SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended October 28, 1995
Commission file number I-683
AM International, Inc.
(Exact name of registrant as specified in its charter)
Delaware 34-0054940
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9399 W. Higgins Rd., Suite 900, Rosemont, Illinois 60018
(Address of principal executive offices) (Zip Code)
(708) 292-0600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports 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 by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
7,010,000 shares (including 1,280 treasury shares) of Registrant's
Common Stock, $.01 par value, were outstanding as of December 8, 1995.
<PAGE>
AM INTERNATIONAL, INC.
INDEX
PART I - Financial Information
Item 1 - Condensed Consolidated Statement of
Operations for the Three Months
Ended October 28, 1995 and October
29, 1994
Condensed Consolidated Balance Sheet
as of October 28, 1995 and
July 31, 1995
Condensed Consolidated Statement of
Cash Flows for the Three Months Ended
October 28, 1995 and October 29, 1994
Notes to Condensed Consolidated Financial
Statements
Item 2 - Management Discussion and Analysis of
Results of Operations and Financial Condition
PART II - Other Information
Item 1- Legal Proceedings
Item 4 - Submission of Matters to a Vote of Security Holders
Item 6 - Exhibits and Reports on Form 8 - K
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
AM INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Three Three
Months Months
(Dollars in thousands Ended Ended
except per share amounts) October October
28, 1995 29, 1994
<S> <C> <C>
Revenues $96,450 $115,982
Cost of Sales 70,764 82,460
Gross Margin 25,686 33,522
Operating expenses:
Selling, general and 26,359 28,139
administrative
Research, development, 3,357 3,141
and engineering
Total Operating Expenses 29,716 31,280
Operating income (loss) (4,030) 2,242
Non-operating income
(expense):
Interest income 135 228
Interest expense (1,294) (1,173)
Other expense, net (191) (418)
Income (loss) before taxes (5,380) 879
Income tax (expense) benefit 1,610 (580)
Net Income (loss) $(3,770) $299
Net Income (loss) Per $(0.54) $0.04
Common Share
Weighted Average shares of
Common Stock outstanding (in 7,010 7,049
thousands)
<FN>
The Notes to Condensed Consolidated Financial Statements are an intergal part of
these financial statements.
</TABLE>
<PAGE>
<TABLE>
AM INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
October July 31,
28, 1995 1995
(Dollars in thousands, except per share amounts)
<CAPTION>
<S> <C> <C>
Assets:
Current assets:
Cash and cash equivalents $12,764 $19,908
Accounts receivable, net 67,419 86,466
Inventories,net 70,449 70,961
Prepaid expenses and other assets 19,208 18,302
Total current assets 169,840 195,637
Property, plant and equipment, net 32,739 32,662
Excess reorganization value 31,393 27,105
Other assets, net 17,642 22,260
Total assets $251,614 $277,664
Liabilities and Shareholders' Equity
Current liabilities:
Short-term borrowings and current $19,997 $12,764
maturities of long-term debt
Accounts payable 44,686 55,343
Service contract deferred income 20,339 23,984
Payroll related expenses 21,219 24,038
Other 55,911 56,179
Total current liabilites 162,152 172,308
Long-term debt 19,141 23,205
Other long-term liabilities 24,371 31,451
Total liabilites $205,664 $226,964
Commitments and Contingencies (Note 4)
Shareholders' equity:
Common stock, $.01 par value; 40 million
shares authorized; 7,010,000
issued as of October 28, 1995 $160 $160
Capital in excess of par value 35,775 35,547
Less: treasury stock, at cost; 1280 shares (6) (6)
at October 28, 1995
Warrants, 1,095,000 issued as of October 383 383
28, 1995; excercise price of $18.00
Accumulated earnings 7,495 11,265
Cumulative translation adjustment 2,143 3,351
Total shareholders' equity 45,950 50,700
Total liabilities and shareholders' equity $251,614 $277,664
<FN>
The Notes to Consolidated Financial Statements are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
AM INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Three Three
Months Months
ended ended
October October
28, 1995 29, 1994
(Dollars in thousands)
<CAPTION>
<S> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) $(3,770) $299
Adjustments to reconcile net income to cash
flow from operating activities:
Depreciation of property, plant and 1,047 982
equipment
Amortization of other assets 449 492
Tax benefit from operating loss 0 156
carryforwards
Change in assets and liabilities:
Accounts receivable, net 9,481 10,017
Inventory, net (3,711) (5,652)
Prepaids and other current assets (1,481) (583)
Accounts payable and accruals (13,111) (13,185)
Other, net (2,872) (43)
Cash flow from operating activities (13,968) (7,517)
Cash flows from investing activities:
Capital expenditures (1,980) (1,471)
Divestitures of Operations 0 0
Cash flow from investing activities (1,980) (1,471)
Cash flows from financing activities:
Net borrowings/(payments) under short-term 10,114 1,180
borrowing agreements
Principal borrowings/(payments) of long- (1,116) (1,472)
term debt
Cash flow from financing activities 8,998 (292)
Effect of exchange rate changes on cash (194) 404
Increase (decrease) in cash and cash (7,144) (8,876)
equivalents
Cash and cash equivalents at beginning of 19,908 25,959
period
Cash and cash equivalents at end of period $12,764 $17,083
<FN>
The Notes to Consolidated Financial Statements are an integral part
of these financial statements.
</TABLE>
<PAGE>
AM INTERNATIONAL, INC.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share)
Note 1 - Basis of Presentation
The Condensed Consolidated Financial Statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission but do not include all information and
footnotes required by generally accepted accounting principles. In the opinion
of management, the Condensed Consolidated Financial Statements reflect all
adjustments, which are of a normal recurring nature, necessary for fair
presentation. Certain prior year amounts have been reclassified to conform with
current year presentation. The accompanying Condensed Consolidated Financial
Statements should be read in conjunction with the Consolidated Financial
Statements and the related notes thereto included in the Company's Annual Report
on Form 10-K for the year ended July 31, 1995.
Note 2 - Borrowing Arrangements
The Company's short and long - term borrowings are comprised of the following:<PAGE>
<TABLE>
October July 31,
28, 1995 1995
<S> <C> <C>
U.S.:
Revolving Credit Facility $8,936 $0
General Unsecured Claims & 20,034 21,047
Priority Tax Claims
Other 2,017 1,896
Total U.S. 30,987 22,943
Foreign:
Belgian Bank Debt 2,457 1,893
French Bank Debt 1,027 513
Capital Leases 4,667 9,927
Other 0 693
Total Foreign 8,151 13,026
Consolidated $39,138 $35,969
Classified in the Consolidated
Balance Sheet
as follows:
Short - term $19,997 $9,635
Long - term 19,141 27,023
Consolidated $39,138 $36,658
</TABLE>
<PAGE>
Note 2 - Borrowing Arrangements (continued)
The Company maintains a $25,000 three year secured domestic Revolving Credit
Facility (subject to borrowing base limitations) which expires October 13, 1996
with BT Commercial Corporation and LaSalle National Bank. The Revolving Credit
Facility includes a $10,000 sub-facility for the issuance of letters of credit.
As of October 28, 1995, the calculated borrowing base was approximately $18,900.
As security for utilizations under the Revolving Credit Facility the Company
granted a security interest and general lien upon its domestic assets excluding
Sheridan Systems inventories. As of October 28, 1995 the Company had borrowings
of $8,936 under the Revolving Credit Facility and was utilizing $4,572 of the
facility to secure outstanding letters of credit. Interest is charged at a rate
which is 1.75% in excess of the prime lending rate of Bankers Trust Company.
Letter of credit fees are 2.5% per annum plus a 0.5% facing fee on standby
letters of credit and 1.5% per annum on commercial documentary letters of
credit. As of October 28, 1995, the interest rate was 10.5%. The agreement
contains restrictive covenants limiting investments in foreign subsidiaries
(which at October 28, 1995 permitted additional investments of approximately
$6,700), limiting capital expenditures, restricting the payment of dividends
and other payments and providing for quarterly measures of pretax net income and
interest coverage, among other things. In addition, the agreement limits the
Company's ability to borrow or to request letters of credit following a material
adverse change. Based on the financial results for the quarter ended October
28, 1995 the Company did not comply with all of the financial covenants of its
Revolving Credit Agreement. The lenders subsequently provided waivers for the
covenant violations.
On October 13, 1993 the Company concluded a reorganization when the United
States Bankruptcy Court for the District of Delaware confirmed the Company's
Plan of Reorganization (Plan). The Plan provides that holders of allowed
general unsecured claims receive cash payments toward satisfaction of the full
amount of their claims in equal quarterly payments payable on the last business
day of each calendar quarter ending after October 13, 1993 over a five-year
period, together with interest at 5% per annum. Holders of priority tax claims
are paid 10% of the allowed claim together with accrued and unpaid interest at
8% per annum on the then outstanding amount on each anniversary of October 13,
1993 which occurs prior to the sixth anniversary of the date of assessment and
the balances of such claims along with accrued and unpaid interest on the sixth
anniversary. For financial reporting purposes interest on general unsecured
claims has been imputed at 9% per annum. At October 28, 1995 the Company had
$1,091 of restricted cash which primarily pertains to the settlement of disputed
claims in accordance with the Plan.
At October 28, 1995, the Company had short - term credit facilities with groups
of banks in numerous foreign countries, which in some cases are subject to
borrowing base limitations, denominated in local currencies, totaling
approximately $12,700 of which $6,600 was utilized. At any time the facilities
may be withdrawn and payment demanded on any outstanding balance. At October
28, 1995 the various short term facilities were primarily utilized to finance
working capital requirements, letters of credit and guarantees, and are
generally secured by certain assets of local subsidiaries and in some cases
guaranteed by the Company. Interest is based on a spread over the respective
country's base lending rate. In October, 1995 the Company exited its German and
Swiss subsidiaries through the filing for bankruptcy by the German subsidiary.
<PAGE>
The German subsidiary had sustained significant operating losses and declining
revenue levels. The German subsidiary had short term borrowings of $2,766 under
its credit facility and $4,990 of capital lease debt.
Note 3 - Capital Structure
The Company has outstanding Warrants to purchase 1,095,000 shares of Common
Stock. The Warrants are exercisable at $18.00 per share and expire on October
15, 1996. In addition, the Company's 1994 Long Term Incentive Plan provides for
the issuance of 1,400,000 shares of new $0.01 par value Common Stock. Options
to purchase the Common Stock are awarded at a price not less than 100% of the
market price on the date of grant, become excercisable at various dates
generally from one to four years after the date of grant, and expire ten years
after the date of grant. At October 28, 1995 options to purchase 610,717 shares
were outstanding at option price ranging from $7.625 to $12.125.
Note 4 - Commitments and Contingencies
The Company received creditor claims during its bankruptcy proceedings of which
approximately $49,000 remain in dispute at the date of this Report. Although
the disputed claims are in many cases in excess of recorded reserves, the
Company believes that many of the claims are duplicative, erroneous or
exaggerated and the Company believes it has valid defenses to the claims. The
Company has filed objections to these disputed claims in the United States
Bankruptcy Court in Delaware. During the quarter ended October 28, 1995 the
Company expunged or settled approximately $1,700 in disputed claims for amounts
within previously established reserves. The disputed claims are primarily
comprised of environmental and product liability claims. The Company has been
notified of various environmental matters in connection with certain current or
former Company locations in Connecticut, Illinois, Ohio, Indiana, Pennsylvania,
and Rhode Island. The Company is also involved in various other administrative
and legal proceedings incidental to its business, including product liability
and general liability lawsuits against which the Company is partially insured.
At the present time, it is management's opinion, based on information available
to the Company and management's experience in such matters, that the resolution
of these legal proceedings is not expected to have a material adverse effect on
the Company's financial condition, results of operations or liquidity.
The Company has sold certain receivables related to machine sales, subject to
limited recourse provisions and repurchase provisions. At October 28, 1995, the
balance on such receivable for which the Company is contingently liable was
$3,086 net of provisions for any anticipated losses.
Note 5 - Components of Certain Balance Sheet Accounts
The allowance for doubtful accounts deducted from accounts receivable in the
Condensed Consolidated Balance Sheet was $4,422 at October 28, 1995 and $5,314
at July 31, 1995.
<PAGE>
Inventories are valued at the lower of cost, which includes material, labor and
overhead determined by the first-in, first-out, (FIFO) method, or market.
Inventories at October 28, 1995 and July 31, 1995 consisted of the following:
<TABLE>
October 28, July 31, 1995
1995
<S> <C> <C>
Raw Materials $2,517 $2,812
Work in process and finished 67,932 68,149
goods
Total Inventories, net $70,449 $70,961
</TABLE>
Inventories and cost of goods sold reported in the interim financial statements
are based, in part, on accounting estimates relating to inventory obsolescence
and differences between book inventories and physical inventories.
Accumulated depreciation deducted from property, plant and equipment was $4,045
at October 28, 1995 and $7,317 at July 31, 1995.
<PAGE>
Item 2 - Management's Discussion and Analysis of Results of Operations and
Financial Condition.
AM INTERNATIONAL, INC.
QUARTERLY REPORT
October 28, 1995
Management's Discussion and Analysis
The discussion of the results of operations and financial condition presented
below should be read in conjunction with Management's Discussion and Analysis
included in the Company's Annual Report to Shareholders for the year ended July
31, 1995.
Consolidated Results of Operations
<TABLE>
Three Months Three Months
ended ended
October 28, October 29,
1995 1994
($ in millions)
<CAPTION>
<S> <C> <C>
Revenues $96.5 $116.0
Gross Margin 25.7 33.5
% 26.6% 28.9%
Selling, General & Admin. 26.4 28.1
Expenses
Research, Development & 3.3 3.2
Engineering
Operating Income (Loss) $(4.0) $2.2
Interest, Net 1.2 0.9
Other Non-Operating Expenses 0.2 0.4
Taxes (expense) benefit 1.6 (0.6)
Net Income (Loss) $(3.8) $0.3
</TABLE>
SUMMARY
The consolidated net loss for the quarter ended October 28, 1995 of $3.8 million
($0.54 per common share) compared unfavorably to the consolidated net income of
$0.3 million ($0.04 per common share) for the quarter ended October 29, 1994.
Revenues for the first quarter of fiscal year 1996 were $96.5 million as
compared to $116.0 million in the corresponding period in fiscal year 1995.
This revenue decrease was primarily attributable to a decrease in revenues at
Sheridan Systems ($8.9 million) and in the continuing AM Multigraphics -
International segment ($4.8 million) as well as from divested unprofitable
foreign subsidiaries ($5.8 million).
<PAGE>
Gross margin for the quarter ended October 28, 1995, of $25.7 million was $7.8
million below that recorded in the prior year comparable quarter. This decrease
in gross margin was due to lower volume as well as a decrease in the overall
gross margin rate to 26.6% in the quarter ended October 28, 1995, as compared to
28.9% in the quarter ended October 29, 1994. The decrease in margin rate was
attributable to the lower revenue level which led to lower absorption of
manufacturing expenses and the continued shift in product mix toward lower
margin distributed products.
Operating expenses for the first quarter of fiscal year 1996 were $29.7 million,
or $1.6 million lower than the $31.3 million in the comparable quarter in fiscal
year 1995. The decrease in selling, general and administration expenses were
achieved through headcount reductions and divestitures.
The operating loss for the first quarter of fiscal year 1996 of $4.0 million
compared unfavorably to the operating income of $2.2 million in the comparable
period in 1995. The reduction in income was due primarily to the decrease in
gross margin, which was largely attributable to the lower revenue level and the
continued shift in product mix toward lower margin distributed products.
The company recorded an income tax benefit of $1.6 million in the first quarter
of fiscal year 1996 as compared to an income tax provision of $0.6 million in
the first quarter of fiscal year 1995. Although Fresh Start Reporting rules
require recognition of these benefits and expenses, the Company does not
anticipate being required to pay or receive refunds for U.S. income taxes due to
the utilization of domestic tax operating loss carry forwards.
<PAGE>
SHERIDAN SYSTEMS
Results for the quarter ended October 28, 1995 and October 29, 1994 were:
<TABLE>
October 28, 1995 October 29, 1994
($ in millions)
<CAPTION>
<S> <C> <C>
Revenues $32.0 $40.9
Operating Income 0.8 5.0
Backlog 33.4 60.8
</TABLE>
The Sheridan Systems business segment serves the printing and newspaper
publishing industries by providing bindery systems and newspaper mailroom
systems. The products sold by Sheridan Systems are largely capital equipment
items and market demand has historically been cyclical. Orders in this business
segment can be in the millions of dollars and therefore revenues, margins and
customer backlogs may vary significantly.
Revenues of $32.0 million for the first quarter of fiscal year 1996 were $8.9
million (21.8%) below the comparable quarter of fiscal year 1995. Sales of
bindery systems decreased $3.9 million while newspaper mailroom systems sales
decreased $2.8 million as compared with the prior year period reflecting lower
backlog at the beginning of the quarter as compared with the previous year as
well as weaker demand during the quarter. In addition, the segment's after
market revenues declined $2.2 million primarily as a result of the divestiture
of the forms press, sheet feed and AIP service and parts businesses in the
fourth quarter of fiscal year 1995.
Gross profit of $9.1 million for the period ended October 28, 1995 was $3.5
million below that reported in the same period in fiscal year 1995. This
decrease was due primarily to the negative impact of lower revenues.
For the first quarter of fiscal year 1996, compared to the first quarter of
fiscal year 1995, operating expenses increased $0.6 million primarily due to
higher research, development and engineering expenses, as the Company continued
to enhance and augment its current product offerings through internal product
development.
Operating income for the first quarter of fiscal year 1996 of $0.8 million was
$4.2 million below that in the corresponding quarter in fiscal year 1995 due to
the lower revenue level and increased research, development and engineering
expenses.
Backlog at the end of the first quarter of fiscal year 1996 was $33.4 million,
or $27.4 million below the backlog at the end of first quarter of fiscal year
1995 and $12.0 million below the backlog at the end of fiscal year 1995. This
reduction in backlog was due primarily to weakness in market demand particularly
for bindery systems. In addition, Sheridan Systems internal efforts to reduce
cycle times and market demand for shortened lead times contributed to the
reduction in backlog.
<PAGE>
AM MULTIGRAPHICS - NORTH AMERICA
Results for the quarter ended October 28, 1995 and October 29, 1994 were:
<TABLE>
October 28, 1995 October 29, 1994
($ in millions)
<CAPTION>
<S> <C> <C>
Revenues $36.8 $36.8
Operating Income (0.9) 0.3
(Loss)
</TABLE>
The AM Multigraphics - North American business segment serves the graphics arts
industry by distributing an extensive range of sheet-fed offset duplicating
presses, digital color printing equipment, pre and post press equipment, and a
wide range of supplies and technical services.
The AM Multigraphics - North American business segment continues to implement
its strategic plan to transition from being a manufacturer to becoming a
distributor of equipment, supplies and services to the graphics art industry.
The relocation of facilities, reengineering of operations and the upgrading of
systems capabilities are tactical objectives of the plan on which further
progress was achieved in the most recent period.
Revenues of $36.8 million were comparable in total to the first quarter of
fiscal year 1995 but continued to reflect the changing composition of the AM
Multigraphics business. The AM Multigraphics segment continued its efforts to
transition out of manufacturing to focus on the sale of distributed products.
Current period revenues reflect an increase in the sale of distributed
equipment, primarily pre-press products, while traditional duplicator machines,
supplies and services declined consistent with recent trends. The long term
decline in the installed base of duplicating presses has been spurred in large
part by inroads from competing technologies.
Gross profit of $9.6 million in the first quarter of fiscal 1996 was $1.1
million below that in the corresponding quarter in fiscal year 1995. The
decrease in gross margin and margin rate was primarily due to the change in
product mix as the operations derived an increased proportion of revenues from
lower margin distributed products while higher margin manufactured products and
services decreased.
Operating expenses of $10.4 million in the quarter ended October 28, 1995 were
essentially unchanged from the comparable prior year period. The AM
Multigraphics segment continued to incur costs to transition from a manufacturer
to a distributor and in addition made further investments in building a digital
selling and support capability.
The operating loss for the first quarter of fiscal year 1996 of $0.9 was
unfavorable as compared to the operating income of $0.3 in the corresponding
period of fiscal year 1995 due primarily to the decrease in gross margin rate.
<PAGE>
AM MULTIGRAPHICS - INTERNATIONAL
Results for the quarter ended October 28, 1995 and October 29, 1994 were:
<TABLE>
October 28, 1995 October 29, 1994
($ in millions)
<CAPTION>
<S> <C> <C>
Revenues
- Continuing 22.8 27.6
Subsidiaries
- Divested 4.8 10.6
Subsidiaries
- Total 27.6 38.2
Operating Income
- Continuing (2.5) (0.8)
Subsidiaries
- Divested (0.3) (1.5)
Subsidiaries
- Total (2.8) (2.3)
</TABLE>
The AM Multigraphics - International operations serve certain foreign graphic
arts markets primarily through wholly owned subsidiaries (the exception, AM
Japan is 67% owned). The subsidiaries distribute an extensive range of sheet-
fed offset duplicating presses, digital color printing equipment, pre and post
press equipment, and a wide range of supplies and technical services. As of
October 28, 1995 the Company had continuing operating subsidiaries in the U.K.,
the Netherlands, Belgium, France and Japan. In October, 1995 the Company exited
its German subsidiary through the filing for bankruptcy by the German subsidiary
The German subsidiary owned the Company's Swiss subsidiary. In June 1995 the
Company divested its Australian subsidiary. The Company is continuing its
efforts to exit unprofitable foreign operations. The table above provides
information about continuing and discontinued subsidiaries.
Revenues in continuing subsidiaries decreased $4.8 million in the period ended
October 28, 1995 as compared with the year earlier period. The Company's
divestiture of its analog copier business in the U.K. during the fourth quarter
of fiscal year 1995 accounted for $2.7 million of the decrease in revenues in
the current period for continuing subsidiaries. The balance of the decrease was
spread across the subsidiaries. The operations have experienced declining
demand for duplicator products due to the inroads from competing print
technologies and increased competition for electronic pre-press products.
The continuing subsidiaries had an operating loss in the first quarter of fiscal
year 1995 of $2.5 million as compared with a loss $0.8 million in the prior year
period. The loss in the first quarter was partially attributable to the
seasonal nature of the European operations which historically have weak
operating results due to the impact of vacations in August and September. In
addition, gross margins have declined due to the changing product mix as the
operations derive a smaller portion of revenues from higher margin duplicator
machines, supplies and services.
<PAGE>
Other Income Statement Items
Interest expense, net increased $0.2 million to $1.2 million in the first
quarter of fiscal 1996 from $1.0 million in the corresponding period of fiscal
1995. This increase was due primarily to increased debt levels.
LIQUIDITY AND CAPITAL RESOURCES
The Company's total cash as of October 28, 1995 was $12.8 million and had
decreased by $7.1 million since July 31, 1995. The primary source of cash
during the first quarter period was from the collection of accounts receivable
($9.5 million). The primary uses of cash in the same period were for the
payment of accounts payable and accruals ($13.1 million), the net loss ($3.8
million) and an increase in inventories ($3.7 million).
Accounts receivable were reduced in all segments of the Company's business as
the operations collected strong fourth quarter shipments. Inventory increased
$2.4 million in the Sheridan Systems segment as purchases of components were
made in anticipation of higher order demand in future periods. AM Multigraphics
- - North America's inventory increased $1.4 million due to lower shipments of
manufactured duplicator products. The Company had capital expenditures of $2.0
million in the quarter ended October 28, 1995 which were primarily to upgrade
systems and equipment.
Total debt increased in the first quarter of fiscal year 1996 to $39.1 million,
an increase of $3.2 million. The increase in debt was to fund higher working
capital needs and the net loss. The Company's principal domestic credit
facility is its $25.0 million revolving credit facility. The Company violated
two restrictive financial covenants in its quarter ended October 28, 1995 and
has received waivers of these violations from its lenders. This revolving
credit agreement expires on October 12, 1996. The Company plans to negotiate a
new revolving credit facility to replace the present facility during fiscal year
1996. This credit facility, combined with current cash balances and the
continuation of existing foreign facilities provides the Company with capital
resources and liquidity which are expected to be sufficient for its operations,
including required principal and interest payments to holders of general
unsecured claims and priority tax claims.
<PAGE>
PART II - OTHER INFORMATION
Item 1 -- Legal Proceedings.
There have been no significant changes in the status of the legal proceedings as
reported in Note 4 to the Company's 1995 Annual Report to Shareholders for the
fiscal year ended July 31, 1995 and as reported in Item 3 - Legal Proceedings to
the Company's Annual Report on Form 10-K filed with the Commission on October
26, 1995.
Item 4 -- Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders of AM International, Inc. was held on
December 6, 1995 for the purpose of election of directors and to consider and
act upon a proposal to ratify the appointment of Arthur Andersen LLP as the
Company's independent public accountants. Proxies for the meeting were pursuant
to Section 14(a) of the Securities and Exchange Act of 1934 and there was no
solicitation in opposition to management's solicitations.
All of management's nominees for directors were elected by the following vote:
<TABLE>
FOR WITHHELD
<S> <C> <C>
Robert E. Anderson, III 6,723,524 4,767
Jeffrey D. Benjamin 6,723,512 4,779
Jerome D. Brady 6,723,376 4,915
Robert N. Dangremond 6,723,498 4,793
William E. Hogan, II 6,723,529 4,762
A. Carl Mudd 6,723,528 4,763
Asher O. Pacholder 6,723,527 4,764
</TABLE>
The proposal to ratify the appointment of Arthur Andersen LLP as the Company's
independent public accountants for the fiscal year ending July 31, 1996 was
approved by the following vote:
<TABLE>
<S>
FOR AGAINST ABSTAINING
<C> <C> <C>
6,724,444 2,724 1,073
</TABLE>
Item 6 -- Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> OCT-28-1995
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<PP&E> 32,739
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<COMMON> 160
0
0
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<SALES> 96,450
<TOTAL-REVENUES> 96,450
<CGS> 70,764
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<OTHER-EXPENSES> 29,716
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<INTEREST-EXPENSE> 1,294
<INCOME-PRETAX> (5,380)
<INCOME-TAX> (3,770)
<INCOME-CONTINUING> (3,770)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 000
<NET-INCOME> (3,770)
<EPS-PRIMARY> (.54)
<EPS-DILUTED> (.54)
</TABLE>
