UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

~~Washington,~~

WASHINGTON, D.C. 20549

FORM10-Q

☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended October 31, ~~2018.~~

2019.

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from ____ to.

____.

COMMISSION FILE NUMBER001-09235

~~THOR INDUSTRIES, INC.~~

~~(Exact name of registrant as specified in its charter)~~

~~Delaware~~

THOR INDUSTRIES, INC.

~~93-0768752~~

(~~State or other jurisdiction~~Exact name of

registrant as specified in its charter)

~~(I.R.S. Employer~~

~~incorporation or organization)~~

~~Identification No.)~~

Delaware

93-0768752

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

601 E. Beardsley Ave., Elkhart, IN

46514-3305

(Address of principal executive offices)

(Zip Code)

(574) 970-7460

(Registrant's telephone number, including area code)

~~(574)970-7460~~

~~(Registrant’s telephone number, including area code)~~

None

~~None~~

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes☑No☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes☑No☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-2 of the Exchange Act.


~~Large accelerated filer~~	☑	~~Accelerated filer~~	☐
~~Non-accelerated~~ ~~filer~~	☐	~~Smaller reporting company~~	☐
~~Emerging growth company~~	☐

Large accelerated filer ☑ Accelerated filer ☐

Non-accelerated filer ☐Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).

Yes☐No☑

Securities registered pursuant to Section 12(b) of the Act

Name of each exchange

Title of each class

Trading Symbol(s)

on which registered

Common stock (Par value $.10 Per Share)

THO

New York Stock Exchange

As of ~~October 31, 2018, 52,806,981~~November 29, 2019, 55,198,756 shares of the registrant’s common stock, par value $0.10 per share, were outstanding.

PART I – FINANCIAL INFORMATION (Unless otherwise indicated, amounts in thousands except share and per share data.)

ITEM1. FINANCIAL STATEMENTS

THOR INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

   October 31, 2018 July 31, 2018
ASSETS

Current assets:

Cash and cash equivalents
   $ 224,921 $ 275,249
Accounts receivable, trade, net
   483,543 467,488
Accounts receivable, other, net
   20,248 19,747
Inventories, net
   565,346 537,909
Prepaid income taxes, expenses and other
   30,898 11,281


Total current assets
   1,324,956 1,311,674


Property, plant and equipment, net
   543,697 522,054


Other assets:

Goodwill
   377,693 377,693
Amortizable intangible assets, net
   375,757 388,348
Deferred income taxes, net
   80,872 78,444
Equity investment in joint venture
   46,980 48,463
Other
   50,473 51,989


Total other assets
   931,775 944,937


TOTAL ASSETS
   $ 2,800,428 $ 2,778,665


LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable
   $ 255,512 $ 286,974
Accrued liabilities:

Compensation and related items
   84,695 97,122
Product warranties
   271,749 264,928
Income and other taxes
   14,424 19,345
Promotions and rebates
   68,565 59,133
Product, property and related liabilities
   12,767 17,815
Dividends payable
   20,595 —
Foreign currency forward contract liability
   42,555 —
Other
   28,903 24,013


Total current liabilities
   799,765 769,330


Unrecognized tax benefits
   13,093 12,446
Other liabilities
   59,224 59,148


Total long-term liabilities
   72,317 71,594


Contingent liabilities and commitments

Stockholders’ equity:

Preferred stock – authorized 1,000,000 shares; none outstanding
   —   —
Common stock – par value of $.10 per share; authorized 250,000,000 shares; issued 62,933,415 and 62,765,824 shares, respectively
   6,293 6,277
Additionalpaid-in capital
   259,303 252,204
Retained earnings
   2,010,896 2,022,988
Less treasury shares of 10,126,434 and 10,070,459, respectively, at cost
   (348,146 ) (343,728 )


Total stockholders’ equity
   1,928,346 1,937,741


TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
   $ 2,800,428 $ 2,778,665


	October 31, 2019		July 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	231,778	$	425,615
Restricted cash	38,704		25,647
Accounts receivable, trade, net	556,176		478,531
Factored accounts receivable	168,418		173,405
Accounts receivable, other, net	51,978		64,291
Inventories, net	915,485		827,988
Prepaid income taxes, expenses and other	30,944		41,880
Total current assets	1,993,483		2,037,357
Property, plant and equipment, net	1,104,764		1,092,471
Other assets:
Goodwill	1,361,265		1,358,032
Amortizable intangible assets, net	946,581		970,811
Deferred income tax assets, net	67,778		73,176
Equity investment in joint ventures	44,086		46,181
Other	89,584		82,418
Total other assets	2,509,294		2,530,618
TOTAL ASSETS	$	5,607,541	$	5,660,446

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	569,844	$	551,831
Current portion of long-term debt	18,328		17,370
Short-term financial obligations	36,566		44,094
Accrued liabilities:
Compensation and related items	133,796		135,560
Product warranties	285,600		289,679
Income and other taxes	44,952		61,483
Promotions and rebates	74,520		95,052
Product, property and related liabilities	16,482		17,595
Dividends payable	22,080		—
Liabilities related to factored receivables	168,418		173,405
Other	68,799		62,256
Total current liabilities	1,439,385		1,448,325
Long-term debt	1,780,091		1,885,253
Deferred income tax liabilities, net	135,731		135,703
Unrecognized tax benefits	12,469		10,799
Other liabilities	114,894		85,138
Total long-term liabilities	2,043,185		2,116,893
Contingent liabilities and commitments
Stockholders’ equity:
Preferred stock – authorized 1,000,000 shares; none outstanding	—		—
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	422,831		416,382
Retained earnings	2,095,659		2,066,674
Accumulated other comprehensive loss, net of tax	(59,591)		(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.	2,113,530		2,084,425
Non-controlling interests	11,441		10,803
Total stockholders’ equity	2,124,971		2,095,228
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	5,607,541	$	5,660,446

See Notes to the Condensed Consolidated Financial Statements.

THOR INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED OCTOBER 31, 2019 AND 2018 ~~AND 2017~~ (UNAUDITED)

   Three Months Ended
October 31,
   2018    2017
Net sales
   $ 1,755,976    $ 2,231,668
Cost of products sold
   1,548,720    1,898,483




Gross profit
   207,256    333,185
Selling, general and administrative expenses
   102,693    134,263
Amortization of intangible assets
   12,591    13,558
Acquisition-related costs
   57,089    —
Interest income
   1,222    381
Interest expense
   876    1,412
Other income (expense), net
   (3,712)    2,758




Income before income taxes
   31,517    187,091
Income taxes
   17,564    58,685




Net income and comprehensive income
   $ 13,953    $ 128,406




Weighted-average common shares outstanding:

Basic
   52,726,496    52,611,926
Diluted
   52,899,603    52,818,363
Earnings per common share:

Basic
   $ 0.26    $ 2.44
Diluted
   $ 0.26    $ 2.43
Regular dividends declared per common share
   $ 0.39    $ 0.37


	Three Months Ended October 31, 2019
	2019		2018
Net sales	$	2,158,785	$	1,755,976
Cost of products sold	1,849,974		1,548,720
Gross profit	308,811		207,256
Selling, general and administrative expenses	188,464		102,693
Amortization of intangible assets	24,293		12,591
Acquisition-related costs	—		57,089
Interest income	975		1,222
Interest expense	28,025		876
Other income (expense), net	(370)		(3,712)
Income before income taxes	68,634		31,517
Income taxes	16,789		17,564
Net income	51,845		13,953
Less: Net income attributable to non-controlling interest	780		—
Net income attributable to Thor Industries, Inc.	$	51,065	$	13,953

Weighted-average common shares outstanding:
Basic	55,095,074		52,726,496
Diluted	55,224,655		52,899,603

Earnings per common share:
Basic	$	0.93	$	0.26
Diluted	$	0.92	$	0.26

Regular dividends declared per common share:	$	0.40	$	0.39


Comprehensive income:
Net income	$	51,845	$	13,953
Other comprehensive income (loss), net of tax
Foreign currency translation adjustment	993		—
Unrealized loss on derivatives, net of tax	(3,722)		��

Total other comprehensive loss, net of tax	(2,729)		—
Total Comprehensive income	49,116		13,953
Less: Comprehensive income attributable to non-controlling interest	638		—
Comprehensive income attributable to Thor Industries, Inc.	$	48,478	$	13,953

See Notes to the Condensed Consolidated Financial Statements.

THOR INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED OCTOBER 31, 2019 AND 2018 ~~AND 2017~~ (UNAUDITED)

   Three Months Ended October 31,
   2018    2017
Cash flows from operating activities:

Net income
   $ 13,953    $ 128,406
Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation
   10,467    9,140
Amortization of intangibles
   12,591    13,558
Amortization of debt issuance costs
   393    393
Foreign currency forward contract loss
   42,555    —
Deferred income tax benefit
   (751)    (5,356)
Gain on disposition of property, plant and equipment
   (30)    (1,470)
Stock-based compensation expense
   4,530    4,318
Changes in assets and liabilities:

Accounts receivable
   (16,556)    (152,921)
Inventories
   (27,437)    (56,840)
Prepaid income taxes, expenses and other
   (17,011)    (2,409)
Accounts payable
   (29,150)    33,471
Accrued liabilities
   (10,218)    39,892
Long-term liabilities and other
   830    3,233




Net cash provided by (used in) operating activities
   (15,834)    13,415




Cash flows from investing activities:

Purchases of property, plant and equipment
   (34,453)    (34,283)
Proceeds from dispositions of property, plant and equipment
   61    3,526
Other
   —       641




Net cash used in investing activities
   (34,392)    (30,116)




Cash flows from financing activities:

Principal payments on revolving credit facility
   —       (55,000)
Principal payments on capital lease obligations
   (102)    (94)




Net cash used in financing activities
   (102)    (55,094)




Net decrease in cash and cash equivalents
   (50,328)    (71,795)
Cash and cash equivalents, beginning of period
   275,249    223,258




Cash and cash equivalents, end of period
   $ 224,921    $ 151,463




Supplemental cash flow information:

Income taxes paid
   $ 45,203    $ 73,720
Interest paid
   $ 458    $ 1,161
Non-cash investing and financing transactions:

Capital expenditures in accounts payable
   $ 3,063    $ 4,075
Regular quarterly dividends payable
   $ 20,595    $ 19,497


	Three Months Ended October 31, 2019
	2019		2018
Cash flows from operating activities:
Net income	$	51,845	$	13,953
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation	25,914		10,467
Amortization of intangibles	24,293		12,591
Amortization of debt issuance costs	2,685		393
Foreign currency forward contract loss	—		42,555
Deferred income tax provision (benefit)	2,318		(751)
(Gain) loss on disposition of property, plant and equipment	619		(30)
Stock-based compensation expense	5,013		4,530
Changes in assets and liabilities:
Accounts receivable	(65,307)		(16,556)
Inventories	(82,152)		(27,437)
Prepaid income taxes, expenses and other	6,649		(17,011)
Accounts payable	19,639		(29,150)

Accrued liabilities	(46,593)		(10,218)
Long-term liabilities and other	3,080		830
Net cash used in operating activities	(51,997)		(15,834)
Cash flows from investing activities:
Purchases of property, plant and equipment	(31,220)		(34,453)
Proceeds from dispositions of property, plant and equipment	18,951		61



Other	(1,534)		—
Net cash used in investing activities	(13,803)		(34,392)
Cash flows from financing activities:

Borrowings on revolving asset-based credit facilities	41,569		—
Principal payments on term-loan credit facilities	(140,181)		—
Principal payments on revolving asset-based credit facilities	(5,577)		—

Principal payments on other debt	(3,001)		—


Principal payments on finance lease obligations	(107)		(102)

Short-term financing and other	(7,477)		—
Net cash used in financing activities	(114,774)		(102)
Effect of exchange rate changes on cash and cash equivalents and restricted cash	(206)		—
Net decrease in cash and cash equivalents and restricted cash	(180,780)		(50,328)
Cash and cash equivalents and restricted cash, beginning of period	451,262		275,249
Cash and cash equivalents and restricted cash, end of period	270,482		224,921
Less: restricted cash	38,704		—
Cash and cash equivalents, end of period	$	231,778	$	224,921
Supplemental cash flow information:
Income taxes paid	$	24,512	$	45,203
Interest paid	$	25,592	$	458
Non-cash investing and financing transactions:
Capital expenditures in accounts payable	$	3,137	$	3,063
Regular quarterly dividends payable	$	22,080	$	20,595

See Notes to the Condensed Consolidated Financial Statements.

THOR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED OCTOBER 31, 2019 AND 2018 (UNAUDITED)
Three Months Ended October 31, 2019
Accumulated Stockholders'
Additional Other Equity Non- Total
Common Stock Paid-In Retained Comprehensive Treasury Stock Attributable controlling Stockholders'
Shares Amount Capital Earnings Income (Loss) Shares Amount to Thor Interests Equity
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 — — — 51,065 — — — 51,065 780 51,845
Restricted stock unit activity 206,624 21 1,436 — — 71,341 (3,763) (2,306) — (2,306)
Cash dividends $.40 per common share — — — (22,080) — — — (22,080) — (22,080)
Stock compensation expense — — 5,013 — — — — 5,013 — 5,013
Other comprehensive loss — — — — (2,587) — — (2,587) (142) (2,729)
Balance at October 31, 2019 65,396,531 $ 6,540 $ 422,831 $ 2,095,659 $ (59,591) 10,197,775 $ (351,909) $ 2,113,530 $ 11,441 $ 2,124,971

Three Months Ended October 31, 2018
Accumulated Stockholders'
Additional Other Equity Non- Total
Common Stock Paid-In Retained Comprehensive Treasury Stock Attributable controlling Stockholders'
Shares Amount Capital Earnings Income (Loss) Shares Amount to Thor Interests Equity
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 — — — 13,953 — — — 13,953 — 13,953
Restricted stock unit activity 167,591 16 2,569 — — 55,975 (4,418) (1,833) — (1,833)
Cash dividends $.39 per common share — — — (20,595) — — — (20,595) — (20,595)
Stock compensation expense — — 4,530 — — — — 4,530 — 4,530
Cumulative effect of adoption of
ASU no. 2014-09, net of tax — — — (5,450) — — — (5,450) — (5,450)
Balance at October 31, 2018 62,933,415 $ 6,293 $ 259,303 $ 2,010,896 $ — 10,126,434 $ (348,146) $ 1,928,346 $ — $ 1,928,346

See Notes to the Condensed Consolidated Financial Statements.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(All ~~dollar~~Dollar, Euro and GBP amounts presented in thousands except share and per share ~~data)~~

1.	~~Nature of Operations and Accounting Policies~~

data or except as otherwise specified)

1. Nature of Operations

and Accounting Policies

Nature of Operations

Thor Industries, Inc. was founded in 1980 and ~~through its~~is the sole owner of operating subsidiaries (collectively, the “Company” or "Thor"), ~~currently manufactures a wide range~~that, combined, represent the world's largest manufacturer of recreational vehicles (“RVs”) ~~at various manufacturing facilities located~~. The Company manufactures a wide variety of RVs in the United States and Europe and sells those vehicles, as well as related parts and accessories, primarily ~~in Indiana, with additional facilities in Ohio, Oregon, Idaho and Michigan. These products are sold~~ to independent,non-franchise dealers ~~primarily~~ throughout the United States, Canada and Canada. As discussed in more detail in Note 16 to the Condensed Consolidated Financial Statements, on September 18, 2018, the Company entered into a definitive agreement to acquire the Erwin Hymer Group SE (“Erwin Hymer Group”), the largest RV manufacturer in Europe by revenue.Europe. Unless the context requires or indicates otherwise, all references to “Thor,” the “Company,” “we,” “our” and “us” refer to Thor Industries, Inc. and its subsidiaries.

The July 31, ~~2018~~2019 amounts are derived from the annual audited financial ~~statements.~~statements of Thor. The interim financial statements are unaudited. In the opinion of management, all adjustments (which consist of normal, recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented have been made. These financial statements should be read in conjunction with the Company’s Annual Report on Form10-K for the fiscal year ended July 31, ~~2018.~~2019. Due to seasonality within the recreational vehicle industry, among other factors, annualizing the results of operations for the three months ended October 31, ~~2018~~2019 would not necessarily be indicative of the results expected for athe full fiscal year.

~~Adoption~~

Recently Adopted Accounting Standards

In February 2016, 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 ~~Revenue Recognition Accounting~~leases. The New Leasing Standard

~~In May 2014,~~ requires the ~~Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)No. 2014-09,~~ ~~“Revenue~~recognition of lease assets and lease liabilities by lessees for all leases with terms greater than 12 months. The principal difference from ~~Contracts with Customers (Topic 606),” which outlines a single comprehensive model for entities to use in accounting for revenue~~prior guidance is that the lease assets and lease liabilities arising from ~~contracts with customers.~~

operating leases are now recognized on the Condensed Consolidated Balance Sheet. The New Leasing Standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company adopted ~~ASUNo. 2014-09,~~ ~~and all~~ the ~~related amendments, as of~~New Leasing Standard on August 1, ~~2018, using~~2019. The Company elected the ~~modified retrospective~~optional transition method ~~related to all contracts~~ as well as the available package of practical expedients. As a result, the ~~date of adoption. The cumulative effect of~~Company recognized right-of-use assets and the ~~adoption was recognized as an increase to accrued promotions and rebates of $7,127, an increase of $1,677 in deferred income tax assets, net and a $5,450net-of-tax~~ ~~decrease to retained earnings as of August 1, 2018~~associated lease obligations, both totaling approximately $33 million, on the Condensed Consolidated Balance Sheet ~~and~~ as ~~reflected in Note 14~~of August 1, 2019. The adoption did not have a material impact to the Condensed Consolidated ~~Financial Statements. As~~Statements of Income and ~~for the three months ended October 31, 2018, accrued promotions and rebates increased $733 on apre-tax~~ ~~basis and Net sales were reduced by the same amount as a result of the application of this new standard. The comparative financial statements for prior periods have not been adjusted.~~

The adoption impact is a result of a change in the accounting for certain sales incentives, which were historically recorded as a reduction of revenue at the later of the time products were sold or the date the incentive was offered. Upon adoption of ASU~~No. 2014-09,~~ these incentives are now estimated and recorded at the time of sale, which is primarily upon shipment to customers. This new standard only changes the timing of when these sales incentives are recognized, and does not change the total amount of revenue recognized. The Company did not elect to separately evaluate contract modifications occurring before the adoption date.Comprehensive Income. See Note ~~17 to the Condensed Consolidated Financial Statements~~16 for further ~~discussion of~~disclosures about the ~~Company’s revenue recognition policies and practices.~~

Company's leases.

Other Accounting ~~Pronouncements~~Standards Not Yet Adopted

In January 2017, the FASB issued ASUNo. 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. This 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. This ASU is effective for the Company in its fiscal year 2021 beginning on August 1, 2020. The Company is currently evaluating the impact of this ASU on its consolidated financial statements, which will depend on the outcomes of future goodwill impairment tests.

2. Acquisition — Erwin Hymer Group

On February 1, 2019, the Company acquired Erwin Hymer Group SE ("EHG"). EHG is headquartered in Bad Waldsee, Germany, and is one of the largest RV manufacturers in Europe. EHG is managed as a stand-alone operating entity and is included in the European recreational vehicle segment.

In ~~February 2016,~~ the ~~FASB issued ASUNo. 2016-02,~~ ~~“Leases (Topic 842),” which provides guidance on~~first quarter of fiscal 2020, the ~~recognition,~~Company made measurement ~~presentation,~~period adjustments primarily related to the estimated fair value of certain deferred tax assets to better reflect the facts and ~~disclosure of leases. ASUNo. 2016-02~~ ~~requires~~circumstances that existed at the ~~recognition of lease~~acquisition date. These adjustments resulted in a net decrease in deferred tax assets and ~~lease~~a net increase of goodwill of $3,054.

The following table summarizes the estimated fair values of the EHG assets acquired and liabilities ~~by lessees for all leases with terms greater than 12 months. The principal difference from current guidance is that~~assumed at 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. This ASU is effective for the Company in its fiscal year 2020 beginning on August 1, 2019.acquisition date. The Company is ~~currently evaluating~~in the ~~impact~~process of finalizing internal and third-party valuations of tangible and intangible assets and certain liabilities, therefore, the provisional estimates of intangible assets, fixed assets, goodwill, deferred income tax liabilities, income taxes payable and certain accrued liabilities are subject to change. The Company expects to finalize these values in the Company's fiscal quarter ending January 31, 2020.


Cash	$	97,887
Inventory	593,053
Other assets	426,096
Property, plant and equipment, rental vehicles	80,132
Property, plant and equipment	447,621
Amortizable intangible assets:
Dealer network	355,601
Trademarks	126,181
Technology assets	183,536
Backlog	11,471
Goodwill	1,011,526
Guarantee liabilities related to former EHG North American subsidiaries	(115,668)
Other current liabilities	(850,623)
Debt – Unsecured notes	(114,710)
Debt – Other	(166,196)
Deferred income tax liabilities	(155,863)
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

On the acquisition date, amortizable intangible assets had a weighted-average useful life of 17 years. The dealer network was valued based on the Discounted Cash Flow method and is amortized on an accelerated basis over 20 years. The trademarks and technology assets were valued on the Relief of Royalty method and are amortized on a straight-line basis over 20 years and 10 years, respectively. The backlog was valued based on the Discounted Cash Flow method and was amortized on a straight-line basis over a five-month period. We have recognized $1,011,526 of goodwill as a result of this transaction, of which approximately $242,000 will be deductible for tax purposes.

The following unaudited pro forma information represents the Company’s results of operations as if the fiscal 2019 acquisition of EHG had occurred at the beginning of fiscal 2018. These performance results may not be indicative of the actual results that ~~implementing~~would have occurred under the ownership and management of the Company.


	Three Months Ended October 31,
		2018
Net sales		$	2,327,268
Net income		$	22,461
Basic earnings per common share		$	0.41
Diluted earnings per common share		$	0.41

The supplemental pro forma earnings for the three-month period ended October 31, 2018 were adjusted to exclude $57,089 of acquisition-related costs as discussed below.

Costs incurred during the three months ended October 31, 2018 related specifically to this ~~ASU will have on its consolidated~~acquisition totaling $57,089 are included in Acquisition-related costs in the Condensed Consolidated Statements of Income and Comprehensive Income. These costs included the change in the fair value of the foreign currency forward contract of $42,555 discussed in Note 5 below, and $14,534 of other expenses, consisting primarily of legal, professional and advisory fees related to financial ~~statements.~~

2.	~~Business Segments~~

due diligence and preliminary implementation costs, rating agency fees related to obtaining financing commitments and regulatory review costs.

3. Business Segments

The Company has ~~two~~3 reportable segments, ~~both~~all related to recreational vehicles: (1) North American towables, ~~and~~ (2) motorized. The towable recreational vehicle reportable segment consists of the following operating segments that have been aggregated: Airstream (towable), Heartland (including Bison, Cruiser RV and DRV), Jayco (including Jayco towable, Starcraft and Highland Ridge), Keystone (including CrossRoads and Dutchmen) and KZ (including Venture RV). The motorized recreational vehicle reportable segment consists of the following operating segments that have been aggregated: Airstream (motorized), Jayco (including JaycoNorth American motorized and ~~Entegra Coach) and Thor Motor Coach.~~

(3) European.

The ~~operations of the Company’s Postle subsidiary are included in “Other,” which is anon-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 towable and motorized segments, which are consummated at established transfer prices generally consistent with the selling prices of extrusion components to third-party customers.

~~All manufacturing is currently conducted within the United States. Total assets include those assets used in the operation of each~~following tables reflect certain financial information by reportable ~~andnon-reportable~~ segment, and the Corporate assets consist primarily of cash and cash equivalents, deferred income taxes, deferred compensation plan assets and certain Corporate real estate holdings primarily utilized by Thor operating subsidiaries.

   Three Months Ended
October 31,
Net sales:    2018    2017
Recreational vehicles

Towables
   $ 1,279,098    $ 1,618,501
Motorized
   431,198    566,611




Total recreational vehicles
   1,710,296    2,185,112
Other
   73,848    82,919
Intercompany eliminations
   (28,168 )    (36,363 )




Total
   $ 1,755,976    $ 2,231,668




   Three Months Ended
October 31,
Income (loss) before income taxes:    2018    2017
Recreational vehicles

Towables
   $ 74,550    $ 158,851
Motorized
   21,712    37,586




Total recreational vehicles
   96,262    196,437
Other, net
   5,910    8,483
Corporate
   (70,655 )    (17,829 )




Total
   $ 31,517    $ 187,091




Total assets:    October 31, 2018    July 31, 2018
Recreational vehicles

Towables
   $ 1,682,272    $ 1,654,361
Motorized
   506,706    492,830




Total recreational vehicles
   2,188,978    2,147,191
Other, net
   174,151    167,965
Corporate
   437,299    463,509




Total
   $ 2,800,428    $ 2,778,665

segment:


	Three Months Ended October 31,
NET SALES:	2019		2018
Recreational vehicles
North American Towables	$	1,200,888	$	1,279,098
North American Motorized	415,889		431,198
Total North America	1,616,777		1,710,296
European	493,007		—
Total recreational vehicles	2,109,784		1,710,296
Other	73,566		73,848
Intercompany eliminations	(24,565)		(28,168)
Total	$	2,158,785	$	1,755,976


	Three Months Ended October 31,
INCOME (LOSS) BEFORE INCOME TAXES:	2019		2018
Recreational vehicles
North American Towables	$	104,322	$	74,550
North American Motorized	21,775		21,712
Total North America	126,097		96,262
European	(23,024)		—
Total recreational vehicles	103,073		96,262
Other, net	11,751		5,910
Corporate	(46,190)		(70,655)
Total	$	68,634	$	31,517


TOTAL ASSETS:	October 31, 2019		July 31, 2019
Recreational vehicles
North American Towables	$	1,582,250	$	1,516,519
North American Motorized	476,786		446,626
Total North America	2,059,036		1,963,145
European	3,028,821		3,077,804
Total recreational vehicles	5,087,857		5,040,949
Other, net	166,271		163,897
Corporate	353,413		455,600
Total	$	5,607,541	$	5,660,446

   Three Months Ended
October 31,
Depreciation and intangible amortization expense:    2018    2017
Recreational vehicles

Towables
   $ 16,631    $ 16,793
Motorized
   3,436    2,728




Total recreational vehicles
   20,067    19,521
Other
   2,574    2,809
Corporate
   417    368




Total
   $ 23,058    $ 22,698




   Three Months Ended
October 31,
Capital acquisitions:    2018    2017
Recreational vehicles

Towables
   $ 22,242    $ 17,592
Motorized
   7,419    12,315




Total recreational vehicles
   29,661    29,907
Other
   2,444    610
Corporate
   36    1575




Total
   $ 32,141    $ 32,092

3.	~~Earnings Per Common Share~~


	Three Months Ended October 31,
DEPRECIATION AND INTANGIBLE AMORTIZATION EXPENSE:	2019		2018
Recreational vehicles
North American Towables	$	16,271	$	16,631
North American Motorized	3,494		3,436
Total North America	19,765		20,067
European	27,483		—
Total recreational vehicles	47,248		20,067
Other	2,511		2,574
Corporate	448		417
Total	$	50,207	$	23,058


	Three Months Ended October 31,
CAPITAL ACQUISITIONS:	2019		2018
Recreational vehicles
North American Towables	$	11,275	$	22,242
North American Motorized	2,568		7,419
Total North America	13,843		29,661
European	15,027		—
Total recreational vehicles	28,870		29,661
Other	655		2,444
Corporate	498		36
Total	$	30,023	$	32,141

4. Earnings Per Common Share

The following table reflects the weighted-average common shares used to compute basic and diluted earnings per common share as included on the Condensed Consolidated Statements of Income and Comprehensive Income:

   Three Months Ended
October 31,
   2018    2017
Weighted-average shares outstanding for basic earnings per share
   52,726,496    52,611,926
Unvested restricted stock units
   173,107    206,437




Weighted-average shares outstanding assuming dilution
   52,899,603    52,818,363


	Three Months Ended October 31,
	2019	2018
Weighted-average shares outstanding for basic earnings per share	55,095,074	52,726,496
Unvested restricted stock units	129,581	173,107
Weighted-average shares outstanding assuming dilution	55,224,655	52,899,603

At October 31, ~~2018~~2019 and ~~2017,~~2018, the Company had ~~152,279~~266,699 and ~~46,692~~152,279 unvested restricted stock units outstanding, respectively, which were excluded from this calculation as their effect would be antidilutive.

4.	~~Investments and Fair Value Measurements~~

5. Derivatives and Hedging

The Company ~~assesses~~uses interest rate swap agreements, foreign currency forward contracts and certain non-derivative financial instruments to manage its risks associated with foreign currency exchange rates and interest rates. The Company does not hold derivative financial instruments of a speculative nature or for trading purposes. The Company records derivatives as assets and liabilities on the ~~inputs used to measure~~balance sheet at fair value. Changes in the fair value of derivative instruments are recognized in earnings unless the derivative qualifies and is designated as a hedge. Cash flows from derivatives are classified in the Condensed Consolidated Statements of Cash Flows in the same category as the cash flows from the items subject to designated hedge or undesignated (economic) hedge relationships. The Company evaluates hedge effectiveness at inception and on an ongoing basis. If a derivative is no longer expected to be effective, hedge accounting is discontinued.

Certain of the Company’s derivative transactions are subject to master netting arrangements that allow the Company to net settle 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.

The fair value of our derivative instruments and the associated notional amounts, presented on a pre-tax basis, were as follows:


	October 31, 2019						July 31, 2019
			Fair Value in					Fair Value in
			Other Current					Other Current
Cash Flow Hedges	Notional		Liabilities		Notional			Liabilities
Foreign currency forward contracts	$	51,799	$	729	$	—		$	—
Interest rate swap agreements	798,200		16,641		849,550			12,463
Total derivative financial instruments	$	849,999	$	17,370	$	849,550		$	12,463

The Company did not have any designated hedge instruments prior to February 1, 2019.

Cash Flow Hedges

The Company utilizes foreign currency forward contracts to hedge the effect of certain foreign currency exchange rate fluctuations on forecasted foreign currency transactions, including foreign currency denominated sales. These forward contracts are designated as cash flow hedges. The changes in fair value of these contracts are recorded in accumulated other comprehensive income (“AOCI”) until the hedged items affect earnings, at which time the gain or loss is reclassified into the same line item in the determination of net income as the underlying exposure being hedged. Cash flow hedged forward contracts impacting AOCI are forecasted to occur over the next eight months.

The Company has entered into interest rate swap agreements to manage certain of its interest rate exposures. During fiscal 2019, the Company entered into pay-fixed, receive-floating interest rate swap agreements, totaling $900,000 in initial value, in order to hedge against interest rate risk relating to the Company’s floating rate debt agreements. The $900,000 in initial value declines quarterly over the initial 4.5 year term of the swaps. The interest rate swaps are designated as cash flow hedges of the expected interest payments related to the Company’s LIBOR-based floating rate debt. Amounts initially recorded in AOCI will be reclassified to interest expense over the remaining life of the debt as the forecasted interest transactions occur.

Net Investment Hedges

The Company designates a portion of its outstanding Euro-denominated term loan tranche as a hedge of foreign currency exposures related to investments the Company has in certain Euro-denominated functional currency subsidiaries.

The foreign currency transaction gains and losses on the Euro-denominated portion of the term loan, which is designated and effective as a hedge of the Company’s net investment in its Euro-denominated functional currency subsidiaries, are included as a component of the foreign currency translation adjustment. Losses included in the foreign currency translation adjustment for the three-month period ended October 31, 2019 were $1,254, net of tax.

There were 0 amounts reclassified out of AOCI pertaining to the net investment hedge during the three months ended October 31, 2019.

Derivatives Not Designated as Hedging Instruments

On September 18, 2018, the Company entered into a definitive agreement to acquire EHG, which was later amended as of the February 1, 2019 closing date. The cash portion of the purchase price was denominated in Euro, and therefore the Company’s cash flows were exposed to changes in the Euro/USD exchange rate between the September 18, 2018 agreement date and the closing date.

To reduce its exposure, the Company entered into a deal-contingent, foreign currency forward contract on the September 18, 2018 agreement date in the amount of 1.625 billion Euro. Hedge accounting was not applied to this instrument, and therefore all changes in fair value were recorded in earnings.

This contract was settled in connection with the close of the EHG acquisition on February 1, 2019 in the amount of $70,777, resulting in a loss of the same amount. Of this $70,777 total loss, $42,555 was recognized in the three months ended October 31, 2018 and is included in Acquisition-related costs in the Condensed Consolidated Statements of Income and Comprehensive Income.

The Company also has certain other derivative instruments, with a notional amount totaling approximately $34,990 and a fair value of $1,330, included in Other current liabilities in the Condensed Consolidated Balance Sheet as of October 31, 2019, which have not been designated as hedges and therefore hedge accounting is not applied. For these derivative instruments, changes in fair value are recognized in earnings. The Company also had certain other derivative instruments, with a notional amount totaling approximately $35,700 and a fair value of $1,226, included in Other current liabilities in the Condensed Consolidated Balance Sheet as of July 31, 2019.

The total amounts presented in the Condensed Consolidated Statements of Income and Comprehensive Income due to changes in the fair value of the following derivative instruments are as follows:


	Three Months Ended
	October 31, 2019
Gain (Loss) on Derivatives Designated as Cash Flow Hedges

Gain (Loss) recognized in Other Comprehensive Income, net of tax
Foreign currency forward contracts	$	(525)
Interest rate swap agreements	(3,197)
Total gain (loss)	$	(3,722)

Three Months Ended

October 31, 2019

Interest

Expense

Gain (Loss) Reclassified from AOCI, Net of Tax

Foreign currency forward contracts

—

Interest rate swap agreements

(495)

Gain (Loss) on Derivatives Not Designated as Hedging Instruments

Amount of gain (loss) recognized in income, net of tax

Foreign currency forward contracts

—

Interest rate swap agreements

(75)

Total gain (loss)

(570)

Other than the deal-contingent foreign currency forward contract discussed above, there were no derivatives in place during the three-month period ended October 31, 2018.

6. Inventories

Major classifications of inventories are as follows:


	October 31, 2019		July 31, 2019
Finished goods – RV	$	267,200	$	230,483
Finished goods – other	56,847		60,593
Work in process	124,479		126,636
Raw materials	301,469		300,721
Chassis	211,034		155,099
Subtotal	961,029		873,532
Excess of FIFO costs over LIFO costs	(45,544)		(45,544)
Total inventories, net	$	915,485	$	827,988

Of the $961,029 and $873,532 of inventories at October 31, 2019 and July 31, 2019, $279,708 and $240,983, respectively, were valued on the last-in, first-out (LIFO) basis, and $681,321 and $632,549, respectively, were valued on the first-in, first-out (FIFO) method.

7. Property, Plant and Equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation, and consists of the following:


	October 31, 2019		July 31, 2019
Land	$	131,066	$	142,475
Buildings and improvements	741,722		742,736
Machinery and equipment	403,183		389,666
Rental vehicles	76,751		87,243
Lease right-of-use assets - operating	32,008		—
Lease right-of-use assets - finance	4,079		—
Total cost	1,388,809		1,362,120
Less accumulated depreciation	(284,045)		(269,649)
Property, plant and equipment, net	$	1,104,764	$	1,092,471

See Note 16 to the Condensed Consolidated Financial Statements for further information regarding the lease right-of-use assets.

8. Intangible Assets and Goodwill

The components of amortizable intangible assets are as follows:


	Weighted-Average
	Remaining	October 31, 2019						July 31, 2019
	Life in Years at			Accumulated				Accumulated
	October 31, 2019	Cost		Amortization		Cost		Amortization
Dealer networks/customer relationships	18	$	750,734	$	207,348	$	750,641	$	191,017
Trademarks	18	268,811		37,824		268,778		34,518
Design technology and other intangibles	9	196,664		24,456		196,616		19,689


Total amortizable intangible assets		$	1,216,209	$	269,628	$	1,216,035	$	245,224

Estimated future amortization expense is as follows:


For the remainder of the fiscal year ending July 31, 2020	$	72,951
For the fiscal year ending July 31, 2021	103,984
For the fiscal year ending July 31, 2022	107,549
For the fiscal year ending July 31, 2023	88,066
For the fiscal year ending July 31, 2024	79,602
For the fiscal year ending July 31, 2025 and thereafter	494,429
	$	946,581

Changes in the carrying amount of goodwill by reportable segment for the three months ended October 31, 2019 are summarized as follows:


	North American Towables		North American Motorized		European		Other		Total
Net balance as of July 31, 2019	$	334,822	$	—	$	980,339	$	42,871	$	1,358,032
Fiscal 2020 activity:
Measurement period adjustments	—		—		3,054		—		3,054
Foreign currency translation	—		—		179		—		179
Net balance as of October 31, 2019	$	334,822	$	—	$	983,572	$	42,871	$	1,361,265

Changes in the carrying amount of goodwill by reportable segment for the three months ended October 31, 2018 are summarized as follows:


	North American Towables		North American Motorized		European		Other		Total
Net balance as of July 31, 2018	$	334,822	$	—	$	—	$	42,871	$	377,693
Fiscal 2019 activity:
No activity	—		—		—		—		—
Net balance as of October 31, 2018	$	334,822	$	—	$	—	$	42,871	$	377,693

9. Equity Investment

As discussed in the Company's Fiscal 2019 Form 10-K, in February 2018, the Company formed a joint venture with Tourism Holdings Limited ("thl") called TH2connect, LLC ("TH2"). In July 2019, TH2 was rebranded as "Togo Group."

The Company’s investment in TH2 is accounted for under the equity method of accounting. The Company’s share of the losses of this investment are included in Other income (expense), net in the Condensed Consolidated Statements of Income and Comprehensive Income. The losses recognized in the three-month periods ended October 31, 2019 and October 31, 2018 were $2,095 and $1,483, respectively.

In accordance with the operating agreements between the parties, both thl and the Company will fund TH2's future working capital needs proportionately, and each loaned TH2 $1,534 during the three months ended October 31, 2019. The Company had total loans outstanding with TH2 of $3,691 and $2,157 at October 31, 2019 and July 31, 2019, respectively, and those amounts are included in Other assets on the Condensed Consolidated Balance Sheets.

10. Concentration of Risk

One dealer, FreedomRoads, LLC, accounted for 15% and 24% of the Company's consolidated net sales for the three-month periods ended October 31, 2019 and October 31, 2018, respectively. Sales to this dealer are reported within both the North American towables and North American motorized segments. This dealer also accounted for 17% of the Company’s consolidated trade accounts receivable at October 31, 2019 and 19% at July 31, 2019. The loss of this dealer could have a material effect on the Company’s business.

11. Fair Value Measurements

The financial assets and liabilities using a three-level hierarchy as prescribed in ASC 820, “Fair Value Measurements and Disclosures,” and as discussed in Note 10 in the Notes to the Consolidated Financial Statements in our fiscal 2018 Form~~10-K.~~

~~The financial assets~~ that were accounted for at fair value on a recurring basis at October 31, ~~2018~~2019 and July 31, ~~2018~~2019 are as follows:

   Input Level    October 31, 2018    July 31, 2018
Cash equivalents
   Level 1    $ 181,235    $ 230,319
Deferred compensation plan assets and liabilities
   Level 1    $ 43,275    $ 43,316
Foreign currency forward contract liability
   Level 3    $ 42,555    $ —


	Input Level	October 31, 2019		July 31, 2019
Cash equivalents	Level 1	$	90,229	$	130,100

Deferred compensation plan assets and liabilities	Level 1	$	55,954	$	53,828
Foreign currency forward contract liability	Level 2	$	729	$	—
Interest rate swap liability	Level 2	$	16,641	$	12,463

Cash equivalents represent investments in government and other money market funds traded in an active market, and are reported as a component of Cash and cash equivalents in the Condensed Consolidated Balance Sheets.

The Company considers cash of 23,000 Euro ($25,654) that is pledged as collateral against certain revolving debt obligations related to its European rental fleet operations to be restricted cash. Additionally, cash of 11,700 Euro ($13,050) is restricted pending collateral modification of certain debt.

Deferred compensation plan assets represent 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 compensation plan asset balances are recorded as a component of Other long-term assets in the Condensed Consolidated Balance Sheets. An equal and offsetting liability is also recorded in regards to the deferred compensation plan as a component of Other long-term liabilities in the Condensed Consolidated Balance Sheets. Changes in the fair value of the plan assets and the related ~~liability~~liabilities are reflected in Other income (expense), net and Selling, general and administrative expenses, respectively, in the Condensed Consolidated Statements of Income and Comprehensive Income.

~~See Note 15~~

Foreign currency forward contracts outstanding at October 31, 2019 are used to exchange Pounds Sterling ("GBP") for Euro. The total notional value of these contracts at October 31, 2019 is 40,000 GBP ($51,799), and these contracts have various maturity dates through June 2020.

The Company entered into interest rate swaps to convert a portion of the Company's long-term debt from floating rate to fixed rate debt. As of October 31, 2019, the outstanding swaps had notional contract values of $798,200, partially hedging the interest rate risk related to the ~~Condensed Consolidated Financial Statements for a discussion~~Company's U.S. dollar term loan tranche that matures in February 2026.

The fair value of ~~the~~ foreign currency forward contracts is estimated by discounting the difference between the contractual forward price and the current available forward price for the residual maturity of the contract ~~liability, including further information as to~~using observable market rates. The fair value of interest rate swaps is calculated by discounting the ~~inputs used to determine fair value.~~

5.	~~Inventories~~

~~Major classifications of inventories are as follows:~~

   October 31, 2018    July 31, 2018
Finished goods – RV
   $ 92,990    $ 44,998
Finished goods – other
   26,059    35,320
Work in process
   120,844    124,703
Raw materials
   262,318    258,429
Chassis
   106,684    116,308




Subtotal
   608,895    579,758
Excess of FIFO costs over LIFO costs
   (43,549 )    (41,849 )




Total inventories, net
   $ 565,346    $ 537,909

~~Of the $608,895 and $579,758 of inventories at October 31, 2018 and July 31, 2018, $311,120 and $305,990, respectively, was valued~~estimated future cash flows based on the~~last-in,first-out~~ ~~(LIFO) basis, and $297,775 and $273,768, respectively, was valued on thefirst-in,first-out~~ ~~(FIFO) method.~~

applicable observable yield curves.

6.	~~Property, Plant and Equipment~~

~~Property, plant and equipment is stated at cost, net of accumulated depreciation, and consists of the following:~~

   October 31, 2018    July 31, 2018
Land
   $ 61,738    $ 57,413
Buildings and improvements
   487,865    468,824
Machinery and equipment
   205,533    197,294




Total cost
   755,136    723,531
Less accumulated depreciation
   (211,439 )    (201,477 )




Property, plant and equipment, net
   $ 543,697    $ 522,054

Property, plant and equipment at both October 31, 2018 and July 31, 2018 includes buildings and improvements under capital leases of $6,527 and related amortization included in accumulated depreciation of $1,904 and $1,768 at October 31, 2018 and July 31, 2018, respectively.

7.	~~Intangible Assets and Goodwill~~

~~The components of amortizable intangible assets are as follows:~~

   Weighted-Average
   Remaining    October 31, 2018    July 31, 2018
   Life in Years at    Cost    Accumulated    Cost    Accumulated
   October 31, 2018    Amortization    Amortization
Dealer networks/customer relationships
   15    $ 404,960    $ 157,571    $ 404,960    $ 147,077
Trademarks
   17    146,117    26,136    146,117    24,364
Design technology and other intangibles
   7    18,200    9,858    18,200    9,555
Non-compete agreements
   1    450    405    450    383








Total amortizable intangible assets
      $     569,727    $ 193,970    $     569,727    $ 181,379

~~Estimated annual amortization expense is as follows:~~

For the fiscal year ending July 31, 2019
   $ 50,043
For the fiscal year ending July 31, 2020
   46,194
For the fiscal year ending July 31, 2021
   42,860
For the fiscal year ending July 31, 2022
   37,753
For the fiscal year ending July 31, 2023
   30,291
For the fiscal year ending July 31, 2024 and thereafter
   181,207


   $ 388,348

~~Of the recorded goodwill of $377,693 at both October 31, 2018 and July 31, 2018, $334,822 relates to the towable recreational vehicle reportable segment and $42,871 relates to the Othernon-reportable~~ ~~segment.~~

8.	~~Equity Investment~~

12. Product Warranties

As discussed in the ~~Company’s fiscal 2018~~Company's Fiscal 2019 Form10-K, ~~in February 2018, the Company formed a joint venture with Tourism Holdings Limited (“~~~~thl~~~~”) called TH2connect, LLC (“TH2”).~~

The Company’s investment in TH2 is accounted for under the equity method of accounting. The Company’s share of the losses of this investment, which are included in its operating results for the three months ended October 31, 2018, was $1,483 and is included in Other income (expense), net in the Condensed Consolidated Statements of Income and Comprehensive Income.

9.	~~Concentration of Risk~~

One dealer, FreedomRoads, LLC, accounted for 24% and 23% of the Company’s consolidated net sales for the three-month periods ended October 31, 2018 and October 31, 2017, respectively. Sales to this dealer are reported within both the towables and motorized segments. This dealer also accounted for 24% of the Company’s consolidated trade accounts receivable at October 31, 2018 and 26% at July 31, 2018. The loss of this dealer could have a material effect on the Company’s business.

~~10.~~

~~Product Warranties~~

~~As discussed in the Company’s fiscal 2018 Form10-K,~~ the Company generally provides retail customers of its products with a~~one-year~~one-year or~~two-year~~two-year warranty covering defects in material or workmanship, with longer warranties on certain structural components.

Changes in our product warranty ~~liabilities~~liability during the indicated periods are as follows:

   Three Months Ended
October 31,
   2018    2017
Beginning balance
   $ 264,928    $ 216,781
Provision
   69,767    63,833
Payments
   (62,946 )    (48,615 )




Ending balance
   $ 271,749    $ 231,999


	Three Months Ended October 31,
	2019		2018
Beginning balance	$	289,679	$	264,928
Provision	60,209		69,767
Payments	(64,593)		(62,946)

Foreign currency translation	305		—
Ending balance	$	285,600	$	271,749

~~11.~~

~~Long-Term Debt~~

13. Long-Term Debt

The components of long-term debt are as follows:


	October 31, 2019		July 31, 2019
Term loan	$	1,692,337	$	1,832,341
Asset-based credit facility	36,808		—
Unsecured notes	27,885		27,878
Other debt	91,124		94,124
Gross long-term debt	1,848,154		1,954,343
Debt issuance costs, net of amortization	(49,735)		(51,720)
Total long-term debt, net of debt issuance costs	1,798,419		1,902,623
Less: current portion of long-term debt	(18,328)		(17,370)
Total long-term debt, net, less current portion	$	1,780,091	$	1,885,253

On February 1, 2019, the Company ~~has~~entered into a ~~five-year credit~~seven-year term loan (“term loan”) agreement, which ~~was entered into on June 30, 2016~~consists of both a United States Dollar-denominated term loan tranche and a Euro-denominated term loan tranche, and a $750,000 revolving asset-based credit facility (“ABL”). Subject to earlier termination, the term loan matures on ~~June 30, 2021.~~February 1, 2026 and the ABL matures on February 1, 2024. See Note 12 ~~in the Notes~~ to the Consolidated Financial Statements in our ~~fiscal 2018~~Fiscal 2019 Form10-K for details regarding the ~~credit agreement. There were no borrowings outstanding under this facility at~~term loan and the asset-based facility.

As of October 31, ~~2018 or~~2019, the entire outstanding U.S. term loan tranche balance of $1,008,502 was subject to a LIBOR-based rate totaling 5.8125%, but the interest rate on $798,200 of that balance was fixed at 6.2160% through an interest rate swap by swapping the underlying 1-month LIBOR rate for a fixed rate of 2.4660%. As of July 31, ~~2018,~~2019, the entire outstanding U.S. term loan tranche balance of $1,146,968 was subject to a LIBOR-base rate of 6.1875%, but the interest rate on $849,550 of that balance was fixed at 6.2160% through an interest rate swap by swapping the underlying 1-month LIBOR rate for a fixed rate of 2.4660%. The total interest rate on both the October 31, 2019 and July 31, 2019 outstanding Euro term loan tranche balance of $683,835 and $685,373, respectively, was 4.00%. In addition, the Company must make mandatory prepayments of principal under the term loan agreement upon the occurrence of certain specified events, including certain asset sales, debt issuances and receipt of annual cash flows in excess of certain amounts. No such specified events occurred during the three months ended October 31, 2019.

As of October 31, 2019, the total interest rate on the outstanding ABL borrowings of $36,808 was 1.25%. The ABL 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 ~~during~~and from time to time, without premium or penalty.

The unused availability under the ABL is generally available to the Company for general operating purposes and, based on October 31, 2019 eligible accounts receivable and inventory balances, totaled approximately $668,000.

The unsecured notes of 25,000 Euro ($27,885) relate to long-term debt assumed at the closing of the acquisition of EHG. There are two series, 20,000 Euro ($22,308) with an interest rate of 1.945% maturing in March 2025, and 5,000 Euro ($5,577) with an interest rate of 2.534% maturing February 2028. Other debt relates primarily to real estate loans with varying maturity dates through September 2032 and interest rates ranging from 1.40% - 3.43%.

Total contractual gross debt maturities are as follows:


For the remainder of the fiscal year ending July 31, 2020	$	14,252
For the fiscal year ending July 31, 2021	19,528
For the fiscal year ending July 31, 2022	18,245
For the fiscal year ending July 31, 2023	18,363
For the fiscal year ending July 31, 2024	55,252
For the fiscal year ending July 31, 2025 and thereafter	1,722,514
	$	1,848,154

For the three-month period ended October 31, ~~2018. As~~2019, interest expense on the term loan, ABL and other debt facilities was $24,349. The Company incurred fees to secure the term loan and ABL and those amounts are being amortized ratably over the respective seven and five-year terms of ~~October 31, 2018, the available and unused credit line under the revolver was $495,657, and the Company was in compliance with the financial covenant in the credit agreement.~~

those agreements. The Company recorded total charges related to the amortization of ~~the~~these term loan and ABL fees, ~~incurred to obtain this facility,~~ which are ~~classified as~~included in interest expense, of ~~$393~~$2,685 for ~~each of~~ the three-month ~~periods~~period ended October 31, ~~2018 and October 31, 2017.~~2019. The unamortized ~~balances~~balance of ~~these~~the ABL facility fees ~~were $4,186~~was $11,909 at October 31, ~~2018~~2019 and ~~$4,579 at~~$12,609 as of July 31, ~~2018,~~2019, and ~~are~~is included in Other long-term assets in the Condensed Consolidated Balance Sheets.

~~12.~~

~~Provision for Income Taxes~~

For the three-month period ended October 31, 2018, interest expense on bank debt was $729, and included $393 of amortized debt costs on the Company's previous asset-based credit agreement.

The carrying value of the Company’s long-term debt, excluding debt issuance costs, approximates fair value at October 31, 2019 as the balance is subject to variable market interest rates that the Company believes are market rates for a similarly situated Company. The fair value of the Company's debt is largely estimated using Level 2 inputs as defined by ASC 820.

14. Provision for Income Taxes

The overall effective income tax rate for the three months ended October 31, 2019 was 24.5%. The rate was favorably impacted by certain foreign rate differences which include certain interest income not subject to corporate income tax. This benefit was partially offset by additional income tax expense resulting from the vesting of share-based compensation awards during the three months ended October 31, 2019. The overall effective income tax rate for the three months ended October 31, 2018 was 55.7%. ~~This~~Included in this rate ~~includes~~was the ~~effect of the~~non-deductible foreign currency forward contract loss ~~as noted in Note 15 to the Condensed Consolidated Financial Statements, and the effects~~ of the enactment of the Tax Cuts and Jobs Act on December 22, 2017, which include, but are not limited to, a reduction in the US federal corporate income tax rate to 21.0%, the repeal of the domestic production deduction, additional limitations on the deductibility of interest expense and expanded limitations on the deductibility of executive compensation. Under current federal income tax law, the foreign currency forward contract is characterized$42,555 as ~~a component of the overall pending acquisition of the Erwin Hymer Group~~ discussed in Note 165 to the Condensed Consolidated Financial Statements. ~~As a result,~~Under federal income tax law, the ~~foreign currency forward contract~~ loss recognized for financial statement purposes is~~non-deductible~~was not deductible for federal income tax purposes.

Within the next 12 months, the Company anticipates a decrease of approximately ~~$2,300~~$3,800 in unrecognized tax benefits, and ~~$450~~$850 in accrued interest related to unrecognized tax benefits recorded as of October 31, ~~2018,~~2019, 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 through 2017 remain open for~~

The Company files income tax returns in the U.S. federal jurisdiction and in many U.S. state and foreign jurisdictions. For U.S. federal income tax purposes, ~~and~~ fiscal years ~~2013~~2016 through ~~2017~~2018 remain open ~~for~~and could be subject to examination. In major state and ~~Canadian income tax purposes.~~major foreign jurisdictions, fiscal years 2016 through 2018 generally remain open and could be subject to examination. The Company ~~recently completed an~~is currently under exam by ~~the State of Indiana~~certain U.S. state tax authorities for the fiscal years ended July 31, ~~2013~~2015 through ~~2015. A formal protest was submitted in response to the exam.~~2017. The Company believes it has adequately reserved for its exposure to additional payments for uncertain tax positions ~~related to its State of Indiana income tax returns~~ in its liability for unrecognized tax benefits.

~~13.~~

~~Contingent Liabilities, Commitments and Legal Matters~~

15. Contingent Liabilities, Commitments and Legal Matters

The Company’s total commercial commitments under standby repurchase obligations on global dealer inventory financing ~~as discussed in Note 14 to the Consolidated Financial Statements in our fiscal 2018 Form10-K,~~were ~~$2,622,560~~$2,848,310 and ~~$2,748,465~~$2,961,019 as of October 31, ~~2018~~2019 and July 31, ~~2018, respectively.~~2019. The commitment term is generally up to eighteen months.

~~As discussed in the Company’s fiscal 2018 Form10-K,~~ ~~the~~

The Company accounts for the guarantee under repurchase agreements of dealers’ financing by deferring a portion of the related product sale that represents the estimated fair value of the guarantee at inception. This deferred amount is included in the repurchase and guarantee reserve balances of ~~$7,232~~$8,888 and ~~$7,400~~$9,575 as of October 31, ~~2018~~2019 and July 31, ~~2018,~~2019, respectively, which are included in Other current liabilities in the Condensed Consolidated Balance Sheets.

Losses incurred related to repurchase agreements that were settled during the three-month periods ended October 31, ~~2018~~2019 and October 31, ~~2017~~2018 were not material. Based on current market conditions, the Company believes that any future losses under these agreements will not have a material effect on the Company’s consolidated financial position, results of operations or cash flows.

The Company is also involved in certain litigation arising out of its operations in the normal course of its business, most of which is based upon state “lemon 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. Based on current conditions, and 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.

16. Leases

On August 1, 2019, the Company adopted new accounting guidance under Accounting Standards Codification Topic 842 ("ASC 842") Leases. ASC 842 established new criteria for recognizing right-of-use assets and lease liabilities for operating lease arrangements. The Company elected to adopt this guidance utilizing the optional transition method that allowed the Company to implement this new guidance prospectively, and to only include the disclosures required under ASC 842 for the periods subsequent to adoption.

The Company has operating leases principally for land, buildings and equipment and also leases certain real estate under various finance leases expiring between calendar 2019 and 2028. Leases with an initial term of 12 months or fewer and which do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the term of the lease.

Certain of the Company's leases include options to extend or terminate the leases and these options have been included in the relevant lease term to the extent that they are reasonably certain to be exercised.

The Company has elected the practical expedient to not separate non-lease components from the lease components to which they relate, and instead account for each separate lease and non-lease component associated with that lease component as a single lease component for all underlying asset classes. Accordingly, all costs associated with a lease contract are accounted for as lease costs. Lease costs are recorded in Cost of products sold, Selling, general, and administrative expenses and Interest expense in the Condensed Consolidated Statements of Income and Comprehensive Income.

The Company does not include significant restrictions or covenants in our lease agreements, and residual value guarantees are not generally included within our operating leases.

The components of lease costs for the three-month period ended October 31, 2019 were as follows:

~~14.~~	~~Stockholders’ Equity~~
		Three Months Ended
		October 31, 2019
Operating lease cost		$	3,031
Finance lease cost
Amortization of right-of-use assets		136
Interest on lease liabilities		137
Total lease cost		$	3,304

Other information related to leases was as follows:
Three Months Ended
Supplemental Cash Flows Information October 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 3,005
Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ 278

Supplemental Balance Sheet Information October 31, 2019
Operating leases:
Operating lease right-of-use assets $ 32,008
Other current liabilities 4,307
Other long-term liabilities 27,825
Total operating lease liabilities $ 32,132
Finance leases:
Finance lease right-of-use assets $ 4,079
Other current liabilities 449
Other long-term liabilities 5,134
Total finance lease liabilities $ 5,583

October 31, 2019
Weighted-average remaining lease term
Operating leases 14.5 years
Finance leases 7.6 years
Weighted-average discount rate
Operating leases 3.4 %
Finance leases 9.7 %

Future minimum rental payments required under operating and finance leases as of October 31, 2019 were as follows:
Operating Leases Financing Leases
For the remainder of the fiscal year ending July 31, 2020 $ 7,127 $ 729
For the fiscal year ending July 31, 2021 7,370 991
For the fiscal year ending July 31, 2022 5,912 1,013
For the fiscal year ending July 31, 2023 4,144 1,036
For the fiscal year ending July 31, 2024 3,526 1,059
For the fiscal year ending July 31, 2025 and thereafter 20,845 3,092
Total future lease payments $ 48,924 $ 7,920
Less: amount representing interest (16,792) (2,337)
Total reported lease liability $ 32,132 $ 5,583

18

Future minimum rental payments required under operating and finance leases as of July 31, 2019 were as follows:
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

17. Stockholders’ Equity

Stock-Based Compensation

Under the Company’s restricted stock unit (“RSU”) program, ~~as discussed in Note 17 in the Notes to the Consolidated Financial Statements in our fiscal 2018 Form10-K,~~ RSU awards have been approved each October related to the financial performance of the most recently completed fiscal year since October 2012. 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 of Directors (“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.

In September 2019, the Board approved changes to the equity compensation program for certain members of the Company’s executive management. Under the revised program, a portion of their equity compensation will be determined based on performance related to targets set for both the Company’s return on invested capital and free cash flow during a multi-year measurement period (North American operations only and a two-year measurement period for fiscal year 2020 grants). These performance stock unit (“PSU”) awards are based on a sliding scale of actual performance against relevant goals within a range of fifty percent (50%) to one hundred fifty percent (150%) of the target compensation. Performance below the fifty percent (50%) threshold will result in no earned shares, while performance above the one hundred fifty percent (150%) level would result in an award of shares equal in value to two times the amount of target compensation. In deriving the number of shares earned, if any, both performance metrics will be weighted equally. Following the measurement period, in accordance with actual achievement and certification of performance metrics, fully vested shares of common stock will be issued to the award recipients. The fair value of the PSU awards is determined using the Company’s stock price on the grant date. These awards are equity classified and will be expensed over the applicable measurement period based on the extent to which the performance metrics are probable of achievement.

Total stock-based compensation expense recognized in the three-month periods ended October 31, ~~2018~~2019 and October 31, ~~2017~~2018 for these ~~restricted stock unit~~RSU and PSU awards totaled $5,013 and ~~other stock-based compensation was~~ $4,530, ~~and $4,318,~~ respectively.

For the restricted stock units that vested during the three-month periods ended October 31, 2018 and October 31, 2017, portions of the vested shares awarded were withheld as treasury shares to cover the recipients’ estimated withholding taxes. The total related taxes withheld of $4,418, to be paid by the Company on behalf of the recipients of these awards, is included in Compensation and related items in the Condensed Consolidated Balance Sheets and will be paid in the second quarter of fiscal 2019.

Share Repurchase Program

~~As discussed in the Company’s 2018 Form10-K,~~ ~~on June 19, 2018, the Company’s~~

The Company's Board of Directors has authorized Company management to utilize up to $250,000 to purchase shares of the ~~Company’s~~Company's common stock through June 19, 2020. There were no0 repurchases under this program during the three-month ~~period~~periods ended October 31, ~~2018.~~

~~Retained Earnings~~

~~The components of the change in retained earnings are as follows:~~

Balance as of July 31, 2018
   $ 2,022,988
Cumulative effect of the change in accounting principle, net of tax
   (5,450 )
Net income
   13,953
Dividends declared but not paid
   (20,595 )


Balance as of October 31, 2018
   $ 2,010,896

~~The cumulative effect of the change in accounting principle relates to the adoption of the new revenue recognition standard as discussed in Note 1 to the Condensed Consolidated Financial Statements.~~

~~During the first quarter of fiscal~~ 2019 the Company’s Board approved and declared the payment of a regular quarterly dividend of $0.39 per share for the first quarter of fiscal 2019. This dividend, totaling $20,595, is included in Dividends Payable in the Condensed Consolidated Balance Sheets as of October 31, 2018 and was paid in the second quarter of fiscal 2019.

~~15.~~

~~Foreign Currency Forward Contract~~

As described in more detail in Note 16 to the Condensed Consolidated Financial Statements, on September 18, 2018, the Company entered into a definitive agreement to acquire the Erwin Hymer Group SE (“Erwin Hymer Group”), the largest RV manufacturer in Europe by revenue. The purchase price will be paid with a combination of Thor common stock and approximately 1.7 billion Euro in cash, and therefore changes in the Euro/USD exchange rate between the September 18, 2018 agreement date and the closing date could cause the purchase price to fluctuate, affecting the Company’s cash flows.

In order to reduce its exposure to foreign currency exchange rate changes in relation to the acquisition of the Erwin Hymer Group, the Company entered into a deal-contingent, foreign currency forward contract on the agreement date in the amount of 1.625 billion Euro.

~~Hedge accounting has not been applied to this instrument, and therefore all changes in fair value during the period are reported in current period earnings.~~

The fair value of the foreign currency forward contract, calculated based on a probability-weighted assessment using both Level 2 and Level 3 inputs, was $42,555 as of October 31, 2018, and is included as a current liability in the Condensed Consolidated Balance Sheet. The Level 2 inputs used in determining fair value are based on information obtained from third-party sources and include the spot rate and market-forward points. Fair value is also determined using Level 3 inputs, which are significant to the fair value measurement total. These inputs relate to the deal-contingent element of the contract and include the probability of completing the acquisition and the timing thereof. The probability of completing the transaction was assessed as more likely than not, using four possible closing dates. Any significant changes in the currency spot rate, forward points or probability-weighted assessment of closing could result in a significant change in the fair value of this foreign currency forward contract. The Level 3 inputs and their application into the probability-weighted assessment are evaluated and reviewed by senior legal and financial management of the Company at least quarterly or upon settlement. The Company recognized a non-cash charge related to this contract of $42,555 during the three months ended October 31, 2018, which is included in Acquisition-related costs in the Condensed Consolidated Statements of Income and Comprehensive Income.

~~16.~~

~~Pending Acquisition~~

On September 18, 2018, the Company and the shareholders of Erwin Hymer Group announced that they entered into a definitive agreement for the Company to acquire Erwin Hymer Group. In accordance with the agreement, consideration to be paid to the sellers at closing will consist of approximately 1.7 billion Euro in cash and equity consisting of approximately 2.3 million shares of the Company. The Company will also assume responsibility for the debt of Erwin Hymer Group, which approximated 440 million Euro at October 31, 2018.

The Erwin Hymer Group is headquartered in Bad Waldsee, Germany, and is the largest RV manufacturer in Europe, by revenue. The transaction is subject to customary closing conditions, including regulatory approvals. The transaction is expected to close near the end of calendar 2018.

The Company plans to finance the acquisition primarily through debt financing. In connection with the planned acquisition, the Company has obtained financing commitments for a 5 year, $750 million asset-based credit facility (ABL) and a 7 year, $2.3 billion term loan. The ABL has no required annual minimum payments, will carry interest at LIBOR plus 1.25% to 1.75% based on availability as defined in the ABL agreement, includes a 0.25% unused facility fee and carries a springing minimum fixed charge coverage ratio of 1.0x. The term loan will consist of a U.S. tranche and a Euro tranche, with the interest rate on the U.S. portion at LIBOR plus 3.75% and the interest rate on the Euro portion at EURIBOR plus 4.0%, with interest on both tranches payable quarterly. Both term loan tranches will have annual required payments of 1.0% of the initial term loan balance, payable quarterly in 0.25% installments. Ticking fees on the term loan, as defined in the financing commitments, will also apply starting December 4, 2018.

Costs incurred during the three months ended October 31, 2018 related specifically to this acquisition are included in Acquisition-related costs in the Condensed Consolidated Statements of Income and Comprehensive Income. These costs include the change in the fair value of the foreign currency forward contract of $42,555 discussed in Note 15 above, and $14,534 of other expenses, consisting primarily of legal, professional and advisory fees related to financial due diligence and preliminary implementation costs, rating agency fees related to obtaining financing commitments and regulatory review costs.

~~17.~~

~~Revenue Recognition~~

18. Revenue is recognized as performance obligations under the terms of contracts with customers are satisfied. The Company’s contracts have a single performance obligation of providing the promised goods (recreational vehicles and extruded aluminum components), which is satisfied when control of the goods is transferred to the customer. Dealers do not have a right of return. All warranties provided are assurance-type warranties.

For recreational vehicle sales, the Company recognizes revenue when all performance obligations have been satisfied and control of the product is transferred to the dealer in accordance with shipping terms, primarily FOB shipping point. For sales made to dealers financing their purchases under flooring arrangements with banks or finance companies, revenue is not recognized until written or oral financing approval has been received from the floorplan lender. The Company recognizes revenue on credit sales upon product shipment, and sales with~~cash-on-delivery~~ ~~terms upon receiving payment, at which points the criteria for establishing a contract have been fully satisfied.~~

Recognition

Revenue from the sale of extruded aluminum components is recognized when all performance obligations have been satisfied and control of the products is transferred to the customer, which is generally upon delivery to the customer’s location.

Revenue is measured as the amount of consideration expected to be entitled in exchange for the Company’s products. The amount of revenue recognized includes adjustments for any variable consideration, such as sales discounts, sales allowances, promotions, rebates and other sales incentives which are included in the transaction price and allocated to each performance obligation based on the standalone selling price. The Company estimates variable consideration based on the expected value of total consideration to which customers are likely 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 the three-month period ended October 31, 2018, adjustments to revenue from performance obligations satisfied in prior periods, which relate primarily to changes in estimated variable consideration, were immaterial.

Amounts billed to customers related to shipping and handling activities are included in net sales. In adopting ASC 606, shipping and handling costs have been elected to be accounted for as fulfillment activities, and are included in cost of sales.

The table below disaggregates revenue to the level that the Company believes best depicts how the nature, amount, timing and uncertainty of the Company’s revenue and cash flows are affected by economic factors. Other RV-related revenues shown below in the European segment include sales related to accessories and services, used vehicle sales at owned dealerships and RV rentals. All revenue streams are considered point in time.

   Three Months
Ended
October 31, 2018    Three Months
Ended
October 31, 2017
NET SALES:

Towables

Travel Trailers and Other
   $ 761,484    $ 993,604
Fifth Wheels
   517,614    624,897




Total Towables
   1,279,098    1,618,501
Motorized

Class A
   227,274    252,423
Class C
   184,384    286,666
Class B
   19,540    27,522




Total Motorized
   431,198    566,611
Other, primarily aluminum extruded components
   73,848    82,919
Intercompany eliminations
   (28,168 )    (36,363 )




Total
   $ 1,755,976    $ 2,231,668

Three Months Ended October 31,
NET SALES: 2019 2018
Recreational vehicles
North American Towables
      Travel Trailers and Other $ 709,665 $ 761,484
      Fifth Wheels 491,223 517,614
Total North American Towables 1,200,888 1,279,098
North American Motorized
      Class A 161,732 227,274
      Class C 229,837 184,384
      Class B 24,320 19,540
Total North American Motorized 415,889 431,198
Total North America 1,616,777 1,710,296
European
Motorcaravan 281,733 —
Campervan 77,597 —
Caravan 61,032 —
Other RV-related 72,645 —
Total European 493,007 —
Total recreational vehicles 2,109,784 1,710,296
Other, primarily aluminum extruded components 73,566 73,848
Intercompany eliminations (24,565) (28,168)
Total $ 2,158,785 $ 1,755,976

19. Accumulated Other ~~Practical Expedients~~

~~We do~~Comprehensive Loss

The components of other comprehensive income (loss) ("OCI") and the changes in the Company's accumulated OCI ("AOCI") by component were as follows:


	Three Months Ended
	October 31, 2019
	Foreign Currency		Unrealized
	Translation		Gain (Loss) on
	Adjustment		Derivative		Other		Total
Balance at beginning of period	$	(47,078)	$	(9,472)	$	(1,048)	$	(57,598)
OCI before reclassifications	993		(5,554)		—		(4,561)
Income taxes associated with OCI before reclassifications	—		1,337		—		1,337
Amounts reclassified from AOCI	—		647		—		647
Income taxes associated with amounts reclassified from AOCI	—		(152)		—		(152)
AOCI, net of tax	(46,085)		(13,194)		(1,048)		(60,327)
Less: OCI attributable to noncontrolling interest	(736)		—		—		(736)
AOCI, net of tax attributable to Thor Industries Inc.	$	(45,349)	$	(13,194)	$	(1,048)	$	(59,591)

The Company does not ~~disclose information about~~recognize deferred taxes for a majority of the transaction price allocated to the 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,foreign currency translation gains and losses because the ~~amortization period would be one year or less.~~

Company does not anticipate reversal in the foreseeable future.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless otherwise indicated, all dollar amounts are presented in thousands except share and per share data.

Forward Looking Statements

This report includes certain statements that are “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 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 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, raw material and commodity price fluctuations; raw material, commodity or chassis supply restrictions; the impact of tariffs on material or other input costs; the level and magnitude of warranty claims incurred; legislative, regulatory and tax law and/or policy developments including their potential impact on our dealers and their retail customers or on our suppliers; the costs of compliance with governmental regulation; legal and compliance issues including those that may arise in conjunction with recently completed ~~or announced~~ transactions; lower consumer confidence and the level of discretionary consumer spending; interest rate fluctuations; the potential impact of interest rate fluctuations on the general economy and specifically on our dealers and consumers; restrictive lending practices; management changes; the success of new and existing products, services and ~~services;~~production facilities; consumer preferences; the ability to efficiently utilize existing production facilities; the pace of acquisitions and the successful closing, integration and financial impact thereof; the potential loss of existing customers of acquisitions; our ability to retain key management personnel of acquired companies; a shortage of necessary personnel for production; the loss or reduction of sales to key dealers; disruption of the delivery of units to dealers; increasing costs for freight and transportation; asset impairment charges; equity investment impairment charges; cost structure changes; competition; the impact of potential losses under repurchase or financed receivable agreements; the potential impact of the strength of the U.S. dollar on international ~~demand;~~demand for products priced in U.S. dollars; general economic, market and political ~~conditions;~~conditions in the various countries in which our products are sold; the impact of changing emissions and other regulatory standards in the various jurisdictions in which our products are sold; and changes to our investment and capital allocation strategies or other facets of our strategic plan. Additional risks and uncertainties surrounding the acquisition of Erwin Hymer Group SE ~~(the “Erwin Hymer Group”~~("EHG") include risks regarding the ~~anticipated timing of the closing of the acquisition, the~~ potential benefits of the ~~proposed~~ acquisition and the anticipated operating synergies, the ~~satisfaction of the conditions to closing the acquisition in the anticipated timeframe or at all, the~~ integration of the business, ~~changes inEuro-U.S.~~ ~~dollar exchange rates that could impact themark-to-market~~ ~~value of outstanding derivative instruments,~~ the impact of exchange rate fluctuations and unknown or understated liabilities related to the acquisition and ~~Erwin Hymer Group’s~~EHG's business. These and other risks and uncertainties are discussed more fully in Item 1A of our Annual Report on Form10-K for the year ended July 31, ~~2018.~~

2019.

We disclaim any obligation or undertaking to disseminate any updates or revisions to any forward looking statements contained in this report or to reflect any change in our expectations after the date hereof or any change in events, conditions or circumstances on which any statement is based, except as required by law.

Executive Overview

We were founded in 1980 and have grown to bebecome the largest manufacturer of recreational vehicles ("RVs") in the world. We are also the largest manufacturer of RVs in North ~~America. According~~America, and one of the largest manufacturers of RVs in Europe. In North America, according to Statistical Surveys, Inc. (“Stat Surveys”), for the calendaryear-to-date period ended September 30, ~~2018,~~2019, Thor’s combined U.S. and Canadian market share was approximately ~~50.2%~~46.9% for travel trailers and fifth wheels combined and approximately ~~40.0%~~37.4% for motorhomes. In Europe, according to the European Caravan Federation and based on registrations for Europe's OEM-reporting countries, Thor's European market share for the calendar year-to-date period ended September 30, 2019 was approximately 25.8% for motorcaravans and campervans combined and approximately 21.0% for caravans.

Our business model includes decentralized operating units, and our 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.

Recent Events

Erwin Hymer Group Acquisition ~~Agreement~~

On ~~September 18, 2018,~~February 1, 2019, the Company ~~and the shareholders of~~acquired Erwin Hymer Group SE ~~(“Erwin Hymer Group”~~("EHG") announced that they entered into a definitive agreement for the Company to acquire Erwin Hymer Group. In accordance with the agreement, consideration to be paid to the sellers at closing will consist of approximately 1.7 billion Euro in cash and equity consisting of approximately 2.3 million shares of the Company. The Company will also assume responsibility for the debt of the Erwin Hymer Group, which approximated 440 million Euro at October 31, 2018.

~~The Erwin Hymer Group~~. EHG is headquartered in Bad Waldsee, Germany, and is one of the largest RV ~~manufacturer~~manufacturers in ~~Europe, by revenue. The transaction is subject to customary~~Europe.

At the closing, ~~conditions, including regulatory approvals. The transaction is expected to close near the end of calendar 2018.~~

~~The Company plans to finance the acquisition primarily through debt financing. In connection with the planned acquisition,~~ the Company ~~has obtained~~paid cash consideration of approximately 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 consideration was funded through a combination of available cash on hand of approximately $95 million and debt financing ~~commitments for~~consisting of two credit facility agreements, a ~~5 year, $750~~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, $750.0 million asset-based credit facility ~~and a 7 year, $2.3 billion term loan.~~

~~All costs incurred in the three months ended October 31, 2018 related to this acquisition, including the foreign currency forward contract loss~~("ABL"), each as ~~discussed~~more fully described in Note 1513 to the Condensed Consolidated Financial ~~Statements, and certain legal, advisory and other costs, are included in Acquisition-related costs in the Condensed Consolidated Statements of Income and Comprehensive Income.~~

~~Share Repurchase Program~~

~~On June 19, 2018, the Company’s Board of Directors authorized Company management to utilize up to $250,000 to purchase shares~~Statements. The obligations of the ~~Company’s common stock through June 19, 2020. There were no repurchases~~Company under ~~this program in~~each facility are secured by liens on substantially all of the ~~three-month period ended October 31, 2018.~~

~~Joint Venture~~

~~On February 15, 2018,~~assets of the Company, ~~announced the formation of a joint venture with Tourism Holdings Limited (“~~~~thl~~~~”) called TH2connect, LLC (“TH2”). The Company and~~~~thl~~ ~~each have a 50% ownership position in TH2~~ and ~~equal representation on the board of directors of TH2. The Company’s investment in TH2 is accounted for under the equity method of accounting.~~

~~Tax Reform~~

~~On December 22, 2017, the Tax Cuts~~both agreements contain certain customary representations, warranties and Jobs Act (the “Tax Act”), was signed into law. The Tax Act includes numerous changes to tax laws impacting business, the most significant being a permanent reduction in the federal corporate income tax rate from 35.0% to 21.0%. The rate reduction took effect on January 1, 2018. As a result of other Tax Act changes, the Company’s income tax rate for fiscal year 2019 will be impacted by, among other items, the repealcovenants of the ~~domestic production activities (“Code Section 199”) deduction and limitations on the deductibility of executive compensation.~~

For fiscal 2019, after considering the lower federal income tax rate of 21.0%, an estimated blended state income tax rate, the elimination of the Code Section 199 deduction and the limitations on the deductibility of executive compensation, the Company currently estimates an overall effective income tax rate between 23.0% and 25.0%, before consideration of any discrete tax items.

While the Tax Act is expected to increase cash flow in the future, our main priorities for the use of current and future available cash generated from operations will continue to focus on funding our growth, both organically and through acquisitions, maintaining and growing our regular dividends over time, and reducing indebtedness. Strategic share repurchases or special dividends, as determined by the Company’s Board, will also continue to be considered if and as permitted under any Company credit facilities in place at the time.

Company.

Industry Outlook

— North America

The Company monitors industry conditions in the North American RV market through the use of monthly wholesale shipment data as reported by the Recreation Vehicle Industry Association (“RVIA”), which is typically issued on aone-month lag and represents manufacturers’ RV production and delivery to dealers. In addition, we monitor monthly retail sales trends as reported by Stat Surveys, whose data is typically issued on amonth-and-a-half lag. The Company believes that monthly RV retail sales data is important as consumer purchases impact future dealer orders and ultimately our production.

North American RV independent dealer inventory of Thor products as of October 31, ~~2018 increased 4.9%~~2019 decreased 22.8% to approximately ~~131,500~~101,500 units, compared to approximately ~~125,400~~131,500 units as of October 31, ~~2017. We believe our~~2018. During the remainder of calendar 2019, we expect the North American independent dealer inventory ~~levels are approaching appropriate levels for seasonal consumer demand, although modestly elevated~~rationalization will continue. Barring a significant macroeconomic impact, we expect to see a flat to modest decline in ~~certain locations due to several factors, and are progressing toward more normalized levels, as~~ the ~~year-over-year increase~~North American markets in ~~dealer inventory levels at the prior quarter ended July 31, 2018, was a much larger 26.3%.~~

calendar 2020.

Thor’s North American RV backlog as of October 31, ~~2018~~2019 decreased ~~$1,820,189,~~$21,611, or ~~50.9%~~1.2%, to ~~$1,758,612~~$1,737,001 compared to ~~$3,578,801~~$1,758,612 as of October 31, 2017, with the decrease mainly attributable to our capacity expansions since the prior year, which allows for quicker production and delivery of units to dealers, and the existing dealer inventory levels noted above .

2018.

North American Industry Wholesale Statistics

Key wholesale statistics for the North American RV industry, as reported by RVIA for the periods indicated, are as follows:

   U.S. and Canada Wholesale Unit
Shipments
   Nine Months Ended September 30,    Increase
(Decrease)    %
   2018    2017    Change
Towable Units
   333,253    330,662    2,591    0.8
Motorized Units
   45,465    47,333    (1,868 )    (3.9 )







Total
   378,718    377,995    723    0.2


	U.S. and Canada Wholesale Unit Shipments
	Nine Months Ended September 30,			Increase	%
	2019	2018	(Decrease)	Change
North American Towable Units	273,629	333,253	(59,624)	(17.9)
North American Motorized Units	36,309	45,465	(9,156)	(20.1)
Total	309,938	378,718	(68,780)	(18.2)

According to ~~the~~their most recent ~~RVIA~~ forecast published in November 2018, shipments for towable and motorized units for the 2018 calendar year will approximate 422,200 and 56,800 units, respectively, which are 4.5% and 9.3% lower, respectively, than the corresponding 2017 calendar year wholesale shipments. The combined total of 479,000 units is 5.1% lower than the total calendar 2017 wholesale shipments of 504,599. Travel trailers and fifth wheels are expected to account for approximately 86% of all RV shipments in calendar year 2018. The outlook for calendar year 2018 growth in RV sales is based on the expectation of continued gains in jobs and disposable income. It also takes into account the impact of slowly rising interest rates, inflation and geopolitical risks.

December 2019, RVIA has ~~also~~ forecasted that 2019 calendar year shipments ~~for towables~~of towable and motorized units will ~~ease back~~decrease to approximately ~~401,900~~355,600 and ~~51,300~~46,500 units, respectively, for a total of ~~453,200~~402,100 units, a decline of ~~5.4%~~16.9% from ~~the expected~~ 2018 calendar year shipments. ~~RVIA noted that except for the past two calendar years, total RV shipments for 2019 are expected to be higher than in any prior year since 1973.~~

North American Industry Retail Statistics

We believe that retail demand is the key to continued growth in the North American RV industry, and that annual North American RV industry wholesale shipments will generally approximate aone-to-one replenishment ratio with retail sales ~~once~~as dealer inventory levels are adjusted to generally normalized ~~levels, which we expect to happen during the second half of fiscal 2019.~~

levels.

Key retail statistics for the North American RV industry, as reported by Stat Surveys for the periods indicated, are as follows:

   U.S. and Canada Retail Unit
Registrations
   Nine Months Ended September 30,       %
   2018    2017    Increase    Change
Towable Units
   361,156    343,670    17,486    5.1
Motorized Units
   46,987    46,400    587    1.3







Total
   408,143    390,070    18,073    4.6

U.S. and Canada Retail Unit Registrations
Nine Months Ended September 30, Increase %
2019 2018 (Decrease) Change
North American Towable Units 339,367 365,716 (26,349) (7.2)
North American Motorized Units 41,575 47,696 (6,121) (12.8)
Total 380,942 413,412 (32,470) (7.9)

Note: Data reported by Stat Surveys is based on official state and provincial records. This information is subject to adjustment and is continuously updated, and is often impacted by delays in reporting by various states or provinces.

Company North American Wholesale Statistics

The ~~Company’s~~Company's North American wholesale RV shipments, for the nine-month periods ended September 30, ~~2018~~2019 and ~~2017~~2018 to correspond to the North American industry wholesale periods noted above, were as follows:

   U.S. and Canada Wholesale Unit
Shipments
   Nine Months Ended September 30,       %
   2018    2017    (Decrease)    Change
Towable Units
   168,949    174,201    (5,252 )    (3.0 )
Motorized Units
   17,081    19,555    (2,474 )    (12.7 )







Total
   186,030    193,756    (7,726 )    (4.0 )

U.S. and Canada Wholesale Unit Shipments
Nine Months Ended September 30, Increase %
2019 2018 (Decrease) Change
North American Towable Units 123,889 168,949 (45,060) (26.7)
North American Motorized Units 13,907 17,081 (3,174) (18.6)
Total 137,796 186,030 (48,234) (25.9)

Company North American Retail Statistics

Retail statistics of the ~~Company’s~~Company's North American RV products, as reported by Stat Surveys, for the nine-month periods ended September 30, ~~2018~~2019 and ~~2017~~2018 to correspond to the North American industry retail periods noted above, were as follows:

   U.S. and Canada Retail Unit
Registrations
   Nine Months Ended September 30,       %
   2018    2017    Increase    Change
Towable Units
   177,146    170,115    7,031    4.1
Motorized Units
   18,813    18,339    474    2.6







Total
   195,959    188,454    7,505    4.0

U.S. and Canada Retail Unit Registrations
Nine Months Ended September 30, Increase %
2019 2018 (Decrease) Change
North American Towable Units 155,314 179,233 (23,919) (13.3)
North American Motorized Units 15,554 19,108 (3,554) (18.6)
Total 170,868 198,341 (27,473) (13.9)

Our outlook for future growth in North American retail sales is dependent upon various economic conditions faced by consumers 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 health of the housing market and changes in tax rates and fuel availability and prices. Assuming continued stability or improvement in consumer confidence, availability of retail and wholesale credit, low interest rates with modest rate increases and the absence of negative economic factors, we ~~would~~ expect to see ~~continued~~long-term growth in the North American RV industry.

A positive long-term outlook for the North American RV segment is supported by continued demographic diversification. While consumers between the ages of 55 and 74 still account for the majority of RV retail sales, there is strong interest and growing retail momentum with the younger ~~“generation X”~~"generation X" and ~~“millennials”~~"millennials" segments. Not surprisingly, behavioral attributes confirm these groups as being more active, tech savvy, well researched, open to new ideas, seeking new experiences and very family centric, specifically when it comes to cross-generational family activities like ~~RV’ing,~~RVing, camping and time spent outdoors.

Since 2014, Kampgrounds of America ~~(KOA)~~("KOA") has measured an increase of 6more than 7 million new camper households and annual growth in ~~2018 projects a 45% rise~~camping frequency and has noted continued interest in ~~frequency~~the RV lifestyle, especially among ~~all camping families; largely driven by millennials with 6 in 10 having tried a new camping destination in 2017.~~the younger segments. Younger consumers are also redefining cultural views on “vacation” and opting instead for 50 to 100 mile getaways within driving distance to home or school. Given the importance younger consumers and millennial households place on family, quality experiences, technology and time, we are well-positioned to provide the innovative product offerings which deliver the lifestyle experiences that complement millennial expectations.

In addition to younger age demographics, there are opportunities to expand sales to a more ethnically diverse and global customer base through lifestyle, lifestage and data-driven marketing. We intend to expand upon our recent marketing initiatives that focus on diversity, women, families, millennials and the RV lifestyle across social, digital, web, acquisition, mobile and content marketing. In addition to providingbest-in-class marketing and research assets to our dealers, we are committed to providing our end consumers with technology tools and RV lifestyle resources through our joint venture, TH2.

Economic or industry-wide factors affecting our RV business include the costs of commodities, the ~~potential~~ impact of actual or threatened tariffs on commodity costs, and the labor used in the manufacture of our products. Material and labor costs are the primary factors determining our cost of products sold, and any future increases in raw material or labor costs would impact our profit margins negatively if we were unable to offset 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 offset net cost increases over time.

We have not experienced any ~~recent~~significant unusual supply constraints from our North American chassis ~~suppliers.~~suppliers recently. The North American recreational vehicle industry has, from time to time, experienced shortages of chassis for various reasons, including component shortages, production delays and work stoppages at the chassis manufacturers. These shortages have had a negative impact on our sales and earnings in the past. We believe that the current supply of chassis used in our North American motorized RV production is generally adequate for current production levels, and that available inventory would compensate for short-term changes in supply schedules if they occur.

Industry Outlook — Europe

The Company monitors retail trends in the European RV market as reported by the European Caravan Federation (“ECF”), whose industry data is reported to the public quarterly and typically issued on a one-to-two month lag. Additionally, on a monthly basis the Company receives original equipment manufacturer ("OEM") specific reports from most of the individual member countries that make up the ECF. As these reports are coming directly from the ECF member countries, timing and content vary, but typically the reports are issued on a one-to-two month lag as well. While most countries provide OEM-specific information, the United Kingdom, which makes up 22.4% and 11.3% of the caravan and motorcaravan (including campervans) European market for the nine months ended September 30, 2019, respectively, does not provide OEM-specific information. Industry wholesale shipment data for the European RV market is not available.

The Company reports its European reportable segment sales based on the following product categories:

Motorcaravan —

similar to the Class A and Class C motorized products in the North American market

Campervan —

similar to the Class B motorized products in the North American market, but also includes urban campers

Caravan —

similar to the travel trailer and other towable units in the North American market. Fifth wheel units are not sold in the European market due to their generally larger size and weight

Other —

includes sales of used recreational vehicle units, parts and camping accessories, repair services, rental sales and other

We believe our independent dealer inventory levels of EHG products in Europe, while elevated in certain locations, are generally appropriate for seasonal consumer demand in Europe and are progressing towards more normalized levels. The fiscal first quarter is a seasonally slower quarter in Europe due to the European summer holiday season, but consumer demand in Europe for the remainder of the fiscal year typically aligns with the seasonal retail patterns experienced in the North American market. Thor’s European RV backlog as of October 31, 2019 was $1,292,063.

European Industry Retail Statistics

Key retail statistics for the European RV industry, as reported by the ECF for the periods indicated, are as follows:


	European Unit Registrations
	Motorcaravan and Campervan ⁽²⁾					Caravan
	Nine Months Ended September 30,			%	Nine Months Ended September 30,		%
	2019	2018	Change	2019	2018	Change
OEM Reporting Countries ⁽¹⁾	100,141	94,246	6.3	50,296	47,450	6.0
Non-OEM Reporting Countries ⁽¹⁾	15,009	14,409	4.2	16,519	16,954	(2.6)
Total	115,150	108,655	6.0	66,815	64,404	3.7

(1) – Industry retail registration statistics have been compiled from individual countries reporting of retail sales, and include the following countries: Germany, France, Sweden, Netherlands, Norway, Italy, Spain and others, collectively the "OEM Reporting Countries." The "Non-OEM Reporting Countries" are primarily the United Kingdom and others.

(2) – The ECF reports motorcaravans and campervans together.

Note: Data from the ECF is subject to adjustment and is continuously updated, and is often impacted by delays in reporting by various countries (The Non-OEM Reporting Countries either do not report OEM-specific data to EHG or do not have it available for the entire time period covered).

Company European Retail Statistics ⁽¹⁾


	European Unit Registrations ⁽¹⁾
	Nine Months Ended September 30,			Increase	%
	2019	2018	(Decrease)	Change
Motorcaravan and Campervan	25,795	24,590	1,205	4.9
Caravan	10,561	10,150	411	4.0
Total OEM-Reporting Countries	36,356	34,740	1,616	4.7

(1) – Company retail registration statistics have been compiled from individual countries reporting of retail sales, and include the following countries: Germany, France, Sweden, Netherlands, Norway, Italy, Spain and others, collectively the "OEM Reporting Countries".

Note: For comparison purposes, the totals reflected above include the pre-acquisition results of EHG for January 2019 (and for the nine months ended September 30, 2018). In addition, data from the ECF is subject to adjustments and is continuously updated, and is often impacted by delays in reporting by various countries.

The European outlook for future growth in retail sales depends upon various economic conditions in the respective countries. End-customer demand for RV vehicles depends strongly on consumer confidence. Factors such as the rate of unemployment, private consumption and investments, growth in disposable income of consumers, changes in interest rates, the health of the housing market and changes in tax rates influence retail sales. Assuming continued stability or improvement in consumer confidence, low interest rates with modest rate increases and the absence of negative economic factors, we would expect to see continued long-term growth in the European RV industry.

Several social trends support the positive long-term outlook for Europe. First, there is the growing group of “active seniors” (age 55 to 75) who have the time, health and wealth, combined with the desire, to explore countries and cultures. Secondly, there is the new, but growing, group of younger customers (age 35 to 45) who are discovering RVs as a way to support their lifestyle in search of independence and individuality, as well as using the RV as multi-purpose vehicles to escape urban life and explore outdoor activities and nature.

Our European operations address the European market with a full line-up of leisure vehicles including travel trailers, urban campers, campervans and small-to-large motorhomes. The product offering is not limited to vehicles only, but also includes accessories and services including rental vehicles.

In addition to its product offerings, EHG addresses its consumers through a sophisticated brand management approach based on customer segmentation according to target group, core values and emotions. With the help of data-based and digital marketing, EHG intends to expand its customer reach, in particular in new and younger consumer segments.

Economic or industry-wide factors affecting our European RV business include the costs of commodities and the labor used in the manufacture of our products. Material and labor costs are the primary factors determining our cost of products sold and any future increases in raw material or labor costs would impact our profit margins negatively if we were unable to offset 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.

We believe the outlook for future growth of the European economy and private consumption in general is positive, with differences for each country, but could be negatively impacted by increasing global trade barriers and related tax tariffs, as well as by European political decisions like Brexit, or the introduction of new emission standards.

In our European market, EHG has not experienced any significant, unusual supply constraints from chassis suppliers recently. The European recreational vehicle industry has, from time to time, experienced shortages of chassis for various reasons, including introduction of new regulatory standards, component shortages and production delays at the chassis manufacturers. We believe that the current supply of chassis used in the European motorized RV production is generally adequate for current production levels, and that available inventory would compensate for short-term changes in supply schedules if they occur. However, uncertainties related to changing emission standards, such as the Euro 6d standard which becomes effective from January 2020 for new models and from January 2021 on all new vehicles, may impact the availability of chassis used in our production of certain European motorized RVs and could also impact consumer buying patterns.

Three Months Ended October 31, ~~2018~~2019 Compared to the Three Months Ended October 31, ~~2017~~

   Three Months Ended
October 31, 2018    Three Months Ended
October 31, 2017    Change
Amount %
Change
NET SALES:

Recreational vehicles

Towables
   $ 1,279,098    $ 1,618,501    $ (339,403 ) (21.0 )
Motorized
   431,198    566,611    (135,413 ) (23.9 )






Total recreational vehicles
   1,710,296    2,185,112    (474,816 ) (21.7 )






Other
   73,848    82,919    (9,071 ) (10.9 )
Intercompany eliminations
   (28,168 )    (36,363 )    8,195 22.5






Total
   $ 1,755,976    $ 2,231,668    $ (475,692 ) (21.3 )






# OF UNITS:

Recreational vehicles

Towables
   49,068    66,095    (17,027 ) (25.8 )
Motorized
   4,366    6,843    (2,477 ) (36.2 )






Total
   53,434    72,938    (19,504 ) (26.7 )






GROSS PROFIT:    % of
Segment
Net
Sales    % of
Segment
Net
Sales    Change
Amount %
Change
Recreational vehicles

Towables
   $ 153,692 12.0    $ 256,713 15.9    $ (103,021 ) (40.1 )
Motorized
   44,230 10.3    63,903 11.3    (19,673 ) (30.8 )






Total recreational vehicles
   197,922 11.6    320,616 14.7    (122,694 ) (38.3 )
Other, net
   9,334 12.6    12,569 15.2    (3,235 ) (25.7 )






Total
   $ 207,256 11.8    $ 333,185 14.9    $ (125,929 ) (37.8 )






SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:


Recreational vehicles

Towables
   $ 69,082 5.4    $ 86,760 5.4    $ (17,678 ) (20.4 )
Motorized
   21,252 4.9    26,708 4.7    (5,456 ) (20.4 )






Total recreational vehicles
   90,334 5.3    113,468 5.2    (23,134 ) (20.4 )
Other
   2,089 2.8    2,569 3.1    (480 ) (18.7 )
Corporate
   10,270 —      18,226 —      (7,956 ) (43.7 )






Total
   $ 102,693 5.8    $ 134,263 6.0    $ (31,570 ) (23.5 )






INCOME (LOSS) BEFORE INCOME TAXES:


Recreational vehicles

Towables
   $ 74,550 5.8    $ 158,851 9.8    $ (84,301 ) (53.1 )
Motorized
   21,712 5.0    37,586 6.6    (15,874 ) (42.2 )






Total recreational vehicles
   96,262 5.6    196,437 9.0    (100,175 ) (51.0 )
Other, net
   5,910 8.0    8,483 10.2    (2,573 ) (30.3 )
Corporate
   (70,655 ) —      (17,829 ) —      (52,826 ) (296.3 )






Total
   $ 31,517 1.8    $ 187,091 8.4    $ (155,574 ) (83.2 )

ORDER BACKLOG:    As of
October 31, 2018    As of
October 31, 2017    Change
Amount %
Change
Recreational vehicles

Towables
   $ 1,018,384    $ 2,455,056    $ (1,436,672 ) (58.5 )
Motorized
   740,228    1,123,745    (383,517 ) (34.1 )






Total
   $ 1,758,612    $ 3,578,801    $ (1,820,189 ) (50.9 )

2018


NET SALES:	Three Months Ended October 31, 2019			Three Months Ended October 31, 2018			Change Amount		% Change
Recreational vehicles
North American Towables	$	1,200,888		$	1,279,098		$	(78,210)	(6.1)
North American Motorized	415,889			431,198			(15,309)		(3.6)
Total North America	1,616,777			1,710,296			(93,519)		(5.5)
European	493,007			—			493,007		n/a
Total recreational vehicles	2,109,784			1,710,296			399,488		23.4
Other	73,566			73,848			(282)		(0.4)
Intercompany eliminations	(24,565)			(28,168)			3,603		(12.8)
Total	$	2,158,785		$	1,755,976		$	402,809	22.9

# OF UNITS:
Recreational vehicles
North American Towables	42,865			49,068			(6,203)		(12.6)
North American Motorized	4,490			4,366			124		2.8
Total North America	47,355			53,434			(6,079)		(11.4)
European	11,287			—			11,287		n/a
Total	58,642			53,434			5,208		9.7

GROSS PROFIT:			% of Segment Net Sales			% of Segment Net Sales	Change Amount		% Change
Recreational vehicles
North American Towables	$	184,193	15.3	$	153,692	12.0	$	30,501	19.8
North American Motorized	44,747		10.8	44,230		10.3	517		1.2
Total North America	228,940		14.2	197,922		11.6	31,018		15.7
European	64,611		13.1	—		n/a	64,611		n/a
Total recreational vehicles	293,551		13.9	197,922		11.6	95,629		48.3
Other, net	15,260		20.7	9,334		12.6	5,926		63.5
Total	$	308,811	14.3	$	207,256	11.8	$	101,555	49.0

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Recreational vehicles
North American Towables	$	71,305	5.9	$	69,082	5.4	$	2,223	3.2
North American Motorized	21,631		5.2	21,252		4.9	379		1.8
Total North America	92,936		5.7	90,334		5.3	2,602		2.9
European	73,786		15.0	—		n/a	73,786		n/a
Total recreational vehicles	166,722		7.9	90,334		5.3	76,388		84.6
Other	2,375		3.2	2,089		2.8	286		13.7
Corporate	19,367		—	10,270		—	9,097		88.6
Total	$	188,464	8.7	$	102,693	5.8	$	85,771	83.5

INCOME (LOSS) BEFORE INCOME TAXES: Three Months Ended
October 31, 2019 % of
Segment
Net Sales Three Months Ended
October 31, 2018 % of
Segment
Net Sales Change
Amount %
Change
Recreational vehicles
North American Towables $ 104,322 8.7 $ 74,550 5.8 $ 29,772 39.9
North American Motorized 21,775 5.2 21,712 5.0 63 0.3
Total North America 126,097 7.8 96,262 5.6 29,835 31.0
European (23,024) (4.7) — n/a (23,024) n/a
Total recreational vehicles 103,073 4.9 96,262 5.6 6,811 7.1
Other, net 11,751 16.0 5,910 8.0 5,841 98.8
Corporate (46,190) — (70,655) — 24,465 (34.6)
Total $ 68,634 3.2 $ 31,517 1.8 $ 37,117 117.8

ORDER BACKLOG: Three Months Ended
October 31, 2019 Three Months Ended
October 31, 2018 Change
Amount %
Change
Recreational vehicles
North American Towables $ 1,067,023 $ 1,018,384 $ 48,639 4.8
North American Motorized 669,978 740,228 (70,250) (9.5)
Total North America 1,737,001 1,758,612 (21,611) (1.2)
European 1,292,063 — 1,292,063 n/a
Total $ 3,029,064 $ 1,758,612 $ 1,270,452 72.2

CONSOLIDATED

Consolidated net sales for the three months ended October 31, ~~2018 decreased $475,692,~~2019 increased $402,809, or ~~21.3%~~22.9%, compared to the three months ended October 31, ~~2017.~~2018. This increase is attributable to EHG's net sales of $493,007, partially offset by a decrease in net sales from North America recreational vehicles and Other, net of $90,198, or 5.1%, compared to the three months ended October 31, 2018. Consolidated gross profit for the three months ended October 31, ~~2018 decreased $125,929,~~2019 increased $101,555, or ~~37.8%~~49.0%, compared to the three months ended October 31, ~~2017.~~2018. The increase in gross profit included EHG's gross profit for the period of $64,611, in addition to the increase of $36,944, or 17.8%, in total North American and Other, net gross profit compared to the prior-year quarter. Consolidated gross profit was ~~11.8%~~14.3% of consolidated net sales for the three months ended October 31, ~~2018~~2019 and ~~14.9%~~11.8% for the three months ended October 31, ~~2017.~~

2018, with the increase in percentage primarily impacted by the North American recreational vehicles improvement to 14.2% from 11.6% and the addition of EHG's gross profit percentage of 13.1%.

Selling, general and administrative expenses for the three months ended October 31, ~~2018 decreased $31,570,~~2019 increased $85,771, or ~~23.5%~~83.5%, compared to the three months ended October 31, ~~2017.~~ 2018, with EHG accounting for $73,786 of the $85,771 increase.

Amortization of intangible assets expense for the three months ended October 31, ~~2018 decreased $967, or 7.1%,~~2019 increased $11,702 compared to the three months ended October 31, ~~2017,~~2018, primarily due to incremental amortization expense of $12,682 from EHG, partially offset by lower dealer network amortization as compared to the prior-year period. Income before income taxes for the three months ended October 31, ~~2018~~2019 was ~~$31,517,~~$68,634, as compared to ~~$187,091~~$31,517 for the three months ended October 31, ~~2017, a decrease~~2018, an increase of ~~$155,574,~~$37,117, or ~~83.2%~~117.8%.

Additional information concerning the changes in net sales, gross profit, selling, general and administrative expenses, ~~amortization of intangible assets expense, acquisition and related~~acquisition-related costs and income before income taxes are addressed below and in the segment reporting that follows.

Corporate costs included in selling, general and administrative expenses ~~decreased $7,956~~increased $9,097 to $19,367 for the three months ended October 31, 2019 compared to $10,270 for the three months ended October 31, 2018, ~~compared to $18,226 for the three months ended October 31, 2017, a decrease~~an increase of ~~43.7%~~88.6%. ~~The decrease is primarily due to a decrease~~This increase includes an increase in deferred compensation expense of ~~$3,569,~~$3,271, which relates to the equal and offsetting increase in other ~~expense~~income related to the deferred compensation plan assets as noted ~~below. Incentive~~below, and an increase in stock-based compensation also decreased $2,289 in correlation with the decrease in income before income taxes compared to the prior year. In addition, costs recorded at Corporate related to our standby repurchase obligations on dealer inventory decreased $800 due to lower dealer inventory levels, and salesof $483. Legal, professional and marketing costs also ~~decreased~~increased by ~~$632.~~

$2,757, partially due to professional fees related to the integration of EHG operations. Donations also increased $2,045, primarily due to a significant contribution to the National Forest Foundation in August 2019.

Corporate interest and other income and expense was $26,823 of net expense for the three months ended October 31, 2019 compared to $3,296 of net expense for the three months ended October 31, ~~2018 compared to $397 of net income for the three months ended October 31, 2017.~~2018. This increase in net expense of ~~$3,693~~$23,527 is primarily due to an increase in interest expense and fees of $25,579 resulting from the debt facilities related to the EHG acquisition. This increase was partially offset by the change in the fair value of the Company’s deferred compensation plan assets due to market fluctuations and investment income resulting in net ~~expense~~income of ~~$2,295~~$976 in the current-year period as compared to net ~~income of $1,274 in the prior-year period, an increase in~~ expense of $3,569. The three months ended October 31, 2018 also included a $1,483 operating loss related to the joint venture as discussed in Note 8 to the Condensed Consolidated Financial Statements. These increases in expense were partially offset by interest expense and fees on the revolving credit facility of $729 in the current-year period as compared to $1,257$2,295 in the prior-year period, a ~~decrease~~net increase in ~~expense~~income of ~~$528 as a result of the lower outstanding debt balances.~~

$3,271.

Acquisition-related costs were $57,089 for the three months ended October 31, ~~2018 and include all costs related to the acquisition of Erwin Hymer Group as described in Note 16 to the Condensed Consolidated Financial Statements.~~2018. These Corporate costs included anon-cash foreign currency forward contract loss of $42,555, as the U.S. ~~Dollar~~dollar strengthened against the Euro. The remaining $14,534 related primarily to legal, professional and advisory fees related to financial due diligence and preliminary implementation costs, rating agency fees related to obtaining debt financing and regulatory review costs.

The overall effective income tax rate for the three months ended October 31, ~~2018~~2019 was ~~55.7%~~24.5% compared with ~~31.4%~~55.7% for the three months ended October 31, ~~2017.~~2018. The primary ~~reasons~~reason for the ~~change~~decrease in the overall effective income tax rate between the comparable periods ~~are~~was thenon-deductible foreign currency forward contract loss ~~noted~~of $42,555 that occurred in ~~Note 15 to the Condensed Consolidated Financial Statements and the reduction in the US federal corporate income tax rate for~~ the three months ended October 31, 2018 as ~~a result of~~discussed in Note 5 to the ~~enactment of~~Condensed Consolidated Financial Statements. Under federal income tax law, the ~~Tax Cuts and Jobs Act on December 22, 2017.~~

loss recognized for financial statement purposes was not deductible for federal income tax purposes.

Segment Reporting

NORTH AMERICAN TOWABLE RECREATIONAL VEHICLES

Analysis of the change in net sales for the three months ended October 31, ~~2018~~2019 compared to the three months ended October 31, ~~2017:~~

   Three Months
Ended
October 31, 2018    % of
Segment
Net Sales    Three Months
Ended
October 31, 2017    % of
Segment
Net Sales    Change
Amount %
Change
NET SALES:

Towables

Travel Trailers and Other
   $ 761,484    59.5    $ 993,604    61.4    $ (232,120 ) (23.4 )
Fifth Wheels
   517,614    40.5    624,897    38.6    (107,283 ) (17.2 )










Total Towables
   $ 1,279,098    100.0    $ 1,618,501    100.0    $ (339,403 ) (21.0 )










   Three Months
Ended
October 31, 2018    % of
Segment
Shipments    Three Months
Ended
October 31, 2017    % of
Segment
Shipments    Change
Amount %
Change
# OF UNITS:

Towables

Travel Trailers and Other
   37,497    76.4    51,668    78.2    (14,171 ) (27.4 )
Fifth Wheels
   11,571    23.6    14,427    21.8    (2,856 ) (19.8 )










Total Towables
   49,068    100.0    66,095    100.0    (17,027 ) (25.8 )


~~Impact of Change in Product Mix and Price on Net Sales:~~	% ~~Increase~~
~~Towables~~
~~Travel Trailers and Other~~		~~4.0~~
~~Fifth Wheels~~		~~2.6~~
~~Total Towables~~		~~4.8~~

2018:


	Three Months Ended October 31, 2019		% of Segment Net Sales	Three Months Ended October 31, 2018		% of Segment Net Sales	Change Amount		% Change
NET SALES:
North American Towables
Travel Trailers and Other	$	709,665	59.1	$	761,484	59.5	$	(51,819)	(6.8)
Fifth Wheels	491,223		40.9	517,614		40.5	(26,391)		(5.1)
Total North American Towables	$	1,200,888	100.0	$	1,279,098	100.0	$	(78,210)	(6.1)

	Three Months Ended October 31, 2019		% of Segment Shipments	Three Months Ended October 31, 2018		% of Segment Shipments	Change Amount		% Change
# OF UNITS:
North American Towables
Travel Trailers and Other	32,520		75.9	37,497		76.4	(4,977)		(13.3)
Fifth Wheels	10,345		24.1	11,571		23.6	(1,226)		(10.6)
Total North American Towables	42,865		100.0	49,068		100.0	(6,203)		(12.6)

IMPACT OF CHANGE IN PRODUCT MIX AND PRICE ON NET SALES:										% Change
North American Towables
Travel Trailers and Other										6.5
Fifth Wheels										5.5
Total North American Towables										6.5

The decrease in total North American towables net sales of ~~21.0%~~6.1% compared to the prior-year quarter resulted from a ~~25.8%~~12.6% decrease in unit shipments ~~and~~partially offset by a ~~4.8%~~6.5% increase in the overall net price per unit due to the impact of changes in product mix and price. According to statistics published by RVIA, for the three months ended October 31, ~~2018,~~2019, combined travel trailer and fifth wheel wholesale unit shipments decreased ~~16.7%~~8.4% compared to the same period last year.

According to the most recently published statistics from Stat Surveys, for the three-month periods ended September 30, 2019 and 2018, our market share for travel trailers and fifth wheels combined was 46.1% and 51.2%, respectively. Comparisons of Company shipments to industry shipments on a quarterly basis would not necessarily be indicative of the results expected for a full fiscal year.

The increases in the overall net price per unit within the travel trailer and other product lines of ~~4.0%~~6.5% and the fifth wheel product lines of ~~2.6%~~5.5% were both primarily due to changes in product mix and selective net price increases since the prior-year quarter.

Cost of products sold decreased ~~$236,382~~$108,711 to ~~$1,125,406,~~$1,016,695, or ~~88.0%~~84.7% of North American towables net sales, for the three months ended October 31, ~~2018~~2019 compared to ~~$1,361,788~~$1,125,406 or ~~84.1%~~88.0% of North American towables net sales, for the three months ended October 31, ~~2017.~~2018. The changes in material, labor,freight-out and warranty costs comprised ~~$229,217~~$102,773 of the ~~$236,382~~$108,711 decrease in cost of products sold. Material, labor,freight-out and warranty costs as a combined percentage of North American towables net sales ~~increased~~decreased to 78.7% for the three months ended October 31, 2019 compared to 81.9% for the three months ended October 31, 2018, ~~compared to 78.8% for the three months ended October 31, 2017. This increase in percentage was~~ primarily ~~the~~as a result of ~~an increase~~improvements in the material cost, labor and warranty percentages. The improvement in the material cost percentage ~~to net sales,~~is primarily due to an increase in discounts and sales incentives, which effectively decreases the net sales price per unit and therefore increases the unit material cost percentage. In addition, material cost increases exceeded the favorable ~~impact of~~product mix, selective net price increases and stable material costs since the prior-year period. The warranty cost percentage is lower due to ~~net sales also increased.~~favorable experience trends. Total manufacturing overhead decreased ~~$7,165~~$5,938 with the decrease in sales, ~~but increased~~and decreased slightly as a percentage of North American towables net sales from ~~5.3%~~6.1% to ~~6.1%, as the decreased production resulted in higher overhead costs per unit sold.~~

6.0%.

~~Towables~~

North American towables gross profit ~~decreased $103,021~~increased $30,501 to ~~$153,692,~~$184,193, or ~~12.0%~~15.3% of North American towables net sales, for the three months ended October 31, ~~2018~~2019 compared to ~~$256,713,~~$153,692, or ~~15.9%~~12.0% of North American towables net sales, for the three months ended October 31, ~~2017.~~2018. The ~~decrease~~increase in gross profit ~~is primarily due to~~and the ~~25.8% decrease in unit sales volume noted above, while the decrease in~~ gross profit percentage is due to the ~~increase~~decrease in the cost of products sold percentage noted above.

Selling, general and administrative expenses were ~~$69,082,~~$71,305, or ~~5.4%~~5.9% of North American towables net sales, for the three months ended October 31, ~~2018~~2019 compared to ~~$86,760,~~$69,082, or 5.4% of North American towables net sales, for the three months ended October 31, ~~2017.~~2018. The primary reason for the ~~$17,678 decrease~~$2,223 increase was ~~decreased towables net sales and~~the increase in North American towables income before income taxes, which caused related commissions, bonuses and other compensation to ~~decrease~~increase by ~~$17,293. The~~$2,819. The increase in the overall selling, general and administrative expense as a percentage of North American towables net sales ~~remained~~is primarily due to the ~~same at 5.4% of~~increased compensation noted above combined with the lower sales volume.

North American towables ~~net sales for both periods.~~

~~Towables~~ income before income taxes was ~~$74,550,~~$104,322, or ~~5.8%~~8.7% of North American towables net sales, for the three months ended October 31, ~~2018~~2019 compared to ~~$158,851~~$74,550 or ~~9.8%~~5.8% of North American towables net sales, for the three months ended October 31, ~~2017.~~2018. The primary ~~reasons~~reason for the ~~decrease~~increase in percentage was the ~~increase~~decrease in the cost of products sold percentage, partially offset by the increase in the selling, general and administrative percentage noted above.

NORTH AMERICAN MOTORIZED RECREATIONAL VEHICLES

Analysis of the change in net sales for the three months ended October 31, ~~2018~~2019 compared to the three months ended October 31, ~~2017:~~

   Three Months
Ended
October 31, 2018    % of
Segment
Net Sales    Three Months
Ended
October 31, 2017    % of
Segment
Net Sales    Change
Amount %
Change
NET SALES:

Motorized

Class A
   $ 227,274    52.7    $ 252,423    44.5    $ (25,149 ) (10.0 )
Class C
   184,384    42.8    286,666    50.6    (102,282 ) (35.7 )
Class B
   19,540    4.5    27,522    4.9    (7,982 ) (29.0 )










Total Motorized
   $ 431,198    100.0    $ 566,611    100.0    $ (135,413 ) (23.9 )










   Three Months
Ended
October 31, 2018    % of
Segment
Shipments    Three Months
Ended
October 31, 2017    % of
Segment
Shipments    Change
Amount %
Change
# OF UNITS:

Motorized

Class A
   1,672    38.3    2,267    33.1    (595 ) (26.2 )
Class C
   2,557    58.6    4,364    63.8    (1,807 ) (41.4 )
Class B
   137    3.1    212    3.1    (75 ) (35.4 )










Total Motorized
   4,366    100.0    6,843    100.0    (2,477 ) (36.2 )


~~Impact of Change in Product Mix and Price on Net Sales:~~	% ~~Increase~~
~~Motorized~~
~~Class A~~		~~16.2~~
~~Class C~~		~~5.7~~
~~Class B~~		~~6.4~~
~~Total Motorized~~		~~12.3~~

2018:


	Three Months Ended October 31, 2019		% of Segment Net Sales	Three Months Ended October 31, 2018		% of Segment Net Sales	Change Amount		% Change
NET SALES:
North American Motorized
Class A	$	161,732	38.9	$	227,274	52.7	$	(65,542)	(28.8)
Class C	229,837		55.3	184,384		42.8	45,453		24.7
Class B	24,320		5.8	19,540		4.5	4,780		24.5
Total North American Motorized	$	415,889	100.0	$	431,198	100.0	$	(15,309)	(3.6)

	Three Months Ended October 31, 2019		% of Segment Shipments	Three Months Ended October 31, 2018		% of Segment Shipments	Change Amount		% Change
# OF UNITS:
North American Motorized
Class A	1,250		27.8	1,672		38.3	(422)		(25.2)
Class C	3,041		67.7	2,557		58.6	484		18.9
Class B	199		4.5	137		3.1	62		45.3
Total North American Motorized	4,490		100.0	4,366		100.0	124		2.8

Impact of Change in Product Mix and Price on Net Sales:										% Change
North American Motorized
Class A									(3.6)
Class C									5.8
Class B									(20.8)
Total North American Motorized									(6.4)

The decrease in total North American motorized net sales of ~~23.9%~~3.6% compared to the prior-year quarter resulted from a ~~36.2% decrease~~2.8% increase in unit shipments ~~and~~offset by a ~~12.3% increase~~6.4% decrease in the overall net price per unit due to the impact of changes in product mix and price. According to statistics published by RVIA, for the three months ended October 31, ~~2018,~~2019, combined motorhome wholesale unit shipments decreased ~~16.9%~~11.9% compared to the same period last year.

According to the most recently published statistics from Stat Surveys, for the three-month periods ended September 30, 2019 and 2018, our market share for motorhomes was 39.2% and 40.2%, respectively. Comparisons of Company shipments to industry shipments on a quarterly basis would not necessarily be indicative of the results expected for a full fiscal year.

The ~~increase~~decrease in the overall net price per unit within the Class A product line of ~~16.2%~~3.6% was primarily due to a ~~shift in the~~lower concentration of ~~sales toward~~ the generally larger and more expensive diesel units ~~from~~versus the more modestly-priced gas units in the current period as compared to the prior-year ~~period.~~quarter. The increase in the overall net price per unit within the Class C product line of ~~5.7%~~5.8% was primarily due to the net impact of product mix changes and selective net price increases. The ~~increase~~decrease in the overall net price per unit within the Class B product line of ~~6.4%~~20.8% is primarily due to product mix as a result of the introduction of a new, ~~higher-priced model and more option content per unit in~~lower-priced models since the ~~current-year period.~~

prior-year quarter.

Cost of products sold decreased ~~$115,740~~$15,826 to ~~$386,968,~~$371,142, or ~~89.7%~~89.2% of North American motorized net sales, for the three months ended October 31, ~~2018~~2019 compared to ~~$502,708,~~$386,968, or ~~88.7%~~89.7% of North American motorized net sales, for the three months ended October 31, ~~2017.~~2018. The changes in material, labor,freight-out and warranty costs comprised ~~$113,252~~$14,761 of the ~~$115,740~~$15,826 decrease primarily due to the decreased sales volume. Material, labor,freight-out and warranty costs as a combined percentage of North American motorized net sales ~~increased~~decreased to 84.8% for the three months ended October 31, 2019 compared to 85.2% for the three months ended October 31, 2018, ~~compared~~with the decrease primarily due to ~~84.8% for the three months ended October 31, 2017. This increase in percentage was primarily the result of an increase in the~~lower labor and warranty cost ~~percentage.~~percentages. Total manufacturing overhead decreased ~~$2,488~~$1,065 with the volume decrease, ~~but increased~~and decreased slightly as a percentage of motorized net sales from ~~3.9%~~4.5% to ~~4.5%, as the decrease in production resulted in higher overhead costs per unit sold.~~

~~Motorized~~4.4%.

North American motorized gross profit ~~decreased $19,673~~increased $517 to ~~$44,230,~~$44,747, or ~~10.3%~~10.8% of North American motorized net sales, for the three months ended October 31, ~~2018~~2019 compared to ~~$63,903,~~$44,230, or ~~11.3%~~10.3% of North American motorized net sales, for the three months ended October 31, ~~2017.~~2018. The ~~decrease~~increase in gross profit ~~was due primarily to the 36.2% decrease in unit sales volume noted above,~~ and the ~~decrease~~increase as a percentage of North American motorized net sales is due to the ~~increase~~decrease in the cost of products sold percentage noted above.

Selling, general and administrative expenses were ~~$21,252,~~consistent with the prior year and totaled $21,631, or ~~4.9%~~5.2% of North American motorized net sales, for the three months ended October 31, ~~2018~~2019 compared to ~~$26,708,~~$21,252, or ~~4.7%~~4.9% of North American motorized net sales, for the three months ended October 31, ~~2017.~~2018. The ~~$5,456 decrease~~increase as a percentage of sales was ~~primarily~~ due to ~~decreased motorized net~~the lower sales ~~and~~volumes.

North American motorized income before income taxes ~~which caused related commissions, bonuses and other compensation~~was $21,775, or 5.2% of North American motorized net sales, for the three months ended October 31, 2019 compared to ~~decrease by $4,669. In addition, legal, professional and related settlement costs decreased $984.~~

~~Motorized income before income taxes was~~ $21,712, or 5.0% of motorized net sales, for the three months ended October 31, ~~2018 compared to $37,586, or 6.6%~~2018. The primary reason for this increase in percentage was the decrease in the cost of ~~motorized~~products sold percentage noted above, partially offset by the increase in the selling, general and administrative expense percentages noted above.

EUROPEAN RECREATIONAL VEHICLES

The net sales for the three months ended October 31, ~~2017.~~ 2019 are as follows:


	Three Months Ended October 31, 2019		% of Segment Net Sales
NET SALES:
European
Motorcaravan	$	281,733	57.1
Campervan	77,597		15.7
Caravan	61,032		12.4
Other	72,645		14.8
Total European	$	493,007	100.0

	Three Months Ended October 31, 2019		% of Segment Shipments
# OF UNITS:
European
Motorcaravan	5,510		48.8
Campervan	2,631		23.3
Caravan	3,146		27.9
Total European	11,287		100.0

The ~~primary reason~~European recreational vehicles reportable segment for ~~this decrease~~the three months ended October 31, 2019 includes the results of operations of EHG, as more fully described in ~~percentage was~~Note 2 to the ~~impact~~Condensed Consolidated Financial Statements.

During the three months ended October 31, 2019, EHG recorded net sales of ~~the increases~~$493,007, gross profit of $64,611 and a net loss before income taxes of $23,024. The net loss before income taxes includes $27,483 in ~~the cost of products sold~~total depreciation and ~~selling, general and administrative expense percentages noted above.~~

amortization expense.

Financial Condition and Liquidity

As of October 31, ~~2018,~~2019, we had ~~$224,921~~$231,778 in cash and cash equivalents, of which $131,007 is held in the U.S. and the equivalent of $100,771, predominantly in Euros, was held in Europe, compared to ~~$275,249~~$425,615 on July 31, ~~2018.~~2019, of which $223,394 was held in the U.S. 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 U.S. The components of this ~~$50,328~~$193,837 decrease in cash and cash equivalents are described in more detail below, but the decrease was primarily attributable to ~~capital expenditures of $34,453, and~~ cash used in operations of ~~$15,834.~~

~~Working~~$51,997 and cash used in financing activities of $114,774 as described below.

Net working capital at October 31, ~~2018~~2019 was ~~$525,191, which included a $42,555 foreign currency forward contract liability,~~$554,098 compared to ~~$542,344~~$589,032 at July 31, ~~2018.~~2019. This decrease is primarily attributable to the ~~impact of the foreign currency forward contract liability,~~decrease in cash and cash equivalents noted above, partially offset by seasonal increases in trade accounts receivable and ~~the increase in inventory due to increased production lines.~~inventory. Capital expenditures of ~~$34,453~~$31,220 for the three months ended October 31, ~~2018~~2019 were made primarily for land and production building additions and improvements ~~as well as~~and replacing machinery and equipment used in the ordinary course of business.

We strive to maintain adequate cash balances to ensure we have sufficient resources to respond to opportunities and changing business conditions. We believe ouron-hand cash and cash equivalents, and funds generated from ~~continuing~~ operations, along with funds available under the ~~current~~ revolving asset-based credit facility will be sufficient to fund expected future operational requirements for the foreseeable future. As discussed in Note 16 to the Condensed Consolidated Financial Statements, in September 2018 we obtained financing commitments for an asset-based credit facility and a term loan to fund the pending acquisition of Erwin Hymer Group. Upon closing of this pending acquisition, these new financing commitments will replace the current asset-based facility obtained in conjunction with the Jayco acquisition, and any remaining unamortized facility fees related to the current facility, which totaled $4,186 at October 31, 2018, will become fully amortized when the existing facility is replaced.

Our main short-term priorities for the use of current and future available cash generated from operations are reducing indebtedness and paying regular dividends. Our long-term priorities also include funding our growth both organically and, over time, through ~~acquisitions,~~acquisition, and maintaining and growing our regular dividends over ~~time, reducing indebtedness incurred in connection with the acquisition~~time. We will also consider strategic and opportunistic repurchases of ~~the Erwin Hymer Group as discussed in Note 16 to the Condensed Consolidated Financial Statements and repurchasing~~ shares under the share repurchase program, as discussed in Note 1417 to the Condensed Consolidated Financial ~~Statements. Special~~Statements, and special dividends or other strategic share repurchases, as determined by the Company’s ~~Board, will~~Board.

In regard to reducing indebtedness, subsequent to October 31, 2019, we made additional principal payments totaling $13,500 on the U.S. term loan. On November 21, 2019, we also ~~continue~~paid 18,000 Euro ($19,964 using the applicable exchange rate from that day) on the asset-based credit facility. The term loan and asset-based credit facility are discussed in more detail in Note 13 to ~~be considered.~~

the Condensed Consolidated Financial Statements. As of December 6, 2019, our related outstanding balances on these debt instruments, using the approximate applicable exchange rate for that day for the asset-based credit facility, were as follows:


	December 6, 2019		October 31, 2019
Term loan – U.S.	$	995,002	$	1,008,502
Asset-based credit facility	$	16,650	$	36,808

In regard to growing our business, we anticipate capital expenditures during the remainder of fiscal ~~2019 of~~2020 for the Company ranging from approximately $100,000 to $115,000, primarily for the ~~continued expansion~~completion of ~~our facilities~~the new Airstream towables facility, other building projects and replacing and upgrading machinery, equipment and other assets throughout our facilities to be used in the ordinary course of business. ~~We may also consider additional strategic growth acquisitions that complement or expand our ongoing operations.~~

The Company’s Board currently intends to continue regular quarterly cash dividend payments in the future. As is customary under ~~asset-based lines of~~the credit facilities, certain actions, including our ability to pay dividends, are subject to the satisfaction of certain payment conditions prior to payment. The conditions for the payment of dividends under the existing debt ~~facility~~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, in addition to compliance with any then-existing financing facilities.

Future purchases of the Company’s common stock or special cash dividends may occur based upon market and business conditions and excess cash availability, subject to potential customary limits and restrictions pursuant to ~~any then-existing~~the credit ~~facility,~~facilities, applicable legal limitations and determination by the Board.

Operating Activities

Net cash used in operating activities for the three months ended October 31, ~~2018~~2019 was ~~$15,834~~$51,997 as compared to net cash ~~provided by~~used in operating activities of ~~$13,415~~$15,834 for the three months ended October 31, ~~2017.~~

2018.

For the three months ended October 31, 2019, net income adjusted for non-cash items (primarily depreciation, amortization of intangibles and stock-based compensation) provided $112,687 of operating cash. The change in net working capital used $164,684 of operating cash during that period, primarily due to seasonal increases in accounts receivable and inventory and a reduction in accrued liabilities.

For the three months ended October 31, 2018, net income adjusted fornon-cash items (primarily depreciation, amortization of intangibles, ~~foreign~~forward currency forward contract loss, deferred income tax benefit and stock-based compensation) provided $83,708 of operating cash. The ~~change~~changes in ~~net~~ working capital used $99,542 of operating cash during that period, due to a seasonal increase in accounts receivable and an inventory increase in conjunction with the increases in production facilities and lines. Income tax payments also exceeded the income tax provision during the period, and accounts payable decreased due to the timing of payments for inventory.

~~For~~

Investing Activities

Net cash used in investing activities for the three months ended October 31, ~~2017, net income adjusted fornon-cash~~ items (primarily depreciation, amortization of intangibles, deferred income tax benefit and stock-based compensation) provided $148,989 of operating cash. The changes in working capital used $135,574 of operating cash during that period,2019 was $13,803, primarily ~~the result of a larger than usual seasonal increase in accounts receivable~~ due to ~~both the timing~~capital expenditures of shipments and the increase in sales. Inventory also increased in correlation with the increases in backlog and production facilities and lines, and required income tax payments exceeded the income tax provision during the period as well. These increases were$31,220, partially offset by ~~increases in accounts payable~~proceeds from the dispositions of property, plant and ~~accrued liabilities.~~

~~Investing Activities~~

equipment of $18,951.

Net cash used in investing activities for the three months ended October 31, 2018 was $34,392, primarily due to capital expenditures of $34,453.

Financing Activities

Net cash used in ~~investing~~financing activities for the three months ended October 31, ~~2017~~2019 was ~~$30,116,~~$114,774, consisting primarily ~~due to capital expenditures~~ of ~~$34,283,~~$148,759 in debt payments, partially offset by ~~proceeds received~~$41,569 in borrowings on the ~~dispositions~~revolving credit facilities. During the first quarter of ~~property, plant~~fiscal 2020, the Company's Board approved and ~~equipment~~declared the payment of ~~$3,526.~~

~~Financing Activities~~

a regular dividend of $0.40 per share for the first quarter of fiscal 2020, but this dividend, totaling $22,080, was not paid until the second quarter of fiscal 2020.

Net cash used in financing activities for the three months ended October 31, 2018 was $102. During the first quarter of fiscal 2019, the ~~Company’s~~Company's Board approved and declared the payment of a regular ~~quarterly~~ dividend of $0.39 per share for the first quarter of fiscal 2019, but this dividend, totaling $20,595, was not paid until the second quarter of fiscal 2019.

Net cash used in financing activities for the three months ended October 31, 2017 was $55,094, primarily for principal payments on the revolving credit facility totaling $55,000. During the first quarter of fiscal 2018, the Company’s Board of Directors approved and declared the payment of a

The Company increased its previous regular quarterly dividend of ~~$0.37~~$0.39 per share ~~for~~to $0.40 per share in October 2019. In October 2018, the ~~first quarter of fiscal 2018, but this dividend, totaling $19,497, was not paid until the second quarter of fiscal 2018.~~

~~The~~ Company increased its previous regular quarterly dividend of $0.37 per share to $0.39 per ~~share in October 2018. In October 2017, the Company increased its previous regular quarterly dividend of $0.33 per share to $0.37 per~~ share.

Accounting ~~Pronouncements~~

Standards

Reference is made to Note 1 of our Condensed Consolidated Financial Statements contained in this report for a summary of recently issued accounting ~~pronouncements, which summary is hereby incorporated by reference.~~

standards applicable to the Company.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~We have exposure~~

The Company is exposed to market risk from changes in ~~short-term~~foreign 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.

CURRENCY EXCHANGE RISK – The Company's principal currency exposures mainly relate to the Euro and British Pound Sterling. The Company uses foreign currency forward contracts to manage certain foreign exchange rate exposure related to anticipated sales transactions in Pounds Sterling with financial instruments whose maturity date, along with the realized gain or loss, occurs on or near the execution of the anticipated transaction.

The Company also holds $839,596 of debt denominated in Euros at October 31, 2019. A hypothetical 10% change in the Euro/U.S. Dollar exchange rate would change our October 31, 2019 debt balance by approximately $83,960.

INTEREST RATE RISK –The Company uses pay-fixed, receive-floating interest rate swaps to convert a portion of the Company’s long-term debt from floating to fixed-rate debt. As of October 31, 2019, the Company has $798,200 as notional amounts hedged in relation to the floating-to-fixed interest rate swap. The notional amounts hedged will decrease on a quarterly basis to zero by August 1, 2023.

Based on our interest rate exposure at October 31, 2019, assumed floating-rate debt levels throughout the next 12 months and the effects of our existing derivative instruments, a one-percentage-point increase in interest rates on(approximately 19.5% 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), our results of operations and cash flows for the three months ended~~at October 31, ~~2018 and October 31, 2017~~2019) would ~~not have been materially affected.~~

result in an estimated $7,066 pre-tax reduction in net earnings over a one-year period.

ITEM 4. CONTROLS AND PROCEDURES

The Company maintains “disclosure controls and ~~procedures”,~~procedures,” as such term is defined under Exchange Act Rule13a-15(e), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The Company has carried out an evaluation, as of the end of the period covered by this report, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at attaining the level of reasonable assurance noted above.

During the quarter ended October 31, ~~2018,~~2019, there were 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.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is involved in certain litigation arising out of its operations in the normal course of its business, most of which is based upon state “lemon 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.

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form10-K for the fiscal year ended July 31, ~~2018.~~

2019.

ITEM 6. EXHIBITS


Exhibit			Description
31.1
~~2.1~~	Sale and Purchase Agreement dated as of September 18, 2018 (the “Sale and Purchase Agreement”), by and among the Company, Tyr Holdings Gmbh & Co. AG, a wholly-owned subsidiary of the Company and the selling parties identified therein.*

~~10.1~~	~~Financing Commitment Letter by and among the Company, JPMorgan Chase Bank, N.A. and Barclays Bank PLC~~

~~31.1~~	Chief Executive Officer’s Rule13a-14(a) Certification
31.2
~~31.2~~	Chief Financial Officer’s Rule13a-14(a) Certification
32.1
~~32.1~~	Chief Executive Officer’s Section 1350 Certification
32.2
~~32.2~~	Chief Financial Officer’s Section 1350 Certification
101.INS
~~101.INS~~	XBRL Instance Document
101.SCH
~~101.SCH~~	XBRL Taxonomy Extension Schema Document
101.CAL
~~101.CAL~~	XBRL Taxonomy Calculation Linkbase Document
101.PRE
~~101.PRE~~	XBRL Taxonomy Presentation Linkbase Document
101.LAB
~~101.LAB~~	XBRL Taxonomy Label Linkbase Document
101.DEF
~~101.DEF~~	XBRL Taxonomy Extension Definition Linkbase Document
104		Cover Page Interactive Data File (formatted in XBRL and contained in Exhibit 101)

Attached as Exhibits 101 to this report are the following financial statements from the ~~Company’s~~Company's Quarterly report on Form10-Q for the quarter ended October 31, ~~2018~~2019 formatted in XBRL (“("eXtensible Business Reporting ~~Language”~~Language"): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income and Comprehensive Income, (iii) the Condensed Consolidated Statements of Cash Flows, (iv) the Condensed Consolidated Statements of Changes in Stockholders' Equity and ~~(iv)~~(v) related notes to these financial statements.

*	~~Certain schedules and exhibits referenced in the Sale and Purchase Agreement have been omitted in accordance with Item 601(b)(2) of RegulationS-K.~~ ~~A copy of any omitted schedule and/or exhibit will be furnished supplementally to the Securities and Exchange Commission upon request.~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

THOR INDUSTRIES, INC.

(Registrant)


DATE:		December 9, 2019		/s/ Robert W. Martin
				Robert W. Martin
				President and Chief Executive Officer

DATE:		December 9, 2019		~~THOR INDUSTRIES, INC.~~
	~~(Registrant)~~ /s/ Colleen Zuhl

~~DATE: December 6, 2018~~			~~/s/ Robert W. Martin~~
	~~Robert W. Martin~~
	~~President and Chief Executive Officer~~ Colleen Zuhl

~~DATE: December 6, 2018~~			~~/s/ Colleen Zuhl~~
	~~Colleen Zuhl~~
	Senior Vice President and Chief Financial Officer


	October 31, 2018			July 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	224,921		$	275,249
Accounts receivable, trade, net		483,543			467,488
Accounts receivable, other, net		20,248			19,747
Inventories, net		565,346			537,909
Prepaid income taxes, expenses and other		30,898			11,281

Total current assets		1,324,956			1,311,674


Property, plant and equipment, net		543,697			522,054


Other assets:
Goodwill		377,693			377,693
Amortizable intangible assets, net		375,757			388,348
Deferred income taxes, net		80,872			78,444
Equity investment in joint venture		46,980			48,463
Other		50,473			51,989

Total other assets		931,775			944,937

TOTAL ASSETS	$	2,800,428		$	2,778,665


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	255,512		$	286,974
Accrued liabilities:
Compensation and related items		84,695			97,122
Product warranties		271,749			264,928
Income and other taxes		14,424			19,345
Promotions and rebates		68,565			59,133
Product, property and related liabilities		12,767			17,815
Dividends payable		20,595			—
Foreign currency forward contract liability		42,555			—
Other		28,903			24,013

Total current liabilities		799,765			769,330


Unrecognized tax benefits		13,093			12,446
Other liabilities		59,224			59,148

Total long-term liabilities		72,317			71,594


Contingent liabilities and commitments

Stockholders’ equity:
Preferred stock – authorized 1,000,000 shares; none outstanding		—			—
Common stock – par value of $.10 per share; authorized 250,000,000 shares; issued 62,933,415 and 62,765,824 shares, respectively		6,293			6,277
Additionalpaid-in capital		259,303			252,204
Retained earnings		2,010,896			2,022,988
Less treasury shares of 10,126,434 and 10,070,459, respectively, at cost		(348,146	)		(343,728	)

Total stockholders’ equity		1,928,346			1,937,741

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,800,428		$	2,778,665


	Three Months Ended October 31,
	2018		2017
Net sales	$	1,755,976	$	2,231,668
Cost of products sold		1,548,720		1,898,483

Gross profit		207,256		333,185
Selling, general and administrative expenses		102,693		134,263
Amortization of intangible assets		12,591		13,558
Acquisition-related costs		57,089		—
Interest income		1,222		381
Interest expense		876		1,412
Other income (expense), net		(3,712)		2,758

Income before income taxes		31,517		187,091
Income taxes		17,564		58,685

Net income and comprehensive income	$	13,953	$	128,406


Weighted-average common shares outstanding:
Basic		52,726,496		52,611,926
Diluted		52,899,603		52,818,363

Earnings per common share:
Basic	$	0.26	$	2.44
Diluted	$	0.26	$	2.43

Regular dividends declared per common share	$	0.39	$	0.37


THOR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED OCTOBER 31, 2019 AND 2018 (UNAUDITED)

	Three Months Ended October 31, 2019
								Accumulated					Stockholders'
				Additional				Other					Equity		Non-		Total
	Common Stock					Paid-In		Retained		Comprehensive	Treasury Stock						Attributable		controlling	Stockholders'
	Shares	Amount		Capital		Earnings		Income (Loss)		Shares	Amount		to Thor		Interests		Equity
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	—	—		—		51,065		—		—	—		51,065		780		51,845
Restricted stock unit activity	206,624	21		1,436		—		—		71,341	(3,763)		(2,306)		—		(2,306)
Cash dividends $.40 per common share	—	—		—		(22,080)		—		—	—		(22,080)		—		(22,080)
Stock compensation expense	—	—		5,013		—		—		—	—		5,013		—		5,013
Other comprehensive loss	—	—		—		—		(2,587)		—	—		(2,587)		(142)		(2,729)

Balance at October 31, 2019	65,396,531	$	6,540	$	422,831	$	2,095,659	$	(59,591)	10,197,775	$	(351,909)	$	2,113,530	$	11,441	$	2,124,971






	Three Months Ended October 31, 2018
								Accumulated					Stockholders'
				Additional				Other					Equity		Non-		Total
	Common Stock					Paid-In		Retained		Comprehensive	Treasury Stock						Attributable		controlling	Stockholders'
	Shares	Amount		Capital		Earnings		Income (Loss)		Shares	Amount		to Thor		Interests		Equity
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	—	—		—		13,953		—		—	—		13,953		—		13,953
Restricted stock unit activity	167,591	16		2,569		—		—		55,975	(4,418)		(1,833)		—		(1,833)
Cash dividends $.39 per common share	—	—		—		(20,595)		—		—	—		(20,595)		—		(20,595)
Stock compensation expense	—	—		4,530		—		—		—	—		4,530		—		4,530

Cumulative effect of adoption of ASU no. 2014-09, net of tax	—	—		—		(5,450)		—		—	—		(5,450)		—		(5,450)

Balance at October 31, 2018	62,933,415	$	6,293	$	259,303	$	2,010,896	$	—	10,126,434	$	(348,146)	$	1,928,346	$	—	$	1,928,346


	Weighted-Average
	Remaining		October 31, 2018				July 31, 2018
	Life in Years at		Cost		Accumulated		Cost		Accumulated
	October 31, 2018		Cost		Amortization		Cost		Amortization
Dealer networks/customer relationships		15	$	404,960	$	157,571	$	404,960	$	147,077
Trademarks		17		146,117		26,136		146,117		24,364
Design technology and other intangibles		7		18,200		9,858		18,200		9,555
Non-compete agreements		1		450		405		450		383

Total amortizable intangible assets			$	569,727	$	193,970	$	569,727	$	181,379


For the fiscal year ending July 31, 2019	$	50,043
For the fiscal year ending July 31, 2020		46,194
For the fiscal year ending July 31, 2021		42,860
For the fiscal year ending July 31, 2022		37,753
For the fiscal year ending July 31, 2023		30,291
For the fiscal year ending July 31, 2024 and thereafter		181,207

	$	388,348


	Three Months Ended
Supplemental Cash Flows Information	October 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	3,005
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	278


Supplemental Balance Sheet Information	October 31, 2019
Operating leases:
Operating lease right-of-use assets	$	32,008
Other current liabilities	4,307
Other long-term liabilities	27,825
Total operating lease liabilities	$	32,132

Finance leases:


Finance lease right-of-use assets	$	4,079
Other current liabilities	449
Other long-term liabilities	5,134
Total finance lease liabilities	$	5,583


	October 31, 2019
Weighted-average remaining lease term
Operating leases	14.5 years
Finance leases	7.6 years
Weighted-average discount rate
Operating leases	3.4	%
Finance leases	9.7	%


	Operating Leases		Financing Leases
For the remainder of the fiscal year ending July 31, 2020	$	7,127	$	729
For the fiscal year ending July 31, 2021	7,370		991
For the fiscal year ending July 31, 2022	5,912		1,013
For the fiscal year ending July 31, 2023	4,144		1,036
For the fiscal year ending July 31, 2024	3,526		1,059
For the fiscal year ending July 31, 2025 and thereafter	20,845		3,092
Total future lease payments	$	48,924	$	7,920
Less: amount representing interest	(16,792)		(2,337)
Total reported lease liability	$	32,132	$	5,583


Balance as of July 31, 2018	$	2,022,988
Cumulative effect of the change in accounting principle, net of tax		(5,450	)
Net income		13,953
Dividends declared but not paid		(20,595	)

Balance as of October 31, 2018	$	2,010,896


	Three Months Ended October 31, 2018			Three Months Ended October 31, 2017
NET SALES:
Towables
Travel Trailers and Other	$	761,484		$	993,604
Fifth Wheels		517,614			624,897

Total Towables		1,279,098			1,618,501

Motorized
Class A		227,274			252,423
Class C		184,384			286,666
Class B		19,540			27,522

Total Motorized		431,198			566,611
Other, primarily aluminum extruded components		73,848			82,919
Intercompany eliminations		(28,168	)		(36,363	)

Total	$	1,755,976		$	2,231,668


	U.S. and Canada Wholesale Unit Shipments
	Nine Months Ended September 30,				Increase (Decrease)			%
	2018		2017		Increase (Decrease)			Change
Towable Units		333,253		330,662		2,591			0.8
Motorized Units		45,465		47,333		(1,868	)		(3.9	)

Total		378,718		377,995		723			0.2


	Three Months Ended October 31, 2018					Three Months Ended October 31, 2017					Change Amount			% Change
NET SALES:
Recreational vehicles
Towables	$	1,279,098				$	1,618,501				$	(339,403	)		(21.0	)
Motorized		431,198					566,611					(135,413	)		(23.9	)

Total recreational vehicles		1,710,296					2,185,112					(474,816	)		(21.7	)

Other		73,848					82,919					(9,071	)		(10.9	)
Intercompany eliminations		(28,168	)				(36,363	)				8,195			22.5

Total	$	1,755,976				$	2,231,668				$	(475,692	)		(21.3	)


# OF UNITS:
Recreational vehicles
Towables		49,068					66,095					(17,027	)		(25.8	)
Motorized		4,366					6,843					(2,477	)		(36.2	)

Total		53,434					72,938					(19,504	)		(26.7	)


GROSS PROFIT:				% of Segment Net Sales					% of Segment Net Sales		Change Amount			% Change
Recreational vehicles
Towables	$	153,692			12.0	$	256,713			15.9	$	(103,021	)		(40.1	)
Motorized		44,230			10.3		63,903			11.3		(19,673	)		(30.8	)

Total recreational vehicles		197,922			11.6		320,616			14.7		(122,694	)		(38.3	)
Other, net		9,334			12.6		12,569			15.2		(3,235	)		(25.7	)

Total	$	207,256			11.8	$	333,185			14.9	$	(125,929	)		(37.8	)


SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Recreational vehicles
Towables	$	69,082			5.4	$	86,760			5.4	$	(17,678	)		(20.4	)
Motorized		21,252			4.9		26,708			4.7		(5,456	)		(20.4	)

Total recreational vehicles		90,334			5.3		113,468			5.2		(23,134	)		(20.4	)
Other		2,089			2.8		2,569			3.1		(480	)		(18.7	)
Corporate		10,270			—		18,226			—		(7,956	)		(43.7	)

Total	$	102,693			5.8	$	134,263			6.0	$	(31,570	)		(23.5	)


INCOME (LOSS) BEFORE INCOME TAXES:
Recreational vehicles
Towables	$	74,550			5.8	$	158,851			9.8	$	(84,301	)		(53.1	)
Motorized		21,712			5.0		37,586			6.6		(15,874	)		(42.2	)

Total recreational vehicles		96,262			5.6		196,437			9.0		(100,175	)		(51.0	)
Other, net		5,910			8.0		8,483			10.2		(2,573	)		(30.3	)
Corporate		(70,655	)		—		(17,829	)		—		(52,826	)		(296.3	)

Total	$	31,517			1.8	$	187,091			8.4	$	(155,574	)		(83.2	)


ORDER BACKLOG:	As of October 31, 2018		As of October 31, 2017		Change Amount			% Change
Recreational vehicles
Towables	$	1,018,384	$	2,455,056	$	(1,436,672	)		(58.5	)
Motorized		740,228		1,123,745		(383,517	)		(34.1	)

Total	$	1,758,612	$	3,578,801	$	(1,820,189	)		(50.9	)