-----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, VBPMVgvbIzzRUuWOTVBl2j90vFLk1D8mXIezyo5SMAa1ZKmufNkg3+uxq1FgavM+ LNL1KERWUIdqaAhL3wqz4A== 0000912057-00-022535.txt : 20000510 0000912057-00-022535.hdr.sgml : 20000510 ACCESSION NUMBER: 0000912057-00-022535 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000325 FILED AS OF DATE: 20000509 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: 622919 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 March 25, 2000 ----------------------------------- 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 ------------------------------------------------------------ (State or other jurisdiction of incorporation or organization) 04-2502514 ---------------------------------- (I.R.S. Employer Identification No.) 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 April 24, 2000 - -------------------------- ----------------------------- Common Stock, $1 par value 3,269,043 shares Page 1 of 13 COURIER CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) (Dollars in thousands)
March 25, September 25, 2000 1999 ------------- ------------- ASSETS Current assets: Cash and cash equivalents $ 254 $ 3,460 Accounts receivable, less allowance for uncollectible accounts 31,154 31,388 Inventories (Note B) 14,923 12,232 Deferred income taxes 1,915 1,915 Other current assets 1,150 271 ------------- ------------- Total current assets 49,396 49,266 Property, plant and equipment, less accumulated depreciation: $79,171 at March 25, 2000 and $75,689 at September 25, 1999 32,166 30,628 Real estate held for sale or lease, net 334 344 Goodwill and other intangibles, net 10,420 10,750 Other assets 547 524 ------------- ------------- Total assets $ 92,863 $ 91,512 ============= =============
The accompanying notes are an integral part of the consolidated financial statements. Page 2 of 13 COURIER CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) (Dollars in thousands)
March 25, September 25, 2000 1999 ------------- ------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt $ 351 $ 338 Accounts payable 10,519 11,644 Accrued payroll 4,415 5,173 Accrued taxes 4,451 5,162 Other current liabilities 5,658 5,034 ------------- ------------- Total current liabilities 25,394 27,351 Long-term debt 1,015 1,193 Deferred income taxes 2,534 2,693 Other liabilities 2,520 2,716 ------------- ------------- Total liabilities 31,463 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 1,552 1,258 Retained earnings 60,225 56,486 Unearned compensation (224) -- Treasury stock, at cost: 491,000 shares at March 25, 2000 and 517,000 shares at September 25, 1999 (3,903) (3,935) ------------- ------------- Total stockholders' equity 61,400 57,559 ------------- ------------- Total liabilities and stockholders' equity $ 92,863 $ 91,512 ============= =============
The accompanying notes are an integral part of the consolidated financial statements. Page 3 of 13 COURIER CORPORATION CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Dollars in thousands except per share amounts)
Quarter Ended Six Months Ended ---------------------- ---------------------- March 25, March 27, March 25, March 27, 2000 1999 2000 1999 --------- --------- --------- --------- Net sales $ 44,489 $ 40,480 $ 89,632 $ 79,781 Cost of sales 32,946 30,256 67,005 60,219 --------- --------- --------- --------- Gross profit 11,543 10,224 22,627 19,562 Selling and administrative expenses 7,815 7,186 15,463 14,189 Interest expense 101 167 185 302 --------- --------- --------- --------- Income before taxes 3,627 2,871 6,979 5,071 Provision for income taxes (Note C) 1,276 1,004 2,459 1,784 --------- --------- --------- --------- Net income $ 2,351 $ 1,867 $ 4,520 $ 3,287 ========= ========= ========= ========= Net income per share (Note D): Basic $ 0.72 $ 0.59 $ 1.39 $ 1.03 ========= ========= ========= ========= Diluted $ 0.70 $ 0.56 $ 1.35 $ 0.99 ========= ========= ========= ========= Cash dividends declared per share $ 0.12 $ 0.105 $ 0.24 $ 0.21 ========= ========= ========= =========
The accompanying notes are an integral part of the consolidated financial statements. Page 4 of 13 COURIER CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (Dollars in thousands)
Six Months Ended ------------------------ March 25, March 27, 2000 1999 --------- --------- Cash provided from operating activities $ 2,900 $ 343 --------- --------- Investment activities: Capital expenditures (5,227) (1,326) --------- --------- Cash used for investment activities (5,227) (1,326) --------- --------- Financing activities: Scheduled long-term debt repayments (165) (152) Increase in long-term borrowings -- 750 Cash dividends (781) (672) Proceeds from stock plans 181 363 Stock repurchase (114) -- --------- --------- Cash provided from (used for) financing activities (879) 289 --------- --------- Decrease in cash and cash equivalents (3,206) (694) Cash and equivalents at the beginning of the period 3,460 722 --------- --------- Cash and equivalents at the end of the period $ 254 $ 28 ========= =========
The accompanying notes are an integral part of the consolidated financial statements. Page 5 of 13 COURIER CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES UNAUDITED FINANCIAL STATEMENTS The balance sheet as of March 25, 2000, the statements of income for the three-month and six-month periods ended March 25, 2000 and March 27, 1999, and the statements of cash flows for the six-month periods ended March 25, 2000 and March 27, 1999 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) -------------------------------- March 25, September 25, 2000 1999 ------------- ------------- Raw materials $3,650 $2,945 Work in process 7,610 5,899 Finished goods 3,663 3,388 ------------- -------------- Total $14,923 $12,232 ============= ==============
Page 6 of 13 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) -------------------------------------------------------- Quarter Ended Six Months Ended ------------------------ ------------------------ March 25, March 27, March 25, March 27, 2000 1999 2000 1999 --------- --------- --------- --------- Federal income taxes at statutory rate $ 1,233 $ 976 $ 2,373 $ 1,724 State income taxes, net 110 73 207 115 Goodwill amortization 43 43 86 86 Foreign sales corporation (FSC) benefit from export related income (127) (66) (231) (121) Other 17 (22) 24 (20) --------- --------- --------- --------- Total $ 1,276 $ 1,004 $ 2,459 $ 1,784 ========= ========= ========= =========
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) -------------------------------------------------- Quarter Ended Six Months Ended ---------------------- ---------------------- March 25, March 27, March 25, March 27, 2000 1999 2000 1999 --------- --------- --------- --------- Average shares outstanding for basic 3,263 3,191 3,259 3,185 Effect of potentially dilutive shares 95 121 93 129 --------- -------- --------- -------- Average shares outstanding for diluted 3,358 3,312 3,352 3,314 ========= ======== ========= ========
Page 7 of 13 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 that are allocated to the segments include various support functions such as information technology services, finance, human resources and engineering, and include depreciation and amortization expense related to corporate assets. The following table provides segment information for the three-month and six-month periods ended March 25, 2000 and March 27, 1999:
(000's Omitted) -------------------------------------------------- Quarter Ended Six Months Ended ---------------------- ---------------------- March 25, March 27, March 25, March 27, 2000 1999 2000 1999 --------- --------- --------- --------- BOOK MANUFACTURING SEGMENT: Net sales $ 43,987 $ 39,999 $ 88,721 $ 79,020 Earnings before income taxes 4,354 3,687 8,480 6,735 CUSTOMIZED EDUCATION SEGMENT: Net sales 502 481 911 761 Loss before income taxes (727) (816) (1,501) (1,664) TOTAL COMPANY: Net sales 44,489 40,480 89,632 79,781 Earnings before income taxes 3,627 2,871 6,979 5,071
Page 8 of 13 ITEM 2. COURIER CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS: Sales in the second quarter of fiscal 2000 were up 10% to $44.5 million compared to $40.5 million in the corresponding period last year. Sales from the Company's book manufacturing segment increased 10% to $44.0 million for the quarter, reflecting continued growth in sales to religious and educational publishing customers, as well as increased sales to specialized trade publishing customers including increased paper sales to these customers. Sales from the Company's customized education segment were $0.5 million in the second quarter, an increase of 4% compared to the same period last year. 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 $11.5 million, or 25.9% of sales, in the second quarter compared to $10.2 million, or 25.3% 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 related to previous investments in facilities, equipment and information systems. Higher prices for recycled paper also contributed to the increase in gross profit. Selling and administrative expenses increased to $7.8 million in the second quarter of fiscal 2000 from $7.2 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 17.6% in the second quarter compared to 17.8% of sales in the corresponding period last year. Interest expense was $101,000 in the second quarter of fiscal 2000 compared to $167,000 in the same period of fiscal 1999 reflecting a reduction in average borrowings of approximately $3.2 million. In addition, interest of $19,000 related to new equipment was capitalized in the second quarter of fiscal 2000. The Company's effective tax rate of 35% for the second quarter of fiscal 2000 was comparable to the same period last year as a higher effective state tax rate was offset by an increased foreign sales corporation (FSC) benefit from export related income. Net income for the second quarter of fiscal 2000 was approximately $2.4 million, up 26% over last year's second quarter earnings of approximately $1.9 million. Net income per share on a diluted basis increased 25% to $.70 per share compared to $.56 per share for the corresponding period last year. Pretax earnings from the Company's book manufacturing operations increased to $4.4 million, 18% over last year's second quarter, reflecting increased sales volume and higher levels of productivity. The Company's customized education segment reduced second quarter pretax earnings by $0.7 million, and net income by $.14 per diluted share compared to a reduction of $.16 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 46,000 shares over last year's second quarter. The increase was largely due to options exercised and grants issued to employees under the Company's stock plans. For the six months ended March 25, 2000, sales were $89.6 million, an increase of 12% compared to sales of $79.8 million in the corresponding period last year. Net income for the first half of fiscal 2000 was approximately $4.5 million, or $1.35 per diluted share, up 38% compared to approximately $3.3 million, or $.99 per diluted share, for the same period last year. The growth in sales and earnings for the first six months of fiscal 2000 compared to fiscal 1999 was the result of factors similar to those discussed above for the second quarter. Sales from the Company's book manufacturing segment increased by 12% while related pretax earnings increased by 26% compared to the first six months of fiscal 1999. The customized education segment reduced net income by $.29 per diluted share compared to $.33 per diluted share in the first half of fiscal 1999. Page 9 of 13 COURIER CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS (CONTINUED): 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 six months of fiscal 2000, operations provided approximately $2.9 million of cash. Net income was $4.5 million and depreciation and amortization were $4.0 million. Working capital utilized approximately $5.3 million of cash in the first half of the year due to a $2.7 million increase in inventories, primarily work-in-process, as well as reductions in accounts payable and taxes payable. Also, working capital utilized $0.8 million for deposit payments related to a press expansion project currently in process. The deposit is expected to be returned later this year since the Company intends to finance the full press expansion cost of approximately $1.6 million. Investment activities in the first half of fiscal 2000 used approximately $5.2 million of cash for capital expenditures. For the entire fiscal year, capital expenditures are expected to be approximately $15 million, up sharply over the level of capital spending in recent years. Much of the increase in spending is for equipment, which will expand capacity, primarily additional press capacity as well as new computer-to-plate equipment to continue the Company's prepress technology upgrade program and bindery equipment intended to improve both capacity and productivity. In February 2000, the Company entered into a five-year lease agreement for its Raymond, New Hampshire facility, which had been vacant. The agreement provides for a purchase option at a price of approximately $1.3 million through August 2000. 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 six months of fiscal 2000 used approximately $0.9 million of cash, including dividend payments of approximately $0.8 million. At March 25, 2000, the Company had no borrowings under its $30 million long-term revolving credit facility. Page 10 of 13 COURIER CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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. The Company's plan for identifying, assessing and implementing changes to its information technology and operational systems necessary to ensure Year 2000 (Y2K) compliance is contained in the section captioned "Management's Discussion and Analysis" in the Company's Annual Report on Form 10-K for the year ended September 25, 1999. 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. 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, 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 11 of 13 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 The Annual Meeting of Stockholders of the registrant was held on January 20, 2000. Following are the matters voted on at the meeting. ELECTION OF DIRECTORS All nominees of the Board of Directors of the registrant were reelected for a three-year term. RATIFICATION/APPROVAL OF ACCOUNTANTS Stockholders voted to ratify and approve the selection by the Board of Directors of Deloitte & Touche LLP as independent public accountants for the Corporation for the fiscal year ending September 30, 2000. Votes were cast as follows: 2,934,259 votes for, 11,772 votes against and 13,467 abstained. 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 12 of 13 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) May 8, 2000 By: /s/ James F. Conway III - ----------------------------- ---------------------------- Date James F. Conway III Chairman, President and Chief Executive Officer May 8, 2000 By: /s/ Robert P. Story, Jr. - ----------------------------- ---------------------------- Date Robert P. Story, Jr. Senior Vice President and Chief Financial Officer May 8, 2000 By: /s/ Peter M. Folger - ----------------------------- ---------------------------- Date Peter M. Folger Vice President and Chief Accounting Officer Page 13 of 13 EX-27 2 EXHIBIT 27
5 1,000 6-MOS SEP-30-2000 SEP-26-1999 MAR-25-2000 254 0 31,154 1,040 14,923 49,396 111,337 79,171 92,863 25,394 0 0 0 3,750 57,650 92,863 89,632 89,632 67,005 67,005 15,387 76 185 6,979 2,459 4,520 0 0 0 4,520 1.39 1.35 ACCOUNTS RECEIVABLE ARE NET OF ALLOWANCES OTHER SE INCLUDES TREASURY STOCK
-----END PRIVACY-ENHANCED MESSAGE-----