<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Quarterly Report Pursuant to Section 13 or 15(D) of
The Securities Exchange Act of 1934
For the quarterly period ended April 30, 1997 Commission File No. 0-21084
--------------------------
Champion Industries, Inc.
(Exact name of Registrant as specified in its charter)
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<S> <C>
West Virginia 55-0717455
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.
</TABLE>
2450 First Avenue, P. O. Box 2968
Huntington, West Virginia 25728
(Address of principal executives offices)
(Zip Code)
(304) 528-2791
(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
----- ------
8,104,714 shares of common stock of the Registrant were outstanding
at April 30, 1997.
<PAGE>
CHAMPION INDUSTRIES, INC.
INDEX
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Part I. Financial Information
Item 1. Financial Statements
Consolidated Income Statements............................................... 2
Consolidated Balance Sheets.................................................. 3
Consolidated Statements of Cash Flows........................................ 5
Notes to the Consolidated Financial Statements............................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.................................................................. 8
Part II. Other Information
Item 2. Changes in Securities.................................................... 10
Item 4. Submission of Matters to a Vote of Security Holders...................... 10
Item 6. Exhibits and Reports on Form 8-K......................................... 11
Signatures......................................................................... 11
Exhibit Index...................................................................... 12
</TABLE>
1
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CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
APRIL 30, APRIL 30,
---------------------------- ----------------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
------------- ------------- ------------- -------------
Revenues:
Printing.......................................... $ 22,639,976 $ 10,818,151 $ 37,059,372 $ 20,728,022
Office products and office furniture.............. 5,173,271 3,791,901 10,151,741 7,981,566
------------- ------------- ------------- -------------
Total revenues.................................. 27,813,247 14,610,052 47,211,113 28,709,588
Cost of sales:
Printing.......................................... 15,274,091 7,155,575 26,071,001 14,088,054
Office products and office furniture.............. 3,230,329 2,360,795 6,562,628 5,203,852
------------- ------------- ------------- -------------
Total cost of sales............................. 18,504,420 9,516,370 32,633,629 19,291,906
Selling, general and administrative expenses........ 7,491,468 3,490,007 11,760,628 6,687,873
------------- ------------- ------------- -------------
Income from operations.............................. 1,817,359 1,603,675 2,816,856 2,729,809
Other income (expense):
Interest income................................... 5,815 1,651 13,212 2,949
Interest expense.................................. (388,803) (83,545) (569,903) (144,321)
Other............................................. 290,241 3,900 745,087 16,646
------------- ------------- ------------- -------------
(92,747) (77,994) 188,396 (124,726)
------------- ------------- ------------- -------------
Income before income taxes.......................... 1,724,612 1,525,681 3,005,252 2,605,083
Income taxes...................................... (713,229) (625,000) (1,252,621) (1,068,000)
------------- ------------- ------------- -------------
Net income........................................ $ 1,011,383 $ 900,681 $ 1,752,631 $ 1,537,083
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Earnings per share................................ $ .12 $ .11 $ .21 $ .19
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Weighted average shares outstanding............... 8,163,336 8,051,659 8,162,220 8,045,449
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
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<CAPTION>
APRIL 30, OCTOBER 31,
1997 1996
-------------- -------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents........................................................ $ 2,204,361 $ 2,336,764
Accounts receivable, net of allowance of $939,000 and $514,000................... 17,218,736 11,037,897
Inventories...................................................................... 9,722,799 7,156,466
Other current assets............................................................. 734,573 383,282
Deferred tax assets.............................................................. 822,657 340,334
-------------- -------------
Total current assets........................................................... 30,703,126 21,254,743
Property and equipment, at cost:
Land............................................................................. 647,340 647,340
Buildings and improvements....................................................... 3,230,784 3,125,873
Machinery and equipment.......................................................... 19,084,068 13,802,972
Equipment under capital leases................................................... 3,125,873 2,801,928
Furniture and fixtures........................................................... 1,464,672 1,311,368
Vehicles......................................................................... 1,620,823 1,246,624
-------------- -------------
29,173,560 22,936,105
Less accumulated depreciation.................................................. (10,177,947) (8,917,373)
-------------- -------------
18,995,613 14,018,732
Asset held for sale................................................................ 300,000 --
Cash surrender value of officer's life insurance................................... 436,307 425,507
Goodwill, net of accumulated amortization.......................................... 3,115,575 2,565,287
Other assets....................................................................... 576,928 318,233
-------------- -------------
4,428,810 3,309,027
-------------- -------------
Total assets................................................................... $ 54,127,549 $ 38,582,502
-------------- -------------
-------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
Champion Industries, Inc. and Subsidiaries
3
<PAGE>
CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
1997 1996
------------- -------------
<S> <C> <C>
Liabilities And Shareholders' Equity
Current liabilities:
Notes payable.................................................................... $ 2,000,000 $ 1,300,000
Accounts payable................................................................. 2,624,766 1,542,102
Accrued payroll.................................................................. 2,140,723 1,030,523
Taxes accrued and withheld....................................................... 662,253 725,614
Accrued income taxes............................................................. 539,499 1,295,188
Accrued expenses................................................................. 1,319,293 336,314
Current portion of long-term debt
Notes payable.................................................................. 2,607,475 1,238,423
Capital lease obligations...................................................... 536,487 724,615
------------- -------------
Total current liabilities.................................................... 12,430,496 8,192,779
Long-term debt, net of current portion
Notes payable.................................................................... 12,875,712 3,750,841
Capital lease obligations........................................................ 1,680,002 1,535,176
Deferred income tax liability...................................................... 3,029,852 1,677,624
Deferred gain...................................................................... -- 330,443
------------- -------------
Total liabilities.............................................................. 30,016,062 15,486,863
Commitments and contingencies -- --
Shareholders' equity:
Common stock, $1 par value, 20,000,000 shares authorized; 8,104,714 and 8,104,907
shares issued and outstanding.................................................. 8,104,714 8,104,907
Additional paid-in capital....................................................... 7,711,294 7,714,777
Retained earnings................................................................ 8,295,479 7,275,955
------------- -------------
Total shareholders' equity......................................................... 24,111,487 23,095,639
------------- -------------
Total liabilities and shareholders' equity................................... $ 54,127,549 $ 38,582,502
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30,
-----------------------------
<S> <C> <C>
1997 1996
-------------- -------------
Cash flows from operating activities:
Net income......................................................................... $ 1,752,632 $ 1,537,083
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, amortization and accretion......................................... 1,844,910 757,057
Deferred gain on sale of assets.................................................. (330,443) (9,000)
Changes in assets and liabilities:
Accounts receivable............................................................ (1,749,839) (841,179)
Inventories.................................................................... (511,333) 465,612
Other current assets........................................................... (342,386) (141,749)
Accounts payable............................................................... 197,664 (376,183)
Accrued payroll................................................................ 1,110,200 (455,824)
Taxes accrued and withheld..................................................... 24,639 (222,564)
Accrued income taxes........................................................... (755,689) 248,500
Accrued expenses............................................................... (2,070,722) 99,286
-------------- -------------
Net cash (used in) provided by operations.......................................... (830,367) 1,061,039
Cash flows from investing activities:
Purchase of property and equipment................................................. (1,098,455) (867,638)
Business acquisitions, net of cash received........................................ 305,000 (648,676)
Cash surrender value of officer's life insurance................................... (10,800) 11,100
Other assets....................................................................... 236,007 768
-------------- -------------
Net cash (used in) provided by investing activities................................ (568,248) (1,504,446)
Cash flows from financing activities:
Net borrowings (payments) of notes payable......................................... 700,000 900,000
Proceeds from term debt and leases................................................. 1,614,355 1,700,000
Principal payments on long term debt............................................... (315,034) (1,391,763)
Dividends paid..................................................................... (733,109) (580,296)
Net cash (used in) provided by financing activities................................ 1,266,212 627,941
-------------- -------------
Net (decrease) increase in cash.................................................... (132,403) 184,534
Cash and cash equivalents, beginning of period..................................... 2,336,764 1,350,807
-------------- -------------
Cash and cash equivalents, end of period........................................... $ 2,204,361 $ 1,535,341
-------------- -------------
-------------- -------------
-------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BUSINESS OPERATIONS AND BASIS OF PRESENTATION
The foregoing financial information is unaudited and has been prepared from
the records of Champion Industries, Inc., ("Champion" or the "Company"). In the
opinion of management, the financial information reflects all adjustments
(consisting of items of a normal recurring nature) necessary for a fair
presentation of financial position, results of operations and cash flows in
conformity with generally accepted accounting principles. These interim
financial statements should be read in conjunction with the financial statements
for the year ended October 31, 1996 and related notes thereto contained in the
Company's Form 10-K dated January 28, 1997. The accompanying unaudited financial
statements are presented in accordance with generally accepted accounting
principles and instructions to the Securities and Exchange Commission Form 10-Q.
The accompanying consolidated financial statements of Champion Industries,
Inc. and Subsidiaries (the "Company") include the accounts of The Chapman
Printing Company, Inc., Stationers, Inc., Bourque Printing, Inc., Dallas
Printing Company, Inc., Carolina Cut Sheets, Inc., U.S. Tag & Ticket Company,
Inc., Donihe Graphics, Inc., The Merten Company, Smith & Butterfield Co., Inc.
and Interform Corporation.
2. INVENTORIES
Inventories are stated at the lower of first-in, first-out cost or market.
Manufactured finished goods and work in process inventories include material,
direct labor and overhead based on standard costs, which approximate actual
costs. The Company utilizes an estimated gross profit method for determining
cost of sales in interim periods.
Inventories consisted of the following:
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
1997 1996
------------ ------------
<S> <C> <C>
Printing:
Raw materials................................................... $ 3,550,643 $ 2,276,070
Work in process................................................. 2,297,896 1,473,021
Finished goods.................................................. 892,669 572,228
Office products and office furniture.............................. 2,981,591 2,835,147
------------ ------------
$ 9,722,799 $ 7,156,466
------------ ------------
------------ ------------
</TABLE>
3. EARNINGS PER SHARE
Earnings per share were computed based upon the weighted average shares of
Common Stock outstanding for the period, plus the shares that would be
outstanding assuming the exercise of dilutive stock options. The Company had
8,163,336, 8,051,659, 8,162,220 and 8,045,449 weighted average shares issued and
outstanding for the three and six months ended April 30, 1997 and 1996, as
adjusted for a 25% stock dividend (see Note 4).
6
<PAGE>
CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
4. SHAREHOLDERS' EQUITY
The Company paid a 25% stock dividend, accounted for as a 5 for 4 stock
split, on January 27, 1997 to stockholders of record on January 6, 1997.
1,620,981 shares were issued in the split of which 193 fractional shares were
repurchased.
The Company declared a dividend of five cents to be paid on June 27, 1997,
to stockholders of record on June 6, 1997.
5. ACQUISITIONS
On December 31, 1996, the Company acquired all the issued and outstanding
common shares of Interform Corporation ("Interform"), a business forms printer
located in Bridgeville, Pennsylvania, for $2.5 million. Champion utilized the
proceeds of a loan from a bank to provide the cash consideration and to
refinance the existing long term debt of Interform. The transaction was
accounted for under the purchase method. As of September 30, 1996, Interform had
total assets of $14.9 million and total liabilities of $9.6 million.
The following summarizes the unaudited consolidated pro forma results of
operations for the three and six months ended April 30, 1997 and 1996, assuming
the acquisition had been consummated at the beginning of the periods presented.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
APRIL 30, APRIL 30,
---------------------------- ----------------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
------------- ------------- ------------- -------------
Revenues........................ $ 27,813,000 $ 26,526,000 $ 52,935,000 $ 52,490,000
Net income...................... $ 1,011,000 $ 696,000 $ 1,668,000 $ 1,086,000
Net income per share............ $ .12 $ .09 $ .20 $ .13
Common shares outstanding....... 8,163,336 8,163,336 8,163,336 8,163,336
</TABLE>
6. SUBSEQUENT EVENT
On May 21, 1997, the Company acquired all the issued and outstanding common
shares of Blue Ridge Printing Co., Inc., of Asheville, North Carolina and
Knoxville, Tennessee ("Blue Ridge"), in exchange for 277,775 shares of the
Company's Common Stock. The transaction has been accounted for as a pooling of
interests. Total assets and liabilities of Blue Ridge at June 30, 1996 were
$5.7 million and $4.2 million. Total revenues for the year ended June 30,
1996 were $6.5 million.
7. NEW ACCOUNTING PRONOUNCEMENT
In February 1997, the FASB issued Statement No. 128, "Earnings Per Share"
(FAS 128) which supersedes APB Opinion No. 15, "Earnings Per Share" (APB 15).
FAS 128 is effective for financial statements for both interim and annual
periods ending after December 15, 1997. The standard specifies the
computation, presentation and disclosure of basic and diluted earnings per
common share. Basic and diluted earnings per common share are not anticipated
to be materially different from earnings per common share under APB 15.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, information
derived from the Consolidated Income Statements as a percentage of total
revenues.
<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL REVENUES
------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
APRIL 30, APRIL 30,
-------------------- --------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Printing...................................................................... 81.4% 74.0% 78.5% 72.2%
Office products and office furniture.......................................... 18.6 26.0 21.5 27.8
--------- --------- --------- ---------
Total revenues.............................................................. 100.0 100.0 100.0 100.0
Cost of sales:
Printing...................................................................... 54.9 49.0 55.2 49.1
Office products and office furniture.......................................... 11.6 16.0 13.9 18.1
--------- --------- --------- ---------
Total cost of sales......................................................... 66.5 65.0 69.1 67.2
Selling, general and administrative expenses.................................... 26.9 23.9 24.9 23.3
--------- --------- --------- ---------
Income from operations.......................................................... 6.6 11.1 6.0 9.5
Interest income............................................................... 0.0 0.0 0.0 0.0
Interest (expense)............................................................ (1.4) (0.6) (1.2) (0.5)
Other income.................................................................. 1.0 0.0 1.6 0.1
--------- --------- --------- ---------
Income before taxes............................................................. 6.2 10.5 6.4 9.1
Income tax expense............................................................ (2.6) (4.3) (2.7) (3.7)
--------- --------- --------- ---------
Net income...................................................................... 3.6% 6.2% 3.7% 5.4%
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
THREE MONTHS ENDED APRIL 30, 1997 COMPARED TO THREE MONTHS ENDED APRIL 30, 1996
Total revenues increased 90.4% in the second quarter 1997 to $27.8 million
from $14.6 in the second quarter 1996. Printing revenue increased 109.3% in the
second quarter 1997 to $22.6 million from $10.8 million in the second quarter
1996. Office products and office furniture revenue increased 36.4% in the second
quarter 1997 to $5.2 million from $3.8 million in the second quarter 1996. These
revenue increases were achieved through new acquisitions which accounted for
increased printing sales of $10.5 million and increased office products and
office furniture sales of $1.3 million. Revenues in existing printing divisions
increased by approximately $1.3 million from the quarter ended in 1997 over 1996
due to sales generated from new sales personnel coupled with broadened product
lines.
Total cost of sales increased 94.5% in the second quarter 1997 to $18.5
million from $9.5 million in the second quarter 1996. Printing cost of sales
increased 113.5% in the second quarter 1997 to $15.3 million from $7.2 million
in the second quarter 1996, due primarily to sales volume and the addition of
newly acquired divisions with lower sales margins than existing divisions.
Office products and office furniture cost of sales increased 36.8% in the second
quarter 1997 to $3.2 million from $2.4 million in the second
8
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quarter 1996, primarily due to sales volume. Selling, general &
administrative expenses increased as a percentage of sales in second quarter
1997 to 26.9% from 23.9% in the second quarter 1996 due to costs associated
with acquisitions (professional fees, employee, sales and management
training, and travel expenses) coupled with higher overhead percentages in
recently acquired divisions.
Income from operations increased 13.3% in the second quarter 1997 to $1.8
million from $1.6 million in the second quarter 1996. This increase is a
result of sales volume increases moderated by lower margins and increased
costs as described above. Interest expense on a comparative basis increased
$305,000 as a result of increased debt incurred for acquisitions. Income
taxes are 42% for the second quarter 1997, is up slightly from 41% in the
second quarter 1996. Net income for the second quarter 1997 increased 12.3%
to $1.0 million from $900,000 in the second quarter 1996.
SIX MONTHS ENDED APRIL 30, 1997 COMPARED TO SIX MONTHS ENDED APRIL 30, 1996
Total revenues increased 64.4% in the first half 1997 to $47.2 million from
$28.7 in the first quarter 1996. Printing revenue increased 78.8% in the first
half 1997 to $37.1 million from $20.7 million in the first half 1996. Office
products and office furniture revenue increased 27.2 % in the first half 1997 to
$10.2 million from $8.0 million in the first half 1996. These revenue increases
were achieved through new acquisitions which accounted for increased printing
sales of $15.7 million and increased office products and office furniture
sales of $2.5 million. Revenues at existing printing divisions were increased
by approximately $600,000 due to sales generated from new sales personnel
coupled with broadened product lines. The existing office products and office
furniture divisions experienced a sales decline from the prior quarter
reflecting a non-recurring furniture sale totaling $300,000 in the first half
of 1996.
Total cost of sales increased 69.2% in the first half 1997 to $32.6 million
from $19.3 million in the first half 1996. Printing cost of sales increased
85.1% in the first half 1997 to $26.1 million from $14.1 million in the first
half 1996, due primarily to sales volume and the addition of newly acquired
divisions with lower sales margins. Office products and office furniture cost of
sales increased 26.1% in the first half 1997 to $6.6 million from $5.2 million
in the first half 1996, due to sales volume. Selling, general & administrative
expenses increased as a percentage of sales in first half 1997 to 24.9% from
23.3% in the first half 1996 due to increased costs associated with
acquisitions.
Income from operations increased 3.2% in the first half 1997 to $2.8 million
from $2.7 million in the first half 1996. Interest expense on a comparative
basis increased $400,000 as a result of increased debt. Income taxes are 42% for
the first half 1997 which is up slightly from 41% in the first half 1996. Net
income for the first half 1997 increased 14.0% to $1.8 million from $1.5 million
in the first half 1996.
SEASONALITY
Historically, the Company has experienced a greater portion of its annual
sales and net income in the second and fourth quarters than in the first and
third quarters. The second quarter generally reflects increased orders for
printing of corporate annual reports and proxy statements. A post-Labor Day
increase in demand for printing services and office products coincides with the
Company's fourth quarter.
LIQUIDITY AND CAPITAL RESOURCES
Champion's primary sources of funding for the second quarter 1997 were net
income and borrowings. Funds were used primarily for principal payments on debt,
the purchase of equipment, the funding of increases in accounts receivable and
inventories, the payment of income taxes and the payment of regular cash
dividends.
9
<PAGE>
Working capital on April 30, 1997 was $18.2 million, an increase of $6.1
million from a year ago. The Company's cash balance was $2.2 million on April
30 1997, a portion of which was invested in highly liquid instruments with
maturities of 90 days or less.
The Company has short term credit facilities with banks permitting aggregate
borrowings of $2.8 million. On April 30, 1997, $2.0 million had been drawn under
these facilities. The Company's president personally guarantees a credit
facility of $800,000. There is no assurance that he will continue to do so.
The Company expects that the combination of funds available from working
capital, borrowings available under the Company's credit facilities (including
leases as required) and anticipated cash flows from operations will provide
sufficient capital resources for the foreseeable future. In the event the
Company seeks to accelerate internal growth or make acquisitions beyond these
sources, additional financing would be necessary.
ENVIRONMENTAL REGULATION
The Company is subject to the environmental laws and regulations of the
United States, and the states in which it operates, concerning emissions into
the air, discharges into the waterways and the generation, handling and disposal
of waste materials. The Company's past expenditures relating to environmental
compliance have not had a material effect on the Company. These laws and
regulations are constantly evolving, and it is impossible to predict accurately
the effect they may have upon the capital expenditures, earnings, and
competitive position of the Company in the future. Based upon information
currently available, management believes that expenditures relating to
environmental compliance will not have a material impact on the financial
position of the Company.
PART II -- OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
On May 21, 1997, the Company acquired Blue Ridge. The Company issued
277,775 shares of common stock valued at Five Million Two Hundred Fifty
Thousand Dollars ($5,250,000.00) in exchange for all of the issued and
outstanding shares of common stock of Blue Ridge. The Company issued the
shares without registration under the Securities Act of 1933 based on
exemption from registration pursuant to Section 4(2) of said Act and Rule 506
promulgated thereunder, there being five purchases and all other provisions
of said Rule being satisfied.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the annual meeting of shareholders held March 17, 1997, the following
matters were voted upon: a) Fixing the number of directors at seven (7) and
election of the following nominees as directors, with voting as follows:
<TABLE>
<CAPTION>
DIRECTOR VOTES "FOR" VOTES "WITHHELD" BROKER NON-VOTES
- ----------------------------------------------------------------- ----------- ----------------- ---------------------
<S> <C> <C> <C>
Robert H. Beymer................................................. 7,552,282 5,591 -0-
Philip E. Cline.................................................. 7,554,127 3,746 -0-
Harley F. Mooney, Jr............................................. 7,552,782 5,091 -0-
Todd L. Parchman................................................. 7,553,641 4,232 -0-
A. Michael Perry................................................. 7,552,907 4,966 -0-
Marshall T. Reynolds............................................. 7,554,127 3,746 -0-
Neal W. Scaggs................................................... 7,553,396 4,477 -0-
</TABLE>
10
<PAGE>
b) Approving an amendment to the Company's articles of incorporation to
increase the number of authorized shares of Company Common Stock to 20,000,000
shares, with voting as follows:
<TABLE>
<CAPTION>
VOTES "FOR" VOTES "AGAINST" ABSTENTIONS BROKER NON-VOTES
- ----------- ----------------- ----------- ---------------------
<S> <C> <C> <C>
7,531,922 9,217 16,734 -0-
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) The exhibits listed on the Exhibit Index on page 13 of this Form 10-Q are
filed herewith.
b) The following reports on Form 8-K were filed during the quarter for which
this report is filed:
1) Form 8-K dated April 3, 1997, filed April 3, 1997, describing the
Company's definitive agreement of merger with Blue Ridge Printing Co., Inc., of
Asheville, North Carolina.
2) Form 8-K dated May 21, 1997, filed May 27, 1997, describing the
completion of the Company's definitive agreement of merger with Blue Ridge
Printing Co., Inc., of Asheville, North Carolina.
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
<TABLE>
<S> <C>
CHAMPION INDUSTRIES, INC.
Date: June 16, 1997 /s/ Marshall T. Reynolds
------------------------------------
Marshall T. Reynolds
President and Chief Executive Officer
Date: June 16, 1997 /s/ Joseph C. Worth, III
------------------------------------
Joseph C. Worth, III
Vice President and Chief Financial Officer
</TABLE>
11
<PAGE>
CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE TITLE
- ----------- ----------- --------------------------------------------------------------------------------------------
<C> <S> <C>
3.1 13 Articles of Incorporation of Champion Industries, Inc.
11 15 Statement Re Computation of Per Share Earnings
27 electronic Financial Data Schedule
</TABLE>
12
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CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES
EXHIBIT 3.1
ARTICLES OF INCORPORATION OF CHAMPION INDUSTRIES, INC.
The undersigned, acting as incorporator of a corporation under the West
Virginia Corporation Act, adopts the following Articles of Incorporation for
such corporation:
1. The name of the corporation is Champion Industries, Inc.
2. The period of the corporation's duration is perpetual.
3. The purpose for which the corporation is organized is the transaction of
any and all lawful business for which corporations may be incorporated under
Article One, Chapter Thirty-One, of the West Virginia Code of 1931, as amended.
4. The address of the principal office of the corporation is P. O. Box 2968,
Huntington, West Virginia 25728.
5. The number of directors constituting the initial board of directors of
the corporation is one (1) and the name and address of the person who is to
serve as director until the first annual meeting of shareholders or until his
successors are elected and shall qualify are:
Marshall T. Reynolds
28 Hamill Road
Huntington, West Virginia 25701
6. The name and address of the incorporator is Marshall T. Reynolds, 28
Hamill Road, Huntington, West Virginia 25701.
7. The aggregate number of shares which the corporation shall have authority
to issue is twenty million (20,000,000) common shares of the par value of $1.00
each.
8. Provisions limiting or denying preemptive rights are: No holder of any
shares of the corporation shall have any preemptive right to purchase, subscribe
for, or otherwise acquire any shares of the corporation of any class now or
hereafter authorized, or any securities exchangeable for or
<PAGE>
convertible into such shares, or any warrants or other instruments evidencing
rights or options to subscribe for, purchase, or otherwise acquire such
shares.
9. Provisions for the regulation of the internal affairs of the corporation
are: None.
Dated: March 17, 1997
/s/ Marshall T. Reynolds
This instrument prepared by:
Thomas J. Murray
HUDDLESTON, BOLEN, BEATTY,
PORTER & COPEN
Post Office Box 2185
Huntington, West Virginia 25722
<PAGE>
CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES
EXHIBIT 11
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
APRIL 30, APRIL 30,
-------------------------- --------------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
------------ ------------ ------------ ------------
Primary:
Average shares outstanding............................. 8,104,714 8,021,575 8,104,714 8,014,083
Net effect of dilutive stock options--based on treasury
stock method using average market price.............. 58,622 30,084 57,506 31,366
------------ ------------ ------------ ------------
Totals................................................. 8,163,336 8,051,659 8,162,220 8,045,449
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net income............................................... $ 1,011,383 $ 900,681 $ 1,752,631 $ 1,537,083
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Per share amount......................................... $ 0.12 $ 0.11 $ 0.21 $ 0.19
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Fully diluted:
Average shares outstanding............................. 8,104,714 8,021,575 8,104,714 8,014,083
Net effect of dilutive stock options--based on treasury
stock method using period end market price, if
greater than the average market price................ 58,622 30,084 57,506 31,366
------------ ------------ ------------ ------------
Totals................................................. 8,163,336 8,051,659 8,162,220 8,045,449
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net income............................................... $ 1,011,383 $ 900,681 $ 1,752,631 $ 1,537,083
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Per share amount......................................... $ 0.12 $ 0.11 $ 0.21 $ 0.19
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited consolidated financial statements of Champion Industries, Inc. and
Subsidiaries for the three and six months periods ending April 30, 1997 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> OCT-31-1997 OCT-31-1997
<PERIOD-START> FEB-01-1996 NOV-01-1996
<PERIOD-END> APR-30-1997 APR-30-1997
<CASH> 2,204,361 2,204,361
<SECURITIES> 0 0
<RECEIVABLES> 18,157,736 18,157,736
<ALLOWANCES> 939,000 939,000
<INVENTORY> 9,722,799 9,722,799
<CURRENT-ASSETS> 30,703,126 30,703,126
<PP&E> 29,173,560 29,173,560
<DEPRECIATION> 10,177,947 10,177,947
<TOTAL-ASSETS> 54,127,549 54,127,549
<CURRENT-LIABILITIES> 12,430,496 12,430,496
<BONDS> 0 0
0 0
0 0
<COMMON> 8,104,714 8,104,714
<OTHER-SE> 16,006,773 16,006,773
<TOTAL-LIABILITY-AND-EQUITY> 54,127,549 54,127,549
<SALES> 0 0
<TOTAL-REVENUES> 27,813,247 47,211,113
<CGS> 0 0
<TOTAL-COSTS> 18,504,420 32,633,629
<OTHER-EXPENSES> 7,195,412 11,002,329
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 388,803 569,903
<INCOME-PRETAX> 1,724,612 3,005,252
<INCOME-TAX> 713,229 1,752,631
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,011,383 1,752,631
<EPS-PRIMARY> .12 .21
<EPS-DILUTED> .12 .21
</TABLE>
