<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
---------
Quarterly Report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 1998
Commission File No. 333-51569
PARAGON CORPORATE HOLDINGS INC.
-------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 34-1845312
-------- ----------
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
CO-REGISTRANTS AND SUBSIDIARY GUARANTORS
A.B. Dick Company Delaware 04-3892065
Curtis Industries, Inc. Delaware 13-3583725
Itek Graphix Corp. Delaware 04-2893064
Curtis Sub, Inc. Delaware 34-1737529
Paragon Corporate Holdings Inc. A.B. Dick Company
7400 Caldwell Avenue 7400 Caldwell Avenue
Niles, Illinois 60714 Niles, Illinois 60714
(847) 779-2500 (847) 779-1900
Curtis Industries, Inc.
6140 Parkland Boulevard
Mayfield Heights, Ohio 44124
(440) 446-9700
Itek Graphix Corp. Curtis Sub, Inc.
7400 Caldwell Avenue 6140 Parkland Boulevard
Niles, Illinois 60714 Mayfield Heights, Ohio 44124
(847) 779-1900 (440) 446-9700
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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 twelve months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes ( X ) No ( )
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practical date.
As of October 31, 1998, there were 1,000 shares of the registrant's Class A
common stock outstanding.
As of October 31, 1998, there were 19,000 shares of the registrant's Class B
common stock outstanding.
<PAGE> 2
<TABLE>
<CAPTION>
INDEX
PARAGON CORPORATE HOLDINGS INC.
Part I Financial Information Page Number
<S> <C> <C>
Item 1 Financial Statements (Unaudited)...............................1
Condensed Consolidated Balance Sheets
September 30, 1998 and December 31, 1997.......................2
Condensed Consolidated Statements of Operations
Three Months ended September 30, 1998 and 1997
Nine Months ended September 30, 1998 and the period from
January 17, 1997 through September 30, 1997...............3
Condensed Consolidated Statements of Cash Flows
Nine Months ended September 30, 1998 and the period from
January 17, 1997 through September 30, 1997...............4
Notes to Condensed Consolidated Financial Statements........5-13
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations........................14-17
Part II Other Information
Item 2 Change in Securities.........................................18
Item 6 Exhibits and Reports on Form 8-K.............................18
Signatures..............................................................19
</TABLE>
<PAGE> 3
Part I. Financial Information
Item I. Financial Statements (Unaudited)
1
<PAGE> 4
<TABLE>
<CAPTION>
PARAGON CORPORATE HOLDINGS INC.
Condensed Consolidated Balance Sheets
(In thousands)
September 30, 1998 December 31, 1997
------------------ -----------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 7,043 $ 3,283
Short-term investments 27,506 4,176
Accounts receivable, net 39,152 37,821
Inventories 48,359 48,068
Other 1,484 1,535
--------- ---------
Total current assets 123,544 94,883
Property, plant and equipment, less
accumulated depreciation 14,095 9,998
Goodwill 32,178 32,072
Other assets 4,812 1,122
--------- ---------
$ 174,629 $ 138,075
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY:
Current liabilities:
Accounts payable $ 16,838 $ 14,143
Accrued expenses 28,216 28,599
Deferred service revenue 6,992 6,960
Due to GEC 2,804 945
Restructuring and severance reserves 1,158 3,121
Current portion of long-term debt 748 3,495
--------- ---------
Total current liabilities 56,756 57,263
Senior Notes 115,000 --
Long-term debt, less current portion 1,170 67,121
Retirement obligations 3,519 3,451
Other long-term liabilities 2,731 3,109
Stockholder's equity:
Common stock, no par value, Authorized
2,000 shares of Class A (voting) and 28,000 shares of Class B
(non-voting); issued and outstanding 1,000 shares of Class A and
19,000 shares of Class B, at stated value 1 1
Paid-in capital 47 47
Retained earnings (deficit) (3,916) 7,604
Accumulated other comprehensive loss (679) (521)
--------- ---------
Total stockholder's equity (deficit) (4,547) 7,131
--------- ---------
$ 174,629 $ 138,075
========= =========
See notes to condensed consolidated financial statements.
</TABLE>
2
<PAGE> 5
PARAGON CORPORATE HOLDINGS INC.
Condensed Consolidated Statements of Operations
(In thousands)
<TABLE>
<CAPTION>
Period from
Nine Months January 17, 1997
Three Months Ended Ended through
Sept. 30, 1998 Sept. 30, 1997 Sept. 30, 1998 Sept. 30, 1997
-------------- -------------- -------------- ----------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
NET REVENUE
Equipment $ 16,647 $ 14,558 $ 49,706 $ 46,750
Service 6,174 6,944 19,375 20,879
Repair parts 4,024 3,885 12,053 11,643
Supplies 17,754 20,336 55,948 58,143
Automotive and industrial 20,966 -- 61,560 --
---------- --------- ---------- ---------
Total net revenue 65,565 45,723 198,642 137,415
COST OF REVENUE
Equipment 12,732 10,876 36,931 33,664
Service 4,901 5,257 15,044 15,255
Repair parts 1,510 1,628 4,808 4,863
Supplies 12,002 13,917 37,070 39,148
Automotive and industrial 8,812 -- 26,134 --
---------- --------- ---------- ---------
Total cost of revenue 39,957 31,678 119,987 92,930
---------- --------- ---------- ---------
Gross profit 25,608 14,045 78,655 44,485
COSTS AND EXPENSES
Sales and marketing expenses 10,919 6,124 33,099 17,786
General and administrative expenses 8,622 3,675 28,530 12,104
Research and development 740 894 2,291 2,888
Depreciation and amortization 1,421 285 4,036 970
Management fee 248 456 1,169 1,380
Relocation costs 931 -- 1,840 --
---------- --------- ---------- ---------
22,881 11,434 70,965 35,128
---------- --------- ---------- ---------
Operating income 2,727 2,611 7,690 9,357
Interest expense, net (2,472) (398) (7,186) (1,382)
Other income (expense) (55) 134 (218) 153
---------- --------- ---------- ---------
Income before foreign income
taxes and extraordinary item 200 2,347 286 8,128
Foreign income taxes 86 209 526 579
---------- --------- ---------- ---------
Income (loss) before extraordinary item 114 2,138 (240) 7,549
Extraordinary item -- -- 1,280 --
---------- --------- ---------- ---------
Net income (loss) $ 114 $ 2,138 $ (1,520) $ 7,549
========== ========= ========== ==========
See notes to condensed consolidated financial statements.
</TABLE>
3
<PAGE> 6
PARAGON CORPORATE HOLDINGS INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Period from
January 17, 1997
Nine Months Ended through
September 30, 1998 September 30, 1997
------------------ ------------------
(Unaudited)
<S> <C> <C>
Operating activities:
Net income (loss) $ (1,520) $ 7,549
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Extraordinary item 1,280 --
Provision for depreciation and amortization 4,007 970
Gain on sale of equipment (845) --
Changes in operating assets and liabilities 374 1,399
--------- ---------
Net cash provided by operating activities 3,296 9,918
Investing activities:
Accounts receivable used in connection with the
acquisition of A.B. Dick Company -- (19,489)
Purchases of property, plant and equipment (6,255) (1,349)
Proceeds from sale of equipment 858 --
Payments of acquisition liabilties (2,525) (1,108)
Increase in short-term investments (23,330) (251)
Acquisition of businesses (1,095) --
--------- ---------
Net cash used in investing activities (32,347) (22,197)
Financing activities:
Borrowings on revolving credit lines -- 11,893
Increase (decrease) in amounts due to GEC and affiliates (141) 316
Decrease in long-term borrowings (40,614) --
Proceeds from bond offering 115,000 --
Payment of bond issue costs (5,192) --
Payment on revolving credit lines (26,084) --
Dividend distribution (10,000) --
--------- ---------
Net cash provided by financing activities 32,969 12,209
Effect of exchange rate changes on cash (158) (368)
--------- ---------
Increase (decrease) in cash and cash equivalents 3,760 (438)
Cash and cash equivalents at beginning of period 3,283 2,150
--------- ---------
Cash and cash equivalents at end of period $ 7,043 $ 1,712
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 7
Paragon Corporate Holdings Inc.
Notes to Condensed Consolidated Financial Statements
A. ORGANIZATION
Paragon Corporate Holdings Inc. ("the Company") commenced operations on January
17, 1997 through the acquisition on that date of the common stock of A.B. Dick
Company and its wholly owned subsidiaries (collectively "A.B. Dick"), from
General Electric Company Ltd. ("GEC"). The Company is a holding company with no
independent operations or investments other than its investments in its
subsidiaries, except that the Company has temporarily invested, at the holding
company level, the residual proceeds from the Series A Notes. NES Group, Inc.
is the sole stockholder of the Company. A. B. Dick is engaged in the
manufacture, sale, distribution and service of offset presses, cameras and
plate makers and related supplies for the graphic arts and printing industry.
In connection with the acquisition of A.B. Dick, restructuring reserves of
$6.0 million were included in the purchase price allocation in accordance with
the Company's business plans to substantially reorganize its operations. These
reserves represent accruals for severance of administrative and operating
employees and occupancy costs to be incurred in 1997 and 1998 for idle
manufacturing and headquarters facilities prior to the relocation of operations
in 1998. Through September 30, 1998, the Company has paid approximately $5.3
million of these expenses.
As of November 1, 1998, A. B. Dick has completed the physical relocation of its
headquarters, distribution center and manufacturing activities, except for the
press room chemical manufacturing which will be finalized during the first
quarter of 1999.
On December 5, 1997, the Company acquired all the common stock of Curtis
Industries, Inc. ("Curtis"), a national distributor of products to the
automotive and industrial markets. The acquisition was accounted for under the
purchase method of accounting and, accordingly, the results of operations of
Curtis are included in the consolidated financial statements since the date of
acquisition.
The following unaudited pro forma results of operations assume the acquisition
of Curtis occurred on January 1, 1997. These pro forma results have been
prepared for comparative purposes only and do not purport to be indicative of
the results of operations which actually would have resulted had the
acquisition occurred on January 1, 1997:
<TABLE>
<CAPTION>
Three months ended Period from January 17, 1997
September 30, 1997 through September 30, 1997
------------------ ----------------------------
<S> <C> <C>
Net revenues $ 66,134 $197,391
Costs and expenses 62,268 184,366
Operating income 3,866 11,625
Net income 2,397 6,903
</TABLE>
B. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the nine month
period ended September 30, 1998 are not necessarily indicative of the
5
<PAGE> 8
results that may be expected for the year ending December 31, 1998. For further
information, refer to the consolidated financial statements and footnotes of
Paragon Corporate Holdings Inc. and subsidiaries for the year ended December
31, 1997, included in the Form S-4 Registration Statement (Registration
Statement No. 333-51569) filed by the Company on July 17, 1998.
C. USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
D. ACCOUNTING PRONOUNCEMENTS
In June 1997, the FASB issued Statement 130, Reporting Comprehensive Income,
which establishes new rules for the reporting and display of comprehensive
income and its components. Statement 130 requires the Company's foreign
currency translation adjustments to be included in other comprehensive income
and the disclosure of total comprehensive income. The Company adopted Statement
130 in the first quarter of 1998 with no impact on net income or stockholder's
equity. The components of comprehensive income for the three month and nine
month periods ended September 30, 1998 and 1997 and period from January 17,
1997 through September 30, 1997 are as follows:
<TABLE>
<CAPTION>
Period from
January 17, 1997
Three months ended Nine months through
September 30 September 30 ended September 30 September 30
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income (loss) $ 114 $ 2,138 $(1,520) $ 7,549
Foreign currency translation
adjustment (69) (160) (158) (368)
------- ------- ------- -------
Comprehensive income (loss) $ 45 $ 1,978 $(1,678) $ 7,181
======= ======= ======= =======
</TABLE>
In June 1998, the FASB issued Statement 133, "Accounting for Derivative
Instruments and Hedging Activities" which is required to be adopted in years
beginning after June 15, 1999. Statement 133 requires all derivatives to be
recognized as either assets or liabilities in the balance sheet and be measured
at fair value. The Company is currently evaluating Statement 133 and because
the Company expects to have a minimal use of derivatives, management does not
anticipate that the adoption of the new Statement will have a material effect
on earnings or the financial position of the Company.
E. INVENTORIES
Domestic inventories, which represent approximately 80% of total consolidated
inventory, are determined on the last-in, first-out (LIFO) basis and foreign
inventories are determined on the first-in, first-out (FIFO) basis. Where
necessary, reserves are provided to value inventory at the lower of cost or
market.
Inventories are summarized as follows:
<TABLE>
<CAPTION>
September 30, 1998 December 31, 1997
------------------ -----------------
<S> <C> <C>
Raw materials and work in process $ 8,330 $ 9,295
Finished goods 40,740 39,363
LIFO reserve (711) (590)
-------- --------
$ 48,359 $ 48,068
======== ========
</TABLE>
6
<PAGE> 9
F. DEBT ISSUANCE AND SUBSEQUENT EVENT
On April 1, 1998, the Company issued $115 million of Series A Senior Notes due
2008. Interest on the notes is payable semi-annually in cash in arrears. The
Senior Notes are redeemable at the option of the Company, in whole or in part,
any time on or after 2003 subject to certain call premiums. The Senior Notes
are guaranteed by the domestic subsidiaries of the Company and contain various
restrictive covenants that, among other things, place limitations on the sale
of assets, payment of dividends, incurring additional indebtedness and restrict
transactions with affiliates. The proceeds from the notes, net of costs and
expenses, were used to retire $70.4 million of existing debt and make a
dividend distribution to the sole stockholder of $10.0 million.
Pursuant to a Prospectus dated July 22, 1998 the Company made an offer to
exchange 9 5/8% Series B Notes due 2008 ("Series B Notes") for the $115 million
of Series A Notes. On September 1, 1998, all of the Series A Notes were
exchanged for Series B Notes pursuant to the exchange offer. The form and terms
of the Series B Notes are the same as the form and terms of the Series A Notes,
except that the Series B Notes have been registered under the Securities Act of
1933.
G. INCOME TAXES
The Company and its domestic subsidiaries have elected Subchapter S Corporation
status for United States income tax purposes. Accordingly, the Company's United
States operations are not subject to income taxes as separate entities. The
Company's United States income is included in the income tax returns of the
stockholder. Under the terms of the Tax Payment Agreement with the Stockholder,
the Company makes distributions to the stockholder for payment of income taxes.
The Company has foreign subsidiaries located in Canada, the United Kingdom,
Holland, Belgium and the Netherlands. For the nine months ended, September 30,
1998 and for the period January 17, 1997 through September 30, 1997, the
Company recorded foreign income taxes of $0.5 million and $0.6 million
respectively.
H. EXTRAORDINARY ITEM
An extraordinary expense of $1.3 million was recorded during the second quarter
of 1998 related to the write-off of deferred financing costs and fees
associated with the early extinguishment of certain of the Company's debt.
7
<PAGE> 10
I. GUARANTOR AND NON-GUARANTOR SUBSIDIARIES
The Company's domestic subsidiaries, all of which are directly or indirectly
wholly owned, are the only guarantors of Senior Notes. The guarantees are full,
unconditional and joint and several. Separate financial statements of these
guarantor subsidiaries are not presented as management has determined that they
would not be material to investors.
The Company's foreign subsidiaries are not guarantors of the Senior Notes.
Summarized consolidating balance sheets as of September 30, 1998 and December
31, 1997 for the Company, the guarantor subsidiaries, and the non-guarantor,
foreign subsidiaries are as follows (in thousands):
<TABLE>
<CAPTION>
Combined Combined
The Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Total
--------- ------------ ------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
(SEPTEMBER 30, 1998):
Current assets:
Cash and cash equivalents $ 54 $ 4,738 $ 2,251 $ -- $ 7,043
Short-term investments 27,506 -- -- -- 27,506
Accounts receivable, net -- 29,691 9,461 -- 39,152
Inventories -- 38,737 9,795 (173) 48,359
Other 67 778 639 -- 1,484
--------- --------- --------- --------- ---------
Total current assets 27,627 73,944 22,146 (173) 123,544
Property, plant and
equipment, net -- 13,163 932 -- 14,095
Goodwill -- 32,115 63 -- 32,178
Investment in subsidiary 75,426 13,803 -- (89,229) --
Other assets 4,792 12 8 -- 4,812
Intercompany 8,340 -- -- (8,340) --
--------- --------- --------- --------- ---------
$ 116,185 $ 133,037 $ 23,149 $ (97,742) $ 174,629
========= ========= ========= ========= =========
Current liabilities:
Accounts payable $ -- $ 13,608 $ 3,230 $ -- $ 16,838
Accrued expenses 5,366 19,258 3,595 (3) 28,216
Deferred service revenue -- 5,646 1,346 -- 6,992
Due to GEC -- 2,804 -- -- 2,804
Restructuring and
severance reserves -- 1,158 -- -- 1,158
Intercompany -- 7,754 1,621 (9,375) --
Current portion of long-
term debt -- 748 -- -- 748
--------- --------- --------- --------- ---------
Total current liabilities 5,366 50,976 9,792 (9,378) 56,756
Long-term debt, less
current portion -- 1,170 -- -- 1,170
Senior Notes 115,000 -- -- -- 115,000
Retirement obligations -- 3,525 (6) -- 3,519
Other long-term liabilities -- 2,731 -- -- 2,731
Stockholder's equity (deficit) (4,181) 74,635 13,363 (88,364) (4,547)
--------- --------- --------- --------- ---------
$ 116,185 $ 133,037 $ 23,149 $ (97,742) $ 174,629
========= ========= ========= ========= =========
</TABLE>
8
<PAGE> 11
I. GUARANTOR AND NON-GUARANTOR SUBSIDIARIES - CONTINUED
<TABLE>
<CAPTION>
Combined Combined
The Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Total
--------- ------------ ------------- ------------ --------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
(DECEMBER 31, 1997):
Current assets:
Cash and cash equivalents $ 28 $ 1,173 $ 2,082 $ -- 3,283
Short-term investments 4,176 -- -- -- 4,176
Accounts receivable, net -- 29,230 8,778 (187) 37,821
Inventories -- 39,494 8,496 78 48,068
Other -- 900 635 -- 1,535
--------- --------- --------- --------- ---------
Total current assets 4,204 70,797 19,991 (109) 94,883
Property, plant and
equipment, net -- 9,351 647 -- 9,998
Goodwill -- 32,008 64 -- 32,072
Investment in subsidiary 31,437 11,581 -- (43,018) --
Deferred charges 417 698 7 -- 1,122
Intercompany -- 4,000 -- (4,000) --
--------- --------- --------- --------- ---------
$ 36,058 $ 128,435 $ 20,709 $ (47,127) $ 138,075
========= ========= ========= ========= =========
Current liabilities:
Accounts payable $ -- $ 11,475 $ 2,668 $ -- $ 14,143
Accrued expenses 3,227 22,345 2,430 597 28,599
Deferred service revenue -- 5,903 1,057 -- 6,960
Due to GEC -- 945 -- -- 945
Restructuring and
severance reserves -- 3,121 -- -- 3,121
Intercompany 4,000 -- -- (4,000) --
Current portion of
long-term debt 1,000 2,495 -- -- 3,495
--------- --------- --------- --------- ---------
Total current liabilities 8,227 46,284 6,155 (3,403) 57,263
Long-term debt,less
current portion 20,700 46,421 -- -- 67,121
Retirement obligations -- 3,414 37 -- 3,451
Other long-term liabilities -- -- -- 3,109 3,109
Intercompany -- (1,155) 2,190 (1,035) --
Stockholder's equity 7,131 33,471 12,327 (45,798) 7,131
--------- --------- --------- --------- ---------
$ 36,058 $ 128,435 $ 20,709 $ (47,127) $ 138,075
========= ========= ========= ========= =========
</TABLE>
9
<PAGE> 12
I. GUARANTOR AND NON-GUARANTOR SUBSIDIARIES - CONTINUED
Summarized consolidating statements of income for the three months ended
September 30, 1998 and 1997, respectively, for the Company, the guarantor
subsidiaries, and the non-guarantor, foreign subsidiaries are as follows (in
thousands):
<TABLE>
<CAPTION>
Combined Combined
The Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Total
--------- ------------ ------------- ------------ --------
INCOME STATEMENT DATA:
(THREE MONTHS ENDED SEPTEMBER 30, 1998):
<S> <C> <C> <C> <C> <C>
Net revenue $ -- $ 51,530 $ 14,140 $ (105) $ 65,565
Cost of revenue -- 30,565 9,480 (88) 39,957
-------- -------- -------- -------- --------
Gross profit -- 20,965 4,660 (17) 25,608
Total operating expenses 140 18,352 4,389 -- 22,881
-------- -------- -------- -------- --------
Operating income (loss) (140) 2,613 271 (17) 2,727
Interest (expense), net (2,282) (213) 23 -- (2,472)
Other income (expense) -- 125 (180) -- (55)
-------- -------- -------- -------- --------
Income (loss) before foreign
income taxes (2,422) 2,525 114 (17) 200
Foreign income taxes -- -- 86 -- 86
-------- -------- -------- -------- --------
Net income (loss) $ (2,422) $ 2,525 $ 28 $ (17) $ 114
======== ======== ======== ======== ========
<CAPTION>
Combined Combined
The Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Total
-------- ------------ ------------- -------------- ---------
INCOME STATEMENT DATA:
(THREE MONTHS ENDED SEPT. 30, 1997):
<S> <C> <C> <C> <C> <C>
Net revenue $ -- $ 35,415 $ 10,308 $ -- $ 45,723
Cost of revenue -- 24,423 7,255 -- 31,678
-------- -------- -------- ----------- --------
Gross profit -- 10,992 3,053 -- 14,045
Total operating expenses 6 8,797 2,631 -- 11,434
-------- -------- -------- ----------- --------
Operating income (loss) (6) 2,195 422 -- 2,611
Interest (expense), net 85 (527) 44 -- (398)
Other income -- 1 133 -- 134
-------- -------- -------- ----------- --------
Income before foreign
income taxes 79 1,669 599 -- 2,347
Foreign income taxes -- -- 209 -- 209
-------- -------- -------- ----------- --------
Net income $ 79 $ 1,669 $ 390 $ -- $ 2,138
======== ======== ======== =========== ========
</TABLE>
10
<PAGE> 13
I. GUARANTOR AND NON-GUARANTOR SUBSIDIARIES - CONTINUED
Summarized consolidating statements of income for the nine months ended
September 30, 1998 and the period from January 17, 1997 through September 30,
1997, respectively, for the Company, the guarantor subsidiaries, and the
non-guarantor, foreign subsidiaries are as follows (in thousands):
<TABLE>
<CAPTION>
Combined Combined
The Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Total
--------- ------------ ------------ ------------ ----------
INCOME STATEMENT DATA:
(NINE MONTHS ENDED SEPT. 30, 1998):
<S> <C> <C> <C> <C> <C>
Net revenue $ -- $ 154,401 $ 44,500 $ (259) $ 198,642
Cost of revenue -- 90,723 29,528 (264) 119,987
--------- --------- --------- --------- ---------
Gross profit -- 63,678 14,972 5 78,655
Total operating expenses 288 57,051 13,626 -- 70,965
--------- --------- --------- --------- ---------
Operating income (loss) (288) 6,627 1,346 5 7,690
Interest (expense), net (5,477) (1,834) 125 -- (7,186)
Other income (expense) -- 16 (234) -- (218)
--------- --------- --------- --------- ---------
Income (loss) before foreign
income taxes and
extraordinary item (5,765) 4,809 1,237 5 286
Foreign income taxes -- -- 526 -- 526
--------- --------- --------- --------- ---------
Income (loss) before
extraordinary item (5,765) 4,809 711 5 (240)
Extraordinary item 170 1,110 -- -- 1,280
--------- --------- --------- --------- ---------
Net income (loss) $ (5,935) $ 3,699 $ 711 $ 5 $ (1,520)
========= ========= ========= ========= =========
<CAPTION>
Combined Combined
The Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Total
--------- ------------ ------------- ------------- ---------
INCOME STATEMENT DATA:
(PERIOD FROM JANUARY 17, 1997
THROUGH SEPT. 30, 1997):
<S> <C> <C> <C> <C> <C>
Net revenue $ -- $ 106,905 $ 30,510 $ -- $ 137,415
Cost of revenue -- 71,443 21,487 -- 92,930
--------- --------- --------- ------------- ---------
Gross profit -- 35,462 9,023 -- 44,485
Total operating expenses 22 27,623 7,483 -- 35,128
--------- --------- --------- ------------- ---------
Operating income (loss) (22) 7,839 1,540 -- 9,357
Interest (expense), net (165) (1,312) 95 -- (1,382)
Other income (expense) -- (68) 221 -- 153
--------- --------- --------- ------------- ---------
Income (loss) before foreign
income taxes (187) 6,459 1,856 -- 8,128
Foreign income taxes -- -- 579 -- 579
--------- --------- --------- ------------- ---------
Net income (loss) $ (187) $ 6,459 $ 1,277 $ -- $ 7,549
========= ========= ========= ============= =========
</TABLE>
11
<PAGE> 14
I. GUARANTOR AND NON-GUARANTOR SUBSIDIARIES - CONTINUED
Summarized consolidating statements of cash flows for the nine months ended
September 30, 1998 and the period from January 17, 1997 through September 30,
1997, respectively, for the Company, the guarantor subsidiaries, and the
non-guarantor, foreign subsidiaries are as follows (in thousands):
<TABLE>
<CAPTION>
Combined Combined
The Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Total
---------- ------------ ------------- ------------ ----------
CASH FLOW DATA:
(NINE MONTHS ENDED SEPTEMBER 30, 1998):
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities $ (3,630) $ 5,582 $ 1,344 $ -- $ 3,296
Investing activities:
Purchases of property, plant and
equipment -- (6,186) (69) (69) (6,255)
Proceeds from sale of equipment -- 858 -- -- 858
Payment of acquisition liabilities -- (2,525) -- -- (2,525)
Increase in short-term investments (23,330) -- -- -- (23,330)
Acquisition of businesses -- (233) (862) -- (1,095)
--------- --------- --------- ----------- ---------
Net cash used in investing activities (23,330) (8,086) (931) -- (32,347)
Financing activities:
Decrease in amounts due to GEC
and affiliates -- (141) -- -- (141)
Decrease in long-term borrowings (20,014) (20,600) -- -- (40,614)
Proceeds from bond offering 115,000 -- -- -- 115,000
Payment of bond issue costs (5,192) -- -- -- (5,192)
Payment on revolving credit lines -- (26,084) -- -- (26,084)
Intercompany (52,808) 52,812 (4) -- --
Dividend distribution (10,000) -- -- -- (10,000)
--------- --------- --------- ----------- ---------
Net cash provided by (used in)
financing activities 26,986 5,987 (4) -- 32,969
Effect of exchange rate changes on cash -- 82 (240) -- (158)
--------- --------- --------- ----------- ---------
Increase in cash and cash equivalents 26 3,565 169 -- 3,760
Cash and cash equivalents at beginning
of period 28 1,173 2,082 -- 3,283
--------- --------- --------- ----------- ---------
Cash and cash equivalents at end of
period $ 54 $ 4,738 $ 2,251 $ -- $ 7,043
========= ========= ========= =========== =========
</TABLE>
12
<PAGE> 15
I. GUARANTOR AND NON-GUARANTOR SUBSIDIARIES - CONTINUED
<TABLE>
<CAPTION>
Combined Combined
The Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Total
--------- ------------ ------------- ------------ ---------
CASH FLOW DATA:
(PERIOD FROM JANUARY 17, 1997 THROUGH
SEPTEMBER 30, 1997):
<S> <C> <C> <C> <C> <C>
Net cash provided by operating
activities $ 163 $ 6,579 $ 3,176 $ -- $ 9,918
Investing activities:
Purchases of property, plant and
equipment -- (928) (421) -- (1,349)
Accounts receivable used in
connection with acquisition -- (19,489) -- -- (19,489)
Payment of acquisition liabilities -- (1,108) -- -- (1,108)
Increase in short-term investments (251) -- -- -- (251)
-------- -------- -------- ---------- --------
Net cash used in investing activities (251) (21,525) (421) -- (22,197)
Financing activities:
Borrowings on revolving credit lines -- 11,893 -- -- 11,893
Increase in amounts due to GEC
and affiliates -- 316 -- -- 316
Intercompany -- 1,569 (1,569) -- --
-------- -------- -------- ---------- --------
Net cash provided by (used in)
financing activities -- 13,778 (1,569) -- 12,209
Effect of exchange rate changes on cash -- 28 (396) -- (368)
-------- -------- -------- ---------- --------
Increase (decrease) in cash and cash
equivalents (88) (1,140) 790 -- (438)
Cash and cash equivalents at beginning
of period 100 1,601 449 -- 2,150
-------- -------- -------- ---------- --------
Cash and cash equivalents at end of
period $ 12 $ 461 $ 1,239 $ -- $ 1,712
======== ======== ======== ========== ========
</TABLE>
13
<PAGE> 16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the Consolidated
Financial Statements and related notes included in Amendment No. 2 to the
Company's Form S-4 Registration Number 333-51569, dated July 17, 1998 relating
to the exchange of the Company's Series A Senior Notes for the Series B Senior
Notes.
GENERAL
The Company, through its two wholly-owned subsidiaries, Curtis Industries, Inc.
("Curtis") and A.B. Dick Company ("A.B. Dick") is engaged in (i) the
distribution of automotive and industrial supplies and (ii) the manufacture and
distribution of printing equipment and supplies. The Company's distribution
business supplies consumable, high margin, multiple-purpose products used in
the automotive and industrial markets, with an increasing focus on providing
value-added logistics services. The Company's printing equipment and supplies
business is a leading manufacturer and marketer of printing products for the
global quick print and small commercial graphics markets.
The Company acquired all of the capital stock of A.B. Dick on January 17, 1997.
The Company acquired all of the capital stock of Curtis on December 5, 1997.
The acquisitions were accounted for as purchases and the results of operations
include the Company, A.B. Dick and Curtis from the dates of their respective
acquisitions.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30 1998, COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1997:
NET REVENUE
Net revenue increased $ 19.9 million or 43.5% to $65.6 million in 1998 from
$45.7 million in 1997. The increase was principally due to the acquisition of
Curtis, which accounted for $21.0 million in sales for the quarter. Printing
equipment sales were up $2.1 million or 14.3% over the prior year to $16.6
million. The increase was primarily due to increased domestic sales of press
equipment of $2.2 million offset by an international sales decrease of $0.1
million, due to the weaknesses in the Asian markets. Supplies sales were down
$2.6 million to $17.8 million due to the impact of the discontinuance of
certain domestic equipment lines and the introduction of a new plate product by
a competitor in the pre-press market. The Company is presently pursuing other
supply products. Service revenues decreased by $0.8 million primarily due to
the discontinuance of the Konica copier equipment line and a trend among
customers to switch from preventive service contracts to purchased service
calls.
GROSS PROFIT
Gross profit increased $11.6 million or 82.3% in 1998 as compared to 1997.
Gross profit margin percentage was 39.1% during 1998 compared to 30.7% for the
same period last year. The addition of the Curtis business accounted for $12.2
million of the increase in gross margin dollars and the significant improvement
in the gross margin as a percentage of revenues. The A.B. Dick margins
decreased by $0.6 million and gross margin as a percent of revenue was reduced
approximately 0.5% due to change in the mix of sales of the various products
and services.
14
<PAGE> 17
COSTS AND EXPENSES
Costs and expenses increased by $11.5 million to $22.9 million from $11.4
million from the year earlier. The acquisition of Curtis contributed $10.8
million to the increase while cost saving programs and consolidation of
activities at A. B. Dick reduced costs and expenses by $0.3 million. A portion
of the decrease is attributable to the change in the basis of the calculation
of the management fee. This was offset by relocation expenses and corporate
administrative expenses of $0.9 million and $0.1 million, respectively, during
1998.
OPERATING INCOME
Operating income increased $0.1 million or 3.8% to $2.7 million in 1998 from
$2.6 million in 1997. The 1998 amount includes operating income from Curtis of
$1.3 million. The operating income generated by A. B. Dick decreased by
approximately $0.9 million due to the relocation of its facilities and
approximately $0.3 million as result of the decline in sales revenues and
change in mix of products sold.
Although there can be no guarantee of future forecasts and prospects, based on
the Company's current financial forecast which included consideration for
future cost savings, the international markets and the general U. S. economy,
management believes that operating income before interest, taxes, depreciation
and amortization, and other income (expense) will increase for the second half
of 1998 over the first half of 1998.
NINE MONTHS ENDED SEPTEMBER 30, 1998, COMPARED TO THE PERIOD FROM JANUARY 17,
1997 THROUGH SEPTEMBER 30, 1997:
PRESENTATION
The financial statements presented in this document include comparative 1997
financial statements for the Company, which include the operations of the
acquired subsidiaries from their respective date of acquisition. A.B. Dick was
acquired on January 17, 1997 and Curtis was acquired on December 5, 1997. The
historical 1997 income statement and other financial information for the
Company refer to the 36-week period from January 17, 1997 through September 30,
1997.
NET REVENUE
Net revenue increased $61.2 million or 44.5% from $137.4 for 1997 to $198.6
million for 1998. The increase was principally due to the acquisition of
Curtis, which accounted for $61.6 million in sales for the nine months ended
September 30, 1998. Printing equipment sales were up $3.0 million or 6.3% over
the prior year to $49.7 million primarily due to increases in the domestic
sales of press equipment. Supplies sales were down $2.2 million or 3.8% to
$55.9 million in 1998 compared to $58.1 million in 1997. The discontinuance of
certain domestic equipment lines and the introduction of a new plate product by
a competitor in the pre-press market are the principal reasons for the revenue
decline. Service revenues decreased by $1.5 million primarily due to the
discontinuance of the Konica copier equipment line and a trend among customers
to switch from preventive service contracts to purchased service calls. Repair
parts sales increased by $0.4 million.
GROSS PROFIT
Gross profit was $78.7 million compared to $44.5 million from the prior year.
The increase of $34.2 million or 76.9% was principally due to the acquisition
of Curtis, which had a gross margin of $35.4 million for the nine months ended
September 30, 1998. Gross profit margin percentage was 39.6% during 1998
compared to 32.4% for the same period last year. The addition of the Curtis
business accounted for the significant improvement in the gross margin as a
percentage of revenues. The
15
<PAGE> 18
A. B. Dick margins decreased by $1.2 million or 0.9% as a percent of revenue
primarily due to the change in the mix of sales of the various products and
services.
COSTS AND EXPENSES
Costs and expenses increased by $35.9 million to $71.0 million in 1998 from
$35.1 million for the period January 17, 1997 through September 30, 1997. The
acquisition of Curtis contributed $33.1 million to the increase in costs and
expenses. Relocation expenses and corporate administrative expenses were $2.1
million during 1998.
OPERATING INCOME
Operating income decreased $1.7 million or 18.1% from $9.4 million in 1997 to
$7.7 million in 1998. In 1998 the amount includes operating income from Curtis
of $2.4 million. The operating income generated in 1998 by A. B. Dick decreased
by $1.8 million due to the relocation of its facilities and approximately $2.3
million due to the change in the mix of product sales and services from the
period January 17, 1997 to September 30, 1997.
EXTRAORDINARY ITEM
An extraordinary expense of $1.3 million was recorded during the second quarter
of 1998 related to the write-off of deferred financing costs and fees
associated with the early extinguishment of certain of the Company's debt.
YEAR 2000 ISSUES
The Company is aware of the issues associated with being compliant with the
year 2000 computer programming. A company-wide taskforce is reviewing all
systems to ensure that they do not malfunction as a result of the Year 2000
compliance. The Company is in the process of replacing some systems and
upgrading others. While the current cost of this effort is still being
evaluated, the Company does not expect the cost to be material.
The Company expects to complete its Year 2000 activities within a timeframe that
will enable its information systems to function without significant disruption
in Year 2000. In addition, the Company is in the process of obtaining assurances
from third parties that are critical to its business, such as customers and
vendors, regarding their Year 2000 compliance. If assurances are not received
from critical vendors regarding their Year 2000 compliance, the Company will
seek alternative sources. Failure of the Company or such third parties to
achieve Year 2000 compliance can result in disruption of the Company's
operations that could have a material adverse effect on the Company's financial
condition or results of operations.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $3.3 million and $9.9 million for
the nine months ended September 30, 1998 and the period from January 17, 1997
to September 30, 1997, respectively. The decrease in net cash provided by
operating activities in 1998 was principally the result of decreased net income
and a net decrease in operating assets and liabilities of $0.4 million. The
decline in net income is mainly due to increased interest costs as a result of
the issuance of $115.0 million of senior notes on April 1, 1998 and the
facilities relocation costs incurred by A. B. Dick. Net cash provided from
operating activities in 1997 was principally the result of net income of $7.5
million and a decrease in net operating assets and liabilities of $1.4 million.
16
<PAGE> 19
The net cash used in investing activities was $32.3 million and $22.2 for the
nine months ended September 30, 1998 and the period from January 17, 1997 to
September 30, 1997, respectively. The 1998 amounts include an increase in
short-term investments of $23.3 million, property, plant and equipment
purchases of $6.3 million and payments on acquisition related liabilities of
$2.5 million. Proceeds from the disposition of fixed assets related to the A.
B. Dick relocation provided approximately $0.8 million in cash and $1.1 million
was used for the acquisition of new businesses. The primary components of the
1997 investing activities were $19.5 million for accounts receivable related
to the A.B. Dick acquisition, $1.3 million for property, plant and equipment
purchases and $1.1 million for payment of acquisition related liabilities.
Net cash provided by financing activities was $33.0 million and $12.2 million
for the nine months ended September 30, 1998 and the period from January 17,
1997 to September 30, 1997, respectively. The net cash provided by financing
activities in 1998 is the result of the issuance of the $115.0 million of
senior notes, offset by the reduction of long-term borrowings of $40.6 million
and reduction of revolving lines of credit by $26.1 million. The bond issuance
costs paid were $5.2 million and the Company made a dividend distribution to
its sole stockholder in the amount of $10.0 million. The 1997 net cash from
financing activities was principally from increases in borrowings on the
revolving lines of credit.
The Company's primary capital requirements (excluding acquisitions) consist of
capital expenditures and debt service. The Company expects current financial
resources and funds from continuing operations to be adequate to meet current
cash requirements. At September 30, 1998 the Company had cash, cash equivalents
and short-term investments of $34.5 million and unused credit facilities of
$28.5 million available for its use.
CAUTIONARY STATEMENT FOR SAFE HARBOR PURPOSES
This Management's Discussion and Analysis of Financial Condition and Results of
Operations (MD&A) contains forward-looking statements within the meaning of the
federal securities laws. As a general matter, forward-looking statements are
those focused upon future plans, objectives, or performance as opposed to
historical items and include statements of anticipated events or trends and
expectations and beliefs relating to matters that are not historical in nature.
Such forward-looking statements include, without limitation, statements
regarding the Company's Year 2000 compliance program and future prospects of
the business. Such forward-looking statements are subject to uncertainties and
factors relating to the Company's operations and business environment, all of
which are difficult to predict and many of which are beyond the control of the
Company, that could cause actual results of the Company to differ materially
from those matters expressed in or implied by such forward-looking statements.
17
<PAGE> 20
Part II. Other Information
Item 2. Changes in Securities
During the three month period ended June 30, 1998, the registrant on
April 1, 1998, sold for cash $115,000,000 of 9 5/8% Series A Senior
Notes due April 1, 2008. The initial purchasers of the Notes were
Donaldson, Lufkin & Jenrette Securities Corporation and CIBC
Oppenheimer. The aggregate offering price was $115,000,000 with
aggregate discounts and commission of $3,450,000. Exemption from
registration was under section 4(2) of the Securities Act of 1933.
On July 17, 1998, the Company filed Amendment No. 2 to the Form S-4
Registration Statement with the Securities and Exchange Commission.
The Registration Statement set forth terms of an offer to Exchange
Series B Senior Notes for Series A Senior Notes. Pursuant to such
Offer on September 1, 1998, all of the Series A Senior Notes were
exchanged for Series B Senior Notes.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - See index of exhibits
(b) No reports on Form 8-K were filed during the quarter ended
September 30, 1998
18
<PAGE> 21
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.
PARAGON CORPORATE HOLDINGS INC.
By: /s/ FRANK J. RZICZNEK
----------------------
FRANK J. RZICZNEK
Chief Financial Officer (As duly
authorized representative and as Principal
Financial and Accounting Officer)
A.B. DICK COMPANY
By: /s/ RONALD NIERZWICKI
-----------------------
RONALD NIERZWICKI
Vice President and Controller (As duly authorized
representative and as Principal Financial and
Accounting Officer)
CURTIS INDUSTRIES, INC.
By: /s/ JAMES WATERS
-----------------
JAMES WATERS
Vice President of Finance (As duly authorized
representative and as Principal Financial and
Accounting Officer)
ITEK GRAPHIX CORP.
By: /s/ RONALD NIERZWICKI
----------------------
RONALD NIERZWICKI
Vice President and Controller (As duly authorized
representative and as Principal Financial and
Accounting Officer)
Date: November 13, 1998
19
<PAGE> 22
PARAGON CORPORATE HOLDINGS INC.
FORM 10-Q
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------ ----------------------
<S> <C> <C>
3.1 Certificate of Incorporation of Paragon Corporate Holdings Inc., as currently in effect. *
3.2 By-Laws of Paragon Corporate Holdings Inc. as currently in effect *
3.3 Certificate of Incorporation of A.B. Dick Company, as currently in effect *
3.4 By-Laws of A.B. Dick Company, as currently in effect. *
3.5 Certificate of Incorporation of Curtis Industries, Inc. as currently in effect. *
3.6 By-Laws of Curtis Industries, Inc. as currently in effect. *
3.7 Certificate of Incorporation of Itek Graphix Corp., as currently in effect. *
3.8 By-Laws of Itek Graphix Corp., as currently in effect. *
3.9 Certificate of Incorporation of Curtis Sub, Inc., as currently in effect. *
3.10 By-Laws of Curtis Sub, Inc., as currently in effect. *
4.1 Indenture, dated as of April 1, 1998, among Paragon Corporate Holdings Inc., A.B. Dick *
Company, Curtis Industries, Inc., Itek Graphix Corp., Curtis Sub, Inc and Norwest Bank
Minnesota, National Association, as Trustee (containing, as exhibits, specimens of the
Series A Notes and the Series B Notes).
4.2 Purchase Agreement, dated as of March 27, 1998, among Paragon Corporate Holdings Inc., *
A.B. Dick Company, Curtis Industries, Inc., Itek Graphix Corp., Curtis Sub, Inc., and
Donaldson. Lufkin & Jenrette Securities Corporation and CIBC Oppenheimer Corp., as
Initial Purchasers, relating to the Series A Notes.
4.3 Registration Rights Agreement, dated as of April 1, 1998, among Paragon Corporate *
Holdings Inc., A.B. Dick Company, Curtis Industries, Inc., Itek Graphix Corp.,
Curtis Sub, Inc., and Donaldson. Lufkin & Jenrette Securities Corporation and
CIBC Oppenheimer Corp., as Initial Purchasers.
4.4 Credit and Security Agreement, dated as of April 1, 1998 between Paragon Corporate *
Holdings Inc. and Key Corporate Capital Inc.
10.1 Agreement and Plan of Merger, dated as of November 6, 1997, among Paragon Corporate *
Holdings Inc., Curtis Industries, Inc. and Curtis Acquisition Group.
10.2 Stock Purchase Agreement, dated as of December 19, 1996, between *
Paragon Corporate Holdings Inc. and GEC Incorporated.
10.3 Management Agreement, dated as of April 1, 1998, between Paragon Corporate Holdings Inc. *
and NESCO, Inc.
10.4 Tax Payment Agreement, dated as of April 1, 1998, among Paragon Corporate Holdings Inc., *
A.B. Dick Company, Curtis Industries, Inc., Itek Graphix Corp., Curtis Sub, Inc. and
NES Group, Inc.
10.5 Agreement dated November 10, 1995 between A.B. Dick Company and Gerald J McConnell. *
10.6 Severance and Non-Competition Agreement dated February 28, 1996 between Curtis *
Industries, Inc. and A. Keith Drewett.
10.7 Severance and Non-Competition Agreement dated February 28, 1996 between Curtis
Industries, Inc. and Maurice P. Andrien, Jr. as amended April 22, 1998.
10.8 Agreement dated July 2, 1998 among Curtis Industries, Inc. Paragon Holdings Inc. and **
A. Keith Drewett.
27 Financial Data Schedule
<FN>
* Incorporated by reference from Form S-4 Registration Number 333-51569 filed
under the Securities Act of 1933, as amended
** Incorporated by reference from Amendment No. 2 to Form S-4 Registration Number 333-51569 filed
July 17, 1998 under the Securities Act of 1933, as amended
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements listed on pages 2 and 3 of this Form 10-Q and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001060513
<NAME> PARAGON CORPORATE HOLDINGS INC
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 7,043
<SECURITIES> 27,506
<RECEIVABLES> 40,796
<ALLOWANCES> 1,644
<INVENTORY> 48,359
<CURRENT-ASSETS> 123,544
<PP&E> 17,251
<DEPRECIATION> 3,156
<TOTAL-ASSETS> 174,629
<CURRENT-LIABILITIES> 56,756
<BONDS> 115,000
0
0
<COMMON> 1
<OTHER-SE> (4,548)
<TOTAL-LIABILITY-AND-EQUITY> 174,629
<SALES> 198,642
<TOTAL-REVENUES> 198,642
<CGS> 119,987
<TOTAL-COSTS> 187,943
<OTHER-EXPENSES> 3,009
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,186
<INCOME-PRETAX> 286
<INCOME-TAX> 526
<INCOME-CONTINUING> (240)
<DISCONTINUED> 0
<EXTRAORDINARY> (1,280)
<CHANGES> 0
<NET-INCOME> (1,520)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
