-----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, Hd3y0pSAr8xWusQ39n7zetWBetauiPl/00RC7ROyXBRPYRH/h4e0KyPnkBW95g6u t4gDsuhzSEioYh4HnXQCwQ== 0000904816-97-000002.txt : 19970513 0000904816-97-000002.hdr.sgml : 19970513 ACCESSION NUMBER: 0000904816-97-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970512 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: 97599982 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 MARCH 31, 1997 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, 9 1997 - ----- -------------------------- Common stock, par value $.01 6,514,779 shares PRIMESOURCE CORPORATION INDEX PART I - FINANCIAL STATEMENTS Item 1 - Financial Statements Page No. -------- Consolidated Condensed Balance Sheets March 31, 1997 and December 31, 1996 3 Consolidated Condensed Statements of Income Three Months Ended March 31, 1997 and 1996 4 Consolidated Condensed Statements of Cash Flows Three Months Ended March 31, 1997 and 1996 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 CONSOLIDATED CONDENSED BALANCE SHEETS
March 31, December 31, 1997 1996 (Thousands of dollars) (Unaudited) - -------------------------------------------------------------------------------- ASSETS Current Assets: Receivables ........................................ $ 59,856 $ 60,656 Inventories ........................................ 50,238 48,741 Other .............................................. 3,048 2,653 - -------------------------------------------------------------------------------- Total Current Assets ................................. 113,142 112,050 Property and equipment, net .......................... 13,701 13,719 Excess of cost over net assets of businesses acquired, net ....................... 4,404 4,487 Other assets ......................................... 3,693 3,919 - -------------------------------------------------------------------------------- Total Assets ......................................... $ 134,940 $ 134,175 ================================================================================ LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current portion of long-term obligations ........... $ 1,542 $ 1,550 Accounts payable ................................... 31,722 33,628 Other accrued liabilities .......................... 7,862 9,832 - -------------------------------------------------------------------------------- Total Current Liabilities ............................ 41,126 45,010 Long-term obligations, net of current portion ........ 40,078 36,250 Accrued pension liabilities and other liabilities .... 4,725 4,732 - -------------------------------------------------------------------------------- Total Liabilities .................................... 85,929 85,992 - -------------------------------------------------------------------------------- Commitments and contingencies Shareholders' Equity: Common stock, $.01 par value ....................... 65 65 Additional paid in capital ......................... 25,533 25,533 Retained earnings .................................. 23,439 22,628 Unamortized restricted stock awards ................ (26) (43) - -------------------------------------------------------------------------------- Total Shareholders' Equity ........................... 49,011 48,183 - -------------------------------------------------------------------------------- Total Liabilities and Shareholders' Equity ........... $ 134,940 $ 134,175 ================================================================================ See notes to consolidated condensed financial statements.
PRIMESOURCE CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited)
Three Months (Thousands of dollars, Ended March 31, except per share amounts) 1997 1996 - -------------------------------------------------------------------------------- Net sales ...................................... $ 103,388 $ 86,959 Cost of sales .................................. 85,085 71,777 - -------------------------------------------------------------------------------- Gross profit ................................... 18,303 15,182 Selling, general and administrative expenses ... 15,771 13,353 - -------------------------------------------------------------------------------- Income from operations ......................... 2,532 1,829 Interest expense ............................... (750) (520) Other income (expense), net .................... 85 96 - -------------------------------------------------------------------------------- Income before provision for income taxes .............................. 1,867 1,405 Provision for income taxes ..................... 762 576 - -------------------------------------------------------------------------------- Net income ..................................... $ 1,105 $ 829 ================================================================================ Average number of shares outstanding ........... 6,610,130 6,552,279 Per share of common stock: Net income ..................................... $ .17 $ .13 Cash dividends ................................. $ .045 $ .045 ================================================================================ See notes to consolidated condensed financial statements.
PRIMESOURCE CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended March 31, (Thousands of dollars) 1997 1996 - -------------------------------------------------------------------------------- Operating Activities: Net income ............................................. $ 1,105 $ 829 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation ....................................... 518 493 Amortization ....................................... 114 142 Changes in assets and liabilities affecting operations . (4,975) 3,009 - -------------------------------------------------------------------------------- Net cash provided by (used in) operating activities .... (3,238) 4,473 - -------------------------------------------------------------------------------- Investing Activities: Additions to property and equipment .................... (500) (123) Net increase (decrease) in other assets ................ 212 (236) - -------------------------------------------------------------------------------- Net cash used in investing activities .................. (288) (359) - -------------------------------------------------------------------------------- Financing Activities: Proceeds from long-term obligations .................... 22,700 23,150 Repayment of long-term obligations ..................... (18,880) (26,970) Dividends paid ......................................... (294) (294) - -------------------------------------------------------------------------------- Net cash provided by (used in) financing activities .... 3,526 (4,114) - -------------------------------------------------------------------------------- Net change in cash ..................................... -- -- Cash, beginning of year ................................ -- -- - -------------------------------------------------------------------------------- Cash, end of period .................................... $ -- $ -- ================================================================================ Supplemental disclosures of cash flow information Cash paid during the period for: Interest .......................................... $ 689 $ 526 Income taxes ...................................... 460 135 ================================================================================ See notes to consolidated condensed financial statements.
PRIMESOURCE CORPORATION 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 1996 Annual Report on Form 10-K for further information. The results of operations for the three months ended March 31, 1997 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. Income Per Common Share Income per common share is based on the weighted average number of common shares and equvalent common shares outstanding during the period. In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS 128). This Statement establishes standards for computing and presenting earnings per share (EPS) and applies to entities with publicly held common stock or potential common stock. This Statement is effective for financial statements issued for periods ending after December 15, 1997, earlier application is not permitted. This statement requires restatement of all prior-period EPS data presented. The Company is currently evaluating the impact, if any, adoption of SFAS 128 will have on its financial statements. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Net income for the quarter ended March 31, 1997 was $1,105,000 ($.17 per share) on sales of $103,388,000 compared to $829,000 ($.13 per share) on sales of $86,959,000 for the same period last year. Sales for the quarter increased 18.9% compared to the same quarter last year. This increase is primarily the result of the acquisition of five VGC Corporation locations, one in August 1996 and four in November 1996. Excluding the effect of this acquisition, sales increased modestly during the quarter. Gross profit and selling, general and administrative expenses as a percent of sales showed modest improvements over the same periods last year. Gross profit as a percent of sales increased from 17.5% to 17.7%. Selling, general and administrative expenses decreased from 15.4% to 15.3%. Interest expense was $750,000 for the quarter ended March 31, 1997 compared to $520,000 for the same period last year. This increase is due to increased debt from the VGC acquisition. The effective tax rates for the quarter ended March 31, 1997 was 40.8% compared to 41% the same period last year. The lower rate in 1997 is primarily due to non-deductible expenses being a lesser percent to income. Financial Condition and Liquidity Net cash used in operating activities for the three months ended March 31, 1997 was $3,238,000 compared to cash provided of $4,473,000 for the same period last year. For the quarter ended March 31, 1997, increases in working capital levels decreased the cash flow by approximately $5 million, while in the same period last year decreases in working capital increased the cash flow by approximately $3 million. The increase in 1997, in part, reflects the adjustment of working capital levels for the VGC acquisition to ongoing operating levels. Excluding the effect of changes in assets and liabilities, the cash provided was $1,737,000 in 1997 compared to $1,464,000 in 1996. Net cash used in investing activities was $288,000 for the three months ended March 31, 1997 compared to $359,000 for the same period last year. Capital expenditures for the three months in 1997 were $500,000 compared to $123,000 for the same period last year. Additional capital expenditures for the year, for which there are no material commitments, are anticipated to be approximately $1,500,000. Net cash provided from financing activities was $3,526,000 for the three-month period ended March 31, 1997 compared to $4,114,000 used in financing activities for the same period last year. During the quarter ended March 31, 1997, debt increased $3.8 million, which is primarily attributable to the cash required for operating activities as a result of the increase in working capital. For the same period last year, debt decreased $3.8 million, which reflects the effect of cash generated from operating activities. The balance of the cash used for both periods was for dividend payments. The Company's primary source of debt financing is a revolving credit agreement with a commitment of $50 million of which $14 million was unused at March 31, 1997. The Company believes this facility combined with future 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 March 31, 1997. 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 9, 1997 EX-11 2 COMPUTATION OF INCOME PER SHARE
Three Months Ended March 31, 1997 1996 - ------------------------------------------------------------------------------- PRIMARY Average shares outstanding ..................... 6,514,779 6,552,279 Net effect of dilutive stock options- based on the treasury stock method using average market price ..................... 95,351 - -------------------------------------------------------------------------------- 6,610,130 6,552,279 ================================================================================ Net income (in thousands) ...................... $ 1,105 $ 829 ================================================================================ Per share amount ............................... $ .17 $ .13 ================================================================================
EX-27 3 FDS --
5 1,000 3-MOS DEC-31-1997 JAN-1-1997 MAR-31-1997 0 0 54,662 1,702 50,238 113,142 23,249 9,548 134,940 41,126 40,078 0 0 65 48,946 134,940 103,388 103,388 85,085 85,085 0 113 750 1,867 762 1,105 0 0 0 1,105 .17 .17
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