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Previous: COMMERCIAL NET LEASE REALTY INC, 424B2, 1996-09-12 |
Next: WITTER DEAN REALTY INCOME PARTNERSHIP II LP, 10-Q, 1996-09-12 |
<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 July 31, 1996 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 August 30, 1996.
Common Stock 5,906,296 Shares*
* Adjusted for Stock Dividend declared August 20, 1996, date of record
September 18, 1996, payable October 16, 1996.
<PAGE> 2
VIRCO MFG. CORPORATION AND SUBSIDIARIES
INDEX
Part I. Financial Information
Item 1. Financial Statements (unaudited)
Condensed consolidated balance sheets - July 31, 1996 and
January 31, 1996.
Condensed consolidated statements of income - Three months
ended July 31, 1996 and 1995.
Condensed consolidated statements of income - Six months ended
July 31, 1996 and 1995.
Condensed consolidated statements of cash flows - Three months
ended July 31, 1996 and 1995.
Condensed consolidated statements of cash flows - Six months
ended July 31, 1996 and 1995.
Notes to condensed consolidated financial statements - July
31, 1996.
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
2
<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 7/31/96 1/31/96
------- -------
<S> <C> <C>
Current Assets
Cash $ 1,252 $ 661
Accounts and Notes Receivable 38,766 28,102
Less Allowance for Doubtful Accounts (376) (100)
--------- --------
Net Accounts and Notes Receivable 38,390 28,002
Income Taxes Receivable 0 197
Inventories (Note 2)
Finished Goods 25,609 22,585
Work in Process 7,136 6,949
Raw Materials and Supplies 11,512 13,486
------- --------
Total Inventories 44,257 43,020
Prepaid Expenses and Deferred Income Tax 3,139 2,742
-------- --------
Total Current Assets 87,038 74,622
Restricted Short-term Investment 644 1,272
Property, Plant & Equipment
Cost 77,397 73,693
Less Accumulated Depreciation (39,649) (36,738)
-------- --------
Net Property, Plant & Equipment 37,748 36,955
Other Assets 6,925 6,376
-------- --------
$132,355 $119,225
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
3
<PAGE> 4
VIRCO MFG. CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited (Note 1)
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY 7/31/96 1/31/96
------- -------
<S> <C> <C>
Current Liabilities
Checks Released But Not Yet Cleared Bank $ 1,535 $ 3,545
Accounts Payable 10,339 10,199
Income Taxes Payable 906 --
Current Maturities on Long-Term Debt 924 924
Other Current Liabilities 10,183 8,634
-------- --------
Total Current Liabilities 23,887 23,302
Non-current Liabilities
Long Term Debt (Less Current Portion) 46,553 35,909
Other Non-Current Liabilities 3,991 3,991
-------- --------
Total Non-Current Liabilities 50,544 39,900
Deferred Income Taxes 562 562
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; 5,928,685 Shares
issued at 7/31/96 and 1/31/96 54 54
Additional Paid-In Capital 42,056 42,055
Retained Earnings 15,625 13,717
Less treasury stock at cost (22,389 Shares) (172) (172)
Loan to ESOP Trust (201) (193)
-------- --------
Total Shareholders' Equity 57,362 55,461
-------- --------
$132,355 $119,225
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
4
<PAGE> 5
VIRCO MFG. CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Unaudited (Note 1)
<TABLE>
<CAPTION>
(Dollar Amounts in Thousands)
3 Months Ended
--------------
7/31/96 7/31/95
------- -------
<S> <C> <C>
Net Sales $ 72,538 $ 66,197
Cost of Goods Sold 51,432 48,644
---------- ----------
Gross Profit 21,106 17,553
Shipping, Selling, General and Administrative Expense 14,512 13,607
Provision for Doubtful Accounts 216 152
Interest Expense 889 985
---------- ----------
15,617 14,744
----------
Income/(Loss) Before Taxes on Income 5,489 2,809
Taxes on Income/(Loss) (2,141) (1,096)
---------- ----------
Net Income $ 3,348 $ 1,713
========== ==========
Earnings (Loss) Per Share:
Net Earnings/(Loss) Per Share: $ .56 $ .29
========== ==========
Weighted Average Shares Outstanding
(Adjusted for 10% Stock Dividend
Declared August 20, 1996.) 5,975,513 5,952,350
========== ==========
Dividend Declared
Cash (Per Share) -- --
========== ==========
Stock -- --
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
5
<PAGE> 6
VIRCO MFG. CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Unaudited (Note 1)
<TABLE>
<CAPTION>
(Dollar Amounts in Thousands)
6 Months Ended
--------------
7/31/96 7/31/95
------- -------
<S> <C> <C>
Net Sales $ 109,283 $ 103,122
Cost of Goods Sold 78,798 76,112
---------- ----------
Gross Profit 30,485 27,010
Shipping, Selling, General and Administrative Expense 25,400 24,662
Provision for Doubtful Accounts 326 262
Interest Expense 1,629 1,761
---------- ----------
27,355 26,685
---------- ----------
Income (Loss) Before Taxes on Income 3,130 325
Taxes on Income (1,221) (127)
---------- ----------
Net Income $ 1,909 $ 198
========== ==========
Earnings (Loss) Per Share:
Net Earnings (Loss) Per Share $ .32 $ .03
========== ==========
Weighted Average Shares Outstanding
(Adjusted for 10% Stock Dividend
Declared August 20, 1996.) 5,981,347 5,954,024
========== ==========
Dividend Declared
Cash (Per Share) -- --
========== ==========
Stock -- --
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
6
<PAGE> 7
VIRCO MFG. CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited (Note 1)
<TABLE>
<CAPTION>
(Dollar Amounts in Thousands) 3 Months Ended
--------------
7/31/96 7/31/95
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ 3,348 $ 1,713
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 1,462 1,245
Provision for doubtful accounts 152 61
(Gain) Loss on sales of fixed assets 0 61
Change in Assets and Liabilities:
Accounts and Notes Receivable (15,555) (10,814)
Inventories 4,311 179
Income Taxes Receivable/Payable 2,031 1,030
Prepaid Expenses and Deposits (184) 862
Other Assets 34 390
Accounts Payable and Accrued Expenses 3,218 3,964
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES (1,183) (1,309)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures (1,728) (2,316)
Proceeds from Sale of Assets -- --
Purchase of Life Insurance (20) (631)
Restricted Short Term Investments 153 2,091
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (1,595) (856)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Long-term Debt 3,946 4,473
Reduction of Long-term Debt (225) (270)
Purchase of Treasury Stock -- --
Issuance/Reduction of ESOP Loan (1) (57)
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 3,720 4,146
-------- --------
NET CHANGE IN CASH 942 1,981
CASH AT BEGINNING OF QUARTER 310 161
-------- --------
CASH AT END OF QUARTER $ 1,252 $ 2,142
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
7
<PAGE> 8
VIRCO MFG. CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited (Note 1)
<TABLE>
<CAPTION>
(Dollar Amounts in Thousands) 6 Months Ended
--------------
7/31/96 7/31/95
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ 1,909 $ 198
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 2,930 2,289
Provision for doubtful accounts 262 161
(Gain) Loss on sales of fixed assets 0 61
Change in Assets and Liabilities:
Accounts and Notes Receivable (10,650) (6,733)
Inventories (1,237) (11,576)
Income Taxes Receivable/Payable 1,103 (1,613)
Prepaid Expenses and Deposits (397) (642)
Other Assets 51 1,272
Accounts Payable and Accrued Expenses (321) 4,099
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES (6,350) (12,484)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures (3,723) (5,570)
Proceeds from Sale of Assets -- --
Purchase of Life Insurance (600) (610)
Restricted Short Term Investments 628 7,339
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (3,695) 1,159
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Long-term Debt 11,094 13,209
Reduction of Long-term Debt (450) (380)
Purchase of Treasury Stock -- --
Issuance/Reduction of ESOP Loan (8) 53
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 10,636 12,882
-------- --------
NET CHANGE IN CASH 591 1,557
CASH AT BEGINNING OF QUARTER 661 585
-------- --------
CASH AT END OF QUARTER $ 1,252 $ 2,142
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
8
<PAGE> 9
VIRCO MFG. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1996 and July 31, 1995
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, 1996 are not necessarily indicative of the
results that may be expected for the year ended January 31, 1997.
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, 1996.
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 of inventory quantities. Cost of sales is recorded at
current cost. The effect of penetrating LIFO layers is not
recorded at interim dates unless the reduction in inventory is
expected to be permanent. No such adjustment has been made for the
period ended July 31, 1996. Management continually monitors
production costs, material costs and inventory levels to determine
that interim inventories are fairly stated.
Note 3. Income Taxes
The Company adopted the provisions of SFAS No. 109. Income taxes
for the three and six months periods ended July 31, 1996 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.
9
<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 1996, the Company earned a net profit of
$3,348,000 on sales of $72,538,000 compared to a net profit of
$1,713,000 on sales of $66,197,000 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, 1996 is approximately $4,000,000
greater than the prior year.
Second quarter results reflect an increase in selling prices combined
with stable material costs and improvements in production efficiency.
Results from the prior year reflected increasing material costs and
lagging increases in selling prices. In addition, prior year results
reflect production inefficiencies associated with the start up of our
new Torrance manufacturing facility. This new facility was operating at
anticipated levels of production and efficiency for the current year
quarter.
Financial Condition:
As a result of seasonally high sales activity, accounts receivable
increased by $10,664,000 compared to January 31, 1996. In anticipation
of strong third quarter educational deliveries, inventory at July 31,
1996 increased by $1,237,000 compared to January 31, 1996.
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, 1996 and January 31, 1996 balance sheets. The Company withdrew
$651,000 from the trust during the first six months of 1996 to fund
capital improvements made at the new Torrance facility during the
fourth quarter of 1995 and the first two quarters of 1996.
10
<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 18, 1996:
Election of three directors whose term expire in 1999.
Votes For
---------
James R. Wilburn 4,582,628
Hugh D. Tyler 4,584,418
Donald S. Friesz 4,584,438
Item 6. Exhibits and Reports on Form 8-K.
None
11
<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
------- -------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Primary:
Average Shares Outstanding 5,906,296 5,896,616 5,906,296 5,896,616
Net effect of dilutive stock options - based on
the treasury stock method using average market
price 69,217 55,734 75,051 57,408
--------- --------- --------- ---------
Totals 5,975,513 5,952,350 5,981,347 5,954,024
========= ========= ========= =========
Net Income 3,348,000 1,713,000 1,909,000 198,000
========= ========= ========= =========
Per Share Amount .56 .29 .32 .03
========= ========= ========= =========
</TABLE>
Weighted average shares outstanding are adjusted for 10% stock dividend declared
August 20, 1996.
12
<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: September 12, 1996 By: /s/ James R. Braam
--------------------- --------------------------------
James R. Braam
Vice President - Finance
Date: September 12, 1996 By: /s/ Robert E. Dose
--------------------- --------------------------------
Robert E. Dose
Corporate Controller
13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-START> FEB-01-1996
<PERIOD-END> JUL-31-1996
<CASH> 1,252
<SECURITIES> 0
<RECEIVABLES> 38,766
<ALLOWANCES> (376)
<INVENTORY> 44,257
<CURRENT-ASSETS> 87,038
<PP&E> 77,397
<DEPRECIATION> (39,649)
<TOTAL-ASSETS> 132,355
<CURRENT-LIABILITIES> 23,887
<BONDS> 0
0
0
<COMMON> 54
<OTHER-SE> 57,308
<TOTAL-LIABILITY-AND-EQUITY> 132,355
<SALES> 72,538
<TOTAL-REVENUES> 72,538
<CGS> 51,432
<TOTAL-COSTS> 51,432
<OTHER-EXPENSES> 15,617
<LOSS-PROVISION> 216
<INTEREST-EXPENSE> 889
<INCOME-PRETAX> 5,489
<INCOME-TAX> 2,141
<INCOME-CONTINUING> 3,348
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,348
<EPS-PRIMARY> 0.56
<EPS-DILUTED> 0
</TABLE>
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