FORM 8-K



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported):  August 7, 2018

SCHOOL SPECIALTY, INC.

(Exact name of registrant as specified in its charter)


           Delaware              

    000-24385    

      39-0971239      

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)


W6316 Design Drive

        Greenville, Wisconsin  54942        

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code:  (920) 734-5712

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)


Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Indicate by check mark whether the registrant is an emerging growth company as defined in

Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities

Exchange Act of 1934 (§ 240.12b-2 of this chapter).


Emerging growth company


If an emerging growth company, indicate by check mark if the registrant has elected not to use

the extended transition period for complying with any new or revised financial accounting

standards provided pursuant to Section 13(a) of the Exchange Act.







Item 7.01.

Regulation FD Disclosure.

On August 7, 2018, School Specialty, Inc. issued a 2018 Q2 Investor Update and a press release reporting its financial results for the Fiscal Year 2018 Second Quarter.  A copy of the press release is attached as Exhibit 99.1, and a copy of the 2018 Q2 Investor Update is attached Exhibit 99.2. Both exhibits are incorporated by reference herein.

This information is not deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that section.  Further, the information in this Form 8-K, including the exhibits, shall not be deemed to be incorporated by reference into the filings of the registrant under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such a filing.


Item 9.01.

Financial Statements and Exhibits.

 

(d) Exhibits

 

 

 

 

 

Exhibit No.

Description

 

 

 

 

99.1

Press Release dated August 7, 2018

 

 

 

 

99.2

2018 Q2 Investor Update dated August 7, 2018.


Forward-Looking Statements

This report and the information furnished herewith may contain statements concerning School Specialty’s future financial condition, results of operations, expectations, plans or prospects.  Such statements are forward-looking statements.  Forward-looking statements also include those preceded by or followed by words like “anticipate,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plan,” “projects,” “should,” “targets” and/or similar expressions.  These forward-looking statements are based on School Specialty’s estimates and assumptions as of the date of the information presented, 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 due to a number of factors, including those described in Item 1A. of School Specialty’s Annual Report on Form 10-K for the year ended December 30, 2017, which factors are incorporated herein by reference. Any forward-looking statement in this report and the information furnished herewith speaks only as of the date on which it is made.  Except as required under the federal securities laws, School Specialty does not intend to update or revise the forward-looking statements.




2




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


 

SCHOOL SPECIALTY, INC.

 

 

 

 

Dated:  August 7, 2018

By:   /s/ Kevin L. Baehler                   

 

  Kevin L. Baehler

  Executive Vice President and

  Chief Financial Officer




3


EXHIBIT 99.1

EXHIBIT 99.1


[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12395732&doc=3] 

W6316 Design Drive, Greenville, WI 54942

P.O. Box 1579, Appleton, WI 54912-1579

NEWS RELEASE



School Specialty Announces Fiscal Year 2018 Second Quarter Financial Results


GREENVILLE, Wis., August 7, 2018 – School Specialty, Inc. (OTCQB: SCOO) (“School Specialty”, “SSI” or “the Company”), home of the 21st Century Safe School™ and leading provider of products and innovative solutions that support integrated learning environments for improved student social, emotional, mental and physical well-being, today announced financial results for its fiscal 2018 second quarter ended June 30, 2018.


Joseph M. Yorio, President and Chief Executive Officer, stated, “The first half of 2018 is very encouraging as the sales momentum we are experiencing is the strongest we have seen in the last several years. Importantly, the momentum is strong across our broad Supplies category, all aspects of our Furniture business and in strategic areas of focus such as our relationship with Amazon and in Safety & Security. This being said, much of the benefit of executing the team-sell model and effectively engaging the market with our 21st Century Safe School value proposition is still in front of us. In 2018, we deployed strategies to more effectively price key elements of our offering and ensure we maintain leadership positions on key strategic purchasing agreements. These efforts have coincided with initiatives to drive growth in higher margin elements of our offering. The strategies we are deploying are clearly beginning to enable market penetration which will pave the way to bring a more comprehensive set of solutions to our customers. Now we need to execute on those opportunities to better balance our mix and strengthen margins. We continue to manage our cost structure effectively and see opportunity for SG&A favorability in the second half of the year. This should enable us to offset near-term margin pressure and cost pressures in transportation and wages, and still deliver bottom-line growth in 2018.”


Q2 Results (for the three months ended June 30, 2018 and July 1, 2017)


In the first quarter of fiscal 2018, the Company adopted a new accounting principle (“ASC 606”) which addressed the timing of both revenue recognition and catalog costs. While the Company expects the full year impact of ASC 606 to be minimal as it relates to the Company’s revenues, gross profit, SG&A, and Adjusted EBITDA, the year-over-year comparability between quarters is impacted, particularly for the Company’s catalog expenses included in SG&A. As ASC 606 requires catalog costs to be expensed as incurred instead of amortized over the related sales period (~1 year), it will result in an acceleration of catalog costs in the Company’s first and fourth quarters, with offsetting decreases in the Company’s second and third quarters.


·

Revenues of $169.3 million for the second quarter of fiscal 2018 increased by $9.1 million or 5.7%, as compared to the second quarter of fiscal 2017. The adoption of ASC 606 contributed $4.7 million of the incremental revenue, primarily within the Company’s Distribution segment. Distribution segment revenues of $155.8 million increased by 10.2% or $14.4 million. Revenues from Triumph Learning, acquired in the third quarter of fiscal 2017 and reported in the Company’s Instruction & Intervention product category, contributed $4.1 million of incremental revenues in the second quarter of fiscal 2018. After adjusting for the impact of revenues from Triumph Learning, Distribution segment revenues were up in the second quarter by $10.3 million compared to the prior year period.  





o

Revenues from the Supplies product category increased approximately $3.5 million or 4.5%, in the quarter. Incoming orders in the quarter continued to be strong, up over 11.0% as compared to second quarter orders in 2017.

o

Revenues in the Furniture product category were up 22.4% or $9.6 million, compared to last year’s second quarter. While the adoption of ASC 606 contributed $5.4 million of this increase, incoming orders remained strong in the quarter, up over 16.0% as compared to last year’s second quarter.

o

Agendas revenues were $4.6 million in the second quarter of fiscal 2018, down $1.9 million from last year’s second quarter. AV Tech revenues were $4.1 million in the second quarter of fiscal 2018, down $0.4 million from last year’s second quarter. The revenue performances of both the Agendas and AV Tech categories were modestly below the Company’s expectations.  

o

Instruction & Intervention product category revenues of $14.3 million in the second quarter of fiscal 2018 were up $4.1 million as compared to last year’s second quarter.

o

Curriculum segment revenues of $13.5 million decreased by 28.3% or $5.3 million. The decline was primarily related to three large school district orders, totaling $4.4 million, which shipped in last year’s second quarter. With limited state science adoption-related opportunities in 2018, the Company expected declines in segment revenues in fiscal 2018. However, based on the current pipeline of state adoption and significant opportunities in open territory states, the Company anticipates segment growth resuming in 2019 as adoption-related opportunities are expected to increase.


·

Overall gross profit margin was 34.7% for the three months ended June 30, 2018, as compared to 37.8% for the three months ended July 1, 2017, a decline of 310 basis points.

o

Distribution segment gross margin was 32.6% for the three months ended June 30, 2018, as compared to 35.7% for the three months ended July 1, 2017. Rate variances at a product level negatively impacted gross margins by 250 basis points in the current year’s second quarter. These negative rates are related to certain state, regional and district-level pricing agreements, which became effective at various points in 2017. In addition, the strategic move to more competitive pricing on highly shopped items is a contributing factor for the decline. Higher product development amortization in the current year’s second quarter contributed approximately 20 basis points of lower gross margin. The remaining decline in gross margin was associated with a shift in product mix.

o

Curriculum segment gross margin was 58.8% for the three months ended June 30, 2018, as compared to 53.4% for the three months ended July 1, 2017. Incremental training revenue in the current year’s second quarter contributed approximately 150 basis points of the improvement, while favorable lower product costs in the current year contributed approximately 360 basis points of gross margin improvement. Lower product development amortization in the current year’s second quarter contributed 30 basis points of the gross margin increase.  


·

Selling, General & Administrative (“SG&A”) expenses were $53.8 million as compared to $51.7 million, an increase of $2.1 million or 4.0%. The increase in SG&A is primarily related to the Triumph Learning acquisition, and incremental depreciation and amortization. The acquisition of Triumph Learning resulted in approximately $2.9 million of incremental SG&A costs in the second quarter of 2018 versus last year’s second quarter. Approximately $0.3 million of the costs associated with Triumph Learning were related directly to the integration through the finalization of quarter one 2018 estimates. Transportation costs increased by $1.9 million due to a combination of incremental volume and increased effective transportation rates. Depreciation and amortization expense increased by $0.8 million in the current year second quarter related primarily to incremental depreciation associated with the Company’s implementation of its new e-commerce platform. These increases were partially offset by a combination of $2.0 million of lower catalog expense associated with the adoption of ASC 606, reductions in marketing and selling costs, and lower incentive compensation expenses in the quarter. As a percent of revenue, SG&A decreased from 32.3% for the three months ended July 1, 2017 to 31.8% for the three months ended June 30, 2018.






·

The Company reported operating income of $4.8 million in the second quarter of fiscal 2018, as compared to operating income of $8.7 million in the second quarter of fiscal 2017.


·

Interest expense of $3.7 million was down $0.5 million in the second quarter of 2018, which was primarily related to a reduction in non-cash interest of $0.9 million. This decline in non-cash interest was due to lower interest attributable to the Company’s vendor note obligations. The decrease in non-cash interest expense was partially offset by $0.4 million of incremental cash interest associated with an increase in average borrowings in the current quarter. The increase in average borrowings is related to the acquisition of Triumph Learning in the third quarter of fiscal 2017.  


·

The provision for income taxes was $1.1 million for the three months ended June 30, 2018, as compared to $0.1 million for the three months ended July 1, 2017. The effective income tax rate for the three months ended June 30, 2018 and the three months ended July 1, 2017 was 98.3% and 42.1%, respectively. Due to the minimal amount of income before provision of income taxes in both periods, the Company believes that the effective income tax rate is not representative of the full year expected rate as discrete tax items, such as realized built-in loss and foreign tax adjustments, in the quarter have a large impact on the quarterly rate.


·

Net income was below $0.1 million for the three months ended June 30, 2018, as compared to net income of $0.1 million in the comparable year-ago period. The prior year net loss included a loss of $4.3 million related to the early extinguishment of debt associated with its debt refinancing.


·

The Company reported adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) of $11.5 million in the second quarter of fiscal 2018, as compared to Adjusted EBITDA of $14.6 million in the comparable 2017 period.  The adoption of ASC 606 positively impacted Adjusted EBITDA in the second quarter of 2018 by $2.6 million, due primarily to the timing change associated with the recognition of catalog costs.  


YTD Results (for the six months ended June 30, 2018 and July 1, 2017)


·

Revenue of $268.6 million for the six months ended June 30, 2018 increased by $11.3 million or 4.4%, as compared to the six months ended July 1, 2017. The adoption of ASC 606 contributed $5.9 million of the incremental revenue, primarily within the Company’s Distribution segment. Distribution segment revenues of $250.4 million for the six months ended June 30, 2018 increased by 7.3% or $17.1 million, from the six months ended July 1, 2017. Revenues from the Triumph Learning products, acquired in the third quarter of fiscal 2017 and which are reported in our Instruction & Intervention product category, contributed $11.1 million of incremental revenues in the first six months of fiscal 2018. After adjusting for the impact of revenues from Triumph Learning, Distribution segment revenues were up in the first six months of 2018 by $6.0 million.

o

While the revenues for the Supplies product category declined $1.3 million during the six months ended June 30, 2018, open orders for the Supplies category entering the third quarter are up year-over-year by $2.7 million. In addition, incoming orders have continued to gain momentum into the third quarter of 2018. Third quarter incoming orders are up year-over-year by 7.8%, resulting in a 4.9% increase in year-to-date orders.  

o

Year-to-date revenues in Furniture were up 16.7% or $10.9 million, compared to 2017. The adoption of ASC 606 drove $5.9 million of this increase year-over-year, although the full-year impact of the adoption of ASC 606 is expected to be minimal. The incoming order rate for Furniture products remains strong and year-to-date orders were up 12.8% through the end of the second quarter, and third quarter-to-date Furniture orders have been up 21.4% year-over-year.  

o

Adjusting the Instruction & Intervention category to exclude the incremental revenue associated with the Triumph Learning products, the category was down 4.0% or $0.7 million.  However, order trends have continued to improve as the year progresses, especially in core proprietary products such as Wordly Wise and Spire, which are up nearly 4.0% year-to-date.  





o

The Company’s Agendas and AV Tech categories were down $1.9 million and $0.9 million, respectively, through the first six months of fiscal 2018. Both the AV Tech and Agenda categories are performing modestly below expectations.

o

Curriculum segment revenues of $18.2 million for the six months ended June 30, 2018 decreased by 24.3% or $5.8 million, from the six months ended July 1, 2017. The limited amount of adoption activity in 2018 and fewer large opportunities in open territory states are contributing to the decline.  However, the competitive positioning remains strong and the pipeline of opportunities for 2019 is building.


·

Gross profit margin for the six months ended June 30, 2018 was 35.3%, as compared to 36.9% for the six months ended July 1, 2017. Increased revenues contributed $4.6 million of additional gross profit offset by lower product level gross margins and higher product development amortization.  

o

Distribution segment gross margin was 33.8% for the six months ended June 30, 2018, as compared to 35.3% for the six months ended July 1, 2017. Year-over-year product rate variances had a negative impact on gross margin of 170 basis points, which was partially offset by a shift in product mix, primarily related to the Triumph Learning products. A shift in product mix contributed approximately 50 basis points of gross margin improvement in the first six months of fiscal 2018. Higher product development amortization in the current year’s second quarter resulted in 30 basis points of lower gross margin. More aggressive pricing in certain large state, regional and district-level pricing agreements, which became effective at various points in 2017 resulted in approximately $3.0 million of the decline. In addition, the strategic move to more competitive pricing on commodity items also is a contributing factor the decline. However, these pricing actions have driven growth and customer penetration in fiscal 2018. The Company expects the year-over-year variance in gross margin associated with certain pricing agreements will stabilize in upcoming quarters.  

o

Curriculum segment gross margin was 55.7% for the six months ended June 30, 2018, as compared to 52.6% for the six months ended July 1, 2017. Lower product development amortization in the current first half of the year contributed 90 basis points of the gross margin increase. The adoption of ASC 606 contributed approximately 120 basis points of the gross margin increase in the first six months of fiscal 2018 due to the increase in training revenues in the first half of 2018 as compared to the fiscal half of 2017. The remaining difference in gross margin is related to a combination of year-over-year changes in product costs.


·

Selling, General & Administrative (“SG&A”) expenses were $110.9 million as compared to $99.2 million, an increase of $11.7 million in the first six months of fiscal 2018. The increase was attributable to several areas:  $7.2 million of incremental SG&A associated with the Triumph Learning acquisition of which $1.7 million was related to the integration; $2.5 million related to the impact of the change in accounting principles associated with ASC 606 on our catalog expense; and $2.9 million of incremental depreciation and amortization associated with the Company’s new phone system and new e-commerce platform implementations. The impact of ASC 606 on the Company’s catalog expenses affects the quarterly timing of the expense but does not affect the overall annual expense. Remaining SG&A costs were down approximately $0.9 million when comparing the first six months of 2018 and first six months of 2017. SG&A expenses as a percent of revenue increased to 41.3% from 38.6% for the six-month period.    


·

The Company reported an operating loss of $16.6 million in the first half of fiscal 2018 as compared to an operating loss of $4.4 million in the first half of fiscal 2017.


·

Interest expense of $7.2 million was down $1.1 million the first half of 2018, which was primarily related to a reduction of approximately $1.0 million in non-cash interest primarily due to lower interest attributable to the Company’s vendor note obligations in 2018 as compared to 2017. Cash interest expense was essentially flat in the first six months of 2018 as compared to the first six months of 2017.  






·

The benefit from income taxes was $5.1 million for the six months ended June 30, 2018, as compared to $0.3 million for the six months ended July 1, 2017. The effective income tax rate for the six months ended June 30, 2018 and the six months ended July 1, 2017 was 21.5% and 1.7%, respectively. The change in the effective income tax rate year-over-year is due to a combination of lower tax rates associated with the 2017 tax reform as well as the partial reversal of valuation allowances in the fourth quarter of fiscal 2017. The tax benefit recorded in the six months ended June 30, 2018 is expected to be entirely offset by tax provisions recognized against net income expected to be generated over the remainder of fiscal 2018.  


·

Net loss was approximately $18.7 million for the first half of 2018, as compared to a net loss of $16.6 million in the comparable year-ago period. The prior year net loss included a loss of $4.3 million related to the early extinguishment of debt associated with the Company’s debt refinancing.


·

The Company reported an adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) loss of $0.5 million in the first half of fiscal 2018, as compared to Adjusted EBITDA of $7.6 million in the comparable 2017 period. The adoption of ASC 606 positively impacted Adjusted EBITDA in the first half of 2018 by $1.5 million, due primarily to the acceleration of catalog costs.  


Mr. Yorio continued, “Our objective is to re-invent School Specialty in the eyes of our customers, shareholders and employees. There is tangible progress in all areas, but we are going to accelerate the pace of change. We are uniquely positioned to be the market leading provider of 21st Century Safe School solutions. I’m confident that we will deliver a strong second half of 2018, which will enable us to achieve revenue growth at or above the high-end of our original guidance and modest Adjusted EBITDA growth of approximately 4.0%.”


Additional information on the Company’s updated outlook for 2018 can be found in the investor presentation on page 17, which will be published shortly under the Investor Relations section of the Company’s website.


School Specialty will be hosting a teleconference and webcast on Wednesday, August 8, 2018 at 9:00 a.m. ET to discuss its results and outlook. Speaking from management will be Joseph M. Yorio, President and Chief Executive Officer; Ryan M. Bohr, Executive Vice President and Chief Operating Officer; and Kevin Baehler, Executive Vice President and Chief Financial Officer.


Conference Call Information:

·

Toll-free number: 844-882-7832 / International number: 574-990-9706 / Conference ID: 8274535

·

Replay number: 855-859-2056 / International replay number: 404-537-3406 / Conference ID: 8274535


Interested parties can also participate on the webcast by visiting the Investor Relations section of School Specialty’s website at http://investors.schoolspecialty.com. For those who are unable to participate on the live conference call and webcast, a replay will be available approximately one hour after the completion of the call.


About School Specialty, Inc.

School Specialty designs, develops and delivers a broad assortment of innovative and proprietary products, programs and services to the education marketplace, including essential classroom supplies, furniture, educational technology, supplemental learning resources, science-based curriculum, and evidence-based safety and security training. The Company applies its unmatched team of subject-matter experts and customized planning, development and project management tools to deliver this comprehensive offering as the 21st Century Safe School, a concept built around best-practice school environments that support the social, emotional, mental, and physical safety of students – improving both their learning outcomes and school district performance.





For more information, visit  https://corporate.schoolspecialty.com/ or connect with us on Facebook, Twitter, Instagram, and Pinterest. Find ideas, resources and inspiration by visiting our blog: https://blog.schoolspecialty.com/.

Statement Concerning Forward-Looking Information

Any statements made in this press release about School Specialty’s future financial condition, results of operations, expectations, plans, or prospects constitute forward-looking statements. Forward-looking statements also include those preceded or followed by the words "anticipates," "believes," "could," "estimates," "expects," "intends," "may," "plans," “projects,” “should,” "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 risk factors described in Item 1A of School Specialty's Form 10-K for the fiscal year ended December 30, 2017, which risk factors are incorporated herein by reference. Any forward-looking statement in this release speaks only as of the date on which it is made. Except to the extent required under the federal securities laws, School Specialty does not intend to update or revise the forward-looking statements.


Non-GAAP Financial Information

This press release includes references to Adjusted EBITDA, a non-GAAP financial measure. Adjusted EBITDA represents net income (loss) adjusted for: provision for (benefit from) income taxes; purchase accounting deferred revenue adjustments; restructuring costs; restructuring-related costs included in SG&A; loss on early extinguishment of debt; depreciation and amortization expense; amortization of development costs; net interest expense; and stock-based compensation.  


The Company considers Adjusted EBITDA a relevant supplemental measure of its financial performance. The Company believes this non-GAAP financial measure provides useful supplemental information for investors regarding trends and performance of our ongoing operations and is useful for year-over-year comparisons of such results. We also use this non-GAAP financial measure in making operational and financial decisions and in establishing operational goals.  


In summary, we believe that providing this non-GAAP financial measure to investors, as a supplement to GAAP financial measures, helps investors to (i) evaluate our operating and financial performance and future prospects, (ii) compare financial results across accounting periods, (iii) better understand the long-term performance of our core business, and (iv) evaluate trends in our business, all consistent with how management evaluates such performance and trends.


Adjusted EBITDA does not represent, and should not be considered, an alternative to net income or operating income as determined by GAAP, and our calculation may not be comparable to similarly titled measures reported by other companies.


Company Contacts

Ryan Bohr, EVP and Chief Operating Officer

Kevin Baehler, EVP and Chief Financial Officer

Ryan.bohr@schoolspecialty.com

Kevin.baehler@schoolspecialty.com

Tel: 920-882-5868

Tel: 920-882-5882


Investor and Media Relations Contact

Glenn Wiener

Gwiener@gwcco.com

Tel: 212-786-6011


Tables to Follow








SCHOOL SPECIALTY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In Thousands, Except Share and Per Share Amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2018

 

December 30, 2017

 

July 1, 2017

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$     8,640

 

 $   31,861

 

$    6,900

 

Accounts receivable, less allowance for doubtful accounts

 

90,470

 

69,297

 

87,461

 

Inventories, net

 

131,761

 

77,162

 

124,906

 

Deferred catalog costs

 

-

 

3,450

 

6,762

 

Prepaid expenses and other current assets

 

21,154

 

14,121

 

11,145

 

Refundable income taxes

 

2,115

 

547

 

1,325

 

 

Total current assets

 

254,140

 

196,438

 

238,499

Property, plant and equipment, net

 

32,063

 

33,579

 

32,180

Goodwill

 

26,842

 

26,842

 

21,588

Intangible assets, net

 

35,184

 

37,163

 

33,247

Development costs and other

 

16,192

 

16,339

 

12,600

Deferred taxes long-term

8,347

 

2,046

 

193

 

 

Total assets

 

$  372,768

 

$   312,407

 

$   338,307

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Current maturities - long-term debt

 

$  64,600

 

$  10,989

 

 $46,882

 

Accounts payable

 

61,894

 

26,591

 

59,125

 

Accrued compensation

 

8,209

 

11,995

 

9,173

 

Contract liabilities

 

5,804

 

3,454

 

2,808

 

Accrued royalties

1,998

 

5,699

 

-

 

Other accrued liabilities

 

12,265

 

15,442

 

12,547

 

 

Total current liabilities

 

154,770

 

74,170

 

130,535

Long-term debt - less current maturities

 

130,437

 

130,574

 

124,849

Other liabilities

 

792

 

172

 

169

 

 

Total liabilities

 

285,999

 

204,916

 

255,553

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

Preferred stock, $0.001 par value per share, 500,000

 

 

 

 

 

 

 

 

shares authorized; none outstanding

 

-

 

-

 

-

 

Common stock, $0.001 par value per share, 50,000,000 shares

 

 

 

 

 

 

 

 

authorized; 7,000,000 shares outstanding

 

7

 

7

 

7

 

Capital in excess of par value

 

124,149

 

123,083

 

121,940

 

Accumulated other comprehensive loss

 

(1,832)

 

(1,425)

 

(1,600)

 

Retained earnings (accumulated deficit)

 

(35,555)

 

(14,174)

 

(37,593)

 

 

Total stockholders' equity

 

86,769

 

107,491

 

82,754

 

 

Total liabilities and stockholders' equity

 

 $   372,768

 

$  312,407

 

$   338,307

 

 

 

 

 

 

 

 

 

 

 

 






SCHOOL SPECIALTY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Per Share Amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

 

 

 

 

June 30, 2018

 

July 1, 2017

 

June 30, 2018

 

July 1, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 $                         169,272

 

 $                       160,177

 

 $                         268,559

 

 $                         257,288

 

Cost of revenues

 

110,528

 

99,682

 

173,694

 

162,269

 

 

Gross profit

 

58,744

 

60,495

 

94,865

 

95,019

 

Selling, general and administrative expenses

 

53,808

 

51,721

 

110,946

 

99,189

 

Facility exit costs and restructuring

                                  171

 

                                    44

 

                                   482

 

                                   217

 

 

Operating income (loss)

 

4,765

 

8,730

 

(16,563)

 

(4,387)

 

Other expense:


 

 

 

 

 

 

 

 

 

Interest expense


                               3,688

 

                               4,197

 

                                7,194

 

                                8,247


 

Loss on early extinguishment of debt


                             -   

 

                               4,298

 

                                      -   

 

                                4,298


Income (loss) before benefit from income taxes

 

1,077

 

235

 

(23,757)

 

(16,932)

 

Provision for (benefit from) income taxes

 

1,059

 

99

 

(5,097)

 

(292)

 

 

Net loss

 

 $                                  18

 

 $                                136

 

 $                          (18,660)

 

 $                          (16,640)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

Basic

 

                                7,000

 

                                7,000

 

                                7,000

 

                                7,000

 

 

Diluted

 

                                7,129

 

                                7,077

 

                                7,000

 

                                7,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss per Share:

 

 

 

 

 

 

 

 

 

 

Basic

 

 $                               0.00

 

 $                               0.02

 

 $                              (2.67)

 

 $                              (2.38)

 

 

Diluted

 

 $                               0.00

 

 $                               0.02

 

 $                              (2.67)

 

 $                              (2.38)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2018

 

July 1, 2017

 

June 30, 2018

 

July 1, 2017

 

 

 

 

Adjusted Earnings before interest, taxes, depreciation,

 

 

 

 

 

 

 

 

 

 

 

 

  amortization, bankruptcy-related costs,  restructuring and impairment

 

 

 

 

 

 

 

 

 

 

   charges (EBITDA) reconciliation:

 

 

 

 

 

 

 

 

 

 

 

 

    Net income (loss)

 

 $                                 18

 

 $                               136

 

 $                        (18,660)

 

 $                        (16,640)

 

 

 

 

    Provision for (benefit from) income taxes

 

                               1,059

 

                                    99

 

                             (5,097)

 

                                 (292)

 

 

 

 

Purchase accounting deferred revenue adjustment

 

                                  266

 

                                  -   

 

                                   639

 

                                  -   

 

 

 

 

    Restructuring costs   

 

                                  171

 

                                    44

 

                                   482

 

                                   217

 

 

 

 

    Restructuring-related costs incl in SG&A

 

                                  390

 

                                  997

 

                                1,688

 

                                1,891

 

 

 

 

    Loss on early extinguishment of debt


                             -   

 

                               4,298

 

                                      -   

 

                                4,298


 

 

 

    Depreciation and amortization expense

 

                               3,935

 

                               3,147

 

                                9,393

 

                                6,473

 

 

 

 

    Amortization of development costs

 

                               1,382

 

                               1,172

 

                                2,686

 

                                2,283

 

 

 

 

    Net interest expense

 

                               3,688

 

                               4,197

 

                                7,194

 

                                8,247

 

 

 

 

    Stock-based compensation

 

                                  625

 

                                  511

 

                                1,197

 

                                1,091

 

 

 

 

                 Adjusted EBITDA

 

 $                         11,534

 

 $                         14,601

 

 $                              (477)

 

 $                             7,568

 

 

 

 

 

 

 

 

 

 

 

 

 

 




EXHIBIT 99.2

EXHIBIT 99.2

[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12395732&doc=5]



[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12395732&doc=6]



[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12395732&doc=7]



[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12395732&doc=8]



[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12395732&doc=9]



[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12395732&doc=10]



[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12395732&doc=11]



[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12395732&doc=12]



[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12395732&doc=13]



[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12395732&doc=14]



[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12395732&doc=15]



[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12395732&doc=16]



[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12395732&doc=17]



[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12395732&doc=18]



[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12395732&doc=19]



[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12395732&doc=20]



[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12395732&doc=21]



[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12395732&doc=22]



[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12395732&doc=23]



[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12395732&doc=24]



[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12395732&doc=25]



[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12395732&doc=26]



[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12395732&doc=27]



[http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12395732&doc=28]