UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 September 30, 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 0-19835
DAY RUNNER, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-3624280
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
15295 Alton Parkway
Irvine, California 92618
(Address and zip code of principal executive offices)
(714) 680-3500
(Registrant's telephone number, including area code)
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 |X| No|_|
Indicate the number of shares outstanding of each of the issuer's
classes of Common Stock, as of the latest practicable date:
Class Number of Shares Outstanding at November 8, 1996
- --------------------- -----------------------------------------------
Common Stock, 6,329,771
$0.001 par value
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<CAPTION>
DAY RUNNER, INC.
INDEX
Page Reference
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COVER PAGE....................................................................................... 1
INDEX ........................................................................................ 2
PART I -- FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets
September 30, 1996 and June 30, 1996...................................... 3
Consolidated Statements of Income
Three Months Ended September 30, 1996 and 1995............................ 4
Consolidated Statements of Cash Flows
Three Months Ended September 30, 1996 and 1995............................ 5
Notes to Consolidated Financial Statements.................................. 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations............................... 9
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K............................................ 13
SIGNATURES....................................................................................... 14
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<PAGE>
PART I -- FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements.
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DAY RUNNER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS
September 30, June 30,
1996 1996
------------- ---------
(unaudited) (audited)
<S> <C> <C>
Current assets:
Cash and cash equivalents....................................................... $ 27,462 $ 19,765
Accounts receivable (less allowances for doubtful accounts and sales returns
and other allowances of $7,632 and $7,374 at September 30, 1996 and
June 30, 1996, respectively)............................................... 22,517 21,441
Inventories..................................................................... 17,797 20,040
Prepaid expenses and other current assets....................................... 1,519 1,710
Income taxes receivable......................................................... 1,930
Deferred income taxes........................................................... 5,200 5,200
--------- ---------
Total current assets....................................................... 74,495 70,086
--------- ---------
Property and equipment -- At cost:
Machinery and equipment......................................................... 7,891 6,942
Data processing equipment and software.......................................... 4,966 4,707
Leasehold improvements.......................................................... 1,528 1,514
Vehicles........................................................................ 202 202
--------- ---------
Total...................................................................... 14,587 13,365
Less accumulated depreciation and amortization.................................. 6,550 5,864
--------- ---------
Property and equipment -- net................................................... 8,037 7,501
--------- ---------
Other assets......................................................................... 340 344
--------- ---------
Total assets......................................................................... $ 82,872 $ 77,931
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................................ $ 7,411 $ 8,063
Accrued expenses................................................................ 11,236 10,370
Income taxes payable............................................................ 654
--------- ---------
Total current liabilities.................................................. 19,301 18,433
--------- ---------
Stockholders' equity:
Preferred stock (1,000,000 shares authorized, $0.001 par value; no shares issued
or outstanding)..............................................................
Common stock (14,000,000 shares authorized, $0.001 par value; 6,329,771 and
6,304,771 issued and outstanding at September 30, 1996 and
June 30, 1996, respectively).............................................. 6 6
Additional paid-in capital...................................................... 23,088 22,869
Retained earnings............................................................... 40,468 36,620
Cumulative translation adjustment............................................... 9 3
--------- ---------
Total stockholders' equity................................................. 63,571 59,498
--------- ---------
Total liabilities and stockholders' equity........................................... $ 82,872 $ 77,931
========= =========
See accompanying notes to consolidated financial statements.
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<CAPTION>
DAY RUNNER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
September 30,
1996 1995
-------- -------
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Sales................................................................................... $ 33,549 $ 32,806
Cost of goods sold...................................................................... 16,092 16,351
--------- ---------
Gross profit............................................................................ 17,457 16,455
--------- ---------
Operating expenses:
Selling, marketing and distribution................................................ 7,860 7,471
General and administrative......................................................... 3,394 3,519
--------- ---------
Total operating expenses....................................................... 11,254 10,990
--------- ---------
Income from operations.................................................................. 6,203 5,465
Net interest income..................................................................... 210 54
--------- ---------
Income before provision for income taxes................................................ 6,413 5,519
Provision for income taxes.............................................................. 2,565 2,346
--------- ---------
Net income.............................................................................. $ 3,848 $ 3,173
========= =========
Earnings per common and common equivalent share......................................... $ 0.57 $ 0.49
========= ========
Weighted average number of common and common equivalent shares.......................... 6,710 6,445
========= =========
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
DAY RUNNER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
Three Months Ended
September 30,
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income.................................................................... $ 3,848 $ 3,173
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization.............................................. 756 630
Provision for losses on accounts receivable................................ 113 129
Changes in operating assets and liabilities:
Accounts receivable..................................................... (1,187) 1,269
Inventories............................................................. 2,202 1,196
Prepaid expenses and other current assets............................... 193 137
Income taxes receivable................................................. 1,930
Accounts payable........................................................ (601) (2,079)
Accrued expenses........................................................ 864 1,930
Income taxes payable.................................................... 654 (264)
--------- ---------
Net cash provided by operating activities........................... 8,772 6,121
--------- ---------
Cash flows from investing activities:
Acquisition of property and equipment......................................... (1,291) (683)
Other assets.................................................................. 5 (6)
--------- ----------
Net cash used in investing activities.................................... (1,286) (689)
---------- ---------
Cash flows from financing activities:
Payment of long-term debt..................................................... (38)
Payment of capital lease obligations.......................................... (5)
Net proceeds from issuance of common stock.................................... 219 586
--------- ---------
Net cash provided by financing activities................................ 219 543
--------- ---------
Effect of exchange rate changes on cash and cash equivalents...................... (8) 22
---------- ---------
Net increase in cash and cash equivalents......................................... 7,697 5,997
Cash and cash equivalents at beginning of period.................................. 19,765 4,269
--------- ---------
Cash and cash equivalents at end of period........................................ $ 27,462 $ 10,266
========= =========
See accompanying notes to consolidated financial statements.
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<PAGE>
DAY RUNNER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information relating to the three months ended
September 30, 1996 and 1995 is unaudited)
1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES
The accompanying consolidated balance sheet as of September 30, 1996
and the consolidated statements of income and statements of cash flows for the
three-month periods ended September 30, 1996 and 1995 are unaudited but, in the
opinion of management, include all adjustments consisting of normal, recurring
accruals necessary for a fair presentation of the financial position and the
results of operations for such periods. Certain information and footnote
disclosures normally included in financial statements prepared in conformity
with generally accepted accounting principles have been omitted pursuant to the
requirements of the Securities and Exchange Commission, although the Company
believes that the disclosures included in the financial statements included
herein are adequate to make the information therein not misleading. The
financial statements included herein should be read in conjunction with the
Company's audited consolidated financial statements for the year ended June 30,
1996, and the notes thereto, which are included in the Company's Annual Report
on Form 10-K.
The results of operations for the three months ended September 30, 1996
and 1995 are not necessarily indicative of the results for a full year. The
seasonality of the Company's financial results and the unpredictability of the
factors affecting such seasonality make the Company's quarterly and yearly
financial results difficult to predict and subject to significant fluctuation.
2. INVENTORIES
Inventories consist of the following (in thousands):
September 30, June 30,
1996 1996
---- ----
Raw materials................... $ 5,450 $ 8,212
Work in process................. 437 327
Finished goods.................. 11,910 11,501
---------- ----------
Total.................. $ 17,797 $ 20,040
========== ==========
3. LINE OF CREDIT
Effective November 1, 1996, the Company amended its credit agreement
with a bank. The amended terms of the agreement allow the Company to borrow up
to $5,000,000 under a line of credit and open commercial letters of credit or
open standby letters of credit up to $5,000,000 through November 1, 1997.
However, in no event may the aggregate of borrowings and letters of credit
exceed $5,000,000. Commercial letters of credit and standby letters of credit
shall be issued for a term not to exceed 180 days and shall not expire
subsequent to February 1, 1998 and May 1, 1998, respectively. Borrowings are
collateralized by accounts receivable, inventories and certain other assets.
Borrowings under the line of credit bear interest at either the bank's prime
rate (8.25% at September 30, 1996) or at LIBOR (5.43% at September 30, 1996)
plus 1.75%, at the Company's election. The credit agreement requires the Company
to maintain total debt to tangible net worth of not more than 1.5 to 1 and to
maintain certain specified operating ratios. The agreement also requires that
the Company obtain the bank's approval to declare or pay dividends in excess of
$200,000.
4. STOCKHOLDERS' EQUITY
During the three months ended September 30, 1996, a director exercised
warrants to purchase an aggregate of 25,000 shares of the Company's Common Stock
for an aggregate of $218,750.
5. OTHER TRANSACTIONS
During fiscal 1995 and calendar 1993, the Company entered into barter
agreements whereby it delivered $132,000 and $1,098,000, respectively, of its
inventory in exchange for future advertising credits and other items. The
credits, which expire in October 1998, are valued at the lower of the Company's
cost or market value of the inventory transferred. The Company has recorded
barter credits of $36,000 in prepaid expenses and other current assets at
September 30, 1996 and at June 30, 1996. At September 30, 1996 and June 30,
1996, other assets include $279,000 of such credits. These credits are charged
to expense as they are used. During the three months ended September 30, 1996
and 1995, no amounts were charged to expense for barter credits used for
advertising.
The Company assesses the recoverability of barter credits periodically.
Factors considered in evaluating the recoverability include management's plans
with respect to advertising and other expenditures for which barter credits can
be used. Any impairment losses are charged to operations as they are
determinable. During the three months ended September 30, 1995, the Company
charged $220,000 to operations for such impairment losses. No amounts were
charged to operations during the quarter ended September 30, 1996 for such
impairment losses.
6. EARNINGS PER SHARE
Earnings per share information is computed using the weighted average
number of shares of Common Stock outstanding and dilutive common equivalent
shares from stock options and warrants. For the three months ended September 30,
1995, the Company used the treasury stock method of computing earnings per
share. For the three months ended September 30, 1996, the Company used the
modified treasury stock method of computing earnings per share. Under generally
accepted accounting principles, there is a computational difference between the
treasury stock method and the modified treasury stock method which is based on
the number of shares obtainable upon exercise of options and warrants. If the
number of shares obtainable upon exercise of outstanding options and warrants
exceeds 20% of the number of common shares outstanding at the end of the period,
the modified treasury stock method is used. Since the number of shares so
obtainable exceeded the 20% threshold for the three months ended September 30,
1996, the Company used the modified treasury stock method in calculating
earnings per share for that period.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with, and is
qualified in its entirety by, the Consolidated Financial Statements and Notes
thereto included elsewhere in this Quarterly Report. Historical results and
percentage relationships among any amounts included in the Consolidated
Financial Statements are not necessarily indicative of trends in operating
results for any future period.
OVERVIEW
Since the Company's introduction of the first Day Runner System organizer
in 1982, the Company's revenues have been generated by increased unit sales
primarily of organizers and planners and secondarily of refills. Sales increases
have resulted from higher sales of existing products, new products and product
line extensions. The Company focuses the great majority of its product
development, sales and marketing efforts on the office products channel, which
accounted for 53.0% of first quarter fiscal 1997 sales, and the mass market
channel, which accounted for 37.2% of first quarter fiscal 1997 sales.
Results of Operations
The following table sets forth, for the periods indicated, the
percentages that selected income statement items bear to sales and the
percentage change in the dollar amounts of such items.
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<CAPTION>
Percentage
Percentage Change
of Sales Three
Three Months Ended
Months Ended September 30,
September 30, 1995
1996 1995 to 1996
------ ---------- ------------
<S> <C> <C> <C>
Sales.................................................................. 100.0% 100.0% 2.3%
Cost of goods sold..................................................... 48.0 49.8 (1.6)
----- -----
Gross profit........................................................... 52.0 50.2 6.1
----- -----
Operating expenses:
Selling, marketing and distribution................................ 23.4 22.8 5.2
General and administrative......................................... 10.1 10.7 (3.6)
----- ----
Total operating expenses........................................ 33.5 33.5 2.4
----- -----
Income from operations................................................. 18.5 16.7 13.5
Net interest income.................................................... 0.6 0.1 288.9
---- ----
Income before provision for income taxes............................... 19.1 16.8 16.2
Provision for income taxes............................................. 7.6 7.1 9.3
---- ----
Net income............................................................. 11.5% 9.7% 21.3
==== ====
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The following tables set forth, for the periods indicated, the
Company's approximate sales by product category and distribution channel and as
a percentage of total sales.
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<CAPTION>
Three Months Ended September 30,
Product Category: 1996 1995
- ----------------- -------------------- --------------------
(unaudited; dollars in thousands)
<S> <C> <C> <C> <C>
Organizers and planners.............................. $ 21,061 62.8% $ 20,175 61.5%
Refills.............................................. 10,444 31.1 11,900 36.3
Other................................................ 2,044 6.1 731 2.2
-------- ---- --------- ----
Total............................................ $ 33,549 100.0% $ 32,806 100.0%
======== ===== ========= =====
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<TABLE>
Three Months Ended September 30,
Distribution Channel: 1996 1995
- --------------------- ------------------- --------------------
(unaudited; dollars in thousands)
<S> <C> <C> <C> <C>
Office products...................................... $ 17,783 53.0% $ 16,622 50.7%
Mass market.......................................... 12,480 37.2 11,767 35.9
Foreign customers.................................... 1,364 4.1 2,182 6.6
Other................................................ 1,922 5.7 2,235 6.8
-------- ----- --------- -----
Total............................................ $33,549 100.0% $ 32,806 100.0%
======== ====== ========= =====
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THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED WITH
THE THREE MONTHS ENDED SEPTEMBER 30, 1995
SALES. Sales consist of revenues from gross product shipments net of
allowances for returns, rebates and credits. In the first quarter of fiscal
1997, sales increased by $743,000, or 2.3%, primarily due to increased unit
sales of miscellaneous products grouped together as "other." Sales of "other"
products grew by $1,313,000, or 179.6%; sales of organizers and planners grew by
$886,000, or 4.4%; and sales of refills (which include calendars and
accessories) decreased by $1,456,000, or 12.2%. Product sales were primarily to
the office products channel and secondarily to mass market customers. Sales to
office products customers grew by $1,161,000, or 7.0%, and sales to mass market
customers grew by $713,000, or 6.1%. Higher sales to these channels were
partially offset by declines of $818,000, or 37.5%, in sales to foreign
customers, and $313,000, or 14.0%, in sales to miscellaneous customers grouped
together as "other."
GROSS PROFIT. Gross profit is sales less cost of goods sold, which is
comprised of materials, labor and manufacturing overhead. Gross profit may be
affected by, among other things, product mix, production levels, changes in
vendor and customer prices and discounts, sales volume and growth rate,
purchasing and manufacturing efficiencies, tariffs, duties and inventory
carrying costs. Gross profit as a percentage of sales increased from 50.2% in
the first quarter of fiscal 1996 to 52.0% in the first quarter of fiscal 1997
primarily as a result of lower discounts to customers.
OPERATING EXPENSES. Total operating expenses increased by $264,000, or
2.4%, in the first quarter of fiscal 1997 compared with the first quarter of
fiscal 1996, but remained flat as a percentage of sales at 33.5%. Due primarily
to higher amortization of displays, selling, marketing and distribution expenses
increased $389,000 and increased as a percentage of sales from 22.8% to 23.4%.
Due primarily to a decrease in legal and accounting costs, general and
administrative expenses declined by $125,000 and from 10.7% to 10.1% as a
percentage of sales.
NET INTEREST INCOME. Primarily because of the Company's higher levels
of cash available for short-term investment, net interest income in the first
quarter of fiscal 1997 increased by $156,000 compared with the first quarter of
fiscal 1996 and increased as a percentage of sales from 0.1% to 0.6%.
INCOME TAXES. Primarily because of the improved financial results of
the Company's Hong Kong subsidiary, the Company's first quarter fiscal 1997
effective tax rate was 40.0%, compared with 42.5% for the first quarter of
fiscal 1996.
SEASONAL FLUCTUATIONS
The Company has historically experienced and expects to continue to
experience significant seasonal fluctuations in its sales and other financial
results that it believes have resulted and will continue to result primarily
from its customers' and users' buying patterns. These buying patterns have
typically adversely affected orders for the Company's products in the third
quarter of each fiscal year.
Although it is difficult to predict the future seasonality of sales,
the Company believes that future seasonality should be influenced at least in
part by customer and user buying patterns similar to those that have
historically affected the Company. Quarterly financial results are also affected
by timing and size of orders from large customers, new product introductions and
line extensions, timing and size of orders for new products, changes in product
mix, customer mix, competition, large customers' inventory management, vendor
and customer pricing, general economic conditions, the health of the retail
environment, production levels, supply constraints, manufacturing delays and
supplier performance. The seasonality of the Company's financial results and the
unpredictability of the factors affecting such seasonality make the Company's
quarterly and yearly financial results difficult to predict and subject to
significant fluctuation.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents at September 30, 1996 increased
to $27,462,000 from $19,765,000 at June 30, 1996. In the first quarter of fiscal
1997, net cash of $8,772,000 and $219,000 provided by operating activities and
financing activities, respectively, offset net cash of $1,286,000 used in
investing activities. Of the $8,772,000 net amount provided by the Company's
operating activities, $3,848,000 was provided by net income, $2,202,000 was
provided by a decrease in inventories and $1,930,000 was provided by a decrease
in income taxes receivable, which amounts were partially offset by an increase
of $1,187,000 in accounts receivable. The $219,000 net amount provided by the
Company's financing activities was provided by the issuance of Common Stock upon
the exercise of warrants. The $1,286,000 used in the Company's investing
activities was used primarily to acquire machinery and equipment and secondarily
computer equipment and software.
Primarily because of the timing of orders and shipments, accounts
receivable (net) increased by 5.0% in the first quarter of fiscal 1997 from the
fiscal 1996 year-end amount. Compared with the September 30, 1995 amount,
accounts receivable increased by 25.3% primarily because of terms given to
certain large customers. The average collection period of accounts receivable at
September 30, 1996 was 45 days, compared with 43 and 42 days at June 30, 1996
and September 30, 1995, respectively.
Inventories decreased by 11.2% compared with the fiscal 1996 year-end
amount and by 29.8% compared with the September 30, 1995 amount primarily
because of the Company's better control and management of inventory levels.
The Company's bank line of credit allows for borrowings and the
issuance of commercial or standby letters of credit up to an aggregate of
$5,000,000. Borrowings under the line of credit bear interest at either the
bank's prime rate or at LIBOR plus 1.75%, at the Company's election. At
September 30, 1996, Day Runner had no borrowings under its bank line of credit
but had used the line of credit to secure outstanding letters of credit of
approximately $1,000,000, which reduced the availability under the line of
credit to approximately $4,000,000. Effective November 1, 1996, the Company
amended its credit agreement to be due and payable in full on November 1, 1997.
(See Note 3 to Consolidated Financial Statements.)
The Company has not incurred significant losses or gains from foreign
currency exchange rate fluctuations. The continuing expansion of the Company's
Hong Kong, Mexican and United Kingdom subsidiaries could, however, result in
larger gains or losses as a result of fluctuations in foreign currency exchange
rates as those subsidiaries conduct business in whole or in part in foreign
currencies.
The Company believes that cash flow from operations, vendor credit, its
existing working capital and its bank line of credit will be sufficient to
satisfy the Company's anticipated cash requirements at least through the next 12
months. Nonetheless, the Company may seek additional sources of capital as
necessary or appropriate to finance acquisitions or to otherwise finance the
Company's growth or operations; however, there can be no assurance that such
funds if needed will be available on favorable terms, if at all.
FORWARD LOOKING STATEMENTS
With the exception of the actual reported financial results and other
historical information, the statements made in the Management's Discussion and
Analysis of Financial Condition and Results of Operations are forward looking
statements that involve risks and uncertainties that could affect actual future
results. Such risk and uncertainties include, but are not limited to: timing and
size of orders from large customers, timing and size of orders of new products,
competition, large customers' inventory management, general economic conditions,
the health of the retail environment, supply constraints, supplier performance
and other risks indicated in the Company's filings with the Securities and
Exchange Commission.
<PAGE>
PART II --OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Credit Agreement dated as of May 1, 1993 between the
Registrant and Wells Fargo Bank, National
Association, including Line of Credit Note(1),
Assumption and Consent to Merger Agreement dated as
of June 30, 1993, First Amendment to Credit Agreement
dated as of December 15, 1993(2), Second Amendment to
Credit Agreement dated as of May 1, 1994, including
Line of Credit Note(3), Third Amendment to Credit
Agreement dated as of October 1, 1994, including Line
of Credit Note(4), Fourth Amendment to Credit
Agreement dated as of October 2, 1995, including
Revolving Line of Credit Note(5) and Fifth Amendment
to Credit Agreement dated as of November 1, 1996,
including Revolving Line of Credit Note.
27.1 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
quarter ended September 30, 1996.
(1)Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q (File No. 0-19835) filed with the Commission on August 16, 1993.
(2)Incorporated by reference to the Registrant's Annual Report on Form 10-K
(File No. 0-19835) filed with the Commission on March 30, 1994.
(3)Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q (File No. 0-19835) filed with the Commission on May 16, 1994.
(4)Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q (File No. 0-19835) filed with the Commission on November 14, 1994.
(5)Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q (File No. 0-19835) filed with the Commission on November 13, 1995.
<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.
Date: November 13, 1996
Day Runner, Inc.
By: /s/ MARK A. VIDOVICH
----------------------
Mark A. Vidovich
Chairman of the Board and
Chief Executive Officer
By: /s/ DENNIS K. MARQUARDT
-----------------------
Dennis K. Marquardt
Executive Vice President, Finance
& Administration and
Chief Financial Officer
<PAGE>
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
SEQUENTIALLY
NUMBERED
EXHIBIT NUMBER AND DESCRIPTION PAGE
<S> <C>
10.1 Fifth Amendment to Credit Agreement dated as of November 1, 1996 between the
Registrant and Wells Fargo Bank, National Association, including Revolving
Line of Credit Note.....................................................................
27.1 Financial Data Schedule.................................................................
</TABLE>
FIFTH AMENDMENT TO CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is entered
into as of November 1, 1996, by and between DAY RUNNER, INC., a Delaware
corporation ("Borrower"), and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank").
RECITALS
WHEREAS, Borrower is currently indebted to Bank pursuant to the terms
and conditions of that certain Credit Agreement between Borrower and Bank dated
as of May 1, 1993, as amended from time to time ("Credit Agreement").
WHEREAS, Bank and Borrower have agreed to certain changes in the terms
and conditions set forth in the Credit Agreement and have agreed to amend the
Credit Agreement to reflect said changes.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree that the Credit
Agreement shall be amended as follows:
1. Section 1.1(a) is hereby amended by deleting "October 31, 1996" as
the last day on which Bank will make advances under the Line of Credit, and by
substituting for said date "November 1, 1997," with such change to be effective
upon the execution and delivery to Bank of a promissory note substantially in
the form of Exhibit A attached hereto (which promissory note shall replace and
be deemed the Line of Credit Note defined in and made pursuant to the Credit
Agreement) and all other contracts, instruments and documents required by Bank
to evidence such change.
2. Section 1.1(c) is hereby amended (a) by deleting "October 31, 1996"
as the last day on which Bank will issue Standby Letters of Credit under the
subfeature therefor under the Line of Credit, and by substituting for said date
"November 1, 1997," and (b) by deleting "February 1, 1997" as the last date any
such Standby Letter of Credit may expire, and by substituting for said date "May
1, 1998."
3. Section 1.1(d) is hereby amended (a) by deleting "October 31, 1996"
as the last day on which Bank will issue Commercial Letters of Credit under the
subfeature therefor under the Line of Credit, and by substituting for said date
"November 1, 1997," and (b) by deleting "February 1, 1997" as the last date any
such Commercial Letter of Credit may expire, and by substituting for said date
"February 1, 1998."
<PAGE>
4. The following is hereby added to the Credit Agreement as Section 7.10:
"SECTION 7.10. ARBITRATION.
(a) Arbitration. Upon the demand of any party, any Dispute
shall be resolved by binding arbitration (except as set forth in (e)
below) in accordance with the terms of this Agreement. A "Dispute"
shall mean any action, dispute, claim or controversy of any kind,
whether in contract or tort, statutory or common law, legal or
equitable, now existing or hereafter arising under or in connection
with, or in any way pertaining to, any of the Loan Documents, or any
past, present or future extensions of credit and other activities,
transactions or obligations of any kind related directly or indirectly
to any of the Loan Documents, including without limitation, any of the
foregoing arising in connection with the exercise of any self-help,
ancillary or other remedies pursuant to any of the Loan Documents. Any
party may by summary proceedings bring an action in court to compel
arbitration of a Dispute. Any party who fails or refuses to submit to
arbitration following a lawful demand by any other party shall bear all
costs and expenses incurred by such other party in compelling
arbitration of any Dispute.
(b) Governing Rules. Arbitration proceedings shall be
administered by the American Arbitration Association ("AAA") or such
other administrator as the parties shall mutually agree upon in
accordance with the AAA Commercial Arbitration Rules. All Disputes
submitted to arbitration shall be resolved in accordance with the
Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision in any of the
Loan Documents. The arbitration shall be conducted at a location in
California selected by the AAA or other administrator. If there is any
inconsistency between the terms hereof and any such rules, the terms
and procedures set forth herein shall control. All statutes of
limitation applicable to any Dispute shall apply to any arbitration
proceeding. All discovery activities shall be expressly limited to
matters directly relevant to the Dispute being arbitrated. Judgment
upon any award rendered in an arbitration may be entered in any court
having jurisdiction; provided however, that nothing contained herein
shall be deemed to be a waiver by any party that is a bank of the
protections afforded to it under 12 U.S.C. ss.91 or any similar
applicable state law.
(c) No Waiver; Provisional Remedies, Self-Help and
Foreclosure. No provision hereof shall limit the right of any party to
exercise self-help remedies such as setoff, foreclosure against or sale
of any real or personal property collateral or security, or to obtain
provisional or ancillary remedies, including without limitation
injunctive relief, sequestration, attachment, garnishment or the
appointment of a receiver, from a court of competent jurisdiction
before, after or during the pendency of any arbitration or other
proceeding. The exercise of any such remedy shall not waive the right
of any party to compel arbitration or reference hereunder.
(d) Arbitrator Qualifications and Powers; Awards. Arbitrators
must be active members of the California State Bar or retired judges of
the state or federal judiciary of California, with expertise in the
substantive laws applicable to the subject matter of the Dispute.
Arbitrators are empowered to resolve Disputes by summary rulings in
response to motions filed prior to the final arbitration hearing.
Arbitrators (i) shall resolve all Disputes in accordance with the
substantive law of the state of California, (ii) may grant any remedy
or relief that a court of the state of California could order or grant
within the scope hereof and such ancillary relief as is necessary to
make effective any award, and (iii) shall have the power to award
recovery of all costs and fees, to impose sanctions and to take such
other actions as they deem necessary to the same extent a judge could
pursuant to the Federal Rules of Civil Procedure, the California Rules
of Civil Procedure or other applicable law. Any Dispute in which the
amount in controversy is $5,000,000 or less shall be decided by a
single arbitrator who shall not render an award of greater than
$5,000,000 (including damages, costs, fees and expenses). By submission
to a single arbitrator, each party expressly waives any right or claim
to recover more than $5,000,000. Any Dispute in which the amount in
controversy exceeds $5,000,000 shall be decided by majority vote of a
panel of three arbitrators; provided however, that all three
arbitrators must actively participate in all hearings and
deliberations.
(e) Judicial Review. Notwithstanding anything herein to the
contrary, in any arbitration in which the amount in controversy exceeds
$25,000,000, the arbitrators shall be required to make specific,
written findings of fact and conclusions of law. In such arbitrations
(i) the arbitrators shall not have the power to make any award which is
not supported by substantial evidence or which is based on legal error,
(ii) an award shall not be binding upon the parties unless the findings
of fact are supported by substantial evidence and the conclusions of
law are not erroneous under the substantive law of the state of
California, and (iii) the parties shall have in addition to the grounds
referred to in the Federal Arbitration Act for vacating, modifying or
correcting an award the right to judicial review of (A) whether the
findings of fact rendered by the arbitrators are supported by
substantial evidence, and (B) whether the conclusions of law are
erroneous under the substantive law of the state of California.
Judgment confirming an award in such a proceeding may be entered only
if a court determines the award is supported by substantial evidence
and not based on legal error under the substantive law of the state of
California.
(f) Real Property Collateral; Judicial Reference.
Notwithstanding anything herein to the contrary, no Dispute shall be
submitted to arbitration if the Dispute concerns indebtedness secured
directly or indirectly, in whole or in part, by any real property
unless (i) the holder of the mortgage, lien or security interest
specifically elects in writing to proceed with the arbitration, or (ii)
all parties to the arbitration waive any rights or benefits that might
accrue to them by virtue of the single action rule statute of
California, thereby agreeing that all indebtedness and obligations of
the parties, and all mortgages, liens and security interests securing
such indebtedness and obligations, shall remain fully valid and
enforceable. If any such Dispute is not submitted to arbitration, the
Dispute shall be referred to a referee in accordance with California
Code of Civil Procedure Section 638 et seq., and this general reference
agreement is intended to be specifically enforceable in accordance with
said Section 638. A referee with the qualifications required herein for
arbitrators shall be selected pursuant to the AAA's selection
procedures. Judgment upon the decision rendered by a referee shall be
entered in the court in which such proceeding was commenced in
accordance with California Code of Civil Procedure Sections 644 and
645.
(g) Miscellaneous. To the maximum extent practicable, the AAA,
the arbitrators and the parties shall take all action required to
conclude any arbitration proceeding within 180 days of the filing of
the Dispute with the AAA. No arbitrator or other party to an
arbitration proceeding may disclose the existence, content or results
thereof, except for disclosures of information by a party required in
the ordinary course of its business, by applicable law or regulation,
or to the extent necessary to exercise any judicial review rights set
forth herein. If more than one agreement for arbitration by or between
the parties potentially applies to a Dispute, the arbitration provision
most directly related to the Loan Documents or the subject matter of
the Dispute shall control. This arbitration provision shall survive
termination, amendment or expiration of any of the Loan Documents or
any relationship between the parties."
5. Except as specifically provided herein, all terms and conditions of
the Credit Agreement remain in full force and effect, without waiver or
modification. All terms defined in the Credit Agreement shall have the same
meaning when used in this Amendment. This Amendment and the Credit Agreement
shall be read together, as one document.
6. Borrower hereby remakes all representations and warranties contained
in the Credit Agreement and reaffirms all covenants set forth therein. Borrower
further certifies that as of the date of this Amendment there exists no Event of
Default as defined in the Credit Agreement, nor any condition, act or event
which with the giving of notice or the passage of time or both would constitute
any such Event of Default.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the day and year first written above.
DAY RUNNER, INC. WELLS FARGO BANK,
NATIONAL ASSOCIATION
By: /s/ Dennis Marquardt /s/Clare Gurbach
-------------------- ----------------
Title: Executive Vice President Clare Gurbach
Finance & Administration Vice President
<PAGE>
REVOLVING LINE OF CREDIT NOTE
$5,000,000.00 Los Angeles, California
November 1, 1996
FOR VALUE RECEIVED, the undersigned DAY RUNNER, INC. ("Borrower")
promises to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank")
at its office at Los Angeles RCBO, 333 South Grand Avenue, Third Floor, Los
Angeles, California, or at such other place as the holder hereof may designate,
in lawful money of the United States of America and in immediately available
funds, the principal sum of Five Million Dollars ($5,000,000.00), or so much
thereof as may be advanced and be outstanding, with interest thereon, to be
computed on each advance from the date of its disbursement as set forth herein.
DEFINITIONS:
As used herein, the following terms shall have the meanings set forth
after each, and any other term defined in this Note shall have the meaning set
forth at the place defined:
(a) "Business Day" means any day except a Saturday, Sunday or any other
day on which commercial banks in California are authorized or required by law to
close.
(b) "Fixed Rate Term" means a period commencing on a Business Day and
continuing for one (1), two (2), three (3) or six (6) months, as designated by
Borrower, during which all or a portion of the outstanding principal balance of
this Note bears interest determined in relation to LIBOR; provided however, that
no Fixed Rate Term may be selected for a principal amount less than Five Hundred
Thousand Dollars ($500,000.00); and provided further, that no Fixed Rate Term
shall extend beyond the scheduled maturity date hereof. If any Fixed Rate Term
would end on a day which is not a Business Day, then such Fixed Rate Term shall
be extended to the next succeeding Business Day.
(c) "LIBOR" means the rate per annum (rounded upward, if necessary, to
the nearest whole 1/8 of 1%) and determined pursuant to the following formula:
LIBOR = Base LIBOR
-----------------------------------
100% - LIBOR Reserve Percentage
<PAGE>
(i) "Base LIBOR" means the rate per annum for United States dollar deposits
quoted by Bank as the Inter-Bank Market Offered Rate, with the understanding
that such rate is quoted by Bank for the purpose of calculating effective rates
of interest for loans making reference thereto, on the first day of a Fixed Rate
Term for delivery of funds on said date for a period of time approximately equal
to the number of days in such Fixed Rate Term and in an amount approximately
equal to the principal amount to which such Fixed Rate Term applies. Borrower
understands and agrees that Bank may base its quotation of the Inter-Bank Market
Offered Rate upon such offers or other market indicators of the Inter-Bank
Market as Bank in its discretion deems appropriate including, but not limited
to, the rate offered for U.S. dollar deposits on the London Inter-Bank Market.
(ii) "LIBOR Reserve Percentage" means the reserve percentage prescribed by
the Board of Governors of the Federal Reserve System (or any successor) for
"Eurocurrency Liabilities" (as defined in Regulation D of the Federal Reserve
Board, as amended), adjusted by Bank for expected changes in such reserve
percentage during the applicable Fixed Rate Term.
(d) "Prime Rate" means at any time the rate of interest most recently
announced within Bank at its principal office as its Prime Rate, with the
understanding that the Prime Rate is one of Bank's base rates and serves as the
basis upon which effective rates of interest are calculated for those loans
making reference thereto, and is evidenced by the recording thereof after its
announcement in such internal publication or publications as Bank may designate.
INTEREST:
(a) Interest. The outstanding principal balance of this Note shall bear
interest (computed on the basis of a 360-day year, actual days elapsed) either
(i) at a fluctuating rate per annum equal to the Prime Rate in effect from time
to time, or (ii) at a fixed rate per annum determined by Bank to be one and
three quarters percent (1.75%) above LIBOR in effect on the first day of the
applicable Fixed Rate Term. When interest is determined in relation to the Prime
Rate, each change in the rate of interest hereunder shall become effective on
the date each Prime Rate change is announced within Bank. With respect to each
LIBOR selection hereunder, Bank is hereby authorized to note the date, principal
amount, interest rate and Fixed Rate Term applicable thereto and any payments
made thereon on Bank's books and records (either manually or by electronic
entry) and/or on any schedule attached to this Note, which notations shall be
prima facie evidence of the accuracy of the information noted.
(b) Selection of Interest Rate Options. At any time any portion of this
Note bears interest determined in relation to LIBOR, it may be continued by
Borrower at the end the Fixed Rate Term applicable thereto so that all or a
portion thereof bears interest determined in relation to the Prime Rate or to
LIBOR for a new Fixed Rate Term designated by Borrower. At any time any portion
of this Note bears interest determined in relation to the Prime Rate, Borrower
may convert all or a portion thereof so that it bears interest determined in
relation to LIBOR for a Fixed Rate Term designated by Borrower. At such time as
Borrower requests an advance hereunder or wishes to select a LIBOR option for
all or a portion of the outstanding principal balance hereof, and at the end of
each Fixed Rate Term, Borrower shall give Bank notice specifying: (i) the
interest rate option selected by Borrower; (ii) the principal amount subject
thereto; and (iii) for each LIBOR selection, the length of the applicable Fixed
Rate Term. Any such notice may be given by telephone so long as, with respect to
each LIBOR selection, (A) Bank receives written confirmation from Borrower not
later than three (3) Business Days after such telephone notice is given, and (B)
such notice is given to Bank prior to 10:00 a.m., California time, on the first
day of the Fixed Rate Term. For each LIBOR option requested hereunder, Bank will
quote the applicable fixed rate to Borrower at approximately 10:00 a.m.,
California time, on the first day of the Fixed Rate Term. If Borrower does not
immediately accept the rate quoted by Bank, any subsequent acceptance by
Borrower shall be subject to a redetermination by Bank of the applicable fixed
rate; provided however, that if Borrower fails to accept any such rate by 11:00
a.m., California time, on the Business Day such quotation is given, then the
quoted rate shall expire and Bank shall have no obligation to permit a LIBOR
option to be selected on such day. If no specific designation of interest is
made at the time any advance is requested hereunder or at the end of any Fixed
Rate Term, Borrower shall be deemed to have made a Prime Rate interest selection
for such advance or the principal amount to which such Fixed Rate Term applied.
(c) Additional LIBOR Provisions.
(i) If Bank at any time shall determine that for any reason adequate
and reasonable means do not exist for ascertaining LIBOR, then Bank shall
promptly give notice thereof to Borrower. If such notice is given and until such
notice has been withdrawn by Bank, then (A) no new LIBOR option may be selected
by Borrower, and (B) any portion of the outstanding principal balance hereof
which bears interest determined in relation to LIBOR, subsequent to the end of
the Fixed Rate Term applicable thereto, shall bear interest determined in
relation to the Prime Rate.
(ii) If any law, treaty, rule, regulation or determination of a court or
governmental authority or any change therein or in the interpretation or
application thereof (each, a "Change in Law") shall make it unlawful for Bank
(A) to make LIBOR options available hereunder, or (B) to maintain interest rates
based on LIBOR, then in the former event, any obligation of Bank to make
available such unlawful LIBOR options shall immediately be cancelled, and in the
latter event, any such unlawful LIBOR-based interest rates then outstanding
shall be converted, at Bank's option, so that interest on the portion of the
outstanding principal balance subject thereto is determined in relation to the
Prime Rate; provided however, that if any such Change in Law shall permit any
LIBOR-based interest rates to remain in effect until the expiration of the Fixed
Rate Term applicable thereto, then such permitted LIBOR-based interest rates
shall continue in effect until the expiration of such Fixed Rate Term. Upon the
occurrence of any of the foregoing events, Borrower shall pay to Bank
immediately upon demand such amounts as may be certified to Borrower by Bank in
writing as necessary to compensate Bank for any fines, fees, charges, penalties
or other costs incurred or payable by Bank as a result thereof and which are
attributable to any LIBOR options made available to Borrower hereunder, and any
reasonable allocation made by Bank among its operations shall be conclusive and
binding upon Borrower.
(iii) If any Change in Law or compliance by Bank with any request or
directive (whether or not having the force of law) from any central bank or
other governmental authority shall:
(A) subject Bank to any tax, duty or other charge with respect to
any LIBOR options, or change the basis of taxation of payments
to Bank of principal, interest, fees or any other amount
payable hereunder (except for changes in the rate of tax on
the overall net income of Bank); or
(B) impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account
of, advances or loans by, or any other acquisition of funds by
any office of Bank; or
(C) impose on Bank any other condition;
and the result of any of the foregoing is to increase the cost to Bank of
making, renewing or maintaining any LIBOR options hereunder and/or to reduce any
amount receivable by Bank in connection therewith, then in any such case,
Borrower shall pay to Bank such amounts as may be certified to Borrower by Bank
in writing as necessary, immediately upon receipt of such certification, to
compensate Bank for any additional costs incurred by Bank and/or reductions in
amounts received by Bank which are attributable to such LIBOR options. In
determining which costs incurred by Bank and/or reductions in amounts received
by Bank are attributable to any LIBOR options made available to Borrower
hereunder, any reasonable allocation made by Bank among its operations shall be
conclusive and binding upon Borrower.
(d) Payment of Interest. Interest accrued on this Note shall be payable in
arrears on the first day of each month, commencing December 1, 1996.
(e) Default Interest. From and after the maturity date of this Note, or
such earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of this Note shall
bear interest until paid in full at an increased rate per annum (computed on the
basis of a 360-day year, actual days elapsed) equal to two percent (2%) above
the rate of interest from time to time applicable to this Note.
BORROWING AND REPAYMENT:
(a) Borrowing and Repayment. Borrower may from time to time during the
term of this Note borrow, partially or wholly repay its outstanding borrowings,
and reborrow, subject to all of the limitations, terms and conditions of this
Note and of any document executed in connection with or governing this Note;
provided however, that the total outstanding principal amount of borrowings
under this Note shall not at any time exceed the principal amount stated above.
The unpaid principal balance of this obligation at any time shall be the total
amounts advanced hereunder by the holder hereof less the amount of principal
payments made hereon by or for any Borrower, which balance may be endorsed
hereon from time to time by the holder. The outstanding principal balance of
this Note shall be due and payable in full on November 1, 1997.
(b) Advances. Advances hereunder, to the total amount of the principal
sum stated above, may be made by the holder at the oral or written request of
(i) Dennis K. Marquardt or James Freeman, Jr. or Kevin Marquez or Mark Vidovich
or Tom McCullough, any one acting alone, who are authorized to request advances
and direct the disposition of any advances until written notice of the
revocation of such authority is received by the holder at the office designated
above, or (ii) any person, with respect to advances deposited to the credit of
any account of any Borrower with the holder, which advances, when so deposited,
shall be conclusively presumed to have been made to or for the benefit of each
Borrower regardless of the fact that persons other than those authorized to
request advances may have authority to draw against such account. The holder
shall have no obligation to determine whether any person requesting an advance
is or has been authorized by any Borrower.
(c) Application of Payments. Each payment made on this Note shall be
credited first, to any interest then due and second, to the outstanding
principal balance hereof. All payments credited to principal shall be applied
first, to the outstanding principal balance of this Note which bears interest
determined in relation to the Prime Rate, if any, and second, to the outstanding
principal balance of this Note which bears interest determined in relation to
LIBOR, with such payments applied to the oldest Fixed Rate Term first.
PREPAYMENT:
(a) Prime Rate. Borrower may prepay principal on any portion of this Note
which bears interest determined in relation to the Prime Rate at any time, in
any amount and without penalty.
(b) LIBOR. Borrower may prepay principal on any portion of this Note
which bears interest determined in relation to LIBOR at any time and in the
minimum amount of One Hundred Thousand Dollars ($100,000.00); provided however,
that if the outstanding principal balance of such portion of this Note is less
than said amount, the minimum prepayment amount shall be the entire outstanding
principal balance thereof. In consideration of Bank providing this prepayment
option to Borrower, or if any such portion of this Note shall become due and
payable at any time prior to the last day of the Fixed Rate Term applicable
thereto by acceleration or otherwise, Borrower shall pay to Bank immediately
upon demand a fee which is the sum of the discounted monthly differences for
each month from the month of prepayment through the month in which such Fixed
Rate Term matures, calculated as follows for each such month:
(i) Determine the amount of interest which would have accrued each
month on the amount prepaid at the interest rate applicable to
such amount had it remained outstanding until the last day of
the Fixed Rate Term applicable thereto.
(ii) Subtract from the amount determined in (i) above the amount of
interest which would have accrued for the same month on the
amount prepaid for the remaining term of such Fixed Rate Term
at LIBOR in effect on the date of prepayment for new loans
made for such term and in a principal amount equal to the
amount prepaid.
(iii) If the result obtained in (ii) for any month is greater than
zero, discount that difference by LIBOR used in (ii) above.
Borrower acknowledges that prepayment of such amount may result in Bank
incurring additional costs, expenses and/or liabilities, and that it is
difficult to ascertain the full extent of such costs, expenses and/or
liabilities. Borrower, therefore, agrees to pay the above-described prepayment
fee and agrees that said amount represents a reasonable estimate of the
prepayment costs, expenses and/or liabilities of Bank. If Borrower fails to pay
any prepayment fee when due, the amount of such prepayment fee shall thereafter
bear interest until paid at a rate per annum two percent (2%) above the Prime
Rate in effect from time to time (computed on the basis of a 360-day year,
actual days elapsed). Each change in the rate of interest on any such past due
prepayment fee shall become effective on the date each Prime Rate change is
announced within Bank.
EVENTS OF DEFAULT:
This Note is made pursuant to and is subject to the terms and
conditions of that certain Credit Agreement between Borrower and Bank dated as
of May 1, 1993, as amended from time to time (the "Credit Agreement"). Any
default in the payment or performance of any obligation under this Note, or any
defined event of default under the Credit Agreement, shall constitute an "Event
of Default" under this Note.
MISCELLANEOUS:
(a) Remedies. Upon the occurrence of any Event of Default, the holder
of this Note, at the holder's option, may declare all sums of principal and
interest outstanding hereunder to be immediately due and payable without
presentment, demand, notice of nonperformance, notice of protest, protest or
notice of dishonor, all of which are expressly waived by Borrower, and the
obligation, if any, of the holder to extend any further credit hereunder shall
immediately cease and terminate. Borrower shall pay to the holder immediately
upon demand the full amount of all payments, advances, charges, costs and
expenses, including reasonable attorneys' fees (to include outside counsel fees
and all allocated costs of the holder's in-house counsel), expended or incurred
by the holder in connection with the enforcement of the holder's rights and/or
the collection of any amounts which become due to the holder under this Note,
and the prosecution or defense of any action in any way related to this Note,
including without limitation, any action for declaratory relief, whether
incurred at the trial or appellate level, in an arbitration proceeding or
otherwise, and including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person) relating to
Borrower or any other person or entity.
(b) Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of California.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the date
first written above.
DAY RUNNER, INC.
By: /s/Dennis Marquardt
- -----------------------
Title: Executive Vice President
Finance & Administration
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet and the consolidated statement of income filed as
part of the quarterly report on form 10-Q and is qualified in its entirety by
reference to such quarterly report on form 10-Q.
</LEGEND>
<CIK> 0000853102
<NAME> Day Runner, Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Jun-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 27,462
<SECURITIES> 0
<RECEIVABLES> 30,149
<ALLOWANCES> 7,632
<INVENTORY> 17,797
<CURRENT-ASSETS> 74,495
<PP&E> 14,587
<DEPRECIATION> 6,550
<TOTAL-ASSETS> 82,872
<CURRENT-LIABILITIES> 19,301
<BONDS> 0
0
0
<COMMON> 6
<OTHER-SE> 63,565
<TOTAL-LIABILITY-AND-EQUITY> 82,872
<SALES> 33,549
<TOTAL-REVENUES> 33,549
<CGS> 16,092
<TOTAL-COSTS> 16,092
<OTHER-EXPENSES> 11,254
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (210)
<INCOME-PRETAX> 6,413
<INCOME-TAX> 2,565
<INCOME-CONTINUING> 3,848
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,848
<EPS-PRIMARY> 0.57
<EPS-DILUTED> 0.57
</TABLE>
