-----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, DeP8w9g18tNAdEQIJ5Qkb7keVNgqmwW/0sJgivDTKKkn2jRv/DOsDnF+lwb3UKsj JUo7G/zW+8QWFV+CYzMoSA== 0000794619-96-000007.txt : 19960312 0000794619-96-000007.hdr.sgml : 19960312 ACCESSION NUMBER: 0000794619-96-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960131 FILED AS OF DATE: 19960311 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: 96533571 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 January 31, 1996 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 7,607,515 shares outstanding Class as of March 8, 1996 AMERICAN WOODMARK CORPORATION FORM 10-Q INDEX PAGE PART I. FINANCIAL INFORMATION NUMBER Item 1. Financial Statements Balance Sheets--January 31, 1996 and April 30, 1995 3 Statements of Income--Three months ended January 31, 1996 and 1995; Nine months ended January 31, 1996 and 1995 4 Statements of Cash Flows--Nine months ended January 31, 1996 and 1995 5 Notes to Financial Statements--January 31, 1996 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 1996 1995 ---------- ---------- ASSETS (Unaudited) (Audited) Current Assets Cash and cash equivalents $ 1,196 $ 2,876 Refundable deposits -- 1,708 Customer receivables 20,336 19,639 Inventories 10,600 10,775 Prepaid expenses 562 550 Other current assets 537 621 ---------- ---------- Total Current Assets 33,231 36,169 Property, Plant and Equipment 34,410 33,722 Other Assets 4,681 4,517 ---------- ---------- $72,322 $74,408 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 7,317 $ 8,876 Accrued compensation and related expenses 7,244 7,156 Current maturities of long-term debt 2,694 2,800 Other current liabilities 3,275 3,175 ---------- ---------- Total Current Liabilities 20,530 22,007 Long-Term Debt, less current maturities 13,427 15,534 Long-Term Pension Liabilities 2,205 2,038 Deferred Income Taxes 2,620 3,028 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 7,607,149 shares at January 31, 1996; 7,551,109 shares at April 30, 1995 17,673 17,479 Retained earnings 15,867 14,322 ---------- ---------- Total Stockholders' Equity 33,540 31,801 ---------- ---------- $72,322 $74,408 ========== ========== 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 ------------------ -------------------- 1996 1995 1996 1995 -------- -------- --------- --------- Net sales $46,793 $48,144 $142,970 $147,666 Cost of sales and distribution 37,325 37,089 114,546 112,472 -------- -------- --------- --------- Gross Profit 9,468 11,055 28,424 35,194 Selling and marketing expenses 5,853 5,868 18,072 18,090 General and administrative expenses 2,524 3,103 7,027 8,748 Restructuring costs -- -- -- 516 -------- -------- --------- --------- Operating Income 1,091 2,084 3,325 7,840 Interest expense 341 332 951 1,062 Other (income) expense (155) 10 (153) 4 -------- -------- --------- --------- Income Before Income Taxes 905 1,742 2,527 6,774 Provision for income taxes 346 640 982 2,619 -------- -------- --------- --------- Net Income $ 559 $ 1,102 $ 1,545 $ 4,155 ======== ======== ========= ========= Earnings Per Share: Average shares outstanding 7,606,447 7,548,919 7,590,756 7,542,630 Net income per share $ 0.07 $ 0.15 $ 0.20 $ 0.55 ======== ======== ========= ========= See notes to financial statements 4 AMERICAN WOODMARK CORPORATION STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) Nine Months Ended January 31 ------------------ 1996 1995 -------- -------- Operating Activities Net income $1,545 $4,155 Adjustments to reconcile net income to net cash provided by operating activities: Provision for depreciation and amortization 5,813 5,801 Net loss on disposal of property, plant and equipment 109 33 Deferred income taxes (311) 203 Restructuring costs -- 239 Other 191 241 Changes in operating assets and liabilities: Receivables (730) 589 Inventories 16 117 Refundable deposits 1,708 (605) Other assets (2,032) (2,227) Accounts payable (1,559) (1,137) Accrued compensation and related expenses 115 1,289 Other 212 (374) -------- -------- Net Cash Provided by Operating Activities 5,077 8,324 -------- -------- Investing Activities Payments to acquire property, plant and equipment (4,849) (2,673) Funds designated for capital expenditures -- 252 Proceeds from sales of property, plant and equipment 168 51 -------- -------- Net Cash Used by Investing Activities (4,681) (2,370) -------- -------- Financing Activities Payments of long-term debt (2,270) (2,577) Net decrease in short-term borrowings -- (2,000) Common Stock issued through stock options 194 65 -------- -------- Net Cash Used by Financing Activities (2,076) (4,512) -------- -------- Increase (Decrease) In Cash And Cash Equivalents (1,680) 1,442 Cash And Cash Equivalents, Beginning Of Period 2,876 460 -------- -------- Cash And Cash Equivalents, End Of Period $1,196 $1,902 ======== ======== 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 nine month period ended January 31, 1996 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. Certain fiscal 1995 amounts have been reclassified to conform to fiscal 1996 presentation. 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 results of operations or financial position. 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: January 31 April 30 (in thousands) 1996 1995 ---------- ---------- Gross customer receivables $21,465 $20,820 Less: Allowance for doubtful accounts (289) (243) Allowance for returns and discounts (840) (938) ---------- ---------- Net customer receivables $20,336 $19,639 ========== ========== 6 NOTE E--INVENTORIES The components of inventories were: January 31 April 30 (in thousands) 1996 1995 ---------- ---------- Raw materials $ 5,415 $ 5,650 Work-in-process 9,465 9,876 Finished goods 1,469 1,110 ---------- ---------- Total FIFO inventories $16,349 $16,636 Reserve to adjust inventories to LIFO value (5,749) (5,861) ---------- ---------- Total LIFO inventories $10,600 $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. For the nine month period ended January 31, 1996, total transactions through the revolving credit facility were borrowings and payments of $7.2 million. For the nine month period ended January 31, 1995, total transactions through the revolving credit facility were borrowings of $10.2 million and payments of $12.2 million, resulting in a net reduction of $2.0 million for the period. There were no revolving credit loans outstanding at January 31, 1996 and 1995. NOTE G--SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Nine Months Ended January 31 ----------------- (in thousands) 1996 1995 -------- -------- Cash paid during the period for: Interest $ 823 $ 928 Income taxes $ 915 $3,140 7 NOTE H--OTHER INFORMATION During the third quarter of fiscal 1996, the Company received a tax refund from the City of Winchester pertaining to property taxes paid in prior years for the Company's Corporate Office in Winchester, Virginia. This tax refund, net of specific recovery expenses, increased other income by $398,000. 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, 1996 AND 1995 RESULTS OF OPERATIONS The Company's net sales for the third quarter of fiscal 1996 decreased 2.8% over the third quarter of the prior year. Net sales for the nine month period ending January 31, 1996 decreased 3.2% over the first nine months of the prior year. The decrease in net sales for both periods was primarily attributable to a decline in unit volumes in the home center channel, the Company's largest market segment. The Company was adversely impacted by the continuance of a general economic slowdown in the home center industry, especially for durable, big ticket items. Contributing to the overall decline in net sales for the third quarter of fiscal 1996 was the impact of severe winter weather conditions during January in the midwestern and northeastern regions of the United States. Unit volumes for both periods increased slightly in the distributor channel due to continuing pockets of economic growth in new construction. Unit volumes for both periods remained relatively flat in the builder channel. Current year average unit prices increased for both periods over prior year due to general price increases implemented during the third quarter of both the current and prior fiscal years. The increase in unit prices for the three and nine month periods was partially offset by an unfavorable shift in product mix attributed to the economic slowdown. Fiscal 1996 third quarter and nine month period gross margins were 20.2% and 19.9% of net sales, decreasing from comparative fiscal 1995 gross margins of 23.0% and 23.8%, respectively. The decline in gross margins for both periods was primarily attributable to increased labor costs, higher freight costs and the impact of unfavorable leverage with lower volume on fixed and semi-fixed costs. Increased labor costs resulted from normal rate increases, temporary inefficiencies relating to capital projects at several manufacturing facilities, an increase in employee benefits expense and less than anticipated demand for product. Implementation of new service programs continued to contribute to higher freight costs than were experienced in both periods of the prior fiscal year. Decreased material costs, caused by declining lumber prices and realization of savings from capital projects implemented at several manufacturing facilities, helped offset the decline in margins for both periods. General and administrative expenses decreased $579,000 for the third quarter of fiscal 1996 and $1.7 million for the first nine months compared to the prior year. The decline in expenses for both periods was primarily due to reduced employee compensation associated with the Company's performance incentive programs. Contributing to the expense reductions for both periods of the current year were lower payroll costs resulting from changes in management structure and expenses incurred in the second and third quarters of the prior year relating to additions to the executive management team. 9 In fiscal 1995, the Company recognized $516,000 in restructuring activities initiated in fiscal 1993 that did not become accruable until fiscal 1995. These costs included severance, lease termination costs, losses on lease commitments, and equipment and leasehold improvement write-downs. Interest expense decreased $111,000 during the first nine months of fiscal 1996 compared to the first nine months of fiscal 1995. The decrease in interest expense resulted from reduced short-term borrowings under the Company's revolving credit facility and the Company's continued reduction in long-term debt. During the third quarter of fiscal 1996, the Company received a tax refund from the City of Winchester pertaining to property taxes paid in prior years for the Company's Corporate Office in Winchester, Virginia. This tax refund, net of specific recovery expenses, increased other income by $398,000. LIQUIDITY AND CAPITAL RESOURSES The Company's operating activities in the first nine months of fiscal 1996 generated $5.1 million net cash compared to $8.3 million the prior year. Lower profits, an increase in working capital requirements, and reduced accruals relating to the Company's performance incentives were the primary factors for the lower cash in-flows in the current period. Cash provided by operating activities was favorably impacted during the current period by the refund of short-term deposits made during the prior fiscal year to fund the construction of equipment now in operation at the Toccoa, Georgia component plant. The Company continued an aggressive cost reduction capital spending program, investing $4.9 million in capital expenditures for the first nine months of fiscal 1996. During this period, 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 period. All other capital expenditures during the first nine months of fiscal 1996 were limited to necessary or replacement items and cost savings projects. Net cash used in financing activities in the first nine months of fiscal 1996 decreased $2.4 million from the prior year. The difference is primarily the result of payments in fiscal 1995 that eliminated the Company's short-term revolving debt balance. The Company reduced overall debt by $2.2 million during the first nine months of fiscal 1996. Long-term debt to total equity declined from 48.8% at April 30, 1995 to 40.0% at January 31, 1996. The Company believes that cash flow from operations, combined with available borrowing capacity, will be sufficient to meet forecasted working capital requirements, service existing debt obligations, and fund capital expenditures for the remainder of fiscal 1996. 10 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. Within this macroeconomic environment, the Company also anticipates sluggish demand for big ticket, special order items such as kitchen cabinets. The Company expects this sluggish demand will be a significant factor in the home center industry as remodeling projects are adversely impacted by high consumer debt, pressure on disposable income and fragile consumer confidence. The Company does not anticipate overall sales growth in this environment, although the Company does expect to gain share in a down market based on its position with major customers. The Company expects gross margins to improve from the first half of fiscal 1996 as the Company aggressively pursues cost reductions in the current industry environment. The Company expects to remain profitable and to maintain the strength of the Company's balance sheet. On November 27, 1995 the Company's Board of Directors elected James J. Gosa to President and Chief Operating Officer. Gosa, formerly Executive Vice President, is now responsible for the operating performance of the Company. William F. Brandt, Jr., formerly President, now serves as Chairman of the Board of Directors and Chief Executive Officer, devoting a greater portion of his efforts to strategic planning. 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 results of operations or financial position. 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. 11 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 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 three months ended January 31, 1996. 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 January 31 ------------------ ----------------- 1996 1995 1996 1995 ------ ------ ------ ------ Net income $ 559 $1,102 $1,545 $4,155 Divided by weighted average common shares outstanding 7,606 7,549 7,591 7,543 ------ ------ ------ ------ Earnings per share $ 0.07 $ 0.15 $ 0.20 $ 0.55 ====== ====== ====== ====== 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 8, 1996 /s/ KENT B. GUICHARD Kent B. Guichard Chief Financial Officer Signing on behalf of the registrant and as principal financial officer 15 EX-27 2
5 1,000 9-MOS APR-30-1996 JAN-31-1996 1,196 0 21,465 1,129 10,600 33,231 77,730 43,320 72,322 20,530 13,427 0 0 17,673 15,867 72,322 142,970 142,970 114,546 114,546 0 90 951 2,527 982 1,545 0 0 0 1,545 .20 .20
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