<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 June 29, 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
incorporation or organization) Identification No.)
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
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 6, 1996
- ------------------------------- -------------------------------------
Common Stock, $1 par value 2,025,864 shares
Page 1 of 12
<PAGE> 2
COURIER CORPORATION
<TABLE>
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
<CAPTION>
June 29, September 30,
ASSETS 1996 1995
- ------ -------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 774 $ 1,147
Accounts receivable, less allowance
for uncollectible accounts 21,816 20,019
Inventories (Note B) 9,513 9,449
Deferred income taxes 1,673 1,236
Other current assets 1,016 1,054
------- -------
Total current assets 34,792 32,905
Property, plant and equipment, less
accumulated depreciation: $60,636
at June 29, 1996 and $55,386
at September 30, 1995 34,458 36,225
Real estate held for sale or lease, net (Note D) 351 2,055
Goodwill, at cost 1,204 1,204
Other assets 518 572
------- -------
Total assets $71,323 $72,961
======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Page 2 of 12
<PAGE> 3
COURIER CORPORATION
<TABLE>
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
<CAPTION>
June 29, September 30,
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995
- ------------------------------------ -------- -------------
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt $ 447 $ 382
Accounts payable 7,401 8,979
Income taxes payable 584 1,373
Other current liabilities 7,955 9,194
-------- --------
Total current liabilities 16,387 19,928
Long-term debt 9,839 9,488
Deferred income taxes 3,681 3,447
Other liabilities 3,270 3,272
-------- --------
Total liabilities 33,177 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 8,976 8,884
Retained earnings 48,208 47,133
Treasury stock, at cost: 2,474,000 shares
at June 29, 1996 and 2,493,000
shares at September 30, 1995 (23,538) (23,691)
-------- --------
Total stockholders' equity 38,146 36,826
-------- --------
Total liabilities and stockholders' equity $ 71,323 $ 72,961
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Page 3 of 12
<PAGE> 4
COURIER CORPORATION
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share amounts)
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
-------------------------- --------------------------
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
(13 weeks) (13 weeks) (39 weeks) (40 weeks)
<S> <C> <C> <C> <C>
Net sales $ 32,928 $ 30,210 $ 94,427 $ 90,769
Cost of sales 27,047 23,697 77,258 71,333
--------- --------- --------- ---------
Gross profit 5,881 6,513 17,169 19,436
Selling and administrative expenses 4,962 4,583 14,334 14,344
Interest expense 210 192 677 676
Other income (expense) (Note D) 26 156 (288) 264
--------- --------- --------- ---------
Income before taxes 735 1,894 1,870 4,680
Provision for income taxes (Note C) 220 677 68 1,703
--------- --------- --------- ---------
Net income $ 515 $ 1,217 $ 1,802 $ 2,977
========= ========= ========= =========
Net income per share $ 0.25 $ 0.60 $ 0.87 $ 1.49
========= ========= ========= =========
Cash dividends declared per share $ 0.12 $ 0.10 $ 0.36 $ 0.30
========= ========= ========= =========
Weighted average shares outstanding 2,067,000 2,031,000 2,079,000 2,004,000
</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>
NINE MONTHS ENDED
--------------------
June 29, July 1,
1996 1995
--------- --------
<S> <C> <C>
Cash provided from operations $ 1,443 $ 2,370
------- --------
Investment activities:
Capital expenditures (3,523) (10,873)
Proceeds from sale of assets (Note D) 1,792 --
------- --------
Cash used for investment activities (1,731) (10,873)
------- --------
Financing activities:
Repayment of long-term debt (347) (2,037)
Increase in long-term borrowings 763 7,832
Cash dividends (727) (589)
Proceeds from stock plans 226 274
------- --------
Cash provided from (used for) financing activities (85) 5,480
------- --------
Decrease in cash and cash equivalents (373) (3,023)
Cash at the beginning of the period 1,147 3,033
------- --------
Cash at the end of the period $ 774 $ 10
======= ========
</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 June 29, 1996, the statements of income for the
quarters ended and nine month periods ended June 29, 1996 and July 1, 1995,
and the statements of cash flows for the nine month periods ended June 29,
1996 and July 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)
<TABLE>
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:
<CAPTION>
(000's Omitted)
--------------------------
June 29, September 30,
1996 1995
-------- -------------
<S> <C> <C>
Raw materials $4,038 $4,984
Work in process 4,040 3,529
Finished goods 1,435 936
------ ------
$9,513 $9,449
====== ======
</TABLE>
<TABLE>
C. INCOME TAXES
The statutory federal tax rate is 34%. The total provision differs from
that computed using the statutory federal tax rate for the following
reasons:
<CAPTION>
(000's Omitted)
Quarter Ended Nine Months Ended
------------------- ------------------
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Federal income taxes at
statutory rate $250 $644 $ 636 $1,591
State income taxes, net 18 85 52 210
Donation of real
estate (Note D) -- -- (500) --
Export related income (68) (72) (117) (160)
Other 20 20 (3) 62
---- ---- ----- ------
Total provision $220 $677 $ 68 $1,703
==== ==== ===== ======
</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 in Lowell, Massachusetts 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 for the third quarter of fiscal 1996 were $32.9 million, an increase of 9%
over sales of $30.2 million in the corresponding period of fiscal 1995. The
increase in sales reflects higher volume from several larger customers. The
Company was able to generate sales growth despite increasing competition for
business in a soft market industry-wide.
Gross profit decreased to $5.9 million, or 18% of sales, in the third quarter of
fiscal 1996 compared to $6.5 million, or 22% of sales, in the corresponding
period of fiscal 1995. Margins were down compared to the prior year because of
pricing pressures from increased competition and a decrease in the market price
for recycled paper, which reduced gross profits by $0.7 million. In addition,
the third quarter of fiscal 1995 included a $0.3 million gain on the sale of
used equipment.
Selling and administrative expenses were $5.0 million in the third quarter of
fiscal 1996, or 15% of sales. As a percentage of sales, this was comparable to
the third quarter of fiscal 1995, when selling and administrative expenses were
$4.6 million.
Interest expense was $210,000 in the third quarter of fiscal 1996 compared to
$192,000 in the corresponding period last year. The third quarter of fiscal 1995
included capitalized interest of $72,000. Overall, a slight increase in average
borrowings was more than offset by a lower average borrowing rate.
Other income was $26,000 in the third quarter of fiscal 1996 versus $156,000 in
the corresponding period last year. The third quarter of fiscal 1995 included
$100,000 of revenue from a short-term lease which expired in July 1995 on the
Company's former telephone directory manufacturing facility. On March 1, 1996,
the Company completed a sale and donation of this facility.
The Company's tax rate for the third quarter of fiscal 1996 was 30%. This rate
was lower than the 36% rate in the corresponding period last year primarily
because of a lower effective state tax rate.
Net income was $515,000, or $.25 per share, for the third quarter of fiscal 1996
compared to $1,217,000, or $.60 per share, for the third quarter of fiscal 1995.
The lower earnings reflect the reduction in profit margins due in part to the
pricing pressures from increased competition, the $0.7 million decrease in
revenue from recycling paper and a $0.3 million prior-year gain on the sale of
used equipment.
For the nine months ended June 29, 1996, the Company reported net income of
$1.8 million, or $.87 per share, compared to $3.0 million, or $1.49 per share,
for the same period last year. Sales for the first nine months were $94.4
million versus $90.8 million in the comparable period of 1995. The factors
impacting third quarter results similarly affected year to date results. In
addition, the Company experienced productivity inefficiencies due to severe
weather and start-up costs relating to newly installed equipment earlier in the
year. In the second quarter of fiscal 1996, the Company reported an
after-tax gain of $250,000 on the sale and donation of its former telephone
directory manufacturing facility.
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 nine months of fiscal 1996, $1.4 million of cash was provided
from operations. Cash provided from earnings of $1.8 million and depreciation
and non-cash charges of $5.4 million was used to fund a $5.8 million increase in
working capital.
Investment activities in the first nine months of fiscal 1996 used approximately
$1.7 million of cash. Capital expenditures for the period were approximately
$3.5 million. This was offset, in part, by proceeds of approximately $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 be approximately $8 million, including $3 million to
expand the Company's facility in Pennsylvania which is discussed more fully
below.
Financing activities for the first nine months of fiscal 1996 used approximately
$0.1 million in cash. At June 29, 1996, the Company had approximately $13.5
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. In May 1996, the Company began construction of a 100,000 square
foot addition to this facility. This expansion will enable the Company to
consolidate operations currently located in an older, multi-story facility to
the newer, more efficient property. The Company is pursuing plans to sell the
multi-story facility. The project is scheduled for completion in the first
quarter of fiscal 1997.
Page 10 of 12
<PAGE> 11
COURIER CORPORATION
PART II. OTHER INFORMATION
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)
August 9, 1996 By: /s/James F. Conway III
- ---------------------------- -----------------------
Date James F. Conway III
Chairman, President and
Chief Executive Officer
August 9, 1996 By: /s/Robert P. Story, Jr.
- ---------------------------- ------------------------
Date Robert P. Story, Jr.
Senior Vice President and
Chief Financial Officer
August 9, 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> 9-MOS
<FISCAL-YEAR-END> SEP-28-1996
<PERIOD-START> MAR-31-1996
<PERIOD-END> JUN-29-1996
<EXCHANGE-RATE> 1
<CASH> 774
<SECURITIES> 0
<RECEIVABLES> 21,816<F1>
<ALLOWANCES> 760
<INVENTORY> 9,513
<CURRENT-ASSETS> 34,972
<PP&E> 95,094
<DEPRECIATION> 60,636
<TOTAL-ASSETS> 71,323
<CURRENT-LIABILITIES> 16,387
<BONDS> 0
<COMMON> 4,500
0
0
<OTHER-SE> 33,646<F2>
<TOTAL-LIABILITY-AND-EQUITY> 71,323
<SALES> 94,427
<TOTAL-REVENUES> 94,427
<CGS> 77,258
<TOTAL-COSTS> 77,258
<OTHER-EXPENSES> 14,426
<LOSS-PROVISION> 196
<INTEREST-EXPENSE> 677
<INCOME-PRETAX> 1,870
<INCOME-TAX> 68
<INCOME-CONTINUING> 1,802
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,802
<EPS-PRIMARY> .87
<EPS-DILUTED> .87
<FN>
<F1>RECEIVABLES ARE NET OF ALLOWANCES FOR UNCOLLECTIBLE ACCOUNTS.
<F2>OTHER SE INCLUDES TREASURY STOCK.
</FN>
</TABLE>
