.8 percent,
during the first half of fiscal 2003 compared to the first half of fiscal 2002.
The percentage increase in net revenues for the 26 weeks ended March 1, 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 period.
Net revenues for dealer financing of WAC were $1,512,000 for the 26 weeks ended
March 1, 2003, a decrease of $136,000 or 8.3 percent from the 27-week period
ended March 2, 2002. 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.
Gross profit, as a percent of net revenues, was 15.0 percent for the 26 weeks
ended March 1, 2003 compared to 13.1 percent for the 27 weeks ended March 2,
2002. The Company's higher margins were due primarily to increased volume of
motor home production, increased deliveries to the Company's dealers, an
improved mix of products and a favorable physical inventory adjustment which
were partially offset by the start-up costs of the new production facility in
Charles City, Iowa.
10
Selling expenses were $8,755,000 or 2.1 percent of net revenues during the 26
weeks ended March 2, 2002 compared to $9,310,000 or 2.6 percent of net revenues
during the 27 weeks ended March 2, 2002. The decreases in dollars and percentage
were caused primarily by reductions in advertising expenses during the first
half of fiscal 2003.
General and administrative expenses were $8,087,000 or 1.9 percent of net
revenues during the 26 weeks ended March 1, 2003 compared to $9,135,000 or 2.5
percent of net revenues during the 27 weeks ended March 2, 2002. The decreases
in dollars and percentage when comparing the two periods were caused primarily
by lower stock-based incentive compensation expense, decreases in management
incentive programs and a reduction in the Company's product liability expense.
The Company had net financial income of $493,000 for the 26 weeks ended March 1,
2003 compared to net financial income of $1,804,000 for the 27 weeks ended March
2, 2002. The decrease in interest income when comparing the two periods was due
primarily to lower cash balances available for investing, principally as a
result of Company stock buybacks during the past 12 months and, to a lesser
degree, lower interest rates during the period ended March 1, 2003.
The effective income tax rate increased to 38.7 percent during the 26 weeks
ended March 2, 2003 from 34.0 percent during the 27 weeks ended March 2, 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 and a reduction of
tax-free financial income during the first half of fiscal 2003.
For the first half of fiscal 2003, the Company had net income of $28,587,000, or
$1.50 per diluted share compared to the first half of fiscal 2002's net income
of $20,158,000, or $.95 per diluted share. Net income and earnings per diluted
share increased by 41.8 percent and 57.9 percent, respectively, when comparing
the first half of fiscal 2003 to the first half 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 26 weeks ended March 1, 2003 due to the Company's repurchase of
shares during fiscal 2003 and 2002. (See Note 9 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 March 1, 2003, working capital was $151,333,000, an increase of $6,338,000
from the amount at August 31, 2002. The Company's principal uses of cash during
the 26 weeks ended March 1, 2003 were $17,559,000 for the purchase of property
and equipment, $10,521,000 for the purchase of shares of the Company's Common
Stock and $1,887,000 for the payment of cash dividends. The Company's sources
and uses of cash during the 26 weeks ended March 1, 2003 are set forth in the
unaudited consolidated condensed statement of cash flows for that period.
Principal known demands at March 1, 2003 on the Company's liquid assets for the
remainder of fiscal 2003 include capital expenditures of approximately
$7,800,000 and the payment of cash dividends. Also, on March 19, 2003, the Board
of Directors authorized the purchase of outstanding shares of the Company's
common stock, depending on market conditions, for an aggregate purchase price of
up to $20 million.
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
Due to the lowest consumer confidence levels in recent history in the United
States (U.S.) caused mainly by uncertainties related to the war with Iraq, it
appears that the RV market has recently slowed. On April 10, 2003, Bruce D.
Hertzke, the Company's CEO, commented in an interview with Bloomberg TV that as
a result of the aforementioned factors impacting RV market conditions, the
Company does not expect to meet current analysts' earnings estimates for the
remainder of fiscal 2003.
11
However, 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. A recent Consumer Demographic Profile Study completed
by the University of Michigan 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 Company's Class A and Class C motor homes
was 1,890 orders on March 1, 2003 compared to 3,206 orders on March 2, 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 March 1, 2003, the Company has an investment portfolio of fixed income
securities, which are classified as cash and cash equivalents of $39,507,000, of
which $33,333,000 are fixed income investments that are subject to interest rate
risk.
As of March 1, 2003, the Company had dealer-financing receivables in the amount
of $42,941,000. Interest rate charges 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 corrective actions with regard to significant
deficiencies and material weaknesses.
12
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Shareholders 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 March 1, 2003,
and the related condensed consolidated statements of income and cash flows for
the 13-week and 26-week periods ended March 1, 2003 and the 13-week and 27-week
periods ended March 2, 2002, 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
March 17, 2003
(March 19, 2003 as to Note 7 and 8)
13
PART II Other Information
Item 1. Legal Proceedings
Reference is made to the comments in the Form 10-K for the fiscal
year ended August 31, 2002 with respect to the purported class action
captioned Sanft, et al vs. Winnebago Industries, Inc., et al which
was filed in the United States District Court, Northern District of
Iowa, Central Division on August 30, 2001. Since the Form 10-Q for
the quarter ending November 30, 2002 was filed, the Plantiffs filed a
Motion for Class Certification on January 31, 2003. The Company has
filed a Resistance to Motion for Class Certification and oral
arguments on such Motion and Resistance are scheduled to be held on
April 22, 2003. We would anticipate a ruling on the Motion for Class
Certification within a few weeks thereafter.
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 4. Submission of Matters to a Vote of Security Holders
(a) The annual meeting of shareholders was held January 14, 2003.
(b) The breakdown of votes for the election of three directors was as
follows*
Votes Cast For Authority Withheld
-------------- ------------------
John V. Hanson (2006) 17,413,727 175,056
Bruce D. Hertzke (2006) 15,480,170 2,108,613
Gerald C. Kitch (2006) 17,511,374 77,409
*There were no broker non-votes.
( ) represents year of Annual Meeting that individual's term will expire.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - See Exhibit Index on page 18.
(b) The Company did not file any reports on Form 8-K during the
period covered by this report.
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: April 11, 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 involves
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: April 11, 2003
-------------------------------
By: /s/ Edwin F. Barker
-------------------------------------
Edwin F. Barker
Chief Financial Officer
16
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 11, 2003 /s/ Bruce D. Hertzke
------------------------------ ------------------------------------------------------------
Bruce D. Hertzke
Chairman of the Board, Chief Executive Officer,
and President
(Principal Executive Officer)
Date April 11, 2003 /s/ Edwin F. Barker
------------------------------ ------------------------------------------------------------
Edwin F. Barker
Senior Vice President - Chief Financial Officer
(Principal Financial Officer)
17
EXHIBIT INDEX
10i. Amendment No. 1 to Winnebago Industries, Inc. Rights Plan Agreement
dated January 13, 2003 (Amendment allows FMR Corp., its affiliates and
Associates, to be the Beneficial Owner of up to 20% of the Company's
outstanding stock with the Winnebago Industries, Inc. Rights Plan
Agreement prior to such Amendment providing that the ownership of 15%
or more of the Company's outstanding stock except by a "Hanson Family
Member" was a "triggering event" establishing the holder of such
ownership as an Acquiring Person under the terms of such Plan).
10v. Executive Change of Control Agreement dated March 13, 2003 between
Winnebago Industries, Inc. and Roger W. Martin.
99. 906 certification.
EXHIBIT 10i.
AMENDMENT NO.1
TO
WINNEBAGO INDUSTRIES, INC.
RIGHTS PLAN AGREEMENT
This Amendment No.1 to Winnebago Industries, Inc. Rights Plan Agreement is
dated as of January 13, 2003 (this "Amendment") between Winnebago Industries,
Inc. (the "Company"), an Iowa corporation, and Wells Fargo Bank Minnesota, N.A.
f/k/a Norwest Bank Minnesota, N.A., as Rights Agent (the "Rights Agent"), to the
Winnebago Industries, Inc. Rights Plan Agreement (the "Rights Agreement"), dated
as of May 3, 2000, between the Company and the Rights Agent.
WITNESSETH:
WHEREAS, the Board of Directors of the Company has determined to amend the
Rights Agreement (the terms defined therein and not otherwise defined herein
being used herein as therein defined);
NOW, THEREFORE, in consideration of the premises and the mutual agreement
herein set forth, the parties hereto agree as follows:
SECTION 1. Amendment of Section 1 of Rights Agreement. The definition of
"Acquiring Person" in Section 1 is amended in full to read as
follows:
"Acquiring Person" shall mean any Person who or which, together with
all Affiliates and Associates of such Person, shall be the Beneficial
Owner of 15 % or more of the Common Shares of the Company then
outstanding, but shall not include (i) the Company, (ii) any Subsidiary
(as such term is hereinafter defined) of the Company, (iii) any
employee benefit plan of the Company or any Subsidiary of the Company,
(iv) any Person holding Common Shares for or pursuant to the terms of
any such employee benefit plan, (v) any Hanson Family Member, or (vi)
FMR Corp., its Affiliates and Associates ("FMR"), but only so long as
(A) FMR is the beneficial owner of less than twenty percent (20 %) of
the shares of common stock then outstanding and (B) FMR reports or is
required to report such ownership on Schedule 13G of the Exchange Act
or on Schedule 13D under the Exchange Act (or any comparable or
successor report) which Schedule 13D does not state any present
intention to hold such shares of common stock with the purpose or
effect of changing or influencing the control of the Company.
Notwithstanding the foregoing, no Person shall become an "Acquiring
Person" as the result of (x) an acquisition of Common Shares by the
Company which, by reducing the number of shares outstanding, increases
the proportionate number of shares beneficially owned by such Person to
15 % or more (20% in the case of FMR) of the Common Shares of the
Company then outstanding or (y) the acquisition by such Person of
newly-issued Common Shares directly from the Company (it being
understood that a purchase from an underwriter or other intermediary is
not directly from the Company); PROVIDED HOWEVER, that if a Person
shall become the Beneficial Owner of 15 % or more (20% in the case of
FMR) of the Common Shares of the Company then outstanding by reason of
share purchases by the Company or the receipt of newly-issued Common
Shares directly from the Company and shall, after such share purchases
or direct issuance by the Company, become the Beneficial Owner of any
additional Common Shares of the Company, then such Person shall be
deemed to be an "Acquiring Person"; PROVIDED FURTHER, HOWEVER, that
any transferee from such Person who becomes the Beneficial Owner of 15
% or more (20 % in the case of FMR) of the Common Shares of the Company
then outstanding shall nevertheless be deemed to be an "Acquiring
Person." Notwithstanding the foregoing, if the Board of Directors of
the Company determines in good faith that a Person who would otherwise
be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently, and
such Person divests as promptly as practicable (and in any event within
ten Business Days after notification by the Company) a sufficient
number of Common Shares so that such Person would no longer be an
"Acquiring Person," as defined pursuant to the foregoing provisions of
this paragraph (a), the such Person shall not be deemed to be an
"Acquiring Person" for any purpose of this Agreement.
SECTION 2. Compliance with Rights Agreement. This amendment is an amendment
of the Rights Plan in compliance with Section 27 thereof.
SECTION 3. No other amendments; full effect. Except as expressly amended
hereby, the Rights Agreement shall remain in full force and effect in accordance
with the provisions thereof.
SECTION 4. Counterparts. This amendment may be executed in any number of
counterparts and each of such counterpart shall for all purposes be deemed to be
an original, and all such counterparts shall together constitute but one and the
same instrument.
SECTION 5. Governing Law. This amendment shall be deemed to be a contract
made under the laws of the State of Iowa and for all purposes shall be governed
by and construed in accordance with the laws of such state.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and attest it, all as of the day and year first above written.
WINNEBAGO INDUSTRIES, INC.
By
-----------------------------------------------
/s/ Bruce D. Hertzke, Chairman of the Board,
Chief Executive Officer and President
ATTEST:
By
-------------------------------------------
/s/ Raymond M. Beebe, Vice President-
General Counsel and Secretary
WELLS FARGO BANK MINNESOTA, N.A., as
Rights Agent
By
-----------------------------------------
/s/ Barbara M. Novak, Vice President
ATTEST:
By
-------------------------------------
/s/ Nancy Roseny, Vice President
EXHIBIT 10v.
EXECUTIVE CHANGE OF CONTROL AGREEMENT
This EXECUTIVE CHANGE OF CONTROL AGREEMENT is made as of March 13 2003,
by and between WINNEBAGO INDUSTRIES, INC., an Iowa corporation (the "Company"),
and Roger W. Martin (the "Executive").
RECITALS:
WHEREAS, the Executive is a senior executive and officer of the Company
and has made and is expected to continue to make major contributions to the
profitability, growth and financial strength of the Company;
WHEREAS, the Company recognizes that, as is the case for most publicly
held companies, the possibility of a Change of Control (as hereafter defined)
exists;
WHEREAS, it is in the best interests of the Company, considering the
past and future services of the Executive, to improve the security and climate
for objective decision making by providing for the personal security of the
Executive upon a Change of Control.
NOW, THEREFORE, in consideration of the foregoing premises and the past
and future services rendered and to be rendered by the Executive to the Company
and of the mutual covenants and agreements hereinafter set forth, the parties
agree as follows:
AGREEMENT:
1. CONTINUED SERVICE BY EXECUTIVE. In the event a person or entity, in
order to effect a Change of Control, commences a tender or exchange offer,
circulates a proxy to shareholders or takes other steps, the Executive agrees
that the Executive will not voluntarily leave the employ of the Company, and
will render faithful services to the Company consistent with Executive's
position and responsibilities, until the person or entity has abandoned or
terminated its efforts to effect such Change of Control or until such Change of
Control has occurred.
2. CHANGE OF CONTROL. For purposes of this Agreement, the term "Change
of Control" means the time when (i) any Person becomes an Acquiring Person, or
(ii) individuals who shall qualify as Continuing Directors of the Company shall
have ceased for any reason to constitute at least a majority of the Board of
Directors of the Company; PROVIDED HOWEVER, that in the case of either clause
(i) or (ii) a Change of Control shall not be deemed to have occurred if the
event shall have been approved prior to the occurrence thereof by a majority of
the Continuing Directors who shall then be members of such Board of Directors,
and in the case of clause (i) a Change of Control shall not be deemed to have
occurred upon the acquisition of stock of the Company by a pension,
profit-sharing, stock bonus, employee stock ownership plan or other retirement
plan intended to be qualified under Section 401(a) of the Internal Revenue Code
of 1986, as amended, established by the Company or any subsidiary of the
Company. (In addition, stock held by such a plan shall not be treated as
outstanding in determining ownership percentages for purposes of this
definition.)
For the purpose of the foregoing definition of "Change of Control", the
capitalized terms shall have the following meanings:
(a) "Continuing Director" means (i) any member of the Board of Directors of
the Company, while such person as a member of the Board, who is not an
Affiliate or Associate of any Acquiring Person or of any such Acquiring
Person's Affiliate or Associate and was a member of the Board prior to
the time when such Acquiring Person shall have become an Acquiring
Person, and (ii) any successor of a Continuing Director, while such
successor is a member of the Board, who is not an Acquiring Person or
any Affiliate or Associate of any Acquiring Person or a representative
or nominee of an Acquiring Person or of any affiliate or associate of
such Acquiring Person and is recommended or elected to succeed the
Continuing Director by a majority of the Continuing Directors.
(b) "Acquiring Person" means any Person or any individual or group of
Affiliates or Associates of such Person who acquires beneficial
ownership, directly or indirectly, of 20% or more of the outstanding
stock of the Company if such acquisition occurs in whole or in part
following January 17, 2001, except that the term "Acquiring Person"
shall not include a Hanson Family Member or an Affiliate or Associate
of a Hanson Family Member.
(c) "Affiliate" means a Person that directly or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common
control with, the person specified.
(d) "Associate" means (1) any corporate, partnership, limited liability
company, entity or organization (other than the Company or a
majority-owned subsidiary of the Company) of which such a Person is an
officer, director, member, or partner or is, directly or indirectly the
beneficial owner of ten percent (10%) or more of the class of equity
securities, (2) any trust or fund in which such person has a
substantial beneficial interest or as to which such person serves as
trustee or in a similar fiduciary capacity, (3) any relative or spouse
of such person, or any relative of such spouse, or (4) any investment
company for which such person or any Affiliate of such person serves as
investment advisor.
(e) "Hanson Family Member" means John K. Hanson (deceased) and Luise V.
Hanson (and the executors or administrators of their estates), their
lineal descendants (and the executors or administrators of their
estates), the spouses of their lineal descendants (and the executors or
administrators of their estates) and the John K. and Luise V. Hanson
Foundation.
(f) "Person" means an individual, corporation, limited liability company,
partnership, association, joint stock company, trust, unincorporated
organization or government or political subdivision thereof.
3. SPECIAL BENEFITS EFFECTIVE IMMEDIATELY UPON A CHANGE OF CONTROL. If
a Change of Control shall have occurred while the Executive is still an employee
of the Company, then the Executive shall immediately be entitled to the
following benefits:
(a) IMMEDIATE VESTING OF ALL STOCK OPTIONS AND RIGHTS. All
options and rights granted to the Executive by the Company pursuant to the
Company's Stock Option Plan effective as of August 14, 1997, or any successor or
supplemental stock plan shall become immediately exercisable upon a Change of
Control.
(b) RETIREE HEALTH INSURANCE. Any plans or policies of the
Company providing for medical, dental, vision or similar benefits for retired
employees existing as of the time of a Change of Control shall, as to the
Executive, not be rescinded or modified in any manner which is adverse to the
Executive following a Change of Control.
(c) RESTRICTED STOCK. All non-registered stock of the Company
owned by the Executive, which is subject to restrictions on sale or other
transfer, shall, at the option of the Executive (exercisable at any time by the
delivery of written notice to the Company) be purchased by the Company at its
fair market value. The purchase shall be completed by the Company within thirty
(30) days after the Company receives the written notice of exercise from the
Executive. So long as the Company's stock is traded on the New York Stock
Exchange (the "NYSE"), the "fair market value" shall be the mean between the
highest and lowest reported selling prices as reported by the NYSE on the
business day immediately preceding the day of sale.
4. OTHER BENEFITS EFFECTIVE IMMEDIATELY UPON A CHANGE OF CONTROL
PURSUANT TO PLAN DOCUMENTS. It is acknowledged that there presently exist other
plans and agreements of the Company which may provide benefits to the Executive
and which contain specific provisions dealing with the occurrence of a change of
control of the Company (as defined in such plan or agreement). Following a
Change of Control, no such plan or agreement shall be rescinded or modified in
any manner which is adverse to the Executive. Such other plans and agreements of
the Company shall mean: (a) the Executive Share Option Program; (b) the Officers
Long-Term Incentive Plan; (c) the Deferred Compensation and Deferred Bonus
Plans; and (d) the Officers Incentive Compensation Plan. Nothing herein shall be
construed to affect the Company's right and ability to terminate or amend any
such plan or agreement (subject to the terms thereof) prior to a Change of
Control.
5. TERMINATION FOLLOWING A CHANGE OF CONTROL. If a Change of Control
shall have occurred while the Executive is still an employee of the Company, and
if the Executive's employment with the Company is terminated, within three years
following such Change of Control, then the Executive shall be entitled to the
compensation and benefits provided in Sections 6 and 7, unless such termination
is a result of: (a) the Executive's death; (b) the Executive's Disability (as
defined in Section 5(a) below); (c) the Executive's Retirement (as defined in
Section 5(b) below); (d) the Executive's termination by the Company for Cause
(as defined in Section 5(c) below); or (e) the Executive's decision to terminate
employment other than for Good Reason (as defined in Section 5(d) below).
(a) DISABILITY. If, as a result of the Executive's incapacity
due to physical or mental illness, the Executive shall have been absent from his
duties with the Company on a full-time basis for six months and within 30 days
after written notice of termination is thereafter given by the Company the
Executive shall not have returned to the full-time performance of the
Executive's duties, the Company may terminate the Executive for "Disability".
(b) RETIREMENT. The term "Retirement" as used in this
Agreement shall mean termination by the Company or the Executive of the
Executive's employment based on the Executive having attained the age of 65 or
such other age as shall have been fixed in any arrangement established with the
Executive's consent with respect to the Executive.
(c) CAUSE. The Company may terminate the Executive's
employment for Cause. For purposes of this Agreement only, the Company shall
have "Cause" to terminate the Executive's employment hereunder only on the basis
of (i) fraud, misappropriation or embezzlement on the part of the Executive; or
(ii) intentional misconduct or gross negligence on the part of the Executive
which has resulted in material harm to the Company. Notwithstanding the
foregoing, the Executive shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
of the entire membership of the Company's Board of Directors at a meeting of the
Board called and held for the purpose (after reasonable notice to the Executive
and an opportunity for the Executive, together with the Executive's counsel, to
be heard before the Board), finding that in the good faith opinion of the Board
the Executive was guilty of conduct set forth in the second sentence of this
Section 5( c) and specifying the particulars thereof in detail. Nothing herein
shall limit the right of the Executive or his beneficiaries to contest the
validity or propriety of any such determination.
(d) GOOD REASON. The Executive may terminate the Executive's
employment for Good Reason at any time during the term of this Agreement. For
purposes of this Agreement "Good Reason" shall mean any of the following
(without the Executive's express written consent):
(i) the assignment to the Executive by the Company of duties
inconsistent with the Executive's position, duties, responsibilities and status
with the Company immediately prior to a Change in Control of the Company, or a
change in the Executive's titles or offices as in effect immediately prior to a
Change in Control of the Company, or any removal of the Executive from or any
failure to reelect the Executive to any of such positions, except in connection
with the termination of his employment for Disability, Retirement or Cause or as
a result of the Executive's death or by the Executive other than for Good
Reason;
(ii) a reduction by the Company in the Executive's base salary
as in effect on the date hereof or as the same may be increased from time to
time during the term of this Agreement or the Company's failure to increase
(within 12 months of the Executive's last increase in base salary) the
Executive's base salary after a Change in Control of the Company in an amount
which at least equals, on a percentage basis, the average percentage increase in
base salary for all officers of the Company effected in the preceding 12 months;
(iii) any failure by the Company to continue in effect any
benefit plan or arrangement (including, without limitation, the Company's 401(K)
plan, nonqualified deferred compensation plan, profit sharing plan, group life
insurance plan, and medical, dental, accident and disability plans) in which the
Executive is participating at the time of a Change of Control (or any other
plans providing the Executive with substantially similar benefits) (hereinafter
referred to as "Benefit Plans"), or the taking of any action by the Company
which would adversely affect the Executive's participation in or materially
reduce the Executive's benefits under any such Benefit Plan or deprive the
Executive of any material fringe benefit enjoyed by the Executive at the time of
a Change in Control of the Company;
(iv) any failure by the Company to continue in effect any
incentive plan or arrangement including, without limitation, the Company's
Officers Incentive Compensation Plan, Officers Long-Term Incentive Plan, bonus
and contingent bonus arrangements and credits and the right to receive
performance awards and similar incentive compensation benefits) in which the
Executive is participating at the time of a Change of Control (or any other
plans or arrangements providing him with substantially similar benefits)
(hereinafter referred to as "Incentive Plans") or the taking of any action by
the Company which would adversely affect the Executive's participation in any
such Incentive Plan or reduce the Executive's benefits under any such Incentive
Plan, expressed as a percentage of his base salary, by more than 10 percentage
points in any fiscal year as compared to the immediately preceding fiscal year;
(v) any failure by the Company to continue in effect any plan or
arrangement to receive securities of the Company in which the Executive is
participating at the time of a Change of Control (or plans or arrangements
providing him with substantially similar benefits) (hereinafter referred to as
"Securities Plans") or the taking of any action by the Company which would
adversely affect the Executive's participation in or materially reduce the
Executive's benefits under any such Securities Plan;
(vi) a relocation of the Company's principal executive offices to a
location outside of Forest City, Iowa, or the Executive's relocation to any
place other than the location at which the Executive performed the Executive's
duties prior to a Change in Control of the Company, except for required travel
by the Executive on the Company's business to an extent substantially consistent
with the Executive's business travel obligations at the time of a Change in
Control of the Company;
(vii) any failure by the Company to provide the Executive with the
number of paid vacation days to which the Executive is entitled at the time of a
Change in Control of the Company;
(viii) any material breach by the Company of any provision of this
Agreement;
(ix) any failure by the Company to obtain the assumption of this
Agreement by any successor or assign of the Company; or
(x) any purported termination of the Executive's employment which is
not effected pursuant to a Notice of Termination satisfying the requirements of
Section 3(f), and for purposes of this Agreement, no such purported termination
shall be effective.
(e) NOTICE OF TERMINATION. Any termination by the Company pursuant to
Section 5(a), (b) or (c) shall be communicated by a Notice of Termination. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate those specific termination provisions in this
Agreement relied upon and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provisions so indicated. For purposes of this Agreement, no
such purported termination by the Company shall be effective without such Notice
of Termination.
(f) DATE OF TERMINATION. "Date of Termination" shall mean (a) if this
Agreement is terminated by the Company for Disability, 30 days after Notice of
Termination is given to the Executive (provided that the Executive shall not
have returned to the performance of the Executive's duties on a full-time basis
during such 30-day period) or (b) if the Executive's employment is terminated by
the Company for any other reason, the date on which a Notice of Termination is
given; provided that if within 30 days after any Notice of Termination is given
to the Executive by the Company the Executive notifies the Company that a
dispute exists concerning the termination, the Date of Termination shall be the
date the dispute is finally determined, whether by mutual agreement by the
parties or upon final judgment, order or decree of a court of competent
jurisdiction (the time for appeal therefrom having expired and no appeal having
been perfected).
6. SEVERANCE COMPENSATION UPON TERMINATION OF EMPLOYMENT. If the
Company shall terminate the Executive's employment other than pursuant to
Section 5(a), (b) or (c) or if the Executive shall terminate his employment for
Good Reason, then the Company shall pay to the Executive as severance pay in a
lump sum, in cash, on the fifth day following the Date of Termination, an amount
equal to three (3) times the average of the aggregate annual compensation paid
to the Executive during the three (3) fiscal years of the Company immediately
preceding the Change of Control by the Company subject to United States income
taxes (or, such fewer number of fiscal years if the Executive has not been
employed by the Company during each of the preceding three (3) fiscal years).
7. ADDITIONAL BENEFITS UPON TERMINATION. If within three years
following a Change of Control, the Company shall terminate the Executive's
employment other than pursuant to Section 5(a), 5(b) or 5( c) or if the
Executive shall terminate his employment for Good Reason, then the Company shall
further provide to the Executive the following benefits:
(a) LIFE, DENTAL, VISION, HEALTH AND LONG TERM DISABILITY
COVERAGE. The Executive's participation in, and entitlement to, benefits under:
(i) all life insurance plans of the Company; (ii) all health insurance plans of
the Company, including but not limited to those providing major medical and
hospitalization benefits, dental benefits and vision benefits; and (iii) the
Company's long-term disability plan or plans; as all such plans existed
immediately prior to the Change of Control shall continue as though the
Executive remained employed by the Corporation for an additional period of three
(3) years or until the obtainment of such coverages by the Executive through
another employer, whichever is earlier; provided, however, that in the case of
all health insurance plans of the Company (including but not limited to those
providing major medical and hospitalization benefits, dental benefits and vision
benefits), such three (3) year period shall be extended to the time that the
Executive's attains age 65 (and provided further that the Executive may then be
entitled to certain retiree health insurance under Section 3(c) hereof). To the
extent such participation or entitlement is not possible for any reason
whatsoever, equivalent benefits shall be provided by the Company to the
Executive.
(b) AUTOMOBILE BENEFIT. If the Executive is entitled to the
use of a Company-owned automobile at the time of a Change of Control, then title
to such automobile shall be transferred to the Executive (upon termination of
employment as described in Section 7 above) free and clear of all liens and
encumbrances (or, if the Company does not own such automobile at the time of
termination, then the Company shall arrange for the purchase, for the benefit of
the Executive, of a similar make, model and year of automobile).
(c) DEFERRED COMPENSATION PLANS. Any vesting requirement
imposed under the provisions of, or rules relating to, the Company's Deferred
Compensation and Deferred Bonus Plans, (including, but not limited to, vesting
conditions requiring that the Executive attain the age of 55 and/or complete
five years of service following a deferral) shall be waived and the Executive
shall be fully vested in all deferrals made under such plans.
8. EXCISE TAX-ADDITIONAL PAYMENT.
(a) Notwithstanding anything in this Agreement or any written
or unwritten policy of the Company to the contrary, (i) if it shall be
determined that any payment or distribution by the Company to or for the benefit
of the Executive, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement, any other agreement between the Company
and the Executive or otherwise (a "Payment"), would be subject to the excise tax
imposed by section 4999 of the Internal Revenue Code of 1986, as amended, (the
"Code") or any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), or (ii) if the Executive shall
otherwise become obligated to pay the Excise Tax in respect of a Payment, then
the Company shall pay to the Executive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
such Payment.
(b) All determinations and computations required to be made
under this Section 8, including whether a Gross-Up Payment is required under
clause (ii) of paragraph 8(a) above, and the amount of any Gross-Up Payment,
shall be made by the Company's regularly engaged independent certified public
accountants (the "Accounting Firm"). The Company shall cause the Accounting Firm
to provide detailed supporting calculations both to the Company and the
Executive within 15 business days after such determination or computation is
requested by the Executive. Any initial Gross-Up Payment determined pursuant to
this Section 8 shall be paid by the Company to the Executive within 5 days of
the receipt of the Accounting Firm's determination. A determination that no
Excise Tax is payable by the Executive shall not be valid or binding unless
accompanied by a written opinion of the Accounting Firm to the Executive that
the Executive has substantial authority not to report any Excise Tax on his
federal income tax return. Any determination by the Accounting Firm shall be
binding upon the Company and the Executive, except to the extent the Executive
becomes obligated to pay an Excise Tax in respect of a Payment. In the event
that the Company or the subsidiary exhausts or waives its remedies pursuant to
paragraph 8( c) and the Executive thereafter shall become obligated to make a
payment of any Excise Tax, and if the amount thereof shall exceed the amount, if
any, of any Excise Tax computed by the Accounting Firm pursuant to this
paragraph 8(b) in respect to which an initial Gross-Up Payment was made to the
Executive, the Accounting Firm shall within 15 days after Notice thereof
determine the amount of such excess Excise Tax and the amount of the additional
Gross-Up Payment to the Executive. All expenses and fees of the Accounting Firm
incurred by reason of this Section 8 shall be paid by the Company.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of a Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than ten business days after the Executive
knows of such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. The Executive shall
not pay such claim prior to the expiration of the thirty-day period following
the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested
relating to such claim,
(ii) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
PROVIDED, HOWEVER, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this paragraph 8(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company or the subsidiary shall DETERMINE; PROVIDED, HOWEVER, that if the
Company or the subsidiary directs the Executive to pay such claim and sue for a
refund, the Company or the subsidiary shall advance the amount of such payment
to the Executive, on an interest-free basis and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax,
including interest or penalties with respect thereto, imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
AND FURTHER PROVIDED, that any extension of the statue of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, control of the contest by the Company shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company or the subsidiary pursuant to paragraph 8( c), the
Executive becomes entitled to receive any refund with respect to such claim, the
Executive shall (subject to compliance with the requirements of Section 8 by the
Company or the subsidiary) promptly pay to the Company or the subsidiary the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company or the subsidiary pursuant to paragraph 8( c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of thirty days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall off-set,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
9. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER CONTRACTUAL
RIGHTS.
(a) The Executive shall not be required to mitigate damages or
the amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by the Executive as the
result of employment by another employer after the Date of Termination, or
otherwise.
(b) The provisions of this Agreement, and any payment provided
for hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely as
a result of the passage of time, under any Benefit Plan, Incentive Plan or
Securities Plan, employment agreements or other contract, plan or arrangement.
10. SUCCESSOR TO THE COMPANY.
(a) The Company will require any successor or assign (whether
direct or indirect, by purchase, merger, consolidation or otherwise) of all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Executive, expressly, absolutely and
unconditionally to assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession or assignment had taken place. Any failure of the Company to
obtain such agreement prior to the effectiveness of any such succession or
assignment shall be a material breach of this Agreement and shall entitle the
Executive to terminate the Executive's employment for Good Reason. As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor or assign to its business and/or assets as aforesaid which executes
and delivers the agreement provided for in this Section 10 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal and legal representatives, executors,
administrators, successors, heirs, distributes, devisees and legatees. If the
Executive should die while any amounts are still payable to him hereunder, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the Executive's devisee, legatee, or other
designee or, if there be no such designee, to the Executive's estate.
11. NO GUARANTY OF EMPLOYMENT. Nothing in this Agreement shall be
deemed to entitle the Executive to continued employment with the Company prior
to a Change of Control, and the rights of the Company to terminate the
employment of the Executive, prior to a Change of Control, shall continue as
fully as if this Agreement were not in effect.
12. NOTICE. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt registered, postage prepaid, as follows:
If to the Company:
Winnebago Industries, Inc.
Attn: General Counsel
605 W. Crystal Lake Road
P.O. Box 152
Forest City, IA 50436
If to the Executive:
Roger W. Martin
107 Dellwood Drive
Forest City, IA 50436
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
13. MISCELLANEOUS. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. This Agreement shall be governed by and construed
in accordance with the laws of the State of Iowa.
14. VALIDITY. The invalidity or unenforceability of any provisions
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
16. LEGAL FEES AND EXPENSES. The Company shall pay all legal fees
and expenses which the Executive may incur as a result of the Company's
contesting the validity, enforceability or the Executive's interpretation of, or
determinations under, this Agreement.
17. CONFIDENTIALITY. The Executive shall retain in confidence any
and all confidential information known to the Executive concerning the Company
and its business so long as such information is not otherwise publicly
disclosed.
IN WITNESS WHEREOF, the parties have executed this agreement on the
date set out above.
COMPANY:
WINNEBAGO INDUSTRIES, INC.
By
--------------------------------------------------
/s/ Bruce D. Hertzke, Chairman of the Board,
Chief Executive Officer and President
EXECUTIVE:
--------------------------------------------------
/s/ Roger W. Martin
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
March 1, 2003, 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: April 11, 2003
--------------------------
By: /s/ Bruce D. Hertzke
-------------------------------------
Bruce D. Hertzke
Chief Executive Officer
and President
By: /s/ Edwin F. Barker
-------------------------------------
Edwin F. Barker
Chief Financial Officer