UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
- ---------SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
- ---------SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File Number 333-8925
AMERICOMM DIRECT MARKETING, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 23-2574778
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5775 Peachtree Dunwoody Road 30342
Suite C-150 (Zip code)
Atlanta, GA
(Address of principal executive offices)
Registrant's telephone number, including area code: (404) 256-1123
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding as of
Class August 14 , 1998
Common Stock, $.01 par value 283,807 shares
<PAGE>
AMERICOMM DIRECT MARKETING, INC.
FORM 10 - Q
QUARTERLY PERIOD ENDED JUNE 30, 1998
INDEX
PART I. FINANCIAL INFORMATION Page Numbers
Item 1. Financial Statements
Condensed Balance Sheets as of June 30, 1998 and
December 31, 1997 3
Condensed Statements of Operations for the three and
six month periods ended June 30, 1998 and 1997 4
Condensed Statements of Cash Flows for the six
month periods ended June 30, 1998 and 1997 5
Notes to Condensed Financial Statements
as of June 30, 1998 6-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-12
PART II. OTHER INFORMATION
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8 - K 13
SIGNATURES 14
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICOMM DIRECT MARKETING, INC.
CONDENSED BALANCE SHEETS
(in thousands, except share data)
June 30, 1998 December 31,
1997
---------------- -----------------
Assets
Current assets -
Cash $2,700 $1,314
Accounts receivable, net 25,810 27,943
Inventories 12,941 13,331
Other 3,942 4,043
---------------- -----------------
Total Current Assets 45,393 46,631
---------------- -----------------
Property, plant and equipment, at cost 74,245 68,078
Less: Accumulated depreciation (21,478) (16,884)
---------------- -----------------
52,767 51,194
---------------- -----------------
Other assets -
Goodwill, net of accumulated 49,640 46,173
amortization
Other intangibles, net of 26,966 28,869
accumulated amortization
Other 4,897 4,818
---------------- -----------------
81,503 79,860
---------------- -----------------
$179,663 $177,685
================ =================
Liabilities and Stockholder's Equity
Current liabilities -
Current portion of long-term $920 $864
debt
Bank overdraft 4,192 4,624
Accounts payable 6,034 4,899
Accrued expenses and other 8,810 9,624
---------------- -----------------
19,956 20,011
---------------- -----------------
Noncurrent liabilities 6,578 7,777
---------------- -----------------
Long-term debt 122,170 115,245
---------------- -----------------
Stockholder's equity -
Common stock, $.01 par value 3 3
Additional paid-in capital 46,175 46,175
Accumulated deficit (15,219) (11,526)
---------------- -----------------
30,959 34,652
================ =================
$179,663 $177,685
================ =================
Common Shares Outstanding 283,807 283,807
================ =================
See notes to condensed financial statements
<PAGE>
AMERICOMM DIRECT MARKETING, INC.
CONDENSED STATEMENTS OF OPERATIONS
(in thousands)
Three months ended Six months ended,
June 30, June 30,
--------------------------- ---------------------------
1998 1997 1998 1997
-------- ------------ ------------ ------------
Net sales $48,066 $47,744 $94,440 $86,602
-------- ------------ ------------ ------------
Operating costs and
expenses
Cost of sales 35,328 33,215 68,782 60,808
Selling and 12,381 11,234 23,690 21,079
administrative
-------- ------------ ------------ ------------
Total operating 47,709 47,709 92,472 81,887
costs and expenses
-------- ------------ ------------ ------------
Operating income 357 357 1,968 4,715
Interest, net 3,610 3,242 7,119 6,557
-------- ------------ ------------ ------------
Income (loss) before (3,253) 53 (5,151) (1,842)
income taxes
Income tax expense (677) 17 (1,458) (528)
(benefit)
-------- ------------ ------------ ------------
Net income (loss) $2,576) $36 ($3,693) ($1,314)
======== ============ ============ ============
OTHER DATA:
Consistent with the Form S-4 filed with the Securities and Exchange
Commission on October 17, 1996, the following financial data has been disclosed.
EBITDA is provided because it is a measure of an issuer's ability to
service its indebtedness commonly used by certain investors. EBITDA is not a
measure of financial performance under generally accepted accounting principles
and should not be considered an alternative to net income as a measure of
performance or to cash flow as a measure of liquidity.
EBITDA is defined as operating income, plus depreciation and
amortization and reflects the elimination of non-cash charges related to pension
and deferred financing costs and the elimination of gain on disposal of
equipment.
EBITDA $4,665 $6,538 $9,606 $10,656
======== ============ ============ ============
See notes to condensed financial statements.
<PAGE>
AMERICOMM DIRECT MARKETING INC.
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
Six months ended June 30,
------------------------------------
1998 1997
---------------- ------------------
Cash flows from operating activities
Net loss ($3,693) ($1,314)
Adjustments to reconcile net loss
to net cash provided
by operating activities -
Depreciation and amortization 7,740 6,034
Loss on disposal 24 387
Deferred income tax benefit (1,458) (528)
Amortization of prepaid 80 75
pension asset
Change in assets and 2,905 (2,006)
liabilities, net
---------------- ------------------
Net cash provided by operating activities 5,598 2,648
---------------- ------------------
Cash flows from investing activities
Cash paid for Label America, Inc., 0 (9,469)
net of cash acquired
Cash paid for AmeriComm Direct
Marketing, Inc., net of cash 0 (24,955)
acquired
Cash paid for Cardinal Marketing,
Inc. and Cardinal (4,753) 0
Marketing of New Jersey, Inc.,
net of cash acquired
Proceeds from sale of assets 12 106
Purchases of property and equipment (5,666) (3,313)
---------------- ------------------
Net cash used in investing activities (10,407) (37,631)
---------------- ------------------
Cash flows from financing activities
Net borrowings on revolving line 7,429 11,782
of credit
Decrease in bank overdraft, net (432) (738)
Payments on capital leases (449) (235)
Capital contributions from parent 0 23,878
Due from parent (353) (400)
---------------- ------------------
Net cash provided by financing activities 6,195 34,287
---------------- ------------------
Net increase (decrease) in cash 1,386 (696)
Cash, beginning of period 1,314 1,979
---------------- ------------------
Cash, end of period $2,700 $1,283
================ ==================
See notes to condensed financial statements.
<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements 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 the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for AmeriComm Direct Marketing, Inc. (the "Company") for the
six month period ended June 30, 1998, are not necessarily indicative of the
results that may be expected for the year ending December 31, 1998.
NOTE 2: INVENTORIES
The major classes of inventories were as follows (in thousands):
June 30, 1998 December 31, 1997
--------------- -----------------
Raw materials $7,409 $7,351
Work-in-process 1,399 1,585
Finished goods and customized stock 4,133 4,395
=============== =================
$12,941 $13,331
=============== =================
NOTE 3: ACQUISITIONS
Purchase of Label America, Inc.
On February 21, 1997, the Company acquired all of the issued and outstanding
capital stock of Label America, Inc. ("LAI") for $8,500,000, less outstanding
indebtedness plus transaction costs, which was funded through borrowings on its
revolving loan facility. Additional consideration of $700,000 was paid to the
principal stockholder for a noncompete agreement which amount was also funded
through borrowings on the Company's revolving loan facility. Upon consummation
of the acquisition, LAI was merged into the Company. The LAI acquisition has
been accounted for using the purchase method of accounting and, accordingly, the
results of operations of LAI have been included in the results of operations of
the Company since February 22, 1997. The excess of the consideration paid over
the estimated fair value of net assets acquired of approximately $6,636,000 has
been recorded as goodwill and is being amortized on a straight-line basis over
40 years.
<PAGE>
AmeriComm Direct Marketing, Inc.
On April 24, 1997, the Company acquired all of the issued and outstanding
capital stock of AmeriComm Direct Marketing, Inc. ("ADMI") for $23,635,000 plus
transaction costs. Additional consideration of $1,000,000 was paid to the
principal stockholder for a noncompete agreement. Upon consummation of the
acquisition, ADMI was merged into the Company. The ADMI acquisition has been
accounted for using the purchase method of accounting and, accordingly, the
results of operations of ADMI have been included in the results of operations of
the Company since April 25, 1997. The excess of consideration paid over the
estimated fair value of net assets acquired of $15,273,000 has been recorded as
goodwill and is being amortized on the straight-line basis over 40 years.
The acquisition of ADMI was financed by a capital contribution by AmeriComm
Holdings, Inc. ("AHI"), the Company's parent, of $23,879,000. To provide funds
for the capital contribution, AHI issued $35,000,000 aggregate principal amount
of 12-1/2% Notes due April 24, 2003 (the "AHI Notes"). A portion of the AHI
Notes were used to redeem AHI redeemable cumulative preferred stock. The AHI
Notes place certain restrictions on the Company's ability to incur additional
indebtedness or make future acquisitions. In addition, future interest and
principal payments by AHI are dependent primarily on the operations of the
Company through payments to AHI as permitted under the senior notes of the
Company. Interest is due quarterly commencing June 30, 1997. AHI may pay a
portion or all of any six quarterly interest installments prior to April 24,
1999 by issuing additional notes ("PIK Notes") with interest ranging from 12.5%
to 13.0%. The initial interest installments due June 30, 1997, September 30,
1997, December 31, 1997 and March 31, 1998 were paid by the issuance by AHI of
PIK Notes at 12.5% interest and June 30, 1998 at 13.0% interest. The PIK Notes
must be redeemed prior to April 24, 2003.
Purchase of Cardinal Marketing, Inc. and Cardinal Marketing, of New Jersey, Inc.
On March 16, 1998, the Company acquired all of the issued and outstanding
capital stock of Cardinal Marketing, Inc. and Cardinal Marketing of New Jersey,
Inc. (collectively "Cardinal") for approximately $4,000,000 plus transaction
costs, which was funded through borrowings on the Company's revolving loan
facility and from operations. Additional consideration of $600,000 will be paid
to the stockholders of Cardinal for noncompete agreements, of which $200,000 was
paid on March 16, 1998 and the remaining $400,000 will be paid in two equal
annual installments commencing March 16, 1999. Subsequent to the acquisition,
Cardinal was merged into the Company. The Cardinal acquisition has been
accounted for using the purchase method of accounting and, accordingly, the
results of operations of Cardinal have been included in the results of
operations of the Company since March 17, 1998. The excess of the consideration
paid over the estimated fair value of net assets acquired of approximately
$3,900,000 has been recorded as goodwill and is being amortized on the
straight-line basis over 40 years.
<PAGE>
NOTE 4: SALE OF AMERICOMM HOLDINGS, INC.
On June 26, 1998, all of the outstanding stock of AmeriComm Holdings, Inc.
("AHI"), the parent of the Company, was acquired by DIMAC Holdings, Inc. ("DIMAC
Holdings") pursuant to a certain Agreement and Plan of Merger, dated May 18,
1998, by and among AHI, DIMAC Holdings and DMAC Merger Corp. The aggregate
purchase price was approximately $203 million (including approximately $163
million of assumed indebtedness) plus transaction costs. Upon consummation of
this acquisition, DMAC Merger Corp. was merged into AHI and AHI became a direct,
wholly-owned subsidiary of DIMAC Corporation, which is a direct, wholly-owned
subsidiary of DIMAC Holdings. Concurrently, DIMAC Holdings, through DIMAC
Corporation, acquired DIMAC Marketing Corporation.
NOTE 5: SUBSEQUENT EVENT
On August 10, 1998, DIMAC Corporation and the Company announced that the Company
has commenced a tender offer and consent solicitation for its outstanding
11-5/8% Senior Notes due 2002, Series B (the "Notes").
In conjunction with the offers, the Company is soliciting consents to eliminate
certain restrictive covenants and default provisions in the indenture under
which the Notes were issued, other than the covenants to pay interest on and
principal of the Notes and the related default provisions.
The tender offer and consent solicitation are part of a refinancing transaction
(the "Refinancing") in which DIMAC Corporation currently expects to issue new
debt securities. The new notes will not be registered under the Securities Act
of 1933 and may not be offered or sold in the United States absent registration
or an applicable exemption from registration requirements. The proceeds of the
Refinancing will be used to fund the tender offer and consent solicitation, to
repay certain indebtedness and to pay fees and expenses in connection with the
Refinancing.
The offer is conditioned on, among other things, the receipt of consents from
the holders of at least a majority in principal amount of each of the Notes and
the concurrent consummation of the Refinancing. Holders who tender their Notes
in the offer are required to consent to the proposed amendments to the
indenture.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
On February 21, 1997, the Company acquired all of the issued and outstanding
capital stock of Label America, Inc. ("LAI") for approximately $8.5 million,
less outstanding indebtedness plus transaction costs. Subsequent to the
acquisition, LAI was merged into the Company. The results of operations of LAI
have been included in the statements of operations of the Company since February
22, 1997.
On April 24, 1997, the Company acquired all of the issued and outstanding
capital stock of AmeriComm Direct Marketing, Inc. (ADMI) for $23.6 million plus
transaction costs. Subsequent to the acquisition, ADMI was merged into the
Company. The results of operations of ADMI have been included in the statements
of operations of the Company since April 25, 1997.
On March 16, 1998, the Company acquired all of the issued and outstanding
capital stock of Cardinal Marketing, Inc. and Cardinal Marketing of New Jersey,
Inc. (collectively "Cardinal") for $4.0 million plus transaction costs.
Subsequent to the acquisition, Cardinal was merged into the Company. The results
of operations of Cardinal have been included in the statements of operations of
the Company since March 17, 1998.
The Company has four principal product lines: Direct mail products, mailer
systems, custom pressure sensitive labels and custom envelopes. The following
table summarizes the net sales by product line (in thousands).
Three Months Ended June 30, Six Months Ended June 30,
1998 1997 1998 1997
------------ ------------ ------------ -----------
Direct mail products $15,112 $8,679 $27,617 $13,367
and services
Mailer systems 10,081 12,955 20,728 24,054
Custom pressure 12,117 13,413 24,060 24,249
sensitive labels
Custom envelopes 10,756 12,697 22,035 24,932
------------ ----------- ------------ -----------
$48,066 $47,744 $94,440 $86,602
============ ============ ============ ===========
SECOND QUARTER OF 1998 COMPARED WITH THE SECOND QUARTER OF 1997:
Net sales for the three month period ended June 30, 1998 increased $0.3 million
to $48.1 million, or 0.7%, from the comparable 1997 period. The overall increase
in net sales was due to the acquisitions of ADMI and Cardinal. Specifically, the
increase in net sales for direct mail products and services was due to the above
mentioned acquisitions. Net sales for mailer systems decreased $2.9 million to
$10.1 million from the comparable 1997 period. Mailer systems sales decreased
due to an overall decline in the core commercial products sales as a result of
soft market conditions and reduced prices due to falling paper prices. Net sales
for custom pressure sensitive labels decreased $1.3 million to $12.1 million
from the comparable 1997 period. The decrease in net sales for custom pressure
sensitive labels was due to a decrease in volume from a significant customer.
Net sales for custom envelopes decreased $1.9 million to $10.8 million from the
comparable 1997 period. The decrease in net sales for custom envelopes has been
impacted by a decline in the underlying paper prices and units shipped
reflecting the softness in the envelope market.
Gross profit for the three months ended June 30, 1998 decreased $1.8 million to
$12.7 million, or 12.3%, from the comparable 1997 period. Gross profit, as a
percentage of net sales, decreased to 26.5% for the three month period ended
June 30, 1998 from 30.4% for the comparable 1997 period. The decrease in gross
profit resulted from the market conditions discussed above. These decreases were
partially offset by the increase in gross profit for direct mail products and
services due to the increase in net sales discussed above.
Selling and administrative expenses for the three month period ended June 30,
1998 increased $1.1 million to $12.4 million, or 10.2%, from the comparable 1997
period. Selling and administrative expenses, as a percentage of net sales,
increased to 25.8% for the three month period ended June 30, 1998 from 23.5% for
the comparable 1997 period. The increase in these costs is attributable
primarily to the amortization of certain intangible assets recorded in
conjunction with the above mentioned acquisitions and to a planned increase in
staffing of direct mail account executives.
Operating income for the three month period ended June 30, 1998 was $.4 million
or 0.7% of net sales as compared to an $3.3 million or 6.9% of net sales for the
comparable 1997 period. The decrease in operating income is due to the decrease
in gross profit and increase in selling and administrative expenses discussed
above.
Net interest expense for the three month period ended June 30, 1998 was $3.6
million or 7.5% of net sales as compared to $3.2 million or 6.8% of net sales
for the comparable 1997 period. The increase in interest expense is due to the
increase in borrowings on the revolving loan facility to fund acquisitions and
purchases of property and equipment. The weighted average interest rate for the
three months ended June 30, 1998 was 12.1% as compared to 11.9% for the
comparable 1997 period.
Income tax benefit for the three month period ended June 30, 1998 was $0.7
million as compared to an income tax expense of $17,000 for the comparable 1997
period, resulting in effective tax rates of (21%) and 32%, respectively.
EBITDA for the three month period ended June 30, 1998 was $4.7 million or 9.7%
of net sales as compared to $6.5 million or 13.7% of net sales for the
comparable 1997 period. The decrease in EBITDA is due to the decrease in
operating income.
SIX MONTHS ENDED JUNE 30, 1998 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1997.
Net sales for the six month period ended June 30, 1998 increased $7.8 million to
$94.4 million, or 9.1%, from the comparable 1997 period. The overall increase in
sales was due to the acquisitions of LAI, ADMI and Cardinal. Specifically, the
increase in net sales for direct mail products and services was due to the above
mentioned acquisitions of ADMI and Cardinal. Net sales for mailer systems
decreased $3.3 million to $20.7 million from the comparable 1997 period. Mailer
systems sales decreased due to an overall decline in the core commercial
products sales as a result of soft market conditions and reduced prices due to
falling paper prices. Net sales for custom pressure sensitive labels decreased
$0.2 million to $24.0 million from the comparable 1997 period. The decrease for
custom pressure sensitive labels was due to the decrease in volume from a
significant customer partially offset by the impact of the LAI acquisition. Net
sales for custom envelopes decreased $2.9 million to $22.0 million from the
comparable 1997 period. The decrease in net sales for custom envelopes has been
impacted by a decline in the underlying paper prices and units shipped
reflecting the softness in the envelope market.
Gross profit for the six months ended June 30, 1998 decreased $0.1 million to
$25.7 million, or 0.5%, from the comparable 1997 period. Gross profit, as a
percentage of net sales, decreased to 27.2% for the six month period ended June
30, 1998 from 29.8% for the comparable 1997 period. The decrease in gross profit
is mostly due to the reduction in net sales and reduced margins due to the
market conditions discussed above. These decreases were partially offset by the
increase in gross profit due to the increase in net sales for direct mail
products and services.
Selling and administrative expenses for the six month period ended June 30, 1998
increased $2.6 million to $23.7 million, or 12.4%, from the comparable 1997
period. Selling and administrative expenses, as a percentage of net sales,
increased to 25.1% for the six month period ended June 30, 1998 from 24.3% for
the comparable 1997 period. The increase in these costs is attributable to the
amortization of certain intangible assets recorded in conjunction with the above
mentioned acquisitions and a planned increase in staffing of direct mail account
executives.
Operating income for the six month period ended June 30, 1998 was $2.0 million
or 2.1% of net sales as compared to $4.7 million or 5.4% for the comparable 1997
period. The decrease in operating income is due to the decrease in gross profit
and increase in selling and administrative expenses discussed above.
Interest expense for the six month period ended June 30, 1998 was $7.1 million
or 7.5% of net sales as compared to $6.6 million or 7.6% of net sales for the
comparable 1997 period. The increase in interest expense is due to the increased
borrowings on the line of credit to finance the above mentioned acquisition and
to fund purchases of property and equipment. The weighted average interest rate
for the six month periods ended June 30, 1998 and 1997 was 12.1% and 12.0%,
respectively.
Income tax benefit for the six month period ended June 30, 1998 was $1.5 million
as compared to $0.5 million for the comparable 1997 period resulting in
effective tax rates of 28% and 29%, respectively. As of December 31, 1997, the
Company's tax net operating loss carryforward was $8.6 million.
EBITDA for the six month period ended June 30, 1998 was $9.6 million or 10.2% of
net sales as compared to $10.7 million or 12.3% of net sales for the comparable
1997 period. The decrease in EBITDA is due to the decrease in operating income.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $5.6 million and $2.6 million for
the six month periods ended June 30, 1998 and 1997, respectively. The increase
in the net cash provided by operating activities is due to the $4.9 million
increase in cash generated from changes in working capital partially offset by
the $1.9 million increase in net loss after noncash charges.
Net cash used in investing activities was $10.4 million and $37.6 million for
the six month period ended June 30, 1998 and 1997, respectively, primarily
related to the acquisitions of Cardinal in 1998 and LAI and ADMI in 1997.
Capital expenditures, excluding acquisitions (but including principle payments
under capital leases), were $6.1 million and $3.6 million for the six months
ended June 30, 1998 and 1997, respectively.
Net cash provided by financing activities was $6.2 million and $34.3 million for
the six month period ended June 30, 1998 and 1997, respectively. The net cash
provided by financing activities for the six month period ended June 30, 1998 is
primarily attributable to borrowings on the Company's revolving loan facility
used to acquire Cardinal and finance certain purchases of property and
equipment. The purchases of property and equipment were primarily related to the
continued investment by the Company to expand its resources and capabilities for
the direct mail products and services product line. The net cash provided by
financing activities for the six month period ended June 30, 1997 is primarily
attributable to the $8.0 million borrowed on the Company's revolving loan
facility used to acquire LAI and the $23.9 million capital contribution from
AmeriComm Holdings, Inc. ("AHI"), the Company's parent, used to purchase ADMI.
The Company has up to $25 million of available borrowings from its senior
secured revolving loan facility (the "Revolving Loan"), as amended. Borrowings
on the Revolving Loan are limited to certain levels of receivables and
inventories. As of June 30, 1998, the outstanding balance and availability on
the Revolving Loan was $18.2 million and $6.8 million, respectively.
Management believes, based on current financial performance of the Company and
anticipated growth, that the cash provided by operations and the availability
under the Company's current revolving credit facility will provide sufficient
funds to support planned capital expenditures, working capital requirements,
debt service requirements, including payments made to AHI for servicing its
debt, and potential acquisitions. As discussed above, the Company has commenced
a tender offer and consent solicitation for its outstanding 11-5/8% Senior Notes
due 2002, Series B. The tender offer and consent solicitation are part of a
refinancing transaction in which DIMAC Corporation, the parent of AHI, expects
to issue new debt securities (hereafter referred to as the "Refinancing
Transactions"). No assurance can be given that the Company and DIMAC Corporation
will be able to complete the Refinancing Transactions on terms acceptable to the
Company and DIMAC Corporation, if at all. The ability of the Company to meet its
debt service obligations and reduce its total debt will be dependent upon the
future performance of the Company which, in turn, will be subject to general
economic conditions and to financial, business and other factors, including
factors beyond the Company's control, and potentially, the completion of the
Refinancing Transactions.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
No reportable developments occurred in Legal Proceedings during the quarter
ended June 30, 1998.
Item 2. Changes in Securities - None.
Item 3. Defaults upon Senior Securities - None.
Item 4. Submission of matters to a vote of Security Holders - None.
Item 5. Other Information - None.
Item 6. Exhibits and Reports on Form 8-K -
a) Exhibits
27 - Financial Data Schedule
b) Form 8-K Reports
The report dated and filed May 19, 1998 announcing that AmeriComm
Holdings, Inc. ("AHI"), the Company's parent, executed a merger
agreement with DIMAC Holdings, Inc. ("Holdings") and DMAC Merger Corp.
(the "Merger Agreement") whereby Holdings will acquire all of the
outstanding stock of AHI.
c) Form 8-K Reports The report dated June 26, 1998 and filed July 9, 1998
announcing the consummation of the acquisition of AHI by Holdings
pursuant to the Merger Agreement and the merger of DMAC Merger Corp.
into AHI on June 26, 1998.
d) Form 8-K Reports The report dated August 10, 1998 and filed August 12,
1998 announcing the Company's tender offer and consent solicitation for
its 11-5/8% Senior Notes due 2002, Series B.
<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.
AMERICOMM DIRECT MARKETING, INC.
Date: August 14, 1998 Robert M. Miklas
--------------- ----------------
Robert M. Miklas
President and Chief Executive Officer
(Principal Executive Officer)
Date: August 14, 1998 Scott P. Ebert
--------------- --------------
Scott P. Ebert
Vice President and Controller
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1998
<CASH> 2,700,000
<SECURITIES> 0
<RECEIVABLES> 26,516,000
<ALLOWANCES> (706,000)
<INVENTORY> 12,941,000
<CURRENT-ASSETS> 45,393,000
<PP&E> 74,245,000
<DEPRECIATION> (21,478,000)
<TOTAL-ASSETS> 179,663,000
<CURRENT-LIABILITIES> 19,956,000
<BONDS> 122,170,000
0
0
<COMMON> 3,000
<OTHER-SE> 30,959,000
<TOTAL-LIABILITY-AND-EQUITY> 179,663,000
<SALES> 94,440,000
<TOTAL-REVENUES> 94,440,000
<CGS> 68,782,000
<TOTAL-COSTS> 68,782,000
<OTHER-EXPENSES> 23,690,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,119,000
<INCOME-PRETAX> (5,151,000)
<INCOME-TAX> (1,458,000)
<INCOME-CONTINUING> (3,693,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> (3,693,000)
<EPS-PRIMARY> (13.01)
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