-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, cYfw36fxgkqioNZSUCx0nX+6bfhkUZWdfQOFY+2U3bInPE25qVr0ek66B52jUbn6 zbJybtnOayRz7vn+ijTxRQ== 0000794619-95-000012.txt : 19950615 0000794619-95-000012.hdr.sgml : 19950615 ACCESSION NUMBER: 0000794619-95-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950131 FILED AS OF DATE: 19950317 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: 95521405 BUSINESS ADDRESS: STREET 1: 3102 SHAWNEE DR CITY: WINCHESTER STATE: VA ZIP: 22601 BUSINESS PHONE: 7036659100 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 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly period ended January 31, 1995 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to For the Quarter Ended January 31, 1995 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 incorporated or organization) Identification No.) 3102 Shawnee Drive, Winchester, Virginia 22601 (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code) (703) 665-9100 (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 (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Common Stock, No Par Value--7,549,836 shares as of March 13, 1995 INDEX AMERICAN WOODMARK CORPORATION PART I. FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheet -- January 31, 1995 and April 30, 1994 Statement of Income -- Three months ended January 31, 1995 and January 31, 1994. Nine months ended January 31, 1995 and January 31, 1994. Statement of Cash Flows -- Nine months ended January 31, 1995 and January 31, 1994. Notes to Financial Statements -- January 31, 1995 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION Item 1. Exhibit (11) -- Statement re: Computation of Earnings per Share SIGNATURES 2 PART I. FINANCIAL INFORMATION AMERICAN WOODMARK CORPORATION BALANCE SHEET (UNAUDITED)
January 31 April 30 1995 1994 (*) (000'S omitted) ASSETS CURRENT ASSETS Cash and short-term investments $ 1,902 $ 460 Customer receivables (less allowances)--Note D 18,225 18,845 Inventories--Note E 11,387 11,715 Prepaid expenses 417 602 Deferred taxes 416 456 Other 861 361 TOTAL CURRENT ASSETS 33,208 32,439 PROPERTY, PLANT AND EQUIPMENT 34,089 35,872 OTHER ASSETS 3,760 3,252 INTANGIBLE PENSION ASSET 758 758 $71,815 $72,321 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Loans payable $ 0 $ 2,000 Accounts payable 7,221 8,776 Accrued compensation and related expenses 6,922 5,151 Current maturities of long-term debt 2,849 3,158 Other accrued expenses 3,094 3,622 TOTAL CURRENT LIABILITIES 20,086 22,707 LONG-TERM DEBT, less current maturities 16,066 18,334 DEFERRED INCOME TAXES 2,930 2,767 LONG-TERM PENSION LIABILITIES 2,137 2,137 SHAREHOLDERS' 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 January 31, 1995-- 7,548,919; April 30, 1994-- 7,531,225 17,475 17,410 Retained Earnings 13,121 8,966 30,596 26,376 Other Information - Note F $71,815 $72,321 See notes to financial statements. *The Balance Sheet for April 30, 1994 has been derived from the Audited Financial Statements as of April 30, 1994.
3 AMERICAN WOODMARK CORPORATION STATEMENT OF INCOME (UNAUDITED)
(Third Quarter and Year-to-Date) Three Months Ended Nine Months Ended January 31 January 31 1995 1994 1995 1994 (000's omitted, except per share data) Net sales $48,144 $41,843 $147,666 $126,020 Cost of sales & distribution 37,089 32,622 112,472 100,371 Gross profit 11,055 9,221 35,194 25,649 Selling and marketing expenses 5,868 4,940 18,090 14,683 General and administrative expenses 3,103 2,270 8,748 6,994 Restructuring costs 0 171 516 854 Operating income 2,084 1,840 7,840 3,118 Interest expense 332 453 1,062 1,469 Other (income) expense-net 10 (2) 4 (30) Income before income taxes 1,742 1,389 6,774 1,679 Income tax expense 640 524 2,619 662 NET INCOME $ 1,102 $ 865 $ 4,155 $ 1,017 Earnings Per Share* - Note C Weighted average shares outstanding 7,548,894 7,527,415 7,543,160 7,527,415 Net income $0.15 $ 0.11 $0.55 $0.14 See notes to financial statements. *All share and per share data has been restated to reflect a 10% stock dividend issued on September 24, 1993.
4 AMERICAN WOODMARK CORPORATION STATEMENT OF CASH FLOWS (UNAUDITED)
Nine Months Ended January 31 1995 1994 (000's omitted) OPERATING ACTIVITIES Net Income $ 4,155 $ 1,017 Adjustments to reconcile net income to net cash provided by operating activities: Provision for depreciation and amortization 5,801 5,267 Net loss on disposal of property, plant, and equipment 32 32 Deferred income taxes 203 274 Restructuring costs 239 603 Other 40 189 Changes in operating assets and liabilities: Receivables 579 1,511 Income taxes receivable 0 529 Inventories 328 2,590 Other assets (2,227) (1,407) Accounts payable (1,554) (3,255) Accrued compensation and related expenses 1,706 1,784 Other (373) (80) NET CASH PROVIDED BY OPERATING ACTIVITIES 8,929 9,054 INVESTING ACTIVITIES Payments to acquire property, plant, and equipment (2,673) (2,592) Funds designated to acquire property, plant and equipment 252 627 Proceeds from sales of property, plant, and equipment 51 21 NET CASH USED BY INVESTING ACTIVITIES (2,370) (1,944) FINANCING ACTIVITIES Payments of long-term debt (2,577) (2,947) Net decrease in short-term borrowings (2,000) (5,450) Operating lease equipment deposits (605) 0 Proceeds from sale of common stock 65 0 NET CASH USED BY FINANCING ACTIVITIES (5,117) (8,397) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,442 (1,287) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 460 1,778 CASH AND CASH EQUIVALENTS, END OF PERIOD $1,902 $ 491 See notes to financial statements.
5 AMERICAN WOODMARK CORPORATION NOTES TO FINANCIAL STATEMENTS January 31, 1995 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 Rule 10-01 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 nine month period ended January 31, 1995 are not necessarily indicative of the results that may be expected for the year ending April 30, 1995. For further information refer to the financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended April 30, 1994. Certain fiscal 1994 amounts have been restated to conform to the fiscal 1995 presentation. NOTE B--CHANGES IN ACCOUNTING POLICY The Company adopted Statement of Financial Accounting Standards (SFAS) No. 112 "Employer's Accounting for Postemployment Benefits" in the first quarter of fiscal 1995. Adoption of this Statement did not have a material impact on the Company's operating results or financial position for the first nine months of fiscal 1995. In addition, no future material impact on operating results or financial position is expected. NOTE C--EARNINGS PER SHARE The dilutive effect of stock options on earnings per share is not significant and has been excluded for all periods presented (See Exhibit 11 -- Statement re: Computation of Earnings per Share). 6 NOTE D--CUSTOMER RECEIVABLES The components of customer receivables are (in thousands): January 31 April 30 1995 1994 Gross customer receivables $19,465 $20,062 Less: Allowance for doubtful accounts (346) (313) Allowance for returns and discounts (894) (904) Customer receivables (less allowances) $18,225 $18,845 NOTE E--INVENTORIES Detail of inventories (in thousands): January 31 April 30 1995 1994 Raw materials $ 5,853 $ 5,849 Work in process 9,390 8,885 Finished goods 2,210 3,206 LIFO reserve (6,066) (6,225) $11,387 $11,715 As a result of LIFO inventory liquidations, cost of sales reflected $308 thousand and $687 thousand less expense year-to- date for fiscal 1995 and 1994, respectively, than would have been recorded in a current cost environment. 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 F--OTHER INFORMATION 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 is also involved in other matters under the direction of state environmental authorities. The Company records liabilities for all probable and reasonably estimatable loss contingencies on an undiscounted basis. For loss contingencies related to environmental matters, liabilities are based on the Company's proportional contamination of a site since management believes it "probable" that the other parties, which are financially solvent, will fulfill their proportional contamination obligations, and there are no probable insurance or other indemnification receivables recorded. The Company has accrued for all known 7 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. 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. 8 MANAGEMENT'S DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Comparison of the Three and Nine Month Periods Ending January 31, 1995 and January 31, 1994. Net sales for the third quarter of fiscal 1995 increased 15% over the third quarter of fiscal 1994. Net sales for the nine month period increased 17% over the prior year. Sales rose due to higher unit volumes and customer prices for both the three and nine month periods. Volume in the Home Center channel increased as a result of increased market share in selected areas and a stronger remodeling sector in the current year. Pockets of economic growth in the new construction sector contributed to higher volumes in the Builder channel. For the three month period comparison, volume remained relatively flat in the Distributor channel due to some recent softening in the marketplace. For the nine month period, volume in the Distributor channel increased with the addition of new accounts in the first two quarters of the prior fiscal year. Average unit prices increased for both periods over the prior year due to general price increases in December 1993 and January 1995 and a continuing sales mix shift toward the upper-end of the Company s broad, stock product offering. Third quarter fiscal 1995 gross profit was 23% of net sales as compared to 22% for the same period in fiscal 1994. Gross profit for the nine month period was 24% of net sales, a significant improvement over the 20% gross profit achieved during the same period of the prior year. The margin improvement for both periods compared to the prior year was attributed to the favorable leverage impact that the increased unit sales volume had on the semi-variable and fixed components of overhead costs. The margin improvement for the three month period was less than the nine month period improvement due to material cost increases over the last six months for particle board and cardboard. Manufacturing labor costs rose at the same rate as the sales price increase due to the demands of product variety, the movement toward a just-in-time manufacturing approach, and normal pay-rate increases. Savings from prior period restructuring activities to reconfigure the Company s distribution network were mitigated by higher freight costs, additional costs for new service programs, and increased depreciation in the second and third quarters of the current year to reduce the carrying value of equipment that will be replaced by the end of fiscal 1995. Selling and marketing expenses increased $928 thousand for the third quarter of fiscal 1995 compared to the prior year, and $3.4 million for the nine month period. The increase for both periods was attributed to higher variable selling and promotion costs resulting from further market penetration, the addition of new customers and stores, and new product introductions. Competitive pressures have increased with the consolidation of both customers and cabinet suppliers into larger buying and supplying entities, respectively. 9 General and administrative expenses were up $833 thousand for the three month period and $1.8 million for the nine month period over the prior year. The rise in costs for both periods was primarily attributed to increased compensation as part of the Company s performance incentive programs. Additions to the executive management team since the first quarter of fiscal 1994 also contributed to the increase for the nine month period. Partially offsetting these increases was a decline in bad debt expense. During the second quarter of fiscal 1995, the Company incurred $516 thousand in restructuring expenses for facility write-downs recorded to reflect the Company's reduced requirements for warehouse space in California and Florida. This restructuring charge included expenses for future net lease costs relating to unused warehouse space and equipment write-downs. Total warehouse space is now at the lower level required to facilitate the Company's progress toward just-in-time manufacturing. Operating income was reduced $854,000 in the first nine months of fiscal 1994 to reflect restructuring activities. The Company announced in the second quarter of fiscal 1994 that it would discontinue its frameless line of cabinets effective April 1, 1994, for which the estimated loss was accrued. Also, facility write-downs were recorded to reflect the Company's reduced requirements for warehouse space in Illinois and California. The majority of the restructuring charge was comprised of asset write-downs and losses on lease commitments. Operating income was reduced by $171,000 in the third quarter of fiscal 1994 to reflect a refinement of estimated restructuring costs which were recorded in the preceding second quarter. Interest expense for the third quarter of fiscal 1995 was $121 thousand less than in the prior year third quarter. For the first nine months of fiscal 1995, interest expense was $407 thousand less than in the first nine months of the prior year. The decrease in both periods was due to a substantial reduction in debt. Total average outstanding debt for the first nine months of fiscal 1995 declined $7.7 million from the same period in fiscal 1994. As a result of LIFO inventory liquidation, cost of sales in the first nine months of fiscal 1995 reflected $308 thousand less expense than would have been recorded in a current cost environment. (See Note E to the Financial Statements.) Liquidity and Capital Resources Total debt was reduced $4.6 million while cash reserves have increased $1.4 million during the first nine months of fiscal 1995. Operating activities in the first nine months of fiscal 1995 generated $8.9 million net cash compared to $9.1 million during the first nine months of fiscal 1994. Increased cash from rising profits was offset by a slower rate of reduction of inventories and an increase in the rate of promotional display expenditures. 10 During the third quarter of the current fiscal year, additional equipment for the Toccoa, Georgia facility was purchased to support the Company s move towards a focused facilities environment with a just-in-time manufacturing approach. Some spending was also incurred at other Company facilities to improve material efficiencies. All other expenditures for property, plant and equipment during the first nine months of fiscal 1995 were limited to necessary or replacement items. Capital spending is planned to increase in the next three quarters to continue replacing equipment and to support the Company s progression toward a focused facilities environment. Net cash used by investing activities in the first nine months of fiscal 1995 increased $426 thousand from fiscal 1994 primarily as a result of funding capital expenditures through cash generated from operations instead of funding through industrial revenue bond proceeds received in fiscal 1992. Net cash used by financing activities in the first nine months of fiscal 1995 was $5.1 million compared to $8.4 million during the first nine months of the prior year. The Company's short-term borrowings against the revolving credit facility were reduced in fiscal 1994 from $8.0 million at April 30, 1993 to the January 31, 1994 level of $2.6 million, a net reduction of $5.4 million. The remaining balance of short-term borrowings of $2.0 million at April 30, 1994 was paid off during the first quarter of fiscal 1995. In addition, during the first nine months of fiscal 1995, the Company invested cash in the form of a short- term refundable deposit for the construction of equipment to be used at the Toccoa, Georgia component plant to replace equipment and support the just-in-time manufacturing approach. This transaction was recorded in other current assets. The deposit will be refunded to the Company upon the Company's acceptance of the equipment which is expected near the beginning of the next fiscal year. Upon receipt of the equipment, this project will be fully funded through an operating lease. Cash flow from operations, combined with available borrowing capacity under the Company's existing revolving credit facility, is expected to be sufficient to meet forecasted working capital requirements, to service existing debt obligations, and to fund capital expenditures for fiscal 1995. At the end of the first quarter of fiscal 1995, the Company amended its loan agreement to effectively lower the Company's interest rate on its revolving credit facility. The Company currently has $12.0 million available to borrow under this credit facility. The Company expects total year earnings in fiscal 1995 to exceed those experienced in the most recent full year. A general sales price increase implemented during the third quarter of fiscal 1995 is not expected to have its full impact until the next fiscal year. The marketplace has begun to soften, but a solid posture with the Company's customer base is expected to provide the unit volumes necessary to leverage the Company's semi- variable and fixed costs. However, the Company expects cost pressure from increased material prices and short-term 11 manufacturing inefficiencies during transition to the just-in- time manufacturing approach. This transition is expected to be substantially complete in fiscal 1996. Other During the first quarter of fiscal 1995, the Company adopted SFAS No. 112 "Employers' Accounting for Postemployment Benefits". The effect of this adoption did not have a material impact on the Company's operating results or financial position (See Note B to the Financial Statements). 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 is also involved in other matters under the direction of state environmental authorities. The Company records liabilities for all probable and reasonably estimatable loss contingencies on an undiscounted basis. For loss contingencies related to environmental matters, liabilities are based on the Company's proportional contamination of a site since management believes it "probable" that the other parties, which are financially solvent, will fulfill their proportional contamination obligations, and 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 (See Note F to the Financial Statements). 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 operating results or financial position. On August 24, 1994 the Board of Directors implemented a deferred compensation program for the non-management Directors. The implementation of this program did not materially alter the operating results or financial position for the third quarter and first nine months of fiscal 1995 and will not materially affect future operating results or financial position. On February 28, 1995 the Board of Directors elected two new Directors. Elected were Jake Gosa, Executive Vice President of American Woodmark, and Martha Dally, Executive Vice President for Sara Lee Corporation. This brings the number of Directors to eight persons. For more information, the Company Proxy Statement issued July 18, 1994 should be referenced. 12 SIGNATURES 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) /s/ Shawn E. Pentoney /s/ Kent B. Guichard Shawn E. Pentoney Kent B. Guichard Corporate Controller Chief Financial Officer Date: March 17, 1995 Date: March 17, 1995 13 EX-11 2 Exhibit (11) Statement re: Computation of Earnings per Share
Three Months Ended Nine Months Ended January 31 January 31 1995 1994 1995 1994 Net Income $1,102,000 $865,000 $4,155,000 $1,017,000 Divided by weighted average shares outstanding 7,548,894 7,527,415 7,543,160 7,527,415 Earnings per share $0.15 $0.11 $0.55 $0.14
EX-27 3
5 1,000 9-MOS 6-MOS APR-30-1995 APR-30-1995 JAN-31-1995 OCT-31-1994 1,902 4,627 0 0 19,465 19,590 1,240 1,237 11,387 9,997 33,208 35,224 75,576 74,620 41,487 40,338 71,815 73,896 20,086 21,903 16,066 17,409 17,475 17,474 0 0 0 0 13,121 12,019 71,815 73,896 147,666 99,522 147,666 99,522 112,472 75,383 112,472 75,383 27,354 18,383 40 20 1,062 730 6,774 5,032 2,619 1,979 4,155 3,053 0 0 0 0 0 0 4,155 3,053 .55 .40 .55 .40
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