<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended: December 31, 1996
-----------------
Commission File Number: 0-26756
-------
GEOGRAPHICS, INC.
(Exact name of registrant as specified in its charter)
Wyoming 87-0305614
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1555 Odell Road, P.O. Box 1750, Blaine, WA 98231
- --------------------------------------------------------------------------------
(Address of principal executive office and zip code)
(360) 332-6711
- --------------------------------------------------------------------------------
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------------- ------------
The registrant had 9,467,877 shares of common stock outstanding as of February
12, 1997.
<PAGE>
GEOGRAPHICS, INC.
INDEX
PAGE
-----
Part I. FINANCIAL INFORMATION
ITEM 1 Financial Statements
Consolidated Statements of Income
for the Three Months and Nine Months Ended
December 31, 1996 and December 31, 1995 3
Consolidated Balance Sheets as of
December 31, 1996 and March 31, 1996 4
Consolidated Statements of Cash Flows
for the Nine Months Ended December 31, 1996
and December 31, 1995 5
Notes to Consolidated Financial Statements 6-7
ITEM 2 Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8-11
Part II. OTHER INFORMATION 12-14
SIGNATURE 15
Exhibit 27 - Financial Data Schedule 16
2
<PAGE>
GEOGRAPHICS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
- -------------------------------------------------------------------------------------------------
Dec. 31 Dec. 31 Dec. 31 Dec. 31
1996 1995 1996 1995
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $ 6,089,998 $ 6,369,954 $ 19,119,741 $ 16,463,788
Cost of Sales 3,817,103 4,038,927 11,627,057 10,217,176
----------- ----------- ------------ ------------
Gross Margin 2,272,895 2,331,027 7,492,684 6,246,612
S.G. & A Expense 2,582,567 1,545,862 6,591,911 4,149,553
Goodwill Amortization 0 0 0 159,768
----------- ----------- ------------ ------------
Operating Income (309,672) 785,165 900,773 1,937,291
Other Income (Expenses)
Interest Expense (321,284) (208,059) (715,396) (566,396)
Other 27,102 23,180 13,261 112,333
----------- ----------- ------------ ------------
Income Before Provision
for Income Taxes (603,854) 600,286 198,638 1,483,228
Income Tax Provision (214,601) 204,098 68,608 504,299
----------- ----------- ------------ ------------
Net Income $ (389,253) $ 396,188 $ 130,030 $ 978,929
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
Earnings Per Common and
Common Equivalent Share
Primary $(0.04) $0.05 $0.01 $0.16
Assuming full dilution $(0.04) $0.04 $0.01 $0.13
Share used in computing
earnings per common and
common equivalent shares:
Primary 9,416,953 4,524,769 9,296,617 4,549,173
Assuming full dilution 9,416,953 5,919,429 9,396,176 5,955,423
</TABLE>
SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE>
GEOGRAPHICS, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
Dec. 31, 1996 March 31, 1996
(Unaudited) (Audited)
<S> <S> <S>
Current Assets
Cash $ 229,827 $ 50,028
Accounts receivable, net 4,981,454 4,974,156
Related party receivables 0 899,422
Other receivables 140,739 62,572
Inventories 13,660,745 9,139,273
Deposits 585,674 597,693
Prepaid expenses 619,793 99,204
Deferred income tax 1,072,192 970,000
Other 438,568 96,512
----------- -----------
Total current assets 21,728,992 16,888,860
Property, plant & equipment, net 11,749,179 7,286,694
Deferred income tax 192,000 192,000
Investment in partnerships 118,913 (34,484)
Other assets 396,631 404,971
----------- -----------
Total Assets $34,185,715 $ 24,738,041
----------- -----------
----------- -----------
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities
Bank overdraft $ 494,936 $ 0
Note payable to bank 4,582,250 5,322,939
Accounts payable 1,944,024 2,634,598
Accrued liabilities 1,786,063 1,033,905
Income tax payable 52,071 145,278
Note payable to officer & director 1,000,000 1,264,711
Current portion of long-term debt 1,078,577 656,398
----------- -----------
Total current liabilities 10,937,921 11,057,829
Long-term debt 6,384,636 3,690,360
----------- -----------
Total liabilities 17,322,557 14,748,189
----------- -----------
Stockholders' Equity
Common stock, without par value;
100,000,000 shares authorized; 9,462,877
and 8,004,584 issued and outstanding on
Dec. 31, 1996 and March 31, 1996,
respectively 16,346,617 9,620,068
Foreign currency translation adjustment 16,727 0
Retained earnings 499,814 369,784
----------- -----------
Total Stockholders' Equity 16,863,158 9,989,852
Total Liabilities and Stockholders'
Equity $ 34,185,715 $ 24,738,041
----------- -----------
----------- -----------
</TABLE>
SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS
4
<PAGE>
GEOGRAPHICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
-------------------------------
Dec. 31, 1996 Dec. 31, 1995
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 130,030 $ 978,929
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH FLOWS FROM OPERATING ACTIVITIES
Depreciation and amortization 1,016,576 813,715
Common stock issued in lieu of other liabilities 0 130,000
Deferred income tax (102,192) 0
(Gain) loss on sale of property and equipment 8,985 (119)
CHANGES IN OPERATING ASSETS AND LIABILITIES
Bank Overdraft 494,936 0
Accounts receivable 172,948 (2,523,978)
Related party receivables 899,422 0
Other receivables (78,167) (68,869)
Inventory (4,324,024) (4,276,911)
Deposits 12,019 (293,308)
Prepaid expenses (520,589) 56,805
Other current assets (342,057) (6,776)
Accounts payable (690,574) 366,677
Accrued liabilities 561,319 963,437
Income tax payable (93,207) 372,635
------------ -----------
Net cash flows from operating activities (2,854,575) (3,487,763)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (repayments) on note payable to bank (740,689) 3,749,662
Proceeds from short-term borrowings 0 429,963
Proceeds from long-term debt borrowings 2,231,013 1,395,304
Repayment of long-term debt (556,750) (323,051)
Proceeds (repayment) of notes to officers & directors (264,711) 900,000
Proceeds from issuance of common stock 6,526,549 171,911
Foreign currency translation 16,728 0
------------ -----------
Net cash flows from financing activities 7,212,140 6,323,789
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment (3,931,513) (2,292,774)
Proceeds from sale of equipment 1,787 16,741
Net (increase) decrease in advances to partnerships (153,397) (102,991)
Change in other assets (94,643) (305,699)
------------ -----------
Net cash flows from investing activities (4,177,766) (2,684,723)
------------ -----------
NET CHANGE IN CASH 179,799 151,303
CASH, beginning of year 50,028 15,348
------------ -----------
CASH, end of quarter $ 229,827 $ 166,651
------------ -----------
------------ -----------
NONCASH INVESTING AND FINANCING ACTIVITIES
Financing obtained directly from sellers in
acquisition of equipment $ 1,442,192 $ 242,293
------------ -----------
------------ -----------
Assets acquired directly in acquisition of business $ 390,839 $ 0
------------ -----------
------------ -----------
</TABLE>
SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE>
GEOGRAPHICS, INC.
Notes to Consolidated Financial Statements
1. The accompanying interim unaudited consolidated financial statements of
Geographics, Inc. (the "Company" or "Geographics") have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, such interim statements reflect all adjustments (consisting
of normal recurring accruals) necessary to present fairly the financial
position and the results of operations and cash flows for the interim
periods presented. The results of operations for these interim periods
are not necessarily indicative of the results to be expected for the full
year. These financial statements should be read in conjunction with the
audited consolidated financial statements and footnotes included in the
Company's consolidated financial statements and notes thereto for the
fiscal year ended March 31, 1996.
The consolidated financial statements include the accounts of Geographics,
Inc. and its wholly-owned subsidiaries; Geographics Marketing Canada Inc.,
Geographics (Europe) Limited, Geographics Australia, Pty. Limited, and
Geographics Foreign Sales Corporation. All intercompany balances and
transactions have been eliminated.
Certain of the Company's locations calculated cost of sales using an
estimated gross profit method for interim periods. Cost of sales at these
locations are adjusted based on physical inventories which are performed no
less than once a year.
2. The Company has a $12,000,000 revolving credit agreement with a bank.
Interest on outstanding advances is payable monthly at the bank's prime
rate. Outstanding balances as of December 31, 1996 and March 31, 1995
were $4,582,250 and $5,322,939, respectively.
The prime rate was 8.25% and 8.25% at December 31, 1996 and March 31,
1996, respectively.
3. On May 1, 1996, the Company completed a private placement of 1,268,293
units at a price of $5.125 per unit. Total proceeds from this
transaction approximated $6,500,000. Each unit included one common share
of the Company and one warrant to purchase one additional common share of
the Company at $4.25. The warrants expire June 1, 1999.
4. On January 17, 1997, the Company placed an order for a printing press.
The cost of the press is approximately $2,190,000, which is expected to
be delivered during the fourth quarter of fiscal year 1997. The Company
has a commitment from a financial institution to provide capital lease
financing for this equipment order.
5. An officer and director has received notes from the Company in exchange
for $1,000,000. The notes are payable on demand and are classified as
current liabilities. Interest on these notes is payable monthly at the
rate of prime plus 1%.
6. On July 3, 1996, the Company agreed to purchase substantially all of the
assets of Grahams Graphics Pty. Ltd., its exclusive distributor in
Australia. The total purchase price was approximately $390,000 paid as
follows: (i) the issuance of 50,000 shares of common stock (valued at an
aggregate of $200,000); (ii) the issuance of options to purchase an
6
<PAGE>
additional 50,000 share of common stock for $4.00 per share; (iii) the
assumption of approximately $150,000 in unsecured trade liabilities; and,
(iv) a one time cash payment of $40,000. Upon the completion of the
purchase transaction, the assets assumed were contributed to the
Company's wholly-owned Australian subsidiary, Geographics Australia Pty.
Ltd. The effective date of the transaction is July 1, 1996.
The Company formed Geographics Australia PTY Limited to complete the
acquisition and become the Company's distributor of Geographics products
in Australia, replacing Grahams Graphics PTY Limited as the sole
Australian distributor.
7. There are various claims, lawsuits, and pending actions against the
Company incident to the operations of its business. It is the opinion of
management that the ultimate resolution of these matters will not have a
material effect on the Company's financial position, results of
operations or liquidity.
7
<PAGE>
ITEM 2
Management's Discussion and Analysis of Financial Condition
and Results of Operations
for the Three Months and Nine Months Ended December 31, 1996
and December 31, 1995
RESULTS OF OPERATIONS
SALES. Sales decreased 4% to $6,089,998 in the quarter ended December 31,
1996 from $6,369,954 in the quarter ended December 31, 1995 and
increased 16% to $19,119,741 for the nine months ended December 31,
1996 compared to $16,463,788 for the nine months ended December 31,
1995.
Sales decreased 4% for the quarter ended December 31, 1996 as compared
to the same quarter a year earlier. The Company has identified the
following factors that contributed to the decline in sales:
-- The Company had extraordinary returns during the quarter
resulting from a redesign of existing store planograms with some
of its key customers. These redesigns resulted in a return of
approximately $675,000 of product during the quarter. The
Company agrees to perform these redesigns in conjunction with
their customers to help increase the turns per square feet of
product. The Company believes that assisting the customer to
increase their sales will result in greater sales for the
Company in the future, and will more than offset the effects of
any returns resulting from these actions.
-- The Company was negatively impacted by a reduction in on-hand
inventory levels by some of its major customers from an average
of twelve (12) weeks to an average of eight (8) weeks. This
resulted in a reduction in reorder sales for approximately six
weeks as the customers adjusted their in store inventory levels.
The Company estimates that the impact of this reduction caused
a decline in sales of approximately $1,000,000 for the quarter.
-- Additional sales decrease resulted from price reductions passed
through to customers resulting from drops in raw material prices
paid by the Company.
-- Inclement weather during the third quarter forced the Company to
miss the equivalent of eight days in sales caused by an
inability to ship due to a plant shut-down and logistic problems
with the Company's freight carrier.
Geopaper products were responsible for 71% of sales for the nine
month period ended December 31, 1996, compared to 66% for the same
period a year earlier. Sales of Geopaper increased 24% to
$13,520,877 from $10,894,890 for the periods ended December 31, 1996
and 1995, respectively.
Sales of Company products other than Geopaper (stick on letters, rub
on letters, stencil and LED signs) have remained constant as a
dollar level for the nine months ended December 31, 1996
8
<PAGE>
compared to the nine months ended December 31, 1995. The
non-Geopaper products have decreased as a percentage of total sales
to 29% from 34% for the nine month periods ended December 31, 1996
and 1995, respectively. These products will continue to decrease in
importance to the Company as consumers continue to utilize personal
computers to perform many of the tasks that these non-Geopaper
products were designed for. However, the increased usage of
personal computers is expected to generate new customers for
Geopaper products that are specifically designed for use with
personal computing technology.
International sales of Geographics products were $1,758,868 for the
quarter ended December 31, 1996, an increase of 150% over
international sales of $699,486 for the quarter ended December 31,
1995. International sales increased 93% to $4,481,489 from
$2,321,008 for the nine months ended December 31, 1996 and 1995,
respectively. International sales of Geographics products
represented 24% of total Geographics, Inc. sales for the nine months
ended December 31, 1996, compared to 14% of total sales for the same
period a year earlier. Sales by geographic location for the nine
months ended December 31, 1996 were as follows:
United States 76.4%
Canada 17.3%
Australia 3.1%
Western Europe 2.9%
Others 0.3%
------
Total 100.0%
------
------
GROSS MARGIN. Gross margin as a percentage of sales was 37.3% and 39.2% for
the three and nine month periods ended December 31, 1996, compared
to 36.6% and 37.9% for the same periods last year. The Company's
gross margin rate decreased during the third quarter due in part to
additional labor and material costs incurred in conjunction with the
installation of new equipment in the plant. Additionally, increased
shipping costs were incurred as a result of the plant closure and
reduced servicing from the Company's freight carriers during periods
of inclement weather in the Northwest.
Margins are also affected by changes in the mix of product sold, raw
material costs, automation, labor costs, freight costs, production
levels (overhead absorption) and the rate of product turnover.
Margins are also affected by price increases and decreases passed on
to customers. While management endeavors to improve margins, no
assurance can be given that margins will continue to improve over time.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, General and
Administrative expenses ("SG&A"), which consist of payroll,
advertising, commissions, administrative, accounting and legal costs
increased as a percentage of sales in the three and nine months
ended December 31, 1996 to 42.4% and 34.5%, respectively, as
compared to 24.3% and 25.2% during the same periods in the prior
year. SG&A costs increased as a percentage of sales primarily due
to the Company's increased overhead resulting from the establishment
of Geographics (Europe) Limited, Geographics Australia Pty. Ltd.,
and the installation and training costs related to a new computer
system at the Blaine, WA facility.
SG&A expenses have also been affected by economies of scale,
resulting from lower than expected sales levels and learning curves
for new staff members. The Company
9
<PAGE>
has increased its selling and administrative staff as a result of
continued growth and continued attempts to prepare itself for
additional business and to establish new markets. As the new staff
members gain more experience and sales continue to grow, the Company
anticipates that selling, general and administrative expenses will
decline as a percentage of sales.
GOODWILL AMORTIZATION. The Company recorded no goodwill amortization during
the three and nine months ended December 31, 1996, as compared to $0
and $159,767 for the same periods a year ago. Goodwill resulted
from the acquisition of the lettering division of E.Z. Industries in
1993. The Goodwill was fully amortized as of June 30, 1995.
INTEREST EXPENSE. Interest expense for the three and nine months ended
December 31, 1996 totaled $321,284 and $715,396, respectively,
compared to $208,059 and $566,396 for the same periods in the prior
year. The increase in interest expense was primarily due to
borrowings under the Company's revolving credit facility during the
current year. These borrowings were used to fund increases in
inventories and equipment deposits. Additional interest costs
resulted from borrowings related to equipment purchases and
expansions to the Blaine manufacturing facility and expansions into
Europe and Australia.
LIQUIDITY AND CAPITAL RESOURCES. The Company's principal capital
requirements have been to fund working capital needs, including the
building of inventories in the United States, the United Kingdom,
and Australia. Working capital has also been used to fund equipment
deposits, prepaid expenses, reduce accounts payable and to reduce
income tax payable.
The Company's sales are substantially on net sixty-day terms, and
trade receivables are used as collateral to provide the Company with
a source of capital prior to their collection. Working capital
requirements are reduced by vendor credit terms, which allow the
Company to finance a portion of its inventory.
During the first nine months of fiscal year 1997, the Company
improved its collection of receivables. Net accounts receivable
were $4,981,454 as of December 31, 1996, a decrease of 15% from the
$5,873,578 receivable balance at March 31, 1996. Inventory
increased during the nine months to $13,660,745, an increase of 49%
from the $9,139,273 inventory balance at March 31, 1996. Increases
in inventory can be attributable to management's anticipation of
inventory requirements related to Geographics (Europe) Limited's
initial operations, the acquisition of Geographics Australia Pty
Limited's operations and the continued efforts to increase its
customer base and market share. The investment in inventories,
equipment deposits and prepaid expenses were primarily responsible
for negative cash flows from operating activities of $2,854,575 for
the nine months ended December 31, 1996, compared to negative cash
flows from operating activities of $3,487,763 for the same period a
year earlier.
Despite the Company's rapid growth, Management anticipates improved
accounts receivable and inventory management due to Management's
increased focus on these critical working capital areas. Improved
accounts receivable collection procedures and increased staffing are
expected to minimize future increases in accounts receivable. New
information systems, new warehouse facilities, improved inventory
organization and the addition of key purchasing and inventory
staffing should improve efficiencies in inventory management and
allow for additional sales growth without corresponding
10
<PAGE>
inventory increases.
The Company's cash flow is also affected by financing activities,
including borrowings and repayments on revolving credit facilities,
short and long-term notes payable to the Company's bank, proceeds
from the issuance of debentures to officers and directors, proceeds
from the exercise of stock, as well as repayment of capital leases.
The majority of capital expenditures were financed by long-term bank
loans and capital leases. A private placement of 1,268,293 units at
$5.125 resulted in gross proceeds of $6,500,000 to the Company which
were used to repay borrowings on short-term notes payable to the
Company's bank. Financing activity resulted in net cash flows of
$7,212,140 and $6,323,789 for the nine months ended December 31, 1996
and 1995, respectively.
During the nine months ended December 31, 1996, the Company acquired
additional printing presses, packaging equipment and other machinery
related to the manufacture of Geopaper products. These capital
expenditures were necessary to support the continued expansion of
the Geopaper product line and the increase in Geopaper unit sales.
Cash used in investing activities (primarily capital expenditures)
was $4,177,766 and $2,684,723 for the nine months ended December 31,
1996 and 1995, respectively.
During the nine months ended December 31, 1996, the Company's cash
balance increased by $179,799 to $188,948. The cash balance is not
significant and balances held by the Company are intentionally
maintained at low levels as part of the Company's strategy to
minimize balances outstanding on revolving credit facilities, thus
minimizing interest expense.
Although the Company has the ability to finance its planned growth
and expansion from operating cash flow, capital lease financing and
borrowings under the Company's existing credit facilities, the
Company also considers alternative financing options, such as the
issuance of common stock or convertible debt, in the event market
conditions make such alternatives financially attractive. The
Company's future financing requirements will be affected by the
number of new customers, the strength of reorders by existing
customers, the growth of existing customers, as well as the of
success of new products introduced. Additional financing might also
be necessary in the event the Company pursues further expansion or
business acquisition opportunities. There is no assurance the
Company will be able to obtain such financing or that such
financing, if available, will be on terms satisfactory to the
Company.
FORWARD-LOOKING STATEMENTS. Certain statements in this Form 10-Q, in future
filings by the Company with the Securities and Exchange Commission
(the "Commission"), in the Company's press releases, and in oral
statements made by or with the approval of an authorized executive
officer of the Company constitute "forward-looking statements" as
that term is defined under the Private Securities Litigation Reform
Act of 1995 (the "Act") and releases issued by the Commission. The
words "believe", "expect", "anticipate", "intend", "estimate" and
other expressions which are predictions of or indicate future events
and trends and which do not relate to historical matters identify
forward-looking statements. Reliance should not be placed on
forward-looking statements because they involve known and unknown
risks, uncertainties and other factors, which may cause the actual
results, performance or achievements of the Company to differ
materially from anticipated future results, performance or
achievements expressed or implied by such forward-looking
statements. The Company undertakes no obligation to publicly update
11
<PAGE>
or revise any forward-looking statement, whether as a result of new
information, future events or otherwise.
12
<PAGE>
PART II. OTHER INFORMATION
ITEMS 1- 4 NOT APPLICABLE
ITEM 5 - OTHER INFORMATION
A. On September 20, 1996, Mr. Fidel Carrancedo resigned as a director of the
Company. Mr. Carrancedo resigned for personal reasons and has no
disagreements with the Company. Mr. Carrancedo still remains a principal
stockholder of the Company. No additional Directors have been appointed
to replace Mr. Carrancedo.
B. The Company has adopted the following Statements of Financial Accounting
Standards ("SFAS") for the fiscal year ending March 31, 1997.
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," establishes accounting standards
for the impairment of long-lived assets, certain identifiable
intangibles, and goodwill related to those assets to be held and used and
for long-lived assets and certain identifiable intangibles to be disposed
of. Long-lived assets and certain identifiable intangibles to be held
and used by a company are required to be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Measurement of an impairment loss for
such long-lived assets and identifiable intangibles should be based on
the fair value of the asset. Long-lived assets and certain identifiable
intangibles to be disposed of are required to be reported generally at
the lower of the carrying amount or the fair value less cost to sell.
The adoption of SFAS No. 121 had no material effect on the Company's
financial position as of December 31, 1996 or the results of its
operations for the quarter ended December 31, 1996.
SFAS No. 123, "Accounting for Stock-Based Compensation," establishes
financial accounting and reporting standards for stock-based employee
compensation plans, including stock options, stock purchase plans,
restricted stock, and stock appreciation rights. SFAS No. 123 defines
and encourages the use of the fair value method of accounting for
employee stock-based compensation. Continuing use of the intrinsic value
based method of accounting prescribed in Accounting Principles Board No.
25 ("APB 25") for measurement of employee stock-based compensation is
allowed with pro forma disclosures of net income and earnings per share
as if the fair value method of accounting had been applied. Transactions
in which equity instruments are issued in exchange for goods or services
from non-employees must be accounted for based on the fair value of the
consideration received or of the equity instrument issued, whichever is
more reliably measurable. The Company has determined that it will
continue to use the method of accounting prescribed in APB 25 for
measurement of employee stock-based compensation, and will begin
providing the required pro forma disclosures in its financial statements
for the year ending March 31, 1997 as allowed by SFAS No. 123.
13
<PAGE>
EXHIBIT INDEX
Page
----
Item 6 - EXHIBITS AND REPORTS ON FORM 8-K.
A. Exhibits.
27. Financial Data Schedule 18
B. Reports on Form 8-K.
No reports were filed by the Company on Form 8-K during the fiscal quarter
ended December 31, 1996.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GEOGRAPHICS, INC.
------------------
(Registrant)
Date: February 14, 1997 By: /s/ RONALD S. DEANS
-------------------
Ronald S. Deans
President, Chief Executive Officer
Chief Financial Officer and Secretary
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) FROM
10-Q FOR THE QUARTER ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 229,827
<SECURITIES> 0
<RECEIVABLES> 5,148,454
<ALLOWANCES> (167,000)
<INVENTORY> 13,660,745
<CURRENT-ASSETS> 21,728,992
<PP&E> 15,833,629
<DEPRECIATION> (4,084,450)
<TOTAL-ASSETS> 34,185,715
<CURRENT-LIABILITIES> 10,937,921
<BONDS> 0
0
0
<COMMON> 16,346,617
<OTHER-SE> 516,541
<TOTAL-LIABILITY-AND-EQUITY> 34,185,715
<SALES> 6,089,998
<TOTAL-REVENUES> 6,089,998
<CGS> 3,817,103
<TOTAL-COSTS> 2,582,667
<OTHER-EXPENSES> (27,102)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 321,284
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