Business Editors
MINNEAPOLIS--(BUSINESS WIRE)--March 12, 2001
Jostens, Inc. reported today EBITDA (earnings before interest, taxes, depreciation and amortization) for the year ended Dec. 30, 2000, of $143.4 million. The results exclude transaction costs, special charges, and the write down of Internet investments. The Company's EBITDA for 2000 increased 12.7 percent over the $127.2 million realized in 1999, excluding the special charge.
Jostens sales for 2000 and 1999 were reclassified in accordance with new accounting standard EITF 00-10 pertaining to shipping and handling. This accounting change resulted in increases in both sales and cost of goods sold of $19.5 million in 2000 and $18.8 million in 1999. In 2000, Jostens also adopted SAB 101, the new accounting standard for revenue recognition. Its impact on EBITDA was a negative adjustment of $0.8 million in 2000. The 1999 results have not been reclassified per SAB 101. As a result, year-over-year results for the fourth quarters are not comparable.
The Company's sales were $805.0 million in 2000 compared to $801.3 million in 1999. Gross profit margin for the full year improved to 55.7 percent, compared with 54.0 percent in 1999. The Company reported a net loss of $18.7 million for the full year compared to net income of $43.2 million in 1999. The net loss for the year included the after tax costs related to the transaction ($38.8 million), the cumulative effect of accounting changes ($5.9 million), and a non-cash write down of investments ($6.7 million). Net income was $32.8 million before these adjustments.
In the fourth quarter of 2000, Jostens recorded EBITDA of $39.8 million, excluding transaction costs, special charges, and the write down of Internet investments. This is a 9.9 percent increase in EBITDA over the $36.2 million reported in the fourth quarter of 1999, excluding the special charge. Sales were $188.4 million versus $191.7 million in the fourth quarter in 1999. Gross profit margin was 61.4 percent in the quarter, compared to 62.3 percent in the same period in 1999. The declines in sales and gross margins were related mostly to the Recognition Segment. The Company's net loss in the fourth quarter was $0.6 million compared with a net income of $3.0 million in the same period a year earlier.
Capital spending for the year was $22.2 million, down from $27.8 million in 1999. Additionally, Jostens voluntarily retired $16 million in debt at the end of the fourth quarter 2000. This prepayment was applied against its Term Loan A ($15.2 million) and its Term Loan B ($0.8 million). This reduces the face amount of Jostens' total debt to $704 million. The Company's cash position was $26.6 million at year-end 2000.
In addition, Jostens' investment in net operating working capital at year-end (prior to SAB 101 adjustment) declined by more than $14.1 million versus the prior year as a result of better accounts receivable and inventory management in 2000.
"We achieved our EBITDA goal through solid performance in our School Products Segment, improving our plant efficiencies and implementing tighter cost controls, said Robert C. Buhrmaster, Chairman, CEO and President. "In 2001, we are focused on investing meaningful marketing dollars into growing the school products business, and working aggressively to improve the financial performance of our Recognition business."
School Products Segment
The School Products Segment - composed of Printing & Publishing, Jewelry, Graduation Products and North American Photography - reported sales of $715.6 million, compared with $691.3 million in 1999. Operating income for the full year was $148.6 million, up from $146.7 million in 1999. Sales in the fourth quarter were $168.6 million, compared to $167.7 million in 1999. Operating income in the quarter was $40.0 million, compared to $43.4 million in 1999. The School Products Segment's annual and quarterly operating income for 1999 excludes a special charge of $4.8 million taken in the fourth quarter.
Recognition Segment
Full-year sales were $80.3 million, compared with $99.8 million in 1999. The segment reported an operating loss of $4.2 million versus a loss of $0.4 million in 1999. The decline was primarily due to the loss of certain customers after the Segment experienced problems following the installation of information systems in 1999. Sales in the fourth quarter were $17.9 million versus $22.0 million in 1999. During the quarter, the segment had an operating loss of $1.3 million, compared to a loss of $1.5 million in 1999.
Other Segment
The Other Segment - which includes international business and corporate expenses - reported full-year sales of $9.1 million versus $10.2 million in 1999. The segment reported an operating loss of $30.0 million, excluding transaction costs and special charges of $46.6, compared to an operating loss of $44.5 million, excluding a special charge of $15.4 million, in 1999. The operating improvement of $14.5 million is attributable primarily to savings realized from the actions implemented as a result of the special charge taken in fourth quarter 1999. Sales in the fourth quarter were $1.9 million compared to $2.1 million in the same period in 1999.
During the quarter, the Segment reported an operating loss of $7.2 million, excluding transaction costs and special charges of $0.8 million, compared to a loss of $12.0 million, excluding a special charge of $15.4 million in 1999.
Jostens is a provider of products, programs and services that help people celebrate important moments, recognize achievements and build affiliation. The Company's products include yearbooks, class rings, graduation products, school photography, and awards for employees, athletes and fans.
Certain information in this news release does not relate to historical financial information and may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause the company's actual future results to differ materially from its historical results and those presently anticipated or projected. The factors that could cause the company's results to differ materially from those contained in its forward-looking statements are included in documents the company filed with the Securities and Exchange Commission.
JOSTENS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three months ended (unaudited) Years ended ------------------------- ----------------------- December 30, January 1, December 30, January 1, In thousands 2000 2000 2000 2000 ---------------------------------------------------------------------- Net sales $192,063 $191,705 $803,909 $801,286 Cost of products sold 72,947 72,218 355,254 368,539 ---------------------------------------------------------------------- Gross profit 119,116 119,487 448,655 432,747 Selling and administrative expenses 85,020 89,633 334,134 330,895 Special charges 237 20,194 237 20,194 Transaction costs 523 -- 46,373 -- ---------------------------------------------------------------------- Operating income 33,336 9,660 67,911 81,658 Net interest expense 22,107 2,521 58,932 6,999 Write-off of investments 6,730 -- 6,730 -- ---------------------------------------------------------------------- Income before income taxes 4,499 7,139 2,249 74,659 Provision for income taxes 3,556 4,135 15,032 31,480 ---------------------------------------------------------------------- Income (loss) before cumulative effect of accounting change 943 3,004 (12,783) 43,179 Cumulative effect of accounting change, net of tax 1,737 -- 1,737 ---------------------------------------------------------------------- Net income (loss) $(794) $3,004 $(14,520) $43,179 ====================================================================== EBITDA excluding transaction costs $42,283 $36,164 $143,460 $127,192 JOSTENS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS December 30, January 1, In thousands 2000 2000 ---------------------------------------------------------------------- ASSETS ------ Current assets Cash and cash equivalents $26,552 $38,517 Accounts receivable, net 81,741 107,638 Inventories 85,814 87,839 Other current assets 48,273 52,315 ---------------------------------------------------------------------- Total current assets 242,380 286,309 Other assets 72,834 37,222 Property and equipment, net 79,345 84,640 ---------------------------------------------------------------------- $394,559 $408,171 ====================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) ---------------------------------------------- Current liabilities Short-term borrowings $-- $117,608 Accounts payable and accrued expenses 231,736 239,534 Current portion of long-term debt 14,974 -- ---------------------------------------------------------------------- Total current liabilities 246,710 357,142 Long-term debt net of current maturities 669,807 3,600 Other noncurrent liabilities 11,382 10,919 ---------------------------------------------------------------------- Total liabilities 927,899 371,661 Redeemable preferred shares 48,841 -- Shareholders' equity (deficit) (582,181) 36,510 ---------------------------------------------------------------------- $394,559 $408,171 ====================================================================== JOSTENS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended ------------------------------------ December 30, January 1, In thousands 2000 2000 ---------------------------------------------------------------------- Operating activities Net income (loss) $(14,520) $43,179 Depreciation and amortization 31,703 25,338 Deferred income taxes 4,221 (2,671) Special charge (non-cash portion) -- 14,101 Write-off of investments 6,730 -- Changes in assets and liabilities 7,379 45,272 ---------------------------------------------------------------------- Net cash provided by operating activities 35,513 125,219 ---------------------------------------------------------------------- Investing activities Purchases of property and equipment (22,158) (27,830) Equity investments 3,572 (10,611) Other 421 1,262 ---------------------------------------------------------------------- Net cash used for investing activities (18,165) (37,179) ---------------------------------------------------------------------- Financing activities Net short-term borrowings (repayments)(117,608) 15,281 Repurchases of common stock (823,660) (39,853) Principle payments on long-term debt (19,600) -- Proceeds from issuance of long-term debt 700,139 -- Proceeds from issuance of common shares 208,693 -- Net proceeds from the issuance of preferred shares 43,000 -- Proceeds from the issuance of warrants to purchase common shares 24,733 -- Dividends paid to common shareholders (7,331) (29,998) Debt financing costs (36,459) -- Other (1,220) 2,452 ---------------------------------------------------------------------- Net cash used for financing activities (29,313) (52,118) ---------------------------------------------------------------------- Change in cash and cash equivalents (11,965) 35,922 Cash and cash equivalents, beginning of period 38,517 2,595 ---------------------------------------------------------------------- Cash and cash equivalents, end of period $26,552 $38,517 ====================================================================== JOSTENS, INC. AND SUBSIDIARIES FINANCIAL INFORMATION BY REPORTABLE BUSINESS SEGMENT Three months ended (unaudited) Years ended ------------------------- ----------------------- December 30, January 1, December 30, January 1, In thousands 2000 2000 2000 2000 ---------------------------------------------------------------------- Net Sales From External Customers School Products $173,386 $167,670 $714,506 $691,252 Recognition 16,811 21,971 80,265 99,800 Other 1,866 2,064 9,138 10,234 ---------------------------------------------------------------------- Consolidated $192,063 $191,705 $803,909 $801,286 ====================================================================== Operating Income (Loss) School Products $42,745 $38,609 $148,704 $141,947 Recognition (1,490) (1,529) (4,157) (361) Other (7,919) (27,420) (76,636) (59,928) ---------------------------------------------------------------------- Consolidated 33,336 9,660 67,911 81,658 Net interest expense 22,107 2,521 58,932 6,999 Write-off of investments 6,730 -- 6,730 -- ---------------------------------------------------------------------- Income before income taxes $4,499 $7,139 $2,249 $74,659 ======================================================================
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