American Woodmark 10-K 2006
Documents found in this filing:
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
For the fiscal year ended April 30, 2006
For the transition period from to .
Commission File Number 0-14798
AMERICAN WOODMARK CORPORATION
(Exact name of the registrant as specified in its charter)
3102 Shawnee Drive, Winchester, Virginia 22601
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: (540) 665-9100
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934. Yes ¨ No x
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 registrants 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. ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Large accelerated filer ¨ Accelerated filer x Non-accelerated filer ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes ¨ No x
The aggregate market value of the registrants Common Stock, no par value, held by non-affiliates of the registrant as of October 31, 2005, the last business day of the Companys most recent second quarter was $387,492,335.
As of June 26, 2006, 15,960,896 shares of the Registrants Common Stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrants Annual Report to Shareholders for the fiscal year ended April 30, 2006 (2006 Annual Report) are incorporated by reference into Parts I and II of this Form 10-K.
Portions of the Registrants definitive Proxy Statement for the Annual Meeting of Shareholders to be held on August 24, 2006 (Proxy Statement) are incorporated by reference into Parts II and III of this Form 10-K.
Item 1. BUSINESS
American Woodmark Corporation (American Woodmark or the Company) manufactures and distributes kitchen cabinets and vanities for the remodeling and new home construction markets. American Woodmark was formed in 1980 by the four principal managers of the Boise Cascade Cabinet Division through a leveraged buyout of that division. American Woodmark was operated privately until July of 1986 when it became a public company through a registered public offering of its common stock.
American Woodmark currently offers framed stock cabinets in approximately 340 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 product offering of stock cabinets includes approximately 80 door designs in nine colors. Stock cabinets consist of a common box with standard interior components and an oak, cherry, maple or hickory front frame.
Products are primarily sold under the brand names of American Woodmark®, Timberlake®, and Shenandoah Cabinetry®.
American Woodmarks products are sold on a national basis across the United States to the remodeling and new home construction markets. The Company services these markets through three primary channels: home centers, major builders, and independent dealers and distributors. The Company distributes its products to each market channel directly from six assembly plants through a third party logistics network.
The primary raw materials used include oak, maple, cherry, and hickory lumber. Additional raw materials include paint, particleboard, manufactured components, and hardware. The Company currently purchases paint from one supplier; however, other sources are available. Other raw materials are purchased from more than one source and are readily available.
American Woodmark operates in a highly fragmented industry that is composed of several thousand local, regional, and national manufacturers. The Companys principal means for competition is its breadth and variety of product offering, expanded service capabilities, and affordable quality. American Woodmark believes that no other company in the industry has more than a 20% share of the market. The Company also believes it is one of the three largest manufacturers of kitchen cabinets in the United States.
The Companys business has historically been subject to seasonal influences, with higher sales typically realized in the second and fourth fiscal quarters. General economic forces and changes in the Companys customer mix have reduced seasonal fluctuations in revenue over the past few years.
During the last fiscal year, American Woodmark had two primary customers, The Home Depot and Lowes Companies, Inc., which each accounted for more than 10% of sales. The loss of either customer could have a material adverse effect on the Company.
As of April 30, 2006, the Company had 6,360 employees. Approximately 12% of the Companys employees are represented by labor unions. The Company believes that employee relations are good.
American Woodmarks annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports are available free of charge on the Companys Web site at www.americanwoodmark.com as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission. The contents of the Companys website are not, however, part of this report.
Item 1A. RISK FACTORS
There are a number of business risks and uncertainties that may affect our operations. These risks and uncertainties could cause future results to differ from past performance or expected results, including results described in statements elsewhere in this report that constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial also may adversely impact our business. Should any risks or uncertainties develop into actual events, these developments could have material adverse effects on our business, financial condition, and results of operations. These risks and uncertainties, which we consider to be most relevant to our specific business activities, include, but are not limited to, the following, as well as additional risk factors included in Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations.
Our Business Relies On Residential Construction And Remodeling Activity. Our results of operations are affected by levels of home improvement and residential construction activity, including repair and remodeling and new construction. Interest rates, energy costs, consumer confidence, general and regional economic conditions, and weather conditions and natural disasters can significantly impact levels of home improvement and residential construction activity. We have increased our emphasis on new product development in recent years, and continue to focus on organic growth. Consequently, our financial performance will, in part, reflect our success in implementing our growth strategies in our existing markets and in introducing new products.
We Rely On Key Customers. The size and importance to the Company of individual customers is significant. Larger customers can effect significant changes in their volume of purchases and can otherwise significantly affect the terms and conditions on which we do business. Our sales to The Home Depot and Lowes Companies were approximately 62% of total Company sales for fiscal 2006. Although builders, dealers and other retailers represent other channels of distribution for the Companys products, an unplanned loss of a substantial portion of our sales to The Home Depot or Lowes Companies could have a material adverse impact on the Company.
Our Operating Results Are Affected By The Cost And Availability Of Raw Material. Because we are dependent on outside suppliers for our raw material needs, we must obtain sufficient quantities of quality raw materials from our suppliers at acceptable prices and in a timely manner. We have no long-term supply contracts with our key suppliers. A substantial decrease in the availability of products from our suppliers or the loss of key supplier arrangements could adversely impact our results of operations.
We May Not Be Able To Maintain Or Raise Prices In Response To Inflation And Increasing Costs. Short-term market and competitive pressures may prohibit us from raising prices to offset inflationary raw material and freight costs, which would adversely impact profit margins.
Item 1B. UNRESOLVED STAFF COMMENTS
Item 2. PROPERTIES
American Woodmark leases its Corporate Office which is located in Winchester, Virginia. In addition, the Company leases two and owns 13 manufacturing facilities located primarily in the eastern United States. The Company also leases nine service centers and four additional office centers located throughout the United States that support the sale and distribution of products to each market channel.
Primary properties as of April 30, 2006 include:
Item 3. LEGAL PROCEEDINGS
In response to this Item, the information under Legal Matters under Note I Commitments and Contingencies to the Consolidated Financial Statements and under the caption Legal Matters under Managements Discussion and Analysis in the 2006 Annual Report to Shareholders 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 2006.
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Registrant as of April 30, 2006 are as follows:
Item 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
In response to this Item, the information under Market Information in the 2006 Annual Report is incorporated herein by reference.
The following table details share repurchases during the fourth quarter:
Item 6. SELECTED FINANCIAL DATA
In response to this Item, the information under Five-Year Selected Financial Information in the 2006 Annual Report to Shareholders is incorporated herein by reference.
Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In response to this Item, the information under Managements Discussion and Analysis in the 2006 Annual Report to Shareholders is incorporated herein by reference.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In response to this Item, the information under the caption Risk Factors in Managements Discussion and Analysis in the 2006 Annual Report to Shareholders is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
In response to this Item, the Consolidated Financial Statements, Notes to the Consolidated Financial Statements, the Reports of Independent Registered Public Accounting Firms, Managements Report on Internal Control over Financial Reporting, and the Report of Independent Registered Public Accounting Firm, in the 2006 Annual Report to Shareholders are incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
In response to this Item, the information under Statements Concerning Audit Services and Fees in the Proxy Statement is incorporated herein by reference.
Item 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures. The Company maintains a system of disclosure controls and procedures that are designed to provide reasonable assurance that information, which is required to be timely disclosed, is accumulated and communicated to management in a timely fashion. An evaluation of the effectiveness of the design and operation of the Companys disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange
Act))(Disclosure Controls) was performed as of the end of the period covered by this report. This evaluation was performed under the supervision and with the participation of the Companys management, including the Companys Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, the Companys Chief Executive Officer and Chief Financial Officer concluded that these Disclosure Controls are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Companys management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and are effective to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified by the SECs rules and forms.
Managements Report on Internal Control over Financial Reporting. Managements report on internal control over financial reporting and the attestation report of KPMG LLP, the Companys independent registered public accounting firm, on managements assessment of internal control over financial reporting are included in our Annual Report to Shareholders for the year ended April 30, 2006 and are incorporated in this Item 9A by reference. Our Annual Report to Shareholders is included as Exhibit 13 hereto.
Changes in Internal Control over Financial Reporting. There has been no change in the Companys internal control over financial reporting during the fiscal quarter ended April 30, 2006 that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.
Item 9B. OTHER INFORMATION
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
In response to this Item, and in accordance with general Instruction G(3) of Form 10-K, (1) the information concerning the Companys directors and compliance with Section 16(a) of the Exchange Act required by this Item is incorporated by reference to Nominees and Section 16(a) Beneficial Ownership Reporting Compliance in the Proxy Statement, (2) the information concerning the executive officers of the Registrant is included in Part I of this report under the caption Executive Officers of the Registrant, (3) the information concerning the Audit Committee, including the members of the committee, and our Audit Committee financial expert is incorporated by reference to the discussion under the heading Audit Committee within the Board and Committee Meetings in the Proxy Statement, and (4) the information concerning the Code of Business Conduct and Ethics governing our Chief Executive Officer, Chief Financial Officer, Controller, and Treasurer can be found on our Web site at www.americanwoodmark.com and is incorporated by reference to Corporate Governance in the Proxy Statement.
Item 11. EXECUTIVE COMPENSATION
In response to this Item, and in accordance with general Instruction G(3) of Form 10-K, the information under Certain Information Concerning the Board of Directors and its Committees Compensation of the Board, Compensation of Executive Officers, Report of the Compensation Committee and Performance Graph in the Proxy Statement is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
In response to this Item, and in accordance with general Instruction G(3) of Form 10-K, the information under Security Ownership of Certain Beneficial Owners and Management in the Proxy Statement is incorporated herein by reference.
Equity Compensation Plans
The following table summarizes our equity compensation plans as of April 30, 2006:
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In response to this Item, and in accordance with general Instruction G(3) of Form 10-K, the information under Certain Transactions in the Proxy Statement is incorporated herein by reference.
Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
In response to this Item, and in accordance with general Instruction G(3) of Form 10-K, the information under Statements Concerning Audit Services and Fees in the Proxy Statement, with respect to principal accountant fees and services, is incorporated herein by reference.
Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) 1. Financial Statements
The following consolidated financial statements of American Woodmark Corporation are incorporated by reference to Item 8 of this report:
Consolidated Balance Sheets as of April 30, 2006 and 2005
Consolidated Statements of Income - for each year of the three-year period ended April 30, 2006
Consolidated Statements of Shareholders Equity and Comprehensive Income - for each year of the three-year period ended April 30, 2006
Consolidated Statements of Cash Flows - for each year of the three-year period ended April 30, 2006
Notes to Consolidated Financial Statements
Reports of Independent Registered Public Accounting Firms
Managements Report on Internal Control over Financial Reporting
Report of Independent Registered Public Accounting Firm
(a) 2. Financial Statement Schedules
The following financial statement schedule is filed as a part of this Form 10-K:
Schedule II Valuation of Qualifying Accounts for each year of the three-year period ended April 30, 2006.
Schedules other than the one listed above are omitted either because they are not required or are inapplicable.
(a) 3. Exhibits
Schedule II - Valuation and Qualifying Accounts
AMERICAN WOODMARK CORPORATION
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.
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.