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 January 31, 1996
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 Number)
of incorporation)
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 January 31, 1996. Common Stock, no par
value: 4,865,559 shares.
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ACCESS CORPORATION
BALANCE SHEETS
ASSETS
<CAPTION>
January 31, April 30,
1996 1995
<S> <C> <C>
CURRENT ASSETS:
Cash $ 1,252,837 $ 883,487
Accounts Receivable, Less Allowances
for Doubtful Accounts of $81,014
in January 1996 and $18,100 in April 1995 2,334,017 1,015,811
Inventories
Raw Materials and Purchase Parts 106,791 79,495
Work - in - Process 92,632 318,598
Finished Goods 15,751 14,772
--------- ---------
215,174 412,865
Prepaid Expenses 241,139 68,990
Deferred Income Tax Benefit 30,200 112,000
--------- ---------
TOTAL CURRENT ASSETS 4,073,367 2,493,153
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Computer Hardware & Software 1,427,240 1,952,220
Machinery and Equipment 503,338 503,337
Office and Service Equipment 364,276 313,431
Leasehold Improvements 9,422 5,000
Tools, Dies and Fixtures 115,013 115,013
--------- ---------
2,419,289 2,889,001
Less Accumulated Depreciation (2,153,499) (2,646,833)
--------- ----------
265,790 242,168
COMPUTER SOFTWARE COSTS 1,237,348 1,742,627
DEFERRED INCOME TAX BENEFIT 651,300 651,300
--------- ---------
TOTAL ASSETS $ 6,227,805 $5,129,248
=========== ==========
<FN>
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
</TABLE>
<PAGE>
<TABLE>
ACCESS CORPORATION
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
January 31, April 30,
1996 1995
<CAPTION>
<S> <C> <C>
CURRENT LIABILITIES
Accounts Payable $ 149,176 $ 95,864
Accrued Salaries, Wages and Commissions 293,387 120,054
Accrued Taxes 27,245 24,429
Accrued Warranty Expense 21,917 44,275
Capital Leases - Current 27,299 56,613
Other Accrued Liabilities 762,772 77,683
Advances from Customers 228,635 339,456
------------ ----------
TOTAL CURRENT LIABILITIES 1,510,431 758,374
PREPAID MAINTENANCE CONTRACT REVENUE 574,934 299,578
CAPITAL LEASES - 23,099
MANDATORILY REDEEMABLE PREFERRED STOCK 1,500,000 1,500,000
Accrued Preferred Dividends 79,464 64,685
STOCKHOLDERS' EQUITY
Capital Stock
Common Stock, No Par Value, Authorized
8,000,000 Shares, Issued and Outstanding
3,453,257 Shares 488,183 345,325
Class A Common Stock, No Par Value,
Authorized 2,000,000 Shares, Issued
and Outstanding 1,428,572 Shares(1995) - 142,857
Additional Paid-In Capital 10,680,698 10,760,162
Deficit from April 1, 1985 (8,590,522) (8,749,449)
16,270 Common Stock Shares In
Treasury, at Cost (15,383) (15,383)
---------- ---------
TOTAL STOCKHOLDERS' EQUITY 2,562,976 2,483,512
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $6,227,805 $5,129,248
========== ==========
<FN>
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
</TABLE>
<PAGE>
<TABLE>
ACCESS CORPORATION
STATEMENT OF EARNINGS
Three Months Ended
January 31,
1996 1995
<CAPTION>
<S> <C> <C>
REVENUE
System Sales $1,317,097 $ 164,371
Service 1,233,846 1,172,516
Manufacturing 37,113 69,707
---------- ----------
2,588,056 1,406,594
COST OF REVENUE
System Sales 714,201 78,698
Service 546,176 508,398
Manufacturing 58,481 64,816
---------- ----------
1,318,858 651,912
GROSS PROFIT BEFORE AMORTIZATIO 1,269,198 754,682
AMORTIZATION OF COMPUTER SOFTWARE COST 168,426 168,426
---------- ----------
GROSS PROFIT 1,100,772 586,256
Sales and Administrative 722,263 339,257
Engineering, Research and Development 180,998 158,284
---------- ----------
Total Costs and Expenses 903,261 497,541
EARNINGS FROM OPERATIONS 197,511 88,715
OTHER INCOME (EXPENSE)
Interest Income 12,625 1,021
Other Income 621 359
Interest Expense (2,439) (5,452)
Other (295) (2,089)
---------- ----------
EARNINGS BEFORE INCOME TAXES 208,023 82,554
INCOME TAXES 70,700 28,100
---------- ----------
NET EARNINGS 137,323 54,454
PREFERRED DIVIDEND 68,662 -
INCOME APPLICABLE TO COMMON SHARES $ 68,661 $ 54,454
========== ==========
PER COMMON SHARE AND COMMON SHARE EQUIVALENT
Net earnings $ 0.01 $ 0.01
=========== ==========
<FN>
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
</TABLE>
<PAGE>
<TABLE>
ACCESS CORPORATION
STATEMENT OF EARNINGS
Nine Months Ended
January 31,
1996 1995
<CAPTION>
<S> <C> <C>
REVENUE
System Sales $ 2,477,502 $ 933,404
Service 3,461,846 3,418,014
Manufacturing 108,995 173,653
----------- -----------
6,048,343 4,525,071
COST OF REVENUE
System Sales 1,386,432 486,504
Service 1,696,827 1,510,623
Manufacturing 173,024 164,241
----------- -----------
3,256,283 2,161,368
GROSS PROFIT BEFORE AMORTIZATION 2,792,060 2,363,703
AMORTIZATION OF COMPUTER SOFTWARE COST 505,278 505,278
----------- -----------
GROSS PROFIT 2,286,782 1,858,425
Sales and Administrative 1,638,077 1,180,338
Engineering, Research and Development 431,145 437,310
----------- -----------
Total Costs and Expenses 2,069,222 1,617,648
EARNINGS FROM OPERATIONS 217,560 240,777
OTHER INCOME (EXPENSE)
Interest Income 39,677 1,191
Other Income 621 1,550
Interest Expense (9,091) (22,255)
Other (8,041) (1,962)
----------- -----------
EARNINGS BEFORE INCOME TAXES 240,726 219,301
INCOME TAXES 81,800 74,600
----------- -----------
NET EARNINGS 158,926 144,701
PREFERRED DIVIDENDS 79,464 -
----------- -----------
INCOME APPLICABLE TO COMMON SHARES $ 79,462 $ 144,701
=========== ===========
PER COMMON SHARE AND COMMON SHARE EQUIVALENT
Net Earnings $ 0.02 $ 0.03
=========== ===========
<FN>
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
</TABLE>
<PAGE>
<TABLE>
ACCESS CORPORATION
STATEMENTS OF CASH FLOW
Nine Months Ended
January 31,
1996 1995
<CAPTION>
<S> <C> <C>
CASH FLOW FROM:
OPERATING ACTIVITIES
Net Earnings $ 158,926 $ 144,701
Adjustments to Reconcile Net Earnings
To Net Cash Used in Operations:
Depreciation 108,741 104,845
Amortization 505,278 505,278
Deferred Income Tax 81,800 74,600
(Gain) Loss on Sale of Fixed Asset 7,377 454
Changes in Assets and Liabilities
Accounts Receivable (280,376) (609,654)
Inventories 197,691 (38,567)
Prepaid Expenses (172,149) 5,151
Accounts Payable (50,312) (113,541)
Accrued Liabilities 441,795 15,126
Advances From Customers (628,819) 222,799
Prepaid Maintenance Contract Revenue 260,181 253,565
---------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 630,133 564,757
INVESTING ACTIVITIES:
Capital Additions (139,741) (14,781)
Investment in Subsidiary (68,629) -
Proceeds from Disposal of Fixed Assets - 240
---------- ---------
NET CASH (USED IN) INVESTING ACTIVITIES (208,370) (14,541)
FINANCING ACTIVITIES
Net Proceeds(Payments)Under Bank Line of Credit - (71,807)
Payments on Capital Leases (52,413) (53,692)
---------- ---------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (52,413) (125,499)
NET CHANGE IN CASH 369,350 424,717
CASH, Beginning of the Year 883,487 3,500
---------- ---------
CASH, January 31, 1996 and 1995 $1,252,837 $ 428,217
========== =========
<FN>
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
</TABLE>
<PAGE>
ACCESS CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JANUARY 31, 1996
NOTE A - CONDENSED FINANCIAL STATEMENTS
The condensed balance sheet as of January 31, 1996, the condensed
statements of earnings for the nine month and three month periods ended
January 31, 1996 and 1995, and the condensed statements of cash flows
for the nine month periods ended January 31, 1996 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 January 31, 1996 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 January 31, 1996 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 CimSoft Incorporated at a net
cost of $350,000. 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 its 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 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 markets both it's proprietary software and
resells as a value added re-seller software developed by other
companies. The TDMS software that the company markets, enhances the
quality of its customers' products and service by providing world class
solutions for their technical process. TDMS has the potential for
substantial growth in revenue and profits in that it serves a large,
worldwide market opportunity.
Fiscal year 1996 third quarter revenue of $2.6 million was up $1,181,500
(84%) compared with the third quarter of fiscal 1995. As a result of
the Service/Manufacturing revenue of $1.3 million increased $28,700
(2%) compared with the third quarter of fiscal 1995. TDMS revenue of
$1.3 million increased $1,152,700 (701%) compared with the third quarter
of fiscal 1995. In the first quarter of fiscal 1996 the Company
acquired CimSoft Incorporated. This increase resulted from the
Company's acquisition described below. This acquisition the Company
obtained the sole distribution rights in North America for Cimage
software. The Company recorded revenue includes $1,181,500 in Cimage
software, hardware and professional services and $397,600 for Cimage
Software support in the third quarter of fiscal 1996. The Service
revenue for Micrographic equipment continues to decline. This decline
in revenue is the result of the declining population of the System M
previously manufactured by the Company. The Company anticipates a
decrease in System M Service revenue over the next few years. In the
current year the sales force has concentrated on the Cimage product line
with the result that there has been a dramatic growth in the Cimage
product line for bookings and revenue and a decline in the Company's
unix and AS/400 product line bookings and revenue. The Company
continues to be optimistic about the AS/400 product line and expects a
substantial growth in the coming years.
Revenue for the first nine months of fiscal 1996 of $6.0 million
increased 34% from the nine months ended January 31, 1995. TDMS revenue
of $2.5 million was 165% higher than the same period last fiscal year.
This increase was due to the recognition of revenue for Cimage products
representing $1,799,000 of revenue. Service revenue of $3.6 million was
essentially unchanged from the prior year.
The Company's current backlog of orders is $3.5 million compared to $3.4
million at January 31, 1995. Current TDMS backlog of $1.3 million is
4% higher than that at the same date last year. The increase is due to
$800,100 of Cimage backlog of orders at the end of the third quarter of
fiscal 1996. Service backlog of $2.2 million was 3% higher at January
31, 1996, compared with January 31, 1995. The increase occurred in the
Cimage Software Maintenance bookings, which totaled $486,500 in backlog
at January 31, 1996. This Service backlog is expected to be delivered
within the next twelve months.
Cost of sales for the third quarter and nine months ended January 31,
1996, of 51% and 54%, respectively were within 5% and 6%, respectively,
of those for the comparable periods in fiscal 1995. The Company is
required to pay royalties on the Cimage Product line which reduced the
gross margin for service and software.
Selling and administrative expenses of $722,300 for the third quarter
of fiscal 1996 were $383,000 (113%) higher than the third quarter of
fiscal 1995. Selling and administrative expenses for the nine months
ended January 1996 of $1,638,100 were 39% higher than the same period
last fiscal year. Selling and administrative expenses increased due to
the acquisition of CimSoft. The increase in sales operations is
primarily due to the hiring of additional sales and technical support
personnel. The Company will continue to grow the sales operation to take
advantage of the sales opportunities of the Cimage product line.
<PAGE>
Engineering, research and development expenses are incurred for
maintaining, upgrading and developing new products. The third quarter
expense for engineering, research and development of $181,000 increased
$22,700 from the third quarter of last fiscal year. This increase in
development expense was primarily due to installation and support
personnel applying time to internal projects rather than customer funded
work.
Interest income for the third quarter and nine months ended January 31,
1996, was $12,600 and $39,700, respectively, compared with $1,000 and
$1,200, respectively for fiscal 1995. Interest income for fiscal 1996
was primarily the interest received on cash being invested in short term
investments.
LIQUIDITY AND CAPITAL RESOURCES
During the first nine months of fiscal 1996, the Company increased its
cash balance by $369,300 leaving $1,252,800 in cash. The Company
provided $709,600 in cash from operations and the Company used $139,700
for capital purchases, $68,600 for the investment of CimSoft and $52,400
for payments on capital leases.
Inventory has decreased $197,700 since April 30, 1995. This decrease is
due to work in process inventory on TDMS projects being delivered in the
third quarter of fiscal 1996.
Accounts Receivable, Other Accrued Liabilities, Accounts Payable and
Accrued Salaries, Wages and Commissions increased $1,318,200, $685,100,
$53,300 and $173,300 respectively between April 30, 1995, and the end of
January 1996. The major contributor to this fluctuation is the revenue
from CimSoft customers for the Cimage product line, and the royalties
due Cimage on these orders.
On large customer orders there are provisions for progress payments to
be made by customers based on predetermined events. These advances
decreased approximately $110,800 since April 30, 1995.
Working capital on January 31, 1996, was approximately $2,562,900, which
is $828,100 higher than the April 30, 1995 level. This primarily was
the result of the increase in cash, accounts receivable and prepaid
expenses.
<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: February 28, 1996 /s/Newton D. Baker
Newton D. Baker
Executive Vice President
Date: February 28, 1996 /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: February 28, 1996 NEWTON D. BAKER
---------------
Newton D. Baker
Executive Vice President
Date: February 28, 1996 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 January 31, 1996
and 1995 is attached as Exhibit 11(a).
(b) The calculation of net earnings per common share and
common share equivalent for the nine month periods ended January 31,
1996 and 1995 is attached as Exhibit 11(b).
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-END> JAN-31-1996
<CASH> 1,252,837
<SECURITIES> 0
<RECEIVABLES> 2,334,017
<ALLOWANCES> (81,014)
<INVENTORY> 215,174
<CURRENT-ASSETS> 4,073,367
<PP&E> 2,419,289
<DEPRECIATION> (2,153,499)
<TOTAL-ASSETS> 6,227,805
<CURRENT-LIABILITIES> 1,510,431
<BONDS> 0
<COMMON> 488,183
1,500,000
0
<OTHER-SE> (15,383)
<TOTAL-LIABILITY-AND-EQUITY> 6,227,805
<SALES> 6,048,343
<TOTAL-REVENUES> 6,048,343
<CGS> 3,761,561
<TOTAL-COSTS> 2,069,222
<OTHER-EXPENSES> 23,166
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (9,091)
<INCOME-PRETAX> 240,726
<INCOME-TAX> 81,800
<INCOME-CONTINUING> 158,926
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 158,926
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
<TABLE>
Exhibit 11(a)
ACCESS CORPORATION
CALCULATION OF NET EARNINGS PER COMMON SHARE
AND COMMON SHARE EQUIVALENT
Three Months Ended
January 31,
1996 1995
------------------
<CAPTION>
<S> <C> <C>
NET EARNINGS APPLICABLE TO COMMON SHARES AND
COMMON SHARE EQUIVALENT:
Net Earnings $ 137,323 $ 54,454
Preferred Dividend 68,662 -
Net Earnings Applicable to Common Shares and
Common Share Equivalents $ 68,661 $ 54,454
CALCULATION OF PRIMARY NET EARNINGS PER
COMMON SHARE AND COMMON SHARE EQUIVALENT:
Average Number of Common Shares and Common
Share Equivalent 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
Equivalent $ 0.01 $ 0.01
========== ==========
<FN>
a) Common Share Equivalent have not been included as their inclusion would be anti-dilutive or dilution
is less than 3%
</TABLE>
<TABLE>
Exhibit 11(b)
ACCESS CORPORATION
CALCULATION OF NET EARNINGS PER COMMON SHARE
AND COMMON SHARE EQUIVALENT
Nine Months Ended
January 31,
1996 1995
<CAPTION>
<S> <C> <C>
NET EARNINGS APPLICABLE TO COMMON SHARES AND
COMMON SHARE EQUIVALENT:
Net Earnings $ 158,926 $ 144,701
Preferred Dividend 79,464 -
Net Earnings Applicable to Common Shares and
Common Share Equivalent $ 79,462 $ 144,701
CALCULATION OF PRIMARY NET EARNINGS PER
COMMON SHARE AND COMMON SHARE EQUIVALENT:
Average Number of Common Shares and Common
Share Equivalent 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
Equivalent after Discontinued Operations $ 0.02 $ 0.03
========= =========
<FN>
a) Common Share Equivalent have not been included as their inclusion would be anti-dilutive or dilution
is less than 3%
</TABLE>
