Winnebago is a familiar name on vehicles travelling Canadian highways. The company manufactures and sells large motor homes for vacation travel. These motor homes can be quickly recognized because of the company's "flying W" trademark. A July 2, 2007, press release contained the following information:
Winnebago Industries, Inc., (NYSE: WGO) today announced a new $60 million shares repurchase authorization. Winnebago Industries has repurchased approximately 24.4 million shares of common shares for approximately $356.8 million since December 31, 1997.
Required:
1. Determine the impact of this share repurchase on the financial statements.
2. Why might the board have decided to repurchase the shares?
3. What impact will this purchase have on Winnebago's future dividend obligations?
4. Back on January 14, 2004, the company's board of directors declared a 2-for-1 stock split effected in the form of a 100 percent stock dividend distributed on March 5, 2004. Why would Winnebago choose a stock dividend rather than a stock split?
5. What impact would this stock dividend have had on Winnebago's financial statements? What impact would it have had on the EPS and ROE ratios?