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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended 9/30/95 Commission file number 0-2655
DIXON TICONDEROGA COMPANY
(Exact name of Company as specified in its charter)
FORM 10-K
X Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
- ---- Act of 1934 (Fee Required) For the fiscal year ended 9/30/95.
Transition Report Pursuant to Section 13 or 15(d) of the Securities
- ---- Exchange Act of 1934 (No Fee Required) For the transaction period from
to .
DELAWARE 23-0973760
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2600 Maitland Center Parkway, Suite 200, Maitland, FL 32751
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (407) 875-9000
Title of each class Name of each exchange on which registered
COMMON STOCK, $1.00 PAR VALUE AMERICAN STOCK EXCHANGE
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
Company was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ].
Based on the closing sales price on 11/30/95, the aggregate market value of
the voting stock held by non-affiliates of the Company was $14,068,710.
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of 11/30/95: 3,193,320 shares of common stock, $1.00 Par
Value.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of Form 10-K or any
amendment to this Form 10-K. [ ]
Documents Incorporated by Reference: Proxy statement to security holders
incorporated into Part III for the fiscal year ended 9/30/95.
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PART I
ITEM 1. BUSINESS
NEW DEVELOPMENTS AND BUSINESS STRATEGIES
Dixon Ticonderoga Company (hereinafter the "Company") initiated many new
strategies over the past several years. The Company has completed
manufacturing plant and administrative office consolidations, and instituted
many ambitious cost containment and cash flow initiatives. In addition,
management has introduced a new total quality process into the organization,
along with revamped human resources programs. These strategies have
contributed to significantly improved operating results in recent years and
a reduction in total indebtedness. Moreover, the Company has successfully
disposed of idled properties, further reducing indebtedness. The Company has
also made additional capital investments in its core businesses.
During 1995, the Company celebrated its 200-year anniversary by
achieving consolidated operating income in excess of $9 million and net
operating earnings (before non-recurring items) of $2,618,000, representing
increases of 30% over 1994. In addition, the Company concluded the wind-up
of its real estate segment, allowing management to fully refocus on its core
Consumer Products and industrial business groups. Moreover, the Company made
provision for the ultimate settlement and related costs associated with
several long-standing lawsuits. In 1995, the aforementioned non-recurring
items resulted in a net loss from discontinued real estate operations of
approximately $595,000 and an after-tax provision for litigation of $960,000,
thus reducing net income to $1,063,000. Further information regarding these
transactions is included elsewhere in this Form 10-K.
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INDUSTRY SEGMENTS
The Company has three principal continuing business segments: Consumer
Products, Industrial Graphite and Lubricants, and Refractory Products. These
segments, and the primary operations of each, are as follows:
BUSINESS SEGMENTS OPERATIONS
Consumer Products Manufacture and sale of writing and drawing
pencils, pens, artist materials, felt tip
markers, industrial markers, lumber crayons,
typewriter correction materials and allied
products.
Industrial Graphite and Manufacture and sale to industry of processed
Lubricants natural and synthetic bulk graphite, graphite
oil, solvent and water-based lubricants, as
well as colloidal graphitic suspensions.
Refractory Products Manufacture and sale to industry of clay and
graphite stopper heads, firebrick,
non-graphitic refractory kiln furniture and
furnace linings.
Financial information regarding net revenues, operating profits and
identifiable assets related to the Company's industry segments for the years
ended September 30, 1995, 1994, and 1993, is contained in Note 11 to
Consolidated Financial Statements.
The Company's international operations are subject to certain risks
inherent in carrying on business abroad, including the risk of currency
fluctuations, currency remittance restrictions and unfavorable political
conditions. It is the Company's opinion that there are presently no material
political risks involved in doing business in the foreign countries (i.e.
Mexico, Canada and Europe) in which its operations are being conducted.
CONSUMER PRODUCTS
The Company manufactures its leading brand TICONDEROGA and a full line
of pencils in Versailles, Missouri. The Company also manufactures and markets
advertising specialty pencils, pens and markers through its promotional
products division.
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The Company is also the producer of WEAREVER writing products at its
facility in Deer Lake, Pennsylvania. In addition to the WEAREVER line of
pens, the Company also manufactures and markets felt tip markers, mechanical
pencils and the DIXON brand of pens and allied products at this facility.
The Company also manufactures in Sandusky, Ohio (mainly for wholesale
school suppliers and retailers) PRANG, COLORART, and other well known brands
of wax crayons, chalks, dry and liquid tempera, water colors and art
materials. This division also manufactures special markers for industrial
use and paper-wrapped pencils, all of which are marketed and sold, together
with the products manufactured by the Versailles and Deer Lake operations, by
the U.S. Consumer Products group.
Under an agreement with Warner Bros. Consumer Products, the Company also
manufactures and markets in the U.S. and Canada a complete product line of
pencils, pens, crayons, chalks, markers, paints, art kits and related items
featuring the famous Looney Tunes characters. (See Note 12 to Consolidated
Financial Statements.)
Dixon Ticonderoga Inc., a wholly-owned subsidiary with a distribution
center in Newmarket, Ontario, and a manufacturing plant in Acton Vale,
Quebec, Canada, is engaged in the sale in Canada of black and color writing
and drawing pencils, pens, lumber crayons, correction materials, erasers,
rubber bands and allied products. It also distributes certain of the school
product lines. The Acton Vale plant also produces eraser products and
correction materials for distribution by the U.S. Consumer Products group.
Dixon Ticonderoga de Mexico, Inc., S.A. de C.V., a majority-owned
subsidiary (50.1%) of Dixon Ticonderoga Inc., is engaged in the manufacture
and sale in Mexico of black and color writing and drawing pencils, typewriter
correction materials, lumber crayons and allied products. This subsidiary
also manufactures and sells in Mexico certain products of the type
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manufactured at the Sandusky facility, as well as marker products
manufactured at the Deer Lake facility.
Dixon Europe, Limited, a wholly-owned subsidiary of the Company is
engaged in the distribution of many Dixon Consumer Products in the United
Kingdom and other European countries.
INDUSTRIAL GRAPHITE AND LUBRICANTS
Through its Graphite and Lubricants division, Dixon manufactures and
sells processed natural and synthetic graphite, graphite oil, solvent and
water-based lubricants as well as colloidal graphitic suspensions. The
American Graphite division located in Manchester Township, New Jersey, and
the Southwestern Graphite division located in Burnet, Texas, process and sell
graphite to industrial customers, and are engaged in the processing and
blending of various grades of foreign and domestic graphites for use in the
manufacture and sale of related products.
REFRACTORY PRODUCTS
The New Castle Refractories division, with plants located in Ohio,
Pennsylvania and West Virginia, manufactures various types of non-graphitic
refractory kiln furniture used by the ceramic and glass industries;
firebrick, various types and designs of non-graphitic refractory special
shapes for ferrous and nonferrous metal industries; refractory shapes for
furnace linings and industrial furnace construction; various grades of
insulating firebrick and graphite stopper heads.
REAL ESTATE OPERATIONS (Discontinued Operations)
The Company previously developed Bryn Mawr Ocean Towers (three
nine-story towers) on North Hutchinson Island, Florida, which were sold as
condominiums. Pursuant to a formal plan and agreement dated September 29,
1995, the Company disposed of the remaining property dedicated to this
project and has ceased any further real estate activities. This segment is
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therefore treated as "Discontinued Operations." Management estimates the
annual future cost savings to be approximately $150,000. (See Note 10 to
Consolidated Financial Statements.)
DISTRIBUTION
Consumer products manufactured at the Sandusky, Ohio; Deer Lake,
Pennsylvania; and Versailles, Missouri plants are distributed nationally
through wholesale, commercial and retail stationers, school supply houses,
industrial supply houses, blueprint and reproduction supply firms, art
material distributors and retailers. The consumer products manufactured at
the Canadian and Mexican plants are distributed nationally in these countries
through wholesalers, distributors, school supply houses and retailers.
The industrial products manufactured at the various plants are sold by
direct sales, manufacturers' representatives and industrial distributors in
North America. In addition, these products are sold worldwide, principally
in Central and South America, Europe, the Philippines and Japan.
RAW MATERIALS
Graphite, which can be considered a strategic raw material for the
Company's business, is sold by the Company in bulk and as a component, and is
used in the manufacture of refractory products, lubricants and leads for
wood-cased pencils. Graphite is purchased from Brazil, Madagascar, India,
Mexico, People's Republic of China, Sri Lanka, West Germany and Zimbabwe.
There were no significant raw material shortages of any consequence during
1995 nor any anticipated for future periods.
TRADEMARKS, PATENTS AND COPYRIGHTS
The Company owns a large number of trademarks, patents and copyrights in
each industry segment related to products manufactured and marketed by it,
which have been secured over many years. These have been of value in the
growth of the business and should continue to be of value in the future.
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However, in the opinion of the Company, its business generally is not
dependent upon the protection of any patent or patent application or the
expiration of any patent.
SEASONAL ASPECTS OF THE BUSINESS
The Consumer Products business reflects greater portions (approximately
60%) of its sales in the third and fourth fiscal quarters of the year due to
shipments of school orders to its distribution network. This practice, which
is standard for this industry, usually causes the Company to incur additional
bank borrowings during the period between shipment and payment.
The Industrial Graphite and Lubricants and Refractory Products
businesses have no material seasonal aspects.
COMPETITION
Each of the Company's industry segments is engaged in a highly
competitive business with a number of competitors, some of whom are larger
and have greater resources than the Company. Important to the Company's
market position are the quality and performance of its products, its
marketing and distribution systems, and the reputation developed over the
many years that the Company has been in business.
RESEARCH AND DEVELOPMENT
The Company employs approximately 17 full-time professional employees in
the area of quality control and product development. The Company has
recently established a centralized research and development laboratory in its
Sandusky, Ohio facility. For accounting purposes, research and development
expenses in any year presented in the accompanying Consolidated Financial
Statements were not material.
EMPLOYEES
The total number of persons employed by the Company was approximately
1,180 of which 750 were employed in the United States.
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ITEM 2. PROPERTIES
The following properties of the Company (except present Corporate
Headquarters) are owned in fee and, except as indicated, are collateralized
under the Company's loan agreement with First Union National Bank of North
Carolina, its primary lender. Most of the buildings are of steel frame and
masonry or concrete construction.
SQUARE FEET
LOCATION OF FLOOR SPACE
Maitland, Florida (leased space for Corporate Headquarters)* 25,000
Heathrow, Florida (future site of Corporate Headquarters)* --
Sandusky, Ohio (Consumer Products) 276,000
Manchester Township, New Jersey (American
Graphite) (Industrial Graphite and Lubricants) 76,000
Near Burnet, Texas (Southwestern Graphite)
(Industrial Graphite and Lubricants) 73,000
Burnet, Texas (Warehouse - Southwestern
Graphite) (Industrial Graphite and Lubricants) 10,000
New Castle, Pennsylvania (Refractory Products) 131,000
Newell, West Virginia (Refractory Products) 45,000
Massillon, Ohio (Refractory Products) 113,000
Zoar, Ohio (Refractory Products) 65,000
Acton Vale, Quebec, Canada (Dixon
Ticonderoga Inc.) (Consumer Products) 32,000
Tlalnepantla, D.F., Mexico (Dixon Ticonderoga de Mexico,
S.A. de C.V.) (Consumer Products)* 55,000
Versailles, Missouri (Consumer Products) 120,000
Shelbyville, Tennessee (Consumer Products) 94,000
Deer Lake, Pennsylvania (Consumer Products) 150,000
Vandalia, Illinois (idled) 67,000
* Not included as direct collateral under the loan agreement
with First Union National Bank of North Carolina.
The Company also owns a non-operating graphite mine near Burnet, Texas,
included with land at historical cost in the consolidated balance sheets.
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ITEM 3. LEGAL PROCEEDINGS
In March 1986, The Dixon Venture ("Venture") (an unrelated company)
filed a civil action in the New Jersey Superior Court seeking recovery of
damages and costs allegedly incurred by Venture in connection with the clean-
up of industrial property acquired from the Company in Jersey City, New
Jersey in February, 1984. Venture's claims were brought pursuant to the New
Jersey Environmental Clean-up Responsibility Act ("ECRA"), an environmental
remedial statute dealing with the transfer of industrial property.
Although the trial court entered final judgment dismissing all Venture's
claims, the Appellate division and subsequently the Supreme Court, found that
Venture's claim did state a cause of action upon which relief could be
granted and allowed the case to go to trial on the merits. Significantly,
however, the Supreme Court instructed the trial court to fashion a remedy
best effectuating the understanding of the parties at the time of the
original sale. It is noteworthy that the parties contracted for the sale
fully eight months before the enactment of ECRA and that the closing was
delayed into the ECRA compliance period by Venture. Further, the Supreme
Court and subsequent Appellate decisions recognized that clean-up costs must
bear some rational relationship to the agreed upon sales price or, it stood
to reason, the Company would not have agreed to the original amount.
The case presents issues for the equitable handling of a unique ECRA
transaction and contract responsibilities requiring a tailored remedy. In
July and August 1995, this matter was tried before the New Jersey Supreme
Court. Post-trial briefs are due by late December 1995. It is our belief
that a good portion of the cleanup costs may not be recoverable under the
legal theories set forth by plaintiffs. Moreover, in view of the Supreme
Court's mandate to fashion a remedy that "best effectuates" a common
understanding of the parties, and given the fact that the sales price of the
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subject property was $2.7 million, plaintiffs' damages claims seem
inconsistent and disproportionate with the results contemplated by the
Supreme Court. There are also a number of other factors such as plaintiffs'
general knowledge of the existence of ECRA prior to closing which would,
under the Supreme Court's decision in this case, render it inequitable to
allocate to defendants most or all of the alleged cleanup costs. Due to the
unique nature of this case, it is difficult to evaluate with specificity the
damages outcome at this point in time. The Company will likely be liable for
some portion of plaintiffs' reasonable costs of cleanup, but as of the
present, such liability cannot be quantified with certainty. A portion of
the 1995 provisions for litigation settlements and related costs represents
the Company's best estimate of its ultimate obligation and legal costs
associated with this case.
All relevant insurance carriers have been put on notice of this claim.
To date, two carriers have agreed to defend the case pursuant to a
reservation of rights. It is our belief that most of the defense costs
relating to the Venture litigation will be paid by insurance. Additionally,
the insurance carriers previously agreed to substantially contribute toward
a settlement of this matter.
It also should be noted that the Company intends to pursue legal
malpractice claims against the lawyers who represented it in the initial
transaction and subsequent litigation pertaining to this facility to recover
any damages which may be assessed against it in this matter. At this time,
we believe these claims have substantial factual support. However, no
opinion as to likely outcome can be made at this point.
Also see Note 12 to Consolidated Financial Statements.
ITEM 4. SUBMISSION ON MATTERS TO VOTE OF SECURITY HOLDERS
None.
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PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK
AND RELATED SECURITY HOLDER MATTERS
Dixon Ticonderoga Company common stock is traded on the American Stock
Exchange. The following table sets forth the low and high per share prices
as per the American Stock Exchange closing prices for the applicable quarter.
FISCAL FISCAL
QUARTER ENDING 1995 1994
-------------- ------------ ------------
LOW HIGH LOW HIGH
--- ---- --- ----
December 31 7.38 9.88 5.88 6.88
March 31 8.50 11.13 6.13 7.25
June 30 7.13 8.88 6.58 9.75
September 30 7.25 8.38 8.88 10.38
Since fiscal 1990, the Board of Directors has suspended payment of
dividends. The Board will continue to review the Company's future
performance and determine the dividend policy on a quarter-to-quarter basis.
The Company's loan agreement with its primary lenders, and the note agreement
covering the 10.59% Senior Subordinated Notes, restricts the amount of
dividends which can be paid in the future. (See Notes 3 and 4 to Consolidated
Financial Statements).
The number of record holders of the Company's common stock at November
30, 1995, was 476.
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ITEM 6. SELECTED FINANCIAL DATA
DIXON TICONDEROGA COMPANY AND SUBSIDIARIES
FOR THE FIVE YEARS ENDED SEPTEMBER 30, 1995
(in thousands, except per share amounts)
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
REVENUES $95,565 $91,932 $82,138 $81,740 $78,324
======= ======= ======= ======= =======
INCOME (LOSS) FROM
CONTINUING OPERATIONS $ 1,658 $ 3,417 $ 476 $ 437 $(1,581)
INCOME (LOSS) FROM
DISCONTINUED OPERATIONS (595) (116) (146) (179) 794
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE - - 235 - -
------- ------- ------- ------- -------
NET INCOME (LOSS) $ 1,063 $ 3,301 $ 565 $ 258 $ (787)
======= ======= ======= ======= =======
EARNINGS (LOSS) PER
COMMON SHARE:
CONTINUING OPERATIONS $ .52 $ 1.10 $ .15 $ .14 $ (.52)
DISCONTINUED OPERATIONS (.19) (.04) (.04) (.06) .26
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE - - .07 - -
------- ------- ------- ------- -------
NET INCOME (LOSS) $ .33 $ 1.06 $ .18 $ .08 $ (.26)
======= ======= ======= ======= =======
TOTAL ASSETS $70,158 $68,852 $63,946 $61,981 $62,212
======= ======= ======= ======= =======
LONG-TERM DEBT $14,541 $19,141 $18,279 $23,083 $24,501
======= ======= ======= ======= =======
DIVIDENDS PER
COMMON SHARE $ - $ - $ - $ - $ -
======= ======= ======= ======= =======
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
1995 vs. 1994
Income from continuing operations before income taxes and minority
interest decreased $1,000,000 in 1995. Included in 1995 are provisions of
$1,530,000 for litigation settlements and legal costs related to several
lawsuits (see Item 3 and Note 12 to Consolidated Financial Statements). In
1994, there was a gain on sale of subsidiary stock and other assets of
$2,313,000 relating primarily to the sale of stock in our Mexico subsidiary
(see Note 8 to Consolidated Financial Statements). Net corporate expenses
decreased $690,000 in 1995, while interest expense decreased $678,000. The
interest expense reduction was principally due to the Mexican subsidiary's
low borrowing position subsequent to the aforementioned sale of stock.
1994 vs. 1993:
The improvement in income before income taxes amounted to $3,946,000 in
1994. The increase in gain on sale of subsidiary stock and other assets of
$1,942,000 is primarily due to the sale of the stock in the Mexico subsidiary
(see Note 8 to Consolidated Financial Statements). Consumer Products'
increased revenue (primarily volume) led to better manufacturing
efficiencies. New products and more aggressive marketing, particularly in
the retail market, contributed to this volume increase. Refractory products'
revenue improved with increases in volume and more favorable mix contributing
to higher profitability. The interest expense increase was due primarily to
higher average rates of interest in 1994.
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1993 vs. 1992:
Income from operations before income tax increased to $1,001,000 in
1993, compared with $625,000 in the prior year. This reflects a gain on sale
of assets of $371,000. Income taxes increased, largely due to foreign taxes
on higher income and effective tax rates. Net income from operations
increased $72,000. In addition, 1993 results include $235,000 representing
the cumulative effect of a change in accounting principle. Therefore, net
income increased to $565,000 from $258,000 in the prior year.
As discussed above, pretax results from operations improved overall in
1993. Total revenues remained level; but the Refractory segment showed an
increase in both revenues and profits. U.S. Consumer Products suffered from
foreign competition in certain product lines and increased distribution and
promotional costs. Foreign Consumer Products operating income increased
despite significant losses due to the decline of local currency values.
Increased foreign operating income was largely offset by higher tax
provisions. A sale of idle property in Ticonderoga, New York enhanced 1993
results. Total interest expense decreased due to lower effective interest
rates.
Discontinued Operations:
The 1995 loss from discontinued operations of the real estate segment
represents a net operating loss of $175,000 (net of a tax benefit of
$104,000) and a loss on disposal of $420,000 (net of a tax benefit of
$250,000). Net operating losses of the real estate segment were $116,000 and
$146,000 in 1994 and 1993, respectively.
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REVENUES
Revenues in 1995 increased $3,632,000 over the prior year. The
increases and decreases by segment are as follows:
Increase % Increase (Decrease)
(Decrease) Total Volume Price/Mix
---------- ------------------------
Consumer U.S. $4,624,000 9 8 1
Consumer Foreign (2,198,000) (13) (9) (4)
Graphite & Lubricant 212,000 2 2 -
Refractory 994,000 9 7 2
U.S. Consumer revenue volume increases were primarily in the office
supply mega-store market. The decrease in Foreign Consumer revenue was
primarily due to the majority-owned subsidiary in Mexico. Revenue in Mexico
decreased $5,200,000 due to the decline of the peso value compared to the
U.S. dollar. This decrease was partially offset by increased peso selling
prices. Refractory revenue increased $994,000 primarily due to higher
volume.
Overall 1994 revenues increased $9,795,000 over the prior year. The
increases and decreases by segment are as follows:
Increase % Increase (Decrease)
(Decrease) Total Volume Price/Mix
---------- ------------------------
Consumer U.S. $6,347,000 15 14 1
Consumer Foreign 1,807,000 11 12 (1)
Graphite & Lubricant (352,000) (3) (2) (1)
Refractory 1,993,000 20 7 13
The increase in U.S. Consumer Products volume was in both the commercial and
mass retail markets and was enhanced by new product introductions. Foreign
revenue increase was primarily by our subsidiary in Mexico. However, the
foreign revenue increase is after revenue reductions in Canada and Mexico of
$470,000 and $450,000, respectively, due to the decline of their local
currency value (as compared with the U.S. dollar).
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In 1993, revenues increased approximately $398,000 over the prior year.
The increases and decreases by segment are as follows:
Increase % Increase (Decrease)
(Decrease) Total Volume Price/Mix
---------- ------------------------
Consumer U.S. $ 328,000 1 (1) 2
Consumer Foreign (790,000) (5) (4) (1)
Graphite & Lubricant (510,000) (4) - (4)
Refractory 1,370,000 16 11 5
Revenue in Canada and Mexico decreased ($580,000 and $60,000, respectively),
due to the decline of their local currency value.
OPERATING PROFITS
Operating profits by segment increased $1,476,000 in 1995. Foreign
operations increased $984,000. Our Canadian subsidiary increase of $396,000
reflected higher revenues and a stable year with respect to that country's
currency. The increase in Mexico was primarily due to increased shipments to
the U.S. and related plant efficiencies and currency gains. Refractory
Products increased $372,000 on higher volume. Graphite and Lubricant and
U.S. Consumer operating profits were relatively flat. U.S. Consumer revenue
and gross profit increases were offset by increased selling and distribution
costs, primarily incurred to service the office supply mega-store markets.
In 1994, operating profits by segment increased $2,718,000. Consumer
Products increased $2,132,000 on significantly higher revenues. A decrease
in the value of the local currency in Mexico was offset by price increases
and volume. Refractory products increased $500,000 on higher volume and
favorable product mix.
Operating profits by segment decreased by a total of approximately
$79,000 in 1993. Refractory products increased $110,000 on higher volume.
Graphite and Lubricant increased $60,000 due to improved profit margins.
Foreign Consumer increased $530,000. The decline in value of local
currencies was offset by higher volume and cost reductions in Canada and
<PAGE> 17
price increases in Mexico. U.S. Consumer decreased $820,000. Volume
decreases causing manufacturing inefficiencies and higher selling and
promotional costs were the primary reasons for this decrease.
MINORITY INTEREST
Minority interest represents 49.9% of the net income of the consolidated
subsidiary, Dixon Ticonderoga de Mexico, S.A. de C.V. ($1,150,000 in 1995),
equivalent to the extent of the investment of the minority shareholders. As
described in Note 8 to Consolidated Financial Statements, this minority
interest was created by an initial public offering in September 1994.
Accordingly, 1994 only reflects the portion of net income earned in the
latter part of September 1994.
EFFECT OF CERTAIN NEW ACCOUNTING PRONOUNCEMENTS
As discussed in Note 1 to Consolidated Financial Statements, the
Financial Accounting Standards Board (FASB) issued Statement No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of." This statement, which must be adopted no later than
fiscal 1997, establishes accounting standards with respect to the impairment
of long-lived assets. Its adoption is not expected to materially affect the
future results of operations or financial position of the Company.
In 1995, the FASB also issued Statement No. 123, "Accounting for Stock-
Based Compensation." The statement (effective for the Company in fiscal
1997) would provide certain specific disclosures regarding the value of stock
option grants made in fiscal 1996 and thereafter. Its adoption is not
expected to materially affect the future results of operations or financial
position of the Company.
<PAGE> 18
LIQUIDITY AND CAPITAL RESOURCES
Since 1993, the financial condition of the Company improved
significantly, principally due to its recent operating success and the
completion of major financing initiatives. While consolidated operating
income increased 30% to in excess of $9 million, cash flows from operating
activities decreased approximately $2.85 million in 1995. This reduction is
due to several factors, principally higher working capital requirements
(primarily inventories) to support increasing business segments. Consumer
Products inventories increased approximately 15% due to higher revenues; new
purchased product lines; the servicing of the mass retail and office supply
mega-store markets; and products manufactured by the Company's Mexico
subsidiary during its local currency crises earlier in 1995. Industrial
Graphite and Lubricants inventories also increased 15% due largely to a
slowing of business in the powdered metal industry late in 1995. Despite
increasing revenues, the Company managed to maintain its strong collection
practices which have reduced average days outstanding in accounts receivable
under normal terms. The Company reduced total accounts receivable in 1995 as
compared with an increase of $3 million in the prior year. Cash flow from
operating activities was also negatively affected by certain legal
settlements and related costs associated with several ongoing lawsuits. As
is the case historically, cyclical short-term borrowings (see below) financed
peak mid-year increases in accounts receivable and inventories.
The Company's investing activities included approximately $3 million in
purchases of property and equipment in 1995. The higher level of purchases
as compared with the prior year (approximately $1.8 million) is attributable
to the Company's construction of a new corporate headquarters facility in
Heathrow, Florida. In 1995, the Company incurred approximately $1.5 million
<PAGE> 19
towards the completion of the facility scheduled for January 1996. The total
estimated cost of the project is $3.4 million with construction costs
financed ultimately through a separate fixed-rate permanent mortgage
arrangement. Except as discussed above, all other major capital projects
(principally strategic manufacturing equipment) are discretionary in nature
and thus no material purchase commitments exist. These expenditures will
continue to be funded from operations and new and existing financing
arrangements. In addition, the Company was successful in its program to sell
idle assets, generating proceeds of approximately $1 million in the prior two
years. The transaction involving the 1994 sale of subsidiary stock and the
Company's use of proceeds is discussed below.
The Company completed major financing activities during the past two
years. In 1994, the Company successfully completed primary financing
arrangements (in the initial amount of $35 million) with a new bank lender,
First Union National Bank of North Carolina, to refinance certain short-term
obligations and provide additional working capital. An additional seasonal
$5 million in the working capital line of credit was added in 1995. Also in
1995, the interest rate under these facilities was reduced. As more fully
described in Notes 3 and 4 to Consolidated Financial Statements, the
arrangements (as amended) provide up to $15 million in additional financing
as compared with the Company's agreement with its previous primary lender,
and permits the Company to meet all current debt obligations. Moreover, the
related revolving credit facility provides, under certain circumstances, for
the payment of additional subordinated debt obligations (discussed below).
The agreement also provides for the maintenance of certain financial
covenants and ratios, with which the Company is presently in compliance,
except as to the ratio of operating cash flow to fixed charges (as defined),
<PAGE> 20
capital expenditures and certain payments and asset transactions, all of
which relate to non-recurring activities and for which the Company has
received a waiver of compliance. At September 30, 1995, the Company had
approximately $8 million of unused lines of credit available under this
financing arrangement.
Also in 1994, the Company completed an initial public offering of the
stock of its subsidiary, Dixon Ticonderoga de Mexico, S.A. de C.V. The net
after-tax proceeds from the offering were approximately $5 million, and were
principally used to reduce Company indebtedness. See Note 8 to Consolidated
Financial Statements for further information regarding this transaction.
The Company also has $10.3 million of Senior Subordinated Notes
remaining outstanding with several insurance companies. The note agreement,
as amended, provides for the payment of approximately $3.3 million annually,
through August 1998, with the balance due August 1999. This agreement also
provides for the maintenance of certain financial covenants and ratios, with
which the Company is presently in compliance. The revolving credit
agreements described above provided for the August 1994 and 1995 subordinated
note payments and a credit line reserve for the 1996 payment. The Company
intends to satisfy future subordinated note payments from funds provided by
operations and/or an infusion of new equity or debt.
As a result of its operating success and financing activities over the
past two years, the Company reduced its consolidated debt (net of cash
balances) by nearly $5 million, or 12%, despite increasing working capital
financing requirements. The new and existing sources of financing, financing
strategies discussed above and cash expected to be generated from future
operations will, in management's opinion, be sufficient to fulfill all
current and anticipated requirements of the Company's ongoing business.
<PAGE> 21
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
DIXON TICONDEROGA COMPANY AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
PAGE
Report of Independent Accountants 22
Consolidated Balance Sheets as of
September 30, 1995 and 1994 23-24
Consolidated Statements of Operations For the Years
Ended September 30, 1995, 1994 and 1993 25-26
Consolidated Statements of Shareholders' Equity
For the Years Ended September 30, 1995, 1994
and 1993 27
Consolidated Statements of Cash Flows For the Years
Ended September 30, 1995, 1994 and 1993 28-29
Notes to Consolidated Financial Statements 30-45
Schedule For the Years Ended
September 30, 1995, 1994, and 1993:
II. Valuation and Qualifying Accounts 46
Consent of Independent Accountants 47
Information required by other schedules called for under Regulation S-X
is either not applicable or is included in the Consolidated Financial
Statements or Notes thereto.
<PAGE> 22
REPORT OF INDEPENDENT ACCOUNTANTS
Shareholders and Board of Directors of
Dixon Ticonderoga Company
We have audited the accompanying consolidated financial statements and
the financial statement schedule of Dixon Ticonderoga Company and
subsidiaries as listed in the index on page 21 of this Form 10-K. These
financial statements and the financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and the financial statement schedule
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 audit provides 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
Dixon Ticonderoga Company at September 30, 1995 and 1994, and the
consolidated results of its operations and its cash flows for each of the
three years in the period ended September 30, 1995, in conformity with
generally accepted accounting principles. In addition, in our opinion, the
financial statement schedule referred to above, when considered in relation
to the basic financial statements taken as a whole, presents fairly, in all
material respects, the information required to be included therein.
COOPERS & LYBRAND L.L.P.
Orlando, Florida
November 30, 1995
<PAGE> 23
DIXON TICONDEROGA COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1995 AND 1994
ASSETS 1995 1994
------ ----------- -----------
CURRENT ASSETS:
Cash and cash equivalents $ 1,513,622 $ 1,822,764
Receivables, less allowance for
doubtful accounts of $796,715
in 1995 and $564,905 in 1994 18,202,541 20,335,421
Inventories 32,638,385 28,881,083
Assets held for sale 436,306 256,947
Other current assets 2,254,101 1,924,754
----------- -----------
Total current assets 55,044,955 53,220,969
----------- -----------
CONDOMINIUMS UNDER DEVELOPMENT -- 773,067
----------- -----------
PROPERTY, PLANT AND EQUIPMENT:
Land and buildings 12,908,945 11,867,046
Machinery and equipment 16,986,408 18,983,203
Furniture and fixtures 902,043 843,316
----------- -----------
30,797,396 31,693,565
Less accumulated depreciation ( 17,229,617) ( 18,308,662)
----------- -----------
13,567,779 13,384,903
----------- -----------
OTHER ASSETS 1,545,110 1,473,059
----------- -----------
$70,157,844 $68,851,998
=========== ===========
<PAGE> 24
LIABILITIES AND
SHAREHOLDERS' EQUITY 1995 1994
-------------------- ----------- -----------
CURRENT LIABILITIES:
Notes payable $17,877,665 $11,054,169
Current maturities of long-term debt 4,587,016 4,431,570
Accounts payable 5,280,884 5,258,085
Accrued liabilities 8,388,309 8,626,772
----------- -----------
Total current liabilities 36,133,874 29,370,596
----------- -----------
LONG-TERM DEBT 14,540,884 19,140,668
----------- -----------
OTHER NONCURRENT LIABILITIES 21,815 233,818
----------- -----------
DEFERRED INCOME TAXES 1,155,473 1,144,799
----------- -----------
MINORITY INTEREST 3,073,375 3,421,253
----------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, par $1, authorized
100,000 shares, none issued -- --
Common stock, par $1, authorized
8,000,000 shares, issued 3,448,466
shares in 1995 and 3,424,873
shares in 1994 3,448,466 3,424,873
Capital in excess of par value 2,166,329 2,042,639
Retained earnings 12,640,762 11,577,719
Cumulative translation adjustment (2,087,354) (531,455)
----------- -----------
16,168,203 16,513,776
Less treasury stock, at cost
(255,147 shares in 1995; 265,270
shares in 1994) (935,780) (972,912)
----------- -----------
15,232,423 15,540,864
----------- -----------
$70,157,844 $68,851,998
=========== ===========
The accompanying notes to consolidated financial statements
are an integral part of these balance sheets.
<PAGE> 25
DIXON TICONDEROGA COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30, 1995, 1994 AND 1993
1995 1994 1993
----------- ----------- -----------
REVENUES $95,565,000 $91,932,479 $82,138,339
----------- ----------- -----------
COSTS AND EXPENSES:
Cost of goods sold 62,193,918 62,246,254 56,608,419
Selling and
administrative expenses 24,241,328 22,721,878 20,763,419
----------- ----------- -----------
86,435,246 84,968,132 77,371,838
----------- ----------- -----------
OPERATING INCOME 9,129,754 6,964,347 4,766,501
----------- ----------- -----------
INTEREST EXPENSE (3,652,824) (4,330,581) (4,136,518)
PROVISIONS FOR LITIGATION
SETTLEMENTS AND RELATED COSTS (1,530,377) -- --
GAIN ON SALE OF SUBSIDIARY
STOCK AND OTHER ASSETS -- 2,313,470 371,386
----------- ----------- -----------
(5,183,201) (2,017,111) (3,765,132)
----------- ----------- -----------
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES
AND MINORITY INTEREST 3,946,553 4,947,236 1,001,369
INCOME TAXES 1,137,897 1,518,053 525,463
----------- ----------- -----------
2,808,656 3,429,183 475,906
MINORITY INTEREST 1,150,690 11,469 --
----------- ----------- -----------
INCOME FROM CONTINUING OPERATIONS
BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE 1,657,966 3,417,714 475,906
DISCONTINUED OPERATIONS (594,923) (116,481) (146,395)
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE -- -- 235,046
----------- ----------- -----------
NET INCOME $ 1,063,043 $ 3,301,233 $ 564,557
=========== =========== ===========
<PAGE> 26
EARNINGS (LOSS) PER
COMMON SHARE:
Continuing operations $ .52 $ 1.10 $ .15
Discontinued operations (.19) (.04) (.04)
Cumulative effect of change
in accounting principle -- -- .07
----------- ----------- -----------
Net income $ .33 $ 1.06 $ .18
=========== =========== ===========
The accompanying notes to consolidated financial statements
are an integral part of these statements.
<PAGE> 27
<TABLE>
<CAPTION>
DIXON TICONDEROGA COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 1995, 1994 AND 1993
Common Capital in Cumulative
Stock $1 Excess of Retained Translation Treasury
Par Value Par Value Earnings Adjustment Stock
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE, September 30, 1992 $ 3,376,835 $ 1,750,529 $ 7,711,929 $ (247,016) $(1,044,368)
Net income 564,557
Cumulative translation adjustment (380,403)
Employee Stock Purchase Plan
(10,176 shares) 18,642 37,325
----------- ----------- ----------- ----------- -----------
BALANCE, September 30, 1993 $ 3,376,835 $ 1,769,171 $ 8,276,486 $ (627,419) $(1,007,043)
Net income 3,301,233
Cumulative translation adjustment 95,964
Employee stock options exercised 48,038 253,958
Employee Stock Purchase Plan
(9,305 shares) 19,510 34,131
----------- ----------- ----------- ----------- -----------
BALANCE, September 30, 1994 $ 3,424,873 $ 2,042,639 $11,577,719 $ (531,455) $ (972,912)
Net income 1,063,043
Cumulative translation adjustment (1,555,899)
Employee stock options exercised 23,593 91,985
Employee Stock Purchase Plan
(10,123 shares) 31,705 37,132
----------- ----------- ----------- ----------- -----------
BALANCE, September 30, 1995 $ 3,448,466 $ 2,166,329 $12,640,762 $(2,087,354) $ (935,780)
=========== =========== =========== =========== ===========
The accompanying notes to consolidated financial statements
are an integral part of these statements.
</TABLE>
<PAGE> 28
DIXON TICONDEROGA COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 1995, 1994 AND 1993
1995 1994 1993
----------- ----------- -----------
Cash flows from
operating activities:
Net income from continuing
operations $ 1,657,966 $ 3,417,714 $ 710,952
Net loss from discontinued
operations (594,923) (116,481) (146,395)
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 2,379,728 2,502,451 2,703,873
Gain on sale of subsidiary stock
and other assets -- (2,313,470) (371,386)
Deferred taxes 365,802 508,111 (753,266)
Income attributable to
minority interest 1,150,690 11,469 --
(Income) loss attributable
to currency translation (511,424) 110,830 22,434
Cumulative effect of change in
accounting principle -- -- (235,046)
Changes in assets [(increase)
decrease] and liabilities
[increase(decrease)]:
Receivables, net 194,045 (3,053,682) (1,849,000)
Inventories (4,929,306) (698,187) (1,530,966)
Other current assets (452,261) (577,543) 548,426
Accounts payable and accrued
liabilities 296,368 3,060,868 2,149,578
Condominiums under development 574,087 120,587 12,422
Other assets (460,081) (452,193) (61,805)
----------- ----------- -----------
Net cash provided by (used in)
operating activities (329,309) 2,520,474 1,199,821
----------- ----------- -----------
Cash flows from
investing activities:
Purchases of plant and equipment (3,007,547) (1,842,331) (2,558,458)
Proceeds from sale of assets -- 573,708 397,068
Proceeds from sale of
subsidiary stock -- 5,734,723 --
----------- ----------- -----------
Net cash provided by (used in)
investing activities (3,007,547) 4,466,100 (2,161,390)
----------- ----------- -----------
<PAGE> 29
1995 1994 1993
----------- ----------- -----------
Cash flows from
financing activities:
Principal reductions of
Senior Subordinated Notes (3,325,000) (3,325,000) --
Proceeds from additions to
long-term debt -- 9,666,667 --
Proceeds from additions to
notes payable 8,040,299 7,937,368 2,070,996
Principal reductions of
long-term debt (1,131,276) (5,980,120) (1,500,000)
Principal reductions of
notes payable -- (14,248,878) --
Other non-current liabilities (109,626) 113,341 (7,277)
Employee Stock Purchase Plan 68,837 53,641 55,967
Exercise of stock options 115,578 301,996 -
----------- ----------- -----------
Net cash provided by (used in)
financing activities 3,658,812 (5,480,985) 619,686
----------- ----------- -----------
Effect of exchange rate changes
on cash (631,098) (14,866) (402,837)
----------- ----------- -----------
Net increase (decrease) in cash
and cash equivalents (309,142) 1,490,723 (744,720)
Cash and cash equivalents,
beginning of year 1,822,764 332,041 1,076,761
----------- ----------- -----------
Cash and cash equivalents,
end of year $ 1,513,622 $ 1,822,764 $ 332,041
=========== =========== ===========
Supplemental Disclosures:
Cash paid (received) during
the year for:
Interest $ 3,697,023 $ 4,282,857 $ 4,199,972
Income taxes 1,616,427 400,411 (153,607)
The accompanying notes to consolidated financial
statements are an integral part of these statements.
<PAGE> 30
DIXON TICONDEROGA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Business:
Dixon Ticonderoga Company is a diversified manufacturer and marketer of
writing and art products as well as a producer of graphite, lubricant
and refractory products. Its largest principal customers are school
products distributors, mass merchandisers and industrial manufacturers,
although none account for over 5% of revenues.
Principles of consolidation:
The consolidated financial statements include the accounts of Dixon
Ticonderoga Company and all of its subsidiaries (the "Company"). All
significant intercompany transactions and balances have been eliminated
in consolidation. Minority interest represents the minority
shareholders' proportionate share of the equity of the Company's Mexico
subsidiary (49.9%).
Translation of foreign currencies:
In accordance with Financial Accounting Standards Board (FASB) Statement
No. 52, results from Canada, Mexico and United Kingdom operations are
translated using average exchange rates during the period. Assets and
liabilities denominated in local currency are translated into U.S.
dollars at current exchange rates with the gain or loss being recorded
in shareholders' equity. Gains and losses from foreign currency
transactions are included in the Consolidated Statement of Operations.
Cash and cash equivalents:
Cash and cash equivalents include investment instruments with a maturity
of three months or less at time of purchase.
Inventories:
Inventories are stated at the lower of cost or market. Certain
inventories amounting to $15,250,000 and $13,586,000, at September 30,
1995 and 1994, respectively, are stated on the last-in, first-out (LIFO)
method of determining inventory costs. Under the first-in, first-out
(FIFO) method of accounting, these inventories would be $1,282,000 and
$1,480,000 higher at September 30, 1995 and 1994, respectively. All
other inventories are accounted for using the FIFO method.
All inventories that are stated on the LIFO method were acquired in 1983
as a result of an acquisition. This acquisition was treated as a
purchase and accordingly, inventory was recorded at its fair market
value for financial accounting purposes. As a result, the financial
accounting basis for the LIFO inventories exceeds the LIFO tax basis by
approximately $1,339,000 and $1,203,000 at September 30, 1995 and 1994,
respectively.
<PAGE> 31
Inventories consist of (in thousands):
September 30,
1995 1994
-------- --------
Raw material $ 12,450 $ 12,273
Work in process 4,462 4,494
Finished goods 15,726 12,114
-------- --------
$ 32,638 $ 28,881
======== ========
Assets held for sale:
Assets held for sale represent idled and other assets specifically
identified for sale within the next fiscal year. The assets are stated
at their aggregate net book value which does not exceed estimated net
realizable value. During 1994, the Company reclassified an idle plant
in Shelbyville, Tennessee (net book value of approximately $1.6 million)
as property, plant and equipment to reflect management's intent to
utilize the facility.
Property, plant and equipment:
Property, plant and equipment are stated at cost. Depreciation is
provided principally on a straight-line basis over the estimated useful
lives of the respective assets.
When assets are sold or retired, their cost and related accumulated
depreciation are removed from the accounts. Any gain or loss is
included in income.
Income taxes:
The Company recognizes deferred tax assets and liabilities for future
tax consequences of events that have been included in the financial
statements or tax returns. Under this method, amounts for deferred tax
assets and liabilities are determined based on the differences between
the financial statement and tax bases of assets and liabilities using
enacted tax rates. Valuation allowances are established when necessary
to reduce deferred tax assets to the amount expected to be realized.
Income tax expense is the tax payable for the period and the change
during the period in deferred tax assets and liabilities.
Accounting for long-lived assets:
The FASB recently issued Statement No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of." This statement, which must be adopted no later than fiscal 1997,
establishes accounting standards with respect to the impairment of long-
lived assets. Its adoption is not expected to materially affect the
future results of operations or financial position of the Company.
<PAGE> 32
Reclassifications:
Certain prior year amounts have been reclassified to conform with the
current year classifications.
(2) ACCRUED LIABILITIES:
The major components of accrued liabilities are as follows (in
thousands):
September 30,
1995 1994
-------- --------
Salaries and wages $ 1,650 $ 1,957
Employee benefit plans 798 787
Income taxes 1,173 2,060
Other 4,767 3,823
-------- --------
$ 8,388 $ 8,627
======== ========
(3) NOTES PAYABLE:
In 1994, the Company entered into financing arrangements with a new
lender to refinance certain short-term obligations and provide
additional working capital. The loan and security agreement initially
provided for a total of $35 million in financing through May 1997. This
included a revolving line of credit facility in the amount of $25
million with interest at either the lender's prime rate (8.75% at
September 30, 1995) plus 0.5% or the prevailing LIBOR rate
(approximately 6% at September 30, 1995) plus 2.5%. In 1995, the
Company executed an interest rate "swap" agreement which effectively
fixes the rate on $5 million of this facility at 8.87% for five years.
An additional seasonal $5 million in the revolving line of credit was
added in 1995. Borrowings under the revolving credit facility
($17,168,000 as of September 30, 1995) are based upon eligible accounts
receivable and inventories of the Company's U.S. and Canada operations,
as defined. The loan and security agreement (as amended) also provides
for a credit line reserve of $3,325,000 for the August 1996 subordinated
notes principal payment (see Note 4). In addition, the loan and
security agreement provides for a $10 million term loan (see Note 4).
The financing arrangements are collateralized by the tangible and
intangible assets of the U.S. and Canada operations (including accounts
receivable, inventories, property, plant and equipment, patents and
trademarks) and a pledge of the capital stock of the Company's
subsidiaries. The loan and security agreement (as amended) contains
provisions pertaining to the maintenance of certain financial ratios and
annual capital expenditure levels, as well as restrictions as to payment
of cash or other dividends. As of September 30, 1995, the Company was
in compliance with all such provisions, except as to the ratio of
operating cash flow to fixed charges (as defined), capital expenditures
and certain payments and asset transactions, all of which relate to non-
recurring activities and for which the Company has received a waiver of
compliance.
<PAGE> 33
The weighted average interest rate of the Company's outstanding notes
payable (including foreign borrowings) was 9.4%, 12.9% and 8.3% as of
September 30, 1995, 1994 and 1993, respectively.
(4) LONG-TERM DEBT:
Long-term debt consists of the following (in thousands):
September 30,
1995 1994
-------- --------
Senior subordinated debt $ 10,350 $ 13,675
Bank term loan 8,667 9,667
Other 111 231
-------- --------
19,128 23,573
Less-current maturities 4,587 4,432
-------- --------
$ 14,541 $ 19,141
======== ========
In accordance with the 10.59% Senior Subordinated Notes Agreement, the
Company is obligated to pay interest semiannually and $3,325,000 of
principal annually through August 1998, with the final balance due
August 1999. The loan and security agreement with the Company's primary
lender (see Note 3) provided for the August 1994 and 1995 principal
payments and a credit line reserve for the future 1996 payment. The
note agreement (as amended) contains provisions which limit the payment
of dividends and require the maintenance of certain financial ratios.
Under the agreement, there are no dividends available for payment as of
September 30, 1995. Among other provisions, the Company must also
maintain a ratio of cash flow available for interest charges, as
defined, of 1.75 to 1. As of September 30, 1995, the Company is in
compliance with all such provisions.
The loan and security agreement with the Company's primary lender (see
Note 3) also includes a term loan in the original amount of $10 million.
Interest on the term loan is payable monthly at either the bank's prime
rate (8.75% at September 30, 1995) plus 0.5% or the prevailing LIBOR
rate (approximately 6% at September 30, 1995) plus 2.5%. In 1995, the
Company executed an interest rate "swap" agreement which effectively
fixes the term loan rate at 8.75% through its maturity. The term loan
is payable in varying monthly installments through May 2001.
Aggregate maturities of long-term debt are as follows (in thousands):
1996 $ 4,587
1997 4,841
1998 4,881
1999 2,042
2000 1,667
Thereafter 1,110
-------
$19,128
=======
<PAGE> 34
(5) INCOME TAXES:
The Company adopted FASB Statement No. 109 effective fiscal 1993. The
financial effect of this statement has been reported in the 1993 consolidated
statement of operations as the cumulative effect of a change in accounting
principle. The effect was a net increase in income of $235,046 or $.07 per
share, and a corresponding decrease in net deferred tax liability as of
October 1, 1992.
The components of net deferred tax liability recognized in the accompanying
consolidated balance sheet as of September 30, 1995, are as follows (in
thousands):
1995 1994
------- -------
U.S. current deferred tax assets
(included in other current assets) $ 1,267 $ 667
Foreign current deferred tax liability
(included in accrued liabilities) (1,071) (928)
U.S. and foreign, noncurrent deferred
tax liability (1,155) (1,145)
------- -------
Net deferred tax liability $ (959) $(1,406)
======= =======
Deferred tax assets:
Vacation pay $ 168 146
Accrued pension 147 147
Accrued legal 381
Accrued environmental costs 151 143
Accounts receivable 216 123
Foreign net operating loss carryforward 492 482
Valuation allowance (492) (482)
------- -------
Total deferred tax assets 1,063 559
------- -------
Deferred tax liabilities:
Inventories (786) (717)
Depreciation (464) (444)
Property, plant and equipment (525) (553)
Foreign dividend income (200) (200)
Other (47) (51)
------- -------
Total deferred tax liability (2,022) (1,965)
------- -------
Net deferred tax liability $ (959) $(1,406)
======= =======
It is the policy of the Company to accrue deferred income taxes on temporary
differences related to the financial statement carrying amounts and tax bases
of investments in foreign subsidiaries which are expected to reverse in the
foreseeable future. Certain undistributed earnings of foreign subsidiaries
that are essentially permanent in duration and not expected to reverse in the
foreseeable future approximate $7,600,000 as of September 30, 1995. The
determination of the unrecognized deferred tax liability for such temporary
differences is not practicable.
<PAGE> 35
The provision for income taxes (benefit) from continuing operations is
comprised of the following (in thousands):
1995 1994 1993
------ ------ ------
Current:
U.S. Federal $ 795 $ 76 $ -
State 44 70 70
Foreign 215 1,391 27
------ ------ ------
$1,054 $1,537 $ 97
------ ------ ------
Deferred:
U.S. Federal (612) 88 (29)
Foreign 696 (107) 457
------ ------ ------
84 (19) 428
------ ------ ------
$1,138 $1,518 $ 525
====== ====== ======
Foreign deferred tax provision in 1995 and benefit in 1994 is comprised
principally of temporary differences related to Mexico asset purchases.
Foreign deferred tax provision in 1993 reflects the utilization of Mexico net
operating loss carryforwards amounting to $245,000. U.S. deferred benefit in
1995 results primarily from expenses accrued but not deductible for taxes.
The Company has net operating loss carryforwards for its United Kingdom
subsidiary of approximately $1,950,000 without an expiration date.
<PAGE> 36
The differences between the provision for income taxes computed at the U.S.
statutory federal income tax rate and the provision in the consolidated
financial statements are as follows (in thousands):
1995 1994 1993
------ ------ ------
Amount computed using
the statutory rate $1,342 $1,682 $ 340
Foreign income (329) (203) (5)
State taxes, net of
federal benefit 29 46 46
Permanent differences 104 154 127
Difference between tax and book
basis of subsidiary stock - 386 -
Utilization of NOL valuation
allowance - (400) -
NOL from utilization of
foreign tax credits - (113) -
Others (8) (34) 17
------ ------ ------
Provision for income taxes $1,138 $1,518 $ 525
====== ====== ======
Permanent differences result primarily from intercompany net income that
is eliminated from the consolidated statements of operations but are
taxed in various jurisdictions.
(6) EMPLOYEE BENEFIT PLANS:
The Company maintains several defined benefit pension plans covering
substantially all union employees. The benefits are based upon fixed
dollar amounts per years of service. The assets of the various plans
(principally corporate stocks and bonds, insurance contracts and cash
equivalents) are managed by independent trustees. The policy of the
Company and its subsidiaries is to fund the minimum annual contributions
required by applicable regulations.
<PAGE> 37
The following table sets forth the plans' funded status (accumulated
benefits exceed assets in all plans) at September 30, 1995 and 1994 (in
thousands):
September 30,
1995 1994
------- -------
Actuarial present value of:
Accumulated benefit obligation $(3,366) $(3,228)
======= =======
Projected benefit obligation $(3,366) $(3,228)
Plan assets at market value 2,030 1,776
------- -------
Projected benefit obligation in excess
of plan assets (1,336) (1,452)
Unrecognized net gain from past
experience different from assumptions 441 457
Unrecognized net obligation being
recognized over periods from
10 to 16 years 800 886
------- -------
Pension liability $ (95) $ (109)
======= =======
Net periodic pension costs include the following components (in
thousands):
1995 1994 1993
----- ----- -----
Service costs - benefits earned during period $ 100 $ 99 $ 80
Interest cost on projected benefit obligation 184 179 177
Actual (return) loss on plan assets (150) 28 (147)
Net amortization and deferral 155 (44) 106
----- ----- -----
Net periodic pension cost $ 289 $ 262 $ 216
===== ===== =====
In determining the projected benefit obligation, the assumed discount
rates ranged from 6.0% to 7.5% for 1995, 4.5% to 7.5% for 1994, and 5%
to 6% for 1993. The expected long-term rates of return on assets used
in determining net periodic pension cost ranged from 7.5% to 8.5% for
1995, 7.5% to 9% for 1994, and 6% to 9% for 1993. There are no assumed
rates of increase in compensation expense in any year, as benefits are
fixed and do not vary with compensation levels.
<PAGE> 38
The Company also maintains a defined-contribution plan (401K) for all
non-union domestic employees who meet minimum service requirements.
Company contributions under the plan consist of a basic 3% of the
compensation of participants for the plan year, and for those
participants who elected to make voluntary contributions to the plan,
matching contributions up to an additional 4%, as specified in the plan.
Charges to operations for this plan for the years ended September 30,
1995, 1994 and 1993 were $552,000, $479,000, and $456,000, respectively.
In fiscal 1994, the Company adopted FASB Statement No. 106 "Employers
Accounting for Postretirement Benefits Other Than Pensions". This
statement generally requires the accrual of health care benefits and
other postretirement benefits over the course of the employees' active
service. For substantially all current employees, there are no
postretirement benefits provided, except for pension plans. The current
expenses and the effect of adopting the new statement are not material.
(7) SHAREHOLDERS' EQUITY:
The Company provides an employee stock purchase plan under which 100,000
shares of its common stock can be issued. Among the terms of this plan,
eligible employees may purchase through payroll deductions shares of the
Company's common stock up to 10% of their compensation at the lower of
85% of the fair market value of the stock on the first or last day of
the plan year (May 1 and April 30). On May 1, 1995, 1994 and 1993,
10,123, 9,305, and 10,176 shares, respectively, were issued under this
plan. At September 30, 1995, there are 31,403 shares available for
future purchases under the plan.
In addition, the Company has granted options to key employees, under the
1979 and 1988 Dixon Ticonderoga Company Executive Stock Plans to
purchase shares of its common stock at the market price on the date of
grant. Options under the 1979 Plan (as amended) become exercisable one
year after date of grant and are exercisable during a period not to
exceed ten years from date of grant. Under the 1988 Plan (as amended)
options vest 25% after one year; 25% after two years; and 50% after
three years, and remain exercisable for a period of three years from the
date of vesting. All options expire three months after termination of
employment. At September 30, 1995, there were 271,234 options
exercisable and 247,348 shares available for future grants under the
Plans. The following table summarizes the combined stock options
activity for 1995, 1994 and 1993:
<PAGE> 39
<TABLE>
<CAPTION>
1995 1994 1993
---------------- ---------------- ----------------
Number of Option Number of Option Number of Option
Shares Price Shares Price Shares Price
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Options outstanding 34,726 $4.20 54,913 $4.20 54,913 $4.20
beginning of year 39,300 4.62 39,300 4.62 39,300 4.62
53,902 4.75 81,752 4.75 81,752 4.75
21,400 5.22 21,400 5.22 21,400 5.22
2,000 5.13 2,000 5.13 2,000 5.13
7,000 8.53 7,000 8.53
36,000 7.75 39,000 7.75
2,000 6.13
Options exercised (16,969) 4.75 (20,187) 4.20 - -
(6,000) 5.22 (27,850) 4.75
(500) 5.13
(125) 7.75
Options granted 2,000 8.13 2,000 6.13 7,000 8.53
80,000 8.63 39,000 7.75
20,000 9.49
Options expired (2,000) 8.13 (3,000) 7.75 - -
or canceled (500) 7.75
(1,000) 8.63
------- ------- -------
271,234 196,328 245,365
======= ======= =======
</TABLE>
In March 1995, the Company declared a dividend distribution of one
Preferred Stock Purchase Right on each share of Company common stock.
Each Right will entitle the holder to buy one-thousandth of a share of
a new series of preferred stock at a price of $30.00 per share. The
Rights will be exercisable only if a person or group (other than the
Company's chairman, Gino N. Pala, and his family members) acquires 20%
or more of the outstanding shares of common stock of the Company or
announces a tender offer following which it would hold 30% or more of
such outstanding common stock. The Rights entitle the holders other
than the acquiring person to purchase Company common stock having a
market value of two times the exercise prices of the Right. If,
following the acquisition by a person or group of 20% or more of the
Company's outstanding shares of common stock, the Company were acquired
in a merger or other business combination, each Right would be
exercisable for that number of the acquiring company's shares of common
stock having a market value of two times of exercise prices of the
Right.
The Company may redeem the Rights at one cent per Right at any time
until ten days following the occurrence of an event that causes the
Rights to become exercisable for common stock. The Rights expire in ten
years.
<PAGE> 40
(8) GAIN ON SALE OF SUBSIDIARY STOCK AND OTHER ASSETS:
In September 1994, the Company completed an initial public offering of
the stock of its wholly-owned subsidiary, Dixon Ticonderoga de Mexico,
S.A. de C.V. ("Dixon Mexico"). The underwriter for the offering was
Casa de Bolsa Prime, S.A. de C.V. The offering represented 49.9% of the
shares of Dixon Mexico and was placed in the new Mexican Intermediate
Market. A total of 16,627,760 shares were sold at a per-share price of
N$1.35 (new pesos) in a mixed offering. Of this amount, 4,163,605
shares (or approximately 25%) were sold in a primary offering with the
net proceeds going to Dixon Mexico for working capital and/or the
reduction of cyclical bank borrowings. The balance (12,464,155 shares
or approximately 75%) represented a secondary offering of shares owned
by the Company with the net proceeds going to reduce U.S. debt.
The net proceeds (after underwriting commissions and related expenses)
were approximately N$5 million from the primary offering and N$16
million from the secondary offering (or U.S. $1.4 million and U.S. $4.7
million, respectively). Proceeds from the offering (after taxes of
approximately U.S. $1.0 million) reduced the Company's consolidated debt
(net of cash balances) by approximately U.S. $5 million. The net after-
tax gain from the transaction was approximately U.S. $1.6 million. (The
gain on sale of company-owned shares was approximately U.S. $970,000 and
on the sale of new shares in the subsidiary was U.S. $630,000).
The Underwriting Agreement between the Company, Dixon Mexico and Casa de
Bolsa Prime, S.A. de C.V., provided for a firm offering of shares as
described above at the per-share price of N$1.35, less underwriting
commissions of 5%, plus other customary expenses. Prior to the
offering, there were no relationships between Casa de Bolsa Prime, S.A.
de C.V. and either the Company or Dixon Mexico.
After the successful completion of the offering, the Company maintained
50.1% controlling ownership of Dixon Mexico and five of nine seats on
its board of directors. The remaining four seats on the Dixon Mexico
board of directors will be held by designees of Casa de Bolsa Prime,
S.A. de C.V. or other investors having a minimum of 10% ownership in
Dixon Mexico.
To protect the continuing business relationships between the Company and
Dixon Mexico and ensure the continuity of management planning,
development and administration of the operation, the Company executed a
trademark license agreement and various other business agreements with
Dixon Mexico.
The trademark license agreement is for a minimum term of ten years. All
other agreements are for a minimum term of five years. In return for
the rights, services and assistance provided by the Company under these
agreements, Dixon Mexico will pay to the Company a total fee of 1.5% of
its total monthly sales.
<PAGE> 41
Also in fiscal 1994, the Company sold idle property in Westampton, New
Jersey, generating net proceeds of $460,000 (which approximated its net
book value), as well as certain idle equipment. In addition, the
Company expensed approximately $300,000 to provide for contingencies
related to a previous sale of property.
In fiscal 1993, the Company sold idle property in Ticonderoga, New York,
generating net proceeds of approximately $397,000. This sale resulted
in an aggregate gain of approximately $371,000.
(9) EARNINGS PER COMMON SHARE:
Earnings per common share have been computed based upon the total
weighted average number of common shares outstanding (3,180,626,
3,114,538, and 3,096,324 in 1995, 1994 and 1993, respectively).
(10) DISCONTINUED OPERATIONS:
Pursuant to a formal plan and agreement dated September 29, 1995, the
Company transferred the remaining property and its developmental rights
dedicated to the Bryn Mawr Ocean Towers Condominium project to its
Association. Discontinued operations in 1995 reflect a loss on disposal
of $420,000 (net of a tax benefit of $250,000).
The Real Estate segment is being accounted for as a discontinued
operation as of September 30, 1995, and, accordingly, its operating
results are reported in this manner in all years presented in the
accompanying Consolidated Financial Statements and related data.
Revenues of the Real Estate segment were $135,000 in 1994. There were
no revenues in 1995 or 1993. Net real estate operating losses were
$279,000, $126,000 and $146,000 in 1995, 1994 and 1993, respectively.
Related income tax benefits were $104,000 and $10,000 in 1995 and 1994,
respectively.
<PAGE> 42
(11) LINE OF BUSINESS REPORTING:
The Company has three principal lines of business -- Consumer Products,
Industrial Graphite and Lubricants and Refractory Products. The
following information sets forth certain data pertaining to each line of
business as of September 30, 1995, 1994 and 1993, and for the years then
ended (in thousands).
Industrial
Graphite
Consumer and Refractory Total
Products Lubricants Products Company
-------- ---------- ----------- -------
Net
revenues:
1995 $70,451 $12,375 $12,739 $95,565
1994 $68,025 $12,163 $11,745 $91,933
1993 $59,872 $12,514 $ 9,752 $82,138
Operating
profits:
1995 $ 6,597 $ 2,698 $ 1,076 $10,371
1994 $ 5,453 $ 2,738 $ 704 $ 8,895
1993 $ 3,321 $ 2,654 $ 202 $ 6,177
Certain corporate expenses have been allocated based upon respective
segment sales. Interest expense was $3,653, $4,330 and $4,136;
litigation settlements and related costs were $1,530 in 1995; general
corporate expenses were $1,241, $1,931 and $1,411 in 1995, 1994 and 1993
respectively; gains on sales of assets were $2,313 in 1994 and $371 in
1993, resulting in income from continuing operations before income taxes
of $3,947, $4,947, and $1,001 in 1995, 1994 and 1993, respectively.
Industrial
Graphite
Consumer and Refractory Total
Products Lubricants Products Company
-------- ---------- ----------- -------
Identifiable
assets:
1995 $51,373 $ 9,376 $ 4,425 $65,174
1994 $51,090 $ 8,979 $ 4,576 $64,645
1993 $45,944 $ 8,931 $ 4,699 $59,574
Corporate assets were $4,984, $3,423, and $3,468, at September 30, 1995,
1994 and 1993, respectively. Assets of discontinued operations were
$783 and $904 at September 30, 1994 and 1993, respectively.
<PAGE> 43
Industrial
Graphite
Consumer and Refractory Total
Products Lubricants Products Company
-------- ---------- ----------- -------
Depreciation and
amortization:
1995 $ 1,347 $ 207 $ 249 $ 1,803
1994 $ 1,578 $ 204 $ 233 $ 2,015
1993 $ 1,845 $ 180 $ 278 $ 2,303
Expenditures for
plant and equipment:
1995 $ 1,029 $ 203 $ 258 $ 1,490
1994 $ 898 $ 382 $ 322 $ 1,602
1993 $ 1,904 $ 298 $ 150 $ 2,352
Corporate depreciation and amortization were $577, $487, and $401 for
the years ended September 30, 1995, 1994 and 1993, respectively.
Corporate expenditures for equipment were $1,601, $89, and $389 in 1995,
1994 and 1993, respectively.
Foreign operations:
Operating Identifiable
Revenues Profits Assets
-------- --------- ------------
1995:
Canada $ 7,623 $ 576 $ 6,839
Mexico 7,588 2,997 8,085
United Kingdom 839 (40) 648
1994:
Canada $ 7,087 $ 180 $ 4,433
Mexico 10,551 2,431 10,475
United Kingdom 617 (62) 483
1993:
Canada $ 7,255 $ (128) $ 4,441
Mexico 8,800 2,233 7,789
United Kingdom 393 (91) 397
<PAGE> 44
(12) COMMITMENTS AND CONTINGENCIES:
Under an agreement with Warner Bros. Consumer Products, the Company
manufactures and markets in the U.S. and Canada a complete line of
products featuring the famous Looney Tunes characters. Under the terms
of the agreement, the Company is obligated to pay a total of $536,000
through 1996 for the right to market and sell all types of pencils,
pens, crayons, chalks, markers, paints, art kits and related items.
Through fiscal 1995, the Company has prepaid $364,000 (of which
approximately $306,000 was earned by Warner Bros.).
In 1995, the Company entered into employment agreements with two
executives which provide for the continuation of salary (currently
aggregating $27,500 per month) and related employee benefits for a
period of 24 months following their termination of employment under
certain changes in control of the Company. In addition, all options
held by the executives would become immediately exercisable upon the
date of termination and remain exercisable for 90 days thereafter.
In 1995, the Company incurred approximately $1.5 million towards the
completion of a new corporate headquarters facility. The total
estimated cost of the project, scheduled for completion in fiscal 1996,
is $3.4 million.
The Company in the normal conduct of its business, is a party in certain
litigation. In addition, ongoing litigation includes a claim under New
Jersey's Environmental Clean-Up Responsibility Act (ECRA) by a 1984
purchaser of industrial property from the Company. In 1995, the Company
provided approximately $1.5 million for settlement and related legal
costs associated with three separate lawsuits, including the
aforementioned ECRA claim. The net after-tax provision relating to
these lawsuits is $960,000 (or 30 cents per share). The Company has
evaluated the merits of these cases and other litigation and believes
their outcome will not have a further material effect on the Company's
future results of operations or financial position.
The Company is aware of several environmental matters related to certain
facilities. The Company assesses the extent of these matters on an
ongoing basis. In the opinion of management (after taking into account
accruals), the resolution of these matters will not materially affect
the Company's future results of operations or financial position.
In conjunction with the sale of a discontinued business in a previous
year, the Company guaranteed a loan to the buyer. The loan balance is
approximately $340,000 as of September 30, 1995. In the opinion of
management, the guarantee will not ultimately have any material effect
on the Company's future results of operations or financial position.
<PAGE> 45
(13) SUMMARY OF QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (In Thousands,
Except Per Share Data):
1995: First Second Third Fourth
---- ----- ------ ----- ------
Revenues $21,393 $19,371 $28,446 $26,355
Operating income 1,373 1,623 3,181 2,953
Income before taxes 618 784 2,185 360*
Minority interest (58) (332) (154) (607)
Discontinued operations (20) (30) (100) (445)
Net income 302 140 1,185 (564)*
Earnings per share .10 .04 .37 (.18)*
1994: First Second Third Fourth
---- ----- ------ ----- ------
Revenues $18,431 $19,472 $27,916 $26,113
Operating income 991 1,078 2,561 2,334
Income before taxes 72 163 1,416 3,296**
Minority interest -- -- -- (11)
Discontinued operations (36) (27) (27) (26)
Net income 27 29 1,001 2,244**
Earnings per share .01 .01 .31 .71**
* Reflects provision for litigation settlements and related costs as
described in Note 12.
** Reflects the gain on sale of subsidiary stock and other assets as
described in Note 8.
<PAGE> 46
DIXON TICONDEROGA COMPANY AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE YEARS ENDED SEPTEMBER 30, 1995, 1994 AND 1993
Deductions
Balance at Additions From Balance
Beginning Charged Reserves at Close
Description of Period to Income (1) of Period
----------- ---------- --------- ---------- ---------
ALLOWANCE FOR DOUBTFUL
ACCOUNTS:
Year ended
September 30, 1995 $ 564,905 $ 421,850 $ 190,040 $ 796,715
========= ========= ========= =========
Year ended
September 30, 1994 $ 610,427 $ 198,647 $ 244,169 $ 564,905
========= ========= ========= =========
Year Ended
September 30, 1993 $ 581,447 $ 220,125 $ 191,145 $ 610,427
========= ========= ========= =========
(1) Write-off of accounts considered to be uncollectible (net of
recoveries).
<PAGE> 47
CONSENT OF INDEPENDENT ACCOUNTANTS
Shareholders and Board of Directors of
Dixon Ticonderoga Company
We consent to the incorporation by reference into the previously filed
registration statements of Dixon Ticonderoga Company on Form S-8 (File Nos.
33-20054 and 33-23380) of our report, dated November 30, 1995, on our audit
of the consolidated financial statements and financial statement schedule of
Dixon Ticonderoga Company as of September 30, 1995, 1994 and 1993, and for
the years then ended, which report is included in this Annual Report on Form
10-K.
COOPERS & LYBRAND L.L.P.
Orlando, Florida
December 15, 1995
<PAGE> 48
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURES
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Information required under this Item with respect to Directors will be
contained in the Company's 1995 Proxy Statement, pursuant to Regulation 14A,
which is incorporated herein by reference.
The following table sets forth the names and ages of the Company's
Executive Officers, together with all positions and offices held with the
Company by such Executive Officers. All Executive Officers are subject to
re-election or re-appointment by the Board of Directors at the first
Directors' Meeting succeeding the next Annual Meeting of shareholders.
Name Age Title
---- --- -----
Gino N. Pala 67 Chairman of the Board since February
(Father-in-law of 1989; President and Chief Executive
Richard F. Joyce) Officer since July 1985; prior
thereto President and Co-chief
Executive Officer since 1978.
John F. Millar 59 Executive Vice President/Industrial
Division since November 1985; prior
thereto Treasurer since September
1983; prior thereto Treasurer of the
Joseph Dixon Crucible Company since
July 1977.
Richard A. Asta 39 Executive Vice President of Finance
and Chief Financial Officer since
February 1991; prior thereto Senior
Vice President - Finance and Chief
Financial Officer since March 1990.
Richard F. Joyce 40 Vice Chairman of the Board since
(Son-in-law of January 1990; Executive Vice
Gino N. Pala) President and Chief Legal Executive
since February 1991; prior thereto
Corporate Counsel since July 1990.
<PAGE> 49
Name Age Title
---- --- -----
Leonard D. Dahlberg, Jr. 44 Executive Vice President of
Manufacturing/Consumer Products
Division since August 1995; prior
thereto Senior Vice President of
Manufacturing since February 1993;
prior thereto Vice President of
Manufacturing since March 1990; prior
thereto Vice President and director
of corporate purchasing since
September 1985.
Kenneth A. Baer 49 Treasurer since November 1985; prior
thereto Assistant Secretary and
Treasurer since September 1983.
Laura Van Camp 44 Secretary since January 1986; prior
thereto secretary to President and
Chief Executive Officer since
February 1982.
John Adornetto 54 Vice President and Corporate
Controller since January 1991; prior
thereto Corporate Controller since
September 1978.
Arthur Frederickson 59 Executive Vice President of Sales and
Marketing/Consumer Products Division
since August 1995; prior thereto
Senior Vice President of Sales and
Marketing since October 1992; prior
thereto Senior Vice President of
Sales since May 1991; prior thereto
Director of Sales/Western Region
since January 1990; prior thereto
Western Regional Manager since April
1989.
Richard H. D'Antonio 47 Vice President of Information
Services since October 1993; prior
thereto Principal of RHD Management
Consulting since May 1990.
<PAGE> 50
ITEM 11. EXECUTIVE COMPENSATION
Information required under this Item will be contained in the
Company's 1995 Proxy Statement which is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Information required under this Item will be contained in the
Company's 1995 Proxy Statement which is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required under this Item will be contained in the
Company's 1995 Proxy Statement which is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K
(a) Documents filed as part of this report:
1. Financial statements
See index under Item 8. Financial Statements and Supplementary Data.
2. Exhibits
The following exhibit is required to be filed as part of this annual
report, on Form 10-K:
(21) Subsidiaries of the Company.
(b) Reports on Form 8-K:
None.
<PAGE> 51
SIGNATURES
----------
Pursuant to the requirements of Section 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Annual Report on Form
10-K to be signed on its behalf by the undersigned, thereunto duly
authorized.
DIXON TICONDEROGA COMPANY
/s/ Gino N. Pala
---------------------------
Gino N. Pala, President and
Chief Executive Officer
Pursuant to the Securities Exchange Act of 1934, this Annual Report on
Form 10-K has been signed below by the following persons on behalf of the
Company in the capacities indicated.
/s/ Gino N. Pala Chairman of Board, President, Chief
- -------------------------------- Executive Officer and Director
Gino N. Pala
/s/ Richard F. Joyce Vice Chairman, Executive Vice President/
________________________________ Corporate Counsel and Director
Richard F. Joyce
/s/ Richard A. Asta Executive Vice President of Finance,
- -------------------------------- Chief Financial Officer and Director
Richard A. Asta
Director
- --------------------------------
Fred H. Hawkins
Director
- --------------------------------
Bobby Brantley
/s/ John E. Ramondo Director
- --------------------------------
John E. Ramondo
/s/ Joseph R. Sadowski Director
- --------------------------------
Joseph R. Sadowski
/s/ Philip M. Shasteen Director
- --------------------------------
Philip M. Shasteen
/s/ Samuel B. Casey, Jr. Director
- --------------------------------
Samuel B. Casey, Jr.
/s/ Ben Berzin, Jr. Director
- --------------------------------
Ben Berzin, Jr.
<PAGE> 52
DIXON TICONDEROGA COMPANY AND SUBSIDIARIES
EXHIBIT (21)
TO
1995 ANNUAL REPORT ON FORM 10-K
SUBSIDIARIES OF THE COMPANY
All of the Company's subsidiaries as of September 30, 1995, are listed
below. All subsidiaries are included in the consolidated financial
statements of the Company.
State Or Percentage of
Jurisdiction Voting
Of Organization Securities Owned
--------------- ----------------
Bryn Mawr Ocean Resorts, Inc. (a) Florida 100%
Dixon Ticonderoga, Inc. Ontario, Canada 100%
Dixon Ticonderoga Company
de Mexico, S.A. de C.V.
(subsidiary of Dixon
Ticonderoga, Inc.) Mexico 50.1%
Ticonderoga Graphite Inc. (a) New York 100%
Dixon Europe, Limited United Kingdom 100%
(a) Inactive
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheets, the Consolidated Statement of Operations and the
Consolidated Statement of Cash Flows, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,513,622
<SECURITIES> 0
<RECEIVABLES> 18,999,256
<ALLOWANCES> 796,715
<INVENTORY> 32,638,385
<CURRENT-ASSETS> 55,044,955
<PP&E> 30,797,396
<DEPRECIATION> 17,299,617
<TOTAL-ASSETS> 70,157,844
<CURRENT-LIABILITIES> 36,133,874
<BONDS> 0
<COMMON> 3,448,466
0
0
<OTHER-SE> 11,783,957
<TOTAL-LIABILITY-AND-EQUITY> 70,157,844
<SALES> 95,565,000
<TOTAL-REVENUES> 95,565,000
<CGS> 62,193,918
<TOTAL-COSTS> 62,193,918
<OTHER-EXPENSES> 24,241,328
<LOSS-PROVISION> 1,530,377
<INTEREST-EXPENSE> 3,652,824
<INCOME-PRETAX> 3,946,553
<INCOME-TAX> 1,137,897
<INCOME-CONTINUING> 1,657,966
<DISCONTINUED> (594,923)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,063,043
<EPS-PRIMARY> .33
<EPS-DILUTED> .33
</TABLE>
