|
|
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)
|
Title of each class
|
|
Trading Symbol
|
|
Name of each exchange on which registered
|
|
|
|
|
|
Common Stock, $0.01 par value per share
|
|
VIRC
|
|
The Nasdaq Stock Market LLC
|
|
Large accelerated filer
|
¨
|
|
|
Accelerated filer
|
|
¨
|
Non-accelerated filer
|
ý
|
|
|
Smaller reporting company
|
|
ý
|
|
|
|
|
Emerging growth company
|
|
¨
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
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|
||
|
||
|
||
|
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|
||
|
Item 3. Defaults Upon Senior Securities
|
|
|
Item 4. Mine Safety Disclosures
|
|
|
Item 5. Other Information
|
|
|
||
|
EX-3.3
|
|
|
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
|
|
|
4/30/2020
|
|
1/31/2020
|
|
4/30/2019
|
||||||
(In thousands)
|
|||||||||||
|
|
|
|
|
|
||||||
Assets
|
|
|
|
|
|
||||||
Current assets
|
|
|
|
|
|
||||||
Cash
|
$
|
327
|
|
|
$
|
1,150
|
|
|
$
|
553
|
|
Trade accounts receivables, net
|
7,564
|
|
|
11,762
|
|
|
12,375
|
|
|||
Other receivables
|
57
|
|
|
57
|
|
|
64
|
|
|||
Income tax receivable
|
469
|
|
|
298
|
|
|
263
|
|
|||
Inventories
|
58,190
|
|
|
43,329
|
|
|
63,511
|
|
|||
Prepaid expenses and other current assets
|
2,413
|
|
|
1,746
|
|
|
2,532
|
|
|||
Total current assets
|
69,020
|
|
|
58,342
|
|
|
79,298
|
|
|||
Non-current assets
|
|
|
|
|
|
||||||
Property, plant and equipment
|
|
|
|
|
|
||||||
Land
|
3,731
|
|
|
3,731
|
|
|
3,731
|
|
|||
Land improvements
|
734
|
|
|
717
|
|
|
688
|
|
|||
Buildings and building improvements
|
51,159
|
|
|
51,200
|
|
|
51,176
|
|
|||
Machinery and equipment
|
111,250
|
|
|
110,610
|
|
|
109,087
|
|
|||
Leasehold improvements
|
1,072
|
|
|
990
|
|
|
830
|
|
|||
Total property, plant and equipment
|
167,946
|
|
|
167,248
|
|
|
165,512
|
|
|||
Less accumulated depreciation and amortization
|
128,520
|
|
|
127,351
|
|
|
124,159
|
|
|||
Net property, plant and equipment
|
39,426
|
|
|
39,897
|
|
|
41,353
|
|
|||
Operating lease right-of-use assets
|
20,487
|
|
|
21,325
|
|
|
23,295
|
|
|||
Deferred tax assets, net
|
14,481
|
|
|
11,230
|
|
|
11,086
|
|
|||
Other assets, net
|
8,078
|
|
|
8,198
|
|
|
8,276
|
|
|||
Total assets
|
$
|
151,492
|
|
|
$
|
138,992
|
|
|
$
|
163,308
|
|
|
4/30/2020
|
|
1/31/2020
|
|
4/30/2019
|
||||||
|
(In thousands, except share and par value data)
|
||||||||||
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
||||||
Current liabilities
|
|
|
|
|
|
||||||
Accounts payable
|
$
|
16,656
|
|
|
$
|
10,587
|
|
|
$
|
16,354
|
|
Accrued compensation and employee benefits
|
5,979
|
|
|
6,392
|
|
|
4,631
|
|
|||
Current portion of long-term debt
|
10,618
|
|
|
878
|
|
|
24,226
|
|
|||
Current portion operating lease liability
|
4,527
|
|
|
3,654
|
|
|
2,939
|
|
|||
Other accrued liabilities
|
4,606
|
|
|
3,607
|
|
|
5,552
|
|
|||
Total current liabilities
|
42,386
|
|
|
25,118
|
|
|
53,702
|
|
|||
Non-current liabilities
|
|
|
|
|
|
||||||
Accrued self-insurance retention
|
1,802
|
|
|
1,410
|
|
|
1,773
|
|
|||
Accrued pension expenses
|
21,365
|
|
|
21,310
|
|
|
14,218
|
|
|||
Income tax payable
|
74
|
|
|
70
|
|
|
55
|
|
|||
Long-term debt, less current portion
|
15,630
|
|
|
15,818
|
|
|
16,508
|
|
|||
Operating lease liability, less current portion
|
18,854
|
|
|
19,787
|
|
|
22,221
|
|
|||
Other long-term liabilities
|
662
|
|
|
661
|
|
|
555
|
|
|||
Total non-current liabilities
|
58,387
|
|
|
59,056
|
|
|
55,330
|
|
|||
Commitments and contingencies (Notes 6, 7 and 13)
|
|
|
|
|
|
||||||
Stockholders’ equity
|
|
|
|
|
|
||||||
Preferred stock:
|
|
|
|
|
|
||||||
Authorized 3,000,000 shares, $0.01 par value; none issued or outstanding
|
—
|
|
|
—
|
|
|
—
|
|
|||
Common stock:
|
|
|
|
|
|
||||||
Authorized 25,000,000 shares, $0.01 par value; issued and outstanding 15,713,549 shares at 4/30/2020 and 1/31/2020 and 15,541,956 at 4/30/2019
|
157
|
|
|
157
|
|
|
155
|
|
|||
Additional paid-in capital
|
119,036
|
|
|
118,782
|
|
|
118,292
|
|
|||
Accumulated deficit
|
(54,508
|
)
|
|
(49,810
|
)
|
|
(55,259
|
)
|
|||
Accumulated other comprehensive loss
|
(13,966
|
)
|
|
(14,311
|
)
|
|
(8,912
|
)
|
|||
Total stockholders’ equity
|
50,719
|
|
|
54,818
|
|
|
54,276
|
|
|||
Total liabilities and stockholders’ equity
|
$
|
151,492
|
|
|
$
|
138,992
|
|
|
$
|
163,308
|
|
|
Three months ended
|
||||||
|
4/30/2020
|
|
4/30/2019
|
||||
|
(In thousands, except per share data)
|
||||||
Net sales
|
$
|
17,599
|
|
|
$
|
26,893
|
|
Costs of goods sold
|
12,695
|
|
|
17,809
|
|
||
Gross profit
|
4,904
|
|
|
9,084
|
|
||
Selling, general and administrative expenses
|
11,931
|
|
|
12,681
|
|
||
Loss (gain) on sale of property, plant & equipment
|
—
|
|
|
—
|
|
||
Operating loss
|
(7,027
|
)
|
|
(3,597
|
)
|
||
Pension expense
|
542
|
|
|
188
|
|
||
Interest expense
|
404
|
|
|
700
|
|
||
Loss before income taxes
|
(7,973
|
)
|
|
(4,485
|
)
|
||
Income tax benefits
|
(3,275
|
)
|
|
(1,418
|
)
|
||
Net loss
|
$
|
(4,698
|
)
|
|
$
|
(3,067
|
)
|
|
|
|
|
||||
|
|
|
|
||||
Net loss per common share:
|
|
|
|
||||
Basic
|
$
|
(0.30
|
)
|
|
$
|
(0.20
|
)
|
Diluted (a)
|
(0.30
|
)
|
|
(0.20
|
)
|
||
Weighted average shares of common stock outstanding:
|
|
|
|
||||
Basic
|
15,654
|
|
|
15,486
|
|
||
Diluted (a)
|
15,654
|
|
|
15,486
|
|
|
Three months ended
|
||||||
|
4/30/2020
|
|
4/30/2019
|
||||
|
(In thousands)
|
||||||
|
|
|
|
||||
Net loss
|
$
|
(4,698
|
)
|
|
$
|
(3,067
|
)
|
Other comprehensive income:
|
|
|
|
||||
Pension adjustments (net of tax expense of $120 and $46 at April 30, 2020 and 2019, respectively)
|
345
|
|
|
130
|
|
||
Net comprehensive loss
|
$
|
(4,353
|
)
|
|
$
|
(2,937
|
)
|
|
Three months ended
|
||||||
4/30/2020
|
|
4/30/2019
|
|||||
|
(In thousands)
|
||||||
Operating activities
|
|
|
|
||||
Net loss
|
$
|
(4,698
|
)
|
|
$
|
(3,067
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
1,393
|
|
|
1,452
|
|
||
Non-cash lease expense
|
778
|
|
|
89
|
|
||
Provision for doubtful accounts
|
15
|
|
|
15
|
|
||
Loss (gain) on sale of property, plant and equipment
|
—
|
|
|
—
|
|
||
Deferred income taxes
|
(3,251
|
)
|
|
(1,488
|
)
|
||
Stock-based compensation
|
254
|
|
|
186
|
|
||
Defined pension plan settlement
|
—
|
|
|
—
|
|
||
Amortization of net actuarial loss for pension plans
|
345
|
|
|
130
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Trade accounts receivable
|
4,183
|
|
|
863
|
|
||
Other receivables
|
—
|
|
|
(24
|
)
|
||
Inventories
|
(14,861
|
)
|
|
(16,222
|
)
|
||
Income taxes
|
(167
|
)
|
|
(77
|
)
|
||
Prepaid expenses and other current assets
|
(546
|
)
|
|
(709
|
)
|
||
Accounts payable and accrued liabilities
|
6,668
|
|
|
566
|
|
||
Net cash used in operating activities
|
(9,887
|
)
|
|
(18,286
|
)
|
||
Investing activities:
|
|
|
|
||||
Capital expenditures
|
(488
|
)
|
|
(1,219
|
)
|
||
Proceeds from sale of property, plant and equipment
|
—
|
|
|
—
|
|
||
Net cash used in investing activities
|
(488
|
)
|
|
(1,219
|
)
|
||
Financing activities:
|
|
|
|
||||
Borrowing from long-term debt
|
11,413
|
|
|
19,564
|
|
||
Repayment of long-term debt
|
(1,861
|
)
|
|
(244
|
)
|
||
Payment on deferred financing costs
|
—
|
|
|
—
|
|
||
Tax withholding payments on share-based compensation
|
—
|
|
|
—
|
|
||
Cash dividends paid
|
—
|
|
|
—
|
|
||
Net cash provided by financing activities
|
9,552
|
|
|
19,320
|
|
||
|
|
|
|
||||
Net decrease in cash
|
(823
|
)
|
|
(185
|
)
|
||
Cash at beginning of period
|
1,150
|
|
|
738
|
|
||
Cash at end of period
|
$
|
327
|
|
|
$
|
553
|
|
|
|
Three-Month Period Ended April 30, 2020
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|||||||||||||
In thousands, except share data
|
|
Shares
|
|
Amount
|
|
Additional Paid-in Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholder's Equity
|
|||||||||||
Balance at February 1, 2020
|
|
15,713,549
|
|
|
$
|
157
|
|
|
$
|
118,782
|
|
|
$
|
(49,810
|
)
|
|
$
|
(14,311
|
)
|
|
$
|
54,818
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,698
|
)
|
|
—
|
|
|
(4,698
|
)
|
|||||
Cash dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Pension adjustments, net of tax effect of $120
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
345
|
|
|
345
|
|
|||||
Shares vested and others
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock compensation expense
|
|
—
|
|
|
—
|
|
|
254
|
|
|
—
|
|
|
—
|
|
|
254
|
|
|||||
Balance at April 30, 2020
|
|
15,713,549
|
|
|
$
|
157
|
|
|
$
|
119,036
|
|
|
$
|
(54,508
|
)
|
|
$
|
(13,966
|
)
|
|
$
|
50,719
|
|
|
|
Three-Month Period Ended April 30, 2019
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|||||||||||||
In thousands, except share data
|
|
Shares
|
|
Amount
|
|
Additional Paid-in Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholder's Equity
|
|||||||||||
Balance at February 1, 2019
|
|
15,541,956
|
|
|
$
|
155
|
|
|
$
|
118,106
|
|
|
$
|
(52,192
|
)
|
|
$
|
(9,042
|
)
|
|
$
|
57,027
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,067
|
)
|
|
—
|
|
|
(3,067
|
)
|
|||||
Cash dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Pension adjustments, net of tax effect of $46
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
130
|
|
|
130
|
|
|||||
Shares vested and others
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock compensation expense
|
|
—
|
|
|
—
|
|
|
186
|
|
|
—
|
|
|
—
|
|
|
186
|
|
|||||
Balance at April 30, 2019
|
|
15,541,956
|
|
|
$
|
155
|
|
|
$
|
118,292
|
|
|
$
|
(55,259
|
)
|
|
$
|
(8,912
|
)
|
|
$
|
54,276
|
|
|
|
4/30/2020
|
|
1/31/2020
|
|
4/30/2019
|
||||||
|
|
(in thousands)
|
||||||||||
|
|
|
|
|
|
|
||||||
Finished goods
|
|
$
|
27,348
|
|
|
$
|
15,401
|
|
|
$
|
26,546
|
|
WIP
|
|
19,159
|
|
|
15,957
|
|
|
24,009
|
|
|||
Raw materials
|
|
11,683
|
|
|
11,971
|
|
|
12,956
|
|
|||
Total inventories
|
|
$
|
58,190
|
|
|
$
|
43,329
|
|
|
$
|
63,511
|
|
|
Three-Months Ended
|
||||||
|
4/30/2020
|
|
4/30/2019
|
||||
|
(in thousands)
|
||||||
Operating lease cost
|
$
|
1,440
|
|
|
$
|
1,380
|
|
Short-term lease cost
|
36
|
|
|
54
|
|
||
Short-term sublease income
|
(10
|
)
|
|
(10
|
)
|
||
Variable lease cost (1)
|
455
|
|
|
448
|
|
||
Total lease cost
|
$
|
1,921
|
|
|
$
|
1,872
|
|
|
|
|
|
||||
Other operating leases information:
|
|
|
|
||||
Cash paid for amounts included in the measurement of lease liabilities
|
$
|
662,000
|
|
|
$
|
1,291,000
|
|
Right-of-use assets obtained in exchange for new lease liabilities
|
$
|
270,000
|
|
|
394,000
|
|
|
Weighted-average remaining lease term (years)
|
4.7
|
|
|
5.7
|
|
||
Weighted-average discount rate
|
6.4
|
%
|
|
6.4
|
%
|
|
Operating Lease
|
||
|
(in thousands)
|
||
Remaining of 2021
|
$
|
4,414
|
|
2022
|
5,708
|
|
|
2023
|
5,275
|
|
|
2024
|
5,214
|
|
|
2025
|
5,370
|
|
|
Thereafter
|
1,350
|
|
|
Remaining balance of lease payments
|
$
|
27,331
|
|
|
|
||
Short-term lease liabilities
|
$
|
4,527
|
|
Long-term lease liabilities
|
18,854
|
|
|
Total lease liabilities
|
$
|
23,381
|
|
|
|
||
Difference between undiscounted cash flows and discounted cash flows
|
$
|
3,950
|
|
|
4/30/2020
|
|
1/31/2020
|
|
4/30/2019
|
||||||
|
(in thousands)
|
||||||||||
Revolving credit line
|
$
|
19,740
|
|
|
$
|
9,969
|
|
|
$
|
33,354
|
|
Other
|
6,508
|
|
|
6,727
|
|
|
7,380
|
|
|||
Total debt
|
$
|
26,248
|
|
|
$
|
16,696
|
|
|
$
|
40,734
|
|
Less current portion
|
10,618
|
|
|
878
|
|
|
24,226
|
|
|||
Non-current portion
|
$
|
15,630
|
|
|
$
|
15,818
|
|
|
$
|
16,508
|
|
|
Three Months Ended
|
||||||
|
4/30/2020
|
|
4/30/2019
|
||||
|
(In thousands, except per share data)
|
||||||
|
|
|
|
||||
Net loss
|
$
|
(4,698
|
)
|
|
$
|
(3,067
|
)
|
|
|
|
|
||||
Weighted average shares of common stock outstanding
|
15,654
|
|
|
15,486
|
|
||
Net effect of dilutive shares - based on the treasury stock method using average market price
|
—
|
|
|
—
|
|
||
Totals
|
15,654
|
|
|
15,486
|
|
||
|
|
|
|
||||
Net loss per share - basic
|
$
|
(0.30
|
)
|
|
$
|
(0.20
|
)
|
Net loss per share - diluted (a)
|
$
|
(0.30
|
)
|
|
$
|
(0.20
|
)
|
|
Combined Employee Retirement Plans
|
||||||
|
Three Months Ended
|
||||||
|
4/30/2020
|
|
4/30/2019
|
||||
|
(in thousands)
|
||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
301
|
|
|
355
|
|
||
Expected return on plan assets
|
(224
|
)
|
|
(343
|
)
|
||
Plan settlement
|
—
|
|
|
—
|
|
||
Amortization of prior service cost
|
—
|
|
|
—
|
|
||
Recognized net actuarial loss
|
465
|
|
|
176
|
|
||
Benefit cost
|
$
|
542
|
|
|
$
|
188
|
|
•
|
that stockholder meetings may be held solely by means of remote communications;
|
•
|
that the presence of a stockholder “in person” at a stockholder meeting includes presence by remote communication, if applicable; and
|
•
|
that the list of stockholders entitled to vote at a stockholder meeting may also be provided on a reasonably accessible electronic network.
|
|
VIRCO MFG. CORPORATION
|
|
Date: June 12, 2020
|
By:
|
/s/ Robert E. Dose
|
|
|
Robert E. Dose
|
|
|
Vice President — Finance
|
|
|
(Principal Financial Officer)
|
|
/s/ Robert A. Virtue
|
|
Robert A. Virtue
|
Date: June 12, 2020
|
Chief Executive Officer and Chairman of the Board (Principal Executive Officer)
|
|
/s/ Robert E. Dose
|
|
Robert E. Dose
|
Date: June 12, 2020
|
Vice President — Finance, Secretary and Treasurer (Principal Financial Officer)
|
•
|
The Quarterly Report of the Company on Form 10-Q for the period ended April 30, 2020, 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)
|