|
|
FORM 10-Q
|
ý
|
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
¨
|
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
VIRCO MFG. CORPORATION
(Exact Name of Registrant as Specified in its Charter)
|
Delaware
|
|
95-1613718
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
2027 Harpers Way, Torrance, CA
|
|
90501
|
(Address of Principal Executive Offices)
|
|
(Zip Code)
|
|
Large accelerated filer
|
¨
|
|
|
Accelerated filer
|
|
¨
|
Non-accelerated filer
|
¨
|
(Do not check if a smaller reporting company)
|
|
Smaller reporting company
|
|
ý
|
|
|
|
|
|
|
EX-3.2
|
|
EX-10.1
|
|
EX-31.1
|
|
EX-31.2
|
|
EX-32.1
|
|
EX-101 INSTANCE DOCUMENT
|
|
EX-101 SCHEMA DOCUMENT
|
|
EX-101 CALCULATION LINKBASE DOCUMENT
|
|
EX-101 LABELS LINKBASE DOCUMENT
|
|
EX-101 PRESENTATION LINKBASE DOCUMENT
|
|
|
7/31/2014
|
|
1/31/2014
|
|
7/31/2013
|
||||||
(In thousands, except share data)
|
|||||||||||
|
Unaudited (Note 1)
|
|
|
|
Unaudited (Note 1)
|
||||||
Assets
|
|
|
|
|
|
||||||
Current assets
|
|
|
|
|
|
||||||
Cash
|
$
|
1,130
|
|
|
$
|
1,051
|
|
|
$
|
2,443
|
|
Trade accounts receivables, net
|
29,414
|
|
|
8,468
|
|
|
32,088
|
|
|||
Other receivables
|
47
|
|
|
52
|
|
|
107
|
|
|||
Income tax receivable
|
317
|
|
|
290
|
|
|
304
|
|
|||
Inventories
|
|
|
|
|
|
||||||
Finished goods, net
|
20,145
|
|
|
7,237
|
|
|
14,137
|
|
|||
Work in process, net
|
15,161
|
|
|
11,116
|
|
|
12,243
|
|
|||
Raw materials and supplies, net
|
9,977
|
|
|
9,427
|
|
|
10,460
|
|
|||
|
45,283
|
|
|
27,780
|
|
|
36,840
|
|
|||
Deferred tax assets, net
|
203
|
|
|
203
|
|
|
—
|
|
|||
Prepaid expenses and other current assets
|
1,350
|
|
|
1,795
|
|
|
1,724
|
|
|||
Total current assets
|
77,744
|
|
|
39,639
|
|
|
73,506
|
|
|||
Property, plant and equipment
|
|
|
|
|
|
||||||
Land
|
1,671
|
|
|
1,671
|
|
|
1,671
|
|
|||
Land improvements
|
1,189
|
|
|
1,185
|
|
|
1,213
|
|
|||
Buildings and building improvements
|
47,047
|
|
|
47,271
|
|
|
47,263
|
|
|||
Machinery and equipment
|
113,152
|
|
|
115,667
|
|
|
116,335
|
|
|||
Leasehold improvements
|
1,957
|
|
|
2,328
|
|
|
2,417
|
|
|||
|
165,016
|
|
|
168,122
|
|
|
168,899
|
|
|||
Less accumulated depreciation and amortization
|
128,970
|
|
|
131,817
|
|
|
132,204
|
|
|||
Net property, plant and equipment
|
36,046
|
|
|
36,305
|
|
|
36,695
|
|
|||
Deferred tax assets, net
|
305
|
|
|
611
|
|
|
1,404
|
|
|||
Other assets
|
6,990
|
|
|
6,789
|
|
|
6,722
|
|
|||
Total assets
|
$
|
121,085
|
|
|
$
|
83,344
|
|
|
$
|
118,327
|
|
|
7/31/2014
|
|
1/31/2014
|
|
7/31/2013
|
||||||
|
(In thousands, except share data)
|
||||||||||
|
Unaudited (Note 1)
|
|
|
|
Unaudited (Note 1)
|
||||||
Liabilities
|
|
|
|
|
|
||||||
Current liabilities
|
|
|
|
|
|
||||||
Accounts payable
|
$
|
20,382
|
|
|
$
|
12,355
|
|
|
$
|
17,282
|
|
Accrued compensation and employee benefits
|
3,860
|
|
|
3,594
|
|
|
4,143
|
|
|||
Current portion of long-term debt
|
27,545
|
|
|
2,248
|
|
|
22,668
|
|
|||
Deferred tax liabilities
|
—
|
|
|
—
|
|
|
572
|
|
|||
Other accrued liabilities
|
7,293
|
|
|
4,459
|
|
|
8,110
|
|
|||
Total current liabilities
|
59,080
|
|
|
22,656
|
|
|
52,775
|
|
|||
Non-current liabilities
|
|
|
|
|
|
||||||
Accrued self-insurance retention
|
2,020
|
|
|
2,025
|
|
|
2,614
|
|
|||
Accrued pension expenses
|
23,132
|
|
|
23,951
|
|
|
25,763
|
|
|||
Income tax payable
|
37
|
|
|
69
|
|
|
98
|
|
|||
Long-term debt, less current portion
|
6,000
|
|
|
6,000
|
|
|
6,000
|
|
|||
Other accrued liabilities
|
1,092
|
|
|
1,038
|
|
|
1,372
|
|
|||
Total non-current liabilities
|
32,281
|
|
|
33,083
|
|
|
35,847
|
|
|||
Commitments and contingencies
|
|
|
|
|
|
||||||
Stockholders’ equity
|
|
|
|
|
|
||||||
Preferred stock:
|
|
|
|
|
|
||||||
Authorized 3,000,000 shares, $.01 par value; none issued or outstanding
|
—
|
|
|
—
|
|
|
—
|
|
|||
Common stock:
|
|
|
|
|
|
||||||
Authorized 25,000,000 shares, $.01 par value; issued and outstanding 14,852,640 shares at 7/31/2014 ; and 14,718,414 at 1/31/2014 and 14,730,319 shares at 07/31/2013
|
148
|
|
|
147
|
|
|
147
|
|
|||
Additional paid-in capital
|
116,105
|
|
|
115,978
|
|
|
115,817
|
|
|||
Accumulated deficit
|
(73,191
|
)
|
|
(74,540
|
)
|
|
(71,077
|
)
|
|||
Accumulated other comprehensive loss
|
(13,338
|
)
|
|
(13,980
|
)
|
|
(15,182
|
)
|
|||
Total stockholders’ equity
|
29,724
|
|
|
27,605
|
|
|
29,705
|
|
|||
Total liabilities and stockholders’ equity
|
$
|
121,085
|
|
|
$
|
83,344
|
|
|
$
|
118,327
|
|
|
Three months ended
|
||||||
|
7/31/2014
|
|
7/31/2013
|
||||
|
(In thousands, except per share data)
|
||||||
Net sales
|
$
|
53,192
|
|
|
$
|
56,933
|
|
Costs of goods sold
|
32,346
|
|
|
35,347
|
|
||
Gross profit
|
20,846
|
|
|
21,586
|
|
||
Selling, general and administrative expenses
|
14,770
|
|
|
14,417
|
|
||
Restructuring expense
|
62
|
|
|
412
|
|
||
Interest expense, net
|
505
|
|
|
472
|
|
||
Income (loss) before income taxes
|
5,509
|
|
|
6,285
|
|
||
Income tax expense (benefit)
|
306
|
|
|
75
|
|
||
Net income (loss)
|
$
|
5,203
|
|
|
$
|
6,210
|
|
|
|
|
|
||||
Net income (loss) per common share:
|
|
|
|
||||
Basic
|
$
|
0.35
|
|
|
$
|
0.43
|
|
Diluted
|
$
|
0.35
|
|
|
$
|
0.42
|
|
Weighted average shares outstanding:
|
|
|
|
||||
Basic
|
14,725
|
|
|
14,570
|
|
||
Diluted
|
14,874
|
|
|
14,647
|
|
|
Six Months Ended
|
||||||
|
7/31/2014
|
|
7/31/2013
|
||||
|
(In thousands, except per share data)
|
||||||
Net sales
|
$
|
76,722
|
|
|
$
|
76,823
|
|
Costs of goods sold
|
47,699
|
|
|
48,828
|
|
||
Gross profit
|
29,023
|
|
|
27,995
|
|
||
Selling, general and administrative expenses
|
26,492
|
|
|
24,919
|
|
||
Restructuring expense
|
62
|
|
|
475
|
|
||
Interest expense, net
|
834
|
|
|
800
|
|
||
Income (loss) before income taxes
|
1,635
|
|
|
1,801
|
|
||
Income tax expense (benefit)
|
287
|
|
|
38
|
|
||
Net income (loss)
|
$
|
1,348
|
|
|
$
|
1,763
|
|
|
|
|
|
||||
Net income (loss) per common share:
|
|
|
|
||||
Basic
|
$
|
0.09
|
|
|
$
|
0.12
|
|
Diluted
|
$
|
0.09
|
|
|
$
|
0.12
|
|
Weighted average shares outstanding:
|
|
|
|
||||
Basic
|
14,687
|
|
|
14,506
|
|
||
Diluted
|
14,839
|
|
|
14,591
|
|
|
Three months ended
|
||||||
|
7/31/2014
|
|
7/31/2013
|
||||
|
(In thousands)
|
||||||
Net income (loss)
|
$
|
5,203
|
|
|
$
|
6,210
|
|
Other comprehensive income (loss) :
|
|
|
|
||||
Pension adjustments, net of tax
|
321
|
|
|
402
|
|
||
Comprehensive income (loss)
|
$
|
5,524
|
|
|
$
|
6,612
|
|
|
Six months ended
|
||||||
|
7/31/2014
|
|
7/31/2013
|
||||
|
(In thousands)
|
||||||
Net income (loss)
|
$
|
1,348
|
|
|
$
|
1,763
|
|
Other comprehensive income (loss) :
|
|
|
|
||||
Pension adjustments, net of tax
|
642
|
|
|
804
|
|
||
Comprehensive income (loss)
|
$
|
1,990
|
|
|
$
|
2,567
|
|
|
Six months ended
|
||||||
7/31/2014
|
|
7/31/2013
|
|||||
|
(In thousands)
|
||||||
Operating activities
|
|
|
|
||||
Net income (loss)
|
$
|
1,348
|
|
|
$
|
1,763
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation and amortization
|
2,168
|
|
|
2,046
|
|
||
Provision for doubtful accounts
|
60
|
|
|
50
|
|
||
(Gain) loss on sale of property, plant and equipment
|
—
|
|
|
(13
|
)
|
||
Deferred income taxes
|
275
|
|
|
—
|
|
||
Stock-based compensation
|
259
|
|
|
275
|
|
||
Pension settlement
|
—
|
|
|
—
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Trade accounts receivable
|
(20,978
|
)
|
|
(23,304
|
)
|
||
Other receivables
|
5
|
|
|
1
|
|
||
Inventories
|
(17,504
|
)
|
|
(11,523
|
)
|
||
Income taxes
|
(27
|
)
|
|
(8
|
)
|
||
Prepaid expenses and other assets
|
244
|
|
|
53
|
|
||
Accounts payable and accrued liabilities
|
10,966
|
|
|
9,593
|
|
||
Net cash provided by (used in) operating activities
|
(23,184
|
)
|
|
(21,067
|
)
|
||
Investing activities
|
|
|
|
||||
Capital expenditures
|
(1,904
|
)
|
|
(1,861
|
)
|
||
Proceeds from sale of property, plant and equipment
|
—
|
|
|
19
|
|
||
Net investment in life insurance
|
—
|
|
|
—
|
|
||
Net cash provided by (used in) investing activities
|
(1,904
|
)
|
|
(1,842
|
)
|
||
Financing activities
|
|
|
|
||||
Proceeds from long-term debt
|
33,545
|
|
|
28,851
|
|
||
Repayment of long-term debt
|
(8,248
|
)
|
|
(4,236
|
)
|
||
Common stock repurchased
|
(130
|
)
|
|
(116
|
)
|
||
Cash dividend paid
|
—
|
|
|
—
|
|
||
Net cash provided by (used in) financing activities
|
25,167
|
|
|
24,499
|
|
||
|
|
|
|
||||
Net increase (decrease) in cash
|
79
|
|
|
1,590
|
|
||
Cash at beginning of year
|
1,051
|
|
|
853
|
|
||
Cash at end of year
|
$
|
1,130
|
|
|
$
|
2,443
|
|
|
|
For the Quarter Ended July 31, 2013
|
|
For the Quarter Ended October 31, 2013
|
||||||||||||
(in thousands)
|
|
As Previously Reported
|
|
As Corrected
|
|
As Previously Reported
|
|
As Corrected
|
||||||||
Accrued pension expenses
|
|
$
|
26,567
|
|
|
$
|
25,763
|
|
|
$
|
26,398
|
|
|
$
|
25,192
|
|
Total stockholder’s equity
|
|
28,901
|
|
|
29,705
|
|
|
33,181
|
|
|
34,387
|
|
||||
Net income (loss)
|
|
6,210
|
|
|
6,210
|
|
|
3,408
|
|
|
3,408
|
|
||||
Comprehensive income (loss)
|
|
6,210
|
|
|
6,612
|
|
|
4,208
|
|
|
4,610
|
|
||||
Impact for period-to-date comprehensive income (loss)
|
|
1,763
|
|
|
2,567
|
|
|
5,971
|
|
|
7,177
|
|
|
|
||||||||||
|
7/31/2014
|
|
1/31/2014
|
|
7/31/2013
|
||||||
|
(in thousands)
|
||||||||||
Revolving credit line
|
$
|
33,545
|
|
|
$
|
8,248
|
|
|
$
|
28,668
|
|
Other
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total debt
|
33,545
|
|
|
8,248
|
|
|
28,668
|
|
|||
Less current portion
|
27,545
|
|
|
2,248
|
|
|
22,668
|
|
|||
Non-current portion
|
$
|
6,000
|
|
|
$
|
6,000
|
|
|
$
|
6,000
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
7/31/2014
|
|
7/31/2013
|
|
7/31/2014
|
|
7/31/2013
|
||||||||
|
|
(In thousands, except per share data)
|
||||||||||||||
Net income (loss)
|
|
$
|
5,203
|
|
|
$
|
6,210
|
|
|
$
|
1,348
|
|
|
$
|
1,763
|
|
Average shares outstanding
|
|
14,725
|
|
|
14,570
|
|
|
14,687
|
|
|
14,506
|
|
||||
Net effect of dilutive stock options based on the treasury stock method using average market price
|
|
149
|
|
|
77
|
|
|
152
|
|
|
85
|
|
||||
Totals
|
|
14,874
|
|
|
14,647
|
|
|
14,839
|
|
|
14,591
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per share - basic
|
|
$
|
0.35
|
|
|
$
|
0.43
|
|
|
$
|
0.09
|
|
|
$
|
0.12
|
|
Net income (loss) per share - diluted
|
|
$
|
0.35
|
|
|
$
|
0.42
|
|
|
$
|
0.09
|
|
|
$
|
0.12
|
|
|
|
|
|
|
Expense for 3 months ended
|
|
Expense for 6 months ended
|
|
Unrecognized
Compensation
Cost at
|
||||||||||||||
Date of Grants
|
|
Units Granted
|
|
Terms of Vesting
|
7/31/2014
|
|
7/31/2013
|
|
7/31/2014
|
|
7/31/2013
|
|
7/31/2014
|
||||||||||
2011 Stock Incentive Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
6/24/2014
|
|
28,626
|
|
1 year
|
$
|
13,000
|
|
|
$
|
—
|
|
|
$
|
13,000
|
|
|
$
|
—
|
|
|
$
|
62,000
|
|
6/24/2014
|
|
490,000
|
|
5 year
|
43,000
|
|
|
—
|
|
|
43,000
|
|
|
—
|
|
|
1,237,000
|
|
|||||
12/3/2013
|
|
10,000
|
|
1 year
|
6,000
|
|
|
—
|
|
|
12,000
|
|
|
—
|
|
|
—
|
|
|||||
6/25/2013
|
|
71,430
|
|
1 year
|
13,000
|
|
|
30,000
|
|
|
50,000
|
|
|
30,000
|
|
|
—
|
|
|||||
6/19/2012
|
|
31,250
|
|
1 year
|
—
|
|
|
4,000
|
|
|
—
|
|
|
17,000
|
|
|
—
|
|
|||||
6/19/2012
|
|
520,000
|
|
5 year
|
39,000
|
|
|
40,000
|
|
|
79,000
|
|
|
82,000
|
|
|
444,000
|
|
|||||
2007 Stock Incentive Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
6/19/2012
|
|
78,125
|
|
1 year
|
—
|
|
|
11,000
|
|
|
—
|
|
|
41,000
|
|
|
—
|
|
|||||
6/16/2009
|
|
382,500
|
|
5 year
|
15,000
|
|
|
49,000
|
|
|
62,000
|
|
|
105,000
|
|
|
—
|
|
|||||
Totals for the period
|
|
|
|
|
$
|
129,000
|
|
|
$
|
134,000
|
|
|
$
|
259,000
|
|
|
$
|
275,000
|
|
|
$
|
1,743,000
|
|
|
Three Months Ended
|
||||||||||||||||||||||
|
Pension Plan
|
|
VIP Plan
|
|
Non-Employee Directors Retirement Plan
|
||||||||||||||||||
7/31/2014
|
|
7/31/2013
|
|
7/31/2014
|
|
7/31/2013
|
|
7/31/2014
|
|
7/31/2013
|
|||||||||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
315
|
|
|
322
|
|
|
88
|
|
|
83
|
|
|
4
|
|
|
4
|
|
||||||
Expected return on plan assets
|
(275
|
)
|
|
(276
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of transition amount
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Recognized (gain) loss due to curtailments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of prior service cost
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Recognized net actuarial (gain) loss
|
284
|
|
|
350
|
|
|
45
|
|
|
55
|
|
|
(8
|
)
|
|
(3
|
)
|
||||||
Benefit cost
|
$
|
324
|
|
|
$
|
396
|
|
|
$
|
133
|
|
|
$
|
138
|
|
|
$
|
(4
|
)
|
|
$
|
1
|
|
|
Six months Ended
|
||||||||||||||||||||||
|
Pension Plan
|
|
VIP Plan
|
|
Non-Employee Directors Retirement Plan
|
||||||||||||||||||
7/31/2014
|
|
7/31/2013
|
|
7/31/2014
|
|
7/31/2013
|
|
7/31/2014
|
|
7/31/2013
|
|||||||||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
630
|
|
|
644
|
|
|
176
|
|
|
166
|
|
|
8
|
|
|
8
|
|
||||||
Expected return on plan assets
|
(550
|
)
|
|
(552
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of transition amount
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Recognized (gain) loss due to curtailments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of prior service cost
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Recognized net actuarial (gain) loss
|
568
|
|
|
700
|
|
|
90
|
|
|
110
|
|
|
(16
|
)
|
|
(6
|
)
|
||||||
Benefit cost
|
$
|
648
|
|
|
$
|
792
|
|
|
$
|
266
|
|
|
$
|
276
|
|
|
$
|
(8
|
)
|
|
$
|
2
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
7/31/2014
|
|
7/31/2013
|
|
7/31/2014
|
|
7/31/2013
|
||||||||
|
(In thousands)
|
||||||||||||||
Beginning balance
|
$
|
1,000
|
|
|
$
|
1,000
|
|
|
$
|
1,000
|
|
|
$
|
1,000
|
|
Provision
|
83
|
|
|
75
|
|
|
218
|
|
|
216
|
|
||||
Costs incurred
|
(83
|
)
|
|
(75
|
)
|
|
(218
|
)
|
|
(216
|
)
|
||||
Ending balance
|
$
|
1,000
|
|
|
$
|
1,000
|
|
|
$
|
1,000
|
|
|
$
|
1,000
|
|
|
VIRCO MFG. CORPORATION
|
|
Date: September 11, 2014
|
By:
|
/s/ Robert E. Dose
|
|
|
Robert E. Dose
|
|
|
Vice President — Finance
|
VIRCO MFG. CORPORATION,
|
a Delaware corporation, as a Borrower
|
|
/s/ Robert E. Dose
|
Robert E. Dose
|
Vice President
|
VIRCO INC.
|
a Delaware corporation, as a Borrower
|
|
/s/ Robert E. Dose
|
Robert E. Dose
|
Vice President
|
PNC BANK, NATIONAL ASSOCIATION,
|
as Lender and as Agent
|
|
/s/ Jeanette Vandenbergh
|
Jeanette Vandenbergh
|
Vice President
|
|
/s/ Robert A. Virtue
|
|
Robert A. Virtue
|
Date: September 11, 2014
|
President, Chief Executive Officer and Chairman of the Board (Principal Executive Officer)
|
|
/s/ Robert E. Dose
|
|
Robert E. Dose
|
Date: September 11, 2014
|
Vice President — Finance, Secretary and Treasurer (Principal Financial Officer)
|
•
|
The Quarterly Report of the Company on Form 10-Q for the period ended July 31, 2014, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
|
•
|
The information contained in such report fairly presents, in all material respects, the financial condition and results of operation of the Company.
|
/s/ Robert A. Virtue
|
Robert A. Virtue
|
President, Chief Executive Officer
|
and Chairman of the Board
|
(Principal Executive Officer)
|
|
/s/ Robert E. Dose
|
Robert E. Dose
|
Vice President — Finance, Secretary and Treasurer
|
(Principal Financial Officer)
|