<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 10-Q
(x) Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended January 28, 1995
Commission File Number 1-7208
DUPLEX PRODUCTS INC
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 36-2109817
- --------------------------------------- ----------------------------------
(State of Incorporation or Organization) (I.R.S. Employer Identification No.)
Bethany Road, Sycamore, Illinois 60178 (815) 895-2101
- --------------------------------------- -------- ---------------------------
(Address of Principal Executive Offices) (Zip Code) (Registrant's Telephone No.)
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 report) and (2) has been subject to such
filing requirements for the past ninety days. Yes X No
----- -----
As of January 28, 1995, 7,543,278 shares of common stock with a par value of
$1.00 were outstanding.
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Duplex Products Inc.
Condensed Consolidated Statement of Earnings
(Unaudited)
<TABLE>
<CAPTION>
First quarter ended
January 28, January 29,
(In thousands, except per-share data) 1995 1994
- ----------------------------------------------------- ---------- ----------
<S> <C> <C>
Net sales $73,337 $65,352
Cost of goods sold 55,218 49,370
------- -------
Gross profit 18,119 15,982
Selling, general, and administrative expenses 17,092 15,853
------- -------
Operating profit 1,027 129
------- -------
Other income (expense)
Interest expense (118) (147)
Other income 155 152
------- -------
37 5
------- -------
Earnings before income taxes and accounting changes 1,064 134
Provision for income taxes 415 96
------- -------
Earnings before accounting changes 649 38
Cumulative effect of accounting changes -- (7,084)
------- -------
Net earnings (loss) $ 649 $(7,046)
======= =======
Per share
Earnings before accounting changes $0.09 $ --
Net earnings (loss) 0.09 (0.92)
</TABLE>
The accompanying notes to condensed consolidated financial statements are an
integral part of this statement.
<PAGE> 3
Duplex Products Inc.
Condensed Consolidated Statement of Financial Position
(Unaudited)
<TABLE>
<CAPTION>
January 28, October 29,
(In thousands) 1995 1994
- ---------------------------------------------- ----------- ----------
<S> <C> <C>
Current assets
Cash and equivalents $ 12,175 $ 16,337
Accounts and notes receivable 53,033 48,046
Inventories 27,810 27,530
Income tax refund receivable 2,783 2,998
Deferred income taxes 10,047 10,245
-------- --------
Total current assets 105,848 105,156
Property, plant, and equipment--net 37,069 37,000
Other assets 4,078 4,052
-------- --------
Total assets $146,995 $146,208
======== ========
Liabilities and Shareholders' Equity
Current liabilities
Current portion of long-term debt $ 1,222 $ 1,222
Accounts payable 11,901 11,526
Accrued expenses 20,977 20,894
-------- --------
Total current liabilities 34,100 33,642
-------- --------
Long-term debt 5,772 5,928
-------- --------
Deferred liabilities and credits 6,599 6,599
-------- --------
Shareholders' Equity
Common stock (8,279 and 8,304 shares issued,
respectively) 8,279 8,304
Additional paid-in capital 4,155 4,333
Common stock held in treasury (5,809) (5,809)
Unamortized value of restricted stock issued (609) (648)
Retained earnings 94,508 93,859
-------- --------
Total shareholders' equity 100,524 100,039
-------- --------
Total liabilities and shareholders' equity $146,995 $146,208
======== ========
</TABLE>
The accompanying notes to condensed consolidated financial statements are an
integral part of this statement.
<PAGE> 4
Duplex Products Inc.
Condensed Consolidated Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
First quarter ended
January 28, January 29,
(In thousands) 1995 1994
- ----------------------------------------------- ---------- ----------
<S> <C> <C>
Cash flows from operating activities
Net earnings (loss) $ 649 $ (7,046)
Adjustments to reconcile net earnings (loss) to
cash used by operating activities
Depreciation 1,413 1,691
Deferred income taxes 199 (4,789)
(Increase) decrease in accounts and notes
receivable (5,075) 31,022
Increase in inventories (279) (20,049)
Decrease in income tax refund receivable 215 485
Increase (decrease) in accounts payable 372 (3,217)
Decrease in accrued restructuring costs (1,087) (647)
Increase in other accrued expenses 1,170 153
Other operating activities 41 793
------- --------
Net cash used by operating activities (2,382) (1,604)
------- --------
Cash flows from investing activities
Capital expenditures (1,525) (578)
Net proceeds from sale of assets 63 38
------- --------
Net cash used by investing activities (1,462) (540)
------- --------
Cash flows from financing activities
Repayment of long-term debt (156) (506)
Restricted stock repurchased-net (162) (1,024)
------- --------
Net cash used by financing activities (318) (1,530)
------- --------
Decrease in cash and equivalents during quarter (4,162) (3,674)
Cash and equivalents at beginning of quarter 16,337 18,419
------- --------
Cash and equivalents at end of quarter $12,175 $ 14,745
======= ========
</TABLE>
The accompanying notes to condensed consolidated financial statements are an
integral part of this statement.
<PAGE> 5
Duplex Products Inc.
Notes to Condensed Consolidated Financial Statements
(Amounts in thousands, except per-share data)
Note 1 - Financial Information
The unaudited financial statements include all normal recurring adjustments
which are, in the opinion of management, necessary for a fair presentation of
the results of operations, financial position, and cash flows. The results
reflected in these quarterly financial statements should not be regarded as
necessarily indicative of results that may be expected for the entire year.
Note 2 - Basis of Presentation
These financial statements are presented in accordance with requirements of
Form 10-Q and consequently may not contain all disclosures normally required by
generally accepted accounting principles or those usually reflected in the
Company's Annual Report on Form 10-K.
Accordingly, the financial statements and notes contained herein should be read
in conjunction with the financial statements and associated notes included in
Duplex's Annual Report on Form 10-K for the fiscal year ended October 29, 1994.
Note 3 - Inventories
Inventories consisted of the following:
<TABLE>
<CAPTION>
January 28, October 29,
1995 1994
---------- ----------
<S> <C> <C>
Raw materials $ 8,896 $ 7,380
Work-in-process 2,034 2,419
Finished goods 25,489 24,680
------- -------
36,419 34,479
Less revaluation to LIFO (8,609) (6,949)
------- -------
Total inventories $27,810 $27,530
======== =======
</TABLE>
Changes in the revaluation to LIFO negatively impacted income before taxes for
the first quarter of 1995 by $1,660. For the corresponding 1994 period, the
LIFO revaluation change benefited pretax earnings by $275.
<PAGE> 6
Duplex Products Inc.
Notes to Condensed Consolidated Financial Statements
(Amounts in thousands, except per-share data)
Note 4 - Property, Plant and Equipment
Property, plant, and equipment comprised the following:
<TABLE>
<CAPTION>
January 28, October 29,
(In thousands) 1995 1994
---------- ----------
<S> <C> <C>
Property, plant, and equipment, at cost $102,423 $101,171
Less accumulated depreciation (65,354) (64,171)
-------- --------
Net property, plant, and equipment $ 37,069 $ 37,000
======== ========
</TABLE>
Note 5 - Common Stock Data
Authorized common stock consisted of 20,000 shares having a par value of $1.00
per share. Average shares outstanding for the first quarter of 1995 and 1994
were 7,538 and 7,647, respectively.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Results of Operations
The Company reported net earnings of $0.6 million, or $0.09 per share, in the
first quarter of 1995 compared with a net loss of $7.0 million ($0.92 per
share) in the prior year quarter. The cumulative effect of accounting changes
depressed last year s earnings by $7.0 million, or $0.92 per share.
The $0.6 million improvement in earnings before accounting changes in
the first quarter of 1995 was attributable principally to higher revenues and
continued improvement in manufacturing productivity, partially offset by
significantly higher paper costs, the increased LIFO provision, and higher
operating expenses. The LIFO provision increase, driven by paper cost inflation,
had a negative impact on net earnings per share of $0.13.
The Company has been successful in adjusting its selling prices to reflect the
rise in paper costs. While bond paper continues to be in short supply, Duplex
has been able to satisfy customer requirements by virtue of its long-standing
relationship with suppliers and through adjustments made to product mix. The
Company does not anticipate a material change in this situation in the
foreseeable future.
Net sales for the first quarter of 1995 were $73.3 million, up 12.2% from the
$65.4 million reported in the comparable period in 1994. Net sales in this
year s first quarter represented the highest quarterly level since the second
quarter of 1991. Most of the Company s product lines experienced sales growth
over the same period in 1994.
<PAGE> 7
Gross margin as a percentage of sales was 24.7% for the first three months of
1995 compared with 24.5% in the year earlier period. Excluding the impact of
the LIFO provision, this year s gross margin rate was 27.0%, up 3.0 percentage
points from a year ago.
Selling, general, and administrative costs aggregated $17.1 million (23.3% of
sales) in 1995 s first quarter, an increase of $1.2 million from $15.9 million
(24.3% of sales) in the same period of 1994. This increase was due primarily
to higher spending on training, sales promotion, process improvement, and the
development and management of new products and services.
Operating profit in the first quarter of 1995 increased $0.9 million from the
prior year period, to $1.0 million, and represented the third consecutive
quarter of improved financial performance.
Liquidity and Capital Resources
While net working capital at the end of the first quarter of 1995 of $71.7
million was at approximately the same level as at year-end 1994, material
account balance changes in the current period included a $5.0 million increase
in accounts and notes receivable and a $4.2 million decline in cash and
equivalents, which are discussed below. The current ratio at January 28, 1995
was 3.1 to 1, the same as at year-end 1994.
Management believes that the current level of working capital will be adequate
to cover the Company s liquidity needs related to normal operations in the
foreseeable future. Sufficient resources are deemed to exist to support the
Company s growth through a combination of currently available cash, cash to be
generated from future operations, or additional short-term borrowings.
The Company s total debt at January 28, 1995 was $7.0 million, down $0.2
million from year-end 1994. Total debt as a percentage of total capital was
6.5% at the end of 1995 s first quarter, 0.2 percentage points lower than at
the end of 1994.
Cash and equivalents at the end of 1995 s first quarter were $12.2 million.
This was a decrease of $4.2 million during the first three months of 1995
compared with a decline of $3.7 million during the same 1994 period.
During the first quarter of 1995, $2.4 million was used by operating
activities, up $0.8 million from first quarter 1994's usage of $1.6 million.
The operating cash flow usage in 1995 s first three months occurred primarily
because of an increase in accounts receivable generated by strong sales near
the end of the quarter, partially offset by net earnings and depreciation.
First quarter 1994's operating cash flow usage was attributable principally to
a decline in accounts payable balances, offset, in part, by depreciation.
Capital expenditures totaled $1.5 million in the first quarter of this year
compared with $0.6 million in the year earlier quarter. Expenditures in 1995
were made primarily to upgrade and increase the operating efficiency of
manufacturing equipment.
Cash consumed by financing activities decreased to $0.3 million in the first
quarter of 1995 from $1.5 million a year earlier. The decrease was due
primarily to a drop in restricted stock repurchases in 1995 s first three
months.
<PAGE> 8
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORT ON FORM 8-K
(a) Exhibits
11 Computation of Earnings per Share
27 Financial Data Schedule
(b) Reports on Form 8-K
None
<PAGE> 9
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.
DUPLEX PRODUCTS INC.
/s/ Andrew A. Campbell
- ----------------------------------------------
Andrew A. Campbell, Vice President-Finance,
Chief Financial Officer, and Secretary
(Principal Financial Officer)
March 3, 1995
<PAGE> 10
DUPLEX PRODUCTS INC.
EXHIBIT 11 - COMPUTATION OF EARNINGS PER SHARE
(Unaudited)
<TABLE>
<CAPTION>
First quarter ended
January 28, January 29,
(In thousands, except per-share data) 1995 1994
- -------------------------------- ---------- ----------
<S> <C> <C>
Weighted average number of common shares
outstanding used in computing earnings
per share 7,538 7,647
Primary and fully diluted earnings (loss) per
share $0.09 $(0.92)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-29-1994
<PERIOD-END> JAN-28-1995
<EXCHANGE-RATE> 1
<CASH> 12,175
<SECURITIES> 0
<RECEIVABLES> 53,738
<ALLOWANCES> 705
<INVENTORY> 27,810
<CURRENT-ASSETS> 105,848
<PP&E> 102,423
<DEPRECIATION> 65,354
<TOTAL-ASSETS> 146,995
<CURRENT-LIABILITIES> 34,100
<BONDS> 5,772
<COMMON> 8,279
0
0
<OTHER-SE> 92,245
<TOTAL-LIABILITY-AND-EQUITY> 146,995
<SALES> 73,337
<TOTAL-REVENUES> 73,337
<CGS> 55,218
<TOTAL-COSTS> 55,218
<OTHER-EXPENSES> 17,005
<LOSS-PROVISION> 87
<INTEREST-EXPENSE> 118
<INCOME-PRETAX> 1,064
<INCOME-TAX> 415
<INCOME-CONTINUING> 649
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 649
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0.09
</TABLE>
