<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
________________________________________
FOR QUARTER ENDED, DECEMBER 31, 1995
COMMISSION FILE NUMBER 0-14358
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PARIS BUSINESS FORMS, INC.
--------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
PENNSYLVANIA 23-1645493
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
122 KISSEL ROAD, BURLINGTON, NJ 08016
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE 609-387-7300
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INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.
YES [X] NO [_]
NUMBER OF SHARES OUTSTANDING AS OF DECEMBER 31, 1995
COMMON STOCK 3,937,517
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PARIS BUSINESS FORMS, INC.
CONTENTS
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited): PAGE
Consolidated Balance Sheets - December 31, 1995
and September 30, 1995 (audited) 3
Consolidated Statements of Income
Three months ended, December 31, 1995 and 1994 4
Consolidated Statements of Cash Flows -
Three months ended, December 31, 1995 and 1994 5
Notes to Consolidated Condensed
Financial Statements 6
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7 - 8
PART II. OTHER INFORMATION (Items 1, 2, 3, & 5 - not applicable)
ITEM 4. Submission of Matters to a Vote of Security Holders 9
ITEM 6. Exhibits and Reports on Form 8-K 9
Signatures of Registrant 10
2
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PARIS BUSINESS FORMS, INC.
CONSOLIDATED BALANCE SHEET
UNAUDITED
<TABLE>
<CAPTION>
(IN THOUSANDS)
ASSETS
12-31-95 9-30-95
(AUDITED)
-------- --------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,290 $ 5,227
Marketable securities 4,524 3,658
Accounts receivable 7,846 6,549
Inventories 11,030 17,348
Prepaid expenses 465 300
Deferred income taxes 825 1,233
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Total current assets 26,980 34,315
Property, plant and equipment, net 6,589 6,800
Other assets 415 73
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Total Assets $33,984 $41,188
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long term debt $ 1,612 $ 1,650
Note payable, bank 5,327 4,926
Accounts payable and accrued expenses 3,526 10,776
Accrued payroll and related expenses 403 603
Income taxes payable 670 1,105
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Total current liabilities 11,538 19,060
Deferred income taxes 994 1,020
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Total Liabilities 12,532 20,080
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Commitments:
Shareholders' equity:
Common stock 16 16
Additional paid in capital 8,588 8,588
Retained earnings 14,087 13,683
Unrealized gain on marketable securities 70 121
Treasury stock (1,309) (1,300)
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Total Shareholders' Equity 21,452 21,108
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Total Liabilities and Shareholders' Equity $33,984 $41,188
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</TABLE>
3
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PARIS BUSINESS FORMS, INC.
CONSOLIDATED STATEMENT OF INCOME
UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
12-31-95 12-31-94
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<S> <C> <C>
Net Sales $ 16,603 $ 14,017
Cost of products sold 14,767 12,178
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Gross profit 1,836 1,839
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Selling expenses 619 527
General and administrative expenses 660 772
Interest expense 140 37
Other (income) expense (196) (44)
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Income (loss) before taxes 613 547
Provision (benefit) for income taxes 208 186
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Net Income (loss) $ 405 $ 361
========= =========
Weighted average common and
equivalent shares outstanding 3,824,132 3,715,317
Earnings per share $ 0.11 $ 0.10
========= =========
</TABLE>
4
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PARIS BUSINESS FORMS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
(IN THOUSANDS) THREE MONTHS THREE MONTHS
ENDED ENDED
12-31-95 12-31-94
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 405 $ 361
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Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 277 295
(Gain) loss on sale of marketable securities (111) (45)
Provision for losses on accounts receivable (140) 50
Provision for equity in loss on investment in joint venture 98 32
Deferred income tax credit 382
(Increase) decrease in:
Accounts receivable (1,157) (1,446)
Inventories 6,318 (1,417)
Prepaid expenses (165) (21)
Other assets (49) (23)
Increase (decrease) in:
Accounts payable and accrued expenses (7,251) 2,441
Accrued payroll and related expenses (200) (114)
Income taxes payable, current (435) (165)
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Total adjustments (2,433) (413)
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Net cash provided by (used in) operating activities (2,028) (52)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in joint venture (390) 0
Proceeds from sale of marketable securities 79 220
Purchase of marketable securities (886) (1,396)
Purchase of property, plant and equipment (66) (420)
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Net cash provided by (used in) investing activities (1,263) (1,596)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt (37) (82)
(Purchase) issuance of treasury stock (9) 0
Proceeds of working capital line of credit 400 0
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Net cash provided by (used in) financing activities 354 (82)
Net decrease in cash and cash equivalents (2,937) (1,730)
Cash and cash equivalents at beginning of period 5,227 2,081
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Cash and cash equivalents at end of period $ 2,290 $ 351
======= =======
Supplemental disclosures of cash flow information:
Cash paid for interest expense 140 37
Cash paid for income taxes $ (236) $ (351)
</TABLE>
5
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PARIS BUSINESS FORMS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
ACCOUNTING POLICIES:
The accompanying unaudited interim consolidated financial statements were
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. The Summary of Accounting Policies and Notes to
Consolidated Financial Statements included in the September 30, 1995 Form 10-K
should be read in conjunction with the accompanying statements. These
statements include all adjustments (consisting only of normal recurring
accruals) which the Company believes necessary for a fair presentation of the
statements. The interim operating results are not necessarily indicative of the
results for a full year.
6
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PARIS BUSINESS FORMS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
---------------------
DECEMBER 31, 1995
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<TABLE>
<CAPTION>
----------------------------------------------------------------------------
THREE MONTHS
----------------------------------------------------------------------------
$ %
1995 1994 CHANGE CHANGE
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Sales $16,603 $14,017 $2,586 18%
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Cost of sales 14,767 12,178 2,589 21%
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Gross profit 1,836 1,839 (3) -0%
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Selling 619 527 92 17%
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General and administrative expenses 660 772 (112) -15%
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Interest expense 140 37 103 278%
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Other (income) expense (196) (44) (152) 345%
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Pretax income 613 547 66 12%
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Income taxes 208 186 22 12%
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Net income $ 405 $ 361 $ 44 12%
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</TABLE>
GROSS PROFIT
- ------------
Net sales for the first quarter ended December 31, 1995 were $16.6 million
compared to $14.0 million for the same period in the prior fiscal year,
representing an increase of $2.6 million or 18%. Cost of goods sold were $14.8
million for the quarter ended December 31, 1995 compared with $12.2 million
reported in the corresponding quarter a year ago, representing an increase of
$2.6 million or 21%. The equivalent dollar increases in sales and cost of goods
sold resulted in no change in gross profit in the comparison quarters.
The increase in sales is attributed to a 37% increase in the average selling
price on computer paper or $4.0 million, and $630,000 in the sale of new
products, offset by a 20% decline in sales volume, equivalent to $2.0 million.
The increase in cost of goods sold is due to the significant increase in paper
prices throughout the industry. These increases resulted in a 45% increase in
the average cost of computer paper.
The sales unit volume decline in the first quarter is principally due to two
factors, i.e., (1) the continuing decrease in overall consumer demand for
continuous form computer paper due to the changeover from impact to laser/inkjet
printer technology and (2) a temporary decline in orders from the Company's
principal customer due to a realignment of that customer's vendor base. The
Company expects sales volumes with the major customer to return to prior levels
within ninety days.
OPERATING EXPENSES
- ------------------
Sales and marketing expenses increased $92,000 (17%) due to marketing and
staffing cost associated with new product introductions, including salaries of
$29,000, trade show expense of $35,000, advertising expense of $26,000, and
other sundry expense of $2,000. General and administrative expenses decreased
$112,000 (14%), primarily due to a decrease in allowance for doubtful accounts
of $190,000, offset by an increase in reserves for estimated federal and state
tax audit deficiencies of $75,000.
7
<PAGE>
Sales outside the United States are minimal and, accordingly, the Company
believes it presently has no foreign currency exposure.
INTEREST EXPENSE
- ----------------
Interest expense increased $103,000 (279%), resulting from interest on a working
capital loan of $112,000, offset by decrease of $9,000 due to the paydown of
mortgage debt and a bank term loan.
OTHER (INCOME) EXPENSES
- -----------------------
Other income increased $152,000 (349%), due to $103,000 of investment related
income, $18,000 from equity in joint venture losses and related income and
expense items, and other sundry income of $31,000.
LIQUIDITY AND CAPITAL RESOURCES:
--------------------------------
Working capital increased $140,000 from $15.25 million to $15.39 million and
cash and cash equivalents decreased $2.8 million during the three months ended
December 31, 1995. Inventories were lowered $6.32 million from $17.3 million to
$11.0 million during the first fiscal quarter in reaction to falling raw paper
prices and the expectation of continued price erosion into the second fiscal
quarter. Trade payables were reduced from $11.4 million to $3.99 million,
decreasing trade payables days outstanding from 85 days to the Company's normal
30 day level. Trade receivables were higher at December 31, 1995 as compared to
September 30, 1995 by $1.3 million due to extended payment terms taken by a
major customer traditionally each year in the fiscal first quarter, as well as
longer payment cycles in the retail market channel through which the Company is
now selling at an increasing rate.
The Company has a $6 million line of credit available through a commercial bank
at prime less one half percent (8.25% at December 31, 1995). The outstanding
loan balance on the line of credit at December 31, 1995 was $5.3 million.
No significant investment in property, plant or equipment was made in the first
fiscal quarter.
INVESTMENTS
-----------
In October 1995 the Company invested an additional $390,000 in Signature
Corporation, a joint venture corporation that markets office products though the
supermarket and drugstore retail channels. The Company's original investment of
$333,334 for 33% of the common stock of the joint venture in December, 1992 has
been written off completely by the recognition of the Company's equity in the
operating losses of Signature of $129,334 and $204,000 in fiscal 1995 and 1994,
respectively. With the additional capital investment, the Company has increased
its ownership to 44% of the common stock of Signature. During the three months
ended December 31, 1995, the Company wrote off $98,000 of the $390,000
investment due to the operating losses of the joint venture.
8
<PAGE>
PARIS BUSINESS FORMS, INC.
PART II
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Effective January 1996, by stockholder approval at the Annual Meeting,
the Company changed its name from Paris Business Forms, Inc. to Paris
Corporation. The name change reflects the Company's commitment to
diversifying from its core business of stock and custom business forms
to new channels with a broader base of products including computer
products, office products, software and value added cut sheet paper
products.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
Computation of Primary Earnings Per Share
Average Number of Common Shares
Outstanding During the Period 3,824,132
=========
(b) Reports on Form 8-K
None.
9
<PAGE>
PARIS BUSINESS FORMS, INC.
SIGNATURES OF REGISTRANT
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.
PARIS BUSINESS FORMS, INC.
___________________________
Dominic P. Toscani, Sr.
President and Chairman of
the Board of Directors
____________________________
John A. Whiteside
Chief Financial Officer
DATE: January 31, 1996
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 2,109,863
<SECURITIES> 4,704,290
<RECEIVABLES> 8,382,648
<ALLOWANCES> 536,528
<INVENTORY> 11,029,892
<CURRENT-ASSETS> 26,980,168
<PP&E> 14,397,409
<DEPRECIATION> 7,807,942
<TOTAL-ASSETS> 33,983,770
<CURRENT-LIABILITIES> 11,593,968
<BONDS> 0
0
0
<COMMON> 15,751
<OTHER-SE> 21,436,993
<TOTAL-LIABILITY-AND-EQUITY> 33,983,770
<SALES> 16,602,656
<TOTAL-REVENUES> 16,602,656
<CGS> 14,766,751
<TOTAL-COSTS> 14,766,751
<OTHER-EXPENSES> 1,344,879
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 139,913
<INCOME-PRETAX> 613,326
<INCOME-TAX> 208,532
<INCOME-CONTINUING> 557,176
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 404,794
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
