-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, e7A9Dh/4hOHwNjZVcCMnJI9u4I5CMUKD+8TSFCnvoUSPDkWfFfDsbmJvTXwfkJMs EipnwBBdb51y4sYI4gDVBQ== 0000054050-94-000002.txt : 19940215 0000054050-94-000002.hdr.sgml : 19940215 ACCESSION NUMBER: 0000054050-94-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940214 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: JOSTENS INC CENTRAL INDEX KEY: 0000054050 STANDARD INDUSTRIAL CLASSIFICATION: 3911 IRS NUMBER: 410343440 STATE OF INCORPORATION: MN FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 34 SEC FILE NUMBER: 001-05064 FILM NUMBER: 94507417 BUSINESS ADDRESS: STREET 1: 5501 NORMAN CTR DR CITY: MINNEAPOLIS STATE: MN ZIP: 55437 BUSINESS PHONE: 6128303300 MAIL ADDRESS: STREET 1: 5501 NORMAN CENTER DRIVE CITY: MINNEAPOLIS STATE: MN ZIP: 55437 10-Q 1 2ND QUARTER 94 10Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 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 31, 1993 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 1-5064 JOSTENS, INC. (Exact name of registrant as specified in its charter) Minnesota 41-0343440 (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) 5501 Norman Center Drive, Minneapolis, Minnesota 55437 (Address of principal executive offices) (Zip Code) 612-830-3300 (Registrant's telephone number including area code) (Former name, address and 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 The number of shares outstanding of the registrant's only class of common stock on December 31, 1993 was 45,448,806. JOSTENS, INC. INDEX Part I. Financial Information Item 1. Financial Statements (Unaudited): Condensed Balance Sheets as of December 31, 1993 and 1992 and June 30, 1993 Condensed Statements of Income for the Three Months Ended December 31, 1993 and 1992 and the Six Months Ended December 31, 1993 and 1992 Condensed Statements of Cash Flows for the Six Months Ended December 31, 1993 and 1992 Notes to Condensed Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Part II. Other Information Item 6. Exhibits and Reports on Form 8-K Signatures JOSTENS, INC. AND SUBSIDIARIES CONDENSED BALANCE SHEETS (in thousands) December 31, June 30, 1993 1992 1993 (Restated) CURRENT ASSETS Cash and short-term investments $ 11,916 $ 8,081 $ 13,564 Accounts receivable 140,001 161,316 201,121 Inventories: Finished products 41,767 33,018 41,773 Work-in-process 72,893 77,031 46,580 Materials and supplies 50,879 52,714 42,833 165,539 162,763 131,186 Prepaid expenses 15,718 18,451 16,665 333,174 350,611 362,536 OTHER ASSETS Intangibles 41,438 54,772 42,005 Software development costs 55,755 46,718 49,524 Minority investments and other 30,790 30,052 29,867 127,983 131,542 121,396 PROPERTY AND EQUIPMENT 222,470 216,904 218,891 Accumulated depreciation (139,144) (126,983) (130,003) 83,326 89,921 88,888 $544,483 $572,074 $572,820 CURRENT LIABILITIES Notes payable $ 34,977 $ 42,315 $ - Accounts payable 23,293 25,835 54,230 Salaries, wages and commissions (6,235) (12,639) 33,643 Customer deposits 54,188 48,335 34,621 Other liabilities 70,117 27,671 76,652 Income taxes (870) 6,978 (414) 175,470 138,495 198,732 LONG-TERM DEBT 54,465 55,047 54,843 DEFERRED INCOME TAXES 5,909 17,009 5,909 SHAREHOLDERS' INVESTMENT Preferred shares, $1.00 par value: Authorized 4,000 shares None issued - - - Common shares, $.33 1/3 par value: Authorized 100,000 shares Issued - 45,449, 45,316 and 45,425 shares, respectively 15,150 15,105 15,142 Capital surplus 140,620 138,200 140,131 Retained earnings 155,671 209,459 160,812 Foreign currency translation (2,802) (1,241) (2,749) 308,639 361,523 313,336 $544,483 $572,074 $572,820 JOSTENS, INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF INCOME (in thousands, except per share data) Three Months Ended Six Months Ended December 31, December 31, 1993 1992 1993 1992 (Restated) NET SALES $223,425 $222,188 $390,607 $376,131 Cost of products sold 124,245 122,289 219,422 205,694 Selling and administrative expenses 90,803 82,259 159,826 148,673 215,048 204,548 379,248 354,367 OPERATING INCOME 8,377 17,640 11,359 21,764 Interest expense 1,822 1,973 3,187 3,647 6,555 15,667 8,172 18,117 Income taxes 2,655 5,786 3,310 7,386 INCOME BEFORE CHANGE IN ACCOUNTING PRINCIPLE 3,900 9,881 4,862 10,731 Cumulative effect of change in accounting principle, net of taxes - - - (4,150) NET INCOME $ 3,900 $ 9,881 $ 4,862 $ 6,581 EARNINGS PER COMMON SHARE Before change in accounting principle $ .09 $ .22 $ .11 $ .24 Cumulative effect of change in accounting principle - - - (.09) Net Income $ .09 $ .22 $ .11 $ .15 Average Shares Outstanding 45,448 45,290 45,443 45,263 Dividends Declared Per Common Share $ .22 $ .22 $ .22 $ .22
JOSTENS, INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF CASH FLOWS (in thousands) Six Months Ended December 31, 1993 1992 (Restated) OPERATING ACTIVITIES Net income $ 4,862 $ 6,581 Depreciation and amortization 19,258 16,954 Changes in assets and liabilities (35,188) (59,527) (11,068) (35,992) INVESTING ACTIVITIES Capital expenditures (5,844) (11,746) Software development costs (9,829) (14,067) (15,673) (25,813) FINANCING ACTIVITIES Short-term borrowing 34,977 42,315 Reduction in long-term debt (378) (23,879) Cash Dividends (10,003) (9,969) Cash Dividends-Wicat shares - (860) Other 497 3,669 25,093 11,276 DECREASE IN CASH AND SHORT-TERM INVESTMENTS $ (1,648) $ (50,529) JOSTENS, INC. AND SUBSIDIARIES NOTES TO CONDENSED FINANCIAL STATEMENTS BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Because of the seasonal nature of the Company's business, the results of operations for the six months ended December 31, 1993, are not necessarily indicative of the results for the entire year ending June 30, 1994. The Company elected early adoption of SFAS No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions" in June 1993. This change was effective as of the beginning of the 1993 fiscal year and comparative amounts have been restated accordingly. Certain fiscal 1993 balances have been reclassified to conform to the fiscal 1994 presentation. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended June 30, 1993. EARNINGS PER COMMON SHARE Earnings per common share have been computed by dividing net income by the average number of common shares outstanding. The impact of any additional shares issuable upon exercise of dilutive stock options is not material. DIVIDENDS Cash dividends declared for the six months ended December 31, 1993 and 1992 do not include the second quarter dividend of $.22 declared in January 1994 and 1993. SUBSEQUENT EVENT In November 1993, Jostens management signed a Letter of Intent to sell the Sportswear division, Artex Manufacturing Co Inc., to a subsidiary of Fruit of the Loom. The transaction closed effective as of January 1, 1994. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION Working capital was $157.7 and $163.8 million at December 31, 1993 and June 30, 1993, respectively. The current period changes in the components of working capital reflect improved collection of accounts receivables, a build- up in inventories, additional customer deposits and the payment of salesperson's commissions accrued at fiscal year-end. The seasonality of the Company's business requires the interim financing of operations and inventories and these cash requirements are met through the issuance of short- term commercial paper. The year over year changes in intangibles and other liabilities since December 31, 1992 are due to the restructuring charges recorded in the fourth quarter of fiscal 1993. Accounts receivable are lower than last year due to improved collections as well as certain write-offs that occurred during the restructuring. Inventories have increased due to higher year-end carryover balances at Jostens Learning and Sportswear. RESULTS OF OPERATIONS Net sales for the three and six months ended December 31, 1993 were $223.4 and $390.6 million, respectively, representing increases of 1% and 4% over the comparable periods of the prior fiscal year. All divisions posted increases in sales with the exception of Canada and Jostens Learning. Jostens Learning sales were down significantly due to a shift in sales mix to more hardware sales, which carry lower margins than software products. Although discouraging, these results may or may not be predictive of annual results since the majority of Jostens Learning's sales are recorded in the fourth quarter. Management has announced its intent to thoroughly evaluate and take decisive steps during the next two quarters to deal with the significant issues it faces in its Jostens Learning business. The effect these steps may have on year end results are not predictable at this time. Sportswear posted double-digit sales growth for the first half. Cost of products sold was $124.2 and $219.4 million, respectively, for the three and six months ended December 31, 1993. Costs, as a percent of sales, were 55.6% and 56.2%, respectively, as compared to 55.0% and 54.7% in the same periods last year. Two factors contributed to this increase: First, Jostens Learning lower-margin hardware sales were up significantly compared to last year. Second, Sportswear comprised a higher proportion of sales and reflects lower margins than other product groups. Selling and administrative expenses were $90.8 and $159.8 million, respectively, for the three and six months ended December 31, 1993, which as a percent of sales, were up over the comparable periods of the prior fiscal year, due primarily to significant timing differences during the second quarter. A large portion of these costs vary proportionally with sales. Sportswear royalties, as a percent of sales, increased from the prior year, due to higher percentage of licensed sales, resulting in $1.2 million of additional costs in the first half. The prior year results include approximately $2 million of transaction costs relating to the August 1992 merger with Wicat Systems, Inc. Since the Wicat transaction costs were not deductible for tax purposes, last year's effective tax rate was higher than the current tax rate. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Net income for the three and six months ended December 31, 1993 was $3.9 and $4.9 million, respectively. Earnings per share were $.09 and $.11, compared to $.22 and $.24 the prior year, based on our historical accounting practices and before the effects of a change in accounting principle. Because a significant percentage of the company's sales are in the school market, the first half is seasonally the smallest sales volume since school is not in session for one-third of the time. Thus, the Company's pre-tax margins are lowest during the first half. In November 1993, Jostens management signed a Letter of Intent to sell the Sportswear division, Artex Manufacturing Co Inc., to a subsidiary of Fruit of the Loom. The transaction closed effective as of January 1, 1994. H. William Lurton, retired as Chairman and Chief Executive Officer on October 28, 1993 and from the Board of Directors as of December 31, 1993. Robert P. Jensen was named Chairman of the Board on October 28, 1993. The Board is in the process of conducting a search for a new Chief Executive Officer to replace H. William Lurton. PART II. OTHER INFORMATION Item 6. Exhibits and reports on Form 8-K (a) Not applicable (b) No reports on Form 8-K were filed during the quarter for which this report is filed. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. JOSTENS, INC. Date February 10, 1994 /s/ Robert C. Buhrmaster Robert C. Buhrmaster President and Chief Operating Officer (Principal Financial Officer) G:\AFIN\PUBLIC\AFIN3265\WP\FILES\10Q294.WP -----END PRIVACY-ENHANCED MESSAGE-----