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 April 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 May 8, 1995
Common Stock, $1 par value 1,994,347 shares
Page 1 of 11
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COURIER CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
<CAPTION>
April 1, September 24,
ASSETS 1995 1994
----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $451 $3,033
Accounts receivable, less allowance
for uncollectible accounts 19,236 19,150
Inventories (Note B) 12,214 8,098
Deferred income taxes 1,733 1,738
Other current assets 449 529
----------- -----------
Total current assets 34,083 32,548
Property, plant and equipment, less
accumulated depreciation: $55,200
at April 1, 1995 and $52,110 at
September 24, 1994 30,807 27,419
Real estate leased to others, net 2,084 2,142
Investment in AlphaGraphics, at cost 624 624
Goodwill, at cost 1,204 1,204
Other assets 390 437
----------- -----------
Total assets $69,192 $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>
April 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 7,471 7,898
Income taxes payable 1,096 1,918
Other current liabilities 9,174 7,899
------------ -------------
Total current liabilities 19,821 19,795
Long-term debt 9,262 5,848
Deferred income taxes 3,818 3,972
Other liabilities 3,198 3,190
------------ -------------
Total liabilities 36,099 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 8,553 8,520
Retained earnings 44,064 42,696
Treasury stock, at cost: 2,529,841 shares
at April 1, 1995 and 2,543,310 shares
at September 24, 1994 (24,024) (24,147)
------------ -------------
Total stockholders' equity 33,093 31,569
------------ -------------
Total liabilities and stockholders' equity $69,192 $64,374
============ =============
<FN>
The accompanying notes are an integral part of the consolidated financial statements.
Page 3 of 11
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<TABLE>
COURIER CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share amounts)
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
--------------------------- ---------------------------
April 1, March 26, April 1, March 26,
1995 1994 1995 1994
------------ ------------ ------------ ------------
(27 weeks) (26 weeks)
<S> <C> <C> <C> <C>
Net sales $29,643 $30,576 $60,559 $60,613
Cost of sales 23,472 25,469 47,701 49,836
------------ ------------ ------------ ------------
Gross profit 6,171 5,107 12,858 10,777
Selling and administrative expenses 4,794 4,376 9,696 8,752
Interest expense, net 260 370 484 731
Other income, net 63 157 108 312
------------ ------------ ------------ ------------
Income before taxes 1,180 518 2,786 1,606
Provision for income taxes (Note C) 422 178 1,026 591
------------ ------------ ------------ ------------
Net income before cumulative effect
of accounting change 758 340 1,760 1,015
Cumulative effect on prior years of change
in accounting for income taxes (Note C) - - - 1,525
------------ ------------ ------------ ------------
Net income $758 $340 $1,760 $2,540
============ ============ ============ ============
Net income per share:
Net income before cumulative effect
of accounting change $0.38 $0.18 $0.88 $0.53
Cumulative effect on prior years of change
in accounting for income taxes - - - 0.80
------------ ------------ ------------ ------------
Net income per share $0.38 $0.18 $0.88 $1.33
============ ============ ============ ============
Cash dividends declared per share $0.10 $0.05 $0.20 $0.10
============ ============ ============ ============
Weighted average shares outstanding 1,995,000 1,926,000 1,991,000 1,916,000
<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>
Six Months Ended
April 1, March 26,
1995 1994
---------- ----------
<S> <C> <C>
Cash provided from operations $757 $384
---------- ----------
Investment activities:
Capital expenditures (6,488) (1,282)
---------- ----------
Financing activities:
Repayment of long-term debt (181) (173)
Increase in long-term borrowings 3,595 818
Cash dividends (392) (187)
Proceeds from stock plans 127 161
---------- ----------
Cash provided from financing activities 3,149 619
---------- ----------
Decrease in cash and cash equivalents ($2,582) ($279)
Cash at the beginning of the period 3,033 608
---------- ----------
Cash at the end of the period $451 $329
========== ==========
<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 April 1, 1995, the statements of income for the
quarters ended and the six month periods ended April 1, 1995 and March 26,
1994, and the statements of cash flows for the six month periods ended
April 1, 1995 and March 26, 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)
-----------------------------
April 1, September 24,
1995 1994
----------- -------------
Raw materials $ 5,472 $ 2,913
Work in process 4,928 4,368
Finished goods 1,814 817
-------- --------
$12,214 $ 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 Six Months Ended
------------- ----------------
April 1, March 26, April 1, March 26,
1995 1994 1995 1994
-------- --------- ------- ---------
Federal income taxes $ 401 $ 176 $ 947 $ 546
at statutory rate
State income taxes, 53 22 126 95
net
Export related (38) (16) (88) (55)
income
Other 6 (4) 41 5
------- ------- ------- -------
Total provision $ 422 $ 178 $1,026 $ 591
======= ======= ======= =======
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 $.80 per share for the first quarter of
fiscal 1994.
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 second quarter of fiscal 1995 were $29.6 million compared to
$30.6 million in the corresponding period last year. This 3% decline was
attributable to a reduction in sales of traditional book manufacturing
services. Sales at EPIC, the Company's Electronic Publishing Innovations
Center, continued to exhibit strong growth. This shift reflects the impact
of sales efforts which focus on providing customers with a range of services
that extend beyond traditional book manufacturing; transitioning away from
lower-margin, commodity-like business and improving the overall quality of
revenue.
Gross profit in the second quarter of fiscal 1995 was approximately $1.1
million higher than the same period last year. As a percentage of sales,
gross profit increased from 17% to 21%. The improvement in gross profit was
attributable to cost containment efforts, productivity gains and improved
revenue quality.
Selling and administrative expenses increased by approximately $400,000
compared to last year's second quarter. The increase was due, in large part,
to increasing sales and marketing costs, growth at EPIC, costs associated
with improvements to the Company's information systems, and the introduction
of copyright management services in December 1994.
Net interest expense was $110,000 lower than the second quarter of last year,
primarily due to reduced borrowing levels.
The $94,000 decrease in other income resulted from lower rental income as a
lease on a 230,000 square foot facility in Lowell, Massachusetts expired on
September 30, 1994. The facility is now partially rented and negotiations are
underway with a potential buyer for the property.
The Company's tax rate was 36% for the second quarter of fiscal 1995 as
compared to the 34% rate for the corresponding period last year.
Net income for the second quarter of fiscal 1995 was $758,000 or $.38 per
share compared to $340,000 or $.18 per share for the same period last year.
The improvement reflects the factors noted above, particularly higher gross
profit margins resulting from cost containment efforts and improved revenue
quality. For the six months ended April 1, 1995, the Company reported $1.8
million of net income before the cumulative effect of an accounting change
compared to $1.0 million in the corresponding period last year. These
earnings were $.88 per share compared to $.53 per share last year. Sales for
the first six months of fiscal 1995 were $60.6 million, equal to sales 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 six months of fiscal 1994 to $2.5 million or $1.33 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:
- - - - - --------------------------------
During the first half of fiscal 1995, operations provided approximately $0.8
million in cash. Cash provided from earnings was $1.8 million and
depreciation and other non-cash charges were $3.2 million. This cash was
utilized, in large part, to fund a $4.1 million increase in inventory,
primarily from higher paper prices and stocking levels.
Investment activities for the first six months of fiscal 1995 used $6.5
million in cash for capital expenditures, including installments of $1.5
million on a four-color web press slated for installation near the end of the
fiscal year, as well as payments of $0.7 million on two new binding lines to be
installed in the third and fourth quarters of the 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, bindery equipment and improvements to information
systems, are expected to result in capital expenditures approximating
$14 million in fiscal 1995.
Financing activities in the first six months provided approximately $3.1
million in cash, primarily long-term borrowings, to finance capital
expenditures. At April 1, 1995, the Company had approximately $17.4 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.
During fiscal 1995, the Company expects to obtain approximately $1 million of
development bond financing at a 3% interest rate in connection with the
purchase of the Philadelphia facility.
Page 9 of 11
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COURIER CORPORATION
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
- - - - - ------------------------------------------------------------
The Annual Meeting of Stockholders of the registrant was
held on January 19, 1995. All nominees of the Board of
Directors of the registrant were re-elected for a three-year
term. The stockholders also voted to ratify and approve the
selection by the Board of Directors of Coopers & Lybrand as
independent public accountants for the registrant for the
fiscal year ending September 30, 1995. No other matters
were voted on at the meeting. There were no broker non-
votes at the Annual Meeting.
Election of Directors. Votes were cast in the election of directors as
follows:
Nominee For Withheld
-------- ---- --------
Arnold S. Lerner 1,867,208 7,259
Charles E. Otto 1,862,093 12,374
Ratification/Approval of Accountants. Votes were cast on
this matter as follows:
For Against Abstentions
--------- ------- -----------
1,857,796 8,747 7,924
Item 5. Other Information
- - - - - --------------------------
On February 8, 1995, the Board of Directors of the registrant
voted to expand the size of the Board of Directors to seven
members and to elect Kathleen Foley Curley as a Class B Director
to serve until the 1997 Annual Meeting and Robert P. Story, Jr.
as a Class A Director to serve until the 1996 Annual Meeting.
On March 16, 1995, the Board of Directors of the registrant voted
to expand the size of the Board of Directors to eight members and
to elect George Q. Nichols as a Class C Director to serve until
the 1998 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)
May 16, 1995 By: James F. Conway III
Date James F. Conway III
Chairman, President and
Chief Executive Officer
May 16, 1995 By: Robert P. Story, Jr.
Date Robert P. Story, Jr.
Senior Vice President and
Chief Financial Officer
May 16, 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
<S> <C> <C> <C> <C>
<C>
<PERIOD-TYPE> 3-MOS 3-MOS 6-MOS 6-MOS
YEAR
<FISCAL-YEAR-END> SEP-30-1995 SEP-24-1994 SEP-30-1995 SEP-24-1994
SEP-24-1994
<PERIOD-END> APR-01-1995 MAR-26-1994 APR-01-1995 MAR-26-1994
SEP-24-1994
<CASH> 451,000 329,000 451,000 329,000
3,033,000
<SECURITIES> 0 0 0 0
0
<RECEIVABLES> 19,236,000<F1> 21,675,000<F1> 19,236,000<F1>
21,675,000<F1> 19,150,000<F1>
<ALLOWANCES> (691,000) (806,000) (691,000) (806,000)
(588,000)
<INVENTORY> 12,214,000 8,434,000 12,214,000 8,434,000
8,098,000
<CURRENT-ASSETS> 34,083,000 32,434,000 34,083,000 32,434,000
32,548,000
<PP&E> 86,007,000 78,716,000 86,007,000 78,716,000
79,529,000
<DEPRECIATION> (55,200,000) (49,465,000) (55,200,000) (49,465,000)
(52,110,000)
<TOTAL-ASSETS> 69,192,000 66,515,000 69,192,000 66,515,000
64,374,000
<CURRENT-LIABILITIES> 19,821,000 17,210,000 19,821,000 17,210,000
19,795,000
<BONDS> 0 0 0 0
0
<COMMON> 4,500,000 4,500,000 4,500,000 4,500,000
4,500,000
0 0 0 0
0
0 0 0 0
0
<OTHER-SE> 28,593,000<F3> 23,611,000<F3> 28,593,000<F3>
23,611,000<F3> 27,069,000<F3>
<TOTAL-LIABILITY-AND-EQUITY> 69,192,000 66,515,000 69,192,000 66,515,000
64,374,000
<SALES> 29,643,000 30,576,000 60,559,000 60,613,000
122,727,000
<TOTAL-REVENUES> 29,643,000 30,576,000 60,559,000 60,613,000
122,727,000
<CGS> 23,472,000 25,469,000 47,701,000 49,836,000
98,213,000
<TOTAL-COSTS> 23,472,000 25,469,000 47,701,000 49,836,000
98,213,000
<OTHER-EXPENSES> 4,731,000 4,219,000 9,588,000 8,440,000
17,275,000
<LOSS-PROVISION> 0 0 0 0
0
<INTEREST-EXPENSE> 260,000<F2> 370,000<F2> 484,000<F2>
731,000<F2> 1,400,000<F2>
<INCOME-PRETAX> 1,180,000 518,000 2,786,000 1,606,000
5,839,000
<INCOME-TAX> 422,000 178,000 1,026,000 591,000
2,133,000
<INCOME-CONTINUING> 758,000 340,000 1,760,000 1,015,000
3,706,000
<DISCONTINUED> 0 0 0 0
0
<EXTRAORDINARY> 0 0 0 0
0
<CHANGES> 0 0 0 1,525,000
1,525,000
<NET-INCOME> 758,000 340,000 1,760,000 2,540,000
5,231,000
<EPS-PRIMARY> .38 .18 .88 1.33
2.71
<EPS-DILUTED> .38 .18 .88 1.33
2.71
<FN>
<F1>Recievables are net of allowances for uncollectible accounts.
<F2>Interest expense is net of interest income.
<F3>Includes treasury stock.
</FN>
</TABLE>
