<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________ to __________
Commission File No. 0-21726
INTERNATIONAL IMAGING MATERIALS, INC.
-------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 13-3179629
-------- ----------
(State or Other Jurisdiction) (I.R.S. Employer
of Incorporation or Organization Identification No.)
310 Commerce Drive, Amherst, New York 14228
------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(716) 691-6333
--------------
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $.01 PER SHARE
--------------------------------------
(TITLE OF CLASS)
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulations S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
As of May 31, 1996, the aggregate market value of the registrant's Common Stock
held by non-affiliates was $172,770,235. The closing price of the Common Stock
on May 31, 1996 as reported on the Nasdaq National Market, was $23.375.
At May 31, 1996, 8,660,366 shares of common stock of the Registrant were
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Certain sections of the registrant's Annual Report to Stockholders for the
fiscal year ended March 31, 1996 (the "Annual Report") are incorporated by
reference into Part II of this report. Certain sections of the registrant's
Proxy Statement for its Annual Meeting of Stockholders to be held on August 21,
1996 (the "Proxy Statement") are incorporated by reference into Part III of this
report.
<PAGE>
PART I
ITEM 1. BUSINESS
THE COMPANY
International Imaging Materials, Inc. (the "Company") is the largest
manufacturer of thermal transfer ribbons in North America for numerous diverse
applications. These thermal transfer ribbons are used in bar code printers to
print single-color and full-color tags and labels for use in manufacturing and
factory automation systems, shipping and distribution systems, retail price tag
applications and medical applications. Other thermal transfer ribbons produced
by the Company are used in full-color printers to print high quality color
graphics for business presentations, engineering and scientific drawings,
graphic arts prepress layouts, proofs and comps, signage and other full color
imaging applications. The Company also manufactures MICR ribbons for thermal
transfer proof encoders used to encode checks for processing through the United
States banking system, as well as ribbons used in plain-paper thermal transfer
facsimile machines.
The Company has been manufacturing thermal transfer ribbons since 1984
under a license agreement with Fujicopian Co., Ltd. of Osaka, Japan, a
recognized leader in thermal transfer ribbon technology. Under the license
agreement, the Company has the exclusive right (with certain exceptions) to
manufacture in North America color thermal transfer ribbons covered by
Fujicopian Co. Ltd.'s patents. As a result of the Company's operating
experience and long-standing relationship with Fujicopian Co., Ltd., the Company
has been able to develop significant proprietary product and manufacturing know-
how relating to thermal transfer ribbons.
Effective March 31, 1994, the Company adopted a formal plan to
discontinue the operation of its software division. Discontinuation of this
line of business, which developed an easy-to-use color presentation software
package, resulted in an after-tax loss of $432,000 in fiscal 1994.
Originally incorporated in New York in 1983, the Company was reorganized
as a Delaware corporation in 1985.
The principal executive offices of the Company are located at 310
Commerce Drive, Amherst, New York 14228 and its telephone number is (716) 691-
6333.
PRODUCTS
The Company's thermal transfer ribbons are an essential consumable in the
thermal transfer printing process. In such a printing process, the image to be
printed is transferred from the printer to the receptor material (generally
paper, overhead transparency film or tag or label stock) through the application
of an electronically heated printhead to a thermal transfer ribbon which
releases ink onto the receptor. A basic thermal transfer ribbon is comprised of
an ink coating on a film substrate. Single-color thermal transfer ribbons,
typically used in bar code applications, are manufactured by coating the film
substrate with a wax or resin-based ink coating containing black or other
monochromatic pigments. Color images were traditionally printed with other
ribbons containing multiple sets of three separate panels, with each panel
containing one of the three primary subtractive colors: yellow, magenta and
cyan. As a variation of this principle, some recently developed high-speed
color printers use separate yellow, magenta, cyan and black ribbons, which the
Company also manufactures. By overlaying various combinations of the
subtractive colors (e.g., cyan over yellow to create green) with different
intensities and dot placements, a process color image is created. The film
substrate is also backcoated with various resin-based coatings which are
designed to prevent distortion of the ribbon during the printing process,
minimize static electricity and reduce abrasion of the thermal transfer
printhead. The end-user applications for the Company's ribbons can be grouped
into three fundamental categories: bar code, color and other.
<PAGE>
Bar Code Ribbons
The Company's bar code thermal transfer ribbons include a wide range of
products designed to maximize bar code thermal transfer printer performance for
specific applications. Bar code thermal transfer ribbons are produced to
printer manufacturer (OEM) and end-user specifications based on variables such
as printer speed, electronic printhead design, heat management characteristics
and printing pressure. The Company manufactures bar code thermal transfer
ribbons which are designed to meet these specifications and to comply with
industry bar code printing standards.
The installed base of bar code printers has grown as "on-demand" printing
of human and machine readable information has become more widely accepted for
its efficiency and cost effectiveness in the retail, industrial, shipping and
distribution, and medical sectors. A major factor in this growth has been the
rise in the use of automatic identification and data collection systems in a
variety of manufacturing, business and industrial applications, the most
prevalent of which are on-demand printing systems. On-demand bar code printing
systems permit users to print labels on-site that provide various types of
information. For example, in the case of manufacturers, products may be labeled
to provide information such as the date of manufacture, special serial, lot or
purchase order numbers, accurate weights and measures, expiration dates and
other similar information. Bar codes incorporating such information can be
printed on a label which is affixed to the product at the time of production,
even in high speed production line applications. In such bar code labeling
systems, data is stored in a printed, computer-legible format (i.e., a bar code)
which can be read with scanning devices, allowing the collection of the data
contained in the bar code by a host computer. Such data may be used by the
manufacturers, distributors and ultimate users of products who require bar code
images that provide a very low failure rate for unscannable tags or labels.
The Company expects that future growth in sales of bar code thermal
transfer ribbons will result from an increase in the use of thermal transfer, as
opposed to other printing technologies, and an increase in the use of mandated
bar code standards in various industrial and retail applications. These
standards are established by industry trade organizations for use by vendors
doing business in a particular industry. Such standards have been adopted for
use in the automotive, apparel, defense procurement, grocery, health care,
retail and retail transportation, distribution, chemical and telecommunications
industries. Another factor driving the increased use of bar coding is retail
chain stores use of "compliance" shipping labels which are required for
acceptance of deliveries. National retail chains such as K-Mart, Sears, J.C.
Penney and Walmart have developed bar code label formats which must be used by
vendors. Failure by vendors to do so may result in penalties or charge-backs.
The Company expects this trend to continue and to spread to other industries.
Although a number of different non-impact printing technologies may be
used for bar code printing, the Company believes that thermal transfer printing
is ideal for many bar code printing applications, particularly in harsh
environments. Numerous retail, industrial, medical, food product, financial and
other applications require dark, well-defined lines which are important for
readily scannable bar codes as well as durable, high quality scratch and smudge
resistant printed images. Thermal transfer printing meets these requirements
and offers the ability to print on a variety of materials with very good
reliability.
Color Ribbons
The Company is the sole manufacturer of process color thermal transfer
ribbons in North America using separate panels of yellow, magenta, cyan and
black from the same ribbon. Although color thermal transfer printers imported
into North America by OEMs based outside of North America initially use color
thermal transfer ribbons produced by Fujicopian Co., Ltd., the Company's
experience has been that most such OEMs eventually purchase compatible color
thermal transfer ribbons from the Company to avoid the foreign exchange risk,
longer lead times, additional shipping and distribution expenses and tariffs
associated with imports of thermal transfer ribbons into the United States.
The major applications for color printers are business graphics and
presentations, scientific and engineering drawings, medical imaging, graphic
arts design, electronic publishing, and signage. Graphs and charts developed
using currently available software can be either printed onto paper for
inclusion in reports,
<PAGE>
presentations and other documents, or printed onto transparencies for use with
overhead projectors. Substantial amounts of statistical, financial and other
information can be summarized in easily readable and understandable color charts
and graphs for business presentations. Engineering and scientific
applications enable users to create more easily understandable color renderings
of complex designs, drawings and images. In the graphic arts and electronic
publishing industries, color printers are used to produce color advertising
proofs, test designs for packaging, color layouts and computer-generated
artistic renderings. The ultra-violet light resistance and durability of
recently developed thermal transfer inks, as well as the ability to print on a
wide variety of vinyl substrates, has created new applications for thermal
transfer printing in both indoor and outdoor signage. The use of separate
process color ribbons, and other recent advancements in thermal transfer
printers, have increased color printing speeds by a factor of ten, compared to
printers using a single ribbon composed of separate panels of yellow, magenta
and cyan. This development is expected to open new avenues for full-color
thermal transfer printing.
Color thermal transfer ribbons are produced to printer OEM specifications
based on variables such as printer speed, electronic printhead design, heat
management characteristics and printing pressure. Film substrate
characteristics and backcoat formulations may be adjusted to maximize the
suitability of the ribbon for a particular application. Because of the highly
specialized characteristics of color thermal transfer ribbons, such ribbons are
not interchangeable among different printers. Thus, the Company manufactures
one or more different ribbons for each color printer model manufactured by each
OEM customer. The Company sells color thermal transfer ribbons only to the
printer manufacturer thereby giving each OEM a proprietary ribbon to sell in the
aftermarket.
Other Products
In addition to bar code and color thermal transfer ribbons, the Company
manufactures other types of thermal transfer ribbons, primarily MICR and plain-
paper facsimile ribbons. MICR ribbons are used to encode checks for processing
through the United States banking system. Under the license agreement with
Fujicopian Co., Ltd., the Company has the right to manufacture MICR ribbons
protected by Fujicopian's patents and to use certain proprietary technology to
manufacture such ribbons. Also included in other products are ribbons which are
used in plain-paper thermal transfer facsimile machines due to the reliability,
high quality and permanence of thermal transfer printing.
SALES, MARKETING AND SUPPORT
The Company sells its thermal transfer ribbons principally to printer
OEMs which in turn sell ribbons under their own brand names to end users, either
directly or through distributors and value-added resellers. The Company
markets, sells and provides support for its thermal transfer ribbons in North
America through its own sales and marketing staff principally based at its
Amherst, New York headquarters. Since thermal transfer ribbon formulations and
performance are significantly influenced by printer design, the Company's joint
product development efforts with printer OEMs have been important to the
Company's success. By selling primarily to printer OEMs, the Company has
minimized its need for a large sales support staff.
The Company also markets its bar code thermal transfer ribbons through a
number of alternate distribution channels in situations where the Company
believes that such marketing will not adversely affect sales of the Company's
products to printer OEM customers. Such alternate distribution channels include
master distributors, value-added resellers and large dealers. Value-added
resellers include bar code system integrators, bar code printer resellers,
computer supplies resellers and label converters. Dealers include label
manufacturers, printer resellers and business forms dealers. As the market for
bar code thermal transfer ribbons increasingly matures, end-users are expected
to purchase their ribbon requirements at lower cost through these highly-
competitive alternate distribution channels.
In September 1995, the Company acquired the thermal transfer supplies
business from one of its OEM customers, QMS, Inc., and began selling ribbons and
other thermal transfer supplies under the QMS brand name directly to
distributors, dealers and end-users. As a result of this acquisition, the
Company expanded its product offerings to include non-ribbon thermal transfer
supplies and created a telemarketing capability to serve small distributors,
dealers and end-user customers.
<PAGE>
The Company employs a total of 34 people in its sales and marketing
organization, including executives, managers and a customer service and support
staff. Because the Company sells its thermal transfer ribbons primarily to
large OEM customers, the Company achieves what it considers to be high sales
productivity per sales executive.
CUSTOMERS
The Company's basic channel of distribution for its thermal transfer
ribbons is the printer manufacturer or OEM who in turn sell to thousands of
other distributors and end users of the ribbons. In addition, the Company sells
its bar code thermal transfer ribbons to master distributors, value added
resellers and large dealers. The Company also began to sell QMS thermal
transfer supplies to dealers, distributors and end-users following the
acquisition of this business during fiscal 1996.
BACKLOG
The Company's backlog at March 31, 1996 was $4.2 million, unchanged from
March 31, 1995.
MANUFACTURING
The Company manufactures inks from pigments, waxes, resins and solvents,
and then coats them onto large rolls of ultra-thin polyester film substrate.
These coated "jumbo rolls" are then converted into finished ribbons by slitting
and winding them onto cardboard or plastic cores before packaging and boxing.
The manufacturing process operates 24 hours each day, seven days per week
throughout the year, using four shifts of manufacturing employees. A typical
manufacturing employee works 12 hours each day for four days, followed by four
days off, then three days on and finally three days off. All manufacturing is
performed at the Company's facilities located in Amherst, New York. The
manufacturing function is supported by a plant and industrial engineering
department which has implemented a detailed preventative maintenance program for
the Company's manufacturing equipment. The Company's quality assurance
department oversees required testing and audits both manufacturing processes and
products. The production planning and control department utilizes a
manufacturing resource planning system to plan and control material usage and
shop schedules to satisfy customer orders.
RAW MATERIALS
The principal raw materials required by the Company are polyester film,
pigments and coating solvents. Key supplies are generally purchased pursuant to
contracts covering up to one year. Multiple sources exist for all raw
materials, other than one of the premixed pigments used by the Company in the
manufacture of certain color thermal transfer ribbons. The Company expects to
begin in-house manufacturing of this premixed pigment and is actually developing
alternative domestic sources.
RESEARCH AND PRODUCT DEVELOPMENT
The thermal transfer ribbon industry involves sophisticated technological
and manufacturing processes. Historically, the Company's advanced technology
had largely been provided by Fujicopian which invented, and is a leader in,
thermal transfer printing technology. More recently, the Company significantly
strengthened its own internal research and development staff and now employs 24
people dedicated to research and development.
The Company works closely with Fujicopian and Armor, Fujicopian's
European licensee, in the research and development of new products and
manufacturing processes. The Company, Fujicopian and Armor conduct research and
development strategy meetings to coordinate their efforts four times each year.
During these meetings, each company presents its most recent research and
development activities before selecting those
<PAGE>
programs to further develop independently. In this manner, each company is able
to benefit from three separate research and development programs. The Company
believes that this combined research and development provides the Company,
Fujicopian and Armor with greater thermal transfer ribbon technology and
research and development resources than many of their competitors.
At times, the Company has retained selected universities, including the
Rochester Institute of Technology, to supplement its internal research and
development efforts and to provide technical expertise with respect to a variety
of research and development efforts. The Rochester Institute of Technology is
known for its work in the fields of imaging science and graphic arts.
The Company's research and development expenses were $1.5 million, $2.2
million and $3.1 million during fiscal years 1994, 1995 and 1996, respectively.
In view of the ongoing technological and proprietary developments which
Fujicopian shares with the Company pursuant to the license agreement, the
Company views its royalty payments under the license agreement (which amounted
to $2.7 million during fiscal 1996) as an expense that, in part, yields an
additional form of research and development benefit.
LICENSE AND PATENTS
The Company's license agreement with Fujicopian extends until 2008.
Under the license agreement, Fujicopian has granted to the Company an exclusive
license (with certain exceptions) to manufacture specified products in North
America, including thermal transfer ribbons and improvements to such products
developed by Fujicopian and the Company, and a non-exclusive right to sell and
distribute such products in all countries other than those in Europe and Asia,
using the technology and processes covered by the patents obtained and patent
applications made and to be made by Fujicopian relating to such products and
their manufacture. In exchange for such rights, the Company has agreed to pay
annual royalties on sales of all thermal transfer ribbons.
The Company believes that the two most important patents which it has the
right to use under the license agreement are U.S. Patent No. 4,503,095 and U.S.
Patent No. 4,572,684, both of which expire in 2003. Such patents relate to
certain color thermal transfer ribbons and their use. The Company believes that
these patents have discouraged competitors from manufacturing certain color
thermal transfer ribbons in the United States.
COMPETITION
Competition in the color thermal transfer ribbon market has been limited
as a result of Fujicopian's patents and the Company's right to use these patents
under the license agreement. As a result of the exclusivity provided by the
license agreement, the Company believes that its principal competition for
increased sales of color thermal transfer ribbons to printer OEMs comes from
competing technologies, such as ink jet and laser.
In contrast, the bar code thermal transfer ribbon market is highly
competitive as a number of manufacturers compete for market share. Unlike the
color thermal transfer ribbon market, the Company does not enjoy the benefit of
any patent protection with respect to the proprietary technology it utilizes
(other than in the manufacture of MICR ribbons). General Ribbon of Japan, Ricoh
Electronics, Sony Chemical and Dai Nippon Printing are all Japan-based companies
that compete in North America. Competition from Japanese competitors has, to
some extent, been limited by the foreign exchange risk, longer lead times,
additional transportation and distribution expenses and tariffs associated with
imports into the United States. However, certain of the Company's Japan-based
competitors have either announced their intentions or have begun to manufacture
all or part of their thermal transfer products in the United States to reduce
their manufacturing costs. North American-based companies which compete in the
bar code thermal transfer ribbon market include Chemicraft, Coding Products and
AT&T.
<PAGE>
REGULATORY MATTERS
The Company is subject to various federal, state and local environmental
laws and regulations limiting or related to the use, emission, discharge,
storage, treatment, handling and disposal of hazardous substances, particularly
the federal Water Pollution Control Act, the Clean Air Act of 1970 (as amended
in 1990), the Resource Conservation and Recovery Act (including amendments
relating to underground tanks) and the special "Superfund" program.
The Company has made significant investments in safety and environmental
equipment, including solvent tank storage and thermal oxidizer systems, which
have reduced solvent emissions by more than 95%. This emission amount, as
reduced, is well within the current emission control standards and permit
requirements as established by the New York Department of Environmental
Conservation and the federal Environmental Protection Agency.
The Company is also subject to federal , state and local laws and
regulations relating to workplace safety and worker health, including those
promulgated under the Occupational Safety and Health Act ("OSHA"). The Company
believes that it currently is in compliance in all material respects with
existing OSHA laws and regulations.
EMPLOYEES
As of March 31, 1996, the Company had 608 employees, of whom 34 were
engaged in sales, 24 in research and development, 39 in finance and
administration, 122 in manufacturing support, 360 in manufacturing operations
and 29 in various part-time and temporary capacities.
None of the Company's employees are represented by a collective
bargaining organization and the Company considers its relationships with its
employees to be good.
CAUTIONARY STATEMENT PURSUANT TO "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
Except for historical information, this report, the Company's quarterly
reports to the Securities and Exchange Commission on Form 10-Q and periodic
press releases, as well as other public documents and statements, contain
"forward-looking statements" within the meaning of the federal securities laws.
Forward-looking statements are subject to risks and uncertainties that could
cause actual results to differ materially from those expressed or implied by the
statements, including, among others:
<TABLE>
<CAPTION>
<C> <S>
. Significant price reductions or improvements in competing imaging
technologies.
. The rate of growth of the installed base of thermal transfer printers and the
timing of orders.
. Dependence on a small number of large OEM customers.
. Competitive product offerings and pricing actions.
. The availability and pricing of key raw materials, in particular polyester
film and ink-making materials.
. Productivity improvements in manufacturing, including the start-up of new
coating equipment.
. Dependence on key members of management.
</TABLE>
Readers are cautioned not to place undue reliance on forward-looking
statements. The Company undertakes no obligation to republish revised forward-
looking statements to reflect events or circumstances after the date hereof or
to reflect the occurrences of unanticipated events.
<PAGE>
ITEM 2. PROPERTIES
The Company's main facility is located in Amherst, New York, a suburb of
Buffalo, and contains office space, two manufacturing plants and two warehouses
totaling approximately 300,000 square feet. The Company's principal
manufacturing equipment consists of ink-making machines, coating machines,
backcoating machines, slitting machines and ribbon-packaging machines. The
Company's equipment is subject to a detailed preventative maintenance program
and is believed to be in generally good working order.
ITEM 3. LEGAL PROCEEDINGS
The Company is not presently involved in any legal proceedings which, if
determined adversely to the Company, would have a material adverse effect on the
Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of fiscal 1996.
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Incorporated by reference from the Annual Report, page 28, under the
caption "Common Stock Information."
ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data as of March 31, 1995 and 1996 and
for the years ended March 31, 1994, 1995 and 1996 have been derived from the
audited consolidated financial statements of the Company incorporated herein by
reference. The selected financial data as of March 31, 1992, 1993 and 1994 and
for the years ended March 31, 1992 and 1993 are derived from audited financial
statements. The data set forth below should be read in conjunction with the
consolidated financial statements and the notes thereto incorporated herein by
reference:
<TABLE>
<CAPTION>
March 31,
--------------------------------------------
1992 1993 1994 1995 1996
------- ------- ------- ------- --------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
For the year ended:
Revenues $32,324 $48,438 $61,576 $85,477 $ 88,448
Income from continuing operations 1,544 3,067 6,100 9,970 9,903
Net income from continuing
operations per share 0.29 0.51 0.76 1.10 1.07
Cash dividends --- --- --- --- ---
At year end:
Total assets 45,975 57,483 76,876 97,944 115,461
Notes payable to banks and
long-term debt $20,004 $24,745 $ 7,349 $ 5,637 $ 20,225
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Incorporated by reference from the Annual Report, pages 14 to 17, under
the caption "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements of the Company as listed under item 14(a)(1) of this
Form 10-K and the independent auditors report thereon are incorporated by
reference from the Annual Report, pages 18 to 27.
Supplementary data are not required pursuant to Item 302 of Regulation S-
K. The Company has elected, however, to present certain quarterly information
in note 10 to its audited financial statements included on page 25 of the Annual
Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated by- reference from the Proxy Statement, pages 2 to 3, 5 to 6
and 18, under the captions "Proposal 1 - Election of Directors," "Executive
Officers" and "Compliance with Section 16(a) of the Exchange Act."
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference from the Proxy Statement, pages 4 and 7 to 15,
under the captions "Proposal 1 - Election of Directors - Compensation of
Directors" and "Executive Compensation."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference from the Proxy Statement, page 16, under the
caption "Security Ownership of Principal Stockholders, Directors, Nominees and
Executive Officers."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from the Proxy Statement, pages 9 and 17, under
the captions "Executive Compensation - Compensation Committee Interlocks and
Insider Participation" and "Certain Relationships and Related Transactions."
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) (1) FINANCIAL STATEMENTS - THE FOLLOWING FINANCIAL STATEMENTS, TOGETHER
WITH THE INDEPENDENT AUDITORS REPORT THEREON, ARE INCORPORATED BY REFERENCE TO
THE FOLLOWING PAGES IN THE ANNUAL REPORT:
<TABLE>
<CAPTION>
Page in Annual Report
---------------------
<S> <C>
Consolidated Statements of Income for the years ended
March 31, 1994, 1995 and 1996 18
Consolidated Balance Sheets at March 31, 1995 and 1996 19
Consolidated Statements of Cash Flows for the years ended
March 31, 1994, 1995 and 1996 20
Consolidated Statements of Stockholders' Equity
for the years ended March 31, 1994, 1995 and 1996 21
Notes to Consolidated Financial Statements 22 - 25
Independent Auditors' Report 26
</TABLE>
(2) FINANCIAL STATEMENT SCHEDULES:
Independent Auditors' Report on Financial Statement Schedule
Schedule VIII Valuation and qualifying accounts
(Schedules other than those listed are omitted for the reason that they
are not required, are not applicable or the required information is shown in the
financial statements or notes thereto.)
(3) EXHIBITS:
Exhibits designated by an asterisk are management contracts and compensatory
plans and arrangements required to be identified by Item 14(a)(3).
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- ----------------------------------------
<C> <S>
3.1.1 Amended and Restated Certificate of
Incorporation of the Registrant.
(Incorporated by reference to Exhibit
3.1 to the Registration Statement of
the Registrant on Form S-1
(Registration No. 33-62290) (the
"Registration Statement on Form S-1").)
3.1.2 Amended and Restated Certificate of
Incorporation of the Registrant.
(Incorporated by reference to Exhibit 3
of Form 10-Q dated February 3, 1995.)
3.2 By-laws of the Registrant.
(Incorporated by reference to Exhibit
3.2 to the Registration Statement on
Form S-1.)
4.1 Form of Certificate for Common Stock of
the Registrant. (Incorporated by
reference to Exhibit 4.1 to the
Registration Statement on Form S-1.)
10.1.1 License Agreement, dated June 20, 1983,
between Fuji Kagakushi Kogyo Company
Limited (name subsequently changed to
Fujicopian Co., Ltd.) ("Fujicopian")
and the Registrant. (Incorporated by
reference to Exhibit 10.1.1 to the
Registration Statement on Form S-1.)
10.1.2 Amendment, dated February 24, 1987, to
License Agreement referenced in Exhibit
10.1.1. (Incorporated by reference to
Exhibit 10.1.2 to the Registration
Statement on Form S-1.)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- ----------------------------------------
<C> <S>
10.1.3 Letter Agreement, dated March 6, 1989,
between Fujicopian and the Registrant
amending License Agreement referenced
in Exhibit 10.1.1. (Incorporated by
reference to Exhibit 10.1.3 to the
Registration Statement on Form S-1.)
10.1.4 Amendment, dated April 24, 1990, to
License Agreement referenced in Exhibit
10.1.1. (Incorporated by reference to
Exhibit 10.1.4 to the Registration
Statement on Form S-1.)
10.2 Indemnification Agreement, dated April
11, 1988, between Fujicopian and the
Registrant. (Incorporated by reference
to Exhibit 10.2 to the Registration
Statement on Form S-1.)
10.3.1 Equipment Repurchase Agreement, dated
March 6, 1989, between Fujicopian and
the Registrant. (Incorporated by
reference to Exhibit 10.3.1 to the
Registration Statement on Form S-1.)
10.3.2 Assignment, dated March 30, 1989, of
Equipment Repurchase Agreement
referenced in Exhibit 10.3.1, from the
Registrant to Norstar Bank, National
Association ("Norstar Bank")
(Incorporated by reference to Exhibit
10.3.2 to the Registration Statement on
Form S-1.).
10.3.3 Letter Agreement, dated June 14, 1989,
from Norstar Bank and the Registrant
and agreed to by Fujicopian, clarifying
terms of Assignment referenced in
Exhibit 10.3.2. (Incorporated by
reference to Exhibit 10.3.3 to the
Registration Statement on Form S-1.)
10.3.4 Assignment, dated March 26, 1992, of
Equipment Repurchase Agreement
referenced in Exhibit 10.3.1, from
Norstar Bank to Marine Midland Bank,
N.A. ("Marine Midland Bank"), with
consent by the New York Job Development
Authority ("JDA"). (Incorporated by
reference to Exhibit 10.3.4 to the
Registration Statement on Form S-1.)
10.4.1 Cross-License Agreement, dated as of
December 14, 1984, between
International Business Machines
Corporation ("IBM") and the Registrant.
(Incorporated by reference to Exhibit
10.4.1 to the Registration Statement on
Form S-1.)
10.4.2 Letter Agreement, dated September 3,
1987, between Fujicopian and the
Registrant and related to Cross-License
Agreement, dated as of July 1, 1986,
between IBM and Fujicopian.
(Incorporated by reference to Exhibit
10.4.2 to the Registration Statement on
Form S-1.)
10.10 Memorandum of Understanding Concerning
Heat-Sensitive Color Transfer Ribbons,
dated April 1989, between Fujicopian
and Dai Nippon Printing Co., Ltd., for
the benefit, in part, of the Registrant
(including an English translation
thereof). (Incorporated by reference
to Exhibit 10.10 to the Registration
Statement on Form S-1.)
10.11 Letter Agreement, dated April 1, 1987,
among Fujicopian, Toppan Printing Co.,
Ltd. and Toyo Ink Manufacturing Co.,
Ltd., for the benefit, in part, of the
Registrant (including an English
translation thereof). (Incorporated by
reference to Exhibit 10.11 to the
Registration Statement on Form S-1.)
10.12.6 Registration Rights Agreement, dated
May 6, 1988, between the Registrant and
Norstar Bank. (Incorporated by
reference to Exhibit 10.12.6 to the
Registration Statement on Form S-1.)
10.12.7 Common Stock Subscription Warrant,
dated May 6, 1988, between the
Registrant and Norstar Bank.
(Incorporated by reference to Exhibit
10.12.7 to the Registration Statement
on Form S-1.)
10.13.1 Guarantee Agreement, dated March 30,
1989, made by the JDA to Norstar Bank
for the benefit of and accepted by the
Registrant. (Incorporated by reference
to Exhibit 10.13.1 to the Registration
Statement on Form S-1.)
10.13.2 Amendment, dated December 27, 1990, to
Guarantee Agreement referenced in
Exhibit 10.13.1. (Incorporated by
reference to Exhibit 10.13.2 to the
Registration Statement on Form S-1.)
10.13.3 Loan and Use Agreement, dated as of
March 30, 1989, between Norstar Bank,
the Town of Amherst Industrial
Development Agency ("IDA") and the
Registrant and agreed to by the JDA.
(Incorporated by reference to Exhibit
10.13.3 to the Registration Statement
on Form S-1.)
10.13.4 Mortgage, dated as of March 30, 1989,
made by the Registrant and the IDA to
Norstar Bank. (Incorporated by
reference to Exhibit 10.13.4 to the
Registration Statement on Form S-1.)
10.13.5 Indemnification and Guaranty Agreement,
dated as of March 30, 1989, from the
Registrant to the JDA. (Incorporated
by reference to Exhibit 10.13.5 to the
Registration Statement on Form S-1.)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
- -------- ----------------------------------------
<C> <S>
10.13.6 Subordination Agreement, dated as of
March 30, 1989, by Norstar Bank for the
benefit of the IDA, the JDA and the
Registrant. (Incorporated by reference
to Exhibit 10.13.6 to the Registration
Statement on Form S-1.)
10.13.7 Mortgage Modification and Spreader
Agreement, dated December 27, 1990,
with respect to $1,400,000 Mortgage,
among the JDA, Norstar Bank, the IDA
and the Registrant. (Incorporated by
reference to Exhibit 10.15.8 to the
Registration Statement on Form S-1.)
10.14.1 Guarantee Agreement, dated as of March
30, 1989, made by the JDA to Norstar
Bank for the benefit of and accepted by
the Registrant. (Incorporated by
reference to Exhibit 10.14.1 to the
Registration Statement on Form S-1.)
10.14.2 Amendment, dated December 27, 1990, to
Guarantee Agreement referenced in
Exhibit 10.14.1. (Incorporated by
reference to Exhibit 10.14.2 to the
Registration Statement on Form S-1.)
10.14.3 Security Agreement (Machinery and
Equipment), dated as of March 30, 1989,
made by the Registrant for the benefit
of Norstar Bank and accepted by the
JDA. (Incorporated by reference to
Exhibit 10.14.3 to the Registration
Statement on Form S-1.)
10.14.4 Indemnification and Guaranty Agreement,
dated as of March 30, 1989, made by the
Registrant to the JDA. (Incorporated
by reference to Exhibit 10.14.4 to the
Registration Statement on Form S-1.)
10.14.5 Intercreditor Agreement, dated as of
March 30, 1989, among Norstar Bank, The
Buffalo and Erie County Regional
Development Corporation ("RDC") and the
JDA and acknowledged and accepted by
the Registrant. (Incorporated by
reference to Exhibit 10.14.5 to the
Registration Statement on Form S-1.)
10.14.6 Letter Agreement, dated May 27, 1993
between the New York Job Development
Authority and the Registrant assigning
a loan to the New York Job Development
Authority. (Incorporated by reference
to Exhibit 10.14.6 of Form 10-K dated
June 15, 1994.)
10.15.7 Mortgage Modification and Spreader
Agreement, dated December 27, 1990,
with respect to $1,000,000 Mortgage,
among Norstar Bank, the IDA and the
Registrant. (Incorporated by reference
to Exhibit 10.15.7 to the Registration
Statement on Form S-1.)
10.15.9 Security Agreement (Machinery and
Equipment), dated December 27, 1990,
from the Registrant to Norstar Bank and
agreed to and accepted by the JDA and
related to Machinery and Equipment
Promissory Note. (Incorporated by
reference to Exhibit 10.15.9 to the
Registration Statement on Form S-1.)
10.15.10 Guarantee Agreement, dated December 27,
1990 from the JDA to Norstar Bank for
the benefit of and acknowledged and
accepted by the Registrant.
(Incorporated by reference to Exhibit
10.15.10 to the Registration Statement
on Form S-1.)
10.15.11 Indemnification and Guaranty Agreement,
dated as of December 27, 1990, between
the JDA and the Registrant.
(Incorporated by reference to Exhibit
10.15.11 to the Registration Statement
on Form S-1.)
10.15.12 Intercreditor Agreement, dated as of
December 27, 1990, among Norstar Bank,
the RDC and the JDA and acknowledged
and agreed to by the Registrant.
(Incorporated by reference to Exhibit
10.15.12 to the Registration Statement
on Form S-1.)
10.15.14 Letter Agreement, dated June 3, 1993
between the New York Job Development
Authority and the Registrant assigning
a loan to the New York Job Development
Authority. (Incorporated by reference
to Exhibit 10.14.6 of Form 10-K dated
June 15, 1994.)
10.16 Demand Note Agreement, dated March 31,
1995, between Fleet Bank and the
Registrant. (Incorporated by reference
to Exhibit 10.16 of Form 10-K dated
June 15, 1995.
10.16.1 Amendment, dated June 17, 1996, to
Demand Note Agreement referenced in
Exhibit 10.16.
10.17.1 Assignment, dated March 26, 1992, of
Security Agreement and Machinery and
Equipment Promissory Note referenced in
Exhibit 10.15.9, and of Guarantee
Agreement referenced in Exhibit
10.15.10, from Norstar Bank to Marine
Midland Bank and acknowledged and
consented to by the JDA. (Incorporated
by reference to Exhibit 10.17.1 to the
Registration Statement on Form S-1.)
10.17.2 Modification and Reaffirmation
Agreement, dated as of March 26, 1992,
between Marine Midland Bank, the JDA
and the Registrant. (Incorporated by
reference to Exhibit 10.17.2 to the
Registration Statement on Form S-1.)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
- -------- ----------------------------------------
<C> <S>
10.17.3 Letter Agreement, dated March 26, 1992,
from Marine Midland Bank to Norstar
Bank and agreed to by Norstar Bank and
the JDA and related to Intercreditor
Agreement referenced in Exhibit
10.15.12. (Incorporated by reference
to Exhibit 10.17.3 to the Registration
Statement on Form S-1.)
10.18 Demand Note Agreement, dated March 31,
1995, between Marine Midland Bank and
the Registrant. (Incorporated by
reference to Exhibit 10.18 of Form 10-K
dated June 15, 1995.)
10.18.1 Demand Note Agreement, dated June 3,
1996 between Marine Midland Bank and
the Registrant.
*10.19.1 1984 Stock Plan of the Registrant.
(Incorporated by reference to Exhibit
10.19.1 to the Registration Statement
on Form S-1.)
*10.19.2 Amendment No. 1, dated October 29,
1987, to 1984 Stock Plan of the
Registrant referenced in Exhibit
10.19.1. (Incorporated by reference to
Exhibit 10.19.2 to the Registration
Statement on Form S-1.)
*10.19.3 Amendment, dated July 27, 1989, to 1984
Stock Plan of the Registrant referenced
in Exhibit 10.19.1. (Incorporated by
reference to Exhibit 10.19.3 to the
Registration Statement on Form S-1.)
*10.19.4 Amendment, dated May 11, 1990, to 1984
Stock Plan of the Registrant referenced
in Exhibit 10.19.1. (Incorporated by
reference to Exhibit 10.19.4 to the
Registration Statement on Form S-1.)
*10.19.5 Amendment No. 2, dated July 26, 1990,
to 1984 Stock Plan of the Registrant
referenced in Exhibit 10.19.1.
(Incorporated by reference to Exhibit
10.19.5 to the Registration Statement
on Form S-1.)
*10.19.6 Amendment, dated October 6, 1993, to
1984 Stock Plan of the Registrant
referenced in Exhibit 10.19.1.
(Incorporated by reference to Exhibit
4.3 to the Registration Statement of
the Registrant on Form S-8
(Registration No. 33-71716) (the
"Registration Statement on Form S-8").)
*10.19.7 Amendment dated February 24, 1989, to
1984 Stock Plan of the Registrant
referenced in Exhibit 10.19.1.
(Incorporated by reference to Exhibit
10.20.4 to the Registration Statement
on Form S-1.)
*10.21.1 1990 Incentive Plan of the Registrant.
(Incorporated by reference to Exhibit
10.21 to the Registration Statement on
Form S-1.)
*10.21.2 Amendment, dated October 6, 1993, to
1990 Incentive Plan of the Registrant
referenced in Exhibit 10.21.1.
(Incorporated by reference to Exhibit
4.4 to the Registration Statement on
Form S-8.)
*10.21.3 Amendment dated March 17, 1995, to 1990
Incentive Plan of the Registrant
referenced in Exhibit 10.21.1.
(Incorporated by reference to Exhibit
10.21.3 of Form 10-K dated June 15,
1995.)
10.23 Form of Demand Note executed by persons
listed in item 404(c) of regulations
S-K who are indebted to the Company as
evidence of such indebtedness as set
forth on the schedule attached to the
form.
10.23.1 Form of Term Note executed by persons
listed in item 404(c) of regulation S-K
who are indebted to the Company as
evidence of such indebtedness as set
forth on the schedule attached to the
form.
*10.24.1 Continuity Agreement, dated as of
January 1, 1991, between John W.
O'Leary and the Registrant.
(Incorporated by reference to Exhibit
10.24 to the Registration Statement on
Form S-1.)
*10.24.2 Executive Continuity Agreement, dated
June 23, 1994, between James H. Groh
and the Registrant. (Incorporated by
reference to Exhibit 10.24.2 of Form
10-K dated June 15, 1994.)
*10.24.3 Executive Continuity Agreement, dated
June 27, 1994, between Richard A.
Marshall and the Registrant.
(Incorporated by reference to Exhibit
10.24.3 of Form 10-K dated June 15,
1994.)
*10.24.4 Executive Continuity Agreement, dated
June 21, 1994, between Michael J.
Drennan and the Registrant.
(Incorporated by reference to Exhibit
10.24.4 of Form 10-K dated June 15,
1994.)
*10.24.5 Executive Continuity Agreement, dated
June 23, 1994, between Vincent C.
Dowell and the Registrant.
(Incorporated by reference to Exhibit
10.24.5 of Form 10-K dated June 15,
1994.)
*10.24.6 Executive Continuity Agreement, dated
June 23, 1994, between Richard W. Dean
and the Registrant. (Incorporated by
reference to Exhibit 10.24.6 of Form
10-K dated June 15, 1994.)
*10.24.7 Executive Continuity Agreement, dated
June 27, 1994, between Nick S.
Mandrycky and the Registrant.
(Incorporated by reference to Exhibit
10.24.7 of Form 10-K dated June 15,
1994.)
*10.24.8 Executive Continuity Agreement, dated
May 1, 1995 between Rickey W. Wallace
and the Registrant. (Incorporated by
reference to Exhibit 10.24.8 of Form
10-K dated June 15, 1995.)
*10.24.9 Executive Continuity Agreement, dated
April 20, 1995 between F. Lynn Hamb and
the Registrant. (Incorporated by
reference to Exhibit 10.24.9 of Form
10-K dated June 15, 1995.)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
- --------- ----------------------------------------
<C> <S>
*10.24.10 Executive Continuity Agreement, dated
July 10, 1995 between David B. Lupp and
the Registrant. (Incorporated by
reference to Exhibit 10.4 of Form 10-Q
dated August 16, 1995.)
*10.25 Key Man Life Insurance Policy, dated
December 17, 1992, issued by The Mutual
of New York on the life of John W.
O'Leary, in the amount of $2,000,000,
with the Registrant named as
beneficiary. (Incorporated by
reference to Exhibit 10.25.2 to the
Registration Statement on Form S-1.)
10.26.1 Lease Agreement, dated May 12, 1992,
between Uniland Development Company and
the Registrant with respect to 165
Creekside Drive, Tonawanda, New York.
(Incorporated by reference to Exhibit
10.26.1 to the Registration Statement
on Form S-1.)
10.26.2 First Amendment, dated April 23, 1993,
to Lease Agreement referenced in
Exhibit 10.26.1. (Incorporated by
reference to Exhibit 10.26.2 to the
Registration Statement on Form S-1.)
10.27.1 Lease Agreement, dated December 29,
1992, between Uniland Development
Company and the Registrant with respect
to 70 John Glenn, Amherst.
(Incorporated by reference to Exhibit
10.27 to the Registration Statement on
Form S-1.)
10.27.2 First Amendment, dated September 17,
1993, to Lease Agreement referenced in
Exhibit 10.27.1. (Incorporated by
reference to Exhibit 10.27.2 of Form
10-K dated June 15, 1994.)
10.28 Form of Registration Rights Agreement.
(Incorporated by reference to Exhibit
10.28 to the Registration Statement on
Form S-1.)
*10.29 Form of Directors and Officers
Indemnification Agreement.
(Incorporated by reference to Exhibit
10.29 to the Registration Statement on
Form S-1.)
10.30 1993 Employee Stock Purchase Plan.
(Incorporated by reference to Exhibit
4.5 to the Registration Statement on
Form S-8.)
*10.31 1993 Outside Director Stock Option and
Restricted Stock Plan. (Incorporated
by reference to Exhibit 10.31 of Form
10-K dated June 15, 1995.)
10.32 Stock Option, Nondisclosure,
Noncompetition and Consulting Agreement
between the Company and Antonio M.
Perez, dated December 17, 1992.
(Incorporated by reference to Exhibit
4.10 to the Registration Statement on
Form S-8.)
11 Statement re Computation of Per Share
Earnings.
13 Portions of the 1996 Annual Report to
Stockholders that are incorporated by
reference.
21 Subsidiaries of the Registrant
23 Consent of KPMG Peat Marwick
27 Financial Data Schedule
</TABLE>
(B) REPORTS ON FORM 8-K:
None
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
INTERNATIONAL IMAGING MATERIALS, INC.
By: /s/ John W. O'Leary
---------------------------------------------------
John W. O'Leary
President
June 13, 1996
-------------------------------------------------
Date
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ John W. O'Leary President and Chief Executive June 13, 1996
- ------------------------------- Officer, Director
John W. O'Leary (Chief Operating Officer)
/s/ Michael J. Drennan Vice President - Finance, June 13, 1996
- ------------------------------- Treasurer, Secretary and
Michael J. Drennan Chief Financial Officer
/s/ Donald D. Lennox Chairman of the Board of Directors June 13, 1996
- -------------------------------
Donald D. Lennox
/s/ Robert S. Anderson
- ---------------------------
Robert S. Anderson Director June 13, 1996
/s/ Alexander K. Daw
---------------------------
Alexander K. Daw Director June 13, 1996
/s/ Michael J. Downey
---------------------
Michael J. Downey Director June 13, 1996
/s/ Ronald J. Kubovcik
- ----------------------
Ronald J. Kubovcik Director June 13, 1996
/s/ Richard A. Marshall Executive Vice President & June 13, 1996
- ------------------------ Chief Operating Officer,
Richard A. Marshall Director
/s/ William P. Montague
- ------------------------ Director June 13, 1996
William P. Montague
/s/ Albert J. Simone
- ------------------------ Director June 13, 1996
Albert J. Simone
</TABLE>
<PAGE>
Independent Auditors' Report
----------------------------
The Board of Directors
International Imaging Materials, Inc.:
Under date of April 24, 1996, we reported on the consolidated balance sheets of
International Imaging Materials, Inc. and subsidiaries as of March 31, 1996 and
1995, and the related consolidated statements of income, stockholders' equity
and cash flows for each of the years in the three-year period ended March 31,
1996, as contained in the 1996 annual report to stockholders. These
consolidated financial statements and our report thereon are incorporated by
reference in the annual report on Form 10-K for the year ended March 31, 1996.
In connection with our audits of the aforementioned consolidated financial
statements, we also have audited the related financial statement schedule as
listed in item 14(a)2 of this annual report on Form 10-K. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement schedule
based on our audits.
In our opinion, such financial statement schedule, when considered in relation
to the basic financial statement taken as a whole, presents fairly, in all
material respects, the information set forth therein.
/s/ KPMG Peat Marwick LLP
---------------------------------
KPMG Peat Marwick LLP
Buffalo, New York
April 24, 1996
S-1
<PAGE>
Schedule VIII
INTERNATIONAL IMAGING MATERIALS, INC.
VALUATION AND QUALIFYING ACCOUNTS
(In Thousands)
<TABLE>
<CAPTION>
BALANCE AT AMOUNT CHARGE-OFFS BALANCE
BEGINNING CHARGED TO AND END OF
YEAR ENDED DESCRIPTION OF YEAR EXPENSES DISPOSALS YEAR
---------- ----------- ----------- ---------- ----------- -------
<S> <C> <C> <C> <C> <C>
March 31, 1994 Allowance for
doubtful accounts
receivable $ 8 $ 10 $ --- $ 18
Inventory valuation 971 (79) 666 226
---- ---- ---- ----
$ 979 $ (69) $ 666 $ 244
---- ---- ---- ----
March 31, 1995 Allowance for
doubtful accounts
receivable 18 122 19 121
Inventory valuation 226 550 199 577
---- ---- ---- ----
$ 244 $ 672 $ 218 $ 698
---- ---- ---- ----
March 31, 1996 Allowance for
doubtful accounts
receivable 121 169 6 284
Inventory valuation 577 226 403 400
---- ---- ---- ----
$ 698 $ 395 $ 409 $ 684
---- ---- ---- ----
</TABLE>
S-2
<PAGE>
INDEX TO EXHIBITS
-----------------
<TABLE>
<CAPTION>
Exhibit
Number Description Location
- ------- ---------------------------------------- --------
<C> <S> <C>
3.1.1 Amended and Restated Certificate of
Incorporation of the Registrant.
(Incorporated by reference to Exhibit
3.1 to the Registration Statement of
the Registrant on Form S-1
(Registration No. 33-62290) (the
"Registration Statement on Form S-1").)
3.1.2 Amended and Restated Certificate of
Incorporation of the Registrant.
(Incorporated by reference to Exhibit 3
of Form 10-Q dated February 3, 1995.)
3.2 By-laws of the Registrant.
(Incorporated by reference to Exhibit
3.2 to the Registration Statement on
Form S-1.)
4.1 Form of Certificate for Common Stock of
the Registrant. (Incorporated by
reference to Exhibit 4.1 to the
Registration Statement on Form S-1.)
10.1.1 License Agreement, dated June 20, 1983,
between Fuji Kagakushi Kogyo Company
Limited (name subsequently changed to
Fujicopian Co., Ltd.) ("Fujicopian")
and the Registrant. (Incorporated by
reference to Exhibit 10.1.1 to the
Registration Statement on Form S-1.)
10.1.2 Amendment, dated February 24, 1987, to
License Agreement referenced in Exhibit
10.1.1. (Incorporated by reference to
Exhibit 10.1.2 to the Registration
Statement on Form S-1.)
10.1.3 Letter Agreement, dated March 6, 1989,
between Fujicopian and the Registrant
amending License Agreement referenced
in Exhibit 10.1.1. (Incorporated by
reference to Exhibit 10.1.3 to the
Registration Statement on Form S-1.)
10.1.4 Amendment, dated April 24, 1990, to
License Agreement referenced in Exhibit
10.1.1. (Incorporated by reference to
Exhibit 10.1.4 to the Registration
Statement on Form S-1.)
10.2 Indemnification Agreement, dated April
11, 1988, between Fujicopian and the
Registrant. (Incorporated by reference
to Exhibit 10.2 to the Registration
Statement on Form S-1.)
10.3.1 Equipment Repurchase Agreement, dated
March 6, 1989, between Fujicopian and
the Registrant. (Incorporated by
reference to Exhibit 10.3.1 to the
Registration Statement on Form S-1.)
10.3.2 Assignment, dated March 30, 1989, of
Equipment Repurchase Agreement
referenced in Exhibit 10.3.1, from the
Registrant to Norstar Bank, National
Association ("Norstar Bank")
(Incorporated by reference to Exhibit
10.3.2 to the Registration Statement on
Form S-1.).
10.3.3 Letter Agreement, dated June 14, 1989,
from Norstar Bank and the Registrant
and agreed to by Fujicopian, clarifying
terms of Assignment referenced in
Exhibit 10.3.2. (Incorporated by
reference to Exhibit 10.3.3 to the
Registration Statement on Form S-1.)
10.3.4 Assignment, dated March 26, 1992, of
Equipment Repurchase Agreement
referenced in Exhibit 10.3.1, from
Norstar Bank to Marine Midland Bank,
N.A. ("Marine Midland Bank"), with
consent by the New York Job Development
Authority ("JDA"). (Incorporated by
reference to Exhibit 10.3.4 to the
Registration Statement on Form S-1.)
10.4.1 Cross-License Agreement, dated as of
December 14, 1984, between
International Business Machines
Corporation ("IBM") and the Registrant.
(Incorporated by reference to Exhibit
10.4.1 to the Registration Statement on
Form S-1.)
10.4.2 Letter Agreement, dated September 3,
1987, between Fujicopian and the
Registrant and related to Cross-License
Agreement, dated as of July 1, 1986,
between IBM and Fujicopian.
(Incorporated by reference to Exhibit
10.4.2 to the Registration Statement on
Form S-1.)
10.10 Memorandum of Understanding Concerning
Heat-Sensitive Color Transfer Ribbons,
dated April 1989, between Fujicopian
and Dai Nippon Printing Co., Ltd., for
the benefit, in part, of the Registrant
(including an English translation
thereof). (Incorporated by reference
to Exhibit 10.10 to the Registration
Statement on Form S-1.)
10.11 Letter Agreement, dated April 1, 1987,
among Fujicopian, Toppan Printing Co.,
Ltd. and Toyo Ink Manufacturing Co.,
Ltd., for the benefit, in part, of the
Registrant (including an English
translation thereof). (Incorporated by
reference to Exhibit 10.11 to the
Registration Statement on Form S-1.)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description Location
- -------- ---------------------------------------- --------
<C> <S> <C>
10.12.6 Registration Rights Agreement, dated
May 6, 1988, between the Registrant and
Norstar Bank. (Incorporated by
reference to Exhibit 10.12.6 to the
Registration Statement on Form S-1.)
10.12.7 Common Stock Subscription Warrant,
dated May 6, 1988, between the
Registrant and Norstar Bank.
(Incorporated by reference to Exhibit
10.12.7 to the Registration Statement
on Form S-1.)
10.13.1 Guarantee Agreement, dated March 30,
1989, made by the JDA to Norstar Bank
for the benefit of and accepted by the
Registrant. (Incorporated by reference
to Exhibit 10.13.1 to the Registration
Statement on Form S-1.)
10.13.2 Amendment, dated December 27, 1990, to
Guarantee Agreement referenced in
Exhibit 10.13.1. (Incorporated by
reference to Exhibit 10.13.2 to the
Registration Statement on Form S-1.)
10.13.3 Loan and Use Agreement, dated as of
March 30, 1989, between Norstar Bank,
the Town of Amherst Industrial
Development Agency ("IDA") and the
Registrant and agreed to by the JDA.
(Incorporated by reference to Exhibit
10.13.3 to the Registration Statement
on Form S-1.)
10.13.4 Mortgage, dated as of March 30, 1989,
made by the Registrant and the IDA to
Norstar Bank. (Incorporated by
reference to Exhibit 10.13.4 to the
Registration Statement on Form S-1.)
10.13.5 Indemnification and Guaranty Agreement,
dated as of March 30, 1989, from the
Registrant to the JDA. (Incorporated
by reference to Exhibit 10.13.5 to the
Registration Statement on Form S-1.)
10.13.6 Subordination Agreement, dated as of
March 30, 1989, by Norstar Bank for the
benefit of the IDA, the JDA and the
Registrant. (Incorporated by reference
to Exhibit 10.13.6 to the Registration
Statement on Form S-1.)
10.13.7 Mortgage Modification and Spreader
Agreement, dated December 27, 1990,
with respect to $1,400,000 Mortgage,
among the JDA, Norstar Bank, the IDA
and the Registrant. (Incorporated by
reference to Exhibit 10.15.8 to the
Registration Statement on Form S-1.)
10.14.1 Guarantee Agreement, dated as of March
30, 1989, made by the JDA to Norstar
Bank for the benefit of and accepted by
the Registrant. (Incorporated by
reference to Exhibit 10.14.1 to the
Registration Statement on Form S-1.)
10.14.2 Amendment, dated December 27, 1990, to
Guarantee Agreement referenced in
Exhibit 10.14.1. (Incorporated by
reference to Exhibit 10.14.2 to the
Registration Statement on Form S-1.)
10.14.3 Security Agreement (Machinery and
Equipment), dated as of March 30, 1989,
made by the Registrant for the benefit
of Norstar Bank and accepted by the
JDA. (Incorporated by reference to
Exhibit 10.14.3 to the Registration
Statement on Form S-1.)
10.14.4 Indemnification and Guaranty Agreement,
dated as of March 30, 1989, made by the
Registrant to the JDA. (Incorporated
by reference to Exhibit 10.14.4 to the
Registration Statement on Form S-1.)
10.14.5 Intercreditor Agreement, dated as of
March 30, 1989, among Norstar Bank, The
Buffalo and Erie County Regional
Development Corporation ("RDC") and the
JDA and acknowledged and accepted by
the Registrant. (Incorporated by
reference to Exhibit 10.14.5 to the
Registration Statement on Form S-1.)
10.14.6 Letter Agreement, dated May 27, 1993
between the New York Job Development
Authority and the Registrant assigning
a loan to the New York Job Development
Authority. (Incorporated by reference
to Exhibit 10.14.6 of Form 10-K dated
June 15, 1994.)
10.15.7 Mortgage Modification and Spreader
Agreement, dated December 27, 1990,
with respect to $1,000,000 Mortgage,
among Norstar Bank, the IDA and the
Registrant. (Incorporated by reference
to Exhibit 10.15.7 to the Registration
Statement on Form S-1.)
10.15.9 Security Agreement (Machinery and
Equipment), dated December 27, 1990,
from the Registrant to Norstar Bank and
agreed to and accepted by the JDA and
related to Machinery and Equipment
Promissory Note. (Incorporated by
reference to Exhibit 10.15.9 to the
Registration Statement on Form S-1.)
10.15.10 Guarantee Agreement, dated December 27,
1990 from the JDA to Norstar Bank for
the benefit of and acknowledged and
accepted by the Registrant.
(Incorporated by reference to Exhibit
10.15.10 to the Registration Statement
on Form S-1.)
10.15.11 Indemnification and Guaranty Agreement,
dated as of December 27, 1990, between
the JDA and the Registrant.
(Incorporated by reference to Exhibit
10.15.11 to the Registration Statement
on
Form S-1.)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description Location
- -------- ---------------------------------------- --------
<C> <S> <C>
10.15.12 Intercreditor Agreement, dated as of
December 27, 1990, among Norstar Bank,
the RDC and the JDA and acknowledged
and agreed to by the Registrant.
(Incorporated by reference to Exhibit
10.15.12 to the Registration Statement
on Form S-1.)
10.15.14 Letter Agreement, dated June 3, 1993
between the New York Job Development
Authority and the Registrant assigning
a loan to the New York Job Development
Authority. (Incorporated by reference
to Exhibit 10.14.6 of Form 10-K dated
June 15, 1994.)
10.16 Demand Note Agreement, dated March 31,
1995, between Fleet Bank and the
Registrant. (Incorporated by reference
to Exhibit 10.16 of Form 10-K dated
June 15, 1995.)
10.16.1 Amendment, dated June 17, 1996 to
Demand Note Agreement referenced in
Exhibit 10.16.
10.17.1 Assignment, dated March 26, 1992, of
Security Agreement and Machinery and
Equipment Promissory Note referenced in
Exhibit 10.15.9, and of Guarantee
Agreement referenced in Exhibit
10.15.10, from Norstar Bank to Marine
Midland Bank and acknowledged and
consented to by the JDA. (Incorporated
by reference to Exhibit 10.17.1 to the
Registration Statement on Form S-1.)
10.17.2 Modification and Reaffirmation
Agreement, dated as of March 26, 1992,
between Marine Midland Bank, the JDA
and the Registrant. (Incorporated by
reference to Exhibit 10.17.2 to the
Registration Statement on Form S-1.)
10.17.3 Letter Agreement, dated March 26, 1992,
from Marine Midland Bank to Norstar
Bank and agreed to by Norstar Bank and
the JDA and related to Intercreditor
Agreement referenced in Exhibit
10.15.12. (Incorporated by reference
to Exhibit 10.17.3 to the Registration
Statement on Form S-1.)
10.18 Demand Note Agreement, dated March 31,
1995, between Marine Midland Bank and
the Registrant. (Incorporated by
reference to Exhibit 10.18 of Form 10-K
dated June 15, 1995.)
10.18.1 Demand Note Agreement, dated June 3,
1996 between Marine Midland Bank and
the Registrant.
10.19.1 1984 Stock Plan of the Registrant.
(Incorporated by reference to Exhibit
10.19.1 to the Registration Statement
on Form S-1.)
10.19.2 Amendment No. 1, dated October 29,
1987, to 1984 Stock Plan of the
Registrant referenced in Exhibit
10.19.1. (Incorporated by reference to
Exhibit 10.19.2 to the Registration
Statement on Form S-1.)
10.19.3 Amendment, dated July 27, 1989, to 1984
Stock Plan of the Registrant referenced
in Exhibit 10.19.1. (Incorporated by
reference to Exhibit 10.19.3 to the
Registration Statement on Form S-1.)
10.19.4 Amendment, dated May 11, 1990, to 1984
Stock Plan of the Registrant referenced
in Exhibit 10.19.1. (Incorporated by
reference to Exhibit 10.19.4 to the
Registration Statement on Form S-1.)
10.19.5 Amendment No. 2, dated July 26, 1990,
to 1984 Stock Plan of the Registrant
referenced in Exhibit 10.19.1.
(Incorporated by reference to Exhibit
10.19.5 to the Registration Statement
on Form S-1.)
10.19.6 Amendment, dated October 6, 1993, to
1984 Stock Plan of the Registrant
referenced in Exhibit 10.19.1.
(Incorporated by reference to Exhibit
4.3 to the Registration Statement of
the Registrant on Form S-8
(Registration No. 33-71716) (the
"Registration Statement on Form S-8").)
10.19.7 Amendment dated February 24, 1989, to
1984 Stock Plan of the Registrant
referenced in Exhibit 10.19.1.
(Incorporated by reference to Exhibit
10.20.4 to the Registration Statement
on Form S-1.)
10.21.1 1990 Incentive Plan of the Registrant.
(Incorporated by reference to Exhibit
10.21 to the Registration Statement on
Form S-1.)
10.21.2 Amendment, dated October 6, 1993, to
1990 Incentive Plan of the Registrant
referenced in Exhibit 10.21.1.
(Incorporated by reference to Exhibit
4.4 to the Registration Statement on
Form S-8.)
10.21.3 Amendment dated March 17, 1995, to 1990
Incentive Plan of the Registrant
referenced in Exhibit 10.21.1.
(Incorporated by reference to Exhibit
10.21.3 of Form 10-K dated June 15,
1995.)
10.23 Form of Demand Note executed by persons
listed in item 404(c) of regulation S-K
who are indebted to the Company as
evidence of such indebtedness as set
forth on the schedule to the form.
10.23.1 Form of Term Note executed by persons
listed in item 404(c) of regulation S-K
who are indebted to the Company as
evidence of such indebtedness as set
forth on the schedule attached to the
form.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description Location
- -------- ---------------------------------------- --------
<C> <S> <C>
10.24.1 Continuity Agreement, dated as of
January 1, 1991, between John W.
O'Leary and the Registrant.
(Incorporated by reference to Exhibit
10.24 to the Registration Statement on
Form S-1.)
10.24.2 Executive Continuity Agreement, dated
June 23, 1994, between James H. Groh
and the Registrant. (Incorporated by
reference to Exhibit 10.24.2 of Form
10-K dated June 15, 1994.)
10.24.3 Executive Continuity Agreement, dated
June 27, 1994, between Richard A.
Marshall and the Registrant.
(Incorporated by reference to Exhibit
10.24.3 of Form 10-K dated June 15,
1994.)
10.24.4 Executive Continuity Agreement, dated
June 21, 1994, between Michael J.
Drennan and the Registrant.
(Incorporated by reference to Exhibit
10.24.4 of Form 10-K dated June 15,
1994.)
10.24.5 Executive Continuity Agreement, dated
June 23, 1994, between Vincent C.
Dowell and the Registrant.
(Incorporated by reference to Exhibit
10.24.5 of Form 10-K dated June 15,
1994.)
10.24.6 Executive Continuity Agreement, dated
June 23, 1994, between Richard W. Dean
and the Registrant. (Incorporated by
reference to Exhibit 10.24.6 of Form
10-K dated June 15, 1994.)
10.24.7 Executive Continuity Agreement, dated
June 27, 1994, between Nick S.
Mandrycky and the Registrant.
(Incorporated by reference to Exhibit
10.24.7 of Form 10-K dated June 15,
1994.)
10.24.8 Executive Continuity Agreement, dated
May 1, 1995 between Rickey W. Wallace
and the Registrant. (Incorporated by
reference to Exhibit 10.24.8 of Form
10-K dated June 15, 1995.)
10.24.9 Executive Continuity Agreement, dated
April 20, 1995 between F. Lynn Hamb and
the Registrant. (Incorporated by
reference to Exhibit 10.24.9 of Form
10-K dated June 15, 1995.)
10.24.10 Executive Continuity Agreement dated
July 10, 1995 between David B. Lupp and
the Registrant. (Incorporated by
reference to Exhibit 10.4 of Form 10-Q
dated August 16, 1995.)
10.25 Key Man Life Insurance Policy, dated
December 17, 1992, issued by The Mutual
of New York on the life of John W.
O'Leary, in the amount of $2,000,000,
with the Registrant named as
beneficiary. (Incorporated by
reference to Exhibit 10.25.2 to the
Registration Statement on Form S-1.)
10.26.1 Lease Agreement, dated May 12, 1992,
between Uniland Development Company and
the Registrant with respect to 165
Creekside Drive, Tonawanda, New York.
(Incorporated by reference to Exhibit
10.26.1 to the Registration Statement
on Form S-1.)
10.26.2 First Amendment, dated April 23, 1993,
to Lease Agreement referenced in
Exhibit 10.26.1. (Incorporated by
reference to Exhibit 10.26.2 to the
Registration Statement on Form S-1.)
10.27.1 Lease Agreement, dated December 29,
1992, between Uniland Development
Company and the Registrant with respect
to 70 John Glenn, Amherst.
(Incorporated by reference to Exhibit
10.27 to the Registration Statement on
Form S-1.)
10.27.2 First Amendment, dated September 17,
1993, to Lease Agreement referenced in
Exhibit 10.27.1. (Incorporated by
reference to Exhibit 10.27.2 of Form
10-K dated June 15, 1994.)
10.28 Form of Registration Rights Agreement.
(Incorporated by reference to Exhibit
10.28 to the Registration Statement on
Form S-1.)
10.29 Form of Directors and Officers
Indemnification Agreement.
(Incorporated by reference to Exhibit
10.29 to the Registration Statement on
Form S-1.)
10.30 1993 Employee Stock Purchase Plan.
(Incorporated by reference to Exhibit
4.5 to the Registration Statement on
Form S-8.)
10.31 1993 Outside Director Stock Option and
Restricted Stock Plan. (Incorporated
by reference to Exhibit 10.31 of Form
10-K dated June 15, 1995.)
10.32 Stock Option, Nondisclosure,
Noncompetition and Consulting Agreement
between the Company and Antonio M.
Perez, dated December 17, 1992.
(Incorporated by reference to Exhibit
4.10 to the Registration Statement on
Form S-8.)
11 Statement re Computation of Per Share
Earnings.
13 Portions of the 1996 Annual Report to
Stockholders that are incorporated
herein by reference.....................
21 Subsidiaries of the Registrant
23 Consent of KPMG Peat Marwick
27 Financial Data Schedule
</TABLE>
<PAGE>
EXHIBIT 10.16.1
[LETTERHEAD OF FLEET BANK]
June 17, 1996
Mr. David Lupp
Vice President/Controller
International Imaging Materials, Inc.
310 Commerce Drive
Amherst, NY 14228
Dear Dave:
I am pleased to inform you that Fleet Bank has renewed International
Imaging Materials Inc.'s $20,ooo,ooo.00 line of credit. The new expiration date
will be September 30,1997. All other terms and conditions of the facility (i.e.
rate, etc.) remain unchanged. We have also renewed the company's Foreign
Exchange line in the amount of $1,500,000.00 and Corporate Mastercard in the
amount of $250,000.00 both through September 30, 1997.
I look forward to working with you and Mike for another year. If you
need anything further regarding this matter, please do not hesitate to call.
Sincerely
/s/ John J. Cronin
J.J. Cronin
Vice President
<PAGE>
EXHIBIT 10.18.1
[LETTERHEAD OF MIDLAND BANK]
June 3, 1996
Mr. Michael J. Drennan
Vice President -Finance
International Imaging Materials, Inc.
310 Commerce Drive
Amherst, New York 14228-2396
Dear Mike:
We are please to advise you that Marine Midland Bank, is willing to make
available to you a discretionary line of credit on the following terms:
Borrower: International Imaging Materials, Inc.
Amount: $10,000,.000 in the aggregate at any one time
outstanding
Nature: Advances will be made at the discretion of the
Bank and will be payable on demand.
Interest Rate
Options: Prime Rate of Marine Midland Bank or such
other rate as may be quoted as in effect from
time to time, including LIBor plus 20 basis
points.
Collateral: Unsecured.
Financial
Statements: Quarterly within 45 days of quarters end, and
annually within 90 days of the fiscal year
end.
Purpose: Working capital and letters of credit.
The facility will be available until March 31, 1997 unless extended,
replaced, or terminated by either party. This facility shall be under continuous
review, and our decision to extend or renew will be based, in part, upon
receipt of timely annual and quarterly financial statements. Unless we mutually
agree otherwise this facility will not be available after March 31, 1997.
<PAGE>
Mr. Michael J. Drenan
June 3, 1996
Page 2
We believe the aforementioned facility should meet your requirements. If
the terms of this letter are acceptable to you please execute and return the
enclosed duplicate original of this letter by June 21, 1996 or this letter shall
become null and void .
Should you have any questions as to any aspect of this financing,
please contact me.
Very truly yours,
/s/ Cary J. Haller
Cary J. Haller
Vice President
Agreed and accepted this 11th day of June, 1996
------------- ----
INTERNATIONAL IMAGING MATERIALS, INC.
BY:/s/ Michael J. Drennan VP Finance
---------------------------------------------
Title
CJH/keb
Enclosure
<PAGE>
EXHIBIT 10.23
FORM OF DEMAND NOTE (REFERENCE ATTACHED SCHEDULE)
-------------------
AMOUNT: AMHERST, NEW YORK
DATE:
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
INTERNATIONAL IMAGING MATERIALS, INC. ("IIMAK") at its offices at
310 Commerce Drive, Amherst, New York 14228, the sum of
and /100 dollars ($ ),
- ----------------------------------------- ----------
payable on demand. This Note shall not bear interest until maturity. After
maturity (whether on acceleration or otherwise), this Note shall bear interest
on the unpaid principal balance at a rate of twelve percent (12%) per annum.
Interest shall be calculated on the basis of one three hundred sixty-fifth
(1/365th) of the above specified rate in effect for each calendar day such
principal balance is unpaid. This Note shall be immediately due and payable
upon the termination of the undersigned's employment with IIMAK for any reason.
The holder of the Note has full recourse against all of the undersigned's assets
for collection of the unpaid principal balance on the Note.
The undersigned shall have the right to prepay at any time without premium or
penalty, any or all of the principal indebtedness under this Note.
Any holder of the Note may declare all indebtedness evidenced by this Note to be
immediately due and payable upon: (1) the filing by or against the undersigned
of a request or petition for reorganization, arrangement, adjustment of debts,
adjudication as a bankrupt, relief as a debtor or other relief under the
bankruptcy, insolvency or similar laws of the United States or any state or
territory thereof or any foreign jurisdiction, now or hereafter in effect; or
(2) the making of any general assignment by the undersigned for the benefit of
creditors.
No failure by the holder of this Note to exercise, and no delay in exercising,
any right or power hereunder shall operate as waiver thereof, nor shall any
single or partial exercise by such holder of any right or power hereunder
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the holder hereof as herein
specified are cumulative and not exclusive of any other rights or remedies which
such holder may otherwise have.
No modification, rescission, waiver, forbearance, release of amendment of any
provisions of this Note shall be made, except by a written agreement duly
executed by the undersigned and the holder hereof.
The undersigned hereby waives diligence, presentment, protest and demand, and
also notice of protest, demand, dishonor and nonpayment of this Note.
The Note shall be governed by the laws of the State of New York. The
undersigned agrees to pay all costs and expenses incurred by the holder hereof
in enforcing this Note, including, without limitation, actual attorneys' fees.
- --------------------------- ------------------------------------------
Date Name
<PAGE>
SCHEDULE OF DEMAND NOTES OF PERSONS
INDEBTED TO INTERNATIONAL IMAGING MATERIALS, INC.
IN AN AGGREGATE AMOUNT IN EXCESS OF $60,000
<TABLE>
<CAPTION>
Date of Payor Amount
Note of Note of Note
------- ------- -------
<S> <C> <C>
May 2, 1994 John W. O'Leary $ 267,600.00
February 23, 1995 John W. O'Leary 615,200.00
April 6, 1995 John W. O'Leary 151,652.03
May 8, 1995 John W. O'Leary 433,653.97
March 1, 1996 John W. O'Leary 248,455.93
April 11, 1996 John W. O'Leary 656,729.00
-------------
$2,373,290.93
-------------
May 8, 1995 Richard A. Marshall $ 113,919.07
April 11, 1996 Richard A. Marshall 21,706.00
-------------
$ 135,625.07
-------------
December 21, 1993 Michael J. Drennan $ 86,324.38
April 18, 1994 Michael J. Drennan 31,012.00
May 2, 1994 Michael J. Drennan 135,821.39
December 27, 1994 Michael J. Drennan 15,200.00
March 24, 1995 Michael J. Drennan 171,357.45
April 18, 1995 Michael J. Drennan 37,974.00
May 8, 1995 Michael J. Drennan 368,339.43
January 2, 1996 Michael J. Drennan 8,300.00
April 1, 1996 Michael J. Drennan 218,691.81
April 11, 1996 Michael J. Drennan 157,559.00
April 11, 1996 Michael J. Drennan 67,008.00
-------------
$1,297,587.46
-------------
May 8, 1995 Vincent C. Dowell $ 56,959.53
April 11, 1996 Vincent C. Dowell 10,853.00
-------------
$ 67,812.53
-------------
May 8, 1995 Nick S. Mandrycky $ 56,959.53
-------------
May 8, 1995 Richard W. Dean $ 56,959.53
September 13, 1995 Richard W. Dean 30,096.88
April 11, 1996 Richard W. Dean 16,694.00
-------------
$ 103,750.41
-------------
September 19, 1995 David B. Lupp $ 29,627.62
March 25, 1996 David B. Lupp 3,860.00
March 29, 1996 David B. Lupp 24,495.12
-------------
$ 57,982.74
-------------
</TABLE>
<PAGE>
EXHIBIT 10.23.1
FORM OF TERM NOTE (REFERENCE ATTACHED SCHEDULE)
------------------
AMOUNT: AMHERST, NEW YORK
PAYOR: DATE:
FOR VALUE RECEIVED, the undersigned ("Borrower") promises to pay to the order of
INTERNATIONAL IMAGING MATERIALS, INC. ("IIMAK") at its offices at
310 Commerce Drive, Amherst, New York 14228, the sum of
____________________________ and _____/100 ($____________) or, if less, the
aggregate unpaid principal amount of all advances made by IIMAK to the Borrower
pursuant to the terms of this Note.
Borrower may obtain advances under this Note up to the principal sum hereof by
making requests of IIMAK from time to time either orally or in writing (herein
called "Loan Requests"). If IIMAK, in its sole discretion, decides to honor a
Loan Request, then IIMAK shall advance the amount of the Loan Request to
Borrower. In addition, IIMAK and the Borrower shall endorse the grid attached
hereto, which is a part of this Note, accordingly.
All payments made on account of principal hereof shall be endorsed by both IIMAK
and Borrower on the attached grid. One-third of the principal sum hereof, or if
less, the entire remaining unpaid principal balance, is due and payable on each
of May 1, 1997, 1998 and 1999. Irrespective of these scheduled repayments, this
Note shall be immediately due and payable upon the termination of the Borrower's
employment with IIMAK for any reason. The holder of the Note has full recourse
against all of the Borrower's assets for collection of the unpaid principal
balance on the Note. The Borrower shall have the right to prepay at any time,
without premium or penalty, any or all of the principal indebtedness under this
Note.
Any holder of the Note may declare all indebtedness evidenced by this Note to be
immediately due and payable upon: (1) the filing by or against the Borrower of a
request or petition for reorganization, arrangement, adjustment of debts,
adjudication as a bankrupt, relief as a debtor or other relief under the
bankruptcy, insolvency or similar laws of the United States or any state or
territory thereof or any foreign jurisdiction, now or hereafter in effect; or
(2) the making of any general assignment by the Borrower for the benefit of
creditors.
This Note shall not bear interest until maturity. After maturity (whether on
acceleration or otherwise), this Note shall bear interest on the unpaid
principal balance at a rate of twelve percent (12%) per annum. Interest shall
be calculated on the basis of one three hundred sixty-fifth (1/365th) of the
above specified rate in effect for each calendar day such principal balance is
unpaid.
<PAGE>
No failure by the holder of this Note to exercise, and no delay in exercising,
any right or power hereunder shall operate as waiver thereof, nor shall any
single or partial exercise by such holder of any right or power hereunder
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the holder hereof as herein
specified are cumulative and not exclusive of any other rights or remedies which
such holder may otherwise have.
No modification, rescission, waiver, forbearance, release or amendment of any
provisions of this Note shall be made, except by a written agreement duly
executed by the Borrower and the holder hereof.
The Borrower hereby waives diligence, presentment, protest and demand, and also
notice of protest, demand, dishonor and nonpayment of this Note.
The Note shall be governed by the laws of the State of New York. The Borrower
agrees to pay all costs and expenses incurred by the holder hereof in enforcing
this Note, including, without limitation, actual attorneys' fees.
- -------------------------- -------------------------------------------
Date Borrower
<PAGE>
SCHEDULE OF TERM NOTES OF PERSONS
INDEBTED TO INTERNATIONAL IMAGING MATERIALS, INC.
IN AN AGGREGATE AMOUNT IN EXCESS OF $60,000
<TABLE>
<CAPTION>
Date of Payor Amount
Note of Note of Note
------- ------- -------
<S> <C> <C>
April 10, 1996 John W. O'Leary $71,439.00
---------
April 10, 1996 Richard A. Marshall $38,178.00
---------
April 10, 1996 Michael J. Drennan $20,769.00
---------
April 10, 1996 Vincent C. Dowell $21,526.00
---------
April 10, 1996 Nick S. Mandrycky $20,636.00
---------
April 10, 1996 Richard W. Dean $20,921.00
---------
April 10, 1996 David B. Lupp $16,154.00
---------
</TABLE>
<PAGE>
EXHIBIT 11
INTERNATIONAL IMAGING MATERIALS, INC.
CALCULATION OF NET INCOME PER SHARE OF COMMON STOCK
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Fiscal Year Ended March 31
--------------------------
1994 1995 1996
-------- ------- -------
<S> <C> <C> <C>
Net income $5,668 $9,970 $9,903
Adjustment to net income - reduction of interest expense, net of
tax, resulting from the modified treasury stock method 19 --- ---
------ ------ ------
Adjusted net income $5,687 $9,970 $9,903
------ ------ ------
Weighted average shares outstanding 7,248 8,326 8,750
Common stock equivalents for restricted stock, stock options
and warrants 817 767 474
------ ------ ------
Weighted average common shares outstanding as adjusted 8,065 9,093 9,224
------ ------ ------
Net income per share of common stock $.71 $1.10 $ 1.07
------ ------ ------
</TABLE>
<PAGE>
EXHIBIT 13
INTERNATIONAL IMAGING MATERIALS, INC.
PORTIONS OF 1996 ANNUAL REPORT TO STOCKHOLDERS
<PAGE>
PAGE 14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
Fiscal 1996 was a year of transition for the Company. The financial performance
for the year reflected the resolution of events that began in fiscal 1995, while
significant investments were made in the future of the Company.
During the first half of fiscal 1995, the Company experienced a surge of
incoming orders in all parts of its business. The Company's manufacturing
capacity could not absorb this orders increase and lead times lengthened,
causing customers throughout the distribution channels to further increase their
orders and inventory levels to avoid stock-out situations. A total of $44.5
million in orders were received in this six-month period, a 30% increase over
the $34.3 million of orders placed in the second half of fiscal 1994.
In response, the Company increased its manufacturing capacity largely through
productivity improvements, resulting in sequential quarterly revenue records and
significant lead time reductions throughout fiscal 1995. These lead time
reductions allowed customers to reduce their excess inventory levels, and
consequently, they sharply cut back their orders to the Company. This resulted
in a significant decrease in quarterly revenues for the Company, from $22.3
million in the fourth quarter of fiscal 1995 to $19.0 million in the first
quarter of fiscal 1996. These order reductions continued through the first half
of fiscal 1996, until orders again reflected end user market demand beginning in
the third quarter of fiscal 1996.
Fujicopian's thermal transfer licensee for Europe, Armor, also experienced an
influx of orders during fiscal 1995 which exceeded their manufacturing capacity.
The Company used its coating capacity not consumed by customers' requirements to
supply Armor with thermal transfer jumbo rolls. This business did not recur in
fiscal 1996 once Armor's manufacturing capacity was increased sufficiently.
This sequence of events resulted in fiscal 1996 revenues of $88.4 million, an
increase of only 3.5% over fiscal 1995 revenues of $85.5 million. Revenues in
fiscal 1995, however, increased 38.8% from $61.6 million in fiscal 1994.
Included in fiscal 1995 and fiscal 1994, respectively, were $6.0 million and
$1.6 million of revenue, primarily jumbo rolls supplied to Armor, which did not
recur in fiscal 1996. Therefore, recurring revenues grew 11.3% from fiscal 1995
to fiscal 1996, and 32.5% from fiscal 1994 to fiscal 1995, a compound annual
growth rate of 21.5%, more consistent with actual market growth during this
three-year period.
[Bar chart depicting recurring revenues in thousands] 1992 31,492; 1993 48,432;
1994 59,976; 1995 79,318; 1996 88,448.
The Company sells its ribbons primarily to printer original equipment
manufacturers (OEM's), which in turn sell the ribbons under their own brand
names to end users, either directly or through distributors and value-added
resellers. Recurring revenues to OEM customers in fiscal 1996 were $65.9
million, comprised 74.6% of total revenues, and increased 10.1% from $59.9
million in fiscal 1995. This increase primarily reflects the transfer of ribbon
production for a significant color ribbon program from Fujicopian, new product
lines introduced to existing tag and label customers, the addition of a
significant new tag and label customer, and the overall growth of applications
for tag and label printing.
The Company also sells its ribbons directly to distributors and dealers where
such sales do not adversely affect the Company's OEM customers. Domestic
distributor revenues in fiscal 1996 were $21.3 million, comprised 24.1% of total
revenues, and increased 13.6% from $18.8 million in fiscal 1995. In September
1995, the Company acquired the thermal transfer supplies business from one of
its OEM customers, QMS Inc., and began selling ribbons and other thermal
transfer supplies under the QMS brand name directly to distributors, dealers and
end users. The higher selling prices for ribbons and other items included in
the QMS supplies business, the addition of several new significant tag and label
customers, new product lines introduced to existing tag and label customers,
overall tag and label aftermarket growth, and end-user migration towards this
distributor channel from the OEM channel as the market for tag and label ribbons
matures, all contributed to this growth.
<PAGE>
PAGE 15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED
The rapid expansion of the market for tag and label printing in South America,
and the Company's new marketing programs targeting these opportunities, were
principally responsible for the addition of several new customers in the
international distributor channel. Revenues for this channel were $1.2 million
in fiscal 1996, comprised 1.3% of total revenues, and increased 41.2% from
$840,000 in fiscal 1995.
Recurring revenues for the OEM channel increased 27.4% from fiscal 1994 to
fiscal 1995, principally due to the transfer of ribbon production for two color
printer programs to the Company from Fujicopian late in fiscal 1994, new tag and
label product lines introduced to existing customers, the addition of a
significant new tag and label customer, and the overall growth of the installed
base of thermal transfer printers. Domestic distributor revenues increased
48.4% from fiscal 1994 to fiscal 1995, reflecting the addition of several new
significant customers, new high performance product lines introduced late in
fiscal 1994, and overall tag and label ribbon aftermarket growth.
The Company's ribbon unit selling prices in total were comparable from fiscal
1994 through fiscal 1996. Slight increases in selling prices to color ribbon
OEM customers, significantly higher selling prices to dealers, distributors and
end-users for QMS's thermal transfer supplies, and a shift in mix towards the
higher selling prices in the tag and label distributor channels, offset selling
price decreases to tag and label ribbon OEM and distributor customers.
Gross margins were 29.6% of revenues in fiscal 1996 as compared to 29.8% in
fiscal 1995. The higher base of fixed overhead costs, which was not absorbed by
the declining revenues from customers reducing their inventory levels, was
partially offset by the higher margins on the QMS thermal transfer supplies
business and no management bonuses in fiscal 1996. The gross margin improvement
in fiscal 1995 from 27.9% of revenues in fiscal 1994 primarily reflects
production efficiencies in direct labor and improved leverage of fixed overhead
costs as the Company expanded its manufacturing capacity to fulfill the surge of
incoming orders.
Total operating expenses were $10.9 million in fiscal 1996, an increase of 14.1%
from $9.6 million in fiscal 1995. Research and development expenses increased
$862,000 due to increased staffing and sampling of new products as investments
in future revenue growth. Selling expenses increased $515,000 due to the
creation of a telemarketing capability for QMS thermal transfer supplies, and
the hiring of additional personnel to drive the Company's sales growth,
partially offset by no management bonuses in fiscal 1996.
Total operating expenses in fiscal 1995 increased by 36.6% from $7.0 million in
fiscal 1994. Research and development expenses increased $672,000 due to the
hiring of additional personnel and distribution of samples to customers.
Selling expenses increased $723,000, primarily due to increased staffing and
promotional expenses. Administrative expenses increased $1.2 million,
principally due to increased staffing and the first full year of expenses as a
publicly-held Company in fiscal 1995.
[Bar chart depicting the debt to equity ratio] 1992 1.06; 1993 1.13; 1994 0.12;
1995 0.08; 1996 .26.
Interest expense was $136,000 in fiscal 1996, a decrease of 52.1% from $284,000
in fiscal 1995. Interest incurred on the Company's lines of credit in fiscal
1996 to fund the construction of and equipment for the 100,000 square foot
manufacturing facility, the purchase of the QMS thermal transfer supplies
business, and the repurchase of 315,400 shares of the Company's common stock was
offset by $612,000 of interest capitalized as part of the cost of the new
facility. Interest income was $101,000 in fiscal 1996, a decrease of 76.3% from
$427,000 in fiscal 1995, due to the use of the Company's cash and short-term
investments prior to the borrowings on the lines of credit. Interest expense in
fiscal 1995 decreased 55.6% from $639,000 in fiscal 1994, while interest income
increased 133.3% from $183,000 in fiscal 1994. These improvements resulted from
the repayment of a portion of the
<PAGE>
PAGE 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED
Company's debt with some of the proceeds from the Company's initial public
offering of common stock in fiscal 1994, as well as higher short-term investment
balances in fiscal 1995 resulting from the Company's record financial
performance.
Income taxes in fiscal 1996 were $5.3 million or 35.0% of income before income
taxes. In fiscal 1995, income taxes were $6.1 million or 38.0% of income before
income taxes. Income taxes in fiscal 1994 were $3.6 million or 37.0% of income
from continuing operations before income taxes. Changes in the New York State
alternative minimum tax calculation benefiting the Company and the benefit from
the Company's foreign sales subsidiary established at the beginning of fiscal
1996 contributed to this rate reduction in fiscal 1996. The actual tax payments
in all three years were significantly lower than the expense reflected in the
Company's statements of income since a substantial portion of the tax provisions
were deferred, primarily reflecting the temporary benefits of accelerated
depreciation of plant and equipment on the Company's tax returns. Tax payments
were also reduced by tax deductions from the exercise of non-qualified stock
options and compensatory warrants. For financial reporting purposes, these tax
benefits are recognized as increases in additional paid-in capital, rather than
as reductions of income tax expense.
Effective March 31, 1994, the Company adopted a plan to dispose of its software
division which was completed during fiscal 1995. The division was established
during fiscal 1993 to develop a low-cost, user-friendly software program to
increase the consumption of the Company's color ribbons. The decision to
discontinue this division resulted from the introduction of several similar
programs by other software companies.
The Company's financial performance over the last three fiscal years is best
understood in terms of the entire three-year period, rather than concentrating
on the unique events temporarily influencing each individual year's results.
Net income grew 74.7% on a 43.6% revenue increase from fiscal 1994 through
fiscal 1996. Net income as a percentage of sales increased from 9.2% of
revenues in fiscal 1994 to 11.2% of revenues in fiscal 1996. Return on invested
capital improved from 10.0% in fiscal 1994 to 11.1% in fiscal 1996. Return on
total assets increased from 8.6% in fiscal 1994 to 9.4% in fiscal 1996.
[Bar chart depicting net capital expenditures in thousands] 1992 $8,912; 1993
$8,819; 1994 $13,435; 1995 $14,235; 1996 $17,477.
At the same time as these operating results were improving, the Company invested
heavily in its future. These investments include $45.1 million of capital
expenditures, including 150,000 square feet of facilities and the equipment
needed to both increase manufacturing capacity and improve production
efficiency, as well as a dedicated research and development pilot facility for
the production of new product samples for customers. A total of $6.8 million
was spent on research and development as the Company became less dependent on
Fujicopian and established its own capability to develop new products tailored
to the specific requirements of the North American market. The Company also
paid $5.6 million for the QMS thermal transfer supplies business and created a
telemarketing capability to serve small distributors, dealers and end-user
customers both now and in the future. These investments were funded by $27.2
million from the Company's initial public offering of common stock in fiscal
1994 and an additional $34.4 million generated by operating activities.
[Bar chart depicting cash flow from operations in thousands] 1992 $4,377; 1993
$7,306; 1994 $10,888; 1995 $16,972; 1996 $18,958;
<PAGE>
PAGE 17
- -------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED
Liquidity and Capital Resources
- -------------------------------
The Company's financial condition at March 31, 1996 remained strong, with long-
term debt comprising only 2.8% of total capitalization. Cash from operating
activities in fiscal 1996 of $9.9 million, short-term borrowings on the
Company's lines of credit of $16.3 million and $7.0 million of cash and short-
term investments at March 31, 1995 funded $17.5 million of capital expenditures,
the purchase of the QMS thermal transfer supplies business for
$5.6 million and the repurchase of 315,400 shares of the Company's common stock
for another $5.6 million. The Company expects to spend approximately $15
million on capital expenditures in fiscal 1997, primarily to complete the
construction of and purchase equipment for the new manufacturing facility. The
Company anticipates funding these capital expenditures and its working capital
requirements, in addition to repaying approximately $10 million of the $16.3
million balance on its $30.0 million lines of credit with two banks at March 31,
1996, with cash generated by operating activities in fiscal 1997. The Company
believes that internally generated cash will be more than sufficient to finish
repaying the lines of credit and fund working capital, capital expenditures and
debt service requirements in fiscal 1998.
Trade receivables increased $4.3 million in fiscal 1996, primarily due to
disproportionately higher sales volumes in February and March 1996. The number
of days of sales in trade receivables at March 31, 1996 was 48, as compared to
47 days at March 31, 1995, consistent with the Company's typical range of 45 to
50 days. Inventories increased $2.3 million during fiscal 1996, as the Company
used available manufacturing capacity to increase its finished goods inventory
in anticipation of future revenue increases, as well as create the higher
inventory levels required to service the growing proportion of dealer,
distributor and end-user sales. The $4.7 million increase in other assets from
March 31, 1995 principally consists of the cost of the assets acquired in
connection with the purchase of the QMS thermal transfer supplies business,
which are being amortized over the next five years. The Company also
repurchased 315,400 shares of its common stock during the fourth quarter of
fiscal 1996, at an average purchase price of $17.68 per share. These shares
will be used to fund future stock option and warrant exercises, for which 5,000
shares were issued as of March 31, 1996.
Cash from operating activities in fiscal 1995 of $18.9 million funded $14.2
million of capital expenditures, $1.7 million of scheduled debt repayments, and
a $2.0 million increase in cash and short-term investments. Raw material
inventories increased $3.0 million in the fourth quarter of fiscal 1995 due to
purchases to support future revenue growth and to delay the impact of
anticipated price increases. Trade accounts payable increased $3.5 million in
the fourth quarter of fiscal 1995 due primarily to these raw material purchases.
During fiscal 1995 and 1996, the Company loaned $3.9 million and $3.4 million,
respectively, to certain officers and a director in conjunction with the
exercise of non-qualified stock options and warrants. These exercises, in
addition to the lapse of restrictions in fiscal 1996 on restricted stock grants,
generated tax deductions of $9.8 million and $6.3 million for the Company in
fiscal 1995 and 1996, respectively. During fiscal 1996, $4.2 million of these
loans were repaid through the surrender of shares of common stock to the
Company. The portions of these loans which funded the officers' and director's
personal income tax withholdings are included in other assets since it is the
intention of the Company to allow repayment beyond March 31, 1997. The portions
of these loans that funded the exercise price of the options and warrants are
included as a reduction of stockholders' equity. These demand notes are secured
by the stock and personal assets of the officers and director.
[Bar chart depicting stockholder's equity in thousands] 1992 $18,887; 1993
$21,838; 1994 $59,110; 1995 $73,689; 1996 $78,120.
Inflation
- ---------
Inflationary factors have not had a significant effect on the Company's overall
revenues or profitability during the past three years.
<PAGE>
PAGE 18
INTERNATIONAL IMAGING MATERIALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years Ended March 31,
-------------------------------------------
1994 1995 1996
------------- ------------- -------------
(In thousands, except per share amounts)
<S> <C> <C> <C>
Revenues $61,576 $85,477 $88,448
Cost of goods sold 44,425 59,968 62,253
------- ------- -------
Gross profit 17,151 25,509 26,195
------- ------- -------
Operating expenses:
Research and development 1,545 2,217 3,079
Selling 2,912 3,635 4,150
General and administrative 2,548 3,720 3,695
------- ------- -------
Total operating expenses 7,005 9,572 10,924
------- ------- -------
Operating income 10,146 15,937 15,271
Interest expense 639 284 136
Interest income (183) (427) (101)
------- ------- -------
Income from continuing operations
before income taxes 9,690 16,080 15,236
Income taxes 3,590 6,110 5,333
------- ------- -------
Income from continuing operations 6,100 9,970 9,903
Loss from discontinued operation, net of income tax
benefits of $255 432 --- ---
------- ------- -------
Net income $ 5,668 $ 9,970 $ 9,903
------- ------- -------
Net income (loss) per share of common stock:
Continuing operations .76 1.10 1.07
Discontinued operation (.05) --- ---
------- ------- -------
Net income per share of common stock $ .71 $1.10 $1.07
------- ------- -------
Weighted average common shares outstanding 8,065 9,093 9,224
------- ------- -------
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
PAGE 19
INTERNATIONAL IMAGING MATERIALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31,
----------------------------------
1995 1996
--------------- -----------------
(In thousands, except share and
ASSETS per share amounts)
- ------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,559 $ 570
Securities held to maturity 3,468 ---
Trade receivables 11,902 16,157
Inventories:
Raw materials 8,581 9,397
Work in process 3,802 3,627
Finished goods 3,224 4,839
------- --------
Total inventories 15,607 17,863
------- --------
Prepaid expenses 818 635
Deferred income taxes 1,557 1,467
------- --------
Total current assets 36,911 36,692
------- --------
Property, plant and equipment, at cost:
Land 619 1,163
Building and improvements 10,444 10,924
Equipment 57,636 64,362
Construction in progress 6,388 17,194
------- --------
75,087 93,643
Less accumulated depreciation 16,323 21,826
------- --------
Net property, plant and equipment 58,764 71,817
------- --------
Other assets 2,269 6,952
------- --------
$97,944 $115,461
------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Notes payable to banks --- 16,292
Current installments of long-term debt 1,697 1,674
Trade accounts payable 8,011 8,126
Accrued compensation and benefits 1,085 338
Payable to Fujicopian Co., Ltd., a related party 1,853 1,184
Other accrued expenses 1,467 1,132
Income taxes payable 1,285 ---
------- --------
Total current liabilities 15,398 28,746
Long-term debt, excluding current installments 3,940 2,259
Deferred income taxes 4,917 6,336
------- --------
Total liabilities 24,255 37,341
------- --------
Commitments (Note 8)
Stockholders' equity:
Preferred stock; $.01 par value; 5,000,000 shares
authorized; none issued --- ---
Common stock; $.01 par value; 30,000,000 shares
authorized; 8,731,479 and 8,860,301 shares issued
as of March 31, 1995 and 1996, respectively 87 89
Additional paid-in capital 53,906 53,037
Unearned compensation - restricted stock awards (915) (692)
Notes receivable from exercise of stock options and warrants (1,880) (1,219)
Retained earnings 22,491 32,394
Treasury stock, 310,400 shares, at cost --- (5,489)
------- --------
Total stockholders' equity 73,689 78,120
------- --------
$97,944 $115,461
------- --------
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
PAGE 20
INTERNATIONAL IMAGING MATERIALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended March 31,
-------------------------------
1994 1995 1996
--------- --------- ---------
(In thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 5,668 $ 9,970 $ 9,903
-------- -------- --------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,604 4,520 6,251
Loss on disposal of discontinued operation 421 --- ---
Deferred income taxes 1,561 2,172 2,360
Other noncash expenses 55 310 444
Reduction in income taxes payable from the
exercise of options and warrants 1,102 1,969 1,464
Cash provided (used) by changes in:
Trade receivables (4,023) (675) (4,418)
Inventories (2,232) (4,939) (2,256)
Prepaid expenses (85) (236) 183
Other assets 169 (7) 50
Trade accounts payable 191 2,956 (1,052)
Accrued compensation and benefits (83) 134 (747)
Payable to Fujicopian Co., Ltd. 75 966 (674)
Other accrued expenses (122) 460 (335)
Income taxes payable (645) 1,285 (1,285)
-------- -------- --------
Total adjustments (12) 8,915 (15)
-------- -------- --------
Net cash provided by operating activities 5,656 18,885 9,888
-------- -------- --------
Cash flows used in investing activities:
Capital expenditures (13,435) (14,235) (17,477)
Payments to acquire other assets --- --- (5,575)
Purchases of securities --- (4,468) (22)
Maturities of securities --- 1,000 3,490
-------- -------- --------
Net cash used in investing activities (13,435) (17,703) (19,584)
-------- -------- --------
Cash flows from financing activities:
Proceeds from sale of common stock 27,237 83 102
Purchase of treasury stock --- --- (5,576)
Exercise of stock options and warrants:
Proceeds 2,551 1,013 409
Notes received from officers and director --- (1,996) (2,816)
Proceeds from (repayments of) notes payable to banks (760) --- 16,292
Proceeds from long-term debt 2,048 --- ---
Repayments of long-term debt (18,684) (1,712) (1,704)
-------- -------- --------
Net cash provided by (used in) financing activities 12,392 (2,612) 6,707
-------- -------- --------
Net increase (decrease) in cash and cash equivalents 4,613 (1,430) (2,989)
Cash and cash equivalents at beginning of year 376 4,989 3,559
-------- -------- --------
Cash and cash equivalents at end of year $ 4,989 $ 3,559 $ 570
-------- -------- --------
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest, net of amount capitalized 707 218 151
Income taxes $ 1,704 $ 311 $ 3,044
-------- -------- --------
Supplemental disclosure of noncash investing and
financing activities:
Increase (decrease) in liabilities incurred in
connection with capital expenditures (661) 528 1,172
Notes received from exercise of stock options and warrants --- 1,880 548
Common stock surrendered --- --- 4,909
Issuance of restricted common stock $ 537 $ 292 $ 58
-------- -------- --------
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
PAGE 21
INTERNATIONAL IMAGING MATERIALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Notes
Receivable
From
Exercise
Additional of Stock Total
Common Paid-in Unearned Options Retained Treasury Stockholders'
Stock Capital Compensation & Warrants Earnings Stock Equity
------- ----------- ------------- ----------- -------- --------- --------------
(In thousands, except share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1993 $54 $15,372 $(337) $ --- $ 6,853 $ (104) $21,838
Sale of 2,178,416 common shares 22 27,215 --- --- --- --- 27,237
Exercise of options and warrants:
Shares issued, 487,859 5 2,546 --- --- --- --- 2,551
Tax benefit --- 1,772 --- --- --- --- 1,772
Restricted stock awards:
Shares issued, 32,021 --- 537 (537) --- --- --- ---
Compensation earned --- --- 44 --- --- --- 44
Net income --- --- --- --- 5,668 --- 5,668
------ ------- ------------ ---------- -------- -------- -------
Balance at March 31, 1994 81 47,442 (830) --- 12,521 (104) 59,110
Exercise of options and warrants:
Shares issued, 630,566 6 2,887 --- --- --- --- 2,893
Tax benefit --- 3,306 --- --- --- --- 3,306
Notes received --- --- --- (1,880) --- --- (1,880)
Restricted stock awards:
Shares issued, 12,000 --- 292 (292) --- --- --- ---
Compensation earned --- --- 207 --- --- --- 207
Net income --- --- --- --- 9,970 --- 9,970
Other --- (21) --- --- --- 104 83
------ ------- ------------ ---------- -------- -------- -------
Balance at March 31, 1995 87 53,906 (915) (1,880) 22,491 --- 73,689
Exercise of options and warrants:
Shares issued, 319,081 3 1,648 --- --- --- 87 1,738
Tax benefit --- 2,116 --- --- --- --- 2,116
Shares surrendered, 197,345 (1) (4,908) --- 1,209 --- --- (3,700)
Notes received --- --- --- (548) --- --- (548)
Restricted stock awards:
Shares issued, 2,400 --- 58 (58) --- --- --- ---
Tax benefit --- 197 --- --- --- --- 197
Compensation earned --- --- 281 --- --- --- 281
Purchase of 315,400 treasury shares --- --- --- --- --- (5,576) (5,576)
Net income --- --- --- --- 9,903 --- 9,903
Other --- 20 --- --- --- --- 20
------ ------- ------------ ---------- -------- -------- -------
Balance at March 31, 1996 $89 $53,037 $(692) $(1,219) $32,394 $(5,489) $78,120
------ ------- ------------ ---------- -------- -------- -------
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
PAGE 22
INTERNATIONAL IMAGING MATERIALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1994, 1995 AND 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
International Imaging Materials, Inc. and subsidiaries (the "Company")
manufactures and sells thermal transfer ribbons used in non-impact thermal
transfer printers. The Company's customers are primarily printer manufacturers
and distributors in North America.
A summary of significant accounting policies follows:
(a) Principles of Consolidation
The consolidated financial statements include the financial statements of
International Imaging Materials, Inc. and its two wholly-owned subsidiaries.
All significant intercompany balances and transactions have been eliminated in
consolidation.
(b) Cash Equivalents
Cash equivalents consist of money market funds, repurchase agreements and
commercial paper with original maturities of ninety days or less.
(c) Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market.
(d) Depreciation and Amortization
Depreciation of plant and equipment is calculated using the straight-line
method over the estimated useful lives of the assets. Intangibles included in
other assets are amortized using an accelerated method over the period of
expected benefit.
(e) Income Taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the estimated future tax
consequences attributable to temporary differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The
Company considers the scheduled reversal of deferred tax liabilities, projected
future taxable income and restriction on the use of certain State investment tax
credits in assessing the realizability of deferred tax assets.
(f) Earnings Per Share
Weighted average common shares outstanding include common stock equivalents
which consist of the aggregate dilutive effect of unexercised stock options,
warrants and restricted stock awards.
(g) Foreign Exchange
The Company periodically enters into forward foreign exchange contracts to
minimize exposure and reduce risk from exchange rate fluctuations in the regular
course of business. Since these contracts hedge exposures on firm foreign
currency commitments, gains and losses are deferred and recognized as
adjustments to the costs of the corresponding assets. All balance sheet amounts
denominated in foreign currencies are translated at the current exchange rate as
of the balance sheet date. Transaction gains and losses are included in
earnings.
<PAGE>
INTERNATIONAL IMAGING MATERIALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(h) Use of Estimates
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results could
differ from those estimates.
(2) INDEBTEDNESS
The Company maintains a $20,000,000 line of credit with a bank which bears
interest at either the LIBOR rate plus .20%, the bank's cost of funds rate plus
.50%, or the prime rate, as selected by the Company. In addition, the Company
maintains a $10,000,000 line of credit with another bank which bears interest at
either the LIBOR rate plus .20%, the Federal Funds rate plus .50%, or a fixed
rate to be determined by the bank, as selected by the Company. Advances under
both lines of credit are at the sole discretion of the banks and can be made for
various periods of time not extending beyond September 30, 1997 under the
$20,000,000 line of credit, nor beyond March 31, 1997 under the $10,000,000 line
of credit. There were no borrowings outstanding under either line of credit at
March 31, 1995. There was $9,500,000 outstanding under the $20,000,000 facility
at 5.64% and $6,792,000 outstanding on the $10,000,000 facility at 5.55% at
March 31, 1996. Borrowings under both facilities are payable on demand.
A summary of long-term debt follows:
<TABLE>
<CAPTION>
Interest
Rate at
March 31, March 31,
-------------------
1996 1995 1996
---- ------ ------
(In thousands)
<S> <C> <C> <C>
Term loans, due in:
1997 7.75% $1,215 $ 631
1998 7.75 3,493 2,562
2001 8.25 774 647
Other 2.50 to 4.00% 155 93
------ ------
Total long-term debt 5,637 3,933
Less current installments 1,697 1,674
------ ------
Long-term debt, excluding
current installments $3,940 $2,259
------ ------
</TABLE>
The term loans, payable in monthly installments ranging from $11,000 to
$78,000, bear interest at variable rates based on the prime rate, are secured by
certain plant and equipment, require the maintenance of certain financial
ratios, limit the amount of capital expenditures and prohibit the payment of
cash dividends without the lenders' consent.
PAGE 23
The aggregate annual installments due on long-term debt for each of the next
five years are: $1,674,000 in fiscal 1997, $1,155,000 in fiscal 1998, $838,000
in fiscal 1999, $127,000 in fiscal 2000 and $127,000 in fiscal 2001.
<PAGE>
INTERNATIONAL IMAGING MATERIALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
The Company capitalizes interest as a component of the cost of plant and
equipment. The following is a summary of interest costs incurred:
<TABLE>
<CAPTION>
Years Ended March 31,
---------------------
1994 1995 1996
------ ------ -----
(In thousands)
<S> <C> <C> <C>
Interest cost capitalized $ 152 $ 235 $ 612
Interest cost charged to income 639 284 136
----- ----- -----
Total interest cost incurred $ 791 $ 519 $ 748
----- ----- -----
</TABLE>
The 2001 term loan and the $20,000,000 line of credit are with a bank that
owns warrants to purchase 50,000 shares of the Company's common stock.
The carrying amount of the Company's long-term debt instruments approximates
the fair value of such instruments based upon management's best estimate of
interest rates that would be available to the Company for similar debt
obligations at March 31, 1996.
(3) STOCKHOLDERS' EQUITY
The Company has two stock plans under which non-qualified stock options and
restricted stock have been granted to employees. The Company has also granted
non-qualified stock options and restricted stock under an outside director stock
option and restricted stock plan. All of the options granted under the plans
were granted at the fair market value of the Company's common stock at the date
of grant. All options granted under the plans expire no later than ten years
and one day after grant. The following table summarizes option activity under
these plans:
<TABLE>
<CAPTION>
Years Ended March 31,
------------------------------------------------------
1994 1995 1996
---------------- ---------------- ------------------
<S> <C> <C> <C>
Options outstanding, beginning of year 1,710,187 1,663,270 1,561,274
Granted 379,822 290,946 589,610
Exercised (395,739) (388,942) (301,881)
Canceled (31,000) (4,000) (241,000)
--------------- --------------- -----------------
Options outstanding, end of year 1,663,270 1,561,274 1,608,003
Shares reserved under the stock plans 279,970 685,220 389,820
--------------- --------------- -----------------
Total reserved shares 1,943,240 2,246,494 1,997,823
--------------- --------------- -----------------
Options exercisable at year end 1,120,381 893,617 707,663
--------------- --------------- -----------------
Option prices per share:
Granted $14.00 - $20.13 $17.00 - $26.50 $16.875 - $26.875
Exercised $3.20 - $5.00 $3.20 - $19.75 $5.00 - $19.75
--------------- --------------- -----------------
</TABLE>
During fiscal 1994, stockholders adopted an employee stock purchase plan
which allows the purchase by employees, not holding options, of up to 200,000
shares of the Company's common stock at 85% of the fair market value of the
shares at the time of purchase. As of March 31, 1995 and 1996, 4,369 and 9,055
shares, respectively had been issued under this plan.
<PAGE>
INTERNATIONAL IMAGING MATERIALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
Additionally, the Company has warrants outstanding as follows:
<TABLE>
<CAPTION>
Years Ended March 31,
---------------------------------
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Warrants outstanding 365,460 119,640 102,440
------- ------- -------
Warrants exercisable 305,460 79,640 82,440
------- ------ ------
Exercise price $5.00 - $10.00 $5.00 - $10.00 $5.00 - $10.00
-------------- -------------- --------------
</TABLE>
During fiscal 1995 and 1996, the Company loaned $3,876,000 and $3,364,000,
respectively to certain officers and a director, of which $1,880,000 and
$548,000 funded the exercise price of stock options and warrants and $1,996,000
and $2,816,000 funded the officers and director's personal income tax
liabilities related to the exercise. In fiscal 1996, $4,210,000 of these loans
were repaid through the surrender of shares of the Company's common stock. It
is the intention of the Company to allow repayment of these demand notes, which
are collateralized by the assets of the respective officers, beyond March 31,
1997.
<TABLE>
<S> <C>
(4) INCOME TAXES
</TABLE>
Income tax expense is reflected in the statements of income as follows:
<TABLE>
<CAPTION>
Years Ended March 31,
---------------------------------
1994 1995 1996
-------- -------------- -------
(In thousands)
<S> <C> <C> <C>
Expense attributable to income
from continuing operations $3,590 $6,110 $5,333
Benefit resulting from loss from
discontinued operation (255) --- ---
------ ------ -------
Total income tax expense $3,335 $6,110 $5,333
------ ------ -------
The above income tax expense consists of the following:
Years Ended March 31,
--------------------------------
1994 1995 1996
------ ------ -------
(In thousands)
Current:
Federal $1,450 $3,411 $2,662
State 324 527 313
------ ------ -------
1,774 3,938 2,975
------ ------ -------
Deferred:
Federal 1,523 2,172 2,358
State 38 --- ---
------ ------ -------
1,561 2,172 2,358
------ ------ -------
Total income tax expense $3,335 $6,110 $5,333
------ ------ -------
</TABLE>
<PAGE>
PAGE 24
INTERNATIONAL IMAGING MATERIALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
Income tax expense differs from the expected amount (computed by applying the
34% statutory rate to income before income taxes from both continuing and
discontinued operations) due principally to the effects of the Company's foreign
sales corporation, state income taxes and changes in the valuation allowance for
deferred tax assets.
The tax effects of temporary differences that give rise to the deferred tax
assets and liability at March 31, 1995 and 1996 were as follows:
<TABLE>
<CAPTION>
March 31,
-------------------
1995 1996
-------- ---------
(In thousands)
<S> <C> <C>
Deferred tax assets:
Investment tax and other
credit carryforwards $ 2,613 $ 3,384
Alternative minimum tax credit
carryforwards 3,984 3,781
Capitalized inventory costs 654 581
Other 480 672
------- --------
Total gross deferred tax asset 7,731 8,418
Valuation allowance (2,388) (2,695)
------- --------
Net deferred tax asset 5,343 5,723
Deferred tax liability - depreciation of
plant and equipment (8,703) (10,592)
------- --------
Net deferred tax liability $(3,360) $ (4,869)
------- --------
</TABLE>
The above net deferred tax liability is reflected in the balance sheets as
follows:
<TABLE>
<CAPTION>
March 31,
------------------
1995 1996
-------- --------
(In thousands)
<S> <C> <C>
Current deferred tax asset $ 1,557 $ 1,467
Noncurrent deferred tax liability, net (4,917) (6,336)
------- -------
Net deferred tax liability $(3,360) $(4,869)
------- -------
</TABLE>
In fiscal 1994, 1995 and 1996, 487,859, 630,566 and 319,081 shares of common
stock, respectively, were issued through the exercise of non-qualified stock
options and compensatory warrants. In addition, in fiscal 1996, restrictions
lapsed on 41,900 shares of common stock. The total tax benefit to the Company
from these transactions, which is credited to additional paid-in capital, rather
than recognized as a reduction of income tax expense, was $1,772,000, $3,306,000
and $2,313,000 in fiscal 1994, 1995 and 1996, respectively. Those benefits were
recognized in the balance sheets as follows:
<TABLE>
<CAPTION>
Years Ended March 31,
----------------------
1994 1995 1996
------ ------ ------
(In thousands)
<S> <C> <C> <C>
Reduction in:
Income taxes payable $1,102 $1,969 $1,464
Deferred income taxes 670 1,337 849
------ ------ ------
Credit to additional paid-in capital $1,772 $3,306 $2,313
------ ------ ------
</TABLE>
<PAGE>
INTERNATIONAL IMAGING MATERIALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
At March 31, 1996, the Company's investment tax and other credits ($174,000
Federal and $4,862,000 State) expire from 2001 to 2012. The Company also has
$3,553,000 of Federal and $345,000 of State alternative minimum tax credit
carryforwards available with no expiration date.
(5) OTHER ASSETS
Other assets include $5,575,000 paid to QMS, Inc. in fiscal 1996 for the
rights to sell thermal transfer supplies directly to the customers of QMS, Inc.
under the QMS, Inc. brand name. The purchase price was allocated to the various
service and consulting arrangements, customer records and other agreements
acquired in this transaction. Amortization of the cost of the acquired assets
was $655,000 in fiscal 1996.
(6) RELATIONSHIP WITH FUJICOPIAN CO., LTD.
The Company manufactures thermal transfer ribbons pursuant to a license
agreement with Fujicopian Co., Ltd. which expires in 2008. Royalty expenses
under the agreement are generally equal to 3% of total revenues from
substantially all thermal transfer ribbons and totaled $1,911,000, $2,627,000
and $2,681,000 in fiscal 1994, 1995 and 1996, respectively. The payable to
Fujicopian Co., Ltd. includes royalties due of $687,000 and $732,000 as of March
31, 1995 and 1996, respectively.
The Company also purchased certain materials from Fujicopian which totaled
$3,925,000, $4,579,000 and $3,040,000 in fiscal 1994, 1995 and 1996,
respectively. The Company believes that the costs of such purchases are
competitive with alternative sources of supply.
At March 31, 1996, Fujicopian owned 300,300 shares of the Company's common
stock.
(7) RETIREMENT SAVINGS PLAN
The Company has a defined contribution retirement savings plan qualified
under Section 401(k) of the Internal Revenue Code. Pursuant to the plan,
employees make voluntary contributions which are partially matched by the
Company. Expenses under the Plan were $415,000, $555,000 and $639,000 in fiscal
1994, 1995 and 1996, respectively.
(8) COMMITMENTS
At March 31, 1996, commitments for construction of an additional
manufacturing facility and the purchase of equipment totaled $4,479,000.
Additionally, the Company had contracted to buy certain raw materials for
$10,929,000.
Rent expense under operating leases for certain buildings and equipment was
$223,000, $253,000 and $270,000 in fiscal
PAGE 25
1994, 1995 and 1996, respectively. Minimum annual payments due under these
leases are $214,000 in fiscal 1997, $143,000 in fiscal 1998, $130,000 in fiscal
1999, $132,000 in fiscal 2000 and in fiscal 2001 and a total of $559,000
thereafter.
(9) SIGNIFICANT CUSTOMERS
Sales to significant customers were: $7,270,000 and $7,118,000 to separate
customers in fiscal 1994, $10,282,000 to one customer in fiscal 1995, and
$11,859,000 and $9,599,000 to separate customers in fiscal 1996. In addition,
export sales in the aggregate were $9,576,000 and $9,753,000 in fiscal 1995 and
1996, respectively.
<PAGE>
INTERNATIONAL IMAGING MATERIALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(10) SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Selected quarterly financial data for 1995 and 1996 are as follows:
<TABLE>
<CAPTION>
Year Ended March 31, 1995
---------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
--------- ------------- ------------ -----------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Revenues $19,816 $21,409 $21,941 $22,311
Gross profit 5,782 6,306 6,601 6,820
Net income $ 2,150 $ 2,451 $ 2,631 $ 2,738
------- ------- ------- -------
Net income per share of common stock $ .24 $ .27 $ .29 $ .30
------- ------- ------- -------
Year Ended March 31, 1996
---------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
--------- ------------- ------------ -----------
(In thousands, except per share amounts)
Revenues $19,001 $21,223 $24,018 $24,206
Gross profit 5,417 6,209 7,306 7,263
Net income $ 1,831 $ 2,213 $ 2,865 $ 2,994
------- ------- ------- -------
Net income per share of common stock $ .20 $ .24 $ .31 $ .34
------- ------- ------- -------
</TABLE>
(11) ACCOUNTING PRONOUNCEMENTS
The Company is required to adopt Statements of Financial Accounting Standards
Nos. 121 (Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of) and 123 (Accounting for Stock Based Compensation) in
fiscal 1997. The Company does not believe that the adoption of either standard
will have a material effect on the consolidated financial statements. With
respect to FAS 123, the Company does not expect to adopt the fair value
accounting provisions of the standard in favor of the disclosure alternative.
<PAGE>
PAGE 26
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
International Imaging Materials, Inc.:
We have audited the accompanying consolidated balance sheets of International
Imaging Materials, Inc. and subsidiaries as of March 31, 1995 and 1996, and the
related consolidated statements of income, stockholders' equity, and cash flows
for each of the years in the three-year period ended March 31, 1996. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
International Imaging Materials, Inc. and subsidiaries as of March 31, 1995 and
1996, and the results of their operations and their cash flows for each of the
years in the three-year period ended March 31, 1996, in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
- -----------------------------------------
KPMG PEAT MARWICK LLP
Buffalo, New York
April 24, 1996
<PAGE>
PAGE 28
COMMON STOCK INFORMATION
International Imaging Materials, Inc.'s common stock is traded on The Nasdaq
Stock Market under the symbol IMAK. The Company has never paid dividends on its
common stock nor does it expect to pay dividends in the foreseeable future.
There were 308 shareholders of record and approximately 3,500 beneficial holders
of the Company's common stock at March 31, 1996. The following table sets forth
the high and low sales prices of the Company's common stock for fiscal 1995 and
1996.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31, 1995:
- --------------------------
Price
----------------
Quarter Ended High Low
- ------------------------------------------------------
<S> <C> <C>
July 5, 1994 $20.250 $15.000
October 4, 1994 $25.000 $18.500
January 3, 1995 $33.750 $21.875
March 31, 1995 $30.500 $25.250
YEAR ENDED MARCH 31, 1996:
- --------------------------
Price
----------------
Quarter Ended High Low
- ------------------------------------------------------
July 4, 1995 $29.250 $21.750
October 3, 1995 $27.375 $18.000
January 2, 1996 $28.500 $19.938
March 31, 1996 $26.000 $16.250
</TABLE>
<PAGE>
EXHIBIT 21
INTERNATIONAL IMAGING MATERIALS, INC.
SUBSIDIARIES
Name: International Imaging Materials FSC Ltd.
Jurisdiction of Incorporation: U.S. Virgin Islands
Name: IIMAK DRM, Inc.
Jurisdiction of Incorporation: Delaware
<PAGE>
Exhibit 23
Independent Auditor's Consent
-----------------------------
The Board of Directors
International Imaging Materials, Inc.:
We consent to incorporation by reference in the registration statement (No. 33-
71716) on Form S-8 of International Imaging Materials, Inc. of our reports dated
April 24, 1996, relating to the consolidated balance sheets of International
Imaging Materials, Inc. and subsidiaries as of March 31, 1996 and 1995, and the
related consolidated statements of income, stockholders' equity and cash flows
for each of the years in the three-year period ended March 31, 1996, and related
schedule, which reports appear in or are incorporated by reference in the March
31, 1996 annual report on Form 10-K of International Imaging Materials, Inc.
/s/ KPMG Peat Marwick LLP
-----------------------------------------
KPMG Peat Marwick LLP
Buffalo, New York
June 13, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 570
<SECURITIES> 0
<RECEIVABLES> 16,157
<ALLOWANCES> 0
<INVENTORY> 17,863
<CURRENT-ASSETS> 36,692
<PP&E> 93,643
<DEPRECIATION> 21,826
<TOTAL-ASSETS> 115,461
<CURRENT-LIABILITIES> 28,746
<BONDS> 2,259
0
0
<COMMON> 89
<OTHER-SE> 78,031
<TOTAL-LIABILITY-AND-EQUITY> 115,461
<SALES> 88,448
<TOTAL-REVENUES> 88,448
<CGS> 62,253
<TOTAL-COSTS> 62,253
<OTHER-EXPENSES> 10,924
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 35
<INCOME-PRETAX> 15,236
<INCOME-TAX> 5,333
<INCOME-CONTINUING> 9,903
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,903
<EPS-PRIMARY> 1.07
<EPS-DILUTED> 1.07
</TABLE>
