<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C, 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ................... to ..................
Commission File Number 33-93644
--------
DAY INTERNATIONAL GROUP, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 31-1436 349
- --------------------------------- -----------------------
(State or other jurisdiction (I.R.S. Employer ID No.)
of incorporation or organization)
333 West First Street, Dayton, Ohio 45402-0338
----------------------------------- ----------
(Address of principal executive offices) (zip code)
(513) 224-4000
- ---------------------------------------------------
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---- -----
The number of Common Shares of the Company, $0.01 per share par value,
outstanding as of May 14, 1997 was 51,655.5
<PAGE> 2
DAY INTERNATIONAL GROUP, INC.
Index
<TABLE>
<CAPTION>
Pages
Part I: Financial Information -----
<S> <C>
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets as of March 31, 1997
and December 31, 1996 3
Condensed Consolidated Statements of Income for the quarters
ended March 31, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows for the quarters
ended March 31, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6 - 11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 12 - 14
Part II: Other Information
Item 1 - Legal Proceedings 15
Item 6 - Exhibits and Reports on Form 8-K 15
Signature 15
</TABLE>
2
<PAGE> 3
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DAY INTERNATIONAL GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
ASSETS 1997 1996
--------- ------------
<S> <C> <C>
Cash and cash equivalents $ 4,062 $ 5,433
Accounts receivable, net of allowance 20,072 17,171
Inventories 16,142 16,355
Prepaid expenses and other current assets 1,362 3,630
Deferred income taxes 3,529 3,389
--------- ---------
Total current assets 45,167 45,978
Property, plant and equipment, net 45,187 45,289
Goodwill and other intangibles 142,740 145,018
Other assets 1,537 1,601
--------- ---------
Total assets $ 234,631 $ 237,886
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 7,659 $ 7,453
Accrued associate - related costs and other expenses 12,104 14,004
Interest payable 3,801 1,068
Current maturities of long-term debt 769 803
--------- ---------
Total current liabilities 24,333 23,328
Long-term and subordinated long-term debt 146,769 152,116
Deferred tax liabilities 3,579 3,513
Other long term liabilities 6,278 6,195
Commitments and contingencies -- --
--------- ---------
Total liabilities 180,959 185,152
Stockholders' equity:
Common stock 1 1
Additional paid in capital 51,543 51,531
Retained earnings 3,355 1,780
Foreign currency translation adjustment (1,227) (578)
--------- ---------
Total stockholders'equity 53,672 52,734
--------- ---------
Total liabilities and stockholders' equity $ 234,631 $ 237,886
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 4
DAY INTERNATIONAL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Net sales $ 39,481 $ 33,822
Costs of goods sold 24,524 21,460
-------- --------
Gross profit 14,957 12,362
Selling, general and administrative
expenses 7,042 5,752
Amortization of intangibles 1,214 1,541
Management fees 230 200
-------- --------
Operating income 6,471 4,869
Interest expense (including amortization of
deferred financing costs of $242 - 1997 and $250 - 1996) 4,100 4,128
Other (income) expense (126) 95
-------- --------
Income before income taxes 2,497 646
Provision for income taxes 922 264
-------- --------
Net income $ 1,575 $ 382
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 5
DAY INTERNATIONAL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,575 $ 382
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 3,512 3,744
Changes in operating assets and liabilities (2,224) 1,773
------- -------
Net cash provided by operating activities 2,863 5,899
------- -------
INVESTING ACTIVITIES
Capital expenditures (1,500) (1,053)
Other 2,620 --
------- -------
Net cash provided by (used in) investing activities 1,120 (1,053)
------- -------
FINANCING ACTIVITIES
Net payments on revolving credit facility (5,193) (4,750)
------- -------
Effects of exchange rates on cash (161) (50)
------- -------
CASH AND CASH EQUIVALENTS:
Net increase (decrease) in cash and cash equivalents (1,371) 46
Cash and cash equivalents at beginning of period 5,433 3,769
------- -------
Cash and cash equivalents at end of period $ 4,062 $ 3,815
======= =======
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE> 6
DAY INTERNATIONAL GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
A. BASIS OF PRESENTATION- The balance sheet as of December 31, 1996 is
condensed financial information derived from the audited balance sheet. The
interim financial statements are unaudited. The financial statements of Day
International Group, Inc. (the "Company"), have been prepared in accordance
with generally accepted accounting principles and, in the opinion of
management, reflect all adjustments (consisting of normal recurring accruals)
necessary for a fair presentation in accordance with generally accepted
accounting principles for the periods presented. The results of operations and
cash flows for the interim periods presented are not necessarily indicative of
the results for the full year.
B. INVENTORIES - The components of inventories are as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---- ----
<S> <C> <C>
Finished goods $ 9,076 $ 9,118
Work-in-process 4,009 4,115
Raw materials 3,057 3,122
------- -------
Total $16,142 $16,355
======= =======
</TABLE>
C. CONTINGENCIES - Claims have been made against the Company for the costs of
environmental remedial measures taken or to be taken. Reserves for such
liabilities have been established and no insurance recoveries have been
anticipated in the determination of the reserves. In management's opinion, the
aforementioned claims will be resolved without material adverse effect on the
results of operations, financial position or cash flows of the Company. The
Company's previous parent and its parent, M.A. Hanna, have agreed to indemnify
the Company for certain of the costs associated with these matters
D. SUPPLEMENTAL CONSOLIDATING INFORMATION - In April 1995, the Company
purchased Day International, Inc. ("Day"). The acquisition was financed
through equity, term and revolving credit facilities and senior subordinated
debt (the "Notes"). In connection with the Acquisition, Day became a
wholly-owned subsidiary of the Company (which has no assets or operations
other than its investment in Day) and provided a full and unconditional
guarantee of the Notes. The wholly-owned foreign subsidiaries of Day are not
guarantors with respect to the Notes and are not anticipated to have any
credit arrangements senior to the Notes except for the $4.0 million borrowing
by the UK subsidiary under the Credit Agreement. All of the assets of Day and
its parent, other than the assets of the wholly-owned foreign non guarantor
subsidiaries, are pledged as collateral on the Notes. The only intercompany
eliminations are the normal intercompany eliminations with regard to
intercompany sales and the Company's investment in the wholly owned non
guarantor subsidiaries. The following are the
6
<PAGE> 7
supplemental combined condensed balance sheets as of March 31, 1997 and
December 31, 1996 and the supplemental combined condensed statements of income
and cash flows for the quarters ended March 31, 1997 and 1996 with the
investments in the subsidiaries accounted for using the equity method.
Separate complete financial statements of the Guarantor are not presented
because management has determined that they are not material to the investors.
Day International Group, Inc.
Supplemental Combining Condensed Balance Sheet
March 31, 1997
<TABLE>
<CAPTION>
DAY DAY
International International Non Guarantor
Group, Inc. Inc. (Guarantor) Subsidiaries Eliminations Consolidated
-------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
- ------
Cash & cash equivalents $ 1,259 $ (720) $ 3,523 $ 4,062
Accounts receivable - net 12 12,225 7,835 20,072
Inventories 10,475 5,667 16,142
Other assets -- 3,226 1,665 4,891
----------------------------------------------------------------------
TOTAL CURRENT ASSETS 1,271 25,206 18,690 - 45,167
Intercompany 143,500 583 $(144,083) --
Property, plant and equipment - net 36,206 8,981 45,187
Investment in subsidiaries 63,982 20,120 (84,102) --
Intangible and other assets 139,001 5,276 144,277
----------------------------------------------------------------------
TOTAL ASSETS $208,753 $ 221,116 $ 32,947 $(228,185) $234,631
======================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Accounts payable $ -- $ 5,036 $ 3,138 $ (515) $ 7,659
Accrued associate related costs
and other expenses -- 8,246 3,858 -- 12,104
Interest payable 3,801 3,801
Current maturities of long-term debt -- -- 769 769
----------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 3,801 13,282 7,765 (515) 24,333
Intercompany 6,553 136,589 426 (143,568) --
Long-Term and
Subordinated Long Term Debt 143,500 3,269 146,769
Long-Term Post Retirement
Benefits and Other 7,065 2,792 9,857
Total Stockholders' Equity 54,899 64,180 18,695 (84,102) 53,672
----------------------------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $208,753 $ 221,116 $ 32,947 $(228,185) $234,631
======================================================================
</TABLE>
7
<PAGE> 8
Supplemental Combining Condensed Balance Sheet
December 31, 1996
<TABLE>
<CAPTION>
DAY DAY
International International Non Guarantor
Group, Inc. Inc. (Guarantor) Subsidiaries Eliminations Consolidated
-------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
- ------
Cash & cash equivalents $ 2,757 $ (726) $ 3,402 $ 5,433
Accounts receivable - net 9,139 8,032 17,171
Inventories 10,780 5,575 16,355
Other assets 6,118 901 7,019
-------------------------------------------------------------------
TOTAL CURRENT ASSETS 2,757 25,311 17,910 -- 45,978
Intercompany 148,500 583 $(149,083) --
Property, plant and equipment - net -- 36,112 9,177 45,289
Investment in subsidiaries 62,410 19,218 (81,628) --
Intangible and other assets -- 141,320 5,299 146,619
-------------------------------------------------------------------
TOTAL ASSETS $213,667 $ 222,544 $32,386 $(230,711) $237,886
===================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Accounts payable $ -- $ 4,878 $ 2,919 $ (344) $ 7,453
Accrued associate related costs
and other expenses 10,703 3,301 14,004
Interest payable 1,068 1,068
Current maturities of long-term debt 803 803
-------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 1,068 15,581 7,023 (344) 23,328
Intercompany 10,787 137,536 415 (148,738)
Long-term and
subordinated long-term debt 148,500 3,616 152,116
Long-term post retirement
benefits and other 6,921 2,787 9,708
Total stockholders' equity 53,312 62,506 18,545 (81,629) 52,734
-------------------------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $213,667 $ 222,544 $32,386 $(230,711) $237,886
===================================================================
</TABLE>
8
<PAGE> 9
Day International Group, Inc.
Supplemental Combining Condensed Statement of Income
For the quarter ended March 31, 1997
<TABLE>
<CAPTION>
DAY DAY
International International Non Guarantor
Group, Inc. Inc. (Guarantor) Subsidiaries Eliminations Consolidated
----------- --------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales $ - $ 30,364 $14,378 $(5,261) $ 39,481
Cost of goods sold 18,664 11,121 (5,261) 24,524
----------------------------------------------------------------------
Gross profit - 11,700 3,257 - 14,957
Selling, general and administrative
expenses 10 5,102 1,930 7,042
Amortization of intangibles 1,203 11 1,214
Management fees 230 -- 230
----------------------------------------------------------------------
Operating income (loss) (10) 5,165 1,316 - 6,471
Other expenses (income):
Equity in earning of subsidiaries (1,572) (774) 2,346 -
Interest expense - 4,000 100 4,100
Other (income) expense (15) (143) 32 (126)
----------------------------------------------------------------------
Income before income taxes 1,577 2,082 1,184 (2,346) 2,497
Provision for income taxes 2 510 410 922
----------------------------------------------------------------------
Net Income $ 1,575 $ 1,572 $ 774 $(2,346) $ 1,575
======================================================================
</TABLE>
Day International Group, Inc.
Supplemental Combining Condensed Statement of Income
For the quarter ended March 31, 1996
<TABLE>
<CAPTION>
DAY DAY
International International Non Guarantor
Group, Inc. Inc. (Guarantor) Subsidiaries Eliminations Consolidated
----------- ---------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales $ - $ 24,955 $8,867 $ - $33,822
Cost of goods sold 15,465 5,995 21,460
---------------------------------------------------------------------
Gross profit - 9,490 2,872 - 12,362
Selling, general and administrative expenses 65 3,680 2,007 5,752
Amortization of intangibles 1,393 148 1,541
Management fees 200 200
---------------------------------------------------------------------
Operating income (loss) (65) 4,217 717 - 4,869
Other expenses (income):
Equity in earning of subsidiaries (2,775) (312) 3,087 -
Interest expense
3,878 250 4,128
Other (income) expense (19) (14) 128 95
---------------------------------------------------------------------
Income (loss) before income taxes (1,149) 4,293 589 (3,087) 646
Provision (benefit) for income taxes (1,531) 1,518 277 264
---------------------------------------------------------------------
Net Income $ 382 $ 2,775 $ 312 $ (3,087) $ 382
=====================================================================
</TABLE>
9
<PAGE> 10
Day International, Inc.
Supplemental Combining Condensed Statement of Cash Flows
For the quarter ended March 31, 1997
<TABLE>
<CAPTION>
DAY DAY
International International Non Guarantor
Group, Inc. Inc. (Guarantor) Subsidiaries Eliminations Consolidated
----------- ---------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Operating Activities:
Net Income $ 1,575 $ 1,572 $ 744 $(2,346) $ 1,575
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 3,117 395 3,512
Equity in earning of subsidiaries (1,572) (774) 2,346 -
Change in operating assets and liabilities 2,733 (4,611) (226) (120) (2,224)
------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 2,736 (696) 943 (120) 2,863
Investing Activities:
Capital expenditures (1,073) (427) -- (1,500)
Other 2,620 - 2,620
------------------------------------------------------------------------------
Net cash provided by (used in) investing activities -- 1,547 (427) -- 1,120
Financing Activities -
Net payments on revolving credit facility (5,000) (193) (5,193)
------------------------------------------------------------------------------
Net cash used in financing activities (5,000) - (193) - (5,193)
Intercompany transfers 766 (873) (13) 120
Effects of exchange rates on cash (161) (161)
------------------------------------------------------------------------------
Cash and Cash Equivalents:
Net increase (decrease) in cash and cash equivalents (1,498) (22) 149 - (1,371)
Cash and cash equivalents at beginning of period 2,757 (698) 3,374 5,433
------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 1,259 $ (720) $ 3,523 $ - $ 4,062
==============================================================================
</TABLE>
10
<PAGE> 11
Day International, Inc.
Supplemental Combining Condensed Statement of Cash Flows
For the quarter ended March 31, 1996
<TABLE>
<CAPTION>
DAY DAY
International International Non Guarantor
Group, Inc. Inc. (Guarantor) Subsidiaries Eliminations Consolidated
----------- ---------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Operating Activities:
Net Income $ 382 $ 2,775 $ 312 $(3,087) $ 382
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 3,376 368 3,744
Equity in earning of subsidiaries (2,775) (312) -- 3,087 --
Change in operating assets and liabilities 2,591 (1,003) (398) 583 1,773
-------------------------------------------------------------------
Net cash provided by operating activities 198 4,836 282 583 5,899
Investing Activities -
Capital expenditures (823) (230) (1,053)
-------------------------------------------------------------------
Net cash used in investing activities -- (823) (230) -- (1,053)
Financing Activities -
Net payments on revolving credit facility (4,750) (4,750)
-------------------------------------------------------------------
Net cash used in financing activities (4,750) -- -- -- (4,750)
Intercompany transfers 5,474 (4,473) (418) (583) --
Effects of exchange rates on cash (50) -- (50)
-------------------------------------------------------------------
Cash and Cash Equivalents:
Net increase (decrease) in cash and cash equivalents 922 (460) (416) - 46
Cash and cash equivalents at beginning of period 403 87 3,279 3,769
-------------------------------------------------------------------
Cash and cash equivalents at end of period $ 1,325 $ (373) $ 2,863 $ - $ 3,815
===================================================================
</TABLE>
11
<PAGE> 12
DAY INTERNATIONAL GROUP, INC.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BASIS OF PRESENTATION
The following table sets forth, for the periods shown, net sales, cost of
goods sold, gross profit, selling, general and administrative expense
("SG&A"), amortization of intangibles and operating income in millions of
dollars and as a percentage of net sales.
<TABLE>
<CAPTION>
Three Months
------------
Ended March 31
--------------
1997 1996
---- ----
$ % $ %
---- ----- ---- -----
<S> <C> <C> <C> <C>
Net sales 39.5 100.0 33.8 100.0
Costs of goods sold ................ 24.5 62.0 21.4 63.3
Gross profit ....................... 15.0 38.0 12.4 36.7
SG&A ............................... 7.0 17.7 5.8 17.2
Amortization of intangibles ........ 1.2 3.0 1.5 4.4
Management Fees .................... 0.2 0.5 0.2 0.6
Operating income ................... 6.5 16.5 4.9 14.5
</TABLE>
COMPARISON OF RESULTS OF OPERATIONS
Three Months Ended March 31, 1997 Compared to Three Months Ended March 31,
1996
Net sales increased to $39.5 million for the three months ended March 31, 1997
from $33.8 million for the comparable period in 1996, an increase of $5.7
million or 16.9%. Printing's sales increased to $31.1 million for the three
months ended March 31, 1997 from $25.6 million for the comparable period in
1996, an increase of $5.5 million or 21.5%, of which, $4.6 or 18.0% was a
result of the acquisition of David M on December 31, 1996. Foreign currency
translation rate changes reduced Printing sales by $0.4 million in the first
quarter of 1997 compared to the same period in 1996. The remaining increase of
$1.3 or 5.1% was a result of modest price increases, higher sales of tubular
sleeves, and increased demand for the Company's existing products, mainly in
the U.S. Textiles' sales increased to $8.4 million for the three months ended
March 31, 1997 from $8.2 million for the comparable period in 1996, an
increase of $0.2 million or 2.4%. Textile sales increase was mainly a result
of higher demand for the Company's existing products in the U.S.
Gross profit increased $2.6 million to $15.0 million for the three months
ended March 31, 1997 from $12.4 million for the three months ended March 31,
1996. The acquisition of David M
12
<PAGE> 13
contributed $1.5 million of the increase. As a percentage of net sales, gross
profit increased to 38.0% for the three months ended March 31, 1997 from 36.7%
for the comparable period in 1996. Gross profit was positively impacted by
productivity enhancements such as new construction methods for Printing
products and automated finishing equipment for Textile components. Excluding
the effects of the David M acquisition, gross profit increased by $0.4 million
as a result of higher sales volumes, while lower material costs increased
gross profit by $0.6 million. Lower material costs, as a percent of sales,
were primarily a result of product mix and end market mix changes.
Manufacturing costs were $1.5 million or 17.0% higher than the same period
last year compared to the 16.9% increase in sales. Gross profit was also
impacted by $0.3 million of higher depreciation and amortization as a result
of additional depreciation on 1996 capital expenditures and the acquisition of
David M.
SG&A increased to $7.0 million for the three months ended March 31, 1997 from
$5.8 million for the comparable period in 1996, an increase of $1.2 million or
20.7%. In the quarter ended March 31, 1997, the acquisition of David M
increased SG&A by $0.7 million. As a percentage of net sales, SG&A increased
to approximately 17.7% from 17.2%, as a result of increased selling and
distribution costs associated with higher domestic sales and additional
associate recruitment and relocation costs. Foreign exchange rate changes
increased SG&A by $0.1 million in the first quarter of 1997.
Amortization of intangibles decreased to $1.2 million for the three months
March 31, 1997 from $1.5 million for the comparable period in 1996, a decrease
of $0.3 million. The decrease is a result of certain employment agreements
becoming fully amortized in the first quarter of 1997.
Operating income increased to $6.5 million for the three months ended March
31, 1997 from $4.9 million for the comparable period in 1996, an increase of
$1.6 million or 32.6%. As a percentage of net sales, operating income
increased to 16.5% for the three months ended March 31, 1997 from 14.5% for
the comparable period in 1996.
The effective tax rate for the first quarter of 1997 was 36.9% compared to
40.9% for the first quarter of 1996. The lower effective tax in 1997 is mainly
a result of changes in the locations where European profits were generated
with more of the profits being generated in markets with lower tax rates.
Foreign currency translation rates, collectively, had less than a 1% impact on
sales, gross margins and selling, general and administrative expenses in the
quarter ended March 31, 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically generated funds from its operations and its
working capital requirements have not exhibited seasonal fluctuations.
Utilizing converters to distribute the majority of its products, the Company
is able to maintain relatively minimal levels of working capital as the
converters carry large amounts of inventory and finance receivables.
13
<PAGE> 14
Cash Flows From Operating Activities. Cash flows from operations for the three
months ended March 31, 1997 and March 31, 1996 were $2.9 million and $5.9
million, respectively. For the three months ended March 31, 1997, cash flows
from operations were impacted by a $2.2 million increase in working capital,
primarily due to increases in accounts receivable balances related to
increased sales offset by an increase in accrued interest payable. Cash flows
from operations in 1996 were impacted by a $1.8 million working capital
decrease primarily from a reduction in inventory balances and increased
accrued liabilities partially offset by increased receivable balances, as a
result of strong sales increases.
Cash Flows From Investing Activities. The Company's expenditures for plant,
property and equipment have been relatively stable at $5.2, $3.6 and $3.5 for
1996, 1995, and 1994, respectively. The Company believes that historical
capital spending levels are sufficient to maintain its leading market
position. The Company expects to fund its annual capital expenditures of $5.0
million to $7.0 million over the next several years from cash flow from
operations. Capital expenditures for the three months ended March 31, 1997
were $1.5 million compared to $1.1 million for the three months ended March
31, 1996. In the first quarter of 1997, $1.5 million was received from Flint
Ink Corporation as an adjustment to the David M purchase price and a $1.1
million note receivable was collected.
Cash Flows From Financing Activities. In 1995, the Company entered into a US
Credit Agreement with certain banks, concurrent with its acquisition of Day
International, Inc. The US Credit Agreement has a maximum borrowing capacity
of $77 million and is secured by the assets of the Company and its domestic
subsidiaries, as well as 65% of the stock of each foreign subsidiary. As of
March 31, 1997, the Company had approximately $28.4 million available under
the US Credit Agreement. The Company does not have any scheduled repayment
requirements until 1999 under the US Credit Agreement. In June 1996, the
Company's UK subsidiary entered into a UK Credit Agreement with a UK bank
which provides a $1,533 line of credit and two five year term loans totaling
$4,615. Principal payments on the term loans are due in quarterly installments
of $192 with a final payment of $656 due in May 2002. At March 31, 1997, the
Company had $1,533 available under the UK Credit Agreement. During the quarter
ended March 31, 1997, the Company made $5.0 million in payments on the line of
credit associated with the US Credit Agreement and payments of $0.2 million on
the UK term loans. The Company believes that it will generate sufficient cash
flow from operations to meet debt service, working capital and capital
expenditure requirements, although no assurance can be given that it will be
able to do so.
14
<PAGE> 15
DAY INTERNATIONAL GROUP, INC.
Part II: Other Information
Item 1. Legal Proceedings - None
Item 6. Exhibits and Reports on Form 8-K
a. No report on Form 8-K was filed during the quarter ended March 31,
1997.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, each of
the Registrants has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Day International Group, Inc.
-----------------------------
(Registrant)
Date: May 14, 1997 /s/ David B. Freimuth
--------------------- ----------------------
David B. Freimuth
Vice President and
Chief Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM DAY
INTERNATIONAL GROUP, INC.'S QUARTERLY REPORT ON FORM 10Q FOR THE QUARTER ENDED
MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 4,062
<SECURITIES> 0
<RECEIVABLES> 21,072
<ALLOWANCES> (1,000)
<INVENTORY> 16,142
<CURRENT-ASSETS> 45,167
<PP&E> 52,788
<DEPRECIATION> (7,601)
<TOTAL-ASSETS> 234,631
<CURRENT-LIABILITIES> 24,333
<BONDS> 146,769
<COMMON> 1
0
0
<OTHER-SE> 53,671
<TOTAL-LIABILITY-AND-EQUITY> 234,631
<SALES> 39,481
<TOTAL-REVENUES> 39,481
<CGS> 24,524
<TOTAL-COSTS> 33,010
<OTHER-EXPENSES> (126)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,100
<INCOME-PRETAX> 2,497
<INCOME-TAX> 922
<INCOME-CONTINUING> 1,575
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,575
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
