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, 2001 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 4/30/01 ----- ---------------------- Common stock, par value 11,854,060 shares $.10 per share
2 THOR INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS --------------------------- <TABLE> <CAPTION> ASSETS ------ (UNAUDITED) ----------- APRIL 30, 2001 JULY 31, 2000 <S> <C> <C> Current assets: Cash and cash equivalents $ 17,449,869 $ 59,655,251 Investments short term 39,050,593 18,308,194 Accounts receivable: Trade 64,454,334 50,970,187 Other 2,089,191 973,265 Inventories 94,515,662 89,545,213 Deferred income taxes and other 7,982,752 5,835,370 ------------- ------------- Total current assets 225,542,401 225,287,480 ------------- ------------- Property: Land 5,682,431 5,573,144 Buildings and improvements 32,313,520 24,330,742 Machinery and equipment 24,203,981 17,926,415 ------------- ------------- Total cost 62,199,932 47,830,301 Accumulated depreciation and amortization 16,932,838 14,525,634 ------------- ------------- Property, net 45,267,094 33,304,667 ------------- ------------- Investments: Joint ventures 2,159,388 2,628,282 Investments available for sale 4,129,051 3,486,150 ------------- ------------- Total investments 6,288,439 6,114,432 ------------- ------------- Other assets: Goodwill 10,507,847 10,741,131 Non compete 558,646 1,132,614 Trademarks 1,713,476 1,844,981 Other 4,725,019 3,706,087 ------------- ------------- Total other assets 17,504,988 17,424,813 ------------- ------------- TOTAL ASSETS $ 294,602,922 $ 282,131,392 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Accounts payable $ 47,438,476 $ 49,824,276 Accrued liabilities: Taxes 6,610,797 4,599,864 Compensation and related items 10,447,230 13,356,378 Product warranties 13,212,150 11,878,469 Other 5,547,112 6,719,049 ------------- ------------- Total current liabilities 83,255,765 86,378,036 ------------- ------------- Other liabilities 1,393,722 549,080 Stockholders' equity: Common stock - authorized 20,000,000 shares; issued 13,762,497 shares @ 4/30/01 and 13,743,997 shares @ 7/31/00; par value of $.10 per share 1,376,250 1,374,400 Additional paid in capital 26,432,275 26,169,020 Accumulated other comprehensive income (loss) (2,758,599) (2,620,712) Retained earnings 214,743,743 197,171,503 Restricted Stock (241,568) (297,305) Cost of treasury shares 1,908,437 shares @ 4/30/01; 1,759,037 shares @ 7/31/00 (29,598,666) (26,592,630) ------------- ------------- Total stockholders' equity 209,953,435 195,204,276 ------------- ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 294,602,922 $ 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 NINE MONTHS ENDED APRIL 30, 2001 AND 2000 ------------------------------------------------------------------ <TABLE> <CAPTION> (UNAUDITED) ----------- THREE MONTHS ENDED APRIL 30 NINE MONTHS ENDED APRIL 30 --------------------------- -------------------------- 2001 2000 2001 2000 ---- ---- ---- ---- <S> <C> <C> <C> <C> Net sales $221,028,840 $250,119,544 $604,030,823 $674,438,658 Cost of products sold 195,826,613 217,325,839 535,017,381 586,657,619 ------------ ------------ ------------ ------------ Gross profit 25,202,227 32,793,705 69,013,442 87,781,039 Selling, general, and administrative expenses 14,388,246 15,590,080 41,402,327 43,440,405 Interest income 842,946 848,267 2,908,718 2,402,117 Interest expense 191,643 53,323 443,168 164,388 Other income 57,166 65,797 707,688 322,321 Loss on divestment of subsidiary - 1,120,248 - 2,048,325 ------------ ------------ ------------ ------------ Income before income taxes 11,522,450 16,944,118 30,784,353 44,852,359 Provision for income taxes 4,791,682 6,853,913 12,498,371 18,391,904 ------------ ------------ ------------ ------------ Net income $ 6,730,768 $ 10,090,205 $ 18,285,982 $ 26,460,455 ============ ============ ============ ============ Average common shares outstanding 11,853,442 12,105,260 11,909,689 12,121,163 - --------------------------------- ============ ============ ============ ============ Earnings per common share - ------------------------- Basic $ .57 $ .83 $ 1.54 $ 2.18 ============ ============ ============ ============ Diluted $ .57 $ .83 $ 1.53 $ 2.17 ============ ============ ============ ============ Dividends paid per common share $ .02 $ .02 $ .06 $ .06 - --------------------------------- ============ ============ ============ ============ </TABLE> See notes to consolidated financial statements
4 THOR INDUSTRIES, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS FOR THE NINE MONTHS ENDED APRIL 30, 2001 AND 2000 ------------------------------------------------- <TABLE> <CAPTION> (UNAUDITED) ----------- 2001 2000 ---- ---- <S> <C> <C> CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 18,285,982 $ 26,460,455 Adjustments to reconcile net income to net cash used in operating activities: Depreciation 2,573,173 2,065,712 Amortization 938,757 1,340,959 Loss on divestment of subsidiary - 2,048,325 Deferred income taxes - 2,700,000 Purchase of trading investments (40,824,332) (23,553,903) Proceeds from sale of trading investments 21,171,972 6,177,180 Unrealized gain on trading investments (1,090,039) (276,783) Changes in non cash assets and liabilities - ------------------------------------------ Accounts receivable (14,600,073) (20,929,292) Inventories (4,970,449) (16,100,159) Prepaid expenses and other (1,678,562) (1,959,016) Accounts payable (3,454,859) 5,158,410 Accrued liabilities (736,471) 834,564 Other liabilities 900,379 197,684 ------------ ------------ Net cash used in operating activities (23,484,522) (15,835,864) ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant & equipment (14,502,894) (9,244,208) Disposals of property, plant & equipment 17,421 58,753 Purchase available for sale investment (642,690) (10,294,065) ------------ ------------ Net cash used in investing activities (15,128,163) (19,479,520) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Cash dividends (713,742) (727,003) Purchase of treasury stock (3,006,036) (1,409,317) Proceeds from issuance of common stock 265,105 136,135 ------------ ------------ Net cash used in financing activities (3,454,673) (2,000,185) ------------ ------------ EFFECT OF EXCHANGE RATE CHANGES ON CASH (138,024) 191,849 ------------ ------------ Net (decrease) in cash and equivalents (42,205,382) (37,123,720) Cash and equivalents, beginning of year 59,655,251 68,865,635 ------------ ------------ CASH AND EQUIVALENTS, END OF PERIOD $ 17,449,869 $ 31,741,915 ============ ============ SUPPLEMENTAL CASH FLOW INFORMATION: Income taxes paid 11,052,861 13,449,400 Interest paid 443,168 164,388 NON-CASH TRANSACTIONS: Issuance of restricted stock - 165,100 </TABLE> See notes to consolidated financial statements
5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ 1. The July 31, 2000 amounts are taken from the audited financial statements. The interim financial statements are unaudited. In the opinion of management, all adjustments (which consist of normal recurring adjustments) necessary to present fairly the financial position and results of operations for the interim periods presented have been made. These financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended July 31, 2000. The results of operations for the third quarter ended April 30, 2001, are not necessarily indicative of the results for the full year. Certain amounts in the financial statements have been reclassified to conform with the April 30, 2001 presentation. These changes were made to conform to Emerging Issues Task Force 00-10, "Accounting for Shipping and Handling Costs." 2. Major classifications of inventories are: <TABLE> <CAPTION> (Unaudited) ----------- April 30, 2001 July 31, 2000 -------------- ------------- <S> <C> <C> Raw materials $35,007,448 $36,010,315 Chassis 25,894,180 29,122,188 Work in process 24,110,332 21,412,340 Finished goods 15,005,548 7,881,216 ----------- ----------- Total 100,017,508 94,426,059 Less excess of FIFO costs over LIFO costs 5,501,846 4,880,846 ----------- ----------- Total inventories $94,515,662 $89,545,213 =========== =========== </TABLE> 3. Earnings Per Share: <TABLE> <CAPTION> Three months Three months Nine months Nine months ended ended ended ended April 30, 2001 April 30, 2000 April 30, 2001 April 30, 2000 -------------- -------------- -------------- -------------- <S> <C> <C> <C> <C> Weighted average shares outstanding for basic earnings per share 11,853,442 12,105,260 11,909,689 12,121,163 Stock options 56,362 55,170 45,387 57,546 ---------- ---------- ---------- ---------- Total - For diluted shares 11,909,804 12,160,430 11,955,076 12,178,709 ========== ========== ========== ========== </TABLE> 4. Comprehensive Income: <TABLE> <CAPTION> Three months Three months Nine months Nine months ended ended ended ended April 30, 2001 April 30, 2000 April 30, 2001 April 30, 2000 -------------- -------------- -------------- -------------- <S> <C> <C> <C> <C> Net Income $6,730,768 $10,090,205 $18,285,982 $26,460,455 Foreign currency translation adj. (235,952) (137,168) (138,024) 191,849 Unrealized appreciation (de- preciation) on investments (1,342,735) 240,248 137 91,298 ---------- ---------- ---------- ---------- Comprehensive Income $5,152,081 $10,193,285 $18,148,095 $26,743,602 ========== =========== =========== =========== </TABLE>
6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ CONTINUED --------- 5. Segment Information: <TABLE> <CAPTION> Three Months Three Months Nine Months Nine Months ended ended ended ended April 30, 2001 April 30, 2000 April 30, 2001 April 30, 2000 -------------- -------------- -------------- -------------- <S> <C> <C> <C> <C> Net Sales: Recreation vehicles Towables $94,978,054 $117,929,288 $245,730,268 $293,317,854 Motorized 51,155,194 77,002,777 140,873,035 203,249,616 Other 572,486 1,394,807 2,394,850 4,428,372 Buses 74,323,106 53,792,672 215,032,670 173,442,816 ---------- ---------- ----------- ----------- Total $221,028,840 $250,119,544 $604,030,823 $674,438,658 ============ ============ ============ ============ Income Before Income Taxes: Recreation vehicles $7,307,103 $13,830,362 $16,990,099 $33,879,146 Buses 4,965,483 3,840,345 15,338,677 13,745,800 Corporate (750,136) (726,589) (1,544,423) (2,772,587) --------- --------- ----------- ----------- Total $11,522,450 $16,944,118 $30,784,353 $44,852,359 =========== =========== =========== =========== April 30, 2001 July 31, 2000 -------------- ------------- Identifiable Assets: Recreation vehicles $126,842,863 $118,700,398 Buses 87,178,495 66,250,635 Corporate 80,581,564 97,180,359 ---------- ---------- Total $294,602,922 $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 Company believes it is in compliance with SAB101 and there will be no impact on its consolidated financial statements. 7. 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 April 30, 2001, the Company held equity investments with a fair value of $4,129,051 and cost basis of $6,443,146. The investments are classified as available-for-sale and included in investments. Gross unrealized losses were $2,314,095. 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 nine months ended April 30, 2001 are net realized gains on trading investments of $131,340.
7 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION --------------------------------------------------------- AND RESULTS OF OPERATIONS ------------------------- Quarter Ended April 30, 2001 vs. Quarter Ended April 30, 2000 - ------------------------------------------------------------- Net sales for the third quarter totaled $221,028,840, down 11.6% from $250,119,544 in the same period last year. Income before income taxes was $11,522,450, down 32% from $16,944,118 last year. The decrease in income before income taxes of $5,421,668 was primarily attributed to reduced recreational vehicle revenues for the period of $49,621,138, which resulted in an approximate $6,523,000 reduction in income before income taxes. Bus revenues were $20,530,434 greater than the third quarter last year, which resulted in an approximate $1,125,000 increase in income before income taxes. There were no losses on divestment of operations for the quarter ended April 30, 2001, which resulted in an increase in income before income taxes of $1,120,000 compared to the same period last year; however, this increase was offset by a favorable insurance adjustment of approximately $855,000 in the quarter ended April 30, 2000. Recreational vehicle revenues of $146,705,734 were 25.3% lower than $196,326,872 last year, and accounted for 66.4% of total Company revenues compared to 78.5% last year. Recreational vehicle order backlog of $63,355,000 at April 30, 2001 was down 44.2% compared to the same period last year and reflects the continuing softness in the overall R.V. market. Bus revenues of $74,323,106 were 38.2% higher than last year's $53,792,672 and accounted for 33.6% of total Company revenues compared to 21.5% last year. Bus vehicle order backlog of $188,617,000 at April 30, 2001 was 2.1% lower than the same period last year. Gross profit decreased as a percentage of sales from 13.1% in the third quarter ended April 30, 2000 to 11.4% at April 30, 2001 due primarily to lower recreational vehicle volume. There were no price increases during the quarter ended April 30, 2001. Selling, general and administrative expense and amortization of intangibles decreased to $14,388,246 from $15,590,080 last year. However, as a percentage of net sales, selling, general and administrative expense were 6.5% for the quarter this year compared to 6.2% last year. This increase as a percentage of net sales revenue compared to last year is due largely to the favorable $855,000 insurance adjustment in the quarter last year. Interest income for the quarter was approximately the same as last year due primarily to investable cash being higher than last year offsetting lower market rates. Interest expense increased by approximately $138,000, primarily due to interest paid on increased bus chassis pools. The overall effective income tax rate was 41.6% for the quarter ended April 30, 2001 compared to 40.5% last year. This difference is due primarily to timing of recording the Company's foreign sales corporation's savings. Nine Months Ended April 30, 2001 vs. Nine Months Ended April 30, 2000 - --------------------------------------------------------------------- Net sales for the nine months totaled $604,030,823, down 10.4% from $674,438,658 in the same period last year. Income before income taxes was $30,784,353, down 31.4% from $44,852,359 last year. The decrease in income before income taxes of $14,068,006 was primarily attributed to reduced recreational vehicle revenues for the period of $111,997,689, which resulted in an approximate $16,889,000 reduction in income before income taxes. Bus revenues were $41,589,854 greater than the nine month period last year, which resulted in an approximate $1,593,000 increase in income before income taxes. There were no losses on divestment of operations for the nine months ended April 30, 2001, which resulted in an increase in income before income taxes of approximately $2,048,000 compared to the same period last year; however, this increase was partially offset by the favorable insurance adjustment of approximately $855,000 in the quarter ended April 30, 2000.
8 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION --------------------------------------------------------- AND RESULTS OF OPERATIONS ------------------------- (CONTINUED) ----------- Recreational vehicle revenues of $388,998,153 were 22.4% lower than last year's $500,995,842 and accounted for 64.4% of total Company revenues compared to 74.3% last year. Bus revenues of $215,032,670 were 24% higher than last year's $173,442,816 and accounted for 35.6% of total Company revenues compared to 25.7% last year. Bus revenues were up primarily due to increased unit sales. Gross profit decreased as a percentage of net sales from 13.0% for the nine months ended April 30, 2000 to 11.4% for the nine months ended April 30, 2001 due primarily to lower recreational vehicle volumes. There were no price increases during the nine months ended April 30,2001. Selling, general and administrative expenses and amortization of intangibles decreased to $41,402,327 from $43,440,405. However, as a percentage of net sales, selling, general and administrative expenses were 6.9% compared to 6.4% last year. This increase as a percentage of sales revenue compared to last year is due primarily to additional sales programs and incentives for recreational vehicles in a highly competitive soft market environment this year and the favorable $855,000 insurance adjustment last year. Interest income increased by approximately $507,000 for the nine months ended April 30, 2001 due to increased investable cash. Interest expense increased by approximately $279,000 primarily due to interest paid on increased bus chassis pools. The overall effective income tax rate was 40.6% for the nine months ended April 30, 2001 compared to 41.0% last year due primarily to a tax refund of $165,000 in the second quarter of fiscal 2001. Financial Condition and Liquidity - --------------------------------- As of April 30, 2001, Thor had $56,500,462 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 affect, 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 or if a decline in the fair market value is determined to be other than temporary. Due to the relative short term maturity (average 6 months) of the trading securities, principally investment grade securities composed 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.
9 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION --------------------------------------------------------- AND RESULTS OF OPERATIONS ------------------------- (CONTINUED) ----------- Working capital at April 30, 2001 was $142,286,636 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 April 30, 2001. The loan agreement contains certain covenants including restriction 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 $14,502,894 were primarily for the continued expansion of the Komfort R.V. facility and the expansion of the Company's bus operations. The Company anticipates additional capital expenditures in 2001 of approximately $ 4,100,000 primarily for the completion of its Komfort RV facility and Kansas bus facility. During the nine 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. Factors which could cause materially different results, include, 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. 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 - OTHER INFORMATION --------------------------- Item 6. Exhibits and Reports on Form 8-K -------------------------------- a) Exhibits None b) Reports on Form 8-K None
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 June 13, 2001 (Signed) /s/ Wade F. B. Thompson ------------------ ---------------------------------- Wade F. B. Thompson, Chairman of the Board, President and Chief Executive Officer DATE June 13, 2001 (Signed) /s/ Walter L. Bennett ------------------ ----------------------------------- Walter L. Bennett, Senior Vice President, Secretary (Chief Financial Officer)