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O.C. BUSINESS PLUS

Day Runner Sells Filofax to Reduce Its Debt

April 27, 2001|MARC BALLON | TIMES STAFF WRITER

Struggling Day Runner Inc. said Thursday it sold its Filofax operations, a business that never lived up to its promise and saddled Day Runner with a mountain of debt.

The Fullerton manufacturer of paper organizers, planners and software said Filofax was sold to affiliates of its lenders for $30 million, little more than a third of the $84.5 million Day Runner paid for the British firm 2 1/2 years ago.

Day Runner said it used the proceeds to reduce existing debt, which stood at more than $100 million at the end of the year. It called the transaction a "significant step" in its restructuring efforts.

Company executives did not return calls.

Many analysts believed the Filofax Group acquisition would propel Day Runner to lofty heights, even though the purchase price was 50% more than Filofax's stock value. At the time, Day Runner had just posted record earnings for its fiscal year and had been tapped twice by Forbes magazine as one of the 200 best small companies in the nation.

But Day Runner's fortunes quickly turned.

Besides taking on a hefty debt load in acquiring Filofax, Day Runner suffered a blow when its biggest customers--large retailers--tightened inventories, cutting back orders. The company also was caught flat-footed by the consumer shift toward electronic personal organizers such as Palm Pilot.

By last summer, Day Runner's stock had been delisted from the Nasdaq national market, and the chairman, chief executive officer and three other directors had resigned.

In the last fiscal year, Day Runner lost $106.7 million.

Day Runner stock closed Thursday at 23 cents, unchanged in over-the-counter trading. Shares have fallen by more than 96% in the past year.

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