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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 21, 1999
Commission file number 1-5064
Jostens, Inc.
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(Exact name of Registrant as specified in its charter)
Minnesota 41-0343440
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(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) number)
5501 Norman Center Drive, Minneapolis, Minnesota 55437
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (612-830-3300)
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Item 5. Other Events
In a press release dated July 21, 1999, the company announced earnings
for the three and six months ended July 3, 1999. The news release is
attached as Exhibit 99 and incorporated by reference herein.
Item 7. Financial Statements and Exhibits
(c) Exhibits required by Item 601 of Regulation S-K
Exhibit No. Description
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99 Press release dated July 21, 1999
2
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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.
JOSTENS, INC.
Registrant
Date: July 21, 1999 By /s/ Robert C. Buhrmaster
-------------------------------------
Robert C. Buhrmaster
Chairman of the Board, President and
Chief Executive Officer
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EXHIBIT INDEX
Exhibit Description
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99 Press release dated July 21, 1999
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EXHIBIT 99
Contact: Lory Sutton (Media) 612-830-3229
Heide Erickson (Investors) 612-830-3332
FOR IMMEDIATE RELEASE
JOSTENS REPORTS EPS OF $1.14 IN SECOND-QUARTER,
UP 13 PERCENT FROM LAST YEAR
Second-Quarter Net Income Increases About 4 Percent on Steady Sales
MINNEAPOLIS, July 21, 1999 - Jostens Inc. (NYSE: JOS) today reported
second-quarter net income of $39 million, or $1.14 per diluted share, compared
with net income of $37.6 million, or $1.01 per diluted share, in the
year-earlier period. Sales in the quarter were $303.2 million, compared with
$298.9 million in the same period last year. Gross profit margin improved to
53.6 percent in the quarter, compared with 52.3 percent last year.
For the first half of the year, Jostens earned net income of $47.1
million, or $1.36 per diluted share, compared with $48.1 million, or $1.28 per
diluted share, a year earlier. Sales through the first half were $469.5 million,
versus $467.2 million a year ago. Gross profit margin improved to 55.4 percent
in the first half, up from 54.8 percent over the same period last year.
As announced earlier this month, the company's first-half results were
impacted by issues related to the installation of a new information system to
ensure year-2000 readiness in the Recognition segment.
"Our School Products segment had a strong spring delivery season.
Manufacturing performance was excellent, and although sales were a bit lower
than expected, operating income increased nicely," said Robert C. Buhrmaster,
chairman, president and chief executive officer. "The real performance issue was
in Recognition, where higher costs necessary to upgrade systems and fulfill
customer orders eroded first-half earnings by about 10 cents per share.
"Our business lines are on track to deliver full-year EPS in the $1.55
to $1.65 range. In addition, we are reviewing ways to improve our cost structure
and grow our business," he said.
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JOSTENS REPORTS SECOND QUARTER RESULTS/page 2
School Products Segment
The School Products Segment - a spring business that crosses the first
and second quarters comprises Printing & Publishing, Jewelry, Graduation
Products and North American Photography.
Second-quarter sales were $266.1 million, compared to $264.6 million
last year. Operating income in the quarter was $76.5 million, up 8.1 percent
from last year.
First-half sales were $408.9 million, compared with $402.7 million last
year. Operating income in the half improved 7.1 percent to $100.9 million,
driven by excellent manufacturing efficiencies and expense control throughout
the segment.
Despite price concessions to compensate for vendor-related start-up
issues in a home marketing program, Printing & Publishing had mid-single digit
sales increases for the first half.
Sales in the Graduation Products and Jewelry product lines were
affected by the loss of business from a group of sales representatives that left
the company in mid-1998. First-half sales in Graduation Products increased by
low single-digit rates, while Jewelry sales were down slightly versus a year
earlier.
"Our marketing efforts are focused on boosting consumer demand in
Jewelry, which typically does the majority of its annual sales in the second
half of the year," Buhrmaster said.
Recognition Segment
Sales in the quarter were $31.9 million, up from $28.8 million last
year. Operating income declined to $2 million, versus $3.6 million in the
year-earlier period. For the first half, sales were $53.5 million, compared with
$55.4 million a year ago. Year-to-date operating profit was $2.2 million, versus
$5.6 million last year.
"While an unacceptable systems installation affected Recognition's
results in the first half, the business did deliver better performance than we
expected in June," Buhrmaster said.
Other Segment
The Other Segment - which includes primarily corporate items - reported
second-quarter sales of $5.1 million, down from $5.5 million last year, and an
operating loss of $11.4 million, compared to $9.8 million last year.
-more-
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JOSTENS REPORTS SECOND-QUARTER RESULTS/page 3
First half sales declined to $7.1 million from $9 million last year, as
a result of soft performance in the company's direct-marketing unit for college
alumni. Higher systems expenses, mostly for the Recognition system, and market
test costs led to an operating loss of $21.5 million, compared with a loss of
$16.2 million last year.
Share Repurchase
Jostens also continued its ongoing share repurchase program in the
quarter, buying back 464,000 shares for $10 million. Since the current $100
million repurchase program began in January, Jostens has repurchased 1.1 million
shares for about $25 million.
Jostens is a leading provider of products, programs and services that
help people celebrate important moments, recognize achievements and build
affiliations. The company's products include yearbooks, class rings, graduation
products, school photography, achievement awards, and products for athletic
champions and their fans. Jostens had 1998 sales of $771 million.
Certain information in this news release does not relate to historical
financial information and may be deemed to constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
statements are subject to certain risks and uncertainties that could cause the
company's actual results in the future to differ materially from its historical
results and those presently anticipated or projected.
Among these risks and uncertainties are general economic conditions,
especially during peak buying seasons for the company's products and services;
competitive pricing and program changes; the company's relationship with its
sales force; the company's ability to respond to customer change orders and
delivery schedules; fashion and demographic trends; and the company's ability to
ship backlog and maintain its customer base. Other factors that could cause the
company's results to differ materially from those contained in its
forward-looking statements are included in the Jostens Annual Report on Form
10-K for 1998 and other documents recently filed by the company with the
Securities and Exchange Commission.
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<TABLE>
<CAPTION>
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Condensed Consolidated Statements of Operations
Jostens Inc. and Subsidiaries
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Three months ended Six months ended
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(unaudited) (unaudited)
July 3 July 4 July 3 July 4
In thousands, except per-share data 1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Net sales $303,161 $298,879 $469,519 $467,156
Cost of products sold 140,744 142,559 209,243 211,232
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Gross margin 162,417 156,320 260,276 255,924
Selling and administrative expenses 95,334 91,743 178,636 172,268
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Operating income 67,083 64,577 81,640 83,656
Net interest expense 1,459 1,331 2,498 2,622
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Income before income taxes 65,624 63,246 79,142 81,034
Income taxes 26,578 25,614 32,053 32,906
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Net income $ 39,046 $ 37,632 $ 47,089 $ 48,128
======================================================================================
Earnings per common share
Basic $ 1.14 $ 1.02 $ 1.37 $ 1.29
Diluted $ 1.14 $ 1.01 $ 1.36 $ 1.28
======================================================================================
Weighted average common shares outstanding
Basic 34,128 37,002 34,488 37,368
Diluted 34,208 37,202 34,590 37,551
======================================================================================
Dividends declared per common share $ 0.22 $ 0.22 $ 0.44 $ 0.44
======================================================================================
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</TABLE>
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Condensed Consolidated Balance Sheets
Jostens Inc. and Subsidiaries
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(unaudited)
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July 3 July 4 January 2
In thousands 1999 1998 1999
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ASSETS
CURRENT ASSETS
Short-term investments $ 8,405 $ 11,415 $ 2,595
Accounts receivable, net 129,379 119,947 106,347
Inventories 77,783 82,547 90,494
Other current assets 30,998 33,517 41,108
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Total current assets 246,565 247,426 240,544
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Other assets 41,801 62,619 36,976
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Property and equipment, net 89,071 80,362 88,647
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$377,437 $390,407 $366,167
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LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES
Notes payable $ 93,690 $ 69,920 $ 93,922
Accounts payable and accrued expenses 196,424 177,137 193,857
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Total current liabilities 290,114 247,057 287,779
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Other noncurrent liabilities 19,298 17,784 19,836
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Shareholders' investment 68,025 125,566 58,552
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$377,437 $390,407 $366,167
============================================================================
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5
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Condensed Consolidated Statements of Cash Flows
Jostens Inc. and Subsidiaries
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Six months ended
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(unaudited)
July 3 July 4
In thousands 1999 1998
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OPERATING ACTIVITIES
Net income $ 47,089 $ 48,128
Depreciation and amortization 12,794 12,314
Changes in assets and liabilities 7,411 (6,139)
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Net cash provided by operating activities 67,294 54,303
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INVESTING ACTIVITIES
Purchases of property and equipment (13,339) (17,576)
Equity investment (5,000) --
Other 654 --
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Net cash used for investing activities (17,685) (17,576)
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FINANCING ACTIVITIES
Net short-term borrowings (5,415) 18,376
Principle payments on long-term debt -- (11)
Dividends paid (15,231) (16,565)
Proceeds from exercise of stock options 1,854 1,534
Repurchases of common stock (25,007) (34,714)
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Net cash used for financing activities (43,799) (31,380)
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CHANGE IN SHORT-TERM INVESTMENTS 5,810 5,347
SHORT-TERM INVESTMENTS, BEGINNING OF PERIOD 2,595 6,068
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SHORT-TERM INVESTMENTS, END OF PERIOD $ 8,405 $ 11,415
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<TABLE>
<CAPTION>
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Financial Information by Reportable Business Segment
Jostens Inc. and Subsidiaries
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Three months ended Six months ended
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(unaudited) (unaudited)
July 3 July 4 July 3 July 4
In thousands 1999 1998 1999 1998
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<S> <C> <C> <C> <C>
NET SALES FROM EXTERNAL CUSTOMERS
School Products $ 266,135 $ 264,598 $ 408,923 $ 402,658
Recognition 31,938 28,768 53,536 55,445
Other 5,088 5,513 7,060 9,053
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CONSOLIDATED $ 303,161 $ 298,879 $ 469,519 $ 467,156
====================================================================================
OPERATING INCOME
School Products $ 76,484 $ 70,741 $ 100,942 $ 94,297
Recognition 2,033 3,602 2,162 5,625
Other (11,434) (9,766) (21,464) (16,266)
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Consolidated 67,083 64,577 81,640 83,656
Net interest expense (1,459) (1,331) (2,498) (2,622)
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INCOME BEFORE INCOME TAXES $ 65,624 $ 63,246 $ 79,142 $ 81,034
====================================================================================
</TABLE>
7
