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Previous: BROADWAY STORES INC, 10-Q, 1995-12-12 |
Next: BAILEY CORP, 10-Q, 1995-12-12 |
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
FORM 10-Q
For Quarter Ended October 31, 1995 Commission File Number 1-8777
------------------------ ----------
VIRCO MFG. CORPORATION
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 95-1613718
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2027 Harpers Way, Torrance, CA 90501
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 533-0474
--------------
No change
---------------------------------------------------
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 period 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
----- -----
The number of shares outstanding of each of the issuer's classes of
common stock, as of December 8, 1995.
Common Stock 5,369,359 Shares*
* Adjusted for Stock Dividend declared August 15, 1995, date of record
September 18, 1995, payable October 18, 1995.
<PAGE> 2
VIRCO MFG. CORPORATION AND SUBSIDIARIES
INDEX
Part I. Financial Information
Item 1. Financial Statements (unaudited)
Condensed consolidated balance sheets - October 31, 1995 and
January 31, 1995.
Condensed consolidated statements of income - Three months
ended October 31, 1995 and 1994.
Condensed consolidated statements of income - Nine months
ended October 31, 1995 and 1994.
Condensed consolidated statements of cash flows - Three months
ended October 31, 1995 and 1994.
Condensed consolidated statements of cash flows - Nine months
ended October 31, 1995 and 1994.
Notes to condensed consolidated financial statements - October
31, 1995.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Part II. Other Information
Item 4. Submission of matters to a vote of Security Holders.
Item 6. Exhibits and Reports on Form 8-K
Signatures
<PAGE> 3
PART 1
Item 1. Financial Statements
VIRCO MFG. CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited (Note 1)
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
ASSETS 10/31/95 1/31/95
------ -------- -------
<S> <C> <C>
Current Assets
Cash $ 444 $ 585
Accounts and Notes Receivable 35,129 27,468
Less Allowance for Doubtful Accounts (603) (100)
-------- --------
Net Accounts and Notes Receivable 34,526 27,368
Income Taxes Receivable - -
Inventories (Note 2)
Finished Goods 18,667 21,689
Work in Process 7,404 6,113
Raw Materials and Supplies 9,808 11,418
-------- --------
Total Inventories 35,879 39,220
Prepaid Expenses and Deferred Income Tax 3,321 2,659
-------- --------
Total Current Assets 74,170 69,832
Restricted Short-term Investment 1,612 8,937
Property, Plant & Equipment
Cost 73,020 65,727
Less Accumulated Depreciation (37,871) (34,409)
-------- --------
Net Property, Plant & Equipment 35,149 31,318
Other Assets 6,517 4,921
-------- --------
$117,448 $115,008
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
<PAGE> 4
VIRCO MFG. CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited (Note 1)
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY 10/31/95 1/31/95
------------------------------------ -------- -------
<S> <C> <C>
Current Liabilities
Checks Released But Not Yet Cleared Bank $ 3,465 $ 2,898
Accounts Payable 9,821 11,768
Income Taxes Payable 1,370 1,372
Current Maturities on Long-Term Debt 873 874
Other Current Liabilities 9,522 10,140
------- -------
Total Current Liabilities 25,051 27,052
Non-current Liabilities
Long Term Debt (Less Current Portion) 34,215 32,577
Other Non-Current Liabilities 4,851 4,851
------- -------
Total Non-Current Liabilities 39,066 37,428
Deferred Income Taxes 62 62
Shareholders' Equity
Preferred Stock:
Authorized 3,000,000 Shares, $.01 Par Value; None
Issued or Outstanding - -
Common Stock:
Authorized 10,000,000 Shares, $.01 Par Value;
5,391,748 Shares issued at 7/31/95 and 5,382,948 at
1/31/95
54 49
Additional Paid-In Capital 42,056 36,992
Retained Earnings 11,453 13,787
Less treasury stock at cost (22,389 Shares) (172) (234)
Loan to ESOP Trust (122) (128)
-------- --------
Total Shareholders' Equity 53,269 50,466
-------- --------
$117,448 $115,008
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
<PAGE> 5
VIRCO MFG. CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Unaudited (Note 1)
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
3 Months Ended
--------------
10/31/95 10/31/94
-------- --------
<S> <C> <C>
Net Sales $ 74,613 $ 69,014
Cost of Goods Sold 55,433 50,015
--------- ---------
Gross Profit 19,180 18,999
Shipping, Selling, General and Administrative Expense 13,505 13,234
Interest Expense 903 667
Provision for Doubtful Accounts 267 202
--------- ---------
14,675 14,103
--------- ---------
Income (Loss) Before Taxes on Income 4,505 4,896
Taxes on Income (1,757) (1,910)
--------- ---------
Net Income $ 2,748 $ 2,986
========= =========
Earnings (Loss) Per Share: $ .51 $ .55
- -------------------------- ========= =========
Net Earnings (Loss) Per Share
Weighted Average Shares Outstanding
(Adjusted for 10% Stock Dividends Declared August 15, 1995.
5,437,801 5,418,772
========= =========
Dividend Declared .04 .04
========= =========
Cash (Per Share) .10% 10%
========= =========
Stock
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
<PAGE> 6
VIRCO MFG. CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Unaudited (Note 1)
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
9 Months Ended
--------------
10/31/95 10/31/94
-------- --------
<S> <C> <C>
Net Sales $ 177,735 $ 165,696
Cost of Goods Sold 131,545 121,905
--------- ---------
Gross Profit 46,190 43,791
Shipping, Selling, General and Administrative Expense 38,167 35,859
Provision for Doubtful Accounts 2,664 1,849
Interest Expense 529 485
--------- ---------
41,360 38,193
--------- ---------
Income/(Loss) Before Taxes on Income 4,830 5,598
Taxes on Income/(Loss) (1,884) (2,184)
--------- ---------
Net Income $ 2,946 $ 3,414
========= =========
Earnings (Loss) Per Share:
- --------------------------
Net Earnings/(Loss) Per Share: $ .54 $ .55
========= =========
Weighted Average Shares Outstanding
(Adjusted for 10% Stock Dividend
Declared August 15, 1995.) 5,421,548 5,409,473
========= =========
Dividend Declared
Cash (Per Share) .04 .04
========= =========
Stock 10% 10%
========= =========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
<PAGE> 7
VIRCO MFG. CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited (Note 1)
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
3 Months Ended
--------------
10/31/95 10/31/94
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ 2,748 $ 2,986
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 1,666 1,396
Provision for doubtful accounts 276 248
(Gain) Loss on sales of fixed assets 5 -
Change in Assets and Liabilities:
Accounts and Notes Receivable (861) (558)
Inventories 14,917 8,740
Income Taxes Receivable/Payable 1,611 1,546
Prepaid Expenses and Deposits (20) 620
Other Assets (595) (28)
Accounts Payable and Accrued Expenses (6,664) 1,145
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 13,083 16,095
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures (2,282) (5,523)
Proceeds from Sale of Assets 0 0
Purchase of Life Insurance (1,096) (4)
Restricted Short Term Investments (14) -
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (3,392) (5,527)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Long-term Debt 0 0
Reduction of Long-term Debt (11,193) (11,323)
Sale of Treasury Stock 66 -
Issuance/Reduction of ESOP Loan (47) (264)
Cash Dividend (215) (194)
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES (11,389) (11,781)
-------- --------
NET CHANGE IN CASH (1,698) (1,213)
CASH AT BEGINNING OF QUARTER 2,142 1,506
-------- --------
CASH AT END OF QUARTER $ 444 $ 293
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
<PAGE> 8
VIRCO MFG. CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited (Note 1)
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
9 Months Ended
--------------
10/31/95 7/31/94
-------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ 2,946 $ 3,414
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 3,955 3,278
Provision for doubtful accounts 437 495
(Gain) Loss on sales of fixed assets 66 (12)
Change in Assets and Liabilities:
Accounts and Notes Receivable (7,594) (2,520)
Inventories 3,341 3,617
Income Taxes Receivable/Payable (2) 81
Prepaid Expenses and Deposits (662) (142)
Other Assets 677 (81)
Accounts Payable and Accrued Expenses (2,565) 5,447
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 599 13,577
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures (7,852) (8,519)
Proceeds from Sale of Assets - 12
Purchase of Life Insurance (1,706) 422
Restricted Short Term Investments 7,325 -
------- -------
NET CASH USED IN INVESTING ACTIVITIES (2,233) (8,085)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Long-term Debt 2,297 0
Reduction of Long-term Debt (661) (5,274)
Sale of Treasury Stock 66 (114)
Issuance/Reduction of ESOP Loan 6 -
Cash Dividend (215) (194)
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,493 (5,582)
------- -------
NET CHANGE IN CASH (141) (90)
CASH AT BEGINNING OF QUARTER 585 383
------- -------
CASH AT END OF QUARTER $ 444 $ 293
======= =======
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
<PAGE> 9
VIRCO MFG. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1995 and October 31, 1994
Note 1: The accompanying unaudited condensed consolidated 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 and nine month periods
ended October 31, 1995 are not necessarily indicative of the results
that may be expected for the year ended January 31, 1996. For further
information, refer to the consolidated financial statements and
footnotes thereto included in the Registrant Company and Subsidiaries'
annual report on Form 10-K for the year ended January 31, 1995.
Note 2. Inventory
Year end financial statements reflect inventories verified by physical
counts with the material content valued by the LIFO method. At this
interim date, there has been no physical verification and the precise
adjustment to LIFO values has not been calculated.
Note 3. Income Taxes
The Company adopted the provisions of SFAS No. 109 effective February
1, 1993. Income taxes for the three and nine months periods ended
October 31, 1995 were computed using the effective tax rate estimated
to be applicable for the full fiscal year, which is subject to ongoing
review and evaluation by management.
<PAGE> 10
VIRCO MFG. CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
(b) Results of Operations:
For the third quarter of 1995, the company earned a net profit of
$2,748,000 on sales of $74,613,000 compared to a net profit of $2,986,000 on
sales of $69,014,000 in the same period last year. For the nine months ended
October 31, 1995, the company earned a net profit of $2,946,000 on sales of
$177,735,000 compared to a net profit of $3,414,000 on sales of $165,696,000 in
the prior year.
The year to date results are consistent with Virco's seasonal business
cycle, which produces diminished first quarter sales followed by strong second
and third quarter deliveries of educational furniture. Increased shipments
during 1995 are attributable to improvement in both the educational and
commercial business segments. Increased levels of inventory carried going into
the second and third quarters facilitated increased sales volume as well as
allowed for earlier shipment and improved on time delivery. Sales backlog at
the end of the third quarter is slightly less than the prior year.
Third quarter results reflect an increase in material costs accompanied
by lagging increases in selling prices. The increase in the material component
of the production costs were offset, in part, by a reduction in overhead
spending as a percentage of sales. This reduction in overhead spending was
attained despite start up costs incurred at the new Torrance, CA manufacturing
facility. Distribution costs, which are capitalized into inventory and
expensed to cost of sales, decreased from the prior year due to the closure of
four distribution facilities in November 1994. Below the line spending was
affected by increased interest expense incurred to finance capital investments
as well as the increased levels of inventory. Finally, the Company has
accepted a $500,000 settlement for damages incurred when a nearby manufacturing
facility contaminated the ground water at our Southern Pines, North Carolina
manufacturing facility, which is being marketed for sale.
The Company is continuing to assess the rest of its manufacturing and
distribution facilities for opportunities to reduce costs and streamline
operations. As part of this process the Company's Board of Directors has
authorized management to investigate the sale of the manufacturing plant
located in San Luis, Mexico. At this time, no definitive plans have been made
regarding this facility.
Financial Condition:
Our credit agreement with Wells Fargo Bank, which expires on October 1,
1996, was amended to extend the expiration date to October 1, 1997. The
amended line of credit will continue to provide loans at the Wells Fargo prime
interest rate, but also allows the Company the option to borrow under 30, 60,
and 90 day fixed term rates at LIBOR plus 1.75%. The amended line provides the
Company with a $49,500,000 line of credit with a letter of credit subfeature.
The old line provided separate cash and letter of credit lines of $40,500,000
and $9,000,000 respectively. As of October 31, 1995 we had $18,575,000
available under the terms of the line of credit.
As a result of seasonally high third quarter deliveries, receivables
increased compared to January 31, 1995. Inventory decreased by more than
$3,000,000 from January 31, 1995 due to seasonally high third quarter sales.
Capital expenditures, which have been usually high during late 1994 and the
first nine months of 1995 due to the new Torrance facility, should return to a
more normal level of activity.
<PAGE> 11
PART II
VIRCO MFG. CORPORATION SUBSIDIARIES
Other Information
Item 4. Submission of matters to a vote of Security Holders
None
Item 6. Exhibits and Reports on Form 8-K.
None
<PAGE> 12
VIRCO MFG. CORPORATION AND SUBSIDIARIES
Exhibit (11) - Statement Re: Computation of Earnings Per Share
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ ------------------
October 31 October 31
---------- -----------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Primary:
Average Shares Outstanding 5,369,359 5,360,559 5,369,359 5,360,559
Net effect of dilutive stock options - based on the
treasury stock method using average market price. 68,442 58,213 52,189 48,914
--------- --------- --------- ---------
Totals 5,437,801 5,418,772 5,421,548 5,409,473
========= ========= ========= =========
Net Income 2,748,000 2,986,000 2,946,000 3,414,000
========= ========= ========= =========
Per Share Amount .51 .55 .54 .63
========= ========= ========= =========
</TABLE>
Weighted average shares outstanding are adjusted for 10% stock dividend
declared August 15, 1995.
<PAGE> 13
VIRCO MFG. CORPORATION
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.
VIRCO MFG. CORPORATION
Date: By:
----------------------- ---------------------------------
James R. Braam
Vice President - Finance
Date: By:
----------------------- ---------------------------------
Robert E. Dose
Corporate Controller
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> FEB-01-1995
<PERIOD-END> OCT-31-1995
<CASH> 444
<SECURITIES> 0
<RECEIVABLES> 35,129
<ALLOWANCES> (603)
<INVENTORY> 35,879
<CURRENT-ASSETS> 74,170
<PP&E> 73,070
<DEPRECIATION> 37,448
<TOTAL-ASSETS> 117,448
<CURRENT-LIABILITIES> 25,051
<BONDS> 0
<COMMON> 42,110
0
0
<OTHER-SE> 11,159
<TOTAL-LIABILITY-AND-EQUITY> 117,448
<SALES> 74,613
<TOTAL-REVENUES> 74,613
<CGS> 55,433
<TOTAL-COSTS> 55,433
<OTHER-EXPENSES> 14,675
<LOSS-PROVISION> 267
<INTEREST-EXPENSE> 903
<INCOME-PRETAX> 4,505
<INCOME-TAX> (1,757)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,748
<EPS-PRIMARY> .51
<EPS-DILUTED> 0
</TABLE>
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