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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
SEPTEMBER 22, 2000
COURIER CORPORATION
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(Exact name of registrant as specified in charter)
MASSACHUSETTS
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(State or Other Jurisdiction of Incorporation)
0-7597 04-2502514
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(Commission file number) (IRS employer identification number)
15 WELLMAN AVENUE, NORTH CHELMSFORD, MA 01863
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(Address of principal executive offices) (Zip code)
(978) 251-6000
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(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OF ASSETS.
On September 22, 2000, Courier Corporation and its subsidiaries
("Courier") purchased all of the outstanding common stock of Dover Publications,
Inc., and its related companies, Dover Book Store, Inc. and Transfolio Express,
Inc., (collectively, "Dover") for a purchase price of approximately $39 million
in cash. Dover, headquartered in Mineola, New York, is a publisher of
special-interest books. Courier currently intends to carry on substantially the
same business as was conducted by Dover. The acquisition, made pursuant to the
terms and conditions of a Stock Purchase Agreement dated as of August 14, 2000
(the "Purchase Agreement") by and among Courier, Mrs. Blanche Cirker,
individually, the Estate of Hayward Francis Cirker, by Blanche Cirker,
executrix, and the Stockholders of Dover. The acquisition will be accounted for
as a purchase and, accordingly, the results of operations of Dover will be
included in the consolidated financial statements of Courier from September 22,
2000 forward.
The purchase price was determined in arms-length negotiations and was
financed by a wholly-owned subsidiary of Courier Corporation, using Courier's
existing credit facility with Citizens Bank of Massachusetts, Fleet National
Bank, and KeyBank National Association. The amount available under this facility
was extended from $30 million to $60 million in contemplation of the
transaction.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
(a) Financial Statements of Businesses Acquired
(i) Combined Statements of Income and Cash Flows of Dover
Publications, Inc. and Related Companies for the years
ended August 31, 2000 and 1999 and Independent
Auditors' Report F-1 to F-6
(b) Pro Forma Financial Information
(i) Unaudited Pro Forma Statement of Income
for the year ended September 30, 2000 F-7 to F-8
(ii) Notes to Unaudited Pro Forma Statement
of Income F-9
1
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(c) Exhibits
EXHIBIT NO. DESCRIPTION
2.1 Stock Purchase Agreement dated as of August 14, 2000 by and
among Courier Corporation, Mrs. Blanche Cirker, individually,
the Estate of Hayward Francis Cirker, by Blanche Cirker,
executrix, and the Stockholders of Dover Publications, Inc.,
Dover Book Store, Inc. and Transfolio Express, Inc. (filed as
Exhibit 2.1 to the Current Report on Form 8-K filed on October
6, 2000).
10 Amendment, dated August 11, 2000, to note agreement between
Courier Corporation, Citizens Bank of Massachusetts, Fleet
National Bank and KeyBank National Association, providing for
a $60 million revolving credit facility (filed as Exhibit 10
to the Current Report on Form 8-K filed on October 6, 2000).
27* Financial Data Schedule
* Exhibit is furnished herewith.
2
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COURIER CORPORATION
(Registrant)
Date: December 6, 2000 By: /s/ Robert P. Story, Jr.
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Name: Robert P. Story, Jr.
Title: Senior Vice President and
Chief Financial Officer
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INDEPENDENT AUDITORS' REPORT
To the Stockholders of Dover Publications, Inc.
and Related Companies
We have audited the accompanying combined statements of income and cash flows of
Dover Publications, Inc., and its related companies, Dover Book Store, Inc. and
Transfolio Express, Inc., (collectively the "Companies"), all of which are under
common ownership and common management, for the years ended August 31, 2000 and
1999. These financial statements are the responsibility of the Companies'
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the statements of
income and cash flows are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statements of income and cash flows. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the statements of income and cash
flows. We believe that our audits of the statements of income and cash flows
provide a reasonable basis for our opinion.
In our opinion, such statements of income and cash flows present fairly, in all
material respects, the combined results of operations and combined cash flows of
the Companies for the years ended August 31, 2000 and 1999, in conformity with
accounting principles generally accepted in the United States of America.
/s/Deloitte & Touche LLP
Boston, Massachusetts
December 1, 2000
F-1
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Dover Publications, Inc.
and Related Companies
Combined Statements of Income
Years Ended August 31,
2000 1999
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Net sales $31,639,901 $31,676,935
Cost of sales 21,230,577 20,590,758
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Gross profit 10,409,324 11,086,177
Selling and administrative expenses 6,175,937 5,966,692
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Income before taxes 4,233,387 5,119,485
Provision for income taxes 21,077 20,972
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Net income $ 4,212,310 $ 5,098,513
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The accompanying notes are an integral part of these combined statements.
F-2
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Dover Publications, Inc.
and Related Companies
Combined Statements of Cash Flows
Years Ended August 31,
2000 1999
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Operating Activities:
Net income $ 4,212,310 $ 5,098,513
Adjustments to reconcile net income to
cash provided from operating activities:
Depreciation and amortization 2,176,171 1,995,934
Changes in assets and liabilities:
Accounts receivable (480,333) 814,846
Inventory (93,155) (425,271)
Accounts payable (309,734) 336,355
Other elements of working capital 108,623 195,537
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Cash provided from operating activities 5,613,882 8,015,914
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Investment Activities:
Capital expenditures (481,827) (308,803)
Prepublication costs (1,877,229) (1,782,261)
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Cash used for investment activities (2,359,056) (2,091,064)
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Financing Activities:
Distributions to stockholders (3,189,935) (5,568,000)
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Cash used for financing activities (3,189,935) (5,568,000)
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Increase in cash 64,891 356,850
Cash at the beginning of the period 1,415,681 1,058,831
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Cash at the end of the period $ 1,480,572 $ 1,415,681
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The accompanying notes are an integral part of these combined statements.
F-3
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NOTES TO COMBINED STATEMENTS OF INCOME AND CASH FLOWS
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION: The combined statements of income and cash flows
(collectively, the "financial statements"), prepared on a fiscal year basis,
include the accounts of Dover Publications, Inc. and its related companies,
Dover Book Store, Inc. and Transfolio Express, Inc., (collectively, "Dover" or
the "Company") all of which are under common ownership and management. All
significant intercompany transactions have been eliminated in combination. Such
financial statements have been prepared in conformity with generally accepted
accounting principles, which require the use of certain estimates and
assumptions.
DESCRIPTION OF BUSINESS: Dover is a publisher of special-interest books for
niche markets. Founded in 1941, Dover has more than 7,000 in-print titles in
specialty categories ranging from military history to paper dolls, and from
musical scores to typographic fonts.
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment, including
leasehold improvements, are recorded at cost. The Company provides for
depreciation of property, plant and equipment on a double-declining balance
basis over periods ranging from 3 to 10 years, except for computer software
which is depreciated on a straight line basis over 3 years.
Expenditures for maintenance and repairs are charged against income as incurred;
betterments that increase the value or materially extend the life of the related
assets are capitalized. When assets are sold or retired, the cost and
accumulated depreciation are removed from the accounts and any gain or loss is
included in income.
PREPUBLICATION COSTS: Prepublication costs are amortized using the straight-line
method over an estimated useful life of four years. Such amortization expense
was approximately $1,787,000 in fiscal 2000 and $1,737,000 in fiscal 1999.
INCOME TAXES: The Company has elected to be treated as an S corporation for
income tax purposes. Accordingly, no provision for federal income taxes and
state income taxes has been provided for the years ended August 31, 2000 and
1999, as the taxable income of the Company will be reported in the individual
income tax returns of the stockholders. The Company provides for state and local
income taxes assessed at the corporate level. Income taxes paid for fiscal 2000
and fiscal 1999 approximated income tax expense.
REVENUE RECOGNITION: Revenue is recognized upon shipment of goods to customers.
USE OF ESTIMATES: The process of preparing financial statements in conformity
with generally accepted accounting principles requires management to make
estimates that affect the reported amounts of revenues and expenses during the
reporting period. Actual results may differ from these estimates.
F-4
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NEW ACCOUNTING PRONOUNCEMENTS: The Financial Accounting Standards Board has
issued Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting
for Derivative Instruments and Hedging Activities" (as amended by SFAS No. 137
in June 1999 and SFAS No. 138 in June 2000), which will be effective at the
beginning of the Company's fiscal year ending August 31, 2001. The Company does
not expect the adoption of this standard to have a material effect on its
combined financial statements. The Securities and Exchange Commission has issued
Staff Accounting Bulletin (SAB) No. 101 ("Revenue Recognition in Financial
Statements"), that will be required to be implemented by the Company in the
Company's fiscal year ending August 31, 2001. The Company is currently
evaluating the impact, if any, that the adoption of this SAB will have on its
combined financial statements.
B. INVENTORIES
Inventories are valued at the lower of cost or market, using the first-in,
first-out method.
C. COMMITMENTS AND OTHER ITEMS
The Company leases its facilities on a year to year basis from its principal
shareholder. Rent expense for the years ended August 31, 2000 and 1999 was
approximately $598,000 and $587,000, respectively.
Export sales as a percentage of combined sales were approximately 13% in fiscal
2000 and 12% in fiscal 1999. No customer accounted for more than 10% of combined
sales in either fiscal 2000 or fiscal 1999. Customers are granted credit on an
unsecured basis.
In the ordinary course of business, the Company is subject to various legal
proceedings and claims. The Company believes that the ultimate outcome of these
matters will not have a material adverse effect on its combined financial
statements.
D. RETIREMENT PLAN
The Company provides retirement benefits through a noncontributory, defined
benefit pension plan covering substantially all of its employees. Pension
expense amounted to approximately $138,000 in fiscal 2000 and $127,000 in fiscal
1999. The Company's funding policy is to make annual contributions at least
equal to the minimum required by the applicable regulations. These contributions
were approximately $188,000 during fiscal 2000 and $61,000 during fiscal 1999.
Benefits paid to participants amounted to approximately $187,000 in fiscal 2000
and $200,000 in fiscal 1999.
F-5
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The following table provides information on the underlying actuarial assumptions
for the years ended August 31, 2000 and 1999.
Weighted average assumptions:
Discount rate 7.0%
Expected long-term rate of return on plan assets 7.5%
Rate of compensation increase 5.0%
E. SUBSEQUENT EVENT
On September 22, 2000, Courier Corporation and its subsidiaries purchased all of
the outstanding common stock of Dover Publications, Inc., Dover Book Store, Inc.
and Transfolio Express, Inc. for a purchase price of approximately $39 million
in cash.
F-6
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UNAUDITED PRO FORMA FINANCIAL INFORMATION
The unaudited pro forma financial information presented herein gives effect to
the acquisition by Courier Corporation and its subsidiaries ("Courier") of all
of the outstanding stock of Dover Publications, Inc. and related companies
("Dover"), which was completed on September 22, 2000. The pro forma financial
information is based on the historical financial statements of Courier and
Dover. Courier's fiscal year end is the last Saturday in September and Dover has
an August 31 year end.
The acquisition of Dover has been accounted for using the purchase method of
accounting. Accordingly, assets acquired and liabilities assumed have been
recorded at their estimated fair values, which are subject to further
adjustment, based upon appraisals and other analyses. Management does not expect
that the final allocation of the purchase price for the acquisition of Dover
will differ materially from the estimates used to prepare the pro forma
financial information.
The balance sheet of Dover has been included in the consolidated balance sheet
of Courier as of September 30, 2000 as reported in Courier's Annual Report on
Form 10-K. The pro forma financial information should be read in conjunction
with Courier's 2000 Annual Report on Form 10-K.
The unaudited pro forma statement of income for the year ended September 30,
2000 gives effect to the acquisition of Dover as if it had been consummated
as of the beginning of Courier's fiscal year 2000. This pro forma statement
of income combines the statement of income for the year ended September 30,
2000 of Courier and the statement of income for the year ended August 31,
2000 of Dover.
The pro forma adjustments are based upon available information and
assumptions that management believes are reasonable. The unaudited pro forma
statement of income does not purport to present the results of operations of
Courier had the acquisition of Dover occurred on the dates specified, nor is
it necessarily indicative of the results of operations that may be achieved
in the future.
F-7
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UNAUDITED PRO FORMA STATEMENT OF INCOME
For the year ended September 30, 2000
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
Courier Pro Forma Pro Forma
Corporation Dover Adjustments Combined
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<S> <C> <C> <C> <C>
Net sales $188,320 $31,640 ($3,678)(5) $216,282
Cost of sales 140,226 21,231 (3,348)(3),(5) 158,109
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Gross profit 48,094 10,409 (330) 58,173
Selling and administrative expenses 32,002 6,176 798 (1) 38,976
Interest expense 325 - 2,700 (2) 3,025
Other income (119) - - (119)
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Income before taxes 15,886 4,233 (3,828) 16,291
Provision for income taxes 5,249 21 140 (4) 5,410
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Net income $10,637 $4,212 ($3,968) $10,881
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Net income per basic share $3.25 $3.32
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Net income per diluted share $3.15 $3.23
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Weighted average shares outstanding:
Basic 3,277,000 3,277,000
Diluted 3,373,000 3,373,000
</TABLE>
The accompanying notes are an integral part of this statement.
F-8
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NOTES TO UNAUDITED PRO FORMA STATEMENT OF INCOME
(1) Represents amortization expense related to the goodwill established in
connection with the acquisition. Goodwill will be amortized over 20
years.
(2) Represents interest expense related to the indebtedness incurred in
connection with the acquisition, assuming an average interest rate of
7.0%.
(3) An increase in rental expense of $330,000 is reflected for the new
lease on the office and plant facilities of Dover. The initial term of
the lease agreement expires five years from the date of the acquisition
and requires annual rental payments of approximately $928,000.
(4) Represents the tax effect of Dover's pretax income and the pro forma
adjustments at the blended statutory rate of 40%. Dover's pretax income
is tax effected to reflect the change from an S corporation in
connection with the acquisition.
(5) Represents the elimination of intercompany sales between Courier and
Dover. The intercompany profit in beginning and ending inventory was
assumed to be comparable.
F-9
