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EX-99.3 - EX-99.3 - THOR INDUSTRIES INCd225941dex993.htm
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Exhibit 99.2

Jayco, Corp.

and Subsidiary and Affiliate

Unaudited Condensed Consolidated Financial Report

4.30.2016


 

Jayco, Corp. and Subsidiary and Affiliate

        

Condensed consolidated balance sheets (unaudited)

     1   

Condensed consolidated statements of income (unaudited)

     2   

Condensed consolidated statements of cash flows (unaudited)

     3   

Notes to condensed consolidated financial statements (unaudited)

 

     4-7   


Jayco, Corp. And Subsidiary And Affiliate

Condensed Consolidated Balance Sheets (Unaudited)

April 30, 2016 and December 31, 2015

 

    

April 30,

2016

    

December 31,    

2015    

 

 

 

ASSETS

     

Current Assets

     

Cash

     $ 27,323,898       $ 31,522,009       

Investment in trading securities

     7,123,033         6,861,690       

Receivables

     101,438,776         88,020,406       

Inventories

     155,724,848         115,426,655       

Prepaid expenses

     2,208,380         2,951,018       
  

 

 

 

Total current assets

     293,818,935         244,781,778       

Property and Equipment, at depreciated cost

     54,418,832         53,817,010       

Intangible Assets, net

     2,054,317         2,201,335       

Goodwill

     852,770         852,770       

Cash Value of Life Insurance

     5,456,586         5,456,586       

Other Assets

     60,525         42,055       
  

 

 

 
     $ 356,661,965       $   307,151,534       
  

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current Liabilities

     

Accounts payable

     $ 69,078,145       $ 40,725,469       

Accrued liabilities

     115,513,571         107,487,736       
  

 

 

 

Total current liabilities

     184,591,716         148,213,205       
  

 

 

 

Long-Term Liabilities

     

Deferred compensation

     3,474,794         3,469,461       

Supplemental executive retirement plan obligation

     7,213,891         7,047,240       
  

 

 

 

Total long-term liabilities

     10,688,685         10,516,701       
  

 

 

 

Commitments and Contingencies

     

Stockholders’ Equity

     

Common stock

     4,921,461         4,921,461       

Retained earnings

     156,460,103         143,500,167       
  

 

 

 
     161,381,564         148,421,628       
  

 

 

 
     $     356,661,965       $ 307,151,534       
  

 

 

 

See notes to condensed consolidated financial statements.

 

1


Jayco, Corp. And Subsidiary And Affiliate

Condensed Consolidated Statements Of Income (Unaudited)

Four Months Ended April 30, 2016 and 2015

 

    

April 30,

2016

   

April 30,    

2015    

 

 

 

Net sales

       $     601,327,093      $     466,805,728        

Cost of goods sold

     538,384,750        424,696,041        
  

 

 

 

Gross profit

     62,942,343        42,109,687        
  

 

 

 

Operating expenses:

    

Selling

     13,658,584        11,022,656        

General and administrative

     14,356,264        9,426,610        
  

 

 

 
     28,014,848        20,449,266        
  

 

 

 

Operating income

     34,927,495        21,660,421        
  

 

 

 

Nonoperating income (expense):

    

Investment income

     2,229        63,489        

Interest expense

     (64,569     (75,840)       
  

 

 

 
     (62,340     (12,351)       
  

 

 

 

Net income

     $ 34,865,155      $ 21,648,070        
  

 

 

 

See notes to condensed consolidated financial statements.

 

2


Jayco, Corp. And Subsidiary And Affiliate

Condensed Consolidated Statements Of Cash Flows (Unaudited)

Four Months Ended April 30, 2016 and 2015

 

    

April 30,

2016

   

April 30,    

2015    

 

 

 

Cash Flows From Operating Activities

    

Net income

     $ 34,865,155      $ 21,648,070        

Adjustments to reconcile consolidated net income to net cash provided by operating activities

    

Depreciation and amortization

     2,276,002        1,766,665        

Deferred compensation

     35,734        26,592        

Loss (gain) on sale of property and equipment

     24,219        (1,000)       

Supplemental executive retirement plan obligation

     (94,692     (92,098)       

Change in assets and liabilities, net of acquisitions:

    

Decrease (increase) in:

    

Receivables

     (13,418,370     (19,243,367)       

Inventories

     (40,298,193     (6,935,560)       

Prepaid expenses

     742,638        783,361        

Increase in:

    

Accounts payable

     28,352,676        23,593,290        

Accrued liabilities

     8,025,835        3,994,032        
  

 

 

 

Net cash provided by operating activities

     20,511,004        25,539,985        
  

 

 

 

Cash Flows From Investing Activities

    

Proceeds from sale of property and equipment

     150,000        35,120        

Purchase of property and equipment

     (2,905,024     (5,471,361)       

Proceeds from sale of trading securities

     474,534        115,332        

Other

     (18,470     (177)       
  

 

 

 

Net cash used in investing activities

     (2,298,960     (5,321,086)       
  

 

 

 

Cash Flows From Financing Activities

    

Deferred compensation payments

     (30,401     (27,923)       

Dividends paid

     (21,905,220     (20,806,152)       

Supplemental executive retirement plan payments

     (474,534     (115,332)       
  

 

 

 

Net cash used in financing activities

     (22,410,155     (20,949,407)       
  

 

 

 

Decrease in cash

     (4,198,111     (730,508)       

Cash, beginning

     31,522,009        22,803,857        
  

 

 

 

Cash, ending

     $     27,323,898      $     22,073,349        
  

 

 

 

See notes to condensed consolidated financial statements.

 

3


Jayco, Corp. and Subsidiary and Affiliate

Notes to Condensed Consolidated Financial Statements

 

 

 

Note 1. Nature of Businesses and Significant Accounting Policies

Nature of businesses:

Jayco, Corp. is a management company and the holding company of Jayco, Inc.

Jayco, Inc. and its wholly-owned subsidiary, Highland Ridge RV, Inc. (“Highland Ridge”) are manufacturers of recreational vehicles. The recreational vehicles are sold throughout the United States and Canada and the majority of these vehicles are financed by dealers through financial institutions. Premium Custom Painting Co., a wholly-owned subsidiary of Jayco, Inc., provides painting services, primarily to Jayco, Inc.

Gen23, Corp. is a holding company for Jayco International Sales, Inc.

Jayco International Sales, Inc. is an interest charge domestic international sales corporation.

On June 30, 2016, Jayco, Corp. sold 100% of its stock to an unrelated party.

Significant accounting policies:

Principles of consolidation:

The consolidated financial statements include Jayco, Corp. and its wholly-owned subsidiary, Jayco, Inc. (“Jayco”) and its wholly-owned subsidiaries Highland Ridge RV, Inc. and Premium Custom Painting Co., which are collectively referred to as the Companies. The consolidated financial statements also include an affiliate, Gen23, Corp. and its wholly-owned subsidiary, Jayco International Sales, Inc. All material intercompany accounts and transactions have been eliminated in consolidation.

Use of estimates:

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2015. In our opinion, these condensed consolidated financial statements reflect all adjustments, consisting of normal, recurring accruals and similar items, necessary to present fairly our Condensed Consolidated Financial Statements for the interim periods presented herein. The consolidated results of operations for the four months ended April 30, 2016 and 2015 are not necessarily indicative of the results to be expected for the full year.

Revenue recognition:

Jayco generally manufactures products based on specific orders from customers and ships completed products only after receiving credit approval from financial institutions. Revenue is recognized when title passes to the customer, which is when the product is shipped to customers in accordance with shipping terms, which are primarily FOB shipping point.

 

4


Jayco, Corp. and Subsidiary and Affiliate

Notes to Condensed Consolidated Financial Statements

 

 

 

Warranties:

Jayco provides a limited warranty primarily for a period of two years after the retail sale date for its products. Jayco’s standard warranty requires Jayco or its dealers to repair or replace defective products during such warranty period at no cost to the consumer. Jayco estimates the costs that may be incurred under its basic limited warranty and records a liability in the amount of such costs at the time product revenue is recognized. Factors that affect Jayco’s warranty liability include the number of units sold, historical and anticipated rates of warranty claims, and cost per claim. Jayco periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. Jayco utilizes historical trends and analytical tools to assist in determining the appropriate loss reserve levels.

Changes in Jayco’s warranty liability during the four months ended April 30, 2016 and 2015 are as follows:

 

     2016     2015      
  

 

 

 

Balance, beginning

     $ 69,875,000      $ 58,336,550        

Accruals for products sold

     26,795,533        17,452,716        

Payments made

     (21,143,728     (14,017,727)       
  

 

 

 

Balance, ending

     $   75,526,805      $   61,771,539        
  

 

 

 

Subsequent events:

The Companies have evaluated subsequent events for potential recognition and/or disclosure through September 15, 2016, the date the consolidated financial statements were available to be issued.

 

Note 2. Inventories

Inventories at April 30, 2016 and December 31, 2015 are composed of the following:

 

     2016      2015      
  

 

 

 

Raw materials

     $ 34,049,571       $ 28,584,664       

Work in process, excluding chassis

     9,656,402         9,454,854       

Finished goods, excluding chassis

     45,311,314         36,784,887       

Chassis

     78,307,561         52,202,250       
  

 

 

 
     167,324,848         127,026,655       

Less LIFO reserve

     11,600,000         11,600,000       
  

 

 

 
     $   155,724,848       $   115,426,655       
  

 

 

 

 

5


Jayco, Corp. and Subsidiary and Affiliate

Notes to Condensed Consolidated Financial Statements

 

 

 

Note 3. Property and Equipment

The cost of property and equipment and the related accumulated depreciation as of April 30, 2016 and December 31, 2015 is as follows:

 

     2016      2015      
  

 

 

 

Land and improvements

     $ 22,737,579       $ 22,656,551       

Buildings and improvements

     62,240,380         61,945,527       

Machinery and equipment

     23,541,213         23,552,905       

Transportation equipment

     2,071,034         2,048,724       

Office furniture and equipment

     16,032,694         15,250,057       

Construction in progress

     2,997,122         1,516,068       
  

 

 

 
       129,620,022           126,969,832       

Less accumulated depreciation

     75,201,190         73,152,822       
  

 

 

 
     $ 54,418,832       $ 53,817,010       
  

 

 

 

 

Note 4. Accrued Liabilities

The composition of accrued liabilities as of April 30, 2016 and December 31, 2015 is as follows:

 

     2016      2015      
  

 

 

 

Wages and related taxes

     $ 17,073,459       $ 17,843,503       

Warranty

     75,526,805         69,875,000       

Health and liability insurance

     1,907,000         1,740,999       

Dealer incentives

     16,329,488         12,789,581       

Delivery

     3,465,000         2,760,000       

Other

     1,211,819         2,478,653       
  

 

 

 
     $   115,513,571       $   107,487,736       
  

 

 

 

 

Note 5. Income Taxes

The Companies, with the consent of their stockholders, have elected to have their income taxed under Section 1362 of the Internal Revenue Code and a similar section of the state tax laws which provide that, in lieu of corporation income taxes, the stockholders account for their proportionate shares of the Companies’ items of income, deduction, losses, and credits. The Companies have and intend to make cash distributions for the stockholders’ individual tax liabilities on taxable income generated by the Companies.

The Companies have evaluated their tax positions and have concluded that they have taken no uncertain tax positions that require adjustment to the financial statements. With few exceptions, the Companies are no longer subject to tax examinations by the U.S. federal, state or local tax authorities for years before 2012.

 

6


Jayco, Corp. and Subsidiary and Affiliate

Notes to Condensed Consolidated Financial Statements

 

 

 

 

Note 6. Major Customer

One customer accounted for more than 10% of the Companies’ consolidated net sales for the four months ended April 30, 2016 and 2015. Net sales for the four months ended April 30, 2016 and the related accounts receivable balance at April 30, 2016 for this customer was approximately $82,000,000 and $11,000,000 respectively. Net sales for the four months ended April 30, 2015 and the related accounts receivable balance at December 31, 2015 was approximately $68,000,000 and $14,400,000 respectively.

 

Note  7. Cash Flows Information

Supplemental information relative to the statements of cash flows for the four months ended April 30, 2016 and 2015 is as follows:

 

     2016      2015      
  

 

 

 

Supplemental disclosures of cash flows information:

     

Cash payments for interest

     $             102,402         $             53,950       
  

 

 

 

 

7