-----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, C1Z3AXJ2nRIjsf4nRMMOLtBHAYAgePhmO0Axh33CwfJhEFiqX/9RsBvJJO3z3bfi ZDzS7KY7iGHmffcZmdkcRw== 0000890566-96-001132.txt : 19960816 0000890566-96-001132.hdr.sgml : 19960816 ACCESSION NUMBER: 0000890566-96-001132 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960712 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSOLIDATED GRAPHICS INC /TX/ CENTRAL INDEX KEY: 0000921500 STANDARD INDUSTRIAL CLASSIFICATION: COMMERCIAL PRINTING [2750] IRS NUMBER: 760190827 STATE OF INCORPORATION: TX FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-24068 FILM NUMBER: 96612747 BUSINESS ADDRESS: STREET 1: 2210 W DALLAS ST CITY: HOUSTON STATE: TX ZIP: 77019 BUSINESS PHONE: 7135294200 8-K/A 1 =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 8-K/A AMENDMENT NO. 1 TO CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT: JULY 12, 1996 CONSOLIDATED GRAPHICS, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) TEXAS 76-0190827 (STATE OR OTHER JURISDICTION OF 0-24068 (I.R.S. EMPLOYER INCORPORATION) (COMMISSION FILE NUMBER) IDENTIFICATION NO.) 2210 WEST DALLAS STREET HOUSTON, TEXAS 77019 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 529-4200 =============================================================================== The undersigned registrant hereby amends Item 2. Acquisition or Disposition of Assets and Item 7. Financial Statements and Exhibits of its Current Report on Form 8-K dated July 12, 1996, as originally filed, with respect to the acquisition by Consolidated Graphics, Inc. (the "Company") of Eagle Press ("Eagle") on July 12, 1996 (the "Eagle Acquisition"). ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS On July 12, 1996 the Company acquired for $4.0 million all of the assets and assumed certain of the liabilities of Eagle, a commercial printing operation located in Sacramento, California. The funds used by the Company in completing the acquisition of Eagle were obtained from borrowings on the Company's bank revolving credit agreement. The Company expects to continue operating Eagle without making any significant changes in its operations. The Company has accounted for the Eagle Acquisition as a purchase. The allocation of purchase price to the assets acquired was based on estimates of fair market values and may be revised when additional information that the Company is awaiting concerning asset and liability values is obtained. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (A) Financial statements of business acquired. The information contained in Exhibit 6 hereto is incorporated herein by reference. (B) Pro forma financial information. The following unaudited pro forma financial statements give effect to the Company's acquisition of Eagle and include the effect of the Company's acquisition of Garner Printing ("Garner") of Des Moines, Iowa earlier this fiscal year (the "Garner Acquisition"). The unaudited pro forma financial statements presented below were prepared utilizing the audited historical financial statements of the Company, Eagle and Garner. The unaudited pro forma financial statements should be read in conjunction with the audited historical financial statements and notes thereto of Eagle for the year ended December 31, 1995 incorporated herein, the Company's audited historical financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1996, and the Company's pro forma financial statements and notes thereto and the audited historical financial statements of Garner for the year ended December 31, 1995 and notes thereto included in the Company's Current Report on Form 8-K, as amended, dated July 3, 1996, pertaining to the acquisition of Garner. None of the pro forma financial statements included herein purport to be indicative of the Company's financial position or results of operations that would have occurred had the transactions been completed as of or at the beginning of the periods presented, nor do such statements purport to indicate the Company's financial condition or results of operations at any future date or for any future period. 2 CONSOLIDATED GRAPHICS, INC. UNAUDITED PRO FORMA BALANCE SHEET (IN THOUSANDS) THE UNAUDITED PRO FORMA BALANCE SHEET PRESENTED BELOW REFLECTS THE FINANCIAL POSITION OF THE COMPANY AS OF MARCH 31, 1996, TOGETHER WITH THE FINANCIAL POSITION OF GARNER AND EAGLE AS OF DECEMBER 31, 1995.
HISTORICAL ------------------------------- PRO FORMA COMPANY COMPANY GARNER EAGLE ADJUSTMENTS PRO FORMA ------- --------- --------- ----------- ---------- (AUDITED) (AUDITED) (AUDITED) ASSETS CURRENT ASSETS: Cash and cash equivalents....... $ 3,086 $ 149 $ 50 $-- $ 3,285 Accounts receivable, net........ 19,317 2,022 878 -- 22,217 Inventories..................... 8,023 418 303 -- 8,744 Prepaid expenses................ 1,077 19 9 -- 1,105 ------- ------- ------- ------- -------- Total current assets....... 31,503 2,608 1,240 -- 35,351 PROPERTY AND EQUIPMENT, net.......... 50,591 3,533 2,441 3,924(a) 60,489 GOODWILL, net........................ 5,015 -- -- 71(b) 5,086 OTHER ASSETS......................... 700 -- 4 -- 704 ------- ------- ------- ------- -------- $87,809 $ 6,141 $ 3,685 $ 3,995 $101,630 ======= ======= ======= ======= ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term debt.......................... $ 1,221 $ 1,360 $ 150 $ (150)(c) $ 2,581 Accounts payable................ 5,719 829 273 -- 6,821 Accrued liabilities............. 5,648 544 27 200(d) 6,419 Income taxes payable............ 60 -- -- -- 60 ------- ------- ------- ------- -------- Total current liabilities............. 12,648 2,733 450 50 15,881 LONG-TERM DEBT, net of current portion............................ 20,105 1,507 1,095 2,886(c) 25,593 DEFERRED INCOME TAXES................ 5,180 -- -- 967(e) 6,147 COMMITMENTS AND CONTINGENCIES PROPRIETOR'S EQUITY.................. -- -- 2,140 (2,140)(f) -- SHAREHOLDERS' EQUITY: Common stock.................... 59 15 -- (13)(f) 61 Additional paid-in capital...... 32,762 110 -- 4,021(f) 36,893 Retained earnings............... 17,055 1,776 -- (1,776)(f) 17,055 ------- ------- ------- ------- --------- Total shareholders' equity.................. 49,876 1,901 -- 2,232 54,009 ------- ------- ------- ------- -------- $87,809 $ 6,141 $ 3,685 $ 3,995 $101,630 ======= ======= ======= ======= ========
Note: Certain reclassifications were made to the historical financial statements of Garner and Eagle for purposes of clear and consistent presentation. See footnotes on page 4. 3 CONSOLIDATED GRAPHICS, INC. NOTES TO UNAUDITED PRO FORMA BALANCE SHEET (IN THOUSANDS, EXCEPT SHARE AMOUNTS) (a) Reflects the additional value assigned, pursuant to purchase accounting rules, to the property and equipment of Garner and Eagle. (b) Reflects the value assigned, pursuant to purchase accounting rules, to goodwill in connection with the Garner Acquisition. (c) Reflects the elimination of Eagle's debt, which was not assumed by the Company, and an increase in the Company's debt to finance the Eagle Acquisition. (d) Reflects the estimated costs incurred by the Company to complete both the Garner Acquisition and the Eagle Acquisition. (e) Reflects the amount of additional deferred taxes to be recorded in connection with the Garner Acquisition pursuant to purchase accounting rules and Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes." (f) Reflects the elimination of the historical shareholders' equity of Garner and the historical proprietor's equity of Eagle pursuant to purchase accounting rules, and the issuance of 177,780 shares of the Company's common stock, valued at $23.25 per share, as consideration in the Garner Acquisition. 4 CONSOLIDATED GRAPHICS, INC. UNAUDITED PRO FORMA INCOME STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE DATA) FOR THE YEAR ENDED MARCH 31, 1996 OF THE COMPANY TOGETHER WITH THE YEAR ENDED DECEMBER 31, 1995 OF GARNER AND EAGLE, ASSUMING BOTH THE GARNER ACQUISITION AND THE EAGLE ACQUISITION OCCURRED AS OF THE BEGINNING OF EACH ENTITY'S FISCAL YEAR.
HISTORICAL ----------------------------------- PRO FORMA COMPANY COMPANY GARNER EAGLE ADJUSTMENTS PRO FORMA --------- --------- --------- ----------- --------- (AUDITED) (AUDITED) (AUDITED) SALES................................ $ 85,133 $ 12,673 $ 6,597 $ -- $ 104,403 COST OF SALES........................ 61,237 9,756 4,316 (195)(a) 75,114 -------- -------- ------- --------- --------- Gross profit.................... 23,896 2,917 2,281 195 29,289 SELLING EXPENSES..................... 8,532 1,016 336 -- 9,884 GENERAL AND ADMINISTRATIVE EXPENSES........................... 6,873 1,008 457 (53)(b) 8,285 RESTRUCTURING CHARGE................. 1,500 -- -- -- 1,500 -------- -------- ------- --------- --------- Operating income................ 6,991 893 1,488 248 9,620 INTEREST EXPENSE..................... 876 273 133 167(c) 1,449 INTEREST INCOME...................... (16) -- (2) -- (18) -------- -------- ------- --------- --------- Income before provision for income taxes.................. 6,131 620 1,357 81 8,189 PROVISION FOR INCOME TAXES........... 2,146 -- (d) -- (d) 781(d) 2,927 -------- -------- ------- --------- --------- NET INCOME AVAILABLE TO COMMON SHAREHOLDERS....................... $ 3,985 $ 620 $ 1,357 $ (700) $ 5,262 ======== ======== ======= ========= ========= EARNINGS PER SHARE OF COMMON STOCK... $ .72 $ .92(e) ======== =========
Note: Certain reclassifications were made to the historical financial statements of Garner and Eagle for purposes of clear and consistent presentation. See footnotes on page 6. 5 CONSOLIDATED GRAPHICS, INC. NOTES TO UNAUDITED PRO FORMA INCOME STATEMENTS (IN THOUSANDS, EXCEPT SHARE AMOUNTS) (a) Reflects a net reduction in depreciation and amortization expense of $206 attributable to the Garner Acquisition, offset by a net increase in depreciation expense of $11 attributable to the Eagle Acquisition. Pro forma depreciation and amortization expense was determined based on a preliminary allocation of the purchase price to the operating assets acquired based on estimates of fair values and an estimate of useful lives ranging generally from 3 to 15 years. (b) Reflects the elimination of certain payments of $173 to and on behalf of the selling shareholders of Garner which will not be incurred prospectively pursuant to agreement and the addition of salary expense of $120 to be paid to the management of Eagle pursuant to agreement. Previously, the owner of Eagle did not have a salary as Eagle was operated as a sole proprietorship. (c) Reflects additional interest expense attributable to the increase in the Company's outstanding pro forma long-term debt as a result of the Eagle Acquisition. (d) Garner operated under S-corporation status and Eagle operated under sole proprietorship status for federal and state income tax purposes prior to the acquisition. Accordingly, no provision for income tax expense is reflected in each entity's historical financial statements and an adjustment for pro forma federal and state income tax expense has been made. (e) Pro forma earnings per share was calculated based on the historical weighted average shares of the Company outstanding for the year ended March 31, 1996 of 5,534,180 plus 177,780 shares issued in connection with the Garner Acquisition. 6 (C) Exhibits. The following additional exhibits to the report are furnished with this amendment: 5 -- Consent of KPMG Peat Marwick LLP 6 -- Financial Statements of Eagle Press, including independent auditors' report. 7 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. CONSOLIDATED GRAPHICS, INC. (REGISTRANT) By /s/ G. CHRISTOPHER COLVILLE G. CHRISTOPHER COLVILLE VICE PRESIDENT -- MERGERS AND ACQUISITIONS CHIEF FINANCIAL AND ACCOUNTING OFFICER Date: August 14, 1996 8 EX-5 2 EXHIBIT 5 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS We consent to the incorporation by reference in registration statements No. 33-87192 on Form S-8 and No. 333-06097 on Form S-3 of Consolidated Graphics, Inc. of our report dated May 30, 1996, with respect to the balance sheets of Eagle Press as of April 30, 1996 and December 31, 1995, and the related statements of income, proprietor's equity, and cash flows for the four months ended April 30, 1996, and for the year ended December 31, 1996, which report appears in the Form 8-K/A of Consolidated Graphics, Inc. dated July 12, 1996. Houston, Texas August 14, 1996 EX-6 3 EXHIBIT 6 EAGLE PRESS FINANCIAL STATEMENTS APRIL 30, 1996 AND DECEMBER 31, 1995 (WITH INDEPENDENT AUDITORS' REPORT THEREON) INDEPENDENT AUDITORS' REPORT The Sole Proprietor Eagle Press: We have audited the accompanying balance sheets of Eagle Press as of April 30, 1996 and December 31, 1995, and the related statements of income, proprietor's equity, and cash flows for the four months ended April 30, 1996, and for the year ended December 31, 1995. The 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 financial position of Eagle Press as of April 30, 1996 and December 31, 1995, and the results of its operations and its cash flows for the four months ended April 30, 1996 and for the year ended December 31, 1995 in conformity with generally accepted accounting principles. KPMG Peat Marwick LLP Houston, Texas May 30, 1996 2 EAGLE PRESS BALANCE SHEETS APRIL 30, DECEMBER 31, 1996 1995 ---------- ------------ ASSETS Current assets: Cash...................................... $ 115,965 50,177 Accounts receivable: Trade.................................. 1,192,624 878,303 Other.................................. -- 110 ---------- --------- 1,192,624 878,413 Inventories............................... 197,272 302,460 Prepaid expenses.......................... 13,265 8,450 ---------- --------- Total current assets.............. 1,519,126 1,239,500 Property and equipment (note 2)............. 3,510,289 3,264,630 Less accumulated depreciation............. 895,486 823,341 ---------- --------- 2,614,803 2,441,289 Other assets: Deposits.................................. 3,149 3,149 Loan fees................................. 237 1,194 ---------- --------- 3,386 4,343 ---------- --------- $4,137,315 3,685,132 ========== ========= LIABILITIES AND PROPRIETOR'S EQUITY Current liabilities: Accounts payable.......................... $ 119,273 272,967 Accounts payable to related parties................................ 34,859 -- Accrued expenses.......................... 30,133 11,024 Capitalized lease obligations (note 3).... 6,633 16,446 Current maturities of long-term debt (note 4).......................... 146,827 150,243 ---------- --------- Total current liabilities......... 337,725 450,680 Noncurrent portion of long-term debt (note 4).................................. 1,068,599 1,094,625 ---------- --------- Total liabilities................. 1,406,324 1,545,305 Proprietor's equity......................... 2,730,991 2,139,827 Commitments and contingencies (note 6)...... ---------- --------- $4,137,315 3,685,132 ========== ========= See accompanying notes to financial statements. 3 EAGLE PRESS STATEMENTS OF INCOME FOUR MONTHS ENDED YEAR ENDED APRIL 30, DECEMBER 31, 1996 1995 ------------ ------------- Net sales............................ $3,434,702 6,596,819 Cost of sales........................ 2,035,379 4,348,599 ---------- --------- Gross profit............... 1,399,323 2,248,220 Selling, general and administrative expenses........................... 531,151 782,792 ---------- --------- Income from operations..... 868,172 1,465,428 Other income and (expenses): Interest income.................... 230 1,575 Miscellaneous income............... 5,611 34,335 Loss on sale of assets............. -- (1,700) Bad debt expense................... -- (9,649) Interest expense................... (47,936) (132,907) ---------- --------- Total other income and (expenses).............. (42,095) (108,346) ---------- --------- Net income................. $ 826,077 1,357,082 ========== ========= See accompanying notes to financial statements. 4 EAGLE PRESS STATEMENTS OF PROPRIETOR'S EQUITY FOR THE FOUR MONTHS ENDED APRIL 30, 1996 AND FOR THE YEAR ENDED DECEMBER 31, 1995 Balance at December 31, 1994.................................... $1,493,283 Net income................................................. 1,357,082 Withdrawals................................................ (710,538) ---------- Balance at December 31, 1995.................................... 2,139,827 Net income................................................. 826,077 Withdrawals................................................ (234,913) ---------- Balance at April 30, 1996....................................... $2,730,991 ========== See accompanying notes to financial statements. 5 EAGLE PRESS STATEMENTS OF CASH FLOWS FOUR MONTHS ENDED YEAR ENDED APRIL 30, DECEMBER 31, 1996 1995 ----------- ------------ Cash flows from operating activities: Net income..................................... $ 826,077 1,357,082 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization............... 73,102 207,577 Loss on fixed asset disposition................................. -- 1,700 (Increase) decrease in: Accounts receivable....................... (314,211) (410,041) Inventories............................... 105,188 (125,502) Prepaid expense........................... (4,815) (1,821) Increase (decrease) in: Accounts payable.......................... (118,835) 135,583 Accrued expenses.......................... 19,109 (11,915) --------- ---------- Net cash provided by operating activities.................... 585,615 1,152,663 --------- ---------- Cash flows from investing activities: Purchases of fixed assets...................... (245,659) (124,501) Reduction of deposits.......................... -- 4,186 --------- ---------- Net cash (used by) investing activities.................... (245,659) (120,315) --------- ---------- Cash flows from financing activities: Reductions of long-term debt and capital lease obligations..................... (39,255) (321,102) Loan fees paid................................. -- (3,650) Borrowing from credit line..................... -- 924,000 Repayments to credit line...................... -- (924,000) Withdrawals.................................... (234,913) (710,538) --------- ---------- Net cash (used by) financing activities.................... (274,168) (1,035,290) --------- ---------- Net increase (decrease) in cash.......................... 65,788 (2,942) Cash at beginning of year........................ 50,177 53,119 --------- ---------- Cash at end of year.............................. $ 115,965 50,177 ========== ========== SUPPLEMENTARY INFORMATION: Cash paid for interest........................... $ 47,936 132,907 ========= ========== See accompanying notes to financial statements. 6 EAGLE PRESS NOTES TO FINANCIAL STATEMENTS APRIL 30, 1996 AND DECEMBER 31, 1995 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE OF OPERATIONS Eagle Press (the Company), a proprietorship, operates primarily as a printing company with one plant located in Sacramento, California. BASIS OF ACCOUNTING The Company's financial statements are presented in accordance with generally accepted accounting principles. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses during the reporting period. Actual results could differ from those estimates applied in the preparation of the financial statements. ACCOUNTS RECEIVABLE The Company uses the specific write-off method of accounting for bad debts. The proprietor considers all receivables to be collectible as of April 30, 1996 and December 31, 1995. INVENTORIES The Company's inventory, consisting of paper stocks and works in progress, is valued at cost by specific identification. PROPERTY AND EQUIPMENT The Company's property and equipment are recorded at cost. Depreciation is computed using the straight-line and declining balance methods over the estimated useful lives of the assets, with appropriate provisions for salvage value. The useful lives used in computing depreciation are as follows: Machinery and equipment................................. 5-18 years Vehicles................................................ 5 years Office equipment and software........................... 6 years Furniture and fixtures.................................. 10 years Building, building improvements, and leasehold improvements................................ 31 years INCOME TAXES Federal and state income taxes of the Company are computed on the proprietor's total income from all sources; accordingly, no provision for income taxes is made in these statements. 7 (2) PROPERTY AND EQUIPMENT Property and equipment recorded at cost as of April 30, 1996 and December 31, 1995 consists of: 1996 1995 ------------ ----------- Land............................................. $ 91,750 91,750 Machinery and equipment.......................... 2,749,234 2,513,025 Building......................................... 341,510 341,510 Building improvements............................ 146,291 146,291 Office equipment and software.................... 108,686 106,740 Vehicles......................................... 42,312 42,312 Furniture and fixtures........................... 23,367 23,002 Leasehold improvements........................... 7,139 -- ---------- ----------- 3,510,289 3,264,630 Less accumulated depreciation and amortization................................ 895,486 823,341 ---------- ----------- $2,614,803 2,441,289 ========== =========== Depreciation and amortization charged to expense for the four months ended April 30, 1996 and the year ended December 31, 1995 were $73,102 and $207,577, respectively. (3) LEASE OBLIGATIONS The Company has entered into a noncancelable office lease. The three-year operating lease continues through March 14, 1997, with an option to renew the lease at that time. The Company also leases two pieces of equipment under noncancelable capital leases with interest rates of 10% and 12.86%. The following is a schedule of future minimum lease payments under noncancelable leases in the aggregate: YEAR ENDING DECEMBER 31, ------------ 1996..................................................... $ 48,638 1997..................................................... 7,200 After 1997............................................... -- --------- Total minimum lease payments............................. 55,838 Total imputed interest................................... 608 --------- $ 55,230 ========= (4) LONG-TERM DEBT The Company financed the purchase of a printing press with Phoenixcor, Inc. in 1994. The stated interest rate on the note is 9.38% due March 25, 2001. Fixed payments of principal and interest in the amount of $21,722 are payable monthly with a balloon payment of $295,254 due at maturity. If the note is prepaid in full prior to the second anniversary date, a 4% premium must be paid. The premium decreases by one percent for each year thereafter. Scheduled maturities of long-term debt outstanding at December 31 of each of the years indicated are as follows: 1996 -- $150,243; 1997 -- $164,958; 1998 -- $181,113; 1999 -- $198,852; 2000 -- $218,327; thereafter -- $331,376. (5) RELATED PARTY The Company paid job referral commissions to Richard Ross, brother of John D. Ross, the sole proprietor, totaling $51,723 and $25,000 for the four months ended April 30, 1996 and the year ended 8 December 31, 1995, respectively. These commissions were paid in the normal course of business on the same terms as commissions paid to others. (6) COMMITMENTS AND CONTINGENCIES The Company has an agreement for a line of credit of $250,000 with WestAmerica Bank, secured by trade accounts receivable, which provides for working capital financing. Borrowings bear interest at the WestAmerica Bank reference rate plus 2%. No balance was outstanding as of April 30, 1996 or December 31, 1995. The line of credit was available to the Company until May 31, 1996, at which time management did not renew the line of credit. (7) PENSION PLAN All non-union employees are eligible for a simplified employee pension plan. The Company contributes up to 6% of the participants' gross annual wages to the plan. Total contributions paid to the plan were $10,163 and $21,541 for the four months ended April 30, 1996 and the year ended December 31, 1995, respectively. (8) CONCENTRATION OF RISK A substantial part of the Company's revenues comes from one customer, the loss of which could have a material effect. Approximately $2,230,000, or 65%, and $5,178,000, or 78%, of revenues for the four months ended April 30, 1996 and the year ended December 31, 1995, respectively, were attributable to this customer. Approximately $1,033,872 and $337,000 were included in receivables as of April 30, 1996 and December 31, 1995, respectively. (9) FAIR VALUE OF FINANCIAL INSTRUMENTS The Statement of Financial Accounting Standards No. 107, DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS, requires the disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. Fair value methods and assumptions are set forth below for the Company's financial instruments. As of April 30, 1996 and December 31, 1995, the estimated fair values of cash, long-term debt and the line of credit approximated their carrying amounts. (10) SUBSEQUENT EVENT On May 4, 1996, the Company and Consolidated Graphics, a commercial printing company, entered into a letter of intent that would result in Eagle Press becoming a subsidiary of Consolidated Graphics. The proposed acquisition is subject to numerous conditions that must be finalized. 9 -----END PRIVACY-ENHANCED MESSAGE-----