UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended July 1, 1995
Commission file number 0-7597
COURIER CORPORATION
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2502514
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
165 Jackson Street, Lowell, Massachusetts 01852
(Address of principal executive offices) (ZipCode)
(508) 458-6351
(Registrant's telephone number, including area code)
NO CHANGE
(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 August 9, 1995
Common Stock, $1 par value 2,004,047 shares
Page 1 of 11
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COURIER CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
<CAPTION>
July 1, September 24,
ASSETS 1995 1994
----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 10 $3,033
Accounts receivable, less allowance
for uncollectible accounts 20,560 19,150
Inventories (Note B) 10,685 8,098
Deferred income taxes 1,745 1,738
Other current assets 1,289 529
----------- -----------
Total current assets 34,289 32,548
Property, plant and equipment, less
accumulated depreciation: $54,340
at July 1, 1995 and $52,110 at
September 24, 1994 33,443 27,419
Real estate leased to others, net 2,056 2,142
Investment in AlphaGraphics, at cost 624 624
Goodwill, at cost 1,204 1,204
Other assets 373 437
----------- -----------
Total assets $71,989 $64,374
=========== ===========
<FN>
The accompanying notes are an integral part of the consolidated financial statements.
Page 2 of 11
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COURIER CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
<CAPTION>
July 1, September 24,
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994
------------ -------------
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt $2,080 $2,080
Accounts payable 6,353 7,898
Income taxes payable 1,219 1,918
Other current liabilities 9,006 7,899
------------ -------------
Total current liabilities 18,658 19,795
Long-term debt (Note D) 11,643 5,848
Deferred income taxes 3,817 3,972
Other liabilities 3,261 3,190
------------ -------------
Total liabilities 37,379 32,805
------------ -------------
Stockholders' equity:
Preferred stock, $1 par value - authorized
1,000,000 shares; none issued
Common stock, $1 par value - authorized
6,000,000 shares; issued 4,500,000 shares 4,500 4,500
Additional paid-in capital 8,767 8,520
Retained earnings 45,084 42,696
Treasury stock, at cost: 2,498,406 shares
at July 1, 1995 and 2,543,310 shares
at September 24, 1994 (23,741) (24,147)
------------ -------------
Total stockholders' equity 34,610 31,569
------------ -------------
Total liabilities and stockholders' equity $71,989 $64,374
============ =============
<FN>
The accompanying notes are an integral part of the consolidated financial statements.
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COURIER CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share amounts)
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
--------------------------- ---------------------------
July 1, June 25, July 1, June 25,
1995 1994 1995 1994
------------ ------------ ------------ ------------
(40 weeks) (39 weeks)
<S> <C> <C> <C> <C>
Net sales $30,210 $32,343 $90,769 $92,956
Cost of sales 23,752 25,798 71,453 75,634
------------ ------------ ------------ ------------
Gross profit 6,458 6,545 19,316 17,322
Selling and administrative expenses 4,528 4,604 14,224 13,356
Interest expense, net 192 364 676 1,095
Other income, net 156 157 264 469
------------ ------------ ------------ ------------
Pretax income before cumulative
effect of accounting change 1,894 1,734 4,680 3,340
Provision for income taxes (Note C) 677 634 1,703 1,225
------------ ------------ ------------ ------------
Net income before cumulative effect
of accounting change 1,217 1,100 2,977 2,115
Cumulative effect on prior years of change
in accounting for income taxes (Note C) - - - 1,525
------------ ------------ ------------ ------------
Net income $1,217 $1,100 $2,977 $3,640
============ ============ ============ ============
Net income per share:
Net income before cumulative effect
of accounting change $0.60 $0.57 $1.49 $1.10
Cumulative effect on prior years of change
in accounting for income taxes - - - 0.79
------------ ------------ ------------ ------------
Net income per share $0.60 $0.57 $1.49 $1.89
============ ============ ============ ============
Cash dividends declared per share $0.10 $0.05 $0.30 $0.15
============ ============ ============ ============
Weighted average shares outstanding 2,031,000 1,942,000 2,004,000 1,925,000
<FN>
The accompanying notes are an integral part of the consolidated financial statements.
Page 4 of 11
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<TABLE>
COURIER CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
<CAPTION>
Nine Months Ended
July 1, June 25,
1995 1994
---------- ----------
<S> <C> <C>
Cash provided from operations $2,370 $3,225
---------- ----------
Investment activities:
Capital expenditures (10,873) (4,220)
---------- ----------
Financing activities:
Repayment of long-term debt (2,037) (312)
Increase in long-term borrowings 7,832 706
Cash dividends (589) (284)
Proceeds from stock plans 274 298
---------- ----------
Cash provided from financing activities 5,480 408
---------- ----------
Decrease in cash and cash equivalents ($3,023) ($587)
Cash at the beginning of the period 3,033 608
---------- ----------
Cash at the end of the period $10 $21
========== ==========
<FN>
The accompanying notes are an integral part of the consolidated financial statements.
Page 5 of 11
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COURIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Unaudited Financial Statements
The balance sheet as of July 1, 1995, the statements of income
for the quarters ended and the nine month periods ended July 1,
1995 and June 25, 1994, and the statements of cash flows for the
nine month periods ended July 1, 1995 and June 25, 1994 are
unaudited and, in the opinion of management, all adjustments
necessary for a fair presentation of such financial statements
have been recorded. Such adjustments consisted only of normal
recurring items. Certain amounts for fiscal 1994 have been
reclassified in the accompanying financial statements in order
to be consistent with the current year's classification.
Fiscal year 1995 will be comprised of 53 weeks compared to 52
weeks in fiscal 1994; the additional week was included in the
first quarter in the accompanying financial statements.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
The year-end balance sheet data as of September 24, 1994 was
derived from audited financial statements, but does not include
disclosures required by generally accepted accounting
principles. It is suggested that these interim financial
statements be read in conjunction with the Company's most recent
Form 10-K and Annual Report as of September 24, 1994.
B. INVENTORIES
Inventories are valued at the lower of cost or market. Cost is
determined using the last-in, first-out (LIFO) method for
substantially all inventories. Inventories consisted of the
following:
(000's Omitted)
July 1, September 24,
1995 1994
Raw materials $ 5,151 $ 2,913
Work in process 4,116 4,368
Finished goods 1,418 817
------- -------
$10,685 $ 8,098
======= =======
Page 6 of 11
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COURIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
C. INCOME TAXES
The federal statutory tax rate is 34%. The total provision
differs from that computed using the statutory federal tax rate
for the following reasons:
(000's Omitted)
Quarter Ended Nine Months Ended
July 1, June 25, July 1, June 25,
1995 1994 1995 1994
Federal income taxes at
statutory rate $ 644 $ 590 $1,591 $1,136
State income taxes, net 85 102 210 197
Export related income (72) (59) (160) (114)
Other 20 1 62 6
----- ----- ------ ------
Total provision $ 677 $ 634 $1,703 $1,225
===== ===== ====== ======
Effective September 26, 1993, the Company adopted the
provisions of SFAS No. 109, "Accounting for Income Taxes." SFAS
No. 109 requires the use of the liability method of accounting
for deferred income taxes. This method utilizes current tax
rates, whereas much of the Company's deferred tax liabilities
had been determined in past years when the liabilities arose and
when tax rates were higher. As a result, the cumulative effect
on prior years relating to the adoption of this required
accounting change was an increase in net income of $1,525,000 or
$.79 per share, reported in the first quarter of fiscal 1994.
D. LONG-TERM DEBT
On July 27, 1995, the Company notified the lender of its
intention to redeem the outstanding balance of its 10.55%
senior promissory note. The $3.9 million principal balance on
the note, which originally provided for annual installments
through June 1998, will be paid in its entirety on August 28,
1995. A prepayment penalty of $92,000 will also be paid at that
time.
Page 7 of 11
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COURIER CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations:
Sales for the third quarter of fiscal 1995 were $30.2 million,
down 6.6% from $32.3 million in the corresponding period of
fiscal 1994. This decline in revenue reflects the impact of a
Company initiative designed to improve the quality of revenue by
shifting the focus away from commodity-like business, adding new
services enabling growth in higher value-added turnkey
relationships and enhancing the skills of the sales and service
teams to successfully deliver these new services.
Gross profit of $6.5 million in the third quarter of fiscal 1995
was comparable with the same period last year, but as a
percentage of sales, improved from 20% to 21%. This increase in
the gross profit percentage was due to the improvement in the
quality of revenue, as well as continued cost containment
efforts and a $0.3 million gain on the sale of equipment.
Selling and administrative expenses of $4.5 million in the third
quarter were down slightly from last year's third quarter of
$4.6 million, but increased as a percentage of sales from 14% to
15%. Increased sales costs, costs associated with improvements
to the Company's information systems, and the introduction of
copyright management services were offset by a reduction in
administrative expenses.
Net interest expense was $172,000 lower than the third quarter
of last year, reflecting reduced borrowing levels in fiscal
1995 and capitalized interest of $72,000 in the third quarter of 1995.
Other income of $156,000 in the third quarter of fiscal 1995 was
comparable to the corresponding period last year. This year's
third quarter income included revenue from a short-term lease
which expired in July 1995.
The Company's tax rate was 36% for the third quarter of fiscal
1995 as compared to the 37% rate in the corresponding period of
fiscal 1994.
Net income for the third quarter of fiscal 1995 was $1.2
million, up 11% from $1.1 million in the comparable period last
year. Earnings per share increased to $.60 per share from $.57
per share in the third quarter of fiscal 1994. The improvement
reflects the factors noted above. For the nine months ended
July 1, 1995, the Company reported $3.0 million of net income
before the cumulative effect of an accounting change, up 41%
from $2.1 million in the first nine months last year. These
earnings, on a per share basis, increased 35% to $1.49 per share
in fiscal 1995 versus $1.10 per share in fiscal 1994. Sales
for the first nine months of fiscal 1995 were $90.8 million,
down 2% from $93.0 million in the comparable period of fiscal 1994.
Last year, the Company adopted SFAS No. 109, "Accounting for
Income Taxes, " which produced one-time income of $1.5 million,
increasing net income for the first nine months of fiscal 1994
to $3.6 million or $1.89 per share.
Page 8 of 11
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COURIER CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources:
In the first nine months of fiscal 1995, operations provided
approximately $2.4 million in cash. Cash provided from earnings
was $3.0 million and depreciation and other non-cash charges
were $5.1 million. This cash was utilized in part to fund a
$2.6 million increase in inventory, primarily because of higher
paper prices and stocking levels. In addition, accounts
receivable increased $1.4 million and accounts payable decreased
$1.5 million in the first nine months of fiscal 1995.
Investment activities in the first nine months of fiscal 1995
used almost $11 million in cash for capital expenditures.
Installments of approximately $3.0 million have been made on a
four-color web press scheduled for installation near the end of
this fiscal year. Also, payments of $2.5 million were made on
two new binding lines, one of which was placed in service in
June and the second slated for the fourth quarter of this year.
In addition, a $2.6 million purchase option on a previously
leased 128,000 square foot manufacturing facility in
Philadelphia was finalized in early fiscal 1995. Capital
projects over the remainder of the year, particularly related to
the four-color web press, an electronic prepress system,
additional casebinding capacity, and improvements to
information systems, are expected to result in capital
expenditures of approximately $14 million for fiscal 1995.
Financing activities in the first nine months of the year
provided approximately $5.5 million in cash, primarily in
long-term borrowings to finance capital expenditures. At July
1, 1995, the Company had approximately $13.2 million of
borrowing capacity available under an $11 million long-term
revolving credit agreement and a $10 million informal bank
credit line. During the second quarter of fiscal 1995, the
maturity date of the Company's $11 million long-term revolving
credit facility was extended two years to January 1998. On July
27, 1995, the Company provided thirty day notice to a lender of
its intention to redeem the entire outstanding principal amount
of the 10.55% senior promissory note outstanding of $3.9
million. The redemption will be funded by utilizing the
available credit lines at more favorable interest rates than the
promissory note. Also, the Company has applied for
approximately $1 million of development bond financing at a 3%
interest rate in connection with the purchase of the
Philadelphia facility. The Company expects to obtain this
financing early in fiscal 1996.
Page 9 of 11
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COURIER CORPORATION
PART II. OTHER INFORMATION
Item 5. Other Information
On June 28, 1995, the Board of Directors of the registrant voted
to expand the size of the Board of Directors to nine members and
to elect Richard K. Donahue as a Class A Director to serve until
the 1996 Annual Meeting.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
Page 10 of 11
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SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COURIER CORPORATION
(Registrant)
August 15, 1995 By: James F. Conway III
Date James F. Conway III
Chairman, President and
Chief Executive Officer
August 15, 1995 By: Robert P. Story, Jr.
Date Robert P. Story, Jr.
Senior Vice President and
Chief Financial Officer
August 15, 1995 By: Peter M. Folger
Date Peter M. Folger
Vice President and
Chief Accounting Officer
Page 11 of 11
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS 9-MOS 9-MOS
<FISCAL-YEAR-END> SEP-30-1995 SEP-24-1994 SEP-30-1995 SEP-24-1994
<PERIOD-END> JUL-01-1995 JUN-25-1994 JUL-01-1995 JUN-25-1994
<CASH> 10 21 10 21
<SECURITIES> 0 0 0 0
<RECEIVABLES> 20560<F1> 23131<F1> 20560<F1>
23131<F1>
<ALLOWANCES> 739 850 739 850
<INVENTORY> 10685 7953 10685 7953
<CURRENT-ASSETS> 34289 33105 34289 33105
<PP&E> 33443 30533 33443 30533
<DEPRECIATION> 54340 51020 54340 51020
<TOTAL-ASSETS> 71989 68394 71989 68394
<CURRENT-LIABILITIES> 18658 17895 18658 17895
<BONDS> 0 0 0 0
<COMMON> 4500 4500 4500 4500
0 0 0 0
0 0 0 0
<OTHER-SE> 30110<F2> 25146<F2> 30110<F2>
25146<F2>
<TOTAL-LIABILITY-AND-EQUITY> 71989 68394 71989 68394
<SALES> 30210 32343 90769 92956
<TOTAL-REVENUES> 30210 32343 90769 92956
<CGS> 23752 25798 71453 75634
<TOTAL-COSTS> 23752 25798 71453 75634
<OTHER-EXPENSES> 4372 4447 13960 12887
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 192 364 676 1095
<INCOME-PRETAX> 1894 1734 4680 3340
<INCOME-TAX> 677 634 1703 1225
<INCOME-CONTINUING> 1217 1100 2977 2115
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 1525
<NET-INCOME> 1217 1100 2977 3640
<EPS-PRIMARY> .60 .57 1.49 1.89
<EPS-DILUTED> .60 .57 1.49 1.89
<FN>
<F1>Receivables are net of allowances for uncollectible accounts.
<F2>Includes treasury stock.
</FN>
</TABLE>
