-----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, NNRArZvqRDqCK+2yDMSt7Ej00DYWQGseKAs53vDMrU1ylVncYE67AiPzVH6MY37E re7QO1iq4/98RYZ5Yv3ujQ== 0000904816-96-000006.txt : 19960816 0000904816-96-000006.hdr.sgml : 19960816 ACCESSION NUMBER: 0000904816-96-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRIMESOURCE CORP CENTRAL INDEX KEY: 0000904816 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PROFESSIONAL & COMMERCIAL EQUIPMENT & SUPPLIES [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: 96611651 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 FORM 10-Q FOR PRIMESOURCE CORPORATION 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 JUNE 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 0-21750 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 August 9,1996 - ----- ---------------------------- Common stock, par value $.01 6,530,779 shares PRIMESOURCE CORPORATION AND SUBSIDIARIES INDEX PART I - FINANCIAL STATEMENTS Item 1 - Financial Statements Page No. -------- Consolidated Condensed Balance Sheets June 30, 1996 and December 31, 1995 3 Consolidated Condensed Statements of Operations Three and Six Months Ended June 30, 1996 and 1995 4 Consolidated Condensed Statements of Cash Flows Six Months Ended June 30, 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 10 PART I. FINANCIAL INFORMATION Item 1. Financial Statements PRIMESOURCE CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS
June 30, December 31, 1996 1995 (Thousands of dollars) (Unaudited) - -------------------------------------------------------------------------- ASSETS Current Assets: Receivables ................................... $ 52,289 $ 57,474 Inventories ................................... 36,619 41,581 Other ......................................... 2,459 2,466 - -------------------------------------------------------------------------- Total Current Assets ............................ 91,367 101,521 Property and equipment, net ..................... 9,609 10,358 Excess of cost over net assets of businesses acquired, net .................. 4,744 4,942 Other assets .................................... 3,009 2,983 - -------------------------------------------------------------------------- Total Assets .................................... $ 108,729 $ 119,804 ========================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current portion of long-term obligations ...... $ 1,214 $ 1,206 Accounts payable .............................. 23,636 28,624 Other accrued liabilities ..................... 6,919 6,523 - -------------------------------------------------------------------------- Total Current Liabilities ....................... 31,769 36,353 Long-term obligations, net of current portion ... 25,078 32,202 Accrued pension liabilities and other liabilities 5,032 5,677 - -------------------------------------------------------------------------- Total Liabilities ............................... 61,879 74,232 - -------------------------------------------------------------------------- Commitments and contingencies Shareholders' Equity: Common stock, $.01 par value .................. 65 65 Additional paid in capital .................... 25,651 25,543 Retained earnings ............................. 21,171 20,036 Unamortized restricted stock awards ........... (37) (72) - -------------------------------------------------------------------------- Total Shareholders' Equity ...................... 46,850 45,572 - -------------------------------------------------------------------------- Total Liabilities and Shareholders' Equity ...... $ 108,729 $ 119,804 ==========================================================================
See notes to consolidated condensed financial statements. PRIMESOURCE CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Six Months (Thousands of dollars, Ended June 30, Ended June 30, except per share amounts) 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------------- Net sales .................................. $ 87,898 $ 89,158 $ 174,857 $ 178,735 Cost of sales .............................. 72,322 73,099 144,099 146,806 - ------------------------------------------------------------------------------------------------------- Gross profit ............................... 15,576 16,059 30,758 31,929 Selling, general and administrative expenses 13,619 14,674 26,972 29,032 Restructure expense ........................ 1,315 1,315 - ------------------------------------------------------------------------------------------------------- Income from operations ..................... 1,957 70 3,786 1,582 Interest expense ........................... (423) (496) (943) (948) Other income (expense), net ................ (18) (34) 78 (17) - ------------------------------------------------------------------------------------------------------- Income (loss) before provision (benefit) for income taxes ................ 1,516 (460) 2,921 617 Provision (benefit) for income taxes ....... 600 (175) 1,176 276 - ------------------------------------------------------------------------------------------------------- Net income (loss) .......................... $ 916 $ (285) $ 1,745 $ 341 ======================================================================================================= Average number of shares outstanding ....... 6,556,183 6,526,825 6,554,231 6,571,564 Per share of common stock: Net income (loss) .......................... $ .14 $ (.04) $ .27 $ .05 Cash dividends ............................. $ .045 $ .1125 $ .09 $ .225 =======================================================================================================
See notes to consolidated condensed financial statements. PRIMESOURCE CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended June 30, (Thousands of dollars) 1996 1995 - ----------------------------------------------------------------------------- Net income ........................................... $ 1,745 $ 341 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation ..................................... 991 978 Amortization ..................................... 302 303 Other ............................................ 19 Changes in assets and liabilities affecting operations 7,082 909 - ----------------------------------------------------------------------------- Net cash provided by operating activities ............ 10,139 2,531 - ----------------------------------------------------------------------------- Investing Activities: Business acquisitions ................................ (2,417) (1,037) Proceeds from sale of property and equipment ......... 64 Additions to property and equipment .................. (191) (624) Net increase (decrease) in other assets .............. 160 (34) - ----------------------------------------------------------------------------- Net cash used in investing activities ................ (2,384) (1,695) - ----------------------------------------------------------------------------- Financing Activities: Net decrease in short-term borrowings ................ (3,000) Proceeds from long-term obligations .................. 49,705 58,344 Repayment of long-term obligations ................... (56,821) (55,349) Dividends paid ....................................... (589) (1,469) Cost of shares reaquired ............................. (50) Proceeds from exercise of stock options .............. 20 - ----------------------------------------------------------------------------- Net cash used in financing activities ................ (7,755) (1,454) - ----------------------------------------------------------------------------- Net increase (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 ............................................. $ 1,020 $ 991 Income taxes ......................................... 259 (153) =============================================================================
See notes to consolidated condensed financial statements. 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 and six months ended June 30, 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. 3. Acquisition On May 28, 1996, the Company acquired the operating assets of KPM, a distributor of photographic and graphic arts supplies and equipment in Michigan and portions of northern Indiana, for approximately $2.4 million. The acquisition has been accounted for as a purchase, and, accordingly, the consolidated financial statements include the operations since the acquisition date. The pro-forma results of this acquisition would not have had a significant impact on the Company's consolidated results of operations. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations - --------------------- Net income for the quarter ended June 30, 1996 was $916,000 ($.14 per share) on sales of $87,898,000 compared to a net loss of $285,000 ($.04 loss per share) on sales of $89,158,000 for the same period last year. For the six months ended June 30, 1996, net income was $1,745,000 ($.27 per share) on sales of $174,857,000 compared to net income of $341,000 ($.05 per share) on sales of $178,735,000 for the same period last year. The net income (loss) for the quarter and six months ended June 30, 1995 included a one-time restructuring charge of $1,315,000 ($794,000 after tax) relating to the consolidation of five distribution centers, realigning two others, and the centralizing of certain financial and information services. Excluding this charge, the net income for the quarter and six months ended June 30, 1995 would have been $509,000 ($.08 per share) and $1,135,000 ($.17 per share), respectively. Sales decreased 1% for the quarter and 2% for the six-month period ended June 30, 1996, compared to the same periods in 1995. This decrease is primarily due to a decrease in sales in January, 1996 due to harsh weather in the Northeast and Southeast United States and a decline in electronic prepress sales in the second quarter. Gross profit as a percent of sales was 17.7% for the quarter and 17.6% for the six-month period ended June 30, 1996 compared to 18% and 17.9%, respectively, for the same periods last year. This modest decrease was due primarily to changes in product mix. Selling, general, and administrative expenses as a percent of sales were 15.5% for the quarter and 15.4% for the six-month period ended June 30, 1996 compared to 16.5% and 16.2%, respectively, for the same periods last year. This decrease is primarily due to the restructuring program described above, which was completed in 1995, and ongoing programs to increase operating efficiencies. Interest expense was $423,000 for the quarter and $943,000 for the six-month period ended June 30, 1996 compared to $496,000 and $948,000 for the same quarter and six-month period last year. During the period, the Company's debt levels decreased, however the interest benefit of this decrease was partially offset by increases in interest rates. The effective tax rates for the quarter and six-month period ended June 30, 1996 were 39.6% and 40.3%, respectively, compared to 38% and 44.7%, respectively, for the same periods last year. The lower rate for the six-month period in 1996 is primarily due to non-deductible expenses being a lesser percent to income. Similarly, the lower tax benefit for the quarter ended June 30, 1995 is also due to the effect of non-deductible expenses. Financial Condition and Liquidity - --------------------------------- Net cash provided by operating activities for the six months ended June 30, 1996 was $10,139,000 compared to $2,531,000 for the same period last year. This significant increase in cash flow, is due to both improvements in working capital levels and cash generated from operating income. In 1996, decreases in working capital resulted in an increase in cash flows of $7,082,000 compared to $909,000 in 1995. Excluding the effect of changes in assets and liabilities, the cash provided was $3,057,000 in 1996 compared to $1,622,000 in 1995. Net cash used in investing activities was $2,384,000 for the six months ended June 30, 1996 compared to $1,695,000 for the same period last year. In 1996, the Company expended $2,417,000 for the acquisition of the business assets of KPM. Capital expenditures for the first six months in 1996 were $191,000. Additional capital expenditures for the year, for which there are no material commitments, are anticipated to be approximately $1 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 $7,755,000 for the six-month period ended June 30, 1996 compared to $1,454,000 for the same period last year. As a result of the significant funds generated from operating activities, the Company was able to reduce debt by approximately $7.1 million. The balance of the cash used was for dividend payments. For the same period last year, the outflow was primarily for dividend payments. The Company has a strong and liquid balance sheet. At June 30, 1996, the Company's current ratio was 2.9 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 .56 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 $6.8 million was unused at June 30, 1996. In addition, the Company has uncommitted and short-term lines of $15.7 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. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K a. Exhibits Exhibit 11 -- Earnings per share information. Exhibit 27 -- Financial data schedule b. Reports on Form 8-k The Registrant did not file a report on Form 8-k during the quarter ended June 30, 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 August 12, 1996 EX-11 2 EARNINGS (LOSS) PER SHARE EXHIBIT 11 -- COMPUTATION OF INCOME (LOSS) PER SHARE
Three Months Six Months Ended June 30, Ended June 30, 1996 1995 1996 1995 - ----------------------------------------------------------------------------------------------- PRIMARY Average shares outstanding .......... 6,548,946 6,526,825 6,550,612 6,523,260 Net effect of dilutive stock options- based on the treasury stock method using average market price (1) ...... 7,237 3,619 48,304 - ---------------------------------------------------------------------------------------------- 6,556,183 6,526,825 6,554,231 6,571,564 ============================================================================================== Net income (loss) (in thousands) ..... $ 916 $ (285) $ 1,745 $ 341 ============================================================================================== Per share amount .................... $ .14 $ (.04) $ .27 $ .05 ==============================================================================================
(1) Common stock equivalents have not been considered in computing losses per share as the effect is anti-dilutive. EX-27 3 FDS 6/30/96
5 1,000 6-MOS DEC-31-1996 JUN-30-1996 0 0 46,239 1,600 33,619 91,367 17,934 8,325 108,729 31,769 0 0 0 65 46,785 108,729 174,857 174,857 144,099 144,099 0 373 943 2,921 1,176 1,745 0 0 0 1,745 .27 .27
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