-----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, VpqRKe65zQ0PSIxOblpO3J+dIXrcTePVJ+ElvPKoHM+bGvDVka1odQEsiYVyh89q yWAdhD+Ni/9NDtpJFV4jAw== 0000912057-97-005526.txt : 19970222 0000912057-97-005526.hdr.sgml : 19970222 ACCESSION NUMBER: 0000912057-97-005526 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970214 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: 97535418 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 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: December 31, 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 9,467,877 shares of common stock outstanding as of February 12, 1997. GEOGRAPHICS, INC. INDEX PAGE ----- Part I. FINANCIAL INFORMATION ITEM 1 Financial Statements Consolidated Statements of Income for the Three Months and Nine Months Ended December 31, 1996 and December 31, 1995 3 Consolidated Balance Sheets as of December 31, 1996 and March 31, 1996 4 Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 1996 and December 31, 1995 5 Notes to Consolidated Financial Statements 6-7 ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 8-11 Part II. OTHER INFORMATION 12-14 SIGNATURE 15 Exhibit 27 - Financial Data Schedule 16 2 GEOGRAPHICS, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended Nine Months Ended - ------------------------------------------------------------------------------------------------- Dec. 31 Dec. 31 Dec. 31 Dec. 31 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------- Sales $ 6,089,998 $ 6,369,954 $ 19,119,741 $ 16,463,788 Cost of Sales 3,817,103 4,038,927 11,627,057 10,217,176 ----------- ----------- ------------ ------------ Gross Margin 2,272,895 2,331,027 7,492,684 6,246,612 S.G. & A Expense 2,582,567 1,545,862 6,591,911 4,149,553 Goodwill Amortization 0 0 0 159,768 ----------- ----------- ------------ ------------ Operating Income (309,672) 785,165 900,773 1,937,291 Other Income (Expenses) Interest Expense (321,284) (208,059) (715,396) (566,396) Other 27,102 23,180 13,261 112,333 ----------- ----------- ------------ ------------ Income Before Provision for Income Taxes (603,854) 600,286 198,638 1,483,228 Income Tax Provision (214,601) 204,098 68,608 504,299 ----------- ----------- ------------ ------------ Net Income $ (389,253) $ 396,188 $ 130,030 $ 978,929 ----------- ----------- ------------ ------------ ----------- ----------- ------------ ------------ Earnings Per Common and Common Equivalent Share Primary $(0.04) $0.05 $0.01 $0.16 Assuming full dilution $(0.04) $0.04 $0.01 $0.13 Share used in computing earnings per common and common equivalent shares: Primary 9,416,953 4,524,769 9,296,617 4,549,173 Assuming full dilution 9,416,953 5,919,429 9,396,176 5,955,423
SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS 3 GEOGRAPHICS, INC. CONSOLIDATED BALANCE SHEETS ASSETS
Dec. 31, 1996 March 31, 1996 (Unaudited) (Audited) Current Assets Cash $ 229,827 $ 50,028 Accounts receivable, net 4,981,454 4,974,156 Related party receivables 0 899,422 Other receivables 140,739 62,572 Inventories 13,660,745 9,139,273 Deposits 585,674 597,693 Prepaid expenses 619,793 99,204 Deferred income tax 1,072,192 970,000 Other 438,568 96,512 ----------- ----------- Total current assets 21,728,992 16,888,860 Property, plant & equipment, net 11,749,179 7,286,694 Deferred income tax 192,000 192,000 Investment in partnerships 118,913 (34,484) Other assets 396,631 404,971 ----------- ----------- Total Assets $34,185,715 $ 24,738,041 ----------- ----------- ----------- ----------- LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities Bank overdraft $ 494,936 $ 0 Note payable to bank 4,582,250 5,322,939 Accounts payable 1,944,024 2,634,598 Accrued liabilities 1,786,063 1,033,905 Income tax payable 52,071 145,278 Note payable to officer & director 1,000,000 1,264,711 Current portion of long-term debt 1,078,577 656,398 ----------- ----------- Total current liabilities 10,937,921 11,057,829 Long-term debt 6,384,636 3,690,360 ----------- ----------- Total liabilities 17,322,557 14,748,189 ----------- ----------- Stockholders' Equity Common stock, without par value; 100,000,000 shares authorized; 9,462,877 and 8,004,584 issued and outstanding on Dec. 31, 1996 and March 31, 1996, respectively 16,346,617 9,620,068 Foreign currency translation adjustment 16,727 0 Retained earnings 499,814 369,784 ----------- ----------- Total Stockholders' Equity 16,863,158 9,989,852 Total Liabilities and Stockholders' Equity $ 34,185,715 $ 24,738,041 ----------- ----------- ----------- -----------
SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS 4 GEOGRAPHICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended ------------------------------- Dec. 31, 1996 Dec. 31, 1995 ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 130,030 $ 978,929 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH FLOWS FROM OPERATING ACTIVITIES Depreciation and amortization 1,016,576 813,715 Common stock issued in lieu of other liabilities 0 130,000 Deferred income tax (102,192) 0 (Gain) loss on sale of property and equipment 8,985 (119) CHANGES IN OPERATING ASSETS AND LIABILITIES Bank Overdraft 494,936 0 Accounts receivable 172,948 (2,523,978) Related party receivables 899,422 0 Other receivables (78,167) (68,869) Inventory (4,324,024) (4,276,911) Deposits 12,019 (293,308) Prepaid expenses (520,589) 56,805 Other current assets (342,057) (6,776) Accounts payable (690,574) 366,677 Accrued liabilities 561,319 963,437 Income tax payable (93,207) 372,635 ------------ ----------- Net cash flows from operating activities (2,854,575) (3,487,763) ------------ ----------- CASH FLOWS FROM FINANCING ACTIVITIES Net borrowings (repayments) on note payable to bank (740,689) 3,749,662 Proceeds from short-term borrowings 0 429,963 Proceeds from long-term debt borrowings 2,231,013 1,395,304 Repayment of long-term debt (556,750) (323,051) Proceeds (repayment) of notes to officers & directors (264,711) 900,000 Proceeds from issuance of common stock 6,526,549 171,911 Foreign currency translation 16,728 0 ------------ ----------- Net cash flows from financing activities 7,212,140 6,323,789 ------------ ----------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of equipment (3,931,513) (2,292,774) Proceeds from sale of equipment 1,787 16,741 Net (increase) decrease in advances to partnerships (153,397) (102,991) Change in other assets (94,643) (305,699) ------------ ----------- Net cash flows from investing activities (4,177,766) (2,684,723) ------------ ----------- NET CHANGE IN CASH 179,799 151,303 CASH, beginning of year 50,028 15,348 ------------ ----------- CASH, end of quarter $ 229,827 $ 166,651 ------------ ----------- ------------ ----------- NONCASH INVESTING AND FINANCING ACTIVITIES Financing obtained directly from sellers in acquisition of equipment $ 1,442,192 $ 242,293 ------------ ----------- ------------ ----------- Assets acquired directly in acquisition of business $ 390,839 $ 0 ------------ ----------- ------------ -----------
SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS 5 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 December 31, 1996 and March 31, 1995 were $4,582,250 and $5,322,939, respectively. The prime rate was 8.25% and 8.25% at December 31, 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 expire June 1, 1999. 4. On January 17, 1997, the Company placed an order for a printing press. The cost of the press is approximately $2,190,000, which is expected to be delivered during the fourth quarter of fiscal year 1997. The Company has a commitment from a financial institution to provide capital lease financing for this equipment order. 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 was approximately $390,000 paid as follows: (i) the issuance of 50,000 shares of common stock (valued at an aggregate of $200,000); (ii) the issuance of options to purchase an 6 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 were 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. 7 ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations for the Three Months and Nine Months Ended December 31, 1996 and December 31, 1995 RESULTS OF OPERATIONS SALES. Sales decreased 4% to $6,089,998 in the quarter ended December 31, 1996 from $6,369,954 in the quarter ended December 31, 1995 and increased 16% to $19,119,741 for the nine months ended December 31, 1996 compared to $16,463,788 for the nine months ended December 31, 1995. Sales decreased 4% for the quarter ended December 31, 1996 as compared to the same quarter a year earlier. The Company has identified the following factors that contributed to the decline in sales: -- The Company had extraordinary returns during the quarter resulting from a redesign of existing store planograms with some of its key customers. These redesigns resulted in a return of approximately $675,000 of product during the quarter. The Company agrees to perform these redesigns in conjunction with their customers to help increase the turns per square feet of product. The Company believes that assisting the customer to increase their sales will result in greater sales for the Company in the future, and will more than offset the effects of any returns resulting from these actions. -- The Company was negatively impacted by a reduction in on-hand inventory levels by some of its major customers from an average of twelve (12) weeks to an average of eight (8) weeks. This resulted in a reduction in reorder sales for approximately six weeks as the customers adjusted their in store inventory levels. The Company estimates that the impact of this reduction caused a decline in sales of approximately $1,000,000 for the quarter. -- Additional sales decrease resulted from price reductions passed through to customers resulting from drops in raw material prices paid by the Company. -- Inclement weather during the third quarter forced the Company to miss the equivalent of eight days in sales caused by an inability to ship due to a plant shut-down and logistic problems with the Company's freight carrier. Geopaper products were responsible for 71% of sales for the nine month period ended December 31, 1996, compared to 66% for the same period a year earlier. Sales of Geopaper increased 24% to $13,520,877 from $10,894,890 for the periods ended December 31, 1996 and 1995, respectively. Sales of Company products other than Geopaper (stick on letters, rub on letters, stencil and LED signs) have remained constant as a dollar level for the nine months ended December 31, 1996 8 compared to the nine months ended December 31, 1995. The non-Geopaper products have decreased as a percentage of total sales to 29% from 34% for the nine month periods ended December 31, 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 $1,758,868 for the quarter ended December 31, 1996, an increase of 150% over international sales of $699,486 for the quarter ended December 31, 1995. International sales increased 93% to $4,481,489 from $2,321,008 for the nine months ended December 31, 1996 and 1995, respectively. International sales of Geographics products represented 24% of total Geographics, Inc. sales for the nine months ended December 31, 1996, compared to 14% of total sales for the same period a year earlier. Sales by geographic location for the nine months ended December 31, 1996 were as follows: United States 76.4% Canada 17.3% Australia 3.1% Western Europe 2.9% Others 0.3% ------ Total 100.0% ------ ------ GROSS MARGIN. Gross margin as a percentage of sales was 37.3% and 39.2% for the three and nine month periods ended December 31, 1996, compared to 36.6% and 37.9% for the same periods last year. The Company's gross margin rate decreased during the third quarter due in part to additional labor and material costs incurred in conjunction with the installation of new equipment in the plant. Additionally, increased shipping costs were incurred as a result of the plant closure and reduced servicing from the Company's freight carriers during periods of inclement weather in the Northwest. 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 over time. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, General and Administrative expenses ("SG&A"), which consist of payroll, advertising, commissions, administrative, accounting and legal costs increased as a percentage of sales in the three and nine months ended December 31, 1996 to 42.4% and 34.5%, respectively, as compared to 24.3% and 25.2% during the same periods in the prior year. SG&A costs increased as a percentage of sales primarily due to the Company's 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. SG&A expenses have also been affected by economies of scale, resulting from lower than expected sales levels and learning curves for new staff members. The Company 9 has increased its selling and administrative staff as a result of continued growth and continued attempts to prepare itself for additional business and to establish new markets. As the new staff members gain more experience and sales continue to grow, the Company anticipates that selling, general and administrative expenses will decline as a percentage of sales. GOODWILL AMORTIZATION. The Company recorded no goodwill amortization during the three and nine months ended December 31, 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 nine months ended December 31, 1996 totaled $321,284 and $715,396, respectively, compared to $208,059 and $566,396 for the same periods in the prior year. The increase in interest expense was primarily due to borrowings under the Company's revolving credit facility during the current year. These borrowings were used to fund increases in inventories and equipment deposits. Additional interest costs resulted from borrowings related to equipment purchases and expansions to the Blaine manufacturing facility and expansions into Europe and Australia. 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 nine months of fiscal year 1997, the Company improved its collection of receivables. Net accounts receivable were $4,981,454 as of December 31, 1996, a decrease of 15% from the $5,873,578 receivable balance at March 31, 1996. Inventory increased during the nine months to $13,660,745, an increase of 49% 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 to Geographics (Europe) Limited's initial operations, the acquisition of Geographics Australia Pty Limited's operations and the continued efforts to increase its customer base and market share. The investment in inventories, equipment deposits and prepaid expenses were primarily responsible for negative cash flows from operating activities of $2,854,575 for the nine months ended December 31, 1996, compared to negative cash flows from operating activities of $3,487,763 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 10 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 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 $7,212,140 and $6,323,789 for the nine months ended December 31, 1996 and 1995, respectively. During the nine months ended December 31, 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 $4,177,766 and $2,684,723 for the nine months ended December 31, 1996 and 1995, respectively. During the nine months ended December 31, 1996, the Company's cash balance increased by $179,799 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. FORWARD-LOOKING STATEMENTS. Certain statements in this Form 10-Q, in future filings by the Company with the Securities and Exchange Commission (the "Commission"), in the Company's press releases, and in oral statements made by or with the approval of an authorized executive officer of the Company constitute "forward-looking statements" as that term is defined under the Private Securities Litigation Reform Act of 1995 (the "Act") and releases issued by the Commission. The words "believe", "expect", "anticipate", "intend", "estimate" and other expressions which are predictions of or indicate future events and trends and which do not relate to historical matters identify forward-looking statements. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. The Company undertakes no obligation to publicly update 11 or revise any forward-looking statement, whether as a result of new information, future events or otherwise. 12 PART II. OTHER INFORMATION ITEMS 1- 4 NOT APPLICABLE 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 December 31, 1996 or the results of its operations for the quarter ended December 31, 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. 13 EXHIBIT INDEX Page ---- Item 6 - EXHIBITS AND REPORTS ON FORM 8-K. A. Exhibits. 27. Financial Data Schedule 18 B. Reports on Form 8-K. No reports were filed by the Company on Form 8-K during the fiscal quarter ended December 31, 1996. 14 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: February 14, 1997 By: /s/ RONALD S. DEANS ------------------- Ronald S. Deans President, Chief Executive Officer Chief Financial Officer and Secretary 15 EX-27 2 EX 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) FROM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS MAR-31-1997 OCT-01-1996 DEC-31-1996 229,827 0 5,148,454 (167,000) 13,660,745 21,728,992 15,833,629 (4,084,450) 34,185,715 10,937,921 0 0 0 16,346,617 516,541 34,185,715 6,089,998 6,089,998 3,817,103 2,582,667 (27,102) 0 321,284 (603,584) (214,601) (389,253) 0 0 0 (389,253) (0.04) (0.04)
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