SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended April 30, 1998 Commission File Number 0-14798 AMERICAN WOODMARK CORPORATION (Exact name of the registrant as specified in its charter) 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) Registrant's telephone number, including area code: (540) 6659100 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered ------------------- ------------------------ None None Securities registered pursuant to section 12(g) of the Act: Common Stock (no par value) (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the registrant's Common Stock, no par value, held by non-affiliates of the registrant at June 23, 1998 was $125,909,639 based on the closing price on that date on the NASDAQ Exchange. As of June 23, 1998, 7,811,080 shares of the Registrant's Common Stock were outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Annual Report to Shareholders for the fiscal year ended April 30, 1998 (1998 Annual Report) are incorporated by reference into Parts I and II of this Form 10-K. Portions of the definitive Proxy Statement for the Annual Meeting of Shareholders to be held on August 21, 1998 (Proxy Statement) are incorporated by reference into Part III of this Form 10-K.
PART I 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 approximately 120 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 forty door designs and seven colors. Stock cabinets consist of a common box with standard interior components and an oak, cherry, maple or hickory front frame. The Company's products are sold under the brand names of American Woodmark(R), Crestwood(R), Timberlake(R), Scots Pride(R), and Coventry and Case(R) 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 70% of sales during the fiscal year ended April 30, 1998 were to the remodeling market and 30% 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 include the lumber species oak, maple, cherry and hickory. Additional raw materials include paint, particleboard, manufactured components, and hardware. The Company currently purchases paint from one supplier; however, other sources are available. Oak, maple, cherry and hickory lumber, particleboard, 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. 2
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, 1998, the Company had two customers, The Home Depot and Lowe's Companies, Inc., who each accounted for in excess of 10% of the Company's sales. At April 30, 1998, the Company had 2,245 employees. Approximately 31% of its employees are represented by labor unions. Management believes its employee relations are excellent. 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 six office centers located throughout the United States which support the distribution of products to each market channel. Item 3. LEGAL PROCEEDINGS "Legal Matters" under Note I to the Financial Statements in the 1998 Annual Report is incorporated herein by reference. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of security holders during the fourth quarter of fiscal 1998. PART II Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDERS MATTERS "Market Information" in the 1998 Annual Report is incorporated herein by reference. 3
Item 6. SELECTED FINANCIAL DATA "Five Year Selected Financial Information" in the 1998Annual Report is incorporated herein by reference. Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS "Management's Discussion and Analysis" in the 1998 Annual Report is incorporated herein by reference. Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The Financial Statements, Notes to Financial Statements, "Quarterly Results of Operations," and the Report of Ernst & Young LLP, Independent Auditors, in the 1998 Annual Report are incorporated herein by reference. Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III 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 Proxy Statement, which information is incorporated herein by reference. The executive officers of the Registrant as of April 30, 1998 are as follows: Name Age Position Held During Past Five Years ---- --- ------------------------------------ William F. Brandt, Jr. 52 Chairman of the Board from August 1996 to present Chairman and Chief Executive Officer from 1995 to 1996 Chairman and President from 1980 to 1995 4
James J. Gosa 50 President and Chief Executive Officer from August, 1996 to present President and Chief Operating Officer from 1995 to 1996 Executive Vice President from 1993 to 1995 David L. Blount 50 Vice President, Manufacturing from May, 1995 to present Vice President, Component Manufacturing from 1994 to 1995 Vice President, Manufacturing from 1983 to 1994 Kent B. Guichard 42 Vice President,Finance and Chief Financial Officer from November 1995 to present Vice President, Finance from 1993 to 1995 Philip S. Walter 47 Vice President and General Manager, New Business Development from August, 1997 to present President, Professional Turf Products, Inc.; Managing Director, National Support Network, Inc. (Subsidiaries of The Toro Company) from January 1996 to December 1996 Director, Marketing and Sales, The Toro Company, Irrigation Division, from 1990 to 1996 Ian J. Sole 42 Vice President, Sales and Marketing from October, 1997 to present Vice President, International, Hamilton Beach Proctor-Silex from 1996 to 1997 Vice President, Marketing, Hamilton Beach ProctorSilex from 1991 to 1995 For information concerning Item 405, disclosure of delinquent filers, see the information under the caption, Section 16(a) "Beneficial Ownership Reporting Compliance" in the Proxy Statement, which information is incorporated herein by reference. 5
Item 11. EXECUTIVE COMPENSATION The "Compensation of Executive Officers" segment in the Proxy Statement is incorporated herein by reference. 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. 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. 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, 1998 and 1997 Statement of Income and Retained Earnings - for each year of the threeyear period ended April 30, 1998 Statement of Cash Flows - for each year of the three-year period ended April 30, 1998 (a) 2. Financial Statement Schedules Reference is made to Financial Statement schedules and supplementary data under Item 8 in Part II hereof, where these documents are listed. The following Financial Statement schedule is included in a separate section of this report: Schedule Page -------- ---- II. Valuation and qualifying accounts 11 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. 6
(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) 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) 10.1 (h) - Amendment to Amended and Restated Loan Agreement and to Reimbursement Agreements as of July 8, 1996 10.1 (i) - Amendment to Amended and Restated Loan Agreement as of August 31, 1996 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) 10.2 (c) - Second Amendment to Security Agreement as of August 31, 1996 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) 8
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 (9) 10.7 (e) - 1996 Stock Option Plan (10) 10.8 (a) - 1998 Annual Incentive Plan for Chairman and President/CEO 10.8 (b) - 1998 Annual Incentive Plan for Vice Presidents 10.9 - ISDA Master Agreement between NationsBank, N.A. and American Woodmark Corporation as of May 29, 1998 11 - Computation of Earnings Per Share 13 - 1998 Annual Report to Shareholders 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. 9
(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. (9) - Incorporated by reference to exhibits filed with Form S-8, No. 333-12631. (10) - Incorporated by reference to exhibits filed with Form S-8, No. 333-12623. 10
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, 1998: Allowance for doubtful accounts $ 210 $ -- $(87)(b) $ 123 ------- ------ -------- ------ Reserve for cash discounts $ 303 $3,883(c) $(3,821)(d) $ 365 ------- ------ -------- ------ Reserve for sales returns and allowances $ 868 $5,051(c) $(4,650) $1,269 ------- ------ -------- ------ Year ended April 30, 1997: Allowance for doubtful accounts $ 629 $ 830 $(1,249)(b) $ 210 ------- ------ -------- ------ Reserve for cash discounts $ 250 $3,236(c) $(3,183)(d) $ 303 ------- ------ -------- ------ Reserve for sales returns and allowances $ 627 $4,492(c) $(4,251) $ 868 ------- ------ ------- ------ 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 ------- ------ -------- ------ (a) All reserves relate to accounts receivable. (b) Principally write-offs, net of collections. (c) Reduction of gross sales. (d) Cash discounts granted. 11
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/ JAMES J. GOSA ----------------------------- James J. Gosa President and Chief Executive Officer 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/ KENT B. GUICHARD /s/MARTHA M. DALLY - ------------------------------ ------------------------- Kent B. Guichard Martha M. Dally Vice President, Finance and Director Chief Financial Officer /s/ WILLIAM A. ARMSTRONG /s/FRED S. GRUNEWALD - ------------------------------ -------------------------- William A. Armstrong Fred S. Grunewald Corporate Controller Director /s/ WILLIAM F. BRANDT, JR. /s/C. ANTHONY WAINWRIGHT - ------------------------------ -------------------------- William F. Brandt, Jr. C. Anthony Wainwright Chairman of the Board Director /s/ DANIEL T. CARROLL - ------------------------------ Daniel T. Carroll Director 12
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 13