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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
[ X ] Annual Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (fee required)
FOR FISCAL YEAR ENDED SEPTEMBER 30, 1997
OR
[ ] Transaction Report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 (no fee required)
COMMISSION FILE NUMBER 0 - 14358
PARIS CORPORATION
(Exact name of Registrant as specified in its Charter)
PENNSYLVANIA 23-1645493
(State or other Jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
122 KISSEL ROAD, BURLINGTON, NEW JERSEY 08016
(Address of principal executive office) (zip code)
Telephone: (609) 387-7300
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the act: None
Securities registered pursuant to section 12(g) of the act:
TITLE
Capital Stock, $.004/par value per share
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes [ X ] No [ ]
The aggregate market value of the voting stock held by nonaffiliates of
the registrant as of November 15, 1997 was $1,564,776.
Number of shares of outstanding common stock as of November 15, 1997 -
3,629,431 shares.
Definitive Proxy Statement for the January 30, 1998 annual meeting of
the stockholders has been filed within 120 days after the end of the fiscal year
covered by this annual report.
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ITEM 1 - BUSINESS
GENERAL
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Paris Corporation ("Paris"), formerly Paris Business Forms, Inc.,
incorporated in 1964 under the laws of the Commonwealth of Pennsylvania, is a
holding company with four wholly owned subsidiaries, viz., two active operating
companies in New Jersey and Texas, one inactive Florida corporation, and a
Delaware corporation which owns the Company's trademarks. Paris Business
Products, Inc., a New Jersey corporation and Paris Business Forms, Inc., a Texas
corporation (dba, Paris Business Products, Inc.), are the two operating
companies, with plants in New Jersey and Texas, respectively. PBF Corporation
is the Delaware corporation. The Texas and Florida corporations are both wholly
owned subsidiaries of the New Jersey corporation. Paris also has a 44% interest
in a corporation, Signature Corporation, formed in 1992, to market office
products through the supermarket and drug chain channels. Xerox Corporation and
two individuals own the remainder of the interest in Signature Corporation.
In January, 1996, Paris changed its corporate name to Paris Corporation
from Paris Business Forms, Inc.
The Company converts mill paper rolls to business forms at its two
manufacturing and distribution plants in New Jersey and Texas and distributes
office products, computer products and software through a number of market
channels including forms dealers, paper merchants, stationers, office product
and computer superstores, consumer electronics retailers, buying groups,
catalogs, supermarkets, and drugstore chains. Products include stock and custom
continuous forms; mill cut, value added, and custom cut sheets; paper handling
products for small offices and home offices, computer based printers and
scanners, office products and on-demand laser software. Geographically the
Company markets its products throughout the United States and Canada through
Company sales representatives, independent representatives, brokers, dealers,
and distributors.
Traditionally, the principal focus of the business was the manufacture
of continuous forms designed to run on dot matrix and high speed impact
printers. The Company serves the stock continuous forms market and the custom
forms market, providing business forms to commercial businesses to
specification. Laser and inkjet printer technology continues to replace impact
printers and, accordingly, the Company's market for continuous forms is
shrinking at a pace estimated at 5-10% per year. The negative growth is more
accelerated in the retail market serving small business/home business customers
since the printer equipment investment is minimal and easy to replace. As a
result, the Company has been shifting its focus to the development, manufacture,
and sale of value-added and custom cut sheet products used on laser and inkjet
printers. Perfed, punched, lined, collated, colored, photo quality, and novelty
cut sheet products have been added to the product line. The continuous forms
products segment as a percentage of total sales has decreased from 85% to 77% to
70% in fiscal years 1995, 1996, and 1997, respectively. It is estimated that
this segment will only account for 55% of total sales in fiscal 1998.
The Burlington product line of value-added cut sheet products targeted
to the small office and home office user has continued to expand with various
offerings to meet the everyday needs of inkjet and laser printer paper demand as
well as specialty products for photographic quality and other applications
requiring maximum color contrast and optimal ink absorption. Growth in this
product segment is expected to grow at a double-digit pace.
Signature Corporation, the 44% owned joint venture with Xerox
Corporation to distribute office products to the food and drug store markets,
continues to generate strong growth in revenues. Formed in late 1992,
Signature's sales have tripled over the past two years, with stores served
increasing from 3600 in 1995 to 6800 in 1996 to 11000 in 1997. This penetration
represents approximately 20% of the total number of food and drug outlets in the
United States. In 1998, sales are expected to increase from $6.3 million in
1997 to $10 million in 1998, reflecting continuing growth with existing
customers and new account acquisitions.
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COMPETITION
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The business forms market is divided into two major segments,
competitively. One segment sells directly to end users, principally the 500 to
1000 largest corporations. The other segment, which Paris serves, distributes
forms through resellers and retailers. In the reseller market, there are three
or four major competitors in stock continuous forms who are larger than Paris
and committed to stock computer paper for the foreseeable future due to capital
investment, albeit the negative growth rate. Although the Company does not
compete directly with the approximate dozen direct sellers, weak industry
conditions have forced some direct sellers to market to smaller companies which
traditionally bought through the indirect market. As a result, fierce
competition for market share has ensued over the last two years driving margins
down significantly. Contrary to previous years when sell prices would move in
unison with changes in commodity paper prices, the recent past has seen a severe
narrowing of this spread. During the year, the Company lost two major stock
forms accounts to competition representing an annual sales run rate of
approximately $15 million due to competitive pricing that the Company was unable
to match. The competitive environment is one where only the lowest cost
producer will survive. There have been a number of acquisitions and mergers
within the industry and the consolidation mode is expected to continue going
forward to lower unit costs. Paris does not expect to pursue any acquisitions
within this business segment and will continue to shrink capacity commensurate
with the reduced demand for stock continuous forms.
The cut sheet market is growing at a rapid pace fueled by the
installation of laser and inkjet printers throughout the major U.S. corporations
and home and small businesses. Sales volume is expected to grow due to the
Company's penetration of the retail market, serving a number of major retail
stores. However, competition in this market is increasing rapidly. The major
paper mills have developed marketing subsidiaries to serve the retail market.
Average sell prices of value-added cut sheet products declined about 20% from
fiscal 1996 to fiscal 1997. However, due to increased unit volume of
approximately 60% on a year-to-year basis, sales dollar volume increased.
SUPPLIERS
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The Company purchases registered bond paper, (consisting of a wide
variety of weights, widths, colors, sizes and qualities), cut sheet, and
carbonless paper principally from the major United States paper mills. The
Company believes that it has good relationships with all of its suppliers.
During the fiscal year ended September 30, 1995, the major paper mills
shifted some capacity, or in some cases eliminated capacity, creating a shortage
in raw paper supply for the Company and the paper industry at large. As a
result, paper costs accelerated at a rapid pace, nearly doubling during the
period of July to December, 1994, and increased another 25% from January, 1995
to September, 1995. The tight supply conditions ceased after September, 1995,
with reduced demand from manufacturers and distributors throughout the supply
channel due to high inventory levels. During the fiscal year ended September
30, 1996, supplier pricing declined as much as the previous year increase and
returned to price levels of two years prior. Paper prices remained relatively
stable during fiscal 1997 and similar conditions are expected over the next
twelve months.
Boise Cascade, the Company's largest paper supplier, has indicated plans
to significantly reduce its capacity, by the year 2000, of forms bond rolls
which are used by Paris in the production of continuous forms. The Company
believes that the reduced supply available will be consistent with its plans to
shrink this business segment. However, the Company has expanded its source of
suppliers in the past year to ensure adequate paper supply in the near future.
The Company has partnered or formed strategic alliances to provide raw
material, market support, and/or name recognition for its value added cut sheet
product and non-paper products. Xerox and the Company have formed Signature
Corporation to market office products under the Xerox brand name
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through the supermarket and drugstore chains. Currently, the Company represents
the largest volume customer of Boise Cascade for certain specialty retail cut
sheet products. The Company believes the strong relationship between Paris and
Boise will provide the Company a solid footing for future cut sheet supply.
Paris is working with a supplier to provide specialty products like clipboards,
mouse pads, and binders made from recycled circuit boards and has imported and
resold color scanners during the past year via a relationship with a Taiwanese
supplier.
SEGMENTS AND MAJOR CUSTOMERS
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The Company operates in three segments or lines of business, including
stock continuous forms and cut sheets; custom continuous forms and cut sheets;
and office products. Financial information for each of the Company's segments
including net sales, operating income, total assets, capital expenditures and
sales to major customers, are included in the accompanying financial statements.
No customer accounts for more than 10% of custom shipments, but two
customers accounted for more than 10% of the Company's stock computer business
in fiscal 1998, viz., Office Depot (14%) and Corporate Express (28%). Both
accounts were lost to competition during the latter part of the year. Although
the loss of these two major accounts will have a material adverse effect on
sales revenue, the margin loss is no longer significant since competitive
pricing reached a level that provided little profit on either account.
EMPLOYEES
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As of September 30, 1997, the Company employed approximately 133 people
in manufacturing, sales and administrative functions in its corporate offices
and plants in New Jersey and Texas.
DISTRIBUTION AND MARKETING
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The Company markets the custom and stock forms products through
approximately 2,500 independent dealers in the United States and Canada, as well
as through retail superstores. The independent distributors rely on several
manufacturers, like the Company, to supply these end users. The distributors
range in size from a single individual to a distributorship with several offices
and an extensive sales force. The Company operates, or contracts for storage
space, in several strategically located warehouses along the east coast,
southeast and southwest regions of the country. These locations are used as the
storage and shipping points for its stock forms. Currently, the Company's
primary method of generating sales contacts is through its own sales force,
sales representatives, extensive marketing programs, referral and reputation.
The sales force consists of a National Sales Manager and five
salespersons covering New England, Mid-Atlantic, Southeast, Midwest and
Southwest regions of the eastern United States. A network of independent sales
representatives covering the entire United States has been assembled over the
past two years to sell the new non-paper products through major resellers and
retailers. New marketing positions have been created to support the new product
line.
MANUFACTURING
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The Company's custom paper products are manufactured in the New Jersey
plant with five rotary presses and one collator. The rotary presses provide the
Company with the ability to produce a broad spectrum of form sizes. Each
piece of machinery requires a skilled operator; support personnel are required
on some equipment. The custom forms operation runs primarily two shifts per
day, however some equipment runs three shifts. The estimated annual capacity of
the custom business is approximately $10 million in sales at current prices.
The Company's stock form business is manufactured from two locations.
The New Jersey facility has six presses and one collator, and Texas has one
press as of December 31, 1997. The majority of the
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stock forms is produced to be sold from inventory. Each plant is also capable of
producing customized computer paper or stock forms upon order. The stock
operation is three shifts per day, five days per week, with overtime on an as-
needed basis. The estimated annual capacity of the stock business is
approximately $30 million in sales at current prices.
The Company's equipment is very well suited to produce nearly all of the
forms products required by a forms distributor or retailer. The Company
continues to monitor any new product requirements of its forms distributors and
assess what new equipment or equipment modifications are required to produce the
products.
OPERATIONS
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The Company owns a 159,000 square foot plant and corporate office in
Burlington, New Jersey and leases a 45,000 square foot plant in Fort Worth,
Texas, with 5% devoted to offices, 45% to paper conversion, and 50% to
warehouse. There are no union affiliations among the 86 hourly and 47 salaried
employees at the two locations.
In November, 1997 the Company signed an Agreement of Sale on the New
Jersey plant for $4.5 million with the intention of leasing back approximately
120,000 square feet of the 159,000 square feet sold. As of December 31, 1997
the lease agreement is still under negotiation and not executed. The buyer's
due diligence process is currently in progress. Settlement on the sale-
leaseback is expected in February 1998.
During the year, the Company operated 5 custom presses, 6 stock presses,
and 2 collators. At December 31, 1997 the leases on two stock presses expired
and the presses were returned to the lessor. As of January, 1998 the Company
will operate 5 custom presses, 4 stock presses and 2 collators.
Utilization of production capacity approximated 75% in New Jersey and
50% in Texas during the year. Rationalization of plant capacity will be
considered in fiscal 1998 when utilization is expected to decrease to 65% and
35%, respectively, in New Jersey and Texas.
Custom forms capacity continues to be converted from roll to sheeting
capability as demand shifts from continuous to cut sheet custom forms.
Currently, 50% of custom capacity is directed to cut sheets.
Equipment purchases providing sheeting, stacking and wrapping capacity
at a cost of $300,000 will be delivered in February, 1998 to enable the Company
to manufacture many of the value-added products currently bought out. In
addition, unit cost will be reduced permitting more competitive pricing in the
marketplace.
The Company has adequate domestic paper supply sources with paper mills
and brokers at the present time. However, the mills are reallocating capacity
to higher grade papers and are de-emphasizing forms bond used in continuous form
production.
Inventory levels were maintained at approximately two weeks supply for
raw material and 4-6 weeks supply for finished goods during the year.
OTHER MATTERS
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The corporate structure of the Company's legal entities was reorganized
in fiscal 1995. Paris Business Forms, Inc. (PBFI), the public company,
transferred substantially all of the operating assets and liabilities to a newly
formed subsidiary corporation, Paris Business Products, Inc. (PBP). The Texas
operating corporation, Paris Business Forms, Inc. (PBFITX) and a newly formed
Florida corporation, Paris
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Business Products, Inc. (PBPFL), are subsidiaries of PBP. PBFI is now a holding
Company which owns the Burlington, New Jersey plant and cash and near cash
investments. PBP, PBFITX and PBPFL are operating corporations. PBF Corporation,
a Delaware corporation, owns the Company trademarks and remains a subsidiary of
PBFI.
In 1995, the Board of Directors approved, upon the termination of his
employment, the payment to the President and Chairman of the Board of $100,000
per year for four years in recognition of past services. Accordingly, $400,000
in deferred compensation liability was recognized and included in the 1995
financial statements. As a result of the losses from operations in 1996, the
Board of Directors terminated the Chairman's deferred compensation plan.
Accordingly, the $400,000 liability was reversed in 1996 as a reduction of
general and administrative expenses.
The working capital line of credit with the Company's former bank was
refinanced with a new bank in January, 1997 as a revolving line of credit
secured by accounts receivable and inventories with a maximum line of $7,500,000
at prime plus 1% on advances against inventory and at prime plus 1/2% on
advances against accounts receivable. Outstanding borrowings on the line at
September 30, 1997 and 1996 were $3,932,020 and $3,926,500, respectively.
In April, 1997 the former President resigned his position with a severance
and consulting agreement at full salary for two years guaranteed and the third
year dependent on profitability of the Company. The total cost of the severance
package was recognized in fiscal 1997 in the amount of $328,000.
ITEM 2 - PROPERTIES
The Burlington, New Jersey facility serves as the corporate office,
manufacturing plant and distribution center. The building has been expanded to
159,000 square feet. The original facility of 116,000 square feet, including
5,000 square feet of office space, was constructed and occupied during the first
half of 1986. The warehouse addition of 34,000 square feet was completed during
the summer of 1988.
The Fort Worth, Texas facility was sold in June, 1994 and replaced by a
45,000 square foot leased facility.
In March, 1992 the Company purchased a 70,000 square foot building in
Jacksonville, Florida to expand stock forms operations. The cost of the
building plus improvements was approximately $1.3 million. In April ,1995, the
Florida facility was sold for $1,050,000, and the facility was not replaced.
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ITEM 3 - LEGAL PROCEEDINGS
There are no material legal proceedings in process as of the date of this
filing.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
year ended September 30, 1997.
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PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDERS
MATTERS
(A) The Company's common stock is traded in the over-the-counter market and is
listed on the National Association Of Stock Dealers Daily Quotation Service
(NASDAQ) National Market System. The Symbol for the Company is PBFI. The
registrar and transfer agent is ChaseMellon Bank. The table below shows the
quarterly price range of Paris Corporation common shares, as shown by the
National Daily Quotation Service.
<TABLE>
<CAPTION>
RANGE OF SALE PRICES
--------------------
1997 FISCAL YEAR 1996 FISCAL YEAR
---------------- ----------------
<S> <C> <C> <C> <C>
HIGH LOW HIGH LOW
First Quarter $3.844 $1.375 $8.25 $4.875
Second Quarter 2.375 1.75 6 3.25
Third Quarter 2.375 1.625 5.75 3.5
Fourth Quarter $2.375 $1.625 $ 5 $ 3.5
(B) The approximate number of shareholders of record as of November 15, 1997 was 200.
</TABLE>
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ITEM 6 - SELECTED FINANCIAL DATA
FOR THE YEAR ENDED SEPTEMBER 30,
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
-------------- -------------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
NET SALES $51,674 $57,442 $64,916 $57,892 $59,158
INCOME (LOSS)
FROM OPERATIONS (3,372) (5,495) 5,722 297 (1,489)
NET INCOME (LOSS) (2,469) (3,401) 3,451 429 (998)
EARNINGS PER SHARE (0.68) (.92) .91 .12 (.27)
TOTAL ASSETS 23,477 28,741 41,188 24,747 27,041
WORKING CAPITAL 10,026 12,048 15,255 11,866 10,414
LONG TERM DEBT 0 0 0 2,061 3,179
(excluding current portion)
SHAREHOLDERS' EQUITY $14,701 $17,184 $21,108 $17,494 $17,065
CASH DIVIDENDS PER SHARE NONE NONE NONE NONE NONE
</TABLE>
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ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS ($ IN THOUSANDS, EXCEPT STATISTICAL DATA)
Liquidity and Capital Resources
Working capital at the end of fiscal years 1997, 1996, and 1995 was $10026,
$12048, and $15225, respectively. Working capital decreased $1515 during the
fiscal year ended September 30, 1997. The primary use of working capital was to
fund the net loss of $2468, net of non-cash expenses for depreciation ($1089),
bad debt provision ($240), and deferred income tax credits ($143) and non-cash
gains on equity in joint venture income ($75) and the sale of fixed assets
($88). Equipment expenditures ($130), proceeds from the sale of equipment
($122), and miscellaneous asset increases ($63) accounted for the remainder of
the working capital deficit during the year.
Cash and cash equivalents at the end of fiscal years 1997, 1996, and 1995 were
$2742, $916, and $5227, respectively. Cash and cash equivalents increased $1826
in fiscal 1997. Cash provided by operations was $50 despite the net loss of
$2468 due to the effect of non-cash expenses and income ($552) and working
capital reductions of trade receivables, inventories and trade payables, net
($1966). Proceeds, net, from marketable securities transactions ($1776)
accounted for the remainder of the change in cash and cash equivalents.
Inventories were maintained at normal supply levels during 1997, decreasing
beginning inventories of $6685 to $4774 by year-end, equivalent to approximately
22 days supply. Trade receivables were $1922 lower in fiscal 1997 than the
previous year, decreasing from $6696 to $4774, consistent with the lower sales
level of the fourth quarter.
The Company has a $7500 line of credit available through a commercial bank at
the prime rate plus 1% on advances against inventories and at prime plus 1/2%
on advances against accounts receivable (9% at September 30, 1997), with a
maturity of December 31, 1998 and secured by the Company's accounts receivable
and inventories. The outstanding balance on the line at year end was $3932,
compared to $3927 and $4927 at the end of the preceding years, respectively.
See Note 6 in the Notes to Consolidated Financial Statements for additional
information. In addition, the company has available $2742 in cash and cash
equivalents and $3476 in diversified marketable securities as of September 30,
1997.
With the lease expiration and return to the lessor of two leased presses at
December 31, 1997, there are no existing press leases to which the Company is
obligated. Currently, six stock presses and six custom presses are operating.
The New Jersey plant and office , together with all production presses and
equipment are owned by the company with no encumbrances. The Texas plant is
leased through August, 1999.
Capital expenditures for fiscal years ended September 30, 1997, 1996, and 1995
were $122, $456, and $921, respectively. Significant expenditures in fiscal
1997 included a new custom press and computer equipment.
The fiscal 1997 net operating loss will be partially utilized by carrying
back, for federal income tax purposes, the amount of $2800. The Company expects
a refund of approximately $922 by March, 1998.
On November 14, 1997 the Company signed an Agreement of Sale to sell the New
Jersey plant for $4500 and lease back approximately 120,000 square feet for
three years at an annual rent of approximately $600. The gain on the sale for
financial purposes is estimated at $1900 and $600 for tax purposes.
Internally generated cash flows appear to be adequate to support currently
planned business operations. However, certain events such as significant
acquisitions or capital expenditures could require external financing.
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1997 COMPARED TO 1996
Net sales for the fiscal year ended September 30, 1997 decreased 10% or $5769
due to (1) a 16% decline in stock and custom continuous forms volume ($7287),
attributable to the lower overall market demand for these products and 13% lower
sell prices; (2) 9% lower year to year sales of cut sheet products despite
valued added stock and custom products gains of 28% ($1348) due to offsetting
35% lower sales of commodity cut sheets ($2470); and (3) an increase in hardware
(primarily computer scanners) sales ($2417) primarily reflecting purchases by
one major retail store.
Fiscal 1997 was characterized by significant price pressure with average sell
prices dropping 21% across all paper products, both continuous and cut sheet.
Cut sheet unit volume was up 44% due to greater market demand for inkjet and
laser printer papers. Continuous form unit volume was down 16% if sales to two
major former accounts are excluded, but down only 4% overall.
Cost of sales for the fiscal year ended September 30, 1997 decreased 13%
($7370) compared to last year. The lower product costs this year relative to
sales (costs decreased 13% vs a sales decrease of 10%) were primarily due, on a
comparative basis, to the buying and inventory problems of the prior year which
had caused disproportionately high product costs. Normal inventory levels were
maintained throughout fiscal 1997 and sell prices moved in unison with lower raw
paper costs. In addition, the company reduced product costs at a faster rate
than the decrease in sales by increasing factory productivity and by
implementing cost reduction programs in the company's two plants. Freight costs
as a percentage of sales increased 21% due to the cost of distributing to the
west coast in support of the company's former largest customer.
Gross profit increased $1601 in fiscal 1997 as compared to FY96 from $656 to
$2257. The disproportionately high product costs of last year, due to the
effect of the excessive inventories, contributed approximately $2500 of the
gross profit gain. This comparative gain was offset by the effect of sell
prices dropping at a faster rate than the cost of raw paper ($600), lower unit
volumes ($600), and higher freight costs ($260). Labor productivity and cost
reduction programs added $300 of gross profit to fiscal 1997. In addition,
hardware sales contributed approximately $260 to the gross profit increase.
Selling expenses, marketing costs, and administration expenses decreased $522
this year, from $6151 to $5629.
Sales and marketing expenses were $833 lower in fiscal 1997 due principally to
the elimination or reduction of advertising, promotion, direct mail campaigns,
public relations, travel and entertainment expenses deemed unnecessary to
support our new product offerings, as well as the reduction of payroll costs.
General and administrative expenses increased $417 on a comparative basis due
(1) to the termination of a deferred compensation plan in FY96 resulting in a
reversal of accrued liabilities ($400) in that year; (2) an increase in the
required bad debt reserve ($240) due to customer bankruptcies; (3) offset by a
reduction in payroll cost ($183).
Interest expense in the comparative years was relatively flat proportionate to
the equal level of bank debt maintained over the last two years.
Other income, net in FY96 exceeded fiscal 1997 by $294 due to (1) lower
investment income this year ($479); (2) the settlement of a third party
warehouse services contract ($150), offset by (3) equity in the earnings of
Signature Corp., a 44% owned affiliate ($279); and (4) gains on the sale of
equipment ($56).
Income tax benefit in fiscal 1997 is at an effective tax rate of 25% due to
the lack of assurance of realization of the loss carryforward benefits for state
income taxes. All operating losses for federal income taxes can be carried back
and fully utilized.
Inflation is not expected to have a material adverse effect on future sales or
earnings.
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1996 COMPARED TO 1995
Net sales for the fiscal year ended September 30, 1996 decreased 12% or $7474
due to (1) a 7% decline in stock computer paper volume ($1500), generally
attributable to the diminishing demand for impact printer paper products; (2)
15% lower selling prices for both stock computer paper and custom forms ($8280),
essentially proportionate to the raw paper cost decreases from the mills; (3) a
higher rate of sales rebates and product returns ($319) resulting from the
Company's focus on the retail channel; (4) offset by a 120% increase in new
product offerings ($2625), viz., laser and inkjet papers, specialty office and
consumer products, and computer hardware/software.
Despite 7% lower volumes in stock computer paper and approximately 22% lower
raw paper costs for both stock computer paper and custom forms, resulting in
$2640 of lower product cost, cost of sales increased $3821 or 7% in the current
fiscal year principally due to the significant overstocking of raw paper
inventories at the beginning of the year at the market price peak ($4678). As a
result, weakening sell prices through the first three quarters of the year
resulted in abnormally low margins until the inventories were reduced to normal
operating levels in the fourth quarter. Other factors causing higher product
costs in fiscal year 1996 were the increased volume of new product sales
($2056), greater freight costs ($500) due to the company's major customer
requiring direct store delivery instead of shipments to regional distribution
centers as well as importation costs on certain hardware products foreign
sourced. Factory overhead cost reduction programs ($350), improved production
efficiency ($200), and increased capacity utilization ($373) provided
counterbalancing reductions in cost of sales.
Gross profit declined $11295 in 1996 as compared to 1995 primarily for two
reasons, viz., the significant drop in sell prices due to lower demand and
competitive pressures ($7000) plus the effect of the excessive inventories
carried through most of the year bearing disproportionate unit cost relative to
the market ($4500). To a lesser extent, lower volume contributed negatively
($400). However, new products generated approximately $600 additional gross
profit in 1996.
Sales and marketing expenses were $755 greater in 1996 principally due to new
product offerings requiring greater expenditures for staff ($250), travel and
entertainment ($170), advertising ($150), product samples ($70), direct mail
campaigns ($70), and public relations ($45). General and administrative
expenses decreased $833 due to termination of a deferred compensation plan
($800), a reduction in the required bad debt reserve ($290) and legal expense
accruals ($53) offset by an assessment from a federal employment tax audit
($160), higher professional fees ($40), depreciation ($70), and miscellaneous
expenses ($40).
Interest expense was higher in 1996 by $144 principally due to the greater
utilization of the Company's credit line resulting in additional interest of
$244 less the interest savings of $100 from the payoff of the industrial revenue
note in the second quarter of the fiscal year.
In 1996, other income, net, of $685 exceeded other expense, net, of $237 in
1995 by $922. Losses of approximately $500 on the disposal of factory equipment
and the Florida plant sale occurred in the prior year; there were no significant
sales or disposals in the current fiscal year. In addition, investment income
and gains on the sale of stock investments in FY96 exceeded the prior year by
approximately $400.
Income tax expense in FY95 and income tax benefit in FY96 were at effective
tax rates of 34%.
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ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1997
AND 1996 14
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEARS
ENDED SEPTEMBER 30, 1997, 1996, AND 1995 15
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY FOR
THE YEARS ENDED SEPTEMBER 30, 1997, 1996, 1995 AND 1994 16
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARS
ENDED SEPTEMBER 30, 1997, 1996 AND 1995 17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 18 - 29
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 30
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS 31
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON FINANCIAL
STATEMENT SCHEDULES 32
FINANCIAL STATEMENT SCHEDULES NOT INCLUDED IN THIS FORM 10-K HAVE BEEN OMITTED
BECAUSE THEY ARE NOT APPLICABLE OR THE REQUIRED INFORMATION IS SHOWN IN THE
FINANCIAL STATEMENTS OR NOTES THERETO.
13
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET
--------------------------
SEPTEMBER 30,
-------------------------------
1997 1996
-------------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 2,741,874 $ 916,438
Marketable securities 3,476,183 4,778,296
Accounts receivable, less allowance for doubtful accounts of
$627,039 and $415,536 at September 30, 1997 and 1996, respectively 4,774,165 6,696,174
Inventories 4,591,835 6,685,752
Recoverable income taxes 922,078 1,865,502
Prepaid expenses 266,639 314,364
Current deferred income taxes 1,187,000 1,223,204
---------- ----------
Total Current Assets 17,959,774 22,479,730
Property, plant and equipment, net 5,098,162 6,106,857
Noncurrent deferred income taxes 201,000
Other assets 217,827 154,414
---------- ----------
Total Assets $23,476,763 $28,741,001
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Note payable, bank $ 3,932,020 $ 3,926,500
Accounts payable and accrued expenses 3,359,576 6,193,513
Accrued payroll and related expenses 336,877 311,903
Current deferred income taxes 305,000
---------- ----------
Total Current Liabilities 7,933,473 10,431,916
Noncurrent deferred income taxes 842,000 1,125,075
---------- ----------
Total Liabilities 8,775,473 11,556,991
---------- ----------
Shareholders' equity:
Common stock, $.004 par value; authorized 10,000,000
shares; issued 3,937,517 shares 15,751 15,751
Additional paid-in capital 8,588,243 8,588,243
Retained earnings 7,812,962 10,281,707
Unrealized gain on marketable securities 24,070 24,070
---------- ----------
16,441,026 18,909,771
Less: common stock held in treasury, at cost; 308,086 and
304,986 shares at September 30, 1997 and 1996, respectively (1,739,736) (1,725,761)
---------- ----------
Total Shareholders' Equity 14,701,290 17,184,010
---------- ----------
Total Liabilities and Shareholders' Equity $23,476,763 $28,741,001
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
CONSOLIDATED STATEMENT OF OPERATIONS
------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Net sales
$51,673,925 $57,442,027 $64,916,361
------------ ------------ ------------
Costs and expenses:
Cost of products sold 49,416,174 56,786,409 52,965,236
Selling expenses 2,127,330 3,065,770 2,311,026
General and administrative expenses 3,502,307 3,085,272 3,917,856
Interest expense 316,807 347,113 203,299
Other expense (income), net (391,293) (685,082) 237,328
------------ ------------ ------------
Total costs and expenses 54,971,325 62,599,482 59,634,745
------------ ------------ ------------
Income (loss) before income taxes (3,297,401) (5,157,455) 5,281,616
Provision (credit) for income taxes (828,654) (1,756,611) 1,830,229
------------ ------------ ------------
Net income (loss) $(2,468,747) $(3,400,844) $ 3,451,387
============ ============ ============
Earnings (loss) per share $(0.68) $(0.92) $0.91
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
----------------------------------------------
<TABLE>
<CAPTION>
ADDITIONAL
COMMON STOCK PAID IN RETAINED UNREALIZED TREASURY
SHARES AMOUNT CAPITAL EARNINGS GAIN STOCK TOTAL
------------------------- -------------- -------------- -------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
September 30, 1994 3,937,517 $15,751 $8,588,243 $10,231,166 $(1,340,724) $17,494,436
Net Income 3,451,387
Issuance of 14,089
treasury shares 40,987 40,987
Unrealized gain on
marketable securities,
net of income tax effect:
Effect of accounting
change October 1, 1994 36,574 36,574
Increase in unrealized
gain on marketable
securities during 1995 84,740
--------- ------- ---------- ----------- ------- ----------- -----------
Balance at
September 30, 1995 3,937,517 15,751 8,588,243 13,682,553 121,314 (1,299,737) 21,108,124
Purchase of 96,875
treasury shares (426,024) (426,024)
Net loss (3,400,844) (3,400,844)
Decrease in unrealized
gain on marketable
securities during 1996: (97,244) (97,244)
--------- ------- ---------- ----------- ------- ----------- -----------
Balance at
September 30, 1996 3,937,517 15,751 8,588,243 10,281,709 24,070 (1,725,761) 17,184,012
Purchase of 3,100
Treasury Shares (13,975) (13,975)
Net Loss (2,468,747) (2,468,747)
Balance at
September 30, 1997 3,937,517 $15,751 $8,588,243 $7,812,962 $24,070 ($1,739,736) $14,701,290
========= ======= ========== =========== ======= =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS
-------------------------------------
YEAR ENDED SEPTEMBER 30,
--------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Cash flow from operating activities:
Net Income (loss) $(2,468,747) $(3,400,844) $3,451,387
------------ ------------ ------------
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation 1,089,003 1,134,320 1,135,108
(Gain) loss on sale of property, plant and equipment (88,453) (46,066) 367,907
(Gain) loss on sale of marketable securities (473,240) (861,459) (376,204)
Provision for bad debt 240,000 40,000 330,000
Provision for equity in (gain) loss on investment in joint
venture (74,843) 303,500 129,334
Deferred income tax (credit) expense (142,871) 114,458 (842,369)
(Increase) decrease in:
Accounts receivable 1,682,009 (186,724) (489,906)
Inventories 2,093,917 10,662,097 (13,032,729)
Recoverable income taxes 943,424 (1,865,502)
Prepaid expenses 47,725 (14,829) (5,130)
Other assets 11,430 5,196 3,624
Increase (decrease) in:
Accounts payable and accrued expenses (2,833,935) (4,582,116) 7,859,969
Accrued payroll and related expenses 24,974 (290,699) (29,394)
Income taxes payable, current (1,105,000) 806,449
---------- ---------- -----------
Total adjustments 2,519,140 3,307,176 (4,143,341)
---------- ---------- -----------
Net cash provided by (used in) operating activities 50,393 (93,668) (691,954)
---------- ---------- -----------
Cash flows from investing activities:
Investment in joint venture (390,000)
Proceeds from sale of marketable securities 2,478,627 901,901 429,174
Purchase of marketable securities (703,274) (1,258,088) (1,020,638)
Proceeds from sale of property, plant and equipment 130,000 61,000 1,120,807
Purchase of property, plant and equipment (121,855) (455,931) (921,499)
---------- ---------- -----------
Net cash provided by (used in) investing activities 1,783,498 (1,141,118) (392,156)
---------- ---------- -----------
Cash flows from financing activities:
Repayments of long-term debt (1,650,000) (736,667)
(Purchase) issuance of treasury stock (13,975) (426,025) 40,987
Proceeds (repayments) of working capital line of credit 5,520 (1,000,000) 4,926,500
---------- ---------- -----------
Net cash provided by (used in) financing activities (8,455) (3,076,025) 4,230,820
---------- ---------- -----------
Net increase (decrease) in cash and cash equivalents 1,825,436 (4,310,811) 3,146,710
Cash and cash equivalents, at beginning of year 916,438 5,227,249 2,080,539
---------- ---------- -----------
Cash and cash equivalents, at end of year $2,741,874 $916,438 $5,227,249
========== ========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $316,807 $347,113 $203,299
========== ========== ===========
Income taxes $0 $0 $1,753,912
========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION:
Paris Corporation and subsidiaries (collectively, the "Company") manufacture
stock and custom business forms, provide value added services to cut sheet
products, and distribute office products and computer/printer peripheral
products. The Company manufactures stock and custom forms in Burlington, New
Jersey and stock forms in Fort Worth, Texas. The Company markets through
retailers, resellers, and dealers throughout the United States and Canada.
The consolidated financial statements include the accounts of Paris Corporation
and its wholly-owned subsidiaries with appropriate elimination of intercompany
accounts and transactions.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
USE OF ESTIMATES:
The presentation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS:
The Company considers short-term investments purchased with an original maturity
of three months or less to be cash equivalents.
FINANCIAL INSTRUMENTS:
The carrying amounts of cash and cash equivalents, accounts receivable,
investments, accounts payable and notes payable approximate their fair values at
September 30, 1997 and 1996.
INVESTMENTS IN DEBT AND EQUITY SECURITIES:
At October 1, 1994, the Company adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities: ("SFAS No. 115")". The adoption of SFAS No. 115 resulted in an
increase in stockholders' equity of $36,574, net of taxes of $18,841.
MARKETABLE SECURITIES:
At September 30, 1997 and 1996, marketable debt and equity securities have been
categorized as available for sale. Such securities are stated at fair value
based upon quoted market prices. Unrealized holding gains and losses are
reported as a separate component of stockholders' equity. The Company accounts
for investments in limited partnerships under the equity method of accounting.
INVENTORIES:
Inventories are stated at the lower cost or market. Cost is determined by the
first-in, first-out method (FIFO).
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment are stated at cost. Expenditures for renewals and
betterments which increase the useful life or capacity of property, plant and
equipment are also capitalized at cost. Expenditures for repairs and
maintenance are charged to income as incurred. Gain or loss on the retirement
or disposal of capital assets is reflected in income in the period of disposal.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets.
18
<PAGE>
JOINT VENTURE:
The Company is a joint venture participant with Xerox Corporation in Signature
Corporation, Inc. This investment is accounted for using the equity method.
PER SHARE DATA:
Earnings per share data have been computed on the basis of the weighted average
number of shares of common stock outstanding (3,629,431 shares in 1997,
3,632,531 shares in 1996, and 3,729,406 shares in 1995), plus the dilutive
effect of common stock equivalents (stock options) computed using the treasury
stock method which resulted in an aggregate of 3,629,431 shares in 1997,
3,707,700 shares in 1996, and 3,795,087 shares in 1995.
In February 1997, the Financial Accounting Standards Board issued Statement 128,
"Earnings per Share" that requires the presentation of basic and fully diluted
earnings per share. The Company will adopt Statement 128 in the first quarter
of fiscal 1998. The adoption would not require the presentation of fully
diluted earnings per share because there is no an anti-dilutive effect.
ACQUISITIONS:
In October 1995, the Company invested an additional $390,000 in Signature
Corporation, Inc. ("Signature"), a joint venture corporation that markets office
products through the supermarket and drugstore retail chains. 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 ownership to 44% of the common stock of Signature.
During the year ended September 30, 1996, the Company wrote off $303,500 of the
$390,000 investment due to the operating losses of the joint venture. During
the year ended September 30, 1997 the Company recognized an equity increase of
$74,843 due to the operating profits of the joint venture. The Company's
investment is valued at $161,343.
The Company invested $121,855 in property, plant, and equipment during the year,
of which $72,831 related to the purchase of a press which was formerly leased,
along with the reconditioning of other currently owned presses. The remaining
$49,024 related to the purchase of personal computers and related software and
equipment.
DISPOSITIONS:
The Company sold two stock collators and a press during the year ended September
30, 1997 resulting in a gain of $88,453.
The Jacksonville, Florida facility was sold in April 1995, due to plant
rationalization and reorganization. The net sales proceeds were $978,182 and
the loss realized was $56,955. The retirement of other assets related to the
Jacksonville closing resulted in a loss of $141,291.
19
<PAGE>
NOTE 3 - MARKETABLE SECURITIES
Marketable securities classified as current assets at September 30, 1997 and
1996, are summarized as follows:
1997 FAIR VALUE COST
- ----- --------------- -----------------
EQUITY SECURITIES:
Stocks $ 859,103 $ 772,636
Mutual Funds 426,428 537,234
Limited Partnerships 2,271,991 2,142,243
--------------- -----------------
Total $3,557,522 $3,452,113
=============== =================
1996
- -----
EQUITY SECURITIES:
Stocks $1,014,398 $1,024,347
Mutual Funds 515,962 481,943
Limited Partnerships 3,329,789 3,247,936
--------------- -----------------
Total $4,860,149 $4,754,226
=============== =================
The Company accounts for investments in limited partnerships under the equity
method of accounting. These investments are not subject to SFAS No. 115.
Gross unrealized holding gains and losses at September 30, 1997 and 1996, are as
follows:
UNREALIZED UNREALIZED
1997 GAINS LOSSES
- ----- --------------- -----------------
EQUITY SECURITIES:
Stocks $ 134,875 $
Mutual Funds 110,805
Limited Partnerships 81,339
--------------- -----------------
Total $ 216,214 $ 110,805
=============== =================
1996
- -----
EQUITY SECURITIES:
Stocks $ 75,758 $ 85,706
Mutual Funds 34,019
Limited Partnerships 81,853
--------------- -----------------
Total $ 191,630 $ 85,706
=============== =================
Proceeds from the sale of securities classified as available for sale for the
year ended September 30, 1997 and 1996 were $2,478,627 and $901,901,
respectively. Fiscal 1997 and 1996 gross realized gains and losses were $513,518
and $40,278, and $892,762 and $31,303, respectively, and are included in other
income. For the purpose of determining gross realized gains and losses, the cost
of securities sold is based upon specific identification.
20
<PAGE>
NOTE 4 - INVENTORIES:
Inventories consist of the following at September 30, 1997 and 1996:
SEPTEMBER 30,
-------------------------------
1997 1996
------------ ------------
Raw materials $1,690,741 $2,563,401
Work in progress 91,721 152,193
Finished goods 2,809,372 3,970,158
------------ ------------
Total $4,591,834 $6,685,752
============ ============
NOTE 5 - PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consist of the following at September 30, 1997 and
1996:
<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------------------------------------------------------
ESTIMATED
USEFUL LIVES 1997 1996
------------------- ------------------ --------------------
<S> <C> <C> <C>
Land $ 489,600 $ 489,600
Building and building
improvements 10-30 years 4,966,712 4,966,712
Machinery and equipment 7-10 years 7,996,624 8,577,235
Furniture and fixtures 10 years 366,285 366,285
Automobiles and trucks 4-6 years 159,308 159,308
----------------- -------------------
13,978,529 14,559,140
Less - accumulated depreciation (8,880,367) (8,452,283)
----------------- -------------------
Property, plant and equipment, net $ 5,098,162 $ 6,106,857
================= ===================
</TABLE>
Depreciation expense totaled $1,089, 003, $1,134,320, and $1,135,108 for the
years ended September 30, 1997, 1996 and 1995, respectively.
21
<PAGE>
NOTE 6 - NOTE PAYABLE BANK:
In January, 1997 the Company refinanced its line of credit with another
commercial bank with a two-year term expiring December 31, 1998 and secured by
the Company's accounts receivable and inventories. Under the new revolving
loan, the Company can borrow up to $7,500,000 at prime plus 1% on advances
against inventories and at prime plus 1/2% on advances against accounts
receivable. Interest is payable monthly. Borrowings outstanding at September
30, 1997 and 1996 were $3,932,020 and $3,926,500, respectively; related interest
expense was $316,807 and $314,011 for the respective years.
The line of credit agreement covenants contain certain limitations and
requirements including the following:
. Limitations on capital expenditures in excess of $500,000 per fiscal year;
. Minimum consolidated tangible net worth;
. Net profit after taxes not less than $50,000 at September 30, 1997;
. Limitations on additional borrowings, liens, contingent obligations, leases,
sales of assets, mergers, loans and advances, acquisitions and dividends on
common stock.
Covenant violations of the loan agreement have been waived by the lender during
fiscal 1997.
22
<PAGE>
NOTE 7 - INCOME TAXES:
The composition of the provision (credit) for income taxes is as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
-------------------------------------------------
1997 1996 1995
------------- ------------ -------------
<S> <C> <C> <C>
Current:
Federal $(701,765) $(1,786,483) $2,533,000
State 15,983 196,000
------------- ------------ -------------
(685,782) (1,786,483) 2,729,000
------------- ------------ -------------
Deferred:
Federal (119,864) (5,136) (877,771)
State (23,008) 35,008 (21,000)
------------- ------------ -------------
(142,872) 29,872 (898,771)
------------- ------------ -------------
Total $(828,654) $(1,756,611) $1,830,229
============= ============ =============
</TABLE>
The fiscal 1997 and 1996 federal tax provision reflects the realization of the
Company's net deferred tax assets due to the carryback of the current year's
loss. At September 30, 1997 and 1996, approximately $922,000 and $1,865,000 of
recoverable income taxes relate to the carryback. The Company has state net
operating loss carryforwards of $9,285,000, available to offset future state
taxable income. These state net operating loss carryforwards expire in the years
2000 through 2004.
In 1997 and 1996, the valuation allowance of $700,000 and $500,000,
respectively, relates to deferred tax assets established under FASB 109 for
state net operating loss carryforwards, which will be carried forward to future
years for possible utilization. No benefit for these carryforwards has been
recognized in either year.
Reconciliations of income taxes with the amounts which would result from
applying the U.S statutory rate are as follows:
<TABLE>
<CAPTION>
For the year ended September 30,
--------------------------------------------
1997 1996 1995
------------- ----------- ----------
<S> <C> <C> <C>
Provision (credit) at statutory rate $(1,121,116) $(1,753,535) $1,795,749
Increases (reductions) in taxes
resulting from asset writedowns (200,040)
State income taxes, net of federal
income tax benefit 113,520
Adjustment of prior year accruals 292,462 175,000
Other, net (3,076) (54,000)
----------- ----------- ----------
Total $(828,654) $(1,756,611) $1,830,229
=========== =========== ==========
</TABLE>
The components of the deferred tax asset at September 30, 1997 and 1996 are as
follows:
1997 1996
------------- -----------
Reserve for doubtful accounts $ 364,000 $ 272,000
Reserve for inventory obsolescence
and writedown to net realizable value 542,000 408,000
Accrued compensation 108,000 27,000
Writedown of investment in
Signature Corporation 231,000 262,000
Contingency 173,000 286,000
State NOL carry forwards 670,000 468,000
Valuation allowance (700,000) (500,000)
------------- ------------
Total $1,388,000 $1,223,000
============= ============
23
<PAGE>
The components of the deferred tax asset at September 30, 1997 and 1996 are as
follows:
1997 1996
----------- -----------
Current deferred income taxes asset $1,187,000 $1,223,000
Non-current deferred income taxes asset 201,000
----------- -----------
$1,388,000 $1,223,000
=========== ===========
The components of the deferred tax liability at September 30, 1997 and 1996 are
as follows:
1997 1996
----------- -----------
Depreciation $ 842,000 $ 901,000
Limited partnership income 305,000 224,000
----------- -----------
$1,147,000 $1,125,000
=========== ===========
These amounts have been presented in the financial statements as follows:
1997 1996
----------- -----------
Current deferred income taxes liability $ 305,000
Noncurrent deferred income taxes liability 842,000 1,125,000
----------- -----------
$1,147,000 $1,125,000
=========== ===========
NOTE 8 - SHAREHOLDERS' EQUITY:
The Company adopted a stock option plan effective October 1, 1985. A total of
261,000 shares of common stock were initially authorized and reserved for
issuance under the plan. As a result of stock dividends in 1988 and 1987, the
total stock options authorized is 315,810. The plan expired in October 1995.
In November 1995, the Board of Directors adopted the Company's 1995 Stock Option
Plan to permit the issuance of incentive stock options under Section 422 of the
Internal Revenue Code of Non-Qualified Stock Options. There are 500,000 shares
of Common Stock authorized for non-qualified and incentive stock options under
the 1995 plan, which are subject to adjustment in the event of stock splits,
stock dividends and other situations. Under the plan, no options may be granted
more than ten years after the effective date of plan. The exercise price of all
incentive stock options granted under the option plan may be no less than fair
market value of such shares on the date of grant. Stock option activity for
1997, 1996 and 1995 is as follows:
<TABLE>
1997 1996 1995
------------ ------------ -------------
<S> <C> <C> <C>
Options outstanding at October 1 316,300 303,300 211,000
Options granted 115,000 48,000 146,000
Options expired/exercised (84,000) (35,000) (56,700)
------------ ------------ -------------
Options outstanding and exercisable at September 30 347,300 316,300 300,300
============ ============ =============
Options available for grant at September 30 337,000 452,000 15,510
============ ============ =============
Options price range at September 30 $1.875 to $1.875 to $1.875 to
$7.975 $7.975 $7.975
</TABLE>
24
<PAGE>
NOTE 9 - COMMITMENTS AND CONTINGENCIES:
LEASES:
The Company has certain operating leases, primarily for machinery and equipment
and the Ft. Worth, Texas facility, expiring at various dates. Total rental
expenses amounted to $323,076 in 1997; $410,508 in 1996; and $498,547 in 1995.
As of September 30, 1997, minimum rental payments under noncancelable operating
leases were as follows:
YEAR AMOUNT
------------ ------------
1997 $166,928
1998 103,125
------------
Total $270,053
============
SERVICE CONTRACTS:
The Company has an agreement with an outside contractor to perform warehousing
and distribution services for the Fort Worth, Texas facility. The services
include staffing and managing personnel, provision of all equipment, material,
and services in order to maintain the facility, and the design of a warehouse
management system. The agreement was terminated in May 1997. The Company
incurred a charge of $150,000 which is classified in other income and expense
related to the early termination of the contract. Total service contract
expense was $91,322 in 1997; $204,844 in 1996, and $212,415 in 1995.
CONTINGENCIES:
The Company has agreements with certain customers and vendors which include
potential rebates, commissions and other liabilities upon the fulfillment of
certain terms and conditions. Management has estimated and recorded contingent
liabilities of approximately $145,362 and $690,000 at September 30, 1997 and
1996, respectively, related to these agreements and other potential liabilities.
25
<PAGE>
NOTE 10 - PROFIT SHARING AND DEFERRED COMPENSATION PLAN:
The Company has a noncontributory profit sharing plan which covers substantially
all employees and provides benefits upon retirement, death or termination of
employment. Amounts attributable to participant accounts are based on their
compensation and the meeting of a required vesting schedule. The plan provides
for contributions determined annually by the Board of Directors. The Company's
policy is to currently fund all contributions determined by the Board of
Directors. The Company has made no contributions for the years ended September
30, 1997, 1996 and 1995.
In April, 1997 the Board of Directors approved a severance and consulting
agreement with the former President of the operating subsidiary company, Paris
Business Products, Inc., upon his resignation. The agreement provides for
guaranteed payments for two years aggregating $164,000 for severance and
$164,000 for consulting services, respectively. The Company expensed the entire
$328,000 liability in fiscal 1997. The agreement provides for a third year
amount of $164,000 if certain levels of profitability are attained by the
Company.
In 1995, the Board of Directors approved upon the termination of his employment,
the payment to the President and Chairman of the Board, of $100,000 per year for
four years in recognition of past services. Accordingly, $400,000 in deferred
compensation liability was recognized and included in the 1995 financial
statements. As a result of the losses from operations in 1996, the Board of
Directors terminated the Chairman's deferred compensation plan. Accordingly,
the $400,000 liability was reversed in 1996 as a reduction of general and
administrative expenses.
26
<PAGE>
NOTE 11 - SEGMENT INFORMATION:
The Company currently operates in three basic segments or lines of business.
These segments are (1) stock continuous forms and cut sheets, (2) custom
continuous forms and cut sheets, and (3) office products, including
computer/printer hardware and software products. The following table sets forth
certain financial information with respect to these segments and reconciles such
information to the consolidated financial statements.
<TABLE>
<CAPTION>
YEAR-ENDED SEPTEMBER 30,
--------------------------------------------------------
1997 1996 1995
-------------- -------------- --------------
<S> <C> <C> <C>
Net sales of products and services:
Stock forms $41,855,871 $48,231,271 $55,283,756
Custom forms 5,938,617 7,232,703 8,823,616
Office products, hardware/software 3,879,437 1,978,053 808,989
Total $51,673,925 $57,442,027 $64,916,361
============== ============== ==============
Segment operating income (loss):
Stock forms: $(2,742,349) $(4,460,757) $6,289,470
Custom forms 291,784 (159,855) (581,486)
Office products, hardware/software (492,929) (999,189) (398,654)
Corporate (428,393) 124,376 412,913
-------------- -------------- --------------
Total $(3,371,887) $(5,495,425) $5,722,243
============== ============== ==============
Corporate Consolidated income (loss) before
taxes:
Segment operating income (loss) $(3,371,887) $(5,495,424) $5,722,243
Interest expense (316,807) (347,113) (203,299)
Other income (expense) items 391,293 685,082 (237,328)
-------------- -------------- --------------
Total $(3,297,401) $(5,157,455) $5,281,616
============== ============== ==============
Assets:
Stock forms $8,964,771 $12,844,233 $23,488,774
Custom forms 2,028,064 2,921,664 3,228,294
Corporate 12,483,928 12,975,104 14,471,200
-------------- -------------- --------------
Total consolidated 23,476,763 $28,741,001 $41,188,268
============== ============== ==============
Capital expenditures:
Stock forms $64,134 $190,683 $122,812
Custom forms 8,697 85,258 599,214
Corporate 49,024 179,990 199,473
-------------- -------------- --------------
Total consolidated $121,855 $455,931 $921,499
============== ============== ==============
Depreciation expense:
Stock forms $425,974 $451,835 $287,472
Custom forms 227,020 263,688 477,500
Corporate 436,009 418,797 370,136
-------------- -------------- --------------
Total consolidated $1,089,003 $1,134,320 $1,135,108
============== ============== ==============
</TABLE>
Segment operating income is determined by deducting from sales of products and
services, cost of products sold, and selling, general and administrative
expenses directly related or allocable to the segment. Not included in segment
operating income are certain income and expense items such as interest income
and expense, other income and income taxes.
During the years ended September 30, 1996 and 1995, net sales to one stock
customer accounted for approximately 24% and 35% of the total net sales,
respectively. The same customer accounted for 28% and 20% of the accounts
receivable balance at September 30, 1996 and 1995, respectively.
27
<PAGE>
NOTE 12 - QUARTERLY FINANCIAL DATA (UNAUDITED):
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
DEC 31 MAR 31 JUN 30 SEPT 30
---------- ---------- ---------- ---------
1997:
Net sales $14,928 $12,796 $12,468 $11,482
Gross profit 1,026 359 462 411
Income (loss) before taxes (610) (897) (920) (870)
Net income (loss) (403) (592) (618) (856)
Earnings (loss) per share $(0.11) $(0.16) $(0.17) $(0.24)
1996:
Net Sales $16,603 $13,500 $14,218 $13,121
Gross profit 836 (134) (36) (11)
Income (loss) before taxes (387) (2,109) (1,872) (789)
Net income (loss) (1) (255) (1,392) (1,236) (518)
Earnings (loss) per share $(0.07) $(0.37) $(0.33) $(0.15)
1995:
Net sales $14,017 $19,403 $16,741 $14,755
Gross profit 1,839 4,070 3,560 2,482
Income before taxes 547 1,452 1,915 1,367
Net income (loss) 361 958 1,164 968
Earnings per share $0.10 $0.26 $0.30 $0.25
</TABLE>
(1) Net income for the quarter ended December 31, 1995, previously reported as
$405 is restated above to ($255) due to the correction of an error.
28
<PAGE>
NOTE 13 - OTHER EXPENSE (INCOME), NET:
Other expense (income), net, consists of the following at September 30, 1997,
1996 and 1995:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-------------------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Gain on marketable securities $(473,240) $(861,459) $(376,204)
(Gain)/loss on sale of property, plant, and equipment (88,453) (46,066) 367,907
Equity in joint venture losses, and other expenses 59,563 431,972 217,390
Interest income (124,713) (152,373) (184,596)
Service contract settlement 150,000
Other, net 85,550 (57,157) 212,832
---------- ---------- ---------
Total $(391,293) $(685,082) $237,328
========== ========== =========
</TABLE>
29
<PAGE>
REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
============================
To the Shareholders and Board of Directors,
Paris Corporation
Burlington, New Jersey
We have audited the accompanying consolidated balance sheets of Paris
Corporation and subsidiaries as of September 30, 1997 and 1996, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
each of the three years in the period ended September 30, 1997. 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Paris Corporation and subsidiaries as of September 30, 1997 and 1996, and the
results of their operations and their cash flows for each of the three years in
the period September 30, 1997 in conformity with generally accepted accounting
principles.
Parente, Randolph, Orlando, Carey and Associates
Media, Pennsylvania
November 14, 1997
30
<PAGE>
PARIS CORPORATION
-----------------
SCHEDULE II
-----------
VALUATION AND QUALIFYING ACCOUNTS
---------------------------------
<TABLE>
<CAPTION>
Balance at beginning Additions charged to Balance at
of period cost and expenses Deductions end of period
-------------------- -------------------- ---------- -------------
<S> <C> <C> <C> <C>
For the year ended
September 30, 1997:
Allowance for
doubtful accounts: $ 415,536 $240,000 $ 28,497 $ 627,039
Allowance for
contingency reserve: $ 690,000 $ 0 $544,638 $ 145,362
Allowance for
inventory obsolescence $ 989,990 $406,164 $ 81,235 $1,314,919
For the year ended
September 30, 1996:
Allowance for
doubtful accounts: $ 505,379 $ 40,000 $129,843 $ 415,536
Allowance for
contingency reserve: $ 0 $690,000 $ 0 $ 690,000
Allowance for
inventory obsolescence $1,078,588 $ 0 $ 88,598 $ 989,990
For the year ended
September 30, 1995:
Allowance for
doubtful accounts: $ 449,403 $330,000 $274,024 $ 505,379
Allowance for
inventory obsolescence $ 544,584 $534,004 $ 0 $1,078,588
</TABLE>
ITEM 9 - CHANGES IN AND DISAGREEMENTS OF ACCOUNTING AND FINANCIAL DISCLOSURE
None.
31
<PAGE>
REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
--------------------------------
To The Shareholders and
Board of Directors
Paris Corporation
Burlington, New Jersey:
We have audited the consolidated financial statements of Paris Corporation
and subsidiaries as of September 30, 1997 and 1996, and for each of the three
years in the period ended September 30, 1997, and have issued our report thereon
dated November 14, 1997; such consolidated financial statements and report are
included elsewhere in this Form 10K. Our audits also included the financial
statement schedules of Paris Corporation and subsidiaries listed in Item 14.
These financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on the financial
statement schedules based on our audits. In our opinion, such financial
statement schedules referred to above, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
Parente, Randolph, Orlando, Carey & Associates
Media, Pennsylvania
November 14, 1997
32
<PAGE>
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors of the Company are elected for a term of one year. The current
Directors and Officers of the Company, together with their ages, positions,
backgrounds, and business experiences are set forth below:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ---- --- -------------------------
<S> <C> <C>
Dominic P. Toscani, Sr. 69 President, Chief Executive
(4) Officer, Treasurer and
Chairman of the Board of
Directors
Dominic P. Toscani, Jr. 39 Secretary and Director
(2), (4)
Gerard M. Toscani 37 Senior Vice President
(3), (4) and Director
Thomas A. Baglio 36 Vice President of Retail Sales
Jim Grey 43 Vice President of Custom Sales
John A. Whiteside 49 Chief Financial Officer
Donald Velardi 55 Director of Information Services
Palmer E. Retzlaff 66 Director
(2), (3)
Frank A. Mattei, M.D. 76 Director
(1), (2)
Oscar Tete 73 Director
(1)
John V. Petrycki 57 Director
(1), (3)
Scott Gillespie 39 Director
(1), (3)
</TABLE>
(1) Member of Compensation and Stock Option Committee
(2) Member of Audit Committee.
(3) Member of the Investment and Finance Committee
(4) Dominic P. Toscani, Sr. is the father of Dominic P. Toscani, Jr. and
Gerard M. Toscani.
Dominic P. Toscani, Sr. is the founder of the Company, has served as a
Director and has been responsible for its management since its inception.
Prior to the founding of the Company, Mr. Toscani was a practicing attorney.
33
<PAGE>
Dominic P. Toscani, Jr. became a Director of the Company in 1992. Since May
1, 1997 his position as an officer is Secretary only. The Company entered
into a three year Consultant Contract with him on that date. Previously, he
was Senior Vice President and Secretary since fiscal 1990 and was the
Company's Vice President of Operations since January 1987. He previously
served as Operations Manager since 1982.
Gerard M. Toscani became a Director of the Company in 1992. He was appointed
Senior Vice President during fiscal 1990 and was the Company's Vice President
of Sales and Marketing since January 1987. He previously served as Sales and
Marketing Manager since September 1982.
Thomas A. Baglio currently is the Vice President of Retail Sales. He served
as Regional Sales Manager for the Company since January 1991. For the three
years prior to January 1991 he was a Sales Manager with SCM Allied Paper.
Jim Grey currently is the Vice President of Custom Sales. He has been with
the Company over ten years and has previously served as General Manager of the
New Jersey facility.
John A. Whiteside became Chief Financial Officer in January 1994. He served
as Operations Manager and Controller of a H.J. Heinz Company subsidiary from
1990 until 1994. For the five years prior, he served as the Vice President of
Finance for Ultra Precision, Inc.
Donald Velardi became Director of Information Services in July 1994. He
served as Director, Management Information Systems with Ronpak, Inc. from
1987-1994 and Manager, Information Services with Seimens Corporate Research
and Support, Inc. from 1984 through 1987.
Palmer E. Retzlaff became a Director in November 1993. He has been President
of Southwest Grain Co., Inc. since 1973. Previously he was the General Manager
of the Philadelphia Eagles.
Frank A. Mattei was elected to the Board of Directors in March 1986. He has
been a practicing orthopedic surgeon over the past five years and is
associated with North Philadelphia Health System, (formerly Girard Medical
Center), and St. Agnes Medical Center in Philadelphia.
Oscar Tete was elected to the Board of Directors in March 1986. Mr. Tete
retired in 1990. He was an Executive Vice President of First Fidelity Bank in
Burlington, New Jersey since 1972.
John Petrycki was elected to the Board of Directors in August 1995. Mr.
Petrycki retired in 1995. He was President and CEO of PNC Bank in south
central Pennsylvania.
Scott Gillespie was elected to the Board of Directors in January 1997. Mr.
Gillespie is Vice President of Alex Brown & Sons in New York City.
34
<PAGE>
ITEM 11 - SUMMARY COMPENSATION
The following table contains information regarding the individual compensation
of the seven most highly compensated officers of the Company in fiscal years
1997, 1996 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
-----------------------------------------------
Other
Name and Fiscal Annual
Principal Position Year Salary Bonus Compensation (1)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dominic P. Toscani, Sr. 1997 $268,040 0 $8,000
Chairman of the Board 1996 $303,102 $20,000 $8,000
and President 1995 $285,362 $50,000 $8,000
Dominic P. Toscani, Jr. 1997 $145,232 0 $8,000
Senior Vice President 1996 $198,712 $20,000 $8,000
and Secretary 1995 $179,092 $62,500 $8,000
Gerard M. Toscani 1997 $177,622 0 $8,000
Senior Vice President 1996 $198,712 $20,000 $8,000
1995 $179,092 $62,500 $8,000
Thomas A. Baglio 1997 $115,958 0 $ 0
Vice President of Sales 1996 $120,641 $ 5,000 $ 0
1995 $110,962 $10,000 $ 0
James Grey 1997 $ 85,444 0 $2,000
Vice President of Operations 1996 $ 83,923 $ 5,000 $2,000
1995 $ 77,212 $13,000 $2,350
John A. Whiteside 1997 $ 94,521 0 $ 0
Chief Financial Officer 1996 $ 94,415 $ 5,000 $ 0
1995 $ 84,144 $10,000 $ 0
Donald G. Velardi 1997 $ 71,420 0 $ 0
Director of Information Services 1996 $ 71,334 $ 5,000 $ 0
1995 $ 67,192 $ 7,000 $ 0
</TABLE>
(1) Represents the use of a company car.
All officers serve at the discretion of the board of Directors and are
appointed to their respective offices for one year term.
35
<PAGE>
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
(AS NOVEMBER 14, 1997)
Title of Name and Address of Amount and Nature of Percent of
Class Beneficial Owner Beneficial Ownership (1) Class (1)
- -------- ------------------- ------------------------ -----------
Common Dominic P. Toscani (2) 1,090,198 30%
Stock and Nancy C. Toscani
122 Kissel Road
Burlington, NJ 08016
Common Frank A. Mattei 1,064,831 29.3%
Stock 1016 Mercer Street
Cherry Hill, NJ 08034
Common The Caritas Foundation (3) 359,215 9.9%
Stock 700 Hobbs Road
Wayne, PA 19087
Common FMR Corporation 238,500 6.6%
Stock 82 Devonshire Street
Boston, MA 02109
(1) Based on 3,629,431 shares outstanding and 347,300 options currently
exercisable on November 15, 1997.
(2) Includes 955,947 shares personally held; 43,506 shares held by Paris
Corporation Profit Sharing Plan of which Mr. Toscani is the Plan Trustee;
14,745 shares held by Toscani Investment Company, a family partnership; and
72,000 options exercisable as of November 15, 1997.
(3) The Caritas Foundation, a tax exempt organization formed under Section
501(C)(3) of the Internal Revenue Code of 1954, as amended, was organized
in 1984 by Dominic P. Toscani, Sr. to promote the objectives of free
enterprise and to support individual freedom. At the present time Reverend
Peter Toscani, O.S.A., is sole trustee of the foundation.
36
<PAGE>
<TABLE>
<CAPTION>
SECURITY OWNERSHIP OF MANAGEMENT
AS OF NOVEMBER 15, 1997
Number of
Shareholder Shares owned (1) Percent (1)
- ----------- ---------------- -----------
<S> <C> <C>
Dominic P. Toscani, Sr. (2) (4) 1,090,198 30%
and Nancy C. Toscani
122 Kissel Road
Burlington, NJ 08016
Frank A. Mattei 1,064,831 29.3%
1016 Mercer Street
Cherry Hill, NJ 08034
The Caritas Foundation (3) 359,215 9.9%
FMR Corporation 238,500 6.6%
82 Devonshire Street
Boston, MA 02109
Gerard M. Toscani (4) 120,487 3.3%
Dominic P. Toscani, Jr. (4) 101,210 2.8%
Palmer E. Retzlaff 11,000 *
Oscar Tete 9,102 *
John Petrycki 7,000 *
All Directors (present and proposed) 2,847,043 78.4%
and officers as a group (13 persons)(4)
</TABLE>
* Less than 1%
(1) Based on 3,629,431 shares outstanding and 347,300 options currently
exercisable on November 15, 1997.
(2) Includes 959,947 shares personally held; 43,506 shares held by Paris
Corporation Profit Sharing Plan of which Mr. Toscani is the Plan Trustee;
14,745 shares held by Toscani Investment company, a family partnership; and
72,000 options exercisable as of November 15, 1997.
(3) The Caritas Foundation, a tax exempt organization formed under Section 501
(c) (3) of the Internal Revenue code of 1954, as amended, was organized in
1984 by Dominic P. Toscani, to promote the objectives of free enterprise
and to support individual freedom. At the present time Reverend Peter
Toscani, O.S.A., is sole trustee of the Foundation. The Foundation's
address is 700 Hobbs Road, Wayne, Pennsylvania 19087.
(4) Includes options currently exercisable individually and all officers as a
group (264,000).
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There are no other material relationships or transactions which qualify for
disclosure under this caption.
37
<PAGE>
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
This consolidated financial statements and related schedules filed as part of
this Annual Report on Form 10-K are included in Part II, Item 8.
EXHIBITS:
The following exhibits (with the exception of Exhibit 3.4, 10.5(b), 10.7 And
22(a)) are incorporated by reference to the Company's registration statement on
Form S-18 (no.-3-3344-W) filed February 13, 1986 with the Securities and
Exchange Commission and effective march 25, 1986. Exhibit 3.4, 10.5(b) And 10.7
are incorporated by reference to the Company's fiscal 1989 Form 10-K filed with
the Securities and Exchange Commission on December 19, 1989. Exhibit 22(a) is
incorporated by reference to the Company's fiscal 1990 Form 10-K filed with the
Securities and Exchange Commission on December 27, 1991.
3.1 Articles of Incorporation of the Company.
3.2 Amendment to Articles of Incorporation, dated January 6, 1986.
3.3 Amendment to Articles of incorporation, dated January 7, 1986.
3.4 By-laws of Company, as amended.
4.2(a) Form of Warrant to Purchase Common Stock of Company.
10.5 Company's Profit Sharing Plan, dated October 1, 1979.
10.5(a) Amendment to Profit Sharing Plan, dated October 2, 1985.
10.5(b) Amendment to Profit Sharing Plan, dated October 1, 1986.
10.6 Company's Stock Option Plan, dated October 1, 1985.
10.7 Line of Credit (loan agreement) of $2,000,000 from the Fidelity
Bank.
10.9 Bucks County Industrial Development Authority Loan Agreement for
1,500,000 dated April 10, 1985.
10.9(a) Letter Amendment, dated March 4, 1986 from Special Counsel to
Fidelity Bank.
10.9(b) Letter Amendment, dated March 5, 1986 from Fidelity Bank to
Special Counsel.
10.10 New Jersey Economic Development Authority Note for 3,000,000 by
Company, dated September 10, 1985.
10.10(a) Letter Agreement, dated March 4,1986 from Special Counsel to
Fidelity Bank.
10.10(b) Letter Amendment dated March 5, 1986 from Fidelity Bank to
Special Counsel.
10.10(c) Letter dated, March 24, 1986 from Special Counsel to Fidelity
Bank with respect to the New Jersey Economic Development
Authority Loan.
22(a) List of Subsidiaries.
REPORTS ON FORM 8-K
None.
38
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on behalf
by the undersigned, thereunto duly authorized.
PARIS CORPORATION
Date: By: /s/ Dominic P. Toscani
----------------------- -----------------------------
Dominic P. Toscani, Sr.,
(President, Chairman Board of Directors)
Date: By: /s/ John A Whiteside
----------------------- ----------------------------
John A. Whiteside
(Chief Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURES
/s/ Dominic P. Toscani
- ------------------------------------ -------------------------------
Dominic P. Toscani, Sr. (Date) Frank A. Mattei (Date)
(President, Chairman Board of Directors) (Director)
/s/ John A. Whiteside
- ------------------------------------ -------------------------------
John A. Whiteside (Date) Palmer E. Retzlaff (Date)
(Chief Financial Officer) (Director)
/s/ Dominic P. Toscani /s/ Oscar Tete
- ------------------------------------ -------------------------------
Dominic P. Toscani, Jr. (Date) Oscar Tete (Date)
(Director) (Director)
/s/ Gerard M. Toscani
- ------------------------------------ -------------------------------
Gerard M. Toscani (Date) John V. Petrycki (Date)
(Director) (Director)
- ------------------------------------
Scott Gillespie (Date)
(Director)
39
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> SEP-30-1997
<CASH> 2,741,874
<SECURITIES> 3,476,183
<RECEIVABLES> 5,401,204
<ALLOWANCES> 627,039
<INVENTORY> 4,591,835
<CURRENT-ASSETS> 17,959,774
<PP&E> 13,978,529
<DEPRECIATION> 8,880,367
<TOTAL-ASSETS> 23,476,763
<CURRENT-LIABILITIES> 8,775,473
<BONDS> 0
0
0
<COMMON> 15,751
<OTHER-SE> 14,685,539
<TOTAL-LIABILITY-AND-EQUITY> 14,701,290
<SALES> 51,673,925
<TOTAL-REVENUES> 51,673,925
<CGS> 49,416,174
<TOTAL-COSTS> 55,362,618
<OTHER-EXPENSES> (391,293)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 316,807
<INCOME-PRETAX> (3,297,401)
<INCOME-TAX> (828,654)
<INCOME-CONTINUING> (2,468,747)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,468,747)
<EPS-PRIMARY> (.68)
<EPS-DILUTED> (.68)
</TABLE>
