AMERICAN WOODMARK CORP - Quarter Report: 2011 October (Form 10-Q)

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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)

Large accelerated filer    o	Accelerated filer                  x
Non-accelerated filer      o  (Do not check if a smaller reporting company)	Smaller reporting company o

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PART I.	FINANCIAL INFORMATION	NUMBER
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets--October 31, 2011 and April 30, 2011	3
	Condensed Consolidated Statements of Operations--Three months ended October 31, 2011 and 2010; Six months ended October 31, 2011 and 2010	4
	Condensed Consolidated Statements of Cash Flows--Six months ended October 31, 2011 and 2010	5
	Notes to Condensed Consolidated Financial Statements--October 31, 2011	6-10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	11-16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16
Item 4.	Controls and Procedures	16
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	16
Item 1A.	Risk Factors	16-18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 6.	Exhibits	19
SIGNATURES		20

		October 31,				April 30,
		2011				2011
ASSETS
Current Assets
Cash and cash equivalents		$	57,081			$	55,420
Customer receivables, net			28,672				31,067
Inventories			24,748				24,471
Income taxes receivable and other			2,301				3,799
Deferred income taxes			6,209				5,659
Total Current Assets			119,011				120,416
Property, plant, and equipment, net			95,413				100,628
Restricted cash			14,419				14,419
Promotional displays, net			6,109				7,330
Deferred income taxes			23,053				21,178
Other assets			4,729				4,399
		$	262,734			$	268,370
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable		$	15,429			$	18,569
Accrued compensation and related expenses			18,063				15,607
Current maturities of long-term debt			936				928
Accrued marketing expenses			5,606				7,408
Other accrued expenses			7,753				8,332
Total Current Liabilities			47,787				50,844
Long-term debt, less current maturities			24,338				24,655
Defined benefit pension liabilities			38,843				36,726
Other long-term liabilities			1,876				2,180
Shareholders’ Equity
Preferred stock, $1.00 par value; 2,000,000 shares authorized, none issued			--				--
Common stock, no par value; 40,000,000 shares authorized; issued and outstanding 14,357,593 shares at October 31, 2011; 14,295,540 shares at April 30, 2011			94,650				92,408
Retained earnings			76,516				83,495
Accumulated other comprehensive loss -
Defined benefit pension plans			(21,276	)			(21,938	)
Total Shareholders’ Equity			149,890				153,965
		$	262,734			$	268,370
See accompanying notes to condensed consolidated financial statements

		Three Months Ended								Six Months Ended
		October 31								October 31
		2011				2010				2011				2010
Net sales		$	128,418			$	107,613			$	259,617			$	216,916
Cost of sales and distribution			112,304				97,797				225,096				192,713
Gross Profit			16,114				9,816				34,521				24,203
Selling and marketing expenses			14,508				15,805				30,484				29,908
General and administrative expenses			6,166				6,040				12,507				11,862
Restructuring charges			--				16				15				39
Operating Loss			(4,560	)			(12,045	)			(8,485	)			(17,606	)
Interest expense			137				144				274				292
Other income			(174	)			(231	)			(328	)			(405	)
Loss Before Income Taxes			(4,523	)			(11,958	)			(8,431	)			(17,493	)
Income tax benefit			(1,547	)			(4,574	)			(2,739	)			(6,691	)
Net Loss		$	(2,976	)		$	(7,384	)		$	(5,692	)		$	(10,802	)
Net Loss Per Share
Weighted average shares outstanding
Basic			14,330,954				14,240,178				14,315,318				14,231,165
Diluted			14,330,954				14,240,178				14,315,318				14,231,165
Net loss per share
Basic		$	(0.21	)		$	(0.52	)		$	(0.40	)		$	(0.76	)
Diluted		$	(0.21	)		$	(0.52	)		$	(0.40	)		$	(0.76	)
Cash dividends per share		$	0.00			$	0.09			$	0.09			$	0.18
See accompanying notes to condensed consolidated financial statements

		Six Months Ended
		October 31
		2011				2010
Operating Activities
Net loss		$	(5,692	)		$	(10,802	)
Adjustments to reconcile net loss to net cash provided (used) by operating activities:
Depreciation and amortization			11,486				13,817
Net loss on disposal of property, plant, and equipment			69				67
Gain on sale of assets held for sale			--				(60	)
Stock-based compensation expense			1,833				1,800
Deferred income taxes			(2,929	)			(5,454	)
Pension contributions less than expense			3,215				3,454
Tax benefit from stock-based compensation			--				(57	)
Other non-cash items			(854	)			(553	)
Changes in operating assets and liabilities:
Customer receivables			2,534				71
Inventories			(346	)			1,072
Income taxes receivable and other assets			449				6,254
Accounts payable			(3,140	)			901
Accrued compensation and related expenses			2,456				(4,178	)
Other accrued expenses			(1,202	)			1,259
Net Cash Provided by Operating Activities			7,879				7,591
Investing Activities
Payments to acquire property, plant, and equipment			(2,990	)			(2,264	)
Proceeds from sales of property, plant, and equipment			15				2
Proceeds from sale of assets held for sale			--				1,474
Investment in promotional displays			(1,665	)			(1,638	)
Net Cash Used by Investing Activities			(4,640	)			(2,426	)
Financing Activities
Payments of long-term debt			(309	)			(274	)
Proceeds from issuance of common stock			18				247
Payment of dividends			(1,287	)			(2,562	)
Tax benefit from stock-based compensation			--				57
Net Cash Used by Financing Activities			(1,578	)			(2,532	)
Net Increase In Cash And Cash Equivalents			1,661				2,633
Cash And Cash Equivalents, Beginning of Period			55,420				53,233
Cash And Cash Equivalents, End of Period		$	57,081			$	55,866
See accompanying notes to condensed consolidated financial statements

		Three Months Ended								Six Months Ended
		October 31								October 31
(in thousands, except per share amounts)		2011				2010				2011				2010
Numerator used for both basic and diluted earnings (net loss) per share:
Net loss		$	(2,976	)		$	(7,384	)		$	(5,692	)		$	(10,802	)
Denominator:
Denominator for basic earnings (net loss) per share-weighted average shares			14,331				14,240				14,315				14,231
Effect of dilutive securities:
Stock options and restricted stock units			--				--				--				--
Denominator for diluted earnings (net loss) per share-weighted average shares and assumed conversions			14,331				14,240				14,315				14,231
Net loss per share
Basic		$	(0.21	)		$	(0.52	)		$	(0.40	)		$	(0.76	)
Diluted		$	(0.21	)		$	(0.52	)		$	(0.40	)		$	(0.76	)

 

		Three Months Ended October 31,								Six Months Ended October 31,
(in thousands)		2011				2010				2011				2010
Cost of sales and distribution		$	138			$	186			$	298			$	330
Selling and marketing expenses			187				222				389				399
General and administrative expenses			529				545				1,146				1,071
Stock-based compensation expense		$	854			$	953			$	1,833			$	1,800

 

 

		October 31,				April 30,
(in thousands)		2011				2011
Gross customer receivables		$	30,505			$	33,039
Less:
Allowance for doubtful accounts			(98	)			(67	)
Allowance for returns and discounts			(1,735	)			(1,905	)
Net customer receivables		$	28,672			$	31,067

		October 31,				April 30,
(in thousands)		2011				2011
Raw materials		$	9,759			$	9,275
Work-in-process			16,662				16,597
Finished goods			8,413				8,679
Total FIFO inventories			34,834				34,551
Reserve to adjust inventories to LIFO value			(10,086	)			(10,080	)
Total LIFO inventories		$	24,748			$	24,471

 

		Six Months Ended
		October 31
(in thousands)		2011				2010
Beginning balance at May 1		$	1,738			$	1,582
Accrual			4,432				3,151
Settlements			(4,392	)			(3,244	)
Ending balance at October 31		$	1,778			$	1,489

		Six Months Ended
		October 31
(in thousands)		2011				2010
Cash paid during the period for:
Interest		$	185			$	181
Income taxes		$	160			$	204

		Three Months Ended								Six Months Ended
		October 31								October 31
(in thousands)		2011				2010				2011				2010
Service cost		$	1,283			$	1,180			$	2,566			$	2,359
Interest cost			1,677				1,567				3,353				3,134
Expected return on plan assets			(1,656	)			(1,540	)			(3,312	)			(3,080	)
Amortization of net loss			522				499				1,044				998
Amortization of prior service cost			20				21				40				43
Net periodic pension cost		$	1,846			$	1,727			$	3,691			$	3,454

 

Level 1- Investments with quoted prices in active markets for identical assets or liabilities. The Company’s cash equivalents are invested in money market funds, mutual funds and United States Treasury instruments. The Company’s mutual fund investment assets represent contributions made and invested on behalf of the Company’s named executive officers in a supplementary employee retirement plan.

Level 2- Investments with observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. The Company has no Level 2 assets or liabilities.

Level 3- Investments with unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company has no Level 3 assets or liabilities.

 

		Fair Value Measurements
		As of October 31, 2011
		Level 1				Level 2				Level 3
ASSETS:
Money market funds		$	46,227			$	--			$	--
Mutual funds			1,504				--				--
Total assets at fair value		$	47,731			$	--			$	--
		As of April 30, 2011
		Level 1				Level 2				Level 3
ASSETS:
Money market funds		$	61,226			$	--			$	--
Mutual funds			1,574				--				--
Total assets at fair value		$	62,800			$	--			$	--

·

general economic or business conditions and instability in the financial and credit markets, including their potential impact on our (i) sales and operating costs and access to financing, (ii) customers and suppliers and their ability to obtain financing or generate the cash necessary to conduct their respective businesses;

·	the cyclical nature of the Company’s industry, which is particularly sensitive to changes in consumer confidence, the amount of consumers’ income available for discretionary purchases, and the availability and terms of consumer credit;

·	economic weakness in a specific channel of distribution;

·	the loss of sales from specific customers due to their loss of market share, bankruptcy or switching to a competitor;

·	risks associated with domestic manufacturing operations, including fluctuations in capacity utilization and the prices and availability of key raw materials as well as fuel, transportation, warehousing and labor costs and environmental compliance and remediation costs;

·	the need to respond to price or product initiatives launched by a competitor;

·	the Company’s ability to successfully implement initiatives related to increasing market share, new products, maintaining and increasing its sales force and new product displays; and

·	sales growth at a rate that outpaces the Company’s ability to install new capacity or a sales decline that requires reduction or realignment of the Company’s manufacturing capacity.

		Three Months Ended												Six Months Ended
		October 31												October 31
										Percent												Percent
(in thousands)		2011				2010				Change				2011				2010				Change
Net Sales		$	128,418			$	107,613				19	%		$	259,617			$	216,916				20	%
Gross Profit			16,114				9,816				64	%			34,521				24,203				43	%
Selling and Marketing Expenses			14,508				15,805				(8	%)			30,484				29,908				2	%
General and Administrative Expenses			6,166				6,040				2	%			12,507				11,862				5	%

		FISCAL YEARS ENDED APRIL 30
(in thousands)		Total Amounts				2012					2013 – 2014				2015 – 2016			2017 and Thereafter
Revolving credit facility		$	10,000			$	--			$	10,000			$	--			$	--
Economic development loans			3,524				--				--				--				3,524
Term loans			4,359				416				761				763				2,419
Capital lease obligations			7,700				512				1,057				1,099				5,032
Interest on long-term debt(a)			2,494				500				731				556				707
Operating lease obligations			15,772				3,707				5,909				5,079				1,077
Pension contributions(b)			35,936				2,871				18,565				14,500				--
Total		$	79,785			$	8,006			$	37,023			$	21,997			$	12,759

(a)

Interest commitments under interest bearing debt consist of interest under the Company’s primary loan agreement, term loans and capitalized lease agreements. Amounts outstanding under the Company’s revolving credit facility, $10 million at April 30, 2011, bear a variable interest rate determined by the London Interbank Offered Rate (LIBOR) plus 1.25%. Interest under the Company’s term loans and capitalized lease agreements is fixed at rates between 2% and 6%.  Interest commitments under interest bearing debt for the Company’s revolving credit facility are at LIBOR plus the spread as of April 30, 2011, throughout the remaining term of the facility.

(b)	The estimated cost of the Company’s two defined benefit pension plans is determined annually based upon the discount rate and other assumptions at fiscal year end. Future pension funding contributions beyond 2016 have not been determined at this time.

Item 3.  Quantitative and Qualitative Disclosures of Market Risk

Exhibit Number	Description
3.1 (a)	Articles of Incorporation as amended effective August 12, 1987 (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 10-Q for the quarter ended January 31, 2003; Commission File No. 000-14798).
3.1 (b)	Articles of Amendment to the Articles of Incorporation effective September 10, 2004 (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K as filed on August 31, 2004; Commission File No. 000-14798).
3.2	Bylaws – as amended and restated December 14, 2009 (incorporated by reference to Exhibit 3.2 to the Registrant’s Form 10-K for the fiscal year ended April 30, 2010; Commission File No. 000-14798).
4.1	The Articles of Incorporation and Bylaws of the Registrant as currently in effect (incorporated by reference to Exhibits 3.1 and 3.2).
4.2	Amended and Restated Stockholder’s Agreement (incorporated by reference to Exhibit 4.2 to the Registrant’s Form S-1 for year ended April 30, 1986; Commission File No. 33-6245).   Pursuant to Regulation S-K, Item 601(b)(4)(iii), instruments that define the rights of holders of the Registrant’s long-term debt securities, where the long-term debt securities authorized under each such instrument do not exceed 10 percent of the Registrant’s total assets, have been omitted and will be furnished to the Securities and Exchange Commission on request.
10.1	Form of Grant Letter used in connection with awards of service-based restricted stock units granted under the Company’s 2011 Non-Employee Directors Equity Ownership Plan (Filed Herewith).*
31.1	Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a) of the Exchange Act (Filed Herewith).
31.2	Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a) of the Exchange Act (Filed Herewith).
32.1	Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Filed Herewith).
101	Interactive Data File for the Registrant’s Quarterly Report on Form 10-Q for the quarter ended October 31, 2011 formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Cash Flows, and (iv) Notes to Condensed Consolidated Financial Statements (Filed Herewith).#

	/s/Jonathan H. Wolk
	Jonathan H. Wolk
	Senior Vice President and Chief Financial Officer
	Date:  December 1, 2011
	Signing on behalf of the
	registrant and as principal
	financial and accounting officer