-----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, PmcvBBAnJFZQxAgwD9WpvPhbqV8SzIbeNo+XoSvb65v8+ZIyP5ZRVNN96C90pQQi +Qtneb2Uapunb/UrgINt8A== 0000950137-96-000020.txt : 19960126 0000950137-96-000020.hdr.sgml : 19960126 ACCESSION NUMBER: 0000950137-96-000020 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19951028 FILED AS OF DATE: 19960125 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: DUPLEX PRODUCTS INC CENTRAL INDEX KEY: 0000030547 STANDARD INDUSTRIAL CLASSIFICATION: MANIFOLD BUSINESS FORMS [2761] IRS NUMBER: 362109817 STATE OF INCORPORATION: DE FISCAL YEAR END: 1025 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07208 FILM NUMBER: 96506895 BUSINESS ADDRESS: STREET 1: 1947 BETHANY RD CITY: SYCAMORE STATE: IL ZIP: 60178 BUSINESS PHONE: 8158952101 MAIL ADDRESS: STREET 1: PO BOX 1947 CITY: SYCAMORE STATE: IL ZIP: 60178 10-K 1 FORM 10-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (x) Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended October 28, 1995 Commission file number 1-7208 DUPLEX PRODUCTS INC. (Exact name of Registrant as specified in its charter) Delaware 36-2109817 - --------------------------------------- ------------------------------ (State of incorporation or organization) (I.R.S. Employer Identification No.) 1947 Bethany Road, Sycamore, Illinois 60178 815/895-2101 - --------------------------------------- ------------------------------ (Address of principal executive office) (Zip Code) (Telephone Number) SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: Title of each class Name of each exchange on which registered - ----------------------------------- ----------------------------------------- Common stock, par value American Stock Exchange $1.00 per share 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 twelve 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 ninety days. Yes X No --- --- As of January 5, 1996, 7,484,878 shares of common stock with a par value of $1.00 were outstanding. These shares, which constitute all of the voting stock of the Registrant, had an aggregate market value on January 5, 1996, of approximately $59.9 million based on the closing sale price reported on the American Stock Exchange. All such shares were owned by non-affiliates of the Registrant. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant's Annual Report to Shareholders for the fiscal year ended October 28, 1995, are incorporated by reference in Parts II and IV. Portions of the Registrant's Proxy Statement for the 1996 Annual Meeting of Shareholders are incorporated by reference in Part III. 2 PART I ITEM 1 - BUSINESS GENERAL Duplex Products Inc. began operations in 1947 as a designer and manufacturer of business forms primarily focused on government markets. Over the years, Duplex has broadened considerably the scope of its products and services to keep pace with emerging technologies and the changing information management requirements of businesses. Today the Company is positioned as a leader in serving both the business forms and information management needs of customers in financial, industrial, retail, and commercial markets, with the primary objective of assisting them in improving the efficiency of their operations and in lowering their cost of processing business critical information. Financial data and commentary on the Company's recent operating results and financial position are included on pages 12 through 27 of the 1995 Annual Report to Shareholders, which is incorporated herein by reference. The Company's business is predominantly in a single industry segment, with only the business forms class of product exceeding 10% of total sales. PRODUCTS AND SERVICES The Company serves the business information handling needs of customers with a comprehensive array of value-added forms and services that are both paper-based and electronic-based. These include: - -Custom and stock business forms (continuous, unit set, single, and multi-part) in fan-fold, roll, and sheeted stocks. - -Custom and stock pressure sensitive labels in fan-fold, roll, and sheeted stocks for a wide variety of media bases. - -Integrated form/label combinations. - -Forms management services, including storage, distribution, cost center reporting and inventory management. - -Electronic printing and mailing services, including data communication and manipulation, variable and fixed printing, and document distribution. - -Prepaid phone card packages. - -Services related to check fraud prevention, electronic forms, and information flow analysis. MANUFACTURING AND DISTRIBUTION Products are produced in ten Company plants in the United States and also sourced through a network of outside strategic partners, whose product offerings and capabilities complement those of Duplex. Products and services are sold primarily in the United States and Puerto Rico through the Company's direct sales force of 260 sales consultants. Over the past year, strong emphasis has been placed on providing training to sales consultants on consultative selling techniques and new product and service offerings of the Company. In addition, corporate support of the sales force has been expanded considerably in the areas of market analysis, advertising, and sales promotion. 2 3 The Company is not dependent upon one customer or related group of customers in that no customer or group of customers under common control accounted for 10% or more of total sales in fiscal year 1995. The Company's order backlog at any time is not material in relation to annual sales volume, and the business is not subject to significant seasonal variations. A large portion of the Company's products are distributed to customers through a network of business service centers. Services provided by these centers include warehousing, customer inventory management and reporting, imprinting services, and certain forms production. MARKET ENVIRONMENT Duplex operates in a highly competitive and mature market, with industry sales of traditional business forms in the United States (estimated at approximately $8 billion in 1995) continuing to decline gradually. This decline reflects (1) a move by large businesses from paper-based information systems as they expand the use of personal computers and other productivity-enhancing tools and (2) a decline in the use of unit sets by small companies. However, certain segments of the marketplace offer growth opportunities, including pressure sensitive labels, short-run preprinted cut sheets, electronic printing and mailing services, demand printing, and forms automation. In this connection, significant opportunities relate to assisting customers to reduce their cost of handling and processing information, including the integration of paper and electronic documents, the enhancement of business processes, and the provision of services that allow businesses to outsource "back room" activities that are not central to the generation of revenues. Also, the increase in information both generated by and required by the expanding electronic age will increase paper-based and paperless communications, providing opportunities for suppliers to supplant declining segments of the traditional business forms market with other products and services. Approximately 20% of the U.S. business forms market is controlled by one competitor, with the remaining market share distributed among approximately 600 companies. Duplex ranks among the six largest of these companies, in an industry where price, quality, on-time delivery, and sales service are the prime competitive factors. Over-capacity in the industry is significant giving rise to pricing pressures. This excess of supply over demand may lead to a reduction in the number of forms suppliers through consolidations and mergers. RAW MATERIALS Duplex's principal raw material is paper, which is purchased in a wide range of sizes, colors, widths, and weights from various paper mills. Other materials used in the manufacturing process include inks and lithographic platemaking materials. After a five-year decline in paper prices, the May 1994 through October 1995 period, bond paper prices climbed approximately 115%. Selling prices of Company products were adjusted to reflect these increases; however, pressure on margins continues, reflecting the highly competitive nature of the marketplace. Currently, paper is in good supply and Duplex expects to be able to meet customer requirements. 3 4 RESEARCH AND DEVELOPMENT The Company continues to be involved in research activities relating to the development of new products and services. The Company does not regard either the number of people involved in, or amounts expended on, research activities (none of which are customer sponsored) to be material. LICENSES AND PATENTS No material patents, licenses, franchises, or concessions are held which significantly impact the Company's business. ENVIRONMENTAL PROTECTION The Company believes that it is in substantial compliance with all applicable federal, state, and local regulations regarding environmental protection. The Company has not incurred any material costs in this regard. EMPLOYEES As of October 28, 1995, 1,665 people were employed by Duplex, none of whom are covered by a collective bargaining agreement. ITEM 2 - PROPERTIES The following are the principal properties of the Company: Approximate square Location Description footage Owned/Leased - -------- ----------- ------------ ------------ Emigsville, Pennsylvania Plant and warehouse 66,000 Owned Goshen, Indiana Plant and warehouse 140,000 Owned Jacksonville, Florida Plant and warehouse 127,000 Owned Mechanicsburg, Pennsylvania Plant and warehouse 48,000 Owned Newark, Ohio Plant and warehouse 80,000 Owned Salt Lake City, Utah Plant and warehouse 81,000 Owned Santa Ana, California Plant and warehouse 65,000 Owned Sycamore, Illinois Corporate office, plant, and warehouse 191,000 Owned Tucker, Georgia Plant and warehouse 82,000 Leased West York, Pennsylvania Plant and warehouse 73,000 Owned The Company believes that its facilities are properly maintained, and that production capacity is adequate for current needs. 4 5 In addition, the Company leases (1) electronic printing and mailing facilities in Timonium, Maryland, Elgin, Illinois, and Sacramento, California, (2) leases/owns sixteen business service centers in various locations across the United States, and (3) leases sixty-nine sales offices nationwide and in Puerto Rico. ITEM 3 - LEGAL PROCEEDINGS The Company is not a party to, nor is its property subject to, any material pending legal proceedings. ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS None. PART II ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS Reported as "Stock Exchange Information" and "Trading and Dividend Information" on page 29 of the 1995 Annual Report to Shareholders. ITEM 6 - SELECTED FINANCIAL DATA Reported as "Selected Financial Data" on page 27 of the 1995 Annual Report to Shareholders. ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Reported as "Management's Discussion of Operations" and "Management's Discussion of Liquidity and Capital Resources" on pages 15 through 17 of the 1995 Annual Report to Shareholders. ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See index under Item 14. ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 5 6 PART III ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information regarding directors required by this item is incorporated by reference to the section entitled "Election of Directors" in the Registrant's Proxy Statement for the 1996 Annual Meeting of Shareholders. Information pertaining to executive officers as of January 24, 1996, is shown below. Executive Officer Name Age Since Positions During Last Five Years ---- --- --------- -------------------------------- Andrew A. Campbell 50 1995 President of the Company since June 1995; Vice President, Finance, and Chief Financial Officer of the Company, November 1994 - June 1995; Vice President, Finance, and Chief Financial Officer, Simmons Upholstered Furniture Inc., 1991 - 1994. James R. Ramig 42 1995 Vice President, Finance and Administration, and Chief Financial Officer of the Company since November 1995; President and Chief Executive Officer, Chilton-Globe Inc., May 1995 - November 1995; Chief Financial Officer, Treasurer, and Secretary, Revell-Monogram, Inc., 1991 - 1995. David B. Preston 39 1995 Vice President, Sales of the Company since September 1995; Regional Sales Director of the Company, 1993 - 1995; District Sales Manager of the Company, 1991-1993. Marc A. Loomer 45 1993 Vice President, Operations of the Company since 1994, Vice President, Continuous Improvement of the Company, 1993 - 1994; Director, Marketing of the Company, 1992 - 1993; Director, Planning of the Company, 1991 - 1992.
ITEM 11 - EXECUTIVE COMPENSATION Incorporated by reference to the section entitled "Executive Compensation" in the Registrant's Proxy Statement for the 1996 Annual Meeting of Shareholders. ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Incorporated by reference to the section entitled "Beneficial Ownership of Common Stock" in the Registrant's Proxy Statement for the 1996 Annual Meeting of Shareholders. ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Incorporated by reference to the section entitled "Executive Compensation" in the Registrant's Proxy Statement for the 1996 Annual Meeting of Shareholders. 6 7 PART IV ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K The following documents are filed as part of this report: Page(s) in Annual Report (a)(1) Financial Statements Consolidated Statement of Operations 12 Consolidated Statement of Financial Position 13 Consolidated Statement of Cash Flows 14 Notes to Consolidated Financial Statements 18-25 Report of Independent Auditors' 26 Selected Financial Data 27 Page in Form 10-K --------- (a)(2) Financial Statement Schedule Report of Independent Auditors on Financial Statement Schedule 10 Schedule II - Valuation and Qualifying Accounts and Reserves 11 The schedules listed in Reg. 210.5-04, except the schedule listed above, have been omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. (b) Reports on Form 8-K: None. (c) Exhibits 3(a) Composite of the Registrant's Restated Certificate of Incorporation as amended, including amendment filed March 15, 1990 with the Secretary of the State of Delaware.* 3(b) By-Laws of the Registrant as amended, incorporated by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended October 29, 1994. 4 Shareholder Rights Plan, incorporated by reference to the Registrant's Form 8-K dated June 8, 1989. 10(a) 1984 Incentive Stock Option Plan, incorporated by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended October 29, 1983. 7 8 10(b) 1993 Incentive Stock Option Plan, incorporated by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended October 30, 1993. 10(c) Agreement made and entered into as of June 15, 1995 between Registrant and John C. Colman.* 10(d) Agreement made and entered into as of November 15, 1994 between Registrant and Andrew A. Campbell.* 11 Computation of Earnings (Loss) Per Share.* 13 Portions (pages 12 through 29) of the 1995 Annual Report to Shareholders for the fiscal year ended October 28, 1995.* 23 Consent of Independent Auditors.* 27 Financial Data Schedule.* *Filed electronically herewith. 8 9 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form 10-K for the fiscal year ended October 28, 1995, to be signed on its behalf by the undersigned thereunto duly authorized on January 24, 1996. DUPLEX PRODUCTS INC. By /s/ James R. Ramig --------------------------- James R. Ramig Vice President, Finance and Administration, and Chief Financial Officer (Principal Financial Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated, on January 24, 1996. By /s/ Andrew A. Campbell ----------------------------- Andrew A. Campbell, President and Director By /s/ John A. Bacon, Jr. ----------------------------- John A. Bacon, Jr., Director By /s/ Michael J. Birck ----------------------------- Michael J. Birck, Director By /s/ John C. Colman ----------------------------- John C. Colman, Director By /s/ David J. Eskra ----------------------------- David J. Eskra, Director By /s/ W. Robert Reum ----------------------------- W. Robert Reum, Director 9 10 REPORT OF INDEPENDENT AUDITORS ON FINANCIAL STATEMENT SCHEDULE Board of Directors Duplex Products Inc. In connection with our audit of the consolidated financial statements of Duplex Products Inc. and Subsidiary, referred to in our report dated December 6, 1995, we have also audited Schedule II for each of the three years in the period ended October 28, 1995. In our opinion, this schedule presents fairly, in all material respects, the information required to be set forth therein. /s/ GRANT THORNTON LLP GRANT THORNTON LLP Chicago, Illinois December 6, 1995 10 11 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(Dollar amounts in thousands) Additions Deductions Balance at charged to from reserves Balance beginning costs and ---------------------- at end of year expenses Description Amount of year ---------- ---------- ----------- ------ ------- Year ended October 28, 1995 Allowance for doubtful Accounts accounts $715 $550 charged off $358 $907 Reserve for inventory 1,350 -- Inventories 233 1,117 charged off Year ended October 29, 1994 - --------------------------- Allowance for doubtful Accounts accounts $800 $367 charged off $452 $715 Reserve for inventory -- 1,350 -- 1,350 Year ended October 30, 1993 - --------------------------- Allowance for doubtful Accounts accounts $900 $256 charged off $356 $800
11 12 INDEX OF EXHIBITS 3(a) Composite of the Registrant's Restated Certificate of Incorporation as amended, including amendment filed March 15, 1990 with the Secretary of the State of Delaware.* 3(b) By-Laws of the Registrant as amended, incorporated by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended October 29, 1994. 4 Shareholder Rights Plan, incorporated by reference to the Registrant's Form 8-K dated June 8, 1989. 10(a) 1984 Incentive Stock Option Plan, incorporated by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended October 29, 1983. 10(b) 1993 Incentive Stock Option Plan, incorporated by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended October 30, 1993. 10(c) Agreement made and entered into as of June 15, 1995 between Registrant and John C. Colman.* 10(d) Agreement made and entered into as of November 15, 1994 between Registrant and Andrew A. Campbell.* 11 Computation of Earnings (Loss) Per Share.* 13 Portions (pages 12 through 29) of the 1995 Annual Report to Shareholders for the fiscal year ended October 28, 1995.* 23 Consent of Independent Auditors.* 27 Financial Data Schedule.* *Filed electronically herewith. EX-3.A 2 EXHIBIT 3.A 1 EXHIBIT 3(a) Composite of the Registrant's Restated Certificate of Incorporation as amended, including amendment filed March 15, 1990 with the Secretary of the State of Delaware.* COMPOSITE CERTIFICATE OF INCORPORATION OF DUPLEX PRODUCTS INC. ******* FIRST. The name of the corporation is DUPLEX PRODUCTS INC. SECOND. Its principal office in the State of Delaware is located at No. 100 West Tenth Street, in the City of Wilmington 99, County of New Castle. The name and address of its resident agent is The Corporation Trust Company, No. 100 West Tenth Street, Wilmington 99, Delaware. THIRD. The nature of the business, or objects or purposes to be transacted, promoted or carried on are: To manufacture, purchase, print, engrave, acquire, own, use, sell, distribute, and otherwise dispose of and deal in printed forms and printed material of all kinds. To engage in and transact the business of printing, engraving, and to manufacture, purchase, lease, acquire, own, maintain, use, operate and deal in printing machines, composing machines, binding machines, type, metal, ink, paper and any articles, materials, products, machinery, equipment and property related or incidental to or useful in connection with the business of printing and engraving. To build, purchase, lease, acquire, own, occupy, maintain, improve, use and operate printing plants, print shops, printeries, binderies, shops, studios, factories, laboratories, offices, buildings, structures, and works suitable, necessary or convenient to any of the business of the corporation. To establish, maintain, conduct and carry on a general merchandising business; and in conjunction therewith to manufacture, produce, buy, import and otherwise acquire, own, store, hold, use, sell, export, distribute, lease, pledge and otherwise dispose of and generally deal in and with, at wholesale or retail, as principal or agent for others, upon commission, consignment or otherwise, goods, wares, commodities, merchandise and personal property of every class, name, nature and description. To manufacture, purchase or otherwise acquire, invest in, own, mortgage, pledge, sell, assign and transfer or otherwise dispose of, trade, deal in and deal with goods, wares and merchandise and personal property of every class and description. To acquire, and pay for in cash, stock or bonds of this corporation or otherwise, the good will, rights, assets and property, and to undertake or assume the whole or any part of the obligations or liabilities of any person, firm, association or corporation. To acquire, hold, use, sell, assign, lease, grant licenses in respect of, mortgage or otherwise dispose of letters patent of the United States or any foreign country, patent rights, licenses and privileges, inventions, improvements and processes, copyrights, trade-marks and trade names, relating to or useful in connection with any business of this corporation. To acquire by purchase, subscription or otherwise, and to receive, hold, own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or otherwise dispose of or deal in and with any of the shares of the capital stock, or any voting trust certificates in respect of the shares of capital stock, scrip, warrants, rights, bonds, debentures, notes, trust receipts, and other securities, obligations, 2 chooses in action and evidence of indebtedness or interest issued or created by any corporations, joint stock companies, syndicates, associations, firms, trusts or persons, public or private, or by the government of the United States of America, or by any foreign government, or by any state, territory, province, municipality or other political subdivision or by any governmental agency, and as owner thereof to possess and exercise all the rights, powers and privileges of ownership, including the right to execute consents and vote thereon, and to do any and all acts and things necessary or advisable for the preservation, protection, improvement and enhancement in value thereof. To enter into, make and perform contracts of every kind and description with any person, firm, association, corporation, municipality, county, state, body politic or government or colony or dependency thereof. To borrow or raise moneys for any of the purposes of the corporation and, from time to time without limit as to amount, to draw, make, accept, endorse, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures and other negotiable or non-negotiable instruments and evidences of indebtedness, and to secure the payment of any thereof and of the interest thereon by mortgage upon or pledge, conveyance or assignment in trust of the whole or any part of the property of the corporation, whether at the time owned or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds or other obligations of the corporation for its corporate purposes. To loan to any person, firm or corporation any of its surplus funds, either with or without security. To purchase, hold, sell and transfer the shares of its own capital stock; provided it shall not use its funds or property for the purchase of its own shares of capital stock when such use would cause any impairment of its capital except as otherwise permitted by law, and provided further that shares of its own capital stock belonging to it shall not be voted upon directly or indirectly. To have one or more offices, to carry on all or any of its operations and business and without restriction or limit as to amount to purchase or otherwise acquire, hold, own, mortgage, sell, convey or otherwise dispose of, real and personal property of every class and description in any of the states, districts, territories or colonies of the United States, and in any and all foreign countries, subject to the laws of such state, district, territory, colony or country. In general, to carry on any other business in connection with the foregoing, and to have and exercise all the powers conferred by the laws of Delaware upon corporations formed under the General Corporation Law of the State of Delaware, and to do any or all of the things hereinbefore set forth to the same extent as natural persons might or could do. The objects and purposes specified in the foregoing clauses shall, except where otherwise expressed, be in nowise limited or restricted by reference to, or inference from, the terms of any other clause in this certificate of incorporation, but the objects and purposes specified in each of the foregoing clauses of this article shall be regarded as independent objects and purposes. FOURTH. The total number of shares of stock which the Corporation shall have authority to issue is twenty-one million (21,000,000) of which twenty million (20,000,000) shares shall be Common Stock having a par value of One Dollar ($1.00) per share, amounting in the aggregate to Twenty Million Dollars ($20,000,000), and of which one million (1,000,000) shares shall be Preferred Stock having a par value of One Dollar ($1.00) per share, amounting in the aggregate to One Million Dollars ($1,000,000). The Preferred Stock shall be issuable in series. The board of directors shall have authority to authorize the issuance, from time to time without any vote or other action by the stockholders, of any or all shares of stock of the corporation of any class at any time authorized, and any securities convertible into or exchangeable for any such shares, in each case to such persons and for such consideration and on such terms as the board of directors from time to time in its discretion lawfully may determine; provided, however, that the consideration for the issuance of shares of stock of the corporation having par value shall not be less than such par value. Shares so issued, for which the consideration has been paid to the corporation, shall be fully paid stock, and the holders of such stock shall not be liable to any further call or assessments thereon. 3 1. Common Stock (a) Dividend rights. Subject to provisions of law and the preferences of the Preferred Stock, the holders of the Common Stock shall be entitled to receive dividends at such times and in such amounts as may be determined by the board of directors. (b) Liquidation rights. In the event of any liquidation, dissolution or winding up of the corporation, whether voluntary or involuntary, after payment or provision for payment of the debts and other liabilities of the corporation and the preferential amounts to which the holders of the Preferred Stock shall be entitled, the holders of the Common Stock shall be entitled to share ratably in the remaining assets of the corporation. 2. Preferred Stock (a) General provisions fixed by Certificate of Incorporation. The Preferred Stock of each series (which may have varying dividend rates) shall rank on a parity with the Preferred Stock of every other series in priority of payment of dividends and in the distribution of assets in the event of any liquidation, dissolution or winding up of the corporation, whether voluntary or involuntary, to the extent of the preferential amounts (which amounts may be variable by series) to which the Preferred Stock of the respective series shall be entitled under the provisions of the certificate of incorporation or any amendment thereto or the resolution or resolutions of the board of directors providing for the issue of such series. All shares of any one series of Preferred Stock shall be identical except as to the dates of issue and the dates from which dividends on shares of the series issued on different dates shall accumulate (if cumulative). Shares of Preferred Stock purchased, redeemed or converted into or exchanged for shares of any other class or series shall be deemed to be authorized but unissued shares of Preferred Stock undesignated as to series. The board of directors may set a record date in the manner and for the purposes authorized in the by-laws of the corporation, with respect to shares of stock of the corporation of any class or series. (b) Authority of the board of directors to issue in series. The Preferred Stock may be issued from time to time in one or more series. Subject to the limitations prescribed by law and to the provisions of the certificate of incorporation or any amendment thereto, authority is expressly granted to the board of directors to authorize the issue of one or more series of Preferred Stock, and to fix by resolution or resolutions providing for the issue of each such series the designations, preferences and relative, participating, optional or other special rights and qualifications, limitations and restrictions thereof (sometimes referred to as powers, preferences and rights) to the full extent now or hereafter permitted by law, including but not limited to the following: (1) the number of shares of such series (which may subsequently be increased by resolutions of the Board of Directors) and the distinctive designation thereof; (2) the dividend rate of such series and any limitations, restrictions or conditions on the payment of such dividends; (3) the price or prices at which, and the terms and conditions on which, the shares of such series may be redeemed; (4) the amounts which the holders of the shares of such series are entitled to receive upon any liquidation, dissolution or winding up of the corporation; 4 (5) the terms of any purchase, retirement or sinking fund to be provided for the shares of such series; (6) the terms, if any, upon which the shares of such series shall be convertible into or exchangeable for shares of any other series, class or classes, or other securities, and the terms and conditions of such conversion or exchange; and (7) the voting powers, if any (not to exceed one vote per share), of the shares of such series. The provisions set forth in this paragraph and in the first two paragraphs of this ARTICLE FOURTH and in subparagraphs 1 and 2 thereof, may be changed, altered or amended upon approve by affirmative vote of the holders of a majority of the stock issued and outstanding having voting power given at a stockholders' meeting duly called for such purpose, provided, always, (1) That such change, alteration or amendment shall not affect adversely the provisions of previously issued Preferred Stock; (2) That the shareholders of the $1.00 par value Cumulative Convertible Preferred Shares, Series A, voting as a class, must approve the authorization of any additional class of preferred shares by the affirmative vote of a majority of the Series A shares if the additional class of preferred shares is equal in preference to the Series A shares or by the affirmative vote of at least two-thirds of the Series A shares if the additional class of preferred shares is senior to the Series A shares. (3) That in the event there is a default for a period of two years in the payment of the fixed dividend requirements of the Cumulative Convertible Preferred Shares, Series A, the holders of Series A shares, voting as a class, shall have the right to elect two members of the Board of Directors of the Corporation at the first annual meeting of stockholders (or any adjournment thereof) immediately following such two year period. The designations and the powers, preferences and rights, and the qualifications, limitations or restrictions thereof are as follows: No stockholder of this corporation shall by reason of his holding shares of any class have any preemptive or preferential right to purchase or subscribe to any shares of any class of this corporation, now or hereafter to be authorized, or any notes, debentures, bonds, or other securities convertible into or carrying options or warrants to purchase shares of any class, now or hereafter to be authorized, whether or not the issuance of any such shares, or such notes, debentures, bonds or other securities, would adversely affect the dividend or voting rights of such stockholder, other than such rights, if any, as the board of directors, in its discretion from time to time may grant and at such price as the board of directors in its discretion may fix; and the board of directors may issue shares of any class of this corporation, or any notes, debentures, bonds, or other securities convertible into or carrying options or warrants to purchase shares of any class, without offering any such shares of any class, either in whole or in part, to the existing stockholders of any class. Each shareholder of this corporation, unless otherwise restricted by statute or this Certificate of Incorporation, shall be entitled to one vote for each share of capital stock held by such stockholder. There shall be no cumulative voting of shares of this corporation and any rights thereto are expressly denied by this Certificate of Incorporation. Any amendment to this Certificate of Incorporation which would change any of the provisions of this ARTICLE, except as has been hereinabove otherwise provided in paragraph 3 thereof, shall not be made except upon the approval by affirmative vote of the holders of not less than SEVENTY-FIVE percent (75%) of the stock issued and outstanding, having voting power given at a stockholders' meeting duly called for such purpose. 5 FIFTH. The minimum amount of capital with which the corporation will commence business is One Thousand Dollars ($1,000.00). SIXTH. The names and places of residence of the incorporators are as follows: NAMES RESIDENCES R. F. Westover Wilmington, Delaware H. C. Broadt Wilmington, Delaware A. D. Atwell Wilmington, Delaware SEVENTH. The corporation is to have perpetual existence. EIGHTH. The private property of the stockholders shall not be subject to the payment of corporate debts to any extent whatever. NINTH. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized: To make, alter or repeal the By-laws of the corporation. To authorize and cause to be executed mortgages and liens upon the real and personal property of the corporation. To set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and to abolish any such reserve in the manner in which it was created. By resolution passed by a majority of the whole board, to designate one or more committees, each committee to consist of two or more of the directors of the corporation, which, to the extent provided in the resolution or in this Certificate of Incorporation, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be stated in the By-laws of the corporation or as may be determined from time to time by resolution adopted by the Board of Directors. By resolution approved by the affirmative vote of the holders of a majority of the stock issued and outstanding having voting power given at a stockholders' meeting duly called for that purpose: (a) to merge or consolidate the corporation with or into any other corporation or business entity; (b) to sell, lease or exchange all or substantially all of the property and assets of the corporation; (c) to dissolve or liquidate the corporation; (d) in any manner to amend this Certificate of Incorporation; provided, however, that, unless any such action shall have been first authorized by the unanimous vote of all directors then in office, no such action may be taken except upon approval by affirmative vote of the holders of not less than SEVENTY-FIVE PER CENT (75%) of the stock issued and outstanding having voting power given at a stockholders' meeting duly called for such purpose, in the case of: (i) any merger or consolidation of the corporation with or into any Related Person or an affiliate of a Related Person; (ii) any sale, lease or exchange of all or substantially all of the property and assets of the corporation to a Related Person or an affiliate of a Related Person; (iii) any dissolution or liquidation of the corporation at a time when there exists a Related Person; or (iv) any amendment to this Certificate of Incorporation which would change any of the provisions of this Article. For purposes of this paragraph: 6 (v) The term "Related Person" shall mean a corporation, entity or individual which, together with its affiliates and associates (as defined below), owns of record or beneficially FIVE PER CENT (5%) or more of the stock of the corporation issued and outstanding having voting power with respect to the proposed transaction; and any determination made in good faith by the Board of Directors of the corporation, on the basis of information available to it, as to whether any corporation, entity or individual is a Related Person within the meaning hereof shall be final and binding; (vi) Any corporation, entity or individual shall be deemed to be the beneficial owner of any issued and outstanding stock of the corporation (a) which it has the right to acquire pursuant to any agreement or upon exercise of conversion rights, warrants or options, or otherwise, or (b) which are beneficially owned, directly or indirectly, by any other corporation, entity or individual with which it has any agreement, arrangement or understanding with respect to the acquisition, holding, voting or disposition of stock of the corporation, or which is its "affiliate" or "associate." (vii) An "affiliate" of any specified corporation, entity or individual is any person, other corporation, or entity that directly, or indirectly through one of more intermediaries, controls, or is controlled by, or is under common control with the corporation, entity or individual specified. (viii) The term "associate" used to indicate a relationship with any specified person, corporation or entity, means (1) any corporation, entity, or person of which such specified person, corporation, or entity is an officer or partner or is, directly or indirectly, the beneficial owner of TEN PER CENT (10%) or more of any class of equity securities, (2) any trust or other estate in which such specified person, corporation or entity has a substantial beneficial interest or as to which said specified person, corporation or entity serves as Trustee or in a similar fiduciary capacity, and (3) any relation or spouse of such specified person, corporation or entity, or any relation of such spouse. To manage the business of the corporation and exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by this Certificate of Incorporation directed or required to be exercised or done by the stockholders. TENTH. Whenever a compromise or arrangement is proposed between this corporation and its creditors or any class of them and/or between this corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this corporation or of any creditor or stockholder thereof, or on the application of any receiver or receivers appointed for this corporation under the provisions of section 291 of Title 8 of the Delaware Code, or on the application of trustees in dissolution or of any receiver or receivers appointed for this corporation under the provisions of section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this corporation, as the case may be, and also on this corporation. 7 ELEVENTH. The books of the corporation may be kept (subject to any provisions contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors. Meetings of the stockholders for the election of the directors or for any other purpose shall be held on such date and at such time and place within or without the State of Delaware as shall be determined by a majority vote of all directors then in office, provided, however, that the Annual Meeting of Stockholders in each year shall be held within 150 days after the end of the corporation's fiscal year. At the Annual Meeting of Stockholders the stockholders shall elect, by a plurality vote, by ballot, a class of directors, and transact such other business as may properly be brought before the meeting. Special meetings of the stockholders, for any proper purpose or purposes, unless otherwise prescribed by statue or by this Certificate of Incorporation, may be called by the President and shall be called by the President or Secretary at the request in writing of a majority of all directors then in office, or at the request in writing of stockholders owning SEVENTY-FIVE PER CENT (75%) in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting and the determination of the propriety of such purpose made in good faith by a majority of the Board of Directors then in office shall be final and binding. No action required to be taken or which may be taken at any annual or special meeting of stockholders of the corporation may be taken without a meeting and the power of stockholders to consent in writing to the taking of any action is specifically denied. Commencing with the adoption of this amendment at the annual meeting of stockholders in 1976, and the filing of a Certificate of amendment with the Secretary of State, the Board of Directors shall be divided into three classes, identified as Class I, Class II, and Class III, respectively. The term of office of the directors in one class shall expire each year. Each director shall serve for a term ending on the third annual meeting following the annual meeting at which such director was elected; provided, however, that the director or directors first elected to Class I shall serve for a term ending on the annual meeting next ensuing; the directors first elected to Class II shall serve for a term ending on the second annual meeting following the annual meeting at which such directors were first elected; and the directors first elected to Class III shall serve a full term as hereinabove provided. Notwithstanding the foregoing, each director shall serve until his successor shall have been duly elected and qualified unless he shall resign or become disqualified, disabled or shall otherwise be removed. Vacancies and newly created directorships resulting from any increase in the authorized number of directors shall be filled by a majority of the directors then in office, though less than a quorum, and the directors so chosen shall hold office until the next election of the Class for which such directors shall have been chosen and until their successors are duly elected and shall qualify, unless sooner displaced. Any amendment to this Certificate of Incorporation which would change any of the provisions of this Article shall not be made except upon approval by affirmative vote of the holders of not less than SEVENTY-FIVE PER CENT (75%) of the stock issued and outstanding having voting power given at a stockholders' meeting duly called for such purpose. TWELFTH. The corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. 8 THIRTEENTH. The corporation shall indemnify any and all of its directors or officers or former directors or officers or any person who may have served at its request as a director or officer of another corporation in which it owns shares of capital stock or of which it is a creditor who was or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding, to the extent and under the circumstances permitted by the General Corporation Law of the State of Delaware. Such indemnification (unless ordered by a court) shall be made as authorized in a specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standards of conduct set forth in the General Corporation Law of the State of Delaware. Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such quorum is not obtainable, or even if obtainable as a quorum of disinterested directors so direct, by independent legal counsel in a written opinion, or (3) by the stockholders. Any and all expenses incurred in defending such action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors in the specific case upon receipt of an undertaking by or on behalf of the person or his or her agent to repay such amount unless it shall ultimately be determined that he or she is entitled to be indemnified by the corporation as authorized herein. The foregoing rights of indemnification shall not be deemed exclusive of any other rights to which those seeking indemnification shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such person. FOURTEENTH. To the fullest extent permitted by the Delaware General Corporation Law as the same exists or may hereafter be amended, a director of this corporation shall not be liable to this corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. FIFTEENTH. New by-laws may be adopted or the by-laws may be amended or repealed by affirmative vote of the holders of not less than SEVENTY-FIVE PER CENT (75%) of the stock issued and outstanding having voting power given at a stockholders' meeting duly called for such purpose. By-laws may also be adopted, amended, or repealed by the Board of Directors. Any amendment to this Certificate of Incorporation which would change any of the provisions of this Article shall not be made except upon approval by affirmative vote of the holders of not less than SEVENTY-FIVE PER CENT (75%) of the stock issued and outstanding having voting power given at a stockholders' meeting duly called for such purpose. WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation law of the State of Delaware, do make this certificate, hereby declaring and certifying that the facts herein stated are true, and accordingly have hereunto set our hands and seals this 11th day of June A.D. 1958. R. F. Westover (SEAL) ------------------------- H. C. Broadt (SEAL) 9 -------------------------- A. D. Atwell (SEAL) -------------------------- STATE OF DELAWARE ) ) SS: COUNTY OF NEW CASTLE ) BE IT REMEMBERED that on this 11th day of June A.D. 1958, personally came before me, a Notary Public for the State of Delaware, R. F. Westover, H. C. Broadt and A. C. Atwell, all of the parties to the foregoing certificate of incorporation, known to me personally to be such, and severally acknowledged the said certificate to be the act and deed of the signers respectively and that the facts therein stated are truly set forth. GIVEN under my hand and seal of office the day and year aforesaid. /s/Harold E. Grantland -------------------- Notary Public Harold E. Grantland Notary Public Appointed Jan. 12, 1957 State of Delaware Term 2 Years EX-10.C 3 EXHIBIT 10.C 1 EXHIBIT 10(c) CONSULTING AGREEMENT This Agreement is made as of the 15th of June 1995 by and between DUPLEX PRODUCTS INC., a Delaware corporation with its principal place of business at 1947 Bethany road, Sycamore, Illinois 60178 ("DUPLEX") and JOHN C. COLMAN, an individual, whose principal place of residence is 4 Briar Lane, Glencoe, IL 60022-1801 ("CONSULTANT"). DUPLEX wishes to contract with CONSULTANT for services including management consulting services, and CONSULTANT is willing and qualified to perform such services. In consideration of the above recitals, the terms and covenants of this Agreement, and other valuable consideration, the receipt of which is acknowledged, the parties agree as follows: 1. SERVICES. CONSULTANT shall supply DUPLEX with management consulting services ("Services"). It is understood that Services provided by CONSULTANT pursuant to this Agreement shall be so provided on a day-to-day, as-needed basis. DUPLEX shall have sole discretion to determine the need for the continued provision of such Services. CONSULTANT agrees to perform such additional Services as may be requested in writing by DUPLEX and agreed to by the parties. 2. COMPENSATION. DUPLEX shall compensate CONSULTANT as follows: A. The equivalent of Two Hundred Thousand ($200,000) Dollars per year, payable in equal monthly installments payable by wire transfer via Account No. 51-55754, Bank of America, IL, 231 South LaSalle Street, Chicago, IL 60697, ABA 071-000039, for the effort actually expended by CONSULTANT pursuant to this Agreement ("Consulting Fee"). Such payments shall be made by the 10th day of each month, with the first of such payment being made by July 10, 1995, and by the 10th day of each month thereafter during the existence of this Agreement. B. Actual reasonable expenses incurred by CONSULTANT and approved by DUPLEX that are directly related to CONSULTANT'S performance under and pursuant to this Agreement. C. DUPLEX shall provide general office space, supplies and support in addition to the expense amount listed herein. D. It is understood that CONSULTANT will receive the compensation outlined herein in lieu of any of the Director's fees that CONSULTANT would otherwise be entitled to as a member of the DUPLEX Board of Directors, with the exception of actual expenses related to Directors' meetings. 3. CONFIDENTIALITY. CONSULTANT agrees that (a) all knowledge and information that CONSULTANT may receive from DUPLEX or from its employees or other consultants of DUPLEX, or by virtue of the performance of services under and pursuant to this Agreement, relating to inventions, products, processes, machinery, apparatus, prices, discounts, costs, business affairs, future plans, or technical data that belong to DUPLEX or to those with whom DUPLEX has contracted regarding such information, and (b) all information provided by CONSULTANT to DUPLEX in reports of work done, together with any other information acquired by or as direct result of employment as a consultant by DUPLEX and during the term of such employment, shall for all time and for all purposes be regarded by CONSULTANT as strictly confidential and held by CONSULTANT in confidence, and solely for DUPLEX'S benefit and use, and shall not be used by CONSULTANT or directly or indirectly disclosed by CONSULTANT to any person whatsoever except to DUPLEX or with DUPLEX's prior written permission. 2 4. CONSULTANT REPRESENTATIONS. CONSULTANT represents and warrants that CONSULTANT has the right to perform the services required under and pursuant to this Agreement without violation of obligations to others, and that CONSULTANT has the right to disclose to DUPLEX all information transmitted to DUPLEX in the performance of services under and pursuant to this Agreement, and CONSULTANT agrees that any information submitted to DUPLEX, whether patentable or not, may be utilized fully and freely by DUPLEX. 5. COVENANT NOT TO COMPETE. During the term of this Agreement with DUPLEX, CONSULTANT shall not engage in nor service or assist anyone engaged in a business which is directly or indirectly competitive with the business of DUPLEX or the services provided to DUPLEX by CONSULTANT. In addition, for a period of one (1) year after termination of this Agreement, CONSULTANT shall not directly or indirectly, by himself or in conjunction with any other person, firm, corporation or business enterprise, engage in a business or industry that is competitive with that part of the business of DUPLEX with which CONSULTANT is associated during the term of this Agreement. This covenant not to compete shall be for the Continental United States. CONSULTANT acknowledges the national scope of DUPLEX's business interests. The parties stipulate that the matters covered in this Agreement are important material, confidential and gravely affect the successful conduct of business and good will of DUPLEX. CONSULTANT acknowledges that DUPLEX will suffer irreparable injury in the event that CONSULTANT violates this Agreement. The parties agree that DUPLEX may enforce this Agreement by seeking equitable and injunctive relief, as well as monetary damages, attorney's fees and costs of suit. 6. DURATION AND TERMINATION. This Agreement shall become effective on the date stated above and shall continue at the discretion of the parties. This agreement may be terminated pursuant to the following: A Immediately by DUPLEX on the death or incapacity of CONSULTANT; B. By either party, at any time, on five (5) days' prior written notice; The obligations of CONSULTANT under Sections 3, 4 and 5 above shall survive any expiration or termination of this Agreement. On termination of this Agreement, CONSULTANT will return to DUPLEX all written information, drawings, models, and other materials or files supplied to CONSULTANT or created by CONSULTANT at the direction or expense of DUPLEX. 7. LIMITATION OF DAMAGES. CONSULTANT waives any rights to recovery from DUPLEX for any injuries that CONSULTANT may sustain while performing services under and pursuant to this Agreement and that are a result of CONSULTANT's own negligence. CONSULTANT shall be responsible for and shall reimburse DUPLEX for all loss or damage to DUPLEX's property, property of third parties, or personal injury caused by the acts or omissions of CONSULTANT during the term of this Agreement. 3 8. ASSIGNMENT/MODIFICATION/MERGER The rights of CONSULTANT under this Agreement are personal to CONSULTANT and may not be assigned or transferred to any other person, firm, or corporation without the prior, express, and written consent of DUPLEX. This Agreement shall constitute the entire Agreement between the parties and any prior understanding or representation of any kind preceding the date of this Agreement shall not be binding upon either party except to the extent incorporated in this Agreement. Any modification of this Agreement or additional obligation assumed by either party in connection with this Agreement shall be binding only if evidenced in writing signed by each party or an authorized representative of each party. 9. NOTICES. Any notice provided for or concerning this Agreement shall be in writing and be deemed sufficiently given when sent by certified or registered mail if sent to the respective address of each party as set forth at the beginning of this Agreement. 10. GOVERNING LAW/ARBITRATION. It is agreed that this Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Illinois. 11. EFFECT OF PARTIAL INVALIDITY. The invalidity of any portion of this Agreement will not and shall not be deemed to affect the validity of any other provision. In the event that any provision of this Agreement is held to be invalid, the parties agree that the remaining provisions shall be deemed to be in full force and effect as if they had been executed by both parties subsequent to the expungement of the invalid provision. IN WITNESS WHEREOF, the parties have executed this Agreement on this 16th day of October, 1995. DUPLEX PRODUCTS INC. By: A.A. Campbell John C. Colman Its: President EX-10.D 4 EXHIBIT 10.D 1 EXHIBIT 10(d) SEVERANCE AGREEMENT THIS SEVERANCE AGREEMENT ("Agreement") is entered into as of the 15th day of November, 1994, by and between DUPLEX PRODUCTS INC., a corporation, ("DUPLEX") and ANDREW CAMPBELL ("CAMPBELL"). WHEREAS, DUPLEX desires to hire CAMPBELL in the position of Vice President and Chief Financial Officer. WHEREAS, CAMPBELL desires employment with DUPLEX in the position of Vice President and Chief Financial Officer. NOW THEREFORE, in consideration of the promises set forth in this Agreement, and in further consideration of CAMPBELL's employment by DUPLEX, the parties agree as follows: 1. Definitions. The terms defined below shall have the following meanings throughout this Agreement: 1.1 Base Annual Salary. For purposes of this Agreement, "Base Annual Salary" shall be equal to the greater of: 1.1.1 CAMPBELL's annual salary excluding bonuses or other similar payments as of the date of a Change of Control; or 1.1.2 CAMPBELL's annual salary excluding bonuses or other similar payments as of the date of a Qualifying Termination. 1.2 Change of Control. A "Change of Control" shall exist upon the first of the following to occur: 1.2.1 Any tender offer, merger or other business combination, sale of assets, contested election or any combination of the foregoing transactions (a "Transaction"), which results in the persons who were directors of DUPLEX before the Transaction ceasing to constitute a majority of the Board of Directors of DUPLEX or any successor to DUPLEX after the Transaction; 2 1.2.2 DUPLEX merges or consolidates with another corporation and as a result of the merger or consolidation fifty percent (50%) or less of the outstanding voting securities of the surviving or resulting corporation shall then be owned in the aggregate by former stockholders of DUPLEX; 1.2.3 A tender offer or exchange offer is made and consummated for the ownership of securities of DUPLEX representing more than fifty percent (50%) of the combined voting power of DUPLEX's then outstanding voting securities; or 1.2.4 DUPLEX transfers substantially all of its assets to another corporation which is not a wholly-owned subsidiary of DUPLEX. 1.3 QUALIFYING TERMINATION. A "Qualifying Termination" is a termination of CAMPBELL's employment qualifying him for Severance Consideration under this Agreement and shall mean: 1.3.1 Any termination of CAMPBELL's employment by DUPLEX or any successor to DUPLEX without cause; 1.3.2 Any resignation from employment by CAMPBELL within 90 days following a Change of Control; 1.3.3 Any significant diminution of CAMPBELL's responsibilities as Vice President and Chief Financial Officer of DUPLEX; or 1.3.4 Any reduction in CAMPBELL's Base Annual Salary. 1.4 SEVERANCE CONSIDERATION. "Severance Consideration" shall be equal to one year's Base Annual Salary, plus a pro rata share of any earned bonus based upon performance. Severance Consideration shall be paid from the general assets of DUPLEX, or any successor of DUPLEX. DUPLEX, or any successor of DUPLEX, shall not establish a separate trust, account or plan for the payment of Severance Consideration. 3 2. PAYMENT OF SEVERANCE CONSIDERATION. If CAMPBELL's employment with DUPLEX, or any successor of DUPLEX, is subject to a Qualifying Termination, then DUPLEX, or any successor of DUPLEX, shall pay to CAMPBELL Severance Consideration pursuant to the terms of this Agreement. Severance Consideration shall be paid to CAMPBELL in substantially equal installments over the course of 12 months in keeping with DUPLEX's standard payroll practice. In the event of CAMPBELL's death prior to the entire Severance Consideration being paid, any remaining amounts due shall be paid to CAMPBELL's estate in the same manner provided for herein. 3. OUTPLACEMENT SERVICES. In addition to Severance Consideration, if CAMPBELL experiences a Qualifying Termination, then DUPLEX, or any successor of DUPLEX, shall provide CAMPBELL with outplacement services. Outplacement services shall be provided by a firm mutually agreed upon by both CAMPBELL and DUPLEX. In all other respects, the duration, arrangements and amounts expended for such services shall be determined by DUPLEX, or any successor of DUPLEX; provided, however, that such outplacement services shall continue for a minimum of 6 months. 4. WITHHOLDING OF TAXES. DUPLEX shall withhold from any Severance Consideration payable under this Agreement all federal, state, city or other taxes as may be required by law. 5. NOT AN EMPLOYMENT AGREEMENT. Nothing in this Agreement shall give CAMPBELL any right to continued employment with DUPLEX or any successor of DUPLEX, nor shall it give DUPLEX any rights to the continued performance of duties by CAMPBELL for DUPLEX or any successor of DUPLEX. 6. NOTICES. Notices under this Agreement shall be in writing and shall be deemed given when mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to DUPLEX to: Duplex Products Inc. 1947 Bethany Road Sycamore, Illinois 60178 Attention: Chairman of the Board 4 If to CAMPBELL to: Andrew Campbell --------------- --------------- or to such other address as either party may furnish to the other in writing, except that notices of changes of address shall be effective only upon receipt. 7. APPLICABLE LAW. The performance and interpretation of this Agreement shall be construed in accordance with the laws of the State of Illinois. 8. SEVERABILITY. If a court of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, then the invalidity or unenforceability of that provision shall not affect the validity or enforceability of any other provision of this Agreement and all other provisions shall remain in full force and effect. 9. NO ASSIGNMENT. CAMPBELL's rights to receive payments or benefits under this Agreement shall not be assignable or transferable whether by pledge, creation of a security interest or otherwise. DUPLEX shall have no liability to pay any amount so attempted to be assigned or transferred. 10. SUCCESSORS. This Agreement shall be binding upon and inure to the benefit of DUPLEX, its successors and assigns (including, without limitation, any company into or with which DUPLEX may merge or consolidate). DUPLEX agrees that it will not effect a Change of Control unless either: the person or entity acquiring control of DUPLEX shall expressly assume by an instrument in writing all duties and obligations of DUPLEX under this Agreement; or DUPLEX shall provide for the payment in full of all amounts which are payable to CAMPBELL under this Agreement. 11. AGREEMENT AND RELEASE. CAMPBELL's right to receive and DUPLEX's obligation to pay Severance Consideration shall be contingent upon CAMPBELL executing a binding agreement setting forth a release of any and all claims arising from his employment and/or termination of employment with DUPLEX or any successor of DUPLEX. 5 Such agreement shall also contain covenants of confidentiality and non-competition. Said non-competition covenant shall be for a period of one year following a Qualifying Termination and shall provide, in part, that CAMPBELL shall not, directly or indirectly, either for himself or for any other person, firm, partnership, agency, corporation or other entity, compete with DUPLEX, or any successor of DUPLEX, in its lines of business or solicit, call upon, divert or take away or attempt to solicit, divert or take away from DUPLEX any customers of DUPLEX or any potential customers of DUPLEX nor assist any other person or entity in doing so within the United States of America. 12. Entire Agreement. This Agreement represents the entire agreement of the parties regarding the severance pay arrangements between them. This Agreement may not be modified except by a writing signed by both parties. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered as of the day and year first written. DUPLEX PRODUCTS INC., By: John A. Bacon, Jr. /s/Andrew A. Campbell ------------------ --------------------- ANDREW CAMPBELL Its: Chairman of the Compensation Committee EX-11 5 EXHIBIT 11 1 EXHIBIT 11 - COMPUTATION OF EARNINGS (LOSS) PER SHARE [CAPTION] Fiscal year ended -------------------------------------- October 28, October 29, October 30, 1995 1994 1993 ----------- ----------- ---------- Net earnings (loss) $(1,872) $(16,127) $2,454 Weighted average number of common shares outstanding used in computing earnings per share 7,516,328 7,593,625 7,731,740 Primary and fully diluted earnings (loss) per share before accounting changes $(0.25) $(1.19) $0.19 Cumulative effect of accounting changes per share -- - (0.93) 0.13 ------ ----- ----- Earnings (loss) per share $(0.25) $(2.12) $0.32 ====== ===== =====
EX-13 6 EXHIBIT 13 1 EXHIBIT 13 - PORTIONS OF THE 1995 ANNUAL REPORT TO SHAREHOLDERS FOR THE FISCAL YEAR ENDED OCTOBER 28, 1995 2 CONSOLIDATED STATEMENT OF OPERATIONS
For years ended (In thousands, except per share data) OCTOBER 28, 1995 October 29, 1994 October 30, 1993 - ----------------------------------------------------------------------------------------------------------- NET SALES $275,728 $265,791 $258,867 Cost of goods sold 210,931 204,062 194,977 -------- -------- -------- GROSS PROFIT 64,797 61,729 63,890 Selling, general, and administrative expenses 68,733 66,020 61,039 Restructuring costs -- 10,500 1,500 -------- -------- -------- OPERATING PROFIT (LOSS) (3,936) (14,791) 1,351 Other income (expense) Interest expense (517) (469) (590) Investment income 796 491 632 Other 615 22 838 -------- -------- -------- 894 44 880 -------- -------- -------- EARNINGS (LOSS) BEFORE INCOME TAXES AND ACCOUNTING CHANGES (3,042) (14,747) 2,231 Provision for income taxes (credits) (1,170) (5,704) 777 -------- -------- -------- EARNINGS (LOSS) BEFORE ACCOUNTING CHANGES (1,872) (9,043) 1,454 Cumulative effect of accounting changes -- (7,084) 1,000 -------- -------- -------- NET EARNINGS (LOSS) $(1,872) $(16,127) $ 2,454 ======== ======== ======== EARNINGS (LOSS) PER SHARE BEFORE ACCOUNTING CHANGES $ (0.25) $ (1.19) $ 0.19 Cumulative effect of accounting changes -- (0.93) 0.13 -------- -------- -------- NET EARNINGS (LOSS) PER SHARE $ (0.25) $ (2.12) $ 0.32 ======== ======== ======== Shares used in per share calculation 7,516 7,594 7,732
The following pro forma information reflects the Company's results for 1993 as if the revenue recognition change discussed in note 1 to the consolidated financial statements had been retroactively applied.
(In thousands, except per share data) October 30, 1993 - ----------------------------------------------------------------------------------------------------------- Net earnings $1,966 Net earnings per share 0.25
The notes to consolidated financial statements on pages 18-25 are an integral part of this statement. 12 3 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(In thousands) OCTOBER 28, 1995 October 29, 1994 - ------------------------------------------------------------------------------------------------------------------------------ ASSETS CURRENT ASSETS Cash and equivalents $8,368 $16,337 U.S. Treasury obligations (note 4) 8,149 -- Accounts and notes receivable (note 2) 46,224 48,046 Inventories (note 3) 21,975 27,530 Income tax refund receivable 1,699 2,998 Deferred income taxes (note 9) 9,831 10,245 --------- ---------- TOTAL CURRENT ASSETS 96,246 105,156 PROPERTY, PLANT, AND EQUIPMENT, NET (NOTE 5) 38,815 37,000 OTHER ASSETS (NOTE 4) 5,248 4,052 --------- ---------- TOTAL ASSETS $140,309 $146,208 ========= ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current portion of long-term debt (note 6) $1,233 $1,222 Accounts payable 13,973 11,526 Accrued expenses (note 8) 16,593 20,894 --------- ---------- TOTAL CURRENT LIABILITIES 31,799 33,642 --------- ---------- LONG-TERM DEBT (NOTE 6) 4,695 5,928 --------- ---------- DEFERRED LIABILITIES AND CREDITS Compensation plan cost (note 12) 2,493 2,411 Income taxes (note 9) 3,684 4,188 --------- ---------- TOTAL DEFERRED LIABILITIES AND CREDITS 6,177 6,599 --------- ---------- SHAREHOLDERS' EQUITY Common stock 8,242 8,304 Additional paid-in capital 3,565 4,333 Common stock held in treasury (5,809) (5,809) Unamortized value of restricted stock issued (347) (648) Retained earnings 91,987 93,859 --------- ---------- TOTAL SHAREHOLDERS' EQUITY (NOTES 10, 11, AND 12) 97,638 100,039 --------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $140,309 $146,208 ========= ==========
The notes to consolidated financial statements on pages 18-25 are an integral part of this statement. 13 4 CONSOLIDATED STATEMENT OF CASH FLOWS
For years ended (In thousands) OCTOBER 28, 1995 October 29, 1994 October 30, 1993 - ------------------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM OPERATING ACTIVITIES Net earnings (loss) $ (1,872) $ (16,127) $ 2,454 Adjustments to reconcile net earnings (loss) to cash provided (used) by operating activities Depreciation and amortization 5,410 5,613 6,578 Restructuring costs -- 10,500 1,500 Deferred income taxes (50) (6,569) 485 Provision for doubtful accounts 546 348 256 Gain on sale of fixed assets (568) (115) (732) Purchase of U.S. Treasury obligations (8,149) -- -- (Increase) decrease in accounts and notes receivable 1,276 27,627 (8,261) (Increase) decrease in inventories 5,555 (18,423) 1,399 (Increase) decrease in income tax refund receivable 1,299 (1,461) (1,537) Increase in accounts payable 2,447 1,021 1,155 Decrease in accrued restructuring costs (4,834) (3,759) (4,921) Increase (decrease) in other accrued expenses 533 1,008 (905) Other operating activities 58 552 1,206 -------- -------- --------- NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 1,651 215 (1,323) -------- -------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of long-term investments (2,544) -- -- Capital expenditures (7,747) (2,848) (3,716) Net proceeds from sale of assets 2,422 3,528 3,715 -------- -------- --------- NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (7,869) 680 (1) -------- -------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Repayment of long-term debt (1,222) (1,562) (1,731) Restricted stock repurchased, net (529) (1,415) (852) -------- -------- --------- NET CASH USED BY FINANCING ACTIVITIES (1,751) (2,977) (2,583) -------- -------- --------- DECREASE IN CASH AND EQUIVALENTS DURING YEAR (7,969) (2,082) (3,907) Cash and equivalents at beginning of year 16,337 18,419 22,326 -------- -------- --------- CASH AND EQUIVALENTS AT END OF YEAR $8,368 $16,337 $18,419 ======== ======== ========= Other cash flow information Cash paid for interest $483 $509 $637 Cash paid for income taxes -- -- 103
The notes to consolidated financial statements on pages 18-25 are an integral part of this statement. 14 5 MANAGEMENT'S DISCUSSION OF OPERATIONS 1995 VERSUS 1994 The Company reported a net loss of $1.9 million ($0.25 per share) in 1995 compared with a net loss of $16.1 million ($2.12 per share) in 1994. The 1995 net loss of $1.9 million was an improvement over the 1994 net loss of $2.6 million after adjusting for the negative impact on 1994's results of restructuring charges ($6.4 million after taxes) and the cumulative effect of an accounting change ($7.1 million after taxes), which is further discussed on page 18. The improved operating performance was due to higher sales, continued improvement in manufacturing efficiencies, and gains on the sale of property and equipment. These favorable items were partially offset by costs related to the expansion of product and service offerings, and a significant increase in bond paper costs and related LIFO inventory provision. The LIFO inventory provision had a negative impact on net earnings per share of $0.46 in 1995 compared with a positive impact of $0.11 per share in 1994. Net sales increased for the second consecutive year, growing from $265.8 million in 1994 to $275.7 million in 1995. The revenue growth was attributable to higher selling prices related to paper cost increases, partially offset by a decline in unit volume. This unit volume decrease was driven by a decline in sales force coverage. Currently, an aggressive recruiting program is underway to rebuild and expand the field sales organization. The U.S. business forms industry continues to be an approximately $8.0 billion market. Within this market, certain traditional product segments (primarily custom continuous and stock forms and unit sets) are in decline, while demand for products such as pressure-sensitive labels, preprinted laser cut-sheets, rolls, and form/label combinations is growing at a brisk pace. Duplex is aggressively pursuing product and service opportunities in other growth areas, including electronic printing and mailing, forms management services, promotional printing, electronic forms, workflow automation, and quick turnaround/short-run printing. Niche areas within the market are also being explored by the Company. Responding to customer needs for promotional and market research tools, Duplex introduced a prepaid phone card program in 1995. During the year, the Company's check fraud prevention program saw growth in both market interest and engagement levels. Results for the Company's electronic printing and mailing business fell below expectations and had a negative effect on financial performance in 1995. Revenues were lower than anticipated primarily because of shortcomings in sales focus and training. In addition, the unit encountered some operational difficulties, including underutilization of capacity. Programs to resolve these issues are underway. The Company's focus on the financial services market, initially banking, resulted in sales gains of about 20% in 1995 in this segment. Continued sales force training and development of products for this market are expected to enhance performance in 1996. Sales of outsourced products increased to $78.7 million in 1995 from $69.3 million in 1994, and margins improved. In 1995, the Company continued to expand its network of strategic alliances with outside vendors. The number of such alliances increased to twenty-eight from fifteen last year. The alliance offerings complement Duplex's internal capabilities, providing customers with a full range of information management solutions at competitive prices. Gross profit as a percentage of sales improved to 23.5% in 1995 from 23.2% in 1994. During 1995, the Company benefited from significant cost reductions in manufacturing as a result of restructuring and productivity improvement actions. Unfortunately, these reductions were partially offset by costs related to the expansion of product and service offerings and higher healthcare costs. Additionally, the LIFO inventory provision represented a cost of $5.7 million in 1995 as contrasted with a benefit of $1.4 million in 1994 as a result of the significant increase in bond paper prices. Since June of 1994, bond paper prices have increased about 115%. The Company adjusted selling prices to reflect the rise in paper costs; however, pressure on margins was encountered, reflecting the highly competitive nature of the marketplace. Paper demand has softened recently, and prices are expected to stabilize in 1996. The supply of bond paper has improved, and Duplex has been successful in satisfying customer requirements. The Company does not anticipate a material change in this situation in the near future. Selling, general, and administrative expenses were $68.7 million in 1995, an increase of $2.7 million from the $66.0 million in 1994. As a percentage of sales, these expenses increased slightly, from 24.8% in 1994 to 24.9% in 1995. 15 6 MANAGEMENT'S DISCUSSION OF OPERATIONS Higher costs related to healthcare, realigning the sales force, and expanding products and services were the main reasons for the increase. Other income for the year increased $0.9 million over 1994 primarily due to gains on the sale of property and equipment associated with restructuring activities. The 1995 income tax provision was a credit of $1.2 million ($1.1 million current; $0.1 million deferred). The Company has net operating loss carry-forwards of $14.6 million available to it to apply against future taxable income. These loss carry-forwards will expire in 2010. The effective tax rate for both 1995 and 1994 was a credit of 39%. (see note 9 to the consolidated financial statements.) 1994 VERSUS 1993 The Company reported a net loss of $16.1 million ($2.12 per share) in 1994 compared with net income of $2.5 million ($0.32 per share) in 1993. 1994 and 1993 results were impacted by restructuring provisions and accounting changes. Restructuring provisions of $10.5 million and $1.5 million before taxes were recorded in 1994 and 1993, respectively. These provisions were made to cover costs of programs designed to enhance the Company's competitiveness by closing, downsizing, and streamlining certain production, service, sales, and administrative facilities. In 1994, the Company changed its revenue recognition policy for certain custom forms, which increased the net loss for the year by $7.1 million. Note 1 to the consolidated financial statements contains additional information regarding this change. Accounting changes also included the 1993 adoption of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," which had the effect of increasing net earnings by $1.0 million. Excluding the effect of the above restructuring provisions and accounting changes, 1994's net loss was $2.6 million as contrasted with net income of $2.4 million in 1993. The decline in profitability in 1994 from 1993 resulted principally from above-normal price discounting, significant increases in bond paper costs, and higher selling expenses. These items were partially offset by higher sales, improved manufacturing productivity, and margin gains associated with the outsourcing of certain products. Net sales during 1994 totaled $265.8 million, up 3% from $258.9 million 1993. The sales gain in 1994 represented the first year-over-year increase since 1989. The 1994 improvement primarily reflected higher label, custom unit set, and electronic printing and mailing revenues, with volume gains more than offsetting the impact of higher-than-normal price discounting. Gross profit as a percentage of net sales was 23.2% in 1994 compared with 24.7% in 1993. The gross margin rate decline in 1994 was due primarily to lower selling prices and increases in material costs, particularly paper, which were partially offset by improved manufacturing productivity and the positive impact of increased outsourcing of products. Over the 1992-1994 period, the Company significantly reduced manufacturing and operating expenses by closing six plants, streamlining various business service centers, and reducing administrative employment. These actions resulted in a 27% reduction in the total number of Company employees. During 1994, the Company expanded its program of using outside strategic partners. Reflecting this, sales of outsourced products in 1994 ($69.3 million -- 26% of total revenues) increased 47% from 1993. During 1994, inroads were made in reducing paper waste, and efforts to improve plant labor productivity delivered positive results. The cost of paper fluctuated dramatically in 1994, with bond paper prices increasing approximately 70% from May to December. Selling prices of Company products were adjusted to reflect these increases. Selling, general, and administrative expenses aggregated $66.0 million in 1994, an increase of $5.0 million from $61.0 million in 1993. The increase in 1994 reflected higher selling and training expenses and incremental costs related to the development and management of new products and services. Other income was down $0.8 million in 1994 primarily because there was no counterpart to the 1993 gain on the sale of real estate and equipment associated with the closing of certain plants. The 1994 income tax provision was a credit balance of $5.7 million ($3.1 million current; $2.6 million deferred). The effective tax rate for 1994 was a credit of 39% compared with a charge of 35% in 1993. 16 7 MANAGEMENT'S DISCUSSION OF LIQUIDITY AND CAPITAL RESOURCES Net working capital at October 28, 1995 was $64.4 million compared with $71.5 million at the previous year end. The 1995 decline in working capital was primarily attributable to reductions in inventory and accounts receivable balances and an increase in accounts payable levels. The inventory reduction was due to an increase in the LIFO reserve and a reduction in units on hand. The favorable movement in accounts receivable and payable balances reflected more concentrated collection efforts and the Company's attempt to better match receivable and payable cash flows. The current ratio at the end of 1995 remained strong at 3.0 to 1, down slightly from 3.1 to 1 at the conclusion of 1994. Management believes the level of working capital will be adequate to cover the Company's liquidity requirements related to normal operations, both currently and in the foreseeable future. Sufficient resources are deemed to exist to support the Company's growth through a combination of currently available cash, cash to be generated from future operations, or additional short-term borrowings. The Company's total debt at the end of 1995 was $5.9 million compared with $7.2 million at the previous year end. Total debt as a percentage of total capital was 5.7% at year end 1995, 1.0 point lower than at the end of 1994. Cash and equivalents aggregated $8.4 million at the end of 1995, down $8.0 million from year end 1994. The decrease was due to the establishment of a managed investment program in U.S. Treasury obligations of varying maturities to improve yields. These investments are classified as trading securities rather than cash equivalents. Cash and marketable securities totaled $19.1 million at year end 1995, up $2.7 million from the previous year end. During 1995, the Company generated $1.7 million in cash from operating activities, up $1.5 million from 1994's $0.2 million, which represented a $1.5 million improvement compared with the previous year. Operating cash flow increased in 1995 principally because of positive changes in accounts receivable, inventory, and accounts payable balances, partially offset by the purchase of U.S. Treasury obligations. Operating cash flow increased in 1994 from the prior year principally because of variations in accounts receivable levels (excluding the effect of the revenue recognition change discussed previously), partially offset by the decline in earnings before restructuring costs and accounting changes. Investment activities consumed $7.8 million in cash in 1995 and generated $0.7 million the previous year. In 1993, cash inflows and outflows from investment activities were approximately equal. Capital expenditures totaled $7.7 million in 1995 compared with $2.8 million and $3.7 million in 1994 and 1993, respectively. Expenditures for plant and equipment are expected to total about $12.0 million for 1996. In addition, long-term bonds totaling $2.5 million were purchased in 1995. Net cash used by financing activities in 1995, 1994, and 1993 was $1.8 million, $3.0 million, and $2.6 million, respectively. Year-to-year cash flow changes were driven primarily by variances in the level of restricted stock repurchases. 17 8 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in thousands, except per share data) NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidation. The consolidated financial statements represent the accounts of the Company and its wholly-owned subsidiary after elimination of intercompany transactions and balances. Fiscal Year. The Company's fiscal year ends on the last Saturday in October. The fiscal years ended October 28, 1995, October 29, 1994, and October 30, 1993 each contained fifty-two weeks. Revenue Recognition. The Company recognizes revenue when product is shipped or, for custom forms stored for future delivery, when manufacturing is complete and the product is invoiced, with payment due in the normal course of business. Prior to the year ended October 29, 1994, the Company recorded sales for stored custom forms upon completion of the production process and customer acceptance. In 1994, the Company changed the method of recognizing revenue for certain custom forms in order to better manage cash flow, increase the turnover of working capital, and lower costs associated with managing receivable levels. This had the effect of increasing the Company's 1994 net loss by $7,084 ($0.93 per share), which represented the cumulative impact of the change for periods prior to 1994. Cash Equivalents. The Company considers all highly liquid debt instruments purchased with original maturities of three months or less to be cash equivalents. Inventories. Inventories are stated at the lower of cost or market. For substantially all of the Company's inventories, cost is based on the last-in, first-out (LIFO) method. Depreciation and Amortization. For financial reporting purposes, the cost of plant and equipment is depreciated over the estimated useful lives of the assets, primarily using the straight-line method. Depreciation for income tax purposes is computed using accelerated methods. Earnings (loss) per Share. Earnings (loss) per share are based on the weighted average number of common shares outstanding each period. Fair Value of Financial Instruments. Recorded amounts for financial instruments approximate fair values. NOTE 2 -- ACCOUNTS AND NOTES RECEIVABLE The Company's allowance for doubtful accounts and notes receivable at October 28, 1995 and October 29, 1994 was $907 and $715, respectively. NOTE 3 -- INVENTORIES
Oct. 28, 1995 Oct. 29, 1994 Raw materials $7,496 $7,380 Work in process 1,502 2,419 Finished goods 25,629 24,680 ------- ------- 34,627 34,479 Less reserve for LIFO (12,652) (6,949) ------- ------- $21,975 $27,530 ======= =======
The reserve for LIFO increased $5,703 in 1995 compared with decreases of $1,385 and $55 in 1994 and 1993, respectively. The 1995 increase resulted from price increases totaling $5,910, which were partially offset by quantity decreases of $207. NOTE 4 -- INVESTMENTS Effective October 30, 1994, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities," which requires that trading securities and securities available for sale be carried at fair value, and investments held to maturity be carried at amortized cost. The adoption of this standard did not have a material impact on the financial statements. At October 28, 1995, trading securities, consisting of U.S. Treasury obligations carried at fair value (approximately cost), amounted to $8,149. Held-to-maturity securities aggregated $2,544 at October 28, 1995 and consisted of municipal and corporate obligations with five- to ten-year maturities. These securities were carried at amortized cost, which approximated fair value, and were included in "Other Assets." 18 9 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in thousands, except per share data) NOTE 5 -- PROPERTY, PLANT, AND EQUIPMENT
- ------------------------------------------------------------------------------------------------------------------------ Oct. 28, 1995 Oct. 29, 1994 - ------------------------------------------------------------------------------------------------------------------------ ORIGINAL COST Land, improvements, and leaseholds $ 2,370 $ 2,393 Buildings and improvements 27,028 25,944 Machinery and equipment 76,248 72,834 -------- -------- 105,646 101,171 LESS ACCUMULATED DEPRECIATION AND AMORTIZATION (66,831) (64,171) -------- -------- $ 38,815 $ 37,000 ======== ======== - ------------------------------------------------------------------------------------------------------------------------
For financial reporting purposes, depreciation is based on the following estimated useful lives of assets: Land improvements................................. 5 to 10 years Leasehold improvements............................ Lives of leases Building and improvements......................... 5 to 40 years Machinery and equipment........................... 3 to 15 years NOTE 6 -- DEBT
- ------------------------------------------------------------------------------------------------------------------------ Oct. 28, Oct. 29, 1995 1994 - ------------------------------------------------------------------------------------------------------------------------ MORTGAGE NOTES Interest rate Maturities 8 1/4% to 8 7/10% 1996-1997 $ 540 $ 790 2% 1996-1997 38 60 75% of prime rate (a) 1996-2001 3,150 3,750 ------ ------ 3,728 4,600 CAPITALIZED LEASE 2,200 2,550 ------ ------ 5,928 7,150 LESS CURRENT MATURITIES (1,233) (1,222) ------ ------ $4,695 $5,928 ====== ====== - ------------------------------------------------------------------------------------------------------------------------
(a) Prime rate at October 28, 1995 was 8 3/4%. Aggregate amounts of long-term borrowings (excluding the capitalized lease) that mature during the next five years are as follows: 1996....................$883 1997.................... 895 1998.................... 600 1999.................... 600 2000.................... 600 At October 28, 1995, a revolving line of credit of $10,000 was available to the Company. During 1995, the Company did not borrow under this credit facility, and related commitment fees were immaterial. Borrowings under this line are available to the Company until October 28, 1997, and are subject, at the Company's option, to interest at either the bank's certificate of deposit rate plus 0.85%, LIBOR (London Interbank Offered Rate) plus 0.75%, or the bank's prime rate. The terms of this agreement contain, among other provisions, requirements for maintaining certain financial ratios and tangible net worth. NOTE 7 -- LEASE COMMITMENTS The Company has entered into operating leases, which expire over the next seven years, for certain plant and office facilities and equipment. Rental expenses under these leases aggregated $6,662, $6,400, and $6,110 in 1995, 1994, and 1993, respectively. Shown below are minimal rental commitments under capital and operating leases at October 28, 1995.
- ------------------------------------------------------------------ Capitalized Operating lease leases - ------------------------------------------------------------------ 1996 $ 508 $ 7,203 1997 483 5,696 1998 458 3,629 1999 433 1,959 2000 408 1,551 Later years 490 1,084 ------ ------- Total minimum lease payments 2,780 $21,122 ====== ======= Less interest at 7.25% (580) Present value of minimum lease payments $2,200 ====== - ------------------------------------------------------------------
19 10 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in thousands, except per share data) NOTE 8 -- ACCRUED EXPENSES Oct. 28, 1995 Oct. 29, 1994 Restructuring costs $5,715 $10,549 Compensation 5,820 7,145 Insurance 1,150 800 Other 3,908 2,400 ------- ------- $16,593 $20,894 ======= =======
In 1994, the Company recorded a $10,500 restructuring charge consisting of $7,544 of anticipated cash payments related to employee termination benefits and $2,956 of non-cash write-downs of real estate and operating assets. The charge covered costs associated with enhancing cost competitiveness, streamlining sales, manufacturing and administrative functions, and sharpening marketing and product focus. In 1994, two manufacturing facilities and nine sales offices were closed and 150 positions were eliminated. In 1995, an additional fourteen sales offices were closed and fifty positions were eliminated, and the Company initiated an order fulfillment reengineering project to streamline sales and administrative functions. Also during 1995, management, in light of current operating circumstances, elected to modify the facility consolidation segment of the plan. No additional charge was required as a result of this change. It is estimated that an additional 250 positions will be eliminated in connection with completing the remaining phases of the restructuring plan. The remaining expenditures and non-cash transactions are expected to occur over the next two years. A summary of 1995 and 1994 activity related to the 1994 provision appears in the following table. Cash payments Non-cash transactions 1995 $4,518 $ -- 1994 1,688 214
In the fourth quarter of 1993, a restructuring provision of $1,500 was established to cover severance and other costs associated with corporate staff reductions. This restructuring was completed in 1994. Cash outlays in 1995, 1994, and 1993 totaled $21, $677, and $770, respectively. In the fourth quarter of 1992, a restructuring reserve of $7,000 was recorded to cover costs associated with closing two manufacturing plants and scaling back other operations. A summary of 1995, 1994, and 1993 activity related to the 1992 provision appears in the following table. Cash payments Non-cash transactions 1995 $ 295 $ -- 1994 1,173 -- 1993 3,576 321
The Company expects to incur future expenditures of approximately $1,635, primarily related to long-term leases. Management believes that the remaining accrual for restructuring costs at October 28, 1995 of $5,715 is adequate to complete its current restructuring plans. 20 11 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in thousands, except per share data) NOTE 9 -- INCOME TAXES PROVISION FOR INCOME TAXES (CREDITS)
Oct. 28, Oct. 29, Oct. 30, For years ended 1995 1994 1993 CURRENT Federal $ (732) $(3,203) $ (427) State (388) 55 (206) Puerto Rico -- 47 25 ------- ------- ------ (1,120) (3,101) (608) ------- ------- ------ DEFERRED Federal (39) (2,017) 1,074 State (11) (586) 311 ------- ------- ------ (50) (2,603) 1,385 ------- ------- ------ $(1,170) $(5,704) $ 777 ======= ======= ======
SFAS No. 109, "Accounting for Income Taxes," was adopted in November 1992.
Oct. 28, Oct. 29, For years ended 1995 1994 DEFERRED TAX ASSETS Accounting change $ -- $ 4,723 Loss carry-forward 5,839 -- Restructuring costs 1,193 3,283 Insurance 460 320 Vacation pay 536 584 Inventory obsolescence 447 540 Inventory capitalization 680 -- Other 676 795 ------- ------- 9,831 10,245 Restructuring costs classified as other assets 1,000 1,000 ------- ------- $10,831 $11,245 ======= ======= DEFERRED TAX LIABILITIES Depreciation $ 4,898 $ 4,882 Compensation costs (997) (964) Other (217) 270 ------- ------- $ 3,684 $ 4,188 ======= =======
The effective tax rate for 1995, 1994, and 1993 was (38.5)%, (38.7)%, and 34.8%, respectively. Reconciliation of the U.S. federal statutory rate (34.0)% with the effective tax rate appears in the following table.
Oct. 28, Oct. 29, Oct. 30, 1995 1994 1993 PROVISION FOR INCOME TAXES (CREDITS) AT U.S. FEDERAL STATUTORY RATE $(1,034) $(4,980) $ 758 INCREASE (DECREASE) IN TAXES State taxes, net of federal benefits (256) (510) 171 Investment tax credit (41) (94) (122) Other 161 (120) (30) ------- ------- ----- $(1,170) $(5,704) $ 777 ======= ======= =====
The Company expects to have available net operating loss carry-forwards of $14,598 to apply against future taxable income. These loss carry-forwards will expire in October 2010. Based on the Company's historical taxable income record, when adjusted for non-recurring items such as accounting changes and restructuring charges, and estimates of future profitability, management has concluded that operating income will more likely than not be sufficient to give rise to tax expense to cover all deferred tax assets. 21 12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in thousands, except per share data) NOTE 10 -- CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
- -------------------------------------------------------------------------------------------------------------------------- Unamortized Additional Common value of Common paid-in stock held restricted Retained stock capital in treasury stock earnings Total - -------------------------------------------------------------------------------------------------------------------------- BALANCE AT OCTOBER 31, 1992 $8,510 $5,985 $(5,809) $(1,793) $107,532 $114,425 Net earnings -- -- -- -- 2,454 2,454 Stock redemption and amortization under stock plans, net (61) (131) -- 576 -- 384 - -------------------------------------------------------------------------------------------------------------------------- BALANCE AT OCTOBER 30, 1993 8,449 5,854 (5,809) (1,217) 109,986 117,263 Net loss -- -- -- -- (16,127) (16,127) Stock redemption and amortization under stock plans, net (145) (1,521) -- 569 -- (1,097) - -------------------------------------------------------------------------------------------------------------------------- BALANCE AT OCTOBER 29, 1994 8,304 4,333 (5,809) (648) 93,859 100,039 Net loss -- -- -- -- (1,872) (1,872) Stock redemption and amortization under stock plans, net (62) (768) -- 301 -- (529) - -------------------------------------------------------------------------------------------------------------------------- BALANCE AT OCTOBER 28, 1995 $8,242 $3,565 $(5,809) $(347) $91,987 $97,638
Authorized shares of common stock ($1.00 par value) total 20,000,000 shares. Common shares issued and outstanding are summarized in the table below.
(In thousands) Oct. 28, 1995 Oct. 29, 1994 Oct. 30, 1993 - ----------------------------------------------------------------------------- SHARES OF COMMON STOCK Issued 8,242 8,304 8,449 In treasury (753) (753) (753) ----- ----- ----- Outstanding 7,489 7,551 7,696 ===== ===== =====
The Company has authorized the issuance of 1,000,000 shares of $1.00 par value cumulative convertible preferred stock and 150,000 shares of $1.00 par value Series A convertible preferred shares, but no such shares have been issued. 22 13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in thousands, except per share data) NOTE 11 -- SHAREHOLDERS' RIGHTS PLAN On June 8, 1989, the Board of Directors adopted a Shareholders' Rights Plan to deter coercive takeover tactics and to prevent an acquirer from gaining control of the Company without offering a fair price to all of the Company's shareholders. Under the plan, shareholders of record on June 23, 1989 received a dividend distribution of one right for each outstanding share of the Company's common stock. If an acquiring person becomes the beneficial owner of, or commences a tender or exchange offer for 25% or more of the Company's outstanding common stock, each right will entitle the holder (other than such acquiring person) to purchase a unit consisting of one one-hundredth of a share of Series A convertible preferred stock ($1.00 par value) for $80.00 per unit. In addition, if an acquiring person becomes the beneficial owner of more than 30% of the Company's outstanding common stock, or upon the occurrence of certain other events, each right will entitle the holder (other than such acquiring person) to receive, upon exercise, common stock of the Company having a value equal to two times the exercise price of the right, or $160.00. If the Company is acquired in a merger or other business combination in which the Company would not be the surviving corporation, or if 50% or more of the Company's assets or earning power is sold or transferred, each holder shall have the right to receive, upon exercise, common stock of the acquiring corporation having a value equal to two times the exercise price of the right, or $160.00. The Company may redeem the rights in whole for $0.05 per right, under certain circumstances. The rights will expire on June 23, 1999. NOTE 12 -- EMPLOYEE BENEFIT PLANS The Company's 1984 Incentive Stock Option Plan (which expired on February 23, 1994) provided for the issuance of shares of Company common stock upon the exercise of stock options at prices not less than the market value of the stock as of the date of grant. Unless otherwise specified at the time of grant, all or any portion of the currently outstanding option shares may be exercised at any time during the period commencing one year from the date of grant and ending ten years from the date of grant. The Company's 1993 Incentive Stock Option Plan provided for 500,000 shares of the Company's common stock to be reserved for options that may be issued. The plan also provided that the options' price shall not be less than the market value of the stock at the date of grant. Options may be granted to any key employee of the Company at any time prior to the tenth anniversary of the effective date of the plan. Unless otherwise specified at the time of grant, all or any portion of the option shares may be exercised at any time during the period commencing one year from the date of grant and ending ten years from the date of grant. Options granted under the plan are treated as either incentive stock options or non-qualified stock options for federal income tax purposes. A summary of stock option activity under these plans is shown in the table on page 24. 23 14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in thousands, except per share data) NOTE 12 -- EMPLOYEE BENEFIT PLANS (CONTINUED)
1995 1994 1993 ----------------------------------------------------------------- Average Average Average Shares Price Shares Price Shares Price - --------------------------------------------------------------------------------------------------------------------- STOCK OPTIONS Outstanding at beginning of year 200,000 $10.56 77,700 $11.39 2,700 $11.88 Granted 62,500 8.28 190,000 10.22 75,000 11.38 Exercised -- -- -- -- -- -- Canceled (145,000) 10.63 (67,700) 10.55 -- -- --------- -------- ------- Outstanding at end of year 117,500 9.28 200,000 10.56 77,700 11.39 ========= ======== ======= Exercisable at end of year 12,000 15,000 2,700 Available for grant at end of year 427,500 440,000 178,000
The Company's Restricted Stock Purchase Plan, which expired on February 23, 1994, provided for the Company's common stock to be purchased by a broad range of management level employees at prices established by the Board of Directors. During 1995, 1994, and 1993, 62,400, 145,074, and 60,700 shares, respectively, of stock previously issued under the plan were repurchased at a cost of $529, $1,415, and $852, respectively. Plan expense amounted to $64, $102, and $187 in 1995, 1994, and 1993, respectively. The Employees' Savings and Profit Sharing Plan provides for contributions from both the Company and eligible employees. Company contributions, which cannot exceed 15% of earnings before such payments and federal income taxes, are at the discretion of the Board of Directors. Company contributions to the plan were last made in 1991. During 1989, the Company adopted an unfunded Supplemental Executive Retirement Plan for certain key executives. The plan provides for benefits to supplement those provided under social security and the Employees' Savings and Profit Sharing Plan. At October 28, 1995, the projected benefit obligation associated with the plan totaled $916, all of which has been recognized. Plan expense was $234, $209, and $140 in 1995, 1994, and 1993, respectively. During October 1995, the Financial Accounting Standards Board issued SFAS No. 123, "Accounting for Stock-Based Compensation," which establishes a fair value-based method for accounting for stock-based compensation plans. It encourages, but does not require, the adoption of the fair value method; however, it requires pro forma disclosure of the effect of the fair value method by those entities that do not elect to change to this method of accounting for stock plans. SFAS No. 123 will become effective for the Company in 1997. The Company has not yet determined the impact of implementing this new standard. 24 15 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in thousands, except per share data) NOTE 13 -- QUARTERLY FINANCIAL DATA (UNAUDITED)
First Quarter Second Quarter Third Quarter Fourth Quarter - -------------------------------------------------------------------------------------------------------------- 1995 Net sales $73,337 $69,568 $64,388 $68,435 Gross profit 18,119 15,820 13,831 17,027 Operating profit (loss) 1,027 (692) (2,864) (1,407) Net earnings (loss) 649 (382) (1,529) (610) Net earnings (loss) per share 0.09 (0.05) (0.20) (0.08) 1994 Net sales $65,352 $66,300 $63,959 $70,180 Gross profit 15,982 14,414 15,384 15,949 Operating profit (loss) 129 (14,587) (1,152) 819 Earnings (loss) before accounting changes 38 (8,907) (744) 570 Net earnings (loss) (7,046) (8,907) (744) 570 Per share Earnings (loss) before accounting changes (1.17) (0.10) 0.08 Net earnings (loss) (0.92) (1.17) (0.10) 0.08
Second quarter 1994 operating profit was reduced by restructuring provisions of $12,000 ($7,303 after taxes, or $0.96 per share). In the fourth quarter of 1994, these provisions were reduced by $1,500, resulting in a corresponding increase ($900 after taxes, or $0.12 per share) in operating profit. 25 16 MANAGEMENT'S DISCUSSION OF FINANCIAL RESPONSIBILITY The consolidated financial statements of Duplex Products Inc. and Subsidiary have been prepared by management in conformity with generally accepted accounting principles, based upon currently available facts and circumstances and management's best estimates and judgments of known conditions. It is the responsibility of management to assure the integrity and objectivity of such financial statements and to assure that these statements fairly report the Company's financial position and the results of its operations. To meet this responsibility, management maintains a high standard of record keeping and an effective system of internal controls, including a program of internal audits, written administrative policies and procedures, and programs to assure the selection and training of qualified personnel. These financial statements have been audited by the Company's independent auditors, Grant Thornton LLP, whose report appears on this page. Their audit was conducted in accordance with generally accepted auditing standards. Such standards include the evaluation of internal accounting controls to establish a basis for developing the scope of the audit, as well as any other procedures deemed necessary for expressing an opinion as to whether the financial statements are presented fairly. The Board of Directors, through its Audit Committee consisting solely of outside directors, meets with Grant Thornton LLP, representatives of management, and the Company's internal auditor to evaluate the activities of each, and to discuss accounting, auditing, and financial matters and the carrying out of responsibilities and duties of each group. Both the internal and independent auditors have unrestricted access to the Audit Committee to discuss their audits and the quality of the Company's financial reporting and internal control system. /s/ Andrew A. Campbell Andrew A. Campbell President /s/ James R. Ramig James R. Ramig Vice President, Finance and Administration, and Chief Financial Officer REPORT OF INDEPENDENT AUDITORS TO THE SHAREHOLDERS OF DUPLEX PRODUCTS INC. We have audited the accompanying consolidated statement of financial position of Duplex Products Inc. and Subsidiary as of October 28, 1995 and October 29, 1994, and the related consolidated statements of operations and cash flows for the years ended October 28, 1995, October 29, 1994, and October 30, 1993. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Duplex Products Inc. and Subsidiary at October 28, 1995 and October 29, 1994 and the consolidated results of their operations and their consolidated cash flows for the years ended October 28, 1995, October 29, 1994, and October 30, 1993 in conformity with generally accepted accounting principles. As discussed in the footnotes, the Company changed its method of accounting for revenue recognition and income taxes for the years ended October 29, 1994 and October 30, 1993, respectively. /s/ Grant Thornton LLP Grant Thornton LLP Chicago, Illinois December 6, 1995 26 17 SELECTED FINANCIAL DATA
(Dollar amounts in thousands, except per share data) 1995 1994 1993 1992 1991 - ------------------------------------------------------------------------------------------------------------------------- Net sales $275,728 $265,791 $258,867 $270,093 $285,271 Earnings (loss) before accounting changes (1,872) (9,043) 1,454 (563) 4,269 Net earnings (loss) (1,872) (16,127) 2,454 (563) 4,269 Per share Earnings (loss) before accounting changes (0.25) (1.19) 0.19 (0.07) 0.55 Net earnings (loss) (0.25) (2.12) 0.32 (0.07) 0.55 Dividends declared 0.48 0.69 Common stock price range 9 5/8-6 3/4 11 3/4-8 5/8 11 7/8-9 1/4 13 3/4-10 15 1/2-9 3/4 Cash and equivalents 8,368 16,337 18,419 22,326 22,639 Marketable securities 10,693 Working capital 64,447 71,514 83,372 77,479 81,370 Current ratio 3.0:1 3.1:1 4.3:1 3.7:1 3.9:1 Total assets 140,309 146,208 156,059 159,138 165,112 Short-term debt 1,233 1,222 1,562 1,731 2,117 Long-term debt 4,695 5,928 7,150 8,712 10,443 Shareholders' equity 97,638 100,039 117,263 114,425 118,553 Total debt as a percentage of total capital 5.7% 6.7% 6.9% 8.4% 9.6% Common shares outstanding (thousands) 7,489 7,551 7,696 7,757 7,756 - -------------------------------------------------------------------------------------------------------------------------
The following pro forma information reflects the Company's results for fiscal years 1993, 1992, and 1991 as if the revenue recognition change discussed in note 1 had been retroactively applied.
(Dollar amounts in thousands, except per share data) 1993 1992 1991 - ------------------------------------------------------------------------------------------------------------------ Net earnings (loss) $1,966 $(462) $4,247 Net earnings (loss) per share 0.25 (0.06) 0.55
27 18 DIRECTORS AND OFFICERS BOARD OF DIRECTORS John A. Bacon, Jr. Private Investor. Trustee of Stein Roe Variable Investment Trust and Keyport Variable Investment Trust. Director since 1967. (1) (3) Michael J. Birck President, Chief Executive Officer, and Director of Tellabs, Inc., a manufacturer of telecommunications products. Director of USF&G Corporation and Molex Inc. Director since 1990. (2) Andrew A. Campbell President of Duplex Products Inc. Director since 1995. John C. Colman Private Investor and Consultant. Director of Orion Capital Corporation and Premier Industrial Corporation. Director 1978 - 1994 and since 1995. (3) David J. Eskra Private Investor. Former Chairman of the Board and Chief Executive Officer of Duplex Products Inc. and Pansophic Systems Inc., a computer software company. Director since 1990. (1) (3) W. Robert Reum Chairman of the Board, President, and Chief Executive Officer of The Interlake Corporation, a manufacturer of special materials, aerospace components, and handling and packaging equipment. Director of Amsted Industries. Director since 1994. (1) (2) (1) Member of the Compensation Committee. (2) Member of the Audit Committee. (3) Member of the Executive Committee. CORPORATE OFFICERS Andrew A. Campbell President Marc A. Loomer Vice President, Operations David B. Preston Vice President, Sales James R. Ramig Vice President, Finance and Administration, and Chief Financial Officer Mark A. Robinson Secretary and General Counsel 28 19 SHAREHOLDER INFORMATION CORPORATE HEADQUARTERS Duplex Products Inc. 1947 Bethany Road Sycamore, Illinois 60178 PLANT LOCATIONS Elgin,Illinois Emigsville,Pennsylvania Goshen,Indiana (2) Jacksonville,Florida Mechanicsburg, Pennsylvania Newark, Ohio Sacramento, California Salt Lake City, Utah Santa Ana, California Sycamore,Illinois Timonium, Maryland Tucker, Georgia West York, Pennsylvania ANNUAL MEETING The 1996 Annual Shareholders Meeting of Duplex Products Inc. will be held on March 7, 1996 at 10 a.m., in the Assembly Room of The Northern Trust Company, 50 S. LaSalle Street, Chicago, Illinois. FORM 10-K REPORT Shareholders may obtain, without charge, a copy of Form 10-K Report filed with the Securities and Exchange Commission upon written request to the Director of Shareholder Relations, Duplex Products Inc., 1947 Bethany Road, Sycamore,Illinois 60178. INDEPENDENT AUDITORS Grant Thornton LLP Chicago, Illinois OUTSIDE COUNSEL Hinshaw & Culbertson Chicago, Illinois TRANSFER AGENT AND REGISTRAR Harris Trust and Savings Bank Chicago, Illinois STOCK EXCHANGE INFORMATION Duplex common stock is listed on the American Stock Exchange under the symbol DPX. TRADING AND DIVIDEND INFORMATION
Common stock market price ------------------------- (In dollars) High Low - --------------------------------------------------------- 1995 Fourth quarter 8 6 7/8 Third quarter 9 1/8 7 4/5 Second quarter 9 1/4 7 1/4 First quarter 9 5/8 6 3/4 1994 Fourth quarter 9 1/2 8 5/8 Third quarter 10 8 5/8 Second quarter 11 1/2 9 5/8 First quarter 11 3/4 10
Dividends were not declared in 1994 or 1995. As of October 28, 1995, there were about 1,197 shareholder accounts of record. TRADEMARK OWNERSHIP The following are trademarks of Duplex Products Inc.: DUPLEX(TM), Duplex Direct(TM), NaviGator by Duplex(TM), and The Sextant by Duplex(TM). LABELMAX(TM) is a trademark of Advanced Labeling Systems, Inc. Rolodex(R) is a trademark of Rolodex Corporation. Windows(TM) is a trademark of Microsoft Corporation. 29 EX-23 7 EXHIBIT 23 1 EXHIBIT 23 - CONSENT OF INDEPENDENT AUDITORS We have issued our reports dated December 6, 1995 accompanying the consolidated financial statements and schedule incorporated by reference or included in the Annual Report of Duplex Products Inc. on Form 10-K for the year ended October 28, 1995. We hereby consent to the incorporation by reference of said reports in the Registration Statements of Duplex Products Inc. on Form S-8 (File No. 2-64363, File No. 2-64362, File No. 2-89910, and File No. 33-53507). /s/ GRANT THORNTON LLP GRANT THORNTON LLP Chicago, Illinois January 24, 1996 EX-27 8 FINANCIAL DATA SCHEDULE
5 YEAR OCT-28-1995 OCT-29-1994 OCT-28-1995 8,368 8,149 47,131 907 21,975 96,246 105,646 66,831 140,309 31,799 4,695 8,242 0 0 89,396 140,309 275,728 275,728 210,931 210,931 68,187 546 517 (3,042) (1,170) (1,872) 0 0 0 (1,872) (0.25) (0.25)
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