<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to _________________
Commission file number: 0-26674
DATA DOCUMENTS INCORPORATED
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 47-0714942
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
4205 SOUTH 96TH STREET, OMAHA, NEBRASKA
(Address of principal executive offices)
68127
(Zip Code)
(402) 339-0900
(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
----- -----
The number of shares outstanding of the Registrant's Common Stock, as of
September 30, 1996 was 9,230,261 (excluding 269,607 treasury shares).
1
<PAGE> 2
DATA DOCUMENTS INCORPORATED
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C> <C>
ITEM 1: FINANCIAL STATEMENTS:
CONSOLIDATED BALANCE SHEETS -
At September 30, 1996 and December 31, 1995 3
CONSOLIDATED STATEMENTS OF OPERATIONS -
For the Three and Nine Months Ended September 30, 1996 and 1995 4
CONSOLIDATED STATEMENTS OF CASH FLOWS -
For the Nine Months Ended September 30, 1996 and 1995 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6 - 9
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10 -12
PART II. OTHER INFORMATION
---------------------------
ITEM 2: CHANGES IN SECURITIES 13
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K 13-14
SIGNATURES 15
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM I. - FINANCIAL STATEMENTS
DATA DOCUMENTS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
(COLUMNAR AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 9,563 $ 2,024
Accounts receivable, net of allowance of $ 335,000 and $458,000 28,859 31,569
Inventories (Note B) 35,054 36,048
Other current assets 2,073 1,788
-------- --------
Total Current Assets 75,549 71,429
PROPERTY, PLANT AND EQUIPMENT 37,549 37,502
GOODWILL, net of accumulated amortization of $2,585,000 and $2,273,000 9,961 10,248
DEFERRED FINANCING COSTS AND OTHER ASSETS 5,489 6,546
-------- --------
$128,548 $125,725
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 17,915 $ 19,326
Accrued compensation 3,196 3,579
Accrued interest payable 1,993 3,877
Current maturities of long-term obligations 1,172 1,169
Current and deferred income taxes 919 462
-------- --------
Total Current Liabilities 25,195 28,413
POST-RETIREMENT BENEFITS 1,862 1,805
LONG-TERM OBLIGATIONS 64,134 65,212
DEFERRED INCOME TAXES 2,422 2,871
COMMITMENTS AND CONTINGENCIES (Note C)
COMMON STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value; 5,000,000 shares authorized; none issued - -
Common stock, $0.001 par value; 15,000,000 shares authorized; 9,499,868 and
8,873,016 shares issued; 9,230,261 and 8,603,409 shares outstanding 9 9
Additional paid-in capital 32,020 32,162
Retained earnings (deficit) 3,141 (4,489)
Stockholder notes receivable (235) (258)
Treasury stock, 269,607 shares acquired at no cost - -
-------- --------
Total Common Stockholders' Equity 34,935 27,424
-------- --------
$128,548 $125,725
======== ========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 4
DATA DOCUMENTS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(COLUMNAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- ------------------------
1996 1995 1996 1995
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
NET SALES $59,794 $62,757 $184,472 $176,987
COST OF GOODS SOLD 43,638 48,239 135,880 135,864
------- ------- -------- --------
Gross Profit 16,156 14,518 48,592 41,123
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 9,484 8,840 28,286 26,060
STOCK COMPENSATION CHARGE - - - 156
------- ------- -------- --------
Operating Income 6,672 5,678 20,306 14,907
DEBT EXPENSE, including amortization of
$206,000, $360,000, $621,000 and $1,089,000 2,416 3,547 7,376 10,453
------- ------- -------- --------
INCOME BEFORE INCOME TAXES 4,256 2,131 12,930 4,454
INCOME TAX EXPENSE 1,726 854 5,246 1,847
------- ------- -------- --------
INCOME BEFORE EXTRAORDINARY ITEM 2,530 1,277 7,684 2,607
EXTRAORDINARY ITEM, net of tax (Note F) - - (54) -
------- ------- -------- --------
NET INCOME AVAILABLE FOR
COMMON STOCK $ 2,530 $ 1,277 $ 7,630 $ 2,607
======= ======= ======== ========
EARNINGS PER COMMON SHARE:
Primary:
Income before extraordinary item, as adjusted $ 0.25 $ 0.21 $ .077 $ 0.43
Extraordinary item - - - -
------- ------- -------- --------
Net Income $ 0.25 $ 0.21 $ 0.77 $ 0.43
======= ======= ======== ========
WEIGHTED AVERAGE COMMON AND
COMMON EQUIVALENT SHARES
OUTSTANDING:
Primary 9,955,759 6,483,864 9,940,141 6,483,864
========= ========= ========= =========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 5
DATA DOCUMENTS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(COLUMNAR AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 1996
---------------------------------
1996 1995
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 7,630 $ 2,607
Adjustments to reconcile net income to cash provided by operating
activities:
Depreciation 3,123 5,532
Amortization of intangibles 1,091 1,445
Stock compensation charge - 156
Extraordinary item 37 -
Provision for deferred income taxes (309) (1,291)
Gain on sale of property, plant and equipment (65) (4)
Changes in operating assets and liabilities:
Accounts receivable 2,710 (2,627)
Inventories 994 (3,534)
Other current assets (370) 475
Accounts payable and accrued liabilities 1,297 (636)
Accrued interest (1,884) 1,452
Current taxes on income and other 402 826
Other assets 380 (311)
------- -------
Net cash flows from operating activities 15,036 4,090
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (3,222) (2,156)
Investment in acquired assets of Cal Emblem - (6,186)
Proceeds from the sale of property, plant and equipment 117 14
------- -------
Net cash flows from investing activities (3,105) (8,328)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt - 5,028
Payment of debt (1,239) (188)
Change in liability for outstanding checks (3,034) (643)
Payments for stock registration costs (142) -
Payment of initial public offering costs - (259)
Proceeds from sale of stock 23 71
------- -------
Net cash flows from financing activities (4,392) 4,009
------- -------
NET INCREASE IN CASH 7,539 (229)
CASH AND CASH EQUIVALENTS, Beginning of period 2,024 4,353
------- -------
CASH AND CASH EQUIVALENTS, End of period $ 9,563 $ 4,124
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 8,822 $ 8,129
======= =======
Income taxes $ 4,986 $ 2,329
======= =======
SUPPLEMENTAL SCHEDULE OF NON CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of 32,636 shares of common stock for shareholder notes
receivable $ - $ 32
======= =======
Issuance of promissory notes in connection with Cal Emblem acquisition $ - $ 2,245
======= =======
</TABLE>
See notes to consolidated financial statements.
5
<PAGE> 6
DATA DOCUMENTS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
A. MANAGEMENT STATEMENTS
The consolidated financial statements of Data Documents Incorporated
(the "Company") include the accounts of its wholly-owned subsidiaries:
Data Documents, Inc. (DDI), PBF Washington, Inc. (PBF) and Cal Emblem
Labels, Inc. (Cal Emblem). The summarized financial information of DDI
(see Note G) include the accounts of its wholly-owned subsidiaries: PBF
and Cal Emblem. All significant intercompany transactions and accounts
have been eliminated during consolidation.
The consolidated financial statements of the Company contained herein
should be read in conjunction with the financial statements included in
the Company's Annual Report on Form 10-K for the year ended December 31,
1995.
The consolidated financial statements are unaudited and reflect all
adjustments (consisting of normal and recurring adjustments) that are,
in the opinion of management, necessary for a fair presentation of the
financial position, results of operations and cash flows for the interim
periods.
Certain reclassifications have been made to the 1995 financial
statements to conform to those classifications used in 1996.
B. INVENTORIES
Inventories consisted of (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
(UNAUDITED)
<S> <C> <C>
Finished goods $26,726 $26,888
Work in process 931 1,287
Raw materials 6,374 6,860
Supplies and spare parts 1,023 1,013
------- -------
$35,054 $36,048
======= =======
</TABLE>
Substantially all inventories were valued using the LIFO method. If the
FIFO method of inventory accounting had been used, inventories would
have been lower than reported by $2,563,000 and $712,000 at September
30, 1996 and December 31, 1995, respectively. On a FIFO basis,
operating income would have been higher (lower) by ($710,000) and
$302,000, respectively, for the three months ended September 30, 1996
and September 30, 1995, and ($1,852,000) and $2,307,000 for the nine
months ended September 30, 1996 and September 30, 1995. The FIFO cost
of inventories approximates replacement cost.
6
<PAGE> 7
C. COMMITMENTS AND CONTINGENCIES
The Company is subject to lawsuits and claims which arise out of the
normal course of its business. Management believes that the disposition
of such claims will not have a material adverse effect on the Company.
The Company's income tax returns are currently under IRS examination.
The Company does not expect the results from this examination will have
a material adverse effect on its consolidated financial statements.
D. COMMON STOCK
During the third quarter of 1996, 5,000 warrants were exercised and
converted to 56,490 shares of common stock. For the nine months ended
September 30, 1996, 55,483 warrants were exercised and converted to
626,852 shares of common stock.
E. ACQUISITION
The following unaudited pro forma financial information shows the
results of operations of the Company as though the acquisition of Cal
Emblem occurred as of January 1, 1995. These results include
depreciation on fair value write-up of property and equipment over
estimated lives of 3-7 years, amortization of the excess of purchase
price over net assets acquired over a 30-year life, a decrease in
amortization of Cal Emblem intangibles written off in purchase
accounting and an increase in interest expense as a result of borrowing
funds to pay for the purchase as of January 1, 1995.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------- -----------------------
(In thousands, except per share data) 1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net Sales $ 59,794 $ 65,710 $ 184,472 $ 190,779
Net Income from Continuing Operations 2,530 1,184 7,684 2,486
Net Income Available for Common Stock 2,530 1,184 7,630 2,486
Earnings Per Share:
Primary $ 0.25 $ 0.19 $ 0.77 $ 0.41
</TABLE>
F. EXTRAORDINARY ITEM
In June 1996, the Company incurred an extraordinary charge of $54,000,
net of income tax benefit of $34,000, for the write-off of unamortized
deferred financing costs, unamortized original issue discount, and
certain premium on reacquisition associated with the repurchase of
$500,000 principal amount of 13 1/2% Senior secured Notes due 2002
(the "Senior Notes").
7
<PAGE> 8
G. SUMMARIZED FINANCIAL INFORMATION
Following is the summarized financial information of DDI and its
subsidiaries (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
(UNAUDITED)
<S> <C> <C>
Current assets $ 75,549 $ 71,429
Noncurrent assets $ 52,999 $ 54,296
Current liabilities $ 25,195 $ 28,413
Noncurrent liabilities $ 68,418 $ 69,888
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ ---------------------------
1996 1995 1996 1995
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net sales $ 59,794 $ 62,757 $ 184,472 $ 176,987
Gross profit $ 16,156 $ 14,518 $ 48,592 $ 41,123
Net income $ 2,530 $ 1,277 $ 7,630 $ 2,607
</TABLE>
Following is the summarized financial information of PBF and Cal
Emblem (wholly owned subsidiaries of DDI), which are guarantors of the Senior
Notes. The information presented for Cal Emblem is from the date of
acquisition:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
(UNAUDITED)
<S> <C> <C>
Current assets $ 6,623 $ 7,948
Noncurrent assets $ 9,463 $ 10,581
Current liabilities $ 8,041 $ 11,301
Noncurrent liabilities $ 1,060 $ 1,140
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------- -----------------------
1996 1995 1996 1995
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net sales $ 5,152 $ 4,572 $ 16,297 $ 9,555
Gross profit $ 1,866 $ 1,090 $ 5,114 $ 2,334
Net income $ 368 $ 176 $ 755 $ 308
</TABLE>
8
<PAGE> 9
The separate financial statements of DDI are not presented in this
report because there is no significant difference between the financial
statements of the Company and DDI and, therefore, management concluded
that the inclusion of DDI's separate financial statements would not be
material to holders of the Senior Notes. The separate financial
statements of PBF and Cal Emblem, both of which have guaranteed the
Senior Notes, are not presented because management believes that they
would not be material to holders of the Senior Notes.
H. RECENTLY ISSUED ACCOUNTING STANDARDS
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards (SFAS) No. 123., Accounting for Stock-Based
Compensation, which became effective for the Company beginning January
1, 1996. SFAS No. 123 requires expanded disclosure of stock-based
compensation arrangements with employees and encourages (but does not
require) compensation cost to be measured based on the fair value of
the equity instrument awarded. Companies are permitted, however, to
continue to apply Accounting Principles Board (APB) Opinion No. 25,
which recognizes compensation cost based on the intrinsic value of the
equity instrument awarded. The Company will continue to apply APB No.
25 to its stock-based compensation awards to employees and will
disclose the required pro forma effect on net income and earnings per
share in its Annual Report on Form 10-K.
9
<PAGE> 10
ITEM 2.
MANAGEMENTS' DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The following discussion, which is based on the consolidated financial
statements of the Company, should be read in conjunction with the consolidated
financial statements appearing elsewhere is this report.
When used in the following discussion, the words "believes," "estimates,"
"expects" and similar expressions are intended to identify forward-looking
statements. Such statements are subject to certain risks and uncertainties
which could cause actual results to differ materially from those projected,
including, but not limited to, fluctuations in paper prices, cyclical downturns
in the economy and the effect of emerging technologies such as electronic data
interchange on the business forms industry as a whole. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as of the date hereof. The Company undertakes no obligation to publicly
release any revisions to these forward-looking statements which may be made to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995:
NET SALES
Net sales were $59.8 million for the quarter ended September 30, 1996, a
decrease of 4.7% from $62.8 million in 1995. Paper price decreases in 1996 over
1995 are estimated to have negatively impacted total sales by approximately
7.1%, most of which related to business forms and supplies. Net sales of
business forms, supplies and services decreased 13.8% with decreases of 4.4%
in custom forms sales and 22.8% in stock forms sales. The decreases were
partially offset by $0.8 million of increased sales to Odyssey Integrated
Services(SM) customers. Sales of pressure sensitive labels increased 11.6% and
includes revenues from Cal Emblem, which was acquired in August 1995. The
pressure sensitive labels market was soft through most of the third quarter of
1996, reflecting the economic weakness in the manufacturing sector.
InteliMail(R) sales increased primarily to the addition of new customers.
GROSS PROFIT
Gross profit was $16.2 million for the quarter ended September 30, 1996, an
increase of $1.6 million, or 11.3%, from $14.5 million in 1995. Gross profits
in 1996 were favorably impacted by approximately $1.1 million in reduced
depreciation expense from fully depreciated assets. As a percentage of sales,
gross profit was 27.0% compared with 23.1% in 1995. Gross profit margins of
business forms, supplies and services increased 4.7% for the third quarter of
1996. Pressure sensitive labels gross profit margins increased 3.0% in the
third quarter of 1996 primarily as a result of improved manufacturing
efficiencies. InteliMail(R) gross profit margins increased 2.1%, primarily as
a result of higher operating levels from increased sales volume.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses were $9.5 million for the quarter
ended September 30, 1996, an increase of $0.6 million over 1995. The increase
in expenses resulted from inclusion of the expenses of Cal Emblem. These
expenses increased as a percentage of sales to 15.9% from 14.1% in 1995,
primarily from the effect of lower paper prices in reducing total sales.
10
<PAGE> 11
DEBT EXPENSE
The decrease in debt expense of $1.1 million is primarily attributable to
repayment of $24.0 million of the Senior Notes, as well as the related
reduction in amortization of debt issuance costs and accretion of discount.
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995:
NET SALES
Net sales were $184.5 million for the nine months ended September 30, 1996, an
increase of 4.2% from $177.0 million in 1995. Paper price decreases in 1996
over 1995 are estimated to have negatively impacted total sales by
approximately 3.0%, most of which related to business forms and supplies. Net
sales of business forms, supplies and services decreased 3.9% with no change in
custom forms sales and decreases of 7.3% in stock forms sales. Sales to
federal governmental units were $1.0 million, a decrease of $2.0 million from
1995. The decreases were partially offset by $3.4 million of increased sales
to Odyssey Integrated Services(SM) customers. Pressure sensitive labels sales
increased 20.8% and include revenues from Cal Emblem, which was acquired in
August 1995. The pressure sensitive labels market was soft throughout the nine
months of 1996, partly due to the weaknesses in the retail economy and the
manufacturing sector, generally. InteliMail(R) sales increased 16.4% due to
the addition of new customers and growth from existing customers.
GROSS PROFIT
Gross profit was $48.6 million for the nine months ended September 30, 1996, an
increase of $7.5 million, or 18.2% from $41.1 million in 1995. Gross profits
in 1996 were favorably impacted by approximately $3.0 million in reduced
depreciation expense from fully depreciated assets. As a percentage of sales,
gross profit was 26.3% compared with 23.2% in 1995. Gross profit margins of
business forms, supplies and services increased 4.4% for the first nine months
of 1996. Pressure sensitive labels gross profit margins decreased 0.2% in the
first nine months of 1996 primarily as a result of sales mix. InteliMail(R)
gross profit margins increased 6.1%, primarily as a result of operating levels
from increased sales volume.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses were $28.3 million for the nine
months ended September 30, 1996, an increase of $2.1 million over 1995. The
increase in expenses resulted from inclusion of the expenses of Cal Emblem.
These expenses increased as a percentage of sales to 15.3% and from 14.7% in
1995 primarily from the effect of lower paper prices in reducing total sales.
DEBT EXPENSE
The decrease in debt expense of $3.1 million is primarily attributable to
repayment of $24.0 million of the Senior Notes, as well as the related
reduction in amortization of debt issuance costs and accretion of discount.
EXTRAORDINARY EXPENSE
In June 1996, the Company repurchased $500,000 of the Senior Notes at a price
of 110%. The premium along with the related unamortized debt issuance cost and
issuance discount resulted in a charge of $54,000, net of income tax benefit of
$34,000.
11
<PAGE> 12
LIQUIDITY AND CAPITAL RESOURCES
The Company relies primarily upon operating cash flow and borrowings under its
revolving credit facilities to finance capital expenditures, increases in
working capital and debt service. At September 30, 1996, working capital was
$50.4 million, an increase of $7.3 million from the working capital balance as
of December 31, 1995. Operating activities generated cash of approximately
$15.0 million during the nine months ended September 30, 1996. Cash provided
by operations during the first nine months of 1996 was primarily the result of
increased earnings. The Company had a net cash outflow of approximately $3.1
million from its investing activities during the nine months ended September
30, 1996, for capital expenditures. The Company estimates that its capital
expenditures for fiscal 1996 will be approximately $4.5 million.
In connection with the acquisition of Cal Emblem, the Company issued two
five-year term promissory notes in the aggregate principal amount of $2.2
million which accrue interest at the rate of 10% per annum. Principal and
interest payments will be due in approximately equal installments over five
years.
The tax-exempt industrial revenue bonds in the principal amount $570,000 bear
an annual interest rate of 10.125% and are due on October 1, 1996 ($400,000)
and on October 1, 1997 ($170,000). Monthly sinking fund payments are required.
The Company has a revolving credit facility (the "Revolving Credit Facility")
that provides for borrowings of up to $20 million. The Revolving Credit
Facility is secured by the Company's accounts receivable and the proceeds
thereof and, subject to the first lien of the holders of the Senior Notes, by
the Company's inventory and proceeds thereof. Outstanding indebtedness under
the Revolving Credit Facility is limited to 80% of eligible accounts receivable
(subject to reduction by the lender under certain circumstances). The facility
will expire in February 1997, subject to automatic annual renewal unless
terminated by either party. The Company is obligated to pay certain
termination fees in the event the facility is terminated prior to February
1997. Under the terms of the Indenture governing the Senior Notes, the Company
is permitted to incur additional revolving credit indebtedness in an amount
equal to 85% of its accounts receivable, and based upon accounts receivable
balances at September 30, 1996, the Company was permitted to incur
approximately $24.2 million of revolving credit indebtedness. As of September
30, 1996, there was no amount outstanding under the Revolving Credit Facility.
The facility restricts certain liens and prohibits the payment of dividends on,
and redemption of, any class of the capital stock of DDI (all of which is
currently owned by the Company), PBF or Cal Emblem and certain other restricted
payments, among other things.
The Company expects to satisfy its obligations under the Senior Notes, the
promissory notes issued in connection with the Cal Emblem acquisition and the
industrial revenue bonds, as well as future capital expenditures and working
capital requirements, with cash flow from operations, and believes that this
source will provide sufficient liquidity to enable it to meet its working
capital requirements for at least the next 12 months.
The information in the immediately preceding paragraph is forward-looking and
involves risks and uncertainties that could significantly impact the Company's
expected liquidity requirements in the short and long term. While it is
impossible to itemize the many factors and specific events that could affect
the Company's outlook for its liquidity requirements, such factors would
include fluctuations in paper prices, cyclical downturns in the economy and the
effect of emerging technologies such as electronic data interchange on the
business forms industry as a whole. These factors could reduce the Company's
revenues and increase its expenses, resulting in a greater burden on the
Company's liquidity than that which the Company has described above.
12
<PAGE> 13
PART II. OTHER INFORMATION
Item 2. CHANGES IN SECURITIES
(a) During the quarter ended September 30, 1996, 56,490 shares of
common stock were issued as a result of the exercise of 5,000
Warrants.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 11 - Statement Regarding Computation of Per Share
Earnings
(b) Current Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
September 30, 1996.
13
<PAGE> 14
EXHIBIT 11
DATA DOCUMENTS INCORPORATED AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(AMOUNTS IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE:
Common stock outstanding 9,230,261 5,203,409 9,230,261 5,203,409
Common stock equivalents:
Common stock warrants, if dilutive 653,603 1,280,455 653,603 1,280,455
Common stock options - incremental shares 71,895 - 56,277 -
--------- --------- --------- ---------
Weighted average shares outstanding 9,955,759 6,483,864 9,940,141 6,483,864
========= ========= ========= =========
Net income, as adjusted:
Before extraordinary item $ 2,530 $ 1,341 $ 7,684 $ 2,800
Extraordinary item available for common stock - - (54) -
--------- --------- --------- ---------
Net income available for common stock 2,530 1,341 7,630 2,800
========= ========= ========= =========
Primary earnings per share
Before extraordinary item $ 0.25 $ 0.21 $ 0.77 $ 0.43
Extraordinary item available for common stock $ - $ - $ - $ -
--------- --------- --------- ---------
Net income available for common stock $ 0.25 $ 0.21 $ 0.77 $ 0.43
========= ========= ========= =========
NET INCOME AS ADJUSTED PRIMARY EARNINGS PER SHARE:
Net income before extraordinary item $ 2,530 $ 1,277 $ 7,684 $ 2,607
Add: amortization of original issue discount of
exchangeable warrants - 64 - 193
--------- --------- --------- ---------
Net income before extraordinary item as
adjusted $ 2,530 $ 1,341 $ 7,684 $ 2,800
========= ========= ========= =========
</TABLE>
14
<PAGE> 15
DATA DOCUMENTS INCORPORATED
Signatures
Pursuant to the requirements 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.
DATA DOCUMENTS INCORPORATED
/s/ Joseph C. Addison
----------------------------------------
Joseph C. Addison
Chief Financial Officer
/s/ Walter J. Kearns
----------------------------------------
Walter J. Kearns
President and Chief Executive Officer
15
<PAGE> 1
EXHIBIT 11
DATA DOCUMENTS INCORPORATED AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(AMOUNTS IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE:
Common stock outstanding 9,230,261 5,203,409 9,230,261 5,203,409
Common stock equivalents:
Common stock warrants, if dilutive 653,603 1,280,455 653,603 1,280,455
Common stock options - incremental shares 71,895 - 56,277 -
--------- --------- --------- ---------
Weighted average shares outstanding 9,955,759 6,483,864 9,940,141 6,483,864
========= ========= ========= =========
Net income, as adjusted:
Before extraordinary item $ 2,530 $ 1,341 $ 7,684 $ 2,800
Extraordinary item available for common stock - - (54) -
--------- --------- --------- ---------
Net income available for common stock 2,530 1,341 7,630 2,800
========= ========= ========= =========
Primary earnings per share
Before extraordinary item $ 0.25 $ 0.21 $ 0.77 $ 0.43
Extraordinary item available for common stock $ - $ - $ - $ -
--------- --------- --------- ---------
Net income available for common stock $ 0.25 $ 0.21 $ 0.77 $ 0.43
========= ========= ========= =========
NET INCOME AS ADJUSTED PRIMARY EARNINGS PER SHARE:
Net income before extraordinary item $ 2,530 $ 1,277 $ 7,684 $ 2,607
Add: amortization of original issue discount of
exchangeable warrants - 64 - 193
--------- --------- --------- ---------
Net income before extraordinary item as
adjusted $ 2,530 $ 1,341 $ 7,684 $ 2,800
========= ========= ========= =========
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 9,563
<SECURITIES> 0
<RECEIVABLES> 29,209
<ALLOWANCES> 335
<INVENTORY> 35,054
<CURRENT-ASSETS> 75,549
<PP&E> 84,957
<DEPRECIATION> 47,408
<TOTAL-ASSETS> 128,548
<CURRENT-LIABILITIES> 25,195
<BONDS> 64,134
0
0
<COMMON> 9
<OTHER-SE> 34,926
<TOTAL-LIABILITY-AND-EQUITY> 128,548
<SALES> 184,472
<TOTAL-REVENUES> 184,472
<CGS> 135,880
<TOTAL-COSTS> 135,880
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,376
<INCOME-PRETAX> 12,930
<INCOME-TAX> 5,246
<INCOME-CONTINUING> 7,684
<DISCONTINUED> 0
<EXTRAORDINARY> (54)
<CHANGES> 0
<NET-INCOME> 7,630
<EPS-PRIMARY> .77
<EPS-DILUTED> .77
</TABLE>
