<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
XX QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
---- EXCHANGE ACT OF 1934
For the quarterly period ended March 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 1-9603
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STEVENS INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
Delaware 75-2159407
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
5500 Airport Freeway, Fort Worth, Texas 76117
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(Address of principal executive offices) (zip code)
817/831-3911
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
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 such filing
requirements for the past 90 days.
Yes XX No
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APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Title of Each Class Outstanding at May 6,1996
- --------------------------------------- -------------------------
<S> <C>
Series A Stock, $0.10 Par Value 7,321,568
Series B Stock, $0.10 Par Value 2,128,534
</TABLE>
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
PAGE NO.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets 3
December 31, 1995 and March 31, 1996
(unaudited)
Consolidated Condensed Statements of 4
Operations
Three months ended March 31, 1996 and
1995 (unaudited)
Consolidated Condensed Statements of 5
Stockholders' Equity December 31, 1995
and Three months ended March 31, 1996
(unaudited)
Consolidated Condensed Statements of 6
Cash Flows Three months ended
March 31, 1996 and 1995 (unaudited)
Notes to Consolidated Condensed 7
Financial Statements (unaudited)
Item 2. Management's Discussion and Analysis of 8
Financial Condition and Results of
Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 6. Exhibits and Reports on Form 8-K 12
</TABLE>
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STEVENS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, 1995 MARCH 31, 1996
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ASSETS (unaudited)
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<S> <C> <C>
Current assets:
Cash..................................................... $ 712 $ --
Temporary investments.................................... 102 --
Trade accounts receivable, less allowance for losses of
$655 and $687 in 1995 and 1996, respectively............ 26,079 22,298
Costs and estimated earnings in excess of billings on
long-term contracts..................................... 18,341 15,381
Inventory (Note 3)....................................... 23,300 25,948
Deferred and refundable income taxes..................... 832 1,901
Other current assets..................................... 666 800
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Total current assets..................................... 70,032 66,328
Property, plant and equipment (Note 4)..................... 32,017 31,657
Other assets, net.......................................... 15,598 15,371
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Total Assets............................................. $117,647 $113,356
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LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Trade accounts payable................................... $ 15,117 $ 12,343
Billings in excess of costs and estimated earnings on
long-term contracts..................................... 219 784
Other current liabilities................................ 9,019 8,351
Income taxes payable..................................... -- --
Customer deposits........................................ 3,851 4,424
Advances from affiliates................................. -- 500
Current portion of long-term debt (Note 4)............... 3,699 3,697
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Total current liabilities................................ 31,905 30,099
Long-term debt (Note 4).................................... 33,470 32,235
Deferred income taxes...................................... 4,536 4,536
Deferred pension costs..................................... 2,364 2,364
Commitments and contingencies (Note 5)
Stockholders' equity:
Preferred stock, $0.10 par value, 2,000,000 shares
authorized, non issued and outstanding.................. -- --
Series A common stock, $0.10 par value, 20,000,000
shares authorized, 7,312,000 and shares
issued and outstanding at December 31, 1995 and
March 31, 1996, respectively............................ 731 731
Series B common stock, $0.10 par value, 6,000,000
shares authorized, 2,139,000 and shares
issued and outstanding at December 31, 1995 and
March 31, 1996, respectively............................ 214 214
Additional paid-in-capital............................... 39,144 39,144
Foreign currency translation adjustment.................. 359 194
Excess pension liability adjustment...................... (1,036) (1,036)
Retained earnings........................................ 5,960 4,875
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Total stockholders' equity................................. 45,372 44,122
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Total Liabilities and Stockholders' Equity............... $117,647 $113,356
======== ========
</TABLE>
See notes to consolidated condensed financial statements.
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STEVENS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
---------------------------------
1995 1996
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<S> <C> <C>
Net sales................................................... $ 33,042 $ 22,613
Cost of sales............................................... (24,893) (18,794)
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Gross profit................................................ 8,149 3,819
Selling, general and administrative expenses................ (4,855) (4,845)
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Operating income (loss)..................................... 3,294 (1,026)
Other income (expense):
Interest income........................................... 45 14
Interest expense.......................................... (828) (931)
Other, net................................................ 122 (117)
-------- --------
(661) (1,034)
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Income (loss) before income taxes........................... 2,633 (2,060)
Income tax (expense) benefit................................ (1,185) 975
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Net income (loss)........................................... $ 1,448 $ (1,085)
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Net income (loss) per common share (Note 7)................. $0.15 $(0.11)
======== ========
Weighted average number of shares of common and common
stock equivalents outstanding during the periods (Note 7).. 9,609 9,451
======== ========
</TABLE>
See notes to consolidated condensed financial statements.
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STEVENS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
SHARES AMOUNT
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<S> <C> <C>
Series A Stock
Balance, December 31, 1995................................ 7,312 $ 731
Conversion of Series B Stock to Series A Stock............ 2 --
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Balance, March 31, 1996................................... 7,314 $ 731
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Series B Stock
Balance, December 31, 1995................................ 2,139 $ 214
Conversion of Series B Stock to Series A Stock............ (2)
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Balance, March 31, 1996................................... 2,137 $ 214
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Additional Paid-in Capital
Balance, December 31, 1995................................ $ 39,144
Balance, March 31, 1996................................... $ 39,144
========
Foreign Currency Adjustment
Balance, December 31, 1995................................ $ 359
Translation adjustments................................... (165)
--------
Balance, March 31, 1996................................... $ 194
========
Pension Liability Adjustment
Balance, December 31, 1995................................ $ (1,036)
--------
Balance, March 31, 1996................................... $ (1,036)
========
Retained Earnings
Balance, December 31, 1995................................ $ 5,960
Net (loss) for three months ended March 31, 1996.......... (1,085)
--------
Balance, March 31, 1996................................... $ 4,875
========
Stockholders' Equity at March 31, 1996...................... $ 44,122
========
</TABLE>
See notes to consolidated condensed financial statements.
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<PAGE>
STEVENS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1995 1996
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<S> <C> <C>
Cash provided by operations:
Net income (loss)......................................... $ 1,448 $(1,085)
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization......................... 1,322 1,406
Deferred taxes........................................ -- --
Other................................................. 435 (168)
Changes in operating assets and liabilities:
Trade accounts receivable........................... (7,975) 3,781
Contract costs in excess of billings................ 2,100 3,525
Inventory........................................... (3,762) (2,648)
Other assets........................................ (714) (1,304)
Trade accounts payable.............................. (1,855) (2,774)
Other liabilities................................... 798 (95)
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Total cash provided by (used in ) operating activities...... $(8,203) $ 638
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Cash provided by (used in ) investing activities:
Additions to property, plant and equipment................ $(1,093) $ (685)
Deposits and other........................................ (112) 113
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Total cash provided by (used in) investing activities....... $(1,205) $ (572)
------- -------
Cash provided by (used in) financing activities:
Net proceeds from (repayments of) long-term debt.......... $ 8,387 $ (880)
Exercise of stock options................................. 140 --
------- -------
Total cash provided by (used in) financing activities....... $ 8,527 $ (880)
------- -------
Increase (decrease) in cash and temporary investments....... (881) (814)
Cash and temporary investments at beginning of period....... 1,473 814
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Cash and temporary investments at end of period............. $ 592 $ -0-
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest................................................ $ 498 $ 614
Income taxes............................................ 469 90
</TABLE>
See notes to consolidated condensed financial statements.
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<PAGE>
STEVENS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. The consolidated condensed balance sheet as of March 31, 1996, the
consolidated condensed statement of stockholders' equity for the period
ended March 31, 1996, the consolidated condensed statements of operations
for the three months ended March 31, 1996 and 1995, and the consolidated
condensed statements of cash flows for the three month periods then ended
have been prepared by the Company without audit. In the opinion of
management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position as of March
31, 1996 and the results of operations for the three months ended March 31,
1996 and 1995 and the cash flows for the three months ended March 31, 1996
and 1995 have been made. The December 31, 1995 consolidated condensed
balance sheet is derived from the audited consolidated balance sheet as of
that date. Complete financial statements for December 31, 1995 and related
notes thereto are included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1995 (the "1995 Form 10-K").
The above financial statements have been prepared in accordance with the
instructions to Form 10-Q and therefore do not include all information
included in the 1995 Form 10-K. The results of operations for the three
months ended March 31, 1996 and 1995 are not necessarily indicative of the
results to be expected for the full year.
2. The Company designs, manufactures, markets and services web-fed packaging
and printing systems and related equipment for its customers in the
packaging industry and in the specialty/commercial and security and banknote
segments of the printing industry. The Company is also a worldwide leader in
the manufacture of rotary and platen die cutting and creasing equipment. The
Company manufactures equipment capable of converting and printing, among
other items, food and beverage containers, liquid container cartons,
banknotes, postage stamps, lottery tickets, direct mail inserts, personal
checks and business forms. A growing use of the Company's die cutting
equipment is in non-printing applications to produce consumer items such as
potato chips, cookies, battery grids, disposable diapers, adhesive bandages,
and many other end products. The Company has the technological and
engineering expertise to combine any of the four major printing methods
(offset, flexography, rotogravure and intaglio) together with die cutters
and creasers and product delivery systems into a single system. Complete
press systems are capable of multiple color and multiple size printing and
perform such related functions as numbering, punching, perforating,
slitting, cutting, creasing, folding and stacking. The presses can be custom
engineered for non-standard form size and special auxiliary functions.
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<PAGE>
3. Inventories consist of the following:
<TABLE>
<CAPTION>
December 31, March 31,
1995 1996
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(Amounts in thousands)
<S> <C> <C>
Finished product....... $ 7,204 $ 7,220
Work in progress....... 9,231 11,698
Raw materials.......... 6,865 7,030
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$23,300 $25,948
======= =======
</TABLE>
4. For a description of the amendment and restatement of the bank credit
facility in May 1996, see "Liquidity and Capital Resources". Substantially
all assets of the Company continue to be pledged as collateral on the
Company's credit facilities. The long term debt is recorded net of
unamortized debt issue costs of $1.1 million at March 31, 1996.
5. The Company is party to a number of legal actions arising in the ordinary
course of its business. In management's opinion, the Company has adequate
legal defenses and/or insurance coverage in respect to each of these legal
actions and does not believe that they will materially affect the Company's
operations, liquidity, or financial position. See "Legal Proceedings" herein
and in the 1995 Form 10-K.
6. The benefit of recoverable income tax expense for the three months ended
March 31, 1996 was $975,000 which was principally related to reductions in
currently payable taxes.
7. Earnings per common share for 1996 and 1995 are based upon the weighted
average number of shares of common and common stock equivalents (stock
options, when dilutive) outstanding during the periods. Since the Series A
and Series B stock have identical dividend and participation rights in the
Company's earnings, they have been considered to be comparable in the
calculation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1996 AND 1995
Sales The Company's sales for the three months ended March 31, 1996 decreased
- -----
by $10.4 million (or 31.6%) compared to sales in the same period in 1995 due
primarily to sales decreases in the packaging systems divisions ($7.5 million)
and specialty web products division ($3.5 million) offset by increases in sales
at the banknote printing equipment division ($0.2 million) and the French
service and repair division ($0.4 million).
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<PAGE>
Gross Profit The Company's gross profit for the three months ended March 31,
- ------------
1996 decreased by $4.3 million compared to gross profit in the same period in
1995 due primarily to decreased sales volume for packaging systems and
additional expenses in resolving product performance related problems. Gross
profit margin for 1996 decreased to 16.9% of sales as compared to 24.7% for
1995. This decrease in gross profit margin in 1996 was due primarily to costs
incurred on prototype products at the specialty web products division and
additional warranty and other expenses in connection with various packaging
systems division product performance related problems.
Selling, General and Administrative Expenses The Company's selling, general,
- --------------------------------------------
and administrative expenses decreased by $0.01 million (or 0.2%) for the three
months ended March 31, 1996 compared to the same period in 1995 due to cost
reduction efforts at all divisions in connection with the reduced volume of
sales. The full impact of these cost reduction measures will not be realized
until the third and fourth quarters of 1996. Selling, general and
administrative expenses for the three months ended March 31, 1996 were 21.4% of
sales compared to 14.7% of sales for the same period in 1995 due to the decrease
in sales in 1996 described above.
Other Income (Expense) The Company's interest expense increased by $0.1
- ----------------------
million for the three months ended March 31, 1996 compared to the same period in
1995 due to increased borrowing by the Company in the latter part of 1995 to
fund the working capital needs of the Company. Interest income decreased by
$0.03 million for the three months ended March 31, 1996 as compared to interest
income in the same period in 1995 due to the use of cash to minimize the amount
borrowed under the Company's credit facilities.
TAX MATTERS
The Company's effective state and federal income tax rate ("effective tax rate")
was 47.3% and 45% for the three months ended March 31, 1996 and 1995,
respectively. These effective tax rates were due to recoverable taxes in 1996
and certain research and experimental expenditure tax credits that were recorded
in March 1996, while similar tax benefits were not recorded until the third
quarter of 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company requires capital primarily to fund its ongoing operations, to
provide for expansion of manufacturing capacity, to service its existing debt
and to pursue its strategic objectives including new product development and
penetration of international markets. The Company's working capital needs
typically increase because of a number of factors, including the duration of the
manufacturing process and the relatively large size of most orders. During the
latter part of 1995 and during 1996, the Company has experienced an increased
need for working capital resulting in continued high levels of borrowings under
its bank credit facility. The working capital needs are directly related to the
slowness in orders in 1995 and 1996 and certain product performance issues which
have delayed deliveries, increased costs and delayed cash collections. Also,
the growing international mix of the Company's new orders which typically have
less favorable cash flow terms than domestic orders, and the introduction of new
products have impacted the borrowing levels.
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<PAGE>
Historically, the Company has funded its capital needs with cash provided by
operating activities, borrowings under bank credit facilities, issuance of long-
term debt and the sale and private placement of common stock. Net cash provided
by (used in) operating activities was $0.6 million in the first quarter of 1996
and ($8.2 million) in the first quarter of 1995.
At March 31, 1996, the Company's indebtedness was comprised primarily of a
credit facility and the Company's Subordinated Notes due June 30, 2000. As of
March 31, 1996, there was outstanding $15.3 million in Subordinated Notes,
bearing interest at the rate of 10.5% per annum, with principal payments of $3.6
million being due on June 30, 1996 and each June 30 thereafter, and a final
payment of $0.86 million at maturity.
Under its credit facility, the Company may borrow up to $27 million in the form
of direct borrowings and letters of credit. As of March 31, 1996 there was
$21.7 million in direct borrowings and $4.8 million in standby letters of credit
outstanding under the credit facility. The interest rate on direct borrowings
under the credit facility is at the lender's prime rate, or at the Company's
option, an offshore rate (generally equivalent to LIBOR) plus 1.5%, which
equates to 6.94% at March 31, 1996.
At March 31, 1996, $6.7 million of the Company's borrowings were at the lender's
prime rate of interest (8.75%) and $15.0 million of the borrowings were at an
offshore rate plus 1.5% (6.94%). The amounts borrowed under the credit facility
have been used for working capital.
Both the agreement concerning the credit facility and the agreement with the
holders of the Subordinated Notes provide for joint and several guaranties by
the domestic operating subsidiaries of the Company. To secure the indebtedness
and the guaranties, a first lien was granted to the lender, and a second lien
was granted to the holders of the Subordinated Notes, on substantially all the
assets of the Company and its domestic subsidiaries. The Company's domestic
operating subsidiaries were merged into the Company effective January 1, 1996.
The borrowings under the credit facility and Subordinated Notes agreement are
subject to various restrictive covenants related to financial ratios as well as
limitations on capital expenditures and additional indebtedness. The credit
facility permits the Company to borrow up to $5 million for domestic
acquisitions without lender consent. The Company is not allowed to pay
dividends.
In March of 1996, the Company and its lender reached an agreement for a
modification of the credit facility. The modification will provide for a
reduction in the minimum required debt service coverage ratio during 1996
consistent with the Company's current expectations. The Company anticipates
final documentation of the modification to be completed in May 1996.
Management believes that cash flow from operations together with existing
borrowing capacity under the Company's credit facility will be adequate to fund
its existing operations, repay indebtedness, and allow it to pursue its
strategic objectives over the next 12 months. In addition, the Company may
incur, from time to time, additional short- and long-term bank indebtedness
(under its existing credit facility or otherwise) and may issue, in public or
private transactions, its equity and debt securities to provide additional funds
necessary for the continued pursuit of the Company's growth strategies,
including the financing of possible future acquisitions. The availability and
terms of any such sources of financing will depend on market and other
conditions. There can be no assurance that such additional financing will be
available or, if available, will be on terms and
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conditions acceptable to the Company. The Company's Chairman and Chief
Executive Officer has loaned the Company $950,000 through May 3, 1996 for its
short-term cash requirements which is to be mandatorily repaid from proceeds of
the Banque de France receivable ( approximately $1.7 million).
In addition to the availability of external financing, management believes that
the Company's liquidity will be impacted by its ability to achieve a
satisfactory resolution of the product warranty issues, timely deliveries,
acceptance of the ACE system by the Bank of England and final acceptance of the
SNOW press by Banque de France, the degree of international orders (which
generally have less favorable cash flow terms and require letters of credit that
reduce credit availability), improved terms of domestic orders, and timely
implementation of cost reduction measures. There can be no assurance that the
Company will be successful in any or all of these areas.
The Company's primary sources of liquidity are its cash, internal cash
generation and the external financing described above. Management believes that
the Company has sufficient liquidity capacity to fund its anticipated needs for
working capital and debt repayment.
Backlog and Orders The Company's backlog of unfilled orders at March 31, 1996
- ------------------
was approximately $31.7 million compared to $40.4 million at December 31, 1995,
a decrease of (21.5%). The backlog decrease included $4.4 million of packaging,
$1.0 million of banknote related equipment and $3.6 million of specialty web
equipment as compared to year-end 1995. The backlog at March 31 in each of the
preceding five years has ranged from a low of $28.7 million in 1991 to a high of
$68.0 million in 1995.
The reduction in backlog is the result of a reduced order flow in late 1995.
Orders for the three months ended March 31, 1996 were $14.1 million compared to
$32.8 for the comparable period in 1995, a decrease of $18.7 million while
shipments decreased $10.4 million. The Company believes the above noted reduced
order flow is the result of fluctuations in the flow of major printing and
packaging system orders and certain product performance issues. As a result, the
Company is continuing to adjust its rate of future production and accompanying
costs to match this reduced order flow.
When sales are recorded under the completed contract method of accounting, the
Company normally experiences a six to nine month lag between the time new orders
are booked and the time they are reflected in sales and results of operations.
Larger orders, which are accounted for using the percentage of completion method
of accounting, are reflected in sales and results of operations as the project
progresses through the manufacturing cycle.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On December 5, 1990, Howard Lasker, as the representative of an alleged class
consisting of purchasers of the Company's common stock between October 18, 1989
and October 31, 1990, filed a lawsuit against the Company and certain officers
and directors of the Company. The suit was certified as a class action in March
1992. On February 26, 1993, notice of the pendency of the class action was
mailed to stockholders of record of the Company and was published in the
national
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<PAGE>
edition of the Wall Street Journal. The action, which was filed in the United
States District Court for the Northern District of Texas (Dallas Division),
alleges that the defendants, during the class period, engaged in a course of
action that deceived the investing public regarding the financial condition and
prospects of the Company, that as a consequence, the market value of the
Company's common stock was artificially inflated, and that the plaintiff and
other members of the class purchased Company common stock during the class
period at inflated prices.
After extensive discovery and trial preparation, the case was scheduled to go to
trial in January 1996. Prior to commencement of trial, the parties agreed in
principle to a settlement of the dispute. The Company, its officers' and
directors' liability insurance carrier, and the Plaintiff are in the process of
negotiating a written settlement of the dispute that, if approved by the court,
would result in the dismissal of the litigation. As part of the settlement, the
Company has agreed to issue to the class warrants to purchase Series A Common
Stock with an aggregate value of $700,000. When issued, the value of the
warrants will be charged to the Company's earnings. The court took the January
1996 trial setting off of its docket. In the event the settlement agreement is
not approved by the court, the Company will continue to vigorously pursue all
available defenses.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
3.1 Second Amended and Restated Certificate of Incorporation of the
Company. (1)
3.2 Bylaws of the Company, as amended. (2)
4.1 Specimen of Series A Common Stock Certificate. (3)
4.2 Specimen of Series B Common Stock Certificate. (4)
10.1 Form of Indemnity Agreement. (2)
10.3 Second Amended and Restated Stock Option Plan of the Company. (5)
10.4 Description of Stevens Graphics Incentive Plan. (3)
10.5 Description of Hamilton Life Insurance Payroll Deduction Plan. (2)
10.6 Labor Agreement, dated July 2, 1994, between Hamilton-Stevens Group,
Inc. and the International Union United Automobile, Aerospace and
Agricultural Implement Workers of America. (9)
10.9 Chem-Dyne Site Trust Fund Agreement, dated September 23, 1985. (2)
10.10 Lease Agreement between Space Unlimited Joint Venture #3 and Stevens
Corporation ("Stevens"), dated September 11, 1981, and related lease
addendum. (2)
10.11 First Extension Agreement dated January 19, 1987 between Stevens and
Space Unlimited Joint Venture #3. (3)
10.12 First Amended Joint Venture Agreement of Space Unlimited Joint
Venture #3, dated June 26, 1980, and related Assignment of Joint
Interest and Loan Modification, Assumption Agreement and Release.(2)
10.13 Second Extension Agreement between the Company and Space Unlimited
Joint Venture #3. (6)
10.14 Stevens Graphics Corporation Pension Plan and Trust. (6)
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10.15 Stevens Graphics Corporation Profit Sharing and 401 (k) Savings
Retirement Plan. (6)
10.17 Lease Agreement between Rochester Hills Executive Park and
Zerand-Bernal Group, Inc. (8)
10.18 Severance Agreement among the Company, Post, and Robert F. Hopkins.
(6)
10.19 Restated and Amended Subordinated Debt Agreement dated March 27,
1992, together with forms of Subordinated Notes and Subordinated
Guaranties. (6)
10.20 Amended and Restated Intercreditor and Subordination Agreement dated
April 26, 1994. (11)
10.21 Contract of Sales between the Company and the Banque de France. (6)
10.23 Asset Purchase Agreement dated July 20, 1993 among Post Machinery
Company, Inc., the Company, and Bobst Group, Inc. and Bobst, S.A. (10)
10.24 Letter Agreement dated August 5, 1993 amending Asset Purchase
Agreement among the Company, Post Machinery Company, Inc. Bobst
Group, Inc., and Bobst, S.A. (10)
10.25 Intellectual Property Purchase Agreement dated August 5, 1993
among the Company, Post Machinery Company, Inc., and Bobst S.A. (10)
10.26 Fourth Amendment to Amended and Restated Senior Subordinated Note
Agreement dated April 29, 1994. (11)
10.27 Form of Stock Purchase Agreement dated as of September 16, 1994
between the Company and certain investors. (12)
10.28 Credit Agreement, dated May 16, 1995, between the Company and Bank of
Texas, N.A. (13)
10.29 First Amendment to Amended and Restated Subordination and
Intercreditor Agreement dated August 1995. (14)
10.30 Fifth Amendment to Amended and Restated Senior Subordinated Note
Agreement dated August 1995. (14)
10.31 First Amendment to Credit Agreement effective August 15, 1995
between the Company and Bank of America Texas, N.A. (14)
10.32 Second Amended and Restated Master Note: Reference Rate Related
dated August 15, 1995, executed by the Company and payable to the
order of Bank of America Texas, N.A. in the original principal amount
of $27 million. (14)
10.33 Second Amendment to Credit Agreement effective December 1995
between the Company and Bank of America Texas, N.A. (14)
10.34 Letter Agreement and Promissory Note by and between the Company and
Paul I. Stevens dated April 22, 1996. *
11.1 Computation of Net Income per Common Share. *
27.1 Financial Data Schedule. *
_____________________________________________________
* Filed herewith.
(1) Previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the year ended December 31, 1990 and incorporated herein by reference.
(2) Previously filed as an exhibit to the Company's Registration Statement on
Form S-1 (No. 33-15279) and incorporated herein by reference.
-13-
<PAGE>
(3) Previously filed as an exhibit to the Company's Registration Statement on
Form S-1 (No. 33-24486) and incorporated herein by reference.
(4) Previously filed as an exhibit to the Company's Report on Form 8-A filed
August 19, 1988 and incorporated herein by reference.
(5) Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the period ended June 30, 1994 and incorporated herein by
reference.
(6) Previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the year ended December 31, 1991 and incorporated herein by reference.
(7) Previously filed as an exhibit to the Company's Registration Statement on
Form S-1 (No. 33-32089) and incorporated herein by reference.
(8) Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the period ended June 30, 1993 and incorporated herein by
reference.
(9) Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the period ended September 30, 1994 and incorporated herein by
reference.
(10) Previously filed as an exhibit to the Company's Current Report on Form 8-K
filed August 12, 1993 and incorporated herein by reference.
(11) Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the period ended March 31, 1994 and incorporated herein by
reference.
(12) Previously filed as an exhibit to the Company's Registration Statement on
Form S-3 (No. 33-84246) and incorporated herein by reference.
(13) Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the period ended June 30, 1995 and incorporated herein by
reference.
(14) Previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the year ended December 31, 1995 and incorporated herein by reference.
(b) Reports on Form 8-K.
None.
-14-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Stevens
International, Inc. has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
STEVENS INTERNATIONAL, INC.
Date: May 10, 1996 By:
Paul I. Stevens
Chief Executive Officer
and Acting Chief Financial Officer
-15-
<PAGE>
EXHIBIT 10.34
April 22, 1996
Mr. Paul I. Stevens
9191 Towne Centre Drive,
Suite 120
San Diego, California 92122
Re: Advances to Stevens International, Inc.
Dear Mr. Stevens:
This letter agreement sets forth the terms and conditions with respect to
the advances made by you, Paul I. Stevens ("Stevens"), to Stevens International,
Inc. (the "Company") in the aggregate amount of $950,000 (the "Current Advance")
and any future advances that Stevens may make to the Company ("Future
Advances"). In consideration of the Current Advance, the Company will execute a
promissory note in the principal amount of $950,000 with an interest rate of 8%
per annum (the "Original Promissory Note"). In consideration of any Future
Advances, the Company will execute an additional promissory note or notes
("Additional Promissory Note(s)") to Stevens upon the same terms and conditions
as the Original Promissory Note. The amounts due under the Original Promissory
Note and any Additional Promissory Note(s) will be paid to Stevens from the
Banque de France receivable (the "Receivable"). The amount of the Receivable is
currently 8,728,020 French Francs, an amount equal to approximately U.S.
$1,745,604. The Original Promissory Note and any Additional Promissory Note(s)
shall be mandatorily pre-paid from proceeds received by the Company with respect
to the Receivable at such time as the amount of the proceeds from the Receivable
is equal to or less than the aggregate amount of the Original Promissory Note
plus any Additional Promissory Note(s).
Very truly yours,
/s/ Richard I. Stevens
Richard I. Stevens
President
AGREED TO AND ACKNOWLEDGED
as of the date first above written:
/s/ Paul I. Stevens
- ----------------------------------
Paul I. Stevens
<PAGE>
PROMISSORY NOTE
---------------
$950,000 April 22, 1996
The undersigned, Stevens International, Inc., a Delaware corporation
("Maker"), hereby promises to pay to the order of Paul I. Stevens ("Payee"), at
5500 Airport Freeway, Fort Worth, Texas 76117, or such other place as Payee may
from time to time direct Maker in writing, the principal sum of Nine Hundred and
Fifty Thousand and no/100 Dollars ($950,000), together with interest accrued
thereon at a rate of interest of eight percent (8%) per annum. The principal of
and interest on this Note shall be due and payable in its entirety on April 22,
1997 provided, however, this Note shall be mandatorily pre-paid as set forth in
that certain Letter Agreement of even date herewith between Maker and Payee,
which is attached hereto as Exhibit A and incorporated herein by reference. All
payments on this Note shall be due and payable in lawful money of the United
States of America.
1. Events of Default and Remedies. At the option of Payee, the entire
------------------------------
amount of the unpaid balance of this Note, including accrued but unpaid
interest, shall immediately become due and payable upon the occurrence of one or
more of the following events of default ("Events of Default"):
(a) Failure of Maker to make any payment on this Note as and when the
same becomes due and payable in accordance with the terms hereof, and such
failure continues for a period of ten (10) days after the receipt by Maker
of written notice from Payee of the occurrence of such failure;
(b) Failure of Maker to perform any covenant, agreement or condition
contained herein, other than the payments referred to in (a) above, and
such failure continues for a period of thirty (30) days after the receipt
by Maker of written notice from Payee of the occurrence of such failure; or
(c) Maker shall (i) become insolvent, (ii) voluntarily seek, consent
to or acquiesce in the benefit or benefits of any Debtor Relief Law (as
hereinafter defined) or (iii) become party to (or be made the subject of)
any proceeding provided by any Debtor Relief Law, other than as a creditor
or claimant, that could suspend or otherwise adversely affect the rights of
Payee granted hereunder (unless in the event such proceeding is
involuntary, the petition instituting the same is dismissed within 90 days
of the filing of same). As used herein, the term "Debtor Relief Law" means
the Bankruptcy Code of the United States of America and all other
applicable liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, receivership, insolvency, reorganization or similar debtor
relief laws from time to time in effect affecting the rights of creditors
generally.
<PAGE>
In the event any one or more of the Events of Default specified above shall have
happened, Payee may proceed to protect and enforce its rights either by suit in
equity and/or by action at law, or by other appropriate proceedings, whether for
the specific performance of any covenant or agreement contained in this Note or
in aid of the exercise of any power or right granted by this Note, or to enforce
any other legal or equitable right of the holder of this Note.
2. Cumulative Rights. No delay on the part of Payee in the exercise of
-----------------
any power or right under this Note, or under any other instrument executed
pursuant hereto, shall operate as a waiver thereof, nor shall a single or
partial exercise of any such power or right preclude any other or further
exercise thereof or the exercise of any other right or power hereunder.
Enforcement by Payee of any security for the payment hereof shall not constitute
any election by it of remedies so as to preclude the exercise of any other
remedy available to it.
3. Waiver. Except as otherwise specifically provided for herein, Maker,
------
and each security, endorser, guarantor and other party ever liable for the
payment of any sum of money payable on this Note, jointly and severally waive
demand, presentment, protest, notice of non-payment, notice of intention to
accelerate, notice of protest and any and all lack of diligence or delay in
collection or the filing of suit hereon which may occur, and agree that their
liability on this Note shall not be affected by any renewal or extension in the
time of payment hereof, by any indulgences, or by any release or change in any
security for the payment of this Note; and hereby consent in any and all
renewals, extensions, indulgences, releases or changes, regardless of the number
of such renewals, extensions, indulgences, releases or changes.
4. Attorneys' Fees and Costs. In the event an Event of Default shall
-------------------------
occur, and in the event that thereafter this Note is placed in the hands of any
attorney for collection, or in the event this Note is collected in whole or in
part through legal proceedings of any nature, then and in any such case Maker
promises to pay all costs of collection, including, but not limited to,
reasonable attorneys' fees and court costs incurred by the holder hereof on
account of such collection, whether or not suit is filed.
5. Successors and Assigns. All of the covenants, stipulations, promises
----------------------
and agreements in this Note made by or on behalf of Maker shall bind its
successors and assigns, whether so expressed or not; provided, however, that
Maker may not, without the prior written consent of Payee, assign any of its
rights, powers, duties or obligations under this Note.
6. Maximum Interest. Regardless of any provision contained herein, Maker
----------------
shall never be required to pay and Payee shall never be entitled to receive,
collect or apply as interest hereon, any amount in excess of the highest lawful
interest rate permitted under applicable law, and in the event Payee receives,
collects or applies, as interest, any such excess, such amounts which would be
excessive interest shall be deemed a partial prepayment of principal and treated
hereunder as such for all purposes; and, if the principal hereof is paid in
full, any remaining excess shall be refunded to Maker. In determining whether
or not the interest paid or payable, under any specific contingency, exceeds the
highest lawful interest rate, Maker and Payee shall, to the maximum extent
permitted under applicable law (a) characterize any nonprincipal payment
-2-
<PAGE>
as an expense, fee or premium rather than as interest, (b) exclude prepayments
and the effects thereof and (c) pro rate, allocate and spread the total amount
of interest throughout the entire contemplated term hereof; provided that if the
indebtedness evidenced hereby is paid and performed in full prior to the end of
the full contemplated term hereof, and if the interest received for the actual
period of existence thereof exceeds the highest lawful interest rate, Payee
shall either apply as principal reduction or refund to Maker the amount of such
excess, and in such event, Payee shall not be subject to any penalties provided
by any laws for contracting for, charging or receiving interest in excess of the
highest lawful interest rate.
7. Governing Law. This Note shall be governed by and construed in
-------------
accordance with the substantive laws (but not the rules governing conflicts of
laws) of the State of Texas.
8. Notice. Any notice or demand given hereunder by Payee shall be deemed
------
to have been given and received (a) when actually received by Maker, if
delivered in person, or (b) if mailed, on the earlier of the date actually
received or (whether ever received or not) three Business Days (as hereinafter
defined) after a letter containing such notice, certified or registered with
postage prepaid, addressed to Maker, is deposited in the United States mail.
The address of Maker is 5500 Airport Freeway, Fort Worth, Texas 76117, or such
other address as Maker shall advise Payee by certified or registered letter by
this same procedure.
9. Severability. In case any one or more of the provisions contained in
------------
this Note shall for any reason be held to be invalid, illegal and unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision hereof.
EXECUTED as of the date first set forth above.
STEVENS INTERNATIONAL, INC.
By: /s/ Richard I. Stevens
----------------------------------------
Richard I. Stevens, President
-3-
<PAGE>
EXHIBIT 11.1
STEVENS INTERNATIONAL, INC. AND SUBSIDIARIES
COMPUTATIONS OF NET INCOME PER COMMON SHARE
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1995 1996
-------- ---------
<S> <C> <C>
Primary and fully diluted:
Weighted average shares outstanding............... 9,389 9,451
Assumed exercise of Series A and B stock options
(Treasury stock method)......................... 220 --
------ -------
Total common share equivalents...................... 9,609 9,451
====== =======
Net income (loss)................................... 1,448 (1,085)
====== =======
Per share amounts -- Primary and fully diluted:
Net income (loss)................................... $ 0.15 $ (0.11)
====== =======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF STEVENS INTERNATIONAL, INC. AND
SUBSIDIARIES AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS THEN ENDED AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 22,985
<ALLOWANCES> 687
<INVENTORY> 25,948
<CURRENT-ASSETS> 66,328
<PP&E> 56,141
<DEPRECIATION> 24,484
<TOTAL-ASSETS> 113,356
<CURRENT-LIABILITIES> 30,099
<BONDS> 32,235
0
0
<COMMON> 945
<OTHER-SE> 43,177
<TOTAL-LIABILITY-AND-EQUITY> 113,356
<SALES> 22,613
<TOTAL-REVENUES> 22,613
<CGS> 18,794
<TOTAL-COSTS> 18,794
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 917
<INCOME-PRETAX> (2,060)
<INCOME-TAX> (975)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,451)
<EPS-PRIMARY> (0.11)
<EPS-DILUTED> (0.11)
</TABLE>
