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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 OCTOBER 29, 1994 Commission file number 1-7208
DUPLEX PRODUCTS INC.
(Exact name of Registrant as specified in its charter)
Delaware 36-2109817
(State of incorporation or organization) (I.R.S. Employer Identification No.)
1947 Bethany Road, Sycamore, Illinois 60178 815/895-2101
(Address of principal executive office) (Zip Code) (Telephone Number)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
[CAPTION]
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
- ------------------- -------------------------------------------
Common stock, par value $1.00 per share American Stock Exchange
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 twelve 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 ninety days. Yes X No
--- ---
As of January 6, 1995, 7,543,278 shares of common stock with a par value of
$1.00 were outstanding. These shares, which constitute all of the voting stock
of the Registrant, had an aggregate market value on January 6, 1995, of
approximately $58.5 million based on the closing sale price reported on the
American Stock Exchange. All such shares were owned by non-affiliates of the
Registrant.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the fiscal
year ended October 29, 1994, are incorporated by reference in Parts II and IV.
Portions of the Registrant's Proxy Statement for the 1995 Annual Meeting of
Shareholders are incorporated by reference in Part III.
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PART I
ITEM 1 - BUSINESS
GENERAL
Duplex Products Inc. began operations in 1947 as a designer and manufacturer of
business forms primarily focused on government markets. Over the years, Duplex
has broadened considerably the scope of its products and services to keep pace
with emerging technologies and the changing information management requirements
of businesses. Today the Company is positioned as a leader in serving both the
business forms and information management needs of customers in financial,
industrial, retail, and commercial markets, with the primary objective of
assisting them in improving the efficiency of their operations and in lowering
their cost of processing business critical information.
Financial data and commentary on the Company's recent operating results and
financial position are included on pages 12 through 27 of the 1994 Annual
Report to Shareholders, which is incorporated herein by reference.
The Company's business is predominantly in a single industry segment, with only
the business forms class of product exceeding 10% of total sales.
PRODUCTS AND SERVICES
The Company serves the business information handling needs of customers with a
comprehensive array of value-added forms and services that are both paper-based
and electronic-based. These include:
- - Custom and stock business forms (continuous, unit set, single, and
multi-part) in fan-fold, roll, and sheeted stocks.
- - Custom and stock pressure sensitive labels in fan-fold, roll, and sheeted
stocks for a wide variety of media bases.
- - Integrated form/label combinations.
- - Forms management services, including storage, distribution, cost center
reporting and inventory management.
- - Electronic printing and mailing services, including data communication and
manipulation, variable and fixed printing, and document distribution.
- - Services related to check fraud prevention, electronic forms, and
information flow analysis.
During fiscal year 1994, the Company expanded its electronic printing and
mailing centers in Elgin, Illinois, and Timonium, Maryland, and opened a
facility in Sacramento, California, to serve the West Coast market.
MANUFACTURING AND DISTRIBUTION
Products are produced in ten Company plants in the United States and also
sourced through a network of outside strategic partners, whose product
offerings and capabilities complement those of Duplex.
Products and services are sold primarily in the United States and Puerto Rico
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through the Company's direct sales force of 305 sales consultants. Over the
past year, strong emphasis has been placed on providing training to sales
consultants on consultative selling techniques and new product and service
offerings of the Company. In addition, corporate support of the sales force
has been expanded considerably in the areas of market analysis, advertising,
and sales promotion.
The Company is not dependent upon one customer or related group of customers in
that no customer or group of customers under common control accounted for 10%
or more of total sales in fiscal year 1994. The Company's order backlog at
any time is not material in relation to annual sales volume, and the business
is not subject to significant seasonal variances.
A large portion of the Company's products are distributed to customers through
a network of business service centers. Services provided by these centers
include warehousing, customer inventory management and reporting, imprinting
services, and certain forms production.
MARKET ENVIRONMENT
Duplex operates in a highly competitive and mature market, with industry sales
of traditional business forms in the United States (estimated at approximately
$8 billion in 1994) continuing to decline gradually. This decline reflects (1)
a move by large businesses from paper-based information systems as they expand
the use of personal computers and other productivity-enhancing tools and (2) a
decline in the use of unit sets by small companies. However, certain segments
of the marketplace offer growth opportunities, including pressure sensitive
labels, short-run preprinted cut sheets, electronic printing and mailing
services, demand printing, and forms automation. In this connection,
significant opportunities relate to assisting customers to reduce their cost of
handling and processing information, including the integration of paper and
electronic documents, the enhancement of business processes, and the provision
of services that allow businesses to outsource "back room" activities that are
not central to the generation of revenues. Also, the increase in information
both generated by and required by the expanding electronic age will increase
paper-based and paperless communications, providing opportunities for suppliers
to supplant declining segments of the traditional business forms market with
other products and services.
Approximately 20% of the U.S. business forms market is controlled by one
competitor, with the remaining market share distributed among approximately 600
companies. Duplex ranks among the six largest of these companies, in an
industry where price, quality, on-time delivery, and sales service are the
prime competitive factors. Over-capacity in the industry is significant giving
rise to pricing pressures. This excess of supply over demand most probably
will lead to a reduction in the number of forms suppliers through
consolidations and mergers.
RAW MATERIALS
Duplex's principal raw material is paper, which is purchased in a wide range of
sizes, colors, widths, and weights from various paper mills. Other materials
used in the manufacturing process include inks and lithographic platemaking
materials.
After a five-year decline in paper prices, the May through December period of
1994 saw bond paper prices climb about 70%. Selling prices of Company products
were adjusted to reflect these increases; however, pressure on margins
continues, reflecting the highly competitive nature of the marketplace. In
addition, paper is in short supply and supplies are being allocated by domestic
vendors. Despite this
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situation, Duplex expects to be able to meet customer requirements as a result
of its longstanding vendor relationships and through adjustments to product
mix.
RESEARCH AND DEVELOPMENT
The Company continues to be involved in research activities relating to the
development of new products and services. The Company does not regard either
the number of people involved in, or amounts expended on, research activities
(none of which are customer sponsored) to be material.
LICENSES AND PATENTS
No material patents, licenses, franchises, or concessions are held which
significantly impact the Company's business.
ENVIRONMENTAL PROTECTION
The Company believes that it is in substantial compliance with all applicable
federal, state, and local regulations regarding environmental protection. The
Company has not incurred any material costs in this regard.
EMPLOYEES
As of October 29, 1994, 1,852 people were employed by Duplex, none of whom are
covered by a collective bargaining agreement.
ITEM 2 - PROPERTIES
The following are the principal properties of the Company:
Approximate
square
Location Description footage Owned/Leased
- -------- ----------- ------- ------------
Dillsburg, Pennsylvania Plant and warehouse 38,000 Owned
Emigsville, Pennsylvania Plant and warehouse 66,000 Owned
Goshen, Indiana Plant and warehouse 140,000 Owned
Jacksonville, Florida Plant and warehouse 127,000 Owned
Mechanicsburg, Pennsylvania Plant and warehouse 48,000 Owned
Newark, Ohio Plant and warehouse 80,000 Owned
Orlando, Florida Plant and warehouse 40,000 Owned
Salt Lake City, Utah Plant and warehouse 81,000 Owned
Santa Ana, California Plant and warehouse 65,000 Owned
Sycamore, Illinois Corporate office, plant,
and warehouse 191,000 Owned
Tucker, Georgia Plant and warehouse 82,000 Leased
West York, Pennsylvania Plant and warehouse 73,000 Owned
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The Dillsburg, Pennsylvania, and Orlando, Florida, facilities are vacant and
being marketed for sale. The Company believes that its facilities are
properly maintained, and that production capacity is adequate for current
needs.
In addition, the Company leases (1) electronic printing and mailing facilities
in Timonium, Maryland, Elgin, Illinois, and Sacramento, California, (2)
leases/owns twenty business service centers in various locations across the
United States, and (3) leases eighty-three sales offices nationwide and in
Puerto Rico.
ITEM 3 - LEGAL PROCEEDINGS
The Company is not a party to, nor is its property subject to, any material
pending legal proceedings.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
None.
PART II
ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS
Reported as "Stock Exchange Information" and "Trading and Dividend Information"
on page 29 of the 1994 Annual Report to Shareholders.
ITEM 6 - SELECTED FINANCIAL DATA
Reported as "Selected Financial Data" on page 27 of the 1994 Annual Report to
Shareholders.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Reported as "Management's Discussion of Operations" and "Management's
Discussion of Liquidity and Capital Resources" on pages 15 through 17 of the
1994 Annual Report to Shareholders.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See index under Item 14.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH AUDITORS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding directors required by this item is incorporated by
reference to the section entitled "Election of Directors" in the Registrant's
Proxy Statement for the 1995 Annual Meeting of Shareholders.
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Information pertaining to executive officers as of January 25, 1995, is shown
below.
Executive
Officer
Name Age Since Positions During Last Five Years
---- --- ----- --------------------------------
Ben L. McSwiney 44 1993 President and Chief Executive Officer of the
Company since December 1993; Chief Operating
Officer of the Company, September to December
1993; President and Chief Executive Officer of
WhiteStar Graphics, 1991-1993; Vice President
and General Manager of Williamhouse Regency,
1989-1991.
ITEM 11 - EXECUTIVE COMPENSATION
Incorporated by reference to the section entitled "Executive Compensation" in
the Registrant's Proxy Statement for the 1995 Annual Meeting of Shareholders.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference to the section entitled "Beneficial Ownership of
Common Stock" in the Registrant's Proxy Statement for the 1995 Annual Meeting
of Shareholders.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference to the section entitled "Executive Compensation" in
the Registrant's Proxy Statement for the 1995 Annual Meeting of Shareholders.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
The following documents are filed as part of this report:
Page(s) in
(a)(1) Financial Statements Annual Report
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Consolidated Statement of Operations 12
Consolidated Statement of Financial Position 13
Consolidated Statement of Cash Flows 14
Notes to Consolidated Financial Statements 18-25
Independent Auditors' Report 26
Selected Financial Information 27
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(a)(2) Financial Statement Schedules Page in
Form 10-K
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Report of Independent Auditors on Financial
Statement Schedules 9
Schedule V - Property, Plant, and Equipment 10
Schedule VI - Accumulated Depreciation and
Amortization of Property, Plant,
and Equipment 11
Schedule VIII - Valuation and Qualifying Accounts
and Reserves 12
The schedules listed in Reg. 210.5-04, except those listed above, have been
omitted because they are not applicable or the required information is shown in
the financial statements or notes thereto.
(b) Reports on Form 8-K: None.
(c) Exhibits
3(a) Composite of the Registrant's Restated Certificate of Incorporation as amended, incorporated by reference to
Exhibit 3 of the Registrant's Annual Report on Form 10-K for the fiscal year ended October 25, 1988.
3(b) By-Laws of the Registrant as amended.*
4 Shareholder Rights Plan, incorporated by reference to the Registrant's Form 8-K dated June 8, 1989.
10(a) 1984 Incentive Stock Option Plan, incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended October 29, 1983.
10(b) 1993 Incentive Stock Option Plan, incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended October 30, 1993.
11 Computation of Earnings Per Share.*
13 Portions (pages 12 through 29) of the 1994 Annual Report to Shareholders for the fiscal year ended
October 29, 1994.*
18 Letter regarding Change in Accounting Principles.*
23 Consent of Independent Auditors.*
*Filed electronically herewith.
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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 Annual Report on Form 10-K for
the fiscal year ended October 29, 1994, to be signed on its behalf by the
undersigned thereunto duly authorized on January 20, 1995.
DUPLEX PRODUCTS INC.
By /s/ Andrew A. Campbell
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Andrew A. Campbell
Vice-President Finance, Chief Financial
Officer, and Secretary
(Principal Financial Officer)
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 indicated, on January 20, 1995.
By /s/ Andrew A. Campbell
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Andrew A. Campbell
Vice-President Finance, Chief Financial
Officer, and Secretary
(Principal Financial Officer)
By /s/ Ben L. McSwiney
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Ben L. McSwiney, President,
Chief Executive Officer, and Director
(Principal Executive Officer)
By /s/ John A. Bacon, Jr.
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John A. Bacon, Jr., Director
By /s/ Michael J. Birck
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Michael J. Birck, Director
By /s/ David J. Eskra
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David J. Eskra, Director
By /s/ George S. Hoban
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George S. Hoban, Director
By /s/ W. Robert Reum
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W. Robert Reum, Director
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REPORT OF INDEPENDENT AUDITORS ON FINANCIAL STATEMENT SCHEDULES
Board of Directors
Duplex Products Inc.
In connection with our audit of the consolidated financial statements of Duplex
Products Inc. and Subsidiary, referred to in our report dated December 9, 1994,
we have also audited Schedules V, VI, and VIII for each of the three years in
the period ended October 29, 1994. In our opinion, these schedules present
fairly, in all material respects, the information required to be set forth
therein.
GRANT THORNTON LLP
Chicago, Illinois
December 9, 1994
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DUPLEX PRODUCTS INC. AND SUBSIDIARY
SCHEDULE V - PROPERTY, PLANT, AND EQUIPMENT
(Dollar amounts in thousands)
Balance at Balance at
beginning Additions end of
of year at cost Retirements year
--------------- ------------- ----------- -----------
Year ended October 29, 1994
Land and land improvements $ 3,207 $ -- $ 1,067 $ 2,140
Buildings 31,238 232 5,526 25,944
Leasehold improvements 269 4 20 253
Machinery and equipment 74,267 2,612 4,045 72,834
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$108,981 $2,848 $10,658 $101,171
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Year ended October 30, 1993
Land and land improvements $ 3,768 $ -- $ 561 $ 3,207
Buildings 35,175 202 4,139 31,238
Leasehold improvements 400 11 142 269
Machinery and equipment 76,794 3,503 6,030 74,267
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$116,137 $3,716 $10,872 $108,981
========= ======== ======== =========
Year ended October 31, 1992
Land and land improvements $ 3,768 $ -- $ -- $ 3,768
Buildings 33,989 1,208 22 35,175
Leasehold improvements 351 56 7 400
Machinery and equipment 75,573 3,655 2,434 76,794
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$113,681 $4,919 $2,463 $116,137
========= ======== ======== =========
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DUPLEX PRODUCTS INC. AND SUBSIDIARY
SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION OF
PROPERTY, PLANT, AND EQUIPMENT
(Dollar amounts in thousands)
Additions
Balance at charged to Balance at
beginning costs and end of
of year expenses Retirements year
---------- ----------- ----------- -----------
Year ended October 29, 1994
Land and land improvements $ 720 $ 74 $ 220 $ 574
Buildings 13,900 1,128 2,528 12,500
Leasehold improvements 182 21 17 186
Machinery and equipment 49,668 4,390 3,147 50,911
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$64,470 $5,613 $5,912 $64,171
======= ======== ========== =========
Year ended October 30, 1993
Land and land improvements $ 750 $ 84 $ 114 $ 720
Buildings 14,428 1,208 1,736 13,900
Leasehold improvements 278 42 138 182
Machinery and equipment 50,325 5,244 5,901 49,668
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$65,781 $6,578 $7,889 $64,470
======= ======= ======= =======
Year ended October 31, 1992
Land and land improvements $ 650 $ 100 $ -- $ 750
Buildings 13,040 1,401 13 14,428
Leasehold improvements 231 52 5 278
Machinery and equipment 47,051 5,630 2,356 50,325
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$60,972 $7,183 2,374 $65,781
======= ====== ====== =======
Note: For financial reporting purposes, depreciation is based on the
following estimated useful lives of assets:
Land improvements 5 to 10 years
Buildings and improvements 5 to 40 years
Machinery and equipment 3 to 15 years
Furniture and fixtures 5 to 15 years
Automotive equipment 4 to 5 years
Leasehold improvements Lives of leases
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DUPLEX PRODUCTS INC. AND SUBSIDIARY
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(Dollar amounts in thousands)
Additions Deductions
Balance at charged to from reserves Balance
beginning costs and ---------------------- at end
Description of year expenses Description Amount of year
- ----------- ---------- ---------- ----------- ------ --------
Year ended October 29, 1994
Allowance for Accounts
doubtful accounts $800 $367 charged off $452 $715
Reserve for inventory -- 1,350 -- 1,350
Year ended October 30, 1993
Allowance for Accounts
doubtful accounts 900 256 charged off 356 800
Year ended October 31, 1992
Allowance for Accounts
doubtful accounts 1,200 196 charged off 496 900
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