<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 July 31, 1995 Commission File Number 1-8777
----------------------- ----------------
VIRCO MFG. CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
Delaware 95-1613718
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2027 Harpers Way, Torrance, CA 90501
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 533-0474
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No change
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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 August 30, 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 - July 31, 1995 and
January 31, 1995.
Condensed consolidated statements of income - Three months
ended July 31, 1995 and 1994.
Condensed consolidated statements of income - Six months ended
July 31, 1995 and 1994.
Condensed consolidated statements of cash flows - Three months
ended July 31, 1995 and 1994.
Condensed consolidated statements of cash flows - Six months
ended July 31, 1995 and 1994.
Notes to condensed consolidated financial statements - July
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 7/31/95 1/31/95
------ --------- ---------
<S> <C> <C>
Current Assets
Cash $ 2,142 $ 585
Accounts and Notes Receivable 34,267 27,468
Less Allowance for Doubtful Accounts (326) (100)
-------- --------
Net Accounts and Notes Receivable 33,941 27,368
Income Taxes Receivable 241 --
Inventories (Note 2)
Finished Goods 30,006 21,689
Work in Process 9,158 6,113
Raw Materials and Supplies 11,632 11,418
-------- --------
Total Inventories 50,796 39,220
Prepaid Expenses and Deferred Income Tax 3,301 2,659
-------- --------
Total Current Assets 90,421 69,832
Restricted Short-term Investment 1,598 8,937
Property, Plant & Equipment
Cost 70,744 65,727
Less Accumulated Depreciation (36,206) (34,409)
-------- --------
Net Property, Plant & Equipment 34,538 31,318
Other Assets 5,472 4,921
-------- --------
$132,029 $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 7/31/95 1/31/95
------------------------------------ ------- -------
<S> <C> <C>
Current Liabilities
Checks Released But Not Yet Cleared Bank $ 4,111 $ 2,898
Accounts Payable 16,056 11,768
Income Taxes Payable -- 1,372
Current Maturities on Long-Term Debt 873 874
Other Current Liabilities 9,951 10,140
-------- --------
Total Current Liabilities 30,991 27,052
Non-current Liabilities
Long Term Debt (Less Current Portion) 45,408 32,577
Other Non-Current Liabilities 4,851 4,851
-------- --------
Total Non-Current Liabilities 50,259 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; 5,390,948 Shares
issued at 7/31/95 and 1/31/95 49 49
Additional Paid-In Capital 36,992 36,992
Retained Earnings 13,985 13,787
Less treasury stock at cost (30,389 Shares) (234) (234)
Loan to ESOP Trust (75) (128)
-------- --------
Total Shareholders' Equity 50,717 50,466
-------- --------
$132,029 $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
--------------
7/31/95 7/31/94
--------- ---------
<S> <C> <C>
Net Sales $ 66,197 $ 60,268
Cost of Goods Sold 48,644 44,027
--------- ---------
Gross Profit 17,553 16,241
Shipping, Selling, General and Administrative Expense 13,607 12,665
Provision for Doubtful Accounts 152 176
Interest Expense 985 685
--------- ---------
14,744 13,526
--------- ---------
Income/(Loss) Before Taxes on Income 2,809 2,715
Taxes on Income/(Loss) (1,096) (1,059)
--------- ---------
Net Income $ 1,713 $ 1,656
========= =========
Earnings (Loss) Per Share:
Net Earnings/(Loss) Per Share: $ .32 $ .31
========= =========
Weighted Average Shares Outstanding
(Adjusted for 10% Stock Dividend
Declared August 15, 1995.) 5,414,237 5,405,291
========= =========
Dividend Declared
Cash (Per Share) -- --
========= =========
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>
6 Months Ended
--------------
7/31/95 7/31/94
--------- ---------
<S> <C> <C>
Net Sales $ 103,122 $ 96,682
Cost of Goods Sold 76,112 71,890
--------- ---------
Gross Profit 27,010 24,792
Shipping, Selling, General and Administrative Expense 24,662 22,625
Provision for Doubtful Accounts 262 283
Interest Expense 1,761 1,182
--------- ---------
26,685 24,090
--------- ---------
Income (Loss) Before Taxes on Income 325 702
Taxes on Income (127) (274)
--------- ---------
Net Income $ 198 $ 428
========= =========
Earnings (Loss) Per Share:
Net Earnings (Loss) Per Share $ .04 $ .08
========= =========
Weighted Average Shares Outstanding
(Adjusted for 10% Stock Dividend
Declared August 15, 1995.) 5,412,748 5,401,737
========= =========
Dividend Declared
Cash (Per Share) -- --
========= =========
Stock -- --
========= =========
</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
--------------
7/31/95 7/31/94
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ 1,713 $ 1,656
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 1,245 975
Provision for doubtful accounts 61 150
(Gain) Loss on sales of fixed assets 61 (12)
Change in Assets and Liabilities:
Accounts and Notes Receivable (10,814) (11,394)
Inventories 179 2,060
Income Taxes Receivable/Payable 1,030 934
Prepaid Expenses and Deposits 862 (626)
Other Assets 390 (95)
Accounts Payable and Accrued Expenses 3,964 4,045
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES (1,309) (2,307)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures (2,316) (1,803)
Proceeds from Sale of Assets -- 12
Purchase of Life Insurance (631) (530)
Restricted Short Term Investments 2,091 --
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (856) (2,321)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Long-term Debt 4,473 5,751
Reduction of Long-term Debt (270) (44)
Purchase of Treasury Stock -- --
Issuance/Reduction of ESOP Loan (57) 100
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 4,146 5,807
-------- --------
NET CHANGE IN CASH 1,981 1,179
CASH AT BEGINNING OF QUARTER 161 327
-------- --------
CASH AT END OF QUARTER $ 2,142 $ 1,506
======== ========
</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>
6 Months Ended
--------------
7/31/95 7/31/94
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ 198 $ 428
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 2,289 1,882
Provision for doubtful accounts 161 247
(Gain) Loss on sales of fixed assets 61 (12)
Change in Assets and Liabilities:
Accounts and Notes Receivable (6,733) (1,962)
Inventories (11,576) (5,123)
Income Taxes Receivable/Payable (1,613) (1,465)
Prepaid Expenses and Deposits (642) (762)
Other Assets 1,272 (53)
Accounts Payable and Accrued Expenses 4,099 4,302
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES (12,484) (2,518)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures (5,570) (2,996)
Proceeds from Sale of Assets -- 12
Purchase of Life Insurance (610) 426
Restricted Short Term Investments 7,339 --
-------- --------
NET CASH USED IN INVESTING ACTIVITIES 1,159 (2,558)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Long-term Debt 13,209 8,044
Reduction of Long-term Debt (380) (1,995)
Purchase of Treasury Stock -- --
Issuance/Reduction of ESOP Loan 53 150
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 12,882 6,199
-------- --------
NET CHANGE IN CASH 1,557 1,123
CASH AT BEGINNING OF QUARTER 585 383
-------- --------
CASH AT END OF QUARTER $ 2,142 $ 1,506
======== ========
</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
July 31, 1995 and July 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 six month periods
ended July 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 six months periods ended July
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.
Results of Operations:
For the second quarter of 1995, the Company earned a net profit of $1,713,000 on
sales of $66,197,000 compared to a net profit of $1,656,000 on sales of
$60,268,000 in the same period last year.
The second quarter results are consistent with Virco's seasonal business cycle
which produces diminished first quarter sales followed by strong shipments of
educational products in the second and third quarters. Sales backlog at July 31,
1995 is approximately the same as in the prior year.
Second quarter results reflect an increase in material costs accompanied by
lagging increases in selling prices. Below the line spending was affected by
increased interest expense incurred to finance capital investments as well as
increased inventory and receivables. Distribution costs decreased over the prior
year due to the closure of four distribution centers in November of 1994. The
net result of these events was a $57,000 increase in net income.
During the second quarter, the Company entered into an agreement to lease the
former Los Angeles, CA manufacturing facility under a 15 year lease. With the
lease of this former manufacturing plant, the 1994 lease of the Torrance, CA
distribution facility, and the final installation of various new machines in the
new Torrance, CA location, the Company has substantially executed the
restructuring of the West Coast manufacturing and distribution operations.
Financial Condition:
As a result of seasonally high sales activity, accounts receivable increased by
$6,700,000 compared to January 31, 1995. In anticipation of strong third quarter
educational deliveries, inventory at July 31, 1995 increased by $11,600,000
compared to January 31, 1994.
Increases in receivables and inventory were financed through increased
borrowings under our revolving line of credit with Wells Fargo Bank.
Proceeds from the issuance of an industrial revenue bond were held in trust and
reflected as restricted short term investments on the July 31, 1995 and January
31, 1995 balance sheets. The Company withdrew $7,339,000 from the trust during
the first six months of 1995 to fund capital improvements made at the new
Torrance facility during the fourth quarter of 1994 and the first two quarters
of 1995. In addition, the capital spending at the Torrance facility was
supplemented by leasing approximately $1,750,000 of machinery from General
Electric Capital Corporation during the second quarter of 1995. The Company does
not anticipate leasing any additional manufacturing equipment in the near term.
<PAGE> 11
PART II
VIRCO MFG. CORPORATION SUBSIDIARIES
Other Information
Item 4. Submission of matters to a vote of Security Holders
The following is a description of matters submitted to a vote of registrant's
stockholders at the Annual Meeting of Stockholders held June 20, 1995:
Election of three directors whose term expire in 1998.
<TABLE>
<CAPTION>
Votes For
---------
<S> <C>
George W. Ott 4,147,689
John H. Stafford 4,147,896
Douglas A. Virtue 4,148,702
</TABLE>
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 Six Months Ended
July 31 July 31
------------------ ----------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Primary:
Average Shares Outstanding 5,360,559 5,360,559 5,360,559 5,360,559
Net effect of dilutive stock options - based on
the treasury stock method using average market price 53,678 44,732 52,189 41,178
--------- --------- --------- ---------
Totals 5,414,237 5,405,291 5,412,748 5,401,737
========= ========= ========= =========
Net Income 1,713,000 1,656,000 198,000 428,000
========= ========= ========= =========
Per Share Amount .32 .31 .04 .08
========= ========= ========= =========
</TABLE>
Weighted average shares outstanding are adjusted for 10% stock dividend declared
October 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: 9/1/95 By: /s/ James R. Braam
----------------- --------------------------------
James R. Braam
Vice President - Finance
Date: 9/1/95 By: /s/ Robert E. Dose
----------------- --------------------------------
Robert E. Dose
Corporate Controller
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED STATEMENTS OF INCOME, AND CONSOLIDATED BALANCE SHEETS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> FEB-01-1995
<PERIOD-END> JUL-31-1995
<CASH> 2,142,000
<SECURITIES> 0
<RECEIVABLES> 34,267,000
<ALLOWANCES> 326,000
<INVENTORY> 50,796,000
<CURRENT-ASSETS> 90,421,000
<PP&E> 70,744,000
<DEPRECIATION> 36,206,000
<TOTAL-ASSETS> 132,029,000
<CURRENT-LIABILITIES> 30,991,000
<BONDS> 0
<COMMON> 37,041,000
0
0
<OTHER-SE> 13,676,000
<TOTAL-LIABILITY-AND-EQUITY> 50,717,000
<SALES> 66,197,000
<TOTAL-REVENUES> 66,197,000
<CGS> 48,644,000
<TOTAL-COSTS> 48,644,000
<OTHER-EXPENSES> 14,744,000
<LOSS-PROVISION> 152,007
<INTEREST-EXPENSE> 985,000
<INCOME-PRETAX> 2,809,000
<INCOME-TAX> 1,096,000
<INCOME-CONTINUING> 1,713,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,713,000
<EPS-PRIMARY> .32
<EPS-DILUTED> 0
</TABLE>
