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 April 3, 2004
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 1-3246
ProQuest Company
(Exact name of registrant as specified in its charter)
| Delaware | 36-3580106 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. employer identification number) |
| 300 North Zeeb Road, Ann Arbor, Michigan | 48103-1553 | |
| (Address of principal executive offices) | (Zip code) |
Registrant’s telephone number, including area code: (734) 761-4700
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 checkmark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). x
The number of shares of the Registrant’s Common Stock, $.001 par value, outstanding as of May 10, 2004 was 28,478,877.
| Page | ||||
| PART I |
FINANCIAL INFORMATION |
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| Item 1. |
Consolidated Financial Statements |
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| Consolidated Statements of Operations for the Thirteen Week Periods Ended April 3, 2004 and March 29, 2003 | 1 | |||
| Consolidated Balance Sheets as of April 3, 2004, January 3, 2004 and March 29, 2003 | 2 | |||
| Consolidated Statements of Cash Flows for the Thirteen Week Periods Ended April 3, 2004 and March 29, 2003 | 3 | |||
| 4 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
13 | ||
| Item 3. |
20 | |||
| Item 4. |
21 | |||
| OTHER INFORMATION |
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| Item 1. |
22 | |||
| Item 6. |
22 | |||
| 23 | ||||
| EXHIBITS |
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| Certification of Chief Executive Officer - 302 |
24 | |||
| Certification of Chief Financial Officer - 302 |
26 | |||
| Certification of Chief Executive Officer - 906 |
28 | |||
| Certification of Chief Financial Officer - 906 |
29 | |||
ProQuest Company and Subsidiaries
Consolidated Statements of Operations
For the Thirteen Week Periods Ended April 3, 2004 and March 29, 2003
(In thousands, except per share data)
(Unaudited)
| Thirteen Weeks Ended |
||||||||
| April 3, 2004 |
March 29, 2003 |
|||||||
| Net sales |
$ | 116,240 | $ | 111,843 | ||||
| Cost of sales |
(57,672 | ) | (56,006 | ) | ||||
| Gross profit |
58,568 | 55,837 | ||||||
| Research and development expense |
(4,731 | ) | (5,018 | ) | ||||
| Selling and administrative expense |
(31,916 | ) | (28,650 | ) | ||||
| Earnings from operations before interest and income taxes |
21,921 | 22,169 | ||||||
| Net interest expense: |
||||||||
| Interest income |
260 | 171 | ||||||
| Interest expense |
(4,514 | ) | (4,783 | ) | ||||
| Net interest expense |
(4,254 | ) | (4,612 | ) | ||||
| Earnings before income taxes |
17,667 | 17,557 | ||||||
| Income tax expense |
(6,184 | ) | (6,321 | ) | ||||
| Net earnings |
$ | 11,483 | $ | 11,236 | ||||
| Net earnings per common share: |
||||||||
| Basic |
$ | 0.40 | $ | 0.40 | ||||
| Diluted |
$ | 0.40 | $ | 0.40 | ||||
| Weighted average number of common shares and equivalents outstanding: |
||||||||
| Basic |
28,406 | 28,013 | ||||||
| Diluted |
28,799 | 28,037 | ||||||
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
1
ProQuest Company and Subsidiaries
As of April 3, 2004, January 3, 2004 and March 29, 2003
(In thousands)
| April 3, 2004 (Unaudited) |
January 3, 2004 |
March 29, 2003 (Unaudited) |
||||||||||
| ASSETS | ||||||||||||
| Current assets: |
||||||||||||
| Cash and cash equivalents |
$ | 4,676 | $ | 7,312 | $ | 5,984 | ||||||
| Accounts receivable, net |
79,506 | 94,242 | 78,306 | |||||||||
| Inventory, net |
5,090 | 4,939 | 5,730 | |||||||||
| Other current assets |
48,072 | 39,746 | 28,164 | |||||||||
| Total current assets |
137,344 | 146,239 | 118,184 | |||||||||
| Property, plant, equipment and product masters, at cost |
410,892 | 395,225 | 504,655 | |||||||||
| Accumulated depreciation and amortization |
(224,273 | ) | (214,480 | ) | (325,828 | ) | ||||||
| Net property, plant, equipment and product masters |
186,619 | 180,745 | 178,827 | |||||||||
| Long-term receivables |
4,009 | 5,106 | 3,490 | |||||||||
| Goodwill |
304,469 | 303,693 | 295,539 | |||||||||
| Identifiable intangibles, net |
9,754 | 9,435 | 8,252 | |||||||||
| Purchased and developed software, net |
54,448 | 55,005 | 49,671 | |||||||||
| Other assets |
18,699 | 23,813 | 21,321 | |||||||||
| Total assets |
$ | 715,342 | $ | 724,036 | $ | 675,284 | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| Current liabilities: |
||||||||||||
| Notes payable |
$ | — | $ | 300 | $ | — | ||||||
| Accounts payable |
38,968 | 49,156 | 36,146 | |||||||||
| Accrued expenses |
21,256 | 39,428 | 36,253 | |||||||||
| Current portion of monetized future billings |
25,352 | 25,583 | 26,250 | |||||||||
| Deferred income |
106,383 | 121,890 | 109,302 | |||||||||
| Total current liabilities |
191,959 | 236,357 | 207,951 | |||||||||
| Long-term liabilities: |
||||||||||||
| Long-term debt |
214,250 | 191,000 | 209,300 | |||||||||
| Monetized future billings, less current portion |
44,933 | 46,835 | 50,437 | |||||||||
| Other liabilities |
63,543 | 62,444 | 67,657 | |||||||||
| Total long-term liabilities |
322,726 | 300,279 | 327,394 | |||||||||
| Shareholders’ equity: |
||||||||||||
| Common stock ($.001 par value, 29,038 shares issued and 28,453 shares outstanding at April 3, 2004, 28,964 shares issued and 28,378 shares outstanding at January 3, 2004, and 28,490 shares issued and 27,981 shares outstanding at March 29, 2003) |
28 | 28 | 28 | |||||||||
| Capital surplus |
312,080 | 310,461 | 298,727 | |||||||||
| Notes receivable for stock purchases |
(283 | ) | (279 | ) | (531 | ) | ||||||
| Retained earnings (accumulated deficit) |
(91,528 | ) | (103,011 | ) | (141,596 | ) | ||||||
| Treasury stock, at cost |
(14,515 | ) | (14,515 | ) | (12,554 | ) | ||||||
| Other comprehensive (loss): |
||||||||||||
| Accumulated foreign currency translation adjustment |
(3,107 | ) | (3,231 | ) | (2,841 | ) | ||||||
| Unrealized (loss) from derivatives |
(771 | ) | (806 | ) | (911 | ) | ||||||
| Minimum pension liability |
(1,247 | ) | (1,247 | ) | (383 | ) | ||||||
| Accumulated other comprehensive (loss) |
(5,125 | ) | (5,284 | ) | (4,135 | ) | ||||||
| Total shareholders’ equity |
200,657 | 187,400 | 139,939 | |||||||||
| Total liabilities and shareholders’ equity |
$ | 715,342 | $ | 724,036 | $ | 675,284 | ||||||
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
2
ProQuest Company and Subsidiaries
Consolidated Statements of Cash Flows
For the Thirteen Week Periods Ended April 3, 2004 and March 29, 2003
(In thousands)
(Unaudited)
| Thirteen Weeks Ended |
||||||||
| April 3, 2004 |
March 29, 2003 |
|||||||
| Operating activities: |
||||||||
| Net earnings |
$ | 11,483 | $ | 11,236 | ||||
| Adjustments to reconcile net earnings to net cash (used in) provided by operating activities: |
||||||||
| Depreciation and amortization |
16,365 | 14,894 | ||||||
| Deferred income taxes |
4,838 | 9,612 | ||||||
| Changes in operating assets and liabilities, net of acquisitions: |
||||||||
| Accounts receivable, net |
15,350 | 25,172 | ||||||
| Inventory, net |
(69 | ) | (830 | ) | ||||
| Other current assets |
(7,759 | ) | (2,284 | ) | ||||
| Long-term receivables |
1,097 | 1,145 | ||||||
| Other assets |
96 | (823 | ) | |||||
| Accounts payable |
(10,389 | ) | (4,797 | ) | ||||
| Accrued expenses |
(15,013 | ) | (6,776 | ) | ||||
| Deferred income |
(15,755 | ) | (17,385 | ) | ||||
| Other long-term liabilities |
(1,246 | ) | (1,661 | ) | ||||
| Other, net |
426 | 269 | ||||||
| Net cash (used in) provided by operating activities |
(576 | ) | 27,772 | |||||
| Investing activities: |
||||||||
| Expenditures for property, plant, equipment, product masters and software |
(20,744 | ) | (22,137 | ) | ||||
| Acquisitions, net of cash acquired |
(1,246 | ) | (23,804 | ) | ||||
| Expenditures associated with discontinued operations |
(2,367 | ) | — | |||||
| Net cash used in investing activities |
(24,357 | ) | (45,941 | ) | ||||
| Financing activities: |
||||||||
| Net decrease in short-term debt |
(303 | ) | (53 | ) | ||||
| Proceeds from long-term debt |
144,650 | 139,950 | ||||||
| Repayment of long-term debt |
(121,400 | ) | (117,650 | ) | ||||
| Monetized future billings |
(2,133 | ) | (1,122 | ) | ||||
| Repurchases of common stock |
— | (925 | ||||||