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 October 2, 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 no.) | |
| 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 November 9, 2004 was 28,586,706.
| Page | ||||
| PART I |
FINANCIAL INFORMATION | |||
| Item 1. |
Consolidated Financial Statements |
|||
| 1 | ||||
| Consolidated Balance Sheets as of October 2, 2004, January 3, 2004, and September 27, 2003 |
2 | |||
| 3 | ||||
| 4 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
15 | ||
| Item 3. |
28 | |||
| Item 4. |
28 | |||
| PART II |
OTHER INFORMATION | |||
| Item 1. |
29 | |||
| Item 2. |
29 | |||
| Item 6. |
29 | |||
| 30 | ||||
| EXHIBITS |
||||
| Certification of Chief Executive Officer - 302 |
31 | |||
| Certification of Chief Financial Officer - 302 |
33 | |||
| Certification of Chief Executive Officer - 906 |
35 | |||
| Certification of Chief Financial Officer - 906 |
36 | |||
| Multi-year Stock Option Grant |
37 | |||
ProQuest Company and Subsidiaries
Consolidated Statements of Operations
For the Thirteen and Thirty-Nine Week Periods Ended October 2, 2004, and September 27, 2003
(In thousands, except per share data)
(Unaudited)
| Thirteen Weeks Ended |
Thirty-Nine Weeks Ended |
|||||||||||||||
| October 2, 2004 |
September 27, 2003 |
October 2, 2004 |
September 27, 2003 |
|||||||||||||
| Net sales |
$ | 113,124 | $ | 112,300 | $ | 336,165 | $ | 330,568 | ||||||||
| Cost of sales |
(57,282 | ) | (55,543 | ) | (168,614 | ) | (166,003 | ) | ||||||||
| Gross profit |
55,842 | 56,757 | 167,551 | 164,565 | ||||||||||||
| Research and development expense |
(4,048 | ) | (4,280 | ) | (12,530 | ) | (13,086 | ) | ||||||||
| Selling and administrative expense |
(30,177 | ) | (31,512 | ) | (88,877 | ) | (87,343 | ) | ||||||||
| Other operating income |
900 | — | 900 | — | ||||||||||||
| Earnings from continuing operations before interest and income taxes |
22,517 | 20,965 | 67,044 | 64,136 | ||||||||||||
| Net interest expense: |
||||||||||||||||
| Interest income |
331 | 662 | 1,220 | 1,068 | ||||||||||||
| Interest expense |
(4,656 | ) | (4,662 | ) | (13,640 | ) | (14,046 | ) | ||||||||
| Net interest expense |
(4,325 | ) | (4,000 | ) | (12,420 | ) | (12,978 | ) | ||||||||
| Earnings from continuing operations before income taxes |
18,192 | 16,965 | 54,624 | 51,158 | ||||||||||||
| Income tax expense |
(6,003 | ) | (6,023 | ) | (18,754 | ) | (18,333 | ) | ||||||||
| Earnings from continuing operations |
12,189 | 10,942 | 35,870 | 32,825 | ||||||||||||
| Earnings from discontinued operations, net (less applicable income taxes of $0, $442, $472 and $1,364, respectively) |
— | 804 | 876 | 2,444 | ||||||||||||
| Gain on sale of discontinued operations, net (less applicable income taxes of $0, $0, $515 and $0, respectively) |
— | — | 15,338 | — | ||||||||||||
| Net earnings |
$ | 12,189 | $ | 11,746 | $ | 52,084 | $ | 35,269 | ||||||||
| Net earnings per common share: |
||||||||||||||||
| Basic: |
||||||||||||||||
| Earnings from continuing operations |
$ | 0.43 | $ | 0.38 | $ | 1.26 | $ | 1.16 | ||||||||
| Earnings from discontinued operations |
— | 0.03 | 0.03 | 0.09 | ||||||||||||
| Gain on sale of discontinued operations |
— | — | 0.54 | — | ||||||||||||
| Basic net earnings per common share |
$ | 0.43 | $ | 0.41 | $ | 1.83 | $ | 1.25 | ||||||||
| Diluted: |
||||||||||||||||
| Earnings from continuing operations |
$ | 0.42 | $ | 0.38 | $ | 1.25 | $ | 1.16 | ||||||||
| Earnings from discontinued operations |
— | 0.03 | 0.03 | 0.09 | ||||||||||||
| Gain on sale of discontinued operations |
— | — | 0.53 | — | ||||||||||||
| Diluted net earnings per common share |
$ | 0.42 | $ | 0.41 | $ | 1.81 | $ | 1.25 | ||||||||
| Weighted average number of common shares and equivalents outstanding: |
||||||||||||||||
| Basic |
28,588 | 28,315 | 28,494 | 28,128 | ||||||||||||
| Diluted |
28,815 | 28,625 | 28,806 | 28,306 | ||||||||||||
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
1
ProQuest Company and Subsidiaries
Consolidated Balance Sheets
As of October 2, 2004, January 3, 2004, and September 27, 2003
(In thousands)
| October 2, 2004 (Unaudited) |
January 3, 2004 |
September 27, 2003 (Unaudited) |
||||||||||
| ASSETS | ||||||||||||
| Current assets: |
||||||||||||
| Cash and cash equivalents |
$ | 970 | $ | 4,023 | $ | 3,855 | ||||||
| Accounts receivable, net |
113,476 | 94,242 | 127,055 | |||||||||
| Inventory, net |
4,995 | 4,939 | 5,551 | |||||||||
| Other current assets |
62,576 | 43,035 | 42,208 | |||||||||
| Total current assets |
182,017 | 146,239 | 178,669 | |||||||||
| Property, plant, equipment, and product masters, at cost |
409,266 | 395,225 | 383,027 | |||||||||
| Accumulated depreciation and amortization |
(216,605 | ) | (214,480 | ) | (203,365 | ) | ||||||
| Net property, plant, equipment, and product masters |
192,661 | 180,745 | 179,662 | |||||||||
| Long-term receivables |
5,599 | 5,106 | 4,509 | |||||||||
| Goodwill |
308,214 | 303,693 | 300,905 | |||||||||
| Identifiable intangibles, net |
16,377 | 9,435 | 7,627 | |||||||||
| Purchased and developed software, net |
46,323 | 55,005 | 54,658 | |||||||||
| Other assets |
15,752 | 23,813 | 24,291 | |||||||||
| Total assets |
$ | 766,943 | $ | 724,036 | $ | 750,321 | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| Current liabilities: |
||||||||||||
| Notes payable |
$ | — | $ | 300 | $ | — | ||||||
| Accounts payable |
38,811 | 49,156 | 48,664 | |||||||||
| Accrued expenses |
39,543 | 39,428 | 39,202 | |||||||||
| Current portion of monetized future billings |
25,219 | 25,583 | 24,950 | |||||||||
| Deferred income |
114,392 | 121,890 | 123,978 | |||||||||
| Total current liabilities |
217,965 | 236,357 | 236,794 | |||||||||
| Long-term liabilities: |
||||||||||||
| Long-term debt |
194,600 | 191,000 | 234,050 | |||||||||
| Monetized future billings, less current portion |
42,194 | 46,835 | 47,848 | |||||||||
| Other liabilities |
68,460 | 62,444 | 58,517 | |||||||||
| Total long-term liabilities |
305,254 | 300,279 | 340,415 | |||||||||
| Shareholders’ equity: |
||||||||||||
| Common stock ($.001 par value, 29,174 shares issued and 28,587 shares outstanding at October 2, 2004, 28,964 shares issued and 28,378 shares outstanding at January 3, 2004, and 28,900 shares issued and 28,342 shares outstanding at September 27, 2003) |
29 | 28 | 28 | |||||||||
| Capital surplus |
314,835 | 310,461 | 308,744 | |||||||||
| Unearned compensation on restricted stock |
(261 | ) | — | — | ||||||||
| Notes receivable for stock purchases |
(291 | ) | (279</ | |||||||||