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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 for the quarterly period ended October 31, 2009.
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 for the transition period from
 to  .
 COMMISSION FILE NUMBER 1-9235
 THOR INDUSTRIES, INC.
  Delaware
    
    93-0768752(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 419 West Pike Street, Jackson Center, OH
    
    45334-0629(Address of principal executive offices)
    
    (Zip Code)
 937) 596-6849
 þ o
 o o
 12b-2
 Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
  Class
    
    Outstanding at 10/31/2009Common stock, par value $ .10 per share
    
    55,440,924 shares




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TABLE OF CONTENTS  PART I  Financial InformationITEM 1.Financial StatementsITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 4. CONTROLS AND PROCEDURESPART II    Other InformationITEM 1. LEGAL PROCEEDINGSITEM 1A. RISK FACTORSITEM 6. EXHIBITSSIGNATURESEX-31.1EX-31.2EX-32.1EX-32.2    Table of Contents  
 PART I  Financial Information
 Unless otherwise indicated, all amounts presented in thousands except units, share and per
share data.
 
 ITEM 1.
    
    Financial Statements
 THOR INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)
 October 31, 2009
    
    
    July 31, 2009ASSETSCurrent assets:Cash and cash equivalents
    
    $
    223,202
    
    
    $
    221,684Investments- short term
    
    
    92,200
    
    
    
    107,150Accounts receivable:Trade
    
    
    128,782
    
    
    
    111,793Other
    
    
    5,924
    
    
    
    3,823Inventories
    
    
    134,029
    
    
    
    105,278Prepaid expenses
    
    
    5,556
    
    
    
    10,949Note receivable
    
    
    10,000
    
    
    
    10,000Deferred income taxes
    
    
    33,341
    
    
    
    33,341Total current assets
    
    
    633,034
    
    
    
    604,018Property:Land
    
    
    20,135
    
    
    
    20,310Buildings and improvements
    
    
    133,897
    
    
    
    134,161Machinery and equipment
    
    
    69,947
    
    
    
    69,566Total cost
    
    
    223,979
    
    
    
    224,037Accumulated depreciation
    
    
    84,030
    
    
    
    81,176Property, net
    
    
    139,949
    
    
    
    142,861Investment in joint ventures
    
    
    2,704
    
    
    
    2,257Other assets:Long term investments
    
    
    13,334
    
    
    
    13,428Goodwill
    
    
    148,411
    
    
    
    148,411Non-compete agreements
    
    
    526
    
    
    
    617Trademarks
    
    
    13,336
    
    
    
    13,336Long term note receivable
    
    
    10,988
    
    
    
    10,000Other
    
    
    16,838
    
    
    
    16,196Total other assets
    
    
    203,433
    
    
    
    201,988TOTAL ASSETS
    
    $
    979,120
    
    
    $
    951,124LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    96,485
    
    
    $
    78,120Accrued liabilities:Taxes
    
    
    15,994
    
    
    
    5,700Compensation and related items
    
    
    24,711
    
    
    
    22,548Product warranties
    
    
    42,510
    
    
    
    41,717Promotions and rebates
    
    
    7,379
    
    
    
    6,743Product/property liability and related
    
    
    13,598
    
    
    
    12,990Other
    
    
    18,922
    
    
    
    16,656Total current liabilities
    
    
    219,599
    
    
    
    184,474Long term liabilitiesUnrecognized tax benefits
    
    
    46,838
    
    
    
    46,355Other
    
    
    15,723
    
    
    
    15,262Total long term liabilities
    
    
    62,561
    
    
    
    61,617Stockholders equity:Common stock
 authorized 250,000,000 shares: issued 57,318,263
shares @ 10/31/09 and 7/31/09; par value of $.10 per share
    
    
    5,732
    
    
    
    5,732Additional paid-in capital
    
    
    94,576
    
    
    
    94,367Retained earnings
    
    
    669,375
    
    
    
    677,548Accumulated other comprehensive income
    
    
    961
    
    
    
    1,070Less Treasury shares of 1,877,339 @ 10/31/09 & 7/31/09
    
    
    (73,684
    )
    
    
    (73,684
    )Total stockholders equity
    
    
    696,960
    
    
    
    705,033TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    979,120
    
    
    $
    951,124
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THOR INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF CONDENSED CONSOLIDATED OPERATIONS  FOR THE THREE MONTHS ENDED OCTOBER 31, 2009 AND 2008 (UNAUDITED)
 Three Months Ended October 31,2009
    
    
    2008Net sales
    
    $
    502,552
    
    
    $
    438,817Cost of products sold
    
    
    432,781
    
    
    
    398,754Gross profit
    
    
    69,771
    
    
    
    40,063Selling, general and administrative expenses
    
    
    34,767
    
    
    
    34,266Amortization of intangibles
    
    
    91
    
    
    
    200Interest income
    
    
    1,670
    
    
    
    2,017Interest expense
    
    
    99
    
    
    
    130Other income
    
    
    769
    
    
    
    766Income before income taxes
    
    
    37,253
    
    
    
    8,250Provision for income taxes
    
    
    13,824
    
    
    
    3,130Net income
    
    $
    23,429
    
    
    $
    5,120Average common shares outstanding:Basic
    
    
    55,436,924
    
    
    
    55,408,576Diluted
    
    
    55,516,772
    
    
    
    55,472,773Earnings per common share:Basic
    
    $
    .42
    
    
    $
    .09Diluted
    
    $
    .42
    
    
    $
    .09Regular dividends declared and paid per common share:
    
    $
    .07
    
    
    $
    .07Special dividends declared and paid per common share:
    
    $
    .50
    
    
    $
    
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THOR INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS  FOR THE THREE MONTHS ENDED OCTOBER 31, 2009 AND 2008 (UNAUDITED)
 2009
    
    
    2008Cash flows from operating activities:Net income
    
    $
    23,429
    
    
    $
    5,120Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation
    
    
    3,179
    
    
    
    3,293Amortization
    
    
    91
    
    
    
    200Deferred income taxes
    
    
    (195
    )
    
    
    Loss on disposition of assets
    
    
    (6
    )
    
    
    14Stock based compensation
    
    
    209
    
    
    
    152Changes in non cash assets and liabilities:Accounts receivable
    
    
    (19,090
    )
    
    
    27,722Inventories
    
    
    (28,751
    )
    
    
    (13,981
    )Prepaids and other
    
    
    3,527
    
    
    
    1,566Accounts payable
    
    
    18,336
    
    
    
    (19,174
    )Accrued liabilities
    
    
    17,243
    
    
    
    (14,113
    )Other liabilities
    
    
    481
    
    
    
    (2,791
    )Net cash
provided by (used in) operating activities
    
    
    18,453
    
    
    
    (11,992
    )Cash flows from investing activities:Purchases of property, plant & equipment
    
    
    (911
    )
    
    
    (1,865
    )Proceeds from disposition of assets
    
    
    659
    
    
    
    1,342Proceeds from disposition of investments
    
    
    15,000
    
    
    
    4,450Proceeds on dissolution of joint venture
    
    
    
    
    
    
    1,578Net cash provided by investing activities
    
    
    14,748
    
    
    
    5,505Cash flows from financing activities:Cash dividends
    
    
    (31,602
    )
    
    
    (3,880
    )Proceeds from issuance of common stock
    
    
    
    
    
    
    27Net cash used in financing activities
    
    
    (31,602
    )
    
    
    (3,853
    )Effect of exchange rate changes on cash
    
    
    (81
    )
    
    
    (1,549
    )Net increase (decrease) in cash and equivalents
    
    
    1,518
    
    
    
    (11,889
    )Cash and equivalents, beginning of period
    
    
    221,684
    
    
    
    189,620Cash and equivalents, end of period
    
    $
    223,202
    
    
    $
    177,731Supplemental cash flow information:Income taxes paid
    
    $
    4,203
    
    
    $
    15,044Interest paid
    
    $
    99
    
    
    $
    130Non cash transactions:Capital expenditures in accounts payable
    
    $
    24
    
    
    $
    540
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1.
    
    The July 31, 2009 amounts are derived from the annual audited financial statements. The
interim financial statements are unaudited. In the opinion of management, all adjustments
(which consist of normal recurring adjustments) necessary to present fairly the financial
position, results of operations and change in 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 Form 10-K for the year ended July 31, 2009. The results of operations for the
three months ended October 31, 2009 are not necessarily indicative of the results for the full
year.
 Accounting PronouncementsIn June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation
No. 46(R) (SFAS 167) (not yet codified under the
Accounting Standards Codification ASC). SFAS No. 167 amends ASC 810-10
(formerly FASB Interpretation No. 46(R)) by adding previously considered qualifying
special purpose entities (the concept of these entities was eliminated by SFAS No. 166).
In addition, companies must perform an analysis to determine whether the companys
variable interest or interests give it a controlling financial interest in a variable
interest entity. Companies must also reassess on an ongoing basis whether the company is
the primary beneficiary of a variable interest entity. SFAS 167 is effective for fiscal
years beginning after November 15, 2009. The Company is currently evaluating the impact
that the adoption of SFAS 167 may have on the Companys consolidated financial statements.Subsequent EventsWe evaluated events occurring between the end of our most recent quarter end and
November 30, 2009, the date the financial statements were issued.
 2.
    
    Major classifications of inventories are:
 October 31, 2009
    
    
    July 31, 2009Raw materials
    
    $
    68,999
    
    
    $
    55,956Chassis
    
    
    32,442
    
    
    
    28,613Work in process
    
    
    45,138
    
    
    
    38,159Finished goods
    
    
    11,707
    
    
    
    6,682Total
    
    
    158,286
    
    
    
    129,410Excess of FIFO costs over LIFO costs
    
    
    (24,257
    )
    
    
    (24,132
    )Total inventories
    
    $
    134,029
    
    
    $
    105,278
 3.
    
    Earnings Per Share
 Three Months Ended
    
    Three Months EndedOctober 31, 2009
    
    October 31, 2008Weighted average shares
outstanding for basic earnings per
share
    
    
    55,436,924
    
    
    
    55,408,576Stock options and restricted stock
    
    
    79,848
    
    
    
    64,197Total  For diluted shares
    
    
    55,516,772
    
    
    
    55,472,773
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4.
    
    Comprehensive Income
 Three Months Ended
    
    
    Three Months EndedOctober 31, 2009
    
    
    October 31, 2008Net Income
    
    $
    23,429
    
    
    $
    5,120Foreign
currency translation adjustment, net of tax
    
    
    (81
    )
    
    
    (1,549
    )Change in temporary impairment of
investment, net of tax
    
    
    (28
    )
    
    
    (365
    )Comprehensive income
    
    $
    23,320
    
    
    $
    3,206
 5.
    
    Segment Information
 The Company has three reportable segments: (1) towable recreation vehicles, (2) motorized
recreation vehicles, and (3) buses. The towable recreation vehicle segment consists of product
lines from the following operating companies that have been aggregated: Airstream,
Breckenridge, CrossRoads, Dutchmen, General Coach, Keystone and Komfort. The motorized
recreation vehicle segment consists of product lines from the following operating companies
that have been aggregated: Airstream, Damon and Four Winds. The bus segment consists of the
following operating companies that have been aggregated: Champion Bus, ElDorado California,
ElDorado Kansas and Goshen Coach.
 Three Months Ended
    
    
    Three Months EndedOctober 31, 2009
    
    
    October 31, 2008Net Sales:Recreation vehicles:Towables
    
    $
    342,136
    
    
    $
    285,537Motorized
    
    
    47,793
    
    
    
    44,865Total recreation vehicles
    
    
    389,929
    
    
    
    330,402Buses
    
    
    112,623
    
    
    
    108,415Total
    
    $
    502,552
    
    
    $
    438,817
 Three Months Ended
    
    
    Three Months EndedOctober 31, 2009
    
    
    October 31, 2008Income (Loss) Before Income Taxes:Recreation vehicles:Towables
    
    $
    31,540
    
    
    $
    12,374Motorized
    
    
    102
    
    
    
    (6,602
    )Total recreation vehicles
    
    
    31,642
    
    
    
    5,772Buses
    
    
    8,380
    
    
    
    5,297Corporate
    
    
    (2,769
    )
    
    
    (2,819
    )Total
    
    $
    37,253
    
    
    $
    8,250
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October 31, 2009
    
    
    July 31, 2009Identifiable Assets:Recreation vehicles:Towables
    
    $
    380,666
    
    
    $
    358,562Motorized
    
    
    71,849
    
    
    
    73,969Total recreation vehicles
    
    
    452,515
    
    
    
    432,531Buses
    
    
    125,873
    
    
    
    106,823Corporate
    
    
    400,732
    
    
    
    411,770Total
    
    $
    979,120
    
    
    $
    951,124
 6.
    
    Investments and Fair Value Measurements
 Accounting Standards Codification (ASC) 820-10 defines fair value, establishes a framework
for measuring fair value under generally accepted accounting principles and enhances
disclosures about fair value measurements. Fair value is defined as the exchange price that
would be received for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in an orderly transaction
between market participants on the measurement date. Valuation techniques used to measure fair
value must maximize the use of observable inputs and minimize the use of unobservable inputs.
The standard describes a fair value hierarchy based on three levels of inputs, of which the
first two are considered observable and the last unobservable, that may be used to measure
fair value, which are the following:Level 1  Quoted prices in active markets for identical assets or liabilities.Level 2  Inputs other than Level 1 that are observable, either directly or indirectly, such
as quoted prices for similar assets or liabilities; quoted prices in markets that are not
active; or other inputs that are observable or can be corroborated by observable market data
for substantially the full term of the assets or liabilities.Level 3  Unobservable inputs that are supported by little or no market activity and that are
significant to the fair value of the assets or liabilities.The following table represents the Companys fair value hierarchy for its financial assets
(cash equivalents and investments) measured at fair value on a recurring basis as of October
31, 2009:
 Significant QuotedMarket Prices in
    
    
    Other Observable
    
    
    SignificantActive Markets
    
    
    Inputs
    
    
    Unobservable Inputs
    
    
    Fair Value at October(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    31, 2009Cash & cash equivalents
    
    $
    223,202
    
    
    $
    
    
    
    $
    
    
    
    $
    223,202Auction rate
securities (including Put Rights)
    
    
    
    
    
    
    
    
    
    
    105,534
    
    
    
    105,534Total
    
    $
    223,202
    
    
    $
    
    
    
    $
    105,534
    
    
    $
    328,736
 Our cash equivalents are comprised of money market funds traded in an active market with no
restrictions.
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In addition to the above investments, the Company holds non-qualified retirement plan assets of
$6,437 at October 31, 2009 ($6,016 at July 31, 2009). These assets, which are held
for the benefit of certain employees of the Company, represent Level 1
investments primarily in mutual funds which are valued using observable market prices in active
markets. They are included in Other Assets on the Consolidated Balance Sheet.Level 3 assets consist of municipal bonds with an auction reset feature (auction rate
securities or ARS) whose underlying assets are primarily student loans which are
substantially backed by the federal government. Auction rate securities are long-term floating
rate bonds tied to short-term interest rates. After the initial issuance of the securities, the
interest rate on the securities is reset periodically, at intervals established at the time of
issuance based on market demand for a reset period. Auction rate securities are bought and sold
in the marketplace through a competitive bidding process often referred to as a Dutch
auction. If there is insufficient interest in the securities at the time of an auction, the
auction may not be completed and the rates may be reset to pre-determined penalty or
maximum rates based on mathematical formulas in accordance with each securitys prospectus.The following table provides a reconciliation of the beginning and ending balances for the
assets measured at fair value using significant unobservable inputs (Level 3 financial assets):
 Fair Value Measurements atReporting Date UsingSignificant Unobservable Inputs(Level 3)Balances at August 1, 2009
    
    $
    120,578Net change in other comprehensive income
    
    
    (44
    )Net loss included in earnings
    
    
    Purchases
    
    
    Sales/Maturities
    
    
    (15,000
    )Balances at October 31, 2009
    
    $
    105,534
 Auction Rate SecuritiesAt October 31, 2009, we held $14,500 (par value) of long-term investments and $92,200 (par
value) of short-term investments comprised of taxable and tax-exempt ARS, which are
variable-rate debt securities and have a long-term maturity with the interest being reset
through Dutch auctions that are typically held every 7, 28 or 35 days. The securities have
historically traded at par and are callable at par at the option of the issuer. Interest is
typically paid at the end of each auction period or semi-annually. At October 31, 2009, the
majority of the ARS we held were AAA rated or equivalent, and none were below A rated or
equivalent, with most collateralized by student loans substantially backed by the U.S. Federal
government.Since February 12, 2008, most auctions have failed for these securities and there is no
assurance that future auctions on the ARS in our investment portfolio will succeed and, as a
result, our ability to liquidate our investment and fully recover the par value of our
investment in the near term may be limited or not exist. An auction failure means that the
parties wishing to sell securities could not.In November 2008, the Company elected to participate in a rights offering by UBS AG (UBS), a
Swiss bank which is one of the Companys investment providers, that provides the Company with
the right (the
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Put Rights) to sell to UBS at par value ARS purchased from UBS (approximately $92,200 of our
entire ARS portfolio of $106,700) at any time during a two-year sale period beginning June 30,
2010.The Put Rights are not transferable or marginable. By electing to participate in the rights
offering the Company granted UBS the right, exercisable at any time prior to June 30, 2010 or
during the two-year sale period, to purchase or cause the sale of the Companys ARS (the Call
Right). UBS has stated that it will only exercise the Call Right for the purpose of
restructurings, dispositions or other solutions that will provide their clients with par value
for their ARS. UBS will pay their clients the par value of their ARS within one day of
settlement of any Call Right transaction. Notwithstanding the Call Right, the Company would be
permitted to sell ARS to parties other than UBS, in which case the Put Rights attached to the
ARS that are sold would be extinguished.As consideration for this transaction, Thor has released UBS from all claims relating to the
marketing or sale of ARS (except claims for consequential damages) and has agreed not to sue
UBS for such claims. During 2008, UBS was sued by the Massachusetts Securities Division and by
the New York Attorney General in separate civil lawsuits alleging improper sales practices
relating to ARS. The rights offering reflects the terms of a settlement entered into by UBS and
various regulators, including the SEC, the New York Attorney General, and the Massachusetts
Securities Division, pursuant to which UBS agreed to pay a fine of $150 million. UBS has also
been sued by investors in civil lawsuits and arbitrations seeking damages relating to sales of
ARS.Through its acceptance of the UBS offer, the Company also became eligible to participate in a
no net cost loan program pursuant to which it may borrow up to the par value of its ARS until
June 30, 2010. The Company is still permitted to obtain ARS based financing from lenders other
than UBS.At October 31, 2009, there was insufficient observable ARS market information available to
determine the fair value of our ARS investments, including the Put Rights. Therefore,
management, assisted by Houlihan, Smith & Company, Inc., an independent consultant, determined
an estimated fair value. In determining the estimate, consideration was given to credit
quality, final stated maturities, estimates on the probability of the issue being called prior
to final maturity, impact due to extended periods of maximum auction rates and broker quotes.
Based on this analysis, we recorded a temporary impairment of $1,166 ($720 net of tax in other
comprehensive income which is in the equity section of the balance sheet) related to our
long-term ARS investments of $14,500 (par value) that were not part of the UBS settlement as of
October 31, 2009. These same assumptions were used to estimate the fair value of our UBS ARS
portfolio described above, including the Put Rights.The enforceability of the Put Rights results in a put option which has been recognized as a
separate freestanding instrument that is accounted for separately from the ARS investment. The
Company has elected to account for this put option at fair value and elected to treat this
portion of our ARS portfolio as trading securities. As such, we recorded a charge to operations
of $1,733 related to the Put Rights provided by the settlement and an other-than-temporary
impairment benefit to operations of $1,733 on the $92,200 (par value) portion of our ARS
portfolio to properly record our investment at par as we may decide not to hold these ARS until
final maturity with the opportunity provided by the Put Rights.We have no reason to believe that any of the underlying issuers of our ARS are presently at
risk of default. Through October 31, 2009, we have continued to receive interest payments on
the ARS in accordance with their terms. We believe we will be able to liquidate our investments
without significant loss primarily due to the government guarantee of the underlying
securities; however, it could take until the final
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maturity of the underlying notes (up to 31 years) to realize our investments par value. Based
on the terms of the UBS Call Right, which is exercisable at any time after June 30, 2010,
effective June 30, 2009, the ARS held by UBS were classified as short-term. The remaining ARS
held by another institution remain classified as long-term at July 31, 2009. Although there is
uncertainty with regard to the short-term liquidity of these securities, the Company continues
to believe that the carrying amount represents the fair value of these marketable securities
because of the overall quality of the underlying investments and the anticipated future market
for such investments. In addition, the Company has the intent and ability to hold these
securities until the earlier of: the market for ARS stabilizes, the issuer refinances the
underlying security, a buyer is found outside of the auction process at acceptable terms, the
underlying securities have matured or the Company exercises its right to put the securities to
UBS, one of the Companys investment providers.
 7.
    
    Goodwill and Other Intangible Assets
 Goodwill and indefinite-lived intangible assets are reviewed for impairment by applying a
fair-value based test on an annual basis, or more frequently if circumstances indicate a
potential impairment.The components of other intangible assets are as follows:
 October 31, 2009
    
    July 31, 2009Accumulated
    
    
    
    
    
    AccumulatedCost
    
    Amortization
    
    Cost
    
    AmortizationAmortized Intangible Assets:Non-compete agreements
    
    $
    2,888
    
    
    $
    2,362
    
    
    $
    2,888
    
    
    $
    2,271
 Three Months
    
    Three MonthsEnded
    
    EndedOctober 31, 2009
    
    October 31, 2008Non-compete Agreements:Amortization Expense
    
    $
    91
    
    
    $
    200
 Non-compete agreements are amortized on a straight-line basis.
 Estimated Amortization Expense:For the year ending July 2010
    
    $
    322For the year ending July 2011
    
    $
    238For the year ending July 2012
    
    $
    57
 Goodwill and indefinite-lived intangible assets are not subject to amortization.There was no change in the carrying amount of goodwill and trademarks for the three month
period ended October 31, 2009.
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As of October 31, 2009 and July 31, 2009, Goodwill and Trademarks by segment are as follows:
 Goodwill
    
    
    TrademarksRecreation Vehicles:Towables
    
    $
    143,795
    
    
    $
    10,237Motorized
    
    
    
    
    
    
    2,036Total Recreation Vehicles
    
    
    143,795
    
    
    
    12,273Bus
    
    
    4,616
    
    
    
    1,063Total
    
    $
    148,411
    
    
    $
    13,336
 8.
    
    Product Warranties
 Thor provides customers of our products with a warranty covering defects in material or
workmanship for primarily one year with longer warranties of up to two years on certain
structural components. We record a liability based on a consistent calculation reflecting our
best estimate of the amounts necessary to settle future and existing claims on products sold as
of the balance sheet date. Factors we use in estimating the warranty liability include a
history of units sold, existing dealer inventory, average cost incurred and a profile of the
distribution of warranty expenditures over the warranty period. A significant increase in
dealer shop rates, the cost of parts or the frequency of claims could have a material adverse
impact on our operating results for the period or periods in which such claims or additional
costs materialize. Management believes that the warranty reserve is adequate. However, actual
claims incurred could differ from estimates, requiring adjustments to the reserves. Warranty
reserves are reviewed and adjusted as necessary on a quarterly basis.
 Three Months Ended
    
    
    Three Months EndedOctober 31, 2009
    
    
    October 31, 2008Beginning Balance
    
    $
    41,717
    
    
    $
    61,743Provision
    
    
    12,791
    
    
    
    11,614Payments
    
    
    (11,998
    )
    
    
    (14,534
    )Ending Balance
    
    $
    42,510
    
    
    $
    58,823
 9.
    
    Contingent Liabilities and Commitments
 Our principal commercial commitments at October 31, 2009 are summarized in the following chart:
 Total
    
    Term ofCommitment
    
    Amount Committed
    
    CommitmentGuarantee on dealer financing
    
    $
    7,981
    
    
    variousStandby repurchase obligation on dealer financing
    
    $
    447,663
    
    
    up to eighteen months
 The Company records repurchase and guarantee reserves based on prior experience and known
current events. The combined repurchase and recourse reserve balances are approximately $6,689
as of October 31, 2009.
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Three Months Ended
    
    
    Three Months EndedOctober 31, 2009
    
    
    October 31, 2008Cost of units repurchased
    
    $
    1,377
    
    
    $
    10,181Realization on units resold
    
    
    1,041
    
    
    
    8,392Losses due to repurchase
    
    $
    336
    
    
    $
    1,789
 The Company obtains certain vehicle chassis from automobile manufacturers under converter pool
agreements. These agreements generally provide that the manufacturer will supply chassis at the
Companys various production facilities under the terms and conditions set forth in the
agreement. The manufacturer does not transfer the certificate of origin to the Company and,
accordingly, the Company accounts for the chassis as consigned, unrecorded inventory. Chassis
are typically converted and delivered to customers within 90 days of delivery. If the chassis
is not converted within 90 days of delivery to the Company, the Company generally purchases the
chassis and records the inventory. At October 31, 2009 and July 31, 2009, chassis on hand
accounted for as consigned, unrecorded inventory was approximately
$26,132 and $31,201
respectively.The Company has been named in approximately 340 complaints, some of which were originally
styled as putative class actions (with respect to which class certification was ultimately
denied) and some of which were filed by individual plaintiffs, filed against manufacturers of
travel trailers and manufactured homes supplied to the Federal Emergency Management Agency
(FEMA) for use as emergency living accommodations in the wake of Hurricanes Katrina and Rita.
The complaints have been transferred to the Eastern District of Louisiana by the federal panel
on multidistrict litigation for consideration in a matter captioned In re FEMA Trailer
Formaldehyde Products Liability Litigation, Case Number MDL 07-1873, United States District
Court for the Eastern District of Louisiana. The complaints generally assert claims for damages
(for health related problems, medical expenses, emotional distress and lost earnings) and for
medical monitoring costs due to the presence of formaldehyde in the units. Some of the lawsuits
also seek punitive and/or exemplary damages. Thus far, however, none of the lawsuits allege a
specific amount of damages sought and instead make general allegations about the nature of the
plaintiffs claims without placing a dollar figure on them. The Company strongly disputes the
allegations in these complaints, and intends to vigorously defend itself in all such matters.In addition, we are involved in certain litigation arising out of our operations in the normal
course of our business, most of which are based upon state lemon laws, warranty claims, other
claims and accidents (for which we carry insurance above a specified deductible amount). While
it is impossible to estimate with certainty the ultimate legal and financial liability with
respect to this litigation, we believe that while the final resolution of any such litigation
may have an impact on our consolidated results for a particular reporting period, the ultimate
disposition of such litigation will not have any material adverse effect on our financial
position, results of operation or liquidity.
 10.
    
    Provision for Income Taxes
 The Company accounts for income taxes under the provisions of ASC 740-10. The objectives of
accounting for income taxes are to recognize the amount of taxes payable or refundable for the
current year and deferred tax liabilities and assets for the future tax
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consequences of events that have been recognized in the Companys financial statements or tax
returns. Judgment is required in assessing the future tax consequences of events that have been
recognized in the Companys financial statements or tax returns. Fluctuations in the actual
outcome of these future tax consequences could materially impact the Companys financial
position or its results of operations.It is the Companys policy to recognize interest and penalties accrued relative to unrecognized
tax benefits in income tax expense. For the three month period ended October 31, 2009, no
material change relative to unrecognized tax benefits was recorded and $300 in interest and
penalties had been accrued.The Company and its corporate subsidiaries file a consolidated U.S. federal income tax return
and multiple state income tax returns. The federal returns are subject to exam by taxing
authorities for all years after fiscal 2006. Periodically, various state and local
jurisdictions conduct audits, therefore, a variety of other years are subject to state and
local review.The Company anticipates a decrease of approximately $2,000 in unrecognized tax benefits within
the next twelve months from (1) expected settlements or payments of uncertain tax positions,
and (2) lapses of the applicable statutes of limitations. Actual results may differ materially
from this estimate.
 11.
    
    Retained Earnings
 The components of changes in retained earnings are as follows:
 Balance as of July 31, 2009
    
    $
    677,548Net Income
    
    
    23,429Dividends Paid
    
    
    (31,602
    )Balance as of October 31, 2009
    
    $
    669,375
 12.
    
    Loan Transactions and Related Notes Receivable
 On January 15, 2009, the Company entered into a Credit Agreement (the First Credit Agreement)
with Stephen Adams, in his individual capacity, and Stephen Adams and his successors, as
trustee under the Stephen Adams Living Trust (the Trust and together with each of the
foregoing persons, the Borrowers), pursuant to which the Company loaned $10,000 to the
Borrowers (the First Loan). The Borrowers own approximately 90% of FreedomRoads Holding
Company, LLC (FreedomRoads Holding), the parent company of one of the Companys dealers, and
pursuant to the terms of the First Credit Agreement, the Borrowers agreed to use the proceeds
of the First Loan solely to make an equity contribution to FreedomRoads Holding to enable
FreedomRoads Holding to repay its principal obligations under floorplan financing arrangements
with third parties in respect of products of the Company and its subsidiaries.The principal amount of the First Loan is payable in full on January 15, 2014 and bears
interest at a rate of 12% per annum. Interest is payable in kind for the first year and is
payable in cash on a monthly basis thereafter.In connection with the First Loan, the Borrowers caused FreedomRoads Holding and its
subsidiaries (collectively, the FR Dealers), to enter into an agreement pursuant to which the
FR Dealers agreed to purchase additional recreation vehicles from the Company and its
subsidiaries. The term of this agreement continues until the repayment in full of the First
Loan under the First Credit Agreement (including any refinancing or replacement thereof).
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On January 30, 2009, the Company entered into a Second Credit Agreement (the Second Credit
Agreement and together with the First Credit Agreement, the Credit Agreements) with the
Borrowers pursuant to which the Company loaned an additional $10,000 to the Borrowers (the
Second Loan and together with the First Loan, the Loans). Pursuant to the terms of the
Second Credit Agreement, the Borrowers agreed to use the proceeds of the Second Loan solely to
make an equity contribution to FreedomRoads Holding to be used by FreedomRoads Holding or its
subsidiaries to purchase the Companys products.The principal amount of the Second Loan is payable in full on January 29, 2010 and bears
interest at a rate of 12% per annum. Interest is payable in cash and the first three interest
payments were due and paid in full on April 30, 2009, July 31, 2009 and October 31, 2009. The
remaining interest payment date is January 29, 2010.The Credit Agreements contain customary representations and warranties, affirmative and
negative covenants, events of default and acceleration provisions for loans of this type.The obligations of the Borrowers under the Credit Agreements are guaranteed by FreedomRoads
Holding and are secured by a first priority security interest in all of the direct and indirect
legal, equitable and beneficial interests of the Borrowers in FreedomRoads Holding.In connection with the Second Loan, the FR Dealers and the Company amended their prior
agreement pursuant to which the FR Dealers agreed to purchase additional recreation vehicles
from the Company and its subsidiaries to provide that the term of this agreement now continues
until the repayment in full of the Loans (including any refinancing or replacement thereof).
 13.
    
    Thor CC, Inc.
 In March 1994, the Company and a financial services company formed a
joint venture, Thor Credit Corporation, to finance the sale of
recreation vehicles to consumer buyers. This joint venture was
dissolved in September 2008 after the joint venture partner informed
us that it was no longer providing retail financing for recreation
vehicles. We recovered our investment of $1,578 upon dissolution.In November 2008, the Company announced that it will again be
providing retail financing for recreation vehicle customers of Thor
dealers through the Companys wholly owned subsidiary, Thor CC, Inc.
(Thor CC). The new business, which is led by employees of the former
joint venture, finances new Thor and used recreation vehicle products
sold by our dealers.The retail financing provided by Thor CC is being funded by Thors
operating cash flow. We have allocated approximately $2,500 which has
been used to fund retail loans. The retail loans are then sold to
banks with which Thor CC has established relationships, and the
proceeds of such sales are then available to make new loans. The
retail loans are made to prime and super prime customers with high
credit scores. The Company does not anticipate the aggregate capital
to be allocated to Thor CC will exceed $10,000.As of November 11, 2009, Thor CC offered retail financing through Thor
recreation vehicle dealers in the following states: Alabama,
California, Florida, Georgia, Maryland, North Carolina, Oregon,
Pennsylvania, South Carolina, Tennessee, Texas, Virginia and
Washington. We expect that Thor CC will expand its lending ability
beyond these states in the future.
 
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14.
    
    Liquidation of Insurance Subsidiary
 The Company does not intend to insure any future risks through its insurance subsidiary because
of the uncertainty of the timing of the deductibility of the insurance premium. Further, the
Company does not believe that the future benefits of the insurance subsidiary, including the
risk shifting and risk distribution among the Companys operating subsidiaries, are in excess
of the administrative cost of maintenance. The Company is in the process of liquidating the
entity. The Company does not anticipate any significant losses related to the liquidation.
 15.
    
    Concentration of Risk
 One of our dealers accounted for 20% of the Companys recreation vehicle net sales and 16% of
its consolidated net sales for the three months ended October 31, 2009. The loss of this dealer
could have a significant effect on the Companys recreation vehicle business.
 15




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
 Unless otherwise indicated, all amounts presented in thousands of dollars except unit, share and
per share data.
 Executive Overview
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Trends and Business Outlook
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Three Months Ended October 31, 2009 vs.
 Three Months Ended October 31, 2008
 Three Months Ended
    
    
    Three Months Ended
    
    
    ChangeOctober
31, 2009
    
    

October
31, 2008
    
    
    Amount
    
    
    %NET SALES:Recreation VehiclesTowables
    
    $
    342,136
    
    
    $
    285,537
    
    
    $
    56,599
    
    
    
    19.8Motorized
    
    
    47,793
    
    
    
    44,865
    
    
    
    2,928
    
    
    
    6.5Total Recreation Vehicles
    
    
    389,929
    
    
    
    330,402
    
    
    
    59,527
    
    
    
    18.0Buses
    
    
    112,623
    
    
    
    108,415
    
    
    
    4,208
    
    
    
    3.9Total
    
    $
    502,552
    
    
    $
    438,817
    
    
    $
    63,735
    
    
    
    14.5# OF UNITS:Recreation VehiclesTowables
    
    
    15,801
    
    
    
    12,539
    
    
    
    3,262
    
    
    
    26.0Motorized
    
    
    606
    
    
    
    522
    
    
    
    84
    
    
    
    16.1Total Recreation Vehicles
    
    
    16,407
    
    
    
    13,061
    
    
    
    3,346
    
    
    
    25.6Buses
    
    
    1,590
    
    
    
    1,648
    
    
    
    (58
    )
    
    
    (3.5
    )Total
    
    
    17,997
    
    
    
    14,709
    
    
    
    3,288
    
    
    
    22.4
 GROSS PROFIT:
 % of
    
    
    
    
    
    
    % ofSegment
    
    
    
    
    
    
    Segment
    
    
    ChangeNet Sales
    
    
    
    
    
    
    Net Sales
    
    
    Amount
    
    
    %Recreation VehiclesTowables
    
    $
    52,845
    
    
    
    15.4
    
    
    $
    30,822
    
    
    
    10.8
    
    
    $
    22,023
    
    
    
    71.5Motorized
    
    
    3,491
    
    
    
    7.3
    
    
    
    (776
    )
    
    
    (1.7
    )
    
    
    4,267
    
    
    
    549.9Total Recreation Vehicles
    
    
    56,336
    
    
    
    14.4
    
    
    
    30,046
    
    
    
    9.1
    
    
    
    26,290
    
    
    
    87.5Buses
    
    
    13,435
    
    
    
    11.9
    
    
    
    10,017
    
    
    
    9.2
    
    
    
    3,418
    
    
    
    34.1Total
    
    $
    69,771
    
    
    
    13.9
    
    
    $
    40,063
    
    
    
    9.1
    
    
    $
    29,708
    
    
    
    74.2SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:Recreation VehiclesTowables
    
    $
    21,298
    
    
    
    6.2
    
    
    $
    18,314
    
    
    
    6.4
    
    
    $
    2,984
    
    
    
    16.3Motorized
    
    
    3,378
    
    
    
    7.1
    
    
    
    5,809
    
    
    
    12.9
    
    
    
    (2,431
    )
    
    
    (41.8
    )Total Recreation Vehicles
    
    
    24,676
    
    
    
    6.3
    
    
    
    24,123
    
    
    
    7.3
    
    
    
    553
    
    
    
    2.3Buses
    
    
    4,956
    
    
    
    4.4
    
    
    
    4,587
    
    
    
    4.2
    
    
    
    369
    
    
    
    8.0Corporate
    
    
    5,135
    
    
    
    
    
    
    
    5,556
    
    
    
    
    
    
    
    (421
    )
    
    
    (7.6
    )Total
    
    $
    34,767
    
    
    
    6.9
    
    
    $
    34,266
    
    
    
    7.8
    
    
    $
    501
    
    
    
    1.5INCOME (LOSS) BEFORE INCOME TAXES:Recreation VehiclesTowables
    
    $
    31,540
    
    
    
    9.2
    
    
    $
    12,374
    
    
    
    4.3
    
    
    $
    19,166
    
    
    
    154.9Motorized
    
    
    102
    
    
    
    0.2
    
    
    
    (6,602
    )
    
    
    (14.7
    )
    
    
    6,704
    
    
    
    101.5Total Recreation Vehicles
    
    
    31,642
    
    
    
    8.1
    
    
    
    5,772
    
    
    
    1.7
    
    
    
    25,870
    
    
    
    448.2Buses
    
    
    8,380
    
    
    
    7.4
    
    
    
    5,297
    
    
    
    4.9
    
    
    
    3,083
    
    
    
    58.2Corporate
    
    
    (2,769
    )
    
    
    
    
    
    
    (2,819
    )
    
    
    
    
    
    
    50
    
    
    
    1.8Total
    
    $
    37,253
    
    
    
    7.4
    
    
    $
    8,250
    
    
    
    1.9
    
    
    $
    29,003
    
    
    
    351.6
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ORDER BACKLOG:
 As of
    
    
    As of
    
    
    ChangeOctober 31, 2009
    
    
    October 31, 2008
    
    
    Amount
    
    
    %Recreation VehiclesTowables
    
    $
    266,500
    
    
    $
    92,238
    
    
    $
    174,262
    
    
    
    188.9Motorized
    
    
    48,554
    
    
    
    32,305
    
    
    
    16,249
    
    
    
    50.3Total Recreation Vehicles
    
    
    315,054
    
    
    
    124,543
    
    
    
    190,511
    
    
    
    153.0Buses
    
    
    283,947
    
    
    
    256,644
    
    
    
    27,303
    
    
    
    10.6Total
    
    $
    599,001
    
    
    $
    381,187
    
    
    $
    217,814
    
    
    
    57.1
 CONSOLIDATED
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Segment Reporting
 TOWABLE RECREATION VEHICLES
  Three Months
    
    % of
    
    Three Months
    
    % ofEnded
    
    Segment
    
    Ended
    
    Segment
    
    Change
    
    %October 31, 2009
    
    Net Sales
    
    October 31, 2008
    
    Net Sales
    
    Amount
    
    ChangeNET SALES:TowablesTravel Trailers
    
    $
    175,633
    
    
    
    51.3
    
    
    $
    133,565
    
    
    
    46.8
    
    
    $
    42,068
    
    
    
    31.5Fifth Wheels
    
    
    158,271
    
    
    
    46.3
    
    
    
    139,385
    
    
    
    48.8
    
    
    
    18,886
    
    
    
    13.5Other
    
    
    8,232
    
    
    
    2.4
    
    
    
    12,587
    
    
    
    4.4
    
    
    
    (4,355
    )
    
    
    (34.6
    )Total Towables
    
    $
    342,136
    
    
    
    100.0
    
    
    $
    285,537
    
    
    
    100.0
    
    
    $
    56,599
    
    
    
    19.8
 Three Months
    
    % of
    
    Three Months
    
    % ofEnded
    
    Segment
    
    Ended
    
    Segment
    
    Change
    
    %October 31, 2009
    
    Shipments
    
    October 31, 2008
    
    Shipments
    
    Amount
    
    Change# OF UNITS:TowablesTravel Trailers
    
    
    10,305
    
    
    
    65.2
    
    
    
    7,639
    
    
    
    60.9
    
    
    
    2,666
    
    
    
    34.9Fifth Wheels
    
    
    5,258
    
    
    
    33.3
    
    
    
    4,505
    
    
    
    35.9
    
    
    
    753
    
    
    
    16.7Other
    
    
    238
    
    
    
    1.5
    
    
    
    395
    
    
    
    3.2
    
    
    
    (157
    )
    
    
    (39.7
    )Total Towables
    
    
    15,801
    
    
    
    100.0
    
    
    
    12,539
    
    
    
    100.0
    
    
    
    3,262
    
    
    
    26.0
 Impact Of Change In Price On Net Sales:
 %Increase /(Decrease)TowablesTravel Trailer
    
    
    (3.4
    )%Fifth Wheel
    
    
    (3.2
    )%Other
    
    
    5.1
    %Total Towables
    
    
    (6.2
    )%
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MOTORIZED RECREATION VEHICLES
  Three Months
    
    % of
    
    Three Months
    
    % ofEnded
    
    Segment
    
    Ended
    
    Segment
    
    Change
    
    %October 31, 2009
    
    Net Sales
    
    October 31, 2008
    
    Net Sales
    
    Amount
    
    ChangeNET SALES:MotorizedClass A
    
    $
    29,983
    
    
    
    62.8
    
    
    $
    28,882
    
    
    
    64.4
    
    
    $
    1,101
    
    
    
    3.8Class C
    
    
    13,731
    
    
    
    28.7
    
    
    
    13,142
    
    
    
    29.3
    
    
    
    589
    
    
    
    4.5Class B
    
    
    4,079
    
    
    
    8.5
    
    
    
    2,841
    
    
    
    6.3
    
    
    
    1,238
    
    
    
    43.6Total Motorized
    
    $
    47,793
    
    
    
    100.0
    
    
    $
    44,865
    
    
    
    100.0
    
    
    $
    2,928
    
    
    
    6.5
 Three Months
    
    % of
    
    Three Months
    
    % ofEnded
    
    Segment
    
    Ended
    
    Segment
    
    Change
    
    %October 31, 2009
    
    Shipments
    
    October 31, 2008
    
    Shipments
    
    Amount
    
    Change# OF UNITS:MotorizedClass A
    
    
    313
    
    
    
    51.7
    
    
    
    288
    
    
    
    55.2
    
    
    
    25
    
    
    
    8.7Class C
    
    
    241
    
    
    
    39.8
    
    
    
    200
    
    
    
    38.3
    
    
    
    41
    
    
    
    20.5Class B
    
    
    52
    
    
    
    8.5
    
    
    
    34
    
    
    
    6.5
    
    
    
    18
    
    
    
    52.9Total Motorized
    
    
    606
    
    
    
    100.0
    
    
    
    522
    
    
    
    100.0
    
    
    
    84
    
    
    
    16.1
 Impact of Change In Price On Net Sales:
 %Increase/(Decrease)MotorizedClass A
    
    
    (4.9
    )%Class C
    
    
    (16.0
    )%Class B
    
    
    (9.3
    )%Total Motorized
    
    
    (9.6
    )%
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BUSES
  Three Months
    
    Three MonthsEnded
    
    EndedOctober 31, 2009
    
    October 31, 2008
    
    Change
    
    % ChangeNet Sales
    
    $
    112,623
    
    
    $
    108,415
    
    
    $
    4,208
    
    
    
    3.9# of Units
    
    
    1,590
    
    
    
    1,648
    
    
    
    (58
    )
    
    
    (3.5
    )Impact of Change in Price on Net Sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7.4
  24




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Financial Condition and Liquidity
     25




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Operating Activities
  Investing Activities
  Financing Activities
  Critical Accounting Principles
  Impairment of Goodwill, Trademarks and Long-Lived Assets
  26




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##### Table of Contents



Insurance Reserves
  Product Warranties
  Income Taxes
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##### Table of Contents



Revenue Recognition
  1)
    
    An order for a product has been received from a dealer;2)
    
    Written or oral approval for payment has been received from the dealers flooring
institution;3)
    
    A common carrier signs the delivery ticket accepting responsibility for the product as
agent for the dealer; and4)
    
    The product is removed from the Companys property for delivery to the dealer who
placed the order.
  Repurchase Commitments
  28




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Investments
  Accounting Pronouncements
  Forward Looking Statements
  29




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
 ITEM 4. CONTROLS AND PROCEDURES
   30




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##### Table of Contents



PART II    Other Information
 
 ITEM 1. LEGAL PROCEEDINGS
    
 ITEM 1A. RISK FACTORS
  31




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ITEM 6. EXHIBITS
 Exhibit
    
    Description31.1
    
    Chief Executive Officers Certification filed pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    
    Chief Financial Officers Certification filed pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    
    Chief Executive Officers Certification furnished pursuant to Section 906 of the
Sarbanes-Oxley Act 2002.32.2
    
    Chief Financial Officers Certification furnished pursuant to Section 906 of the
Sarbanes-Oxley Act 2002.
 
 SIGNATURES
  THOR INDUSTRIES, INC.
          (Registrant)DATE: November 30, 2009
    /s/ Peter B. OrthweinPeter B. OrthweinChairman of the Board, President
and Chief Executive OfficerDATE: November 30, 2009
    /s/ Christian G. FarmanChristian G. FarmanSenior Vice President, Treasurer
and Chief Financial Officer 32