SECURITIES AND EXCHANGE COMMISSION{PRIVATE }
Judiciary Plaza, 450 Fifth Street, N.W.
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED MARCH 31, 1998 COMMISSION FILE NO. O-2655
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DIXON TICONDEROGA COMPANY
-----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 23-0973760
- --------------------------------- ----------------------------------
(State or other jurisdiction I.R.S. Employer
of incorporation or organization) Identification No.
195 International Parkway, Heathrow, FL 32746
- --------------------------------------------------------------------------------
(Address of principal executive offices) Zip Code
(407) 829-9000
Registrant's telephone number, including area code: ----------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report.
Class Outstanding as of March 31, 1998
------------------------------ ---------------------
Common Stock $1 par value 3,381,715
<PAGE>
DIXON TICONDEROGA COMPANY AND SUBSIDIARIES
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Information
Consolidated Balance Sheets --
March 31, 1998 and September 30, 1997 3-4
Consolidated Statements of Operations -- For The
Three and Six Months Ended March 31, 1998 and 1997 5
Consolidated Statements of Cash Flows --
For The Six Months Ended March 31, 1998 and 1997 6-7
Notes to Consolidated Financial Statements 8-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-14
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 6. Exhibits and Reports on Form 8-K 15-16
Signatures 17
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. DIXON TICONDEROGA COMPANY AND SUBSIDIARIES
- ------- CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
<S> <C> <C>
March 31, 1998 September 30, 1997
-------------- ------------------
CURRENT ASSETS:
Cash and cash equivalents $ 736,261 $ 5,607,587
Receivables, less allowance for
doubtful accounts of $1,611,193
at March 31, 1998 and $1,004,537
at September 30, 1997 22,475,918 25,969,659
Inventories 39,847,690 31,580,175
Other current assets 3,522,446 3,225,881
------------ ------------
Total current assets 66,582,315 66,383,302
------------ ------------
PROPERTY, PLANT and EQUIPMENT:
Land and buildings 17,107,412 16,955,803
Machinery and equipment 20,453,118 17,130,035
Furniture and fixtures 1,229,248 944,267
------------ ------------
38,789,778 35,030,105
Less accumulated depreciation (20,669,880) (19,542,880)
18,119,898 15,487,225
OTHER ASSETS 2,716,150 2,290,712
------------ ------------
$ 87,418,363 $ 84,161,239
============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
March 31, 1998 September 30, 1997
-------------- ------------------
CURRENT LIABILITIES:
Notes payable $25,175,605 $16,058,080
Current maturities of long-term debt 1,680,773 1,745,080
Accounts payable 6,705,704 7,077,955
Accrued liabilities 6,899,385 12,712,385
------------- -------------
Total current liabilities 40,461,467 37,593,500
------------- -------------
LONG-TERM DEBT 23,053,752 23,555,618
------------- -------------
DEFERRED INCOME TAXES AND OTHER 1,289,726 1,142,631
------------- -------------
MINORITY INTEREST 2,311,946 2,006,865
------------- -------------
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 3,615,809 shares
as of March 31, 1998, and 3,591,681
shares as of September 30, 1997 3,615,809 3,591,681
Capital in excess of par value 2,931,869 2,770,668
Retained earnings 17,553,326 17,127,698
Cumulative translation adjustment (2,940,966) (2,768,856) 20,721,191
------------- -------------
21,160,038 20,721,191
Less - treasury stock, at cost (858,566) (858,566)
------------- -------------
(234,094 shares)
20,301,472 19,862,625
------------- -------------
$ 87,418,363 $ 84,161,239
============= =============
The accompanying notes to consolidated financial statements are an integral part
of these statements.
<PAGE>
DIXON TICONDEROGA COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 1998 AND 1997
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
1998 1997 1998 1997
---- ---- ---- ----
REVENUES $24,853,289 $21,906,942 $48,649,905 $44,214,822
----------- ----------- ----------- -----------
COST AND EXPENSES:
Cost of goods sold 15,386,760 14,000,791 30,705,604 28,661,261
Selling and administrative
expenses 8,106,368 6,790,832 15,296,161 13,145,424
----------- ----------- ----------- -----------
23,493,128 20,791,623 46,001,765 41,806,685
----------- ----------- ----------- -----------
OPERATING INCOME 1,360,161 1,115,319 2,648,140 2,408,137
INTEREST EXPENSE 1,096,432 894,973 1,887,194 1,694,595
----------- ----------- ----------- -----------
INCOME FROM
OPERATIONS BEFORE
INCOME TAXES AND
MINORITY INTEREST 263,729 220,346 760,946 713,542
INCOME TAXES (BENEFIT) (43,582) 24,733 30,240 150,707
----------- ----------- ---------- -----------
307,311 195,613 730,706 562,835
MINORITY INTEREST 186,999 145,882 305,081 298,727
----------- ----------- ---------- -----------
NET INCOME $ 120,312 $ 49,731 $ 425,625 $ 264,108
=========== =========== ========== ===========
EARNINGS PER COMMON
SHARE:
BASIC $ .04 $ .02 $ .13 $ .08
=========== =========== ========== ==========
DILUTED $ .03 $ .01 $ .11 $ .08
=========== =========== ========== ==========
WEIGHTED AVERAGE
SHARES OUTSTANDING:
BASIC 3,374,467 3,309,690 3,370,165 3,301,647
=========== =========== ========== ==========
DILUTED 3,699,439 3,334,227 3,718,635 3,326,711
=========== =========== ========== ==========
The accompanying notes to consolidated financial statements are an integral
part of these statements.
</TABLE>
<PAGE>
<TABLE>
DIXON TICONDEROGA COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 1998 AND 1997
<CAPTION>
1998 1997
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 425,625 $ 264,108
Adjustment to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization 1,336,138 1,285,689
Deferred taxes 197,809 171,528
Provision for doubtful accounts receivable 114,241 97,170
(Income)loss attributable to currency transactions 300,001 (42,775)
Income attributable to minority interest 305,081 298,727
Changes in assets and liabilities, net of
effects of acquisition:
Receivables, net 4,617,090 4,399,028
Inventories (7,259,132) (5,739,620)
Other current assets (302,065) (419,136)
Accounts payable and accrued liabilities (7,434,153) (1,031,468)
Other assets (232,722) (461,938)
------------ ------------
Net cash provided by (used in) operations (7,932,087) (1,178,687)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment, net (577,954) (1,074,968)
Purchase of Vinci de Mexico, S.A. de C.V.,
net of cash acquired (3,289,200) --
------------ ------------
<PAGE>
Net cash provided by (used in)
investing activities (3,867,154) (1,074,968)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of subsidiary stock -- (2,519,324)
Net proceeds from notes payable 7,555,433 4,691,876
Principal reductions of long-term debt (761,897) (588,319)
Exercise of stock options 185,329 174,420
Other non-current liabilities -- 347,436
------------ ------------
Net cash provided by (used in)
financing activities 6,978,865 2,106,089
------------ ------------
Effect of exchange rate changes on cash (50,950) (118,866)
------------ ------------
Net increase (decrease) in cash and
cash equivalents (4,871,326) (266,432)
Cash and cash equivalents,
beginning of period 5,607,587 2,597,032
------------ ------------
Cash and cash equivalents,
end of period $ 736,261 $ 2,330,600
============ ============
Supplemental Disclosures:
Cash paid during the period:
Interest (net of amount capitalized) $1,886,329 $ 1,596,990
Income taxes 589,699 262,024
The accompanying notes to consolidated financial statements are an integral
part of these statements.
</TABLE>
<PAGE>
DIXON TICONDEROGA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION:
The condensed consolidated financial statements included herein have been
prepared by the Registrant, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Registrant believes that
the disclosures are adequate to make the information presented not misleading.
It is suggested that these financial statements be read in conjunction with the
financial statements and the notes thereto included in the Registrant's latest
annual report on Form 10-K. In the opinion of the Registrant, all adjustments
(solely of a normal recurring nature) necessary to present fairly the financial
position of Dixon Ticonderoga Company and subsidiaries as of March 31, 1998, and
the results of their operations and cash flows for the six months ended March
31, 1998 and 1997, have been included. The results of operations for such
interim periods are not necessarily indicative of the results for the entire
year.
Certain fiscal 1997 balances have been reclassified to conform to current year
presentation.
2. INVENTORIES:
Since amounts for inventories under the last-in, first-out (LIFO) method are
based on annual determinations of quantities and costs as of the end of the
fiscal year, the inventories at March 31, 1998 (for which the LIFO method of
accounting are used) are based on certain estimates relating to quantities and
costs as of year end. Under the first-in, first-out (FIFO) method of
accounting, these inventories would be $897,000 and $803,000 higher at March 31,
1998 and September 30, 1997, respectively.
Inventories consist of (in thousands):
March 31, 1998 September 30, 1997
-------------- ------------------
Raw materials $ 12,864 $ 11,760
Work in process 4,940 4,400
Finished goods 22,044 15,420
-------- --------
$ 39,848 $ 31,580
======== ========
3. EFFECT OF CERTAIN NEW ACCOUNTING PRONOUNCEMENTS:
In 1997, the Financial Accounting Standards Board (FASB) issued Statement No.
130 "Reporting Comprehensive Income" which is effective for the Company in
fiscal 1999. This statement requires the reporting of net income and all other
changes to equity during the period, except those resulting from investments by
owners and distributions to owners, in a separate statement that begins with net
income or in the consolidated statement of operations below net income. The
Company estimates that currently the only component of comprehensive income that
<PAGE>
bypasses the statement of operations is foreign currency translation adjustments
presently being reported in the Consolidated Statement of Shareholders' Equity.
4. TRANSLATION OF FOREIGN CURRENCIES:
Since January 1, 1997, Mexico is considered as a highly inflationary economy for
the purpose of applying FASB Statement No. 52, "Foreign Currency Translation."
Translation gains and losses therefore impact the results of operations.
Foreign currency transaction gains (losses) included in net income were
approximately ($300,000) and $43,000 for the periods ended March 31, 1998 and
1997, respectively.
5. ACCOUNTING FOR INCOME TAXES:
The difference between income taxes calculated at the U.S. statutory federal
income tax rate and the provision in the accompanying Consolidated Financial
Statements is primarily due to lower effective foreign tax rates, state income
taxes and other permanent items.
Income taxes reconciled to the statutory rates are as follows for all periods
presented:
Three Months Ended Six Months Ended
March 31, March 31,
1998 1997 1998 1997
---- ---- ---- ----
Taxes calculated at federal $ 90 $ 75 $ 259 $ 243
statutory rate
Foreign income (120) (48) (265) (99)
State taxes (35) (26) (46) (27)
Other permanent items 21 2 82 34
------- ------ ------- -------
Provision (benefit)
for income taxes $ (44) $ 25 $ 30 $ 151
======= ====== ======= =======
<PAGE>
6. CONTINGENCIES:
The Company, in the normal course of business, is party in certain litigation.
In April 1996, a decision was rendered by the Superior Court of New Jersey in
Hudson County finding the Company responsible for $1.94 million plus prejudgment
interest. All company appeals have been denied and in January 1998 the Company
paid $3.6 million to satisfy this claim in full, including all accrued interest.
The Company continues to pursue other responsible parties for indemnification
and/or contribution to the payment of this claim (including its insurance
carriers and a legal malpractice action against its former attorney).
The Company has evaluated the merits of 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 purchased or to be sold.
The Registrant assesses the extent of these matters on an ongoing basis. In the
opinion of management (after taking into account accruals of approximately
$200,000 as of March 31, 1998), the resolution of these matters will not
materially affect the Company's future results of operations or financial
position.
7. ACQUISITION:
In December 1997, the Company's subsidiary, Dixon Ticonderoga de Mexico, S.A. de
C.V., acquired all of the capital stock of Vinci de Mexico, S.A. de C.V.
("Vinci"), and certain assets of a related entity for a final total purchase
price of approximately 28.3 million pesos (approximately $3.5 million) in cash.
Vinci is a well-known manufacturer of tempera and oil paints, chalk and modeling
clay in Mexico. The company also manufactures plastic products (such as rulers
and geometric sets), water colors and crayons. The acquisition was accounted
<PAGE>
for under the "purchase" method of accounting and the balance sheet herein
includes the fair value of Vinci's specific assets and liabilities, including
goodwill approximating $320,000. Goodwill is amortized over the estimated
period of benefit of 20 years. The results of Vinci's operations have been
included in the consolidated results of operations since the date of
acquisition.
The following shows pro forma, unaudited data that would have resulted had the
acquisition been consummated as of October 1, 1996:
(in thousands, except per share data)
Three Months Ended Six Months Ended
March, 31, March 31,
--------- --------
1998 1997 1998 1997
---- ---- ---- ----
Revenues $ 24,853 $ 23,084 $ 49,582 $ 46,506
Net income (loss) 120 (137) 479 (504)
Earnings (loss) per
share: .04 (.04) .14 (.15)
Basic .03 (.04) .13 (.15)
Diluted
Item 2.
- -------
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
REVENUES for the quarter ended March 31, 1998, increased $2,946,000 from the
same quarter last year. The changes by segment are as follows:
Increase % Increase(Decrease)
(Decrease) --------------------
(in thousands) Total Volume Price/Mix
-------------- ----- ------ ---------
Consumer U.S. $ 887 8 8 --
Consumer Foreign 2,097 45 47 (2)
Industrial (38) (1) (1) --
The U.S. Consumer revenue increase was primarily in the educational market due
to more aggressive promotional programs and a restructured sales force. The
increase in Foreign Consumer primarily reflects marketing efforts in the Mexico
mass market and the acquisition of Vinci (see Note 7 to Consolidated Financial
Statements). Revenue decreased $360,000 and $90,000 in Mexico and Canada,
respectively, due to declines in their local currencies compared to the U.S.
dollar.
Revenues for the six months ended March 31, 1998, increased $4,435,000 over the
same period last year. The changes by segment are as follows:
Increase % Increase(Decrease)
(Decrease)
(in thousands) Total Volume Price/Mix
-------------- ----- ------ ---------
Consumer U.S. $1,483 6 8 (2)
Consumer Foreign 2,963 36 38 (2)
Industrial (11) -- -- --
Revenue in Mexico increased $3,120,000 due to increased shipments to the mass
market and the acquisition of Vinci. Decreases of $260,000 and $160,000 in the
revenue of Mexico and Canada, respectively, was due to the decline in their
local currencies compared to the U.S. dollar. U.S. Consumer principally
reflects continued increases in the educational market.
Revenues increased $1,057,000 from the prior quarter as follows:
Increase % Increase(Decrease)
(Decrease)
(in thousands) Total Volume Price/Mix
-------------- ----- ------ ---------
Consumer U.S. ($1,468) (11) (9) (2)
Consumer Foreign 2,287 52 47 5
Industrial 238 4 4 --
The decrease in U.S. Consumer revenue reflects the historical trend where the
first fiscal quarter is positively impacted by holiday sales. Foreign Consumer
revenue increased primarily due to the mass market in Mexico and the Vinci
acquisition, despite a decrease of $290,000 due to the decline in the value of
the peso compared to the U.S. dollar.
While the Company has operations in Canada, Mexico and the U.K., historically
only the operating results in Mexico have been materially impacted by currency
fluctuations. There has been a significant devaluation of the Mexican peso once
in each of the last three decades, the last one being in December 1994. In the
short term after such a devaluation, consumer confidence has been shaken,
leading to an intermediate reduction in revenues in the months following the
<PAGE>
devaluation. Then, after the immediate shock, and as the peso stabilizes,
revenues tend to grow. Selling prices tend to rise over the long term to offset
any inflationary increases in costs. The peso, as well as any currency value,
depends on many factors including international trade, investor confidence, and
government policy, to name a few. These factors are impossible for the Company
to predict, and thus, an estimate of potential effect on results of operations
for the future cannot be made. The Company's Mexico subsidiary maintains a peso
currency option to protect against short-term devaluation in excess of
approximately 10%. In the six months ended March 31, 1998, the Mexican peso
devaluated approximately 9% as compared with the U.S. dollar. This currency
risk in Mexico is also managed through local currency financing and by export
sales to the U.S. denominated in U.S. dollars.
OPERATING INCOME increased $263,000 over the same quarter last year. Foreign
Consumer increased $402,000 on higher revenue in the Mexico mass market, despite
currency losses of approximately $300,000 due to the aforementioned peso
devaluation. U.S. Consumer increased $113,000 as higher gross margins were
partially offset by increased sales costs. Industrial decreased $85,000 on
increased selling and administrative expenses. General corporate expenses were
$167,000 higher, contributing to an overall increase in total selling and
administrative expenses (32.6% of sales compared to 31.0% in the
same quarter last year).
Operating income increased $259,000 for the six months ended March 31, 1998 over
the same period last year. Foreign Consumer operating income increased $600,000
despite $300,000 in currency losses due to the aforementioned peso devaluation.
The addition of Vinci added $250,000 and continuing growth in the mass market
segment accounted for the remaining increase. The U.S. Consumer operating
income decreased $390,000 due to higher selling costs and unfavorable product
mix. The higher selling costs contributed to an increase in total selling and
administrative expenses (31.4% of sales compared to 29.7% last year).
Operating income increased $90,000 over the prior quarter. Foreign Consumer
increased $730,000 on higher revenues. U.S. Consumer decreased $310,000 on
<PAGE>
lower volume, reflecting seasonal holiday sales in the prior quarter.
Administrative costs increased $370,000 on higher salary and benefit costs,
contributing to an increase in total selling and administrative expenses of
1.7% of sales.
INTEREST EXPENSE increased $201,000 and $192,000 for the quarter and six months
ended March 31, 1998, respectively, over the same periods last year on increased
borrowings reflecting the payment of the legal claim described in Note 6 to
Consolidated Financial Statements. Interest expense increased $305,000 over the
prior quarter due to this legal claim as well as higher seasonal borrowings.
INCOME TAXES decreased $68,000 in the current fiscal quarter and $120,000 for
the six months ended March 31, 1998, as compared with the prior year periods,
respectively, due principally to lower effective foreign tax rates. (See Note 5
to Consolidated Financial Statements).
MINORITY INTEREST represents 49.9% of the net income of the consolidated
subsidiary, Dixon Ticonderoga de Mexico, S.A. de C.V. through January 1997. In
February 1997, the Company increased its ownership, thus reducing minority
interest to approximately 20%.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operating activities in the first six months of fiscal 1997
decreased by approximately $6.8 million over the same period last year, due
principally to the payment of the legal claim (Note 6 to Consolidated Financial
Statements) and other large calendar year-end selling and promotional expense
obligations. In addition, Mexico accelerated inventory purchases in the
current period to take advantage of certain tax benefits and discounts.
<PAGE>
Investing activities included approximately $3.3 million (net of cash acquired)
related to the acquisition of Vinci (see Note 7 to Consolidated Financial
Statements). Total other capital expenditures are expected to approximate less
than $2 million in fiscal 1998. Such expenditures approximate less than
$531,000 in the first six months, as compared with $1,075,000 in the prior year
period. Generally, all other major capital projects are discretionary in nature
and thus no material purchase commitments exist. Other capital expenditures will
continue to be funded from operations and existing financing arrangements.
The Company has financing arrangements with a consortium of lenders to fund
capital expenditures and provide working capital. The loan and security
agreement provides for a total of $48 million in financing. This includes a
revolving line of credit facility in the amount of $40 million which bears
interest at either the prime rate, plus 0.5%, or the prevailing LIBOR rate plus
2.5%. Borrowings under the revolving credit facility are based upon eligible
accounts receivable and inventories of the Company's U.S. and Canada operations,
as defined. The financing agreement also includes a term loan in the original
amount of $7.75 million. The term loan bears interest at the same rate, and is
payable in varying monthly installments through 2001. The Company previously
executed certain interest rate "swap" agreements which effectively fix the rate
of interest on approximately $13 million of this debt at 8.75% to 8.87%.
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 contains provisions pertaining to the maintenance of certain financial
ratios and annual capital expenditure levels, as well as restrictions as to
payment of cash dividends. The Company is presently in compliance with all such
provisions. At March 31, 1998, the Company had approximately $15 million of
unused lines of credit available under this financing arrangement.
<PAGE>
In September 1996, the Company also completed the private placement of $16.5
million of 12% Senior Subordinated Notes, due 2003. In connection with the
private placement, the Company issued to noteholders warrants to purchase
300,000 shares of Company stock at $7.24 per share. The note agreement contains
provisions which limit the payment of dividends and requires the maintenance of
certain financial covenants and ratios, with which the Company is presently in
compliance. In January 1998, the Company canceled a reverse interest rate "swap"
agreement covering $10 million of the notes, resulting in a deferred gain of
approximately $375,000, to be recognized over the remaining original term of the
notes.
The Company entered into the aforementioned interest rate "swap" agreements to
balance and manage overall interest rate exposure and minimize overall cost of
borrowings. The "swaps" are not presently expected to have a material effect on
total interest expense over the term of the underlying agreements.
The new and existing sources of financing 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 and to
meet all of its obligations.
YEAR 2000 COMPUTER ISSUES
The Company is in process of assessing and addressing the impact of the year
2000 on its computer hardware and software. The Company is presently undergoing
an upgrade of its principal operating and application software, which is
believed to be year 2000 compliant. Peripheral applications and/or personal
computer systems may not be compliant in all cases. Management and its outside
management information consultants are in the process of developing a plan to
assure full compliance by 1999. Accordingly, the Company does not expect this
matter to materially impact how it conducts business nor its future results of
operations or financial position.
<PAGE>
FORWARD-LOOKING STATEMENTS
Any "forward-looking statements" contained in this Quarterly Report on Form 10-Q
involve known and unknown risks (including, but not limited to certain foreign
currency risk), uncertainties and other factors that could cause the actual
results to differ materially from those expressed or implied by such forward-
looking statements.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
- ------- ----------------------------------------------------------------
At the Company's Annual Meeting of Shareholders held on March 6, 1998, one
matter was submitted to a vote of shareholders. Gino N. Pala and Richard F.
Joyce were elected as directors of the Company for terms expiring in 2001. The
following table sets forth certain information with respect to the election of
directors at the annual meeting:
Shares Withholding
Name of Nominee Shares Voted For Authority
--------------- ---------------- ---------
Gino N. Pala 3,123,976 4,142
Richard F. Joyce 3,123,976 3,242
The following table sets forth the other directors of the Company whose
terms of office continued after the aforementioned annual meeting of the
shareholders:
<PAGE>
Name of Director Term Expires
------------------ ------------
Joseph R. Sadowski 1999
Philip M. Shasteen 1999
John E. Ramondo 2000
Kent Kramer 2000
Ben Berzin, Jr. 2000
Item 6. Exhibits and Reports on Form 8-K
- ------- ------------------------------------------
(a) Exhibits
----------
The following exhibits are required to be filed as part of this quarterly
report on Form 10-Q:
(3) (i) Restated Certificate of Incorporation *
(3) (ii) Amended and Restated Bylaws **
(4) (a) Specimen Certificate of Company Common Stock *
(4) (b) Amended and Restated Stock Option Plan ***
(27) Financial Data Schedule ****
* Incorporated by reference to the Company's quarterly report on Form
10-Q for the period ended March 31, 1997, file number 0-2655, filed in
Washington, D.C.
** Incorporated by reference to the Company Annual Report on Form 10-K
for the year ended September 30, 1996, file number 0-2655, filed in Washington,
D.C.
<PAGE>
*** Incorporated by reference to Appendix 3 to the Company's Proxy
Statement dated January 27, 1997, filed in Washington, D.C.
**** Filed electronically via EDGAR.
(b) Reports on Form 8-K
--------------------------
Not applicable.
<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.
DIXON TICONDEROGA COMPANY
Dated: May 13, 1998 By: /s/ Gino N. Pala
----------------------------
Gino N. Pala
Chairman of the Board,
President, Chief Executive
Officer and Director
Dated: May 13, 1998 By: /s/ Richard A. Asta
----------------------------
Richard A. Asta
Executive Vice President of
Finance and Chief Financial
Officer
Dated: May 13, 1998 By: /s/ John Adornetto
----------------------------
John Adornetto
Vice President/Corporate
Controller and Chief
Accounting Officer
<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.
DIXON TICONDEROGA COMPANY
Dated: May 13, 1998 By: ----------------------------
Gino N. Pala
Chairman of the Board,
President, Chief Executive
Officer and Director
Dated: May 13, 1998 By: ----------------------------
Richard A. Asta
Executive Vice President of
Finance and Chief Financial
Officer
Dated: May 13, 1998 By: ----------------------------
John Adornetto
Vice President/Corporate
Controller and Chief
Accounting Officer
<PAGE>
<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> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 736,261
<SECURITIES> 0
<RECEIVABLES> 24,087,111
<ALLOWANCES> 1,611,193
<INVENTORY> 39,847,690
<CURRENT-ASSETS> 66,582,315
<PP&E> 38,789,778
<DEPRECIATION> 20,669,880
<TOTAL-ASSETS> 87,418,363
<CURRENT-LIABILITIES> 40,461,467
<BONDS> 0
<COMMON> 3,615,809
0
0
<OTHER-SE> 16,685,663
<TOTAL-LIABILITY-AND-EQUITY> 87,418,363
<SALES> 48,649,905
<TOTAL-REVENUES> 48,649,905
<CGS> 30,705,604
<TOTAL-COSTS> 30,705,604
<OTHER-EXPENSES> 15,296,161
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,887,194
<INCOME-PRETAX> 760,946
<INCOME-TAX> 30,240
<INCOME-CONTINUING> 425,625
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 425,625
<EPS-PRIMARY> .13
<EPS-DILUTED> .11
</TABLE>
