##### Table of Contents



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 April 30, 2006
    
    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)
 Registrants telephone number, including area code: 937) 596-6849
  Yes þ
    
    No o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
  Yes o
    
    No þ
  Class
    
    Outstanding at 4/30/2006Common stock, par value $.10 per share
    
    56,684,286 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 2. Unregistered Sales of Equity Securities and Use of ProceedsITEM 6. ExhibitsSIGNATURESEX-31.1 Section 302 CEO CertificationEX-31.2 Section 302 CFO CertificationEX-32.1 Section 906 CFO CertificationEX-32.2 Section 906 CEO Certification    Table of Contents  
 PART I  Financial Information
 Unless otherwise indicated, all amounts presented in thousands of dollars except unit, share
and per share data.
 
 ITEM 1. Financial Statements
 THOR INDUSTRIES, INC. AND SUBSIDIARIES  CONSOLIDATED BALANCE SHEETS
 April 30, 2006
    
    
    July 31, 2005ASSETSCurrent assets:Cash and cash equivalents
    
    $
    141,494
    
    
    $
    163,596Investments  short term
    
    
    125,013
    
    
    
    45,219Accounts receivable:Trade
    
    
    217,115
    
    
    
    140,927Other
    
    
    6,789
    
    
    
    5,409Inventories
    
    
    200,159
    
    
    
    161,770Prepaid expenses
    
    
    8,388
    
    
    
    5,857Deferred income taxes
    
    
    19,323
    
    
    
    1,262Total current assets
    
    
    718,281
    
    
    
    524,040Property:Land
    
    
    23,408
    
    
    
    21,339Buildings and improvements
    
    
    120,750
    
    
    
    109,443Machinery and equipment
    
    
    53,742
    
    
    
    49,259Total cost
    
    
    197,900
    
    
    
    180,041Accumulated depreciation
    
    
    48,638
    
    
    
    40,252Property, net
    
    
    149,262
    
    
    
    139,789Investment in Joint ventures
    
    
    2,664
    
    
    
    2,800Other assets:Goodwill
    
    
    165,663
    
    
    
    165,662Non-compete agreements
    
    
    3,078
    
    
    
    3,790Trademarks
    
    
    13,900
    
    
    
    13,900Other
    
    
    9,929
    
    
    
    7,898Total other assets
    
    
    192,570
    
    
    
    191,250TOTAL ASSETS
    
    $
    1,062,777
    
    
    $
    857,879LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    161,311
    
    
    $
    118,056Accrued liabilities:Taxes
    
    
    49,510
    
    
    
    8,351Compensation and related items
    
    
    35,692
    
    
    
    28,519Product warranties
    
    
    56,840
    
    
    
    55,118Promotions and rebates
    
    
    11,687
    
    
    
    7,362Product/property liability and related
    
    
    9,999
    
    
    
    7,913Dividend payable
    
    
    
    
    
    
    17,000Other
    
    
    8,115
    
    
    
    6,493Total current liabilities
    
    
    333,154
    
    
    
    248,812Deferred income taxes and other liabilities
    
    
    13,778
    
    
    
    11,680Stockholders equity:Common stock  authorized 250,000,000 shares;
issued 57,040,286 shares @ 4/30/06 and 56,933,483
shares @ 7/31/05; par value of $.10 per share
    
    
    5,704
    
    
    
    5,693Additional paid-in capital
    
    
    85,439
    
    
    
    82,652Accumulated other comprehensive income
    
    
    1,939
    
    
    
    943Retained earnings
    
    
    635,448
    
    
    
    515,877Restricted stock plan
    
    
    (552
    )
    
    
    (747
    )Less Treasury shares of 356,000 @ 4/30/06 & 256,000 @ 7/31/05
    
    
    (12,133
    )
    
    
    (7,031
    )Total stockholders equity
    
    
    715,845
    
    
    
    597,387TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    1,062,777
    
    
    $
    857,879




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THOR INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME  FOR THE THREE & NINE MONTHS ENDED APRIL 30, 2006 AND 2005
 Three Months Ended April 30
    
    
    Nine Months Ended April 302006
    
    
    2005
    
    
    2006
    
    
    2005Net sales
    
    $
    857,615
    
    
    $
    728,693
    
    
    $
    2,260,985
    
    
    $
    1,898,460Cost of products sold
    
    
    729,604
    
    
    
    634,658
    
    
    
    1,931,369
    
    
    
    1,645,818Gross profit
    
    
    128,011
    
    
    
    94,035
    
    
    
    329,616
    
    
    
    252,642Selling, general and
administrative expenses
    
    
    50,317
    
    
    
    43,160
    
    
    
    135,890
    
    
    
    115,203Interest income
    
    
    2,552
    
    
    
    680
    
    
    
    6,270
    
    
    
    2,025Interest expense
    
    
    347
    
    
    
    144
    
    
    
    917
    
    
    
    254Other income
    
    
    243
    
    
    
    743
    
    
    
    1,169
    
    
    
    1,868Income before income taxes
    
    
    80,142
    
    
    
    52,154
    
    
    
    200,248
    
    
    
    141,078Provision for income taxes
    
    
    29,003
    
    
    
    19,204
    
    
    
    73,870
    
    
    
    52,418Net income
    
    $
    51,139
    
    
    $
    32,950
    
    
    $
    126,378
    
    
    $
    88,660Average common shares outstanding:Basic
    
    
    56,656,684
    
    
    
    56,732,473
    
    
    
    56,605,615
    
    
    
    56,801,528Diluted
    
    
    57,087,096
    
    
    
    57,129,262
    
    
    
    56,994,628
    
    
    
    57,195,012Earnings per common share:Basic
    
    $
    .90
    
    
    $
    .58
    
    
    $
    2.23
    
    
    $
    1.56Diluted
    
    $
    .90
    
    
    $
    .58
    
    
    $
    2.22
    
    
    $
    1.55Dividends declared per common share:
    
    $
    .07
    
    
    $
    .03
    
    
    $
    .12
    
    
    $
    .09




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THOR INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS  FOR THE NINE MONTHS ENDED APRIL 30, 2006 AND 2005
 2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    126,378
    
    
    $
    88,660Adjustments to reconcile net income to net cash (used in)
provided by operating activities:Depreciation
    
    
    10,023
    
    
    
    7,131Amortization
    
    
    712
    
    
    
    730Deferred income taxes
    
    
    (18,149
    )
    
    
    (Gain) loss on disposition of assets
    
    
    (11
    )
    
    
    74Loss on disposition of trading investments
    
    
    403
    
    
    
    1,064Unrealized (gain) on trading investments
    
    
    (461
    )
    
    
    (39
    )Changes in non cash assets and liabilities, net of effect
from acquisitions:Purchases of trading investments
    
    
    (197,462
    )
    
    
    (103,733
    )Proceeds from disposition of trading investments
    
    
    117,726
    
    
    
    123,914Accounts receivable
    
    
    (77,568
    )
    
    
    (49,438
    )Inventories
    
    
    (38,389
    )
    
    
    (31,450
    )Prepaids and other
    
    
    (4,427
    )
    
    
    (3,751
    )Accounts payable
    
    
    36,747
    
    
    
    (9,308
    )Accrued liabilities
    
    
    58,425
    
    
    
    9,835Other liabilities
    
    
    2,933
    
    
    
    348Net cash provided by operating activities
    
    
    16,880
    
    
    
    34,037Cash flows from investing activities:Purchase of property, plant & equipment
    
    
    (18,263
    )
    
    
    (38,568
    )Proceeds from disposition of assets
    
    
    229
    
    
    
    35Acquisitions  Net of cash acquired
    
    
    
    
    
    
    (28,022
    )Net cash used in investing activities
    
    
    (18,034
    )
    
    
    (66,555
    )Cash flows from financing activities:Cash dividends
    
    
    (23,807
    )
    
    
    (5,126
    )Purchase of common stock for retirement
    
    
    
    
    
    
    (8,490
    )Purchase of common stock held as treasury shares
    
    
    
    
    
    
    (4,601
    )Proceeds from issuance of common stock
    
    
    1,863
    
    
    
    814Retirement of acquired debt
    
    
    
    
    
    
    (1,001
    )Net cash used in financing activities
    
    
    (21,944
    )
    
    
    (18,404
    )Effect of exchange rate changes on cash
    
    
    996
    
    
    
    489Net decrease in cash and equivalents
    
    
    (22,102
    )
    
    
    (50,433
    )Cash and equivalents, beginning of period
    
    
    163,596
    
    
    
    136,120Cash and equivalents, end of period
    
    $
    141,494
    
    
    $
    85,687Supplemental cash flow information:Income taxes paid
    
    $
    52,057
    
    
    $
    52,586Interest paid
    
    
    917
    
    
    
    254Non cash transactions:Retirement of treasury shares
    
    $
    
    
    
    $
    8,490Capital expenditures in accounts payable
    
    
    1,406
    
    
    
    Purchase of treasury shares
    
    
    5,102
    
    
    
    2,430Incentive stock option disqualifying disposition
    
    
    339
    
    
    
    Cancellation of restricted stock
    
    
    42
    
    
    
    




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1.
    
    The July 31, 2005 amounts are 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, 2005. The results of operations for the three
and nine months ended April 30, 2006 are not necessarily indicative of the results for the
full year.2.
    
    Major classifications of inventories are:
 April 30, 2006
    
    
    July 31, 2005Raw materials
    
    $
    101,124
    
    
    $
    78,493Chassis
    
    
    45,544
    
    
    
    29,506Work in process
    
    
    45,762
    
    
    
    55,413Finished goods
    
    
    28,553
    
    
    
    14,196Total
    
    
    220,983
    
    
    
    177,608Less excess of FIFO costs
over LIFO costs
    
    
    20,824
    
    
    
    15,838Total inventories
    
    $
    200,159
    
    
    $
    161,770
 3.
    
    Earnings Per Share
 Three Months
    
    
    Three Months
    
    
    Nine Months
    
    
    Nine MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedApril 30, 2006
    
    
    April 30, 2005
    
    
    April 30, 2006
    
    
    April 30, 2005Weighted
average shares outstanding for basic
earnings per share
    
    
    56,656,684
    
    
    
    56,732,473
    
    
    
    56,605,615
    
    
    
    56,801,528Stock options and
restricted stock
    
    
    430,412
    
    
    
    396,789
    
    
    
    389,013
    
    
    
    393,484Total  For diluted shares
    
    
    57,087,096
    
    
    
    57,129,262
    
    
    
    56,994,628
    
    
    
    57,195,012
 4.
    
    Comprehensive Income
 Three Months
    
    
    Three Months
    
    
    Nine Months
    
    
    Nine MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedApril 30, 2006
    
    
    April 30, 2005
    
    
    April 30, 2006
    
    
    April 30, 2005Net income
    
    $
    51,139
    
    
    $
    32,950
    
    
    $
    126,378
    
    
    $
    88,660Foreign currency
translation adjustment
    
    
    156
    
    
    
    (238
    )
    
    
    996
    
    
    
    490Comprehensive income
    
    $
    51,295
    
    
    $
    32,712
    
    
    $
    127,374
    
    
    $
    89,150
 5.
    
    Segment InformationThe 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 Hensall and Oliver, Keystone, Komfort, Thor
America and Thor California. The motorized recreation vehicle segment consists of product
lines from the following operating companies that have been aggregated: Airstream, Damon,
Four Winds and Oliver. The bus segment consists of the following operating companies that have
been aggregated: Champion Bus, ElDorado California, ElDorado Kansas and Goshen Coach. During
the quarter ended January 31, 2006, the Company made the decision not to produce a planned
motorized product line. The impairment charge associated with the decision was $1,360 and is
included in cost of products sold.




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 Three Months
    
    
    Three Months
    
    
    Nine Months
    
    
    Nine MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedApril 30, 2006
    
    
    April 30, 2005
    
    
    April 30, 2006
    
    
    April 30, 2005Net Sales:Recreation vehicles:Towables
    
    $
    615,043
    
    
    $
    497,032
    
    
    $
    1,606,140
    
    
    $
    1,302,690Motorized
    
    
    161,593
    
    
    
    165,758
    
    
    
    424,528
    
    
    
    421,423Total recreation vehicles
    
    
    776,636
    
    
    
    662,790
    
    
    
    2,030,668
    
    
    
    1,724,113Buses
    
    
    80,979
    
    
    
    65,903
    
    
    
    230,317
    
    
    
    174,347Total
    
    $
    857,615
    
    
    $
    728,693
    
    
    $
    2,260,985
    
    
    $
    1,898,460
 Three Months
    
    
    Three Months
    
    
    Nine Months
    
    
    Nine MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedApril 30, 2006
    
    
    April 30, 2005
    
    
    April 30, 2006
    
    
    April 30, 2005Income Before Income Taxes:Recreation vehicles:Towables
    
    $
    71,888
    
    
    $
    44,119
    
    
    $
    183,314
    
    
    $
    121,511Motorized
    
    
    7,756
    
    
    
    7,421
    
    
    
    18,293
    
    
    
    19,207Total recreation vehicles
    
    
    79,644
    
    
    
    51,540
    
    
    
    201,607
    
    
    
    140,718Buses
    
    
    2,034
    
    
    
    2,641
    
    
    
    6,013
    
    
    
    5,109Corporate
    
    
    (1,536
    )
    
    
    (2,027
    )
    
    
    (7,372
    )
    
    
    (4,749
    )Total
    
    $
    80,142
    
    
    $
    52,154
    
    
    $
    200,248
    
    
    $
    141,078
 April 30, 2006
    
    
    July 31, 2005Identifiable Assets:Recreation vehicles:Towables
    
    $
    503,856
    
    
    $
    384,292Motorized
    
    
    166,902
    
    
    
    126,045Total recreation vehicles
    
    
    670,758
    
    
    
    510,337Buses
    
    
    105,886
    
    
    
    96,942Corporate
    
    
    286,133
    
    
    
    250,600Total
    
    $
    1,062,777
    
    
    $
    857,879
 6.
    
    Treasury SharesThe Company purchased 100,000 shares of treasury stock in April 2006 at an average cost
of $51. The cash outlay occurred in May 2006. The Company purchased 256,000 shares of
treasury stock in April 2005 at an average cost of $27. Of these shares 90,000 shares
were paid for in May 2005. The Company also purchased and retired 323,200 shares of
treasury stock in the first quarter of fiscal 2005 at an average cost of $26.27 per share.
This retirement resulted in a reduction of $32 in common stock and $458 in additional
paid-in-capital and $8,000 in retained earnings.
 7.
    
    Investments  Short TermShort term investments, which are principally investment grade securities composed of
asset-based notes, mortgage-based notes, auction rate securities and corporate bonds, are
generally bought and held for sale in the near term, and are classified as trading securities.
Trading securities are carried at fair market value. Realized and unrealized gains and losses
on trading securities are included in earnings. Dividend and interest income are recognized
when earned.
 8.
    
    AcquisitionsOn November 1, 2004, we completed our acquisition of the stock of DS Corp. dba CrossRoads RV,
an Indiana corporation (CrossRoads), pursuant to an Agreement and Plan of Merger (the Merger
Agreement), dated as of October 28, 2004, by and among our company, Thor Acquisition Corp., a
Delaware corporation and a wholly-owned subsidiary of our company (Acquisition




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 Subsidiary), CrossRoads and the securityholders of CrossRoads. CrossRoads is engaged in
the business of manufacturing towable recreation vehicles. Under the terms of the Merger
Agreement, Acquisition Subsidiary merged with and into CrossRoads, and CrossRoads continued as
the surviving corporation (the Merger). In addition, as part of the Merger, certain members
of management of CrossRoads entered into non-competition agreements with our company.The purchase price paid by us for the acquisition of the stock of CrossRoads was $28,030, which
was payable in cash and was funded from our cash on hand. The fair value of assets acquired
and liabilities assumed was $32,958, and $4,928 respectively. The purchase price allocation
includes $1,176 of non-compete agreements, which will be amortized over two to seven years,
$20,485 of goodwill and $794 for trademarks that are not subject to amortization.On May 27, 2005, we completed our acquisition of the Goshen Coach Division of Veritrans
Specialty Vehicles Inc. pursuant to an asset purchase agreement dated May 26, 2005 for cash of
$10,083.
 9.
    
    Goodwill and Other Intangible AssetsThe components of other intangible assets are as follows:
 April 30, 2006
    
    July 31, 2005Accumulated
    
    
    
    
    
    AccumulatedCost
    
    Amortization
    
    Cost
    
    AmortizationAmortized Intangible Assets:Non-compete agreements
    
    $
    15,889
    
    
    $
    12,811
    
    
    $
    15,889
    
    
    $
    12,099
 Three Months
    
    Three Months
    
    Nine Months
    
    Nine MonthsEnded
    
    Ended
    
    Ended
    
    EndedApril 30, 2006
    
    April 30, 2005
    
    April 30, 2006
    
    April 30, 2005Non-compete Agreements:Amortization Expense
    
    $
    237
    
    
    $
    259
    
    
    $
    712
    
    
    $
    730
 Non-compete agreements are amortized on a straight-line basis.Estimated Amortization Expense:
 For the year ending July 2006
    
    $
    949For the year ending July 2007
    
    $
    887For the year ending July 2008
    
    $
    828For the year ending July 2009
    
    $
    492For the year ending July 2010
    
    $
    337
 There was no change in the carrying amount of goodwill and trademarks for the nine month period
ended April 30, 2006.As of April 30, 2006, Goodwill and Trademarks by segments totaled as follows:
 Goodwill
    
    
    TrademarksRecreation Vehicles:Towables
    
    $
    143,795
    
    
    $
    10,237Motorized
    
    
    17,252
    
    
    
    2,600Total Recreation Vehicles
    
    
    161,047
    
    
    
    12,837Bus
    
    
    4,616
    
    
    
    1,063Total
    
    $
    165,663
    
    
    $
    13,900




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 10.
    
    WarrantyThor provides customers of our products with a warranty covering defects in material or
workmanship for periods generally ranging from one to two years, with longer warranties on
certain structural components. We record a liability based on our best estimate of the amounts
necessary to settle future and existing claims on products sold as of the balance sheet date.
Factors we use in estimating the warranty liability include a history of units sold, existing
dealer inventory, average cost incurred and a profile of the distribution of warranty
expenditures over the warranty period. A significant increase in dealer shop rates, the cost
of parts or the frequency of claims could have a material adverse impact on our operating
results for the period or periods in which such 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
    
    
    Three Months
    
    
    Nine Months
    
    
    Nine MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedApril 30, 2006
    
    
    April 30, 2005
    
    
    April 30, 2006
    
    
    April 30, 2005Beginning Balance
    
    $
    53,882
    
    
    $
    49,152
    
    
    $
    55,118
    
    
    $
    45,829Provision
    
    
    17,428
    
    
    
    16,752
    
    
    
    45,281
    
    
    
    44,133Payments
    
    
    14,470
    
    
    
    12,923
    
    
    
    43,559
    
    
    
    38,076Acquisitions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,095Ending Balance
    
    $
    56,840
    
    
    $
    52,981
    
    
    $
    56,840
    
    
    $
    52,981
 11.
    
    Commercial CommitmentsOur principal commercial commitments at April 30, 2006 are summarized in the following chart:
 Total
    
    Term ofCommitment
    
    Amount Committed
    
    GuaranteeGuarantee on dealer financing
    
    $
    3,440
    
    
    less than 1 yearStandby repurchase obligation
on dealer financing

    
    $
    877,967
    
    
    less than 1 year
 The Company records repurchase and guarantee reserves based on prior experience and known
current events. The combined repurchase and recourse reserve balances are approximately $1,864
and $1,368 as of April 30, 2006 and July 31, 2005, respectively.
 Three Months
    
    
    Three Months
    
    
    Nine Months
    
    
    Nine MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedApril 30, 2006
    
    
    April 30, 2005
    
    
    April 30, 2006
    
    
    April 30, 2005Cost of units repurchased
    
    $
    881
    
    
    $
    2,313
    
    
    $
    2,984
    
    
    $
    9,149Realization on units resold
    
    
    749
    
    
    
    1,959
    
    
    
    2,555
    
    
    
    7,433Losses due to repurchase
    
    $
    132
    
    
    $
    354
    
    
    $
    429
    
    
    $
    1,716
 12.
    
    Stock-Based CompensationEffective August 1, 2005, we adopted Statement of Financial Accounting Standard (SFAS) No.
123R, Share Based Payment, using the modified prospective transition method. Under the modified
prospective method, awards that are granted, modified or settled after the date of the adoption
should be measured and accounted for in accordance with SFAS 123R.




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 Stock Options  The Companys Board of Directors approved the 1999 Stock Option Plan.
2,000,000 shares were authorized under the Plan. Options expire 10 years from the date of
grant and are vested evenly over 3 to 4 years from the date of grant.A summary of option activity under the 1999 Stock Option Plan for the nine months ended April
30, 2006 is as follows:
 Weighted
    
    
    Weighted Avg.Avg. Exercise
    
    
    Remaining
    
    
    AggregateShares
    
    
    Price
    
    
    Contractual Life
    
    
    Intrinsic ValueOutstanding, August 1, 2005
    
    
    704,041
    
    
    $
    19.63
    
    
    
    
    
    
    
    Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    111,003
    
    
    
    16.78
    
    
    
    
    
    
    
    Canceled
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding, April 30, 2006
    
    
    593,038
    
    
    
    20.17
    
    
    
    6.9
    
    
    $
    17,976Exercisable, April 30, 2006
    
    
    429,010
    
    
    
    17.23
    
    
    
    6.5
    
    
    $
    14,263
 The fair value of each option award is estimated on the date of grant using the Black-Scholes
option-pricing model. Assumptions utilized in the model are evaluated when awards are granted.
Forfeiture assumptions are revised as necessary to reflect experience. The fair value of the
stock options is based upon the market price of the underlying common stock as of the date of
the grant, reduced by the present value of estimated future dividends, and risk-free interest
rates. The risk-free rate for periods within the contractual life of the option is based on
the U.S. Treasury yield curve in effect at the time of the grant. Expected volatilities are
based on the historical volatility of our stock. The expected term of the options represents
the period of time that options granted are outstanding and is estimated using historical
exercise and termination behavior.The amount expensed in the current period under SFAS No. 123R is consistent with prior proforma
disclosures under SFAS 123.For the three and nine months ended April 30, 2006, the Company recorded expense of $220 and
$638 respectively for stock option awards. At April 30, 2006, there was $716 of total
unrecognized compensation costs related to stock options that is expected to be recognized over
a weighted average period of 1.1 years.Cash received from stock option exercises for the three and nine months ended April 30, 2006
was $607 and $1,863 respectively. The total intrinsic value of stock options exercised was
$3,260 for the nine months ended April 30, 2006.Exercises of options are satisfied with the issuance of new shares from authorized shares.Stock Awards  The Company has a stock award plan which allows for the granting of up to
600,000 shares of restricted stock to selected executives. Restrictions expire 50% after 5
years following the date of issue and the balance after six years.A summary of stock award activity under this Plan for the nine months ended April 30, 2006 is
as follows:
 WeightedAverage GrantShares
    
    
    Date Fair ValueNonvested, August 1, 2005
    
    
    115,700
    
    
    $
    12.93Granted
    
    
    
    
    
    
    Vested
    
    
    16,800
    
    
    
    5.77Forfeited
    
    
    4,200
    
    
    
    9.98Nonvested, April 30, 2006
    
    
    94,700
    
    
    $
    14.33




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
   
 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
       Trends and Business Outlook




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
   THREE MONTHS ENDED APRIL 30, 2006 VS. THREE MONTHS ENDED APRIL 30, 2005
 Three Months Ended
    
    
    
    
    
    
    Three Months Ended
    
    
    
    
    
    
    ChangeApril 30, 2006
    
    
    
    
    
    
    April 30, 2005
    
    
    
    
    
    
    Amount
    
    
    %NET SALES:Recreation VehiclesTowables
    
    $
    615,043
    
    
    
    
    
    
    $
    497,032
    
    
    
    
    
    
    $
    118,011
    
    
    
    23.7Motorized
    
    
    161,593
    
    
    
    
    
    
    
    165,758
    
    
    
    
    
    
    
    (4,165
    )
    
    
    (2.5
    )Total Recreation Vehicles
    
    
    776,636
    
    
    
    
    
    
    
    662,790
    
    
    
    
    
    
    
    113,846
    
    
    
    17.2Buses
    
    
    80,979
    
    
    
    
    
    
    
    65,903
    
    
    
    
    
    
    
    15,076
    
    
    
    22.9Total
    
    $
    857,615
    
    
    
    
    
    
    $
    728,693
    
    
    
    
    
    
    $
    128,922
    
    
    
    17.7# OF UNITS:Recreation VehiclesTowables
    
    
    31,729
    
    
    
    
    
    
    
    25,222
    
    
    
    
    
    
    
    6,507
    
    
    
    25.8Motorized
    
    
    2,190
    
    
    
    
    
    
    
    2,436
    
    
    
    
    
    
    
    (246
    )
    
    
    (10.1
    )Total Recreation Vehicles
    
    
    33,919
    
    
    
    
    
    
    
    27,658
    
    
    
    
    
    
    
    6,261
    
    
    
    22.6Buses
    
    
    1,438
    
    
    
    
    
    
    
    1,149
    
    
    
    
    
    
    
    289
    
    
    
    25.2Total
    
    
    35,357
    
    
    
    
    
    
    
    28,807
    
    
    
    
    
    
    
    6,550
    
    
    
    22.7% of
    
    
    
    
    
    % ofSegment
    
    
    
    
    
    SegmentNet Sales
    
    
    
    
    
    Net SalesGROSS PROFIT:Recreation VehiclesTowables
    
    $
    105,743
    
    
    
    17.2
    
    
    $
    72,670
    
    
    
    14.6
    
    
    $
    33,073
    
    
    
    45.5Motorized
    
    
    15,830
    
    
    
    9.8
    
    
    
    15,692
    
    
    
    9.5
    
    
    
    138
    
    
    
    0.9Total Recreation Vehicles
    
    
    121,573
    
    
    
    15.7
    
    
    
    88,362
    
    
    
    13.3
    
    
    
    33,211
    
    
    
    37.6Buses
    
    
    6,438
    
    
    
    8.0
    
    
    
    5,673
    
    
    
    8.6
    
    
    
    765
    
    
    
    13.5Total
    
    $
    128,011
    
    
    
    14.9
    
    
    $
    94,035
    
    
    
    12.9
    
    
    $
    33,976
    
    
    
    36.1SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:Recreation VehiclesTowables
    
    $
    33,914
    
    
    
    5.5
    
    
    $
    28,607
    
    
    
    5.8
    
    
    $
    5,307
    
    
    
    18.6Motorized
    
    
    8,074
    
    
    
    5.0
    
    
    
    8,271
    
    
    
    5.0
    
    
    
    (197
    )
    
    
    (2.4
    )Total Recreation Vehicles
    
    
    41,988
    
    
    
    5.4
    
    
    
    36,878
    
    
    
    5.6
    
    
    
    5,110
    
    
    
    13.9Buses
    
    
    4,092
    
    
    
    5.1
    
    
    
    2,937
    
    
    
    4.5
    
    
    
    1,155
    
    
    
    39.3Corporate
    
    
    4,237
    
    
    
    .5
    
    
    
    3,345
    
    
    
    .5
    
    
    
    892
    
    
    
    26.7Total
    
    $
    50,317
    
    
    
    5.9
    
    
    $
    43,160
    
    
    
    5.9
    
    
    $
    7,157
    
    
    
    16.6INCOME BEFORE INCOME TAXES:Recreation VehiclesTowables
    
    $
    71,888
    
    
    
    11.7
    
    
    $
    44,119
    
    
    
    8.9
    
    
    $
    27,769
    
    
    
    62.9Motorized
    
    
    7,756
    
    
    
    4.8
    
    
    
    7,421
    
    
    
    4.5
    
    
    
    335
    
    
    
    4.5Total Recreation Vehicles
    
    
    79,644
    
    
    
    10.3
    
    
    
    51,540
    
    
    
    7.8
    
    
    
    28,104
    
    
    
    54.5Buses
    
    
    2,034
    
    
    
    2.5
    
    
    
    2,641
    
    
    
    4.0
    
    
    
    (607
    )
    
    
    (23.0
    )Corporate
    
    
    (1,536
    )
    
    
    (.2
    )
    
    
    (2,027
    )
    
    
    (.2
    )
    
    
    491
    
    
    
    24.2Total
    
    $
    80,142
    
    
    
    9.3
    
    
    $
    52,154
    
    
    
    7.2
    
    
    $
    27,988
    
    
    
    53.7




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
 CONSOLIDATED
 ($ in 000)
    Segment Reporting
 RECREATION VEHICLES
  Impact from Internal GrowthAverage PricePer Unit
    
    Units
    
    Net ChangeRecreation VehiclesTowables
    
    
    (2.1
    )%
    
    
    25.8
    %
    
    
    23.7
    %Motorized
    
    
    7.6
    %
    
    
    (10.1
    )%
    
    
    (2.5
    )%
 TOWABLE RECREATION VEHICLES




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
 MOTORIZED RECREATION VEHICLES
    BUSES
  Impact
    
    Impact from Internal Growthfrom Acquisition
    
    Average Price Per Unit
    
    Units
    
    Net ChangeBuses
    
    
    17.4
    %
    
    
    5.7
    %
    
    
    (.2
    )%
    
    
    22.9
    %
    ORDER BACKLOG
  As of
    
    
    As of
    
    
    ChangeApril 30, 2006
    
    
    April 30, 2005
    
    
    Amount
    
    
    %Recreation VehiclesTowables
    
    $
    369
    
    
    $
    183
    
    
    $
    186
    
    
    
    101.6Motorized
    
    
    132
    
    
    
    132
    
    
    
    
    
    
    
    Total Recreation Vehicles
    
    
    501
    
    
    
    315
    
    
    
    186
    
    
    
    59.0Buses
    
    
    197
    
    
    
    140
    
    
    
    57
    
    
    
    40.7Total
    
    $
    698
    
    
    $
    455
    
    
    $
    243
    
    
    
    53.4




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
 NINE MONTHS ENDED APRIL 30, 2006 VS. NINE MONTHS ENDED APRIL 30, 2005
 Nine Months
    
    
    
    
    
    
    Nine Months
    
    
    
    
    
    
    ChangeApril 30, 2006
    
    
    
    
    
    
    April 30, 2005
    
    
    
    
    
    
    Amount
    
    
    %NET SALES:Recreation VehiclesTowables
    
    $
    1,606,140
    
    
    
    
    
    
    $
    1,302,690
    
    
    
    
    
    
    $
    303,450
    
    
    
    23.3Motorized
    
    
    424,528
    
    
    
    
    
    
    
    421,423
    
    
    
    
    
    
    
    3,105
    
    
    
    0.7Total Recreation Vehicles
    
    
    2,030,668
    
    
    
    
    
    
    
    1,724,113
    
    
    
    
    
    
    
    306,555
    
    
    
    17.8Buses
    
    
    230,317
    
    
    
    
    
    
    
    174,347
    
    
    
    
    
    
    
    55,970
    
    
    
    32.1Total
    
    $
    2,260,985
    
    
    
    
    
    
    $
    1,898,460
    
    
    
    
    
    
    $
    362,525
    
    
    
    19.1# OF UNITS:Recreation VehiclesTowables
    
    
    83,289
    
    
    
    
    
    
    
    66,569
    
    
    
    
    
    
    
    16,720
    
    
    
    25.1Motorized
    
    
    5,695
    
    
    
    
    
    
    
    5,968
    
    
    
    
    
    
    
    (273
    )
    
    
    (4.6
    )Total Recreation Vehicles
    
    
    88,984
    
    
    
    
    
    
    
    72,537
    
    
    
    
    
    
    
    16,447
    
    
    
    22.7Buses
    
    
    4,227
    
    
    
    
    
    
    
    3,047
    
    
    
    
    
    
    
    1,180
    
    
    
    38.7Total
    
    
    93,211
    
    
    
    
    
    
    
    75,584
    
    
    
    
    
    
    
    17,627
    
    
    
    23.3% of
    
    
    
    
    
    % ofSegment
    
    
    
    
    
    SegmentNet Sales
    
    
    
    
    
    Net SalesGROSS PROFIT:Recreation VehiclesTowables
    
    $
    273,265
    
    
    
    17.0
    
    
    $
    196,777
    
    
    
    15.1
    
    
    $
    76,488
    
    
    
    38.9Motorized
    
    
    39,007
    
    
    
    9.2
    
    
    
    40,972
    
    
    
    9.7
    
    
    
    (1,965
    )
    
    
    (4.8
    )Total Recreation Vehicles
    
    
    312,272
    
    
    
    15.4
    
    
    
    237,749
    
    
    
    13.8
    
    
    
    74,523
    
    
    
    31.3Buses
    
    
    17,344
    
    
    
    7.5
    
    
    
    14,893
    
    
    
    8.5
    
    
    
    2,451
    
    
    
    16.5Total
    
    $
    329,616
    
    
    
    14.6
    
    
    $
    252,642
    
    
    
    13.3
    
    
    $
    76,974
    
    
    
    30.5SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:Recreation VehiclesTowables
    
    $
    90,167
    
    
    
    5.6
    
    
    $
    75,451
    
    
    
    5.8
    
    
    $
    14,716
    
    
    
    19.5Motorized
    
    
    20,711
    
    
    
    4.9
    
    
    
    21,706
    
    
    
    5.2
    
    
    
    (995
    )
    
    
    (4.6
    )Total Recreation Vehicles
    
    
    110,878
    
    
    
    5.5
    
    
    
    97,157
    
    
    
    5.6
    
    
    
    13,721
    
    
    
    14.1Buses
    
    
    10,709
    
    
    
    4.6
    
    
    
    9,749
    
    
    
    5.6
    
    
    
    960
    
    
    
    9.8Corporate
    
    
    14,303
    
    
    
    0.6
    
    
    
    8,297
    
    
    
    0.4
    
    
    
    6,006
    
    
    
    72.4Total
    
    $
    135,890
    
    
    
    6.0
    
    
    $
    115,203
    
    
    
    6.1
    
    
    $
    20,687
    
    
    
    18.0INCOME BEFORE INCOME TAXES:Recreation VehiclesTowables
    
    $
    183,314
    
    
    
    11.4
    
    
    $
    121,511
    
    
    
    9.3
    
    
    $
    61,803
    
    
    
    50.9Motorized
    
    
    18,293
    
    
    
    4.3
    
    
    
    19,207
    
    
    
    4.6
    
    
    
    (914
    )
    
    
    (4.8
    )Total Recreation Vehicles
    
    
    201,607
    
    
    
    9.9
    
    
    
    140,718
    
    
    
    8.2
    
    
    
    60,889
    
    
    
    43.3Buses
    
    
    6,013
    
    
    
    2.6
    
    
    
    5,109
    
    
    
    2.9
    
    
    
    904
    
    
    
    17.7Corporate
    
    
    (7,372
    )
    
    
    0.3
    
    
    
    (4,749
    )
    
    
    (.3
    )
    
    
    (2,623
    )
    
    
    (55.2
    )Total
    
    $
    200,248
    
    
    
    8.9
    
    
    $
    141,078
    
    
    
    7.4
    
    
    $
    59,170
    
    
    
    41.9
 CONSOLIDATED
 ($ in 000)




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
   Segment Reporting
 RECREATION VEHICLES
  Impact from Internal GrowthImpact
    
    Average Pricefrom Acquisition
    
    Per Unit
    
    Units
    
    Net ChangeRecreation VehiclesTowables
    
    
    3.0
    %
    
    
    (1.9
    )%
    
    
    22.2
    %
    
    
    23.3
    %Motorized
    
    
    
    
    
    
    5.3
    %
    
    
    (4.6
    )%
    
    
    .7
    %
 TOWABLE RECREATION VEHICLES
    MOTORIZED RECREATION VEHICLES




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
  BUSES
  Impact
    
    Impact from Internal Growthfrom Acquisition
    
    Average Price Per Unit
    
    Units
    
    Net ChangeBuses
    
    
    17.7
    %
    
    
    8.0
    %
    
    
    6.4
    %
    
    
    32.1
    %
    Financial Condition and Liquidity
 $ (in 000)




---



##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
  Critical Accounting Policies
  Impairment of Goodwill, Trademarks and Long-Lived Assets
  Insurance Reserves
  Warranty




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
 Income Taxes
  Forward Looking Statements
  
 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
  
 ITEM 4. Controls and Procedures




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
   
 PART II    Other Information
 
 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
 (c) ISSUER PURCHASES OF EQUITY SECURITIES
 (c) Total Number
    
    (d) Maximum Numberof Shares
    
    (or Approximate(a) Total
    
    (b)
    
    (or Units)
    
    Dollar Value)Number
    
    Average
    
    Purchased as
    
    of Shares (or Units)of Shares
    
    Price Paid
    
    Part of Publicly
    
    that May Yet Be(or Units)
    
    Per Share
    
    Announced Plans
    
    Purchased Under thePeriod
    
    Purchased
    
    (or Unit)
    
    or Programs (1)
    
    Plans or ProgramsFebruary 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,132,800March 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,132,800April 2006
    
    
    100,000
    
    
    $
    51.01
    
    
    
    100,000
    
    
    
    1,032,800
 
 (1)
    
    On March 11, 2003, we announced that our Board of Directors had approved a share
repurchase program, pursuant to which up to 1,000,000 shares of our common stock may be
repurchased. In the second quarter of fiscal 2004, we affected a two-for-one stock
split, resulting in 2,000,000 shares authorized for repurchase under the program. At
April 30, 2006, 1,032,800 common stock remained authorized for repurchase under the
repurchase program. 
 ITEM 6. Exhibits
 a.) Exhibits




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##### Table of Contents



SIGNATURES
  THOR INDUSTRIES, INC.(Registrant)DATE: May 30, 2006
        
    /s/
    Wade F. B. ThompsonWade F. B. ThompsonChairman of the Board, Presidentand Chief Executive OfficerDATE: May 30, 2006
        
    /s/
    Walter L. BennettWalter L. BennettExecutive Vice President,Secretary and Chief Financial Officer