Item 1. BUSINESS
American Woodmark Corporation manufactures and distributes kitchen cabinets and vanities for the remodeling and new home construction markets. The Company was formed in 1980 by the four principal managers of the Boise Cascade Cabinet Division through a leveraged buyout of that division. The Company was operated privately until 1986 when it became a public company through a Common Stock offering.
The Company currently offers framed stock cabinets in almost 100 different cabinet lines, ranging in price from relatively inexpensive to medium priced styles. Styles vary by design and color from natural wood finishes to low-pressure laminate surfaces. The entire product offering includes thirty-three door designs and five colors. Stock cabinets consist of a common box with standard interior components and an oak, cherry or maple front frame.
The Company's products are sold under the brand names of American Woodmark(R), Crestwood(R), Timberlake(TM), Scots Pride(TM), and Coventry and Case(TM) cabinets.
American Woodmark's products are sold on a national basis via three market channels: independent dealer/distributors, home centers, and major builders. It is estimated that 60% of sales during the fiscal year ended April 30, 1996 were to the remodeling market and 40% to the new home market. Products are distributed to each market channel directly from the Company's three assembly plants and through a logistics network consisting of four service centers located in key areas throughout the United States.
The primary raw materials used by the Company are oak and maple lumber, paint, particle board, manufactured components, and hardware. The Company currently purchases paint from one supplier; however, other sources are available. Oak and maple lumber, particle board, manufactured components, and hardware are purchased from more than one source and are readily available.
The Company operates in a highly fragmented industry which is composed of several thousand local, regional and national manufacturers. The Company believes that no other company in the industry has more than a 15% share of the market. The Company also believes that American Woodmark is one of the five largest manufacturers of kitchen cabinets in the United States.
The Company's business has historically been subjected to seasonal influences, with higher sales typically realized in the second and fourth fiscal quarters. General economic forces and changes in the Company's customer mix have reduced seasonal fluctuations in the Company's revenue over the past few years.
In the fiscal year ended April 30, 1996, the Company had two customers, Builders Square, Inc., a subsidiary of K-mart Corporation, and The Home Depot, who each accounted for in excess of 10% of the Company's sales.
At April 30, 1996, the Company had 2,164 employees. Approximately 30% of its employees are represented by labor unions. Management believes its employee relations are excellent.
Item 2.
Item 2. PROPERTIES
The Company leases its Corporate Office which is located in Winchester, Virginia. In addition, the Company leases one and owns six manufacturing facilities located primarily in the eastern United States. The Company also leases four service centers located throughout the United States which support the distribution of products to each market channel.
Item 3.
Item 3. LEGAL PROCEEDINGS
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.
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.
Item 4.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth quarter of fiscal 1996.
PART II
Item 5.
Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDERS MATTERS
"Market Information" in the American Woodmark Corporation's 1996 Annual Report to Stockholders ("1996 Annual Report") is incorporated herein by reference.
The Company's primary loan agreement prohibits the payment of cash dividends. The Company has not paid cash dividends on its Common Stock since its inception.
Item 6.
Item 6. SELECTED FINANCIAL DATA
"Five Year Selected Financial Information" in the 1996 Annual Report is incorporated herein by reference.
Item 7.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
"Management's Discussion and Analysis" in the 1996 Annual Report is incorporated herein by reference.
Item 8.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Financial Statements, "Quarterly Results of Operations," and the Report of Ernst & Young LLP, Independent Auditors, in the 1996 Annual Report are incorporated herein by reference.
Item 9.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
For information concerning the directors and nominees for directorships, see the information under the caption "Election of Directors" in the Registrant's Proxy Statement ("Proxy Statement") for the Annual Meeting of Stockholders to be held on August 20, 1996, which information is incorporated herein by reference.
The executive officers of the Registrant as of April 30, 1996 are as follows:
Name Age Position Held During Past Five Years ---------------------- --- -------------------------------------
William F. Brandt, Jr. 50 Chairman and Chief Executive Officer since November, 1995 Chairman and President 1980-1995
James J. Gosa 48 President and Chief Operating Officer since November, 1995 Executive Vice President 1993-1995 Vice President, Sales and Marketing 1991-1993 Vice President, Marketing and Branch Operations Thomas Somerville Co. 1985-1991 Director since 1995
Kent B. Guichard 40 Vice President, Finance and Chief Financial Officer since November 1995 Vice President, Finance 1993-1995 Vice President & Controller, AM Graphics Division, AM International 1991-1993 Controller, Aircraft Wheel and Brake Operations, BF Goodrich Company 1989-
David L. Blount 48 Vice President, Manufacturing since May, 1995 Vice President, Component Manufacturing 1994-1995 Vice President, Manufacturing 1983-1994
For information concerning Item 405, disclosure of delinquent filers, see the information under the caption, "Election of Directors" in the Proxy Statement, which information is incorporated herein by reference.
Item 11.
Item 11. EXECUTIVE COMPENSATION
The "Compensation of Executive Officers" segment in the Proxy Statement is incorporated herein by reference.
Item 12.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The "Principal Shareholders of the Company" segment in the Proxy Statement is incorporated herein by reference.
Item 13.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the caption "Certain Transactions" in the Proxy Statement is incorporated herein by reference.
Item 14.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The following Financial Statements of American Woodmark Corporation are incorporated by reference in Item 8:
Balance Sheet - April 30, 1996 and 1995
Statement of Income and Retained Earnings - for each of the years in the three-year period ended April 30, 1996
Statement of Cash Flows - for each of the years in the three-year period ended April 30, 1996
Notes to Financial Statements
Report of Ernst & Young LLP, Independent Auditors
(a) 2. Financial Statement Schedules
The following Financial Statement schedule is included in a separate section of this report:
Schedule Page -------------------------------------- ---- II. Valuation and qualifying accounts S-1
All other schedules for which provisions are made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.
(a) 3. Exhibits
Exhibit No. Description - ----------- --------------------------------------------------------------
3.1 - Articles of Incorporation as amended effective August 12, 1987 (3)
3.2 (a) - Bylaws (1)
3.2 (b) - Amendment to Bylaws on June 22, 1994 (7)
4 - Amended and Restated Stockholders' Agreement (1)
9 - Voting Trust Agreement (1)
10.1 (a) - Amended and Restated Loan Agreement between the Company and NationsBank of North Carolina as of March 23, 1992 (5)
10.1 (b) - Amendment to Amended and Restated Loan Agreement and to Reimbursement Agreements as of September 8, 1992 (6)
10.1 (c) - Amendment to Amended and Restated Loan Agreement and to Reimbursement Agreements as of June 25, 1993 (6)
10.1 (d) - Amendment to Amended and Restated Loan Agreement and to Reimbursement Agreements as of March 15, 1993 (6)
10.1 (e) - Amendment to Amended and Restated Loan Agreement and to Reimbursement Agreements as of August 31, 1993 (7)
10.1 (f) - Amendment to Amended and Restated Loan Agreement and to Reimbursement Agreements as of March 15, 1994 (7)
10.1 (g) - Amendment to Amended and Restated Loan Agreement and to Reimbursement Agreements as of July 27, 1994 (8)
10.2 (a) - Security Agreement between the Company and NationsBank of North Carolina as of March 23, 1992 (5)
10.2 (b) - Amendment to Security Agreement as of August 31, 1993 (7)
10.3 (a) - Bond Purchase Agreement Sale - Orange, Virginia (1)
10.3 (b) - Bond Purchase Agreement and Agreement of Sale - Orange, Virginia (1)
10.3 (c) - Bond Purchase Agreement and Agreement of Sale - The Industrial Development Authority of the County of Mohave, Arizona (2)
10.3 (d) - Bond Purchase Agreement and Agreement of Sales - Stephens County Development Authority (3)
10.3 (e) - Amendment of Bond Purchase Agreement and Agreement of Sale - Orange, Virginia (4)
10.3 (f) - Loan Agreement between the Company and the County Commission of Hardy County, West Virginia as of December 1, 1991, relating to bond financing (5)
10.3 (g) - Promissory Note between the Company and County Commission of Hardy County, West Virginia as of December 18, 1991 (5)
10.3 (h) - Reimbursement Agreement between the Company and NationsBank as of December 1, 1991 (5)
10.3 (i) - Amendment to Reimbursement Agreements as of June 15, 1992 (5)
10.4 (a) - Credit Line Deed of Trust and Security Agreement - Orange and Clarke Counties, Virginia, as amended (1)
10.4 (b) - Deed of Trust and Security Agreement - Hardy County, West Virginia, as amended (1)
10.5 (a) - Loan Agreement between the Company and the West Virginia Economic Development Authority and the Hardy County Rural Development Authority (1)
10.5 (b) - Security Agreement between the Company and the West Virginia Economic Development Authority (1)
10.5 (c) - Deed of Trust - Hardy County, West Virginia (1)
10.6 (a) - Lease between the Company and Amwood Associates (1)
10.6 (b) - Lease between the Company and the West Virginia Industrial and Trade Jobs Development Corporation (3)
10.6 (c) - Lease between the Company and the West Virginia Industrial and Trade Jobs Development Corporation (3)
10.6 (d) - Amendment to Deed of Lease between the Company and West Virginia Economic Development Authority as of March 30, 1992 (5)
10.7 (a) - 1986 Employee Stock Option Plan (1)
10.7 (b) - Form of Option Agreement and Stock Purchase Agreement (1)
10.7 (c) - 1990 Non-Employee Directors Stock Option Plan (7)
10.7 (d) - 1995 Non-Employee Directors Stock Option Plan
10.8 - 1996 Incentive Plan
11 - Computation of Earnings Per Share
13 - 1996 Annual Report to Stockholders
23 - Consent of Ernst & Young LLP, Independent Auditors
27 - Financial Data Schedule
(b) Reports on Form 8-K
None.
- -------------------------------------------------------------------------------
(1) - Incorporated by reference to exhibits filed with Form S-1, No. 33-6245.
(2) - Incorporated by reference to exhibits filed with the 1987 Form 10-K.
(3) - Incorporated by reference to exhibits filed with the 1988 Form 10-K.
(4) - Incorporated by reference to exhibits filed with the 1989 Form 10-K.
(5) - Incorporated by reference to exhibits filed with the 1992 Form 10-K.
(6) - Incorporated by reference to exhibits filed with the 1993 Form 10-K.
(7) - Incorporated by reference to exhibits filed with the 1994 Form 10-K.
(8) - Incorporated by reference to exhibits filed with the 1995 Form 10-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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)
/s/ WILLIAM F. BRANDT, JR. William F. Brandt, Jr. Chief Executive Officer Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ JAMES J. GOSA /s/ JOHN T. GERLACH James. J. Gosa John T. Gerlach President and Chief Operating Director Officer Director
/s/ KENT B. GUICHARD /s/ RICHARD A. GRABER Kent B. Guichard Richard A. Graber Vice President, Finance and Director Chief Financial Officer
/s/ DANIEL T. CARROLL /s/ DONALD P. MATHIAS Daniel T. Carroll Donald P. Mathias Director Director
/s/ MARTHA M. DALLY /s/ C. ANTHONY WAINWRIGHT Martha M. Dally C. Anthony Wainwright Director Director
Schedule II - Valuation and Qualifying Accounts
AMERICAN WOODMARK CORPORATION
(In Thousands)
Additions Balance at Charged to Balance Beginning Cost and Deduc- at End Description(a) of Period Expenses tions of Period - --------------------------- ---------- ---------- ------ ---------
Year ended April 30, 1996:
Allowance for doubtful accounts $ 243 $ 620 $ (234)(b) $ 629
Reserve for cash discounts $ 240 $2,977(c) $(2,967)(d) $ 250
Reserve for sales returns and allowances $ 698 $3,489(c) $(3,560) $ 627
Year ended April 30, 1995:
Allowance for doubtful accounts $ 313 $ 40 $ (110)(b) $ 243
Reserve for cash discounts $ 225 $2,811(c) $(2,796)(d) $ 240
Reserve for sales returns and allowances $ 679 $3,865(c) $(3,846) $ 698
Year ended April 30, 1994:
Allowance for doubtful accounts $ 818 $ 234 $ (739)(b) $ 313
Reserve for cash discounts $ 240 $2,393(c) $(2,408)(d) $ 225
Reserve for sales returns and allowances $ 903 $3,792(c) $(4,016) $ 679
(a) All reserves relate to accounts receivable. (b) Principally write-offs, net of collections. (c) Reduction of gross sales. (d) Cash discounts granted.
S-1
In accordance with Securities and Exchange Commission requirements, the Company will furnish copies of all exhibits to its Form 10-K, not contained herein upon receipt of a written request and payment of $.10 (10 cents) per page to:
Mr. Kent Guichard Vice President, Finance and Chief Financial Officer American Woodmark Corporation P.O. Box 1980 Winchester, Virginia 22604-8090