New England Business Service Announces 2001 Results, EPS Slips 32.5%
Thursday, August 02, 2001
GROTON, Mass.--Aug. 1, 2001--New England Business Service, Inc. today announced results for its fourth quarter and fiscal year ended June 30, 2001. Revenues for the fourth quarter grew 15.0% to $145.6 million from the prior year's $126.7 million. Included in the quarter are the results of PremiumWear, Inc., which was acquired in July 2000. In addition, the fourth quarter of fiscal 2001 consists of fourteen weeks compared to thirteen weeks in the year ago period. Net income of $3.6 million, or $.28 per share, compares with $7.2 million, or $.53 per share, in the year ago period. Results in the current period include $2.8 million of after-tax integration and restructuring costs, equivalent to approximately $.23 per share, versus $331 thousand of after-tax integration costs, equivalent to approximately $.02 per share, in the period a year ago. Excluding the impact of these non-recurring items, earnings were $6.4 million in the quarter, or $.51 per share, versus $6.9 million, or $.51 per share, in the prior year's fourth quarter. Fourth quarter results for fiscal 2001 include approximately $.17 per share of acquisition-related amortization expense versus $.13 per share last year. For the year, revenues increased 12.1% to a record $586.1 million versus last year's $523.1 million. Fiscal year 2001 consisted of 53 weeks and, as noted, includes the results of PremiumWear, compared to 52 weeks in fiscal year 2000. Net income of $18.7 million decreased 36.2% from last year's $29.4 million, while earnings per share decreased 32.5% to $1.43 from last year's $2.12. Excluding the impact of one-time items in both years, net income of $26.0 million compares to $28.8 million last year, and earnings per share decreased 4.3% to $1.98 from last year's $2.07. Results for the year include approximately $.61 per share of acquisition-related amortization expense versus $.52 last year. Revenue amounts for all periods have been restated in accordance with the Emerging Issue Task Force Issue No. 00-10, "Accounting for Shipping and Handling Fees and Costs.'' The effect of the restatement is to reclassify payments from customers related to shipping and handling fees into revenue, that were previously recognized as a reduction of cost of sales. This restatement has no effect on the Company's net income. Mr. Robert J. Murray, Chairman and CEO, commented, "The fourth quarter saw continued weak economic conditions, reducing demand across all of our channels. Despite having expanded our product and channel breadth considerably over the past several years, we were unable to avert the impact of this slowdown. We have aggressively managed costs in response to the current environment, and in May announced cost reduction actions which are intended to improve our performance while not sacrificing long-term growth opportunities.'' Murray added, "We continue to be pleased with market acceptance of our payroll processing services in conjunction with our Advantage Business Services partnership. Initially introduced through McBee, we have also begun to test payroll processing through our NEBS and RapidForms brands with promising early results. To date, we have closed approximately 1,500 payroll service agreements with small businesses and the momentum continues to build in this initiative.'' Murray continued, "Looking forward, we are working under the assumption that economic conditions will continue to be weak in our markets for the remainder of the calendar year. With that as a backdrop, the current financial outlook for the Company in fiscal year 2002 is for sales growth of approximately 2%, which represents approximately 4% growth when adjusted for the 53 week fiscal year in fiscal 2001, and earnings per share growth, excluding one-time items, of between 6 and 10%. We currently expect first quarter revenue and earnings to trail year ago levels, with stronger performance over the remainder of the year. This does not include the effect of the recent accounting pronouncements on business combinations, which we currently expect to contribute an additional $.20 per share to fiscal year 2002 results.'' The Company did not repurchase any of its shares during the fourth quarter. During fiscal year 2001, the Company repurchased 1,095,900 shares of its stock, leaving approximately 1.2 million shares under the current authorization. The Company's Board of Directors declared a dividend of $.20 per share with a record date of August 17, 2001 and a payment date of August 31, 2001. The Company's conference call to review fourth quarter results will be broadcast live via the investor relations section of the Company's Web site, www.nebs.com, at 10:00 AM EDT on Thursday, August 2, 2001. A replay will also be available at the same location. The Company's consolidated financial results, balance sheet and statement of changes in financial position are attached along with supplemental information including the effect of the restatement for the implementation of EITF #00-10 on revenues and cost of sales by reporting segment for the past two fiscal years by quarter.