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School Specialty Reports Fourth Quarter and Fiscal 2010 Results
  --  Continued strong free cash flow - $90.2 million for fiscal 2010, or
      $4.78 per diluted share
  --  Strengthening balance sheet as evidenced by $52.6 million in debt
      reduction and $19.2 million of increased cash
  --  Continued soft furniture sales and business unit divestiture drove $39.1
      million decrease in Q4 revenues
  --  Ongoing cost-reduction efforts lead to $46.5 million reduction in SG&A
      expenses


School Specialty (Nasdaq:SCHS) today reported fiscal fourth quarter and year-end results that reflect continuing strong free cash flow and solid progress in containing costs to counter a depressed school funding environment. While revenue for both the fourth quarter and fiscal 2010 were well below the prior-year's results due to an unprecedented slow-down in school spending, operational discipline and business consolidations enabled a 140-basis-point improvement in gross margin and a 90-basis-point rise in operating margin for the year, resulting in a slight decline in earnings per share.

Chief Executive Officer David J. Vander Zanden said School Specialty made significant progress during an extremely difficult year for education budgets and school spending. "I am very proud of our associates. They pulled together to successfully complete a number of important initiatives across the corporation that were focused both on executing planned business realignments and on softening the impact of a severe reduction in education spending," said Vander Zanden. "While revenue declined more than 14 percent, our operating income was down only 4 percent. Free cash flow was exceptional, thanks in large part to new processes and systems that allow our associates to create permanent efficiencies in working capital management. During the year we completed a major restructuring of our Educational Resources group, gained new curriculum and educational technology offerings to support our growth strategy, and negotiated a more flexible credit agreement to fund our future capital needs."

Continued working capital improvements helped drive fiscal 2010 free cash flow to $90.2 million, or $4.78 per diluted share. Much of the available cash was used to reduce total debt, which declined $52.6 million over the 12-month period. In addition, the company's year-end cash balance increased $19.2 million compared to the prior year.

Fourth Quarter Financial Results

  --  Revenue for the fourth quarter of fiscal 2010 was $117.0 million,
      compared with $156.2 million in the prior year's final quarter.  The
      decrease was due primarily to a combination of decreased furniture
      revenue of $14.1 million plus the impact related to the divestiture of
      School Specialty Publishing, which generated $9.3 million of the revenue
      in last year's fourth quarter. The impact of continued difficult general
      economic conditions on school spending, along with business
      integration-related decisions, comprised the balance of the decline.
      Partially offsetting the decline was $1.3 million of incremental revenue
      associated with the acquisition of AutoSkill International.

  --  Gross profit was $50.8 million compared with $62.2 million in last
      year's fourth quarter.   Consolidated gross margin improved 360 basis
      points to 43.4 percent from the prior year's 39.8 percent, reflecting a
      more favorable product mix within both the Accelerated Learning
      (formerly named the Publishing segment) and Educational Resources
      segments.

  --  Selling, general and administrative expenses declined $11.8 million to
      $64.7 million (55.3 percent of revenue) from the prior year's $76.5
      million (49.0 percent of revenue). The decrease is attributable to the
      company's cost-reduction efforts over the past 12 months, supply chain
      efficiencies and lower volume.

  --  The operating loss for the fourth quarter was $13.9 million, compared to
      an operating loss of $14.3 million last year.

  --  Net interest expense and other expense in the fourth quarter of fiscal
      2010 increased $0.3 million to $7.7 million, compared to the same period
      last year. The increase was attributable to non-cash interest expense of
      $3.4 million as compared to $3.1 million in last year's fourth quarter,
      as a result of the company adopting FASB ASC Topic 470-20 regarding new
      accounting rules for convertible debt. Interest expense savings related
      to decreased overall debt balances were offset by accelerated
      amortization of debt issuance costs related to the retired revolving
      credit facility of $0.4 million, or $0.01 per share.

  --  Net loss in the fourth quarter was $13.7 million ($0.73 per share)
      compared to a net loss of $13.2 million ($0.70 per share) in the
      comparable quarter last year. Both periods included non-cash charges
      related to convertible debt accounting, which increased the fourth
      quarter loss by $0.11 per share in fiscal 2010 and $0.10 per share in
      fiscal 2009. Earnings per share in fiscal 2010 was reduced by $0.02 for
      the company's share of the net loss from its minority interest in
      Carson-Dellosa Publishing, LLC, which was formed during fiscal 2010's
      second quarter in connection with the School Specialty Publishing
      divestiture.


Fiscal 2010 Financial Results

  --  Consolidated revenue for fiscal 2010 was $896.7 million compared with
      $1,047.0 million last year. The two primary drivers of this reduction
      were lower levels of school construction and renovations, which resulted
      in a $55.9 million decline in furniture revenue, and an expected $21
      million decline in state science adoption revenue. In addition, the
      divestiture of School Specialty Publishing resulted in $12.9 million of
      the revenue decline, which was partially offset by $5.9 million of
      incremental revenue associated with the acquisition of AutoSkill
      International. The remaining decline was related to the impact of
      general economic conditions on school spending.

  --  Gross profit for the year was $379.1 million compared with $428.6
      million last year.   Gross margin increased 140 basis points to 42.3
      percent versus last year's 40.9 percent. The improvement was primarily
      due to product pricing and successful vendor costing initiatives.
      Favorable product mix, particularly in the Accelerated Learning segment,
      also contributed to the increased gross margin.

  --  Selling, general and administrative expenses declined $46.5 million to
      $304.4 million (34.0 percent of revenue), from the prior year's $350.9
      million (33.5 percent of revenue).  Contributing to the decline were
      cost reductions from operational consolidations, efficiencies in supply
      chain operations and multiple expense control efforts companywide.

  --  Operating income for fiscal 2010 was $74.7 million compared to $77.7
      million in fiscal 2009.  Improved gross margin contributed to a
      90-basis-point increase in operating margin from 7.4 percent in fiscal
      2009 to 8.3 percent in fiscal 2010.

  --  Interest expense and other expense for fiscal 2010 declined $2.1 million
      to $30.5 million from the prior year's $32.6 million, the result of a
      decline in average debt balances of approximately $90 million. The
      reduction includes the elimination of an accounts receivable
      securitization program in fiscal 2009. These totals also include
      non-cash interest expense related to new accounting rules for
      convertible debt of $13.1 million in fiscal 2010 and $12.0 million in
      fiscal 2009.

  --  Net income for fiscal 2010 was $25.9 million ($1.37 per diluted share)
      compared with $27.1 million ($1.44 per diluted share). Both periods
      included non-cash charges related to convertible debt accounting, which
      reduced diluted earnings per share by $0.42 in fiscal 2010 and $0.39 in
      fiscal 2009. Fiscal 2010 diluted earnings per share has been reduced by
      $0.04 for the company's share of the net loss from its minority interest
      in Carson-Dellosa Publishing, LLC. Diluted earnings per share for fiscal
      2010 and fiscal 2009, excluding the impact of the accounting change for
      convertible debt, were $1.78 and 1.83, respectively.

  --  The company's fiscal 2010 free cash flow totaled $90.2 million. The
      company used its free cash flow to pay down debt, fund its acquisition
      of AutoSkill International and purchase the Think Math!(TM) curriculum.
      In addition, the company increased its end-of-year cash balance by $19.2
      million.


Outlook

School Specialty is expecting fiscal 2011 revenue to be in a range of $790 million to $825 million. Excluding revenue from divestitures, this is a decline of approximately 6 percent to 10 percent from fiscal 2010 levels. The continued expected softness in the furniture market represents approximately 70 percent of the volume decline. Diluted earnings per share is expected to be in the range of $1.00 to $1.30 in fiscal 2011, or $1.32 to $1.62 excluding the impact of the convertible debt accounting. Fiscal 2011 free cash flow is expected to be in a range of $60 million to $70 million, which includes an approximate $16 million cash tax payment associated with the expected repurchase obligation under the $133 million convertible notes.

"The funding environment will continue to challenge our revenue and margins in fiscal 2011, especially for our supplies and furniture businesses where price is becoming more important. The back-to-school season is expected to be very difficult for most districts across America. Looking beyond the summer, we have several new initiatives, including a contract with U.S. Communities, a non-profit government purchasing cooperative, and the introduction of a new private label furniture line that we expect to help maintain revenue and margins in the second half of the year. We have also just signed a new consumer-focused contract with Amazon.com that we anticipate will generate new revenue in the second half of the year. We are cautiously optimistic in our belief that fiscal 2011 will reflect the bottom of the funding decline and that states will begin to experience revenue growth over the coming months," said Vander Zanden.

Conference Call

School Specialty will host a conference call to discuss its fiscal 2010 financial results. The conference call begins today, June 10, at 10:00 a.m. Central (11:00 a.m. Eastern). The call will be simultaneously broadcast in the Investors section of the School Specialty web site at www.schoolspecialty.com, and a replay of the call will be available.

About School Specialty, Inc.

School Specialty is a leading education company that provides innovative and proprietary products, programs and services to help educators engage and inspire students of all ages and abilities to learn. The company designs, develops, and provides preK-12 educators with the latest and very best curriculum, supplemental learning resources, and school supplies. Working in collaboration with educators, School Specialty reaches beyond the scope of textbooks to help teachers, guidance counselors and school administrators ensure that every student reaches his or her full potential.

For more information about School Specialty, visit www.schoolspecialty.com.

Cautionary Statement Concerning Forward-Looking Information

Any statements made in this press release about future results of operations, expectations, plans or prospects, including but not limited to statements included under the heading "Outlook," constitute forward-looking statements. Forward-looking statements also include those preceded or followed by the words "anticipates," "believes," "could," "estimates," "expects," "intends," "may," "should," "plans," "targets" and/or similar expressions. These forward-looking statements are based on School Specialty's current estimates and assumptions and, as such, involve uncertainty and risk. Forward-looking statements are not guarantees of future performance, and actual results may differ materially from those contemplated by the forward-looking statements because of a number of factors, including the factors described in Item 1A of School Specialty's Annual Report on Form 10-K for the fiscal year ended April 25, 2009, which factors are incorporated herein by reference. Except to the extent required under the federal securities laws, School Specialty does not intend to update or revise the forward-looking statements.

                        -Financial Tables Follow-


                               SCHOOL SPECIALTY, INC.
                       CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In Thousands, Except Per Share Amounts)
                                     Unaudited


                                  Three Months Ended        Fiscal Year Ended
                               ------------------------  ------------------------

                                                (As                       (As
                                             Adjusted)*               Adjusted)*
                                April 24,    April 25,    April 24,   April 25,
                                  2010         2009         2010         2009
                               -----------  -----------  ----------  ------------

  Revenues                       $ 117,039    $ 156,170   $ 896,678   $ 1,046,980

  Cost of revenues                  66,205       93,985     517,530       618,377
                               -----------  -----------  ----------  ------------
   Gross profit                     50,834       62,185     379,148       428,603
  Selling, general and
   administrative expenses          64,745       76,530     304,451       350,919
                               -----------  -----------  ----------  ------------
   Operating income (loss         (13,911)     (14,345)      74,697        77,684

  Other (income) expense:
   Interest expense                  7,705        7,540      30,532        30,238
   Interest income                    (33)         (11)        (66)         (333)

   Other                                --        (124)          --         2,679
                               -----------  -----------  ----------  ------------
  Income (loss) before
   provision for income taxes     (21,583)     (21,750)      44,231        45,100
  Provision for (benefit
   from) income taxes              (8,320)      (8,544)      17,678        17,972
                               -----------  -----------  ----------  ------------
   Income (loss) before from
    investment in
    unconsolidated affiliate    $ (13,263)   $ (13,206)    $ 26,553      $ 27,128
                               -----------  -----------  ----------  ------------
  Equity in (losses) earnings
   of unconsolidated
   affiliate, net of tax             (460)           --       (701)            --
                               -----------  -----------  ----------  ------------

   Net income (loss)            $ (13,723)   $ (13,206)    $ 25,852      $ 27,128
                               ===========  ===========  ==========  ============

  Weighted average shares
   outstanding:
   Basic                            18,859       18,795      18,843        18,802
   Diluted                          18,859       18,795      18,874        18,895

  Net Income Per Share:
   Basic                          $ (0.73)     $ (0.70)      $ 1.37        $ 1.44
   Diluted                        $ (0.73)     $ (0.70)      $ 1.37        $ 1.44

  *The Company adopted at the beginning of Fiscal 2010 Financial Accounting
   Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic
   470-20, "Debt with Conversion and Other Options" ("FASB ASC Topic 470-20").
   The adoption of FASB ASC Topic 470-20 required an adjustment of previously
   reported amounts assigned to debt, deferred taxes, equity and interest
   expense.


                   SCHOOL SPECIALTY, INC.
           CONSOLIDATED CONDENSED BALANCE SHEETS
                       (In Thousands)

                                              (As Adjusted
                                                  from
                                                 Audited
                                              Statements)*
                                 April 24,     April 25,
                                    2010          2009
                                ------------  ------------
  ASSETS                         (Unaudited)   (Unaudited)
  Current assets:
   Cash and cash equivalents        $ 21,035       $ 1,871
   Accounts receivable                72,734       103,683
   Inventories                        99,910       127,108
   Deferred catalog costs             13,593        15,537
   Prepaid expenses and other
    current assets                    12,164        17,347
   Refundable income taxes             1,539         1,566

   Deferred taxes                      9,867         9,805
                                ------------  ------------
    Total current assets             230,842       276,917
  Property, plant and
   equipment, net                     66,607        70,183
  Goodwill                           540,248       532,318
  Intangible assets, net             166,552       168,082
  Other                               33,118        27,551
  Investment in unconsolidated
   affiliate                          28,299            --
                                ------------  ------------

    Total assets                 $ 1,065,666   $ 1,075,051
                                ============  ============

  LIABILITIES AND
   SHAREHOLDERS' EQUITY
  Current liabilities:
   Current maturities -
    long-term debt                 $ 132,397     $ 127,071
   Accounts payable                   47,954        56,786
   Accrued compensation                7,501        12,821
   Deferred revenue                    4,312         4,254

   Other accrued liabilities          24,750        28,231
                                ------------  ------------
    Total current liabilities        216,914       229,163
  Long-term debt - less
   current maturities                199,742       244,586
  Deferred taxes and other            92,398        86,109

  Other liabilities                    1,423           913
                                ------------  ------------

    Total liabilities                510,477       560,771
                                ------------  ------------

  Commitments and
   contingencies
  Shareholders' equity:
   Preferred stock, $0.001 par
    value per share, 1,000,000
    shares authorized; none
    outstanding                           --            --
   Common stock, $0.001 par
    value per share,
    150,000,000 authorized and
    24,280,097 and 24,243,438
    shares issued,
    respectively                          24            24
   Capital paid-in excess of
    par value                        436,959       435,150
   Treasury stock, at cost -
    5,420,210 and 5,420,210
    shares, respectively           (186,637)     (186,637)
   Accumulated other
    comprehensive income              24,052        10,804

   Retained earnings                 280,791       254,939
                                ------------  ------------

    Total shareholders' equity       555,189       514,280
                                ------------  ------------
    Total liabilities and
     shareholders' equity        $ 1,065,666   $ 1,075,051
                                ============  ============

  *The Company adopted at the beginning of Fiscal 2010
   Financial Accounting Standards Board ("FASB")
   Accounting Standards Codification ("ASC") Topic 470-20,
   "Debt with Conversion and Other Options" ("FASB ASC
   Topic 470-20"). The adoption of FASB ASC Topic 470-20
   required an adjustment of previously reported amounts
   assigned to debt, deferred taxes, equity and interest
   expense.

                        SCHOOL SPECIALTY, INC.
                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In Thousands)
                               Unaudited


                                                 Fiscal Year Ended
                                              ----------------------

                                                             (As
                                                          Adjusted)*

                                               April 24,   April 25,
                                                 2010        2009
                                              ----------  ----------
  Cash flows from operating activities:
   Net income                                   $ 25,852    $ 27,128
   Adjustments to reconcile net income to
    net cash provided by operating
    activities:
    Depreciation and intangible asset
     amortization expense                         26,847      24,315
    Amortization of development costs              5,067       6,401
    Investment in unconsolidated affiliate           701          --
    Amortization of debt fees and other            2,420       1,394
    Share-based compensation expense               2,448       4,488
    Deferred taxes                                 5,981       6,011
    Loss on disposal of property, equipment
     and other                                       652         490
    Non-cash convertible debt deferred
     financing costs                              13,062      12,033
    Changes in current assets and liabilities (net of
     assets acquired and liabilities assumed in business
     combinations):
     Change in amounts sold under
      receivables securitization, net                 --    (50,000)
     Accounts receivable                          29,008      21,867
     Inventories                                  13,586      22,313
     Deferred catalog costs                        1,944       (692)
     Prepaid expenses and other current
      assets                                       1,317      10,860
     Accounts payable                            (9,267)     (8,484)

     Accrued liabilities                         (7,659)     (6,910)
                                              ----------  ----------
      Net cash provided by operating
       activities                                111,959      71,214
                                              ----------  ----------

  Cash flows from investing activities:
   Cash paid in acquisitions, net of cash
    acquired                                    (11,700)          --
   Additions to property, plant and
    equipment                                   (13,832)    (11,622)
   Acquisition of intangible and other
    assets                                       (1,800)          --
   Proceeds from disposal of discontinued
    operations                                       800       2,485
   Investment in product development costs      (10,035)     (8,523)
   Proceeds from disposal of property, plant
    and equipment                                  2,083         186

   Investment in Noncontrolling Interest         (2,226)          --
                                              ----------  ----------

      Net cash used in investing activities     (36,710)    (17,474)
                                              ----------  ----------

  Cash flows from financing activities:
   Proceeds from bank borrowings                 304,400     680,000
   Repayment of debt and capital leases        (356,979)   (725,890)
   Purchase of treasury stock                         --    (15,250)
   Proceeds from exercise of stock options           117       3,195
   Excess income tax benefit from exercise
    of stock options                                  --       1,439

   Payment of debt fees and other                (3,623)         603
                                              ----------  ----------

      Net cash used in financing activities     (56,085)    (55,903)
                                              ----------  ----------

  Net increase in cash and cash equivalents       19,164     (2,163)
  Cash and cash equivalents, beginning of
   period                                          1,871       4,034
                                              ----------  ----------

  Cash and cash equivalents, end of period      $ 21,035     $ 1,871
                                              ==========  ==========

  Free cash flow reconciliation:
   Net cash provided by operating activities   $ 111,959    $ 71,214
   Additions to property and equipment          (13,832)    (11,622)
   Investment in development costs              (10,035)     (8,523)
   Proceeds from disposal of property and
    equipment                                      2,083         186
   Net accounts receivable securitization
    facility                                          --      50,000
                                              ----------  ----------

   Free cash flow                               $ 90,175   $ 101,255
                                              ==========  ==========

  *The Company adopted at the beginning of Fiscal 2010 Financial
   Accounting Standards Board ("FASB") Accounting Standards
   Codification ("ASC") Topic 470-20, "Debt with Conversion and
   Other Options" ("FASB ASC Topic 470-20"). The adoption of FASB
   ASC Topic 470-20 required an adjustment of previously reported
   amounts assigned to debt, deferred taxes, equity and interest
   expense.

                                      School Specialty, Inc.
                   Segment Analysis - Revenues and Gross Profit/Margin Analysis
                                     4th Quarter, Fiscal 2010
                                          (In thousands)
                                             Unaudited


  Segment Revenues and Gross Profit/Margin
   Analysis-QTD
  ----------------------------------------------------

                                                                                 % of Revenues
                                                                              ------------------

                                                                      Change
                               4Q10-QTD     4Q09-QTD      Change $       %    4Q10-QTD  4Q09-QTD
                              ----------  ------------  ------------  ------  --------  --------
  Revenues
   Educational Resources        $ 94,258     $ 121,834    $ (27,576)  -22.6%     80.5%     78.0%
   Accelerated Learning
    Group                         22,584        34,338      (11,754)  -34.2%     19.3%     22.0%
   Corporate and Interco
    Elims                            197           (2)           199              0.2%      0.0%
                              ----------  ------------  ------------          --------  --------

    Total Revenues             $ 117,039     $ 156,170    $ (39,131)            100.0%    100.0%
                              ==========  ============  ============  -25.1%  ========  ========


                                                                               % of Gross Profit
                                                                              ------------------

                                                                      Change
                               4Q10-QTD     4Q09-QTD      Change $       %    4Q10-QTD  4Q09-QTD
                              ----------  ------------  ------------  ------  --------  --------
  Gross Profit
   Educational Resources        $ 37,476      $ 46,243     $ (8,767)  -19.0%     73.7%     74.4%
   Accelerated Learning
    Group                         12,498        15,264       (2,766)  -18.1%     24.6%     24.5%
   Corporate and Interco
    Elims                            860           678           182              1.7%      1.1%
                              ----------  ------------  ------------          --------  --------

    Total Gross Profit          $ 50,834      $ 62,185    $ (11,351)            100.0%    100.0%
                              ==========  ============  ============  -18.3%  ========  ========


  Segment Gross Margin Summary-QTD
  --------------------------------------


  Gross Margin                 4Q10-QTD     4Q09-QTD
                              ----------  ------------
   Educational Resources           39.8%         38.0%
   Accelerated Learning
    Group                          55.3%         44.5%
    Total Gross Margin             43.4%         39.8%


  ----------------------------------------------------------------------------------------------


  Segment Revenues and Gross Profit/Margin
   Analysis-YTD
  ----------------------------------------------------

                                                                                 % of Revenue
                                                                              ------------------

                                                                      Change
                               4Q10-YTD     4Q09-YTD      Change $       %    4Q10-YTD  4Q09-YTD
                              ----------  ------------  ------------  ------  --------  --------
  Revenues
   Educational Resources       $ 641,048     $ 737,068    $ (96,020)  -13.0%     71.5%     70.4%
   Accelerated Learning
    Group                        256,157       310,203      (54,046)  -17.4%     28.6%     29.6%
   Corporate and Interco
    Elims                          (527)         (291)         (236)             -0.1%      0.0%
                              ----------  ------------  ------------          --------  --------

    Total Revenues             $ 896,678   $ 1,046,980   $ (150,302)            100.0%    100.0%
                              ==========  ============  ============  -14.4%  ========  ========


                                                                               % of Gross Profit
                                                                              ------------------

                                                                      Change
                               4Q10-YTD     4Q09-YTD      Change $       %    4Q10-YTD  4Q09-YTD
                              ----------  ------------  ------------  ------  --------  --------
  Gross Profit
   Educational Resources       $ 233,011     $ 256,641    $ (23,630)   -9.2%     61.6%     59.9%
   Accelerated Learning
    Group                        143,442       168,914      (25,472)  -15.1%     37.8%     39.4%
   Corporate and Interco
    Elims                          2,695         3,048         (353)              0.6%      0.7%
                              ----------  ------------  ------------          --------  --------

    Total Gross Profit         $ 379,148     $ 428,603    $ (49,455)            100.0%    100.0%
                              ==========  ============  ============  -11.5%  ========  ========


  Segment Gross Margin Summary-YTD
  --------------------------------------


  Gross Margin                 4Q10-YTD     4Q09-YTD
                              ----------  ------------
   Educational Resources           36.3%         34.8%
   Accelerated Learning
    Group                          56.0%         54.5%
    Total Gross Margin             42.3%         40.9%

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: School Specialty, Inc.

CONTACT: School Specialty, Inc.
David Vander Ploeg, Executive VP and CFO
920-882-5854
Communications & Investor Relations
Mark Fleming
920-882-5646