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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Mark one)
[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
[x] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from
May 1, 1995 to February 3, 1996
Commission File Number: 0-22834
SUCCESSORIES, INC.
(FORMERLY KNOWN AS CELEX GROUP, INC.)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ILLINOIS 36-3760230
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
919 SPRINGER DRIVE 60148
LOMBARD, ILLINOIS (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (708) 953-8440
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- -------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
$.01 par value Common Stock
(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 Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to the Form 10-K. [ ]
The aggregate market value of the $.01 par value Common Stock, held by
non-affiliates of the registrant on April 29, 1996, based upon the closing sale
price on that date as reported in The Wall Street Journal was approximately $8
5/8.
Registrant had 5,208,452 shares of $.01 par value Common Stock,
outstanding as of April 15, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive Proxy Statement for its 1996
Annual Meeting of Shareholders are incorporated by reference into Part III
hereof.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with, and is
qualified in its entirety by, the Consolidated Financial Statements and Notes
thereto included elsewhere in this Report.
The Company designs, manufactures and markets a diverse range of
proprietary business and personal motivational and self-improvement products
including books, tapes, personalized gifts and awards as well as the
Successories and Celebrating Excellence line of wall decor, gifts, books and
apparel. The Company's products are designed to promote business themes such
as teamwork, goals, quality and leadership. Although these products are
marketed primarily through two distribution channels: direct marketing and
retail stores, sales are also made to wholesalers. The Company's products are
marketed to a wide range of customers and clients including Fortune 500
companies, mid-sized and small companies, corporate management personnel and
retail customers.
Although the Company utilizes multiple marketing channels for its
products, the Company's products have similar purposes and uses in each channel
of distribution and similar opportunities for growth. The profitability varies
among products and marketing channels. The Company utilizes its facilities
interchangeably for each distribution channel. Furthermore, the marketing
channels are directed at a single customer base located primarily in the United
States.
For the nine months ended February 3, 1996, and the twelve months
ended April 30, 1995 and 1994, retail sales, direct mail sales and wholesale
distribution sales (net product sales -- which exclude fees, royalties and
other income) accounted for the following percentages of the Company's net
product sales:
<TABLE>
<CAPTION>
For the 9 Months Ended For the 12 Months Ended
February 3, 1996 April 30, 1995 April 30, 1994
----------------------------- -------------- --------------
<S> <C> <C> <C>
Retail* 49% 49% 49%
Direct Mail 49% 49% 49%
Wholesale Distribution 2% 2% 2%
</TABLE>
- ---------------
*Includes sales to franchisees
Percentages for the nine months ended January 31, 1995 do not
materially differ from the percentages for the time periods provided.
The gross profit margins for retail sales attributable to
Company-owned stores and for direct marketing sales are approximately equal.
The gross profit margin for wholesale sales and
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sales to franchisees is lower, since these sales are made primarily at a
significant discount from retail price.
During the fiscal year ended April 30, 1994, the Company repurchased
franchise development territories from a number of franchisees. At the
inception of the Company's franchise program, the Successories retail store
concept was in the initial stages and the Company had not fully developed its
plans for the expansion of its retail system. The Company initially sold
franchise development territories to individual franchisees, granting each
franchisee the right to develop multiple retail locations in a cluster within
the defined territory. As this program progressed, however, the existing
franchisees were either unwilling or unable to develop an acceptable number of
retail locations within their respective territories in the time frame required
to take maximum advantage of the opportunity for available retail locations.
As a result, the Company initiated a program to repurchase the existing
franchise development territories that were perceived as being underdeveloped
and implemented an ongoing strategy to offer franchises predominantly in areas
that would not support the development of multiple retail locations. During
fiscal 1995, the Company completed the repurchase of those major metropolitan
areas that were perceived as being underdeveloped, including Atlanta, Georgia;
Los Angeles, California; and Denver, Colorado. The Company's franchise
agreements do not provide a repurchase option and the Company does not expect a
continuing pattern of such repurchases in the future, because the Company
believes that the areas subject to franchise development territory agreements
that remain in effect are being adequately developed so as not to require any
immediate additional repurchase efforts.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the
percentage of net product sales and the percentage change versus the prior
period for each line item presented, as taken from the Company's Consolidated
Statements of Operations. The reader should note that the nine months ended
February 3, 1996, are being compared to the unaudited results for the nine
months ended January 31, 1995 (dollars in thousands):
<TABLE>
<CAPTION>
Nine Months Ended Favorable (Unfavorable)
-------------------------------------------
February 3, 1996 January 31, 1995 1996 vs. 1995
-------------------- --------------------- ----------------------
Amount % Amount % Amount %
------ --- ------ --- ------ ---
<S> <C> <C> <C> <C> <C> <C>
Net product sales . . . . . . . . . . . $ 35,483 100.0 $ 32,147 100.0 $ 3,336 10.4
Cost of goods sold . . . . . . . . . . 13,309 37.5 14,193 44.2 884 6.2
-------- ----- --------- ----- -------- -----
Gross profit on product . . . . . . . . 22,174 62.5 17,954 55.8 4,220 23.5
Fees, royalties & other income . . . . 741 2.1 1,143 3.6 (402) (35.2)
-------- ----- --------- ----- -------- -----
Gross margin . . . . . . . . . . . . . 22,915 64.6 19,097 59.4 3,818 20.0
Operating expenses . . . . . . . . . . 22,724 64.0 20,478 63.7 (2,246) (11.0)
-------- ----- --------- ----- -------- -----
Income (loss) from operations . . . . . 191 0.5 (1,381) (4.3) 1,571 113.8
Other income (expense) net . . . . . . (879) (2.5) (475) (1.5) (404) (85.1)
-------- ----- --------- ----- -------- -----
Income before income taxes . . . . . . (688) (1.9) (1,856) (5.8) 1,168 62.9
Income tax expense (benefit) . . . . . (1,388) (3.9) 0 0.0 1,388 N/A
-------- ----- --------- ----- -------- -----
Net income (loss) . . . . . . . . . . . $ 700 2.0 $ (1,856) (5.8) $ 2,556 (137.7)
========= ===== ========= ===== ======== =====
</TABLE>
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<TABLE>
<CAPTION>
Twelve Months Ended
------------------------------------------- Favorable (Unfavorable)
April 30, 1995 April 30, 1994 1995 vs. 1994
-------------------- --------------------- ----------------------
Amount % Amount % Amount %
------ --- ------ --- ------ ---
<S> <C> <C> <C> <C> <C> <C>
Net product sales . . . . . . . . . . . $ 42,809 100.0 $28,594 100.0 $14,215 49.7
Cost of goods sold . . . . . . . . . . 20,748 48.5 9,396 32.9 (11,352) 120.8
--------- ----- ------- ----- ------- -----
Gross profit on product . . . . . . . . 22,061 51.5 19,198 67.1 2,863 14.9
Fees, royalties & other income . . . . 1,340 3.1 1,191 4.2 (149) (12.5)
--------- ----- ------- ----- ------- -----
Gross margin . . . . . . . . . . . . . 23,401 54.7 20,389 71.3 3,012 14.8
Operating expenses . . . . . . . . . . 30,267 70.7 16,432 57.5 (13,835) (84.2)
--------- ----- ------- ----- ------- -----
Income (loss) from operations . . . . . (6,866) (16.0) 3,957 13.8 (10,823) (273.5)
Other income (expense) net . . . . . . (879) (2.1) (338) (1.2) (541) (160.1)
--------- ----- ------- ----- ------- -----
Income before income taxes . . . . . . (7,745) (18.1) 3,619 12.7 (11,364) (314.0)
Income tax expense (benefit) . . . . . 0 0.0 1,405 4.9 1,405 100.0
--------- ----- ------- ----- ------- -----
Net income (loss) . . . . . . . . . . . $ (7,745) (18.1) $ 2,214 7.7 $(9,959) (449.8)
========= ===== ======== ===== ======= =====
</TABLE>
NINE MONTHS ENDED FEBRUARY 3, 1996 COMPARED TO NINE MONTHS ENDED
JANUARY 31, 1995
Net product sales for the nine months ended February 3, 1996 increased
10.4% to $35,483,000 compared to $32,147,000 for the nine months ended January
31, 1995. Of the $3,336,000 net product sales increase, approximately 30% of
the increase is attributable to retail sales and 58% of the increase is
attributable to increased direct marketing sales. Same store sales were
basically flat with a modest increase of $35,000 or 0.4% for the nine months
ended February 3, 1996, when compared to the same time period in the prior
year. As of February 3, 1996, the Company operated 54 retail locations
compared to 50 locations as of January 31, 1995. Franchise locations decreased
to 43 locations from 46 at January 31, 1995. The number of Direct Mail pieces
mailed in the nine months ended February 3, 1996, increased to approximately
10.3 million from 9.8 million pieces mailed for the same period in the prior
year.
Cost of sales, as a percentage of net sales, was 37.5% for the nine
months ended February 3, 1996, compared to 44.2% for the same nine-month period
ended in the prior year. The decrease in the cost of goods sold percentage
from 1996 to the prior year is primarily the result of improvements in labor
and overhead, as well as streamlining that has occurred in the Company's order
fulfillment system. Operating expenses are basically flat as a percentage of
net sales at 64.0% for the nine months ended February 3, 1996, compared to
63.7% for the same nine-month period in the prior year. The improvements made
in the current fiscal year, due to cost reduction programs implemented by the
new management team, are somewhat masked due to one-time costs associated with
significant organizational changes (i.e., severance, etc.).
Interest expense increased from $334,000 for the nine months ended
January 31, 1995 to $866,000 for the nine months ended February 3, 1996. An
increase of $485,000. This increase reflects additional borrowings in the
current fiscal period, as well as $120,000 of fees paid in association with the
amendments to the existing term loan.
Income tax expense for the nine months ended January 31, 1995, was
zero as the Company had incurred a net loss. For the nine months ended
February 3, 1996, the Company
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has recorded a net tax benefit of $1,388,000 which relates to the recognition
of a portion of the net deferred tax asset which was generated as a result of
net operating losses incurred in prior periods.
At April 30, 1995, the Company had determined, based upon evidence
then available, that a valuation allowance of $3,897,000 was required against
net deferred tax assets at that date due to the uncertainty as to whether the
benefits of net operating loss (NOL) carryforwards would be realized. At that
date, such valuation allowance reduced net deferred tax assets to zero. At
February 3, 1996, net deferred assets were $1,600,000 after a valuation
allowance of $2,635,000. The Company believes that it is more likely than not
that $1,600,000 of the available NOL carryforwards will be utilized prior to
their expiration.
To the extent that the NOL carryforwards and existing deductible
temporary differences are not offset by existing taxable temporary differences
reversing within the carryforward period, $1,600,000 of the remaining net
operating loss carryforwards is expected to be realized by achieving future
profitable operations, based on the following:
1. During the period May 1, 1995 through February 3, 1996, the
Company launched a turnaround strategy to improve performance
by implementing a cost reduction program and enhancing asset
utilization. Specifically, this strategy included: (a) a
corporate office restructuring that resulted in head count
reductions; (b) efforts to increase recipients of the Company
catalog; (c) implementation of more sophisticated systems to
better track marketing efforts and enhance inventory
management; (d) utilization of outside consultants to assist
in the development of a more efficient process flow; and, (e)
implementation of improved budgeting, forecasting and
performance monitoring techniques.
2. The improved budgetary, forecasting and performance monitoring
techniques have permitted the Company to more accurately
project future results of operations and to better understand
the sensitivity of various factors of both revenues and costs.
3. While pre-tax operations for the period ended February 3, 1996
resulted in a pre-tax loss of $689,000, the Company believes
that operations for the period would have been profitable had
they not been adversely affected by implementation of the
strategy described above which resulted in significant
non-recurring charges. These improved results for the period
ended February 3, 1996 compare with a net loss of $7,745,000
for the year ended April 30, 1995.
The NOLs do not begin to expire until the year 2005.
As indicated above, realization of the recorded net tax benefit of
$1,600,000 is dependent on generating sufficient taxable income prior to
expiration of the NOL carryforwards. Although realization is not assured, the
Company believes that it is more likely than not that the recorded benefit will
be realized. However, the amount of such realization could be either increased
or
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reduced in the near term if estimates of future taxable income during the
carryforward period are changed.
The Company reported a net income of $700,000 for the nine months
ended February 3, 1996 compared to a net loss of $1,856,000 for the nine months
ended January 31, 1995.
FISCAL YEAR ENDED APRIL 30, 1995 COMPARED TO FISCAL YEAR ENDED APRIL 30, 1994
Net product sales for the fiscal year ended April 30, 1995, increased
49.7% to $42,809,000 compared to $28,594,000 for the fiscal year ended April
30, 1994. Approximately 51.0% of the increase is attributable to increased
retail sales and 46.4% to increased direct marketing sales. Of the increase in
retail sales for fiscal year 1995 over the prior year, approximately 2.4% is
attributable to increased sales by existing stores, 47.5% to sales by stores
opened during the period and 49.6% is attributable to increased product sales
to franchise locations. Same store sales increased $198,000, or 5.0% for the
fiscal year ended April 30, 1995 from the fiscal year ended April 30, 1994. As
of April 30, 1995, the Company operated 51 retail locations compared to 35
retail locations as of April 30, 1994. Franchise locations increased from 28
at April 30, 1994 to 41 on April 30, 1995. The number of direct mail pieces
mailed in the 1995 fiscal year increased to approximately 14.4 million from 7.3
million direct mail pieces sent in fiscal 1994.
Cost of sales as a percentage of net product sales was 48.5% in fiscal
1995 compared to 32.9% in fiscal 1994. The increase in cost percentage from
1994 to 1995 is primarily the result of higher than expected labor and overhead
directly related to a fulfillment system failure during the Company's peak
selling season as well as changes in product and marketing channel mix.
Operating expenses as a percentage of net sales were 70.7% in fiscal
1995, compared to 57.5% in fiscal 1994. Operating expense increased in 1995 as
a result of increased costs associated with sending 14.4 million direct mail
pieces in fiscal year 1995 compared to 7.3 million in fiscal year 1994.
Furthermore, an increase in the number of full time employees from 290 at April
30, 1994 to 370 at April 30, 1995, and increased costs necessary to support
increased sales volume.
In addition, during fiscal year 1995, the Company completed a review
of its prepaid catalog's useful lives and determined that, due to changes in
its direct mail program, the amortization period for certain catalog costs was
shorter than in previous years. Therefore, the Company changed its
amortization period for certain catalog costs effective February 1, 1995. The
effect of this change in estimate increased amortization expense by $702,000.
During fiscal 1994, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants issued SOP 93-7, "Reporting
on Advertising Costs," which outlines the accounting for direct marketing
advertising costs. The Company adopted the SOP in fiscal year 1996 (nine
months ended February 3, 1996). The effect of adoption did not have a material
effect on the Company's financial statements.
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The Company recorded significant adjustments during the fourth quarter
of fiscal 1995 aggregating $6,226,000. These adjustments consisted of the
$702,000 in increased amortization expense due to the change in the
amortization period for certain catalog costs referred to in the preceding
paragraph and adjustments to inventory aggregating $5,524,000. The inventory
adjustments resulted from a physical inventory taken on April 30, 1995 as well
as adjustments to standard product costs for labor and overhead. The Company
has concluded that $4,035,000 of its reported loss for fiscal 1995 is related
to previously unidentified inventory adjustments in the third quarter of fiscal
1995 and, as a result, financial statements for the third quarter of fiscal
1995 were restated. The Company believes that weaknesses in its internal
control and management information systems inhibited timely identification of
escalating costs. The Company has strengthened its internal control
environment by hiring and promoting key employees in the Accounting and MIS
departments in addition to enhancing policies and procedures in the inventory
management system.
As a result of the substantial increase in costs during the last half
of fiscal year 1995, the Company increased its draws on its lines of credit.
Net interest expense increased from $89,000 in 1994 to $573,000 in fiscal 1995
as a result of the increased borrowing levels during 1995. The Company
implemented a plan to reduce costs in fiscal 1996 which included significant
changes in management and an 18% reduction in the corporate work force.
Additionally, stringent spending limits were established and expenditures were
closely monitored by upper management.
Income tax expense for fiscal 1994 was $1,405,000 and the effective
tax rate was 38.8%. No taxes were provided for fiscal 1995 as the Company
incurred a net loss. At April 30, 1995, the Company determined that a
valuation allowance was required against net deferred tax assets due to
uncertainty of when or if the benefits of net operating losses will be
realized.
LIQUIDITY AND CAPITAL RESOURCES
Net cash in the amount of $75,000 was used in the Company's operating
activities for the nine months ended February 3, 1996, compared to $5,170,000
for fiscal 1995 and $4,701,000 in fiscal 1994. The reduction in cash used
during the most recent period, when compared to fiscal 1995, is primarily the
result of the increase in the income from operations. The Company posted a
loss from operations of $6,866,000 for fiscal 1995 compared to income from
operations of $190,000 for the nine months ended February 3, 1996. During
fiscal years 1994 and 1995, the Company provided financing arrangements to
certain of its franchisees. As of February 3, 1996, $252,000 was due from
franchisees in the form of notes receivable compared to $667,000 due at April
30, 1995. The Company does not intend to provide financing to any of its
franchisees in the future.
The Company's allowance for doubtful accounts and sales returns
increased from $388,000 in 1994 to $719,000 in fiscal 1995. The allowance then
decreased to $500,000 for the nine months ended February 3, 1996. The decrease
reflects improved processes as implemented by the Company's financial
management, which has resulted in fewer accounts that
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involve credit risk. Furthermore, the Company has implemented new collection
procedures that have reduced the overall aging (past due status) of accounts
receivable.
For the nine months ended February 3, 1996, net cash used in investing
activities was $1,680,000 compared to $6,036,000 in fiscal 1995 and $5,068,000
in fiscal 1994. The capital expenditures for the nine months ended February 3,
1996, were primarily for new retail stores, as well as for manufacturing and
data processing equipment and systems. The Company expects moderate expansion
of its retail stores during the coming fiscal year.
Net cash provided from financing activities during the nine months
ended February 3, 1996, was $1,805,000 compared to $11,477,000 in fiscal 1995
and $10,082,000 in fiscal 1994. At February 3,1996, options for 821,250 shares
were outstanding, of which 437,750 were exercisable. These options were issued
at exercise prices equal to the fair market value of the underlying common
stock at the date of grant. A portion of such options are below current market
value and a portion of such options are above current market value.
On January 12, 1995, the Company sold 150,000 shares of common stock
for $13.2825 per share, or an aggregate of $1,992,375 in an off-shore
transaction to a non-U.S. person pursuant to Regulation S under the Securities
Act. Regulation S is a safe harbor exemption from registration under the
Securities Act for sales of securities that occur outside the U.S. The
proceeds of the sale were used for working capital to fund product inventories
for the holiday season.
On October 25, 1994, the Company entered into a credit facility with
its bank. The facility was comprised of two revolving lines of credit: a
$7,500,000 Fixed Asset Revolving Loan (the Fixed Asset Loan) and a $7,500,000
Revolving Credit Loan (the Working Capital Loan). Both facilities were
unsecured.
The Fixed Asset Loan was to expire on October 25, 1996, at which time
it was to convert to a fully amortizing three-year term loan. At the option of
the Company, the Fixed Asset Loan bore interest at LIBOR reserve adjusted rate
("LIBOR") plus 1.75%, or the prime rate plus 0.25%. The purpose of the Fixed
Asset Loan was to fund the purchase of leasehold improvements related to the
opening of additional retail locations.
The Working Capital Loan was to expire on October 25, 1996. At the
option of the Company, the Working Capital Loan bore interest at LIBOR plus
1.50%, or the prime rate. The purpose of the Working Capital Loan was to fund
general working capital requirements.
Under its credit facility, the Company was required to maintain
certain financial ratios and levels of net worth, and among other things,
future indebtedness, dividends and capital expenditures were restricted.
As of April 30, 1995, the Company was in default of several covenants
contained in its credit facility. As a result, on May 31, 1995 the Company and
its bank executed an Agreement
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("the Forbearance Agreement") which revised the covenants set forth in the
original credit facility and which restricted advances on the Company's Working
Capital Loan to $500,000. The Forbearance Agreement expired on July 31, 1995
and was replaced by an Amended and Restated Credit Agreement ("the Credit
Agreement").
The Credit Agreement is comprised of a $10.0 million Term Loan ("the
Term Loan") and a $3.0 million Revolving Loan ("the Revolving Loan"). Both
facilities are secured by all assets of the Company. As of July 31,1995,
amounts due to the bank under the original Loan Agreement were converted to the
Term Loan.
On September 25, 1995, an amendment ("the Amendment") was made to the
Credit Agreement that lowered the borrowing base associated with the Revolving
Loan. The Amendment (1) reduced the borrowing base for inventory to $6.0
million from $7.0 million, (2) reduced the borrowing base for Accounts
Receivable from $1.55 million to $1.0 million, and (3) fixed the predetermined
borrowing limit at $2.0 million.
In November 1995, the Company negotiated a total amount of additional
financing of $1.5 million. This amount was raised, in various installments,
principally from management (Mac Anderson and James Beltrame), significant
shareholders, and various members of the Board of Directors. The total
principal amount carries an annual interest rate of 10% and matures November 1,
1996. The $1.5 million of principal also contained warrants to purchase
120,000 shares of common stock at a price of $4.725. The warrants were granted
to each lender on a specified pro rata basis.
The Company reduced the Term Loan by $1 million as of January 31, 1996
as required by the Agreement. The remaining $9 million matures May 1, 1996.
The Term Loan bears interest at the prime rate plus 1.0%.
Borrowing under the Revolving Loan expired on January 1, 1996.
On February 7, 1996, an amendment (the "Second Amendment") was made to
the Credit Agreement to reestablish the Revolving Loan which had expired on
January 1, 1996. The Revolving Loan allowed the Company to borrow up to $2.5
million, subject to certain borrowing base restrictions. Mr. Anderson and Mr.
Beltrame have severally guaranteed one million dollars of the Revolving Loan.
On May 1, 1996, an amendment (the "Third Amendment") was made to the
Credit Agreement to extend the maturity date of both the Revolving Loan and
Term Loan to May 1, 1997. The Agreement to extend the Term Loan maturity date
includes a provision requiring a monthly principal payment of $75,000 effective
June 1, 1996. The Company believes that internally generated funds and the
credit facilities will be sufficient to meet its current operating needs and to
fund anticipated capital expenditures in Fiscal 1996 (twelve months ending
February 1, 1997).
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SEASONALITY
The Company generally experiences peak sales in the fourth quarter of
its fiscal year (November through January), due to the holiday season, and its
lowest sales levels in its second fiscal quarter (May through July). The
effects of seasonality are greater in the Company's retail operations than its
catalog operations. Most expenses are incurred evenly throughout the year,
although some selling and administrative expenses are variable with sales. The
Company's quarterly operating results may also vary depending upon such factors
as the opening of new stores, new catalog mailings and the timing of new
product introductions by the Company. The Company's cash requirements
generally reach a seasonal peak in October to finance increased inventory
levels needed to meet third and fourth quarter sales demand.
INFLATION
The Company does not believe that inflation has had a material impact
on its operations.
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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.
SUCCESSORIES, INC.
Date: February 13, 1997 By: /s/ Arnold M. Anderson
--------------------------------------
Arnold M. Anderson
Chief Executive Officer and
Chairman of the Board of
Directors
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Date
--------- ----
<S> <C>
/s/ Arnold M. Anderson February 13, 1997
- -------------------------------------------
Arnold M. Anderson
Chief Executive Officer, Chairman of the Board
and Director (Principal Executive Officer)
/s/ James M. Beltrame February 13, 1997
- -------------------------------------------
James M. Beltrame
President, Chief Operating Officer, Chief Financial Officer
and Director (Principal Financial and Accounting Officer)
/s/ Michael H. McKee February 13, 1997
- -------------------------------------------
Michael H. McKee
Senior Vice President, Creative Department and Director
/s/ Timothy C. Dillon February 13, 1997
- -------------------------------------------
Timothy C. Dillon
Vice President, General Counsel, Secretary and Director
- ---------------------------------------------------
Mervyn C. Phillips, Jr.
Director
</TABLE>
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<TABLE>
<S> <C>
- ---------------------------------------------------
Michael Singletary
Director
- ---------------------------------------------------
C. Joseph LaBonte
Director
/s/ Seamas T. Coyle February 13, 1997
- ---------------------------------------------------
Seamas T. Coyle
Director
/s/ Guy E. Snyder February 13, 1997
- ---------------------------------------------------
Guy E. Snyder
Director
- ---------------------------------------------------
Steven B. Larrick
Director
</TABLE>
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INDEX TO EXHIBITS
Exhibit No. Description Sequential Page No.
3.1 Articles of Incorporation of Registrant (1)
3.2 By-laws of Registrant (1)
4.1 Specimen Common Stock Certificate (1)
10.1 Form of Franchising Agreement (3)
10.2 Employment Agreement with Arnold M. Anderson
dated February 28, 1993 (1)*
10.3 Credit Agreement with Harris Trust and Savings
Bank (4)
10.4 Credit Agreement and Guaranty between the Company
and NBD Bank (5)
10.5 First Forbearance Agreement between the Company
and NBD Bank (6)
10.6 Amended and Restated Credit Agreement between
the Company and NBD Bank dated as of July 31, 1995 (7)
10.7 Lease Agreements between LaSalle National Trust
Bank as Trustee under Trust No. 107739 and Celebrating
Excellence (4)
10.8 Stock Option Instrument for Arnold M. Anderson dated
November 19, 1991 (1)*
10.9 Celex Group, Inc. Stock Option Plan (2)*
10.10 Joint Venture Agreement with Morrison DFW, Inc. and
related documents (4)
10.11 Indemnification Agreement dated May 26, 1995 between
the Company and Arnold M. Anderson (7)*
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Indemnification Agreements in the form filed were also entered
into by the Company with Messrs. James M. Beltrame, Michael H.
McKee, Peter C. Walts, Mervyn C. Phillips, Jr., Michael
Singletary, C. Joseph LaBonte, Seamas T. Coyle, Timothy C.
Dillon, Steven B. Larrick and Guy E. Snyder
10.12 First Amendment to the Credit Agreement between the Company
and NBD Bank dated as of September 25, 1995 (8)
10.13 Second amendment to the Credit Agreement between the Company
and NBD Bank dated as of February 7, 1996 (9)
10.14 Form of Subordinated Note, Common Stock Purchase Warrant and
Subordination Agreement relating to issuance of $1,500,000
Subordinated Notes and Warrants to purchase 120,000 shares of
the Company's Common Stock (9)
10.15 Common Stock Option Agreement granted to Arnold M. Anderson
and Incentive Stock Option Agreement granted to Arnold M.
Anderson (9)
10.16 Common Stock Option Agreement granted to James M. Beltrame
and Incentive Stock Option Agreement granted to James M.
Beltrame (9)
10.17 Third Amendment to the Credit Agreement between the Company
and NBD Bank dated as of May 2, 1996 (9)
22.1 Subsidiaries (4)
23.1 Consent of Price Waterhouse LLP (9)
______________________
(1) Previously filed with Registration Statement on Form SB-2, No. 33-67530C
filed on August 17, 1993, and incorporated herein by reference.
(2) Previously filed with Amendment No. 1 to the Registration Statement on
Form SB-2, No. 33-67530C filed on September 24, 1993, and incorporated
herein by reference.
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(3) Previously filed with Post-effective Amendment No. 1 to the Registration
Statement on Form SB-2, No. 33-67530C filed on January 19, 1994, and
incorporated herein by reference.
(4) Previously filed with Annual Report on Form 10-K for the year ended April
30, 1994, and incorporated herein by reference.
(5) Previously filed with the Company's Form 10Q/A-1 for the quarter ended
July 31, 1995, and incorporated herein by reference.
(6) Previously filed with the Company's Form 8-K dated June 7, 1995,
reporting Date of Event May 26, 1995, and incorporated herein by
reference.
(7) Previously filed with the Company's Annual Report on Form 10-K for the
year ended April 30, 1995, and incorporated herein by reference.
(8) Previously filed with the Company's Form 10-Q for the quarter ended
October 28, 1995, and incorporated herein by reference.
(9) Previously filed with the Company's Annual Report on Form 10-K for the
transition period from May 1, 1995 to February 3, 1996, and incorporated
herein by reference.
* Management contract or compensatory plan or arrangement required to be filed
as an exhibit to this Annual Report on Form 10-K pursuant to Item 14(c) of
Form 10-K.
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