<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 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 0-7597
---------------------------------------------------------
COURIER CORPORATION
- --------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS 04-2502514
- --------------------------------------------------------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
165 JACKSON STREET, LOWELL, MASSACHUSETTS 01852
- --------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(508) 251-6000
- --------------------------------------------------------------------------------
(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
REQUIREMENT 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 LASTEST PRACTICABLE DATE.
CLASS OUTSTANDING AT APRIL 30, 1996
- ----------------------------------- ---------------------------------
COMMON STOCK, $1 PAR VALUE 2,025,531 SHARES
PAGE 1 OF 12
<PAGE> 2
<TABLE>
COURIER CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
<CAPTION>
March 30, September 30,
ASSETS 1996 1995
- ------ --------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 367 $ 1,147
Accounts receivable, less allowance
for uncollectible accounts 21,437 20,019
Inventories (Note B) 12,413 9,449
Deferred income taxes 1,403 1,236
Other current assets 994 1,054
------- -------
Total current assets 36,614 32,905
Property, plant and equipment, less
accumulated depreciation: $58,925
at March 30, 1996 and $55,386
at September 30, 1995 34,771 36,225
Real estate held for sale or lease, net (Note D) 379 2,055
Goodwill, at cost 1,204 1,204
Other assets 564 572
------- -------
Total assets $73,532 $72,961
======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Page 2 of 12
<PAGE> 3
<TABLE>
COURIER CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
<CAPTION>
March 30, September 30,
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995
- ------------------------------------ --------- -------------
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt $ 382 $ 382
Accounts payable 8,373 8,979
Income taxes payable 314 1,373
Other current liabilities 8,585 9,194
------- -------
Total current liabilities 17,654 19,928
Long-term debt 11,088 9,488
Deferred income taxes 3,659 3,447
Other liabilities 3,275 3,272
------- -------
Total liabilities 35,676 36,135
------- -------
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 8,969 8,884
Retained earnings 47,936 47,133
Treasury stock, at cost: 2,476,000 shares
at March 30, 1996 and 2,493,000
shares at September 30, 1995 (23,549) (23,691)
------- -------
Total stockholders' equity 37,856 36,826
------- -------
Total liabilities and stockholders' equity $73,532 $72,961
======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Page 3 of 12
<PAGE> 4
<TABLE>
COURIER CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share amounts)
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
------------------------ -----------------------
March 30, April 1, March 30, April 1,
1996 1995 1996 1995
---------- ---------- ---------- ----------
(13 weeks) (13 weeks) (26 weeks) (27 weeks)
<S> <C> <C> <C> <C>
Net sales $ 31,384 $ 29,643 $ 61,499 $ 60,559
Cost of sales 25,707 23,407 50,211 47,636
---------- ----------- ---------- ----------
Gross profit 5,677 6,236 11,288 12,923
Selling and
administrative expenses 4,864 4,859 9,372 9,761
Interest expense 255 260 467 484
Other income
(expense) (Note D) (340) 63 (314) 108
---------- ---------- ---------- ----------
Income before taxes 218 1,180 1,135 2,786
Provision (benefit)
for income taxes
(Note C) (445) 422 (152) 1,026
---------- ---------- ---------- ----------
Net income $ 663 $ 758 $ 1,287 $ 1,760
========== ========== ========== ==========
Net income per share $ 0.32 $ 0.38 $ 0.62 $ 0.88
========== ========== ========== ==========
Cash dividends
declared per share $ 0.12 $ 0.10 $ 0.24 $ 0.20
========== ========== ========== ==========
Weighted average
shares outstanding 2,082,000 1,995,000 2,083,000 1,991,000
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Page 4 of 12
<PAGE> 5
COURIER CORPORATION
<TABLE>
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
<CAPTION>
SIX MONTHS ENDED
-----------------------
March 30, April 1,
1996 1995
--------- --------
<S> <C> <C>
Cash provided from (used for) operations $(1,803) $ 757
------- -------
Investment activities:
Capital expenditures (2,099) (6,488)
Proceeds from sale of assets (Note D) 1,792 --
------- -------
Cash used for investment activities (307) (6,488)
------- -------
Financing activities:
Repayment of long-term debt (191) (181)
Increase in long-term borrowings 1,791 3,595
Cash dividends (484) (392)
Proceeds from stock plans 214 127
------- -------
Cash provided from financing activities 1,330 3,149
------- -------
Decrease in cash and cash equivalents (780) (2,582)
Cash at the beginning of the period 1,147 3,033
------- -------
Cash at the end of the period $ 367 $ 451
======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Page 5 of 12
<PAGE> 6
COURIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
UNAUDITED FINANCIAL STATEMENTS
------------------------------
The balance sheet as of March 30, 1996, the statements of income for the
quarters ended and six month periods ended March 30, 1996 and April 1,
1995, and the statements of cash flows for the six month periods ended
March 30, 1996 and April 1, 1995 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 1995 have been
reclassified in the accompanying financial statements in order to be
consistent with the current year's classifications.
Fiscal year 1996 will be comprised of 52 weeks compared to 53 weeks in
fiscal 1995; the additional week was included in the first quarter of
fiscal 1995 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 30, 1995 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 30, 1995.
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation," which establishes
accounting and reporting standards for stock-based employee compensation
plans; this pronouncement will apply to options granted in fiscal 1996
and thereafter. The Company has until fiscal 1997 to adopt SFAS No. 123
and is continuing to evaluate whether or not it will change to the
recognition provisions of this pronouncement.
Page 6 of 12
<PAGE> 7
COURIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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:
<TABLE>
<CAPTION>
(000's Omitted)
---------------
March 30, September 30,
1996 1995
----------- -------------
<S> <C> <C>
Raw materials $ 5,285 $4,984
Work in process 5,493 3,529
Finished goods 1,635 936
------- ------
$12,413 $9,449
======= ======
</TABLE>
C. INCOME TAXES
<TABLE>
The statutory federal tax rate is 34%. The total provision (benefit)
differs from that computed using the statutory federal tax rate for the
following reasons:
<CAPTION>
(000's Omitted)
Quarter Ended Six Months Ended
----------------------- ----------------------
March 30, April 1, March 30, April 1,
1996 1995 1996 1995
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Federal income taxes at
statutory rate $ 74 $401 $ 386 $ 947
State income taxes, net 7 53 34 126
Donation of real
estate (Note D) (500) -- (500) --
Export related income (15) (38) (49) (88)
Other (11) 6 (23) 41
----- ---- ----- ------
Total provision $(445) $422 $(152) $1,026
====== ==== ===== ======
</TABLE>
Page 7 of 12
<PAGE> 8
COURIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
D. OTHER INCOME (EXPENSE)
On March 1, 1996, the Company completed the sale and donation of its
former telephone directory manufacturing facility which had been vacant.
Sale proceeds of $1.8 million for approximately half the site resulted
in a pretax loss of $365,000 which is included in other income (expense).
The donation of the remainder of the property generated a tax benefit of
approximately $500,000 resulting in an after-tax gain on the overall
transaction of approximately $250,000 or $.12 per share.
Page 8 of 12
<PAGE> 9
COURIER CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
- ----------------------
Sales in the second quarter of fiscal 1996 increased 6% to $31.4 million versus
$29.6 million in the corresponding period last year. Slow sales activity early
in the quarter, due in part to severe weather conditions in January and
February, were offset by particularly strong sales in March. Software
documentation sales, which were down sharply in the first quarter, increased in
the second quarter over the same period last year, but that market continues to
be impacted by volatility in the software industry as those companies adjust to
rapid changes in their business.
Gross profit in the second quarter was $5.7 million versus $6.2 million in the
prior year's second quarter and, as a percentage of sales, decreased to 18% from
21%. The decrease in gross profit resulted from the severe winter weather and
general slowness early in the quarter, as well as a significant reduction in
revenue from recycling paper. Gross profit margins were also impacted by costs
of a 4-color web press installed earlier this year, although performance on this
press improved significantly during the quarter.
Selling and administrative expenses were $4.9 million, the same as last year's
second quarter. As a percentage of sales, selling and administrative expenses
were 15% of sales versus 16% last year.
Interest expense was $255,000 in the second quarter of fiscal 1996 which is
comparable to the corresponding period last year as the impact of increased
average borrowings was offset by a lower average borrowing rate.
Other income (expense) includes the Company's sale and donation of its former
telephone directory manufacturing facility. The sale of approximately half of
the site resulted in a pretax loss of $365,000. Tax benefits of approximately
$500,000 from the donation of the remainder of the property resulted in an
after-tax gain of approximately $250,000 or $.12 per share on the overall
transaction.
The Company's tax rate, exclusive of the $500,000 tax benefit related to the
donation of property discussed above, was 32% in the second quarter of 1996.
This rate was lower than last year's second quarter rate of 36% primarily due to
a lower effective state tax rate.
Net income was $663,000, or $.32 per share, for the second quarter of fiscal
1996 compared to last year's second quarter earnings of $758,000, or $.38 per
share. The lower earnings reflect the reduction in profit margins due in part to
the severe weather and decreased revenue from recycling paper. The impact of
lower margins was partially offset by the $250,000 after-tax gain on the sale
and donation of property.
Page 9 of 12
<PAGE> 10
COURIER CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED):
- ----------------------------------
In October 1995, the Financial Accounting Standards Board issued SFAS No. 123,
"Accounting for Stock-Based Compensation," which establishes accounting and
reporting standards for stock-based employee compensation plans; this
pronouncement will apply to options granted in fiscal 1996 and thereafter. The
Company has until fiscal 1997 to adopt SFAS No. 123 and is continuing to
evaluate whether or not it will change to the recognition provisions of this
pronouncement.
LIQUIDITY AND CAPITAL RESOURCES:
- --------------------------------
During the first half of fiscal 1996, $1.8 million of cash was used for
operations. Cash required to fund a $6.6 million increase in working capital,
primarily inventory and accounts receivable, exceeded cash provided from
earnings of $1.3 million and depreciation and other non-cash charges of $3.6
million.
Investment activities in the first six months of fiscal 1996 used approximately
$0.3 million. Capital expenditures for the period amounted to approximately $2.1
million. This was offset by proceeds of $1.8 million received in connection with
the sale of approximately half of the Company's former telephone directory
facility, which had been vacant; the Company donated the remainder of the site.
Capital expenditures for the entire fiscal year are expected to reach
approximately $8.0 million.
Financing activities in the first half of fiscal 1996 provided approximately
$1.3 million under the Company's revolving credit agreement to fund the increase
in working capital. At March 30, 1996, the Company had approximately $11.2
million of borrowing capacity available under an $11 million long-term revolving
credit facility and a $10 million informal bank credit line. In April 1996, the
Company received $1.2 million of development bond financing at a 3% interest
rate in connection with the fiscal 1995 purchase of a formerly leased facility
in Pennsylvania. The Company is reviewing plans to expand this facility. The
expansion would enable the Company to consolidate an older, multi-story
manufacturing facility into the newer, more efficient property. The Company is
pursuing plans to sell the multi-story facility which would assist in the
funding of expansion and relocation costs.
Page 10 of 12
<PAGE> 11
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 18,
1996. 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 Deloitte & Touche LLP as
independent public accountants for the registrant for the fiscal year ending
September 28, 1996. An amendment to the registrant's 1993 Stock Incentive
Plan, which would, among other things, increase the number of shares
available for grant under the Plan by 100,000 shares was also approved by
the stockholders. The full text of the Plan amendment was included as an
exhibit to the proxy statement and is incorporated herein by reference.
ELECTION OF DIRECTORS Votes were cast for the election of directors as
follows:
Nominee For Withheld Authority
------- --- ------------------
Edward J. Hoff 1,841,236 7,340
Robert P. Story, Jr. 1,841,486 7,090
Richard K. Donahue 1,837,745 10,831
DIRECTORS CONTINUING IN OFFICE: James F. Conway III, W. Nicholas
Thorndike, Kathleen Foley Curley, Arnold S. Lerner, Charles E. Otto,
George Q. Nichols
RATIFICATION/APPROVAL OF ACCOUNTANTS Votes were cast in the ratification
and approval of Deloitte & Touche LLP as independent public accountants as
follows:
For Against Abstain
--- ------- -------
1,821,640 11,834 15,102
APPROVAL OF AMENDMENT TO 1993 STOCK INCENTIVE PLAN Votes were cast in the
approval of the amendment to the 1993 Stock Incentive Plan as follows:
For Against Abstain Broker Nonvotes
--- ------- ------- ---------------
1,633,197 194,395 15,534 5,450
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(a) Exhibits
Exhibit No. Description of Exhibit
----------- ----------------------
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
Page 11 of 12
<PAGE> 12
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 7, 1996 By: /s/ James F. Conway III
- ---------------------------- -----------------------
Date James F. Conway III
Chairman, President and
Chief Executive Officer
May 7, 1996 By: /s/ Robert P. Story, Jr.
- ---------------------------- -----------------------
Date Robert P. Story, Jr.
Senior Vice President and
Chief Financial Officer
May 7, 1996 By: /s/ Peter M. Folger
- ---------------------------- -----------------------
Date Peter M. Folger
Vice President and
Chief Accounting Officer
Page 12 of 12
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000025212
<NAME> COURIER CORPORATION
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-28-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> MAR-30-1996
<EXCHANGE-RATE> 1
<CASH> 367
<SECURITIES> 0
<RECEIVABLES> 21,437<F1>
<ALLOWANCES> 710
<INVENTORY> 12,413
<CURRENT-ASSETS> 36,614
<PP&E> 93,696
<DEPRECIATION> 58,925
<TOTAL-ASSETS> 73,532
<CURRENT-LIABILITIES> 17,654
<BONDS> 0
<COMMON> 4,500
0
0
<OTHER-SE> 33,356<F2>
<TOTAL-LIABILITY-AND-EQUITY> 73,532
<SALES> 61,499
<TOTAL-REVENUES> 61,499
<CGS> 50,211
<TOTAL-COSTS> 50,211
<OTHER-EXPENSES> 9,540
<LOSS-PROVISION> 146
<INTEREST-EXPENSE> 467
<INCOME-PRETAX> 1,135
<INCOME-TAX> (152)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,287
<EPS-PRIMARY> .62
<EPS-DILUTED> .62
<FN>
<F1>Receivables are net of allowances for uncollectible accounts.
<F2>Other - SE includes treasury stock.
</FN>
</TABLE>
