-----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, HbX1pGfH/k4heAmPpJzyI6HhqGgMV18Ww5m/Tpf21yByV8t9PNFd6iXw+KvDvbDT +c+tql8DSpriZpf4HGEXcg== 0000904816-96-000002.txt : 19960621 0000904816-96-000002.hdr.sgml : 19960621 ACCESSION NUMBER: 0000904816-96-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRIMESOURCE CORP CENTRAL INDEX KEY: 0000904816 STANDARD INDUSTRIAL CLASSIFICATION: 5040 IRS NUMBER: 231430030 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-21750 FILM NUMBER: 96563397 BUSINESS ADDRESS: STREET 1: 4350 HADDONFIELD RD STREET 2: SUITE 222 CITY: PENNSAUKEN STATE: NJ ZIP: 08109 BUSINESS PHONE: 6094884888 MAIL ADDRESS: STREET 1: FAIRWAY CORPORATE CENTER SUITE 222 STREET 2: 4350 HADDONFIELD ROAD CITY: PENNSAUKEN STATE: NJ ZIP: 08109 FORMER COMPANY: FORMER CONFORMED NAME: PHILLIPS & JACOBS INC DATE OF NAME CHANGE: 19930514 10-Q 1 TEXT 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE PERIOD ENDED MARCH 31, 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- 21750 PrimeSource Corporation (Exact name of registrant as specified in its charter) Pennsylvania 23-1430030 (State of incorporation) (I.R.S. Employer Identification No.) 4350 Haddonfield Road, Suite 222, Pennsauken, NJ 08109 (Address of principal executive offices) (Zip Code) (609) 488-4888 (Registrant's telephone number, including area code) Indicate by a 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: Class Outstanding at May 8, 1996 Common stock, par value $.01 6,552,279 shares 2 PRIMESOURCE CORPORATION AND SUBSIDIARIES INDEX PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements Page No. Consolidated Condensed Balance Sheets March 31, 1996 and December 31, 1995 3 Consolidated Condensed Statements of Income Three Months Ended March 31, 1996 and 1995 4 Consolidated Condensed Statements of Cash Flows Three Months Ended March 31, 1996 and 1995 5 Notes to Consolidated Condensed Financial Statements 6 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 7
PART II - OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-k 9 SIGNATURES 9
3 PART I. FINANCIAL INFORMATION Item 1. Financial Statements PRIMESOURCE CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS
March 31, December 31, 1996 1995 (Thousands of dollars) (Unaudited) - - ------------------------------------------------------------------------------ ASSETS Current Assets: Receivables $ 53,549 $ 57,474 Inventories 39,052 41,581 Other 2,900 2,466 - - ------------------------------------------------------------------------------ Total Current Assets 95,501 101,521 Property and equipment, net 9,988 10,358 Excess of cost over net assets of businesses acquired, net 4,994 4,942 Other assets 3,180 2,983 - - ------------------------------------------------------------------------------ Total Assets $ 113,663 $ 119,804 ============================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current portion of long-term obligations $ 1,210 $ 1,206 Accounts payable 27,064 28,624 Other accrued liabilities 5,534 6,523 - - ------------------------------------------------------------------------------ Total Current Liabilities 33,808 36,353 Long-term obligations, net of current portion 28,378 32,202 Accrued pension liabilities and other liabilities 5,215 5,677 - - ------------------------------------------------------------------------------ Total Liabilities 67,401 74,232 - - ------------------------------------------------------------------------------ Commitments and contingencies Shareholders' Equity: Common stock, $.01 par value 66 65 Additional paid in capital 25,680 25,543 Retained earnings 20,571 20,036 Unamortized restricted stock awards (55) (72) - - ------------------------------------------------------------------------------ Total Shareholders' Equity 46,262 45,572 - - ------------------------------------------------------------------------------ Total Liabilities and Shareholders' Equity $ 113,663 $ 119,804 ==============================================================================
See notes to consolidated condensed financial statements. 4 PRIMESOURCE CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended March 31, (Thousands of dollars, except per share amounts) 1996 1995 - - ------------------------------------------------------------------------------ Net sales $ 86,959 $ 89,577 Cost of sales 71,777 73,707 - - ------------------------------------------------------------------------------ Gross profit 15,182 15,870 Selling, general, and administrative expenses 13,353 14,358 - - ------------------------------------------------------------------------------ Income from operations 1,829 1,512 Interest expense (520) (452) Other income, net 96 17 - - ------------------------------------------------------------------------------ Income before provision for income taxes 1,405 1,077 Provision for income taxes 576 451 - - ------------------------------------------------------------------------------ Net income $ 829 $ 626 ============================================================================== Average number of shares outstanding 6,552,279 6,573,231 Per share of common stock: Net income $ .13 $ .10 Cash dividend .045 .1125 ==============================================================================
See notes to consolidated condensed financial statements. 5 PRIMESOURCE CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended March 31, (Thousands of dollars) 1996 1995 - - ------------------------------------------------------------------------------ OPERATING ACTIVITIES: Net income $ 829 $ 626 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 493 505 Amortization 142 147 Changes in assets and liabilities affecting operations 3,009 2,247 - - ------------------------------------------------------------------------------ Net cash provided by operating activities 4,473 3,525 - - ------------------------------------------------------------------------------ INVESTING ACTIVITIES: Acquisition of Litho Supply (112) Additions to property and equipment (123) (275) Net increase in other assets (236) (65) - - ------------------------------------------------------------------------------ Net cash used in investing activities (359) (452) - - ------------------------------------------------------------------------------ FINANCING ACTIVITIES: Net decrease in short-term borrowings (3,000) Proceeds from long-term obligations 23,150 28,700 Repayment of long-term obligations (26,970) (28,677) Dividends paid (294) (734) Proceeds from exercise of stock options 20 - - ------------------------------------------------------------------------------ Net cash used in financing activities (4,114) (3,691) - - ------------------------------------------------------------------------------ Net decrease in cash --- (618) Cash, beginning of year 618 - - ------------------------------------------------------------------------------ Cash, end of period $ --- $ --- ============================================================================== Supplemental disclosures of cash flow information Cash paid (received) during the period for: Interest $ 526 $ 537 Income taxes 135 (892) ==============================================================================
See notes to consolidated condensed financial statements. 6 PRIMESOURCE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. Adjustments The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission and instructions to Form 10-Q. While these statements reflect all adjustments (which consist of normal recurring accruals) which are, in the opinion of management, necessary to a fair presentation of the results for the interim periods presented, they do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. These statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company's 1995 Annual Report on Form 10-K for further information. The results of operations for the three months ended March 31, 1996 are not necessarily indicative of the results to be expected for the full year. 2. Inventory Pricing Inventories consist primarily of purchased goods for sale. Inventories are stated at the lower of cost or market. Cost is determined using the last-in, first-out (LIFO) and first-in, first-out methods of accounting. Because the inventory determination under the LIFO method can only be made at the end of each fiscal year, interim financial results are based on estimated LIFO amounts and are subject to final year-end LIFO inventory adjustments. 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Consolidated net income for the three-months ended March 31, 1996 was $829,000 ($.13 per share) on sales of $86,959,000 compared to net income of $626,000 ($.10 per share) on sales of $89,577,000 for the same quarter last year. Sales for the quarter decreased 3% compared to the same quarter last year. Unusually harsh weather in the Northeast and Southeast United States significantly affected sales in January. Sales for January compared to January of last year decreased approximately $3.4 million compared to a net decrease for the quarter of $2.6 million. Gross profit as a percent of sales remained relatively constant at 17.5% compared to 17.7% for the same quarter last year. There continues to be competitive pressures on margins, which will require the Company to emphasize value-added solutions to its customers, combined with products which provide the best returns to the customer and the Company, in order to maintain or improve existing margins. Selling, general, and administrative expenses as a percent of sales were 15.4% compared to 16% in the same quarter last year. This decrease is primarily due to the restructuring program completed in 1995 which consolidated five distribution centers, realigned two others and centralized certain financial and information services. Interest expense was $520,000 for the quarter compared to $452,000 for the same quarter last year. This increase is primarily due to a modest increase in interest rates in the first quarter compared to the same period last year. The effective tax rates for the quarters ended March 31, 1996 and 1995 were 41% and 41.9%, respectively. The lower rate in 1996 is primarily due to non- deductible expenses being a lower percent to income in 1996 compared to 1995. 8 Financial Condition and Liquidity Net cash provided by operating activities for the three-months ended March 31, 1996 was $4,473,000 compared to $3,525,000 for the same quarter last year. Improvements in working capital levels created over $3 million of cash flow in 1996 and over $2 million in 1995. Excluding the effect of changes in assets and liabilities, the cash flow was $1,464,000 in 1996 compared to $1,278,000 for the same quarter last year. Net cash used in investing activities was $359,000 for the quarter compared to $452,000 for the same quarter last year. Expenditures in 1996 consisted of property and equipment additions and increases in long-term assets, primarily long-term receivables. Additional capital expenditures in 1996, for which there are no material commitments, are anticipated to be approximately $2 million. In addition, the Company's business strategy includes continuing to acquire regional distributors within the Company's current markets or companies that offer new products and services to the printing and imaging industries. Net cash used in financing activities was $4,114,000 for the quarter compared to $3,691,000 for the same quarter last year. Due to the cash flow generated from operations, the Company was able to reduce debt by approximately $3.8 million during the quarter. The balance of the outflow for the quarter was for dividend payments. For the same quarter last year, debt was reduced by approximately $3.0 million with the balance of the outflow primarily for dividend payments. The Company has a strong and liquid balance sheet. At March 31, 1996, the Company's current ratio was 2.8 to 1, with current assets, consisting primarily of accounts receivable and branded inventory, representing over 80% of the total assets. The debt to equity ratio was .64 to 1. The Company's primary source of debt financing is three revolving credit agreements with a total commitment of $27.5 million of which $4.0 million was unused at March 31, 1996. In addition, the Company has uncommitted and short- term lines of $10.7 million of which none was outstanding. The Company believes these facilities combined with the cash flow from operations will be adequate to meet the ongoing capital requirements of the Company. 9 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K a. Exhibits Exhibit 11 -- Earnings per share information. b. Reports on Form 8-k The Registrant did not file a report on Form 8-k during the quarter ended March 31, 1996. - - ------------------------------------------------------------------------------ SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PRIMESOURCE CORPORATION (REGISTRANT) BY /s/ William A. DeMarco William A. DeMarco Vice President of Finance and Chief Financial Officer (principal financial and accounting officer) DATE May 13, 1996 EX-11 2 EXHIBIT 11 COMPUTATION OF INCOME PER SHARE
Three Months (Amounts in thousands, Ended March 31, except per share data ) 1996 1995 - - ------------------------------------------------------------------------------ PRIMARY Average shares outstanding 6,552 6,520 Net effect of dilutive stock options- based on the treasury stock method using average market price 53 - - ----------------------------------------------------------------------------- 6,552 6,573 - - ----------------------------------------------------------------------------- Net income $ 829 $ 626 ============================================================================= Per share amount $ .13 $ .10 =============================================================================
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