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, 2001 COMMISSION FILE NUMBER 1-9235 ---------------- ------ THOR INDUSTRIES, INC. ------------------------------------------------------------------------ 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 1/31/2001 ----- ------------------------ Common stock, par value 11,849,060 shares $.10 per share
2 THOR INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS --------------------------- ASSETS ------ <TABLE> <CAPTION> (UNAUDITED) ----------- JANUARY 31, 2001 JULY 31, 2000 ---------------- ------------- <S> <C> <C> Current assets: Cash and cash equivalents $18,456,535 $59,655,251 Investments - short term 33,014,845 18,308,194 Accounts receivable: Trade 53,166,621 50,970,187 Other 1,977,433 973,265 Inventories 96,197,294 89,545,213 Deferred income taxes and other 7,978,105 5,835,370 ------------ ------------ Total current assets 210,790,833 225,287,480 ------------ ------------ Property: Land 5,683,928 5,573,144 Buildings and improvements 27,645,598 24,330,742 Machinery and equipment 22,408,865 17,926,415 ------------ ------------ Total cost 55,738,391 47,830,301 Accumulated depreciation and amortization 16,107,993 14,525,634 ------------ ------------ Property, net 39,630,398 33,304,667 ------------ ------------ Investments: Joint ventures 2,411,745 2,628,282 Investments available for sale 6,171,478 3,486,150 ------------ ------------ Total Investments 8,583,223 6,114,432 Other assets: Goodwill 10,486,025 10,741,131 Noncompete agreements 541,667 1,132,614 Trademarks 1,757,311 1,844,981 Other 4,537,905 3,706,087 ------------ ------------ Total other assets 17,322,908 17,424,813 ------------ ------------ TOTAL ASSETS $276,327,362 $282,131,392 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Accounts payable $42,599,105 $49,824,276 Accrued liabilities: Taxes 1,614,536 4,599,864 Compensation and related items 8,527,049 13,356,378 Product warranties 12,312,133 11,878,469 Other 5,144,494 6,719,049 ------------ ------------ Total current liabilities 70,197,317 86,378,036 ------------ ------------ Other liabilities 1,181,647 549,080 Stockholders' equity: Common stock - authorized 20,000,000 shares; issued 13,757,497 shares @ 1/31/01 and 13,743,997 shares @ 7/31/00; par value of $.10 per share 1,375,750 1,374,400 Additional paid in capital 26,361,125 26,169,020 Accumulated other comprehensive loss (1,179,912) (2,620,712) Retained earnings 208,250,248 197,171,503 Restricted stock plan (260,147) (297,305) Cost of treasury shares 1,908,437 shares @ 1/31/01 and 1,759,037 @ 7/31/00 (29,598,666) (26,592,630) ------------ ------------ Total stockholders' equity 204,948,398 195,204,276 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $276,327,362 $282,131,392 ============ ============ </TABLE> See notes to consolidated financial statements
3 THOR INDUSTRIES, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED INCOME FOR THE THREE MONTHS AND SIX MONTHS ENDED JANUARY 31, 2001 AND 2000 ------------------------------------------------------------------- <TABLE> <CAPTION> (UNAUDITED) ----------- THREE MONTHS ENDED JANUARY 31 SIX MONTHS ENDED JANUARY 31 ----------------------------- --------------------------- 2001 2000 2001 2000 ---- ---- ---- ---- <S> <C> <C> <C> <C> Net sales $169,214,332 $193,709,463 $374,397,026 $414,730,215 Cost of products sold 152,188,420 168,743,799 330,975,177 360,195,060 ------------- ------------- ------------- ------------- Gross profit 17,025,912 24,965,664 43,421,849 54,535,155 Selling, general, and administrative expenses 12,656,248 13,530,986 26,624,714 27,398,146 Interest income 645,428 736,264 2,065,772 1,553,850 Interest expense 150,396 71,299 251,525 111,065 Other income 209,085 28,453 650,522 256,524 Loss on divestment of subsidiary - 706,955 - 928,077 ------------- ------------- ------------- ------------- Income before income taxes 5,073,781 11,421,141 19,261,904 27,908,241 Provision for income taxes 1,909,380 4,710,798 7,706,689 11,537,991 ------------- ------------- ------------- ------------- Net income $3,164,401 $6,710,343 $11,555,215 $16,370,250 ============= ============= ============= ============= Average common shares outstanding 11,887,495 12,109,647 11,936,896 12,128,941 - --------------------------------- ============= ============= ============= ============= Earnings per common share: - ------------------------- Basic $.27 $.55 $.97 $1.35 ==== ==== ==== ===== Diluted $.27 $.55 $.96 $1.34 ==== ==== ==== ===== Dividends paid per common share $.02 $.02 $.04 $.04 - ------------------------------- ==== ==== ==== ==== </TABLE> See notes to consolidated financial statements
4 THOR INDUSTRIES, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS FOR THE SIX MONTHS ENDED JANUARY 31, 2001 AND 2000 -------------------------------------------------- <TABLE> <CAPTION> (UNAUDITED) ----------- 2001 2000 ---- ---- <S> <C> <C> CASH FLOWS FROM OPERATING ACTIVITIES: Net income $11,555,215 $16,370,250 Adjustments to reconcile net income to net cash used in operating activities: Depreciation 1,689,310 1,358,723 Amortization 933,723 893,973 Loss on divestment of subsidiary -- 928,077 Purchase of trading investments (31,866,070) (12,661,714) Proceeds from sale of trading investments 18,903,584 -- Unrealized gain on trading investments (1,744,165) -- Changes in non cash assets and liabilities: - ------------------------------------------- Accounts receivable (3,200,602) (1,585,369) Inventories (6,652,081) (13,713,855) Prepaid expenses and other (3,513,699) (3,376,296) Accounts payable (7,225,171) (6,139,234) Accrued liabilities (8,955,548) (1,940,454) Other liabilities 669,725 155,633 ------------- ------------ Net cash used in operating activities (29,405,779) (19,710,266) ------------- ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant & equipment (7,982,956) (4,487,558) Disposals of property, plant & equipment 513 30,086 Purchase of available for sale investments (619,371) (4,771,048) ------------- ------------ Net cash used in investing activities (8,601,814) (9,228,520) CASH FLOWS FROM FINANCING ACTIVITIES: Cash dividends (476,470) (484,897) Purchase of treasury stock (3,006,036) (1,409,317) Proceeds from issuance of common stock 193,455 136,135 ------------- ------------ Net cash used in financing activities (3,289,051) (1,758,079) ------------- ------------ EFFECT OF EXCHANGE RATE CHANGES ON CASH 97,928 329,017 Net decrease in cash and equivalents (41,198,716) (30,367,848) Cash and equivalents, beginning of year 59,655,251 68,865,635 ------------- ------------ CASH AND EQUIVALENTS, END OF PERIOD $18,456,535 $38,497,787 ============= ============ SUPPLEMENTAL CASH FLOW INFORMATION: Income taxes paid $10,164,358 $9,256,950 Interest paid 251,525 111,065 NON-CASH TRANSACTIONS: Issuance of restricted stock -- 165,100 </TABLE> See notes to consolidated financial statements
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 financial position, results of operations and cash flows for such periods presented. 2. Major classifications of inventories are: <TABLE> <CAPTION> (Unaudited) January 31, 2001 July 31, 2000 ---------------- ------------- <S> <C> <C> Raw materials $34,416,133 $36,010,315 Chassis 26,165,862 29,122,188 Work in process 25,992,754 21,412,340 Finished goods 14,917,391 7,881,216 ----------- ----------- Total 101,492,140 94,426,059 Less excess of FIFO costs over LIFO costs 5,294,846 4,880,846 ----------- ----------- Total inventories $96,197,294 $89,545,213 =========== =========== </TABLE> <TABLE> <CAPTION> 3. Earnings Per Share: Three months Three months Six months Six months ended ended ended ended January 31, 2001 January 31, 2000 January 31, 2001 January 31, 2000 ---------------- ---------------- ---------------- ---------------- <S> <C> <C> <C> <C> Weighted average shares outstanding for basic earnings per share 11,887,495 12,109,647 11,936,896 12,128,941 Stock options 40,061 59,886 38,870 58,674 ------------- ------------ ------------ ------------- Total - diluted shares 11,927,556 12,169,533 11,975,766 12,187,615 ============= ============ ============ ============= </TABLE> <TABLE> <CAPTION> 4. Comprehensive Income: Three months Three months Six months Six months ended ended ended ended January 31, 2001 January 31, 2000 January 31, 2001 January 31, 2000 ---------------- ---------------- ---------------- ---------------- <S> <C> <C> <C> <C> Net Income $3,164,401 $6,710,343 $11,555,215 $16,370,250 Foreign currency translation adj. 219,146 113,806 97,928 329,017 Unrealized appreciation (depreciation) on investments 1,237,408 (357,597) 1,342,872 (148,950) ------------- ------------ ------------ ------------- Comprehensive Income $4,620,955 $6,466,552 $12,996,015 $16,550,317 ============= ============ ============ ============= </TABLE>
6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ (CONTINUED) ----------- <TABLE> <CAPTION> 5. Segment Information: Three Months Three Months Six Months Six Months ended ended ended ended January 31, 2001 January 31, 2000 January 31, 2001 January 31, 2000 ---------------- ---------------- ---------------- ---------------- <S> <C> <C> <C> <C> Net Sales: Recreation vehicles Towables $62,596,219 $76,099,088 $145,493,174 $169,143,373 Motorized 36,579,485 55,971,287 88,418,633 123,545,211 Other 618,117 1,845,143 1,822,364 3,980,749 Buses 69,420,511 59,793,945 138,662,855 118,060,882 ------------ ------------ ------------ ------------ Total $169,214,332 $193,709,463 $374,397,026 $414,730,215 ============ ============ ============ ============ Income Before Income Taxes: Recreation vehicles $1,497,198 $8,140,882 $9,682,996 $20,048,784 Buses 4,427,062 4,699,187 10,373,192 9,905,455 Corporate (850,479) (1,418,928) (794,284) (2,045,998) ------------ ------------ ------------ ------------ Total $5,073,781 $11,421,141 $19,261,904 $27,908,241 ============ ============ ============ ============ January 31, 2001 July 31, 2000 ---------------- ------------- Identifiable Assets: Recreation vehicles $125,515,796 $118,700,398 Buses 76,703,825 66,250,635 Corporate 74,107,741 97,180,359 ---------- ---------- Total $276,327,362 $282,131,392 ============ ============ </TABLE> 6. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin 101 (SAB 101), "Revenue Recognition in Financial Statements", which provides guidance on applying accounting principles generally accepted in the United States of America, for recognizing revenue. SAB 101 is effective for the fourth quarter of fiscal years beginning after December 15, 1999. The impact, if any, of adopting SAB 101 on our consolidated financial position, results of operations and cash flows, has not been determined. 7. The Company adopted the provisions of SFAS No. 133, "Accounting for Derivative Instruments & Hedging Activities," as amended on August 1, 2000. The Company has performed a review of all contracts to properly identify all derivative financial instruments. No such derivatives were identified. Therefore, the adoption of SFAS No. 133 had no effect on the Company's financial statements. 8. Investments - The Company classifies its debt and equity securities as trading or available-for-sale. Trading securities are bought and held principally for the purpose of selling them in the near term. All securities not included in trading are classified as available-for-sale. Trading and available-for-sale investments are recorded at fair value. Unrealized holding gains and losses on trading investments are included in earnings. Unrealized holding gains and losses, net of the related tax effect, on available-for-sale investments are excluded from earnings and are reported as a separate component of comprehensive income, net of income taxes until realized. Realized gains and losses from the sale of available-for-sale investments are determined on a specific-identification basis. Dividend and interest income are recognized when earned. At January 31, 2001, the Company held equity investments with a fair value of $6,171,478 and cost basis of $6,419,828. The investments are classified as available-for-sale and included in other investments. Gross unrealized losses were $248,350. The Company has certain corporate debt investments that are classified as trading investments and reported as Investments - short term. Included in other income for the six months ended January 31, 2001 are net realized gains on trading investments of $126,336.
7 Quarter Ended January 31, 2001 vs. Quarter Ended January 31, 2000 - ----------------------------------------------------------------- Net sales for the second quarter totaled $169,214,332, down 12.6% from $193,709,463 in the same period last year. Income before income taxes was $5,073,781, down 55.6% from $11,421,141 last year. The decrease in income before income taxes of $6,347,360 was primarily attributable to reduced recreation vehicle revenues of $34,121,697, which resulted in an approximate $6,640,000 reduction in income before income taxes. Bus revenues were $9,626,566 greater than the second quarter last year. However, due to product mix, income before income taxes in the second quarter this year was down approximately $272,000 from the same period last year. These reductions in RV and bus income before taxes were offset by no losses on divestment of operations in the second quarter of this year versus $707,000 loss last year on losses from divestment of operations. Recreation vehicle revenues of $99,793,821 were 25.5% lower than last years $133,915,518 and accounted for 59% of total Company revenues compared to 69.1% last year. Recreation vehicle order backlog of $69,820,000 at January 31, 2001 was down 41% compared to the same period last year and reflects the continuing softness in the overall RV market. Bus revenues of $69,420,511 were 16.1% higher than last years $59,793,945 and accounted for 41% of total Company revenues compared to 30.9% last year. Bus vehicle order backlog of $205,106,000 at January 31, 2001 was 61% higher compared to the same period last year and reflects the continuing strength in the overall bus market. Manufacturing gross profit decreased as a percentage of sales from 12.9% in the second quarter ended January 31, 2000 to 10.1% at January 31, 2001 due primarily to lower recreation vehicle volumes. There were no appreciable price increases during the quarter ended January 31, 2001. Selling, general, and administrative expense and amortization of intangibles decreased to $12,656,248 from $13,530,986 last year. However, as a percentage of sales selling, general, and administrative expense were 7.5% for the quarter this year compared to 7.0% last year. This increase as a percentage of sales revenue is due to additional sales programs and incentives for recreation vehicle sales in a highly competitive soft market environment. Interest income decreased by approximately $91,000 due primarily to lower market rates. Interest expense increased by approximately $79,000, primarily due to interest paid on increased bus chassis pool. The combined income tax rate was 37.6% for the quarter ended January 31, 2001 compared to 41.2% last year due primarily to tax savings generated by the Company's foreign sales corporation and a tax refund of $165,000. Six Months Ended January 31, 2001 vs. Six Months Ended January 31, 2000 - ----------------------------------------------------------------------- Net sales for the six months totaled $374,397,026, down 9.7% from $414,730,215 in the same period last year. Income before income taxes was $19,261,904, down 31.0% from $27,908,241 last year. The decrease in income before taxes of $8,646,337 was previously attributed to reduced recreation vehicle revenues of $60,935,162, which resulted in an approximate $10,366,000 reduction in income before income taxes. This reduction in RV income before taxes was offset by increased bus revenues of $20,601,973, which generated an increase of approximately $468,000 in income before taxes. In addition, no losses were incurred on divestment of operations in the six months ended January 31, 2001 versus $928,000 loss last year on losses from divestment of operations. Recreation vehicle revenues of $235,734,171 were 20.5% lower than last years $296,669,333 and accounted for 63% of total Company revenue compared to 71.5% last year. Recreation vehicle revenues were down due to continued softness in the overall market. Bus revenues of $138,662,855 were 17.5% higher than last years $118,060,882 and accounted for 37% of total Company revenue compared to 28.5% last year. Bus revenues were up primarily due to increased unit sales. Manufacturing gross profit decreased as a percentage of sales from 13.1% for the six months ended January 31, 2000 to 11.6% at January 31, 2001 due primarily to lower recreation vehicle volumes. There were no appreciable price increases during the six months ended January 31, 2001. Selling, general, and administrative expense and amortization of intangibles decreased to $26,624,714 from $27,398,146 last year. However, as a percentage of sales selling, general and administrative expenses are 7.1% for the six months ended January 31, 2001 compared to 6.6% last year. This increase as a percentage of sales revenues is due to additional sales programs and incentives for recreation vehicle sales in a highly competitive soft market environment.
8 Interest income increased by approximately $512,000 for the six months ended January 31, 2001 due primarily to increased investable cash and higher returns primarily during the first quarter of this year versus last year. Interest expense increased by approximately $140,000 primarily due to interest paid on increased bus chassis pool. The combined income tax rate was 40.0% for the six months ended January 31, 2001 compared to 41.3% last year due primarily to tax savings generated by the Company's foreign sales corporation and a tax refund of $165,000. Financial Condition and Liquidity - --------------------------------- As of January 31, 2001, Thor had $51,471,380 in cash, cash equivalents and short term investments, compared to $77,963,445 on July 31, 2000. The Company classifies its debt and equity securities as "trading" or "available for sale". The former are carried on the Consolidated Balance sheet as Cash and cash equivalents or Investments - short term. The latter are carried on the Consolidated Balance Sheet under the caption "Investments" - "Investments available for sale." Trading securities are, generally, bought and held for sale in the near term. All other securities are classified as available for sale. In each case, the securities are carried at fair market value. Unrealized gains or losses on trading investments are included in earnings. Unrealized gains and losses on investments classified as available for sale, net of related tax effect, are not included in earnings, but appear as a component of Accumulated other comprehensive loss on the Consolidated Balance Sheet, until the gain or loss is realized upon the disposition of the investment. Due to the relative short term maturities (average 6 months) of the trading securities, principally investment grade securities comprised of asset backed notes, mortgage backed notes and corporate bonds, management does not believe that changes in fair market value will have a significant impact on the Company's financial position or results of future operations. Working capital at January 31, 2001 was $140,593,516 compared to $138,909,444 at July 31, 2000. The Company has no long term debt. The Company currently has a $30,000,000 revolving line of credit. There were no borrowings on the line of credit at January 31, 2001. 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, 2001. The Company believes that internally generated funds and the revolving credit agreement will be sufficient to meet current needs and additional capital requirements. Capital expenditures of $7,982,956 were primarily for the continued expansion of the Komfort RV facility and the expansion of the Company's bus operation. The Company anticipates additional capital expenditures in 2001 of approximately $15,300,000 primarily for the completion of its Komfort RV facility and Kansas bus facility and continued expansion of its California bus facility. During the six months of fiscal 2001, Thor purchased 149,400 shares of its common stock, increasing treasury stock by $3,006,036. Forward Looking Statements - -------------------------- This report includes certain statements that are "forward looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934 as amended. These forward looking statements involve uncertainties and risks. There can be no assurances that actual results will not differ from the Company's expectations. Factor, which could cause materially different results, includes, among others, the success of new product introduction, the pace of acquisition and cost structure improvements, competitive and general economic conditions. The Company disclaims any obligation or undertaking to disseminate any updates or revisions to any change in expectation of the Company after the date hereof or any change in events, conditions or circumstances on which any statement is based except as required by law.
9 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Quantitative and Qualitative Disclosures About Market Risk - ---------------------------------------------------------- The Company is exposed to market risk from changes in foreign currency related to its operations in Canada. However, because of the size of Canadian operations, a hypothetical 10% change in the Canadian dollar as compared to the U.S. dollar would not have a significant impact on the Company's financial position or results of operations. The Company is also exposed to market risks related to interest rates because of its investments in corporate debt securities. A hypothetical 10% change in interest rates would not have a significant impact on the Company's financial position or results of operations. PART II Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- Annual Meeting of Shareholders on December 4, 2000 Matters Voted on by Shareholders: --------------------------------- 1.) Election of Directors: Neil D. Chrisman, and Alan Siegel Results of Voting by Shareholders: ---------------------------------- <TABLE> <CAPTION> For Against Abstain --- ------- ------- <S> <C> <C> <C> Neil D. Chrisman 11,282,722 -0- 57,816 Alan Siegel 11,273,682 -0- 66,856 </TABLE> Item 6. Exhibits and Reports on Form 8-K -------------------------------- a.) Exhibit NA b.) Reports on Form 8-K NA
10 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 14, 2001 (Signed) /s/ Wade F. B. Thompson ------------------ ------------------------------- Wade F. B. Thompson, Chairman of the Board, President and Chief Executive Officer DATE March 14, 2001 (Signed) /s/ Walter L. Bennett ------------------- ------------------------------- Walter L. Bennett, Senior Vice President, Secretary (Chief Accounting Officer)