|
|
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
|
|
|
|
|
Emerging growth company
|
|
¨
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
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Item 3. Defaults Upon Senior Securities
|
|
|
Item 4. Mine Safety Disclosures
|
|
|
Item 5. Other Information
|
|
|
||
|
EX-10.21
|
|
|
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
|
|
|
7/31/2017
|
|
1/31/2017
|
|
7/31/2016
|
||||||
(In thousands, except share data)
|
|||||||||||
|
Unaudited (Note 1)
|
|
|
|
Unaudited (Note 1)
|
||||||
Assets
|
|
|
|
|
|
||||||
Current assets
|
|
|
|
|
|
||||||
Cash
|
$
|
2,747
|
|
|
$
|
788
|
|
|
$
|
2,428
|
|
Trade accounts receivables, net
|
40,201
|
|
|
9,915
|
|
|
33,835
|
|
|||
Other receivables
|
73
|
|
|
216
|
|
|
43
|
|
|||
Income tax receivable
|
175
|
|
|
275
|
|
|
268
|
|
|||
Inventories, net
|
50,861
|
|
|
35,689
|
|
|
51,871
|
|
|||
Prepaid expenses and other current assets
|
1,888
|
|
|
1,610
|
|
|
1,461
|
|
|||
Total current assets
|
95,945
|
|
|
48,493
|
|
|
89,906
|
|
|||
Property, plant and equipment
|
|
|
|
|
|
||||||
Land
|
1,671
|
|
|
1,671
|
|
|
1,671
|
|
|||
Land improvements
|
680
|
|
|
675
|
|
|
674
|
|
|||
Buildings and building improvements
|
46,036
|
|
|
46,021
|
|
|
46,019
|
|
|||
Machinery and equipment
|
100,984
|
|
|
99,896
|
|
|
100,693
|
|
|||
Leasehold improvements
|
803
|
|
|
842
|
|
|
684
|
|
|||
|
150,174
|
|
|
149,105
|
|
|
149,741
|
|
|||
Less accumulated depreciation and amortization
|
114,591
|
|
|
114,780
|
|
|
115,339
|
|
|||
Net property, plant and equipment
|
35,583
|
|
|
34,325
|
|
|
34,402
|
|
|||
Deferred tax assets, net
|
15,611
|
|
|
17,008
|
|
|
573
|
|
|||
Other assets
|
8,308
|
|
|
8,361
|
|
|
7,071
|
|
|||
Total assets
|
$
|
155,447
|
|
|
$
|
108,187
|
|
|
$
|
131,952
|
|
|
7/31/2017
|
|
1/31/2017
|
|
7/31/2016
|
||||||
|
(In thousands, except share and par value data)
|
||||||||||
|
Unaudited (Note 1)
|
|
|
|
Unaudited (Note 1)
|
||||||
Liabilities
|
|
|
|
|
|
||||||
Current liabilities
|
|
|
|
|
|
||||||
Accounts payable
|
$
|
20,945
|
|
|
$
|
12,388
|
|
|
$
|
18,014
|
|
Accrued compensation and employee benefits
|
6,373
|
|
|
5,138
|
|
|
5,632
|
|
|||
Current portion of long-term debt
|
29,987
|
|
|
68
|
|
|
31,068
|
|
|||
Other accrued liabilities
|
7,543
|
|
|
3,991
|
|
|
7,280
|
|
|||
Total current liabilities
|
64,848
|
|
|
21,585
|
|
|
61,994
|
|
|||
Non-current liabilities
|
|
|
|
|
|
||||||
Accrued self-insurance retention
|
1,904
|
|
|
1,350
|
|
|
1,315
|
|
|||
Accrued pension expenses
|
17,991
|
|
|
18,699
|
|
|
22,606
|
|
|||
Income tax payable
|
42
|
|
|
36
|
|
|
31
|
|
|||
Long-term debt, less current portion
|
6,000
|
|
|
4,943
|
|
|
5,936
|
|
|||
Other accrued liabilities
|
1,978
|
|
|
2,220
|
|
|
2,339
|
|
|||
Total non-current liabilities
|
27,915
|
|
|
27,248
|
|
|
32,227
|
|
|||
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 15,357,457 shares at 07/31/2017 and 15,179,664 at 1/31/2017 and 07/31/2016
|
154
|
|
|
152
|
|
|
152
|
|
|||
Additional paid-in capital
|
117,020
|
|
|
116,976
|
|
|
116,643
|
|
|||
Accumulated deficit
|
(43,392
|
)
|
|
(46,380
|
)
|
|
(65,394
|
)
|
|||
Accumulated other comprehensive loss
|
(11,098
|
)
|
|
(11,394
|
)
|
|
(13,670
|
)
|
|||
Total stockholders’ equity
|
62,684
|
|
|
59,354
|
|
|
37,731
|
|
|||
Total liabilities and stockholders’ equity
|
$
|
155,447
|
|
|
$
|
108,187
|
|
|
$
|
131,952
|
|
|
Three months ended
|
||||||
|
7/31/2017
|
|
7/31/2016
|
||||
|
(In thousands, except per share data)
|
||||||
Net sales
|
$
|
72,636
|
|
|
$
|
61,354
|
|
Costs of goods sold
|
45,953
|
|
|
37,616
|
|
||
Gross profit
|
26,683
|
|
|
23,738
|
|
||
Selling, general and administrative expenses
|
18,278
|
|
|
16,226
|
|
||
Gain on sale of property, plant & equipment
|
(1
|
)
|
|
—
|
|
||
Operating income
|
8,406
|
|
|
7,512
|
|
||
Interest expense, net
|
529
|
|
|
486
|
|
||
Income before income taxes
|
7,877
|
|
|
7,026
|
|
||
Income tax expense
|
2,849
|
|
|
140
|
|
||
Net income
|
$
|
5,028
|
|
|
$
|
6,886
|
|
|
|
|
|
||||
Net income per common share:
|
|
|
|
||||
Basic
|
$
|
0.33
|
|
|
$
|
0.46
|
|
Diluted
|
$
|
0.33
|
|
|
$
|
0.45
|
|
Weighted average shares outstanding:
:
|
|
|
|
||||
Basic
|
15,211
|
|
|
15,036
|
|
||
Diluted
|
15,285
|
|
|
15,147
|
|
|
Six months ended
|
||||||
|
7/31/2017
|
|
7/31/2016
|
||||
|
(In thousands, except per share data)
|
||||||
Net sales
|
$
|
95,871
|
|
|
$
|
82,181
|
|
Costs of goods sold
|
60,761
|
|
|
50,380
|
|
||
Gross profit
|
35,110
|
|
|
31,801
|
|
||
Selling, general and administrative expenses
|
29,970
|
|
|
27,135
|
|
||
Gain on sale of property, plant & equipment
|
(1
|
)
|
|
(1
|
)
|
||
Operating income
|
5,141
|
|
|
4,667
|
|
||
Interest expense, net
|
824
|
|
|
750
|
|
||
Income before income taxes
|
4,317
|
|
|
3,917
|
|
||
Income tax expense
|
1,500
|
|
|
170
|
|
||
Net Income
|
$
|
2,817
|
|
|
$
|
3,747
|
|
|
|
|
|
||||
Net income per common share:
|
|
|
|
||||
Basic
|
$
|
0.19
|
|
|
$
|
0.25
|
|
Diluted
|
$
|
0.18
|
|
|
$
|
0.25
|
|
Weighted average shares outstanding:
: |
|
|
|
||||
Basic
|
15,170
|
|
|
15,004
|
|
||
Diluted
|
15,233
|
|
|
15,100
|
|
|
Three months ended
|
||||||
|
7/31/2017
|
|
7/31/2016
|
||||
|
(In thousands)
|
||||||
Net Income
|
$
|
5,028
|
|
|
$
|
6,886
|
|
Other comprehensive income
|
|
|
|
||||
Pension adjustments (net of tax $92, $0 in 2018 and 2017)
|
148
|
|
|
330
|
|
||
Comprehensive income
|
$
|
5,176
|
|
|
$
|
7,216
|
|
|
Six months ended
|
||||||
|
7/31/2017
|
|
7/31/2016
|
||||
|
(In thousands)
|
||||||
Net income
|
$
|
2,817
|
|
|
$
|
3,747
|
|
Other comprehensive income
|
|
|
|
||||
Pension adjustments (net of tax $184, $0 in 2018 and 2017)
|
296
|
|
|
660
|
|
||
Comprehensive income
|
$
|
3,113
|
|
|
$
|
4,407
|
|
|
Six months ended
|
||||||
7/31/2017
|
|
7/31/2016
|
|||||
|
(In thousands)
|
||||||
Operating activities
|
|
|
|
||||
Net income
|
$
|
2,817
|
|
|
$
|
3,747
|
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
2,601
|
|
|
2,555
|
|
||
Provision for doubtful accounts
|
35
|
|
|
53
|
|
||
Increase in inventory reserve
|
534
|
|
|
275
|
|
||
Gain on sale of property, plant and equipment
|
(1
|
)
|
|
(1
|
)
|
||
Deferred income taxes
|
1,569
|
|
|
129
|
|
||
Stock-based compensation
|
385
|
|
|
276
|
|
||
Amortization of net actuarial loss for pension plans, net of tax
|
296
|
|
|
660
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Trade accounts receivable
|
(30,321
|
)
|
|
(23,940
|
)
|
||
Other receivables
|
143
|
|
|
(8
|
)
|
||
Inventories, net
|
(15,706
|
)
|
|
(17,543
|
)
|
||
Income taxes
|
105
|
|
|
42
|
|
||
Prepaid expenses and other current assets
|
(224
|
)
|
|
(471
|
)
|
||
Accounts payable and accrued liabilities
|
12,980
|
|
|
7,640
|
|
||
Net cash used in operating activities
|
(24,787
|
)
|
|
(26,586
|
)
|
||
Investing activities
|
|
|
|
||||
Capital expenditures
|
(3,891
|
)
|
|
(1,935
|
)
|
||
Proceeds from sale of property, plant and equipment
|
1
|
|
|
1
|
|
||
Net cash used in investing activities
|
(3,890
|
)
|
|
(1,934
|
)
|
||
Financing activities
|
|
|
|
||||
Proceeds from long-term debt
|
36,742
|
|
|
37,004
|
|
||
Repayment of long-term debt
|
(5,767
|
)
|
|
(6,607
|
)
|
||
Common stock repurchased
|
(339
|
)
|
|
(264
|
)
|
||
Net cash provided by financing activities
|
30,636
|
|
|
30,133
|
|
||
|
|
|
|
||||
Net increase in cash
|
1,959
|
|
|
1,613
|
|
||
Cash at beginning of period
|
788
|
|
|
815
|
|
||
Cash at end of period
|
$
|
2,747
|
|
|
$
|
2,428
|
|
|
|
7/31/2017
|
|
1/31/2017
|
|
7/31/2016
|
||||||
Finished goods
|
|
$
|
21,912
|
|
|
$
|
11,174
|
|
|
$
|
22,461
|
|
WIP
|
|
16,923
|
|
|
13,486
|
|
|
17,250
|
|
|||
Raw materials
|
|
12,026
|
|
|
11,029
|
|
|
12,160
|
|
|||
Inventories, net
|
|
$
|
50,861
|
|
|
$
|
35,689
|
|
|
$
|
51,871
|
|
|
7/31/2017
|
|
1/31/2017
|
|
7/31/2016
|
||||||
|
(in thousands)
|
||||||||||
Revolving credit line
|
$
|
35,924
|
|
|
$
|
4,914
|
|
|
$
|
36,979
|
|
Other
|
63
|
|
|
97
|
|
|
25
|
|
|||
Total debt
|
35,987
|
|
|
5,011
|
|
|
37,004
|
|
|||
Less current portion
|
29,987
|
|
|
68
|
|
|
31,068
|
|
|||
Non-current portion
|
$
|
6,000
|
|
|
$
|
4,943
|
|
|
$
|
5,936
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
7/31/2017
|
|
7/31/2016
|
|
7/31/2017
|
|
7/31/2016
|
||||||||
|
|
(In thousands, except per share data)
|
||||||||||||||
Net income
|
|
$
|
5,028
|
|
|
$
|
6,886
|
|
|
$
|
2,817
|
|
|
$
|
3,747
|
|
Weighted average shares outstanding
|
|
15,211
|
|
|
15,036
|
|
|
15,170
|
|
|
15,004
|
|
||||
Net effect of dilutive shares - based on the treasury stock method using average market price
|
|
74
|
|
|
111
|
|
|
63
|
|
|
96
|
|
||||
Totals
|
|
15,285
|
|
|
15,147
|
|
|
15,233
|
|
|
15,100
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net income per share - basic
|
|
$
|
0.33
|
|
|
$
|
0.46
|
|
|
$
|
0.19
|
|
|
$
|
0.25
|
|
Net income per share - diluted
|
|
$
|
0.33
|
|
|
$
|
0.45
|
|
|
$
|
0.18
|
|
|
$
|
0.25
|
|
|
|
|
|
Expense for 3 months ended
|
|
Expense for 6 months ended
|
|
Unrecognized
Compensation Cost at |
||||||||||||||
Date of Grants
|
Units Granted
|
Terms of Vesting
|
|
7/31/2017
|
|
7/31/2016
|
|
7/31/2017
|
|
7/31/2016
|
|
7/31/2017
|
||||||||||
2011 Stock Incentive Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
06/20/2017
|
40,404
|
1 year
|
|
$
|
33,000
|
|
|
$
|
—
|
|
|
$
|
33,000
|
|
|
$
|
—
|
|
|
$
|
166,000
|
|
06/20/2017
|
464,000
|
5 years
|
|
77,000
|
|
|
—
|
|
|
77,000
|
|
|
—
|
|
|
2,216,000
|
|
|||||
06/21/2016
|
51,284
|
1 year
|
|
16,000
|
|
|
33,000
|
|
|
66,000
|
|
|
33,000
|
|
|
—
|
|
|||||
06/21/2016
|
36,000
|
3 years
|
|
12,000
|
|
|
8,000
|
|
|
24,000
|
|
|
8,000
|
|
|
86,000
|
|
|||||
06/22/2015
|
48,000
|
4 years
|
|
8,000
|
|
|
8,000
|
|
|
16,000
|
|
|
16,000
|
|
|
60,000
|
|
|||||
06/22/2015
|
27,174
|
1 year
|
|
—
|
|
|
6,000
|
|
|
—
|
|
|
25,000
|
|
|
—
|
|
|||||
06/24/2014
|
490,000
|
5 years
|
|
60,000
|
|
|
60,000
|
|
|
120,000
|
|
|
120,000
|
|
|
440,000
|
|
|||||
06/19/2012
|
520,000
|
5 years
|
|
12,000
|
|
|
37,000
|
|
|
49,000
|
|
|
74,000
|
|
|
—
|
|
|||||
Totals for the period
|
|
|
|
$
|
218,000
|
|
|
$
|
152,000
|
|
|
$
|
385,000
|
|
|
$
|
276,000
|
|
|
$
|
2,968,000
|
|
|
Three Months Ended
|
||||||||||||||||||||||
|
Pension Plan
|
|
VIP Plan
|
|
Non-Employee Directors Retirement Plan
|
||||||||||||||||||
7/31/2017
|
|
7/31/2016
|
|
7/31/2017
|
|
7/31/2016
|
|
7/31/2017
|
|
7/31/2016
|
|||||||||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
304
|
|
|
296
|
|
|
89
|
|
|
90
|
|
|
9
|
|
|
3
|
|
||||||
Expected return on plan assets
|
(342
|
)
|
|
(284
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of transition amount
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Recognized (gain) loss due to Curtailments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of prior service cost
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Recognized net actuarial (gain) loss
|
179
|
|
|
282
|
|
|
60
|
|
|
77
|
|
|
—
|
|
|
(29
|
)
|
||||||
Benefit cost
|
$
|
141
|
|
|
$
|
294
|
|
|
$
|
149
|
|
|
$
|
167
|
|
|
$
|
9
|
|
|
$
|
(26
|
)
|
|
Six Months Ended
|
||||||||||||||||||||||
|
Pension Plan
|
|
VIP Plan
|
|
Non-Employee Directors Retirement Plan
|
||||||||||||||||||
7/31/2017
|
|
7/31/2016
|
|
7/31/2017
|
|
7/31/2016
|
|
7/31/2017
|
|
7/31/2016
|
|||||||||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
608
|
|
|
592
|
|
|
178
|
|
|
180
|
|
|
18
|
|
|
6
|
|
||||||
Expected return on plan assets
|
(684
|
)
|
|
(568
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of transition amount
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Recognized (gain) loss due to Curtailments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of prior service cost
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Recognized net actuarial (gain) loss
|
358
|
|
|
564
|
|
|
120
|
|
|
154
|
|
|
—
|
|
|
(58
|
)
|
||||||
Benefit cost
|
$
|
282
|
|
|
$
|
588
|
|
|
$
|
298
|
|
|
$
|
334
|
|
|
$
|
18
|
|
|
$
|
(52
|
)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
7/31/2017
|
|
7/31/2016
|
|
7/31/2017
|
|
7/31/2016
|
||||||||
|
(In thousands)
|
||||||||||||||
Beginning balance
|
$
|
1,000
|
|
|
$
|
1,000
|
|
|
$
|
1,000
|
|
|
$
|
1,000
|
|
Provision
|
112
|
|
|
47
|
|
|
182
|
|
|
176
|
|
||||
Costs incurred
|
(112
|
)
|
|
(47
|
)
|
|
(182
|
)
|
|
(176
|
)
|
||||
Ending balance
|
$
|
1,000
|
|
|
$
|
1,000
|
|
|
$
|
1,000
|
|
|
$
|
1,000
|
|
|
VIRCO MFG. CORPORATION
|
|
Date: September 14, 2017
|
By:
|
/s/ Robert E. Dose
|
|
|
Robert E. Dose
|
|
|
Vice President — Finance
|
|
|
(Principal Financial Officer)
|
Name:
|
Robert E. Dose
|
Title:
|
Senior Vice President-Finance
|
Name:
|
Robert E. Dose
|
Title:
|
Senior Vice President-Finance
|
Name:
|
Jeanette Vandenbergh
|
Property Location
|
Owned/Leased
|
2027 Harpers Way
Torrance, CA 90501
|
Leased
|
1701 Sturgis Road
Conway, AR 72034
|
Owned
|
1265 Bruce Street
Conway, AR 72034
|
Owned
|
1655 Amity Road
Conway, AR 72034
|
Owned
|
|
/s/ Robert A. Virtue
|
|
Robert A. Virtue
|
Date: September 14, 2017
|
Chief Executive Officer and Chairman of the Board (Principal Executive Officer)
|
|
/s/ Robert E. Dose
|
|
Robert E. Dose
|
Date: September 14, 2017
|
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, 2017, 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
|
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)
|