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Winnebago Industries is a prominent manufacturer of motor homes in the U.S (Winnebago Industries, Inc. 2011). The company has a good history of manufacturing entertainment vehicles for over 50 years now. This company produces facilities in the State of Lowa and they distribute their products through independent dealers throughout the U.S and Canada who tell the products to the final consumers. Winnebago industries lead the industry with the greatest retail market in the U.S. In addition, the company has reintroduced the ERA in the 2012 model which will help to improve its market share (Winnebago Industries, Inc. 2011). Winnebago has demonstrated its ability to maintain its liquidity through its improved profitability. However, in 2010, the company was negatively impacted by the increased compensation and benefit expense. Its employees have not had salary increase since 2008 and in 2009; salaries were reduced across the board in order to reduce the company’s cost. Equity grants have also been awarded to the top management and this has resulted to incremental stock based compensation. Restricted stock awards were given to maintain and motivate key managers to continue improving long-term stock market performance in order to increase shareholder value (Winnebago Industries, Inc. 2011).
Net values for Winnebago industries have increased due to towables and motor home delivery. In 2011, the gross profit was 6.4% of the net revenues (Winnebago Industries, Inc. 2011). There is also increased cost of expenses as well as administrative expense due to increase in legal expense. On the financial condition of the industry, cash equivalent of the company have increased from 65.2 to 74.4 Dollars in 2011. The company has a loan agreement that provides it with 20 million dollar credit facility. In addition, the company has signed registration statement which allows it to sell up to 35 million dollars of its common stock. The company’s current working capital is 109.4 million dollars which is increase from the 91.3 in 2010 (Winnebago Industries, Inc. 2011). The cash that is spent in operating activities is lower than the cash generated from operating activities and this signifies good financial status. In Winnebago, financial statements are prepared in accordance with GAAP. This requires the company to make assumptions concerning future events that affect the amounts of revenue, liabilities and expenses (Winnebago Industries, Inc. 2011). Such assumptions are based on the time when the financial statements are prepared. The company recognizes revenues from recreation vehicles when they get orders for the products and they deliver the product to the dealer who placed the order. In addition, the company accrues for sales promotions and incentive expenses. Moreover, Winnebago industries repurchase goods defaulted by dealers if the goods have not been sold to retail customers.
Winnebago Industries is involved in legal proceedings which are ordinary routine litigations which are essential to the business. The company may have a risk if it will not be able to integrate the operation of SunnyBrook Company to its operations after purchasing the company (Winnebago Industries, Inc. 2011). Some of the possible risks include the diversion of management to the integration operations, difficulties in assimilating and retaining employees as well as difficulties in the integration of departments, systems and accounting systems. Unregistered sales of equity securities are repurchased by the outstanding shares of the common stock but this only depends on the market conditions. In this connection, the Winnebago Industries shows improved financial performance as shown in its financial statements. Each class of financial instrument in Winnebago industries is based on the short-term and long-term investments and assets and liabilities measured on fair value (Winnebago Industries, Inc. 2011). Winnebago industries thus have good financial statements that fully present their financial status.
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