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 September 30, 1997
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 1-6352
JOHN H. HARLAND COMPANY
(Exact name of registrant as specified in its charter)
GEORGIA 58-0278260
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2939 Miller Rd.
Decatur, Georgia 30035
(Address of principal executive offices) (Zip code)
(770) 981-9460
(Registrant's telephone number, including area code)
(Not Applicable)
(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 ( ).
The number of shares of the Registrant's Common Stock outstanding on
November 11, 1997 was 31,014,787.
<PAGE>
Item 1. FINANCIAL STATEMENTS
<TABLE>
JOHN H. HARLAND COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
ASSETS
- ------
September 30, December 31,
(In thousands) 1997 1996
- ---------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 9,459 $ 22,667
Accounts receivable 66,623 69,596
Inventories 25,225 33,464
Deferred income taxes 10,951 8,347
Other 11,429 14,329
---------- ----------
Total current assets 123,687 148,403
---------- ----------
INVESTMENTS AND OTHER ASSETS:
Assets held for disposal 10,875 30,656
Investments 5,187 6,178
Goodwill and intangibles - net 116,814 127,491
Deferred income taxes 13,390 20,012
Other 31,281 25,596
---------- ----------
Total investments and other assets 177,547 209,933
---------- ----------
PROPERTY, PLANT AND EQUIPMENT 229,905 215,140
Less accumulated depreciation
and amortization 126,411 118,745
---------- ----------
Property, plant and equipment - net 103,494 96,395
---------- ----------
Total $ 404,728 $ 454,731
========== ==========
<FN>
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
JOHN H. HARLAND COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
September 30, December 31,
(In thousands, except share amounts) 1997 1996
- ---------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Short-term debt $ 43,089
Accounts payable - trade $ 27,782 27,057
Deferred revenues 23,587 25,069
Accrued liabilities:
Salaries, wages and employee benefits 17,411 21,560
Restructuring costs 5,708 12,694
Taxes 3,423 6,031
Other 9,796 9,211
---------- ----------
Total current liabilities 87,707 144,711
---------- ----------
LONG-TERM LIABILITIES:
Long-term debt, less current maturities 109,390 114,075
Other 14,171 13,542
---------- ----------
Total long-term liabilities 123,561 127,617
---------- ----------
Total liabilities 211,268 272,328
---------- ----------
SHAREHOLDERS' EQUITY:
Series preferred stock, authorized 500,000
shares of $1.00 par value, none issued
Common stock - authorized 144,000,000
shares of $1.00 par value, issued
37,907,497 issued 37,907 37,907
Additional paid-in capital 1,628 2,032
Foreign exchange translation adjustments (107) 54
Retained earnings 325,797 316,315
---------- ----------
Total shareholders' equity 365,225 356,308
Less 6,896,725 and 6,983,520 shares of
treasury stock - at cost 171,765 173,905
---------- ----------
Shareholders' equity - net 193,460 182,403
---------- ----------
Total $ 404,728 $ 454,731
========== ==========
<FN>
See Notes to Condensed Consolidated Financial Statement
</TABLE>
<PAGE>
<TABLE>
JOHN H. HARLAND COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996
(Unaudited)
<S> <C> <C> <C> <C>
THREE MONTHS ENDED NINE MONTHS ENDED
(In thousands, except SEPTEMBER 30, SEPTEMBER 30,
per share amounts) 1997 1996 1997 1996
- --------------------------------------------------------------------------
NET SALES $ 142,099 $ 155,912 $ 421,056 $ 457,804
---------- ---------- ---------- ----------
COST AND EXPENSES:
Cost of sales 82,578 83,055 243,869 247,956
Selling, general and
administrative expenses 46,178 42,384 131,423 129,950
Amortization of intangibles 3,510 3,998 10,929 12,355
Restructuring charge 2,745 94,054
Acquired in-process research
and development cost 7,973
---------- ---------- ---------- ----------
Total 132,266 129,437 388,966 492,288
---------- ---------- ---------- ----------
INCOME(LOSS) FROM
OPERATIONS 9,833 26,475 32,090 (34,484)
---------- ---------- ---------- ----------
OTHER INCOME(EXPENSE):
Interest expense (2,029) (2,844) (6,626) (7,620)
Other - net 452 514 2,645 1,411
---------- ---------- ---------- ----------
Total (1,577) (2,330) (3,981) (6,209)
---------- ---------- ---------- ----------
INCOME(LOSS) BEFORE
INCOME TAXES 8,256 24,145 28,109 (40,693)
INCOME TAXES 3,427 10,107 11,665 (12,114)
---------- ---------- ---------- ----------
NET INCOME(LOSS) 4,829 14,038 16,444 (28,579)
RETAINED EARNINGS AT
BEGINNING OF PERIOD 323,291 303,276 316,315 361,554
---------- ---------- ---------- ----------
328,120 317,314 332,759 332,975
Cash dividends (2,323) (7,850) (6,962) (23,511)
---------- ---------- ---------- ----------
RETAINED EARNINGS AT END
OF PERIOD $ 325,797 $ 309,464 $ 325,797 $ 309,464
========== ========== ========== ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING 30,991 30,984 31,060 30,836
========== ========== ========== ==========
NET INCOME(LOSS) PER
COMMON SHARE $ .16 $ .45 $ .53 $ (.93)
========== ========== ========== ==========
CASH DIVIDENDS PER COMMON
SHARE $ .075 $ .255 $ .225 $ .765
========== ========== ========== ==========
<FN>
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
JOHN H. HARLAND COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996
(Unaudited)
<CAPTION>
(In thousands) 1997 1996
- -----------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income(loss) $ 16,444 $ (28,579)
Adjustments to reconcile net income(loss) to
net cash provided by operating activities:
Depreciation and amortization 29,179 34,625
Provision for restructuring charge 88,564
Acquired in-process research and development cost 7,973
(Gain)loss on sale of assets (2,293) 698
Other 3,025 2,098
Change in assets and liabilities net of
effect of acquisitions:
Deferred income taxes 9,549 (36,882)
Accounts receivable 2,973 (10,803)
Inventories and other current assets 6,850 13,769
Accounts payable and accrued expenses (14,232) (4,504)
---------- ---------
Net cash provided by operating activities 51,495 66,959
---------- ---------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (27,663) (22,132)
Proceeds from sale of property, plant and equipment 24,446 921
Payment for acquisition of businesses,
net of cash acquired (35,080)
Long-term investments and
other assets - net (8,343) (12,132)
---------- ---------
Net cash used in investing activities (11,560) (68,423)
---------- ---------
FINANCING ACTIVITIES:
Issuance of treasury stock 3,691 3,662
Dividends paid (6,962) (23,511)
Repurchase of common stock (1,979)
Short-term debt - net (43,089) 34,250
Long-term debt - net (4,685)
Other - net (119) 103
---------- ----------
Net cash (used in)provided by financing activities (53,143) 14,504
---------- ----------
Net (decrease)increase in cash and cash equivalents (13,208) 13,040
Cash and cash equivalents at beginning of period 22,667 12,862
---------- ----------
Cash and cash equivalents at end of period $ 9,459 $ 25,902
========== ==========
<FN>
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
JOHN H. HARLAND COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(Unaudited)
1. Basis of Presentation
The condensed consolidated financial statements contained in this
report are unaudited but reflect all adjustments, consisting only of
normal recurring accruals, which are, in the opinion of management,
necessary for a fair presentation of the results of operations,
financial position and cash flows of the John H. Harland Company and
subsidiaries (the "Company") for the interim periods reflected.
Certain information and note disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to applicable rules
and regulations of the Securities and Exchange Commission. The results
of operations for the interim period reported herein are not
necessarily indicative of results to be expected for the full year.
2. Accounting Policies
The condensed consolidated financial statements included herein should
be read in conjunction with the consolidated financial statements and
notes thereto, and the Independent Auditors' Report included in the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996. Reference is made to the accounting policies of the
Company described in the notes to consolidated financial statements
included in such Form 10-K. The Company has consistently followed
those policies in preparing this report.
3. Restructuring Charge
In the second quarter of 1996, the Company announced plans to
consolidate its core printing plants into a network of regional
facilities over a two-year period. As part of this strategy, the
Company recorded pre-tax charges of $92.5 million in the second
quarter of 1996 and incurred costs of $1.6 million in the first
quarter of 1996. The 1996 restructuring charge related to costs of
consolidation of manufacturing operations, including severance and
associated revaluation of assets, and valuation adjustments related to
discontinuing certain subsidiary product lines. The pre-tax
restructuring charge for the nine months ended September 30, 1996
includes the following (in thousands):
- -------------------------------------------------------------------
Write down of equipment and facilities $ 45,132
Write down of intangibles 23,198
Employee severance 17,943
Other 7,781
----------
Total $ 94,054
==========
The Company recorded as expense additional severance payments of $1.2
million and $5.1 million for the three-month and nine-month periods
ended September 30, 1997, respectively. In addition, the Company
reversed $1.2 million of the severance accruals during the second
quarter of 1997 and reversed $1.1 million of the facilities accruals
in the third quarter of 1997. The severance payments will not be paid
due to the decision to retain certain employees and operations, and
certain of the facilities which were initially identified as having a
fair market value less than book value have realized a higher sales
<PAGE>
price than anticipated. Management expects to incur additional charges
in 1997 and 1998, predominantly related to employee severance.
As part of this restructuring, certain assets, predominantly land,
buildings and equipment at the facilities to be closed, with a
carrying value of approximately $10.9 million are being held for sale.
The Company generally expects to sell these assets within one year of
the related facility being closed.
4. Acquisition
In May 1996, the Company acquired OKRA Marketing Corporation. The
following represents the unaudited pro forma results of operations
which assume the acquisition occurred on January 1, 1996. These
results include certain adjustments, primarily increased amortization
expense related to intangible assets, one-time expenses and increased
interest expense (in thousands, except per share amounts):
Nine months ended
September 30, 1996
- ---------------------------------------------------------------------
Net sales $ 463,483
Net loss 22,487
Net loss per common share .73
The pro forma financial information presented above does not purport
to be indicative of either the results of operations that would have
occurred had the acquisition taken place on January 1, 1996 or of
future consolidated results of operations.
5. Accounting for Income Taxes
The provision(benefit) for income taxes for the nine months ended
September 30, 1997 and 1996 includes the following (in thousands):
1997 1996
- ----------------------------------------------------------------------
Current provision $ 4,224 $ 25,034
Deferred provision(benefit) 7,441 (37,148)
---------- ----------
Total $ 11,665 $ (12,114)
========== ==========
6. Inventories
Inventories consist of the following (in thousands):
September 30, December 31,
1997 1996
- ---------------------------------------------------------------------
Raw materials and semi-finished goods $ 20,020 $ 28,190
Finished goods 2,813 2,770
Hardware component parts 2,392 2,504
-------- --------
Total $ 25,225 $ 33,464
========= =========
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Third Quarter 1997 compared with Third Quarter 1996
Consolidated net sales for the third quarter of 1997 decreased $13.8
million or 8.9% as compared to the third quarter of 1996. Sales for
the Financial Services ("FS") segment decreased $14.6 million or 11.0%
from the 1996 period. The revenue decrease continues to reflect the
loss of certain financial institution contracts prior to 1997, as well
as attrition in community banks due to disruption in service from
consolidation, and the wind down of the Company's direct check
operations. In August 1996, the Company entered into a long-term
contract with a direct mail check supplier, which helped offset a
reduction in unit volumes. Although revenue per unit from the contract
is lower than average revenue per unit, the costs to produce these
units are also lower. Revenues from FS's marketing services, which
includes database marketing, decision support and loan compliance
services, increased 0.8% over 1996. Scantron's sales increased by $0.7
million or 2.8% over the 1996 period, due to increases in its core
data collection products and services.
Consolidated gross profit decreased by 18.3% and decreased as a
percentage of sales from 46.7% in 1996 to 41.9% in 1997. Competitive
pricing, a reduction in unit volume and transition costs associated
with rebuilding the Company's printing infrastructure negatively
impacted FS's margins in comparison to 1996. Transition costs included
redundant expenses related to customer service, plant closings,
increased hiring and training costs relating to the opening of
regional facilities and production inefficiencies. Scantron's gross
margin increased from 45.3% in 1996 to 53.5% in 1997 largely due to
improvements in core products and field services.
Consolidated selling, general and administrative expenses increased as
a percentage of sales from 27.2% in 1996 to 32.4% in 1997. The major
components of this increase included costs relating to restructuring
the sales and account management organization and to updating the
Company's technology. These increases were partially offset by
reduced marketing expenses relating to the Company's direct check
operations.
The Company's restructuring charges reflect the Company's plans for
plant consolidation and other strategic decisions related to product
development. In the third quarter of 1997, the Company incurred
additional charges of $2.7 million for severance and reversed $1.1
million of the 1996 charge, relating to facility sales. See note 3 to
the Condensed Consolidated Financial Statements.
The Company's consolidated effective income tax rate for the third
quarter of 1997 was 41.5% compared to 41.9% in 1996. The higher
effective tax rate in 1996 was primarily due to the effects of non-
deductible amortization of intangibles.
The Company reported net income of $4.8 million or $0.16 per share for
the third quarter of 1997, compared to a net income of $14.0 million,
or $0.45 per share in the 1996 quarter.
<PAGE>
Year to Date 1997 compared with Year to Date 1996
Consolidated net sales for the nine-month period ended September 30,
1997 decreased $36.7 million or 8.0% as compared to the same period in
1996. Sales for the FS segment decreased $39.6 million or 10.0% from
the 1996 period. The revenue decrease continues to reflect the loss of
certain financial institution contracts prior to 1997, as well as
attrition in community banks due to disruption in service from
consolidation, and the wind down of the Company's direct check
operations. In August 1996, the Company entered into a long-term
contract with a direct mail check supplier, which helped offset a
reduction in unit volumes. Although revenue per unit from the contract
is lower than average revenue per unit, the costs to produce these
units are also lower. Revenues from FS's marketing services, which
includes database marketing, decision support and loan compliance
services, increased 5.2% over 1996. The increase was due primarily to
the acquisition of OKRA in May 1996. Scantron's sales increased by
$2.5 million or 4.1% over the 1996 period largely due to increased
sales of data collection products.
Consolidated gross profit decreased by 15.6% and decreased as a
percentage of sales from 45.8% in 1996 to 42.1% in 1997. Competitive
pricing, a reduction in unit volume and transition costs associated
with rebuilding the Company's printing infrastructure negatively
impacted FS's margins in comparison to 1996. The transition costs
include redundant expenses related to customer service, plant
closings, increased hiring and training costs relating to the regional
facilities and production inefficiencies. Scantron's gross margin
increased from 43.8% in 1996 to 48.3% in 1997 largely due to
improvements in core products and field services.
Consolidated selling, general and administrative expenses increased as
a percentage of sales from 28.3% in 1996 to 31.2% in 1997. This
increase includes costs related to restructuring the sales and account
management workforces and increased expenses relating to information
technologies, offset by reduced marketing expenses from the Company's
direct check operations.
Charges totaling $94.1 million and $8 million related to restructuring
and acquired in-process research and development, respectively, were
recorded in the nine months ended September 30, 1996. These costs
reflect the Company's plans for plant consolidation and new product
strategies. In the nine months ended September 30, 1997, the Company
incurred additional restructuring-related charges of $5.1 million
relating to severance. During 1997, the Company has reversed $2.3
million of the 1996 restructuring charge. Of this amount, $1.2 million
represents severance that will not be paid due to a subsequent
decision to retain certain employees and operations. The remaining
$1.1 million represents excess building valuation reserves due to
certain facilities being sold at higher prices than originally
anticipated. See note 3 to the Condensed Consolidated Financial
Statements.
The Company's consolidated effective income tax rate for the first
nine months of 1997 was 41.5% compared to 29.8% for the same period in
1996. The lower effective tax rate and associated tax benefit in 1996
were primarily due to the effects of the restructuring charge, the
non-deductible acquired in-process research and development charge and
non-deductible amortization of intangibles.
The Company reported net income for the first nine months of 1997 of
$16.4 million, or $0.53 per share compared to a net loss of $28.6
million or $0.93 per share for the same period in 1996. The
restructuring charge and the acquired in-process research and
development charge for the nine months ended September 30, 1996
reduced earnings by $1.80 per share and $0.26 per share, respectively.
<PAGE>
FINANCIAL CONDITION, CAPITAL RESOURCES AND LIQUIDITY
Cash flows provided by operating activities in the first nine months
of 1997 were $51.5 million compared to $67.0 million in 1996. The
primary uses of funds in the first nine months of 1997 were for the
reduction of short-term borrowings, capital expenditures, expenditures
related to long-term investment and other assets and dividends paid to
the Company's shareholders. Expenditures for property, plant and
equipment totaled $27.7 million in the first nine months of 1997,
compared to $22.1 million for the same period in 1996. In addition the
Company generated $24.4 million from the sales of property, plant and
equipment in the first nine months of 1997.
In April 1997, the Company's board of directors authorized the
repurchase of up to 1.5 million shares of the Company's outstanding
common stock. In May 1997, the Company paid $2.0 million to repurchase
100,000 shares.
The Company has unsecured lines of credit which provide for borrowings
up to $111.0 million. In the first nine months of 1997, the Company
reduced its borrowings under these lines by $43.0 million to zero. At
September 30, 1996, $69.3 million was outstanding under these lines of
credit.
On September 30, 1997, the Company had $9.5 million in cash and cash
equivalents. The Company believes that its current cash position,
funds from operations and the availability of funds under its lines of
credit will be sufficient to meet anticipated requirements for working
capital, dividends, capital expenditures and other corporate needs.
The Company also believes that it possesses sufficient unused debt
capacity and access to debt and equity capital markets to pursue
additional acquisition opportunities.
OUTLOOK
The Company is progressing through initiatives implemented in 1996 to
reduce the operating expense of producing and supplying check
services, improve quality and establish a platform for new services
particularly aimed at tying check products into marketing services and
making them an integral part of a financial institution's marketing
program. The Company's strategy to achieve these initiatives includes
standardizing products, centralizing and outsourcing customer service,
and consolidating and automating its manufacturing operations. Future
plans for the Company include developing and acquiring new technology
and businesses to enhance its product line.
The Company has a long-term agreement with APAC Teleservices, Inc.
("APAC"), to operate two state-of-the-art call centers for centralized
customer service for its check printing operations. All of the
customer service functions previously conducted in the Company's
imprint plants are now handled by these call centers. Management
anticipates that short-term inefficiencies experienced in these
centers and overlapping activities in the plants will continue until
planned process improvements and automation projects are fully
implemented.
The Company will continue to consolidate its core printing plants into
a network of regional facilities and incorporate advanced
manufacturing technology and systems into this network. A total of 17
facilities have closed in 1997, including four in the third quarter,
with three more scheduled to close by the end of the fourth quarter.
The remaining facilities scheduled for consolidation are anticipated
to close in 1998. Management expects to incur future restructuring
charges, predominantly related to employee severance.
<PAGE>
The Company may make further purchases of its common stock in cash on
the open market or in private transactions, which will be funded
through working capital and/or short-term borrowings. Shares held
under its repurchase program will be held in treasury, used for
acquisitions, used to finance the Company's employee benefits programs
or for other corporate purposes.
RISK FACTORS AND CAUTIONARY STATEMENTS
When used in this Form 10-Q and in subsequent filings by the Company
with the Securities and Exchange Commission, in the Company's press
releases and in written or oral statements made by authorized
representatives of the Company, the words or phrases "should result",
"are expected to", "will continue", "will approximate", "is
anticipated", "estimate", "project" or similar expressions are
intended to identify "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. These
statements are necessarily subject to certain risks and uncertainties,
including, but not limited to, those discussed below that could cause
actual results to differ materially from the Company's historical
experience and its present expectations or projections. Caution should
be taken not to place undue reliance on any such forward-looking
statements, which speak only as of the date such statements are made
and which may or may not be based on historical experiences and/or
trends which may or may not continue in the future. The Company does
not undertake and specifically declines any obligation to publicly
release the result of any revisions which may be made to any forward-
looking statements to reflect events or circumstances occurring after
the date of such statements or to reflect the occurrence of
unanticipated events.
Various factors may affect the Company's financial performance,
including, but not limited to, those factors discussed below and could
cause the Company's actual results for future periods to differ from
any opinions, statements or projections expressed with respect
thereto. Such differences could be material and adverse.
With regard to the rebuilding of the Company's print infrastructure,
there can be no assurances that the printing plant consolidation and
the centralization and outsourcing of customer service will occur
within the projected time frame or will result in the anticipated
quality improvements or projected costs savings. Many variables will
impact the ability to improve production efficiencies and reduce
redundant expenses. Such variables include, but are not limited to,
the ability to hire and train employees at the Company's regional
facilities, the development and implementation of new technology and
information systems used in the Company's production operations and
could impact the amount and timing of transition costs. Further, there
can be no assurance that the Company's historic trends related to
costs or profit margins will continue in the future. Many factors can
affect the Company's ability to achieve similar cost and profitability
trends, including, among other factors, revenue per unit, the ability
to secure similar materials prices and labor rates and to achieve
projected overhead cost savings. Competition among suppliers,
restricted supply of materials, labor and services, and other such
factors outside of the Company's control, may adversely affect prices
and may materially impact the Company's results.
Check revenues could be negatively impacted by several factors outside
the Company's control, including the continuing expansion of
alternative payment systems such as credit cards, debit cards and
other forms of electronic commerce or on-line payment systems. Check
revenues could also be adversely affected by competitive check pricing
and by the continuing consolidation of financial institutions, among
other factors. There can be no assurances that the Company will
<PAGE>
experience similar or higher revenue as achieved in prior years, or
that any targets or projections made relating to check revenues will
be achieved.
While the Company believes substantial growth opportunities exist in
Marketing Services, specifically in Decision Support software and
Direct Marketing, there can be no assurances that the Company will
achieve its growth targets. There are many variables relating to the
development of the next generation Decision Support software,
including the timing and costs of the development effort, the
viability of the product, product acceptance and competition. Also,
no assurance can be made as to the Company's ability to expand its
Direct Marketing business and meet projected growth targets.
From time to time, authorized representatives of the Company may make
predictions or forecasts regarding the Company's future results,
including estimated earnings. Any such forecast reflects various
assumptions, which are subject to significant uncertainties, many of
which may prove to be incorrect. Further, the achievement of any
forecast depends on numerous factors, many of which are beyond the
Company's control. As a result, there can be no assurance that the
Company's performance will be consistent with any management forecasts
or that the variation from such forecasts may not be material and
adverse. Accordingly, investors are cautioned not to base their entire
analysis of the Company's business and prospects upon isolated
predictions, but instead are encouraged to utilize the entire
available mix of historical and forward-looking information when
evaluating the Company. Further, there can be no assurance that a
review of both historical trends and predictions will necessarily lead
to the same results that may actually be experienced in the future.
In addition, authorized representatives of the Company may
occasionally comment on published projections by independent analysts
regarding the Company's future performance. Such comments should not
be interpreted as an endorsement or adoption of any given estimate or
range of estimates, or the assumptions and methodologies upon which
such estimates are based. The Company expressly disclaims any
continuing responsibility to advise analysts or the public markets of
its view regarding the current accuracy of the published estimates of
outside analysts. Persons relying on such estimates should pursue
their own independent investigation and analysis of their accuracy and
the reasonableness of the assumptions on which they are based and they
should also be aware that actual results could differ from such
estimates.
Generally speaking, the Company does not make public its own internal
projections, budgets or estimates. Undue reliance should not be placed
on any comments regarding the differences between such independent
estimates and the Company's own expectations regarding its future
operations. The methodologies employed by the Company in arriving at
its own internal projections and the approaches taken by independent
analysts in making their estimates may differ in many significant
respects. Although the Company may presently perceive a given estimate
to be reasonable, changes in the Company's business, market conditions
or the general economic climate may materially impact the results
obtained through the use of differing analyses and assumptions.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 130, "Reporting Comprehensive Income"
("SFAS 130") and issued Statement of Financial Accounting Standard No. 131,
"Disclosures about Segments of an Enterprise and Related Information"
("SFAS 131"). SFAS 130 establishes standards for the reporting and
displaying of comprehensive income and its components (revenues, expenses,
gains, and losses) in a full set of general-purpose financial statements.
<PAGE>
SFAS 131 establishes standards for the way that public business enterprises
report information about operating segments in annual financial statements
and requires that those enterprises report selected information about
operating segments in interim financial reports issued to shareholders. The
Company plans to adopt SFAS 130 and SFAS 131 in 1998. Management does not
expect SFAS 130 or SFAS 131 to have a significant impact on the
consolidated financial statements.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits
Reference No. Description of Exhibit
- ----------------------------------------------------------------
27 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports filed on Form 8-K for the three months ended
September 30, 1997.
Signatures
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 thereunto duly authorized.
JOHN H. HARLAND COMPANY
(Registrant)
November 14, 1997 William M. Dollar
Date: _________________ By:_____________________________
William M. Dollar
Vice-President, Finance and
Treasurer
(Principal Accounting Officer)
November 14, 1997 S. David Passman
Date: _________________ By:_____________________________
S. David Passman
Senior Vice-President and
Chief Financial Officer
(Principal Financial Officer)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's financial statements for the nine months ended September 30, 1997 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1997
<CASH> 9,459
<SECURITIES> 152
<RECEIVABLES> 68,938
<ALLOWANCES> 2,315
<INVENTORY> 25,225
<CURRENT-ASSETS> 123,687
<PP&E> 229,905
<DEPRECIATION> 126,411
<TOTAL-ASSETS> 404,728
<CURRENT-LIABILITIES> 87,707
<BONDS> 109,390
<COMMON> 37,907
0
0
<OTHER-SE> 155,553
<TOTAL-LIABILITY-AND-EQUITY> 404,728
<SALES> 421,056
<TOTAL-REVENUES> 421,056
<CGS> 243,869
<TOTAL-COSTS> 243,869
<OTHER-EXPENSES> 134,168
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,626
<INCOME-PRETAX> 28,109
<INCOME-TAX> 11,665
<INCOME-CONTINUING> 16,444
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,444
<EPS-PRIMARY> 0.53
<EPS-DILUTED> 0.53
<PAGE>
</TABLE>
