<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
---------
QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED January 31, 1998 COMMISSION FILE NUMBER 1-9235
---------------- ------
THOR INDUSTRIES, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 93-0768752
------------------------------ -------------------
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
419 West Pike Street, Jackson Center, OH 45334-0629
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (937) 596-6849
- --------------------------------------------------- --------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------ ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at 1/31/98
----- ----------------------
Common stock, par value 8,148,739 shares
$.10 per share
<PAGE> 2
THOR INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------
<TABLE>
<CAPTION>
ASSETS
------
(UNAUDITED)
-----------
JANUARY 31, 1998 JULY 31, 1997
---------------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 18,745,493 $ 13,380,357
Accounts receivable:
Trade 46,698,916 52,714,496
Other 1,387,127 776,952
Inventories 66,943,118 62,380,940
Prepaid expenses 3,783,064 3,647,131
------------- -------------
Total current assets 137,557,718 132,899,876
------------- -------------
Property:
Land 1,234,789 1,237,784
Buildings and improvements 12,085,992 12,115,879
Machinery and equipment 14,083,603 14,860,030
------------- -------------
Total cost 27,404,384 28,213,693
Accumulated depreciation and amortization 12,151,774 12,159,291
------------- -------------
Property, net 15,252,610 16,054,402
------------- -------------
Investment in joint ventures 3,504,894 3,365,442
------------- -------------
Other assets:
Goodwill 14,219,717 14,538,350
Non compete 3,482,692 3,953,586
Trademarks 2,370,827 2,533,497
Other 2,114,080 2,062,562
------------- -------------
Total other assets 22,187,316 23,087,995
------------- -------------
TOTAL ASSETS $ 178,502,538 $ 175,407,715
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 28,293,607 $ 31,814,320
Accrued liabilities:
Compensation and related items 6,337,866 8,828,872
Product warranties 7,613,648 7,452,061
Other 2,920,382 3,017,392
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Total current liabilities 45,165,503 51,112,645
------------- -------------
Other liabilities 1,886,584 1,847,064
Stockholders' equity:
Common stock - authorized 10,000,000 shares; issued 9,104,497 shares @
1/31/98 and 9,099,247 shares @ 7/31/97; par value of $.10 per share 910,450 909,925
Additional paid in capital 25,260,860 25,105,120
Foreign currency translation (962,105) (629,546)
Retained earnings 125,767,992 116,438,755
Restricted Stock (150,498) --
Cost of treasury shares 955,758 shares @ 1/31/98;
955,758 shares @ 7/31/97 (19,376,248) (19,376,248)
------------- -------------
Total stockholders' equity 131,450,451 122,448,006
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 178,502,538 $ 175,407,715
============= =============
</TABLE>
See notes to consolidated financial statements
<PAGE> 3
THOR INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
FOR THE THREE MONTHS AND SIX MONTHS ENDED JANUARY 31, 1998 AND 1997
-------------------------------------------------------------------
<TABLE>
<CAPTION>
(UNAUDITED)
-----------
THREE MONTHS ENDED JANUARY 31 SIX MONTHS ENDED JANUARY 31
----------------------------- ---------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $134,509,914 $123,525,067 $299,968,268 $274,021,888
Cost of products sold 119,205,480 111,517,777 265,130,155 245,324,688
----------- ----------- ----------- -----------
Gross profit 15,304,434 12,007,290 34,838,113 28,697,200
Selling, general, and
administrative expenses 10,354,261 8,185,152 20,433,227 16,702,136
---------- --------- ---------- ----------
Operating income 4,950,173 3,822,138 14,404,886 11,995,064
Interest income 267,710 198,381 503,509 435,019
Interest expense (66,084) (310,200) (110,949) (521,933)
Gain on sale of subsidiary 1,269,000 -- 1,269,000 --
Other income (expense) (283,349) (220,354) 163,624 164,608
--------- --------- ------------- --------------
Income before income taxes 6,137,450 3,489,965 16,230,070 12,072,758
Provision for income taxes 2,330,834 1,470,824 6,412,066 4,938,462
--------- --------- --------- ---------
Net income $3,806,616 $2,019,141 $9,818,004 $7,134,296
========== ========== ========== ==========
Earnings per common share
- -------------------------
Basic $.47 $.24 $1.21 $.84
==== ==== ===== ====
Diluted $.46 $.24 $1.20 $.84
==== ==== ===== ====
Dividends paid per common share $.03 $.03 $.06 $.06
- ------------------------------- ==== ==== ==== ====
</TABLE>
See notes to consolidated financial statements
<PAGE> 4
THOR INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE SIX MONTHS ENDED JANUARY 31, 1998 AND 1997
--------------------------------------------------
<TABLE>
<CAPTION>
(UNAUDITED)
-----------
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 9,818,004 $ 7,134,296
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation 1,132,630 1,171,022
Amortization 952,197 1,082,870
Gain on sale of subsidiary (1,269,000) --
Restricted stock plan expense 4,967 --
Changes in non cash assets and liabilities
- ------------------------------------------
Accounts receivable 4,980,465 1,286,483
Inventories (5,380,985) 3,301,463
Prepaid expenses and other (358,285) (432,534)
Accounts payable (2,790,260) (7,920,440)
Accrued liabilities (2,426,429) (6,988,319)
Other liabilities 39,520 --
------------ ------------
Net cash provided by (used in) operating activities 3,608,541 (1,365,159)
- --------------------------------------------------- ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant & equipment (887,000) (1,020,790)
Disposals of property, plant & equipment 196,317 164,600
Proceeds from sale of subsidiary 3,267,804 --
------------ ------------
Net cash provided by (used) in investing activities 2,577,121 (856,190)
- --------------------------------------------------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends (488,767) (504,909)
Net proceeds from line of credit -- 7,765,000
Purchase of treasury stock -- (13,561,052)
Proceeds from issuance of common stock 800 --
------------ ------------
Net cash used in financing activities (487,967) (6,300,961)
- ------------------------------------- ------------ ------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (332,559) 75,147
------------ ------------
Net increase (decrease) in cash and equivalents 5,365,136 (8,447,163)
Cash and equivalents, beginning of year 13,380,357 13,061,981
------------ ------------
CASH AND EQUIVALENTS, END OF PERIOD $ 18,745,493 $ 4,614,818
============ ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Non-cash transaction - issuance of restricted stock $ 155,465 --
Income taxes paid 3,452,226 $ 4,284,000
Interest paid 110,949 310,200
</TABLE>
See notes to consolidated financial statements
<PAGE> 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
1. The accompanying consolidated financial statements, which are unaudited,
reflect all adjustments consisting of only normal recurring adjustments,
which are, in the opinion of management, necessary to present fairly the
consolidated operating results for such unaudited periods.
2. Major classifications of inventories are:
<TABLE>
<CAPTION>
(Unaudited)
-----------
January 31, 1998 July 31, 1997
---------------- -------------
<S> <C> <C>
Raw materials $41,333,520 $42,872,707
Work in process 15,863,635 14,755,637
Finished goods 13,316,940 7,921,573
---------- ---------
Total 70,514,095 65,549,917
Less excess of FIFO costs over LIFO costs 3,570,977 3,168,977
--------- ---------
Total inventories $66,943,118 $62,380,940
=========== ===========
</TABLE>
3. On September 29, 1997, the Board of Directors approved the Thor Industries,
Inc. Restricted Stock and Select Executive Incentive Plans. Under the terms
of the Restricted Stock Plan, a total of up to 100,000 restricted shares of
common stock may be granted to selected executives of Thor. Restrictions
expire 50% after five years following the date of issue, and the balance
after six years. As of January 31, 1998, the Company issued 5,150 shares of
restricted stock under the Plan.
4. Earnings Per Share - As of January 31, 1998, the Company adopted Financial
Accounting Standards Board Statement No. 128, "Earnings Per Share" (FAS
128). This standard requires the presentation of basic and diluted earnings
per share on the face of the income statement. Earnings per share as
reported in prior periods has been restated in accordance with FAS 128, by
dividing net income by the following:
<TABLE>
<CAPTION>
Three months Three months Six months Six months
ended ended ended ended
January 31, 1998 January 31, 1997 January 31, 1998 January 31, 1997
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Weighted average shares
outstanding for basic
earnings per share 8,148,330 8,258,377 8,146,016 8,464,984
Stock options 43,440 - 0 - 36,763 - 0 -
Total - For diluted shares 8,191,770 8,258,377 8,182,779 8,464,984
</TABLE>
5. On December 31, 1997, the Company sold for cash certain assets and
liabilities of Henschen Corp., a division of Airstream, Inc. The
transaction resulted in a one time pre-tax gain of approximately
$1,269,000.
On February 9, 1998, the Company purchased certain assets and liabilities
of Champion Motor Coach, Inc. The total cash price of the acquisition was
approximately $10,163,356 which was paid from internal funds.
<PAGE> 6
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
- ------------------------------------------------------------------------
OPERATIONS
- ----------
Quarter Ended January 31, 1998 vs. Quarter Ended January 31, 1997
- -----------------------------------------------------------------
Net sales for the second quarter totaled $134,509,914 up 8.9% from $123,525,067
in the same period last year. Income before income taxes was $6,137,450 compared
to $3,489,965 in the same period last year. This increase was primarily due to
the gain on sale of a subsidiary of $1,269,000, increased sales volume, improved
labor efficiency and lower warranty costs. In general, the Company did not
adjust its sales prices during the second quarter of Fiscal 1998. Recreation
vehicle revenues of $102,279,952 were 15.1% higher than last year and were 76.0%
of total company revenues compared to 71.9% last year. Bus revenues of
$32,229,962 were 7.1% lower than last year and were 24.0% of total company
revenues compared to 28.1% last year. Manufacturing gross profit was 11.4% of
sales compared to 9.7% last year.
Operating income totaled $4,950,173, up 29.5% from $3,822,138 in the same period
last year. Selling, general and administrative expenses increased to
$10,354,261, 7.7% of sales, from $8,185,152, 6.6% of sales, due primarily to
increased income related compensation, and increased selling expenses in the
highly competitive RV markets. Interest income increased by $69,329 and interest
expense decreased by $244,116. This decrease in interest expense was due
primarily to the payback of additional borrowing for the purchase of 503,319
shares of treasury stock in Fiscal 1997. The combined income tax rate was 38.0%
compared to 42.1% last year. This decrease in tax was due primarily to use of a
capital loss carryforward applied to the gain on the sale of a subsidiary.
Six Months Ended January 31, 1998 vs. Six Months Ended January 31, 1997
- -----------------------------------------------------------------------
Net sales for the six months totaled $299,968,268, up 9.5% from $274,021,888 in
the same period last year. Income before income taxes was $16,230,070 compared
to $12,072,758 in the same period last year. This increase was primarily due to
the gain on sale of a subsidiary of $1,269,000, increased sales volume, improved
labor efficiency and lower warranty costs. Recreation vehicle revenues of
$227,940,435 were 10.4% higher than last year and were 76.0% of total company
revenues compared to 75.3% last year. Bus revenues of $72,027,833 were 6.5%
higher than last year and were 24.0% of total company revenues compared to 24.7%
last year. Manufacturing gross profit was 11.6% of sales compared to 10.5% last
year.
Operating income totaled $14,404,886, up 20.1% from $11,995,064 in the same
period last year. Selling, general and administrative expenses increased to
$20,433,227, 6.8% of sales, from $16,702,136, 6.1% of sales due primarily to an
adjustment to deferred compensation in the first quarter of Fiscal 1997 of
$669,000, an increase in income related compensation and increased selling
expense in the highly competitive RV market in 1998. Interest income increased
by $68,490 and interest expense decreased by $410,984. This decrease in interest
expense was due primarily to the payback of additional borrowings for the
purchase of 543,319 shares of treasury stock in Fiscal 1997. The combined income
tax rate was 39.5% compared to 40.9% last year. This decrease in tax was due
primarily to use of a capital loss carryforward applied to the gain on the sale
of a subsidiary.
Financial Condition and Liquidity
- ---------------------------------
As of January 31, 1998, Thor had $18,745,493 in cash and cash equivalents,
compared to $13,380,357 on July 31, 1997. Working capital at January 31, 1998
was $92,392,215 compared to $81,787,231 at July 31, 1997. Inventory valued at
current cost at January 31, 1998 exceeded the LIFO inventory by $3,570,977.
On January 31, 1998, the Company had a $30,000,000 revolving line of credit with
Harris Trust and Savings Bank. There were no borrowings at January 31, 1998. 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
30, 1998. The Company had no long term debt as of January 31, 1998. Amortization
of intangibles decreased from $1,082,870 through January 31, 1997 to $952,197
through January 31, 1998 due to certain intangibles being fully amortized.
<PAGE> 7
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
- ------------------------------------------------------------------------
OPERATIONS
- ----------
(continued)
On September 29, 1997, the Board of Directors approved the Thor Industries, Inc.
Restricted Stock and Select Executive Incentive Plans. Under the terms of the
Restricted Stock Plan a total of up to 100,000 restricted shares of stock may be
granted to selected executives within a 10 year period.
On December 31, 1997, the Company sold for cash certain assets and liabilities
of Henschen Corp., a division of Airstream, Inc. The transaction resulted in a
one time pre-tax gain of approximately $1,269,000.
On February 9, 1998, the Company purchased certain assets and liabilities of
Champion Motor Coach, Inc. The total cash price of the acquisition was
approximately $10,163,356 which was paid from internal funds.
The Company's Thor West facility is operating at a loss. Management is currently
taking actions to reduce costs and improve sales volume, which management
believes will be successful. However, no assurance can be made that Thor West
will attain profitable operations.
The Company believes internally generated funds and the revolving credit
agreement already in place will be sufficient to meet current operating needs
and anticipated capital requirements.
This report includes "forward looking statements" that involve uncertainties and
risks. There can be no assurance that actual results will not differ from the
Company's expectations. Factors which could cause materially different results
include, among others, the success of new product introductions, the pace of
acquisitions and cost structure improvements, competitive and general economic
conditions, and the other risks set forth in the Company's filings with the
Securities and Exchange Commission.
PART II
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Annual Meeting of Shareholders on
Matters Voted on by Shareholders:
---------------------------------
1.) Election of Director: Alan Siegel
Results of Voting by Shareholders:
----------------------------------
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C> <C>
Item 1 7,158,379 -0- 76,184
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
a.) Exhibit
N/A
b) Reports on Form 8-K
On February 24, 1998, a Form 8-K was filed with the
Securities and Exchange Commission pursuant to the
acquisition of certain assets and liabilities of Champion
Motor Coach, Inc.
<PAGE> 8
SIGNATURES
----------
Pursuant to the requirements 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.
(Registrant)
DATE March 12, 1998 (Signed) /s/ Wade F. B. Thompson
------------------- -------------------------------------------
Wade F. B. Thompson, Chairman of the Board,
President and Chief Executive Officer
DATE March 12, 1998 (Signed) /s/ Walter L. Bennett
------------------- -------------------------------------------
Walter L. Bennett, Senior Vice President,
Secretary (Chief Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000730263
<NAME> Thor Industries, Inc.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> JAN-31-1998
<CASH> 18,745,493
<SECURITIES> 0
<RECEIVABLES> 46,698,916
<ALLOWANCES> 0
<INVENTORY> 66,943,118
<CURRENT-ASSETS> 137,557,718
<PP&E> 27,404,384
<DEPRECIATION> 12,151,774
<TOTAL-ASSETS> 178,502,538
<CURRENT-LIABILITIES> 45,165,503
<BONDS> 0
0
0
<COMMON> 910,450
<OTHER-SE> 130,540,001
<TOTAL-LIABILITY-AND-EQUITY> 178,502,538
<SALES> 229,968,268
<TOTAL-REVENUES> 299,968,268
<CGS> 265,130,155
<TOTAL-COSTS> 285,563,382
<OTHER-EXPENSES> (1,432,624)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 110,949
<INCOME-PRETAX> 16,230,070
<INCOME-TAX> 6,412,066
<INCOME-CONTINUING> 9,818,004
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,818,004
<EPS-PRIMARY> 1.21
<EPS-DILUTED> 1.20
</TABLE>
