Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jul. 31, 2020 | Sep. 12, 2020 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | VIRCO MFG CORPORATION | |
Entity Central Index Key | 0000751365 | |
Document Type | 10-Q | |
Document Period End Date | Jul. 31, 2020 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --01-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 15,918,642 | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Current Reporting Status | Yes |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jul. 31, 2020 | Jan. 31, 2020 | Jul. 31, 2019 |
Current assets: | |||
Cash | $ 878 | $ 1,150 | $ 877 |
Trade accounts receivables, net | 32,688 | 11,762 | 41,105 |
Other receivables | 60 | 57 | 397 |
Income tax receivable | 535 | 298 | 340 |
Inventories | 49,444 | 43,329 | 59,017 |
Prepaid expenses and other current assets | 2,174 | 1,746 | 2,359 |
Total current assets | 85,779 | 58,342 | 104,095 |
Property, plant and equipment: | |||
Land | 3,731 | 3,731 | 3,731 |
Land improvements | 734 | 717 | 688 |
Buildings and building improvements | 51,182 | 51,200 | 51,192 |
Machinery and equipment | 111,710 | 110,610 | 109,540 |
Leasehold improvements | 1,086 | 990 | 970 |
Total property, plant and equipment | 168,443 | 167,248 | 166,121 |
Less accumulated depreciation and amortization | 129,596 | 127,351 | 125,250 |
Net property, plant and equipment | 38,847 | 39,897 | 40,871 |
Operating lease right-of-use assets | 19,551 | 21,325 | 22,924 |
Deferred tax assets, net | 11,222 | 11,230 | 7,816 |
Other assets, net | 7,970 | 8,198 | 8,256 |
Total assets | 163,369 | 138,992 | 183,962 |
Current liabilities: | |||
Accounts payable | 16,764 | 10,587 | 18,634 |
Accrued compensation and employee benefits | 5,595 | 6,392 | 5,322 |
Current portion of long-term debt | 18,387 | 878 | 35,457 |
Current portion operating lease liability | 4,581 | 3,654 | 3,275 |
Other accrued liabilities | 6,417 | 3,607 | 6,871 |
Total current liabilities | 51,744 | 25,118 | 69,559 |
Non-current liabilities: | |||
Accrued self-insurance retention | 1,494 | 1,410 | 1,686 |
Accrued pension expenses | 21,419 | 21,310 | 13,951 |
Income tax payable | 71 | 70 | 55 |
Long-term debt, less current portion | 15,407 | 15,818 | 16,291 |
Operating lease liability, less current portion | 17,798 | 19,787 | 21,598 |
Other long-term liabilities | 704 | 661 | 557 |
Total non-current liabilities | 56,893 | 59,056 | 54,138 |
Commitments and contingencies (Notes 6, 7 and 13) | |||
Preferred stock: | |||
Authorized 3,000,000 shares, $0.01 par value; none issued or outstanding | 0 | 0 | 0 |
Common stock: | |||
Authorized 25,000,000 shares, $0.01 par value; issued and outstanding 15,918,642 shares at 7/31/2020 and 15,713,549 at 1/31/2020 and 7/31/2019 | 159 | 157 | 157 |
Additional paid-in capital | 119,149 | 118,782 | 118,282 |
Accumulated deficit | (50,955) | (49,810) | (49,392) |
Accumulated other comprehensive loss | (13,621) | (14,311) | (8,782) |
Total stockholders’ equity | 54,732 | 54,818 | 60,265 |
Total liabilities and stockholders’ equity | $ 163,369 | $ 138,992 | $ 183,962 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jul. 31, 2020 | Jan. 31, 2020 | Jul. 31, 2019 |
Statement of Financial Position [Abstract] | |||
Preferred stock, shares authorized (shares) | 3,000,000 | 3,000,000 | 3,000,000 |
Preferred stock, par value (usd per share) | $ 0.01 | $ 0.01 | $ 0.01 |
Preferred stock, shares issued (shares) | 0 | 0 | 0 |
Preferred stock, shares outstanding (shares) | 0 | 0 | 0 |
Common stock, shares authorized (shares) | 25,000,000 | 25,000,000 | 25,000,000 |
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock, shares issued (shares) | 15,918,642 | 15,713,549 | 15,713,549 |
Common stock, shares outstanding (shares) | 15,918,642 | 15,713,549 | 15,713,549 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of (Loss) Income Unaudited - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2020 | Jul. 31, 2019 | |
Income Statement [Abstract] | ||||
Net sales | $ 59,285 | $ 70,359 | $ 76,884 | $ 97,252 |
Costs of goods sold | 36,082 | 41,620 | 48,777 | 59,429 |
Gross profit | 23,203 | 28,739 | 28,107 | 37,823 |
Selling, general and administrative expenses | 15,488 | 18,557 | 27,419 | 31,238 |
Loss on sale of property, plant & equipment | 0 | 3 | 0 | 3 |
Operating income | 7,715 | 10,179 | 688 | 6,582 |
Pension expense | 542 | 188 | 1,084 | 376 |
Interest expense | 494 | 907 | 898 | 1,607 |
(Loss) income before income taxes | 6,679 | 9,084 | (1,294) | 4,599 |
Income tax (benefit) expense | 3,126 | 3,217 | (149) | 1,799 |
Net (loss) income | $ 3,553 | $ 5,867 | $ (1,145) | $ 2,800 |
Net income (loss) per common share: | ||||
Basic (usd per share) | $ 0.23 | $ 0.38 | $ (0.07) | $ 0.18 |
Diluted (usd per share) | $ 0.23 | $ 0.38 | $ (0.07) | $ 0.18 |
Weighted average shares outstanding: | ||||
Basic (shares) | 15,733 | 15,561 | 15,694 | 15,524 |
Diluted (shares) | 15,746 | 15,568 | 15,694 | 15,529 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income Unaudited - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2020 | Jul. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net (loss) income | $ 3,553 | $ 5,867 | $ (1,145) | $ 2,800 |
Other comprehensive income: | ||||
Pension adjustments (net of tax expense of $120 and $45 for Three Months Ended July 31, 2020 and 2019, respectively. Net of tax expense of $240 and $91 for Six Months Ended July 31, 2020 and 2019, respectively) | 345 | 130 | 690 | 260 |
Net comprehensive (loss) income | $ 3,898 | $ 5,997 | $ (455) | $ 3,060 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive Income (Loss) Unaudited (Parentheticals) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2020 | Jul. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Pension adjustments, tax | $ 120 | $ 45 | $ 240 | $ 91 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows Unaudited - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 31, 2020 | Jul. 31, 2019 | |
Operating activities | ||
Net (loss) income | $ (1,145) | $ 2,800 |
Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||
Depreciation and amortization | 2,675 | 2,916 |
Non-cash lease expense | 712 | 173 |
Provision for doubtful accounts | 35 | 35 |
Loss on sale of property, plant and equipment | 0 | 3 |
Deferred income taxes | 8 | 1,782 |
Stock-based compensation | 506 | 423 |
Defined pension plan settlement | 0 | 0 |
Amortization of net actuarial loss for pension plans | 690 | 352 |
Changes in operating assets and liabilities: | ||
Trade accounts receivable | (20,964) | (27,887) |
Other receivables | 0 | (357) |
Inventories | (6,114) | (11,728) |
Income taxes | (236) | (155) |
Prepaid expenses and other current assets | (200) | (515) |
Accounts payable and accrued liabilities | 8,178 | 4,516 |
Net cash used in operating activities | (15,855) | (27,642) |
Investing activities: | ||
Capital expenditures | (1,359) | (2,309) |
Proceeds from sale of property, plant and equipment | 0 | 0 |
Net cash used in investing activities | (1,359) | (2,309) |
Financing activities: | ||
Borrowing from long-term debt | 23,884 | 30,911 |
Repayment of long-term debt | (6,787) | (577) |
Payment on deferred financing costs | 0 | 0 |
Tax withholding payments on share-based compensation | (155) | (244) |
Cash dividends paid | 0 | 0 |
Net cash provided by financing activities | 16,942 | 30,090 |
Net (decrease) increase in cash | (272) | 139 |
Cash at beginning of period | 1,150 | 738 |
Cash at end of period | $ 878 | $ 877 |
Unaudited Consolidated Statemen
Unaudited Consolidated Statements of Changes in Equity and Accumulated Other Comprehensive Income (Loss) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss |
Beginning balance (shares) at Jan. 31, 2019 | 15,541,956 | ||||
Beginning balance at Jan. 31, 2019 | $ 57,027 | $ 155 | $ 118,106 | $ (52,192) | $ (9,042) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 2,800 | 2,800 | |||
Pension adjustments, net of tax effect | 260 | 260 | |||
Shares vested and others (shares) | 171,593 | ||||
Shares vested and others | (245) | $ 2 | (247) | ||
Stock compensation expense | $ 423 | 423 | |||
Ending balance (shares) at Jul. 31, 2019 | 15,713,549 | 15,713,549 | |||
Ending balance at Jul. 31, 2019 | $ 60,265 | $ 157 | 118,282 | (49,392) | (8,782) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Pension adjustments, tax | 91 | ||||
Beginning balance (shares) at Apr. 30, 2019 | 15,541,956 | ||||
Beginning balance at Apr. 30, 2019 | 54,276 | $ 155 | 118,292 | (55,259) | (8,912) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 5,867 | 5,867 | |||
Pension adjustments, net of tax effect | 130 | 130 | |||
Shares vested and others (shares) | 171,593 | ||||
Shares vested and others | (245) | $ 2 | (247) | ||
Stock compensation expense | $ 237 | 237 | |||
Ending balance (shares) at Jul. 31, 2019 | 15,713,549 | 15,713,549 | |||
Ending balance at Jul. 31, 2019 | $ 60,265 | $ 157 | 118,282 | (49,392) | (8,782) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Pension adjustments, tax | $ 45 | ||||
Beginning balance (shares) at Jan. 31, 2020 | 15,713,549 | 15,713,549 | |||
Beginning balance at Jan. 31, 2020 | $ 54,818 | $ 157 | 118,782 | (49,810) | (14,311) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | (1,145) | (1,145) | |||
Pension adjustments, net of tax effect | 690 | 690 | |||
Shares vested and others (shares) | 205,093 | ||||
Shares vested and others | (137) | $ 2 | (139) | ||
Stock compensation expense | $ 506 | 506 | |||
Ending balance (shares) at Jul. 31, 2020 | 15,918,642 | 15,918,642 | |||
Ending balance at Jul. 31, 2020 | $ 54,732 | $ 159 | 119,149 | (50,955) | (13,621) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Pension adjustments, tax | 240 | ||||
Beginning balance (shares) at Apr. 30, 2020 | 15,713,549 | ||||
Beginning balance at Apr. 30, 2020 | 50,719 | $ 157 | 119,036 | (54,508) | (13,966) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 3,553 | 3,553 | |||
Pension adjustments, net of tax effect | 345 | 345 | |||
Shares vested and others (shares) | 205,093 | ||||
Shares vested and others | (137) | $ 2 | (139) | ||
Stock compensation expense | $ 252 | 252 | |||
Ending balance (shares) at Jul. 31, 2020 | 15,918,642 | 15,918,642 | |||
Ending balance at Jul. 31, 2020 | $ 54,732 | $ 159 | $ 119,149 | $ (50,955) | $ (13,621) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Pension adjustments, tax | $ 120 |
Unaudited Consolidated Statem_2
Unaudited Consolidated Statements of Changes in Equity and Accumulated Other Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2020 | Jul. 31, 2019 | |
Statement of Stockholders' Equity [Abstract] | ||||
Pension adjustments, tax | $ 120 | $ 45 | $ 240 | $ 91 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jul. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements and are presented in accordance with the requirements of Form 10-Q and Rule 10-01 of Regulation S-X. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2020 (“Form 10-K”). In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the three months and six months ended July 31, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2021. The balance sheet at January 31, 2020 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. All references to the “Company” refer to Virco Mfg. Corporation and its subsidiaries. Liquidity Management evaluated whether there are any conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern over the next twelve months through September 30, 2021. The Company has experienced an overall decline in net sales and net income through the first six-months of fiscal 2021 as compared to fiscal 2020 as a result of the disruption to its business and its customers caused by the COVID-19 pandemic. As a result of the reduced revenue, the Company was not in compliance with its fixed-charge coverage ratio under its revolving and secured credit agreement with PNC Bank, as of July 31, 2020 (see Note 7). The Company successfully negotiated a waiver and amendment to the agreement to satisfy the event of default and reduced the ratio required for the rolling four quarter period ending October 31, 2020 from 1.10:1.00 to 1.00:1.00. The Company expects the impact of COVID-19 to continue to be a challenge for the foreseeable future and believes the economy will be adversely impacted for an indeterminate period, including the demand for its products. |
Seasonality and Management Use
Seasonality and Management Use of Estimates | 6 Months Ended |
Jul. 31, 2020 | |
Seasonality [Abstract] | |
Seasonality and Management Use of Estimates | The market for educational furniture is marked by extreme seasonality, with approximately 50% of the Company’s total sales typically occurring from June to August each year, the Company’s peak season. Hence, the Company typically builds and carries significant amounts of inventory during and in anticipation of this peak summer season to facilitate the rapid delivery requirements of customers in the educational market. This requires a large up-front investment in inventory, labor, storage and related costs as inventory is built in anticipation of peak sales during the summer months. As the capital required for this build-up generally exceeds cash available from operations, the Company has generally relied on third-party bank financing to meet cash flow requirements during the build-up period immediately preceding the peak season. In addition, the Company typically is faced with a large balance of accounts receivable during the peak season. This occurs for two primary reasons. First, accounts receivable balances typically increase during the peak season as shipments of products increase. Second, many customers during this period are educational institutions and government entities, which tend to pay accounts receivable slower than commercial customers. The Company’s working capital requirements during and in anticipation of the peak summer season require management to make estimates and judgments that affect assets, liabilities, revenues and expenses, and related contingent assets and liabilities. On an ongoing basis, management evaluates its estimates, including those related to market demand, labor costs and stocking |
New Accounting Pronouncements
New Accounting Pronouncements | 6 Months Ended |
Jul. 31, 2020 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements Recently Adopted Accounting Updates In response to the large volume of anticipated lease concessions to be granted related to the effects of the COVID-19 pandemic, and the resultant expected cost and complexity of applying the lease modification requirements in ASC 842, the FASB issued Staff Q&A—Topic 842 and Topic 840: Accounting For Lease Concessions Related to the Effects of the COVID-19 Pandemic , in April 2020 as interpretive guidance to provide clarity in response to the crisis. The FASB staff indicated that it would be acceptable for entities to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how they would be accounted for as though enforceable rights and obligations for those concessions existed in the original contract. Consequently, for such lease concessions, an entity will not need to reassess each existing contract to determine whether enforceable rights and obligations for concessions exist and an entity can elect to apply or not to apply the lease modification guidance in ASC 842 to those contracts. The election is available for concessions related to the effects of the COVID-19 pandemic that result in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract. In accordance with this interpretive guidance, the Company elected to account for lease concessions related to the effects of the COVID-19 pandemic that resulted in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract consistent with how they would be accounted for as though enforceable rights and obligations for those concessions existed in the original contract. Consequently, for such lease concessions, the Company did not reassess each existing contract to determine whether enforceable rights and obligations for concessions existed and elected not to apply the lease modification guidance in ASC 842 to those contracts. The Company accounted for COVID-19 lease abatements of $136,000 as reductions to variable lease expense as if no changes to the lease contract were made while continuing to recognize expense and reductions in the operating lease liability, as well as the operating lease right-of-use asset during the abatement period. There were no lease concessions recorded in the first quarter of fiscal 2021. In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes . This update simplifies various aspects related to accounting for income taxes, removes certain exceptions to the general principles in ASC 740, and clarifies and amends existing guidance to improve consistent application. The Company adopted this ASU as of February 1, 2020 and the adoption of this standard did not have a material effect on our condensed consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement ( Topic 820 ) which modifies the disclosure requirements of fair value measurements in Topic 820, Fair Value Measurement . For public companies the ASU removes disclosure requirements for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels and the valuation process for Level 3 fair value measurements. The ASU modifies the disclosure requirements for investments in certain entities that calculate net asset value and clarifies that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. The ASU adds the disclosure requirement for changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The Company adopted this ASU as of February 1, 2020 and the adoption of this standard did not have a material effect on our condensed consolidated financial statements. Recently Issued Accounting Updates In August 2018, the FASB issued Accounting Standards Update No. 2018-14 (ASU 2018-14 ), Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20) , which amends the current disclosure requirements regarding defined benefit pensions and other post retirement plans , and allows for the removal of certain disclosures, while adding certain new disclosure requirements. This standard is effective for fiscal years beginning after December 15, 2020 and allows for early adoption. The Company is currently evaluating the effect the standard will have on the consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 replaces the incurred loss impairment methodology for measuring and recognizing credit losses with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The adoption date, as modified by the recently issued ASU 2019-10 discussed below, will be for the fiscal year ending after December 15, 2022 and interim periods therein. The Company is currently evaluating the effect the standard will have on the consolidated financial statements and related disclosures. In November 2019, the FASB issued ASU 2019-10, Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates . ASU 2019-10 moves the effective date for certain previously issued amendments to later dates, depending on the filing status of the respective entity. Specifically, due to the amendment and the Company’s status as a smaller reporting company, the new effective dates for relevant previously issued amendments not yet adopted by the Company relate to ASU 2016-13 as described above. Other recently issued accounting updates are not expected to have a material impact on the Company’s consolidated financial statements. |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jul. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition The Company manufactures, markets and distributes a wide variety of school and office furniture to wholesalers, distributors, educational institutions and governmental entities. Revenue is recorded for promised goods or services when control is transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Company's sales generally involve a single performance obligation to deliver goods pursuant to customer purchase orders. Prices for our products are based on published price lists and customer agreements. The Company has determined that the performance obligations are satisfied at a point in time when the Company completes delivery per the customer contract. The majority of sales are free on board ("FOB") destination where the destination is specified per the customer contract and may include delivering the furniture into the classroom, school site or warehouse. Sales of furniture that are sold FOB factory are typically made to resellers of our product who in turn provide logistics to the ultimate customer. Once a product has been delivered per the shipping terms, the customer is able to direct the use of, and obtain substantially all of the remaining benefits from, the asset. The Company considers control to have transferred upon shipment or delivery in accordance with shipping terms because the Company has a present right to payment at that time, the customer has legal title to the asset, the Company has transferred physical possession of the asset, and the customer has significant risks and rewards of ownership of the asset. Sales are recorded net of discounts, sales incentives and rebates, sales taxes and estimated returns and allowances. The Company offers sales incentives and discounts through various regional and national programs to our customers. These programs include product rebates, product returns allowances and trade promotions. Variable consideration for these programs is estimated in the transaction price at contract inception based on current sales levels and historical experience using the expected value method, subject to constraint. We do not consider our revenue generated through direct-to-customers and resellers to be meaningfully different revenue streams given similarities in the nature of the products, performance obligation and distribution processes. Sales are predominately in the United States and to a similar class of customer. We do not manage or evaluate the business based on product line or any other discernable category. |
Inventories
Inventories | 6 Months Ended |
Jul. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | InventoriesInventories are valued at the lower of cost (determined on a first-in, first-out basis) or net realizable value and includes material, labor and factory overhead. The Company maintains valuation allowances for estimated slow-moving and obsolete inventory to reflect the difference between the cost of inventory and the estimated net realizable value. Valuation allowances for slow-moving and obsolete inventory are determined through a physical inspection of the product in connection with a physical inventory, a review of slow-moving product and consideration of active marketing programs. The market for education furniture is traditionally driven by value, not style, and the Company has not typically incurred significant obsolescence expenses. If market conditions are less favorable than those anticipated by management, additional valuation allowances may be required. Due to reductions in sales volume in the past years, the Company’s manufacturing facilities are operating at reduced levels of capacity. The Company records the cost of excess capacity as a period expense, not as a component of capitalized inventory valuation. The following table presents a breakdown of the Company’s inventories as of July 31, 2020, January 31, 2020 and July 31, 2019: 7/31/2020 1/31/2020 7/31/2019 (in thousands) Finished goods $ 23,065 $ 15,401 $ 27,464 WIP 15,430 15,957 17,989 Raw materials 10,949 11,971 13,564 Total inventories $ 49,444 $ 43,329 $ 59,017 |
Leases
Leases | 6 Months Ended |
Jul. 31, 2020 | |
Leases [Abstract] | |
Leases | Leases The Company has operating leases on real property, equipment, and automobiles that expire at various dates. The Company determines if an arrangement is a lease at inception and assesses classification of the lease at commencement. All of the Company’s leases are classified as operating leases, as a lessee. The Company uses the implicit rate when readily determinable, or the incremental borrowing rate. Our incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments using company specific credit spreads. The Company’s lease terms include options to extend or terminate the lease only when it is reasonably certain that we will exercise that option. Lease expense for our operating leases is recognized on a straight-line basis over the lease term. In accordance with ASC 842, quantitative information regarding our leases is as follows: Three-Months Ended Six-Months Ended 7/31/2020 7/31/2019 7/31/2020 7/31/2019 (in thousands, except lease term and discount rate) Operating lease cost $ 1,472 $ 1,320 $ 2,912 $ 2,700 Short-term lease cost 124 82 160 136 Short-term sublease income (10) (20) (20) (30) Variable lease cost (1) (85) 61 370 509 Total lease cost $ 1,501 $ 1,443 $ 3,422 $ 3,315 Other operating leases information: Cash paid for amounts included in the measurement of lease liabilities $ 2,201 $ 2,611 Right-of-use assets obtained in exchange for new lease liabilities $ 398 $ 1,036 Weighted-average remaining lease term (years) 4.5 5.4 Weighted-average discount rate 6.4 % 6.38 % (1) Subsequent to the issuance of the Company’s condensed consolidated financial statements as of July 31, 2019, management identified an immaterial correction related to the disclosure of certain variable lease payments. Variable lease expense for the three-months and six-months ended July 31, 2019 did not previously include $61,000 and $509,000, respectively of variable lease payments for property taxes, insurance and common area maintenance related to triple net leases. Management corrected the disclosure related to variable lease expense in the table above for the three-months and six-months ended July 31, 2019 and, except for this change, the correction had no impact upon the Company’s condensed consolidated financial statements. Minimum future lease payments for operating leases in effect as of July 31, 2020, are as follows: Operating Lease (in thousands) Remaining of 2021 $ 2,942 2022 5,757 2023 5,323 2024 5,225 2025 5,370 Thereafter 1,350 Remaining balance of lease payments $ 25,967 Short-term lease liabilities $ 4,581 Long-term lease liabilities 17,798 Total lease liabilities $ 22,379 Difference between undiscounted cash flows and discounted cash flows $ 3,588 |
Debt
Debt | 6 Months Ended |
Jul. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Debt Outstanding balances for the Company’s long-term debt were as follows: 7/31/2020 1/31/2020 7/31/2019 (in thousands) Revolving credit line $ 27,505 $ 9,969 $ 44,585 Other 6,289 6,727 7,163 Total debt 33,794 16,696 51,748 Less current portion 18,387 878 35,457 Non-current portion $ 15,407 $ 15,818 $ 16,291 The Company ("the “Borrowers”) has a Revolving Credit and Security Agreement (the “Credit Agreement”) with PNC Bank, National Association, as administrative agent and lender (“PNC”). The Credit Agreement has been amended twenty times since it’s origination in 2011 through fiscal 2020, which, among other things, extended the maturity date of the Credit Agreement for three years until March 19, 2023. The Credit Agreement is an asset-based loan consisting of (i) a revolving line of credit with a Maximum Revolving Advance Amount of $65,000,000 that is subject to a borrowing base limitation and generally provides for advances of up to 85% of eligible accounts receivable, plus a percentage equal to the lesser of 60% of the value of eligible inventory or 85% of the liquidation value of eligible inventory, plus $15,000,000 from January through July of each year, minus undrawn amounts of letters of credit and reserves and (2) an equipment loan of $2,000,000. The Credit Agreement is secured by substantially all of the Company's, as defined, personal property and certain of the Company's real property. The principal amount outstanding under the Credit Agreement and any accrued and unpaid interest is due no later than March 19, 2023, and the Credit Agreement is subject to certain prepayment penalties upon earlier termination of the Credit Agreement. Prior to the maturity date, principal amounts outstanding under the Credit Agreement may be repaid and reborrowed at the option of the Borrowers without premium or penalty, subject to borrowing base limitations, seasonal adjustments and certain other conditions, including reduced borrowings under the revolving line to less than or equal $10,000,000 for a period of 30 consecutive days during the fourth quarter of each fiscal year. The Credit Agreement also contains certain financial covenants, including a fixed charge coverage ratio beginning on February 1 st , 2020 of not less than 1.10 to 1.00, and capital expenditures not to exceed $8,000,000. The Company was in violation with its financial covenants as of July 31, 2020. On September 8, 2020, the Company entered into Amendment No. 21 to the Revolving Credit and Security Agreement (“Amendment No. 21”) with its lender, PNC Bank, National Association. Amendment No. 21 provided a limited waiver of the Company’s violation of the covenant to maintain a Fixed Charge Coverage Ratio of at least 1.10 to 1.00 for the four fiscal quarter period ended July 31, 2020, and amended the Fixed Charge Coverage Ratio as follows: (i) 1.00 to 1.00 for the consecutive four fiscal quarter period ending October 31, 2020, and (ii) 1.10 to 1.00 for each consecutive four fiscal quarter period ending thereafter. In connection with Amendment No. 21, the Company also agreed to pay to PNC Bank a non-refundable fee of $75,000. The Credit Agreement bears interest, at the Borrowers’ option, at either the Alternate Base Rate (as defined in the Credit Agreement) or the Eurodollar Currency Rate (as defined in the Credit Agreement), in each case plus an applicable margin. The applicable margin for Alternate Base Rate loans is a percentage within a range of 1.25% to 1.75%, and the applicable margin for Eurodollar Currency Rate loans is a percentage within a range of 2.25% to 2.75%, in each case based on the EBITDA of the Borrower's at the end of each fiscal quarter and may be increased at PNC's option by 2.0% during the continuance of an event of default. The interest rate as of July 31, 2020 was 4.5%. The Company also incurs a fee on the unused portion of the revolving line of credit at a rate of 0.375%. To date the impact of COVID-19 on liquidity has been to moderate the seasonal increase in accounts receivable and production of inventory for summer delivery. Both the increase in accounts receivable and inventory are traditionally financed through the Company’s line of credit with PNC Bank. Reductions in receivables and inventory were substantially offset by a reduction in borrowing under the revolving line with PNC Bank. In addition to the financial covenants, the Credit Agreement contains events of default as disclosed in Note 3 to our Annual Report on Form 10-K for the year-ended January 31, 2020. Substantially all of the Borrowers' accounts receivable are automatically and promptly swept to repay amounts outstanding under the Credit Agreement upon receipt by the Borrowers. Due to this automatic liquidating nature of the Credit Agreement, if the Borrowers breach any covenant, violate any representation or warranty or suffer a deterioration in their ability to borrow pursuant to the borrowing base calculation, the Borrowers may not have access to cash liquidity unless provided by PNC at its discretion. The Company's revolving line of credit with PNC is structured to provide seasonal credit availability during the Company's peak summer season. Approximately $32,896,000 was available for borrowing as of July 31, 2020. Management believes that the carrying value of debt approximated fair value at July 31, 2020 and 2019, as all of the long-term debt bears interest at variable rates based on prevailing market conditions. |
Income Taxes
Income Taxes | 6 Months Ended |
Jul. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company recognizes deferred income taxes under the asset and liability method of accounting for income taxes in accordance with the provisions of ASC No. 740, Accounting for Income Taxes . Deferred income taxes are recognized for differences between the financial statement and tax basis of assets and liabilities at enacted statutory tax rates in effect for the years in which the differences are expected to reverse. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. In assessing the realizability of deferred tax assets, the Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income or reversal of deferred tax liabilities during the periods in which those temporary differences become deductible. The Company maintains a partial valuation allowance of $1,186,000, $1,183,000 and $2,003,000 as of July 31, 2020, January 31, 2020 and July 31, 2019 to reduce against certain state deferred tax assets that the Company does not believe it is more-likely-than-not to realize. On March 27, 2020, the President signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The CARES Act modified the limitation for business interest expense deduction and the new limitation has increased from 30 to 50 percent of adjusted taxable income. Historically deferred taxes related to interest expense limitation were fully offset by a valuation allowance. The Company performed an analysis of the impact of the CARES Act and calculated a tax benefit of approximately $200,000 which was driven by the release of the valuation allowance related to the business interest limitation. The January 31, 2016 and subsequent years remain open for examination by the IRS and state tax authorities. The Company is not currently under any state examination. The Company is currently under IRS examination for its fiscal year ended January 31, 2016 Federal tax return. Income tax expense for the second quarter ended July 31, 2020 is less than the prior year, primarily due to the decrease in pre-tax income and higher effective tax rate. For the six months ended July 31, 2020 the Company recorded an income tax benefit compared to income tax expense due to the loss for the current year versus income in the prior year. |
Net Income (Loss) per Share
Net Income (Loss) per Share | 6 Months Ended |
Jul. 31, 2020 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) per Share | Net income (loss) per Share Three Months Ended Six Months Ended 7/31/2020 7/31/2019 7/31/2020 7/31/2019 (In thousands, except per share data) Net income (loss) $ 3,553 $ 5,867 $ (1,145) $ 2,800 Weighted average shares of common stock outstanding 15,733 15,561 15,694 15,524 Net effect of dilutive shares - based on the treasury stock method using average market price 13 7 — 5 Totals 15,746 15,568 15,694 15,529 Net income (loss) per share - basic $ 0.23 $ 0.38 $ (0.07) $ 0.18 Net income (loss) per share - diluted (a) $ 0.23 $ 0.38 $ (0.07) $ 0.18 (a) All exercisable and non-exercisable restricted stock awards and/or units were not included in the computation of diluted net loss per share for the six months and three months ended July 31, 2020, because their inclusion would have been anti-dilutive due to the net loss recorded for both periods. The number of stock awards and/or units outstanding, which met this anti-dilutive criterion for the six months ended July 31, 2020, was 5,000. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jul. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Stock Incentive Plan The Company's two stock plans are the 2019 Employee Stock Incentive Plan (the “2019 Plan”) and the 2011 Employee Incentive Stock Plan (the “2011 Plan”). Under the 2019 Plan, the Company may grant an aggregate of 1,000,000 shares to its employees in the form of restricted stock units and non-employee directors in the form of restricted stock awards. Restricted stock units and awards granted under the 2019 Plan are expensed ratably over the vesting period of the awards. The Company determines the fair value of its restricted stock units or awards and related compensation expense as the difference between the market value of the units or awards on the date of grant less the exercise price of the units or awards granted. During the six-month periods ended July 31, 2020, the Company granted 94,695 awards to non-employee directors, vested 45,600 shares according to their terms and forfeited 0 shares under the 2019 Plan. As of July 31, 2020, there were approximately 677,305 shares available for future issuance under the 2019 Plan. Under the 2011 Plan, the Company may grant an aggregate of 2,000,000 shares to its employees in the form of restricted stock units and non-employee directors in the form of restricted stock awards. Restricted stock units and awards granted under the 2011 Plan are expensed ratably over the vesting period of the awards. The Company determines the fair value of its restricted stock units or awards and related compensation expense as the difference between the market value of the units or awards on the date of grant less the exercise price of the units or awards granted. During the six-month periods ended July 31, 2020, the Company granted 0 restricted awards to non-employee directors and 0 units to its employees; vested 59,385 stock awards and 119,200 units according to their terms and forfeited 0 stock units under the 2011 Plan. As of July 31, 2020, there were approximately 32,892 shares available for future issuance under the 2011 Plan. During the three months ended July 31, 2020, stock-based compensation expense related to restricted stock units and awards recognized in cost of goods sold and selling, general and administrative expenses was $65,000 and $187,000, respectively. During the three months ended July 31, 2019, stock-based compensation expense related to restricted stock units and/or awards recognized in cost of goods sold and selling, general and administrative expenses was $57,000 and $180,000, respectively. During the six months ended July 31, 2020, stock-based compensation expense related to restricted stock units and awards recognized in cost of goods sold and selling, general and administrative expenses was $128,000 and $378,000, respectively. During the six months ended July 31, 2019, stock-based compensation expense related to restricted stock units and/or awards recognized in cost of goods sold and selling, general and administrative expenses was $116,000 and $307,000, respectively. |
Retirement Plans
Retirement Plans | 6 Months Ended |
Jul. 31, 2020 | |
Retirement Benefits [Abstract] | |
Retirement Plans | Retirement Plans The Company and its subsidiaries cover certain employees under a noncontributory defined benefit retirement plan, entitled the Virco Employees’ Retirement Plan (the “Pension Plan”). As more fully described in the Form 10-K, benefit accruals under the Employees Retirement Plan were frozen effective December 31, 2003. There is no service cost incurred under this plan. The Company also provides a supplementary retirement plan for certain key employees, the VIP Retirement Plan (the “VIP Plan”). As more fully described in the Annual Report on Form 10-K for the year ended January 31, 2019, benefit accruals under this plan were frozen since December 31, 2003. There is no service cost incurred under this plan. The net periodic pension cost for the Pension Plan and the VIP Plan for the three months and six months ended July 31, 2020 and 2019 were as follows: Combined Employee Retirement Plans Three Months Ended Six Months Ended 7/31/2020 7/31/2019 7/31/2020 7/31/2019 (in thousands) Service cost $ — $ — $ — $ — Interest cost 301 355 602 710 Expected return on plan assets (224) (343) (448) (686) Plan settlement — — — — Amortization of prior service cost — — — — Recognized net actuarial loss 465 176 930 352 Benefit cost $ 542 $ 188 $ 1,084 $ 376 401(k) Retirement Plan |
Warranty Accrual
Warranty Accrual | 6 Months Ended |
Jul. 31, 2020 | |
Product Warranties Disclosures [Abstract] | |
Warranty Accrual | Warranty Accrual The Company provides an assurance type warranty against all substantial defects in material and workmanship. The standard warranty offered on products sold after January 1, 2017 was modified to provide specific warranty periods by product component, with no warranty period longer than ten years. The Company’s warranty is not a guarantee of service life, which depends upon events outside the Company’s control and may be different from the warranty period. The Company accrues an estimate of its exposure to warranty claims based upon both product sales data and an analysis of actual warranty claims incurred. The following is a summary of the Company’s warranty-claim activity for the three and six months ended July 31, 2020 and 2019: Three Months Ended Six Months Ended 7/31/2020 7/31/2019 7/31/2020 7/31/2019 (in thousands) Beginning balance $ 800 $ 700 $ 800 $ 700 Provision (17) 245 43 316 Costs incurred (33) (145) (93) (216) Ending balance $ 750 $ 800 $ 750 $ 800 |
Contingencies
Contingencies | 6 Months Ended |
Jul. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies The Company has a self-insured retention for product and general liability losses up to $250,000 per occurrence, workers’ compensation liability losses up to $250,000 per occurrence and for automobile liability losses up to $50,000 per occurrence. The Company has purchased insurance to cover losses in excess of the retention up to a limit of $30,000,000. The Company has obtained an actuarial estimate of its total expected future losses for liability claims and recorded a liability equal to the net present value. The Company and its subsidiaries are defendants in various legal proceedings resulting from operations in the normal course of business. It is the opinion of management, in consultation with legal counsel, that the ultimate outcome of all such matters will not materially affect the Company’s financial position, results of operations or cash flows. |
Delivery Costs
Delivery Costs | 6 Months Ended |
Jul. 31, 2020 | |
Other Income and Expenses [Abstract] | |
Delivery Costs | Delivery Costs For the quarter ended July 31, 2020 and 2019, shipping and classroom delivery costs of approximately $4,907,000 and $6,497,000, respectively, were included in selling, general and administrative expenses in the accompanying consolidated statements of operations. For the six months ended July 31, 2020 and 2019, shipping and classroom delivery costs of approximately 6,985,000 and 9,258,000, respectively, were included in selling, general and administrative expenses in the accompanying consolidated statements of operations. |
COVID-19
COVID-19 | 6 Months Ended |
Jul. 31, 2020 | |
Unusual or Infrequent Items, or Both [Abstract] | |
COVID-19 | COVID-19 On March 11, 2020, the World Health Organization declared the current coronavirus (COVID-19) outbreak to be a global pandemic. In response to this declaration and the rapid spread of COVID-19 within the United States, federal, state and local governments throughout the country have imposed varying degrees of restriction on social and commercial activity to promote social distancing in an effort to slow the spread of the illness. The Company has been operating its manufacturing and distribution facilities on a voluntary basis to give employees the flexibility to remain at home with children who are out of school or for other personal reasons as they deem necessary. Office employees and others who can work from home continue to do so. Appropriate measures are being taken to protect the health of employees performing essential on-site operations. The Company’s Conway, Arkansas facilities, which represent approximately two thirds of the Company’s production and distribution capacity, has been fully operational for this period of time. In accordance with State of California and local orders that include guidance on the definition and responsibilities of “essential businesses,” the Company has been operating its Torrance facility. During May, the Company closed its Torrance facility for several days before and after Memorial Day to perform comprehensive cleaning of production and office areas. Management estimates that the Torrance facility is currently staffed at approximately 50% of its normal level. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jul. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsOn September 8, 2020, the Company entered into Amendment No. 21 to the Revolving Credit and Security Agreement (“Amendment No. 21”) with its lender, PNC Bank, National Association. Amendment No. 21 provided a limited waiver of the Company’s violation of the covenant to maintain a Fixed Charge Coverage Ratio of at least 1.10 to 1.00 for the four fiscal quarter period ended July 31, 2020, and amended the Fixed Charge Coverage Ratio as follows: (i) 1.00 to 1.00 for the consecutive four fiscal quarter period ending October 31, 2020, and (ii) 1.10 to 1.00 for each consecutive four fiscal quarter period ending thereafter. In connection with Amendment No. 21, the Company also agreed to pay to PNC Bank a non-refundable fee of $75,000. |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jul. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | The following table presents a breakdown of the Company’s inventories as of July 31, 2020, January 31, 2020 and July 31, 2019: 7/31/2020 1/31/2020 7/31/2019 (in thousands) Finished goods $ 23,065 $ 15,401 $ 27,464 WIP 15,430 15,957 17,989 Raw materials 10,949 11,971 13,564 Total inventories $ 49,444 $ 43,329 $ 59,017 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jul. 31, 2020 | |
Leases [Abstract] | |
Quantitative Information of Leases | In accordance with ASC 842, quantitative information regarding our leases is as follows: Three-Months Ended Six-Months Ended 7/31/2020 7/31/2019 7/31/2020 7/31/2019 (in thousands, except lease term and discount rate) Operating lease cost $ 1,472 $ 1,320 $ 2,912 $ 2,700 Short-term lease cost 124 82 160 136 Short-term sublease income (10) (20) (20) (30) Variable lease cost (1) (85) 61 370 509 Total lease cost $ 1,501 $ 1,443 $ 3,422 $ 3,315 Other operating leases information: Cash paid for amounts included in the measurement of lease liabilities $ 2,201 $ 2,611 Right-of-use assets obtained in exchange for new lease liabilities $ 398 $ 1,036 Weighted-average remaining lease term (years) 4.5 5.4 Weighted-average discount rate 6.4 % 6.38 % (1) Subsequent to the issuance of the Company’s condensed consolidated financial statements as of July 31, 2019, management identified an immaterial correction related to the disclosure of certain variable lease payments. Variable lease expense for the three-months and six-months ended July 31, 2019 did not previously include $61,000 and $509,000, respectively of variable lease payments for property taxes, insurance and common area maintenance related to triple net leases. Management corrected the disclosure related to variable lease expense in the table above for the three-months and six-months ended July 31, 2019 and, except for this change, the correction had no impact upon the Company’s condensed consolidated financial statements. |
Schedule of Minimum Future Lease Payments | Minimum future lease payments for operating leases in effect as of July 31, 2020, are as follows: Operating Lease (in thousands) Remaining of 2021 $ 2,942 2022 5,757 2023 5,323 2024 5,225 2025 5,370 Thereafter 1,350 Remaining balance of lease payments $ 25,967 Short-term lease liabilities $ 4,581 Long-term lease liabilities 17,798 Total lease liabilities $ 22,379 Difference between undiscounted cash flows and discounted cash flows $ 3,588 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jul. 31, 2020 | |
Debt Disclosure [Abstract] | |
Outstanding balances of long-term debt | Outstanding balances for the Company’s long-term debt were as follows: 7/31/2020 1/31/2020 7/31/2019 (in thousands) Revolving credit line $ 27,505 $ 9,969 $ 44,585 Other 6,289 6,727 7,163 Total debt 33,794 16,696 51,748 Less current portion 18,387 878 35,457 Non-current portion $ 15,407 $ 15,818 $ 16,291 |
Net Income (Loss) per Share (Ta
Net Income (Loss) per Share (Tables) | 6 Months Ended |
Jul. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | Three Months Ended Six Months Ended 7/31/2020 7/31/2019 7/31/2020 7/31/2019 (In thousands, except per share data) Net income (loss) $ 3,553 $ 5,867 $ (1,145) $ 2,800 Weighted average shares of common stock outstanding 15,733 15,561 15,694 15,524 Net effect of dilutive shares - based on the treasury stock method using average market price 13 7 — 5 Totals 15,746 15,568 15,694 15,529 Net income (loss) per share - basic $ 0.23 $ 0.38 $ (0.07) $ 0.18 Net income (loss) per share - diluted (a) $ 0.23 $ 0.38 $ (0.07) $ 0.18 (a) All exercisable and non-exercisable restricted stock awards and/or units were not included in the computation of diluted net loss per share for the six months and three months ended July 31, 2020, because their inclusion would have been anti-dilutive due to the net loss recorded for both periods. The number of stock awards and/or units outstanding, which met this anti-dilutive criterion for the six months ended July 31, 2020, was 5,000. |
Retirement Plans (Tables)
Retirement Plans (Tables) | 6 Months Ended |
Jul. 31, 2020 | |
Retirement Benefits [Abstract] | |
Schedule of Defined Benefit Plans Disclosures | The net periodic pension cost for the Pension Plan and the VIP Plan for the three months and six months ended July 31, 2020 and 2019 were as follows: Combined Employee Retirement Plans Three Months Ended Six Months Ended 7/31/2020 7/31/2019 7/31/2020 7/31/2019 (in thousands) Service cost $ — $ — $ — $ — Interest cost 301 355 602 710 Expected return on plan assets (224) (343) (448) (686) Plan settlement — — — — Amortization of prior service cost — — — — Recognized net actuarial loss 465 176 930 352 Benefit cost $ 542 $ 188 $ 1,084 $ 376 |
Warranty Accrual (Tables)
Warranty Accrual (Tables) | 6 Months Ended |
Jul. 31, 2020 | |
Product Warranties Disclosures [Abstract] | |
Schedule of Product Warranty Liability | The following is a summary of the Company’s warranty-claim activity for the three and six months ended July 31, 2020 and 2019: Three Months Ended Six Months Ended 7/31/2020 7/31/2019 7/31/2020 7/31/2019 (in thousands) Beginning balance $ 800 $ 700 $ 800 $ 700 Provision (17) 245 43 316 Costs incurred (33) (145) (93) (216) Ending balance $ 750 $ 800 $ 750 $ 800 |
Basis of Presentation (Details)
Basis of Presentation (Details) - Consecutive Four Fiscal Quarters Ending Thereafter - Amendment No. 21 To Credit Facility [Member] | Jul. 31, 2020 |
Maximum | |
Maximum fixed charge coverage ratio | 1.10 |
Minimum | |
Maximum fixed charge coverage ratio | 1 |
Seasonality (Details)
Seasonality (Details) | 6 Months Ended |
Jul. 31, 2020 | |
Sales [Member] | |
Seasonality (Textual) [Abstract] | |
The market for educational furniture is marked by extreme seasonality | 50.00% |
New Accounting Pronouncements (
New Accounting Pronouncements (Details) $ in Thousands | 6 Months Ended |
Jul. 31, 2020USD ($) | |
COVID-19 [Member] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Reduction In Variable Lease Expense | $ 136 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Jul. 31, 2020 | Jan. 31, 2020 | Jul. 31, 2019 |
Inventory Disclosure [Abstract] | |||
Finished goods | $ 23,065 | $ 15,401 | $ 27,464 |
WIP | 15,430 | 15,957 | 17,989 |
Raw materials | 10,949 | 11,971 | 13,564 |
Total inventories | $ 49,444 | $ 43,329 | $ 59,017 |
Leases - ASC 842 Quantitative I
Leases - ASC 842 Quantitative Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2020 | Jul. 31, 2019 | |
Leases [Abstract] | ||||
Operating lease cost | $ 1,472 | $ 1,320 | $ 2,912 | $ 2,700 |
Short-term lease cost | 124 | 82 | 160 | 136 |
Short-term sublease income | (10) | (20) | (20) | (30) |
Variable lease cost | (85) | 61 | 370 | 509 |
Total lease cost | $ 1,501 | $ 1,443 | 3,422 | 3,315 |
Cash paid for amounts included in the measurement of lease liabilities | 2,201 | 2,611 | ||
Right-of-use assets obtained in exchange for new lease liabilities | $ 398 | $ 1,036 | ||
Weighted-average remaining lease term (years) | 4 years 6 months | 5 years 4 months 24 days | 4 years 6 months | 5 years 4 months 24 days |
Weighted-average discount rate | 6.40% | 6.38% | 6.40% | 6.38% |
Leases - ASC 842 Minimum Lease
Leases - ASC 842 Minimum Lease Payments (Details) - USD ($) $ in Thousands | Jul. 31, 2020 | Jan. 31, 2020 | Jul. 31, 2019 |
Leases [Abstract] | |||
Remaining of 2021 | $ 2,942 | ||
2022 | 5,757 | ||
2023 | 5,323 | ||
2024 | 5,225 | ||
2025 | 5,370 | ||
Thereafter | 1,350 | ||
Remaining balance of lease payments | 25,967 | ||
Short-term lease liabilities | 4,581 | $ 3,654 | $ 3,275 |
Long-term lease liabilities | 17,798 | $ 19,787 | $ 21,598 |
Total lease liabilities | 22,379 | ||
Difference between undiscounted cash flows and discounted cash flows | $ 3,588 |
Debt (Long-term Debt) (Details)
Debt (Long-term Debt) (Details) - USD ($) $ in Thousands | Jul. 31, 2020 | Jan. 31, 2020 | Jul. 31, 2019 |
Debt Instrument [Line Items] | |||
Long-term debt | $ 33,794 | $ 16,696 | $ 51,748 |
Less current portion | 18,387 | 878 | 35,457 |
Non-current portion | 15,407 | 15,818 | 16,291 |
Revolving Credit Facility [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt | 27,505 | 9,969 | 44,585 |
Other Debt [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 6,289 | $ 6,727 | $ 7,163 |
Debt (Narrative) (Details)
Debt (Narrative) (Details) | 6 Months Ended | ||
Jul. 31, 2020USD ($) | Sep. 08, 2020USD ($) | Feb. 01, 2020USD ($) | |
Line of Credit Facility [Line Items] | |||
Line Of Credit Facility, Borrowing Capacity, Term | $ 15,000,000 | ||
Line of credit facility, period for reduced borrowings during fourth quarter of each fiscal year (consecutive days) | 30 days | ||
Revolving credit facility bears interest increased | 2.00% | ||
Interest rate | 4.50% | ||
Unused portion fee rate | 0.375% | ||
Inventory [Member] | |||
Line of Credit Facility [Line Items] | |||
Revolving credit facility borrowing base limitation | 60.00% | ||
Inventories [Member] | |||
Line of Credit Facility [Line Items] | |||
Revolving credit facility borrowing base limitation | 85.00% | ||
Maximum [Member] | Accounts receivable [Member] | |||
Line of Credit Facility [Line Items] | |||
Revolving credit facility borrowing base limitation | 85.00% | ||
Amendment No. 20 To Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Maximum fixed charge coverage ratio | 1.10 | ||
Amendment No. 20 To Credit Facility [Member] | Maximum [Member] | |||
Line of Credit Facility [Line Items] | |||
Maximum capital expenditures | $ 8,000,000 | ||
Amendment No. 21 To Credit Facility [Member] | Subsequent Event | |||
Line of Credit Facility [Line Items] | |||
Non-refundable fee | $ 75,000 | ||
Amendment No. 21 To Credit Facility [Member] | Subsequent Event | Consecutive Four Fiscal Quarters Ending July 31, 2020 | |||
Line of Credit Facility [Line Items] | |||
Maximum fixed charge coverage ratio | 1.10 | ||
Amendment No. 21 To Credit Facility [Member] | Subsequent Event | Consecutive Four Fiscal Quarters Ending October 31, 2020 | |||
Line of Credit Facility [Line Items] | |||
Maximum fixed charge coverage ratio | 1 | ||
Amendment No. 21 To Credit Facility [Member] | Subsequent Event | Consecutive Four Fiscal Quarters Ending Thereafter | |||
Line of Credit Facility [Line Items] | |||
Maximum fixed charge coverage ratio | 1.10 | ||
Amendment No. 21 To Credit Facility [Member] | Minimum [Member] | Consecutive Four Fiscal Quarters Ending Thereafter | |||
Line of Credit Facility [Line Items] | |||
Maximum fixed charge coverage ratio | 1 | ||
Amendment No. 21 To Credit Facility [Member] | Maximum [Member] | Consecutive Four Fiscal Quarters Ending Thereafter | |||
Line of Credit Facility [Line Items] | |||
Maximum fixed charge coverage ratio | 1.10 | ||
PNC [Member] | Revolving Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Remaining borrowing capacity | $ 32,896,000 | ||
PNC [Member] | Revolving Credit Facility [Member] | Amendment No. 19 to Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Line of credit facility, maximum borrowing capacity | 65,000,000 | ||
PNC [Member] | Equipment Loan [Member] | Amendment No. 19 to Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Line of credit facility, maximum borrowing capacity | 10,000,000 | ||
Line of credit facility, Equipment financing | $ 2,000,000 | ||
Eurodollar [Member] | Minimum [Member] | |||
Line of Credit Facility [Line Items] | |||
Revolving credit facility bears interest range of | 2.25% | ||
Eurodollar [Member] | Maximum [Member] | |||
Line of Credit Facility [Line Items] | |||
Revolving credit facility bears interest range of | 2.75% | ||
Alternate Base Rate Loans [Member] | London Interbank Offered Rate LIBOR [Member] | Minimum [Member] | |||
Line of Credit Facility [Line Items] | |||
Revolving credit facility bears interest range of | 1.25% | ||
Alternate Base Rate Loans [Member] | London Interbank Offered Rate LIBOR [Member] | Maximum [Member] | |||
Line of Credit Facility [Line Items] | |||
Revolving credit facility bears interest range of | 1.75% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | Mar. 27, 2020 | Mar. 26, 2020 | Jul. 31, 2020 | Jan. 31, 2020 | Jul. 31, 2019 |
Income Tax Disclosure [Abstract] | |||||
Valuation allowance | $ 1,186 | $ 1,183 | $ 2,003 | ||
Limitation for business interest expense deduction as a percentage of adjusted taxable income | 50.00% | 30.00% | |||
Income tax benefit from the CARES Act | $ 200 |
Net Income (Loss) per Share (De
Net Income (Loss) per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2020 | Jul. 31, 2019 | |
Earnings Per Share [Abstract] | ||||
Net income (loss) | $ 3,553 | $ 5,867 | $ (1,145) | $ 2,800 |
Weighted average shares outstanding - basic (shares) | 15,733,000 | 15,561,000 | 15,694,000 | 15,524,000 |
Net effect of dilutive share-based on the treasury stock method using average market price (shares) | 13,000 | 7,000 | 0 | 5,000 |
Totals (shares) | 15,746,000 | 15,568,000 | 15,694,000 | 15,529,000 |
Net income (loss) per share - basic (usd per share) | $ 0.23 | $ 0.38 | $ (0.07) | $ 0.18 |
Net income (loss) per share - diluted (usd per share) | $ 0.23 | $ 0.38 | $ (0.07) | $ 0.18 |
Antidilutive stock options (shares) | 5,000 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2020 | Jul. 31, 2019 | |
Cost of Goods Sold [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 65,000 | $ 57,000 | $ 128,000 | $ 116,000 |
Selling, General and Administrative Expenses [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | 187,000 | $ 180,000 | 378,000 | $ 307,000 |
Restricted Stock Units (RSUs) [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation expense | $ 2,431,000 | $ 2,431,000 | ||
Unrecognized compensation expense, weighted average period to be recognized | 3 years | |||
Restricted Stock Units (RSUs) [Member] | 2019 Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Awards authorized (shares) | 1,000,000 | 1,000,000 | ||
Granted in the period (shares) | 94,695 | |||
Vested in period (shares) | 45,600 | |||
Forfeited in period (shares) | 0 | |||
Awards available for future issuance (shares) | 677,305 | 677,305 | ||
Restricted Stock Units (RSUs) [Member] | 2011 Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Awards authorized (shares) | 2,000,000 | 2,000,000 | ||
Granted in the period (shares) | 0 | |||
Vested in period (shares) | 119,200 | |||
Forfeited in period (shares) | 0 | |||
Awards available for future issuance (shares) | 32,892 | 32,892 | ||
Director [Member] | Restricted Stock Awards [Member] | 2011 Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted in the period (shares) | 0 | |||
Vested in period (shares) | 59,385 |
Retirement Plans (Narrative) (D
Retirement Plans (Narrative) (Details) - United States [Member] - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2020 | Jul. 31, 2019 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Minimum annual contributions per employee, percent | 1.00% | |||
Maximum annual contributions per employee, percent | 75.00% | |||
Number of common shares held | 850,789 | 708,345 | 850,789 | 708,345 |
Contributions by employer | $ 195 | $ 187 | $ 405 | $ 374 |
Retirement Plans (Periodic Pens
Retirement Plans (Periodic Pension Cost) (Details) - Pension Plan [Member] - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2020 | Jul. 31, 2019 | |
Components of Net Cost | ||||
Service cost | $ 0 | $ 0 | $ 0 | $ 0 |
Interest cost | 301 | 355 | 602 | 710 |
Expected return on plan assets | (224) | (343) | (448) | (686) |
Plan settlement | 0 | 0 | 0 | 0 |
Amortization of prior service cost | 0 | 0 | 0 | 0 |
Recognized net actuarial loss | 465 | 176 | 930 | 352 |
Benefit cost | $ 542 | $ 188 | $ 1,084 | $ 376 |
Warranty (Details)
Warranty (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2020 | Jul. 31, 2019 | |
Warranty claim activity | ||||
Beginning balance | $ 800 | $ 700 | $ 800 | $ 700 |
Provision | (17) | 245 | 43 | 316 |
Costs incurred | (33) | (145) | (93) | (216) |
Ending balance | $ 750 | $ 800 | $ 750 | $ 800 |
Maximum [Member] | ||||
Warranty [Line Items] | ||||
Product warranty period | 10 years |
Contingencies (Details)
Contingencies (Details) - Maximum | Jul. 31, 2020USD ($) |
Loss Liability [Member] | |
Loss Contingencies [Line Items] | |
Self insurance retention | $ 30,000,000 |
Automobile Liability Loss [Member] | |
Loss Contingencies [Line Items] | |
Self insurance retention | 50,000 |
Workers compensation Liability Insurance [Member] | |
Loss Contingencies [Line Items] | |
Self insurance retention | 250,000 |
Product and General Liability Insurance [Member] | |
Loss Contingencies [Line Items] | |
Self insurance retention | $ 250,000 |
Delivery Costs (Details)
Delivery Costs (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2020 | Jul. 31, 2019 | |
Other Income and Expenses [Abstract] | ||||
Shipping and classroom delivery costs | $ 4,907,000 | $ 6,497,000 | $ 6,985,000 | $ 9,258,000 |
COVID-19 (Details)
COVID-19 (Details) | Jun. 12, 2020 |
Unusual or Infrequent Items, or Both [Abstract] | |
Current staffing level at Torrance facility (percent) | 50.00% |
Subsequent Events (Details)
Subsequent Events (Details) - Amendment No. 21 To Credit Facility [Member] - Subsequent Event $ in Thousands | Sep. 08, 2020USD ($) |
Subsequent Event [Line Items] | |
Non-refundable fee | $ 75 |
Consecutive Four Fiscal Quarters Ending July 31, 2020 | |
Subsequent Event [Line Items] | |
Maximum fixed charge coverage ratio | 1.10 |
Consecutive Four Fiscal Quarters Ending October 31, 2020 | |
Subsequent Event [Line Items] | |
Maximum fixed charge coverage ratio | 1 |
Consecutive Four Fiscal Quarters Ending Thereafter | |
Subsequent Event [Line Items] | |
Maximum fixed charge coverage ratio | 1.10 |