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, 2002 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 1/31/2002 ----- ------------------------ Common stock, par value 14,194,551 shares $.10 per share
THOR INDUSTRIES, INC. AND SUBSIDIARIES -------------------------------------- CONSOLIDATED BALANCE SHEETS --------------------------- ASSETS ------ <TABLE> <CAPTION> JANUARY 31, 2002 JULY 31, 2001 ---------------- ------------- <S> <C> <C> Current assets: Cash and cash equivalents $ 31,091,027 $ 60,058,777 Investments - short term - 47,134,094 Accounts receivable: Trade 86,800,847 46,174,662 Other 2,297,171 1,341,033 Inventories 88,113,133 80,286,637 Deferred income taxes and other 11,525,190 2,970,082 ------------- ------------- Total current assets 219,827,368 237,965,285 ------------- ------------- Property: Land 9,107,948 8,182,431 Buildings and improvements 38,089,448 35,936,200 Machinery and equipment 23,678,795 20,049,176 ------------- ------------- Total cost 70,876,191 64,167,807 Accumulated depreciation 19,235,396 17,232,199 ------------- ------------- Property, net 51,640,795 46,935,608 ------------- ------------- Investments: Joint ventures 2,201,238 2,192,453 Investments available-for-sale 4,124,264 5,406,286 ------------- ------------- Total Investments 6,325,502 7,598,739 ------------- ------------- Other assets: Goodwill 130,539,260 10,378,420 Non-compete agreements 4,811,817 524,584 Trademarks 8,669,642 1,669,642 Other 4,675,597 3,994,601 ------------- ------------- Total other assets 148,696,316 16,567,247 ------------- ------------- TOTAL ASSETS $ 426,489,981 $ 309,066,879 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Accounts payable $ 63,683,829 $ 57,290,788 Accrued liabilities: Taxes 19,231,287 496,333 Compensation and related items 13,198,160 11,630,556 Product warranties 22,239,988 12,541,890 Other 6,040,553 5,308,473 ------------- ------------- Total current liabilities 124,393,817 87,268,040 ------------- ------------- Deferred income taxes and other liabilities 6,920,348 1,852,432 Stockholders' equity: Common stock - authorized 40,000,000 shares; issued 16,102,988 shares @ 1/31/02 and 13,817,847 shares @ 7/31/01; par value of $.10 per share 1,610,299 1,381,785 Additional paid in capital 89,729,981 27,258,323 Accumulated other comprehensive loss (2,737,787) (1,685,309) Retained earnings 236,791,618 222,942,676 Restricted stock plan (619,629) (352,402) Cost of treasury shares, 1,908,437 shares @ 1/31/02 and 7/31/01 (29,598,666) (29,598,666) ------------- ------------- Total stockholders' equity 295,175,816 219,946,407 ------------- ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 426,489,981 $ 309,066,879 ============= ============= </TABLE> See notes to consolidated financial statements
THOR INDUSTRIES, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED INCOME FOR THE THREE MONTHS AND SIX MONTHS ENDED JANUARY 31, 2002 AND 2001 ------------------------------------------------------------------- <TABLE> <CAPTION> THREE MONTHS ENDED JANUARY 31 SIX MONTHS ENDED JANUARY 31 ----------------------------- --------------------------- 2002 2001 2002 2001 ---- ---- ---- ---- <S> <C> <C> <C> <C> Net sales $269,215,671 $173,181,163 $479,009,802 $383,002,980 Cost of products sold 238,437,128 155,981,994 424,694,716 339,190,397 ------------ ------------ ------------ ------------ Gross profit 30,778,543 17,199,169 54,315,086 43,812,583 Selling, general, and administrative expenses 18,911,965 12,829,505 33,123,630 27,015,448 Interest income 183,215 645,428 1,116,252 2,065,772 Interest expense 42,897 150,396 194,400 251,525 Other income 57,610 209,085 336,300 650,522 ------------ ------------ ------------ ------------ Income before income taxes 12,064,506 5,073,781 22,449,608 19,261,904 Provision for income taxes 4,386,280 1,909,380 8,078,983 7,706,689 ------------ ------------ ------------ ------------ Net income $ 7,678,226 $ 3,164,401 $ 14,370,625 $ 11,555,215 ============ ============ ============ ============ Average common shares outstanding - Basic 13,968,808 11,887,495 12,942,133 11,936,896 - ----------------------------------------- Average common shares outstanding - Diluted 14,048,290 11,930,800 13,004,774 11,982,122 - ------------------------------------------- Earnings per common share: - -------------------------- Basic $ .55 $ .27 $ 1.11 $ .97 ============ ============ ============ ============ Diluted $ .55 $ .27 $ 1.10 $ .96 ============ ============ ============ ============ Dividends paid per common share $ .02 $ .02 $ .04 $ .04 - ------------------------------- ============ ============ ============ ============ </TABLE> See notes to consolidated financial statements
THOR INDUSTRIES, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS FOR THE SIX MONTHS ENDED JANUARY 31, 2002 AND 2001 -------------------------------------------------- <TABLE> <CAPTION> 2002 2001 ------------ ------------ <S> <C> <C> CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 14,370,625 $ 11,555,215 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 2,171,810 1,689,310 Amortization 64,767 933,723 Purchase of trading securities (3,588,351) (31,866,070) Proceeds from sale of trading investments 50,027,883 18,903,584 Gain on sale of investments available-for-sale (29,322) -- Gain on sale of trading investments (404,238) -- Deferred income tax 4,670,477 (1,744,165) Changes in non-cash assets and liabilities, net of assets and liabilities acquired - ---------------------------------------------------------------------------------- Accounts receivable (16,751,079) (3,200,602) Inventories 11,109,150 (6,652,081) Prepaid expenses and other (2,570,433) (3,513,699) Accounts payable (22,539,090) (7,225,171) Accrued liabilities 4,598,788 (8,955,548) Other liabilities 1,565,280 669,725 ------------ ------------ Net cash provided by (used in) operating activities 42,696,267 (29,405,779) ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant & equipment (3,282,397) (7,982,956) Disposals of property, plant & equipment 27,157 513 Purchase of available-for-sale investments -- (619,371) Proceeds from sale of available-for-sale investments 96,228 -- Acquisition of Keystone (68,604,096) -- ------------ ------------ Net cash used in investing activities (71,763,108) (8,601,814) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Cash dividends (521,683) (476,470) Purchase of treasury stock -- (3,006,036) Proceeds from issuance of common stock 883,491 193,455 ------------ ------------ Net cash provided by (used in) financing activities 361,808 (3,289,051) ------------ ------------ EFFECT OF EXCHANGE RATE CHANGES ON CASH (262,717) 97,928 ------------ ------------ Net decrease in cash and equivalents (28,967,750) (41,198,716) Cash and equivalents, beginning of year 60,058,777 59,655,251 ------------ ------------ CASH AND EQUIVALENTS, END OF PERIOD $ 31,091,027 $ 18,456,535 ============ ============ SUPPLEMENTAL CASH FLOW INFORMATION: Non-cash transactions - Issuance of restricted stock $ 346,199 -- Income taxes paid 176,559 $ 10,164,358 Interest paid 194,400 251,525 Stock issued for Keystone $ 61,470,483 -- </TABLE> See notes to consolidated financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ 1. The July 31, 2001 amounts are from the annual 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/A for the year ended July 31, 2001. The results of operations for the three months and the six months ended January 31, 2002, are not necessarily indicative of the results for the full year. Certain amounts in the financial statements have been reclassified to conform with the January 31, 2002 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> January 31, 2002 July 31, 2001 ---------------- ------------- <S> <C> <C> Raw materials $40,370,610 $33,974,281 Chassis 17,503,117 19,021,209 Work in process 21,239,055 23,879,366 Finished goods 14,849,293 8,801,723 ---------- --------- Total 93,962,075 85,676,579 Less excess of FIFO costs over LIFO costs 5,848,942 5,389,942 --------- --------- Total inventories $88,113,133 $80,286,637 =========== =========== </TABLE> 3. Earnings Per Share: <TABLE> <CAPTION> Three months Three months Six months Six months ended ended ended ended January 31, 2002 January 31, 2001 January 31, 2002 January 31, 2001 ---------------- ---------------- ---------------- ---------------- <S> <C> <C> <C> <C> Weighted average shares outstanding for basic earnings per share 13,968,808 11,887,495 12,942,133 11,936,896 Stock options 52,754 43,305 49,277 45,226 Other issuable shares 26,728 -- 13,364 -- ---------- ---------- ---------- ---------- Total - For diluted shares 14,048,290 11,930,800 13,004,774 11,982,122 ========== ========== ========== ========== </TABLE> 4. Stockholders' Equity: <TABLE> <CAPTION> Three months Three months Six months Six months ended ended ended ended January 31, 2002 January 31, 2001 January 31, 2002 January 31, 2001 ---------------- ---------------- ---------------- ---------------- <S> <C> <C> <C> <C> Net Income $7,678,226 $3,164,401 $14,370,625 $11,555,215 Foreign currency translation adj. (1,881) 219,146 (262,718) 97,928 Unrealized appreciation (depreciation) on investments (377,005) 1,237,408 (789,760) 1,342,872 ---------- ---------- ----------- ----------- Comprehensive Income $7,299,340 $4,620,955 $13,318,147 $12,996,015 ========== ========== =========== =========== </TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ (CONTINUED) ----------- 5. Segment Information: <TABLE> <CAPTION> Three Months Three Months Six Months Six Months ended ended ended ended January 31, 2002 January 31, 2001 January 31, 2002 January 31, 2001 ---------------- ---------------- ---------------- ---------------- <S> <C> <C> <C> <C> Net Sales: Recreation vehicles Towables $170,117,283 $ 64,982,994 $255,639,527 $150,729,261 Motorized 31,959,855 37,112,294 73,642,444 89,741,793 Other 657,913 618,118 1,575,251 1,822,364 Buses 66,480,620 70,467,757 148,152,580 140,709,562 ------------ ------------ ------------ ------------ Total $269,215,671 $173,181,163 $479,009,802 $383,002,980 ============ ============ ============ ============ Income Before Income Taxes: Recreation vehicles $10,777,185 $1,497,198 $16,266,706 $ 9,682,996 Buses 3,276,381 4,427,062 8,809,804 10,373,192 Corporate (1,989,060) (850,479) (2,626,902) (794,284) ----------- --------- ----------- --------- Total $12,064,506 $5,073,781 $22,449,608 $19,261,904 =========== ========== =========== =========== </TABLE> <TABLE> <CAPTION> January 31, 2002 July 31, 2001 ---------------- ------------- <S> <C> <C> Identifiable Assets: Recreation vehicles $305,592,717 $114,149,684 Buses 78,758,957 82,194,269 Corporate 42,138,307 112,722,926 ------------ ------------ Total $426,489,981 $309,066,879 ============ ============ </TABLE> 6. Goodwill and Other Intangible Assets On August 1, 2001, the Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets", which eliminated the amortization of goodwill and other intangibles with indefinite useful lives. The Company performed an impairment test of its goodwill and determined that no impairment of the recorded goodwill existed. In accordance with SFAS No. 142, goodwill will be tested for impairment at least annually and more frequently if an event occurs which indicates the goodwill may be impaired. On an annual basis, we expect to perform our impairment testing during the fourth quarter. The components of other intangibles are as follows: <TABLE> <CAPTION> January 31, 2002 July 31, 2001 ---------------- ------------- Accumulated Accumulated Cost Amortization Cost Amortization ---- ------------ ---- ------------ <S> <C> <C> <C> <C> Amortized Intangible Assets Non-compete agreements $14,073,367 $9,261,550 $9,573,367 $9,048,783 </TABLE> Aggregate amortization expense for non-compete agreements for the quarters ended January 31, 2002 and January 31, 2001 was $178,704 and $242,879 respectively. Aggregate amortization expense for the six months ended January 31, 2002 and January 31, 2001 was $212,767 and $590,947 respectively. Non-compete agreements are amortized on a straight-line basis. Estimated Amortization Expense: For the year ending July 2002 $570,176 For the year ending July 2003 $714,818 For the year ending July 2004 $714,818 For the year ending July 2005 $671,485 For the year ending July 2006 $584,818 The changes in the carrying amount of goodwill and trademarks for the period ended January 31, 2002 are as follows: Goodwill Trademarks -------- ---------- Balance as of July 31, 2001 $ 10,378,420 $1,669,642 Arising from acquisitions 120,160,840 7,000,000 ------------ ---------- Balance as of January 31, 2002 $130,539,260 $8,669,642 ============ ==========
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ (CONTINUED) ----------- As of January 31, 2002, goodwill and trademarks for the recreational vehicles segment totaled $130,243,760 and $8,441,674 respectively. The remainder related to the bus segment. The table below shows the effect on net income had SFAS No. 142 been adopted in prior periods: <TABLE> <CAPTION> Three Months Three Months Six Months Six Months ended ended ended ended January 31, 2002 January 31, 2001 January 31, 2002 January 31, 2001 ---------------- ---------------- ---------------- ---------------- <S> <C> <C> <C> <C> Net Income $7,678,226 $3,164,401 $14,370,625 $11,555,215 Goodwill Amortization - 127,168 - 254,721 Trademark Amortization - 41,236 - 82,474 ---------- ---------- ----------- ----------- Adjusted Net Income $7,678,226 $3,332,805 $14,370,625 $11,892,410 ========== ========== =========== =========== </TABLE> <TABLE> <CAPTION> Basic Diluted Basic Diluted Basic Diluted Basic Diluted ----- ------- ----- ------- ----- ------- ----- ------- <S> <C> <C> <C> <C> <C> <C> <C> <C> Earnings per common share $.55 $.55 $.27 $.27 $1.11 $1.10 $.97 $.96 Effect of accounting change - - .01 .01 - - .03 .03 ----- ----- ----- ----- ----- ----- ----- ----- Adjusted Net Income $.55 $.55 $.28 $.28 $1.11 $1.10 $1.00 $.99 ===== ===== ===== ===== ===== ===== ===== ===== </TABLE> 7. Accounting Pronouncements In August 2001, the FASB issued Statement of Financial Accounting Standards No. 144 ("SFAS 144") entitled "Accounting for the Impairment or Disposal of Long-Lived Assets", which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. While SFAS 144 supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of", it retains many of the fundamental provisions of that statement. SFAS 144 becomes effective for fiscal years beginning after December 15, 2001, with early application encouraged. The Company is reviewing the impact of SFAS 144, and does not believe that its adoption will have a material affect 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 accumulated other comprehensive income 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 is recognized when earned. At January 31, 2002, the Company held equity investments with a fair value of $4,124,264 and cost basis of $6,039,712. The investments are classified as available-for-sale and included in other investments. Gross unrealized losses were $1,915,448. 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, 2002 are net realized gains on trading investments of $63,035. 9. Acquisition On November 9, 2001, Thor acquired 100% of the common and preferred stock of Keystone RV Company ("Keystone"). Keystone is engaged in the business of manufacturing travel trailers and fifth wheel recreation vehicles. The purchase price of approximately $151,090,000 consisted of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ (CONTINUED) ----------- cash of $88,810,000 and 2,250,000 shares of Thor common stock valued at $62,280,000, of which 1,372,433 shares are restricted. The final purchase price includes $6,244,000 of cash and 29,273 shares of Thor common stock valued at $810,000 that will be paid and issued subsequent to January 31, 2002, and is included in accounts payable as $7,054,000 at January 31, 2002. The value of the common stock was based on the average market price of Thor's common shares over the two-day period before and after the terms of the acquisition were agreed to and announced. The value of the restricted shares was based on an independent appraisal. The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition: Current assets $ 63,920,463 Property, plant and equipment 3,607,668 Goodwill 120,012,845 Trademarks and non-compete agreements 11,500,000 Other assets 141,251 ------------- Total assets acquired 199,182,227 Current liabilities 43,918,410 Other liabilities 4,173,099 ------------- Net assets acquired $ 151,090,718 ============= The purchase price allocation includes $4,500,000 of non-compete agreements, which will be amortized over seven to ten years, $120,012,845 of goodwill and $7,000,000 for trademarks that are not subject to amortization. The non-compete, goodwill and trademarks are not deductible for tax purposes. The primary reasons for the acquisition include Keystone's future earnings potential, its fit with our existing operations, its market share, and its cash flow. The results of operations for Keystone are included in Thor's operating results beginning November 10, 2001. The Keystone goodwill and its results are included in the recreation vehicle reporting segment. Pro forma results of operations, as if the acquisition occurred as of the beginning of the periods presented are as follows: <TABLE> <CAPTION> Three Months Three Months Six Months Six Months ended ended ended ended January 31, 2002 January 31, 2001 January 31, 2002 January 31, 2001 ---------------- ---------------- ---------------- ---------------- <S> <C> <C> <C> <C> Net Sales $276,643,368 $230,050,576 $613,633,714 $521,681,296 Net Income $ 8,335,692 $ 4,125,090 $ 24,108,381 $ 15,103,653 Earnings per common share Basic $ .59 $ .29 $ 1.70 $ 1.06 Diluted $ .59 $ .29 $ 1.69 $ 1.06 </TABLE> MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF - ------------------------------------------------------------------------ OPERATIONS - ---------- Quarter Ended January 31, 2002 vs. Quarter Ended January 31, 2001 - ----------------------------------------------------------------- Net sales for the second quarter of fiscal 2002 were $269,215,671 compared to $173,181,163 for the second quarter of fiscal 2001. Income before income taxes in fiscal 2002 was $12,064,506, a 137.8% increase from $5,073,781 in fiscal 2001. The increase in income before income taxes of $6,990,725 in fiscal 2002 was primarily caused by increased recreation vehicle revenues of $100,021,645 which resulted in an increase in income before income taxes of approximately $9,280,000. Included in the second quarter of 2002 are sales of $95,447,258 and income before income taxes of $7,793,594 for Keystone RV acquired on November 9, 2001. Bus revenues were $3,987,137 less in fiscal 2002 than in fiscal 2001. Bus income before income taxes in fiscal 2002 was approximately $1,151,000 less than the same period last year because of reduced revenues at our Champion and ElDorado Kansas operations and overall lower margins. This was due primarily to declines in airline traffic after the terrorist attacks of
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION --------------------------------------------------------- AND RESULTS OF OPERATIONS ------------------------- (CONTINUED) ----------- September 11, 2001 which affected the hotel, motel, rental car and other businesses and delayed purchases of buses, as well as to increased competition. Recreation vehicle revenues increased in the second quarter of fiscal 2002 by 97.4% to $202,735,051, compared to $102,713,406 in fiscal 2001 and accounted for 75.3% of total company revenues compared to 59.3% in fiscal 2001. Recreation vehicle order backlog of $127,870,000 (includes $62,613,000 for Keystone RV) at January 31, 2002 was up 117.5% compared to the same period last year. Excluding Keystone RV backlog, recreation vehicle backlogs were $65,257,000 at January 31, 2002, up 11% compared to the same period last year. This increase in backlog indicates a recent strengthening in the marketplace. Bus revenues in fiscal 2002 decreased by 5.7% to $66,480,620 compared to $70,467,757 in fiscal 2001 and accounted for 24.7% of total company revenues compared to 40.7% in fiscal 2001. Bus vehicle order backlog of $117,081,000 at January 31, 2002 was down 43% compared to the same period last year. Gross profit as a percentage of sales in fiscal 2002 increased to 11.4% from 9.9% in fiscal 2001 primarily due to increased recreation vehicle sales. Selling, general, and administrative expenses and amortization of intangibles were $18,911,965 compared to $12,829,505 for the same period in fiscal 2001. As a percentage of sales, selling, general and administrative expenses were 7.0% in fiscal 2002 compared to 7.4% in fiscal 2001. Amortization of intangibles decreased in fiscal 2002 to $178,704 compared to $414,266 in fiscal 2001. This $235,562 reduction is primarily due to expiration of certain non-compete expenses of approximately $208,817 offset by the Keystone non-compete cost of $144,642 for fiscal 2002, and the reduction in goodwill and trademark amortization expense in fiscal 2002 of approximately $171,387 resulting from the Company's adoption of Statement of Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets". The additional selling, general and administrative costs offsetting the reduction of amortization of intangibles is due primarily to the increased costs associated with the substantial increase in revenue. Interest income decreased by $462,213 due primarily to lower market rates in fiscal 2002 and the use of cash investments to partially fund the acquisition of Keystone RV Company on November 9, 2001. The overall effective income tax rate was 36.4% for fiscal 2002 compared to 37.6% in fiscal 2001 due primarily to research and development tax credits recognized by the Company. Six Months Ended January 31, 2002 vs. Six Months Ended January 31, 2001 - ----------------------------------------------------------------------- Net sales for the six months of fiscal 2002 were $479,009,802 compared to $383,002,980 for the same period last year. Income before income taxes in fiscal 2002 was $22,449,608, a 16.5% increase from $19,261,904 in fiscal 2001. The increase in income before income taxes of $3,187,704 in fiscal 2002 was primarily caused by increased recreation vehicle revenues of $88,563,804 which resulted in an increase in income before income taxes of approximately $6,584,000. Included in the fiscal 2002 results for the six months, are the sales of $95,447,258 and income before income taxes of $7,793,594 for Keystone RV Company acquired on November 9, 2001. Bus revenues were $7,443,018 greater in fiscal 2002 than fiscal 2001. Bus income before income taxes in fiscal 2002 was approximately $1,563,000 less than the same period last year due primarily to increased competition. Recreation vehicle revenues increased in the six months of fiscal 2002 by 36.6% to $330,857,222, compared to $242,293,418 in fiscal 2001 and accounted for 69.1% of total company revenues compared to 63.3% in fiscal 2001. Bus revenues in fiscal 2002 increased by 5.3% to $148,152,580 compared to $140,709,562 in fiscal 2001 and accounted for 30.9% of total company revenues compared to 36.7% in fiscal 2001. Gross profit as a percentage of sales in fiscal 2002 decreased to 11.3% from 11.4% in fiscal 2001 primarily due to reduced bus operation margins. Selling, general, and administrative expenses and amortization of intangibles were $33,123,630 compared to $27,015,448 for the same period in fiscal 2001. As a percentage of sales, selling, general and administrative expenses were 6.9% in fiscal 2002 compared to 7.1% in fiscal 2001. Amortization of intangibles decreased in fiscal 2002 to $212,767 compared to $933,722 in fiscal 2001. This $720,955 reduction is primarily due to expiration of certain non-compete expenses of approximately $522,822 offset by the Keystone non-compete cost of $144,642 for fiscal 2002, and the reduction in goodwill and trademark amortization expense in fiscal 2002 of approximately $342,775 resulting from the Company's adoption of Statement of Financial Accounting Standard No. 142 "Goodwill and Other Intangible Assets". The additional selling, general, and administrative costs offsetting the reduction of amortization of intangibles is due primarily to the increased costs associated with the increased revenue in recreation vehicles. Interest income decreased by
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION --------------------------------------------------------- AND RESULTS OF OPERATIONS ------------------------- (CONTINUED) ----------- $949,520 due primarily to lower market rates in fiscal 2002 and the use of cash investments to partially fund the acquisition of Keystone RV Company on November 9, 2001. The overall effective tax rate was 36.0% for the six months of fiscal 2002 compared to 40.0% in fiscal 2001 due primarily to research and development tax credits recognized by the Company. Financial Condition and Liquidity - --------------------------------- As of January 31, 2002, we had $31,091,027 in cash and cash equivalents compared to $60,058,777 in cash and cash equivalents and $47,134,094 in short-term investments on July 31, 2001. The reduction in cash, cash equivalents and short-term investments was due to cash required for the acquisition of Keystone RV Company on November 9, 2001. We classify our debt and equity securities as trading or available-for-sale securities. The former are carried on our consolidated balance sheet as "Cash and cash equivalents" or "Investments - short-term". The latter are carried on our consolidated balance sheet as "Investments - investments available-for-sale". Trading securities, principally investment grade securities composed of asset-based notes, mortgage-backed notes and corporate bonds, are generally bought and held for sale in the near term. All other securities are classified as available-for-sale. In each case, securities are carried at fair market value. Unrealized gains or losses on trading securities are included in earnings. Unrealized gains and losses in 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 our consolidated balance sheets 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 our trading securities, we do not believe that a change in the fair market value of these securities will have a significant impact on our financial position or results of future operations. Working capital at January 31, 2002 was $95,433,551 compared to $150,697,245 on July 31, 2001. The Company had 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, 2002. 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 20, 2002. The Company believes that internally generated funds and the revolving line of credit agreement will be sufficient to meet current needs and additional capital requirements. Capital expenditures of $3,282,000 were primarily for the expansion of our Kansas bus operation, a roof replacement at our Airstream operation, and expansion at our Four Winds operation to manufacture diesel motor homes. The Company anticipates additional capital expenditures in 2002 of approximately $4,600,000. The major components of these anticipated capital expenditures include the completion of our Kansas bus operation expense for $400,000; the completion of a roof replacement at our Airstream operation for $278,000; building expenses at our Keystone and Four Winds operations for approximately $1,262,000, and computer systems for our Airstream and Keystone operations for approximately $763,000. The balance of capital expenditures will be for purchase or replacement of machinery and equipment in the ordinary course of business. The Company also plans to spend $9,200,000 on a new building and equipment for our ElDorado California bus operation which will start in the latter part of fiscal 2002, with the majority of cost to be incurred in fiscal 2003. This expansion at ElDorado California will allow the Company to increase production efficiencies and techniques and produce 40 foot and larger buses. On November 9, 2001, Thor acquired 100% of the common and preferred stock of Keystone RV Company ("Keystone"). Keystone is engaged in the business of manufacturing travel trailers and fifth wheel recreation vehicles. The purchase price of approximately $151,090,000 consisted of cash of $88,810,000 and 2,250,000 shares of Thor common stock valued at $62,280,000, of which 1,372,433 shares are restricted. The final purchase price includes $6,244,000 of cash and 29,273 shares of Thor common stock valued at $810,000 that will be paid and issued subsequent to January 31, 2002, and is included in accounts payable as $7,054,000 at January 31, 2002. The value of the common stock was based on the average market price of Thor's common shares over the two-day period before and after the terms of the acquisition were agreed to and announced. The value of the restricted shares was based on an independent appraisal.
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. 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 introductions, the pace of acquisitions 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. PART II Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- Annual Meeting of Shareholders on December 3, 2001 Matters Voted on by Shareholders: --------------------------------- Proposal #1 Election of Directors: Peter B. Orthwein and William C. Tomson Proposal #2 Amendment of Certificate of Incorporation to increase authorized number of shares from 20,000,000 to 40,000,000. Results of Voting by Shareholders: ---------------------------------- Proposal #1 For Against Abstain --- ------- ------- Peter B. Orthwein 10,503,791 -0- 241,059 William C. Tomson 10,715,371 -0- 29,479 Proposal #2 For Against Abstain --- ------- ------- 9,551,440 413,604 779,806 Item 6. Exhibits and Reports on Form 8-K -------------------------------- b.) Reports on Form 8-K On October 31, 2001 a Form 8-K was filed with the Securities and Exchange Commission pursuant to a press release regarding the Company's intent to purchase Keystone RV Company. On November 13, 2001 a Form 8-K was filed with the Securities and Exchange Commission pursuant to the acquisition of Keystone RV Company. On December 3, 2001 a Form 8-K/A was filed which amended the Form 8-K filed on November 13, 2001, and includes the historical financial information with respect to Keystone RV Company and the pro forma financial information required with respect to the acquisition of Keystone.
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 13, 2002 (Signed) /s/ Wade F. B. Thompson ------------------ -------------------------------------------- Wade F. B. Thompson, Chairman of the Board, President and Chief Executive Officer DATE March 13, 2002 (Signed) /s/ Walter L. Bennett ------------------ -------------------------------------------- Walter L. Bennett, Senior Vice President, Secretary (Chief Accounting Officer)