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Table of Contents
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 10-Q
 
 
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
For the Quarterly Period Ended June 29, 2002
 
OR
 
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
 
Commission file number 1-5064
 
 
Jostens, Inc.
(Exact name of Registrant as specified in its charter)
 
 
 
Minnesota

  
41-0343440

(State or other jurisdiction of incorporation or organization)
  
(I.R.S. employer identification number)
5501 Norman Center Drive, Minneapolis, Minnesota

  
55437

(Address of principal executive offices)
  
(Zip code)
 
 
Registrant’s telephone number: (952) 830-3300
 
 
 
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 requirement for the past 90 days. Yes [X]    No [    ]
 
On August 9, 2002 there were 8,955,741 shares of the Registrant’s common stock outstanding.
 


Table of Contents
 
Jostens, Inc. and Subsidiaries
 
         
Page

Part I Financial Information
    
Item 1.
  
Financial Statements (Unaudited)
    
       
3
       
4
       
5
       
6
Item 2.
     
12
Item 3.
     
18
Part II Other Information
    
Item 1.
     
19
Item 6.
     
19
  
20
 

2


Table of Contents
 
PART I FINANCIAL INFORMATION
 
ITEM 1.    FINANCIAL STATEMENTS
 
JOSTENS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
 
    
Three months ended

    
Six months ended

 
In thousands, except per-share data

  
June 29, 2002

    
June 30, 2001

    
June 29, 2002

    
June 30, 2001

 
Net sales
  
$
353,720
 
  
$
337,740
 
  
$
475,043
 
  
$
454,804
 
Cost of products sold
  
 
151,446
 
  
 
145,638
 
  
 
199,153
 
  
 
191,564
 
    


  


  


  


Gross profit
  
 
202,274
 
  
 
192,102
 
  
 
275,890
 
  
 
263,240
 
Selling and administrative expenses
  
 
100,480
 
  
 
95,433
 
  
 
167,491
 
  
 
162,548
 
Special charges
  
 
 
  
 
2,138
 
  
 
 
  
 
2,138
 
    


  


  


  


Operating income
  
 
101,794
 
  
 
94,531
 
  
 
108,399
 
  
 
98,554
 
Net interest expense
  
 
17,016
 
  
 
19,640
 
  
 
34,706
 
  
 
40,922
 
    


  


  


  


Income from continuing operations before income taxes
  
 
84,778
 
  
 
74,891
 
  
 
73,693
 
  
 
57,632
 
Provision for income taxes
  
 
35,184
 
  
 
31,012
 
  
 
30,584
 
  
 
23,739
 
    


  


  


  


Income from continuing operations
  
 
49,594
 
  
 
43,879
 
  
 
43,109
 
  
 
33,893
 
Gain (loss) on discontinued operations, net of tax
  
 
940
 
  
 
(1,391
)
  
 
940
 
  
 
(3,681
)
    


  


  


  


Net income
  
 
50,534
 
  
 
42,488
 
  
 
44,049
 
  
 
30,212
 
Dividends and accretion on redeemable preferred shares
  
 
(2,883
)
  
 
(2,504
)
  
 
(5,666
)
  
 
(4,922
)
    


  


  


  


Net income available to common shareholders
  
$
47,651
 
  
$
39,984
 
  
$
38,383
 
  
$
25,290
 
    


  


  


  


Earnings per common share
                                   
Basic
                                   
Income from continuing operations
  
$
5.22
 
  
$
4.60
 
  
$
4.18
 
  
$
3.22
 
Gain (loss) on discontinued operations
  
 
0.10
 
  
 
(0.15
)
  
 
0.10
 
  
 
(0.41
)
    


  


  


  


Basic earnings per common share
  
$
5.32
 
  
$
4.45
 
  
$
4.28
 
  
$
2.81
 
    


  


  


  


Diluted
                                   
Income from continuing operations
  
$
4.70
 
  
$
4.16
 
  
$
3.77
 
  
$
2.91
 
Gain (loss) on discontinued operations
  
 
0.09
 
  
 
(0.14
)
  
 
0.09
 
  
 
(0.37
)
    


  


  


  


Diluted earnings per common share
  
$
4.79
 
  
$
4.02
 
  
$
3.86
 
  
$
2.54
 
    


  


  


  


Weighted average common shares outstanding
                                   
Basic
  
 
8,958
 
  
 
8,993
 
  
 
8,961
 
  
 
8,993
 
Diluted
  
 
9,951
 
  
 
9,949
 
  
 
9,946
 
  
 
9,949
 
 
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

3


Table of Contents
 
JOSTENS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
<
    
(Unaudited)

    
December 29, 2001

 
In thousands, except per-share data

  
June 29, 2002

    
June 30, 2001

    
ASSETS
                          
Current assets
                          
Cash and cash equivalents
  
$
59,148
 
  
$
43,070
 
  
$
43,100
 
Accounts receivable, net of allowance of $3,789, $3,550 and $3,657
  
 
80,418
 
  
 
94,440
 
  
 
56,238
 
Inventories, net of reserve of $2,340, $3,558 and $2,089
  
 
47,167
 
  
 
60,728
 
  
 
70,514
 
Deferred income taxes
  
 
19,964
 
  
 
17,995
 
  
 
19,964
 
Salespersons overdrafts, net of allowance of $6,595, $5,800 and $6,897
  
 
14,913
 
  
 
14,177
 
  
 
28,037
 
Prepaid expenses and other current assets
  
 
5,189
 
  
 
4,574
 
  
 
7,723
 
Current assets of discontinued operations
  
 
 
  
 
 
  
 
7,029
 
    


  


  


Total current assets
  
 
226,799
 
  
 
234,984
 
  
 
232,605
 
    


  


  


Other assets
                          
Intangibles, net
  
 
14,763
 
  
 
17,105
 
  
 
14,260
 
Deferred financing costs, net
  
 
25,194
 
  
 
30,331
 
  
 
27,476
 
Other
  
 
34,520
 
  
 
30,672
 
  
 
32,075
 
    


  


  


Total other assets
  
 
74,477
 
  
 
78,108
 
  
 
73,811
 
    


  


  


Property and equipment
  
 
274,431
 
  
 
290,061
 
  
 
267,255
 
Less accumulated depreciation
  
 
(209,562
)
  
 
(216,136
)
  
 
(199,064
)
    


  


  


Property and equipment, net
  
 
64,869
 
  
 
73,925
 
  
 
68,191
 
    


  


  


    
$
366,145
 
  
$
387,017
 
  
$
374,607
 
    


  


  


LIABILITIES AND SHAREHOLDERS’ DEFICIT
                          
Current liabilities
                          
Accounts payable
  
$
8,040
 
  
$
14,569
 
  
$
18,721
 
Accrued employee compensation and related taxes
  
 
26,519
 
  
 
25,855
 
  
 
27,392
 
Commissions payable
  
 
41,996
 
  
 
43,479
 
  
 
18,639
 
Customer deposits
  
 
59,662
 
  
 
58,516
 
  
 
126,400
 
Income taxes payable
  
 
48,556
 
  
 
38,307
 
  
 
16,940
 
Interest payable
  
 
7,667
 
  
 
8,876
 
  
 
10,567
 
Current portion of long-term debt
  
 
22,049
 
  
 
20,879
 
  
 
20,966
 
Other accrued liabilities
  
 
13,906
 
  
 
16,073
 
  
 
16,913
 
Current liabilities of discontinued operations
  
 
5,939
 
  
 
 
  
 
16,511
 
    


  


  


Total current liabilities
  
 
234,334
 
  
 
226,554
 
  
 
273,049
 
Long-term debt—less current maturities, net of unamortized original issue discount of $17,547, $18,700 and $18,143
  
 
610,547
 
  
 
655,430
 
  
 
626,017