-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SQ2UAzBhU/coYR9OGrDqMbL3FjsCd6D0vReIerRagsnf1+c/9ZPSKY7+cD3xrYdE unPGLeqbWvGnuAEeYbSdgw== 0000912057-00-004450.txt : 20000209 0000912057-00-004450.hdr.sgml : 20000209 ACCESSION NUMBER: 0000912057-00-004450 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991225 FILED AS OF DATE: 20000208 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COURIER CORP CENTRAL INDEX KEY: 0000025212 STANDARD INDUSTRIAL CLASSIFICATION: BOOK PRINTING [2732] IRS NUMBER: 042502514 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-07597 FILM NUMBER: 526942 BUSINESS ADDRESS: STREET 1: 15 WELLMAN AVENUE CITY: NORTH CHELMSFORD STATE: MA ZIP: 01863 BUSINESS PHONE: 9782516000 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 25, 1999 ---------------------------------------- or / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to --------------------- --------------------- Commission file number 0-7597 ------------------------------------------------------ COURIER CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) MASSACHUSETTS 04-2502514 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 15 Wellman Avenue, North Chelmsford, Massachusetts 01863 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (978) 251-6000 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) NO CHANGE - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at February 1, 2000 - ---------------------------------- ----------------------------------------- Common Stock, $1 par value 3,260,557 shares Page 1 of 12 COURIER CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) (Dollars in thousands)
December 25, September 25, ASSETS 1999 1999 - ------ --------------- -------------- Current assets: Cash and cash equivalents $32 $3,460 Accounts receivable, less allowance for uncollectible accounts 35,053 31,388 Inventories (Note B) 15,540 12,232 Deferred income taxes 1,903 1,915 Other current assets 412 271 --------------- ------------- Total current assets 52,940 49,266 Property, plant and equipment, less accumulated depreciation: $77,500 at December 25, 1999 and $75,689 at September 25, 1999 30,306 30,628 Real estate held for sale or lease, net 339 344 Goodwill and other intangibles, net 10,585 10,750 Other assets 547 524 --------------- ------------- Total assets $94,717 $91,512 =============== =============
The accompanying notes are an integral part of the consolidated financial statements. Page 2 of 12 COURIER CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) (Dollars in thousands)
December 25, September 25, LIABILITIES AND STOCKHOLDERS' EQUITY 1999 1999 - ------------------------------------ --------------- -------------- Current liabilities: Current maturities of long-term debt $338 $338 Accounts payable 12,825 11,644 Accrued payroll 3,165 5,173 Accrued taxes 5,743 5,162 Other current liabilities 6,839 5,034 -------------- -------------- Total current liabilities 28,910 27,351 Long-term debt 1,611 1,193 Deferred income taxes 2,545 2,693 Other liabilities 2,332 2,716 -------------- -------------- Total liabilities 35,398 33,953 -------------- -------------- Stockholders' equity: Preferred stock, $1 par value - authorized 1,000,000 shares; none issued Common stock, $1 par value - authorized 6,000,000 shares; issued 3,750,000 shares 3,750 3,750 Additional paid-in capital 1,449 1,258 Retained earnings 58,264 56,486 Unearned compensation (236) - Treasury stock, at cost: 502,000 shares at December 25, 1999 and 517,000 shares at September 25, 1999 (3,908) (3,935) -------------- -------------- Total stockholders' equity 59,319 57,559 -------------- -------------- Total liabilities and stockholders' equity $94,717 $91,512 ============== ==============
The accompanying notes are an integral part of the consolidated financial statements. Page 3 of 12 COURIER CORPORATION CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Dollars in thousands except per share amounts)
THREE MONTHS ENDED ---------------------------- December 25, December 26, 1999 1998 ------------ ------------ Net sales $45,143 $39,301 Cost of sales 34,059 29,963 ---------- ------------ Gross profit 11,084 9,338 Selling and administrative expenses 7,648 7,003 Interest expense 84 135 ---------- ------------ Income before taxes 3,352 2,200 Provision for income taxes (Note C) 1,183 780 ---------- ------------ Net income $2,169 $1,420 ========== ============ Net income per share (Note D): Basic $0.67 $0.45 ========== ============ Diluted $0.65 $0.43 ========== ============ Cash dividends declared per share $0.12 $0.105 ========== ============
The accompanying notes are an integral part of the consolidated financial statements. Page 4 of 12 COURIER CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (Dollars in thousands)
THREE MONTHS ENDED ------------------------------ December 25, December 26, 1999 1998 ----------- ------------ Cash provided from (used for) operating activities ($1,914) $12 ----------- ------------ Investment activities: Capital expenditures (1,490) (254) ----------- ------------ Cash used for investment activities (1,490) (254) ----------- ------------ Financing activities: Scheduled long-term debt repayments (82) (75) Increase in long-term borrowings 500 - Cash dividends (391) (333) Proceeds from stock plans 63 122 Stock repurchase (114) - ----------- ------------ Cash used for financing activities (24) (286) ----------- ------------ Decrease in cash and cash equivalents (3,428) (528) Cash and equivalents at the beginning of the period 3,460 722 ----------- ------------ Cash and equivalents at the end of the period $32 $194 =========== ============
The accompanying notes are an integral part of the consolidated financial statements. Page 5 of 12 COURIER CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES UNAUDITED FINANCIAL STATEMENTS The balance sheet as of December 25, 1999, the statements of income for the three-month periods ended December 25, 1999 and December 26, 1998, and the statements of cash flows for the three-month periods ended December 25, 1999 and December 26, 1998 are unaudited and, in the opinion of management, all adjustments necessary for a fair presentation of such financial statements have been recorded. Such adjustments consisted only of normal recurring items. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The balance sheet data as of September 25, 1999 was derived from audited year-end financial statements, but does not include disclosures required by generally accepted accounting principles. It is suggested that these interim financial statements be read in conjunction with the Company's most recent Form 10-K and Annual Report for the year ended September 25, 1999. NEW ACCOUNTING PRONOUNCEMENTS The Financial Accounting Standards Board has issued Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities" (as amended by SFAS No. 137 in June 1999), which will be effective in the Company's fiscal year ending September 29, 2001. The Company is currently evaluating the impact, if any, that the adoption of this new standard will have on the consolidated financial statements. B. INVENTORIES Inventories are valued at the lower of cost or market using the last-in, first-out (LIFO) method for most inventories. Inventories consisted of the following: (000'S OMITTED)
December 25, September 25, 1999 1999 ------------ ------------- Raw materials $ 4,395 $ 2,945 Work in process 7,866 5,899 Finished goods 3,279 3,388 --------- --------- Total inventories $ 15,540 $12,232 ========= =========
Page 6 of 12 COURIER CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) C. INCOME TAXES The statutory federal tax rate is 34%. The total tax provision differs from that computed using the statutory federal tax rate for the following reasons:
(000'S OMITTED) THREE MONTHS ENDED ------------------ December 25, December 26, 1999 1998 ---------- ---------- Federal income taxes at statutory rate $1,140 $ 748 State income taxes, net 97 42 Goodwill amortization 43 43 Export related income (104) (56) Other 7 3 --------- ------ Total provision $1,183 $ 780 ========= =======
D. NET INCOME PER SHARE Following is a reconciliation of the shares used in the calculation of basic and diluted net income per share. Potentially dilutive shares, calculated using the treasury stock method, consist of shares issued under the Company's stock option plans.
(000'S OMITTED) THREE MONTHS ENDED ------------------------------------- December 25, December 26, 1999 1998 ------------ ------------ Average shares outstanding for basic 3,254 3,179 Effect of potentially dilutive shares 91 139 -------- ------ Average shares outstanding for diluted 3,345 3,318 ===== ========
Page 7 of 12 COURIER CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) E. BUSINESS SEGMENTS The Company operates in one primary business segment, book manufacturing, with a second smaller business segment in customized education. The book manufacturing segment offers services from preparation, production, media replication, kitting and packaging through storage and distribution for education, religious and consumer book publishers. The customized education segment responds to the demand for increased choice in the way educational information is received and used. Operations include The Home School, a direct marketer of educational materials to families engaged in home-based learning, and Copyright Management Services, a provider of customized college coursepacks. In evaluating segment performance, management primarily focuses on income or loss before taxes and non-operating items such as gains or losses from asset disposals. Intersegment sales are not significant. Corporate expenses which are allocated to the segments include various support functions such as information technology services, finance, human resources and engineering, and includes depreciation and amortization expense related to corporate assets. The following table provides segment information for the three month periods ended December 25, 1999 and December 26, 1998:
Book Customized Total Manufacturing Education Company ------------- --------- ------- FIRST QUARTER FISCAL 2000 Net sales $44,734 $409 $45,143 Earnings (loss) before income 4,126 (774) 3,352 taxes FIRST QUARTER FISCAL 1999 Net sales $38,981 $320 $39,301 Earnings (loss) before income 3,048 (848) 2,200 taxes
Page 8 of 12 ITEM 2. COURIER CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS: Sales in the first quarter of fiscal 2000 increased 15% to $45.1 million compared to $39.3 million in the first quarter of fiscal 1999. Sales from the Company's core book manufacturing segment were up 15% to $44.7 million for the quarter primarily due to continued growth in sales to religious and educational publishing customers as well as a sharp increase in sales to specialized trade publishing customers including increased paper sales to these customers. Sales from the Company's customized education segment grew more than 25% during the first quarter to $0.4 million. Revenues from the customized education segment are highly seasonal with the Company's fourth quarter historically representing the period of highest market demand. Gross profit increased to $11.1 million, or 24.6% of sales, in the first quarter compared to $9.3 million, or 23.8% of sales, in the same period last year. The increase in gross profit reflects the impact of the increased sales volume as well as gains in productivity. Selling and administrative expenses increased to $7.6 million in the first three months of fiscal 2000 from $7.0 million in the same period last year due largely to expenses directly related to the increase in profitability. As a percentage of sales, selling and administrative expenses decreased to 16.9% in the first quarter compared to 17.8% of sales in the corresponding period last year. Interest expense was $84,000 in the first quarter of fiscal 2000 compared to $135,000 in the first three months of fiscal 1999, reflecting a reduction in average borrowings of approximately $3.4 million. The Company's effective tax rate of 35% for the first quarter of fiscal 2000 was comparable to the same period last year as a higher effective state tax rate was offset by an increased benefit from export related income. Net income for the first quarter of fiscal 2000 was approximately $2.2 million, up 53% over last year's first quarter earnings of approximately $1.4 million. Net income per share on a diluted basis increased 51% to $.65 per share compared to $.43 per share for the corresponding period last year. Pretax earnings from the Company's core book manufacturing operations increased to $4.1 million, 35% over last year's first quarter, reflecting increased sales volume and higher levels of productivity. The Company's customized education segment reduced first quarter pretax earnings by $0.8 million, or $.15 per diluted share compared to a reduction of $.17 per diluted share for the same period last year. Revenues and related earnings for the customized education segment are highly seasonal and are expected to increase in the fourth fiscal quarter which coincides with the months of highest market demand. For purposes of computing diluted net income per share, weighted average shares outstanding increased by approximately 27,000 shares over last year's first quarter. The increase was largely due to options exercised and grants issued under the Company's stock plans. The Financial Accounting Standards Board has issued Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities" (as amended by SFAS No. 137 in June 1999), which will be effective in the Company's fiscal year ending September 29, 2001. The Company is currently evaluating the impact, if any, that the adoption of this new standard will have on the consolidated financial statements. LIQUIDITY AND CAPITAL RESOURCES: During the first three months of fiscal 2000, operations used approximately $1.9 million of cash. Net income was $2.2 million and depreciation and amortization were $2.0 million. Working capital utilized approximately $5.6 million of cash in the first quarter due to increases in both accounts receivable and inventories related to increased sales volume and work-in-process inventories as well as increased paper inventories associated with Year 2000 contingency planning. Investment activities in the first three months of fiscal 2000 used approximately $1.5 million of cash for capital expenditures. For the entire fiscal year, capital expenditures are expected to be approximately Page 9 of 12 COURIER CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES (CONTINUED): $13 to $15 million. The Company's Raymond, New Hampshire facility, which had been leased through June 1996, continues to be vacant pending sale or lease. In addition, the Company intends to sell the unoccupied and underutilized portions of its multi-building manufacturing complex in Westford, MA, which would result in reductions in building operating costs while maintaining current levels of book manufacturing at the site. In January 2000, the Company signed an agreement to sell this property, but a number of significant contingencies exist. Assuming the contingencies can be resolved, closing is scheduled for the second quarter of fiscal 2001. Financing activities for the first quarter of fiscal 2000 included an increase in long-term borrowings of approximately $0.4 million. In addition, dividend payments were approximately $0.4 million. At December 25, 1999, the Company had borrowings of $0.5 million under its $30 million long-term revolving credit facility. YEAR 2000 ISSUE: THE STATEMENTS IN THE FOLLOWING SECTION INCLUDE "YEAR 2000 READINESS DISCLOSURE" WITHIN THE MEANING OF THE YEAR 2000 INFORMATION AND READINESS DISCLOSURE ACT. Historically, many computer programs were written using two digits rather than four to specify the year. Such software may recognize the year 2000 as "00" which could result in computer system failures or miscalculations, commonly referred to as the Year 2000 (Y2K) issue. The Company recognizes the need to ensure that its operations will not be adversely impacted by a Year 2000 software failure. Incomplete or untimely resolution of the Y2K issue by the Company, key suppliers, customers and other parties could have a material adverse effect on the Company's results of operations, financial condition and cash flows. The Company established a Year 2000 Management Task Force to address the Y2K issue. This Task Force coordinated efforts to identify, assess and implement changes to information technology ("IT") systems and operational systems such as presses and binders, telecommunications equipment, building security and environmental controls, and is continuing to evaluate the Y2K readiness of key suppliers, customers and other parties. To date, the Company has not experienced any problems of consequence related to the Y2K issue. The cost to the Company of achieving Y2K compliance was approximately $1.6 million, of which approximately half was for capital expenditures, primarily for new IT systems. The Company has not incurred any significant Y2K costs in fiscal 2000. The Y2K costs were funded through operating cash flows. The Company did not separately track internal costs incurred for the Y2K project, particularly the payroll costs of its engineering and information technology groups. FORWARD-LOOKING INFORMATION: Statements that describe future expectations, plans or strategies are considered "forward-looking statements" as that term is defined under the Private Securities Litigation Reform Act of 1995 and releases issued by the Securities and Exchange Commission. The words "believe," "expect," "anticipate," "intend," "estimate" and other expressions which are predictions of or indicate future events and trends and which do not relate to historical matters identify forward-looking statements. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated. Factors that could affect actual results include, among others, changes in customers' demand for the Company's products, changes in raw material costs and availability, seasonal changes in customer orders, pricing actions by competitors, consolidation among customers or competitors, success in the integration of acquired businesses, Year 2000 issues, and general changes in economic conditions. Although the Company believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements will prove to be accurate. The forward-looking statements included herein are made as of the date hereof, and the Company undertakes no obligation to update publicly such statements to reflect subsequent events or circumstances. Page 10 of 12 COURIER CORPORATION ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There have been no material changes from the information concerning the Company's "Quantitative and Qualitative Disclosures About Market Risk" as previously reported in the Company's Annual Report on Form 10-K for the year ended September 25, 1999. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits
EXHIBIT NO. DESCRIPTION OF EXHIBIT 27 Financial Data Schedule
(b) Reports on Form 8-K None. Page 11 of 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. COURIER CORPORATION ------------------- (REGISTRANT) February 7, 2000 By: /s/James F. Conway III ---------------- ---------------------- Date James F. Conway III Chairman, President and Chief Executive Officer February 7, 2000 By: /s/Robert P. Story, Jr. ---------------- ----------------------- Date Robert P. Story, Jr. Senior Vice President and Chief Financial Officer February 7, 2000 By: /s/Peter M. Folger ---------------- ------------------ Date Peter M. Folger Vice President and Chief Accounting Officer Page 12 of 12 EX-27 2 EXHIBIT 27
5 1,000 3-MOS SEP-30-2000 SEP-26-1999 DEC-25-1999 32 0 35,053 976 15,540 52,940 107,806 77,500 94,717 28,910 0 0 0 3,750 55,569 94,717 45,143 45,143 34,059 34,059 7,610 38 84 3,352 1,183 2,169 0 0 0 2,169 0.67 0.65 ACCOUNTS RECEIVABLE ARE NET OF ALLOWANCES. OTHER SE INCLUDES TREASURY STOCK.
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