-----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, WyIy22OmDfza9V8uXoaQ8WQlNUimNZBcX03j5NLuIStSMPWhknwDco0f6cKmizwV 9yWZJZ3QjW8q7toaxhmW6A== 0000898430-96-005190.txt : 19961111 0000898430-96-005190.hdr.sgml : 19961111 ACCESSION NUMBER: 0000898430-96-005190 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961108 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: VIKING OFFICE PRODUCTS INC CENTRAL INDEX KEY: 0000859303 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-CATALOG & MAIL-ORDER HOUSES [5961] IRS NUMBER: 952082946 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18237 FILM NUMBER: 96657628 BUSINESS ADDRESS: STREET 1: 13809 S FIGUEROA ST CITY: LOS ANGELES STATE: CA ZIP: 90061 BUSINESS PHONE: 2133214493 MAIL ADDRESS: STREET 1: 13809 SOUTH FIGUEROA STREET CITY: LOS ANGELES STATE: CA ZIP: 90061 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 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: 0-18237 VIKING OFFICE PRODUCTS, INC. ------------------------------------------------------- (Exact name of registrant as specified in its charter) California 95-2082946 - ------------------------------- -------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 879 West 190th Street P. O. Box 61144 Los Angeles, California 90061 ------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (310) 225-4500 -------------------------------------------------------- (Registrant's Telephone Number, including area code) -------------------------------------------------------- (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 NOVEMBER 6, 1996 ----- ------------------------------- Common Stock 83,539,591 1 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS VIKING OFFICE PRODUCTS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) (Unaudited)
September 30, June 28, 1996 1996 ------------- -------- ASSETS Current assets: Cash and cash equivalents $ 14,693 $ 11,693 Short-term investments 38,348 33,068 Accounts receivable, net 135,258 121,061 Merchandise inventories 89,575 81,753 Prepaid catalog costs 17,364 17,831 Prepaid expenses and other current assets 2,972 3,430 ------------- -------- Total current assets 298,210 268,836 ------------- -------- Property and equipment, net 107,712 95,231 Other assets: Deposits and other assets 6,704 6,590 Intangible assets, net 28,759 28,984 ------------- -------- Total other assets 35,463 35,574 ------------- -------- Total assets $441,385 $399,641 ============= ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $104,756 $91,975 Sales and value added taxes payable 8,639 3,956 Income taxes payable 31,237 26,149 ------------- -------- Total current liabilities 144,632 122,080 ------------- -------- Deferred income taxes 2,532 2,532 Stockholders' equity: Common stock 100,447 98,567 Unamortized value of long-term incentive stock grant (4,623) (4,346) Retained earnings 197,954 181,722 Cumulative foreign currency translation adjustment 443 (914) ------------- -------- Total stockholders' equity 294,221 275,029 ------------- -------- Total liabilities and stockholders' equity $441,385 $399,641 ============= ========
VIKING OFFICE PRODUCTS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In Thousands, Except Per Share Amounts) (Unaudited)
Three Months Ended September 30, -------------------- 1996 1995 -------- -------- Revenues $290,532 $230,010 Cost of goods sold, including delivery 188,002 149,999 -------- -------- Gross profit 102,530 80,011 Selling, general & administrative expenses 80,035 61,315 -------- -------- Operating income 22,495 18,696 Other income 2,126 2,024 Interest expense 26 71 -------- -------- Income before income taxes 24,595 20,649 Income taxes 8,363 7,347 -------- -------- Net income $16,232 $13,302 ======== ======== Net income per common and common equivalent share $0.19 $0.15 ======== ======== Weighted average number of common and common equivalent shares 87,500 85,940 ======== ========
VIKING OFFICE PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (unaudited)
Three Months Ended September 30, ---------------------- 1996 1995 -------- -------- Cash flows from operating activities: Cash received from customers $ 273,439 $ 212,272 Cash paid to suppliers and employees (248,301) (200,159) Interest received 908 541 Interest paid (25) (71) Income taxes paid (3,546) (10) -------- -------- Net cash provided by operating activities 22,475 12,573 Cash flows from investing activities: Capital expenditures (16,080) (9,840) Short-term investments (5,280) 637 Proceeds from sale of property and equipment 65 39 Issuance of notes receivable and other (104) (2,757) -------- -------- Net cash used in investing activities (21,399) (11,921) Cash flows from financing activities: Proceeds from issuance of common stock 1,879 1,596 -------- -------- Net cash provided by financing activities 1,879 1,596 Effect of exchange rate changes on cash 45 154 -------- -------- Net increase (decrease) in cash and cash equivalents 3,000 2,402 Cash and cash equivalents, beginning of period 11,693 11,065 -------- -------- Cash and cash equivalents, end of period $ 14,693 $ 13,467 ======== ======== Reconciliation of net income to net cash provided by operating activities: Net income $ 16,232 $ 13,302 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,236 2,790 Loss on sale of property and equipment (47) 87 Provision for doubtful accounts and customer returns 3,166 2,739 Increase in accounts receivable (16,282) (17,615) Increase in merchandise inventories (7,289) (12,045) Decrease in prepaid expenses and other assets 1,060 4,553 Increase in accounts payable and accrued expenses 11,222 14,972 Increase in other liabilities 10,177 3,790 -------- -------- Total adjustments 6,243 (729) -------- -------- Net cash provided by (used in) operating activities $ 22,475 $ 12,573 ======== ========
VIKING OFFICE PRODUCTS, INC. NOTES TO FINANCIAL STATEMENTS ----------------------------- (UNAUDITED) 1. FINANCIAL STATEMENTS The condensed financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange commission and reflect all adjustments, consisting only of normal recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of the results of the interim periods presented. Certain information 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, although the Company believes that disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report to shareholders for the year ended June 28, 1996. The June 28, 1996 condensed consolidated Balance Sheet was derived from the audited consolidated balance sheet at June 28, 1996, which was incorporated by reference in the Company's annual report on Form 10-K. In October 1995, The Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation", which is effective for the Company beginning July 1, 1996. SFAS No. 123 requires expanded disclosure of stock-based compensation arrangements with employees and encourages (but does not require) compensation cost to be measured based on the fair value of the equity instrument awarded. Companies are permitted, however, to continue to apply APB Opinion No. 25, which recognizes compensation cost based on the intrinsic value of the equity instrument awarded. The Company will continue to apply APB Opinion No. 25 to its stock based compensation awards to employees and will disclose the required pro forma effect on net income and earnings per share. 5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS ----------------------------------------------------------------------- OF OPERATIONS ------------- The following table shows, for the periods indicated, the percentage relationships to revenues of items included in the Condensed Consolidated Statements of Income and the percentage changes in the dollar amounts of such items from period to period.
Three Months Ended Percentage September 30, Increase ------------------ ------------- 1996 1995 1996 vs. 1995 ------ ------ ------------- Revenues 100.0% 100.0% 26.3% Cost of goods sold, including delivery 64.7% 65.2% 25.3% ----- ----- Gross profit 35.3% 34.8% 28.1% Selling, general & administrative expenses 27.5% 26.7% 30.5% ----- ----- Operating income 7.8% 8.1% 20.3% Other income 0.7% 0.9% 5.0% Interest expense 0.0% 0.0% NA ----- ----- Income before income taxes 8.5% 9.0% 19.1% Income taxes 2.9% 3.2% 13.8% ----- ----- Net income 5.6% 5.8% 22.0% ===== =====
THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THE THREE MONTHS ENDED - ------------------------------------------------------------------------ SEPTEMBER 30, 1995. - ------------------- Revenues for the three months ended September 30, 1996 were $290.5 million, an increase of $60.5 million, or 26.3%, over the comparable period of the prior year. European revenues were $165.8 million, an increase of 42.1% over the prior year. European operations included the United Kingdom, The Republic of Ireland, France, Belgium, Luxembourg, The Netherlands and, since opening in November of 1995, Germany. Revenues generated by the new German business were $28.7 million for the three months ended September 30, 1996. In Australia, revenues were $15.4 million, increasing 26.9% over last year. International operations accounted for more than 62% of the first quarter revenues. United States revenues were $109.3 million, an increase of 8.0% versus the same period last year. This slower growth rate was due primarily to lower selling prices of paper products versus last year. On a company-wide basis, during the three months ended September 30, 1996, the number of catalogs mailed increased 19.0%, the number of customers who purchased products increased 25.8% and the average revenue per customer increased by 0.4% compared to the comparable period of the prior year. Gross profit for the three months ended September 30, 1996 increased by $22.5 million, or 28.1% over last year. As a percentage of revenues, gross profit increased from 34.8% in the three months ended September 30, 1995 to 35.3% in the current quarter. The increase in gross profit is primarily attributable to decreases in the costs of paper products and higher gross profit in the newer markets in Australia and Europe, excluding Germany. 6 Selling, general and administrative expenses for the three months ended September 30, 1996 increased by $18.7 million, or 30.5% over the comparable period of the prior year. As a percentage of revenues, these expenses increased from 26.7% in the three months ended September 30, 1995 to 27.5% in the three months ended September 30, 1996. This percentage increase was primarily due to operating expenses in Germany, as well as start up and early operating expenses for two new distribution centers in Europe and one in the United States. Other income for the three months ended September 30, 1996 increased by $102,000, or 5.0% over the comparable period of the prior year. The three months ended September 30, 1996 included more cash discounts received on higher inventory purchases. Income taxes for the three months ended September 30, 1996 increased by $1,016,000 due to higher pretax earnings. The effective tax rate decreased from 35.6% for the three months ended September 30, 1995 to 34.0% for the current period. This decrease was primarily attributable to the use of foreign losses to offset domestic taxable income. Consolidated net income for the quarter ended September 30, 1996 was $16.2 million, an increase of 22.0% over the prior year quarter. Consolidated earnings per share were $.19 compared to $.15 last year. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Viking's primary source of liquidity has been cash flow from operations. Viking believes that its existing cash and short-term investments, funds generated from operations and available credit under its revolving credit facility will be sufficient to finance its working capital requirements for the foreseeable future. At September 30, 1996, the Company had working capital of $153.6 million compared to $146.8 million at June 28, 1996. The improved working capital position primarily reflects increased net income, net of investing activities, which consisted primarily of capital expenditures. Cash provided by operating and financing activities that exceeded current working capital and capital expenditures requirements was invested in short-term marketable securities. Capital expenditures amounted to $16.1 million for first nine months of fiscal 1997 as Viking continued to invest in domestic and international operations, particularly in Europe. Viking believes there are substantial opportunities throughout Europe to expand its business. Capital expenditures related to expansion have been funded by cash from operations. Management believes that future expansion plans, and the capital requirements for such expansion, will be provided from existing cash and short-term investments, and cash flows from operations. Capital expenditures in fiscal 1997 are expected to be between $50 million and $60 million. Viking has a revolving credit agreement which provides for an unsecured revolving credit facility up to $60 million through June 2001. Advances under this credit facility bear interest at the bank's base rate or, at the option of Viking, the LIBOR rate plus a percentage spread based upon certain defined ratios. In addition, Viking is required to pay a commitment fee of 1/8% on the total amount of the revolving credit facility. The availability of the line of credit is subject to Viking's maintenance of certain financial ratios. At September 30, 1996, no amounts were outstanding under this credit facility and the entire $60 million was available for borrowing. 7 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) THE FOLLOWING EXHIBIT IS FILED AS PART OF THIS REPORT: 27 Financial Data Schedule (b) REPORTS ON FORM 8-K. There were no reports filed on Form 8-K during the three months ended September 30, 1996. 8 SIGNATURE - --------- 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. VIKING OFFICE PRODUCTS, INC. DATE: November 8, 1996 BY: /s/ Frank R. Jarc ------------------- Executive Vice President, Chief Financial Officer BY: /s/ Keith Bjelajac --------------------- Corporate Controller 9 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS JUN-27-1997 SEP-30-1996 14,693 38,348 145,668 10,410 89,575 298,210 140,038 32,326 441,385 144,632 0 0 0 100,447 193,774 441,385 290,532 290,532 188,002 188,002 77,102 2,933 26 24,595 8,363 16,232 0 0 0 16,232 0.19 0.19
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