<PAGE>
Page 1
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1998
/ / 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 0-19056
--------
Northstar Computer Forms, Inc.
----------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Minnesota 41-0882640
- ------------------------------- ----------------------
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Numbers)
7130 Northland Circle North 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 and 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 August 28, 1998
----- ------------------------------
Common Stock, $ .05 par value 2,664,436 Shares
<PAGE>
Page 2
Part 1. Financial Information
Item 1. Financial Statements
NORTHSTAR COMPUTER FORMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
July 31, October 31,
1998 (Unaudited) 1997
---------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,750,113 $ 5,317,881
Accounts receivable, less
allowance for doubtful accounts of $307,000 at
July 31, 1998 and $294,000 at October 31, 1997 4,809,078 6,614,209
Inventories 1,820,939 1,912,646
Other current assets 359,480 267,737
Deferred income taxes 311,805 318,656
---------------- -------------
Total current assets 12,051,415 14,431,129
---------------- -------------
Property, plant and equipment 30,286,425 29,478,905
Less accumulated depreciation and
amortization (15,711,727) (14,267,762)
---------------- -------------
Net property, plant and equipment 14,574,698 15,211,143
---------------- -------------
Notes receivable, less current portion 157,091 829,108
Goodwill, net 1,606,669 1,757,799
Other assets, net 1,330,250 1,095,695
---------------- -------------
Total assets $ 29,720,123 $ 33,324,874
---------------- -------------
---------------- -------------
</TABLE>
See accompanying notes to unaudited Condensed
Consolidated Financial Statements
<PAGE>
Page 3
NORTHSTAR COMPUTER FORMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET, CONTINUED
<TABLE>
<CAPTION>
July 31, October 31,
1998 (Unaudited) 1997
----------------- ----------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 1,385,000 $ 3,235,000
Accounts payable 1,617,600 1,373,805
Accrued liabilities 1,076,978 2,607,885
----------------- ----------------
Total current liabilities 4,079,578 7,216,690
Deferred compensation 809,362 827,147
Deferred income taxes 1,293,278 1,184,633
Long-term debt, less current portion 5,543,050 7,330,550
Commitments
Stockholders' equity:
Common stock, $ .05 par value
authorized, 5,000,000 shares; issued
and outstanding, 2,663,986 at July 31, 1998
and 2,642,207 at October 31, 1997 133,199 132,110
Additional paid-in capital 2,349,039 2,245,730
Retained earnings 15,512,617 14,388,014
----------------- ----------------
Total stockholders' equity 17,994,855 16,765,854
----------------- ----------------
Total liabilities and stockholders' equity $ 29,720,123 $ 33,324,874
----------------- ----------------
----------------- ----------------
</TABLE>
See accompanying notes to unaudited Condensed
Consolidated Financial Statements
<PAGE>
Page 4
NORTHSTAR COMPUTER FORMS, INC.
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
July 31 July 31
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 10,358,271 $ 11,330,222 $31,720,241 $34,679,910
Cost of goods sold 7,681,180 7,870,793 23,221,113 24,506,609
------------- ------------ ------------ ------------
Gross profit 2,677,091 3,459,429 8,499,128 10,173,301
Selling, general and
administrative expenses 1,971,457 2,069,002 6,000,510 6,095,665
------------- ------------ ------------ ------------
Operating income 705,634 1,390,427 2,498,618 4,077,636
Other income (expense):
Interest expense (141,542) (223,238) (523,244) (671,472)
Other, net, principally
interest income 47,366 91,607 169,564 128,668
Gain (loss)on sale of assets (21,546) 2,500 (44,278) 5,766
------------- ------------ ------------ ------------
(115,722) (129,131) (397,958) (537,038)
------------- ------------ ------------ ------------
Earnings before
income taxes 589,912 1,261,296 2,100,660 3,540,598
Provision for income taxes 225,000 503,500 799,000 1,416,500
------------- ------------ ------------ ------------
Net earnings $ 364,912 $ 757,796 $ 1,301,660 $ 2,124,098
------------- ------------ ------------ ------------
Net earnings
per common share:
Basic $ 0.14 $ 0.29 $ 0.49 $ 0.82
------------- ------------ ------------ ------------
Diluted $ 0.12 $ 0.27 $ 0.45 $ 0.77
------------- ------------ ------------ ------------
Dividends declared per
common share $ - $ - $ 0.066 $ 0.050
------------- ------------ ------------ ------------
------------- ------------ ------------ ------------
Weighted average common
shares outstanding
Basic 2,660,958 2,587,898 2,650,908 2,605,672
------------- ------------ ------------ ------------
------------- ------------ ------------ ------------
Diluted 2,883,899 2,807,258 2,871,990 2,777,880
------------- ------------ ------------ ------------
------------- ------------ ------------ ------------
</TABLE>
See accompanying notes to unaudited Condensed
Consolidated Financial Statements
<PAGE>
Page 5
NORTHSTAR COMPUTER FORMS, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
for the nine months ended July 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,301,660 $ 2,124,098
Adjustments to reconcile net earnings to
net cash provided by operating activities
Depreciation 1,873,296 1,852,657
Amortization 247,742 168,647
Provision for losses on receivables 41,400 41,400
Loss (gain) on sale of equipment 44,278 (5,766)
Changes in certain operating assets and liabilities 648,535 284,372
--------------- -------------
Net cash provided by operating activities 4,156,911 4,465,408
--------------- -------------
Cash flows from investing activities:
Capital expenditures and equipment deposits (1,347,329) (1,137,241)
Capitalized computer software costs (229,261) (584,321)
Proceeds from sale of equipment 66,200 11,400
Notes receivable repayments 672,017 104,155
Other (4,500)
--------------- -------------
Net cash used in investing activities (838,373) (1,610,507)
--------------- -------------
Cash flows from financing activities:
Principal payments on long-term debt (3,637,500) (591,950)
Dividends paid (353,204) (240,868)
Stock options exercised 104,398 151,160
--------------- -------------
Net cash used in financing activities (3,886,306) (681,658)
--------------- -------------
Net (decrease) increase in cash and cash equivalents (567,768) 2,173,243
Cash and cash equivalents at beginning of period 5,317,881 2,378,105
--------------- -------------
Cash and cash equivalents at end of period $ 4,750,113 $ 4,551,348
-------------- --------------
-------------- --------------
Supplemental disclosure of cash flow:
Cash paid during the period for:
Income taxes $ 1,422,750 $ 1,528,580
Interest 486,156 671,472
</TABLE>
See accompanying notes to unaudited Condensed
Consolidated Financial Statements
<PAGE>
Page 6
NORTHSTAR COMPUTER FORMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1998
1. Basis of Presentation
The interim condensed consolidated financial statements included in this
Form 10-Q have been prepared by Northstar Computer Forms, Inc. (the
Company), without audit, 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 these rules and regulations. The year-
end balance sheet was derived from audited financial statements, but does
not include all disclosures required by generally accepted accounting
principles. These condensed consolidated financial statements should be
read in conjunction with the financial statements and related notes
included in the Company's 1997 Annual Report on Form 10-KSB as filed with
the Securities and Exchange Commission.
The unaudited condensed consolidated financial statements presented herein
as of July 31, 1998, and for the three months and nine months then ended
reflect, in the opinion of management, all adjustments (which include only
normal, recurring adjustments) necessary for a fair presentation of the
financial position, results of operations and cash flows as of and for the
periods presented. The results of operations for any interim period are
not necessarily indicative of results for the full year.
2. Earnings per share
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
Share," a new standard for computing and presenting earnings per share. As
required, the Company adopted this new standard in the first quarter of its
1998 fiscal year. Net earnings per share (EPS) for all periods presented
have been computed by dividing net earnings by the weighted average number
of common shares outstanding (basic EPS) and by the weighted average number
of common and common equivalent shares outstanding (diluted EPS). The
Company's common equivalent shares consist of stock options when their
effect is not antidilutive.
On May 13, 1998, the common stock of the Company was split 3 for 2. All
applicable per share and number of share data have been retroactively
restated to reflect the stock split.
<PAGE>
Page 7
The computation of basic and diluted weighted average common shares
outstanding is as follows:
<TABLE>
<CAPTION>
For the three months For the nine months
ended July 31, ended July 31,
(Unaudited) (Unaudited)
1998 1997 1998 1997
---- ---- ---- ----
<C> <C> <C> <C> <C>
Weighted average common
shares outstanding 2,660,958 2,587,898 2,650,908 2,605,672
Common equivalent shares
outstanding:
Option equivalents 222,941 219,360 221,082 172,208
----------- ----------- ---------- ----------
Weighted average common
and common equivalent 2,883,899 2,807,258 2,871,990 2,777,880
----------- ----------- ---------- ----------
----------- ----------- ---------- ----------
</TABLE>
3. New Accounting Pronouncements
In June 1997, the FASB issued SFAS 130, "Reporting Comprehensive Income," a
new standard requiring the reporting and display of "Comprehensive Income"
(defined as the change in equity of a business enterprise during a period
from sources other than those resulting from investment by owners and
distributions to owners) and its components in a full-set of general-
purpose financial statements. The new standard will be effective for the
Company's annual financial statement in fiscal year 1999. In the nine
month period ended July 31, 1998, and in fiscal year 1997, the Company did
not have any changes in equity from nonowner sources.
In June 1997, the FASB issued SFAS 131, "Disclosures About Segments of an
Enterprise and Related Information," a new standard for reporting
information about operating or business segments in financial statements.
The new standard will be effective for the Company's annual financial
statements in fiscal year 1999. The Company has not evaluated what impact,
if any, this new standard will have on the Company's future reporting of
operating and business segments.
In March 1998, the Accounting Standards Executive Committee issued
Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." This SOP provides
guidance on accounting for the costs of computer software developed or
obtained for internal use. The Company is reviewing the requirements of
the SOP and does not expect it to significantly change its current
accounting for software costs. SOP 98-1 is required to be adopted by the
Company for its fiscal year 2000.
4. Notes Receivable
During fiscal year 1998, the Company received a prepayment of $583,000 on
notes receivable previously classified as noncurrent assets.
<PAGE>
Page 8
NORTHSTAR COMPUTER FORMS, INC.
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations of
Interim Financial Data
The following discussion and analysis provides information that the Company's
management believes is relevant to an assessment and understanding of the
Company's results of operations and financial condition.
In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the Company cautions readers that statements
contained herein, other than historical data, may be forward-looking and
subject to risk and uncertainties. The following important factors could
cause the Company's actual results to differ materially from those projected
in forward-looking statements made by, or on behalf of, the Company. This
list is not intended to present an all-inclusive list of such important
factors.
- Inability to successfully complete the integration of the Company's
new software system within all internal bank forms production
facilities.
- Loss of a major customer due to bank consolidations or other reasons.
- Rise in paper prices which outpaces the Company's ability to pass the
increase onto its customers.
- Technological obsolescence.
- Competition from large national manufacturers of internal bank forms.
The following table sets forth, for the period indicated, certain items in the
Company's unaudited condensed consolidated statement 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 JULY 31:
<TABLE>
<CAPTION>
Percentage of Net Sales Decrease
----------------------- --------
1998 1997 1998 vs. 1997
---- ---- -------------
<S> <C> <C> <C>
Net Sales................................. 100.0% 100.0% (8.6)%
Cost of Goods Sold........................ 74.2 69.5 (2.4)
--------- ---------- -----------
Gross Profit ...................... 25.8 30.5 (22.6)
--------- ---------- -----------
Selling, General and
Administrative Expenses................. 19.0 18.3 (4.7)
--------- ---------- -----------
Operating Income.......................... 6.8 12.2 (49.3)
Net Earnings.............................. 3.5 6.7 (51.8)
--------- ---------- -----------
</TABLE>
NINE MONTHS ENDED JULY 31:
<TABLE>
<CAPTION>
Percentage of Net Sales Decrease
----------------------- --------
1998 1997 1998 vs. 1997
---- ---- -------------
<S> <C> <C> <C>
Net Sales ................................ 100.0 % 100.0 % (8.5) %
Cost of Goods Sold ....................... 73.2 70.7 (5.2)
--------- ---------- -----------
Gross Profit ...................... 26.8 29.3 (16.5)
--------- ---------- -----------
Selling, General and
Administrative Expenses ............... 18.9 17.6 (1.6)
--------- ---------- -----------
Operating Income ......................... 7.9 11.7 (38.7)
Net Earnings ............................. 4.1 6.1 (38.7)
--------- ---------- -----------
</TABLE>
<PAGE>
Page 9
The following table sets forth unaudited net sales information for the periods
indicated for internal bank forms, custom business forms and consolidated net
sales of the Company.
<TABLE>
<CAPTION>
INTERNAL CUSTOM CONSOLIDATED
BANK FORMS % BUSINESS FORMS % SALES
----------- ------ -------------- ------ -------------
Third Quarter (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
1998 $ 7,092,723 68 $3,265,548 32 $10,358,271
1997 8,360,909 74 2,969,313 26 11,330,222
Increase (Decrease) (1,268,186) 296,235 (971,951)
Percentage Change (15.2%) 10.0% (8.6%)
Nine Months
1998 $21,914,829 69 $9,805,412 31 $31,720,241
1997 25,174,512 73 9,505,398 27 34,679,910
Increase (Decrease) (3,259,683) 300,014 (2,959,669)
Percentage Change (12.9%) 3.2% (8.5%)
</TABLE>
NET SALES. Sales of internal bank forms decreased for the quarter and nine
months of 1998. This decrease in sales is due to non-renewal of sales contracts
and acquisition of some internal bank forms customers by banks who are not
customers of the Company. There was no change in product pricing for the
quarter or nine month period. In addition, for both the quarter and nine months
in 1997 there were several large bank conversion sales. For the quarter and
nine months of 1998, the Company has had several smaller bank conversion sales.
A bank conversion results generally from an acquisition of one bank by another
or a change in the equipment utilized by a bank for internal document sorting.
Therefore, due to the unpredictable nature of bank conversions, the Company's
revenue for this type of sale fluctuates. Sales of custom business forms
increased for the nine months and the quarter. Sales increases resulted from an
increased order volume from existing customers as well as sales to new
customers.
GROSS PROFIT. Gross profit margin for the third quarter of 1998 decreased from
30.5 percent of sales in 1997 to 25.8 percent of sales in 1998. For the nine
months, gross profit margin decreased from 29.3 percent of sales in 1997 to 26.8
percent of sales in 1998. Although stable paper prices resulted in paper costs
as a percentage of sales of approximately 1.5 percent less in 1998 than in 1997,
other costs, principally variable expenses which increased approximately
$217,000 and fixed and semi-fixed costs which increased approximately $76,000,
had a negative impact on gross profit margin. Overall, the reduction in sales
reduced the absorption of costs, thereby increasing cost of goods sold as a
percentage of sales from 69.5 percent in 1997 to 74.2 percent in 1998 for the
third quarter and from 70.7 percent in 1997 to 73.2 percent in 1998 for the nine
months.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expense decreased $97,545 for the three months and $95,155 for
the nine months ended July 31, 1998 compared to the respective periods in 1997.
However, due to the reduction in sales, the selling, general and administrative
expenses accounted for 19.0 and 18.9 percent of sales in the third quarter and
first nine months of 1998, respectively, compared to 18.3 and 17.6 percent of
sales in the third quarter and first nine months of 1997, respectively. In
1998, sales commissions to distributors/partners were restructured to provide
additional incentive to increase new business. These restructured commission
cost increases were offset by decreases in costs related to employee profit
sharing and bonus benefits and reduced computer service costs.
<PAGE>
Page 10
OPERATING INCOME. As a result of the previously discussed sales decrease and
cost increases, operating income was 6.8 percent of sales for the third quarter
of 1998 and 7.9 percent of sales for the nine months ended July 31, 1998
compared to 12.2 percent for the third quarter of 1997 and 11.7 percent for the
nine months ended July 31, 1997.
OTHER INCOME AND EXPENSE. Other expense decreased approximately $140,000 for
the first nine months of 1998. This reduction is principally due to decreased
interest expense as a result of debt repayment and increased interest income
from investment of additional cash balances on hand during 1998.
PROVISION FOR INCOME TAXES. The provision for income taxes decreased to 38
percent for the nine month period ended July 31, 1998 compared to 40 percent for
the same period in 1997.
EARNINGS. Earnings before income taxes were $589,912 or 5.7 percent of sales
for the third quarter of 1998 and $2,100,660 or 6.6 percent of sales for the
nine months ended July 31, 1998 compared with $1,261,296 or 11.1 percent of
sales in the third quarter of 1997 and $3,540,598 or 10.2 percent of sales for
the nine months ended July 31, 1997. Net earnings were $1,301,660 ($ .45 per
share diluted, $ .49 per share basic) for the nine months ended July 31, 1998
compared to $2,124,098 ($.77 per share diluted, $.82 per share basic) in 1997.
FINANCIAL CONDITION AND LIQUIDITY
LONG-TERM DEBT. The Company's long-term debt consists of a term loan and
Industrial Development Revenue Bonds. The term loan principal is payable in
quarterly installments and from annual excess cash flow as defined in the Loan
Agreement with any remaining principal balance on the term loan due on July 31,
2003. In 1998, the Company paid excess cash flow payments of $2,000,000 and
prepaid an additional $1,000,000 in loan principal. Interest on both loans is
payable monthly. The bonds require annual principal payments and monthly
interest payments at a variable rate based upon comparable tax-exempt issues.
Both the term loan and the bonds specify limits on capital expenditures and
dividends. Both also specify working capital, net worth and certain financial
ratios that the Company must maintain.
LIQUIDITY. Cash provided by operations was $4,156,911 during the nine months
ended July 31, 1998, compared to $4,465,408 for the same period in 1997.
Working capital was $8.0 million at July 31, 1998, compared to $7.2 million at
October 31, 1997.
During the nine months ended July 31, 1998, the Company continued to upgrade its
manufacturing capacity by the acquisition of $1,576,590 in equipment and
computer software compared to $1,721,562 for the first nine months of 1997. The
Company anticipates that total equipment and computer software expenditures for
1998 will approximate the 1997 capital expenditures of $2,050,000. During 1998,
the Company received a prepayment of notes receivable of $583,000 previously
classified as a noncurrent asset.
If necessary to finance operations, the Company has a $1.5 million line of
credit at an interest rate equal to the bank's reference rate. The Company did
not have to utilize this line of credit during 1998 or 1997. The Company
believes its existing financial resources are adequate to fund its 1998
operations, including 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
facilities already in place.
<PAGE>
Page 11
OUTLOOK. Merger and acquisition activity in the banking industry is extremely
strong at this time. Banks generally consolidate their purchasing of internal
bank forms with one supplier. Therefore, the Company could obtain or lose a
significant customer as this consolidation activity continues. Recently,
competition in the internal bank forms industry has become more intense and is
particularly strong in contract negotiations with the larger banks. This
increased competition has resulted in non-renewal of three contracts during the
nine month period and renewals of certain other contracts at reduced profit
margin levels. In addition, as part of the acquisition of the internal bank
forms plant from Deluxe Corporation (Deluxe) in 1996, the Company had a two year
contract to manufacture a special product line for Deluxe. Deluxe has elected
not to renew this contract at this time. However, the Company has obtained three
new large volume internal bank form customers. In addition, to increase and
improve market penetration in the internal bank forms market, the Company has
developed additional distribution channels by forming two new sales alliances.
The Company anticipates sales from these new alliances with distributors to
begin early in the fourth quarter of fiscal 1998. In the custom business forms
business, the Company has verbally agreed to an extension of its contracts to
manufacture forms for its largest customer. The Company also has proposals
pending for three new forms contracts.
To remain competitive, the integration of the Company's computer systems is
increasingly important. The internal bank forms computer system which the
Company developed and installed in the first location in 1997 is being
continually enhanced and is now installed in three of the Company's four
internal bank forms production facilities. The fourth installation is
scheduled for later this year. This integrated computer system is already
increasing operating efficiencies within the three plants by streamlining order
processing, enhancing equipment utilization and improving billing and reporting
capabilities.
In addition, the Company is developing and implementing additional marketing
strategies to strengthen the Company's market position. These marketing efforts
will focus on the internal bank forms industry as well as the other financial
forms products manufactured at the Company's custom business forms production
facilities.
READINESS FOR YEAR 2000. The Company has taken actions to understand the nature
and extent of work required to make the Company's systems Year 2000 compliant.
The Company believes, based on available information, that it will be able to
manage its total Year 2000 transition without any material adverse effect on its
business operations, products or financial prospects. The Company estimates
that compliance modifications costs will approximate $50,000.
<PAGE>
Page 12
NEW ACCOUNTING PRONOUNCEMENTS. In June 1997, the FASB issued SFAS 130,
"Reporting Comprehensive Income," a new standard requiring the reporting and
display of "Comprehensive Income" (defined as the change in equity of a
business enterprise during a period from sources other than those resulting
from investment by owners and distributions to owners) and its components in
a full-set of general-purpose financial statements. The new standard will be
effective for the Company's annual financial statements in fiscal year 1999.
In the nine month period ended July 31, 1998, and in fiscal year 1997, the
Company did not have any changes in equity from nonowner sources.
In June 1997, the FASB issued SFAS 131, "Disclosures About Segments of an
Enterprise and Related Information," a new standard for reporting information
about operating or business segments in financial statements. The new
standard will be effective for the Company's annual financial statements in
fiscal year 1999. The Company has not evaluated what impact, if any, this
new standard will have on the Company's future reporting of operating and
business segments.
In March 1998, the Accounting Standards Executive Committee issued Statement
of Position (SOP) 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use." This SOP provides guidance on
accounting for the costs of computer software developed or obtained for
internal use. The Company is reviewing the requirements of the SOP and does
not expect it to significantly change its current accounting for software
costs. SOP 98-1 is required to be adopted by the Company for its fiscal year
2000.
<PAGE>
Page 13
NORTHSTAR COMPUTER FORMS, INC.
PART II. - OTHER INFORMATION
item 6. Exhibits and Reports on Form 8-K - None.
None of the other items contained in Part II of Form 10-Q is applicable to the
Company for the quarter ended July 31, 1998.
<PAGE>
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.
Northstar Computer Forms, Inc.
(Registrant)
Date: September 10, 1998 By: Mary Ann Morin
------------------------- -------------------------
Mary Ann Morin
Chief Financial Officer
(Principal Financial Officer)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-30-1997
<PERIOD-END> JUL-31-1998
<CASH> 4,750,113
<SECURITIES> 0
<RECEIVABLES> 5,116,078
<ALLOWANCES> 307,000
<INVENTORY> 1,820,939
<CURRENT-ASSETS> 12,051,415
<PP&E> 30,286,425
<DEPRECIATION> 15,711,727
<TOTAL-ASSETS> 29,720,123
<CURRENT-LIABILITIES> 4,079,578
<BONDS> 5,543,050
0
0
<COMMON> 133,199
<OTHER-SE> 17,861,656
<TOTAL-LIABILITY-AND-EQUITY> 29,720,123
<SALES> 31,720,241
<TOTAL-REVENUES> 31,720,241
<CGS> 23,221,113
<TOTAL-COSTS> 29,180,223
<OTHER-EXPENSES> (125,286)
<LOSS-PROVISION> 41,400
<INTEREST-EXPENSE> 523,244
<INCOME-PRETAX> 2,100,660
<INCOME-TAX> 799,000
<INCOME-CONTINUING> 1,301,660
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,301,660
<EPS-PRIMARY> .49
<EPS-DILUTED> .45
</TABLE>
