<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 October 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 10/31/99
----- -----------------------
Common stock, par value 12,141,660 shares
$.10 per share
<PAGE> 2
<TABLE>
<CAPTION>
THOR INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------
ASSETS
------
(UNAUDITED)
OCTOBER 31, 1999 JULY 31, 1999
---------------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 54,060,736 $ 68,865,635
Accounts receivable:
Trade 57,238,789 52,167,539
Other 1,779,078 1,667,486
Inventories 79,629,257 72,850,279
Deferred income taxes and other 11,185,988 6,572,972
------------- -------------
Total current assets 203,893,848 202,123,911
------------- -------------
Property:
Land 1,492,477 1,400,995
Buildings and improvements 20,544,379 19,010,749
Machinery and equipment 15,078,627 14,122,834
------------- -------------
Total cost 37,115,483 34,534,578
Accumulated depreciation and amortization 12,894,796 12,218,224
------------- -------------
Property, net 24,220,687 22,316,354
------------- -------------
Investment in joint ventures 3,504,619 3,419,101
------------- -------------
Other assets:
Goodwill 11,123,789 11,251,342
Non compete Agreements 1,959,411 2,235,010
Trademarks 1,976,484 2,020,319
Other 4,357,400 2,545,698
------------- -------------
Total other assets 19,417,084 18,052,369
------------- -------------
TOTAL ASSETS $ 251,036,238 $ 245,911,735
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 41,676,997 $ 48,290,096
Accrued liabilities:
Taxes 6,519,210 --
Compensation and related items 9,715,762 13,676,462
Product warranties 11,349,955 11,543,598
Other 5,415,054 5,519,658
------------- -------------
Total current liabilities 74,676,978 79,029,814
------------- -------------
Deferred income taxes and other liabilities 1,552,856 1,508,756
Stockholders' equity:
Common stock - authorized 20,000,000 shares; issued 13,730,997 shares @
10/31/99 and 13,715,147 shares @ 7/31/99; par value of $.10 per share 1,373,100 1,371,515
Additional paid in capital 25,984,030 25,684,380
Foreign currency translation (983,300) (1,198,511)
Retained earnings 171,435,813 162,018,698
Restricted Stock Plan (364,903) (216,168)
Unrealized appreciation on investments 208,647 --
Cost of treasury shares 1,589,337 shares @ 10/31/99
and 1,566,637 shares @ 7/31/99 (22,846,983) (22,286,749)
------------- -------------
Total stockholders' equity 174,806,404 165,373,165
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 251,036,238 $ 245,911,735
============= =============
</TABLE>
See notes to consolidated financial statements
<PAGE> 3
<TABLE>
<CAPTION>
THOR INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
FOR THE THREE MONTHS ENDED OCTOBER 31, 1999 AND 1998
----------------------------------------------------
(UNAUDITED)
-----------
THREE MONTHS ENDED OCTOBER 31
-----------------------------
1999 1998
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<S> <C> <C>
Net sales $ 221,020,752 $ 189,176,940
Cost of products sold 191,451,261 166,154,502
------------- -------------
Gross profit 29,569,491 23,022,438
Selling, general, and
administrative expenses 13,867,160 11,728,356
------------- -------------
Operating income 15,702,331 11,294,082
Interest income 817,586 580,902
Interest expense (39,766) (29,331)
Other income 228,071 305,464
Loss on divestment of subsidiary (221,121) (190,000)
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Income before income taxes 16,487,101 11,961,117
Provision for income taxes 6,827,193 4,968,916
------------- -------------
Net income $ 9,659,908 $ 6,992,201
============= =============
Average common shares outstanding 12,148,235 12,220,818
- --------------------------------- ------------- -------------
Earnings per common share:
- --------------------------
Basic $ .80 $ .57
====== =====
Diluted $ .79 $ .57
====== =====
Dividends paid per common share $ .02 $ .02
- ------------------------------- ====== =====
</TABLE>
See notes to consolidated financial statements
<PAGE> 4
<TABLE>
<CAPTION>
THOR INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE THREE MONTHS ENDED OCTOBER 31, 1999 AND 1998
----------------------------------------------------
(UNAUDITED)
-----------
1999 1998
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 9,659,908 $ 6,992,201
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation 672,290 560,756
Amortization 446,987 389,335
Loss on divestment of subsidiary 221,122 190,000
Changes in non cash assets and liabilities
- ------------------------------------------
Accounts receivable (5,182,842) 7,861,135
Inventories (6,778,978) (9,043,096)
Prepaid expenses and other (4,881,881) (51,849)
Accounts payable (6,613,099) (7,987,871)
Accrued liabilities 2,039,141 3,612,618
Other Liabilities 60,465 44,400
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Net cash provided by (used in) operating activities (10,356,887) 2,567,629
- --------------------------------------------------- ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant & equipment (2,559,977) (1,437,641)
Disposals of property, plant & equipment 4,127 13,928
Purchase of available for sale investment (1,440,481) --
------------ ------------
Net cash used in investing activities (3,996,331) (1,423,713)
- ------------------------------------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends (242,793) (242,960)
Purchase of treasury stock (560,234) (1,661,382)
Proceeds from issuance of common stock 136,135 --
------------ ------------
Net cash used in financing activities (666,892) (1,904,342)
- ------------------------------------- ------------ ------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 215,211 (89,477)
------------ ------------
Net decrease in cash and equivalents (14,804,899) (849,903)
Cash and equivalents, beginning of year 68,865,635 43,531,805
------------ ------------
CASH AND EQUIVALENTS, END OF PERIOD $ 54,060,736 $ 42,681,902
============ ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid $ 1,105,900 $ 1,106,726
Interest paid 39,766 29,331
NON CASH TRANSACTIONS:
Issuance of restricted stock 165,100 126,372
Receivable from divestment of subsidiary -- 1,011,954
Unrealized appreciation on investment 208,647 --
</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)
-----------
October 31, 1999 July 31, 1999
---------------- -------------
<S> <C> <C>
Raw materials $32,270,015 $31,479,371
Chassis 18,090,267 19,944,422
Work in process 22,372,719 20,959,710
Finished goods 10,764,491 4,128,011
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Total 83,497,492 76,511,514
Less excess of FIFO costs
over LIFO costs 3,868,235 3,661,235
--------- ---------
Total inventories $79,629,257 $72,850,279
=========== ===========
<CAPTION>
3. Earnings Per Share
Three Months Three Months
ended ended
October 31, 1999 October 31, 1998
---------------- ----------------
<S> <C> <C>
Weighted average shares outstanding
for basic earnings per share 12,148,235 12,220,818
Stock options 57,415 56,099
---------- ----------
Total - For diluted shares 12,205,650 12,276,917
========== ==========
4. Stockholders' Equity
Comprehensive income for the quarters ended October 31, 1999 and 1998 was
$10,083,766 and $6,902,724, respectively.
Three Months Three Months
ended ended
October 31, 1999 October 31, 1998
---------------- ----------------
<S> <C> <C>
Net Income $ 9,659,908 $ 6,992,201
Foreign currency translation adjustment 215,211 (89,477)
Unrealized appreciation on investments 208,647 --
----------- -----------
Comprehensive Income $10,083,766 $ 6,902,724
=========== ===========
<CAPTION>
5. Segment Information Three Months Three Months
ended ended
October 31, 1999 October 31, 1998
---------------- ----------------
<S> <C> <C>
Net Sales:
Recreation vehicles
Towables $ 93,044,286 $ 80,582,529
Motorized 67,573,924 55,863,818
Other 2,135,606 1,873,437
Buses 58,266,936 50,857,156
------------- -------------
Total $ 221,020,752 $ 189,176,940
============= =============
Operating Income:
Recreation vehicles $ 11,846,858 $ 8,933,572
Buses 5,228,394 3,335,725
Corporate (1,372,921) (975,215)
------------- -------------
Total $ 15,702,331 $ 11,294,082
============= =============
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(CONTINUED)
-----------
<S> <C> <C>
Identifiable Assets:
Recreation vehicles $112,515,384 $98,960,442
Buses 60,082,975 51,799,333
Corporate 78,437,879 60,165,915
------------- -------------
Total $251,036,238 $210,925,690
============ ============
</TABLE>
6. In December, 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 three
months ended October 1998 consolidated statements of income of Thor
Industries, Inc. are $4,050,351 and $(848,207), respectively. 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%.
During the first quarter of fiscal 2000, pursuant to an agreement to
discontinue purchasing and consigning chassis to Mountain High Coachworks,
Thor agreed to guarantee up to $1,000,000 of financing on chassis
purchased through Ford Motor Credit. In the event that Mountain High
Coachworks is not able to continue performing its warranty obligations,
the Company would be responsible for warranty on Thor West product sold
before December 9, 1998.
7. 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, 2000. The effect on the Company's financial statements has not
yet been determined.
PART II
Item 4. Submission of Matters to a Vote of Security Holders
On September 16, 1999 a form 14-C was filed to inform stockholders of
Thor Industries, Inc. that the holder of a majority of the
outstanding stock of the Company had delivered written consent to the
Company approving the 1999 Stock Option Plan.
Item 6. Exhibits and Reports on Form 8-K
a.) Exhibit
NA
b.) Reports on Form 8-K
On October 25, 1999, a Form 8-K was filed with the Securities
and Exchange Commission pursuant to a release No. 42021
regarding Section 21C of the Securities Exchange Act of 1934.
<PAGE> 7
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Quarter Ended October 31, 1999 vs.
Quarter Ended October 31, 1998
- ---------------------------------
Net sales for the first quarter totaled $221,020,752, up 16.8% from $189,176,940
in the same period last year. Income before income taxes was $16,487,101, up
37.8% from $11,961,117 in the same period last year. Of this $4,525,984 increase
in income before taxes, $695,644 represents reduced losses of Thor West of
$221,122 in 1999 versus loss from operations of $726,766 and a $190,000
divestment loss in 1998. The remaining increase is attributable to increased
sales. Recreation vehicle revenues of $162,753,816 were 17.7% higher than last
year and were 74% of total company revenues compared to 73% last year.
Recreation vehicle revenues were up primarily due to increased unit sales. Bus
revenues of $58,266,935 were 14.6% higher than last year and were 26% of total
company revenues compared to 27% last year. Price increases averaged
approximately 1.5% for the quarter ended October 31, 1999.
1999 operating income totaled $15,702,331, up 39% from $11,294,082 in the same
period last year. Of this $4,408,249 increase in operating income, $658,207 is
due to operating losses of Thor West in 1998 compared to no operating losses in
1999. The remaining income is the result of increased revenues. Selling, general
and administrative expenses and amortization of intangibles increased to
$13,867,160, 6.3% of sales, from $11,728,356, 6.2% of sales, primarily due to
increased income related compensation and selling expense related to increased
volume. Interest income increased by $236,684 primarily due to investment of
cash. The combined income tax rate was 41.4% in the current year compared to
41.5% last year.
Financial Condition and Liquidity
- ---------------------------------
As of October 31, 1999, Thor had $54,060,736 in cash and cash equivalents,
compared to $68,865,635 on July 31, 1999. Working capital at October 31, 1999
was $129,216,870 compared to $123,094,097 at July 31, 1999. Inventory valued at
current cost at October 31, 1999 exceeded the LIFO inventory by $3,868,235.
At October 31, 1999, the Company had a $30,000,000 revolving line of credit with
Harris Trust and Savings Bank. There were no borrowings at October 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 October
30, 2000. The Company had no long term debt as of October 31, 1999.
On July 22, 1999, The Board of Directors adopted the Thor Industries, Inc. 1999
Stock Option Plan which was subsequently approved by a majority of its
shareholders. Under the terms of the Plan, options to purchase 500,000 shares
may be granted to selected executives of Thor Industries within a 10 year
period.
During the first quarter of fiscal 2000, Thor purchased 22,700 shares of its
common stock, increasing treasury stock by $560,234.
The Company believes that 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 $2,559,977 were
primarily for expansion of the Company's Four Winds manufacturing facility.
Additional funds to complete this expansion will be approximately $1,000,000.
The Company anticipates additional capital expenditures in fiscal year 2000 of
approximately $5,200,000 primarily to expand its Komfort and Thor California RV
operations and its bus operations in total.
Amortization of intangibles increased from $389,335 for the period ended October
31, 1998, to $446,987 for the period ended October 31, 1999.
YEAR 2000 Issues
- ----------------
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the Year 2000. This could result in a system
failure or miscalculations causing disruptions in operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities.
<PAGE> 8
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
---------------------
(CONTINUED)
-----------
The Company has initiated formal communications with all of its significant
suppliers and large customers to determine the extent to which the Company is
vulnerable to those third parties' failure to remedy their own Year 2000 issue.
The Company's total Year 2000 project costs include the estimated costs and time
associated with the impact of third party's Year 2000 issues on the Company, and
are based on presently available information. However, there can be no guarantee
that the systems of other companies on which the Company's systems rely will be
timely converted, or that a failure to convert by another company, or a
conversion that is incompatible with the Company's systems, would not have a
material adverse effect on the Company. The Company believes it has no exposure
to contingencies related to the Year 2000 issue for the products it has sold.
The Company has completed its critical Year 2000 projects. The total cost of the
Year 2000 project is estimated at $343,000, substantially all of which was to
purchase revised software and hardware, and was funded through operating cash
flows.
The Company believes that manual systems could serve as backup for any systems
used internally. The Company also plans to store on spreadsheets or have manual
documents on all data necessary to run its day to day operations on an interim
basis during the initial month of Year 2000.
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 12/8/99 /s/ Wade F. B. Thompson
--------------------- -----------------------------------
Wade F. B. Thompson
Chairman of the Board, President
and Chief Executive Officer
DATE 12/8/99 /s/ Walter L. Bennett
--------------------- -----------------------------------
Walter L. Bennett
Senior Vice President
Secretary (Chief Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-START> AUG-01-1999
<PERIOD-END> OCT-31-1999
<CASH> 54,060,736
<SECURITIES> 0
<RECEIVABLES> 59,017,867
<ALLOWANCES> 0
<INVENTORY> 79,629,257
<CURRENT-ASSETS> 203,893,848
<PP&E> 37,115,483
<DEPRECIATION> 12,894,796
<TOTAL-ASSETS> 251,036,238
<CURRENT-LIABILITIES> 74,676,978
<BONDS> 0
0
0
<COMMON> 1,373,100
<OTHER-SE> 173,433,304
<TOTAL-LIABILITY-AND-EQUITY> 251,036,238
<SALES> 221,020,752
<TOTAL-REVENUES> 221,020,752
<CGS> 191,451,261
<TOTAL-COSTS> 205,318,421
<OTHER-EXPENSES> (824,536)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 39,766
<INCOME-PRETAX> 16,487,101
<INCOME-TAX> 6,827,193
<INCOME-CONTINUING> 9,659,908
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,659,908
<EPS-BASIC> .80
<EPS-DILUTED> .79
</TABLE>
