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 July 31, 1995
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 7,598,367 shares outstanding
Class as of September 11, 1995
<PAGE>
AMERICAN WOODMARK CORPORATION
FORM 10-Q
INDEX
PAGE
PART I. FINANCIAL INFORMATION NUMBER
Item 1. Financial Statements
Balance Sheets--July 31, 1995 and April 30, 1995 3
Statements of Income--Three months ended 4
July 31, 1995 and July 31, 1994
Statements of Cash Flows--Three months ended 5
July 31, 1995 and July 31, 1994
Notes to Financial Statements--July 31, 1995 6-8
Item 2. Management's Discussion and Analysis 9-11
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 12-13
SIGNATURE 14
2
<PAGE>
PART I. FINANCIAL INFORMATION
AMERICAN WOODMARK CORPORATION
BALANCE SHEETS
(in thousands, except share data)
July 31 April 30
1995 1995
ASSETS (Unaudited) (Audited)
Current Assets
Cash and cash equivalents $ 2,894 $ 2,876
Refundable deposits 1,158 1,708
Customer receivables 18,047 19,639
Inventories 11,011 10,775
Prepaid expenses and other 560 738
Deferred income taxes 450 433
------- -------
Total Current Assets 34,120 36,169
Property, Plant and Equipment 33,972 33,722
Deferred Costs and Other Assets 3,630 3,714
Intangible Pension Asset 803 803
------- -------
$72,525 $74,408
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable 8,446 9,496
Accrued compensation and related expenses 5,471 6,536
Current maturities of long-term debt 2,737 2,800
Other accrued expenses 3,157 3,175
------- -------
Total Current Liabilities 19,811 22,007
Long-Term Debt, less current maturities 15,277 15,534
Deferred Income Taxes 2,932 3,028
Long-Term Pension Liabilities 2,205 2,038
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 7,588,913 shares at
July 31, 1995; 7,551,109 shares at
April 30, 1995 17,617 17,479
Retained earnings 14,683 14,322
------- -------
Total Stockholders' Equity 32,300 31,801
------- -------
$72,525 $74,408
======= =======
See notes to financial statements
3
<PAGE>
AMERICAN WOODMARK CORPORATION
STATEMENTS OF INCOME
(in thousands, except share data)
(Unaudited)
Quarter Ended
July 31
--------------------
1995 1994
Net sales $ 47,250 $ 45,518
Cost of sales and distribution 37,956 34,732
-------- --------
Gross Profit 9,294 10,786
Selling and marketing expenses 6,008 5,910
General and administrative expenses 2,412 2,519
-------- --------
Operating Income 874 2,357
Interest expense 294 391
Other income (19) (1)
-------- --------
Income Before Income Taxes 599 1,967
Provision for income taxes 238 799
-------- --------
Net Income $ 361 $ 1,168
======== ========
Earnings Per Share
Average shares outstanding 7,566,994 7,534,388
Net income per share $0.05 $0.16
========= =========
See notes to financial statements
4
<PAGE>
AMERICAN WOODMARK CORPORATION
STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Quarter Ended
July 31
-----------------
1995 1994
Operating Activities
Net income $ 361 $ 1,168
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision for depreciation and amortization 1,811 1,840
Net (gain) loss on disposal of property,
plant and equipment (5) 10
Deferred income taxes (113) 199
Restructuring costs (50) (95)
Other -- 20
Changes in operating assets and liabilities:
Receivables 1,592 838
Inventories (236) 674
Refundable deposits 550 --
Other assets (500) (751)
Accounts payable (1,050) (565)
Accrued compensation and related expenses (1,038) (117)
Other 345 730
------- -------
Net Cash Provided by Operating Activities 1,667 3,951
------- -------
Investing Activities
Payments to acquire property, plant and
equipment (1,509) (692)
Funds designated for capital expenditures -- 142
Proceeds from sales of property, plant and
equipment 42 7
------- -------
Net Cash Used by Investing Activities (1,467) (543)
------- -------
Financing Activities
Payments of long-term debt (320) (464)
Net decrease in short-term borrowings -- (2,000)
Common Stock issued through stock options 138 28
------- -------
Net Cash Used by Financing Activities (182) (2,436)
------- -------
Increase In Cash And Cash Equivalents 18 972
Cash And Cash Equivalents, Beginning Of Period 2,876 460
------- -------
Cash And Cash Equivalents, End Of Period $2,894 $1,432
======= =======
See notes to financial statements
5
<PAGE>
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 three month period ended July 31, 1995
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.
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 operating results or financial
position. In addition, no future material impact on operating
results or financial position is expected.
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:
July 31 April 30
(in thousands) 1995 1995
Gross customer receivables $19,246 $20,820
Less:
Allowance for doubtful accounts (253) (243)
Allowance for returns and discounts (946) (938)
-------- --------
Net customer receivables $18,047 $19,639
======== ========
6
<PAGE>
NOTE E--INVENTORIES
The components of inventories were:
July 31 April 30
(in thousands) 1995 1995
Raw materials $ 5,697 $ 5,650
Work-in-process 9,707 9,876
Finished goods 1,446 1,110
-------- --------
Total FIFO inventories $16,850 $16,636
Reserve to adjust inventories
to LIFO value (5,839) (5,861)
-------- --------
Total LIFO inventories $11,011 $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. In the first quarter of fiscal 1996,
there was no activity through the revolving credit facility. In
the first quarter of fiscal 1995, the total transactions through
this revolving credit facility were borrowings of $8.3 million
and payments of $10.3 million, resulting in a net reduction of
$2.0 million for the period. There were no revolving credit
loans outstanding at July 31, 1995 and July 31, 1994.
NOTE G--OTHER INFORMATION
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 is
also involved in other matters under the direction of state
environmental authorities.
7
<PAGE>
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
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
THREE MONTHS ENDED JULY 31, 1995 AND JULY 31, 1994
Results of Operations
Net sales for the first quarter of fiscal 1996 were up 3.8% over
the first quarter of the prior year. Average unit prices rose
due to a general price increase implemented during the third
quarter of the prior year. Overall unit volumes were consistent
with the prior year. A slight volume decline in the Company's
Home Center and Distributor Channels was due to a general
slowdown in the remodeling sector. Continuing pockets of
economic growth in new construction contributed to a volume
increase in the Company's Builder Channel.
Gross profit for the first quarter of fiscal 1996 was 19.7% of
net sales compared to 23.7% the prior year. The primary
contributors to the reduction in profits were increased material
costs, manufacturing labor inefficiencies and higher freight
costs. Material costs increased over the prior year as cardboard
and particle board price increases were only partially offset by
a decrease in lumber prices. Increased labor costs resulted from
normal rate increases, temporary inefficiencies relating to
capital projects at several manufacturing facilities and less
than anticipated demand for product. Implementation of new
service programs contributed to higher freight costs than
experienced in the first quarter of the prior year.
General and administrative expenses decreased $107,000 for the
first quarter of fiscal 1996 compared to the prior year. The
decline in costs is primarily attributed to reduced compensation
as part of the Company's performance incentive programs.
Interest expense for the quarter was $97,000 less than first
quarter of the prior fiscal year due to continued reduction in
debt. Total average outstanding debt for the first quarter of
fiscal 1996 declined $3.1 million from the same period in fiscal
1995.
Liquidity and Capital Resources
During the first quarter of fiscal 1996, the Company's operating
activities generated $1.7 million in net cash compared to $4.0
million in the first quarter of the prior year. Less cash was
generated in the current period primarily due to lower profits
and performance incentive payments relating to the prior fiscal
year.
9
<PAGE>
During the first quarter of fiscal 1996, 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 first quarter of fiscal 1996. All other
capital expenditures during the quarter were limited to necessary
or replacement items and cost savings projects. Overall, capital
spending in the first quarter of fiscal 1996 increased $817,000
over the prior year as the Company initiated projects to remove
certain capacity constraints and lower overall costs.
Net cash used by financing activities in the first quarter of
fiscal 1996 was $181,000, a decrease of $2.3 million from the
prior year. The difference is the result of payments in fiscal
1995 that eliminated the Company's short-term revolving debt
balance. There were no borrowings against this revolving credit
facility during the first quarter of fiscal 1996.
Cash flow from operations, combined with available borrowing
capacity, is expected to be sufficient to meet forecasted working
capital requirements, service existing debt obligations, and fund
capital expenditures for fiscal 1996.
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. In this environment, the Company
expects to gain market share and to generate higher sales based
on its position with major customers, its broad stock product
offering and its ability to deliver quality products with
superior service. The Company expects gross margins and overall
profitability performance to improve from the first quarter
results as the Company takes steps to better align production
with market demand and to reduce inefficiencies relating to the
start-up of certain capital projects.
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
operating results or financial position (See Note B to the
Financial Statements).
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
10
<PAGE>
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
any material adverse effect on the Company's operating results 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 is
also involved in other matters under the direction of state
environmental authorities.
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 obligation of a site. 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 (See Note G to the Financial
Statements).
11
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Shareholders of American Woodmark
Corporation held on August 23, 1995, the holders of 7,107,498 of
the total 7,569,663 shares of Common Stock outstanding and
eligible to vote duly executed and delivered valid proxies. The
shareholders approved the three items outlined within the
Company's Proxy Statement that was solicited to shareholders and
reported to the Commission pursuant to Regulation 14A under the
Act.
The following items were approved at the Company's Annual
Meeting:
Negative/
Affirmative Withheld
Votes Votes Abstentions
----------- --------- -----------
1. Re-election of the
Board of Directors. 7,104,072 3,426 --
2. Ratification of Selection
of Independent Certified
Public Accountants. 7,103,085 999 3,414
3. Stock Option Plan for
Non-Employee Directors. 6,974,156 127,043 6,299
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11--Earnings Per Share Computation Page 13
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the
three months ended July 31, 1995.
12
<PAGE>
AMERICAN WOODMARK CORPORATION
Exhibit 11
Computation of Earnings per Share
(in thousands, except per share amounts)
Quarter Ended
July 31
-----------------
1995 1994
Net Income $ 361 $1,168
Divided by weighted average
common shares outstanding 7,567 7,534
------ ------
Earnings per share $0.05 $0.16
====== ======
13
<PAGE>
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: September 11, 1995 /s/ Kent B. Guichard
Kent B. Guichard
Chief Financial Officer
Signing on behalf of the
registrant and as principal
financial officer
14
<PAGE>
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<PERIOD-END> JUL-31-1995
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<SECURITIES> 0
<RECEIVABLES> 19,246
<ALLOWANCES> 1,199
<INVENTORY> 11,011
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<PP&E> 75,999
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<COMMON> 17,617
0
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<OTHER-SE> 19,820
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<SALES> 47,250
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<CGS> 37,956
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