<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
February 16, 1998
- ------------------------------------------------------------------------------
Dixon Ticonderoga Company
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-2655 23-0973760
- ------------------------------------------------------------------------------
(State or the Jurisdiction (Commission (IRS Employer Identification
of incorporation) File Number) Number)
195 International Parkway, Heathrow, FL 32746
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (407) 829-9000
<PAGE>
<PAGE> 2
ITEM 2. Acquisition or Disposition of Assets
- ---------------------------------------------
On December 12, 1997, Dixon Ticonderoga Company's publicly held Mexican
subsidiary, Dixon Ticonderoga de Mexico, S.A. de C.V. ("Dixon Mexico") completed
its acquisition of all the capital stock of Vinci de Mexico, S.A. de C.V.,
("Vinci") and certain assets of a related entity, for a total purchase price of
28.3 million pesos (or $3.5 million) in cash. The acquisition was financed
entirely through Dixon Mexico's on-hand cash and cash equivalents.
Dixon Mexico acquired the capital stock and assets from Grupo Ifam, S.A. de
C.V. and Guillermo Almazan Cueto. Dixon Ticonderoga Company and Dixon Mexico
had no prior relationship with the sellers.
Vinci, a 50-year-old company with average annual revenues during the past five
years of U.S. $8 million, manufactures and markets artist paints, chalks,
modeling clay and crayons, as well as geometric sets, rulers and compasses. It
operates a 50,000 square-foot manufacturing facility in Mexico City and
currentlyemploys about 200 people. The assets acquired include manufacturing
equipment which will continue to be utilized in the manufacture of all the
aforementioned product lines. The Vinci brand name is well-known among
consumers and educators in Mexico and elsewhere in Latin America. Management
believes its products complement those currently sold by Dixon Mexico.
Dixon Mexico manufactures wood-case graphite and coloring pencils, crayons,
chalks, markers, erasers and allied products. It operates a 55,000 square-foot
manufacturing facility in Tlalnepantla, D.F., Mexico and employs approximately
375 people in manufacturing, distribution, marketing and administrative
operations. Dixon Mexico has 33 million shares outstanding, of which Dixon
Ticonderoga Company owns 80%. The shares are traded on the Mexican Intermediate
Market.<PAGE>
<PAGE> 3
ITEM 7. Financial Statements and Exhibits PAGE
- ------------------------------------------ ----
(a) Financial statements for business acquired:
Vinci de Mexico, S.A. de C.V., Financial Statements
or the Year Ended December 31, 1996:
Report of Independent Accounts 4
Balance Sheet 5
Statement of Income 6
Statement of Stockholders' Equity 7
Statement of Changes In Financial Position 8
Notes to Financial Statements 9 - 19
Vinci De Mexico, S.A. de C.V.,
Financial Statements for the Nine Months
Ended September 30, 1997 (Unaudited):
Balance Sheet 20
Statement of Income 21
(b) Pro forma financial information:
Introduction 22
Unaudited Pro Forma Condensed Balance Sheet
as of September 30, 1997 23
Unaudited Pro Forma Condensed Statement of
Operations for the Year Ended September 30, 1997 24
Notes to Unaudited Pro Forma Condensed
Financial Statements 25
(c) Exhibits
The following exhibit is required to be filed as part of this report on
Form 8-K/A:
(2) Share Purchase Agreement by and among Dixon Ticonderoga de Mexico,
S.A. de C.V. and by Grupo Ifam, S.A. de C.V. and Guillermo Almazan
Cueto with respect to the capital stock of Vinci de Mexico, S.A. de
C.V. (English translation).*
(23)Consent of Independent Accountants 27
* Incorporated by reference to the Company's current report on Form 8-K
dated December 12, 1997, filed in Washington, D.C.
<PAGE>
<PAGE>
Translation of a report originally issued in Spanish.
(See Note 1 to the Financial Statements)
To The Stockholders of
Vinci de Mexico, S. A. de C. V.:
We have audited the accompanying balance sheet of VINCI DE MEXICO, S.
A. DE C. V. as of December 31, 1996, and the related statements of income,
stockholders' equity and changes in financial position for the year then ended.
These financial statements are the responsibility of the Company's Management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform our 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 statements presentation.
We believe that our audit provides a reasonable basis for our opinion.
As mentioned in Note 3 a), starting in 1996, the Company fully recognizes the
effects of inflation on the financial information.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Vinci de Mexico, S. A. de C.
V. as of December 31, 1996, and the results of its operations, changes in
stockholders' equity and the changes in its financial position for the year then
ended, in conformity with generally accepted accounting principles in Mexico.
The translated financial statements in U.S. dollars as of December 31, 1996,
are presented for purposes of additional analysis and are not a required part
of the basic financial statements referred to above. We have reviewed such
translation into U.S. dollars and, in our opinion, the translated amounts have
been properly computed on the basis set forth in Note 1 to the financial
statements.
SALLES, SAINZ Y CIA., S. C.
/s/ C.P. Manuel Sainz M.
__________________________
C.P. Manuel Sainz M.
Mexico, D. F.
March 14, 1997
<PAGE>
<PAGE>
VINCI DE MEXICO, S. A. DE C.V.
Balance Sheet as of December 31, 1996
Expressed In Terms Of The Purchasing Power
Of The Mexican Peso As Of That Date
Mexican U.S. Dollars
CURRENT ASSETS: Pesos (Note 1)
Cash and marketable securities $ 2,061,470 $ 262,578
Accounts receivable 12,066,244 1,536,925
Inventories 9,746,698 1,241,475
___________ ___________
Total current assets 23,874,412 3,040,978
MACHINERY AND EQUIPMENT, net 16,495,504 2,101,097
OTHER ASSETS 901,704 114,854
___________ ___________
$41,271,620 $ 5,256,929
=========== ===========
CURRENT LIABILITIES:
Bank loans $11,028,225 $1,404,708
Affiliated companies 5,028,115 640,451
Trade 3,983,917 507,447
Vinci A.G. 2,424,730 308,847
Other accounts payable & accrued
liabilities 494,876 63,034
Taxes payable 4,969,837 633,028
_________ __________
Total current liabilities $27,929,700 $3,557,515
STOCKHOLDERS' EQUITY:
Capital stock $60,477,298 $7,703,231
Contributions-future increase of
capital stock 879 112
Retained earnings
Legal reserve 896,916 114,244
Unappropriated 14,844,567 1,890,811
Net loss for the year (13,666,378) (1,740,740)
___________ __________
2,075,105 264,315
Accumulated effect of restatement (49,211,362) (6,268,244)
___________ __________
Total stockholders' equity 13,341,920 1,699,414
___________ __________
$41,271,620 $5,256,929
=========== ==========
The accompanying notes are an integral part of this balance sheet.
<PAGE>
<PAGE>
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
EXPRESSED IN TERMS OF THE PURCHASING POWER
OF THE MEXICAN PESO AS OF THAT DATE
MEXICAN U.S. DOLLARS
PESOS (Note 1)
NET SALES $46,920,426 $5,976,439
COST OF SALES 35,470,034 4,517,958
___________ __________
Gross Profit 11,450,392 1,458,481
OPERATING EXPENSES 15,592,380 1,986,062
___________ __________
Operating Loss (4,141,988) (527,581)
INTEGRAL COST OF FINANCING
Interest paid 6,249,180 795,983
Interest gain (305,350) (38,894)
Loss on exchange fluctuations 1,367,876 174,232
Gain on exhange fluctuations (1,290,244) (164,343)
Gain on monetary position (1,723,801) (219,568)
____________ __________
4,297,661 547,410
____________ __________
OTHER EXPENSES (INCOME)
Other expenses 5,018,365 639,209
Other income (729,601) (92,932)
___________ __________
4,288,764 546,277
___________ __________
Loss before provision
for asset tax (12,728,413) (1,621,268)
PROVISIONS FOR ASSET TAX 937,965 119,472
___________ __________
Net loss for the period $(13,666,378) $(1,740,740)
============ ===========
<PAGE>
<PAGE>
VINCI DE MEXICO, S. A. DE C.V.
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1996
EXPRESSED IN TERMS OF THE PURCHASING POWER
OF THE MEXICAN PESO AS OF THAT DATE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Contibutions
for future Retained earnings Accumulated
Capital increase of Legal Unappropriated effect of
stock capital stock reserve earnings restatement Total
- ------------------------------------------------------------------------------------------------------------------------
MEXICAN PESOS
BALANCE AS OF DEC. 31, 1995 $41,751,448 $ -- $896,916 $ 17,781,667 $(50,093,980) $10,336,051
Correction to inventories
valuation of prior years -- -- -- (2,937,100) --
(2,937,100)
Contributions for the year 18,725,850 879 -- -- -- 18,726,729
Net loss for the year -- -- -- (13,666,378) --
(13,666,378)
Recognition of the effects
of inflation for the year -- -- -- -- 882,618 882,618
___________ ____________ ________ ___________ ____________ ___________
BALANCE AS OF DEC. 31, 1996 $60,477,298 $ 879 $896,916 $ 1,178,189 $(49,211,362) $13,341,920
=========== ============ ======== ============ ============= ===========
U.S. DOLLARS (NOTE 1)
BALANCE AS OF DEC. 31, 1995 $ 5,318,046 $ -- $114,244 $ 2,264,921 $ (6,380,667) $ 1,316,544
Correction to inventories
valuation of prior years -- -- -- (374,110) -- (374,110)
Contributions for the year 2,385,185 112 -- -- -- 2,385,297
Net loss for the year -- -- -- (1,740,740) -- (1,740,740)
Recognition of the effects
of inflation for the year -- -- -- -- 112,423 112,423
___________ ____________ ____________ ____________ ____________ ___________
BALANCE AS OF DEC. 31, 1996 $ 7,703,231 $ 112 $114,244 $ 150,071 $ (6,268,244) $ 1,699,414
=========== ============ ============ ============ ============ ===========
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE>
<PAGE>
STATEMENT OF CHANGES IN FINANCIAL POSITION
FOR THE YEAR ENDED DECEMBER 31, 1996
EXPRESSED IN TERMS OF THE PURCHASING POWER
OF THE MEXICAN PESO AS OF THAT DATE
U.S.
MEXICAN DOLLARS
PESOS (Note 1)
_____________ ____________
OPERATIONS
Net loss for the year $ (13,666,378) $ (1,740,740)
Add-Charges to income which did
not require outlay of funds:
Depreciation and amortization 1,523,737 194,084
Provision for doubtful accounts 5,012,000 638,398
Provision for slow moving inventories 300,000 38,212
_____________ ____________
(6,830,641) (870,046)
(Increase) decrease in working capital:
Accounts receivable 4,019,967 512,039
Inventories 776,141 98,860
Affiliated companies 1,769,308 225,364
Trade (154,768) (19,713)
Vinci, A.G. (605,904) (77,176)
Other accounts payable
and accrued liabilities (3,361,706) (428,194)
Taxes payable 1,834,201 233,629
_____________ ____________
Resources applied in operations (2,553,402) (325,237)
FINANCING
Contributions of capital stock 18,726,729 2,385,297
Increase in bank loans, net of payments (15,811,696) (2,013,998)
_____________ ____________
Resources obtained from
financing activity 2,915,033 371,299
INVESTMENT
Retirements of machinery/equipment net 592,123 75,421
Decrease in other assets 1,095,865 139,585
_____________ ____________
Resources obtained from
investment activity 1,687,988 215,006
_____________ ____________
Increase in cash and marketable
securities during the year $ 2,049,619 $ 261,068
============= ============
<PAGE>
<PAGE>
Translation of financial statements originally issued in Spanish
VINCI DE MEXICO, S. A. DE C. V.
NOTES TO FINANCIAL STATEMENTS AS OF DECEMBER 31, 1996
EXPRESSED IN TERMS OF THE PURCHASING POWER
OF THE MEXICAN PESO AS OF THAT DATE
(Stated in Mexican Pesos and U.S. Dollars)
(1) Explanation added for translation into English:
These financial statements are presented on the basis of generally accepted
accounting principles in Mexico. Certain accounting practices applied by the
Company that conform with generally accepted accounting principles in Mexico do
not concur with generally accepted accounting principles in the United States.
The principal differences in this regard consist of the recognition of the
effects of inflation on the financial information in Mexico, as well as the
application of the partial method of recognizing deferred income taxes.
The translation to U.S. dollars was made by applying the current exchange
rate at the end of the year to all the accounts. As of December 31, 1996, the
exchange rate was $7.85 Mexican pesos per dollar.
(2) Activities:
The Company is engaged in the manufacturing of school supplies, as well as
paints and colors for students and artists.
(3) Significant accounting policies:
The significant accounting policies followed by the Company, which are in
accordance with generally accepted accounting principles in Mexico, are as
follows:
a) Recognition of the effects of inflation in the financial statements
Starting in 1996, the Company fully recognizes the effects of inflation on
the financial information, in conformity with the normative provisions
contained in Bulletin B-10, hence, the amounts presented in the accompanying
financial statements and their notes are stated in Mexican pesos of purchasing
power as of the end of the year.
<PAGE>
<PAGE>
The items derived from the recognition of the effects of inflation are
shown below:
INVENTORIES
Inventories are priced at average cost which does not exceed market value.
The charges to the cost of sales are made under the same method. Inventories are
restated by applying the factors derived from the National Consumer Price Index
(NCPI) published by the Central Bank of Mexico.
MACHINERY AND EQUIPMENT
Machinery and equipment are recorded originally at their cost of
acquisition. The Company annually restates its fixed assets by applying the
factors derived from the NCPI to both cost and accumulated depreciation.
Depreciation is computed under the straight-line method on the basis of the
useful lives of the assets, at the annual rates shown below:
Machinery and equipment 10%
Molds and dies 35%
Computer equipment 25% and 30%
Furniture and fixtures 10%
RESTATEMENT OF CAPITAL STOCK AND RETAINED EARNINGS
The restatement of capital stock and retained earnings was determined by
applying the factors derived from the NCPI. This restatement represents the
amount necessary to convert stockholders' contributions and retained earnings
to Mexican pesos equivalent to those of the year-end.
The restatement of capital stock and retained earnings was distributed among
each one of the headings derived therefrom, consequently, each one is presented
summarized by the sum of its nominal value and its related restatement, as shown
below:
Nominal
values Restatement Total
MEXICAN PESOS
Capital stock $ 23,175,000 $ 37,302,298 $ 60,477,298
Contributions for future
increase of capital stock 879 - 879
Legal reserve 25,000 871,916 896,916
Unappropriated earnings (16,278,649) 17,456,838 1,178,189
Accumulated effect
of restatement - (49,211,362) (49,211,362)
----------- ------------ ------------
$ 6,922,230 $ 6,419,690 $ 13,341,920
=========== ============ ============
<PAGE>
<PAGE>
U. S. DOLLARS
Capital stock 2,951,891 4,751,340 7,703,231
Contributions for future
increase of capital stock 112 - 112
Legal reserve 3,184 111,059 114,244
Unappropriated earnings (2,073,476) 2,223,546 150,071
Accumulated effect
of restatement - (6,268,244) (6,268,244)
--------- ---------- ----------
881,712 817,702 1,699,414
========= ========== ==========
RESTATEMENT OF INCOME FOR THE YEAR
The items making up the statement of income were restated by inflation
factors required to state them at Mexican pesos of purchasing power of the
current year-end, as shown below:
MEXICAN PESOS U.S. DOLLARS
Values Values
Restated Nominal Restated
Nominal
Net sales $ 46,920,426 $ 42,584,523 5,976,439 5,424,158
Cost of sales 35,470,034 32,204,726 4,517,958 4,102,043
------------ ----------- --------- ---------
Gross profit 11,450,392 10,379,797 1,458,481 1,322,115
Operating expenses 15,592,380 13,335,189 1,986,062 1,698,555
------------ ----------- --------- ---------
Operating loss (4,141,988) (2,955,392) (527,581) (376,440)
Integral cost-
financing 4,297,661 3,518,284 547,410 448,138
Other expenses 4,288,764 4,374,349 546,277 557,178
------------ ----------- --------- ---------
Loss before
provision (12,728,413) (10,848,025) (1,621,268)(1,381,756)
Provision for
asset tax 937,965 937,965 119,472 119,472
------------ ----------- --------- ---------
Net loss for
the year $(13,666,378) $ (11,785,990) (1,740,740)(1,501,228)
============ =========== ========= ===========
<PAGE>
<PAGE>
GAIN ON MONETARY POSITION
The gain on monetary position represented an income in the amount of
$1,723,801 (U.S. dollars 219,568) which was determined by applying the inflation
factor derived from the NCPI to the initial monthly monetary position. The total
gain on monetary position is presented in the statement of income as part of the
integral cost of financing.
ACCUMULATED EFFECT OF RESTATEMENT
The balance of this account represents the difference resulting between the
restatement of inventories and machinery and equipment, compared with the
restatement of capital stock and retained earnings, by applying the NCPI.
b) Marketable securities
Investments in marketable securities are recorded at market value.
c) Deferred or prepaid income tax and employee profit sharing
The prepaid or deferred effect of items which accrual or deduction for tax
purposes and profit sharing are recognized in years in the short-term, other
than the year of their book recognition, is not recorded inasmuch as this
effect is not significant.
As of December 31, 1996, there are temporary items that will generate
increase or decrease in income tax and employee profit sharing in future years
which have not been recorded, due to the fact that the turnaround time in which
they should be applied for tax purposes is not known. Of these temporary
differences the most significant one is represented by the difference between
the deduction of purchases and the cost of sales recorded.
d) Labor obligations
Bulletin D-3 "Labor Obligations", issued by the Mexican Institute of Public
Accountants, A.C. sets forth the recognition of labor obligations derived from
formal and informal plans, with regard to remuneration's that will be paid to
the workers or their benefits resulting from pension plans, seniority premiums,
and any other remuneration established at the conclusion of the labor relation
or starting at that moment.
The recognition of these labor obligations implies the quantification of
the net cost of the period, that is, of the amount that will affect the income
(loss) for the year, as well as the determination of the liability accumulated
at the date for each and every one of the workers eligible in the remuneration
plans at retirement that have been established.
<PAGE>
<PAGE>
INDEMNIFICATIONS
The Company has a contingent liability for indemnifications payable to
personnel that retires under certain circumstances. The Company follows the
policy of expensing the payments for this item at the moment they are made.
At December 31, 1996, the Company has established a formal plan for payment
of indemnifications to its personnel, in the event of a voluntary retirement,
which is managed by Fideicomisos Bancomer, S.A.
The relevant information obtained from the actuarial study as of December
31, 1996, is shown below:
MEXICAN PESOS U.S. DOLLARS
Obligations for projected benefits $ 1,060,564 135,088
Obligations for current benefits 1,015,107 129,298
Assets of the plan 1,194,271 152,119
Transition assets 23,716 3,021
Projected net liability 109,991 14,012
Net cost for the period 23,636 3,011
Probable labor life 13 13
SENIORITY PREMIUMS
In accordance with the Federal Labor Law, the Company has a labor
liability for seniority premiums payable to employees who have completed 15 or
more years of service. In conformity with Bulletin D-3 "Labor Obligations", the
Company proceeded, based on actuarial calculations, to make the contributions
to the fund it has established for paying seniority premiums which is managed
by Fideicomisos Bancomer, S. A. The relevant information obtained from the
actuarial study as of December 31, 1996, is shown below:
MEXICAN PESOS U.S. DOLLARS
Obligations for projected benefits $ 467,777 59,583
Obligations for current benefits 446,373 56,856
Assets of the plan 511,830 65,194
Transition assets 15,250 1,942
Projected net liability 28,803 3,669
Net cost for the period 448 57
Probable labor life 13 13
e) Exchange fluctuations
Foreign currency transactions are recorded at the exchange rates in effect
when they occur. All foreign currency denominated assets and liabilities are
adjusted at the end of the year based on the exchange rate in effect as of that
date. Exchange fluctuations are considered as a part of the integral cost of
financing in the statement of income.<PAGE>
<PAGE>
(4) Classification of accounts receivable:
MEXICAN U.S.
PESOS DOLLARS
Trade receivables $ 16,190,773 2,062,282
Other receivables 12,349 1,573
Asset tax recoverable 142,991 18,213
Value added tax recoverable 707,741 90,148
Officers and employees 24,390 3,107
____________ _________
17,078,244 2,175,323
Less - Allowance for doubtful accounts 5,012,000 638,398
____________ _________
$ 12,066,244 1,536,925
============ =========
(5) Integration of inventories:
MEXICAN U.S.
PESOS DOLLARS
Raw materials $ 2,737,309 348,662
Work in process 1,006,377 128,186
Finished goods 4,785,297 609,522
Tax warehouse 931,670 118,670
Spare parts 179,145 22,819
------------ ---------
9,639,798 1,227,859
Restatement 406,900 51,828
Less- Allowance for slow-moving inventories 300,000 38,212
------------ ---------
$ 9,746,698 1,241,475
============ =========
(6) Classification of machinery and equipment:
MEXICAN PESOS
Historical Restatement Total
cost
Machinery and equipment $ 6,614,274 $10,695,410 $17,309,684
Molds and dies 1,123,124 1,879,131 3,002,255
Furniture and fixtures 721,027 307,596 1,028,623
Computation equipment 468,101 469,209 937,310
----------- ------------ -----------
8,926,526 13,351,346 22,277,872
Less- Accumulated depreciation 2,220,456 3,561,912 5,782,368
----------- ----------- -----------
$ 6,706,070 $ 9,789,434 $16,495,504
=========== =========== ===========
<PAGE>
<PAGE>
U. S. DOLLARS
Historical Restatement Total
cost
Machinery and equipment 842,486 1,362,316 2,204,802
Molds and dies 143,057 239,352 382,409
Furniture and fixtures 91,840 39,180 131,020
Computation equipment 59,624 59,765 119,389
----------- ----------- -----------
1,137,007 1,700,613 2,837,620
Less- Accumulated depreciation 282,828 453,695 736,523
----------- ----------- -----------
854,179 1,246,918 2,101,097
=========== =========== ===========
In the event that assets should be sold at restated net values, this could
generate income tax for the excess of restated value over the value in books
determined in accordance with tax regulations.
As a guarantee of adherence to the Federal Tax Debtor Support Program
(PROAFI), the Company assigned the machinery and equipment invoices for
security in the amount of $ 6,047,265 (770,264 U.S. dollars).
<PAGE>
<PAGE>
(7) Summary of bank loans:
Payable in Mexican pesos: MEXICAN PESOS U.S. DOLLARS
Inverlat, S. A. de C. V.
Non-performaning credit since
March 20, 1995 at a normal 32.5%
rate and a 48.75% arrears rate $ 1,800,000 229,273
Non-performing credit since
April 11, 1995 at a normal 19.9%
rate and a 29.85% arrears rate 560,000 71,329
Non-performing credit since
April 17, 1995 at a normal 19.5%
rate and a 29.25% arrears rate 1,000,000 127,374
Unpaid accrued interest 2,374,850 302,494
----------- ----------
5,734,850 730,470
----------- ----------
Banca Quadrum, S. A. de C. V.
Payment agreement in eighteen
consecutive monthly amortizations
starting February 1, 1997, at an
Equilibrium Interbank Interest
rate on unpaid balances
(liquidated in advance - February 1997) 1,272,000 162,020
----------- ----------
Union de Credito para la Contaduria
Publica, S.A. de C.V.
Promissory note with a maturity on
January 2, 1997 at a 38.17% rate
with accounts receivable as collateral
(paid at maturity) 1,620,000 206,346
Unpaid accrued interest 18,635 2,373
----------- ----------
1,638,635 208,719
----------- ----------
8,645,485 1,101,209
----------- ----------
Payable in US dollars:
Woodforest National Bank:
Direct loan with a maturity on
April 24, 1997 in the amount
of 300,000 US dollars, plus 3,499
US dollars interest, at a 6.45% rate 2,382,740 303,499
----------- ----------
$11,028,225 1,404,708
=========== ==========
<PAGE>
<PAGE>
(8) Foreign currency position:
As of December 31, 1996, the Company had U.S. dollars denominated assets
and liabilities, as shown below:
U.S.
DOLLARS
Assets 609,666
Liabilities 814,412
----------
Excess of liabilities over assets 204,746
==========
(9) Other expenses:
This item primarily includes fines, surcharges, and restatements, resulting
from the tax agreements entered into during the year.
(10) Stockholders' investment:
a) As of December 31, 1996, capital stock is represented by 23,175,000
common shares with a par value of one Mexican peso each, fully subscribed and
paid.
b) At the Ordinary General Stockholders' Meetings held on October 1, 1996,
the stockholders resolved to increase capital stock in the amount of $18,725,850
(U.S. dollars 2,385,185) by capitalizing liabilities in favor of Grupo Ifam,
S.A. de C.V.
c) Legal reserve is not available for distribution to the stockholders
during the existence of the Company, except as stock dividends.
d) As of December 31, 1996, stockholders' investment has the following tax
restrictions:
NET TAXABLE INCOME ACCOUNT (CUFIN)
As of December 31, 1996, the balance of the "Net taxable income" tax account
amounted to $12,093,688 (U.S. dollars 1,540,421). Dividends paid up to this
amount are not subject to income tax payment. Payments in excess of this amount
are subject to a 34% income tax payable by the Company. The balance of the
CUFIN may be restated for inflation until the date of dividends payment and
can be increased with the taxable income of future years.
REDUCTIONS TO CAPITAL STOCK
As of December 31, 1996, the balance of the "Restated paid-in capital" tax
account amounted to $60,955,849 (U.S. dollars 7,764,186). Should there be a
reimbursement made to the stockholders, the amount reimbursed in excess of the
aforementioned amount should be treated as distributed earnings.
<PAGE>
<PAGE>
(11) Asset tax:
Asset tax is determined by applying a general 1.8% rate to the amount
resulting from deducting the nominal value of certain debts from the restated
value of assets. Payments made on income tax during the same period may be taken
as a credit against this tax. Asset tax exceeding income tax the Company is
subject to in the period may be refunded in the following ten fiscal years,
provided that income tax exceeded asset tax in an amount equivalent to the
restated value of asset tax. Furthermore, the difference resulting from
deducting the asset tax from income tax for the last three years may be taken
as a tax credit against the tax for the fiscal year. During the fiscal year
ended December 31, 1996, the Company was subject to asset tax in the
amount of $937,965 (U.S. dollars 119,472).
(12) Income tax:
The principal items affecting the Company's taxable income are as follows:
MEXICAN U.S.
PESOS DOLLARS
Income before provision for asset tax $ (12,728,413) (1,621,268)
Add (less)
Tax inflationary component, net 3,545,628 451,621
Tax depreciation in excess of book
depreciation (405,080) (51,597)
Non deductible expenses 142,865 18,197
Purchases in excess of cost of sales (1,094,611) (139,425)
Gain on monetary position (1,723,801) (219,568)
Provisions for doubtful accounts and
slow-moving inventories 5,312,000 676,610
Fines and surcharges 2,140,616 272,659
Restatement in accordance with the
Bulletin B-10 730,213 93,010
------------- --------
Tax loss $ (4,080,583) (519,761)
============= ========
(13) Employee profit sharing:
Employee profit sharing for the year ended December 31, 1996, was determined
as follows:
MEXICAN U.S.
PESOS DOLLARS
Tax loss $ (4,080,583) (519,761)
Add (less):
Tax inflationary component (3,545,628) (451,621)
Excess of depreciation on restatement
over historic depreciation 880,200 112,115
------------- --------
Employee profit sharing basis $ (6,746,011) (859,267)
============= ========
<PAGE>
<PAGE>
(14) Tax loss carryforwards:
Tax losses may be restated starting with the first month of the second half
of the fiscal year in which the loss was incurred, up to the last month of the
first half of the fiscal year in which the loss will be carried forward.
Tax loss carryforwards as of December 31, 1996 are summarized as shown
below:
Year Restated amount as Year it
Incurred of December 31, 1996 Expires
MEXICAN PESOS U.S. DOLLARS
1994 $ 3,029,360 385,861 2004
1995 8,022,096 1,021,806 2005
1996 4,455,926 567,569 2006
------------ -----------
$ 15,507,382 1,975,236
============= ===========
(15) Related party transactions:
The balances as of December 31, 1996, and the transactions during the year
with affiliated companies were as follows (nominal values):
BALANCES TRANSACTIONS
MEXICAN PESOS Credit Expenses Increase of
capital stock
Grupo Ifam, S.A. de C.V. $ 246,934 $ 322,087 $17,875,879
Inversiones Fambes, S.A. de C.V. 4,640,256 2,373,377 -
Peerless, S.A. de C.V. 140,925 1,221,453 -
---------- ---------- -----------
$5,028,115 $3,916,917 $17,875,879
========== ========== ===========
U.S. DOLLARS
Grupo Ifam, S.A. de C.V. $ 31,453 $ 41,025 $2,276,921
Inversiones Fambes, S.A. de C.V. 591,048 302,306 -
Peerless, S.A. de C.V. 17,950 155,582 -
---------- ---------- ----------
$ 640,451 $ 498,913 $2,276,921
========== ========== ===========
<PAGE>
<PAGE>
VINCI DE MEXICO, S.A. DE C.V.
BALANCE SHEET AS OF SEPTEMBER 30, 1997 (UNAUDITED)
EXPRESSED IN TERMS OF THE PURCHASING POWER
OF THE MEXICAN PESO AS OF THAT DATE
<TABLE>
<CAPTION>
<S> <C> <C>
MEXICAN U.S. DOLLARS
CURRENT ASSETS: PESOS
Cash and marketable securities $ 4,510,463 $ 577,302
Accounts receivable 12,133,590 1,553,000
Inventories 9,723,921 1,244,583
____________ __________
Total current assets 26,367,974 3,374,885
MACHINERY AND EQUIPMENT, net 16,132,996 2,064,891
OTHER ASSETS 1,374,781 175,961
____________ __________
$ 43,875,751 $5,615,737
============ ==========
CURRENT LIABILITIES:
Bank loans $ 7,004,570 $ 896,528
Affiliated companies 7,108,105 909,779
Trade 9,237,129 1,182,277
Other accounts payable and accrued
liabilities 3,416,740 437,314
Taxes payable 2,521,841 322,775
Employee profit sharing 199,000 25,470
____________ ___________
Total current liabilities 29,487,385 3,774,143
STOCKHOLDERS' EQUITY:
Capital stock 69,624,625 8,911,382
Contributions-future increase of
capital stock 766,984 98,168
Retained earnings:
Legal reserve 1,004,187 128,529
Unappropriated 1,319,100 168,834
Net loss for the year (234,187) (29,974)
____________ __________
2,089,100 267,389
Accumulated effect of restatement (58,092,343) (7,435,345)
____________ ___________
Total stockholders' equity 14,388,366 1,841,594
____________ ___________
$ 43,875,751 $5,615,737
============ ===========
<PAGE>
VINCI DE MEXICO, S.A. DE C.V.
STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED)
EXPRESSED IN TERMS OF THE PURCHASING POWER
OF THE MEXICAN PESO AS OF THAT DATE
MEXICAN U.S. DOLLARS
PESOS
NET SALES $50,117,341 $6,414,609
COST OF SALES 38,120,324 4,879,089
___________ __________
Gross Profit 11,997,017 1,535,520
OPERATING EXPENSES 15,474,823 1,980,651
___________ __________
Operating Loss (3,477,806) (445,131)
INTEGRAL COST OF FINANCING:
Interest paid 1,831,677 234,440
Interest gain (105,485) (13,501)
Loss on exchange fluctuations 454,317 58,149
Gain on exhange fluctuations (682,310) (87,330)
Gain on monetary position (953,623) (122,057)
___________ __________
544,576 69,701
___________ __________
OTHER EXPENSES (INCOME):
Other expenses 2,849,251 364,681
Other income (7,683,095) (983,373)
___________ __________
(4,833,844) (618,692)
___________ __________
Income before provisions for
asset tax and employee profit
sharing 811,462 103,860
PROVISIONS FOR:
Asset tax 846,649 108,364
Employee profit sharing 199,000 25,470
___________ __________
1,045,649 133,834
___________ __________
Net loss for the period $ (234,187) $ (29,974)
=========== ==========
<PAGE>
<PAGE>
DIXON TICONDEROGA COMPANY
UNAUDITED PRO FORMA CONDENSED
FINANCIAL STATEMENTS
INTRODUCTION
The unaudited pro forma condensed balance sheet as of September 30, 1997
assumes that the acquisition of all the capital stock of Vinci de Mexico, S.A.
de C.V., and the assets of a related entity had occurred on September 30, 1997
and accordingly, is reflected in the financial position of Dixon Ticonderoga
Company as of that date.
The unaudited pro forma condensed statement of operations for the year ended
September 30, 1997 presents the results of operations of Dixon Ticonderoga
Company assuming the acquisition had been consummated as of the beginning of
that period.
The unaudited pro forma condensed financial statements have been prepared by
Dixon Ticonderoga Company and all calculations have been made upon assumptions
deemed appropriate. The unaudited pro forma condensed financial statements were
prepared using the prevailing accounting policies of both Dixon Ticonderoga
Company and Vinci de Mexico, S.A. de C.V. The preliminary allocations of the
purchase price, in accordance with generally accepted accounting principles,
are included in the unaudited pro forma condensed financial statements.
The unaudited pro forma financial information does not purport to be indicative
of the results of operations or the financial position which would have actually
been obtained if the acquisition had been consummated on the dates indicated.
In addition, the unaudited pro forma financial information does not purport to
be indicative of results of operations or financial position which may be
achieved in the future.
The unaudited pro forma financial information should be read in conjunction with
consolidated financial statements and notes thereto contained in the Dixon
Ticonderoga Company 1997 Annual Report on Form 10-K.
<PAGE>
<PAGE>
DIXON TICONDEROGA COMPANY
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
YEAR ENDED SEPTEMBER 30, 1997
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
AS Vinci de Mexico PRO FORMA PRO
REPORTED S.A.de C.V.(a) ADJUSTMENTS FORMA
CURRENT ASSETS
Cash and cash
equivalents $ 5,607,587 $ 577,302 $(3,533,829)(b) $ 2,651,060
Receivables, net 25,969,659 1,553,000 68,732 (b) 27,591,391
Inventories 31,580,175 1,244,583 -- 32,824,758
Other current assets 3,225,881 -- -- 3,225,881
------------ ------------ -------------- -------------
Total current assets 66,383,302 3,374,885 (3,465,097) 66,293,090
------------ ------------ -------------- -------------
PROPERTY, PLANT AND
EQUIPMENT 35,030,105 4,156,423 271,855 (b) 38,520,239
(938,144)(b)
Less accumulated
depreciation (19,542,880) (938,144) 938,144 (b) (19,542,880)
------------ ------------ -------------- -------------
15,487,225 3,218,279 271,855 18,977,359
------------ ------------ -------------- -------------
OTHER ASSETS 2,290,712 175,961 425,445(b)(c) 2,892,118
------------ ------------ -------------- -------------
$ 84,161,239 $ 6,769,125 $(2,767,797) $ 88,162,567
============ ============ ============== =============
CURRENT LIABILITIES:
Notes payable $ 16,058,080 $ 896,528 $ -- $ 16,954,608
Current portion of
long term debt 1,745,080 -- -- 1,745,080
Accounts payable 7,077,955 2,092,056 -- 9,170,011
Accrued liabilities 12,712,385 785,559 153,590 (b) 13,651,534
------------ ------------ -------------- -------------
Total current liabilities 37,593,500 3,774,143 153,590 41,521,233
------------ ------------ -------------- -------------
LONG TERM DEBT 23,555,618 -- -- 23,555,618
------------ ------------ -------------- -------------
DEFERRED INCOME TAXES
AND OTHER 1,142,631 -- 73,595 (b) 1,216,226
------------ ------------ -------------- -------------
MINORITY INTEREST 2,006,865 -- -- 2,006,865
------------ ------------ -------------- -------------
SHAREHOLDERS' EQUITY
Common stock 3,591,681 2,629,425 (2,629,425)(b) 3,591,681
Capital in excess
of par value 2,770,668 98,168 (98,168)(b) 2,770,668
Retained earnings 17,127,698 267,389 (267,389)(b) 17,127,698
Cumulative translation
adjustment (2,768,856) -- -- (2,768,856)
------------ ------------ -------------- -------------
20,721,191 2,994,982 (2,994,982) 20,721,191
Less treasury stock (858,566) -- -- (858,566)
------------ ------------ -------------- -------------
TOTAL SHAREHOLDERS' EQUITY 19,862,625 2,994,982 (2,994,982) 19,862,625
------------ ------------ -------------- -------------
$84,161,239 $6,769,125 $(2,767,797) $88,162,567
============ ============ ============== =============
</TABLE>
<PAGE>
<PAGE>
DIXON TICONDEROGA COMPANY
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
AS Vinci de Mexico PRO FORMA PRO
REPORTED S.A.de C.V.(a) ADJUSTMENTS FORMA
REVENUES $115,054,806 $ 7,289,813 $ -- $122,344,619
------------ ------------ ------------- ------------
COSTS AND EXPENSES:
Cost of goods sold 72,916,837 5,605,972 -- 78,522,809
Selling and 31,252,037 2,147,878 21,272 (c)
administrative expenses 27,186 (d) 33,448,373
------------ ------------ ------------- ------------
104,168,874 7,753,850 48,458 111,971,182
------------ ------------ ------------- ------------
OPERATING INCOME (LOSS) 10,885,932 (464,037) (48,458) 10,373,437
INTEREST EXPENSE 3,799,760 501,618 -- 4,301,378
------------ ------------ ------------- ------------
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES AND MINORITY INTEREST 7,086,172 (965,655) (48,458) 6,072,059
INCOME TAXES (BENEFIT) 2,676,458 163,848 (483,949) (e) 2,356,357
------------ ------------ ------------- ------------
4,409,714 (1,129,503) 435,491 3,715,702
MINORITY INTEREST 808,536 (225,901) (f)
87,098 (g) 669,733
------------- ------------ ------------- ------------
NET INCOME (LOSS) $ 3,601,178 $ (1,129,503) $ 574,294 $ 3,045,969
============= ============ ============= ============
EARNINGS PER SHARE:
Primary $ 1.05 $ .89
============= ============
Fully Diluted $ 1.00 $ .85
============= ============
WEIGHTED AVERAGE SHARES
OUTSTANDING:
Primary 3,433,801 3,433,801
============= ============
Fully Diluted 3,602,120 3,602,120
============= ============
<PAGE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED
FINANCIAL STATEMENTS
a) Balance sheet data condensed from the unaudited balance sheet of Vinci de
Mexico S.A. de C.V., with the addition of approximately $1.15 million of
machinery and equipment of a related entity also purchased in the trans-
action. Statement of operations data for the first year ended September
30, 1997 were derived from the internal financial statements of Vinci
de Mexico S.A. de C.V., for the three months ended December 31, 1996 combined
with the unaudited statement of operations of Vinci de Mexico S.A. de C.V.,
for the nine months ended September 30, 1997 (included herein). The
aforementioned statement of operations data have been adjusted to exclude
the effects of inflation in conformity with U.S. generally accepted
accounting principles. Balance sheet and statement of operations data
are translated at the exchange rate of 7.813 Mexican pesos per dollar,
the exchange rate at September 30, 1997.
b) To reflect the acquisition of Vinci de Mexico, S.A. de C.V. (and assets of a
related entity) under the purchase method of accounting.
c) To recognize amortization of goodwill in the amount of $425,445 over the
estimated period of benefit of 20 years.
d) To recognize depreciation for the purchase adjustment of machinery and
equipment over the estimated useful life of 10 years.
e) To adjust income taxes on combined operations to the prevailing statutory
rate.
f) To reflect minority interest in the results of operations of Vinci de
Mexico, S.A. de C.V.
g) To reflect minority interest in cumulative pro forma adjustments.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: February 16, 1998 By: /s/ Gino N. Pala
----------------- ----------------
Gino N. Pala, Chairman
of the Board, President
Chief Executive Officer
and Director
<PAGE>
<PAGE>
Exhibit (23)
CONSENT OF INDEPENDENT ACCOUNTANTS
TO WHOM IT MAY CONCERN:
We consent to the use of our report dated March 14, 1997 with respect to the
balance sheet of Vinci de Mexico, S.A. de C.V., as of December 31, 1996, and
the related statements of income and changes in financial position for the year
then ended included herein and to the incorporation by reference of such report
in the registration statements on Form S-8 (File Nos. 33-20054, 33-23380 and
333-22205) and on Form S-2 (File No. 333-22119) of Dixon Ticonderoga Company.
SALLES, SAINZ y CIA., S.C.
/s/ C.P. Manuel Sainz M.
-------------------------
Mexico, D.F.
February 11, 1998
</TABLE>
