FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(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, 1997
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 registrant's
classes of Common Stock, as of the latest practicable date:
Number of Shares Outstanding
Class at November 11, 1997
- ------------------------------- -------------------------------------
Common Stock, $0.001 par value 5,635,804
<PAGE>
DAY RUNNER, INC.
INDEX
Page Reference
COVER PAGE...............................................................1
INDEX ................................................................2
PART I -- FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets
September 30, 1997 and June 30, 1997..............3
Consolidated Statements of Income
Three Months Ended September 30, 1997 and 1996.....4
Consolidated Statements of Cash Flows
Three Months Ended September 30, 1997 and 1996.....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...............................................................15
<PAGE>
PART I -- FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements.
<TABLE>
<CAPTION>
DAY RUNNER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS
September 30, June 30,
1997 1997
(unaudited) (audited)
----------- ---------
<S> <C> <C>
Current assets:
Cash and cash equivalents....................................................... $ 8,080 $ 15,550
Accounts receivable (less allowances for doubtful accounts and sales returns
and other allowances of $10,912 and $8,664 at September 30, 1997 and
June 30, 1997, respectively)............................................... 24,646 22,303
Inventories..................................................................... 28,845 23,406
Prepaid expenses and other current assets....................................... 2,378 2,409
Deferred income taxes........................................................... 6,386 6,386
-------- --------
Total current assets....................................................... 70,335 70,054
--------- ---------
Property and equipment -- At cost:
Machinery and equipment......................................................... 11,103 10,316
Data processing equipment and software.......................................... 6,041 5,863
Leasehold improvements.......................................................... 1,975 1,838
Vehicles........................................................................ 167 214
--------- ---------
Total...................................................................... 19,286 18,231
Accumulated depreciation and amortization....................................... (10,628) (9,543)
--------- ---------
Property and equipment -- net................................................... 8,658 8,688
--------- ---------
Other assets......................................................................... 562 138
--------- ---------
Total assets......................................................................... $ 79,555 $ 78,880
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Lines of credit................................................................. $ 376 $ 452
Accounts payable................................................................ 11,116 8,320
Accrued expenses................................................................ 11,849 9,500
Income taxes payable............................................................ 2,770 1,049
Current portion of capital lease obligations.................................... 17 23
-------- --------
Total current liabilities.................................................. 26,128 19,344
--------- ---------
Long-term liabilities:
Capital lease obligations....................................................... 30 52
--------- ---------
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; 6,458,978 and
6,364,429 issued ...and 5,598,084 and 5,851,329 outstanding at
September 30,
1997 and June 30, 1997, respectively)...................................... 6 6
Additional paid-in capital...................................................... 24,937 23,759
Retained earnings............................................................... 53,520 49,168
Cumulative translation adjustment............................................... 40 92
Treasury stock: at cost (860,894 and 513,100 shares at September 30, 1997 and
June 30, 1997, respectively)................................................ (25,106) (13,541)
--------- ----------
Total stockholders' equity................................................. 53,397 59,484
--------- ---------
Total liabilities and stockholders' equity........................................... $ 79,555 $ 78,880
========= =========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DAY RUNNER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
September 30,
1997 1996
---- ----
<S> <C> <C>
Sales................................................................................... $ 38,138 $ 33,549
Cost of goods sold...................................................................... 18,032 15,964
--------- ---------
Gross profit............................................................................ 20,106 17,585
--------- ---------
Operating expenses:
Selling, marketing and distribution................................................ 9,302 7,988
General and administrative......................................................... 3,764 3,394
--------- ---------
Total operating expenses......................................................... 13,066 11,382
--------- ---------
Income from operations.................................................................. 7,040 6,203
Net interest income..................................................................... 95 210
--------- ---------
Income before provision for income taxes................................................ 7,135 6,413
Provision for income taxes.............................................................. 2,783 2,565
--------- ---------
Net income.............................................................................. $ 4,352 $ 3,848
========= =========
Earnings per common and common equivalent share......................................... $ 0.70 $ 0.57
======== ========
Weighted average number of common and common
equivalent shares.................................................................. 6,256 6,710
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
DAY RUNNER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
Three Months Ended
September 30,
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income.................................................................... $ 4,352 $ 3,848
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization.............................................. 1,074 756
Provision for losses on accounts receivable................................ 113
Changes in operating assets and liabilities:
Accounts receivable..................................................... (1,931) (1,187)
Inventories............................................................. (4,160) 2,202
Prepaid expenses and other current assets............................... 40 193
Income taxes receivable................................................. 1,930
Accounts payable........................................................ 2,063 (601)
Accrued expenses........................................................ 1,938 864
Income taxes payable.................................................... 1,719 654
--------- ---------
Net cash provided by operating activities............................ 5,095 8,772
--------- ---------
Cash flows from investing activities:
Purchase of business.......................................................... (318)
Acquisition of property and equipment......................................... (897) (1,291)
Other assets.................................................................. (38) 5
---------- ---------
Net cash used in investing activities.................................... (1,253) (1,286)
---------- ----------
Cash flows from financing activities:
Net repayment under lines of credit........................................... (888)
Repayment of capital lease obligations........................................ (33)
Net proceeds from issuance of common stock.................................... 1,178 219
Repurchase of common stock.................................................... (11,565)
---------- ---------
Net cash (used in) provided by financing activities...................... (11,308) 219
---------- ---------
Effect of exchange rate changes in cash........................................... (4) (8)
---------- ----------
Net (decrease) increase in cash and cash equivalents.............................. (7,470) 7,697
Cash and cash equivalents at beginning of period.................................. 15,550 19,765
--------- ---------
Cash and cash equivalents at end of period........................................ $ 8,080 $ 27,462
========= =========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
DAY RUNNER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information relating to the three months ended
September 30, 1997 and 1996 is unaudited)
1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES
The accompanying consolidated balance sheet as of September 30, 1997,
consolidated statements of income and cash flows for the three-month periods
ended September 30, 1997 and 1996 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, 1997, 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, 1997
and 1996 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,
1997 1997
---- ----
Raw materials................... $ 8,170 $ 10,204
Work in process................. 454 426
Finished goods.................. 20,221 12,776
---------- ----------
Total.................. $ 28,845 $ 23,406
========== ==========
3. LINES OF CREDIT
Effective September 1, 1997, the Company amended its primary credit
agreement with a bank to allow the Company to borrow up to $15,000,000 under a
line of credit through November 1, 1997 and open commercial letters of credit or
open standby letters of credit up to $15,000,000, with the aggregate of
borrowing and letters of credit not to exceed $15,000,000. On November 1, 1997,
this credit agreement was further amended to allow for borrowing under the line
of credit through February 1, 1998. Commercial letters of credit and standby
letters of credit may be issued for a term not to exceed 180 days and shall not
expire subsequent to August 1 and May 1, 1998, respectively. At September 30,
1997, the Company had no amounts outstanding under this line of credit but had
outstanding secured letters of credit totaling approximately $1,000,000.
Under this credit agreement, borrowings are collateralized by accounts
receivable, inventories and certain other assets and bear interest at the
Company's election either at the bank's prime rate (8.50% at September 30, 1997)
or at LIBOR (5.65625% at September 30, 1997) plus 1.75%. The credit agreement
requires the Company to maintain total debt to tangible net worth of not more
than 1.5 to 1, to maintain certain specified operating ratios and to obtain the
bank's approval to declare or pay dividends in excess of $200,000.
The Company also has a credit agreement with a Canadian bank.
Borrowings under this line of credit, which is used for working capital purposes
by the Company's Canadian subsidiary, may not exceed Canadian $1,000,000, bear
interest at the bank's prime rate (4.75% at September 30, 1997) and are due and
payable on demand. Prior to October 17, 1997, borrowings under the line bore
interest at the bank's prime rate plus 0.50%. At September 30, 1997,
approximately US $376,000 was outstanding under this line of credit.
4. STOCKHOLDERS' EQUITY
During the three months ended September 30, 1997, certain directors,
officers and employees exercised options and warrants to purchase an aggregate
of 94,549 shares of the Company's Common Stock for an aggregate of approximately
$1,178,000.
5. TREASURY STOCK
During the three months ended September 30, 1997, the Company
repurchased 347,794 shares from certain officers and directors at a cost of
$33.25 per share for an aggregate of approximately $11,565,000.
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. In computing earnings per share, the
Company used the modified treasury stock method for the three months ended
September 30, 1997 and 1996.
7. ACQUISITIONS
On July 29, 1997, the Company purchased the stock of Ultima
Distribution Inc., which was the distributor of the Company's products in
Canada, for approximately $318,000. In addition, contingent payments may be paid
over the next two years, based on Ultima's operating performance during that
period.
On October 1, 1997, the Company purchased substantially all the
operating assets of Ram Manufacturing, Inc., a Little Rock, Arkansas developer,
manufacturer and marketer of wall boards. The cash purchase price was
approximately $2,400,000, and the Company also assumed certain liabilities
totaling approximately $3,000,000. In addition, contingent payments may be paid
over the next three years, based upon Ram's operating performance during that
period.
8. STATEMENTS OF CASH FLOW
The net cash used to purchase Ultima Distribution Inc. on July 29, 1997
was used as follows (in thousands):
Working capital $ 227
Property, plant and equipment (150)
Cost in excess of net assets of company acquired (395)
----------
Net cash used to acquire business $ (318)
==========
Supplemental disclosure of cash flow information (in thousands):
Three Months Ended September 30,
1997 1996
------------------------------
Cash paid during the period for:
Interest $ 52 $ 29
Income taxes $1,007
<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.
Since the Company's introduction of the first Day Runner System
organizer in 1982, the Company's revenues have been generated by sales primarily
of organizers and planners and secondarily of refills. Recently, much of the
Company's growth has resulted from sales of related organizing products,
virtually all of which have been introduced within the last three years. The
Company focuses its product development, sales and marketing efforts primarily
on the office products and mass market channels. The office products channel and
the mass market channel accounted for 47.0% and 41.3%, respectively, of first
quarter fiscal 1998 sales.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the
percentages that income statement items bear to sales and the percentage change
in the dollar amounts of such items.
<TABLE>
<CAPTION>
Percentage
Percentage Change
of Sales Three
Three Months Ended Months Ended
September 30, September 30,
1997 1996 1996 to 1997
------ ---------- -------------
<S> <C> <C> <C>
Sales.................................................................. 100.0% 100.0% 13.7%
Cost of goods sold..................................................... 47.3 47.6 13.0
----- -----
Gross profit........................................................... 52.7 52.4 14.3
----- -----
Operating expenses:
Selling, marketing and distribution................................ 24.4 23.8 16.4
General and administrative......................................... 9.9 10.1 10.9
----- ------
Total operating expenses........................................ 34.3 33.9 14.8
----- -----
Income from operations................................................. 18.4 18.5 13.5
Net interest income.................................................... 0.3 0.6 (54.8)
---- ----
Income before provision for income taxes............................... 18.7 19.1 11.3
Provision for income taxes............................................. 7.3 7.6 8.5
---- ----
Net income............................................................. 11.4% 11.5% 13.1
==== =====
</TABLE>
<PAGE>
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.
<TABLE>
<CAPTION>
Three Months Ended September 30,
Product Category: 1997 1996
- ----------------- ---- ----
(unaudited; dollars in thousands)
<S> <C> <C> <C> <C>
Organizers and planners.............................. $ 21,188 55.6% $ 21,061 62.8%
Refills.............................................. 10,875 28.5 10,444 31.1
Related organizing products.......................... 6,075 15.9 2,044 6.1
-------- ----- --------- -----
Total............................................ $ 38,138 100.0% $ 33,549 100.0%
======== ===== ========= =====
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended September 30,
Distribution Channel: 1997 1996
- --------------------- ---- ----
(unaudited; dollars in thousands)
<S> <C> <C> <C> <C>
Office products...................................... $ 17,924 47.0% $ 17,783 53.0%
Mass market.......................................... 15,750 41.3 12,480 37.2
Foreign customers.................................... 2,415 6.3 1,364 4.1
Other................................................ 2,049 5.4 1,922 5.7
---------- ----- --------- ------
Total............................................ $ 38,138 100.0% $ 33,549 100.0%
========== ===== ========= =====
</TABLE>
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED WITH
THE THREE MONTHS ENDED SEPTEMBER 30, 1996
SALES. Sales consist of revenues from gross product shipments net of
allowances for returns, rebates and credits. In the first quarter of fiscal
1998, sales increased by $4,589,000, or 13.7%, primarily because of increased
sales of related organizing products. In the quarter ended September 30, 1997,
sales of related organizing products grew by $4,031,000, or 197.2%; sales of
refills (which include calendars and accessories) grew by $431,000, or 4.1%; and
sales of organizers and planners grew by $127,000, or 0.6%. Product sales were
primarily to office products customers and secondarily to mass market customers.
Sales to mass market customers grew by $3,270,000, or 26.2%; sales to foreign
customers grew by $1,051,000, or 77.1%; sales to the office products customers
grew by $141,000, or 0.8%; and sales to miscellaneous customers grouped together
as "other" increased by $127,000, or 6.6%.
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, sales
returns, purchasing and manufacturing efficiencies, tariffs, duties and
inventory carrying costs. Gross profit as a percentage of sales increased from
52.4% in the first quarter of fiscal 1997 to 52.7% in the first quarter of
fiscal 1998.
OPERATING EXPENSES. Total operating expenses increased by $1,684,000, or
14.8%, in the first quarter of fiscal 1998 compared with the first quarter of
fiscal 1997 and increased as a percentage of sales from 33.9% to 34.3%.
Primarily because of higher personnel costs and secondarily because of higher
promotional display costs, selling, marketing and distribution expenses
increased by $1,314,000 and from 23.8% to 24.4% as a percentage of sales.
General and administrative expenses increased by $370,000, but decreased from
10.1% to 9.9% as a percentage of sales primarily because of the Company's
increased ability to absorb fixed costs as a result of higher sales.
NET INTEREST INCOME. Primarily because of a decrease in the Company's cash
available for short-term investment resulting from the Company's repurchase of
common stock, net interest income in the first quarter of fiscal 1998 compared
with the first quarter of fiscal 1997 decreased by $115,000 and from 0.6% to
0.3% as a percentage of sales.
INCOME TAXES. Primarily because of the improved financial results of
the Company's Hong Kong subsidiary, the Company's first quarter fiscal 1998
effective tax rate was 39.0%, compared with 40.0% for the first quarter of
fiscal 1997.
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 new product introductions and line extensions, the timing of large orders,
changes in product sales or customer mix, vendor and customer pricing,
production levels, supply and manufacturing delays, large customers' inventory
management and general industry and economic conditions. 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, 1997 decreased
to $8,080,000 from $15,550,000 at June 30, 1997. In the three months ended
September 30, 1997, net cash of $5,095,000 provided by operating activities,
offset net cash of $1,253,000 and $11,308,000 used in investing activities and
financing activities, respectively. Of the $5,095,000 net amount provided by the
Company's operating activities, $4,352,000 was provided by net income,
$2,063,000 was provided by an increase in accounts payable, $1,938,000 was
provided by an increase in accrued expenses, and $1,719,000 was provided by an
increase in income taxes payable, which amounts were partially offset by an
increase of $4,160,000 in inventories and an increase of $1,931,000 in accounts
receivable. Of the $1,253,000 net amount used in the Company's investing
activities, $897,000 was used to acquire primarily machinery and equipment and
secondarily computer equipment and software and $318,000 was used to acquire
Ultima Distribution Inc. Of the $11,308,000 net amount used in the Company's
financing activities, $11,565,000 was used to repurchase 347,794 shares of
Common Stock from certain officers and directors, which amount was partially
offset by $1,178,000 that was provided by the issuance of Common Stock upon
exercise of then-outstanding stock options and warrants.
Primarily because of the Company's increased sales of certain dated
products, the timing of such sales and the payment terms customary for such
products, accounts receivable (net) at September 30, 1997 increased by 10.5%
from the fiscal 1997 year-end amount. Compared with the September 30, 1996
amount, accounts receivable (net) increased by 9.5% primarily because of the
growth in sales. The average collection period of accounts receivable at
September 30, 1997 was 47 days, compared with 47 and 45 days at June 30, 1997
and September 30, 1996, respectively.
Inventories at September 30, 1997 increased by 23.2% from the fiscal
1997 year-end amount and by 62.1% compared with the September 30, 1996 amount
primarily because of continuing expansion of distribution of new and recently
introduced products and the Company's anticipated growth in sales.
At September 30, 1997, Day Runner had no amounts outstanding under its
primary $15,000,000 bank line but had used the line to secure outstanding
letters of credit of approximately $1,000,000, which reduced the availability
under the line to approximately $14,000,000. Borrowings under this line of
credit bear interest at the Company's election at either the bank's prime rate
or at LIBOR plus 1.75%. Effective November 1, 1997, the Company amended this
credit agreement to be due and payable on February 1, 1998, except that
commercial letters of credit and standby letters of credit may be issued to
expire no later than August 1 and May 1, 1998, respectively. (See Note 3 to
Consolidated Financial Statements.)
The Company's Canadian line of credit allows for borrowings of up to
Canadian $1,000,000 (approximately US $784,000). Borrowings bear interest at the
Canadian bank's prime rate and are due and payable on demand. Prior to October
17, 1997, borrowings under the line bore interest at the bank's prime rate plus
0.50%. At September 30, 1997, approximately Canadian $519,000 (approximately
US $376,000) was outstanding under this line of credit, which reduced
the availability under the line to approximately Canadian $481,000
(approximately US $348,000). (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
international operations 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 for corporate finance purposes 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 and elsewhere in this
quarterly report are forward looking statements that involve risks and
uncertainties that could affect actual future results. Such risks and
uncertainties include, but are not limited to: timing and size of orders from
large customers, timing and size of orders for 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
3.1 Certificate of Incorporation of the Registrant, as amended(1)
3.2 Bylaws of the Registrant, as amended(2)
10.1 1998 Officer Bonus Plan
10.2 Form of Stock Purchase Agreement dated August 27, 1997
and Schedule of Sellers
10.3 Form of Warrant dated August 19, 1997 to purchase
shares of the Registrant's Common Stock issued to
certain officers of the Company and Schedule of
Warrants(3)
10.4 Credit Agreement dated as of May 1, 1993 between the
Registrant and Wells Fargo Bank, National
Association, including Line of Credit Note(4),
Assumption and Consent to Merger Agreement dated as
of June 30, 1993(5), First Amendment to Credit
Agreement dated as of December 15, 1993(5), Second
Amendment to Credit Agreement dated as of May 1,
1994, including Line of Credit Note(6), Third
Amendment to Credit Agreement dated as of October 1,
1994, including Line of Credit Note(7), Fourth
Amendment to Credit Agreement dated as of October 2,
1995, including Revolving Line of Credit Note(8) ,
Fifth Amendment to Credit Agreement dated as of
November 1, 1996, including Revolving Line of Credit
Note (9), Sixth Amendment to Credit Agreement dated
as of September 1, 1997, including Revolving Line of
Credit Note(3) and Letter Agreement dated as of
November 1, 1997
11.1 Statement of Computation of Earnings per Share
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, 1997.
(1) Incorporated by reference to the Registrant's Transition Report on Form
10-K (File No. 0-19835) filed with the Commission on September 27, 1994.
(2) Incorporated by reference to the Registrant's Current Report on Form 8-K
(File No. 0-19835) filed with the Commission on August 5, 1993.
(3) Incorporated by reference to the Registrant's Annual Report on Form 10-K
(File No. 0-19835) filed with the Commission on September 29, 1997.
(4) 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.
(5) 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.
(6) 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.
(7) 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.
(8) 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.
(9) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
(File No. 0-19835)filed with the Commission on November 13, 1996.
<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, 1997
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
ATTACHMENT II EXHIBIT 10.1
DAY RUNNER, INC. OFFICER BONUS PLAN
FOR THE FISCAL YEAR ENDING JUNE 30,1998
The Officer Bonus Plan (the "Bonus Plan") for the fiscal year ending
June 30, 1998, will be paid based on the Company's fiscal year ending June 30,
1998 financial performance as measured by the degree of attainment of a pre-set,
Compensation Committee -approved, net income goal.
The established net income goal for the fiscal year ending June
30, 1998 to be used for calculation of the fiscal 1998 bonuses is
after bonuses net income (after taxes and all other expense
items) of $12,548,000.
The percentage attainment of the net income goal will be applied
to the matrix on the following pages to determine the bonus. (For
the purposes of this attachment, only a partial matrix is shown.)
Percentage calculations for net income and bonus percentages will
be calculated to two decimal places and will be rounded up.
A minimum of 115% of the after-bonuses net income goal must be
achieved to receive any bonus.
Bonus payments, if any, will be made in one lump sum payable
within 30 days after the net income results for fiscal 1998 have
been finalized and any review and audit by the Company's outside
accountants have been completed (as evidenced by the Company's
auditors executing its financial report and delivering copies to
the Compensation Committee).
In the event any officer included in the Bonus Plan is an
officer of the Company for only a portion of the 12-month period
ending June 30,1998 (or changes his/her officer position during
this period), then his/her participation in the Bonus Plan will
be pro-rata based on the number of days as a Company officer (or
as he/she held each respective office) in the fiscal year ending
June 30, 1998 divided by 365, without regard to the actual net
income earned by the Company during the period he/she was an
officer; provided, however, that in order to be eligible for
participation in the Bonus Plan, an officer must be an officer
for at least six months of the Company's 1998 fiscal year, and
prior to July 1, 1998, the Company must not have terminated such
officer's employment for "Cause" (as defined in the Company's
Officer Severance Plan) and such officer must not have resigned
as an officer of the Company without "Good Reason" (as defined in
the Company's Officer Severance Plan) prior to July 1, 1998.
Unless additional officers are explicitly included in the Bonus
Plan pursuant to a subsequent, duly adopted Board or Compensation
Committee resolution, only the following officers shall be
eligible to participate in the Bonus Plan: Chief Executive
Officer; President & Chief Operating Officer; Chief Financial
Officer & Executive Vice President, Finance & Administration;
Vice President, Sales; Vice President, Marketing; Vice President,
Product Development; Vice President, International Sales; Vice
President, Chief Information Officer; and Vice President,
Corporate Development.
Bonuses will be calculated and paid according to the partial matrix
on the following pages which is to be used by applying the applicable bonus
percentage to the annual base salary for each eligible officer.
<PAGE>
<TABLE>
<CAPTION>
DAY RUNNER, INC.
FISCAL YEAR 1998 OFFICER BONUS SCHEDULE *
Chief Executive President and Chief Financial Vice President -
Officer Chief Operating Officer Officer Sales
Base Salary Base Salary Base Salary Base Salary
1997 N/I(1)=$12,548 $330,000 $275,000 $180,000 $155,000
----------------------- ------------------------ ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Income Net Income Percent of Bonus Percent of Bonus Percent of Bonus Percent of Bonus
Growth Rate Target Salary Amount Salary Amount Salary Amount Salary Amount
- ------------------------------------------------------------------------------------------------------------------------------------
15.0% $14,430 15.0% $ 49,500 15.0% $41,250 15.0% $27,000 15.0% $23,250
16.0% $14,556 17.4% $ 57,514 17.4% $47,929 17.1% $30,857 17.1% $26,571
17.0% $14,681 19.9% $ 65,529 19.9% $54,607 19.3% $34,714 19.3% $29,893
18.0% $14,807 22.3% $ 73,543 22.3% $61,286 21.4% $38,571 21.4% $33,214
19.0% $14,932 24.7% $ 81,557 24.7 $67,964 23.6% $42,429 23.6% $36,536
20.0% $15,058 27.1% $ 89,571 27.1% $74,643 25.7% $46,286 25.7% $39,857
21.0% $15,183 29.6% $ 97,586 29.6% $81,321 27.9% $50,143 27.9% $43,179
22.0% $15,309 32.0% $105,600 32.0% $88,000 30.0% $54,000 30.0% $46,500
23.0% $15,434 34.4% $113,614 34.4% $94,679 32.1% $57,857 32.1% $49,821
24.0% $15,560 36.9% $121,629 36.9% $101,357 34.3% $61,714 34.3% $53,143
25.0% $15,685 39.3% $129,643 39.3% $108,036 36.4% $65,571 36.4% $56,464
26.0% $15,810 41.7% $137,657 41.7% $114,714 38.6% $69,429 38.6% $59,786
27.0% $15,936 44.1% $145,671 44.1% $121,393 40.7% $73,286 40.7% $63,107
28.0% $16,061 46.6% $153,686 46.6% $128,071 42.9% $77,143 42.9% $66,429
29.0% $16,187 49.0% $161,700 49.0% $134,750 45.0% $81,000 45.0% $69,750
30.0% $16,312 51.4% $169,714 51.4% $141,429 47.1% $84,857 47.1% $73,071
31.0% $16,438 53.9% $177,729 53.9% $148,107 49.3% $88,714 49.3% $76,393
32.0% $16,563 56.3% $185,743 56.3% $154,786 51.4% $92,571 51.4% $79,714
33.0% $16,689 58.7% $193,757 58.7% $161,464 53.6% $96,429 53.6% $83,036
34.0% $16,814 61.1% $201,771 61.1% $168,143 55.7% $100,286 55.7% $86,357
35.0% $16,940 63.6% $209,786 63.6% $174,821 57.9% $104,143 57.9% $89,679
36.0% $17,065 66.0% $217,800 66.0% $181,500 60.0% $108,000 60.0% $93,000
37.0% $17,191 68.4% $225,814 68.4% $188,179 62.1% $111,857 62.1% $96,321
38.0% $17,316 70.9% $233,829 70.9% $194,857 64.3% $115,714 64.3% $99,643
39.0% $17,442 73.3% $241,843 73.3% $201,536 66.4% $119,571 66.4% $102,964
40.0% $17,567 75.7% $249,857 75.7% $208,214 68.6% $123,429 68.6% $106,286
41.0% $17,693 78.1% $257,871 78.1% $214,893 70.7% $127,286 70.7% $109,607
42.0% $17,818 80.6% $265,886 80.6% $221,571 72.9% $131,143 72.9% $112,929
43.0% $17,944 83.0% $273,900 83.0% $228,250 75.0% $135,000 75.0% $116,250
44.0% $18,069 85.4% $281,914 85.4% $234,929 77.1% $138,857 77.1% $119,571
45.0% $18,195 87.9% $289,929 87.9% $241,607 79.3% $142,714 79.3% $122,893
46.0% $18,320 90.3% $297,943 90.3% $248,286 81.4% $146,571 81.4% $126,214
47.0% $18,446 92.7% $305,957 92.7% $254,964 83.6% $150,429 83.6% $129,536
48.0% $18,571 95.1% $313,971 95.1% $261,643 85.7% $154,286 85.7% $132,857
49.0% $18,697 97.6% $321,986 97.6% $268,321 87.9% $158,143 87.9% $136,179
50.0% $18,822 100.0% $330,000 100.0% $275,000 90.0% $162,000 90.0% $139,500
--------------------------------------------------------------------------------------------------------------------------
Continued Vice President Vice President - Vice President - Vice President
Product Development Marketing Information Services International Sales
Base Salary Base Salary Base Salary Base Salary
1997 N/I(1)=$12,548 $155,000 $125,000 $135,000 $125,000
----------------------- ---------------------- --------------------- --------------------- ---------------------
Net Income Net Income Percent of Bonus Percent of Bonus Percent of Bonus Percent of Bonus
Growth Rate Target Salary Amount Salary Amount Salary Amount Salary Amount
------------------------ ---------------------- --------------------- --------------------
15.0% $14,430 15.0% $23,250 15.0% $18,750 15.0% $20,250 15.0% $18,750
16.0% $14,556 17.1% $26,571 17.1% $21,429 16.3% $21,986 16.3% $20,357
17.0% $14,681 19.3% $29,893 19.3% $24,107 17.6% $23,721 17.6% $21,964
18.0% $14,807 21.4% $33,214 21.4% $26,786 18.9% $25,457 18.9% $23,571
19.0% $14,932 23.6% $36,536 23.6% $29,464 20.1% $27,193 20.1 $25,179
20.0% $15,058 25.7% $39,857 25.7% $32,143 21.4% $28,929 21.4% $26,786
21.0% $15,183 27.9% $43,179 27.9% $34,821 22.7% $30,664 22.7% $28,393
22.0% $15,309 30.0% $46,500 30.0% $37,500 24.0% $32,400 24.0% $30,000
23.0% $15,434 32.1% $49,821 32.1% $40,179 25.3% $34,136 25.3% $31,607
24.0% $15,560 34.3% $53,143 34.3% $42,857 26.6% $35,871 26.6% $33,214
25.0% $15,685 36.4% $56,464 36.4% $45,536 27.9% $37,607 27.9% $34,821
26.0% $15,810 38.6% $59,786 38.6% $48,214 29.1% $39,343 29.1% $36,429
27.0% $15,936 40.7% $63,107 40.7% $50,893 30.4% $41,079 30.4% $38,036
28.0% $16,061 42.9% $66,429 42.9% $53,571 31.7% $42,814 31.7% $39,463
29.0% $16,187 45.0% $69,750 45.0% $56,250 33.0% $44,550 33.0% $41,250
30.0% $16,312 47.1% $73,071 47.1% $58,929 34.3% $46,286 34.3% $42,857
31.0% $16,438 49.3% $76,393 49.3% $61,607 35.6% $48,021 35.6% $44,464
32.0% $16,563 51.4% $79,714 51.4% $64,286 36.9% $49,757 36.9% $46,071
33.0% $16,689 53.6% $83,036 53.6% $66,964 38.1% $51,493 38.1% $47,679
34.0% $16,814 55.7% $86,357 55.7% $69,643 39.4% $53,229 39.4% $49,286
35.0% $16,940 57.9% $89,679 57.9% $72,321 40.7% $54,964 40.7% $50,893
36.0% $17,065 60.0% $93,000 60.0% $75,000 42.0% $56,700 42.0% $52,500
37.0% $17,191 62.1% $96,321 62.1% $77,679 43.3% $58,436 43.3% $54,107
38.0% $17,316 64.3% $99,643 64.3% $80,357 44.6% $60,171 44.6% $55,714
39.0% $17,442 66.4% $102,964 66.4% $83,036 45.9% $61,907 45.9% $57,321
40.0% $17,567 68.6% $106,286 68.6% $85,714 47.1% $63,643 47.1% $58,929
41.0% $17,693 70.7% $109,607 70.7% $88,393 48.4% $65,379 48.4% $60,536
42.0% $17,818 72.9% $112,929 72.9% $91,071 49.7% $67,114 49.7% $62,143
43.0% $17,944 75.0% $116,250 75.0% $93,750 51.0% $68,850 51.0% $63,750
44.0% $18,069 77.1% $119,571 77.1% $96,429 52.3% $70,586 52.3% $65,357
45.0% $18,195 79.3% $122,893 79.3% $99,107 53.6% $72,321 53.6% $66,964
46.0% $18,320 81.4% $126,214 81.4% $101,786 54.9% $74,057 54.9% $68,571
47.0% $18,446 83.6% $129,536 83.6% $104,464 56.1% $75,793 56.1% $70,179
48.0% $18,571 85.7% $132,857 85.7% $107,143 57.4% $77,529 57.4% $71,786
49.0% $18,697 87.9% $136,179 87.9% $109,821 58.7% $79,264 58.7% $73,393
50.0% $18,822 90.0% $139,500 90.0% $112,500 60.0% $81,000 60.0% $75,000
Continued
Vice President
Corporate Development
Base Salary
1997 N/I(1)=$12,548 $125,000
----------------------- ---------------------
Net Income Net Income Percent of Bonus
Growth Rate Target Salary Amount
------------------------ ---------------------
15.0% $14,430 15.0% $18,750
16.0% $14,556 16.3% $20,357
17.0% $14,681 17.6% $21,964
18.0% $14,807 18.9% $23,571
19.0% $14,932 20.1 $25,179
20.0% $15,058 21.4% $26,786
21.0% $15,183 22.7% $28,393
22.0% $15,309 24.0% $30,000
23.0% $15,434 25.3% $31,607
24.0% $15,560 26.6% $33,214
25.0% $15,685 27.9% $34,821
26.0% $15,810 29.1% $36,429
27.0% $15,936 30.4% $38,036
28.0% $16,061 31.7% $39,463
29.0% $16,187 33.0% $41,250
30.0% $16,312 34.3% $42,857
31.0% $16,438 35.6% $44,464
32.0% $16,563 36.9% $46,071
33.0% $16,689 38.1% $47,679
34.0% $16,814 39.4% $49,286
35.0% $16,940 40.7% $50,893
36.0% $17,065 42.0% $52,500
37.0% $17,191 43.3% $54,107
38.0% $17,316 44.6% $55,714
39.0% $17,442 45.9% $57,321
40.0% $17,567 47.1% $58,929
41.0% $17,693 48.4% $60,536
42.0% $17,818 49.7% $62,143
43.0% $17,944 51.0% $63,750
44.0% $18,069 52.3% $65,357
45.0% $18,195 53.6% $66,964
46.0% $18,320 54.9% $68,571
47.0% $18,446 56.1% $70,179
48.0% $18,571 57.4% $71,786
49.0% $18,697 58.7% $73,393
50.0% $18,822 60.0% $75,000
*The officer's bonus amount is calculated by multiplying the officer's base salary times a percent of salary
at various targeted income levels. Additionally, this is only a partial table.
</TABLE>
STOCK PURCHASE AGREEMENT EXHIBIT 10.2
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered into
effective as of August 27, 1997 (the "Effective Date"), by and between
_____________________ ("Seller"), and Day Runner, Inc., a Delaware corporation
("Purchaser").
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, ________ shares of Common Stock of Purchaser (the
"Shares") on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the above recital and the mutual
promises and covenants set forth below, the parties hereto hereby agree as
follows:
1. Purchase and Sale of Stock.
1. 1 Purchase. On the basis of and in reliance upon the
representations and warranties set forth herein and subject to the terms and
conditions of this Agreement, Seller hereby sells, transfers, and assigns to
Purchaser, and Purchaser hereby purchases from Seller, the Shares for a purchase
price equal to the closing price of a share of Purchaser's Common Stock on the
Nasdaq National Market System on the Effective Date multiplied by the number of
Shares (the "Purchase Price").
1. 2 Delivery of Shares; Payment. Prior to the close of
business on September 4, 1997, Seller shall deliver the Shares to Purchaser by
either (a) delivering to Purchaser an original executed Assignment Separate from
Certificate, together with a stock certificate representing all or a portion of
the Shares and/or (b) causing the Shares (or such portion of the Shares not
delivered in accordance with Section 1.2(a) hereof) to be transferred
electronically to the account of Montgomery Securities, 600 Montgomery Street,
San Francisco, California (DTC Account No. 773) for further credit to the
account of Purchaser (Account No. 110-61298). Within three business days after
the receipt of the Shares, Purchaser will pay or cause to be paid to Seller the
Purchase Price by check or wire transfer at the election of Purchaser.
1. 3 No Additional Consideration. Except for the Purchase
Price set forth in this Section 1 hereof, Seller is neither owed nor entitled to
any additional compensation or consideration from Purchaser or its directors,
officers, agents, representatives or stockholders with respect to the purchase
and sale of the Shares.
2. Representations and Warranties of Seller. Seller hereby represents
and warrants to Purchaser as follows:
2. 1 Ownership of the Shares. Seller is the lawful record and
beneficial owner of, and has good and marketable title to, the Shares. The
Shares are owned by Seller free and clear of all liens, encumbrances, security
interests, equities, claims, options, licenses, charges and assessments, and are
subject to no restrictions with respect to transferability by Seller to
Purchaser except compliance with applicable securities laws. Upon delivery of
the Shares to Purchaser, Seller shall have conveyed to Purchaser good and
marketable title in and to the Shares free and clear of all liens, encumbrances,
security interests, equities, claims, options, licenses, charges, assessments
and restrictions whatsoever. The Shares do not represent more than 10% of all
shares of Common Stock of Purchaser that Seller beneficially owns as of the
Effective Date, and for purposes of determining such percentage ownership, all
shares of Common Stock of Purchaser that are subject to outstanding options or
warrants, whether vested or unvested, held by Seller or an affiliate of Seller
as of the Effective Date shall be deemed beneficially owned by Seller. The
Shares do not exceed the maximum number of shares of Common Stock of Purchaser
that Seller, as of the Effective Date, could sell pursuant to Rule 144 under the
Securities Exchange Act of 1934.
2. 2 Authority. Seller represents and warrants that all
action by Seller necessary for the sale of the Shares pursuant to this Agreement
and the performance of Seller's obligations hereunder has been taken. Seller
further represents that this Agreement is a legal, valid and binding obligation
of Seller enforceable in accordance with its terms, that Seller has all right,
legal capacity, authority and requisite legal power to enter into this Agreement
and to carry out and perform Seller's obligations under the terms of this
Agreement. The execution and delivery of, and the performance of the obligations
under, this Agreement by Seller do not and will not contravene or result in any
breach of any law or of any regulation, order, writ, injunction or decree of any
court, tribunal, governmental body, authority, agency or instrumentality
applicable to Seller or the Shares, nor do or will such execution, delivery or
performance violate, conflict with or result in (or with notice or lapse of time
or both result in) a breach of or default under any term or provision of any
agreement, oral or written, to which Seller is a party or is bound or to which
the Shares are subject.
2. 3 Disclosure.
(a) (Seller to check and initial the box that applies):
Seller is currently an executive officer and/or a director
of Purchaser and, in such capacity, Seller is familiar with and fully informed
with respect to Purchaser's business, operations, financial condition, affairs
and prospects.
If Seller is a trust, then its trustee (or one of its
trustees) is a beneficial owner of the Shares, is currently an executive officer
and/or director of Purchaser and has executed this Agreement on behalf of such
trust, and by virtue of such relationship with Purchaser, such trustee is
familiar with and fully informed with respect to Purchaser's business,
operations, financial condition, affairs and prospects.
If Seller is a partnership, then its general partner (or an
officer or affiliate of its general partner) is a beneficial owner of the
Shares, is currently an executive officer and/or director of Purchaser and has
executed this Agreement on behalf of such partnership, and by virtue of such
relationship with Purchaser, such person is familiar with and fully informed
with respect to Purchaser's business, operations, financial condition, affairs
and prospects.
If Seller is a corporation, then its chief executive officer
(or one of its executive officers) is a beneficial owner of the Shares, is
currently an executive officer and/or director of Purchaser and has executed
this Agreement on behalf of such corporation, and by virtue of such relationship
with Purchaser, such person is familiar with and fully informed with respect to
Purchaser's business, operations, financial condition, affairs and prospects.
(b) Seller has had an opportunity to seek the advice of counsel
with regard to the sale of the Shares under, and with regard to the other terms
of, this Agreement. Seller and/or Seller's advisors have had a reasonable
opportunity to ask questions of and receive answers from Purchaser, or a person
or persons acting on its behalf, concerning this transaction, and to obtain
additional information, to the extent possessed by Purchaser or obtainable by
Purchaser without unreasonable effort or expense. To Seller's best knowledge and
belief,all such questions have been answered to the full satisfaction of Seller.
Seller has had sufficient opportunity to review Purchaser's historical and
current financial data.
(c) Seller is not aware of any material adverse non-public
information concerning Purchaser or its business, operations, financial
condition, affairs or prospects that Seller has not disclosed in all material
respects to the Board of Directors of Purchaser.
2. 4 Brokers. No broker, finder or other person is entitled to any
broker's, finder's or other fee or commission in connection with this Agreement
or the transactions contemplated hereby by reason of any claim arising by,
through or under Seller.
2. 5 Adequacy of Consideration. The consideration Seller is receiving
in exchange for the consideration Seller is giving under this Agreement is fair,
just and reasonable. Seller is aware that the value of the Shares is subject to
considerable potential fluctuation and may now, or in the future, have an actual
value substantially above, or below, the Purchase Price Purchaser is paying
therefor, and it is possible that Seller might realize a higher price for the
Shares if Seller held them for an additional period. Seller has such knowledge
of business, financial and legal matters, and has had sufficient access to
experts on such matters, to assess the value of the Shares and the advisability
of this transaction.
2. 6 Miscellaneous Representations.
(a) Seller and/or Seller's advisors have such knowledge and
experience in financial, tax and business matters to enable Seller and/or them
to utilize the information made available to Seller and/or them in connection
with the sale of the Shares, to evaluate the merits and risks of the transaction
and to make an informed decision with respect thereto.
(b) Seller understands that the tax consequences to Seller
from the sale of the Shares depend on Seller's individual circumstances and
Seller has not received or relied on any advice from Purchaser or its agents or
representatives regarding such tax consequences.
3. Representations and Warranties of Purchaser. Purchaser represents
and warrants that all action by Purchaser necessary for the purchase of the
Shares pursuant to this Agreement and the performance of Purchaser's obligations
hereunder has been taken. Purchaser further represents that this Agreement is a
legal, valid and binding obligation of Purchaser enforceable in accordance with
its terms. The execution and delivery of, and the performance of the obligations
under, this Agreement by Purchaser do not and will not contravene or result in
any breach of any law or of any regulation, order, writ, injunction or decree of
any court, tribunal, governmental body, authority, agency or instrumentality,
nor do or will such execution, delivery or performance violate, conflict with or
result in (or with notice or lapse of time or both result in) a breach of or
default under any term or provision of any agreement, oral or written, to which
Purchaser is a party or is bound. Purchaser is not aware of any material
nonpublic information concerning Purchaser or its business, operations,
financial condition, affairs or prospects that Purchaser has not disclosed in
all material respects to Seller.
4. Market Stand-Off Agreement. Seller agrees not to sell, offer to
sell or contract to sell, directly or indirectly, any shares of Common Stock (or
other securities) of Purchaser owned beneficially or of record by Seller at any
time during the 60-day period following the Effective Date.
5. Indemnification. Each party hereto shall indemnify and hold
harmless the other party in respect of: (a) any and all loss, liability, damage
or deficiency resulting from any breach of the representations and warranties of
such party set forth in this Agreement, or from the breach or nonfulfillment of
any covenant or agreement on the part of such indemnifying party under this
Agreement; and (b) any and all actions, suits, proceedings, judgments, costs and
expenses (including reasonable legal fees) incident to the foregoing. No party
shall be entitled to indemnification pursuant to this Section 5 unless such
party shall have given prompt notice of the relevant claim to the party from
whom indemnification is sought and shall have provided such party with the
opportunity to conduct the defense thereof at its own expense.
6. Miscellaneous.
6. 1 Notices. All notices and demands referred to or required herein
or pursuant hereto shall be in writing, shall specifically reference this
Agreement and shall be deemed to be duly sent and given upon actual delivery to
and receipt by the relevant party (which notice, in the case of Purchaser, must
be from an executive officer of Purchaser other than Seller even if Seller is an
officer or authorized agent of Purchaser) or five days after deposit in the U.S.
mail by certified or registered mail, return receipt requested, with postage
prepaid, addressed to the other party at the address set forth on the signature
page hereof (if, however, a party has given the other party due notice of
another address for the sending of notices, then future notices shall be sent to
such new address).
6. 2 Legal Advice and Construction of Agreement. Each party represents
that such party has had the opportunity to seek independent legal advice with
respect to the advisability of entering into this Agreement and neither has been
entitled to rely upon nor has in fact relied upon the legal or other advice of
the other party or such other party's counsel in entering into this Agreement.
6. 3 Parties' Understanding. Each party represents that such party has
carefully read this Agreement, that such party fully understands the final and
binding effect of this Agreement, that the only promises made to such party to
sign this Agreement are those stated above, and that such party is signing this
Agreement voluntarily.
6. 4 Entire Agreement. This Agreement constitutes a single integrated
contract expressing the entire agreement of the parties with respect to the
subject matter hereof and supersedes all prior and contemporaneous oral and
written agreements and discussions with respect to the subject matter hereof.
6. 5 Amendment. This Agreement and each provision hereof may be
amended, modified, supplemented or waived only by a written document
specifically identifying this Agreement and duly executed by each party hereto
or the authorized representative of such party.
6. 6 California Law and Location. This Agreement was negotiated,
finalized and delivered within the State of California, and the rights and
obligations of the parties hereto shall be construed and enforced in accordance
with and governed by the internal (and not the conflict of laws) laws of the
State of California applicable to the construction and enforcement of contracts
between parties resident in California which are entered into and fully
performed in California. Any action or proceeding arising out of, relating to or
concerning this Agreement, including, without limitation, any claim of breach of
contract, shall be filed in the state courts of the County of Los Angeles, State
of California or in a United States District Court in the Central District of
California and in no other location. The parties hereby waive the right to
object to such location on the basis of venue.
6. 7 Attorneys' Fees. In the event a lawsuit is instituted by either
party concerning a dispute under this Agreement, the prevailing party in such
lawsuit shall be entitled to recover from the losing party all reasonable
attorneys' fees, costs of suit and expenses (including fees, costs and expenses
of appeals), in addition to whatever damages or other relief the injured party
is otherwise entitled to under law and in connection with such dispute.
6. 8 Force Majeure. Neither Purchaser nor Seller shall be deemed in
default if such party's performance or obligations hereunder are delayed or
become impossible or impractical by reason of any act of God, war, fire,
earthquake, strike, civil commotion, epidemic or any other cause beyond such
party's reasonable control.
6. 9 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but which together shall constitute
one and the same instrument.
6. 10 Successors and Assigns. Neither party may assign this Agreement
or any of such party's rights or obligations hereunder (including without
limitation rights and duties of performance) to any third party or entity, and
this Agreement may not be involuntarily assigned or assigned by operation of
law, without the prior written consent of the non-assigning party, which consent
may be given or withheld by such non-assigning party in the sole exercise of
such party's discretion. Any prohibited assignment shall be null and void, and
any attempted assignment of this Agreement in violation of this Section shall
constitute a material breach of this Agreement and cause for its termination by
and at the election by notice of the other party hereto. This Agreement shall be
binding upon and inure to the benefit of each of the parties hereto and, except
as otherwise provided herein, their respective legal successors and permitted
assigns.
6. 11 Survival. The representations and warranties herein shall
survive the execution and delivery of this Agreement and each party hereto is
estopped from making a claim which conflicts with such party's representations
and warranties hereunder.
6. 12 Limitation of Damages. Except as expressly set forth herein, in
any action or proceeding arising out of, relating to or concerning this
Agreement, including, without limitation, any claim of breach of contract,
liability shall be limited to compensatory damages proximately caused by such
breach and neither party shall, under any circumstances, be liable to the other
party for consequential, incidental, indirect or special damages, including but
not limited to lost profits or income, even if such party has been apprised of
the likelihood of such damages occurring.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the Effective Date.
PURCHASER: SELLER (if an individual):
DAY RUNNER, INC. Signature(s):
By: /s/ Mark A. Vidovich Address:
Print Name: Mark A. Vidovich
Title: Chief Executive Officer
Address: 15295 Alton Parkway
Irvine, CA 92718
Attention: Chief Executive Officer
SELLER (if trust,
partnership or corporation):
(Print Name of Entity)
By:
Print Name:
Title:
By:
Print Name:
Title:
Address:
SCHEDULE OF SELLERS
Name of Seller Number of Shares Repurchased
Dennis Baglama 6,930
Ronald Bianco 10,000
Donald E. Bottinelli 2,163
James E. Freeman, Jr. 27,329
James P. Higgins 3,500
O.S. II, Inc. 91,174
Lakeside Enterprises 10,000
Stan Littley 4,158
Dennis Marquardt 21,000
Charles Miller 3,267
Alan Rachlin 34,500
Judy Tucker 7,827
Mark Vidovich 70,000
Richard Whatley 1,500
Boyd Willat 23,236
Felice Willat 31,210
EXHIBIT 10.4
Los Angeles Regional Commercial
Banking Office
333 South Grand Avenue, 3rd Floor
Los Angeles, CA 90071 November 1, 1997
Day Runner, Inc.
2750 W. Moore Avenue
Fullerton, CA 9283
Gentlemen:
This letter is to confirm that Wells Fargo Bank, National Association
("Bank") has agreed to extend the maturity date of that certain credit
accommodation granted by Bank to Day Runner, Inc. ("Borrower") in the maximum
principal amount of Fifteen Million Dollars ($15,000,000.00) pursuant to the
terms and conditions of that certain Credit Agreement between Bank and Borrower
as of May 1, 1993, as amended from time to time.
The maturity date of said credit accommodation, and the last day on
which Bank will issue Standby Letters of Credit under the subfeature relating to
said credit accommodation, and the last day on which Bank will issue Commercial
Letters of Credit under the subfeaure relating to said credit accomodation, as
described in Agreement, is hereby extended until February 1, 1998. Until such
date, all terms and conditions of the Agreement which pertain to said credit
accommodation shall remain in full force and effect, except as expressly
modified hereby. The promissory note dated as of September 1, 1997, executed by
Borrower and payable to the order of Bank which evidences said credit
accommodation, a copy of which is attached hereto as Exhibit A, shall be deemed
modified as of the date this letter is acknowledged by Borrower to reflect the
new maturity date set forth above. Further, the last date on which the
above-described Standby Letters of Credit may expire is hereby extended to May
1, 1998, and the last date on which the above-described Commercial Letters of
Credit may expire is hereby extended to August 1, 1998. All other terms and
conditions of the Note remain in full force and effect, without waiver or
modification.
Borrower acknowledges that Bank has not committed to make any renewal
or further extension of the maturity date of the above-described credit
accommodation beyond the new maturity date specified herein, and that any such
renewal or further extension remains in the sole discretion of Bank. This letter
constitutes the entire agreement between Bank and Borrower with respect to the
maturity date extension for the above-described credit accommodation, and
supersedes all prior negotiations, discussions and correspondence concerning
said extension.
Please acknowledge your acceptance of the terms and conditions
contained herein by dating and signing one copy below and returning it to my
attention at the above address on or before November 14, 1997.
Very truly yours,
WELLS FARGO BANK,
NATIONAL ASSOCIATION
By: /s/ Clare Gurbach
---------------------
Vice President
Acknowledged and accepted as of DAY RUNNER, INC.
By: /s/ Dennis K. Marquardt
--------------------------------------------
Title: Executive Vice President, Finance & Admin.
<PAGE>
Exhibit A
REVOLVING LINE OF CREDIT NOTE
$15,000,000.00 Los Angeles, California
September 1, 1997
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 Fifteen Million Dollars ($15,000,000.00), 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) or two (2) 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) NLIBOR" 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
(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 October 1, 1997.
(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 riot 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 E. Freeman, Jr. or Kevin Marquez or Mark
Vidovich or Ravi Shan or 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 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.
<PAGE>
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 K. Marquardt
-----------------------------------------------
Title: Executive Vice President, Finance and Admin.
<TABLE>
<CAPTION>
EXHIBIT 11.1
DAY RUNNER, INC.
COMPUTATION OF EARNINGS PER COMMON AND COMMON EQUIVALENT SHARES
Three Months Ended September 30,
1997 1996
---------------------------------------------
<S> <C> <C>
Net Income $ 4,352,000 $3,848,000
=========== ==========
Weighted average shares outstanding 5,756,000 6,317,000
Additional shares from assumed exercise of options
and warrants 1,561,000 1,310,000
Shares assumed to be repurchased under the
treasury stock method (812,000) (726,000)
NQ tax benefit (249,000) (191,000)
-------- ---------
Total 6,256,000 6,710,000
========= =========
FULLY DILUTED:
Weighted average shares outstanding 5,756,000 6,317,000
Additional shares from assumed exercise of options
and warrants 1,561,000 1,310,000
Shares assumed to be repurchased under the
treasury stock method (729,000) (708,000)
NQ tax benefit (281,000) (198,000)
-------- --------
Total 6,307,000 6,721,000
========= =========
EARNINGS PER SHARE:
Primary $ 0.70 $ 0.57
========== ===========
Fully diluted $ 0.69 $ 0.57
========== ===========
</TABLE>
<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-30-1998
<PERIOD-START> Jul-01-1997
<PERIOD-END> Sep-30-1997
<CASH> 8,080
<SECURITIES> 0
<RECEIVABLES> 35,558
<ALLOWANCES> 10,912
<INVENTORY> 28,845
<CURRENT-ASSETS> 70,335
<PP&E> 19,286
<DEPRECIATION> 10,628
<TOTAL-ASSETS> 79,555
<CURRENT-LIABILITIES> 26,128
<BONDS> 0
0
0
<COMMON> 6
<OTHER-SE> 53,391
<TOTAL-LIABILITY-AND-EQUITY> 79,555
<SALES> 38,138
<TOTAL-REVENUES> 38,138
<CGS> 18,032
<TOTAL-COSTS> 18,032
<OTHER-EXPENSES> 13,066
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (95)
<INCOME-PRETAX> 7,135
<INCOME-TAX> 2,783
<INCOME-CONTINUING> 4,352
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,352
<EPS-PRIMARY> 0.70
<EPS-DILUTED> 0.69
</TABLE>
