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Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q SB
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended APRIL 30, 1996
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-19056
Northstar Computer Forms, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Minnesota 41-0882640
---------------------------- ----------------
(State of other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Numbers)
7130 Northland Circle N
Brooklyn Park, Minnesota
- --------------------------------------- 55428
(Address or Principal Executive Offices) Zip Code
Registrant's telephone number, including area code (612) 531-7340
- -------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes /X/ No / /.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at May 31, 1996
----- ---------------------------
Common Stock, $.05 par value 1,715,531 Shares
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Page 2
Part 1. Financial Information
Item 1. Financial Statements
NORTHSTAR COMPUTER FORMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
April 30, October 31,
1996 (Unaudited) 1995
---------------- -------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 2,345,283 $ 1,180,788
Accounts receivable, less
allowance for doubtful accounts
of $87,847 in 1996 and $87,379 in 1995 3,112,610 3,646,156
Inventories 1,092,696 1,317,914
Other current assets 214,930 222,147
Deferred income taxes 130,000 132,481
------------ ------------
Total current assets 6,895,519 6,499,486
------------ ------------
Property, plant and equipment 20,057,902 19,724,836
Less accumulated depreciation and amortization (10,856,635) (10,124,228)
------------ ------------
Net property, plant and equipment 9,201,267 9,600,608
------------ ------------
Notes receivable, less current portion 1,003,704 1,052,238
Other assets 377,774 371,032
------------ ------------
Total Assets $ 17,478,264 $ 17,523,364
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to unaudited Condensed
Consolidated Financial Statements
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NORTHSTAR COMPUTER FORMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
April 30, October 31,
1996 (Unaudited) 1995
---------------- -------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 200,000 $ 200,000
Accounts payable 965,975 819,561
Accrued liabilities 585,792 934,191
----------- -----------
Total current liabilities 1,751,767 1,953,752
Deferred compensation 757,616 772,032
Deferred income taxes 728,049 675,458
Long-term debt, less current portion 2,535,000 2,535,000
Stockholders' equity:
Common stock, $.05 par value
authorized, 5,000,000 shares; issued
and outstanding, 1,715,531 in 1996 and
1,713,896 in 1995 85,776 85,695
Additional paid-in capital 1,995,230 1,983,865
Retained earnings 9,624,826 9,517,562
----------- -----------
Total stockholders' equity 11,705,832 11,587,122
----------- -----------
Total Liabilities and Stockholders' Equity $17,478,264 $17,523,364
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to unaudited Condensed
Consolidated Financial Statements
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Page 4
NORTHSTAR COMPUTER FORMS, INC.
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
<TABLE>
Three Months Ended Six Months Ended
April 30 April 30
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $5,922,005 $5,884,092 $11,525,902 $11,829,967
Cost of goods sold 4,843,777 4,753,022 9,574,730 9,525,329
---------- ---------- ----------- -----------
Gross profit 1,078,228 1,131,070 1,951,172 2,304,638
Selling, general and
administrative expenses 808,968 796,264 1,532,705 1,527,163
---------- ---------- ----------- -----------
Operating income 269,260 334,806 418,467 777,475
Other income (expense):
Gain (loss) on sale of assets (1,638) 323,398 (1,638) 322,774
Interest expense (38,398) (20,252) (79,268) (22,986)
Other, net, principally
interest income 26,483 12,028 43,882 17,936
---------- ---------- ----------- -----------
(13,553) 315,174 (37,024) 317,724
---------- ---------- ----------- -----------
Earnings before
income taxes 255,707 649,980 381,443 1,095,199
Provision for income taxes 105,500 260,000 148,500 438,000
---------- ---------- ----------- -----------
Net earnings $ 150,207 $ 389,980 $ 232,943 $ 657,199
---------- ---------- ----------- -----------
Net earnings
per common share: $ .09 $ .22 $ .14 $ .37
---------- ---------- ----------- -----------
Weighted average common and
common equivalent shares
outstanding 1,738,232 1,761,106 1,738,232 1,761,106
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Dividends Paid $ .065 $ .06 $ .065 $ .06
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
</TABLE>
See accompanying notes to unaudited Condensed
Consolidated Financial Statements
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NORTHSTAR COMPUTER FORMS, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
for the six months ended April 30, 1996 and 1995
<TABLE>
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 232,943 $ 657,199
Adjustments to reconcile net earnings to
net cash provided by operating activities
Depreciation and amortization 753,970 633,252
Provision for losses on receivables 27,600 27,600
(Gain) loss on sale of property and equipment 1,638 (322,774)
Net changes in operating assets and liabilities 553,631 (52,836)
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Net cash provided by operating activities 1,569,782 942,441
---------- -----------
Cash flows from investing activities:
Capital expenditures and equipment deposits (339,813) (1,292,987)
Proceeds from sale of property and equipment 225 527,605
Notes receivable repayments 48,534
Officers and employees loan repayments 3,220
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Net cash used in investing activities (291,054) (762,162)
---------- -----------
Cash flows from financing activities:
Principle payment on long-term debt (210,000)
Dividends paid (111,510) (102,336)
Redemption of common stock (2,723)
---------- -----------
Net cash used in financing activities (114,233) (312,336)
---------- -----------
Net increase (decrease) in cash and cash equivalents 1,164,495 (132,057)
Cash and cash equivalents at beginning of period 1,180,788 984,722
---------- -----------
Cash and cash equivalents at end of period $2,345,283 $ 852,665
---------- -----------
---------- -----------
Supplemental disclosure of cash flow:
Cash paid during the period for:
Income taxes $ 138,650 $ 342,325
Interest (net of amount capitalized of 79,268 20,694
$64,844 in 1995)
</TABLE>
In 1995, non-cash investing activities of $2,166,678 related to the
construction of the company's new corporate headquarters and manufacturing
facility which were paid through draws from cash restricted for construction.
See accompanying notes to unaudited Condensed
Consolidated Financial Statements
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NORTHSTAR COMPUTER FORMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1996
(Unaudited)
1. Basis of Presentation
The interim condensed consolidated financial statements are unaudited
and reflect all adjustments which are, in the opinion of management,
necessary for a fair presentation of financial position, results of
operations, and cash flows for such periods. All such adjustments are
of a normal and recurring nature. The results of operations for any
interim period are not necessarily indicative of results for the full
year. These interim financial statements should be read in conjunction
with the consolidated financial statements and notes thereto contained
in the Company's annual report for the fiscal year ended October 31,
1995.
2. Inventories consisted of the following:
April 30
1996 October 31, 1995
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Raw materials $ 819,481 $1,087,367
Work in process 273,215 230,547
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Total $1,092,696 $1,317,914
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3. Earnings per share
Earnings per common and common equivalent share are computed using the
weighted average number of common and common equivalent shares
outstanding. Common equivalent shares are the result of dilutive stock
options.
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NORTHSTAR COMPUTER FORMS, INC.
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations of
Interim Financial Data
Results of Operations
The following table sets forth, for the periods indicated, certain items in
the Company's condensed consolidated statements of earnings as a percentage
of net sales and the percentage changes of the dollar amounts of such items
as compared with the prior period.
Three Months Ended April 30
Percentage of Net Sales Increase
----------------------- (Decrease)
1996 1995 1996 vs 1995
---- ---- -------------
Net Sales ................... 100.0% 100.0% 0.6%
Cost of Goods Sold .......... 81.8 80.8 1.9
----- -----
Gross Profit ........... 18.2 19.2 (4.7)
----- ----- -----
Selling, General and
Administrative Expenses ... 13.7 13.5 1.6
----- ----- -----
Operating Income ............ 4.5 5.7 (19.6)
Earnings .................... 2.5 6.6 (61.5)
----- ----- -----
Six Months Ended April 30
Percentage of Net Sales Increase
----------------------- (Decrease)
1996 1995 1996 vs 1995
---- ---- -------------
Net Sales ................... 100.0% 100.0% (2.6)%
Cost of Goods Sold .......... 83.1 80.5 .5
----- ------ -----
Gross Profit ........... 16.9 19.5 (15.3)
----- ------ -----
Selling, General and
Administrative Expenses ... 13.3 12.9 .4
----- ------ -----
Operating Income ............ 3.6 6.6 (46.2)
Earnings .............. 2.0 5.6 (64.6)
---- ------ -----
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The following table sets forth the sales for the periods indicated of the
internal bank forms, general business forms and consolidated sales.
INTERNAL GENERAL CONSOLIDATED
BANK FORMS % BUSINESS FORMS % SALES
---------- - -------------- - ------------
Current Quarter
1996 $3,229,326 55 $2,692,679 45 $ 5,922,005
1995 2,953,789 50 2,930,303 50 5,884,092
Increase (Decrease) 275,537 (237,624) 37,913
Percentage change 9.3% (8.1)% .6%
Six Months
1996 $6,412,876 56 $5,113,026 44 $11,525,902
1995 5,810,398 49 6,019,569 51 11,829,967
Increase (Decrease) 602,478 (906,543) (304,065)
Percentage Change 10.4% (15.1)% (2.6)%
Increased sales activity in internal bank forms came from new and existing
customers. In the internal bank form business, the volume of forms produced
and the sales dollars for the six month period increased consistently. This
increase occurred in both standard and custom bank form products. For custom
products the increase is principally due to a new envelope press purchased
late in 1995 which helped meet an existing demand. Drive-up envelope form
sales increased approximately 30 percent for the six month period. The
increase in standard internal bank form products is due to an overall
increase in standard bank form orders from new and existing customers.
In the general business forms business, sales of one product, sold
principally to one customer, decreased approximately $575,000 for the second
quarter of 1996 and $900,000 for the six months. The primary customer for
the product substantially reduced their orders for the first six months. All
other general business forms business increased approximately 15% for the
second quarter and remained relatively constant for the six months.
Gross profit for the second quarter of 1996 decreased from 19.2 percent in
1995 to 18.2 percent in 1996. For the six months, gross profit decreased from
19.5 percent in 1995 to 16.9 percent in 1996. During the six month period
variable costs, particularly material costs and variable expenses, remained
relatively constant as a percentage of sales increasing less than .05
percent. Labor costs increased approximately 2 percent for the six month
period. This increase is due principally to the higher cost of fringe
benefits, particularly health insurance costs. In addition, fixed costs
increased approximately $127,000 for the six months or 1 percent of sales.
These fixed costs increases relate to depreciation which increased $37,225
for the quarter and $93,900 for the six months. Depreciation increased due
to the new facility the Company moved to in March 1995.
Interest expense relates to the financing on the new corporate headquarters
and manufacturing facility. Earnings before income taxes decreased $394,273
or 60.7 percent for the second quarter. $322,774 of the decrease relates to
a gain on the sale of property recognized by the company in 1995. For the
six months, earnings before income taxes decreased $713,756 or 65.2 percent.
Earnings per share for the six months were $ .14 in 1996 and $ .37 in 1995.
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Financial Condition
Capital expenditures for equipment during the six months ended April 30, 1996
were $339,813 compared to approximately $775,000 for the comparable period of
1995, net of capital expenditures relating to the new facility. The Company
anticipates a reduced capital expenditure requirement for 1996 because no
significant equipment additions are planned.
Net cash provided by operating activities was $1,569,782 for the six months
ended April 30, 1996 compared to $942,441 for the same period in 1995. This
increase is due principally to a reduction in the days outstanding in
accounts receivable. This represents the primary source of working capital
for equipment acquisitions and payment of dividends. The Company's working
capital was $5.1 million on April 30, 1996 compared to $3.3 million on April
30, 1995. The Company also has available a bank line of credit for $1 million
at an interest rate equal to the bank's reference rate.
The Company believes its existing financial resources are adequate to fund
its 1996 capital expenditures and dividend payments and foresees no events or
uncertainties that are likely to have a material impact on its liquidity.
The Company expects to be able to generate sufficient cash flow from
operations to avoid relying on external sources of financing, beyond the
financing sources already in existence.
Outlook
Paper prices, which increased significantly in fiscal 1995, appear to have
leveled off. During 1996, the Company will attempt to recover the cost of
the previous paper price increases as quickly as competition will allow.
Order backlog continues to fluctuate. Because of the short manufacturing
lead time of seven to ten days and the softness of the forms market, the
Company may continue to have fluctuations in sales during 1996. The Company
is attempting to offset this by developing new markets for existing products
as well as new product lines.
There are no other changes planned for 1996. The Company is not aware of any
other trends, events or uncertainties that will have a significant impact on
its financial condition or results of operations.
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NORTHSTAR COMPUTER FORMS, INC.
PART II. - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The registrant held its Annual Meeting of Stockholder on April 4,
1996.
(a) The shareholders re-elected the incumbent Board of Directors:
Roger T. Bredesen, John G. Mutschler, J.S. Braun, Kenneth E.
Overstreet, Roy W. Terwilliger and elected director nominee
Dr. Lester A. Wanninger.
(b) The shareholders approved the re-appointment of Coopers & Lybrand,
independent certified public accountants, to audit the consolidated
financial statements of the Company and its subsidiary for the year
to end October 31, 1996.
1,553,897 shares were voted affirmatively. There were 1,308 votes
against.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit
11 Statement re computation of per share earnings.
(b) Reports on Form 8-K
None
None of the other items contained in Part II of Form 10-QSB is applicable to
the Company for the quarter ended April 30, 1996.
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Page 11
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.
Northstar Computer Forms, Inc.
(Registrant)
Date: June 5, 1996 By: Mary Ann Morin
----------------------- -----------------------------
Mary Ann Morin
Treasurer and Controller
(Principal Financial Officer)
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Page 12
NORTHSTAR COMPUTER FORMS, INC.
Exhibit
11. Schedule of Computation of Per Share Earnings.
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NORTHSTAR COMPUTER FORMS, INC. AND SUBSIDIARY
EXHIBIT 11
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
<TABLE>
Three Months Ended Six Months Ended
April 30 April 30
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET EARNINGS $ 150,207 $ 389,980 $ 232,943 $ 657,199
EARNINGS PER SHARE
Primary:
Net earnings $ .09 $ .22 $ .14 $ .37
---------- ---------- ---------- ----------
Fully diluted (1):
Net earnings $ .09 $ .22 $ .14 $ .37
---------- ---------- ---------- ----------
AVERAGE NUMBER OF
COMMON AND COMMON
EQUIVALENT SHARES
Primary:
Weighted average number of
common shares outstanding 1,715,531 1,705,568 1,715,531 1,705,568
Common equivalent shares:
Dilutive stock options, using
Treasury Stock Method 22,701 55,538 22,701 55,538
---------- ---------- ---------- ----------
1,738,232 1,761,106 1,738,232 1,761,106
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Fully diluted (1)
Weighted average number of
common shares outstanding 1,715,531 1,705,568 1,715,531 1,705,568
Common equivalent shares:
Dilutive stock options, using
Treasury Stock Method 22,701 55,538 22,701 55,538
---------- ---------- ---------- ----------
1,738,232 1,761,106 1,738,232 1,761,106
---------- ---------- ---------- ----------
</TABLE>
(1) This calculation is submitted in accordance with Regulation S-K Item 601
(b) (11) although not required by footnote 2 to paragraph 14 of APB Opinion
No. 15 because it results in dilution of less than 3%
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> APR-30-1996
<CASH> 2345283
<SECURITIES> 0
<RECEIVABLES> 3200457
<ALLOWANCES> 87847
<INVENTORY> 1092696
<CURRENT-ASSETS> 6895519
<PP&E> 20057902
<DEPRECIATION> 10856635
<TOTAL-ASSETS> 17478264
<CURRENT-LIABILITIES> 1751767
<BONDS> 2535000
0
0
<COMMON> 85776
<OTHER-SE> 11620056
<TOTAL-LIABILITY-AND-EQUITY> 17478264
<SALES> 11525902
<TOTAL-REVENUES> 11525902
<CGS> 9574730
<TOTAL-COSTS> 1461223
<OTHER-EXPENSES> 1638
<LOSS-PROVISION> 27600
<INTEREST-EXPENSE> 79268
<INCOME-PRETAX> 381443
<INCOME-TAX> 148500
<INCOME-CONTINUING> 232943
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 232943
<EPS-PRIMARY> .14
<EPS-DILUTED> .14
</TABLE>
