New England Business Service 2002 Results: Sales of $133.6 Million
Press release from the issuing company
GROTON, Mass.--July 31, 2002--New England Business Service, Inc. today announced results for its fourth quarter and fiscal year ended June 29, 2002.
Revenues for the fourth quarter of fiscal 2002 were $133.6 million, versus $145.6 million in the prior year. Adjusting for an additional week in the fourth quarter of fiscal year 2001, revenues declined approximately 1%. Net income of $6.6 million, or $.49 per share, compares with $3.6 million, or $.28 per share, in the year ago period. Results in the current period include $485,000 of after-tax costs related to previously announced restructuring actions (including exit costs, training costs and relocation costs), equivalent to approximately $.04 per share, versus $2.8 million of restructuring-related costs, equivalent to approximately $.23 per share, in the period a year ago. Excluding the impact of these items, net income was $7.1 million in the quarter, or $.53 per share, versus $6.4 million, or $.51 per share, in the prior year's fourth quarter. The current year's results benefited from a change in goodwill accounting discussed below.
Mr. Robert J. Murray, Chairman and CEO, commented, "Comparing the quarters on the same basis, sales were essentially flat year to year. We consider this to be a solid performance, considering the current economic environment. Previous restructuring actions taken continue to benefit our consolidated results. Despite one less week than a year ago, profits improved in all segments except Direct Marketing. The lower profits in Direct Marketing were related entirely to one less week in fiscal 2002 as actual margins improved."
Revenues for the full year of fiscal 2002 were $557.5 million, versus $586.1 million in the prior year. Adjusting for an extra week in fiscal year 2001, this amounts to a decline of approximately 3%. Net income of $22.5 million, or $1.73 per share, compares with $18.7 million, or $1.43 per share, last year. Results in the current year include $1.1 million of after-tax costs related to previously announced restructuring actions (including exit costs, training costs and relocation costs), equivalent to approximately $.08 per share, versus $7.3 million of restructuring-related costs, equivalent to approximately $.55 per share, in the prior year. Additionally, during the first quarter of fiscal year 2002, the Company recognized a goodwill impairment relating to its European operations in the amount of $2.8 million, or $.21 per share. Excluding the impact of the restructuring actions and the goodwill impairment, net income was $26.3 million for fiscal year 2002 and $26.0 million for fiscal year 2001, equivalent to $2.03 and $1.98 per share, respectively. The current year's results benefited from a change in goodwill accounting discussed below.
In accordance with Financial Accounting Standards Board Statement No. 142 relating to intangible assets, which the Company adopted in the first quarter of fiscal year 2002, the Company has not recorded 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 fourth quarter, amortization expense would have been $1.1 million lower and earnings per share $.05 higher than reported. Fourth quarter results for fiscal 2002 include approximately $.08 per share of amortization expense versus $.17 per share last year. Had the same accounting treatment occurred during all of fiscal year 2001, amortization expense would have been $3.8 million lower and earnings per share $.18 higher than reported. The full year results for fiscal 2002 include approximately $.40 per share of amortization expense versus $.61 per share last year.
Mr. Murray added, "Considering all of the events of the past year and economic conditions in the U.S., we are pleased with our results. Beyond our earnings performance, careful management of capital spending and working capital helped generate strong cash flows, allowing us to reduce our consolidated debt by over $20 million in the fourth quarter alone. At the end of the year, our consolidated debt is at $149.5 million, a $33 million reduction from a year ago and down $50 million from the peak level last year."
Mr. Murray continued, "Looking forward, we are targeting sales for fiscal year 2003 to grow between 3-5%. Based on improving productivity in a number of areas and cost actions the Company has taken during the last two years, we expect earnings per share to grow somewhat faster than sales, between 5-8%. The greeting card season, which suffered last year due to the effects of September 11, and the economy are key factors in achieving these results."
The Company did not repurchase any shares of its stock during the fourth quarter, leaving approximately 1.2 million shares remaining under the current authorization.
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