-----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, KA9EmGFkd/Xxb/CYvl/tR816Bzi9UcJBVkW9JUuGm6OK4C0W1FBmltf+4kiMWbjN /QdZlcJd2oRxxNxfBFr9gA== 0000912057-94-003052.txt : 19940915 0000912057-94-003052.hdr.sgml : 19940915 ACCESSION NUMBER: 0000912057-94-003052 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19940731 FILED AS OF DATE: 19940914 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MERRILL CORP CENTRAL INDEX KEY: 0000790406 STANDARD INDUSTRIAL CLASSIFICATION: 2750 IRS NUMBER: 410946258 STATE OF INCORPORATION: MN FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14082 FILM NUMBER: 94549019 BUSINESS ADDRESS: STREET 1: ONE MERRILL CIRCLE STREET 2: ENERGY PARK CITY: ST PAUL STATE: MN ZIP: 55108 BUSINESS PHONE: 6126464501 FORMER COMPANY: FORMER CONFORMED NAME: MERRILL CORP/FA DATE OF NAME CHANGE: 19930915 10-Q 1 10-Q (7/31/94) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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 JULY 31, 1994 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: 0-14082 MERRILL CORPORATION (Exact name of Registrant as specified in its charter) MINNESOTA 41-0946258 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) One Merrill Circle St. Paul, Minnesota 55108 (Address of principal executive (Zip Code) offices) Registrant's telephone number, including area code: 612-646-4501 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 filing requirements for the past 90 days. Yes X No -------- -------- The number of shares outstanding of Registrant's Common Stock, par value $.01, on September 12, 1994 was 7,594,476. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART I. -- FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Incorporated herein is the following unaudited financial information: Consolidated Balance Sheets as of July 31, 1994 and January 31, 1994. Consolidated Statements of Operations for the three-month and six-month periods ended July 31, 1994 and 1993. Consolidated Statements of Cash Flows for the six-month periods ended July 31, 1994 and 1993. Notes to Consolidated Financial Statements. 2 MERRILL CORPORATION CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA) (UNAUDITED) ASSETS
JULY 31, JANUARY 31, 1994 1994 ----------- ----------- Current assets Cash and cash equivalents.......................................................... $ 1,017 $ 2,558 Trade receivables, less allowance for doubtful accounts of $3,456 and $2,294 respectively...................................................................... 44,431 38,777 Work in process inventories........................................................ 12,176 11,821 Other inventories.................................................................. 3,455 3,935 Refundable income taxes............................................................ 487 Other.............................................................................. 2,207 2,344 ----------- ----------- Total current assets............................................................. 63,773 59,435 ----------- ----------- Property, plant and equipment, net................................................... 27,166 26,678 Goodwill, net........................................................................ 11,221 11,616 Other assets......................................................................... 2,357 2,394 ----------- ----------- Total assets..................................................................... $ 104,517 $ 100,123 ----------- ----------- ----------- ----------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Note payable to bank............................................................... $ 1,800 $ 2,600 Current maturities of long-term debt............................................... 1,318 1,325 Current maturities of capital lease obligations.................................... 365 365 Accounts payable................................................................... 11,637 15,939 Accrued expenses................................................................... 13,862 13,145 Income taxes payable............................................................... 115 Deferred income taxes.............................................................. 2,281 3,418 ----------- ----------- Total current liabilities........................................................ 31,263 36,907 ----------- ----------- Long-term debt, net of current maturities............................................ 6,040 6,040 Capital lease obligations, net of current maturities................................. 2,442 2,616 Deferred income taxes................................................................ 669 669 Other................................................................................ 725 294 Shareholders' equity Common stock, $.01 par value: 25,000,000 shares authorized; 7,580,176 shares and 7,492,922 shares, respectively, issued and outstanding............................ 76 75 Undesignated stock: 500,000 shares authorized; no shares issued.................... Additional paid-in capital......................................................... 14,126 12,996 Retained earnings.................................................................. 49,176 40,526 ----------- ----------- Total shareholders' equity....................................................... 63,378 53,597 ----------- ----------- Total liabilities and shareholders' equity....................................... $ 104,517 $ 100,123 ----------- ----------- ----------- -----------
The accompanying notes are an integral part of the consolidated financial statements. 3 MERRILL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED JULY 31, JULY 31, -------------------- ---------------------- 1994 1993 1994 1993 --------- --------- ----------- --------- Revenue........................................................... $ 63,679 $ 44,912 $ 125,142 $ 86,156 Cost of sales..................................................... 41,917 29,117 80,364 54,554 --------- --------- ----------- --------- Gross profit.................................................... 21,762 15,795 44,778 31,602 Selling, general and administrative expenses...................... 14,162 9,880 29,044 20,240 --------- --------- ----------- --------- Operating income................................................ 7,600 5,915 15,734 11,362 Interest expense.................................................. (269) (62) (502) (154) Other income...................................................... 130 63 193 148 --------- --------- ----------- --------- Income before provision for income taxes and cumulative effect of change in accounting for income taxes....................... 7,461 5,916 15,425 11,356 Provision for income taxes........................................ 3,065 2,398 6,330 4,556 --------- --------- ----------- --------- Income before cumulative effect of change in accounting for income taxes............................................................ 4,396 3,518 9,095 6,800 Cumulative effect of change in accounting for income taxes........ 177 --------- --------- ----------- --------- Net income...................................................... $ 4,396 $ 3,518 $ 9,095 $ 6,977 --------- --------- ----------- --------- --------- --------- ----------- --------- Income per common and common equivalent share: Before cumulative effect of change in accounting for income taxes.......................................................... $.55 $.44 $1.13 $.86 Cumulative effect of change in accounting for income taxes...... .02 --------- --------- ----------- --------- Net income...................................................... $.55 $.44 $1.13 $.88 --------- --------- ----------- --------- --------- --------- ----------- --------- Dividends per common share........................................ $.03 $.025 $.06 $.05 --------- --------- ----------- --------- --------- --------- ----------- --------- Weighted average number of common and common equivalent shares outstanding...................................................... 8,043,226 7,937,011 8,056,911 7,901,682 --------- --------- ----------- --------- --------- --------- ----------- ---------
The accompanying notes are an integral part of the consolidated financial statements. 4 MERRILL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
SIX MONTHS ENDED JULY 31, -------------------- 1994 1993 --------- --------- Operating activities Net income............................................................................ $ 9,095 $ 6,977 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization....................................................... 4,141 2,489 Amortization of intangible assets................................................... 520 144 Provision for losses on trade receivables........................................... 1,309 389 Tax benefit realized upon exercise of stock options................................. 715 466 Deferred compensation expense....................................................... 431 Cumulative effect of change in accounting for income taxes.......................... (177) Increase (decrease) from changes in operating assets and liabilities Trade receivables................................................................. (6,963) (2,918) Work in process inventories....................................................... (355) (2,323) Other inventories................................................................. 480 65 Refundable income taxes........................................................... (487) Other current assets.............................................................. 137 (327) Accounts payable.................................................................. (4,302) (836) Accrued expenses.................................................................. 717 2,111 Accrued and deferred income taxes................................................. (1,252) 1,023 --------- --------- Net cash provided by operating activities....................................... 4,186 7,083 --------- --------- Investing activities Purchase of property, plant and equipment............................................. (4,629) (2,542) Business acquisitions, net of cash acquired........................................... (849) Other................................................................................. (88) 35 --------- --------- Net cash used in investing activities........................................... (4,717) (3,356) --------- --------- Financing activities Borrowings on note payable to bank.................................................... 27,700 600 Repayments on note payable to bank.................................................... (28,500) (600) Principal payments on long-term debt and capital lease obligations.................... (181) (42) Dividends paid........................................................................ (452) (369) Other equity transactions, net........................................................ 423 290 --------- --------- Net cash used in financing activities........................................... (1,010) (121) --------- --------- Increase (decrease) in cash and cash equivalents........................................ (1,541) 3,606 Cash and cash equivalents, beginning of period.......................................... 2,558 9,562 --------- --------- Cash and cash equivalents, end of period................................................ $ 1,017 $ 13,168 --------- --------- --------- --------- Supplemental cash flow disclosure Income taxes paid..................................................................... $ 7,359 $ 3,067 Interest paid......................................................................... 267 148 --------- --------- --------- ---------
The accompanying notes are an integral part of the consolidated financial statements. 5 MERRILL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. ACCOUNTING POLICIES The consolidated financial statements as of July 31, 1994 and for the periods ended July 31, 1994 and 1993 have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, which the Company considers necessary for a fair presentation of the results for the indicated periods. Certain information and accounting policies and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's latest annual report on Form 10-K. 2. SELECTED BALANCE SHEET DATA (IN THOUSANDS)
JULY 31, JANUARY 31, 1994 1994 --------- ----------- Property, plant and equipment At cost......................................................... $ 50,442 $ 46,352 Less accumulated depreciation and amortization.................. (23,276) (19,674) --------- ----------- $ 27,166 $ 26,678 --------- ----------- --------- -----------
3. ACQUISITION On December 31, 1993, the Company completed the acquisition of substantially all of the assets of May Printing Company. Pro forma (unaudited) results for the periods ended July 31, 1993 as though the acquisition had been effective at the beginning of fiscal 1994 are as follows: (000's except per share amounts)
SIX MONTHS THREE MONTHS ENDED ENDED JULY 31, JULY 31, 1993 1993 ------------- ------------ Revenue.......................................................... $ 52,097 $ 100,601 Net Income....................................................... 3,748 7,476 Net Income Per Share............................................. $.47 $.94
6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The following table sets forth the percentage relationship to revenue of certain items in the Company's statements of operations for the three-month and six-month periods ended July 31, 1994 and 1993, and the percentage change in such items between the two periods.
THREE MONTHS ENDED JULY 31, SIX MONTHS ENDED JULY 31, -------------------------- -------------------------- PERCENTAGE PERCENTAGE INCREASE INCREASE PERCENTAGE (DECREASE) PERCENTAGE (DECREASE) OF REVENUE ---------- OF REVENUE ---------- ------------- 1994 VS. ------------- 1994 VS. 1994 1993 1993 1994 1993 1993 ----- ----- ---------- ----- ----- ---------- Revenue Financial.................................. 34.9% 38.6% 28% 34.3% 36.5% 37% Corporate.................................. 34.1 39.3 23 33.8 41.7 18 Commercial & other......................... 31.0 22.1 99 31.9 21.8 112 ----- ----- --- ----- ----- --- Total revenue............................ 100.0 100.0 42 100.0 100.0 45 Cost of sales................................ 65.8 64.8 44 64.2 63.3 47 ----- ----- ----- ----- Gross profit............................. 34.2 35.2 38 35.8 36.7 42 Selling, general and administrative expenses.................................... 22.3 22.0 43 23.2 23.5 44 ----- ----- ----- ----- Operating income......................... 11.9 13.2 29 12.6 13.2 39 Interest expense............................. (0.4) (0.1) 334 (0.4) (0.2) 226 Other income................................. 0.2 0.1 106 0.2 0.2 30 ----- ----- ----- ----- Income before taxes and cumulative effect of change in accounting for income taxes................................... 11.7 13.2 26 12.4 13.2 36 Provision for income taxes................... 4.8 5.3 28 5.1 5.3 39 Cumulative effect of change in accounting for income taxes................................ 0.2 ----- ----- ----- ----- Net income............................... 6.9% 7.9% 25% 7.3% 8.1% 30% ----- ----- ----- ----- ----- ----- ----- -----
The operating results for both the three-month and six-month periods ended July 31, 1994 were records for those periods. These results were again revenue driven, reflecting double-digit revenue increases, compared to the same periods of the prior year, in each of the Company's three traditional revenue categories, complemented by the results of May Printing Company, acquired in December, 1993. Revenue continued to be well balanced among the three categories in the current periods. The increase in Financial revenue reflected the high level of activity in the financial markets which existed into late June. Increased corporation proxy activity, EDGAR filings and mutual fund documentation were responsible for the improvement in Corporate revenue. The doubling of revenue in the Commercial and Other category was primarily due to the inclusion of May Printing Company, but also reflected increased election-related printing in this general election year, and revenue from additional facilities management installations. Since June, interest rate and other concerns have caused financial markets to become very uncertain and limiting to new financings. This has resulted in the level of activity in the Company's Financial revenue category being below previous levels for the past two months. For this reason, despite good activity in the Corporate and Commercial and Other categories, management has announced that it does not believe that third quarter operating results will meet market expectations that existed prior to the announcement. As anticipated, gross margins were lower in both current periods, principally due to the traditionally lower level of margins generated by May Printing Company. Selling, general and administrative 7 expenses increased significantly again reflecting the inclusion of May Printing. Exclusive of May, these expenses grew somewhat less than the growth in revenue due to the fixed nature of a portion of these expenses. The effective income tax rate was 41 percent in both current periods, compared to 40.5 percent for the second quarter and 40.1 percent for the six-month period last year. The tax rate for the six-month periods represents the estimated rates for the respective fiscal years. The increase in the effective rate is caused by higher state income taxes and the reduction in the portion of business entertainment expenses deductible under the new tax laws. FINANCIAL CONDITION Working capital increased $10 million in the six-month period, reflecting strong earnings and operating cash flows. Capital expenditures for the period were $4.6 million, principally for production equipment, office remodeling and furnishings. Cash and cash equivalents, net of current bank borrowings, decreased $741,000 in the period. In addition to capital expenditures, cash flows were utilized to support a $7 million increase in trade receivables, reflecting the 42 percent revenue increase in the period, and a $4.3 reduction in accounts payable due to the slowing of production activity in the latter part of the period as discussed above. The Company had outstanding purchase commitments for capital equipment of approximately $1.5 million as of July 31, 1994. 8 PART II. -- OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 11. Schedule of Computation of Per Share Earnings 27. Financial Data Schedules (b) Reports on Form 8-K None 9 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. (REGISTRANT) MERRILL CORPORATION BY (SIGNATURE) /s/ John W. Castro (NAME AND TITLE) John W. Castro, President and Chief Executive Officer (DATE) September 14, 1994 BY (SIGNATURE) /s/ John B. McCain (NAME AND TITLE) John B. McCain, Chief Financial Officer (DATE) September 14, 1994
10 EXHIBIT INDEX
EXHIBIT METHOD OF FILING - ----------- --------------------------------- 11. Schedule of Computation of Per Share Earnings........................ Filed herewith electronically 27. Financial Data Schedules............................................. Filed herewith electronically
11 EX-11 2 EXHIBIT 11 EXHIBIT 11 MERRILL CORPORATION SCHEDULE OF COMPUTATION OF PER SHARE EARNINGS (UNAUDITED)
THREE MONTHS SIX MONTHS ENDED JULY 31, ENDED JULY 31, ---------------------------- ---------------------------- 1994 1993 1994 1993 ------------- ------------- ------------- ------------- Primary: Net income......................................... $ 4,396,071 $ 3,518,707 $ 9,094,913 $ 6,977,203 ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- Weighted average number of common shares outstanding during the period..................... 7,569,496 7,396,907 7,543,657 7,371,312 Add common equivalent shares relating to outstanding options to purchase common stock using the treasury stock method......................... 473,730 540,104 513,254 530,370 ------------- ------------- ------------- ------------- Total common and common equivalent shares outstanding..................................... 8,043,226 7,937,011 8,056,911 7,901,682 ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- Primary income per common share...................... $.55 $.44 $1.13 $.88 ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- Fully diluted: Net income......................................... $ 4,396,071 $ 3,518,707 $ 9,094,913 $ 6,977,203 ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- Weighted average number of common shares outstanding during the period..................... 7,569,496 7,396,907 7,543,657 7,371,312 Add common equivalent shares relating to outstanding options to purchase common stock using the treasury stock method......................... 473,689 612,219 513,115 575,399 ------------- ------------- ------------- ------------- Total common and common equivalent shares outstanding..................................... 8,043,185 8,009,126 8,056,772 7,946,711 ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- Fully diluted income per common share................ $.55 $.44 $1.13 $.88 ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
12 EX-27 3 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FOUND ON PAGES 3 AND 4 OF THE COMPANY'S FORM 10-Q FOR THE YEAR-TO-DATE, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS JAN-31-1995 FEB-01-1994 JUL-31-1994 1,017 0 47,887 3,456 15,631 63,773 50,442 23,276 104,517 31,263 10,165 76 0 0 63,378 104,517 125,142 125,142 80,364 80,364 29,044 1,309 502 15,425 6,330 9,095 0 0 0 9,095 1.13 1.13
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