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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 28, 1995 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
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(Address of principal executive office) (Zip Code) (Telephone Number)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class Name of each exchange on which registered
- ----------------------------------- -----------------------------------------
Common stock, par value American Stock Exchange
$1.00 per share
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 5, 1996, 7,484,878 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 5, 1996, of
approximately $59.9 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 28, 1995, are incorporated by reference in Parts II and IV.
Portions of the Registrant's Proxy Statement for the 1996 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 1995 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.
- -Prepaid phone card packages.
- -Services related to check fraud prevention, electronic forms, and information
flow analysis.
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
through the Company's direct sales force of 260 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.
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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 1995. 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 variations.
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 1995) 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 may 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 1994 through October 1995
period, bond paper prices climbed approximately 115%. Selling prices of Company
products were adjusted to reflect these increases; however, pressure on margins
continues, reflecting the highly competitive nature of the marketplace.
Currently, paper is in good supply and Duplex expects to be able to meet
customer requirements.
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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 28, 1995, 1,665 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
- -------- ----------- ------------ ------------
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
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
The Company believes that its facilities are properly maintained, and that
production capacity is adequate for current needs.
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In addition, the Company leases (1) electronic printing and mailing facilities
in Timonium, Maryland, Elgin, Illinois, and Sacramento, California, (2)
leases/owns sixteen business service centers in various locations across the
United States, and (3) leases sixty-nine 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 1995 Annual Report to Shareholders.
ITEM 6 - SELECTED FINANCIAL DATA
Reported as "Selected Financial Data" on page 27 of the 1995 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
1995 Annual Report to Shareholders.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See index under Item 14.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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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 1996 Annual Meeting of Shareholders.
Information pertaining to executive officers as of January 24, 1996, is shown
below.
Executive
Officer
Name Age Since Positions During Last Five Years
---- --- --------- --------------------------------
Andrew A. Campbell 50 1995 President of the Company since June
1995; Vice President, Finance, and
Chief Financial Officer of the
Company, November 1994 - June 1995;
Vice President, Finance, and Chief
Financial Officer, Simmons
Upholstered Furniture Inc., 1991 -
1994.
James R. Ramig 42 1995 Vice President, Finance and
Administration, and Chief Financial
Officer of the Company since
November 1995; President and Chief
Executive Officer, Chilton-Globe
Inc., May 1995 - November 1995;
Chief Financial Officer, Treasurer,
and Secretary, Revell-Monogram,
Inc., 1991 - 1995.
David B. Preston 39 1995 Vice President, Sales of the
Company since September 1995;
Regional Sales Director of the
Company, 1993 - 1995; District
Sales Manager of the Company,
1991-1993.
Marc A. Loomer 45 1993 Vice President, Operations of the
Company since 1994, Vice President,
Continuous Improvement of the
Company, 1993 - 1994; Director,
Marketing of the Company, 1992 -
1993; Director, Planning of the
Company, 1991 - 1992.
ITEM 11 - EXECUTIVE COMPENSATION
Incorporated by reference to the section entitled "Executive Compensation" in
the Registrant's Proxy Statement for the 1996 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 1996 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 1996 Annual Meeting of Shareholders.
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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
Annual Report
(a)(1) Financial Statements
Consolidated Statement of Operations 12
Consolidated Statement of Financial Position 13
Consolidated Statement of Cash Flows 14
Notes to Consolidated Financial Statements 18-25
Report of Independent Auditors' 26
Selected Financial Data 27
Page in
Form 10-K
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(a)(2) Financial Statement Schedule
Report of Independent Auditors on Financial
Statement Schedule 10
Schedule II - Valuation and Qualifying Accounts
and Reserves 11
The schedules listed in Reg. 210.5-04, except the schedule 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, including amendment filed March 15, 1990
with the Secretary of the State of Delaware.*
3(b) By-Laws of the Registrant as amended, incorporated by reference to
the Registrant's Annual Report on Form 10-K for the fiscal year
ended October 29, 1994.
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.
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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.
10(c) Agreement made and entered into as of June 15, 1995 between Registrant
and John C. Colman.*
10(d) Agreement made and entered into as of November 15, 1994 between
Registrant and Andrew A. Campbell.*
11 Computation of Earnings (Loss) Per Share.*
13 Portions (pages 12 through 29) of the 1995 Annual Report to Shareholders
for the fiscal year ended October 28, 1995.*
23 Consent of Independent Auditors.*
27 Financial Data Schedule.*
*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 28, 1995, to be signed on its behalf by the
undersigned thereunto duly authorized on January 24, 1996.
DUPLEX PRODUCTS INC.
By /s/ James R. Ramig
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James R. Ramig
Vice President, Finance and
Administration, and Chief Financial
Officer
(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 24, 1996.
By /s/ Andrew A. Campbell
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Andrew A. Campbell, President
and Director
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/ John C. Colman
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John C. Colman, Director
By /s/ David J. Eskra
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David J. Eskra, 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 SCHEDULE
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 6, 1995,
we have also audited Schedule II for each of the three years in the period
ended October 28, 1995. In our opinion, this schedule presents fairly, in all
material respects, the information required to be set forth therein.
/s/ GRANT THORNTON LLP
GRANT THORNTON LLP
Chicago, Illinois
December 6, 1995
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SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(Dollar amounts in thousands)
Additions Deductions
Balance at charged to from reserves Balance
beginning costs and ---------------------- at end
of year expenses Description Amount of year
---------- ---------- ----------- ------ -------
Year ended October 28, 1995
Allowance for doubtful Accounts
accounts $715 $550 charged off $358 $907
Reserve for inventory 1,350 -- Inventories 233 1,117
charged off
Year ended October 29, 1994
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Allowance for doubtful Accounts
accounts $800 $367 charged off $452 $715
Reserve for inventory -- 1,350 -- 1,350
Year ended October 30, 1993
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Allowance for doubtful Accounts
accounts $900 $256 charged off $356 $800
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INDEX OF EXHIBITS
3(a) Composite of the Registrant's Restated Certificate of
Incorporation as amended, including amendment filed March 15, 1990
with the Secretary of the State of Delaware.*
3(b) By-Laws of the Registrant as amended, incorporated by reference to
the Registrant's Annual Report on Form 10-K for the fiscal year
ended October 29, 1994.
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.
10(c) Agreement made and entered into as of June 15, 1995 between
Registrant and John C. Colman.*
10(d) Agreement made and entered into as of November 15, 1994 between
Registrant and Andrew A. Campbell.*
11 Computation of Earnings (Loss) Per Share.*
13 Portions (pages 12 through 29) of the 1995 Annual Report to
Shareholders for the fiscal year ended October 28, 1995.*
23 Consent of Independent Auditors.*
27 Financial Data Schedule.*
*Filed electronically herewith.