UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For Quarterly Period Ended October 31, 1995
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 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 or other jurisdiction (I.R.S. Employer Identification
of incorporation) Number)
4350 Glendale-Milford Road, Suite 250, Cincinnati, Ohio 45242-3700
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (513)786-8350
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES X NO
---------- --------
Indicate the number of shares outstanding of each of the issuer's
classes of common shares, as of October 31, 1995. Common Stock, no par
value: 3,453,257 shares; Class A Common Stock, no par value, 1,428,572
shares.
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ACCESS CORPORATION
BALANCE SHEET
ASSETS
<CAPTION>
October31, April 30,
1995 1995
---------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 917,202 $ 883,487
Accounts Receivable, Less Allowances 1,549,392 1,015,811
for Doubtful Accounts of $145,654
in October 1995 and $18,100 in April 1995
Inventories
Raw Materials and Purchase Parts 64,720 79,495
Work - in - Process 155,693 318,598
Finished Goods 20,965 14,772
---------- ----------
241,378 412,865
Prepaid Expenses 174,249 68,990
Deferred Income Tax Benefit 100,900 112,000
---------- ----------
TOTAL CURRENT ASSETS 2,983,121 2,493,153
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Computer Hardware & Software 1,401,001 1,952,220
Machinery and Equipment 503,338 503,337
Office and Service Equipment 364,275 313,431
Leasehold Improvements 5,252 5,000
Tools, Dies and Fixtures 115,013 115,013
---------- ----------
2,388,879 2,889,001
Less Accumulated Depreciation (2,115,126) (2,646,833)
---------- ----------
273,753 242,168
COMPUTER SOFTWARE COSTS 1,405,774 1,742,627
DEFERRED INCOME TAX BENEFIT 651,300 651,300
---------- ----------
TOTAL ASSETS $5,313,948 $5,129,248
========== ==========
<FN>
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
</TABLE>
<PAGE>
<TABLE>
ACCESS CORPORATION
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION> October 31, April 30,
1995 1995
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES
Accounts Payable $ 238,731 $ 95,864
Accrued Salaries, Wages and Commissions 125,465 120,054
Accrued Taxes 62,122 24,429
Accrued Warranty Expense 21,917 44,275
Capital Leases - Current 35,166 56,613
Other Accrued Liabilities 229,661 77,683
Advances from Customers 243,735 339,456
----------- -----------
TOTAL CURRENT LIABILITIES 956,797 758,374
PREPAID MAINTENANCE CONTRACT REVENUE 344,336 299,578
CAPITAL LEASES 7,699 23,099
MANDATORILY REDEEMABLE PREFERRED STOCK 1,500,000 1,500,000
Accrued Preferred Dividends 10,802 64,685
STOCKHOLDERS' EQUITY
Capital Stock
Common Stock, No Par Value, Authorized 345,325 345,325
8,000,000 Shares, Issued and Outstanding
3,453,257 Shares
Class A Common Stock, No Par Value, 142,857 142,857
Authorized 2,000,000 Shares, Issued
and Outstanding 1,428,572 Shares
Additional Paid-In Capital 10,749,360 10,760,162
Deficit from April 1, 1985 (8,727,845) (8,749,449)
16,270 Common Stock Shares In (15,383) (15,383)
Treasury, at Cost
---------- -----------
TOTAL STOCKHOLDERS' EQUITY 2,494,314 2,483,512
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $5,313,948 $5,129,248
========== ==========
<FN>
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
</TABLE>
<PAGE>
<TABLE>
ACCESS CORPORATION
STATEMENT OF EARNINGS
Three Months Ended
<CAPTION> October 31,
1995 1994
---------------------
<S> <C> <C>
REVENUE
System Sales $ 944,345 $ 345,694
Service 1,137,791 1,199,287
Manufacturing 20,880 57,312
--------- ---------
2,103,016 1,602,293
COST OF REVENUE
System Sales 520,633 179,695
Service 606,901 414,275
Manufacturing 50,441 154,649
--------- ---------
1,177,975 748,619
GROSS PROFIT BEFORE AMORTIZATION 925,041 853,674
AMORTIZATION OF COMPUTER SOFTWARE COST 168,426 168,426
GROSS PROFIT 756,615 685,248
Sales and Administrative 578,056 429,154
Engineering, Research and Development 140,858 121,706
--------- ---------
Total Costs and Expenses 718,914 550,860
EARNINGS FROM OPERATIONS 37,701 134,388
OTHER INCOME (EXPENSE)
Interest Income 14,611 (780)
Other Income 10 463
Interest Expense (4,515) (6,772)
Other (33) 377
NET EARNINGS BEFORE INCOME TAXES 47,774 127,676
INCOME TAXES 11,100 43,400
NET EARNINGS 36,674 84,276
PREFERRED DIVIDEND 10,802 -
INCOME APPLICABLE TO COMMON SHARES $ 25,872 $ 84,276
========= =========
PER COMMON SHARE AND COMMON SHARE EQUIVALENTS
Net earnings $ 0.01 $ 0.02
========= ==========
<FN>
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
</TABLE>
<PAGE>
<TABLE>
ACCESS CORPORATION
STATEMENT OF EARNINGS
Six Months Ended
October 31,
1995 1994
<CAPTION> _____________________
<S> <C> <C>
REVENUE
System Sales $1,160,406 $ 769,034
Service 2,228,000 2,245,498
Manufacturing 71,881 103,945
---------- ---------
3,460,287 3,118,477
COST OF REVENUE
System Sales 672,231 407,806
Service 1,150,651 1,002,225
Manufacturing 114,543 99,424
---------- ---------
1,937,425 1,509,455
GROSS PROFIT BEFORE AMORTIZATION 1,522,862 1,609,022
AMORTIZATION OF COMPUTER SOFTWARE COST 336,852 336,852
GROSS PROFIT 1,186,010 1,272,170
Sales and Administrative 915,814 841,082
Engineering, Research and Development 250,147 279,026
---------- ---------
Total Costs and Expenses 1,165,961 1,120,108
EARNINGS FROM OPERATIONS 20,049 152,062
OTHER INCOME (EXPENSE)
Interest Income 27,052 170
Other Income 1,191
Interest Expense (6,652) (16,803)
Other (7,746) 127
EARNINGS FROM CONTINUING OPERATIONS 32,703 136,747
BEFORE INCOME TAXES
INCOME TAXES 11,100 46,500
NET EARNINGS 21,603 90,247
PREFERRED DIVIDENDS 10,802 -
---------- ---------
INCOME APPLICABLE TO COMMON SHARES $ 10,801 $ 90,247
========== =========
PER COMMON SHARE AND COMMON SHARE EQUIVALENTS
Net Earnings $ 0.00 $ 0.02
========== =========
<FN>
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
</TABLE>
<PAGE>
<TABLE>
ACCESS CORPORATION
STATEMENTS OF CASH FLOW
Six Months Ended
October 31,
<CAPTION> 1995 1994
-------------------
<S> <C> <C>
CASH FLOW FROM:
OPERATING ACTIVITIES
Net Earnings (Loss) $ 21,603 $ 90,247
Adjustments to Reconcile Net Earnings
To Net Cash Used in Operations:
Depreciation 70,367 67,255
Amortization 336,852 336,852
Deferred Income Tax 11,100 46,500
(Gain) Loss on Sale of Fixed Asset 7,377 -
Changes in Assets and Liabilities
Accounts Receivable (313,960) (372,311)
Inventories 171,487 47,742
Prepaid Expenses (105,259) 46,005
Accounts Payable 131,734 ( 86,843)
Accrued Liabilities (184,466) ( 63,725)
Advances From Customers ( 95,720) ( 27,613)
Prepaid Maintenance Contract Revenue 17,486 69,734
--------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 68,601 153,843
INVESTING ACTIVITIES:
Capital Additions (109,331) ( 9,849)
Investment in Subsidiary 175,976
--------- ---------
NET CASH (USED IN) INVESTING ACTIVITIES 66,645 ( 9,849)
FINANCING ACTIVITIES
Preferred Dividends ( 64,685) -
Net Proceeds(Payments)Under Bank Line of Credit - ( 71,807)
Payments on Capital Leases ( 36,846) ( 38,017)
--------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (101,531) (109,824)
NET CHANGE IN CASH 33,715 34,170
CASH, Beginning of the Year 883,487 3,500
--------- --------
CASH, October 31, 1995 and 1994 $ 917,202 $ 37,670
========= =========
<FN>
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
</TABLE>
<PAGE>
ACCESS CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
OCTOBER 31, 1995
NOTE A - Condensed Financial Statements
The condensed balance sheet as of October 31, 1995, the condensed
statements of earnings for the six month and three month periods ended
October 31, 1995 and 1994, and the condensed statements of cash flows
for the six month periods ended October 31, 1995 have been prepared by
the Company without audit. These financial statements reflect all
adjustments which are, in the opinion of management, necessary to a fair
statement of the results for the interim periods presented. All
adjustments made during the quarter ended October 31, 1995 are of a
normal recurring nature.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's annual report on
Form 10-K for the year ended April 30, 1995. The results of operations
for the period, ended October 31, 1995 are not necessarily indicative of
the operating results for the full year.
NOTE B - Reclassification
Certain amounts previously reported have been reclassified to be
consistent with the classifications being used in the current period.
NOTE C - Acquisition
On July 31, 1995, the Company acquired a new company at a net cost of
$350,000, CimSoft Incorporated. CimSoft had offices in Michigan and
California. It was the exclusive distributor for all of Cimage
Enterprises Systems, Limited (CESL) products in North America. These
products are sold under the trade name "Cimage" in markets similar to
those the Company has served for many years.
The Company expects to expand their ability to serve its existing
markets through new product offerings, broader sales and distribution
coverage, and continued growth in its customer service programs.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
The Company 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.
Fiscal year 1996 second quarter revenue of $2.1 million was up $500,700
(31%) compared with the second quarter of fiscal 1995. Service/Manufacturing
revenue of $1.2 million decreased $97,900 (8%) compared with the second
quarter of fiscal 1995. TDMS revenue of $944,300 increased $598,700 (173%)
compared with the second quarter of fiscal 1995. In the first quarter of
fiscal 1996 the Company acquired CimSoft Incorporated. This acquisition
included a substantial TDMS order in the amount of $439,700 which was
delivered in August 1995. The Company also completed a major TDMS contract
in the month of October totaling $221,600. The reduction in
Service/Manufacturing is due to a re-certification order received for
$159,900 in October 1994.
Revenue for the first six months of fiscal 1996 of $3.5 million
increased 11% from the six months ended October 31, 1994. TDMS revenue
of $1,160,400 was 51% higher than the same period last year. This
increase was due to the recognition of revenue of the CimSoft order
received in the acquisition, which represented $373,700 of revenue as
well as the settlement on a major contract in the amount of $221,600.
Service/ Manufacturing revenue of $2.3 million was essentially unchanged
from the prior year.
The Company's current backlog of orders is $2.2 million compared to $3.5
million at the end of the six months ended October 31, 1994. Current
TDMS backlog of $619,000 is 55% lower than that at the same date last
year. This decrease in backlog is the result of the Company delivering
a major order that was in backlog last fiscal year as well as the
cancellation of a portion of that order. The order that was canceled was
for development effort of a new product. This customer decided to
remain on their existing Access system. Service/Manufacturing backlog
of $1.6 million was 25% lower at October 31, 1995 compared with October
31, 1994. This reduction in backlog was due to the loss of some of the
maintenance coverage on the Company's micrographic based systems
delivered several years ago which the Company no longer manufactures.
The Company expects this portion of its business to continue to decline.
This Service/Manufacturing backlog is expected to be delivered within
the next twelve months.
Cost of sales for the second quarter and six months ended October 31,
1995 of 56% were within 9% and 8%, respectively, of those for the
comparable periods in fiscal 1994.
Selling and administrative expenses of $578,100 for the second quarter
of fiscal 1995 were $148,900 (35%) higher than the second quarter of
fiscal 1995. Selling and administrative expenses for the six months
ended October 1995 of $915,800 were 9% higher than the same period last
fiscal year. Selling and administrative expenses increased due to the
acquisition of CimSoft. The Company will continue to grow the sales
operation to take advantage of the sales opportunities resulting from
the CimSoft acquisition.
<PAGE>
Engineering, research and development expenses are incurred for
maintaining, upgrading and developing new products. The second quarter
expense for engineering, research and development of $140,900 increased
$19,200 from the second quarter of last fiscal year. This increase in
development expense reflects the introduction of a new product, Cimage
software. This increase in development expense is the result of less
time being applied to inventory projects, offset partially by a
reduction in labor and other related expenses.
Interest income for the second quarter and six months ended October 31,
1995 was $14,600 and $27,100, respectively, compared with ($800) and
$200, respectively. Interest income for fiscal 1995 was primarily the
interest received on cash being invested in short term investments.
LIQUIDITY AND CAPITAL RESOURCES
During the first six months of fiscal 1996, the Company increased its
cash balance by $33,700 leaving $917,200 in cash. The Company provided
$3,900 in cash from operations and invested $146,200 in fixed assets.
The Company increased the cash $176,000 from investments for the
acquisition of CimSoft through the collection of the Cimage Accounts
Receivable, offset by a reduction in Customer Deposits and other
liabilities.
Inventory has decreased $171,500 since April 30, 1995. This decrease is
due to work in process inventory on TDMS projects being delivered in the
second quarter of fiscal 1996.
Accounts receivable increased $314,000 between April 30, 1995 and the
end of October 1995. The majority of this increase relates to a
development contract completed in October 1995. This receivable is
expected to be collected before the end of fiscal 1996.
On large customer orders there are provisions for progress payments to
be made by customers based on predetermined events. These advances
decreased approximately $95,700 since April 30, 1995.
Working capital on October 31, 1995 was approximately $2,026,300, which
is $291,500 higher than the April 30, 1995 level. This primarily was
the result of the increase in cash, accounts receivables and prepaid
expenses.
The Company's operations are structured so that revenues from its
ongoing service business, in combination with the sale of new Cimage ,
AS/400 and UNIX products are expected to provide the cash flow required
to operate the Company.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
ACCESS CORPORATION
Date: November 30, 1995 /s/Newton D. Baker
------------------
Newton D. Baker
Executive Vice President
Date: November 30, 1995 /s/ Barbara A. Sommer
---------------------
Barbara A. Sommer
Assistant Treasurer & Chief
Accounting Officer
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
ACCESS CORPORATION
Date: November 30, 1995 NEWTON D. BAKER
---------------------------
Newton D. Baker
Executive Vice President
Date: November 30, 1995 BARBARA A. SOMMER
--------------------------------
Barbara A. Sommer
Assistant Treasurer & Chief
Accounting Officer
<PAGE>
EXHIBIT INDEX
(11) Statement re-computation of per share earnings
(a) The calculation of net earnings per common share and
common share equivalent for three month periods ended October 31, 1995
and 1994 is attached as Exhibit 11(a).
(b) The calculation of net earnings per common share and
common share equivalent for the six month periods ended October 31, 1995
and 1994 is attached as Exhibit 11(b).
<PAGE>
<TABLE>
Exhibit 11(a)
ACCESS CORPORATION
CALCULATION OF NET EARNINGS PER COMMON SHARE
AND COMMON SHARE EQUIVALENT
Three Months Ended
October 31,
<CAPTION> 1995 1994
-------------------
<S> <C> <C>
NET EARNINGS APPLICABLE TO COMMON SHARES AND
COMMON SHARE EQUIVALENTS:
Net Earnings $ 36,674 $ 84,276
Preferred Dividend 10,802 -
Net Earnings Applicable to Common Shares and
Common Share Equivalents $ 25,872 $ 84,276
CALCULATION OF PRIMARY NET EARNINGS PER
COMMON SHARE AND COMMON SHARE EQUIVALENTS:
Average Number of Common Shares and Common
Share Equivalents Outstanding 4,865,559 4,865,559
PRIMARY NET EARNINGS PER COMMON SHARE AND
COMMON SHARE EQUIVALENT:
Net Earnings per Common Share and Common Share
Equivalents after Discontinued Operations $ 0.01 $ 0.02
========= =========
<FN>
a) Common Share Equivalents have not been included as their inclusion would
be anti-dilutive or dilution is less than 3%
</TABLE>
<PAGE>
<TABLE>
Exhibit 11(b)
ACCESS CORPORATION
CALCULATION OF NET EARNINGS PER COMMON SHARE
AND COMMON SHARE EQUIVALENT
Six Months Ended
October 31,
1995 1994
<CAPTION> -------------------
<S> <C> <C>
NET EARNINGS APPLICABLE TO COMMON SHARES AND
COMMON SHARE EQUIVALENTS:
Net Earnings $ 21,603 $ 90,247
Preferred Dividend 10,802 -
Net Earnings Applicable to Common Shares and
Common Share Equivalents $ 10,801 $ 90,247
CALCULATION OF PRIMARY NET EARNINGS PER
COMMON SHARE AND COMMON SHARE EQUIVALENTS:
Average Number of Common Shares and Common
Share Equivalents Outstanding 4,865,559 4,865,559
PRIMARY NET EARNINGS PER COMMON SHARE AND
COMMON SHARE EQUIVALENT:
Net Earnings per Common Share and Common Share
Equivalents after Discontinued Operations $ 0.00 $ 0.02
========= =========
<FN>
a) Common Share Equivalents have not been included as their inclusion would
be anti-dilutive or dilution is less than 3%
</TABLE>
