<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 APRIL 30, 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 June 2, 1996.
Common Stock 5,369,360 Shares*
* Adjusted for Stock Dividend declared August 15, 1995, date of record
September 18, 1995, payable October 18, 1995.
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VIRCO MFG. CORPORATION AND SUBSIDIARIES
INDEX
Part I. Financial Information
Item 1. Financial Statements (unaudited)
Condensed consolidated balance sheets - April 30, 1996 and
January 31, 1996.
Condensed consolidated statements of income - Three months
ended April 30, 1996 and 1995.
Condensed consolidated statements of cash flows - Three months
ended April 30, 1996 and 1995.
Notes to condensed consolidated financial statements -
April 30, 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
<TABLE>
<CAPTION>
Item 1. Financial Statements
--------------------
VIRCO MFG. CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited (Note 1)
(Dollar Amounts in Thousands)
ASSETS 4/30/96 1/31/96
------ --------- ---------
<S> <C> <C>
Current Assets
Cash $ 310 $ 661
Accounts and Notes Receivable 23,227 28,102
Less Allowance for Doubtful Accounts (240) (100)
--------- ---------
Net Accounts and Notes Receivable 22,987 28,002
Income Taxes Receivable 1,125 197
Inventories (Note 2)
Finished Goods 30,352 22,585
Work in Process 7,322 6,949
Raw Materials and Supplies 10,894 13,486
--------- ---------
Total Inventories 48,568 43,020
Prepaid Expenses and Deferred Income Tax 2,955 2,742
--------- ---------
Total Current Assets 75,945 74,622
Restricted Short-term Investment 797 1,272
Property, Plant & Equipment
Cost 75,673 73,693
Less Accumulated Depreciation (38,191) (36,738)
--------- ---------
Net Property, Plant & Equipment 37,482 36,955
Other Assets 6,939 6,376
--------- ---------
$ 121,163 $ 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)
<TABLE>
<CAPTION>
(Dollar Amounts in Thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY 4/30/96 1/31/96
------------------------------------ --------- ---------
<S> <C> <C>
Current Liabilities
Checks Released But Not Yet Cleared Bank $ 2,067 $ 3,545
Accounts Payable 7,533 10,199
Income Taxes Payable -- --
Current Maturities on Long-Term Debt 924 924
Other Current Liabilities 9,239 8,634
--------- ---------
Total Current Liabilities 19,763 23,302
Non-current Liabilities
Long Term Debt (Less Current Portion) 42,833 35,909
Other Non-Current Liabilities 3,991 3,991
--------- ---------
Total Non-Current Liabilities 46,824 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; 5,391,749 Shares
issued at 4/30/96 and 1/31/96 54 54
Additional Paid-In Capital 42,055 42,055
Retained Earnings 12,278 13,717
Less treasury stock at cost (22,389 Shares) (172) (172)
Loan to ESOP Trust (201) (193)
--------- ---------
Total Shareholders' Equity 54,014 55,461
--------- ---------
$ 121,163 $ 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
--------------
4/30/96 4/30/95
----------- -----------
<S> <C> <C>
Net Sales $ 36,745 $ 36,925
Cost of Goods Sold 27,366 27,468
----------- -----------
Gross Profit 9,379 9,457
Shipping, Selling, General and Administrative Expense 10,888 11,055
Provision for Doubtful Accounts 110 110
Interest Expense 740 776
----------- -----------
11,738 11,941
----------- -----------
Income/(Loss) Before Taxes on Income (2,359) (2,484)
Taxes on Income/(Loss) (920) (969)
----------- -----------
Net Income/(Loss) $ (1,439) $ (1,515)
=========== ===========
Earnings/(Loss) Per Share (.27) (.28)
=========== ===========
Weighted Average Shares Outstanding
(Adjusted for 10% Stock Dividends
Declared August 15, 1995.) 5,369,360 5,360,560
=========== ===========
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 CASH FLOWS
Unaudited (Note 1)
<TABLE>
<CAPTION>
(Dollar Amounts in Thousands) 3 Months Ended
--------------
4/30/96 4/30/95
------- --------
<S> <C> <C>
Cash Flows From Operating Activities
Net Income (Loss) $(1,439) $ (1,515)
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 1,468 1,044
Provision for doubtful accounts 110 100
(Gain)/Loss on sales of fixed assets -- --
Change in assets and liabilities:
Accounts and notes receivable 4,905 4,081
Inventories (5,548) (11,755)
Prepaid expenses and deposits (213) (1,504)
Income taxes receivable/payable (928) (2,643)
Other assets 17 882
Accounts payable and accrued expenses (3,539) 135
------- --------
Net Cash Provided By Operating Activities (5,167) (11,175)
Cash Flows From Investing Activities
Capital expenditures (1,995) (3,254)
Proceeds from sale of assets -- --
Net investment in life insurance (580) 21
Restricted short term investments 475 5,248
------- --------
Net Cash Used in Investing Activities (2,100) 2,015
Cash Flows From Financing Activities
Issuance of long-term debt 7,148 8,736
Repayment of long-term debt (225) (110)
Loans to ESOP (7) 110
------- --------
Net Cash Provided by Financing Activities 6,916 8,736
Net Change in Cash (351) (424)
Cash at Beginning of Quarter 661 585
------- --------
Cash at End of Quarter $ 310 $ 161
======= ========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
6
<PAGE> 7
VIRCO MFG. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1996 and April 30, 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 month period
ended April 30, 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 and the precise adjustment to LIFO values has not
been calculated.
Note 3. Income Taxes
The Company adopted Statement of Financial Accounting Standards
(SFAS) No 109 effective February 1, 1993. Income taxes for the
three month period ended April 30, 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.
7
<PAGE> 8
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
8
<PAGE> 9
VIRCO MFG. CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations:
For the first quarter of 1996, the Company incurred a net loss from continuing
operations of $1,439,000 on sales of $36,745,000 compared to a net loss from
continuing operations of $1,515,000 on sales of $36,925,000 in the same period
last year.
The first quarter results are consistent with Virco's seasonal business cycle
which produces diminished first quarter sales. The decrease in net loss is
attributable to decreases in selling and marketing expense, offset by a small
increase in manufacturing cost due to reduced levels of production at the Mexico
manufacturing facility.
In May the Company signed a letter of intent with Crown 2000 International for
the sale of the wholly owned Mexico manufacturing facility. In this letter of
intent, Virco and Crown 2000 have stipulated that they will promptly negotiate a
definitive sales agreement. The sale is intended to close in August 1996 and is
not expected to have a material adverse effect in operating results. Net assets
of the Mexico operation were $4,944,000 and $6,386,000 at April 30, 1996 and
January 31, 1996 respectively.
Financial Condition:
As a result of seasonally low deliveries in the first quarter, accounts
receivable decreased by approximately $3,550,000. In anticipation of strong
summer deliveries, inventory was increased by nearly $5,550,000. The increase in
inventory was financed through the credit facility with Wells Fargo Bank.
Proceeds from the 1994 issuance of an industrial revenue bond are held in trust
and reflected as restricted short term investments on the January 31, 1996
balance sheet. In the first quarter, the Company withdrew $475,000 from the
trust to fund capital improvements which were made at the west coast facility
during the fourth quarter of 1995. This facility is now complete and operating
at anticipated levels of production.
9
<PAGE> 10
VIRCO MFG. CORPORATION AND SUBSIDIARIES
Exhibit (11) - Statement Re: Computation of Earnings Per Share
<TABLE>
<CAPTION>
Three Months Ended
------------------
April 30
--------
1996 1995
---- ----
<S> <C> <C>
Primary:
Average Shares Outstanding 5,369,360 5,360,560
Net effect of dilutive stock options - based on
the treasury stock method using average market
price -- --
---------- ----------
Totals 5,369,360 5,360,560
========== ==========
Net Loss 1,439,000 1,515,000
========== ==========
Per Share Amount (.27) (.28)
========== ==========
</TABLE>
Weighted average shares outstanding are adjusted for 10% stock dividend declared
August 15, 1995.
10
<PAGE> 11
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> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-START> FEB-01-1996
<PERIOD-END> APR-30-1996
<CASH> 310
<SECURITIES> 0
<RECEIVABLES> 23227
<ALLOWANCES> (240)
<INVENTORY> 48568
<CURRENT-ASSETS> 75945
<PP&E> 75673
<DEPRECIATION> 38191
<TOTAL-ASSETS> 121163
<CURRENT-LIABILITIES> 19763
<BONDS> 0
0
0
<COMMON> 54
<OTHER-SE> 53960
<TOTAL-LIABILITY-AND-EQUITY> 121163
<SALES> 36745
<TOTAL-REVENUES> 36745
<CGS> 27366
<TOTAL-COSTS> 27366
<OTHER-EXPENSES> 10888
<LOSS-PROVISION> 110
<INTEREST-EXPENSE> 740
<INCOME-PRETAX> (2359)
<INCOME-TAX> (920)
<INCOME-CONTINUING> (1439)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1439)
<EPS-PRIMARY> (.27)
<EPS-DILUTED> 0
</TABLE>
