<PAGE> 1
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 November 29, 1999
-----------------
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 000-18815
---------
OUTLOOK GROUP CORP.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Wisconsin 39-1278569
- ------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1180 American Drive
Neenah, Wisconsin 54956
- --------------------------------------------------------------------------------
(Address of principal executive offices, including zip code)
(920) 722-2333
- --------------------------------------------------------------------------------
(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 twelve 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.
4,222,018 shares of common stock, $.01 par value, were
outstanding at January 3, 2000.
<PAGE> 2
OUTLOOK GROUP CORP. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
Number
------
PART I. FINANCIAL INFORMATION:
- -------------------------------
<S> <C> <C>
Item 1. Financial Statements 3
Condensed Consolidated Balance Sheets 4
As of November 29, 1999 and May 31, 1999 (Unaudited)
Condensed Consolidated Statements of Operations 5
For the three months and six months ended November 29, 1999
and November 30, 1998 (Unaudited)
Condensed Consolidated Statements of Cash Flows 6
For the six months ended November 29, 1999 and
November 30, 1998 (Unaudited)
Notes to Condensed Consolidated Financial Statements 7
(Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition 10
and Results of Operations
Item 3. Quantitative and Qualitative Disclosure About Market Risk 12
PART II. OTHER INFORMATION
- ---------------------------
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 6. Exhibits and Reports on Form 8-K 13
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The condensed consolidated financial statements included herein have been
included by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading. This information is unaudited but includes all
adjustments (consisting only of normal recurring accruals) which, in the
opinion of Company management, are necessary for a fair presentation of the
Company's financial position and results of operations for such periods.
The results of operations for interim periods are not necessarily
indicative of the results of operations for the entire year. It is
suggested that these condensed financial statements be read in conjunction
with the financial statements and the notes thereto included in the
Company's 1999 Form 10-K. The May 31, 1999 Condensed Consolidated Balance
Sheet Data was derived from audited financial statements, but does not
include all disclosures required by Generally Accepted Accounting
Principles.
<PAGE> 4
OUTLOOK GROUP CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
NOVEMBER 29, MAY 31,
ASSETS 1999 1999
=================================================================== ------------- ------------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 57 $ 1,940
Accounts receivable , less allowance for 10,711 10,713
doubtful accounts of $1,057 and $771, respectively
Notes receivable-current portion 2,672 2,805
Inventories 6,136 4,899
Deferred income taxes 203 203
Income taxes refundable 963 876
Other 1,132 738
-------- -------
Total current assets 21,874 22,174
Notes receivable-long term, less allowance for 1,474 1,633
doubtful accounts of $477 in both years
Property, plant, and equipment
Land 543 589
Building and improvements 11,372 11,290
Machinery and equipment 39,678 40,973
-------- -------
51,593 52,852
Less: accumulated depreciation (26,591) (26,488)
-------- -------
25,002 26,364
Other assets 1,760 1,596
-------- -------
Total assets $ 50,110 $ 51,767
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
===================================================================
Current Liabilities
Current maturities of long-term debt $ 2,719 $ 2,308
Accounts payable 3,743 3,222
Book overdraft - 337
Accrued liabilities:
Salaries and wages 1,494 1,509
Other 794 790
-------- --------
Total current liabilities 8,750 8,166
Long-term debt, less current maturities 3,200 4,753
Deferred income taxes 4,170 4,170
Shareholders' Equity
Cumulative preferred stock - -
Common stock (4,269,318 and 5,117,132 shares, respectively) 51 51
Additional paid-in capital 18,494 18,494
Retained earnings 21,754 20,682
Treasury stock (847,814 and 450,000 shares, respectively) (6,209) (4,449)
Officer loans (100) (100)
-------- --------
Total shareholders' equity 33,990 34,678
-------- --------
Total liabilities and shareholders' equity $ 50,110 $ 51,767
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 5
OUTLOOK GROUP CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTH PERIOD ENDED SIX MONTH PERIOD ENDED
NOVEMBER 29, 1999 NOVEMBER 30, 1998 NOVEMBER 29, 1999 NOVEMBER 30, 1998
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Net sales $ 17,959 $ 17,798 $ 34,002 $ 34,779
Cost of goods sold 14,014 14,132 26,669 28,183
----------- ----------- ----------- -----------
Gross profit 3,945 3,666 7,333 6,596
Selling, general, and
administrative expenses 2,763 2,699 5,617 5,272
----------- ----------- ----------- -----------
Operating profit 1,182 967 1,716 1,324
Other income (expense):
Interest expense (124) (204) (230) (323)
Interest and other income 139 204 278 357
----------- ----------- ----------- -----------
Earnings from operations
before income taxes 1,197 967 1,764 1,358
Income tax expense 478 373 692 527
----------- ----------- ----------- -----------
Net earnings $ 719 $ 594 $ 1,072 $ 831
=========== =========== =========== ===========
Net earnings per common share - Basic $ 0.16 $ 0.13 $ 0.24 $ 0.18
Net earnings per common share - Diluted $ 0.16 $ 0.13 $ 0.24 $ 0.18
Weighted average
number of shares outstanding - Basic 4,443,225 4,667,132 4,546,777 4,667,132
=========== =========== =========== ===========
Weighted average
number of shares outstanding - Diluted 4,459,220 4,667,132 4,553,019 4,667,132
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 6
OUTLOOK GROUP CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTH PERIOD ENDED
NOVEMBER 29, 1999 NOVEMBER 30, 1998
----------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net earnings $ 1,072 $ 831
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 1,955 1,984
Change in assets and liabilities:
Accounts and notes receivable 294 1,527
Inventories (1,237) (282)
Other (617) (165)
Accounts payable 521 (2,704)
Accrued liabilities (11) (291)
Income taxes refundable (87) 219
----------------- -----------------
Net cash provided by operating activities 1,890 1,119
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets 174 -
Acquisition of property, plant, and equipment (708) (1,733)
Loan to officer - (100)
----------------- -----------------
Net cash used in investing activities (534) (1,833)
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in book overdraft (337) -
Payments on long-term borrowings (1,142) (942)
Purchase of treasury stock (1,760) -
----------------- -----------------
Net cash used in financing activities (3,239) (942)
Net decrease in cash (1,883) (1,656)
Cash and cash equivalents at beginning of period 1,940 2,825
----------------- -----------------
Cash and cash equivalents at end of period $ 57 $ 1,169
================= =================
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 7
OUTLOOK GROUP CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
November 29, 1999
1. Net Earnings Per Common Share:
Basic earnings per share is computed by dividing net earnings by the
weighted average shares outstanding during each period. Diluted
earnings per share is computed similar to basic earnings per share
except that the weighted average shares outstanding is increased to
include the number of additional shares that would have been
outstanding if stock options were exercised and the proceeds from such
exercise were used to acquire shares of common stock at the average
market price during the period.
<TABLE>
<CAPTION>
THREE MONTH PERIOD ENDED SIX MONTH PERIOD ENDED
NOVEMBER 29, 1999 NOVEMBER 30, 1998 NOVEMBER 29, 1999 NOVEMBER 30, 1998
------------------ ------------------ --------------------- -----------------
<S> <C> <C> <C> <C>
Weighted average shares outstanding - Basic 4,443,225 4,667,132 4,546,777 4,667,132
Effect of dilutive securities - stock options 15,995 - 6,242 -
------------------ ------------------ -------------------- ------------------
Weighted average shares outstanding - Dilutive 4,459,220 4,667,132 4,553,019 4,667,132
================== ================== ===================== ==================
</TABLE>
2. Inventories:
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
NOVEMBER 29, 1999 MAY 31, 1999
------------------------- -----------------------
<S> <C> <C>
Raw materials $ 3,501 $ 2,305
Work in process 1,365 1,107
Finished goods 1,270 1,487
------------------------- -----------------------
$ 6,136 $ 4,899
========================= =======================
</TABLE>
3. Income Taxes:
The effective income tax rate used to calculate the income tax expense
for the quarters ended November 29, 1999 and November 30, 1998 is based
on the anticipated income tax rate for the entire fiscal year.
4. Loan to Officer:
In July, 1998 the Company executed a $100,000 loan to the President and
Chief Operating Officer of the Company. The term of the loan is five
years at an interest rate of 8% per annum.
5. Debt:
As of November 29, 1999 the Company had no debt outstanding relating
to its revolving credit agreement.
<PAGE> 8
6. Accounting Periods:
The Company elected to adopt 13 week quarters beginning in fiscal 1997;
however, fiscal year-end remains May 31.
7. Segment Reporting:
The Company has three reportable segments that are strategic business
units that offer different products and services. These business units
are: Outlook Graphics, Outlook Label Systems, and Outlook Packaging.
Outlook Graphics produces custom printed products on a wide range of
media including newsprint, coated paper, and heavy board, including
paperboard packaging. Outlook Graphics also provides finishing
services, promotional contract packaging, direct mailing, and
distribution services. Outlook Label Systems manufactures items such as
coupons, pressure sensitive specialty labels, printed vinyl cards,
continuous forms, cartons, and sweepstakes and specialty game pieces.
Flexographic printing and laminating of flexible packaging films is
handled by the Outlook Packaging business unit.
The Company evaluates the performance of its reportable segments based
on the income from operations of the respective business units.
Summarized financial information for the three month and six month
periods ending November 29, 1999, and November 30, 1998 are as follows:
INCOME STATEMENT DATA:
<TABLE>
<CAPTION>
THREE MONTH PERIOD ENDED SIX MONTH PERIOD ENDED
NOVEMBER 29, 1999 NOVEMBER 29, 1999
NET SALES NET EARNINGS (LOSS) NET SALES NET EARNINGS (LOSS)
--------- ------------------- --------- -------------------
<S> <C> <C> <C> <C> <C>
GRAPHICS $ 9,402 $ 513 GRAPHICS $ 18,521 $ 1,040
LABEL SYSTEMS 4,594 437 LABEL SYSTEMS 8,188 620
PACKAGING 4,075 (69) PACKAGING 7,476 (330)
ALL OTHER (112) (162) ALL OTHER (183) (258)
--------- ------------------- --------- -------------------
TOTAL $ 17,959 $ 719 TOTAL $ 34,002 $ 1,072
</TABLE>
<TABLE>
<CAPTION>
THREE MONTH PERIOD ENDED SIX MONTH PERIOD ENDED
NOVEMBER 30, 1998 NOVEMBER 30, 1998
NET SALES NET EARNINGS (LOSS) NET SALES NET EARNINGS (LOSS)
--------- ------------------- --------- -------------------
<S> <C> <C> <C> <C> <C>
GRAPHICS $ 9,392 $ 571 GRAPHICS $ 18,866 $ 1,009
LABEL SYSTEMS 4,393 409 LABEL SYSTEMS 7,680 411
PACKAGING 4,225 (314) PACKAGING 8,499 (517)
ALL OTHER (212) (72) ALL OTHER (266) (72)
--------- ------------------- --------- -------------------
TOTAL $ 17,798 $ 594 TOTAL $ 34,779 $ 831
</TABLE>
BALANCE SHEET DATA:
<TABLE>
<CAPTION>
NOVEMBER 29, 1999 MAY 31, 1999
TOTAL ASSETS TOTAL ASSETS
------------------- -------------------
<S> <C> <C> <C>
GRAPHICS $ 28,064 GRAPHICS $ 30,312
LABEL SYSTEMS 8,282 LABEL SYSTEMS 8,032
PACKAGING 13,764 PACKAGING 13,423
------------------- -------------------
TOTAL $ 50,110 TOTAL $ 51,767
</TABLE>
<PAGE> 9
8. Commitments and Contingencies
The Company is a defendant in litigation filed by Barrier films
Ltd.-New York ("Barrier-NY"). This litigation, which was reported in
the Company's May 31, 1999 financial statements, alleges various causes
of action generally arising out of the acquisition of Barrier Films
Corporation from the Company by Barrier-NY. Because the complaint
presents overlapping claims, and requests multiple awards of damages of
cancellations of obligations for the same underlying facts, determining
the actual amount at issue is uncertain. However, all of the claims
made total approximately $28 million, plus elimination of payments
under Barrier-NY's promissory note to the Company, plus requests for
costs and punitive damages, without any attempt to adjust the claims
for multiple requests resulting from overlapping causes of action.
In August 1999, the Company answered the claims denying liability and
filed a counterclaim for more than $2.6 million, plus costs and other
damages. The claim is a result of Barrier-NY's failure to make payments
due the Company under the 1997 promissory note and under the Purchase
and Sale Agreement in connection with the sale of BFC. At the present
time, the litigation is at a very early state. However, the Company
believes that Barrier-NY's claims are without merit, and intends to
defend the matter, and to pursue its counterclaim, vigorously and
aggressively.
Because of the early stages of this claim and counterclaims, the
ultimate resolution of this matter cannot be determined. In the event
of an unanticipated adverse final judgement in this claim, the
Company's consolidated financial position and results of operations
could be materially affected.
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following section presents a discussion and analysis of the Company's
results and operations during the second quarters, and first six months, of
fiscal 2000 and 1999, and its financial condition at November 29, 1999.
Statements that are not historical facts (such as statements in the future tense
or using terms such as "believe", "expect" or "anticipate") may be
forward-looking statements that involve risks and uncertainties. The Company's
actual future results could materially differ from those discussed. Factors that
could cause or contribute to such differences include, but are not limited to,
those discussed in the following sections, particularly under "General Factors."
Results of Operations
In the second quarter of fiscal 2000, net sales were $18.0 million as compared
to $17.8 million for the same period in the prior year. For the year to date
period, sales were $34.0 million as compared to $34.8 million, a decrease of
2.3% or $0.8 million. For the six-month period, the Label business unit had a
net sales increase of $0.5 million, while the Graphics and Packaging business
units had net sales decreases of $0.3 million and $1.0 million, respectively.
The Graphics business segment had a decrease of approximately $2.8 million in
the print and specialty print market. This decrease was offset by increases of
approximately $1.1 million in direct mail markets, approximately $.9 million in
contract packaging markets, and $0.5 million in the collateral management
market. These changes reflect a changing services mix, and in particular a focus
on several large mailing related projects in recent periods. The decline in the
net sales of the Packaging business unit is the result of increased competition
in the produce and snack foods markets.
The Company's gross profit margin increased to 22.0% in the current quarter up
from 20.6% in fiscal 1999. Year to date, gross profit margins are 21.6% of sales
in fiscal 2000 as compared to 19.0% in fiscal 1999. The increase of
approximately $0.7 million in gross profit is the result of a more profitable
product sales mix resulting from the discontinuation of unprofitable business,
the types of business on which the Company focused, and from the Company's
efforts to increase manufacturing efficiency and productivity. During the first
quarter of fiscal 2000, the Company began a personnel development and process
improvement program designed to enhance quality, reduce costs and strengthen the
Company's competitive position. This program continued through the second
quarter.
Selling, general, and administrative expenses increased slightly to 15.4% of
sales for the quarter as compared to 15.2% in the prior year's quarter. Year to
date, selling, general and administrative expenses are 16.5% of sales as
compared to 15.2% last year. This increase reflects the company's sales,
marketing, and product development efforts, increases to the bad debt reserve,
and additional expenses related to the implementation of new productivity
improvement and investments in employee training programs.
As a result, the operating profit percentage increased to 6.6% of sales in the
current quarter up from 5.4% of net sales in fiscal 1999. Year to date operating
profit was 5.0% of sales as compared to 3.8% in fiscal 1999.
Interest expense decreased approximately $80,000 to $124,000 in the current
quarter. For the first six months of the current fiscal year, interest expense
was $230,000, as compared to $323,000 in the prior fiscal year. The decrease is
the result of reduced debt. The Company's average interest rate is below the
prime interest rate.
Other income includes earnings on invested cash balances for the quarter,
scrap-recycling revenues, and interest earned on note receivables.
Income tax expense is being accrued for the year at the rate of 38.5% although
quarter to quarter fluctuations may occur.
As a result of these factors, quarterly earnings increased to $719,000 or $0.16
per share, compared to $594,000 or $0.13 per share for the comparable period
last year. Year to date, earnings from operations increased to $1,072,000 or
$.24 per share, compared to $831,000 or $.18 per share last year.
<PAGE> 11
Liquidity and Capital Resources
Operating activities provided $1.9 million of increased cash during the first
half of fiscal 2000. Cash from operations before depreciation generated $3.0
million. Additional cash of $0.8 million was generated from the collection of
outstanding accounts receivable and increases in accounts payable. These
improvements were offset primarily by a $ 1.2 million increase in raw materials
inventory, and a $0.6 million increase in other assets. The Company has
increased its raw materials inventory by taking advantage of considerable volume
discounts allowed by vendors in anticipation of forthcoming price increases.
Investing activities represent the acquisition of $708,000 in plant and
equipment for the purpose of increasing productivity and increasing capacity of
the core business. Included in this total are laminator upgrades at the
Packaging business unit, press upgrades and imaging equipment upgrades at the
Label business unit, press and finishing equipment upgrades at the Graphics
business unit, and computer software and hardware upgrades at all of the
respective business units.
Cash generated from operating activities was used to reduce long-term borrowings
by $1.1 million and to purchase treasury stock in the amount of $1.8 million. As
of the quarter end, the company was in compliance with all of its loan
covenants.
As previously reported, the Company holds notes receivable from the purchasers
of its former Barrier operations that total approximately $2.4 million. The
Company is currently in litigation to collect those amounts; the other party is
making claims against the Company, including seeking termination of the note.
The Company is also in litigation to collect another note that totals
approximately $0.7 million. Failure of the Company to collect these amounts, or
amounts due under other notes or accounts receivable in excess of reserves would
adversely affect the Company's balance sheet and results of operations.
The Company maintains a credit facility with a bank, but at quarter end, has no
outstanding balances on the revolver. The facility provides for a maximum
revolving credit commitment of $15.0 million less $4.8 million used for standby
letters of credit. Interest on the debt outstanding varies with the Company's
selection to have the debt be based upon margins over the bank determined
preference rate or an IBOR rate. The Company's actual rate is dependent upon the
Company's performance against a specific ratio as measured against a
predetermined performance chart. Long-term Company indebtedness now consists
solely of IRB obligations.
The Company anticipates capital expenditures of approximately $2.75 million in
fiscal 2000, excluding any acquisition opportunities that may become available
to the Company. The Company intends to finance these expenditures through funds
obtained from operations plus its credit facilities and possible leasing
opportunities. During the first six months of fiscal 2000, the Company made
capital expenditures of $708,000.
The Company regularly reassesses how its various operations complement the
Company as a whole and considers strategic decisions to acquire new operations
or expand, terminate or sell certain existing operations. These reviews resulted
in various transactions during fiscal 1998 and 1999, and may result in
additional transactions during fiscal 2000 and beyond.
Year 2000 Compliance
The Company undertook many actions intended to assure that its computer systems
and other equipment were capable of functioning in, and processing for, periods
for the Year 2000 and beyond. These actions were generally described in the
Company's report 10-Q for the quarter ended August 28, 1999. The Company
implemented a program intended to address, on a timely basis, "Year 2000
Compliance" (the need for computer applications and other systems used by the
Company to function in and after the Year 2000 and to recognize and properly
perform date sensitive functions involving dates after December 31, 1999.)
As of January 11, 2000, the Company has not experienced any material
consequences of failure of Year 2000 Compliance, either by the Company, its
suppliers, and customers. However, Year 2000 compliance has many elements and
potential consequences, some of which may not be foreseeable or may be realized
in future periods. Therefore, there can be no assurance that unforeseen
circumstances could still not arise, or that the Company will not in the future
identify equipment or systems which are not Year 2000 compliant.
<PAGE> 12
General Factors
Because of the project-oriented nature of the Company's business, the Company's
largest customers have historically tended to vary from year to year depending
on the number and size of the projects completed for these customers, and the
Company is dependent upon its ability to retain, and obtain new customers.
During the first half of fiscal 2000, 40.2% of the Company's net sales were to 5
customers. The largest, approximately 12.7% of those sales, were to the largest
customer, America Online (all in the Graphics segment). The Company's AOL
projects were primarily related to promotional mailings. The timing of these
promotional mailings is determined by AOL and the volume of activities can vary
significantly from period to period. There is no assurance that the volume of
these promotional mailings will continue in the future. The Company has no
knowledge of any impact on Outlook operations regarding AOL's recently announced
acquisition of Time Warner.
Changes in the Company's project mix and timing of projects make predictability
of the Company's future results very difficult. Customers generally purchase the
Company's services under cancelable purchase orders rather than long-term
contracts, although exceptions sometimes occur when the Company is required to
purchase substantial inventories or special machinery to meet orders. The
Company believes that operating without long-term contracts is consistent with
industry practices, although it increases the Company's vulnerability to losses
of business and significant period-to-period changes.
The Company uses complex and specialized equipment to provide its services.
Therefore, the Company is dependent upon the functioning of such machinery, and
its ability to acquire and maintain appropriate equipment.
As do other companies, the Company has significant accounts receivable or other
amounts due from its customers or other parties. From time to time, certain of
these accounts receivable or other amounts due have become unusually large
and/or overdue, and on occasion the Company has taken significant write-offs
relating to accounts receivable. The failure of the Company's customers to pay
in full amounts due to the Company would affect future profitability. Also, see
above regarding litigation relating to the collection of certain notes
receivable.
In addition, the Company's business requires it to maintain substantial
inventories. From time to time, changes in customer projects or Company services
can render certain inventories obsolete, and from time to time the Company has
taken substantial write-offs of obsolete inventories. The need to take such
write-offs in the future may affect future profitability and depends upon
changing customer requirements and other factors beyond the Company's control.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The following discussion about the Company's risk-management activities may
include forward-looking statements that involve risk and uncertainties. Actual
results could differ materially from those discussed.
The Company has financial instruments, including notes receivable and long-term
debt, which are sensitive to changes in interest rates. However, the Company
does not use any interest-rate swaps or other types of derivative financial
instruments to limit its sensitivity to changes in interest rates because of the
relatively short-term nature of its notes receivable and variability of interest
rates on certain of its long-term debt.
The Company does not believe there has been any material changes in the reported
market risks faced by the Company since the end of its most recent fiscal year,
May 31, 1999.
<PAGE> 13
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a), (c) At the Company's annual meeting of shareholders on October
21, 1999, the two continuing directors who were management's
nominees for re-election were elected to the Outlook Group
Board of Directors. The directors were re-elected with the
following votes:
<TABLE>
<CAPTION>
Authority for
Director's Name Votes "For" Voting Withheld
--------------- ----------- ---------------
<S> <C> <C>
Harold J. Bergman 4,180,653 102,750
Richard C. Fischer 3,889,298 394,105
</TABLE>
In addition, at the meeting, shareholders approved the
Outlook Group Corp. 1999 Stock Option Plan. The vote on that
Plan was as follows:
For: 2,369,086
Against: 780,754
Abstain/
No vote: 1,133,563
(b) Joseph Baksha, Jeffry Collier, James Dillon, Pat Richter and John
Wiley continue as Company directors whose terms expire in 2000 or
2001.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. See attached Exhibit Index, which is
incorporated by reference herein.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter
for which this report is filed.
<PAGE> 14
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.
OUTLOOK GROUP CORP.
-------------------
(Registrant)
Dated: January 11, 2000 /s/ Richard C. Fischer
--------------------------------------------------------
Richard C. Fischer, Chairman and Chief Executive Officer
/s/ Paul M. Drewek
--------------------------------------------------------
Paul M.Drewek, Chief Financial Officer
<PAGE> 15
OUTLOOK GROUP CORP.
(the "Company")
EXHIBIT INDEX
to
Report on Form 10-Q for Quarter ended November 29, 1999
Exhibit Filed
Number Description Herewith / Incorporated by reference
- --------------------------------------------------------------------------------
27 Financial Data Schedule X
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> MAY-31-2000
<PERIOD-START> AUG-29-1999
<PERIOD-END> NOV-29-1999
<CASH> 57
<SECURITIES> 0
<RECEIVABLES> 10,711
<ALLOWANCES> 1,057
<INVENTORY> 6,136
<CURRENT-ASSETS> 21,874
<PP&E> 51,593
<DEPRECIATION> 26,591
<TOTAL-ASSETS> 50,110
<CURRENT-LIABILITIES> 8,750
<BONDS> 0
0
0
<COMMON> 51
<OTHER-SE> 33,939
<TOTAL-LIABILITY-AND-EQUITY> 50,110
<SALES> 17,959
<TOTAL-REVENUES> 17,959
<CGS> 14,014
<TOTAL-COSTS> 16,777
<OTHER-EXPENSES> 15
<LOSS-PROVISION> 286
<INTEREST-EXPENSE> 124
<INCOME-PRETAX> 1,197
<INCOME-TAX> 478
<INCOME-CONTINUING> 719
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 719
<EPS-BASIC> .16
<EPS-DILUTED> .16
</TABLE>
