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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996 COMMISSION FILE NUMBER 1-11802
[GRAPHIC OMITTED]
WORLD COLOR PRESS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 37-1167902
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
101 PARK AVENUE, NEW YORK, NEW YORK 10178
(Address of principal executive offices) (Zip Code)
212-986-2440
(Registrant's telephone number, including area code)
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 in the past 90 days. YES [X] No [ ]
At May 10, 1996, 33,749,717 shares of the registrant's common stock, $.01 par
value, were outstanding.
<PAGE>
WORLD COLOR PRESS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
INDEX
Page
PART I. FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets as of
March 31, 1996 and December 31, 1995...................................3
Condensed Consolidated Statements of
Operations for the Three Months ended March 31, 1996 and
April 2, 1995..........................................................4
Condensed Consolidated Statements of Cash Flows for
the Three Months ended March 31, 1996 and April 2, 1995................5
Notes to Condensed Consolidated Financial
Statements.........................................................6 - 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations................................8 - 9
PART II. OTHER INFORMATION.................................................10
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WORLD COLOR PRESS, INC.
PART I. FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
ASSETS 1996 1995
(Unaudited) (Note)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 10,911 $ 8,902
Accounts receivable - net 216,479 218,022
Inventories 111,651 130,369
Deferred income taxes 29,354 28,364
Other 7,600 11,060
-------------- -------------
Total current assets 375,995 396,717
-------------- -------------
NONCURRENT ASSETS:
Property, plant and equipment, at cost 935,657 924,300
Accumulated depreciation and amortization (459,479) (443,879)
--------------- -------------
Property, plant and equipment - net 476,178 480,421
Goodwill - net 249,261 249,473
Other 25,799 24,117
-------------- -------------
Total noncurrent assets 751,238 754,011
-------------- -------------
TOTAL ASSETS $ 1,127,233 $ 1,150,728
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 180,657 $ 198,522
Current maturities of long-term debt 41,959 37,360
-------------- -------------
Total current liabilities 222,616 235,882
-------------- -------------
NONCURRENT LIABILITIES:
Long-term debt 425,650 449,746
Deferred income taxes 12,228 9,258
Other long-term liabilities 93,094 97,076
-------------- -------------
Total noncurrent liabilities 530,972 556,080
-------------- -------------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value - authorized, 100,000,000 shares at March 31,
1996 and December 31, 1995; shares issued and outstanding,
33,749,717 at March 31, 1996 and 32,218,427 at December 31, 1995 337 322
Additional paid-in capital 583,756 574,831
Accumulated deficit (210,448) (216,387)
--------------- -------------
Total stockholders' equity 373,645 358,766
-------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,127,233 $ 1,150,728
============== =============
</TABLE>
Note: Derived from audited financial statements
See notes to condensed consolidated financial statements.
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WORLD COLOR PRESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1996 AND APRIL 2, 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS
1996 1995
<S> <C> <C>
NET SALES $ 329,111 $ 275,399
COST OF SALES 276,825 231,965
-------- -------------
GROSS PROFIT 52,286 43,434
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 32,304 28,700
-------- -------------
OPERATING INCOME 19,982 14,734
INTEREST EXPENSE 10,084 7,375
-------- -------------
INCOME BEFORE INCOME TAXES 9,898 7,359
INCOME TAX PROVISION 3,959 2,944
-------- -------------
NET INCOME $ 5,939 $ 4,415
========== ===========
Net income per common and common equivalent share $ 0.17 $ 0.13
Weighted average common and
common equivalent shares outstanding 34,827,689 34,440,867
</TABLE>
See notes to condensed consolidated financial statements.
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WORLD COLOR PRESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1996 AND APRIL 2, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 5,939 $ 4,415
Adjustments to reconcile net income to net cash
flows provided by (used in) operating activities:
Depreciation and amortization 19,962 16,140
Deferred income tax provision 1,980 1,839
Amortization of debt issuance costs 462 493
Changes in operating assets and liabilities:
Accounts receivable - net 1,543 (8,588)
Inventories 18,718 (30,619)
Accounts payable and accrued expenses (17,865) 11,773
Other assets and liabilities, net (3,112) (16,114)
------------ ------------
Net cash flows provided by (used in) operating activities 27,627 (20,661)
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INVESTING ACTIVITIES:
Additions to property, plant and equipment - net (12,061) (69,950)
Acquisitions of businesses, net of cash acquired (3,000) (107,643)
------------ ------------
Net cash used in investing activities (15,061) (177,593)
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FINANCING ACTIVITIES:
Net borrowings (repayments) on debt (19,497) 180,055
Proceeds from issuance of common stock 8,940 66
------------ -----------
Net cash provided by (used in) financing activities (10,557) 180,121
------------ -----------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 2,009 (18,133)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 8,902 24,828
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 10,911 $ 6,695
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
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WORLD COLOR PRESS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
1. BASIS OF PRESENTATION
The accompanying condensed consolidated interim financial statements have
been prepared by World Color Press, Inc. (along with its subsidiaries,
the "Company") pursuant to the rules and regulations of the Securities
and Exchange Commission and reflect normal and recurring adjustments,
which are, in the opinion of the Company, considered necessary for a fair
presentation. As permitted by these regulations, these statements do not
include all information required by generally accepted accounting
principles to be included in an annual set of financial statements,
however, the Company believes that the disclosures made are adequate to
make the information presented not misleading. It is suggested that these
condensed consolidated financial statements be read in conjunction with
the consolidated financial statements and the notes thereto included in
the Company's latest Annual Report on Form 10-K.
Certain reclassifications have been made to prior period amounts to
conform with the current presentation.
2. INVENTORIES
Inventories are summarized as follows:
MARCH 31, DECEMBER 31,
1996 1995
Work-in-process $ 31,890 $ 34,366
Raw materials 79,761 96,003
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Total $ 111,651 $ 130,369
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3. INITIAL PUBLIC OFFERING
On January 25, 1996, 15,861,568 shares of the Company's common stock were
sold at $19 per share in an initial public equity offering (the
"Offering"). All of the shares in the Offering were sold by existing
stockholders. The Company did not receive any of the proceeds from the
sale of the shares, except that certain members of former management
elected to participate in the Offering by exercising certain stock
options granted to them by the Company. An aggregate of 1,531,290 shares
underlying such options were sold in the Offering, generating proceeds to
the Company of $8,940. These proceeds were used to pay expenses of the
Offering and for general corporate purposes.
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WORLD COLOR PRESS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
4. SUBSEQUENT EVENT
On April 25, 1996, the Company entered into a definitive agreement to
acquire the outstanding stock of Ringier America, a leading diversified
commercial printer whose business includes the printing of catalogs,
magazines and soft-cover books, for approximately $415,000, including
indebtedness. The transaction is subject to certain conditions including,
among others, regulatory approvals and completion of financing. The
Company expects to complete arrangements with its bank group during the
second quarter of 1996 to expand its credit facilities, primarily to
finance this acquisition.
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WORLD COLOR PRESS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
GENERAL
In March 1995 the Company purchased The Lanman Companies, Inc. and its
subsidiaries, a group of graphic communications companies, Northeast Graphics
Inc., a national commercial printer, and The Wessel Company, Inc., a national
commercial printer of direct marketing materials. Collectively, these acquired
companies will hereinafter be referred to as the "1995 Acquisitions."
Results of operations for this interim period are not necessarily indicative of
results for the full year. The Company's operations are seasonal. Historically,
approximately two-thirds of its operating income has been generated in the
second half of the fiscal year.
RESULTS OF OPERATIONS
Three Months Ended March 31, 1996 versus Three Months Ended April 2, 1995
Net sales increased $53,712 or 19.5%, to $329,111 in 1996 from $275,399 in 1995.
Approximately 12% of the percentage increase was attributable to the 1995
Acquisitions, with the balance resulting from higher paper prices and continued
volume growth.
Gross profit increased $8,852 or 20.4% to $52,286 in 1996 from $43,434 in 1995.
The increase is attributable to the 1995 Acquisitions, increased volume and
improved operating efficiencies. The first quarter 1996 gross profit margin of
15.9% was up slightly from the same period in 1995, due to the above factors,
partially offset by the effect of the higher paper prices.
Selling, general and administrative expenses increased $3,604 or 12.6% to
$32,304 in 1996 from $28,700 in 1995. The increase is partially attributable to
the 1995 Acquisitions, including the related additional amortization expense for
goodwill, as well as increased selling expenses related to higher volume.
Interest expense increased $2,709 or 36.7% to $10,084 in 1996 from $7,375 in
1995. The increase is attributable to an increase in average borrowings
primarily incurred to fund the 1995 Acquisitions, capital expenditures and
working capital requirements, along with a higher average cost of funds.
The effective tax rates for the first quarter of 1996 and 1995 were 40%, and
were primarily composed of the combined federal and state statutory rates.
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<PAGE>
WORLD COLOR PRESS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
LIQUIDITY AND CAPITAL RESOURCES
On January 25, 1996, 15,861,568 shares of the Company's common stock were sold
at $19 per share in an initial public equity offering (the "Offering"). All of
the shares in the Offering were sold by existing stockholders. The Company did
not receive any of the proceeds from the sale of the shares, except that certain
members of former management elected to participate in the Offering by
exercising certain stock options granted to them by the Company. An aggregate of
1,531,290 shares underlying such options were sold in the Offering, generating
proceeds to the Company of $8,940. These proceeds were used to pay expenses of
the Offering and for general corporate purposes.
Net income from operations plus depreciation and amortization and deferred
income taxes was $28,343 and $22,887 for the three months ended March 31, 1996
and April 2, 1995, respectively. The Company's outstanding indebtedness less
cash decreased $21,506 from December 31, 1995 to March 31, 1996 as a result of
operating cash flow and proceeds from the issuance of common stock upon the
exercise of stock options in connection with the Offering, partially offset by
the funding of capital expenditures. Inventory levels decreased $18,718 or 14.4%
in the first quarter of 1996, reflecting a decline in the price of paper and its
return to a more normalized availability. The Company anticipates that 1996
capital expenditures will be approximately $75,000 for the full year. As of
March 31, 1996, the Company had undrawn commitments of $74,300 under its
acquisition term loan facility and $70,471 under its revolving bank credit
facility.
During the period ended March 31, 1996, the Company acquired a business. The
contribution of this business was not significant to the Company's results of
operations for the period presented, nor is it expected to have a material
effect on the Company's results on a continuing basis.
On April 25, 1996, the Company entered into a definitive agreement to acquire
the outstanding stock of Ringier America, a leading diversified commercial
printer whose business includes the printing of catalogs, magazines and
soft-cover books, for approximately $415,000, including indebtedness. The
transaction is subject to certain conditions including, among others, regulatory
approvals and completion of financing. The Company expects to complete
arrangements with its bank group during the second quarter of 1996 to expand its
credit facilities, primarily to finance this acquisition.
The Company believes that its liquidity, capital resources and cash flows are
sufficient to fund planned capital expenditures, working capital requirements
and interest and principal payments for the foreseeable future.
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<PAGE>
WORLD COLOR PRESS, INC.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibits required in accordance with Item 601 of Regulation S-K are
incorporated by reference herein as filed with registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995, dated
March 30, 1996.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarterly period ended
March 31, 1996.
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.
WORLD COLOR PRESS, INC.
Date: May 10, 1996 By: /s/ MARC L. REISCH
-------------------
Marc L. Reisch
Executive Vice President,
Chief Operating and Financial
Officer and Treasurer
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
WORLD COLOR PRESS, INC.
FINANCIAL DATA SCHEDULE
FOR THE QUARTER ENDED MARCH 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF WORLD COLOR PRESS,
INC. AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-END> MAR-31-1996
<CASH> 10,911
<SECURITIES> 0
<RECEIVABLES> 216,479
<ALLOWANCES> 0
<INVENTORY> 111,651
<CURRENT-ASSETS> 375,995
<PP&E> 935,657
<DEPRECIATION> 459,479
<TOTAL-ASSETS> 1,127,233
<CURRENT-LIABILITIES> 222,616
<BONDS> 425,650
0
0
<COMMON> 337
<OTHER-SE> 373,308
<TOTAL-LIABILITY-AND-EQUITY> 1,127,233
<SALES> 329,111
<TOTAL-REVENUES> 329,111
<CGS> 276,825
<TOTAL-COSTS> 276,825
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,084
<INCOME-PRETAX> 9,898
<INCOME-TAX> 3,959
<INCOME-CONTINUING> 5,939
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,939
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.17
</TABLE>
