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8-K - FORM 8-K - VIRCO MFG CORPORATION | a59285e8vk.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
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Contact: Robert A. Virtue, President Douglas A. Virtue, Executive Vice President Robert E. Dose, Vice President Finance Virco Mfg. Corporation (310) 533-0474 |
Virco Announces Fourth Quarter Results
Torrance, California April 15, 2011 Virco Mfg. Corporation (NASDAQ: VIRC) today
announced fourth quarter and year-to-date results in the following letter to stockholders from
Robert A. Virtue, President and CEO:
As with the past several big recessions in American History (1982-83, 1991-92, 2001-2002), the
effects of the Great Recession (2008-2009) continued to have a lagging impact on tax collections
and purchasing behaviors of public institutions long after the recession had officially ended. In
2010 this was certainly the case for our primary market of K-12 furniture, fixtures and equipment,
which by our estimate suffered a contraction of roughly 20%.
Against that backdrop, and as with prior recessions, we fared somewhat better within our own
market, gaining share and expanding our list of satisfied customers. Also as with prior
recessions, these share gains came at the cost of profitability and were insufficient to offset the
overall downward pressure on revenue. For the year ended January 31, 2011, revenues dropped 5%
from $190,513,000 to $180,995,000. For the 4th quarter comprising November through
January, revenues declined 11.3% from $25,921,000 to $22,993,000. Our net loss for the full year
was $17,594,000, which consisted of a pre-tax loss of $8,587,000 plus a valuation allowance on
deferred tax assets. Operating results for the quarter were a pre-tax loss of $6,948,000 compared
to a pre-tax loss in last years fourth quarter of $7,202,000. This slight quarterly improvement
reflects the implementation of cost controls which are ongoing and may yield further improvements
as our annual cycle progresses through its summer peak with seasonal volumes that we believe will
be 4-5 times higher than these winter lows.
Here are the numbers for the 4th quarter and the full fiscal year 2010:
Three Months Ended | Twelve Months Ended | |||||||||||||||
As Adjusted (b) | As Adjusted (b) | |||||||||||||||
1/31/2011 | 1/31/2010 | 1/31/2011 | 1/31/2010 | |||||||||||||
(In thousands, except share data) | (In thousands, except share data) | |||||||||||||||
Net sales |
$ | 22,993 | $ | 25,921 | $ | 180,995 | $ | 190,513 | ||||||||
Cost of sales |
18,055 | 19,952 | 129,621 | 129,423 | ||||||||||||
Gross profit |
4,938 | 5,969 | 51,374 | 61,090 | ||||||||||||
Selling, general
administrative &
other expense |
11,886 | 13,171 | 59,961 | 62,541 | ||||||||||||
Loss before income
taxes |
(6,948 | ) | (7,202 | ) | (8,587 | ) | (1,451 | ) | ||||||||
Income tax expense
(benefits) |
9,756 | (2,513 | ) | 9,007 | (726 | ) | ||||||||||
Net loss |
$ | (16,704 | ) | $ | (4,689 | ) | $ | (17,594 | ) | $ | (725 | ) | ||||
Cash dividend
declared |
$ | 0.00 | $ | 0.00 | $ | 0.10 | $ | 0.10 | ||||||||
Net loss per share
- basic (a) |
$ | (1.18 | ) | $ | (0.33 | ) | $ | (1.25 | ) | $ | (0.05 | ) | ||||
Weighted average
shares outstanding
- basic (a) |
14,152 | 14,124 | 14,130 | 14,155 |
(a) | Net loss per share was calculated based on basic shares outstanding due to the anti-dilutive effect on the inclusion of common stock equivalent shares. | |
(b) | The results of operations and ending balance sheet for 01/31/2010 have been modified to reflect a change in accounting principle. |
As Adjusted (b) | ||||||||
1/31/2011 | 1/31/2010 | |||||||
Current assets |
$ | 49,515 | $ | 61,312 | ||||
Non-current assets |
51,073 | 61,120 | ||||||
Current liabilities |
20,017 | 22,926 | ||||||
Non-current liabilities |
30,169 | 30,236 | ||||||
Stockholders equity |
50,402 | 69,270 |
We are often asked our opinion about the future of the domestic educational furniture market.
Simply stated, demand for our furniture depends on the health of the entire public sector,
including federal, state, and especially municipal agencies. Each of these depends on different
funding streams, all of which appear to be recovering at different rates. We hesitate to
generalize about macro- and micro-economic trends, but until tax receipts at local and state levels
return to something like their pre-recession norms, we expect our market to reflect the highly
uneven nature of the current recovery.
As corroboration, last year we saw a resurgence of support for public education in parts of the
country that didnt participate in the real estate bubble and subsequent crash. Statisticians
might have called this a regression to the mean, with bigger urban and suburban districts
suffering disproportionately compared to districts in smaller communities with agricultural and/or
resource-based economies.
Broadly speaking, this regression to the mean seems to be part of an ongoing fragmentation of the
American public school system, which has long been dominated by major urban or suburban districts
with their large populations and tax bases. As those populations and tax bases shift in search of
employment and more affordable, livable communities, and as parents seek out educational
alternatives such as charters and private schools, we expect the pattern of fragmentation to
continue. This may introduce a granularity to our market that hasnt existed since the suburban
demographic shift of the baby boom following WWII. Whether or not these regional trends persist
over the long term, we believe fragmentation and funding uncertainties will continue to influence
our market for at least the next few years.
On the positive side, we believe our domestic factories with their shorter supply chains, in
combination with a multi-channel distribution strategy, position us to respond quickly and
effectively to this rapidly evolving market.
To further support the changing needs of educators, we are continuing our aggressive product
development efforts. In addition, were actively expanding our full suite of project management
services. These service offerings now match or exceed those of certain pure distributors, with
the added benefit of more dependable quality and delivery from our own factories. In our opinion
this makes us the most reliable single-source supplier for Americas educators.
Were also actively developing various international markets, with their compelling demographics
and currently strong funding. Adult education remains a top focus as well, because we believe
adult re-education will play an important role in the long term recovery from this recession. As
we continue with our brand development efforts we will as always pay close attention to the balance
sheet (despite last years headwinds, tight controls allowed us to generate positive operating cash
flow of $5,452,000).
Most importantly, we continue to focus on our core constituency: American K-12 educators and
students. We believe more fervently than ever that education is the best path to prosperity for a
healthy civil society. Our close relationships with educators give us crucial insight into their
needs, including the need to support rapidly evolving classroom technologies. We intend to use our
design/engineering skills and agile factories to serve with custom products and services if
necessary the educators and students whose teaching and learning will shape this countrys
future.
This news release contains forward-looking statements as defined by the Private Securities
Litigation Reform Act of 1995. These statements include, but are not limited to, statements
regarding: business strategies; market demand and product development; economic conditions; the
educational furniture industry; international markets; state and municipal bond funding; adult
re-education; the addition and development of multi-channel distribution partners; the
fragmentation of American public school systems and our ability to respond to this change;
sustainability initiatives; pricing; and seasonality. Forward-looking statements are based on
current expectations and beliefs about future events or circumstances, and you should not place
undue reliance on these statements. Such statements involve known and unknown risks,
uncertainties,
assumptions and other factors, many of which are out of our control and difficult to forecast.
These factors may cause actual results to differ materially from those which are anticipated. Such
factors include, but are not limited to: changes in general economic conditions including raw
material, energy and freight costs; state and municipal bond funding; state, local and municipal
tax receipts; the seasonality of our markets; the markets for school and office furniture
generally; the specific markets and customers with which we conduct our principal business; and the
competitive landscape, including responses of our competitors to changes in our prices. See our
Annual Report on Form 10-K for the year ended January 31, 2011, and other materials filed with the
Securities and Exchange Commission for a further description of these and other risks and
uncertainties applicable to our business. We assume no, and hereby disclaim any, obligation to
update any of our forward-looking statements. We nonetheless reserve the right to make such
updates from time to time by press release, periodic reports or other methods of public disclosure
without the need for specific reference to this press release. No such update shall be deemed to
indicate that other statements which are not addressed by such an update remain correct or create
an obligation to provide any other updates.
End of filing