<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JULY 31, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 0-14082
MERRILL CORPORATION
(Exact name of Registrant as specified in its charter)
MINNESOTA 41-0946258
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer Identification No.)
One Merrill Circle
St. Paul, Minnesota 55108
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 612-646-4501
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 (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to filing requirements
for the past 90 days.
Yes X No
-------- --------
The number of shares outstanding of Registrant's Common Stock, par value $.01,
on September 13, 1996 was 7,902,133.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART I. -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Included herein is the following unaudited financial information:
Consolidated Balance Sheets as of July 31, 1996 and January 31,
1996.
Consolidated Statements of Operations for the three-month and
six-month periods ended July 31, 1996 and 1995.
Consolidated Statements of Cash Flows for the six-month periods
ended July 31, 1996 and 1995.
Notes to Consolidated Financial Statements.
2
<PAGE>
MERRILL CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
JULY 31, JANUARY 31,
1996 1996
----------- -----------
<S> <C> <C>
Current assets
Cash and cash equivalents.......................................................... $ 2,462 $ 12,074
Trade receivables, less allowance for doubtful accounts of $4,881 and $3,545,
respectively...................................................................... 74,659 48,566
Work in process inventories........................................................ 34,887 10,898
Other inventories.................................................................. 2,418 5,235
Other current assets............................................................... 3,710 2,463
----------- -----------
Total current assets............................................................. 118,136 79,236
----------- -----------
Property, plant and equipment, net................................................... 37,285 31,681
Goodwill, net........................................................................ 32,744 10,528
Other assets, net.................................................................... 7,981 4,076
----------- -----------
Total assets..................................................................... $ 196,146 $ 125,521
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Note payable, bank................................................................. $ 52,150 $ 6,000
Current maturities of long-term debt............................................... 1,057 770
Current maturities of capital lease obligations.................................... 242 538
Accounts payable................................................................... 20,287 17,598
Accrued expenses................................................................... 21,777 14,951
----------- -----------
Total current liabilities........................................................ 95,513 39,857
----------- -----------
Long-term debt, net of current maturities............................................ 6,525 4,525
Capital lease obligations, net of current maturities................................. 1,992 1,929
Other liabilities.................................................................... 5,045 1,476
----------- -----------
Total liabilities................................................................ 109,075 47,787
----------- -----------
Shareholders' equity
Common stock, $.01 par value: 25,000,000 shares authorized; 7,902,133 shares and
7,855,783 shares, respectively, issued and outstanding............................ 79 78
Undesignated stock: 500,000 shares authorized; no shares issued....................
Additional paid-in capital......................................................... 17,217 16,324
Retained earnings.................................................................. 69,775 61,332
----------- -----------
Total shareholders' equity....................................................... 87,071 77,734
----------- -----------
Total liabilities and shareholders' equity....................................... $ 196,146 $ 125,521
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
3
<PAGE>
MERRILL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE-MONTHS ENDED SIX-MONTHS ENDED
JULY 31 JULY 31
------------------------- -----------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues.................................................... $ 87,569 $ 62,703 $ 158,769 $ 120,135
Cost of revenues............................................ 54,878 43,815 100,908 82,631
---------- ---------- ---------- ----------
Gross profit.............................................. 32,691 18,888 57,861 37,504
Selling, general and administrative expenses................ 23,099 14,039 40,608 28,971
---------- ---------- ---------- ----------
Operating income.......................................... 9,592 4,849 17,253 8,533
Interest expense............................................ (1,184) (234) (1,405) (446)
Other income................................................ 85 182 225 316
---------- ---------- ---------- ----------
Income before provision for income taxes.................. 8,493 4,797 16,073 8,403
Provision for income taxes.................................. 3,822 2,083 7,157 3,613
---------- ---------- ---------- ----------
Net income................................................ $ 4,671 $ 2,714 $ 8,916 $ 4,790
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net income per common and common equivalent share:
Primary................................................... $.57 $.34 $1.11 $.60
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Fully diluted............................................. $.57 $.34 $1.09 $.60
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Dividends per common share.................................. $.03 $.03 $ .06 $.06
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average number of common and common equivalent
shares outstanding:
Primary................................................... 8,214,770 7,967,817 8,067,014 7,935,543
-------- -------- -------- --------
-------- -------- -------- --------
Fully diluted............................................. 8,222,439 7,985,614 8,156,757 7,944,202
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
4
<PAGE>
MERRILL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX-MONTHS ENDED
JULY 31
----------------------
1996 1995
---------- ----------
<S> <C> <C>
Operating activities
Net income.......................................................................... $ 8,916 $ 4,790
Adjustments to reconcile net income to net cash used in operating activities
Depreciation and amortization..................................................... 4,918 4,820
Amortization of intangibles assets................................................ 982 553
Provision for losses on trade receivables......................................... 1,336 610
Change in deferred compensation................................................... (573) (602)
Changes in operating assets and liabilities
Trade receivables............................................................... (8,604) (12,070)
Work in process inventories..................................................... (19,896) (1,245)
Other inventories............................................................... 4,552 (2,705)
Other current assets............................................................ (155) (1,367)
Accounts payable................................................................ (3,811) (211)
Accrued expenses................................................................ 3,465 1,617
Accrued and deferred income taxes............................................... (2,095) (975)
---------- ----------
Net cash used in operating activities......................................... (10,965) (6,785)
---------- ----------
Investing activities
Business acquisitions, net of cash acquired......................................... (26,902)
Purchase of property, plant and equipment........................................... (3,472) (9,579)
Other, net.......................................................................... (814) 83
---------- ----------
Net cash used in investing activities......................................... (31,188) (9,496)
---------- ----------
Financing activities
Borrowings on note payable, bank.................................................... 93,475 18,000
Repayments on note payable, bank.................................................... (47,325) (11,100)
Principal payments on long-term debt and capital lease obligations.................. (14,030) (184)
Dividends paid...................................................................... (473) (461)
Tax benefit realized upon exercise of stock options................................. 163 896
Other equity transactions, net...................................................... 731 93
---------- ----------
Net cash provided by financing activities..................................... 32,541 7,244
---------- ----------
Decrease in cash and cash equivalents................................................. (9,612) (9,037)
Cash and cash equivalents, beginning of period........................................ 12,074 9,967
---------- ----------
Cash and cash equivalents, end of period.............................................. $ 2,462 $ 930
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
5
<PAGE>
MERRILL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. ACCOUNTING POLICIES
The consolidated financial statements as of July 31, 1996 and for the
periods ended July 31, 1996 and 1995 have been prepared by the Company, without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. The consolidated financial statements reflect all adjustments,
consisting of normal recurring accruals, which the Company considers necessary
for a fair presentation of the results for the indicated periods. Certain
information and accounting policies and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. These consolidated financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's latest annual report on Form 10-K. The preparation of the financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities and
the reported amounts of revenue and expenses during the reported periods. Actual
results could differ from those estimates. The most significant areas which
require the use of management's estimates relate to the determination of the
allowance for uncollectible trade accounts receivable, sales credits and
obsolete inventory.
2. BUSINESS ACQUISITIONS
On April 15, 1996, the Company purchased substantially all of the operating
assets and assumed certain liabilities of The Corporate Printing Company, Inc.
and Affiliated Group (CPC) for approximately $22.6 million in cash. The purchase
price is subject to reductions equal to the amount that certain liabilities, as
determined in the agreement, of CPC as of January 31, 1996, exceed $10 million,
and by the amount that CPC's book value of assets as of January 31, 1996, less
liabilities assumed by the Company is less than $13.2 million. The purchase
price is also subject to reductions for the collection of certain accounts
receivables, net losses of CPC for the period January 1, 1996 through April 15,
1996 and expenses incurred with closing certain foreign offices of CPC. The
purchase price is subject to increase by 11% of CPC's affiliated Subchapter S
corporations' net income for the period February 1, 1996 to April 15, 1996. The
Company did not purchase any assets relating to CPC's pressroom and shipping
businesses. The agreement calls for additional contingent consideration, not to
exceed $12 million, based on increases in the average stock price, as defined in
the agreement, of the Company's common stock through April 15, 2001. The Company
also entered into a five-year non-compete agreement with CPC's principal
shareholder that requires payments totalling $3.4 million through April 15,
2001. The principal shareholder is also entitled to an additional $500,000
annually, through March 31, 2001, if the Company maintains certain business of a
specified customer. The acquisition has been accounted for as a purchase. The
allocation of the purchase price and the determination of the excess of the
purchase price over the fair market value of the net assets acquired are
preliminary as of July 31, 1996. The excess of the purchase price over the
estimated fair value of the net tangible and intangible identifiable assets
acquired approximated $16.5 million and is being amortized using the
straight-line method over 15 years.
On March 29, 1996, the Company purchased all of the outstanding common stock
of FMC Resource Management Corporation for $5.4 million in cash and a promissory
note for $2.0 million. The agreement calls for additional contingent
consideration, not to exceed $4 million, based on annual gross profits through
January 31, 2001, as defined in the agreement. The acquisition has been
accounted for as a purchase. The allocation of the purchase price and the
determination of the excess of the purchase price over the fair market value of
the net assets acquired are preliminary as of July 31, 1996. The excess of the
purchase price over the estimated fair value of the net tangible and intangible
identifiable assets acquired approximated $6.0 million and is being amortized
using the straight-line method over 15 years.
6
<PAGE>
MERRILL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
2. BUSINESS ACQUISITIONS (CONTINUED)
Pro forma (unaudited) results for the three-month and six-month periods
ended July 31, 1995 as though the acquisitions had been effective at February 1,
1995 are as follows:
<TABLE>
<CAPTION>
THREE-MONTHS ENDED SIX-MONTHS ENDED
JULY 31, 1995 JULY 31, 1995
------------------- -----------------
(IN THOUSANDS EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C>
Revenues................................... $ 81,810 $ 158,857
-------- -----------------
-------- -----------------
Net Income................................. $ 1,821 $ 3,714
-------- -----------------
-------- -----------------
Net Income Per Share....................... $ 0.23 $ 0.47
-------- -----------------
-------- -----------------
</TABLE>
3. FINANCIAL AGREEMENT
The Company amended its revolving credit agreement during fiscal year 1997.
The agreement provides for an unsecured bank line of credit through April 12,
1999. Amounts available for borrowing under the amended agreement were increased
from $15 million to $60 million. Under the amended agreement, the Company has
the option to borrow at the bank's reference rate, at 1.0% above the London
Interbank Offered Rate or at 1.0% above a certificate of deposit based rate. The
Company is required to pay a commitment fee of 0.25% on the unused portion of
the line. The amended revolving credit agreement includes various covenants,
including the maintenance of minimum tangible net worth and limitations on the
amounts of certain transactions without the approval of the bank.
4. SHAREHOLDERS' EQUITY
In May 1996, shareholders of the Company ratified the Company's 1996
Non-Employee Director Plan (the Plan) whereby 200,000 shares of common stock are
reserved for granting of nonstatutory options and awarding common shares as
partial payment to non-employee directors who serve on the the Company's Board
of Directors. Nonstatutory stock options issued under the Plan are granted at an
exercise price not less than 100% of the fair market value of the Company's
common stock on the date of grant. Compensation expense is recorded when common
stock is awarded as partial payment for the director's annual retainer in an
amount approximately equal to the fair market value of the Company's common
stock on the date of grant. As of July 31, 1996, nonstatutory options for 18,000
shares and 1,750 shares of common stock were granted.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Certain statements in Management's Discussion and Analysis of Financial
Condition and Results of Operations, constitute 'forward-looking' statements
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
'forward-looking' statements involve known and unknown risks, uncertainties, or
achievements of the Company which may cause actual results to be materially
different from any future results, performance, or achievements expressed or
implied by such 'forward-looking' statements. These risks and uncertainties
include, but are not limited to, the effect of economic and financial market
conditions, government security reporting regulations, paper costs and the
integration and performance of recent acquisitions.
RESULTS OF OPERATIONS
The following table sets forth the percentage relationship to revenues of
certain items in the Company's consolidated statements of operations for the
three-month and six-month periods ended July 31, 1996 and 1995, and the
percentage change in such items between the periods.
<TABLE>
<CAPTION>
THREE-MONTHS ENDED JULY 31, SIX-MONTHS ENDED JULY 31,
------------------------------------- ----------------------------------------
PERCENTAGE PERCENTAGE
INCREASE INCREASE
PERCENTAGE (DECREASE) PERCENTAGE (DECREASE)
OF REVENUES ----------- OF REVENUES -----------
--------------------- 1996 VS. ------------------------ 1996 VS.
1996 1995 1995 1996 1995 1995
-------- -------- ----------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Financial.................................. 38.4% 32.7% 64% 36.1% 29.5% 62%
Corporate.................................. 31.9 32.2 38 31.1 35.0 17
Commercial and Other....................... 18.6 22.3 16 21.1 22.1 26
Document Management Services............... 11.1 12.8 22 11.7 13.4 15
-------- -------- -------- --------
Total revenues........................... 100.0 100.0 40 100.0 100.0 32
Cost of revenues............................. 62.7 69.9 25 63.6 68.8 22
-------- -------- -------- --------
Gross profit............................. 37.3 30.1 73 36.4 31.2 54
Selling, general and administrative
expenses.................................... 26.3 22.4 65 25.5 24.1 40
-------- -------- -------- --------
Operating income......................... 11.0 7.7 98 10.9 7.1 102
Interest expense............................. (1.4) (0.4) 406 (.9) (0.4) 215
Other income................................. -- 0.3 (53) .1 0.3 (29)
-------- -------- -------- --------
Income before taxes...................... 9.6 7.6 77 10.1 7.0 91
Provision for income taxes................... 4.3 3.3 83 4.5 3.0 98
-------- -------- -------- --------
Net income............................... 5.3% 4.3% 72 5.6% 4.0% 86
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
REVENUES. Revenues for the second quarter of fiscal year 1997 and the
six-month period ended July 31, 1996, increased 40% and 32% respectively, when
compared to the corresponding periods in the previous year. These increases
reflect general growth in all of the Company's revenue categories and the impact
of the first full quarter of operating activity of recently acquired FMC
Resource Management Corporation (FMC) and the Corporate Printing Company, Inc.
(CPC). Financial revenue increased 64% for the current quarter and 62% for the
current six-month period when compared to the same periods a year ago. The
increase in Financial revenue reflects continued growth of financial market
transactions which the Company began to experience during the last half of
fiscal year 1996 and the inclusion of a full quarter of CPC related operating
activities. The increase in Corporate revenue of 38% for the current quarter and
17% for the current six-month period, when compared to the same periods a year
ago, is attributed to strong corporate compliance work during the first half of
fiscal year 1997, continued demand for EDGAR services and additional market
share contributed by CPC's fund clients. Commercial and Other revenue increased
for both of the current periods reflecting
8
<PAGE>
increased revenues from election-related printing activities and revenue
generated by FMC. Document Management Services revenue for the current quarter
and the six-month period ended July 31, 1996 increased 22% and 15%,
respectively, when compared to the same periods a year ago. The increase in
revenue reflects a 37% increase in Document Service Center revenue during the
first two quarters of fiscal year 1997 when compared to the same period in
fiscal year 1996. This growth was offset by less than anticipated growth in the
transactional reprographics and imaging services.
GROSS PROFIT. Gross profit increased as a percentage of revenue for both
the current quarter and the six-month period. The increase was primarily a
result of strong Financial category activity which increased utilization of our
central typesetting facility resulting in improved margins.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. During the current quarter,
selling, general and administrative expenses increased as a percent of revenue,
when compared to the same period one year ago, resulting in an overall increase
of selling, general and administrative expenses as a percent of revenue for the
six-month period ended July 31, 1996. This increase is attributable to higher
costs associated with the Company's continued expansion of selling and marketing
activities and integration costs associated with the CPC and FMC acquisitions.
PROVISION FOR INCOME TAXES. The effective income tax rate was 45% during
the current quarter and 44.5% for the current six-month period. This compares to
an effective income tax rate of 43.4% for the second quarter a year ago and 43%
for the six-month period ended July 31, 1995. The increase in the effective
rates is a result of increased non-deductible business entertainment expenses
being incurred in conjunction with increased Financial category activity. The
tax rate for the current six-month period represents the estimated effective tax
rate for fiscal year 1997.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at July 31, 1996 decreased to $22.6 million from $39.4
million at January 31, 1996, and is primarily the result of financing the fiscal
year 1997 first quarter acquisitions of FMC and CPC with the Company's revolving
credit agreement. Amounts outstanding under the revolving credit agreement
approximated $52 million at July 31, 1996 compared to $6 million on January 31,
1996. The Company is currently in the process of obtaining long term financing
to replace acquisition-related borrowings under the revolving credit agreement.
There are no assurances that long term financing can be completed given the
uncertainty of financial markets. Strong operating results for the six-month
period ended July 31, 1996 have partially offset the decrease in working capital
resulting from the financing impact of the acquisitions. Increased revenue
during the current periods and continued demand for Company products and
services have resulted in an increase in July 31, 1996 accounts receivable and
work-in-process inventory balances of $26.1 million and $24.0 million,
respectively, when compared to corresponding balances at January 31, 1996.
Capital expenditures for the six-month period ended July 31, 1996 approximated
$3.5 million and primarily related to reprographic and computer based production
equipment. Cash and cash equivalents decreased by approximately $9.6 million
during the six-month period ended July 31, 1996.
NEW ACCOUNTING STANDARD
In October 1995, the Financial Accounting Standards Board issued Statement
No. 123 "Accounting for Stock-Based Compensation." This statement established
financial accounting and reporting standards for stock-based employee
compensation plans. The Company intends to follow the option that permits
companies to apply current accounting standards for stock-based employee
compensation. Effective with fiscal year-end 1997 reporting, the Company will
disclose pro forma net income and net income per share amounts as if Statement
No. 123 were applied.
9
<PAGE>
PART II. -- OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
On May 21, 1996, the Registrant held its Annual Meeting of Shareholders and
elected its Board of Directors, each for a one year term. The vote totals for
the election of the Board of Directors were as follows: Rick R. Atterbury
received 6,357,933 shares voted for and 4,140 withheld; James R. Campbell
received 6,355,501 shares voted for and 6,572 withheld; John W. Castro received
6,358,083 shares voted for and 3,990 withheld; Ronald N. Hoge received 6,358,083
shares voted for and 3,990 withheld; Frederick W. Kanner received 6,357,651
shares voted for and 4,422 withheld; Richard G. Lareau received 5,953,245 shares
voted for and 408,828 withheld; Paul G. Miller received 6,357,983 shares voted
for and 4,090 withheld; and Robert F. Nienhouse received 6,357,933 shares voted
for and 4,140 withheld.
The shareholders also adopted the Company's 1996 Non-Employee Director Plan
by a vote of 4,958,166 shares in favor, 798,921 shares against, and 604,986
shares abstain.
The shareholders also ratified the selection of Coopers & Lybrand L.L.P. as
the independent accountants of the Company by a vote of 6,353,337 shares in
favor, 423 shares against, and 8,313 shares abstain.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11. Schedule of Computation of Per Share Earnings
(b) Reports on Form 8-K
An amendment to Form 8-K, reporting under Item 5 of the acquisition by
the Registrant of all of the issued and outstanding capital stock of FMC
Resource Management Corporation on March 29, 1996, was filed on June 10,
1996. The Company had previously filed the Form 8-K pursuant to Item 2.
An amendment to Form 8-K relating to the acquisition by a wholly-owned
subsidiary of the Registrant of certain assets and assumption of certain
liabilities of The Corporate Printing Company, Inc. on April 15, 1996,
was filed on July 1, 1996. This amendment, pursuant to Item 7, included
the financial statements of The Corporate Printing Company, Inc. and
Affiliated Group (consisting of balance sheets as of December 31, 1995
and 1994 and the related statements of income and retained earnings and
cash flows for the years then ended including the accountants' reports
thereon.) Also included were unaudited condensed consolidated pro-forma
statements of operations for the three-month period ended April 30, 1996
and for the year ended January 31, 1996.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
(REGISTRANT) MERRILL CORPORATION
BY (SIGNATURE) /s/ John W. Castro
(NAME AND TITLE) John W. Castro, President and Chief Executive Officer
(DATE) September 13, 1996
BY (SIGNATURE) /s/ Kay A. Barber
(NAME AND TITLE) Kay A. Barber, Chief Financial Officer
(DATE) September 13, 1996
11
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT METHOD OF FILING
- --------- ---------------------------------
<C> <S> <C>
11. Schedule of Computation of Per Share Earnings........................ Filed herewith electronically
27. Financial Data Schedules............................................. Filed herewith electronically
</TABLE>
<PAGE>
EXHIBIT 11
MERRILL CORPORATION
SCHEDULE OF COMPUTATION OF PER SHARE EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JULY 31, ENDED JULY 31,
---------------------------- ----------------------------
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Primary:
Net income......................................... $ 4,671,408 $ 2,714,290 $ 8,916,495 $ 4,789,834
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Weighted average number of common shares
outstanding during the period..................... 7,888,116 7,743,790 7,874,950 7,692,713
Add common equivalent shares relating to
outstanding options to purchase common stock using
the treasury stock method......................... 326,654 224,027 192,064 242,830
------------- ------------- ------------- -------------
Weighted average number of common and common
equivalent shares outstanding................. 8,214,770 7,967,817 8,067,014 7,935,543
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Primary income per common share...................... $.57 $.34 $1.11 $.60
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Fully diluted:
Net income......................................... $ 4,671,408 $ 2,714,290 $ 8,916,495 $ 4,789,834
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Weighted average number of common shares
outstanding during the period..................... 7,888,116 7,743,790 7,874,950 7,692,713
Add common equivalent shares relating to
outstanding options to purchase common stock using
the treasury stock method......................... 334,323 241,824 281,807 251,489
------------- ------------- ------------- -------------
Weighted average number of common and common
equivalent shares outstanding................. 8,222,439 7,985,614 8,156,757 7,944,202
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Fully diluted income per common share................ $.57 $.34 $1.09 $.60
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-START> FEB-01-1996
<PERIOD-END> JUL-31-1996
<CASH> 2,462
<SECURITIES> 0
<RECEIVABLES> 79,540
<ALLOWANCES> 4,881
<INVENTORY> 37,305
<CURRENT-ASSETS> 118,136
<PP&E> 76,610
<DEPRECIATION> 39,325
<TOTAL-ASSETS> 196,146
<CURRENT-LIABILITIES> 95,513
<BONDS> 0
0
0
<COMMON> 79
<OTHER-SE> 86,992
<TOTAL-LIABILITY-AND-EQUITY> 196,146
<SALES> 158,769
<TOTAL-REVENUES> 158,769
<CGS> 100,908
<TOTAL-COSTS> 100,908
<OTHER-EXPENSES> 40,608
<LOSS-PROVISION> 1,336
<INTEREST-EXPENSE> 1,405
<INCOME-PRETAX> 16,073
<INCOME-TAX> 7,157
<INCOME-CONTINUING> 8,916
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,916
<EPS-PRIMARY> 1.11
<EPS-DILUTED> 1.09
</TABLE>
