<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, 1999 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 1/31/99
----- ----------------------
Common stock, par value 12,184,810 shares
$.10 per share
<PAGE> 2
THOR INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
(UNAUDITED)
-----------
JANUARY 31, 1999 JULY 31, 1998
---------------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 28,492,121 $ 43,531,805
Accounts receivable:
Trade 55,999,403 56,275,459
Other 2,296,002 1,850,844
Inventories 75,244,764 66,717,687
Prepaid expenses 5,484,991 5,328,903
------------- -------------
Total current assets 167,517,281 173,704,698
------------- -------------
Property:
Land 1,400,995 1,400,995
Buildings and improvements 16,869,838 14,871,672
Machinery and equipment 14,358,236 14,083,765
------------- -------------
Total cost 32,629,069 30,356,432
Accumulated depreciation and amortization 13,026,693 12,912,386
------------- -------------
Property, net 19,602,376 17,444,046
------------- -------------
Investment in joint ventures 3,441,317 3,369,968
------------- -------------
Other assets:
Goodwill 11,506,448 11,761,553
Non compete 2,615,904 3,011,798
Trademarks 2,107,988 2,208,158
Other 2,964,116 2,480,722
------------- -------------
Total other assets 19,194,456 19,462,231
------------- -------------
TOTAL ASSETS $ 209,755,430 $ 213,980,943
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 37,670,845 $ 49,382,369
Accrued liabilities:
Taxes 62,326 --
Compensation and related items 8,109,254 11,181,046
Product warranties 10,847,909 10,063,753
Other 3,257,833 3,938,450
------------- -------------
Total current liabilities 59,948,167 74,565,618
------------- -------------
Other liabilities 1,289,755 1,200,955
Stockholders' equity:
Common stock - authorized 20,000,000 shares;
issued 13,698,147 shares @ 1/31/99 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 (1,179,914) (1,184,939)
Retained earnings 144,185,000 132,227,188
Restricted Stock (240,042) (137,544)
Cost of treasury shares 1,513,337 shares @ 1/31/99;
1,433,637 shares @ 7/31/98 (21,059,821) (19,376,248)
------------- -------------
Total stockholders' equity 148,517,508 138,214,370
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 209,755,430 $ 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 SIX MONTHS ENDED JANUARY 31, 1999 AND 1998
-------------------------------------------------------------------
<TABLE>
<CAPTION>
(UNAUDITED)
-----------
THREE MONTHS ENDED JANUARY 31 SIX MONTHS ENDED JANUARY 31
----------------------------- ---------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 165,533,004 $ 134,509,914 $ 354,709,944 $ 299,968,268
Cost of products sold 144,547,890 119,808,675 310,702,392 266,490,758
------------- ------------- ------------- -------------
Gross profit 20,985,114 14,701,239 44,007,552 33,477,510
Selling, general, and
administrative expenses 11,649,927 10,354,261 23,378,283 20,433,227
------------- ------------- ------------- -------------
Operating income 9,335,187 4,346,978 20,629,269 13,044,283
Interest income 461,714 267,710 1,042,616 503,509
Interest expense (25,416) (66,084) (54,747) (110,949)
Gain on sale of subsidiary -- 1,269,000 -- 1,269,000
Other income (expense) (572,168) (283,349) (456,704) 163,624
------------- ------------- ------------- -------------
Income before income taxes 9,199,317 5,534,255 21,160,434 14,869,467
Provision for income taxes 3,747,031 2,092,573 8,715,947 5,874,628
------------- ------------- ------------- -------------
Net income $ 5,452,286 $ 3,441,682 $ 12,444,487 $ 8,994,839
============= ============= ============= =============
Earnings per common share
- -------------------------
Basic $ .45 $ .28 $ 1.02 $ .74
===== ===== ====== ======
Diluted $ .44 $ .28 $ 1.01 $ .73
===== ===== ====== ======
Dividends paid per common share $ .02 $ .02 $ .04 $ .04
- ------------------------------- ===== ===== ====== ======
</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, 1999 AND 1998
<TABLE>
<CAPTION>
(UNAUDITED)
-----------
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 12,444,487 $ 8,994,839
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation 1,110,994 1,132,630
Amortization 751,169 952,197
Gain on sale of subsidiary -- (1,269,000)
Restricted stock plan expense 23,874 4,967
Changes in non cash assets and liabilities
- ------------------------------------------
Accounts receivable (169,102) 5,482,403
Inventories (13,106,273) (4,818,556)
Prepaid expenses and other (81,691) (348,669)
Accounts payable (10,327,225) (3,895,990)
Accrued liabilities (365,507) (2,963,867)
Other liabilities 88,800 39,520
------------ ------------
Net cash provided by (used in) operating activities (9,630,474) 3,310,474
- --------------------------------------------------- ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant & equipment (3,543,910) (862,000)
Disposals of property, plant & equipment 37,969 196,317
Proceeds from sale of subsidiary 261,954 3,267,804
------------ ------------
Net cash provided by (used) in investing activities (3,243,987) 2,602,121
- --------------------------------------------------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends (486,675) (488,767)
Purchase of treasury stock (1,683,573) --
Proceeds from issuance of common stock -- 800
------------ ------------
Net cash used in financing activities (2,170,248) (487,967)
- ------------------------------------- ------------ ------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 5,025 (332,559)
------------ ------------
Net increase (decrease) in cash and equivalents (15,039,684) 5,092,069
Cash and equivalents, beginning of year 43,531,805 12,752,729
------------ ------------
CASH AND EQUIVALENTS, END OF PERIOD $ 28,492,121 $ 17,844,798
============ ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Non-cash transaction - issuance of restricted stock $ 126,372 $ 155,465
Income taxes paid 8,808,459 3,452,226
Interest paid 54,747 110,949
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)
-----------
January 31, 1999 July 31, 1998
---------------- -------------
<S> <C> <C>
Raw materials $50,732,450 $44,988,889
Work in process 18,192,876 19,858,127
Finished goods 9,591,534 4,724,367
----------- -----------
Total 78,516,860 69,571,383
Less excess of FIFO costs over LIFO costs 3,272,096 2,853,696
----------- -----------
Total inventories $75,244,764 $66,717,687
=========== ===========
</TABLE>
3. Earnings Per Share
------------------
<TABLE>
<CAPTION>
Three months Three months Six months Six months
ended ended ended ended
January 31, 1999 January 31, 1998 January 31, 1999 January 31, 1998
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Weighted average shares
outstanding for basic
earnings per share 12,185,359 12,222,495 12,203,088 12,219,024
Stock options 67,467 65,151 62,102 55,150
---------- ---------- ---------- ----------
Total - For diluted shares 12,252,826 12,287,646 12,265,190 12,274,174
========== ========== ========== ==========
</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 six months ended January 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 six months ended
January 31, 1998 consolidated statement of income for Thor Industries,
Inc. are $14,058,398 and $(1,265,179). 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 $250,000 reserve was set up in January
1999 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 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Annual Meeting of Shareholders on 12/7/98
Matters Voted on by Shareholders:
---------------------------------
1.) Election of Directors: Peter B. Orthwein and William C. Tomson
Results of Voting by Shareholders:
----------------------------------
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C> <C>
Peter B. Orthwein 11,460,042 -0- 51,487
William C. Tomson 11,445,042 -0- 66,487
</TABLE>
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 January 31, 1999 vs. Quarter Ended January 31, 1998
- -----------------------------------------------------------------
Net sales for the second quarter totaled $165,533,004 up 23.1% from $134,509,914
in the same period last year. Income before income taxes was $9,199,317. up
66.2% from $5,534,255 in the same period last year. Of this $3,665,062 increase
in income before taxes, $1,291,277 represents income of Champion Bus, Inc.
acquired February 9, 1998, $751,112 represents reduced losses of Thor West in
1999 of $402,688 versus $1,153,800 in 1998, and $419,546 represents reduced
losses of ElDorado National Michigan in 1999 of $12,074 versus $431,620 in 1998.
Included in 1998 second quarter income before income taxes is a gain on the sale
of Henschen Industrial of approximately $1,269,000. Recreation vehicle revenues
of $112,370,471 were 9.9% higher than last year and were 68% of total company
revenues compared to 76% last year. Recreation Vehicle revenues were up
primarily due to increased unit sales. Bus revenues of $53,162,533 were 64.9%
higher than last year and were 32% of total company revenues compared to 24%
last year. Bus revenues include sales of $12,600,796 of Champion Bus and
$470,292 sales in 1999 versus $2,429,414 in 1998 of ElDorado National Michigan,
which was shut down effective July 31, 1998. Manufacturing gross profit
increased to 12.7% compared to 10.9% last year due primarily to higher volumes
and the ElDorado National Michigan loss last year.
1999 operating income totaled $9,335,187, up 114.8% from $4,346,978 in the same
period last year. Of this $4,988,209 increase in operating income, $1,260,000
represents income from Champion Bus, Inc., no operating losses at Thor West in
1999 compared to a $1,066,925 operating loss in 1998, and $353,895 represent
reduced losses of ElDorado National Michigan in 1999 of $12,074 versus $365,969
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 $11,649,927, 7.0% of sales, from $10,354,261, 7.7% of
sales, primarily due to increased income related compensation and selling
expense related to increased volume. Interest income increased by $194,004
primarily due to investment of excess cash. The combined income tax rate was
40.7% in the current year compared to 37.8% last year. The decrease in tax last
year was due primarily to use of a capital loss carryforward applied to the sale
of Henschen.
Six Months Ended January 31, 1999 vs. Six Months Ended January 31, 1998
- -----------------------------------------------------------------------
Net sales for the six months totaled $354,709,944, up 18.2% from $299,968,268 in
the same period last year. Income before income taxes was $21,160,434, up 42.3%
from $14,869,467 in the same period last year. Of the $6,290,967 increase in
income before taxes, $2,245,382 represents income of Champion Bus, Inc. acquired
February 9, 1998, $124,805 represents reduced losses of Thor West in 1999 of
$1,319,434 versus $1,444,239 in 1998 and $860,421 represents reduced losses of
ElDorado National Michigan in 1999 of $134,830 versus $995,251 in 1998. Included
in 1998 six months income before income taxes is a gain on the sale of Henschen
Industrial of approximately $1,269,000. Recreation vehicle revenues of
$250,690,255 were 10.0% higher than last year and were 71% of total company
revenue compared to 76% last year. Recreation vehicle revenues were up primarily
due to increased unit sales. Bus revenues of $104,019,689 were 44.4% higher than
last year and were 29% of total company revenues compared to 24% last year. Bus
revenues included sales of $27,718,706 of Champion Bus and $669,882 sales in
1999 versus $5,295,635 in 1998 of ElDorado National Michigan, which was shut
down effective 7/31/98. Manufacturing gross profits increased to 12.4% compared
to 11.2% last year due primarily to higher volumes and the ElDorado National
Michigan loss last year.
1999 operating income totaled $20,629,269, up 58.1% from $13,044,283 in the same
period last year. Of the $7,584,986 increase in operating income, $2,260,000
represents income from Champion Bus, Inc., $606,973 represents reduced losses of
Thor West in 1999 of $658,206 versus $1,265,179 in 1998, and $740,489 represents
reduced losses of ElDorado National Michigan in 1999 of $132,497 versus $872,986
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 $23,378,283, 6.6% of sales, from $20,433,227, 6.8% of
sales, primarily due to increased income related compensation and selling
expenses related to increased volumes. Interest income increased by $539,107
primarily due to investment of excess cash. The combined income tax rate was
41.2% in the current year compared to 39.5% 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 January 31, 1999, the Company had $28,492,121 in cash and cash
equivalents, compared to $43,531,805 on July 31, 1998. Working capital at
January 31, 1999 was $107,569,114 compared to $99,139,080 at July 31, 1998.
Inventory valued at current cost at January 31, 1999 exceeded the LIFO inventory
by $3,272,096.
On January 31, 1999, the Company had a $30,000,000 revolving line of credit with
Harris Trust and Savings Bank. There were no borrowings at January 31, 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 January 31, 1999. Amortization
of intangibles decreased from $952,197 for the period ended January 31, 1998 to
$751,169 for the period ended January 31, 1999 due to certain intangibles being
fully amortized.
During the six months of fiscal 1999, Thor purchased 79,700 shares of its common
stock, increasing treasury stock by $1,683,573.
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. The Company does not anticipate
significant capital expenditures for fiscal 1999.
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 systems Year
2000 Compliant by June 30, 1999. Approximately 70% 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 $177,000
on compliance issues and estimates expenditures of $140,000 through completion
in June 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.
THOR INDUSTRIES, INC.
(Registrant)
DATE March 12, 1999 (Signed) /s/ Wade F. B. Thompson
------------------- --------------------------------
Wade F. B. Thompson, Chairman of the Board,
President and Chief Executive Officer
DATE March 12, 1999 (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
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-START> AUG-01-1998
<PERIOD-END> JAN-31-1999
<CASH> 28,492,121
<SECURITIES> 0
<RECEIVABLES> 58,295,405
<ALLOWANCES> 0
<INVENTORY> 75,244,764
<CURRENT-ASSETS> 167,517,281
<PP&E> 32,026,693
<DEPRECIATION> 13,026,693
<TOTAL-ASSETS> 209,755,430
<CURRENT-LIABILITIES> 59,948,167
<BONDS> 0
0
0
<COMMON> 1,369,815
<OTHER-SE> 147,147,693
<TOTAL-LIABILITY-AND-EQUITY> 209,755,430
<SALES> 354,709,944
<TOTAL-REVENUES> 354,709,944
<CGS> 310,702,293
<TOTAL-COSTS> 334,080,675
<OTHER-EXPENSES> (585,912)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 54,747
<INCOME-PRETAX> 21,160,434
<INCOME-TAX> 8,715,947
<INCOME-CONTINUING> 12,444,487
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,444,487
<EPS-PRIMARY> 1.02
<EPS-DILUTED> 1.01
</TABLE>
