-----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, Eoihq9Sj4ksymfw/Q4Rt8LLTzOVZF585yb4GzBahuyI41JNS5vs36nkIs+J1kijL ngoRWwBgYgeuBLE4b7s5Xg== 0000014995-96-000005.txt : 19960216 0000014995-96-000005.hdr.sgml : 19960216 ACCESSION NUMBER: 0000014995-96-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960214 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIXON TICONDEROGA CO CENTRAL INDEX KEY: 0000014995 STANDARD INDUSTRIAL CLASSIFICATION: PENS, PENCILS & OTHER ARTISTS' MATERIALS [3950] IRS NUMBER: 230973760 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-02655 FILM NUMBER: 96520415 BUSINESS ADDRESS: STREET 1: 2600 MAITLAND CENTER PKWY STREET 2: STE 200 CITY: MAITLAND STATE: FL ZIP: 32751 BUSINESS PHONE: 4078759000 MAIL ADDRESS: STREET 1: 2600 MAITLAND CTR PARKWAY STREET 2: STE 200 CITY: MAITLAND STATE: FL ZIP: 32751 FORMER COMPANY: FORMER CONFORMED NAME: BRYN MAWR CORP/DE/ DATE OF NAME CHANGE: 19831002 FORMER COMPANY: FORMER CONFORMED NAME: BRYN MAWR GROUP INC DATE OF NAME CHANGE: 19730619 FORMER COMPANY: FORMER CONFORMED NAME: BRYN MAWR CAMP RESORTS INC DATE OF NAME CHANGE: 19700608 10-Q 1 DECEMBER 31, 1995 FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Judiciary Plaza, 450 Fifth Street, N.W. Washington, D.C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR QUARTER ENDED DECEMBER 31, 1995 COMMISSION FILE NO. O-2655 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DIXON TICONDEROGA COMPANY - --------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 23-0973760 - --------------------------------- --------------------------------- (State or other jurisdiction I.R.S. Employer of incorporation or organization) Identification No. 195 International Parkway, Heathrow, FL 32746 - --------------------------------------------------------------------------- (Address of principal executive offices) Zip Code (407) 829-9000 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 [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the period covered by this report. Class Outstanding as of December 31, 1995 - ---------------------------- ---------------------------------------- Common Stock $1 par value 3,198,320 2 DIXON TICONDEROGA COMPANY AND SUBSIDIARIES ------------------------------------------ INDEX ----- Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Information Consolidated Balance Sheets -- December 31, 1995 and September 30, 1995 3-4 Consolidated Statements of Operations -- For The Three Months Ended December 31, 1995 and 1994 5 Consolidated Statements of Cash Flows -- For The Three Months Ended December 31, 1995 and 1994 6-7 Notes to Consolidated Financial Statements 8-9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10-12 PART II. OTHER INFORMATION - Not applicable Signatures 13 3 PART I - FINANCIAL INFORMATION 1 Item 1. DIXON TICONDEROGA COMPANY AND SUBSIDIARIES - ------- CONSOLIDATED BALANCE SHEETS
December 31, September 30, 1995 1995 ------------ ------------- CURRENT ASSETS: Cash and cash equivalents $ 1,809,684 $ 1,513,622 Receivables, less allowance for doubtful accounts of $438,072 at December 31 1995 and $796,715 at September 30, 1995 16,067,028 18,202,541 Inventories 32,833,380 32,638,385 Assets held for sale 431,400 436,306 Other current assets 2,636,900 2,254,101 ----------- ----------- Total current assets 53,778,392 55,044,955 ----------- ----------- PROPERTY, PLANT and EQUIPMENT: Land and buildings 14,421,377 12,908,945 Machinery and equipment 16,166,245 16,986,408 Furniture and fixtures 832,008 902,043 ----------- ----------- 31,419,630 30,797,396 Less accumulated depreciation (17,362,132) (17,229,617) ----------- ----------- 14,057,498 13,567,779 OTHER ASSETS 1,564,560 1,545,110 ----------- ----------- $69,400,450 $70,157,844 =========== ===========
4
December 31, September 30, 1995 1995 ------------ ------------- CURRENT LIABILITIES: Notes payable $20,017,808 $17,877,665 Current maturities of long-term debt 4,587,016 4,587,016 Accounts payable 4,567,780 5,280,884 Accrued liabilities 7,456,450 8,388,309 ----------- ----------- Total current liabilities 36,629,054 36,133,874 ----------- ----------- LONG-TERM DEBT 14,267,306 14,540,884 ----------- ----------- OTHER NONCURRENT LIABILITIES 7,658 21,815 ----------- ----------- DEFERRED INCOME TAXES 1,051,241 1,155,473 ----------- ----------- MINORITY INTEREST 2,657,878 3,073,375 ----------- ----------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Preferred stock, par $1, authorized 100,000 shares, none issued --- --- Common stock, par $1, authorized 8,000,000 shares; issued 3,453,466 shares as of December 31, 1995 and 3,448,466 as of September 30, 1995 3,453,466 3,448,466 Capital in excess of par value 2,187,429 2,166,329 Retained earnings 12,791,387 12,640,762 Cumulative translation adjustment (2,709,189) (2,087,354) ----------- ----------- 15,723,093 16,168,203 Less - treasury stock, at cost (255,147 shares) (935,780) (935,780) ----------- ----------- 14,787,313 15,232,423 ----------- ----------- $69,400,450 $70,157,844 =========== ===========
The accompanying notes to consolidated financial statements are an integral part of these statements. 5 DIXON TICONDEROGA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994
THREE MONTHS ENDED DECEMBER 31, 1995 1994 -------- -------- REVENUES $20,945,721 $21,392,751 ----------- ----------- COST AND EXPENSES: Cost of goods sold 14,289,772 14,443,760 Selling and administrative expenses 5,676,154 5,575,746 ----------- ----------- 19,965,926 20,019,506 ----------- ----------- OPERATING INCOME 979,795 1,373,245 INTEREST EXPENSE 614,415 756,080 ----------- ----------- INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST 365,380 617,165 INCOME TAXES 100,647 237,927 ----------- ----------- 264,733 379,238 MINORITY INTEREST 114,110 57,782 ----------- ----------- INCOME FROM CONTINUING OPERATIONS 150,623 321,456 DISCONTINUED OPERATIONS --- (19,501) ----------- ----------- NET INCOME $ 150,623 $ 301,955 =========== =========== EARNINGS PER COMMON SHARE: Continuing operations $ .05 $ .10 Discontinued operations --- .00 ----------- ----------- Net income $ .05 $ .10 =========== =========== WEIGHTED AVERAGE SHARES OUTSTANDING 3,194,153 3,164,820 =========== ===========
The accompanying notes to consolidated financial statements are an integral part of these statements. 6 DIXON TICONDEROGA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994
1995 1994 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income from continuing operations $ 150,623 $ 321,456 Net loss from discontinued operations --- (19,501) Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization 599,675 655,380 Deferred taxes 85,131 (157,335) Income attributable to currency translation (46,089) --- Income attributable to minority interest 114,110 57,782 Changes in assets and liabilities: Receivables, net 1,720,566 3,310,229 Inventories (823,300) (1,064,076) Other current assets (398,139) (175,247) Accounts payable and accrued liabilities (1,567,732) (1,261,100) Condominiums --- (10,877) Other assets (91,051) (204,193) ----------- ----------- Net cash provided by (used in) operations (256,206) 1,452,518 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of plant and equipment, net (1,157,217) (193,872) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from (principal reductions of) notes payable 2,181,101 (501,946) Principal reductions of long-term debt (283,637) (268,835) Exercise of stock options 26,104 47,938 Other non-current liabilities (1,809) (24,218) ----------- ----------- Net cash provided by (used in) financing activities 1,921,759 (747,061) ----------- ----------- Effect of exchange rate changes on cash (212,274) (391,528) ----------- ----------- 7 Net increase in cash and cash equivalents 296,062 120,057 Cash and cash equivalents, beginning of period 1,513,622 1,822,764 ----------- ----------- Cash and cash equivalents, end of period $1,809,684 $ 1,942,821 =========== =========== Supplemental Disclosures: Cash paid during the period: Interest (net of amount capitalized) $ 429,281 $ 430,464 Income taxes 101,978 955,667
The accompanying notes to consolidated financial statements are an integral part of these statements. 8 DIXON TICONDEROGA COMPANY AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION: The condensed consolidated financial statements included herein have been prepared by the Registrant, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Registrant believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and the notes thereto included in the Registrant's latest annual report on Form 10- K. In the opinion of the Registrant, all adjustments (solely of a normal recurring nature) necessary to present fairly the financial position of the Dixon Ticonderoga Company and subsidiaries as of December 31, 1995 and the results of their operations and cash flows for the three months ended December 31, 1995 and 1994, have been included. The results of operations for such interim periods are not necessarily indicative of the results for the entire year. 2. INVENTORIES: Since amounts for inventories under the LIFO method are based on annual determinations of quantities and costs as of the end of the fiscal year, the inventories at December 31, 1995 (for which the LIFO method of accounting are used) are based on certain estimates relating to quantities and costs as of year end. Inventories consist of (in thousands): December 31, September 30, 1995 1995 ------------ ------------- Raw materials $14,631 $12,450 Work in process 4,958 4,462 Finished goods 13,244 15,726 ------- ------- $32,833 $32,638 ======= ======= 3. EFFECT OF CERTAIN NEW ACCOUNTING PRONOUNCEMENTS: The Financial Accounting Standards Board (FASB) issued Statement No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." This statement, which must be adopted no later than fiscal 1997, establishes accounting standards with respect to the impairment of long-lived assets. Its adoption is not expected to materially affect the future results of operations or financial position of the Company. 9 In 1995, the FASB also issued Statement No. 123, "Accounting for Stock-Based Compensation." The statement (effective for the Company in fiscal 1997) would provide certain specific disclosures regarding the value of stock option grants made in fiscal 1996 and thereafter. The Company does not expect to adopt the compensation recognition provision of the Statement, and, accordingly, it is not expected to materially affect the future results of operations or financial position of the Company. The specific disclosures required by the statement have not been calculated at this time. 4. ACCOUNTING FOR INCOME TAXES: The difference between income taxes calculated at the U.S. statutory federal income tax rate and the provision in the condensed consolidated financial statements is primarily due to foreign income taxes and other permanent items. 5. CONTINGENCIES: The Company, in the normal conduct of its business, is a party in certain litigation. In addition, ongoing litigation includes a claim under New Jersey's Environmental Clean-Up Responsibility Act (ECRA) by a 1984 purchaser of industrial property from the Company. In 1995, the Company provided approximately $1.5 million for settlement and related legal costs associated with three separate lawsuits, including the aforementioned ECRA claim. The Company has evaluated the merits of these cases and other litigation and believes their outcome will not have a further material effect on the Company's future results of operations or financial position. The Registrant is aware of several environmental matters related to certain facilities purchased or to be sold. The Registrant assesses the extent of these matters on an ongoing basis. In the opinion of management (after taking into account accruals), the resolution of these matters will not materially affect the Company's future results of operations or financial position. In connection with the sale of a discontinued business in a previous year, the Company guaranteed a loan to the buyer. The loan balance is approximately $340,000 as of December 31, 1995. In the opinion of management, the guarantee will not ultimately have any material effect on the Company's future results of operations or financial position. 6. DISCONTINUED OPERATIONS: In September 1995, the Company disposed of its real estate operations, and accordingly, the prior year operating results of the real estate segment have been restated as discontinued operations. Revenues from discontinued operations were not material. 10 Item 2. - ------- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS REVENUES for the quarter ended December 31, 1995, decreased $447,000 from the same quarter last year. The changes by segment are as follows: % Increase (Decrease) Increase --------------------- (Decrease) Total Volume Price/Mix ---------- ----- ------ --------- Consumer U.S. $(435,000) (3) (2) (1) Consumer Foreign 10,000 - 4 (4) Graphite & Lubricants 119,000 4 6 (2) Refractory (141,000) (5) (8) 3 Consumer U.S. revenues decreased due to an expected deferral of certain educational market business to later quarters. Revenue in Mexico decreased $671,000 (or 68%) due to the decline in the local currency's value compared to the U.S. dollar. The major devaluation in the Mexican peso took place in late December 1994, therefore having minimal effect on Mexico revenues in the first fiscal quarter of 1995. This comparative decrease in the value of the Mexican peso was partially offset by peso price increases. Revenues decreased $5,409,000 from the prior quarter ended September 30, 1995, as follows: % Increase (Decrease) Increase --------------------- (Decrease) Total Volume Price/Mix ---------- ----- ------ --------- Consumer U.S. $(1,828,000) (13) (11) (2) Consumer Foreign (3,431,000) (59) (43) (16) Graphite & Lubricants 174,000 6 7 (1) Refractory (324,000) (10) (12) 2 The decreases in Foreign and U.S. Consumer reflect the seasonality of the demand for their products. The prior quarter historically results in a higher percentage of annual revenues (approximately 29% as compared to 21% this quarter) due to seasonal school and mass market orders. OPERATING INCOME decreased $393,000 from the same period last year, principally due to the revenue decreases described above. Operating income decreased $1,973,000 from the prior quarter due primarily to the aforementioned seasonality that historically generates higher revenues and related operating income in the final fiscal quarter. 11 INTEREST EXPENSE decreased $142,000 from the same period last year, primarily due to lower borrowings in Mexico. Interest expense decreased $449,000 from the prior quarter due to lower cyclical borrowing levels. INCOME TAXES decreased $137,000 from the same period last year, due to the decrease in before tax income and lower effective foreign tax rates. Income taxes increased $228,000 over the prior quarter which included a lower effective foreign tax rate due to a permanent Meixco tax adjustment. MINORITY INTEREST represents 49.9% of the net income of the consolidated subsidiary, Dixon Ticonderoga de Mexico, S.A. de C.V. in each period presented. DISCONTINUED OPERATIONS in the prior-year quarter represents the Company's real estate segment that was disposed of in September 1995. The loss of $20,000 is net of a tax benefit of $10,000. LIQUIDITY AND CAPITAL RESOURCES The financial condition of the Company has improved significantly over the past two years, principally due to its recent operating success and the completion of major financing initiatives. Cash flows from operating activities in the first quarter of fiscal 1996 were approximately $1.7 million lower than the prior year due to strong accounts receivable practices that accelerated collection into the prior quarter ended September 1995. Inventory levels only increased slightly during the period. Investing activities included approximately $1 million in additional costs related to the construction of the Company's new corporate headquarters. Through December 1995, the Company had incurred approximately $2.6 million towards the completion of this facility. The total estimated cost of the project is $3.4 million with construction costs to be financed ultimately through a separate fixed-rate permanent mortgage arrangement. On an interim basis, these costs have been financed through a construction loan, included in notes payable in the accompanying financial statements. The Company also intends to finance certain strategic manufacturing equipment (in the amount of $2.8 million) under a long-term lease arrangement commencing in late 1996. Generally, all other major capital projects are discretionary in nature and thus no material purchase commitments exist. Other capital expenditures will include customary projects, and will continue to be funded from operations and existing financing arrangements. The Company completed major financing activities during the past two years. In 1994, the Company successfully completed primary financing arrangements (in the initial amount of $35 million) with a new bank lender, to refinance certain short-term obligations and provide additional working capital. An additional seasonal $5 million in the working capital line of credit was added in 1995. Also in 1995, the interest rate under these facilities was reduced. The arrangements (as amended) provide up to $15 million in additional financing as compared with the Company's agreement with its previous lender, and permits the Company to meet all current debt obligations. Moreover, the related revolving credit facility provides, under certain circumstances, for the payment of additional subordinated debt obligations (discussed below). The agreement also provides for the maintenance of certain financial covenants and ratios, with which the Company 12 is presently in compliance, except as to the ratio of operating cash flow to fixed charges (as defined) and capital expenditure activities, for which the Company has received a waiver of compliance. At December 31, 1995, the Company had approximately $7 million of unused lines of credit available under this financing arrangement. The Company also has $10.3 million of Senior Subordinated Notes remaining outstanding with several insurance companies. The note agreement, as amended, provides for the payment of approximately $3.3 million annually, through August 1998, with the balance due August 1999. This agreement also provides for the maintenance of certain financial covenants and ratios, with which the Company is presently in compliance. The revolving credit agreements described above provided for the August 1994 and 1995 subordinated note payments and a credit line reserve for the 1996 payment. The Company intends to satisfy future subordinated note payments from funds provided by operations and/or an infusion of new equity or debt. The new and existing sources of financing, financing strategies discussed above and cash expected to be generated from future operations will, in management's opinion, be sufficient to fulfill all current and anticipated requirements of the Company's ongoing business. 13 PART II. OTHER INFORMATION Not applicable. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DIXON TICONDEROGA COMPANY Dated: February 14, 1996 By: /s/ Gino N. Pala -------------------------- Gino N. Pala Chairman of the Board, President, Chief Executive Officer and Director Dated: February 14, 1996 By: /s/ Richard A. Asta -------------------------- Richard A. Asta Executive Vice President of Finance and Chief Financial Officer Dated: February 14, 1996 By: /s/ John Adornetto -------------------------- John Adornetto Vice President/Corporate Controller and Chief Accounting Officer EX-27 2 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Consolidated Balance Sheets, the Consolidated Statement of Operations, and the Consolidated Statement of Cash Flows, and is qualified in its entirety by reference to such financial statements. 3-MOS SEP-30-1996 DEC-31-1995 1,809,684 0 16,505,100 438,072 32,833,380 53,778,392 31,419,630 17,362,132 69,400,450 36,629,054 0 3,453,466 0 0 11,333,847 69,400,450 20,945,721 20,945,721 14,289,772 14,289,772 5,676,154 0 614,415 365,380 100,647 150,623 0 0 0 150,623 .05 .05
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