-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A+c7QXSWb7dY1gH4z8Td4YljbJYMWbn2FgzZInLdCtGGLbGh3XQXWQL4xIMnIFbO SGc0j2GvhKHHGKLqTGGTVQ== 0000794619-97-000010.txt : 19970312 0000794619-97-000010.hdr.sgml : 19970312 ACCESSION NUMBER: 0000794619-97-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970131 FILED AS OF DATE: 19970311 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN WOODMARK CORP CENTRAL INDEX KEY: 0000794619 STANDARD INDUSTRIAL CLASSIFICATION: MILLWOOD, VENEER, PLYWOOD & STRUCTURAL WOOD MEMBERS [2430] IRS NUMBER: 541138147 STATE OF INCORPORATION: VA FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14798 FILM NUMBER: 97554393 BUSINESS ADDRESS: STREET 1: 3102 SHAWNEE DR CITY: WINCHESTER STATE: VA ZIP: 22601 BUSINESS PHONE: 5406659100 MAIL ADDRESS: STREET 1: PO BOX 1980 CITY: WINCHESTER STATE: VA ZIP: 22604-8090 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 31, 1997 OR [ ] 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 0-14798 American Woodmark Corporation (Exact name of registrant as specified in its charter) Virginia 54-1138147 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3102 Shawnee Drive, Winchester, Virginia 22601 (Address of principal executive offices) (Zip Code) (540) 665-9100 (Registrant's telephone number, including area code) Not Applicable (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, no par value 7,715,556 shares outstanding Class as of March 11, 1997 AMERICAN WOODMARK CORPORATION FORM 10-Q INDEX PAGE PART I. FINANCIAL INFORMATION NUMBER Item 1. Financial Statements Balance Sheets--January 31, 1997 and April 30, 1996 3 Statements of Income--Three months ended January 31, 1997 and 1996; Nine months ended January 31, 1997 and 1996 4 Statements of Cash Flows--Nine months ended January 31, 1997 and 1996 5 Notes to Financial Statements--January 31, 1997 6-8 Item 2. Management's Discussion and Analysis 9-12 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 13-14 SIGNATURE 15 2 PART I. FINANCIAL INFORMATION AMERICAN WOODMARK CORPORATION BALANCE SHEETS (in thousands, except share data) January 31 April 30 1997 1996 ----------- --------- ASSETS (Unaudited) (Audited) Current Assets Cash and cash equivalents $ 11,811 $ 7,201 Customer receivables 18,890 19,709 Inventories 11,356 10,326 Prepaid expenses and other 1,323 899 Deferred income taxes 1,176 527 ----------- --------- Total Current Assets 44,556 38,662 Property, Plant and Equipment 32,544 33,188 Intangible Pension Assets 504 504 Deferred Costs and Other Assets 4,391 3,982 ----------- --------- $ 81,995 $ 76,336 =========== ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 9,341 $ 7,651 Accrued compensation and related expenses 8,446 8,467 Current maturities of long-term debt 2,471 2,719 Other accrued expenses 2,906 4,416 ----------- --------- Total Current Liabilities 23,164 23,253 Long-Term Debt, less current maturities 10,943 12,866 Long-Term Pension Liabilities 1,592 1,592 Deferred Income Taxes 2,859 2,780 Commitments and Contingencies -- -- Stockholders' Equity Preferred Stock, $1.00 par value; 2,000,000 shares authorized, none issued Common Stock, no par value; 20,000,000 shares authorized; issued and outstanding 7,701,956 shares at January 31, 1997; 7,608,761 shares at April 30, 1996 17,951 17,677 Retained earnings 25,486 18,168 ----------- --------- Total Stockholders' Equity 43,437 35,845 ----------- --------- $ 81,995 $ 76,336 =========== ========= See notes to financial statements 3 AMERICAN WOODMARK CORPORATION STATEMENTS OF INCOME (in thousands, except share data) (Unaudited) Three Months Ended Nine Months Ended January 31 January 31 --------------------- --------------------- 1997 1996 1997 1996 ---------- ---------- ---------- ---------- Net sales $ 51,643 $ 46,793 $ 161,981 $ 142,970 Cost of sales and distribution 37,189 37,325 117,482 114,546 ---------- ---------- ---------- ---------- Gross Profit 14,454 9,468 44,499 28,424 Selling and marketing expenses 7,698 5,853 21,664 18,072 General and administrative expenses 3,071 2,524 10,025 7,027 ---------- ---------- ---------- ---------- Operating Income 3,685 1,091 12,810 3,325 Interest expense 246 341 708 951 Other income (150) (155) (363) (153) ---------- ---------- ---------- ---------- Income Before Income Taxes 3,589 905 12,465 2,527 Provision for income taxes 1,526 346 4,840 982 ---------- ---------- ---------- ---------- Net Income $ 2,063 $ 559 $ 7,625 $ 1,545 ========== ========== ========== ========== Earnings Per Share Average shares outstanding 7,687,774 7,606,447 7,659,808 7,590,756 Net income per share $ 0.27 $ 0.07 $ 1.00 $ 0.20 ========== ========== ========== ========== See notes to financial statements 4 AMERICAN WOODMARK CORPORATION STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) Nine Months Ended January 31 --------------------- 1997 1996 --------- --------- Operating Activities Net income $ 7,625 $ 1,545 Adjustments to reconcile net income to net cash provided by operating activities: Provision for depreciation and amortization 5,786 5,813 Net loss on disposal of property, plant and equipment 58 109 Deferred income taxes (570) (311) Other non-cash items 1,131 206 Changes in operating assets and liabilities: Refundable deposits -- 1,708 Customer receivables (188) (691) Inventories (1,154) (38) Other assets (2,354) (2,032) Accounts payable 1,690 (1,559) Accrued compensation and related expense (21) 115 Other (1,934) 212 --------- --------- Net Cash Provided by Operating Activities 10,069 5,077 --------- --------- Investing Activities Payments to acquire property, plant and equipment (3,318) (4,849) Proceeds from sales of property, plant and equipment 63 168 --------- --------- Net Cash Used by Investing Activities (3,255) (4,681) --------- --------- Financing Activities Payments of long-term debt (2,171) (2,270) Proceeds from the issuance of Common Stock 274 194 Payment of dividends (307) -- --------- --------- Net Cash Used by Financing Activities (2,204) (2,076) --------- --------- Increase (Decrease) In Cash And Cash Equivalents 4,610 (1,680) Cash And Cash Equivalents, Beginning Of Period 7,201 2,876 --------- --------- Cash And Cash Equivalents, End Of Period $ 11,811 $ 1,196 ========= ========= See notes to financial statements 5 AMERICAN WOODMARK CORPORATION NOTES TO FINANCIAL STATEMENTS NOTE A--BASIS OF PRESENTATION The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month and nine-month periods ended January 31, 1997 are not necessarily indicative of the results that may be expected for the year ended April 30, 1997. The unaudited financial statements should be read in conjunction with the financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended April 30, 1996. Certain fiscal 1996 amounts have been reclassified to conform to fiscal 1997 presentation. NOTE B--EARNINGS PER SHARE Earnings per share are based on the weighted average common shares outstanding. The dilutive effect of stock options on earnings per share is not significant and has been excluded for all periods presented. NOTE C--CUSTOMER RECEIVABLES The components of customer receivables were: January 31 April 30 (in thousands) 1997 1996 ---------- --------- Gross customer receivables $ 21,393 $ 21,215 Less: Allowance for doubtful accounts (1,437) (629) Allowance for returns and discounts (1,066) (877) ---------- --------- Net customer receivables $ 18,890 $ 19,709 ========== ========= Allowance for doubtful accounts increased $800,000 during the first quarter due to a Chapter 11 filing by a customer of the Company. Total allowance for doubtful accounts attributable to this customer is $1.3 million and reflects all of this customer's outstanding receivables. 6 NOTE D--INVENTORIES The components of inventories were: January 31 April 30 (in thousands) 1997 1996 ---------- --------- Raw materials $ 6,120 $ 5,261 Work-in-process 9,523 9,336 Finished goods 1,600 1,392 ---------- --------- Total FIFO inventories $ 17,243 $ 15,989 Reserve to adjust inventories to LIFO value (5,887) (5,663) ---------- --------- Total LIFO inventories $ 11,356 $ 10,326 ========== ========= An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations must necessarily be based on management's estimates of expected year-end inventory levels and costs. Since they are subject to many forces beyond management's control, interim results are subject to the final year-end LIFO inventory valuation. NOTE E--LOANS PAYABLE The revolving credit facility is used by the Company as a working capital account. As such, borrowings and repayments may routinely occur on a daily basis. There was no activity through the revolving credit facility during the first nine months of fiscal 1997. For the nine-month period ended January 31, 1996, total transactions through this revolving credit facility were borrowings and repayments of $7.2 million. There were no revolving credit loans outstanding at January 31, 1997 and 1996. The Company's primary loan agreement was amended during the first quarter of fiscal 1997, allowing the Company to pay cash dividends on Common Stock. NOTE F--CASH FLOW Supplemental disclosures of cash flow information: Nine Months Ended January 31 ------------------ (in thousands) 1997 1996 ------- ------- Cash paid during the period for: Interest $ 616 $ 814 Income taxes $ 6,544 $ 1,263 7 NOTE G--OTHER INFORMATION The Company is involved in various suits and claims in the normal course of business. Included therein are claims against the Company pending before the Equal Employment Opportunity Commission. Although management believes that such claims are without merit and intends to vigorously contest them, the ultimate outcome of these matters cannot be determined at this time. In the opinion of management, after consultation with counsel, the ultimate liabilities and losses, if any, that may result from suits and claims involving the Company will not have a material adverse effect on the Company's results of operations or financial position. The Company is voluntarily participating with a group of companies which is cleaning up a waste facility site at the direction of a state environmental authority. The Company records liabilities for all probable and reasonably estimable loss contingencies on an undiscounted basis. For loss contingencies related to environmental matters, liabilities are based on the Company's proportional share of the contamination obligation of a site since management believes it probable that the other parties, which are financially solvent, will fulfill their proportional contamination obligations. There are no probable insurance or other indemnification receivables recorded. The Company has accrued for all known environmental remediation costs which are probable and can be reasonably estimated, and such amounts are not material. Due to factors such as the continuing evolution of environmental laws and regulatory requirements, technological changes, and the allocation of costs among potentially responsible parties, estimation of future remediation costs is necessarily imprecise. It is possible that the ultimate cost, which cannot be determined at this time, could exceed the Company's recorded liability. As a result, charges to income for environmental liabilities could have a material effect on results of operations in a particular quarter or year as assessments and remediation efforts proceed. However, management is not aware of any matters which would be expected to have a material adverse effect on the Company's results of operations or financial position. 8 MANAGEMENT'S DISCUSSION AND ANALYSIS THREE AND NINE MONTHS ENDED JANUARY 31, 1997 AND 1996 RESULTS OF OPERATIONS Net sales of $51.6 million for the third quarter of fiscal 1997 increased 10.4% over the third quarter of fiscal 1996. The increase in net sales between third quarters was attributable to sales growth in the home center channel resulting from a stronger economy and less severe winter weather conditions in the Midwestern and Northeastern regions of the United States. Net sales of $162.0 million for the nine-month period ended January 31, 1997 were 13.3% higher than the same period of the prior year. The increase in net sales for the nine-month period resulted from growth in unit volumes in all three market channels, as the Company benefitted from improved overall economic conditions and specific relationships with key home centers, distributors and builders. Current year average unit prices increased over prior year due to a general price increase implemented during the third quarter of the prior fiscal year, favorable changes in market channel sales mix and a shift towards the higher end of the Company's broad stock product offering. Fiscal 1997 third quarter and nine-month period gross margins were 28.0% and 27.5% of net sales, a significant increase over comparative fiscal 1996 gross margins of 20.2% and 19.9%, respectively. The margin improvement for both periods was primarily attributed to better material utilization, increased labor productivity and the impact of favorable leverage with higher volume on fixed and semi-fixed costs. These gains were partially offset by increases in lumber prices. Normal labor rate increases and increased incentive pay expenses for both periods were more than offset by increases in labor productivity resulting from the use of new equipment and manufacturing techniques. Selling and marketing expenses increased $1.8 million for the third quarter of fiscal 1997 and $3.6 million for the first nine months compared to the prior year. The increase for both periods resulted from increased incentive pay expenses, one-time costs associated with a national sales event, and increases in advertising and variable promotional costs. General and administrative expenses were 5.9% and 6.2% of net sales for the three-month and nine-month periods ended January 31, 1997 as compared to 5.4% and 4.9% for the comparable periods of fiscal 1996. The increase for both periods was primarily due to employee compensation costs associated with the Company's performance incentive programs. Recognition of $830,000 in bad debt reserves also unfavorably impacted the nine-month period of fiscal 1997. Interest expense decreased $95,000 to $246,000 for the third quarter of fiscal 1997 compared to the prior year, and decreased $243,000 to $708,000 for the current nine-month period compared to the prior year. The decline resulted from continued reduction in long-term debt. As of January 31, 1997, long-term debt to total capital has been reduced to 20.1%. 9 Other income increased $210,000 for the first nine months compared to the prior year due to a combination of increased interest income from short-term investments of cash and less expenses pertaining to the disposal of property, plant and equipment. The effect of this increase over prior year was lessened by a property tax refund received by the Company in the third quarter of the prior fiscal year which, net of specific recovery expenses, increased other income by $398,000. Fiscal 1997 effective tax rates reflected in the statement of income differ from the U.S. federal statutory rate because of state taxes and the effects of tax-exempt interest income. The effective tax rate for the third quarter of fiscal 1997 also includes an adjustment to reflect year-to-date earnings at a higher federal statutory rate. LIQUIDITY AND CAPITAL RESOURCES Operating activities generated $10.1 million in cash for the first nine months of fiscal 1997 as compared to $5.1 million in the comparable period of fiscal 1996. The increase in cash generated from operations was attributable to increased profits. Other non-cash items and increased accounts payable had favorable impacts upon cash flow, but were offset by a seasonal increase in inventory and timing differences pertaining to the payment of accrued promotional costs and income taxes. An $800,000 increase in bad debt reserves, reflected in other non-cash items, was made in the first quarter to fully reserve against the receivables of a customer which filed a petition for reorganization under Chapter 11 of the United States Bankruptcy Code. Capital expenditures were $3.3 million for the first nine months of fiscal 1997. During this period, the Company purchased equipment to optimize lumber processing for the Orange, Virginia facility, and completed several projects designed to increase efficiency and lower overall production costs. The Company anticipates that, with the initiation of future projects designed to lower overall costs and improve the Company's competitive position, capital spending will increase in the last quarter of the fiscal year, with total fiscal 1997 capital spending approximating or exceeding fiscal 1996. The Company reduced overall debt by $2.2 million during the first nine months of fiscal 1997. Long-term debt to total equity declined from 35.9% at April 30, 1996 to 25.2% at January 31, 1997. There were no borrowings against the Company's short-term revolving credit facility during the period. Cash flow from operations, combined with accumulated cash on hand and available borrowing capacity, is expected to be sufficient to meet forecasted working capital requirements, service existing debt obligations and fund capital expenditures for the remainder of fiscal 1997. 10 OTHER The Company anticipates an overall economic environment of moderate growth supported by stable interest rates and low inflation for the remainder of fiscal 1997. The Company anticipates that demand in the domestic cabinet market will return to the levels experienced prior to the economic downturn which impacted the home center industry in the first half of fiscal 1996. In this environment, the Company expects to gain market share and to generate higher sales based on its position with major customers, its broad stock product offering and its ability to deliver quality products with superior service. The Company expects to experience continued improvement from the profitability experienced in fiscal 1996. Additional volume, the full-year impact of the general price increase implemented during the third quarter of fiscal 1996 and higher productivity should more than offset the anticipated rise in other costs. The Company currently maintains sufficient overall capacity to meet projected growth over the next two years. In this environment, the Company's strategy is, on average, to reinvest at least depreciation on an annual basis. The Company is anticipating average to slightly above average capital expenditures in fiscal 1997. Identified projects include expansion to remove specific capacity limitations in certain processes, productivity improvements, cost savings and replacement of aging equipment. The Company anticipates capital expenditures will be funded from a combination of cash flow from operations and cash on hand. While the Company is not currently aware of any events that would result in a material decline in earnings from fiscal 1996, we participate in an industry that is subject to rapidly changing conditions. The preceding forward-looking statements are based on current expectations, but there are numerous factors that could cause the Company to experience a decline in sales or earnings including: (1) overall industry demand at depressed levels, (2) economic weakness in a specific channel of distribution, especially the home center industry, (3) the loss of sales from specific customers due to their loss of market share, bankruptcy or switching to a competitor, (4) a sudden and significant rise in basic raw material costs, and (5) the need to respond to competitive initiatives launched by a competitor. While the Company believes these risks to be manageable and believes that these risks will not materially impact the long-term performance of the Company, these risks could under certain circumstances have a materially adverse impact on short-term operating results. During fiscal 1997, a customer of the Company announced plans to liquidate under provisions provided by the United States Bankruptcy Code. As of January 31, 1997, the Company has fully reserved for all outstanding receivables pertaining to this customer. The Company's management anticipates that these events will not have any material adverse effect on the Company's future results of operations or financial position. Richard A. Graber, Director and Retired Vice President, Marketing, resigned from the Board of Directors effective February 1, 1997. On February 24, 1997 the Company announced a $0.02 per share cash dividend on its Common Stock. The cash dividend will be paid on March 21, 1997, to shareholders of record on March 7, 1997. 11 The Company is involved in various suits and claims in the normal course of business. Included therein are claims against the Company pending before the Equal Employment Opportunity Commission. Although management believes that such claims are without merit and intends to vigorously contest them, the ultimate outcome of these matters cannot be determined at this time. In the opinion of management, after consultation with counsel, the ultimate liabilities and losses, if any, that may result from suits and claims involving the Company will not have any material adverse effect on the Company's results of operations or financial position. The Company is voluntarily participating with a group of companies which is cleaning up a waste facility site at the direction of a state environmental authority. The Company records liabilities for all probable and reasonably estimable loss contingencies on an undiscounted basis. For loss contingencies related to environmental matters, liabilities are based on the Company's proportional share of the contamination obligation of a site since management believes it probable that the other parties, which are financially solvent, will fulfill their proportional contamination obligations. There are no probable insurance or other indemnification receivables recorded. The Company has accrued for all known environmental remediation costs which are probable and can be reasonably estimated, and such amounts are not material. 12 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 11--Earnings Per Share Computation Page 14 (b) Reports on Form 8-K The Company did not file any reports on Form 8-K during the nine months ended January 31, 1997. 13 AMERICAN WOODMARK CORPORATION Exhibit 11 Computation of Earnings per Share (in thousands, except per share amounts) Three Months Ended Nine Months Ended January 31 October 31 ------------------ ------------------ 1997 1996 1997 1996 ------- ------- ------- ------- Net income $ 2,063 $ 559 $ 7,625 $ 1,545 Divided by weighted average common shares outstanding 7,688 7,606 7,660 7,591 ------- ------- ------- ------- Earnings per share $ 0.27 $ 0.07 $ 1.00 $ 0.20 ======= ======= ======= ======= 14 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMERICAN WOODMARK CORPORATION (Registrant) Date: March 11, 1997 /s/ KENT B. GUICHARD Kent B. Guichard Vice President, Finance and Chief Financial Officer Signing on behalf of the registrant and as principal financial officer 15 EX-27 2
5 1,000 9-MOS APR-30-1997 JAN-31-1997 11,811 0 21,393 2,503 11,356 44,556 77,262 44,718 81,995 23,164 10,943 0 0 17,951 25,486 81,995 161,981 161,981 117,482 117,482 0 830 708 12,465 4,840 7,625 0 0 0 7,625 1.00 1.00
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