Virco Announces Fourth Quarter Results

Apr 04, 2001, 01:00 ET from Virco Mfg. Corporation

    TORRANCE, Calif., April 4 /PRNewswire/ -- Except for historical
 information contained herein, the matters set forth in this release include
 forward-looking statements that are dependent on certain risks and
 uncertainties, including such factors, among others, as market acceptance,
 market demand, pricing, material costs, labor and benefit costs, potential
 seasonality and other uncertainties referred to in the Company's filings with
 the Securities and Exchange Commission.
     On April 3, 2001 the management of Virco Mfg. Corporation (Amex:   VIR)
 released the following report on its fourth quarter and annual results for the
 fiscal year ended January 31, 2001.
     Our performance in the year 2000 was, on the whole, disappointing.  Sales
 increased 7.2% from $268,079,000 to $287,342,000, but profits declined from
 $10,166,000 to $4,016,000.  Included in the profit figures were one-time gains
 from the sale of our former Torrance warehouse, recorded in April 2000, and
 the settlement of a claim, recorded in October.  Absent these gains, the
 Company would have produced a loss of approximately $3,400,000.  The following
 chart summarizes our results.
 
                                           01/31/2001              01/31/2000
                                              000's                   000's
      Quarter
        Sales                               $45,316                  $47,297
        Net Loss                             (7,279)                    (810)
 
      Fiscal Year
        Sales                              $287,342                 $268,079
        Net Income                            4,016                   10,166
 
     Although these results are consistent with the downward trend described in
 our third quarter report, in which we detailed their causes, we are seeing
 steady improvement in each on the following areas:
 
     --  Operating Expenses
     --  Pricing / Margins
     --  Reduction of Capital Expenditures
 
     Perhaps most importantly, incoming orders continue to suggest that our
 core customers have been relatively unaffected by the current general economic
 slowdown.  Incoming orders through the first two months of fiscal year ending
 January 31, 2002 are running about 4% behind the same period for the fiscal
 year ended January 31, 2001, but we have quoted on a number of longer term
 projects that have a good probability of turning into orders, and we have
 added several new public school accounts that we didn't have last year.
     We are confident enough about these prospects to have scheduled and
 staffed for an annual shipping plan of approximately $300,000,000.  We monitor
 incoming orders, bidding success, and backlog on a daily basis, and we will
 adjust our forecast and production levels as appropriate.
     Since announcing a corporate consolidation and associated layoff in
 December 2000, we have cut total monthly operating expenses.  We are now
 operating under a single corporate umbrella, as opposed to our former
 structure with two autonomous divisions and a corporate administrative group.
     This improvement in efficiency is due not only to our layoff of
 141 management, administrative, and support personnel, which we completed in
 December 2000, but also to our Assemble-to-Ship (ATS) program and improvements
 in the seasonal utilization of production and warehouse workers.
     ATS, which we'll describe further in our next report, is designed to
 support higher sales with fewer employees and less inventory.  As part of this
 program we have reduced factory output for the first quarter of 2001, in
 addition to shifting production toward more versatile components that will be
 assembled closer to their summer delivery dates.  The intended long-term
 operating effect of ATS is a stabilization of production levels and a
 permanent reduction in the ratio of inventory to sales.
     The reduction in factory output is expected to result in a larger reported
 operating loss for the first quarter of 2001.  Keep in mind that although we
 recorded a one-time gain from the sale of our Torrance warehouse in April
 2000, we recorded an operating loss of approximately $2,200,000 in that
 quarter.  High levels of output further moderated last year's first quarter
 results, but caused an abrupt slowdown in quarters three and four, with
 proportionate under absorption of overhead.
     Although we don't actively manage absorption for its own sake, we also
 don't want the accounting connected with it to generate false impressions
 about the improved efficiency of underlying operations.  Reducing inventory
 while simultaneously increasing its versatility is the right thing to do, even
 though it results in lower output and lower overhead absorption in the short
 term.
     We are currently in the process of implementing a general price increase.
 Although this is easy to announce, it's a bit more difficult to actually
 achieve.  Many of our direct customers buy under annual contracts, which will
 expire on a staggered basis throughout the year, and therefore price increases
 can be expected to have an increasing effect on margins throughout the year.
 On the commercial side of our business, we have maintained favorable pricing
 for our most efficient dealers while raising prices to those who require more
 expensive services.
     We will have a clearer picture of the impact of these pricing changes in
 early summer, when the bulk of our orders come in.  So far, we have maintained
 all large accounts that were part of last year's sales volume, and in fact we
 have continued to add new customers even in situations where our prices have
 gone up.  These particular cases have reaffirmed our conviction that most
 public school administrators require service and quality in addition to
 competitive pricing, and that they're willing to pay a fair price for the
 right combination.
     We must at this point issue a warning about extrapolating early-season
 operating improvements and apparent success in our price increase into hard
 estimates of year-end performance.  We have not made any such estimates
 internally, since market conditions and customer response are so difficult to
 predict six months in advance.  We have never offered "guidance" or
 "forecasts", and we do not intend this report to serve as either.
 Nonetheless, our general conclusion after two months of operations and about
 half of the public school bidding season is that combined education and
 commercial shipments will be in the $300,000,000 range for fiscal 2001.
     We are also making good progress in reducing capital expenditures to one-
 half the rate of depreciation.  For the next several years, we expect capital
 expenditures to be budgeted at $7,000,000 annually, while depreciation is
 expected to exceed $14,000,000.  We will focus on product development and
 maintenance of existing equipment and tooling.  These investments can be fully
 supported while still meeting our goal of creating a leaner capital structure
 for the Company.  The Company will use cash flow generated from operations to
 pay off debt associated with our new plant in Conway, Arkansas and to buy back
 Company Stock.
     As usual, we will be offering an expanded treatment of each of these
 initiatives in our Annual Report to Shareholders, due to be mailed in the
 middle of May.  We'll also update our strategic vision for the Company, which
 is appropriate following three years of unprecedented capital investments.
 For those of you interested in visiting us in person, our Annual Shareholders'
 Meeting will be held on June 12, 2001 at our corporate offices in Torrance,
 California.  We hope to see many of you there.
 
 
                                  Three Months Ended       Fiscal Year Ended
                               01/31/2001   01/31/2000  01/31/2001  01/31/2000
                                      (in thousands except per share data)
 
     Sales (c)                    $45,316    $47,297     $287,342    $268,079
     Income /(Loss) before
      cum. effect of change
      in accounting principle     $(7,279)     $(810)      $4,313     $10,166
     Cumulative effect of
      change in accounting
      principle (b)                   $--        $--        $(297)        $--
 
 
     Net Income/(Loss)            $(7,279)     $(810)      $4,016     $10,166
 
 
     Amounts per common
      share -- basic
     Income /(Loss) before
      cum. effect of change
      in accounting
      principle (a)                $(0.64)    $(0.07)       $0.38       $0.89
 
     Cumulative effect
      of change in accounting
      principle (b)                   $--        $--       $(0.03)        $--
 
     Net Income / (Loss)           $(0.64)    $(0.07)       $0.35       $0.89
 
 
     Amounts per common
      share - assuming dilution
     Income /(Loss) before
      cum. effect of change
      in accounting
      principle (a)                $(0.64)    $(0.07)       $0.38       $0.87
 
     Cumulative effect of
      change in accounting
      principle (b)                   $--        $--       $(0.03)        $--
 
     Net Income / (Loss)           $(0.64)    $(0.07)       $0.35       $0.87
 
     Weighted average
      shares outstanding:
      - basic (a)                  11,299     11,353       11,338      11,481
      - assuming dilution (a)      11,299     11,353       11,475      11,642
 
     (a)  Adjusted for the 10 % stock dividend declared August 15, 2000 and
          paid September 29, 2000 to shareholders of record September 7, 2000.
 
     (b)  Effective February 1, 2000, the Company adopted the provision of SAB
          No. 101, "Revenue Recognition in Financial Statements."  As a result,
          the Company recognized a cumulative effect of change in accounting
          principle of $297,000 in its statement of income for the quarter
          ended April 30, 2000.
 
     (c)  The prior period statements of operations contain certain
          reclassifications to conform to the presentation required by EITF
          No. 00-10, "Accounting for Shipping and Handling Fees and Costs,"
          which the Company adopted during the fourth quarter of the year ended
          January 31, 2001.
 
 
                                                    01/31/2001      01/31/2000
                                                       000's           000's
 
     Current Assets                                    88,973         89,926
     Non-Current Assets                               110,576        100,937
     Current Liabilities                               35,800         38,503
     Non-Current Liabilities                           69,608         58,526
     Stockholders' Equity                              94,141         93,834
 
 

SOURCE Virco Mfg. Corporation
    TORRANCE, Calif., April 4 /PRNewswire/ -- Except for historical
 information contained herein, the matters set forth in this release include
 forward-looking statements that are dependent on certain risks and
 uncertainties, including such factors, among others, as market acceptance,
 market demand, pricing, material costs, labor and benefit costs, potential
 seasonality and other uncertainties referred to in the Company's filings with
 the Securities and Exchange Commission.
     On April 3, 2001 the management of Virco Mfg. Corporation (Amex:   VIR)
 released the following report on its fourth quarter and annual results for the
 fiscal year ended January 31, 2001.
     Our performance in the year 2000 was, on the whole, disappointing.  Sales
 increased 7.2% from $268,079,000 to $287,342,000, but profits declined from
 $10,166,000 to $4,016,000.  Included in the profit figures were one-time gains
 from the sale of our former Torrance warehouse, recorded in April 2000, and
 the settlement of a claim, recorded in October.  Absent these gains, the
 Company would have produced a loss of approximately $3,400,000.  The following
 chart summarizes our results.
 
                                           01/31/2001              01/31/2000
                                              000's                   000's
      Quarter
        Sales                               $45,316                  $47,297
        Net Loss                             (7,279)                    (810)
 
      Fiscal Year
        Sales                              $287,342                 $268,079
        Net Income                            4,016                   10,166
 
     Although these results are consistent with the downward trend described in
 our third quarter report, in which we detailed their causes, we are seeing
 steady improvement in each on the following areas:
 
     --  Operating Expenses
     --  Pricing / Margins
     --  Reduction of Capital Expenditures
 
     Perhaps most importantly, incoming orders continue to suggest that our
 core customers have been relatively unaffected by the current general economic
 slowdown.  Incoming orders through the first two months of fiscal year ending
 January 31, 2002 are running about 4% behind the same period for the fiscal
 year ended January 31, 2001, but we have quoted on a number of longer term
 projects that have a good probability of turning into orders, and we have
 added several new public school accounts that we didn't have last year.
     We are confident enough about these prospects to have scheduled and
 staffed for an annual shipping plan of approximately $300,000,000.  We monitor
 incoming orders, bidding success, and backlog on a daily basis, and we will
 adjust our forecast and production levels as appropriate.
     Since announcing a corporate consolidation and associated layoff in
 December 2000, we have cut total monthly operating expenses.  We are now
 operating under a single corporate umbrella, as opposed to our former
 structure with two autonomous divisions and a corporate administrative group.
     This improvement in efficiency is due not only to our layoff of
 141 management, administrative, and support personnel, which we completed in
 December 2000, but also to our Assemble-to-Ship (ATS) program and improvements
 in the seasonal utilization of production and warehouse workers.
     ATS, which we'll describe further in our next report, is designed to
 support higher sales with fewer employees and less inventory.  As part of this
 program we have reduced factory output for the first quarter of 2001, in
 addition to shifting production toward more versatile components that will be
 assembled closer to their summer delivery dates.  The intended long-term
 operating effect of ATS is a stabilization of production levels and a
 permanent reduction in the ratio of inventory to sales.
     The reduction in factory output is expected to result in a larger reported
 operating loss for the first quarter of 2001.  Keep in mind that although we
 recorded a one-time gain from the sale of our Torrance warehouse in April
 2000, we recorded an operating loss of approximately $2,200,000 in that
 quarter.  High levels of output further moderated last year's first quarter
 results, but caused an abrupt slowdown in quarters three and four, with
 proportionate under absorption of overhead.
     Although we don't actively manage absorption for its own sake, we also
 don't want the accounting connected with it to generate false impressions
 about the improved efficiency of underlying operations.  Reducing inventory
 while simultaneously increasing its versatility is the right thing to do, even
 though it results in lower output and lower overhead absorption in the short
 term.
     We are currently in the process of implementing a general price increase.
 Although this is easy to announce, it's a bit more difficult to actually
 achieve.  Many of our direct customers buy under annual contracts, which will
 expire on a staggered basis throughout the year, and therefore price increases
 can be expected to have an increasing effect on margins throughout the year.
 On the commercial side of our business, we have maintained favorable pricing
 for our most efficient dealers while raising prices to those who require more
 expensive services.
     We will have a clearer picture of the impact of these pricing changes in
 early summer, when the bulk of our orders come in.  So far, we have maintained
 all large accounts that were part of last year's sales volume, and in fact we
 have continued to add new customers even in situations where our prices have
 gone up.  These particular cases have reaffirmed our conviction that most
 public school administrators require service and quality in addition to
 competitive pricing, and that they're willing to pay a fair price for the
 right combination.
     We must at this point issue a warning about extrapolating early-season
 operating improvements and apparent success in our price increase into hard
 estimates of year-end performance.  We have not made any such estimates
 internally, since market conditions and customer response are so difficult to
 predict six months in advance.  We have never offered "guidance" or
 "forecasts", and we do not intend this report to serve as either.
 Nonetheless, our general conclusion after two months of operations and about
 half of the public school bidding season is that combined education and
 commercial shipments will be in the $300,000,000 range for fiscal 2001.
     We are also making good progress in reducing capital expenditures to one-
 half the rate of depreciation.  For the next several years, we expect capital
 expenditures to be budgeted at $7,000,000 annually, while depreciation is
 expected to exceed $14,000,000.  We will focus on product development and
 maintenance of existing equipment and tooling.  These investments can be fully
 supported while still meeting our goal of creating a leaner capital structure
 for the Company.  The Company will use cash flow generated from operations to
 pay off debt associated with our new plant in Conway, Arkansas and to buy back
 Company Stock.
     As usual, we will be offering an expanded treatment of each of these
 initiatives in our Annual Report to Shareholders, due to be mailed in the
 middle of May.  We'll also update our strategic vision for the Company, which
 is appropriate following three years of unprecedented capital investments.
 For those of you interested in visiting us in person, our Annual Shareholders'
 Meeting will be held on June 12, 2001 at our corporate offices in Torrance,
 California.  We hope to see many of you there.
 
 
                                  Three Months Ended       Fiscal Year Ended
                               01/31/2001   01/31/2000  01/31/2001  01/31/2000
                                      (in thousands except per share data)
 
     Sales (c)                    $45,316    $47,297     $287,342    $268,079
     Income /(Loss) before
      cum. effect of change
      in accounting principle     $(7,279)     $(810)      $4,313     $10,166
     Cumulative effect of
      change in accounting
      principle (b)                   $--        $--        $(297)        $--
 
 
     Net Income/(Loss)            $(7,279)     $(810)      $4,016     $10,166
 
 
     Amounts per common
      share -- basic
     Income /(Loss) before
      cum. effect of change
      in accounting
      principle (a)                $(0.64)    $(0.07)       $0.38       $0.89
 
     Cumulative effect
      of change in accounting
      principle (b)                   $--        $--       $(0.03)        $--
 
     Net Income / (Loss)           $(0.64)    $(0.07)       $0.35       $0.89
 
 
     Amounts per common
      share - assuming dilution
     Income /(Loss) before
      cum. effect of change
      in accounting
      principle (a)                $(0.64)    $(0.07)       $0.38       $0.87
 
     Cumulative effect of
      change in accounting
      principle (b)                   $--        $--       $(0.03)        $--
 
     Net Income / (Loss)           $(0.64)    $(0.07)       $0.35       $0.87
 
     Weighted average
      shares outstanding:
      - basic (a)                  11,299     11,353       11,338      11,481
      - assuming dilution (a)      11,299     11,353       11,475      11,642
 
     (a)  Adjusted for the 10 % stock dividend declared August 15, 2000 and
          paid September 29, 2000 to shareholders of record September 7, 2000.
 
     (b)  Effective February 1, 2000, the Company adopted the provision of SAB
          No. 101, "Revenue Recognition in Financial Statements."  As a result,
          the Company recognized a cumulative effect of change in accounting
          principle of $297,000 in its statement of income for the quarter
          ended April 30, 2000.
 
     (c)  The prior period statements of operations contain certain
          reclassifications to conform to the presentation required by EITF
          No. 00-10, "Accounting for Shipping and Handling Fees and Costs,"
          which the Company adopted during the fourth quarter of the year ended
          January 31, 2001.
 
 
                                                    01/31/2001      01/31/2000
                                                       000's           000's
 
     Current Assets                                    88,973         89,926
     Non-Current Assets                               110,576        100,937
     Current Liabilities                               35,800         38,503
     Non-Current Liabilities                           69,608         58,526
     Stockholders' Equity                              94,141         93,834
 
 SOURCE  Virco Mfg. Corporation