2020
THOR INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
| THOR INDUSTRIES, INC. | ||||||||||||||||||||||||||||||||||||||
| (Exact name of registrant as specified in its charter) | ||||||||||||||||||||||||||||||||||||||
| Delaware | 93-0768752 | |||||||||||||||||||||||||||||||||||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |||||||||||||||||||||||||||||||||||||
| 601 | 46514-3305 | |||||||||||||||||||||||||||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||||||||||||||||||||||||||
Registrant’s telephone number, including area code: (574) 970-7460
Securities registered pursuant to Section 12(b) of the Exchange Act:
| Registrant’s telephone number, including area code: (574) 970-7460 | |||||||||||||||||||||||||||||||
| Securities registered pursuant to Section 12(b) of | ||||||||||||||||||||||||||||||||
| Name of each exchange | ||||||||||||||||||||||||||||||||
| Title of each class | Trading Symbol(s) | on which | ||||||||||||||||||||||||||||||
Common | THO | New York Stock Exchange | ||||||||||||||||||||||||||||||
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to thisForm 10-K. ☑
| Large accelerated filer | ☑ | Accelerated filer | ☐ | |||||||||||||||||||||
| Non-accelerated filer | ☐ |
| Smaller reporting company | ☐ | ||||||||||||||||||||
| Emerging growth company | ☐ | |||||||||||||||||||||||
55,198,756.
ITEM 1. ITEM 1A. ITEM 1B. ITEM 2. ITEM 3. ITEM 4. ITEM 5. ITEM 6. ITEM 7. ITEM 7A. ITEM 8. ITEM 9. ITEM 9A. ITEM 9B. ITEM 10. ITEM 11. ITEM 12. ITEM 13. ITEM 14. ITEM 15. EX-21.1 EX-23.1 EX-31.1 EX-31.2 EX-32.1 EX-32.2 Xplore. Income. Thor Motor Coach also manufactures and sells Class B motorhomes under the trade names Sequence and Tellaro. Redwood. Cornerstone and Class C and A motorhomes under trade names such as Odyssey, Esteem, and Emblem. The European Recreational Vehicles reportable segment consists solely of the EHG business, as discussed in Note 2 to the Consolidated Financial Statements. EHG manufactures a full line of towable and motorized recreational vehicles, including motorcaravans, caravans, campervans and urban vehicles in eight RV production facilities within Europe. Recreational vehicles: Towables Motorized Total recreational vehicles Other Intercompany eliminations Total In Europe, we produce numerous types of towable and motorized recreational vehicles, including caravans, motorcaravans, campervans, urban vehicles and other RV-related products and services. In Europe, the focus is on light and small caravans that can even be towed by small passenger cars. In North America, capacity decreases can generally be achieved relatively quickly and at relatively low cost, mainly by decreasing the number of production employees. In Europe, short-term capacity decreases can generally be achieved by adjusting work schedules and reducing the number of contract and temporary workers. However, industry wholesale shipments in calendar 2020 may not follow typical seasonal patterns as dealers adjust their inventory to the current demand by consumers in the near term following the increased market demand as a result of the COVID-19 pandemic. dealer agreements. 2019. the reduction in commercial air travel and cruises, have decreased dealer inventory levels at July 31, 2020 to historically low levels in many areas and therefore caused a significant increase in recent dealer orders. 2021. We believe that our products and facilities comply in all material respects with applicable vehicle safety (including those promulgated by NHTSA), environmental, position, however, future developments in regulation and/or policy could impose significant challenges upon our business operations. RVIA and approximately 30 RV manufacturers across Europe according to Caravaning Industry Association e.V. (“CIVD”). competitive both in the United States and in Europe. and we may lose sales and market share. business, sales, hiring, and employee retention. Our Company's products and customer confidence and purchase decisions. The network of carriers may also be negatively impacted by the pandemic. If the pandemic worsens in the regions in which we operate and sell into, the transportation contractors may have difficulty finding drivers who are willing to deliver in those regions, or governmental agencies or other actors may restrict movement of goods in those regions. In March and April, in particular, based on welfare concerns for individuals and in compliance with various governmental actions, including shelter-in-place orders, we experienced disruptions in the transportation of our units from our production facilities to dealer retail facilities in both North America and Europe. 2020. In the event that either of these lending institutions limit or discontinue dealer financing, we could experience a material adverse effect on our results of operations. sales or otherwise negatively impact our business. obsolete, and/or new technological advances could disrupt our industry. earnings. Exchange which entail compliance and disclosure risks as well as the potential for increased costs. service or cyber-attacks. Within our European-based operations, we are subject to employee contracts, Works Councils and certain labor organizations. Any disruption in our relationships with these third-party associations, could adversely affect our ability to attract and retain qualified employees to meet current or future manufacturing needs at a reasonable cost, or at all. did not have any foreign currency forward contracts outstanding. Within EHG there are assets held in non-Euro currencies, with most of these assets related to the RV rental business. Where possible, these assets have been funded by debt in the local currency which economically offsets the underlying currency risk. Within our European-based operations, the Company incurs significant costs with respect to employee benefits which are largely governed by country and regional regulations. New or revised governmental mandates may cause our operating results and financial condition to suffer. Locations RVs: Jackson Center, OH (Airstream) (A)(B) Elkhart, IN (Thor Motor Coach) (B) Bristol, IN (Thor Motor Coach) (B) Wakarusa, IN (Thor Motor Coach) (B) Middlebury, IN (Keystone) (A) Goshen, IN (Keystone) (A) Topeka, IN (Keystone) (A) Syracuse, IN (Keystone) (A) Pendleton, OR (Keystone) (A) Elkhart, IN (Heartland) (A) Elkhart, IN (Heartland) (A) Middlebury, IN (Heartland) (A) Nappanee, IN (Heartland) (A) Howe, IN (Heartland) (A) LaGrange, IN (Heartland) (A) Nampa, ID (Heartland) (A) Shipshewana, IN (KZ) (A) Middlebury, IN (Jayco) (A)(B) Elkhart, IN (Jayco) (B) Topeka, IN (Jayco) (A) Topeka, IN (Jayco) (A) Shipshewana, IN (Jayco) (A) Twin Falls, ID (Jayco) (A) RV Subtotal Other: Cassopolis, MI (C) Elkhart, IN (C) Elkhart, IN (C) Other Subtotal Corporate: Elkhart, IN (Corporate) Milford, IN (utilized by Bison) Elkhart, IN (utilized by Thor Motor Coach) Wakarusa, IN (utilized by Keystone and Thor Motor Coach) Corporate Subtotal Total First Quarter Second Quarter Third Quarter Fourth Quarter symbol “THO.” 129. factors, in addition to compliance with any then-existing financing facilities. 2020. Income statement data: Net sales Net income from continuing operations Net income Earnings per common share from continuing operations: Basic Diluted Earnings per common share: Basic Diluted Dividends paid per common share: Regular Special Balance sheet data: Total assets Long-term liabilities In Europe, according to the European Caravan Federation (“ECF”), EHG’s current market share for the six months ended June 30, 2020 based on units was approximately 26.2% for motorcaravans and campervans combined and approximately 20.6% for caravans. Loss before income taxes Income tax benefit Loss from discontinued operations, net of income taxes Income and Comprehensive Income. – North America 2019. Dealer inventory levels were elevated in certain locations as of July 31, 2019, which depressed dealer orders and backlog as of that time. In recent periods, dealer inventory levels have decreased materially based on recent production interruptions from March through May 2020 due to the COVID-19 pandemic, coupled with strong retail demand for RVs given the perceived safety of RV travel during the COVID-19 pandemic, a strong desire to socially distance and the reduction in commercial air travel and cruises. As of July 31, 2020, dealer inventory levels were well below optimal stocking levels, which has increased dealer orders and the backlog. North America Towables – Units Motorized – Units Total This calendar year 2021 most likely forecast could range from a lower estimate of approximately 494,400 total units to an upper estimate of approximately 519,900 units. North America once the currently low dealer inventory levels are replenished to generally normalized levels over the ensuing months. Towables – Units Motorized – Units Total updated, and is often impacted by delays in reporting by various states or provinces. The COVID-19 pandemic has resulted in further delays in the submission of information reported by the various states or provinces beginning with calendar 2020 results. North America Towables – Units Motorized – Units Total North America Towables – Units Motorized – Units Total were as follows: Towables – Units Motorized – Units Total could also impact consumer buying patterns Fiscal 2017 Fiscal 2016 Change Amount % Change NET SALES Recreational vehicles Towables Motorized Total recreational vehicles Other Intercompany eliminations Total # OF UNITS Recreational vehicles Towables Motorized Total Fiscal 2017 % of Segment Net Sales Fiscal 2016 % of Segment Net Sales Change Amount % Change GROSS PROFIT Recreational vehicles Towables Motorized Total recreational vehicles Other Intercompany eliminations Total SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Recreational vehicles Towables Motorized Total recreational vehicles Other Corporate Total INCOME (LOSS) BEFORE INCOME TAXES Recreational vehicles Towables Motorized Total recreational vehicles Other Intercompany eliminations Corporate Total As of July 31, 2017 As of July 31, 2016 Change Amount % Change Recreational vehicles Towables Motorized Total 2019 with 10.1% last year. Consolidated Financial Statements. the remaining unamortized debt fees related to the Company’s previous asset-based facility. $88,230, or 47.8%. Fiscal 2019 included acquisition-related costs totaling $114,866. certain non-deductible transaction costs resulting from the EHG acquisition. NET SALES: Towables Travel Trailers and Other Fifth Wheels Total Towables # OF UNITS: Towables Travel Trailers and Other Fifth Wheels Total Towables North American Towables Travel Trailers and Other Fifth Wheels Total North American Towables NET SALES: Motorized Class A Class C Class B Total Motorized # OF UNITS: Motorized Class A Class C Class B Total Motorized Stat Surveys, for the twelve-month periods ended June 30, 2020 and 2019, our market share for travel trailers and fifth wheels combined was 44.3% and 48.6%, respectively. mix as a result of the introduction of new, lower-priced models since the prior year. 5.3%, as the decrease in sales resulted in higher overhead costs per unit sold. 2019. sales. Change Amount % Change NET SALES Recreational vehicles Towables Motorized Total recreational vehicles Other Intercompany eliminations Total # OF UNITS Recreational vehicles Towables Motorized Total % of Segment Net Sales % of Segment Net Sales Change Amount % Change GROSS PROFIT Recreational vehicles Towables Motorized Total recreational vehicles Other Intercompany eliminations Total SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Recreational vehicles Towables Motorized Total recreational vehicles Other Corporate Total INCOME (LOSS) BEFORE INCOME TAXES Recreational vehicles Towables Motorized Total recreational vehicles Other Intercompany eliminations Corporate Total ORDER BACKLOG July 31, 2016 July 31, 2015 Amount Change Recreational vehicles Towables Motorized Total NET SALES: Towables Travel Trailers and Other Fifth Wheels Total Towables # OF UNITS: Towables Travel Trailers and Other Fifth Wheels Total Towables NET SALES: Motorized Class A Class C Class B Total Motorized # OF UNITS: Motorized Class A Class C Class B Total Motorized 2019 Total foreign exchange rates. The increase in the overall net price per unit within the increases since the prior fiscal year. costs per unit sold. decreased $1,745. potential customary limits and restrictions pursuant to our credit facilities and applicable legal limitations. compliance with any then-existing financing facilities. payments. 2020 totaling $88,318. EHG acquisition, and payments for regular quarterly cash dividend payments of $0.39 per share for each quarter of fiscal 2019 totaling $84,139. 2018 totaling $77,989. to $0.39 per share. Policies 25 years for trademarks and 10 to 15 years for technology assets, respectively. impairment of goodwill during fiscal 2020, 2019 or 2018. more information. Revolving credit loan (1) Capital leases (2) Operating leases (2) Purchase obligations (3) Unrecognized income tax benefits (4) Total contractual cash obligations Standby repurchase obligations (1) commitments. result in an estimated $12,700 pre-tax reduction in net earnings over a one-year period. Fiscal 2017 Net sales Gross profit from continuing operations Net income from continuing operations Net income Earnings per common share from continuing operations: (1) Basic Diluted Earnings per common share: (1) Basic Diluted Dividends paid per common share (2) Market prices per common share High Low Fiscal 2016 Net sales Gross profit from continuing operations Net income from continuing operations Net income Earnings per common share from continuing operations: (1) Basic Diluted Earnings per common share: (1) Basic Diluted Dividends paid per common share Market prices per common share High Low We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. Equity compensation plans approved by security holders Equity compensation plans not approved by security holders Total Exhibit Description 10.2 10.3 10.4 10.5 10.6 10.7 10.8 23.1 31.1 31.2 32.1 32.2 101.INS Inline XBRL Instance Document* 101.SCH Inline XBRL Taxonomy Extension Schema Document* 101.CAL Inline XBRL Taxonomy Calculation Linkbase Document* 101.PRE Inline XBRL Taxonomy Presentation Linkbase Document* 101.LAB Inline XBRL Taxonomy Label Linkbase Document* 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document* (Signed) /s/ Robert W. Martin Director, President and Chief Executive Officer (Principal executive officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed on September (Signed) /s/ (Signed) /s/ Andrew E. Graves /s/ Andrew E. Graves Director (Signed) /s/ Director Company as of July 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended July 31, 2020, in conformity with accounting principles generally accepted in the United States of America. management’s goodwill impairment evaluation, including those over the determination of reporting unit fair value, such as controls related to management’s selection of sales growth rates and the discount rate. 28, 2020 2019 Assets Current assets: Cash and cash equivalents Accounts receivable, trade, less allowance for doubtful accounts — $692 in 2017 and $625 in 2016 Accounts receivable, other, net Inventories, net Prepaid expenses and other Total current assets Property, plant and equipment, net Other assets: Goodwill Amortizable intangible assets, net Deferred income taxes, net Other Total other assets Total Assets Liabilities and Stockholders’ Equity Current liabilities: Accounts payable Accrued liabilities: Compensation and related items Product warranties Income and other taxes Promotions and rebates Product, property and related liabilities Other Total current liabilities Long-term debt Unrecognized tax benefits Other liabilities Total long-term liabilities Contingent liabilities and commitments Stockholders’ equity: Preferred stock—authorized 1,000,000 shares; none outstanding Common stock—par value of $.10 a share; authorized, 250,000,000 shares; issued 62,597,110 shares in 2017 and 62,439,795 shares in 2016 Additional paid-in capital Retained earnings Less treasury shares of 10,011,069 in 2017 and 9,957,180 in 2016, at cost Total stockholders’ equity Total Liabilities and Stockholders’ Equity 2018 Net sales Cost of products sold Gross profit Selling, general and administrative expenses Impairment charges Amortization of intangible assets Interest income Interest expense Other income, net Income from continuing operations before income taxes Income taxes Net income from continuing operations Loss from discontinued operations, net of income taxes Net income and comprehensive income Earnings per common share from continuing operations: Basic Diluted Loss per common share from discontinued operations: Basic Diluted Earnings per common share: Basic Diluted 2018 Additional Paid-in Balance at July 31, 2014 Net income Shares purchased Stock option and restricted stock activity Restricted stock unit activity Cash dividends – $1.08 per common share Stock compensation expense Balance at July 31, 2015 Net income Restricted stock unit activity Cash dividends – $1.20 per common share Stock compensation expense Balance at July 31, 2016 Net income Restricted stock unit activity Cash dividends – $1.32 per common share Stock compensation expense Balance at July 31, 2017 2018 Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation Amortization of intangibles Amortization of debt issuance costs Impairment charges Deferred income tax benefit Gain on disposition of property, plant & equipment Stock-based compensation Excess tax benefits from stock-based awards Changes in assets and liabilities (excluding acquisitions): Accounts receivable Inventories Prepaid expenses and other assets Accounts payable Accrued liabilities Long-term liabilities and other Net cash provided by operating activities Cash flows from investing activities: Purchases of property, plant & equipment Proceeds from dispositions of property, plant & equipment Proceeds from notes receivable Acquisitions, net of cash acquired Other Net cash used in investing activities Cash flows from financing activities: Borrowings on revolving credit facility Principal payments on revolving credit facility Payments of debt issuance costs Cash dividends paid Purchase of treasury stock Payments related to vesting of stock-based awards Excess tax benefits from stock-based awards Proceeds from issuance of common stock Principal payments on capital lease obligations Net cash provided by (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year Supplemental cash flow information: Income taxes paid Interest paid Non-cash transactions: Capital expenditures in accounts payable 2018 data or as otherwise specified) Statements. The results of any companies acquired during a year are included in the consolidated financial statements for the applicable year from the effective date of the acquisition. In addition, at July 31, 2020 and July 31, 2019, the equivalent of $174,077 and $115,168, respectively, was held in Euros at one European financial institution and $49,732 and $39,254, respectively, was held in Euros by a different European financial institution. For impairment testing purposes, fair values are generally determined by a discounted cash flow model, which incorporates certain estimates. These estimates are subject to significant management judgment, including the determination of many factors such as sales growth rates, gross margin patterns, cost growth rates, terminal value assumptions and discount rates. Changes in these estimates can have a significant impact on the determination of cash flows and fair value and could potentially result in future material impairments. The Company may utilize a qualitative approach rather than a quantitative approach to determine if an impairment exists, considering various factors including industry changes, actual results as compared to forecasted results, or the timing of a recent acquisition, if applicable. Intangible assets consist of trademarks, dealer networks/customer relationships, design technology and other assets, backlog and non-compete agreements. Trademarks are amortized on a straight-line basis over 15 to 25 years. Dealer networks/customer relationships are amortized on an accelerated basis over 12 to 20 years, with amortization beginning after backlog amortization is completed, if applicable. Design technology and other assets and non-compete agreements are amortized using the straight-line method over 2 to 15 years. Backlog is amortized using a straight-line basis over the associated fulfillment period. are therefore recorded as an asset with an offsetting balance recorded as a secured obligation in Liabilities related to factored receivables on the Consolidated Balance Sheets. further information. Stock-based compensation expense is recorded net of estimated forfeitures, which is based on historical forfeiture rates over the vesting period of employee awards. Weighted-average shares outstanding for basic earnings per share Unvested restricted stock and restricted stock units Weighted-average shares outstanding assuming dilution the FASB issued ASU No. 2016-02, “Leases (Topic 842),” and has subsequently issued ASU's 2018-10, "Codification Improvements (Topic 842)," and 2018-11, "Targeted Improvements (Topic 842)" (collectively the "New Leasing Standard"), which provide guidance on the recognition, measurement, presentation, and disclosure of leases. The New Leasing Standard requires the recognition of lease assets and lease liabilities by lessees for all leases with terms greater than 12 months. The principal difference from prior guidance is that the lease assets and lease liabilities arising from operating leases are now recognized on the Consolidated Balance Sheet. The New Leasing Standard was effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company adopted the New Leasing Standard on August 1, 2019. The Company elected the optional transition method as well as the available package of practical expedients. As a result, the Company recognized right-of-use assets and the associated lease obligations, both totaling approximately $33 million, on the Consolidated Balance Sheet as of August 1, 2019. Historical periods were not restated. The adoption did not have a material impact to the Consolidated Statements of Income and Comprehensive Income. See Note 15 for further disclosures about the Company's leases. Standards Not Yet Adopted immaterial. Cash Other current assets Property, plant and equipment Dealer network Trademarks Backlog Goodwill Current liabilities Total fair value of net assets acquired Less cash acquired Total cash consideration for acquisition, less cash acquired liabilities assumed as of the acquisition date. Net sales Net income Basic earnings per common share Diluted earnings per common share Cash Other current assets Property, plant and equipment Customer relationships Trademarks Backlog Goodwill Current liabilities Capital lease obligations Total fair value of net assets acquired Less cash acquired Total cash consideration for acquisition, less cash acquired Cash Other current assets Property, plant and equipment Dealer network Trademarks Backlog Goodwill Current liabilities Total fair value of net assets acquired Less cash acquired Total cash consideration for acquisition, less cash acquired Loss before income taxes Income tax benefit Loss from discontinued operations, net of income taxes The European recreational vehicles reportable segment consists solely of the EHG business. EHG manufactures a full line of towable and motorized recreational vehicles, including motorcaravans, caravans and campervans in eight RV production facilities within Europe. EHG produces and sells numerous brands within Europe, including Buccaneer, Buerstner, Carado, Compass, CrossCamp, Dethleffs, Elddis, Eriba, Etrusco, Hymer, Laika, LMC, Niesmann+Bischoff, Sunlight and Xplore. In addition, EHG’s operations include other RV-related products and services. taxes, deferred compensation plan assets and certain Corporate real estate holdings primarily utilized by Thor’s U.S.-based operating subsidiaries. Net sales: Recreational vehicles Towables Motorized Total recreational vehicles Other Intercompany eliminations Total Income (loss) from continuing operations before income taxes: Recreational vehicles Towables Motorized Total recreational vehicles Other Intercompany eliminations Corporate Total Total assets: Recreational vehicles Towables Motorized Total recreational vehicles Other, net Corporate Total Depreciation and amortization expense: Recreational vehicles Towables Motorized Total recreational vehicles Other Corporate Total Capital acquisitions: Recreational vehicles Towables Motorized Total recreational vehicles Other Corporate Total which are not designated as cash flow hedges. Finished products – RV Finished products – other Work in process Raw materials Chassis Subtotal Excess of FIFO costs over LIFO costs Total inventories are as follows: Land Buildings and improvements Machinery and equipment Total cost Less accumulated depreciation Net property, plant and equipment lease right-of-use assets. Dealer networks/customer relationships Trademarks Design technology and other intangibles Non-compete agreements Backlog Total amortizable intangible assets For the fiscal year ending July 31, 2018 For the fiscal year ending July 31, 2019 For the fiscal year ending July 31, 2020 For the fiscal year ending July 31, 2021 For the fiscal year ending July 31, 2022 For the fiscal year ending July 31, 2023 and thereafter Net balance as of July 31, 2015 Fiscal year 2016 activity: Goodwill acquired Impairment charges Net balance as of July 31, 2016 Fiscal year 2017 activity: No activity Net balance as of July 31, 2017 Goodwill Accumulated impairment charges Net balance as of July 31, 2017 Cash equivalents Deferred compensation plan assets Beginning balance Provision Payments Acquisitions Ending balance Federal State and local Total current expense Federal State and local Total deferred (benefit) Total income tax expense Provision at federal statutory rate State and local income taxes, net of federal benefit Federal income tax credits and incentives Domestic production activities deduction Change in uncertain tax positions Other Total income tax expense Deferred income tax asset (liability): Inventory basis Employee benefits Self-Insurance Reserves Accrued product warranties Accrued incentives Sales returns and allowances Accrued expenses Property, plant and equipment Deferred compensation Intangibles Unrecognized tax benefits Other Deferred income tax asset, net valuation allowance if, based upon available evidence, it is more likely than not that some, or all, of the deferred tax assets will not be realized. The valuation allowances recorded at July 31, 2020 and July 31, 2019 relate to certain foreign net operating loss carry forwards and other assets in foreign jurisdictions. allowance. 2018. Beginning balance Tax positions related to prior years: Additions Reductions Tax positions related to current year: Additions Settlements Lapses in statute of limitations Ending balance Unrecognized tax benefits Reduction to unrecognized tax benefits for tax credit carry forward Accrued interest and penalties Total unrecognized tax benefits Short-term, included in “Income and other taxes” Long-term Total unrecognized tax benefits 2017 2016 Cost of units repurchased Realization of units resold Losses due to repurchase flows. For the fiscal year ending July 31, 2018 For the fiscal year ending July 31, 2019 For the fiscal year ending July 31, 2020 For the fiscal year ending July 31, 2021 For the fiscal year ending July 31, 2022 For the fiscal year ending July 31, 2023 and thereafter Total minimum lease payments Less amount representing interest Present value of net minimum capital lease payments Less current portion Long-term capital lease obligations July 31, 2019 were as follows: $3,804, respectively. Nonvested, beginning of year Granted Vested Forfeited Nonvested, end of year all periods presented. Nonvested, beginning of year Granted Vested Forfeited Nonvested, end of year all periods presented.PagePage 816171818192021394041414344444445454648iidollarDollar and Euro amounts are presented in thousands except per share data.The following discussion of our business solely relates to ongoing operations.companyCompany was founded in 1980 and through its subsidiaries, manufactures a wide rangehas grown to become the largest manufacturer of recreational vehicles (“RVs”) in the United Statesworld. We are also the largest manufacturer of RVs in North America, and sells those vehicles primarilyone of the largest manufacturers of RVs in Europe. The Company manufactures a wide variety of RVs in the United States and Canada.Europe, and sells those vehicles, as well as related parts and accessories, primarily to independent, non-franchise dealers throughout the United States, Canada and Europe. We are incorporated in Delaware and are the successor to a corporation of the same name which was incorporated in Nevada on July 29, 1980. Our principal executive office is located at 601 East Beardsley Avenue, Elkhart, Indiana 46514 and our telephone number is (574) 970-7460. Our Internet address iswww.thorindustries.com.We maintain copies of our recent filings with the Securities and Exchange Commission (“SEC”), available free of charge, on our web site. Unless the context otherwise requires or indicates, all references to “Thor”, the “Company”, “we”, “our” and “us” refer to Thor Industries, Inc. and its subsidiaries. and other operating subsidiaries are Airstream, Inc. (“Airstream”Airstream”), Thor Motor Coach, Inc. (“Thor Motor Coach”Coach”), Keystone RV Company (“Keystone”Keystone”,which includes CrossroadsCrossRoads and Dutchmen), Heartland Recreational Vehicles, LLC (“Heartland”Heartland”,which includes Bison Horse Trailers, LLC dba Bison Coach (“Bison”), Cruiser RV, LLC (“CRV”CRV”) and DRV, LLC (“DRV”DRV”)), K.Z., Inc. (“KZ”KZ”,which includes Thor Livin’ Lite, Inc. dba Livin’ Lite RV, Inc. (“Livin’ Lite)), Postle Operating, LLC (“Postle”)Venture RV) and Jayco, Inc. (“Jayco”(“Jayco”,which includes Jayco, StarCraft,Starcraft, Highland Ridge and Entegra Coach).AcquisitionsOther Significant Events2016On June 30, 2016,2020Stock Purchase Agreement (“Jayco SPA”) fortransaction in which the acquisitionCompany acquired EHG. EHG is headquartered in Bad Waldsee, Germany, and is one of all the issued and outstanding capital stock of towable and motorized recreational vehicle manufacturer Jayco forlargest RV manufacturers in Europe. The Company acquired EHG in order to expand its operations into the established but growing European market with a long-standing European industry leader.$562,690, netapproximately 1.53 billion Euro (approximately $1.76 billion at the exchange rate as of February 1, 2019) and issued 2,256,492 shares of the Company’s common stock to the sellers valued at $144.2 million. The cash acquired. This acquisitionconsideration was funded from the Company’sthrough a combination of available cash on hand of approximately $95 million and $360,000 from an asset-based revolvingdebt financing consisting of two credit facility agreements, a seven-year, $2.1 billion term loan, with an approximate $1.4 billion U.S. dollar-denominated tranche and an approximate 0.6 billion Euro tranche (approximately $0.7 billion at the exchange rate at February 1, 2019), and $100 million utilized at closing from a five-year, $750 million asset-based credit facility (“ABL”), each as more fully described in Notes 2 and 11Note 12 to the Consolidated Financial Statements. Jayco operatesThe obligations of the Company under each facility are secured by liens on substantially all of the assets of the Company, and both agreements contain certain customary representations, warranties and covenants of the Company.an independent operationdiscussed in Note 2 to the same manner as the Company’s other recreational vehicle subsidiaries. The Company purchased Jayco to complement its existing towable and motorized RV product offerings and dealer base. The fiscal 2016 resultsConsolidated Financial Statements, are included in Acquisition-related costs in the Consolidated Statements of Income and Comprehensive Income only include one month of Jayco’s operating results.Fiscal 2015On May 15, 2015, the Company entered into a repurchase agreement (the “May 15, 2015 Repurchase Agreement”), to purchase shares of its common stock from the Thompson Family Foundation (the “Foundation”) in a private transaction. Pursuant to the terms of the May 15, 2015 Repurchase Agreement, the Company purchased from the Foundation 1,000,000 shares of its common stock at a price of $60.00 per share, and held them as treasury stock, representing an aggregate purchase price of $60,000. The closing price of Thor common stock on May 15, 2015 was $61.29. The transaction was consummated on May 19, 2015, and the Company used available cash to purchase the shares. The number of shares repurchased by the Company represented 1.9% of the Company’s issued and outstanding common stock immediately prior to the repurchase.On May 1, 2015, the Company closed on a Membership Interest Purchase Agreement with Postle Aluminum Company, LLC for the acquisition of all the outstanding membership units of Postle for cash consideration paid in fiscal 2015 of $144,048, net of cash acquired. Postle is a manufacturer of aluminum extrusion and specialized component products for the RV and other markets, and operates as an independent operation in the same manner as the Company’s other subsidiaries.On January 5, 2015, the Company closed on a Stock Purchase Agreement (“CRV/DRV SPA”) for the acquisition of all the outstanding membership units of towable recreational vehicle manufacturer CRV and luxury fifth wheel towable recreational vehicle manufacturer DRV, by its Heartland subsidiary. In accordance with the CRV/DRV SPA, the closing was deemed effective as of January 1, 2015. As contemplated in the CRV/DRV SPA, the Company also acquired, in a series of integrated transactions, certain real estate used in the ongoing operations of CRV and DRV. Cash consideration paid for this acquisition was $47,523, net of cash acquired. The Company purchased CRV and DRV to supplement and expand its existing lightweight travel trailer and luxury fifth wheel product offerings and dealer base.Discontinued Operations (Fiscal 2014)On July 31, 2013, we entered into a definitive Stock Purchase Agreement and sold our bus business to Allied Specialty Vehicles, Inc. (“ASV”). The sale closed on October 20, 2013. Thor’s bus business included Champion Bus, Inc., General Coach America, Inc., Goshen Coach, Inc., El Dorado National (California), Inc., and El Dorado National (Kansas), Inc. As a result of the divestiture of the bus business, the results of operations of the bus business are reported as a loss from discontinued operations, net of income taxes, on the Consolidated Statements of Income and Comprehensive Income for the years ended July 31, 2016 and 2015. See Note 3 to the Consolidated Financial Statements for further information. Tommy Bahama®,Flying Cloud, SportCaravel, Bambi andBasecamp. Airstream also sells theInterstate and Atlas series of Class B motorhomes.Redwood.as well as equestrian recreational vehicle products with living quarters, and includes the operations of Heartland, Bison, CRVCruiser RV and DRV. Heartland, including CRVCruiser RV and DRV, manufactures and sells conventional travel trailers and fifth wheels under trade names such asLandmark,Bighorn,Elkridge,Trail Runner,North Trail, Cyclone,Torque,Prowler, WildernessMilestone,Shadow Cruiser Fun Finder, , Lithium, MPG, Radiance, SundanceandStryker and luxury fifth wheels under the trade nameDRVMobile Suites. Bison manufactures and sells equestrian recreational vehicle products with living quarters under trade names such asPremiere,Silverado,Ranger,Laredo,Trail Boss andTrail HandSuites.advanced lightweight travel trailers and specialty products, and includes the operations of KZ and Livin’ Lite.Venture RV. KZ manufactures and sells conventional travel trailers and fifth wheels under trade names such asEscape, Sportsmen,Spree, Connect, Venom,Gold, Durango,SportTrek, Connect, and Sportster andSonic, while Livin’ LiteVenture RV manufactures and sells advanced lightweightconventional travel trailers and specialty products under trade names such asCampliteStratus, SportTrek and QuicksilverSonic. camping trailers and motorhomes, and includes the operations of Jayco, Starcraft, Highland Ridge and Entegra Coach. Jayco manufactures and sells conventional travel trailers and fifth wheels under trade names such asJay Flight,Jay Feather, Eagle, Pinnacleand Seismic,Talon, and also manufactures Class A and Class C motorhomes under trade names such asAlante Precept,, Precept, Greyhawk andRedhawk. Starcraft manufactures and sells conventional travel trailers and fifth wheels under trade names such as Launch, Autumn Ridge and SolsticeTelluride. Highland Ridge manufactures and sells conventional travel trailers and fifth wheels under trade names such asHighlander, Mesa Ridge andOpen Range. Entegra Coach manufactures and sells luxury Class A motorhomes under trade names such asInsignia, Aspire, Anthem and Cornerstone.twothree reportable segments: (1) towable recreational vehiclesNorth American Towable Recreational Vehicles, (2) North American Motorized Recreational Vehicles and (2) motorized recreational vehicles.(3) European Recreational Vehicles. The towable recreational vehicleNorth American Towable Recreational Vehicle reportable segment consists of the following operating segments that have been aggregated: Airstream (towable), Heartland (including Bison, CRVCruiser RV and DRV), Jayco (including Jayco towable, Starcraft and Highland Ridge), Keystone (including CrossRoads and Dutchmen) and KZ (including Livin’ Lite)Venture RV). The motorized recreational vehicleNorth American Motorized Recreational Vehicle reportable segment consists of the following operating segments that have been aggregated: Airstream (motorized), Jayco (including Jayco motorized and Entegra Coach) and Thor Motor Coach.subsidiary, which was acquired May 1, 2015,and Togo Group subsidiaries are included in Other,“Other,” which is a non-reportable segment. Net sales included in Other mainly relate to the sale of aluminum extrusions and specialized component products. Intercompany eliminations adjust for Postle sales to the Company’s towablesNorth American towable and North American motorized segments, which are consummated at established arm’s length transfer prices generally consistent with the selling prices of extrusion components to third-party customers. 2017 2016 2015 Amount % Amount % Amount % $ 5,127,491 71 $ 3,338,659 73 $ 3,096,405 77 1,971,466 27 1,094,250 24 870,799 22 7,098,957 98 4,432,909 97 3,967,204 99 253,557 3 218,673 5 56,594 1 (105,562 ) (1 ) (69,470 ) (2 ) (16,979 ) – $ 7,246,952 100 $ 4,582,112 100 $ 4,006,819 100 2020 2019 2018 Amount % Amount % Amount % Recreational vehicles: North American Towables $ 4,140,482 50.7 $ 4,558,451 58.0 $ 6,008,700 72.1 North American Motorized 1,390,098 17.0 1,649,329 21.0 2,146,315 25.8 2,485,391 30.4 1,486,978 18.9 — — Total recreational vehicles 8,015,971 98.1 7,694,758 97.9 8,155,015 97.9 Other 234,481 2.9 263,374 3.3 305,947 3.7 Intercompany eliminations (82,519) (1.0) (93,374) (1.2) (132,053) (1.6) Total $ 8,167,933 100.0 $ 7,864,758 100.0 $ 8,328,909 100.0 43 to the Consolidated Financial Statements. primarily throughout the United States and Canada, as well as related parts and accessories. Recreationalaccessories, primarily to independent, non-franchise dealers throughout the United States, Canada and Europe. North American recreational vehicle classifications are based upon standards established by the Recreation VehicleRV Industry Association (“RVIA”). The principal types of towable recreational vehicles that we produce in North America include conventional travel trailers and fifth wheels. In addition, we also produce truck campers, folding campers and equestrian and other specialty towable recreational vehicles,wheels as well as Class A, Class C and Class B motorhomes.vacationingother purposes. WeWithin North America we produce “conventional” and “fifth wheel” travel trailers. Conventional trailers are towed by means of a frame hitch attached to the towing vehicle. Fifth wheel trailers, designed to be towed by pickup trucks, are constructed with a raised forward section that is attached to a receiver in the bed area of the pickup truck.Spartan Motors.The Shyft Group. We design, manufacture and install the living area and driver’s compartment of Class A motorhomes. Class C and Class B motorhomes are generally built on a Ford, General Motors or Mercedes Benz small truck or van chassis, which includes an engine, drivetrain components and a finished cab section. We construct a living area which has access to the driver’s compartment and attaches to the cab section. Although they are not designed for permanent or semi-permanent living, motorhomes can provide comfortable living facilities for camping, vacationing and other purposes. are produced to dealer order. Our facilities are designed to provide efficient assembly-line manufacturing of products. CapacityIn North America and Europe, capacity increases can generally be achieved relatively quickly and at relatively low cost, largely by acquiring, leasing, or building additional facilities and equipment and increasing the number of production employees. We believe that, except for chassis and certain key towable RV components sourced from one major supplier, substitute sources for raw materials and components are generally available with no material impact on our operations.andthat are affected accordingly. We have not experienced any recent significant cost increases from our chassis suppliers.Generally, allnecessary to the production of our units. Through July 31, 2020 those disruptions were generally short-term in nature and limited in scope. We managed to continue production by shifting our production schedules, securing alternative supplies of the needed parts and taking other proactive actions. Subsequent to July 31, 2020, due to the heightened demand within the RV industry and other related industries that utilize some of the same component parts, we continue to face supply constraints of various component parts. This situation is fluid, with the items experiencing shortages changing frequently as disruptions caused by COVID-19 are impacting the entire supply chain as well as the transportation of those items. If the supply constraints become more significant, longer term in nature or are not limited in scope; if industry demand continues to increase faster than the suppliers can respond; or if other factors were to impact the suppliers’ ability to supply our production needs, our business and results of operations could be adversely affected. We are continuing to take proactive actions to limit the impact of these supply constraints and delays on our production and sales.primarily throughout the United States, Canada and Canada.Europe. Each of our recreational vehicle operating subsidiaries sell to their own network of independent dealers, with many dealers carrying more than one of our product lines, as well as products from other manufacturers. As of July 31, 2017,2020, there were approximately 2,300 dealershipsdealership locations carrying our products in the U.S. and Canada.Canada and approximately 1,000 dealership locations carrying our products throughout Europe. We believe that the working relationships between ourthe management and sales personnel of our operating entities and the independent dealers provide us with valuable information on customer preferences and the quality and marketability of our products.callview new and existing products as well as place orders. Due to the current pandemic and ongoing efforts to limit its spread, we do not expect to attend any major wholesale shows for at least the remainder of calendar 2020. Based on their dealers. Ourour backlog as of July 31, 2020, we do not believe that the lack of these wholesale shows will have a material, negative impact to our near-term operations.the majorvarious consumer recreational vehicle shows or trade fairs which take place throughout the year at different locations across the country.United States, Canada and Europe. However, due to the current pandemic and ongoing efforts to limit its spread, most retail show sponsors and dealers have cancelled these shows for at least the near-term future. We do not expect the lack of these shows to have a negative impact on our sales in the near-term due to increased digital marketing activities by both our operating units and the dealers of our units. We also benefit in the United States from the recreational vehicle awareness advertising and major marketing programs sponsored by the RVIA in national print media and television. We have historically engaged in a limited amount of consumer-oriented advertising for our recreational vehicles, primarily through industry magazines, product brochures, direct mail advertising campaigns and the internet.agreements with their dealers.of our dealers,dealer, FreedomRoads, LLC, accounted for 20%approximately 15.0% of our continuing consolidated net sales in fiscal 2017, 20%2020 and for approximately 18.5% and 20.0% in fiscal 20162019 and 17% in fiscal 2015, with the increases in fiscal 2017 and 2016 partially due to FreedomRoads, LLC’s acquisitions of formerly independent RV dealerships.2018, respectively. This dealer also accounted for 30%approximately 18% of the Company’s consolidated trade accounts receivable at July 31, 20172020 and 18%approximately 19% at July 31, 2016.WeBased on current conditions, we believe that any future losses under these agreements would not have a material adverse effect on our Company. The Company’s total commercial commitments under standby repurchase obligations on dealer inventory financing as of July 31, 20172020 and July 31, 20162019 were $2,200,544$1,876,922 and $1,898,307,$2,961,019, respectively. The losses incurred due to repurchase were $302, $818 and $1,265not material in fiscal 2017, 20162020, 2019 or 2018.2015, respectively.BacklogAsEuropean recreational vehicle segments as of July 31, 2017, the backlog for towable2020 and motorized recreational vehicle orders was $1,416,240 and $915,559,July 31, 2019, respectively, comparedwere as follows.July 31, 2020 July 31, 2019 Change
Amount%
ChangeRecreational vehicles North American Towables $ 2,763,678 $ 693,156 $ 2,070,522 298.7 North American Motorized 1,451,641 458,847 992,794 216.4 Total North America 4,215,319 1,152,003 3,063,316 265.9 European 1,525,973 852,675 673,298 79.0 Total $ 5,741,292 $ 2,004,678 $ 3,736,614 186.4 $735,085 and $461,762, respectively,several factors, beginning with elevated dealer inventory levels in certain locations at July 31, 2016, reflecting increases2019, which caused backlogs at that date to be relatively low. By comparison, recent production interruptions from March through May 2020 due to the COVID-19 pandemic, coupled with increased retail demand due to the perceived safety of 92.7%RV travel during the COVID-19 pandemic, a strong desire to socially distance, and 98.3%, respectively.TheBarring any significant and longer term material supply constraints, the existing backlogbacklogs of the North American towable, North American motorized and motorizedEuropean recreational vehicles isvehicle segments are expected to be filled in fiscal 2018.Historically, the amount of our current backlog compared to our backlog in previous periods reflects general economic and industry conditions and, together with other relevant factors, such as continued acceptance of our products by the consumer, may be an indicator of our revenues in the near term.WeWeprovisions of the National Traffic and Motor Vehicle Safety Act (“NTMVSA”) and the safety standards for recreational vehicles and recreational vehicle components which have been promulgated thereunder by the U.S. Department of Transportation. Because of our sales in Canada,United States, we are also governed by similar laws and regulations issued by the Canadian government.We are a member of the RVIA, a voluntary association of recreational vehicle manufacturers which promulgates recreational vehicle safety standards.standards in the United States. We place an RVIA seal on each of our North American recreational vehicles to certify that the RVIA’s standards have been met.Both federal We also comply with the National Highway Traffic Safety Administration (“NHTSA”) in the U.S. and statewith similar standards within Canada and Europe as it relates to the safety of our products.all applicable emission control standards.We also subject to the regulations promulgated by the Occupational Safety and Health Administration (“OSHA”). Our plants are periodically inspected by federalvarious governmental and industry agencies concerned with health and safety in the work place and by the RVIA, to ensure that our plants and products comply with applicable governmental and industry standards.RVIAindustry, health, safety and OSHAother required regulations.position.severalnumerous other manufacturers selling products that compete directly with our products. We also compete against consumer demand for used recreational vehicles, particularly during periods of economic downturn, and against other forms of consumer leisure, outdoor or vacation spending priorities. We also experience a certain level of competition between our own operating subsidiaries. Increased activity in the market for used recreational vehicles may also impactsimpact manufacturers’ sales of new products. Competition in the recreational vehicle industry is based upon price, design, value, quality and service. We believe that the price, design, value and quality of our products and the warranty coverage and service that we provide allow us to compete favorably for retail purchasers of recreational vehicles.vehicles and consumer leisure spending. There are approximately 6065 RV manufacturers in the U.S. and Canada, according to RVIA.estimate that, in the aggregate, we are the largest recreational vehicle manufacturer in North America in terms of both units produced and revenue. According to Statistical Surveys, Inc., for the six months ended June 30, 2017,2020, Thor’s current combined U.S. and Canadian market share based on unit retail sales was approximately 50.7%43.7% for travel trailers and fifth wheels combined and approximately 39.6%38.5% for motorhomes.2017,2020, we employed approximately 17,80022,250 full-time employees worldwide, including 14,900 full-time employees in the United States, of which approximately 1,9001,800 were salaried, and 7,350 full-time employees in Europe, of which approximately 2,000 were salaried. None of our North American employees are represented by certified labor organizations. Within our European-based operations, we are subject to employee contracts, Works Councils and certain labor organizations. We believe that we maintain a good working relationship with our employees.Information about Foreign and Domestic Operations and Export SalesWe manufacture all of our recreational vehicles in the United States. Export sales from our continuing operations, predominantly to Canada, were $628,176, $368,426 and $465,642 in fiscal 2017, 2016 and 2015, respectively, with these totals being adversely impacted by the relative strength of the U.S. dollar during those periods.“forward looking”“forward-looking” statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward lookingforward-looking statements are made based on management’s current expectations and beliefs regarding future and anticipated developments and their effects upon Thor, and inherently involve uncertainties and risks. These forward lookingforward-looking statements are not a guarantee of future performance. We cannot assure you that actual results will not differ materially from our expectations. Factors which could cause materially different results include, among others,others:restrictions, restrictions;incurred, incurred;increased governmental regulation, regulation;recent transactions, the potential impact of increased tax burdens on our dealers and retail consumers, recently completed transactions;spending, spending;theand their potential impact of rising interest rates on the general economy and specifically on our dealers and consumers, consumers;changes, changes;product introductions,and existing products and services;obtainingan acquisition, the integration and producing at new production facilities,financial impact thereof, the pacelevel of achievement of anticipated operating synergies from acquisitions, the potential for unknown or understated liabilities related to acquisitions, the potential loss of existing customers of acquisitions, the integration of new acquisitions,and our ability to retain key management personnel of acquired companies, companies;dealers,dealers;availabilitydelivery of delivery personnel, units to dealers;charges, charges;changes, competition, changes;agreements, or financed receivable agreements;including thoseare discussed more fully in ITEM 1A. RISK FACTORSItem 1A Risk Factors below.forward lookingforward-looking statements contained in this Annual Report onForm 10-K or to reflect any change in our expectations after the date of this Annual Report onForm 10-K or any change in events, conditions or circumstances on which any statement is based, except as required by law. You may also read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a website that contains reports, proxy and information statements and other information that is filed electronically with the SEC. The website can be accessed atwww.sec.gov. which relate to our continuing operations, should be considered carefully in addition to the other information contained in this filing.Toto Our Businesscompetitive.resultresults in numerous existing and potential recreational vehicle manufacturing competitors. CertainRecently, a limited number of automotive manufacturers have entered the RV industry, especially in Europe, with the introduction of campervans that directly compete with our products. Also, a number of our operating subsidiaries also compete with each other. Competition is based upon price, design, value, quality and service as well as other factors. Competitive pressures have, from time to time, resulted in a reduction of our profit margins and/or a reduction in our market share. Sustained increases in these competitive pressures could have a material adverse effect on our results of operations. If existing or new competitors develop products that are superior to ours or that achieve better consumer acceptance or if existing competitors offer similar products at a lower net price to dealers, our market share, sales volume and profit margins may be adversely affected.The industrywhich we operate isactual or perceived value among these alternatives by consumers could impact future sales volume and profitability.●Competition for workers skilled in the industry, especially during times of increasing RV production, which may increase the cost of our labor or limit the speed at which we can expand production;●Employee retention and recruitment challenges, as employees with industry knowledge and experience may be attracted to the most lucrative positions and their ability to change employers is relatively easy;●Potential for greater adverse impact from natural disasters; and●Competition for desirable production facilities, especially during times of increasing RV production, may increase the cost of acquiring production facilities or limit the availability of obtaining such facilities.cyclical and this leadssubject to fluctuations in sales, production and net income.WeDealerThe pandemic may disrupt the historical trends in the seasonality of our business in North America and Europe. Independent dealer demand and buying patterns mayalso impact the timing of shipments from one quarter to another. In addition, severe weather conditions in some geographic areas may delay the timing of shipments from one quarter to another. The seasonality of our business may negatively impact quarterly operating results.From a longer-term perspective, the recreational vehicle industry has historically been cyclicalnature, and there can be substantial annual fluctuationsresponse to rapid changes in our production levels, shipments and operating results. As discussed further below, numerous external factors have historically contributed to such cyclicality. Due to the seasonality and cyclicality inherent in our business, the results for any annual or quarterly prior perioddemand, we may not be indicative ofable to effectively manage our costs, which could negatively impact operating results, for any future annual or quarterly period.●Overall consumer confidence and the level of discretionary consumer spending;●Industry demand;●Retail and wholesale buying patterns;●Dealer confidence and stocking levels;●General economic, market and political conditions, including war, terrorism and military conflict;●Tax policies and tax rates;●RV retail consumer demographics;●Interest rates and the availability of credit;●Employment trends;●Consolidation of RV dealerships;●Global, domestic or regional financial turmoil;●Natural disasters;●Raw material costs;●Availability of raw materials and components used in production;●Relative or perceived cost, availability and comfort of recreational vehicle use versus other modes of travel, such as car, air or rail travel; and●Increases in real wages and disposable income of consumers and their willingness to make large discretionary purchases.20%approximately 15.0% of our consolidated net sales for fiscal 2017.2020. During recent years, FreedomRoads, LLC has acquired a number of formerly independent RV dealerships which has impacted our sales and concentration of sales to FreedomRoads, LLC. Future consolidation of dealerships by FreedomRoads, LLC could impact our sales, concentration of sales to this key dealer and our exposure under repurchase obligations.recent transaction activity,acquisitions; the integration of acquired companies, assets, operations and operationsjoint venture arrangements and the merger of subsidiaries within Thor involve a number of related risks, including, but not limited to:●The diversion of management’s attention from the management of daily operations to various transaction and integration activities;●The potential for disruption to existing operations and plans;●The assimilation and retention of employees, including key employees;● of our management teams to manage expanded operations to meet operational and financial expectations;●The integration of departments and systems, including accounting systems, technologies, books and records and procedures;●The potential loss of, or adverse effects on, existing business relationships with suppliers and customers; and●The assumption of liabilities of the acquired businesses, which could be greater than anticipated.The terms of our management teams to manage expanded operations, including international operations, to meet operational and financial expectations;agreementcurrency exchange rates, interest rates, financial institutions and political, financial and monetary systems. These developments could, in turn, affect our businesses, liquidity, results of operations and financial position.operating flexibility.$500 million long-term credit facility is secured by certain assetssuccess in international markets will depend, in part, on our ability to anticipate and effectively manage these and other risks, which could materially impact our international operations or the business as a whole.Company, primarilyEHG acquisition on February 1, 2019. In conjunction with the acquisition, we entered into a term loan agreement with USD and EUR tranches ($1.4 billion and €618 million, respectively) and a $750 million ABL. We also assumed various existing debt obligations from EHG as of the acquisition date. Our level of debt impacts our profit before tax and cash inventory, accounts receivableflow because of the interest expense and certain machineryperiodic payments. In addition, our debt level could impair our ability to raise additional capital, if necessary, or increase borrowing costs on future debt, and equipment. The credit agreement contains certain requirements, affirmativemay have the effect, among other things, of reducing our flexibility to respond to changing business and negative covenantseconomic conditions, requiring us to use a substantial portion of our cash flow to repay indebtedness and under certain circumstances,placing us at a financial covenant.disadvantage compared to competitors with lower debt obligations.are unabledo not generate sufficient cash flow to complymeet our debt service, capital investment and working capital requirements, we may need to fund those requirements with these requirements and covenants,borrowings from the ABL, or reduce or cease our payments of dividends, we may be restricted inunable to repurchase our ability to pay dividends or engage in certain other business transactions, the lender may obtain control of our cash accountsshares or we may incurneed to seek additional financing or sell assets.default. Borrowing availability underany LIBOR transition. The consequences of these developments cannot be entirely predicted, but could include an increase in the cost of our variable rate indebtedness.agreement is determined onratings and other factors may impact our access to future funding and the cost of debt.monthly basis and is limited to the lesserresult of the facility totalCOVID-19 pandemic, future funding, if needed, could be unavailable or insufficient. A debt crisis, particularly in the United States or Europe, could negatively impact currencies, global financial markets, social and the monthly calculated borrowing base, which is based on stipulated loan percentages appliedpolitical stability, funding sources, availability and costs, asset and obligation values, customers, suppliers, demand for our products, and our operations and financial results. Financial market conditions could also negatively impact dealer or retail customer access to specified assetscapital for purchases of the Company.MostIn addition, twoTwo major floor plan financial institutions held approximately 75%58% of our portion of our independent dealers’ total floored dollars outstanding at July 31, 2017.sales.unchanged.consistent. Recreational vehicles are generally used for recreational purposes, and demand for our products may be adversely affected by competition from other activities that occupy consumers’ leisure time and by changes in consumer lifestyle, usage pattern or taste. Similarly, an overall decrease in consumer leisure time may reduce consumers’ willingness to purchase our products.obsolete.WeIn North America, we generally self-insure a portion of our product liability and other claims and also purchase product liability and other insurance in the commercial insurance market. In North America, upon exhaustion of relatively higher deductibles or retentions, we maintain a full line of insurance coverage. In Europe, we generally fully insure similar risks with insurance offering relatively low deductibles or premiums. We cannot be certain that our insurance coverage will be sufficient to cover all future claims against us. We have a self-insured retention (“SIR”) for products liability and personal injury matters ranging from $500 to $7,500 depending on the product type and when the occurrence took place. Generally, any occurrence (as defined by our insurance policies) after March 31, 2015 is subject to the $500 SIR, while matters occurring after March 31, 2014 and through March 31, 2015 are subject to a $1,000 SIR.Amounts above the SIR, up to a certain dollar amount, are covered by our excess insurance policy. Currently, we maintain excess liability insurance aggregating $50,000 with outside insurance carriers to minimize our risks related to catastrophic claims in excess of our self-insured positions for products liability and personal injury matters. Any material change in the aforementioned factors could have an adverse impact on our operating results. Any increase in the frequency and size of claims, as compared to our experience in prior years, may cause the premium that we are required to pay for insurance to increase significantly and may negatively impact future SIRself-insured retention levels. It may also increase the amounts we pay in punitive damages, not all of which are covered by our insurance.Whenintroducemay be subject to additional litigation, for which we would generally not have insurance coverage.weor enhanced standard warranty coverage of our products, may incurresult in expenses that we did not anticipate, which, in turn, cancould result in reduced earnings.For example, we may experience unexpectedUnexpected engineering or design flaws that will force a recall of a new product or may causehave resulted in recalls and increased warranty costs.claims in the past and could be incurred in the future. The costs resulting from these types of problems could be substantial and could have a significant adverse effect on our earnings. Estimated warranty costs are provided at the time of product sale to reflect our best estimate of the amounts necessary to settle future and existing claims on products. An increase in actual warranty claims costs as compared to our estimates, due to either the introduction of new products or extended warranty coverage, could result in increased warranty reserves and expense which could have an adverse impact on our earnings.aan independent dealer’s purchase of our products, we will generally execute a repurchase agreement with the lending institution. Repurchase agreements provide that, typically for a period of up to 18 months after a recreational vehicle is financed and in the event of default by the dealer, we will repurchase the recreational vehicle repossessed by the lending institution for the amount then due, which is usually less than 100% of the dealer’s cost.wereare obligated to repurchase a substantially greater number of recreational vehicles, or incurredincur substantially greater discounting to resell these units in the future, thisthose circumstances would increase our costs. In difficult economic times this amount could increase significantly compared to recent years.SomeAdditionally, continued consolidation of our major suppliers further limits alternative supply sources, which could increase costs and decrease our sales and profit margins. Finally, certain raw material components aremay be sourced from foreign sourcescountries where we do not have operations, and delays in obtaining these components, along with added tariffs, could result in increased costs and decreased sales and profit margins.MostMany components are readily available from a variety of sources. However, a fewcertain key components are currently produced by only a small group of quality suppliers that have the capacity to supply large quantities.Primarily, this occursquantities, primarily occurring in the case ofof: 1) motorized chassis, where there are a limited number of chassis suppliers, and 2) windows and doors, towable chassisframes and slide-out mechanisms, axles and upholstered furniture for our recreational vehicles, where LCI Industries is a major supplier for these items within the North American RV industry.chassis,products, or if, as a group, our chassis suppliers significantly reduced the availability of chassis to the industry, our business would be adversely affected. Similarly, shortages at, or production delays or work stoppages by the employees of chassis suppliers, could have a material adverse effect on our sales. Additionally, the inability of chassis suppliers to comply timely with new or enhanced emission or other compliance requirements could adversely affect supply. If the condition of the U.S. auto industry were to significantly deteriorate, thisthat deterioration could also result in supply interruptions and a decrease in our sales and earnings while we obtain replacement chassis from other sources.LCI Industries is a major suppliera number of key componentscertain component parts, including chassis, that are necessary to the production of our recreational vehicles suchunits. Through July 31, 2020 those disruptions were generally short-term in nature and limited in scope. We managed to continue production by shifting our production schedules, securing alternative supplies of the needed parts and taking other proactive actions. Subsequent to July 31, 2020, due to the heightened demand within the RV industry and other related industries that utilize some of the same component parts, we continue to face supply constraints of various component items. This situation is fluid, with the items experiencing shortages changing frequently as windows and doors, towable chassis and slide-out mechanisms, axles and upholstered furniture. We havedisruptions caused by COVID-19 are impacting the entire supply chain as well as the transportation of those items. If the supply constraints become more significant, longer term in nature or are not experienced any significant shortages or delayslimited in delivery related to these items; however,scope, if industry demand werecontinues to increase faster than LCI Industriesthe suppliers can respond or if other factors were to impact theirthe suppliers’ ability to continue to supply our production needs, for these key components, our business and results of operations could be adversely affected.foreign locations. Port,countries where we do not currently have operations. Changes in trade policy and resulting tariffs that have or may be imposed, along with port, production or other delays, could cause increased costs for, or shortages of, certain RV components or sub-components. This could result inWe may not be able to source alternative supplies as necessary without increased costs relatedor at all. If alternatives are not readily available, that unavailability could lead to alternative supplies or a potential decreasedecreases in our sales and earnings if alternatives are not readily available.cancould result in decreased sales and gross margin and could harm our reputation.regulations.Weregulations in the various countries in which we operate and/or sell our products.the provisions of the National Trafficvarious vehicle and Motor Vehicle Safety Act (“NTMVSA”)component safety and the safety standards for vehicles and components which have been promulgated under the NTMVSA by the U.S. Department of Transportation.‘The NTMVSA authorizes the National Highway Traffic Safety Administration tocompliance standards. In various jurisdictions, governmental agencies require a manufacturer to recall and repair vehicles which contain certain hazards or defects. Sales into foreign countries may be subject to similar regulations. Any recalls of our vehicles, voluntary or involuntary, could have a material adverse effect on our results of operations and could harm our reputation. Additionally, changes in policy, regulations or the imposition of additional regulations could have a material adverse effect on our Company.Welaws”. Federal,laws.” U.S. federal and state, and foreignas well as various European laws and regulations, impose upon vehicle operators various restrictions on the weight, length and width of motor vehicles that may be operated in certain jurisdictions or on certain roadways. Certain jurisdictions also prohibit the sale of vehicles exceeding length restrictions. FederalU.S. federal and state, as well as various European, authorities have various environmental control standards relating to air, water, noise pollution and hazardous waste generation and disposal which affect our business and operations.foreignEuropean laws and regulations affect the Company’s activities. Areas of our business affected by such laws and regulations include, but are not limited to, labor, advertising, real estate, promotions, quality of services, intellectual property, tax, import and export duties, tariffs, anti-corruption, anti-competition, environmental, privacy, health and safety. Compliance with these laws and others may be onerous and costly, at times, and may be inconsistent from jurisdiction to jurisdiction, which further complicates compliance efforts. Violations of these laws and regulations could lead to significant penalties, including restraints on our export or import privileges, monetary fines, criminal or civil proceedings and regulatory or other actions that could materially adversely affect our operating results.Exchange.the compliance, reporting, or other operating or administrative costs, and therefore could have an adverse impact on our business.and the accumulation and reporting of operating results, cause disclosure of confidential or personal information or cause damage to our reputation.service.periodicallyregularly review security measures and processes designed to prevent unauthorized access to our information systems, we may not be able to anticipate and effectively prevent unauthorized access or data loss in the future. The misuse, leakage, unauthorized access or falsification of information could result in a violation of privacy laws, including the European Union's General Data Protection Regulation ("GDPR") and California’s Consumer Privacy Act (“CCPA”), and damage to our reputation which could, in turn, have a significant, negative impact on our results of operations.we cannot assure you that our measures willmay not be successful in any given instance, particularly in countries outside the U.S. We endeavor to protect our rights; however, third parties may infringe upon our intellectual property rights. We may be forced to take steps to protect our rights, including through litigation, which could result in a diversion of resources.or require us to enter into royalty or licensing agreements in order to obtain the right to use a third party’s intellectual property.property or damage our reputation. Any royalty or licensing agreements, if required, may not be available to us on acceptable terms or at all. A successful claim of infringement against us could result in our being required to pay significant damages, enter into costly license or royalty agreements, or stop the sale of certain products, any of which could have a negative impact on our business, financial condition, and results of operations.significantmaterial amount of goodwill, intangible assets and other long-lived assets. At least annually, we review goodwill for impairment. Long-lived assets, identifiable intangible assets and goodwill are also reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable from future cash flows. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, sale or disposition of a significant portion of the business or other factors. If the carrying value of a long-lived asset is considered impaired, a non-cash impairment charge is recorded for the amount by which the carrying value of the long-lived asset exceeds its fair value. Our determination of future cash flows, future recoverability and fair value of our long-lived assets includes significant estimates and assumptions. Changes in those estimates or assumptions or lower-than-anticipated future financial performance may result in the identification of an impaired asset and a non-cash impairment charge, which could be material. Any such charge could adversely affect our operating results and financial condition.keysuch employees, our success may depend upon the existence of adequate succession plans. The loss of our executive management or other key employees or the failure to attract or retain qualified employees could have a material adverse effect on us in the event that our succession plans prove inadequate.Construction, re-configuration, relocationexpansion of production facilitieswe may incur unanticipated costs or delays that could adversely affect operating results.andand/or expansion of certain products and models may require the construction, improvement, re-configuration, relocation or expansion of production facilities. SuchThese development and expansion activities may be delayed, or we may incur unanticipated costs or not achieve the intended efficiencies, which could have a material adverse effect on our operating results and financial condition. In addition, uponcommencementCanadian market are subject to currency risk as devaluation of operations in new facilities we may incur unanticipated costs and suffer inefficiencies, which may adversely affect our profitability.The relative strength ofthe Canadian dollar versus the U.S. dollar may negatively impact sales.We have historically generated considerable sales in Canada and sales to Canadian dealers are made in U.S. dollars. The strength of the U.S. dollar relative tosales into Canada. With the Canadian dollar adversely impacts sales in Canada. Shouldacquisition of EHG, the U.S. dollar remain strong or further strengthen relative to the Canadian dollar, our Canadian sales will likely continue to be negatively impacted.Commodity price fluctuations may impact operating results.Commodity costs, including aluminumCompany has Euro-denominated assets which is utilized extensively by certain of our subsidiaries, are subject to price fluctuations outsidechanges in the Euro and U.S. dollar currency rate. To offset a portion of our control.this currency risk, the acquisition was partially funded through a Euro-denominated Term Loan B which provides an economic hedge.priceCompany has used foreign currency forward contracts to help manage (i.e., partially hedge) certain foreign exchange rate exposures related to anticipated sales transactions in Pound Sterling with financial instruments whose maturity date, along with the realized gain or loss, occurs on or near the execution of aluminum is typically influenced by macroeconomic factors, global supply and demand of aluminum (including expectations for growth and contraction and the level of global inventories), and the level of activity by financial investors. In addition, the price of aluminum is influenced by the supply of, and demand for, metal in a particular region and associated transportation costs. Similarly, other commodity prices such as for steel and wood or wood products are also subject to price fluctuations outside of our control. Pricing changes for aluminum, steel, wood, and other relevant commodities, and the level of aluminum, steel, wood or other commodity inventory maintained byanticipated transaction. At July 31, 2020, the Company may ultimately adversely impact operating results.we cannot assure you that our policies, procedures and controls willmay not be sufficient to prevent all forms of misconduct. We review our compensation policies and practices as part of our overall enterprise risk management program, but it is possible that our compensation policies could incentivize inappropriate risk taking or misconduct. If such inappropriate risk taking or misconduct occurs, it is possible that it could have a material adverse effect on our results of operations and/or our financial condition.TheToto Our Company●The development of new products and features by our competitors;●Development of new collaborative arrangements by us, our competitors or other parties;●Changes in government regulations applicable to our business;●Changes in investor perception of our business and/or management;● in our industry;●Occurrence of major catastrophic events; and●Sales of our common stock held by certain equity investors or members of management.Fluctuations in our quarterly resultsindustry;particularly if unforeseen, cause usreflect expectations of future growth and profitability and may also reflect expectations that its cash dividend will continue at current levels or grow. Future dividends are subject to declaration by the Company’s Board of Directors. Furthermore, and as is customary under credit facilities generally, certain actions, including our ability to pay dividends and repurchase shares, are subject to the satisfaction of certain payment conditions prior to payment. If the Company fails to meet expectations related to future growth, profitability, dividends, share repurchases or other market expectations, the Company might miss investor expectations or independent analyst estimates, which might result in analysts or investors changing their opinions and/or recommendations regarding our stock.stock and our stock price may decline, which could have a material adverse impact on investor confidence and employee retention.2017,2020, worldwide we owned or leased approximately 13,183,00020,611,000 square feet of total manufacturing plant and office space. We believe that our present facilities, consisting primarily of steel clad, steel or wood frame and masonry construction, and the machinery and equipment contained in these facilities, are generally well maintained and in good condition. As a result of our continued expansion efforts, we added 882,000 square feet in facilities in fiscal 2017. We believe that our facilities are suitable and adequate for their intended purposes and that we would be able to obtain replacements for our leased premises at acceptable costs should our leases not be renewed.2017: Owned or Leased No. of
Buildings Approximate
Building Area
Square Feet Owned 11 613,000 Owned 14 722,000 Owned 2 122,000 Owned 1 52,000 Owned 2 181,000 Owned 26 2,250,000 Owned 11 742,000 Owned 1 138,000 Owned 4 376,000 Owned 16 1,103,000 Leased 1 53,000 Owned 1 143,000 Owned 2 111,000 Owned 3 266,000 Leased 1 126,000 Owned 1 252,000 Owned 14 555,000 Owned 29 2,054,000 Owned 2 90,000 Owned 6 377,000 Leased 1 69,000 Owned 6 289,000 Owned 3 162,000 158 10,846,000 Leased 4 270,000 Leased 4 389,000 Owned 1 50,000 9 709,000 Owned 1 21,000 Owned 7 138,000 Owned 3 223,000 Owned 18 1,246,000 29 1,628,000 196 13,183,000 (A) Included in the towable recreational vehicles reportable segment.(B) Included in the motorized recreational vehicles reportable segment.(C) Included in the other non-reportable segment.Locations – Applicable Segment(s) Owned or Leased No. of
BuildingsApproximate
Building Area Square FeetUnited States: Indiana – North American Towable Segment Owned 88 6,117,000 Indiana – North American Towable Segment Leased 1 53,000 Indiana – North American Towable and Motorized Segments Owned 38 2,722,000 Indiana – North American Motorized Segment Owned 17 1,070,000 Indiana – Corporate, North American Towable and Motorized Segments Owned 24 1,465,000 Indiana – Other Segment Owned 1 50,000 Indiana – Other Segment Leased 6 502,000 Indiana Subtotal 175 11,979,000 Ohio – North American Towable and Motorized Segments Owned 12 1,337,000 Michigan – Other Segment Owned 1 10,000 Michigan – Other Segment Leased 4 270,000 Idaho – North American Towable Segment Owned 5 661,000 Oregon – North American Towable Segment Owned 5 371,000 Other Subtotal 27 2,649,000 United States Subtotal 202 14,628,000 Europe: Germany – European Segment Owned 90 4,204,000 Germany – European Segment Leased 32 590,000 Italy – European Segment Owned 3 568,000 Italy – European Segment Leased 1 22,000 France – European Segment Owned 6 330,000 United Kingdom – European Segment Owned 1 269,000 Europe Subtotal 133 5,983,000 Total 335 20,611,000 At July 31, 2017, thelaws”,laws,” warranty claims and vehicle accidents in North America (for which the Company carries insurance above a specified self-insured retention or deductible amount). The outcomes of legal proceedings and claims brought against the Company are subject to significant uncertainty. There is significant judgment required in assessing both the probability of an adverse outcome and the determination as to whether an exposure can be reasonably estimated. In management’s opinion, the ultimate disposition of any current legal proceedings or claims against the Company will not have a material effect on the Company’s financial condition, operating results or cash flows. Litigation is, however, inherently uncertain and an adverse outcome from such litigation could have a material effect on the operating results of a particular reporting period.. Set forth below is under the range of high and low market prices for the Common Stock for each quarter during the Company’s two most recent fiscal years, as quoted in the NYSE Monthly Market Statistics and Trading Reports: Fiscal 2017 Fiscal 2016 High Low High Low $ 87.08 $ 74.75 $ 57.35 $ 50.12 108.45 74.00 62.99 47.59 115.74 88.87 64.79 47.56 109.91 87.96 76.76 60.05 1, 2017,16, 2020, the number of holders of record of the Common Stock was 160.2017,2020, we paid a $0.33$0.40 per share dividend for each fiscal quarter. In fiscal 2016,2019, we paid a $0.30$0.39 per share dividend for each fiscal quarter.dividends for each quarterdividend payments in the foreseeable future. As is customary under asset-based lines of credit facilities generally, certain actions, including our ability to pay dividends, are subject to the satisfaction of certain payment conditions prior to payment. The conditions for the paymentspayment of dividends under our existing debt facilities include a minimum level of adjusted excess cash availability and a fixed charge coverage ratio test, both as defined in the credit agreement.agreements. The declaration of future dividends and the establishment of the per share amounts, record dates and payment dates for any such future dividends are subject to the determination of the Board, and will be dependent upon future earnings, cash flows and other factors.2017.ITEM 12Item 12. Fiscal Years Ended July 31, 2017 2016(1)(2) 2015(3) 2014(4) 2013(5) $ 7,246,952 $ 4,582,112 $ 4,006,819 $ 3,525,456 $ 3,241,795 374,254 258,022 202,009 175,516 151,676 374,254 256,519 199,385 179,002 152,862 $ 7.12 $ 4.92 $ 3.80 $ 3.29 $ 2.86 $ 7.09 $ 4.91 $ 3.79 $ 3.29 $ 2.86 $ 7.12 $ 4.89 $ 3.75 $ 3.36 $ 2.88 $ 7.09 $ 4.88 $ 3.74 $ 3.35 $ 2.88 $ 1.32 $ 1.20 $ 1.08 $ 0.92 $ 0.72 $ – $ – $ – $ 1.00 $ 1.50 $ 2,557,931 $ 2,325,464 $ 1,503,248 $ 1,408,718 $ 1,328,268 200,345 408,590 59,726 60,306 73,982 (1) Fiscal Years Ended July 31, 2018 2017 Income statement data: Net sales $ 8,167,933 $ 7,864,758 $ 8,328,909 $ 7,246,952 $ 4,582,112 Income before income taxes from continuing operations 272,896 184,666 633,029 556,386 383,313 Acquisition-related costs included in income before income taxes — 114,866 — — — Net income from continuing operations 221,384 132,465 430,151 374,254 258,022 Net income 221,384 132,465 430,151 374,254 256,519 Net income attributable to Thor Industries, Inc. 222,974 133,275 430,151 374,254 256,519 Earnings per common share from continuing operations: Basic $ 4.01 $ 2.46 $ 8.17 $ 7.12 $ 4.92 Diluted $ 4.00 $ 2.45 $ 8.14 $ 7.09 $ 4.91 Earnings per common share: Basic $ 4.04 $ 2.47 $ 8.17 $ 7.12 $ 4.89 Diluted $ 4.02 $ 2.47 $ 8.14 $ 7.09 $ 4.88 Dividends paid per common share: Regular $ 1.60 $ 1.56 $ 1.48 $ 1.32 $ 1.20 Balance sheet data: Total assets $ 5,771,460 $ 5,660,446 $ 2,778,665 $ 2,557,931 $ 2,325,464 Long-term liabilities 1,910,610 2,116,893 71,594 200,345 408,590 in our towable segment.(2)Includes one month of the operations of Jayco from the date of its acquisition during the fiscal year.(3)Includes three and seven months of the operations of Postle and CRV/DRV, respectively, from the dates of their acquisitions during the fiscal year.(4)Includes three, nine and eleven months of the operations of KZ, Bison and Livin’ Lite, respectively, from the dates of their acquisitions during the fiscal year.(5)Includes non-cash goodwill and intangible asset impairments of $6,810 and $4,715, respectively, associated with a subsidiary in our discontinued bus business, and a non-cash long-lived asset impairment of $2,000 associated with a subsidiary in our towable segment.The footnote items noted in (5) above that related toour towable segment.discontinued bus business only impactoperations of Jayco from the net income and earnings per common share totals indate of its acquisition during the chart above.fiscal year.ITEMItem 8 of this Report.Our MD&A focuses on our ongoing operations. Discontinued operations are excluded from our MD&A except as indicated otherwise.bebecome the largest manufacturer of recreational vehicles (“RVs”) in the world based on units and revenue. We are also the largest manufacturer of RVs in North America. AccordingAmerica, and one of the largest manufacturers of RVs in Europe. In North America, according to Statistical Surveys, Inc. (“Stat Surveys”), for the six months ended June 30, 2017,2020, Thor’s current combined U.S. and Canadian market share based on units was approximately 50.7%43.7% for travel trailers and fifth wheels combined and approximately 39.6%38.5% for motorhomes.we compensate operating management primarily with cash, based upon the profitability of the business unit which they manage. Our corporate staff provides financial management, insurance, legal, human resource, risk management, marketing and internal audit functions. Senior corporate management interacts regularly with operating management to assure that corporate objectives are understood and monitored appropriately.Ourour RV products are primarily sold to independent, non-franchise dealers who, in turn, retail those products. Our growth has been achieved both organically and through acquisition, and our strategy is designed to increase our profitability by driving innovation, servicing our customers, manufacturing quality products, improving the efficiencies of our facilities and making strategic growth acquisitions.Our growth has been both internal and by acquisition. Our strategy is designed to increase our profitability through innovation, servicing our customers, manufacturing quality products, improving the efficiencies of our facilities and making acquisitions.continuing operations to finance our growth, however, we did obtain aand utilize credit facilityfacilities to partially fund the Jayco, Corp.majority of the cash consideration for the EHG acquisition as more fully described in Notes 2 and 1112 to the Consolidated Financial Statements. Capital expendituresacquisitions of $115,027$105,823 in fiscal 20172020 were made primarily for purchases of land, production building additions and improvements and replacing machinery and equipment used in the ordinary course of business.Significant EventsFiscal 2016On June 30, 2016, the Company closed on a Stock Purchase Agreement (“Jayco SPA”) for the acquisition of all the issued and outstanding capital stock of towable and motorized recreational vehicle manufacturer Jayco, Corp. (“Jayco”) for cash consideration of $562,690, net of cash acquired. This acquisition was funded from the Company’s cash on hand and $360,000 from an asset-based revolving credit facility as more fully described in Notes 2 and 11 to the Consolidated Financial Statements. Jayco operates as an independent operation in the same manner as the Company’s other recreational vehicle subsidiaries. The Company purchased Jayco to complement its existing towable and motorized RV product offerings and dealer base.Fiscal 2015On May 15, 2015, the Company entered into a repurchase agreement (the “May 15, 2015 Repurchase Agreement”), to purchase shares of its common stock from the Thompson Family Foundation (the “Foundation”) in a private transaction. Pursuant to the terms of the May 15, 2015 Repurchase Agreement, the Company purchased 1,000,000 shares of its common stock at a price of $60.00 per share from the Foundation, and held them as treasury stock, representing an aggregate purchase price of $60,000. The closing price of Thor common stock on May 15, 2015 was $61.29. The transaction was consummated on May 19, 2015, and the Company used available cash to purchase the shares. The number of shares repurchased by the Company represented 1.9% of the Company’s issued and outstanding common stock immediately prior to the repurchase.On May 1, 2015, the Company closed on a Membership Interest Purchase Agreement with Postle Aluminum Company, LLC for the acquisition of all the outstanding membership units of Postle Operating, LLC (“Postle”) for cash consideration paid in fiscal 2015 of $144,048, net of cash acquired. Postle is a manufacturer of aluminum extrusion and specialized component products for the RV and other markets, and operates as an independent operation in the same manner as the Company’s other subsidiaries.On January 5, 2015, the Company closed on a Stock Purchase Agreement (“CRV/DRV SPA”) for the acquisition of all the outstanding membership units of towable recreational vehicle manufacturer Cruiser RV, LLC (“CRV”) and luxury fifth wheel towable recreational vehicle manufacturer DRV, LLC (“DRV”) by its Heartland Recreational Vehicles, LLC subsidiary (“Heartland”). In accordance with the CRV/DRV SPA, the closing was deemed effective as of January 1, 2015. As contemplated in the CRV/DRV SPA, the Company also acquired, in a series of integrated transactions, certain real estate used in the ongoing operations of CRV and DRV. Cash consideration paid for this acquisition was $47,523, net of cash acquired. The Company purchased CRV and DRV to supplement and expand its existing lightweight travel trailer and luxury fifth wheel product offerings and dealer base.Discontinued Operations (Fiscal 2014)On July 31, 2013, the Company entered into a definitive Stock Purchase Agreement (“ASV SPA”) and sold our bus business to Allied Specialty Vehicles, Inc. (“ASV”). The sale closed on October 20, 2013. Thor’s bus business included Champion Bus, Inc., General Coach America, Inc., Goshen Coach, Inc., El Dorado National (California), Inc., and El Dorado National (Kansas), Inc. As a result of the sale, the results of operations of the bus business are reported as loss from discontinued operations, net of income taxes on the Consolidated Statements of Income and Comprehensive Income for the fiscal years ended July 31, 2016 and 2015. See Note 3 to the Consolidated Financial Statements for further information. capital acquisitions by segment.following table summarizes theCOVID-19 coronavirus pandemic had a sudden and material negative impact on our business and results of discontinued operations: 2017 2016 2015 $ – $ (2,417 ) $ (4,791 ) – 914 2,167 $ – $ (1,503 ) $ (2,624 ) The loss before income taxesoperations, particularly during the last half of discontinuedour fiscal year ended July 31, 2020. Additional impacts could be incurred in future periods, including negative impacts to our results of operations, reflects expenses incurred directlyliquidity and financial position as a direct or indirect result of the pandemic. These risks to our business are more fully described in Part I, item 1A “Risk Factors” of this Report.former busprice we are required to pay to acquire raw material inputs, or limiting our production output due to a lack of key material components in sufficient quantities.including ongoinginto the growing European market with a long-standing European industry leader.liabilities retained bythis acquisition incurred during the Company underfiscal year ended July 31, 2019, including the ASV SPA for bus product liabilityforeign currency forward contract loss and workers’ compensation claims occurring priorcertain bank fees, ticking fees, legal, advisory and other costs, as discussed in Note 2 to the closing dateConsolidated Financial Statements, are included in Acquisition-related costs in the Consolidated Statements of the sale.RVIA,Recreation Vehicle Industry Association (“RVIA”), which is typically issued on a one-month lag and represents the manufacturers’ RV production and delivery to dealers. In addition, the Company monitorswe monitor monthly retail (end user) sales trends as reported by StatisticalStat Surveys, Inc., whose data is typically issued on a month-and-a-half lag. We believelag, but may currently have a longer lag time due to the impact of the COVID-19 pandemic. The Company believes that monthly RV retail sales data is important as consumer purchases impact future dealer orders and ultimately our production and sales.We believe our dealer inventory is generally at appropriate levels for seasonal consumer demand, with dealers reflecting optimism at the RV Open House in September 2017.production.2017 increased 16.1%2020 decreased 38.2% to approximately 109,70063,900 units, fromcompared to approximately 94,500103,400 units as of July 31, 2016. 2019.totalNorth American RV backlog as of July 31, 20172020 increased $1,134,952$3,063,316, or 94.8%265.9%, to $2,331,799 from $1,196,847$4,215,319 compared to $1,152,003 as of July 31, 2016.Calendar YTD U.S. and Canada Wholesale Unit Shipments Six Months Ended June 30, 2017 2016 Increase Change 223,644 197,515 26,129 13.2% 32,786 28,771 4,015 14.0% 256,430 226,286 30,144 13.3% According to the most recent RVIA forecast U.S. and Canada Wholesale Unit Shipments Six Months Ended June 30, Increase % 2020 2019 (Decrease) Change North American Towable Units 159,059 191,094 (32,035) (16.8) North American Motorized Units 17,008 25,487 (8,479) (33.3) Total 176,067 216,581 (40,514) (18.7) August 2017,wholesale shipments fornoted above in both towable and motorized units is primarily due to the impact of the COVID-19 pandemic on North American shipments during the March to June 2020 timeframe, as most RV manufacturers were shut down for the 2017 calendar year will approximate 419,500 and 60,200 units, respectively, which are 11.6% and 9.9% higher, respectively, than the corresponding 2016 calendar year wholesale shipments. The combined totala number of 479,700 units would be the third largest total in the past half century. Travel trailers and fifth wheels are expected to account for approximately 85% of all RV shipments in calendar year 2017, and more Class C motorhomes are expected to be shipped in 2017 than any year since 1984. The outlookweeks during that time period.2017 growth in RV sales is based on2020 wholesale unit shipments. Under a most likely scenario, towable and motorized unit shipments are projected to increase to approximately 383,900 and 40,500, respectively, for an annual total of approximately 424,400 units, up 4.5% from the expectation of continued gains in jobs and disposable income and low inflation. It also takes into account the impact of slowly rising interest rates and assumes geopolitical risks will have minimal impact on the overall pace of growth in the domestic economy.RVIA has also forecasted that 20182019 calendar year shipmentsshipments. The most likely forecast for towablescalendar year 2020 could range from a lower estimate of approximately 414,200 total units to an upper estimate of approximately 434,500 units.units will approximate 429,300unit shipments are projected to increase to approximately 452,500 and 61,90054,700 units, respectively, which are 2.3% and 2.8%for an annual total of approximately 507,200 units, or 19.5% higher respectively, than expected 2017the most likely scenario for calendar year 2020 shipments.Calendar YTDindustry. We believeindustry, and that annual North American RV industry wholesale shipments will generally approximate a one-to-one replenishment ratio with retail sales going forward.StatisticalStat Surveys Inc. for the periods indicated, are as follows: U.S. and Canada Retail Unit Registrations Six Months Ended June 30, 2017 2016 Increase Change 215,945 192,610 23,335 12.1% 30, 543 25,997 4,546 17.5% 246,488 218,607 27,881 12.8% U.S. and Canada Retail Unit Registrations Six Months Ended June 30, Increase % 2020 2019 (Decrease) Change North American Towable Units 201,979 222,244 (20,265) (9.1) North American Motorized Units 21,635 28,384 (6,749) (23.8) Total 223,614 250,628 (27,014) (10.8) StatisticalStat Surveys Inc. is based on official state and provincial records. This information is subject to adjustment and is continuously updated.Calendar YTDsix-month periodssix months ended June 30, 20172020 and 2016,2019 to correspond towith the industry wholesale periods denotednoted above, were as follows (the 2016 totals exclude Jayco due to the timing of its acquisition on June follows: U.S. and Canada Wholesale Unit Shipments Six Months Ended June 30, Increase % 2020 2019 (Decrease) Change North American Towable Units 66,725 85,920 (19,195) (22.3) North American Motorized Units 6,513 9,825 (3,312) (33.7) Total 73,238 95,745 (22,507) (23.5) 2016): U.S. and Canada Wholesale Unit Shipments Six Months Ended June 30, 2017 2016 Increase Change 116,278 67,684 48,594 71.8% 13,484 7,681 5,803 75.6% 129,762 75,365 54,397 72.2% Calendar YTDshipmentsstatistics of the Company’s RV products, as reported by StatisticalStat Surveys, Inc., were as follows for the six-month periodssix months ended June 30, 20172020 and 2016,2019 to correspond towith the industry retail periods denotednoted above, and are adjusted to include retail unit shipment results from acquisitions only from the date of acquisition forward (therefore, the 2016 totals exclude Jayco due to the timing of its acquisition on June 30, 2016): U.S. and Canada Retail Unit Registrations Six Months Ended June 30, 2017 2016 Increase Change 106,795 66,308 40,487 61.1% 12,096 6,857 5,239 76.4% 118,891 73,165 45,726 62.5% U.S. and Canada Retail Unit Registrations Six Months Ended June 30, Increase % 2020 2019 (Decrease) Change North American Towable Units 86,053 102,525 (16,472) (16.1) North American Motorized Units 8,321 10,384 (2,063) (19.9) Total 94,374 112,909 (18,535) (16.4) StatisticalStat Surveys Inc. is based on official state and provincial records. This information is subject to adjustment and is continuously updated.Company Wholesale Statistics – Fiscal YearForupdated, and is often impacted by delays in reporting by various states or provinces. The COVID-19 pandemic has resulted in further delays in the fiscal years ended July 31, 2017submission of information reported by the various states or provinces beginning with calendar 2020 results, and 2016,may also be impacting the Company’s wholesale RV shipments were as follows (includes Jayco results only fromcompleteness of such information.June 30, 2016 date of acquisition forward): U.S. and Canada Wholesale Unit Shipments Fiscal Year Ended July 31, 2017 2016 Increase Change 213,562 128,932 84,630 65.6% 24,133 13,815 10,318 74.7% 237,695 142,747 94,948 66.5% The wholesale totals above for towablesCOVID-19 pandemic may continue to adversely impact our business remains uncertain and motorized units include 62,642 and 5,654 units, respectively, in fiscal 2017 and 3,577 and 243 units, respectively, in fiscal 2016 related to Jayco since its June 30, 2016 acquisition date.Ourunpredictable. Nonetheless, our outlook for future growth in North American retail sales isremains optimistic. At least in the near-term, we believe consumers are likely to continue to alter their future vacation and travel plans, opting for fewer vacations via air travel, cruise ships and hotels, and preferring vacations that RVs are uniquely positioned to provide, where they can continue practicing social distancing while also allowing them to explore or unwind, often close to home. Minimal-contact vacation options like road trips and camping may be perceived as great choices for people who want to limit pandemic-related risks involved with close personal interactions. Future retail sales will continue to be dependent upon various economic conditions faced by consumers, especially in the wake of the coronavirus pandemic, such as the rate of unemployment, the level of consumer confidence, the growth in disposable income of consumers, changes in interest rates, credit availability, the statehealth of the housing market and changes in tax rates and fuel prices. Assuming continued stability or improvement in consumer confidence, availability and prices.retail and wholesale credit, low interest ratesthe outdoors and the absenceenrichment that comes with living an active lifestyle. RVs allow people to be in control of negative economictheir travel experiences, going where they want, when they want, and with the people they want. The RV units we design, produce and sell allow people to spend time outdoors pursuing their favorite activities, creating cherished moments, and most importantly, deeply connecting with family and friends. Based on the increasing value consumers are placing on these factors, we would expect to see continuedlong-term growth in the RV industry.A positive future outlook for the RV segment is supported by favorable demographics. The number of consumers between the ages of 55 and 74, the age brackets that historically have accounted for the bulk of retail RV sales, will total 79 million by 2025, 15% higher than in 2015 according to the RVIA. In addition, in recent years the industry has benefited from growing retail sales to younger consumers with new product offerings targeted to younger, more active families, as they place a higher value on family outdoor recreation than any prior generation. Based on a study from the Pew Research Center, the “Millennial” generation, defined at the time as those between the ages of 18 and 34, consisted of more than 75 million people in 2015. In general, these consumers are more technologically savvy, but still value active outdoor experiences shared with family and friends, making them strong potential customers for our industry in the decades to come. Based on the Kampgrounds of America (KOA) 2017 North American Camping Report, their millennial group comprised 31% of the total population in the most recent census yet accounted for 38% of the total campers in 2016, which increasedRV industry.34% of the total campers in 2015. Younger RV consumers are generally attracted to lower and moderately priced travel trailers, as affordability is a key driver at this stage in their lives.As the first generation of the internet age, Millennials are generally more comfortable gathering information online, and are therefore generally more knowledgeable about products and competitive pricing than any prior generation. This generation is camping more as they view camping as an opportunity to spend time with family and friends as well as a way to reduce stress, escape the pressures of everyday life, be more active and lead a healthier lifestyle. In addition to younger age demographics, there are opportunities to expand sales to a more ethnically diverse customer base. In our efforts to connect with RV consumers of all generations, during the first quarter of fiscal 2017 we launched a new consumer-facing website designed to inspire consumers to explore the RV lifestyle. The new website includes video and interactive features to help consumers determine the type of RV which may suit their specific camping needs, while providing video footagehealth crisis, economic or industry-wide factors that can be utilized by dealers to market our products. We will continue to evaluate additional marketing opportunities to younger and more diverse consumers over the coming year.Economic or industry-wide factors affectingaffect our RV business include the costs of commodities, usedthe impact of actual or threatened tariffs on commodity costs and labor costs incurred in the manufactureproduction of our products. Material cost isand labor costs are the primary factorfactors determining theour cost of our products sold, and any future increases in raw material or labor costs would negatively impact our profit margins negatively if we were unable to raiseoffset those cost increases through a combination of product decontenting, material sourcing strategies, efficiency improvements or raising the selling prices for our products by corresponding amounts. Historically, we have generally been able to pass along thoseoffset net cost increases to customers.We have not experienced any recent unusual cost increases or supply constraints from our chassis suppliers. over time.We believe European Unit Registrations Caravan Six Months Ended June 30, %
ChangeSix Months Ended June 30, %
Change 2020 2019 2020 2019 73,179 74,483 (1.8) 31,009 35,748 (13.3) 5,270 10,843 (51.4) 6,775 11,067 (38.8) Total 78,449 85,326 (8.1) 37,784 46,815 (19.3) Six Months Ended June 30, Increase % 2020 2019 (Decrease) Change Motorcaravan and Campervan 19,168 18,929 239 1.3 Caravan 6,374 7,737 (1,363) (17.6) Total OEM-Reporting Countries 25,542 26,666 (1,124) (4.2) RV production is adequate for current production levels,RVs and that available inventory would compensate for short-term changes in supply schedules if they occur.20172020 VS. FISCAL 2016 $ 5,127,491 $ 3,338,659 $ 1,788,832 53.6 1,971,466 1,094,250 877,216 80.2 7,098,957 4,432,909 2,666,048 60.1 253,557 218,673 34,884 16.0 (105,562 ) (69,470 ) (36,092 ) (52.0 ) $ 7,246,952 $ 4,582,112 $ 2,664,840 58.2 213,562 128,932 84,630 65.6 24,133 13,815 10,318 74.7 237,695 142,747 94,948 66.5 $ 783,752 15.3 $ 547,460 16.4 $ 236,292 43.2 215,324 10.9 144,913 13.2 70,411 48.6 999,076 14.1 692,373 15.6 306,703 44.3 44,702 17.6 33,975 15.5 10,727 31.6 (195 ) – (23 ) – (172 ) – $ 1,043,583 14.4 $ 726,325 15.9 $ 317,258 43.7 $ 273,550 5.3 $ 195,983 5.9 $ 77,567 39.6 86,009 4.4 56,214 5.1 29,795 53.0 359,559 5.1 252,197 5.7 107,362 42.6 8,935 3.5 8,162 3.7 773 9.5 51,353 – 45,910 – 5,443 11.9 $ 419,847 5.8 $ 306,269 6.7 $ 113,578 37.1 $ 458,915 9.0 $ 321,874 9.6 $ 137,041 42.6 125,323 6.4 88,523 8.1 36,800 41.6 584,238 8.2 410,397 9.3 173,841 42.4 28,909 11.4 18,547 8.5 10,362 55.9 (195 ) – (23 ) – (172 ) – (56,566 ) – (45,608 ) – (10,958 ) (24.0 ) $ 556,386 7.7 $ 383,313 8.4 $ 173,073 45.2 ORDER BACKLOG $ 1,416,240 $ 735,085 $ 681,155 92.7 915,559 461,762 453,797 98.3 $ 2,331,799 $ 1,196,847 $ 1,134,952 94.8 FISCAL 2020 FISCAL 2019 Change
Amount%
ChangeNET SALES: Recreational vehicles North American Towables $ 4,140,482 $ 4,558,451 $ (417,969) (9.2) North American Motorized 1,390,098 1,649,329 (259,231) (15.7) Total North America 5,530,580 6,207,780 (677,200) (10.9) European 2,485,391 1,486,978 998,413 67.1 Total recreational vehicles 8,015,971 7,694,758 321,213 4.2 Other 234,481 263,374 (28,893) (11.0) Intercompany eliminations (82,519) (93,374) 10,855 11.6 Total $ 8,167,933 $ 7,864,758 $ 303,175 3.9 # OF UNITS: Recreational vehicles North American Towables 150,182 169,540 (19,358) (11.4) North American Motorized 15,088 18,085 (2,997) (16.6) Total North America 165,270 187,625 (22,355) (11.9) European 54,506 32,860 21,646 65.9 Total 219,776 220,485 (709) (0.3) % of
Segment
Net Sales% of
Segment
Net SalesGROSS PROFIT: Recreational vehicles North American Towables $ 619,892 15.0 $ 614,968 13.5 $ 4,924 0.8 North American Motorized 149,995 10.8 165,184 10.0 (15,189) (9.2) Total North America 769,887 13.9 780,152 12.6 (10,265) (1.3) European 304,388 12.2 150,039 10.1 154,349 102.9 Total recreational vehicles 1,074,275 13.4 930,191 12.1 144,084 15.5 Other, net 43,932 18.7 42,903 16.3 1,029 2.4 Total $ 1,118,207 13.7 $ 973,094 12.4 $ 145,113 14.9 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Recreational vehicles North American Towables $ 238,656 5.8 $ 253,092 5.6 $ (14,436) (5.7) North American Motorized 72,720 5.2 79,202 4.8 (6,482) (8.2) Total North America 311,376 5.6 332,294 5.4 (20,918) (6.3) European 239,635 9.6 134,051 9.0 105,584 78.8 Total recreational vehicles 551,011 6.9 466,345 6.1 84,666 18.2 Other 11,914 5.1 9,014 3.4 2,900 32.2 Corporate 71,194 — 60,685 — 10,509 17.3 Total $ 634,119 7.8 $ 536,044 6.8 $ 98,075 18.3 FISCAL 2020 FISCAL 2019 Change
Amount%
ChangeINCOME (LOSS) BEFORE INCOME TAXES: Recreational vehicles North American Towables $ 336,207 8.1 $ 322,228 7.1 $ 13,979 4.3 North American Motorized 71,943 5.2 80,910 4.9 (8,967) (11.1) Total North America 408,150 7.4 403,138 6.5 5,012 1.2 European 9,850 0.4 (5,946) (0.4) 15,796 265.7 Total recreational vehicles 418,000 5.2 397,192 5.2 20,808 5.2 Other, net 27,751 11.8 29,086 11.0 (1,335) (4.6) Corporate (172,855) — (241,612) — 68,757 28.5 Total $ 272,896 3.3 $ 184,666 2.3 $ 88,230 47.8 Change
Amount%
ChangeORDER BACKLOG: Recreational vehicles North American Towables $ 2,763,678 $ 693,156 $ 2,070,522 298.7 North American Motorized 1,451,641 458,847 992,794 216.4 Total North America 4,215,319 1,152,003 3,063,316 265.9 European 1,525,973 852,675 673,298 79.0 Total $ 5,741,292 $ 2,004,678 $ 3,736,614 186.4 20172020 increased $2,664,840$303,175, or 58.2%3.9%, compared to fiscal 2016. Jayco accounted for $1,814,048 of the $2,664,8402019. This increase and 39.6% of the 58.2% increase in consolidatedis primarily attributable to incremental European net sales due toof $998,413, as the inclusion ofcurrent fiscal year includes twelve months of Jayco’sEuropean operations in fiscal 2017 as compared to one monthsix months in the prior fiscal 2016year from the date of EHG's acquisition. This increase was largely offset by a decrease in North American net sales of $695,238, primarily as a result of the COVID-19 impact on sales between March and May 2020. In March, we temporarily suspended production at all of our North American RV production facilities and temporarily suspended a substantial portion of our European RV production. Throughout late-April and May, our companies in North America and Europe resumed operations, with the exception of our production facility in the UK which resumed operations in mid-June.20172020 increased $317,258,$145,113, or 43.7%14.9%, compared to fiscal 2016, with Jayco2019. The increase in gross profit is primarily due to incremental European gross profit for fiscal 2020 of $154,349. European gross profit in fiscal 2019 was negatively impacted by $61,418 of purchase accounting for $212,050 of the $317,258 increase and 29.2% of the 43.7% increase.adjustments. Consolidated gross profit was 14.4%13.7% of consolidated net sales for fiscal 20172020 and 15.9%12.4% for fiscal 2016. The decrease2019, with the increase in percentage primarily impacted by the North American recreational vehicle improvement to 13.9% from 12.6% and the improvement in European gross profit percentage is primarily due to the dilutive impact of both Jayco’s gross profit percentage of 11.5% and the overall market-driven changes in product mix toward generally smaller and lower-priced units, which typically have lower gross margins. In addition, there was a higher concentration of motorized net sales to consolidated net sales in fiscal 2017 as12.2% compared to fiscal 2016, and motorized products typically carry a lower gross margin as compared to towable products.20172020 increased $113,578$98,075, or 37.1%18.3%, compared to fiscal 2016. 2019, primarily due to incremental European selling, general and administrative expenses of $105,584 due to a full year of European operations in fiscal 2020 as compared to six months in fiscal 2019.20172020 increased $35,963$21,596 compared to fiscal 2016,2019, primarily due to the increase in Jayco’s totalincremental European amortization expense of $38,386. Income from continuing$25,197 due to a full year of European operations before income taxes forin fiscal 2017 was $556,386,2020 as compared to $383,313six months in fiscal 2019, partially offset by lower North American dealer network amortization as compared to the prior year.2016, an increase2020 of $173,073 or 45.2%.Additional information concerning$10,057 relates to the changesNorth American Towables reportable segment as discussed in net sales, gross profit, selling, general and administrative expenses and income before income taxes are addressed inNote 7 to the segment reporting that follows.$5,443$10,509 to $51,353$71,194 for fiscal 20172020 compared to $45,910$60,685 for fiscal 2016. The2019, an increase isof 17.3%. This increase includes an increase in professional fees of $4,595, primarily due to additional fees related to the integration of the EHG operations, and an increase in compensation costs, as incentive compensation increased $2,973 in correlation with the increase in income from continuing operations before income taxes compareddonations of $2,003, primarily due to a significant contribution to the prior year, and stock-based compensation increased $3,113. The stock-based compensation increase is due to increasing income from continuing operations before income taxes over the past three years, as most stock awards vest ratably over a three-year period.National Forest Foundation in August 2019. Deferred compensation expense also increased $2,342,$1,519, which relates towas effectively offset by the equal and offsetting increase in other income noted below duerelated to the increase in the related deferred compensation plan assets. Costs related to salesassets as noted below.marketing initiatives also increased $1,366. These increases were partially offset by a decrease of $4,882 in legal and professional fees, primarily due to non-recurring professional fees incurred in fiscal 2016include costs related to the Jayco acquisition of EHG as described in Note 2 to the Consolidated Financial Statements. These Corporate costs included a foreign currency forward contract loss of $70,777, with the remaining $44,089 consisting primarily of bank fees, ticking fees, legal, professional and advisory fees related to financial due diligence and implementation costs, regulatory review costs and the developmentwrite-off of long-term strategic growth initiatives.$5,213$101,661 of net expense for fiscal 20172020 compared to $302$66,061 of net incomeexpense for fiscal 2016.2019. This increase in net expense of $5,515$35,600 is primarily due to an increase in interest expense and fees of $8,172$37,067 on the debt facilities related to the revolving credit facility, as there wereEHG acquisition, primarily due to fiscal 2020 including twelve months of these expenses in fiscal 2017interest expense as compared to one monthsix months in fiscal 20162019 from the date of the establishment of the facility and the related JaycoEHG acquisition. This increase in expense was partially offset by the investment income and marketincrease in fair value appreciation onof the Company’sCompany's deferred compensation plan assets totaling $2,879due to market fluctuations and investment income, which resulted in additional income of $1,572 in fiscal 20172020 when compared to the income in fiscal 2019.$537 in$184,666 for fiscal 2016,2019, an increase in income of $2,342.2017 remained constant at 32.7%2020 was 18.9% on $556,386$272,896 of income before income taxes, compared with 32.7%28.3% on $383,313$184,666 of income before income taxes for fiscal 2016.2019. The primary drivers of the change in the overall effective tax rate between comparable periods are certain foreign tax rate differences from the U.S. federal corporate tax rate of 21.0% and the change in the annual mix of earnings between foreign and domestic. The fiscal 2019 effective income tax rate for fiscal 2017 includes a benefit of $1,898 related to the adoption of ASU 2016-09 as discussed in Note 1 to the Consolidated Financial Statements. The effective income tax rates for the fiscal 2017 and fiscal 2016 periods were both favorablywas negatively impacted by various uncertain tax benefit settlementsan unfavorable, non-deductible forward currency forward contract loss and expirations.20172020 vs. Fiscal 2016 Fiscal 2017 % of
Segment
Net Sales Fiscal 2016 % of
Segment
Net Sales Change
Amount %
Change $ 3,088,561 60.2 $ 1,884,128 56.4 $ 1,204,433 63.9 2,038,930 39.8 1,454,531 43.6 584,399 40.2 $ 5,127,491 100.0 $ 3,338,659 100.0 $ 1,788,832 53.6 Fiscal 2017 % of
Segment
Net Sales Fiscal 2016 % of
Segment
Net Sales Change
Amount %
Change 166,140 77.8 95,561 74.1 70,579 73.9 47,422 22.2 33,371 25.9 14,051 42.1 213,562 100.0 128,932 100.0 84,630 65.6 Fiscal 2020 % of
Segment
Net SalesFiscal 2019 % of
Segment
Net SalesChange
Amount%
ChangeNET SALES: North American Towables Travel Trailers and Other $ 2,449,239 59.2 $ 2,710,308 59.5 $ (261,069) (9.6) Fifth Wheels 1,691,243 40.8 1,848,143 40.5 (156,900) (8.5) Total North American Towables $ 4,140,482 100.0 $ 4,558,451 100.0 $ (417,969) (9.2) Fiscal 2020 % of
Segment
ShipmentsFiscal 2019 % of
Segment
ShipmentsChange
Amount%
Change# OF UNITS: North American Towables Travel Trailers and Other 114,486 76.2 129,710 76.5 (15,224) (11.7) Fifth Wheels 35,696 23.8 39,830 23.5 (4,134) (10.4) Total North American Towables 150,182 100.0 169,540 100.0 (19,358) (11.4) IMPACT OF CHANGE IN PRODUCT MIX AND PRICE ON NET SALES: % Decrease
Change2.1 (10.0) 1.9 (1.9) 2.2 (12.0) increasedecrease in total North American towables net sales of 53.6%9.2% compared to the prior fiscal year resulted from a 65.6% increase11.4% decrease in unit shipments partially offset by a 12.0% decrease in the overall net price per unit due to the impact of changes in product mix and price. Jayco accounted for 37.7% of the 53.6% increase in total towable net sales and for $1,257,659 of the $1,788,832 increase due to the inclusion of twelve months of Jayco’s operations in fiscal 2017 as compared to one month in fiscal 2016 from the date of acquisition. Jayco also accounted for 45.8% of the 65.6% increase in total towable unit shipments and for 59,065 of the 84,630 unit increase. The 12.0% decrease in the overall towables net price per unit is greater than the percentage decreases within the travel trailer and fifth wheel product lines due to a higher concentration of the more moderately priced travel trailers and other units, as compared to fifth wheels, in the current-year period as compared to the prior-year period. The “Other” units within the travel trailer and other category consist primarily of truck and folding campers and other specialty vehicles. The overall industry increase in combined travel trailer and fifth wheel wholesale unit shipments for the twelve months ended July 31, 2017 was 17.7% compared to the same period last year according to statistics published by RVIA.The decreases in the overall net price per unit within the travel trailer and other product lines of 10.0% and the fifth wheel product lines of 1.9% were both primarily due to a change in product mix, attributable to both the acquisition of Jayco and market-driven changes in product mix toward generally smaller and lower-priced units.Cost of products sold increased $1,552,540 to $4,343,739, or 84.7% of towables net sales, for fiscal 2017 compared to $2,791,199, or 83.6% of towables net sales, for fiscal 2016. The change in material, labor, freight-out and warranty costs comprised $1,450,503 of the $1,552,540 increase in cost of products sold. Material, labor, freight-out and warranty costs as a combined percentage of towables net sales increased to 78.9% for fiscal 2017 compared to 77.7% for fiscal 2016. This increase in percentage was primarily the result of increases in both the material and freight-out percentages to sales due to changes in product mix, which is partially attributable to the acquisition of Jayco. There was also a modest increase in labor costs due to both the current competitive RV labor market and training an increasing workforce. Total manufacturing overhead increased $102,037 with the increase in sales, but decreased slightly as a percentage of towables net sales from 5.9% to 5.8%.Variable costs in manufacturing overhead increased $95,035 to $274,407, or 5.4% of towable net sales, for fiscal 2017 compared to $179,372, or 5.4% of towable net sales, for fiscal 2016 as a result of the increase in net sales. Fixed costs in manufacturing overhead, which consist primarily of facility costs, property taxes and depreciation, increased $7,002 to $23,103 in fiscal 2017 from $16,101 in fiscal 2016 primarily due to the increase in manufacturing facilities and production lines.Towables gross profit increased $236,292 to $783,752, or 15.3% of towables net sales, in fiscal 2017 compared to $547,460, or 16.4% of towables net sales, in fiscal 2016. The increase in gross profit is primarily due to the 65.6% increase in unit sales volume noted above, while the decrease in the gross profit percentage is primarily due to the increase in the cost of products sold percentage noted above.Selling, general and administrative expenses were $273,550, or 5.3% of towables net sales, for fiscal 2017 compared to $195,983, or 5.9% of towables net sales, for fiscal 2016. The primary reason for the $77,567 increase was increased towables net sales and towables income before income taxes, which caused related commissions, bonuses and other compensation to increase by $55,791. These costs, however, decreased as a percentage of towables net sales by 0.4% compared to the prior fiscal year. Sales-related travel, advertising and promotional costs also increased $11,296 in correlation with the sales increase and legal, professional and related settlement cost increased $4,033.Towables income before income taxes was $458,915, or 9.0% of towables net sales, for fiscal 2017 compared to $321,874, or 9.6% of towables net sales, for fiscal 2016. The primary reason for the decrease in percentage was the impact of the increase in the cost of products sold percentage as noted above. In addition, amortization costs as a percentage of towables net sales also increased 0.4% due to the increase of $34,581 in Jayco’s amortization costs. These increases in cost percentages were partially offset by the one-time goodwill impairment charge of $9,113 included in the results for fiscal 2016 as discussed in Note 7 to the Consolidated Financial Statements, and the decrease in the selling, general and administrative expense percentage noted above.Motorized Recreational VehiclesAnalysis of Change in Net Sales for Fiscal 2017 vs. Fiscal 2016 Fiscal 2017 % of
Segment
Net Sales Fiscal 2016 % of
Segment
Net Sales Change
Amount %
Change $ 914,681 46.4 $ 583,252 53.3 $ 331,429 56.8 968,899 49.1 427,951 39.1 540,948 126.4 87,886 4.5 83,047 7.6 4,839 5.8 $ 1,971,466 100.0 $ 1,094,250 100.0 $ 877,216 80.2 Fiscal 2017 % of
Segment
Net Sales Fiscal 2016 % of
Segment
Net Sales Change
Amount %
Change 8,264 34.2 6,114 44.3 2,150 35.2 15,181 62.9 7,023 50.8 8,158 116.2 688 2.9 678 4.9 10 1.5 24,133 100.0 13,815 100.0 10,318 74.7 IMPACT OF CHANGE IN PRODUCT MIX AND PRICE ON NET SALES:% Increase MotorizedClass A21.6Class C10.2Class B4.3Total Motorized5.5The increase in total motorized net sales of 80.2% compared to the prior fiscal year resulted from a 74.7% increase in unit shipments and a 5.5%2.2% increase in the overall net price per unit due to the impact of changes in product mix and price. Jayco accounted for 50.8% of the 80.2% increaseThe fiscal year decreases in total motorizedtowables net sales and for $556,389 of the $877,216 increaseunit shipments were both substantially due to the inclusion of twelve months of Jayco’s operations in fiscal 2017 as compared to one month in fiscal 2016 from the date of acquisition. Jayco accounted for 39.2% of the 74.7% increase in total motorizedlower net sales and unit shipments and for 5,411 of the 10,318 unit increase. The 5.5% increase in the overall motorized net price per unit, in spitethird quarter of much larger percentage increases within the Class A and Class C product lines, is primarily due to a significantly higher concentration of the more moderately priced Class C units, as compared to Class A units, in the current-year periodfiscal 2020 as compared to the prior-year period.third quarter of fiscal 2019, primarily due to the impact of the COVID-19 pandemic and the resulting production shutdowns for six to eight weeks for most of our North American production facilities. The overall industry increase“Other” units within the “Travel Trailer and Other” category consists primarily of folding campers in wholesale unit shipments of motorhomesfiscal 2019.2017 was 14.2%2020, combined travel trailer and fifth wheel wholesale unit shipments decreased 7.8% compared to the same period last year accordingyear. According to statistics published by RVIA.Fiscal 2020 % of
Segment
Net SalesFiscal 2019 % of
Segment
Net SalesChange
Amount%
ChangeNET SALES: North American Motorized Class A $ 495,520 35.6 $ 761,176 46.2 $ (265,656) (34.9) Class C 776,191 55.8 824,449 50.0 (48,258) (5.9) Class B 118,387 8.6 63,704 3.8 54,683 85.8 Total North American Motorized $ 1,390,098 100.0 $ 1,649,329 100.0 $ (259,231) (15.7) Fiscal 2020 % of
Segment
ShipmentsFiscal 2019 % of
Segment
ShipmentsChange
Amount%
Change# OF UNITS: North American Motorized Class A 3,946 26.2 5,946 32.9 (2,000) (33.6) Class C 10,143 67.2 11,690 64.6 (1,547) (13.2) Class B 999 6.6 449 2.5 550 122.5 Total North American Motorized 15,088 100.0 18,085 100.0 (2,997) (16.6) IMPACT OF CHANGE IN PRODUCT MIX AND PRICE ON NET SALES: %
ChangeNorth American Motorized Class A (1.3) Class C 7.3 Class B (36.7) Total North American Motorized 0.9 of 21.6% was primarily due to a higherslightly lower concentration of sales of the generally larger and generally more expensive diesel units comparedin relation to the more moderately pricedmodestly-priced gas units in the current-year periodfiscal 2020 compared to the prior-year period. This increase was primarily due to the change in product mix attributable to the acquisition of Jayco’s high-end Class A diesel products.fiscal 2019. The increase in the overall net price per unit within the Class C product line of 10.2% is7.3% was primarily due to a higher concentrationthe net impact of sales of the generally more expensive high-end Class C diesel units in the current period compared to a year ago, also due to the change in product mix attributable to the acquisition of Jayco.changes and selective net price increases. The increasedecrease in the overall net price per unit within the Class B product line of 4.3%36.7% is primarily due to changes in product mix.increased $806,805decreased $244,042 to $1,756,142,$1,240,103, or 89.1%89.2% of motorized net sales, for fiscal 20172020 compared to $949,337,$1,484,145, or 86.8%90.0% of motorized net sales, for fiscal 2016.2019. The changechanges in material, labor, freight-out and warranty costs comprised $770,629$235,505 of the $806,805 increase$244,042 decrease due to increasedthe decreased sales volume. Material, labor, freight-out and warranty costs as a combined percentage of motorized net sales increased to 84.8%was 83.9% for fiscal 2017 as2020 compared to 82.4%85.0% for fiscal 2016. This increase2019, with the decrease in percentage was primarily due to an increaseimprovements in each of the material, cost percentage to sales due to changes in product mix, which is primarily attributable to the acquisition of Jayco. The labor cost percentage also increased due to both the current competitive RV labor market and training an increasing workforce. The combination of assimilating and training an increasing workforce while expanding production lines and product offerings also led to an increase in the warranty cost percentage.percentages. Total manufacturing overhead increased $36,176decreased $8,537 with the volume increase,decrease, but decreased slightlyincreased as a percentage of motorized net sales from 4.4%5.0% to 4.3%.increased $33,384decreased $8,843 to $77,429,$61,928, or 3.9%4.5% of North American motorized net sales, for fiscal 20172020 compared to $44,045,$70,771 or 4.0%4.3% of North American motorized net sales, for fiscal 20162019 as a result of the increasedecrease in net sales. This slight decrease as a percentage of motorized net sales is primarily dueand management-led initiatives to a lower percentagecontrol costs, particularly in response to sales of employee medical benefit costs.the COVID-19 pandemic. Fixed costs in manufacturing overhead, which consist primarily of facility costs, property taxes and depreciation, increased $2,792$306 to $6,807$11,606 in fiscal 20172020 from $4,015$11,300 in fiscal 2016 primarily due to the increase in manufacturing facilities and production lines.increased $70,411decreased $15,189 to $215,324,$149,995, or 10.9%10.8% of motorized net sales, infor fiscal 20172020 compared to $144,913,$165,184, or 13.2%10.0% of motorized net sales, infor fiscal 2016.2019. The $70,411 increasedecrease in gross profit was due primarily to the impact of the 74.7% increase16.6% decrease in unit sales volume noted above, while the decrease in gross profitincrease as a percentage of motorized net sales wasis due to the increasedecrease in the costscost of products sold percentage noted above.$86,009,$72,720, or 4.4%5.2% of motorized net sales, for fiscal 20172020 compared to $56,214,$79,202, or 5.1%4.8% of motorized net sales, for fiscal 2016.2019. The primary reason for the $29,795 increase$6,482 decrease was increasedprimarily due to decreased motorized net sales and motorized income before income taxes, which caused related commissions, bonuses and other compensation to decrease by $4,750. Sales-related travel, advertising and promotion costs also decreased $1,180, in correlation with the lower sales levels as well as lower travel in the latter part of the year due to the impact of COVID-19 travel restrictions. The increase by $20,799. These costs, however, decreasedin selling, general and administrative expenses as a percentage of sales was primarily due to the reduction in motorized net sales by 0.7% compared to the prior fiscal year. Sales related travel, advertising and promotional costs also increased $5,006 in correlation with the sales increase.$125,323,$71,943, or 6.4%5.2% of motorized net sales, for fiscal 20172020 compared to $88,523,$80,910, or 8.1%4.9% of motorized net sales, for fiscal 2016. The primary reasons for this decrease in percentage were the impact of the increase in the cost of products sold percentage noted above and an increase in amortization costs as a percentage of motorized net sales of 0.2% due to the increase of $3,805 in Jayco’s amortization costs, partially offset by the decrease in the selling, general and administrative expense percentage to sales noted above.FISCAL 2016 VS. FISCAL 2015 Fiscal 2016 Fiscal 2015 $ 3,338,659 $ 3,096,405 $ 242,254 7.8 1,094,250 870,799 223,451 25.7 4,432,909 3,967,204 465,705 11.7 218,673 56,594 162,079 286.4 (69,470 ) (16,979 ) (52,491 ) (309.2 ) $ 4,582,112 $ 4,006,819 $ 575,293 14.4 128,932 115,685 13,247 11.5 13,815 10,858 2,957 27.2 142,747 126,543 16,204 12.8 Fiscal 2016 Fiscal 2015 $ 547,460 16.4 $ 442,509 14.3 $ 104,951 23.7 144,913 13.2 111,625 12.8 33,288 29.8 692,373 15.6 554,134 14.0 138,239 24.9 33,975 15.5 3,965 7.0 30,010 – (23 ) – (554 ) – 531 – $ 726,325 15.9 $ 557,545 13.9 $ 168,780 30.3 $ 195,983 5.9 $ 168,379 5.4 $ 27,604 16.4 56,214 5.1 44,859 5.2 11,355 25.3 252,197 5.7 213,238 5.4 38,959 18.3 8,162 3.7 2,006 3.5 6,156 306.9 45,910 – 35,647 – 10,263 28.8 $ 306,269 6.7 $ 250,891 6.3 $ 55,378 22.1 $ 321,874 9.6 $ 259,092 8.4 $ 62,782 24.2 88,523 8.1 66,746 7.7 21,777 32.6 410,397 9.3 325,838 8.2 84,559 26.0 18,547 8.5 1,424 2.5 17,123 – (23 ) – (554 ) – 531 – (45,608 ) – (33,813 ) – (11,795 ) (34.9 ) $ 383,313 8.4 $ 292,895 7.3 $ 90,418 30.9 As of As of Change % $ 735,085 $ 304,005 $ 431,080 141.8 461,762 269,961 191,801 71.0 $ 1,196,847 $ 573,966 $ 622,881 108.5 CONSOLIDATEDConsolidated net sales for fiscal 2016 increased $575,293, or 14.4%, compared to fiscal 2015. The fiscal 2016 acquisition of Jayco, which was completed on June 30, 2016, coupled with the fiscal 2015 acquisitions of CRV/DRV and Postle, which both had twelve months of operations in fiscal 2016 as compared to seven months and three months, respectively, in fiscal 2015 from the date of acquisitions, accounted for $268,810 of the $575,293 increase and 6.7% of the 14.4% increase. Consolidated gross profit for fiscal 2016 increased $168,780, or 30.3%, compared to fiscal 2015. Consolidated gross profit was 15.9% of consolidated net sales for fiscal 2016 compared to 13.9% of consolidated net sales for fiscal 2015. Selling, general and administrative expenses for fiscal 2016 increased 22.1% compared to fiscal 2015. Income from continuing operations before income taxes for fiscal 2016 was $383,313 as compared to $292,895 in fiscal 2015, an increase of 30.9%. The specifics on the changes in net sales, gross profit, selling, general and administrative expenses and income before income taxes are addressed in the segment reporting below.Corporate costs included in selling, general and administrative expenses increased $10,263 to $45,910 for fiscal 2016 compared to $35,647 for fiscal 2015. The increase is due to an increase in legal and professional service fees of $4,623, largely attributable to professional fees incurred related to the acquisition of Jayco, the development of long-term strategic growth initiatives and increased sales and marketing initiatives. In addition, compensation costs also increased, as bonuses increased $1,996 in correlation with the increase in income from continuing operations before income taxes compared to the prior year, and stock-based compensation increased $2,611. The stock-based compensation increase is due to increasing income from continuing operations before income taxes over the past three years, as most stock awards vest ratably over a three-year period. Costs related to the actuarially determined workers’ compensation and product liability reserves recorded at Corporate also increased by a total of $1,417.Corporate interest and other income and expense was $302 of net Corporate income for fiscal 2016 compared to $1,834 of net income for fiscal 2015. The $1,532 decrease in net other Corporate income is primarily due to interest expense of $789 on borrowings under the new revolving credit facility. In addition, interest income on notes receivable decreased $1,002 since all previous notes receivable were paid in full by the end of the first quarter of fiscal 2016.The overall annual effective tax rate for fiscal 2016 was 32.7% on $383,313 of income from continuing operations before income taxes, compared to 31.0% on $292,895 of income from continuing operations before income taxes for fiscal 2015.2019. The primary reason for the increase in the effective income tax rate is due to the larger amount of uncertain tax benefits that settled favorably in fiscal 2015 when compared to fiscal 2016. The effective income tax rates for the fiscal 2015 and fiscal 2016 periods were both impacted, to a similar extent, by the retroactive reinstatement of the federal research and development credit and other credits that were enacted on December 19, 2014 and December 18, 2015, respectively.The changes in material costs and selling prices within our business due to inflation were not significantly different from inflation in the United States economy as a whole. Levels of capital investment, pricing and inventory investment in our business were not materially affected by changes caused by inflation.SEGMENT REPORTINGTowable Recreational VehiclesAnalysis of Change in Net Sales for Fiscal 2016 vs. Fiscal 2015 Fiscal 2016 % of
Segment
Net Sales Fiscal 2015 % of
Segment
Net Sales Change
Amount %
Change $ 1,884,128 56.4 $ 1,597,874 51.6 $ 286,254 17.9 1,454,531 43.6 1,498,531 48.4 (44,000 ) (2.9 ) $ 3,338,659 100.0 $ 3,096,405 100.0 $ 242,254 7.8 Fiscal 2016 % of
Segment
Net Sales Fiscal 2015 % of
Segment
Net Sales Change
Amount %
Change 95,561 74.1 81,001 70.0 14,560 18.0 33,371 25.9 34,684 30.0 (1,313 ) (3.8 ) 128,932 100.0 115,685 100.0 13,247 11.5 IMPACT OF CHANGE IN MIX AND PRICE ON NET SALES:%Increase (Decrease) Towables Travel Trailers and Other(0.1) Fifth Wheels0.9Total Towables(3.7) The increase in total towables net sales of 7.8% compared to the prior fiscal year resulted from an 11.5% increase in unit shipments and a 3.7% decrease in the overall net price per unit due to the impact of changes in mix and price. Of the $242,254 increase in total towables net sales, $76,877 was due to the acquisition of Jayco on June 30, 2016 and $54,711 was due to the inclusion of twelve months of operations of CRV/DRV in fiscal 2016 as compared to seven months in fiscal 2015 from the date of acquisition. The 3.7% decrease in the overall net price per unit is primarily due to the higher concentration of more moderately priced travel trailers and other units, as compared to fifth wheels, in fiscal 2016 as compared to fiscal 2015. The “Other” units within the travel trailer and other category consist primarily of truck and folding campers and other specialty vehicles. The overall industry increase in combined travel trailer and fifth wheel wholesale unit shipments for the twelve months ended July 31, 2016 was 8.7% compared to the same period last year according to statistics published by RVIA.The slight decrease in the overall net price per unit within the travel trailer and other product lines of 0.1% and the modest increase in the overall net price per unit within the fifth wheel product lines of 0.9% were both primarily due to the net impact of changes in product mix, selective net selling price increases and the addition of products and features that carry higher selling prices. The fifth wheel increase was also partially due to the change in product mix attributable to the acquisition of DRV.Cost of products sold increased $137,303 to $2,791,199, or 83.6% of towable net sales, for fiscal 2016 compared to $2,653,896, or 85.7% of towable net sales, for fiscal 2015. The change in material, labor, freight-out and warranty comprised $124,074 of the $137,303 increase in cost of products sold and was due to increased sales volume. Material, labor, freight-out and warranty as a combined percentage of towable net sales decreased to 77.7% in fiscal 2016 from 79.8% in fiscal 2015. This 2.1% decrease in percentage was primarily the result of a decrease in the material cost percentage to sales due to favorable product mix, selective net selling price increases and improved material management since the prior year period. Warranty and freight-out both improved as a percentage of sales as well. Total manufacturing overhead increased $13,229 to $195,473 in fiscal 2016 compared to $182,244 in fiscal 2015 primarily as a result of the increase in sales volume.Variable costs in manufacturing overhead increased $10,246 to $179,372, or 5.4% of towable net sales, for fiscal 2016 compared to $169,126, or 5.5% of towable net sales, for fiscal 2015 as a result of the increase in net sales. This decrease as a percentage of towable net sales is primarily due to a lower percentage of employee medical benefits and workers’ compensation costs. Fixed costs in manufacturing overhead, which consist primarily of facility costs, property taxes and depreciation, increased $2,983 to $16,101 in fiscal 2016 from $13,118 in fiscal 2015 primarily due to facility expansions.Towables gross profit increased $104,951 to $547,460, or 16.4% of towables net sales, in fiscal 2016 compared to $442,509, or 14.3% of towables net sales, in fiscal 2015. The increases in gross profit and gross profit percentage were primarily due to the increase in net sales noted above coupled with the decrease in the cost of products sold percentage noted above.Selling, general and administrative expenses were $195,983, or 5.9% of towables net sales, in fiscal 2016 compared to $168,379, or 5.4% of towables net sales, in fiscal 2015. The primary reason for the $27,604 increase was increased towables net sales and towablesmotorized income before income taxes which caused related commissions, bonuses and other compensation to increase by $21,046. Sales-related travel, advertising and promotional costs also increased $2,889is the decrease in correlation with the sales increase. These two cost categories were also the primary reasons for the increase in selling, general and administrative expense as a percentage ofmotorized net sales.Towables income before income taxes was $321,874 or 9.6% of towables The percentage to net sales in fiscal 2016 and $259,092 or 8.4% in fiscal 2015. The primary reasons for this 1.2% increase in percentage were the impact of the increase in net sales along withincreased primarily due to the decrease in the cost of products sold percentage noted above, partially offset by the increase in the selling, general and administrative expense percentage noted above, the goodwill impairment charge of $9,113 included in the fiscal 2016 results as discussed in Note 7 to the Consolidated Financial Statements, and additional amortization costs in fiscal 2016 resulting from both the Jayco acquisition and the inclusion of twelve months of amortization related to CRV/DRV in fiscal 2016 as compared to seven months in fiscal 2015 from the date of acquisition.Motorizedabove.20162020 vs. Fiscal 2015 Fiscal 2016 % of
Segment
Net Sales Fiscal 2015 % of
Segment
Net Sales Change
Amount %
Change $ 583,252 53.3 $ 517,318 59.4 $ 65,934 12.7 427,951 39.1 273,171 31.4 154,780 56.7 83,047 7.6 80,310 9.2 2,737 3.4 $ 1,094,250 100.0 $ 870,799 100.0 $ 223,451 25.7 Fiscal 2016 % of
Segment
Net Sales Fiscal 2015 % of
Segment
Net Sales Change
Amount %
Change 6,114 44.3 5,698 52.5 416 7.3 7,023 50.8 4,476 41.2 2,547 56.9 678 4.9 684 6.3 (6 ) (0.9 ) 13,815 100.0 10,858 100.0 2,957 27.2 Fiscal 2020 % of
Segment
Net SalesFiscal 2019 % of
Segment
Net SalesChange
Amount%
ChangeNET SALES: European Motorcaravan $ 1,505,353 60.6 $ 960,155 64.6 $ 545,198 56.8 Campervan 433,398 17.4 201,089 13.5 232,309 115.5 Caravan 273,475 11.0 172,144 11.6 101,331 58.9 Other 273,165 11.0 153,590 10.3 119,575 77.9 Total European $ 2,485,391 100.0 $ 1,486,978 100.0 $ 998,413 67.1 Fiscal 2020 % of
Segment
ShipmentsFiscal 2019 % of
Segment
ShipmentsChange Amount % Change # OF UNITS: European Motorcaravan 27,244 50.0 17,201 52.3 10,043 58.4 Campervan 13,297 24.4 6,790 20.7 6,507 95.8 Caravan 13,965 25.6 8,869 27.0 5,096 57.5 Total European 54,506 100.0 32,860 100.0 21,646 65.9 IMPACT OF CHANGE IN PRODUCT MIX AND PRICE ON NET SALES: % Increase (Decrease)
ChangeMotorizedEuropean Class A(1.6) 5.4Class C19.7 (0.2) Class B1.4 4.3Motorized1.2 (1.5) total motorizedEuropean recreational vehicle net sales of 25.7%67.1% compared to the prior fiscal year resulted from a 27.2%65.9% increase in unit shipments and a 1.5% decrease1.2% increase in the overall net price per unit due to the impact of changes in product mix and price. Of the $223,451The increase in motorized net sales $27,634 wasand unit sales is due to fiscal 2020 including twelve months of operations as compared to six months in fiscal 2019 as noted above.acquisitionoverall net price per unit includes an approximate decrease of Jayco. 1.5% related to the impact of foreign currency exchange rate changes on a constant-currency basis, which was more than offset by changes in product mix and selective price increases as noted below. 1.5% decrease in the overall net price per unit iswithin the Motorcaravan product line of 1.6% was primarily due to the higher concentration of the more moderately priced Class C units, as compared to Class A units,reduction in fiscal 2016 compared to fiscal 2015. The overall market increase in wholesale unit shipments of motorhomes was 14.2% for the twelve months ended July 31, 2016 compared to the same period last year according to statistics published by RVIA.Class ACampervan product line of 5.4%19.7% was primarily due to a slight increase in the concentrationnet impact of product mix changes, including more sales of units with higher chassis content than the largerprior year, and generally more expensive diesel units fromselective selling price increases, partially offset by the more moderately priced gas units compared to fiscal 2015. This increase was partially due to the changereduction in product mix attributable to the acquisition of Jayco.exchange rates. The increase in the overall net price per unit within the Class BCaravan product line of 4.3%1.4% is primarily due to the impact of product mix changes partially offset by the impact of the reduction in exchange rates.FISCAL 2019 FISCAL 2018 Change
Amount%
ChangeNET SALES: Recreational vehicles North American Towables $ 4,558,451 $ 6,008,700 $ (1,450,249) (24.1) North American Motorized 1,649,329 2,146,315 (496,986) (23.2) Total North America 6,207,780 8,155,015 (1,947,235) (23.9) European 1,486,978 — 1,486,978 n/a Total recreational vehicles 7,694,758 8,155,015 (460,257) (5.6) Other 263,374 305,947 (42,573) (13.9) Intercompany eliminations (93,374) (132,053) 38,679 29.3 Total $ 7,864,758 $ 8,328,909 $ (464,151) (5.6) # OF UNITS: Recreational vehicles North American Towables 169,540 240,865 (71,325) (29.6) North American Motorized 18,085 25,355 (7,270) (28.7) Total North America 187,625 266,220 (78,595) (29.5) European 32,860 — 32,860 n/a Total 220,485 266,220 (45,735) (17.2) % of
Segment
Net Sales% of
Segment
Net SalesGROSS PROFIT: Recreational vehicles North American Towables $ 614,968 13.5 $ 882,232 14.7 $ (267,264) (30.3) North American Motorized 165,184 10.0 234,108 10.9 (68,924) (29.4) Total North America 780,152 12.6 1,116,340 13.7 (336,188) (30.1) European 150,039 10.1 — — 150,039 n/a Total recreational vehicles 930,191 12.1 1,116,340 13.7 (186,149) (16.7) Other, net 42,903 16.3 48,326 15.8 (5,423) (11.2) Total $ 973,094 12.4 $ 1,164,666 14.0 $ (191,572) (16.4) SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Recreational vehicles North American Towables $ 253,092 5.6 $ 304,554 5.1 $ (51,462) (16.9) North American Motorized 79,202 4.8 96,370 4.5 (17,168) (17.8) Total North America 332,294 5.4 400,924 4.9 (68,630) (17.1) European 134,051 9.0 — — 134,051 n/a Total recreational vehicles 466,345 6.1 400,924 4.9 65,421 16.3 Other 9,014 3.4 10,047 3.3 (1,033) (10.3) Corporate 60,685 — 66,473 — (5,788) (8.7) Total $ 536,044 6.8 $ 477,444 5.7 $ 58,600 12.3 FISCAL 2019 FISCAL 2018 Change
Amount%
ChangeINCOME (LOSS) BEFORE INCOME TAXES: Recreational vehicles North American Towables $ 322,228 7.1 $ 532,657 8.9 $ (210,429) (39.5) North American Motorized 80,910 4.9 134,785 6.3 (53,875) (40.0) Total North America 403,138 6.5 667,442 8.2 (264,304) (39.6) European (5,946) (0.4) — — (5,946) n/a Total recreational vehicles 397,192 5.2 667,442 8.2 (270,250) (40.5) Other, net 29,086 11.0 32,667 10.7 (3,581) (11.0) Corporate (241,612) — (67,080) — (174,532) (260.2) Total $ 184,666 2.3 $ 633,029 7.6 $ (448,363) (70.8) Change
Amount%
ChangeORDER BACKLOG: Recreational vehicles North American Towables $ 693,156 $ 766,965 $ (73,809) (9.6) North American Motorized 458,847 634,092 (175,245) (27.6) Total North America 1,152,003 1,401,057 (249,054) (17.8) European 852,675 — 852,675 n/a Total $ 2,004,678 $ 1,401,057 $ 603,621 43.1 Fiscal 2019 % of
Segment
Net SalesFiscal 2018 % of
Segment
Net SalesChange
Amount%
ChangeNET SALES: North American Towables Travel Trailers and Other $ 2,710,308 59.5 $ 3,646,581 60.7 $ (936,273) (25.7) Fifth Wheels 1,848,143 40.5 2,362,119 39.3 (513,976) (21.8) Total North American Towables 4,558,451 100.0 6,008,700 100.0 (1,450,249) (24.1) Fiscal 2019 % of
Segment
ShipmentsFiscal 2018 % of
Segment
ShipmentsChange
Amount%
Change# OF UNITS: North American Towables Travel Trailers and Other 129,710 76.5 186,710 77.5 (57,000) (30.5) Fifth Wheels 39,830 23.5 54,155 22.5 (14,325) (26.5) Total North American Towables 169,540 100.0 240,865 100.0 (71,325) (29.6) IMPACT OF CHANGE IN PRODUCT MIX AND PRICE ON NET SALES: %
ChangeNorth American Towables Travel Trailers and Other 4.8 Fifth Wheels 4.7 Total North American Towables 5.5 increases.increased $190,163decreased $1,182,985 to $949,337,$3,943,483, or 86.8%86.5% of motorizedNorth American towables net sales, infor fiscal 20162019 compared to $759,174,$5,126,468 or 87.2%85.3% of motorizedNorth American towables net sales, infor fiscal 2015.2018. The changechanges in material, labor, freight-out and warranty costs comprised $180,862$1,141,479 of the $190,163 increase due to increased sales volume.$1,182,985 decrease in cost of products sold. Material, labor, freight-out and warranty costs as a combined percentage of motorizedNorth American towables net sales was 82.4%increased slightly to 79.8% for fiscal 2019 compared to 82.7%79.6% for the prior year period. The decreasefiscal 2018. This increase in percentage was primarily due tothe result of an increase in the material cost percentage to net sales, improvingprimarily due to a reductionan increase in certaindiscounts and sales incentives, which effectively decreased the net sales price per unit and therefore increased the unit material costs.cost percentage. Total manufacturing overhead increased $9,301decreased $41,506 with the decrease in sales, but decreasedincreased as a percentage of motorizedNorth American towables net sales from 4.5%5.7% to 4.4%6.7%, as the significant increase in motorized netdecreased sales resulted in better absorption of fixedhigher overhead costs.increased $8,985decreased $45,693 to $44,045,$272,100, or 4.0%6.0% of motorizedNorth American towables net sales, for fiscal 20162019 compared to $35,060,$317,793 or 4.0%5.3% of motorizedNorth American towables net sales, for fiscal 20152018 as a result of the increasedecrease in net sales. Fixed costs in manufacturing overhead, which consist primarily of facility costs, property taxes and depreciation, increased $316$4,187 to $4,015$31,310 in fiscal 20162019 from $3,699$27,123 in fiscal 2015.Motorized2018.$33,288$6,533.$144,913,$532,657 or 13.2%8.9% of North American towables net sales, for fiscal 2018. The primary reasons for the decrease in percentage were the increases in both the cost of products sold and selling, general and administrative percentages noted above.Fiscal 2019 % of
Segment
Net SalesFiscal 2018 % of
Segment
Net SalesChange
Amount%
ChangeNET SALES: North American Motorized Class A $ 761,176 46.2 $ 1,000,881 46.6 $ (239,705) (23.9) Class C 824,449 50.0 1,047,376 48.8 (222,927) (21.3) Class B 63,704 3.8 98,058 4.6 (34,354) (35.0) Total North American Motorized $ 1,649,329 100.0 $ 2,146,315 100.0 $ (496,986) (23.2) Fiscal 2019 % of
Segment
ShipmentsFiscal 2018 % of
Segment
ShipmentsChange
Amount%
Change# OF UNITS: North American Motorized Class A 5,946 32.9 8,754 34.5 (2,808) (32.1) Class C 11,690 64.6 15,875 62.6 (4,185) (26.4) Class B 449 2.5 726 2.9 (277) (38.2) Total North American Motorized 18,085 100.0 25,355 100.0 (7,270) (28.7) IMPACT OF CHANGE IN PRODUCT MIX AND PRICE ON NET SALES: %
ChangeNorth American Motorized Class A 8.2 Class C 5.1 Class B 3.2 Total North American Motorized 5.5 infor fiscal 20162019 compared to $111,625,$1,912,207, or 12.8%89.1% of motorized net sales, for fiscal 2018. The changes in material, labor, freight-out and warranty costs comprised $420,594 of the $428,062 decrease due to the decreased sales volume. Material, labor, freight-out and warranty costs as a combined percentage of motorized net sales was 85.0% for fiscal 2019 compared to 84.9% for fiscal 2018. Total manufacturing overhead decreased $7,468 with the volume decrease, but increased as a percentage of motorized net sales from 4.2% to 5.0%, as the decrease in sales resulted in higher overhead costs per unit sold.2015.2019 from $9,466 in fiscal 2018.$33,288 increasedecrease in gross profit was due primarily to the impact of the 27.2% increase28.7% decrease in unit sales volume noted above, whileand the increase in gross profitdecrease as a percentage of motorized net sales wasis due to the increase in sales and the reduction in the costscost of products sold percentage noted above.$56,214,$79,202, or 5.1%4.8% of motorized net sales, infor fiscal 20162019 compared to $44,859,$96,370, or 5.2%4.5% of motorized net sales, infor fiscal 2015.2018. The primary reason for the $11,355 increase$17,168 decrease was increasedprimarily due to decreased motorized net sales and motorized income before income taxes, which caused related commissions, bonuses and other compensation to increasedecrease by $9,180. Legal, professional$15,825. Sales-related travel, advertising and related settlementpromotion costs also increased $1,589.$88,523$80,910, or 8.1%4.9% of motorized net sales, infor fiscal 2016 and $66,7462019 compared to $134,785, or 7.7%6.3% of motorized net sales, infor fiscal 2015.2018. The primary reasons for this 0.4% increasedecrease in percentage were the impact of the increaseincreases in net sales coupled with the decrease inboth the cost of products sold percentageand selling, general and administrative expense percentages noted above.Fiscal 2019 % of
Segment
Net SalesNET SALES: European Motorcaravan $ 960,155 64.6 Campervan 201,089 13.5 Caravan 172,144 11.6 Other 153,590 10.3 Total European $ 1,486,978 100.0 Fiscal 2019 % of
Segment
Shipments# OF UNITS: European Motorcaravan 17,201 52.3 Campervan 6,790 20.7 Caravan 8,869 27.0 Total European 32,860 100.0 2017,2020, we had $538,519 in cash and cash equivalents, of $223,258which $276,841 is held in the United States and the equivalent of $261,678, predominantly in Euros, is held in Europe, compared to $209,902$425,615 on July 31, 2016.2019, of which $223,394 was held in the United States and the equivalent of $202,221, predominantly in Euros, was held in Europe. Cash and cash equivalents held internationally may be subject to foreign withholding taxes if repatriated to the United States. The components of this $13,356$112,904 increase in fiscal 2017cash and cash equivalents are described in more detail below, but the increase iswas primarily dueattributable to the $419,333 of cash provided by operations being mostly offset byof $540,941 less cash usesused in financing activities of $215,000 for principal payments on long-term debt, $115,027 for capital expenditures$392,916 and $69,409 for cash dividends to our stockholders.Workingused in investing activities of $84,249.20172020 was $399,121$586,996 compared to $365,206$589,032 at July 31, 2016.2019. Capital expenditures of $115,027$106,697 for the fiscal year ended July 31, 20172020 were made primarily to purchasefor land to expand our RVand production facilitiesbuilding additions and to replaceimprovements, and replacing machinery and equipment used in the ordinary course of business.continuing operations, along with funds available under the revolving asset-based credit facility will be sufficient to fund expected future operational requirements for the foreseeable future. We have historically relied on internally generated cash flows from operations to finance substantially all our growth, however, we obtained a revolving asset-based credit facility to partially fund the fiscal 2016 acquisition of Jayco as discussed in Notes 2 and 11 to the Consolidated Financial Statements. main priorities for the use of current and future available cash generated from operations remain consistent with our history, and include reducing our indebtedness, maintaining and over time growing our dividend payments, and funding our growth both organically and opportunistically through acquisitions, maintainingacquisitions. We may also consider strategic and growing our regular dividends over time,opportunistic repurchases of shares and reducing indebtedness. Strategic share repurchases or special dividends as determined by the Company’sCompany's Board will also continueof Directors and subject to be considered.induring fiscal 20182021 for the Company of approximately $175,000,$135,000. Approximately half of those expenditures will be in North America and half in Europe, primarily for the continued expansion of our facilities and replacing and upgrading machinery, equipment and other assets throughout our facilities to be used in the ordinary course of business. In regard to reducing indebtedness, we made additional debt payments of $55,000 in August 2017, which brings the current remaining indebtedness to $90,000, and we currently expect to pay off the remaining indebtedness in its entirety by the end of fiscal 2018. We may also consider additional strategic growth acquisitions that complement or expand our ongoing operations.foreseeable future. As is customary under asset-based lines of credit facilities generally, certain actions, including our ability to pay dividends, are subject to the satisfaction of certain payment conditions prior to payment. The conditions for the paymentspayment of dividends under the existing debt facilities include a minimum level of adjusted excess cash availability and a fixed charge coverage ratio test, both as defined in the credit agreement.agreements. The declaration of future dividends and the establishment of the per share amounts, record dates and payment dates for any such future dividends are subject to the determination of the Board, and will be dependent upon future earnings, cash flows and other factors.Future purchases of the Company’s common stock or special cash dividends may occur based upon market and business conditions and excess cash availability, subjectfactors, in addition to potential customary limits and restrictions pursuant to the credit facility, applicable legal limitations and determination by the Board.20172020 was $419,333$540,941 as compared to net cash provided by operating activities of $341,209$508,019 for fiscal 20162019 and cash provided of $247,860$466,508 for fiscal 2015. 2018.2017,2020, net income adjusted for non-cash operating items (primarily depreciation, amortization of intangibles, deferred income tax benefit and stock-based compensation) provided $451,018 of operating cash. The change in net working capital provided $89,923 of operating cash during fiscal 2020, due primarily to a reduction in inventory as well as an increase in accounts payables due to the timing of inventory purchases, partially offset by an increase in accounts receivable due to an increase in July 2020 sales as compared to July 2019 sales.benefitexpense and stock-based compensation) resulted in $444,799provided $555,019 of operating cash. ChangesThe changes in working capital used $25,466$88,511 of operating cash during fiscal 2017,2018, primarily due to a larger than usualan increase in accounts receivable and inventory in correlation with the increases in sales backlog and production lines, partially offset by increasescapacity and a decrease in accounts payable, and accrued liabilities primarily resulting from the timing of payments.For fiscal 2016, net income adjusted for non-cash items (primarily depreciation, amortization of intangibles, impairment charges, deferred income tax benefitinventory purchases and stock-based compensation) resulted in $313,254 of operating cash. Changes in working capital provided $27,955 of operatingthe related payments. These cash during fiscal 2016, primarily due touses were partially offset by an increase in accounts payable and accrued liabilities primarily resulting from the timing of payments.For fiscal 2015, net income adjusted for non-cash items (primarily depreciation, amortization of intangibles, deferred income tax benefit and stock-based compensation) resulted in $230,024 of operating cash. Changes in working capital provided $17,836 of operating cash during fiscal 2015, primarily due to a decrease in accounts receivable, which was largely attributable to the timing of shipments and quicker collections on accounts receivable at the fiscal year end compared to the prior year. The increase in cash generated from accounts receivable was partially offset by a reduction in accounts payable resulting from the timing of payments at the fiscal year end as compared to the prior year.20172020 was $116,655,$84,249, primarily due to capital expenditures of $115,027$106,697 which included approximately $51,100 for land and a final purchase price adjustment paymentproduction building additions and improvements, with the remainder used primarily to replace machinery and equipment used in the ordinary course of $5,039 related to the fiscal 2016 acquisition of Jayco,business. These capital expenditures were partially offset by proceeds from the dispositionsdisposition of property, plant and equipment of $4,682.$27,677.$115,027$130,224 included approximately $85,600$73,200 for land and production building additions and improvements, with the remainder used primarily to replace machinery and equipment used in the ordinary course of business.Net cash used in investing activities for fiscal 2016 was $601,473, primarily due to $557,651 of net cash consideration paid for the acquisition of Jayco and $51,976 for capital expenditures. The capital expenditures of $51,976 included approximately $39,500 for land and production building additions and improvements, with the remainder primarily to replace machinery and equipment used in the ordinary course of business.Net cash used in investing activities for fiscal 2015 was $234,968, primarily due to $144,048 and $47,523 of net cash consideration paid for the acquisitions of Postle and CRV/DRV, respectively, a final purchase price adjustment payment of $2,915 related to the fiscal 2014 acquisition of the KZ towable recreational vehicle business and capital expenditures of $42,283. The capital expenditures of $42,283 included approximately $37,000 for land and production building additions and improvements, as well as software system enhancements, with the remainder primarily to replace machinery and equipment used in the ordinary course of business.of $289,322 for fiscal 20172020 was $392,916, consisting primarily due to $215,000of $274,963 in principal payments onterm loan debt payments. Additionally, the revolving credit facility, as more fully described in Note 11 to the Consolidated Financial Statements in this report, andCompany made regular quarterly cash dividend payments of $69,409, which included a regular quarterly $0.33$0.40 per share dividend for each of the four quartersquarter of fiscal 2017.of $286,688 for fiscal 20162019 was $1,539,073, consisting primarily from $360,000of $2,195,018 borrowed in borrowings from our asset-based revolving credit facility, as more fully described in Note 11 toconnection with the Consolidated Financial Statements in this report. Those borrowings wereEHG acquisition, partially offset by cash dividend$497,966 in debt payments, of $62,970, which included a regular quarterly $0.30 per share dividend for each of the four quarters of fiscal 2016, and $7,850$70,176 paid for debt issuance costs as more fully described in Note 11related to the Consolidated Financial Statements in this report.of $118,750 for fiscal 20152018 was $231,024, primarily related tofor principal payments on the repurchase of a total of 1,000,000 shares of common stock of the Company for $60,000previous revolving credit facility totaling $145,000 and forregular quarterly cash dividend payments of $57,381. The Company repurchased the shares at a discount to the then current market price and did not incur brokerage fees. See Note 16 to the Consolidated Financial Statements in this report for a description of the share repurchase transaction. The Company paid a regular quarterly $0.27$0.37 per share dividend infor each of the four quartersquarter of fiscal 2015 which totaled $57,381.$0.27$0.39 per share to $0.30$0.40 per share in October 2015 and then to $0.332019. In October 2018, the Company increased its previous regular quarterly dividend of $0.37 per share in October 2016.PrinciplesImpairmentHistorically, we completed our As part of the annual impairment testtesting, the Company may utilize a qualitative approach rather than a quantitative approach to determine if an impairment exists, considering various factors including industry changes, actual results as compared to forecasted results, or the timing of April 30. During the fourth quartera recent acquisition, if applicable.the fiscal year ended July 31, 2017, we changed the dateRoyalty method and are both amortized on a straight-line basis, using lives of our annual impairment test15 to May 31.Additionally, we review our goodwill for impairment at least annually. Accordingly, weWe continually assess whether events or changes in circumstances represent a ‘triggering’ event that would require us to complete an impairment assessment. Factors that we consider in determining whether a triggering event has occurred include, among other things, whether there has been a significant adverse change in legal factors, business climate or competition related to the operation of the asset, whether there has been a significant decrease in actual or expected operating results related to the asset and whether there are current plans to sell or dispose of the asset. The determination of whether a triggering event has occurred is subject to significant management judgment, including at which point or fiscal quarter a triggering event has occurred when the relevant adverse factors persist over extended periods. the expected net cash flows to be realized over the life of the asset and/or the asset’s fair value. Fair values are generally determined by a discounted cash flow model. These estimates are also subject to significant management judgment, including the determination of many factors such as sales growth rates, gross margin patterns, cost growth rates, terminal value assumptions and discount rates.rates developed using market observable inputs and consideration of risk regarding future performance. Changes in these estimates can have a significant impact on the determination of cash flows and fair value and could potentially result in future material impairments. Management engagesengaged an independent valuation firm to assist in certain of its impairment assessments.regarding our goodwillof the interim impairment assessments and our changeperformed in the annual impairment test date.Insurance ReservesGenerally, we are self-insured for workers’ compensation, products liability and group medical insurance. Under these plans, liabilities are recognized for claims incurred,fiscal 2020, including an estimate for those incurred but not reported. The liability for workers’ compensation claims is determined by the Company with the assistance of a third party administrator and actuary using various state statutes and historical claims experience. Group medical reserves are estimated using historical claims experience. We have a self-insured retention (“SIR”) for products liability and personal injury matters ranging from $500 to $7,500 depending on the product type and when the occurrence took place. Generally, any occurrence (as defined by our insurance policies) after March 31, 2015 is subjectone related to the $500 SIR, while matters occurring after March 31, 2014European reporting unit, and through March 31, 2015 are subject to a $1,000 SIR. We have established a liability on our balance sheet for such occurrences based on historical data, known cases and actuarial information. Amounts above the SIR, up to a certain dollar amount, are covered by our excess insurance policy. Currently, we maintain excess liability insurance aggregating $50,000 with outside insurance carriers to minimize our risks related to catastrophic claims in excessresults of our self-insured positions for products liability and personal injury matters. Anythose assessments. There was no material change in the aforementioned factors could have an adverse impact on our operating results.components.components or other items. We record a liability based on our best estimate of the amounts necessary to settle future and existing claims on products sold as of the balance sheet date. Factors we use in estimating the warranty liability include a history of units sold, existing dealer inventory, average cost incurred and a profile of the distribution of warranty expenditures over the warranty period. A significant increase in dealer shop rates, the cost of parts or the frequency of claims could have a material adverse impact on our operating results for the period or periods in which such additional claims or costs materialize. Management believes that the warranty liability is adequate; however, actual claims incurred could differ from estimates, requiring adjustments to the reserves. Warranty liabilities are reviewed and adjusted as necessary on at least a quarterly basis.assessingdetermining the future tax consequences of events that have been recognized in our financial statements or tax returns. Fluctuations in theThe actual outcome of these future tax consequences could materiallydiffer from our estimates and have a material impact on our financial position or results of operations.We recognizeusthe Company to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as we havethe Company has to determine the probability of various possible outcomes. We reevaluateThe Company reevaluates these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, voluntary settlements and new audit activity. Such a change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision.ourthe Company’s provision for income taxes, ourthe Company’s deferred tax assets and liabilities and the valuation allowance recorded against ourthe Company’s deferred tax assets, if any.assets. Valuation allowances must be considered due to the uncertainty of realizing deferred tax assets. Companies must assessThe Company assesses whether valuation allowances should be established against theirour deferred tax assets on a tax jurisdictional basis based on the consideration of all available evidence, including cumulative income over recent periods, using a more likely than not standard. Weevaluateda single performance obligation of providing the realizability of our deferred tax assets on our Consolidated Balance Sheetspromised goods (recreational vehicles and extruded aluminum components), which includes the assessmentis satisfied when control of the cumulative income over recent prior periods.Revenue RecognitionRevenues fromgoods is transferred to the sale ofcustomer.vehicles are recorded primarilyvehicle sales, the Company’s European recreational vehicle reportable segment sells accessory items and provides repair services through our dealerships. Each ordered item represents a distinct performance obligation satisfied when allcontrol of the following conditions have been met:1) An order for a product has been received from a dealer;2) Written or oral approval for payment has been received from the dealer’s flooring institution, if applicable;3) A common carrier signs the delivery ticket accepting responsibility for the product as agent for the dealer; and4) The productgood is removed from our property for delivery to the dealer who placed the order.These conditions are generally met when title passes, which is when vehicles are shipped to dealers in accordance with shipping terms, which are primarily FOB shipping point. Most sales are made to dealers financing their purchases under flooring arrangements with banks or finance companies. Certain shipments are sold to customers on credit or cash on delivery (“COD”) terms. We recognize revenue on credit sales upon shipment and COD sales upon payment and delivery.Products are not sold on consignment, dealers do not have the right to return products and dealers are typically responsible for interest costs to floor plan lenders.Revenues from the sale of extruded aluminum components are recognized when title to products and the risk of loss are transferred to the customer. IntercompanyService and repair contracts with customers are short term in nature and are recognized when the service is complete.are eliminated upon consolidation.Repurchase CommitmentsWe are contingently liable under terms of repurchase agreements with financial institutions providing inventory financing for certain dealers of certain of our RV products. These arrangements,discounts, sales allowances, promotions, rebates and other sales incentives which are customaryincluded in the RV industry, provide fortransaction price and allocated to each performance obligation based on the repurchasestandalone selling price. The Company estimates variable consideration based on the expected value of products soldtotal consideration to dealerswhich customers are likely to be entitled to based primarily on historical experience and current market conditions. Included in the eventestimate is an assessment as to whether any variable consideration is constrained. Revenue estimates are adjusted at the earlier of default bya change in the dealer.expected value of consideration or when the consideration becomes fixed.guarantee under these repurchase agreements, we may also be required to repurchase RV inventory relative to dealer terminations in certain states in accordance with state laws or regulatory requirements. The repurchase price is generally determined by the original sales price of the product and pre-defined curtailment arrangements and we typically resell the repurchased product at a discount from its repurchase price. We accountConsolidated Financial Statements for the guarantee under our repurchase agreements with our dealers’ financing institutions by estimating and deferring a portion of the related product sale that represents the estimated fair value of the repurchase obligation. The estimated fair value takes into account our estimate of the loss we will incur upon resale of any repurchases. This estimate is based on recent historical experience supplemented by management’s assessment of current economic and other conditions affecting our dealers. This deferred amount is included in our repurchase and guarantee reserve.Our risk of loss under these repurchase agreements is reduced because (a) we sell our products to a large number of dealers under these arrangements, (b) the repurchase price we are obligated to pay declines over the period of the agreements (generally up to eighteen months) while the value of the related product may not decline ratably and (c) we have historically been able to readily resell any repurchased product. We believe that any future losses under these agreements will not have a significant effect on our consolidated financial position or results of operations.20172020 are summarized in the following charts. Unrecognized income tax benefits in the amount of $15,945 have been excluded from the table because we are unable to determine a reasonably reliable estimate of the timing of future payment. We have no other material off balance sheet commitments: Payments Due By Period Contractual Obligations Total Fiscal 2018 Fiscal 2019-2020 Fiscal 2021-2022 After 5 Years $ 145,000 $ – $ – $ 145,000 $ – 9,758 948 1,871 1,924 5,015 15,656 2,547 3,586 2,030 7,493 51,498 51,498 – – – 1,735 1,735 – – – $ 223,647 $ 56,728 $ 5,457 $ 148,954 $ 12,508 (1)See Note 11 to the Consolidated Financial Statements for additional information.(2)See Note 14 to the Consolidated Financial Statements for additional information.(3)Represent commitments to purchase specified quantities of raw materials at market prices in our other non-reportable segment. The dollar values above have been estimated based on July 31, 2017 market prices.(4)We have included in unrecognized income tax benefits $1,735 for payments expected to be made in fiscal 2018. Unrecognized income tax benefits in the amount of $10,263 have been excluded from the table because we are unable to determine a reasonably reliable estimate of the timing of future payment. Total Amount of Commitment Expiration Per Period Other Commercial Commitments Amounts
Committed Less Than
One Year (1) 1-3 Years 4-5 Years Over 5 Years $ 2,200,544 $ 1,157,161 $ 1,043,383 $ – $ – (1)The standby repurchase obligations generally extend up to eighteen months from the date of sales of the related product to the dealer. In estimating the expiration of the standby repurchase obligations, we used inventory reports as of July 31, 2017 from our dealers’ primary lending institutions and made an assumption for obligations for inventory aged 0-12 months that it was financed evenly over the twelve-month period. Payments Due By Period Contractual Obligations Total Fiscal
2021Fiscal
2022-2023 Fiscal
2024-2025 After 5 Years $ 1,711,211 $ 13,817 $ 24,177 $ 48,125 $ 1,625,092 384,900 79,000 142,500 129,400 34,000 7,243 991 2,049 2,142 2,061 49,888 9,816 13,658 7,687 18,727 57,616 57,616 — — — Total contractual cash obligations $ 2,210,858 $ 161,240 $ 182,384 $ 187,354 $ 1,679,880 Total Amounts Committed Amount of Commitment Expiration Per Period Other Commercial Commitments 1-3 Years 4-5 Years Over 5 Years $ 1,876,922 $ 1,086,896 $ 790,026 $ — $ — We have exposureshort-termforeign currency exchange rates and interest rates. The Company enters into various hedging transactions to mitigate certain of these risks in accordance with guidelines established by the Company’s management. The Company does not use financial instruments for trading or speculative purposes.on(approximately 22.5% of our variable rate debt. Depending upon the borrowing option chosen, the interest charged is based upon either the Base Rate or LIBOR of a selected time period, plus an applicable margin. If interest rates increased by 0.25% (which approximates a 10% increase of the weighted-average interest rate on our borrowings as ofat July 31, 2017), our results of operations and cash flows for fiscal 20172020) would not be materially affected. — – SEE ITEM 15 Quarter Ended October 31 January 31 April 30 July 31 $ 1,708,531 $ 1,588,525 $ 2,015,224 $ 1,934,672 236,752 211,702 293,841 301,288 78,745 64,782 111,263 119,464 78,745 64,782 111,263 119,464 $ 1.50 $ 1.23 $ 2.12 $ 2.27 $ 1.49 $ 1.23 $ 2.11 $ 2.26 $ 1.50 $ 1.23 $ 2.12 $ 2.27 $ 1.49 $ 1.23 $ 2.11 $ 2.26 $ – $ 0.66 $ 0.33 $ 0.33 $ 87.08 $ 108.45 $ 115.74 $ 109.91 $ 74.75 $ 74.00 $ 88.87 $ 87.96 Quarter Ended October 31 January 31 April 30 July 31 $ 1,030,351 $ 975,071 $ 1,284,054 $ 1,292,636 152,216 148,822 201,937 223,350 50,736 45,247 79,193 82,846 50,497 44,668 78,582 82,772 $ 0.97 $ 0.86 $ 1.51 $ 1.58 $ 0.97 $ 0.86 $ 1.51 $ 1.57 $ 0.96 $ 0.85 $ 1.50 $ 1.58 $ 0.96 $ 0.85 $ 1.49 $ 1.57 $ 0.30 $ 0.30 $ 0.30 $ 0.30 $ 57.35 $ 62.99 $ 64.79 $ 76.76 $ 50.12 $ 47.59 $ 47.56 $ 60.05 (1)Earnings per common share are computed independently for each of the quarters presented. The summation of the quarterly amounts will not necessarily equal the total earnings per common share reported for the year due to changes in the weighted-average shares outstanding during the year.(2)A regular quarterly dividend of $0.33 per share was declared in the first quarter of fiscal 2017 but not paid until the second quarter of fiscal 2017.Quarter Ended Fiscal 2020 October 31 January 31 April 30 July 31 Net sales $ 2,158,785 $ 2,003,133 $ 1,681,735 $ 2,324,280 Gross profit 308,811 256,406 205,633 347,357 Net income attributable to Thor Industries, Inc. 51,065 28,673 24,068 119,168 Basic $ 0.93 $ 0.52 $ 0.44 $ 2.16 Diluted $ 0.92 $ 0.52 $ 0.43 $ 2.14 Dividends paid per common share $ 0.40 $ 0.40 $ 0.40 $ 0.40 Market prices per common share High $ 68.78 $ 83.99 $ 89.45 $ 119.77 Low $ 42.05 $ 61.69 $ 32.30 $ 59.32 Quarter Ended Fiscal 2019 October 31 January 31 April 30 July 31 Net sales $ 1,755,976 $ 1,290,576 $ 2,506,583 $ 2,311,623 Gross profit 207,256 141,596 292,430 331,812 Net income attributable to Thor Industries, Inc. 13,953 (5,417) 32,684 92,055 Basic $ 0.26 $ (0.10) $ 0.59 $ 1.67 Diluted $ 0.26 $ (0.10) $ 0.59 $ 1.67 Dividends paid per common share $ 0.39 $ 0.39 $ 0.39 $ 0.39 Market prices per common share High $ 109.94 $ 76.16 $ 71.66 $ 66.44 Low $ 63.48 $ 47.71 $ 57.84 $ 51.13 by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that our receipts and expenditures are being made only in accordance with authorizations of our management and members of our Board of Directors and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.cannot provide absolute assurance of achieving financial reporting objectives. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper override. Because of such limitations, there is a risk that material misstatements may not be preventedprevent or detected on a timely basis by internal control over financial reporting. Projectionsdetect misstatements. Also, projections of any evaluation of effectiveness to future periods are also subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with establishedthe policies or procedures may deteriorate.20172020 using the criteria set forth inInternal Control — IntegratedControl-Integrated Framework (2013) (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its assessment, management believes that as of July 31, 2017,2020, the Company’s internal control over financial reporting is effective based on those criteria.2017,2020, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.and Stockholders ofElkhart, Indiana2017,2020, based on criteria established inInternal Control — Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of July 31, 2020, based on criteria established in Internal Control—Integrated Framework (2013) issued by COSO.Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.theits inherent limitations, of internal control over financial reporting including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be preventedprevent or detected on a timely basis.detect misstatements. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of July 31, 2017, based on the criteria established inInternal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements of the Company as of and for the year ended July 31, 2017 and our report dated September 27, 2017 expressed an unqualified opinion on those financial statements.27, 201728, 2020 and SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE, in the Company’s definitive Proxy Statement to be filed with the SEC pursuant to Regulation 14A, which portions of said Proxy Statement are hereby incorporated by reference.20172020 about the Company’s Common Stock that is authorized for issuance under the Company’s equity compensation plans, including the Thor Industries, Inc. 2016 Equity and Incentive Plan (the “2016 Plan”) and the Thor Industries, Inc. 2010 Equity and Incentive Plan (the “2010 Plan”).Plan Category Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
(a) Weighted-average
exercise price of
outstanding options,
warrants and rights
(b) Number of securities remaining
available for future issuance
under equity compensation plans
(excluding securities reflected in
column (a))
(c) 332,576 (1) $ – (2) 3,045,406 (3) – – – 332,576 $ – 3,045,406 (1)Represents shares underlying restricted stock units granted pursuant to the 2016 Plan and the 2010 Plan.(2)The restricted stock units of 332,576 in column (a) do not have an exercise price.(3)Represents shares remaining available for future issuance pursuant to the 2016 Plan and the 2010 Plan.Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights
(a) Weighted-average exercise price of outstanding options, warrants and rights
(b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c) Equity compensation plans approved by security holders 641,410 (1) $ — (2) 2,193,643 (3) Equity compensation plans not approved by security holders — — — Total 641,410 $ — 2,193,643 SUMMARIESSUMMARY OF EQUITY COMPENSATION PLANS in the Company’s definitive Proxy Statement, to be filed with the SEC pursuant to Regulation 14A, which portions of said Proxy Statement are hereby incorporated by reference.2.1 3.13.1 3.23.34.14.1 Form of Common Stock Certificate (incorporated by reference to Exhibit 4(a) of the Company’s Annual Report onForm 10-K for the fiscal year ended July 31, 1987) (P) Rule 311 10.110.1 10.910.1010.1110.1210.1310.1421.110.12 21.1 104.1 The cover page from Thor Industries Inc.’s Annual Report on Form 10-K for the fiscal year ended July 31, 2020 formatted in Inline XBRL (included in Exhibit 101). 20172020 formatted in XBRL (“eXtensibleiXBRL (Inline “eXtensible Business Reporting Language”): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income and Comprehensive Income, (iii) Consolidated Statements of Stockholders’ Equity, (iv) the Consolidated Statements of Cash Flows and (v) related notes to these financial statements.*Filed herewith**Furnished herewith27, 201728, 2020 on its behalf by the undersigned, thereunto duly authorized.THOR INDUSTRIES, INC. Robert W. Martin 27, 201728, 2020 by the following persons on behalf of the Registrant and in the capacities indicated.(Signed)/s/ Robert W. Martin(Signed)/s/ Colleen ZuhlRobert W. MartinColleen ZuhlDirector, President and Chief Executive OfficerSenior Vice President and Chief Financial Officer(Principal executive officer)(Principal financial and accounting officer)/s/ Robert W. Martin (Signed) Peter B. Orthwein(Signed)/s/ James L. ZiemerColleen Zuhl Robert W. Martin Peter B. OrthweinJames L. ZiemerColleen Zuhl Director, President and Chief Executive Officer Executive Chairman of the Board(Principal executive officer) Director(Principal financial and accounting officer) (Signed) (Signed)Jan H. SuwinskiPeter B. Orthwein Jan H. SuwinskiPeter B. Orthwein Chairman of the Board Director and Chairman Emeritus /s/ Amelia A. Huntington (Signed) J. Allen Kosowsky(Signed)/s/ Alan SiegelWilson R. Jones Amelia A. Huntington J. Allen KosowskyAlan SiegelWilson R. Jones Director Director(Signed) /s/ Christopher J. Klein (Signed) /s/ J. Allen Kosowsky (Signed)Christopher J. Klein /s/ Wilson R. JonesDirector Director (Signed) /s/ Jan H. Suwinski (Signed) Wilson R. Jones/s/ James L. Ziemer Jan H. Suwinski DirectorDirector Director and Stockholders ofElkhart, Indiana20172020 and 2016, and2019, the related consolidated statements of income and comprehensive income, stockholders’ equity, and cash flows, for each of the three years in the period ended July 31, 2017. These2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements arepresent fairly, in all material respects, the responsibilityfinancial position of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.conducted our auditshave also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States). (PCAOB), the Company’s internal control over financial reporting as of July 31, 2020, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated September 28, 2020, expressed an unqualified opinion on the Company’s internal control over financial reporting.misstatement. An audit includesmisstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the financial statements. An auditOur audits also includes assessingincluded evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement presentation.statements. We believe that our audits provide a reasonable basis for our opinion.Insuch consolidatedon the financial statements, present fairly, in all material respects,taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.positionstatementsThor Industries, Inc.the fair value of its reporting units with their carrying values. Fair values were determined by a discounted cash flow model. These estimates are subject to significant management judgment, including the determination of many factors such as, but not limited to, sales growth rates and subsidiaries at July 31, 2017discount rates developed using market observable inputs and 2016, andconsidering risk regarding future performance. Changes in these estimates can have a significant impact on the resultsdetermination of their operations and their cash flows for each of the three yearsand fair value and could potentially result in the period ended July 31, 2017, in conformity with accounting principles generally accepted in the United States of America.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reportingfuture material impairments. The goodwill balance was $1,477 million as of July 31, 2017, based on2020, of which $1,038 million was allocated to the criteria established inInternal Control—Integrated Framework (2013) issuedEuropean reporting unit. As a result of the assessments performed by the Committee of Sponsoring OrganizationsCompany during the year ended July 31, 2020, the Company concluded that the fair value of the Treadway CommissionEuropean reporting unit exceeds its carrying value and that there was no impairment of European reporting unit goodwill.report dated September 27, 2017 expressed an unqualified opinion onfair value specialists, when performing audit procedures to evaluate the Company’s internal controlreasonableness of management’s estimates and assumptions related to selection of the sales growth rates and discount rate.financial reporting.27, 2017F-120172020 and 2016 2017 2016 $ 223,258 $ 209,902 453,754 370,085 31,090 22,454 460,488 403,869 11,577 10,548 1,180,167 1,016,858 425,238 344,267 377,693 377,693 443,466 507,391 92,969 53,417 38,398 25,838 952,526 964,339 $ 2,557,931 $ 2,325,464 $ 328,601 $ 263,774 100,114 81,159 216,781 201,840 51,211 25,531 46,459 40,452 16,521 15,969 21,359 22,927 781,046 651,652 145,000 360,000 10,263 9,975 45,082 38,615 200,345 408,590 – – 6,260 6,244 235,525 224,496 1,670,826 1,365,981 (336,071 ) (331,499 ) 1,576,540 1,265,222 $ 2,557,931 $ 2,325,464 July 31, 2020 July 31, 2019 ASSETS Current assets: Cash and cash equivalents $ 538,519 $ 425,615 Restricted cash 2,844 25,647 Accounts receivable, trade, net 588,069 478,531 Factored accounts receivable 143,278 173,405 Accounts receivable, other, net 82,880 64,291 Inventories, net 716,305 827,988 Prepaid income taxes, expenses and other 30,382 41,880 Total current assets 2,102,277 2,037,357 Property, plant and equipment, net 1,107,649 1,092,471 Other assets: Goodwill 1,476,541 1,358,032 Amortizable intangible assets, net 914,724 970,811 Deferred income tax assets, net 78,738 73,176 Equity investment in joint ventures 0 46,181 Other 91,531 82,418 Total other assets 2,561,534 2,530,618 TOTAL ASSETS $ 5,771,460 $ 5,660,446 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 636,506 $ 551,831 Current portion of long-term debt 13,817 17,370 Short-term financial obligations 35,939 44,094 Accrued liabilities: Compensation and related items 160,083 135,560 Product warranties 252,869 289,679 Income and other taxes 83,893 61,483 Promotions and rebates 97,378 95,052 Product, property and related liabilities 15,440 17,595 Liabilities related to factored receivables 143,278 173,405 Other 76,078 62,256 Total current liabilities 1,515,281 1,448,325 Long-term debt 1,652,831 1,885,253 Deferred income tax liabilities, net 123,802 135,703 Unrecognized tax benefits 12,765 10,799 Other liabilities 121,212 85,138 Total long-term liabilities 1,910,610 2,116,893 Contingent liabilities and commitments 0 0 Stockholders’ equity: Preferred stock—authorized 1,000,000 shares; NaN outstanding 0 0 Common stock—par value of $.10 per share; authorized 250,000,000 shares; issued 65,396,531 and 65,189,907 shares, respectively 6,540 6,519 Additional paid-in capital 436,828 416,382 Retained earnings 2,201,330 2,066,674 Accumulated other comprehensive income (loss), net of tax 26,993 (57,004) Less treasury shares of 10,197,775 and 10,126,434, respectively, at cost (351,909) (348,146) Stockholders’ equity attributable to Thor Industries, Inc. 2,319,782 2,084,425 Non-controlling interests 25,787 10,803 Total stockholders’ equity 2,345,569 2,095,228 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 5,771,460 $ 5,660,446 F-22017, 20162020, 2019 and 2015 2017 2016 2015 $ 7,246,952 $ 4,582,112 $ 4,006,819 6,203,369 3,855,787 3,449,274 1,043,583 726,325 557,545 419,847 306,269 250,891 – 9,113 – 63,925 27,962 16,015 923 743 1,292 9,730 1,592 180 5,382 1,181 1,144 556,386 383,313 292,895 182,132 125,291 90,886 374,254 258,022 202,009 – (1,503 ) (2,624 ) $ 374,254 $ 256,519 $ 199,385 $ 7.12 $ 4.92 $ 3.80 $ 7.09 $ 4.91 $ 3.79 $ – $ (0.03 ) $ (0.05 ) $ – $ (0.03 ) $ (0.05 ) $ 7.12 $ 4.89 $ 3.75 $ 7.09 $ 4.88 $ 3.74 2020 2019 2018 Net sales $ 8,167,933 $ 7,864,758 $ 8,328,909 Cost of products sold 7,049,726 6,891,664 7,164,243 Gross profit 1,118,207 973,094 1,164,666 Selling, general and administrative expenses 634,119 536,044 477,444 Amortization of intangible assets 97,234 75,638 55,118 Impairment charges 10,057 0 0 Acquisition-related costs 0 114,866 0 Interest income 3,116 8,080 2,148 Interest expense 107,322 68,112 5,187 Other income (expense), net 305 (1,848) 3,964 Income before income taxes 272,896 184,666 633,029 Income taxes 51,512 52,201 202,878 Net income 221,384 132,465 430,151 Less: net (loss) attributable to non-controlling interests (1,590) (810) 0 Net income attributable to Thor Industries, Inc. $ 222,974 $ 133,275 $ 430,151 Weighted-average common shares outstanding: Basic 55,172,694 53,905,667 52,674,161 Diluted 55,397,376 54,026,686 52,853,360 Earnings per common share: Basic $ 4.04 $ 2.47 $ 8.17 Diluted $ 4.02 $ 2.47 $ 8.14 Comprehensive income: Net income $ 221,384 $ 132,465 $ 430,151 Other comprehensive income (loss), net of tax Foreign currency translation gain (loss), net of tax 92,735 (47,078) 0 Unrealized (loss) on derivatives, net of tax (9,351) (9,472) 0 Other income (loss), net of tax 352 (1,048) 0 Total other comprehensive income (loss), net of tax 83,736 (57,598) 0 Total comprehensive income 305,120 74,867 430,151 Comprehensive (loss) attributable to non-controlling interest (1,851) (1,404) 0 Comprehensive income attributable to Thor Industries, Inc. $ 306,971 $ 76,271 $ 430,151 F-32017, 20162020, 2019 and 2015 Retained Treasury Stock Common Stock Shares Amount Shares Amount Capital Earnings 8,880,877 $ (267,453 ) 62,210,429 $ 6,221 $ 208,501 $ 1,030,428 – – – – – 199,385 1,000,000 (60,000 ) – – – – – – 5,000 1 140 – 30,597 (1,562 ) 90,608 9 122 – – – – – – (57,381 ) – – – – 6,776 – 9,911,474 (329,015 ) 62,306,037 6,231 215,539 1,172,432 – – – – – 256,519 45,706 (2,484 ) 133,758 13 (430 ) – – – – – – (62,970 ) – – – – 9,387 – 9,957,180 (331,499 ) 62,439,795 6,244 224,496 1,365,981 – – – – – 374,254 53,889 (4,572 ) 157,315 16 (1,471 ) – – – – – – (69,409 ) – – – – 12,500 – 10,011,069 $ (336,071 ) 62,597,110 $ 6,260 $ 235,525 $ 1,670,826 Accumulated Stockholders’ Additional Other Equity Non- Total Common Stock Paid-In Retained Comprehensive Treasury Stock Attributable controlling Stockholders’ Shares Amount Capital Earnings Income (Loss), net Shares Amount to Thor Interests Equity Balance at July 31, 2017 62,597,110 $ 6,260 $ 235,525 $ 1,670,826 $ — 10,011,069 $ (336,071) $ 1,576,540 $ — $ 1,576,540 Net income — — — 430,151 — — — 430,151 0 430,151 Restricted stock unit activity 168,714 17 (321) — — 59,390 (7,657) (7,961) — (7,961) Cash dividends $1.48 per common share — — — (77,989) — — — (77,989) — (77,989) Stock compensation expense — — 17,000 — — — — 17,000 — 17,000 Balance at July 31, 2018 62,765,824 $ 6,277 $ 252,204 $ 2,022,988 $ — 10,070,459 $ (343,728) $ 1,937,741 $ — $ 1,937,741 Net income (loss) — — — 133,275 — — — 133,275 (810) 132,465 Restricted stock unit activity 167,591 16 1,286 — — 55,975 (4,418) (3,116) — (3,116) Cash dividends $1.56 per common share — — — (84,139) — — — (84,139) — (84,139) Stock compensation expense — — 18,950 — — — — 18,950 — 18,950 Other comprehensive income (loss) — — — — (57,004) — — (57,004) (594) (57,598) Cumulative effect of adoption of ASU no. 2014-09, net of tax — — — (5,450) — — — (5,450) — (5,450) Acquisitions 2,256,492 226 143,942 — — — — 144,168 12,207 156,375 Balance at July 31, 2019 65,189,907 $ 6,519 $ 416,382 $ 2,066,674 $ (57,004) 10,126,434 $ (348,146) $ 2,084,425 $ 10,803 $ 2,095,228 Net income (loss) — — — 222,974 — — — 222,974 (1,590) 221,384 Restricted stock unit activity 206,624 21 557 — — 71,341 (3,763) (3,185) — (3,185) Cash dividends $1.60 per common share — — — (88,318) — — — (88,318) — (88,318) Stock compensation expense — — 19,889 — — — — 19,889 — 19,889 Other comprehensive income (loss) — — — — 83,997 — — 83,997 (261) 83,736 Acquisitions — — — — — — — — 16,835 16,835 Balance at July 31, 2020 65,396,531 $ 6,540 $ 436,828 $ 2,201,330 $ 26,993 10,197,775 $ (351,909) $ 2,319,782 $ 25,787 $ 2,345,569 F-42017, 20162020, 2019 and 2015 2017 2016 2015 $ 374,254 $ 256,519 $ 199,385 34,333 24,613 15,366 63,925 27,962 16,015 1,570 131 – – 9,113 – (39,552 ) (14,116 ) (7,292 ) (2,231 ) (35 ) (91 ) 12,500 9,387 6,776 – (320 ) (135 ) (92,305 ) (15,773 ) 41,324 (56,619 ) (15,582 ) 14,750 (13,888 ) 719 (3,000 ) 67,138 28,625 (26,632 ) 63,075 26,016 (30 ) 7,133 3,950 (8,576 ) 419,333 341,209 247,860 (115,027 ) (51,976 ) (42,283 ) 4,682 347 381 – 8,367 1,400 (5,039 ) (557,651 ) (194,486 ) (1,271 ) (560 ) 20 (116,655 ) (601,473 ) (234,968 ) – 360,000 – (215,000 ) – – – (7,850 ) – (69,409 ) (62,970 ) (57,381 ) – – (60,000 ) (4,572 ) (2,484 ) (1,562 ) – 320 135 – – 141 (341 ) (328 ) (83 ) (289,322 ) 286,688 (118,750 ) 13,356 26,424 (105,858 ) 209,902 183,478 289,336 $ 223,258 $ 209,902 $ 183,478 $ 198,619 $ 128,409 $ 115,124 $ 8,558 $ 672 $ 180 $ 6,266 $ 3,538 $ 1,540 2020 2019 2018 Cash flows from operating activities: Net income $ 221,384 $ 132,465 $ 430,151 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 98,933 73,139 38,105 Amortization of intangibles 97,234 75,638 55,118 Amortization of debt issuance costs 10,743 6,189 1,570 Impairment charges 10,057 0 0 Foreign currency forward contract loss 0 70,777 0 Deferred income tax provision (benefit) (11,212) (9,059) 14,525 (Gain) loss on disposition of property, plant and equipment 3,990 739 (1,450) Stock-based compensation expense 19,889 18,950 17,000 Changes in assets and liabilities: Accounts receivable (115,232) 136,145 (2,391) Inventories 133,290 283,311 (77,421) Prepaid income taxes, expenses and other 18,427 (13,114) (14,197) Accounts payable 60,469 (120,507) (40,736) Guarantee liabilities related to former EHG subsidiaries 0 (108,843) 0 Accrued liabilities and other (14,059) (46,612) 29,575 Long-term liabilities and other 7,028 8,801 16,659 Net cash provided by operating activities 540,941 508,019 466,508 Cash flows from investing activities: Purchases of property, plant and equipment (106,697) (130,224) (138,197) Proceeds from dispositions of property, plant and equipment 27,677 2,732 3,835 Business acquisitions, net of cash acquired 0 (1,658,577) 0 Foreign currency forward contract payment related to business acquisition 0 (70,777) 0 Equity investment in joint venture 0 (6,500) (50,402) Other (5,229) (2,157) 1,271 Net cash used in investing activities (84,249) (1,865,503) (183,493) Cash flows from financing activities: Borrowings on term-loan credit facilities 0 2,095,018 0 Borrowings on revolving asset-based credit facilities 379,222 100,000 0 Payments on term-loan credit facilities (274,963) (242,919) 0 Payments on revolving credit facilities (379,986) (100,000) (145,000) Payments on unsecured notes 0 (84,728) 0 Payments on other debt (14,493) (70,319) 0 Payments of debt issuance costs 0 (70,176) 0 Cash dividends paid (88,318) (84,139) (77,989) Payments on finance lease obligations (442) (405) (378) Payments related to vesting of stock-based awards (3,763) (4,418) (7,657) Other (10,173) 1,159 0 Net cash provided by (used in) financing activities (392,916) 1,539,073 (231,024) Effect of exchange rate changes on cash and cash equivalents and restricted cash 26,325 (5,576) 0 Net increase in cash and cash equivalents and restricted cash 90,101 176,013 51,991 Cash and cash equivalents and restricted cash, beginning of period 451,262 275,249 223,258 Cash and cash equivalents and restricted cash, end of period 541,363 451,262 275,249 Less: restricted cash 2,844 25,647 0 Cash and cash equivalents, end of period $ 538,519 $ 425,615 $ 275,249 Supplemental cash flow information: Income taxes paid $ 56,803 $ 87,813 $ 218,841 Interest paid $ 101,784 $ 57,189 $ 3,901 Non-cash investing and financing transactions: Capital expenditures in accounts payable $ 3,458 $ 4,332 $ 5,375 Common stock issued for business acquisition $ 0 $ 144,168 $ 0 F-52017, 20162020, 2019 and 2015dollarDollar, Euro and GBP amounts are presented in thousands, except share and per share data)through itsis the sole owner of operating subsidiaries (collectively, the “Company” or “Thor”), that, combined, represent the world’s largest manufacturer of recreational vehicles by units and revenue. The Company manufactures a wide rangevariety of recreationalRVs in the United States and Europe and sells those vehicles, at various manufacturing facilitiesas well as related parts and accessories, primarily in Indiana and Ohio, with additional facilities in Oregon and Idaho. These products are sold to independent, non-franchise dealers primarily throughout the United States, Canada and Canada.Europe. As discussed in more detail in Note 2 to the Consolidated Financial Statements, on February 1, 2019, the Company acquired Erwin Hymer Group SE, one of the largest RV manufacturers in Europe. Unless the context otherwise requires or indicates otherwise, all references to “Thor”,“Thor,” the “Company”, “we”,“Company,” “we,” “our” and “us” refer to Thor Industries, Inc. and its subsidiaries. ongoing business activities are primarily comprised of two3 distinct operations, which include the design, manufacture and sale of North American towable recreational vehicles, North American motorized recreational vehicles and European recreational vehicles, with the European vehicles including both towable and motorized recreational vehicles.products as well as other RV-related products and services. Accordingly, the Company has presented segmented financial information for these two3 segments in Note 4 to the Consolidated Financial Statements. See Note 3 to the Consolidated Financial Statements for a description of the Company’s former bus operations which were sold as of October 20, 2013. Accordingly, the accompanying financial statements (including footnote disclosures unless otherwise indicated) reflect these operations as discontinued operations apart from the Company’s continuing operations.Certain amounts for fiscal 2016 and fiscal 2015 included in Note 12 to the Consolidated Financial Statements have been reclassified to conform to the fiscal 2017 presentation.wholly-owned subsidiaries. AllThe Company consolidates all majority-owned subsidiaries, and all intercompany balances and transactions are eliminated upon consolidation.U.S.United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Key estimates include the valuation of acquired assets and liabilities, reserves for inventory, incurred but not reported medical claims, warranty claims, recalls, workers’ compensation claims, vehicle repurchases, uncertain tax positions, product and non-product litigation and assumptions made in asset impairment assessments. The Company bases its estimates on historical experience and on various other assumptions believed to be reasonable under the circumstances. The Company believes that such estimates are made using consistent and appropriate methods. Actual results could differ from these estimates.20172020 and 2016,July 31, 2019, cash and cash equivalents of $211,408$260,876 and $164,696,$148,488, respectively, were held by one U.S. financial institution, and $963 and $61,057, respectively, was held by a different U.S. financial institution.cash equivalents, investments, accounts receivable, notes receivable and accounts payable approximate fair value because of the relatively short maturity of these financial instruments. The carrying value of the Company’s long-term debt approximates fair value as the entire balance is subject to variable market interest rates that the Company believes approximate market rates for a similarly situated Company. The fair value of long-term debt is largely estimated using level 2 inputs as defined by ASC 820 and discussed in Note 912 to the Consolidated Financial Statements.market,net realizable value, determined on the last-in, first-out (“LIFO”) basis with the remainder being valued on a first-in, first-out (“FIFO”) basis. Manufacturing costs include materials, labor, freight-in and manufacturing overhead. Unallocated overhead and abnormal costs are expensed as incurred.$5,710, $3,812$15,060, $8,350 and $2,362$5,035 in fiscal 2017, 20162020, 2019 and 2015,2018, respectively, which relates primarily to office buildings and office equipment and is recorded in selling, general and administrative expenses.Intangible Assets – Intangible assets consistgoodwill, trademarks, dealer networks/customer relationships, design technology assets and non-compete agreements. Trademarks are amortized on a straight-line basis over 15 to 25 years. Dealer networks/customer relationships are amortized on an accelerated basis over 12 to 20 years, and design technology assets and non-compete agreements are amortizedbusiness using the straight-lineacquisition method of accounting. Assets acquired and liabilities assumed, including amounts attributed to noncontrolling interests, are recorded at the acquisition date at their fair values. Assigning fair values requires the Company to make significant estimates and assumptions regarding the fair value of identifiable intangible assets, property, plant and equipment, deferred tax asset valuation allowances, and liabilities, such as uncertain tax positions and contingencies. The Company may refine these estimates if necessary over 2a period not to 15 years.F-6Backlog is amortized usingexceed one year by taking into consideration new information that, if known at the acquisition date, would have affected the fair values ascribed to the assets acquired and liabilities assumed.straight-line basis method over periods uppresent value of those cash flows and determining their useful lives. Subsequent changes to 3 months.projections driven by actual results following the acquisition date could require the Company to record impairment charges. is tested at least annually for impairment. Goodwill is reviewed for impairment by applying a fair-value based test on an annual basis, or more frequently if events or circumstances indicate a potential impairment.Warranty reserves are reviewed and adjusted as necessary on at least a quarterly basis.AllowanceSee Note 11 to the Consolidated Financial Statements for Doubtfulfurther information.The allowance for doubtful accounts represents management’s estimate of probable credit losses in existingFactored accounts receivable are receivables from sales to independent dealer customers of our European operations that have been sold to third-party finance companies that provide financing to those dealers. These sold receivables, which are subject to recourse and in which the Company retains an interest as determined from a reviewsecured obligation, do not meet the definition of past due balancesa true sale, and other specific account information. The allowance for doubtful accounts activity during fiscal 2017, 2016 and 2015 was not material.third partythird-party administrator and actuary using various state statutes and historical claims experience. Group medical reserves are estimated using historical claims experience. The Company has a self-insured retention (“SIR”) for products liability and personal injury matters ranging from $500 to $7,500 per occurrence, depending on the product type and when the occurrence took place. Generally, any occurrence (as defined by our insurance policies) after March 31, 2015 is subject to the $500 SIR, while matters occurring after March 31, 2014 and through March 31, 2015 are subject to a $1,000 SIR. The Company has established a liability on our balance sheet for product liability and personal injury occurrences based on historical data, known cases and actuarial information. Currently,maintains excess liability insurance aggregating $50,000 with outside insurance carriers to minimize our risks related to catastrophic claims in excess of our self-insured positions for products liability and personal injury matters.Revenue Recognition – Revenues from the sale of recreational vehicles are recorded primarilyrecognizes revenue when all performance obligations have been satisfied and control of the following conditions have been met:1)An order for a product has been received from a dealer;2)Written or oral approval for payment has been received from the dealer’s flooring institution, if applicable;3)A common carrier signs the delivery ticket accepting responsibility for the product as agent for the dealer; and4)The product is removed from the Company’s property for deliveryproduct is transferred to the dealer who placed the order.These conditions are generally met when title passes, which is when vehicles are shipped to dealers in accordance with shipping terms. Shipping terms which arevary depending on regional contracting practices. U.S. customers primarily contract under FOB shipping point. Most sales are madepoint terms. European customers generally contract on ExWorks (“EXW”) incoterms (meaning the seller fulfills its obligation to dealers financing their purchases under flooring arrangements with banksdeliver when it makes goods available at its premises, or finance companies. Certain shipments are soldanother specified location, for the buyer to customers on credit or cash on delivery (“COD”) terms. The Company recognizes revenue on credit sales upon shipmentcollect). Under EXW incoterms, the performance obligation is satisfied and COD sales upon payment and delivery. Products are not sold on consignment, dealerscontrol is transferred at the point when the customer is notified that the vehicle is available for pickup. Customers do not have a right of return. All warranties provided are assurance-type warranties.rightCompany’s European recreational vehicle reportable segment sells accessory items and provides repair services through our three owned dealerships. Each ordered item represents a distinct performance obligation satisfied when control of the good is transferred to return productsthe customer. Service and dealersrepair contracts with customers are typically responsible for interest costs to floor plan lenders.At the time of revenue recognition, amounts billed to dealers for delivery of product are recognized as revenueshort term in nature and the corresponding delivery expense charged to costs of products sold.Revenues from the sale of extruded aluminum components are recognized when titlethe service is complete.risktransaction price and allocated to each performance obligation based on the standalone selling price. The Company estimates variable consideration based on the expected value of losstotal consideration to which customers are transferredlikely to be entitled to based primarily on historical experience and current market conditions. Included in the estimate is an assessment as to whether any variable consideration is constrained. Revenue estimates are adjusted at the earlier of a change in the expected value of consideration or when the consideration becomes fixed. During fiscal 2020, adjustments to revenue from performance obligations satisfied in prior periods, which relate primarily to changes in estimated variable consideration, were immaterial.customer.Dealer Volume Rebates, Sales Incentives and remaining performance obligations at period end because our contracts generally have original expected durations of one year or less. In addition, we expense when incurred contract acquisition costs, primarily sales commissions, because the amortization period, which is aligned with the contract term, is one year or less. Estimated costs related to dealer volume rebates and sales incentives are accrued as a reduction of revenue at the later of the time products are sold or the date the rebate or incentive is offered. Advertising costs, which consist primarily of tradeshows, are expensed as incurred, and were $24,997, $14,472$67,019, $38,643 and $12,515$26,874 in fiscal 2017, 20162020, 2019 and 2015,2018, respectively.These arrangements, which are customary in the RV industry, provide for the repurchase of products sold to dealers in the event of default by the dealer on their agreement to pay the financial institution. The risk of loss from these agreements is spread over numerous dealers.F-7In additionSee Note 14 to the guarantee under these repurchase agreements, we may also be required to repurchase inventory relative to dealer terminations in certain states in accordance with state laws or regulatory requirements. The repurchase price is generally determined by the original sales price of the product and pre-defined curtailment arrangements and the Company typically resells the repurchased product at a discount from its repurchase price. The Company accountsConsolidated Financial Statements for the guarantee under its repurchase agreements with our dealers’ financing institutions by estimating and deferring a portion of the related product sale that represents the estimated fair value of the repurchase obligation. The estimated fair value takes into account our estimate of the loss we will incur upon resale of any repurchases. This estimate is based on recent historical experience supplemented by management’s assessment of current economic and other conditions affecting our dealers. This deferred amount is included in our repurchase and guarantee reserve which is included in Other current liabilities in the Consolidated Balance Sheets.Fluctuations in theThe actual outcome of these future tax consequences could materiallydiffer from our estimates and have a material impact on our financial position or results of operations.assets, if any.assets. Valuation allowances must be considered due to the uncertainty of realizing deferred tax assets. The Company assesses whether valuation allowances should be established against our deferred tax assets on a tax jurisdictional basis based on the consideration of all available evidence, including cumulative income over recent periods, using a more likely than not standard. The valuation allowance activity during the year was not material.and restricted stock units as follows: 2017 2016 2015 52,562,723 52,458,789 53,166,206 195,719 131,727 109,304 52,758,442 52,590,516 53,275,510 2020 2019 2018 Weighted-average shares outstanding for basic earnings per share 55,172,694 53,905,667 52,674,161 Unvested restricted stock units 224,682 121,019 179,199 Weighted-average shares outstanding assuming dilution 55,397,376 54,026,686 52,853,360 excludesexcluded 233,395 unvested restricted stock and restricted stock units that have an antidilutive effect from its calculation of weighted-average shares outstanding assuming dilution but had none at July 31, 2017,2019. There were 0 antidilutive, unvested restricted stock units at July 31, 2020 or July 31, 2018.or 2015.F-8PronouncementsFinancial Accounting Standards Board (“FASB”)FASB issued Accounting Standards Update (“ASU”)ASU No. 2017-04, “Intangibles—"Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,”" which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge (referred to as Step 2 in the goodwill impairment test). Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment charge equal to that excess shall be recognized, not to exceed the amount of goodwill allocated to the reporting unit. The standardThis ASU is effective for annual and any interim impairment tests for periods beginning after December 15, 2019, with early adoption permitted after January 1, 2017.2019. This ASU No. 2017-04 is effective for the Company in its fiscal year 2021 beginning on August 1, 2020. The Company is currently evaluating the impact of this standardASU on itsthe Company's consolidated financial statements which will depend on the outcomes of future goodwill impairment tests.In March 2016,FASB issued Accounting Standards Update No. 2016-09Company acquired Erwin Hymer Group SE (“ASU 2016-09”EHG”), “Improvements to Employee Share-Based Payment Accounting,” which simplifies several aspects. EHG is headquartered in Bad Waldsee, Germany, and is one of the accounting for employee share-based payment transactions, including the accounting for the related income taxes, forfeitures, statutory tax withholding requirements and classificationlargest RV manufacturers in Europe. EHG is managed as a stand-alone operating entity that is included in the statement of cash flows. ASU 2016-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within those annual reporting periods. Early adoption is permitted andEuropean recreational vehicle operating segment.adopted the provisions of ASU 2016-09 as of August 1, 2016. Applicable provisions of the standard were adopted prospectively as allowed under this ASU. The provisionsmade measurement period adjustments primarily related to the estimated fair value of certain fixed assets, other receivables and deferred income taxestax assets to better reflect the facts and circumstances that existed at the acquisition date. These adjustments resulted in a decrease in fixed assets, an increase in other receivables, increases in deferred income tax benefitassets, a decrease in deferred income tax liabilities and a net increase of $1,898 for fiscal 2017.goodwill of $1,282. The Company did not change its policy relatedimpact to forfeitures, which is estimated based on historical forfeiture rates over the vestingour Consolidated Statement of Income and Comprehensive Income as a result of these measurement period of employee awards. Provisions related to the statement of cash flows have been adopted prospectively and result in the recognition of the excess tax benefits from share-based awards being reflected in cash provided by operating activities.In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (“ASU 2016-02”), “Leases (Topic 842),” which provides guidance on the recognition, measurement, presentation, and disclosure of leases. ASU 2016-02 requires the recognition of lease assets and lease liabilities by lessees for all leases with terms greater than 12 months. The principal difference from current guidance is that the lease assets and lease liabilities arising from operating leases will be recognized on the Consolidated Balance Sheet. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The ASU is effective for the Company in its fiscal year 2020 beginning on August 1, 2019. The Company is currently evaluating the impact that implementing this ASU will have on its financial statements.In September 2015, the FASB issued Accounting Standards Update No. 2015-16 (“ASU 2015-16”), “Business Combinations (Topic 805): Simplifying the Accounting for Measurement Period Adjustments,” to simplify the accounting for measurement-period adjustments in a business combination. Under the new standard, an acquirer must recognize adjustments to provisional amounts in a business combination in the reporting period in which the adjustment amounts are determined, rather than retrospectively adjusting the provisional amounts recognized at the acquisition date with a corresponding adjustment to goodwill as under current guidance. ASU 2015-16 is effective for fiscal years, and the interim periods within those years, beginning after December 15, 2015. The Company adopted ASU 2015-16 on August 1, 2016 and there was no impact upon its adoption.In July 2015, the FASB issued Accounting Standards Update No. 2015-11 (“ASU 2015-11”), “Inventory (Topic 330): Simplifying the Measurement of Inventory.” ASU 2015-11 requires inventory measured using any method other than last-in, first-out (“LIFO”) or the retail inventory method to be subsequently measured at the lower of cost or net realizable value, rather than at the lower of cost or market. Under this standard, subsequent measurement of inventory using the LIFO and retail inventory method is unchanged. ASU 2015-11 is effective prospectively for fiscal years, and for interim periods within those years, beginning after December 15, 2016. ASU 2015-11 is effective for the Company in its fiscal year 2018 beginning on August 1, 2017. The Company does not expect the adoption of ASU 2015-11 to have a material impact on its consolidated financial statements.In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (“ASU 2014-09”), “Revenue from Contracts with Customers (Topic 606),” which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. This standard will supersede most current revenue recognition guidance. Under the new standard, entities are required to identify the contract with a customer, identify the separate performance obligations in the contract, determine the transaction price, allocate the transaction price to the separate performance obligations in the contract and recognize the appropriate amount of revenue when (or as) the entity satisfies each performance obligation. The new standard will also require additional qualitative and quantitative disclosures about contracts with customers, significant judgments made in applying the revenue guidance, and assets recognized from the costs to obtain or fulfill a contract. ASU 2014-09 is effective for fiscal years, and the interim periods within those years, beginning after December 15, 2017. The standard is effective for the Company in its fiscal year 2019 beginning on August 1, 2018. In applying the ASU, entities have the option of using either a full retrospective transition or a modified retrospective approach with the cumulative effect recognized as of the date of adoption. The Company is currently evaluating the approach it will use to apply the ASU and the impact that the adoption of the ASU will have on the Company’s consolidated financial statements including the impact on financial statement disclosure under the ASU.F-92. ACQUISITIONSJayco, Inc.On June 30, 2016, the Company closed on a Stock Purchase Agreement (“Jayco SPA”) for the acquisition of all the issued and outstanding capital stock of towable and motorized recreational vehicle manufacturer Jayco, Corp. (“Jayco”) for initial cash consideration of $576,060, subject to adjustment. This acquisition was funded from the Company’s cash on hand and $360,000 from an asset-based revolving credit facility as more fully described in Note 11 to the Consolidated Financial Statements. The final purchase price adjustment of $5,039, included in accounts payable as of July 31, 2016, was based on the final determination of net assets as of the June 30, 2016 closing date and was paid during the first quarter of fiscal 2017. Jayco operates as an independent operation in the same manner as the Company’s other recreational vehicle subsidiaries, and its towables operations are aggregated within the Company’s towable recreational vehicle reportable segment and its motorized operations are aggregated within the Company’s motorized recreational vehicle reportable segment. The Company purchased Jayco to complement its existing towable and motorized RV product offerings and dealer base.assigned toof the Jayco netEHG assets acquired which are based on internal and independent external valuations: $ 18,409 258,158 80,824 261,100 92,800 12,400 74,184 (216,776 ) 581,099 (18,409 ) $ 562,690 Cash $ 97,887 Inventory 593,053 Other assets 435,747 Property, plant and equipment, rental vehicles 80,132 Property, plant and equipment 437,216 Amortizable intangible assets: Dealer network 355,601 Trademarks 126,181 Technology assets 183,536 Backlog 11,471 Goodwill 1,009,754 Guarantee liabilities related to former EHG North American subsidiaries (115,668) Other current liabilities (851,774) Debt – Unsecured notes (114,710) Debt – Other (166,196) Deferred income tax liabilities (152,186) Other long-term liabilities (17,205) Non-controlling interests (12,207) Total fair value of net assets acquired 1,900,632 Less: cash acquired (97,887) Total fair value of net assets acquired, less cash acquired $ 1,802,745 19.317 years. The dealer network was valued based on the Discounted Cash Flow Methodmethod and is amortized on an accelerated basis over 20 years. The trademarks and technology assets were valued on the Relief fromof Royalty Methodmethod and are amortized on a straight-line basis over 20 years. Backlogyears and 10 years, respectively. The backlog was valued based on the Discounted Cash Flow Methodmethod and iswas amortized on a straight-line basis over 3 months. Goodwill isa 5 month period. We recognized $1,009,754 of goodwill as a result of this transaction, of which approximately $311,000 will be deductible for tax purposes.20162019 acquisition of JaycoEHG had occurred at the beginning of fiscal 2015: Fiscal Year Ended
July 31, 2016 $ 6,176,686 $ 284,394 $ 5.42 $ 5.41 PostleOn May 1, 2015,2018. The disclosure of pro forma net sales and earnings does not purport to indicate the Company closedresults that would actually have been obtained had the acquisition been completed on a Membership Interest Purchase Agreement with Postle Aluminum Company, LLCthe assumed date for the acquisition of allperiods presented, or which may be realized in the outstanding membership units of Postle Operating, LLC (“Postle”), a manufacturer of aluminum extrusion and specialized component products sold to RV and other manufacturers, for total cash consideration of $144,048, net of cash acquired.future. The net cash consideration of $144,048 was funded entirelyunaudited pro forma information does not reflect any operating efficiencies or cost savings that may be realized from the Company’s cash on hand, based on a final determinationintegration of the actual net assets as of the May 1, 2015 closing date and paid during the fourth quarter of fiscal 2015. Postle operates as an independent operation in the same manner as the Company’s other subsidiaries. The operations of Postle are reported in Other, which is a non-reportable segment.F-10Fiscal 2019 Net sales $ 9,067,750 Net income $ 143,517 Basic earnings per common share $ 2.66 Diluted earnings per common share $ 2.66 followingpro forma earnings for the fiscal year ended July 31, 2019 were adjusted to exclude $114,866 of acquisition-related costs. Nonrecurring expenses related to management fees of $1,677 were excluded from pro forma earnings for the fiscal year ended July 31, 2019. The period presented excludes $61,418 of nonrecurring expense related to the fair value adjustment to acquisition-date inventory. EHG’s historical net income included in the total above includes nonrecurring charges related to its former North American operations in the amount of $52,501 during the fiscal year ended July 31, 2019. These charges primarily consist of EHG’s guarantees to third parties for certain North American subsidiary obligations and the impairment of loan receivables due to EHG from their former North American subsidiaries.values assigned to the Postle netvalue of Togo Group assets acquired which are based on internal and independent external valuations: $ 2,963 54,780 32,251 38,800 6,000 300 42,871 (23,729 ) (7,225 ) 147,011 (2,963 ) $ 144,048 Onliabilities assumed as of the acquisition2020 Agreement effective date.Cash $ 326 Accounts receivable 466 Other assets 749 Property, plant and equipment 362 Amortizable intangible assets Trade names and trademarks 1,130 Developed technology 5,700 Other 1,350 Goodwill 61,955 Liabilities (2,595) Non-controlling interest (16,835) Total fair value of net assets acquired $ 52,608 12.3 years. The customer relationships were valued based on the Discounted Cash Flow Method and will be amortized on an accelerated basis over 12 years. The trademarks were valued on the Relief from Royalty Methodapproximately eight years and will be amortized on a straight-line basis over 15 years. Backlogbasis. The developed technology was valued based onusing the Discounted Cash Flow MethodMulti-Period Excess Earnings method, which is a form of the income approach. Trade names and was amortized on a straight-line basis over 6 weeks. Goodwilltrademarks were valued using the Relief from Royalty method. The majority of the goodwill is expected to be deductible for tax purposes.Cruiser RV, LLC and DRV, LLCOn January 5, 2015, the Company closed on a Stock Purchase Agreement (“CRV/DRV SPA”) for the acquisition of all the outstanding membership units of towable recreational vehicle manufacturer Cruiser RV, LLC (“CRV”) and luxury fifth wheel towable recreational vehicle manufacturer DRV, LLC (“DRV”) through its Heartland Recreational Vehicles, LLC subsidiary (“Heartland”). The Heartland operations are reported within the towable recreational vehicle reportable segment. In accordance with the CRV/DRV SPA, the closing was deemed effective as of January 1, 2015. As contemplated in the CRV/DRV SPA, the Company also acquired, in a series of integrated transactions, certain real estate used in the ongoing operations of CRV and DRV. The initial cash paid for this acquisition was $47,412, subject to adjustment, and was funded entirely from the Company’s cash on hand. Adjustments to increase the net cash consideration of $1,173 were identified as of July 31, 2015, based on the determination of the actual net assets as of the close of business on December 31, 2014 and the finalization of certain tax matters, and paid during the fourth quarter of fiscal 2015. The $1,173 included reimbursing the seller for $1,062 of cash on hand at the acquisition date, and resulted in total net cash consideration of $47,523. The Company purchased CRV and DRV to supplement and expand its existing lightweight travel trailer and luxury fifth wheel product offerings and dealer base.The following table summarizes the final fair values assignedCRV and DRV net assets acquired, which are based on internal and independent external valuations: $ 1,062 22,175 4,533 14,300 5,400 450 13,172 (12,507 ) 48,585 (1,062 ) $ 47,523 F-11On the acquisition date, amortizable intangible assets had a weighted-average useful life of 13.9 years. The dealer network was valued based on the Discounted Cash Flow Method and will be amortized on an accelerated basis over 12 years. The trademarks were valued on the Relief from Royalty Method and will be amortized on a straight-line basis over 20 years. Backlog was valued based on the Discounted Cash Flow Method and was amortized on a straight-line basis over 6 weeks. Goodwill is deductible for tax purposes.3. DISCONTINUED OPERATIONSOn July 31, 2013, the Company entered into a Stock Purchase Agreement (“ASV SPA”) and sold its bus business to Allied Specialty Vehicles, Inc. (“ASV”). The sale closed on October 20, 2013. The Company’s bus business, which manufactured and sold transit and shuttle buses, included the operations of Champion Bus Inc., General Coach America, Inc., Goshen Coach, Inc., ElDorado National (California), Inc. and ElDorado National (Kansas), Inc. This divestiture allowed the Company to focus on the strategic development and growth of its core recreational vehicle business.The results of operations for the bus business have been reported as loss from discontinued operations, net of income taxes, in the Consolidated Statements of Income and Comprehensive Income for fiscal 2016 and fiscal 2015.The following table summarizes the results of discontinued operations: 2017 2016 2015 $ – $ (2,417 ) $ (4,791 ) – 914 2,167 $ – $ (1,503 ) $ (2,624 ) The loss before income taxes of discontinued operations reflects expenses incurred directly related to the former bus operations, including ongoing costs related to liabilities retained by the Company under the ASV SPA for bus product liability and workers’ compensation claims occurring prior to the closingMarch 23, 2020 effective date of the sale.As2020 Agreement, the Company accounted for the equity method investment in Togo Group on a resultone-month lag. Beginning in the fiscal quarter ended April 30, 2020, that lag was eliminated. The impact of this change was not material to the Company's Consolidated Financial Statements. The Company's share of the saleloss from this investment recognized in the Company's fiscal year through the March 23, 2020 effective date of the bus business, and in accordance with the ASV SPA, the Company is no longer the primary obligor to the taxing authorities for bus operations in certain states. Under the terms2020 Agreement was $6,884. The Company's share of the sale,losses from this investment for the Company has agreed to indemnify ASV for any claims made by the taxing authorities after the date of sale for these uncertain tax positions, but does not expect future losses under this guarantee to be material.4. fiscal years ended July 31, 2019 and July 31, 2018 were $8,798 and $1,939, respectively.two3 reportable segments:segments, all related to recreational vehicles: (1) towable recreational vehiclesNorth American towables, (2) North American motorized and (2) motorized recreational vehicles. (3) European.towablesNorth American towable recreational vehicle reportable segment consists of the following operating segments that have been aggregated: Airstream (towable), Heartland (including Bison, CRVCruiser RV and DRV), Jayco (including Jayco towable, Starcraft and Highland Ridge), Keystone (including CrossRoads and Dutchmen), and KZ (including Livin’ Lite)Venture RV). The North American motorized recreational vehicle reportable segment consists of the following operating segments that have been aggregated: Airstream (motorized), Jayco (including Jayco motorized and Entegra Coach) and Thor Motor Coach.subsidiary, which was acquired May 1, 2015,and Togo Group subsidiaries are included in “Other,” which is a non-reportable segment. Net sales included in Other mainly relate to the sale of aluminum extrusions and specialized component products. Intercompany eliminations adjust for Postle sales to the Company’s towablesNorth American towable and North American motorized segments, which are consummated at established arm’s-length transfer prices generally consistent with the selling prices of extrusion components to third partythird-party customers.All manufacturing is conducted in the United States. and deferred income tax assets.F-122020 2019 2018 NET SALES: Recreational vehicles North American Towables $ 4,140,482 $ 4,558,451 $ 6,008,700 North American Motorized 1,390,098 1,649,329 2,146,315 Total North America 5,530,580 6,207,780 8,155,015 European 2,485,391 1,486,978 0 Total recreational vehicles 8,015,971 7,694,758 8,155,015 Other 234,481 263,374 305,947 Intercompany eliminations (82,519) (93,374) (132,053) Total $ 8,167,933 $ 7,864,758 $ 8,328,909 INCOME (LOSS) BEFORE INCOME TAXES: Recreational vehicles North American Towables $ 336,207 $ 322,228 $ 532,657 North American Motorized 71,943 80,910 134,785 Total North America 408,150 403,138 667,442 European 9,850 (5,946) 0 Total recreational vehicles 418,000 397,192 667,442 Other, net 27,751 29,086 32,667 Corporate (172,855) (241,612) (67,080) Total $ 272,896 $ 184,666 $ 633,029 2017 2016 2015 $ 5,127,491 $ 3,338,659 $ 3,096,405 1,971,466 1,094,250 870,799 7,098,957 4,432,909 3,967,204 253,557 218,673 56,594 (105,562 ) (69,470 ) (16,979 ) $ 7,246,952 $ 4,582,112 $ 4,006,819 $ 458,915 $ 321,874 $ 259,092 125,323 88,523 66,746 584,238 410,397 325,838 28,909 18,547 1,424 (195 ) (23 ) (554 ) (56,566 ) (45,608 ) (33,813 ) $ 556,386 $ 383,313 $ 292,895 $ 1,535,029 $ 1,425,168 $ 907,175 500,761 476,973 162,940 2,035,790 1,902,141 1,070,115 156,996 156,822 161,075 365,145 266,501 272,058 $ 2,557,931 $ 2,325,464 $ 1,503,248 $ 75,568 $ 36,054 $ 26,296 9,393 2,994 2,353 84,961 39,048 28,649 11,967 12,352 1,678 1,330 1,175 1,054 $ 98,258 $ 52,575 $ 31,381 $ 72,801 $ 37,489 $ 35,039 41,677 11,191 4,309 114,478 48,680 39,348 1,157 2,799 436 2,120 2,495 3,271 $ 117,755 $ 53,974 $ 43,055 Export sales2020 2019 TOTAL ASSETS: Recreational vehicles North American Towables $ 1,529,913 $ 1,516,519 North American Motorized 480,225 446,626 Total North America 2,010,138 1,963,145 European 3,102,071 3,077,804 Total recreational vehicles 5,112,209 5,040,949 Other, net 212,378 163,897 Corporate 446,873 455,600 Total $ 5,771,460 $ 5,660,446 2020 2019 2018 DEPRECIATION AND INTANGIBLE AMORTIZATION EXPENSE: Recreational vehicles North American Towables $ 66,042 $ 67,751 $ 68,964 North American Motorized 14,202 13,831 11,800 Total North America 80,244 81,582 80,764 European 103,671 54,881 0 Total recreational vehicles 183,915 136,463 80,764 Other, net 10,488 10,647 10,861 Corporate 1,764 1,667 1,598 Total $ 196,167 $ 148,777 $ 93,223 CAPITAL ACQUISITIONS: Recreational vehicles North American Towables $ 27,219 $ 69,321 $ 85,304 North American Motorized 12,603 17,179 34,660 Total North America 39,822 86,500 119,964 European 62,165 35,653 0 Total recreational vehicles 101,987 122,153 119,964 Other, net 2,664 3,493 8,440 Corporate 1,172 1,599 8,902 Total $ 105,823 $ 127,245 $ 137,306 DESTINATION OF NET SALES BY GEOGRAPHIC REGION: United States $ 5,296,482 $ 5,803,373 $ 7,540,015 Germany 1,494,419 836,151 1,687 Other Europe 966,023 636,105 4,358 Canada 377,053 561,172 776,068 Other foreign 33,956 27,957 6,781 Total $ 8,167,933 $ 7,864,758 $ 8,328,909 2020 2019 PROPERTY, PLANT AND EQUIPMENT BY GEOGRAPHIC REGION: United States $ 564,171 $ 569,641 Germany 444,981 424,333 Other Europe 93,220 92,553 Other 5,277 5,944 Total $ 1,107,649 $ 1,092,471 Company’s continuing operations, predominantlyitems subject to Canada, were $628,176, $368,426designated hedge or undesignated (economic) hedge relationships. The Company evaluates hedge effectiveness at inception and $465,642 in fiscal 2017, 2016 and 2015, respectively, and accounted for 8.7%, 8.0% and 11.6%on an ongoing basis. If a derivative is no longer expected to be effective, hedge accounting is discontinued.consolidatedderivative transactions are subject to master netting arrangements that allow the Company to net salessettle contracts with the same counter parties. These arrangements generally do not call for collateral and as of the applicable dates presented below, no cash collateral had been received or pledged related to the underlying derivatives. July 31, 2020 July 31, 2019 Cash Flow Hedges Notional Fair Value in
Other Current
LiabilitiesNotional Fair Value in
Other Current
LiabilitiesInterest rate swap agreements $ 673,400 $ 24,840 $ 849,550 $ 12,463 respective years.F-132020 2019 2018 Gain (Loss) on Derivatives Designated as Cash Flow Hedges Gain (loss) recognized in Other Comprehensive Income, net of tax Foreign currency forward contracts $ 0 $ 129 $ 0 Interest rate swap agreements (9,351) (9,396) 0 Total gain (loss) $ (9,351) $ (9,267) $ 0 2020 Sales Acquisition-Related Costs Interest
ExpenseGain (Loss) Reclassified from AOCI, Net of Tax Foreign currency forward contracts $ (386) $ 0 $ 0 Interest rate swap agreements 0 0 (5,914) Gain (Loss) on Derivatives Not Designated as Hedging Instruments Amount of gain (loss) recognized in income, net of tax Interest rate swap agreements 0 0 (376) Total gain (loss) $ (386) $ 0 $ (6,290) 2019 Sales Acquisition-Related Costs Interest
ExpenseGain (Loss) Reclassified from AOCI, Net of Tax Foreign currency forward contracts $ 129 $ 0 $ 0 Interest rate swap agreements 0 0 76 Gain (Loss) on Derivatives Not Designated as Hedging Instruments Amount of gain (loss) recognized in income, net of tax Foreign currency forward contracts 0 (70,777) 0 Interest rate swap agreements 0 0 (438) Total gain (loss) $ 129 $ (70,777) $ (362) are: July 31, 2017 2016 $ 24,904 $ 39,943 27,862 20,141 117,319 97,872 214,518 173,362 109,555 102,686 494,158 434,004 (33,670 ) (30,135 ) $ 460,488 $ 403,869 July 31, 2020 July 31, 2019 Finished goods—RV $ 152,297 $ 230,483 Finished goods—other 44,779 60,593 Work in process 128,181 126,636 Raw materials 302,813 300,721 Chassis 135,194 155,099 Subtotal 763,264 873,532 Excess of FIFO costs over LIFO costs (46,959) (45,544) Total inventories, net $ 716,305 $ 827,988 $494,158$763,264 and $434,004$873,532 of inventoryinventories at July 31, 20172020 and 2016, $284,897July 31, 2019, $251,099 and $219,050,$240,983, respectively, was valued on the last-in, first-out (LIFO)(“LIFO”) basis, and $209,261$512,165 and $214,954,$632,549, respectively, was valued on the first-in, first-out (FIFO)(“FIFO”) method.The Company’s reserves for inventory obsolescence were $5,240 at July 31, 2017 and $4,840 at July 31, 2016. July 31, 2017 2016 $ 48,812 $ 46,422 380,139 300,902 161,724 133,112 590,675 480,436 (165,437 ) (136,169 ) $ 425,238 $ 344,267 Property, plant and equipment at both July 31, 2017 and July 31, 2016 includes buildings and improvements acquired under capital leases of $6,527, and includes related amortization included in accumulated depreciation of $1,224 and $680, respectively.The Company sold land and buildings and improvements relatedJuly 31, 2020 July 31, 2019 Land $ 136,200 $ 142,475 Buildings and improvements 760,986 742,736 Machinery and equipment 438,985 389,666 Rental vehicles 83,534 87,243 Lease right-of-use assets – operating 33,609 — Lease right-of-use assets – finance 3,672 — Total cost 1,456,986 1,362,120 Less accumulated depreciation (349,337) (269,649) Property, plant and equipment, net $ 1,107,649 $ 1,092,471 a towable RV facility located in the western United States in the first quarter of fiscal 2017. The sale resulted in net cash proceeds of $4,254 and a gain on the sale of $2,165, which is included in Other income, net in the Consolidated Financial Statements of Income and Comprehensive Income. RV production from this facility was previously consolidated into another Company complex infor further information regarding the same region. July 31, 2017 July 31, 2016 Weighted-Average
Remaining
Life in Years
at July 31, 2017 Cost Accumulated
Amortization Cost Accumulated
Amortization 16 $ 404,960 $ 101,795 $ 404,960 $ 55,191 18 147,617 17,570 148,117 10,539 8 19,300 9,203 22,400 10,870 2 450 293 450 203 – – – 12,400 4,133 $ 572,327 $ 128,861 $ 588,327 $ 80,936 July 31, 2020 July 31, 2019 Cost Accumulated
AmortizationCost Accumulated
AmortizationDealer networks/customer relationships $ 766,198 $ 252,320 $ 750,641 $ 191,017 Trademarks 275,775 47,743 268,778 34,518 Design technology and other intangibles 213,468 40,654 196,616 19,689 Total amortizable intangible assets $ 1,255,441 $ 340,717 $ 1,216,035 $ 245,224 For the fiscal year ending July 31, 2021 $ F-14108,713For the fiscal year ending July 31, 2022 112,674 For the fiscal year ending July 31, 2023 92,063 For the fiscal year ending July 31, 2024 83,381 For the fiscal year ending July 31, 2025 76,410 For the fiscal year ending July 31, 2026 and thereafter 441,483 $ 914,724 The dealer networks and customer relationships are being amortized on an accelerated basis. Trademarks, design technology and other intangibles and non-compete agreements are amortized on a straight-line basis.Estimated amortization expense for future years is as follows: $ 53,968 50,136 46,269 42,935 37,828 212,330 $ 443,466 During the second quarter of fiscal 2016, the Company determined that sufficient evidence existed to warrant an interimanalysis for one of its reporting units. As a result of this analysis,testing purposes, the Company recorded a pre-tax, non-cash goodwill impairment charge of $9,113 in the second quarter of fiscal 2016 related to this reporting unit within the towables reportable segment. For the purpose of this goodwill test, the fair value of the reporting unit was determined by employing a discounted cash flow model, which utilized Level 3 inputs as defined by ASC 820 and discussed in Note 9 to the Consolidated Financial Statements. The $9,113 charge represents the full impairment of the goodwill related to this reporting unit.Historically, the Company completed its annual impairment test as of April 30. During the fourth quarter of the fiscal year ended July 31, 2017, the Company changed the date of its annual impairment test to May 31. This change did not result in any delay, acceleration or avoidance of impairment. The Company completed its annual impairment test as of April 30, 2017, and then performed an additional impairment test as of May 31, 2017 in connection with the change. No impairment of goodwill was identified as of either April 30, 2017 or May 31, 2017. The Company believes May 31 is a preferable test date because it will allow the Company to consider certain industry forecasts and other relevant external information important to the financial forecasting process that are not available as of the April 30 date. Furthermore, the May 31 date will allow additional time to complete the impairment testing and estimate the implied fair value of goodwill for comparison with the carrying value, should that be necessary, because the testing will occur earlier within a quarterly reporting cycle. This change was applied prospectively beginning May 31, 2017. Retrospective application to prior periods is impracticable as the Company is unable to objectively determine, without the use of hindsight, the assumptions that would have been used in those earlier periods.The Company’s reporting units are generally the same as its operating segments, which are identified in Note 43 to the Consolidated Financial Statements. FairThe fair values of the applicable reporting units are determined by utilizing a discounted cash flow model.model, which represents Level 3 inputs as defined by ASC 820. These estimates are subject to significant management judgment, including the determination of many factors such as sales growth rates, gross margin patterns, cost growth rates, terminal value assumptions and discount rates, and therefore largely represent Level 3 inputs as defined by ASC 820 and discussed in Note 9 to the Consolidated Financial Statements.rates. Changes in these estimates can have a significant impact on the determination of cash flows and fair value and could potentially result in future material impairments.20172020 and 2016July 31, 2019 are summarized as follows: Towables Motorized Other Total $ 269,751 $ – $ 42,871 $ 312,622 74,184 – – 74,184 (9,113 ) – – (9,113 ) $ 334,822 $ – $ 42,871 $ 377,693 – – – – $ 334,822 $ – $ 42,871 $ 377,693 F-15North
American
TowablesNorth
American
MotorizedEuropean Other Total Net balance as of July 31, 2018 $ 334,822 $ 0 $ 0 $ 42,871 $ 377,693 Fiscal year 2019 activity: Goodwill acquired 0 0 1,008,472 0 1,008,472 Foreign currency translation and other 0 0 (28,133) 0 (28,133) Net balance as of July 31, 2019 $ 334,822 $ 0 $ 980,339 $ 42,871 $ 1,358,032 Goodwill acquired 0 0 0 62,366 62,366 Measurement period adjustment 0 0 1,282 (411) 871 Foreign currency translation and other 0 0 56,308 0 56,308 Impairment charge (1,036) 0 0 0 (1,036) Net balance as of July 31, 2020 $ 333,786 $ 0 $ 1,037,929 $ 104,826 $ 1,476,541 net balancegoodwill balances as of July 31, 20172020 and July 31, 2019 are summarized as follows: Towables Motorized Other Total $ 343,935 $ 17,252 $ 42,871 $ 404,058 (9,113 ) (17,252 ) – (26,365 ) $ 334,822 $ – $ 42,871 $ 377,693 North
American
TowablesNorth
American
MotorizedEuropean Other Total Goodwill $ 343,935 $ 17,252 $ 1,037,929 $ 104,826 $ 1,503,942 Accumulated impairment charges (10,149) (17,252) 0 0 (27,401) Net balance as of July 31, 2020 $ 333,786 $ 0 $ 1,037,929 $ 104,826 $ 1,476,541 North
American
TowablesNorth
American
MotorizedEuropean Other Total Goodwill $ 343,935 $ 17,252 $ 980,339 $ 42,871 $ 1,384,397 Accumulated impairment charges (9,113) (17,252) 0 0 (26,365) Net balance as of July 31, 2019 $ 334,822 $ 0 $ 980,339 $ 42,871 $ 1,358,032 20%approximately 15.0% of the Company’s consolidated net sales in fiscal 2017, 20%2020 and approximately 18.5% and 20.0% in fiscal 20162019 and 17% in fiscal 2015.2018, respectively. Sales to this dealer are reported within both the North American towables and North American motorized segments. This dealer also accounted for 30%approximately 18.0% of the Company’s continuing consolidated trade accounts receivable at July 31, 20172020 and 18%approximately 19.0% at July 31, 2016.2019. The loss of this dealer could have a significantmaterial effect on the Company’s business. INVESTMENTS AND EMPLOYEE BENEFIT PLANSthree levelthree-level hierarchy, as prescribed in ASC 820, “Fair Value Measurements and Disclosures.Disclosures,” as defined below:20172020 and July 31, 2016, all using Level 1 inputs,2019 are as follows: July 31, 2017 July 31, 2016 $ 176,663 $ 143,282 $ 28,095 $ 15,529 Input Level July 31, 2020 July 31, 2019 Cash equivalents Level 1 $ 227,154 $ 130,100 Deferred compensation plan mutual fund assets Level 1 $ 47,327 $ 53,828 Deferred compensation plan liabilities Level 1 $ 61,290 $ 53,828 Interest rate swap liabilities Level 2 $ 26,664 $ 12,463 representaccounted for at fair value are investments in securities (primarily mutual funds) traded in an active market held for the benefit of certain employees of the Company as part of a deferred compensation plan. Deferred compensationAdditional plan asset balancesinvestments in COLI are recorded as components of Other long-term assets in the Consolidated Balance Sheets. An equalat their cash surrender value, not fair value, and offsetting liability is also recorded in regards to the deferred compensation plan as a component of Other long-term liabilities in the Consolidated Balance Sheets. Changes in theso are not included above.plan assets andestimated future cash flows based on the related liability are reflected in Other income, net and Selling, general and administrative expenses, respectively, in the Consolidated Statements of Income and Comprehensive Income.10. applicable observable yield curves.one-year1 year or two-year2 year warranty covering defects in material or workmanship, with longer warranties on certain structural components. The Company records a liability based on its best estimate of the amounts necessary to settle future and existing claims on products sold as of the balance sheet date. Factors used in estimating the warranty liability include a history of retail units sold, existing dealer inventory, average cost incurred and a profile of the distribution of warranty expenditures over the warranty period. Management believes that the warranty liabilities are adequate. However, actualActual claims incurred could differ from estimates, requiring adjustments to the reserves. Warrantyliabilities.reviewedas follows:2020 2019 2018 Beginning balance $ 289,679 $ 264,928 $ 216,781 Provision 198,873 233,927 259,845 Payments (238,590) (251,071) (211,698) Acquisition 0 43,329 0 Foreign currency translation 2,907 (1,434) 0 Ending balance $ 252,869 $ 289,679 $ 264,928 July 31, 2020 July 31, 2019 Term loan $ 1,597,091 $ 1,832,341 Unsecured notes 29,620 27,878 Other debt 84,500 94,124 Total long-term debt 1,711,211 1,954,343 Debt issuance costs, net of amortization (44,563) (51,720) Total long-term debt, net of debt issuance costs 1,666,648 1,902,623 Less: current portion of long-term debt (13,817) (17,370) Total long-term debt, net, less current portion $ 1,652,831 $ 1,885,253 necessarydefined in the ABL agreement. This agreement also includes a 0.25% unused facility fee. The Company may, generally at its option, pay any borrowings under the ABL, in whole or in part, at any time and from time to time, without premium or penalty. There were no borrowings outstanding on the ABL agreement as of July 31, 2020 and July 31, 2019.least a quarterly basis. 2017 2016 2015 $ 201,840 $ 108,206 $ 94,938 195,799 114,119 114,429 (180,858 ) (110,092 ) (106,266 ) – 89,607 5,105 $ 216,781 $ 201,840 $ 108,206 For the fiscal year ending July 31, 2021 $ F-1613,817For the fiscal year ending July 31, 2022 12,027 For the fiscal year ending July 31, 2023 12,150 For the fiscal year ending July 31, 2024 12,277 For the fiscal year ending July 31, 2025 35,848 For the fiscal year ending July 31, 2026 and thereafter 1,625,092 $ 1,711,211 11. LONG-TERM DEBTThe Company has a five-year credit agreement, which was entered into on June 30, 2016 and matures on June 30, 2021. The agreement provides for a $500,000 asset-based revolving credit facility and a $100,000 expansion option, subject to certain conditions. Borrowings outstanding on this facility totaled $145,000 at July 31, 2017 and $360,000 at July 31, 2016, and are subject to a variable pricing structure which can result in increases or decreases to the interest rate. Under the terms of the credit agreement, the Company can elect to borrow funds under two different structures. The first option is a variable interest rate based upon the prime rate plus a pricing spread (“Base Rate”). The second option is a variable interest rate based upon the London Interbank Offered Rate plus a pricing spread (“LIBOR Rate”). Depending on the Company’s borrowing availability as a percentage of the revolving credit commitment, pricing spreads can range from 1.25% to 1.75% in the case of loans bearing interest at the LIBOR Rate, and from 0.25% to 0.75% for loans bearing interest at the Base Rate.As of July 31, 2017, all of the $145,000 in outstanding borrowings were loans bearing interest at the LIBOR Rate, and the borrowing spread on those loans was 1.50%, resulting in a total rate of approximately 2.72%. The revolving credit facility, which is secured by substantially all of the Company’s tangible and intangible assets excluding real property, contains customary limits and restrictions concerning investments, sales of assets, liens on assets, stock repurchases and dividend and other payments depending on adjusted excess cash availability as defined in the agreement and summarized below. The terms of the facility permit prepayment without penalty at any time, subject to customary breakage costs relative to the LIBOR-based loans.Borrowing availability under the credit agreement is limited to the lesser of the facility total and the monthly calculated borrowing base, which is based on stipulated loan percentages applied to specified assets of the Company. The credit agreement has no financial covenant restrictions for borrowings as long as the Company has adjusted excess availability under the facility that exceeds 10% of the lesser of the line commitment or the borrowing base total, with a floor of $40,000. As of July 31, 2017, the available and unused credit line under the revolver was $352,675, and the Company was in compliance with the financial covenant in the credit agreementIn2017, total LIBOR Rate and Base Rate2020, interest expense on the facilityterm loan, ABL and other debt facilities was $7,002 and the weighted-average interest rate on borrowings from the facility was 2.34%. In fiscal 2016, total LIBOR Rate and Base Rate interest expense on the facility was $789 and the weighted-average interest rate on borrowings from the facility was 2.55%.$93,475. The Company incurred fees totaling $56,166 and $14,010 in fiscal 2019 to secure the facility of $7,850 in fiscal 2016,term loan and ABL, respectively, and those feesamounts are being amortized ratably over the respective seven and five-year termterms of the agreement, or a shorter period if the credit agreement period is shortened for any reason.those agreements. The Company recorded total charges related to the amortization of these term loan and ABL fees, which are reflectedincluded in interest expense, of $1,570 in$10,743 for fiscal 2017 and $131 in fiscal 2016.2020. The unamortized balancesbalance of thesethe ABL facility fees were $6,149was $9,807 at July 31, 20172020 and $7,719 at July 31, 2016 and areis included in Other long-term assets in the Consolidated Balance Sheets.long-termterm loan debt, excluding debt issuance costs, was $1,597,091 and $1,832,341 at July 31, 2017 approximates fair value as the entire balance is subject to variable market interest rates that the Company believes are market rates for a similarly situated Company.2020 and July 31, 2019, respectively. The fair value of the Company’s debt is largelyprimarily estimated using levelLevel 2 inputs as defined by ASC 820 and discussed in Note 9 to the Consolidated Financial Statements.12.820. For the Fiscal Year Ended July 31, 2020 2019 2018 United States $ 258,483 $ 200,859 $ 633,029 Foreign 14,413 (16,193) 0 Total $ 272,896 $ 184,666 $ 633,029 from continuing operations are as follows: July 31, Income Taxes: 2017 2016 2015 $ 200,370 $ 126,846 $ 98,504 20,941 12,716 1,222 221,311 139,562 99,726 (37,033 ) (13,079 ) (7,785 ) (2,146 ) (1,192 ) (1,055 ) (39,179 ) (14,271 ) (8,840 ) $ 182,132 $ 125,291 $ 90,886 F-17 For the Fiscal Year Ended July 31, Income Taxes: 2020 2019 2018 U.S. Federal $ 49,494 $ 48,757 $ 166,402 U.S. state and local 9,891 5,921 21,025 Foreign 1,842 6,611 0 Total current expense 61,227 61,289 187,427 U.S. Federal 6,472 10,862 17,820 U.S. state and local (197) (36) (2,369) Foreign (15,990) (19,914) 0 Total deferred expense (benefit) (9,715) (9,088) 15,451 Total income tax expense $ 51,512 $ 52,201 $ 202,878 taxestax expense at the federal statutory rate and the actual income taxestax expense are as follows: July 31, 2017 2016 2015 $ 194,735 $ 134,160 $ 102,513 11,021 6,599 5,144 (3,228 ) (4,194 ) (2,207 ) (19,527 ) (12,609 ) (9,519 ) 375 611 (5,650 ) (1,244 ) 724 605 $ 182,132 $ 125,291 $ 90,886 For the Fiscal Year Ended July 31, 2020 2019 2018 Provision at federal statutory rate $ 57,308 $ 38,779 $ 170,095 Differences between U.S. federal statutory and foreign tax rates (50,898) 1,478 0 Foreign currency remeasurement (gains) and losses 30,246 (12,942) 0 U.S. state and local income taxes, net of federal benefit 7,616 4,642 14,255 Nondeductible compensation 2,249 2,401 0 Nondeductible acquisition costs 0 3,031 0 Nondeductible foreign currency forward contract loss on acquisition 0 14,863 0 Federal income tax credits and incentives (1,738) (3,373) (3,518) Domestic production activities deduction 0 0 (16,175) Change in uncertain tax positions 1,101 1,279 396 Effect of the U.S. Tax Act 0 0 38,620 Other 5,628 2,043 (795) Total income tax expense $ 51,512 $ 52,201 $ 202,878 taxestax balances is as follows: July 31, 2020 2019 Deferred income tax asset (liability): Inventory basis $ 1,000 $ 807 Employee benefits 7,353 5,272 Self-insurance reserves 4,923 5,185 Accrued product warranties 53,586 62,563 Accrued incentives 4,316 6,144 Sales returns and allowances 1,027 1,516 Accrued expenses 6,733 3,617 Property, plant and equipment (28,438) (22,699) Operating leases 9,110 0 Deferred compensation 15,876 15,247 Intangibles (147,423) (143,861) Net operating loss and other carryforwards 32,877 15,725 Unrealized (gain)/loss 4,892 (4,546) Unrecognized tax benefits 3,046 2,689 Other 4,558 2,759 Valuation allowance (18,500) (12,945) Deferred income tax (liability), net $ (45,064) $ (62,527) follows: July 31, 2017 2016 $ 1,460 $ 1,196 6,471 4,587 9,940 10,504 73,393 43,388 6,175 5,154 2,340 1,642 3,399 2,607 (8,151 ) (4,164 ) 14,556 9,145 (17,184 ) (22,308 ) 3,925 4,105 (3,355 ) (2,439 ) $ 92,969 $ 53,417 2017,2020, the related income tax cost of the repatriation of foreign earnings is not material. Additionally, the Company has $1,8820 unrecorded deferred tax liabilities related to the investment in foreign subsidiaries at July 31, 2020.2026-20272027-2030 of which the Company expects to realize prior to expiration. At July 31, 2020, the Company had $73,751 of gross NOL carry forwards in certain foreign jurisdictions that will expire from fiscal 2023 to indefinite carryforward, of which $48,741 has been fully reserved with a valuation allowance and the remaining amount the Company expects to realize. In addition, the Company has $8,973$4,721 of gross U.S. state tax Net Operating Loss (“NOL”) carry forwardsNOL carryforwards that expire from fiscal 2018-20372021-2040 that the Company does not expect to realize and therefore has been fully reserved. The deferred tax asset of $422 associatedreserved with the state tax NOL carry forwards and the related equal and offsettinga valuation allowance are not reflected in the table above.Unrecognized Tax Benefits:$8,477$11,606 for fiscal 2017, $8,8862020, $11,332 for fiscal 20162019 and $8,764$10,491 for fiscal 2015.F-182017, 20162020, 2019 and 20152018 were as follows: 2017 2016 2015 $ 13,269 $ 13,156 $ 20,813 75 1,546 126 (1,510 ) (920 ) (7,695 ) 3,853 3,123 2,858 (1,450 ) (956 ) (1,898 ) (1,566 ) (2,680 ) (1,048 ) $ 12,671 $ 13,269 $ 13,156 2020 2019 2018 Beginning balance $ 13,848 $ 13,004 $ 12,671 Tax positions related to prior years: Additions 73 0 353 Reductions (129) (263) (2,203) Tax positions related to current year: Additions 1,966 2,062 3,629 Settlements 0 (773) (192) Lapses in statute of limitations (1,520) (918) (1,254) Tax positions acquired from EHG 0 736 0 Ending balance $ 14,238 $ 13,848 $ 13,004 20172020 and 2016July 31, 2019 were $1,209$2,516 and $1,547,$1,758, respectively. The total amount of interest and penalties benefitexpense recognized in the Consolidated Statements of Income and Comprehensive Income for the fiscal years ended July 31, 2017, 20162020, July 31, 2019 and 2015July 31, 2018 were $218, $231$544, $454 and $2,552,$203, respectively. July 31, 2017 2016 $ 12,671 $ 13,269 (1,882 ) (2,255 ) 1,209 1,547 $ 11,998 $ 12,561 $ 1,735 $ 2,586 10,263 9,975 $ 11,998 $ 12,561 July 31, 2020 2019 Unrecognized tax benefits $ 14,238 $ 13,848 Reduction to unrecognized tax benefits which offset tax credit and loss carryforwards (809) (1,916) Accrued interest and penalties 2,516 1,758 Total unrecognized tax benefits $ 15,945 $ 13,690 Short-term, included in “Income and other taxes” $ 3,180 $ 2,891 Long-term 12,765 10,799 Total unrecognized tax benefits $ 15,945 $ 13,690 $3,950$5,000 in unrecognized tax benefits and $500$1,300 in interest during fiscal 20182021 from expected settlements or payments of uncertain tax positions and lapses of the applicable statutes of limitations. Actual results may differ from these estimates.Generally, fiscal years 2015 and 2016 remain open for federalpurposesreturns in the U.S. federal jurisdiction and fiscal years 2013, 2014, 2015 and 2016 remain open forin many U.S. state and Canadian income tax purposes. The Company and its subsidiaries file a consolidated U.S. federal income tax return and multiple state income tax returns.foreign jurisdictions. The Company is currently under exam by variouscertain U.S. state tax authorities for the fiscal years ended July 31, 20132015 through 2015.July 31, 2017. The Company believes it has adequately reserved for its exposure to additional payments for uncertain tax positions related to its state income tax returns in its liability for unrecognized tax benefits.Major Tax Jurisdiction F-19Tax Years Subject to ExamUnited States – Federal Fiscal 2017 – Fiscal 2019 United States – State Fiscal 2017 – Fiscal 2019 Germany Fiscal 2016 – Fiscal 2018 France Fiscal 2017 – Fiscal 2019 Italy Fiscal 2015 – Fiscal 2019 United Kingdom Fiscal 2018 – Fiscal 2019 13. pre-definedpredefined curtailment arrangements. The Company typically resells the repurchased product at a discount from its repurchase price. The risk of loss from these agreements is spread over numerous dealers. In addition to the guarantee under these repurchase agreements, the Company may also be required to repurchase inventory relative to dealer terminations in certain states in accordance with state laws or regulatory requirements. The repurchase activity related to dealer terminations in certain states has historically been insignificant in relation to our repurchase obligation with financial institutions.20172020 and July 31, 20162019 were $2,200,544$1,876,922 and $1,898,307,$2,961,019, respectively. The commitment term is generally up to eighteen months.$6,345$7,747 and $6,068$9,575 as of July 31, 20172020 and July 31, 2016,2019, respectively, which are included in Other current liabilities in the Consolidated Balance Sheets.The following table reflects lossesyears. Theyears were not material. Based on current market conditions, the Company believes that any future losses under these agreements will not have a significant effect on the Company’s consolidated financial position, results of operations or cash flows: 2015 $ 4,453 $ 4,650 $ 7,171 4,151 3,832 5,906 $ 302 $ 818 $ 1,265 Legal Matterslaws”,laws,” warranty claims and vehicle accidents (for which the Company carries insurance above a specified self-insured retention or deductible amount). The outcomes of legal proceedings and claims brought against the Company are subject to significant uncertainty. There is significant judgment required in assessing both the probability of an adverse outcome and the determination as to whether an exposure can be reasonably estimated. In management’s opinion, the ultimate disposition of any current legal proceedings or claims against the Company will not have a material effect on the Company’s financial condition, operating results or cash flows. Litigation is, however, inherently uncertain and an adverse outcome from such litigation could have a material effect on the operating results of a particular reporting period.F-20Fiscal Year EndedJuly 31, 2020 Operating lease cost $ 12,580 Finance lease cost Amortization of right-of-use assets 544 Interest on lease liabilities 531 Total lease cost $ 13,655 Fiscal Year Ended Supplemental Cash Flow Information July 31, 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 12,487 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 4,655 14. LEASESSupplemental Balance Sheet Information July 31, 2020 Operating leases: Operating lease right-of-use assets $ 33,609 Operating lease liabilities Other current liabilities $ 5,343 Other long-term liabilities 28,456 Total operating lease liabilities $ 33,799 Finance leases: Finance lease right-of-use assets $ 3,672 Finance lease liabilities Other current liabilities $ 505 Other long-term liabilities 4,743 Total finance lease liabilities $ 5,248 July 31, 2020 Weighted-average remaining lease term Operating leases 13.6 years Finance leases 6.8 years Weighted-average discount rate Operating leases 3.4 % Finance leases 9.7 % 20172020 and 2028.capitaloperating and operatingfinance leases as of July 31, 2017 are2020 were as follows: Capital Leases Operating Leases $ 948 $ 2,547 938 2,152 933 1,434 951 1,123 973 907 5,015 7,493 9,758 $ 15,656 (3,285 ) 6,473 (378 ) $ 6,095 The current portionOperating Leases Finance Leases For the fiscal year ending July 31, 2021 $ 9,816 $ 991 For the fiscal year ending July 31, 2022 8,030 1,013 For the fiscal year ending July 31, 2023 5,628 1,036 For the fiscal year ending July 31, 2024 4,370 1,059 For the fiscal year ending July 31, 2025 3,317 1,083 For the fiscal year ending July 31, 2026 and thereafter 18,727 2,061 Total future lease payments $ 49,888 $ 7,243 Less: amount representing interest (16,089) (1,995) Total reported lease liability $ 33,799 $ 5,248 capital lease obligations are included in Other current liabilities and the long-term capital lease obligations are included in Other long-term liabilities, respectively, in the Consolidated Balance Sheets.Operating Leases Finance Leases For the fiscal year ending July 31, 2020 $ 8,785 $ 974 For the fiscal year ending July 31, 2021 6,809 993 For the fiscal year ending July 31, 2022 5,437 1,015 For the fiscal year ending July 31, 2023 3,980 1,037 For the fiscal year ending July 31, 2024 3,424 1,061 For the fiscal year ending July 31, 2025 and thereafter 20,745 3,037 Total future lease payments $ 49,180 8,117 Less: amount representing interest (2,427) Total lease liability 5,690 Less: current portion (444) Long-term finance lease obligations $ 5,246 2017, 20162019 and 2015 was $3,560, $3,757 and $2,092, respectively.15. EMPLOYEE BENEFIT PLANSSubstantially all non-highly compensated employees are eligible to participate in a 401(k) plan. The Company may make discretionary contributions to the 401(k) plan according to a matching formula determined by each operating subsidiary. Total expense for the plan was $1,797 in fiscal 2017, $917 in fiscal 2016 and $565 in fiscal 2015.The Company has established a deferred compensation plan for highly compensated employees who are not eligible to participate in a 401(k) plan. This plan allows participants to defer a portion of their compensation and to direct the Company to invest the funds in mutual fund investments held by the Company. Participant benefits are limited to the value of the investments held on their behalf. Investments held by the Company are accounted for at fair value and reported as Other long-term assets, and the equal and offsetting obligation to the participants is reported as Other long-term liabilities in the Consolidated Balance Sheets. Changes in the fair value of the plan assets and the related deferred liability are both recorded through the Consolidated Statements of Income and Comprehensive Income. The Company does not make contributions to the plan. The balance of investments held in this plan, and the equal and offsetting long-term liability to the participants, was $28,095 at July 31, 20172018 was $8,825 and $15,529 at July 31, 2016.Treasury StockThe Company entered into a repurchase agreement, dated May 15, 2015 (the “May 15, 2015 Repurchase Agreement”), to purchase certain shares of its common stock from the Thompson Family Foundation (the “Foundation”) in a private transaction. Pursuant to the terms of the May 15, 2015 Repurchase Agreement, the Company purchased 1,000,000 shares of its common stock at a price of $60.00 per share from the Foundation, and held them as treasury stock, representing an aggregate purchase price of $60,000. The closing price of Thor common stock on May 15, 2015 was $61.29. The Foundation holds shares of common stock of the Company previously owned by the late Wade F. B. Thompson, the Company’s co-founder and former Chief Executive Officer. At the time of the repurchase transaction, Alan Siegel, a member of the board of directors of the Company (the “Board”), served as a director of the Foundation. The repurchase transaction was evaluated and approved by members of the Board who are not affiliated with the Foundation. The transaction was consummated on May 19, 2015, and the Company used available cash to purchase the shares. The number of shares repurchased by the Company represented 1.9% of the Company’s issued and outstanding common stock immediately prior to the repurchase.F-21Stock-Based Compensation2017,2020, the remaining shares available to be granted under the 2016 Equity and Incentive Plan are 1,834,021982,258 and under the 2010 Equity and Incentive Plan are 1,211,385. Awards may be in the form of options (incentive stock options and non-statutory stock options), restricted stock, restricted stock units, performance compensation awards and stock appreciation rights. Stock Awards – A summary of restricted stock award activity and the related expense under the 2010 Equity and Incentive Plan was immaterial for fiscal 2017, 2016 and 2015 is as follows: 2017 2016 2015 Shares Weighted-
Average Grant
Date Fair Value Shares Weighted-
Average Grant
Date Fair Value Shares Weighted-
Average Grant
Date Fair Value 5,806 $ 31.36 9,713 $ 31.16 13,620 $ 31.08 – – – – – – (3,907 ) 30.87 (3,907 ) 30.87 (3,907 ) 30.87 – – – – – – 1,899 $ 32.36 5,806 $ 31.36 9,713 $ 31.16 In fiscal 2017, 2016 and 2015, the Company recorded expense for restricted stock awards under this Plan of $101, $115 and $115, respectively. At July 31, 2017, there were no unrecognized future compensation costs related to restricted stock. This restricted stock vests evenly over 5 years from the date of grant.has approvedgenerally approves awards each October related to the financial performance of the most recently completed fiscal year since 2012.year. The awarded employee restricted stock units vest, and shares of common stock are issued, in equal installments on the first, second and third anniversaries of the date of grant. In addition, concurrent with the timing of the employee awards, the Nominating and Governance Committee of the Board has awarded restricted stock units to Board members that will vest, and shares of common stock will be issued, on the first anniversary of the date of the grant.2017, 20162020, 2019 and 20152018 for these restricted stock unitRSU and PSU awards was $12,399, $9,272totaled $19,889, $18,950 and $6,661$17,000, respectively.F-22Restricted Stock Units– 2017, 20162020, 2019 and 20152018 is included below: 2017 2016 2015 Restricted Stock
Units Weighted-
Average Grant
Date Fair Value Restricted Stock
Units Weighted-
Average Grant
Date Fair Value Restricted Stock
Units Weighted-
Average Grant
Date Fair Value 325,136 $ 53.95 280,353 $ 50.55 212,073 $ 49.21 166,567 84.85 181,872 55.37 162,967 50.95 (157,315 ) 53.87 (133,758 ) 48.73 (90,608 ) 48.14 (1,812 ) 64.03 (3,331 ) 54.18 (4,079 ) 50.54 332,576 $ 69.41 325,136 $ 53.95 280,353 $ 50.55 2020 2019 2018 Restricted
Stock
UnitsWeighted-
Average Grant
Date Fair ValueRestricted
Stock
UnitsWeighted-
Average Grant
Date Fair ValueRestricted
Stock
UnitsWeighted-
Average Grant
Date Fair ValueNonvested, beginning of year 451,563 $ 91.08 328,431 $ 101.97 332,576 $ 69.41 Granted 407,151 50.78 310,924 79.12 171,340 124.84 Vested (206,624) 92.87 (167,591) 90.23 (168,714) 64.01 Forfeited (10,680) 69.66 (20,201) 91.11 (6,771) 93.46 Nonvested, end of year 641,410 $ 65.28 451,563 $ 91.08 328,431 $ 101.97 20172020 there was $16,679$18,219 of total unrecognized compensation costs related to restricted stock unit awards that isare expected to be recognized over a weighted-average period of 2.281.59 years.Total non-cash compensation expense recognizedrestricted stock awards and restricted stock unit awards in fiscal 2017, 2016 and 2015 was $12,500, $9,387 and $6,776, respectively.stock basedstock-based compensation expense of $4,625, $3,473$4,775, $4,550 and $2,507$4,930 in fiscal 2017, 20162020, 2019 and 2015,2018, respectively.***********F-232020 2019 2018 NET SALES: Recreational vehicles North American Towables Travel Trailers and Other $ 2,449,239 $ 2,710,308 $ 3,646,581 Fifth Wheels 1,691,243 1,848,143 2,362,119 Total North American Towables 4,140,482 4,558,451 6,008,700 North American Motorized Class A 495,520 761,176 1,000,881 Class C 776,191 824,449 1,047,376 Class B 118,387 63,704 98,058 Total North American Motorized 1,390,098 1,649,329 2,146,315 Total North American 5,530,580 6,207,780 8,155,015 European Motorcaravan 1,505,353 960,155 0 Campervan 433,398 201,089 0 Caravan 273,475 172,144 0 Other RV-related 273,165 153,590 0 Total European 2,485,391 1,486,978 0 Total recreational vehicles 8,015,971 7,694,758 8,155,015 Other, primarily aluminum extruded components 234,481 263,374 305,947 Intercompany eliminations (82,519) (93,374) (132,053) Total $ 8,167,933 $ 7,864,758 $ 8,328,909 2020 Foreign Currency
Translation
AdjustmentUnrealized
Gain (Loss) on
DerivativesOther Total Balance at beginning of period $ (47,078) $ (9,472) $ (1,048) $ (57,598) OCI before reclassifications 92,735 (20,557) 352 72,530 0 4,906 0 4,906 Amounts reclassified from AOCI 0 8,180 0 8,180 Income taxes associated with amounts reclassified from AOCI 0 (1,880) 0 (1,880) AOCI, net of tax 45,657 (18,823) (696) 26,138 Less: AOCI attributable to non-controlling interest (855) 0 0 (855) AOCI, net of tax attributable to Thor Industries, Inc. $ 46,512 $ (18,823) $ (696) $ 26,993 2019 Foreign Currency
Translation
AdjustmentUnrealized
Gain (Loss) on
DerivativesOther Total Balance at beginning of period $ 0 $ 0 $ 0 $ 0 OCI before reclassifications (44,684) (12,184) (1,048) (57,916) (2,394) 2,917 0 523 Amounts reclassified from AOCI 0 (279) 0 (279) Income taxes associated with amounts reclassified from AOCI 0 74 0 74 AOCI, net of tax (47,078) (9,472) (1,048) (57,598) Less: AOCI attributable to non-controlling interest (594) 0 0 (594) AOCI, net of tax attributable to Thor Industries, Inc. $ (46,484) $ (9,472) $ (1,048) $ (57,004)