1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED January 31, 2000 COMMISSION FILE NUMBER 1-9235
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THOR INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 93-0768752
------------------------------- -------------------
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
419 West Pike Street, Jackson Center, OH 45334-0629
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (937) 596-6849
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at 1/31/2000
----- ------------------------
Common stock, par value 12,105,260 shares
$.10 per share
2
THOR INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
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ASSETS
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(Unaudited)
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January 31, 2000 July 31, 1999
---------------- -------------
Current assets:
Cash and cash equivalents $38,497,787 $68,865,635
Investments short term 12,629,225 --
Accounts receivable:
Trade 54,670,988 52,167,539
Other 749,406 1,667,486
Inventories 86,564,134 72,850,279
Deferred income taxes and other 9,635,107 6,572,972
--------- ---------
Total current assets 202,746,647 202,123,911
----------- -----------
Property:
Land 1,493,415 1,400,995
Buildings and improvements 21,017,104 19,010,749
Machinery and equipment 16,206,776 14,122,834
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Total cost 38,717,295 34,534,578
Accumulated depreciation and amortization 13,260,675 12,218,224
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Property, net 25,456,620 22,316,354
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Investments:
Joint ventures 3,460,568 3,419,101
Other 4,541,894 --
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Other assets:
Goodwill 10,996,236 11,251,342
Non compete 1,683,812 2,235,010
Trademarks 1,932,650 2,020,319
Other 2,857,079 2,545,698
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Total other assets 17,469,777 18,052,369
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TOTAL ASSETS $253,675,506 $245,911,735
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $42,150,862 $48,290,096
Accrued liabilities:
Taxes 2,988,744 --
Compensation and related items 9,620,310 13,676,462
Product warranties 11,296,961 11,543,598
Other 5,821,326 5,519,658
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Total current liabilities 71,878,203 79,029,814
---------- ----------
Other liabilities 1,596,956 1,508,756
Stockholders' equity:
Common stock - authorized 20,000,000 shares;
issued 13,730,997 shares @ 01/31/00 and 13,715,147
shares @ 7/31/99; par value of $.10 per share 1,373,100 1,371,515
Additional paid in capital 25,984,030 25,684,380
Foreign currency translation (869,494) (1,198,511)
Retained earnings 177,904,051 162,018,698
Restricted Stock Plan (346,324) (216,168)
Unrealized depreciation on investments (148,950) --
Cost of treasury shares 1,625,737 shares @ 01/31/00;
1,566,637 shares @ 7/31/99 (23,696,066) (22,286,749)
------------ ------------
Total stockholders' equity 180,200,347 165,373,165
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $253,675,506 $245,911,735
============ ============
See notes to consolidated financial statements
3
THOR INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
FOR THE THREE MONTHS AND SIX MONTHS ENDED JANUARY 31, 2000 AND 1999
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(Unaudited)
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THREE MONTHS ENDED JANUARY 31 SIX MONTHS ENDED JANUARY 31
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2000 1999 2000 1999
---- ---- ---- ----
Net sales $193,709,463 $165,533,004 $414,730,215 $354,709,944
Cost of products sold 168,743,799 144,547,890 360,195,060 310,702,392
----------- ----------- ----------- -----------
Gross profit 24,965,664 20,985,114 54,535,155 44,007,552
Selling, general, and
administrative expenses 13,530,986 11,649,927 27,398,146 23,378,283
---------- ---------- ---------- ----------
Operating income 11,434,678 9,335,187 27,137,009 20,629,269
Interest income 736,264 461,714 1,553,850 1,042,616
Interest expense (71,299) (25,416) (111,065) (54,747)
Other income (expense) 28,453 (169,480) 256,524 135,984
Loss on divestment of subsidiary (706,955) (402,688) (928,077) (592,688)
--------- --------- --------- ---------
Income before income taxes 11,421,141 9,199,317 27,908,241 21,160,434
Provision for income taxes 4,710,798 3,747,031 11,537,991 8,715,947
--------- --------- ---------- ---------
Net income $6,710,343 $5,452,286 $16,370,250 $12,444,487
========== ========== =========== ===========
Average common shares outstanding 12,109,647 12,185,359 12,128,941 12,203,088
- --------------------------------- ========== ========== ========== ==========
Earnings per common share:
- -------------------------
Basic $.55 $.45 $1.35 $1.02
==== ==== ===== =====
Diluted $.55 $.44 $1.34 $1.01
==== ==== ===== =====
Dividends paid per common share $.02 $.02 $.04 $.04
- ------------------------------- ==== ==== ==== ====
See notes to consolidated financial statements
4
THOR INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE SIX MONTHS ENDED JANUARY 31, 2000 AND 1999
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(Unaudited)
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2000 1999
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $16,370,250 $12,444,487
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation 1,358,723 1,110,994
Amortization 893,973 751,169
Loss on divestment of subsidiary 928,077 --
Changes in non cash assets and liabilities
- ------------------------------------------
Accounts receivable (1,585,369) (169,102)
Inventories (13,713,855) (13,106,273)
Prepaid expenses and other (3,376,296) (81,691)
Accounts payable (6,139,234) (10,327,225)
Accrued liabilities (1,940,454) (365,507)
Other liabilities 155,633 112,674
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Net cash used in operating activities (7,048,552) (9,630,474)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant & equipment (4,487,558) (3,543,910)
Disposals of property, plant & equipment 30,086 37,969
Purchase of available for sale investment (4,771,048) --
Purchase of trading investments (12,661,714) --
Proceeds from sale of subsidiary -- 261,954
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Net cash used in investing activities (21,890,234) (3,243,987)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends (484,897) (486,675)
Purchase of treasury stock (1,409,317) (1,683,573)
Proceeds from issuance of common stock 136,135 --
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Net cash used in financing activities (1,758,079) (2,170,248)
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EFFECT OF EXCHANGE RATE CHANGES ON CASH 329,017 5,025
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Net decrease in cash and equivalents (30,367,848) (15,039,684)
Cash and equivalents, beginning of year 68,865,635 43,531,805
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CASH AND EQUIVALENTS, END OF PERIOD $38,497,787 $28,492,121
============= =============
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid $9,256,950 $8,808,459
Interest paid 111,065 54,747
NON-CASH TRANSACTIONS:
Issuance of restricted stock 165,100 126,372
Note from Mountain High Coachworks, Inc. -- 750,000
See notes to consolidated financial statements
5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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1. The accompanying consolidated financial statements, which are unaudited,
reflect all adjustments consisting of only normal recurring adjustments,
which are, in the opinion of management, necessary to present fairly the
consolidated operating results for such unaudited periods.
2. Major classifications of inventories are:
(Unaudited)
January 31, 2000 July 31, 1999
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Raw materials $36,155,422 $31,479,371
Chassis 19,375,512 19,944,422
Work in process 20,595,514 20,959,710
Finished goods 14,512,921 4,128,011
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Total 90,639,369 76,511,514
Less excess of FIFO costs over LIFO costs 4,075,235 3,661,235
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Total inventories $86,564,134 $72,850,279
=========== ===========
3. Earnings Per Share:
Three months Three months Six months Six months
ended ended ended ended
January 31, 2000 January 31, 1999 January 31, 2000 January 31, 1999
---------------- ---------------- ---------------- ----------------
Weighted average shares
outstanding for basic
earnings per share 12,109,647 12,185,359 12,128,941 12,203,088
Stock options 59,886 67,467 58,674 62,102
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Total - diluted shares 12,169,533 12,252,826 12,187,615 12,265,190
========== ========== ========== ==========
4. Comprehensive Income:
Three months Three months Six months Six months
ended ended ended ended
January 31, 2000 January 31, 1999 January 31, 2000 January 31, 1999
---------------- ---------------- ---------------- ----------------
Net Income $6,710,343 $5,452,286 $16,370,250 $12,444,487
Foreign currency
translation adj. 113,806 75,905 329,017 5,025
Unrealized depreciation
on investments (357,597) -- (148,950) --
------------- ------------- --------------- ---------------
Comprehensive Income $6,366,552 $5,528,191 $16,550,317 $12,449,512
========== ========== =========== ===========
6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
5. Segment Information:
Three Months Three Months Six Months Six Months
ended ended ended ended
January 31, 2000 January 31, 1999 January 31, 2000 January 31, 1999
---------------- ---------------- ---------------- ----------------
Net Sales:
Recreation vehicles
Towables $76,099,087 $64,396,718 $169,143,373 $144,979,247
Motorized 55,971,287 46,328,464 123,545,211 102,192,282
Other 1,845,143 1,645,289 3,980,749 3,518,726
Buses 59,793,946 53,162,533 118,060,882 104,019,689
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Total $193,709,463 $165,533,004 $414,730,215 $354,709,944
============ ============ ============ ============
Operating Income:
Recreation vehicles $8,081,185 $5,607,276 $19,928,043 $14,540,848
Buses 4,765,504 4,816,708 9,993,898 8,152,433
Corporate (1,412,011) (1,088,797) (2,784,932) (2,064,012)
----------- ----------- ----------- -----------
Total $11,434,678 $9,335,187 $27,137,009 $20,629,269
=========== ========== =========== ===========
Identifiable Assets:
Recreation vehicles $122,954,112 $109,209,308
Buses 56,849,546 55,118,085
Corporate 73,871,848 45,428,037
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Total $253,675,506 $209,755,430
============ ============
6. In December 1998, the Company sold certain assets and liabilities of the
Company's Thor West operations for $1,011,954 to the management of Thor
West. Thor West's net sales and operating loss included in the three
months ended October 1998 consolidated statements of income of Thor
Industries, Inc. are $4,050,351 and $(848,207), respectively.
As part of the transaction, the Company agreed to guarantee $750,000 of
secured debt of the acquirer, Mountain High Coachworks, and during the
first quarter of fiscal 2000, pursuant to an agreement to discontinue
purchasing and consigning chassis to Mountain High Coachworks, the Company
agreed to guarantee up to $1,000,000 of financing on chassis purchased
through Ford Motor Credit. No reserve has been provided for either
guarantee.
During the second quarter of fiscal 2000, the Company reserved $707,000
for losses it may incur due to serious financial difficulties being
encountered by Mountain High Coachworks and its ability to pay for certain
chassis due Thor. In the event that Mountain High Coachworks is not able
to continue performing its warranty obligations, the Company would be
responsible for warranty on Thor West product sold before December 9,
1998.
7. Derivative Instruments and Hedging Activities - SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities," was issued in June
1998. The statement requires derivatives to be recorded on the balance
sheet as assets or liabilities, measured at fair value. Gains or losses
resulting from changes in fair value of the derivatives are recorded
depending upon whether the instruments meet the criterion for hedge
accounting. This statement is effective for fiscal years beginning after
June 15, 2000. The effect on the Company's financial statements has not
yet been determined.
8. The Company classifies its investments in accordance with Statement of
Financial Accounting Standards No. 115, "Accounting for investments in
Debt & Equity Securities," which requires that all applicable investments
be categorized as either trading, available-for-sale or held-to-maturity
securities. At January 31, 2000, the Company held equity securities with a
fair value of $4,541,894 and cost basis of $4,771,048. The securities are
classified as available-for-sale and included in other investments. Gross
unrealized holding losses of $229,154 are reported as a separate component
of Stockholders' Equity, net of deferred income taxes. There were no sales
of investments during the six months ended January 31, 2000. In addition,
the Company has acquired certain debt securities during the second quarter
that are classified as trading securities and reported as investments
short term. The change in net unrealized depreciation is included in
income during the quarter.
7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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Continued
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PART II
Item 4. Submission of Matters to a Vote of Security Holders
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Annual Meeting of Shareholders on December 6, 1999
Matters Voted on by Shareholders:
---------------------------------
1.) Election of Directors: Wade F.B. Thompson, Neil D.
Chrisman, and Jan H. Suwinski
Results of Voting by Shareholders:
----------------------------------
For Against Abstain
Wade F.B. Thompson 10,953,533 -0- 39,274
Neil D. Chrisman 10,977,549 -0- 15,258
Jan H. Suwinski 10,978,720 -0- 14,087
8
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
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OPERATIONS
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Quarter Ended January 31, 2000 vs. Quarter Ended January 31, 1999
- -----------------------------------------------------------------
Net sales for the second quarter totaled $193,709,463 up 17.0% from $165,533,004
in the same period last year. Income before income taxes was $11,421,141 up
24.2% from $9,199,317 in the same period last year. The increase in income
before taxes of $2,221,824 is primarily attributable to increased sales.
Recreation vehicle revenues of $133,915,517 were 19.2% higher than last year and
were 69.1% of total company revenues compared to 68.0% last year. Recreation
vehicle revenues were up primarily due to increased unit sales. Bus revenues of
$59,793,946 were 12.5% higher than last year and were 30.9% of total company
revenues compared to 32.0% last year. There were no price increases in the
quarter ended January 31, 2000.
2000 operating income totaled $11,434,678, up 22.5% from $9,335,187 in the same
period last year. The $2,099,491 increase in operating income is the result of
increased revenues. Selling, general and administrative expense and amortization
of intangibles increased to $13,530,986, 7.0% of sales, from $11,649,927, 7.0%
of sales, primarily due to increased income related compensation and selling
expense related to increased volume. Interest income increased by $274,550
primarily due to investment of cash. During the second quarter of fiscal 2000,
the Company reserved $707,000 for losses it may incur due to serious financial
difficulties being encountered by Mountain High Coachworks and its ability to
pay for certain chassis due Thor. The combined income tax rate was 41.2% in the
current year compared to 40.7% last year.
Six Months Ended January 31, 2000 vs. Six Months Ended January 31, 1999
- -----------------------------------------------------------------------
Net sales for the six months totaled $414,730,215, up 16.9% from $354,709,944 in
the same period last year. Income before income taxes was $27,908,241, up 31.9%
from $21,160,434 in the same period last year. Of the $6,747,807 increase in
income before taxes, $391,357 represents reduced losses of Thor West in 2000 of
$928,077 versus loss from operations of $726,746, a $592,688 loss on divestment
in 1999, and $454,916 represents the increase in net interest income. The
remaining increase is attributable to increased sales. Recreation vehicle
revenues of $296,669,333 were 18.3% higher than last year and were 71.5% of
total company revenue compared to 71.0% last year. Recreation vehicle revenues
were up primarily due to increased unit sales. Bus revenues of $118,060,882 were
13.5% higher than last year and were 28.5% of total company revenues compared to
29.0% last year. Manufacturing gross profits increased to 13.1% compared to
12.4% last year due primarily to higher volumes. Price increases averaged
approximately 1.5% for the six months ended January 31, 2000.
2000 operating income totaled $27,137,009, up 31.5% from $20,629,269 in the same
period last year. Of the $6,507,740 increase in operating income, $726,746
represents reduced operating losses of Thor West in 2000 of $ -0- versus
$726,746 in 1999. The balance of increased operating income is the result of
increased revenues. Selling, general and administrative expense and amortization
of intangibles increased to $27,398,146, 6.6% of sales, from $23,378,283, 6.6%
of sales, primarily due to increased income related compensation and selling
expenses related to increased volumes. Interest income increased by $511,234
primarily due to investment of cash. The combined income tax rate was 41.3% in
the current year compared to 41.2% last year.
Financial Condition and Liquidity
- ---------------------------------
As of January 31, 2000, the Company had $51,127,012 in cash, cash equivalents
and short term investments, compared to $68,865,635 on July 31, 1999. Working
capital at January 31, 2000 was $130,868,444 compared to $123,094,097 at July
31, 1999. Inventory valued at current cost at January 31, 2000 exceeded the LIFO
inventory by $4,075,235.
On January 31, 2000, the Company had a $30,000,000 revolving line of credit with
Harris Trust and Savings Bank. There were no borrowings at January 31, 2000. The
loan agreement contains certain covenants, including restrictions on additional
indebtedness, and the Company must maintain certain financial ratios. The line
of credit bears interest at negotiated rates below prime and expires on November
30, 2000. The Company had no long term debt as of January 31, 2000.
During the six months of fiscal 2000, Thor purchased 59,100 shares of its common
stock, increasing treasury stock by $1,409,317.
9
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
- ------------------------------------------------------------------------
OPERATIONS
- ----------
CONTINUED
---------
The Company believes internally generated funds and the revolving credit
agreement already in place will be sufficient to meet current operating needs
and anticipated capital requirements. Capital expenditures of $4,487,558 were
primarily for the expansion of the Company's Four Winds manufacturing facility.
The Company anticipates additional capital expenditures in fiscal 2000 of
approximately $8,000,000 primarily to expand its Komfort, Thor California, and
ElDorado Kansas facilities and the purchase of land and buildings formerly
leased by Airstream.
Amortization of intangibles increased from $751,169 for the period ended January
31, 1999 to $893,973 for the period ended January 31, 2000.
Year 2000 Disclosure
- --------------------
The Company did not experience any significant Year 2000 issues in its
information technology ("IT") systems or non-information technology systems
through January 31, 2000. No major business processes, operations or customer
deliveries were disrupted as a result of the Year 2000 issue.
Through January 31, 2000, the total cost associated with the Year 2000 projects
was approximately $343,000, substantially all of which was to purchase revised
software and hardware, and was funded through operating cash flows.
This report includes "forward looking statements" that involve uncertainties and
risks. There can be no assurance that actual results will not differ from the
Company's expectations. Factors which could cause materially different results
include, among others, the success of new product introductions, the pace of
acquisitions and cost structure improvements, competitive and general economic
conditions, and the other risks set forth in the Company's filings with the
Securities and Exchange Commission.
10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THOR INDUSTRIES, INC.
(Registrant)
DATE March 10, 2000 (Signed) /s/ Wade F. B. Thompson
------------------------- ------------------------
Wade F. B. Thompson,
Chairman of the Board,
President and Chief
Executive Officer
DATE March 10, 2000 (Signed) /s/ Walter L. Bennett
------------------------- ------------------------
Walter L. Bennett, Senior
Vice President,
Secretary (Chief
Accounting Officer)