Back to GetFilings.com
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 29, 2001
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 0-7597
COURIER CORPORATION
A MASSACHUSETTS CORPORATION
I.R.S. EMPLOYER IDENTIFICATION NO. 04-2502514
15 WELLMAN AVENUE
NORTH CHELMSFORD, MASSACHUSETTS 01863
TELEPHONE NO. 978-251-6000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, $1 PAR VALUE
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 BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF THE REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION
STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY
AMENDMENT TO THIS FORM 10-K. [ ]
STATE THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF
THE REGISTRANT AS OF DECEMBER 3, 2001
COMMON STOCK, $1 PAR VALUE - $96,352,890
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S CLASSES OF
COMMON STOCK AS OF DECEMBER 3, 2001
COMMON STOCK, $1 PAR VALUE - 5,116,687
DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF THE REGISTRANT'S PROXY STATEMENT FOR THE ANNUAL MEETING OF
STOCKHOLDERS SCHEDULED TO BE HELD ON JANUARY 17, 2002 (PART III).
================================================================================
PART I
ITEM 1. BUSINESS.
INTRODUCTION
Courier Corporation and its subsidiaries ("Courier" or the "Company")
are among America's leading book manufacturers and specialty publishers. Courier
Corporation, founded in 1824, was incorporated under the laws of Massachusetts
on June 30, 1972. The Company has three business segments: full-service book
manufacturing, customized education and specialty publishing.
The book manufacturing segment focuses on streamlining and enhancing
the process of bringing books from the point of creation to the point of use.
Courier is the fifth largest book manufacturer in the United States and largest
in the Northeast, offering services from content management, prepress and
production through storage and distribution. Courier's principal markets are
religious, educational and specialty trade with products including Bibles,
educational texts and consumer books. Revenues from this segment accounted for
approximately 86% of Courier's consolidated revenues in fiscal 2001.
The customized education segment operates businesses that respond to
the need for greater choice in education. Courier Custom Publishing offers
solutions that enable educators to provide students with customized teaching
materials from multi-publisher custom books to out-of-print book reproductions
and self-published books. The Home School, which Courier sold in March 2001, was
a direct marketer of educational materials to families engaged in educating
children at home. Revenues in this segment accounted for less than 1% of
consolidated revenues in fiscal 2001.
The specialty publishing segment consists of Dover Publications, Inc.,
acquired by Courier on September 22, 2000. Dover publishes over 7,500 titles in
more than 30 specialty categories ranging from literature and poetry classics to
paper dolls, and from musical scores to typographical fonts. Revenues in this
segment were approximately 16% of consolidated sales in fiscal 2001.
Additional segment information, including the amounts of net sales,
earnings or loss before taxes, and total assets, for each of the last three
fiscal years, is contained in the Notes to Consolidated Financial Statements on
pages F-17 and F-18 included in this Annual Report on Form 10-K.
On September 22, 2000, the Company acquired Dover Publications, Inc.
("Dover"), a Mineola, New York publisher of special-interest books. Dover sells
its products through most American bookstore chains, independent booksellers,
children's stores, craft stores and gift shops, as well as a diverse range of
distributors around the world. Dover also sells its books directly to customers
through its specialty catalogs and over the Internet at
www.doverpublications.com. The combination of Dover's publishing, sales and
distribution skills with Courier's book manufacturing, digital content
conversion, and e-commerce skills are providing a powerful end-to-end publishing
solution for Courier.
In March 2001, Courier sold substantially all of the assets of The Home
School and ceased operating this business. The Company had purchased the assets
of The Home School Books & Supplies in September 1997. Results of The Home
School were included in the customized education segment prior to its sale.
On July 21, 1997, the Company acquired all of the outstanding stock of
Book-mart Press, Inc. ("Book-mart"), a North Bergen, New Jersey book
manufacturer specializing in short to medium runs of softcover and hardcover
books. Founded in 1977, Book-mart has built a strong reputation and
1
loyal customer following in New York and the surrounding areas. Book-mart offers
high quality offset printing and binding for order quantities as low as 300
copies. The acquisition complemented the Company's existing range of book
manufacturing services so that the Company can offer its customers one-stop
full-service shopping for book production at any run length.
BUSINESS SEGMENTS
BOOK MANUFACTURING SEGMENT
Courier's book manufacturing segment produces hard and softcover books,
as well as related services involved in managing the process of creating and
distributing these products for publishers, religious organizations and other
information providers. Courier provides book manufacturing and related services
from six facilities in Westford, Stoughton and North Chelmsford, Massachusetts;
Philadelphia, Pennsylvania; North Bergen, New Jersey; and Kendallville, Indiana.
Courier's book manufacturing operations consist of both electronic and
conventional film processing, platemaking, printing and binding of soft and hard
bound books. Each of Courier's six facilities have certain specialties adapted
to the needs of the market niches Courier serves, such as short-run book
manufacturing, printing on lightweight paper and 4-color book manufacturing.
These services are primarily sold to publishers of educational, religious and
consumer books.
Courier's book manufacturing sales force of 19 people is responsible
for all of the Company's sales to over 500 book-manufacturing customers.
Courier's salespeople operate out of sales offices located in New York, Chicago,
Philadelphia, Hayward, California, North Chelmsford, Massachusetts and North
Bergen and North Caldwell, New Jersey.
Sales to The Gideons International aggregated approximately 25% of
consolidated sales in fiscal 2001, 26% in fiscal 2000 and 27% in fiscal 1999.
Sales to Pearson plc aggregated approximately 13% of fiscal 2001 consolidated
sales, 17% in fiscal 2000 and 15% in fiscal 1999. The loss of either of these
customers would have a material adverse effect on the Company. No other customer
accounted for more than 10% of fiscal 2001 consolidated sales. The Company
distributes products around the world; export sales, as a percentage of
consolidated sales, were approximately 19% in fiscal 2001 and 18% in both fiscal
2000 and fiscal 1999.
All phases of Courier's business are highly competitive. The printing
industry, exclusive of newspapers, includes approximately 50,000 establishments.
While most of these establishments are relatively small, several of the
Company's competitors are considerably larger or are affiliated with companies
that are considerably larger and have greater financial resources than Courier.
In recent years, consolidation of both customers and competitors within the
Company's markets has increased pricing pressures. The major competitive factors
in Courier's book manufacturing business in addition to price are product
quality, speed of delivery, customer service, availability of appropriate
printing capacity, related services and technology support.
CUSTOMIZED EDUCATION SEGMENT
Courier Custom Publishing specializes in providing custom books for
college professors who have created personally tailored curriculum that
precisely matches the needs of their courses. These custom books range from
reading anthologies, combining materials from multiple sources, to out-of-print
books to self-authored original teaching materials. Courier obtains copyright
permissions from
2
the publishers or authors and prepares electronic masters from which these
custom books are produced, either by Courier or the college campus print shop.
Courier Custom Publishing markets its custom book services directly to
professors nationwide as well as to college bookstores and campus print shops.
It utilizes direct marketing techniques to professors, including mailings and
e-mail, backed up by a series of highly targeted web sites. The web sites
include www.custombook.com, www.anthologypro.com, www.ceopress.com,
www.eruditionbooks.com, www.bookhound.com, and www.coursepack.com. Direct
marketing efforts to professors are supported by an internal direct response
staff located in North Chelmsford, Massachusetts. Student purchases of custom
books from Courier Custom Publishing are made over the web at
www.custombookstore.com or by phone. Sales to college bookstores and campus
print shops are made through direct marketing and a supporting web site,
www.coursepackconnection.com.
Courier Custom Publishing's competition is primarily from university
bookstores and printshops that perform copyright clearance and coursepack
production in-house for the university, and from large college textbook
publishers who offer custom publishing services. Courier Custom Publishing
distinguishes its products and services on the basis of convenience and
high-quality book manufacturing.
The Home School, which Courier sold in March 2001, was a direct
marketer of educational materials to families engaged in educating children at
home and was included in the customized education segment prior to its sale.
SPECIALTY BOOK PUBLISHING SEGMENT
Dover, acquired by the Company in September 2000, is a publisher of
books in over 30 specialty categories, including fine and commercial arts,
children's books, crafts, musical scores, graphic design, mathematics, physics
and other areas of science, puzzles, games, social science, stationery items,
and classics of literature for both juvenile and adult markets, including the
Dover Thrift Editions.
Dover sells its products through most American bookstore chains,
independent booksellers, children's stores, craft stores and gift shops, as well
as a diverse range of distributors around the world. Dover also sells its books
directly to customers through its specialty catalogs and over the Internet at
www.doverpublications.com. Dover has also sold its books directly to consumers
for over 50 years. Dover mails its proprietary catalogs to over 500,000
consumers.
The specialty book publishing market is comprised of hundreds of
publishers, many of which are very small, but a few are much larger than Dover
or are part of organizations that are much larger. The number of publishers in
the United States doubled in the 1990's to approximately 63,000 at the end of
2000 according to R.R. Bowker. In addition, newer sources of competition have
emerged with large retailers launching or expanding publishing operations and
new web-based publishing businesses starting up, which compete in the specialty
book publishing market, including publishing of electronic books. Dover
distinguishes its products by offering an extremely wide variety of high quality
books at modest prices.
3
COMPANY BUSINESS AS A WHOLE
MATERIALS AND SUPPLIES
Courier purchases its principal raw materials, primarily paper, but
also plate materials, ink, cover stock and casebinding materials, from numerous
suppliers, and is not dependent upon any one source for its requirements. Many
of Courier's book manufacturing customers purchase their own paper and furnish
it at no charge to these operations for book production. Dover purchases a
significant portion of its books from Courier's book manufacturing operations.
ENVIRONMENTAL REGULATIONS
The Company periodically makes capital expenditures so that its
operations comply, in all material respects, with applicable federal, state and
local environmental laws and regulations. No significant expenditures for this
purpose are anticipated in fiscal 2002. The Company does not believe that its
compliance with applicable environmental laws and regulations will have a
material impact on the Company's earnings or competitive position.
EMPLOYEES
The Company employed 1,504 persons at September 29, 2001 compared to
1,535 a year ago.
OTHER
There is no portion of Courier's business subject to cancellation of
government contracts or renegotiation of profits. Courier's overall business is
not significantly seasonal in nature. Seasonal demand from educational
publishers is highest in the Company's first and fourth quarters, but this has
been balanced in recent years by demand from customers in other publishing
markets. Demand for the customized education segment's products and services is
highest in the Company's fourth quarter. Dover's business is not significantly
seasonal in nature.
Courier holds no material patents, licenses, franchises or concessions
that are important to its operations, but does have trademarks, service marks,
and Universal Resource Locators (URL's) on the World Wide Web in connection with
each of its businesses. Substantially all of Dover's publications are protected
by copyright, either in its own name, in the name of the author of the work, or
in the name of a predecessor publisher from whom rights were acquired.
4
ITEM 2. PROPERTIES.
REAL PROPERTIES
The following schedule lists the facilities owned or leased by Courier
at September 29, 2001. Courier considers its plants and other facilities to be
well maintained and suitable for the purposes intended.
OWNED/
PRINCIPAL ACTIVITY AND LOCATION (YEAR CONSTRUCTED) LEASED SQ. FT.
- -------------------------------------------------- -------------- ----------------
CORPORATE HEADQUARTERS AND EXECUTIVE OFFICES
North Chelmsford, MA (1973, 1996) Owned 69,000 (1)
BOOK MANUFACTURING AND WAREHOUSING
Westford plant, Westford, MA (1900, 1968, 1969, 1981, 1990) Owned 593,000 (2)
Kendallville plant, Kendallville, IN (1978) Owned 155,000
National plant, Philadelphia, PA (1975, 1997) Owned 229,000 (3)
Stoughton plant, Stoughton, MA (1980) Leased 169,000
Book-mart plant, North Bergen, NJ (1917, 1935, 1997) Leased 75,000
DOVER OFFICES AND WAREHOUSES
Mineola, New York Leased 106,000
New Hyde Park, NY Leased 78,000
(1) In September 1996, the Company relocated its corporate headquarters into
approximately 21,000 square feet of an existing facility in North
Chelmsford, MA that also houses Courier Custom Publishing, warehousing
and end-user fulfillment operations.
(2) In April 1999, the Company announced its intention to offer for sale the
old, unoccupied and underutilized portions of its multi-building
manufacturing complex in Westford, MA. In January 2000, the Company
signed an agreement to sell this portion of the property, but in April
2001 the buyer failed to meet certain performance requirements and, by
its terms, the agreement expired. The Company is currently evaluating
its options regarding this portion of the property.
(3) In December 1996, the Company completed construction of a 100,000 square
foot addition to its Philadelphia manufacturing facility. The expansion
enabled the Company to consolidate operations located in an older
multistory facility to the newer, more efficient property. The older
multistory facility, which was vacated in January 1997, was sold in June
1998.
EQUIPMENT
The Company's products are manufactured on equipment that in most cases
is owned by the Company, although it leases computers, image setters and
electronic printing systems which are subject to more rapid obsolescence. In
addition, it leases three printing presses where the lessor holds title. Capital
expenditures amounted to approximately $12.8 million in 2001, $16.3 million in
2000 and $5.0 million in 1999. Capital expenditures in fiscal 2001 were
primarily for a new press for the religious market and factory automation
equipment and digital prepress systems to improve productivity and service
levels. Fiscal 2002 capital expenditures are expected to be approximately $9
million. Courier considers its equipment to be in good operating condition and
adequate for its present needs.
5
ENCUMBRANCES AND RENTAL OBLIGATIONS
For a description of encumbrances on certain properties and equipment,
see Note D of Notes to Consolidated Financial Statements on page F-11 of this
Annual Report on Form 10-K. Information concerning leased properties and
equipment is disclosed in Note E of Notes to Consolidated Financial Statements,
which appears on page F-11 of this Annual Report on Form 10-K.
ITEM 3. LEGAL PROCEEDINGS.
In the ordinary course of business, the Company is subject to various
legal proceedings and claims. The Company believes that the ultimate outcome of
these matters will not have a material adverse effect on its financial
statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of security holders during the
quarter ended September 29, 2001.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The information required by this Item is contained in the section
captioned "Selected Quarterly Financial Data (Unaudited)" which appears on page
F-20 of this Annual Report on Form 10-K.
ITEM 6. SELECTED FINANCIAL DATA.
The information required by this Item is contained in the section
captioned "Five-Year Financial Summary" appearing on page F-21 of this Annual
Report on Form 10-K.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The information required by this Item is contained in the section
captioned "Management's Discussion and Analysis" on pages F-22 through F-25 of
this Annual Report on Form 10-K.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not hold any derivative financial instruments,
derivative commodity instruments or other financial instruments except as noted
in Note A of Notes to Consolidated Financial Statements, which appears on pages
F-7 through F-9 of this Annual Report on Form 10-K. The Company engages neither
in speculative nor derivative trading activities. The Company is exposed to
market risk for changes in interest rates. At September 29, 2001, the Company
had $15.8 million of outstanding borrowings under its revolving bank credit
facility which bears interest at a floating rate.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by this Item is contained on pages F-1 through
F-19 of this Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
6
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Courier's executive officers, together with their ages and all positions
and offices with the Company presently held by each person named, are as
follows:
James F. Conway III 49 Chairman, President and Chief
Executive Officer
George Q. Nichols 72 Corporate Senior Vice President
and Chairman of National
Publishing Company
Robert P. Story, Jr. 50 Senior Vice President and
Chief Financial Officer
Peter M. Folger 48 Vice President and
Controller
Peter D. Tobin 46 Corporate Vice President and
Executive Vice President of
Courier Companies
The terms of office of all of the above executive officers continue
until the first meeting of the Board of Directors following the next annual
meeting of stockholders and the election or appointment and qualification of
their successors, unless any officer sooner dies, resigns, is removed or becomes
disqualified.
Mr. Conway III was elected Chairman of the Board in September 1994 after
serving as acting Chairman since December 1992. He has been Chief Executive
Officer since December 1992 and President since July 1988.
Mr. Nichols became an executive officer of Courier in June 1989 while
retaining his position as President of National Publishing Company, a position
he has held since 1975. He was elected a Director of the Company in March 1995
and became Senior Vice President of the Company in November 1996. He became
Chairman of National Publishing Company in December 1999.
Mr. Story became Senior Vice President and Chief Financial Officer in
April 1989. He joined Courier in November 1986 as Vice President and Treasurer.
He was elected a Director of the Company in February 1995.
Mr. Folger has been Controller since 1982 and became Vice President in
November 1992.
Mr. Tobin became Vice President of Courier Corporation and Executive
Vice President of Courier Companies in October 2000. He joined Courier Companies
as National Sales Manager in 1994 and became Vice President of Sales and
Marketing in 1997.
7
All other information called for by Item 10 is contained in the
definitive Proxy Statement to be delivered to stockholders in connection with
the Annual Meeting of Stockholders scheduled to be held on Thursday, January 17,
2002. Such information is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
and
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
and
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information called for by Items 11, 12 and 13 is contained in the
definitive Proxy Statement to be delivered to stockholders in connection with
the Annual Meeting of Stockholders scheduled to be held on Thursday, January 17,
2002. Such information is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) DOCUMENTS FILED AS PART OF THIS REPORT
1. FINANCIAL STATEMENTS
PAGE(S)
---------------------
- Independent Auditors' Report F-1
- Consolidated Statements of Income for each of the three
years in the period ended September 29, 2001 F-2
- Consolidated Balance Sheets as of September 29, 2001
and September 30, 2000 F-3 to F-4
- Consolidated Statements of Cash Flows for each of the
three years in the period ended September 29, 2001 F-5
- Consolidated Statements of Changes in Stockholders' Equity
for each of the three years in the period ended
September 29, 2001 F-6
- Notes to Consolidated Financial Statements F-7 to F-19
2. FINANCIAL STATEMENT SCHEDULE
- Schedule II - Consolidated Valuation and Qualifying
Accounts S-1
8
3. EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
3A-1 Articles of Organization of Courier Corporation, as of June 29,
1972 (filed as Exhibit 3A-1 to the Company's Annual Report on
Form 10-K for the fiscal year ended September 26, 1981, and
incorporated herein by reference).
3A-2 Articles of Amendment of Courier Corporation (changing
stockholder vote required for merger or consolidation), as of
January 20, 1977 (filed as Exhibit 3A-2 to the Company's Annual
Report on Form 10-K for the fiscal year ended September 26,
1981, and incorporated herein by reference).
3A-3 Articles of Amendment of Courier Corporation (providing for
staggered election of directors), as of January 20, 1977 (filed
as Exhibit 3A-3 to the Company's Annual Report on Form 10-K for
the fiscal year ended September 26, 1981, and incorporated
herein by reference).
3A-4 Articles of Amendment of Courier Corporation (authorizing class
of Preferred Stock), as of February 15, 1978 (filed as Exhibit
3A-4 to the Company's Annual Report on Form 10-K for the fiscal
year ended September 26, 1981, and incorporated herein by
reference).
3A-5 Articles of Amendment of Courier Corporation (increasing number
of shares of authorized Common Stock), as of January 16, 1986
(described in item #2 of the Company's Proxy Statement for the
Annual Meeting of Stockholders held on January 16, 1986, and
incorporated herein by reference).
3A-6 Articles of Amendment of Courier Corporation (providing for fair
pricing procedures for stock to be sold in certain business
combinations), as of January 16, 1986 (filed as Exhibit A to the
Company's Proxy Statement for the Annual Meeting of Stockholders
held on January 16, 1986, and incorporated herein by reference).
3A-7 Articles of Amendment of Courier Corporation (limiting personal
liability of directors to the Corporation or to any of its
stockholders for monetary damages for breach of fiduciary duty),
as of January 28, 1988 (filed as Exhibit 3A-7 to the Company's
Annual Report on Form 10-K for the fiscal year ended September
24, 1988, and incorporated herein by reference).
3A-8 Articles of Amendment of Courier Corporation (establishing
Series A Preferred Stock), as of November 8, 1988 (filed as
Exhibit 3A-8 to the Company's Annual Report on Form 10-K for the
fiscal year ended September 24, 1988, and incorporated herein by
reference).
3B By-Laws of Courier Corporation, amended and restated as of March
18, 1999 (filed as Exhibit 3.2 to the Company's Current Report
on Form 8-K, dated March 18, 1999, and incorporated herein by
reference).
9
10A-1+ Courier Corporation Stock Grant Plan (filed as Exhibit C to the
Company's Proxy Statement for the Annual Meeting of Stockholders
held on January 20, 1977, and incorporated herein by reference).
10A-2+ Amendment, effective January 19, 1989, to the Courier
Corporation Stock Grant Plan (described in Item 4 of the
Company's Proxy Statement for the Annual Meeting of Stockholders
held January 19, 1989, and incorporated herein by reference).
10B+ Letter Agreement, dated February 8, 1990, of Courier Corporation
relating to supplemental retirement benefit and consulting
agreement with James F. Conway, Jr. (filed as Exhibit 10B to the
Company's Annual Report on Form 10-K for the fiscal year ended
September 29, 1990, and incorporated herein by reference).
10C-1+ Courier Corporation 1989 Deferred Income Stock Option Plan for
Non-employee Directors, effective September 28, 1989 (filed as
Exhibit A to the Company's Proxy Statement for the Annual
Meeting of Stockholders held January 18, 1990, and incorporated
herein by reference).
10C-2+ Amendment, effective November 4, 1993, to the 1989 Deferred
Income Stock Option Plan for Non-employee Directors (filed as
Exhibit 10C-2 to the Company's Annual Report on Form 10-K for
the fiscal year ended September 25, 1993, and incorporated
herein by reference).
10C-3+ Amendment, effective September 24, 1998, to the 1989 Deferred
Income Stock Option Plan for Non-employee Directors (filed as
Exhibit 10C-3 to the Company's Annual Report on Form 10-K for
the fiscal year ended September 26, 1998, and incorporated
herein by reference).
10C-4+ Amendment, effective January 21, 1999, to the 1989 Deferred
Income Stock Option Plan for Non-employee Directors (described
in Item 3 of the Company's Proxy Statement for the Annual
Meeting of Stockholders held January 21, 1999, and
incorporated herein by reference).
10D-1+ Courier Corporation 1983 Stock Option Plan (filed as Exhibit A
to the Company's Proxy Statement for the Annual Meeting of
Stockholders held on January 20, 1983, and incorporated herein
by reference).
10D-2+ Amendment, effective January 17, 1985, to the Courier
Corporation 1983 Stock Option Plan (described in Item 2 of the
Company's Proxy Statement for the Annual Meeting of Stockholders
held on January 17, 1985, and incorporated herein by reference).
10D-3+ Amendment, effective January 19, 1989, to the Courier
Corporation 1983 Stock Option Plan (described in Item 3 of the
Company's Proxy Statement for the Annual Meeting of Stockholders
held January 19, 1989, and incorporated herein by reference).
10E-1+ The Courier Executive Compensation Program, effective October 4,
1993 (filed as Exhibit 10E-2 to the Company's Annual Report on
Form 10-K for the fiscal year ended September 25, 1993, and
incorporated herein by reference).
10E-2+ The Management Incentive Compensation Program, effective October
4, 1993 (filed as Exhibit 10E-3 to the Company's Annual Report
on Form 10-K for the fiscal year ended September 25, 1993, and
incorporated herein by reference).
10
10F+ Courier Corporation Senior Executive Severance Program and
Agreements, dated October 25, 1988 pursuant to the program with
Messrs. Conway III, Nichols, Story, and Folger (filed as Exhibit
10P to the Company's Annual Report on Form 10-K for the fiscal
year ended September 24, 1988, and incorporated herein by
reference).
10G Rights Agreement between Courier Corporation and State Street
Bank and Trust Company dated March 18, 1999 (filed as Exhibit
4.1 to the Company's Current Report on Form 8-K, dated March 18,
1999, and incorporated herein by reference).
10H+ Courier Corporation 1999 Employee Stock Purchase Plan (filed as
Exhibit A to the Company's Proxy Statement for the Annual
Meeting of Stockholders held on January 21, 1999, and
incorporated herein by reference).
10I-1+ Agreement, as of March 3, 1993, of Courier Corporation relating
to employment contract and supplemental retirement benefit with
George Q. Nichols (filed as Exhibit 10J to the Company's Annual
Report on Form 10-K for the fiscal year ended September 25,
1993, and incorporated herein by reference).
10I-2+ Amendment, as of April 16, 1997, to supplemental retirement
benefit agreement with George Q. Nichols (filed as Exhibit 10J-2
to the Company's Annual Report on Form 10-K for the fiscal year
ended September 27, 1997, and incorporated herein by reference).
10I-3+* Amendment, as of November 9, 2000, to supplemental retirement
benefit agreement with George Q. Nichols.
10J-1 Revolving Credit Agreement, dated as of March 18, 1997, between
Courier Corporation, State Street Bank and Trust Company and
BankBoston, N.A., providing for a $20 million revolving credit
facility (filed as Exhibit 10 to the Company's Quarterly Report
on Form 10-Q for the period ended March 29, 1997, and
incorporated herein by reference).
10J-2 Amendment, dated July 22, 1997, to Note Agreement between
Courier Corporation, State Street Bank and Trust Company and
BankBoston, N.A., providing for a $30 million revolving credit
facility (filed as Exhibit 10L-2 to the Company's Annual Report
on Form 10-K for the fiscal year ended September 27, 1997, and
incorporated herein by reference).
10J-3 Amendment, dated February 27, 1998, to Note Agreement between
Courier Corporation, State Street Bank and Trust Company and
BankBoston, N.A., providing for a $30 million revolving credit
facility (filed as Exhibit 10 to the Company's Quarterly Report
on Form 10-Q for the period ended March 28, 1998, and
incorporated herein by reference).
10J-4 Amendment, dated February 26, 1999, to Note Agreement between
Courier Corporation, State Street Bank and Trust Company and
BankBoston, N.A., providing for a $30 million revolving credit
facility (filed as Exhibit 10 to the Company's Quarterly Report
on Form 10-Q for the period ended March 27, 1999, and
incorporated herein by reference).
11
10J-5 Amendment, dated July 22, 1999, to Note Agreement between
Courier Corporation, State Street Bank and Trust Company,
BankBoston, N.A. and KeyBank National Association, providing for
a $30 million revolving credit facility (filed as Exhibit 10L-5
to the Company's Annual Report on Form 10-K for the fiscal year
ended September 25, 1999, and incorporated herein by reference).
10J-6 Amendment, dated August 11, 2000, to Note Agreement between
Courier Corporation, Citizens Bank of Massachusetts (successor
to State Street Bank and Trust Company), Fleet National Bank
(f/k/a BankBoston, N.A.) and KeyBank National Association,
providing for a $60 million revolving credit facility (filed as
Exhibit 10 to the Company's Current Report on Form 8-K dated
September 22, 2000, and incorporated herein by reference).
10J-7 Amendment, dated October 12, 2000, to Note Agreement between
Courier Corporation, Citizens Bank of Massachusetts, Fleet
National Bank, and KeyBank National Association, providing for a
$60 million revolving credit facility (filed as Exhibit 10L-7 to
the Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 2000, and incorporated herein by reference).
10J-8* Amendment, dated March 31, 2001, to Note Agreement between
Courier Corporation, Citizens Bank of Massachusetts, Fleet
National Bank, and KeyBank National Association, providing for a
$60 million revolving credit facility.
10K Master Lease Finance Agreement, dated as of July 27, 1994,
between Courier Corporation and BancBoston Leasing (filed as
Exhibit 10P to the Company's Annual Report on Form 10-K for the
fiscal year ended September 24, 1994, and incorporated herein by
reference).
10L-1+ Courier Corporation 1993 Stock Incentive Plan, as amended and
restated, effective May 6, 1996 (filed as Exhibit 10O to the
Company's Annual Report on Form 10-K for the fiscal year ended
September 28, 1996, and incorporated herein by reference).
10L-2+ Amendment, effective September 24, 1998, to the Courier
Corporation 1993 Stock Incentive Plan (filed as Exhibit 10O-2 to
the Company's Annual Report on Form 10-K for the fiscal year
ended September 26, 1998, and incorporated herein by reference).
10L-3+ Amendment, effective January 21, 1999, to the Courier
Corporation 1993 Stock Incentive Plan (described in Item 4 of
the Company's Proxy Statement for the Annual Meeting of
Stockholders held January 21, 1999, and incorporated herein by
reference).
10L-4+ Amendment, effective January 18, 2001, to the Courier
Corporation 1993 Stock Incentive Plan (described in Item 3 of
the Company's Proxy Statement for the Annual Meeting of
Stockholders held January 18, 2001, and incorporated herein by
reference).
10M Stock Purchase Agreement by and among Courier Corporation and
the stockholders of Book-mart Press, Inc., dated as of July 21,
1997 (filed as Exhibit 2.1 to the Company's Current Report on
Form 8-K dated July 21, 1997, and incorporated herein by
reference).
12
10N+ Courier Corporation Deferred Compensation Program dated November
6, 1997 including Messrs. Conway III, Nichols, and Story (filed
as Exhibit 10 to the Company's Quarterly Report on Form 10-Q for
the period ended December 27, 1997, and incorporated herein by
reference).
10O Master Lease Finance Agreement, dated as of September 23, 1998
between Courier Corporation and General Electric Capital
Corporation (filed as Exhibit 10R to the Company's Annual Report
on Form 10-K for the fiscal year ended September 26, 1998, and
incorporated herein by reference).
10P Stock Purchase Agreement by and among Courier Corporation, Mrs.
Blanche Cirker, individually, the Estate of Hayward Francis
Cirker, by Blanche Cirker, executrix, and each of the
stockholders of Dover Publications, Inc., Dover Book Store
Inc. and Transfolio Express, Inc. dated as of August 14, 2000
(filed as Exhibit 2.1 to the Company's Current Report on Form
8-K dated September 22, 2000, and incorporated herein by
reference).
10Q Master Lease Finance Agreement, dated as of September 25, 2000
between Courier Corporation and Eastern Bank (filed as Exhibit
10T to the Company's Annual Report on Form 10-K for the fiscal
year ended September 30, 2000, and incorporated herein by
reference).
21* Schedule of Subsidiaries.
23* Consent of Deloitte & Touche LLP, independent auditors.
* Exhibit is furnished herewith.
+ Designates a Company compensation plan or arrangement.
(b) REPORTS ON FORM 8-K
None.
13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on December 13, 2001.
COURIER CORPORATION
By: /s/ JAMES F. CONWAY III
--------------------------
James F. Conway III
Chairman, President and
Chief Executive Officer
By: /s/ ROBERT P. STORY, JR.
---------------------------
Robert P. Story, Jr.
Senior Vice President and
Chief Financial Officer
By: /s/ PETER M. FOLGER
---------------------------
Peter M. Folger
Vice President and Chief
Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant in the capacities indicated, on December 13, 2001.
/s/ JAMES F. CONWAY III /s/ ARNOLD S. LERNER
- ----------------------------------- ------------------------------------
James F. Conway III Arnold S. Lerner
Chairman, President and Director
Chief Executive Officer
/s/ KATHLEEN FOLEY CURLEY /s/ GEORGE Q. NICHOLS
- ---------------------------------- ------------------------------------
Kathleen Foley Curley George Q. Nichols
Director Director
/s/ RICHARD K. DONAHUE /s/ ROBERT P. STORY, JR.
- ---------------------------------- ------------------------------------
Richard K. Donahue Robert P. Story, Jr.
Director Director
/s/ EDWARD J. HOFF /s/ W. NICHOLAS THORNDIKE
- ---------------------------------- -------------------------------------
Edward J. Hoff W. Nicholas Thorndike
Director Director
14
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of Courier Corporation, North
Chelmsford, MA:
We have audited the accompanying consolidated balance sheets of Courier
Corporation and subsidiaries (the "Company") as of September 29, 2001 and
September 30, 2000, and the related consolidated statements of income, changes
in stockholders' equity, and cash flows for each of the three years in the
period ended September 29, 2001. Our audits also included the financial
statement schedule listed in the Index at Item 14. These financial statements
and the financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of September 29,
2001 and September 30, 2000, and the results of its operations and its cash
flows for each of the three years in the period ended September 29, 2001 in
conformity with accounting principles generally accepted in the United States of
America. Also, in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
November 8, 2001
F-1
COURIER CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED
SEPTEMBER 29, 2001 SEPTEMBER 30, 2000 SEPTEMBER 25, 1999
-----------------------------------------------------------------------
Net sales (Note A) $211,943,000 $192,226,000 $166,842,000
Cost of sales 150,572,000 144,132,000 126,035,000
-----------------------------------------------------------------------
Gross profit 61,371,000 48,094,000 40,807,000
Selling and administrative expenses 39,202,000 31,351,000 27,065,000
Amortization of goodwill and
other intangibles 1,466,000 651,000 661,000
Interest expense 1,899,000 325,000 524,000
Other (income) expense (Note J) (1,230,000) (119,000) -
-----------------------------------------------------------------------
Income before taxes 20,034,000 15,886,000 12,557,000
Provision for income taxes (Note C) 6,817,000 5,249,000 4,181,000
-----------------------------------------------------------------------
Net income $ 13,217,000 $ 10,637,000 $ 8,376,000
=======================================================================
Net income per share (Notes A and K):
Basic $2.61 $2.16 $1.74
Diluted $2.54 $2.10 $1.68
Cash dividends declared per share $0.36 $0.32 $0.28
=======================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
F-2
COURIER CORPORATION
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 29, 2001 SEPTEMBER 30, 2000
---------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents (Note A) $ 173,000 $ 562,000
Accounts receivable, less allowance for uncollectible
accounts of $1,964,000 in 2001 and $1,391,000 in 2000
(Note A) 33,806,000 39,336,000
Inventories (Note B) 22,140,000 27,421,000
Deferred income taxes (Note C) 2,837,000 2,543,000
Other current assets 753,000 1,016,000
---------------------------------------------------
Total current assets 59,709,000 70,878,000
Property, plant and equipment (Notes A and D):
Land 1,059,000 1,059,000
Buildings and improvements 22,007,000 20,812,000
Favorable building lease 2,816,000 2,816,000
Machinery and equipment 103,205,000 93,392,000
Furniture and fixtures 1,561,000 1,512,000
Construction in progress 2,289,000 2,850,000
---------------------------------------------------
132,937,000 122,441,000
Less-Accumulated depreciation and amortization (88,005,000) (81,427,000)
---------------------------------------------------
Property, plant and equipment, net 44,932,000 41,014,000
Real estate held for sale or lease, net (Note J) - 323,000
Goodwill and other intangibles, net (Notes A and H) 25,498,000 26,040,000
Prepublication costs (Note A) 2,904,000 2,949,000
Other assets 572,000 562,000
---------------------------------------------------
Total assets $133,615,000 $141,766,000
===================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
F-3
COURIER CORPORATION
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 29, 2001 SEPTEMBER 30, 2000
------------------ ------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt (Notes A and D) $ 76,000 $ 366,000
Accounts payable (Note A) 11,933,000 17,548,000
Accrued payroll 6,139,000 7,126,000
Accrued taxes 6,092,000 5,303,000
Other current liabilities 6,789,000 7,188,000
-------------------------------------------------
Total current liabilities 31,029,000 37,531,000
Long-term debt (Notes A and D) 16,501,000 31,327,000
Deferred income taxes (Note C) 2,801,000 2,428,000
Other liabilities 2,959,000 2,709,000
-------------------------------------------------
Total liabilities 53,290,000 73,995,000
-------------------------------------------------
Commitments and contingencies (Note E)
Stockholders' equity (Notes A and F):
Preferred stock, $1 par value - authorized
1,000,000 shares; none issued
Common stock, $1 par value - authorized
6,000,000 shares; issued 5,445,000 shares
in 2001 and 3,750,000 in 2000 5,445,000 3,750,000
Additional paid-in capital 1,454,000 2,283,000
Retained earnings 76,944,000 65,551,000
Unearned compensation (510,000) (513,000)
Treasury stock, at cost: 333,000 shares in 2001
and 406,000 shares in 2000 (3,008,000) (3,300,000)
-------------------------------------------------
Total stockholders' equity 80,325,000 67,771,000
-------------------------------------------------
Total liabilities and stockholders' equity $133,615,000 $ 141,766,000
=================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
F-4
COURIER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED
SEPTEMBER 29, 2001 SEPTEMBER 30, 2000 SEPTEMBER 25, 1999
--------------------------------------------------------------------
Operating Activities:
Net income $ 13,217,000 $ 10,637,000 $ 8,376,000
Adjustments to reconcile net income to
cash provided from operating activities:
Depreciation and amortization 11,796,000 8,062,000 8,282,000
Deferred income taxes (Note C) 79,000 (893,000) (456,000)
Changes in assets and liabilities, net of acquisitions:
Accounts receivable 5,530,000 (2,639,000) (3,447,000)
Inventory 5,281,000 (1,300,000) (1,404,000)
Accounts payable (5,615,000) 5,298,000 2,350,000
Accrued taxes 789,000 (31,000) 227,000
Other elements of working capital (1,123,000) 2,829,000 (245,000)
Other, net (1,862,000) 557,000 687,000
----------------------------------------------------------------
Cash provided from operating activities 28,092,000 22,520,000 14,370,000
----------------------------------------------------------------
Investment Activities:
Business acquisitions, net of cash (Note H) - (38,571,000) -
Capital expenditures (12,841,000) (16,347,000) (4,999,000)
Prepublication costs (Note A) (1,415,000) - -
Proceeds from sale of assets (Note J) 2,124,000 - -
----------------------------------------------------------------
Cash used for investment activities (12,132,000) (54,918,000) (4,999,000)
----------------------------------------------------------------
Financing Activities:
Scheduled long-term debt repayments (366,000) (338,000) (312,000)
Borrowings (repayments) of revolving credit facility, net (14,750,000) 30,500,000 (5,250,000)
Cash dividends (1,824,000) (1,572,000) (1,354,000)
Stock repurchases - (114,000) (455,000)
Proceeds from stock plans 591,000 1,024,000 738,000
----------------------------------------------------------------
Cash provided from (used for) financing activities (16,349,000) 29,500,000 (6,633,000)
----------------------------------------------------------------
Increase (decrease) in cash and cash equivalents (389,000) (2,898,000) 2,738,000
Cash and cash equivalents at the beginning of the period 562,000 3,460,000 722,000
----------------------------------------------------------------
Cash and cash equivalents at the end of the period $ 173,000 $ 562,000 $ 3,460,000
================================================================
Supplemental cash flow information:
Interest paid $ 1,888,000 $ 311,000 $ 396,000
Income taxes paid (net of receipts) $ 5,413,000 $ 6,177,000 $ 3,939,000
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
F-5
COURIER CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
TOTAL
STOCKHOLDERS' COMMON ADDITIONAL
EQUITY STOCK PAID-IN CAPITAL
----------------------------------------------------------
Balance, September 26, 1998 $ 49,790,000 $ 3,750,000 $ 384,000
Net income 8,376,000 - -
Cash dividends (1,354,000) - -
Stock repurchase (455,000) - -
Stock plan activity 1,202,000 - 874,000
----------------------------------------------------------
Balance, September 25, 1999 57,559,000 3,750,000 1,258,000
Net income 10,637,000 - -
Cash dividends (1,572,000) - -
Stock repurchase (114,000) - -
Restricted stock grant/amortization
activity, net 45,000 - 386,000
Other stock plan activity 1,216,000 - 639,000
----------------------------------------------------------
Balance, September 30, 2000 67,771,000 3,750,000 2,283,000
Net income 13,217,000 - -
Cash dividends (1,824,000) - -
Stock dividend (Note A) - 1,695,000 (1,695,000)
Restricted stock grant/amortization
activity, net 111,000 - 64,000
Other stock plan activity 1,050,000 - 802,000
----------------------------------------------------------
Balance, September 29, 2001 $ 80,325,000 $ 5,445,000 $ 1,454,000
==========================================================
RETAINED UNEARNED TREASURY
EARNINGS COMPENSATION STOCK
----------------------------------------------------------
Balance, September 26, 1998 $49,464,000 $ - $ (3,808,000)
Net income 8,376,000 - -
Cash dividends (1,354,000) - -
Stock repurchase - - (455,000)
Stock plan activity - - 328,000
----------------------------------------------------------
Balance, September 25, 1999 56,486,000 - (3,935,000)
Net income 10,637,000 - -
Cash dividends (1,572,000) - -
Stock repurchase - - (114,000)
Restricted stock grant/amortization
activity, net - (513,000) 172,000
Other stock plan activity - - 577,000
----------------------------------------------------------
Balance, September 30, 2000 65,551,000 (513,000) (3,300,000)
Net income 13,217,000 - -
Cash dividends (1,824,000) - -
Stock dividend (Note A) - - -
Restricted stock grant/amortization
activity, net - 3,000 44,000
Other stock plan activity - 248,000
----------------------------------------------------------
Balance, September 29, 2001 $76,944,000 $ (510,000) $ (3,008,000)
==========================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
F-6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS: Courier Corporation and its subsidiaries ("Courier" or the "Company")
are focused on streamlining and enhancing the process by which printed books and
digital content reach end-user markets, primarily for educational, religious,
and specialty book publishers. Courier has three business segments: full-service
book manufacturing, customized education and, beginning in fiscal 2001 with the
acquisition of Dover Publications, Inc. ("Dover"), specialty publishing (see
Note H).
PRINCIPLES OF CONSOLIDATION AND PRESENTATION: The consolidated financial
statements, prepared on a fiscal year basis, include the accounts of Courier
Corporation and its subsidiaries after elimination of all significant
intercompany transactions. Such financial statements have been prepared in
conformity with accounting principles generally accepted in the United States of
America, which require the use of certain estimates and assumptions. Fiscal
years 2001 and 1999 were 52-week periods compared with fiscal year 2000 which
was a 53-week period. Certain amounts for fiscal years 2000 and 1999 have been
reclassified in the accompanying financial statements in order to conform to the
current year's classification.
FINANCIAL INSTRUMENTS: Financial instruments consist primarily of cash, accounts
receivable, accounts payable and debt obligations. The Company classifies as
cash and cash equivalents amounts on deposit in banks and cash invested
temporarily in various instruments with maturities of three months or less at
time of purchase. The Company estimates the fair value of financial instruments
based on interest rates available to the Company and by comparison to quoted
market prices. At September 29, 2001 and September 30, 2000, the fair market
value of the Company's financial instruments approximated their carrying values.
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are recorded at
cost, including interest on funds borrowed to finance the acquisition or
construction of major capital additions. Interest capitalized in fiscal years
2001 and 2000 was approximately $170,000 and $102,000, respectively. No interest
was capitalized in fiscal year 1999. The Company provides for depreciation of
property, plant and equipment on a straight-line basis over periods ranging from
3 to 11 years, except for depreciation on buildings and improvements which is
based on estimated useful lives ranging from 10 to 40 years.
Leasehold improvements and a favorable building lease are amortized on a
straight-line basis over the shorter of their useful life or the term of the
lease. Expenditures for maintenance and repairs are charged against income as
incurred; betterments that increase the value or materially extend the life of
the related assets are capitalized. When assets are sold or retired, the cost
and accumulated depreciation are removed from the accounts and any gain or loss
is included in income.
GOODWILL: Goodwill arising from business acquisitions is amortized using the
straight-line method over 20 years. Amortization expense was approximately
$1,411,000 for fiscal year 2001 and approximately $596,000 for both fiscal years
2000 and 1999. The Company continues to carry goodwill of approximately $1.2
million arising from the purchase of a company prior to October 31, 1970; such
amount is not being amortized because management believes that the value has not
diminished.
F-7
On June 30, 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible
Assets," which changes the accounting for goodwill and certain other intangible
assets from an amortization method to an impairment-only approach. The Company
will adopt SFAS No. 142 effective at the beginning of its fiscal year ending
September 28, 2002. The Company does not anticipate that it will change the
nature or carrying amounts of its intangible assets as a result of adopting this
standard. If these rules had applied to goodwill for fiscal 2001, the result
would have been to increase fiscal 2001 pretax income by approximately $1.4
million and net income by approximately $1.0 million, or $.20 per diluted share.
LONG-LIVED ASSETS: Management periodically reviews long-lived assets for
impairment and does not believe that there is any material impairment of any
asset of the Company as measured in accordance with SFAS No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of."
PREPUBLICATION COSTS: Prepublication costs, associated with the specialty
publishing segment, are amortized using the straight-line method over an
estimated useful life of four years.
INCOME TAXES: Deferred income tax liabilities and assets are determined based
upon the differences between the financial statement and tax bases of assets and
liabilities, and are measured by applying enacted tax rates and laws for the
taxable years in which these differences are expected to reverse.
REVENUE RECOGNITION: Revenue is recognized upon shipment of goods to customers
or upon the transfer of ownership for those customers whom the Company provides
manufacturing and distribution services. Revenue for distribution services is
recognized as services are provided.
SHIPPING AND HANDLING FEES: In July 2000, the Emerging Issues Task Force
("EITF") of the Financial Accounting Standards Board reached a consensus on
Issue 00-10, "Accounting for Shipping and Handling Fees and Costs." EITF 00-10
requires companies to classify as revenues shipping and handling fees billed to
customers. Previously, such revenues, and related expenses, were included in
cost of sales. All periods presented in the accompanying financial statements
have been reclassified to conform to the current year presentation. The adoption
of this standard increased net sales and cost of sales by approximately $3.8
million, $3.9 million and $2.9 million for 2001, 2000 and 1999, respectively,
and thus had no impact on reported earnings.
USE OF ESTIMATES: The process of preparing financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates that affect the reported amounts of assets
and liabilities at the date of the financial statements, as well as revenues and
expenses during the reporting period. Actual results may differ from these
estimates.
NET INCOME PER SHARE: Basic net income per share is based on the weighted
average number of common shares outstanding each period. Diluted net income per
share also includes potentially dilutive items such as options (see Note K).
STOCK SPLIT: On August 31, 2001, the Company distributed a three-for-two stock
split effected in the form of a 50% stock dividend, except for treasury shares.
Previously authorized but unissued
F-8
shares were used to effect this dividend. Weighted average shares outstanding
and per share amounts for periods prior to August 31, 2001 presented in the
accompanying financial statements have been restated to give effect to the stock
split.
TREASURY STOCK: The Company has historically used treasury stock for stock
options exercised and stock grants and intends to continue to use treasury stock
for such purposes.
NEW ACCOUNTING PRONOUNCEMENTS: Effective October 1, 2000, the Company adopted
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" (as
amended by SFAS No. 137 in June 1999 and SFAS No. 138 in June 2000); the
adoption did not have a material effect on the Company's consolidated financial
statements. The Securities and Exchange Commission has issued Staff Accounting
Bulletin (SAB) No. 101 ("Revenue Recognition in Financial Statements"), that was
implemented by the Company in the fourth quarter of the Company's fiscal year
ending September 29, 2001. The adoption of this SAB did not have a material
effect on the Company's consolidated financial statements.
In June 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets," which was discussed above under "Goodwill." SFAS No. 141 requires the
purchase method of accounting be used for all business combinations initiated
after June 30, 2001.
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 39%, and 47% of the
Company's inventories at September 29, 2001 and September 30, 2000,
respectively. Other inventories are determined on a first-in, first-out (FIFO)
basis.
2001 2000
--------------- ---------------
Raw materials $ 2,573,000 $ 3,619,000
Work in process 5,743,000 8,018,000
Finished goods 13,824,000 15,784,000
--------------- ---------------
Total $ 22,140,000 $ 27,421,000
=============== ===============
On a FIFO basis, reported year-end inventories would have been higher by $5.8
million in fiscal 2001 and $5.9 million in fiscal 2000.
F-9
C. INCOME TAXES
The provision for income taxes differs from that computed using the statutory
federal income tax rates for the following reasons:
2001 2000 1999
--------------- -------------- ---------------
Federal taxes at statutory rate $ 6,942,000 $ 5,430,000 $ 4,269,000
State taxes, net of federal tax benefit 401,000 474,000 397,000
Foreign sales corporation (FSC) export
related income (710,000) (643,000) (499,000)
Other 184,000 (12,000) 14,000
--------------- -------------- ---------------
Total $ 6,817,000 $ 5,249,000 $ 4,181,000
=============== ============== ===============
The provision for income taxes consisted of the following:
2001 2000 1999
-------------- --------------- ----------------
Currently payable:
Federal $ 6,017,000 $ 5,353,000 $ 3,972,000
State 721,000 789,000 665,000
-------------- --------------- ----------------
6,738,000 6,142,000 4,637,000
-------------- --------------- ----------------
Deferred:
Federal 193,000 (822,000) (392,000)
State (114,000) (71,000) (64,000)
-------------- --------------- ----------------
79,000 (893,000) (456,000)
-------------- --------------- ----------------
Total $ 6,817,000 $ 5,249,000 $ 4,181,000
============== =============== ================
The following is a summary of the significant components of the Company's
deferred tax assets and liabilities as of September 29, 2001 and September 30,
2000:
2001 2000
--------------- --------------
Deferred tax assets:
Vacation accrual not currently deductible $ 620,000 $ 589,000
Other accruals not currently deductible 632,000 567,000
Non-deductible reserves 1,571,000 1,364,000
Other 14,000 23,000
--------------- ---------------
Classified as current 2,837,000 2,543,000
Deferred compensation arrangements 1,142,000 1,059,000
Other 253,000 232,000
--------------- ---------------
Total deferred tax assets $ 4,232,000 $ 3,834,000
=============== ===============
Deferred tax liabilities:
Accelerated depreciation 4,088,000 3,719,000
Goodwill amortization 108,000 -
--------------- ---------------
Total deferred tax liabilities $ 4,196,000 $ 3,719,000
=============== ===============
Non-current deferred tax assets have been netted against non-current deferred
tax liabilities for balance sheet classification purposes.
F-10
D. LONG-TERM DEBT
Long-term debt consisted of the following:
2001 2000
----------- -----------
Obligation under revolving bank credit facility
at 3.88% as of September 29, 2001 $15,750,000 $30,500,000
Obligation under industrial development bond
arrangement at 3%, payable in monthly
installments through May 2011 827,000 901,000
9.5% secured promissory note - 292,000
----------- -----------
16,577,000 31,693,000
Less: Current maturities 76,000 366,000
----------- -----------
Total $16,501,000 $31,327,000
=========== ===========
Scheduled aggregate principal payments of long-term debt are $76,000 in fiscal
2002, $78,000 in fiscal 2003, $15,830,000 in fiscal 2004, $83,000 in fiscal
2005, $85,000 in fiscal 2006 and $425,000 thereafter.
The Company has a $60 million long-term revolving credit facility in place under
which the Company can borrow at a rate not to exceed LIBOR plus 1.5%. The
revolving credit facility matures in March 2004 and borrowings of $15,750,000
are included in scheduled aggregate principal payments due in 2004. The Company
has not had any short-term borrowings during the three fiscal years ended
September 29, 2001.
The revolving credit facility contains restrictive covenants including
provisions relating to the maintenance of working capital, the level of capital
expenditures, the incurring of additional indebtedness and a quarterly test of
EBITDA to debt service. It also provides for a commitment fee not to exceed 3/8%
per annum on the unused portion. The industrial bond arrangement provides for a
lien on the assets acquired with the proceeds.
E. COMMITMENTS AND CONTINGENCIES
The Company is committed under various operating leases to make annual rental
payments for certain buildings and equipment. Amounts charged to operations
under such leases approximated $5,239,000 in fiscal 2001, $3,956,000 in fiscal
2000 and $3,553,000 in fiscal 1999. As of September 29, 2001, minimum annual
rental commitments under the Company's long-term operating leases are
approximately $3,785,000 in fiscal 2002, $3,182,000 in fiscal 2003, $2,874,000
in fiscal 2004, $2,075,000 in fiscal 2005 and $2,571,000 in the aggregate
thereafter. The Company leases one of its facilities from a corporation owned in
part by an executive of the Company. The lease agreement requires annual
payments of approximately $216,000 over the initial term of July 1997 through
July 2002. At September 29, 2001 and September 30, 2000, the Company had letters
of credit outstanding of $909,000 and $542,000, respectively.
In the ordinary course of business, the Company is subject to various legal
proceedings and claims. The Company believes that the ultimate outcome of these
matters will not have a material adverse effect on its consolidated financial
statements.
F-11
F. STOCK ARRANGEMENTS
STOCK OPTION/INCENTIVE PLANS: The Courier Corporation 1993 Stock Incentive Plan,
as amended and restated, replaced the expiring 1983 Stock Option Plan. In
January 2001, stockholders approved an amendment to the plan which provided an
increase in the number of shares available for the granting of stock options and
stock grants under the plan by 150,000 shares to a total of 817,500 shares.
Under the provisions of each plan, both non-qualified and incentive stock
options to purchase shares of the Company's common stock may be granted to key
employees. The option price per share may not be less than the fair market value
of stock at the time the option is granted and incentive stock options must
expire not later than ten years from the date of grant. During fiscal years 2001
and 2000, 5,000 and 27,000 shares, respectively, of restricted stock were
granted which vest over a four-year period. Amortization expense relating to the
fiscal years 2001 and 2000 stock grants was $111,000 and $45,000, respectively.
DIRECTORS' OPTION PLAN: A 1989 plan, as amended and restated, allows members of
the Company's Board of Directors to make an election to apply either 50% or 100%
of their annual retainer fee, including the committee chair retainer, toward the
annual grant of stock options to be offered at a price per share $5 below the
fair market value of the Company's common stock at the time the option is
granted. Retainer fees for fiscal 2001 amounted to $16,000 per director; in
addition, the three committee chair fees amounted to a total of $17,000 for
fiscal 2001. The plan, as approved by stockholders, provides a total of 375,000
shares for the issuance of such options.
The following is a summary of all option activity for these plans:
STOCK OPTION/INCENTIVE PLANS DIRECTORS' OPTION PLAN
---------------------------- ----------------------
Average Average
Exercise Exercise
Shares Price Shares Price
-------------------------------------------------------------
Outstanding at September 26, 1998 398,336 $ 8.26 66,600 $ 6.48
Issued 7,500 15.83 27,000 10.50
Exercised (88,994) 7.09 (30,900) 6.98
Cancelled - - - -
-------------------------------------------------------------
Outstanding at September 25, 1999 316,842 $ 8.77 62,700 $ 7.96
Issued 118,200 17.92 30,150 12.76
Exercised (105,123) 6.95 (19,050) 9.57
Cancelled (11,874) 14.24 - -
-------------------------------------------------------------
Outstanding at September 30, 2000 318,045 $ 12.56 73,800 $ 9.51
Issued 61,225 21.92 30,099 15.89
Exercised (70,393) 7.49 (12,450) 6.58
Cancelled (8,880) 17.55 (17,499) 10.57
-------------------------------------------------------------
Outstanding at September 29, 2001 299,997 $ 15.52 73,950 $ 12.35
=============================================================
Exercisable at September 29, 2001 167,172 $ 12.17 73,950 $ 12.35
Available for future grants 198,643 123,000
F-12
The following tables present information with regards to stock options
outstanding at September 29, 2001:
Stock Option/Incentive Plans
------------------------------------------------------------
$6.33 - $10.39 - $15.83 -
RANGE OF EXERCISE PRICES $3.11 $9.45 $15.22 $23.73
- ------------------------ ------------------------------------------------------------
Options outstanding 6,750 59,222 61,275 172,750
Weighted average exercise price of options
outstanding $3.11 $8.27 $13.20 $19.31
Weighted average remaining life 1.2 years 2 years 2.8 years 5.6 years
Options exercisable 6,750 59,222 60,275 40,925
Weighted average exercise price of options
exercisable $3.11 $8.27 $13.17 $17.83
DIRECTORS' OPTION PLAN
RANGE OF EXERCISE PRICES $7.15 - $15.89
- ------------------------ --------------
Options outstanding 73,950
Weighted average exercise price of options
outstanding $12.35
Weighted average remaining life 2.8 years
Options exercisable 73,950
Weighted average exercise price of options
exercisable $12.35
STOCK GRANT PLAN: The Company established a stock grant plan in 1977 entitling
key employees to receive shares of common stock of the Company. Shares granted
are either fully vested or vest over periods up to 5 years. The maximum number
of shares of common stock that may be awarded under the stock grant plan is
298,125 and no more than 50,625 shares may be awarded in any one fiscal year.
The numbers of shares granted under the plan were 6,000 in fiscal 2000 and 150
in fiscal 1999. No shares were granted under this plan in fiscal 2001. As of
September 29, 2001, there were 1,242 shares available for future grants under
the plan.
EMPLOYEE STOCK PURCHASE PLAN: The Company's 1999 Employee Stock Purchase Plan
("ESPP"), approved by stockholders in January 1999 to replace the expiring 1989
ESPP, covers an aggregate of 150,000 shares of Company common stock for issuance
under the plan. Eligible employees may purchase shares of Company common stock
at not less than 85% of fair market value at the beginning or end of the grant
period. During fiscal 2001, 16,892 shares were issued under the plan at an
average price of $16.57 per share. Since inception, 48,837 shares have been
issued. At September 29, 2001, an additional 101,163 shares were reserved for
future issuances.
STOCKHOLDERS' RIGHTS PLAN: In March 1999, the Board of Directors adopted a
ten-year stockholders' rights plan, replacing a plan which expired in October
1998. Under the plan, the Company's stockholders of record at March 19, 1999
received rights to purchase one one-thousandth of a share of preferred stock for
each share of common stock held on that date. The rights are not exercisable, or
transferable apart from the common stock, until certain events occur.
F-13
PRO FORMA DISCLOSURES: The Company accounts for its stock option plans under APB
Opinion No. 25, "Accounting for Stock Issued to Employees" and related
interpretations. Had compensation cost for grants under the ESPP and for stock
options granted after 1995 been determined under the provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation," the Company's net income would have
been $12,653,000, or $2.43 per diluted share, for fiscal 2001; $10,145,000, or
$2.01 per diluted share, for fiscal 2000; and $8,026,000, or $1.61 per diluted
share, for fiscal 1999. The pro forma effect on net income and net income per
diluted share for fiscal 2001, fiscal 2000 and fiscal 1999 is not representative
of the pro forma effect on net income in future years, because it does not take
into consideration pro forma compensation expense related to options granted
prior to fiscal 1996.
For purposes of pro forma disclosures, the fair value of each option grant was
estimated on the date of grant using the Black-Scholes option-pricing model. The
following key assumptions were used to value options issued:
2001 2000 1999
---- ---- ----
Risk-free interest rate 4.5% 5.9% 6.3%
Expected volatility 34% 39% 42%
Expected dividend yields 1.7% 1.7% 1.7%
Estimated life for grants under:
1993 Stock Incentive Plan 7 years 7 years 7 years
Directors' Option Plan 5 years 5 years 5 years
ESPP 0.5 years 0.5 years 0.5 years
For purposes of pro forma disclosure, following is a summary of the weighted
average fair value per share of options granted during each of the past three
fiscal years.
1993 STOCK INCENTIVE PLAN DIRECTORS' OPTION PLAN
------------------------- ----------------------
On grant date: 2001 2000 1999 2001 2000 1999
---- ---- ---- ---- ---- ----
Exercise price was equal to stock price $7.88 $7.63 $7.17 - - -
Exercise price was in excess of
stock price $5.96 $6.05 - - - -
Exercise price was less than stock price - - - $4.90 $6.92 $6.21
G. RETIREMENT PLANS
The Company and its consolidated subsidiaries maintain various defined
contribution retirement plans covering substantially all of its employees,
except for Dover employees. Dover, acquired in September 2000 (see Note H),
provides retirement benefits through a defined benefit plan as described below.
Retirement costs of multi-employer union plans consist of defined contributions
determined in accordance with the respective collective bargaining agreements.
Retirement benefits for non-union employees are provided through the Courier
Profit Sharing and Savings Plan, which includes an Employee Stock Ownership Plan
(ESOP). Retirement costs included in the
F-14
accompanying financial statements amounted to approximately $2,600,000 in fiscal
2001, $2,500,000 in fiscal 2000 and $2,330,000 in fiscal 1999.
The Courier Profit Sharing and Savings Plan is qualified under Section 401(k) of
the Internal Revenue Code. The plan allows eligible employees to contribute up
to 100% of their compensation, subject to IRS limitations, with the Company
matching 25% of the first 6% of pay contributed by the employee. The Company
also makes contributions to the plan annually based on profits each year for the
benefit of all eligible non-union employees.
Shares of Company common stock may be allocated to participants' ESOP accounts
annually based on their compensation as defined in the plan. During fiscal years
2001, 2000 and 1999, no such shares were allocated to eligible participants. At
September 29, 2001, the ESOP held 240,589 shares on behalf of the participants.
Dover has a noncontributory, defined benefit pension plan covering substantially
all of its employees. The Company's funding policy for the plan is to contribute
amounts sufficient to meet minimum funding requirements as set forth in employee
benefit and tax laws plus such additional amounts as the Company may determine
to be appropriate.
At September 30, 2000, the projected benefit obligation was $3,647,000 and the
fair value of the plan assets was $3,471,000. Accordingly, the accrued pension
obligation was $176,000. The following tables provide information regarding the
plan for the year ended September 29, 2001.
Change in projected benefit obligation:
Obligation at beginning of year $3,647,000
Service cost 149,000
Interest cost 234,000
Actuarial (gain) (177,000)
Benefits paid (243,000)
-------------
Obligation at end of year $3,610,000
=============
Change in plan assets:
Fair value of plan assets at beginning of year $3,471,000
Actual return on plan assets 406,000
Employer contributions 82,000
Benefits paid (243,000)
-------------
Fair value of plan assets at end of year $3,716,000
=============
Reconciliation of funded status:
Funded status at end of year $106,000
Unrecognized net actuarial (gain) and other (260,000)
-------------
Accrued pension cost $(154,000)
=============
F-15
Components of the net periodic benefit cost:
Service cost $149,000
Interest cost 234,000
Expected return on plan assets (254,000)
Amortization of prior service cost 14,000
------------
Net periodic benefit cost $143,000
============
Actuarial assumptions used to determine costs and benefit obligations 2001 and
2000:
Discount rate 7.0%
Compensation increases 5.0%
Return on assets for the year 7.5%
H. BUSINESS ACQUISITIONS
On September 22, 2000, the Company acquired all of the outstanding capital stock
of Dover Publications, Inc., a Mineola, New York publisher of special-interest
books. The Company paid approximately $39 million in cash to the former
stockholders of Dover for their shares of capital stock. The acquisition was
accounted for as a purchase and, accordingly, Dover's financial results have
been included in the consolidated financial statements from the date of
acquisition. The financial statements reflect the allocation of the purchase
price to the assets acquired and liabilities assumed, based on their appraised
fair value at the date of acquisition. The excess purchase price over the fair
value of the net assets acquired amounted to $17 million which has been
accounted for as goodwill and is expected to be deductible for tax purposes.
Approximately $1 million of appraisal adjustments were recorded in 2001,
increasing goodwill to $17 million and decreasing the fair value initially
assigned to the net assets acquired at September 22, 2000. The Company recorded
approximately $0.9 million of goodwill amortization in 2001 relating to the
Dover acquisition. The Company will adopt SFAS No. 142, "Goodwill and Other
Intangible Assets," effective with the beginning of fiscal 2002 (see Note A).
SFAS No. 142 requires that goodwill no longer be amortized over its estimated
useful life. Accordingly, the Company will cease to amortize goodwill.
The following unaudited pro forma information presents a summary of consolidated
results of operations of the Company and Dover as if the acquisition had
occurred at the beginning of fiscal 2000, with pro forma adjustments to give
effect to amortization of goodwill, interest expense on acquisition debt and
certain other adjustments, together with related income tax effects.
(Unaudited) 2000
- ------------------------------------------------------------------------
Net sales $220,182,000
Net income 10,881,000
Net income per diluted share 2.15
F-16
These pro forma results have been prepared for comparative purposes only and do
not purport to be indicative of the results of operations which actually would
have resulted had the business combination been in effect at the beginning of
the fiscal 2000 or of future results of operations of the consolidated entities.
I. BUSINESS SEGMENTS
The Company historically operated in one primary business segment, book
manufacturing, with a second smaller business segment in customized education.
On September 22, 2000, the Company acquired Dover Publications, Inc. (see Note
H) which operates in a third segment, specialty publishing. Operating results of
the specialty publishing segment are not included in the fiscal 2000 segment
information because the results of operations for the period prior to September
30, 2000 were not significant.
The Company has aggregated its book manufacturing business into one segment
because of strong similarities in the economic characteristics, the nature of
products and services, production processes, class of customer and distribution
methods used. The book-manufacturing segment offers a full range of services
from production through storage and distribution for education, religious and
specialty book publishers. The customized education segment responds to the
demand for increased choice in the way educational information is received and
used. Operations include Courier Custom Publishing, a provider of customized
college coursepacks and textbooks and The Home School, a direct marketer of
educational materials to families engaged in home-based learning. Substantially
all of the assets of The Home School were sold in March 2001 and The Home School
ceased operations.
The accounting policies of the segments are the same as those described in Note
A. In evaluating segment performance, management primarily focuses on income or
loss before taxes and other income. The elimination of intersegment sales and
related profit represents sales from the book-manufacturing segment to the
specialty publishing segment. Other income, discussed in Note J, is reflected as
"unallocated" in the following table. Corporate expenses that are allocated to
the segments include various support functions such as information technology
services, finance, human resources and engineering, and include depreciation and
amortization expense related to corporate assets. The corresponding corporate
asset balances are not allocated to the segments. Unallocated corporate assets
consist primarily of cash and cash equivalents and fixed assets used by the
corporate support functions.
F-17
The following table provides segment information as required under SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information."
Total Book Manu- Specialty Customized Unallo- Intersegment
Company facturing Publishing Education cated Elimination
-------------- -------------- ------------- -------------- -------------- -------------
FISCAL 2001
Net sales $ 211,943,000 $ 181,233,000 $ 33,259,000 $ 1,488,000 $ - $ (4,037,000)
Earnings (loss) before
income taxes 20,034,000 18,691,000 1,425,000 (848,000) 1,230,000 (464,000)
Assets 133,615,000 83,735,000 40,670,000 341,000 8,869,000
Depreciation and
amortization 11,796,000 8,990,000 2,690,000 116,000
Capital expenditures 12,841,000 12,149,000 225,000 - 467,000
Interest
(income)/expense 1,899,000 (161,000) 2,060,000
- ------------------------------------------------------------------------------------------------------------------------------------
FISCAL 2000
Net sales $ 192,226,000 $ 188,865,000 $ 3,361,000 -
Earnings (loss) before
income taxes 15,886,000 19,066,000 (3,299,000) $ 119,000
Assets 141,766,000 88,748,000 $ 41,577,000 848,000 10,593,000
Depreciation and
amortization 8,062,000 7,844,000 218,000 -
Capital expenditures 16,347,000 15,665,000 13,000 669,000
Interest expense 325,000 272,000 53,000 -
- ------------------------------------------------------------------------------------------------------------------------------------
FISCAL 1999
Net sales $ 166,842,000 $ 164,037,000 $ 2,805,000 -
Earnings (loss) before
income taxes 12,557,000 15,155,000 (2,598,000) -
Assets 91,512,000 74,900,000 1,470,000 $ 15,142,000
Depreciation and
amortization 8,282,000 7,988,000 294,000 -
Capital expenditures 4,999,000 3,848,000 107,000 1,044,000
Interest expense 524,000 445,000 79,000 -
- ------------------------------------------------------------------------------------------------------------------------------------
Export sales as a percentage of consolidated sales were approximately 19% in
fiscal 2001 and 18% in both fiscal 2000 and fiscal 1999. Sales to the Company's
largest customer amounted to approximately 25% of consolidated sales in fiscal
2001, 26% in fiscal 2000 and 27% in fiscal 1999. In addition, sales to another
customer amounted to 13% of consolidated sales in fiscal 2001, 17% in fiscal
2000 and 15% in fiscal 1999. No other customer accounted for more than 10% of
consolidated sales. Customers are granted credit on an unsecured basis.
F-18
J. OTHER (INCOME) EXPENSE
In March 2001, the Company sold substantially all of the assets of its
subsidiary, The Home School, and ceased operating the business. The proceeds
from the sale were $0.8 million resulting in a pretax gain of approximately $0.3
million, and an after-tax gain of approximately $0.2 million, or $0.04 per
diluted share.
During fiscal 2001, the Company completed the sale of its Raymond, New Hampshire
facility; such facility comprised the September 30, 2000 balance sheet caption
"Real estate held for sale or lease, net". In February 2000, the Company entered
into a five-year lease agreement for this facility, which had been vacant. The
lease provided for a purchase option at a price of $1.3 million. The option was
exercised in August 2000 and the transaction closed in October 2000, resulting
in a pretax gain of approximately $0.9 million and an after-tax gain of
approximately $0.6 million, or $.10 per diluted share. Other (income) expense
also includes net rental income from this facility of $49,000 in fiscal 2001 and
$119,000 in fiscal 2000.
K. NET INCOME PER SHARE
Following is a reconciliation of the 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. These shares have been adjusted to reflect a three-for-two stock split
effected in the form of a dividend distributed on August 31, 2001 (see Note A).
2001 2000 1999
----------------------------------------------
Average shares outstanding for basic 5,058,000 4,915,000 4,806,000
Effect of potentially dilutive shares 140,000 144,000 172,000
----------------------------------------------
Average shares outstanding for dilutive 5,198,000 5,059,000 4,978,000
==============================================
F-19
COURIER CORPORATION
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
FISCAL 2001
(Dollars in thousands except per share amounts) First Second Third Fourth
- -----------------------------------------------------------------------------------------------------------
Operating Results:
Net sales $54,190 $49,954 $50,871 $56,928
Gross profit 14,624 13,778 15,293 17,676
Net income 2,952 2,133 2,966 5,166
Net income per diluted share 0.57 0.41 0.57 0.99
Dividends declared per share 0.09 0.09 0.09 0.09
Stock price:
Highest 20.50 21.17 27.33 28.65
Lowest 18.00 19.33 19.97 20.00
FISCAL 2000
(Dollars in thousands except per share amounts) First Second Third Fourth*
- -----------------------------------------------------------------------------------------------------------
Operating Results:
Net sales $46,044 $45,410 $48,259 $52,513
Gross profit 11,084 11,543 12,159 13,308
Net income 2,169 2,351 2,517 3,600
Net income per diluted share 0.43 0.47 0.50 0.70
Dividends declared per share 0.08 0.08 0.08 0.08
Stock price:
Highest 16.42 16.67 17.83 20.50
Lowest 14.25 14.83 15.42 18.00
SALES AND COST OF SALES HAVE BEEN ADJUSTED TO RECORD FREIGHT BILLINGS IN
ACCORDANCE WITH EITF 00-10 (SEE NOTE A). FREIGHT BILLINGS WERE PREVIOUSLY
INCLUDED IN COST OF SALES. GROSS PROFIT AND NET INCOME AMOUNTS PREVIOUSLY
REPORTED ARE NOT AFFECTED.
NET INCOME PER SHARE IS BASED ON WEIGHTED AVERAGE SHARES OUTSTANDING. PER SHARE
AMOUNTS HAVE BEEN RETROACTIVELY ADJUSTED TO REFLECT A THREE-FOR-TWO STOCK SPLIT
EFFECTED ON AUGUST 31, 2001 (SEE NOTE A).
* FOURTH QUARTER OF FISCAL 2000 INCLUDED 14 WEEKS.
COMMON SHARES OF THE COMPANY ARE TRADED OVER-THE-COUNTER ON THE NASDAQ NATIONAL
MARKET - SYMBOL "CRRC."
THERE WERE APPROXIMATELY 780 STOCKHOLDERS OF RECORD AS OF SEPTEMBER 29, 2001.
F-20
COURIER CORPORATION
FIVE-YEAR FINANCIAL SUMMARY
(Dollar amounts in millions
except per share data) 2001 2000* 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------
Net sales $211.9 $192.2 $166.8 $155.5 $135.2
Gross profit 61.4 48.1 40.8 37.7 28.1
Net income 13.2 10.6 8.4 7.7 4.3
Net income per diluted share 2.54 2.10 1.68 1.58 0.94
Dividends per share 0.36 0.32 0.28 0.26 0.21
Working capital 28.7 33.3 21.9 16.5 14.1
LIFO reserve 5.8 5.9 5.5 5.3 5.7
Current ratio (FIFO basis) 2.1 2.0 2.0 1.9 1.8
Total assets 133.6 141.8 91.5 87.6 89.6
Long-term debt 16.5 31.3 1.2 6.8 18.6
Long-term debt as a percentage
of capitalization 17.0% 31.6% 2.0% 12.0% 30.8%
Depreciation and amortization 11.8 8.1 8.3 8.5 7.2
Capital expenditures 12.8 16.3 5.0 4.1 6.7
Stockholders' equity 80.3 67.8 57.6 49.8 41.7
Return on stockholders' equity 17.8% 17.0% 15.6% 16.9% 10.7%
Stockholders' equity per share 15.71 13.52 11.88 10.47 9.24
Shares outstanding (in 000's) 5,112 5,016 4,850 4,758 4,517
Number of employees 1,504 1,535 1,320 1,254 1,202
SALES AND COST OF SALES HAVE BEEN ADJUSTED TO RECORD SHIPPING FEES IN SALES IN
ACCORDANCE WITH EITF 00-10. (SEE NOTE A). FREIGHT BILLINGS WERE PREVIOUSLY
INCLUDED IN COST OF SALES. GROSS PROFIT AND NET INCOME AMOUNTS PREVIOUSLY
REPORTED ARE NOT AFFECTED.
NET INCOME PER SHARE IS BASED ON WEIGHTED AVERAGE SHARES OUTSTANDING;
STOCKHOLDERS' EQUITY PER SHARE IS BASED ON SHARES OUTSTANDING AT YEAR END.
SHARES OUTSTANDING AND PER SHARE AMOUNTS HAVE BEEN RETROACTIVELY ADJUSTED TO
REFLECT A THREE-FOR-TWO STOCK SPLIT EFFECTED ON AUGUST 31, 2001 (SEE NOTE A).
* FISCAL 2000 INCLUDED 53 WEEKS.
F-21
MANAGEMENT'S DISCUSSION AND ANALYSIS
OVERVIEW
Courier Corporation, founded in 1824, is one of America's leading book
manufacturers and specialty publishers. Courier's industry-leading financial
performance, including five straight years of growth in sales and earnings, was
achieved through a strong focus on growth markets, technological innovation and
outstanding customer service.
The Company has three business segments: full-service book manufacturing,
customized education and specialty publishing.
BOOK MANUFACTURING - streamlines the process of bringing books from the point of
creation to the point of use. Courier is the fifth largest book manufacturer in
the United States and largest in the Northeast, offering services from content
management, prepress and production through storage and distribution. Courier's
principal markets include religious, educational and specialty trade books.
CUSTOMIZED EDUCATION - operates businesses that respond to the need for greater
choice in education. Courier Custom Publishing offers solutions that enable
educators to provide students with customized teaching materials from
multi-publisher custom books to out-of-print book reproductions and
self-published books. The Home School, which Courier sold in March 2001, was a
direct marketer of educational materials to families engaged in educating
children at home and was included in the customized education segment prior to
its sale.
SPECIALTY PUBLISHING - consists of Dover Publications, acquired by Courier on
September 22, 2000. Dover publishes over 7,500 titles in more than 30 specialty
categories ranging from literature and poetry classics to paper dolls, and from
musical scores to typographical fonts. Dover sells its products through most
American bookstore chains, independent booksellers, children's stores, craft
stores and gift shops, as well as a diverse range of distributors around the
world. Dover also sells its books directly to customers through its specialty
catalogs and over the internet at www.doverpublications.com.
2001 2000 1999
--------------- -------------- ---------------
SALES BY SEGMENT: (IN THOUSANDS)
Book Manufacturing $181,233 $188,865 $164,037
Customized Education 1,488 3,361 2,805
Specialty Publishing 33,259 - -
Intersegment sales (4,037) - -
--------------- -------------- ---------------
Total $211,943 $192,226 $166,842
RESULTS OF OPERATIONS
Sales in fiscal 2001 increased 10% to $211.9 million compared to $192.2 million
in fiscal 2000. Fiscal 2000 included 53 weeks compared to 52 weeks in fiscal
2001. The fiscal 2001 sales increase was 12% if fiscal 2000 is adjusted to a
comparable 52-week period. The sales increase in fiscal 2001 was the result of
the acquisition of Dover on September 22, 2000. Dover's sales in 2001 were $33.3
million. Intersegment sales from the book manufacturing segment to Dover of $4
million in 2001 were eliminated from consolidated sales. Book manufacturing
sales in 2001 decreased 4% to $181.2 million from $188.9 million last year.
Adjusting for the additional week in fiscal 2000, sales for the segment
decreased by approximately 2% in 2001. Sales to the specialty trade market fell
17% below last year due to weakness in consumer demand for books on subjects
such as computer games, technology, investing, and general business. Meanwhile,
sales to educational publishers increased by 4% in 2001, particularly from
strong sales of elementary and high school books, which offset softness in sales
of college texts. Sales to the religious market increased 9% over the prior
year. Customized education segment sales of $1.5 million in 2001 decreased by
$1.9 million from fiscal 2000 due to the March 2001 sale of The Home School.
Sales for Courier Custom Publishing, the Company's college coursepack business,
increased 10% over fiscal 2000. Courier's sales in fiscal 2000 increased 15% to
$192.2 million
F-22
compared to $166.8 million in fiscal 1999. Fiscal 2000 included 53 weeks
compared to 52 weeks in 1999. Sales from Courier's book manufacturing segment
were up 15% in fiscal 2000 due to increased sales in all three of our target
markets - educational, religious and specialty trade - and because of the extra
week. Courier's customized education segment sales grew by 20% in fiscal 2000 to
$3.4 million due to increases at both The Home School and Courier Custom
Publishing.
In July 2000, the Emerging Issues Task Force (EITF) of the Financial Accounting
Standards Board reached a consensus on Issue 00-10, "Accounting for Shipping and
Handling Fees and Costs." The Company adopted the provisions of EITF 00-10 for
the fiscal year ended September 29, 2001 requiring shipping and handling fees to
be classified as revenue. Results of prior years have been reclassified to
conform with the fiscal 2001 presentation. The impact of this adoption was to
increase sales and cost of sales by $3.8 million, $3.9 million and $2.9 million
in fiscal 2001, 2000, and 1999, respectively. This accounting change had no
impact on Courier's earnings.
Gross profit in fiscal 2001 increased by $13.3 million, or 28% and, as a
percentage of sales, increased to 29% from 25% in fiscal 2000. The increases
were primarily the result of the acquisition of Dover. Dover's gross profit in
2001 was $15 million and, as a percentage of sales, was 46%, which was
significantly higher than the Company's other segments. In Courier's book
manufacturing segment, the gross margin was comparable to the prior year,
despite the drop in sales. Aggressive cost controls, increased productivity
levels and lower paper costs offset a drop in recycling income, as well as
higher energy costs, health insurance and depreciation expense. Gross profit in
fiscal 2000 increased by $7.3 million, or 18% and as a percentage of sales,
increased to 25% from 24% in 1999. The improvement in gross profit in fiscal
2000 resulted from increased sales volume combined with productivity gains from
investments in capital equipment and increased recycling income.
Selling and administrative expenses increased to $39.2 million in fiscal 2001
from $31.4 million in fiscal 2000, and, as a percentage of sales, increased to
18% in 2001 from 16% in 2000. Dover's selling and administrative expenses were
$11 million in 2001 or 33% of their sales, which is a much higher percentage
than the rest of Courier's business, in part due to Dover's consumer and retail
catalog marketing operations. Selling and administrative expenses in the book
manufacturing segment were down 3% in 2001 and, at 15% of sales were comparable
to last year. Selling and administrative expenses in the customized education
segment were down $2.3 million in 2001 primarily from the disposition of The
Home School in March 2001. Selling and administrative expenses in fiscal 2000
increased to $31.4 million from $27.1 million in fiscal 1999, remaining at 16%
as a percentage of sales. The increase in selling and administrative expenses
resulted primarily from the extra week in fiscal 2000 and from expenses that
relate directly to the increase in overall profitability.
Amortization of goodwill and other intangibles increased to $1.5 million in
fiscal 2001 from $0.7 million in fiscal 2000 and fiscal 1999 due to additional
goodwill amortization related to the acquisition of Dover in September 2000. In
fiscal 2002, amortization of goodwill and certain other intangibles will be
eliminated as a result of the adoption of a new accounting method for goodwill
described below.
Interest expense in fiscal 2001 was $1.9 million compared to $0.3 million in
fiscal 2000 due to an increase in average borrowings of approximately $27
million, resulting from the acquisition of Dover for $39 million in cash
financed by the Company's revolving credit facility. During 2001, borrowings of
$15 million were repaid using cash generated from operations. Interest expense
in fiscal 2000 was $0.2 million lower than fiscal 1999, reflecting a reduction
in average borrowings in 2000 of approximately $1.3 million. Capitalized
interest related to new equipment was approximately $0.2 million in fiscal 2001
and $0.1 million in fiscal 2000.
Other income in fiscal 2001 is comprised of a pretax gain of approximately $0.3
million from the sale of The Home School. In addition, during fiscal 2001 the
Company completed the sale of a facility in Raymond, New Hampshire. In February
2000, the Company entered into a lease agreement for this facility, which had
been vacant. The lease provided for a purchase option at a price of $1.3
million. The option was exercised in August 2000 and the transaction closed in
October 2000, resulting in a pretax gain of approximately $0.9 million. Other
income also includes net rental income from this facility of $49,000 in fiscal
2001 and $119,000 in fiscal 2000.
F-23
The Company's effective tax rate for fiscal 2001 was 34% which was higher than
the 33% rate for fiscal 2000 due, in part, to increased profitability in fiscal
2001 taxed at a higher statutory federal tax rate. In fiscal 2000, the effective
tax rate was 33%, the same rate as 1999.
Income (loss) by segment: (in thousands) 2001 2000 1999
- -----------------------------------------------------------------------------------------------------------
Book Manufacturing $18,691 $19,066 $15,155
Customized Education (848) (3,299) (2,598)
Specialty Publishing 1,425 - -
Other income 1,230 119 -
Intersegment eliminations (464) - -
- -----------------------------------------------------------------------------------------------------------
Income before taxes 20,034 15,886 12,557
Provision for income taxes 6,817 5,249 4,181
- -----------------------------------------------------------------------------------------------------------
Net income $13,217 $10,637 $8,376
- -----------------------------------------------------------------------------------------------------------
Net income for fiscal 2001 was $13.2 million, or $2.54 per diluted share,
compared with $10.6 million, or $2.10 per diluted share, for fiscal 2000.
Fiscal 2001 included after-tax gains totaling $750,000 or $.14 per diluted
share from the sale of real estate ($.10 per diluted share) and the sale of
The Home School ($.04 per diluted share). Excluding these gains, net income
in fiscal 2001 was $12.5 million, up 17% over the prior year, and net income
per diluted share was $2.40, an increase of 14% over last year. Pretax
earnings from the Company's book manufacturing segment in 2001 decreased 2%
to $18.7 million from $19.1 million in the prior year. Pretax earnings from
the specialty publishing segment, established in fiscal 2001 with the
acquisition of Dover, were $1.4 million. The customized education segment
reduced its pretax loss to $0.8 million, or $.11 per diluted share in fiscal
2001, from a pretax loss of $3.3 million, or $.43 per diluted share, in
fiscal 2000, primarily due to the disposition of The Home School. For fiscal
2000, net income was $10.6 million, an increase of 27% over net income in
fiscal 1999 of $8.4 million. Net income per share on a diluted basis was up
25% to $2.10 per share from $1.68 per share in fiscal 1999. Pretax earnings
from the Company's book manufacturing segment increased 26% in fiscal 2000 to
$19.1 million from $15.2 million in the prior year. The customized education
segment incurred a pretax loss of $3.3 million, or $.43 per diluted share in
fiscal 2000 compared to a pretax loss of $2.6 million, or $.34 per diluted
share in fiscal 1999. Results for fiscal 2000 in the customized education
segment include a $350,000 pretax charge, or $.05 per diluted share, for the
planned closure of The Home School's retail store.
For purposes of computing net income per diluted share, weighted average shares
outstanding increased by approximately 139,000 shares in fiscal 2001 and 81,000
shares in fiscal 2000. These increases were primarily due to options exercised
and shares issued under the Company's stock plans and the impact of potentially
dilutive shares. On August 31, 2001, the Company distributed a three-for-two
stock split effected in the form of a 50% dividend. Weighted average shares
outstanding and net income per share amounts have been restated to give effect
to the stock split.
LIQUIDITY AND CAPITAL RESOURCES
In fiscal 2001, operating activities provided approximately $28.1 million of
cash. Net income for the year was $13.2 million and depreciation and
amortization was $11.8 million, including $1.4 million for amortization of
goodwill and $1.5 million for amortization of prepublication costs. Working
capital reductions provided approximately $4.9 million of cash in 2001,
primarily from decreases of approximately $5.5 million in accounts receivable
and $5.3 million in inventories, offset by a decrease in accounts payable of
approximately $5.6 million.
Investment activities in 2001 used approximately $12.1 million in cash. Capital
expenditures were approximately $12.8 million, primarily for a new press for the
religious market and factory automation equipment to improve productivity and
service levels. Prepublication costs at Dover were approximately $1.4 million in
2001. Proceeds from the March 2001 sale of the assets of The Home School were
approximately $0.8 million, while proceeds from the October 2000 sale of the
Raymond, NH facility were $1.3 million. The Company entered into an agreement in
January 2000 to sell the unoccupied and underutilized portions of its
multi-building manufacturing complex in Westford, MA. In April 2001, the buyer
failed to meet certain performance requirements of the
F-24
agreement, and by its terms, the agreement expired. The Company is currently
evaluating its options regarding this property. For fiscal 2002, capital
expenditures are expected to drop to approximately $9 million and prepublication
costs are anticipated to increase slightly to approximately $1.6 million.
Financing activities for fiscal 2001 provided approximately $16.3 million of
cash. Approximately $15.1 million of cash was used to pay down debt. At
September 29, 2001, borrowings under the Company's $60 million long-term
revolving credit facility were $15.8 million. This revolving credit facility
matures in March 2004. Dividend payments were $1.8 million and proceeds from
stock plans were $0.6 million, primarily from the exercise of stock options. The
Company believes that its cash from operations and available credit facilities
will be sufficient to meet its cash requirements through fiscal 2002.
NEW ACCOUNTING PRONOUNCEMENTS
Effective October 1, 2000, the Company adopted Statement of Financial Accounting
Standard (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (as amended by SFAS No. 137 in June 1999 and SFAS No. 138 in June
2000); the adoption did not have a material effect on the Company's consolidated
financial statements. The Securities and Exchange Commission has issued Staff
Accounting Bulletin (SAB) No. 101 ("Revenue Recognition in Financial
Statements"), that was implemented by the Company in the fourth quarter of the
Company's fiscal year ending September 29, 2001. The adoption of this SAB did
not have a material effect on the Company's consolidated financial statements.
In June 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 141 requires the purchase method of accounting be used for all
business combinations initiated after June 30, 2001. SFAS No. 142 changes the
accounting for goodwill and other intangible assets from an amortization method
to an impairment-only approach. The Company will adopt SFAS No. 142 effective at
the beginning of its fiscal year ending September 28, 2002. The Company does not
anticipate that the adoption of SFAS No. 142 will change the nature or carrying
amounts of its intangible assets. If these rules had applied to goodwill for
fiscal 2001, the result would have been to increase fiscal 2001 pretax income by
approximately $1.4 million and net income by approximately $1.0 million, or $.20
per diluted share.
RISKS
The Company derived approximately 38% of its fiscal 2001 revenues from two major
customers. The loss of either of these customers or a significant reduction in
order volumes from them would have a material adverse effect on the Company.
FORWARD-LOOKING INFORMATION
THE ANNUAL REPORT TO SHAREHOLDERS 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. FACTORS THAT COULD AFFECT ACTUAL RESULTS INCLUDE, AMONG
OTHERS, CHANGES IN CUSTOMERS' DEMAND FOR THE COMPANY'S PRODUCTS, INCLUDING
SEASONAL CHANGES IN CUSTOMER ORDERS, CHANGES IN RAW MATERIAL COSTS, PRICING
ACTIONS BY COMPETITORS, CONSOLIDATION AMONG CUSTOMERS AND COMPETITORS, SUCCESS
IN THE INTEGRATION OF ACQUIRED BUSINESSES, UNANTICIPATED CHANGES IN OPERATING
EXPENSES, CHANGES IN TECHNOLOGY, AND GENERAL CHANGES IN ECONOMIC CONDITIONS.
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.
F-25
COURIER CORPORATION
SCHEDULE II
CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
ADDITIONS
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND OTHER AT END
OF PERIOD EXPENSES DEDUCTIONS CHANGES (1) OF PERIOD
--------- ---------- ---------- ----------- ---------
Fiscal year ended September 29, 2001
Allowance for uncollectible accounts $ 1,391,000 $ 718,000 $ 145,000 $ - $ 1,964,000
Fiscal year ended September 30, 2000
Allowance for uncollectible accounts $ 937,000 $ 345,000 $ 141,000 $ 250,000 $ 1,391,000
Fiscal year ended September 25, 1999
Allowance for uncollectible accounts $ 1,078,000 $ 174,000 $ 315,000 $ - $ 937,000
(1) Other changes reflects amount related to a business acquisition.
S-1