SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
(X) Annual report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 (No Fee Required) for the fiscal year ended August
30, 1997; or
( ) Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 (No Fee Required)
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: (515) 582-3535
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
- ----------------------------- -------------------------------------
Common Stock ($.50 par value) The New York Stock Exchange, Inc.
Chicago Stock Exchange, Inc.
The Pacific Stock Exchange, Inc.
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
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 __
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Annual Report on Form
10-K or any amendment to this Annual Report on Form 10-K ______.
Aggregate market value of the common stock held by non-affiliates of the
Registrant on October 13, 1997: $111,684,545 (14,410,909 shares at closing price
on New York Stock Exchange of $7.75).
Common stock outstanding on November 19, 1997, 25,480,827 shares.
DOCUMENTS INCORPORATED BY REFERENCE
1. The Winnebago Industries, Inc. Annual Report to Shareholders for the fiscal
year ended August 30, 1997, portions of which are incorporated by reference
into Part II hereof.
2. The Winnebago Industries, Inc. Proxy Statement for the Annual Meeting of
Shareholders scheduled to be held December 17, 1997, portions of which are
incorporated by reference into Part III hereof.
WINNEBAGO INDUSTRIES, INC.
FORM 10-K
Report for the Fiscal Year Ended August 30, 1997
PART I
ITEM 1. Business
GENERAL
Winnebago Industries, Inc. is a leading U.S. manufacturer of motor homes,
self-contained recreation vehicles used primarily in leisure travel and outdoor
recreation activities. Motor home sales by the Company represented more than 87
percent of its revenues in each of the past five fiscal years. The Company's
motor homes are sold through dealer organizations primarily under the Winnebago,
Itasca, Vectra, Rialta and Luxor brand names.
Other products manufactured by the Company consist principally of extruded
aluminum, commercial vehicles, and a variety of component products for other
manufacturers. Finance revenues consisted of revenues from floor plan unit
financing of the Company's products in dealer inventories.
The Company was incorporated under the laws of the state of Iowa on February 12,
1958, and adopted its present name on February 28, 1961. The Company's executive
offices are located at 605 West Crystal Lake Road in Forest City, Iowa. Unless
the context indicates otherwise, the term "Company" refers to Winnebago
Industries, Inc. and its subsidiaries.
PRINCIPAL PRODUCTS
The Company determined it was appropriate to define its operations into two
business segments for fiscal 1997 (See Note 16, "Business Segment Information"
in the Company's Annual Report to Shareholders for the year ended August 30,
1997). However, during each of the last five fiscal years, at least 91% of the
revenues of the Company were derived from recreational vehicle products.
The following table sets forth the respective contribution to the Company's net
revenues by product class for each of the last five fiscal years (dollars in
thousands):
Fiscal Year Ended (1)
--------------------------------------------------------------------
August 30, August 31, August 26, August 27, August 28,
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
Motor Homes (Class A and C) ........ $ 381,191 $ 432,212 $ 402,435 $ 385,319 $ 326,861
87.0% 89.2% 87.5% 88.9% 89.4%
Other Recreation
Vehicle Revenues (2) .......... 19,771 17,166 19,513 21,903 17,655
4.5% 3.5% 4.2% 5.1% 4.8%
Other Manufactured Products
Revenues (3) .................. 35,750 34,020 36,961 25,184 20,344
8.2% 7.0% 8.0% 5.8% 5.6%
---------- ---------- ---------- ---------- ----------
Total Manufactured
Products Revenues ....... 436,712 483,398 458,909 432,406 364,860
99.7% 99.7% 99.7% 99.8% 99.8%
Finance Revenues (4) .............. 1,420 1,406 1,220 831 595
.3% .3% .3% .2% .2%
---------- ---------- ---------- ---------- ----------
Total Net Revenues ................ $ 438,132 $ 484,804 $ 460,129 $ 433,237 $ 365,455
100.0% 100.0% 100.0% 100.0% 100.0%
(1) The fiscal year ended August 31, 1996 contained 53 weeks; all other
fiscal years in the table contained 52 weeks. All years are
appropriately restated to exclude the Company's discontinued Cycle-Sat,
Inc. (Cycle-Sat) subsidiary's revenues from satellite courier and tape
duplication services and discontinued North Iowa Electronics, Inc.
(NIE) subsidiary's revenues from contract assembly of a variety of
electronic products.
(2) Primarily EuroVan Campers, recreation vehicle related parts, recreation
vehicle service revenue and van conversions.
(3) Primarily sales of extruded aluminum, commercial vehicles and component
products for other manufacturers.
(4) Winnebago Acceptance Corporation (WAC) revenues from dealer financing.
Unit sales of the Company's principal recreation vehicles for the last five
fiscal years were as follows:
Fiscal Year Ended (1)
----------------------------------------------------------
August 30, August 31, August 26, August 27, August 28,
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
Unit Sales:
Class A ............................. 4,834 5,893 5,993 6,820 6,095
Class C ............................. 2,724 2,857 2,853 1,862 1,998
---------- ---------- ---------- ---------- ----------
Total Motor Homes ............... 7,558 8,750 8,846 8,682 8,093
Class B Conversions (EuroVan Camper).. 1,205 857 1,014 376 ---
(1) The fiscal year ended August 31, 1996 contained 53 weeks; all other
fiscal years in the table contained 52 weeks.
The primary use of recreation vehicles for leisure travel and outdoor recreation
has historically led to a peak retail selling season concentrated in the spring
and summer months. The Company's sales of recreation vehicles are generally
influenced by this pattern in retail sales, but can also be affected by the
level of dealer inventory. The Company has generally manufactured recreation
vehicles during the entire year, both for immediate delivery and for inventory
to satisfy the peak selling season.
Order backlog information is not deemed significant to understand the Company's
business.
Presently, the Company meets its working capital and capital equipment
requirements and cash requirements of subsidiaries with funds generated
internally and funds from agreements with financial institutions. Since March
26, 1992, the Company has had a financing and security agreement with
NationsCredit Corporation (See Note 7, "Notes Payable" in the Company's Annual
Report to Shareholders for the year ended August 30, 1997).
RECREATION VEHICLES
MOTOR HOMES - A motor home is a self-propelled mobile dwelling used primarily as
a temporary dwelling during vacation and camping trips.
Recreation Vehicle Industry Association (RVIA) classifies motor homes into three
types (Class A, Class B and Class C). The Company currently manufactures Class A
and C motor homes and converts Class B motor homes.
Class A models are conventional motor homes constructed directly on medium-duty
truck chassis which include the engine and drivetrain components. The living
area and driver's compartment are designed and produced by the recreation
vehicle manufacturer.
Class B models are panel-type trucks to which sleeping, kitchen and toilet
facilities are added. These models also have a top extension added to them for
more head room.
Class C models are mini motor homes built on van-type chassis onto which the
manufacturer constructs a living area with access to the driver's compartment.
Certain models of the Company's Class C units include van-type driver's
compartments built by the Company.
The Company currently manufactures and sells motor homes primarily under the
Winnebago, Itasca, Vectra, Rialta and Luxor brand names. The Class A and Class C
motor homes generally provide living accommodations for four to seven persons
and include kitchen, dining, sleeping and bath areas, and in some models, a
lounge. Optional equipment accessories include, among other items, air
conditioning, electric power plant, stereo system and a wide selection of
interior equipment. The Company converts Class B motor homes under the EuroVan
Camper brand name, which are distributed through the Volkswagen dealer
organization.
The Company offers, with the purchase of any new Winnebago, Itasca, Vectra or
Luxor motor home, a comprehensive 12-month/15,000-mile warranty, a
3-year/36,000-mile warranty on sidewalls and slide-out room assemblies, and a
10-year fiberglass roof warranty. The Rialta has a 2-year/24,000-mile warranty.
The Company's motor homes are sold by dealers in the retail market at prices
ranging from approximately $40,000 to more than $210,000, depending on size and
model, plus optional equipment and delivery charges.
The Company currently manufactures Class A and Class C motor homes ranging in
length from 26 to 37 feet and 22 to 31 feet, respectively. Class B motor homes
converted by the Company (EuroVan Camper) are 17 feet in length.
NON-RECREATION VEHICLE ACTIVITIES
OEM, COMMERCIAL VEHICLES, AND OTHER PRODUCTS
OEM - Original equipment manufacturer sales of component parts such as aluminum
extrusions, metal stamping, rotational moldings, vacuum formed plastics and
fiberglass to outside manufacturers.
Commercial Vehicles - Commercial vehicles sales are custom shells designed
specifically for the buyer's special needs and requirements.
Other Products - Sales of molded plastic docks for marine applications.
WINNEBAGO ACCEPTANCE CORPORATION - WAC engages in floor plan and rental unit
financing for a limited number of the Company's dealers.
DISCONTINUED ACTIVITIES -
On November 19, 1996, the Company sold all of the assets of its Cycle-Sat
subsidiary, a distributor of satellite courier and tape duplication services, to
Vyvx, Inc., a subsidiary of The Williams Companies, Inc., Tulsa, Oklahoma. See
Note 2, "Discontinued Operations - Sale of Cycle-Sat Subsidiary" in the
Company's Annual Report to Shareholders for the year ended August 30, 1997.
The Company discontinued its van conversion operations in fiscal 1995.
The Company sold a majority of the assets of its NIE subsidiary, a contract
assembler of a variety of electronic products, on August 8, 1993. See Note 3,
"Discontinued Operations - Disposal of Electronic Component Assembly Segment" in
the Company's Annual Report to Shareholders for the year ended August 30, 1997.
PRODUCTION
The Company's Forest City facilities have been designed to provide vertically
integrated production line manufacturing. The Company also operates a fiberglass
manufacturing facility in Hampton, Iowa, and a sewing operation in Lorimor,
Iowa. The Company manufactures the majority of the components utilized in its
motor homes, with the exception of the chassis, engines, auxiliary power units
and appliances.
Most of the raw materials and components utilized by the Company are obtainable
from numerous sources. The Company believes that substitutes for raw materials
and components, with the exception of chassis, would be obtainable with no
material impact on the Company's operations. The Company purchases Class A and C
chassis from General Motors Corporation - Chevrolet Motor Division and Ford
Motor Company; Class C chassis from Volkswagen of America, Inc.; and Class A
chassis from Freightliner Custom Chassis Corporation. Class B chassis from
Volkswagen of America, Inc. are utilized in the Company's Rialta motor home and
the EuroVan Camper. Only two vendors accounted for as much as five percent of
the Company's purchases in fiscal 1997, Ford Motor Company and General Motors
Corporation (approximately 30 percent, in the aggregate).
Motor home bodies are made from various materials and structural components
which are typically laminated into rigid, lightweight panels. Body designs are
developed with computer design and analysis, and subjected to a variety of tests
and evaluations to meet Winnebago standards and requirements.
The Company manufactures picture windows, lavatories, and all of the doors,
cabinets, shower pans, waste holding tanks, wheel wells and sun visors used in
its recreation vehicles. In addition, the Company produces most of the bucket
seats, upholstery items, lounge and dinette seats, seat covers, mattresses,
decorator pillows, curtains and drapes.
The Company produces substantially all of the raw, liquid-painted and
powder-coated aluminum extrusions used for interior and exterior trim in its
recreation vehicles. The Company also sells aluminum extrusions to over 130
customers.
DISTRIBUTION AND FINANCING
The Company markets its recreation vehicles on a wholesale basis to a broadly
diversified dealer organization located throughout the United States and, to a
limited extent, in Canada and other foreign countries. Foreign sales, including
Canada, were less than 8.5 percent of net revenues in fiscal 1997. As of August
30, 1997 and August 31, 1996, the motor home dealer organization in the United
States and Canada included approximately 340 dealers. During fiscal 1997, 11
dealers accounted for approximately 25 percent of motor home unit sales, and
only one dealer accounted for more than seven percent (7.1%) of motor home unit
sales.
Winnebago Industries Europe GmbH, a wholly owned subsidiary, was sold in August
1997 (See Note 16, "Business Segment Information," in the Company's Annual
Report to Shareholders for the year ended August 30, 1997). All international
sales (except Canada) are now handled by eight distributors who market the
Company's recreation vehicles within ten foreign countries.
The Company has sales agreements with dealers which are renewed on an annual or
bi-annual basis. Many of the dealers are also engaged in other areas of
business, including the sale of automobiles, and many dealers carry one or more
competitive lines. The Company continues to place high emphasis on the
capability of its dealers to provide complete service for its recreation
vehicles. Dealers are obligated to provide full service for owners of the
Company's recreation vehicles, or in lieu thereof, to secure such service at
their own expense from other authorized firms.
At August 30, 1997, the Company had a staff of 37 people engaged in field sales
and service to the motor home dealer organization.
The Company advertises and promotes its products through national RV magazines
and cable TV networks and on a local basis through trade shows, television,
radio and newspapers, primarily in connection with area dealers.
Substantially all sales of recreation vehicles to dealers are made on cash
terms. Most dealers are financed on a "floor plan" basis under which a bank or
finance company lends the dealer all, or substantially all, of the purchase
price, collateralized by a lien upon, or title to, the merchandise purchased.
Upon request of a lending institution financing a dealer's purchases of the
Company's products, and after completion of a credit investigation of the dealer
involved, the Company will execute a repurchase agreement. These agreements
provide that, in the event of default by the dealer on the dealer's agreement to
pay the lending institution, the Company will repurchase the financed
merchandise. The agreements provide that the Company's liability will not exceed
100 percent of the invoice price and provide for periodic liability reductions
based on the time since the date of the invoice. The Company's contingent
liability on all repurchase agreements was approximately $115,637,000 and
$129,135,000 at August 30, 1997 and August 31, 1996, respectively. Included in
these contingent liabilities are approximately $24,868,000 and $33,216,000,
respectively, of certain dealer receivables subject to recourse (See Note 10,
"Contingent Liabilities and Commitments" in the Company's Annual Report to
Shareholders for the year ended August 30, 1997). The Company's contingent
liability under repurchase agreements varies significantly from time to time,
depending upon seasonal shipments, competition, dealer organization, gasoline
supply and availability of bank financing.
COMPETITION
The recreation vehicle market is highly competitive, both as to price and
quality of the product. The Company believes its principal marketing advantages
are the quality of its products, its dealer organization, its warranty and
service capability and its marketing techniques. The Company also believes that
its prices are competitive with the competitions' units of comparable size and
quality.
The Company is a leading manufacturer of motor homes. For the 12 months ended
August 31, 1997, Recreation Vehicle Industry Association (RVIA) reported factory
shipments of 36,900 Class A motor homes, 4,100 Class B motor homes and 13,300
Class C motor homes. Unit sales of such products by the Company for the last
five fiscal years are shown elsewhere in this report. The Company is not a
significant factor in the markets for its other recreation vehicle products and
its non-recreation vehicle products and services.
REGULATION, TRADEMARKS AND PATENTS
The plumbing, heating and electrical systems manufactured and installed in all
of the Company's motor homes are manufactured and installed to meet National
Fire Protection Association 501C (American National Standards Institute 119.2)
as well as Federal Motor Vehicle Safety Standards applicable to motor homes. A
variety of other federal and state regulations pertaining to safety in
recreation vehicles have been adopted or are proposed from time to time. The
Company believes that it is in compliance with all such existing regulations and
while it is not able to predict what effect the adoption of any such future
regulations will have on its business, it is confident of its ability to equal
or exceed any reasonable safety standards.
The Company has several registered trademarks, including Winnebago, Itasca,
Minnie Winnie, Brave, Sunrise, Adventurer, Spirit, Suncruiser, Sundancer,
Warrior, Vectra, Luxor, Rialta, Minnie, Thermo-Panel and Thermo-Steel.
RESEARCH AND DEVELOPMENT
During fiscal 1997, 1996 and 1995, the Company spent approximately $1,695,000,
$801,000 and $2,216,000, respectively, on research and development activities.
These activities involved the equivalent of 24, 12 and 23 full-time employees
during fiscal 1997, 1996 and 1995, respectively.
HUMAN RESOURCES
As of September 1, 1997, 1996 and 1995, the Company employed approximately
2,830, 3,150 and 3,010 persons, respectively. Of these, approximately 2,270,
2,250 and 2,240 persons, respectively, were engaged in manufacturing and
shipping functions. None of the Company's employees are covered under a
collective bargaining agreement.
ITEM 2. Properties
The Company's manufacturing, maintenance and service operations are conducted in
multi-building complexes owned by the Company, containing an aggregate of
approximately 1,452,000 square feet in Forest City, Iowa. The Company also owns
698,000 square feet of warehouse facilities located in Forest City. The Company
leases approximately 235,000 square feet of its unoccupied manufacturing
facilities in Forest City to others. The Company also owns a manufacturing
facility (74,000 square feet) in Hampton, Iowa. The Company leases a storage
facility (25,000 square feet) in Hampton, Iowa and a manufacturing facility
(17,200 square feet) in Lorimor, Iowa. Leases on the above facilities expire at
various dates, the earliest of which is January 1, 1998. In fiscal 1989, the
Company purchased a 308,000 square foot shopping mall on 30 acres in Temple,
Texas (this facility was sold in August 1997). In fiscal 1993, Winnebago
Industries Europe GmbH purchased a distribution and service facility consisting
of approximately 16,700 square feet and located on approximately six acres of
land in Kirkel, Germany (this facility was sold in August 1997). The Company's
facilities in Forest City are located on approximately 780 acres of land, all
owned by the Company.
Most of the Company's buildings are of steel or steel and concrete construction
and are fire resistant with high-pressure sprinkler systems, dust collector
systems, automatic fire doors and alarm systems. The Company believes that its
facilities and equipment are well maintained, in excellent condition, suitable
for the purposes for which they are intended and adequate to meet the Company's
needs for the foreseeable future.
ITEM 3. Legal Proceedings
The Company is involved in various legal proceedings which are ordinary routine
litigation incident 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
Not Applicable.
Executive Officers of the Registrant
NAME OFFICE (YEAR FIRST ELECTED AN OFFICER) AGE
- --------------------- ------------------------------------------------------- ---------
Fred G. Dohrmann + Chairman of the Board & Chief Executive Officer (1989) 65
Bruce D. Hertzke + President & Chief Operating Officer (1989) 46
Edwin F. Barker Vice President, Chief Financial Officer (1980) 50
Raymond M. Beebe Vice President, General Counsel & Secretary (1974) 55
Ronald D. Buckmeier Vice President, Product Development (1997) 50
Brian J. Hrubes Controller (1996) 46
James P. Jaskoviak Vice President, Sales and Marketing (1994) 45
Robert J. Olson Vice President, Manufacturing (1996) 46
Joseph L. Soczek, Jr. Treasurer (1996) 54
+ Director
Officers are elected annually by the Board of Directors. All of the foregoing
officers have been employed by the Company as officers or in other responsible
positions for at least the last five years.
PART II
ITEM 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
Reference is made to information concerning the market for the Company's common
stock, cash dividends and related stockholder matters on page 32 of the
Company's Annual Report to Shareholders for the year ended August 30, 1997,
which information is incorporated by reference herein. On October 16, 1997, the
Board of Directors declared a cash dividend of $.10 per common share payable
January 5, 1998 to shareholders of record on December 5, 1997. The Company paid
dividends of $.20 per common share during fiscal year 1997 and $.30 per common
share during fiscal 1996.
ITEM 6. Selected Financial Data
Reference is made to the information included under the caption "Selected
Financial Data" on page 31 of the Company's Annual Report to Shareholders for
the year ended August 30, 1997, which information is incorporated by reference
herein.
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Reference is made to the information under the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations" on pages 10
through 13 of the Company's Annual Report to Shareholders for the year ended
August 30, 1997, which information is incorporated by reference herein.
ITEM 8. Financial Statements and Supplementary Data
The consolidated financial statements of the Company which appear on pages 14
through 29 and the report of the independent accountants which appears on page
30, and the supplementary data under "Interim Financial Information (Unaudited)"
on page 9 of the Company's Annual Report to Shareholders for the year ended
August 30, 1997, are incorporated by reference herein.
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not Applicable.
PART III
ITEM 10. Directors and Executive Officers of the Registrant
Reference is made to the table entitled Executive Officers of the Registrant in
Part One of this report and to the information included under the caption
"Election of Directors" in the Company's Proxy Statement for the Annual Meeting
of Shareholders scheduled to be held December 17, 1997, which information is
incorporated by reference herein.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors and persons who own more than 10 percent of the Company's
common stock (collectively "REPORTING PERSONS") to file reports of ownership and
changes in ownership with the Securities and Exchange Commission (the "SEC") and
the New York Stock Exchange. Reporting Persons are required by the SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on its review of the copies of such forms received or written
representations from certain Reporting Persons that no Forms 5 were required for
those persons, the Company believes that, during fiscal year 1997, all the
Reporting Persons complied with all applicable filing requirements. Mr. Gerald
E. Boman, a director of the Company, inadvertently omitted to file a Form 5 for
fiscal 1996 reporting an aggregate of eight gifts of common stock by Mr. Boman
and his wife. These transactions were reported in an amended Form 5 for fiscal
1997.
ITEM 11. Executive Compensation
Reference is made to the information included under the caption "Executive
Compensation" in the Company's Proxy Statement for the Annual Meeting of
Shareholders scheduled to be held December 17, 1997, which information is
incorporated by reference herein.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
Reference is made to the share ownership information included under the caption
"Voting Securities and Principal Holders Thereof" in the Company's Proxy
Statement for the Annual Meeting of Shareholders scheduled to be held December
17, 1997, which information is incorporated by reference herein.
ITEM 13. Certain Relationships and Related Transactions
Reference is made to the information included under the caption "Certain
Transactions with Management" in the Company's Proxy Statement for the Annual
Meeting of Shareholders scheduled to be held December 17, 1997, which
information is incorporated by reference herein.
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. The consolidated financial statements of the Company are
incorporated by reference in ITEM 8 and an index to financial
statements appears on page 13 of this report.
2. Consolidated Financial Statement Schedules Winnebago
Industries, Inc. and Subsidiaries
PAGE
----
Report of Independent Auditors on Supplemental
Financial Schedule 14
II. Valuation and Qualifying Accounts 15
All schedules, other than Schedule II, are omitted because of the
absence of the conditions under which they are required or because the
information required is shown in the consolidated financial statements
or the notes thereto.
(a) 3. Exhibits
See Exhibit Index on page 16.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the last quarter of the
period covered by this report.
UNDERTAKING
For the purposes of complying with the amendments to the rules governing Form
S-8 (effective July 13, 1990) under the Securities Act of 1933, the undersigned
registrant hereby undertakes as follows, which undertaking shall be incorporated
by reference into registrant's Registration Statements on Form S-8 Nos. 2-40316
(which became effective on or about June 10, 1971), 2-82109 (which became
effective on or about March 15, 1983), 33-21757 (which became effective on or
about May 31, 1988), 33-59930 (which became effective on or about March 24,
1993) and 333-31595 (which became effective on or about July 18, 1997).
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnifi-cation by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
By /s/ Fred G. Dohrman
Chairman of the Board
SIGNATURE CAPACITY
/s/ Fred G. Dohrmann
Fred G. Dohrmann Chairman of the Board, Chief Executive
Officer and Director
/s/ Edwin F. Barker
Edwin F. Barker Vice President, Chief Financial Officer
/s/ Gerald E. Boman
Gerald E. Boman Director
/s/ Jerry N. Currie
Jerry N. Currie Director
/s/ John V. Hanson
John V. Hanson Director
/s/ Bruce D. Hertzke
Bruce D. Hertzke Director
/s/ Gerald C. Kitch
Gerald C. Kitch Director
/s/ Richard C. Scott
Richard C. Scott Director
/s/ Joseph M. Shuster
Joseph M. Shuster Director
/s/ Frederick M. Zimmerman
Frederick M. Zimmerman Director
/s/ Francis L. Zrostlik
Francis L. Zrostlik Director
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
WINNEBAGO INDUSTRIES, INC. AND SUBSIDIARIES *PAGE
- ------------------------------------------- -----
Independent Auditors' Report 30
Consolidated Balance Sheets 14 - 15
Consolidated Statements of Operations 16
Consolidated Statements of Cash Flows 17
Consolidated Statements of Changes in Stockholders' Equity 18
Notes to Consolidated Financial Statements 19 - 29
* Refers to respective pages in the Company's 1997 Annual Report to
Shareholders, a copy of which is attached hereto, which pages are
incorporated herein by reference.
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
Winnebago Industries, Inc.
Forest City, Iowa
We have audited the consolidated financial statements of Winnebago Industries,
Inc. and subsidiaries (the Company) as of August 30, 1997 and August 31, 1996
and for each of the three years in the period ended August 30, 1997 and have
issued our report thereon dated October 21, 1997. Such consolidated financial
statements and report are included in your fiscal 1997 Annual Report to
Shareholders and are incorporated herein by reference. Our audits also included
the consolidated financial statement schedule of Winnebago Industries, Inc. and
subsidiaries, as listed in Item 14(a)2. This consolidated financial statement
schedule is the responsibility of the Company's management. Our responsibility
is to express an opinion based on our audits. In our opinion, such consolidated
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
/s/ Deloitte & Touch LLP
Deloitte & Touche LLP
Minneapolis, Minnesota
October 21, 1997
WINNEBAGO INDUSTRIES, INC. AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
(Dollars in thousands)
--------------------------------------------------------------------------------
COLUMN COLUMN COLUMN COLUMN COLUMN COLUMN
A B C D E F
- ------------------------------------- ----------- ------------------------- ------------ ----------- -----------
ADDITIONS
(REDUCTIONS)
BALANCE AT CHARGED TO BALANCE
BEGINNING COST AND BAD DEBTS DEDUCTIONS AT END OF
PERIOD AND DESCRIPTION OF PERIOD EXPENSES RE-COVERIES CHARGE-OFFS OTHER* PERIOD
- ------------------------------------- ----------- ------------ ----------- ------------ ----------- -----------
Year Ended August 30, 1997:
Allowance for doubtful
accounts receivable $ 702 $ 730 $ 1 $ 4 $ --- $ 1,429
Allowance for doubtful
dealer receivables 197 (160) 118 --- --- 155
Allowance for excess and
obsolete inventory 569 1,319 --- 1,074 --- 814
Allowance for doubtful
notes receivable 797 668 --- --- --- 1,465
Year Ended August 31, 1996:
Allowance for doubtful
accounts receivable 1,128 359 --- 329 (456) 702
Allowance for doubtful
dealer receivables 255 (70) 29 17 --- 197
Allowance for excess and
obsolete inventory 669 1,301 --- 1,401 --- 569
Allowance for doubtful
notes receivable 950 (324) --- 285 456 797
Year Ended August 26, 1995:
Allowance for doubtful
accounts receivable 1,472 (228) 19 135 --- 1,128
Allowance for doubtful
dealer receivables 279 47 11 82 --- 255
Allowance for excess and
obsolete inventory 1,370 1,425 --- 2,126 --- 669
Allowance for doubtful
notes receivable 2,024 --- --- 1,074 --- 950
* Includes transfers of reserves from doubtful dealer receivables to doubtful
accounts and from doubtful accounts to long-term notes receivable.
EXHIBIT INDEX
3a. Articles of Incorporation previously filed with the Registrant's Annual
Report on Form 10-K for the fiscal year ended August 27, 1988
(Commission File Number 1-6403), and incorporated by reference herein.
3b. Amended Bylaws of the Registrant.
4a. Restated Inventory Floor Plan Financing Agreement between Winnebago
Industries, Inc. and NationsCredit Corporation previously filed with
the Registrant's Annual Report on Form 10-K for the fiscal year ended
August 27, 1994 (Commission File Number 1-6403), and incorporated by
reference herein and the First Amendment dated October 31, 1995
thereto.
4b. Restated Financing and Security Agreement dated July 6, 1995 between
Winnebago Industries, Inc. and NationsCredit Commercial Corporation
previously filed with the Registrant's Annual Report on Form 10-K for
the fiscal year ended August 26, 1995 (Commission File Number 1-6403),
and incorporated by reference herein.
10a. Winnebago Industries, Inc. Stock Option Plan for Outside Directors
previously filed with the Registrant's Annual Report on Form 10-K for
the fiscal year ended August 29, 1992 (Commission File Number 1-6403),
and incorporated by reference herein.
10b. Amendment to Winnebago Industries, Inc. Deferred Compensation Plan
previously filed with the Registrant's Annual Report on Form 10-K for
the fiscal year ended August 26, 1995 (Commission File Number 1-6403),
and incorporated by reference herein.
10c. Amendment to Winnebago Industries, Inc. Profit Sharing and Deferred
Savings and Investment Plan previously filed with the Registrant's
Annual Report on Form 10-K for the fiscal year ended August 26, 1995
(Commission File Number 1-6403), and incorporated by reference herein.
10d. Winnebago Industries, Inc. Book Unit Rights Plan previously filed with
the Registrant's Annual Report on Form 10-K for the fiscal year ended
August 29, 1987 (Commission File Number 1-6403), and incorporated by
reference herein.
10e. Winnebago Industries, Inc. 1987 Non-Qualified Stock Option Plan
previously filed with the Registrant's Annual Report on Form 10-K for
the fiscal year ended August 29, 1987 (Commission File Number 1-6403),
and incorporated by reference herein.
10f. Winnebago Industries, Inc. RV Incentive Compensation Plan.
10g. Winnebago Industries, Inc. Employee's Stock Bonus Plan and Trust
Agreement previously filed with the Registrant's Annual Report on Form
10-K for the fiscal year ended August 31, 1996 (Commission File Number
1-6403) and incorporated by reference herein.
10h. Winnebago Industries, Inc. Directors' Deferred Compensation Plan.
10i. Winnebago Industries, Inc. 1997 Stock Option Plan.
13. Winnebago Industries, Inc. Annual Report to Shareholders for the year
ended August 30, 1997.
21. List of Subsidiaries.
23. Consent of Independent Auditors.
27. Financial Data Schedule.
EXHIBIT 3b.
BY-LAWS
OF
WINNEBAGO INDUSTRIES, INC.
AS AMENDED
ARTICLE I. OFFICES
The principal office of the Corporation in the State of Iowa, shall be
located in the City of Forest City, County of Winnebago, State of Iowa.
The Corporation may have such other offices, either within or without
of the State of Iowa, as the Board of Directors may designate or as the business
of the Corporation may require from time to time.
ARTICLE II. SHAREHOLDERS
Section 1. Annual Meeting
The Annual Meeting of the Shareholders shall be held on a date in the
month of January of each year, commencing with the January, 1999 meeting, to be
annually set by the Board of Directors with written notice thereof to be given
not less than ten (10) days prior thereto by the Secretary, to be held in Forest
City, Iowa, at such place as may be designated by the Board of Directors, for
the purpose of electing directors and for the transaction of such other business
as may come before the meeting.
ARTICLE III. BOARD OF DIRECTORS
Section 1. General Powers
The business and affairs of this Corporation shall be managed by its
Board of Directors.
Section 2. Number, Tenure and Qualifications
The number of directors constituting the Board of Directors of the
Corporation shall be ten (10) until increased or decreased by proper amendment
thereto. Each director shall hold office until the next annual meeting of the
shareholders and until his successor shall have been elected and qualified.
Directors need not be residents of the State of Iowa nor shareholders of the
Corporation.
Section 3. Regular Meetings
The regular meeting of the Board of Directors shall be held without
other notice than these By-Laws, immediately after, and at the same place as,
the Annual Meeting of the Shareholders. The Board of Directors may provide, by
resolution, the time and place, either within or without the State of Iowa, for
the holding of additional regular meetings without other notice than such
resolution.
Section 4. Special Meetings
Special meetings of the Board of Directors may be called by or at the
request of the President or any one director. The persons or person authorized
to call special meetings of the Board of Directors may fix the time for holding
any special meetings of the Board of Directors so called, but the place shall be
the same as the regular meeting place unless another place is unanimously agreed
upon at the time and ratified by appropriate resolution.
Section 5. Notice of Meetings
Notice of any special meeting of the Board of Directors shall be given
at least five (5) days previously thereto by written notice delivered personally
or mailed to each director at his business address, or by telegram. If mailed,
such notice shall be deemed to be delivered when deposited in the United States
mail so addressed, with sufficient postage thereon prepaid. If notice be given
by telegram, such notice shall be deemed to be delivered when the telegram is
delivered to the telegraph company; any director may waive notice of any
meeting. The attendance of a director at a meeting shall constitute a waiver of
notice of such meeting, except where a director attends a meeting for the
expressed purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of any regular or special meeting of the Board of
Directors need be specified in the notice or waiver of notice of such meeting.
Section 6. Committees
The Board of Directors may, by resolution adopted by a majority of the
whole board, designate from among its members an Executive Committee and one or
more other committees. Any such committee, to the extent provided in the
resolution, shall have and may exercise all the authority of the Board of
Directors; provided, however, that no such committee shall have such authority
in reference to any matter for which such authority is specifically reserved to
the full Board of Directors by the terms of the Iowa Business Corporation Act,
as amended. Each such committee shall keep regular minutes of its meetings and
report the same to the Board of Directors when required.
ARTICLE IV. OFFICERS
Section 1. Number
The officers of the Corporation shall be a President, Vice
President, a Secretary and a Treasurer. Such other officers, assistant officers
and acting officers as may be deemed necessary, may be elected or appointed by
the Board of Directors. Any two or more offices may be held by the same person
if so nominated and elected.
Section 2. Election and Term of Office
The officers of the Corporation to be elected by the Board of Directors
shall be elected annually by the Board of Directors at the first meeting of the
Board of Directors held after each annual meeting of the shareholders. If the
election of officers shall not be held at such meeting, such election shall be
held as soon thereafter as conveniently may be. The officers of the Corporation
shall hold office until their successors are chosen and qualify or until their
death or resignation. Any officer elected by the Board of Directors may be
removed at any time by the affirmative vote of a majority of the Board of
Directors in office. Any vacancy occurring in any office in the Corporation
shall be filled by the Board of Directors.
ARTICLE V. FISCAL YEAR
The fiscal year of this Corporation shall begin on the 1st day of
September and end on the last day of August, in each year.
ARTICLE VI. AMENDMENTS
These By-Laws may be altered, amended or repealed and new By-Laws may
be adopted by the Board of Directors at any regular or special meeting of the
Board of Directors.
EXHIBIT 10f.
September 19, 1997
RV OFFICER INCENTIVE COMPENSATION PLAN
GROUP A - OFFICER
FISCAL PERIOD 1997-1998
WINNEBAGO INDUSTRIES, INC.
FOREST CITY, IOWA
PURPOSE
The purpose of this plan is to provide greater incentive to employees in officer
positions, who contribute to the success of the Company, by enabling them to
participate in that success, and to aid in attracting and retaining employees
who will contribute to the progress and profitability of the Company.
It is the purpose of this plan to attract, obtain, develop, motivate, and retain
capable officer personnel, stimulate constructive and imaginative thinking, and
otherwise contribute to the growth and profits of the corporation
ADMINISTRATION
The plan prior to each new fiscal year must meet the approval of the Human
Resource Committee of the Board of Directors. The Human Resource Committee may
establish such rules and regulations as it deems necessary for proper
administration of this plan and may amend or revoke any rule or regulation so
established.
PARTICIPANTS
Recommendation of a participant must be made by the President of Winnebago
Industries, Inc.
MINIMUM QUALIFICATIONS REQUIRED OF PARTICIPANTS:
1. Participant must be an officer with specific responsibilities which can
impact the corporation
2. Participants must be employed for the entire fiscal year to be eligible
for the bonus and in addition, participant must be employed at the time
the bonus is paid except as waived by the Human Resource Committee.
NATURE OF THE PLAN
The incentive award is based on the performance of the CORPORATION.
This is a bonus based upon the Company's attainment of a predetermined profit
goal for the fiscal quarter. The profit goal is to be recommended by the Human
Resource Committee and approved by the Board of Directors each quarter at the
beginning of the fiscal quarter.
PS433/1
Officer Incentive Compensation Plan
Page Two
The profit goal, for purposes of this plan, will be the "Incentive Compensation
Profit" which shall mean the combined gross income from the operation of the
Company less the combined expenses, deductions and credits of the Company
attributable to such operations. In computing the incentive compensation profit,
no deduction shall be taken or allowance made for federal or state income taxes,
or any expenses associated with retirement plans or incentive compensation
plans. Incentive awards are determined in proportion to the actual operating
profit generated for the quarter in relation to the profit goal that was set. If
the operating profit achieved is less than 80 percent of goal set, no bonus is
paid and the maximum bonus paid at 120 percent of the profit goal.
METHOD OF PAYMENT
The quarterly amount of a participant's incentive compensation for the quarter
shall be the percentage of the total amount of base salary received by the
individual the fiscal quarter when he was a participant in the plan. 60% of the
quarterly amount of the earned bonus will be paid within 45 days after the close
of the fiscal quarter and the remainder of the bonus due will be paid after the
books have been audited at the end of the fiscal year providing the Company has
made its objective in each quarter.
Bonuses will be paid as follows:
NUMBER OF QUARTERS AMOUNT OF THE BONUS
OBJECTIVE WAS MADE HOLDBACK TO BE PAID
--------------------------- --------------------------
1 25%
2 50%
3 75%
4 100%
The attached quarterly bonus formula developed for the Officers Group I of
Winnebago Industries provides a 40 percent bonus calculation for a 100 percent
achievement of operating profit.
A participant must be employed by Winnebago Industries on August 28, 1998 to be
eligible for any previous quarterly or holdback allocations.
Approved By:
/s/ Fred G. Dohrmann 10-15-97
- ------------------------------ -------------
Fred G. Dohrmann Dated
C.E.O. & Chairman of the Board
/s/ Joseph M. Shuster 10-15-97
- ------------------------------ -------------
Joseph M. Shuster Dated
Chairperson, Human Resource Committee
of the Winnebago Board of Directors
PS433/2
September 19, 1997
RV EXECUTIVE MANAGEMENT INCENTIVE COMPENSATION PLAN
GROUP B - EXECUTIVE
FISCAL PERIOD 1997-1998
WINNEBAGO INDUSTRIES, INC.
FOREST CITY, IOWA
PURPOSE
The purpose of this plan is to provide greater incentive to employees in
managerial positions, who contribute to the success of the Company, by enabling
them to participate in that success, and to aid in attracting and retaining
employees who will contribute to the progress and profitability of the Company.
It is the purpose of this plan to attract, obtain, develop, motivate, and retain
capable managerial personnel, stimulate constructive and imaginative thinking,
and otherwise contribute to the growth and profits of the corporation.
ADMINISTRATION
The plan prior to each new fiscal year must meet the approval of the Human
Resource Committee of the Board of Directors. The Human Resource Committee may
establish such rules and regulations as it deems necessary for proper
administration of this plan and may amend or revoke any rule or regulation so
established.
PARTICIPANTS
Recommendation of a participant must be made by the Vice President that has the
responsibility for the specific unit or group which the proposed participant is
a member. The Vice President must justify direct dependence of recommended
employee's influence, performance and achievements, which could determine the
success of that unit or group and employee must be considered a direct link to
the success and profitability of the corporation.
MINIMUM QUALIFICATIONS REQUIRED OF PARTICIPANTS:
1. Participant must be in Labor Grade Number 70 or above.
2. Participant must be in the capacity of a staff supervisor or manager of
a specific unit or group with specific responsibilities which can
impact the corporation.
3. Participants must be employed for the entire fiscal year to be eligible
for the bonus and in addition, participant must be employed at the time
the bonus is paid except as waived by the Human Resource Committee.
Appointment of participants to the "Executive Management Incentive Compensation
Plan" will be recommended by the President to the Human Resource Committee for
approval based on meeting the aforementioned qualifications and upon
recommendation of the respective Vice President.
NATURE OF THE PLAN
The incentive award is based on the performance of the CORPORATION.
This is a bonus based upon the Company's attainment of a predetermined profit
goal for the fiscal quarter. The profit goal is to be recommended by the Human
Resource Committee and approved by the Board of Directors each quarter at the
beginning of the fiscal quarter.
PS432/1
Executive Management Incentive Compensation Plan
Page Two
The profit goal, for purposes of this plan, will be the "Incentive Compensation
Profit" which shall mean the combined gross income from the operation of the
Company less the combined expenses, deductions and credits of the Company
attributable to such operations. In computing the incentive compensation profit,
no deduction shall be taken or allowance made for federal or state income taxes,
or any expenses associated with retirement plans or incentive compensation
plans. Incentive awards are determined in proportion to the actual operating
profit generated for the quarter in relation to the profit goal that was set. If
the operating profit achieved is less than 80 percent of goal set, no bonus is
paid and the maximum bonus paid at 120 percent of the profit goal.
METHOD OF PAYMENT
The quarterly amount of a participant's incentive compensation for the quarter
shall be the percentage of the total amount of base salary received by the
individual the fiscal quarter when he was a participant in the plan. 60% of the
quarterly amount of the earned bonus will be paid within 45 days after the close
of the fiscal quarter and the remainder of the bonus due will be paid after the
books have been audited at the end of the fiscal year providing the Company has
made its objective in each quarter.
Bonuses will be paid as follows:
NUMBER OF QUARTERS AMOUNT OF THE BONUS
OBJECTIVE WAS MADE HOLDBACK TO BE PAID
-------------------------- --------------------------
1 25%
2 50%
3 75%
4 100%
The attached quarterly bonus formula developed for the Executive Group II of
Winnebago Industries provides a 30 percent bonus calculation for a 100 percent
achievement of operating profit.
A participant must be employed by Winnebago Industries on August 28, 1998 to be
eligible for any previous quarterly or holdback allocations.
Approved By:
/s/ Fred G. Dohrmann 10-15-97
- ------------------------------ -------------
Fred G. Dohrmann Dated
C.E.O. & Chairman of the Board
/s/ Joseph M. Shuster 10-15-97
- ------------------------------ -------------
Joseph M. Shuster Dated
Chairperson, Human Resource Committee
of the Winnebago Board of Directors
PS432/2
September 19, 1997
RV MANAGEMENT INCENTIVE COMPENSATION PLAN
GROUP C - MANAGEMENT
FISCAL PERIOD 1997-1998
WINNEBAGO INDUSTRIES, INC.
FOREST CITY, IOWA
PURPOSE
The purpose of this plan is to provide greater incentive to employees in
managerial positions, who contribute to the success of the Company, by enabling
them to participate in that success, and to aid in attracting and retaining
employees who will contribute to the progress and profitability of the Company.
It is the purpose of this plan to attract, obtain, develop, motivate, and retain
capable managerial personnel, stimulate constructive and imaginative thinking,
and otherwise contribute to the growth and profits of the corporation
ADMINISTRATION
The plan prior to each new fiscal year must meet the approval of the Human
Resource Committee of the Board of Directors. The Human Resource Committee may
establish such rules and regulations as it deems necessary for proper
administration of this plan and may amend or revoke any rule or regulation so
established.
PARTICIPANTS
Recommendation of a participant must be made by the Vice President member that
has the responsibility for the specific unit or group which the proposed
participant is a member. The Vice President must justify direct dependence of
recommended employee's influence, performance and achievements, which could
determine the success of that unit or group and employee must be considered a
direct link to the success and profitability of the corporation.
MINIMUM QUALIFICATIONS REQUIRED OF PARTICIPANTS:
1. Participant must be in the capacity of a manager of a specific unit or
group with budget responsibilities and specific responsibilities which
significantly can impact the corporation.
2. Participants must be employed for the entire fiscal year to be eligible
for the bonus and in addition, participant must be employed at the time
the bonus is paid except as waived by the Human Resource Committee.
Appointment of participants to the "Management Incentive Compensation Plan" will
be recommended by the President to the Human Resource Committee for approval
based on meeting the aforementioned qualifications and upon recommendation of
the respective Vice President.
NATURE OF THE PLAN
The incentive award is based on the performance of the CORPORATION.
This is a bonus based upon the Company's attainment of a predetermined profit
goal for the fiscal quarter. The profit goal is to be recommended by the Human
Resource Committee and approved by the Board of Directors each quarter at the
beginning of the fiscal quarter.
PS434/1
Management Incentive Compensation Plan
Page Two
The profit goal, for purposes of this plan, will be the "Incentive Compensation
Profit" which shall mean the combined gross income from the operation of the
Company less the combined expenses, deductions and credits of the Company
attributable to such operations. In computing the incentive compensation profit,
no deduction shall be taken or allowance made for federal or state income taxes,
or any expenses associated with retirement plans or incentive compensation
plans.
METHOD OF PAYMENT
The quarterly amount of a participant's incentive compensation for the quarter
shall be the percentage of the total amount of base salary received by the
individual the fiscal quarter when he was a participant in the plan. 60% of the
quarterly amount of the earned bonus will be paid within 45 days after the close
of the fiscal quarter and the remainder of the bonus due will be paid after the
books have been audited at the end of the fiscal year providing the Company has
made its objective in each quarter.
Bonuses will be paid as follows:
NUMBER OF QUARTERS AMOUNT OF THE BONUS
OBJECTIVE WAS MADE HOLDBACK TO BE PAID
-------------------------- ----------------------------
1 25%
2 50%
3 75%
4 100%
A participant must be employed by Winnebago Industries on August 28, 1998 to be
eligible for any previous quarterly or holdback allocations.
Incentive awards are determined in proportion to the actual operating profit
generated for the quarter in relation to the profit goal that was set. If the
operating profit achieved is less than 80 percent of goal set, no bonus is paid
and the maximum bonus paid at 120 percent of the profit goal.
The attached quarterly bonus formula developed for the Management Group III of
Winnebago Industries provides a 20 percent bonus calculation for a 100 percent
achievement of operating profit.
Approved By:
/s/ Fred G. Dohrmann 10-15-97
- ------------------------------ -------------
Fred G. Dohrmann Dated
C.E.O. & Chairman of the Board
/s/ Joseph M. Shuster 10-15-97
- ------------------------------ -------------
Joseph M. Shuster Dated
Chairperson, Human Resource Committee
of the Winnebago Board of Directors
PS434/2
EXHIBIT 10h.
WINNEBAGO INDUSTRIES, INC.
DIRECTORS' DEFERRED COMPENSATION PLAN
1. PLAN
The Winnebago Industries, Inc. Directors' Deferred Compensation Plan (the
"Plan")
2. EFFECTIVE DATE AND PLAN YEAR
The Plan is effective April 1, 1997. The Plan Year shall be from January 1
through December 31 each year.
3. PURPOSE OF THE PLAN
The Plan's purpose is to enable the directors of Winnebago Industries,
Inc. (the "Company"), who are nonemployees, to elect to receive their fees
and retainers as members of the Board of Directors and committees of the
Board in a form other than as direct payments.
4. PARTICIPANTS
Any member of the Board of Directors of the Company who is not an employee
may elect to become a participant ("Participant" or "Director") under the
Plan by filing an election in the form prescribed by the Board of
Directors.
5. COMPENSATION ELIGIBLE FOR DEFERRAL
Any Participant may elect, in accordance with Section 6 of this Plan, to
defer annually the receipt of a portion of the director's fees or
retainers otherwise payable to him or her by the Company in any calendar
year for services to the Company ("Deferral Compensation"), which portion
shall be designated by him or her. Compensation paid to a Director for
business or professional services rendered to the Company shall not be
treated as Deferral Compensation.
6. ELECTION FORM
Each Director shall be entitled to file with the Plan Administrator before
June 1, 1997, and thereafter prior to December 31 of each Plan Year (or
prior to the commencement of the term of a new Director) a form prescribed
by the Board of Directors so as to make an election under the Plan.
Pursuant to such election, a Director may elect with respect to a Plan
Year to defer a designated percentage of Deferral Compensation of either
fifty percent (50%) or one hundred percent (100%). The Director's election
shall also include: (i) the manner in which the Deferral Compensation is
to be applied, (ii) the timing of receipt of payment of any Deferral
Compensation which is prescribed in Section 9; and (iii) the form of
distribution of any Deferral Compensation which is prescribed in Section
10.
A Director's election regarding the amount of Deferral Compensation, and
the time and method payment of Deferral Compensation, shall be irrevocable
with respect to Deferral Compensation deferred in any one year and Company
matching contributions thereon, if any.
A Director may elect to apply 100% of his or her Deferral Compensation to
either but not both of the following forms:
a. "Money Credits" which are described in Section 8(a); or
b. "Winnebago Stock Units" which are described in Section 8(b).
7. MATCHING CONTRIBUTION ON WINNEBAGO STOCK UNITS
Any Director electing to defer fees under the Plan and to invest Deferral
Compensation in "Winnebago Stock Units", as described in Section 8, shall
receive a matching contribution from the Company equal to twenty-five
percent (25%) of the Deferral Compensation so invested. The Company's
match provided pursuant to this Plan shall be credited to the Director's
Deferral Accounts and invested in "Winnebago Stock Units" pursuant to the
provisions of Section 8(b).
8. DIRECTOR'S DEFERRAL ACCOUNTS
Accounts ("Director's Deferral Accounts") will be established by the
Company for each Director electing to defer fees or retainers and invest
his or her Deferral Compensation in either "Money Credits" or "Winnebago
Stock Units." His or her Director's Deferral Accounts shall be credited as
of the last day of each calendar month with the amount of Deferral
Compensation earned, and any Company matches made with respect to
Winnebago Stock Units, during that month. Deferral Compensation shall be
converted into "Money Credits" or "Winnebago Stock Units" in accordance
with the following procedures:
a. MONEY CREDITS
"Money Credits" are units credited in accordance with the Participant's
election to the Director's Deferral Accounts in the form of dollars.
The Money Credits shall accrue interest from the credit date. The rate
of interest which shall be applied to the Participant's Money Credits
is the 30 year Treasury bond yields as of the first business day of the
Plan Year. The Board of Directors may from time to time prescribe
additional methods for the accrual of interest on Money Credits with
respect to Deferral Compensation deferred in Plan Year's subsequent to
the Director's new election.
b. WINNEBAGO STOCK UNITS
"Winnebago Stock Units" are units credited in accordance with the
Participant's election to the Director's Winnebago Stock Unit Account
in the form of common stock of the Company. The common stock utilized
for purposes of the Plan shall be treasury shares of the Company.
Winnebago Stock Units shall be recorded in the Director's Winnebago
Stock Unit Account on the basis of the mean between the high and the
low prices of the common stock of the Company on the date upon which
the Account is to be credited, as officially quoted by the New York
Stock Exchange. Winnebago Stock Units representing the Company match
provided pursuant to Section 7 shall be recorded in the Director's
Matching Winnebago Stock Unit Account on the same basis.
A Participant's Matching Winnebago Stock Unit Account shall vest on a
graduated basis at the rate of thirty-three and one-third percent
(33-1/3%) for each complete 12 month period of service as a Director
following the Effective Date of the Plan, and any matching Winnebago
Stock Units thereafter recorded in such account after the Director's
completion of 36 months of service after the Effective Date will be
fully vested and nonforfeitable. Notwithstanding the above, the
Participant's Matching Winnebago Stock Unit Account shall become fully
vested upon his or her attainment of age 69-1/2 or death while serving
as Director. In the event that a Participant terminates his or her
service as a Director, any unvested Winnebago Stock Units shall be
forfeited by the Director and applied to future Company matching
contributions.
In the event of any change in the outstanding shares of common stock of
the Company by reason of any stock dividend or split, recapitalization,
merger, consolidation, spin-off, reorganization, combination or
exchange of shares or other similar corporate change, then if the Plan
Administrator shall determine, in its sole discretion, that such change
equitably requires an adjustment in the number of Winnebago Stock Units
then held in the Director's Winnebago Stock Unit Account, or in the
Matching Winnebago Stock Unit Account, such adjustments shall be made
by the Plan Administrator and shall be conclusive and binding for all
purposes of the Plan.
9. TIMING OF DISTRIBUTION OF DIRECTOR'S DEFERRAL ACCOUNTS
A Participant shall receive distribution, or commence to receive
distribution of his or her Director's Deferral Accounts, in accordance
with the Participant's election which shall be upon the earliest of:
a. a designated date;
b. his or her attainment of a specified age;
c. the occurrence of a stipulated event, such as termination of service as
a Director, death, disability, his or her cessation of business
activity, or any other event specified by the Participant and approved
by the Plan Administrator;
d. the first anniversary of the Participant's date of death; or
e. the fifth anniversary of the Participant's termination of service as a
Director.
In the event of a "change in the control of the Company", as defined in
Section 14, the Participant shall receive a lump sum distribution of his
or her Director's Deferral Accounts within 30 days following his or her
termination of service as a Director after such change in control.
Notwith-standing the above, in no event shall a Participant's receipt of a
distribution of Winnebago Stock Units from his or her Director's Deferral
Accounts precede the six-month anniversary of his or her election to
convert Deferral Compensation into Winnebago Stock Units.
10. FORM OF DISTRIBUTION OF MONEY UNITS IN DIRECTOR'S DEFERRAL ACCOUNTS
A Participant shall be entitled to receive distribution of his or her
Money Units in his or her Director's Deferral Accounts in either of the
following forms as designated by the Participant in the deferral election
filed pursuant to Section 6:
a. a lump sum; or
b. approximately equal annual installments over a five-year period.
11. FORM OF DISTRIBUTION OF WINNEBAGO STOCK UNITS IN DIRECTOR'S DEFERRAL
ACCOUNTS
A Participant's vested Winnebago Stock Units shall be distributed fully
and in kind on the distribution date elected by the Participant in his or
her deferral election filed with the Plan Administrator pursuant to
Section 6. All shares of Company stock distributed pursuant to this Plan
but which are not registered with the Securities and Exchange Commission
shall bear an appropriate restrictive legend as shall be determined by the
Company's securities counsel:
12. BENEFICIARY
If a Participant shall cease to be a Director by reason of his or her
death, or if he or she shall die after he or she shall be entitled to
distributions hereunder but prior to receipt of all distributions
hereunder, all Money Units or Winnebago Stock Units than distributable
hereunder shall be distributed (i) to such beneficiary as such Participant
shall designate by an instrument in writing filed with the Company, or
(ii) in the absence of such designation, to his or her personal
representative, or (iii) if no personal representative is appointed within
six months of his or her death to his or her spouse, or (iv) if his or her
spouse is not then living, to his or her then living descendants, per
stirpes, in the same manner and at the same intervals as they would have
been made to such Participant had he or she continued to live; provided
however, in no event shall shares of Company stock be distributed prior to
the date elected by the Director.
13. PARTICIPANTS' RIGHTS UNSECURED
The right of any Participant to receive a distribution hereunder of Money
Credits or Winnebago common stock shall be an unsecured claim against the
general assets of the Company. The Deferral Compensation and any interest
thereon may not be assigned, transferred, encumbered, or otherwise
disposed of until the same shall be paid to such Director. The Company
shall be obligated to credit treasury shares in anticipation of its
obligation to make such distributions under the Plan, but no Participant
shall have any rights in or against any shares of common stock so credited
or in any cash or Money Units held in his or her Director's Deferral
Accounts. All such common stock and Money Units shall constitute general
assets of the Company and may be disposed of by the Company at such time
and for such purposes as it may deem appropriate.
14. DEPOSIT OF FUNDS INTO GRANTOR TRUST
The Company shall deposit with the trustee of a grantor trust established
by the Company an amount of funds which is sufficient to carry out the
terms of the Plan and which is to be distributed in accordance with the
terms and conditions of the Plan. The funds deposited into such trust
shall remain subject to the claims of the general creditors of the Company
as if such funds were general assets of the Company.
Upon the occurrence of a "change in control of the Company," the
Director's Deferral Account shall be distributed to him or her in a lump
sum within thirty days following the termination of his or her services as
a Director.
For purposes of this Plan, "change in control of the Company" means the
time when (i) any person, either individually or together with such
persons' affiliates or associates, shall have become the beneficial owner,
directly or indirectly, of at least 30% of the outstanding stock of the
Company and there shall have been a public announcement of such occurrence
by the Company or such person, or (ii) individuals who shall qualify as
Continuing Directors 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 that in the case
of clause (i), a Change of Control shall not be deemed to have occurred
upon the transfer of stock of the Company by gift or bequest from one
Hanson Family Member to another Hanson Family Member or to an Affiliate of
a Hanson Family Member. For the purpose of this definition:
(a) "Continuing Director" means any member of the Board of Directors of
the Company, while such person is 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 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 an 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 group of affiliates or
associates who acquires the beneficial ownership, directly or
indirectly, of 20% or more of the outstanding stock of the Company if
such acquisition occurs following the date of this Agreement.
(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 corporation or organization (other than the
Company or a majority owned subsidiary of the Company) of which such
person is an officer or partner or is, directly or indirectly the
beneficial owner of ten percent ( 10%) or more of any 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. No 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 established by the Company or any subsidiary shall be deemed an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
In addition, stock held by such a plan shall not be treated as
outstanding in determining ownership percentages in clause (i) of
Section 14 or paragraph (b) of Section 14 above.
(e) "Hanson Family Member" means John K. Hanson and Luise V. Hanson, the
executors and administrators of the estates of John K. Hanson and
Luise V. Hanson, the lineal descendants of John K. Hanson and Luise
V. Hanson, the spouses of such lineal descendants, and the John K.
and Luise V. Hanson Foundation.
15. PLAN ADMINISTRATOR
The Plan Administrator shall be the Human Resources Committee of the Board
of Directors of the Company. The Plan Administrator shall interpret the
Plan (including ambiguous provisions thereof), determine benefits which
are payable to Participants, and make all final decisions with respect to
the rights of Participants hereunder. The Plan Administrator shall at
least annually provide each participating Director with a statement of his
or her account.
16. AMENDMENTS TO THE PLAN
The Board of Directors of the Company may amend the Plan at any time,
without the consent of the Participants or their beneficiaries, provided,
however, that no amendment shall divest any Participant or beneficiary of
rights to which he or she would have been entitled if the Plan had been
terminated on the effective date of such amendment.
17. TERMINATION OF PLAN
The Board of Directors of the Company may terminate the Plan at any time.
Upon termination of the Plan, distributions in respect of credits and
units in a Participant's Director's Deferral Accounts as of the date of
termination shall be made in the manner and at the time heretofore
prescribed or, alternatively, the Board of Directors may provide the
Participant or beneficiaries with benefits under a substitute plan which
shall not be less than the vested benefits which would have been
distributed in a full and complete distribution of all credits and units
in a Participant's Director's Deferral Accounts as of the date of Plan
termination.
18. EXPENSES
All costs of administration of the Plan will be paid by the Company.
WINNEBAGO INDUSTRIES, INC.
DIRECTORS' SHARE OPTION PROGRAM
ARTICLE I
PURPOSE
1.1 PURPOSE. The purpose of the Plan is to provide stock options to
non-employee directors of Winnebago Industries, Inc. in a form that will provide
incentives and rewards for performance as a member of the Board of Directors,
and allow the recipients to diversify their investment portfolios.
1.2 INTENT. The Plan is intended to be a nonqualified stock option plan
within the meaning of Section 83 of the Code. The plan is not intended to be a
plan covered by the Employee Retirement Income Security Act of 1974, as amended.
ARTICLE II
DEFINITIONS AND CONSTRUCTION
2.1 DEFINITIONS. AS used herein, the following capitalized words and
phrases shall have the respective meanings set forth below
"BENEFICIARY" means the person or persons designated by a Participant,
pursuant to Section 3.7, to exercise an Option after the Participant's death.
"BOARD OF DIRECTORS" OR "BOARD" means the board of directors of the
Employer.
"CHANGE OF CONTROL" MEANS the time when (i) any person, either
individually or together with such persons' affiliates or associates, shall have
become the beneficial owner, directly or indirectly, of at least 30% of the
outstanding stock of the Company and there shall have been a public announcement
of such occurrence by the Company or such person, or (ii) individuals who shall
qualify as Continuing Directors 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 that in the case of clause (i), a Change
of Control shall not be deemed to have occurred upon the transfer of stock of
the Company by gift or bequest from one Hanson Family Member to another Hanson
Family Member or to an Affiliate of the Hanson Family Member. For the purpose of
this definition:
(a) "Continuing Director" means any member of the Board of Directors of
the Company, while such person is 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 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 an 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 group of affiliates or
associates who acquires the beneficial ownership, directly or indirectly, of 20%
or more of the outstanding stock of the Company if such acquisition occurs
following the date of this Agreement.
(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 corporation or organization (other than
the Company or a majority-owned subsidiary of the Company) of which such person
is an officer or partner or is, directly or indirectly the beneficial owner of
ten percent (10%) or more of any 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. No 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 established by the Company or any subsidiary
shall be deemed an Acquiring Person or an Affiliate or Associate of an Acquiring
Person. In addition, stock held by such a plan shall not be treated as
outstanding in determining ownership percentages in Sections 11.1(i) or 11.2(b)
above.
(e) "Hanson Family Member" means John K. Hanson and Luise V. Hanson,
the executors or administrators of their estates, their lineal descendants, the
spouses of their lineal descendants, and the John K. and Luise V. Hanson
Foundation.
"CODE" means the Internal Revenue Code of 1986, any amendments thereto,
and any regulations or rulings issued thereunder.
"COMMITTEE" means the Winnebago Compensation Committee appointed in
accordance with Section 6.1.
"DIRECTOR" means an active member of the Board of Directors who is not
an employee.
"EFFECTIVE DATE" MEANS April 1, 1997.
"EMPLOYEE" means any key individual, including but not limited to a
person in an executive position with the Employer, who is employed by the
Employer.
"EMPLOYER" means Winnebago Industries, Inc. and any successor thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, any
amendments thereto, and any regulations or rulings issued thereunder.
"EXERCISE PERIOD" means the period during which a Participant may
exercise an Option, as determined under Section 4.1.
"EXERCISE PRICE" means the price to be paid by a Participant to
exercise an Option, as determined under Section 3.3.
"FAIR MARKET VALUE" means the closing price of a share of Stock
reflected in the consolidated trading tables of The Wall Street Journal
(presently the NYSE-Composite Transactions), or other recognized market source,
as determined by the Committee, on the applicable date of reference hereunder,
or if there is no sale on such date, then the closing price on the last previous
day on which a sale is reported.
"GRANT DATE" means, with respect to any Option, the date on which the
Option Agreement is executed by the Employer and the Participant.
"OPTION" means the right of a Participant, granted by the Employer in
accordance with Section 3.2, to purchase Stock from the Employer at the Exercise
Price.
"OPTION AGREEMENT" means an agreement setting forth the terms of an
Option executed by the Employer and a Participant pursuant to Section 3.2.
"PARTICIPANT" means any Director who has been granted Options in
accordance with the Plan and whose Options have not been exercised in full.
"PLAN" means the Winnebago Industries, Inc. Directors' Share Option
Plan, as set forth herein and from time to time amended.
"STOCK" means shares of common or preferred stock of a corporation
listed on a national securities exchange (exclusive of the stock of Winnebago
Industries, Inc.) or NASDAQ, or shares of a regulated investment company
designated by the Committee as subject to purchase through the exercise of an
Option.
"TERMINATION OF SERVICE" means a Director's' separation from the
service as a member of the Board of the Employer (including all subsidiaries and
affiliates of the Employer) by reason of resignation, failure to be renominated,
discharge, death or other termination. The Committee may, in its discretion,
determine whether any leave or other absence from service constitutes a
Termination of Service for purposes of the Plan
"TRUST" means the trust established pursuant to Article VII to hold the
Stock that is subject to purchase through the exercise of an Option.
"TRUST AGREEMENT" means an agreement setting forth the terms of the
Trust established pursuant to Article VII.
"TRUST FUND" means the Stock subject to an Option that is held in the
Trust
"TRUSTEE" means the persons or institution acting as trustee of the
Trust.
2.2 HEADINGS. The headings of Articles, Sections and Paragraphs are
solely for convenience of reference. If there is any conflict between such
headings and the text of this Plan. the text shall control.
2.3 GENDER. Unless the context clearly requires a different meaning,
all pronouns shall refer indifferently to persons of any gender.
2.4 SINGULAR AND PLURAL. Unless the context clearly requires a
different meaning, singular terms shall also include the plural and vice versa.
ARTICLE III
OPTION GRANT
3.1 ELIGIBILITY. Options may be granted to any Director selected by the
Committee from the members of the Board of Directors of the Employer. In making
this selection and in determining the form and amount of Options, the Committee
shall consider any factors that it deems relevant, including the individual's
responsibilities, value of services to the Employer, and past and potential
contributions to the Employer's direction, profitability and growth.
3.2 GRANT OF OPTIONS. Options may be granted by the Committee at any
time on or after the Effective Date and prior to the termination of the Plan.
Options shall become effective upon the execution by Employer and the
Participant of an Option Agreement specifying the Stock, the number of shares
subject to the Option, the Exercise Price, and such other terms and in such form
as the Committee may from time to time determine in accordance with the Plan.
3.3 EXERCISE PRICE. The Exercise Price shall be initially determined by
the Committee but shall be no less than 25 percent and no more than 100 percent
of the Fair Market Value of the Stock on the Grant Date. The Exercise Price
shall be subsequently adjusted so that in the event of a stock dividend, stock
split, reverse stock split, rights offering, return of capital distribution,
recapitalization or similar transaction that materially affects the Fair Market
Value of the Stock, the Committee shall adjust the Exercise Price so that it
retains the same ratio to the Fair Market Value of the Stock as existed
immediately before such transaction, or as may otherwise be provided in the
Option Agreement.
3.4 CONDITIONS OF GRANT. As a condition to the grant of a Stock Option,
the Committee may, in its discretion, require a Participant to enter into an
agreement with the Employer on or before the Grant Date to remain in the service
of the Board of Directors of the Employer for at least six months after the
Grant Date of an Option.
3.5 STOCK TO BE HELD IN TRUST. Upon the grant of an Option, the
Employer shall acquire the Stock and contribute it to the Trust as soon as
practicable after the Grant Date. At the time contributed to the Trust, the
Stock shall not be subject to any security interest, whether or not perfected,
or to any option or contract under which any other person may acquire any
interest in it, except as otherwise provided in Section 7.2 and Section 12 of
the Trust Agreement.
3.6 SUBSTITUTION OF ASSETS HELD IN TRUST. The Committee may, in its
discretion, after consultation with the Participant, substitute Stock of equal
Fair Market Value for any Stock subject to purchase through the exercise of an
Option.
3.7 DESIGNATION OF BENEFICIARY. As soon as practicable after the grant
of an Option, the Participant shall designate one or more Beneficiaries and
successor Beneficiaries, and may change a Beneficiary designation at any time,
by filing the prescribed form with the Committee. The consent of the
Participant's current Beneficiary shall not be required for a change of
Beneficiary. No Beneficiary shall have any rights under the Plan or an Option
Agreement during the lifetime of the Participant, except as may otherwise be
provided in Section 3.9.
(a) The Beneficiary of a Participant who dies without having
designated a Beneficiary in accordance with this Section 3.7 and who is
lawfully married on the date of death shall be the Participant's
surviving spouse
(b) The Beneficiary of any other Participant who dies without
having designated a Beneficiary in accordance with this Section 3.7
shall be the Participant's estate.
3.8 GENERAL NON-TRANSFERABILITY. No Option granted under this Plan may
be transferred, assigned, or alienated (whether by operation of law or
otherwise), except as provided herein, and no Option shall be subject to
execution, attachment or similar process. An Option may be exercised only by the
Participant (or the Participant's Beneficiary pursuant to Section 3.7).
ARTICLE IV
OPTION EXERCISE
4.1 EXERCISE PERIOD. A Participant may exercise all or any portion of
an Option at any time during the period beginning six months after the Grant
Date and ending on the earlier of
(a) twelve months after the Participant's date of death, and
(b) fifteen years after the Grant Date.
4.2 OPTION EXERCISE. A Participant (or the Participant's Beneficiary
pursuant to Section 3.7) may exercise all or any portion of an Option by giving
written notice to the Committee and tendering full payment of the Exercise Price
by bank certified or cashiers check on or before the date of exercise.
4.3 DELIVERY OF STOCK. On the date of exercise, or as soon as
practicable thereafter (but in no event later than five business days after the
date of exercise), the Employer shall deliver or cause to be delivered the Stock
then being purchased to the Participant (or the Participant's Beneficiary
pursuant to Section 3.7). In the event that the listing, registration or
qualification of the Option or the Stock on any securities exchange or under any
state or federal law, or the consent or approval of any governmental regulatory
body, is necessary as a condition of, or in connection with, the exercise of the
Option, then the Option shall not be exercised in whole or in part until such
listing, registration, qualification, consent or approval has been effected or
obtained.
4.4 FAILURE TO EXERCISE. No Option shall be exercised, in whole or in
part, after the end of the Exercise Period and the Employer shall have no
obligation to deliver or cause to be delivered to the Participant (or the
Participant's Beneficiary) the Stock subject to such Option.
ARTICLE V
AMENDMENT OR TERMINATION
5.1 PLAN AMENDMENT. The Board may, from time to time in its discretion,
amend any provision of the Plan, in whole or in part, with respect to any
Participant or group of Participants. Such amendment shall be effective as of
the date specified therein and shall be binding upon the Committee, all
Participants and Beneficiaries, and all other persons claiming an interest under
the Plan.
5.2 PLAN TERMINATION. The Plan shall terminate on the fifteenth
anniversary of the Effective Date or such earlier date as the Board may
determine in its discretion. Such termination shall be effective as of the date
determined by the Board and shall be binding upon the Committee, all
Participants and Beneficiaries, and all other persons claiming an interest under
the Plan. Options shall continue to be exercisable after the effective date of
such termination, and may be exercised in accordance with Article IV, but no new
Options shall be granted.
5.3 AMENDMENT OF OPTIONS. An Option may be amended by the Committee at
any time if the Committee determines that an amendment is necessary or advisable
as a result of:
(a) any addition to or change in the Code or ERISA, a federal
or state securities law or any other law or regulation, which occurs
after the Grant Date and by its terms applies to the Option,
(b) any substitution of stock held in Trust pursuant to
Section 3.6,
(c) any Plan amendment pursuant to Section 5.1, or Plan
termination pursuant to Section 5.2, provided that the amendment does
not materially affect the terms, conditions and restrictions applicable
to the Option, or
(d) any circumstances not specified in Paragraphs (a), (b),
or (c), with the consent of the Participant.
5. 4 CHANGE OF CONTROL. Notwithstanding any other provision of the Plan
or an Option Agreement, in the event of a Change of Control:
(a) the Participant shall not be required to remain in the
employ of the Employer for at least six months after the Grant Date of
an Option under Section 3.4(b),
(b) the Exercise Period under Section 4.1 shall not end prior
to six months after such Change of Control,
(c) an Option Agreement shall not be amended by the Committee
under Section 5.3 for any reason without the consent of the
Participant, and
(d) an Option may be terminated by the Committee on any date
after a Change of Control, in its sole discretion and without the
consent of the Participant, if the Committee makes a cash payment to
the Participant on such date in an amount equal to the Fair Market
Value of the Stock subject to such Option, reduced by the Exercise
Price, and multiplied by the number of shares subject to such Option.
ARTICLE VI
ADMINISTRATION
6.1 THE COMMITTEE. The Plan shall be administered by a Committee
consisting of one or more persons appointed by the Board of Directors. The
Committee shall act by a majority of its members at the time in office and may
take action either by vote at a meeting or by consent in writing without a
meeting.
(a) The Board may remove any member of the Committee at any
time, with or without cause, and may fill any vacancy. If a vacancy
occurs, the remaining member or members of the Committee shall have
full authority to act.
(b) Any member of the Committee may resign by written
resignation delivered to the Board. Any such resignation shall become
effective upon its receipt by the Board or on such other date as agreed
to by the Board and the resigning member.
6.2 POWERS OF THE COMMITTEE. In carrying out its duties with respect to
the general administration of the Plan, the Committee shall have, in addition to
any other powers conferred by the Plan or by law, the following powers:
(a) to determine eligibility to participate in the Plan and
eligibility to receive Options;
(b) to grant Options, and to determine the form, amount and
timing of such Options;
(c) to determine the terms and provisions of the Option
Agreements, and to modify such Option Agreements as provided in Section
5.3;
(d) to substitute stock held in Trust as provided in Section
3.6;
(e) to maintain all records necessary for the administration
of the Plan;
(f) to prescribe, amend, and rescind rules for the
administration of the Plan to the extent not inconsistent with the
terms thereof;
(g) to appoint such individuals and subcommittees as it deems
desirable for the conduct of its affairs and the administration of the
Plan;
(h) to employ counsel, accountants and other consultants to
aid in exercising its powers and carrying out its duties under the
Plan; and
(i) to perform any other acts necessary, and proper for the
conduct of its affairs and the administration of the Plan, except those
reserved by the Board.
6.3 DETERMINATIONS BY THE COMMITTEE. The Committee shall interpret and
construe the Plan and the Option Agreements. and its interpretations and
determinations shall be conclusive and binding on all Participants,
Beneficiaries and an other persons claiming an interest under the Plan or any
Option Agreement. The Committee s interpretations and determinations under the
Plan and the Option Agreements need not be uniform and may be made by it
selectively among Participants, Beneficiaries and any other persons whether or
not they are similarly situated.
6.4 INDEMNIFICATION OF THE COMMITTEE. The Employer shall indemnify and
hold harmless each member of the Committee against any and all expenses and
liabilities arising out of such member's action or failure to act in such
capacity excepting only expenses and liabilities arising out of such member's
own willful misconduct or gross negligence.
(a) Expenses and liabilities against which a member of the
Committee is indemnified hereunder shall include, without limitation,
the amount of any settlement or judgment, costs, counsel fees and
related charges reasonably incurred in connection with a claim asserted
or a proceeding brought against him or the settlement thereof.
(b) This right of indemnification shall be in addition to any
other rights to which any member of the Committee may be entitled.
(c) The Employer may, at its own expense, settle any claim
asserted or proceeding brought against any member of the Committee when
such settlement appears to be in the best interests of the Employer.
6.6 EXPENSES OF THE COMMITTEE. The members of the Committee shall serve
without compensation for services as such. All expenses of the Committee shall
be paid by the Employer.
ARTICLE VII
TRUST PROVISIONS
7.1 ESTABLISHMENT OF THE TRUST. The Trust shall be established to hold
all Stock contributed by the Employer pursuant to Section 3.5. Except as
otherwise provided in Section 7.2, and Section 12 of the Trust Agreement, the
Trust shall be irrevocable and no portion of the Trust Fund shall be used for
any purpose other than the delivery of Stock pursuant to the exercise of an
Option, and the payment of expenses of the Plan and Trust.
7.2 TRUST STATUS. The Trust is intended to be a grantor trust, within
the meaning of Section 671 of the Code, of which the Employer is the grantor,
and this Plan is to be construed in accordance with that intention.
Notwithstanding any other provision of this Plan, the Trust Fund shall remain
the property of the Employer and shall be subject to the claims of its creditors
in the event of its bankruptcy or insolvency. No Participant shall have any
priority claim on the Trust Fund or any security interest or other right
superior to the rights of a general creditor of the Employer.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.1 GOVERNING LAW. Except to the extent preempted by federal law, the
construction and operation of the Plan shall be governed by the laws of the
State of Iowa without regard to the choice of law principles of such state.
8.2 SEVERABILITY. If any provision of this Plan is held illegal or
invalid by any court or governmental authority for any reason, the remaining
provisions shall remain in full force and effect and shall be construed and
enforced in accordance with the purposes of the Plan as if the illegal or
invalid provision did not exist.
8.3 NO OBLIGATION TO EXERCISE. The granting of an Option shall impose
no obligation upon a Participant to exercise such Option.
8.4 NO RIGHTS OF SHAREHOLDER. Neither the Participant or a Beneficiary
shall be, or shall have any of the rights and privileges of, a stockholder with
respect to any Stock purchasable or issuable upon the exercise of an Option,
prior to the date of exercise of such Option.
8.5 NO RIGHT TO CONTINUED SERVICE. Nothing contained in the Plan shall
be deemed to give any Director the right to be retained as a member of the Board
of Directors of the Employer, or to interfere with the right of the shareholders
of the Employer to discharge any Director in accordance with applicable
corporate laws without regard to the effect that such discharge shall have upon
such Director's ' rights or potential rights, if any, under the Plan. The
provisions of the Plan are in addition to, and not a limitation on, any rights
that a Participant may have against the Employer by reason of any other
agreement with the Employer.
8.6 NOTICES. Unless otherwise specified in an Option Agreement, any
notice to be provided under the Plan to the Committee shall be mailed (by
certified mail, postage prepaid) or delivered to the Committee in care of the
Employer at its executive offices, and any notice to the Participant shall be
mailed (by certified mail, postage prepaid) or delivered to the Participant at
the current address shown on the payroll records of the Employer. No notice
shall be binding on the Committee until received by the Committee, and no notice
shall be binding on the Participant until received by the Participant.
EXHIBIT 10i.
WINNEBAGO INDUSTRIES, INC.
STOCK OPTION PLAN
THIS Stock Option Plan ("PLAN"), effective as of the date of its approval
by the Board of Directors, the 14th day of August, 1997, is hereby adopted and
established by Winnebago Industries, Inc., an Iowa corporation, ("COMPANY") and
will be maintained by the Company for the purpose of providing stock options for
selected management, key employees, directors, advisors and consultants as
provided herein.
ARTICLE 1 -- PURPOSE
The purpose of the Plan is to provide additional incentive to those
officers, employees, directors, advisors and consultants of the Company whose
substantial contributions are essential to the continued growth and success of
the Company's business in order to strengthen their commitment to the Company,
to motivate them to faithfully and diligently perform their assigned
responsibilities and to attract and retain competent and dedicated individuals
whose efforts will result in the long-term growth and profitability of the
Company. To accomplish such purposes, the Plan provides that the Company may
grant Incentive Stock Options, Nonqualified Stock Options and Stock Appreciation
Rights. The provisions of the Plan are intended to satisfy the requirements of
Section 16(b) of the Exchange Act, and the regulations promulgated thereunder.
ARTICLE 2 -- DEFINITIONS
For purposes of this Plan:
2.1 "ADVISOR" or "CONSULTANT" means an advisor or consultant who is an
independent contractor with respect to the Company or a Subsidiary, and who
provides bona fide services (other than in connection with the offer or sale of
securities in a capital raising transaction) to the executive officers or Board
of Directors regarding major functions, portions or operations of the Company's
business; who is not an employee, officer, director or holder of more than ten
percent (10%) of the outstanding voting securities of the Company; and whose
services the Committee determines is of vital importance to the overall success
of the Company.
2.2 "AGREEMENT" means the written agreement evidencing the grant of an
Award and setting forth the terms and conditions thereof.
2.3 "AWARD" means, individually or collectively, a grant under this Stock
Option Plan, Stock Appreciation Rights, or both as the context requires.
2.4 "BOARD" means the Board of Directors of the Company.
2.5 "CHANGE IN CONTROL" means one of the following events:
(i) any "person" or group of persons acting in concert (as defined in
Sections 13(d) and 14(d) of the Exchange Act), other than the Hanson
Family, the Company, or a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any Subsidiary, acquires,
directly or indirectly, after the Effective Date of this Plan "beneficial
ownership" (as defined in Rule 13d-3 under the Exchange Act) of any class
of securities representing at least thirty percent (30%) of the combined
voting power of the Company;
(ii) during any period of not more than two consecutive years,
individuals who at the beginning of such period constitute the Board and
any new directors (other than any director designated by a person who has
entered into an agreement with the Company to effect a transaction
described in Subsections 2.5(i), 2.5(iii), or 2.5(iv) of this Plan), cease
for any reason to constitute a majority thereof;
(iii) the stockholders of the Company approve a merger other than (A)
a merger that would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company or any Subsidiary, at least fifty percent (50%) of the combined
voting power of all classes of stock of the Company or such surviving
entity outstanding immediately after such merger or (B) a merger effected
to implement a recapitalization of the Company (or similar transaction) in
which the shareholders of the Company immediately prior to the
recapitalization (or similar transaction) acquire at least fifty percent
(50%) of the combined voting power of the Company's then outstanding
securities through the recapitalization (or similar transaction); or
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or a sale of all or substantially all of the
assets of the Company.
2.6 "CODE" means the Internal Revenue Code of 1986, as amended.
2.7 "COMMITTEE" means a Committee which may be appointed by the Board to
administer the Plan to perform the functions set forth herein, composed of two
or more directors who are Non-Employee Directors, as defined in paragraph
(b)(3)(i) of Rule 16b-3 under the Exchange Act. Unless and until the Board
appoints such Committee, the Board shall administer the Plan and perform the
functions set forth herein, and references herein to the Committee shall be
deemed to refer to the Board.
2.8 "COMPANY" means Winnebago Industries, Inc., an Iowa corporation, or any
successor thereto.
2.9 "DISABILITY" means the inability, due to illness or injury, to engage
in any gainful occupation for which the individual is suited by education,
training or experience, which condition continues for at least six (6) months.
2.10 "EFFECTIVE DATE OF THIS PLAN" shall be the date first written above on
which this Plan was adopted by the Board.
2.11 "ELIGIBLE EMPLOYEE" shall have the meaning given to it by Article 5.
2.12 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
2.13 "FAIR MARKET VALUE" means the fair market value of the Shares as
determined by the Committee in its sole discretion, PROVIDED, HOWEVER, that if
the Shares are then admitted to trading on a national securities exchange, the
Fair Market Value on any date shall be the mean between the high and low prices
for a share of the Company's Common Stock on the New York Stock Exchange at the
time the option is granted.
2.14 "FREE-STANDING STOCK APPRECIATION RIGHT" means a Stock Appreciation
Right that is not granted in conjunction with the grant of an Option.
2.15 "HANSON FAMILY" shall mean collectively the spouse, lineal descendent,
or spouse of a lineal descendent of John K. Hanson, or any entity, affiliate or
associate controlled by the spouse, lineal descendent, or spouse of a lineal
descendent of John K. Hanson.
2.16 "IMMEDIATE FAMILY MEMBER" means a person who is the Participant's
spouse, mother, father, brother, sister, or child.
2.17 "INCENTIVE STOCK OPTION" means an Option within the meaning of Section
422 of the Code.
2.18 "NON-EMPLOYEE DIRECTOR" means a member of the Board who is not an
employee of the Company.
2.19 "NONQUALIFIED STOCK OPTION" means an Option which is not an Incentive
Stock Option.
2.20 "OPTION" means an Incentive Stock Option, a Nonqualified Stock Option,
or either or both of them, as the context requires.
2.21 "PARTICIPANT" means a person to whom an Award has been granted under
the Plan.
2.22 "PLAN" means the Winnebago Industries, Inc. Stock Option Plan, as
amended from time to time.
2.23 "RELATED STOCK APPRECIATION RIGHT" means a Stock Appreciation Right
that is granted in conjunction with the grant of an Option.
2.24 "RETIREMENT" means termination of employment with the Company by a
Participant (other than as a result of death or Disability) if the Participant
is at least fifty-five (55) years of age.
2.25 "SECURITIES ACT" means the Securities Act of 1933, as amended.
2.26 "SHARES" means shares of Common Stock, with fifty cents ($.50) par
value per share, of the Company.
2.27 "STOCK APPRECIATION RIGHT" means the right to receive all or some
portion of the increase in the value of the Shares as provided in Article 7
hereof
2.28 "SUBSIDIARY" means any corporation in a descending, unbroken chain of
corporations, beginning with the Company, if each of the corporations other than
the last corporation in the unbroken chain owns stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain.
2.29 "TEN-PERCENT STOCKHOLDER" means an Eligible Employee, who, at the time
an Incentive Stock Option is to be granted to such Eligible Employee, owns
(within the meaning of Section 422(b)(6) of the Code) stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company, a parent or a Subsidiary within the meaning of Sections 424(e) and
424(f), respectively, of the Code.
ARTICLE 3 -- ADMINISTRATION
3.1 The Plan shall be administered by the Board or, if the Board so
determines, by a Committee, which Committee shall at all times satisfy the
provisions of Rule 16b-3 under the Exchange Act. The Committee shall hold
meetings at such times as may be necessary for the proper administration of the
Plan. The Committee shall keep minutes of its meetings. A majority of the
Committee shall constitute a quorum and a majority of a quorum may authorize any
action. Any decision reduced to writing and signed by all of the members of the
Committee shall be fully effective as if it had been made at a meeting duly
held. No member of the Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan or
Options and all members of the Committee shall be fully indemnified by the
Company with respect to any such action, determination or interpretation. The
Company shall pay all expenses incurred in the administration of the Plan.
3.2 Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time:
(i) to determine those Eligible Employees to whom Awards shall be
granted under the Plan and the number of Shares subject to such Awards to
be granted to each Eligible Employee and to prescribe the terms and
conditions (which need not be identical) of each Award, including the
purchase price per share of each Award, and the forfeiture provisions, if
any, if the Employee leaves the employment of the Company or a Subsidiary
within a prescribed time or acts against the interests of the Company
within a prescribed time;
(ii) to construe and interpret the Plan, the Awards granted hereunder
and to establish, amend and revoke rules and regulations for the
administration of the Plan, including, but not limited to, correcting any
defect or supplying any omission, or reconciling any inconsistency in the
Plan or in any Agreement, and (subject to the provisions of Article 12
below) to amend the terms and conditions of any outstanding Award to the
extent such terms and conditions are within the discretion of the Committee
as provided in the Plan, in the manner and to the extent it shall deem
necessary or advisable to make the Plan fully effective, and all decisions
and determinations by the Committee in the exercise of this power shall be
final and binding upon the Company or a Subsidiary, and the Participants,
as the case may be;
(iii) to determine the duration and purposes for leaves of absence
which may be granted to a Participant without constituting a termination of
employment or service for purposes of the Plan; and
(iv) generally, to exercise such powers and to perform such acts as
are deemed necessary or advisable to promote the best interests of the
Company with respect to the Plan.
3.3 Notwithstanding any other provision in this Plan, a grant of Options to
any Eligible Employee who is an officer of the Company or a Subsidiary shall be
approved by a majority vote of the Board.
ARTICLE 4 -- STOCK SUBJECT TO PLAN
4.1 The maximum number of Shares that may be issued or transferred pursuant
to Awards granted under this Plan is Two Million (2,000,000 ) (or the number and
kind of shares of stock or other securities that are substituted for those
Shares or to which those Shares are adjusted pursuant to Article 8), and the
Company shall reserve for the purposes of the Plan, out of its treasury shares
or its authorized but unissued Shares, such number of Shares.
4.2 Whenever any outstanding Award or portion thereof expires, is canceled
or is otherwise terminated (other than by exercise of the Award ), the Shares
allocable to the unexercised portion of such Award may again be the subject of
Awards hereunder, to the extent permitted by Rule 16b-3 under the Exchange Act.
ARTICLE 5 -- ELIGIBILITY
Eligible Employees shall be the officers, employees, directors, Advisors
and Consultants of the Company who occupy responsible managerial or professional
positions and who have the capability of making a substantial contribution to
the success of the Company. In making the selection and in determining the form
and amount of Awards, the Committee shall give consideration to the functions
and responsibilities of the individual, past and potential contributions to
profitability and sound growth, the value of the individual's services to the
Company, and any other factors deemed relevant by the Committee. The Committee
shall have full and final authority on selecting those Eligible Employees who
will receive Awards.
ARTICLE 6 -- OPTIONS
The Committee may grant Options in accordance with the Plan, the terms and
conditions of which shall be set forth in an Agreement. Each Option and
Agreement shall be subject to the following conditions:
6.1 PURCHASE PRICE. The purchase price or the manner in which the purchase
price is to be determined for Shares under each Option shall be set forth in the
Agreement, PROVIDED, HOWEVER, that the purchase price per Share under (a) each
Nonqualified Stock Option shall not be less than eighty-five percent (85%) of
the Fair Market Value of a Share at the time the Option is granted, (b) each
Incentive Stock Option shall not be less than one hundred percent (100%) of the
Fair Market Value of a Share at the time the Option is granted, and (c) each
Incentive Stock Option granted to a Ten-Percent Stockholder shall not be less
than one hundred ten (110%) of the Fair Market Value of a Share at the time the
Option is granted.
6.2 DURATION. Options granted hereunder shall be for such term as the
Committee shall determine, PROVIDED, HOWEVER, that no Option shall be
exercisable after the expiration of ten (10) years from the date it is granted,
or five (5) years in the case of an Incentive Stock Option granted to a
Ten-Percent Stockholder. The Committee may, subsequent to the granting of any
Option, extend the term thereof but in no event shall the term as so extended
exceed the maximum term provided for in the preceding sentence.
6.3 NON-TRANSFERABILITY. No Option granted hereunder shall be transferable
by the Participant to whom such Option is granted otherwise than (a) by gift to
an Immediate Family Member or members, (b) by gift to a partnership or limited
liability company consisting only of Immediate Family Members, (c) by gift to a
trust solely for the benefit of the Participant and/or Immediate Family Members,
(collectively, an "assignee"), or (d) by will or the laws of descent and
distribution; PROVIDED, HOWEVER, an Incentive Stock Option shall only be
transferable by will or the laws of descent or distribution. An Option may be
exercised during the lifetime of such Participant only by the Participant, the
Participant's assignee, or such Participant's guardian or legal representative.
The terms of such Option shall be binding upon the beneficiaries, executors,
administrators, heirs, assignees and successors of the Participant.
6.4 VESTING. Subject to Section 6.5, unless otherwise set forth in the
Agreement, each Option shall become exercisable upon the earlier of (a) as to
all of the Shares covered by the Option on the death, Retirement, or Disability
of the Participant, or (b) six (6) months after the date the Option was granted.
To the extent not exercised, installments shall accumulate and be exercisable,
in whole or in part, at any time after becoming exercisable, but not later than
the date the Option expires. The Committee may accelerate the exercisability of
any Option or portion thereof at any time.
6.5 ACCELERATED VESTING. Notwithstanding the provisions in Section 6.4,
each Option granted to a Participant shall become vested in full and immediately
exercisable upon the occurrence of a Change in Control.
6.6 TERMINATION OF EMPLOYMENT. In the event that a Participant ceases to be
employed by the Company or any Subsidiary, any outstanding Options held by such
Participant shall, unless this Plan or the Agreement evidencing such Option
provides otherwise, terminate as follows:
(a) If the Participant's termination of employment is due to his
death, Disability, or Retirement, the Option shall become vested in full
and immediately exercisable for a period of three (3) years following such
termination of employment, and shall thereafter terminate; and
(b) If the Participant's termination of employment is for any other
reason (including a Participant's ceasing to be employed by a Subsidiary as
a result of the sale of such Subsidiary or an interest in such Subsidiary),
the Option (to the extent that such Option is vested as provided for in
Section 6.4 at the time of the Participant's termination of employment)
shall be exercisable for a period of ninety (90) days following such
termination of employment, and shall thereafter terminate.
Notwithstanding the foregoing, the Committee may provide, either at the
time an Option is granted or thereafter, that the Option may be exercised after
the periods provided for in this Section, but in no event beyond the term of the
Option.
6.7 CANCELLATION AND RECISION OF OPTIONS. Unless the Agreement specifies
otherwise, the Committee may cancel and rescind any unexpired, unpaid,
unexercised, or deferred Options (whether vested or unvested pursuant to this
Section 6) at any time before the exercise thereof, if the Participant is not in
compliance with the following conditions:
(i) A Participant shall not render services for any organization or
engage directly or indirectly in any business which, in the judgment of the
Committee, is or becomes competitive with the Company, or which
organization or business, or the rendering of services to such organization
or business, is or becomes prejudicial to or in conflict with the interests
of the Company. For Participants whose employment has terminated, the
judgment of the Committee shall be based on the Participant's position and
responsibilities while employed by the Company or its Subsidiaries, the
Participant's post-employment responsibilities and position with the other
organization or business, the extent of past, current, and potential
competition or conflict between the Company and the other organization or
business, the effect of the Participant's assuming the postemployment
position on the Company's or its Subsidiary's customers, suppliers, and
competitors, and such other considerations as are deemed relevant given the
applicable facts and circumstances. A Participant may, however, purchase as
an investment or otherwise, stock or other securities of any organization
or business so long as such investment does not represent a greater than
five percent (5%) equity interest in the organization or business.
(ii) A Participant shall not, without prior written authorization
from the Company, disclose to anyone outside the Company or Subsidiaries,
or use in other than the Company's or Subsidiary's business, any
information or materials determined to be confidential by the Committee
relating to the business of the Company or its Subsidiaries, acquired by
the Participant either during or after employment with the Company or its
Subsidiaries.
6.8 METHOD OF EXERCISE. The exercise of an Option shall be made only by a
written notice delivered to the Secretary of the Company at the Company's
principal executive office, specifying the number of Shares to be purchased and
accompanied by payment therefor and otherwise in accordance with the Agreement
pursuant to which the Option was granted. The purchase price for any Shares
purchased pursuant to the exercise of an Option shall be paid in full upon such
exercise in cash, by check, or, at the discretion of the Committee and upon such
terms and conditions as the Committee shall approve, by (a) a loan made by the
Company to the Participant, (b) transferring Shares already owned to the Company
pursuant to Section 6.9, or (c) by delivery of an unconditional and irrevocable
undertaking by a broker to sell a portion of the Shares and deliver to the
Company sufficient funds to pay for the exercise price and applicable federal,
state, and local tax withholding. If requested by the Committee, the Participant
shall deliver the Agreement evidencing the Option to the Secretary of the
Company who shall endorse thereon a notation of such exercise and return such
Agreement to the Participant.
6.9 ALTERNATIVE PAYMENT METHOD. If the Committee, in its sole discretion,
determines that the Participant may pay for the purchase price of Shares
purchased pursuant to an exercise of an Option by using Shares already owned,
the Participant shall deliver a notarized statement of ownership (hereinafter,
"STATEMENT"), in a form to be determined by the Committee, to the Company
indicating that the Participant owns Shares of sufficient number and value to
cover the purchase price of the Shares purchased pursuant to the exercise of the
Option. However, no surrender of the actual stock certificates relating to the
Shares listed in the Statement is necessary. The number of Shares in the
Statement will be treated as a constructive payment of the purchase price, and
the Participant shall retain ownership of such Shares. The Company shall issue a
stock certificate for a number of Shares equal to the Shares purchased pursuant
to the Option minus the number of Shares used for the constructive payment. All
Shares listed in the Statement shall be valued at their Fair Market Value
6.10 RIGHTS OF PARTICIPANTS. No Participant shall be deemed for any purpose
to be the owner of any Shares subject to any Option unless and until (a) the
Option shall have been exercised pursuant to the terms thereof, (b) the Company
shall have issued and delivered the Shares to the Participant, and (c) the
Participant's name shall have been entered as a stockholder of record on the
books of the Company. Thereupon, the Participant shall have full voting,
dividend and other ownership rights with respect to such Shares.
6.11 ANNUAL LIMITATION. To the extent that the aggregate Fair Market Value
(measured at the date of grant) of Incentive Stock Options which become
exercisable for the first time by any Participant during any calendar year
exceeds one hundred thousand dollars ($ 100,000), the excess of such Options
shall be treated as Nonqualified Stock Options.
6.12 EFFECT OF EXERCISE. The exercise of any Option shall cancel that
number of Related Stock Appreciation Rights, if any, which is equal to the
number of Shares purchased pursuant to the exercised Option.
ARTICLE 7 -- STOCK APPRECIATION RIGHTS
7.1 GRANT. The Committee may from time to time, and subject to such other
terms and conditions as the Committee may prescribe, grant a Free-Standing Stock
Appreciation Right or a Related Stock Appreciation Right to any Eligible
Employee. The terms and conditions of such Stock Appreciation Right shall be set
forth in the Agreement. A Related Stock Appreciation Right shall be related on a
one-for-one basis to Shares which are subject to the Option concurrently being
granted under the Plan to the grantee of such Related Stock Appreciation Right.
A Related Stock Appreciation Right shall be subject to the same terms and
conditions as the related Option, and shall only be granted at the same time as
the related Option is so granted. A Free-Standing Stock Appreciation Right may
be granted by the Committee at any time.
7.2 EXERCISE OF A RELATED STOCK APPRECIATION RIGHT. A Participant who has
been granted a Related Stock Appreciation Right may, in lieu of the exercise of
an equal number of Options, elect to exercise one or more Related Stock
Appreciation Rights and thereby become entitled to receive from the Company
payment of the amount determined pursuant to Section 7.5. Related Stock
Appreciation Rights shall be exercisable only to the same extent and subject to
the same conditions as the Option or Options related thereto are exercisable, as
provided for in Article 6. A Related Stock Appreciation Right issued in tandem
with an Incentive Stock Option may be exercised only when the Fair Market Value
of the Shares subject to the Incentive Stock Option exceeds the exercise price
of such Option. The Committee may, in its discretion, prescribe additional
conditions to the exercise of any Related Stock Appreciation Rights.
7.3 EXERCISE OF FREE-STANDING STOCK APPRECIATION RIGHTS. Free-Standing
Stock Appreciation Rights generally will be exercisable at such time or times,
and may be subject to such other terms and conditions, as shall be determined by
the Committee, in its discretion, and such terms and conditions shall be set
forth in the Agreement; PROVIDED, HOWEVER, that no Free-Standing Stock
Appreciation Right shall be exercisable after the expiration of ten (10) years
from the date it is granted. No Free-Standing Stock Appreciation Right granted
hereunder shall be transferable by the Participant to whom such right is granted
otherwise than by will or the laws of descent and distribution, and a
Free-Standing Stock Appreciation Right may be exercised during the lifetime of
such Participant only by the Participant or such Participant's guardian or legal
representative. The terms of such Free-Standing Stock Appreciation Right shall
be binding upon the beneficiaries, executors, administrators, heirs and
successors of the Participant.
7.4 CHANGE IN CONTROL. Notwithstanding any other provision in this Plan,
each Stock Appreciation Right granted to a Participant shall become immediately
exercisable in full upon the occurrence of a Change in Control.
7.5 AMOUNT PAYABLE. Upon the exercise of each Stock Appreciation Right, the
Participant shall be entitled to receive the following:
(A) If the Participant exercised a Free-Standing Stock Appreciation
Right, the amount equal to the excess of the Fair Market Value of one Share
on the exercise date over the Fair Market Value of one Share on the grant
date; and
(B) If the Participant exercised a Related Stock Appreciation Right,
the amount equal to the excess of the Fair Market Value of one Share on the
exercise date over the exercise price for one Share under the Option to
which the Stock Appreciation Right relates.
7.6 EFFECT OF EXERCISE. The exercise of a Related Stock Appreciation Right
shall cancel an equal number of Shares subject to Options related thereto.
7.7 METHOD OF EXERCISE. Stock Appreciation Rights shall be exercised by a
Participant only by a written notice delivered in person or by mail to the
Secretary of the Company at the Company's principal executive office, specifying
the number of Shares with respect to which the Stock Appreciation Right is being
exercised. If requested by the Committee, the Participant shall deliver the
Agreement evidencing the Stock Appreciation Right being exercised and with
respect to a Related Stock Appreciation Right, the Agreement evidencing any
related Option to the Secretary of the Company who shall endorse thereon a
notation of such exercise and return such Agreement or Agreements to the
Participant.
7.8 FORM OF PAYMENT. Payment of the amount determined under this Article,
may be made solely in whole Shares in a number determined based upon their Fair
Market Value on the date of exercise of the Stock Appreciation Right, or
alternatively, at the sole discretion of the Committee, solely in cash, or in a
combination of cash and Shares as the Committee deems advisable. In the event
that a Stock Appreciation Right is exercised within sixty (60) days following a
Change in Control, any amount payable shall be solely in cash. If the Committee
decides to make full payment in Shares, and the amount payable results in a
fractional Share, payment for the fractional Share will be made in cash.
ARTICLE 8 -- LOANS
8.1 The Company or any Subsidiary may make loans to a Participant in
connection with the exercise of an Option, subject to the terms and conditions
in this Article and such other terms and conditions not inconsistent with the
Plan including the rate of interest, as the Committee shall impose from time to
time.
8.2 No loan made under the Plan shall exceed the sum of (a) the aggregate
purchase price payable pursuant to the Option with respect to which the loan is
made, plus (b) if applicable, the amount of the reasonably estimated income and
payroll taxes payable by the Participant with respect to the exercise of the
Option. In no event may any such loan exceed the Fair Market Value, at the date
of exercise, of the Shares received pursuant to such exercise.
8.3 No loan shall have an initial term exceeding five (5) years, PROVIDED,
HOWEVER, that loans under the Plan shall be renewable at the discretion of the
Committee, and PROVIDED, HOWEVER, that the indebtedness under each loan shall
become due and payable, as the case may be, on a date no later than (a) one (1)
year after termination of the Participant's employment due to death or
Disability, or (b) the date of termination of the Participant's employment for
any reason other than death or Disability.
8.4 Loans under the Plan may be satisfied by a Participant, as determined
by the Committee, in cash or, with the consent of the Committee, in whole or in
part by the transfer to the Company of Shares whose Fair Market Value on the
date of such payment is equal to part or all of the outstanding balance of such
loan.
8.5 A loan shall be secured by a pledge of Shares with a Fair Market Value
of not less than the principal amount of the loan. After any repayment of a
loan, pledged Shares no longer required as security may be released to the
Participant.
8.6 Every loan shall meet all applicable laws, regulations and rules of the
Federal Reserve Board and shall satisfy the applicable laws and regulations
under the Code for imputed interest.
ARTICLE 9 -- ADJUSTMENT UPON CHANGES IN CAPITALIZATION
9.1 In the event of any change in the outstanding Shares of the Company by
reason of a stock dividend, stock split, recapitalization, merger,
consolidation, combination, or exchange of shares or other similar corporate
change, the Committee in its sole discretion shall make such adjustments as it
deems appropriate in the aggregate number and kind of Shares issuable under the
Plan, in the number and kind of Shares covered by Awards made under the Plan,
and in the exercise price of outstanding Options, and such determination shall
be conclusive.
9.2 Any such adjustment in the Shares or other securities subject to
outstanding Incentive Stock Options (including any adjustments in the purchase
price) shall be made in such manner as not to constitute a modification as
defined by Section 424(h)(3) of the Code and only to the extent otherwise
permitted by Sections 422 and 424 of the Code.
9.3 In the event of any liquidation, dissolution, merger, consolidation or
other reorganization (collectively, a "TRANSACTION") of the Company, the Options
and Agreements shall continue in effect in accordance with their respective
terms, except that following a Transaction each Participant shall be entitled to
receive in respect of each Share subject to an Option, as the case may be, upon
exercise of any Option, the same number and kind of stock, securities, cash,
property or other consideration that each holder of a Share was entitled to
receive in the Transaction in respect of a Share.
ARTICLE 10 -- OUTSIDE DIRECTOR OPTIONS
10.1 GENERAL. Notwithstanding any of the other provisions of the Plan to
the contrary, the provisions of this Article shall apply only to grants of
Options to directors of the Company ("Outside Directors") who do not hold a
position of employment with the Company or a Subsidiary besides his or her
position as a director of the Company. Except as set forth in this Article, the
other provisions of the Plan shall apply to grants of Options to Outside
Directors to the extent not inconsistent with this Article. Solely for purposes
of interpreting Article 6 of this Plan, an Outside Director's service as a
member of the Board shall be deemed to be employment with the Company. All
Outside Directors shall receive Nonqualified Stock Options in accordance with
this Article and the Plan, and may not be granted Incentive Stock Options under
this Plan. The purchase price per Share purchasable under Options granted to
Outside Directors shall be the Fair Market Value of a Share on the date of
grant. No Agreement with any Outside Director may alter the provisions of this
Article and no Option granted to an Outside Director may be subject to a
discretionary acceleration of exercisability.
10.2 AUTOMATIC GRANT TO CURRENT OUTSIDE DIRECTORS. Each Outside Director of
the Company on the Effective Date of this Plan who has not been granted an
option to purchase 10,000 Shares under the Company's Stock Option Plan for
Outside Directors in effect immediately prior to the Effective Date of this
Plan, will, without action by the Committee, be granted automatically a
Nonqualified Stock Option to purchase 10,000 Shares at a per share price equal
to the Fair Market Value of a Share on the date of grant.
10.3 AUTOMATIC GRANT TO NEW OUTSIDE DIRECTORS. Each Outside Director who,
after the Effective Date of this Plan, is elected or appointed to the Board for
the first time and who is not granted an option to purchase 10,000 Shares under
the Company's Stock Option Plan for Outside Directors in effect immediately
prior to the Effective Date of this Plan, will, at the time such Director is so
elected or appointed and duly qualified, be granted automatically, without
action by the Committee, a Nonqualified Stock Option to purchase 10,000 Shares
at a per share price equal to the Fair Market Value of a Share on the date of
grant.
10.4 DISCRETIONARY GRANT TO OUTSIDE DIRECTORS. The Board of Directors of
the Company may, in its discretion, grant additional Nonqualified Stock Options
to Outside Directors subject to the terms and conditions of this Article 10 and
the Plan.
10.5 DECLINING AWARDS. Notwithstanding any automatic grant of an Award
under this Article, an Outside Director may elect, at any time before the Award
would otherwise be made, to decline an automatic Award under this Plan or to
revoke a previous election to decline an automatic Award. An Outside Director
who elects to decline an automatic Award under this Plan shall receive nothing
in lieu of such Award, either at the time of such election or at any time
thereafter.
10.6 DISCRETIONARY GRANT TO EMPLOYEE DIRECTORS. If a Participant is a
director and holds a position of employment with the Company or a Subsidiary
besides his or her position as a director of the Company, the Company may grant
such Participant Options under this Plan as an employee of the Company without
the restrictions of this Article.
ARTICLE 11 -- RELEASE OF FINANCIAL INFORMATION
A copy of the Company's annual report to stockholders shall be delivered to
each Participant if and at the time any such report is distributed to the
Company's stockholders. Upon request, by any Participant, the Company shall
furnish to such Participant a copy of its most recent annual report and each
quarterly report and current report filed under the Exchange Act since the end
of the Company's prior fiscal year.
ARTICLE 12 -- TERMINATION AND AMENDMENT OF THE PLAN
12.1 The Plan shall terminate on the day preceding the tenth anniversary of
its Effective Date, except with respect to Awards outstanding on such date, and
no Awards may be granted thereafter. The Board may sooner terminate or amend the
Plan at any time, and from time to time; PROVIDED, HOWEVER, that, except as
provided in Article 8 hereof, no amendment shall be effective unless approved by
the stockholders of the Company where stockholder approval of such amendment is
required (a) to comply with Rule 16b-3 under the Exchange Act, or (b) to comply
with any other law, regulation or stock exchange rule. Notwithstanding anything
in this Section to the contrary, Article 10 relating to Options for Directors
shall not be amended more than once in any six-month period, other than to
comport with changes in the Code, the Employee Retirement Income Security Act of
1974, as amended, or the rules or regulations thereunder.
12.2 Except as provided in Article 9 hereof, rights and obligations under
any Award granted before any amendment of the Plan shall not be adversely
altered or impaired by such amendment, except with the consent of the
Participant.
ARTICLE 13 -- NON-EXCLUSIVITY OF THE PLAN
The adoption of the Plan by the Board shall not be construed as amending,
modifying or rescinding any previously approved incentive arrangement or as
creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under the Plan, and such arrangements
may be either applicable generally or only in specific cases.
ARTICLE 14 -- LIMITATION OF LIABILITY
As illustrative of the limitations of liability of the Company, but not
intended to be exhaustive thereof, nothing in the Plan shall be construed to:
14.1 give any employee any right to be granted an Award other than at the
sole discretion of the Committee;
14.2 give any person any rights whatsoever with respect to Shares except as
specifically provided in the Plan;
14.3 limit in any way the right of the Company or its Subsidiaries to
terminate the employment of any person at any time; or
14.4 be evidence of any agreement or understanding, expressed or implied,
that the Company, or its Subsidiaries, will employ any person in any particular
position, at any particular rate of compensation or for any particular period of
time.
ARTICLE 15 -- REGULATIONS AND OTHER APPROVALS; GOVERNING LAW
15.1 This Plan and the rights of all persons claiming hereunder shall be
construed and determined in accordance with the laws of the State of Iowa.
15.2 The obligation of the Company to sell or deliver Shares with respect
to Options granted under the Plan shall be subject to all applicable laws, rules
and regulations, including all applicable federal and state securities laws, and
the obtaining of all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Committee.
15.3 Any provisions of the Plan inconsistent with Rule 16b-3 under the
Exchange Act shall be inoperative and shall not affect the validity of the Plan.
15.4 Except as otherwise provided in Article 12, the Board may make such
changes as may be necessary or appropriate to comply with the rules and
regulations of any government authority or to obtain for Participants granted
Incentive Stock Options, the tax benefits under the applicable provisions of the
Code and regulations promulgated thereunder.
15.5 Each Award is subject to the requirement that, if at any time the
Committee determines, in its absolute discretion, that the listing, registration
or qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Award or the issuance of
Shares, no Awards shall be granted or payment made or Shares issued, in whole or
in part, unless listing, registration, qualification, consent or approval has
been effected or obtained free of any conditions as acceptable to the Committee.
15.6 In the event that the disposition of Shares acquired pursuant to the
Plan is not covered by a then current registration statement under the
Securities Act and is not otherwise exempt from such registration, such Shares
shall be restricted against transfer to the extent required by the Securities
Act or regulations thereunder, and the Company may place a restrictive legend on
the share certificate indicating such restrictions. Furthermore, the Committee
may require a Participant receiving Shares pursuant to the Plan, as a condition
precedent to receipt of such Shares, to represent to the Company in writing that
the Shares acquired by such Participant are acquired for investment only and not
with a view to distribution.
ARTICLE 16 -- MISCELLANEOUS
16.1 MULTIPLE AGREEMENTS. The terms of each Award may differ from, other
Awards granted under the Plan at the same time, or at any other time. The
Committee may also grant more than one Award to a given Participant during the
term of the Plan, either in addition to, or in substitution for, one or more
Awards previously granted to that Participant. The grant of multiple Awards may
be evidenced by a single Agreement or multiple Agreements, as determined by the
Committee.
16.2 WITHHOLDING OF TAXES.
(a) Whenever the Company proposes to issue or transfer Shares under
the Plan, the Company shall have the right to require the Participant to
remit to the Company prior to the issuance of any stock certificates and to
deduct from any payment of cash to the Participant an amount sufficient to
satisfy any federal, state, and local withholding tax requirements.
(b) Whenever under the Plan payments are to be made in cash, such
payments will be net of an amount sufficient to satisfy any federal, state,
and local withholding tax requirements.
(c) The Participant may satisfy, totally or in part, the obligations
pursuant to Section 16.2(a) by electing to have Shares withheld having a
Fair Market Value equal to the amount of cash required to be withheld. All
elections shall be irrevocable, and be made in writing and signed by the
Participant prior to the day of exercise.
(d) The Agreement evidencing any Incentive Stock Options granted
under this Plan shall provide that if the Participant makes a disposition,
within the meaning of Section 424(c) of the Code and regulations
promulgated thereunder, of any Share or Shares issued to such Participant
pursuant to such Participant's exercise of an Incentive Stock Option, and
such disposition occurs within the two (2) year period commencing on the
day after the date of grant of such Option or within the one (1) year
period commencing on the day after the date of transfer of the Share or
Shares to the Participant pursuant to the exercise of such Option, such
Participant shall, within ten (10) days of such disposition, notify the
Company thereof and thereafter immediately deliver to the Company any
amount of federal, state or local income taxes and other amounts that the
Company informs the Participant the Company is required to withhold.
16.3 DESIGNATION OF BENEFICIARY. Each Participant may, with the consent of
the Committee, designate a person or persons to receive in the event of such
Participant's death, any Award or any amount of Shares payable pursuant thereto,
to which such Participant would then be entitled. Such designation shall be made
upon forms supplied by and delivered to the Company and may be revoked or
changed in writing. In the event of the death of a Participant and in the
absence of a beneficiary validly designated under the Plan who is living at the
time of such Participant's death, the Company shall deliver such Options, and/or
amounts payable to the executor or administrator of the estate of the
Participant, or if no such executor or administrator has been appointed (to the
knowledge of the Company), the Company, in its discretion, may deliver such
Options, and/or amounts payable to the spouse or to any one or more dependents
or relatives of the Participant, or if no spouse, dependent or relative is known
to the Company, then to such other person as the Company may designate.
16.4 GENDER AND NUMBER. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
16.5 SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
16.6 SUCCESSORS. All obligations of the Company under the Plan, with
respect to Awards granted hereunder, shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially
all of the business and/or assets of the Company.
16.7 SHAREHOLDER APPROVAL. Shareholder approval of this Plan is required to
qualify any Option as an Incentive Stock Option, and if shareholder approval is
not received within twelve (12) months after the Effective Date of this Plan,
any Awards of Incentive Stock Options shall be automatically converted into
Nonqualified Stock Options.
NOW, THEREFORE, this Plan is made effective as of the day, month and year
first above written.
WINNEBAGO INDUSTRIES, INC.
By: /s/ Fred G. Dohrmann
------------------------------
Fred G. Dohrmann, Chief Executive Officer
WINNEBAGO INDUSTRIES, INC. 1997 ANNUAL REPORT
[LOGO] WINNEBAGO
INDUSTRIES
CORPORATE PROFILE
Winnebago Industries, Inc., headquartered in Forest City, Iowa, is a leading
United States manufacturer of motor homes, self-contained recreation vehicles
used primarily in leisure travel and outdoor recreation activities. Motor home
sales by the Company represented more than 87 percent of its revenues in each of
the past five fiscal years. These vehicles are sold through dealer organizations
primarily under the Winnebago(R), Itasca(R), Vectra(R), Rialta(R) and Luxor(R)
brand names. The Company markets its recreation vehicles on a wholesale basis to
a broadly diversified dealer organization located throughout the United States,
and to a limited extent, in Canada and other foreign countries. As of August 30,
1997, the motor home dealer organization in the United States and Canada
included approximately 340 dealers. In addition, the Company's subsidiary,
Winnebago Acceptance Corporation, provides floor plan financing of dealer
inventories of the Company's products.
The Company was incorporated under the laws of the state of Iowa on February 12,
1958, and adopted its present name on February 28, 1961.
TABLE OF CONTENTS
Report to Shareholders..........................................................................2
Operations Review...............................................................................5
Net Revenues by Major Product Class.............................................................9
Interim Financial Information...................................................................9
Management's Discussion and Analysis of Financial Condition and
Results of Operations.......................................................................10
Consolidated Balance Sheets....................................................................14
Consolidated Statements of Operations..........................................................16
Consolidated Statements of Cash Flows..........................................................17
Consolidated Statements of Changes in Stockholders' Equity.....................................18
Notes to Consolidated Financial Statements.....................................................19
Independent Auditors' Report...................................................................30
Selected Financial Data........................................................................31
Shareholder Information........................................................................32
Directors and Officers..........................................................Inside Back Cover
ABOUT THE COVER
Winnebago Industries started from scratch and utilized a great deal of new
technology when designing the all-new 1998 Winnebago Chieftain. No longer do you
have to sacrifice storage in order to reap the benefits of increased living
space in a slideout motor home.
MOTOR HOME PRODUCT CLASSIFICATION
[GRAPHIC OMITTED] CLASS A MOTOR HOMES
These are conventional motor homes constructed directly
on medium-duty truck chassis which include the engine and
drivetrain components. The living area and driver's
compartment are designed and produced by Winnebago
Industries, Inc. Class A motor homes from Winnebago
Industries include: Winnebago Brave(R), Adventurer(R) and
Chieftain(R); Itasca Sunrise(R), Suncruiser(R) and
Sunflyer(R); Vectra Grand Tour(R) and Luxor(R).
[GRAPHIC OMITTED] CLASS B VAN CAMPERS
These are panel-type trucks to which any two of the
following conveniences are added; sleeping, kitchen and
toilet facilities, also 110-volt electrical hook-up,
fresh water storage, city water hook-up and a top
extension to provide more head room. Winnebago Industries
converts the EuroVan Camper, which is distributed by
Volkswagen of America and Volkswagen of Canada.
[GRAPHIC OMITTED] CLASS C MOTOR HOMES (MINI)
These are mini motor homes built on van-type chassis onto
which Winnebago Industries constructs a living area with
access to the driver's compartment. Class C motor homes
from Winnebago Industries include: Winnebago Minnie(R)
and Minnie Winnie(R); Itasca Spirit(R) and Sundancer(R);
and the Rialta(R).
WINNEBAGO INDUSTRIES
MOTOR HOME FAMILY TREE
Winnebago Industries manufactures five brands of Class A & C motor homes.
Listed below are the brand names and model designations
of the Company's 1998 product line.
- ----------------- ----------------- ----------------- ----------------- -----------------
[GRAPHIC OMITTED] [GRAPHIC OMITTED] [GRAPHIC OMITTED] [GRAPHIC OMITTED] [GRAPHIC OMITTED]
WINNEBAGO [LOGO] ITASCA [LOGO] RIALTA [LOGO] VECTRA [LOGO] LUXOR [LOGO]
- ----------------- ----------------- ----------------- ----------------- -----------------
- Minnie - Spirit - Vectra Grand
- Minnie Winnie - Sundancer Tour
- Brave - Sunrise
- Adventurer - Suncruiser
- Chieftain - Sunflyer
1
TO OUR SHAREHOLDERS
A YEAR OF TRANSITION
If there is one word that best describes fiscal 1997 for Winnebago
Industries, Inc., it is "transition." We focused our attention and resources in
fiscal 1997 on our core business of motor home manufacturing. Following the loss
of our founder and former Chairman John K. Hanson, Winnebago Industries
continued on its path to refocus on its core business of building quality,
value-driven recreation vehicle (RV) products.
This transition within the Company resulted in divestiture of businesses
and corporate assets in fiscal 1997 that have not contributed to the Company's
growth within the RV industry. During fiscal 1997, the Company sold its 80
percent owned subsidiary, Cycle-Sat, Inc., as well as Outdoor America (a Temple,
Texas mall), Totem Vending Services and a corporate airplane. We also
reevaluated our international sales strategies and sold our wholly owned
subsidiary, Winnebago Industries Europe, GmbH (WIE).
[PHOTO] PRESIDENT AND CHIEF OPERATING OFFICER BRUCE D. HERTZKE (LEFT) AND
CHAIRMAN AND CHIEF EXECUTIVE OFFICER FRED G. DOHRMANN
FINANCIAL RESULTS
Revenues for fiscal 1997 were $438.1 million, compared to revenues of
$484.8 million for the previous fiscal year. Net income for fiscal 1997 was
$23.0 million, or 91 cents per share, compared to $12.4 million, or 49 cents per
share, for the same period last year. Included in fiscal 1997 net income is a
$16.5 million net gain, or 65 cents per share, from the sale of our 80 percent
interest in Cycle-Sat, Inc.
Operating results for fiscal 1997 were negatively impacted by soft market
conditions for the Company's motor homes in the last half of the year, causing
the Company to increase promotional programs to stimulate wholesale and retail
activity. Also impacting operating results for the year was a loss of $7.7
million from the operations and August 1997 sale of WIE. A tax credit of
approximately $3.7 million was realized in the fourth quarter as a result of the
closing of WIE.
PRODUCTS
Significant product development in fiscal 1997 led to over half of all our
1998 model lineup featuring either brand new or significantly redesigned
products. Realizing weakness in some of our 1997 Class A product offerings, we
concentrated on developing new Class A products that will meet the growing
market demand for widebody and slideout room floorplans. In addition, we have
continued to build on three years of consistent market share growth in the Class
C market with the development of some very exciting products for this market
segment. (Please see page five for an overview of Winnebago Industries' exciting
new 1998 product offerings.)
[PHOTO] 1998 WINNEBAGO ADVENTURER 35WP
2
NEW PRODUCT DEVELOPMENT PROCESS
The Company's product development team, under the leadership of Ron
Buckmeier, vice president of product development, has implemented a process to
develop new products and maximize manufacturing efficiencies. Taking a cue from
the auto industry, we've created a cross-functional approach for the design and
manufacture of our motor homes.
This approach encourages individual departments to broaden their scope
beyond their respective areas of responsibility in developing new products or
processes. In addition to the goal of faster introduction of new designs and
models, we've realized a broader level of responsibility and accountability
throughout the entire organization. For example, we are now in a position where
those employees responsible for the final-stage development of our products have
a better understanding of the market-driven factors behind those products; by
the same token, employees who previously focused on only the early stages of
development now have a clearer understanding of their impact on the entire
production process.
The new system also streamlines the production process, allowing us to work
closely together as a team.
Although the team is less than a year old, we're very proud of the impact
it had on our 1998 products. Next year, the product development team's impact
will be felt 100 percent throughout the entire product line.
INTERNATIONAL
As discussed previously, a transition was also seen in our international
operations with the sale of our wholly owned subsidiary and European
distributor, WIE. In August 1997 we sold WIE, and awarded distribution rights to
sell our products within Germany, The Netherlands, Belgium, Luxembourg and
Austria. All international sales (except Canadian) now operate under the same
distributorship philosophy with eight distributors now marketing our products
within 10 foreign countries.
Winnebago Industries will continue to produce motor home models compatible
for the foreign markets and will continue to search out new market opportunities
for global expansion.
OEM
Winnebago Industries generated $29.0 million in revenue in fiscal 1997 from
the sale of original equipment manufacturing (OEM) components to a wide array of
outside companies. In comparison, we had OEM revenues of $28.3 million in fiscal
1996. The sale of OEM components allows the Company to maximize use of the
Company's production capacity, while affording us the added benefit of low cost
component parts which helps in keeping our motor home prices as competitive as
possible.
The Creative Aluminum Products Company (CAPCO), which produces aluminum
extrusions for Winnebago Industries as well as for a variety of outside
companies, is our largest OEM facility, accounting for nearly 90 percent of
Winnebago Industries current OEM business.
OEM revenues are also generated from the sale of thermoformed and rotocast
plastics and fiberglass components.
QUALITY
A motto the Company emulates is, "Quality is a Journey -- Not a
Destination." Although we are extremely pleased with the results of our quality
control efforts, we will never be completely satisfied and will continue to look
for ways to make our products better. The Company has now embarked on a higher
level of quality, implementing more preventative measures in the production
process, coupled with additional employee training. We believe that Winnebago
Industries is the most technologically advanced manufacturer in the RV industry,
providing employees the tools necessary to do their jobs better, resulting in
top quality motor homes.
[PHOTO] 1997 RIALTA 22RC
3
We're proud of the quality work our employees produce and of their
commitment to the Company. (For more information about our quality programs,
please see the Excellence in Quality section on page seven.)
OUTLOOK
Although industry projections suggest shipments will be somewhat stagnant
in calendar 1998, Winnebago Industries is set to increase market share due to
the positive impact of our new 1998 products in the marketplace. The long-term
outlook for motor home sales continues to appear very favorable. Future growth
over the next decade will be enhanced by the "baby boom" population segment's
emergence into the RV market's prime buying age of 50 plus. According to a 1993
University of Michigan study, RV ownership will continue to grow in popularity
for years to come. Overall, one of every four respondents to the survey stated
intentions to purchase an RV in the future. Demographics of this market segment
have shown that they have more time and discretionary income to enjoy leisure
travel and outdoor recreation than ever before, which indicates that prospects
for the industry will remain favorable over the next 20 years. Winnebago
Industries supports the "Go RVing Coalition" which has been formed by various RV
industry entities to work toward RV market expansion, particularly to the "baby
boom" market.
In addition to our traditional market, we are exploring ways to benefit
from the licensing of our Winnebago brand name in product categories that might
benefit from the use of this highly recognized name. To take advantage of the
equity in the name, we've retained the services of one of the country's best
licensing firms to explore marketing the Winnebago name in categories from
bicycles to park model homes. Licensing provides additional revenue, keeps motor
home prices as competitive as possible and creates added exposure and awareness
of the brand name.
We're also looking ahead at the possibility of enlarging Winnebago
Industries through expansions or acquisitions in the RV area. A Corporate
Development Committee of our Board of Directors has been created to review all
future plans for expansion or acquisition.
Winnebago Industries is an extremely financially stable company. Our land,
buildings, and equipment are all paid for and there is no long-term debt. We
have an enviable cash balance, providing the Company with the opportunity of
future growth. Winnebago Industries will continue to focus resources, financial
and otherwise, on building quality RVs; increasing motor home market share; and
expanding profitability. We believe our renewed focus on what we do best -- the
manufacture of quality RVs -- will accomplish these goals.
/s/ Fred G. Dohrmann
Fred G. Dohrmann
Chairman and
Chief Executive Officer
/s/ Bruce D. Hertzke
Bruce D. Hertzke
President and
Chief Operating Officer
November 10, 1997
[PHOTO] 1998 ITASCA SUNFLYER 33WB
4
OPERATIONS REVIEW
NEW PRODUCTS
Winnebago Industries is making the largest introduction of new and
redesigned motor homes in the Company's history. Over one half of all the motor
home products for the Company's 1998 model lineup are either brand new or have
major modifications.
[PHOTO] 1998 ITASCA SUNFLYER 33WB
CHIEFTAIN AND SUNFLYER INTRODUCED.
Leading the 1998 product introductions are the new Winnebago Chieftain and
Itasca Sunflyer product lines. Winnebago Industries started from scratch and
utilized a great deal of new technology when designing the all-new Chieftain and
Sunflyer models. No longer do RVers have to sacrifice storage in order to reap
the benefits of increased living space in a slideout motor home. Most Chieftain
and Sunflyer models include a new galley and couch slideout with the new
StoreMore(TM) Slideout System. This system provides spacious interior and
exterior storage that extends with the slide for ease of access. The Chieftain
and Sunflyer also feature a new Powerline Energy Management System(TM). When
utilizing 30 amp service, this fully automatic system has the ability to run two
roof air conditioners at the same time by monitoring the usage of 120 volt
electrical power and redistributing the power as needed. The Chieftain and
Sunflyer models range in length from approximately 33 to 36 feet.
BRAVE AND SUNRISE REDESIGNED. The Winnebago Brave and Itasca Sunrise were
completely redesigned for 1998. Three distinct product lines are now offered in
this series: the entry-level Brave SE and Sunrise SE, the upgraded Brave DL and
Sunrise DL and full-basement Brave and Sunrise models, each featuring widebody
design with spacious exterior storage compartments. All of the various Brave and
Sunrise models range from approximately 26 to 35 feet in length.
ADVENTURER AND SUNCRUISER REDESIGNED. The top selling Winnebago Adventurer
and Itasca Suncruiser were also redesigned for 1998. Ranging in length from
approximately 30 to 37 feet, many of these widebody, basement style motor homes
also utilize the new StoreMore(TM) Slideout System. Designed for full-time use,
the Adventurer and Suncruiser feature Home Comfort Design, with high-line
fabrics, stain-resistant carpets and beautiful interior furnishings in a variety
of very functional floorplans.
VECTRA GRAND TOUR. The Vectra Grand Tour line continues to be an excellent
value in mid-range, widebody, bus-style motor homes and has four models
available ranging from approximately 34 to 36 feet in length. The 35WQ pusher
model has a 275 hp Cummins diesel engine with an optional 300 hp Caterpillar
engine available.
LUXOR. The top-of-the-line Luxor model is an excellent value in diesel
pusher motor homes and is available in two beautiful 37-foot floorplans, the
37WQ and 37WP, each featuring lavish interior decor with spacious custom-made
cabinets and hand-laid ceramic tile floors in the galley. The 1998 Luxor was
recently featured by Andy Pargh, the "Gadget Guru" on NBC's "Today" show as an
example of a deluxe high line motor home.
CONTINUED CLASS C GROWTH. Winnebago Industries has experienced continued
growth in Class C market share, showing consistent retail market share growth
for the past three years. The Company's retail market share for all Class C
products was 19.9 percent in August 1996, the last report available from
Statistical Surveys, Inc., an independent RV reporting firm. This compares to
10.1 percent in August 1994, an increase of 97 percent.
MINNIE AND SPIRIT. Winnebago Industries Class C offerings have also been
redesigned for 1998 to initiate even more future growth. The Winnebago Minnie
and Itasca Spirit units are an excellent entry-level
5
value and now feature new widebody and slideout models. Available in models
ranging from approximately 22 to 31 feet in length, the Minnie and Spirit
include new 31 foot models featuring the new StoreMore(TM) Slideout System that
provides an additional 110 cubic feet of livable space inside.
MINNIE WINNIE AND SUNDANCER. The Winnebago Minnie Winnie and Itasca
Sundancer lines now feature four widebody, basement models for 1998, including
the new 31WS with a unique rear slideout system. When camped, the rear wall of
the innovative 31WS slides out with the bed to provide a comfortable full size
bedroom with a queen size walk-around bed and wardrobe. With the expanding
bedroom, the 31WS is able to provide additional lounge and galley features
previously only available in Class A products.
[PHOTO] 1998 WINNEBAGO MINNIE WINNIE 31WS-DL
RIALTA. The Rialta is a unique Class C product that offers fuel efficiency,
great front-wheel-drive maneuverability and multi-purpose usability. Available
in three floorplans, the Rialta is an easy-to-drive 22-feet in length and is
available with full motor home amenities. The VR6 engine that was designed into
the Rialta last year provided the product with additional power, as well as
stimulated sales in 1997. The Rialta product line has been refreshed for 1998
and the Company expects to see continued market improvement. The Rialta was
featured for several weeks last spring as the official motor home of the "RV
Roadtrip" segment on ABC's "Good Morning America."
EUROVAN CAMPER. The EuroVan Camper project has also been very successful.
Winnebago Industries converts the camper portion of this Class B motor home
which is marketed through a select group of Volkswagen of America and Volkswagen
of Canada dealers. Currently, it is a leader in Class B sales in the United
States.
COMMERCIAL VEHICLES. In fiscal 1997, the Company separated responsibilities
for its Specialty and Commercial Vehicles. Winnebago Specialty Vehicles are
typically a modification of an existing motor home or commercial vehicle to meet
the specific requirements of persons with a wide range of disabilities or those
with special business applications. Commercial Vehicles are designed from the
ground up from an empty motor home shell for a wide variety of uses such as
mobile police and fire command centers, dental offices, educational training
centers, hair salons, etc. Net revenues from Commercial Vehicles and Specialty
Vehicles increased 16 percent in fiscal 1997 versus 1996.
MARKETING OPPORTUNITIES
[PHOTO] COMMERCIAL VEHICLE - POLICE AND FIRE COMMAND CENTER
MOTORSPORTS. Winnebago Industries is striving to reach other niche markets
such as motorsports through its various marketing programs. The Company and its
dealers participate in 23 national NHRA drag events and several NASCAR Winston
Cup events each year. Providing additional exposure, Winnebago Industries
products are the official motor homes of several race tracks, including the
Texas Motor Speedway and the Phoenix International Raceway. The Company's
products are also the official motor homes of the Nashville Network's "TNN
Motorsports,"
6
providing additional exposure on "Southern Outdoors," "Winston Cup Racing" and
"NHRA Racing" television programs.
YOUNG MARKET. In an attempt to attract a younger, first-time buyer,
Winnebago Industries provides the Winnebago Minnie motor home that appears on
MTV's "Road Rules" television program. While the demographics of viewers for
this weekly television series are not typical of those of our traditional motor
home buyer, the use of the motor home helps portray the image to a younger
audience that motor homes are great fun for family travel and people of all
ages.
WINNEBAGO INDUSTRIES WEBSITE. The Company's website
(http://www.winnebagoind.com) has been expanded to provide extensive product and
company information to consumers on the internet. Due to the popularity of
computers, Winnebago Industries has increased the number of models offering
areas for computers and/or computer work stations with outlets for power and
telephone modems.
SERVICE
[PHOTO] PERSONNEL FOR WINNEBAGO INDUSTRIES' DEALERS ARE REGULARLY BROUGHT
INHOUSE FOR INTENSIVE SALES AND SERVICE TRAINING.
Winnebago Industries has what it believes to be the most comprehensive
service programs in the RV industry, providing the Company with an important
market advantage when selling our motor homes.
WARRANTY. With the purchase of any new Winnebago, Itasca, Vectra or Luxor
motor home, Winnebago Industries offers a comprehensive 12-month/15,000-mile
warranty, a 3-year/36,000-mile warranty on sidewalls and slideout room
assemblies, and a 10-year fiberglass roof warranty. The Rialta has a
2-year/24,000 mile warranty.
TOLL-FREE HOTLINE. Experienced service advisors respond to inquiries from
prospective customers, answer questions pertaining to Winnebago Industries
produced vehicles and work with the owners and dealership personnel to expedite
repairs.
PREFERRED CARE. Every owner of a new Winnebago Industries motor home
receives a free one-year membership in the Company's Preferred Care Program that
provides 24-hour customer assistance and emergency road service including jump
starts, fuel delivery, lockout assistance and tire changing.
TRIP SAVER. Winnebago Industries now offers a new parts program, making the
Company's outstanding service and warranty programs even better. The "Trip
Saver" program is designed to get customers back on the road quicker. Trip saver
provides 24-hour air shipment of qualified in-stock parts during the new
vehicle's warranty period.
COMPUTERIZED NETWORK. Winnebago Industries dealers have many other market
advantages such as access to a computerized network for filing warranty claims
and parts ordering, the most extensive service literature in the RV industry,
hands-on sales and service training, microfiche parts catalog and parts shipping
advantages.
EXCELLENCE IN QUALITY
The Company believes its employees are critical to the total quality process.
Employee suggestions are solicited for improvements in the Company's products
and processes that result in cost and time savings. Since the employee cost
savings suggestion program was initiated six years ago, 1,850 ideas have been
implemented, resulting in annual cost savings of more than $3 million.
This cost savings program is designed to help the Company to control costs
and thereby improve financial performance. It also helps us to build high
quality products that represent the greatest value for the dollar to our
customers.
7
"QUALITY IS A JOURNEY -- NOT A DESTINATION." Although we are extremely
pleased with the results of our quality efforts, we will never be completely
satisfied and will continue to look for ways to make our products better. The
Company has now embarked on a higher level of quality, implementing more
preventative measures in the production process, coupled with additional
employee training.
LEADER IN TECHNOLOGY. The drive for excellence in quality has led the
Company to become an industry leader in technology. The high level of technology
at Winnebago Industries provides employees with the tools necessary to do their
jobs better and to maximize quality and efficiency. The Company's investment in
advanced technology is on-going to assure our customers of top-quality products
in the future.
For example, a fixtureless sidewall frame process was implemented during
fiscal 1997. This process allows us to utilize the pre-routed paths to place
aluminum tubes that are then welded into the sidewall. The frame is actually
welded in position within the sidewall during the assembly line process, not
only improving the quality fit, but also eliminating the need for the
complicated, high-maintenance weld fixture previously used.
The Company has completed the process of converting spray adhesive
application equipment used in the production of motor home sidewalls to a new
roll-coating process. In addition to an improvement in adhesive effectiveness,
this effectively eliminated this area as a major volatile organic compound
source. The change in process also enabled the Company to convert to a new
polystyrene insulation material that can be reprocessed into plastic feedstock
instead of being discarded in a local landfill. A densifier, that works much
like a hay baler, now collects and processes all polystyrene scrap.
These new technologies translate into better quality due to improved
accuracy, fit and finish; faster processes and an improved environment.
QUALITY AWARD. This quality emphasis has resulted in Winnebago Industries
fully meeting Ford Motor Company's 1997 requirements for the Ford Motor Home and
Transit Bus - Qualified Vehicle Modifier Program.
[LOGO] WINNEBAGO INDUSTRIES CIRCLE OF EXCELLENCE SINCE 1986
CUSTOMER SATISFACTION. The Company also made a strong commitment to
customer satisfaction through the implementation of several programs such as a
Customer Satisfaction Index (CSI) program. Our CSI program includes two separate
customer surveys. One focuses on the sales and delivery process, while the
second deals with service after the sale. This information helps us to identify
quality issues and create solutions. CSI is also a critical segment of our
"Circle of Excellence" dealer recognition program.
Winnebago Industries' management met recently with the Company's dealers in
Las Vegas for a very successful national dealer meeting. The 1998 products were
well received by dealers and since the meeting in August, motor home orders have
remained well ahead when compared to the same period last year.
[PHOTO] WINNEBAGO BRAVE DL 31DQ
DEALER SATISFACTION. The Company's dealers also awarded Winnebago
Industries their seal of approval with excellent results on the 1996 Dealer
Satisfaction Index (DSI). Conducted by the Recreation Vehicle Dealers
Association, the DSI ranking showed Winnebago Industries moved up to be ranked
second overall among all RV manufacturers, trailing the leader by only 1.18
percentage points. Winnebago Industries' score shows an 11 percent increase in
overall dealer satisfaction, to 80 percent and was the only manufacturer to have
improvement in nearly every category. The Company ranked as the leader in
aftermarket and sales support quality. Winnebago Industries aftermarket scores,
which include service, training, parts, warranty, etc. showed a satisfaction
rating of 85 percent, a full ten points higher than the next closest
manufacturer. This reaffirms Winnebago Industries' core belief that taking care
of the customer after the sale is key to growth in the industry.
8
NET REVENUES BY MAJOR PRODUCT CLASS
Fiscal year ended (1)
August 30, August 31, August 26, August 27, August 28,
(dollars in thousands) 1997 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------
Motor homes (Class A & C) $381,191 $432,212 $402,435 $385,319 $326,861
87.0% 89.2% 87.5% 88.9% 89.4%
Other recreation vehicle revenues (2) 19,771 17,166 19,513 21,903 17,655
4.5% 3.5% 4.2% 5.1% 4.8%
Other manufactured products revenues (3) 35,750 34,020 36,961 25,184 20,344
8.2% 7.0% 8.0% 5.8% 5.6%
-------------------------------------------------------------------------
Total manufactured products revenues 436,712 483,398 458,909 432,406 364,860
99.7% 99.7% 99.7% 99.8% 99.8%
Finance revenues (4) 1,420 1,406 1,220 831 595
.3% .3% .3% .2% .2%
-------------------------------------------------------------------------
Total net revenues $438,132 $484,804 $460,129 $433,237 $365,455
100.0% 100.0% 100.0% 100.0% 100.0%
(1) The fiscal year ended August 31, 1996 contained 53 weeks; all other fiscal
years in the table contained 52 weeks. All years are appropriately restated to
exclude the Company's discontinued Cycle-Sat subsidiary's revenues from
satellite courier and tape duplication services and discontinued NIE
subsidiary's revenues from contract assembly of a variety of electronic
products.
(2) Primarily EuroVan Campers, recreation vehicle related parts, recreation
vehicle service revenue and van conversions.
(3) Primarily sales of extruded aluminum, commercial vehicles and component
products for other manufacturers.
(4) WAC revenues from dealer financing.
INTERIM FINANCIAL INFORMATION (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) Quarter ended
FISCAL 1997 November 30, 1996 March 1, 1997 May 31, 1997 August 30, 1997
- -------------------------------------------- ---------------------- -------------------- ----------------- ------------------
Net revenues from continuing
operations $113,892 $105,702 $117,226 $101,312
Operating income (loss) from
continuing operations 3,856 (3,330) 5,514 (892)
Income (loss) from continuing
operations 2,706 (3,674) 3,720 3,824
Net income (loss) 19,178 (3,674) 3,720 3,824
Income (loss) per common share:
Continuing operations .11 (.15) .15 .15
Discontinued operations .65 -- -- --
Net income (loss) .76 (.15) .15 .15
Quarter ended
FISCAL 1996 December 2, 1995 March 2, 1996 June 1, 1996 August 31, 1996
- -------------------------------------------- ---------------------- -------------------- ----------------- ------------------
Net revenues from continuing
operations $113,735 $106,161 $144,363 $120,545
Operating income from continuing
operations 3,967 2,873 7,445 6,424
Income from continuing operations 2,672 2,198 5,394 4,160
Net income 2,990 2,238 5,411 1,746
Income (loss) per common share:
Continuing operations .11 .09 .21 .16
Discontinued operations .01 -- -- (.09)
Net income .12 .09 .21 .07
The Company recorded a net gain on the sale of the Cycle-Sat subsidiary of
$16,472,000 during the first quarter of fiscal 1997. The Company recorded a tax
credit of approximately $3,700,000 during the fourth quarter of fiscal 1997 due
to the closing of WIE.
The information presented in this annual report differs from that in certain of
the filed 10-Q's, for fiscal 1996, due to required restatements to reflect the
Company's Cycle-Sat and electronic component assembly segments as discontinued
operations.
9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
GENERAL
The primary use of recreation vehicles (RVs) for leisure travel and outdoor
recreation has historically led to a peak retail selling season concentrated in
the spring and summer months. The Company's sales of RVs are generally
influenced by this pattern in retail sales, but can also be affected by the
level of dealer inventory. The Company has generally manufactured RVs during the
entire year, both for immediate delivery and for inventory to satisfy the peak
selling season.
RESULTS OF OPERATIONS
FISCAL 1997 COMPARED TO FISCAL 1996
Net revenues for manufactured products were $436,712,000 for fiscal 1997, a
decrease of $46,686,000, or 9.7 percent, from fiscal 1996. Motor home shipments
(Class A and C) during fiscal 1997 were 7,558 units, a decrease of 1,192 units,
or 13.6 percent, compared to fiscal 1996. Fiscal 1997 revenues for manufactured
products were negatively impacted by the performance of the Company's Class A
motor home products in the marketplace. The Company's Class A motor home product
shipments decreased by 18.0 percent during fiscal 1997 when compared to fiscal
1996 whereas the Recreation Vehicle Industry Association (RVIA) factory shipment
numbers for the comparable period showed an increase of 8.2 percent. The
Company, recognizing its weakness in the Class A market, has concentrated on
intensive product development and will bring to the market the most extensive
new product lineup in its history. Over one half of the Company's 1998 products
feature new or significantly redesigned models, with the most revolutionary new
product offerings being in the Class A motor home series. Management believes
that long-term prospects remain bright as the Company continues to develop
products to meet the increasing demands of the "baby boom" market segment.
Early indications are that the Company's 1998 products are being received well
in the marketplace and the initial orders through October 1997, for the
Company's 1998 products are currently running ahead of orders received for the
same period last year.
Cost of manufactured products, as a percent of manufactured product revenues,
was 88.3 percent for fiscal 1997 compared to 86.3 percent for fiscal 1996. This
increase can be attributed primarily to reduced sales volume in Class A motor
homes and an increase in sales discounts offered during fiscal 1997.
Selling and delivery expenses increased by $1,841,000 to $27,131,000 comparing
fiscal 1997 to fiscal 1996 and increased as a percentage of net revenues to 6.2
percent from 5.2 percent. The increase in dollars and percentage were due to
increases in product promotional expenses.
General and administrative expenses decreased by $1,261,000 to $20,313,000
comparing fiscal 1997 to fiscal 1996 but increased in fiscal 1997, as a
percentage of net revenues, to 4.6 percent from 4.5 percent in fiscal 1996. The
decrease in dollars was caused primarily by a decrease in the Company's product
liability costs and by a reduction in the Company's overall compensation and
bonus expenses during fiscal 1997. The increase in percentage was attributed
primarily to the reduced sales volume.
For fiscal 1997, the Company had net financial income of $1,844,000, due to
investment income from higher cash balances maintained by the Company, a result
of the Cycle-Sat sale, compared to net financial income of $354,000 during
fiscal 1996. During fiscal 1997, the Company recorded $2,258,000 of net interest
and dividend income, $137,000 of realized and unrealized gains in its trading
securities portfolio, and losses of $551,000 in foreign currency transactions,
relating to transactions by the Company with Winnebago Industries
10
Europe, GmbH (WIE) and by WIE with dealers located in foreign countries other
than Germany. During fiscal 1996, the Company recorded $930,000 of net interest
and dividend income, $350,000 of realized and unrealized losses in its trading
securities portfolio, and losses of $226,000 in foreign currency transactions,
relating to the Company's investment in European operations caused by the
weakening of the U.S. dollar against European currencies.
For fiscal 1997, the Company had income from continuing operations before taxes
of $6,992,000 compared to $21,063,000 for fiscal 1996. The tax loss from the
closing and sale of the Company's European subsidiary, WIE, resulted in a tax
credit of approximately $3,700,000 . The tax credit reduced the effective tax
rate on continuing operations to 5.9 percent for the year.
During fiscal 1997, the Company completed the sale of its 80% owned subsidiary,
Cycle-Sat, Inc., for approximately $57,000,000 which resulted in an after-tax
gain of $16,472,000 or $.65 per common share (See Note 2 to the Company's 1997
Consolidated Financial Statements).
For fiscal 1997, the Company had net income of $23,048,000, or $.91 per share,
compared to fiscal 1996's net income of $12,385,000, or $.49 per share.
FISCAL 1996 COMPARED TO FISCAL 1995
Net revenues for manufactured products were $483,398,000 for fiscal 1996, an
increase of $24,489,000, or 5.3 percent, from fiscal 1995. Motor home shipments
(Class A and C) during fiscal 1996 were 8,750 units, a decrease of 96 units, or
1.1 percent, compared to fiscal 1995. Even though fiscal 1996 unit sales were
down, fiscal 1996 showed an increase in revenues, when compared to fiscal 1995,
due to a product mix change more heavily weighed to more expensive units with a
slideout feature.
Finance revenues were $1,406,000 for fiscal 1996 an increase of $186,000, or
15.2 percent from fiscal 1995. The increase can be attributed to an increase in
the average dealer receivable balances during fiscal 1996 when compared to
fiscal 1995.
Cost of manufactured products, as a percent of manufactured product revenues,
was 86.3 percent for fiscal 1996 compared to 86.7 percent for fiscal 1995. This
decrease can be attributed primarily to the shift in product mix to higher
margin slideout units, offset partially by a decrease in motor home production
volume.
Selling and delivery expenses were fairly stable in fiscal 1996 as compared to
fiscal 1995 but decreased in fiscal 1996, as a percentage of net revenues, to
5.2 percent from 5.5 percent in fiscal 1995, primarily due to increased 1996
revenue.
General and administrative expenses increased by $2,623,000 to $21,574,000
comparing fiscal 1996 to fiscal 1995 and increased as a percentage of net
revenues to 4.5 percent from 4.1 percent. The increase in dollars was caused
primarily by increases in the Company's employee bonus programs and an increase
in provisions for legal expenses.
For fiscal 1996, the Company had net financial income of $354,000 compared to
net financial income of $2,114,000 during fiscal 1995. During fiscal 1996, the
Company recorded $930,000 of net interest and dividend income, $350,000 of
realized and unrealized losses in its trading securities portfolio, and losses
of $226,000 in foreign currency transactions, relating to the Company's
investment in European operations caused by the weakening of the U.S. dollar
against European currencies. During fiscal 1995, the Company recorded $1,213,000
of foreign currency transaction gains, $559,000 of net interest and dividend
income and $342,000 of realized and unrealized gains in its trading securities
portfolio.
For fiscal 1996, the Company had income from continuing operations before taxes
of $21,063,000 compared to $20,006,000 for fiscal 1995. During fiscal 1995, the
Company recorded a credit for income taxes of $7,912,000, the result of
reductions of the Company's deferred tax asset valuation allowance.
During fiscal 1996, the Company reported losses from discontinued operations of
$2,039,000 which related to discontinued operations of the Cycle-Sat subsidiary
and to a
11
loss on the disposal of the electronic component assembly segment. During fiscal
1995, the Company reported a loss in discontinued operations related to the
Cycle-Sat subsidiary of $162,000.
For fiscal 1996, the Company had net income of $12,385,000, or $.49 per share,
compared to fiscal 1995's net income of $27,756,000, or $1.10 per share.
ANALYSIS OF FINANCIAL CONDITION, LIQUIDITY AND RESOURCES
The Company meets its working capital, capital equipment requirements and cash
requirements of subsidiaries with funds generated internally and funds from
agreements with financial institutions.
At August 30, 1997, working capital was $99,935,000, an increase of $37,780,000
from the amount at August 31, 1996. Cash provided by operations was $5,215,000,
$17,258,000 and $25,404,000 during fiscal years ended August 30, 1997, August
31, 1996 and August 26, 1995, respectively. Operating cash flows were lower in
fiscal 1997, due primarily to a decrease in net income for the fiscal year. Cash
flows provided by investing activities was $46,678,000 in fiscal 1997 compared
to cash used by investing activities of $14,950,000 in fiscal 1996 and
$15,031,000 in fiscal 1995. Cash provided by investing activities for fiscal
1997 was up significantly due to the proceeds the Company received from the sale
of the Cycle-Sat subsidiary. Cash flows used by investing activities primarily
include investments in dealer receivable, long-term notes receivable and capital
expenditures. Capital expenditures were $4,438,000 in fiscal 1997, $10,463,000
in fiscal 1996 and $9,348,000 in fiscal 1995. Net cash used by financing
activities was $20,560,000 in fiscal 1997, $10,019,000 in fiscal 1996 and
$2,712,000 in fiscal 1995. The change in cash used by financing activities was
due primarily to the payment of long-term debt of the Cycle-Sat subsidiary
during fiscal 1997. (See Consolidated Statements of Cash Flows.)
The Company's sources of liquidity consisted principally of cash and cash
equivalents in the amount of $32,130,000 at August 30, 1997 compared to cash and
marketable securities of $5,113,000 at August 31, 1996.
The Company also has available a line of credit for $30,000,000, (or 75 percent
of eligible inventory, whichever is less) through a financing and security
agreement with NationsCredit Corporation. There were no outstanding borrowings
under the line of credit at August 30, 1997. (See Note 7 to the Company's 1997
Consolidated Financial Statements.)
Principal expected demands at August 30, 1997 on the Company's liquid assets for
fiscal 1998 include approximately $4,250,000 of capital expenditures (primarily
equipment replacements) and payments of cash dividends.
Management currently expects its cash on hand, funds from operations and
borrowings available under existing credit facilities to be sufficient to cover
both short-term and long-term operating requirements.
ACCOUNTING CHANGES
Impairment of Long-Lived Assets
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of
" was issued in March 1995 and was adopted by the Company in fiscal 1997. The
impact on the Company of adopting this statement was immaterial.
Earnings per Share
SFAS No. 128, "Earnings per Share," was issued in February 1997 and will be
adopted by the Company in the second quarter of fiscal 1998. The adoption of
SFAS No. 128 is not expected to have a significant impact on the calculation of
earnings per share.
Comprehensive Income
SFAS No 130, "Reporting Comprehensive Income" was issued in June 1997 and must
be adopted by the Company no later than fiscal 1999. The statement requires
companies to disclose comprehensive income and its components in their general
purpose financial statements.
12
Segment Disclosures
SFAS No. 131, "Disclosures about Segments of and Enterprise and Related
Information" was issued in June 1997 and must be adopted by the Company no later
than fiscal 1999. The statement establishes standards which redefine how
operating segments are determined and requires public companies to report
financial and descriptive information about reportable operating segments.
The Company has not completed the process of evaluating the effect of SFAS No.
130, "Reporting Comprehensive Income" and SFAS No. 131 "Disclosures about
Segments of and Enterprise and Related Information" but does not believe the new
accounting pronouncements will significantly affect the Company's financial
condition or operating results.
FORWARD LOOKING INFORMATION
Except for the historical information contained herein, certain of the matters
discussed in this report are "forward looking statements" as defined in the
Private Securities Litigation Reform Act of 1995, which involve risks and
uncertainties, including, but not limited to demand from customers, effects of
competition, the general state of the economy, interest rates, consumer
confidence, changes in the product or customer mix or revenues and in the level
of operating expenses and other factors which may be disclosed throughout this
Annual 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.
IMPACT OF INFLATION
Historically, the impact of inflation on the Company's operations has not been
significantly detrimental, as the Company has usually been able to adjust its
prices to reflect the inflationary impact on the cost of manufacturing its
products.
13
CONSOLIDATED BALANCE SHEETS
(dollars in thousands) August 30, 1997 August 31, 1996
- ------------------------------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 32,130 $ 797
Marketable securities -- 4,316
Receivables, less allowance for doubtful accounts
($1,429 and $702 respectively) 31,322 30,029
Dealer financing receivables, less allowance for
doubtful accounts ($155 and $197, respectively) 13,336 11,491
Inventories 53,584 63,103
Prepaid expenses 5,872 3,253
Deferred income taxes 4,917 6,343
Current assets of discontinued operations -- 7,285
--------------------------------------------
Total current assets 141,161 126,617
--------------------------------------------
PROPERTY AND EQUIPMENT, at cost
Land 1,167 1,501
Buildings 42,455 43,952
Machinery and equipment 66,142 67,456
Transportation equipment 5,004 7,878
--------------------------------------------
114,768 120,787
Less accumulated depreciation 81,175 80,858
--------------------------------------------
Total property and equipment, net 33,593 39,929
--------------------------------------------
LONG-TERM NOTES RECEIVABLE, less allowances
($1,465 and $797, respectively) 5,692 3,918
--------------------------------------------
INVESTMENT IN LIFE INSURANCE 17,641 16,821
--------------------------------------------
DEFERRED INCOME TAXES, NET 14,900 14,548
--------------------------------------------
OTHER ASSETS 488 3,906
--------------------------------------------
LONG-TERM ASSETS OF DISCONTINUED OPERATIONS -- 14,857
--------------------------------------------
TOTAL ASSETS $213,475 $220,596
--------------------------------------------
See notes to consolidated financial statements.
14
(dollars in thousands) August 30, 1997 August 31, 1996
- ------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 695 $ 1,866
Accounts payable, trade 20,471 20,232
Current liabilities of discontinued operations -- 17,532
Provision for loss on disposal of electronic
component assembly segment -- 4,074
Accrued expenses:
Insurance 2,687 2,947
Product warranties 3,329 3,489
Vacation liability 3,012 3,116
Promotional 2,508 2,193
Other 8,524 9,013
--------------------------------------------
Total current liabilities 41,226 64,462
--------------------------------------------
LONG-TERM DEBT -- 1,692
--------------------------------------------
POSTRETIREMENT HEALTH CARE AND DEFERRED
COMPENSATION BENEFITS 48,367 46,937
--------------------------------------------
MINORITY INTEREST IN DISCONTINUED OPERATIONS -- 2,194
--------------------------------------------
CONTINGENT LIABILITIES AND COMMITMENTS
STOCKHOLDERS' EQUITY
Capital stock common, par value $.50; authorized
60,000,000 shares 12,927 12,920
Additional paid-in capital 23,109 23,723
Reinvested earnings 92,179 74,221
--------------------------------------------
128,215 110,864
Less treasury stock, at cost 4,333 5,553
--------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 123,882 105,311
--------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $213,475 $220,596
--------------------------------------------
15
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended
August 30, August 31, August 26,
(dollars in thousands, except per share data) 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------
Continuing Operations
Revenues
Manufactured products $436,712 $483,398 $458,909
Finance 1,420 1,406 1,220
-----------------------------------------------------------
Total net revenues 438,132 484,804 460,129
-----------------------------------------------------------
Costs and expenses
Cost of manufactured products 385,540 417,231 397,870
Selling and delivery 27,131 25,290 25,416
General and administrative 20,313 21,574 18,951
-----------------------------------------------------------
Total costs and expenses 432,984 464,095 442,237
-----------------------------------------------------------
Operating income 5,148 20,709 17,892
Financial income 1,844 354 2,114
-----------------------------------------------------------
Income from continuing operations before
income taxes 6,992 21,063 20,006
Provision (credit) for taxes 416 6,639 (7,912)
-----------------------------------------------------------
Income from continuing operations 6,576 14,424 27,918
Discontinued operations
Income (loss) from operations of
discontinued Cycle-Sat subsidiary (less
applicable income tax provisions and (credits)
of $261, and ($88), respectively) -- 593 (162)
Gain on sale of Cycle-Sat subsidiary (less
applicable income tax provision of
$13,339) 16,472 -- --
Loss from the disposal of discontinued
operations (less applicable income tax
credits of $1,157) -- (2,632) --
-----------------------------------------------------------
Net income $23,048 $12,385 $ 27,756
-----------------------------------------------------------
Income (loss) per share:
Income from continuing operations $ .26 $ .57 $ 1.11
Discontinued operations .65 (.08) (.01)
-----------------------------------------------------------
Net income $ .91 $ .49 $ 1.10
-----------------------------------------------------------
Weighted average number of shares of
stock (in thousands) 25,435 25,349 25,286
See notes to consolidated financial statements.
16
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended
August 30, August 31, August 26,
(dollars in thousands) 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net income $ 23,048 $12,385 $27,756
Adjustments to reconcile net income to net
cash from operating activities:
Pre-tax gain on sale of Cycle-Sat subsidiary (29,811) -- --
Depreciation and amortization 6,468 9,700 8,863
Loss on disposal of property, leases and other assets 577 503 959
Provision (credit) for doubtful receivables 1,238 (637) 202
Realized and unrealized (gains) and losses on
trading securities, net (137) 350 (342)
Purchases of trading securities -- (10,789) (4,373)
Proceeds from sale of trading securities 4,453 8,267 5,872
Provision for loss on disposal of electronic component
assembly segment (4,074) 4,074 --
Change in assets and liabilities:
(Increase) decrease in receivables and other assets (4,027) 1,462 (166)
Decrease (increase) in inventories 9,519 (10,023) 2,289
(Decrease) increase in accounts payable and accrued
expenses (2,349) 459 (3,541)
Increase (decrease) in deferred income taxes 1,074 (560) (14,030)
Increase in postretirement benefits 1,430 1,845 1,832
Other (2,194) 222 83
--------------------------------------------------
Net cash provided by operating activities 5,215 17,258 25,404
--------------------------------------------------
Cash flows from investing activities:
Proceeds from sale of Cycle-Sat subsidiary 57,000 -- --
Payments to minority shareholder from sale of Cycle-Sat (7,160) -- --
Purchases of property and equipment (4,438) (10,463) (9,348)
Proceeds from sale of property and equipment 4,498 591 499
Investments in dealer receivables (38,228) (41,003) (35,899)
Collections of dealer receivables 36,543 38,915 35,072
Investments in long-term notes receivable and
other assets (4,131) (3,883) (3,077)
Proceeds from long-term notes receivable
and other assets 2,889 893 2,656
Cash paid for acquisition of TFI -- -- (4,934)
Other (295) -- --
--------------------------------------------------
Net cash provided (used) by investing activities 46,678 (14,950) (15,031)
--------------------------------------------------
Cash flows from financing activities and capital
transactions:
Payment of long-term debt of discontinued operations (13,220) -- --
Net proceeds from notes payable -- 215 1,700
Payments of cash dividends (5,090) (7,604) (7,586)
Payments of long-term debt and capital leases (2,863) (4,596) (2,494)
Proceeds from issuance of long-term debt -- 1,884 5,100
Proceeds from issuance of common and treasury
stock 613 82 568
--------------------------------------------------
Net cash used by financing activities and
capital transactions (20,560) (10,019) (2,712)
--------------------------------------------------
Net increase (decrease) in cash and cash equivalents 31,333 (7,711) 7,661
Cash and cash equivalents at beginning of year 797 8,508 847
--------------------------------------------------
Cash and cash equivalents at end of year $32,130 $ 797 $ 8,508
--------------------------------------------------
See notes to consolidated financial statements.
17
CONSOLIDATED STATEMENTS OF
CHANGES IN STOCKHOLDERS' EQUITY
Common Shares Additional Treasury Stock
-------------------- Paid-In Reinvested -----------------------
(amounts in thousands except per share data) Number Amount Capital Earnings Number Amount
- ---------------------------------------------------------------------------------------------------------------------------
Balance, August 27, 1994 25,822 $12,911 $24,175 $49,270 583 $6,646
Proceeds from the sale of
common stock to employees 7 4 (517) -- (95) (1,081)
Cash dividends on common stock -
$.30 per share -- -- -- (7,586) -- --
Net income -- -- -- 27,756 -- --
------------------------------------------------------------------------------
Balance, August 26, 1995 25,829 12,915 23,658 69,440 488 5,565
Proceeds from the sale of
common stock to employees 11 5 65 -- (1) (12)
Cash dividends on common stock -
$.30 per share -- -- -- (7,604) -- --
Net income -- -- -- 12,385 -- --
------------------------------------------------------------------------------
Balance, August 31, 1996 25,840 12,920 23,723 74,221 487 5,553
Proceeds from the sale of
common stock to employees 14 7 (614) -- (107) (1,220)
Cash dividends on common stock -
$.20 per share -- -- -- (5,090) -- --
Net income -- -- -- 23,048 -- --
------------------------------------------------------------------------------
Balance, August 30, 1997 25,854 $12,927 $23,109 $92,179 380 $4,333
------------------------------------------------------------------------------
See notes to consolidated financial statements.
18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
In fiscal 1997, the Company's continuing operations were conducted predominantly
in two industry segments: the manufacture and sale of recreation vehicles and
other manufactured products, and floor plan financing for selected Winnebago,
Itasca, Vectra, Rialta and Luxor dealers. The recreation vehicle market is
highly competitive, both as to price and quality of the product. The Company
believes its principal marketing advantages are the quality of its products, its
dealer organization, its warranty and service capability and its marketing
techniques. The Company also believes that its prices are competitive with the
competitions' units of comparable size and quality.
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the
parent company and subsidiary companies. All material intercompany balances and
transactions with subsidiaries have been eliminated.
For all fiscal years presented, the Consolidated Financial Statements reflect
the Company's Cycle-Sat and electronic component assembly segments as
discontinued operations.
STATEMENT OF CASH FLOWS. For purposes of these statements, cash equivalents
primarily consisted of commercial paper, tax exempt money market preferreds and
variable rate auction preferred stock with an original maturity of three months
or less. For cash equivalents, the carrying amount is a reasonable estimate of
fair value.
FISCAL PERIOD. The Company follows a 52/53 week fiscal year period. The
financial statements for fiscal 1997 and 1995 are based on a 52 week period,
fiscal 1996 is on a 53 week basis.
MARKETABLE SECURITIES
At August 31, 1996, marketable securities were primarily comprised of common
stocks and mutual funds. These investments are categorized as trading and, in
accordance with SFAS No. 115, are stated at fair value based on quoted market
prices. Unrealized gains and losses are included in earnings as a component of
financial income and expense. Net realized gains and losses on security
transactions are determined on the specific identification basis.
REVENUE RECOGNITION. Sales are recorded by the Company when products are shipped
to independent dealers. Interest income from dealer floor plan receivables are
recorded on the accrual basis in accordance with the terms of the loan
agreements.
INVENTORIES. Inventories are valued at the lower of cost or market, with cost
being determined by using the last-in, first-out (LIFO) method and market
defined as net realizable value.
PROPERTY AND EQUIPMENT. Depreciation of property and equipment is computed using
the straight-line method on the cost of the assets, less allowance for salvage
value where appropriate, at rates based upon their estimated service lives.
Accelerated depreciation methods are used for tax purposes whenever permitted.
Management periodically reviews the carrying values of long-lived assets for
impairment whenever events or changes in circumstances indicate that the
carrying value may not be recoverable. In performing the review for
recoverability, management estimates the undiscounted future cash flows expected
to result from the use of the asset and its eventual disposition.
PROVISION FOR WARRANTY CLAIMS. Estimated warranty costs are provided at the time
of sale of the warranted products.
INCOME TAXES. The Company accounts for income taxes under SFAS No. 109,
"Accounting for Income Taxes". This Statement requires recognition of deferred
assets and liabilities for the expected future tax consequences of events that
have been included in the financial statements or tax returns. Under this
method, deferred tax assets and liabilities are determined based on the
differences between the financial statement
19
and tax basis of assets and liabilities using enacted tax rates in effect for
the years in which the differences are expected to reverse.
ALLOWANCE FOR DOUBTFUL ACCOUNTS. Allowance for doubtful accounts are based on
previous loss experience. Additional amounts are provided through charges to
income as management believes necessary after evaluation of receivables and
current economic conditions. Amounts which are considered to be uncollectible
are charged off and recoveries of amounts previously charged off are credited to
the allowance upon recovery.
FAIR VALUE DISCLOSURES OF FINANCIAL INSTRUMENTS. Marketable securities are
carried at fair value. All other financial instruments are carried at amounts
believed to approximate fair value.
USE OF ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
RECLASSIFICATIONS. Certain prior year information has been reclassified to
conform to the current year presentation.
NOTE 2: DISCONTINUED OPERATIONS - SALE OF CYCLE-SAT SUBSIDIARY
The Company owned an 80% interest in Cycle-Sat, Inc. (Cycle-Sat), a
telecommunications service firm that was a leading distributor of television and
radio commercials using satellite, fiber optic and digital technologies. On
August 5, 1996 (the measurement date), the Company adopted a formal plan to sell
its Cycle-Sat subsidiary. Accordingly, Cycle-Sat is accounted for as a
discontinued operation in the accompanying consolidated financial statements.
Cycle-Sat revenues were $30,327,000 and $24,628,000 for the fiscal years ended
1996 and 1995, respectively. The net assets of Cycle-Sat included in the
accompanying consolidated balance sheet as of August 31, 1996 consisted of the
following:
Aug. 31,
(dollars in thousands) 1996
- -----------------------------------------------------
Receivables $ 5,707
Other current assets 1,578
-----------
Current assets of
discontinued operations $ 7,285
-----------
Property and equipment $ 4,858
Intangible and other assets 9,999
-----------
Long-term assets of
discontinued operations $14,857
-----------
Current maturities of
long-term debt $10,134
Notes payable 4,215
Accounts payable and
other current liabilities 3,183
-----------
Current liabilities of
discontinued operations $17,532
-----------
Minority interest in
discontinued operations $ 2,194
-----------
On November 19, 1996, the Company sold all of the assets of its Cycle-Sat, Inc.
subsidiary to Vyvx, Inc., a subsidiary of The Williams Companies, Inc., Tulsa,
Oklahoma for approximately $57 million. Vyvx, Inc., is a leading provider of
integrated satellite and fiberoptic video transmission services. The transaction
resulted in an after-tax gain of $16.5 million or $.65 per common share.
NOTE 3: DISCONTINUED OPERATIONS - DISPOSAL OF ELECTRONIC COMPONENT ASSEMBLY
SEGMENT
In August 1993, the Company agreed to sell certain assets and liabilities of its
electronic component assembly business, North Iowa Electronics, Inc. (NIE) to an
unaffiliated third party (the buyer) for $100,000 in cash and a $1.6 million
promissory note. The transaction was accounted for as a transfer of net assets
with recognition of the gain ($285,000) deferred due to uncertainty surrounding
the buyer's ability to generate sufficient cash flows to retire the note.
During fiscal 1995, the Company guaranteed certain debt obligations of the buyer
totaling $4,500,000. The buyer experienced significant financial difficulties
and the Company decided, during fiscal 1996, to make no
20
further financial accommodations and to exit ongoing involvement with this
business.
In the fourth quarter of fiscal 1996, the Company provided $4,074,000 for the
anticipated loss related to the net cost of resolution of this matter. Cash in
an amount approximating the amount provided was paid related to the guarantee to
fully resolve this matter during fiscal 1997.
NOTE 4: DEALER FINANCING RECEIVABLES
Dealer floor plan receivables are collateralized by recreation vehicles and are
due upon the dealer's sale of the vehicle, with the entire balance generally due
at the end of one year. At August 30, 1997, the Company had certain
concentration of credit risks whereby $12,094,000 of dealer financing
receivables were due from one dealer.
NOTE 5: INVENTORIES
Inventories consist of the following:
Aug. 30, Aug. 31,
(dollars in thousands) 1997 1996
- -----------------------------------------------------
Finished goods $ 27,577 $ 28,228
Work in process 13,842 13,915
Raw materials 29,907 37,537
-------------------------
71,326 79,680
LIFO reserve 17,742 16,577
-------------------------
$ 53,584 $ 63,103
The above value of inventories, before reduction for the LIFO reserve,
approximates replacement cost at the respective dates.
21
NOTE 6: LONG-TERM NOTES RECEIVABLE
Long-term notes receivable of $5,692,000 and $3,918,000 at August 30, 1997 and
August 31, 1996, respectively, are primarily collateralized by dealer
inventories and real estate. The notes had weighted average interest rates of
8.7 percent per annum and 8.5 percent per annum at August 30, 1997 and August
31, 1996, respectively, and have various maturity dates ranging through August
2002.
NOTE 7: NOTES PAYABLE
Short-term lines of credit and related borrowings outstanding at fiscal year-end
are as follows:
Available
Credit Lines Outstanding Interest Rate
------------------ ------------------ --------------------
Aug. 30, Aug. 31, Aug. 30, Aug. 31, Aug. 30, Aug. 31,
(dollars in thousands) 1997 1996 1997 1996 1997 1996
- -------------------------------------------------------------------------------------------
Notes payable:
Continuing operations $30,000 $30,000 $ -- $ -- 9.0% 8.75%
Discontinued operations -- 4,215 -- 4,215 -- 7.2%
Maximum Average Weighted Average Interest
Outstanding Outstanding Rate During Year*
----------------------------- ----------------------------- -----------------------------
(dollars in thousands) 1997 1996 1995 1997 1996 1995 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
Notes payable:
Continuing operations $ -- $ -- $ 2,000 $ -- $ -- $ 58 $ -- -- 9.6%
Discontinued operations -- 4,500 4,000 -- 4,274 2,711 -- 7.4% 8.5%
*Based on the approximate average aggregate amount outstanding during the year
and the interest rate.
Since March 1992, the Company has had a financing and security agreement with
Nations Credit Corporation (NationsCredit). Terms of the agreement limit
borrowings to the lesser of $30,000,000 or 75 percent of eligible inventory
(fully manufactured recreation vehicles and motor home chassis and related
components). Borrowings are secured by the Company's receivables and inventory.
Borrowings under the agreement bear interest at the prime rate, as defined in
the agreement, plus 50 basis points. The line of credit is available and
continues for successive one-year periods unless either party provides at least
90-days' notice prior to the end of the one-year period to the other party that
they wish to terminate the line of credit. The agreement also contains certain
restrictive covenants including maintenance of minimum net worth, working
capital and current ratio. As of August 30, 1997, the Company was in compliance
with these covenants. There were no outstanding borrowings under the line of
credit during 1997 or 1996.
22
NOTE 8: LONG-TERM DEBT
Outstanding August 30, 1997 Outstanding August 31, 1996
------------------------------ -------------------------------------------
Current Long Interest Current Long Interest
(dollars in thousands) Maturities Term Rate Maturities Term Rate
- ----------------------------------------------------------------------------------------------------------------------
Long-term borrowings, continuing
operations $ 695 -- 7.5% $ 1,866 $ 1,692 5.5-7.95%
Long-term obligations, discontinued
operations -- -- -- 10,134 -- 8.0-15.15%
During fiscal 1994, the Company and Winnebago RV, Inc. entered into a $2,001,000
financing agreement with 1st Source Bank for the purchase of a 1990 King Air 350
airplane. Terms of the agreement called for 35 monthly installment payments
beginning August 28, 1994, and a 36th payment to pay off the remaining principal
and interest balance under the agreement. Borrowing under the agreement was
secured by the airplane. The amount outstanding under the agreement was paid in
full during the first quarter of fiscal 1997. The outstanding balance under this
agreement at August 31, 1996 was $1,709,000, with an interest rate of 7.95
percent per annum.
During fiscal year 1993, the Company and Winnebago Industries Europe, GmbH
(WIE), a wholly owned subsidiary of the Company, entered into a financing
arrangement with Volksbank Saarbrucken-St. Ingebert eG to finance the
acquisition and renovation of a new facility in Kirkel, Saarland, Germany. The
financing arrangement included four loans with interest rates ranging from 5.5
percent to 8.75 percent per annum. As of August 30, 1997 only one of the loans
was outstanding which had an interest rate of 7.5 percent per annum. Borrowings
under this agreement at August 30, 1997 were $695,000. The loan was guaranteed
by the Company and was secured by real estate and improvements to the new
facility. The Company sold the facility in August 1997. Subsequent to fiscal
1997 year end, the Company paid all amounts outstanding under this agreement.
In fiscal 1995, Cycle-Sat entered into a series of long-term borrowings
aggregating $10,025,000 to finance the acquisition of a majority of the assets
of the TFI division of MPO Videotronics. The interest rates on these borrowings
ranged from 8.0 percent per annum to 8.2 percent per annum as of August 31,
1996. The outstanding balance of these obligations as of August 31, 1996
aggregated $8,893,000. The Company repaid these obligations during fiscal 1997
in conjunction with the sale of Cycle-Sat discussed in Note 2.
NOTE 9: EMPLOYEE RETIREMENT PLANS
The Company has a qualified profit sharing and contributory 401(k) plan and a
stock bonus retirement plan for eligible employees. The plans provide for
contributions by the Company in such amounts as the Board of Directors may
determine. Contributions to the plans in cash for fiscal years 1997, 1996 and
1995 were $1,933,000, $2,099,000, and $2,106,000, respectively.
The Company also has a nonqualified deferred compensation program which permits
key employees to annually elect (via individual contracts) to defer a portion of
their compensation until their retirement. The retirement benefit to be provided
is fixed based upon the amount of compensation deferred and the age of the
individual at the time of the contracted deferral. An individual generally vests
at the later of age 55 and five years of service since the deferral was made.
For deferrals prior to December 1992, vesting occurs at the later of age 55 and
five years of service from first deferral or 20 years of service. Deferred
compensation expense was $1,558,000, $1,556,000, and $1,629,000 in fiscal 1997,
1996 and 1995, respectively. Total deferred compensation liabilities were
$21,164,000, and $21,025,000 at August 30, 1997 and August 31, 1996,
respectively.
To assist in funding the deferred compensation liability, the Company has
invested in corporate-owned life insurance policies. The cash surrender value of
these policies (net of borrowings of $10,335,000 and
23
$10,499,000, at August 30, 1997 and August 31, 1996, respectively) are presented
as assets of the Company in the accompanying balance sheets.
The Company has adopted a Directors' Deferred Compensation Plan which permits
non-employee directors to receive their fees and retainers as members of the
Board of Directors and committees of the Board in a form other than as direct
payments.
The Company provides certain health care and other benefits for retired
employees who have fulfilled eligibility requirements at age 55 with 15 years of
continuous service. Retirees are required to pay a monthly premium for medical
coverage based on years of service at retirement and then current age. The
Company's postretirement health care plan currently is not funded. The status of
the plan is as follows:
Accumulated postretirement benefit obligation at August 30, 1997 and August 31,
1996:
Aug. 30, Aug. 31,
(dollars in thousands) 1997 1996
- --------------------------------------------------
Retirees $ 2,239 $ 2,042
Fully eligible active plan
participants 3,578 2,852
Other active plan
participants 13,738 10,005
-------------------
19,555 14,899
Unrecognized prior
service cost 509 558
Unrecognized net gain 7,139 10,455
-------------------
Accrued postretirement
benefit liability
recognized in financial
statements $27,203 $25,912
-------------------
Net postretirement benefit expense for the fiscal years ended August 30, 1997,
August 31, 1996 and August 26, 1995 consisted of the following components:
Aug. 30, Aug. 31, Aug. 26,
(dollars in thousands) 1997 1996 1995
- ----------------------- ---------- --------- ----------
Service cost-
benefits earned
during the year $ 876 $ 947 $1,047
Interest cost on
accumulated
postretirement
obligation 1,153 1,133 1,171
Net amortization
and deferral (490) (416) (379)
---------- --------- ----------
$1,539 $1,664 $1,839
---------- --------- ----------
The average assumed health care cost trend rate used in measuring the
accumulated postretirement benefit obligation as of August 30, 1997 was 8.39
percent, decreasing each successive year until it reaches 5.25 percent in 2017
after which it remains constant.
A one-percentage point increase in the assumed health care cost trend rate for
each year would increase the accumulated postretirement benefit obligation as of
August 30, 1997 by approximately $4,841,000. The effect of this change on the
net postretirement health care cost for fiscal 1997 would be to increase it by
approximately $547,000.
The discount rate used in determining the accumulated postretirement benefit
obligation was 7.0 percent at August 30, 1997 and 7.5 percent at August 31,
1996. During fiscal 1996, the Company revised certain provisions of its
postretirement health care plan to offer different medical plan options and
revised the monthly contribution rate for retirees. The impact of these
revisions resulted in a decrease in the accumulated postretirement benefit
obligation of approximately $5,695,000 and a decrease in the previously
estimated net postretirement benefit expense for fiscal year 1996 of
approximately $1,249,000. The unrecognized net gain as of August 31, 1996 is
being amortized over the average remaining service period of active plan
participants, estimated to be 18 years. The unrecognized prior service cost as
of August 31, 1996 is being amortized over the average remaining years to full
eligibility for benefits of active plan participants, estimated to be 12 years.
NOTE 10: 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. Most dealers are financing on a
"floor plan" basis under which a bank or finance company lends the dealer all,
or substantially all, of the purchase price, collateralized by a lien upon, or
title to, the merchandise purchased. Upon request of a lending institution
financing a dealer's purchases of the Company's products, and after completion
of a credit investigation of the dealer involved, the Company will execute a
24
repurchase agreement. These agreements provide that, in the event of default by
the dealer on his agreement to pay the lending institution, the Company will
repurchase the financed merchandise. The agreements provide that the Company's
liability will not exceed 100 percent of the dealer invoice and provide for
periodic liability reductions based on the time since the date of the original
invoice. The Company's contingent liability on all repurchase agreements was
approxi-mately $115,637,000 and $129,135,000 at August 30, 1997 and August 31,
1996, respectively. The Company's losses under repurchase agreements were
approximately $344,000, $202,000 and $212,000 during fiscal years 1997, 1996 and
1995, respectively.
Included in these contingent liabilities are certain dealer receivables subject
to full recourse to the Company with NationsCredit and Green Tree Financial.
Contingent liabilities under these recourse agreements were $24,868,000 and
$33,216,000 at August 30, 1997 and August 31, 1996, respectively. The Company's
losses under these recourse agreements were approximately $965,000, $85,000 and
$11,000 during fiscal years 1997, 1996 and 1995, respectively.
The Company self-insures for a portion of product liability claims.
Self-insurance retention liability varies annually based on market conditions
and ranges from $2,500,000 to $5,000,000 per occurrence and $8,000,000 to
$10,000,000 in aggregate per policy year (fiscal 1989 to fiscal 1997).
Liabilities in excess of these amounts are the responsibility of the insurer.
The Company is involved in various legal proceedings which are ordinary routine
litigation incident 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.
NOTE 11: INCOME TAXES
The components of the provision (credit) for income taxes are as follows:
Year Ended
(dollars in August 30, August 31, August 26,
thousands) 1997 1996 1995
- ---------------- ------------ ------------ ------------
Continuing
operations
Current $1,288 $ 5,707 $ 5,599
Deferred (872) 932 (13,511)
- ---------------- ------------ ------------ ------------
416 6,639 (7,912)
- ---------------- ------------ ------------ ------------
Discontinued
operations
Current $11,393 596 431
Deferred 1,946 (1,492) (519)
- ---------------- ------------ ------------ ------------
13,339 (896) (88)
- ---------------- ------------ ------------ ------------
Total
provision
(credit) $13,755 $ 5,743 $ (8,000)
- ---------------- ------------ ------------ ------------
25
The following is a reconciliation of the U.S. statutory tax rate to the
effective income tax rates (benefit) provided:
Year ended
August 30, 1997 August 31, 1996 August 26, 1995
- -------------------------------------------------------------------------------
U.S. federal statutory rate 35.0% 35.0% 35.0%
Cash surrender value (0.9) (2.0) (1.5)
Life insurance premiums 0.3 1.9 .8
Tax credits (1.1) (2.2) (2.0)
Effect of change in valuation allowance -- -- (77.9)
Net loss (income) of WIE not
included in consolidated return 7.3 (1.4) 1.7
Loss on sale of WIE (9.9) -- --
State taxes, net of federal benefit 1.0 -- --
Foreign sales corporation commissions 0.7 -- --
Other 5.0 0.4 3.4
--------------------------------------
Total 37.4% 31.7% (40.5)%
--------------------------------------
--------------------------------------
Whereof:
Continuing operations 5.9% 31.5% (39.5)%
Discontinued operations 44.7% (30.5)% (35.2)%
--------------------------------------
The tax effect of significant items comprising the Company's net deferred tax
assets are as follows:
August 30, August 31,
1997 1996
--------------------------------------------
(dollars in thousands) Assets Liabilities Total Total
- ----------------------------------------------------------------------------------
CURRENT
Miscellaneous reserves $ 2,223 $ (105) $ 2,118 $ 3,597
Non-deductible warranty reserves 1,140 -- 1,140 1,198
Bad debt reserves 718 -- 718 516
Self-insurance reserve 941 -- 941 1,032
-------- -------- -------- --------
Subtotal 5,022 (105) 4,917 6,343
-------- -------- -------- --------
NONCURRENT
Postretirement health care benefits 9,521 -- 9,521 9,069
Deferred compensation 7,857 -- 7,857 7,825
Accelerated depreciation (2,478) (2,478) (2,402)
Other -- -- -- 56
-------- -------- -------- --------
Subtotal 17,378 (2,478) 14,900 14,548
-------- -------- -------- --------
Total $ 22,400 $ (2,583) $ 19,817 $ 20,891
-------- -------- -------- --------
In the second and fourth quarters of fiscal 1995, the Company recognized tax
benefits of $6,000,000 and $2,000,000, respectively, due to a continued trend of
earnings which increased the likelihood that the Company would realize its gross
deferred tax assets in the future, thus eliminating the need for the valuation
allowance.
In the fourth quarter of fiscal 1997, the Company recognized a tax benefit of
approximately $3,700,000 due to the sale and closing of WIE.
26
NOTE 12: FINANCIAL INCOME AND EXPENSE
The following is a reconciliation of financial income (expense):
Year ended
(dollars in thousands) August 30, 1997 August 31, 1996 August 26, 1995
- ----------------------------------------------------------------------------------------------
Net realized (losses) gains on sale of
trading securities ................. $ (995) $ 218 $ 101
Net unrealized gains (losses) on trading
securities ......................... 1,132 (568) 241
(Losses) gains on foreign currency
transactions ....................... (551) (226) 1,213
Interest income from investments and
receivables ........................ 2,534 1,546 1,310
Dividend income ........................ 398 141 184
Interest expense ....................... (674) (757) (935)
------- ------- -------
$ 1,844 $ 354 $ 2,114
------- ------- -------
NOTE 13: DIVIDEND DECLARED
On October 16, 1997, the Board of Directors declared a cash dividend of $.10 per
common share payable January 5, 1998, to shareholders of record on December 5,
1997.
NOTE 14: STOCK OPTION PLANS
The Company's 1987 stock option plans allow the granting of non-qualified and
incentive stock options to key employees at prices not less than 100 percent of
fair market value, determined by the mean of the high and low prices, on the
date of grant. The plans are administered by a committee appointed by the
Company's Board of Directors who are not employees of the Company or any of its
subsidiaries. The Committee may determine at the time of granting whether each
option granted will be a non-qualified or incentive stock option. The term of
each option shall expire and all rights to purchase shares thereunder shall
cease ten years after the date such option is granted or on such date prior
thereto as may be fixed by the Committee. No option shall permit the purchase of
any shares thereunder during the first year after the date such option is
granted. The Committee may, at its discretion, limit the number of shares
purchaseable in any year thereafter to the extent it considers appropriate with
respect to a particular individual to whom an option is granted.
A summary of stock option activity for fiscal years 1997, 1996 and 1995 is as
follows::
1997 1996 1995
Wtd. Wtd. Wtd.
Avg. Avg. Avg.
Price Exercise Price Exercise Price Exercise
Shares per share Price/Sh Shares per share Price/Sh Shares per share Price/Sh
- -------------------------------------------------------------------------------------------------------------------------
Outstanding at beginning
of year 746,000 $4 - $12 $6.56 764,000 $4 - $12 $6.02 900,500 $4-$18 $7.11
Options granted 242,000 7 - 8 7.68 -- -- -- 10,000 10 10.00
Options exercised (107,000) 4 - 6 4.87 (1,000) 6 5.69 (94,833) 4 - 9 5.35
Options canceled (231,500) 8 - 12 10.40 (17,000) 9 - 12 10.03 (51,667) 9 - 18 15.97
--------------------------------------------------------------------------------------------
Outstanding at end of year 649,500 $4 - $10 $6.53 746,000 $4 - $12 $6.56 764,000 $4 - $12 $6.02
--------------------------------------------------------------------------------------------
27
The following table summarizes information about stock options outstanding at
August 30, 1997:
Number Weighted
Range of Number Weighted Exercisable Average
Exercise Outstanding Average Remaining Weighted Average At Aug. 30, Exercise
Prices at August 30, 1997 Contractual Life Exercise Price 1997 Price
- ------------------ ---------------------- ------------------------ --------------------- --------------- ---------------
$4.31 - $5.69 337,500 3 $5.14 337,500 $5.14
7.19 - 7.75 227,000 9 7.68 -- --
8.88 - 10.00 85,000 2 9.03 85,000 9.03
---------------------- ------------------------ --------------------- --------------- ---------------
649,500 6 $6.53 422,500 $5.92
In 1997, the Company adopted SFAS No. 123, "Accounting for Stock Based
Compensation." The Company has elected to continue following the accounting
guidance of Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" for measurement and recognition of stock-based transactions
with employees. No compensation cost has been recognized for options issued
under the Stock Option Plans because the exercise price of all options granted
was not less than 100 percent of fair market value of the common stock on the
date of grant. Had compensation cost for the stock options issued been
determined based on the fair value at the grant date, consistent with provisions
of SFAS No. 123, the Company's 1997 net income and earnings per share would have
been changed to the pro forma amounts indicated below:
(dollars in thousands, except per share data)
1997
Net earnings ------------
As reported $23,048
Pro forma 22,884
Earnings per share
As reported $ .91
Pro-forma .90
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following assumptions:
Dividend yield 3.19%
Risk free interest rate 6.64%
Expected life 9 years
Expected volatility 29.27%
Estimated fair value of
options granted per share $2.40 - $2.58
There were no options granted during fiscal 1996.
The Company's Board of Directors has adopted and is recommending that the
shareholders approve the 1997 Stock Option Plan during the Company's annual
meeting on December 17, 1997. The plan provides additional incentives to those
officers, employees, directors, advisors and consultants of the Company whose
substantial contributions are essential to the continued growth and success of
the Company's business. The plan allows the granting of non-qualified and
incentive stock options as well as stock appreciation rights. The plan will be
administered by the Board or by a committee appointed by the Company's Board of
Directors. The purchase prices for these shares shall not be less than 85
percent of the fair market value of a share at the time of option granting for
non-qualified stock options or less than 100 percent for incentive stock
options. The term of each option would expire and all rights to purchase shares
thereunder would cease ten years after the date such option is granted or on
such date prior thereto as may be fixed by the Committee. Options granted under
this plan would become exercisable six months after the date the option is
granted. Options granted under this plan in August 1997, subject to shareholder
approval, were 207,000 shares at an exercise price of $8.5625. This option grant
has not been included in the summary stock option tables shown above.
28
NOTE 15: SUPPLEMENTAL CASH FLOW DISCLOSURE Cash paid during the year for:
Year ended
(dollars in thousands) August 30, 1997 August 31, 1996 August 26, 1995
- -------------------------------------------------------------------------------
Interest $ 656 $2,000 $1,911
Income taxes 16,426 5,085 6,989
NOTE 16: BUSINESS SEGMENT INFORMATION
The Company defines its operations into two business segments: Recreation
Vehicles and Other Manufactured Products, which includes all data relative to
the manufacturing and selling of its recreational and other manufactured
products; and Financing, which relates to the WAC subsidiary operation.
Identifiable assets are those assets used in the operations of each industry
segment. General Corporate assets consist of cash and cash equivalents,
marketable securities, deferred income taxes and other corporate assets. General
Corporate income and expenses include administrative costs. Inter-segment sales
and expenses are not significant.
For the years ended August 30, 1997, August 31, 1996 and August 26, 1995, the
Company's segment information is as follows:
Recreation
Vehicles
and Other
Manufactured General
(dollars in thousands) Products Financing Corporate Total
- ------------------------------------------------------------------------------------------------
1997
Net revenues from continuing operations $436,712 $ 1,420 $ -- $438,132
Operating income (loss) from continuing operations 6,976 736 (2,564) 5,148
Identifiable assets 136,810 16,912 59,753 213,475
Depreciation and amortization 5,797 9 662 6,468
Capital expenditures 3,982 35 421 4,438
Summary information for WIE is as follows: Net revenues - $9,655. Operating loss
- - $(6,376). The Company sold WIE during August 1997. As a result of the sale,
the Company recorded a capital loss for tax purposes resulting in a tax credit
of approximately $3,700,000 due to this loss. These amounts are included in the
Recreation Vehicles and Other Manufactured Products segment above.
1996
Net revenues from continuing operations $483,398 $ 1,406 $ -- $484,804
Operating income (loss) from continuing operations 23,169 1,518 (3,978) 20,709
Identifiable assets 154,238 15,250 51,108 220,596
Depreciation and amortization 5,790 7 3,903 9,700
Capital expenditures 6,754 -- 3,709 10,463
Summary information for WIE is as follows: Net revenues - $13,773. Operating
loss - $(238). Identifiable assets - $10,388. These amounts are included in the
Recreation Vehicles and Other Manufactured Products segment above.
1995
Net revenues from continuing operations $458,909 $ 1,220 $ -- $460,129
Operating income (loss) from continuing operations 19,053 989 (2,150) 17,892
Identifiable assets 135,036 12,690 63,904 211,630
Depreciation and amortization 5,292 12 3,559 8,863
Capital expenditures 7,977 16 1,355 9,348
Summary information for WIE is as follows: Net revenues - $8,834. Operating loss
- - $(1,209). Identifiable assets - $9,426. These amounts are included in the
Recreation Vehicles and Other Manufactured Products segment above.
29
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS
WINNEBAGO INDUSTRIES, INC.
FOREST CITY, IOWA
We have audited the consolidated balance sheets of Winnebago Industries, Inc.,
and subsidiaries (the Company) as of August 30, 1997 and August 31, 1996 and the
related statements of operations, cash flows and changes in stockholders' equity
for each of the three years in the period ended August 30, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements present fairly, in all
material respects, the financial position of Winnebago Industries, Inc. and
subsidiaries at August 30, 1997 and August 31, 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
August 30, 1997 in conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
Deloitte & Touche LLP
Minneapolis, Minnesota
October 21, 1997
30
SELECTED FINANCIAL DATA(1)
August 30, August 31, August 26, August 27, August 28,
(dollars in thousands, except per share data) 1997 1996 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
Revenues
Manufactured products $ 436,712 $ 483,398 $ 458,909 $ 432,406 $ 364,860
Finance 1,420 1,406 1,220 831 595
Total net revenues 438,132 484,804 460,129 433,237 365,455
Income before taxes 6,992 21,063 20,006 15,264 10,513
Provision (credit) for income taxes 416 6,639 (7,912) (1,312) (1,087)
Income from continuing operations 6,576 14,424 27,918 16,576 11,600
(Loss) income from discontinued operations -- (2,039) (162) 869 (2,322)
Gain on sale of Cycle-Sat subsidiary 16,472 -- -- -- --
Cumulative effect of accounting change -- -- -- (20,420) --
Net income (loss) 23,048 12,385 27,756 (2,975) 9,278
Per share data:
Income from continuing operations .26 .57 1.11 .66 .46
(Loss) income from discontinued
operations -- (.08) (.01) .03 (.09)
Gain on sale of Cycle-Sat subsidiary .65 -- -- -- --
Cumulative effect of accounting change -- -- -- (.81) --
Net income (loss) $ .91 $ .49 $ 1.10 $ (.12) $ .37
Cash dividends per share $ .20 $ .30 $ .30 $ -- $ --
Weighted average number of shares of
common stock outstanding (in
thousands) 25,435 25,349 25,286 25,187 25,042
BALANCE SHEET
Total assets $ 213,475 $ 220,596 $ 211,630 $ 181,748 $ 155,227
Stockholders' equity 123,882 105,311 100,448 79,710 81,693
Working capital 99,935 62,155 69,694 58,523 44,633
Long-term debt of continuing operations $ -- $ 1,692 $ 3,810 $ 2,693 $ 633
Current ratio 3.4 to 1 2.0 to 1 2.4 to 1 2.1 to 1 1.9 to 1
UNIT SALES:
Class A 4,834 5,893 5,993 6,820 6,095
Class C 2,724 2,857 2,853 1,862 1,998
Total Motor Homes 7,558 8,750 8,846 8,682 8,093
Class B Conversions (EuroVan Campers) 1,205 857 1,014 376 --
(1) Restated to reflect Cycle-Sat and NIE as discontinued operations
31
SHAREHOLDER INFORMATION
PUBLICATIONS
A notice of Annual Meeting of Shareholders and Proxy Statement is furnished to
shareholders in advance of the annual meeting.
Copies of the Company's quarterly financial news releases and the annual report
on Form 10-K (without exhibits), required to be filed by the Company with the
Securities and Exchange Commission, may be obtained without charge from the
corporate offices as follows:
Public Relations Department
Winnebago Industries, Inc.
P.O. Box 152
605 West Crystal Lake Road
Forest City, Iowa 50436
Telephone: (515) 582-0152
Fax: (515) 582-6966
E-mail: pr@winnebagoind.com
This annual report as well as corporate news releases may Minneapolis, Minnesota
55402-1844 also be viewed online in the financial section of Winnebago
Industries' website: http://www.winnebagoind.com
Shareholder Account Assistance
Registration and Transfer Agent to contact for address changes, account
certificates and stock holdings:
Norwest Bank Minnesota, N.A.
P.O. Box 64854
St. Paul, Minnesota 55164-0854
or
161 North Concord Exchange
South St. Paul, Minnesota 55075-1139
Telephone: (800) 468-9716 or (612) 450-4064
ANNUAL MEETING
The Annual Meeting of shareholders will be held on
Wednesday, December 17, 1997 at 7:30 p.m. (CST) in
Friendship Hall, Highway 69 South, Forest City, Iowa.
AUDITOR
Deloitte & Touche LLP
400 One Financial Plaza
120 South Sixth Street
COMMON STOCK DATA
The Company's common stock is listed on the New York, Chicago and Pacific Stock
Exchanges.
Ticker symbol: WGO
Shareholders of record as of October 13, 1997: 11,746
Shares outstanding at year-end: 25,854,461
Below are the New York Stock Exchange high, low and closing prices of Winnebago
Industries, Inc. stock for each quarter of fiscal 1997 and fiscal 1996.
FISCAL 1997 High Low Close FISCAL 1996 High Low Close
- ----------------------------------------------------------------------------------------------------------------
First Quarter $ 8.500 $ 7.000 $ 7.500 First Quarter $ 8.500 $ 7.375 $ 7.625
Second Quarter 7.875 6.875 7.125 Second Quarter 8.375 6.750 8.000
Third Quarter 7.375 6.250 6.875 Third Quarter 10.375 7.750 10.250
Fourth Quarter 9.625 6.625 8.375 Fourth Quarter 10.250 7.625 8.125
CASH DIVIDENDS PER SHARE
FISCAL 1997 FISCAL 1996
- --------------------------------------------------------------------
Amount Date Paid Amount Date Paid
- ------ --------- ------ ---------
$ .10 January 6, 1997 $ .10 December 4, 1995
.10 July 7, 1997 .10 April 8, 1996
.10 June 17, 1996
32
DIRECTORS AND OFFICERS
DIRECTORS
Fred G. Dohrmann
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER,
WINNEBAGO INDUSTRIES, INC.
Gerald E. Boman
FORMER SENIOR VICE PRESIDENT,
WINNEBAGO INDUSTRIES, INC.
Jerry N. Currie
PRESIDENT & CHIEF EXECUTIVE OFFICER
CURRIES COMPANY AND GRAHAM MANUFACTURING
John V. Hanson
FORMER PRESIDENT AND DEPUTY CHAIRMAN OF THE BOARD,
WINNEBAGO INDUSTRIES, INC.
Bruce D. Hertzke
PRESIDENT AND CHIEF OPERATING OFFICER
WINNEBAGO INDUSTRIES, INC.
Gerald C. Kitch
EXECUTIVE VICE PRESIDENT
PENTAIR, INC.
Richard C. Scott
VICE PRESIDENT, UNIVERSITY DEVELOPMENT
BAYLOR UNIVERSITY
Joseph M. Shuster
CHAIRMAN, TELTECH
Frederick M. Zimmerman
PROFESSOR OF MANUFACTURING SYSTEMS ENGINEERING,
THE UNIVERSITY OF ST. THOMAS
Francis L. Zrostlik
PRESIDENT, STELLAR INDUSTRIES
Luise V. Hanson
DIRECTOR EMERITUS
OFFICERS
Fred G. Dohrmann
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
Bruce D. Hertzke
PRESIDENT AND CHIEF OPERATING OFFICER
Edwin F. Barker
VICE PRESIDENT, CHIEF FINANCIAL OFFICER
Raymond M. Beebe
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
Ronald D. Buckmeier
VICE PRESIDENT, PRODUCT DEVELOPMENT
Brian J. Hrubes
CONTROLLER
James P. Jaskoviak
VICE PRESIDENT, SALES AND MARKETING
Robert J. Olson
VICE PRESIDENT, MANUFACTURING
Joseph L. Soczek, Jr.
TREASURER
[PHOTO] WINNEBAGO INDUSTRIES' OFFICERS: (SEATED LEFT TO RIGHT) EDWIN F. BARKER,
FRED G. DOHRMANN AND BRUCE D. HERTZKE (STANDING LEFT TO RIGHT) JAMES P.
JASKOVIAK, ROBERT J. OLSON, RAYMOND M. BEEBE, JOSEPH L. SOCZEK, JR., BRIAN J.
HRUBES AND RONALD D. BUCKMEIER.
WINNEBAGO INDUSTRIES, INC.
P.O. BOX 152
FOREST CITY, IOWA 50436
Bulk Rate
U.S. Postage
PAID
Minneapolis, MN
Permit No. 43
EXHIBIT 21
List of Subsidiaries
JURISDICTION PERCENT
OF OF
NAME OF CORPORATION INCORPORATION OWNERSHIP
- ------------------------------------------------ ------------- ---------
Winnebago Industries, Inc. Iowa Parent
Winnebago International Corporation Iowa 100%
Winnebago Health Care Management Company Iowa 100%
Winnebago Acceptance Corporation Iowa 100%
Winnebago R.V., Inc. Delaware 100%
Cycle-Sat, Inc. Iowa 80%
EXHIBIT 23
INDEPENDENT ACCOUNTANTS' CONSENT
We consent to the incorporation by reference in Registration Statements No.
2-40316, No. 2-82109, No. 33-21757, No. 33-59930 and No. 333-31595 of Winnebago
Industries, Inc. on Form S-8 of our reports dated October 21, 1997 appearing in
and incorporated by reference in the Annual Report on Form 10-K for Winnebago
Industries, Inc. for the year ended August 30, 1997.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Minneapolis, Minnesota
November 19, 1997
5
YEAR
AUG-30-1997
AUG-30-1997
32,130
0
46,242
1,584
53,584
141,161
114,768
81,175
213,475
41,226
0
12,927
0
0
110,955
213,475
438,132
438,132
385,540
385,540
47,444
0
1,844
6,992
416
6,576
16,472
0
0
23,048
.91
0
