FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 28, 1996
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 33-96680
HERFF JONES, INC.
- --------------------------------------------------------------------------------
(Exact Name of registrant as specified in its charter)
INDIANA 35-1637714
- --------------------------------------------------------------------------------
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
4501 West 62nd Street, Indianapolis, Indiana 46268
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(317) 297-3740
- --------------------------------------------------------------------------------
(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 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.
Number of shares outstanding of the issuer's Common Stock as of November 8,1996:
Class
Common Stock, without par value 9,618,996
<PAGE>
INDEX
Part I. - Financial Information Page No.
--------
Condensed Consolidated Statement of Operations -
First Quarter Ended September 28, 1996
and September 30, 1995 3
Condensed Consolidated Balance Sheet -
As of September 28, 1996, June 29, 1996
and September 30, 1995 4
Condensed Consolidated Statement of Cash Flows -
First Quarter Ended September 28, 1996
and September 30, 1995 5
Notes to Condensed Consolidated
Financial Statements 6 - 8
Management's Discussion and Analysis of
Financial Condition and
Results of Operations 9 - 12
Part II. - Other Information 13
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
Part I - Financial Information
Herff Jones, Inc.
Condensed Consolidated Statement of
Operations
(Amounts in thousands of dollars, except
per share data)
(Unaudited)
First Quarter Ended
---------------------------------------
September 28, 1996 September 30, 1995
------------------ ------------------
Net sales $ 46,656 $ 43,543
Cost of sales (excludes
ESOP compensation) 30,122 26,339
Selling, general, and
administrative expenses
(excludes ESOP compensation) 20,441 19,178
ESOP compensation
Current year service 4,058 2,760
Prior year service -- 4,033
----------- -----------
Income (loss) from operations (7,965) (8,767)
Interest income 5 617
Interest expense 4,977 3,506
----------- -----------
Income (loss) before
income taxes and
extraordinary item (12,937) (11,656)
Income taxes 4,593 4,441
----------- -----------
Net income (loss) before
extraordinary item (8,344) (7,215)
Extraordinary item: Prepayment
fee on the senior ESOP notes -- (5,884)
retirement, less applicable
tax benefit of $3,621
----------- -----------
Net income (loss) $ (8,344) $ (13,099)
=========== ===========
Income (loss) per common share $ (4.48) $ (10.01)
=========== ===========
Weighted average number of
common shares
outstanding, pro-forma for
periods prior to
August 22, 1995 1,863,248 1,308,519
=========== ===========
See accompanying notes to unaudited condensed consolidated financial statements.
<PAGE>
Herff Jones, Inc.
Condensed Consolidated Balance Sheet
As of September 28, 1996, June 29, 1996, and September 30, 1995
(Amounts in thousands of dollars)
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
September June September
28, 1996 29, 1996 30, 1995
------------ ----------- ------------
Assets:
Current Assets
<S> <C> <C> <C>
Cash and cash equivalents $ 643 $ 8,680 $ 1,792
Accounts receivable 39,018 54,066 33,545
Inventories 41,127 36,941 37,332
Prepaid expense 7,585 2,651 6,422
Deferred income taxes 5,321 5,321 2,412
--------- --------- ---------
Total Current Assets 93,694 107,659 81,503
Non-Current Assets
Property, plant, and equipment 89,408 87,741 73,701
Accumulated depreciation (40,095) (38,700) (35,404)
--------- --------- ---------
Net Property, Plant,
and Equipment 49,313 49,041 38,297
Deferred financing cost, net and
other assets 5,363 5,603 6,552
--------- --------- ---------
Total Non-Current Assets 54,676 54,644 44,849
Total Assets $ 148,370 $ 162,303 $ 126,352
========= ========= =========
Liabilities and Shareholders' Equity:
Current Liabilities
Trade accounts payable $ 8,759 $ 7,541 $ 7,029
Salaries and wages payable 4,986 4,068 3,108
Interest payable 1,900 5,157 1,711
Customer deposits 12,175 19,856 10,677
Commissions payable 2,531 14,857 2,156
Income taxes accrued (4,596) 3,200 (7,562)
Other accrued liabilities 7,926 9,749 8,760
Current portion of long-term debt 54,053 22,315 45,646
--------- --------- ---------
Total Current Liabilities 87,734 86,743 71,525
Non-Current Liabilities
Other 2,247 2,247 2,085
Long-term debt 162,928 173,574 178,600
Deferred income taxes 81 81 (401)
--------- --------- ---------
Total Non-Current Liabilities 165,256 175,902 180,284
Total Liabilities 252,990 262,645 251,809
Shareholders' Equity (Deficit)
Common stock 5,728 5,728 5,745
Retained earnings 111,181 119,525 106,323
Deferred compensation (218,824) (222,953) (235,299)
Foreign currency translation 12 11 26
Excess of cost over market
(shares committed to be released) (2,717) (2,653) (2,252)
--------- --------- ---------
Total Shareholders' Equity (Deficit) (104,620) (100,342) (125,457)
Total Liabilities and Shareholders' Equity (Deficit) $ 148,370 $ 162,303 $ 126,352
========= ========= =========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
<PAGE>
Herff Jones, Inc.
Consolidated Statement of Cash Flows
(Amounts in thousands of dollars)
(Unaudited)
Three Months Ended
---------------------------
September September
28, 1996 30, 1995
----------- -----------
Cash flows from operating activities:
Net income (loss) (8,344) (13,099)
Adjustments to reconcile net income to net
cash (used) provided by operating activities:
Depreciation and amortization 1,697 1,313
Amortization and write off of financing cost 240 295
ESOP compensation (before
dividend exclusion) 4,029 7,094
Tax benefit of ESOP shares
(cost over market) 36 878
Other 1 20
(Gain) loss on disposal of
property, plant and equipment, net (1) (6)
Increase (decrease) in cash generated by
changes in assets and liabilities
Accounts receivable 15,048 18,563
Inventories (4,186) (4,012)
Prepaid expenses (4,934) (4,926)
Trade accounts payable 1,218 2,624
Salaries and wages 918 (731)
Interest payable (3,257) (1,711)
Customer deposits (7,681) (4,209)
Commissions payable (12,326) (12,526)
Income taxes payable (7,796) (17,990)
Deferred income taxes -- 1
Other accrued liabilities (1,823) 508
Other assets -- (28)
--------- ---------
Total adjustments (18,817) (14,843)
--------- ---------
Net cash (used) provided by operating activities $ (27,161) $ (27,942)
Cash flows from investing activities:
Proceeds from disposal of property,
plant and equipment 4 55
Capital expenditures (1,972) (1,076)
Sale of marketable securities -- 6,219
--------- ---------
Net cash (used) provided by investing activities $ (1,968) $ 5,198
Cash flows from financing activities:
Purchase of shares by the ESOP trust -- (188,278)
Premium on stock redemption -- (3)
Dividends declared -- (2,687)
Increase in revolver, net 29,299 12,120
Recapitalization financing cost -- (5,854)
Payment of long-term debt (2,250) --
Advance term payment (5,957) --
New borrowings -- 204,526
Prepayment of senior ESOP notes -- (69,826)
--------- ---------
Net cash (used) provided in financing activities $ 21,092 $ (50,002)
Cash and cash equivalents:
Net increase (decrease) (8,037) (72,746)
Beginning of period 8,680 74,538
========= =========
End of period $ 643 $ 1,792
========= =========
See accompanying notes to unaudited condensed consolidated financial statements.
<PAGE>
Part I - Financial Information
Notes to Unaudited Condensed Consolidated Financial Statements
Three Months Ended September 28, 1996
(Amounts in thousands of dollars)
Note 1 - Adjustments
The unaudited condensed consolidated financial statements presented
herein have been prepared by the Company and contain all adjustments
(consisting of only normal recurring adjustments) necessary to present
fairly the Company's financial position as of September 28, 1996, and
the results of its operations and cash flows for the quarter ended
September 28, 1996. These unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principals for complete
financial statements.
The significant accounting policies followed by the Company are set
forth in Note (3) of the Company's consolidated financial statements
for the year ended June 29, 1996, which have been included in the
Company's Form 10-K which was filed on September 24, 1996. Statement of
Financial Accounting Standards No. 121 "Accounting for Impairment of
Long Lived Assets and Long Lived Assets to be Disposed of" was adopted
by the Company on June 30, 1996 with no material impact on results of
operations. The Company has restated certain prior year items to
conform to the current year presentation.
During the first quarter of fiscal 1996, the Herff Jones, Inc. Employee
Stock Ownership Plan (ESOP) purchased substantially all remaining
shares (6,724,200) of common stock held by shareholders other than the
ESOP.
The Company issued Series A Notes and used the proceeds, along with
borrowings under the New Credit Agreement and internally generated cash
from operations, to fund the purchase of outstanding shares of common
stock by the ESOP and to prepay the Senior ESOP Notes. In prepaying the
Senior ESOP Notes, the Company incurred a prepayment fee of $5,884 net
of the applicable tax benefit.
The Company utilizes a 52/53 week fiscal year for accounting purposes
ending on the last Saturday in June. Fiscal 1996 contained 53 weeks
with the additional week included in the first quarter ended September
30, 1995. Fiscal 1997 will contain 52 weeks.
Because of the seasonality of the Company's business, operating results
on a quarterly basis are not indicative of operating results for the
full year. Historically, the first fiscal quarter is the lowest sales
quarter, while the fourth fiscal quarter is the highest, typically
including over 40% of the year's sales.
Note 2 - Allowance for Doubtful Accounts and Returns
September 28, 1996 June 29, 1996 September 30, 1995
------------------ ------------- ------------------
$ 3,304 $ 4,883 $ 1,279
<PAGE>
Note 3 - Inventories
The components of inventory balances are summarized below:
September 28, June 29, September 30,
1996 1996 1995
------------- -------- -------------
Raw materials and supplies
(includes gold) $19,278 $16,017 $16,588
Work-in-process 13,197 13,008 12,789
Finished goods 8,652 7,916 7,955
------- ------- -------
$41,127 $36,941 $37,332
======= ======= =======
Note 4 - Financing
September 28, June 29, September 30,
1996 1996 1995
------------- -------- -------------
Long-Term Debt consists
of the following:
Senior Bank
Facility (Revolver) $ 44,338 $ 15,039 $ 36,646
Senior Bank
Facility (Term) 45,043 53,250 60,000
Senior Subordinated
Notes 120,000 120,000 120,000
1994 Industrial Development
Revenue Bonds Due in 2019 7,600 7,600 7,600
--------- --------- ---------
216,981 195,889 224,246
Less: Current Portion (54,053) (22,315) (45,646)
--------- --------- ---------
Long-Term Debt $ 162,928 $ 173,574 $ 178,600
========= ========= =========
In the first quarter ended, September 28, 1996, the Company (pursuant to the
credit agreement underlying the Senior Bank Facility) made a required advance
payment on the Term Loan of $5,957. This was in addition to the year one
scheduled amortization payments made of $9,000. The subsequent scheduled
payments on the Term Loan are adjusted down pro rata by this advance payment.
Note 5 - Common Stock
September 28, June 29, September 30,
1996 1996 1995
------------- -------- -------------
Common Shares
Authorized 16,500,000 16,500,000 16,500,000
Outstanding 9,618,996 9,618,996 9,640,356
<PAGE>
Note 5 - Common Stock (Con't)
Pursuant to the August 22, 1995 recapitalization plan in which the ESOP
purchased substantially all remaining shares of common stock held by
shareholders other than the ESOP, the weighted average number of common
shares outstanding was calculated on a pro forma basis assuming the
recapitalization occurred at June 25, 1995. The number of common shares
outstanding immediately after the recapitalization took place was
1,236,494. This number has been used as the pro forma weighted average
number of common shares outstanding for the first one and a half months
of fiscal 1996.
The actual weighted average number of common shares outstanding for the
first quarter ended September 30, 1995 was 5,406,506. The actual loss
per common share for the first quarter ended September 30, 1995 was
($2.42).
Note 6 - Statement of Shareholders' Equity
<TABLE>
<CAPTION>
Foreign Total
Common Stock Retained Currency Deferred Excess Cost Shareholders'
Shares Amount Earnings Translation Compensation Over Market Equity
------ ------ -------- ----------- ------------ ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance June 29, 1996 9,618,996 $5,728 $119,525 $11 ($222,953) ($2,653) ($100,342)
Tax benefit of cost over market of
ESOP shares committed to be
released - - - - - 36 36
Foreign currency translation
adjustment 1 1
Shares committed to be released - - - - 4,129 (100) 4,029
Net income for the quarter - - (8,344) - - - (8,344)
--------- ------ -------- --- --------- ------- ---------
Balance September 28, 1996 9,618,996 $5,728 $111,181 $12 ($218,824) ($2,717) ($104,620)
========= ====== ======== === ========= ======= =========
</TABLE>
Excess of cost over market represents the cumulative difference between the
market value of shares committed to be released and the cost of those shares to
the ESOP, net of tax effects.
<PAGE>
HERFF JONES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Herff Jones is one of the leading manufacturers of recognition awards,
educational products and graduation-related products for the scholastic market
in the United States. Its product lines include class rings, medals and awards,
diplomas and graduation announcements (also referred to as "fine paper"),
yearbooks, caps and gowns, school photography services and multimedia education
products. The Company historically has sold approximately 80% of its products to
the high school and elementary market and approximately 20% of its products to
the college and commercial or non-scholastic market through a network of
approximately 700 primarily independent sales representatives. The Company
believes that the Herff Jones name is widely recognized in schools and
universities nationwide.
RECAPITALIZATION
Pursuant to a plan of recapitalization adopted by the Company's Board
of Directors in May 1995 and effective as of August 22, 1995, (a) the Company's
outstanding shares in three classes of common stock were converted to a single
class of Common Stock on a share-for-share basis, (b) the Company-sponsored ESOP
trust purchased substantially all of the shares of Common Stock so converted
held by shareholders other than the ESOP, (c) the ESOP borrowed approximately
$188.3 million from the Company (the "ESOP Loan") to fund its purchase of Common
Stock and (d) the Company used the proceeds of the offering of the Senior
Subordinated Notes ("Notes"), along with borrowings under the New Credit
Agreement and internally generated cash from operations, to fund the ESOP Loan
and to prepay the Senior ESOP Notes. In prepaying the Senior ESOP Notes, the
Company incurred a prepayment fee of $5.9 million, net of the applicable tax
benefit.
In connection with the forgoing transactions (the "ESOP Transactions"),
the Company entered into the New Credit Agreement pursuant to which a group of
financial institutions have provided the Company with a new $120.0 million
credit facility, which includes a $60.0 million senior secured term loan (the
"Term Loan") and a $60.0 million senior secured revolving credit facility (the
"Revolving Credit Facility"), which includes a letter of credit facility with a
$12.0 million sublimit. The Term Loan and the Revolving Credit Facility have a
final maturity of September 30, 2000. The Company incurred significant financing
costs, which have been deferred as other assets and will be charged to expense
over the life of the related debt instruments.
As a result of the issuance of the Notes and the incurrence of
additional indebtedness under the New Credit Agreement to effect the ESOP
Transactions, as well as anticipated working capital borrowings, the Company's
interest expense increased significantly in fiscal 1996 and such higher interest
expense is expected to continue for a number of years.
<PAGE>
RESULTS OF OPERATIONS
The Company utilizes a 52/53 week year for accounting purposes. Fiscal
1996 contained 53 weeks and the additional week was included in the first
quarter ended September 28, 1996. Fiscal 1997 will contain 52 weeks. The
Company's business is highly seasonal. Historically, sales in the first fiscal
quarter are at the lowest level of the year and as a result the first quarter
produces operating losses. However, because of the seasonality of the Company's
business, operating results on a quarterly basis are not necessarily indicative
of operating results for the full year.
For the first quarter ended September 28, 1996 and September 30, 1995.
General. Net sales rose 7.2% to $46.7 million in fiscal 1997 from $43.5
million in fiscal 1996. Operating losses decreased to $8.0 million in fiscal
1997 from $8.8 million in fiscal 1996. Net losses before the extraordinary item
increased to $8.3 million in fiscal 1997 from $7.2 million in fiscal 1996. Net
losses after the extraordinary item decreased to $8.3 million in fiscal 1997
from $13.1 million in fiscal 1996.
Net Sales. Net sales increased $3.2 million or 7.2% to $46.7 million in
fiscal 1997 from $43.5 million in fiscal 1996. Such increases were due to sales
from Delmar, which was acquired as of April 29, 1996, of $4.4 million, partially
offset by lower sales in the yearbook and photography product lines, due to the
timing of shipments.
Cost Of Sales. Cost of sales increased $3.8 million or 14.4% to $30.1
million in fiscal 1997 from $26.3 million in fiscal 1996, primarily as a
function of increased sales and costs associated with Delmar. Cost of sales as a
percentage of sales increased to 64.6% in fiscal 1997 from 60.5% in fiscal 1996,
primarily because of higher manufacturing costs at Delmar.
Selling, General And Administrative Expenses. Selling, general and
administrative expense increased $1.2 million or 6.6% to $20.4 million in fiscal
1997 from $19.2 million in fiscal 1996. The increase was attributable to an
increase in the Company's commission expense resulting from increased net sales
in fiscal 1997 coupled with increases to selling, general and administrative
expense spending related to Delmar. Selling, general and administrative expense
as a percentage of sales remained relatively consistent at 43.8% in fiscal 1997,
down slightly from 44.0% in fiscal 1996.
ESOP Compensation. ESOP compensation decreased $2.7 million to $4.1
million in fiscal 1997 from $6.8 million in fiscal 1996. The ESOP Transactions,
which were completed during fiscal 1996, resulted in a significant increase in
the number of shares to be allocated to employee accounts effective each
December 31 from 1995 through 2009. In fiscal 1996, the shares allocated
effective December 31, 1995 related to service rendered by employees during
calendar 1995. ESOP compensation expense for the quarter ended September 30,
1995 included $4.0 million related to employee service rendered in the prior
fiscal year. Excluding the fiscal 1996 amount relating to fiscal 1995 service,
ESOP compensation expense increased $1.3 million due to an increase in the
market value of the shares and the lack of a current quarter dividend.
Loss from Operations. Operating losses decreased $.8 million to a loss
of $8.0 million in fiscal 1997 from a loss of $8.8 million in fiscal 1996. The
decreased loss was predominantly due to the decrease in ESOP compensation
expense as discussed above, partially offset by increased seasonal losses
related to Delmar.
<PAGE>
Interest Expense. Interest expense increased $1.5 million to $5.0
million in the first quarter of fiscal 1997 from $3.5 million in the
corresponding quarter of fiscal 1996 due to a full quarter of increased debt
associated with the recapitalization.
Income Tax Benefit. Income taxes increased to a benefit of $4.6 million
in fiscal 1997 from $4.4 million in fiscal 1996, due to the increase in the loss
before income taxes and the extraordinary item, partially offset by a lower
fiscal 1997 effective tax rate.
Extraordinary Item. In fiscal 1996 the Company incurred a prepayment
fee of $5.9 million, net of the applicable tax benefit, on the retirement of the
Senior ESOP Notes.
Net Loss. The first quarter net loss decreased to $8.3 million from
$13.1 million in fiscal 1996. The decreased loss was primarily attributable to
the decrease in ESOP compensation expense and the fiscal 1996 extraordinary
item, as discussed above, partially offset by increased seasonal losses related
to Delmar, increased interest expense due to the increased debt, and the virtual
elimination of interest income in the current year.
FINANCIAL CONDITION AND LIQUIDITY
The Company's business is highly seasonal. Historically the first
quarter requires the use of working capital due to losses from operations,
caused by relatively low shipping of product; the absorption of fixed costs that
are incurred evenly throughout the year; the build up of inventories for the
pre-Christmas photography and class ring activity; the payment of the Company's
income taxes from the previous fiscal year; and the settlement of commission
accounts with the Company's independent sales representatives. This is partially
offset by the reduction of accounts receivable resulting from payment for
products shipped prior to graduations in the fourth quarter of the previous
fiscal year.
Beginning in the first quarter of fiscal 1996, the recapitalization
described previously significantly changed the Company's financial condition,
adding substantial indebtedness and resulting in a deficit shareholders' equity
position. The cash flow pattern and expectations of the Company's highly
seasonal business result in the classification, at September 28, 1996, of $44.3
of the senior bank facility (revolver) as a current liability, although payment
within the next year is not necessarily required by the terms of the Company's
financing arrangements.
Capital expenditures were $2.0 million and $1.1 million in the first
quarter of fiscal 1997 and 1996, respectively. The increase over the prior year
is attributable to increased expenditures in the Photography and Education
product lines.
In the first quarter of 1997, a dividend was not paid. It is projected
that fiscal 1997 dividends will be paid in December and June. A $0.35 per share
dividend was paid during the first quarter of fiscal 1996, totaling $3.4
million. Approximately $1.0 million of the $3.4 million of fiscal 1996 dividends
was paid to the ESOP trust, which used those funds to make payments on its loan
from the Company.
Income taxes accrued are a negative $4.6 million at September 28, 1996
compared to $3.2 million at June 29, 1996 and a negative $7.6 million at
September 30, 1995. The decrease from June is the result of the payment of taxes
for the prior fiscal year, coupled with the provision for the tax benefit
associated with the seasonal losses this year. The decreased tax benefit at the
end of first quarter compared to the prior year first quarter end is the result
of the lower pre-tax loss in this fiscal year compared to the combined pre-tax
loss and pre-tax extraordinary item in the prior fiscal year.
<PAGE>
For the three months ended September 28, 1996, cash and cash
equivalents declined $8.0 million to $.6 million as compared to a decrease of
$72.7 million to $1.8 million for the three months ended September 30, 1995. The
decrease in the decline was primarily the result of funding the ESOP trust's
purchase of substantially all remaining outstanding shares of the Company's
stock in first quarter of fiscal 1996.
Cash used in operating activities was $27.2 million in the quarter
ended September 28, 1996, compared to $27.9 million in the quarter ended
September 30, 1995, as described below.
Net losses were $8.3 million in the first quarter of fiscal 1997
compared to $13.1 million in fiscal 1996. The primary causes for the decreased
loss were decreases in ESOP compensation (which is a non-cash expense) and the
fiscal 1996 extraordinary item charge .
Accounts receivable decreased $15.0 million in the first quarter of
fiscal 1997 compared to a decline of $18.6 million in fiscal 1996. The reduction
in the decline was primarily the result of increased sales and additional
accounts receivable balances related to Delmar in the first quarter of fiscal
1997 compared with fiscal 1996.
Customer deposits decreased $7.7 million in the first quarter of fiscal
1997 compared to a decline of $4.6 million in fiscal 1996. The larger decline
was attributable to increased sales and Delmar sales activity in the first
quarter of fiscal 1997.
Income taxes accrued decreased $7.8 million in the first quarter of
fiscal 1997 compared to a decline of $18.0 million in fiscal 1996. The decline
was primarily attributable to the decreased pre-tax loss of the Company in the
first quarter of fiscal 1997 compared to the combined pre-tax loss and pre-tax
extraordinary item in fiscal 1996 and a lower payment of taxes related to the
prior fiscal year.
Net cash used by investing activities was $2.0 million for the quarter
ended September 28, 1996 compared to $5.2 million provided in the quarter ended
September 30, 1995. The primary reason for the decrease was the sale of
marketable securities of $6.2 million to finance the ESOP Transactions in fiscal
1996.
Net cash provided in financing activities was $21.0 million in the
quarter ended September 28, 1996 compared to $50.0 million used in the quarter
ended September 30, 1995. The increase was attributable to the fiscal 1996
purchase of substantially all the remaining shares of Herff Jones stock by the
ESOP Trust for $188.3 million, partially offset by the related net increase in
borrowings of $134.7 million. In addition, there were higher seasonal borrowings
under the revolver in fiscal 1997 of $17.2 million partially offset by payments
on long-term debt of $8.2 million.
Deferred Compensation at September 28, 1996 decreased to $218.8 million
from $223.0 million at June 29, 1996 and $235.3 million at September 30, 1995.
The decrease is the result of recording ESOP shares committed to be released.
<PAGE>
PART II - OTHER INFORMATION
Exhibits and Reports on Form 8-K
Item 6.
(a) The following Exhibits are filed as a part of this report:
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K;
No reports on Form 8-K were filed during the quarter
for which the report is filed.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act as of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HERFF JONES, INC.
(Registrant)
By: / S / Lawrence F. Fehr
-------------------------------------
Lawrence F. Fehr
Vice President and
Chief Financial Officer
November 12, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS
ENDED SEPTEMBER 28, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001000371
<NAME> Herff Jones, Inc.
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-28-1997
<PERIOD-START> JUN-30-1996
<PERIOD-END> SEP-28-1996
<EXCHANGE-RATE> 1.000
<CASH> 643
<SECURITIES> 0
<RECEIVABLES> 39,018
<ALLOWANCES> 3,304
<INVENTORY> 41,127
<CURRENT-ASSETS> 93,694
<PP&E> 89,408
<DEPRECIATION> 40,095
<TOTAL-ASSETS> 148,370
<CURRENT-LIABILITIES> 87,734
<BONDS> 162,928
<COMMON> 5,728
0
0
<OTHER-SE> (110,348)
<TOTAL-LIABILITY-AND-EQUITY> 148,370
<SALES> 46,656
<TOTAL-REVENUES> 46,656
<CGS> 30,122
<TOTAL-COSTS> 30,122
<OTHER-EXPENSES> 24,499
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,977
<INCOME-PRETAX> (12,937)
<INCOME-TAX> 4,593
<INCOME-CONTINUING> (8,344)
<DISCONTINUED> 0
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</TABLE>
