-----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, VwY9zG0f9XWjvdufIW+4N7WklpR6sC07ZAArLVjJGuxt0P2hQj2riMTbpK8Gcxed oqZpKfGL6C/vg015AIxP/w== 0000950148-96-002471.txt : 19961111 0000950148-96-002471.hdr.sgml : 19961111 ACCESSION NUMBER: 0000950148-96-002471 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961108 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DATA DOCUMENTS INC CENTRAL INDEX KEY: 0000026994 STANDARD INDUSTRIAL CLASSIFICATION: COMMERCIAL PRINTING [2750] IRS NUMBER: 470714942 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-95804 FILM NUMBER: 96656324 BUSINESS ADDRESS: STREET 1: 4205 S 96TH ST CITY: OMAHA STATE: NE ZIP: 68127 BUSINESS PHONE: 402-339-09 MAIL ADDRESS: STREET 1: 4205 SOUTH 96TH STREET CITY: OMAHA STATE: NE ZIP: 68127 10-Q 1 FORM 10-Q DATED SEPTEMBER 30, 1996 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549-1004 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended September 30, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________ to _________________ Commission file number: 0-26674 DATA DOCUMENTS INCORPORATED (Exact name of registrant as specified in its charter) DELAWARE 47-0714942 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.)
4205 SOUTH 96TH STREET, OMAHA, NEBRASKA (Address of principal executive offices) 68127 (Zip Code) (402) 339-0900 (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 number of shares outstanding of the Registrant's Common Stock, as of September 30, 1996 was 9,230,261 (excluding 269,607 treasury shares). 1 2 DATA DOCUMENTS INCORPORATED INDEX PART I. FINANCIAL INFORMATION
Page Number ----------- ITEM 1: FINANCIAL STATEMENTS: CONSOLIDATED BALANCE SHEETS - At September 30, 1996 and December 31, 1995 3 CONSOLIDATED STATEMENTS OF OPERATIONS - For the Three and Nine Months Ended September 30, 1996 and 1995 4 CONSOLIDATED STATEMENTS OF CASH FLOWS - For the Nine Months Ended September 30, 1996 and 1995 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6 - 9 ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10 -12 PART II. OTHER INFORMATION --------------------------- ITEM 2: CHANGES IN SECURITIES 13 ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K 13-14 SIGNATURES 15
2 3 PART I - FINANCIAL INFORMATION ITEM I. - FINANCIAL STATEMENTS DATA DOCUMENTS INCORPORATED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 1996 AND DECEMBER 31, 1995 (COLUMNAR AMOUNTS IN THOUSANDS) - --------------------------------------------------------------------------------
SEPTEMBER 30, DECEMBER 31, 1996 1995 (UNAUDITED) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 9,563 $ 2,024 Accounts receivable, net of allowance of $ 335,000 and $458,000 28,859 31,569 Inventories (Note B) 35,054 36,048 Other current assets 2,073 1,788 -------- -------- Total Current Assets 75,549 71,429 PROPERTY, PLANT AND EQUIPMENT 37,549 37,502 GOODWILL, net of accumulated amortization of $2,585,000 and $2,273,000 9,961 10,248 DEFERRED FINANCING COSTS AND OTHER ASSETS 5,489 6,546 -------- -------- $128,548 $125,725 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued liabilities $ 17,915 $ 19,326 Accrued compensation 3,196 3,579 Accrued interest payable 1,993 3,877 Current maturities of long-term obligations 1,172 1,169 Current and deferred income taxes 919 462 -------- -------- Total Current Liabilities 25,195 28,413 POST-RETIREMENT BENEFITS 1,862 1,805 LONG-TERM OBLIGATIONS 64,134 65,212 DEFERRED INCOME TAXES 2,422 2,871 COMMITMENTS AND CONTINGENCIES (Note C) COMMON STOCKHOLDERS' EQUITY: Preferred stock, $0.01 par value; 5,000,000 shares authorized; none issued - - Common stock, $0.001 par value; 15,000,000 shares authorized; 9,499,868 and 8,873,016 shares issued; 9,230,261 and 8,603,409 shares outstanding 9 9 Additional paid-in capital 32,020 32,162 Retained earnings (deficit) 3,141 (4,489) Stockholder notes receivable (235) (258) Treasury stock, 269,607 shares acquired at no cost - - -------- -------- Total Common Stockholders' Equity 34,935 27,424 -------- -------- $128,548 $125,725 ======== ========
See notes to consolidated financial statements. 3 4 DATA DOCUMENTS INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (COLUMNAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) - --------------------------------------------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ---------------------- ------------------------ 1996 1995 1996 1995 (UNAUDITED) (UNAUDITED) NET SALES $59,794 $62,757 $184,472 $176,987 COST OF GOODS SOLD 43,638 48,239 135,880 135,864 ------- ------- -------- -------- Gross Profit 16,156 14,518 48,592 41,123 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 9,484 8,840 28,286 26,060 STOCK COMPENSATION CHARGE - - - 156 ------- ------- -------- -------- Operating Income 6,672 5,678 20,306 14,907 DEBT EXPENSE, including amortization of $206,000, $360,000, $621,000 and $1,089,000 2,416 3,547 7,376 10,453 ------- ------- -------- -------- INCOME BEFORE INCOME TAXES 4,256 2,131 12,930 4,454 INCOME TAX EXPENSE 1,726 854 5,246 1,847 ------- ------- -------- -------- INCOME BEFORE EXTRAORDINARY ITEM 2,530 1,277 7,684 2,607 EXTRAORDINARY ITEM, net of tax (Note F) - - (54) - ------- ------- -------- -------- NET INCOME AVAILABLE FOR COMMON STOCK $ 2,530 $ 1,277 $ 7,630 $ 2,607 ======= ======= ======== ======== EARNINGS PER COMMON SHARE: Primary: Income before extraordinary item, as adjusted $ 0.25 $ 0.21 $ .077 $ 0.43 Extraordinary item - - - - ------- ------- -------- -------- Net Income $ 0.25 $ 0.21 $ 0.77 $ 0.43 ======= ======= ======== ======== WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING: Primary 9,955,759 6,483,864 9,940,141 6,483,864 ========= ========= ========= =========
See notes to consolidated financial statements. 4 5 DATA DOCUMENTS INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (COLUMNAR AMOUNTS IN THOUSANDS) - --------------------------------------------------------------------------------
NINE MONTHS ENDED SEPTEMBER 30, 1996 --------------------------------- 1996 1995 (UNAUDITED) (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 7,630 $ 2,607 Adjustments to reconcile net income to cash provided by operating activities: Depreciation 3,123 5,532 Amortization of intangibles 1,091 1,445 Stock compensation charge - 156 Extraordinary item 37 - Provision for deferred income taxes (309) (1,291) Gain on sale of property, plant and equipment (65) (4) Changes in operating assets and liabilities: Accounts receivable 2,710 (2,627) Inventories 994 (3,534) Other current assets (370) 475 Accounts payable and accrued liabilities 1,297 (636) Accrued interest (1,884) 1,452 Current taxes on income and other 402 826 Other assets 380 (311) ------- ------- Net cash flows from operating activities 15,036 4,090 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (3,222) (2,156) Investment in acquired assets of Cal Emblem - (6,186) Proceeds from the sale of property, plant and equipment 117 14 ------- ------- Net cash flows from investing activities (3,105) (8,328) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from debt - 5,028 Payment of debt (1,239) (188) Change in liability for outstanding checks (3,034) (643) Payments for stock registration costs (142) - Payment of initial public offering costs - (259) Proceeds from sale of stock 23 71 ------- ------- Net cash flows from financing activities (4,392) 4,009 ------- ------- NET INCREASE IN CASH 7,539 (229) CASH AND CASH EQUIVALENTS, Beginning of period 2,024 4,353 ------- ------- CASH AND CASH EQUIVALENTS, End of period $ 9,563 $ 4,124 ======= ======= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $ 8,822 $ 8,129 ======= ======= Income taxes $ 4,986 $ 2,329 ======= ======= SUPPLEMENTAL SCHEDULE OF NON CASH INVESTING AND FINANCING ACTIVITIES: Issuance of 32,636 shares of common stock for shareholder notes receivable $ - $ 32 ======= ======= Issuance of promissory notes in connection with Cal Emblem acquisition $ - $ 2,245 ======= =======
See notes to consolidated financial statements. 5 6 DATA DOCUMENTS INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 1996 AND 1995 (UNAUDITED) - -------------------------------------------------------------------------------- A. MANAGEMENT STATEMENTS The consolidated financial statements of Data Documents Incorporated (the "Company") include the accounts of its wholly-owned subsidiaries: Data Documents, Inc. (DDI), PBF Washington, Inc. (PBF) and Cal Emblem Labels, Inc. (Cal Emblem). The summarized financial information of DDI (see Note G) include the accounts of its wholly-owned subsidiaries: PBF and Cal Emblem. All significant intercompany transactions and accounts have been eliminated during consolidation. The consolidated financial statements of the Company contained herein should be read in conjunction with the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 1995. The consolidated financial statements are unaudited and reflect all adjustments (consisting of normal and recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods. Certain reclassifications have been made to the 1995 financial statements to conform to those classifications used in 1996. B. INVENTORIES Inventories consisted of (in thousands):
SEPTEMBER 30, DECEMBER 31, 1996 1995 (UNAUDITED) Finished goods $26,726 $26,888 Work in process 931 1,287 Raw materials 6,374 6,860 Supplies and spare parts 1,023 1,013 ------- ------- $35,054 $36,048 ======= =======
Substantially all inventories were valued using the LIFO method. If the FIFO method of inventory accounting had been used, inventories would have been lower than reported by $2,563,000 and $712,000 at September 30, 1996 and December 31, 1995, respectively. On a FIFO basis, operating income would have been higher (lower) by ($710,000) and $302,000, respectively, for the three months ended September 30, 1996 and September 30, 1995, and ($1,852,000) and $2,307,000 for the nine months ended September 30, 1996 and September 30, 1995. The FIFO cost of inventories approximates replacement cost. 6 7 C. COMMITMENTS AND CONTINGENCIES The Company is subject to lawsuits and claims which arise out of the normal course of its business. Management believes that the disposition of such claims will not have a material adverse effect on the Company. The Company's income tax returns are currently under IRS examination. The Company does not expect the results from this examination will have a material adverse effect on its consolidated financial statements. D. COMMON STOCK During the third quarter of 1996, 5,000 warrants were exercised and converted to 56,490 shares of common stock. For the nine months ended September 30, 1996, 55,483 warrants were exercised and converted to 626,852 shares of common stock. E. ACQUISITION The following unaudited pro forma financial information shows the results of operations of the Company as though the acquisition of Cal Emblem occurred as of January 1, 1995. These results include depreciation on fair value write-up of property and equipment over estimated lives of 3-7 years, amortization of the excess of purchase price over net assets acquired over a 30-year life, a decrease in amortization of Cal Emblem intangibles written off in purchase accounting and an increase in interest expense as a result of borrowing funds to pay for the purchase as of January 1, 1995.
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, --------------------- ----------------------- (In thousands, except per share data) 1996 1995 1996 1995 Net Sales $ 59,794 $ 65,710 $ 184,472 $ 190,779 Net Income from Continuing Operations 2,530 1,184 7,684 2,486 Net Income Available for Common Stock 2,530 1,184 7,630 2,486 Earnings Per Share: Primary $ 0.25 $ 0.19 $ 0.77 $ 0.41
F. EXTRAORDINARY ITEM In June 1996, the Company incurred an extraordinary charge of $54,000, net of income tax benefit of $34,000, for the write-off of unamortized deferred financing costs, unamortized original issue discount, and certain premium on reacquisition associated with the repurchase of $500,000 principal amount of 13 1/2% Senior secured Notes due 2002 (the "Senior Notes"). 7 8 G. SUMMARIZED FINANCIAL INFORMATION Following is the summarized financial information of DDI and its subsidiaries (in thousands):
SEPTEMBER 30, DECEMBER 31, 1996 1995 (UNAUDITED) Current assets $ 75,549 $ 71,429 Noncurrent assets $ 52,999 $ 54,296 Current liabilities $ 25,195 $ 28,413 Noncurrent liabilities $ 68,418 $ 69,888
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------ --------------------------- 1996 1995 1996 1995 (UNAUDITED) (UNAUDITED) Net sales $ 59,794 $ 62,757 $ 184,472 $ 176,987 Gross profit $ 16,156 $ 14,518 $ 48,592 $ 41,123 Net income $ 2,530 $ 1,277 $ 7,630 $ 2,607
Following is the summarized financial information of PBF and Cal Emblem (wholly owned subsidiaries of DDI), which are guarantors of the Senior Notes. The information presented for Cal Emblem is from the date of acquisition:
SEPTEMBER 30, DECEMBER 31, 1996 1995 (UNAUDITED) Current assets $ 6,623 $ 7,948 Noncurrent assets $ 9,463 $ 10,581 Current liabilities $ 8,041 $ 11,301 Noncurrent liabilities $ 1,060 $ 1,140
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, --------------------- ----------------------- 1996 1995 1996 1995 (UNAUDITED) (UNAUDITED) Net sales $ 5,152 $ 4,572 $ 16,297 $ 9,555 Gross profit $ 1,866 $ 1,090 $ 5,114 $ 2,334 Net income $ 368 $ 176 $ 755 $ 308
8 9 The separate financial statements of DDI are not presented in this report because there is no significant difference between the financial statements of the Company and DDI and, therefore, management concluded that the inclusion of DDI's separate financial statements would not be material to holders of the Senior Notes. The separate financial statements of PBF and Cal Emblem, both of which have guaranteed the Senior Notes, are not presented because management believes that they would not be material to holders of the Senior Notes. H. RECENTLY ISSUED ACCOUNTING STANDARDS The Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 123., Accounting for Stock-Based Compensation, which became effective for the Company beginning January 1, 1996. SFAS No. 123 requires expanded disclosure of stock-based compensation arrangements with employees and encourages (but does not require) compensation cost to be measured based on the fair value of the equity instrument awarded. Companies are permitted, however, to continue to apply Accounting Principles Board (APB) Opinion No. 25, which recognizes compensation cost based on the intrinsic value of the equity instrument awarded. The Company will continue to apply APB No. 25 to its stock-based compensation awards to employees and will disclose the required pro forma effect on net income and earnings per share in its Annual Report on Form 10-K. 9 10 ITEM 2. MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The following discussion, which is based on the consolidated financial statements of the Company, should be read in conjunction with the consolidated financial statements appearing elsewhere is this report. When used in the following discussion, the words "believes," "estimates," "expects" and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those projected, including, but not limited to, fluctuations in paper prices, cyclical downturns in the economy and the effect of emerging technologies such as electronic data interchange on the business forms industry as a whole. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly release any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. RESULTS OF OPERATIONS COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995: NET SALES Net sales were $59.8 million for the quarter ended September 30, 1996, a decrease of 4.7% from $62.8 million in 1995. Paper price decreases in 1996 over 1995 are estimated to have negatively impacted total sales by approximately 7.1%, most of which related to business forms and supplies. Net sales of business forms, supplies and services decreased 13.8% with decreases of 4.4% in custom forms sales and 22.8% in stock forms sales. The decreases were partially offset by $0.8 million of increased sales to Odyssey Integrated Services(SM) customers. Sales of pressure sensitive labels increased 11.6% and includes revenues from Cal Emblem, which was acquired in August 1995. The pressure sensitive labels market was soft through most of the third quarter of 1996, reflecting the economic weakness in the manufacturing sector. InteliMail(R) sales increased primarily to the addition of new customers. GROSS PROFIT Gross profit was $16.2 million for the quarter ended September 30, 1996, an increase of $1.6 million, or 11.3%, from $14.5 million in 1995. Gross profits in 1996 were favorably impacted by approximately $1.1 million in reduced depreciation expense from fully depreciated assets. As a percentage of sales, gross profit was 27.0% compared with 23.1% in 1995. Gross profit margins of business forms, supplies and services increased 4.7% for the third quarter of 1996. Pressure sensitive labels gross profit margins increased 3.0% in the third quarter of 1996 primarily as a result of improved manufacturing efficiencies. InteliMail(R) gross profit margins increased 2.1%, primarily as a result of higher operating levels from increased sales volume. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses were $9.5 million for the quarter ended September 30, 1996, an increase of $0.6 million over 1995. The increase in expenses resulted from inclusion of the expenses of Cal Emblem. These expenses increased as a percentage of sales to 15.9% from 14.1% in 1995, primarily from the effect of lower paper prices in reducing total sales. 10 11 DEBT EXPENSE The decrease in debt expense of $1.1 million is primarily attributable to repayment of $24.0 million of the Senior Notes, as well as the related reduction in amortization of debt issuance costs and accretion of discount. COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995: NET SALES Net sales were $184.5 million for the nine months ended September 30, 1996, an increase of 4.2% from $177.0 million in 1995. Paper price decreases in 1996 over 1995 are estimated to have negatively impacted total sales by approximately 3.0%, most of which related to business forms and supplies. Net sales of business forms, supplies and services decreased 3.9% with no change in custom forms sales and decreases of 7.3% in stock forms sales. Sales to federal governmental units were $1.0 million, a decrease of $2.0 million from 1995. The decreases were partially offset by $3.4 million of increased sales to Odyssey Integrated Services(SM) customers. Pressure sensitive labels sales increased 20.8% and include revenues from Cal Emblem, which was acquired in August 1995. The pressure sensitive labels market was soft throughout the nine months of 1996, partly due to the weaknesses in the retail economy and the manufacturing sector, generally. InteliMail(R) sales increased 16.4% due to the addition of new customers and growth from existing customers. GROSS PROFIT Gross profit was $48.6 million for the nine months ended September 30, 1996, an increase of $7.5 million, or 18.2% from $41.1 million in 1995. Gross profits in 1996 were favorably impacted by approximately $3.0 million in reduced depreciation expense from fully depreciated assets. As a percentage of sales, gross profit was 26.3% compared with 23.2% in 1995. Gross profit margins of business forms, supplies and services increased 4.4% for the first nine months of 1996. Pressure sensitive labels gross profit margins decreased 0.2% in the first nine months of 1996 primarily as a result of sales mix. InteliMail(R) gross profit margins increased 6.1%, primarily as a result of operating levels from increased sales volume. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses were $28.3 million for the nine months ended September 30, 1996, an increase of $2.1 million over 1995. The increase in expenses resulted from inclusion of the expenses of Cal Emblem. These expenses increased as a percentage of sales to 15.3% and from 14.7% in 1995 primarily from the effect of lower paper prices in reducing total sales. DEBT EXPENSE The decrease in debt expense of $3.1 million is primarily attributable to repayment of $24.0 million of the Senior Notes, as well as the related reduction in amortization of debt issuance costs and accretion of discount. EXTRAORDINARY EXPENSE In June 1996, the Company repurchased $500,000 of the Senior Notes at a price of 110%. The premium along with the related unamortized debt issuance cost and issuance discount resulted in a charge of $54,000, net of income tax benefit of $34,000. 11 12 LIQUIDITY AND CAPITAL RESOURCES The Company relies primarily upon operating cash flow and borrowings under its revolving credit facilities to finance capital expenditures, increases in working capital and debt service. At September 30, 1996, working capital was $50.4 million, an increase of $7.3 million from the working capital balance as of December 31, 1995. Operating activities generated cash of approximately $15.0 million during the nine months ended September 30, 1996. Cash provided by operations during the first nine months of 1996 was primarily the result of increased earnings. The Company had a net cash outflow of approximately $3.1 million from its investing activities during the nine months ended September 30, 1996, for capital expenditures. The Company estimates that its capital expenditures for fiscal 1996 will be approximately $4.5 million. In connection with the acquisition of Cal Emblem, the Company issued two five-year term promissory notes in the aggregate principal amount of $2.2 million which accrue interest at the rate of 10% per annum. Principal and interest payments will be due in approximately equal installments over five years. The tax-exempt industrial revenue bonds in the principal amount $570,000 bear an annual interest rate of 10.125% and are due on October 1, 1996 ($400,000) and on October 1, 1997 ($170,000). Monthly sinking fund payments are required. The Company has a revolving credit facility (the "Revolving Credit Facility") that provides for borrowings of up to $20 million. The Revolving Credit Facility is secured by the Company's accounts receivable and the proceeds thereof and, subject to the first lien of the holders of the Senior Notes, by the Company's inventory and proceeds thereof. Outstanding indebtedness under the Revolving Credit Facility is limited to 80% of eligible accounts receivable (subject to reduction by the lender under certain circumstances). The facility will expire in February 1997, subject to automatic annual renewal unless terminated by either party. The Company is obligated to pay certain termination fees in the event the facility is terminated prior to February 1997. Under the terms of the Indenture governing the Senior Notes, the Company is permitted to incur additional revolving credit indebtedness in an amount equal to 85% of its accounts receivable, and based upon accounts receivable balances at September 30, 1996, the Company was permitted to incur approximately $24.2 million of revolving credit indebtedness. As of September 30, 1996, there was no amount outstanding under the Revolving Credit Facility. The facility restricts certain liens and prohibits the payment of dividends on, and redemption of, any class of the capital stock of DDI (all of which is currently owned by the Company), PBF or Cal Emblem and certain other restricted payments, among other things. The Company expects to satisfy its obligations under the Senior Notes, the promissory notes issued in connection with the Cal Emblem acquisition and the industrial revenue bonds, as well as future capital expenditures and working capital requirements, with cash flow from operations, and believes that this source will provide sufficient liquidity to enable it to meet its working capital requirements for at least the next 12 months. The information in the immediately preceding paragraph is forward-looking and involves risks and uncertainties that could significantly impact the Company's expected liquidity requirements in the short and long term. While it is impossible to itemize the many factors and specific events that could affect the Company's outlook for its liquidity requirements, such factors would include fluctuations in paper prices, cyclical downturns in the economy and the effect of emerging technologies such as electronic data interchange on the business forms industry as a whole. These factors could reduce the Company's revenues and increase its expenses, resulting in a greater burden on the Company's liquidity than that which the Company has described above. 12 13 PART II. OTHER INFORMATION Item 2. CHANGES IN SECURITIES (a) During the quarter ended September 30, 1996, 56,490 shares of common stock were issued as a result of the exercise of 5,000 Warrants. Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit 11 - Statement Regarding Computation of Per Share Earnings (b) Current Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended September 30, 1996. 13 14 EXHIBIT 11 DATA DOCUMENTS INCORPORATED AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (AMOUNTS IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS) - --------------------------------------------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1996 1995 1996 1995 PRIMARY EARNINGS PER SHARE: Common stock outstanding 9,230,261 5,203,409 9,230,261 5,203,409 Common stock equivalents: Common stock warrants, if dilutive 653,603 1,280,455 653,603 1,280,455 Common stock options - incremental shares 71,895 - 56,277 - --------- --------- --------- --------- Weighted average shares outstanding 9,955,759 6,483,864 9,940,141 6,483,864 ========= ========= ========= ========= Net income, as adjusted: Before extraordinary item $ 2,530 $ 1,341 $ 7,684 $ 2,800 Extraordinary item available for common stock - - (54) - --------- --------- --------- --------- Net income available for common stock 2,530 1,341 7,630 2,800 ========= ========= ========= ========= Primary earnings per share Before extraordinary item $ 0.25 $ 0.21 $ 0.77 $ 0.43 Extraordinary item available for common stock $ - $ - $ - $ - --------- --------- --------- --------- Net income available for common stock $ 0.25 $ 0.21 $ 0.77 $ 0.43 ========= ========= ========= ========= NET INCOME AS ADJUSTED PRIMARY EARNINGS PER SHARE: Net income before extraordinary item $ 2,530 $ 1,277 $ 7,684 $ 2,607 Add: amortization of original issue discount of exchangeable warrants - 64 - 193 --------- --------- --------- --------- Net income before extraordinary item as adjusted $ 2,530 $ 1,341 $ 7,684 $ 2,800 ========= ========= ========= =========
14 15 DATA DOCUMENTS INCORPORATED 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. DATA DOCUMENTS INCORPORATED /s/ Joseph C. Addison ---------------------------------------- Joseph C. Addison Chief Financial Officer /s/ Walter J. Kearns ---------------------------------------- Walter J. Kearns President and Chief Executive Officer 15 EX-11 2 STATEMENT REGARDING COMPUTATION OF PER SHARE EARN 1 EXHIBIT 11 DATA DOCUMENTS INCORPORATED AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (AMOUNTS IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS) - --------------------------------------------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1996 1995 1996 1995 PRIMARY EARNINGS PER SHARE: Common stock outstanding 9,230,261 5,203,409 9,230,261 5,203,409 Common stock equivalents: Common stock warrants, if dilutive 653,603 1,280,455 653,603 1,280,455 Common stock options - incremental shares 71,895 - 56,277 - --------- --------- --------- --------- Weighted average shares outstanding 9,955,759 6,483,864 9,940,141 6,483,864 ========= ========= ========= ========= Net income, as adjusted: Before extraordinary item $ 2,530 $ 1,341 $ 7,684 $ 2,800 Extraordinary item available for common stock - - (54) - --------- --------- --------- --------- Net income available for common stock 2,530 1,341 7,630 2,800 ========= ========= ========= ========= Primary earnings per share Before extraordinary item $ 0.25 $ 0.21 $ 0.77 $ 0.43 Extraordinary item available for common stock $ - $ - $ - $ - --------- --------- --------- --------- Net income available for common stock $ 0.25 $ 0.21 $ 0.77 $ 0.43 ========= ========= ========= ========= NET INCOME AS ADJUSTED PRIMARY EARNINGS PER SHARE: Net income before extraordinary item $ 2,530 $ 1,277 $ 7,684 $ 2,607 Add: amortization of original issue discount of exchangeable warrants - 64 - 193 --------- --------- --------- --------- Net income before extraordinary item as adjusted $ 2,530 $ 1,341 $ 7,684 $ 2,800 ========= ========= ========= =========
14 EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 9,563 0 29,209 335 35,054 75,549 84,957 47,408 128,548 25,195 64,134 0 0 9 34,926 128,548 184,472 184,472 135,880 135,880 0 0 7,376 12,930 5,246 7,684 0 (54) 0 7,630 .77 .77
-----END PRIVACY-ENHANCED MESSAGE-----