SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K / A
Amendment No. 1
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2004 Commission file number 1-8689
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DIXON TICONDEROGA COMPANY
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(Exact name of Company as specified in its charter)
Form 10-K/A
X Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
--- Act of 1934 for the fiscal year ended September 30, 2004.
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
--- Act of 1934 for the transaction period from _____ to _____.
Delaware 23-0973760
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
195 International Parkway, Heathrow, FL 32746
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (407) 829-9000
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Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock, $1.00 par value 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 12 months (or for such shorter period that the company was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ]
Based on the closing sales price on January 4, 2005, the aggregate market value
of the voting stock held by non-affiliates of the Company was $12,856,193.
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of January 4, 2005: 3,207,894 shares of common stock, $1.00 Par
Value.
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 Form 10-K or any amendment to this Form
10-K. [ X ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [ ] No [ X ]
Documents Incorporated by Reference: Proxy statement to security holders
incorporated into Part III for the fiscal year ended September 30, 2004.
EXPLANATORY NOTE: The purpose of this Amendment No. 1 is to include the
information required under Part III, Items 10-14 of Form 10-K for Dixon
Ticonderoga Company (the "Company") for the year ended September 30, 2004, and
not previously included in the Company's Annual Report on Form 10-K and required
exhibits under Part IV, Item 15.
Part III
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ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
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The Board of Directors of Dixon - Structure/Independence
--------------------------------------------------------
Dixon's Board of Directors consists of nine seats which are divided into
three classes for purposes of election. One class is elected at each annual
meeting of stockholders to serve for a three-year term. Pursuant to the Board's
determination, each of Dixon's directors, other than Messrs. Pala, Joyce, Asta
and Cespedes, qualify as "independent" in accordance with the requirements of
the American Stock Exchange listing standards. In addition, as further required
by the American Stock Exchange listing standards, the Board of Directors has
made a subjective determination as to each independent director that no
relationships exist which, in the opinion of the Board, would interfere with the
exercise of independent judgment in carrying out the responsibilities of a
director.
Directors with Terms Expiring in 2005
-------------------------------------
PHILIP M. SHASTEEN, 55, attorney, part owner and member of the Board of
Directors of Johnson, Blakely, Pope, Bokor, Ruppel & Burn, LLP (law firm) since
1992. Mr. Shasteen has been a director of the Company since 1986.
RICHARD A. ASTA, 48, Executive Vice President of Finance and Chief
Financial Officer of the Company since 1990. Mr. Asta has been a director of the
Company since 1999.
WESLEY D. SCOVANNER, 58, President, Wesley D. Scovanner & Associates, Inc.,
(financial and business consulting) since 1983. Mr. Scovanner was appointed to
fill a vacant seat on the board in December 2002.
Directors with Terms Expiring in 2006
-------------------------------------
BEN BERZIN, JR., 56, Executive Vice President, PNC Bank, N.A. (commercial
bank) since 1990. Mr. Berzin has been a director of the Company since 1994.
KENT KRAMER, 60, Chief Executive Officer of Professional Sports Marketing,
Inc. (sports marketing) since 1992. Mr. Kramer has been a director of the
Company since 1997.
DIEGO CESPEDES CREIXELL, 46, President, Grupo Dixon S.A. de C.V., (an
indirect subsidiary of the Company) since 1996. Mr. Cespedes has been a director
of the Company since 2000.
Directors with Terms Expiring in 2007
-------------------------------------
GINO N. PALA, 76, Chairman of the Board of Directors and Co-Chief Executive
Officer of the Company since 1999; prior thereto, Chairman, President and Chief
Executive Officer of the Company since 1989. Mr. Pala has been a director of the
Company since 1978. Mr. Pala is the father-in-law of Mr. Joyce.
RICHARD F. JOYCE, 49, Vice Chairman of the Board of Directors, President
and Co-Chief Executive Officer of the Company since 1999; prior thereto, Vice
Chairman, President and Chief Operating Officer of the Company's Consumer Group
2
and Chief Legal Executive since 1996. Mr. Joyce has been a director of the
Company since 1982. Mr. Joyce is the son-in-law of Mr. Pala.
JOHN RITENOUR, 53, Chief Executive Officer, Insurance Office of America
(insurance agency) since 1989. Mr. Ritenour has been a director of the Company
since 1999.
Executive Officers
------------------
In addition to Messrs. Pala, Joyce, Asta and Cespedes, the following
persons are executive officers of the Company:
LEONARD D. DAHLBERG, JR., 53, Executive Vice President of Operations since
August 2000; prior thereto Executive Vice President of Procurement since 1999;
prior thereto Executive Vice President, Industrial Group from 1996 until 1999;
prior thereto Executive Vice President of Manufacturing/ Consumer Products
Division from 1995 until 1996; prior thereto Senior Vice President of
Manufacturing from 1993 until 1995.
JOHN ADORNETTO, 62, Vice President and Corporate Controller since 1991.
Audit Committee
---------------
Dixon's audit committee was established as a standing committee in
accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 and
performs certain functions and has responsibilities as set forth in the report
below. Present members of the committee are Messrs. Scovanner (Chairman),
Berzin, and Kramer, all independent (as defined in the American Stock Exchange
listing standards) members of the Board. During fiscal 2004, the committee held
two meetings. A copy of the current charter of the Audit Committee is attached
as an exhibit to Dixon's annual report on Form 10-K for the fiscal year ended
September 30, 2004.
Dixon's Board has determined that Dixon has at least one audit committee
financial expert serving on its audit committee. That person is Mr. Scovanner
and he has been determined by the Board to be independent, as that term is
defined in the American Stock Exchange listing standards. Stockholders should
understand that this designation is a disclosure requirement of the Securities
and Exchange Commission related to Mr. Scovanner's experience and understanding
with respect to certain accounting and auditing matters. The designation does
not impose on Mr. Scovanner any duties, obligations or liability that are
greater than are generally imposed on him as a member of the Audit Committee and
Board, and his designation as an audit committee financial expert pursuant to
this Securities and Exchange Commission requirement does not affect the duties,
obligations or liability of any other member of the Audit Committee or Board.
Section 16(a) Beneficial Ownership Reporting Compliance.
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Section 16(a) of the Securities Exchange Act of 1934 requires Dixon's
directors, officers and owners of more than 10% of the Shares to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of Dixon's common stock and any other equity securities.
Based solely upon a review of our records, during the past fiscal year, all
reports required to be filed pursuant to Section 16(a) of the Securities
Exchange Act of 1934 during the 2004 fiscal year were filed on a timely basis.
Code of Ethics
--------------
The Company has adopted a code of ethics that applies to its principal
executive officers, principal financial officer and principal accounting
officer. The Company will provide to any person without charge, upon request, a
copy of such code of ethics. Requests for copies should be directed to the
Company's Corporate Secretary at its headquarters in Heathrow, Florida.
3
ITEM 11. EXECUTIVE COMPENSATION
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Executive Compensation
----------------------
The following tables show salaries, bonuses and other compensation paid
during the last three fiscal years for Dixon's Chairman and Co-Chief Executive
Officer, the President and Co-Chief Executive Officer and Dixon's other
executive officers. No options were granted to executive officers in fiscal
2002, 2003 or 2004.
Name and Other Annual
Principal Position Year Salary Bonus Compensation
------------------ ---- -------- -------- -------------
Gino N. Pala 2004 $278,800 $ 25,000 $ 23,341
Chairman and Co-Chief 2003 $278,800 $ 52,275 $ 30,680
Executive Officer 2002 $278,800 $ 0 $ 39,846
Diego Cespedes Creixell 2004 $241,389 $ 98,000 $ 42,660
President, Grupo Dixon 2003 $191,780 $ 33,000 $ 26,229
S.A. de C.V. 2002 $182,939 $ 22,969 $ 11,298
Richard F. Joyce 2004 $225,802 $ 21,000 $ 28,928
President and Co-Chief 2003 $225,802 $ 42,338 $ 39,703
Executive Officer 2002 $225,802 $ 0 $ 37,827
Richard A. Asta, Executive 2004 $196,370 $ 17,000 $ 34,006
Vice President of Finance & 2003 $196,370 $ 34,365 $ 30,751
Chief Financial Officer 2002 $196,370 $ 0 $ 34,133
Leonard D. Dahlberg 2004 $123,690 $ 7,000 $ 20,970
Executive Vice President 2003 $123,690 $ 13,915 $ 19,527
of Operations 2002 $123,690 $ 0 $ 19,179
John Adornetto 2004 $121,600 $ 13,280 $ 11,370
Vice President and 2003 $121,600 $ 13,680 $ 10,275
Corporate Controller 2002 $121,600 $ 0 $ 11,875
Option Grants in Last Fiscal Year
---------------------------------
No options were granted in the last fiscal year.
Aggregated Option Exercises in 2004 and 2004 Year-End Option Values
-------------------------------------------------------------------
No options were exercised in fiscal 2004. The following table provides
information with respect to the shares of Company common stock underlying
options at 2004 fiscal year end.
Value of Unexercised
In-the-Money Options
Name Exercisable Unexercisable at Year-End
---- ----------- ------------- --------------------
Gino N. Pala 47,600 -0- 8,778
Richard F. Joyce 69,000 -0- 10,395
Richard A. Asta 37,800 -0- 6,534
Diego Cespedes Creixell 22,500 -0- 4,950
Leonard D. Dahlberg, Jr. 17,800 -0- 2,574
John Adornetto 15,600 -0- 2,673
4
Director Compensation
---------------------
Of Dixon's current Board members, Messrs. Pala, Joyce, Asta and Cespedes
are salaried employees of Dixon. Board members who are not salaried employees of
Dixon receive separate compensation for Board services. That compensation
includes an annual retainer of $7,500 and attendance fees of $400 for each Board
meeting and $450 for each Board committee meeting. Salaried employee Board
members receive attendance fees of $350 for each Board meeting. We also
reimburse the non-employee Board members for expenses related to their
attendance. In the past, Board members were granted options to purchase Company
common stock. No options were granted to Board members in fiscal 2002 or 2003.
During fiscal year 2004, an option was granted to Mr. Scovanner to purchase
5,000 Shares at an exercise price of $3.41 per Share because the Company had
neglected to grant him an option when his Board service commenced.
Employment Agreements
---------------------
Dixon entered into an employment agreement with Mr. Pala in 1995 which,
until amended effective January 1, 2004, had a rolling one-year term until Dixon
or Mr. Pala terminates it. Currently, Mr. Pala is paid a base salary at a rate
of $278,800 per annum, subject to increase from time to time in accordance with
Dixon's normal business practices and, if so increased, the salary may not be
decreased. Under the agreement, Mr. Pala is also entitled to participate in
other Dixon compensation programs and other benefits.
Dixon may terminate Mr. Pala's employment for cause (as defined in the
Agreement), in which case Dixon is obligated to pay him his full salary through
the date of termination. If Dixon terminates the agreement other than for cause
or other than for his disability or if he terminates the agreement for good
reason (as defined in the agreement, including if the successor to all or
substantially all of Dixon's business and/or assets does not expressly assume
and agree to perform the agreement), he will:
o Continue to receive his full salary through the date of termination;
o Receive an amount equal to the product of (i) his annual salary,
multiplied by (ii) the greater of the number of years remaining in the
term of employment under the agreement or the number two, such payment
to be made (a) if resulting from a termination based on a change of
control of Dixon, in a lump sum on or before the fifth day following
the date of termination, or (b) if resulting from any other cause, in
substantially equal semi-monthly installments; and
o Receive a bonus in an amount determined by multiplying his base salary
by a percentage that is the average percentage of base salary that was
paid (or payable) to him as a bonus under any Dixon bonus plan or
arrangement, for the three full fiscal years immediately preceding the
termination.
Dixon has entered into employment agreements with Messrs. Joyce, Asta and
Dahlberg which are similar in their terms to the agreement the Company entered
into with Mr. Pala, except that Mr. Joyce's, Mr. Asta's and Mr. Dahlberg's
current salaries, are $225,802, $196,370 and $123,690 per annum, respectively.
Amendments to the employment agreements described above were approved by
Dixon's compensation committee on July 7, 2004, signed on December 15, 2004, and
effective as of January 1, 2004 (each, an "Amendment", and together, the
"Amendments"). The Amendments establish a three year term of employment
commencing as of January 1, 2004, with annual renewals thereafter, update
salaries and titles, change the definition of a change in control as defined in
the Employment Agreements so that a change in control approved by Dixon's board
of directors is within the definition of that term, and add a provision that
during a disability period and after termination for cause or for Dixon's breach
of the Employment Agreement or for good reason as defined in the Employment
Agreement, benefits and other compensation will be paid as provided for under
the Employment Agreements. The amount of the severance payments as provided for
5
in the employment agreements upon a change in control was not changed.
On December 15, 2004, Dixon entered into a Second Amendment to Employment
Agreement (each, a "Second Amendment", and together, the "Second Amendments")
with each of Messrs Pala, Joyce, Asta, and Dahlberg, (each, an "Executive", and
together, the "Executives"). Each Second Amendment amends the Employment
Agreement previously entered into between the applicable Executive and Dixon, as
previously amended by the Amendment. All of the Second Amendments are
conditioned on the closing of the offer by Pencil Acquisition Corp. to purchase
all of Dixon's outstanding common stock (the "Offer") described under "SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS - Possible Change in Control", below.
The Second Amendments for Messrs. Pala and Joyce provide that Messers. Pala
and Joyce are not entitled to terminate their respective Employment Agreements
because of a change in control until the expiration of the six month period
immediately following the payment by the Purchaser for Shares of Dixon pursuant
to the Offer, (the "Transition Period") and that the payment by the Purchaser
for Shares pursuant to the Offer will constitute a change in control giving rise
to the right of the Executive to terminate his employment for good reason under
the employment agreement and the Executive has the right to terminate his
employment for good reason as a result of a change in control only during the
three month period immediately following the end of the Transition Period. The
Second Amendments for Messrs. Asta and Dahlberg are the same as those for
Messrs. Pala and Joyce, except that the Transition Period referred to above is
twelve months.
Success Bonus Plan
------------------
In July, 2004, Dixon's compensation committee approved in concept and in
late November approved the terms of a written Success Bonus Plan to encourage
certain of Dixon's executives to remain with Dixon and to support the sale of
Dixon on terms approved by the independent members of Dixon's Board. The success
bonuses will be paid six months after a closing of the sale of Dixon and will be
forfeited if the executive does not honor his employment agreement through that
six month period unless Dixon agrees to allow the executive to voluntarily
terminate his employment before that time. The bonuses are in the following
amounts: Pala and Joyce -- $46,000 each, Asta -- $34,000, and Dahlberg --
$22,500, and will be payable upon the closing of the Offer.
Certain Relationships and Related Transactions
----------------------------------------------
Dixon has loans outstanding to Messrs. Pala, Joyce and Asta in the
principal amounts of $204,000, $127,000 and $125,000, respectively. The proceeds
of the loans were used by the borrowers to purchase Shares from Dixon at the
time that they exercised stock options. At the time, the shares of common stock
are sold pursuant to a Stock Purchase Agreement between them and Pencil
Acquisition Corp., the loans must be repaid. Interest on a portion of the loans
accrues at the rate of 8% per annum. The loans were made prior to the enactment
of the Sarbanes-Oxley Act of 2002. See "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS - Possible Change in
Control", below.
Compensation Committee Interlocks and Insider Participation.
------------------------------------------------------------
No compensation committee members are or have been officers or employees of
Dixon and none had interlocking relationships with any other entities, including
any of the type that would be required to be disclosed in this Report.
6
Report of the Compensation Committee on Executive Compensation
--------------------------------------------------------------
The compensation committee reviews and recommends to the Board any changes
in the compensation of all of Dixon's executive officers except for Diego
Cespedes Creixell, whose compensation is determined by the board of directors of
Dixon's Mexican subsidiary and approved by Dixon's Chairman of the Board.
Compensation for other company employees is determined by Dixon's executive
officers.
The salaries of the executive officers were not increased in fiscal 2004.
Bonuses were paid to the executive officers in fiscal 2004 in accordance with
Dixon's existing Management Incentive Program; however, Diego Cespedes
Creixell's bonus was paid as required by his employment agreement.
During fiscal 2004, the compensation committee approved the amendments to
the employment agreements with Dixon's executive officers described under
"Employment Agreements", above, and the Success Bonus Plan described under
"Success Bonus Plan," above.
The foregoing report is submitted by the members of the Compensation
Committee:
John Ritenour (Chairman)
Ben Berzin, Jr.
Kent Kramer
Wesley D. Scovanner
Philip M. Shasteen
7
Performance Measurement Comparison
----------------------------------
The graph below compares the five-year total return to stockholders for the
Company common stock with the comparable return of the two indexes listed. The
graph assumes that you invested $100 in Company common stock and in each of the
indexes on September 30, 1998. Points on the graph represent the performance as
of the last business day of the years indicated.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG DIXON TICONDEROGA COMPANY,
THE RUSSELL 2000 INDEX AND A PEER GROUP
[OBJECT OMITTED]
Cumulative Total Return
-----------------------
09-1999 09-2000 09-2001 09-2002 09-2003 09-2004
------- ------- ------- ------- ------- -------
Dixon Ticonderoga Company 100 56.92 0.77 14.65 43.94 49.60
Russell 2000 100 123.39 97.22 88.18 20.36 142.96
Peer Group 100 113.65 103.79 115.15 126.66 137.76
* $100 invested on 9/30/99 in stock or index-including reinvestment of
dividends. Fiscal year ending September 30.
8
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
----------------------------------------------------------------------
RELATED STOCKHOLDER MATTERS
---------------------------
Beneficial Ownership of Shares of Common Stock
----------------------------------------------
Beneficial ownership is determined in accordance with the rules of the SEC
and generally includes voting or investment power with respect to securities. In
computing the number of Shares beneficially owned by a person and the percentage
of ownership held by that person, Shares subject to options and warrants held by
that person that are currently exercisable or will become exercisable within 60
days are deemed outstanding, while these Shares are not deemed outstanding for
computing the percentage ownership of any other person. Except as otherwise
indicated below, Dixon believes, based on information furnished to Dixon, the
persons and entities named in the table below have sole voting and investment
power with respect to all Shares beneficially owned.
Share Ownership of Officers and Directors
-----------------------------------------
The following table shows, as of January 4, 2005, the Shares owned
beneficially by the directors and executive officers of Dixon.
Amount and Nature Percentage
Of Beneficial Of Voting
Name of Beneficial Owner Ownership Securities
------------------------ ----------------- -----------
Gino N. Pala 696,070 (1) 21.4%
Richard F. Joyce 251,255 (2) 7.7%
Richard A. Asta 95,945 (3) 3.0%
Diego Cespedes Creixell 22,500 (4) *
Philip M. Shasteen 26,269 (5) *
Ben Berzin, Jr. 24,500 (5) *
Kent Kramer 20,500 (5) *
Wesley D. Scovanner 5,000 (8) *
John Ritenour 10,000 (5) *
Leonard D. Dahlberg, Jr. 25,894 (6) *
John Adornetto 27,415 (7) *
All directors and executive
Officers as a group 1,230,382 (9) 35.5%
* Indicates ownership is less than 1%.
(1) Includes 485,670 shares owned individually, 150,000 shares owned as
trustee, and 12,800 shares owned as custodian for grandchildren. In
addition, includes an option to purchase 47,600 shares that can be
exercised within the next sixty days.
(2) Includes options to purchase 69,000 shares that can be exercised
within the next sixty days; a trust which owns 97,420 shares for which
Mr. Joyce's wife acts as Trustee; shares owned by Mr. Joyce jointly
with his wife; shares owned by Mr. Joyce's wife as custodian for their
children; and shares owned by their children.
(3) Includes options to purchase 37,800 shares that can be exercised
within the next sixty days.
(4) Includes options to purchase 22.500 shares that can be exercised
within the next sixty days.
(5) Includes options to purchase 10,000 shares that can be exercised
within the next sixty days.
(6) Includes options to purchase 17,800 shares that can be exercised
within the next sixty days.
(7) Includes options to purchase 15,600 shares that can be exercised
within the next sixty days.
(8) Includes options to purchase 5,000 shares that can be exercised within
the next sixty days.
(9) Includes options to purchase 270,900 shares that can be exercised
within the next sixty days.
9
Persons Owning More than Five Percent of Dixon Shares of Common Stock.
----------------------------------------------------------------------
The following table shows, as of January 4, 2005, all persons known to
Dixon to be beneficial owners of more than 5% of Dixon's Shares.
Voting Authority Dispositive Authority Total Amount of Percent
Name and Address Sole Shared Sole Shared Beneficial Owners of Class
---------------- ------------------ --------------------- ----------------- ---------
Gino N. Pala 47,600(1) -0- 47,600(1) 648,470(3) 696,070* 21.4%
c/o Dixon Ticonderoga Company
195 International Parkway
Heathrow, FL 32746
Richard F. Joyce 69,000(2) -0-(3) 69,000(2) 251,255(4) 251,255(2) 7.7%
c/o Dixon Ticonderoga Company
195 International Parkway
Heathrow, FL 32746
Avocet Capital Management L.P. -0- 217,400 -0- 217,400 217,400 6.8%
5508 Highway 290 West
Suite 207
Austin, TX 78735
Loeb Arbitrage Fund 202,110 6,790 202,110 6,790 208,900 6.5%
Loeb Partners Corporation
Loeb Offshore Fund
61 Broadway
New York, N. Y. 10006
Pencil Acquisition Corp.(5) 911,824 -0- -0- -0- 911,824 28.5%
c/o Fila-Fabbrira Italiana
Lapis ed Affini S.p.A
Via Sempione, 2/ C, 20016
Pero (MI), Milan, Italy
(1) Includes option to purchase 47,600 shares that can be exercised within the
next 60 days.
(2) Includes option to purchase 69,000 shares that can be exercised within the
next 60 days.
(3) Includes 485,670 shares owned individually, 150,000 shares owned as
trustee, and 12,800 shares owned as custodian for grandchildren.
(4) Includes a trust which owns 97,420 shares for which Mr. Joyce's wife acts
as Trustee; shares owned by Mr. Joyce jointly with his wife; shares owned
by Mr. Joyce's wife as custodian for their children; and shares owned by
their children.
(5) Under the terms of the Stock Purchase Agreement, Messrs. Pala, Joyce and
other stockholders appointed designees of the Purchaser as proxies with
respect to voting all shares beneficially owned by them, agreed to vote
their shares in favor of approval of the proposed transaction and in
opposition to any transaction inconsistent with the proposed transaction,
and authorized the proxies to execute and deliver consents with respect to
their shares upon any and all such matters as each such proxy or its
substitute shall in its sole discretion deem proper. The Stock Purchase
Agreement terminates in the event the Merger Agreement is terminated.
Shares subject to the Stock Purchase Agreement represent approximately
28.5% of the outstanding Shares.
Equity Compensation Plan Information
------------------------------------
See Note 7 to Consolidated Financial Statements included under Item 8 of
Form 10-K for information related to the Company's stock option plans.
10
Possible Change in Control
--------------------------
On December 16, 2004, Dixon , Fila - Fabbrica Italiana Lapis ed Affini
S.p.A., an Italian corporation ("Fila"), and Pencil Acquisition Corp, a Delaware
corporation and a wholly-owned subsidiary of Fila (the "Purchaser"), entered
into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant to
which, among other things, on January 7, 2005, the Purchaser commenced an offer
(the "Offer") to purchase for cash all of Dixon's issued and outstanding shares
of common stock, par value $1.00 per share, at $7.00 per share. The Purchaser's
obligation to accept the tendered shares for purchase is subject to, among other
conditions set forth in Annex I of the Merger Agreement, there being validly
tendered and not withdrawn prior to the expiration of the tender offer, at least
66 2/3% of the outstanding shares of Dixon common stock.
The Merger Agreement provides that, promptly upon the payment for shares
pursuant to the Offer and the Stock Purchase Agreement (described below), which
represent at least 66 2/3% of the outstanding Shares, the Purchaser will be
entitled to designate such number of directors, rounded to the closest whole
number, of Dixon's Board of Directors, as will give the Purchaser representation
on the Board equal to its proportionate ownership of the Shares and Dixon must,
either increase the size of the Board or secure the resignation of such number
of directors as is necessary to enable the Purchaser's designees to be elected
or appointed to the Board and will use its reasonable best efforts to cause the
Purchaser's designees to be so elected or appointed. Dixon's obligations
relating to the its Board are subject to Section 14(f) of the Exchange Act and
Rule 14f-1 under the Exchange Act.
The merger is subject to the satisfaction or waiver of certain conditions,
including, if required, the approval and adoption of the Merger Agreement by the
affirmative vote of the holders of 66 2/3% of the outstanding Shares. If the
minimum condition is satisfied, the Purchaser would have sufficient voting power
to approve the merger without the affirmative vote of any other stockholder of
Dixon. Dixon has agreed, if required, to cause a meeting of its stockholders to
be held as promptly as practicable following consummation of the Offer for the
purposes of considering and taking action upon the approval and adoption of the
Merger Agreement. Additionally, under the Delaware General Corporation Law, if
the Purchaser acquires, pursuant to the Offer or otherwise, at least 90% of the
outstanding Shares, the Purchaser would be able to complete the Merger without a
vote of Dixon's stockholders. The Purchaser has agreed to vote its shares in
favor of the approval and adoption of the Merger Agreement.
Concurrently with the execution and delivery of the Merger Agreement, Gino
N. Pala and Richard F. Joyce, Dixon's Co-Chief Executive Officers, Richard A.
Asta, Dixon's Executive Vice President of Finance and Chief Financial Officer,
Leonard D. Dahlberg, Dixon's Executive Vice President of Operations, John
Adornetto, Dixon's Vice President and Corporate Controller, Laura Hemmings,
Dixon's corporate Secretary, and Deborah Joyce, Mr. Joyce's wife, entered into a
Stock Purchase Agreement (the "Stock Purchase Agreement") with the Purchaser,
pursuant to which, each of them agreed to sell his or her shares to the
Purchaser (or, at the Purchaser's request, to tender his or her shares to the
Purchaser in the Offer), appointed designees of the Purchaser as proxies with
respect to voting all shares beneficially owned by such person, agreed to vote
his or her shares in favor of approval of the merger and in opposition to any
transaction inconsistent with the merger, and authorized the proxies to execute
and deliver consents with respect to such person's shares upon any and all such
matters as each such proxy or its substitute shall in its sole discretion deem
proper. The Stock Purchase Agreement terminates in the event the Merger
Agreement is terminated. Shares subject to the Stock Purchase Agreement
represent approximately 28% of the outstanding shares of Dixon common stock as
of January 7, 2005.
11
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
See Item 11. Executive Compensation, for discussion of certain transactions
involving executive officers of the Company.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
--------------------------------------
Audit Fees
----------
The aggregate fees billed by PricewaterhouseCoopers LLP, the Company's
independent accountants, for professional services rendered for the audit of the
Company's annual financial statements for the fiscal year ended September 30,
2004 and for the reviews of the financial statements included in the Company's
Quarterly Reports on Form 10-Q for the that fiscal year were $302,000 of which
an aggregate amount of $121,000 had been billed through September 30, 2004.
Audit fees in fiscal 2003 were $254,000.
Financial Information Systems Design and Implementation Fees
------------------------------------------------------------
PricewaterhouseCoopers LLP did not provide the Company with services
relating to financial information systems design and implementation for the
fiscal year ended September 30, 2004.
All Other Fees
--------------
The aggregate fees billed by PricewaterhouseCoopers LLP for services
rendered to the Company, other than the services described above under "Audit
Fees" and "Financial Information Systems Design and Implementation Fees," for
the fiscal year ended September 30, 2004 and 2003 were $138,000 and $269,000,
respectively, and consisted principally of fees for audits of the Company's
benefit plans and fees for tax related services. In reviewing non-audit services
that may have been provided by PricewaterhouseCoopers LLP, including any
services under "Financial Information System Design and Implementation Fee,"
above, the Company's Audit Committee considered whether the provision of such
services was compatible with maintaining the independence of
PricewaterhouseCoopers LLP.
12
PART IV
-------
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
------------------------------------------
(a) Documents filed as part of this report:
1. Financial statements
See index under Item 8. of Form 10-K, Financial Statements and
Supplementary Data
(b) Exhibits
The following exhibits are required to be filed as part of this Amendment
No. 1 on Form 10-K/A:
(3) (i) Restated Certificate of Incorporation2
(3) (ii) Amended and Restated Bylaws1
(4) a. Specimen Certificate of Company Common Stock2
(4) b. Amended and Restated Stock Option Plan3
(10) b. 12.00% Senior Subordinated Notes, Due 2003, Note and Warrant
Purchase Agreement1
(10) c. 12.00% Senior Subordinated Notes, Due 2003, Common Stock
Purchase Warrant Agreement1
(10) j. Amendment No. 1 to 12.00% Senior Subordinated Notes, Due 2003,
Note and Warrant Purchase Agreement.4
(10) m. Amendment No. 2 to Note and Warrant Purchase Agreement.5
(10) n. Loan and Security Agreement by and among Dixon Ticonderoga
Company and its Subsidiaries and Foothill Capital Corporation.6
(10) o. Dixon Ticonderoga Company Amended and Restated Note and
Warrant Purchase Agreement, 12.5% Senior Subordinated Notes, due
October 3, 2005.6
(10) p. Warrant Amendment Agreement.9
(21) Subsidiaries of the Company.10
(23) Consent of Independent Certified Public Accountants.10
13
(31.1) Chairman of the Board and Co-Chief Executive Officer
Certification pursuant to Exchange Act Rule 13a-14 as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(31.2) Vice Chairman of the Board and Co-Chief Executive Officer
Certification pursuant to Exchange Act Rule 13a-14 as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(31.3) Executive Vice President of Finance and Chief Financial Officer
Certification pursuant to Exchange Act Rule 13a-14 as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(32.1) Chairman of the Board and Co-Chief Executive Officer
Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(32.2) Vice Chairman of the Board and Co-Chief Executive Officer
Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(32.3) Executive Vice President of Finance and Chief Financial Officer
Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(99.A11) Code of Ethics 8
1Incorporated by reference to the Company's Annual Report on Form 10-K for the
year ended September 30, 1996, file number 0-2655, filed in Washington, D.C.
2Incorporated by reference to the Company's Quarterly Report on Form 10-Q for
the period ended March 31, 1997, file number 1-8689, filed in Washington, D.C.
3Incorporated by reference to Appendix 3 to the Company's Proxy Statement dated
January 27, 1997, filed in Washington, D.C.
4Incorporated by reference to the Company's Annual Report on Form 10-K for the
year ended September 30, 1999, file number 1-8689, filed in Washington, D.C.
5Incorporated by reference to the Company's Annual Report on Form 10-K for the
year ended September 30, 2002, file number 1-8689, filed in Washington, D.C.
6Incorporated by reference to the Company's Quarterly Report on Form 10-Q for
the period ended December 31, 2002, file number 1-8689, filed in Washington,
D.C.
7Incorporated by reference to the Company's Annual Report on Form 10-K for the
year ended September 30, 2003, file number 1-8689, filed in Washington, D.C.
8Incorporasted by reference to the Company's Report on Form 10-K/A for the year
ended September 30, 2003, file number 1-8689, filed in Washington, D.C.
14
9Incorporated by reference to the Company's Quarterly Report on Form 10-Q for
the period ended March 31, 2004, file number 1-8689, filed in Washington, D.C.
10Incorporated by reference to the Company's Annual Report on Form 10-K for the
year ended September 30, 2004, file number 1-8689, filed in Washington, D.C.
15
SIGNATURES
----------
Pursuant to the requirements of Section 15(d) the Securities and Exchange
Act of 1934, the Company has duly caused this Amendment No. 1 on Form 10-K/A to
be signed on its behalf by the undersigned, thereunto duly authorized.
DIXON TICONDEROGA COMPANY
Date: January 28, 2005 By: /s/ GINO N. PALA
---------------- ---------------------
Gino N. Pala, Chairman of Board and
Co-Chief Executive Officer
Exhibit 31.1
------------
CHAIRMAN OF THE BOARD AND CO-CHIEF EXECUTIVE OFFICER
CERTIFICATION PURSUANT TO EXCHANGE ACT RULE 13A-14 AS ADOPTED
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002.
I, Gino N. Pala, Chairman of the Board and Co-Chief Executive Officer of Dixon
Ticonderoga Company, certify that:
1. I have reviewed this report on Form 10-K/A of Dixon Ticonderoga Company;
2. Based on my knowledge, this report does not contain any untrue
statements of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls;
6. The registrant's other certifying officers and I have indicated in this
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: January 28, 2005 By: /s/ GINO N. PALA
---------------- ----------------
Gino N. Pala
Chairman of Board and Co-Chief
Executive Officer
Exhibit 31.2
------------
VICE CHAIRMAN OF BOARD AND CO-CHIEF EXECUTIVE OFFICER
CERTIFICATION PURSUANT TO EXCHANGE ACT RULE 13A-14 AS ADOPTED
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002.
I, Richard F. Joyce, Vice Chairman of Board, Co-Chief Executive Officer,
President and Director of Dixon Ticonderoga Company, certify that:
1. I have reviewed this report on Form 10-K/A of Dixon Ticonderoga Company;
2. Based on my knowledge, this report does not contain any untrue
statements of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls;
6. The registrant's other certifying officers and I have indicated in this
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: January 28, 2005 By: /s/ RICHARD F. JOYCE
---------------- --------------------
Richard F. Joyce, Vice Chairman of Board,
Co-Chief Executive Officer and President
Exhibit 31.3
------------
EXECUTIVE VICE PRESIDENT OF FINANCE AND CHIEF FINANCIAL OFFICER
CERTIFICATION PURSUANT TO EXCHANGE ACT RULE 13A-14 AS ADOPTED
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002.
I, Richard A. Asta, Executive Vice President of Finance, Chief Financial Officer
and Director of Dixon Ticonderoga Company, certify that:
1. I have reviewed this report on Form 10-K/A of Dixon Ticonderoga Company;
2. Based on my knowledge, this report does not contain any untrue
statements of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls;
6. The registrant's other certifying officers and I have indicated in this
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: January 28, 2005 By: /s/ RICHARD A. ASTA
---------------- -------------------
Richard A. Asta, Executive Vice President
of Finance and Chief Financial Officer
Exhibit 32.1
------------
CHAIRMAN OF THE BOARD AND CO-CHIEF EXECUTIVE OFFICER
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002.
In connection with the Report of Dixon Ticonderoga Company (the "Company")
on Form 10-K/A, as filed with the Securities and Exchange Commission on the date
hereof (the "Report"), I, Gino N. Pala, Chairman of Board and Co-Chief Executive
Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
A signed original of this written statement required by Section 906 has
been provided to the Company and will be retained by the Company and furnished
to the Securities and Exchange Commission or its staff upon request.
Date: January 28, 2005 By: /s/ GINO N. PALA
---------------- ----------------
Gino N. Pala
Chairman of Board, Co-Chief Executive
Officer and Director
Exhibit 32.2
------------
VICE CHAIRMAN OF BOARD AND CO-CHIEF EXECUTIVE OFFICER
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002.
In connection with the Report of Dixon Ticonderoga Company (the "Company")
on Form 10-K/A, as filed with the Securities and Exchange Commission on the date
hereof (the "Report"), I, Richard F. Joyce, Vice Chairman of Board and Co-Chief
Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
A signed original of this written statement required by Section 906 has
been provided to the Company and will be retained by the Company and furnished
to the Securities and Exchange Commission or its staff upon request.
Date: January 28, 2005 By: /s/ RICHARD F. JOYCE
---------------- --------------------
Richard F. Joyce
Vice Chairman of Board, Co-Chief
Executive Officer and President
Exhibit 32.3
------------
EXECUTIVE VICE PRESIDENT OF FINANCE AND CHIEF FINANCIAL OFFICER
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002.
In connection with the Report of Dixon Ticonderoga Company (the "Company")
on Form 10-K/A, as filed with the Securities and Exchange Commission on the date
hereof (the "Report"), I, Richard A. Asta, Executive Vice President Of Finance
and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
(1) the Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
A signed original of this written statement required by Section 906 has
been provided to the Company and will be retained by the Company and furnished
to the Securities and Exchange Commission or its staff upon request.
Date: January 28, 2005 By: /s/ RICHARD A. ASTA
---------------- -------------------
Richard A. Asta
Executive Vice President of Finance,
Chief Financial Officer and Director