FORM 10-K ANNUAL REPORT
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended April 30, 1995.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _____________ to ______________
Commission file number: 2-33108
ACCESS CORPORATION
------------------
(Exact name of registrant as specified in its charter)
Ohio 31-0673364
- ---------------------- --------------------------------------
State of Incorporation I. R. S. Employer Identification Number
4350 Glendale-Milford Road, Suite 250, Cincinnati, Ohio 45242-3700
- ------------------------------------------------------- ---------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (l) 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 registrant was required to
file such reports), and (2) has been subject to the filing
requirements for at least the past 90 days. Yes X . No ___.
<PAGE>
Indicate by check mark if disclosure of delinquent
fillers pursuant to Item 405 of Regulation S-K ( 229.405 of this
chapter) is not contained herein, and will be contained, to the
best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [ ] Inapplicable
State the aggregate market value of the voting stock
held by non-affiliates of the registrant. The aggregate market
value shall be computed by reference to the price at which the
stock was sold, or the average bid and asked prices of such
stock, as of a specified date within 60 days prior to the date
of filing. Because there is no established market for the
Common Stock of the Company, it is not possible to determine the
aggregate market value of such Common Stock held by non-affialiates
Indicate the number of shares outstanding of each of
the registrant's classes of common stock, as of the close of the
period covered by this report. Common Stock, without par value:
3,436,987 shares outstanding and Class A Common Stock, without
par value: 1,428,572 shares outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The 1995 Annual Report to the shareholders of the Company for
the fiscal year ended April 30, 1995, is incorporated herein by
reference in Parts I and II to the extent specified in such
Parts.
PART I
ITEM 1. BUSINESS
The registrant ("ACCESS" or the "Company") was
incorporated under the laws of the State of Ohio on November 18,
1963. Its executive offices are located at 4350 Glendale-Milford
Road, Suite 250, Cincinnati, Ohio 45242-3700, and its telephone
number is (513) 786-8350.
DESCRIPTION OF PRODUCTS AND SERVICES
- -------------------------------------
ACCESS enhances the quality of its customers' products
by providing software solutions for their technical processes.
ACCESS' software allows its customers to manage the process of
design changes, release of those changes, and the efficient
storage, indexing, and retrieval of both engineering drawings
and related technical documentation.
ACCESS serves primarily engineering customers in
discrete and process manufacturing. Its applications benefit
companies in the medical products, pharmaceutical, computer and
electronic, petrochemical, defense, and automotive industries.
In addition, companies under strict government regulation have
found ACCESS' applications beneficial in organizing and
controlling compliance procedures.
The Cincinnati-based company has two business units:
Technical Document Management Systems (TDMS) and Service/Manufacturing.
<PAGE>
TDMS BUSINESS UNIT
- ------------------
ACCESS' application software features three proprietary
products: EDICS/DM (Engineering Document Image Control
System/Document Management), EDICS/RM (Engineering Document
Image Control System/Release Management), and ECC (Electronic
Change Control), each of which may be configured to specific
organizational needs.
A database application for managing documents and
engineering-related information, EDICS processes both text and A
through E-size drawings that may be scanned or electronically
imported from CAD. These documents, from multiple sources, are
integrated into a single system which fully automates the
revision process and provides flexible tools for viewing,
editing, and printing.
EDICS also enables a user to comply with requirements of
regulatory agencies, such as the Food and Drug Administration,
by allowing storage and immediate retrieval of product and
process information.
ECC may be added to the EDICS system to improve control
over the design and processing changes. It provides advanced
functionality to automate the entire document change process,
including multiple approval processing and notification,
rejection handling, in-process review, approval history, and
change process performance reporting.
ECC automates a company's engineering change control
process consistent with its established procedures and
operational requirements. ECC correlates change documents with
markups and affected drawings for the length of the change
cycle. It can be configured to facilitate concurrent reviews
(now a Computer Aided Acquisition and Logistics Support, CALS,
requirement for many Department of Defense contracts).
Both EDICS and ECC support effective concurrent
engineering environments, which involve the cooperative
interaction of design, manufacturing, support personnel,
suppliers, and customers. Concurrent engineering is intended to
reduce time-to-market and increase manufacturability,
serviceability, and reliability.
ACCESS has been approved as an Industry Application
Specialist by IBM's Industrial Sector Marketing. In this
relationship, ACCESS provides EDICS/400 and ECC/400 for use on
the IBM AS/400.
ACCESS also supplies EDICS and ECC in the UNIX
environment running on IBM's RS/6000 and on both AT&T and
Hewlett Packard UNIX platforms.
SERVICE/MANUFACTURING BUSINESS UNIT
- ------------------------------------
Within the Service/Manufacturing business unit, the
Company provides quality field maintenance including hardware
and software service on a nationwide basis to the Company's
installed customer base.
<PAGE>
In addition to maintaining ACCESS-installed systems,
ACCESS' service group also maintains non-ACCESS electronic and
electromechanical equipment such as card embossers, microfiche
duplicators, microfilm scanners, large drawing format scanners,
and highly sophisticated 5-1/4" and 12" laser.
ACCESS continues to pursue additional third-party
service opportunities with manufacturers of electronic
electromechanical products who require a rapid on-site service
response but whose customer base is not large enough to support
a nationwide service network.
MARKETING
- ---------
The Company markets its products for the most part
directly in the United States. The Company has been approved as
an Industry Application Specialist by IBM's Industrial Sector
Marketing for the AS/400. Marketing operations are conducted
primarily from the Company's headquarters in Cincinnati, Ohio.
The Company employs four sales and marketing personnel.
Technical Document Management Systems (TDMS), as well
as related computer systems, are produced and configured only in
response to firm orders. At the end of fiscal years 1995 and
1994, TDMS backlog totaled approximately $1,053,900 and
$2,615,900, respectively. The TDMS backlog at the end of 1995
fiscal year is expected to be delivered within the 1996 fiscal
year.
Effective at the beginning of the third quarter of
fiscal 1994, the Company discontinued its operations with
respect to its Hardware Engineering Services and Contract
Manufacturing line of business. It is limiting its
manufacturing to supplying cards for the micrographic equipment
sold in prior years and the parts required to support existing
equipment. The Company has completed or transferred all
contracts and commitments for its Engineering and Contract
Manufacturing customers.
At present, there are ACCESS systems installed in 48
states and in Puerto Rico, Jamaica, Mexico, Japan, Canada,
Europe, China, the Middle East, Australia and the CIS (the
former USSR). There is no recurring geographic market
concentration with respect to the sale of ACCESS systems in the
United States, and in fiscal year 1995, no more than 13% of the
Company's revenues were derived from operations in any single
state.
Aggregate sales to international customers represented
4% of the Company's annual sales in fiscal 1995. In fiscal year
1995, no domestic distributors were employed.
ACCESS' primary marketing focus is the sale of the
Technical Document Management System products to manufacturers,
information processors, utilities and other users of technical
documentation. Marketing for the Component Service business unit
is provided by ACCESS personnel to sell the Company's services.
<PAGE>
No single customer accounts for a significant
percentage of the Company's revenues on a continuing basis. Net
sales to the aerospace industry were 18.8% of fiscal 1995
revenues and 5.4% of fiscal 1994 revenues; net sales to the
various agencies of the federal government represented 18.4% of
fiscal 1995 revenues and 17% of fiscal 1994 revenues, (these
contracts could have been canceled at the election of the
government); net sales to the computer industry were 10.5% of
fiscal 1995 revenues and 2.1% of fiscal 1994 revenues; and net
sales to the medical industry were 7.2% of fiscal 1995 revenues
and 20.6% of fiscal 1994 revenues. See Note 7 of Notes to
Financial Statements included on page 18 of the 1995 Annual
Report to Shareholders of the Company, which information on such
page is filed as part of this Annual Report on Form 10-K and
incorporated by reference herein.
COMPETITION
- -----------
Increases in Technical Document Management Systems
(TDMS) competition continue to push system prices down to
historically unprecedented low levels. The highly published
changes within IBM have inhibited the growth of the Company's
relationship with that organization. Amidst all this, the
Company has significantly reduced fixed costs and increased
productivity in anticipation of a TDMS market characterized by
low cost, high volume, shrink-wrapped software.
PURCHASING AND PRODUCTION
- -------------------------
The majority of the TDMS software is developed by the
Company. The TDMS hardware and some miscellaneous software and
supplies are purchased by the Company from a number of
suppliers. In the case of certain materials, the Company employs
a single source of supply, although alternative sources are
available. The Company integrates and installs the TDMS hardware and software.
PATENTS
- --------
At the current time, technology utilized in the
Company's micrographic storage and retrieval unit and related
products are protected by three unexpired United States patents
owned by the Company.
The Company's issued patents cover most of the major
components and supplies utilized in the Company's micrographic
storage and retrieval system.
PRODUCT DEVELOPMENT
- --------------------
Development to enhance the current technical document
management and distributions systems is in process. In its
development operations, the Company currently employs
approximately eight persons with degrees in engineering and
related fields. Some of these individuals are involved in the
delivery and maintenance of systems or engaged in consulting
with respect to these systems. In addition, the Company from
time to time engages the services of independent research firms
and contractors to assist in development projects. During
fiscal year 1995 and fiscal year 1994, the Company spent
$1,018,486 and $1,945,403, respectively, on these activities.
See Note 5 of Notes to Financial Statements included on page 17
of the 1995 Annual Report to shareholders of the Company, which
information on such page is filed as part of this Annual Report
on Form 10-K and incorporated by reference herein.
<PAGE>
EMPLOYEE RELATIONS
- ------------------
The Company employs approximately 47 persons, all on a
full-time basis and all of whom are non-union. Approximately
four employees are connected with marketing activities, while
the others are involved in production, installation, service,
product development, and financial or administrative
operations.
Standard hospitalization, prescription drug, dental,
life insurance, and disability protection are provided for all
full-time employees. The Company has a 401(k) Plan and a
Section 125 Plan. The Company considers its employee relations
to be good.
ITEM 2. PROPERTIES
The principal operations of the Company are conducted
in approximately 19,678 square feet of leased plant and office
space in Cincinnati, Ohio. The Cincinnati property is occupied
under a lease which extends through May 1, 2000. The annual
rental under this lease is $166,000.
The Company owns automatic, custom-made machines used
in the production of its proprietary media and owns various
standard tools and equipment used in the production of ACCESS
products.
The capacity of the Company's TDMS facilities and
equipment exceeds the current requirements of the Company's
operations.
The Company owns computer hardware and software used
for development, support, and installation for its TDMS product
The Cincinnati building occupied by the Company and
the fixtures and equipment therein are modern, well maintained,
in satisfactory operating condition and adequately insured.
The building is air-conditioned.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material pending
legal proceeding.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5. MARKET FOR THE REGISTRANTS' COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
Information with respect to the market for the
Company's Shares of Common Stock and related security holder
matters is set forth on page 12 of the 1995 Annual Report to
the shareholders of the Company, which information on such page
is filed as part of this Annual Report on Form 10-K and
incorporated herein by reference.
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
Information with respect to selected financial data of
the Company is set forth on page 6 of the 1995 Annual Report
to the shareholders of the Company, which information on such
page is filed as part of this Annual Report on Form 10-K and
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
"Management's Discussion and Analysis of Financial
Condition and Results of Operations" is set forth on pages 7
through 9 of the 1995 Annual Report to the shareholders of the
Company, which pages are filed as part of this Annual Report on
Form 10-K and incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is set forth on
pages 11 through 18 of the 1995 Annual Report to the
shareholders of the Company, which information on such pages is
filed as part of this Annual Report on Form 10-K and
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Directors. Set forth below is certain information
regarding the directors of the Company, which information has
been obtained in part from the records of the Company and in
part from the directors. All directors have been elected by
the holders of the Company's Common Stock. All directors are
elected annually.
NEWTON D. BAKER, age 61. Mr. Baker has been the
Executive Vice President of the Company since October 1986. He
has been the Treasurer of the Company since July 1970 and
Assistant Secretary since June 1974. He has been a director of
the Company since 1988.
KENT P. FRIEL, age 59. Mr. Friel has been Chairman of
the Board of the Company since April 1986. Since June 1989 Mr.
Friel has been President of Schonberg Associates, Inc., which
performs outplacement services for organizations which may
include the Company. He was President and Chief Executive
Officer of the Company from February 1986 through May 1989. He
has been a director of the Company since 1983.
<PAGE>
ROBERT J. KALTHOFF, age 69. Dr. Kalthoff has been
Chairman and Treasurer of The Kalthoff Group, Inc. since March
1990, and was President from March 1990 to December 1994. The
Kalthoff Group, Inc. is an information service and consulting
firm for users and vendors in electronic image information
management industries. He has been a director of the Company
since 1963.
DENNIS J. SULLIVAN, JR., age 63. Mr. Sullivan is
currently the Executive Counselor for Dan Pinger Public
Relations, Inc. Mr. Sullivan served as Executive Vice
President and Chief Financial Officer of Cincinnati Bell, Inc.
from 1987 to February 1993. He has been a director of the
Company since 1990.
SCOTT D. WATKINS, age 46. Mr. Watkins has been
President of the Company and Chief Operating Officer since
April 1989, and Chief Executive Officer since May 1989. He has
been a director of the Company since 1989.
JOHN W. WEIL, age 67. Dr. Weil has been President of
Weil Associates, Inc., which provides consulting services to
industrial and non-profit organizations since January 1985. He
is a director of Maxwell Laboratories and Weil Associates, Inc.
He has been a director of the Company since 1985.
Oce, the Company's major holder of Common Stock, has
the right (in accordance with the Voting Trust Agreement - see
"Certain Relationships and Related Transactions") to direct the
Voting Trustees to vote for up to two director nominees
designated by Oce. In exercise of this right, Oce has directed
the Voting Trustees to vote for Mr. Hardie. Oce retains the
right, which it may exercise at any time, to direct the Voting
Trustees to vote for up to one additional director nominee.
The following information relates to Mr. Hardie.
JAMES H. HARDIE, age 65. Mr. Hardie is, and since
1965 has been, a partner in the law firm of Reed Smith Shaw &
McClay, Pittsburgh, Pennsylvania. That firm performs and has
performed certain legal services from time to time for Oce and
certain of its subsidiaries since 1967. Mr. Hardie is also a
director of UST&D, Inc., Kiene Diesel Accessories, Inc. and
Respironics, Inc.. Mr. Hardie has been a director of the
Company since 1987.
(b) Executive Officers. Set forth below is certain
information regarding the executive officers of the Company.
All executive officers are elected annually by the Board of
Directors.
<TABLE>
<PAGE>
<CAPTION>
Name Age Position & Business
Experience
<S> <C> <C>
Scott D. Watkins 46 President and Chief Operating
Officer since April 1989, and
Chief Executive Officer since
May 1989.
Newton D. Baker 61 Executive Vice President of the
Company since October 1986;
Treasurer and Assistant Secretary
of the Company since
prior to 1982.
Kim Bollinger 37 Vice President of Customer Ser-
vices for the Company since
May 1993; Director of Systems
Man agement from June 1992 to
May 1993, and Manager of
Consulting Services from
January 1990 to June 1992.
</TABLE>
ITEM 11. EXECUTIVE COMPENSATION
(a) Cash Compensation of Executive Officers. The
Board has established an Executive Compensation Committee which
considers and makes recommendations to the Board of Directors
concerning the compensation of the executives of the Company.
During the fiscal year ended April 30, 1995, this committee met
six times and consisted of Messrs. Friel, Hardie and Sullivan.
Neither Mr. Hardie nor Mr. Sullivan was an officer or
employee of the Company or any of its subsidiaries in fiscal
1995 or any prior year. As noted above, Mr. Friel, who is not
an employee of the Company, has been Chairman of the Board of
the Company since April 1986 and was President and Chief
Executive Officer of the Company from February 1986 through May
1989.
The following table sets forth for the fiscal years
ended April 30, 1993, 1994 and 1995, certain information
regarding cash compensation as well as certain other
compensation paid to or accrued for the services rendered
during such years to each of the Executive Officers of the
Company whose total salary and bonus exceeded $100,000 in all
capacities in which they served.
<TABLE>
<PAGE>
I. SUMMARY COMPENSATION TABLE
Long-Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
-----------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Securities
Annual Restricted Underlying All
Compen- Stock Options/ LTIP Other
Fiscal Salary (1) Bonus(1) sation Award SARS Payouts Compen.
Name and Principal Position Year ($) ($) ($) ($) (#)(3) ($) ($)
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Scott D. Watkins 1995 155,000.04 32,000.00 - - - - -
President and Chief Executive 1994 153,916.56 - - - 100,000.00 - -
Officer 1993 140,019.22 - - (2) - - - -
Newton D. Baker 1995 115,009.09 18,000.00 - - - - -
Exec. Vice President,Treasurer 1994 118,582.90 - - - 75,000.00 - -
& Asst. Secretary 1993 110,019.22 - - (2) - - - -
<FN>
(1) These include amounts that would have been payable, but were
deferred pursuant to election of an Executive Officer,
such as through the Company's 401(k) Savings Plan.
(2) No perquisites were provided or other personal benefits
paid to a named Executive Officer in fiscal year 1993,
1994 or 1995 which exceeded the lesser of $50,000 or 10%
of the total annual salary and bonus reported for such
named Executive Officer.
(3) These numbers represent options for shares of Common Stock
awarded pursuant to the Company's stock option plans. See
the next table titled, "Option/SAR Exercises and Year-End
Value Table" for more detailed information on such
options.
</TABLE>
<TABLE>
<PAGE>
II. OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth information with respect to the
named executive officers
concerning the exercise of options and/or SAR's during fiscal
year 1995 and unexercised
options and SAR's held at April 30, 1995.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR, AND FY
END OPTION/SAR VALUE
<CAPTION>
(a) (b) (c) (d) (e)
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
Shares Value at FY-End (#) at FY-End ($)
Acquired on Realize Exercisable/ Exercisable/
Name Exercise (#) ($) 1/ Unexercisable Unexercisable 1/
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Scott D. Watkins 0 0 110,000/70,000 0
Newton D. Baker 0 0 77,500/52,500 0
<FN>
1/ ACCESS Common Stock is not traded actively; therefore, there
is no established market value
No stock options or SAR's were granted to either of the named
persons in fiscal 1995.
</TABLE>
(b) Compensation of Directors. Each non-employee
director receives an annual fee of $5,000. Any such person who
is the Chairman, any member of the Audit Committee, or a
director who resides outside the metropolitan Cincinnati area
receives an additional $2,000 annually for each position held.
In addition, each such director is reimbursed for expenses
incurred in connection with his attendance any Board or
Committee meeting. Mr. Hardie is to be compensated on the same
basis as the other non-employee directors until the meeting.
(c) Existing Stock Option Plans. The Company
currently has five Stock Option Plans: The 1979 Stock Option
Plan (the "1979 Plan"), the 1983 Stock Option Plan (the "1983
Plan"), the 1985 Incentive Stock Option Plan (the "1985 Plan"),
the 1991 Stock Option Plan (the "1991 Plan"), and the 1993
Stock Incentive Plan (the "1993 Plan"). The 1979, 1983, 1991
and 1993 Plans provide for the grant of both qualified and non-
qualified stock options for shares of the Common Stock of the
Company; the 1985 Plan permits the grant of incentive stock
options only. Options under all of the Plans may be granted to
officers and other key employees of the Company. The 1979,
1991 and 1993 Plans also permit the grant of non-qualified
options to directors of the Company and, in appropriate cases
authorized by the Board of Directors, to other persons in
business relationships with the Company. Optionees are selected
by the Board of Directors; criteria considered in such
selection include the potential optionee's position with or
<PAGE>
services to the Company, his or her tenure in that position,
and his or her performance while holding the position or
providing those services. The 1979 Plan was terminated in 1991
except for outstanding options, and no further options may be
granted under that Plan or the 1983 and 1985 Plans. The 1993
Plan also permits the grant of restricted shares.
The option price under the Plans may not be less than
the fair market value of the Common Stock at the date of the
grant, as determined by the Board of Directors. Other terms
and conditions of options granted under the Plans are
established by the Board of Directors, which administers the
Plans, directly or through the Management Compensation
Committee, except that incentive stock options granted under
the Plans may not be exercised prior to one year from date of
grant and expire ten years from date of grant.
All of the plans (except for the 1979 Plan) provide
for the acceleration of the exercise date of stock options in
certain events relating to a change of control of the Company
and for the extension of the period during which stock options
may be exercised upon termination of employment following such an
event. Such provisions may be considered as having an anti-
takeover effect.
The 1979 Plan was amended and restated by the Board of
Directors on June 24, 1988, effective May l, 1988. All of the
existing Plans were also amended at that time to make certain
changes relating to incentive stock options necessitated by the
provisions of the Tax Reform Act of 1986.
No options were granted or exercised in the last fiscal year.
Retention Agreements:
- ----------------------
On August 24, 1994, the Company entered into Executive
Retention Agreements with each of Mr. Watkins and Mr. Baker.
These Agreements provide if during the six months preceding or
the 24 months following a Change in Control (as defined
therein), Mr. Watkins' or Mr. Baker's employment is terminated
by the Company (other than for Cause of Disability) or by such
executive officer for Good Reason, such executive officer shall
be entitled to a severence payment equal to twice his highest
annual salary in the last five years, continued insurance
coverage and up to $25,000 for outplacement services. Change
of Control is defined to include a merger or other business
combination after which the existing shareholders of the
Company have less than 50% of the voting power, the sale of all
or substantially all of the assets of the Company, the
acquisition by, or commencement of a tender offer by any person
other than Oce or Prudential, of or for 20% of the Company's
voting power, or a change in the majority of the Board of
Directors without approval of the existing directors. Good
Reason includes an adverse change in salary, authority or
benefits.
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth, as of July 17, 1995,
the beneficial ownership of the Company's Common Stock by (l)
each person known to the Company to own more than 5% of the
outstanding shares of Common Stock, (2) each director
individually and (3) all directors and officers as a group.
The information in the table has been in part received from the
persons listed and in part taken from the records of the
Company.
Beneficial ownership of Common Stock of the Company has
been determined for this purpose in accordance with Rule 13d-3
of the Securities and Exchange Commission ("SEC"), under which
a person is deemed to be the beneficial owner of Common Stock
if he has or shares voting power or investment power in respect
of such Common Stock or has the right to acquire such ownership
within 60 days. Accordingly, the amounts shown on the table
represent beneficial ownership for the purposes of compliance
with SEC reporting requirements, and do not necessarily bear on
the economic incidents of ownership of Common Stock.
<TABLE>
<PAGE>
<CAPTION>
Amount & Nature
Name and, With of Beneficial
Respect to 5% Ownership
Ownership, ----------- Percent of
Address Direct Indirect Common Stock
- ----------------- -------- --------- -------------
<S> <C> <C> <C>
Oce-van der Grinten
N.V. (1) 100 2,180,854 63.46%
St. Urbanusweg 43
5900 MA Venlo
The Netherlands
2,180,854 -- 63.45%
Kent P. Friel,
Dennis J. Sullivan, Jr.,
John W. Weil, and
Scott D. Watkins as
Voting Trustees (1)
4350 Glendale-Milford Rd.
Suite 250
Cincinnati, OH 45242-3700
Newton D. Baker* (2) 148,984 -- 4.33%
Kent P. Friel* (4) 10,742 -- .31%
James H. Hardie* (3) -- -- --
Robert J. Kalthoff* 112,588 74,180.5 5.43%
ACCESS Corporation
4350 Glendale-Milford Rd.
Suite 250
Cincinnati, OH 45242-3700
Dennis J.Sullivan,Jr.*(4) 100 -- .003%
Scott D. Watkins* (2)(4) 203,924 -- 4.95%
John W. Weil* 15,000 -- .44%
All directors and 530,838 74,180.5 17.60%
officers as a group
(10 persons)(2)(4)
_________________
*Director
<PAGE>
</TABLE>
(1) On April 27, 1992, pursuant to the Note Purchase
Agreement described above, Oce entered into the Voting Trust
Agreement appointing Kent P. Friel, Dennis J. Sullivan, Jr.,
John W. Weil, and Scott D. Watkins ("the Voting Trustees") as
voting trustees for 2,180,854 shares. The Voting Trustees vote
on matters relating to the election of directors, including
setting the number of directors, in their discretion, except
that the Voting Trustees must vote for up to two nominees for
director designated by Oce in its discretion. Oce retains the
right to obtain the Voting Trustees' proxy as to the voting of
such shares with respect to all issues not related to the
election of directors. (See "Certain Transactions-Agreements
with Oce".) Oce retains the right to dispose of such shares,
subject to certain restrictions in the Note Purchase Agreement.
As a result of these arrangements, Oce and the Voting Trustees
share beneficial ownership of such shares.
The Voting Trust created under the Voting Trust
Agreement has a term of 10 years, and Oce has agreed to renew
it for an additional term of 10 years. The Voting Trust will
terminate upon the sale of the shares of Common Stock subject
thereto, but only with respect to those so sold and subject to
the proviso that Oce may not sell more than 50% of its shares
without consent of the Company, the closing of any underwritten
public offering of Common Stock as a result of which not less
than $10 million in aggregate sales price to the public of
Common Stock shall have been sold in such offering plus any
previously underwritten public offering or the acquisition by
any person of more shares of Common Stock than are held by Oce.
Oce can also terminate the Voting Trust by notice given at any
time after October 3, 1995, but if Oce does so, it may be
required to make a tender offer on terms specified in the note
Purchase Agreement for all shares of Common Stock following the
fiscal year in which the anniversary of the giving of notice
occurs.
Mr. Watkins is President and Chief Executive Officer
of the Company. Mr. Friel is Chairman of the Board of
Directors of the Company but is not an employee of the Company.
Messrs. Sullivan and Weil are also non-employee directors of
the Company. The Voting Trustees have no current intention to
change the composition of the Board of Directors of the
Company.
Except as set forth above, there are no arrangements
or understandings among Oce and the Voting Trustees with
respect to the election of directors or other matters.
(2) Includes 203,300 shares which officers as a group have
the right to acquire upon the exercise of immediately
exercisable stock options, including 110,000 exercisable by Mr.
Watkins and 77,500 exercisable by Mr. Baker.
(3) Does not include shares held by Oce.
(4) Does not include shares held by the Voting Trustees
in their capacity as such.
The Prudential Insurance Company of America
("Prudential"), Three Gateway Center, 100 Mulberry Street,
Newark, New Jersey 07102, owns all 1,428,572 outstanding shares
of the Company's Class A Common Stock, no par value ("Class A
Stock"). The Class A Stock, is convertible share-for-share at
any time into shares of the Company's Common Stock and
thereafter would constitute 30% of the outstanding Common
Stock.
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Agreement with Majority Shareholder. On October
------------------------------------
28, 1991, the Company and Oce entered into a Note Purchase
Agreement which provided up to $1,500,000 of financing to the
Company for the purpose of paying for expenditures or
reimbursing the Company for expenditures incurred by the
Company to offer its Engineering Change Control and imaging
products on the IBM AS/400 Series, or other IBM computer
platform, installing, debugging and supporting initial
installations and expenses incurred in marketing and selling
the resulting IBM-based products. The IBM project was
completed and sales of products began in fiscal 1993. Under the
Agreement, the first $1 million of notes purchased by Oce bore
interest at 7% per annum, the next $250,000 at 9% per annum,
and the remaining $250,000 at a variable rate established at
9%.
Under certain circumstances, the Company was entitled
to redeem the notes in exchange for shares of mandatorily
redeemable preferred stock.
On August 26, 1992, the Company exercised its option
and issued 10,000 shares of 7% Class One Preferred Stock to Oce
in redemption of the $1,000,000 principal amount of notes then
outstanding.
On April 30, 1993, the Company issued an additional
5,000 shares of Class One Preferred Stock to Oce for $500,000;
all such shares carry a 9% dividend.
Annual dividends on the Preferred Stock for any fiscal
year are cumulative to the extent of 50% of the Company's net
after-tax earnings, as defined, for such year. At April 30,
1995, $64,685 Preferred Stock dividends were accrued.
Annually, beginning in 1995, the Company is required to redeem
the Preferred Stock at a price of $100 per share plus
accumulated dividends in an amount equal to a specified portion
of after-tax earnings, as defined. Unless dividends on the
Preferred Stock are current, the Company may not declare a
dividend on, or repurchase any of, the Common Stock.
Pursuant to the Note Purchase Agreement, upon the
conversion of the Class B Stock into Common Stock on April 27,
1992, Oce, the Company and four directors elected by the holders
of Common Stock, entered into the Voting Trust Agreement.
2,180,854 shares of Common Stock held by Oce were transferred to
Kent P. Friel, Scott D. Watkins, John W. Weil, and Dennis J.
Sullivan, Jr. by Oce-van der Grinten, N.V. as Voting Trustees.
This Agreement is irrevocable for a period of ten years, except
for certain circumstances. (See Item 12.)
(b) Legal Services. James M. Anderson, Secretary of
---------------
the Company, is a partner in the law firm of Taft, Stettinius &
Hollister, which firm acts as General Counsel to the Company.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS
ON FORM 8-K
(a) (1) The following financial statements for ACCESS
Corporation, included on pages 10 through 18 of the
1995 Annual Report to the Shareholders of the Company,
which pages are filed as part of this Annual Report on
Form 10K and incorporated herein by reference:
(i) Independent Auditors' Report;
(ii) Balance sheets as of April 30, 1995 and
April 30, 1994;
(iii) Statements of Operations for the
years ended April 30, 1995, April 30, 1994
and April 30, 1993;
(iv) Statements of Capital Stock and Other
Stock-holders' Equity for the years ended
April 30, 1995, April 30, 1994 and April 30,
1993;
(v) Statements of Cash Flows for the years
ended April 30, 1995, April 30, 1994 and
April 30, 1993; and
(vi) Notes to Financial Statements.
(2) Exhibits: Refer to EXHIBIT INDEX on page X-l of
this Annual Report on Form 10-K.
(b) Reports on Form 8-K: None.
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS
FILED PURSUANT TO SECTION 15(D)
For the information of the Commission, furnished with this
Annual Report on Form 10-K are four copies of the Company's 1995
Proxy Statement and form of proxy relating to its Annual Meeting
of Shareholders to be held August 21, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Section 15(d) of
the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the
undersigned, there unto duly authorized, as of the 24th day of
July, 1995.
ACCESS CORPORATION
By SCOTT D. WATKINS
_________________________________
Scott D. Watkins
President, Chief Executive 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 as of the 24th day of July,1995.
<PAGE>
SCOTT D. WATKINS
____________________________ President, Chief Executive
Scott D. Watkins Officer
NEWTON D. BAKER
_____________________________Executive Vice President
Newton D. Baker and Treasurer (Principal
Financial and Accounting
Officer), Director
/s/ KENT P. FRIEL* Chairman of the Board
____________________
Kent P. Friel
/s/ JAMES H. HARDIE* Director
____________________
James H. Hardie
/s/ ROBERT J. KALTHOFF* Director
____________________
Robert J. Kalthoff
/s/ JOHN W. WEIL* Director
____________________
John W. Weil
/s/ DENNIS J. SULLIVAN, JR.* Director
____________________
Dennis J. Sullivan, Jr.
* Pursuant to Power of Attorney
<PAGE>
By NEWTON D. BAKER
_____________________
Newton D. Baker
Attorney-In-Fact
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1995
<PERIOD-END> APR-30-1995
<CASH> 883,487
<SECURITIES> 0
<RECEIVABLES> 1,033,911
<ALLOWANCES> 18,100
<INVENTORY> 412,865
<CURRENT-ASSETS> 2,493,153
<PP&E> 2,889,001
<DEPRECIATION> 2,646,833
<TOTAL-ASSETS> 5,129,248
<CURRENT-LIABILITIES> 758,374
<BONDS> 0
<COMMON> 488,182
1,500,000
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 5,129,248
<SALES> 6,041,782
<TOTAL-REVENUES> 6,041,782
<CGS> 3,689,032
<TOTAL-COSTS> 5,809,996
<OTHER-EXPENSES> 3,805
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,911
<INCOME-PRETAX> 196,070
<INCOME-TAX> 66,700
<INCOME-CONTINUING> 129,370
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 129,370
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
<TABLE>
ACCESS CORPORATION
CALCULATION OF NET EARNINGS (LOSS) PER COMMON SHARE
AND COMMON SHARE EQUIVALENTS
YEAR ENDED APRIL 30
-----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
Net earnings (loss) applicable to
Common Share and Common Share
Equivalents:
Net earnings (loss) Before
Cumulative Effect of change in
Accounting Principle $ 153,524 $ 614,008 ($ 182,731) ($ 615,239) $ 129,370
Cumulative Effect as of May 1,1992
of a change in the Accounting for
income taxes, net of valuation
allowance of $2,220,000 $ 730,000
Preferred Dividend $ 64,685
Net earnings (loss) applicable to
Common Shares and Common
Share Equivalents After
Cumulative Effect and
Preferred Dividend $ 153,524 $ 614,008 $ 547,269 ($ 615,239) $ 64,685
---------- ---------- ----------- ------------ ----------
Calculation of primary net earnings
(loss) per Common Share and
Common Share Equivalents:
Average number of Common Shares
and Common Share Equivalents
outstanding; 4,809,236 4,865,559 4,865,559 4,865,559 4,865,559
---------- ---------- ----------- ----------- ----------
Average number of Common Shares
and Common Share Equivalents
outstanding; 4,809,236 4,865,559 4,865,559 4,865,559 4,865,559
---------- ---------- ----------- ----------- ----------
Primary net earnings (loss) per
Common Share and Common Share
Equivalent Before Cumulative Effect
of change in Accounting Principle $ 0.03 $ 0.13 ($ 0.04) ($ 0.13) $ 0.01
Cumulative Effect of change in
Accounting Principle per
Common Shares and
Common Share Equivalents $ 0.15
Primary net earnings (loss) per Common
Share and Common Share Equivalent
After Cumulative Effect of change
in Accounting Principle $ 0.03 $ 0.13 $ 0.11 ($ 0.13) $ 0.01
</TABLE>
<TABLE>
Contents
<CAPTION>
<S> <C>
Letter to Shareholders 2
Selected Financial Data 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Independent Auditors' Report 10
Statements of Operations 11
Statements of Capital Stock and Other
Stockholder's Equity 12
Balance Sheets 13
Statements of Cash Flows 14
Notes to Financial Statements 15
About the Company 19
ACCESS Directors, Officers and Shareholder
Information 21
</TABLE>
<PAGE>
To Our Shareholders:
ACCESS' fiscal 1995 produced significant improvements
in our financial health as well as the quality of our
products and services. Net profits, operating profits,
gross margins, and cash balances all showed dramatic
increases over fiscal year 1994. At the same time, we
eliminated our bank debt entirely and continued our
commitment to raising the quality of our products and
services. This all occurred during a year of very difficult
market conditions that saw a major competitor, with revenues
three times that of ACCESS, close its doors.
Financially, your company ended the year in better
health than it has in many years. Net income after tax for
fiscal 1995 was $129,000, a significant improvement over our
net after tax loss of $615,239 for the prior year.
Similarly, fiscal 1995 produced an operating income of
$231,785 versus an operating loss in fiscal 1994, for a
$791,000 improvement in the Company's operating income
between fiscal 1994 and 1995.
The Company's gross margins, calculated before the
amortization of the IBM AS/400 software development,
continue their upward trend. Gross margins before
amortization reached 50% in fiscal 1995, versus 49% in
fiscal 1994, and 42% in fiscal 1993.
For the second year in a row ACCESS' cash position
showed dramatic improvement. I reported to you last year
that the Company had reduced its bank borrowing from
approximately $960,000 at the beginning of fiscal 1994 to
under $100,000 at the end of the year. In this past year,
the Company generated another $884,000 cash from operations,
completely repaid our bank debt in July, and ended the year
with a cash balance in excess of $880,000. That's more than
a $1.8 million improvement in the Company's cash position
within two years.
In response to an overall software market characterized
by dropping prices and increased competition, we continue to
reduce our fixed costs of operation. As a result, ACCESS'
break-even volume, the minimum amount of revenue that the
Company needs to cover its operating costs, was 45% lower in
fiscal 1995 than it was in fiscal 1994.
These reductions in operating costs also reflect a
continued improvement in the Company's productivity as
measured by revenue per employee. Productivity increased by
5% to $118,000 revenue per employee in fiscal year 1995, up
from $112,000 per employee in fiscal 1994, and $100,000 per
employee in fiscal 1993.
<PAGE>
Not everything proceeded as planned for fiscal 1995.
Total revenue for the Company dropped by 12% versus a year
ago, which was attributable to a reduction in revenue from
our TDMS software business and our discontinued
manufacturing operation. This drop in TDMS revenue was
almost entirely due to deliveries to a large TDMS customer
in fiscal year 1994, which did not recur in fiscal year
1995. However, TDMS bookings for fiscal year 1995 increased
by 4% over fiscal year 1994. Service revenue continues to
show healthy increases in revenue (+5%) and bookings (+6%)
versus last year. Fiscal 1995 also saw the elimination of
bookings and revenue from the Company's unprofitable
contract engineering and manufacturing business that we
discontinued during fiscal 1994.
Growth in Service Business:
ACCESS' service business, exclusive of manufacturing,
continues to be a strong and consistently growing part of
our company. Revenue, bookings, gross profit and
contribution income all improved over fiscal 1994. As noted
above, total service revenue increased by 5%, bookings
increased by 6%, and service gross profit increased by 8%
versus last year. Our focus on Third Party Maintenance over
the past several years has resulted in even more dramatic
improvements for fiscal 1995, with a revenue increase of 53%
over fiscal 1994. Our customer base in Third Party
Maintenance increased by over 150%. Both software and
hardware maintenance revenue increased from fiscal 1994.
We are aggressively pursuing new Third Party
Maintenance opportunities, including potential acquisitions.
Our service offering is extremely flexible and of very high
quality, accommodating the needs of each customer according
to its unique situation. This flexibility and quality
combined with our nationwide service coverage means we can
focus on special-needs customers, and vendors of moderate
size, competing effectively with much larger Third Party
Maintenance providers.
Although we are constantly watching the bottom line, we
believe that our success in the service business has come
from our constant and relentless focus on total customer
satisfaction.
<PAGE>
TDMS Software Business:
As I discussed in last year's report, the market for
Technical Document Management Systems continues to evolve at
a rapid pace. Competitors continue to enter the TDMS market
place with new products as well as with enhanced products
from related product categories. This constant competitive
pressure, combined with the ever improving price performance
of computer hardware, exerts a tremendous downward force on
industry pricing. This trend has been clear to us for
several years, and we have responded by focusing on reducing
the fixed costs associated with delivery of our products.
Consistent, year-to-year decreases in pricing can have
detrimental impacts on any organization. In fact, we
believe prices will continue to fall over the coming year.
However, our market research tells us that at a certain, yet
to be attained, price level the market for our TDMS products
could increase significantly.
Many companies in our target industries are starting
with simpler systems than in the past, at a substantially
lower initial investment. As these first systems prove
themselves, our customers are purchasing additional software
licenses and functionality as they expand the systems to
other parts of the company. We feel this trend bodes well
for the future. The lower cost of the initial systems will
broaden the number of companies that will find it
economically attractive to buy TDMS software. The expansion
of installed systems provides a continual source of revenue
for ACCESS. This "add-on" revenue has become such a
substantial portion of our TDMS revenue, that we recently
added sales staff dedicated to handling the needs of our
existing customers.
During fiscal 1995, ACCESS focused much of our
development investment on improving the quality, reliability
and performance of our UNIX and AS/400 products. Throughout
the year this has continuously increased customer
satisfaction with these products. Although work in this
area is never done, we believe our software products to be
of exceptionally high quality. This will provide a solid
foundation on which to build additional functionality, and
to continue to pursue that price level at which we can sell
our software in high volume, while still maintaining
profitability.
<PAGE>
Fiscal Year 1996:
Over the last two fiscal years, the Company has
dramatically strengthened its financial position. Our
challenge for fiscal 1996 will be to increase our investment
in marketing our high quality products and services, while
at the same time maintaining our strong financial
performance. The long lead time from investment to
realization of return makes this doubly difficult. Our
strategy is to expand our sales and marketing operation as
quickly as our resources will prudently allow. We will
continue our focus on building profitable Third Party
Maintenance business through sales as well as acquisition.
The mission for our TDMS software operation is to take
advantage of the high-quality products that we have
developed and to identify specific market segments where the
Company's product functionality has the optimal fit to the
customer's needs. We expect fiscal 1996 to be a year in
which the Company establishes a strong basis for growth in
our Third Party Maintenance and TDMS software business for
the coming years.
We will continue to pursue a management philosophy that
emphasizes quality over expedience, customer service and
value over the quick fix, and profitable revenue over rapid
revenue growth. We believe that this approach will allow us
to prosper over the long run by building solid, long term,
and profitable relationships with our customers.
Sincerely,
SCOTT D. WATKINS
- ----------------
Scott D. Watkins
President and Chief Executive Officer
<PAGE>
<TABLE>
ACCESS CORPORATION
SELECTED FINANCIAL DATA
FOR THE YEARS ENDED April 30 April 30 April 30 April 30 April 30
1995 1994 1993 1992 1991
Summary of Earnings (Loss) from Operations
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net Sales $6,041,782 $6,896,352 $7,020,074 $8,744,752 $8,562,117
Gross Profit 2,352,750 2,573,260 2,871,200 3,836,484 3,577,312
Gross Profit as percentage
of net sales 39% 37% 41% 44% 42%
Interest Expense 31,911 26,450 53,246 7,543 83,735
Net Earnings (Loss)from
Continuing Operations 129,370 (551,376) (23,947) 889,808 156,322
Net Earnings (Loss)before
cumulative effect of
accounting change 129,370 (615,239) (182,731) 614,008 153,524
Cumulative effect of
accounting change 730,000
Net Earnings (Loss) 129,370 (615,239) 547,269 614,008 153,524
Preferred Dividend 64,685 - - - -
Income(loss)applicable to
common shares $ 64,685 $ (615,239) $ 547,269 $ 614,008 $ 153,524
---------- ----------- ---------- ---------- ----------
Average common and common
share equivalents
outstanding 4,865,559 4,865,559 4,865,559 4,865,559 4,809,236
Per Common Share Statistics
Net Earnings (Loss) from
Continuing Operations $ 0.01 $ (0.11) $ (0.00) $ 0.18 $ 0.03
Net Earnings (Loss)before
cumulative effect of
accounting change 0.01 (0.13) (0.04) 0.13 0.03
Cumulative effect of
accounting change 0.15
---------- ----------- ----------- ---------- ----------
Net Earnings (Loss) $ 0.01 $ (0.13) $ 0.11 $ 0.13 $ 0.03
---------- ----------- ----------- ---------- ----------
Balance Sheet Data
Working Capital $1,734,779 $ 695,922 $ 342,444 $1,193,459 $1,194,232
Working Capital Ratio 3.3:1 1.7:1 1.1:1 1.5:1 1.9:1
Total Assets 5,129,248 5,132,511 7,242,855 5,027,295 3,260,231
Long-term debt 250,000
Mandatorily redeemable
preferred stock 1,500,000 1,500,000 1,500,000
Capital Stock and Other
Stockholders' equity $2,483,512 $2,418,826 $3,035,419 $2,488,150 $1,780,178
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
NET REVENUES
(In thousands)
1995 Change 1994 Change 1993
Net Revenues $6,042 (12%) $6,896 (2%) $7,020
ACCESS Corporation has two primary lines of business.
Over the years the Company has built a substantial,
continuing field maintenance business. This business
services, on a nationwide basis, hardware and, on a national
and international basis, software for the Company's
installed base of customers and third parties. The Company
is also a leader in the Technical Document Management
Systems (TDMS) software business. In this line of business,
the Company develops and markets software solutions for its
customers' technical processes. TDMS has the potential for
substantial growth in revenue and profits in that it serves
a potentially large, worldwide market opportunity.
The Company continues to have a stable rate base of
revenue and profits from its service operations. Service
sales are comprised of hardware and software support to the
Company's installed base of customers and some third-party
maintenance contracts. Service sales were $4,538,900,
$4,320,300 and $4,141,200 in fiscal years 1995, 1994 and
1993, respectively. These sales made up 75%, 63% and 59% of
total revenues in these fiscal years, respectively. The
increase in the percentage of total sales reflects the
decrease in sales in the Technical Document Management
Systems (TDMS) line of business and the discontinuance of
its Hardware Engineering Servies and Contract Manufacturing
operations.
The fluctuations in the Company's revenues overall are
a result of the changes in its TDMS operations. System
sales from these operations were $1,275,000, $2,189,200, and
$2,490,700 in fiscal years 1995, 1994 and 1993,
respectively. These sales represented 21%, 32% and 35% of
total revenues, respectively. The reduction between 1994
and 1995 sales was the result of the completion of a major
order to deliver a system to eleven sites in fiscal 1994.
In fiscal 1995 there was no comparable order. In 1993
revenues included over $360,000 of revenue which represented
cost reimbursement for integration of the Company's software
with WANG's VS system. Revenues from the Company's TDMS
operations in 1994 were up slightly from the 1993 levels,
excluding the WANG system integration cost recovery revenue.
Effective at the beginning of the third quarter of
fiscal 1994, the Company discontinued its operations with
respect to its Hardware Engineering Services and Contract
Manufacturing line of business. It is limiting its
manufacturing to supplying cards for the micrographic
equipment sold in prior years and the parts required to
support existing equipment. The Company has completed or
transferred to third parties all contracts and commitments
for its Engineering and Contract Manufacturing customers.
<PAGE>
Revenues from the continuing manufacturing operations,
a support group to the Service line of business, were
$227,800, $386,800 and $388,200 in fiscal years 1995, 1994
and 1993, respectively which were 4%, 5% and 6% of the total
revenues in these fiscal years, respectively.
In fiscal year 1995 sales to the U.S. commercial market
continued to exceed those to the federal government and
international markets. Sales to the U.S. commercial market
represented 78% of the total revenue in fiscal 1995,
compared with 73% in fiscal 1994 and 78% in fiscal 1993.
The federal government accounted for 18% of total revenue in
fiscal 1995, compared with 17% in 1994 and 15% in 1993.
This reflects the Company's emphasis on marketing to the
commercial market. Sales to international markets accounted
for 4% of fiscal 1995 revenues, compared with 10% in 1994
and 7% in 1993.
Gross Profits
(In Thousands) 1995 Change 1994 Change 1993
Gross Profits $2,352.8 (9%) $2,573.3 (10%) $2,871.2
Percentage of net revenues 39% 37% 41%
The above Gross Profits for 1995, 1994 and 1993 were
net of $673,700, $839,900 and $112,300 of amortization,
respectively. Service gross margins of 55% have been
relatively comparable with the fiscal 1994 and 1993 levels
of 53% and 52%, respectively. TDMS gross margins before
amortization in fiscal 1995 were 43%, which was a decrease
from fiscal 1994 level of 59% and an increase from the
fiscal 1993 level of 40%. TDMS gross margins after
amortization in fiscal 1995 were (10%), which was a decrease
from fiscal 1994 and 1993 levels of 20% and 35%,
respectively. Manufacturing gross margins of 1% in fiscal
year 1995 were more favorable than those reported in fiscal
years 1994 and 1993 of (45%) and (35%), respectively.
Selling, general and administrative expenses decreased
from $2,008,000 in fiscal 1994 to $1,528,000 in fiscal 1995.
The primary contributor to this decrease in expenses was the
reduction in personnel and related expenses.
Engineering, Research and Development (R&D)
expenditures were incurred for maintaining and upgrading
existing products and developing new products. Engineering
and development expenses for the current period decreased
from $1,124,800 in fiscal 1994 to $592,500 in fiscal 1995
because the Company completed the development work on the
AS/400 in fiscal 1994. Fiscal 1995 operating expenses for
R&D were 47% lower than fiscal 1994 and 12% higher than
fiscal 1993.
The Operating income of $196,400 increased $680,700 in
fiscal 1995. The Company's gross margin improved 2% in
fiscal 1995. The Company also decreased operating expenses
by $1,011,800 in fiscal 1995. Even though revenues
declined, these changes in operations and improved gross
margins resulted in the above increase in the operating
income in fiscal 1995.
The Company accrued $66,700 of income taxes in fiscal
1995. This expense resulted in a reduction in deferred
income tax benefits accrued in Fiscal 1993 when the Company
adopted Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes".
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
In fiscal 1995, the Company provided approximately
$1,047,500 of cash from operating activities. The Company
eliminated $71,800 of its bank borrowing. The net result
was a cash balance of $883,500 and zero bank borrowing at
April 30, 1995.
Accounts receivable increased approximately $124,200
during fiscal year 1995. This increase is the result of a
steady flow of sales throughout fiscal 1995.
Inventories at April 30, 1995 decreased approximately
$103,200 from the balance at April 30, 1994. This decrease
is primarily due to the delivery of finished products in the
manufacturing area and completion of projects for the TDMS
product line.
Accounts Payable at April 30, 1995 decreased
approximately $62,500 from April 30, 1994. This decrease
reflected primarily a reduction of spending throughout the
Company.
The Company requires progress payments on its large
TDMS System orders based on predetermined events. Reported
as current liabilities, these progress payments totaled
approximately $339,500 at April 30, 1995, which represents
an increase of approximately $30,200 from April 30, 1994.
Working capital on April 30, 1995 was $1,734,800,
compared with $695,900 on April 30, 1994. The Company has a
loan agreement which provides for a line of credit through
April 7, 1996 (See Note 2 of the Notes to the Financial
Statements). The bank line of credit was $400,000 at April
30, 1995, of which none was outstanding.
The Company's plans are structured so that revenues
from its AS/400 and UNIX products, in combination with those
from its recurring service business, are expected to provide
the cash flow required to operate the Company.
The Company's assets currently include $1,742,600 of
net realizable value for the computer software development
of the AS/400 product line. This software is currently
being amortized at the greater of 33% of the AS/400 software
revenue or $56,100 per month. These computer software
development costs will be fully amortized no later than
November 1997. At this point in time, there is a good
market for the Company's AS/400 software product line.
However, there is no assurance that this market will
continue through November 1997. If it becomes apparent that
net realizable value of this asset on the Company's books
will not be supported by sufficient future revenue, the
Company will write down the book value of the software and
take this write-down as an expense in the period in which it
occurs.
<PAGE>
Independent Auditors' Report
Stockholders and Board of Directors:
We have audited the accompanying balance sheets of
ACCESS Corporation as of April 30, 1995 and 1994, and the
related statements of operations, of capital stock and
other stockholders' equity and of cash flows for each of the
three years in the period ended April 30, 1995. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on
the financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of ACCESS Corporation as of April 30,
1995 and 1994, and the results of its operations and its
cash flows for each of the three years in the period ended
April 30, 1995, in conformity with generally accepted
accounting principles.
As discussed in Note 6 to the financial statements, in 1993
the Company changed its method of accounting for income
taxes to conform with Statement of Financial Accounting
Standards No. 109.
DELOITTE & TOUCHE LLP
- ---------------------
Deloitte & Touche LLP
Cincinnati, Ohio
May 31, 1995
<PAGE>
<TABLE>
ACCESS CORPORATION
STATEMENT OF OPERATIONS
FOR THE YEARS ENDED APRIL 30, 1995, 1994 AND 1993
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
REVENUE:
System Sales $1,274,996 $2,189,248 $2,490,713
Service 4,538,938 4,320,323 4,141,187
Manufacturing 227,848 386,781 388,183
---------- ---------- ----------
Total 6,041,782 6,896,352 7,020,074
----------- ---------- ----------
COST:
System sales, exclusive of amoritization shown
separately below 729,965 902,566 1,502,179
Service 2,059,347 2,020,136 2,008,586
Manufacturing 226,016 560,486 525,825
---------- ---------- ----------
Total 3,015,328 3,483,188 4,036,590
---------- ---------- ----------
GROSS PROFIT BEFORE AMORTIZATION 3,026,454 3,413,164 2,983,484
AMORTIZATION OF COMPUTER SOFTWARE COST 673,704 839,904 112,284
---------- ----------- ---------
GROSS PROFIT 2,352,750 2,573,260 2,871,200
OPERATING EXPENSES:
Selling, general and administrative 1,528,460 2,007,953 2,333,196
Engineering, research and development 592,504 1,124,789 528,268
---------- --------------------
OPERATING INCOME (LOSS) 231,786 (559,482) 9,736
OTHER INCOME(EXPENSE) (3,805) 24,047 15,363
INTEREST EXPENSE (31,911) (26,450) (53,246)
---------- ---------- ----------
EARNINGS (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 196,070 (561,885) (28,147)
INCOME TAXES (BENEFIT) (Note 6) 66,700 (10,509) (4,200)
----------- --------- ---------
NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS 129,370 (551,376) (23,947)
DISCONTINUED OPERATIONS (Note 9):
Net earnings (loss) from operations discontinued E&M
Business (less applicable income tax benefit of
$81,800) (73,812) (158,784)
Income on disposal of discontinued operations 9,949
------------ --------- ---------
EARNINGS (LOSS) BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE 129,370 (615,239) (182,731)
CUMULATIVE EFFECT AS OF MAY 1, 1992 OF A CHANGE IN
THE ACCOUNTING FOR INCOME TAXES, NET OF VALUATION
ALLOWANCE OF $2,220,000 (Note 6) 730,000
---------- ----------- --------
NET EARNINGS (LOSS) 129,370 (615,239) 547,269
PREFERRED DIVIDEND 64,685 - -
---------- --------------------
INCOME (LOSS) APPLICABLE TO COMMON SHARES $ 64,685 $ (615,239)$ 547,269
---------- ---------- ----------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES 4,865,559 4,865,559 4,865,559
PER COMMON SHARE AND COMMON SHARE EQUIVALENT (Note 4):
Net earnings (loss) from continuing operations $ 0.01 $ (0.11) $ (0.00)
Net earnings(loss) before cumulative effect of change in
accounting principle 0.01 (0.13) (0.04)
Cumulative effect of accounting change - - 0.15
---------- ---------- ----------
Net earnings (loss) $ 0.01 $ (0.13)$ 0.11
---------- ---------- ----------
<FN>
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
ACCESS CORPORATION
STATEMENTS OF CAPITAL STOCK AND OTHER STOCKHOLDERS' EQUITY
APRIL 30, 1995, 1994 AND 1993
Treasury Common Class A Common
--------------- ----------------- --------------
Shares Amount Shares Amount Shares Amount
<S> <C> <C> <C> <C> <C> <C>
BALANCE, Apr 30, 1992 16,270 $(15,383) 3,453,257 $345,325 1,428,572 $142,857
Net earnings
------ -------- --------- -------- --------- --------
BALANCE, Apr 30, 1993 16,270 (15,383) 3,453,257 345,325 1,428,572 142,857
Deferred compensation under
restricted stock plan
Net loss
------ -------- --------- -------- --------- --------
BALANCE, Apr 30, 1994 16,270 (15,383) 3,453,257 345,325 1,428,572 142,857
Class One Preferred Stock
Dividends
Net earnings
------ --------- --------- -------- --------- --------
BALANCE, Apr 30, 1995 16,270 $(15,383) 3,453,257 $345,325 1,428,572 $142,857
<FN>
See notes to financial statements.
</TABLE>
<TABLE>
ACCESS CORPORATION
STATEMENT OF CAPITAL STOCK AND OTHER STOCKHOLDERS'EQUITY
APRIL 30, 1995, 1994 AND 1993
<CAPTION>
Additional Paid-in Retained Earnings
Capital (Deficit)
<S> <C> <C>
BALANCE, APR 30, 1992 $10,826,201 $(8,810,849)
Net Earnings 547,269
----------- ------------
BALANCE, APR 30, 1993 10,826,201 (8,263,580)
Deferred compensation under
restricted stock plan ( 1,354)
Net Loss (615,239)
------------ ------------
BALANCE, APR 30, 1994 10,824,847 (8,878,819)
Class One Preferred Stock
dividends (64,685)
Net earnings 129,370
------------ ------------
BALANCE, APR 30, 1995 $10,760,162 $(8,479,449)
----------- ------------
<FN>
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
ACCESS CORPORATION
BALANCE SHEETS
APRIL 30, 1995 AND 1994
<CAPTION>
1995 1994
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 883,487 $ 3,500
Accounts receivable, less allowance
for doubtful accounts of $18,100 in 1995
and $17,480 in 1994 (Note 2): 1,015,811 891,600
Inventories (Note 2):
Raw materials and purchased parts 79,495 92,718
Work-in-process 318,598 365,470
Finished goods 14,772 57,840
---------- ----------
Total inventories 412,865 516,028
Prepaid expenses 68,990 106,662
Deferred income tax, net of valuation
allowance of $300,000 (Note 6) 112,000 112,000
---------- ----------
Total current assets 2,493,153 1,629,790
EQUIPMENT AND LEASEHOLD
IMPROVEMENTS (Note 2):
Computer hardware and software 1,952,220 2,280,658
Machinery and equipment 503,337 503,338
Office and service equipment 313,431 539,717
Leasehold improvements 5,000 5,000
Tools, dies and fixtures 115,013 115,013
---------- ----------
Total 2,889,001 3,443,726
Less accumulated depreciation 2,646,833 3,075,334
---------- ----------
Net equipment and leasehold 242,168 368,392
improvements
COMPUTER SOFTWARE COSTS, net of
accumulated amortization of $1,625,891 in
1995 and $952,188 in 1994 1,742,627 2,416,329
---------- ----------
DEFERRED INCOME TAX BENEFIT,
net of valuation allowance of $2,134,000 in
1995 and 1994 (Note 6) 651,300 718,000
---------- ----------
TOTAL $5,129,248 $5,132,511
---------- ----------
<FN>
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
LIABILITIES AND CAPITAL STOCK AND
OTHER STOCKHOLDERS' EQUITY 1995 1994
<S> <C> <C>
CURRENT LIABILITIES:
Note payable - bank (Note 2) $ - $ 71,807
Accounts payable 95,864 158,345
Accrued salaries, wages and commissions 120,054 56,721
Accrued taxes 24,429 74,269
Accrued warranty expense 44,275 44,783
Other accrued liabilities 77,683 144,691
Advances from customers 339,456 309,305
Capital leases 56,613 73,947
---------- ----------
Total current liabilities 758,374 933,868
PREPAID MAINTENANCE CONTRACTS 299,578 198,971
CAPITAL LEASES (Note 8) 23,099 80,845
MANDATORY REDEEMABLE
PREFERRED STOCK (Note 3) 1,500,000 1,500,000
Preferred Dividends 64,685
CAPITAL STOCK AND OTHER
STOCKHOLDERS' EQUITY (Notes 2,4):
Capital Stock:
Common Stock, no par value,authorized,
8,000,000 shares; issued and outstanding
3,453,257 shares 345,325 345,325
Class A Common Stock, no par value,
authorized 2,000,000 shares; issued and
outstanding 1,428,572 shares 142,857 142,857
Additional paid-in capital 10,760,162 10,824,847
Deficit from April 1, 1985 (8,749,449) (8,878,819)
16,270 Common Stock shares in treasury,
at cost (15,383) (15,383)
---------- ----------
Total capital stock and other
stockholders' equity 2,483,512 2,418,827
---------- ----------
TOTAL $5,129,248 $5,132,511
---------- ----------
</TABLE>
<PAGE>
<TABLE>
ACCESS CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED APRIL 30, 1995, 1994 AND 1993
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ 129,370 $ (615,239) $ 547,269
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Amortization 673,704 839,904 112,284
Depreciation 139,819 254,943 137,319
Deferred income taxes 66,700 (830,000)
Deferred compensation under restricted stock plan (1,354)
Loss (gain) on disposal of fixed assets 7,028 (3,608) 3,119
Prepaid maintenance contracts 100,606 66,704 21,228
Change in assets and liabilities:
Accounts receivable (124,211) 1,106,941 (598,637)
Inventories 103,163 60,411 594,321
Prepaid expenses 37,672 70,470 (52,471)
Accounts payable (62,481) (133,824) (621,927)
Accrued liabilities (54,023) (283,155) 58,726
Advances from customers 30,151 (449,309) 39,498
---------- ---------- ----------
Net cash provided by (used in) operating activities 1,047,498 912,884 (589,271)
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Computer software costs (2,120,999)
Capital additions (22,779) (84,316) (83,335)
Proceeds from disposal of fixed assets 2,156 22,459 100
---------- ---------- ----------
Net cash (used in) investing activities (20,623) (61,857) (2,204,234)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds (repayments) on bank line of credit (71,807) (848,959) 920,766
Payments on capital leases (75,081) (52,068)
Proceeds from note payable 750,000
Proceeds from redeemable preferred stock 500,000
---------- ---------- ----------
Net cash provided by (used in) financing (146,888) (901,027) 2,170,766
activities ---------- ---------- ----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 879,987 (50,000) (622,739)
CASH AND CASH EQUIVALENTS, Beginning of year 3,500 53,500 676,239
---------- ---------- ----------
CASH AND CASH EQUIVALENTS, End of year $ 883,487 $ 3,500 $ 53,500
---------- ---------- ----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid for interest $ 31,911 $ 26,616 $ 32,531
Cash paid for income taxes 13,500
<FN>
NON-CASH TRANSACTION - During 1993, notes payable of $1,000,000 were converted into
redeemable preferred stock (Note 3). During 1994, the Company entered into capital leases
totaling $206,860 (Note 8).
See notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS ACCESS Corporation
for the years ended April 30, 1995, 1994 and 1993
NOTE 1: A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
The Company services hardware and software for its
installed base of customers and third parties. It also
develops and markets software for the electronic storage,
control and processing of technical documentation.
Revenue Recognition
Revenues from the sale of new systems are recognized
upon shipment. If there are services performed, revenue is
recognized at the time of customer acceptance.
Revenues resulting from research and development
arrangements (Note 5) are recognized as the related costs
are incurred.
Revenue from prepaid maintenance agreements is
recognized ratably over the life of the maintenance
contracts.
Inventories
Inventories comprised of material, labor, and related
overhead expenses are stated at the lower of cost (first-in,
first-out method) or market.
Equipment and Leasehold Improvements
Equipment and leasehold improvements are recorded at
cost and depreciated over their estimated useful lives using
the straight-line method. Computer software is depreciated
over three years or its useful life, whichever is less.
Computer Software Development Costs
Computer software development costs are recorded in
accordance with Statement of Financial Accounting Standards
No. 86, Accounting for the Costs of Computer Software to be
Sold, Leased or Otherwise Marketed. Costs incurred up to
the point of establishing technological feasibility are
expensed currently. Costs incurred after establishment of
technological feasibility were capitalized. Amortization of
these capitalized costs began in March 1993 when the
products were released to customers and are to be amortized
over a period not to exceed five years. Amortization
expense was $673,704, $839,904 and $112,284 for fiscal years
1995, 1994 and 1993, respectively.
Income Taxes
Effective May 1, 1992, the Company adopted Statement of
Financial Accounting Standards No. 109, which was issued in
February, 1992. The Company previously accounted for income
taxes in accordance with Statements of Financial Accounting
Standards No. 96.
Statement of Cash Flows
Cash and cash equivalents consist of cash on hand, cash
on deposit, and short-term investments with original
maturities less than ninety days.
Product Warranties
Under its product warranty policy, the Company has
agreed to replace certain parts or provide remedial service
during the designated warranty period. Costs associated
with these programs are determined on the basis of estimated
net future costs.
NOTE 2: BANK LINE OF CREDIT
The Company's current line of credit agreement
($400,000 as of April 8, 1994) extends through April 7,
1996. Borrowings under the agreement bear interest at one
percent over the prime rate, 9% at April 30, 1995. Borrowing
is based upon the levels (as set forth in the loan
agreement) of eligible accounts receivable. To secure any
borrowing, the Company has pledged accounts receivable,
inventories, fixed assets, and general intangibles. The
agreement contains restrictive and other covenants which
require the Company to maintain certain levels of
indebtedness to net worth, current ratio and cash flow from
operations. It also restricts new borrowings, capital
expenditures, and dividends on its capital stock.
<TABLE>
_______________________________________________________________________
1995 1994 1993
_______________________________________________________________________
<S> <C> <C> <C>
Maximum borrowings
during the year $127,354 $790,249 $1,159,319
Average outstanding balance
during the year $ 27,956 $302,652 $ 706,060
Weighted average
interest rate 9.1% 7.5% 7.5%
<FN>
(determined on a monthly basis)
</TABLE>
<PAGE>
NOTE 3: MANDATORILY REDEEMABLE PREFERRED STOCK AND NOTES PAYABLE
On October 28, 1991, the Company entered into a Note
Purchase Agreement with Oce-van der Grinten, N.V. ("Oce"),
which provided for borrowing by the Company of up to $1.5
million to fund a major software development project. On
August 26, 1992, $1,000,000 of then outstanding notes were
redeemed in exchange for 10,000 shares of mandatorily
redeemable preferred stock. In April 1993, the Company
issued to Oce an additional 5,000 shares of mandatorily
redeemable preferred stock for $500,000.
The preferred stock is divided into three series:
10,000 shares of 7% preferred stock ($1,000,000); 2,500
shares of 9% preferred stock ($250,000), and 2,500 shares of
variable rate preferred stock ($250,000). The variable rate
preferred stock was issued at the rate of 9%. Dividends on
the preferred stock for any fiscal year are cumulative only
to the extent of 50% of the Company's net after-tax
earnings, as defined, for such year.
Annually, beginning in 1995, the Company is required to
redeem the preferred stock at $100 per share plus
accumulated dividends in an amount equal to a specified
portion of after-tax earnings, as defined. Unless dividends
on the preferred stock are current, the Company may not
declare a dividend on its common shares or redeem or
purchase any of its common shares. Under the Note Purchase
Agreement, Oce agreed to limitations on the voting and
transfer of its stock (including the transfer of such stock
to a voting trust, the trustees of which are four of the
Company's directors) and Oce was released from its
obligation under certain circumstances to make a tender
offer for the Company's common stock. As of April 30, 1995,
the Company had authorized and issued a total of 15,000
shares of preferred stock.
NOTE 4: CAPITAL STOCK
In 1992 the Company entered into a Voting Trust
Agreement with Oce. The Voting Trust Agreement required Oce
to place the certificates for 1,904,763 of its Common Stock,
less 100 shares, into a voting trust. The trustees of the
trust are four directors of the Company. Pursuant to the
Voting Trust Agreement, the shares will be voted for matters
related to the election of directors in the discretion of
the voting trustees (except that such shares will be voted
for up to two director nominees designated by Oce) and on
all other matters by Oce pursuant to a proxy to be granted
to it by the voting trustees.
The Voting Trust Agreement is irrevocable for a period
of ten years and may be renewed, at the option of Oce, for
additional periods of not more than ten years each. The
Voting Trust Agreement will automatically terminate:
- with respect to any such shares sold to a party unrelated
to Oce
- upon the closing of any underwritten public offering of
Common Stock which results in not less than $10,000,000
in aggregate sales price of Common Stock having been
sold.
- upon the acquisition by any person of beneficial
ownership of as many or more shares of Common Stock as
are owned by Oce.
Further, the Voting Trust Agreement may be terminated
by notice by Oce to the voting trustees at anytime after
October 3, 1995.
If the Voting Trust Agreement is terminated by notice
or is not renewed on its tenth anniversary, Oce is required
to make a tender offer for any and all of the shares of
Common Stock (including any such shares issued on conversion
of Class A Common Stock) at a price per share not less than
that defined in the Note Purchase Agreement (Note 3) and
calculated using the Company's audited financial statements.
If the calculated price per share is less than zero, Oce is
not required to make a tender offer.
If the Voting Trust Agreement is terminated by notice
to the voting trustees, the tender offer is required not
later than six months after the end of the fiscal year in
which the first anniversary of the notice affected the
termination. If the agreement is not renewed, the tender
offer is required not later than six months after the end of
that fiscal year end.
Common Shares
Common Stock shareholders including the voting trustees
have equal voting rights. Actions by a majority of voting
trustees constitute the act of the voting trust. Class A
Common Stock shareholders have class voting privileges on
changes to the Articles of Incorporation and some other
specified matters but do not vote on the election of
directors. Class A Common Stock is convertible into Common
Stock, share for share, at any time.
Shares of Common Stock reserved for the conversion of
the Class A stock were 1,428,572 in 1995 and 1994.
<PAGE>
Earnings Per Share
The earnings (loss) per share computations are based on
the weighted average number of common shares outstanding
during the year adjusted for the effect of common share
equivalents where dilutive. Fully diluted earnings (loss)
per share are not presented as the effect of the dilution is
less than 3% or is anti-dilutive for the years 1993 - 1995.
Stock Option Plans
During the year ended April 30, 1994, the Company
adopted the 1993 incentive stock option plan covering
500,000 shares of its Common Stock. The Company also
amended the 1983, 1985 and 1991 plans to add provisions
providing that all outstanding stock options will become
exercisable upon the occurrence of a change of control or
similar event.
Options may be granted under the 1991 and 1993 plans
to officers and key employees of the Company. Additionally,
directors of the Company and other persons in business
relationships with the Company, such as independent
contractors and consultants, may be granted nonqualified
options under the 1991 plan. No further options may be
granted under the 1979, 1983 and 1985 plans. Incentive
stock options may be granted only to Company employees.
The option price under the plans may not be less than
the fair market value of the Common Stock at the date of
grant, as determined by the Board of Directors, which
administers the plans. All options granted under the 1985
plan and any incentive stock options granted under the 1979,
1983, 1991 and 1993 plans may not be exercised prior to one
year from date of grant and expire ten years from the date
of grant.
<TABLE>
Changes in stock options were as follows:
<CAPTION>
_______________________________________________________________________
Number of Shares
Reserved Granted
______________________________________________________________________
<S> <C> <C>
Balance, April 30, 1993 383,000 224,600
Reserved 500,000
Granted 325,000
Canceled (4,800) (113,800)
_________ ________
Balance,April 30,1994 878,200 435,800
Canceled (500) (73,400)
_________ _________
Balance, April 30, 1995 877,700 362,400
========= =========
</TABLE>
[FN]
At April 30, 1995, options to purchase 204,900 shares of
Common Stock were exercisable at $.50 to $5.25 per share.
NOTE 5: ENGINEERING, RESEARCH AND DEVELOPMENT
Engineering, research and development costs for the
years ended April 30, 1995, 1994 and 1993 are as follows:
<TABLE>
___________________________________________________________________________
1995 1994 1993
<S> <C> <C> <C>
___________________________________________________________________________
Charged to specific
customer orders $ 495,887 $ 820,614 $1,158,387
Charged to computer
software costs 2,120,999
Charged directly to
engineering, research
and development 522,599 1,124,789 528,268
__________ __________ __________
Total cost of engineering,
research and develop-
ment efforts $1,018,486 $1,945,403 $3,807,654
========== ========== ==========
</TABLE>
Revenue recognized under research and development
arrangements for the years ended April 30, 1995, 1994, and
1993 was $-0-, $-0- and $383,000 respectively. This revenue
was completely offset by costs incurred during the same
period.
<TABLE>
NOTE 6: INCOME TAXES
The provision for income taxes (benefit) includes the
following:
<CAPTION>
______________________________________________________________________
1995 1994 1993
<S> <C> <C> <C>
______________________________________________________________________
Federal:
Deferred $66,700 ($214,100) ($14,000)
Currently payable
(Refundable) 66,700 ( 10,509) 14,000
Tax benefit of net
operating loss
carryforward (66,700) ( 86,000)
Valuation Allowance 214,100
________ __________ _________
Total $66,700 ($ 10,509) ($86,000)
======== ========== =========
</TABLE>
Effective May 1, 1992, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting
for Income Taxes." This statement supersedes SFAS No. 96,
"Accounting for Income Taxes." The cumulative effect of
adopting SFAS No. 109 on the Company's financial statements
was to increase net earnings by $730,000 ($.15 per share)
for the year ended April 30, 1993. The effect on earnings
was to increase 1993 net income by $100,000.
<PAGE>
Deferred income taxes reflect the net income tax
effects of (a) temporary differences between the carrying
amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes, and
(b) net operating loss and tax credit carryforwards. The
income tax effects of significant items comprising the
Company's net deferred income tax asset as of April 30, 1995
and 1994 are as follows:
<TABLE>
________________________________________________________________________
1995 1994
<S> <C> <C>
________________________________________________________________________
Net operating loss carryforwards
Federal $2,995,000 $3,025,000
State 37,000 138,000
Temporary differences:
Accrued warranty expense 25,000 21,000
Inventory capitalization 96,000 82,000
Other 44,300 ( 2,000)
__________ ___________
Total $3,197,300 $3,264,000
Less Valuation Allowance (2,434,000) (2,434,000)
__________ ___________
Net deferred income tax asset $ 763,300 $ 830,000
========== ===========
<FN>
The amounts and expiration dates for the Company's net
operating loss carryforwards for income tax return purposes
are summarized as follows:
Year Ending April 30 Federal
2002 $1,759,000
2004 2,762,000
2005 3,027,000
2008 459,000
2009 803,000
----------
Total $8,810,000
==========
</TABLE>
<TABLE>
NOTE 7: REVENUES TO MAJOR CUSTOMERS
On a continuing basis, no single customer accounts for
a significant percentage of the Company's net sales.
However, net revenues to customers in selected industries as
a percent of total revenues are as follows:
<CAPTION>
_____________________________________________________________________
1995 1994 1993
<S> <C> <C> <C>
_____________________________________________________________________
Federal Government 18.4% 16.6% 15.0%
Aerospace 18.8% 5.4% 3.4%
Petroleum 4.9% 4.4% .5%
Computer 10.5% 2.1% 9.5%
Medical 7.2% 20.6% 13.8%
Manufacturing 12.4% 3.0%
<FN>
Accounts receivable from these customers at April 30,
1995 and April 30, 1994 were $778,100 and $657,100,
respectively.
</TABLE>
NOTE 8: LEASE COMMITMENTS
The Company leases office and manufacturing facilities
and equipment under operating leases. Rent expense was
$223,977 (1995), $342,311 (1994), and $339,504 (1993) of
which $60,281 (1995), $131,268 (1994) and $45,426 (1993),
were under short-term cancelable leases.
As of April 30, 1995, minimum annual payments under all
noncancelable long-term operating lease agreements are:
$144,398 (1996), $186,780 (1997), $166,780 (1998), $170,950
(1999), and $170,950 (2000).
The Company leases office equipment and software
under capital leases. As of April 30, 1995, minimum annual
payments under all noncancelable capital lease agreements
are: $68,497 (1996) and $26,035 (1997) for a total of
$94,532. Maintenance on these leases total $3,283,
representing net minimum lease payments of $91,250.
Interest on these leases represented $11,538 for a present
value of net minimum lease payments of $79,712. This is
reflected in the balance sheet as current and noncurrent
obligations under capital leases of $56,613 and $23,098,
respectively. The cost, accumulated depreciation and
depreciation expense of assets under capital leases was
$206,900, $124,000 and $76,300, respectively at April 30,
1995.
NOTE 9: DISCONTINUED OPERATIONS
Effective as of the end of the second quarter of fiscal
1994, the Company discontinued its operations with respect
to its Hardware Engineering and Contract Manufacturing
product lines. It is limiting its manufacturing to the
supply of cards for the micrographic equipment sold in prior
years and the parts required to support existing equipment.
Revenues from discontinued operations were $431,000
and $866,000 for fiscal years 1994 and 1993, respectively.
Previously reported results of operations have been
reclassified to show the effects of the discontinued
operations.
<PAGE>
ABOUT THE COMPANY
CORPORATE PROFILE
ACCESS Corporation is dedicated to enhancing the
quality of its customers' products by providing world class
software solutions for their technical processes. ACCESS'
software allows its customers to manage the process of
design changes, release of those changes, and the efficient
storage, indexing, and retrieval of both engineering
drawings and related technical documentation.
ACCESS Corporation primarily serves engineering
customers in discrete and process manufacturing. Its
applications benefit companies in the medical products,
pharmaceutical, computer and electronic, petrochemical,
defense, and automotive industries. In addition, companies
under strict government regulation have found ACCESS'
applications beneficial in organizing and controlling
compliance procedures.
The Cincinnati-based company has two business units:
Technical Document Management Systems (TDMS) and Component
and Systems Service.
ACCESS HISTORY
Founded over thirty years ago, ACCESS has designed
systems for use by organizations throughout the world. Some
have been in continuous use for as long as twenty years.
ACCESS' early success in automating the handling of
document based information positioned the Company to take a
leadership role in the evolution of computer technology in
the specialized area of imaging and technical document
management. As the industry has evolved into more
sophisticated products and processes, numerous document
management problems have emerged. ACCESS' TDMS business
unit addresses these challenges by designing innovative
software solutions.
The Service business is comprised of hardware and
software support to the Company's installed base of
customers and third-party maintenance contracts. It also
provides media and parts on a nationwide basis to the
Company's installed customer base.
ACCESS TDMS BUSINESS UNIT
ACCESS' application software features three unique
products: EDICS/RM (Engineering Document Image Control
System/Release Management), EDICS/DM (Engineering Document
Image Control System/ Document Management) and ECC
(Electronic Change Control) which may be configured to
specific organizational needs.
A powerful database application for managing documents
and engineering related information, EDICS processes both
text and A through E size drawings that may be scanned or
electronically imported from CAD (computer aided design).
These documents from multiple sources are integrated into a
single system which fully automates the revision process and
provides flexible tools for viewing, editing, and printing.
EDICS also enables a user to comply with regulatory
agencies, such as the Food and Drug Administration, by
allowing storage and immediate retrieval of product and
process information.
ECC may be added to the EDICS system to improve control
over the design and processing changes. It provides
advanced functionality to automate the entire document
change process, including multiple approval processing and
notification, rejection handling, in-process review,
approval history, and change-process performance reporting.
<PAGE>
ECC automates a company's entire engineering change
control process consistent with its established procedures
and operational requirements. ECC correlates change
documents with markups and affected drawings for the length
of the change cycle. It can be easily configured to
facilitate concurrent reviews (now a Computer Aided
Acquisition and Logistics Support, CALS, requirement for
many Department of Defense contracts).
Both EDICS and ECC support effective concurrent
engineering environments, which involve the cooperative
interaction of design, manufacturing, support personnel,
suppliers, and customers. Concurrent engineering reduces
time-to-market and increases manufacturability,
serviceability, and reliability.
ACCESS has been approved as an Industry Application
Specialist by IBM's Industrial Sector Marketing. In this
relationship, ACCESS provides EDICS/400 and ECC/400 for use
on the IBM AS/400.
ACCESS also supplies EDICS and ECC in the Unix
environment running on IBM's RS/6000 and on both AT&T and
Hewlett Packard Unix platforms.
COMPONENT SERVICE
ACCESS also provides quality field maintenance
including hardware and software service on a nationwide
basis to the Company's installed customer base.
In addition to maintaining ACCESS-installed systems,
ACCESS' service group also maintains non-ACCESS electronic
and electromechanical equipment such as card embossers,
microfiche duplicators, microfilm scanners, large drawing
format scanners and highly sophisticated 5-1/4" and 12"
laser drives.
ACCESS continues to pursue additional third-party
service opportunities with manufacturers of electronic and
electromechanical products who require a rapid on-site
service response but whose customer base is not large enough
to support a nationwide service network.
SALES
ACCESS systems have been installed in 48 states, Japan,
Europe, Australia, Canada, Mexico, Jamaica, Puerto Rico, the
Middle East, China, and the former Soviet Union. Sales in
and outside the United States are handled predominantly on a
direct basis. There is no recurring geographic market
concentration with respect to the sales of ACCESS systems in
the United States, and in fiscal year 1995, not more than
13% of the Company's sales were derived from customers in
any single state.
ACCESS' primary marketing focus is the sale of its TDMS
products to manufacturers and other users of technical
documentation. No single customer accounts for a
significant percentage of the Company's revenues on a
continuing basis, although sales of ACCESS' systems to
various agencies of the federal government represented 18%
of 1995 revenues and 17% of 1994 revenues. These revenues
represented numerous federal contracts.
COMMON SHARES
Currently there is no established market for the
Company's Common Shares and the Company is not aware of any
reported bid quotations. The Company has not paid, and has
no plans to pay, dividends on its Common Shares. The number
of holders of record of ACCESS Corporation's Common Shares
as of April 30, 1995, was 389.
FORM 10-K AVAILABLE
An Annual Report on Form 10-K will be filed with the
Securities and Exchange Commission detailing the activities,
management, and financial results of ACCESS Corporation for
the fiscal year ending April 30, 1995. A shareholder may
obtain a copy of this report at no charge by writing to
ACCESS Corporation, 4350 Glendale-Milford Road, Suite 250,
Cincinnati, Ohio 45242, Attention: Treasurer.
<PAGE>
Board of Directors
Kent P. Friel
Chairman of the Board
President, Schonberg
Associates, Inc.
Cincinnati, Ohio
Scott D. Watkins
President and Chief
Executive Officer
Newton D. Baker
Executive Vice President
and Treasurer
James H. Hardie
Partner in law firm
of Reed Smith Shaw
& McClay
Pittsburgh, Pennsylvania
Robert J. Kalthoff
Chairman of the Kalthoff
Group, Inc.
Cincinnati, Ohio
Dennis J. Sullivan, Jr.
Executive Counselor
Dan Pinger Relations, Inc.
Cincinnati, Ohio
John W. Weil
President
Weil Associates, Inc.
Bloomfield Hills, Michigan
Officers
Scott D. Watkins
President and Chief
Executive Officer
Newton D. Baker
Executive Vice President
and Treasurer
Kim Bollinger
Vice President,
Customer Services
James M. Anderson
Secretary, Partner in law
firm of Taft, Stettinius
& Hollister
Cincinnati, Ohio
Shareholder Information
Transfer Agent/Registrar
Fifth Third Bank
Fifth Third Center
Corporate Trust
Cincinnati, OH 45263
Independent Auditors
Deloitte & Touche LLP
250 East Fifth Street
Cincinnati, Ohio
45201-5340
General Counsel
Taft, Stettinius & Hollister
1800 Star Bank Center
Cincinnati, Ohio 45202
Patent Counsel
Wood, Herron & Evans
2700 Carew Tower
Cincinnati, Ohio 45202
Deloitte & Touche LLP
250 East Fifth Street
P. O. Box 5340
Cincinnati, Ohio 45201-5340
Telephone (513)784-7100
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration
Statement Nos. 2-67785, 2-91016, 33-00158, 33-48194 and 33-
48195 of ACCESS Corporation on Forms S-8 of our reports
dated May 31, 1995, appearing in and incorporated by
reference in the Annual Report on Form 10-K of ACCESS
Corporation for the year ended April 30, 1995.
DELOITTE & TOUCHE LLP
- ------------------------------------
Deloitte & Touche LLP
Cincinnati, Ohio
July 21, 1995
Exhibit 24(i)
POWER OF ATTORNEY
--------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned,
officer and/or director of ACCESS Corporation, an Ohio
Corporation, which is about to file with the Securities and
Exchange Commission, Washington, DC, under the provisions of
the Securities Exchange Act of 1934, as amended, a 1995
Annual Report, hereby constitutes Mr. Newton D. Baker, his
true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign such
1995 Annual Report and any or all amendments thereto, and to
file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or his
substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set
his hand this 5th day of July, 1995.
JAMES H. HARDIE
------------------------------
James H. Hardie
Exhibit 24(ii)
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned,
officer and/or director of ACCESS Corporation, an Ohio
Corporation, which is about to file with the Securities and
Exchange Commission, Washington, DC, under the provisions of
the Securities Exchange Act of 1934, as amended, a 1995
Annual Report, hereby constitutes Mr. Newton D. Baker, his
true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign such
1995 Annual Report and any or all amendments thereto, and to
file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or his
substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set
his hand this 5th day of July, 1995.
ROBERT J. KALTHOFF
---------------------------------
Robert J. Kalthoff
Exhibit 24(iii)
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned,
officer and/or director of ACCESS Corporation, an Ohio
Corporation, which is about to file with the Securities and
Exchange Commission, Washington, DC, under the provisions of
the Securities Exchange Act of 1934, as amended, a 1995
Annual Report, hereby constitutes Mr. Newton D. Baker, his
true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign such
1995 Annual Report and any or all amendments thereto, and to
file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or his
substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set
his hand this 5th day of July, 1995.
JOHN W. WEIL
---------------------------
John W. Weil
Exhibit 24(iv)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned,
officer and/or director of ACCESS Corporation, an Ohio
Corporation, which is about to file with the Securities and
Exchange Commission, Washington, DC, under the provisions of
the Securities Exchange Act of 1934, as amended, a 1995
Annual Report, hereby constitutes Mr. Newton D. Baker, his
true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign such
1995 Annual Report and any or all amendments thereto, and to
file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or his
substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set
his hand this 10th day of July, 1995.
KENT P. FRIEL
----------------------------
Kent P. Friel
Exhibit 24(v)
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned,
officer and/or director of ACCESS Corporation, an Ohio
Corporation, which is about to file with the Securities and
Exchange Commission, Washington, DC, under the provisions of
the Securities Exchange Act of 1934, as amended, a 1995
Annual Report, hereby constitutes Mr. Newton D. Baker, his
true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign such
1995 Annual Report and any or all amendments thereto, and to
file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or his
substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set
his hand this 3rd day of July, 1995.
DENNIS P. SULLIVAN
-----------------------------
Dennis P. Sullivan
Deloitte & Touche LLP
250 East Fifth Street
P. O. Box 5340
Cincinnati, Ohio 45201-5340
Telephone (513)784-7100
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULES
Stockholders and Board of Directors
ACCESS Corporation
Cincinnati, Ohio
We have audited the financial statements of ACCESS
Corporation as of April 30, 1995 and 1994, and for each of
the three years in the period ended April 30, 1995, and have
issued our report thereon dated May 31, 1995; such financial
statements and report are included in your 1995 Annual Report
to the Stockholders and are incorporated herein by reference.
Our audits also included the financial statement schedule of
ACCESS Corporation, listed in Item 14 of Form 10-K. This
financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an
opinion based on our audits. In our opinion, such financial
statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
DELOITTE & TOUCHE LLP
- ------------------------------------
Deloitte & Touche LLP
Cincinnati, Ohio
May 31, 1995
<TABLE>
ACCESS CORPORATION
SCHEDULE II- Valuation and Qualifiying Accounts
<CAPTION>
Column A Column B Column C Column D Column E
Balance Charged to Charged to Balance
Beginning Costs and Other End of
Description of Period Expenses Accounts Period
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Year Ended
April 30, 1995
Deferred Income
Tax Benefit
Valuation
Allowance ($2,434,100) $ 0 $ 0 ($2,434,100)
Allowance for
Doubtful Accounts $ 17,479 $ 4,796 $ 4,175 $ 18,100
- ------------------------------------------------------------------------------------------------
Year Ended
April 30, 1994
Deferred Income
Tax Benefit
Valuation
Allowance ($2,220,000) $ 214,100 $ 0 ($2,434,100)
Allowance for
Doubtful Accounts $ 36,360 (2) $ 13,287 (1) $ 5,594 $ 17,479
- -----------------------------------------------------------------------------------------------
Year Ended
April 30, 1993
Deferred Income
Tax Benefit
Valuation
Allowance $ 0 (3) $2,220,000 $ 0 ($2,220,000)
Allowance for
Doubtful Accounts $ 50,000 (2) $ 4,562 (1) $18,292 $ 36,360
- -----------------------------------------------------------------------------------------------
<FN>
(1) Accounts written off as uncollectable.
(2) Net change in reserve.
(3) Recorded as part of cumulative effect of change in
accounting for income taxes
</TABLE>
