Back to GetFilings.com



Table of Contents
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-Q
 
(Mark One)
 
[X]
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended July 31, 2002
 
OR
 
[    ]
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                              to
 
Commission File Number 0-24383
 
WORKFLOW MANAGEMENT, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
06-1507104
(State or other jurisdiction of
 
(I.R.S. Employer
incorporation or organization.)
 
Identification No.)
     
240 Royal Palm Way
   
Palm Beach, FL
 
33480
(Address of principal executive offices)
 
(Zip Code)
 
(561) 659-6551
(Registrant’s telephone number, including area code)
 
N/A
(Former name, former address and former fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  X  No       .
 
As of September 12, 2002, there were 13,180,489 shares of common stock outstanding.


Table of Contents
WORKFLOW MANAGEMENT, INC.
INDEX
 
           
Page No.

PART I—FINANCIAL INFORMATION
      
  
Financial Statements
      
         
3
    
    July 31, 2002 (unaudited) and April 30, 2002
      
         
4
    
    For the three months ended July 31, 2002 and July 31, 2001
      
         
5
    
    For the three months ended July 31, 2002 and July 31, 2001
      
         
7
  
Management’s Discussion and Analysis of Financial Condition and Results of Operations
    
17
  
Quantitative and Qualitative Disclosure About Market Risk
    
25
PART II—OTHER INFORMATION
      
  
Exhibits and Reports on Form 8-K
    
26
    
27
    
27
    
28

Page  2


Table of Contents
 
PART I—FINANCIAL INFORMATION
 
Item 1.    Financial Statements
 
WORKFLOW MANAGEMENT, INC.
CONSOLIDATED BALANCE SHEET
(In thousands, except share amounts)
 
ASSETS
  
July 31, 2002

    
April 30, 2002

 
    
(Unaudited)
        
Current assets:
                 
Cash and cash equivalents
  
$
4,535
 
  
$
5,262
 
Accounts receivable, less allowance for doubtful accounts of $4,934 and $4,917, respectively
  
 
93,782
 
  
 
102,184
 
Inventories
  
 
52,785
 
  
 
50,529
 
Prepaid expenses and other current assets
  
 
18,878
 
  
 
13,821
 
    


  


Total current assets
  
 
169,980
 
  
 
171,796
 
Property and equipment, net
  
 
47,475
 
  
 
48,992
 
Goodwill
  
 
131,810
 
  
 
128,232
 
Other intangible assets, net
  
 
1,394
 
  
 
1,544
 
Other assets
  
 
6,506
 
  
 
7,635
 
    


  


Total assets
  
$
357,165
 
  
$
358,199
 
    


  


LIABILITIES AND STOCKHOLDERS’ EQUITY
                 
Current liabilities:
                 
Short-term debt
  
$
169,000
 
  
$
157,843
 
Accounts payable
  
 
38,623
 
  
 
42,594
 
Accrued compensation
  
 
10,530
 
  
 
12,641
 
Accrued additional purchase consideration
  
 
3,183
 
  
 
8,525
 
Accrued income taxes
           
 
933
 
Accrued restructuring costs
  
 
516
 
  
 
573
 
Other accrued liabilities
  
 
23,264
 
  
 
22,457
 
    


  


Total current liabilities
  
 
245,116
 
  
 
245,566
 
                   
Other long-term debt
  
 
1,321
 
  
 
1,500
 
Deferred income taxes
  
 
6,777
 
  
 
6,820
 
Long-term swap contract liability
  
 
4,345
 
  
 
3,666
 
Other long-term liabilities
  
 
3,189
 
  
 
3,865
 
    


  


Total liabilities
  
 
260,748
 
  
 
261,417
 
    


  


Stockholders’ equity:
                 
Preferred stock, $.001 par value, 1,000,000 shares authorized, none outstanding
                 
Common stock, $.001 par value, 150,000,000 shares authorized, 13,178,489 and 13,132,724 issued and outstanding, respectively
  
 
13
 
  
 
13
 
Additional paid-in capital
  
 
52,598
 
  
 
52,501
 
Notes receivable from officers
  
 
(4,820
)
  
 
(4,820
)
Accumulated other comprehensive loss
  
 
(4,319
)
  
 
(6,255
)
Retained earnings
  
 
52,945
 
  
 
55,343
 
    


  


Total stockholders’ equity
  
 
96,417
 
  
 
96,782
 
    


  


Total liabilities and stockholders’ equity
  
$
357,165
 
  
$
358,199
 
    


  


See accompanying notes to consolidated financial statements.

Page  3


Table of Contents
WORKFLOW MANAGEMENT, INC.
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share amounts)
(Unaudited)
 
      
Three Months Ended

 
      
July 31,
2002

      
July 31,
2001

 
Revenues
    
$
156,209
 
    
$
155,166
 
Cost of revenues
    
 
112,802
 
    
 
111,213
 
      


    


Gross profit
    
 
43,407
 
    
 
43,953
 
Selling, general and administrative expenses
    
 
36,385
 
    
 
36,545
 
Restructuring costs
    
 
221
 
          
      


    


Operating income
    
 
6,801
 
    
 
7,408
 
Interest expense
    
 
4,149
 
    
 
3,703
 
Interest income
    
 
(140
)
    
 
(220
)
Loss on ineffective interest rate hedge
    
 
4,345
 
          
Debt offering costs
    
 
1,705
 
          
Other expense (income)
    
 
13
 
    
 
(14
)
      


    


(Loss) income before (benefit) provision for income taxes
    
 
(3,271
)
    
 
3,939
 
(Benefit) provision for income taxes
    
 
(872
)
    
 
1,641
 
      


    


Net (loss) income
    
$
(2,399
)
    
$
2,298
 
      


    


(Loss) income per share:
                     
Basic
    
$
(0.18
)
    
$
0.18
 
Diluted
    
$
(0.18
)
    
$
0.18
 
Weighted average common shares outstanding:
                     
Basic
    
 
13,155
 
    
 
13,002
 
Diluted
    
 
13,155
 
    
 
13,069
 

See accompanying notes to consolidated financial statements.

Page  4


Table of Contents
WORKFLOW MANAGEMENT, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
 
      
Three Months Ended

 
      
July 31,
2002

      
July 31,
2001

 
Cash flows from operating activities:
                     
Net (loss) income
    
$
(2,399
)
    
$
2,298
 
Adjustments to reconcile net income to net cash provided by operating activities:
                     
Depreciation and amortization expense
    
 
2,644
 
    
 
2,740
 
Restructuring costs, net of cash paid
    
 
(57
)
    
 
(966
)
Amortization of deferred financing costs
    
 
295
 
    
 
161
 
Changes in assets and liabilities (net of assets acquired and liabilities assumed in business combinations):
                     
Accounts receivable
    
 
8,321
 
    
 
4,583
 
Inventories
    
 
(2,313
)
    
 
849
 
Prepaid expenses and other assets
    
 
(3,654
)
    
 
240
 
Accounts payable
    
 
(3,927
)
    
 
6,193
 
Accrued liabilities
    
 
(418
)
    
 
(2,804
)
      


    


Net cash (used in) provided by operating activities
    
 
(1,508
)
    
 
13,294
 
      


    


Cash flows from investing activities:
                     
Cash paid in acquisitions, net of cash received
    
 
(1,072
)
    
 
(3,624
)
Cash paid for additional purchase consideration
    
 
(7,306
)
    
 
(7,043
)
Additions to property and equipment
    
 
(1,396
)
    
 
(5,053
)
Cash collection of notes receivable
    
 
175
 
          
Cash received on the sale of property and equipment
    
 
245
 
    
 
9,218
 
Other
    
 
(79
)
    
 
(1
)
      


    


Net cash used in investing activities
    
 
(9,433
)
    
 
(6,503
)
      


    


Cash flows from financing activities:
                     
Proceeds from credit facility borrowings
    
 
43,950
 
    
 
48,111
 
Payments of credit facility borrowings
    
 
(32,800
)
    
 
(52,058
)
Payments of short-term debt, net
               
 
(157
)
Payments of other long-term debt
    
 
(179
)
    
 
(1,222
)
Payments of deferred financing costs
    
 
(831
)
    
 
(221
)
Proceeds from common stock issued under employee benefit programs
    
 
92
 
    
 
116
 
Issuance of common stock to outside directors
    
 
6
 
    
 
5
 
      


    


Net cash provided by (used in) financing activities
    
 
10,238
 
    
 
(5,426
)
      


    


Effect of exchange rates on cash and cash equivalents
    
 
(24
)
    
 
(1
)
      


    


Net (decrease) increase in cash and cash equivalents
    
 
(727
)
    
 
1,364
 
Cash and cash equivalents at beginning of period
    
 
5,262
 
    
 
2,126
 
      


    


Cash and cash equivalents at end of period
    
$
4,535
 
    
$
3,490
 
      


    


(Continued)

Page  5


Table of Contents
WORKFLOW MANAGEMENT, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
(Continued)
 
    
Three Months E