<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 28, 1996
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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
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COURIER CORPORATION
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2502514
- ------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
15 Wellman Avenue, North Chelmsford, Massachusetts 01863
- ------------------------------------------------------------------------------
(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 February 4, 1997
- ------------------------------------- -------------------------------------
Common Stock, $1 par value 2,027,939 shares
Page 1 of 11
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<TABLE>
COURIER CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
<CAPTION>
December 28, September 28,
ASSETS 1996 1996
- ------ ------------ -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 29 $ 33
Accounts receivable, less allowance
for uncollectible accounts 23,917 24,935
Inventories (Note B) 10,292 8,178
Deferred income taxes 1,582 1,580
Other current assets 1,092 954
------- -------
Total current assets 36,912 35,680
Property, plant and equipment, less
accumulated depreciation: $59,545
at December 28, 1996 and $58,868
at September 28, 1996 35,264 36,675
Real estate held for sale or lease, net 2,849 698
Goodwill, at cost 1,204 1,204
Other assets 497 509
------- -------
Total assets $76,726 $74,766
======= =======
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
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<TABLE>
COURIER CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
<CAPTION>
December 28, September 28,
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1996
- ------------------------------------ ------------ -------------
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt $ 466 $ 466
Accounts payable 9,282 9,705
Accrued taxes 5,144 4,835
Other current liabilities 6,993 6,952
-------- --------
Total current liabilities 21,885 21,958
Long-term debt 10,644 9,277
Deferred income taxes 3,465 3,488
Other liabilities 1,293 1,279
-------- --------
Total liabilities 37,287 36,002
-------- --------
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 9,060 9,055
Retained earnings 49,399 48,713
Treasury stock, at cost: 2,471,000 shares
at December 28, 1996 and 2,471,000
shares at September 28, 1996 (23,520) (23,504)
-------- --------
Total stockholders' equity 39,439 38,764
-------- --------
Total liabilities and stockholders' equity $ 76,726 $ 74,766
======== ========
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
Page 3 of 11
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<TABLE>
COURIER CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share amounts)
<CAPTION>
THREE MONTHS ENDED
----------------------------
December 28, December 30,
1996 1995
------------ ------------
<S> <C> <C>
Net sales $30,539 $30,115
Cost of sales 24,218 24,446
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Gross profit 6,321 5,669
Selling and administrative expenses 4,850 4,566
Interest expense 160 212
Other income 7 26
------- -------
Income before taxes 1,318 917
Provision for income taxes (Note C) 389 293
------- -------
Net income $ 929 $ 624
======= =======
Net income per share $ 0.45 $ 0.30
======= =======
Cash dividends declared per share $ 0.12 $ 0.12
======= =======
Weighted average shares outstanding 2,050,000 2,084,000
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
Page 4 of 11
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<TABLE>
COURIER CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
<CAPTION>
THREE MONTHS ENDED
--------------------------
December 28, December 30,
1996 1995
----------- ------------
<S> <C> <C>
Cash provided from (used for) operating activities $ 1,462 $(2,996)
------- -------
Investment activities:
Capital expenditures (2,543) (682)
------- -------
Financing activities:
Repayment of long-term debt (165) (146)
Increase in long-term borrowings 1,532 2,944
Cash dividends (243) (241)
Stock repurchase program (47) --
------- -------
Cash provided from financing activities 1,077 2,557
------- -------
Decrease in cash and cash equivalents (4) (1,121)
Cash at the beginning of the period 33 1,147
------- -------
Cash at the end of the period $ 29 $ 26
======= =======
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
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 28, 1996, the statements of income for the
three-month periods ended December 28, 1996 and December 30, 1995, and the
statements of cash flows for the three-month periods ended December 28,
1996 and December 30, 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 1996 have been reclassified in
the accompanying financial statements in order to be consistent with the
current year's classifications.
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 28, 1996 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 28, 1996.
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation," which permits either
recording the estimated value of stock-based employee compensation over the
applicable vesting period or disclosing the unrecorded cost and the related
effect on net income per share in the notes to the financial statements.
The Company will continue to apply current accounting rules for the
recording of stock-based compensation (APB Opinion No. 25) and will comply
with the provision of SFAS No. 123 relative to disclosure in the notes to
the financial statements which will be effective with the Company's Annual
Report for the fiscal year ending September 27, 1997.
Page 6 of 11
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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)
---------------------------
December 28, September 28,
1996 1996
------------ -------------
<S> <C> <C>
Raw materials $ 3,455 $2,901
Work in process 4,743 3,746
Finished goods 2,094 1,531
------- ------
$10,292 $8,178
======= ======
</TABLE>
<TABLE>
C. INCOME TAXES
The statutory federal tax rate is 34%. The total tax provision differs from that
computed using the statutory federal tax rate for the following reasons:
<CAPTION>
(000's Omitted)
Three Months Ended
---------------------------
December 28, December 30,
1996 1995
------------ -------------
<S> <C> <C>
Federal income taxes at
statutory rate $448 $312
State income taxes, net 23 27
Export related income (52) (34)
Other (30) (12)
---- ----
Total provision $389 $293
==== ====
</TABLE>
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 in the first quarter of fiscal 1997 were $30.5 million compared to $30.1
million in the prior year's first quarter. The modest sales growth reflects
market softness and increasingly competitive conditions.
Gross profit increased to $6.3 million, or 21% of sales, in the first quarter
from $5.7 million, or 19% of sales, in the same period last year. The
improvement in gross profit was attributable to benefits realized from
streamlining software documentation operations, gains in productivity and lower
costs. Partially offsetting these positive factors, however, was a decrease in
the market price of recycled paper which reduced gross profit by $340,000
compared to the same period last year. In addition, costs associated with
consolidating operations in Philadelphia amounted to $350,000 in the first
quarter of 1997. The consolidation into a newer, more efficient manufacturing
facility was completed in December 1996.
Selling and administrative expenses increased to $4.9 million in the first
quarter of fiscal 1997 from $4.6 million in the same period last year. As a
percentage of sales, selling and administrative expenses were 16% compared to
15% in the first quarter last year. The increase includes expansion of the
Company's Copyright Management Services (CMS) division and expenses that relate
to the increase in profitability.
Interest expense was $160,000 compared to $212,000 in the first quarter of
fiscal 1996 reflecting both a lower average interest rate and decreased average
borrowings. In addition, interest of $28,000 was capitalized in the first
quarter of fiscal 1997.
The Company's effective tax rate for the first quarter was 30%. This rate was
lower than the 32% rate in the corresponding period last year primarily because
of a lower effective state tax rate.
Net income for the first quarter of fiscal 1997 was $929,000, up 49% from
$624,000 in the first quarter of last year. Net income per share increased 50%
to $.45 per share from $.30 per share in the corresponding period last year. The
increase in earnings reflects improvements in the Company's gross profit margins
as noted above.
In October 1995, the Financial Accounting Standards Board issued SFAS No. 123,
"Accounting for Stock-Based Compensation," which permits either recording the
estimated value of stock-based employee compensation over the applicable vesting
period or disclosing the unrecorded cost and the related effect on net income
per share in the notes to the financial statements. The Company will continue to
apply current accounting rules for the recording of stock-based compensation
(APB Opinion No. 25) and will comply with the provision of SFAS No. 123 relative
to disclosure in the notes to the financial statements which will be effective
with the Company's Annual Report for the fiscal year ending September 27, 1997.
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 1997, operations provided approximately $1.5
million of cash. Net income was $0.9 million and depreciation was $1.8 million.
Working capital used approximately $1.3 million of cash reflecting an increase
in inventories.
Investment activities in the first three months of fiscal 1997 used
approximately $2.5 million of cash for capital expenditures. Capital
expenditures were made primarily for the final phase of the building expansion
at the Company's Philadelphia manufacturing facility and for upgrades to binding
equipment. Capital expenditures for the entire fiscal year are expected to be
comparable to fiscal 1996 levels, which amounted to approximately $7.3 million.
In December 1996, the Company completed the consolidation of operations in
Philadelphia from an older, multi-story facility to the recently expanded, more
efficient property. The Company is currently renegotiating an agreement, which
it had previously signed, to sell the multi-story facility to a developer for
approximately $4.6 million. Closing had been scheduled for March 1997; however,
if a renegotiated agreement is reached, the closing would not be until later in
the year and would remain subject to certain contingencies. The Company's
Raymond, New Hampshire facility, which had been leased through June 1996, is now
vacant pending sale or lease. With respect to the Company's former headquarters
in Lowell, Massachusetts, which was vacated in September 1996, the Company has
considered various alternatives and is presently giving priority to donating the
property to a not-for-profit organization.
Financing activities for the first quarter of fiscal 1997 provided approximately
$1.1 million of cash. At December 28, 1996, the Company had approximately $12.4
million of borrowing capacity available under an $11 million long-term revolving
credit facility and a $10 million informal bank credit line. These facilities
are expected to be replaced with a new $20 million revolving credit facility in
the second quarter.
In November 1996, the Company announced that its Board of Directors authorized
the repurchase of common shares with an aggregate purchase price of up to $3
million. Through the end of the first quarter, the Company acquired 3,221 shares
of common stock at an average cost of $14.63 per share under this program.
Page 9 of 11
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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.
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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)
February 10, 1997 By: /s/James F. Conway III
- ----------------- --------------------------------
Date James F. Conway III
Chairman, President and
Chief Executive Officer
February 10, 1997 By: /s/Robert P. Story, Jr.
- ----------------- ----------------------------
Date Robert P. Story, Jr.
Senior Vice President and
Chief Financial Officer
February 10, 1997 By: /s/Peter M. Folger
- ----------------- --------------------------------
Date Peter M. Folger
Vice President and
Chief Accounting Officer
Page 11 of 11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-27-1997
<PERIOD-START> SEP-29-1996
<PERIOD-END> DEC-28-1996
<EXCHANGE-RATE> 1
<CASH> 29
<SECURITIES> 0
<RECEIVABLES> 23,917
<ALLOWANCES> 893<F1>
<INVENTORY> 10,292
<CURRENT-ASSETS> 36,912
<PP&E> 94,809
<DEPRECIATION> 59,545
<TOTAL-ASSETS> 76,726
<CURRENT-LIABILITIES> 21,885
<BONDS> 0
0
0
<COMMON> 4,500
<OTHER-SE> 34,939<F2>
<TOTAL-LIABILITY-AND-EQUITY> 76,726
<SALES> 30,539
<TOTAL-REVENUES> 30,539
<CGS> 24,218
<TOTAL-COSTS> 24,218
<OTHER-EXPENSES> 4,776
<LOSS-PROVISION> 67
<INTEREST-EXPENSE> 160
<INCOME-PRETAX> 1,318
<INCOME-TAX> 389
<INCOME-CONTINUING> 929
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 929
<EPS-PRIMARY> 0.45
<EPS-DILUTED> 0.45
<FN>
<F1>RECEIVABLES ARE NET OF ALLOWANCES FOR UNCOLLECTIBLE ACCOUNTS.
<F2>OTHER SE INCLUDES TREASURY STOCK.
</FN>
</TABLE>
