American Woodmark - 10-Q quarterly report FY

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, and (2) has been subject to such filing requirements for the past 90 days. Yes  x     No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month period ended July 31, 2002 are not necessarily indicative of the results that may be expected for the year ended April 30, 2003. The unaudited financial statements should be read in conjunction with the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended April 30, 2002.

In August 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets” which addresses the financial accounting and reporting for the impairment or disposal of long-lived assets. The Company was required to adopt SFAS No. 144 as of May 1, 2002. The adoption of this statement had no impact on the Company’s financial position or results of operations.

In June 2002, the Financial Accounting Standards Board issued SFAS No. 146, “Accounting for Costs from Exit or Disposal Activities” which requires, among other things, that a liability for costs associated with an exit or disposal activity be recognized when the liability is incurred. The provisions of this statement shall be effective for exit or disposal activities initiated after December 31, 2002.

The Company’s comprehensive income was $9.1 and $7.4 million for the quarter ended July 31, 2002 and July 31, 2001 respectively. Comprehensive income differs from net income for the quarter ended July 2002 due to an increase in the unrealized loss on the Company’s interest rate swap agreements.

The following table sets forth the computation of basic and diluted earnings per share:

The components of customer receivables were:

The components of inventories were:

An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations must necessarily be based on management’s estimates of expected year-end inventory levels and costs. Since they are subject to many forces beyond management’s control, interim results are subject to the final year-end LIFO inventory valuation.

Supplemental disclosures of cash flow information:

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.

Net sales for the first quarter of fiscal 2003 were $137.5 million, an increase of 17.3% over the same period in fiscal 2002. Higher sales were the result of continued growth in shipments to both the remodel and new home construction markets. Overall unit volume between periods was up 12.4% due to the combination of new products and new outlets. The average revenue per unit in fiscal 2003 increased 4.4% over the first quarter of fiscal 2002 due to a shift in product mix.

Gross margin for the first quarter of fiscal 2003 was 26.0%, which was comparable to the gross margin of 25.9% in the first quarter of fiscal 2002. Lower material and freight costs were offset by increases in labor and overhead costs. Material costs were lower due to favorable product mix and price reductions on certain commodities as a result of reduced market demand for these items. Delivery costs improved due to increased capacity utilization. Labor costs increased due to higher crewing to support the start-up of the Company’s two new facilities. Overhead costs were up due to higher depreciation and other operating costs associated with the Company’s capital expansion program.

Selling and marketing expenses for the first quarter of fiscal 2003 were $13.7 million or 10.0% of sales compared to $12.0 million or 10.3% of sales for the same period in fiscal 2002. The increase of $1.7 million was due to promotional expenses to support merchandising efforts and employee pay-for-performance plans.

General and administrative expenses for the first quarter of fiscal 2003 were $6.8 million or 4.9% of net sales compared to $5.5 million or 4.7% of net sales in the first quarter of fiscal 2002. The increase in G&A expense of $1.3 million was the result of increased headcount, miscellaneous overhead, and higher costs for performance based employee incentive plans.

Interest expense decreased $261 thousand from the same period of the prior fiscal year. The decrease is attributable to capitalized interest as a result of the company’s capital expansion program.

The Company’s operating activities generated $12.3 million in net cash during the first quarter of fiscal 2003 compared to $9.4 million for the same period in fiscal 2002, due primarily to an increase in net income and an increase in the provision for depreciation and amortization.

Capital spending during the first quarter of fiscal 2003 was $14.5 million compared to $3.8 million in the same period of fiscal 2002. Capital spending rose due to the completion of the assembly facility in Tahlequah, OK, and the new lumber processing facility in Hazard, KY. In addition, the Company continued its investments to expand Monticello, KY, lumber processing and Kingman, AZ, assembly operations. The Company expects to continue with its capital spending plans for the remainder of fiscal 2003 as it completes projects and makes additional investments. Total capital spending is expected to be between $10.5 million and $15.5 million for the remainder of the fiscal year.

Net cash used by financing activities was $6.0 million for the first quarter of fiscal 2003 compared to net cash proceeds of $641 thousand in the first quarter of fiscal 2002. The Company repurchased $5.4 million in common stock and paid cash dividends of $414 thousand during the most recent period. On August 29, 2002 the Board of Directors authorized the use of up to an additional $10 million for the repurchase of the Company’s common stock. The Company announced that repurchases may be made from time-to-time in the open market, in privately negotiated transactions or otherwise, at prices that the Company deems appropriate. This is in addition to the authorization of the $10 million repurchase announced on January 18, 2001, of which the Company has repurchased $9.3 million of its common stock.

Cash flow from operations combined with accumulated cash on hand and available borrowing capacity is expected to be sufficient to meet forecasted working capital requirements, service existing debt obligations, and fund capital expenditures of the remainder of fiscal 2003.

The Company is involved in various suits and claims in the normal course of business that includes claims against the Company pending before the Equal Employment Opportunity Commission. Although management believes that such suits and EEOC 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 any material adverse effect on the Company’s operating results or financial position.

On August 29, 2002, the Board of Directors approved a $.05 per share cash dividend on its Common Stock. The cash dividend will be paid on October 2, 2002, to shareholders of record on September 18, 2002.

The Company’s business has historically been subjected to seasonal influences, with higher sales typically realized in the second and fourth fiscal quarters.

The costs of the Company’s products are subject to inflationary pressures and commodity price fluctuations. Inflationary pressure and commodity price increases have been relatively modest over the past five years. The Company has generally been able over time to recover the effects of inflation and commodity price fluctuations through sales price increases.

On July 31, 2002, the company had no material exposure to changes in interest rates for its debt agreements. All significant borrowings of the company carry a fixed interest rate between 5% and 6%.

We participate in an industry that is subject to rapidly changing conditions. Forward-looking statements, contained in this Management’s Discussion and Analysis are based on current expectations, but there are numerous factors that could cause the Company to experience a decline in sales and/or earnings. These include (1) overall industry demand at reduced levels, (2) economic weakness in a specific channel of distribution, especially the home center industry, (3) the loss of sales from specific customers due to their loss of market share, bankruptcy or switching to a competitor, (4) a sudden and significant rise in basic raw material costs, (5) a dramatic increase to the cost of diesel fuel, and/or transportation related services, (6) the need to respond to price or product initiatives launched by a competitor, and (7) sales growth at a rate that outpaces the Company’s ability to install new capacity. While the Company believes that these risks are manageable and will not adversely impact the long-term performance of the Company, these risks could, under certain circumstances, have a materially adverse impact on operating results.

At the Annual Meeting of Shareholders of American Woodmark Corporation held on August 29, 2002, the holders of 7,350,087 of the total 8,273,251 shares of Common Stock outstanding and eligible to vote duly executed and delivered valid proxies. The shareholders approved the two items outlined within the Company’s Proxy Statement that was solicited to shareholders and reported to the Commission pursuant to Regulation 14A under the Act.

The following items were approved at the Company’s Annual Meeting:

As the members of the Board of Directors were elected individually, the aforementioned tallies pertaining to re-election represent a range of affirmative and negative votes.

(a)  Exhibits.

(b)  Reports on Form 8-K.

The Company did not file any reports on Form 8-K during the three months ended July 31, 2002.

I, James J. Gosa, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of American Woodmark Corporation;

2.  Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report.

Date:  September 11, 2002

I, Kent B. Guichard, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of American Woodmark Corporation;

2.  Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report.

Date:    September 11, 2002