<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 DECEMBER 30, 1995
------------------------------------------------
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) 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 FEBRUARY 5, 1996
- ----------------------------- -----------------------------------
COMMON STOCK, $1 PAR VALUE 2,021,881 SHARES
PAGE 1 OF 11
<PAGE> 2
<TABLE>
COURIER CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
<CAPTION>
December 30, September 30,
ASSETS 1995 1995
- ------ ------------ -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 26 $ 1,147
Accounts receivable, less allowance
for uncollectible accounts 23,148 20,019
Inventories (Note B) 12,906 9,449
Deferred income taxes 1,230 1,236
Other current assets 984 1,054
-------- -------
Total current assets 38,294 32,905
Property, plant and equipment, less
accumulated depreciation: $57,193
at December 30, 1995 and $55,386
at September 30, 1995 35,126 36,225
Real estate held for sale or lease, net 2,025 2,055
Goodwill, at cost 1,204 1,204
Other assets 576 572
------- -------
Total assets $77,225 $72,961
======= =======
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
Page 2 of 11
<PAGE> 3
<TABLE>
COURIER CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
<CAPTION>
December 30, September 30,
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1995
- ------------------------------------ ------------ -------------
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt $ 382 $ 382
Accounts payable 11,249 8,979
Income taxes payable 990 1,373
Other current liabilities 8,153 9,194
------- -------
Total current liabilities 20,774 19,928
Long-term debt 12,286 9,488
Deferred income taxes 3,548 3,447
Other liabilities 3,274 3,272
------- -------
Total liabilities 39,882 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 8,939 8,884
Retained earnings 47,516 47,133
Treasury stock, at cost: 2,484,000 shares
at December 30, 1995 and 2,493,000
shares at September 30, 1995 (23,612) (23,691)
------- -------
Total stockholders' equity 37,343 36,826
------- -------
Total liabilities and stockholders' equity $77,225 $72,961
======= =======
</TABLE>
The accompanying notes are an integral part of
the consolidated financial statements.
Page 3 of 11
<PAGE> 4
<TABLE>
COURIER CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share amounts)
<CAPTION>
THREE MONTHS ENDED
----------------------------
December 30, December 31,
1995 1994
-------------- --------------
(13 weeks) (14 weeks)
<S> <C> <C>
Net sales $ 30,115 $ 30,916
Cost of sales 24,504 24,229
--------- ---------
Gross profit 5,611 6,687
Selling and administrative expenses 4,508 4,902
Interest expense, net 212 224
Other income, net 26 45
--------- ---------
Pretax income 917 1,606
Provision for income taxes (Note C) 293 604
--------- ---------
Net income $ 624 $ 1,002
========= =========
Net income per share $ 0.30 $ 0.50
========= =========
Cash dividends declared per share $ 0.12 $ 0.10
========= =========
Weighted average shares outstanding 2,084,000 1,990,000
</TABLE>
The accompanying notes are an integral part of
the consolidated financial statements.
Page 4 of 11
<PAGE> 5
<TABLE>
COURIER CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
<CAPTION>
THREE MONTHS ENDED
-----------------------------
December 30, December 31,
1995 1994
------------ ------------
<S> <C> <C>
Cash used for operations $(2,996) $ (818)
------- -------
Investment activities:
Capital expenditures (682) (3,262)
------- -------
Financing activities:
Repayment of long-term debt (146) (141)
Increase in long-term borrowings 2,944 1,820
Cash dividends (241) (196)
------- -------
Cash provided from financing activities 2,557 1,483
------- -------
Decrease in cash and cash equivalents (1,121) (2,597)
Cash at the beginning of the period 1,147 3,033
------- -------
Cash at the end of the period $ 26 $ 436
======= =======
</TABLE>
The accompanying notes are an integral part of
the consolidated financial statements.
Page 5 of 11
<PAGE> 6
COURIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
UNAUDITED FINANCIAL STATEMENTS
------------------------------
The balance sheet as of December 30, 1995, the statements of income and
the statements of cash flows for the three month periods ended
December 30, 1995 and December 31, 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.
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.
<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)
----------------------------------------
December 30, September 30,
1995 1995
-------------- -------------
<S> <C> <C>
Raw materials $ 6,489 $4,984
Work in process 5,080 3,529
Finished goods 1,337 936
------- ------
$12,906 $9,449
======= ======
</TABLE>
Page 6 of 11
<PAGE> 7
COURIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
<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)
Three Months Ended
------------------------------
December 30, December 31,
1995 1994
-------------- ------------
<S> <C> <C>
Federal income taxes at
statutory rate $312 $546
State income taxes, net 27 83
Export related income (34) (50)
Other (12) 25
---- ----
Total provision $293 $604
==== ====
</TABLE>
Page 7 of 11
<PAGE> 8
COURIER CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
- ---------------------
Sales in the first quarter of fiscal 1996 were $30.1 million versus $30.9
million in the corresponding period last year. The first quarter of fiscal 1995
included 14 weeks compared to 13 weeks in this year's first quarter. After
adjusting for the extra week, sales increased 5% over the first quarter of
fiscal 1995. Sales in the publishing and religious market segments grew by 15%
over last year. However, sales to the documentation market were down
significantly due in part to delays in product releases by a number of key
documentation customers relating to the timing of Microsoft's release of
Windows'95. This market is expected to experience continued volatility for the
foreseeable future as customers adjust to rapid changes in their business.
Gross profit in the first quarter was $5.6 million versus $6.7 million in the
prior year's first quarter and, as a percentage of sales, decreased to 19% from
22%. The decrease in gross profit resulted from the volatility in the
documentation market and from significant start-up costs and depreciation
expense related to a recently installed 4-color web press and three new binding
lines.
Selling and administrative expenses decreased by approximately $400,000 compared
to last year's first quarter. Approximately $350,000 of this decrease relates to
the additional week in last year's first quarter. As a percentage of sales,
selling and administrative expenses were 15% versus 16% last year.
Interest expense was $212,000 in the first 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.
The Company's tax rate of 32% in the first quarter of 1996 was lower than last
year's first quarter rate of 38% primarily due to a lower effective state tax
rate.
Net income was $624,000, or $.30 per share, for the first quarter of fiscal 1996
compared to last year's first quarter earnings of $1,002,000, or $.50 per share.
The reduction in earnings was primarily due to the volatility in the
documentation market and the start-up costs relating to the newly installed
equipment.
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 8 of 11
<PAGE> 9
COURIER CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES:
- -------------------------------
During the first quarter of fiscal 1996, $3.0 million of cash was used for
operations. Cash required to fund a $5.7 million increase in working capital,
primarily inventory and accounts receivable, exceeded cash provided from
earnings of $0.6 million and depreciation and other non-cash charges of $1.8
million.
Investment activities in the first three months of fiscal 1996 used
approximately $700,000 for capital expenditures. Capital expenditures for the
entire fiscal year are expected to reach approximately $8.0 million.
Financing activities in the first quarter of fiscal 1996 provided approximately
$2.6 million under the Company's revolving credit agreement to fund the increase
in working capital. At December 30, 1995, the Company had approximately $10.1
million of borrowing capacity available under an $11 million long-term revolving
credit facility and a $10 million informal bank credit line. During fiscal 1996,
the Company expects to obtain approximately $1 million of development bond
financing at a 3% interest rate in connection with the fiscal 1995 purchase of a
formerly leased facility in Philadelphia.
On January 31, 1996, the Company entered into a Purchase and Sale and Donation
Agreement on its former telephone directory manufacturing facility which is
currently vacant. The Agreement includes a sales price of $1.8 million for
approximately half of the site with the Company donating the remainder of the
property. The transaction is scheduled to close in February 1996.
Page 9 of 11
<PAGE> 10
COURIER CORPORATION
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
<TABLE>
(a) Exhibits
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
10 Amendment, dated December 29, 1995, to Note Agreement
between Courier Corporation and the First National
Bank of Boston, regarding $11,000,000 revolving
credit facility.
</TABLE>
(b) Reports on Form 8-K
A Form 8-K dated December 4, 1995 reporting under Item 4 a change in the
Company's certifying accountant from Coopers & Lybrand L.L.P.
to Deloitte & Touche LLP.
Page 10 of 11
<PAGE> 11
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)
<TABLE>
<S> <C>
February 9, 1996 By: s/James F. Conway III
- -------------------------- -------------------------------
Date James F. Conway III
Chairman, President and
Chief Executive Officer
February 9, 1996 By: s/Robert P. Story, Jr.
- -------------------------- -------------------------------
Date Robert P. Story, Jr.
Senior Vice President and
Chief Financial Officer
February 9, 1996 By: s/Peter M. Folger
- -------------------------- -------------------------------
Date Peter M. Folger
Vice President and
Chief Accounting Officer
</TABLE>
Page 11 of 11
<PAGE> 1
COURIER CORPORATION
COURIER CITIZEN COMPANY
COURIER COMPANIES, INC.
COURIER DELAWARE HOLDING CORPORATION
COURIER FOREIGN SALES CORPORATION LIMITED
COURIER INVESTMENT CORPORATION
COURIER KENDALLVILLE, INC.
COURIER PROPERTIES, INC.
COURIER STOUGHTON, INC.
COURIER WESTFORD, INC.
NATIONAL PUBLISHING COMPANY
COURIER EPIC, INC.
(formerly known as THE COURIER CONNECTION, INC.)
165 Jackson Street
Lowell, Massachusetts 01852
Dated as of: December 29, 1995
The First National Bank of Boston
100 Federal Street
Boston, Massachusetts 02110
Re: Modification No. 7 To Revolving Credit Agreement
------------------------------------------------
Ladies and Gentlemen:
We refer to the Revolving Credit Agreement, dated as of September 26, 1991
(as amended, the "Agreement"), among the twelve entities listed at the top of
this letter of agreement (collectively, the "Borrowers") and The First National
Bank of Boston (the "Lender"). Terms and expressions used in this letter of
agreement (hereinafter, "Modification No. 7") which are not defined herein, but
which are defined in the Agreement, shall have the same respective meanings
herein as therein.
We have requested you to make certain amendments to the Agreement. You have
advised us that you are willing to make the amendments so requested by us on the
condition that we join with you in this Modification No. 7.
<PAGE> 2
Accordingly, in consideration of these premises, the promises, mutual
covenants and agreements contained in this Modification No. 7, and fully
intending to be legally bound by this Modification No. 7, we hereby agree with
you as follows: '
ARTICLE I
---------
MODIFICATION OF AGREEMENT
-------------------------
Effective as of December 29, 1995 (the "Modification Date"), the
Agreement is amended as follows:
(a) The term "Loan Documents" shall, whenever used in the Agreement or any
of the other Loan Documents, be deemed to also mean and include Modification No.
7 to Revolving Credit Agreement, dated as of December 29, 1995, among the
Borrowers and the Lender.
(b) Clause (iv) of Section 1.1.45 is amended to read in its entirety as
follows:
"(iv) minus (a) for the fiscal quarter
ending March 31, 1995, the lesser of
$7,000,000 or actual Capital Expenditures
made during such period, (b) for the fiscal
quarter ending June 30, 1995, the lesser of
$5,000,000 or actual Capital Expenditures
made during such period, (c) for the fiscal
quarter ending September 30, 1995, the
lesser of $7,000,000 or actual Capital
Expenditures made during such period, (d)
for the fiscal quarter ending December 31,
1995, the lesser of $7,000,000 or actual
Capital Expenditures made during such
period, (e) for the fiscal quarter ending
March 31, 1996, the lesser of $7,000,000 or
actual Capital Expenditures made during such
period, and (f) for the fiscal quarter
ending June 30, 1996 and each fiscal quarter
thereafter, actual Capital Expenditures made
during such period."
ARTICLE II
----------
REPRESENTATIONS, WARRANTIES AND COVENANTS
-----------------------------------------
The Borrowers hereby jointly and severally represent, warrant and covenant to
you as follows:
(a) REPRESENTATIONS IN AGREEMENT. Each of the representations and
warranties made by or on behalf of the Borrowers to you in the Agreement was
true and correct when made and is true and correct in all material respects on
and as of the Modification Date with the same full force and effect as if each
of such representations and warranties had been made by the Borrowers on such
date, except to the extent that such representations and warranties relate
solely to a prior date.
-2-
<PAGE> 3
(b) NO EVENTS OF DEFAULT. No Event of Default exists on the Modification
Date (after giving effect to all of the arrangements and transactions
contemplated by this Modification No. 7). No condition exists on the
Modification Date which would, with notice or the lapse of time, or both,
constitute an Event of Default.
(c) BINDING EFFECT OF DOCUMENTS. This Modification No. 7 has been duly
executed and delivered to you by the Borrowers, and is in full force and effect
as of the date hereof, and the agreements and obligations of the Borrowers
contained herein constitute legal, valid and binding obligations of the
Borrowers enforceable against the Borrowers in accordance with their respective
terms.
ARTICLE III
-----------
MISCELLANEOUS
-------------
This Modification No. 7 may be executed in any number of counterparts, but
all such counterparts shall together constitute but one and the same agreement.
In making proof of this Modification No. 7, it shall not be necessary to produce
or account for more than one counterpart thereof signed by each of the parties
hereto. Except to the extent specifically amended and supplemented hereby, all
of the terms, conditions and the provisions of the Agreement, the Note and each
of the Loan Documents shall remain unmodified, and the Agreement, the Note and
each of the Loan Documents as amended and supplemented by this Modification No.
7 are confirmed as being in full force and effect.
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this letter of agreement and return
such counterpart to the undersigned, whereupon this letter agreement, as so
accepted by you, shall become a binding agreement between you and the
undersigned.
Very truly yours,
The Borrowers:
--- ---------
COURIER CORPORATION
By: /s/ Robert P. Story, Jr.
-------------------------
Title: Senior V.P. & CFO
-3-
<PAGE> 4
COURIER CITIZEN COMPANY
By: /s/ Robert P. Story, Jr.
--------------------------
Title: Senior V.P. & CFO
COURIER COMPANIES, INC.
By: /s/ Robert P. Story, Jr.
--------------------------
Title: Treasurer
COURIER DELAWARE HOLDING
CORPORATION
By: /s/ William L. Lampe, Jr.
--------------------------------
Title: Vice President, Treasurer
COURIER FOREIGN SALES
CORPORATION LIMITED
By: /s/ Robert P. Story, Jr.
--------------------------
Title: President
COURIER INVESTMENT
CORPORATION
By: /s/ Robert P. Story, Jr.
--------------------------
Title: Treasurer
COURIER KENDALLVILLE, INC.
By: /s/ Robert P. Story, Jr.
--------------------------
Title: Treasurer
-4-
<PAGE> 5
COURIER PROPERTIES, INC.
By: /s/ Robert P. Story, Jr.
--------------------------
Title: Treasurer
COURIER STOUGHTON, INC.
By: /s/ Robert P. Story, Jr.
--------------------------
Title: Treasurer
COURIER WESTFORD, INC.
By: /s/ Robert P. Story, Jr.
--------------------------
Title: Treasurer
NATIONAL PUBLISHING COMPANY
By: /s/ William L. Lampe, Jr.
--------------------------
Title: Treasurer
COURIER EPIC, INC. (formerly known as
THE COURIER CONNECTION, INC.)
By: /s/ Robert P. Story, Jr.
--------------------------
Title: Treasurer
-5-
<PAGE> 6
The foregoing letter of agreement is accepted by the undersigned as of
January 3, 1996.
The Lender:
--- ------
THE FIRST NATIONAL BANK OF
BOSTON
By: /s/ Gregory G. O'Brien
------------------------
Title: Managing Director
-6-
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF THE COURIER CORPORATION FOR THE QUARTER ENDED
DECEMBER 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000025212
<NAME> COURIER CORPORATION
<MULTIPLIER> 1,000
<CURRENCY>U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> QTR
<FISCAL-YEAR-END> SEP-28-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> DEC-30-1995
<EXCHANGE-RATE> 1
<CASH> 26
<SECURITIES> 0
<RECEIVABLES> 23,148<F1>
<ALLOWANCES> 636
<INVENTORY> 12,906
<CURRENT-ASSETS> 38,294
<PP&E> 92,319
<DEPRECIATION> 57,193
<TOTAL-ASSETS> 77,225
<CURRENT-LIABILITIES> 20,774
<BONDS> 0
<COMMON> 4,500
0
0
<OTHER-SE> 32,843<F2>
<TOTAL-LIABILITY-AND-EQUITY> 77,225
<SALES> 30,115
<TOTAL-REVENUES> 30,115
<CGS> 24,504
<TOTAL-COSTS> 24,504
<OTHER-EXPENSES> 4,407
<LOSS-PROVISION> 75
<INTEREST-EXPENSE> 212
<INCOME-PRETAX> 917
<INCOME-TAX> 293
<INCOME-CONTINUING> 624
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 624
<EPS-PRIMARY> .30
<EPS-DILUTED> .30
<FN>
<F1> Receivables are net of allowances for uncollectible accounts.
<F2> Other-SE includes treasury stock
</FN>
</TABLE>
