UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JANUARY 26, 2002.
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO
__________
Commission File Number: 000-24385
SCHOOL SPECIALTY, INC.
(Exact Name of Registrant as Specified in its Charter)
Wisconsin 39-0971239
(State or Other (IRS Employer
Jurisdiction of Incorporation) Identification No.)
W6316 Design Drive
Greenville, Wisconsin
(Address of Principal Executive Offices)
54942
(Zip Code)
(920) 734-5712
(Registrant's Telephone Number, including Area Code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [_]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding at
Class February 15, 2002
----- -----------------
Common Stock, $0.001 par value 18,017,365
SCHOOL SPECIALTY, INC.
INDEX TO FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JANUARY 26, 2002
PART I - FINANCIAL INFORMATION
- ------------------------------
Page
Number
------
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets at January 26, 2002
(Unaudited), April 28, 2001 and January 27, 2001 (Unaudited) ............................ 1
Unaudited Consolidated Statements of Operations for the Three and Nine Months
Ended January 26, 2002 and January 27, 2001 ............................................. 2
Unaudited Consolidated Statements of Cash Flows for the Nine
Months Ended January 26, 2002 and January 27, 2001 ...................................... 3
Notes to Unaudited Consolidated Financial Statements ......................................... 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS .......................................................... 14
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK .................................................................................. 18
PART II - OTHER INFORMATION
- ---------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ............................................................. 19
-Index-
PART I - FINANCIAL INFORMATION
- ------------------------------
ITEM 1. Financial Statements
SCHOOL SPECIALTY, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)
January 26, April 28, January 27,
2002 2001 2001
---- ---- ----
(unaudited) (unaudited)
ASSETS
------
Current assets:
Cash and cash equivalents .................................................. $ 5,315 $ 5,688 $ 5,817
Accounts receivable, less allowance for doubtful accounts of
$3,838, $3,523, and $3,843, respectively ................................. 45,174 40,358 54,086
Inventories ................................................................ 72,131 102,192 69,925
Prepaid expenses and other current assets .................................. 29,095 35,053 42,987
Deferred taxes ............................................................. 8,259 7,873 6,964
--------- --------- ---------
Total current assets ..................................................... 159,974 191,164 179,779
Property, plant and equipment, net ............................................ 49,185 43,522 44,755
Goodwill, net ................................................................. 389,286 249,781 249,484
Intangible assets, net ........................................................ 35,384 5,090 12,549
Deferred taxes ................................................................ - - 1,861
Other ......................................................................... 11,358 16,735 6,772
--------- --------- ---------
Total assets ............................................................. $ 645,187 $ 506,292 $ 495,200
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current maturities - long-term debt ........................................ $ 4,412 $ 21,615 $ 14,823
Accounts payable ........................................................... 27,823 57,896 39,105
Accrued compensation ....................................................... 13,032 7,989 3,326
Other accrued liabilities .................................................. 21,463 15,633 17,823
Accrued income taxes ....................................................... 8,115 - 7,214
Accrued restructuring ...................................................... 962 2,513 -
--------- --------- ---------
Total current liabilities ................................................ 75,807 105,646 82,291
Long-term debt ................................................................ 278,221 158,168 167,102
Deferred taxes ................................................................ 16,282 3,018 -
--------- --------- ---------
Total liabilities ........................................................ 370,310 266,832 249,393
Shareholders' equity:
Preferred stock, $0.001 par value per share, 1,000,000 shares
authorized; none outstanding ............................................. - - -
Common stock, $0.001 par value per share, 150,000,000 shares
authorized and 18,004,156, 17,587,008 and 17,541,909
shares issued and outstanding, respectively .............................. 18 18 17
Capital paid-in excess of par value ........................................ 207,202 198,119 197,303
Accumulated other comprehensive (loss) income .............................. (759) 190 -
Retained earnings .......................................................... 68,416 41,133 48,487
--------- --------- ---------
Total shareholders' equity ............................................... 274,877 239,460 245,807
--------- --------- ---------
Total liabilities and shareholders' equity ............................... $ 645,187 $ 506,292 $ 495,200
========= ========= =========
See accompanying notes to consolidated financial statements.
1
SCHOOL SPECIALTY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In Thousands, Except Per Share Data)
For the Three For the Nine
Months Ended Months Ended
-------------------------- --------------------------
January 26, January 27, January 26, January 27,
2002 2001 2002 2001
---- ---- ---- ----
Revenues .......................................................... $ 104,005 $ 104,658 $ 633,823 $ 562,264
Cost of revenues .................................................. 64,259 66,624 393,949 359,648
--------- --------- --------- ---------
Gross profit ................................................... 39,746 38,034 239,874 202,616
Selling, general and administrative expenses ...................... 48,199 42,245 179,750 154,938
--------- --------- --------- ---------
Operating income (loss) ........................................ (8,453) (4,211) 60,124 47,678
Other (income) expense:
Interest expense ............................................... 3,769 4,214 11,730 12,510
Interest income ................................................ (11) (33) (42) (97)
Other .......................................................... 1,997 1,398 2,961 1,101
--------- --------- --------- ---------
Income (loss) before provision for (benefit
from) income taxes ............................................. (14,208) (9,790) 45,475 34,164
Provision for (benefit from) income taxes ......................... (5,683) (4,988) 18,192 14,671
--------- --------- --------- ---------
Net income (loss) ................................................. $ (8,525) $ (4,802) $ 27,283 $ 19,493
========= ========= ========= =========
Weighted average shares outstanding:
Basic .......................................................... 17,998 17,473 17,882 17,467
Diluted ........................................................ 17,998 17,473 21,683 17,672
Net income (loss) per share:
Basic .......................................................... $ (0.47) $ (0.27) $ 1.53 $ 1.12
Diluted ........................................................ $ (0.47) $ (0.27) $ 1.39 $ 1.10
See accompanying notes to consolidated financial statements.
2
SCHOOL SPECIALTY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
For the Nine
Months Ended
------------------------------
January 26, January 27,
2002 2001
---- ----
Cash flows from operating activities:
Net income .................................................................................. $ 27,283 $ 19,493
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense ..................................................... 7,242 10,862
Amortization of debt fees and other ....................................................... 1,806 455
Loss (gain) on disposal of property and equipment ......................................... 948 (184)
Gain on sale of available-for-sale securities ............................................. (287) -
Loss on business disposition .............................................................. 130 717
Loss on write-off of investment ........................................................... 1,657 -
Change in current assets and liabilities (net of assets acquired and liabilities
assumed in business combinations accounted for under the purchase method):
Accounts receivable ....................................................................... 1,252 (2,054)
Inventories ............................................................................... 31,057 23,794
Prepaid expenses and other current assets ................................................. 6,619 (11,667)
Accounts payable .......................................................................... (31,296) (10,655)
Accrued liabilities ....................................................................... 16,832 3,321
--------- ---------
Net cash provided by operating activities ............................................... 63,243 34,082
--------- ---------
Cash flows from investing activities:
Cash paid in acquisitions, net of cash acquired ............................................. (160,203) (113,832)
Proceeds from business disposition .......................................................... 1,500 3,538
Additions to property and equipment ......................................................... (7,261) (9,925)
Proceeds from sale of property and equipment ................................................ 185 20,275
Proceeds from sale of available-for-sale securities ......................................... 5,238 -
Other ....................................................................................... - (1,575)
--------- ---------
Net cash used in investing activities ................................................... (160,541) (101,519)
--------- ---------
Cash flows from financing activities:
Proceeds from bank borrowings ............................................................... 228,500 159,200
Repayment of debt and capital leases ........................................................ (281,987) (141,238)
Proceeds from convertible debt offering ..................................................... 149,500 -
Proceeds from sale of accounts receivable ................................................... - 50,000
Payment of debt fees ........................................................................ (5,403) -
Proceeds from repayment of long-term note receivable ........................................ 1,115 -
Proceeds from exercise of stock options ..................................................... 5,200 1,355
Repurchase of common stock .................................................................. - (214)
--------- ---------
Net cash provided by financing activities ............................................... 96,925 69,103
--------- ---------
Net (decrease) increase in cash and cash equivalents ........................................... (373) 1,666
Cash and cash equivalents, beginning of period ................................................. 5,688 4,151
--------- ---------
Cash and cash equivalents, end of period ....................................................... $ 5,315 $ 5,817
========= =========
Non-cash investing activities:
Common stock issued for net assets acquired in business combination ......................... $ 2,700 $ -
Non-cash financing activities:
Note issued as partial consideration for net assets acquired in business combination ........ $ 4,012 $ -
See accompanying notes to consolidated financial statements.
3
SCHOOL SPECIALTY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
(Unaudited)
(In Thousands)
The Company entered into certain business combinations accounted for under the
purchase method in the nine months ended January 26, 2002, and January 27, 2001.
The transactions that occurred in the nine months ending January 26, 2002 were
paid for using cash, cash and common stock, or cash and a note, and the
transactions that occurred during the nine months ended January 27, 2001 were
paid for using cash. The fair values of the assets and liabilities of the
acquired companies at the dates of the acquisitions are presented as follows:
For the Nine
Months Ended
---------------------------
January 26, January 27,
2002 2001
---- ----
Accounts receivable ............................ $ 6,435 $ 27,365
Inventories .................................... 3,674 7,480
Prepaid expenses and other current assets ...... 1,472 5,142
Property, plant and equipment .................. 7,202 4,922
Goodwill ....................................... 133,530 75,365
Intangible assets .............................. 33,276 2,750
Other assets ................................... 49 10
Short-term debt and capital lease obligations .. (2,483) (1,852)
Accounts payable ............................... (624) (2,800)
Accrued liabilities ............................ (5,573) (4,754)
Long-term debt and capital lease obligations ... (342) (566)
Deferred taxes ................................. (13,264) -
--------- ---------
Net assets acquired ......................... $ 163,352 $ 113,062
========= =========
Acquisitions were funded as follows:
Cash paid, net of cash acquired ................ $ 156,640 $ 113,062
Note payable to selling shareholders ........... 4,012 -
Common stock ................................... 2,700 -
--------- ---------
Total ...................................... $ 163,352 $ 113,062
========= =========
See accompanying notes to consolidated financial statements.
4
SCHOOL SPECIALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In Thousands, Except Per Share Data)
NOTE 1--BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. The balance sheet at April
28, 2001, has been derived from the Company's audited financial statements for
the fiscal year ended April 28, 2001. For further information, refer to the
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended April 28, 2001.
Certain amounts previously reported have been reclassified to conform to the
current year presentation.
NOTE 2--SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME
Changes in shareholders' equity during the nine months ended January 26, 2002,
were as follows:
Shareholders' equity balance at April 28, 2001 ....................... $239,460
Net income ........................................................... 27,283
Issuance of common stock for business combination .................... 2,700
Issuance of common stock in conjunction with
stock option exercises ............................................. 5,200
Tax benefit from issuance of common stock in conjunction
with stock option exercises ........................................ 1,183
Unrealized loss on available-for-sale securities,
net of tax ......................................................... (951)
Cumulative translation adjustment .................................... 2
--------
Shareholders' equity balance at January 26, 2002 ..................... $274,877
========
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5
SCHOOL SPECIALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In Thousands, Except Per Share Data)
Comprehensive income (loss) for the periods presented in the consolidated
statements of operations were as follows:
For the Three For the Nine
Months Ended Months Ended
-------------------------- --------------------------
January 26, January 27, January 26, January 27,
2002 2001 2002 2001
---- ---- ---- ----
Net income (loss) ........................................................ $ (8,525) $ (4,802) $ 27,283 $ 19,493
Other comprehensive income (loss):
Unrealized gain (loss) on available-for-sale securities:
Unrealized holding gain (loss) arising during period,
net of tax ........................................................ 38 - (779) -
Less: Reclassification adjustment for gains
included in net income, net of tax ................................ - - 172 -
---------- ---------- ---------- ----------
Net unrealized gain (loss) on available-for-sale securities
recognized in other comprehensive income (loss) ..................... 38 - (951) -
Unrealized gain (loss) on derivative financial instrument:
Unrealized holding gain (loss) arising during period,
net of tax ........................................................ 69 - (559) -
Less: Reclassification adjustment for losses
included in net income (loss), net of tax ......................... (210) - (559) -
---------- ---------- ---------- ---------
Net unrealized gain on derivative financial
instruments recognized in other comprehensive
income (loss) ....................................................... 279 - - -
Cumulative translation adjustment ...................................... 2 234 2 30
---------- --------- ---------- ----------
Total comprehensive income (loss) ........................................ $ (8,206) $ (4,568) $ 26,334 $ 19,523
========== ========= ========== ==========
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6
SCHOOL SPECIALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In Thousands, Except Per Share Data)
NOTE 3--EARNINGS PER SHARE
The following information presents the Company's computations of basic earnings
(loss) per share ("basic EPS") and diluted earnings (loss) per share ("diluted
EPS") for the periods presented in the consolidated statements of operations:
Income (Loss) Shares Per Share
(Numerator) (Denominator) Amount
--------- ----------- ------
Three months ended January 26, 2002:
Basic and diluted EPS .................................. $ (8,525) 17,998 $(0.47)
======== ====== ======
Three months ended January 27, 2001:
Basic and diluted EPS .................................. $ (4,802) 17,473 $(0.27)
======== ====== ======
Nine months ended January 26, 2002:
Basic EPS .............................................. $ 27,283 17,882 $ 1.53
======
Effect of dilutive employee stock options .............. - 714
Effect of convertible debt ............................. 2,903 3,087
-------- ------
Diluted EPS ............................................ $ 30,186 21,683 $ 1.39
======== ====== ======
Nine months ended January 27, 2001:
Basic EPS .............................................. $ 19,493 17,467 $ 1.12
======
Effect of dilutive employee stock options .............. - 205
-------- ------
Diluted EPS ............................................ $ 19,493 17,672 $ 1.10
======== ====== ======
The Company had additional employee stock options outstanding during the nine
months ended January 26, 2002 and January 27, 2001, of 111 and 283,
respectively, that were not included in the computation of diluted EPS because
they were anti-dilutive.
NOTE 4--GOODWILL AND OTHER INTANGIBLE ASSETS
Effective at the beginning of fiscal 2002, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 142, which resulted in goodwill no
longer being subject to amortization, but rather an annual impairment test. The
following information presents what reported net income (loss), basic EPS and
diluted EPS would have been had SFAS No. 142 been adopted at the beginning of
fiscal 2001:
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7
SCHOOL SPECIALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In Thousands, Except Per Share Data)
For the Three For the Nine
Months Ended Months Ended
------------------------- -------------------------
January 26, January 27, January 26, January 27,
2002 2001 2002 2001
---- ---- ---- ----
Reported net income (loss) .............. $ (8,525) $ (4,802) $ 27,283 $ 19,493
Add back: Goodwill amortization ...... - 1,326 - 3,685
-------- -------- -------- --------
Adjusted net income (loss) .............. $ (8,525) $ (3,476) $ 27,283 $ 23,178
======== ======== ======== ========
Basic EPS:
Reported basic EPS ................... $ (0.47) $ (0.27) $ 1.53 $ 1.12
Goodwill amortization ................ - 0.07 - 0.21
-------- -------- -------- --------
Adjusted basic EPS ...................... $ (0.47) $ (0.20) $ 1.53 $ 1.33
======== ======== ======== ========
Diluted EPS:
Reported diluted EPS ................. $ (0.47) $ (0.27) $ 1.39 $ 1.10
Goodwill amortization ................ - 0.07 - 0.21
-------- -------- -------- --------
Adjusted diluted EPS .................... $ (0.47) $ (0.20) $ 1.39 $ 1.31
======== ======== ======== ========
The following table presents details of the Company's intangible assets:
Accumulated Net Book
January 26, 2002 Gross Value Amortization Value
---------------- ----------- ------------ -----
Amortizable intangible assets:
Customer relationships ..................... $ 16,000 $ (89) $ 15,911
Non-compete agreements ..................... 2,819 (645) 2,174
Order backlog .............................. 612 (6) 606
Other ...................................... 1,038 (422) 616
---------- ---------- ----------
Total amortizable intangible assets ...... 20,469 (1,162) 19,307
Non-amortizable intangible assets:
Perpetual license agreement ................ 15,700 - 15,700
Other ...................................... 377 - 377
---------- ---------- ----------
Total non-amortizable intangible assets .. 16,077 - 16,077
---------- ---------- ----------
Total intangible assets ................ $ 36,546 $ (1,162) $ 35,384
========== ========== ==========
Accumulated Net Book
April 28, 2001 Gross Value Amortization Value
-------------- ----------- ------------ -----
Amortizable intangible assets:
Non-compete agreements ..................... $ 2,851 $ (327) $ 2,524
Other ...................................... 4,362 (1,796) 2,566
---------- ---------- ----------
Total intangible assets .................. $ 7,213 $ 2,123 $ 5,090
========== ========== ==========
8
SCHOOL SPECIALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In Thousands, Except Per Share Data)
Accumulated Net Book
January 27, 2001 Gross Value Amortization Value
---------------- ----------- ------------ -----
Amortizable intangible assets:
Technology ........................ $ 4,347 $ (1,142) $ 3,205
Non-compete agreements ............ 2,853 (185) 2,668
Product development ............... 2,842 (858) 1,984
Trademarks ........................ 2,495 (335) 2,160
Other ............................. 4,238 (1,706) 2,532
---------- ---------- --------
Total intangible assets ......... $ 16,775 $ (4,226) $ 12,549
========== ========== ========
Intangible amortization expense included in operating income (loss) was as
follows:
January 26, January 27,
2002 2001
---- ----
For the three months ended .. $ 275 $ 512
For the nine months ended ... 605 1,331
Estimated intangible amortization expense for each of the five succeeding fiscal
years and the remainder of fiscal 2002 is estimated to be:
Fiscal 2002 (three months remaining) .... $ 460
Fiscal 2003 ............................. 2,351
Fiscal 2004 ............................. 1,714
Fiscal 2005 ............................. 1,669
Fiscal 2006 ............................. 1,439
Fiscal 2007 ............................. 1,118
The following information presents changes to net goodwill during the period
beginning January 28, 2001 through January 26, 2002.
Balance at Balance at Balance at
January Business April January
Segment 27, 2001 Disposition Amortization Adjustments 28, 2001 Acquired Adjustments 26, 2002
------- -------- ----------- ------------ ----------- -------- -------- ----------- --------
Traditional ... $154,673 $ - $ (1,025) $ (75) $153,573 $ - $ 5,595 $159,168
Specialty ..... 94,811 (963) (635) 2,995 96,208 133,530 380 230,118
-------- -------- -------- -------- -------- --------- ---------- --------
Total ....... $249,484 $ (963) $ (1,660) $ 2,920 $249,781 $ 133,350 $ 5,975 $389,286
======== ======== ======== ======== ======== ========= ========== ========
During the fourth quarter of fiscal 2001, the Company sold the SmartStuff
division, for a net gain of approximately $500, which included the disposition
of net goodwill of $963. The adjustments during the fourth quarter of fiscal
2001 in the Specialty segment primarily represent the accrual for additional
purchase price consideration of $3,000 related to the acquisition of Global
Video, LLC. The adjustments during the nine months ended January 26, 2002 in the
Traditional segment represent the reclassification to goodwill of the net book
value of $2,381 for certain previously recorded intangible assets. The
reclassification was made upon adoption of SFAS No. 142. The balance of the
adjustments represent purchase price adjustments and adjustments related to
finalization of integration plans associated with the acquisition of JL Hammett.
The Specialty segment adjustments during the nine months ended January 26, 2002
represent additional
9
purchase price consideration paid to the former owners of Global Video and final
purchase accounting adjustment of $380.
NOTE 5--BUSINESS COMBINATIONS
On December 21, 2001, the Company acquired all of the issued and outstanding
shares of capital stock of Premier Agendas, Inc. and Premier School Agendas
Ltd., Agenda Scolaire Premier Ltee (together "Premier Agendas"). Premier
Agendas, headquartered in Bellingham, Washington, is the largest provider of
academic agendas in the United States and Canada. The Company expects the
acquisition to create synergies with existing student agenda brands Time Tracker
and Hammond & Stephens. The aggregate purchase price, net of cash acquired, of
$155,931, includes a $4,012 six-month note payable to the former owners of
Premier Agendas that bears interest at two percent over LIBOR. The balance of
the purchase price was cash and was funded primarily through borrowings under
the existing credit facility. The results of this acquisition have been included
in the consolidated financial statements and are part of the Specialty segment
results since the date of acquisition. The Company is in the process of
evaluating synergies and restructuring that may result from the acquisition and
expects purchase price adjustments in subsequent quarters related to costs
associated with those activities.
The Company acquired the following intangible assets as part of the Premier
Agendas acquisition:
Allocated Amortization
Acquired Intangibles Value Life
-------------------- ----- ----
Amortizable intangibles:
Customer relationships .......... $16,000 15 years
Order backlog ................... 600 1 year
Non-compete agreements .......... 77 2 years
-------
Total ......................... 16,777 -
Non amortizable intangibles:
Perpetual license agreement ..... 15,700 -
-------
Total acquired intangibles .... $32,377 -
=======
The above valuations are based on a preliminary third-party valuation, which is
expected to be finalized during fiscal 2002's fourth quarter. In addition to the
above intangible assets, the Company preliminarily recorded approximately
$127,400 in goodwill related to the Premier Agendas acquisition, which will not
be deductible for income tax purposes.
Also, during fiscal 2002, the Company acquired two other businesses, accounted
for under the purchase method of accounting, for a total purchase price, net of
cash acquired, of $7,421. The following transactions were paid for with cash and
120 shares of School Specialty, Inc. common stock:
. October 2001 - Premier Science, a start-up science curriculum
company which will be operated from the Mansfield, Ohio facility.
. May 2001 - Envision, Inc., based in Grand Junction, Colorado, a
designer, producer and marketer of student agenda books.
The results of these acquisitions have been included in the consolidated
financial statements and are part of the Specialty segment results since the
date of acquisition. The acquisitions resulted in goodwill of approximately
$6,200, which was assigned to the Specialty segment and is fully deductible for
tax purposes. No significant purchase price adjustments are anticipated with
respect to either of the above acquisitions.
In the first nine months of fiscal 2001, the Company made two acquisitions
accounted for under the purchase method for an aggregate purchase price, net of
cash acquired, of $116,625, including $2,750 paid for non-compete
agreements. The above purchase price includes subsequent cash payments related
to final purchase price
10
adjustments of $3,210 and $353, which were made during the first and third
quarters of fiscal 2002, respectively. The business acquired were:
. November 2000 - certain assets of the K-12 wholesale business of the
J.L. Hammett Company, a marketer of supplemental educational
supplies, with operations in Lyons, New York and Southaven,
Mississippi. Results included in the Traditional segment since the
date of acquisition.
. June 2000 - acquired 100% of Global Video, LLC, a designer, producer
and marketer of educational videos, based in Tempe, Arizona. Results
included in the Specialty segment since the date of acquisition.
During the first quarter of fiscal 2002, the Company recorded a liability and
corresponding increase to goodwill of approximately $2,300 for estimated costs
to consolidate acquired Global Video operations into existing operations. During
the third quarter of fiscal 2002, the plan of consolidation was substantially
modified and $2,150 of the liability was reversed with the related goodwill
reduced accordingly. Goodwill resulting from the above two transactions was
approximately $78,040, of which, $49,440 has been allocated to the Traditional
segment and $28,600 to the Specialty segment.
The following information presents the unaudited pro forma results of operations
of the Company for the three and nine months ended January 26, 2002 and January
27, 2001, and includes the Company's consolidated results of operations and the
results of the companies acquired during fiscal 2002 and fiscal 2001 as if all
such purchase acquisitions had been made at the beginning of fiscal 2001. The
results presented below include certain pro forma adjustments to reflect the
amortization of goodwill (if the transaction occurred during fiscal 2001) and
intangible assets, adjustments to interest expense, and the inclusion of an
income tax provision on all earnings:
Three Months Ended Nine Months Ended
---------------------------- ----------------------------
January 26, January 27, January 26, January 27,
2002 2001 2002 2001
---- ---- ---- ----
Revenues ........................ $105,282 $110,814 $717,696 $732,290
Net income (loss) ............... (11,831) (10,286) 38,018 29,017
Net income (loss) per share:
Basic ........................ $ (0.66) $ (0.58) $ 2.13 $ 1.65
Diluted ...................... $ (0.66) $ (0.58) $ 1.89 $ 1.63
The unaudited pro forma results of operations are prepared for comparative
purposes only and do not necessarily reflect the results that would have
occurred had the acquisitions occurred at the beginning of fiscal 2001 or the
results that may occur in the future.
NOTE 6--SEGMENT INFORMATION
The Company's business activities are organized around two principal business
segments, Traditional and Specialty and operate principally in the United
States, with limited Specialty segment operations in Canada. Both internal and
external reporting conform to this organizational structure, with no significant
differences in accounting policies applied. The Company evaluates the
performance of its segments and allocates resources to them based on revenue
growth and profitability. While the segments serve a similar customer base,
notable differences exist in products, gross margin and revenue growth rate.
Products supplied within the Traditional segment include consumables (consisting
of classroom supplies, instructional materials, educational games, art supplies
and school forms), school furniture and indoor and outdoor equipment. Products
supplied within the Specialty segment target specific educational disciplines,
such as art, industrial arts, physical education, sciences, early childhood and
student academic planners.
Effective with the beginning of fiscal 2002, the Company discontinued separately
reporting the Internet segment, as the management of this business has changed
such that this business is operated as a sales channel. Amounts
11
previously reported for the Internet segment have been restated to conform with
fiscal 2002's presentation. The following table presents segment information:
Three Months Ended Nine Months Ended
------------------------- -------------------------
January 26, January 27, January 26, January 27,
2002 2001 2002 2001
---- ---- ---- ----
Revenues:
Traditional ............................... $ 62,318 $ 61,695 $ 407,237 $ 341,541
Specialty ................................. 41,687 42,963 226,586 220,723
---------- ---------- --------- ---------
Total ................................... $ 104,005 $ 104,658 $ 633,823 $ 562,264
========== ========== ========= =========
Operating income (loss) and income (loss)
before income taxes:
Traditional ............................... $ 1,996 $ 93 $ 48,560 $ 33,918
Specialty ................................. (6,152) (946) 24,924 23,435
---------- ---------- --------- ---------
Total ................................... (4,156) (853) 73,484 57,353
General corporate expense ................. 4,297 3,358 13,360 9,675
Interest expense and other ................ 5,755 5,579 14,649 13,514
---------- ---------- --------- ---------
Income (loss) before income taxes ......... $ (14,208) $ (9,790) $ 45,475 $ 34,164
========== ========== ========= =========
Identifiable assets (at quarter end):
Traditional ............................... $ 217,836 $ 223,482 $ 217,836 $ 223,482
Specialty ................................. 334,103 169,130 334,103 169,130
---------- ---------- --------- ---------
Total ................................... 551,939 392,612 551,939 392,612
Corporate ................................. 93,248 102,588 93,248 102,588
---------- ---------- --------- ---------
Total ................................... $ 645,187 $ 495,200 $ 645,187 $ 495,200
========== ========== ========= ========
Depreciation and amortization:
Traditional ............................... $ 873 $ 1,716 $ 2,412 $ 4,376
Specialty ................................. 915 1,789 2,423 5,258
---------- ---------- --------- ---------
Total ................................... 1,788 3,505 4,835 9,634
Corporate ................................. 841 497 2,407 1,228
---------- ---------- --------- ---------
Total ................................... $ 2,629 $ 4,002 $ 7,242 $ 10,862
========== ========== ========= =========
Expenditures for property and equipment:
Traditional ............................... $ 239 $ 1,006 $ 1,505 $ 1,957
Specialty ................................. 358 930 1,390 3,751
---------- ---------- --------- ---------
Total ................................... 597 1,936 2,895 5,708
Corporate ................................. 2,859 1,095 4,366 4,217
---------- ---------- --------- ---------
Total ................................... $ 3,456 $ 3,031 $ 7,261 $ 9,925
========== ========== ========= =========
NOTE 7-- RESTRUCTURING COSTS
During the fourth quarter of fiscal 2001, the Company recorded a restructuring
charge of $4,500 to close redundant facilities and for related severance costs,
which is discussed in the fiscal 2001 Form 10-K. During fiscal 2001, the Company
terminated 76 employees under this plan, and no additional employees will be
terminated under this plan.
During the second quarter of fiscal 1999, the Company recorded a $4,200
restructuring charge, which is discussed in the fiscal 2000 and fiscal 2001 Form
10-K. This charge was for the Company's plan to consolidate existing
warehousing, customer service and sales operations. Under this restructuring
plan, which was completed during the first quarter of fiscal 2001, the Company
terminated approximately 240 employees.
12
SCHOOL SPECIALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In Thousands, Except Per Share Data)
Selected information related to the restructuring reserve is as follows:
Facility
Severance and Closure and
Terminations Consolidation Other Costs Total
------------ ------------- ----------- -----
April 29, 2000 liability balance $ 40 $ 17 $ 8 $ 65
First quarter, fiscal 2001
Utilizations ....................... (40) (17) (8) (65)
Second quarter, fiscal 2001
Utilizations ....................... - - - -
Third quarter, fiscal 2001
Utilizations ....................... - - - -
Fourth quarter, fiscal 2001
Additions .......................... 1,544 2,391 565 4,500
Utilizations ....................... (744) (697) (546) (1,987)
-------- -------- -------- -------
April 28, 2001 liability balance 800 1,694 19 2,513
First quarter, fiscal 2002
Utilizations ....................... (337) (291) (19) (647)
Second quarter, fiscal 2002
Utilizations ....................... (140) (198) - (338)
Third quarter, fiscal 2002
Utilizations ....................... (227) (339) - (566)
-------- -------- -------- -------
January 26, 2002 liability balance ...... $ 96 $ 866 $ - $ 962
======== ======== ======== =======
13
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
The following table sets forth various items as a percentage of
revenues on a historical basis.
Three Months Ended Nine Months Ended
----------------------------- -----------------------------
January 26, January 27, January 26, January 27,
2002 2001 2002 2001
---- ---- ---- ----
Revenues .............................................. 100.0% 100.0% 100.0% 100.0%
Cost of revenues ...................................... 61.8 63.7 62.2 64.0
------ ------ ------ ------
Gross profit ....................................... 38.2 36.3 37.8 36.0
Selling, general and administrative expenses .......... 46.3 40.3 28.4 27.5
------ ------ ------ ------
Operating income (loss) ............................ (8.1) (4.0) 9.5 8.5
Interest expense, net ................................. 3.6 4.0 1.8 2.2
Other ................................................. 2.0 1.4 0.5 0.2
------ ------ ------ ------
Income (loss) before provision for (benefit from)
income taxes ....................................... (13.7) (9.4) 7.2 6.1
Provision for (benefit from) income taxes ............. (5.5) (4.8) 2.9 2.6
------ ------ ------ ------
Net income (loss) ..................................... (8.2)% (4.6)% 4.3% 3.5%
====== ====== ====== ======
Three Months Ended January 26, 2002 Compared to Three Months Ended January 27,
2001
Revenues
- --------
Revenues were essentially flat for the three months ended January 26, 2002 and
January 27, 2001 at $104.0 million and $104.7 million, respectively. Change in
revenues was primarily due to the disposition of three Specialty businesses
since January 2001, offset by internal growth in the Specialty segment and
revenue related to Specialty and Traditional acquisitions since the beginning of
fiscal 2001.
Gross Profit
- ------------
Gross profit was $39.7 million or 38.2% of revenues for the three months ended
January 26, 2002, an increase of $1.7 million, or 4.5% over the three months
ended January 27, 2001, of $38.0 million or 36.3% of revenues. Increase in gross
profit was primarily due to gross margin expansion. Increase in gross margin was
due primarily to an improvement in Traditional segment gross margin of 300 basis
points. This improvement was due to synergies created in virtually all
Traditional segment product lines from our November 2000 acquisition of J.L.
Hammett's K-12 wholesale division ("Hammett"). Specialty segment gross margin
improved by 60 basis points primarily driven by product mix. Consolidated gross
margin was also impacted by an increase in revenue mix from the Traditional
segment, which typically has lower gross margins than the Specialty segment.
Selling, General and Administrative Expenses
- --------------------------------------------
Selling, general and administrative expenses ("SG&A") include selling expenses
(the most significant component of which is sales wages and commissions),
operations expenses (which includes customer service, warehouse and warehouse
shipment transportation costs), catalog costs, general administrative overhead
(which includes information systems, accounting, legal, and human resources) and
depreciation and amortization expense.
SG&A increased 14.1% from $42.2 million or 40.4% of revenues for the three
months ended January 27, 2001, to $48.2 million or 46.3% of revenues for the
three months ended January 26, 2002. Increase in SG&A and SG&A as a percent of
revenues was primarily due to 1) costs associated with closing our distribution
center in Birmingham, Alabama and moving those operations to Southaven,
Mississippi, 2) inclusion of operating costs of Premier Agendas since the date
of acquisition, a highly seasonal business acquired during a seasonally low
period and 3) costs associated with integrating the Hammond & Stephens sales
force into acquired Premier Agendas operations. All of the above costs are
reflected in the Specialty segment results. Increase in SG&A in the Traditional
segment was
14
primarily due to the inclusion of a full quarter of operating costs for acquired
Hammett operations and an increase in selling expenses due to gross margin
expansion. These increases in SG&A were partially offset by reduced amortization
due to our adoption of SFAS No. 142 at the beginning of fiscal 2002.
Interest Expense
- ----------------
Net interest expense decreased $0.4 million from $4.2 million or 4.0% of
revenues for the three months ended January 27, 2001 to $3.8 million or 3.6% of
revenues for the three months ended January 26, 2002. The decrease in net
interest expense was primarily due to a reduction in our effective borrowing
rate partially offset by an increase in debt outstanding.
Other Expense
- -------------
Other expense increased $0.6 million to $2.0 million in fiscal 2002's third
quarter from $1.4 million in fiscal 2001's third quarter. Other expense in
fiscal 2002's third quarter primarily represented the discount and loss on the
accounts receivable securitization of $0.4 million and $1.7 million related to
the write-off of a long-term investment. Fiscal 2001's third quarter other
expense primarily consisted of a loss on the disposition of Gresswell, our U.K
subsidiary, of $0.7 million and the discount and loss on the securitization of
$0.7 million.
Benefit from Income Taxes
- -------------------------
Benefit from income taxes for the three months ended January 26, 2002 increased
13.9% or $0.7 million over the three months ended January 27, 2001, reflecting
income tax rates of 40.0% and 50.9% for the three months ended January 26, 2002
and January 27, 2001, respectively. The effective tax rate of 40.0% in the third
quarter of fiscal 2002 as compared to 50.9% in the third quarter of fiscal 2001
was primarily due to the impact of our adoption of SFAS No. 142 and its related
impact on non-deductible goodwill amortization and the impact of the disposition
of Gresswell on fiscal 2001's third quarter effective tax rate. The higher
effective tax rate, compared to the federal statutory rate of 35.0%, was
primarily due to state income taxes.
Nine Months Ended January 26, 2002 Compared to the Nine Months Ended January 27,
2001
Revenues
- --------
Revenues increased 12.7% from $562.3 million for the nine months ended January
27, 2001, to $633.8 million for the nine months ended January 26, 2002. Increase
in revenues was primarily driven by the inclusion of revenues from the
businesses acquired since the beginning of fiscal 2001 and internal growth in
Specialty segment revenues. These increases were offset by the exclusion of
revenues in the Specialty segment for the three businesses disposed of since
January 2001.
Gross Profit
- ------------
Gross profit increased 18.4% from $202.6 million or 36.0% of revenues for the
nine months ended January 27, 2001 to $239.9 million or 37.8% of revenues for
the nine months ended January 26, 2002. Increase in gross profit was primarily
due to an increase in revenues and gross margin expansion. Increase in gross
margin was primarily due to 1) gross margin expansion of 260 basis points in the
Traditional segment, driven by synergies realized with the Hammett acquisition
and 2) gross margin expansion of 170 basis points in the Specialty segment,
driven by pricing enhancements and an increase in revenue mix from higher margin
businesses. Consolidated gross margin expanded by 180 basis points impacted by
an increase in Traditional segment revenue mix from 60.7% of total revenues in
fiscal 2001 to 64.3% (or $65.7 million of revenues) in fiscal 2002. Traditional
segment gross margin is typically lower than Specialty segment gross margin.
Selling, General and Administrative Expenses
- --------------------------------------------
SG&A increased 16.0% from $154.9 million or 27.6% of revenues for the nine
months ended January 27, 2001, to $179.8 million or 37.8% of revenues for the
nine months ended January 26, 2002. Increase in SG&A was primarily due to an
increase in variable costs related to increased revenues and an increase in
fixed operating costs, primarily due to redundancies created with the Hammett
acquisition and costs to consolidate existing operations into acquired
15
businesses. These increases are offset by our early adoption at the beginning of
fiscal 2002 of SFAS No. 142, which resulted in the discontinuance of
amortization of goodwill. The increase in SG&A as a percentage of revenues was
primarily due to 1) costs associated with closing our distribution center in
Birmingham, Alabama, 2) operating costs of Premier Agendas, a highly seasonal
business acquired during a seasonally low period, 3) increase in commission
expense in the Traditional segment, due to expanded gross margins, 4) increased
facility and warehouse expenses in the Traditional segment, driven by
redundancies created with the Hammett acquisition and an increase in leased
versus owned facilities, 5) costs associated with integrating our Hammond &
Stephens sales force with the Premier Agendas sales force and 6) increased
catalog costs in the Specialty segment due primarily to the inclusion of expense
for the full nine months ended January 26, 2002 of Global Video, which has
higher catalog costs as a percentage of revenues than our other specialty
businesses. The increases were offset by a reduction in amortization expense,
due to our adoption of SFAS No. 142 at the beginning of fiscal 2002.
Interest Expense
- ----------------
Net interest expense decreased $0.7 million from $12.4 million or 2.2% of
revenues for the nine months ended January 27, 2001 to $11.7 million or 1.8% of
revenues for the nine months ended January 26, 2002. The decrease in interest
expense was primarily attributed to a reduction in our effective borrowing rate
partially offset by an increase in our outstanding debt.
Other Expense
- -------------
Other expense increased $1.9 million from $1.1 million for the nine months ended
January 27, 2001 to $3.0 million for the nine months ended January 26, 2002.
Other expenses for the nine months ended January 26, 2002 primarily consisted of
the discount and loss on the accounts receivable securitization of $1.6 million,
$1.7 million to write-off a long-term investment and a $0.3 million realized
gain on the sale of available-for-sale securities. Other expense in fiscal 2001
primarily consisted of a $0.7 million loss on the disposition of Gresswell and
the discount and loss on the Securitization of $0.7 million.
Provision for Income Taxes
- --------------------------
Provision for income taxes for the nine months ended January 26, 2002 increased
24.0% or $3.5 million over the nine months ended January 27, 2001, reflecting
income tax rates of 40.0% and 42.9% for the nine months ended January 26, 2002
and January 27, 2001, respectively. The effective tax rate of 40.0% in fiscal
2002 as compared to 42.9% in fiscal 2001 was due primarily to the impact of our
adoption of SFAS No. 142 and its impact on non-deductible goodwill amortization.
The higher effective tax rate, compared to the federal statutory rate of 35.0%,
was primarily due to state income taxes.
Liquidity and Capital Resources
At January 26, 2002, we had working capital of $84.2 million. Our capitalization
at January 26, 2002 was $557.5 million and consisted of total debt of $282.6
million and shareholders' equity of $274.9 million.
We have a five-year secured $350 million revolving credit facility with Bank of
America, N.A. The credit facility had an initial $100 million term loan maturing
quarterly and $250 million of availability under revolving loans. The credit
facility matures on September 30, 2003. During fiscal 2002's third quarter, the
term loan portion of the credit facility was repaid in full. The amount
outstanding under the revolving portion of the credit facility as of January 26,
2002 was $128 million. As of January 26, 2002, our effective interest rate on
borrowings under our credit facility was 3.46%. Borrowings under the credit
facility are usually significantly higher during the first two quarters of our
fiscal year to meet the working capital needs of our peak selling season.
On July 30, 2001, we sold an aggregate principal amount $130 million of 6
percent convertible subordinated notes due August 1, 2008. The notes are
convertible at any time prior to maturity into shares of School Specialty, Inc.
common stock at a conversion price of $32.29 per share and accrue interest
payable semi-annually. Net proceeds from the sale of these notes was
approximately $125.7 million. On August 2, 2001, the purchasers of the notes
exercised their over-allotment option in full and purchased an additional $19.5
million aggregate principal
16
amount of the notes, with net proceeds of approximately $18.9 million. We used
the total net proceeds from the offering of approximately $144.6 million to
repay a portion of the debt outstanding under the credit facility.
Effective January 2, 2001, we entered into an interest rate swap agreement with
The Bank of New York covering $50 million of outstanding debt. The one-year,
non-cancelable swap agreement fixed the 30 day LIBOR interest rate at 6.07% per
annum. The swap expired on January 2, 2002.
In November 2000, we entered into the receivable securitization, with a
financial institution whereby we sell on a continuous basis an undivided
interest in all of our eligible trade accounts receivable. Under the receivable
securitization, we transfer without recourse all of our accounts receivable to a
wholly-owned subsidiary. This subsidiary, in turn, has sold and, subject to
certain conditions, may from time to time sell an undivided interest in these
receivables and is permitted to receive advances of up to $50 million for the
sale of such undivided interest. Initially, the facility was to expire in
November 2001, but it was amended to extend the expiration date to November 19,
2002. At January 26, 2002, $50 million was advanced under the receivable
securitization and accordingly, that amount of accounts receivable has been
removed from our consolidated balance sheet. The proceeds from the sale were
used to reduce outstanding debt. Costs associated with the sale of receivables
in fiscal 2002, primarily related to the discount and loss on sale, were $1.6
million and are included in other expenses in our consolidated statement of
operations.
During the nine months ended January 26, 2002, net cash provided by operating
activities was $63.2 million an 85.6% increase over cash provided by operating
activities for the nine months ended January 27, 2001. The increase was driven
primarily by working capital improvement and increased net income. Net cash used
in investing activities was $160.5 million, including $160.2 million related to
acquisitions and $7.3 million for capital expenditures. These uses were
partially offset by proceeds of $5.2 from the sale of available-for-sale
securities and $1.5 million in proceeds from a business disposition. Net cash
provided by financing activities was $96.9 million. Net proceeds from our
convertible debt offering of approximately $144.6 million were used repay debt
outstanding on our credit facility.
During the nine months ended January 27, 2001, net cash provided by operating
activities was $34.1 million. Net cash used in investing activities was $101.5
million, including $113.8 million for acquisitions and $9.9 million for capital
expenditures, partially offset by $2.5 million in proceeds from the sale of a
closed distribution center, $17.8 million in net proceeds from sale/leaseback
transactions and $3.5 million in net proceeds from the sale of Gresswell. Net
cash provided by financing activities was $69.1 million, which consisted
primarily of net borrowings under our credit facility and a $50 million
reduction in borrowings on our credit facility using proceeds from the
securitization.
We anticipate that our cash flow from operations and borrowings available from
our existing credit facility will be sufficient to meet our liquidity
requirements for our operations (including anticipated capital expenditures) and
our debt service obligations for the remainder of the fiscal year.
Fluctuations in Quarterly Results of Operations
Our business is subject to seasonal influences. Our historical revenues and
profitability have been dramatically higher in the first two quarters of our
fiscal year primarily due to increased shipments to customers coinciding with
the start of each school year.
Quarterly results also may be materially affected by the timing of acquisitions,
the timing and magnitude of costs related to such acquisitions, variations in
our costs for the products we sold, the mix of products sold and general
economic conditions. Moreover, the operating margins of companies we acquire may
differ substantially from our own, which could contribute to further fluctuation
in our quarterly operating results. Therefore, results for any quarter are not
indicative of the results that we may achieve for any subsequent fiscal quarter
or for a full fiscal year.
Inflation
Inflation has and is expected to have only a minor effect on our results of
operations and our internal and external sources of liquidity.
17
Forward-Looking Statements
Statements in this report which are not historical are "forward-looking"
statements within the meaning of the Private Securities Litigation Reform Act of
1995. The forward-looking statements include: (1) statements made under Item 2,
Management's Discussion and Analysis of Financial Condition and Results of
Operations, including, without limitation, statements with respect to internal
growth plans, projected revenues, margin improvement, future acquisitions,
capital expenditures and adequacy of capital resources; (2) statements included
or incorporated by reference in our future filings with the Securities and
Exchange Commission; and (3) information contained in written material, releases
and oral statements issued by, or on behalf of School Specialty including,
without limitation, statements with respect to projected revenues, costs,
earnings and earnings per share. Forward-looking statements also include
statements regarding the intent, belief or current expectation of School
Specialty or its officers. Forward-looking statements include statements
preceded by, followed by or that include forward-looking terminology such as
"may," "will," "should," "believes," "expects," "anticipates," "estimates,"
"continues" or similar expressions.
All forward-looking statements included in this report are based on information
available to us as of the date hereof. We do not undertake to update any
forward-looking statements that may be made by or on behalf of us, in this
report or otherwise. Our actual results may differ materially from those
contained in the forward-looking statements identified above. Factors which may
cause such a difference to occur include, but are not limited to the factors
identified in Exhibit 99.2 to our Form 10-K for the fiscal year ended April 28,
2001.
ITEM 3. Quantitative And Qualitative Disclosures About Market Risk
For information as to our Quantitative and Qualitative Disclosures about Market
Risk, please see our Annual Report on Form 10-K for the fiscal year ending April
28, 2001. There have been no material changes in our quantitative or qualitative
exposure to market risk since the end of fiscal 2001.
18
PART II - OTHER INFORMATION
- ---------------------------
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
See the Exhibit Index which is incorporated herein by reference.
(b) The Company filed one report on Form 8-K during the quarter covered by
this report as follows:
(1) Form 8-K dated December 21, 2001, filed on January 4, 2002, under
Items 2 and 7. The Company announced its acquisition of all the
issued and outstanding shares of capital stock of Premier Agendas,
Inc. and Premier School Agendas, Ltd., Agenda Scolaire Premier
Ltee.
19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SCHOOL SPECIALTY, INC.
(Registrant)
02/21/2002 /s/ Daniel P. Spalding
---------- -------------------------------------------------
Date Daniel P. Spalding
Chairman of the Board, Chief Executive Officer
(Principal Executive Officer)
02/21/2002 /s/ Mary M. Kabacinski
---------- ------------------------------------------------
Date Mary M. Kabacinski
Executive Vice President, Chief Financial Officer
(Principal Financial and Accounting Officer)
20
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
4.1 Consent and Amendment dated December 10, 2001 relating to the
Credit Agreement by and among School Specialty, Inc. and Bank of
America, N.A.
12.1 Statement Regarding Computation of Ratio of Earnings to Fixed
Charges
21