0000794619-95-000023.txt : 19950914 0000794619-95-000023.hdr.sgml : 19950914 ACCESSION NUMBER: 0000794619-95-000023 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950731 FILED AS OF DATE: 19950912 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: 95572983 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 [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 1995 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 7,598,367 shares outstanding Class as of September 11, 1995 AMERICAN WOODMARK CORPORATION FORM 10-Q INDEX PAGE PART I. FINANCIAL INFORMATION NUMBER Item 1. Financial Statements Balance Sheets--July 31, 1995 and April 30, 1995 3 Statements of Income--Three months ended 4 July 31, 1995 and July 31, 1994 Statements of Cash Flows--Three months ended 5 July 31, 1995 and July 31, 1994 Notes to Financial Statements--July 31, 1995 6-8 Item 2. Management's Discussion and Analysis 9-11 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders 12 Item 6. Exhibits and Reports on Form 8-K 12-13 SIGNATURE 14 2 PART I. FINANCIAL INFORMATION AMERICAN WOODMARK CORPORATION BALANCE SHEETS (in thousands, except share data) July 31 April 30 1995 1995 ASSETS (Unaudited) (Audited) Current Assets Cash and cash equivalents $ 2,894 $ 2,876 Refundable deposits 1,158 1,708 Customer receivables 18,047 19,639 Inventories 11,011 10,775 Prepaid expenses and other 560 738 Deferred income taxes 450 433 ------- ------- Total Current Assets 34,120 36,169 Property, Plant and Equipment 33,972 33,722 Deferred Costs and Other Assets 3,630 3,714 Intangible Pension Asset 803 803 ------- ------- $72,525 $74,408 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable 8,446 9,496 Accrued compensation and related expenses 5,471 6,536 Current maturities of long-term debt 2,737 2,800 Other accrued expenses 3,157 3,175 ------- ------- Total Current Liabilities 19,811 22,007 Long-Term Debt, less current maturities 15,277 15,534 Deferred Income Taxes 2,932 3,028 Long-Term Pension Liabilities 2,205 2,038 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 7,588,913 shares at July 31, 1995; 7,551,109 shares at April 30, 1995 17,617 17,479 Retained earnings 14,683 14,322 ------- ------- Total Stockholders' Equity 32,300 31,801 ------- ------- $72,525 $74,408 ======= ======= See notes to financial statements 3 AMERICAN WOODMARK CORPORATION STATEMENTS OF INCOME (in thousands, except share data) (Unaudited) Quarter Ended July 31 -------------------- 1995 1994 Net sales $ 47,250 $ 45,518 Cost of sales and distribution 37,956 34,732 -------- -------- Gross Profit 9,294 10,786 Selling and marketing expenses 6,008 5,910 General and administrative expenses 2,412 2,519 -------- -------- Operating Income 874 2,357 Interest expense 294 391 Other income (19) (1) -------- -------- Income Before Income Taxes 599 1,967 Provision for income taxes 238 799 -------- -------- Net Income $ 361 $ 1,168 ======== ======== Earnings Per Share Average shares outstanding 7,566,994 7,534,388 Net income per share $0.05 $0.16 ========= ========= See notes to financial statements 4 AMERICAN WOODMARK CORPORATION STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) Quarter Ended July 31 ----------------- 1995 1994 Operating Activities Net income $ 361 $ 1,168 Adjustments to reconcile net income to net cash provided by operating activities: Provision for depreciation and amortization 1,811 1,840 Net (gain) loss on disposal of property, plant and equipment (5) 10 Deferred income taxes (113) 199 Restructuring costs (50) (95) Other -- 20 Changes in operating assets and liabilities: Receivables 1,592 838 Inventories (236) 674 Refundable deposits 550 -- Other assets (500) (751) Accounts payable (1,050) (565) Accrued compensation and related expenses (1,038) (117) Other 345 730 ------- ------- Net Cash Provided by Operating Activities 1,667 3,951 ------- ------- Investing Activities Payments to acquire property, plant and equipment (1,509) (692) Funds designated for capital expenditures -- 142 Proceeds from sales of property, plant and equipment 42 7 ------- ------- Net Cash Used by Investing Activities (1,467) (543) ------- ------- Financing Activities Payments of long-term debt (320) (464) Net decrease in short-term borrowings -- (2,000) Common Stock issued through stock options 138 28 ------- ------- Net Cash Used by Financing Activities (182) (2,436) ------- ------- Increase In Cash And Cash Equivalents 18 972 Cash And Cash Equivalents, Beginning Of Period 2,876 460 ------- ------- Cash And Cash Equivalents, End Of Period $2,894 $1,432 ======= ======= 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 period ended July 31, 1995 are not necessarily indicative of the results that may be expected for the year ending April 30, 1996. 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, 1995. NOTE B--CHANGES IN ACCOUNTING POLICY The Company adopted Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," in the first quarter of fiscal 1996. Adoption of this Statement did not have a material impact on the Company's operating results or financial position. In addition, no future material impact on operating results or financial position is expected. NOTE C--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 D--CUSTOMER RECEIVABLES The components of customer receivables were: July 31 April 30 (in thousands) 1995 1995 Gross customer receivables $19,246 $20,820 Less: Allowance for doubtful accounts (253) (243) Allowance for returns and discounts (946) (938) -------- -------- Net customer receivables $18,047 $19,639 ======== ======== 6 NOTE E--INVENTORIES The components of inventories were: July 31 April 30 (in thousands) 1995 1995 Raw materials $ 5,697 $ 5,650 Work-in-process 9,707 9,876 Finished goods 1,446 1,110 -------- -------- Total FIFO inventories $16,850 $16,636 Reserve to adjust inventories to LIFO value (5,839) (5,861) -------- -------- Total LIFO inventories $11,011 $10,775 ======== ======== 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--LOANS PAYABLE The revolving credit facility is used by the Company as a working capital account. As such, borrowings and repayments routinely occur on a daily basis. In the first quarter of fiscal 1996, there was no activity through the revolving credit facility. In the first quarter of fiscal 1995, the total transactions through this revolving credit facility were borrowings of $8.3 million and payments of $10.3 million, resulting in a net reduction of $2.0 million for the period. There were no revolving credit loans outstanding at July 31, 1995 and July 31, 1994. 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 is also involved in other matters under the direction of state environmental authorities. 7 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 MONTHS ENDED JULY 31, 1995 AND JULY 31, 1994 Results of Operations Net sales for the first quarter of fiscal 1996 were up 3.8% over the first quarter of the prior year. Average unit prices rose due to a general price increase implemented during the third quarter of the prior year. Overall unit volumes were consistent with the prior year. A slight volume decline in the Company's Home Center and Distributor Channels was due to a general slowdown in the remodeling sector. Continuing pockets of economic growth in new construction contributed to a volume increase in the Company's Builder Channel. Gross profit for the first quarter of fiscal 1996 was 19.7% of net sales compared to 23.7% the prior year. The primary contributors to the reduction in profits were increased material costs, manufacturing labor inefficiencies and higher freight costs. Material costs increased over the prior year as cardboard and particle board price increases were only partially offset by a decrease in lumber prices. Increased labor costs resulted from normal rate increases, temporary inefficiencies relating to capital projects at several manufacturing facilities and less than anticipated demand for product. Implementation of new service programs contributed to higher freight costs than experienced in the first quarter of the prior year. General and administrative expenses decreased $107,000 for the first quarter of fiscal 1996 compared to the prior year. The decline in costs is primarily attributed to reduced compensation as part of the Company's performance incentive programs. Interest expense for the quarter was $97,000 less than first quarter of the prior fiscal year due to continued reduction in debt. Total average outstanding debt for the first quarter of fiscal 1996 declined $3.1 million from the same period in fiscal 1995. Liquidity and Capital Resources During the first quarter of fiscal 1996, the Company's operating activities generated $1.7 million in net cash compared to $4.0 million in the first quarter of the prior year. Less cash was generated in the current period primarily due to lower profits and performance incentive payments relating to the prior fiscal year. 9 During the first quarter of fiscal 1996, equipment was purchased for the Hardy County, West Virginia facility to increase efficiency and lower overall production costs. Spending continued for the expansion of the Toccoa, Georgia facility to accommodate additional equipment that promotes a more efficient and cost effective process flow. In addition, a capital project to improve lumber processing at the Orange, Virginia facility was completed during the first quarter of fiscal 1996. All other capital expenditures during the quarter were limited to necessary or replacement items and cost savings projects. Overall, capital spending in the first quarter of fiscal 1996 increased $817,000 over the prior year as the Company initiated projects to remove certain capacity constraints and lower overall costs. Net cash used by financing activities in the first quarter of fiscal 1996 was $181,000, a decrease of $2.3 million from the prior year. The difference is the result of payments in fiscal 1995 that eliminated the Company's short-term revolving debt balance. There were no borrowings against this revolving credit facility during the first quarter of fiscal 1996. Cash flow from operations, combined with available borrowing capacity, is expected to be sufficient to meet forecasted working capital requirements, service existing debt obligations, and fund capital expenditures for fiscal 1996. Other The Company anticipates an overall economic environment of slow growth supported by stable interest rates and low inflation for the remainder 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 gross margins and overall profitability performance to improve from the first quarter results as the Company takes steps to better align production with market demand and to reduce inefficiencies relating to the start-up of certain capital projects. During the first quarter of fiscal 1996, the Company adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of". 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 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 10 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. 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 estimable 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 share of the contamination obligation of a site. 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 G to the Financial Statements). 11 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders At the Annual Meeting of Shareholders of American Woodmark Corporation held on August 23, 1995, the holders of 7,107,498 of the total 7,569,663 shares of Common Stock outstanding and eligible to vote duly executed and delivered valid proxies. The shareholders approved the three items outlined within the Company's Proxy Statement that was solicited to shareholders and reported to the Commission pursuant to Regulation 14A under the Act. The following items were approved at the Company's Annual Meeting: Negative/ Affirmative Withheld Votes Votes Abstentions ----------- --------- ----------- 1. Re-election of the Board of Directors. 7,104,072 3,426 -- 2. Ratification of Selection of Independent Certified Public Accountants. 7,103,085 999 3,414 3. Stock Option Plan for Non-Employee Directors. 6,974,156 127,043 6,299 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 11--Earnings Per Share Computation Page 13 (b) Reports on Form 8-K The Company did not file any reports on Form 8-K during the three months ended July 31, 1995. 12 AMERICAN WOODMARK CORPORATION Exhibit 11 Computation of Earnings per Share (in thousands, except per share amounts) Quarter Ended July 31 ----------------- 1995 1994 Net Income $ 361 $1,168 Divided by weighted average common shares outstanding 7,567 7,534 ------ ------ Earnings per share $0.05 $0.16 ====== ====== 13 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: September 11, 1995 /s/ Kent B. Guichard Kent B. Guichard Chief Financial Officer Signing on behalf of the registrant and as principal financial officer 14 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS APR-30-1996 JUL-31-1995 2,894 0 19,246 1,199 11,011 34,120 75,999 42,027 72,525 19,811 15,277 17,617 0 0 19,820 72,525 47,250 47,250 37,956 37,956 8,401 0 294 599 238 361 0 0 0 361 .05 .05