1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED January 31, 2001 COMMISSION FILE NUMBER 1-9235
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THOR INDUSTRIES, INC.
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Delaware 93-0768752
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(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 1/31/2001
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Common stock, par value 11,849,060 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, 2001 JULY 31, 2000
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Current assets:
Cash and cash equivalents $18,456,535 $59,655,251
Investments - short term 33,014,845 18,308,194
Accounts receivable:
Trade 53,166,621 50,970,187
Other 1,977,433 973,265
Inventories 96,197,294 89,545,213
Deferred income taxes and other 7,978,105 5,835,370
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Total current assets 210,790,833 225,287,480
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Property:
Land 5,683,928 5,573,144
Buildings and improvements 27,645,598 24,330,742
Machinery and equipment 22,408,865 17,926,415
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Total cost 55,738,391 47,830,301
Accumulated depreciation and amortization 16,107,993 14,525,634
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Property, net 39,630,398 33,304,667
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Investments:
Joint ventures 2,411,745 2,628,282
Investments available for sale 6,171,478 3,486,150
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Total Investments 8,583,223 6,114,432
Other assets:
Goodwill 10,486,025 10,741,131
Noncompete agreements 541,667 1,132,614
Trademarks 1,757,311 1,844,981
Other 4,537,905 3,706,087
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Total other assets 17,322,908 17,424,813
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TOTAL ASSETS $276,327,362 $282,131,392
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LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $42,599,105 $49,824,276
Accrued liabilities:
Taxes 1,614,536 4,599,864
Compensation and related items 8,527,049 13,356,378
Product warranties 12,312,133 11,878,469
Other 5,144,494 6,719,049
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Total current liabilities 70,197,317 86,378,036
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Other liabilities 1,181,647 549,080
Stockholders' equity:
Common stock - authorized 20,000,000 shares;
issued 13,757,497 shares @ 1/31/01 and 13,743,997
shares @ 7/31/00; par value of $.10 per share 1,375,750 1,374,400
Additional paid in capital 26,361,125 26,169,020
Accumulated other comprehensive loss (1,179,912) (2,620,712)
Retained earnings 208,250,248 197,171,503
Restricted stock plan (260,147) (297,305)
Cost of treasury shares 1,908,437 shares @ 1/31/01
and 1,759,037 @ 7/31/00 (29,598,666) (26,592,630)
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Total stockholders' equity 204,948,398 195,204,276
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $276,327,362 $282,131,392
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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, 2001 AND 2000
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(UNAUDITED)
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THREE MONTHS ENDED JANUARY 31 SIX MONTHS ENDED JANUARY 31
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2001 2000 2001 2000
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Net sales $169,214,332 $193,709,463 $374,397,026 $414,730,215
Cost of products sold 152,188,420 168,743,799 330,975,177 360,195,060
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Gross profit 17,025,912 24,965,664 43,421,849 54,535,155
Selling, general, and
administrative expenses 12,656,248 13,530,986 26,624,714 27,398,146
Interest income 645,428 736,264 2,065,772 1,553,850
Interest expense 150,396 71,299 251,525 111,065
Other income 209,085 28,453 650,522 256,524
Loss on divestment of subsidiary - 706,955 - 928,077
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Income before income taxes 5,073,781 11,421,141 19,261,904 27,908,241
Provision for income taxes 1,909,380 4,710,798 7,706,689 11,537,991
------------- ------------- ------------- -------------
Net income $3,164,401 $6,710,343 $11,555,215 $16,370,250
============= ============= ============= =============
Average common shares outstanding 11,887,495 12,109,647 11,936,896 12,128,941
- --------------------------------- ============= ============= ============= =============
Earnings per common share:
- -------------------------
Basic $.27 $.55 $.97 $1.35
==== ==== ==== =====
Diluted $.27 $.55 $.96 $1.34
==== ==== ==== =====
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, 2001 AND 2000
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(UNAUDITED)
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2001 2000
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $11,555,215 $16,370,250
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation 1,689,310 1,358,723
Amortization 933,723 893,973
Loss on divestment of subsidiary -- 928,077
Purchase of trading investments (31,866,070) (12,661,714)
Proceeds from sale of trading investments 18,903,584 --
Unrealized gain on trading investments (1,744,165) --
Changes in non cash assets and liabilities:
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Accounts receivable (3,200,602) (1,585,369)
Inventories (6,652,081) (13,713,855)
Prepaid expenses and other (3,513,699) (3,376,296)
Accounts payable (7,225,171) (6,139,234)
Accrued liabilities (8,955,548) (1,940,454)
Other liabilities 669,725 155,633
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Net cash used in operating activities (29,405,779) (19,710,266)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant & equipment (7,982,956) (4,487,558)
Disposals of property, plant & equipment 513 30,086
Purchase of available for sale investments (619,371) (4,771,048)
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Net cash used in investing activities (8,601,814) (9,228,520)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends (476,470) (484,897)
Purchase of treasury stock (3,006,036) (1,409,317)
Proceeds from issuance of common stock 193,455 136,135
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Net cash used in financing activities (3,289,051) (1,758,079)
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EFFECT OF EXCHANGE RATE CHANGES ON CASH 97,928 329,017
Net decrease in cash and equivalents (41,198,716) (30,367,848)
Cash and equivalents, beginning of year 59,655,251 68,865,635
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CASH AND EQUIVALENTS, END OF PERIOD $18,456,535 $38,497,787
============= ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid $10,164,358 $9,256,950
Interest paid 251,525 111,065
NON-CASH TRANSACTIONS:
Issuance of restricted stock -- 165,100
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 financial position, results of operations and cash flows for
such periods presented.
2. Major classifications of inventories are:
(Unaudited)
January 31, 2001 July 31, 2000
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Raw materials $34,416,133 $36,010,315
Chassis 26,165,862 29,122,188
Work in process 25,992,754 21,412,340
Finished goods 14,917,391 7,881,216
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Total 101,492,140 94,426,059
Less excess of FIFO costs over LIFO costs 5,294,846 4,880,846
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Total inventories $96,197,294 $89,545,213
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3. Earnings Per Share:
Three months Three months Six months Six months
ended ended ended ended
January 31, 2001 January 31, 2000 January 31, 2001 January 31, 2000
---------------- ---------------- ---------------- ----------------
Weighted average shares
outstanding for basic
earnings per share 11,887,495 12,109,647 11,936,896 12,128,941
Stock options 40,061 59,886 38,870 58,674
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Total - diluted shares 11,927,556 12,169,533 11,975,766 12,187,615
============= ============ ============ =============
4. Comprehensive Income:
Three months Three months Six months Six months
ended ended ended ended
January 31, 2001 January 31, 2000 January 31, 2001 January 31, 2000
---------------- ---------------- ---------------- ----------------
Net Income $3,164,401 $6,710,343 $11,555,215 $16,370,250
Foreign currency
translation adj. 219,146 113,806 97,928 329,017
Unrealized appreciation
(depreciation) on investments 1,237,408 (357,597) 1,342,872 (148,950)
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Comprehensive Income $4,620,955 $6,466,552 $12,996,015 $16,550,317
============= ============ ============ =============
6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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(CONTINUED)
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5. Segment Information:
Three Months Three Months Six Months Six Months
ended ended ended ended
January 31, 2001 January 31, 2000 January 31, 2001 January 31, 2000
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Net Sales:
Recreation vehicles
Towables $62,596,219 $76,099,088 $145,493,174 $169,143,373
Motorized 36,579,485 55,971,287 88,418,633 123,545,211
Other 618,117 1,845,143 1,822,364 3,980,749
Buses 69,420,511 59,793,945 138,662,855 118,060,882
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Total $169,214,332 $193,709,463 $374,397,026 $414,730,215
============ ============ ============ ============
Income Before
Income Taxes:
Recreation vehicles $1,497,198 $8,140,882 $9,682,996 $20,048,784
Buses 4,427,062 4,699,187 10,373,192 9,905,455
Corporate (850,479) (1,418,928) (794,284) (2,045,998)
------------ ------------ ------------ ------------
Total $5,073,781 $11,421,141 $19,261,904 $27,908,241
============ ============ ============ ============
January 31, 2001 July 31, 2000
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Identifiable Assets:
Recreation vehicles $125,515,796 $118,700,398
Buses 76,703,825 66,250,635
Corporate 74,107,741 97,180,359
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Total $276,327,362 $282,131,392
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6. In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin 101 (SAB 101), "Revenue Recognition in Financial
Statements", which provides guidance on applying accounting principles
generally accepted in the United States of America, for recognizing
revenue.
SAB 101 is effective for the fourth quarter of fiscal years beginning
after December 15, 1999. The impact, if any, of adopting SAB 101 on our
consolidated financial position, results of operations and cash flows, has
not been determined.
7. The Company adopted the provisions of SFAS No. 133, "Accounting for
Derivative Instruments & Hedging Activities," as amended on August 1,
2000. The Company has performed a review of all contracts to properly
identify all derivative financial instruments. No such derivatives were
identified. Therefore, the adoption of SFAS No. 133 had no effect on the
Company's financial statements.
8. Investments - The Company classifies its debt and equity securities as
trading or available-for-sale. Trading securities are bought and held
principally for the purpose of selling them in the near term. All
securities not included in trading are classified as available-for-sale.
Trading and available-for-sale investments are recorded at fair value.
Unrealized holding gains and losses on trading investments are included in
earnings. Unrealized holding gains and losses, net of the related tax
effect, on available-for-sale investments are excluded from earnings and
are reported as a separate component of comprehensive income, net of
income taxes until realized. Realized gains and losses from the sale of
available-for-sale investments are determined on a specific-identification
basis. Dividend and interest income are recognized when earned.
At January 31, 2001, the Company held equity investments with a fair value
of $6,171,478 and cost basis of $6,419,828. The investments are classified
as available-for-sale and included in other investments. Gross unrealized
losses were $248,350.
The Company has certain corporate debt investments that are classified as
trading investments and reported as Investments - short term. Included in
other income for the six months ended January 31, 2001 are net realized
gains on trading investments of $126,336.
7
Quarter Ended January 31, 2001 vs. Quarter Ended January 31, 2000
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Net sales for the second quarter totaled $169,214,332, down 12.6% from
$193,709,463 in the same period last year. Income before income taxes was
$5,073,781, down 55.6% from $11,421,141 last year. The decrease in income before
income taxes of $6,347,360 was primarily attributable to reduced recreation
vehicle revenues of $34,121,697, which resulted in an approximate $6,640,000
reduction in income before income taxes. Bus revenues were $9,626,566 greater
than the second quarter last year. However, due to product mix, income before
income taxes in the second quarter this year was down approximately $272,000
from the same period last year. These reductions in RV and bus income before
taxes were offset by no losses on divestment of operations in the second quarter
of this year versus $707,000 loss last year on losses from divestment of
operations.
Recreation vehicle revenues of $99,793,821 were 25.5% lower than last years
$133,915,518 and accounted for 59% of total Company revenues compared to 69.1%
last year. Recreation vehicle order backlog of $69,820,000 at January 31, 2001
was down 41% compared to the same period last year and reflects the continuing
softness in the overall RV market. Bus revenues of $69,420,511 were 16.1% higher
than last years $59,793,945 and accounted for 41% of total Company revenues
compared to 30.9% last year. Bus vehicle order backlog of $205,106,000 at
January 31, 2001 was 61% higher compared to the same period last year and
reflects the continuing strength in the overall bus market.
Manufacturing gross profit decreased as a percentage of sales from 12.9% in the
second quarter ended January 31, 2000 to 10.1% at January 31, 2001 due primarily
to lower recreation vehicle volumes. There were no appreciable price increases
during the quarter ended January 31, 2001. Selling, general, and administrative
expense and amortization of intangibles decreased to $12,656,248 from
$13,530,986 last year. However, as a percentage of sales selling, general, and
administrative expense were 7.5% for the quarter this year compared to 7.0% last
year. This increase as a percentage of sales revenue is due to additional sales
programs and incentives for recreation vehicle sales in a highly competitive
soft market environment.
Interest income decreased by approximately $91,000 due primarily to lower market
rates. Interest expense increased by approximately $79,000, primarily due to
interest paid on increased bus chassis pool.
The combined income tax rate was 37.6% for the quarter ended January 31, 2001
compared to 41.2% last year due primarily to tax savings generated by the
Company's foreign sales corporation and a tax refund of $165,000.
Six Months Ended January 31, 2001 vs. Six Months Ended January 31, 2000
- -----------------------------------------------------------------------
Net sales for the six months totaled $374,397,026, down 9.7% from $414,730,215
in the same period last year. Income before income taxes was $19,261,904, down
31.0% from $27,908,241 last year. The decrease in income before taxes of
$8,646,337 was previously attributed to reduced recreation vehicle revenues of
$60,935,162, which resulted in an approximate $10,366,000 reduction in income
before income taxes. This reduction in RV income before taxes was offset by
increased bus revenues of $20,601,973, which generated an increase of
approximately $468,000 in income before taxes. In addition, no losses were
incurred on divestment of operations in the six months ended January 31, 2001
versus $928,000 loss last year on losses from divestment of operations.
Recreation vehicle revenues of $235,734,171 were 20.5% lower than last years
$296,669,333 and accounted for 63% of total Company revenue compared to 71.5%
last year. Recreation vehicle revenues were down due to continued softness in
the overall market. Bus revenues of $138,662,855 were 17.5% higher than last
years $118,060,882 and accounted for 37% of total Company revenue compared to
28.5% last year. Bus revenues were up primarily due to increased unit sales.
Manufacturing gross profit decreased as a percentage of sales from 13.1% for the
six months ended January 31, 2000 to 11.6% at January 31, 2001 due primarily to
lower recreation vehicle volumes. There were no appreciable price increases
during the six months ended January 31, 2001. Selling, general, and
administrative expense and amortization of intangibles decreased to $26,624,714
from $27,398,146 last year. However, as a percentage of sales selling, general
and administrative expenses are 7.1% for the six months ended January 31, 2001
compared to 6.6% last year. This increase as a percentage of sales revenues is
due to additional sales programs and incentives for recreation vehicle sales in
a highly competitive soft market environment.
8
Interest income increased by approximately $512,000 for the six months ended
January 31, 2001 due primarily to increased investable cash and higher returns
primarily during the first quarter of this year versus last year. Interest
expense increased by approximately $140,000 primarily due to interest paid on
increased bus chassis pool.
The combined income tax rate was 40.0% for the six months ended January 31, 2001
compared to 41.3% last year due primarily to tax savings generated by the
Company's foreign sales corporation and a tax refund of $165,000.
Financial Condition and Liquidity
- ---------------------------------
As of January 31, 2001, Thor had $51,471,380 in cash, cash equivalents and short
term investments, compared to $77,963,445 on July 31, 2000. The Company
classifies its debt and equity securities as "trading" or "available for sale".
The former are carried on the Consolidated Balance sheet as Cash and cash
equivalents or Investments - short term. The latter are carried on the
Consolidated Balance Sheet under the caption "Investments" - "Investments
available for sale."
Trading securities are, generally, bought and held for sale in the near term.
All other securities are classified as available for sale. In each case, the
securities are carried at fair market value. Unrealized gains or losses on
trading investments are included in earnings. Unrealized gains and losses on
investments classified as available for sale, net of related tax effect, are not
included in earnings, but appear as a component of Accumulated other
comprehensive loss on the Consolidated Balance Sheet, until the gain or loss is
realized upon the disposition of the investment.
Due to the relative short term maturities (average 6 months) of the trading
securities, principally investment grade securities comprised of asset backed
notes, mortgage backed notes and corporate bonds, management does not believe
that changes in fair market value will have a significant impact on the
Company's financial position or results of future operations.
Working capital at January 31, 2001 was $140,593,516 compared to $138,909,444 at
July 31, 2000. The Company has no long term debt. The Company currently has a
$30,000,000 revolving line of credit. There were no borrowings on the line of
credit at January 31, 2001. 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, 2001. The Company believes that
internally generated funds and the revolving credit agreement will be sufficient
to meet current needs and additional capital requirements. Capital expenditures
of $7,982,956 were primarily for the continued expansion of the Komfort RV
facility and the expansion of the Company's bus operation. The Company
anticipates additional capital expenditures in 2001 of approximately $15,300,000
primarily for the completion of its Komfort RV facility and Kansas bus facility
and continued expansion of its California bus facility.
During the six months of fiscal 2001, Thor purchased 149,400 shares of its
common stock, increasing treasury stock by $3,006,036.
Forward Looking Statements
- --------------------------
This report includes certain statements that are "forward looking" statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934 as amended. These forward
looking statements involve uncertainties and risks. There can be no assurances
that actual results will not differ from the Company's expectations. Factor,
which could cause materially different results, includes, among others, the
success of new product introduction, the pace of acquisition and cost structure
improvements, competitive and general economic conditions. The Company disclaims
any obligation or undertaking to disseminate any updates or revisions to any
change in expectation of the Company after the date hereof or any change in
events, conditions or circumstances on which any statement is based except as
required by law.
9
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
(CONTINUED)
Quantitative and Qualitative Disclosures About Market Risk
- ----------------------------------------------------------
The Company is exposed to market risk from changes in foreign currency related
to its operations in Canada. However, because of the size of Canadian
operations, a hypothetical 10% change in the Canadian dollar as compared to the
U.S. dollar would not have a significant impact on the Company's financial
position or results of operations. The Company is also exposed to market risks
related to interest rates because of its investments in corporate debt
securities. A hypothetical 10% change in interest rates would not have a
significant impact on the Company's financial position or results of operations.
PART II
Item 4. Submission of Matters to a Vote of Security Holders
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Annual Meeting of Shareholders on December 4, 2000
Matters Voted on by Shareholders:
---------------------------------
1.) Election of Directors: Neil D. Chrisman, and Alan Siegel
Results of Voting by Shareholders:
----------------------------------
For Against Abstain
--- ------- -------
Neil D. Chrisman 11,282,722 -0- 57,816
Alan Siegel 11,273,682 -0- 66,856
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a.) Exhibit
NA
b.) Reports on Form 8-K
NA
10
SIGNATURES
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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 14, 2001 (Signed) /s/ Wade F. B. Thompson
------------------ -------------------------------
Wade F. B. Thompson, Chairman of the
Board, President and Chief Executive
Officer
DATE March 14, 2001 (Signed) /s/ Walter L. Bennett
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Walter L. Bennett, Senior Vice
President, Secretary (Chief Accounting
Officer)