<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM 10-K
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Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended July 31, 1996, Commission File Number 1-9235
THOR INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 93-0768752
- ------------------------------- ---------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
419 W. Pike Street, Jackson Center, Ohio 45334-0629
- ---------------------------------------- ---------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (937) 596-6849
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Name of each exchange on which registered:
Common Stock (par value $.10) New York Stock Exchange
- ----------------------------- -----------------------
Securities registered pursuant to Section 12(g) of the Act: None
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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 the filing
requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent files pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
The aggregate market value of voting securities of the registrant held by
non-affiliates of the registrant on October 11, 1996, was $115,046,776 based
upon closing price on the New York Stock Exchange for such date. The number of
common shares of registrant's stock outstanding as of October 14, 1996, was
8,646,808.
Documents incorporated by reference:
Portions of the Proxy Statement for the Annual Meeting of Shareholders to be
held on December 9, 1996, are incorporated by reference in Part III.
<PAGE> 2
PART I
ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF BUSINESS
Thor Industries, Inc. ("Thor"), founded in 1980, produces and sells a wide range
of recreation vehicles and small and mid-size buses in the United States and
Canada.
The Company's principal operating subsidiaries are Airstream, Inc.
("Airstream"); Dutchmen Manufacturing, Inc. ("Dutchmen"); Four Winds
International, Inc. ("Four Winds"); Thor America, Inc. ("Thor America"); Thor
Industries West, Inc. ("Thor West"); Komfort Corp. ("Komfort"); Thor Indiana,
Inc. ("Thor Indiana"); Aero Manufacturing ("Aero"); Citair, Inc. ("Citair");
Thor California, Inc. ("Thor California"); ElDorado National Kansas, Inc.
("ElDorado Kansas"); ElDorado National California, Inc. ("ElDorado California")
and ElDorado National Michigan, Inc. ("ElDorado Michigan").
The Company, a Delaware corporation, is the successor to a corporation of the
same name which was incorporated in Nevada on July 29, 1980. Its principal
executive office is located at 419 West Pike Street, Jackson Center, Ohio
45334, and its telephone number is (937) 596-6849.
RECREATIONAL VEHICLES
AIRSTREAM
Airstream manufactures and sells premium and medium-high priced travel trailers
and motorhomes under the trade names "Airstream," "Classic" and "Land Yacht".
Airstream "Classic" vehicles are distinguished by their rounded shape and bright
aluminum finish and, in management's judgment, constitute the most recognized
product in the industry. Airstream, responding to the demands of the market for
a lower-cost product, also manufactures and sells the "Land Yacht," and "Cutter"
motorhomes. It also manufacturers "Integrity" laminated fifth wheels.
DUTCHMEN
Dutchmen manufactures conventional travel trailers and fifth wheels at its
Goshen and Middlebury, Indiana, facilities. Dutchmen has become the largest
travel trailer and fifth wheel brand in the United States due to its reputation
for building a quality product sold at a low price. It has expanded into the
manufacture of folding camping trailers.
AERO
Aero Manufacturing builds and sells lightweight, European-styled travel trailers
designed for towing behind cars, mini vans and sport utility vehicles, at its
newly acquired Syracuse, Indiana plant.
FOUR WINDS
The Company purchased Four Winds on June 1, 1992. Four Winds manufactures
conventional Class C and Class A motorhomes. Its products are sold under the
"Four Winds," "Hurricane," "Dutchmen" and "Chateau" trade names.
THOR AMERICA
Thor America (formerly Thor Pennsylvania) is a manufacturer of travel trailers
and fifth wheels. Thor America sells moderate and lower priced products under
the trade names "Citation," "Chateau," and Prism."
THOR INDIANA
Thor Indiana builds laminated fifth wheels and travel trailers under the brand
names Signature and Park Avenue in Bristol, IN.
THOR WEST
Thor West manufactures and sells moderately-priced Class A motorhomes under the
trade names "Pinnacle," and "Residency," in Ontario, CA.
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ITEM 1. BUSINESS (CONTINUED)
CITAIR
Citair is one of the largest Canadian producers of moderately-priced travel
trailers, fifth wheels and Class C motorhomes. It operates under the name
"General Coach" and sells under the trade names "Citation" and "Corsair." Its
manufacturing facilities are located in Hensall, Ontario, and Oliver, B.C.
KOMFORT
In April, 1995, the Company acquired the business and assets of Komfort Trailer,
Milwaukie, Oregon, for cash. Komfort manufacturers travel trailers and fifth
wheels and sells primarily in the western U. S. and western Canada.
THOR CALIFORNIA
Thor California commenced operations in a 126,000 sq. ft. leased manufacturing
plant in southern California. It manufacturers conventional travel trailers and
fifth wheels under the brand names "Wanderer" and "Tahoe."
BUSES
ELDORADO NATIONAL
ElDorado National is a manufacturer of small and mid-size buses for transit,
airport car rental and hotel/motel shuttles, paramedical transit for hospitals
and nursing homes, tour and charter operations, and other uses.
Management believes that ElDorado National is the largest manufacturer of small
and mid-size commercial buses in North America. The Company builds buses under
model names such as "Aerotech," "Escort," "MST," "ELF," "Transmark," and "EZ
Rider." Its plants are located in Salina, KS, Chino, CA and Brown City, MI.
PRODUCT LINE SALES SEGMENT
The table below sets forth the contribution of each of the Company's product
lines to net sales in each of the last three years.
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
($000)
Amount % Amount % Amount %
------ - ------ - ------ -
<S> <C> <C> <C> <C> <C> <C>
Recreation vehicles $ 495,991 82 $ 468,999 83 $ 418,522 85
Buses 106,087 18 93,682 17 72,557 15
-------- --- -------- --- -------- ---
Total Net Sales $ 602,078 100 $ 562,681 100 $ 491,079 100
======= === ======== === ======== ===
</TABLE>
Further information concerning business segments is included in Note L of the
Notes to the Consolidated Financial Statements.
RECREATIONAL VEHICLES:
The Company manufactures and sells a wide variety of RVs throughout the United
States and Canada, as well as related parts and accessories. The Company also
manufactures axles.
RV classifications are based upon standards established by the Recreation
Vehicle Industry Association ("RVIA"). The principal types of RVs produced by
the Company include conventional travel trailers, fifth wheels, fold-down
camping trailers, Class A, Class B, and Class C motorhomes.
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ITEM 1. BUSINESS (CONTINUED)
Travel trailers are non-motorized vehicles which are designed to be towed by
passenger automobiles, pickup trucks or vans. Travel trailers provide
comfortable, self-contained living facilities for short periods of time. The
Company produces "conventional," "fifth wheel" and "fold-down" travel trailers.
Conventional and fold-down camping trailers are towed by means of a frame hitch
attached to the towing vehicle. Fifth wheel trailers, designed to be towed by
pickup trucks, are constructed with a raised forward section that is attached to
the bed area of the pickup truck.
A motorhome is a self-powered vehicle built on a motor vehicle chassis. The
interior typically includes a driver's area, kitchen, bathroom, and dining and
sleeping areas. Motorhomes are self-contained with their own lighting, heating,
cooking, refrigeration, sewage holding and water storage facilities, so that
they can be lived in without being attached to utilities. Although they are not
designed for permanent or semi-permanent living, motorhomes do provide
comfortable living facilities for short periods of time.
Class A motorhomes, constructed on medium-duty truck chassis, are supplied
complete with engine and drive train components by motor vehicle manufacturers
such as General Motors or Ford. The living area and driver's compartment are
designed, manufactured, and installed by the Company. Conventional Class C
motorhomes are built on a Ford or General Motors small truck or van chassis
which includes an engine, drive train components, and a finished cab section.
The Company constructs a living area which has access to the driver's
compartment and attaches it to the cab. The Company also produces a small number
of Class B motorhomes which are essentially self-contained, converted vans.
Management believes its products are competitive, both in terms of price and
quality, with those of its competitors in each category of the RV market.
PRODUCTION. In order to minimize finished inventory, the Company's RVs generally
are produced to order. The Company's facilities are designed to provide
efficient assembly line manufacturing of its products. The Company believes that
its production facilities are sufficient for its current production levels.
Capacity increases can be achieved at relatively low cost, largely by increasing
the number of production employees, adding additional shifts, or acquiring
additional facilities.
The Company purchases in finished form many of the components used in the
production of RVs. The principal raw materials used in the manufacturing
processes for motorhomes and travel trailers are aluminum, lumber, plywood,
plastic, fiberglass, and steel purchased from numerous suppliers. Chassis for
the Company's Class A and Class C motorhomes are obtained primarily from General
Motors and Ford. The Company believes that, except for chassis, substitute
sources for raw materials and components are available with no material impact
on the Company's operations. The Company is able to obtain the benefit of volume
price discounts for many of its purchases of raw materials and components by
centralized purchasing.
Generally, all of the Company's operating subsidiaries introduce new or improved
lines or models of RVs each year. Changes typically include new sizes and
floorplans, different decors or design features, and engineering improvements.
AXLES. The Company's subsidiary, Henschen Corp. ("Henschen"), fabricates rubber
torsion axles for use in a wide range of recreation, industrial, and
agricultural vehicles.
SEASONALITY. Since RVs are used primarily by vacationers and campers, the
Company's sales of its RVs are seasonal and, in most geographical areas, tend to
be significantly lower during the winter months than in other periods. As a
result, sales of RVs historically are lowest during the Company's second fiscal
quarter, which ends January 31.
MARKETING AND DISTRIBUTION. The Company markets its RVs through independent
dealers located throughout the U.S. and Canada. Each of the Company's RV
subsidiaries maintains its own dealer organization, with few dealers carrying
more than one product line offered by the Company. Presently there are
approximately 800 dealers carrying the Company's products in the U.S. and
Canada. The Company believes that close working relationships between its
management personnel and the many
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ITEM 1. BUSINESS (CONTINUED)
independent dealers provide the Company with valuable information on customer
preferences and the quality and marketability of the Company's products.
Additionally, by maintaining substantially separate dealer networks for each of
its subsidiaries, the Company's products are more likely to be competing against
competitor's products in similar price ranges rather than the Company's other
products.
Each of the Company's operating subsidiaries has an independent sales force to
call on its dealers. The Company's most important sales promotions occur at the
major RV shows for dealers which take place throughout the year at different
locations across the country. The Company benefits from the RV awareness
advertising and major marketing programs geared towards first-time buyers
sponsored by RVIA in national print media and television. The Company engages in
a limited amount of consumer-oriented advertising for its RVs, primarily through
industry magazines, the distribution of product brochures, and direct mail
advertising campaigns.
In its selection of dealers, the Company emphasizes the individual dealer's
financial strength to maintain a sufficient inventory of the Company's products,
as well as its reputation, experience, and ability to provide service. Many of
the Company's dealers carry one or more competitor's line of RVs. Each operating
company has sales agreements with its dealers and these agreements are subject
to annual review. No single dealer accounted for more than 5% of the Company's
consolidated net sales of RVs during the year.
Substantially all of the Company's sales to dealers are made on terms requiring
cash on delivery or within 20 days thereafter. The Company generally does not
finance dealer purchases. Most dealers are financed on a "floorplan" basis by a
bank or finance company which lends the dealer all or substantially all of the
wholesale purchase price and retains a security interest in the vehicles
purchased. As is customary in the RV industry, upon the request of a lending
institution financing a dealer's purchase of the Company's products and after
completion of a credit investigation of the dealer involved, the Company will
execute a repurchase agreement. Repurchase agreements provide that, for up to 12
months after a unit is financed and in the event of default by the dealer, the
Company will repurchase the unit repossessed by the financing institution for
the amount then due, which is usually less than 100% of dealer's cost. The risk
of loss under repurchase agreements is spread over numerous dealers and is
further reduced by the high resale value of the units which the Company would be
required to repurchase. In the Company's experience, losses under repurchase
agreements have not been significant and management believes any future losses
under the agreements would not have a material adverse effect on the Company.
Thor entered the retail recreation vehicle financing business in March, 1994.
Thor Credit Corporation is a captive finance company formed between Thor
Industries and Ganis Corporation, a major national financial institution engaged
in recreation vehicle financing.
In March 1996, Thor and Cruise America, Inc. formed a joint venture, CAT Joint
Venture LLC, to rent vehicles to the public.
WARRANTIES. The Company currently provides retail purchasers of its RVs with a
limited warranty for one year (or 12,000 miles, if earlier, in the case of
motorhomes) against defects in materials and workmanship, excluding only certain
specified components which are separately warranted by the suppliers. These
components include the chassis and engines of the Company's motorhomes, which
are warranted by their manufacturers. Some of the Company's subsidiaries offer
longer term structural warranties. Henschen warrants its axles for five years
from the date of purchase.
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ITEM 1. BUSINESS (CONTINUED)
BUSES:
The Company's line of small and mid-size buses are sold under the name ElDorado
National. Its trade names include "Aerotech," "Escort FE," "Escort RE," "ELF,"
"Transmark," "MST" and "EZ Rider." The Company's line of small buses consists of
airport shuttle buses, intra- and inter-urban mass transportation buses, and
buses for tourist uses.
PRODUCTION. The Company's production facilities in Salina, Kansas; Chino,
California; and Brown City, Michigan, are designed to provide efficient assembly
line manufacturing of its bus products. The vehicles are produced according to
specific orders which are normally obtained by dealers.
Some of the chassis, all of the engines and auxiliary units, and some of the
seating and other components used in the production of buses are purchased in
finished form. The Chino, California, facility assembles chassis for its rear
engine buses from industry standard components and assembles the buses directly
on the chassis.
The principal raw materials used in the manufacturing of buses are fiberglass,
steel, aluminum, plywood, and plastic. Most of the raw materials and components
needed are purchased from numerous suppliers. The Company purchases most of its
bus chassis from Ford and General Motors and most of its engines from Cummins.
The Company believes that, except for chassis, raw materials and components
could be purchased from other sources, if necessary, with no material impact on
the Company's operations.
MARKETING AND DISTRIBUTION. The Company markets its product line through a
network of 36 independent dealers in the United States and Canada. The Company
selects distributors using criteria similar to those used in selecting RV
dealers. During fiscal 1996, no single dealer accounted for more than 8% of the
Company's net bus revenue. The Company also sells its buses directly to certain
national accounts such as major rental car companies, hotel chains, and transit
authorities.
Terms of sale are typically cash on delivery or through national floorplan
financing institutions. Sales to some state transportation agencies and other
government agencies may be on longer terms.
WARRANTIES. The Company currently provides purchasers of its buses with a
limited warranty for one year or 12,000 miles against defects in materials and
workmanship, excluding only certain specified components which are warranted
separately by suppliers. The Company provides a five-year or 75,000 mile
warranty on the Company-assembled body structure of its "Aerotech" buses.
Chassis and engines are warranted for one year or 12,000 miles by their
manufacturers.
REGULATION
The Company is subject to the provisions of the National Traffic and Motor
Vehicle Safety Act and the safety standards for bus, RVs, and components, which
have been promulgated thereunder by the Department of Transportation. Because of
its sales in Canada, the Company is also governed by similar laws and
regulations issued by the Canadian Government.
The Company is a member of RVIA, a voluntary association of RV manufacturers
which promulgates RV safety standards. The Company places an RVIA seal on each
of its RVs to certify that such standards have been met.
Both federal and state authorities have various environmental control standards
relating to air, water, and noise pollution which affect the business and
operation of the Company. For example, these standards, which are generally
applicable to all companies, control the Company's choice of paints, discharge
of air compressor waste water, and noise emitted by factories. The Company
relies upon certifications obtained by chassis manufacturers with respect to
compliance by the Company's vehicles with all applicable emission control
standards.
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ITEM 1. BUSINESS (CONTINUED)
The Company is also subject to the regulations promulgated by the Occupational
Safety and Health Administration ("OSHA"). The Company's plants are periodically
inspected by federal agencies concerned with health and safety in the work
place, and by RVIA, to ensure that the Company's products comply with applicable
governmental and industry standards.
The Company believes that its products and facilities comply in all material
respects with applicable vehicle safety, environmental, RVIA, and OSHA
regulations.
COMPETITION
The RV industry is characterized by relative ease of entry, although the codes,
standards, and safety requirements introduced in recent years are a deterrent to
new competitors. The need to develop an effective dealer network also acts as a
barrier to entry. The RV market is intensely competitive with a number of other
manufacturers selling products which compete directly with those of the Company.
Competition in the industry is based upon price, design, value, quality, and
service. The Company believes that the quality, design, and price of its
products and the warranty coverage and service it provides is such that its
products compete favorably for retail purchasers. The Company estimates that it
is the second largest R.V. manufacturer.
The Company estimates that it has a 25% market share of the U.S. and Canadian
small and mid-size bus market. Other competitors offer lines of buses which
compete with all of the Company's products. Price, quality, and delivery are the
primary competitive factors. As with its RVs, the Company believes that the
quality, design, and price of its products, the warranty coverage and service it
provides, and the loyalty of its customers is such that its products compare
favorably with similarly priced products of its competitors.
TRADE NAMES AND PATENTS
The Company has registered United States and Canadian trade names or licenses
under the trade names of others, covering the principal trade names and model
lines under which its products are marketed. The Company is not dependent upon
any patents or technology licenses in the conduct of its business.
EMPLOYEE RELATIONS
At July 31, 1996, the Company had approximately 2,670 employees in the United
States and 197 in Canada. Of these 2,867 employees, 291 are salaried. Citair's
and Thor America's approximately 340 hourly employees are currently represented
by certified labor organizations. Citair's and Thor America's current labor
agreements covering their operations expire at various times between September
1997 and August 1999. The Company's employees at other facilities are not
represented by certified labor organizations. The Company believes it maintains
a good working relationship with its employees.
RESEARCH AND DEVELOPMENT
During the fiscal years 1996, 1995, and 1994, the Company spent approximately
$881,000, $1,127,000, and $799,000, respectively, on research and development
activities.
FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES
Canadian sales from operations in Canada and export sales to Canada from United
States operations amounted to approximately 3% and 5%, respectively, of the
Company's total net sales to unaffiliated customers in fiscal year 1996.
Further information concerning foreign operations is shown in Note L of the
Notes to Consolidated Financial Statements.
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ITEM 2. PROPERTIES
The Company owns or leases approximately 1,887,000 square feet of plant and
office space. Management believes that the Company's present facilities,
consisting primarily of steel clad, steel or wood frame, or masonry
construction, and the machinery and equipment contained therein, are well
maintained and in good condition. The Company believes that it would be able to
obtain replacement premises at acceptable costs for its leased premises should
its leases not be renewed.
The following table describes the location, number and size of the Company's
facilities as of July 31, 1996.
FACILITIES
<TABLE>
<CAPTION>
Approximate
No. of Building Area
Location Owned or Leased Buildings Square Feet
- -------- --------------- --------- -----------
RVs
<S> <C> <C> <C>
Jackson Center, OH (Airstream) (1).......................Leased................9................299,000
Jackson Center, OH (Henschen) (1)........................Leased................2.................90,000
Middleburg, PA (Thor America).............................Owned................3................116,000
Hensall, Ontario, Canada (Citair).........................Owned................1................100,000
Oliver, B.C., Canada (Citair).............................Owned................1.................55,000
Oliver, B.C., Canada (Citair) (5)........................Leased................1.................11,000
Ontario, CA (Thor West) (2)..............................Leased................1................111,000
Middlebury, IN (Dutchmen).................................Owned................1.................20,000
Goshen, IN (Dutchmen) (3)................................Leased................1.................40,000
Goshen, IN (Dutchmen).....................................Owned................4................123,000
Syracuse, IN (Dutchmen)...................................Owned................1.................46,000
Syracuse, IN, (Aero)......................................Owned................2.................67,000
Syracuse, IN, (Aero) (12)................................Leased................1.................52,000
Bristol, IN (Dutchmen) (6)...............................Leased................1.................57,000
Bristol, IN (Thor Indiana) (8)...........................Leased................6................106,000
Elkhart, IN (Four Winds)..................................Owned................3................180,000
Cassopolis, MI (Thor Indiana).............................Owned................2.................32,000
Milwaukie, OR (Komfort) (9)..............................Leased................1.................57,000
San Moreno, CA (Thor California) (10)....................Leased................1................126,000
BUSES
Salina, KS (ElDorado Kansas)..............................Owned................1.................93,000
Salina, KS (ElDorado Kansas) (11)........................Leased................1..................8,000
Chino, CA (ElDorado California) (4)......................Leased.............. 1.................64,000
Chino, CA (ElDorado California) (4)......................Leased.............. 1.................10,000
Brown City, MI (ElDorado Michigan) (7)...................Leased.............. 1.................24,000
Total.........................................................................47..............1,887,000
== =========
</TABLE>
(1) Airstream locations are occupied under net subleases which expire in 2002.
The Henschen location is occupied under a net sublease which expires in
1999.
(2) This location is occupied under a ten-year net lease with the right of first
refusal if a sale is proposed by lessor. The lease expires in 2001 with an
option to renew for two consecutive five-year terms.
(3) This location is occupied under a net lease which expires in 1998.
(4) This location is occupied under a net lease which expires in 1997 with a
3-year renewal option.
(5) This location is occupied under a net lease which expires in 1999.
(6) This location is occupied under a net lease which expires in 1998 with a
5-year renewal option.
(7) This location is occupied under a net lease which expires in 1996 with two
additional one-year renewal options.
(8) This location is occupied under a net lease which expires in 2005 with an
option to extend for 5 years
(9) This location is occupied under a net lease which expires in 2005 with an
option to extend for 5 years.
(10)This location is occupied under a net lease which expires in 2001 with an
option to extend for 5 years
(11)This location is occupied under a net lease which expires in 1997 and is
renewable annually.
(12)This location is occupied under a net lease which expires in 2001.
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ITEM 3. LEGAL PROCEEDINGS
The Company is involved in certain litigation arising out of its operations in
the normal course of business. The Company believes that no such litigation will
have a material adverse effect on the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters submitted.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
(A) MARKET INFORMATION
The Company's Common Stock is traded on the New York Stock Exchange. Set forth
below is the range of high and low prices for the common stock for each quarter
during the Company's most recent fiscal years, as quoted in the New York Stock
Exchange Monthly Market Statistics and Trading Reports.
<TABLE>
<CAPTION>
Fiscal 1996 Fiscal 1995
----------- -----------
High Low High Low
---- --- ---- ---
<S> <C> <C> <C> <C>
First Quarter.............. $20.00 $15.75 $23.25 $19.25
Second Quarter............. 20.25 15.88 20.25 18.75
Third Quarter.............. 19.88 16.25 21.75 18.88
Fourth Quarter............. 22.75 18.13 23.25 18.75
</TABLE>
(B) HOLDERS
As of October 15, 1996, the number of record holders of the Company's common
stock was 201.
(C) DIVIDENDS
The Company paid quarterly dividends of $.03 a share during 1996 and previous
years beginning in 1988. Effective April 27, 1992, the Company's Common stock
was split 3-for-2. Since that date, the Company has declared quarterly dividends
of $.03 per share on the split shares, thus increasing the dividend by 50%.
Prior to 1988, no dividends had been paid. Any payment of cash dividends in the
future will be at the discretion of the Company's Board of Directors and will
depend upon the financial condition, capital requirements, and earnings of the
Company, as well as other factors which the Board of Directors may deem
relevant.
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ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Fiscal years ended July 31,
1996 1995 1994 1993 1992
--------------------------------------------------------------------------
INCOME STATEMENT DATA: ($000, except per share amounts)
<S> <C> <C> <C> <C> <C>
Net sales................................... $602,078 $562,681 $491,079 $412,223 $273,443
Income before change in
accounting principle........................ 16,070 13,790 16,045 11,267 8,398
Change in accounting principle.............. -- -- -- 561 --
Net income.................................. 16,070 13,790 16,045 11,828 8,398
EARNINGS PER COMMON SHARE:
Income before change in
accounting principle........................ 1.82 1.55 1.80 1.27 1.15
Change in accounting principle.............. -- -- -- .06 --
Net income.................................. 1.82 1.55 1.80 1.33 1.15
Dividends per common share.................. 12(cent) 12(cent) 12(cent) 12(cent) 9(cent)
BALANCE SHEET DATA:
Total assets................................ $175,884 $148,461 $142,446 $122,747 $124,246
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Net sales in fiscal 1996 totaled $602,077,568, up 7.0% from $562,681,238 in
fiscal 1995. Net income in fiscal 1996 totaled $16,070,000, versus $13,789,687
in 1995. Net income per common share was $1.82 in 1996 versus $1.55 in 1995.
The consolidated statements of income for the years ended July 31, 1996, 1995
and 1994 shown as a percentage of net sales are as follows:
<TABLE>
<CAPTION>
Fiscal years ended July 31,
-----------------------------------------------
1996 1995 1994
-----------------------------------------------
<S> <C> <C> <C>
Net sales........................................................ 100.0% 100.0% 100.0%
Cost of products sold............................................ 88.7 88.6 86.3
-----------------------------------------------
Gross profit..................................................... 11.3 11.4 13.7
Selling, general and administrative.............................. 6.8 7.5 8.2
-----------------------------------------------
Operating income................................................. 4.5 3.9 5.5
Other Income..................................................... .1 .1 --
-----------------------------------------------
Income before income taxes....................................... 4.6 4.0 5.5
Provision for income taxes....................................... 1.9 1.5 2.2
-----------------------------------------------
Net income....................................................... 2.7% 2.5% 3.3%
-----------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
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1996 VS. 1995
Net sales totaled $602,077,568 up 7% from $562,681,238 in the same period last
year. Net income increased to $16,070,000 compared to $13,789,687 last year.
This increase was primarily due to increased sales and reduction in selling,
general and administrative expenses. In general, the Company did not adjust its
sales prices during fiscal 1996.
Recreation vehicle revenues of $495,991,000 were 6% higher than last year.
Recreation vehicle sales were 82% of total company revenues compared to 83% last
year. Bus revenues of $106,087,000 were 13% higher than last year. Bus sales
were 18% of total company revenue compared to 17% last year. Manufacturing gross
profit decreased to 11.3% of sales from 11.4% last year.
As a percentage of sales, selling, general and administrative costs decreased
due primarily to cost-effective reductions in selling and promotion programs.
Interest income increased by approximately $315,000 and interest expense
increased by approximately $298,000. The increase in interest expense was due
primarily to line of credit use for expansion of facilities, the start up of
Thor California, and increases in accounts receivables and inventories.
The combined income tax rate was 41% compared to 38.8% last year. Last year's
rate reflects favorable utilization of foreign tax credits.
1995 VS. 1994
Net sales totaled $562,681,238 up 14.6% from $491,078,835 in the same period
last year. Net income declined to $13,789,687 compared to $16,044,564 last year.
This decline was primarily due to very competitive pricing in a soft
recreational vehicle market during the second half of fiscal 1995 and increased
material costs.
Recreation vehicle revenues of $468,999,000 were 12% higher than last year.
Recreation vehicle sales were 83% of total company revenues compared to 85%
last year. Bus revenues of $93,682,000 were 29% higher than last year. Bus
sales were 17% of total company revenue compared to 15% last year.
Manufacturing gross profit decreased to 11.4% of sales from 13.7% last year.
As a percentage of sales, selling, general and administrative costs decreased
due primarily to reduced commissions and performance bonuses related to reduced
operating profits.
Interest income increased by approximately $200,000 and interest expense
increased by approximately $79,000. The increase in interest expense was due
primarily to the build-up of recreation vehicle inventory and chassis in the
last half of fiscal 1995, and the acquisitions of Komfort and Skamper.
The combined income tax rate was 38.8% compared to 40.1% last year. This
reduction was due primarily to favorable utilization of foreign tax credits.
LIQUIDITY
On July 31, 1996, Thor had $13,061,981 in cash and cash equivalents, compared to
$6,820,796 on July 31, 1995.
Working capital on July 31, 1996, was $74,981,738 compared to $65,151,234 on
July 31, 1995. Inventory valued at current cost on July 31, 1996, exceeded LIFO
inventory by $2,618,202.
The Company currently has a $25,000,000 revolving line of credit with Harris
Trust and Savings Bank and Bank One. The amount borrowed under the line on July
31, 1996, was $6,515,000. The loan agreement contains certain covenants,
including restrictions on additional indebtedness, and the Company must maintain
certain financial ratios. The line of credit bears interest at negotiated rates
below prime and expires on November 29, 1996. The Company had no long term debt
as of July 31, 1996. Amortization of intangibles increased from $2,736,489 for
the year ended July 31, 1995 to $2,748,852 for the year ended July 31, 1996.
11
<PAGE> 12
During fiscal 1996, Thor purchased 224,200 shares of its common stock,
increasing treasury stock by $3,890,737.
On March 14, 1996, Thor formed a limited liability corporation, with Cruise
America, Inc. as a 50% partner, for the purpose of renting recreation vehicles
to the public. Thor's investment involved $300,000 cash for equity and
$2,000,000 cash for a subordinated note bearing interest at prime plus .25%
maturing March 31, 2000.
The Company believes that internally generated funds and the revolving credit
agreement already in place will be sufficient to meet current needs and
anticipated capital requirements. The Company does not anticipate significant
capital expenditures for fiscal 1997.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
Quarterly Financial Data
- ---------------------------------------------------------------------------------------------------------------------------
October 31 January 31 April 30 July 31
-----------------------------------------------------------------------------
($000, except per share amounts)
<S> <C> <C> <C> <C>
1996
Net sales.................................. $151,519 $119,781 $169,174 $161,604
Gross profit............................... 16,635 12,240 17,812 21,437
Net income (1) ........................... 4,412 1,964 4,002 5,692
Net Income per common share................ .50 .22 .46 .64
Dividends paid per common share............ .03 .03 .03 .03
MARKET PRICES PER COMMON SHARE:
High ................................... $ 20.00 $ 20.25 $ 19.88 $ 22.75
Low .................................... $ 15.75 $ 15.88 $ 16.25 $ 18.13
----------------------------------------------------------
1995
Net sales.................................. $ 139,170 $114,369 $163,082 $146,060
Gross profit............................... 19,435 13,296 17,691 13,936
Net income ................................ 5,783 2,209 3,745 2,053
Net Income per common share................ .65 .25 .42 .23
Dividends paid per common share............ .03 .03 .03 .03
MARKET PRICES PER COMMON SHARE:
High ................................... $ 23.25 $ 20.25 $ 21.75 $ 23.25
Low .................................... $ 19.25 $ 18.75 $ 18.88 $ 18.75
----------------------------------------------------------
<FN>
(1) Net income in the fourth quarter was increased by $1,400,000 in 1996, due to
adjustments to physical inventory, warranty reserves and management incentives.
</TABLE>
12
<PAGE> 13
ITEM 9 DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to Directors and Executive Officers of the Registrant
is included in the definitive Proxy Statement, dated on or about October 28,
1996, filed with the Commission pursuant to Regulation 14A, which portion of
said Proxy Statement is hereby incorporated by reference.
ITEM 11. MANAGEMENT REMUNERATION
The information required in response to this Item is contained under the caption
EXECUTIVE OFFICERS in the definitive Proxy Statement, dated on or about October
28, 1996, filed with the Commission pursuant to Regulation 14A, which portion of
said Proxy Statement is hereby incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The information required in response to this Item is contained under the caption
ELECTION OF DIRECTORS for Security Ownership of Management and under the caption
OWNERSHIP OF COMMON STOCK for principal shareholders, of the definitive Proxy
Statement, dated on or about October 28, 1996, filed with the Commission
pursuant to Regulation 14A, which portion of said Proxy Statement is hereby
incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required in response to this Item is contained under the caption
CERTAIN RELATIONS AND TRANSACTIONS WITH MANAGEMENT in the definitive Proxy
Statement, dated on or about October 28, 1996, filed with the Commission
pursuant to Regulation 14A, which portion of said Proxy Statement is hereby
incorporated by reference.
13
<PAGE> 14
PART IV
ITEM 14. FINANCIAL STATEMENT SCHEDULES, EXHIBITS, AND
REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
(A) 1. FINANCIAL STATEMENTS PAGE
<S> <C> <C>
Independent Auditors' Report..................................................................17
Consolidated Balance Sheets, July 31, 1996 and 1995.......................................18--19
Consolidated Statements of Income for the Years Ended
July 31, 1996, 1995 and 1994...............................................................20
Consolidated Statements of Stockholders' Equity for the
Years Ended July 31, 1996, 1995 and 1994...................................................21
Consolidated Statements of Cash Flows for the Years Ended
July 31, 1996, 1995 and 1994...............................................................22
Notes to Consolidated Financial Statements................................................23--27
(A) 2. FINANCIAL STATEMENT SCHEDULE AS OF JULY 31, 1996, AND FOR EACH
OF THE THREE YEARS IN THE PERIOD ENDED JULY 31, 1996:
Schedule II--Valuation and Qualifying Accounts................................................28
All other schedules have been omitted as not required or not applicable
under the instructions.
(A) 3. EXHIBITS
(3) ARTICLES OF INCORPORATION AND BY-LAWS
(a) Registrant's Restated Certificate of..................................................*
Incorporation. (Filed as Exhibit 3(a)
to Registration Statement No. 33-13827.)
(b) Registrant's By-laws. (Filed as Exhibit 3(b).........................................*
to Registration Statement No. 33-13827.)
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS
INCLUDING INDENTURES
(a) Form of Common Stock Certificate......................................................*
(Filed as Exhibit 4(a) to 10-K dated July 31, 1987.)
</TABLE>
14
<PAGE> 15
EXHIBITS (CONTINUED)
<TABLE>
<CAPTION>
(10) MATERIAL CONTRACTS
<S> <C>
(a) Sublease Agreement (Jackson Center), dated.........................................*
August 29, 1980, between Airstream and
Beatrice. (Filed as Exhibit 10(c) to
Registration Statement No. 2-87044.)
(22) SUBSIDIARIES OF THE REGISTRANT
The subsidiaries of the Registrant, excluding those which,
considered in the aggregate as a single subsidiary, would not
constitute a significant subsidiary as of July 31, 1996, are:
Airstream, Inc. (a Nevada corporation),
Citair, Inc. (a Pennsylvania corporation),
Thor Industries West, Inc. (a California corporation),
ElDorado National Kansas, Inc. (a Kansas corporation)
ElDorado National California, Inc. (a California corporation)
ElDorado National Michigan, Inc. (a Delaware corporation),
Thor America, Inc. (a Pennsylvania corporation)
Dutchmen Manufacturing, Inc. (a Delaware corporation)
Four Winds International, Inc. (a Delaware corporation)
Citair does business in Canada under the name "General Coach."
Aero Manufacturing, Inc. (a Delaware corporation)
Thor Indiana, Inc. (a Delaware corporation)
Komfort Corp. (a Delaware corporation)
Thor California, Inc. (a Delaware corporation)
(27) Financial Data Schedule
<FN>
*Incorporated by reference.
</TABLE>
(B) REPORT ON FORM 8-K
There were no filings on Form 8-K during fiscal year 1996.
15
<PAGE> 16
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.
THOR INDUSTRIES, INC.
(Signed) Wade F.B. Thompson
-----------------------
Wade F. B. Thompson
Chairman, President, and Chief Executive Officer
Date October 14, 1996
---------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
(Signed) Peter B. Orthwein (Signed) Walter L. Bennett
------------------------ ---------------------------
Peter B. Orthwein Walter L. Bennett
Vice Chairman, Treasurer Vice President, Finance
(Principal Financial Officer) and Director (Principal Accounting Officer)
Date October 14, 1996 Date October 14, 1996
---------------------------- -------------------------------
(Signed) Wade F.B. Thompson (Signed) Alan Siegel
------------------------ ---------------------------
Wade F. B. Thompson Alan Siegel
Chairman, President, and Chief Executive Director
Officer (Principal Executive Officer
and Director)
Date October 14, 1996 Date October 14, 1996
---------------------------- ------------------------------
(Signed) William C. Tomson
------------------------
William C. Tomson
Director
Date October 14, 1996
----------------------------
16
<PAGE> 17
INDEPENDENT AUDITORS' REPORT
THE BOARD OF DIRECTORS AND STOCKHOLDERS--THOR INDUSTRIES, INC.
We have audited the accompanying consolidated balance sheets of Thor Industries,
Inc., and subsidiaries as of July 31, 1996 and 1995, and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the three years in the period ended July 31, 1996. Our audits also included
the financial statement schedule listed in the Index of Item 14(a)(2). These
financial statements and the financial statement schedule are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements and financial statement schedules 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, such consolidated financial statements present fairly, in all
material respects, the financial position of the companies as of July 31, 1996
and 1995, and the results of their operations and their cash flows for each of
the three years in the period ended July 31, 1996, in conformity with generally
accepted accounting principles. Also, in our opinion, such financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
DELOITTE & TOUCHE LLP
Dayton, Ohio
September 27, 1996
17
<PAGE> 18
<TABLE>
<CAPTION>
Thor Industries, Inc. and Subsidiaries
Consolidated Balance Sheets, July 31, 1996 and 1995
- ---------------------------------------------------------------------------------------------------------------------------
Assets 1996 1995
- ------ ---------------------------------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents........................................................... $ 13,061,981 $ 6,820,796
Accounts receivable:
Trade, less allowance for doubtful accounts--
$52,190 in 1996 and 1995........................................................ 48,962,786 37,447,506
Other........................................................................... 811,173 500,388
Inventories (Note C)................................................................ 63,493,523 56,113,536
Prepaid expenses and other (Note E)................................................. 3,706,461 3,632,568
---------------------------------------
Total current assets................................................................ 130,035,924 104,514,794
---------------------------------------
PROPERTY, PLANT AND EQUIPMENT:
Land................................................................................ 1,212,024 1,030,524
Buildings and improvements.......................................................... 11,978,857 9,833,498
Machinery and equipment............................................................. 15,182,013 13,601,025
---------------------------------------
Total cost.......................................................................... 28,372,894 24,465,047
Accumulated depreciation............................................................ 11,167,142 9,619,796
---------------------------------------
Net property, plant and equipment................................................... 17,205,752 14,845,251
---------------------------------------
OTHER ASSETS:
Goodwill............................................................................ 15,175,617 15,812,885
Noncompete agreements............................................................... 4,912,964 5,875,860
Trademarks.......................................................................... 2,858,835 3,184,174
Other (Note K) ..................................................................... 5,695,368 4,227,937
---------------------------------------
Total other assets.................................................................. 28,642,784 29,100,856
---------------------------------------
TOTAL............................................................................... $175,884,460 $148,460,901
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
18
<PAGE> 19
<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity
- ------------------------------------------------------------------------------------------------------------------
1996 1995
---------------------------------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable.......................................................... $27,901,604 $ 18,443,654
Line of Credit (Note D)................................................... 6,515,000 --
Accrued liabilities:
Compensation and related items......................................... 11,704,885 10,711,604
Product warranties..................................................... 6,345,670 5,956,520
Other.................................................................. 2,587,027 4,251,782
---------------------------------------
TOTAL CURRENT LIABILITIES.................................................. 55,054,186 39,363,560
---------------------------------------
OTHER LIABILITIES.......................................................... 1,672,041 1,194,032
CONTINGENT LIABILITIES (NOTE H)............................................ -- --
STOCKHOLDERS' EQUITY (NOTE I)
Preferred stock--authorized 1,000,000 shares; none outstanding.............. -- --
Common stock--par value of $.10 a share;
authorized, 10,000,000 shares;
issued 9,099,247 shares in 1996 and 1995................................. 909,925 909,925
Additional paid-in capital................................................. 25,105,120 25,105,120
Foreign currency translation............................................... (641,856) (772,606)
Retained earnings.......................................................... 99,600,240 84,585,329
---------------------------------------
TOTAL...................................................................... 124,973,429 109,827,768
Less 412,439 treasury shares in 1996 and 188,239 in 1995................... (5,815,196) (1,924,459)
---------------------------------------
Total stockholders' equity................................................. 119,158,233 107,903,309
---------------------------------------
TOTAL...................................................................... $175,884,460 $148,460,901
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
19
<PAGE> 20
<TABLE>
<CAPTION>
Thor Industries, Inc. and Subsidiaries
Consolidated Statements of Income for the Years Ended July 31, 1996, 1995 and 1994
- ---------------------------------------------------------------------------------------------------------------------------
1996 1995 1994
------------------------------------------------------------
<S> <C> <C> <C>
NET SALES...................................................... $602,077,568 $562,681,238 $491,078,835
Cost of products sold.......................................... 533,953,803 498,323,348 423,567,286
------------------------------------------------------------
GROSS PROFIT................................................... 68,123,765 64,357,890 67,511,549
Selling, general and
administrative expenses...................................... 38,537,782 39,553,763 37,871,348
Amortization of intangibles.................................... 2,748,852 2,736,489 2,680,416
------------------------------------------------------------
Operating income............................................... 26,837,131 22,067,638 26,959,785
OTHER INCOME (EXPENSE):
Interest income.............................................. 935,332 619,843 419,562
Interest expense............................................. (625,185) (327,282) (247,733)
Other........................................................ 95,248 190,340 (335,827)
------------------------------------------------------------
405,395 482,901 (163,998)
------------------------------------------------------------
INCOME BEFORE INCOME TAXES..................................... 27,242,526 22,550,539 26,795,787
Provision for income taxes (Note E)............................ 11,172,526 8,760,852 10,751,223
------------------------------------------------------------
NET INCOME..................................................... $ 16,070,000 $ 13,789,687 $ 16,044,564
============================================================
NET INCOME PER COMMON SHARE (NOTE A)........................... $ 1.82 $ 1.55 $ 1.80
============================================================
</TABLE>
See notes to consolidated financial statements.
20
<PAGE> 21
<TABLE>
<CAPTION>
Thor Industries, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity for the Years Ended July 31, 1996, 1995 and 1994
- ---------------------------------------------------------------------------------------------------------------------------------
Treasury Stock Common Stock
----------------------------------------------------- Additional Foreign
Paid-In Currency Retained
Shares Amount Shares Amount Capital Translation Earnings
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
JULY 31, 1993 142,739 $1,029,148 9,035,595 $903,560 $24,138,585 ($59,881) $56,891,634
Net income -- -- -- -- -- -- 16,044,564
Stock option activity--net -- -- 63,652 6,365 966,535 -- --
Cash dividends
$.12 per common share -- -- -- -- -- -- (1,070,656)
Foreign currency
translation adjustment -- -- -- -- -- (868,573) --
----------------------------------------------------------------------------------------------------
JULY 31, 1994 142,739 1,029,148 9,099,247 909,925 25,105,120 (928,454) 71,865,542
Net Income -- -- -- -- -- 13,789,687
Shares purchased 45,500 895,311 -- -- -- -- --
Cash dividends
$.12 per common share -- -- -- -- -- -- (1,069,900)
Foreign currency
translation adjustment -- -- -- -- -- 155,848 --
---------------------------------------------------------------------------------------------------
JULY 31, 1995 188,239 1,924,459 9,099,247 909,925 25,105,120 (772,606) 84,585,329
Net Income -- -- -- -- -- -- 16,070,000
Shares purchased 224,200 3,890,737 -- -- -- -- --
Cash dividends
$.12 per common share -- -- -- -- -- -- (1,055,089)
Foreign currency
translation adjustment -- -- -- -- -- 130,750 --
---------------------------------------------------------------------------------------------------
JULY 31, 1996 412,439 $ 5,815,196 9,099,247 $ 909,925 $ 25,105,120 ($641,856) $99,600,240
===================================================================================================
</TABLE>
See notes to consolidated financial statements.
21
<PAGE> 22
<TABLE>
<CAPTION>
Thor Industries, Inc. and Subsidiaries
Consolidated Statements of Cash Flows for the Years Ended July 31, 1996, 1995 and 1994
- ---------------------------------------------------------------------------------------------------------------------------
1996 1995 1994
------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME..................................................... $16,070,000 $13,789,687 $16,044,564
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation.............................................. 2,266,175 2,020,389 1,840,395
Amortization of intangibles............................... 2,748,852 2,736,489 2,680,416
Deferred income taxes..................................... 355,321 (783,174) (389,658)
CHANGES IN ASSETS AND LIABILITIES,
NET OF EFFECTS FROM ACQUISITIONS:
Accounts receivable............................................ (11,826,065) 2,466,203 (8,445,211)
Inventories.................................................... (7,379,987) (5,732,083) (8,402,419)
Prepaid expenses and other..................................... 125,834 (1,202,925) 459,114
Accounts payable............................................... 9,457,950 (7,911,297) 6,175,515
Accrued liabilities............................................ (282,324) 237,464 2,951,308
Other liabilities.............................................. (164,250) (332,954) 212,774
------------------------------------------------------------
Net cash provided by operating activities...................... 11,371,506 5,287,799 13,126,798
CASH FLOWS FROM INVESTING ACTIVITIES: ------------------------------------------------------------
Purchases of property, plant and equipment..................... (4,722,312) (5,204,320) (4,256,172)
Disposals of property, plant and equipment..................... 192,067 211,621 652,194
Acquisitions--net of cash acquired............................. -- (5,123,702) --
Investment in CAT Joint Venture LLC ........................... (2,300,000) -- --
Investment in Thor Credit Corp................................. -- -- (1,434,155)
------------------------------------------------------------
Net cash used in investing activities.......................... (6,830,245) (10,116,401) (5,038,133)
CASH FLOWS FROM FINANCING ACTIVITIES: ------------------------------------------------------------
Cash dividends................................................. (1,055,089) (1,069,900) (1,070,656)
Net increase (decrease) in line of credit...................... 6,515,000 -- (4,514,000)
Purchase of treasury shares.................................... (3,890,737) (895,311) --
Proceeds from issuance of common stock......................... -- -- 972,900
------------------------------------------------------------
Net cash provided by (used in) financing activities ........... 1,569,174 (1,965,211) (4,611,756)
------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH........................ 130,750 50,936 (528,686)
------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents........... 6,241,185 (6,742,877) 2,948,223
Cash and cash equivalents, beginning of year................... 6,820,796 13,563,673 10,615,450
------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF YEAR......................... $13,061,981 $ 6,820,796 $13,563,673
============================================================
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid.............................................. $10,070,961 $ 11,590,599 $ 9,629,938
Interest paid.................................................. $ 625,185 $ 327,282 $ 247,733
</TABLE>
See notes to consolidated financial statements.
22
<PAGE> 23
THOR INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JULY 31, 1996,
1995 and 1994
- -------------------------------------------------------------------------------
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- -------------------------------------------------------------------------------
PRINCIPLES OF CONSOLIDATION--The accompanying consolidated financial statements
include the accounts of Thor Industries, Inc. and its wholly-owned domestic and
foreign subsidiaries. Investments in two unconsolidated 50% owned Companies are
accounted for by the equity method. All intercompany balances and transactions
are eliminated in consolidation.
CASH AND CASH EQUIVALENTS--Interest-bearing deposits and other investments with
original maturities of three months or less are considered cash equivalents.
INVENTORIES--Inventories are stated at the lower of cost or market, determined
principally by the last-in, first-out (LIFO) basis.
DEPRECIATION--Property, Plant and Equipment is recorded at cost and
depreciated using the straight-line method over the estimated useful lives of
the assets as follows:
Buildings and improvements--ten to thirty-nine years
Machinery and equipment--three to ten years
OTHER ASSETS--Other assets are amortized using the straight-line method over the
estimated lives of the assets as follows:
Goodwill--twenty or thirty years
Noncompete agreements--five or ten years
Trademarks--ten or twenty years
Other, principally dealer network--five years
PRODUCT WARRANTIES--Estimated warranty costs are provided at the time of sale of
the warranted products.
REVENUE RECOGNITION--Revenues from the sale of recreational vehicles and buses
are recognized when shipped to dealers, distributors, or contract buyers.
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 at the
date of the financial statements and the reported amount of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
INCOME TAXES--Income taxes are computed in accordance with the Statement of
Financial Accounting Standards No. 109.
FOREIGN CURRENCY TRANSLATION--Assets and liabilities of Canadian operations
reported in the consolidated balance sheets have been translated at current
exchange rates. Revenues and expenses reported in the consolidated statements of
income have been translated at the average exchange rate for the year.
Transaction gains and losses are not significant.
CONCENTRATION OF CREDIT RISK--The Company's accounts receivable are primarily
concentrated in the recreational vehicle industry.
INCOME PER COMMON SHARE--Income per common share is computed using the weighted
average number of common shares outstanding during each accounting period:
8,809,660 in 1996, 8,918,654 in 1995 and 8,919,752 in 1994. Exercise of stock
options, which are common equivalent shares, would not cause a significant
dilution in income per share.
LONG-LIVED ASSETS--In March 1995, the Financial Accounting Standards Board
issued Financial Accounting Standard No. 121, "Accounting for the Impairment of
Long-lived Assets and for Long-lived Assets to be disposed of," which
establishes accounting standards for the impairment of long-lived assets,
certain identifiable intangibles and goodwill related to those assets to be held
and used, as well as long-lived assets and certain identifiable intangibles to
be disposed of. The Company will be required to adopt the standard in the first
quarter of fiscal year 1997. The adoption of this statement will not be material
to the Company's consolidated financial position or results of operations.
23
<PAGE> 24
STOCK OPTIONS--The Company measures cost for stock options issued to employees
using the method of accounting prescribed by APB Opinion No. 25, "Accounting for
Stock Issued to Employees." In October, 1995, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 123 (SFAS 123),
"Accounting for Stock-based Compensation," which requires adoption by the
Company in fiscal year 1997. Pursuant to the new standard, companies are
encouraged, but not required, to adopt the fair value method of accounting for
stock options and similar equity instruments. The Company has elected to
continue measuring compensation cost in accordance with APB Opinion No. 25 and
will adopt the additional disclosure requirements of SFAS 123 in fiscal year
1997.
RECLASSIFICATIONS--Certain reclassifications have been made in the 1995 and 1994
consolidated financial statements to conform to the presentation used in 1996.
These reclassifications had no effect on the results of operations or
shareholders' equity as previously reported.
B. ACQUISITIONS
- -------------------------------------------------------------------------------
On March 1, 1995, the Company purchased for cash certain assets and liabilities
of Skamper Corporation, and on March 27, 1995, the Company purchased for cash
certain assets of Lake Capital Corporation, doing business as Komfort Trailer.
The total cash purchase price of both acquisitions was approximately $5,124,000.
The revenues and operating results of each entity is reflected in the
consolidated statements of income of Thor Industries from time of acquisition
forward.
C. INVENTORIES
- -------------------------------------------------------------------------------
Major classifications of inventories are:
<TABLE>
<CAPTION>
As of July 31,
---------------------------------------
1996 1995
---------------------------------------
<S> <C> <C>
Finished products...................................... $ 6,529,164 $ 4,761,063
Work in process........................................ 12,400,652 10,761,474
Raw materials.......................................... 30,272,306 26,772,652
Chassis................................................ 16,909,603 16,178,944
---------------------------------------
Total.................................................. 66,111,725 58,474,133
Less excess of FIFO costs over LIFO costs.............. 2,618,202 2,360,597
---------------------------------------
Total inventories...................................... $63,493,523 $56,113,536
=======================================
</TABLE>
D. LINE OF CREDIT
- -------------------------------------------------------------------------------
The Company has a $25,000,000 unsecured revolving line of credit with two banks.
At July 31, 1996, $6,515,000 was outstanding. The loan agreement contains
certain covenants, and the Company must maintain certain financial ratios. The
line of credit bears interest below the prime rate (6.25% at July 31, 1996) and
expires on November 29, 1996.
E. INCOME TAXES
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Years ended July 31,
------------------------------------------------------------
1996 1995 1994
------------------------------------------------------------
<S> <C> <C> <C>
Components of the provision are:
Current:
Federal.................................. $ 8,489,786 $ 7,549,261 $ 8,843,050
State and local.......................... 2,364,009 1,898,648 1,934,926
Foreign.................................. (36,590) 96,117 362,905
------------------------------------------------------------
Total current............................ 10,817,205 9,544,026 11,140,881
------------------------------------------------------------
Total deferred........................... 355,321 (783,174) (389,658)
------------------------------------------------------------
Provision for income taxes............... $ 11,172,526 $ 8,760,852 $ 10,751,223
============================================================
</TABLE>
24
<PAGE> 25
<TABLE>
<CAPTION>
July 31, July 31,
1996 1995
---------------------------------------
<S> <C> <C>
A SUMMARY OF DEFERRED INCOME TAXES IS:
CURRENT DEFERRED TAX ASSET (LIABILITY):
Inventory basis..................................................................... $ (952,174) $ (766,574)
Employee benefits................................................................... 166,607 204,244
Self-insurance...................................................................... 121,939 (20,943)
Product warranties.................................................................. 2,461,775 2,367,593
Other............................................................................... (255,192) 4,651
---------------------------------------
TOTAL CURRENT DEFERRED TAX ASSET
INCLUDED IN PREPAID EXPENSES AND OTHER.............................................. 1,542,955 1,788,971
---------------------------------------
LONG-TERM DEFERRED TAX ASSET (LIABILITY):
Property basis...................................................................... (1,820,924) (1,992,927)
Foreign tax credit.................................................................. -- 322,724
Deferred compensation............................................................... 234,179 291,667
Other............................................................................... 583,787 484,883
---------------------------------------
TOTAL LONG-TERM DEFERRED TAX LIABILITY
INCLUDED IN OTHER LIABILITIES....................................................... (1,002,958) (893,653)
---------------------------------------
NET DEFERRED TAX ASSET.............................................................. $ 539,997 $ 895,318
=======================================
</TABLE>
The differences between income taxes at the federal statutory rate and the
actual income taxes are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------------------------------------------------------------
<S> <C> <C> <C>
Provision at statutory rates................................... $9,534,884 $7,892,689 $ 9,378,525
State and local income taxes, net of federal tax benefit....... 1,536,606 1,034,121 1,257,702
Amortization of intangibles.................................... 269,869 265,436 265,436
Other.......................................................... (168,833) (431,394) (150,440)
------------------------------------------------------------
Provision for income taxes .................................... $11,172,526 $8,760,852 $10,751,223
============================================================
</TABLE>
Income before income taxes includes foreign income of $176,482 in 1996, $533,547
in 1995 and $1,182,579 in 1994.
F. LEASES
- -------------------------------------------------------------------------------
The Company has operating leases principally for land, buildings and equipment.
Minimum future rental payments required under these operating leases are
$11,277,308, which includes the following amounts due in each of the next five
years ending July 31: $2,361,216 in 1997; $2,024,356 in 1998; $1,726,621 in
1999; $1,547,930 in 2000; $1,479,927 in 2001 and $2,137,258 thereafter. Rent
expense was $2,497,776 in 1996, $2,050,048 in 1995 and $998,327 in 1994.
G. PROFIT SHARING AND PENSION PLANS
- -------------------------------------------------------------------------------
The Company has a profit sharing plan for all full-time employees at one
subsidiary and a defined contribution pension plan for domestic union employees
at another subsidiary. Contributions to the profit sharing plan are at the
discretion of the Board of Directors; contributions to the pension plan are
based on hours worked. Total expense for these plans was $180,171 in 1996,
$176,451 in 1995 and $191,010 in 1994.
25
<PAGE> 26
H. CONTINGENT LIABILITIES
- -------------------------------------------------------------------------------
It is customary practice for companies in the recreational vehicle industry to
enter into repurchase agreements with financing institutions to provide
financing to their dealers. Generally, the agreements provide for the repurchase
of products from the financing institution in the event of a dealer's default.
Although the total contingent liability approximated $129,000,000 at July 31,
1996, the risk of loss under the agreements is spread over numerous dealers and
is further reduced by the resale value of the units which the Company would be
required to repurchase. Losses under these agreements have not been significant
in the periods presented in the accompanying consolidated financial statements,
and management believes any future losses under the agreements will not have a
significant effect on consolidated financial position or results of operations.
The Company obtains certain vehicle chassis from an automobile manufacturer
under a converter pool agreement. The agreement generally provides that the
manufacturer will supply chassis at the Company's various production facilities
under the terms and conditions as set forth in the agreement. The manufacturer
does not transfer the certificate of origin to the Company and, accordingly, the
Company accounts for the chassis as consigned inventory. Typically, chassis are
converted and delivered to customers within 90 days of delivery. If the chassis
is not converted within 90 days of delivery to the Company, the Company
purchases the chassis, and at that time the Company records the inventory. At
July 31, 1996, chassis on hand accounted for as consigned inventory was
approximately $10,987,000.
I. STOCK OPTIONS
- -------------------------------------------------------------------------------
Officers and key employees have been granted stock options under the 1988
Incentive Stock Option Plan. Under the Plan, options to purchase 300,000 common
shares may be granted and expire on various dates from 1998-2002. A three year
summary of the Plan follows:
<TABLE>
<CAPTION>
SHARES 1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Granted........................ -- -- --
Outstanding.................... 100 30,100 30,100
Exercisable ................... 100 30,100 30,100
Exercised...................... -- -- 63,652
Available for grant............ 151,500 121,500 121,500
Exercise price per share....... $8.00 $8.00--$18.33 $8.00--$18.33
</TABLE>
At July 31, 1996, 151,600 common shares have been reserved for the plan.
J. RESEARCH AND DEVELOPMENT
- -------------------------------------------------------------------------------
Research and development expenses were approximately $881,000 in 1996,
$1,127,000 in 1995, and $799,000 in 1994.
K. JOINT VENTURES
- -------------------------------------------------------------------------------
In March 1996, the Company and Cruise America, Inc. formed a joint venture, CAT
Joint Venture LLC, to rent recreation vehicles to the public. Thor invested
$300,000 for its 50% interest and provided $2,000,000 for a subordinated note
due and payable on March 31, 2000 bearing interest at prime plus .25%. The
investment and note receivable are included in other assets in the balance
sheet.
In March 1994, the Company and a financial services company formed a joint
venture, Thor Credit Corporation, to finance the sales of recreational vehicles
to consumer buyers. Thor advanced $1,434,155 for its 50% interest in Thor
Credit, which is included in other assets in the balance sheet. The results of
operations of these joint ventures were not material in 1996 or 1995.
26
<PAGE> 27
L. BUSINESS SEGMENTS
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995 1994
------------------------------------------------------------
<S> <C> <C> <C>
NET SALES: ($000) ($000) ($000)
RECREATIONAL VEHICLES:
United States................................................ $448,708 $ 447,783 $399,080
Canada....................................................... 47,283 21,216 19,442
BUSES:
United States ............................................... 102,337 91,137 67,958
Canada....................................................... 3,750 2,545 4,599
------------------------------------------------------------
Total.......................................................... $602,078 $562,681 $ 491,079
============================================================
OPERATING INCOME (LOSS):
Recreational vehicles:
United States................................................ $20,404 $ 18,095 $ 24,363
Canada....................................................... (168) 180 523
Buses:
United States................................................ 6,601 4,648 2,278
Canada....................................................... -- (51) 313
------------------------------------------------------------
Total.......................................................... $26,837 $ 22,872 $ 27,477
============================================================
IDENTIFIABLE ASSETS:
RECREATIONAL VEHICLES:
United States................................................ $126,347 $ 112,106 $ 108,406
Canada....................................................... 11,596 11,803 9,264
BUSES:
United States................................................ 37,941 24,552 21,850
Canada....................................................... -- -- 2,926
------------------------------------------------------------
Total.......................................................... $175,884 $ 148,461 $ 142,446
============================================================
DEPRECIATION AND AMORTIZATION EXPENSE:
Recreational vehicles.......................................... $4,218 $ 3,960 $ 3,630
Buses.......................................................... 797 797 891
------------------------------------------------------------
Total.......................................................... $5,015 $ 4,757 $ 4,521
CAPITAL EXPENDITURES:
Recreational vehicles.......................................... $4,345 $ 5,034 $ 4,078
Buses.......................................................... 377 170 178
------------------------------------------------------------
Total.......................................................... $4,722 $ 5,204 $ 4,256
============================================================
</TABLE>
27
<PAGE> 28
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED JULY 31, 1996, 1995 AND 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- -------- -------- -------- -------- --------
Additions
Balance at Charged to Balance
Beginning Costs and at End of
Description of Period Expenses Deductions (1) Period
---------------------------------------------------------------
<S> <C> <C> <C> <C>
YEAR ENDED JULY 31, 1996:
Allowance for doubtful accounts............$ 52,190 $ 80,306 $ (80,306) $ 52,190
===============================================================
Accumulated amortization of
goodwill and other intangibles.............$ 11,860,540 $ 2,748,852 -- $14,609,392
===============================================================
YEAR ENDED JULY 31, 1995:
Allowance for doubtful accounts............$ 35,420 $ 84,093 $ (67,323) $ 52,190
===============================================================
Accumulated amortization of
goodwill and other intangibles.............$ 9,124,051 $ 2,736,489 -- $11,860,540
===============================================================
YEAR ENDED JULY 31, 1994:
Allowance for doubtful accounts............$ 32,000 $ 70,600 $ (67,180) $ 35,420
=============================================================
Accumulated amortization of
goodwill and other intangibles.............$ 6,443,635 $ 2,680,416 -- $9,124,051
=============================================================
<FN>
(1) Write-offs, net of recoveries.
</TABLE>
28
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> JUL-31-1996
<CASH> 13,061,981
<SECURITIES> 0
<RECEIVABLES> 49,773,959
<ALLOWANCES> 0
<INVENTORY> 63,493,523
<CURRENT-ASSETS> 130,035,924
<PP&E> 28,372,894
<DEPRECIATION> 11,167,142
<TOTAL-ASSETS> 175,884,460
<CURRENT-LIABILITIES> 55,054,186
<BONDS> 0
<COMMON> 909,925
0
0
<OTHER-SE> 124,063,504
<TOTAL-LIABILITY-AND-EQUITY> 175,884,460
<SALES> 602,077,568
<TOTAL-REVENUES> 602,077,568
<CGS> 533,953,803
<TOTAL-COSTS> 575,240,437
<OTHER-EXPENSES> (95,248)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (310,147)
<INCOME-PRETAX> 27,242,526
<INCOME-TAX> 11,172,526
<INCOME-CONTINUING> 16,070,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,070,000
<EPS-PRIMARY> 1.82
<EPS-DILUTED> 0
</TABLE>
