-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CaQjBW574LgRUm6gI2Ev3iF8Tjgf+30QJeAXB/v+zbbljLCRDCHDiWnHvv2m8LFf icxhT9bb9ByIc6qmosA8kw== 0000912057-96-026191.txt : 19961118 0000912057-96-026191.hdr.sgml : 19961118 ACCESSION NUMBER: 0000912057-96-026191 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEOGRAPHICS INC CENTRAL INDEX KEY: 0001000621 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PAPER AND PAPER PRODUCTS [5110] IRS NUMBER: 870305614 STATE OF INCORPORATION: WY FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-26756 FILM NUMBER: 96662819 BUSINESS ADDRESS: STREET 1: 1555 ODELL RD CITY: BLAINE STATE: WA ZIP: 98230 BUSINESS PHONE: 3603326711 MAIL ADDRESS: STREET 1: 1555 ODELL RD CITY: BLAINE STATE: WA ZIP: 98230 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended: September 30, 1996 ------------------ Commission File Number: 0-26756 ------- GEOGRAPHICS, INC. (Exact name of registrant as specified in its charter) Wyoming 87-0305614 - ------------------------------------------------------------------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1555 Odell Road, P.O. Box 1750, Blaine, WA 98231 - ------------------------------------------------------------------------------ (Address of principal executive office and zip code) (360) 332-6711 - ------------------------------------------------------------------------------ (Registrant's telephone number including area code) 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 X No ---------- ---------- The registrant had 9,416,877 shares of common stock outstanding as of November 8, 1996. GEOGRAPHICS, INC. INDEX PAGE ----- Part I. FINANCIAL INFORMATION ITEM 1 Financial Statements Consolidated Statements of Income for the Three Months and Six Months Ended September 30, 1996 and September 30, 1995 3 Consolidated Balance Sheets as of September 30, 1996 and March 31, 1996 4 Consolidated Statements of Cash Flows for the Six Months Ended September 30, 1996 and September 30, 1995 5 Notes to Consolidated Financial Statements 6 - 7 ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 8 - 10 Part II. OTHER INFORMATION 11 - 13 SIGNATURE 15 Exhibit 11 - Computation of Earnings per Share 16 Exhibit 27 - Financial Data Schedule 17 GEOGRAPHICS, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended Six Months Ended - ------------------------------------------------------------------------------------ Sept. 30 Sept. 30 Sept. 30 Sept. 30 1996 1995 1996 1995 - ------------------------------------------------------------------------------------ Sales $ 6,858,676 $ 5,158,126 $ 13,029,743 $ 10,093,834 Cost of Sales 4,083,653 3,150,693 7,809,954 6,178,249 ----------- ----------- ------------ ------------ Gross Margin 2,775,023 2,007,433 5,219,789 3,915,585 S.G. & A Expense 1,975,339 1,312,954 4,009,344 2,603,692 Goodwill Amortization 0 0 0 159,768 ----------- ----------- ------------ ------------ Operating Income 799,684 694,479 1,210,445 1,152,125 Other Income (Expenses) Interest Expense (203,341) (195,231) (394,112) (358,337) Other (10,065) 67,737 (13,841) 89,154 ----------- ----------- ------------ ------------ Income Before Provision for Income Taxes 586,278 566,985 802,492 882,942 Income Tax Provision 213,172 192,775 283,209 300,201 ----------- ----------- ------------ ------------ Net Income $ 373,106 $ 374,210 $ 519,283 $ 582,741 ----------- ----------- ------------ ------------ ----------- ----------- ------------ ------------ Earnings Per Common and Common Equivalent Share Primary $0.04 $0.06 $0.06 $0.10 Assuming full dilution $0.04 $0.06 $0.06 $0.09 Share used in computing earnings per common and common equivalent shares: Primary 9,427,811 6,170,171 9,198,337 5,869,219 Assuming full dilution 9,427,803 7,035,423 9,199,419 7,132,239
SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS GEOGRAPHICS, INC. CONSOLIDATED BALANCE SHEETS ASSETS
Sept. 30, 1996 March 31, 1996 (Unaudited) (Audited) Current Assets Cash $ 188,948 $ 50,028 Accounts receivable, net 5,293,250 4,974,156 Related party receivables 0 899,422 Other receivables 180,608 62,572 Inventories 13,275,929 9,139,273 Deposits 1,394,255 597,693 Prepaid expenses 483,794 99,204 Deferred income tax 837,339 970,000 Other 145,900 96,512 ------------ ------------ Total current assets 21,800,023 16,888,860 Property, plant & equipment, net 9,393,035 7,286,694 Deferred income tax 192,000 192,000 Investment in partnerships 119,596 (34,484) Other assets 397,504 404,971 ------------ ------------ Total Assets $ 31,902,158 $ 24,738,041 ------------ ------------ ------------ ------------ LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities Note payable to bank 4,398,617 5,322,939 Accounts payable 2,010,041 2,634,598 Accrued liabilities 1,946,773 1,033,905 Income tax payable 45,952 145,278 Note payable to officer & director 1,000,000 1,264,711 Current portion of long-term debt 782,302 656,398 ------------ ------------ Total current liabilities 10,183,685 11,057,829 Long-term debt 4,665,842 3,690,360 ------------ ------------ Total liabilities 14,849,527 14,748,189 ------------ ------------ Stockholders' Equity Common stock, without par value; 100,000,000 shares authorized; 9,412,877 and 8,004,584 issued and outstanding on Sept. 30, 1996 and March 31, 1996, respectively 16,159,408 9,620,068 Foreign currency translation adjustment 4,156 0 Retained earnings 889,067 369,784 ------------- ------------ Total Stockholders' Equity 17,052,631 9,989,852 Total Liabilities and Stockholders' Equity $ 31,902,158 $ 24,738,041 ------------ ------------ ------------ ------------
SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS GEOGRAPHICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended -------------------------------- Sept. 30, 1996 Sept. 30, 1995 -------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 519,283 $ 582,742 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH FLOWS FROM OPERATING ACTIVITIES Depreciation and amortization 759,980 612,839 Common stock issued in lieu of other liabilities 0 130,000 Deferred income tax 132,661 0 (Gain) loss on sale of property and equipment 8,985 (119) Equity loss from investments in partnerships 0 (3,655) CHANGES IN OPERATING ASSETS AND LIABILITIES Accounts receivable (138,848) (452,290) Related party receivables 899,422 0 Other receivables (118,036) (73,677) Inventory (3,939,208) (3,288,691) Deposits (796,562) (181,047) Prepaid expenses (384,590) (278,575) Other current assets (49,388) (6,162) Accounts payable (624,557) 509,218 Accrued liabilities 522,029 370,830 Income tax payable (99,326) 64,851 ----------- ----------- Net cash flows from operating activities (3,308,155) (2,013,736) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Net borrowings (repayments) on note payable to bank (924,322) 1,347,001 Proceeds from short-term borrowings 0 800,000 Proceeds from long-term debt borrowings 225,000 583,324 Repayment of long-term debt (343,378) (259,549) Proceeds (repayment) of notes to officers & directors (264,711) 900,000 Proceeds from issuance of common stock 6,539,340 52,152 Foreign currency translation 4,156 0 ----------- ----------- Net cash flows from financing activities 5,236,085 3,422,928 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of equipment (1,607,921) (1,204,941) Proceeds from sale of equipment 6,887 16,741 Net (increase) decrease in advances to partnerships (154,080) (182,634) Change in other assets (33,896) (14,567) ----------- ----------- Net cash flows from investing activities (1,789,010) (1,385,401) ----------- ----------- NET CHANGE IN CASH 138,920 23,791 CASH, beginning of year 50,028 15,348 ----------- ----------- CASH, end of quarter $ 188,948 $ 39,139 ----------- ----------- ----------- ----------- NONCASH INVESTING AND FINANCING ACTIVITIES Financing obtained directly from sellers in acquisition of equipment $ 1,219,764 $ 242,293 ----------- ----------- ----------- ----------- Assets acquired directly in acquisition of business $ 390,839 $ 0 ----------- ----------- ----------- -----------
SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS GEOGRAPHICS, INC. Notes to Consolidated Financial Statements 1. The accompanying interim unaudited consolidated financial statements of Geographics, Inc. (the "Company" or "Geographics") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. 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, such interim statements reflect all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position and the results of operations and cash flows for the interim periods presented. The results of operations for these interim periods are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in the Company's consolidated financial statements and notes thereto for the fiscal year ended March 31, 1996. The consolidated financial statements include the accounts of Geographics, Inc. and its wholly-owned subsidiaries; Geographics Marketing Canada Inc., Geographics (Europe) Limited, Geographics Australia, Pty. Limited, and Geographics Foreign Sales Corporation. All intercompany balances and transactions have been eliminated. Certain of the Company's locations calculated cost of sales using an estimated gross profit method for interim periods. Cost of sales at these locations are adjusted based on physical inventories which are performed no less than once a year. 2. The Company has a $12,000,000 revolving credit agreement with a bank. Interest on outstanding advances is payable monthly at the bank's prime rate. Outstanding balances as of September 30, 1996 and March 31, 1995 were $4,398,617 and $5,322,939, respectively. The prime rate was 8.25% and 8.25% at September 30, 1996 and March 31, 1996, respectively. 3. On May 1, 1996, the Company completed a private placement of 1,268,293 units at a price of $5.125 per unit. Total proceeds from this transaction approximated $6,500,000. Each unit included one common share of the Company and one warrant to purchase one additional common share of the Company at $4.25. The warrants are exercisable upon issuance and regulatory approval, and expire June 1, 1999. 4. On January 23, 1996, the Company placed an order for a printing press. The cost of the press is approximately $1,200,000 which is expected to be delivered during the third quarter of fiscal year 1997. On June 27, 1996, the Company placed an order for a packaging machine. The cost of the packaging machine is approximately $750,000 and is expected to be delivered during the third quarter of fiscal year 1997. The Company has commitments from financial institutions to provide capital lease financing for these equipment orders. 5. An officer and director has received notes from the Company in exchange for $1,000,000. The notes are payable on demand and are classified as current liabilities. Interest on these notes is payable monthly at the rate of prime plus 1%. 6. On July 3, 1996, the Company agreed to purchase substantially all of the assets of Grahams Graphics Pty. Ltd., its exclusive distributor in Australia. The total purchase price is expected to approximate $390,000 to be paid as follows: (i) the issuance of 50,000 share of common stock (valued at an aggregate of $200,000); (ii) the issuance of options to purchase an additional 50,000 share of common stock for $4.00 per share; (iii) the assumption of approximately $150,000 in unsecured trade liabilities; and, (iv) a one time cash payment of $40,000. Upon the completion of the purchase transaction, the assets assumed will be contributed to the Company's wholly-owned Australian subsidiary, Geographics Australia Pty. Ltd. The effective date of the transaction is July 1, 1996. The Company formed Geographics Australia PTY Limited to complete the acquisition and become the Company's distributor of Geographics products in Australia, replacing Grahams Graphics PTY Limited as the sole Australian distributor. 7. There are various claims, lawsuits, and pending actions against the Company incident to the operations of its business. It is the opinion of management that the ultimate resolution of these matters will not have a material effect on the Company's financial position, results of operations or liquidity. ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations for the Three Months and Six Months Ended September 30, 1996 and September 30, 1995 RESULTS OF OPERATIONS SALES. Sales increased 33% to $6,858,676 in the quarter ended September 30, 1996 from $5,158,126 in the quarter ended September 30, 1995 and increased 29% to $13,029,743 for the six months ended September 30, 1996 compared to $10,093,834 for the six months ended September 30, 1995. Sales increased 33% for the quarter ended September 30, 1996 as compared to the same quarter a year earlier. Sales for the quarter ended September 30, 1995 included the completion of Geopaper Gondola merchandising rack shipments to approximately 300 office product superstores, while the current quarter did not have a material number of initial product shipments. After adjusting sales for initial product shipments of approximately $750,000 in the prior year, sales increased by 56% as compared to the same period a year ago. Geopaper products were responsible for 69% of sales for the six month period ended September 30, 1996, compared to 64% for the same period a year earlier. Sales of Geopaper increased 40% to $9,021,249 from $6,455,172 for the periods ended September 30, 1996 and 1995, respectively. Sales of Company products other than Geopaper (stick on letters, rub on letters, stencil and LED signs) increased by 10% for the six months ended September 30, 1996 compared to the six months ended September 30, 1995. The non-Geopaper products have decreased as a percentage of total sales to 31% from 36% for the six month periods ended September 30, 1996 and 1995, respectively. These products will continue to decrease in importance to the Company as consumers continue to utilize personal computers to perform many of the tasks that these non-Geopaper products were designed for. However, the increased usage of personal computers is expected to generate new customers for Geopaper products that are specifically designed for use with personal computing technology. International sales of Geographics products were $1,523,100 for the quarter ended September 30, 1996, an increase of 32% over international sales of $1,152,233 for the quarter ended September 30, 1995. International sales increased 68% to $2,722,621 from $1,621,522 for the six months ended September 30, 1996 and 1995, respectively. International sales of Geographics products represented 21% of total Geographics, Inc. sales for the six months ended September 30, 1996, compared to 16% of total sales for the same period a year earlier. Sales by geographic location for the six months ended September 30, 1996 were as follows: United States 78.8% Canada 17.0% Western Europe 2.3% Australia 1.6% Others 0.3% ------ Total 100.0% ------ ------ GROSS MARGIN. Gross margin as a percentage of sales was 40.5 % and 40.1% for the three and six month periods ended September 30, 1996, compared to 38.9% and 38.8% for the same periods last year. The Company's gross margin rate increased primarily due to lower freight rates resulting from increased product shipments during the past year. Margins are also affected by changes in the mix of product sold, raw material costs, automation, labor costs, freight costs, production levels (overhead absorption) and the rate of product turnover. Margins are also affected by price increases and decreases passed on to customers. While management endeavors to improve margins, no assurance can be given that margins will continue to improve. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, General and Administrative expenses ("SG&A"), which consist of payroll, advertising, and commissions, as well as administrative, accounting and legal costs increased as a percentage of sales in the three and six months ended September 30, 1996 to 28.8% and 30.8%, respectively, as compared to 25.5% and 25.8% during the same periods in the prior year. SG&A costs increased as a percentage of sales primarily due to increased overhead resulting from the establishment of Geographics (Europe) Limited, Geographics Australia Pty. Ltd., and the installation and training costs related to a new computer system at the Blaine, WA facility. GOODWILL AMORTIZATION. The Company recorded no goodwill amortization during the three and six months ended September 30, 1996, as compared to $0 and $159,767 for the same periods a year ago. Goodwill resulted from the acquisition of the lettering division of E.Z. Industries in 1993. The Goodwill was fully amortized as of June 30, 1995. INTEREST EXPENSE. Interest expense for the three and six months ended September 30, 1996 totaled $203,341 and $394,112, respectively, compared to $195,231 and $358,337 for the same periods in the prior year. This increase in interest expense was primarily due to borrowings under the Company's revolving credit facility during the current year to fund increases in inventories and equipment deposits, as well as additional interest costs resulting from borrowings related to equipment purchases and expansions to the Blaine manufacturing facility. LIQUIDITY AND CAPITAL RESOURCES. The Company's principal capital requirements have been to fund working capital needs, including the building of inventories in the United States, the United Kingdom, and Australia. Working capital has also been used to fund equipment deposits, prepaid expenses, reduce accounts payable and to reduce income tax payable. The Company's sales are substantially on net sixty day terms, and trade receivables are used as collateral to provide the Company with a source of capital prior to their collection. Working capital requirements are reduced by vendor credit terms, which allow the Company to finance a portion of its inventory. During the first six months of fiscal year 1997, the Company improved its collection of receivables. Net accounts receivable were $5,293,250 as of September 30, 1996, a decrease of 9.9% from the $5,873,578 receivable balance at March 31, 1996. Inventory increased during the six months to $13,275,929, an increase of 45.3% from the $9,139,273 inventory balance at March 31, 1996. Increases in inventory can be attributable to management's anticipation of inventory requirements related Geographics (Europe) Limited's initial operations, the acquisition of Geographics Australia Pty Limited's operations and the introduction of a new educational product line. The investment in inventories, equipment deposits and prepaid expenses were primarily responsible for negative cash flows from operating activities of $3,308,155 for the six months ended September 30, 1996, compared to negative cash flows from operating activities of $2,013,736 for the same period a year earlier. Despite the Company's rapid growth, Management anticipates improved accounts receivable and inventory management due to Management's increased focus on these critical working capital areas. Improved accounts receivable collection procedures and increased staffing are expected to minimize future increases in accounts receivable. New information systems, new warehouse facilities, improved inventory organization and the addition of key purchasing and inventory staffing should improve efficiencies in inventory management and allow for additional sales growth without corresponding inventory increases. The Company's cash flow is also affected by financing activities, including borrowings and repayments on revolving credit facilities, short and long term notes payable to the Company's bank, proceeds from the issuance of debentures to officers and directors, proceeds from the exercise of stock, as well as repayment of capital leases. The majority of capital expenditures were financed by long-term bank loans and capital leases. A private placement of 1,268,293 units at $5.125 (see Part II, Item 5. A.), resulted in gross proceeds of $6,500,000 to the Company which were used to repay borrowings on short-term notes payable to the Company's bank. Financing activity resulted in net cash flows of $5,236,085 and $3,422,928 for the six months ended September 30, 1996 and 1995, respectively. During the six months ended September 30, 1996, the Company acquired additional printing presses, packaging equipment and other machinery related to the manufacture of Geopaper products. These capital expenditures were necessary to support the continued expansion of the Geopaper product line and the increase in Geopaper unit sales. Cash used in investing activities (primarily capital expenditures) was $1,789,010 and $1,385,401 for the six months ended September 30, 1996 and 1995, respectively. During the six months ended September 30, 1996, the Company's cash balance increased by $138,920 to $188,948. The cash balance is not significant and balances held by the Company are intentionally maintained at low levels as part of the Company's strategy to minimize balances outstanding on revolving credit facilities, thus minimizing interest expense. Although the Company has the ability to finance its planned growth and expansion from operating cash flow, capital lease financing and borrowings under the Company's existing credit facilities, the Company also considers alternative financing options, such as the issuance of common stock or convertible debt, in the event market conditions make such alternatives financially attractive. The Company's future financing requirements will be affected by the number of new customers, the strength of reorders by existing customers, the growth of existing customers, as well as the of success of new products introduced. Additional financing might also be necessary in the event the Company pursues further expansion or business acquisition opportunities. There is no assurance the Company will be able to obtain such financing or that such financing, if available, will be on terms satisfactory to the Company. PART II. OTHER INFORMATION ITEMS 1-3 NOT APPLICABLE ITEM 4- SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS At the Annual Meeting of Shareholders of Geographics, Inc. held on August 28, 1996, the nominees for election as Directors of the Corporation were elected in the following manner. Nominee Number of Shares For ------- -------------------- Term expiring in 1997: Ronald S. Deans 6,319,032 Scott Deans 6,314,332 Moises Cosio 6,317,632 Robert Parker 6,318,382 Mark G. Deans 6,315,132 Fidel Garcia Carrancedo 6,318,632 Alan D. Tuck Jr. 6,317,582 Luis Alberto Morato 6,314,482 With respect to the proposed increase in the number of members of the Board of Directors from seven (7) to eight (8) members, the Board of Directors adopted the proposal as submitted by the votes indicated below: Number of Shares ---------------- For the proposal: 6,246,346 Against the proposal: 95,818 Votes withheld: 0 Abstentions: 6,400 Non-votes 227,378 With respect to the notification of the selection of Moss Adams LLP as the Company's auditors for the fiscal year ending March 31, 1997, the Board of Directors adopted the proposed amendment as submitted by the votes indicated below: Number of Shares ---------------- For the proposal: 5,613,256 Against the proposal: 728,490 Votes withheld: 0 Abstentions: 6,818 Non-votes 227,378 With respect to the proposed issuance of 180,000 incentive stock options to certain employees, officers and directors of the Company, the Board of Directors adopted the proposed amendment as submitted by the votes indicated below: Number of Shares ---------------- For the proposal: 4,568,198 Against the proposal: 301,330 Votes withheld: 0 Abstentions: 35,420 Non-votes 1,670,994 With respect to the proposed adoption of the Geographics, Inc. 1996 Stock Option Plan, the Board of Directors adopted the proposed amendment as submitted by the votes indicated below: Number of Shares ---------------- For the proposal: 4,444,762 Against the proposal: 423,225 Votes withheld: 0 Abstentions: 36,961 Non-votes 1,670,994 With respect proposed amendment to the Company's Articles of Incorporation to effect an increase in the Company's authorized common stock from 10,000,000 shares of common stock, no par value to 100,000,000 shares of common stock, no par value, the Board of Directors adopted the proposed amendment as submitted by the votes indicated below: Number of Shares ---------------- For the proposal: 5,883,723 Against the proposal: 444,717 Votes withheld: 0 Abstentions: 20,124 Non-votes 227,378 ITEM 5 - OTHER INFORMATION A. On September 20, 1996, Mr. Fidel Carrancedo resigned as a director of the Company. Mr. Carrancedo resigned for personal reasons and has no disagreements with the Company. Mr. Carrancedo still remains a principal stockholder of the Company. No additional Directors have been appointed to replace Mr. Carrancedo. B. The Company has adopted the following Statements of Financial Accounting Standards ("SFAS") for the fiscal year ending March 31, 1997. SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," establishes accounting standards for the impairment of long-lived assets, certain identifiable intangibles, and goodwill related to those assets to be held and used and for long-lived assets and certain identifiable intangibles to be disposed of. Long-lived assets and certain identifiable intangibles to be held and used by a company are required to be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Measurement of an impairment loss for such long-lived assets and identifiable intangibles should be based on the fair value of the asset. Long-lived assets and certain identifiable intangibles to be disposed of are required to be reported generally at the lower of the carrying amount or the fair value less cost to sell. The adoption of SFAS No. 121 had no material effect on the Company's financial position as of September 30, 1996 or the results of its operations for the quarter ended September 30, 1996. SFAS No. 123, "Accounting for Stock-Based Compensation," establishes financial accounting and reporting standards for stock-based employee compensation plans, including stock options, stock purchase plans, restricted stock, and stock appreciation rights. SFAS No. 123 defines and encourages the use of the fair value method of accounting for employee stock-based compensation. Continuing use of the intrinsic value based method of accounting prescribed in Accounting Principles Board No. 25 ("APB 25") for measurement of employee stock-based compensation is allowed with pro forma disclosures of net income and earnings per share as if the fair value method of accounting had been applied. Transactions in which equity instruments are issued in exchange for goods or services from non-employees must be accounted for based on the fair value of the consideration received or of the equity instrument issued, whichever is more reliably measurable. The Company has determined that it will continue to use the method of accounting prescribed in APB 25 for measurement of employee stock-based compensation, and will begin providing the required pro forma disclosures in its financial statements for the year ending March 31, 1997 as allowed by SFAS No. 123. EXHIBIT INDEX Page ---- ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K. A. Exhibits. 11. Statement regarding computation of Earnings Per Share 16 27. Financial Data Schedule 17 B. Reports on Form 8-K. No reports were filed by the Company on Form 8-K during the fiscal quarter ended September 30, 1996. 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. GEOGRAPHICS, INC. ----------------- (Registrant) Date: November 15, 1996 By: /s/ RONALD S. DEANS --------------------------------- Ronald S. Deans President, Chief Executive Officer Chief Financial Officer and Secretary EX-11 2 EXHIBIT 11 EXHIBIT 11 GEOGRAPHICS, INC. COMPUTATION OF EARNINGS PER SHARE (Unaudited)
Three Months Ended Sept. 30, 1996 Sept. 30, 1995 - ---------------------------------------------------------------------------------------- PRIMARY EARNINGS PER COMMON SHARE: Net income used to compute primary earnings per share $ 373,106 $ 374,210 ---------- ---------- ---------- ---------- Weighted average number of shares outstanding 9,393,547 5,789,818 Add: Weighted average number of shares which could have been issued upon exercise of outstanding options 22,940 286,915 Add: Weighted average number of shares which could have been issued upon exercise of outstanding warrants 11,323 93,438 ---------- ---------- Weighted average number of shares used to compute primary earnings per share 9,427,810 6,170,171 ---------- ---------- ---------- ---------- Primary earnings per share $ 0.04 $ 0.06 ---------- ---------- ---------- ---------- FULLY DILUTED EARNINGS PER COMMON SHARE: Net income $ 373,106 $ 374,210 Add: Interest which would not have been incurred, net of tax, upon conversion of 8% debentures 0 7,208 Add: Interest which would not have been incurred, net of tax, upon conversion of 11% debentures 0 3,063 Add: Interest which would not have been incurred, net of tax, upon conversion of 10.25% debenture 0 2,502 ---------- ---------- Net income used to calculate fully diluted earnings per share $ 373,106 $ 386,983 ---------- ---------- ---------- ---------- Weighted average number of shares outstanding 9,393,547 5,789,818 Add: Weighted average number of shares which could have been issued upon exercise of outstanding options 22,933 431,156 Add: Weighted average number of shares which could have been issued upon exercise of outstanding warrants 11,323 117,663 Add: Weighted average number of shares which could have been issued upon conversion of 8% debentures 0 468,634 Add: Weighted average number of shares which could have been issued upon conversion of 11% debentures 0 183,442 Add: Weighted average number of shares which could have been issued upon conversion of 10.25% debentures 0 44,710 ---------- ---------- Weighted average number of shares used to compute fully diluted earnings per share 9,427,803 7,035,423 ---------- ---------- ---------- ---------- Fully diluted earnings per share $ 0.04 $ 0.06 ---------- ---------- ---------- ----------
EX-27 3 EXHIBIT 27 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FORM (A) FROM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS MAR-31-1997 JUL-01-1996 SEP-30-1996 188,948 0 5,623,796 (149,938) 13,275,929 21,800,023 13,287,609 (3,894,574) 31,902,158 10,183,685 0 0 0 16,159,408 893,223 31,902,158 6,858,676 6,858,676 4,083,653 1,975,339 10,065 0 203,341 586,278 213,172 373,106 0 0 0 373,106 0.04 0.04
-----END PRIVACY-ENHANCED MESSAGE-----