<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 April 30, 1999 COMMISSION FILE NUMBER 1-9235
-------------- ------
THOR INDUSTRIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
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)
</TABLE>
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 4/30/99
----- ----------------------
Common stock, par value 12,139,810 shares
$.10 per share
<PAGE> 2
THOR INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------
ASSETS
------
<TABLE>
<CAPTION>
(UNAUDITED)
-----------
APRIL 30, 1999 JULY 31, 1998
-------------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $42,074,011 $43,531,805
Accounts receivable:
Trade 64,607,626 56,275,459
Other 3,410,292 1,850,844
Inventories 75,386,114 66,717,687
Prepaid expenses 5,144,026 5,328,903
--------- ---------
Total current assets 190,622,069 173,704,698
----------- -----------
Property:
Land 1,403,241 1,400,995
Buildings and improvements 17,650,797 14,871,672
Machinery and equipment 15,148,504 14,083,765
---------- ----------
Total cost 34,202,542 30,356,432
Accumulated depreciation and amortization 13,389,466 12,912,386
---------- ----------
Property, net 20,813,076 17,444,046
---------- ----------
Investment in joint ventures 3,350,443 3,369,968
--------- ---------
Other assets:
Goodwill 11,378,895 11,761,553
Non compete 2,425,456 3,011,798
Trademarks 2,064,154 2,208,158
Other 2,861,165 2,480,722
--------- ---------
Total other assets 18,729,670 19,462,231
---------- ----------
TOTAL ASSETS $233,515,258 $213,980,943
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $48,052,651 $49,382,369
Accrued liabilities:
Taxes 1,695,568 --
Compensation and related items 11,990,731 11,181,046
Product warranties 11,408,298 10,063,753
Other 3,819,735 3,938,450
--------- ---------
Total current liabilities 76,966,983 74,565,618
---------- ----------
Other liabilities 1,334,155 1,200,955
Stockholders' equity:
Common stock - authorized 20,000,000 shares; issued 13,698,147 shares @
4/30/99 and 13,692,697
shares @ 7/31/98; par value of $.10 per share 1,369,815 1,369,270
Additional paid in capital 25,442,470 25,316,643
Foreign currency translation (2,177,753) (1,184,939)
Retained earnings 152,891,154 132,227,188
Restricted Stock (228,105) (137,544)
Cost of treasury shares 1,558,337 shares @ 4/30/99;
1,433,637 shares @ 7/31/98 (22,083,461) (19,376,248)
------------ ------------
Total stockholders' equity 155,214,120 138,214,370
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $233,515,258 $213,980,943
============ ============
</TABLE>
See notes to consolidated financial statements
<PAGE> 3
THOR INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
FOR THE THREE MONTHS AND NINE MONTHS ENDED APRIL 30, 1999 AND 1998
------------------------------------------------------------------
<TABLE>
<CAPTION>
(UNAUDITED)
-----------
THREE MONTHS ENDED APRIL 30 NINE MONTHS ENDED APRIL 30
--------------------------- --------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $223,707,917 $206,902,078 $578,417,861 $506,870,346
Cost of products sold 193,890,089 183,474,664 504,592,481 449,965,422
----------- ----------- ----------- -----------
Gross profit 29,817,828 23,427,414 73,825,380 56,904,924
Selling, general, and
administrative expenses 14,335,033 12,867,697 37,713,316 33,300,925
---------- ---------- ---------- ----------
Operating income 15,482,795 10,559,717 36,112,064 23,603,999
Interest income 367,910 123,441 1,410,526 626,950
Interest expense (16,751) (103,073) (71,498) (214,022)
Gain on sale of subsidiary -- -- -- 1,269,000
Other income (expense) (559,063) (148,754) (1,015,767) 14,871
--------- --------- ----------- ------
Income before income taxes 15,274,891 10,431,331 36,435,325 25,300,798
Provision for income taxes 6,325,041 4,296,124 15,040,988 10,155,784
--------- --------- ---------- ----------
Net income $8,949,850 $6,135,207 $21,394,337 $15,145,014
========== ========== =========== ===========
Earnings per common share
- -------------------------
Basic $.73 $.50 $1.75 $1.24
==== ==== ===== =====
Diluted $.73 $.50 $1.75 $1.23
==== ==== ===== =====
Dividends paid per common share $.02 $.02 $.06 $.06
- ------------------------------- ==== ==== ==== ====
</TABLE>
See notes to consolidated financial statements
<PAGE> 4
THOR INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE NINE MONTHS ENDED APRIL 30, 1999 AND 1998
-------------------------------------------------
<TABLE>
<CAPTION>
(UNAUDITED)
-----------
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $21,394,337 $15,145,014
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation 1,654,482 1,864,040
Amortization 1,113,004 1,439,739
Gain on sale of subsidiary -- (1,269,000)
Restricted stock plan expense 35,811 --
Changes in non cash assets and liabilities
- ------------------------------------------
Accounts receivable (9,891,615) (3,779,112)
Inventories (13,247,623) (7,309,679)
Prepaid expenses and other 432,325 (650,497)
Accounts payable 54,581 (2,828,469)
Accrued liabilities 6,271,503 4,177,708
Other liabilities 133,200 19,650
------------- ------------
Net cash provided by operating activities 7,950,005 6,809,394
- ----------------------------------------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant & equipment (5,277,924) (1,318,696)
Disposals of property, plant & equipment 38,569 333,262
Proceeds from sale of subsidiary 261,954 3,267,804
Acquisition of Champion Bus, Inc. -- (9,670,735)
------------- -----------
Net cash used in investing activities (4,977,401) (7,388,365)
- ------------------------------------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends (730,371) (734,502)
Purchase of treasury stock (2,707,213) --
Proceeds from issuance of common stock -- 800
----------- -----------
Net cash used in financing activities (3,437,584) (733,702)
- ------------------------------------- ----------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (992,814) (219,511)
--------------- ---------
Net increase (decrease) in cash and equivalents (1,457,794) (1,532,184)
Cash and equivalents, beginning of year 43,531,805 12,752,729
--------------- ---------------
CASH AND EQUIVALENTS, END OF PERIOD $42,074,011 $11,220,545
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Non-cash transaction - issuance of restricted stock $126,372 $155,465
Income taxes paid 14,206,835 6,744,226
Interest paid 71,498 214,022
Note from Mountain High Coachworks, Inc. 750,000 --
</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)
-----------
April 30, 1999 July 31, 1998
-------------- -------------
<S> <C> <C>
Raw materials $51,216,023 $44,988,889
Work in process 20,582,495 19,858,127
Finished goods 7,062,292 4,724,367
--------- ---------
Total 78,860,810 69,571,383
Less excess of FIFO costs over LIFO costs 3,474,696 2,853,696
--------- ---------
Total inventories $75,386,114 $66,717,687
=========== ===========
</TABLE>
3. Earnings Per Share
------------------
<TABLE>
<CAPTION>
Three months Three months Nine months Nine months
ended ended ended ended
April 30, 1999 April 30, 1998 April 30, 1999 April 30, 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Weighted average shares
outstanding for basic
earnings per share 12,166,608 12,223,108 12,191,195 12,220,356
Stock options 69,606 84,647 64,734 66,593
------------- ------------- ------------- -------------
Total - For diluted shares 12,236,214 12,307,755 12,255,929 12,286,949
========== ========== ========== ==========
</TABLE>
4. 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.
5. Comprehensive Income - In June 1997, the FASB issued SFAS No. 130,
"Reporting Comprehensive Income," which will require disclosure in the
financial statements of all the changes in equity during a period from
transactions and other events and circumstances from non-owner sources.
Items included in comprehensive income will include separate
classification of items based upon their nature. The Statement requires
that comparative information for prior years to be restated. SFAS No. 130
is effective for financial statements for fiscal years beginning after
December 15, 1997. The effect on the Company's financial statements has
not yet been determined.
6. Segments - In June 1997, the FASB issued SFAS No. 131, "Disclosures About
Segments of an Enterprise and Related Information," which will require new
segment information in public companies' annual financial statements.
Additionally, selected information will be required in interim financial
statements. The Statement requires that comparative information for prior
years be restated. SFAS No. 131 is effective for financial statements for
periods beginning after December 15, 1997. The effect on the Company's
financial statements has not yet been determined.
7. Effective September 30, 1998, the Company sold certain assets and
liabilities of the Company's Thor West operations for $1,011,954 to the
management of Thor West. Thor West's net sales and operating loss included
in the nine months ended April 30, 1999 consolidated statements of income
of Thor Industries, Inc. are $4,050,351 and $(848,207), respectively. Thor
West's net sales and operating loss included in the nine months ended
April 30, 1998 consolidated statement of income for Thor Industries, Inc.
are $21,911,033 and $(2,002,658). As part of the transaction, the Company
agreed to guarantee $750,000 of debt of the acquirer and assumed a
$750,000 unsecured subordinated note. The note has a three year term and
bears interest at 10% per annum. A $500,000 reserve is currently set up on
the subordinated note.
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
CONTINUED
---------
8. Derivative Instruments and Hedging Activities - SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities," was issued in June
1998. The statement requires derivatives to be recorded on the balance
sheet as assets or liabilities, measured at fair value. Gains or losses
resulting from changes in fair value of the derivatives are recorded
depending upon whether the instruments meet the criterion for hedge
accounting. This statement is effective for fiscal years beginning after
June 15, 1999.
PART II
Item 6. Exhibits and Reports on Form 8-K
a.) Exhibit
N/A
b) Reports on Form 8-K
On January 11, 1999, a Form 8-K was filed with the
Securities and Exchange Commission pursuant to litigation
filed by Overland Custom Coach.
<PAGE> 7
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
- ------------------------------------------------------------------------
OPERATIONS
----------
Quarter Ended April 30, 1999 vs. Quarter Ended April 30, 1998
- -------------------------------------------------------------
Net sales for the third quarter totaled $223,707,917 up 8.1% from $206,902,078
in the same period last year. Income before income taxes was $15,274,891, up
46.4% from $10,431,331 in the same period last year. Of this $4,843,560 increase
in income before taxes, $1,221,743 represents increase in income of Champion
Bus, Inc. acquired February 9, 1998, $297,673 represents reduced losses of Thor
West in 1999 of $538,339 versus $836,012 in 1998, and $509,575 represents
reduced losses of ElDorado National Michigan in 1999 of $46,474 versus $556,049
in 1998. Recreation vehicle revenues of $167,792,384 were 2.6% higher than last
year and were 75% of total company revenues compared to 79% last year.
Recreation Vehicle revenues were up primarily due to increased unit sales. Bus
revenues of $55,915,533 were 29.1% higher than last year and were 25% of total
company revenues compared to 21% last year. Bus revenues include sales of
$14,744,321 of Champion Bus in 1999 versus $11,847,032 in 1998 and $331,981
sales in 1999 versus $2,080,170 in 1998 of ElDorado National Michigan, which was
shut down effective July 31, 1998. Manufacturing gross profit increased to 13.3%
compared to 11.3% last year due primarily to higher volumes, the ElDorado
National Michigan loss last year and the sale of Thor West.
1999 operating income totaled $15,482,795, up 46.6% from $10,559,717 in the same
period last year. Of this $4,923,078 increase in operating income, $1,126,000
represents increase in income from Champion Bus, Inc., no operating loss at Thor
West in 1999 compared to a $737,479 operating loss in 1998, and $360,649
represents reduced losses of ElDorado National Michigan in 1999 of $39,699
versus $400,348 in 1998. The balance of increased operating income is the result
of increased revenues. Selling, general and administrative expense and
amortization of intangibles increased to $14,335,033, 6.4% of sales, from
$12,867,697, 6.2% of sales, primarily due to increased income related
compensation and selling expense related to increased volume. Interest income
increased by $244,469 primarily due to investment of excess cash. The combined
income tax rate was 41.4% in the current year compared to 41.2% last year.
Nine Months Ended April 30, 1999 vs. Nine Months Ended April 30, 1998
- ---------------------------------------------------------------------
Net sales for the nine months totaled $578,417,861, up 14.1% from $506,870,346
in the same period last year. Income before income taxes was $36,435,325, up 44%
from $25,300,798 in the same period last year. Of the $11,134,527 increase in
income before taxes, $3,467,125 represents increase in income of Champion Bus,
Inc. acquired February 9, 1998, $422,478 represents reduced losses of Thor West
in 1999 of $1,857,773 versus $2,280,251 in 1998 and $1,369,994 represents
reduced losses of ElDorado National Michigan in 1999 of $181,304 versus
$1,551,298 in 1998. Included in 1998 nine months income before income taxes is a
gain on the sale of Henschen Industrial of approximately $1,269,000. Recreation
vehicle revenues of $418,482,638 were 6.9% higher than last year and were 72% of
total company revenue compared to 77% last year. Recreation vehicle revenues
were up primarily due to increased unit sales. Bus revenues of $159,935,223 were
38.7% higher than last year and were 28% of total company revenues compared to
23% last year. Bus revenues included sales of $42,463,027 of Champion Bus versus
$11,847,032 in 1998 and $1,001,863 sales in 1999 versus $7,375,805 in 1998 of
ElDorado National Michigan, which was shut down effective 7/31/98. Manufacturing
gross profits increased to 12.8% compared to 11.2% last year due primarily to
higher volumes, the ElDorado National Michigan loss last year and the sale of
Thor West.
1999 operating income totaled $36,112,064, up 53% from $23,603,999 in the same
period last year. Of the $12,508,065 increase in operating income, $3,386,000
represents income from Champion Bus, Inc., $1,344,452 represents reduced losses
of Thor West in 1999 of $658,206 versus $2,002,658 in 1998, and $1,101,138
represents reduced losses of ElDorado National Michigan in 1999 of $172,196
versus $1,273,334 in 1998. The balance of increased operating income is the
result of increased revenues. Selling, general and administrative expense and
amortization of intangibles increased to $37,713,316, 6.5% of sales, from
$33,300,925, 6.6% of sales, primarily due to increased income related
compensation and selling expenses related to increased volumes. Interest income
increased by $783,576 primarily due to investment of excess cash. The combined
income tax rate was 41.3% in the current year compared to 40.1% last year. The
decrease in tax last year was due primarily to use of a capital loss
carryforward applied to the sale of Henschen.
<PAGE> 8
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
- ------------------------------------------------------------------------
OPERATIONS CONTINUED
--------------------
Financial Condition and Liquidity
- ---------------------------------
As of April 30, 1999, the Company had $42,074,011 in cash and cash equivalents,
compared to $43,531,805 on July 31, 1998. Working capital at April 30, 1999 was
$113,655,086 compared to $99,139,080 at July 31, 1998. Inventory valued at
current cost at April 30, 1999 exceeded the LIFO inventory by $3,474,696.
On April 30, 1999, the Company had a $30,000,000 revolving line of credit with
Harris Trust and Savings Bank. There were no borrowings at April 30, 1999. 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, 1999. The Company had no long term debt as of April 30, 1999. Amortization
of intangibles decreased from $1,428,295 for the nine month period ended April
30, 1998 to $1,113,004 for the same period ended April 30, 1999 due to certain
intangibles being fully amortized.
During the nine months of fiscal 1999, Thor purchased 124,700 shares of its
common stock, increasing treasury stock by $2,707,213.
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. Capital expenditures of $5,277,924 were
primarily for expansion of the Company's manufacturing facilities. Additional
funds to complete these expansions will be approximately $4,330,000. The Company
does not anticipate additional significant capital expenditures beyond the
amounts noted above.
Year 2000 Disclosure
- --------------------
Year 2000 Project "Year 2000" issues stem from the fact that computer
programmers and other designers of equipment that use microprocessors have long
abbreviated dates by eliminating the first two digits of the year. As the Year
2000 approaches, many systems may be unable to distinguish years beginning with
20 from years beginning with 19, and so may not accurately process certain
date-based information, which could cause a variety of operational problems for
businesses. The Company established action plans to make all of our critical
systems Year 2000 Compliant by July 31, 1999. Approximately 76% of our systems,
on a corporate-wide basis, are currently Y2K compliant. While no guarantees can
be given, management believes Thor will not have any material problems resulting
from its own Year 2000 Compliance. The Company has spent approximately $212,000
on compliance issues and estimates expenditures of $107,000 through completion
in July 1999.
The Company has developed a standard Year 2000 survey questionnaire being used
by all Company locations. The survey forms were mailed to all national account
vendors, and to critical vendors on a local level. National account survey forms
are returned to the Director, Internal Audit who reviews them for compliance
issues. Any needed vendor follow-up is communicated to the Senior Vice President
of Purchasing for resolution.
Questioning on the vendor survey form is aimed at determining whether vendors'
products and administrative systems are Y2K compliant. If systems are
non-compliant, the form asks what changes are needed and expected implementation
dates. The Company has surveyed office equipment, auxiliary systems to the
physical buildings, and our equipment for Y2K compliant microprocessors and feel
the Company has minimal exposures in these areas. Most production, ordering, and
scheduling systems, not being replaced with current Y2K software, are already
complemented by manual systems that can be relied upon in the event Y2K glitches
are encountered. The Company's plans include converting order entry and
accounting applications to microcomputer spreadsheets in the event that such
systems are found not to be Y2K compliant.
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.
<PAGE> 9
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.
<TABLE>
<CAPTION>
THOR INDUSTRIES, INC.
(Registrant)
<S> <C>
DATE June 11, 1999 (Signed) /s/ Wade F. B. Thompson
------------------------------ ----------------------------------
Wade F. B. Thompson, Chairman of the Board,
President and Chief Executive Officer
DATE June 11, 1999 (Signed) /s/ Walter L. Bennett
------------------------------ -----------------------------------
Walter L. Bennett, Senior Vice President,
Secretary (Chief Accounting Officer)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000730263
<NAME> Thor Industries
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-START> AUG-01-1998
<PERIOD-END> APR-30-1999
<CASH> 42,074,011
<SECURITIES> 68,017,918
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 75,386,114
<CURRENT-ASSETS> 190,622,069
<PP&E> 34,202,542
<DEPRECIATION> 13,389,466
<TOTAL-ASSETS> 233,515,258
<CURRENT-LIABILITIES> 76,966,983
<BONDS> 0
0
0
<COMMON> 1,369,815
<OTHER-SE> 153,844,305
<TOTAL-LIABILITY-AND-EQUITY> 223,515,258
<SALES> 578,417,861
<TOTAL-REVENUES> 578,417,861
<CGS> 504,592,481
<TOTAL-COSTS> 542,305,797
<OTHER-EXPENSES> (394,759)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 71,498
<INCOME-PRETAX> 36,435,325
<INCOME-TAX> 15,040,988
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,394,337
<EPS-BASIC> 1.75
<EPS-DILUTED> 1.75
</TABLE>
