UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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þ
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Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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For the quarterly period ended
October 3, 2009
or
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o
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Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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For the transition period from
_____
to
_____
Commission File Number 0-50063
MOD-PAC CORP.
(Exact name of registrant as specified in its charter)
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New York State
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16-0957153
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(State or other jurisdiction of
incorporation or organization)
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(IRS employer identification no.)
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1801 Elmwood Ave., Buffalo, NY
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14207
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(Address of principal executive offices)
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(Zip code
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Telephone number including area code:
(716) 873-0640
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months or for
such shorter period that the registrant was required to file such reports, and (2) has been subject
to such filing requirements for the past 90 days. Yes
þ
No
o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes
o
No
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer or smaller reporting company. See definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
o
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
þ
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(Do not check if a smaller
reporting company)
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
o
No
þ
The number of shares outstanding of each class of common stock as of October 3, 2009 were:
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Common Stock, $0.01 par value
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2,792,859 shares
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Class B Common Stock, $0.01 par value
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637,272 shares
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MOD-PAC CORP.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
2
PART I FINANCIAL INFORMATION
Part 1.
Financial Information
Item 1. Financial Statements
MOD-PAC CORP.
Consolidated Balance Sheets
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(dollars in thousands)
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October 3,
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December 31,
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2009
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2008
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(Unaudited)
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Current assets:
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Cash and cash equivalents
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$
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315
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$
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200
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Trade accounts receivable, net of allowance
of $186 in 2009 and $170 in 2008
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5,457
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4,750
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Inventories
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4,118
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4,313
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Prepaid expenses
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406
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357
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Total current assets
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10,296
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9,620
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Property, plant and equipment, at cost
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63,579
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68,707
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Less accumulated depreciation
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(47,685
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)
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(47,116
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)
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Net property, plant and equipment
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15,894
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21,591
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Assets held for sale
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2,091
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Other assets
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465
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1,340
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Totals assets
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$
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28,746
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$
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32,551
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Current liabilities:
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Current maturities of long-term debt
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$
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186
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$
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168
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Accounts payable
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2,902
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3,222
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Accrued expenses
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729
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581
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Line of credit, current
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600
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Total current liabilities
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4,417
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3,971
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Line of credit, long-term
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1,000
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Long-term debt
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2,301
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2,413
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Other liabilities
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52
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37
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Deferred income taxes
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118
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Total liabilities
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$
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6,770
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$
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7,539
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Shareholders equity:
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Common stock, $.01 par value
Authorized 20,000,000 shares, issued
3,443,557 in 2009, 3,439,347 in 2008
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34
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34
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Class B common stock, $.01 par value
Authorized 5,000,000 shares, issued
637,272 in 2009, 641,482 in 2008
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7
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7
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Additional paid-in capital
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2,595
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2,385
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Retained earnings
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25,555
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28,801
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28,191
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31,227
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Less treasury shares, at cost 650,698 in
2009 and 2008
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(6,215
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(6,215
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Total shareholders equity
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21,976
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25,012
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Total liabilities and shareholders equity
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$
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28,746
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$
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32,551
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See
notes to financial statements
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3
MOD-PAC CORP.
Consolidated Statements of Operations
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(dollars in thousands)
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(Unaudited)
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Nine Months Ended
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Three Months Ended
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October 3,
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September 27,
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October 3,
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September 27,
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2009
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2008
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2009
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2008
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Revenue:
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Net sales
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$
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35,727
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$
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34,922
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$
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12,446
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$
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12,504
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Rental income
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399
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356
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141
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133
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Total revenue
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36,126
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35,278
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12,587
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12,637
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Costs and Expenses:
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Cost of products sold
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31,732
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30,675
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10,071
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10,662
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Selling, general and administrative expenses
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5,799
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5,994
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1,841
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1,854
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Write-down of impaired assets
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2,175
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Interest expense, net
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194
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203
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64
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79
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Other income
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(410
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)
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(93
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(400
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)
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(12
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Total costs and expenses
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39,490
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36,779
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11,576
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12,583
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(Loss) income before income taxes
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(3,364
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(1,501
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)
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1,011
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54
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Income tax (benefit) expense
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(118
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)
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(477
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)
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40
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Net (loss) income
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$
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(3,246
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$
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(1,024
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$
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1,011
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$
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14
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(Loss) income per share:
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Basic
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$
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(0.95
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$
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(0.30
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$
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0.29
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$
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0.00
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Diluted
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$
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(0.95
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$
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(0.30
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$
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0.29
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$
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0.00
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See
notes to financial statements
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4
MOD-PAC CORP.
Consolidated Statements of Cash Flows
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(dollars in thousands)
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(Unaudited)
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Nine Months Ended
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October 3,
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September 27,
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2009
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2008
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Cash flows from operating activities:
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Net loss
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$
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(3,246
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)
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$
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(1,024
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)
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Adjustments to reconcile net loss to net cash provided by operating activities:
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Depreciation and amortization
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2,531
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2,850
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Provision for doubtful accounts
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45
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11
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Stock option compensation expense
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210
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208
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Deferred income taxes
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(118
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)
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(479
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)
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Write-down of impairment of assets
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2,175
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Fair value adjustment for assets held for sale
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(263
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)
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Gain on disposal of assets
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(80
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)
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(54
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)
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Cash flows from changes in operating assets and liabilities
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Accounts receivable
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(752
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)
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(1,149
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)
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Inventories
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195
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(598
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)
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Prepaid expenses
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(49
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)
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(57
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)
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Other liabilities
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15
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(234
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)
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Accounts payable
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(320
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)
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648
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Accrued expenses
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148
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(5
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)
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Net cash provided by operating activities
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491
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117
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Cash flows from investing activities:
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Proceeds from the sale of assets
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212
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125
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Proceeds from the cash surrender value of officers life insurance policies
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857
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Change in other assets
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(78
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)
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(45
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Capital expenditures
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(841
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)
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(1,601
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)
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Net cash provided by (used in) investing activities
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150
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(1,521
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)
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Cash flows from financing activities:
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Principal payments on long-term debt
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(126
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)
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(79
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)
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(Decrease) increase in line of credit
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(400
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)
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1,125
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Proceeds from loans
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580
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Purchase of treasury stock
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(150
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)
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Deferred financing fees
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(5
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)
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Net cash (used in) provided by financing activities
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(526
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)
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1,471
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Net increase in cash and cash equivalents
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115
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67
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Cash and cash equivalents at beginning of year
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200
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|
|
98
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Cash and cash equivalents at end of period
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$
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315
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$
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165
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See notes to financial statements.
5
MOD-PAC CORP.
Notes to Consolidated Financial Statements
Nine Months Ended October 3, 2009
(unaudited)
1)
Basis of Presentation
The Registrant, MOD-PAC CORP., is referred to in this Quarterly Report on Form 10-Q as MOD-PAC,
the Company or in the nominative we or the possessive our.
The accompanying unaudited financial statements have been prepared in accordance with accounting
principles generally accepted in the United States for interim financial information. Accordingly,
they do not include all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation have been included and are of a normal recurring
nature. The results of operations for any interim period are not necessarily indicative of results
for the full year. Operating results for the nine-month period ended October 3, 2009 are not
necessarily indicative of the results that may be expected for the year ending December 31, 2009.
The balance sheet at December 31, 2008 has been derived from the audited financial statements at
that date, but does not include all of the information and footnotes required by generally accepted
U.S. accounting principles for complete financial statements.
For further information, refer to the financial statements and footnotes thereto included in the
Companys 2008 annual report on Form 10-K.
Revenue is recognized on the accrual basis, which is at the time of shipment of goods or acceptance
at the United States Postal Service.
2)
Recent Accounting Pronouncements
Effective July 1, 2009, the Company adopted the Financial Accounting Standards Board (FASB)
Accounting Standards Codification (ASC) 105-10,
Generally Accepted Accounting Principles -
Overall
(ASC 105-10). ASC 105-10 establishes the FASB
Accounting Standards Codification
(the
Codification) as the source of authoritative accounting principles recognized by the FASB to be
applied by nongovernmental entities in the preparation of financial statements in conformity with
U.S. GAAP. Rules and interpretive releases of the SEC under authority of federal securities laws
are also sources of authoritative U.S. GAAP for SEC registrants. All guidance contained in the
Codification carries an equal level of authority. The Codification superseded all existing non-SEC
accounting and reporting standards. All other non-grandfathered, non-SEC accounting literature not
included in the Codification is non-authoritative. The FASB will not issue new standards in the
form of Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts. Instead, it will
issue Accounting Standards Updates (ASUs). The FASB will not consider ASUs as authoritative in
their own right. ASUs will serve only to update the Codification, provide background information
about the guidance and provide the bases for conclusions on the change(s) in the Codification.
References made to FASB guidance throughout this document have been updated for the Codification.
In December 2007, the ASC Topic 805,
Business Combinations
(ASC 805) was issued. ASC 805
requires the acquirer of a business to recognize and measure the identifiable assets acquired, the
liabilities assumed, and any non-controlling interest in the acquiree at fair value. ASC 805 also
requires transactions costs related to the business combination to be expensed as incurred. ASC 805
applies prospectively to business combinations; the effective date for the Company is January 1,
2009. The impact of ASC 805 on future business combinations cannot currently be determined.
In May 2009, the FASB issued guidance now codified as ASC Topic 855,
Subsequent Events
(ASC
855). ASC 855 establishes general standards for accounting for and disclosure of events that occur
after the balance sheet date but before financial statements are available to be issued
(subsequent events). More specifically, ASC 855 sets forth the period after the balance sheet
date during which management of a reporting entity should evaluate events or transactions that may
occur for potential recognition in the financial statements, identifies the circumstances under
which an entity should recognize events or transactions occurring after the balance sheet date in
its financial statements and the disclosures that should be made about events or transactions that
occur after the balance sheet
date. ASC 855 provides largely the same guidance on subsequent events which previously existed only
in auditing literature. The Company adopted ASC 855 on April 5, 2009. We have evaluated subsequent
events through November 5, 2009, the date this quarterly report on Form 10-Q was filed with the
U.S. Securities and Exchange Commission. We made no significant changes to our condensed
consolidated financial statements as a result of our subsequent events evaluation.
6
3)
Rationalization of Product Lines
In the second quarter of 2009, the Company rationalized its product lines in order to capitalize on
its growing position in the custom folding cartons product line.
The following charges, incurred in the second quarter of 2009, are associated with this
rationalization process:
(in thousands)
|
|
|
|
|
Write-down of impaired assets
|
|
$
|
1,933
|
|
Workforce reduction costs (included in Selling, general and
administrative expenses)
|
|
|
65
|
|
Other rationalization charges (included in Cost of products sold)
|
|
|
134
|
|
|
|
|
|
Total
|
|
$
|
2,132
|
|
|
|
|
|
As of October 3, 2009, approximately $24 thousand of accrued liabilities associated with workforce
reduction charges and contract settlement costs are recorded on the consolidated balance sheet.
Approximately $20 thousand of this amount is expected to be paid in the fourth quarter of 2009.
The Company has not incurred any additional costs associated with this rationalization in the third
quarter of 2009 and does not expect to incur additional costs in the future.
4)
Product Line Net Sales
Product
line net sales are as follows:
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
|
|
|
Three months ended
|
|
|
|
October 3,
|
|
|
September 27,
|
|
|
October 3,
|
|
|
September 27,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
Folding cartons:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Custom folding cartons
|
|
$
|
25,888
|
|
|
$
|
22,189
|
|
|
$
|
9,408
|
|
|
$
|
8,194
|
|
Stock packaging
|
|
|
5,888
|
|
|
|
6,392
|
|
|
|
2,239
|
|
|
|
2,278
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Folding cartons sub-total
|
|
|
31,776
|
|
|
|
28,581
|
|
|
|
11,647
|
|
|
|
10,472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Print services:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty print and direct mail
|
|
|
1,519
|
|
|
|
3,201
|
|
|
|
|
|
|
|
1,064
|
|
Personalized
|
|
|
2,432
|
|
|
|
3,140
|
|
|
|
799
|
|
|
|
968
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Print services sub-total
|
|
|
3,951
|
|
|
|
6,341
|
|
|
|
799
|
|
|
|
2,032
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
35,727
|
|
|
$
|
34,922
|
|
|
$
|
12,446
|
|
|
$
|
12,504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7
5)
Income (Loss) Per Share
The
following table sets forth the computation of income (loss) per
share:
(in thousands except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
|
|
|
Three months ended
|
|
|
|
October 3,
|
|
|
September 27,
|
|
|
October 3,
|
|
|
September 27,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) as reported
|
|
$
|
(3,246
|
)
|
|
$
|
(1,024
|
)
|
|
$
|
1,011
|
|
|
$
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted income (loss)
per share weighted average shares
|
|
|
3,430
|
|
|
|
3,436
|
|
|
|
3,430
|
|
|
|
3,430
|
|
Net effect of diluted stock options
|
|
|
|
|
|
|
|
|
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income (loss) per share
weighted average shares
|
|
|
3,430
|
|
|
|
3,436
|
|
|
|
3,470
|
|
|
|
3,430
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per share
|
|
$
|
(0.95
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
0.29
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income (loss) per share
|
|
$
|
(0.95
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
0.29
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The effect of dilutive stock options has not been included for the nine months ended October 3,
2009 and September 27, 2008, since this would be anti-dilutive as a result of the Companys net
loss. There is no effect of dilutive stock options for the three months ended September 27, 2008
due to the average share price in the three months ended September 27, 2008 being lower than all
outstanding option prices.
6)
Inventories
Inventories are stated at the lower of cost or market, cost being determined in accordance with the
first-in, first-out method.
Inventories
are as follows:
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
October 3,
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
Finished goods
|
|
$
|
2,631
|
|
|
$
|
2,671
|
|
Work in progress
|
|
|
361
|
|
|
|
238
|
|
Raw material
|
|
|
1,126
|
|
|
|
1,404
|
|
|
|
|
|
|
|
|
Total inventory
|
|
$
|
4,118
|
|
|
$
|
4,313
|
|
|
|
|
|
|
|
|
7)
Income Taxes
The Companys effective tax rate for the third quarter and first nine months of 2009 was 0% and
3.3%, respectively. This benefit was less than the statutory income tax rate, primarily as a
result of the Company recording a full valuation allowance of $1.0 million related to its net
deferred tax asset. The valuation allowance was recorded due to the uncertainty with respect to
utilizing this net deferred tax asset in the future based on the trend of operating losses. The
effective tax rate for the third quarter and first nine months of 2008 was 74.1% and 31.8%,
respectively. The effective tax rate in the third quarter of 2008 was impacted by a revision in
the expected effective annual tax rate and the low amount of income before income taxes in the
quarter.
The Companys continuing practice is not to recognize interest and/or penalties related to income
tax matters in income tax expense. As of October 3, 2009, the Company had no amounts accrued
related to uncertain tax positions. The tax years 2006, 2007, and 2008 remain open to examination
by the major taxing jurisdictions to which the Company is subject.
8
8)
Stock-Based Compensation
MOD-PAC CORP. established a Stock Option Plan that authorized the issuance of 800,000 shares of
Common Stock for the purpose of attracting and retaining executive officers and key employees, and
to align managements interests with those of the shareholders of MOD-PAC CORP. The options must
be exercised no more than ten years from the grant date and vest over up to a five-year period.
The exercise price for the options is equal to the fair market value of the common stock at the
date of grant.
MOD-PAC CORP. established the Directors Stock Option Plan that authorized the issuance of 200,000
shares of Common Stock for the purpose of attracting and retaining the services of experienced and
knowledgeable outside directors, and to align their interest with those of its shareholders. The
options must be exercised no more than ten years from the grant date and vest after six months.
The exercise price for the options is equal to the fair market value at the date of grant.
The Company uses a straight-line method of attributing the value of stock-based compensation
expense, subject to minimum levels of expense, based on vesting. Stock compensation expense
recognized during the period is based on the value of the portion of shared-based payment awards
that is ultimately expected to vest during the period.
The fair value of stock options granted was estimated on the date of grant using the Black-Scholes
option-pricing model. The weighted average fair value of the options was $1.08 and $2.27 for
options granted during the nine months ended October 3, 2009 and September 27, 2008, respectively.
The following table provides the range of assumptions used to value stock options granted during
the nine months ended October 3, 2009 and September 27, 2008.
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
October 3,
|
|
|
September 27,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
Expected volatility
|
|
|
75
|
%
|
|
|
39
|
%
|
Risk-free rate
|
|
|
2.0
|
%
|
|
|
2.9
|
%
|
Expected dividends
|
|
|
0
|
%
|
|
|
0
|
%
|
Expected term (in years)
|
|
|
5.5
|
|
|
|
5.5
|
|
To determine expected volatility, the Company uses historical volatility based on weekly closing
prices of its Common Stock since the Companys spin-off from Astronics Corporation in March 2003.
The risk-free rate is based on the United States Treasury yield curve at the time of grant for the
appropriate term of the options granted. Expected dividends are based on the Companys history and
expectation of dividend payouts. The expected term of stock options is based on vesting schedules,
expected exercise patterns and contractual terms.
A summary of the Companys stock option activity and related information for the nine months ended
October 3, 2009 is as follows:
(aggregate intrinsic value in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
Aggregate
|
|
|
|
|
|
|
|
Average
|
|
|
Intrinsic
|
|
|
|
Options
|
|
|
Exercise Price
|
|
|
Value
|
|
Outstanding at January 1, 2009
|
|
|
537,009
|
|
|
$
|
7.33
|
|
|
$
|
67
|
|
Options granted
|
|
|
30,000
|
|
|
|
1.68
|
|
|
|
|
|
Options forfeited
|
|
|
(7,000
|
)
|
|
|
1.85
|
|
|
|
|
|
Options expired
|
|
|
(14,180
|
)
|
|
|
5.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at October 3, 2009
|
|
|
545,829
|
|
|
$
|
7.10
|
|
|
$
|
89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at October 3, 2009
|
|
|
451,589
|
|
|
$
|
7.44
|
|
|
$
|
65
|
|
|
|
|
|
|
|
|
|
|
|
The aggregate intrinsic value in the preceding table represents the total pretax option holders
intrinsic value, based on the Companys closing stock price of Common Stock of $2.39 as of October
3, 2009, which would have been received by the option holders had all option holders with an
exercise price less than the market price been exercised as of that date. The intrinsic value of
options exercised is based on the Companys closing stock price of common stock as of the date the
option is exercised. There
were no options exercised in the first nine months of 2009. The Companys current policy is to
issue additional new shares upon exercise of stock options.
9
The fair value of options vested since December 31, 2008 is $138 thousand. At October 3, 2009,
total compensation costs related to non-vested awards not yet recognized was $189 thousand which
will be recognized over a weighted average period of 1.6 years.
The following is a summary of weighted average exercise prices and contractual lives for
outstanding and exercisable stock options as of October 3, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
|
|
|
Exercisable
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
Weighted
|
|
|
|
|
|
|
|
Remaining
|
|
|
Average
|
|
|
|
|
|
|
Remaining
|
|
|
Average
|
|
Exercise Price
|
|
|
|
|
|
Life
|
|
|
Exercise
|
|
|
|
|
|
|
Life
|
|
|
Exercise
|
|
Range
|
|
Shares
|
|
|
in Years
|
|
|
Price
|
|
|
Shares
|
|
|
in Years
|
|
|
Price
|
|
$1.68 to $5.62
|
|
|
207,659
|
|
|
|
8.1
|
|
|
$
|
2.79
|
|
|
|
165,659
|
|
|
|
7.0
|
|
|
$
|
3.03
|
|
$6.22 to $8.44
|
|
|
148,919
|
|
|
|
5.5
|
|
|
$
|
7.72
|
|
|
|
119,719
|
|
|
|
4.8
|
|
|
$
|
7.81
|
|
$10.00 to $11.73
|
|
|
132,474
|
|
|
|
6.3
|
|
|
$
|
10.79
|
|
|
|
109,874
|
|
|
|
6.2
|
|
|
$
|
10.83
|
|
$12.41 to $15.54
|
|
|
56,777
|
|
|
|
4.5
|
|
|
$
|
13.01
|
|
|
|
56,337
|
|
|
|
4.5
|
|
|
$
|
13.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
545,829
|
|
|
|
6.6
|
|
|
$
|
7.14
|
|
|
|
451,589
|
|
|
|
5.9
|
|
|
$
|
7.44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9)
Line of Credit
The Company has access to a $5.0 million committed line of credit with a commercial bank, which
expires in March 2010. At October 3, 2009, $0.6 million was borrowed and an additional $0.2
million was in use through standby letters of credit. The amount of the line of credit that was
unused and available to the Company at October 3, 2009 was $4.2 million. Interest on the line of
credit is either LIBOR plus 150 basis points or the prime rate plus 50 basis points, at the
Companys option.
10)
Assets Held for Sale
As a result of the Companys rationalization of its product lines in the second quarter of 2009 and
managements change of plans regarding its use of the Blasdell, NY facility in the second quarter
of 2009, the Company has presented the following assets as held for sale as of October 3, 2009. The
presentation of assets held for sale is based on managements committed plan and related actions to
sell these assets.
Assets
held for sale are as follows:
(in thousands)
|
|
|
|
|
Specialty Print and Direct Mail equipment
|
|
$
|
700
|
|
Land and building Blasdell, NY facility
|
|
|
1,391
|
|
|
|
|
|
Total
|
|
$
|
2,091
|
|
|
|
|
|
The Company recognized asset impairment charges in the second quarter of 2009 of $2.1 million ($0.2
million for the Blasdell, NY facility and $1.9 million for Specialty Print and Direct Mail
equipment) related to these assets based upon an estimate of the net realizable value based on
expected selling prices less costs to sell. The reported fair value of these assets held for sale
is considered to be level three within the fair value hierarchy as established by ASC 820
Fair
Value Measurements
. Level three is defined as inputs for which significant valuation assumptions
are unobservable in a market and therefore value is based on the best available data, some of which
is internally developed and considers risk premiums that a market participant would require.
During the third quarter of 2009 the carrying value of assets held for sale increased by $163
thousand. This increase was the result of an adjustment of $263 thousand to increase the carrying
value to fair value that was made at the end of the third quarter based on bids received in a
public auction held in September 2009, offset partially, by a decrease in balance of $100 thousand
for assets sold during the third quarter of 2009.
10
On October 9, 2009 the Company entered into a contract to sell the Blasdell, NY facility. The sale
is subject to various terms and conditions and there is no assurance that the facility will be
sold. The net proceeds of the sale are expected to approximate the carrying value of the property
at October 3, 2009.
Subsequent to October 3, 2009 and through November 5, 2009 the Company received net proceeds of
$483 thousand from the sale of Specialty Print and Direct Mail equipment. The sale price
approximates the fair value of the assets at October 3, 2009.
11)
Capital Structure
The Companys Class B stock is fully convertible into Common stock on a one-for-one basis at no
cost. During the first nine months of 2009, 4,210 shares of Class B stock were converted to Common
stock.
12)
Information Regarding Industry Segments
The Company operates as one reporting segment. The Companys customer base is comprised of
companies and individuals throughout the United States and North America and is diverse in both
geographic and demographic terms. The format of the information used by the Companys President and
CEO is consistent with the reporting format used in the Companys 2008 Form 10-K and other external
information.
13)
Financial Instruments
The Companys financial instruments consist primarily of cash and cash equivalents, receivables,
accounts payable and long-term debt. The carrying value of the Companys accounts receivable and
accounts payable approximate fair value due to the short-term nature of the instruments. The
recorded amounts for long-term debt approximate fair value based on current market rates of similar
instruments.
14)
Long-Term Debt
Long-term debt includes the following:
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
October 3,
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
Capital lease obligations:
|
|
|
|
|
|
|
|
|
Building
due in 2023; bears interest at 10%; payable monthly
|
|
$
|
1,800
|
|
|
$
|
1,800
|
|
Equipment
|
|
|
42
|
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
1,842
|
|
|
|
1,820
|
|
Less estimated current maturities
|
|
|
22
|
|
|
|
12
|
|
|
|
|
|
|
|
|
Capital lease obligations long-term
|
|
|
1,820
|
|
|
|
1,808
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans:
|
|
|
|
|
|
|
|
|
Equipment loans
|
|
|
549
|
|
|
|
650
|
|
Other
|
|
|
96
|
|
|
|
111
|
|
|
|
|
|
|
|
|
|
|
|
645
|
|
|
|
761
|
|
Less estimated current maturities
|
|
|
164
|
|
|
|
156
|
|
|
|
|
|
|
|
|
Loans long-term
|
|
|
481
|
|
|
|
605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt
|
|
$
|
2,301
|
|
|
$
|
2,413
|
|
|
|
|
|
|
|
|
11
15)
Assets Under Capital Leases Included in Property, Plant and Equipment
Assets under capital leases included in property, plant and equipment are summarized as follows:
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
October 3,
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
Land
|
|
$
|
400
|
|
|
$
|
400
|
|
Buildings
|
|
|
4,148
|
|
|
|
4,148
|
|
Equipment
|
|
|
32
|
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
4,580
|
|
|
|
4,573
|
|
Less accumulated depreciation
|
|
|
845
|
|
|
|
711
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets under capital leases
|
|
$
|
3,735
|
|
|
$
|
3,862
|
|
|
|
|
|
|
|
|
16)
Long-Lived Assets
Long-lived assets, including acquired identifiable intangible assets, are tested for impairment
whenever events or changes in circumstances indicate that the carrying amount of those assets may
not be recoverable. An impairment loss is recognized if the carrying amount of a long-lived asset
or asset group is not recoverable and exceeds its fair value. The carrying amount of a long-lived
asset or asset group is not recoverable if it exceeds the sum of the undiscounted cash flows
expected to result from the use and eventual disposition of the asset or asset group. That
assessment is based on the carrying amount of the asset or asset group at the date tested. An
impairment loss is measured as the amount by which the carrying amount of a long-lived asset or
asset group exceeds its fair value.
Based on this testing, no asset impairment charges were recognized in 2008. The Company recognized
asset impairment charges in the second quarter of 2009 of $2.2 million.
12
Item 2.
Managements Discussion and Analysis of Financial Condition and Results of
Operations
OVERVIEW
In the 2009 second quarter, we made a strategic decision to rationalize our product lines and exit
the commercial print market, choosing to focus our resources on our growing custom folding carton
line. As a result of the rationalization, we expect to realize significant improvement in
operating performance as we had not realized the results that we had anticipated in the commercial
print market over the last four years. In addition, we expect that we can be more effective in
sales and marketing in the custom folding carton market with a more focused approach. Our custom
folding carton customers are generally in the healthcare, confectionary, food and food service, and
automotive industries, including private label manufacturers. Our expertise in this market is our
ability to run on-demand the specific quantities required by our customers as opposed to doing long
runs and creating inventory and obsolescence challenges either for our customers or ourselves. As
a result, we do not require minimum print orders and are more flexible than most printers in
addressing our customers needs. This capability has served extremely well for our private label
customers who may have several of the same carton requirements with varying print requirements for
their customers.
We also plan to continue developing our stock packaging and personalized print product lines. Our
stock packaging line serves primarily private confectionaries and, therefore is seasonal in nature
and driven by the economy. During this recession, sales in stock packages have declined
measurably. Our personalized print product line is focused on its store, catalog and web sales.
Because we provide products such as personalized dinner and cocktail napkins, small boxes for
sundries at events, and other celebration type items both for the retail and corporate markets,
this product line is also heavily impacted by economic downturns. Nonetheless, we believe that in
the stock packaging market, we are a leader with over 4,000 customers that we serve around the
world. Also, in personalized print where we compete with much larger companies, we have developed
a strong brand as Krepe-Kraft among event planners and wedding coordinators. Our website,
www.partybasics.com
, has had some success, and we also provide our products to third-party
webstores as well.
REVENUE
For the third quarter of 2009, total revenue was $12.6 million, relatively unchanged from the third
quarter of 2008. The custom folding carton product line sales were $9.4 million compared with $8.2
million in the third quarter of 2008. The 14.8% increase was mainly due to substantial growth with
several large existing customers and sales to one large new customer, offset partially by decreased
business with several existing customers and decreased waste sales due to a drop in the recycled
paperboard market. Sales of the Companys stock packaging product line were $2.2 million compared
with $2.3 million in the third quarter of 2008, down 1.7% primarily due to weakness in general
business conditions. Personalized print sales for the third quarter of 2009 were $0.8 million
compared with $1.0 million in 2008, a decrease of 17.5%, mainly due to weakness in general business
conditions. There were no specialty print and direct mail sales in the third quarter of 2009 due
to the product line rationalization that took place at the end of the second quarter of 2009.
Specialty print and direct mail sales were $1.1 million in the third quarter of 2008.
For the first nine months of 2009, total revenue was $36.1 million compared with $35.3 million in
2008, an increase of 2.4%. The custom folding cartons product line sales were $25.9 million
compared with $22.2 million in 2008. This was an increase of 16.7% due to increased business
volumes from several customers including substantial growth from several large existing customers
and sales to one large new customer, that was partially offset by decreased business from several
existing customers and decreased waste sales due to a drop in the recycled paperboard market. Sales
of the Companys stock packaging product line were $5.9 million, compared with $6.4 million in the
prior year, a decrease of 7.9% mainly due to weakness in general business conditions. Personalized
print sales for the first nine months of 2009 were $2.4 million compared with $3.1 million in the
same period of 2008, a decrease of 22.5% primarily due to general soft market conditions. Specialty
print and direct mail sales for the first nine months of 2009 were $1.5 million compared to $3.2
million in the first nine months of 2009. There were no specialty print and direct mail sales in
the third quarter of 2009 due to the product line rationalization that took place at the end of the
second quarter of 2009.
13
EXPENSES AND MARGINS
Gross margin was 20.0% for the third quarter of 2009, up from 15.6% in the third quarter of 2008.
The improvement in gross margin was driven by the measurable savings realized from the product line
rationalization. Savings were realized through lower depreciation expense and decreased labor and
supply costs. Lower freight and utility costs also helped margin improvement. Partially
offsetting those gains were generally weaker custom folding carton sales mix and decreased product
waste sales due to a drop in the recycled paperboard market. Selling, general, and administrative
costs (SG&A) decreased slightly to $1.8 million in the third quarter of 2009 from $1.9 million
during the same period in the prior year. Lower labor costs due to reduced headcount from the
product line rationalization combined with decreased professional service fees more than offset
increased commission expense.
Gross margin was 12.2% for the first nine months of 2009, down from 13.0% for the same period of
2008. The current year gross margin for the first nine months was negatively affected by a
generally weaker sales mix, decreased waste sales due to a drop in the recycled paperboard market,
and increased repairs expense, offset slightly by lower depreciation expense in the current year.
Selling, general, and administrative costs decreased 3.2% to $5.8 million in the first nine months
of 2009 from $6.0 million during the same period in the prior year. This slight decrease was driven
primarily by lower professional service costs, offset partially by higher depreciation expense.
Included in the first nine months of 2009 SG&A, was $65 thousand in workforce reduction costs that
were the result of the Companys rationalization of the specialty print and direct mail product
lines in the second quarter of 2009. Additionally, $2.2 million of expense was incurred that was
associated with the write-down of impaired assets in the second quarter of 2009. This impairment
resulted from the Companys rationalization of the specialty print and direct mail product line in
the second quarter of 2009 and the write-down of its Blasdell, NY facility to fair market value
based on expected selling prices net of costs to sell.
TAXES
The Companys effective tax rate for the third quarter and first nine months of 2009 was 0% and
3.3%, respectively. This benefit was less than the statutory income tax rate, primarily as a
result of the Company recording a full valuation allowance of $1.0 million related to its net
deferred tax asset. The valuation allowance was recorded due to the uncertainty with respect to
utilizing this net deferred tax asset in the future based on the trend of operating losses. The
effective tax rate for the third quarter and first nine months of 2008 was 74.1% and 31.8%,
respectively. The effective tax rate in the third quarter of 2008 was impacted by a revision in
the expected effective annual tax rate and the low amount of income before income taxes in the
quarter.
NET INCOME/LOSS AND INCOME/LOSS PER SHARE
The net income for the third quarter of 2009 was $1.0 million, compared with a net income of $0.01
million in the third quarter of 2008. In addition to the fluctuations discussed above, other
income was $0.4 million in the third quarter of 2009. Included in this balance is a $0.3 million
fair value adjustment to increase the balance of assets held for sale associated with the
rationalized product line based on bids received in a public auction held in September 2009. These
assets had previously been written down in the second quarter of 2009. Also included in other
income was a $0.1 million gain on the sale of assets associated with the rationalized product line.
Diluted income per share was $0.29 in the third quarter of 2009 and $0.00 in the third quarter of
2008.
The net loss for the first nine months of 2009 was $3.2 million, or $0.95 per diluted share,
compared with a net loss of $1.0 million, or $0.30 per diluted share, in the first nine months of
2008. This increase in loss was due to the fluctuations discussed above.
LIQUIDITY
Cash and cash equivalents at October 3, 2009, were increased slightly to $0.3 million from the $0.2
million balance at December 31, 2008.
The Company has access to a $5.0 million committed line of credit with a commercial bank, which
expires in March 2010. At October 3, 2009, $0.6 million was borrowed and an additional $0.2
million
was in use through standby letters of credit. The borrowed amount is a decrease of $0.4 million
from the balance at December 31, 2008. Interest on the line of credit is either LIBOR plus 150
basis points or the prime rate plus 50 basis points at the Companys option.
14
The decrease in the amount outstanding under the line of credit in the first nine months of 2009
was primarily the result of proceeds from the cash surrender value of officers life insurance
policies, proceeds from the sale of specialty print and direct mail equipment, non-cash impairment
charges, and depreciation and amortization expense, partially offset by net losses, capital
expenditures, and working capital requirements.
Accounts payable declined $0.3 million during the first nine months of 2009 primarily due to timing
of payments.
Accounts receivable increased $0.8 million during the first nine month of 2009, primarily due to
the timing of sales and collections.
Capital expenditures driven primarily by productivity improvement and upgrade investments, for the
first nine months of 2009, were $0.8 million compared with $1.6 million for the first nine months
of 2008. Depreciation and amortization for the first nine months of 2009 was $2.5 million compared
with $2.9 million in the same period last year.
The Company believes that cash, cash equivalents, and the line of credit are sufficient to meet
cash requirements for operations, capital expenditures and debt service for the balance of 2009.
The Companys management is in the process of negotiation to renew or replace the existing line of
credit that is due to expire in the first quarter of 2010.
There were no shares repurchased by the Company during the first nine months of 2009. The Company
has authorization to repurchase 75,885 shares at October 3, 2009. The closing price of the
Companys stock at October 3, 2009 was $2.39. At this price, the repurchase of 75,885 shares would
require $181,365.
CONTRACTUAL OBLIGATIONS
The following table displays an update in the format of the information originally presented on the
Companys 2008 Form 10-K related to its capital lease obligations.
(in thousands, as of December 31, 2008)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period
|
|
Total
|
|
|
2009
|
|
|
2010-2011
|
|
|
2012-2013
|
|
|
After 2013
|
|
Line of Credit
|
|
$
|
1,000
|
|
|
|
|
|
|
$
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment Loans
|
|
|
650
|
|
|
|
136
|
|
|
|
305
|
|
|
|
209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Loans
|
|
|
111
|
|
|
|
20
|
|
|
|
44
|
|
|
|
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Lease
Obligation
Aggregate payments
(1)
|
|
|
7,844
|
|
|
|
155
|
|
|
|
339
|
|
|
|
360
|
|
|
|
6,990
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Lease
Obligations
Aggregate (Other)
|
|
|
21
|
|
|
|
13
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Leases
|
|
|
849
|
|
|
|
514
|
|
|
|
326
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase Commitments
|
|
|
1,278
|
|
|
|
1,022
|
|
|
|
256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
11,753
|
|
|
$
|
1,860
|
|
|
$
|
2,278
|
|
|
$
|
625
|
|
|
$
|
6,990
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Represents a forty-nine year lease beginning November 2003 for 203,000 square feet of
office and warehouse buildings adjacent to our corporate printing and manufacturing
property. Beginning in November 2022 and ending in October 2027, the Company has an option
to purchase the property for $1.8 million and terminate the lease. If the purchase option
is not exercised, the Company is obligated to make monthly payments of $15,000 through
October 2052.
|
15
COMMITMENTS
The Company has commitments for items that it purchases in the normal on-going affairs of the
business. The Company is not aware of any obligations in excess of normal market conditions, or of
any long-term commitments that would have a material adverse affect on its financial condition.
MARKET RISK
There has been no significant change in market risks since December 31, 2008.
As a result of short cycle times, the Company does not have any long-term commitments to purchase
production raw materials or sell products that would present significant risks due to price
fluctuations. Raw paper stock is available to us from multiple domestic sources; as a result, we
believe the risk of supply interruptions due to such things as strikes at the source of supply or
to failures in logistics systems are limited.
Risks due to fluctuation in interest rates are not material to the Company at October 3, 2009
because of our limited exposure to floating rate debt.
Since May of 2003, over 90% of the Companys power needs are met through natural gas. The Company
has investigated supply contracts of various lengths and currently it has supply arrangements for
fixed prices on approximately 60% of its estimated usage through October 2010. Historically, the
price of natural gas has fluctuated widely. Although the Company is concerned about cost, its main
concern is availability. The Company monitors the availability of natural gas, considering such
factors as amount in storage, gas production data and transportation data, so that it can take
appropriate action if concerns about availability occur. The Company has investigated and tested a
back-up power source in the form of a rented transportable diesel-powered generator. Although such
generators are generally available, the Company cannot be assured that a generator adequate to meet
the Companys needs would be available if and when such need should arise.
We have no foreign operations, nor do we transact any business in foreign currencies. Accordingly,
we have no foreign currency market risks.
The market risk that the Company was exposed to at December 31, 2008 was generally the same as
described above.
CRITICAL ACCOUNTING POLICIES
There have been no changes in critical accounting policies in the current year from those disclosed
in our 2008 Form 10-K.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this report are forward-looking statements within the meaning of
the U.S. Private Securities Litigation Reform Act of 1995. All forward-looking statements involve
risks and uncertainties. All statements contained herein that are not clearly historical in nature
are forward-looking, and the word anticipate, believe, expect, estimate, project, and
similar expressions are generally intended to identify forward-looking statements. Any forward
looking statement contained herein, in press releases, written statements or other documents filed
with the Securities and Exchange Commission, or in MOD-PACs communications and discussions with
investors and analysts in the normal course of business through meetings, webcasts, phone calls and
conference calls, regarding expectations with respect to sales, earnings, cash flows, operating
efficiencies, product and market channel expansions, capacity utilization and expansion, and
repurchase of capital stock, are subject to known and unknown risks, uncertainties and
contingencies. Many of these risks, uncertainties, and contingencies are beyond our control, and
may cause actual results, performance or achievements to differ materially from anticipated
results, performance or achievements. Factors that might affect such forward-looking statements
include, among other things:
|
|
|
Overall economic and business conditions;
|
|
|
|
|
The demand for MOD-PACs goods and services;
|
|
|
|
|
Customer acceptance of the products and services MOD-PAC provides;
|
|
|
|
|
Competitive factors in print and print services and folding cartons industries;
|
|
|
|
|
Changes in tax requirements (including tax rate changes, new tax laws and revised tax
law interpretations);
|
16
|
|
|
The availability and costs of natural gas supplies in Western New York State;
|
|
|
|
|
The internal and external costs of compliance with laws and regulations such as Section
404 of the Sarbanes-Oxley Act of 2002; and
|
|
|
|
|
Litigation against the Company.
|
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
See Market Risk in Item 2, above.
Item 4T.
Controls and Procedures
The Companys management, with the participation of the Companys President and Chief Executive
Officer, and Chief Operating Officer and Chief Financial Officer, has evaluated the effectiveness
of the Companys disclosure controls and procedures as defined in Rules 13a 15(e) and 15(d) -
15(e) of the Securities Exchange Act of 1934, as of October 3, 2009. Based on that evaluation, the
Companys President and Chief Executive Officer, and Chief Operating Officer and Chief Financial
Officer concluded that the Companys disclosure controls and procedures were effective as of
October 3, 2009. There were no changes in the Companys internal control over financial reporting
during the third quarter of 2009 that have materially affected, or are reasonably likely to
materially affect, the Companys internal control over financial reporting.
PART II OTHER INFORMATION
Item 1.
Legal Proceedings
There are no material pending legal proceedings to which the Registrant or any of its
subsidiaries is a party or of which any of their property is the subject.
Item 1A
.
Risk Factors
There has been no significant change to the risk factors disclosed in our Annual Report
on Form 10-K for the year ended December 31, 2008.
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Total Number
|
|
|
(d) Maximum
|
|
|
|
|
|
|
|
|
|
|
|
of Shares (or
|
|
|
Number (or
|
|
|
|
|
|
|
|
(b)
|
|
|
Units) Purchased
|
|
|
Approximate Dollar
|
|
|
|
(a) Total
|
|
|
Average
|
|
|
as Part of
|
|
|
Value) of Shares (or
|
|
|
|
Number of
|
|
|
Price
|
|
|
Publicly
|
|
|
Units) that May Yet
|
|
|
|
Shares (or
|
|
|
Paid per
|
|
|
Announced
|
|
|
Be Purchased Under
|
|
|
|
Units)
|
|
|
Share
|
|
|
Plans or
|
|
|
the Plans or
|
|
Period
|
|
Purchased
|
|
|
(or Unit)
|
|
|
Programs
|
|
|
Programs
|
|
July 5 August 1, 2009
|
|
|
|
|
|
|
N/A
|
|
|
|
¾
|
|
|
|
75,885
|
|
August 2 August 29, 2009
|
|
|
¾
|
|
|
|
N/A
|
|
|
|
¾
|
|
|
|
75,885
|
|
August 30 October 3, 2009
|
|
|
¾
|
|
|
|
N/A
|
|
|
|
¾
|
|
|
|
75,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
¾
|
|
|
|
N/A
|
|
|
|
¾
|
|
|
|
75,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Item 3.
Defaults Upon Senior Securities
Not applicable.
17
Item 4.
Submission of Matters to a Vote of Securities Holders
Not applicable.
Item 5.
Other Information
Not applicable.
Item 6.
Exhibits
|
|
|
Exhibit 31.1
|
|
Section 302 Certification President and Chief Executive Officer
|
|
|
|
Exhibit 31.2
|
|
Section 302 Certification Chief Operating Officer and Chief Financial
Officer
|
|
|
|
Exhibit 32.1
|
|
Certification of President and Chief Executive Officer pursuant to 18
U.S.C. Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of
2002
|
|
|
|
Exhibit 32.2
|
|
Certification of Chief Operating Officer and Chief Financial Officer pursuant to
18 U.S.C. Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002
|
18
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, thereunto duly authorized.
|
|
|
|
|
|
MOD-PAC CORP.
|
|
|
(Registrant)
|
|
|
Date: November 5, 2009
|
/s/ David B. Lupp
|
|
|
David B. Lupp
|
|
|
Chief Operating Officer and Chief
Financial Officer
(Principal Financial Officer)
|
|
19
EXHIBIT INDEX
|
|
|
Exhibit
|
|
|
No.
|
|
Description
|
Exhibit 31.1
|
|
Section 302 Certification President and Chief Executive Officer
|
|
|
|
Exhibit 31.2
|
|
Section 302 Certification Chief Operating Officer and Chief Financial Officer
|
|
|
|
Exhibit 32.1
|
|
Certification of President and Chief Executive Officer pursuant to 18 U.S.C.
Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of
2002
|
|
|
|
Exhibit 32.2
|
|
Certification of Chief Operating Officer and Chief Financial Officer pursuant
to 18 U.S.C. Section 1350 as adopted pursuant to section 906 of the
Sarbanes-Oxley Act of 2002
|
20
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