Thor’s Hammer Falls on Unnamed Exec

Recreational vehicle and bus maker blames a former senior finance official for errors, but finds internal-controls problems and will restate earnings.
Stephen TaubJune 20, 2007

Thor Industries Inc. said that a former finance executive’s misconduct caused the recreational vehicle and commercial bus-maker to overstate earnings at a subsidiary by about $26 million pretax.

Thor said in a regulatory filing that an audit-committee investigation found that from fiscal 2004 to the second quarter of fiscal 2007, a former vice president of finance, who also was a senior financial officer of its Dutchmen Manufacturing Inc. unit, intentionally understated the cost of products sold. The filing did not identify the employee.

Thor also disclosed that the audit committee’s investigation identified problems with internal controls at Dutchmen and other operating subsidiaries, along with corporate finance and accounting. The company is restating prior results for each of the years in the three-year period ended July 31, 2006, it said, adding that the probe has ha also caused the company to delay the filing of results for the first two quarters of fiscal 2007.

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The company said the executive in the Dutchmen Manufacturing case “manipulated accounts” relating to inventory, accounts receivable, accounts payable, and cost of products sold by entering and approving his own inaccurate journal entries, and by reconciling the related accounts. He also prepared fraudulent supporting documentation.

These actions resulted in the $26 million pretax overstatement at Dutchmen, it said. The audit committee found no evidence that anyone else, at Dutchmen or elsewhere in the company, knew of or participated in this misconduct or that there was theft or misappropriation of company assets, the company said.

The company, which also makes Airstream products, previously had said that it had uncovered issues that primarily involved inventory, accounts receivable, accounts payable, and cost of goods sold, and that revisions would cut net income, mostly in fiscal 2006, by about $16 million. It said that it was studying which periods it would have to restate, and that it was talking with the Securities and Exchange Commission about the situation.

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