UNITED STATES
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 March 30, 2013
OR
o | 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 0-7597
COURIER CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts |
| 04-2502514 |
(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
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15 Wellman Avenue, North Chelmsford, Massachusetts |
| 01863 |
(Address of principal executive offices) |
| (Zip Code) |
(978) 251-6000
(Registrant’s telephone number, including area code)
NO CHANGE
(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 o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x Noo
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one:)
Large accelerated filer o |
| Accelerated filer x |
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Non- accelerated filer o |
| Smaller reporting company o |
(Do not check if a smaller reporting company) |
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Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes o No x
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
Class |
| Outstanding at May 3, 2013 |
Common Stock, $1 par value |
| 11,448,474 shares |
COURIER CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in thousands except per share amounts)
|
| QUARTER ENDED |
| SIX MONTHS ENDED |
| ||||||||
|
| March 30, |
| March 24, |
| March 30, |
| March 24, |
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| 2013 |
| 2012 |
| 2013 |
| 2012 |
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Net sales |
| $ | 61,778 |
| $ | 62,388 |
| $ | 126,534 |
| $ | 125,324 |
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Cost of sales (Note E) |
| 49,774 |
| 50,190 |
| 98,530 |
| 97,528 |
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Gross profit |
| 12,004 |
| 12,198 |
| 28,004 |
| 27,796 |
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Selling and administrative expenses (Note E) |
| 11,281 |
| 11,317 |
| 23,249 |
| 24,942 |
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Operating income |
| 723 |
| 881 |
| 4,755 |
| 2,854 |
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Interest expense, net |
| 191 |
| 193 |
| 381 |
| 453 |
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Other income (Note K) |
| — |
| — |
| — |
| (587 | ) | ||||
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Pretax income |
| 532 |
| 688 |
| 4,374 |
| 2,988 |
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Income tax provision (Note C) |
| 196 |
| 248 |
| 1,618 |
| 1,094 |
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Net income |
| $ | 336 |
| $ | 440 |
| $ | 2,756 |
| $ | 1,894 |
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Net income per share (Note G): |
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Basic |
| $ | 0.03 |
| $ | 0.04 |
| $ | 0.24 |
| $ | 0.16 |
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Diluted |
| $ | 0.03 |
| $ | 0.04 |
| $ | 0.24 |
| $ | 0.16 |
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Cash dividends declared per share |
| $ | 0.21 |
| $ | 0.21 |
| $ | 0.42 |
| $ | 0.42 |
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The accompanying notes are an integral part of the consolidated condensed financial statements.
COURIER CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
|
| March 30, |
| September 29, |
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| 2013 |
| 2012 |
| ||
ASSETS |
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Current assets: |
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Cash and cash equivalents |
| $ | 90 |
| $ | 64 |
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Investments |
| 824 |
| 765 |
| ||
Accounts receivable, less allowance for uncollectible accounts of $958 at March 30, 2013 and $944 at September 29, 2012 |
| 31,572 |
| 35,152 |
| ||
Inventories (Note B) |
| 33,653 |
| 36,364 |
| ||
Deferred income taxes |
| 4,209 |
| 4,273 |
| ||
Recoverable income taxes |
| 1,437 |
| — |
| ||
Other current assets |
| 950 |
| 950 |
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Total current assets |
| 72,735 |
| 77,568 |
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Property, plant and equipment, less accumulated depreciation: $206,126 at March 30, 2013 and $199,267 at September 29, 2012 |
| 89,333 |
| 89,952 |
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Goodwill (Note A) |
| 15,966 |
| 15,988 |
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Other intangibles, net (Note A) |
| 1,687 |
| 1,892 |
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Prepublication costs, net (Note A) |
| 6,761 |
| 7,135 |
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Deferred income taxes |
| 3,245 |
| 3,451 |
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Other assets |
| 1,381 |
| 1,374 |
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Total assets |
| $ | 191,108 |
| $ | 197,360 |
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The accompanying notes are an integral part of the consolidated financial statements.
COURIER CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
|
| March 30, |
| September 29, |
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| 2013 |
| 2012 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Current maturities of long-term debt |
| $ | 1,907 |
| $ | 1,872 |
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Accounts payable |
| 9,904 |
| 11,364 |
| ||
Accrued payroll |
| 6,381 |
| 8,360 |
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Accrued taxes |
| 925 |
| 3,857 |
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Other current liabilities (Note E) |
| 9,445 |
| 7,417 |
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Total current liabilities |
| 28,562 |
| 32,870 |
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Long-term debt |
| 15,302 |
| 13,696 |
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Other liabilities (Note E) |
| 5,567 |
| 6,283 |
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Total liabilities |
| 49,431 |
| 52,849 |
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Stockholders’ equity (Note F): |
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Preferred stock, $1 par value - authorized 1,000,000 shares; none issued |
| — |
| — |
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Common stock, $1 par value - authorized 18,000,000 shares; issued 11,448,000 at March 30, 2013 and 11,464,000 at September 29, 2012 |
| 11,448 |
| 11,464 |
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Additional paid-in capital |
| 19,462 |
| 18,958 |
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Retained earnings |
| 111,716 |
| 115,038 |
| ||
Accumulated other comprehensive loss |
| (949 | ) | (949 | ) | ||
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Total stockholders’ equity |
| 141,677 |
| 144,511 |
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Total liabilities and stockholders’ equity |
| $ | 191,108 |
| $ | 197,360 |
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The accompanying notes are an integral part of the consolidated financial statements.
COURIER CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
|
| SIX MONTHS ENDED |
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| March 30, |
| March 24, |
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| 2013 |
| 2012 |
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Operating Activities: |
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Net income |
| $ | 2,756 |
| $ | 1,894 |
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Adjustments to reconcile net income to cash provided from operating activities: |
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Depreciation of property, plant and equipment |
| 9,416 |
| 9,582 |
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Amortization of prepublication costs |
| 2,017 |
| 2,157 |
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Amortization of intangible assets |
| 205 |
| 205 |
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Stock-based compensation (Note F) |
| 672 |
| 767 |
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Deferred income taxes |
| 270 |
| 610 |
| ||
Gain on disposition of assets (Note K) |
| — |
| (587 | ) | ||
Changes in assets and liabilities: |
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Accounts receivable |
| 3,580 |
| 3,294 |
| ||
Inventory |
| 2,711 |
| 141 |
| ||
Accounts payable |
| (1,460 | ) | (1,995 | ) | ||
Accrued and recoverable taxes |
| (4,369 | ) | (2,491 | ) | ||
Other elements of working capital |
| 284 |
| 1,505 |
| ||
Other long-term, net |
| (726 | ) | (639 | ) | ||
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Cash provided from operating activities |
| 15,356 |
| 14,443 |
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Investment Activities: |
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Capital expenditures |
| (8,793 | ) | (2,353 | ) | ||
Prepublication costs |
| (1,643 | ) | (2,301 | ) | ||
Proceeds on disposition of assets (Note K) |
| — |
| 587 |
| ||
Short-term investments |
| (59 | ) | (225 | ) | ||
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Cash used for investment activities |
| (10,495 | ) | (4,292 | ) | ||
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Financing Activities: |
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Long-term debt borrowings (repayments) |
| 1,641 |
| (4,924 | ) | ||
Cash dividends |
| (4,839 | ) | (5,139 | ) | ||
Share repurchases (Note H) |
| (1,568 | ) | — |
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Proceeds from stock plans |
| 166 |
| 167 |
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Contingent consideration |
| (235 | ) | (275 | ) | ||
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Cash used for financing activities |
| (4,835 | ) | (10,171 | ) | ||
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Increase (decrease) in cash and cash equivalents |
| 26 |
| (20 | ) | ||
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Cash and cash equivalents at the beginning of the period |
| 64 |
| 104 |
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Cash and cash equivalents at the end of the period |
| $ | 90 |
| $ | 84 |
|
The accompanying notes are an integral part of the consolidated condensed financial statements.
COURIER CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Unaudited Financial Statements
The consolidated condensed balance sheet as of March 30, 2013 and the consolidated condensed statements of operations for the three-month and six-month periods ended March 30, 2013 and March 24, 2012 and the statements of cash flows for the six-month periods ended March 30, 2013 and March 24, 2012 are unaudited. In the opinion of management, all adjustments, consisting of normal recurring items, considered necessary for a fair presentation of such financial statements have been recorded. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“generally accepted accounting principles”) have been condensed or omitted. The balance sheet data as of September 29, 2012 was derived from audited year-end financial statements, but does not include disclosures required by generally accepted accounting principles. It is suggested that these interim financial statements be read in conjunction with the Company’s most recent Annual Report on Form 10-K for the year ended September 29, 2012.
Goodwill and Other Intangibles
The Company evaluates possible impairment to goodwill and other intangible assets annually at the end of its fiscal year or whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. There were no such events or changes in circumstances in the period ended March 30, 2013. “Other intangibles” include trade names, customer lists and technology. Trade names with indefinite lives are not subject to amortization. Customer lists and technology are being amortized over five to ten-year periods. Amortization expense related to customer lists and technology was approximately $100,000 in the second quarters and $200,000 in the first six months of both fiscal years 2013 and 2012.
Fair Value Measurements
Certain assets and liabilities are required to be recorded at fair value on a recurring basis, while other assets and liabilities are recorded at fair value on a nonrecurring basis, generally as a result of impairment charges. Fair value is determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Assets measured at fair value on a nonrecurring basis include long-lived assets and goodwill and other intangible assets. The three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies, is:
Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.
Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
Level 3—Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants.
Fair Value of Financial Instruments
Financial instruments consist primarily of cash, investments in mutual funds (Level 1), accounts receivable, accounts payable, debt obligations and contingent consideration (Level 3). At March 30, 2013 and September 29, 2012, the fair value of the Company’s financial instruments approximated their carrying values. The fair value of the Company’s revolving credit facility approximates its carrying value due to the variable interest rate and the Company’s current rate standing.
Prepublication Costs
Prepublication costs, associated with creating new titles in the publishing segment, are amortized to cost of sales using the straight-line method over estimated useful lives of two to four years.
B. INVENTORIES
Inventories are valued at the lower of cost or market. Cost is determined using the last-in, first-out (LIFO) method for approximately 53% and 57% of the Company’s inventories at March 30, 2013 and September 29, 2012, respectively. Other inventories, primarily in the publishing segment, are determined on a first-in, first-out (FIFO) basis. Inventories consisted of the following:
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| (000’s Omitted) |
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|
| March 30, |
| September 29, |
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Raw materials |
| $ | 4,521 |
| $ | 4,523 |
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Work in process |
| 8,341 |
| 8,763 |
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Finished goods |
| 20,791 |
| 23,078 |
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Total |
| $ | 33,653 |
| $ | 36,364 |
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C. INCOME TAXES
In calculating the provision for income taxes on an interim basis, the Company uses an estimate of the annual effective tax rate based upon the facts and circumstances known and applies that rate to its ordinary year-to-date earnings or losses. The effect of discrete items, such as unusual or infrequently occurring events, is recognized in the interim period in which the discrete item occurs.
The provision for income taxes differs from that computed using the statutory federal income tax rates for the following reasons:
|
| (000’s Omitted) |
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| Six Months Ended |
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|
| March 30, |
| March 24, |
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Federal taxes at statutory rates |
| $ | 1,531 |
| 35.0 | % | $ | 1,046 |
| 35.0 | % |
State taxes, net of federal tax benefit |
| 181 |
| 4.2 |
| 126 |
| 4.2 |
| ||
Federal manufacturer’s deduction |
| (121 | ) | (2.8 | ) | (76 | ) | (2.5 | ) | ||
Other |
| 27 |
| 0.6 |
| (2 | ) | (0.1 | ) | ||
Total |
| $ | 1,618 |
| 37.0 | % | $ | 1,094 |
| 36.6 | % |
D. OPERATING SEGMENTS
The Company has two operating segments: book manufacturing and publishing. The book manufacturing segment offers a full range of services from production through storage and distribution for religious, educational and specialty trade book publishers. The publishing segment consists of Dover Publications, Inc., Federal Marketing Corporation, Inc., d/b/a Creative Homeowner, and Research & Education Association, Inc. (“REA”).
Segment performance is evaluated based on several factors, of which the primary financial measure is operating income. Operating income is defined as gross profit (sales less cost of sales) less selling and administrative expenses, and includes severance and other restructuring costs but excludes stock-based compensation. As such, segment performance is evaluated exclusive of interest, income taxes, stock-based compensation, intersegment profit, impairment charges, and other income. The elimination of intersegment sales and related profit represents sales from the book manufacturing segment to the publishing segment.
The following table provides segment information for the three-month and six-month periods ended March 30, 2013 and March 24, 2012.
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| (000’s Omitted) |
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| Quarter Ended |
| Six Months Ended |
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|
| March 30, |
| March 24, |
| March 30, |
| March 24, |
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|
| 2013 |
| 2012 |
| 2013 |
| 2012 |
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Net sales: |
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Book manufacturing |
| $ | 55,919 |
| $ | 55,454 |
| $ | 113,400 |
| $ | 111,450 |
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Publishing |
| 9,353 |
| 9,635 |
| 18,487 |
| 19,087 |
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Elimination of intersegment sales |
| (3,494 | ) | (2,701 | ) | (5,353 | ) | (5,213 | ) | ||||
Total |
| $ | 61,778 |
| $ | 62,388 |
| $ | 126,534 |
| $ | 125,324 |
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Pretax income: |
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Book manufacturing operating income |
| $ | 1,395 |
| $ | 2,349 |
| $ | 6,894 |
| $ | 6,555 |
|
Publishing operating loss |
| (368 | ) | (1,136 | ) | (1,504 | ) | (2,963 | ) | ||||
Stock-based compensation |
| (331 | ) | (345 | ) | (672 | ) | (767 | ) | ||||
Elimination of intersegment profit |
| 27 |
| 13 |
| 37 |
| 29 |
| ||||
Interest expense, net |
| (191 | ) | (193 | ) | (381 | ) | (453 | ) | ||||
Other income |
| — |
| — |
| — |
| 587 |
| ||||
Total |
| $ | 532 |
| $ | 688 |
| $ | 4,374 |
| $ | 2,988 |
|
E. RESTRUCTURING COSTS
During fiscal 2012, approximately $3.3 million of pre-tax restructuring charges were recorded for cost reduction measures taken throughout the year in the Company’s operating segments, including a reduction in the Company’s one-color offset press capacity. Severance and post-retirement benefit expenses were $1.9 million and accelerated depreciation on an unutilized one-color press was $1.4 million. Approximately $1.6 million of these costs were recorded in the first six months of fiscal 2012 for severance and post-retirement benefit costs, with approximately $1.5 million recorded in the first quarter of last year. Approximately $0.9 million and $0.6 million of these restructuring costs were included in selling and administrative expenses in the Company’s book manufacturing segment and publishing segment, respectively. At March 30, 2013, approximately $0.4 million of the remaining restructuring payments were included in “Other current liabilities” in the accompanying consolidated balance sheet.
In fiscal 2011, the Company recorded restructuring costs of $7.7 million associated with closing and consolidating its Stoughton, Massachusetts manufacturing facility due to the impact of technology and competitive pressures affecting the one-color paperback books in which the plant specialized. Restructuring costs included $2.3 million for employee severance and benefit costs, $2.1 million for an early withdrawal liability from a multi-employer pension plan, and $3.3 million for lease termination and other facility closure costs; no sub-lease income was assumed at the time due to local real estate market conditions. Subsequently, a portion of the facility has been sublet effective March 2013. Remaining payments of approximately $3.5 million will be made over periods ranging from 3 years for the building lease obligation to 18 years for the liability related to the multi-employer pension plan. At March 30, 2013, approximately $1.0 million of the restructuring payments were included in “Other current liabilities” and $2.6 million were included in “Other liabilities” in the accompanying consolidated balance sheet.
The following table depicts the remaining accrual balances for these restructuring costs.
|
| (000’s omitted) |
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|
| Accrual at |
| Charges |
| Costs |
| Accrual at |
| |||
|
| September 29, |
| or |
| Paid or |
| March 30, |
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| 2012 |
| Reversals |
| Settled |
| 2013 |
| |||
Employee severance, post-retirement and other benefit costs |
| $ | 870 |
|
|
| $ | (298 | ) | $ | 572 |
|
Early withdrawal from multi-employer pension plan |
| 2,072 |
|
|
| (36 | ) | 2,036 |
| |||
Lease termination, facility closure and other costs |
| 1,665 |
|
|
| (251 | ) | 1,414 |
| |||
Total |
| $ | 4,607 |
| — |
| $ | (585 | ) | $ | 4,022 |
|
F. STOCK ARRANGEMENTS
The Company records stock-based compensation expense for the cost of stock options and stock grants as well as shares issued under the Company’s 1999 Employee Stock Purchase Plan, as amended. The fair value of each option awarded is calculated on the date of grant using the Black-Scholes option-pricing model. Stock-based compensation recognized in selling and administrative expenses in the accompanying financial statements in the second quarters of fiscal 2013 and 2012 was $331,000 and $345,000, respectively. The related tax benefit recognized in the second quarters of fiscal 2013 and 2012 was $117,000 and $124,000, respectively. For the first six months of fiscal 2013 and 2012, stock-based compensation was $672,000 and $767,000, respectively, and the related tax benefit recognized was $237,000 and $279,000, respectively. Unrecognized stock-based compensation cost at March 30, 2013 was $1.9 million, to be recognized over a weighted-average period of 2.0 years.
The Company annually issues a combination of stock options and stock grants to its key employees under the Courier Corporation 2011 Stock Option and Incentive Plan (the “2011 Plan”). Stock options and stock grants generally vest over three years. Such options and grants were historically issued in September each year. However, beginning this past fiscal year, the Company shifted the timing of such awards to November. As a result, options and grants relating to fiscal 2012 were awarded in November 2012. As such, no annual awards were issued during the fiscal year ended September 29, 2012. In the first quarter of fiscal 2013, 54,635 stock options were awarded under the 2011 Plan with an exercise price of $11.01 per share, which was the stock price on the date of grant, and a weighted-average fair value of $1.75 per share. In addition, 64,028 stock grants were awarded in November 2012 with a weighted-average fair value of $11.01 per share.
The Company annually issues a combination of stock options and stock grants to its non-employee directors under the Courier Corporation 2010 Stock Equity Plan for Non-Employee Directors (the “2010 Plan”). Stock options and stock grants generally vest over three years. During the second quarter of fiscal 2013, 14,931 stock awards, with a weighted-average fair value of $11.77 per share, were granted to non-employee directors as well as 85,498 stock options with an exercise price of $11.77 per share, which was the stock price on the date of grant, and a weighted-average fair value of $2.05 per share. Directors may also elect to receive their annual retainer and committee chair fees as shares of stock in lieu of cash; 12,320 such shares were issued in the second quarter of fiscal 2013.
The weighted average Black-Scholes fair value assumptions for stock options awarded under the 2011 Plan and the 2010 Plan in the first six months of fiscal 2013 were as follows:
|
| 2011 Plan |
| 2010 Plan |
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|
|
Estimated life of options (years) |
| 10 |
| 10 |
|
Risk-free interest rate |
| 1.7 | % | 2.0 | % |
Expected volatility |
| 41.5 | % | 41.6 | % |
Expected dividend yield |
| 7.6 | % | 7.2 | % |
G. NET INCOME PER SHARE
The following is a reconciliation of the outstanding shares used in the calculation of basic and diluted net income per share. Potentially dilutive shares, calculated using the treasury stock method, consist of shares issued under the Company’s stock option plans.
|
| (000’s Omitted) |
| ||||||
|
| Quarter Ended |
| Six Months Ended |
| ||||
|
| March 30, |
| March 24, |
| March 30, |
| March 24, |
|
|
|
|
|
|
|
|
|
|
|
Average shares outstanding for basic |
| 11,295 |
| 12,087 |
| 11,309 |
| 12,066 |
|
Effect of potentially dilutive shares |
| 110 |
| 73 |
| 121 |
| 65 |
|
Average shares outstanding for diluted |
| 11,405 |
| 12,160 |
| 11,430 |
| 12,131 |
|
H. SHARE REPURCHASE PROGRAM
On November 20, 2012, the Company announced the approval by its Board of Directors for the repurchase of up to $10 million of the Company’s outstanding common stock from time to time on the open market or in privately negotiated transactions, including pursuant to a Rule 10b5-1 nondiscretionary trading plan. This stock repurchase authorization is effective for a period of twelve months. Through March 30, 2013, the Company repurchased approximately 123,000 shares of common stock for approximately $1.6 million.
In April 2012, the Company’s Board of Directors approved a similar program for the repurchase of up to $10 million of the Company’s outstanding common stock. In fiscal 2012, the Company repurchased 823,970 shares of common stock for approximately $10 million.
I. MULTI-EMPLOYER PENSION PLANS
The Company contributes to two multi-employer pension plans under collective bargaining agreements covering certain employees at its book manufacturing facility in Philadelphia. Multi-employer pension plans cover employees of and receive contributions from two or more unrelated employers pursuant to one or more collective bargaining agreements, and the assets contributed by each employer may be used to fund the benefits of all employees covered by the plan.
The risks of participating in these multi-employer benefit plans are different from single-employer benefit plans in the following aspects:
· Assets contributed to the multi-employer benefit plan by one employer may be used to provide benefits to employees of other participating employers.
· If a participating employer stops contributing to the multi-employer benefit plan, the unfunded obligations of the plan may be borne by the remaining participating employers.
· If the Company stops participating in either of its multi-employer pension plans, the Company may be required to pay those plans an amount based on its allocable share of the underfunded status of the plan, referred to as a withdrawal liability, subject to safe harbors based on its annual contribution level.
The Company is required to make contributions to the multi-employer plans in accordance with two separate collective bargaining agreements covering the Company’s employees in each plan as well as the terms of such plan.
The Company’s contributions for the Bindery Industry Employers GCC/IBT Pension Plan represented approximately 70% of total contributions in each of the last three years. This plan currently includes only three other contributing employers. The Company contributed less than 5% of total contributions to the GCIU — Employer Retirement Benefit Plan in each of the past three years. The Company is not subject to surcharges for the remainder of 2013 and currently estimates that it will be required to contribute approximately $373,000 to these two plans in fiscal 2013. These contributions could significantly increase due to other employers’ withdrawals or changes in the funded status of the plans. Both plans are
estimated to be underfunded as of March 30, 2013 and have a Pension Protection Act zone status of critical (“red”). Such status identifies plans that are less than 65% funded. Rehabilitation plans have been adopted for each plan.
On January 6, 2013, a new 5-year contract was entered into for the Bindery Industry Employers GCC/IBT Pension Plan. This new contract provides the Company with the right to withdraw from the plan if certain future events occur. If one of these future events were to occur and the Company exercises its right to withdraw from the plan, the potential withdrawal liability would equal the Company’s proportionate share of the unfunded vested benefits based on the year in which the liability is triggered, subject to safe harbors based on the Company’s annual contribution level. In addition, a new 5-year contract was entered into for the GCIU — Employer Retirement Benefit Plan effective May 1, 2013.
The Company believes that the multi-employer pension plans in which it currently participates have significant unfunded vested benefits. Due to uncertainty regarding future withdrawal liability triggers or further reductions in participation or withdrawal by other employers, the Company is unable to determine the amount and timing of its future withdrawal liability, if any. The Company’s participation in these multi-employer pension plans could have a material adverse impact on its financial condition, results of operations or liquidity. Disagreements over a potential withdrawal liability for either plan may lead to legal disputes.
J. FAIR VALUE MEASUREMENTS
Certain assets and liabilities are required to be recorded at fair value on a recurring basis. The Company’s only assets and liabilities adjusted to fair value on a recurring basis are short-term investments in mutual funds and contingent consideration. In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company is required to record certain assets and liabilities on a nonrecurring basis, generally as a result of acquisitions or the remeasurement of assets resulting in impairment charges.
The following table shows the assets and liabilities carried at fair value measured on a recurring basis as of March 30, 2013 and September 29, 2012 classified in one of the three levels as described in Note A:
|
| (000’s Omitted) |
| ||||||||
|
| Total |
| Quoted |
| Significant |
| Significant |
| ||
As of March 30, 2013: |
|
|
|
|
|
|
|
|
| ||
Short-term investments in mutual funds |
| $ | 824 |
| $ | 824 |
| — |
| — |
|
Contingent consideration liability |
| — |
| — |
| — |
| — |
| ||
|
|
|
|
|
|
|
|
|
| ||
As of September 29, 2012: |
|
|
|
|
|
|
|
|
| ||
Short-term investments in mutual funds |
| $ | 765 |
| $ | 765 |
| — |
| — |
|
Contingent consideration liability |
| (385 | ) | — |
| — |
| (385 | ) |
|
| Contingent |
| |
|
| Consideration |
| |
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) |
| Liability |
| |
(000’s Omitted) |
|
|
| |
Balance as of September 29, 2012 |
| $ | (385 | ) |
Change in fair value |
| (15 | ) | |
Payment |
| 400 |
| |
Balance at March 30, 2013 |
| $ | — |
|
K. OTHER INCOME
The Company historically leased non-operating real property to cell phone companies for two cell-tower sites on a month-to-month basis. In the first quarter of fiscal 2012, the Company recorded a gain of $587,000 associated with the sales and assignments of both of these interests. The Company does not have further financial obligations under these arrangements.
L. SUBSEQUENT EVENT
On April 30, 2013, the Company announced the acquisition of FastPencil, Inc. (“FastPencil”), a California-based developer of end-to-end, cloud-based content management technology. FastPencil’s products serve both traditional publishers and self-publishers. The Company acquired all of the outstanding capital stock of FastPencil for $5 million, with additional future “earn out “potential payments of up to $13 million over the next five years. FastPencil’s financial results will be included in the consolidated financial statements from the date of acquisition. Due to the timing of the acquisition, the initial accounting of the value of the acquired assets and liabilities is not complete. A preliminary purchase price allocation is currently expected to be included in the Company’s consolidated financial statements for the quarter ending June 29, 2013.
Item 2. |
| MANAGEMENT’S DISCUSSION AND ANALYSIS OF |
|
|
| FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
|
Critical Accounting Policies and Estimates:
The Company’s consolidated condensed financial statements have been prepared in accordance with generally accepted accounting principles. The preparation of these financial statements requires management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. On an ongoing basis, management evaluates its estimates and judgments, including those related to collectibility of accounts receivable, recovery of inventories, impairment of goodwill and other intangibles, and prepublication costs. Management bases its estimates and judgments on historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. Actual results may differ from these estimates. The significant accounting policies which management believes are most critical to aid in fully understanding and evaluating the Company’s reported financial results include the following:
Accounts Receivable. Management performs ongoing credit evaluations of the Company’s customers and adjusts credit limits based upon payment history and the customer’s current creditworthiness. Collections and payments from customers are continuously monitored. A provision for estimated credit losses is determined based upon historical experience and any specific customer collection risks that have been identified. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.
Inventories. Management records reductions in the cost basis of inventory for excess and obsolete inventory based primarily upon historical and forecasted product demand. If actual market conditions are less favorable than those projected by management, additional inventory charges may be required.
Goodwill and Other Intangibles. Other intangibles include customer lists and technology, which are amortized on a straight-line basis over periods ranging from five to ten years, and an indefinite-lived trade name. The Company evaluates possible impairment of goodwill and other intangibles at the reporting unit level, which is the operating segment or one level below the operating segment, on an annual basis or whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. The Company completed its annual impairment test at September 29, 2012, which resulted in no change to the nature or carrying amounts of its intangible assets. Changes in market conditions or poor operating results could result in a decline in value of the Company’s goodwill and other intangible assets thereby potentially requiring an additional impairment charge in the future.
Prepublication Costs. The Company capitalizes prepublication costs, which include the costs of acquiring rights to publish a work and costs associated with bringing a manuscript to publication such as artwork and editorial efforts. Prepublication costs are amortized on a straight-line basis over periods ranging from two to four years. Management regularly evaluates the sales and profitability of the products based upon historical and forecasted demand. If actual market conditions are less favorable than those projected by management, additional amortization expense may be required.
Overview:
Courier Corporation, founded in 1824, is among America’s leading book manufacturers and a leader in content management and customization in new and traditional media. The Company also publishes books under three brands offering award-winning content and thousands of titles. The Company has two operating segments: book manufacturing and publishing. The book manufacturing segment streamlines the process of bringing books from the point of creation to the point of use. Based on sales, Courier is the third largest book manufacturer in the United States, offering services from prepress and production through storage and distribution, as well as innovative content management, customization and state-of-the-art digital print capabilities. The publishing segment consists of Dover Publications, Inc. (“Dover”), Research & Education Association, Inc. (“REA”), and Federal Marketing Corporation, d/b/a Creative Homeowner (“Creative Homeowner”). Dover publishes over 9,000 titles in more than 30 specialty categories including children’s books, literature, art, music, crafts, mathematics, science, religion and architecture. REA publishes test preparation and study-guide books and software for high school, college and graduate students, and professionals. Creative Homeowner publishes books on home design, decorating, landscaping, and gardening, and also sells home plans.
Results of Operations:
FINANCIAL HIGHLIGHTS
(dollars in thousands except per share amounts)
|
| Quarter Ended |
| Six Months Ended |
| ||||||||||||
|
| March 30, |
| March 24, |
| % |
| March 30, |
| March 24, |
| % |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net sales |
| $ | 61,778 |
| $ | 62,388 |
| -1 | % | $ | 126,534 |
| $ | 125,324 |
| 1 | % |
Cost of sales |
| 49,774 |
| 50,190 |
| -1 | % | 98,530 |
| 97,528 |
| 1 | % | ||||
Gross profit |
| 12,004 |
| 12,198 |
| -2 | % | 28,004 |
| 27,796 |
| 1 | % | ||||
As a percentage of sales |
| 19.4 | % | 19.6 | % |
|
| 22.1 | % | 22.2 | % |
|
| ||||
Selling and administrative expenses |
| 11,281 |
| 11,317 |
|
|
| 23,249 |
| 24,942 |
| -7 | % | ||||
Operating income |
| 723 |
| 881 |
| -18 | % | 4,755 |
| 2,854 |
| 67 | % | ||||
Interest expense, net |
| 191 |
| 193 |
| -1 | % | 381 |
| 453 |
| -16 | % | ||||
Other income |
| — |
| — |
|
|
| — |
| (587 | ) |
|
| ||||
Pretax income |
| 532 |
| 688 |
| -23 | % | 4,374 |
| 2,988 |
| 46 | % | ||||
Income tax provision |
| 196 |
| 248 |
| -21 | % | 1,618 |
| 1,094 |
| 48 | % | ||||
Net income |
| $ | 336 |
| $ | 440 |
| -24 | % | $ | 2,756 |
| $ | 1,894 |
| 46 | % |
Net income per diluted share |
| $ | 0.03 |
| $ | 0.04 |
| -25 | % | $ | 0.24 |
| $ | 0.16 |
| 50 | % |
Revenues in the second quarter of fiscal 2013 were $61.8 million, down 1% from the same period last year. For the first six months, revenues were up 1% to $126.5 million compared to the corresponding prior-year period. Book manufacturing segment sales increased 1% in the quarter to $55.9 million with growth in the specialty trade market offset by a decline in sales to the education market, while sales to the religious market were comparable to last year’s second quarter. Seasonal demand in the education market is typically highest in the second half of the Company’s fiscal year. For the first six months of fiscal 2013, book manufacturing sales increased 2% to $113.4 million with gains in the education and religious markets offset in part by a slight decline in the specialty trade market. In the publishing segment, revenues were down 3% in both the second quarter and first half of fiscal 2013 to $9.4 million and $18.5 million, respectively, compared with the same periods last year.
Net income for the second quarter of fiscal 2013 was $336,000, down from $440,000 in the same period last year. For the first six months, net income increased 46% to $2.8 million compared to the corresponding period of fiscal 2012. Results in the first half of last year included pre-tax restructuring costs of $1.6 million for severance and post-retirement benefits as well as a pre-tax gain of $0.6 million from the sale of certain non-operating assets.
Restructuring Costs
During fiscal 2012, approximately $3.3 million of pre-tax restructuring charges were recorded for cost reduction measures taken throughout the year in the Company’s operating segments, including a reduction in the Company’s one-color offset press capacity. Severance and post-retirement benefit expenses were $1.9 million and accelerated depreciation on an unutilized one-color press was $1.4 million. Approximately $1.6 million of these costs were recorded in the first six months of fiscal 2012 for severance and post-retirement benefit costs, with approximately $1.5 million recorded in the first quarter of last year. Approximately $0.9 million and $0.6 million of these costs were included in selling and administrative expenses in the Company’s book manufacturing segment and publishing segment, respectively. At March 30, 2013, approximately $0.4 million of these remaining restructuring payments were included in “Other current liabilities” in the accompanying consolidated balance sheet.
In fiscal 2011, the Company recorded restructuring costs of $7.7 million associated with closing and consolidating its Stoughton, Massachusetts manufacturing facility due to the impact of technology and competitive pressures affecting the one-color paperback books in which the plant specialized. Restructuring costs included $2.3 million for employee severance and benefit costs, $2.1 million for an early withdrawal liability from a multi-employer pension plan, and $3.3 million for lease termination and other facility closure costs; no sub-lease income was assumed at the time due to local real estate market conditions. Subsequently, a portion of the facility has been sublet effective March 2013. Remaining payments of approximately $3.5 million will be made over periods ranging from 3 years for the building lease obligation to 18 years for the liability related to the multi-employer pension plan. At March 30, 2013, approximately $1.0 million of the restructuring payments were included in “Other current liabilities” and $2.6 million were included in “Other liabilities” in the accompanying consolidated balance sheet.
The following table depicts the remaining accrual balances for these restructuring costs.
|
| (000’s omitted) |
| |||||||||
|
| Accrual at |
| Charges |
| Costs |
| Accrual at |
| |||
|
| September 29, |
| or |
| Paid or |
| March 30, |
| |||
|
| 2012 |
| Reversals |
| Settled |
| 2013 |
| |||
Employee severance, post-retirement and other benefit costs |
| $ | 870 |
|
|
| $ | (298 | ) | $ | 572 |
|
Early withdrawal from multi-employer pension plan |
| 2,072 |
|
|
| (36 | ) | 2,036 |
| |||
Lease termination, facility closure and other costs |
| 1,665 |
|
|
| (251 | ) | 1,414 |
| |||
Total |
| $ | 4,607 |
| — |
| $ | (585 | ) | $ | 4,022 |
|
Subsequent Event - Business Acquisition
On April 30, 2013, the Company announced the acquisition of FastPencil, Inc. (“FastPencil”), a California-based developer of end-to-end, cloud-based content management technology. FastPencil’s products serve both traditional publishers and self-publishers. The Company acquired all of the outstanding capital stock of FastPencil for $5 million, with additional future “earn out “potential payments of up to $13 million over the next five years. FastPencil’s financial results will be included in the consolidated financial statements from the date of acquisition. Due to the timing of the acquisition, the initial accounting of the value of the acquired assets and liabilities is not complete. A preliminary purchase price allocation is currently expected to be included in the Company’s consolidated financial statements for the quarter ending June 29, 2013.
Book Manufacturing Segment
SEGMENT HIGHLIGHTS
(dollars in thousands)
|
| Quarter Ended |
| Six Months Ended |
| ||||||||||||
|
| March 30, |
| March 24, |
| % |
| March 30, |
| March 24, |
| % |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net sales |
| $ | 55,919 |
| $ | 55,454 |
| 1 | % | $ | 113,400 |
| $ | 111,450 |
| 2 | % |
Cost of sales |
| 47,526 |
| 46,306 |
| 3 | % | 91,956 |
| 89,815 |
| 2 | % | ||||
Gross profit |
| 8,393 |
| 9,148 |
| -8 | % | 21,444 |
| 21,635 |
| -1 | % | ||||
As a percentage of sales |
| 15.0 | % | 16.5 | % |
|
| 18.9 | % | 19.4 | % |
|
| ||||
Selling and administrative expenses |
| 6,998 |
| 6,799 |
| 3 | % | 14,550 |
| 15,080 |
| -4 | % | ||||
Operating income |
| $ | 1,395 |
| $ | 2,349 |
| -41 | % | $ | 6,894 |
| $ | 6,555 |
| 5 | % |
Within the book manufacturing segment, the Company focuses on three key publishing markets: education, religious and specialty trade. In fiscal 2013, sales to the religious market in the second quarter were $18 million, comparable to the same period last year, but were up 3% in the first six months to $35 million, with sales to the Company’s largest religious customer up 4% year to date. Sales to the education market in the quarter were down 8% to $20 million but up 4% to $45 million for the first half of fiscal 2013 compared to the same periods last year. The year-to-date growth in this market was primarily due to increased sales of college textbooks and reflects an over 50% increase in revenues from the Company’s digital print capabilities, including growing demand for customized college textbooks. Sales to the specialty trade market overall increased 11% to $15 million in the second quarter compared to the same period last year, reflecting an increased use of digital printing, but were down 2% to $30 million for the first six months, reflecting tight inventory management among publishers and the impact of e-book sales on certain titles.
In October 2012, the Company announced plans to install a fourth HP digital production line at its Kendallville, Indiana location. The new press is expected to serve a larger customer base across a full range of run lengths as many publishers are moving to utilize both offset and digital inkjet print technology to maximize the lifespan of their titles, while reducing inventory and obsolescence costs. This new digital print facility began production in April 2013.
Cost of sales in the book manufacturing segment increased $1.2 million to $47.5 million in the second quarter and increased $2.1 million to $92.0 million in the first six months of fiscal 2013 compared to the same periods last year, reflecting the growth in sales, lower waste recycling income, and startup costs related to the new digital print production line in Kendallville, Indiana. Gross profit for the second quarter decreased $0.8 million to $8.4 million compared with the corresponding period in fiscal 2012 and, as a percentage of sales, decreased to 15.0% from 16.5%. For the first six months of fiscal 2013, gross profit decreased $0.2 million to $21.4 million and, as a percentage of sales, decreased to 18.9% from 19.4% in the first half of last year. This decline in gross profit reflects a highly competitive pricing environment, reduced recycling income from waste byproducts, including paper, and startup costs related to the new digital print production line.
Selling and administrative expenses for the segment increased $0.2 million to $7.0 million in the second quarter of fiscal 2013 compared to the same period last year, largely due to growth in the Company’s digital print operation. For the first six months of fiscal 2013, selling and administrative expenses decreased $0.5 million to $14.6 million, primarily attributable to $0.9 million of restructuring costs recorded in the first half of fiscal 2012 offset in part by increased expenses related to the growth in digital printing.
Second quarter operating income in the book manufacturing segment was $1.4 million compared with $2.3 million in the same period of fiscal 2012. For the first six months of fiscal 2013, operating income was $6.9 million compared to $6.6 million in fiscal 2012, which included $0.9 million of restructuring costs.
These results reflect a less favorable sales mix, a highly competitive pricing environment, startup costs related to the new digital pint production line, and reduced recycling income.
Publishing Segment
SEGMENT HIGHLIGHTS
(dollars in thousands)
|
| Quarter Ended |
| Six Months Ended |
| ||||||||||||
|
| March 30, |
| March 24, |
| % |
| March 30, |
| March 24, |
| % |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net sales |
| $ | 9,353 |
| $ | 9,635 |
| -3 | % | $ | 18,487 |
| $ | 19,087 |
| -3 | % |
Cost of sales |
| 5,769 |
| 6,596 |
| -13 | % | 11,964 |
| 12,953 |
| -8 | % | ||||
Gross profit |
| 3,584 |
| 3,039 |
| 18 | % | 6,523 |
| 6,134 |
| 6 | % | ||||
As a percentage of sales |
| 38.3 | % | 31.5 | % |
|
| 35.3 | % | 32.1 | % |
|
| ||||
Selling and administrative expenses |
| 3,952 |
| 4,175 |
| -5 | % | 8,027 |
| 9,097 |
| -12 | % | ||||
Operating loss |
| $ | (368 | ) | $ | (1,136 | ) |
|
| $ | (1,504 | ) | $ | (2,963 | ) |
|
|
Revenues in the Company’s publishing segment were down 3% in both the second quarter and first six months of fiscal 2013 to $9.4 million and $18.5 million, respectively, compared with the corresponding prior year periods. Sales at Dover in the quarter were $6.8 million, comparable to last year’s second quarter, and were down less than 1% to $14.4 million for the first six months compared to the prior year. Sales at REA decreased 9% in both the quarter and first half of fiscal 2013 to $1.3 million and $2.1 million, respectively, compared with the same periods last year. Creative Homeowner’s sales were down 12% in both the second quarter and first six months of fiscal 2013 to $1.2 million and $1.9 million, respectively, compared to the corresponding prior year periods. These declines reflect in part a shrinking base of brick and mortar retail channels. In addition, during the first quarter of fiscal 2013, Hurricane Sandy closed the Company’s publishing operations for several days and generators were used to bring operations back for several weeks until power was restored to the area. During the first six months of fiscal 2013, the segment continued to increase its range of titles offered online in both printed and e-book form, including over 4,000 titles now available as e-books through Amazon, Apple, Barnes & Noble and Google. Sales of e-books were launched in the second half of 2012 and were $0.6 million in the first six months of fiscal 2013.
Cost of sales in this segment declined 13% to $5.8 million in the second quarter and 8% to $12.0 million in the first six months of fiscal 2013 compared to the same periods last year, reflecting the lower sales volume and an improved cost structure in the segment. Gross profit increased 18% to $3.6 million compared to last year’s second quarter and, as a percentage of sales, increased to 38.3% from 31.5%. For the first six months of fiscal 2013, gross profit increased 6% to $6.5 million and, as a percentage of sales, increased to 35.3% from 32.1%, reflecting the benefit of prior cost reduction measures and reduced obsolescence costs, as well as the impact of e-book sales.
Selling and administrative expenses for the segment decreased $0.2 million and $1.1 million in the second quarter and first six months, respectively, of fiscal 2013 compared to the corresponding prior year periods, largely attributable to cost reduction measures and $0.6 million of restructuring costs recorded in the first half of last year.
The publishing segment’s operating loss was $0.4 million in the second quarter of fiscal 2013 compared to $1.1 million in the corresponding period last year. For the first six months, the operating loss was $1.5 million compared to $3.0 million in the first half of fiscal 2012. These reductions in the segment’s operating loss reflect the impact of cost reduction benefits, reduced obsolescence costs and $0.6 million of restructuring costs in the first quarter of fiscal 2012.
Total Consolidated Company
Interest expense, net of interest income, was $191,000 in the second quarter of fiscal 2013 compared to $193,000 of net interest expense in the same period last year. For the first six months of fiscal 2013, interest expense, net of interest income, was $381,000 compared to $453,000 of net interest expense in the first half of fiscal 2012. Average debt under the revolving credit facility in the second quarter of fiscal 2013 was approximately $12.8 million at an average annual interest rate of 1.5%, generating interest
expense of approximately $47,000. Average debt under the revolving credit facility in the second quarter of last year was approximately $16.1 million at an average annual interest rate of 0.8%, generating interest expense of approximately $30,000. Average debt under the revolving credit facility in the first half of fiscal 2013 was approximately $11.3 million at an average annual interest rate of 1.5%, generating interest expense of approximately $83,000. Average debt under the revolving credit facility in the first six months of last year was approximately $16.8 million at an average annual interest rate of 0.9%, generating interest expense of approximately $73,000. At March 30, 2013, $1.9 million was outstanding under the Company’s term loan with related interest expense of $20,000 in the second quarter and $40,000 in the first six months of fiscal 2013 compared to $37,000 in the quarter and $74,000 in the first half of last year. In addition, approximately $34,000 and $68,000 of interest expense was amortized in the second quarter and first half of fiscal 2013, associated with the restructuring costs incurred in fiscal 2011, compared with approximately $30,000 and $63,000 in corresponding prior year periods, respectively. Interest expense also includes commitment fees and other costs associated with maintaining the Company’s $100 million revolving credit facility.
In the first quarter of fiscal 2012, the Company recorded other income of $587,000 from gains associated with the sale of its interests in non-operating real property relating to cell towers.
The Company’s effective tax rate for the first half of fiscal 2013 was 37.0%, comparable to the 36.6% for the same period last year.
For purposes of computing net income per diluted share, weighted average shares outstanding decreased by 755,000 in the second quarter and by 701,000 for the first half of fiscal 2013 compared with the corresponding periods last year, reflecting the Company’s repurchase of approximately 824,000 shares in the second half of fiscal 2012.
Liquidity and Capital Resources:
During the first six months of fiscal 2013, operations provided $15.4 million of cash, compared to $14.4 million in the first half of last year. Net income was $2.8 million and depreciation and amortization were $11.6 million.
Investment activities in the first six months of fiscal 2013 used $10.5 million of cash. Capital expenditures were $8.8 million. For the entire fiscal year, capital expenditures are expected to be approximately $17 to $19 million, with approximately $13 million related to expanding digital capabilities. Prepublication costs were $1.6 million in the first half of fiscal 2013, compared to $2.3 million in the same period last year. For the full fiscal year, prepublication costs are projected to be approximately $4 million, comparable to last year’s level.
Financing activities for the first six months of fiscal 2013 used approximately $4.8 million of cash. Cash dividends of $4.8 million were paid and the Company repurchased $1.6 million of its common stock. Borrowings increased by $1.6 million during the first half of fiscal 2013. At March 30, 2013, borrowings under a term loan used to finance the purchase of the Company’s new digital print equipment were $1.9 million, with $0.8 million at a fixed annual interest rate of 3.9% and $1.1 million at a fixed annual interest rate of 3.6%. The Company also has a $100 million long-term revolving credit facility in place under which the Company can borrow at a rate not to exceed LIBOR plus 2.25%. At March 30, 2013, the Company had $15.3 million in borrowings under this facility at an interest rate of 1.5%. The revolving credit facility, which matures in March 2016, contains restrictive covenants including provisions relating to the incurrence of additional indebtedness and a quarterly test of EBITDA to debt service. The Company was in compliance with all debt covenants at March 30, 2013. The facility also provides for a commitment fee not to exceed 3/8% per annum on the unused portion. The revolving credit facility is used by the Company for both its long-term and short-term financing needs. The Company believes that its cash on hand, cash from operations and the available credit facility will be sufficient to meet its cash requirements for at least the next twelve months.
On November 20, 2012, the Company announced the approval by its Board of Directors for the repurchase of up to $10 million of the Company’s outstanding common stock from time to time on the open market or in privately negotiated transactions, including pursuant to a Rule 10b5-1 nondiscretionary trading plan. Through March 30, 2013, the Company had repurchased 123,261 shares of common stock for approximately $1.6 million under this program. In April 2012, the Company’s Board of Directors approved a similar program for the repurchase of up to $10 million of the Company’s outstanding common stock. During the second half of fiscal 2012, the Company repurchased 823,970 shares of common stock for approximately $10 million.
The following table summarizes the Company’s contractual obligations and commitments at March 30, 2013 to make future payments as well as its existing commercial commitments.
|
|
|
| (000’s Omitted) |
| |||||||||||
|
|
|
| Payments due by period |
| |||||||||||
|
|
|
| Less than |
| 1 to 3 |
| 3 to 5 |
| More than |
| |||||
|
| Total |
| 1 Year |
| Years |
| Years |
| 5 Years |
| |||||
Contractual Payments: |
|
|
|
|
|
|
|
|
|
|
| |||||
Long-term debt (1) |
| $ | 17,209 |
| $ | 1,907 |
| $ | 15,302 |
| $ | — |
| $ | — |
|
Interest due on debt (2) |
| 39 |
| 39 |
| — |
| — |
| — |
| |||||
Operating leases (3) |
| 6,750 |
| 1,181 |
| 1,826 |
| 1,515 |
| 2,228 |
| |||||
Purchase obligations (4) |
| 5,115 |
| 5,115 |
| — |
| — |
| — |
| |||||
Other liabilities (5) |
| 7,173 |
| 1,607 |
| 1,749 |
| 637 |
| 3,180 |
| |||||
Total |
| $ | 36,286 |
| $ | 9,849 |
| $ | 18,877 |
| $ | 2,152 |
| $ | 5,408 |
|
(1) Includes the Company’s revolving credit facility, which has a maturity date of March 2016.
(2) Represents scheduled interest payments on the Company’s term loan. Future interest on the Company’s revolving credit facility is not included because the interest rate and principal balance fluctuate on a daily basis and an estimate could differ significantly from actual interest expense.
(3) Represents amounts at September 29, 2012, except for the Stoughton, Massachusetts building lease obligation, which was included in “Other liabilities” at both September 29, 2012 and March 30, 2013.
(4) Represents capital commitments.
(5) Includes approximately $4.0 million of restructuring costs, of which the current liability is $1.4 million.
Forward-Looking Information:
This Quarterly Report on Form 10-Q includes forward-looking statements. Statements that describe future expectations, plans or strategies are considered “forward-looking statements” as that term is defined under the Private Securities Litigation Reform Act of 1995 and releases issued by the Securities and Exchange Commission. The words “believe,” “expect,” “anticipate,” “intend,” “estimate” and other expressions which are predictions of or indicate future events and trends and which do not relate to historical matters identify forward-looking statements. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those currently anticipated. Some of the factors that could affect actual results are discussed in Item 1A of this Form 10-Q and include, among others, changes in customers’ demand for the Company’s products, including seasonal changes in customer orders and shifting orders to lower cost regions, changes in market growth rates, changes in raw material costs and availability, pricing actions by competitors and other competitive pressures in the markets in which the Company competes, consolidation among customers and competitors, insolvency of key customers or vendors, changes in the Company’s labor relations, changes in obligations of multiemployer pension plans, success in the execution of acquisitions and the performance and integration of acquired businesses including carrying value of intangible assets, restructuring and impairment charges required under generally accepted accounting principles, changes in operating expenses including medical and energy costs, changes in technology including migration from paper-based books to digital, difficulties in the start up of new equipment or information technology systems, changes in copyright laws, changes in consumer product safety regulations, changes in environmental regulations, changes in tax regulations, changes in the Company’s effective income tax rate and general changes in economic conditions, including currency fluctuations, changes in interest rates, changes in consumer confidence, changes in the housing market, and tightness in the credit markets. Although the Company believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements will prove to be accurate. The forward-looking statements included herein are made as of the date hereof, and the Company undertakes no obligation to update publicly such statements to reflect subsequent events or circumstances.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes from the information concerning the Company’s “Quantitative and Qualitative Disclosures About Market Risk” as previously reported in the Company’s Annual Report on Form 10-K for the year ended September 29, 2012.
Item 4. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures
As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end of the period covered by this Quarterly Report, the Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.
(b) Changes in internal controls over financial reporting
There was no change in the Company’s internal control over financial reporting that occurred during the period covered by this Quarterly Report that has materially affected, or that is reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
The Company’s consolidated results of operations, financial condition and cash flows can be adversely affected by various risks. Our business is influenced by many factors that are difficult to predict, involve uncertainties that may materially affect actual results and are often beyond our control. We discuss below the risks that we believe are material. You should carefully consider all of these factors. For other factors that may cause actual results to differ materially from those indicated in any forward-looking statement contained in this report, see Forward-Looking Information in Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Industry competition and consolidation may increase pricing pressures and adversely impact our margins or result in a loss of customers.
The book industry is extremely competitive. In the book manufacturing segment, consolidation over the past few years of both customers and competitors within the markets in which the Company competes has caused downward pricing pressures. In addition, excess capacity and competition from printing companies in lower cost countries may increase competitive pricing pressures. Furthermore, some of our competitors have greater sales, assets and financial resources than us, and those in foreign countries may derive significant advantages from local governmental regulation, including tax holidays and other subsidies. All or any of these competitive pressures could affect prices or customers’ demand for our products, impacting our profit margins and/or resulting in a loss of customers and market share.
A reduction in orders or pricing from, or the loss of, any of our significant customers may adversely impact our operating results.
We derived approximately 55% and 53% of our fiscal 2012 and 2011 revenues, respectively, from two major customers. We expect similar concentrations in fiscal 2013. We do business with these customers on a purchase order basis and they are not bound to purchase at particular volume levels. As a result,
either of these customers could determine to reduce their order volume with us, especially if our pricing is not deemed competitive. A significant reduction in order volumes from, or the loss of, either of these customers could have a material adverse effect on our results of operations and financial condition. In addition, our publishing segment is dependent on Amazon as a primary sales channel. Any change in pricing or order volume could have a material adverse effect on our results.
Because a significant portion of publishing sales are made to or through retailers and distributors, the insolvency of any of these parties could have an adverse impact on our financial condition and operating results.
In our publishing segment, sales to retailers and distributors are highly concentrated on a small group, which previously included Borders Group, Inc. (“Borders”). During fiscal 2011, we recorded a bad debt expense of $700,000 related to the Borders’ bankruptcy and liquidation. Sales to Borders for our publishing segment in fiscal 2011 declined $3.3 million compared to fiscal 2010. In addition, the Company experienced a 9% reduction in sales in the trade market of its book manufacturing segment in fiscal 2011 compared with the prior year. As a result of the impact of the Borders situation, in the third quarter of fiscal 2011, the Company recorded a pre-tax impairment charge of $8.6 million, representing 100% of REA’s goodwill as well as approximately $200,000 for prepublication costs related to underperforming titles. Similarly, any bankruptcy, liquidation, insolvency or other failure of another major retailer or distributor could also have a material impact on the Company.
Electronic delivery of content may adversely affect our business.
Electronic delivery of content offers an alternative to the traditional delivery through print. Widespread consumer acceptance of electronic delivery of books is uncertain, as is the extent to which consumers are willing to replace print materials with online hosted media content. If our customers’ acceptance of electronic delivery of books and online hosted media content continues to grow, demand for and/or pricing of our printed products may be adversely affected. To the extent that we do not successfully adapt to provide our content in electronic form, demand for and sales of our content may suffer.
We could face significant liability as a result of our participation in multi-employer pension plans.
We participate in two multi-employer defined benefit pension plans for certain union employees. Multi-employer pension plans cover employees of and receive contributions from two or more unrelated employers under one or more union contracts. Our risks of participating in these types of plans include the fact that (i) plan contributions by each employer, including us, may be used to provide benefits to employees of other participating employers, (ii) if another participating employer withdraws from either plan, the unfunded obligations of the plan may be borne by the remaining participating employers, including us, and (iii) if we withdraw from participating in either plan, we may be required to pay the plan an amount based on our allocable share of the underfunded status of the plan.
We make periodic contributions to two multi-employer plans pursuant to our union contracts to allow the plans to meet the pension benefit obligations to plan participants. We currently expect that we will be required to contribute approximately $373,000 to these two plans in fiscal 2013, but these contributions could significantly increase due to other employers’ withdrawals or changes in the funded status of the plans. Further, if we continue to participate in such pension plans, our contributions may increase depending on the outcome of future union negotiations and applicable law, changes in the funding status of the plans, and any reduction in participation or withdrawal by other employers from the plans. Our continued participation in these plans could have a material adverse impact on our results of operations, cash flows or financial condition. In the event that we withdraw from participation in one or both of these plans, we could be required to make a withdrawal liability payment or series of payments to the plan, which would be reflected as an expense in our consolidated statements of operations and a liability on our consolidated balance sheet. Our withdrawal liability for any multiemployer plan would depend on the funded status of the plan and the level of our prior plan contributions. Both plans are estimated to be underfunded as of March 30, 2013 and have a Pension Protection Act zone status of critical (“red”); such status identifies plans that are less than 65% funded. In addition, our contributions to the Bindery Industry Employers GCC/IBT Pension Plan represented approximately 70% of total contributions in each of the last three years. This plan currently includes only three other contributing employers. A withdrawal by one or more of these employers could materially increase the amount of our required contributions to this plan. A future withdrawal by us from either of the two multi-employer pension plans could result in a
withdrawal liability for us, the amount of which could be material to our results of operations, cash flows and financial condition.
A failure to successfully adapt to changing book sales channels may have an adverse impact on our business.
Over the last several years, the “bricks & mortar” bookstore channel has experienced a significant contraction, including the bankruptcy of Borders Group, Inc. and Nebraska Book Co., the closure of many independent bookstores, and the reduction in inventory and shelf space for books in other national chains. In addition to expanding our online and direct to consumer sales, we have responded by seeking alternative channels for our products, such as mass merchandising chains. However, there is no guarantee that we will be able to address the challenges in these channels, including creating price competitive products that will successfully penetrate these markets and accurately predicting the volume of returns.
Declines in general economic conditions may adversely impact our business.
Economic conditions have the potential to impact our financial results significantly. Within the book manufacturing and publishing segments, we may be adversely affected by the current worldwide economic downturn, including as a result of changes in government, business and consumer spending. Examples of how our financial results may be impacted include:
· Fluctuations in federal or state government spending on education, including a reduction in tax revenues due to the current economic environment, could lead to a corresponding decrease in the demand for educational materials, which are produced in our book manufacturing segment and comprise a portion of our publishing products.
· Consumer demand for books can be impacted by reductions in disposable income when costs such as electricity and gasoline reduce discretionary spending.
· Tightness in credit markets may result in customers delaying orders to reduce inventory levels and may impact their ability to pay their debts as they become due and may disrupt supplies from vendors, and may result in customers becoming insolvent.
· Changes in the housing market may impact the sale of Creative Homeowner’s products.
· Reduced fundraising by religious customers may decrease their order levels.
· A slowdown in book purchases may result in retailers returning an unusually large number of books to publishers to reduce their inventories.
A failure to keep pace with rapid industrial and technological change may have an adverse impact on our business.
The printing industry is in a period of rapid technological evolution. Our future financial performance will depend, in part, upon the ability to anticipate and adapt to rapid industrial and technological changes occurring in the industry and upon the ability to offer, on a timely basis, services that meet evolving industry standards. If we are unable to adapt to such technological changes, we may lose customers and may not be able to maintain our competitive position. In addition, we may encounter difficulties in the implementation and start-up of new equipment and technology.
We are unable to predict which of the many possible future product and service offerings will be important to establish and maintain a competitive position or what expenditures will be required to develop and provide these products and services. We cannot assure investors that one or more of these factors will not vary unpredictably, which could have a material adverse effect on us. In addition, we cannot assure investors, even if these factors turn out as we anticipate, that we will be able to implement our strategy or that the strategy will be successful in this rapidly evolving market.
Our operating results are unpredictable and fluctuate significantly, which may adversely affect our stock price.
Our quarterly and annual operating results have fluctuated in the past and are likely to fluctuate in the future due to a variety of factors, some of which are outside of our control. Factors that may affect our future operating results include:
· the timing and size of the orders for our books;
· the availability of markets for sales or distribution by our major customers;
· the lengthy and unpredictable sales cycles associated with sales of textbooks to the elementary and high school market;
· the migration of educators and students towards electronic delivery of content;
· our customers’ willingness and success in shifting orders from the peak textbook season to the off-peak season to even out our manufacturing load over the year;
· fluctuations in the currency market may make manufacturing in the United States more or less attractive and make equipment more or less expensive for us to purchase;
· issues that might arise from the integration of acquired businesses, including their inability to achieve expected results; and
· tightness in credit markets affecting the availability of capital for ourselves, our vendors, and/or our customers.
As a result of these and other factors, period-to-period comparisons of our operating results are not necessarily meaningful or indicative of future performance. In addition, the factors noted above may make it difficult for us to forecast and provide in a timely manner public guidance (including updates to prior guidance) related to our projected financial performance. Furthermore, it is possible that in future quarters our operating results could fall below the expectations of securities analysts or investors. If this occurs, the trading price of our common stock could decline.
Our financial results could be negatively impacted by impairments of goodwill or other intangible assets, or other long-lived assets.
We perform an annual assessment for impairment of goodwill and other intangible assets, as well as other long-lived assets, at the end of our fiscal year or whenever events or changes in circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying value, including a downturn in the market value of the Company’s stock. A downward revision in the fair value of one of our acquired businesses could result in impairments of goodwill and non-cash charges. Any impairment charge could have a significant negative effect on our reported results of operations. For example, at the end of the third quarter of fiscal 2011, the Company determined that the fair value of REA was below its carrying value and a pre-tax impairment charge of $8.6 million was recorded, which represented 100% of REA’s goodwill as well as approximately $200,000 for prepublication costs related to underperforming titles and long-lived assets.
Fluctuations in the cost and availability of paper and other raw materials may cause disruption and impact margins.
Purchases of paper and other raw materials represent a large portion of our costs. In our book manufacturing segment, paper is normally supplied by our customers at their expense or price increases are passed through to our customers. In our publishing segment, cost increases have generally been passed on to customers through higher prices or we have substituted a less expensive grade of paper. However, if we are unable to continue to pass on these increases or substitute a less expensive grade of paper, our margins and profits could be adversely affected.
Availability of paper is important to both our book manufacturing and publishing segments. Although we generally have not experienced difficulty in obtaining adequate supplies of paper, unexpected changes in the paper markets could result in a shortage of supply. If this were to occur in the future, it could cause disruption to the business or increase paper costs, adversely impacting either or both net sales or profits.
Fluctuations in the costs and availability of other raw materials could adversely affect operating costs or customer demand and thereby negatively impact our operating results, financial condition or cash flows.
In addition, fluctuations in the markets for paper and raw materials may adversely affect the market for our waste byproducts, including recycled paper, and used plates, and therefore adversely affect our income from such sales.
Energy costs and availability may negatively impact our financial results.
Energy costs are incurred directly to run production equipment and facilities and indirectly through expenses such as freight and raw materials such as ink. In a competitive market environment, increases to these direct and indirect energy related costs might not be able to be passed through to customers through price increases or mitigated through other means. In such instances, increased energy costs could adversely impact operating costs or customer demand. In addition, interruption in the availability of energy could disrupt operations, adversely impacting operating results.
Inadequate intellectual property protection for our publications could negatively impact our financial results.
Certain of our publications are protected by copyright, primarily held in the Company’s name. Such copyrights protect our exclusive right to publish the work in the United States and in many other countries for specified periods. Our ability to continue to achieve anticipated results depends in part on our ability to defend our intellectual property against infringement. Our operating results may be adversely affected by inadequate legal and technological protections for intellectual property and proprietary rights in some jurisdictions and markets. In addition, some of our publications are of works in the public domain, for which there is nearly no intellectual property protection. Our operating results may be adversely affected by the increased availability of such works elsewhere, including on the Internet, either for free or for a lower price.
A failure to maintain or improve our operating efficiencies could adversely impact our profitability.
Because the markets in which we operate are highly competitive, we must continue to improve our operating efficiency in order to maintain or improve our profitability. Although we have been able to expand our capacity, improve our productivity and reduce costs in the past, there is no assurance that we will be able to do so in the future. In addition, reducing operating costs in the future may require significant initial costs to reduce headcount, close or consolidate operations, or upgrade equipment and technology.
Changes in postal rates and postal regulations may adversely impact our business.
Postal costs are a significant component of our direct marketing cost structure and postal rate changes can influence the number of catalogs that we may mail. In addition, increased postal rates can impact the cost of delivering our products to customers. The occurrence of either of these events could adversely affect consumer demand and our results of operations.
Our facilities are subject to stringent environmental laws and regulations, which may subject us to liability or increase our costs.
We use various materials in our operations that contain substances considered hazardous or toxic under environmental laws. In addition, our operations are subject to federal, state, and local environmental laws relating to, among other things, air emissions, waste generation, handling, management and disposal, waste water treatment and discharge and remediation of soil and groundwater contamination. Permits are required for the operation of certain of our businesses and these permits are subject to renewal, modification and in some circumstances, revocation. Under certain environmental laws, including the Comprehensive Environmental Response, Compensation and Liability Act, as amended (“CERCLA,” commonly referred to as “Superfund”), and similar state laws and regulations, we may be liable for costs and damages relating to soil and groundwater contamination at off-site disposal locations or at our facilities. Future changes to environmental laws and regulations may give rise to additional costs or liabilities that could have a material adverse impact on our financial position and results of operations.
A failure to successfully integrate acquired businesses may have a material adverse effect on our business or operations.
Over the past several years, we have completed several acquisitions, and may continue to make acquisitions in the future. We believe that these acquisitions provide strategic growth opportunities for us. Achieving the anticipated benefits of these acquisitions will depend in part upon our ability to integrate these businesses in an efficient and effective manner. The challenges involved in successfully integrating acquisitions include:
· we may find that the acquired company or assets do not further our business strategy, or that we overpaid for the company or assets, or that economic conditions have changed, all of which may result in a future impairment charge;
· we may have difficulty integrating the operations and personnel of the acquired business and may have difficulty retaining the customers and/or the key personnel of the acquired business;
· we may have difficulty incorporating and integrating acquired technologies into our business;
· our ongoing business and management’s attention may be disrupted or diverted by transition or integration issues and the complexity of managing diverse locations;
· we may have difficulty maintaining uniform standards, controls, procedures and policies across locations;
· an acquisition may result in litigation from terminated employees of the acquired business or third parties; and
· we may experience significant problems or liabilities associated with technology and legal contingencies of the acquired business.
These factors could have a material adverse effect on our business, results of operations and financial condition or cash flows, particularly in the case of a larger acquisition or multiple acquisitions in a short period of time. From time to time, we may enter into negotiations for acquisitions that are not ultimately consummated. Such negotiations could result in significant diversion of management’s time from our business as well as significant out-of-pocket costs. Tightness in credit markets may also affect our ability to consummate such acquisitions.
The consideration that we pay in connection with an acquisition could affect our financial results. If we were to proceed with one or more significant acquisitions in which the consideration included cash, we could be required to use a substantial portion of our available cash and credit facilities to consummate such acquisitions. To the extent we issue shares of stock or other rights to purchase stock, including options or other rights, our existing stockholders may experience dilution in their share ownership in our company and their earnings per share may decrease. In addition, acquisitions may result in the incurrence of debt, large one-time write-offs and restructuring charges. They may also result in goodwill and other intangible assets that are subject to impairment tests, which could result in future impairment charges. Any of these factors may materially and adversely affect our business and operations.
A failure to hire and train key executives and other qualified employees could adversely affect our business.
Our success depends, in part, on our ability to continue to retain our executive officers and key management personnel. Our business strategy also depends on our ability to attract, develop, motivate and retain employees who have relevant experience in the printing and publishing industries. There can be no assurance that we can continue to attract and retain the necessary talented employees, including executive officers and other key members of management and, if we fail to do so, it could adversely affect our business.
A lack of skilled employees to manufacture our products may adversely affect our business.
If we experience problems hiring and retaining skilled employees, our business may be negatively affected. The timely manufacture and delivery of our products requires an adequate supply of skilled employees, and the operating costs of our manufacturing facilities can be adversely affected by high turnover in skilled positions. Accordingly, our ability to increase sales, productivity and net earnings could be impacted by our ability to employ the skilled employees necessary to meet our requirements. Although our book manufacturing locations are geographically dispersed, individual locations may encounter strong competition with other manufacturers for skilled employees. There can be no assurance that we will be able to maintain an adequate skilled labor force necessary to efficiently operate our facilities. In addition, unions represent certain groups of employees at one of our locations, and periodically, contracts with those unions come up for renewal. The outcome of those negotiations could have an adverse effect on our operations at that location. Also, changes in federal and/or state laws may facilitate the organization of unions at locations that do not currently have unions, which could have an adverse effect on our operations.
We are subject to various laws and regulations that may require significant expenditures.
We are subject to federal, state and local laws and regulations affecting our business, including those promulgated under the Consumer Product Safety Act, the rules and regulations of the Consumer Products Safety Commission as well as laws and regulations relating to personal information. We may be required to make significant expenditures to comply with such governmental laws and regulations and any amendments thereto. Complying with existing or future laws or regulations may materially limit our business and increase our costs. Failure to comply with such laws may expose us to potential liability and have a material adverse effect on our results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On November 20, 2012, the Company announced the approval by its Board of Directors for the repurchase of up to $10 million of the Company’s outstanding common stock from time to time on the open market or in privately negotiated transactions, including pursuant to a Rule 10b5-1 nondiscretionary trading plan. This stock repurchase authorization is effective for a period of twelve months. Through March 30, 2013, approximately 123,000 shares of common stock were repurchased for approximately $1.5 million. The following table summarizes the monthly purchases under this program during the second quarter of the Company’s fiscal year 2013.
ISSUER PURCHASES OF EQUITY SECURITIES
|
|
|
|
|
| (c) Total Number of |
| (d) Approximate Dollar |
| ||
|
| (a) Total |
|
|
| Shares Purchased as |
| Value of Shares that |
| ||
|
| Number of |
| (b) Average |
| Part of Publicly |
| May Yet Be |
| ||
|
| Shares |
| Price Paid |
| Announced Plans or |
| Purchased Under |
| ||
Fiscal Month |
| Purchased |
| per Share |
| Programs |
| the Plans or Programs |
| ||
December 30, 2012 - January 26, 2013 |
| — |
| — |
| — |
| — |
| ||
January 27, 2013- February 23, 2013 |
| 79,501 |
| $ | 12.58 |
| 79,501 |
| $ | 8,999,992 |
|
February 24, 2013 - March 30, 2013 |
| 43,760 |
| $ | 12.99 |
| 43,760 |
| $ | 8,431,569 |
|
|
|
|
|
|
|
|
|
|
| ||
Total |
| 123,261 |
| $ | 12.73 |
| 123,261 |
|
|
|
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
There have been no material changes to the procedures by which security holders may recommend nominees to the Company’s Board of Directors.
Item 6. Exhibits
Exhibit No. |
| Description |
|
|
|
10.1 |
| Stock Purchase and Sale Agreement for the acquisition of FastPencil, Inc. dated April 29, 2013 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K on May 3, 2013, and incorporated herein by reference). |
|
|
|
31.1* |
| Certification of Chief Executive Officer |
|
|
|
31.2* |
| Certification of Chief Financial Officer |
|
|
|
32.1** |
| Certification of Chief Executive Officer |
|
|
|
32.2** |
| Certification of Chief Financial Officer |
|
|
|
101.INS** |
| XBRL Instance Document |
|
|
|
101.SCH** |
| XBRL Taxonomy Extension Schema Document |
|
|
|
101.CAL** |
| XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
101.DEF** |
| XBRL Taxonomy Extension Definition Linkbase Document |
|
|
|
101.LAB** |
| XBRL Taxonomy Extension Label Linkbase Document |
|
|
|
101.PRE** |
| XBRL Taxonomy Extension Presentation Linkbase Document |
* Filed herewith.
** Furnished herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
COURIER CORPORATION
(Registrant)
May 9, 2013 |
| By: | /s/James F. Conway III | |
Date |
|
| James F. Conway III | |
|
|
| Chairman, President and | |
|
|
| Chief Executive Officer | |
|
|
| ||
|
|
| ||
May 9, 2013 |
| By: | /s/Peter M. Folger | |
Date |
|
| Peter M. Folger | |
|
|
| Senior Vice President and | |
|
|
| Chief Financial Officer | |
|
|
| ||
|
|
| ||
May 9, 2013 |
| By: | /s/Kathleen M. Leon | |
Date |
|
| Kathleen M. Leon | |
|
|
| Vice President and | |
|
|
| Controller | |
EXHIBIT INDEX
Exhibit No. |
| Description |
|
|
|
10.1 |
| Stock Purchase and Sale Agreement for the acquisition of FastPencil, Inc. dated April 29, 2013 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K on May 3, 2013, and incorporated herein by reference). |
|
|
|
31.1* |
| Certification of Chief Executive Officer |
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|
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31.2* |
| Certification of Chief Financial Officer |
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32.1** |
| Certification of Chief Executive Officer |
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|
|
32.2** |
| Certification of Chief Financial Officer |
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|
|
101.INS** |
| XBRL Instance Document |
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|
|
101.SCH** |
| XBRL Taxonomy Extension Schema Document |
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101.CAL** |
| XBRL Taxonomy Extension Calculation Linkbase Document |
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101.DEF** |
| XBRL Taxonomy Extension Definition Linkbase Document |
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101.LAB** |
| XBRL Taxonomy Extension Label Linkbase Document |
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101.PRE** |
| XBRL Taxonomy Extension Presentation Linkbase Document |
* Filed herewith.
** Furnished herewith.