New England Business Service Reports 3Q Results, $132 Million in Sales
Press release from the issuing company
GROTON, Mass.--April 24, 2002--New England Business Service, Inc. today announced slightly higher sales for its third quarter ended March 30, 2002 with increased earnings, aided by the change in goodwill accounting.
Mr. Robert J. Murray, Chairman and CEO, commented, "On nominally higher consolidated sales, earnings per share, excluding restructuring costs, increased 9% from last year's third quarter, but decreased 3% after adjusting for the change in goodwill accounting. Operating profits were up strongly in four of our five reporting segments, partially offset by continued weakness in our Apparel operation. Lower industry promotional spending due to the soft economy contributed to a 4.8% sales decline in the Apparel segment, and an operating loss versus profits in the year ago period. Corporate-wide actions taken over the past 18 months to reduce our cost structure benefited our results."
Revenues for the third quarter of fiscal 2002 were $132.9 million, slightly ahead of the comparable quarter in the prior year. Net income of $4.6 million, or $.35 per share, compares with $3.5 million, or $.27 per share, in the year ago period. Results in the current period include $207,000 of after-tax costs related to previously announced restructuring actions (including exit costs, training costs and relocation costs), equivalent to approximately $.02 per share, versus $917,000 of such costs, equivalent to approximately $.07 per share, in the period a year ago. Excluding the impact of these items, net income was $4.9 million in the quarter, or $.37 per share, versus $4.5 million, or $.34 per share, in the prior year's third quarter.
In accordance with Financial Accounting Standards Board Statement No. 142 relating to intangible assets, which the Company adopted in the first quarter of the current fiscal year, the Company has not recorded ongoing amortization expense during fiscal year 2002 on certain intangible assets with indefinite lives, such as goodwill and tradenames. Had the same accounting treatment occurred in the prior year's third quarter, amortization expense would have been $900,000 lower and earnings per share $.04 higher than reported. Third quarter results for fiscal 2002 include approximately $.10 per share of amortization expense versus $.15 per share last year.
Mr. Murray added, "The effects of our actions to control our cost structure are evident across our business units. I am pleased with these improvements and confident the cost actions we have taken in the Apparel segment, along with modest volume increases, will significantly benefit their results. Additionally, we continue to generate strong cash flows, reducing our consolidated debt by $9 million to $170 million during the quarter."
Mr. Murray continued, "We expect revenue in the fourth quarter will be approximately in line with last year, adjusting for the additional week in last year's fourth quarter. We look for earnings per share in the quarter, excluding non-recurring items related to previously announced restructuring actions, to be in the range of $.45 to $.50 per share. This would bring results for the year to $1.95 to $2.00 per share. Earnings for the quarter and the year reflect the discontinuance of amortization of goodwill and certain intangibles with indefinite lives which is adding approximately $.20 per share to fiscal 2002 earnings."
The Company did not repurchase any shares of its stock during the third quarter, leaving approximately 1.2 million shares remaining under the current authorization.
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