<PAGE>
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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] Annual report under Section 13 or 15(d) of the Securities Exchange Act
of 1934. (Fee required). For the fiscal year ended December 31, 1995.
[_] Transition report under Section 13 or 15(d) of the Securities Act of
1934. (No fee required).
For the transition period from to .
Commission file number: 0-11744.
PUBLISHERS EQUIPMENT CORPORATION
(Name of Small Business Issuer In Its Charter)
75-1653425
TEXAS (I.R.S. Employer
(State or Other Jurisdiction of Identification No.)
Incorporation or Organization)
75248
16660 DALLAS PARKWAY, SUITE 1100, DALLAS, TX (Zip code)
(Address of principal executive
offices)
(214) 931-2312
(Issuer's Telephone Number, Including Area Code)
SECURITIES REGISTERED UNDER SECTION 12(B) OF THE EXCHANGE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
<S> <C>
None --
</TABLE>
SECURITIES REGISTERED UNDER SECTION 12(G) OF THE EXCHANGE ACT:
TITLE OF CLASS
Common Stock, No Par Value
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the issuer was required to file such reports), and (2) has
been subject to such filing requirements for past 90 days. Yes [X] No [_]
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
KSB or any amendment to Form 10-KSB. [_]
The issuers revenues for the fiscal year ended December 31, 1995 were
$7,428,033.
The aggregate market value of the voting stock held by non-affiliates of the
registrant on March 18, 1996, based on the closing sales price of the common
stock on the Nasdaq Stock Market on that date was approximately $1,246,000.
Indicated below is the number of shares outstanding of each class of the
issuer's common stock as of March 18, 1996.
<TABLE>
<CAPTION>
TITLE OF EACH CLASS OF COMMON STOCK NUMBER OUTSTANDING
----------------------------------- ------------------
<S> <C>
Common Stock, No Par Value 5,191,185
</TABLE>
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the Annual Meeting of the issuer to be
held during 1996 are incorporated hereby by reference in Part III.
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<PAGE>
PUBLISHERS EQUIPMENT CORPORATION
INDEX TO THE DECEMBER 31, 1995 FORM 10-KSB
Page
----
PART I
[S] [C] [C]
Item 1. Business................................................ 3
Item 2. Properties.............................................. 5
Item 3. Legal Proceedings....................................... 6
Item 4. Submission of Matters to a Vote of
Security Holders........................................ 6
PART II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters......................... 6
Item 6. Management's Discussion and Analysis
of Financial Condition and Results
of Operations........................................... 7
Item 7. Financial Statements and Supplementary
Data.................................................... 11
Item 8. Changes In and Disagreements with
Accountants on Accounting and
Financial Disclosure.................................... 25
PART III
Item 9. Directors, Executive Officers, Promoters
and Control Persons; Compliance with
Section 16(a) of the Exchange Act....................... 25
Item 10. Executive Compensation.................................. 25
Item 11. Security Ownership of Certain
Beneficial Owners and Management........................ 25
Item 12. Certain Relationships and Related
Transactions............................................ 26
Item 13. Exhibits, Lists and Reports on
Form 8-K................................................ 26
2
<PAGE>
PART I
Item 1. Business
--------
General
Publishers Equipment Corporation (the "Company") serves the single-width
newspaper, commercial and semi-commercial printing markets through its wholly-
owned subsidiary, King Press Corporation ("King Press"). King Press, acquired
by the Company in 1984, manufactures and markets single-width web offset presses
worldwide and has been an active force in the market since the early 1960's.
Single-width printing equipment prints two newspaper pages across at one time
and is generally utilized by daily, weekly, and bi-weekly newspapers, as well as
by commercial and semi-commercial printers. The markets for single-width
equipment consist of a large number of individual equipment users that produce a
wide variety of products that includes newspapers, flyers, inserts, brochures
and catalogs.
Until the mid-1960's, publishers and printers in the United States utilized
equipment employing the "letterpress" printing process. During the 1960's, many
newspapers replaced their letterpress equipment with "offset" printing equipment
because of its capability to produce sharper images and better quality color,
qualities important to advertisers who provide a newspaper's principal source of
revenue. The transition to offset presses occurred rapidly in the single-width
newspaper industry due to a relatively low capital investment in existing
letterpresses and a less demanding operating environment. Today, the vast
majority of single-width equipment in production worldwide by publishers and
printers employs the offset printing process. Suppliers of single-width web
offset equipment, including the Company, have continued to make equipment
improvements that enhance speed, productivity and color capabilities in response
to the demands of a changing mix of equipment users and their changing equipment
needs.
The Company was incorporated under the laws of the state of Texas in 1979 and
maintains its principal executive offices at 16660 Dallas Parkway, Suite 1100,
Dallas, Texas 75248, telephone number (214) 931-2312. As of December 31, 1995,
the Company employed 110 persons. King Press' manufacturing personnel are
represented by the International Association of Machinists and Aerospace Workers
of the AFL-CIO under a five-year contract that expires November 20, 2000. All
subsequent references to the Company include Publishers Equipment Corporation
and its wholly-owned subsidiary, King Press, unless the context requires
otherwise.
Principal Customers and Marketing
The Company markets its single-width equipment products through sales offices in
the U.S. as well as through independent international sales agents located in
over 50 countries. In recent years the Company has realigned its international
dealer network to increase effectiveness and expand into new market areas.
During 1995, the Company derived approximately one-third
3
<PAGE>
of its revenues from expanded sales of its cost effective newspaper press
equipment in South America. During 1994, the Company entered the People's
Republic of China by engaging a Chinese dealer organization to conduct sales of
the Company's equipment throughout China. This relationship resulted in the
Company's first sales of its equipment in the People's Republic of China in
1994. (See Item 6. Results of Operations. Revenues.) In addition, the Company's
executive officers engage in sales activities for its single-width equipment
products.
The Company's revenues are derived from sales to a broad base of small
newspapers as well as commercial and semi-commercial printers. During 1995, one
customer accounted for approximately 19 percent of the Company's revenues.
During 1994, three customers together accounted for more than 33 percent of the
Company's revenues.
Equipment and Services
The Company's line of single-width offset equipment products meet the needs of
printers and publishers ranging from cost effective presses for newspaper
production to heatset equipment that meets the high quality requirements of
commercial printers.
Product Application
------- -----------
News King Printing Press Newspaper, Small
and Add-On Units
Litho King Printing Press Newspaper, Small
and Add-On Units and Mid-Size
Color King Printing Press Newspaper; Semi-
and Add-On Units Commercial, Heatset
and Non-Heatset
Process King Printing Press Commercial, Heatset
and Add-On Units and Non-Heatset
Media King Printing Press Newspaper, Mid-Size;
and Add-On Units Semi-Commercial, Heatset
and Non-Heatset
The Company warrants the performance of its products for a period of one year
against defects in both materials and workmanship, in addition to supplemental
contractual warranties and performance guarantees as agreed to with individual
customers. Because of the complex nature of printing presses, the Company's
contracts provide for a continuing involvement with its customers' operations
following the completion of a project in order to assure that the performance of
the equipment meets both contractual obligations and customer requirements.
During 1995, approximately $235,000 was charged to operations for warranty
costs, compared to approximately $503,000 charged to operations for warranty
costs in 1994.
4
<PAGE>
Product Development
The Company separately funds research and development activities as required to
accomplish its stated goals. In 1990, a heat-set version of the Process King
was introduced for the European market. In 1992, the Company introduced an
improved steel side-framed News King printing unit. In 1993, the Company
introduced the Media King, a modular four-high stackable unit targeted for use
by printers and publishers requiring four color capability in a compact press
arrangement, and the Litho King, a highly featured version of the Company's News
King unit. The first installation of Media King units was completed in late
1994 for a West European customer. In 1994 and 1995, the Company's research and
development activities were directed primarily at improvements and modifications
to its current product lines, including the adaptation of equipment for the
printing requirements of the People's Republic of China. The Company's new and
redesigned products are designed to enable the Company to compete effectively in
both domestic and international markets.
The Company, in addition, conducts research and development activities in
connection with customer contracts for new and improved equipment, with the cost
of these activities included in the contract price. Currently, research and
development activities are directed towards new single-width equipment products
that will complement the Company's current products and services, as well as
improvements to the Company's current product lines.
During 1995, the Company spent approximately $79,000 on research and development
activities not connected with customer contracts. During 1994, the Company
spent approximately $160,000 on such research and development activities.
Competition
King Press' operations compete on a worldwide basis, principally with U.S. based
Harris Graphics of Harris-Heidelberg, the Graphic Systems Division of Rockwell
International Corporation and MAN Roland, Inc. The Company believes its single-
width presses provide a price/performance combination superior to its
competitors.
Item 2. Properties
----------
The Company leases 1,925 square feet for its principal executive offices at
16660 Dallas Parkway, Suite 1100, Dallas, Texas, which is used for its corporate
management offices. The lease on this office expires in 1996, at which time the
Company expects to negotiate a renewal of the lease.
The Company owns a 137,000 square foot office and manufacturing facility in
Joplin, Missouri, which is used as the principal offices of King Press.
5
<PAGE>
Item 3. Legal Proceedings
-----------------
The Company has from time to time become involved in various claims and lawsuits
incidental to their businesses. In the opinion of management of the Company,
any ultimate liability arising out of currently pending claims and lawsuits will
not have a material adverse effect on the consolidated financial condition or
results of operations of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity and Related
-------------------------------------------------
Stockholder Matters
-------------------
The Company's common stock has traded on the Nasdaq Stock Market under the
symbol PECN since January 7, 1986 and prior to that time in the over-the-counter
market. The following table sets forth the range of the daily high and low
sales prices for the common stock, as reported by the National Association of
Securities Dealers, Inc. through NASDAQ for all periods after January 1, 1993.
<TABLE>
<CAPTION>
Stock
-------------------
High Low
---- ---
<S> <C> <C>
1994
First Quarter............. 5/8 7/16
Second Quarter............ 7/16 3/16
Third Quarter............. 9/32 7/32
Fourth Quarter............ 5/8 1/2
1995
First Quarter............. 5/8 5/16
Second Quarter............ 7/16 1/16
Third Quarter............. 5/16 7/32
Fourth Quarter............ 5/16 1/8
1996
First Quarter............. 1/4 0.16
(Through March 18, 1996)
</TABLE>
As of March 18, 1996, there were approximately 444 record holders of the
Company's common stock.
The Company has not paid any dividends on its common stock since its inception.
Periodically, the Company will consider the payment of dividends in light of the
Company's earnings, capital requirements, financial condition and other factors,
but there is no assurance that the Company will decide to pay dividends in the
future. The loan agreement pertaining to the Company's revolving line of credit
includes restrictions on the payment of dividends.
6
<PAGE>
Item 6. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations
-----------------------------------
Financial Position and Liquidity
King Press was supported in 1995 by a secured $3,850,000 working capital line of
credit that expired January 31, 1996. The loan agreement pertaining to the line
of credit included restrictions on indebtedness, liens and the disposal of
assets; required that certain financial ratios be maintained; and reduced the
principal amount available under the line of credit in even monthly increments
from $3,850,000 at July 31, 1995, to $2,950,000 at January 1, 1996. At December
31, 1995, King Press had $2,702,000 outstanding under the revolving credit line,
and was in default of provisions of the loan agreement pertaining to certain
financial ratios. The lender agreed to waive default under those provisions at
December 31, 1995.
The King Press working capital revolving line of credit was renewed effective
March 1, 1996, in the amount of $3,050,000, with an expiration date of March 31,
1997. The loan agreement pertaining to the new line of credit includes
restrictions on indebtedness, liens and the disposal of assets; requires that
certain financial ratios be maintained; and, reduces the principal amount
available under the line of credit in quarterly increments from $3,050,000 at
April 30, 1996, to $2,700,000 at February 1, 1997.
It is the Company's intention to restructure its line of credit at its maturity
in March 1997 to increase the principal amount available under the line. The
Company will pursue the restructuring of its line of credit during 1996, but
there can be no assurances that such a restructuring will occur. If the Company
is not successful in securing a new line of credit before the March 31, 1997
maturity date of its present line of credit, the Company will ask the lender to
extend the present line of credit.
The Company's liquidity in 1995 was adversely affected by low order entry rates
for both foreign and domestic customers in the fourth quarter of 1994 and during
1995 (See Item 6. Results of Operations Revenues). Certain actions available to
the Company to increase working capital in 1995 were taken. The Company
received $150,000 from the sale of shares held in an affiliated company (See
Note 3 of Notes to Consolidated Financial Statements), and made reductions in
manpower levels consistent with existing contract commitments. In addition,
discretionary spending, including capital expenditures, was reduced in 1995.
The Company's liquidity entering 1996 is significantly improved from its
position entering 1995 because of increased backlog which totalled approximately
$6,098,000 at December 31, 1995, compared to approximately $1,351,000 at
December 31, 1994. The Company believes that the existing line of credit will
be sufficient to meet working capital needs in 1996. However, the Company will
continue to take steps available to it to conserve working capital in 1996. The
Company reached an agreement for a
7
<PAGE>
one-year extension to December 1997 of the maturity of it's $1.0 million
Convertible Subordinated Note (See Note 6 of Notes to Consolidated Financial
Statements).
Results of Operations
Revenues. Revenues of $7,428,000 for 1995 compares to $14,732,000 for 1994, a
- ---------
decrease of approximately 50 percent. The decrease in revenues in 1995 is a
result of lower sales to both domestic and foreign customers. Revenues derived
from sales to domestic customers decreased approximately 59 percent in 1995,
reflecting continued slow conditions in domestic markets for printing equipment
and the split shipment in December 1995 and January 1996 of a large order for
Gannett Company, a leading newspaper group. This equipment, which was
originally scheduled for delivery in the fourth quarter of 1995 in a multi-press
arrangement, will provide versatile printing capability for color circulars,
inserts and other newspaper products to supplement Gannett Company's large press
capabilities. The Company believes that this application of its single-width
press equipment to supplement large newspaper press equipment represents a very
important new business opportunity for the Company. In recent years, the
business mix of major newspapers has included an increasing content of short
press run items such as circulars and inserts. These short-run products are
produced more cost effectively, with less waste, on single-width press equipment
such as the Company supplied to Gannett Company. The equipment delivered to
Gannett Company had a successful start-up in February 1996 and was placed in
production immediately thereafter.
The use of single-width equipment to supplement large newspaper press room
equipment is a positive development in domestic printing equipment markets which
have begun a slow and irregular recovery from one of the worst recessions ever
experienced by the industry. This recession began in 1990 when reductions in
printing demand occurred following a curtailment of advertising expenditures by
major domestic business segments. Advertising expenditures represent the major
source of income for the industry's customer base. The reduction in domestic
advertising expenditures that began in 1990 was made in response to
uncertainties in the U.S. economy, and this decline continued through 1992. In
1993, the trend in domestic advertising expenditures began to show signs of a
slow turn-around, and in 1994 registered a clear increase, as reported in trade
publications. These improved market conditions continued in 1995, but press
orders were affected by the normal lag time of equipment expenditures behind
increases in printing demand. In addition, many potential purchasers adopted a
cautious approach to equipment purchase decisions as the strength of the
recovery in print demand and the effect of increasing newsprint costs were
assessed. Newsprint cost is the single largest component of a newspapers
production expense. As advertising levels increased, newsprint demand grew to
absorb paper mill capacity, resulting in higher newsprint costs. To a lesser
extent, domestic sales
8
<PAGE>
activity has been affected by the absorption of over capacity in certain market
segments.
In early 1996, there are indications of an easing of newsprint costs. This
development, if sustained, in combination with recent reductions in interest
rates will create a more favorable environment in domestic printing equipment
markets. The Company believes that there is pent-up demand for printing
equipment in domestic markets. The successful startup of the Company's
equipment at Gannett Offset will provide an important showcase for the Company's
products as domestic market conditions improve.
Revenues derived from sales to foreign customers, which accounted for
approximately 60 percent of total revenues in 1995, decreased approximately 40
percent in 1995 compared to 1994, when foreign sales accounted for approximately
50 percent of total revenues. The Company attributes the reduction in foreign
revenues in 1995 primarily to delays in the awarding of contracts by prospective
equipment purchasers. These delays, which the Company believes have affected
all equipment suppliers, are produced by a variety of factors that include
economic uncertainties affecting print demand and financing availability,
selection of equipment supplier under very competitive conditions and, in some
cases, the privatization of related assets by governmental bodies.
In recent years the Company has focused increased attention on the expansion of
its international sales capabilities. This focus, which resulted in a
realignment and strengthening of the Company's international dealer network, was
driven by a belief that the most rapidly emerging markets for printing equipment
lie overseas, principally in the Middle East, the Pacific Rim and former East
Bloc countries. In January 1996, the Company was successful in booking a large
order for combined newspaper and commercial press equipment for delivery to a
Middle East customer in the fourth quarter of 1996. Newspapers in many foreign
markets are increasing the glossy, heatset page content of their products, which
must be produced on commercial press equipment. The Company believes that this
development in foreign markets offers a significant business opportunity for its
cost effective newspaper and commercial press equipment which can be sold
separately or in combination. In 1995, the Company introduced the Commercial
2000 press package, a complete newspaper/commercial press consisting of its
Color King and News King printing units. The Commercial 2000 press package is
offered to both foreign and domestic sales prospects.
The large Middle East order booked in January 1996 was followed in February 1996
by a press order from a customer in the Netherlands and a commitment for a
significant press order from a second sales prospect in the Middle East. During
1995, the Company derived approximately one-third of its revenues from expanded
sales of its cost effective newspaper press equipment in South America. During
1994, King Press shipped press orders into the Russian Republic, Thailand, and
the People's Republic of China. These orders join other installations of the
Company's equipment in key growth markets and provide important showcases for
other prospective purchasers of the Company's equipment.
9
<PAGE>
The recession in domestic printing equipment markets has resulted in an industry
restructuring that has included business consolidations, failures and the down-
sizing of operations to match capacity with demand. The Company's operations
have been scaled back consistent with meeting contract commitments and providing
support for its worldwide equipment installations. This action, together with
the institution of other cost containment measures, have enabled the Company to
manage through the difficult period of 1990 through 1994 while maintaining its
overall competitiveness.
With backlog in excess of $6.0 million entering 1996 plus contracts booked in
early 1996, and additional contract bookings anticipated during the year, the
Company will generate significantly more revenues in 1996 than were generated in
1995. Profit margins on contracts to be delivered in 1996 will continue to be
adversely affected by competitive pricing pressures and certain strategic
pricing concessions; however, the opportunity exists for profitable operations
by the Company for the year.
The adverse market conditions of the last four years has not only affected
equipment suppliers, but also many in the Company's customer base whose
financial strength has been weakened as printing demand declined. Increasingly,
the Company's sales efforts have become dependent upon its ability to provide
assistance in arranging equipment financing for both domestic and foreign
customers. In the case of domestic customers, this assistance generally
involves a coordination of activities with third party leasing companies. For
foreign customers, this assistance comes from the ability of the Company to
arrange third party financing through such institutions as the Export-Import
Bank of the United States. Such international financial arrangements are
complex, involving both foreign and domestic banks, and often impede equipment
delivery schedules.
Gross Profit. Gross profit of $1,964,000, or 26.4 percent of revenues, for 1995
- -------------
compares to $3,142,000, or 21.3 percent of revenues, for 1994. The improvement
in gross profit expressed as a percent of revenues in 1995 is the result of more
favorable profit margins on contracts and adjustments to the Company's warranty
reserve to bring this reserve in line with the estimated liability for equipment
under warranty at year end.
The improvement in contract profit margins in 1995 was made in spite of
competitive pricing conditions that continue to place great pressure on profit
margins. The competition for equipment orders during the period of slow market
activity has been marked by increased pricing pressures as some of the Company's
competitors have used substantial discounting to secure business. The Company
has generally declined to enter into contracts with pricing that does not permit
it to cover its costs, in the belief that selling products below cost is not
healthy for the Company or the industry.
The Company warrants the performance of its products for a period of one year
against defects in both materials and workmanship. An addition to the warranty
reserve is made in connection with
10
<PAGE>
each sale of the Company's products and is evaluated at year end. During 1995,
reductions to the Company's warranty reserve of approximately $336,000 were made
to bring this reserve in line with the estimated liability for equipment under
warranty at year end. The warranty reserve of $124,000 at December 31, 1995 (See
Consolidated Balance Sheet) compares to $378,000 at December 31, 1994.
Selling, General and Administrative Expense. Selling, general and
- --------------------------------------------
administrative expense of $2,449,000, or 33.0 percent of revenues for 1995
compares to $2,726,000, or 18.5 percent of revenues, for 1994. The reduction in
selling, general and administrative expense in 1995 is a result of the Company's
continuing cost reduction and cost containment efforts.
Other Income (Expense). Interest expense of $383,000 for 1995 compares to
- -----------------------
$393,000 for 1994, reflecting a lower level of borrowing by King Press under its
working capital revolving line of credit in 1995. Interest income of $16,000 in
1995 compares to $15,000 in 1994, and is derived from short term money market
investments. Net other income of $105,000 for 1995 compares to net other income
of $31,000 in 1994. During the first quarter of 1995, the Company sold shares
held in an affiliated company for $150,000 (See Note 3 of Notes to Consolidated
Financial Statements).
Provision For Taxes. There was no provision required for federal or state
- --------------------
income taxes in 1995 or 1994. (See Note 9 of Notes to Consolidated Financial
Statements).
Item 7. Financial Statements and Supplementary Data
-------------------------------------------
Index to Consolidated Financial Statements
and Financial Statement Schedules: Page
----
Report of Independent Public Accountants.......... 12
Consolidated Balance Sheet as of
December 31, 1995............................... 13
Consolidated Statements of Operations -
two years in the period ended
December 31, 1995............................... 14
Consolidated Statements of Shareholders'
Equity - two years in the period
ended December 31, 1995......................... 15
Consolidated Statements of Cash Flows -
two years in the period ended
December 31, 1995............................... 16
Notes to Consolidated Financial
Statements...................................... 17
11
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Publishers Equipment Corporation:
We have audited the accompanying consolidated balance sheet of Publishers
Equipment Corporation (a Texas corporation) as of December 31, 1995, and the
related consolidated statements of operations, shareholders' equity and cash
flows for each of the two years in the period then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Publishers Equipment
Corporation as of December 31, 1995, and the results of its operations and its
cash flows for the two years in the period then ended in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Tulsa, Oklahoma
March 5, 1996
12
<PAGE>
PUBLISHERS EQUIPMENT CORPORATION
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CONSOLIDATED BALANCE SHEET
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31,
1995
- --------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
------
Current assets:
Cash and cash equivalents........................................... $ 91,097
Trade accounts receivable (net of allowance for
doubtful accounts of $18,818)..................................... 814,407
Inventories (Note 4)................................................ 9,343,197
Prepaid expenses and other current assets........................... 146,881
---------------
Total current assets.............................................. 10,395,582
---------------
Property, plant and equipment, at cost (Note 6):
Land................................................................ 30,138
Building............................................................ 1,516,583
Transportation equipment............................................ 47,768
Furniture and fixtures.............................................. 756,779
Machinery and tools................................................. 1,572,081
---------------
3,923,349
Less accumulated depreciation....................................... 2,598,814
---------------
Net property, plant and equipment................................. 1,324,535
---------------
$ 11,720,117
===============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Trade accounts payable.............................................. $ 1,426,741
Accrued liabilities................................................. 1,021,983
Accrued warranty expense (Note 5)................................... 123,578
Customer deposits................................................... 2,234,220
Current portion of long term debt (Note 6).......................... 2,920
---------------
Total current liabilities......................................... 4,809,442
---------------
Long term debt (Note 6)............................................... 3,703,084
Other liabilities..................................................... 184,504
Contingencies and commitments (Notes 7 and 8)
Shareholders' equity (Notes 10 and 11):
Preferred stock, no par value; 1,000,000 shares authorized;
Series A convertible preferred stock, 250,000 shares
authorized, 72,670 issued in 1995,
liquidation value of $6.88 per share (Note 10).................... 500,000
Common stock, no par value; 9,000,000 shares authorized
5,222,365 issued in 1995.......................................... 18,814,871
Treasury stock, 45,714 shares at cost............................... (168,496)
Retained deficit.................................................... (16,123,288)
---------------
Total shareholders' equity........................................ 3,023,087
---------------
$ 11,720,117
===============
See accompanying notes.
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</TABLE>
13
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PUBLISHERS EQUIPMENT CORPORATION
<TABLE>
- ------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
- ------------------------------------------------------------------------------------------------------
<CAPTION>
Years ended December 31,
1995 1994
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenues (Notes 13 and 14) .................... $ 7,428,033 $ 14,731,930
Cost of revenues .............................. 5,464,322 11,589,976
----------- ------------
Gross profit .................................. 1,963,711 3,141,954
Selling, general and administrative
expenses (Note 12) .......................... 2,448,853 2,725,589
----------- ------------
Operating profit (loss) ....................... (485,142) 416,365
Other income (expense):
Interest expense ............................ (382,906) (393,291)
Interest income ............................. 15,553 14,744
Other income, net (Note 3) .................. 105,307 31,058
----------- ------------
Income (loss) before income taxes ............. (747,188) 68,876
Provision for income taxes (Note 9) ........... -- --
----------- ------------
Net income (loss) ............................. $ (747,188) $ 68,876
=========== ============
Net income (loss) per common share............. $ (0.14) $ 0.01
Weighted average common shares ................ 5,176,651 5,162,117
See accompanying notes.
- ------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
PUBLISHERS EQUIPMENT CORPORATION
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
Years ended December 31, 1994 and 1995
- ---------------------------------------------------------------------------------------------------------------------
Series A
Convertible
Preferred Stock Common Stock
--------------- ------------
Shares Amount Shares Amount
------ ------ ------ ------
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at December 31, 1993............ 101,738 $ 700,000 5,193,297 $ 18,614,871
Issuance of shares upon conversion
of preferred stock (Note 10)........ (14,534) (100,000) 14,534 100,000
Net profit............................ -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1994............ 87,204 600,000 5,207,831 18,714,871
Issuance of shares upon conversion
of preferred stock (Note 10)........ (14,534) (100,000) 14,534 100,000
Net loss.............................. -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995............ 72,670 $ 500,000 5,222,365 $ 18,814,871
======== ========= =========== ============
<CAPTION>
Treasury Stock
--------------
Shares Amount Retained Deficit Total
------ ------ ---------------- -----
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at December 31, 1993............ 45,714 $ (168,496) $ (15,444,976) $ 3,701,399
Issuance of shares upon conversion
of preferred stock (Note 10)........ -- -- -- --
Net profit............................ -- -- 68,876 68,876
- ---------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1994............ 45,714 (168,496) (15,376,100) 3,770,275
Issuance of shares upon conversion
of preferred stock (Note 10)........ -- -- -- --
Net loss.............................. -- -- (747,188) (747,188)
- ---------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995............ 45,714 $ (168,496) $ (16,123,288) $ 3,023,087
======== ========== ============= ============
See accompanying notes.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
PUBLISHERS EQUIPMENT CORPORATION
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
Years ended December 31,
1995 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)............................................. $ (747,188) $ 68,876
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization............................. 224,175 180,060
Provision for losses on doubtful accounts................. (189,008) 15,764
Change in assets and liabilities:
Decrease (increase) in accounts receivable................ 668,769 (316,943)
Increase in inventories................................... (1,539,013) (90,344)
Decrease (increase) in other current assets............... 136,789 (111,366)
Decrease (increase) in other assets....................... 74,349 (42,848)
Increase (decrease) in accounts payable
and accrued liabilities................................. (162,066) 659,366
Increase (decrease) in accrued warranty expense........... (253,892) 109,310
Increase (decrease) in customer deposits.................. 2,234,220 (4,279)
------------ ------------
Net cash provided by (used in) operations..................... 447,135 467,596
Cash flows from investing activities:
Net retirements of property, plant and equipment.............. 1,378 --
Additions to property, plant and equipment.................... (26,552) (110,246)
------------ ------------
Net cash used by investing activities......................... (25,174) (110,246)
Cash flows from financing activities:
Total borrowings.............................................. 5,880,000 7,939,358
Total repayments.............................................. (6,223,743) (8,294,095)
------------ ------------
Net cash used in financing activities......................... (343,743) (354,737)
------------ ------------
Net increase in cash and cash equivalents....................... 78,218 2,613
Cash and cash equivalents at beginning of period................ 12,879 10,266
------------ ------------
Cash and cash equivalents at end of period...................... $ 91,097 $ 12,879
============ ============
See accompanying notes.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
PUBLISHERS EQUIPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS
Publishers Equipment Corporation (the "Company") is a multinational manufacturer
of single-width newspaper, commercial and semi-commercial printing presses. The
Company markets it's products through it's wholly-owned subsidiary, King Press
Corporation ("King Press"). King Press was acquired by the Company in 1984 and
has served printing equipment markets since the early 1960's. Presses are sold
primarily to small newspapers as well as commercial and semi-commercial printers
and publishers located throughout the world.
2. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation - The Consolidated Financial Statements of the
Company include the accounts of Publishers Equipment Corporation and King Press
Corporation. All significant intercompany transactions are eliminated.
Revenue Recognition - Revenues from sales of manufactured presses and parts are
recognized when shipped.
Accounts Receivable - A majority of the Company's accounts receivable are due
from companies in the printing industry. Credit is extended based on evaluation
of the customer's financial condition and generally, collateral is not required.
Credit losses have historically been within management's expectations.
Inventories - Inventories are stated at the lower of cost (first-in, first-out)
or market.
Depreciation - Depreciation is determined for financial reporting by the
straight-line method using the following estimated useful lives:
Building 30 years
Transportation equipment 3 years
Furniture and fixtures 3 to 10 years
Machinery and tools 2 to 20 years
For income tax purposes, depreciation is determined by accelerated methods.
Research and Development Costs - The costs and expenses related to basic
research, engineering, and product development are expensed as incurred. During
1995 and 1994, research and development costs aggregated approximately $79,000
and $160,000, respectively.
17
<PAGE>
PUBLISHERS EQUIPMENT CORPORATION
NOTES (Continued)
Income Taxes - Deferred income taxes are provided for differences in the
recognition of income and expenses for financial statement and tax purposes (See
Note 8).
Earnings Per Share - Earnings per share is based upon the weighted average
number of common shares outstanding. The effects of the Company's common stock
equivalents, convertible debentures and preferred stock were anti-dilutive in
1995 and insignificant in 1994, and were therefore excluded from the calculation
of earnings per share for both 1995 and 1994.
Cash Equivalents - The Company considers all highly liquid instruments purchased
with a maturity of three months or less and certificates of deposit to be cash
equivalents.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principals requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
3. INVESTMENT IN AFFILIATE
At December 31, 1994, the Company had a 7.0 percent equity interest in KBA-
Motter Corp. In January 1995, the Company sold the common shares of KBA-Motter
Corp. representing its 7.0 percent equity interest for $150,000, which amount is
reflected in "Other income, net" in the accompanying Consolidated Statements of
Operations. As a result, at December 31, 1995, the Company had no equity
interest in this affiliated company. The Company wrote off its investment in
KBA-Motter Corp. in 1991.
Beginning July 1, 1991, the Company accounted for its investment in KBA-Motter
Corp. by the Cost Method. During 1995 and 1994 there were no material
transactions between the Company and KBA-Motter Corp.
18
<PAGE>
PUBLISHERS EQUIPMENT CORPORATION
NOTES (Continued)
4. INVENTORIES
Year ended
December 31,
1995
- ----------------------------------------------------------------
Raw materials................ $ 94,669
Work-in process.............. 795,281
Finished goods............... 8,319,709
Used presses................. 546,763
---------
9,756,422
Less inventory reserves (413,225)
---------
$9,343,197
=========
5. WARRANTY
The Company warrants the performance of its products for a period of one year
against defects in both materials and workmanship, in addition to supplemental
contractual warranties and performance guarantees as agreed to with individual
customers.
Warranty expense was approximately $235,000 in 1995 and $503,000 in 1994, and is
included in cost of revenues in the accompanying Consolidated Statements of
Operations. During 1995, reductions to the Company's warranty reserve of
approximately $336,000 were made to bring this reserve in line with the
estimated liability for equipment under warranty at year end (See Consolidated
Balance Sheet).
6. DEBT
Year ended
December 31,
1995
- ---------------------------------------------------------------
Amounts outstanding under
the King Press bank revolving line
of credit, interest at prime plus
1.5% (10.0% at December 31, 1995)
due March 1997, secured by all real
and personal property of King Press.... $2,702,000
19
<PAGE>
PUBLISHERS EQUIPMENT CORPORATION
NOTES (Continued)
Subordinated note, convertible into common stock
at $7.50 per share (subject to anti-dilution
provisions), interest at 0% in 1995 and
German Prime rate in 1996 and 1997,
due December 1997, unsecured........... 1,000,000
Other................................... 4,004
---------
3,706,004
Less current maturities................. 2,920
---------
$3,703,084
=========
Maturities of long term debt are as follows:
1996......................................... $ 2,920
1997......................................... 3,703,084
1998......................................... --
1999......................................... --
2000......................................... --
Thereafter................................... --
---------
$3,706,004
==========
At December 31, 1995, King Press may borrow up to $3,100,000 at the U.S. Prime
rate of interest plus 1.5 percent under a revolving credit line expiring March
6, 1996. At December 31, 1995, King Press had $2,702,000 outstanding under the
revolving credit line. The loan agreement pertaining to the revolving line of
credit includes restrictions on indebtedness, liens, disposal of assets and
requires that certain financial ratios be maintained. At December 31, 1995, the
Company was in default of provisions of the line of credit pertaining to certain
financial ratios. The lender has agreed to waive the default under those
provisions through December 31, 1995.
The line of credit was renewed in the amount of $3,050,000 with a maturity date
of March 31, 1997, in a loan agreement dated March 1, 1996. The loan agreement
pertaining to the new line of credit includes restrictions on indebtedness,
liens, disposal of assets, requires that certain financial ratios be maintained
and requires that the principal amount available under the line of credit be
reduced in quarterly increments from $3,050,000 at April 30, 1996 to $2,700,000
at February 1, 1997. King Press is in compliance with the provisions of the
March 1, 1996 loan agreement.
The Company paid interest of approximately $424,000 in 1995 and $381,000 in
1994.
20
<PAGE>
PUBLISHERS EQUIPMENT CORPORATION
NOTES (Continued)
7. COMMITMENTS
At December 31, 1995, commitments for lease payments under noncancelable
operating leases totalled $25,000, all of which is due in 1996.
Lease expense totalled approximately $33,000 for both years ended December 31,
1995 and 1994.
8. CONTINGENCIES
The Company has from time to time become involved in various claims and lawsuits
incidental to its business. In the opinion of management, any liability arising
out of currently pending claims and lawsuits will not have a material adverse
effect on the consolidated financial condition or results of operations of the
Company.
9. INCOME TAXES
Effective January 1, 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS No.
109). SFAS No. 109 requires recognition of deferred tax liabilities and assets
for the expected future consequences of events that have been included in the
financial statements and tax returns. Under this method, deferred tax
liabilities and assets are determined based on the difference between the
financial statement and tax bases of assets and liabilities using enacted tax
rates. The adoption of SFAS No. 109 had no effect on the financial statements.
The Company had no provision for Federal or state income taxes for 1995 or 1994.
The following is a reconciliation of the U.S. Federal statutory rate to the
effective tax rate.
1995 1994
------ ------
U.S. Federal statutory rate (benefit) (34%) 34%
Loss producing no current tax benefit 34% (34%)
------ ------
0% 0%
=== ===
21
<PAGE>
PUBLISHERS EQUIPMENT CORPORATION
NOTES (Continued)
At December 31, 1995, the Company had deferred tax liabilities of $254,000,
deferred tax assets of $6,516,000 and a valuation allowance of $6,262,000. The
principal temporary differences included above are long term capital loss
carryforwards ($2,581,000), net operating loss carryforwards ($2,240,000),
general business credits ($690,000), uniform inventory cost capitalization
($378,000), depreciation ($220,000) and accruals ($913,000).
The Company has long term capital loss carryforwards for U.S. tax purposes of
$7,592,000, net operating loss carryforwards of $6,588,000 and general business
credit carryforwards of $690,000. The long term capital loss carryforwards, the
tax loss carryforward and general business credit carryforwards expire beginning
in 2001, 2006 and 1996, respectively.
10. PREFERRED STOCK
In connection with the acquisition of a Swedish subsidiary whose operations were
discontinued in 1991, the Company issued 145,349 shares of its Series A
Convertible Preferred Stock ("Series A"), no par value, to AB Bonnierforetagen.
The terms of the Series A shares provide that such shares shall be nonvoting
stock with a nonparticipating liquidation preference of $6.88 per share. The
Series A shares shall be entitled to receive dividends at the same rate as the
common stock on an "as converted" basis. The terms of the Series A further
provide that all of the issued shares will be converted to common stock ratably
over a 10 year period commencing January 1, 1991. The Series A will not be
convertible at the option of the holder unless and until the occurrence of
certain events, such as a merger, recapitalization or change in control of the
Company. The Series A shares are convertible at a rate of one share of
preferred stock for one share of common stock and the conversion rate is subject
to certain anti-dilution adjustments. On each January 1, 1992, 1993, 1994, 1995
and 1996, 14,534 shares of the Series A converted to 14,534 shares of common
stock. As a result of the foregoing, the Company has reserved 72,670 common
shares for issuance upon conversion of the outstanding Series A shares.
11. STOCK OPTIONS AND PREEMPTIVE RIGHTS
The Company has granted incentive stock options to key employees and directors
of the Company at prices equal to the greater of $1.00 or market value at date
of grant. The stock options are exercisable in 25% cumulative annual
installments beginning at the date of grant.
22
<PAGE>
PUBLISHERS EQUIPMENT CORPORATION
NOTES (Continued)
A summary of option transactions in 1994 and 1995 follows:
<TABLE>
<CAPTION>
Options Total Option
(Shares) Price
- ---------------------------------------------------------
<S> <C> <C>
Outstanding at
December 31, 1993........... 254,742 $ 259,805
Granted....................... 143,750 143,750
Cancelled..................... (11,000) (11,000)
Exercised..................... -- --
--------- ---------
Outstanding at
December 31, 1994........... 387,492 $ 392,555
Granted....................... -- --
Cancelled..................... (213,242) (213,242)
Exercised..................... -- --
Outstanding at
December 31, 1995........... 174,250 $ 179,313
--------- ---------
Exercisable at end of 1995.... 113,375
Common stock reserved for
options at end of 1995...... 280,725
Exercise price of options
outstanding at end of 1995.. $ 1.00 - $ 1.50
</TABLE>
12. EMPLOYEE BENEFIT PLANS
The Company has a 401(k) plan available to the employees of the Company after
six months of service. The plan provides for voluntary contributions from
participating employees. A participant may elect to make contributions up to
the maximum permissible amount (the lesser of $30,000 or 25% of the
participant's annual compensation) on a before tax basis. The 401(k) plan
allows the Company to make voluntary contributions to the accounts of
participating employees. The Company made no contributions to the 401(k) plan
for 1995 or 1994. The Company pays all fees and expenses incurred for
administration of the 401(k) plan.
Employees of the Company participate in defined contribution pension plans.
Contributions to the pension plans are based on hours worked and wages earned.
Contributions to the plans are funded currently. The costs of the pension plans
were approximately $133,000 in 1995 and $164,000 in 1994.
23
<PAGE>
PUBLISHERS EQUIPMENT CORPORATION
NOTES (Continued)
13. EXPORT SALES
Included in revenues are export sales to foreign customers which aggregated
approximately $4,423,000 in 1995 and $7,322,000 in 1994.
14. SIGNIFICANT CUSTOMERS
During 1995, one customer accounted for 19 percent of the Company's revenues.
During 1994, three customers together accounted for more than 33 percent of the
Company's revenues.
24
<PAGE>
Item 8. Changes In and Disagreements with Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure
--------------------
Not applicable.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
--------------------------------------------------------------
Compliance with Section 16(a) of the Exchange Act
-------------------------------------------------
Executive Officers Of The Company
---------------------------------
<TABLE>
<CAPTION>
Name Age Present Position
- ---- --- ----------------
<S> <C> <C>
Evans Kostas 60 Chairman of the Board
Chief Executive Officer
and President
Roger R. Baier 53 Chief Financial Officer
and Vice President
Finance
</TABLE>
Both of the Executive Officers of the Company have served in their present
capacities for the Company for at least the past five years.
[The remaining information required by Part III, Items 9, 10, 11 and 12 are set
forth in the Proxy Statement to be delivered to Shareholders in connection with
the Company's Annual Meeting of Shareholders presently scheduled to be held on
June 21, 1996, which information is incorporated herein by reference.]
Item 10. Executive Compensation
----------------------
The information concerning executive compensation is set forth in the Proxy
Statement under the heading "Executive Compensation", which information is
incorporated herein by reference.
Item 11. Security Ownership of Certain Beneficial Owners
-----------------------------------------------
and Management
--------------
The information concerning Security Ownership of Certain Beneficial Owners and
Management is set forth in the Proxy Statement under the heading "Security
Ownership of Management and Principal Shareholders", which information is
incorporated herein by reference.
25
<PAGE>
Item 12. Certain Relationships and Related Transactions
----------------------------------------------
The information concerning Certain Relationships and Related Transactions is set
forth in the Proxy Statement under the heading "Certain Transactions", which
information is incorporated herein by reference.
Item 13. Exhibits, Lists and Reports on Form 8-K
---------------------------------------
(a) Exhibits.
See Index to Exhibits.
(b) Reports on Form 8-K.
Not applicable.
26
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PUBLISHERS EQUIPMENT CORPORATION
By:/s/ Evans Kostas
____________________________ Date: March 8, 1996
Evans Kostas -------------------
Chairman of the Board,
President and Chief Executive Officer
In accordance with the Exchange Act, the report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Evans Kostas Chairman of the Board March 8, 1996
_______________________ President and Chief -------------
Evans Kostas Executive Officer
/s/ Roger R. Baier Vice President-Finance March 8, 1996
_______________________ and Treasurer (Principal -------------
Roger R. Baier Financial and Accounting
Officer)
/s/ Simon Bonnier
_______________________ Director March 11, 1996
Simon Bonnier --------------
/s/ James K. Feeney
_______________________ Director March 11, 1996
James K. Feeney --------------
/s/ Robert S. Hamilton
_______________________ Director March 10, 1996
Robert S. Hamilton --------------
/s/ Ole B. Rygh
_______________________ Director March 18, 1996
Ole B. Rygh --------------
/s/ Reinhart Siewert
_______________________ Director March 11, 1996
Reinhart Siewert --------------
27
<PAGE>
PUBLISHERS EQUIPMENT CORPORATION
INDEX TO EXHIBITS
Exhibit No. Description Page
----------- ----------- ----
3.1 Articles of Incorporation of the
Company, together with Articles
of Amendment and Form of Amendment *
3.2 Articles of Amendment to Articles
of Incorporation of the Company,
filed with the Office of the Secre-
tary of State of Texas on June 2,
1988 **
3.3 Certificate of Correction of
Articles of Incorporation of the
Company, filed with the Office of
the State of Texas on April 9, 1990 ***
3.4 Amended and Restated Bylaws of the
Company ***
10.1 Loan Agreement, dated as of March
1, 1996, between the Company and
Mercantile Bank of Joplin, N.A. 30
10.2 Promissory Note, dated as of March
1, 1996, between the Company and
Mercantile Bank of Joplin, N.A. 37
10.3 Publishers Equipment Corporation
Stock Option Plan, as Amended ***
10.4 Purchase Agreement for 7%
Convertible Subordinated Notes
Due 1993, dated as of December
6, 1986, by and among the
Company, Windmoller & Holscher
and Koenig & Bauer AG ****
10.5 Employment Agreement, dated as
of May 2, 1988, as Amended by
and between the Company and
Robert S. Hamilton ****
28
<PAGE>
Exhibit No. Description Page
----------- ----------- ----
22 Subsidiaries of the Company 29
Jurisdiction
Name of Incorporation
---- ----------------
King Press
Corporation Missouri
Applied Graphics,
Inc. Texas
24 Consent of Independent Public
Accountants 42
27 Financial Data Schedule
- ---------------------------------------
* Incorporated by reference from the Exhibits to the Company's Registration
Statement on Form S-1 (Registration No. 2-28017).
** Incorporated by reference from the Exhibitd to the Company's Annual Report
on Form 10-K for the year ended December 31, 1988.
*** Incorporated by reference from the Exhibits to the Company's Annual Report
on Form 10-K for the year ended December 31, 1989.
**** Incorporated by reference from the Exhibits to the Company's Annual Report
on Form 10-KSB for the year ended December 31, 1992.
***** Incorporated by reference from the Exhibits to the Company's Annual Report
on Form 10-KSB for the year ended December 31, 1993.
29
<PAGE>
EXHIBIT 10.1
Loan Agreement, dated as of March 1, 1996,
Between the Company and Mercantile Bank of Joplin, N.A.
30
<PAGE>
EXHIBIT 10.2
Promissory Note, dated as of March 1, 1996
Between the Company and Mercantile Bank of Joplin, N.A.
37
<PAGE>
EXHIBIT 24
----------
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
- -----------------------------------------
We consent to the incorporation by reference in the Registration Statement (Form
S-8, No. 33-8142) pertaining to the Stock Option Plan of Publishers Equipment
Corporation and in the related Prospectus of our report dated March 5, 1996,
with respect to the financial statements and schedules of Publishers Equipment
Corporation included in this Annual Report (Form 10-KSB) for the year ended
December 31, 1995.
ARTHUR ANDERSEN LLP
Tulsa, Oklahoma
March 19, 1996
42
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 91,097
<SECURITIES> 0
<RECEIVABLES> 814,407
<ALLOWANCES> 0
<INVENTORY> 9,343,197
<CURRENT-ASSETS> 10,395,582
<PP&E> 1,324,535
<DEPRECIATION> 0
<TOTAL-ASSETS> 11,720,117
<CURRENT-LIABILITIES> 4,809,442
<BONDS> 0
0
500,000
<COMMON> 18,814,871
<OTHER-SE> (16,123,288)
<TOTAL-LIABILITY-AND-EQUITY> 11,720,117
<SALES> 0
<TOTAL-REVENUES> 7,428,033
<CGS> 5,464,322
<TOTAL-COSTS> 5,464,322
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 382,906
<INCOME-PRETAX> (747,188)
<INCOME-TAX> 0
<INCOME-CONTINUING> (747,188)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (747,188)
<EPS-PRIMARY> (0.14)
<EPS-DILUTED> (0.14)
</TABLE>
