UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended May 29, 2021

	or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _________________ to _________________
	Commission File Number: 001-06403

WINNEBAGO INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Iowa			42-0802678
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
P. O. Box 152,	Forest City,	Iowa	50436
(Address of principal executive offices)			(Zip Code)
		641-585-3535
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.50 par value per share	WGO	New York Stock Exchange

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒    Accelerated Filer ☐    Non-accelerated filer ☐

    Smaller Reporting Company ☐        Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of June 18, 2021, there were 33,599,487 shares of common stock, par value $0.50 per share, outstanding.

Winnebago Industries, Inc.

Quarterly Report on Form 10-Q

For the Quarterly Period Ended May 29, 2021

Table of Contents

PART I.	FINANCIAL INFORMATION	3
Item 1.	Consolidated Financial Statements	3
	Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)	3
	Consolidated Balance Sheets	4
	Consolidated Statements of Cash Flows	5
	Consolidated Statements of Changes in Shareholders' Equity	7
	Notes to Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures.	34
PART II.	OTHER INFORMATION	35
Item 1.	Legal Proceedings.	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	35
Item 6.	Exhibits	36
SIGNATURES		37

2

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Winnebago Industries, Inc.

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)

(Unaudited)

	Three Months Ended				Nine Months Ended
(in thousands, except per share data)	May 29, 2021		May 30, 2020		May 29, 2021		May 30, 2020
Net revenues	$	960,737	$	402,458	$	2,593,754	$	1,617,726
Cost of goods sold	791,125		370,434		2,130,556		1,427,307
Gross profit	169,612		32,024		463,198		190,419
Selling, general, and administrative expenses	63,586		33,271		165,001		126,540
Amortization	3,590		6,926		10,771		18,514
Total operating expenses	67,176		40,197		175,772		145,054
Operating income (loss)	102,436		(8,173)		287,426		45,365
Interest expense	10,229		8,440		30,222		23,140
Non-operating income	(93)		(74)		(310)		(460)
Income (loss) before income taxes	92,300		(16,539)		257,514		22,685
Provision (benefit) for income taxes	21,005		(4,186)		59,728		3,702
Net income (loss)	$	71,295	$	(12,353)	$	197,786	$	18,983
Earnings (loss) per common share
Basic	$	2.12	$	(0.37)	$	5.89	$	0.57
Diluted	$	2.05	$	(0.37)	$	5.83	$	0.57
Weighted average common shares outstanding
Basic	33,552		33,625		33,565		33,102
Diluted	34,772		33,625		33,943		33,289
Net income (loss)	$	71,295	$	(12,353)	$	197,786	$	18,983
Other comprehensive income (loss), net of tax:
Amortization of net actuarial loss (net of tax of $3, $3, $9 and $9)	9		8		26		24
Interest rate swap activity (net of tax of $—, $141, $— and $163)	—		(432)		—		(500)
Other comprehensive income (loss)	9		(424)		26		(476)
Comprehensive income (loss)	$	71,304	$	(12,777)	$	197,812	$	18,507

The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements.

3

Winnebago Industries, Inc.

Consolidated Balance Sheets

(in thousands, except per share data)	May 29, 2021		August 29, 2020
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	405,841	$	292,575
Receivables, less allowance for doubtful accounts ($287 and $353, respectively)	228,199		220,798
Inventories, net	333,018		182,941
Prepaid expenses and other assets	21,559		17,296
Total current assets	988,617		713,610
Property, plant, and equipment, net	177,578		174,945
Goodwill	348,058		348,058
Other intangible assets, net	393,997		404,768
Investment in life insurance	28,381		27,838
Operating lease assets	27,318		29,463
Other long-term assets	15,821		15,018
Total assets	$	1,979,770	$	1,713,700
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable	$	173,008	$	132,490
Income taxes payable	—		8,840
Accrued expenses
Accrued compensation	59,412		36,533
Product warranties	82,062		64,031
Self-insurance	18,237		17,437
Promotional	9,851		12,543
Accrued interest	7,821		4,652
Accrued dividends	4,273		180
Other	20,946		23,684
Total current liabilities	375,610		300,390
Long-term debt, net	524,450		512,630
Deferred income taxes	14,852		15,608
Unrecognized tax benefits	6,538		6,511
Operating lease liabilities	25,391		27,048
Deferred compensation benefits, net of current portion	9,920		11,130
Other long-term liabilities	12,751		12,917
Total liabilities	969,512		886,234
Contingent liabilities and commitments (Note 10)
Shareholders' equity
Preferred stock, par value $0.01: 10,000 shares authorized; Zero shares issued and outstanding	—		—
Common stock, par value $0.50: 120,000 shares authorized; 51,776 shares issued and outstanding	25,888		25,888
Additional paid-in capital	214,460		203,791
Retained earnings	1,095,167		913,610
Accumulated other comprehensive loss	(500)		(526)
Treasury stock, at cost: 18,225 and 18,133 shares, respectively	(324,757)		(315,297)
Total shareholders' equity	1,010,258		827,466
Total liabilities and shareholders' equity	$	1,979,770	$	1,713,700

The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements.

4

Winnebago Industries, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended
(in thousands)	May 29, 2021		May 30, 2020
Operating Activities
Net income	$	197,786	$	18,983
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation	13,476		11,854
Amortization	10,771		18,514
Non-cash interest expense, net	10,372		7,440
Amortization of debt issuance costs	1,852		2,181
Last-in, first-out expense	2,321		1,450
Stock-based compensation	11,719		3,332
Deferred income taxes	(765)		365
Other, net	(4,412)		516
Change in operating assets and liabilities:
Receivables, net	(7,384)		31,440
Inventories, net	(152,398)		91,938
Prepaid expenses and other assets	1,010		159
Accounts payable	40,817		(13,528)
Income taxes and unrecognized tax benefits	(12,771)		(2,622)
Accrued expenses and other liabilities	35,560		(9,585)
Net cash provided by (used in) operating activities	147,954		162,437
Investing Activities
Purchases of property, plant and equipment	(23,596)		(28,582)
Acquisition of business, net of cash acquired	—		(260,965)
Proceeds from sale of property, plant and equipment	12,450		—
Other, net	(224)		141
Net cash provided by (used in) investing activities	(11,370)		(289,406)
Financing Activities
Borrowings on long-term debt	2,629,932		1,795,209
Repayments on long-term debt	(2,629,932)		(1,501,709)
Purchase of convertible bond hedge	—		(70,800)
Proceeds from issuance of warrants	—		42,210
Payments of cash dividends	(12,136)		(10,881)
Payments for repurchases of common stock	(12,109)		(1,789)
Payments of debt issuance costs	(224)		(10,761)
Other, net	1,151		539
Net cash provided by (used in) financing activities	(23,318)		242,018
Net increase in cash and cash equivalents	113,266		115,049
Cash and cash equivalents at beginning of period	292,575		37,431
Cash and cash equivalents at end of period	$	405,841	$	152,480

5

Supplemental Disclosures
Income taxes paid, net	$	71,090	$	6,240
Interest paid	14,618		14,961
Non-cash investing and financing activities
Issuance of common stock for acquisition of business	$	—	$	92,572
Capital expenditures in accounts payable	121		255
Dividends declared not yet paid	4,273		126

The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements.

6

Winnebago Industries, Inc.

Consolidated Statements of Changes in Shareholders' Equity

(Unaudited)

	Three Months Ended May 29, 2021
(in thousands, except per share data)	Common Shares			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock			Total Shareholders' Equity
	Number	Amount								Number	Amount
Balance at February 27, 2021	51,776	$	25,888	$	209,727	$	1,032,020	$	(509)	(18,225)	$	(324,762)	$	942,364
Stock-based compensation	—	—		4,733		—		—		—	5		4,738
Common stock dividends paid; $0.12 per share	—	—		—		(4,062)		—		—	—		(4,062)
Common stock dividends accrued; $0.12 per share	—	—		—		(4,086)		—		—	—		(4,086)
Actuarial loss, net of tax	—	—		—		—		9		—	—		9
Net income	—	—		—		71,295		—		—	—		71,295
Balance at May 29, 2021	51,776	$	25,888	$	214,460	$	1,095,167	$	(500)	(18,225)	$	(324,757)	$	1,010,258
	Three Months Ended May 30, 2020
(in thousands, except per share data)	Common Shares			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock			Total Shareholders' Equity
	Number	Amount								Number	Amount
Balance at February 29, 2020	51,776	$	25,888	$	200,751	$	890,994	$	(543)	(18,153)	$	(315,566)	$	801,524
Stock-based compensation	—	—		(315)		—		—		—	7		(308)
Issuance of stock, net	—	—		20		—		—		8	133		153
Repurchase of common stock	—	—		—		—		—		(1)	(52)		(52)
Common stock dividends paid; $0.11 per share	—	—		—		(3,730)		—		—	—		(3,730)
Actuarial loss, net of tax	—	—		—		—		8		—	—		8
Interest rate swap activity, net of tax	—	—		—		—		(432)		—	—		(432)
Net loss	—	—		—		(12,353)		—		—	—		(12,353)
Balance at May 30, 2020	51,776	$	25,888	$	200,456	$	874,911	$	(967)	(18,146)	$	(315,478)	$	784,810
	Nine Months Ended May 29, 2021
	Common Shares			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock			Total Shareholders' Equity
	Number	Amount								Number	Amount
Balance at August 29, 2020	51,776	$	25,888	$	203,791	$	913,610	$	(526)	(18,133)	$	(315,297)	$	827,466
Stock-based compensation	—	—		11,701		—		—		1	18		11,719
Issuance of stock	—	—		(1,032)		—		—		149	2,631		1,599
Repurchase of common stock	—	—		—		—		—		(242)	(12,109)		(12,109)
Common stock dividends paid; $0.36 per share	—	—		—		(12,136)		—		—	—		(12,136)
Common stock dividends accrued; $0.12 per share	—	—		—		(4,093)		—		—	—		(4,093)
Actuarial loss, net of tax	—	—		—		—		26		—	—		26
Net income	—	—		—		197,786		—		—	—		197,786
Balance at May 29, 2021	51,776	$	25,888	$	214,460	$	1,095,167	$	(500)	(18,225)	$	(324,757)	$	1,010,258

7

	Nine Months Ended May 30, 2020
(in thousands, except per share data)	Common Shares			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock			Total Shareholders' Equity
	Number	Amount								Number	Amount
Balance at August 31, 2019	51,776	$	25,888	$	91,185	$	866,886	$	(491)	(20,262)	$	(351,256)	$	632,212
Stock-based compensation	—	—		3,309		—		—		1	23		3,332
Issuance of stock, net	—	—		(2,011)		—		—		160	2,782		771
Issuance of stock for acquisition	—	—		57,811		—		—		2,000	34,761		92,572
Repurchase of common stock	—	—		—		—		—		(45)	(1,788)		(1,788)
Common stock dividends paid; $0.33 per share	—	—		—		(10,958)		—		—	—		(10,958)
Actuarial loss, net of tax	—	—		—		—		24		—	—		24
Interest rate swap activity, net of tax	—	—		—		—		(500)		—	—		(500)
Equity component of convertible senior notes and offering costs, net of tax of $20,840	—	—		61,335		—		—		—	—		61,335
Convertible note hedge purchase, net of tax of $17,417	—	—		(53,383)		—		—		—	—		(53,383)
Warrant transactions	—	—		42,210		—		—		—	—		42,210
Net income	—	—		—		18,983		—		—	—		18,983
Balance at May 30, 2020	51,776	$	25,888	$	200,456	$	874,911	$	(967)	(18,146)	$	(315,478)	$	784,810

The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements.

8

Winnebago Industries, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

(Dollars and shares in thousands, unless otherwise noted)

Note 1.    Basis of Presentation

The consolidated financial statements include the accounts of Winnebago Industries, Inc. and its wholly owned subsidiaries. Significant intercompany account balances and transactions have been eliminated.

The use of the terms "Winnebago Industries," "Winnebago", and "the Company" in this Quarterly Report on Form 10-Q, unless the context otherwise requires, refers to Winnebago Industries, Inc. and its wholly owned subsidiaries.

The interim unaudited consolidated financial statements included herein are prepared pursuant to the rules and regulations of the United States (“U.S.”) Securities and Exchange Commission (“SEC”). The information furnished in these consolidated financial statements includes normal recurring adjustments, unless noted otherwise in the Notes to Financial Statements, and reflects all adjustments that are, in management’s opinion, necessary for a fair presentation of such financial statements. The consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). GAAP requires us to make estimates and assumptions that affect amounts reported. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to SEC rules and regulations.

The consolidated financial statements included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended August 29, 2020 filed with the SEC. Interim results of operations are not necessarily indicative of the results to be expected for the full fiscal year.

Fiscal Period

The Company has a 5-4-4 quarterly accounting cycle with the fiscal year ending on the last Saturday in August. Fiscal 2021 ending on August 28, 2021 will consist of 52 weeks. Fiscal 2020 ended on August 29, 2020 consisted of 52 weeks.

Cash and Cash Equivalents

Cash and cash equivalents represent cash, demand deposits and highly liquid investments with original maturities of three months or less that are not legally restricted. Cash equivalents are recorded at cost, which approximates fair value. Accounts at each banking institution are insured by the Federal Deposit Insurance Corporation up to $250,000, while the remaining balances are uninsured.

Subsequent Events

In preparing the accompanying unaudited consolidated financial statements, the Company evaluated subsequent events for potential recognition and disclosure through the date of this filing noting no material subsequent events.

CARES Act

The Coronavirus Aid, Relief, and Economic Security ("CARES") Act was signed into law on March 27, 2020 to help alleviate the impact of the COVID-19 pandemic in the U.S. The Company is taking advantage of the employer payroll tax deferral offered by the CARES Act, which allows the Company to defer the payment of employer payroll taxes for the period from March 27, 2020 to December 31, 2020. The deferred employer payroll tax liability as of May 29, 2021 was $16,223 and will be payable in equal installments in December 2021 and December 2022. The Company also took advantage of a tax credit granted to companies under the CARES Act who continued to pay their employees when operations were fully or partially suspended. The refundable tax credit available through the end of the third quarter of Fiscal 2020 reflected in cost of goods sold on the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) was approximately $3,999. The entire amount is expected to be received by the end of calendar year 2021. As of May 29, 2021, $3,202 remains outstanding within other current assets on the Consolidated Balance Sheets.

Recently Adopted Accounting Pronouncements

The Company adopted Accounting Standards Codification ("ASC") Topic 326, Financial Instruments—Credit Losses, which changes the accounting for credit losses on instruments measured at amortized costs, such as accounts receivables and deposits by adding an impairment model that is based on expected losses rather than incurred losses. An entity will recognize as an allowance its estimate of expected credit losses, which is believed to result in more timely recognition of such losses as the standard eliminates the probable initial recognition threshold. The Company adopted the new standard using the modified retrospective approach, which involves recognizing the cumulative effect of initial adoption of Topic 326 as an adjustment to its opening retained earnings as of August 30, 2020. As a result, the Company did not adjust comparative period financial information for periods before the effective date. No incremental allowance for credit losses has been recognized during the nine months ended May 29, 2021 as a result of the adoption. The adoption of this standard did not have a material impact on the Company’s

9

financial condition, results of operations or disclosures.

Recently Issued Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40) which reduces the number of models used to account for convertible instruments, amends diluted earnings per share ("EPS") calculations for convertible instruments, and amends the requirements for a contract (or embedded derivative) that is potentially settled in an entity's own shares to be classified in equity. Certain disclosure requirements were also added to increase transparency and decision-usefulness regarding a convertible instrument's terms and features. Additionally, the if-converted method for including convertible instruments must be used in diluted EPS as opposed to the treasury stock method. The new guidance is effective for annual reporting periods beginning after December 15, 2021, which is the Company's Fiscal 2023. Early adoption is permitted using either a modified retrospective or full retrospective approach. The Company expects to adopt the new guidance in the first quarter of Fiscal 2023 and has not yet evaluated the impact the adoption of this guidance will have on its financial condition, results of operations or disclosures; however, the new guidance is expected to change the Company's diluted EPS reporting.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of Effects of Reference Rate Reform on Financial Reporting, which provides practical expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The expedients and exceptions provided by this guidance apply only to contracts, hedging relationships, and other transactions that reference the London interbank offered rate (“LIBOR”) or another reference rate expected to be discontinued as a result of reference rate reform. This guidance is not applicable to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. The guidance can be applied immediately through December 31, 2022. The Company will adopt this standard when LIBOR is discontinued and does not expect a material impact to its financial condition, results of operations or disclosures based on the current debt portfolio and capital structure.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which eliminates certain exceptions to Topic 740's general principles, improves consistent application and simplifies its application. The standard is effective for annual reporting periods beginning after December 15, 2020, which is the Company's Fiscal 2022, including interim periods within those annual reporting periods. The Company expects to adopt the new guidance in the first quarter of Fiscal 2022, and does not expect a material impact to its financial condition, results of operations or disclosures.

Note 2.    Business Segments

The Company has six operating segments: 1) Grand Design towables, 2) Winnebago towables, 3) Winnebago motorhomes, 4) Newmar motorhomes, 5) Chris-Craft marine and 6) Winnebago specialty vehicles. Financial performance is evaluated based on each operating segment's Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), as defined below, which excludes certain corporate administration expenses and non-operating income and expense.

The Company's two reportable segments are: Towable (an aggregation of the Grand Design towables and the Winnebago towables operating segments) and Motorhome (an aggregation of the Winnebago motorhomes and Newmar motorhomes operating segments). Towable is comprised of non-motorized products that are generally towed by another vehicle, along with other related manufactured products and services. Motorhome is comprised of products that include a motorized chassis, along with other related manufactured products and services.

The Corporate / All Other category includes the Chris-Craft marine and Winnebago specialty vehicles operating segments as well as certain corporate administration expenses related to the oversight of the enterprise, such as corporate leadership and administration costs.

Identifiable assets of the reportable segments exclude general corporate assets, which principally consist of cash and cash equivalents and certain deferred tax balances. The general corporate assets are included in the Corporate / All Other category.

The Company's Chief Executive Officer (the Chief Operating Decision Maker ("CODM")) regularly reviews consolidated financial results in their entirety and operating segment financial information through Adjusted EBITDA, and has ultimate responsibility for enterprise decisions. The Company's CODM is responsible for allocating resources and assessing performance of the consolidated enterprise, reportable segments and operating segments. Management of each operating segment has responsibility for operating decisions, allocating resources and assessing performance within their respective operating segment. Both reportable segments and all operating segments follow the same accounting policies in Note 1 to the Consolidated Financial Statements included in Item 8 of Part II of the Company's Annual Report on Form 10-K for the fiscal year ended August 29, 2020.

10

The Company monitors and evaluates operating performance of its reportable segments based on Adjusted EBITDA. The Company believes disclosing Adjusted EBITDA is useful to securities analysts, investors and other interested parties when evaluating companies in the industry. EBITDA is defined as net income before interest expense, provision for income taxes, and depreciation and amortization expense. Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation and amortization expense, and other pretax adjustments made in order to present comparable results from period to period. Examples of items excluded from Adjusted EBITDA include acquisition-related fair-value inventory step-up, acquisition-related costs, restructuring expenses, gain or loss on sale of property and equipment, and non-operating income (loss).

Financial information by reportable segment is as follows:

	Three Months Ended				Nine Months Ended
(in thousands)	May 29, 2021		May 30, 2020		May 29, 2021		May 30, 2020
Net Revenues
Towable	$	555,749	$	188,898	$	1,449,934	$	813,611
Motorhome	385,257		203,590		1,090,221		755,023
Corporate / All Other	19,731		9,970		53,599		49,092
Consolidated	$	960,737	$	402,458	$	2,593,754	$	1,617,726
Adjusted EBITDA
Towable	$	80,130	$	16,451	$	205,639	$	86,982
Motorhome	37,467		(10,789)		118,779		13,488
Corporate / All Other	(7,823)		(1,588)		(17,386)		(8,919)
Consolidated	$	109,774	$	4,074	$	307,032	$	91,551
Capital Expenditures
Towable	$	4,639	$	2,296	$	11,490	$	11,962
Motorhome	2,976		5,768		10,247		13,348
Corporate / All Other	1,061		1,492		1,859		3,272
Consolidated	$	8,676	$	9,556	$	23,596	$	28,582

(in thousands)	May 29, 2021		August 29, 2020
Assets
Towable	$	745,249	$	718,253
Motorhome	721,603		600,304
Corporate / All Other	512,918		395,143
Consolidated	$	1,979,770	$	1,713,700

11

Reconciliation of net income to consolidated Adjusted EBITDA is as follows:

	Three Months Ended				Nine Months Ended
(in thousands)	May 29, 2021		May 30, 2020		May 29, 2021		May 30, 2020
Net income (loss)	$	71,295	$	(12,353)	$	197,786	$	18,983
Interest expense	10,229		8,440		30,222		23,140
Provision (benefit) for income taxes	21,005		(4,186)		59,728		3,702
Depreciation	4,917		4,134		13,476		11,854
Amortization	3,590		6,926		10,771		18,514
EBITDA	111,036		2,961		311,983		76,193
Acquisition-related fair-value inventory step-up	—		—		—		4,810
Acquisition-related costs	—		(189)		—		9,761
Restructuring expenses	19		1,376		112		1,247
Gain on sale of property, plant and equipment	(1,188)		—		(4,753)		—
Non-operating income	(93)		(74)		(310)		(460)
Adjusted EBITDA	$	109,774	$	4,074	$	307,032	$	91,551

Note 3.    Investments and Fair Value Measurements

In determining the fair value of financial assets and liabilities, the Company utilizes market data or other assumptions that it believes market participants would use in pricing the asset or liability in the principal or most advantageous market and adjusts for non-performance and/or other risks associated with the Company as well as counterparties, as appropriate. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date:

Level 1 — Unadjusted quoted prices which are available in active markets for identical assets or liabilities accessible at the measurement date.

Level 2 — Inputs other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 — Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

Financial assets and liabilities measured at fair value on a recurring basis are as follows:

	Fair Value at		Fair Value Hierarchy
(in thousands)	May 29, 2021		Level 1		Level 2		Level 3
Assets that fund deferred compensation
Domestic equity funds	$	917	$	917	$	—	$	—
International equity funds	39		39		—		—
Fixed income funds	46		46		—		—
Total assets at fair value	$	1,002	$	1,002	$	—	$	—

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	Fair Value at		Fair Value Hierarchy
(in thousands)	August 29, 2020		Level 1		Level 2		Level 3
Assets that fund deferred compensation
Domestic equity funds	$	626	$	626	$	—	$	—
International equity funds	34		34		—		—
Fixed income funds	50		50		—		—
Total assets at fair value	$	710	$	710	$	—	$	—

Assets that Fund Deferred Compensation

The Company's assets that fund deferred compensation are marketable equity securities measured at fair value using quoted market prices and primarily consist of equity-based mutual funds. These securities, used to fund the Executive Share Option Plan and the Executive Deferred Compensation Plan, are classified as Level 1 as they are traded in an active market for which closing stock prices are readily available. Refer to Note 11 of the Notes to the Consolidated Financial Statements included in Item 8 of Part II of the Company's Annual Report on Form 10-K for the fiscal year ended August 29, 2020 for additional information regarding these plans.

The proportion of the assets that will fund options which expire within a year are included in prepaid expenses and other assets on the Consolidated Balance Sheets. The remaining assets are classified as non-current and included in other assets on the Consolidated Balance Sheets.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain financial instruments are measured at fair value on a nonrecurring basis. These assets primarily include goodwill, intangible assets, property, plant and equipment, and right-of-use lease assets. These assets were originally recognized at amounts equal to the fair value determined at date of acquisition or purchase. If certain triggering events occur, or if an annual impairment test is required, the Company will evaluate the non-financial asset for impairment. If an impairment has occurred, the asset is will be written down to its current estimated fair value. No impairments were recorded for non-financial assets in the three or nine months ended May 29, 2021 or May 30, 2020.

Assets and Liabilities Not Measured at Fair Value

Certain financial instruments are not measured at fair value but are recorded at carrying amounts approximating fair value based on their short-term nature. These financial instruments include cash and cash equivalents, receivables, accounts payable, other payables, and long-term debt. If these instruments were measured at fair value in the financial statements, they would be classified as Level 1 in the fair value hierarchy. See Note 8 for information about the fair value of the Company's long-term debt.

Note 4.    Inventories

Inventories consist of the following:

(in thousands)	May 29, 2021		August 29, 2020
Finished goods	$	19,638	$	17,141
Work-in-process	182,316		86,651
Raw materials	169,218		114,982
Total	371,172		218,774
Less: Last-in, first-out ("LIFO") reserve	38,154		35,833
Inventories, net	$	333,018	$	182,941

Inventory valuation methods consist of the following:

(in thousands)	May 29, 2021		August 29, 2020
LIFO basis	$	147,836	$	88,675
First-in, first-out basis	223,336		130,099
Total	$	371,172	$	218,774

The above inventory value, before reduction for the LIFO reserve, approximates replacement cost at the respective dates.

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Note 5.    Property, Plant, and Equipment

Property, plant, and equipment is stated at cost, net of accumulated depreciation, and consists of the following:

(in thousands)	May 29, 2021		August 29, 2020
Land	$	9,111	$	11,101
Buildings and building improvements	147,679		144,565
Machinery and equipment	120,557		117,370
Software	33,644		28,456
Transportation	4,974		4,913
Construction in progress	22,158		20,778
Property, plant, and equipment, gross	338,123		327,183
Less: Accumulated depreciation	160,545		152,238
Property, plant, and equipment, net	$	177,578	$	174,945

Depreciation expense was $4,917 and $4,134 for the three months ended May 29, 2021 and May 30, 2020, respectively, and $13,476 and $11,854 for the nine months ended May 29, 2021 and May 30, 2020, respectively.

Note 6.    Goodwill and Intangible Assets

The changes in the carrying amount of goodwill by segment, with no accumulated impairment losses, for the nine months ended May 29, 2021 and May 30, 2020 are as follows:

(in thousands)	Towable		Motorhome		Corporate / All Other		Total
Balances at August 31, 2019	$	244,684	$	—	$	30,247	$	274,931
Acquisition of Newmar(1)	—		73,127		—		73,127
Balances at May 30, 2020	$	244,684	$	73,127	$	30,247	$	348,058
Balances at August 29, 2020 and May 29, 2021(2)	$	244,684	$	73,127	$	30,247	$	348,058

(1)    The change in Motorhome activity is related to the acquisition of Newmar Corporation, Dutch Real Estate Corp., New-Way Transport and New-Serv (collectively "Newmar") that occurred on November 8, 2019. See Note 2 to the Consolidated Financial Statements included in Item 8 of Part II of the Company's Annual Report on Form 10-K for the fiscal year ended August 29, 2020 for additional acquisition information.

(2) There was no activity in the nine months ended May 29, 2021.

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Other intangible assets, net of accumulated amortization, consist of the following:

	May 29, 2021
($ in thousands)	Weighted Average Life-Years	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
Trade names	Indefinite	$	275,250	$	—	$	275,250
Dealer networks	12.1	159,581		$	42,360	117,221
Backlog	0.5	28,327		28,327		—
Non-compete agreements	4.3	6,647		5,121		1,526
Other intangible assets		$	469,805	$	75,808	$	393,997
	August 29, 2020
($ in thousands)	Weighted Average Life-Years	Cost		Accumulated Amortization		Net Carrying Value
Trade names	Indefinite	$	275,250	$	—	$	275,250
Dealer networks	12.2	159,581		32,487		127,094
Backlog	0.5	28,327		28,327		—
Non-compete agreements	4.1	6,647		4,223		2,424
Other intangible assets		$	469,805	$	65,037	$	404,768

The weighted average remaining amortization period for intangible assets as of May 29, 2021 was approximately 9 years.

Estimated future amortization expense related to finite-lived intangible assets is as follows:

(in thousands)	Amount
Remainder of Fiscal 2021	$	3,590
Fiscal 2022	13,719
Fiscal 2023	13,526
Fiscal 2024	13,424
Fiscal 2025	13,219
Fiscal 2026	13,165
Thereafter	48,104
Total amortization expense remaining	$	118,747

Note 7.    Product Warranties

The Company provides certain service and warranty on its products. From time to time, the Company also voluntarily incurs costs for certain warranty-type expenses occurring after the normal warranty period expires to help protect the reputation of the Company's products and the goodwill of the Company's customers. Estimated costs related to product warranty are accrued at the time of sale and are based upon historical warranty and service claims experience. Adjustments are made to accruals as claim data and cost experience becomes available.

In addition to the costs associated with the contractual warranty coverage provided on products, the Company also occasionally incurs costs as a result of additional service actions not covered by warranties, including product recalls and customer satisfaction actions. Although the Company estimates and reserves for the cost of these service actions when probable and estimable, there can be no assurance that expense levels will remain at current levels or such reserves will continue to be adequate.

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Changes in the product warranty liability are as follows:

	Three Months Ended		Nine Months Ended
(in thousands)	May 29, 2021	May 30, 2020	May 29, 2021	May 30, 2020
Balance at beginning of period	$