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Anacomp
acquisitions included for the ¬rst time in 1981, or for the full period in 1981, plus internal
growth generated by those acquisitions. Other changes in revenue for the year resulted
primarily from new software development sales and non-recurring licensing agreements
(especially from new software systems for banks, ¬nanced in part by limited partnerships),
offset in part by reduced revenues due to declining activity in certain data centers and the
completion of certain non-repetitive software projects.
Direct costs of service and equipment increased 54%, primarily from the costs associ-
ated with the recent acquisitions plus increased expenses required to support increased
software development, and rising costs for personnel and other services. Selling, general
and administrative expenses increased 17% from the costs associated with the recent
acquisitions plus the expenses necessary to manage the rapidly growing company and
from rising personnel costs. The increases in other direct operating and selling, general
and administrative costs were offset in part by a savings of approximately $1,255,000
being realized during 1981 due to a change in the funding of Anacomp™s contribution to
the Thrift Plan for Employees.
Interest income increased from interest earned by cash investment programs and
from the interest earned on notes receivable.
Interest expense increased primarily from the interest on the recently issued 9% and
9 „2% Convertible Subordinated Debentures, with other increases from debt incurred to
1

¬nance acquisitions and interest on short-term borrowings, offset somewhat by lower
interest on the 10% Convertible Subordinated Debentures due to conversions to equity.
Other income included the gain from a transaction with Kalvar which resulted from
an agreement whereby Anacomp sold to Kalvar its Kalvar preferred stock for Kalvar com-
mon stock and sold its option to acquire additional Kalvar common stock in exchange for
a promissory note from Kalvar.
The provision for income taxes re¬‚ects the normal tax relating to the income reported
for ¬nancial statement purposes after giving effect to the bene¬ts obtained from invest-
ment tax credits and from the exclusion of dividend income. The expected tax rate for ¬s-
cal 1981 was revised downward during the fourth quarter as a result of a large capital
gain arising primarily from the transaction with Kalvar.
742 Case: Anacomp, Inc.




12 Part 4 Additional Cases




SELECTED FINANCIAL DATA
Anacomp, Inc., and Subsidiaries


(dollars in thousands,
except per share amounts) 1982 1981 1980 1979 1978
......................................................................................................................................

For the year ended June 30
Revenues $109,599 $106,368 $71,643 $41,662 $23,433
Income before provision for
income taxes and extraor-
dinary credit 3,622 13,997 7,787 5,045 3,154
Income before extraordinary
credit 2,779 7,938 4,627 2,704 1,542
Net income 4,609 7,938 4,627 2,704 1,542
Anacomp




Earnings per common and
common equivalent share:
Income before extraordi-
nary credit $.30 $.87 $.70 $.57 $.39
Net income .50 .87 .70 .57 .39
Earnings per common share
assuming full dilution:
Income before extraordi-
nary credit $.29 $.83 $.66 $.51 $.32
Net income .48 .83 .66 .51 .32
Cash dividends declared per
common share .12 .11 .10 .09 .06

As of June 30
Current assets $ 99,044 $ 75,453 $33,453 $16,200 $ 9,869
Current liabilities 41,276 19,634 22,079 11,452 3,561
Working capital 7,768 55,819 11,374 4,748 6,308
Total assets 211,660 130,798 76,950 30,069 14,182
Long-term debt 105,208 50,591 10,608 8,162 3,993
Stockholders™ equity 61,035 55,891 44,077 10,211 6,639
Book value per common
share $6.59 $6.18 $5.56 $2.14 $1.55
Number of employees 2,300 2,000 1,800 895 430
Number of holders of
common stock 7,930 5,575 3,810 1,955 1,225
......................................................................................................................................
743
Case: Anacomp, Inc.




13
Part 4 Additional Cases




CONSOLIDATED BALANCE SHEET
Anacomp, Inc. and Subsidiaries

June 30
....................................
(dollars in thousands, except per share amounts) 1982 1981
......................................................................................................................................
Assets
Current assets:
Cash (including temporary investments) $ 34,519 $29,392
Accounts and notes receivable, less allowances for doubtful
accounts of $1,915 and $1,210, respectively 25,284 23,216
Unbilled revenues 18,534 15,863
Inventories 4,469 3,014
Deferred CIBS development costs (Note 3) 5,647 ”




Anacomp
Prepaid expenses (including income taxes of $3,018 and $1,242,
respectively) 10,591 3,968
Total current assets 99,044 75,453
Property and equipment, at cost less accumulated depreciation and
amortization of $10,189 and $8,660, respectively 25,112 14,930
Cost of computer software systems purchased, less accumulated
depreciation of $1,584 and $186, respectively 20,363 1,747
Excess of purchase price over net assets of businesses acquired, less
accumulated amortization of $2,319 and $1,285, respectively 42,646 24,291
Other assets 24,495 14,377
$211,660 $130,798

(continued)
744 Case: Anacomp, Inc.




14 Part 4 Additional Cases




CONSOLIDATED BALANCE SHEET (continued)

June 30
....................................
(dollars in thousands, except per share amounts) 1982 1981
......................................................................................................................................

Liabilities and Stockholders™ Equity
Current liabilities:
Notes payable, banks $ 14,000 $ ”
Current portion of long-term debt 2,907 2,359
Accounts payable 8,151 8,787
Accrued salaries, wages and bonuses 4,604 3,863
Accrued interest payable 5,129 1,747
Income taxes ” 419
Other accrued liabilities 6,485 2,459
Anacomp




Total current liabilities 41,276 19,634
Long-term debt, net of current portion:
Convertible subordinated debentures 86,274 43,340
Other long-term debt 18,934 7,251
Total long-term debt 105,208 50,591
Deferred income taxes 3,177 4,015
Minority interest 964 667
Stockholder™s equity:
Preferred stock”$1 par value, authorized 1,000,000 shares,
none issued ” ”
Common stock”$1 par value, authorized 25,000,000 shares,
9,256,544 and 9,042,722 issued, respectively 9,257 9,043
Capital in excess of par value of common stock 37,305 35,207
Unrealized losses on marketable securities (899) (233)
Retained earnings 15,372 11,874
Total stockholders™ equity 61,035 55,891
$211,660 $130,798
......................................................................................................................................
745
Case: Anacomp, Inc.




15
Part 4 Additional Cases




CONSOLIDATED STATEMENT OF INCOME
Anacomp, Inc., and Subsidiaries

Year Ended June 30
.....................................................

(dollars in thousands, except per share amounts) 1982 1981 1980
......................................................................................................................................
Revenues
Services provided $88,045 $87,304 $58,781
Equipment sold 21,554 19,064 12,862
109,599 106,368 71,643

Operating costs and expenses
Costs of services provided 67,302 62,464 40,342
Costs of equipment sold 16,764 13,900 9,172




Anacomp
Selling, general and administrative expenses 19,888 17,821 15,284
103,954 94,185 64,798
5,645 12,183 6,845
Interest income 5,525 3,204 485
Interest expense (8,158) (4,090) (1,381)
Other, net 610 2,700 1,838
(2,023) 1,814 942
Income before provision for income taxes and extra-
ordinary credit 3,622 13,997 7,787
Provision for income taxes 843 6,059 3,160
Income before extraordinary credit 2,779 7,938 4,627
Extraordinary credit, net of related tax 1,830 ” ”
Net income $ 4,609 $ 7,938 $ 4,627

Earnings per common and common equivalent
share
Income before extraordinary credit $.30 $.87 $.70
Extraordinary credit .20 ” ”
Net income $.50 $.87 $.70

Earnings per common share assuming full
dilution
Income before extraordinary credit $.29 $.83 $.66
Extraordinary credit .19 ” ”
Net income $.48 $.83 $.66
Cash dividends declared per share $.12 $.11 $.10
......................................................................................................................................
746 Case: Anacomp, Inc.




16 Part 4 Additional Cases




CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
Anacomp, Inc., and Subsidiaries

Year Ended June 30
.....................................................

(dollars in thousands) 1982 1981 1980
......................................................................................................................................

Working capital was provided by:
Income before extraordinary credit $2,779 $7,938 $4,627
Charges to income not requiring an outlay of
working capital:
Depreciation and amortization 6,708 4,368 3,026
Deferred income taxes (1,314) 3,951 2

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