10-Q/A 1 l91439ae10-qa.txt PARAGON CORPORATE HOLDINGS INC. FORM 10-Q/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q/A Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended September 30, 2001 Commission File No. 333-51569 PARAGON CORPORATE HOLDINGS INC. ------------------------------- (Exact Name of Registrant as Specified in its Charter) DELAWARE 34-1845312 -------- ---------- (State or other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) CO-REGISTRANTS AND SUBSIDIARY GUARANTORS A.B.Dick Company Delaware 04-3892065 CI, Inc. Delaware 13-3583725 Itek Graphix Corp. Delaware 04-2893064 Curtis Sub, Inc. Delaware 34-1737529 Paragon Corporate Holdings Inc. A.B.Dick Company CI, Inc. 7400 Caldwell Avenue 7400 Caldwell Avenue 6140 Parkland Boulevard Niles, Illinois 60714 Niles, Illinois 60714 Mayfield Heights, Ohio 44124 (847) 779-2500 (847) 779-1900 (440) 446-9700 Itek Graphix Corp. Curtis Sub, Inc. 7400 Caldwell Avenue 6140 Parkland Boulevard Niles, Illinois 60714 Mayfield Heights, Ohio 44124 (847) 779-1900 (440) 446-9700

(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) 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 90 days. Yes (X) No ( ) Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practical date. As of November 14, 2001, there were 4,200,000 shares of the registrant's common stock outstanding. Paragon Corporate Holdings Inc. Condensed Consolidated Statements of Cash Flows (In Thousands)

See notes to condensed consolidated financial statements. 4 Summarized consolidating statements of cash flows for the nine months ended September 30, 2001 and 2000, respectively, for the Company, the guarantor subsidiaries, and the non-guarantor subsidiaries are as follows (in thousands):

13 currencies in which the Company transacts business, its financial results will be affected. The principal foreign currencies in which the Company transacts business are the Japanese yen, the Canadian dollar, the British pound sterling, the Dutch guilder, and the Belgian franc. The fluctuation of the U.S. dollar versus other currencies resulted in decreases to stockholder's equity of approximately $0.6 million and $0.3 million for the nine months ended September 30, 2001 and 2000, respectively. LIQUIDITY AND CAPITAL RESOURCES Net cash used in operating activities was $9.2 million and $12.6 million for the nine months ended September 30, 2001 and 2000, respectively. The net cash used in operating activities in 2001 was principally the result of a $10.3 net loss before extraordinary items, reduction of accounts payable of $8.5 million, and a decrease in accrued liabilities of $8.8 million. These uses were offset by decreases in inventory and accounts receivable of $9.3 million and $2.5 million, respectively. The net income in 2001 is due to gain on early extinguishment of debt offset by operating losses and interest costs on the senior notes. Net cash used in operating activities in 2000 was also primarily attributable to operating losses and interest on the senior notes mentioned above. The net cash (used in) provided by investing activities was ($0.2) million and $58.0 million for the nine months ended September 30, 2001 and 2000, respectively. The 2001 net cash (used in ) operations is primarily the purchases of property, plant, and equipment of $1.0 million offset by $0.6 million of proceeds from sale of property, plant, and equipment. The 2000 amount reflects the payment for the Multigraphics acquisition of $4.6 million and the proceeds from the sale of the net assets of Curtis Industries of $60.5 million. Net cash used in financing activities was $31.8 million and $4.2 million for the nine months ended September 31, 2001 and 2000, respectively. The net cash used in financing activities in 2001 was a $34.5 million payment for extinguishment of senior notes and $2.2 million of principal payments on long-term borrowings, offset by $4.9 million of borrowings on the Company's revolving credit facility. The net cash used in financing activities in 2000 was the result $7.4 million payment of debt assumed in the acquisition, $4.5 million distribution for taxes, and $2.1 million principal payments on long-term borrowings offset by $9.8 million borrowings on the Company's revolving credit facility. The Company's primary capital requirements (excluding acquisitions) consist of working capital, capital expenditures and debt service. The Company expects current financial resources and funds from operations to be adequate to meet current cash requirements. At September 30, 2001, the Company had cash and cash equivalents of $15.8 million and unused credit facilities of approximately $1.7 million available for its use. At September 30, 2001, the Company was in violation of certain financial covenants under the terms of the Credit Agreement for which it has received waivers through September 30, 2001. During August 2001, the Company redeemed $109.2 million of its $115.0 million of Senior Notes for a cash payment of $34.5 million and $25.0 million of new non-interest bearing notes payable. The Company used a portion of the net cash proceeds from its sale of Curtis to extinguish the debt. This early extinguishment resulted in an extraordinary gain of $43.6 million net of the direct costs of the transaction of $3.0 million and the write-off of the associated debt issuance costs of $3.1 million. Income taxes have not been provided for the extraordinary gain as the extinguishment of debt represents a tax-free transaction to the Company under current provisions of the Internal Revenue Code. The $25 million of non-interest bearing notes are payable only upon the occurrence of certain events as defined under the terms of notes and are convertible to an equity interest in A.B.Dick at the option of the holders of a majority of the notes. 19 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PARAGON CORPORATE HOLDINGS INC. By: /s/ Brian J. Longe ---------------------------------------- BRIAN J. LONGE President and Chief Executive Officer and Director (As duly authorized representative and Principal Executive Officer) PARAGON CORPORATE HOLDINGS INC. By: /s/ Gregory T. Knipp ---------------------------------------- GREGORY T. KNIPP Chief Financial Officer (As duly authorized representative and as Principal Financial and Accounting Officer) A.B.DICK COMPANY By: /s/ Gregory T. Knipp ---------------------------------------- GREGORY T. KNIPP Chief Financial Officer (As duly authorized representative and as Principal Financial and Accounting Officer) ITEK GRAPHIX CORP. By: /s/ Brian J. Longe_ ---------------------------------------- BRIAN J. LONGE President and Chief Executive Officer (As duly authorized Officer) Date: November 21, 2001 23

PARAGON CORPORATE HOLDINGS INC 10-Q/A